Our
culture
Our intelligent software solutions are setting
new standards - for example, in Qatar, where
a new elevated conveyor system for the Hamad
International Airport in Doha was planned com-
pletely digitally and commissioned well before
the airport itself was opened.
3 Energy
application
Page 85
Our strategy defines the direction our Company
is taking, sets the focus for our business activities
and determines our entrepreneurial priorities.
strategy
Our
Page 41
At Siemens, we live and nurture an ownership
culture - because, by giving his or her best,
each individual makes a vital contribution to
our Company's overall success.
Page 20
Flexible and small gas turbines will be an impor-
tant growth field in the years ahead. Find out
how our SGT-750 in Lubmin, Germany, is helping
secure Europe's power supply.
generation
1 Power
Page 30
A capacity of 120 gigawatts and more than
100,000 kilometers of high-voltage trans-
mission lines - these are only two features of
a power grid of true superlatives. Learn how
we've cooperated with local partners in Brazil
to create one of the world's most advanced,
safest and most reliable power grids.
power distribution and
smart grid
2 Power transmission,
Page 5
Vision 2020 describes our path to a successful
future - a strong mission, a lived ownership
culture shared by all our people and a consis-
tent strategy.
Our
path
Contents: Company Report
2
To learn more, please read on.
We make real what matters by setting
the benchmark in the way we electrify,
automate and digitalize the world
around us.
Company Report 2014
siemens.com
Fiscal 2014
Siemens at a glance
Page 64
4 Imaging and
in-vitro diagnostics
Rush University Medical Center in Chicago
demonstrates how we're helping hospital
operators and clinicians worldwide offer the
best possible healthcare at affordable prices.
Page 74
For over 165 years, Siemens has stood for
engineering excellence and innovation, for
quality and reliability, for human creativity
and drive, for stability and financial solidity
and, last but not least, for good corporate
citizenship. Our Vision 2020 fully embraces
this legacy while moving us forward into
a successful future.
Our path
Making real what matters |
6
| | | |||||||||| Our path
||||||| | || |
WHAT do we stand for?
WHAT sets us apart?
HOW can we achieve
long-term success?
Joe Kaeser
President and CEO
of Siemens AG
|| | Vision 2020
We make real what matters.
Our path
If you want to gear a company to the future, you've got to
provide answers to the following questions: What do you
stand for? What sets you apart? How will you achieve long-
term success? And that's what we've done. Vision 2020
is paving the way to a successful future. And to make it
happen, we're focusing on three topics:
1. A clear mission
A mission expresses a company's self-understanding and
defines its aspirations. “We make real what matters.” That's
our aspiration. That's what we stand for. That's what sets
us apart. A reflection of our strong brand, it's the mission
that inspires us to succeed.
2. A lived ownership culture
One engine of sustainable business is our ownership culture,
in which every employee takes personal responsibility for
our Company's success. “Always act as if it were your own
Company" this maxim applies to everyone at Siemens, from
Managing Board member to trainee.
3. A consistent strategy
With our positioning along the electrification value chain,
we have knowhow that extends from power generation to
power transmission, power distribution and smart grid to
the efficient application of electrical energy. And with our
outstanding strengths in automation, we're well equipped
for the future and the age of digitalization. Vision 2020
| | | ||||||||||
7
8
|||||||||
Our path
| | | |||||||||||
Dear Readers,
4
Vision 2020
siemens.com
SIEMENS
SIEMENS
3
We make real what matters.
Annual Report 2014
Vision 2020
Expected
market growth
Our strategy
- Process Industries
and Drives
Services
- Digital Factory
-Mobility
-Power Generation
and Renewables
Technologies
Management
- Wind Power
- Healthcare
-Building
Customer and business focus
Imaging
and in-vitro
diagnostics
Energy
application
Power transmission,
power distribution
and smart grid
generation
Power
Electrification
~4-6%
Automation
Digitalization
~7-9%
89
- Power and Gas - Energy
~2-3%
-Financial
Services
| Business excellence
|
We're bundling all the insights that help us improve our business
operations into a new type of knowledge management. This Corporate
Memory isn't limited to databases and methodologies. It's also an-
chored in our organization. Why? Because it's the only way we can draw
the right conclusions – from highly successful projects as well as from
earlier failures.
-
We have a comprehensive understanding of our customers' business
processes. In the future, we want to leverage this knowledge even better
by analyzing the data generated in these processes, providing recommen-
dations for improvement and action, and thus creating value. The result-
ing competitive advantages for our customers are increasingly derived
from cloud-based solutions and services powered by data analytics
software. A clear example is our cross-unit remote service, which we're
continuously expanding.
Business analytics and data-driven services,
software and IT solutions
Image-guided therapy and molecular diagnostics ……………………………………
The increasing use of molecular biological methods and progress in
the life sciences are accelerating technological change in healthcare.
To improve quality and efficiency, societies worldwide are also demand-
ing new solutions for next-generation healthcare. Against this backdrop,
fundamental changes are emerging – changes to which we're optimally
gearing our Healthcare business.
Some industry sectors – oil & gas and food & beverage, for example –
are growing at above-average rates. We want to participate in this
growth. That's why we're bundling our expertise in process industries
and drive technologies and continuing to expand our related portfolio
of products and software solutions.
Key sectors in process industries
The virtual and real worlds are merging more and more. Already today,
our software solutions are helping customers develop products much
faster, more flexibly and more efficiently. For example, they can now
perform endurance tests even before a single bolt is tightened in the real
world. Not only products but also the plants in which they're produced
have digital twins that can be used to coordinate and integrate product
design and production planning. The digital models are always up-to-
date - as planned, as built, as maintained – while allowing improvements
throughout entire lifecycles.
Digital-twin software
91
||||||||||
Our strategy
|||||||||
In greater demand than ever before, intelligent mobility solutions are
providing major impulses for growth - particularly in the areas of urban
transportation and automated traffic-control solutions. We see stronger
growth potential in this area as well.
Urban and interurban mobility
Energy management is becoming increasingly vital – for distribution grids as well
as industrial and private energy producers and consumers. Energy management
systems make it possible to integrate increasingly decentralized power supplies
into the energy cycle, while mitigating the negative impact of the fluctuations
that occur when power is generated from renewable sources - thus improving
the utilization of existing power grids. Our intelligent, integrated automation
solutions offer customers decisive added value.
Distribution grid automation and software
Among renewable sources of energy, wind power will play a key role over
the long term. Offshore wind turbines deliver high yields and are subject
to less fluctuation than other renewables. We want to continue building
on the leading position in offshore wind power that we've captured in
recent years. We consider double-digit market growth realistic in this field
in the medium term.
||||||||| Offshore wind power
In the area of power generation, the trend is increasingly toward decen-
tralized energy supply. Customers worldwide are relying more and more
on individualized energy supplies and demanding tailor-made solutions.
As a result, we see major growth potential in the field of flexible and small
gas turbines - potential that we intend to rigorously exploit.
Flexible and small gas turbines |||||||||||||
Customer and business focus also includes setting clear priorities for
resource allocation in the future. We'll utilize the power of our employees,
our technological expertise and our capital in a more targeted manner
in the areas where they'll create maximum value for Siemens. Positioning
our Company rigorously along the value chain of electrification and allocat-
ing resources in a targeted manner will enable us to access the fields
that promise to provide us with long-term profitable growth. On this double
page, we present selected growth fields.
| | | |||||||||| Our strategy |||||||||| ││
|
90
People excellence and care
|
A strategy sets the course. In the end, however, it's implementation and
results that count. To enable us to manage our Company more effectively,
we've expanded One Siemens into an integrated management model
that combines under one roof the overarching targets and priorities with
which we're implementing our strategy throughout the Company.
Financial framework
To measure and compare our development vis-à-vis the market and in our
competitive environment, we use a system of defined key indicators. We've
now refined and expanded this financial target system.
→ SEE PAGE 96
Operating system and Corporate Memory
We manage our Company in accordance with specific, clearly defined prior-
ities. And we do it rigorously. In addition, the Corporate Memory - our
knowledge management - ensures that we learn from mistakes and keep
our work focused on success. → SEE PAGE 98
| Sustainability and citizenship
We contribute to sustainable development by maintaining a responsible
balance at the Company level between profit, planet and people.
→ SEE PAGE 102
|
These factors are making a decisive contribution to our Company's success
managed jointly and holistically, not individually or in isolation. That's how
One Siemens is helping us to reach our Vision 2020 goals.
Management model
1. Financial framework
Our strategy
2. Operating system and Corporate Memory
3. Sustainability and citizenship
| Management model
IIII
95
96
One Siemens
|
|| | Management model
| | | |||||||||| Our strategy |||||||||| ││
92
22
| | | |||||||||| Our strategy |||||||||| ││
|| | Governance
|
|
|
We want to lead Siemens in such a way that we focus on our customers at
all times and further expand our market penetration while maintaining lean
and flexible structures. That's why we've selected a market-integrative
setup that combines a common regional organization with a coordinated
vertical approach. Against this backdrop, we've retailored the structures
and responsibilities of our businesses, our Regions and our corporate
governance functions. Concretely, this means:
We've removed layers from our Company, thus bringing our businesses closer to
customers and key markets. We replaced our 14 Regional Clusters with 30 Lead
Countries. These Countries, which generate more than 85% of our business,
now report directly to our Managing Board.
We've also eliminated the Sector level and consolidated our business activities
into nine Divisions and one separately managed unit, Healthcare. This change,
too, is increasing our customer proximity and accelerating our decision-making.
In addition, we've made governance even more stringent across all levels of
our organization. Our Managing Board leads the Company and maintains the
balance between our businesses and Regions. It's supported by strong, efficient
corporate governance functions, our Corporate Core. This Corporate Core
ensures fast, unbureaucratic decision-making across key Company functions.
Stringent governance also means making sure that our proven method-
ologies for continuously improving performance are rigorously applied
Company-wide in our businesses and projects in the future. In this con-
nection, we're relying on our well-established top+ program. We're also
managing our compliance system and Company-wide compliance organi-
zation directly from Company headquarters to ensure that our activities
always fully comply with applicable laws and with our own internal principles
and regulations.
Customers and markets
Regions
Businesses
Managing Board
| Governance
IIII
Our strategy
93
Innovation
| | | |||||||||| Our strategy |||||||||| ││
|| | 1. Financial framework
94
|
Capital
efficiency
Growth
Capital
structure
Dividend
productivity
payout ratio
Profit margin ranges of businesses
One Siemens
1. Financial framework
|
97
98
| | | |||||||||| Our strategy |||||||||| ││
|| |
2. Operating system and Corporate Memory
Doing the right things right – that's what a strategy's implementation
depends on. To manage a company effectively, efficiently and thus
successfully, you've got to set clear priorities, have the right tools and
base your work on clear goals and rules. Our One Siemens operating
system delivers these prerequisites and sets the priorities for:
|
Customer proximity
We've set out to increase our Company's value on a sustainable basis.
To measure our progress, we use a balanced system of defined financial
performance indicators. We've further refined the range of the One
Siemens indicators we've reported to date:
Financial framework
Our strategy
Total cost
Management model
Growth
Our aim is to outpace the average growth rate of our most relevant
competitors.
|
Capital efficiency
We've set ourselves an ambitious target corridor of 15% to 20% for
sustainable return on capital employed.
|||||||
Total cost productivity
We want to continuously optimize our costs and achieve total cost
productivity gains of 3% to 5% a year.
|
Capital structure
|
We've set ourselves a goal for our capital structure that will enable us
|
to maintain our very solid and efficient financial basis.
Dividend payout ratio
We want to achieve an attractive payout ratio of 40% to 60% of net
income.
|
Profit margin ranges of businesses
At the level of our businesses, we've defined individual margin ranges
based on the profitability of the most relevant competitors of each
business.
One Siemens
→ Page 212
→ Page 210
Further
information
September 30, 2013
9,190
28,111
8,013
in millions of €
Total equity (Shareholders of Siemens AG)
in millions of €
in millions of €
Industrial net debt
30,954
1,390
in millions of €
→ Page 189
Industrial net debt/
adjusted EBITDA (continuing operations)
0.15
0.35
FY 2014
FY 2013
→ Page 189
Continuing operations
Free cash flow
Cash and cash equivalents
5,399
2,805
September 30, 2014
17.2
→ Page 188
4.81
5,378
30%
→ Page 309
Return on capital employed (ROCE)
in %
13.7
→ Page 188
Continuing and discontinued operations
Net income
in millions of €
5,507
4,409
25%
→ Page 201
Basic earnings per share³
in €
6.37
5.08
25%
→ Page 202
Return on capital employed (ROCE)
in %
17.3
13.5
|| | Capital structure and Liquidity
→ Page 207
Further
information
in millions of €
5.5
in thousands
28.8
28.1
→ Page 219
in thousands
8.6
8.3
→ Page 219
in thousands
4.3
4.0
→ Page 219
FY 2014
FY 2013
Further
information
Accumulated annual customer reductions of carbon dioxide emissions
generated by elements from the Environmental Portfolio¹
Energy efficiency improvement compared to baseline in fiscal 20101
Waste efficiency improvement compared to baseline in fiscal 20101
Waste for disposal reduction compared to baseline in fiscal 20101
Carbon dioxide emission efficiency improvement compared to baseline in fiscal 20101
in millions of
metric tons
428
369
→ Page 221
in %
11
5
6.24
5.7
in %
→ Page 219
4.0
5,201
5,328
→ Page 207
1 October 1, 2013 - September 30, 2014.
2 Excluding currency translation and portfolio effects.
3 Basic earnings per share - attributable to shareholders
of Siemens AG. For fiscal 2014 and 2013 weighted
average shares outstanding (basic) (in thousands)
amounted to 843,449 and 843,819 shares,
respectively.
|| | Customers and Innovation
Revenue generated by the Environmental Portfolio¹
in % of revenue from continuing operations
Research and development expenses¹
in % of revenue from continuing operations
Research and development employees 1,2
Inventions 1,3
Continuing and discontinued operations
Free cash flow
Patent first filings¹4
FY 2014
FY 2013
Further
information
in billions of €
33.0
31.9
→ Page 221
in %
46
43
in billions of €
4.1
|| | Environment
in €
One Siemens
→ Page 201
102
| | | |||||||||| Our strategy |||||||||| ││
|| | 3. Sustainability and citizenship
|
|
|
Together with our customers and partners, we want to shape the future by
making real what matters and addressing the global issues and trends
that are truly crucial. Driven by our passion for engineering excellence,
we're committed to the values of our Company's founder. Guiding us
for over 165 years, his maxim - "I won't sell the future of my Company
for a short-term profit" - demands that we maintain a healthy balance
between profit, planet and people.
-
Profit by offering a range of products, solutions and services that makes
a difference worldwide, because it provides our customers with decisive
competitive advantages and strengthens our profitability over the long term.
-
Planet by utilizing our planet's limited resources responsibly and by
enabling our customers to improve their own environmental performance.
-
People by living a culture that strengthens our employees' sense of
responsibility worldwide, fosters their development and places integrity at the
center of our Company's activities. As good corporate citizens, we're also
contributing to the sustainable development of society through our portfolio,
our local presence worldwide and our role as a thought leader.
What we create is yours. For the benefit of our customers and for the
societies in which we live and work. Yesterday, today and in the future.
That's what ensures our long-term entrepreneurial success. That's what
we understand by sustainability. And that's what we mean when we
say, "We make real what matters."
One Siemens
Management model
3. Sustainability
and citizenship
Planet
|
Our strategy
IIIII
103
People
Profit
Excellent employees are the heart and soul of Siemens. That's how
it's always been. And we want it to be even more so in the future.
Therefore, we're anchoring an ownership culture at our Company. For
us, this is not an abstract idea but a concrete goal that we're pursuing
with measures we can track. After all, the behavior, motivation and
values of the people who work for Siemens mold our culture. In an
attractive working environment, we promote lifelong learning and
personal development. Integrity - supported by a well-established
compliance system – remains the principle that guides our conduct.
Our share programs are enabling us to increase employee participation
in our Company's success while bringing us closer every day to a lived
ownership culture.
One Siemens
101
We want to do an excellent job of managing our businesses while
pursuing our aim of continuous improvement. For this, we've developed
outstanding tools as part of our Company-wide top+ movement – tools
that we will apply with even greater rigor in the future. These tools
enable us, for instance, to benchmark our performance against the best
and to increase our productivity. Tightening our risk management
approach is helping us identify project risks while still in the bidding
phase and thus avoid costly project delays. Last but not least, we're
fostering our service business across organizational boundaries, for
example, by developing service platforms.
||||
Our strategy
IIIII
99
→ Page 222
Management model
2. Operating system and Corporate Memory
Customer
proximity
Innovation
Business
excellence
People
excellence
and care
| One Siemens
|
Operating system and Corporate Memory
100
| | | |||||||||| Our strategy |||||||||| ││
To implement its strategy and ensure its continued development, a company
needs an operating system that defines principles for the excellent manage-
ment of its businesses and determines appropriate action areas. Our operating
system, One Siemens, sets the following four priorities:
Customer proximity ⠀⠀⠀⠀⠀⠀
Profitable growth is based on proximity to our customers and on an
understanding of their individual requirements. To meet and exceed
our customers' expectations, we invest in local sales presence and
support for specific groups of market partners. Our key account
management approach is just one successful example of this. We're
represented in virtually every country in the world by Regional
Companies that operate as local partners to our customers. We also
exploit our in-depth knowledge of customer processes and continually
develop our offerings for key verticals in a targeted manner - across
organizational boundaries. To regularly gauge the satisfaction
of our customers around the world, we use a uniform measure, the
Net Promoter Score (NPS).
h
|||||||||||||| Innovation
Innovation is essential for ensuring long-term competitiveness. This
applies to our entire portfolio of products, solutions and services.
Added value for our customers is based increasingly on software and
IT solutions. As a result, we've made this field a particular focus of our
attention – for example, through research and development activities
in software architecture and platforms. Tools such as partner networks
are enabling us to manage highly effective innovation processes and
an open innovation culture. We're concentrating on new technology-
driven growth areas as well as innovative business models.
|||||||||
Business excellence
Our strategy
Sustainability and citizenship
Company Report
2014
8,131
12%
→ Page 202
Total Sectors profit
in millions of €
7,335
5,842
26%
→ Page 202
in % of revenue (Total Sectors)
in %
10.0
7.9
Continuing operations
Adjusted EBITDA
in millions of €
9,139
8,097
13%
→ Page 202
Income from continuing operations
in millions of €
5,400
4,179
29%
9,103
in millions of €
Adjusted EBITDA
Total Sectors
Financial Report
2014
106
Key figures fiscal 2014¹
|| | Volume
FY 2014
FY 2013
% Change
Actual Comparable²
Further
information
Continuing operations
Orders
Revenue
in millions of €
Basic earnings per share³
in millions of €
79,755
(2)%
73,445
(2)%
1%
1%
→ Page 193
→ Page 193
|| | Profitability and Capital efficiency
FY 2014
FY 2013
% Change
Further
information
78,350
71,920
in %
⠀⠀⠀⠀⠀⠀⠀ People excellence and care
→ Page 216
107
108
|||A.1 Letter to our Shareholders
Berlin and Munich, December 3, 2014
Dear Shareholders,
In fiscal 2014, we worked hard, we were highly focused, and we achieved a great
deal. Despite a complex geopolitical situation, our overall results for the year were
very good. We increased profit by 25%, tackled a great many issues and improved
our operations, even though in some areas we could have been even more success-
ful. Above all, we gave our Company a new setup based on our Vision 2020 and
defined the direction we'll be taking in the years ahead.
We're proud of what we've achieved so far, particularly because the circumstances
have been anything but favorable: global economic development was very uneven
in fiscal 2014, and with more than 40 critical hotspots around the world, political
uncertainties were greater than they'd been in decades. That's why we were right
when we decided not to pin our hopes on a global economic recovery but to exploit
our own strengths.
For fiscal 2014, we reported net income of €5.5 billion, with revenue totaling
€71.9 billion and orders €78.4 billion. We thus reached the targets we'd originally
set for the year and exceeded our goal for profit development while making sub-
stantial progress in strengthening our portfolio. These achievements will enable us
to propose a dividend of €3.30 to the Annual Shareholders' Meeting. Siemens is
and will remain a good investment. We stand for a long-term, reliable and attractive
dividend policy and will remain a company with a rock-solid financial basis.
Nevertheless, our performance could have been even better. The high charges
on which we again focused considerable attention in fiscal 2014 are not what
Siemens stands for. We're working hard to improve our risk management, and
we expect to see successes already in fiscal 2015.
Fiscal 2014 was a year of upheaval for our Company. Our Company-wide Vision 2020
concept is paving the way to the future. Vision 2020 defines a clear strategic direc-
tion for the "new Siemens." We're positioning our Company in strategically attractive
growth fields and demonstrating a clear focus as we gear our setup to these fields.
62
in thousands
117
115
9 Without travel expenses.
in thousands
215
211
in thousands
→ Page 216
348
343
in thousands
Further
information
2013
Sep. 30,
Sep. 30,
2014
Expenses per employee for continuing education 6,9
Female employees in management positions (percentage of all management positions) 6,8
Expenses for continuing education 6,9
Employee turnover rate 6,7
→ Page 173
Total employees - continuing and discontinued operations
8 Employees in management positions include
all managers with disciplinary responsibility,
plus project managers.
6 Continuing and discontinued operations.
70
72
→ Page 173
in thousands
357
367
FY 2014
FY 2013
Further
information
in %
9.1
10.8
→ Page 216
in %
7 Employee turnover rate is defined as the ratio of
voluntary and involuntary exits from Siemens during
the fiscal year to the average number of employees.
15.6
→ Page 216
in millions of €
276
265
61
in €
769
670
→ Page 216
1 Continuing operations.
2 Average number of employees in fiscal year.
3 Number of inventions reported by the Business
Units in an internal report.
4 First filings as part of inventions submitted
to patent offices.
5 Commonwealth of Independent States.
15.6
in thousands
Americas
therein Germany
Asia, Australia
12
8
→ Page 222
in %
8
10
→ Page 222
→ Page 173
20
14
→ Page 222
in %
||| Employees
Total employees - continuing operations
Europe, C.I.S., 5 Africa, Middle East
(Discussion on basis of
Siemens AG
and legal disclosures
C.11
C.10 | Compensation Report
German Commercial Code)
associated material
opportunities and risks
developments and
242
D.
Financial Statements
Consolidated
C.9 |Report on expected
Additional
Information
248
D.1 Consolidated Statements
of Income
338
E.1 Responsibility Statement
339
249
D.2 | Consolidated Statements
of Comprehensive Income
E.2 | Independent
Auditor's Report
341
E.
242
B.5 |Takeover-relevant
information (pursuant to
Sections 289 para. 4 and
315 para. 4 of the German
Commercial Code) and
explanatory report
(part of the Combined
Management Report)
C.8 |Sustainability
and citizenship
Supervisory Board
B.2 Corporate Governance
statement pursuant
to Section 289a of the
German Commercial Code
(part of the Combined
Management Report)
187
C.2 | Financial performance
system
193
C.3 | Results of operations
205
126
A.4 | The Siemens
C.4 | Financial position
Share/Investor Relations
138
B.3 Compliance Report
210
C.5 | Net assets position
(part of the Combined
Management Report)
213
C.6 | Overall assessment
of the economic position
144
214
C.7 | Subsequent events
215
165
225
B.4 Compensation Report
(part of the Combined
Management Report)
114
Joe Kaeser
In 2014, we defined our strategic direction and aligned our organization accordingly.
In 2015, we'll consolidate our operations. We're increasing expenditures for research
and development and for our go-to-market activities in selected areas and regions.
Operational improvements will already be visible in 2016. Starting in early 2017, all
our efforts will bear fruit in the form of faster growth and enhanced cost efficiency.
Vision 2020 sets the strategic course for Siemens. The direction is clear, team spirit
is flourishing, and we have every reason to look to the future with confidence.
Ever since Werner von Siemens founded his company in a rear building in Berlin in
1847, Siemens has stood for pioneering spirit. We continuously foster long-term
success - day by day, quarter by quarter, year by year. Rigorously and responsibly.
After a year at the helm of this great Company, I assure you that I still feel person-
ally responsible for passing on to the next generation an enterprise that's even
better and stronger than today's. “We make real what matters." That's my mission
for Siemens. That's my responsibility. That's my promise.
For the Managing Board
Sincerely yours,
Joe Kaeser
President and Chief Executive Officer
113
|| | A.2 Managing Board of Siemens AG
Ralf P. Thomas
Controlling and Finance,
Financial Services,
Global Services
Roland Busch
Asia, Australia
Energy Management,
Building Technologies,
Mobility
Joe Kaeser
President and
Chief Executive Officer
Corporate Development,
Governance & Markets,
Communications
and Government Affairs,
Legal and Compliance
Klaus Helmrich
Europe, Africa
Digital Factory,
Process Industries
and Drives
From left
to right
Siegfried Russwurm
> assumes responsibility and makes a difference.
Labor Director
> more than any other, stands for innovation in the electrification of the world
> is a strong, global brand renowned for hard work, financial solidity, top quality,
engineering excellence and a talent for innovation
Already today, 140,000 Siemens employees hold shares in our Company. I want to
increase this figure substantially. Our aim is to have more than 200,000 employee
shareholders by 2020. And I'm convinced we can do it.
and control technology, power grids, and factory and rail automation. We aim
to achieve an equally strong position in the field of digitalization, in which we're
already a key player: our worldwide installed customer base gives us not only
access to an enormous volume of data but also an in-depth understanding of the
related processes. And our customers appreciate these advantages.
A company like Siemens never stands still. This was the case in the past, and it will
remain so in the future. That's why we intend to continue developing our port-
folio with determination and the utmost prudence in order to strengthen our core
business in the medium term. We've taken the first steps with our acquisition
of Rolls-Royce's aero-derivative gas turbine business and our decision to acquire
U.S. compressor and turbine manufacturer Dresser-Rand. These two acquisitions
will close important gaps in our electrification portfolio for the oil and gas industry
as well as for decentralized power generation.
The announcement that we're divesting our stake in BSH Bosch und Siemens
Hausgeräte (BSH) was a further signal that we're intent on implementing our
Vision 2020. The Siemens brand will continue to be used for household appliances,
so Siemens will still be found “in the kitchen and in the laundry room." However,
BSH will now be managed exclusively by Bosch.
We can accept the fact that we didn't win the bid for the French company Alstom,
although, objectively speaking, our offer was the better one. In this connection,
one thing is particularly important to me: we proved that Siemens is capable of
taking action in any situation. What's more, we had an impact on the transaction
that was not negligible for our competitors.
New setup at all levels and in all business fields
Our focus on what is essential is also reflected in our Company's organization.
We've eliminated the Clusters and Sectors and reduced the number of Divisions
from 16 to ten. In addition, we've substantially strengthened our international
organization.
We're blazing new trails with our new setup. For instance, thanks to our Digital
Factory Division, we're the world's first company to bundle all the requirements for
the factory of the future under one roof. The Division will be our driving force
for Industry 4.0, the much-discussed Fourth Industrial Revolution in which every
aspect of production - from idea, development and manufacturing to services
and recycling - will be totally integrated. At Siemens, we're not just talking about
Industry 4.0; we're implementing it.
In view of the growing strategic importance of the U.S. energy markets, we've
relocated the management of our energy business as well as the responsibility for
supporting our marketing activities throughout the Americas to Houston, Texas.
To head our energy business, we've brought in Lisa Davis, who joined the Managing
Board of Siemens AG on August 1, 2014, and has since been making valuable
contributions to its work. For our customers and for our Company, the energy
landscape has changed dramatically, not least because of political factors such as
Germany's "energy transition." We're responding to these shifts.
111
112
Our healthcare business achieved very good results overall in the past quarters, an
accomplishment we're proud of. However, over the long term, we anticipate fun-
damental changes and new business models in healthcare markets and technologies.
With the aim of continuing the success story of Siemens' medical engineering
activities and of giving them greater freedom and better prospects for the future,
we'll manage our healthcare business independently within Siemens - as a
company within the Company. Healthcare is not "still" at Siemens or “staying” at
Siemens. Healthcare is part of Siemens.
We've paved the way for the sale of our audiology business to the investment
company EQT and Germany's Strüngmann family of entrepreneurs. Siemens will
remain invested in the hearing aid business with preferred equity and will thus
benefit from the business's future successes. Not only is the transaction an excellent
move from a financial perspective; we're also convinced that the new investors
have a clear growth strategy for further developing the hearing aid business over
the long term.
This step is fully in line with our strategy of strengthening our core business and
of divesting activities that yield few or no synergies for the Company.
Looking at my description of our Vision 2020 targets, you'll have noticed that we've
set very ambitious goals. In pursuing these goals, we won't be able to please
everyone, because the pace in international competition is far too fast. That's why
we have to set priorities. But our actions will be well-focused, level-headed and
responsible as can be expected of Siemens.
Culture makes the difference
However, strategy isn't the only thing that counts here - since a strategy can
be implemented only if it's based on a strong company culture. At Siemens, this
means an ownership culture. I asked our employees and managers how they'd
describe ownership culture in one word. “Responsibility" was far and away the
most common answer. And that's precisely the point: we must always bear in mind
that we have a responsibility to pass on a better company to the next generation.
Our foremost maxim must be: always act as if it were your own Company! I'm
convinced that an ownership culture is not only a formula for success at strong,
family-run enterprises but that it will also be the foundation for our success. It's
this culture that will shape Siemens.
With greater employee participation, we'll also ensure that Siemens remains an
excellent company in the future. A company that
Commonwealth of Independent States,
Middle East
Human Resources,
114
A.2 | Managing Board of
Siemens AG
136
118
A.3 Report of the
> For the medium term, we're strengthening our core business.
> For the short term, we're improving our performance and efficiency.
Our Company-wide reorganization will be implemented in three phases. While the
measures included in these phases will be reflected in our key financial figures at
various times, we're continually addressing all of them with the same intensity and
the same rigor:
Our stages on the path to 2020
For years now, we've been focusing on the megatrends of urbanization, demo-
graphic change, globalization and climate change. And now a further megatrend
has emerged: digitalization, which consists in capturing and analyzing data and
then using it to create customer value. We want to play a key role in shaping this
digital transformation. Businesses related to software and data analytics are
achieving dynamic annual growth of 7% to 9% and, in some fields of digitalization,
even more. Highly attractive markets await us here, and we're positioning our
Company accordingly.
In keeping with Vision 2020, we're positioning Siemens along the electrification
value chain. Electrification, automation and digitalization, and the impact of these
fields on all parts of our Company: that's what the new Siemens is all about. Our
new setup will help us close the gap to our competitors. We have some catching up
to do in terms of growth as well as margin development. Our goal must be to
close that gap. And we'll succeed, although not overnight. One thing, however, is
clear: Vision 2020 has already made us stronger and brought us closer to our mar-
kets. We'll also be investing more in innovation and market access than in the past -
with the aim of creating sustainable value for our employees, our customers and
for you, our shareholders.
Vision 2020 is our concept for the future and, above all, for achieving sustainable
growth. We proceeded calmly and carefully in drafting Vision 2020, taking all the
time we needed, and then implemented the concept in record time.
Vision 2020 - Our Company-wide concept
I'd like to extend my thanks to all 343,000 Siemens employees – and particularly
to our many people in the world's crisis regions - for their continuing dedication.
Throughout fiscal 2014, the Managing Board team received tremendous employee
support for the changes now necessary at our Company. Cooperation with the
employee representatives was also characterized by a spirit of mutual trust. In addi-
tion, Dr. Gerhard Cromme and the members of the Supervisory Board diligently
assisted the work of the Managing Board, providing outstanding support for all our
activities and projects. I'm very grateful for the commitment of all these individu-
als. I'd also like to extend a special thanks to our customers, who gave us their trust
and confidence in fiscal 2014. We'll remain an expert and reliable partner for them
in the future.
-
110
CEO of Siemens AG
President and
C.1 Business and
economic environment
172
B.1 |Corporate
Governance Report
132
Corporate Technology
Hermann Requardt
Healthcare
Lisa Davis
Americas
Power and Gas,
Wind Power and Renewables,
Power Generation Services
115
250
116
A.
To our Shareholders
B.
Corporate
Governance
C.
Combined
Management Report
108
A.1
Letter to our Shareholders
|| | Contents: Financial Report
Let me start with the most important thing: our Company's long-term, sustainable
development. Already today, Siemens is a leader in electrification and automation -
just think of our urban mobility systems, our solutions for the process industry and
our power plants as well as our outstanding position in power plant instrumentation
D.3 | Consolidated Statements
of Financial Position
342
THE PUBLICATION
7 REFERENCE TO AN
EXTERNAL PUBLICATION
REFERENCE TO THE
INTERNET
17
117
Contents: Financial Report
118
| A.3 Report of the Supervisory Board
Berlin and Munich, December 3, 2014
Dear Shareholders,
In fiscal 2014, the Managing Board cooperated with the Supervisory Board closely
and regularly in the development of Vision 2020, which defines Siemens' long-term
perspective along the electrification value chain, with our strengths in automation
and digitalization. The goal is to enhance Siemens' performance in the short term,
strengthen its core business in the medium term and return to profitable growth.
In fiscal 2014, the Supervisory Board performed with great diligence the duties
assigned to it by law, the Siemens Articles of Association and the Bylaws for the
Supervisory Board. We regularly advised the Managing Board on the management
of the Company and monitored the Managing Board's activities. We were directly
involved at an early stage in all major decisions regarding the Company. In written
and oral reports, the Managing Board regularly provided us with timely and com-
prehensive information on Company planning and business operations as well as
on the strategic development and current state of the Company. On the basis of
reports submitted by the Managing Board, we considered in detail business devel-
opment and all decisions and transactions of major significance to the Company.
Deviations from business plans were explained to us in detail and intensively
discussed. The Managing Board coordinated the Company's strategic orientation
with us. The proposals made by the Managing Board were approved by the Super-
visory Board and/or the relevant Supervisory Board committees after in-depth
examination and consultation. In my capacity as Chairman of the Supervisory
Board, I was also in regular contact with the Managing Board and, in particular,
with the President and CEO and was kept up-to-date on current developments
in the Company's business situation and on key business transactions. In addition,
I engaged in separate discussions with members of the Managing Board regard-
ing the prospects for and the future orientation of individual Siemens businesses.
Topics at the plenary meetings of the Supervisory Board
We held a total of six regular meetings and three extraordinary meetings in fiscal
2014. In addition, we made one decision outside meetings. Attendance at Supervisory
Board meetings by members was around 91%.
Regular topics of discussion at our plenary meetings were revenue, profit and
employment development at Siemens AG, at the Company's operating units
and at the Siemens Group as well as the Company's financial situation, profitability
and major investment and divestment projects.
E.3 | Statement of the
Managing Board
→ REFERENCE WITHIN
Key to references
> For the long term, we're driving sustainable growth.
347
E.8 | Financial calendar
251
D.4 | Consolidated Statements
of Cash Flows
344
E.5 | Five-year summary
252
D.5 | Consolidated Statements
of Changes in Equity
345
E.4 Company structure
D.6 | Notes to Consolidated
Financial Statements
346
E.6 | Notes and forward-
looking statements
E.7 | Further information and
information resources
330
254
D.7 Supervisory Board and
Managing Board
Long-term debt
Aa3
A+
P-1
Short-term debt
Services
A-1+
Aa3
Investors Poor's Ratings
Service
Moody's
September 30, 2014
Moody's Standard &
Investors Poor's Ratings
Service
Services
P-1
September 30, 2013
| Credit ratings
At the end of fiscal 2014, the net debt of Siemens AG was
€12,008 million, with cash and cash equivalents of €8,013 mil-
lion. For further information on our credit ratings and financial
obligations, please see → NOTE 26 ADDITIONAL CAPITAL DISCLOSURES
in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages
290-292 of this Annual Report.
Siemens AG has good, investment-grade credit ratings.
"Aa3/negative/P-1" from Moody's Investors Service and "A+/stable/
A-1+" from Standard & Poor's are very positive ratings - particu-
larly when compared to those of our competitors in the indus-
try sector. Our solid financial position gives us unrestricted
access to the international financial and capital markets.
A.4.6 Credit ratings
WWW.SIEMENS.COM/SHAREHOLDERSTRUCTURE.
Around 64% of Siemens' outstanding shares are currently held
by institutional investors, about 19% by private shareholders
and around 6% by members of the Siemens family. For fur-
ther information on our shareholder structure, please see
Standard &
A+
A-1+
investors: 11%
Private investors: 19%
Germany: 27%
Unidentified: 11%
Institutional investors:
64%
U.S.: 21%
U.K.: 11%
The Siemens Share/Investor Relations
126 A.4
Report of the Supervisory Board
118 A.3
| Investor type and regional distribution
Managing Board of Siemens AG
Letter to our Shareholders
108 A.1
128
With around 660,000 shareholders, Siemens AG is one of the
world's largest publicly owned companies. Siemens has a sta-
ble shareholder structure that has changed only slightly over
time. This applies, in particular, to our more than 650,000 pri-
vate Siemens shareholders, who have often maintained their
investments for many years. In July 2014, we mandated an ex-
ternal institute to conduct an analysis of our shareholder struc-
ture. Based on an evaluation of publications from institutional
investors and on statistical estimates, this analysis showed that
shareholders in Germany hold the largest percentage of our
outstanding shares, about 27% of the total. Shareholders in the
U.S. hold roughly 21% and shareholders in the U.K. around 11%,
while investors in France hold 8% and those in Switzerland 8%.
To our Shareholders
108 A.
members: 6%
Siemens family
Unidentified
114 A.2
A.4.5 Shareholder structure
Like the delisting in New York, these two delistings were the
result of a change in investor behavior. In 2013, trading volume
on both exchanges accounted for considerably less than 3% of
our global trading volume.
Additional Information
in millions of €
Total dividend payout
Payout ratio4
4,068
Jan. 26, 2011
Jan. 25, 2012
6,321
2.9
2.70
3.00
3.9
3.00
3.6
Jan. 24, 2013
4,590
3.00
3.0
Jan. 29, 2014
4,409
Jan. 28, 2015
5,507
in millions of €
Net income (as reported)
Ex-dividend date
3.301
3.5
in %
in €
FY 2010
FY 2011
FY 2012
FY 2013
in %
127
2,7063
49
2,528
48
|
337 | E.
Consolidated Financial Statements
247
Independently of the delistings, high standards of transparency
in financial reporting and first-class corporate governance will
continue to be a top priority at Siemens. The Company will, of
course, continue to foster open and direct dialogue with its
German and international investors. The termination of the
stock exchange listings will have no impact on Siemens' stra-
tegic orientation or its presence.
Switzerland: 8%
On October 8, 2014, the listing of the Siemens share on the
London Stock Exchange (LSE) was terminated. On the same
date, SIX Swiss Exchange AG in Zürich (SIX) approved the
request of Siemens AG to terminate the Siemens share's listing
on the SIX stock exchange as of January 8, 2015.
The goal of the delisting and deregistration was to address
the change in the behavior of investors. The trading of Siemens
shares is now conducted predominantly in Germany and
via electronic trading platforms (over-the-counter, OTC). The
trading volume of Siemens shares in the U.S. was low, amount-
ing to significantly less than 5% of their global trading volume
over the last 12 months. The deregistration has enabled us to
simplify our financial reporting processes and increase their
efficiency.
On May 15, 2014, the listing of Siemens' American Depository
Receipts (ADRs) on the New York Stock Exchange (NYSE) was
terminated. On the same date, the Company applied for dereg-
istration at the U.S. stock exchange regulatory authority, the
United States Securities and Exchange Commission (SEC). The
deregistration became effective on August 15, 2014.
A.4.4 Delisting from stock exchanges
in New York, London and Zürich
In May 2014, Siemens began to improve its capital structure
and repurchase its shares. The share buyback program has a
total value of up to €4 billion for the repurchase of shares by
the end of October 2015. By September 30, 2014, the Company
had acquired about 11.3 million shares at an average price of
€95.25 per share, for a total value of around €1.1 billion.
A.4.3 Share buyback program
At the Annual Shareholders' Meeting, the Managing Board and
the Supervisory Board will propose a dividend payment of
€3.30, which represents a dividend yield of 3.5% and a payout
ratio of 49%. This proposal continues our tradition of paying
attractive dividends to our investors.
A.4.2 Dividend proposal
4 To calculate the payout ratio, net income was adjusted
for non-cash items in 2010 (DX impairment charges)
and 2012 (impairment charges for Solar and NSN
restructuring).
3 Based on estimated number of shares entitled to
a dividend payment on day of Annual Shareholders'
Meeting for fiscal 2014.
2 Dividend payout/Siemens share price on day of
Annual Shareholders' Meeting; for fiscal 2014:
dividend payout/Siemens share price at fiscal year-end.
1 To be proposed to the Annual Shareholders' Meeting.
46
2,356
2,629
42
2,533
57
France: 8%
131 | B.
Rest of Europe: 5%
To ensure the efficiency of its work, the Supervisory Board has established seven
standing committees, which prepare proposals and issues to be dealt with at the
Board's plenary meetings. The Supervisory Board's decision-making powers have
also been delegated to these committees within the permissible legal framework.
The committee chairpersons report to the Supervisory Board on their committees'
work at the subsequent Board meetings. The members of the individual Super-
visory Board committees, the number of committee meetings and the number of
committee decisions are set out in chapter → D.7 SUPERVISORY BOARD AND MANAGING
BOARD on pages 330-333 of this Annual Report.
The Chairman's Committee met seven times in fiscal 2014. It also made one deci-
sion by written circulation. Between meetings, I discussed topics of major impor-
tance with the members of the Chairman's Committee. The Committee concerned
itself, in particular, with personnel topics and corporate governance issues – for
example, the preparation of the efficiency review - as well as with the assumption by
Managing Board members of positions at other companies and institutions.
The Nominating Committee met once in fiscal 2014 and made one decision by
written circulation. The members of the Committee concerned themselves with
longer-term succession planning for the Supervisory Board also outside Committee
meetings. In addition, the Nominating Committee prepared recommendations
regarding the candidates to be proposed to the Supervisory Board for a by-election
of shareholder representatives at the Annual Shareholders' Meeting on January 27,
2015, and was supported in this process by an external personnel consultant.
In searching for and evaluating succession candidates, the Nominating Committee
took into account the requirements of the German Stock Corporation Act,
the German Corporate Governance Code and the Bylaws for the Supervisory Board
122
as well as the goals that the Supervisory Board had set for its own composition,
giving particular consideration to the goal of increasing the number of women on
the Supervisory Board if possible and ensuring broad industry and technology
expertise as emphasized by the Supervisory Board in its efficiency review.
The Compliance Committee met five times in fiscal 2014. It discussed the quarterly
reports and the annual report submitted by the Chief Compliance Officer.
The Committee also concerned itself with a review of the circumstances relating to
a pay increase that had been granted to the former Chairman of the Central Works
Council, Lothar Adler, at the beginning of 2009. As a precaution, Mr. Adler did
not participate in the discussions of this matter in order to preclude any appearance
of a conflict of interest. The Compliance Committee recommended that the
Supervisory Board approve the settlement agreement with former Managing Board
member Heinz-Joachim Neubürger and present the agreement to the Annual
Shareholders' Meeting for its approval.
The Mediation Committee was not required to meet in fiscal 2014.
The Compensation Committee met six times in fiscal 2014. The Committee prepared
proposals for the Supervisory Board regarding the implementation of the new
recommendations of the German Corporate Governance Code as well as the simpli-
fication of the Managing Board remuneration system as of fiscal 2015. In addition,
the Compensation Committee prepared, in particular, proposals for the full Super-
visory Board regarding the determination of targets for variable compensation, the
determination and review of the appropriateness of Managing Board compensation
and the approval of the Compensation Report.
The Innovation and Finance Committee (formerly the Finance and Investment
Committee) met four times and made one decision by written circulation. The
focuses of its meetings included the Committee's recommendation regarding the
budget for fiscal 2014 as well as the preparation and/or approval of investment and
divestment projects. In addition, the Committee intensively addressed the Company's
innovation focuses.
Work in the Supervisory Board committees
The Audit Committee met six times in fiscal 2014. In the presence of the indepen-
dent auditors as well as the President and Chief Executive Officer and the Chief
Financial Officer, the Committee discussed the financial statements and the Com-
bined Management Report for Siemens AG and the Siemens Group. In addition,
the Audit Committee addressed the half-year and quarterly financial reports and,
in the presence of the independent auditors, discussed their audit reviews. The
Committee recommended that the Supervisory Board propose to the Annual Share-
holders' Meeting the election of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
as the independent auditors. The Committee appointed the independent auditors
for fiscal 2014, defined the audit focal points and determined the auditors' fee.
The Committee monitored the independence and qualifications of the independent
auditors. Furthermore, the Audit Committee dealt with the Company's financial
reporting and risk management systems and with the effectiveness, resources
and findings of the internal audit as well as with reports concerning potential
and pending legal disputes.
124
Detailed discussion of the financial statements
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft audited the Annual Financial
Statements of Siemens AG, the Consolidated Financial Statements of the Siemens
Group and the Combined Management Report for Siemens AG and the Siemens
Group for fiscal 2014 and issued an unqualified opinion. The Annual Financial
Statements of Siemens AG and the Combined Management Report for Siemens AG
and the Siemens Group were prepared in accordance with the requirements of
German law. The Consolidated Financial Statements of the Siemens Group were
prepared in accordance with the International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU) and with the additional requirements of
German law set out in Section 315a (1) of the German Commercial Code (Handels-
gesetzbuch). The financial statements also comply with the IFRS as issued by the
International Accounting Standards Board (IASB). The independent auditors con-
ducted their audit in accordance with Section 317 of the German Commercial Code
and in compliance with the generally accepted German standards for the audit of
financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) and
with the International Standards on Auditing (ISA). The above-mentioned docu-
ments as well as the Managing Board's proposal for the appropriation of net income
were submitted to us by the Managing Board in a timely manner. The Audit Com-
mittee discussed the dividend proposal in detail at its meeting on November 4,
2014. It discussed the Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined Management Report
in detail at its meeting on December 2, 2014.
The audit reports prepared by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
were distributed to all members of the Supervisory Board and comprehensively
reviewed at the Supervisory Board's meeting on December 3, 2014, in the presence
of the independent auditors, who reported on the scope, focal points and main
findings of their audit. No major weaknesses in the Company's internal control or
risk management systems were reported. At this meeting, the Managing Board
explained the financial statements of Siemens AG and the Siemens Group as well as
the Company's risk management system.
The Supervisory Board concurs with the results of the audit. Following the
definitive findings of the Audit Committee's examination and our own examination,
we have no objections. The Managing Board prepared the Annual Financial State-
ments of Siemens AG and the Consolidated Financial Statements of the Siemens
Group. We approved the Annual Financial Statements and the Consolidated Finan-
cial Statements. In view of our approval, the financial statements are accepted as
submitted. At our meeting on December 3, 2014, we endorsed the Managing Board's
proposal that the net income available for distribution be used to pay out a divi-
dend of €3.30 per share entitled to a dividend and that the amount of net income
attributable to shares of stock not entitled to receive a dividend for fiscal 2014 be
carried forward.
Changes in the composition of
the Supervisory and Managing Boards
Prof. Dr. Rainer Sieg left the Supervisory Board on February 28, 2014, upon reaching
retirement age. Lothar Adler left the Supervisory Board on May 31, 2014, upon reach-
ing retirement age. They were succeeded by Michael Sigmund and Olaf Bolduan,
who were appointed to the Supervisory Board by court order. Berthold Huber,
Gerd von Brandenstein and Prof. Dr. Peter Gruss have announced that they will
resign from the Supervisory Board, effective the end of the Annual Shareholders'
Meeting on January 27, 2015. Prof. Dr. Gruss will serve as the chairman of the
Siemens Technology & Innovation Council that reports to the Managing Board,
a move that - in line with the suggestions of the efficiency review - will further
strengthen technology and innovation at Siemens. The Supervisory Board would
like to express its appreciation to the members who have left or are leaving the Board
for their many years of loyal support. On the recommendation of the Nominating
Committee, the Supervisory Board decided at its meeting on December 3, 2014, to
propose to the 2015 Annual Shareholders' Meeting that Dr. Nathalie von Siemens
and Dr. Norbert Reithofer be elected to succeed the two departing shareholder
representatives, effective the end of the Annual Shareholders' Meeting. A successor
to Mr. Huber will be appointed by court order.
Peter Y. Solmssen left the Managing Board, effective December 31, 2013. Dr. Michael
Süẞ left the Managing Board, effective May 6, 2014. The Supervisory Board appointed
Lisa Davis a full member of the Managing Board, effective August 1, 2014.
123
We've discussed the implementation of the German Corporate Governance Code.
At our meeting on May 6, 2014, we approved an interim update to our Declaration
of Conformity with the Code, in which a temporary deviation from one of the
Code's recommendations was explained. This deviation resulted from the fact
that contrary to Section 5.4.5, para. 1, sentence 2 of the German Corporate Gover-
nance Code - Jim Hagemann Snabe, in his capacity as a member of SAP's Executive
Board, briefly held supervisory board positions in four external, publicly listed
companies. Jim Hagemann Snabe resigned his position on SAP's Executive Board,
effective May 21, 2014. At our meeting on September 24, 2014, we decided to issue
an unqualified Declaration of Conformity in accordance with Section 161 of the
German Stock Corporation Act (Aktiengesetz), whereby the Company complies -
and will continue to comply – with the recommendations of the German Corporate
Governance Code. Information on corporate governance at Siemens is available in
chapter → B.1 CORPORATE GOVERNANCE REPORT on pages 132-136 of this Annual Report.
Our Declarations of Conformity have been made permanently available to our
shareholders on our website. The current Declaration of Conformity is available in
chapter → B.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
COMMERCIAL CODE on page 136 of this Annual Report.
-
Corporate Governance Code
Dr. Gerhard Cromme
Chairman of the
Supervisory Board
120
At our meeting on November 6, 2013, we discussed the Company's key financial
figures for fiscal 2013 and approved the budget for 2014. In addition, we adjusted
the composition of the Supervisory Board committees and the assignment of
responsibilities in the Managing Board. On the basis of reported target achievement,
we also defined the compensation of the Managing Board members for fiscal 2013.
The appropriateness of this compensation was confirmed by an internal review. On
the recommendation of the Compensation Committee, we amended the Managing
Board contracts in order to bring them into line with the new recommendations
of the German Corporate Governance Code - in particular, with the Code's recom-
mendation that compensation amounts be capped. At this meeting, the amount
of Managing Board compensation was also reviewed and adjusted. On January 28,
2014, the Annual Shareholders' Meeting approved by a majority of over 93%
the remuneration system for the Managing Board members for fiscal 2014. At our
meeting on November 6, 2013, we also approved the sale of major businesses at
the Water Technologies Business Unit and our share buyback program. The Manag-
ing Board reported to us on the current status of acquisitions and divestments
and on sustainability at Siemens.
At our meeting on November 27, 2013, we discussed the financial statements and
the Combined Management Report for Siemens AG and the Siemens Group as of
September 30, 2013, as well as the agenda for the Annual Shareholders' Meeting on
January 28, 2014, and the Annual Report for 2013, including the Report of the Super-
visory Board and the Corporate Governance Report. At this meeting, we approved
the termination by mutual consent of Peter Y. Solmssen's appointment as a full
member of the Managing Board, effective December 31, 2013, as well as the termina-
tion agreement regarding his Managing Board employment contract. Responsibility
for Legal & Compliance was transferred to Joe Kaeser. On the recommendation of
the Compensation Committee, we approved the targets for Managing Board com-
pensation for fiscal 2014. The Infrastructure & Cities Sector provided us with a
status report on its current business situation. The Managing Board also reported
to us on Operational Excellence at Siemens.
At our meeting on January 27, 2014, the Managing Board reported to us on the Com-
pany's business and financial position following the conclusion of the first quarter.
We also discussed the Annual Shareholders' Meeting to be held on January 28, 2014.
At extraordinary meetings on April 29, 2014, and June 15, 2014, we dealt with the
submission of a bid to Alstom. Even though our offer was not accepted, it demon-
strated the Managing Board's and Supervisory Board's capacity to act and showed
that our Company can respond quickly and decisively to changes in its competitive
environment.
At our meeting on May 6, 2014, we discussed Vision 2020 and the related reorien-
tation of the Company's organization structure. In this connection, we approved
a reassignment of responsibilities in the Managing Board. We approved the
termination by mutual consent of Dr. Michael Süß's appointment as a member of
the Managing Board as well as the termination agreement regarding his Managing
Board employment contract. Lisa Davis was appointed a full member of the Managing
Board, effective August 1, 2014. We also approved the exchange of Managing Board
responsibilities between Klaus Helmrich and Prof. Dr. Siegfried Russwurm, effective
October 1, 2014 - in particular, the transfer of the function of Labor Director. In
addition, we discussed the Company's business and financial position following
the conclusion of the second quarter. At this meeting, we approved the acquisition
of Rolls-Royce's aero-derivative gas turbine and compressor business and the
contribution of key parts of our Metals Technologies Business Unit to a joint venture
with the Japanese company Mitsubishi-Hitachi Metals Machinery, Inc.
At our meeting on July 30, 2014, the Managing Board reported on the Company's
business and financial position following the conclusion of the third quarter as well
as on the status of the implementation of Vision 2020. On the recommendation of
the Supervisory Board's Compliance Committee, we approved the settlement agree-
ment with former Managing Board member Heinz-Joachim Neubürger and decided
to submit the agreement to the Annual Shareholders' Meeting for approval. We also
dealt with the planned sale of our Health Services Business Unit to Cerner Corpora-
tion of the U.S. Following the conclusion of negotiations with Cerner, we approved
the transaction on August 6, 2014. Jim Hagemann Snabe did not take part in these
discussions and, as a precaution, abstained from voting on the proposal in order to
preclude any appearance of a conflict of interest.
The Supervisory Board has reviewed the efficiency of its activities with the help of
an external consultant. The results of this review were presented and discussed at
our meeting on July 30, 2014. The review confirmed that the members of the Super-
visory Board were independent and highly competent. The wish was expressed that
this situation continue to be ensured in the future. Cooperation within the Super-
visory Board was assessed as open and constructive. The Innovation and Finance
Committee had been previously repositioned to better meet the Company's future
technological challenges. This committee will, among other things, consider
strategically important technological issues in order to further strengthen technol-
ogy and innovation. As suggested by the efficiency review, reporting to the full
Supervisory Board on technology, innovation and risk management will also be
intensified.
At our extraordinary meeting on September 21, 2014, we approved the Managing
Board's decisions to acquire the Dresser-Rand Group, which is listed on the
New York Stock Exchange, and to sell our 50% stake in BSH Bosch und Siemens
Hausgeräte GmbH (BSH) to co-owner Robert Bosch GmbH.
At our meeting on September 24, 2014, the Managing Board reported to us on the
state of the Company shortly before the end of fiscal 2014. On the recommendation
of the Compensation Committee, we adjusted and simplified the Managing Board
remuneration system, effective the beginning of fiscal 2015. We also reviewed and
adjusted the amount of Managing Board compensation. A detailed explanation
of the new remuneration system is available in chapter → B.4 COMPENSATION REPORT
on pages 161-162 of this Annual Report.
→ B.4
SEE PAGES
161-162
121
→ B.1
SEE PAGES
132-136
→ B.2
SEE PAGE
136
→ D.7
SEE PAGES
330-333
On behalf of the Supervisory Board, I would like to thank the members of the Manag-
ing Board as well as the employees and employee representatives of Siemens AG
and all Group companies for their outstanding commitment and constructive coop-
eration in fiscal 2014.
Rest of world: 9%
For the Supervisory Board
Dr. Gerhard Cromme
MSCI World
7.9%
9.3%
7.1%
FY 2005 - FY 2014
The strength of the Siemens share is also illustrated by a long-
term comparison: the assets of an investor who acquired
Siemens stock worth €1,000 at the beginning of fiscal 2005
and reinvested the dividends and the corresponding value of
the OSRAM spinoff in additional Siemens shares would have
increased to €2,147 by the end of fiscal 2014. This annual
return of 7.9% is above the results for MSCI World (7.1%) but
below those for the DAX 30 (9.3%).
108 A.
126
108 A.1
Letter to our Shareholders
114 A.2
DAX®
Managing Board of Siemens AG
Report of the Supervisory Board
126 A.4
The Siemens Share/Investor Relations
Corporate Governance
171 | C
Combined Management Report
| Dividend
Fiscal year
131 | B.
118 A.3
Siemens
Ten-year period
Long-term performance of Siemens shares compared
with leading indices (average annual performance with dividends
and the corresponding value of the OSRAM spinoff reinvested)
Chairman
me
125
|||A.4 The Siemens Share/Investor Relations
Change in the value of an investment in Siemens shares in fiscal 2014 (with dividends reinvested; indexed)
in % September 30, 2013
125
120
115
110
105
100
95
90
Siemens
DAX®
MSCI World
September 30, 2014
The Siemens share price developed positively during fiscal 2014
in a market environment strongly impacted by economic and
political factors. In the first four months, European stock mar-
kets and the Siemens share price rose substantially due to un-
expectedly positive economic data. After the Siemens share
achieved its high for the year of €101.35 in January 2014, stock
markets initially began to decline in February and then moved
sideways in the following months in a volatile stock market
environment. On September 30, 2014, the Siemens share
closed at €94.37, a gain of 6% compared to September 30, 2013.
-
The Managing Board and the Supervisory Board will propose
a dividend payment of €3.30 per share for fiscal 2014. Represent-
ing a planned payout ratio of 49%, this proposal ensures - in
accordance with our One Siemens dividend policy – that our
shareholders participate adequately in the Company's profit
development. In May 2014, we launched a share buyback pro-
gram of up to €4 billion. By the end of fiscal 2014, we'd acquired
shares with a total value corresponding to about €1.1 billion.
Siemens AG continues to have a very sound financial basis. In
an environment in which the ratings of many countries have
come under pressure, the Company continues to enjoy good
investment-grade credit ratings.
A.4.1 Development of the Siemens share
Over the entire fiscal year, Siemens stock performed well in
the market environment, closing at €94.37 per share on
September 30, 2014. For shareholders who reinvested their
dividends, this amounted to a gain of 9.3% (fiscal 2013: a gain
of 22.8%, including the proceeds from the OSRAM spinoff)
compared to the price on September 30, 2013. The develop-
ment of the Siemens share price was slightly below the perfor-
mance of the leading German stock exchange index, the
DAX (which rose 10.2%), and the leading international index,
MSCI World (which advanced 12.2%).
дамал Сложие
To our Shareholders
Dividend per share
Dividend yield²
171 | C
FY 2014
Combined Management Report
Corporate Governance
Siemens voluntarily complies with the Code's non-binding
suggestions, with the following exceptions:
> Since the Managing Board appointments of 2011, the sugges-
tion in Section 5.1.2 para. 2 sentence 1 of the Code that the
maximum possible appointment period of five years should
not be the rule for first-time appointments to a management
board has not been followed.
141 B.3.8
142 B.3.9
Compliance indicators
Data privacy
Company-wide award for integrity
and compliance
Collective Action and
Siemens Integrity Initiative
Our revised compliance priorities -
Guidance until 2020
143 B.3.10 Further information and
legal proceedings
165 B.5.1
165 B.5.2
Takeover-relevant information
(pursuant to Sections 289 para. 4
and 315 para. 4 of the German
Commercial Code) and explanatory
report (part of the Combined
Management Report)
Composition of common stock
Restrictions on voting rights
or transfer of shares
165 B.5.3 Equity interests exceeding 10%
of voting rights
165 B.5.4 Shares with special rights conferring
powers of control
165 B.5.5 System of control of any employee
share scheme where the control rights
are not exercised directly by the
employees
166 B.5.6 Legislation and provisions of the
Articles of Association applicable to
the appointment and removal of
members of the Managing Board
and governing amendment to the
Articles of Association
on page 136 of this Annual Report.
MENT PURSUANT TO SECTION 289A OF THE GERMAN COMMERCIAL CODE
The Managing Board and the Supervisory Board of Siemens AG
have discussed compliance with the Code's recommendations
in detail. Based on their deliberations, the boards have
approved the annual Declaration of Conformity as of October 1,
2014. The Declaration of Conformity is posted on our website
and presented in chapter → B.2 CORPORATE GOVERNANCE STATE-
Siemens AG complies with all the currently applicable recom-
mendations of the German Corporate Governance Code (Code)
without exception.
B.1.1 Declaration of Conformity
pursuant to Section 161 of the German
Stock Corporation Act
|| | B.1 Corporate Governance Report
> Pursuant to Section 3.7 para. 3 of the Code, in the case of a
takeover offer, a management board should convene an ex-
traordinary general meeting at which shareholders discuss
the takeover offer and may decide on corporate actions. The
convening of a shareholders' meeting - even taking into
account the shortened time limits stipulated in the German
Securities Acquisition and Takeover Act (Wertpapiererwerbs-
und Übernahmegesetz) – is an organizational challenge for
large publicly listed companies. It appears doubtful whether
the associated effort is justified in cases where no relevant
decisions by the shareholders' meeting are intended. There-
fore, extraordinary shareholders' meetings shall be convened
only in appropriate cases.
B. Corporate Governance
or employees in the event of a
takeover bid
members of the Managing Board
169 B.5.9 Compensation agreements with
change of control of the Company
following a takeover bid
168 B.5.8 Significant agreements which take
effect, alter or terminate upon a
-
131
166 B.5.7 Powers of the Managing Board to
issue and repurchase shares
Additional Information
141 B.3.7
132 | B.1
132 B.1.1
Corporate
Governance
B.
WWW.SIEMENS.COM/AR/CORPORATE-GOVERNANCE
Good corporate governance comprises
responsible, value-based management
and monitoring focused on long-term
success. In this chapter, we present
Siemens' Corporate Governance Report,
discuss the Company's management
and control structure, explain the
remuneration of the Managing Board
and the Supervisory Board and provide
detailed insights into the takeover-
relevant information of the Company.
130
132 B.1.2
129
337 | E.
Consolidated Financial Statements
247
1 Like Siemens' existing share programs, Siemens Profit Sharing is a voluntary and
discretionary benefit for eligible employees. The issuance of a new tranche or the
distribution of the profit-sharing pool to employees in one or several fiscal years
does not create a legal claim or right to issue a new tranche or to receive a distribu-
tion in subsequent years. If a distribution in shares is not feasible or economically
appropriate, an equivalent cash payment will be made.
In addition to our share programs, we've established Share
Ownership Guidelines. Applicable Company-wide, these guide-
lines require members of the Managing Board of Siemens AG
and other senior executives of the Siemens Group to hold an
interest in Siemens equal in value to between 50% and 300%
of their base compensation for the period in which they hold
office.
We already enable our workforce to participate in a variety of
share-based programs: the Siemens Stock Awards, the Share
Matching Program (with its underlying Share Matching Plan,
Monthly Investment Plan and Base Share Program) and the
Jubilee Share Program. In fiscal 2014, 3,584,370 shares were
issued to service these programs. Non-vested grants under the
various programs will result in additional share issuances
to employees in the future. For more detailed information
on share-based payment, please see → NOTE 32 SHARE-BASED
PAYMENT in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
on pages 306-309 of this Annual Report.
| Additional Information
135 B.1.3
135 B.1.4
Corporate Governance Report
Declaration of Conformity pursuant
to Section 161 of the German Stock
Corporation Act
141 B.3.6
140 B.3.5
140 B.3.4
139 B.3.3
Compliance Report (part of the
Combined Management Report)
Compliance priorities for fiscal 2014
139 B.3.2 Compliance risk management
Business partners and suppliers
Compliance training
| Management Report)
Corporate Governance statement
pursuant to Section 289a of
the German Commercial Code
(part of the Combined
138 B.3.1
138 | B.3
136 | B.2
164 B.4.3 | Other
144 B.4.1 Remuneration of members
of the Managing Board
163 B.4.2 Remuneration of members
of the Supervisory Board
Compensation Report
(part of the Combined
Management Report)
144 | B.4
Management and control structure
Share ownership and share
transactions by members of the
Managing and Supervisory Boards
Annual Shareholders' Meeting
and investor relations
B.1.2 Management and control structure
Siemens AG is subject to German corporate law. Therefore, it
has a two-tier board structure, consisting of a Managing Board
and a Supervisory Board.
Fostering an ownership culture is a key pillar of Vision 2020,
which is sustainably supported, among other things, by em-
ployee share ownership. Siemens intends to increase the num-
ber of employee shareholders from today's figure of about
140,000 to over 200,000. To strengthen participation by em-
ployees around the world in our Company's success, we're
launching a new profit-sharing scheme for fiscal 2015. Called
Siemens Profit Sharing, the scheme offers employees below
senior management level worldwide an opportunity to benefit
from the Company's outstanding success by receiving shares
from Siemens free of charge.¹
B.1.2.1 SUPERVISORY BOARD
The regular term of office of the members of the Supervisory
Board will expire at the close of the Annual Shareholders'
Meeting in 2018. Jim Hagemann Snabe – who was appointed
by court order until the end of the Annual Shareholders'
Meeting 2014 as successor to Dr. Josef Ackermann, who re-
signed from the Supervisory Board effective September 30,
2013 was elected a shareholder representative on the
Supervisory Board at the Annual Shareholders' Meeting on
January 28, 2014. Michael Sigmund and Olaf Bolduan were
appointed to the Supervisory Board by court order to succeed
the employee representatives Prof. Dr. Rainer Sieg and Lothar
Adler, who resigned from the Supervisory Board effective
February 28, 2014 and May 31, 2014, respectively.
(part of the Combined Management Report)
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
144 B.4
Corporate Governance Report
132 B.1
136 B.2
134
Corporate Governance
131 B.
108 | A. To our Shareholders
The composition of the Supervisory Board and its committees
is presented in chapter → D.7 SUPERVISORY BOARD AND MANAGING
BOARD on pages 330-333 of this Annual Report. Information on
the work of the Supervisory Board is provided in the → A.3
REPORT OF THE SUPERVISORY BOARD on pages 118-125. The com-
pensation paid to the members of the Supervisory Board
is explained in chapter → B.4 COMPENSATION REPORT on pages
163-164.
-
The Innovation and Finance Committee comprises the Chair-
man of the Supervisory Board, three of the Supervisory Board's
shareholder representatives and four of the Supervisory Board's
employee representatives. Based on the Company's overall
strategy, the Committee discusses, in particular, the Company's
focuses of innovation and prepares the Supervisory Board's
discussions and resolutions regarding questions relating to the
Company's financial situation and structure - including annual
planning (budget) as well as the Company's fixed asset
investments and its financial measures. In addition, the Inno-
vation and Finance Committee has been authorized by the
Supervisory Board to decide on the approval of transactions
and measures that require Supervisory Board approval and
have a value of less than €600 million.
The Mediation Committee, which comprises the Chairman of
the Supervisory Board, the First Deputy Chairman (who is
elected in accordance with the German Codetermination Act),
one of the Supervisory Board's shareholder representatives and
one of the Supervisory Board's employee representatives, sub-
mits proposals to the Supervisory Board in the event that the
Supervisory Board cannot reach the two-thirds majority
required for the appointment or dismissal of a Managing Board
member.
Compensation Report
The Nominating Committee, which comprises the Chairman
and the Second Deputy Chairman of the Supervisory Board as
well as two further members to be elected by the shareholder
representatives of the Supervisory Board from among their own
number, is responsible for making recommendations to the
Supervisory Board on suitable candidates for election as share-
holder representatives on the Supervisory Board by the Annual
Shareholders' Meeting. In preparing these recommendations,
the objectives specified by the Supervisory Board regarding its
composition are to be taken into account as well as the required
knowledge, abilities and experience of the proposed candi-
dates; attention shall also be paid to independence, diversity
and, in particular, the appropriate participation of women.
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
As the Company's top management body, the Managing Board
is committed to serving the interests of the Company and
achieving sustainable growth in Company value. The members
of the Managing Board are jointly responsible for the entire
management of the Company and decide on the basic issues
of business policy and corporate strategy as well as on the
Company's annual and multi-year plans.
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
Shareholders exercise their rights in the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of unappropriated net income, the ratifica-
tion of the acts of the Managing and Supervisory Boards, and
the appointment of the independent auditors. Amendments to
the Articles of Association and measures that change the Com-
pany's capital stock are approved at the Annual Shareholders'
Meeting and are implemented by the Managing Board. The
Managing Board facilitates shareholder participation in this
B.1.4 Annual Shareholders' Meeting
and investor relations
WWW.SIEMENS.COM/DIRECTORS-DEALINGS.
Pursuant to Section 15a of the German Securities Trading Act
(Wertpapierhandelsgesetz), members of the Managing Board
and the Supervisory Board are legally required to disclose the
purchase or sale of shares of Siemens AG or of financial instru-
ments based thereon if the total value of such transactions en-
tered into by a board member or any closely associated person
reaches or exceeds €5,000 in any calendar year. All transac-
tions reported to Siemens AG in accordance with this require-
ment have been duly published and are available on the
Company's website
-
As of the same day, the Supervisory Board's current members
held Siemens shares representing less than 0.01% (2013: less
than 0.01%) of the capital stock of Siemens AG, which totaled
881,000,000 shares. These figures do not include the 9,386,535
(2013: 9,313,438) shares or 1.07% (2013: 1.06%) of the capital
stock of Siemens AG, which totaled 881,000,000 shares, over
which the von Siemens-Vermögensverwaltung GmbH (vSV),
a German limited liability company, has voting control under
powers of attorney based on an agreement between - among
others members of the Siemens family, including Gerd von
Brandenstein, and vSV. These shares are voted together by VSV
based on proposals made by a family partnership established
by the Siemens family or by one of its committees. Gerd von
Brandenstein is the chairman of the executive committee and
has a deciding vote in cases of deadlock.
As of September 30, 2014, the Managing Board's current mem-
bers held a total of 181,009 (2013: 216,560) Siemens shares
representing 0.02% (2013: 0.02%) of the capital stock of
Siemens AG, which totaled 881,000,000 shares.
B.1.3 Share ownership and share
transactions by members of the
Managing and Supervisory Boards
The composition of the Managing Board and its committee is
presented in chapter → D.7 SUPERVISORY BOARD AND MANAGING
BOARD on pages 334-335 of this Annual Report. Information on
the compensation paid to the members of the Managing Board
is provided in the → B.4 COMPENSATION REPORT on pages 144-162.
Currently, there is one Managing Board committee, the Equity
and Employee Stock Committee. This committee comprises
three members of the Managing Board and oversees, in particu-
lar, the utilization of authorized capital in connection with the
issuance of employee stock and the implementation of certain
capital measures. It also determines the scope and conditions
of the share-based compensation components and/or pro-
grams for employees and managers (with the exception of the
Managing Board).
The Managing Board prepares the Company's quarterly finan-
cial statements and the half-year financial reports, the Annual
Financial Statements of Siemens AG, the Consolidated Finan-
cial Statements of the Siemens Group and the Combined Man-
agement Report of Siemens AG and the Siemens Group. In
addition, the Managing Board must ensure that the Company
adheres to statutory provisions, official regulations and internal
Company policies (compliance) and works to achieve compli-
ance with these provisions and policies within the Siemens
Group. Further comprehensive information on the compliance
program and related activities in fiscal 2014 is presented
in chapter B.3 COMPLIANCE REPORT on pages 138-143 of this
Annual Report. The Managing Board and the Supervisory Board
cooperate closely for the benefit of the Company. The Manag-
ing Board informs the Supervisory Board regularly, comprehen-
sively and without delay on all issues of importance to the
Company with regard to strategy, planning, business develop-
ment, financial position, earnings, compliance and risks. When
filling managerial positions at the Company, the Managing
Board takes diversity into consideration and, in particular, aims
for an appropriate consideration of women and internationality.
B.1.2.2 MANAGING BOARD
As required by the German Codetermination Act (Mitbestim-
mungsgesetz), the Company's shareholders and its employees
each select one-half of the Supervisory Board's twenty members.
representatives. The Compliance Committee concerns itself, in
particular, with the Company's adherence to statutory provi-
sions, official regulations and internal Company policies.
-
(part of the Combined Management Report)
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
144 B.4
Corporate Governance Report
132 B.1
136 B.2
132
Corporate Governance
131 B.
108 | A. To our Shareholders
> In its election proposals, the Supervisory Board shall also
pay particular attention to the appropriate participation of
women. Qualified women shall already be included in the
initial process of selecting potential candidates for new elec-
tions or for the filling of Supervisory Board positions that
have become vacant and shall be considered, as appropriate,
in nominations. We have meanwhile been able to increase
the number of women on our Supervisory Board to five.
Our goal is to maintain and, if possible, to increase this
number. It is also intended that - as is currently the case - at
the minimum one woman should be a member of the Nomi-
nating Committee.
> Taking the Company's international orientation into account,
care shall also be taken to ensure that the Supervisory Board
has an adequate number of members with extensive interna-
tional experience. Our goal is to make sure that the present
considerable share of Supervisory Board members with
extensive international experience is maintained.
> The composition of the Supervisory Board of Siemens AG
shall be such that qualified control and advising for the
Managing Board is ensured. The candidates proposed for
election to the Supervisory Board shall have the expertise,
skills and professional experience necessary to carry out the
functions of a Supervisory Board member in a multinational
company and safeguard the reputation of Siemens in public.
In particular, care shall be taken in regard to the personality,
integrity, commitment, professionalism and independence
of the individuals proposed for election. The goal is to ensure
that, in the Supervisory Board, as a group, all know-how and
experience is available that is considered essential in view of
Siemens' activities.
The composition of the Supervisory Board is to be such that its
members as a group have the knowledge, skills and profes-
sional experience necessary to carry out its proper functions.
For this reason, the Supervisory Board approved - taking into
account the Code's recommendations - concrete objectives for
its composition in fiscal 2013:
Compensation Report
The Compliance Committee comprises the Chairman of the
Supervisory Board, three of the Supervisory Board's shareholder
representatives and four of the Supervisory Board's employee
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
> The age limitation established in the Bylaws for the Super-
visory Board will be taken into consideration. In addition, no
more than two former members of the Managing Board of
Siemens AG shall belong to the Supervisory Board.
The Audit Committee comprises the Chairman of the Super-
visory Board, three of the Supervisory Board's shareholder
representatives and four of the Supervisory Board's employee
representatives. According to the German Stock Corporation
Act, the Audit Committee must include at least one indepen-
dent Supervisory Board member with knowledge and experi-
ence in the application of accounting principles or the audit-
ing of financial statements. The Chairman of the Audit
Committee, Dr. Hans Michael Gaul, fulfills these statutory re-
quirements. The Audit Committee oversees, in particular, the
accounting process and conducts a preliminary review of the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report. On the basis of the independent audi-
tors' report on their audit of the annual financial statements,
the Audit Committee makes, after its preliminary review, rec-
ommendations regarding Supervisory Board approval of the
Annual Financial Statements of Siemens AG and the Consoli-
dated Financial Statements of the Siemens Group. In addition
to the work performed by the independent auditors, the Audit
Committee discusses the Company's quarterly financial state-
ments and half-year financial reports, which are prepared by
the Managing Board, as well as the report on the auditors' re-
view of the quarterly financial statements and the half-year fi-
nancial report (condensed financial statements and interim
management report). It concerns itself with the Company's
risk monitoring system and oversees the effectiveness of the
internal control system as this relates, in particular, to finan-
cial reporting, the risk management system and the internal
audit system. The Audit Committee receives regular reports
from the Internal Audit Department. It prepares the Supervi-
sory Board's recommendation to the Annual Shareholders'
Meeting concerning the election of the independent auditors
and submits the corresponding proposal to the Supervisory
Board. It awards the audit contract to the independent auditors
elected by the Annual Shareholders' Meeting and monitors the
independent audit of the financial statements – including, in
particular, the auditors' independence, professional expertise
and services.
Supervisory Board's plenary meetings regarding the system of
Managing Board compensation, including the implementation
of this system in the Managing Board contracts, the definition
of the targets for variable Managing Board compensation, the
determination and review of the appropriateness of the total
compensation of individual Managing Board members and the
approval of the annual Compensation Report.
133
337 | E. Additional Information
Consolidated Financial Statements
247 | D.
Combined Management Report
171 | C.
The Compensation Committee, which comprises the mem-
bers of the Chairman's Committee of the Supervisory Board as
well as one of the Supervisory Board's shareholder representa-
tives and one of the Supervisory Board's employee representa-
tives, prepares, in particular, the proposals for decisions by the
The Chairman's Committee, which comprises the Chairman
and Deputy Chairmen of the Supervisory Board as well as one
further employee representative elected by the Supervisory
Board, makes proposals, in particular, regarding the appoint-
ment and dismissal of Managing Board members and handles
contracts with members of the Managing Board. In preparing
recommendations on the appointment of Managing Board
members, the Chairman's Committee takes into account the
candidates' professional qualifications, international experience
and leadership qualities, the age limit specified for Managing
Board members, the Managing Board's long-range plans for suc-
cession as well as its diversity and, in particular, the appropriate
consideration of women. The Chairman's Committee concerns
itself with questions regarding the Company's corporate gover-
nance and prepares the resolutions to be approved by the Super-
visory Board regarding the Declaration of Conformity with the
Code - including the explanation of deviations from the Code -
and regarding the approval of the Corporate Governance Report
as well as the Report of the Supervisory Board to the Annual
Shareholders' Meeting. Furthermore, the Chairman's Committee
submits recommendations to the Supervisory Board regarding
the composition of the Supervisory Board committees and de-
cides whether to approve contracts and business transactions
with Managing Board members and parties related to them.
The Supervisory Board has seven committees, whose duties,
responsibilities and procedures fulfill the requirements of the
German Stock Corporation Act and the Code. The chairmen of
these committees provide the Supervisory Board with regular
reports on their committees' activities.
for the appropriation of net income and the Report of the
Supervisory Board to the Annual Shareholders' Meeting. In
addition, the Supervisory Board or the Compliance Committee,
which is described in more detail below, concern themselves
with the Company's adherence to statutory provisions, official
regulations and internal Company policies (compliance). The
Supervisory Board also appoints the members of the Managing
Board and determines each member's portfolios. Important
Managing Board decisions - such as those regarding major
acquisitions, divestments, fixed asset investments and finan-
cial measures - require Supervisory Board approval, unless the
Bylaws for the Supervisory Board specify that such authority be
delegated to the Innovation and Finance Committee of the
Supervisory Board. In the Bylaws for the Managing Board, the
Supervisory Board has established the rules that govern the
Managing Board's work.
The Supervisory Board oversees and advises the Managing
Board in its management of the Company's business. At regular
intervals, the Supervisory Board discusses business develop-
ment, planning, strategy and the strategy's implementation.
It reviews the Annual Financial Statements of Siemens AG and
the Consolidated Financial Statements of the Siemens Group,
the Combined Management Report of Siemens AG and the
Siemens Group, and the proposal for the appropriation of net
income. It approves the Annual Financial Statements of
Siemens AG as well as the Consolidated Financial Statements
of the Siemens Group, based on the results of the preliminary
review conducted by the Audit Committee and taking into
account the reports of the independent auditors. The
Supervisory Board decides on the Managing Board's proposal
-
These objectives for the Supervisory Board's composition have
been fully achieved: a considerable number of Supervisory
Board members are currently engaged in international activi-
ties and/or have many years of international experience. Since
the Supervisory Board election in 2013, the Supervisory Board
has had five female members. Dr. Nicola Leibinger-Kammüller
is a member of the Nominating Committee. The Supervisory
Board has an adequate number of independent members. In
the opinion of the Supervisory Board, a minimum of 16 Super-
visory Board members are independent in the meaning of Sec-
tion 5.4.2 of the Code. Some Supervisory Board members
hold or have held in the past fiscal year - high-ranking posi-
tions at other companies with which Siemens does business.
Transactions between Siemens and such companies are carried
out on an arm's length basis. We believe that these trans-
actions do not compromise the independence of the Super-
visory Board members in question.
> An adequate number of independent members shall belong
to the Supervisory Board. Material and not only temporary
conflicts of interest, such as organizational functions or advi-
sory capacities with major competitors of the company, shall
be avoided. Under the presumption that the mere exercise of
Supervisory Board duties as an employee representative
gives no cause to doubt the compliance with the indepen-
dence criteria pursuant to Section 5.4.2 of the Code, the
Supervisory Board shall have a minimum of 16 members who
are independent in the meaning of the Code. In any case, the
Supervisory Board shall be composed in such a way that a
number of at least six independent shareholder representa-
tives in the meaning of Section 5.4.2 of the Code is achieved.
In addition, the Supervisory Board members shall have suffi-
cient time to be able to devote the necessary regularity and
diligence to their mandate.
A.4.8 Ownership culture/
Stock-based programs
165 | B.5
4 To be proposed to the Annual Shareholders' Meeting.
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
The Business Conduct Guidelines can be downloaded from the
Internet on: www.SIEMENS.COM/289A.
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to maintain successful activi-
ties. They contain the basic principles and rules for our conduct
within our Company and in relation to our external partners and
the general public. They set out how we meet our ethical and
legal responsibility as a company and give expression to our cor-
porate values of being "Responsible - Excellent - Innovative."
Additional Information
In the 167 years of its existence, our Company has built an
excellent reputation around the world. Technical performance,
innovation, quality reliability, and international engagement
have made Siemens one of the leading companies in electron-
ics and electrical engineering. It is top performance with the
highest ethics that has made Siemens strong. This is what the
Company should continue to stand for in the future.
Our Company's values
Further Corporate Governance Practices applied beyond legal
requirements are contained in our Business Conduct Guidelines.
WWW.SIEMENS.COM/289A.
A general description of the functions and operation of the
Managing Board and the Supervisory Board can be found under
the heading → B.1.2 MANAGEMENT AND CONTROL STRUCTURE under
chapter B.1 CORPORATE GOVERNANCE REPORT on pages 132-135
and via the Internet on: WWW.SIEMENS.COM/289A. Further
details regarding the operation of the Managing Board and
Supervisory Board can be derived from the description of the
committees as well as from the bylaws for the corporate bodies
concerned. These documents can be found at:
WWW.SIEMENS.COM/289A.
The composition of the committees of the Managing and Super-
visory Boards is given under chapter →D.7 SUPERVISORY BOARD
AND MANAGING BOARD on pages 330-335, respectively of the
Annual Report, as is a description of the composition of the
Managing Board and the Supervisory Board. The compositions
can be accessed via the Internet on:
and Business Conduct Guidelines
137
|| | B.3 Compliance Report
For us at Siemens, integrity means acting in accordance with
our values - responsible, excellent and innovative - wherever
we do business. A key element of integrity is compliance:
adherence to the law and to our own internal regulations. We
have zero tolerance for corruption and violations of the princi-
ples of fair competition - and where these do occur, we rigor-
ously respond.
Prevent
Management responsibility
These priorities, which guided our activities in fiscal 2014, in-
clude the conclusion of project- and market-specific Collective
Action agreements and the launch of the second funding
round of the Siemens Integrity Initiative. We have also carried
out a project to reinforce our business-partner compliance due
337 | E.
> Responsibility for data privacy: we will assume new
responsibilities in the area of data privacy.
> Manage risk & assurance: we want to continue to provide our
businesses with the appropriate level of assurance within
our Compliance System.
> Stand for integrity: Our aim is to support business leadership
in its responsibility for compliance and to execute our Collec-
tive Action strategy focused on tangible business benefits.
> Committed to business: we want to foster trustful collabora-
tion between the Compliance Organization and our busi-
nesses as well as strengthen the market and customer focus
of compliance.
For fiscal 2014, we defined the following compliance priorities:
Our compliance priorities provide the basis for the ongoing
development and further improvement of our Compliance
System. In this connection, we take into account and aim to
fulfill continuously evolving requirements in the compliance
field, which reflect both our own work and the changing mar-
ket conditions and compliance risks of our business activities.
B.3.1 Compliance priorities for fiscal 2014
Our activities in the World Economic Forum include the Com-
pany's participation in the Pact Against Corruption Initiative
and the Siemens General Counsel's membership in the Global
Agenda Council on Transparency & Anti-Corruption.
We actively support the enactment of the United Nations Con-
vention against Corruption and the Anti-Bribery Convention of
the Organization for Economic Co-operation and Development
(OECD), which like the ten principles of the United Nations
Global Compact - provide important guidance for our entire
organization. We are also actively involved in the Global Com-
pact. At the end of 2013, our Chief Compliance Officer was
elected Chairman of the Task Force on Anti-Bribery/Corruption
of the Business and Industry Advisory Committee to the OECD.
| Siemens Compliance System
Our Compliance System aims to ensure that all our worldwide
business practices are in line with these guidelines and in com-
pliance with all applicable laws. To serve this purpose and pro-
vide the Company with reliable protection against compliance
risks, our Compliance System has three pillars: Prevent, Detect
and Respond. We are continuously working to further strengthen
compliance in our Company and to combat corruption together
with other organizations (Collective Action).
Our Business Conduct Guidelines describe how we fulfill our
compliance-related responsibilities. They are also an expression
of our values and lay the foundation for our own internal regu-
lations. Our Business Conduct Guidelines are binding for all
employees worldwide.
The Compliance Report is an integral part of the Combined
Management Report.
OPERATION OF THE MANAGING BOARD, THE
SUPERVISORY BOARD, AND COMPOSITION AND
OPERATION OF THEIR COMMITTEES
WWW.SIEMENS.COM/289A.
The Code can be downloaded from the Internet at:
Since the Managing Board appointments of 2011, the sugges-
tion in Section 5.1.2 para. 2 sentence 1 of the Code that the
maximum possible appointment period of five years should not
be the rule for first-time appointments to a management board
has not been followed.
The Managing Board
Berlin and Munich, October 1, 2014
Siemens Aktiengesellschaft
Since making its last Declaration of Conformity dated May 7,
2014, Siemens AG has complied with the recommendations
of the Code with the one exception noted therein (contrary
to Section 5.4.5, paragraph 1, sentence 2 of the Code, Jim
Hagemann Snabe, who is a member of the Supervisory
Board of Siemens AG and a former member of the Executive
Board of SAP AG, held four supervisory board positions at
other publicly listed companies). This exception has been
eliminated since Mr. Snabe resigned his position on the
Executive Board of SAP AG, effective May 21, 2014.
Corporate Governance Code ("Code"), published by the
Federal Ministry of Justice in the official section of the
Federal Gazette (Bundesanzeiger).
Siemens AG complies and will continue to comply with
the currently applicable recommendations of the German
"Declaration of Conformity by the Managing Board and the
Supervisory Board of Siemens Aktiengesellschaft with the
German Corporate Governance Code
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of Octo-
ber 1, 2014:
DECLARATION OF CONFORMITY WITH THE GERMAN
CORPORATE GOVERNANCE CODE
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code (Handelsgesetzbuch) is an
integral part of the Combined Management Report. In accord-
ance with Section 317 para. 2 sentence 3 of the German
Commercial Code, the disclosures made within the scope of
Section 289a of the German Commercial Code are not subject
to the audit by the auditors.
|| | B.2 Corporate Governance statement pursuant to Section 289a
of the German Commercial Code
Our Articles of Association, the Bylaws for the Supervisory
Board, the Bylaws for the most important Supervisory Board
committees, the Bylaws for the Managing Board, all our Decla-
rations of Conformity with the Code and a variety of other
corporate-governance-related documents are posted on our
website at: WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
As part of our investor relations activities, we inform our inves-
tors comprehensively about developments within the Company.
For communication purposes, Siemens makes extensive use of
the Internet. We publish quarterly, half-yearly and annual
reports, earnings releases, ad hoc announcements, analyst pre-
sentations, shareholder letters and press releases as well as the
financial calendar for the current year, which contains the pub-
lication dates of significant financial communications and the
date of the Annual Shareholders' Meeting, at WWW.SIEMENS.
COM/INVESTORS. Details of our investor relations activities are
provided in chapter → A.4 THE SIEMENS SHARE/INVESTOR RELATIONS
on pages 126-129 of this Annual Report.
meeting through electronic communications – in particular, via
the Internet and enables shareholders who are unable to
attend the meeting to vote by proxy. Furthermore, shareholders
may exercise their right to vote in writing or by means of elec-
tronic communications (absentee voting). The Managing Board
may enable shareholders to participate in the Annual Share-
holders' Meeting without the need to be present at the venue
and without a proxy and to exercise some or all of their rights
fully or partially by means of electronic communications.
Shareholders may submit proposals regarding the proposals of
the Managing and Supervisory Boards and may contest deci-
sions of the Annual Shareholders' Meeting. Shareholders
owning Siemens stock with an aggregate notional value of
€100,000 or more may also demand the judicial appointment
of special auditors to examine specific issues. The reports, doc-
uments and information required by law, including the Annual
Report, may be downloaded from our website. The same
applies to the agenda for the Annual Shareholders' Meeting
and to any counterproposals or shareholders' nominations that
require disclosure.
-
135
The Supervisory Board"
> Compliance risk management
108 | A. To our Shareholders
Corporate Governance
-
Pursuant to Section 3.7 para. 3 of the Code, in the case of a
takeover offer, a management board should convene an ex-
traordinary general meeting at which shareholders discuss the
takeover offer and may decide on corporate actions. The con-
vening of a shareholders' meeting - even taking into account
the shortened time limits stipulated in the German Securities
Acquisition and Takeover Act (Wertpapiererwerbs- und Über-
nahmegesetz) – is an organizational challenge for large pub-
licly listed companies. It appears doubtful whether the associ-
ated effort is justified in cases where no relevant decisions by
the shareholders' meeting are intended. Therefore, extraordi-
nary shareholders' meetings shall be convened only in appro-
priate cases.
Siemens voluntarily complies with the Code's non-binding
suggestions, with the following exceptions:
CORPORATE GOVERNANCE PRACTICES
Suggestions of the Code
INFORMATION ON
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Compensation Report
We also provide extensive information online. Quarterly, semi-
annual and annual financial reports, analyst presentations and
press releases as well as our financial calendar for the current
year which includes all major publication dates and the date
of the Annual Shareholders' Meeting (please see → E.7 FINANCIAL
CALENDAR on page 347 of this Annual Report) - are available at
WWW.SIEMENS.COM/INVESTORS. For each quarter and each fiscal
year, we also publish the Siemens Shareholder Letter, which is
addressed primarily to our private investors and provides a
brief summary of key developments during the previous quar-
ter or fiscal year.
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
144 B.4
Corporate Governance Report
132 B.1
136 B.2
136
131 B.
> Policies and procedures
(part of the Combined Management Report)
> Advice and support
(September 30)
Number of shares issued
Fiscal year-end
90.33
76.00
89.06
101.35
88.71
94.37
in €
in millions
in €
in €
FY 2014¹
Low
High
(Xetra closing price)
Siemens stock price
| Stock market information
FY 20131
881
in millions of €
78,823
> Training and communication
3 Continuing and discontinued operations.
2 On the basis of outstanding shares.
1 Fiscal year from October 1 to September 30.
3.00
3.304
in €
Dividend per share
881
75,078
5.08
5.03
6.31
in €
Diluted earnings per share³
6.37
in €
Basic earnings per share³
We take our responsibility to maintain an intensive dialogue
with the capital market very seriously. Cultivating close con-
tacts with our shareholders, we keep them informed of all
major developments throughout Siemens. As part of our inves-
tor relations work, we provide information on our Company's
development in quarterly, semiannual and annual reports. Our
CEO and CFO also maintain close contact with investors
through roadshows and conferences. In addition, Siemens
holds Capital Market Days, at which Company management
informs investors and analysts about our business strategy
and market environment.
A.4.7 Siemens on the capital market
Market capitalization²
> Global case tracking
> Whistleblowing channels "Tell us"
and ombudsman
> Compliance controls
> Monitoring and compliance reviews
> Compliance audits
> Compliance investigations
Respond
> Consequences for misconduct
> Remediation
108 | A. To our Shareholders
131 B.
Corporate Governance
138
132 B.1
136 B.2
Detect
144 B.4
Corporate Governance Report
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
> Integration in personnel processes
138 B.3
Compensation Report
> Collective action
165 B.5
(part of the Combined Management Report)
In the event of a 100% target attainment, the annual target
amount for the monetary value of the Stock Awards com-
mitment is €1.9 million for the President and CEO (effective
August 1, 2013) and €1 million for each of the other members of
the Managing Board. Beginning with fiscal 2011, the Super-
visory Board has the option of increasing, on an individual
basis, the target amount for a member of the Managing Board
who has been reappointed by as much as 75% above the
amount of €1 million, for one fiscal year at a time. This option
enables the Supervisory Board to take account of the Managing
Board member's individual accomplishments and experience as
well as the scope and demands of his or her function.
In the event of extraordinary unforeseen developments that
have an impact on the stock price, the Supervisory Board may
decide to reduce the number of promised Stock Awards retro-
actively, or it may decide that in lieu of a transfer of Siemens
Stock only a cash settlement in a defined and limited amount
will be paid, or it may decide to postpone transfers of Siemens
stock for payable Stock Awards until the developments have
ceased to have an impact on the stock price.
247 | D.
Long-term stock-based compensation
The bonus is paid 75% in cash and 25% in the form of gener-
ally non-forfeitable Siemens stock commitments (Bonus
Awards). After a four-year waiting period, the beneficiary will
receive one share of Siemens stock for each Bonus Award. The
value of Siemens stock to be transferred for Bonus Awards
after the waiting period is subject to a ceiling of 300% of the
target amount of the Bonus Awards. If this maximum amount
is exceeded, the corresponding entitlement to share commit-
ments will be forfeited without replacement. Instead of the
transfer of Siemens stock, an equivalent cash settlement may
be effected.
the adjusted amount of the bonus paid can be as much as 240%
of the target amount. In choosing the factors to be considered
in deciding on possible revisions of the bonus payouts (±20%),
the Supervisory Board takes account of incentives for sustain-
able corporate management. The revision option may also
be exercised in recognition of Managing Board members' indi-
vidual achievements.
The Supervisory Board is entitled to revise the amount resulting
from attaining targets by as much as 20% downward or up-
ward, at its duty-bound discretion (pflichtgemäßes Ermessen);
For a 100% target attainment (target amount), the amount of
the bonus equals the amount of base compensation. The bonus
is subject to a ceiling (cap) of 200%. If targets are substantially
missed, variable compensation may not be paid at all.
171 | C. Combined Management Report
Variable compensation (bonus) is based on the Company's
business performance in the past fiscal year. The targets for
variable compensation are derived from the financial frame-
work of our integrative management model One Siemens. On
this basis, the Supervisory Board at the beginning of each
fiscal year defines specific targets. Corresponding targets - in
addition to other factors - also apply to senior managers, with
a view to establishing a consistent target system throughout
the Company.
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards). The beneficiaries
will receive one free share of Siemens stock for each Stock
Award after a restriction period. Beginning with the award for
fiscal 2011, the restriction period for Stock Awards ends at the
close of the second day after publication of the preliminary
operating results for the fourth calendar year after the date of
the award.
132 B.1 Corporate Governance Report
136 B.2
Consolidated Financial Statements
337 | E.
Additional Information
145
The performance-based component of long-term stock-based
compensation is likewise founded on One Siemens. The allo-
cation rules for long-term stock-based compensation take this
focus into account as follows:
> On the one hand, half of the annual target amount for the
annual Stock Awards is linked to the average basic earnings
per share (EPS) from continuing and discontinued operations
for the last three completed fiscal years. In principle, the tar-
get value is the average basic EPS from the past three fiscal
years completed prior to the year of compensation. At the
end of each fiscal year, the Supervisory Board decides on a
figure that represents that year's target attainment, which
may lie between 0% and 200% (cap). This target attainment
will then determine the actual monetary value of the award
and the resulting number of Stock Awards.
> On the other hand, the development of the performance of
Siemens' stock relative to competitors is to have a direct ef-
fect on compensation. For this purpose, with respect to the
other half of the annual target amount for the Stock Awards,
the Supervisory Board will first grant a number of Stock
Awards equivalent to the monetary value of half the target
amount on the date of the award. The Supervisory Board will
also decide on a target system (target value for 100% and tar-
get curve) for the performance of Siemens stock relative to
the stock of competitors (for fiscal 2014, these are ABB,
Alstom, General Electric, Rockwell and Schneider). The refer-
ence period for measuring the target will be the same as the
four-year restriction period for the Stock Awards. After this
restriction period expires, the Supervisory Board will deter-
mine how much better or worse Siemens stock has per-
formed relative to the stock of its competitors. This determi-
nation will yield a target attainment of between 0% and
200% (cap). If target attainment is above 100%, an additional
cash payment corresponding to the outperformance is
effected. If target attainment is less than 100%, a number of
Stock Awards equivalent to the shortfall from the target will
expire without replacement.
The value of Siemens stock to be transferred for Stock Awards
after the end of the restriction period is subject to a ceiling of
300% of the respective target amount. If this maximum amount
of compensation is exceeded, the corresponding entitlement to
stock commitments will be forfeited without replacement.
With regard to the further terms of the Stock Awards, the same
principles apply in general for the Managing Board and for
senior managers; these principles are discussed in more detail
in NOTE 32 SHARE-BASED PAYMENT in → D.6 NOTES TO CONSOLI-
DATED FINANCIAL STATEMENTS. That note also includes further
information about the stock-based employee investment plans.
Maximum amount for compensation overall
In addition to the forfeiture rules to maintain the maximum
amounts of compensation for variable compensation (bonus)
and long-term stock-based compensation, a maximum amount
for the compensation overall has also been agreed upon.
Beginning with fiscal 2014, this amount cannot be more than
1.7 times greater than target compensation. Target compensa-
tion comprises base compensation, the target amount for vari-
able compensation (bonus), and the target amount for long-
term stock-based compensation, excluding fringe benefits and
pension benefit commitments. Including fringe benefits and
pension benefit commitments of the relevant fiscal year, the
maximum amount of compensation for the overall compensa-
tion increases by corresponding amounts.
Performance-based components
Variable compensation (bonus)
Fringe benefits include costs, or the cash equivalent, of
non-monetary benefits and other perquisites, such as the pro-
vision of a Company car, contributions toward the cost of insur-
ance, reimbursement of fees for legal advice, tax advice and
accommodation and moving expenses, including a gross-up for
any taxes that have to be borne in this regard, as well as costs
relating to preventive medical examinations.
165 B.5
Base compensation is paid as a monthly salary. It is reviewed
annually, and revised if appropriate. The base compensation of
the President and CEO Joe Kaeser has been €1,845,000 per year
since the time of his appointment on August 1, 2013. The base
compensation of the CFO, of those members of the Managing
Board who have responsibilities for Sector portfolios and of Klaus
Helmrich because of his additional services as Labor Director
("Arbeitsdirektor") has been €998,400 per year since October 1,
2013. The base compensation of the other members of the Man-
aging Board has been €928,800 per year since October 1, 2013.
Corporate Governance
131 B.
144
108 | A. To our Shareholders
Obligation to hold shares during term of office on the Managing Board
Performance-based component
Performance-based components with deferred payout
Non-performance-based component
of Base
compen-
sation
2-times
member:
Fringe benefits
Share Ownership Guidelines
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
144 B.4
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
January 28, 2014. The new remuneration system that takes
effect in fiscal 2015 is explained in section → B.4.1.4 REMUNER-
ATION SYSTEM FOR THE MANAGING BOARD FROM FISCAL 2015 ONWARD.
The new remuneration system will be submitted to the Annual
Shareholders' Meeting for its approval on January 27, 2015.
In fiscal 2014, the remuneration system for the Managing Board
had the following components:
Non-performance-based components
Base compensation
138 B.3
-
Additional Information
The Siemens Share Ownership Guidelines are an integral part
of the remuneration system for the Managing Board and senior
executives. These guidelines require the members of the
Managing Board after a certain buildup phase to hold
Siemens stock worth a multiple of their base compensation
300% for the President and CEO, 200% for the other members
of the Managing Board - during their term of office on the
Managing Board. The determining figure in this context is the
average base compensation that each member of the Managing
Board has drawn over the four years before the applicable date
of proof of compliance. Accordingly, changes that have been
made to base compensation in the meantime are included.
Non-forfeitable stock commitments (Bonus Awards) are taken
into account in determining compliance with the Share Owner-
ship Guidelines.
337 | E.
147
Additionally, compensatory or severance payments cover non-
monetary benefits by including an amount of 5% of the total
compensation or severance amount. Compensatory or sever-
ance payments will be reduced by 15% as a lump-sum allow-
ance for discounted values and for income earned elsewhere.
However, this reduction will apply only to the portion of the
compensatory or severance payment that was calculated with-
out taking account of the first six months of the remaining
term of the Managing Board member's contract.
If a member leaves the Managing Board, the variable compen-
sation (bonus) is determined pro rata temporis after the end of
the fiscal year in which the appointment was terminated and is
settled in cash at the usual payout or transfer date, as the case
may be. If the employment contract is terminated in the course
of an appointment period, the non-forfeitable stock commit-
ments (Bonus Awards) for which the waiting period is still in
progress remain in effect without restriction. If the employ-
ment agreement is terminated because of retirement, disability
or death, a Managing Board member's Bonus Awards will be
settled in cash as of the date of departure from the Board.
Stock commitments that were made as long-term stock-based
compensation (Stock Awards) and for which the restriction
period is still in progress will be forfeited without replacement
if the employment agreement is not extended after the end of
an appointment period, either at the Board member's request
or because there is serious cause that would have entitled the
Company to revoke the appointment or terminate the contract.
However, once granted, Stock Awards are not forfeited if the
employment agreement is terminated by mutual agreement at
the Company's request, or because of retirement, disability or
death, or in connection with a spinoff, the transfer of an oper-
ation, or a change of activity within the corporate group. In this
case, the Stock Awards will remain in effect upon termination
of the employment agreement and will be honored on expira-
tion of the restriction period.
B.4.1.2 REMUNERATION OF THE MEMBERS
OF THE MANAGING BOARD FOR FISCAL 2014
On the basis of the financial framework in the context of One
Siemens, at the beginning of the fiscal year the Supervisory
Board set the targets and weighting for the parameters of return
on capital employed (ROCE) and Free cash flow, together with
earnings per share (EPS), in each case on the basis of continu-
ing and discontinued operations. The definition of these param-
eters and their weighting acknowledges a sustainable enhance-
ment of corporate value. Additionally, in setting the target for
the variable compensation (bonus) for those Managing Board
members with responsibilities for Sector portfolios, the Super-
visory Board set economic value added (EVA) as a Sector-specific
target, as well as additional individual targets for all members of
the Managing Board so as to take fuller account of the individ-
ual Board members' performance. For this purpose, up to five
individual targets were generally defined; these take account of
such aspects as business performance in the Regions, imple-
mentation of portfolio measures, and customer satisfaction. An
external review of the appropriateness of the Managing Board's
compensation for fiscal 2014 confirmed that the remuneration
of the Managing Board resulting from target attainment for fis-
cal 2014 is to be considered appropriate. In light of this expert
review, and following a review of the achievement of the targets
set at the beginning of the fiscal year, the Supervisory Board
decided at its meeting on November 5, 2014, to set the variable
compensation (bonus), the Bonus Awards and Stock Awards to
be granted, and the pension benefit contributions as follows:
Variable compensation (bonus)
In setting the targets for the variable compensation (bonus) at
the beginning of fiscal 2014, the Supervisory Board took into
account that the Company continues to focus on a sustainable
appreciation of value. This focus is intended to enable the Com-
pany to maintain its financial flexibility and hold its own
against competitors even in periods of high market volatility:
The emphasis in terms of the sustainable enhancement of
value was on capital efficiency and capital structure. Target
values slightly higher than the prior-year figures were set in the
case of return on capital employed and substantially higher
than the prior-year figures in the case of Free cash flow. These
were agreed upon uniformly with all members of the Managing
Board. Moreover, the target values for the target parameters
were set on the basis of continuing and discontinued opera-
tions, so as to take full account of the Managing Board's overall
responsibility for the Company's economic situation, perfor-
mance and outlook. Additionally, targets were set taking
account of business expectations for fiscal 2014. Here capital
efficiency improved because of the absence of the expenses for
the Siemens 2014 program in comparison to the prior year, as
well as because of effects outside the Sectors.
108 | A. To our Shareholders
131 B.
Corporate Governance
148
132 B.1 Corporate Governance Report
136 B.2
144 B.4
138 B.3
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
165 B.5
Managing
Board
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Consolidated Financial Statements
-
247 | D.
In the event of a change of control that results in a substantial
change in the position of the Managing Board member
example, due to a change in corporate strategy or a change in
the Managing Board member's duties and responsibilities
the member of the Managing Board has the right to terminate
his or her contract with the Company for good cause. A change
of control exists if one or more shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling influence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an inter-
company agreement within the meaning of Section 291 of the
German Stock Corporation Act (Aktiengesetz), or if Siemens AG
is to be merged into an existing corporation or other entity. If
this right of termination is exercised, the Managing Board
member is entitled to a severance payment in the amount of
not more than two years' compensation. The calculation of the
annual compensation includes not only the base compensation
and the target amount for the bonus, but also the target
amount for the Stock Awards, in each case based on the most
recent completed fiscal year prior to termination of the con-
tract. The stock-based components for which a firm commit-
ment already exists will remain unaffected. There is no entitle-
ment to a severance payment if the Managing Board member
receives benefits from third parties in connection with a
change of control. Moreover, there is no right to terminate if
the change of control occurs within a period of twelve months
prior to a Managing Board member's retirement.
Evidence that this obligation has been met must first be pro-
vided after a four-year buildup phase, and updated annually
thereafter. If the value of the accrued holdings declines below
the minimum to be evidenced from time to time because the
market price of Siemens stock has fluctuated, the member of
the Managing Board must acquire additional shares.
Pension benefit commitments
The members of the Managing Board, like all Siemens AG
employees, are included in the Siemens Defined Contribution
Benefit Plan (BSAV). Under the BSAV, members of the Managing
Board receive contributions that are credited to their personal
pension account. The amount of the annual contributions is
based on a predetermined percentage which refers to the base
compensation and the target amount for the bonus. This per-
centage is decided upon annually by the Supervisory Board;
most recently it was set at 28%. In making its decision, the
Supervisory Board takes account of the intended level of provi-
sion for each individual, also considering the length of time for
108 | A. To our Shareholders
131 B.
Corporate Governance
146
132 B.1 Corporate Governance Report
136 B.2
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
(part of the Combined Management Report)
144 B.4
165 B.5
Compensation Report
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
which the individual has been a Managing Board member, as
well as the annual and long-term expense to the Company as a
result of that provision. The non-forfeitability of pension bene-
fit commitments is in compliance with the provisions of the
German Company Pensions Act (Betriebsrentengesetz). Special
contributions may be granted to Managing Board members on
the basis of individual decisions of the Supervisory Board. In
the case of new appointments of members of the Managing
Board from outside the Company, these contributions may
be defined as non-forfeitable from their inception. If a member
of the Managing Board earned a pension benefit entitlement
from the Company before the BSAV was introduced, a portion
of his or her contributions went toward financing this prior
commitment.
Members of the Managing Board are entitled to benefits under
the BSAV on reaching age 60, at the earliest, or age 62 for ben-
efit commitments made on or after January 1, 2012. As a rule,
the accrued pension benefit balance is paid out to the
Managing Board member in twelve annual installments. At the
request of the Managing Board member or of his or her surviv-
ing dependents, the pension benefit balance may also be paid
out in fewer installments or as a lump sum, subject to the
Company's consent. The accrued pension benefit balance may
also be paid out as a pension. As a further alternative, the
Managing Board member may choose a combination of
pay-
ment in one to twelve installments and payment of a pension.
If the pension option is chosen, a decision must be made as to
whether it should include pensions for surviving dependents.
If a member of the Managing Board dies while receiving a pen-
sion, benefits will be paid to the member's surviving depen-
dents if the member chose such benefits. The Company will
then provide a limited-term pension to surviving children until
they reach age 27, or age 25 in the case of benefit commitments
made on or after January 1, 2007.
Benefits from the retirement benefit system that was in place
before the BSAV are normally granted as pension benefits with
a surviving dependent's pension. In this case as well, a payout
in installments or a lump sum may be chosen instead of pen-
sion payments.
Members of the Managing Board who were employed by the
Company on or before September 30, 1983, are entitled to tran-
sition payments for the first six months after retirement, equal
to the difference between their final base compensation and the
retirement benefits payable under the corporate pension plan.
Commitments in connection with termination
of Managing Board membership
Managing Board contracts provide for a compensatory payment
if membership on the Managing Board is terminated pre-
maturely by mutual agreement, without serious cause. The
amount of this payment must not exceed the value of two
years' compensation and compensate no more than the re-
maining term of the contract (cap). The amount of the compen-
satory payment is calculated on the basis of base compensa-
tion, together with the variable compensation (bonus) and the
long-term stock-based compensation (Stock Awards) actually
received during the last fiscal year before termination. The
compensatory payment is payable in the month when the
member leaves the Managing Board. In addition, a one-time
special contribution is made to the BSAV. The amount of this
contribution is based on the BSAV contribution that the Board
member received in the previous year, and on the remaining
term of the appointment, but is limited to not more than two
years' contributions (cap). The above benefits are not paid if an
amicable termination of the member's activity on the Managing
Board is agreed upon at the member's request, or if there is
serious cause for the Company to terminate the employment
relationship.
-
for
-
171 | C. Combined Management Report
compen-
sation
measures and
remediation
President
and CEO:
3-times
653
908
195
305
114
188
50
75
31
42
2 Includes loss of variable and voluntary compensation elements, transfer and
suspension.
The "Tell us" help desk and the Company's ombudsman are two
secure reporting channels that can be used by our employees
and external stakeholders to report violations of external and
internal rules. Reports to these channels are passed on to our
Compliance Organization. Possible misconduct may also be
reported directly via the Managing Board or via supervisors
to the Compliance Organization and, in particular, to the
Compliance Officers in our individual company units. Our
employees regularly make use of this reporting channel. In fis-
cal 2014, the total number of compliance cases requiring
further inquiries or investigations reported via all the above-
mentioned reporting channels was 653. We believe that the
decrease from fiscal 2013 (908) is within the normal range of
variation.
The total number of disciplinary sanctions for compliance vio-
lations in fiscal 2014 was 195 (fiscal 2013: 305). The disciplinary
sanctions reported in a specific fiscal year do not all relate to
the compliance cases reported in the same period: disciplinary
sanctions are frequently not implemented in the year in which
a case was reported. This is due to the fact that a reported com-
pliance case has to undergo the Company's entire internal case
handling process (see top right), from the mandating and per-
forming of an internal investigation to the documentation of its
results in an investigation report that will form the basis for
related disciplinary sanctions and remediation measures.
Furthermore, a single reported compliance case may, for
instance, result in several disciplinary sanctions or in no disci-
plinary sanctions at all - for instance, because the employee
concerned meanwhile has left the company for some other
reason. Therefore, too, it is not possible to establish a direct
correlation between the numbers of reported compliance cases
and the numbers and types of disciplinary sanctions
implemented in a given reporting period.
In our view, the detected compliance violations in our Company
in the past fiscal year demonstrate once again that our
Compliance System was properly designed and is being imple-
mented effectively.
The "Ask us" help desk encourages our employees to ask com-
pliance-related questions. Incoming questions are automati-
cally forwarded without prior registration to the Compliance
Officers responsible for the employees' entities. Furthermore,
all employees can pose questions directly to the Compliance
Officers responsible for their respective units. Most employee
questions are now being handled and answered in this way.
These questions are not registered either. In light of these
developments, we have decided to discontinue the reporting
of inquiries submitted to the "Ask us" help desk.
108 | A. To our Shareholders
131 B.
Corporate Governance
140
132 B.1
136 B.2
2013
2014
Year ended September, 30
1 Continuing and discontinued operations.
The identification of compliance risks in individual Siemens
entities worldwide (CRA) and the Group-level compliance risk
analysis are complemented by an interdisciplinary exchange
during the quarterly Compliance Risk Radar meeting.
B.3.3 Business partners and suppliers
Cooperation with third parties such as sales agents, customs
clearing agents, consultants, distributors and resellers is part
of Company operations and often essential in order to reach
certain areas of the market. At the same time, however, the
Company may be liable for the actions of these third parties.
Our mandatory process and tool for business-partner com-
pliance due diligence is designed to help all Siemens entities
conduct risk-based integrity checks of business partners.
Transparent and risk-oriented decisions about a business part-
ner relationship are based on high-quality compliance due
diligence.
The management of each Siemens unit is responsible for the
unit's utilization of business partners. This means that busi-
ness partners must be carefully selected and appropriately
monitored and managed throughout the course of a business
relationship.
In fiscal 2014, we carried out a project to reinforce the effective-
ness of our business-partner compliance due diligence process
and of management's assessment of the related compliance
risks. Key outcomes of the project include the regular review of
business partner portfolios at the Lead Countries and Divisions
and on-site compliance checks for selected types of business
partners as part of due diligence. Both measures are scheduled
for implementation in fiscal 2015. Furthermore we have
introduced a web-based compliance training program, which is
mandatory for certain business partners before they can enter
into a business relationship with our Company. Other business
partners may also take part in the training program on a volun-
tary basis.
We require our suppliers to comply with our Code of Conduct
for Siemens Suppliers, which includes compliance with all
applicable laws and, in particular, the prohibition of corrupt
activities. We also require our suppliers to support the Code's
implementation in their own supply chains. The Code of
Conduct is based on the ten principles of the United Nations
Global Compact. Instruments such as sustainability self-assess-
ments by suppliers and sustainability audits by external audi-
tors enable us to systematically identify potential risks in our
supply chain and to monitor whether our suppliers are in com-
pliance with the Code's requirements.
171 | C. Combined Management Report
247 | D.
Consolidated Financial Statements
Corporate Governance Report
337 | E.
139
B.3.4 Compliance training
One focus of our preventive measures under the Compliance
System is to provide compliance training to all managers and
employees who hold positions with a particular risk profile. In
fiscal 2014, the definition of these "sensitive functions" was ex-
panded and specified more precisely. In accordance with this
definition, the Compliance Officers of the relevant Company
units identify the managers and employees whose participa-
tion is required and ensure that they attend the training
sessions. They monitor and confirm the fulfillment of these
requirements at regular intervals.
Our Company-wide compliance training portfolio consists of
in-person and web-based training programs. The in-person
training programs also provide our employees with an opportu-
nity to discuss correct behavior based on day-to-day work
examples. In fiscal 2013, we introduced an annual Integrity
Dialog to maintain a high awareness of integrity and compli-
ance topics at Siemens. The Dialog, which is conducted across
the entire Company, serves as a forum for managers to discuss
recent compliance matters with their employees.
The assessment and analysis of compliance risks for the oper-
ating units and at Group level offers important indicators that
help us develop and define the focus of our training activities,
including the selection of themed modules for the annual
events held in conjunction with the Integrity Dialog. Our oper-
ating units address specific challenges by enhancing their
training activities with additional topics from their own busi-
nesses or by extending the mandatory target groups for spe-
cific compliance training programs in their units. In this way,
our training activities reflect both Siemens-wide topics and the
key topics specific to the operating units.
B.3.5 Compliance indicators
Compliance indicators¹
Compliance cases reported
Disciplinary sanctions
therein warnings
therein dismissals
Therein other²
Additional Information
144 B.4
138 B.3
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
141
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
If substantial progress is to be made in combating corruption
and fostering fair competition, as many stakeholders as pos-
sible must act collectively. That's why we have joined forces
with other organizations to fight corruption and promote
ethical markets through collective action and the Siemens
Integrity Initiative.
and Siemens Integrity Initiative
B.3.8 Collective Action
Effective fiscal 2015, the consideration of weak compliance per-
formance on the part of managers has been made a mandatory
element of the Company's bonus regulations. In addition, re-
lated performance issues will also be addressed through the
Compliance Organization. In light of the above and to reinforce
the recognition of exemplary commitment to integrity and
compliance within the Company, an annual award for integrity
and compliance will be presented starting in fiscal 2015. The
award will honor outstanding examples of management
responsibility for compliance and employee commitment to
compliance. In addition to recognition by Company manage-
ment, the competition will promote best practices within
Siemens and encourage others to follow these examples.
Achievements during fiscal 2014 include a collective action in
Colombia: in August 2014, a code of conduct was signed for the
first time by around 190 companies associated with the Colom-
bian Chamber of Goods and Oil Services (CAMPETROL) as well
as several oil and gas operators. All of the signatories, of whom
Siemens is one, are committed to initiating corporate ethics
programs that abolish and prohibit activities such as bribery
and the demand for and offering of undue favors. The signato-
ries have also agreed to disclose serious cases to CAMPETROL
and the Regional Center of the United Nations Global Compact,
which will act as a neutral facilitator.
integrity. This approach proved useful in the following period.
It was subsequently replaced by a specific process for dealing
with weak compliance performance on the part of managers.
As part of this process, a corrective factor is applied to bonus
payments if remedial action is not taken following the issuance
of a "yellow card."
B.3.7 Company-wide award
for integrity and compliance
Data protection laws in the European Economic Area (EEA)
require a recipient of personal data located outside the EEA to
provide a level of data protection equivalent to the level of data
protection in the EEA. As a result, the instrument of Binding
Corporate Rules (BCR) was developed at European Union level
to allow multinational groups of companies, such as Siemens,
to make transfers of personal data across borders and between
group companies that implement the BCR in compliance with
the aforementioned requirement. In this context, Siemens
has issued, effective fiscal 2015, its BCR for the Protection of
Personal Data within the Company.
In line with our compliance priorities for fiscal 2014, we've con-
tinued to integrate data privacy into our Company's Compliance
System. Selected measures include the integration of data
privacy into the Compliance Risk Assessments, data privacy
reporting via our quarterly Compliance Performance Review
and the inclusion of data privacy incidents in our global compli-
ance case tracking tool.
B.3.6 Data privacy
Compliance investigation
investigation
mandating an
before
the allegation
or evaluating
In 2008, we made compliance excellence a component of the
incentive system for our senior management. This system was
not designed to honor basic compliance with the law and inter-
nal regulations, which is always expected. Instead, it focused
on rewarding managers for "going the extra mile" in imple-
menting our Compliance Program and driving a culture of
The Corporate compliance risks are derived from these consol-
idated results, which are then shared with the Company's busi-
nesses. As in the CRA process, relevant risks are reported to
Siemens' Enterprise Risk Management (ERM), and measures to
reduce the risks are drawn up and implemented.
To support the enforcement of the code of conduct, a compli-
ance pact has also been signed, involving a whistleblower
channel - supported by the Secretary of Transparency in the
President's Office - and sanctions in cases of wrongdoing.
The status of the 31 projects funded within the first funding
round-based upon the settlement with the World Bank -, with
a total contractual funding volume of US$37.7 million, was
presented to the World Bank in April 2014, together with the
Siemens Integrity Initiative Annual Report 2013.
165 B.5
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
| Compliance investigation process
Compliance case
Allegation
received
Assessment
carried out
Mandating
Research and
planning
The global Siemens Integrity Initiative was launched by Siemens
on December 9, 2009. It earmarks more than US$100 million for
supporting organizations and projects fighting corruption and
fraud through Collective Action, education and training. The
initiative focuses on supporting projects that have a clear im-
pact on the business environment, can demonstrate objective
and measurable results and have the potential to be scaled up
and replicated. The Siemens Integrity Initiative constitutes one
element of the July 2009 settlement between Siemens and the
World Bank and the March 2013 settlement between Siemens
and the European Investment Bank (EIB).
Investigation
Disciplinary
by examining
> Manage risk & assurance: we want to continue providing our
businesses with the appropriate level of assurance within
our Compliance System. We constantly monitor external and
internal developments and, where necessary, update the
compliance safeguards for our Company.
> Committed to business: our Compliance Organization and
our businesses must work hand-in-hand to effectively miti-
gate compliance risks. Without compromising our integrity
standards, we'll also intensify support for our businesses in
order to allow them to seize business opportunities even in
challenging environments.
> Foster integrity: a clear tone from the top, coupled with tan-
gible ownership of compliance at all management levels, is
essential. We will continue to help our managers meet this
responsibility. Our new Company-wide award for integrity
and compliance will play an important role in this respect.
Beyond the boundaries of our organization, we will continue
to cooperate with our stakeholders in order to combat cor-
ruption and promote fair markets.
Compliance will also make further contributions to Vision
2020. The following five compliance priorities define the levers
for the future development of compliance at Siemens:
Ownership culture is a cornerstone of Vision 2020, and the in-
tegrity of our employees' decisions and actions is an essential
part of it. Every employee is expected to act responsibly and
to live up to this principle. Our Compliance System aims to
support Siemens employees in making risk-based decisions
with integrity - this is how compliance can ultimately provide
reliable assurance to our Company and its employees and at
the same time help strengthen an ownership culture at
Siemens. Therefore, ownership culture lies at the heart of our
compliance priorities.
Since their introduction in fiscal 2011, our compliance priorities
have provided the focus of our compliance-related activities
and the basis for the ongoing development of our Compliance
System. In light of our experience to date and above all - in
line with our entrepreneurial concept Vision 2020, we have
decided to develop this approach further in order to create a
reliable long-term perspective for the ongoing development of
compliance at Siemens.
B.3.9 Our revised compliance priorities -
Guidance until 2020
The second funding round was announced on June 27, 2013,
and the deadline for applications was August 29, 2013. We
received more than 180 applications from about 60 countries.
In a two-stage review and due diligence process, we selected
projects which are to receive approximately US$30.0 million of
total funding over a period of three to five years. We began con-
cluding the funding contracts in October 2014.
Preparation
of Base
In fiscal 2014, the CRA was performed for a total of 14 top-risk
countries. The CRA results have been incorporated into the
Group-level compliance risk analysis, which aims to determine
systematic and globally recurring compliance risks to the
Company as quickly as possible. As well as the CRA results, this
analysis of the overall Group-level compliance risks takes into
account, for example, the insights from compliance controls -
the ongoing assessment of the operation of our compliance
processes to ensure their effectiveness and the results of
case-related investigations.
> In even-numbered years, the CRA process is performed for
so-called top-risk countries in order to complement the anal-
yses at Lead Country/Division level with in-depth risk assess-
ments for selected countries. We will identify these countries
in advance based on an analysis of external and internal
compliance risks.
The system and levels for the remuneration of the Managing
Board are determined and reviewed regularly by the full Super-
visory Board, based on proposals from the Compensation Com-
mittee. The Supervisory Board reviews remuneration levels
annually to ensure that they are appropriate. In that process,
the Company's economic situation, performance and outlook,
as well as the tasks and performance of the individual Manag-
ing Board members, are taken into account. In addition, the
Supervisory Board considers the common level of remunera-
tion in comparison with peer companies and with the compen-
sation structure in place in other areas of the Company. Here it
also takes due account of the relationship between the Manag-
ing Board's remuneration and that of senior management and
staff, both overall and with regard to its development over
time, and for this purpose the Supervisory Board has also
determined how senior management and the relevant staff
are to be differentiated. The remuneration system that was in
place for the Managing Board members for fiscal 2014 was
approved by 93.98% at the Annual Shareholders' Meeting on
for their remuneration to be commensurate with the Company's
size and economic position. Exceptional achievements are to be
rewarded adequately, while falling short of goals is intended to
result in an appreciable reduction in remuneration. The
Managing Board's compensation is also structured so as to be
attractive in comparison to that of competitors, with a view to
attracting outstanding managers to our Company and keeping
them with us for the long term.
Target compensation
| Remuneration system for Managing Board members for fiscal 2014
The remuneration system for the Managing Board at Siemens is
intended to provide an incentive for successful corporate man-
agement with an emphasis on sustainability. Members of the
Managing Board are expected to make a long-term commitment
to and on behalf of the Company, and may benefit from any sus-
tained increase in the Company's value. In the interest of that
aim, a substantial portion of their total remuneration is linked to
the long-term performance of Siemens stock. A further aim is
B.4.1.1 REMUNERATION SYSTEM
B.4.1 Remuneration of members
of the Managing Board
This section is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of
the German Commercial Code (Handelsgesetzbuch), German
Accounting Standards (Deutsche Rechnungslegungs Standards),
and International Financial Reporting Standards (IFRS). The
Compensation Report is an integral part of the Combined
Management Report.
The Compensation Report outlines the principles underlying
the determination of the total compensation of the members of
the Managing Board of Siemens AG, and sets out the structure
and level of the remuneration of the Managing Board mem-
bers. It also describes the policies governing, and levels of, the
compensation paid to Supervisory Board members.
||| B.4 Compensation Report
143
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
Continue to further optimize and streamline
our compliance processes.
Effective Processes
Continue providing our businesses with
the appropriate level of assurance within
our Compliance System.
Manage Risk & Assurance
Vision 2020
Maximum amounts of compensation
Share Ownership Guidelines
Stock-based
components
(Bonus Awards
and Stock
Awards):
max. 300% of
the respective
target amount
max. 1.7-times
of target
compensation
Compensation
overall
compen-
sation
Base
Bonus (cash):
0-200%
add. +20%
adjustment
compen-
sation
Base
25% in Bonus Awards
> 75% granted in cash and
add. ±20% adjustment
Processes
> variability: 0-200%
capital employed, Free cash flow,
> target parameter: Return on
Variable compensation (bonus)
> variability: 0-200% respectively
> target parameter: Ø earnings per share
compared to 5 competitors
> target parameter: stock price
Long-term stock-based compensation
Cash
compen-
sation
Stock-
based
compen-
sation
individual targets
Effective
Manage Ri
Assurance
Our compliance priorities as of fiscal 2015 are illustrated and
briefly described in the figures below. These priorities, which
will also guide our activities for fiscal 2015, will be supple-
mented by focus areas and activities for each fiscal year.
> Effective processes: utilizing our compliance portfolio man-
agement system, we will continue to improve our compliance
processes in order to optimize efficiency and keep opera-
tional burdens as low as possible while further strengthen-
ing the assurance against compliance risks that those pro-
cesses provide.
> Excellent compliance team: we expect our Compliance
Officers to combine compliance expertise with business
understanding, and we offer them attractive career paths.
That's why we will continue working to develop a first-class
learning and development landscape for our Compliance
Organization. We will also reinforce close collaboration
across the Company's global Compliance Organization to
ensure that we provide the best possible support for our
businesses.
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
144 B.4
The effectiveness of compliance at Siemens is based on
the global governance of our Compliance Organization and
clear-cut reporting lines and close cooperation between our
Corporate Governance Report
142
Corporate Governance
131 B.
of the investi-
gation report
diligence process. The company's compliance risk assessment
process has been further developed: Besides other improve-
ments Data Privacy has been included therein as part of our
activities to integrate Data Privacy into the Compliance System.
B.3.2 Compliance risk management
-
Our Compliance Risk Assessment (CRA) process requires that
CEOs and managers in the Company together with the
relevant Compliance Officers systematically determine and
assess the compliance risks to their units on a regular basis.
-
A CRA was performed for all the Company's operating units in
fiscal 2013. Based on our experience to date and the analysis
of these results, the CRA process has been further developed.
Starting fiscal 2014, the CRA is performed in two different ways:
132 B.1
136 B.2
> In odd-numbered years (starting in fiscal 2015), the CRA
process will be performed at Lead Country/Division level.
| Compliance priorities for fiscal 2015
Compliance Officers around the world and our Company units.
The other pillar of our Compliance System with its three
action levels Prevent, Detect and Respond – is the requirement
that all Siemens managers assume personal responsibility for
compliance at their respective units.
e Risk &
Team
Compliance
Excellent
Culture
Ownership
Business
Committed to
Integrity
Foster
-
Compliance Priorities
Foster Integrity
Provide an excellent compliance team through
a first-class learning and development land-
scape and close collaboration.
Excellent Compliance Team
Further intensify cooperation between the
Compliance Organization and our businesses
and reinforce our Compliance System's
market and customer focus.
Committed to Business
WWW.SIEMENS.COM/COMPLIANCE
→ C.9 REPORT ON EXPECTED DEVELOPMENTS AND ASSOCIATED MATERIAL
OPPORTUNITIES AND RISKS on pages 225-241 and → NOTE 28 LEGAL
PROCEEDINGS in D.6 NOTES TO CONSOLIDATED FINANCIAL STATE-
MENTS on pages 293-295 of this Annual Report.
For further information, please see:
B.3.10 Further information
and legal proceedings
We will continue to further develop our compliance system in
order to adapt it to evolving requirements in the field of
compliance. Our overall aim remains unchanged: we want to
anchor integrity permanently throughout our company in
order to ensure sound business decisions based on clear princi-
ples of integrity.
Support business management to meet its
responsibilities for compliance and further
strengthen the culture of integrity in our
Company and beyond.
108 | A. To our Shareholders
Base
compen-
sation
998,400
Klaus Helmrich
Dr. Ralf P. Thomas
Total
1
The amount of the obligation is based on a member's
average base compensation for the four years prior to
the respective date of proof. The amount shown here is
3 As per March 14, 2014 (date of proof), including Bonus
Awards.
Obligations under Share Ownership Guidelines
Percentage of base
compensation¹
Value¹
Number of shares²
Required
Due date for initial
measurement
of adherence
200%
One-year variable compensation (bonus) -
Cash component²
Total
61,222
FY 2014
998,400
34,938
2,465
Fixed compensation (base compensation)
Fringe benefits¹
FY 2013
Lisa Davis
CFO
Dr. Roland Busch
(Amounts in number of units or €)
94,202
200%
1,819,250
19,345
680%
6,184,635
65,766
200%
1,819,250
19,345
825%
7,504,674
79,803
6,741,625
71,688
22,548,065
239,771
2 Based on the average Xetra opening price of €94.04
for the fourth quarter of 2013 (October-December).
The following table shows the proof-of-compliance obligations
of the other Managing Board members in view of the Share
Ownership Guidelines:
Managing Board members required to show proof in subsequent years
8,858,756
Dr. Ralf P. Thomas
Performance-based
components
1,594,910
1,426,193
Multi-year variable compensation
2,016,262
558,849
1,940,184
1,185,593
95,184
71,843
1,845,000
FY 2014
FY 2013
1,113,750
One-year variable compensation (bonus) -
Cash component²
Total
Fixed compensation (base compensation)
Fringe benefits¹
Joe Kaeser
President and CEO
without long-term incentive
effect, non-stock-based
with long-term incentive
effect, stock-based
Performance-based
components
Non-performance-
based components
Siemens Stock Awards (restriction period: 2010-2013)
Siemens Stock Awards (restriction period: 2009-2012)
Share Matching Plan (vesting period: 2011-2013)
Share Matching Plan (vesting period: 2010-2012)
Other³
without long-term incentive
effect, non-stock-based
with long-term incentive
effect, stock-based
0
1,299,629
based components
Non-performance-
(Amounts in €)
| Managing Board members serving as of September 30, 2014
6,675,626
3,674,958
Total (GCGC)
1,058,566
504,323
Service cost
65,704
5,617,060
3,170,635
Total
0
0
126,564
202,848
0
0
1,392,062
856%
32,998
3,103,125
of fiscal 20141
Entitlement to
matching shares
2,216
Due during
fiscal year
Entitlement to
matching shares
2,216
Forfeited during
fiscal year
Entitlement to
matching shares
Balance at end
of fiscal 201412
Entitlement to
matching shares
Dr. Roland Busch
Lisa Davis 3
-
Klaus Helmrich
Prof. Dr. Hermann Requardt
1,386
3
3
1,386
Prof. Dr. Siegfried Russwurm
Dr. Ralf P. Thomas
Balance at beginning
2,846
Joe Kaeser
Managing Board members
4 Barbara Kux resigned from the Managing Board effective
at the end of the day on November 16, 2013.
5 Peter Y. Solmssen resigned from the Managing Board
effective at the end of the day on December 31, 2013;
his employment contract ends effective March 31, 2015.
See the information on → PAGE 153 for the Stock
Awards committed for the months of January through
September 2014.
6 Dr. Michael Süß resigned from the Managing Board
effective at the end of the day on May 6, 2014; his em-
ployment agreement ended effective September 30,
2014. See the information on → PAGE 153 for the Stock
Awards granted for the remaining term of his contract
for the period from May 7 through September 30, 2014.
108 | A. To our Shareholders
131 B.
Corporate Governance
158
132 B.1 Corporate Governance Report
136 B.2
144 B.4
138 B.3
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
165 B.5
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Shares from the Share Matching Plan
In fiscal 2011, the members of the Managing Board were
entitled for the last time to participate in the Siemens Share
Matching Plan, and under the plan were entitled to invest up to
50% of the annual gross amount of their variable cash compen-
sation (bonus) determined for fiscal 2010 in Siemens shares.
After expiration of a vesting period of approximately three
years, the plan participants will receive one free matching
share of Siemens stock for every three Siemens shares acquired
and continuously held under the plan, provided the partici-
pants were employed without interruption at Siemens AG or a
Siemens company until the end of the vesting period. The fol-
lowing table shows the development of the matching share
entitlements of the individual members of the Managing Board
in fiscal 2014.
(Amounts in number of units)
serving as of September 30, 2014
161
Former members
of the Managing Board
159
Share Ownership Guidelines
The deadlines by which the individual members of the Man-
aging Board must provide first-time proof of compliance with
the Siemens Share Ownership Guidelines vary from member
to member, depending on when the member was appointed
to the Managing Board. The following table shows the number
of Siemens shares that were held by Managing Board mem-
bers in office at September 30, 2014, as of the deadline in
March 2014 for showing compliance with the Share Owner-
ship Guidelines, and that are to be held permanently with a
view to future deadlines.
(Amounts in number of units or €)
Managing Board members serving as
of September 30, 2014, and required
to show proof as of March 14, 2014
Joe Kaeser
Prof. Dr. Hermann Requardt
Prof. Dr. Siegfried Russwurm
Total
Obligations under Share Ownership Guidelines
Required
Proven
Percentage of base
compensation¹
Value¹
Number of shares²
Percentage of base
compensation¹
Value² Number of shares³
1
The amount of the obligation is based on a member's
average base compensation for the four years prior to
the respective date of proof.
300%
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
Brigitte Ederer4
Barbara Kux 5
Peter Y. Solmssen 6
Dr. Michael Süß7
Total
6,451
3,766
-
0
2,685
(Amounts in €)
2,685
Amounts may include entitlements acquired before the
member joined the Managing Board.
2 The entitlements of the Managing Board members
serving as of September 30, 2014, had the following fair
values: Joe Kaeser €0 (2013: €146,901), Dr. Roland Busch
€0 (2013: €0), Lisa Davis €0 (2013: €0), Klaus Helmrich
€0 (2013: €527), Prof. Dr. Hermann Requardt €0 (2013:
€92,011), Prof. Dr. Siegfried Russwurm €0 (2013: €0) and
Dr. Ralf P. Thomas €133,392 (2013: €152,696). The enti-
tlements of former Managing Board members have the
following fair values: Brigitte Ederer €0 (2013: €0),
Barbara Kux €0 (2013: €0), Peter Y. Solmssen €0 (2013:
€0), and Dr. Michael Süß €0 (2013: €0). The above fair
values also take into account that the shares acquired
under the Base Share Program as part of the Share
Matching Plan were provided with a Company subsidy
(for additional information on the Base Share Program
see → NOTE 32 SHARE-BASED PAYMENT in → D.6 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS).
3 Lisa Davis was elected a full member of the Managing
Board effective August 1, 2014.
4 Brigitte Ederer resigned from the Managing Board
effective at the end of the day on September 30, 2013.
5 Barbara Kux resigned from the Managing Board effective
at the end of the day on November 16, 2013.
6 Peter Y. Solmssen resigned from the Managing Board
effective at the end of the day on December 31, 2013;
his employment contract ends effective March 31, 2015.
7 Dr. Michael Süß resigned from the Managing Board
effective at the end of the day on May 6, 2014; his
employment agreement ended effective September 30,
2014.
171 | C. Combined Management Report
1
In deviation from the multi-year variable compensation granted
for fiscal 2014 and shown above, this table includes the actual
figure for multi-year variable compensation granted in previous
years and allocated in fiscal 2014.
| Managing Board members serving as of September 30, 2014
The following table shows allocations during or for fiscal 2014,
as the case may be, for fixed compensation, fringe benefits,
one-year variable compensation, and multi-year variable com-
pensation - broken down by the relevant years for which they
were subscribed, as well as the expense of pension benefits.
Peter Y. Solmssen?
Member of the Managing Board
until December 31, 2013
FY 2014
FY 2013
Barbara Kux6
Member of the Managing Board
until November 16, 2013
FY 2013
FY 2014
118,680
900,000
0
900,000
FY 2014
FY 2013
Member of the Managing Board
until September 30, 2013
Brigitte Ederer5
4,120,380
3,560,233
560,147
2,811,298
519,915
3,331,213
56,005
0
42,393
0
62,071
3,684,352
539,849
4,224,201
2,951,530
499,761
3,451,291
2,488,302
520,994
3,009,296
Dr. Michael Süß8
Member of the Managing Board
until May 6, 2014
1,688,282
520,698
2,208,980
900,000
0
1,192,671
509,312
227,441
427,574
0
855,148
621,563
23,060
36,158
1,003,658
598,503
FY 2014
FY 2013
967,500
232,200
8,130
240,330
32,977
932,977
4,909
123,589
968,048
0
942,571
68,048
42,571
4,222,710
2,818,722
561,000
3,099,746
0
590,020 480,000
748,800
0
0 4,498,800
1,797,120
0
0 1,797,120 483,750 748,800
3,748,800 1,934,354 1,359,243
748,800 537,124 340,461
0
427,613 348,775
0
1,545,347 1,163,786
450,000 748,800
1,081,989
1,081,989
1,081,989
83,589
83,589
83,589
527,714
2,963,676
520,698
3,484,374
335,011
2,973,443 1,060,857
0
1,500,000 737,545 600,018
1,500,000 659,685 418,764
5,094,560 3,451,148 3,190,032 1,081,989
520,994 520,994 520,994 499,761 539,849 539,849
3,494,437 1,581,851 5,615,554 3,950,909 3,729,881 1,621,838 6,059,409
520,736
2,154,028
1,403,988
2,538,746
1,633,292
0
14,749
0
FY 2013
September 30, 2013
174,626
1,392,062
Managing Board until
Brigitte Ederer 12
537,110 1,021,363
3,504,508 3,462,595
1,046,148
3,270,791
427,574
2,941,250
539,849
5,519,560
0 1,875,000
1,875,000
0
Member of the
3 Brigitte Ederer resigned from the Managing Board
effective at the end of the day on September 30, 2013.
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
(part of the Combined Management Report)
590,020
527,714
0
488,586
598,503
174,150 483,750
272,167 1,577,456
68,396 459,722
0 427,613
118,680 450,000
104,204 1,545,347
450,000
0 1,545,347
0 427,613
0
1,117,734
0
900,000
621,563
23,060
36,158
1,003,658
598,503
967,500
232,200
8,130
240,330
118,680 900,000
4,909 32,977
123,589 932,977
0 590,020
68,048
968,048
0 527,714
0 2,963,395
Allocations
154
153
ber 2015 at the closing price of Siemens stock in Xetra trading
on May 6, 2014.
15 Dr. Michael Süß resigned from the Managing Board effective
at the end of the day on May 6, 2014; his contract ended
effective as of September 30, 2014. In addition to his total
compensation shown above as a member of the Managing
Board, Dr. Süß received the following compensation for the
remaining term of his contract from May 7 to September 30,
2014: fixed compensation of €399,897, fringe benefits of
€12,470, variable compensation (bonus) of €315,171, and
Siemens Stock Awards in the amount of €326,425. According
to the provisions of the contract, the variable compensation
(bonus) for fiscal 2014 will be granted entirely in cash and the
Siemens Stock Awards will be settled in cash in Septem-
14 Peter Y. Solmssen resigned from the Managing Board effective
at the end of the day on December 31, 2013; his contract with
the Company ends effective as of March 31, 2015. In addition
to his total compensation as a member of the Managing
Board, as shown above, Mr. Solmssen received the following
compensation in the months of January through Septem-
ber 2014: fixed compensation of €696,600, fringe benefits of
€160,717, variable compensation (bonus) of €719,465, and
Siemens Stock Awards in the amount of €611,240. He was
also reimbursed for relocation expenses of €270,211 plus the
associated tax of €241,373, in accordance with the commit-
ment he received when he took office.
13 Barbara Kux resigned from the Managing Board effective at
the end of the day on November 16, 2013.
174,626 427,574 204,992 459,642 471,698
402,419 2,905,898 717,489 3,040,756 1,581,847
427,574
2,940,969
0
0
855,148
2,915,453
526,669 526,160 526,771 530,392 570,428
873,142 3,454,484 1,213,418 3,595,256 2,279,080
0 3,489,129
0 525,734
287,754
200,832
1,708,652
590,020
527,714
120,018
83,753
686,647 3,064,864
61,383 590,020
42,821 527,714
346,473 2,928,324
2,960,305
525,886
3,486,191
0
942,571
0
March 2016
200%
1,996,800
21,234
March 2018
7,696,114
81,840
based on average base compensation since the mem-
ber's initial appointment.
108 | A. To our Shareholders
131 B.
Corporate Governance
160
2 Based on the average Xetra opening price of €94.04 for
the fourth quarter of 2013 (October-December).
132 B.1 Corporate Governance Report
136 B.2
144 B.4
138 B.3
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
165 B.5
19,440
1,828,114
200%
March 2019
42,571
900,000
0
900,000
FY 2014
FY 2013
May 6, 2014
Dr. Michael Süß 15
Member of the
Managing Board until
FY 2013
Compensation Report
Peter Y. Solmssen 14
Member of the
Managing Board until
December 31, 2013
FY 2014
FY 2014
Managing Board until
November 16, 2013
FY 2014
Member of the
Barbara Kux 13
19,932
March 2016
200%
1,996,800
21,234
FY 2013
FY 2014
(max)
998,400
2 Lisa Davis was elected a full member of the Managing
Board effective August 1, 2014.
68,754
2,660,180
526,160
3,186,340
21,048
0
56,005
0
56,005
1,746,282
526,669
2,272,951
2,588,293
525,734
3,114,027
509,312
0
525,886
2,551,046
509,312
2,025,160
0
0
0
0
0
55,545
0
0
1,893,389
526,771
2,420,160
0
1,940,539
530,392
2,470,931
Joe Kaeser
serving as of September 30, 2014
Managing Board members
(Amounts in €)
Defined benefit obligation² for all pension
commitments excluding deferred compensation³
FY 2013
FY 2014
FY 2013
Total contributions¹ for
The following table shows individualized details of the contri-
butions (additions) under the BSAV for fiscal 2014 as well as the
defined benefit obligations for the pension commitments.
The contributions under the BSAV are added to the personal
pension accounts each January following the close of the fiscal
year, with value date on January 1. Until the beneficiary's time
of retirement, the pension account is credited with an annual
interest payment (guaranteed interest), currently 1.75%, on Jan-
uary 1 of each year.
For fiscal 2014, the members of the Managing Board were
granted contributions under the BSAV totaling €5.1 million
(2013: €6.4 million), based on a resolution of the Supervisory
Board dated November 5, 2014. Of this amount, €5.0 million
(2013: €6.3 million), related to contributions to their personal
pension accounts and the remaining €0.1 million (2013:
€0.1 million) to funding of pension commitments earned prior
to transfer to the BSAV.
Pension benefit commitments
155
In addition to the compensation for fiscal 2014 for his activity as member
of the Managing Board presented above, Dr. Süß received the following
compensation for the remaining term of his employment agreement
from May 7 to September 30, 2014: fixed compensation of €399,897,
fringe benefits of €12,470 and variable compensation (bonus) of €315,171.
8 Dr. Michael Süß resigned from the Managing Board effective at the end
of the day on May 6, 2014; his contract ended effective as of Septem-
ber 30, 2014. According to his provisions of the contract, his variable
compensation (bonus) for fiscal 2014 will be granted entirely in cash.
7 Peter Y. Solmssen resigned from the Managing Board effective at the end
of the day on December 31, 2013; his contract with the Company ends
effective as of March 31, 2015. In addition to the compensation for his
activity as a member of the Managing Board in fiscal 2014, as shown above,
Mr. Solmssen received the following compensation for the months of
January through September 2014: fixed compensation of €696,600, fringe
benefits of €160,717, variable compensation (bonus) of €719,465 and
Siemens Stock Awards in the amount of €611,240. He was also reimbursed
for relocation expenses of €270,211 plus the associated tax of €241,373, in
accordance with the commitment he received when he took office.
6 Barbara Kux resigned from the Managing Board effective at the end of
the day on November 16, 2013.
2,207,912
570,428
1,637,484
Dr. Roland Busch
0
0
523,175
477,239
1,392,062
471,698
459,642
204,992
427,574
1,299,629
commit-
ments of
Forfeitable
commit-
ments of
Bonus
(Amounts in number of units)
Awards
Stock
Awards
Forfeitable commitments
of Stock Awards
(Target
attainment
depending
Non-
forfeitable
commit-
ments of
Bonus
Awards
0
0
509,312
1,392,062
0
0
0
0
0
0
0
0
477,239
0
1,299,629
0
1,137,126
0
227,441
523,175
0
1,392,062
0
0
Lisa Davis 4
Klaus Helmrich
FY 2014
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
132 B.1 Corporate Governance Report
136 B.2
156
Corporate Governance
131 B.
108 | A. To our Shareholders
employment contract - that is, from May 7 to September 30,
2014 - as well as a special contribution to the BSAV. Dr. Süß
received 5,429 Stock Awards for the period from May 7 through
September 30, 2014, which will be settled in cash in Septem-
ber 2015 according to the provisions of his contract and in
connection with the mutually agreed-upon termination of his
Managing Board membership. Mr. Solmssen received 10,166
Stock Awards and 3,317 Bonus Awards for the period from Jan-
uary through September 2014. Other than this, former Manag-
ing Board members and their surviving dependents received no
(2013: 5,615) Stock Awards.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€24.2 million (2013: €33.1 million) in fiscal 2014. This figure in-
cludes the compensation for former Managing Board member
Peter Y. Solmssen for the period from January through Septem-
ber 2014, together with reimbursement of relocation costs and
the associated tax. Furthermore, it includes the compensatory
payment connected with the mutually agreed-upon termina-
tion of the Managing Board membership of Dr. Michael Süßẞ as
of May 6, 2014, the compensation for the remaining term of his
8 Dr. Michael Süß resigned from the Managing Board
at the end of the day on May 6, 2014; his employment
agreement ended effective September 30, 2014.
7 Peter Y. Solmssen resigned from the Managing Board
at the end of the day on December 31, 2013; his employ-
ment agreement ends effective March 31, 2015.
6 Barbara Kux resigned from the Managing Board effective
at the end of the day on November 16, 2013.
5 Brigitte Ederer resigned from the Managing Board
effective at the end of the day on September 30, 2013.
4 Lisa Davis was elected a full member of the Managing
Board effective August 1, 2014.
3 Deferred compensation totals €10,057,923 (2013:
€8,595,135), including €3,171,486 for Joe Kaeser (2013:
€2,914,462), €302,595 for Klaus Helmrich (2013:
€276,893), €1,381,365 for Prof. Dr. Hermann Requardt
(2013: €1,275,259), and €49,732 for Dr. Ralf P. Thomas
(2013: €46,155) as well as for former Managing Board
members: €4,697,955 for Barbara Kux (2013: €4,082,366),
and €454,790 for Peter Y. Solmssen (2013: €0).
for Peter Y. Solmssen, of €812,700 (2013: €0) for Dr. Mi-
chael Süẞ, and of €2,745,615 (2013: €0) for Lisa Davis.
2 The defined benefit obligations reflect one-time special
contributions to the BSAV of €3,558,315 (2013:
€22,480,000) for new appointments from outside the
Company, as well as special contributions in connection
with departures from the Managing Board: in the
amount of €0 (2013: €10,740,000) for Peter Löscher, of
€0 (2013: €882,000) for Brigitte Ederer, of €0 (2013:
€340,000) for Barbara Kux, of €0 (2013: €10,518,000)
The expenses (service cost) recognized in accordance
with IFRS in fiscal 2014 for Managing Board members'
entitlements under the BSAV in fiscal 2014 amounted to
€7,913,201 (2013: €6,053,355).
1
165 B.5
2,353,756
43,685,384
(part of the Combined Management Report)
Compensation Report
37,403
fiscal 2014²
Balance at end of
Forfeited
during
fiscal year
during
Vested and
transferred
fiscal 2014
Granted during fiscal year¹
Balance at beginning of
The following table shows the changes in the stock commit-
ments (Bonus Awards and Stock Awards) held by Managing
Board members in fiscal 2014:
Stock commitments
This section provides information concerning the stock commit-
ments held by members of the Managing Board that were com-
ponents of stock-based compensation in fiscal 2014 and prior
years, and about the Managing Board members' entitlements to
matching shares under the Siemens Share Matching Plan.
ON STOCK-BASED COMPENSATION INSTRUMENTS
IN FISCAL 2014
B.4.1.3 ADDITIONAL INFORMATION
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
Other
DATED FINANCIAL STATEMENTS.
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their
surviving dependents as of September 30, 2014, amounted
to €234.4 (2013: €192.5) million. This figure is included in
→ NOTE 22 POST-EMPLOYMENT BENEFITS in → D.6 NOTES TO CONSOLI-
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
144 B.4
3,903,372
52,962,753
541,800
5,235,965
559,104
5,067,597
Prof. Dr. Siegfried Russwurm
5,094,071
6,273,529
541,800
559,104
Prof. Dr. Hermann Requardt
2,248,901
3,047,911
504,000
559,104
2,818,7222
93,184
5,580,345
2,008,718
2,769,337
541,800
559,104
7,174,641
1,033,200
1,033,200
559,104
541,800
4,390,368
3,490,629
15,750,8832
18,343,788²
504,000
520,128
2,740,4792
1,499,0342
504,000
66,461
2,446,9512
past three
fiscal years)
504,000
Peter Y. Solmssen?
Barbara Kux6
Brigitte Ederer 5
Former members of the Managing Board
1,970,651
2,742,051
19,565
559,104
Dr. Ralf P. Thomas
Dr. Michael Süß³
Total
on EPS for
(Target
attainment
depending
6 Barbara Kux resigned from the Managing Board effective
at the end of the day on November 16, 2013.
7 Peter Y. Solmssen resigned from the Managing Board
effective at the end of the day on December 31, 2013;
his employment contract ends effective March 31, 2015.
8 Dr. Michael Süß resigned from the Managing Board
effective at the end of the day on May 6, 2014; his
employment agreement ended effective September 30,
2014.
171 | C. Combined Management Report
247 | D.
Consolidated Financial Statements
337 | E.
Additional Information
157
The following table shows the stock (Bonus Awards and Stock
Awards) awarded in November 2014 for fiscal 2014:
Awarded for fiscal¹
Non-forfeitable commitments
of Bonus Awards
(Amounts in number of units)
Managing Board members
serving as of September 30, 2014
Joe Kaeser
Dr. Roland Busch
Lisa Davis 2
5 Brigitte Ederer resigned from the Managing Board
effective at the end of the day on September 30, 2013.
Klaus Helmrich
4 Lisa Davis was elected a full member of the Managing
Board effective August 1, 2014.
3 The number of forfeitable commitments of Stock Awards
shown here for Brigitte Ederer as of the end of fiscal
51,582
Dr. Michael Süß8
Total
17,122
200,281
38,432
5,684
7,295
6,182
5,510
22,806
46,399
452,133
46,350
71,136
60,284
96,341
246,631 487,212
1 The weighted average fair value as of the grant date for
fiscal 2014 was €82.49 per granted share.
2 Amounts do not include stock commitments (Bonus
Awards and Stock Awards) granted in November 2014
for fiscal 2014; for details, see the next page. However,
these amounts may include Stock Awards received as
compensation by the Managing Board member before
joining the Managing Board.
2014 remains in effect in full on the basis of the agree-
ment in connection with her departure from the Manag-
ing Board; the number of Stock Awards linked to future
stock performance will be revised on the basis of actual
target attainment after the end of the restriction period.
(Target attainment depending
on EPS for past three fiscal years)
Forfeitable commitments of Stock Awards
(Target attainment depending
on future stock performance)
Former members of the Managing Board
Brigitte Ederer³
Barbara Kux4
Peter Y. Solmssen 5
Dr. Michael Süß6
Total
0
0
0
849
946
1,660
0
35,687
3,980
66,003
0
884
1,729
4,146
6,916
6,639
4,824
Dr. Ralf P. Thomas
9,296
12,615
13,140
5,578
6,639
6,916
576
12,044
12,546
30,106
4,824
6,916
Prof. Dr. Hermann Requardt
4,709
8,299
8,645
Prof. Dr. Siegfried Russwurm
4,934
6,639
6,916
6,639
1 See the information on → PAGES 151-153 for the
corresponding fair values.
14,661
7,295
Dr. Roland Busch
16,180
33,795
5,364
7,295
6,182
2,829
21,544
44,443
Lisa Davis 4
Klaus Helmrich
17,122
35,695
5,287
7,295
6,182
3,858
22,409
45,314
76,699
Prof. Dr. Hermann Requardt
31,729
10,974
on future
stock per-
formance)
Commit-
ments of
Bonus
Awards and
Commit-
ments of
Stock
Awards
Stock
Awards
Non-
forfeitable
commit-
ments of
Bonus
Awards
commit-
ments of
Stock
Awards³
Forfeitable
Managing Board
members serving as of
September 30, 2014
Joe Kaeser
24,819
67,437
6,910
12,949
14,661
25,762
52,766
6,641
Brigitte Ederer5
24,819
43,469
5,364
24,819
38,105
Barbara Kux6
24,819
52,766
5,287
7,295
6,182
14,661
30,106
51,582
Peter Y. Solmssen?
24,819
52,766
5,287
of the Managing Board
Former members
23,184
206
9,119
7,728
14,661
32,403
54,952
Prof. Dr. Siegfried Russwurm
24,819
52,766
5,684
6,182
9,119
14,661
30,503
54,952
Dr. Ralf P. Thomas
22,241
206
3,474
2,944
5,475
7,728
fiscal year
Non-
forfeitable
967,500
65,544
1,033,044
Total compensation of all Managing Board members for fiscal 2014, according to the applicable reporting standards, amounted to €28.57
(2013: €34.589) million. The granted payout amount presented below is to be used instead of the target value according to the GCGC for
the one-year variable compensation (bonus), and service costs for pension benefits are not included. In addition, the cash component of
the compensatory payment of Lisa Davis in the amount of €1,098,246 is included.
Total (GCGC)³
Service cost
Total'
Target attainment depending on EPS for past three fiscal years 5
Target attainment depending on future stock performance 6
Siemens Stock Awards (restriction period: 4 years)
Variable compensation (bonus) - Bonus Awards 2.5
Performance-based
components
Multi-year variable compensation 3.4
Total
Fixed compensation (base compensation)
Fringe benefits'
effect, stock-based
with long-term incentive
effect, non-stock-based
Performance-based without long-term incentive
components
based components
One-year variable compensation (bonus) -
Cash component (GCGC)²
without long-term incentive
effect, non-stock-based
One-year variable compensation (bonus) -
Cash component²
Total compensation
FY 2013
FY 2014
FY 2014
(min)
FY 2014
FY 2013
FY 2014
(max)
FY 2014
(min)
1,845,000
95,184
1,940,184
1,113,750 1,845,000
71,843 95,184
1,185,593 1,940,184
FY 2014
FY 2013
672,101
558,881
556,875 1,383,750
2,542,970 2,220,668
since August 1, 2014
Lisa Davis 10
Member with responsibilities for Sector portfolio
Dr. Roland Busch
Member with responsibilities for Sector portfolio
Joe Kaeser
President and CEO
Non-performance-
(Amounts in €)
Managing Board members serving as of September 30, 2014
One-year variable compensation (bonus) -
Cash component²
Additional Information
337 | E
247 | D. Consolidated Financial Statements
171 | C. Combined Management Report
The compensation presented on the following pages was
granted to the members of the Managing Board for fiscal 2014
(individualized disclosure).
The following disclosure of the compensation granted for fis-
cal 2014 takes account not only of the applicable reporting
standards, but also of the recommendations of the Code. Con-
sequently, the model table recommended by the Code for dis-
closing the value of benefits granted for the year under review
was used. The figures presented also include the attainable
minimums or maximums, as applicable. The fair values shown
for granted stock-based compensation were calculated on the
basis of the applicable reporting standards. The transfer of
one share per award will not take place until the expiration of
the four-year waiting or restriction period - that is, not until
November 2018. The number of Stock Awards linked to the
performance of the price of Siemens stock will be adjusted
after the end of the restriction period, on the basis of the
actual target attainment. Accordingly, the value of the ac-
tual shares transferred may be higher or lower than shown
here, also depending on the stock price in effect at the time
of transfer.
On the basis of the decisions by the Supervisory Board de-
scribed above, Managing Board compensation for fiscal 2014
totaled €28.57 million, a decrease of 17.4% (2013: €34.58 mil-
lion). Of this total amount, €17.89 million (2013: €16.98 million)
was attributable to cash compensation and €10.68 million
(2013: €17.60 million) to stock-based compensation.
Total compensation
compensation (Stock Awards) for fiscal 2014 will be calculated
once the actual target attainment is available, and will be
granted at the usual date. The Stock Awards already granted
in the past and those for fiscal 2014, for which the restriction
period is still running, will be absolutely maintained, in accor-
dance with the terms of his contract with the Company, and
will be settled in cash in September 2015 at the closing price
of Siemens stock in Xetra trading on May 6, 2014 (€93.91).
Dr. Süẞ agreed not to take up activities for any significant
competitor of Siemens for a period of one year after the end
of his employment contract - that is, until September 30,
2015. For this post-contractual non-compete commitment, he
will be paid a monthly total of gross €65,000. In determining
the amount of the compensatory payment for Dr. Süß, in ac-
cordance with the terms of his contract with the Company,
the base compensation for fiscal 2014 and the variable com-
pensation and long-term stock-based compensation actually
received for fiscal 2013 were applied and limited, as applica-
ble, to either two annual payments in total or the compensa-
tion for the remaining term of his appointment. The portion
of the compensatory payment that was calculated excluding
the first six months of the remaining contract term was re-
duced by 15% as a lump-sum allowance for discounted values
and for income earned elsewhere. In addition, non-monetary
benefits were covered by a payment in the amount of 5% of
the compensatory payment.
In connection with the mutually agreed termination of
Dr. Michael Süẞ's activity on the Managing Board as of May 6,
2014, it was agreed that his current contract with the Company
would terminate as of September 30, 2014. The entitlements
agreed upon under the contract remained in effect until that
date. Dr. Süẞ receives a compensatory payment in the gross
amount of €4,286,092 in connection with the mutually agreed
premature termination of his activity as a member of the Man-
aging Board, together with a one-time special contribution of
€812,700 to the BSAV, to be credited in January 2015. It was
also agreed with Dr. Süß that the long-term stock-based
In connection with the mutually agreed termination of Peter Y.
Solmssen's activity on the Managing Board as of December 31,
2013, it was agreed that his contract with the Company would
remain in effect until March 31, 2015. The entitlements agreed
upon under the contract will remain in effect until that date.
These will not include the fringe benefits under the contract,
particularly the Company car and contributions toward the cost
of insurance, which will be covered until the contract ends by
a monthly lump-sum payment of €11,500. The Stock Awards
already granted in the past for fiscal 2011, 2012 and 2013, for
which the restriction period is still in progress, will be abso-
lutely maintained. Mr. Solmssen was also reimbursed for relo-
cation costs, in accordance with the commitment he received
when he took office. The Company furthermore reimbursed
Mr. Solmssen for out-of-pocket expenses of €100,000 plus
value added-tax.
As Barbara Kux's appointment to the Managing Board expired
regularly on November 16, 2013, no compensatory payments
were agreed upon in that connection. The Stock Awards already
granted in the past for fiscal 2011, 2012 and 2013, for which the
restriction period is still running, will be absolutely maintained,
in accordance with the terms of her contract with the Company.
Benefits associated with termination
of Managing Board membership
beneficiaries are not entitled to receive dividends. This figure
for determining the number of commitments amounted to
€72.30 (2013: €80.88).
163.67%
97.55%
€5,201million
17.3%
149
FY 2014
Managing Board members serving as of September 30, 2014
Non-performance-
based components
effect, non-stock-based
without long-term incentive
Total compensation
Performance-based
components
Total compensation of all Managing Board members for fiscal 2014, according to the applicable reporting standards, amounted to €28.57
(2013: €34.58⁹) million. The granted payout amount presented below is to be used instead of the target value according to the GCGC for
the one-year variable compensation (bonus), and service costs for pension benefits are not included. In addition, the cash component of
the compensatory payment of Lisa Davis in the amount of €1,098,246 is included.
Total (GCGC)³
Service cost
Target attainment depending on future stock performance
Total'
Target attainment depending on EPS for past three fiscal years5
Siemens Stock Awards (restriction period: 4 years)
Variable compensation (bonus) - Bonus Awards 2.5
Multi-year variable compensation 3.4
One-year variable compensation (bonus) -
Cash component (GCGC)²
Total
Fixed compensation (base compensation)
Fringe benefits'
without long-term incentive
effect, non-stock-based
with long-term incentive
effect, stock-based
Performance-based
components
(Amounts in €)
Target attainment
FY 2014
(max)
(max)
FY 2014
FY 2014
(min)
998,400
61,222
1,059,622
34,938 998,400
2,465
61,222
37,403 1,059,622
998,400
43,731
1,042,131
998,400
43,731
1,042,131
967,500 998,400
42,134 43,731
1,009,634 1,042,131
998,400
(max)
FY 2013
FY 2014
FY 2014
(min)
FY 2014
FY 2013
CFO
Dr. Ralf P. Thomas
FY 2014
61,222
1,059,622
483,750 748,800
1,856,952 1,171,739
998,400
1,874,400
0
21,352 480,000
19,121 335,011
112,006 2,972,208
3,350,336 2,962,670 1,042,131 5,094,560
519,915 560,147 560,147 560,147
3,870,251 3,522,817 1,602,278 5,654,707
0 1,500,000
659,685 335,011
0 1,500,000
737,545 480,000
0 748,800
0 3,748,800
0 1,797,120
17,469 748,800
57,134 1,163,786
16,661 348,775
0 3,748,800
0 748,800
356,728
459,722
0 1,797,120
433,819 1,209,836
3,001,484 3,477,625
Prof. Dr. Siegfried Russwurm
Member with responsibilities for Sector portfolio
558,849 2,016,262
4,287,412 6,177,114
0 2,721,052
849,093
2,818,722 2,818,722 2,818,722
4,644,618 2,999,664 3,667,815
-
0 1,797,120
180,942
180,942
-
166,400
166,400
14,542
166,400
14,542
51,089
1,049,489
998,400
998,400
51,089
1,049,489
998,400
51,089
967,500
48,591
0 3,321,000 483,750 748,800
0 7,083,750 1,551,574 1,218,300
0 1,383,750 433,840 403,289
1,845,000
95,184
1,940,184 1,016,091 1,049,489
(max)
(min)
0 3,748,800
FY 2014
-
124,800
1,520,154
41,645
2,721,053
0
870,781
607,728
1,825,896 180,942
-
0
0
2,850,000 590,020 480,000
1,500,000
2,850,000 527,714 335,011
1,500,000
4,285,438 5,544,602 1,940,184 9,503,000 3,051,415 3,016,589 1,049,489 5,094,560
504,323 1,058,566 1,058,566 1,058,566 520,736 561,000 561,000 561,000
6,603,168 2,998,750 10,561,566 3,572,151 3,577,589 1,610,489 5,655,560
4,789,761
0
0
912,065
636,502
936,774
1,047,315
124,800
0
0 5,566,905
299,520
0
0 748,800
Actual FY 2014 figure
14,542
180,942
For the other half of the annual target amount for the Stock
Awards, the Supervisory Board approved a number of Stock
Awards equivalent to the monetary value of half the target
amount on the award date. The amount by which these stock
commitments must be adjusted - or an additional cash pay-
ment must be made - after the end of the restriction period
will depend on the performance of Siemens stock compared to
the stock of five competitors - ABB, Alstom, General Electric,
Rockwell and Schneider - over the coming four years, and will
therefore not be determined until after the end of fiscal 2018. If
significant changes occur among the relevant competitors
during the period under consideration, the Supervisory Board
may appropriately take these changes into account in deter-
mining the values for comparison and/or calculating the rele-
vant stock prices of those competitors.
0
0
0
0
0
231
0
126,867
0
5,237
0
0
0
0
81,747
0
0
1,299,629
10,807
0
0
537,110
1,381,376
0
268,614
0
0
366,317
0
1,021,363
1,518,929
1,392,062
459,642
1,342,022
1,070,035
1,392,062
0
1,392,062
178,145
0
0
292,379
1,299,629
1,046,148
366,548
1,098,246
0
Klaus Helmrich
Member of the Managing Board
Prof. Dr. Hermann Requardt"
Member with responsibilities for Sector portfolio
FY 2013
FY 2014
900,000
68,329
968,329
998,400
62,457
1,060,857
FY 2014
(min)
998,400
FY 2014
(max)
FY 2013
FY 2014
FY 2014
(min)
998,400
62,457
1,060,857
The number of stock commitments (Bonus Awards and Stock
Awards) granted was based on the closing price of Siemens
stock in Xetra trading on the date of award less the present
value of dividends expected during the holding period, because
62,457
1,060,857
The Supervisory Board increased the annual target amount for
the monetary value of the Stock Awards commitment for fiscal
2014 by 25% to €1,250,000 for Prof. Dr. Hermann Requardt.
12 Brigitte Ederer resigned from the Managing Board effective
at the end of the day on September 30, 2013. According
to the provisions of her contract, the variable compensation
(bonus) for fiscal 2013 was granted entirely in cash, and the
Siemens Stock Awards for fiscal 2013 were settled in cash.
1,500,000
11
The total compensation of €34.58 million for the prior year
also includes the fiscal 2013 compensation of €5,604,567 for
former Managing Board member Peter Löscher.
1,500,000
1,059,622 5,094,560
208,034 230,055 230,055 230,055
320,040 3,202,263 1,289,677 5,324,615
459,642 1,070,035
3,326,228 3,283,905
16,598 1,046,148
111,135 3,269,556
1 Fringe benefits include costs, or the cash equiva-
lent, of non-monetary benefits and other perqui-
sites, such as provision of Company cars in the
amount of €181,638 (2013: €239,301), contributions
toward the cost of insurance in the amount of
€71,776 (2013: €88,827), reimbursement of fees
for legal advice, tax advice and accommodation
and moving expenses, including any taxes that
have been assumed in this regard as well as costs
connected with preventive medical examinations,
in the amount of €194,498 (2013: €176,221).
2 The Supervisory Board adjusted the bonus payout
amount resulting from target attainment individu-
ally downward by 10% for Dr. Süß.
3 The figures for individual maximums for multi-
year variable compensation reflect the possible
maximum value in accordance with the maximum
amount agreed for fiscal 2014, that is 300% of
the applicable target amount.
4 The expenses recognized for stock-based compen-
sation (Bonus Awards and Stock Awards) and for
the Share Matching Plan for members of the Man-
aging Board in accordance with IFRS in fiscal 2014
and 2013 amounted to €16,141,235 and €23,160,536,
respectively. The following amounts pertained to
the members of the Managing Board in fiscal 2014:
Joe Kaeser €1,822,932 (2013: €2,099,925), Dr. Ro-
land Busch €922,535 (2013: €1,091,572), Lisa Davis
€1,337,996 (2013: €0), Klaus Helmrich €949,521
(2013: €1,058,299), Prof. Dr. Hermann Requardt
€1,254,756 (2013: €1,686,929), Prof. Dr. Siegfried
Russwurm €1,118,839 (2013: €1,653,844), and
Dr. Ralf P. Thomas €446,570 (2013: €19,572). The
corresponding expense, determined the same
way, for former Managing Board members was
follows: Brigitte Ederer €35,373 (2013: €3,062,678),
Barbara Kux €1,971,611 (2013: €1,566,960), Peter
Löscher €107,733 (2013: €8,261,949), Peter Y.
Solmssen €3,430,484 (2013: €1,566,874), and
Dr. Michael Süẞ €2,742,885 (2013: €1,091,934).
5 For Stock Awards for which the target attainment
depends on the EPS for the past three fiscal years,
and for Bonus Awards, the fair value at the date of
award is equivalent to the respective monetary value.
6 The monetary values referred to a 100% target attainment
amounted to €4,970,916 (2013: €6,197,430). The following
amounts pertained to the members of the Managing Board:
Joe Kaeser €950,022 (2013: €887,577), Dr. Roland Busch
€500,027 (2013: €500,000), Lisa Davis €907,076 (2013: €0),
Klaus Helmrich €500,027 (2013: €500,000), Prof. Dr.
Hermann Requardt €625,034 (2013: €625,041), Prof. Dr.
Siegfried Russwurm €500,027 (2013: €625,041), and Dr.
Ralf P. Thomas €500,027 (2013: €18,117). The corresponding
monetary values for former Managing Board members were
as follows: Brigitte Ederer €0 (2013: €500,000), Barbara Kux
€63,913 (2013: €500,000), Peter Y. Solmssen €125,007 (2013:
€500,000), and Dr. Michael Süß €299,756 (2013: €500,000).
7 The total maximum compensation for fiscal 2014 represents
the contractual maximum amount for overall compensation,
excluding fringe benefits and pension benefit commitments.
The maximum amount, at 1.7 times target compensation
(base compensation, target amount for bonus and target
amount for stock-based compensation) is less than the total
individual contractual caps for performance-based
components.
8 The total compensation reflects the current fair value of
stock-based compensation components on the award date.
On the basis of the current monetary values of stock-based
compensation components, total compensation amounted
to €29,109,709 (2013: €34,236,151).
9
10 In compensation for the forfeiture of stock, pension bene-
fits, health benefits and transitional remuneration from her
former employer, the Supervisory Board granted Ms. Davis
a one-time amount of €5,491,229. This amount will be
provided 20% cash, 30% in the form of Siemens Stock
Awards, and the remaining 50% as a special contribution
to the pension plan.
292,379
124,800
1,825,896
268,614
0
0
0
14,741
Share Matching Plan (vesting period: 2010 - 2012)
Other³
0
0
0
21,619
Total
Service cost
Total (GCGC)
54,001
208,034
262,035
2,661,981
230,055
2,892,036
1 Fringe benefits include costs, or the cash equivalent, of
non-monetary benefits and other perquisites, such as
provision of Company cars in the amount of €181,638
(2013: €239,301), contributions toward the cost of
insurance in the amount of €71,776 (2013: €88,827),
reimbursement of fees for legal advice, tax advice and
accommodation and moving expenses, including any
taxes that have been assumed in this regard as well as
costs connected with preventive medical examinations,
in the amount of €194,498 (2013: €176,221).
2 The Supervisory Board adjusted the bonus payout
519,851
amount resulting from target attainment individually
0
0
For half of the annual target amount for the Stock Awards, an
average basic EPS of €5.40 was determined for fiscal years 2012
through 2014, yielding a target attainment of 96%.
Long-term stock-based compensation
0
In an overall assessment of all aspects, taking individual
achievements into account and exercising its duty-bound
discretion (pflichtgemäßes Ermessen), the Supervisory Board
decided to adjust the bonus payout amounts resulting from
target attainment downward for one Managing Board member.
Taking this adjustment by the Supervisory Board into account,
target attainment grades of the bonus for members of the
Managing Board came to between 78.81% and 161.57%.
In addition, in determining target attainment, the attainment
of Sector-specific targets for economic value added (EVA) and
of the respective individual targets was taken into account. In
measuring attainment of the individual targets, the Super-
visory Board took account of the Compensation Committee's
recommendation.
1 Continuing and discontinued operations. The values measured for target attainment were not adjusted.
100% of target
15.4%
€5,250 million
Free cash flow¹
Return on capital employed (ROCE)1
Target parameter
|
these two target parameters for variable compensation (bonus):
The following targets were set and attained with respect to
1,059,622
16,598
1,046,148
Multi-year variable compensation
534,592
downward by 10% for Dr. Süß. The cash component
of one-year variable compensation (bonus) presented
above therefore represents the amount awarded for
fiscal 2014; which will be paid out in January 2015.
Siemens Stock Awards (restriction period: 2010-2013)
Siemens Stock Awards (restriction period: 2009-2012)
Share Matching Plan (vesting period: 2011 - 2013)
4 In compensation for the forfeiture of stock, pension
benefits, health benefits and transitional remuneration
from her former employer, the Supervisory Board
granted Ms. Davis a one-time amount of €5,491,229.
This amount will be provided 20% in cash, 30% in the
form of Siemens Stock Awards and the remaining 50%
as a special contribution to the pension plan. The cash
component will be paid in December 2014.
180,942
FY 2013
900,000
68,329
968,329
FY 2014
998,400
62,457
1,060,857
FY 2013
967,500
65,544
1,033,044
FY 2013
967,500
42,134
1,009,634
FY 2014
998,400
43,731
1,042,131
433,819
1,209,836
183,382
3 The "Other" item includes the adjustment of the 2010
Siemens Stock Awards in accordance with Section 23
and Section 125 of the German Transformation Act
(Umwandlungsgesetz) because of the spin-off of
OSRAM. For Ms. Davis, "Other" represents the cash
component of the compensatory payment that will
be paid in December 2014.
124,800
427,574
1,049,489
1,016,091
FY 2014
998,400
83,589
1,081,989
51,089
for Sector portfolio
Dr. Roland Busch
Member with responsibilities
FY 2014
166,400
14,542
Lisa Davis 4
Member with responsibilities
for Sector portfolio
since August 1, 2014
Klaus Helmrich
Member of the Managing Board
Member with responsibilities
for Sector portfolio
Member with responsibilities
Prof. Dr. Hermann Requardt | Prof. Dr. Siegfried Russwurm
for Sector portfolio
48,591
FY 2013
FY 2014
998,400
5 Brigitte Ederer resigned from the Managing Board effec-
tive at the end of the day on September 30, 2013. Accord-
ing to the provisions of her contract, her variable compen-
sation (bonus) for fiscal 2013 was granted entirely in cash.
967,500
FY 2013
140,000
2,896,779 1,291,926
62,833
5,133,191
155,000
1 Both the employee representatives on the Supervisory
Board who represent the employees pursuant to Section
3 para. 1 No. 1 of the German Codetermination Act
(Mitbestimmungsgesetz) and the representatives of the
trade unions on the Supervisory Board declared their
readiness to transfer their compensation to the Hans
Boeckler Foundation, in accordance with the guidelines
of the Confederation of German Trade Unions (DGB).
40,500
2 Olaf Bolduan was appointed to the Supervisory Board by
court order as of July 11, 2014, succeeding Lothar Adler,
who resigned from the Supervisory Board as of the end
of the day on May 31, 2014.
1,640,247
340,500
15,000
433,500 4,622,2055
4,500
493,500
106,667
140,000
227,000
27,000
93,333
58,333
2,999,444
381,167
34,500
Total
3 Michael Sigmund was appointed to the Supervisory
Board by court order as of March 1, 2014, succeeding
Prof. Dr. Rainer Sieg, who resigned from the Supervisory
Board as of the end of the day on February 28, 2014.
134,815
211,852
160,000
4 Dr. Josef Ackermann resigned from the Supervisory
Board as of the end of the day on September 30, 2013.
B.4.3 Other
171 | C. Combined Management Report
132 B.1 Corporate Governance Report
136 B.2
Prof. Dr. Rainer Sieg³
144 B.4
164
Corporate Governance
131 B.
108 | A. To our Shareholders
The Company provides a group insurance policy for Board and
Committee members and certain employees of the Siemens
organization that is taken out for one year and renewed annu-
ally. The insurance covers the personal liability of the insured
in the case of a financial loss associated with employment func-
tions. The insurance policy for fiscal 2014 includes a deductible
for the members of the Managing Board and the Supervisory
Board in compliance with the requirements of the German
Stock Corporation Act and the Code.
No loans or advances from the Company are provided to mem-
bers of the Supervisory Board.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties
and for any value-added taxes to be paid on their remuneration.
For the performance of his duties, the Chairman of the Super-
visory Board is also entitled to an office with secretarial support
and the use of a carpool service.
5 The total figure, compared to the amount of €4,420,926
presented in the 2013 Compensation Report, includes
additional meeting attendance fees of €433,500, but not
the total compensation of €232,222 for former Supervisory
Board members Jean-Louis Beffa, Werner Mönius,
Håkan Samuelsson and Lord lain Vallance of Tummel.
In addition, the members of the Supervisory Board are entitled
to receive a meeting attendance fee of €1,500 for each meeting
of the Supervisory Board and its committees that they attend.
The members of the Supervisory Board committees receive the
following additional fixed compensation for their work on these
committees: the Chairman of the Audit Committee receives
€160,000, and each of the other members of that Committee
receives €80,000; the Chairman of the Chairman's Committee
receives €120,000, and each of the other members of that Com-
mittee receives €80,000; the Chairman of the Compensation
Committee receives €100,000, and each of the other members
of that Committee receives €60,000 (compensation for any
work on the Chairman's Committee counts toward compensa-
tion for work on the Compensation Committee); the Chairman
of the Innovation and Finance Committee receives €80,000,
and each of the other members of that Committee receives
€40,000; the Chairman of the Compliance Committee receives
€80,000, and each of the other members of that Committee
receives €40,000. However, no additional compensation is paid
for work on the Compliance Committee if a member of that
Committee is already entitled to compensation for work on the
Audit Committee.
According to current rules, members of the Supervisory Board
receive an annual base compensation of €140,000; the Chair-
man of the Supervisory Board receives a base compensation of
€280,000, and each of the Deputy Chairmen receives €220,000.
The current remuneration policies for the Supervisory Board
were authorized at the Annual Shareholders' Meeting held on
January 28, 2014, and are effective as of fiscal 2014. Details
are set out in Section 17 of the Articles of Association of
Siemens AG. The remuneration of the Supervisory Board con-
sists entirely of fixed compensation; it reflects the responsibili-
ties and scope of the work of the Supervisory Board members.
The Chairman and Deputy Chairmen of the Supervisory Board
as well as the Chairmen and members of the Audit Committee,
the Chairman's Committee, the Compensation Committee, the
Compliance Committee and the Innovation and Finance Com-
mittee receive additional compensation.
The compensation shown on the previous page was deter-
mined for each of the members of the Supervisory Board for
fiscal 2014 (individualized disclosure).
163
Additional Information
337 | E.
Consolidated Financial Statements
138 B.3
247 | D.
If a Supervisory Board member does not attend a meeting of
the Supervisory Board, one-third of the aggregate compensa-
tion due to that member is reduced by the percentage of Super-
visory Board meetings not attended by the member in relation
to the total number of Supervisory Board meetings held during
the fiscal year. In the event of changes in the composition of
the Supervisory Board and/or its committees, compensation is
paid pro rata temporis, rounding up to the next full month.
Lothar Adler 1,2
28,000
Former Supervisory Board members
Michael Sigmund³
104,000
6,000
98,000
140,130
10,500
129,630
Güler Sabancı
133,500
7,500
81,667
98,000
7,500
5,679
119,259
Gérard Mestrallet
149,815
15,000
134,815
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
134,944
10,500
132,438
Dr. Josef Ackermann4
9,000
Jim Hagemann Snabe
202,500
22,500
40,000
140,000
201,000
21,000
40,000
140,000
Sibylle Wankel¹
288,500
90,667
28,500
140,000
370,167
43,500
186,667
140,000
Birgit Steinborn¹
241,722
19,500
97,778
124,444
120,000
165 B.5
131 B. Corporate Governance
Compensation Report
Siemens AG maintains two lines of credit in an amount of
€4 billion and an amount of US$3 billion, respectively, which
provide its lenders with a right of termination in the event that
(1) Siemens AG becomes a subsidiary of another company or
(2) a person or a group of persons acting in concert acquires
effective control over Siemens AG by being able to exercise
decisive influence over its activities (Art. 3(2) of Council Regu-
lation (EC) 139/2004). In addition, Siemens AG has a bilateral
B.5.8 Significant agreements which take
effect, alter or terminate upon a change
of control of the Company following a
takeover bid
For details on the authorizations, especially with respect to the
restrictions to exclude subscription rights and the terms to in-
clude shares when calculating such restrictions, please refer to
the relevant resolution and to Section 4 of the Articles of Associ-
ation. For further information on the authorized and conditional
capitals and on the treasury stock of the Company as of Sep-
tember 30, 2014, see → NOTE 25 EQUITY in → D.6 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS on pages 289-290 of this
Annual Report.
As of September 30, 2014, the Company held 45,745,147 (2013:
37,997,595) shares of stock in treasury.
In November 2013, the Company announced that it would carry
out a share buyback of up to €4 billion in volume within the
next up to 24 months using the authorization given by the An-
nual Shareholders' Meeting on January 25, 2011. The buyback
commenced on May 12, 2014. Under this share buyback
Siemens repurchased 11,331,922 shares by September 30, 2014.
The total consideration paid for these shares amounted to
about €1.079 billion (excluding incidental transaction charges).
The buyback may serve only to cancel and reduce the capital
stock, issue shares to employees, board members of affiliated
companies and members of the Managing Board of Siemens AG,
or service convertible bonds and warrant bonds.
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authoriza-
tion to meet obligations or rights to acquire Siemens shares
that were or will be agreed with members of the Managing
Board within the framework of rules governing Managing
Board compensation.
subsidiaries (exclusion of subscription rights, limited to 10%
of the capital stock, by mutatis mutandis application of Sec-
tion 186 para. 3 sentence 4 German Stock Corporation Act).
168
167
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
> used to meet obligations or rights to acquire Siemens shares
arising from, or in connection with, convertible bonds or war-
rant bonds issued by the Company or any of its consolidated
> sold, with the approval of the Supervisory Board, to third par-
ties against payment in cash if the price at which such
Siemens shares are sold is not significantly lower than
the market price of Siemens stock at the time of selling (ex-
clusion of subscription rights, limited to 10% of the capital
stock, by mutatis mutandis application of Section 186 para. 3
sentence 4 German Stock Corporation Act) or
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
> offered for purchase to individuals currently or formerly em-
ployed by the Company or any of its affiliated companies as
well as to board members of any of the Company's affiliated
companies, or awarded and/or transferred to such individu-
als with a vesting period of at least two years
Such Siemens shares may be
> retired
Besides selling them over the stock exchange or through a pub-
lic sales offer to all shareholders, the Managing Board is author-
ized by resolution of the Annual Shareholders' Meeting on
January 25, 2011 to also use Siemens shares repurchased on the
basis of this or any previously given authorization as follows:
Company to acquire until January 24, 2016 up to 10% of its
capital stock existing at the date of adopting the resolution
or - if this value is lower - as of the date on which the autho-
rization is exercised. The aggregate of shares of stock of
Siemens AG repurchased under this authorization and any
other Siemens shares previously acquired and still held in
treasury by the Company or attributable to the Company pur-
suant to Sections 71d and 71e of the German Stock Corpora-
tion Act may at no time exceed 10% of the then existing capi-
tal stock. Any repurchase of Siemens shares shall be
accomplished at the discretion of the Managing Board either
(1) by acquisition over the stock exchange or (2) through a
public share repurchase offer. The Managing Board is addi-
tionally authorized, with the approval of the Supervisory
Board, to complete the repurchase of Siemens shares in
accordance with the authorization described above by using
certain equity derivatives (such as put and call options, for-
ward purchases and any combination of these derivatives). In
exercising this authorization, all stock repurchases based on
the equity derivatives are limited to a maximum volume of
5% of Siemens' capital stock existing at the date of adopting
the resolution at the Annual Shareholders' Meeting. An equity
derivative's term of maturity may not, in any case, exceed
18 months and must be chosen in such a way that the repur-
chase of Siemens shares upon exercise of the equity deriva-
tive will take place no later than January 24, 2016.
credit line at its disposal in the amount of €450 million which
may be terminated by the lender if major changes in
Siemens AG's corporate legal situation occur that jeopardize
the orderly repayment of the credit.
In March 2013, a consolidated subsidiary as borrower and
Siemens AG as guarantor entered into two bilateral loan agree-
ments, each of which has been drawn in the full amount of
US$500 million. Both agreements provide their respective
lenders with a right of termination in the event that (1)
Siemens AG becomes a subsidiary of another company or (2)
a person or a group of persons acting in concert acquires effec-
tive control over Siemens AG by being able to exercise decisive
influence over its activities (Art. 3(2) of Council Regulation
(EC) 139/2004).
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documenta-
tion (ISDA Agreements) grant the counterparty a right of termi-
nation when Siemens AG consolidates with, merges into, or
transfers substantially all its assets to a third party. However,
this right of termination only exists, if (1) the resulting entity's
creditworthiness is materially weaker than Siemens AG's im-
mediately prior to such event or (2) the resulting entity fails to
simultaneously assume Siemens AG's obligations under the
ISDA Agreement. Additionally, some ISDA Agreements grant
the counterparty a right of termination if a third party acquires
the beneficial ownership of equity securities that enable it to
elect a majority of Siemens AG's Supervisory Board or other-
wise acquire the power to control Siemens AG's material policy-
making decisions and if the creditworthiness of Siemens AG is
materially weaker than it was immediately prior to such an
event. In either situation, ISDA Agreements are designed such
that upon termination all outstanding payment claims docu-
mented under them are to be netted.
In February 2012, Siemens issued bonds with warrant units
with a volume of US$3 billion. In case of a change of control,
the terms and conditions of these warrants enable their hold-
ers to receive a higher number of Siemens shares in accordance
with an adjusted strike price if they exercise their option rights
within a certain period of time after the change of control. This
period of time shall end either (1) not less than 30 days and no
more than 60 days after publication of the notice of the issuer
regarding the change of control, as determined by the issuer or
(2) 30 days after the change of control first becomes publicly
known. The strike price adjustment decreases depending on
the remaining term of the warrants and is determined in detail
in the terms and conditions of the warrants. In this context, a
change of control occurs if control of Siemens AG is acquired
by a person or by persons acting in concert.
WWW.SIEMENS.COM/AR/COMBINED-MANAGEMENT-REPORT
124,444
In our Combined Management Report,
we analyze our business activities
in the reporting year as well as the
current state of Siemens worldwide
and Siemens AG. Starting from a
description of our business, economic
environment and strategy, we present
our financial target system and a
detailed explanation of our results of
operations as well as our financial
and net assets position. We also report
on various aspects of sustainability
at Siemens and on expected develop-
ments and their material opportunities
and risks.
170
169
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
The Company may not repurchase its own shares unless so
authorized by a resolution duly adopted by the shareholders
at a general meeting or in other very limited circumstances
set forth in the German Stock Corporation Act. On January 25,
2011, the Annual Shareholders' Meeting authorized the
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member's duties and responsibilities), the
member of the Managing Board has the right to terminate his
or her contract with the Company for good cause. A change of
control exists if one or several shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling influence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an intercom-
pany agreement within the meaning of Section 291 of the Ger-
man Stock Corporation Act, or if Siemens AG is to be merged
into an existing corporation or other entity. If this right of ter-
mination is exercised, the Managing Board member is entitled
to a severance payment in the amount of no more than two
years' compensation. The calculation of the annual compensa-
tion includes not only the base compensation and the target
amount for the bonus, but also the target amount for the stock
awards, in each case based on the most recent completed fiscal
year prior to termination of the contract. The stock-based com-
pensation components for which a firm commitment already
exists will remain unaffected. There is no entitlement to a sev-
erance payment if the Managing Board member receives bene-
fits from third parties in connection with a change of control.
Moreover, there is no right to terminate if the change of control
occurs within a period of twelve months prior to a Managing
Board member's retirement. Additionally, the severance pay-
ments cover non-monetary benefits by including an amount of
5% of the total severance amount. Severance payments will be
reduced by 15% as a lump-sum allowance for discounted values
and for income earned elsewhere. However, this reduction will
apply only to the portion of the severance payment that was
calculated without taking account of the first six months of the
remaining term of the Managing Board member's contract.
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
144 B.4
Corporate Governance Report
132 B.1
136 B.2
108 | A. To our Shareholders
B.5.9 Compensation agreements with
members of the Managing Board or
employees in the event of a takeover bid
In February 2012, Siemens issued bonds with warrant units
with a volume of US$3 billion. The bonds with warrant units
with a minimum per-unit denomination of US$250,000 were
offered exclusively to institutional investors outside the U.S.
Subscription rights of Siemens shareholders were excluded.
The bonds issued by Siemens Financieringsmaatschappij N.V.
are guaranteed by Siemens AG and complemented with war-
rants issued by Siemens AG. The warrants entitle their holders
to receive Siemens shares against payment of the exercise
price in euros. At issuance, the warrants resulted in option
rights relating to a total of about 21.7 million Siemens shares.
The terms and conditions of the warrants enable Siemens to
service exercised option rights also by delivering treasury stock
as well as to buy back the warrants. The bonds with warrant
units were issued in two tranches with maturities of 5.5 years
and 7.5 years, respectively. The maturities refer to both the
bonds and the related warrants.
The total amount of new shares issued or to be issued under
the Authorized Capital 2014 or in accordance with the bonds
mentioned above, in exchange for contributions in cash and in
kind and with shareholders' subscription rights excluded, may
in certain cases be subject to further restrictions, such as the
restriction that they may not exceed 20% of the capital stock.
The details of those restrictions are described in the relevant
authorization.
> where the exclusion is necessary in order to grant holders of
conversion or option rights or conversion or option obliga-
tions on Siemens shares a compensation for the effects of
dilution.
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
171 | C. Combined Management Report
Shares of stock issued by Siemens AG to employees under its
employee share program and/or as stock-based compensation
are transferred directly to the employees. The beneficiary
employees who hold shares of employee stock may exercise
their control rights in the same way as any other shareholder
directly in accordance with applicable laws and the Articles of
Association.
B.5.5 System of control of any
employee share scheme where
the control rights are not exercised
directly by the employees
There are no shares with special rights conferring powers of
control.
B.5.4 Shares with special rights
conferring powers of control
We are not aware of, nor have we during the fiscal year 2014
been notified of, any shareholder directly or indirectly holding
10% or more of the voting rights.
165
B.5.3 Equity interests exceeding 10%
of voting rights
Shares issued to employees worldwide under the employee
share program implemented since the beginning of fiscal 2009,
in particular the Share Matching Plan, are freely transferable un-
less applicable local laws provide otherwise. However, in order
to receive one matching share free of charge for each three
shares purchased, participants are required to hold the shares
purchased by them under the rules of the program for a vesting
period of about three years, during which the participants have
to be continuously employed by Siemens AG or another Siemens
company. The right to receive matching shares is forfeited if the
purchased shares are sold, transferred, hedged on, pledged or
hypothecated in any way during the vesting period.
At the Annual Shareholders' Meeting, each share of stock has
one vote and accounts for the shareholders' proportionate
share in the Company's net income. Excepted from this rule are
treasury shares held by the Company, which do not entitle the
Company to any rights. Under Section 136 of the German Stock
Corporation Act the voting right of the affected shares is ex-
cluded by law.
B.5.2 Restrictions on voting rights or
transfer of shares
All shares confer the same rights and obligations. The share-
holders' rights and obligations are governed by the provisions
of the German Stock Corporation Act, in particular by Sections
12, 53a et seq., 118 et seq. and 186 of the German Stock Corpo-
ration Act.
As of September 30, 2014, the Company's common stock
totaled €2.643 billion (2013: €2.643 billion) divided into 881 mil-
lion (2013: 881 million) registered shares with no par value and
a notional value of €3.00 per share. The shares are fully paid in.
In accordance with Section 4 para. 3 of the Company's Articles
of Association, the right of shareholders to have their owner-
ship interests evidenced by document is excluded, unless such
evidence is required under the regulations of a stock exchange
on which the shares are listed. Collective share certificates may
be issued. Pursuant to Section 67 para. 2 of the German Stock
Corporation Act (Aktiengesetz), only those persons recorded
in the Company's stock register will be recognized as share-
holders of the Company.
B.5.1 Composition of common stock
The takeover-relevant information pursuant to Sections 289
para. 4 and 315 para. 4 of the German Commercial Code (Han-
delsgesetzbuch) and the explanatory report are an integral part
of the Combined Management Report.
explanatory report
|||B.5 Takeover-relevant information (pursuant to Sections 289
para. 4 and 315 para. 4 of the German Commercial Code) and
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
The von Siemens-Vermögensverwaltung GmbH (vSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 9,386,535 shares (as of September 30, 2014) on
behalf of members of the Siemens family, whereby aforemen-
tioned shares constitute a part of the overall number of shares
held by members of the Siemens family. The VSV is a German
limited liability company and party to an agreement with,
among others, members of the Siemens family (family agree-
ment). In order to bundle and represent their interests, the
members of the Siemens family established a family partner-
ship. This family partnership makes proposals to the VSV with
respect to the exercise of the voting rights at Shareholders'
Meetings of the Company, which are taken into account by
the VSV when acting within the bounds of its professional dis-
cretion. Pursuant to the family agreement, the shares under
powers of attorney are voted by the VSV collectively.
(part of the Combined Management Report)
B.5.6 Legislation and provisions of the
Articles of Association applicable to the
appointment and removal of members.
of the Managing Board and governing
amendment to the Articles of Association
According to Section 179 of the German Stock Corporation Act,
any amendment to the Articles of Association requires a resolu-
tion of the Annual Shareholders' Meeting. The authority to
adopt purely formal amendments to the Articles of Association
was transferred to the Supervisory Board under Section 13
para. 2 of the Articles of Association. In addition, by resolution
of the Annual Shareholders' Meetings on January 25, 2011 and
January 28, 2014, the Supervisory Board has been authorized to
amend Section 4 of the Articles of Association in accordance
with the utilization of the Authorized Capital 2011 and the
Authorized Capital 2014, and after expiration of the then-appli-
cable authorization period.
> where the exclusion is necessary with regard to fractional
amounts resulting from the subscription ratio
> where the issue price of the new shares/bonds is not signif-
icantly lower than the stock market price of the Siemens
shares already listed or the theoretical market price of the
bonds computed in accordance with generally accepted actu-
arial methods (exclusion of preemptive rights, limited to 10%
of the capital stock, in accordance with or by mutatis mutan-
dis application of Section 186 para. 3 sentence 4 German
Stock Corporation Act)
In the event of capital increases against contributions in cash,
the Managing Board is authorized to exclude shareholders'
subscription rights with the approval of the Supervisory Board
in the following cases:
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Compensation Report
165 B.5
144 B.4
(part of the Combined Management Report)
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German
Codetermination Act (Mitbestimmungsgesetz). According to
Section 8 para. 1 of the Articles of Association, the Managing
Board is comprised of several members, the number of which
is determined by the Supervisory Board. Pursuant to Section 84
of the German Stock Corporation Act and Section 9 of the
Articles of Association, the Supervisory Board may appoint a
President of the Managing Board as well as a Vice President.
132 B.1 Corporate Governance Report
136 B.2
166
108 | A. To our Shareholders
The new shares under the Authorized Capital 2014 and the
bonds under these authorizations are to be issued against
cash or non-cash contributions. The bonds are, as a matter of
principle, to be offered to shareholders for subscription. The
Managing Board is authorized to exclude, with the approval of
the Supervisory Board, subscription rights of shareholders in
the event of capital increases against contributions in kind.
By resolution of the Annual Shareholders' Meeting of Janu-
ary 26, 2010, the Managing Board is authorized until Janu-
ary 25, 2015 to issue bonds in an aggregate principal amount of
up to €15 billion with conversion rights or with warrants at-
tached, or a combination of these instruments, entitling the
holders to subscribe to up to 200 million registered shares of
Siemens AG of no par value, representing a pro rata amount of
up to €600 million of the capital stock. Additionally, by resolu-
tion of the Annual Shareholders' Meeting of January 28, 2014,
the Managing Board is authorized until January 27, 2019 to
issue bearer or registered bonds in an aggregate principal
amount of up to €15 billion with conversion rights or with
bearer or registered warrants attached or a combination of
these instruments, entitling the holders to subscribe to up to
80 million registered shares of Siemens AG of no par value, rep-
resenting a pro rata amount of up to €240 million of the capital
stock. In order to grant shares of stock to holders/creditors of
convertible bonds or warrant bonds issued by the Company
or by consolidated subsidiaries of the Company under these
authorizations the capital stock was conditionally increased by
up to €600 million through the issuance of up to 200 million
shares of no par value registered in the names of the holders
(Conditional Capital 2010) and by up to €240 million, respec-
tively, through the issuance of up to 80 million shares of no par
value registered in the names of the of the holders (Conditional
Capital 2014).
As of September 30, 2014, the total unissued authorized capital
of Siemens AG therefore consisted of €618.6 million nominal
that may be issued in installments with varying terms by issu-
ance of up to 206.2 million registered shares of no par value.
Furthermore, the Managing Board is authorized to increase,
with the approval of the Supervisory Board, the capital stock
until January 27, 2019 by up to €528.6 million through the issu-
ance of up to 176.2 million registered shares of no par value
against cash contributions and/or contributions in kind (Author-
ized Capital 2014).
issued in such a manner that the contribution to be paid on
such shares is covered by that part of the annual net income
which the Managing Board and the Supervisory Board may
allocate to other retained earnings under Section 58 para. 2 of
the German Stock Corporation Act.
The Managing Board is authorized to increase, with the ap-
proval of the Supervisory Board, the capital stock until Janu-
ary 24, 2016 by up to €90 million through the issuance of up to
30 million registered shares of no par value against contribu-
tions in cash (Authorized Capital 2011). Preemptive rights of
existing shareholders are excluded. The new shares shall be
issued under the condition that they are offered exclusively
to employees of Siemens AG and its consolidated subsidiaries.
To the extent permitted by law, employee shares may also be
B.5.7 Powers of the Managing Board
to issue and repurchase shares
Resolutions of the Annual Shareholders' Meeting require a sim-
ple majority vote, unless a greater majority is required by law.
Pursuant to Section 179 para. 2 of the German Stock Corpora-
tion Act, amendments to the Articles of Association require
a majority of at least three-quarters of the capital stock repre-
sented at the time of the casting of the votes, unless another
capital majority is prescribed by the Articles of Association.
131 B. Corporate Governance
Dr. Nicola Leibinger-Kammüller
target amount
27,000
Obligation to hold shares during term of office on the Managing Board
Performance-based component
162
108 | A. To our Shareholders
Non-performance-based component
Performance-based component with deferred payout
of Base
compen-
sation
2-times
Managing
Board
member:
of Base
compen-
sation
President
and CEO:
3-times
Base
compen-
sation
Base
compen-
sation
compensation
of target
max. 1.7-times
overall
Compensation
Bonus (cash):
0-200%
add. +20%
adjustment
compen-
sation
Base
131 B. Corporate Governance
132 B.1 Corporate Governance Report
144 B.4
136 B.2
Dr. Gerhard Cromme
serving as of September 30, 2014
Total
Meeting
attendance
fee
FY 2013
Additional
compensation
for committee
work
Base com-
pensation
Total
fee
Meeting
attendance
add. ±20% adjustment
Additional
compensation
for committee
work
FY 2014
Supervisory Board members
(Amounts in €)
B.4.2 Remuneration of members
of the Supervisory Board
(part of the Combined Management Report)
Takeover-relevant information (pursuant to
Sections 289 para. 4 and 315 para. 4 of the
German Commercial Code) and explanatory report
(part of the Combined Management Report)
Compensation Report
(part of the Combined Management Report)
165 B.5
Corporate Governance statement pursuant to
Section 289a of the German Commercial Code
(part of the Combined Management Report)
Compliance Report
138 B.3
Base com-
pensation
> variability: 0-200%
capital efficiency, profit, individual
> 3 targets one third each:
Compensation structure. Base compensation, variable com-
pensation (bonus) and long-term stock-based compensation
will each constitute approximately one-third of the target com-
pensation for all Managing Board members. The maximum
amounts for stock commitments (Stock Awards), for bonus and
for compensation overall that were introduced in fiscal 2014
will remain fully in effect.
Specifically, the following changes were adopted effective
October 1, 2014:
Annual remuneration reviews - together with
contractually defined maximum amounts for
variable compensation and for stock-based
components of compensation and compensation
overall - ensure that compensation is appropriate.
Appropriateness
Granting a substantial portion of compensation
as stock, together with the share ownership
obligation, puts an emphasis on the ownership
culture within the Company.
Ownership culture
Individual performance is rewarded by agreeing
on individual targets and by the possibility for
the Supervisory Board to adjust the bonus as well
as by individualizable target amounts for stock-
based compensation.
Individual performance
Variable compensation is linked
to the Company's success and
to comparisons with competitors.
Performance orientation
Variable compensation (bonus). In the future, the bonus
will depend on an equal one-third weighting of target attain-
ment in the target categories of capital efficiency, earnings and
individual targets. This weighting will give greater importance
to the Managing Board members' individual performance.
In deciding the individual targets, account will be taken of both
business-related targets like market coverage and business
Dividing compensation into three equally
weighted components, and the equal weighting
of three bases of measurement for the bonus,
permit transparent, understandable communica-
tion of Managing Board remuneration.
The multi-year bases of measurement and long-
term goals for variable components ensure and
encourage sustainable Company development.
Sustainability
| Principal features of the new remuneration system for the Managing Board
The complexity of the former system also resulted from the
way in which variable compensation (bonus) was granted
partly in Stock commitments, Bonus Awards, and from the di-
vided measurement of performance for long-term stock-based
compensation (Stock Awards). Beginning with fiscal 2015, the
bonus will be paid in cash only. The Stock Awards will now be
measured only on the basis of one performance component.
-
offered in the market. The Supervisory Board has maintained
the time-tested division of compensation into non-perfor-
mance-based and performance-based components, but in the
future the individual components of compensation - base com-
pensation, variable compensation (bonus) and long-term,
stock-based compensation will be weighted equally. This
equal weighting will also be applied in setting the target cate-
gories for variable compensation (bonus).
At its meeting on September 24, 2014, the Supervisory Board
decided to introduce a new, simplified remuneration system for
the Managing Board as of October 1, 2014. In past years, the
remuneration system for the Managing Board was modified a
number of times on the basis of new regulatory and statutory
requirements. The system grew more complex as a result.
Establishing transparency about the remuneration of the Man-
aging Board is an important element of good corporate gover-
nance. For that reason, in its revision of the remuneration
system, the Supervisory Board has reduced the system's com-
plexity to the necessary minimum. At the same time, the Super-
visory Board retained incentives for successful corporate man-
agement with an emphasis on sustainability and ensured that
the system would remain consistent with other remuneration
MANAGING BOARD FROM FISCAL 2015 ONWARD
B.4.1.4 REMUNERATION SYSTEM FOR THE
Additional Sustainability indicators are available at:
Transparency
280,000
performance as well as targets like customer and employee
satisfaction, innovation and sustainability. For fiscal 2015, the
target values for the earnings component will be set on a multi-
year basis. Target attainment for the bonus can still vary
between 0% and a ceiling (cap) of 200%.
171 | C. Combined Management Report
Variable compensation (bonus)
> variability: 0-200%
compared to 5 competitors
> target parameter: stock price
Long-term stock-based compensation
Cash
compen-
sation
compen-
sation
Stock-
based
(Stock Awards):
max. 300% of
Stock-based
components
After the end of the fiscal year, the Supervisory Board can still
decide, exercising its duty-bound discretion (pflichtgemäßes
Ermessen), to adjust bonus payout amounts by ±20% for all or
some of the members of the Managing Board. Thus the maxi-
mum amount of 240% of the target amount applies for the
bonus. In deciding on a discretionary adjustment, the Super-
visory Board will take account not only of the Company's eco-
nomic situation and the individual performance of the various
Managing Board members, but also of such factors as the
results of an employee survey (Global Engagement Survey) and
a customer satisfaction survey (Net Promoter Score). Variable
compensation (bonus) will be granted entirely in cash.
Share Ownership Guidelines
Even after the adjustment of the remuneration system for the
Managing Board, regulatory requirements will be met in full.
More than half of the variable compensation has a multi-year
basis. The new system continues to reward long-term commit-
ment to and on behalf of the Company as well as Managing
Board members' participation in a sustained increase in the
Company's value.
Compensatory payments in connection with termination
of Managing Board membership. The terms for compensa-
tory payments will remain essentially unchanged. In particular,
the compensatory payment still cannot exceed the value of two
years' compensation. In the future, the compensatory and sev-
erance payments will be reduced by 10% as a lump-sum allow-
ance for discounted values and for income earned elsewhere;
this reduction will apply only to the portion of the compensa-
tory or severance payment that was calculated without taking
account of the first six months of the remaining term of the
Managing Board member's contract.
Share Ownership Guidelines. The share ownership obli-
gation for members of the Managing Board will remain un-
changed: 300% of base compensation for the President and
CEO, 200% of base compensation for the other members of the
Managing Board during the four years prior to the relevant date
of proof.
| Remuneration system for Managing Board members as of fiscal 2015
Target compensation
Long-term stock-based compensation. Long-term stock-
based compensation will continue to be granted in the form of
forfeitable Stock Awards for Siemens stock. To reflect a Manag-
ing Board member's individual experience as well as the scope
and demands of his or her function, the annual target amount
for all Managing Board members, including the President and
CEO, can now be increased, on an individual basis, by as much
as 75% of the contractually agreed-upon target amount for one
fiscal year at a time. Starting with fiscal 2015, this long-term
stock-based compensation will be linked solely to the perfor-
mance of Siemens stock in comparison to competitors. The
Supervisory Board will also decide on a target system (target
value for 100% and target curve) for the performance of
Siemens stock relative to the stock of - at present - five compet-
itors: ABB, General Electric, Rockwell, Schneider and Toshiba.
The change in stock price will be measured on the basis of a
twelve-month reference period (compensation year) over three
years (performance period), while the four-year restriction pe-
riod for Stock Awards will still apply unchanged. After this re-
striction period expires, the Supervisory Board will determine
how much better or worse Siemens stock has performed rela-
tive to the stock of its competitors. This determination will yield
a target attainment of between 0% and 200% (cap). If target at-
tainment is above 100%, the members of the Managing Board
will receive an additional cash payment, the amount of which
will be based on the outperformance. If target attainment is
less than 100%, a number of Stock Awards equivalent to the
shortfall from the target will expire without replacement. All in
all, the allocation by way of the Stock Awards will be limited to
300% of the target amount (maximum amount).
161
Additional Information
337 | E.
Consolidated Financial Statements
247 | D.
Maximum amounts of compensation
287,000
280,000
615,500
129,630
153,500
13,500
140,000
Hans-Jürgen Hartung¹
229,204
25,500
74,074
129,630
248,500
28,500
80,000
140,000
Bettina Haller¹
155,000
15,000
140,000
185,123
15,000
35,309
134,815
10,500
140,130
Robert Kensbock1
140,000
120,000
140,000
288,500
28,500
120,000
140,000
Jürgen Kerner¹
186,500
16,500
30,000
Prof. Dr. Peter Gruss
140,000
25,500
76,667
140,000
Harald Kern¹
112,500
7,500
105,000
273,667
27,000
106,667
242,167
339,000
39,000
160,000
Olaf Bolduan 1,2
133,500
7,500
28,000
98,000
385,667
39,000
134,815
211,852
Werner Wenning
35,000
617,000
315,889
77,037
211,852
314,389
25,500
77,037
211,852
Berthold Huber¹
57,000
280,000
280,000
27,000
55,500
4,500
Gerd von Brandenstein
140,000
330,000
30,000
160,000
140,000
Dr. Hans Michael Gaul
153,500
13,500
140,000
205,778
39,500
18,000
134,815
Michael Diekmann
198,000
18,000
40,000
140,000
250,000
30,000
80,000
140,000
52,963
WWW.SIEMENS.COM/AR/SUSTAINABILITY-FIGURES
4.9
210 C.5
Building
Tech-
nologies
Building
Tech-
nologies
Mobility
Process
Industries
and Drives
Digital
Factory
Energy
Manage-
ment
All businesses except for solutions for oil and gas
industries go to Power and Gas, oil and gas solutions
go to Process Industries and Drives.
Wind Power
and
Renewables
Power
and Gas
Products³
Solutions &
Power Grid
Trans-
portation &
Logistics²
Drive
Tech-
nologies
1
2 Beginning with fiscal 2015, the airport logistics and
postal automation business is reported within Centrally
managed portfolio activities.
3 All businesses except for rail electrification go to Energy
Management; Rail electrification goes to Mobility.
4 Also includes solar and hydro business.
Mobility
Building
Tech-
nologies
Energy
Manage-
ment
and
Renewables
Power
and Gas
Wind Power
Industrial Business
174
14
| Reportable segments as of October 1, 2014
Beginning of fiscal 2015, Siemens' reportable segments are as
follows:
SFS, which acts as business partner for Siemens's other Divi-
sions and Healthcare and also conducts its own business with
external customers, is a reportable segment which is reported
outside our Industrial Business. Beginning with fiscal 2015,
Equity Investments ceased to be a reportable segment and
became part of Centrally managed portfolio activities, which
are reported within the Reconciliation to Consolidated Finan-
cial Statements.
In addition, the former Healthcare Sector became a separately
managed business within Siemens effective October 1, 2014.
The above mentioned seven Divisions together with Health-
care form our Industrial Business.
BUSINESS DESCRIPTION.
For more details on these organizational changes see →C.1.1.2
Industry
Automation
Power
Trans-
mission
Wind Power
Power
Generation¹
3 By customer location.
2 Commonwealth of Independent States.
All figures refer to continuing operations.
1
26% of total worldwide
74 production plants
major
18% of total worldwide
employees4
orders (in millions of €)³
20% of total worldwide
revenue (in millions of €)³
20% of total worldwide
62,000 **
15,929
14,433
26% of total worldwide
4 As of September 30, 2014.
Digital
Factory
213 C.6
Overall assessment of the economic position
Subsequent events
Infrastructure & Cities Sector
Industry Sector
Energy Sector
| Transfer of businesses as of October 1, 2014
The following figure shows the main transfers of the businesses
from the three Sectors Energy, Industry and Infrastructure &
Cities as of September 30, 2014 to these Divisions as of
October 1, 2014.
173
Consolidated Financial Statements
Additional Information
5 15 employees or more.
247 D.
337
Report on expected developments and
associated material opportunities and risks
225 C.9
242 C.10 Compensation Report and legal disclosures
Siemens AG (Discussion on basis
of German Commercial Code)
Sustainability and citizenship
215 C.8
242 C.11
214 C.7
Process
Industries
and Drives
Healthcare
Financial
Services
171 C.
Corporate Governance
131 | B.
176
108 | A. To our Shareholders
In August 2014, we announced our plan to sell our hospital
information system business to the U.S.-based company Cerner
Corp. Since the fourth quarter of fiscal 2014, these activities
formerly included in the Healthcare Sector fulfilled the require-
ments to be reported as discontinued operations. Results for
prior periods are reported on a comparable basis.
Healthcare offers customers a comprehensive portfolio of
medical solutions across the treatment chain
from preven-
tion and early detection to diagnosis, treatment and follow-up
care. We are a major supplier of technology to the healthcare
industry worldwide and a trendsetter in medical imaging, labo-
ratory diagnostics, healthcare IT and hearing instruments. In
addition, we provide technical maintenance, professional and
consulting services, and, together with SFS, financing to assist
customers in purchasing our products.
-
Healthcare
The businesses of the former Energy Service Division offer
comprehensive services for products, solutions and technol-
ogies, covering performance enhancements, maintenance ser-
vices, customer trainings and consulting services for the for-
mer Divisions Power Generation and Wind Power. Financial
results relating to the Energy Service Division were included in
these Divisions. Beginning with fiscal 2015, the Division was
renamed Power Generation Services. Results for that Division
will be included in the new Power and Gas and Wind Power and
Renewables Divisions.
The businesses of our former Power Transmission Division
provide energy utilities and large industrial power users
with turnkey power transmission solutions as well as discrete
products, systems and related engineering and services. These
offerings are used to process and transmit electrical power
from the source, such as power plants and onshore and off-
shore wind farms, to various points along the power trans-
mission network. Beginning with fiscal 2015, these businesses
are part of the new Energy Management Division.
The businesses of our former Wind Power Division manufac-
ture wind turbines for onshore and offshore applications, in-
cluding both geared turbines and direct drive machines. The
product portfolio is based on four product platforms, two for
each of the onshore and offshore applications. The revenue mix
of these businesses may vary from reporting period to report-
ing period depending on the project mix between onshore and
offshore projects in the respective period. Beginning with fiscal
2015, these businesses were combined with our solar and hydro
activities in the new Wind Power and Renewables Division.
Division. Our solution business for the oil and gas industry will
be included in the new Process Industries and Drives Division.
Beginning with fiscal 2015, substantially all of the former Divi-
sion's businesses will be included in the new Power and Gas
In May 2014, we announced the acquisition of the Rolls-Royce
Energy aero-derivative gas turbine and compressor business
of Rolls-Royce plc, U.K. With the acquisition, we intend to
strengthen our position in the growing oil and gas industry as
well as in the field of decentralized power generation. In Sep-
tember 2014, we have entered into an agreement with Dresser-
Rand to acquire all of its issued and outstanding common
shares by way of a friendly takeover bid. With its comprehen-
sive portfolio of compressors, steam turbines, gas turbines and
engines, Dresser-Rand is a leading supplier for the oil & gas,
process, power and other industries in the related energy infra-
structure markets worldwide. The acquisition complements our
existing offerings, notably for the global oil & gas industry and
for distributed power generation.
Combined Management Report
The businesses of our former Power Generation Division offer
an extensive portfolio of products and solutions for generating
electricity from fossil fuels and for producing and transporting
oil and gas. The Division's customers include both energy pro-
viders and industrial companies. Due to the broad range of the
offerings, the Division's revenue mix may vary from reporting
period to reporting period depending on the share of revenue
attributable to products, solutions and services. Because typical
profitability levels differ among these three revenue sources,
the revenue mix in a reporting period accordingly affects
Division profit for that period.
172 C.1
187 C.2
-
The businesses of the former Industry Automation Division
offer a unique combination of automation technologies, indus-
trial controls and industry software that supports customers in
optimizing the complete product development and production
In fiscal year 2014, the Sector consisted of three Divisions:
Industry Automation, Drive Technologies and Customer Ser-
vices. Financial results relating to the Customer Services Divi-
sion were included in the results for Industry Automation and
Drive Technologies. During the third quarter of fiscal 2014,
nearly all activities of the Metals Technologies business for-
merly included in the Industry Sector fulfilled the requirements
to be reported as discontinued operations. These activities
are to become part of a joint venture with Mitsubishi-Hitachi
Metals Machinery Inc., in which Siemens will hold a 49% stake.
Results for prior periods are reported on a comparable basis.
With the businesses included in the former Industry Sector, we
are one of the world's leading suppliers of innovative and envi-
ronmentally friendly products and solutions for industrial com-
panies, particularly those in the process and manufacturing
industries. Our end-to-end automation solutions, drive technol-
ogies, industrial IT and industry software, in-depth industry
expertise and technology-based services help our customers
use resources and energy more efficiently, improve productiv-
ity, and increase flexibility.
Industry
Beginning with fiscal 2015, Siemens Healthcare will be man-
aged separately under the Siemens umbrella. This will enable
Healthcare to adjust to markets flexibly and in a more focused
way. It means in essence, a sales organization optimized to
meet the needs of Healthcare and a Healthcare specific set up
of support and central functions. In addition, Siemens an-
nounced in November 2014 the sale of its hearing aid business
Audiology Solutions to the investment company EQT and the
German entrepreneurial family Strüngmann as co-investors.
In fiscal 2014, the Healthcare Sector included four Divisions:
Imaging & Therapy Systems, Clinical Products, Diagnostics
and Customer Solutions. The Sector also included Audiology
Solutions, a Sector-led business. In addition to our Sector-level
financial results, we also reported financial results for our
Diagnostics Division.
Because a large part of our revenue stems from recurring busi-
ness, our business activities are to a certain extent resilient to
short-term economic trends but are dependent on regulatory
and policy developments around the world. We are currently
operating in a low growth environment, impacted by healthcare
reforms, budgetary constraints and consolidation of healthcare
service providers, predominantly in the U.S. and Europe.
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
Business and economic environment
production plants
In fiscal 2014, the Energy Sector comprised four Divisions:
Power Generation; Wind Power; Power Transmission; and
Energy Service. In addition, the Sector included two Sector-
led businesses: solar and hydro. Results for these businesses
were included in results for the Sector. Siemens has decided
to exit solar business activities after completing projects in
progress.
Energy
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
Our Divisions are responsible for developing and implementing
their strategy; for developing and producing their portfolio of
products and services; and for managing their sales channels.
As "global entrepreneurs" they have end-to-end business re-
sponsibility worldwide, including with regard to their operating
results. They therefore have "right of way" over the regional
units in business matters.
The businesses of the former Energy Sector offer a wide spec-
trum of products, solutions and services for generating and
transmitting power, and for extracting, converting and trans-
porting oil and gas.
As of October 1, 2014, Healthcare became a separately managed
unit, which includes among others, the set-up of customized
structures (e.g. sales structures, R&D), systems (especially IT)
and functions (e.g. human resources, procurement).
During the first quarter of fiscal 2014, we disbanded our
Regional Cluster organization. Following this organizational
change, we have designated 30 Lead Countries which are indi-
vidually responsible for managing a number of other Coun-
tries regarding market penetration. The Lead Countries and
their assigned Countries are responsible for the local customer
relationship management and for implementing the business
strategies of the Divisions. Each Lead Country reports directly
to the Managing Board.
STATEMENTS.
Until September 30, 2014, our business activities focused on
the four Sectors Energy, Healthcare, Industry and Infrastruc-
ture & Cities. In addition to these four Sectors, we had two addi-
tional reportable segments: Equity Investments and SFS. For
more information on the portfolio transactions described
below, see → NOTE 4 in → D.6 NOTES TO CONSOLIDATED FINANCIAL
C.1.1.2 BUSINESS DESCRIPTION
175
Additional Information
Consolidated Financial Statements
247 D.
337
of German Commercial Code)
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
214 C.7
215 C.8
225 C.9
213 C.6
Except otherwise stated, financial measures presented in this
Combined Management Report are based on our organizational
structure as of September 30, 2014. Based on this organiza-
tional structure, we provide financial measures for our four
Sectors and for two Businesses, each combining two Divisions
within a Sector as well as for eight Divisions of our Sectors.
These financial measures include: orders, revenue, profit and
profit margin. Divisions within a Sector may do business with
each other, leading to corresponding orders and revenue. Such
orders and revenues are eliminated on a Sector level. Further-
more, our reportable segments may do business with each
other, leading to corresponding orders and revenue. Such
orders and revenue are eliminated on the Siemens level within
Eliminations, Corporate Treasury and other reconciling items
and are not included in orders and revenue with external cus-
tomers (external orders and external revenue, respectively)
reported in this document. For Equity Investments we report
profit, and for SFS we report profit and total assets. Free cash
flow and further financial measures are reported for each
reportable segment in the Notes to Consolidated Financial
Statements. For information related to the definition of these
financial measures and to the reconciliation of segment finan-
cial measures to the Consolidated Financial Statements, see
→ NOTE 35 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Beginning with fiscal 2015, our businesses are supported by our
Corporate Core, which comprises the units Corporate Develop-
ment; Governance & Markets; Communications and Govern-
ment Affairs; Legal and Compliance, Human Resources; Corpo-
rate Technology; and Controlling and Finance and by our
Corporate Services, which consist of the units Information
Technology; Supply Chain Management; Export Control and
Customs; Business Process Services; and Siemens Real Estate.
The Corporate Core issues binding company-wide guidelines in
coordination with the Managing Board and oversee their imple-
mentation. In addition, the Heads of selected corporate func-
tions (Governance & Markets, Communications and Govern-
ment Affairs, Legal and Compliance, Human Resources,
Controlling and Finance) have an unrestricted right to issue
instructions in relation to their function across all parts of the
company in accordance with the Bylaws for the Managing
Board of Siemens AG and to the extent legally permissible.
20% of total worldwide
major
employees
orders (in millions of €)³
27% of total worldwide
240 C.9.5 Significant characteristics of the
accounting-related internal control
and risk management system
Opportunities
Risk management
Risks
Report on expected developments
opportunities and risks
Report on expected developments
and associated material
238 C.9.4
of financial management
205 C.4.1 Principles and objectives
Financial position
205|C.4
202 C.3.4 Reconciliation to adjusted EBITDA
204 C.3.5 Selected information based on
new organizational structure
Results of operations
193 C.3.1 Orders and revenue by region
194 C.3.2 Segment information analysis
201 C.3.3 | Income
193 | C.3
financial performance measures
242 |
189 C.2.5 Dividend and share buybacks
190 C.2.6 Additional information for
2 C.10 Compensation Report
225 C.9
213 C.6
210 C.5 | Net assets position
Business and economic environment
Results of operations
242 C.11.2
208 C.4.5 Capital resources and requirements
242 C.11.1
207 C.4.4 Cash flows
(Discussion on basis of German
Commercial Code)
206 C.4.3 Investing activities
Siemens AG
242 | C.11
205 C.4.2 Capital structure
230 C.9.3
229 C.9.2
225 C.9.1
and legal disclosures
Overall assessment of the
economic position
Corporate citizenship
189 C.2.4 Capital structure
183 C.1.3
215 C.8.1
Economic environment
179 C.1.2
215 | C.8
The Siemens Group
172 C.1.1
| Subsequent events
214 | C.7
economic environment
Business and
172 | C.1
Management Report
Combined
C.
Strategy
224 C.8.8
216 C.8.2
Employees
Environmental protection
Environmental Portfolio
Distribution and customer relations
222 C.8.7
187 C.2.3 Profitability and capital efficiency
221 C.8.6
187 C.2.2 Revenue growth
221 C.8.5
187 C.2.1 Overview
Supply chain management
220 C.8.4
Financial performance system
187 C.2
Research and development
218 C.8.3
| Sustainability and citizenship
Sustainability at Siemens
processes from product design to production to sales and ser-
vice. In line with "Industrie 4.0" - a German high-tech indus-
trial strategy
- we are working on the convergence between
the real and the virtual worlds of production, sometimes called
"Digital Enterprise." Our portfolio is geared largely to the man-
ufacturing industry and its major markets such as automotive,
aerospace and production equipment as well as food and bev-
erage, pharmaceutical and chemical. Therefore our business
activities can be strongly affected by economic cycles because
these markets tend to react quickly to changes in the overall
economic environment.
244 C.11.3 Net assets and financial position
245 C.11.4 Employees
245 C.11.6 Risks and opportunities
245 C.11.7 | Outlook
Europe, C.I.S.,²
| Global presence¹
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
172
Combined Management Report
171 C.
Africa, Middle East
Corporate Governance
Americas
41,542
revenue (in millions of €)³
26% of total worldwide
76
70,000 **
20,880
18,756
да
Asia,
Australia
48% of total worldwide
production plants5
major
62% of total worldwide
employees
orders (in millions of €)³
53% of total worldwide
revenue (in millions of €)³
54% of total worldwide
211,000 **
139
38,732
245 C.11.5 Subsequent events
131 | B.
which consist of the following Divisions: Power and Gas;
Wind Power and Renewables; Energy Management; Build-
ing Technologies; Mobility; Digital Factory; and Process
Industries and Drives.
Healthcare
Sector
Energy
Sector
therein:
Total Sectors
| Reportable segments as of September 30, 2014
In fiscal 2014, the Sectors formed four of our reportable seg-
ments. In addition to our four Sectors, we had two additional
reportable segments: Equity Investments and SFS. The following
figure shows our reportable segments as of September 30, 2014.
Below the Managing Board, Siemens was structured organiza-
tionally into four Sectors (Energy, Healthcare, Industry and
Infrastructure & Cities), Financial Services (SFS), Cross-Sector
Services, Corporate Units and Countries in fiscal 2014. The
Sectors were principally broken down into Divisions and these
in turn into Business Units.
Our Company is incorporated in Germany, with our corporate
headquarters situated in Munich. Siemens operates under the
leadership of its Managing Board. The Siemens Managing
Board is the sole management body and has overall business
responsibility in accordance with the German Stock Corporation
Act (Aktiengesetz, AktG). At all other organizational levels
within our Company, management responsibility is assigned to
individuals who make decisions and assume personal responsi-
bility (CEO principle). This principle establishes clear and direct
responsibilities and fosters efficient decision-making.
Siemens comprises Siemens AG, a stock corporation under the
Federal laws of Germany, as the parent company and a total
of about 800 legal entities, including minority investments.
C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION
We are a globally operating technology company with core ac-
tivities in the fields of electrification, automation and digital-
ization, and we occupy leading market positions worldwide in
the majority of our businesses. We can look back on a success-
ful history spanning 167 years, with groundbreaking and revo-
lutionary innovations such as the invention of the dynamo,
the first electric streetcar, the construction of the first public
power plant, and the first images of the inside of the human
body. On a continuing basis, we have around 343,000 employees
as of September 30, 2014 and business activities in nearly all
countries of the world and reported consolidated revenue of
€71.920 billion in fiscal 2014. We operate 289 major produc-
tion and manufacturing plants worldwide. In addition, we have
office buildings, warehouses, research and development facili-
ties or sales offices in almost every country in the world.
C.1.1 The Siemens Group
II | C.1 Business and economic environment
C. Combined Management Report
171
171
therein:
108 | A. To our Shareholders
Industry
Sector
> Power Generation
During fiscal 2014, we initiated a change in the organizational
structure of Siemens, which became effective as of October 1,
2014. Beginning with fiscal 2015, we eliminated the Sectors and
bundled the businesses of the former Energy, Industry and
Infrastructure & Cities Sectors into seven reportable segments,
> Building
Technologies
Solutions & Products
> Power Grid
> Transportation &
Logistics
Sector
therein:
Financial
Services
Equity
Investments
Infrastructure & Cities
Net assets position
> Drive Technologies
> Wind Power
> Industry Automation
> Diagnostics
therein:
With the businesses of the former Drive Technologies Divi-
sion we are one of the world's leading suppliers of integrated
drive systems. With our products and systems for innovative
applications and industry-specific solutions as well as end-to-
end services, we are increasing the productivity, energy effi-
ciency and reliability of machinery and installations in indus-
tries such as shipbuilding, cement, mining, and pulp and
paper. Advanced industry software facilitates our offerings'
optimal integration. Our reliable gears, couplings, and drive
solutions are partly also in high demand in other Divisions of
the Siemens Group, mainly for rail transport and wind turbines.
With our e-Car business, we develop motors and inverters for
electric cars and thereby address an additional future growth
market. The industries served by our businesses, particularly
the process industries, the energy industry and the infrastruc-
ture sector, generally show a delayed response to changes in
the overall economic environment. In contrast, our business
activities that serve customers in the manufacturing industries
can be strongly affected by economic cycles.
> Power Transmission
C.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
Fiscal year 2014 started with a divergent global economic
development. While emerging countries showed a mixed pic-
ture with growth slowing down in the BRIC countries (Brasil,
Russia, India, China), early economic indicators in many indus-
trial economies (U.S., U.K., Japan, countries of the Euro zone)
signaled improvements. In the Euro zone, years of economic
stagnation and recession seemed set to come to an end. Given
the importance of these "heavy weights" for the world econ-
omy, expectations for fiscal 2014 were quite positive. Indeed,
with growth of 2.8% year-over-year, global gross domestic
product (GDP) growth had accelerated in the second half of cal-
endar 2013 compared to the first half, when GDP grew by 2.1%
year-over-year. However, these promising prospects did not
materialize in 2014 for several unforeseeable reasons. The un-
usually strong winter of 2013/2014 disrupted large parts of the
U.S. economy and led to negative GDP growth in the U.S. in the
first quarter of calendar 2014. With the start of calendar 2014,
the first of a series of geopolitical conflicts escalated: the con-
flict in Ukraine brought about substantial uncertainty for the
whole year. In the Middle East, several military conflicts got
worse: Israel and Palestinians again went to war; Libya fell back
into political chaos; the militant group "Islamic State" made sig-
nificant military advances in Syria and Iraq and triggered an
American-led intervention. All these shocks to the global econ-
omy led to increased uncertainty and weighed on global econ-
omic activity. Accordingly, global GDP grew only by 2.7% and
not by 3.2% as expected in October 2013. The slowdown of fixed
investment growth and value added manufacturing growth -
both important indicators for Siemens as a producer of capital
goods - was even stronger: Fixed investments grew by only
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
177
industries, the former Energy Power Generation Division's
oil & gas solutions business is part of the new Process Indus-
tries and Drives Division. The former Customer Services
Division is managed within the new Digital Factory Division.
Infrastructure & Cities
The businesses of the former Infrastructure & Cities Sector of-
fer a wide range of technologies that increase the functionality
and sustainability of metropolitan centers and urban infra-
structures worldwide, such as integrated mobility solutions,
building and security systems, power distribution equipment,
grid automation and control products and solutions, smart grid
applications and low and medium-voltage products. We apply
our IT and automation expertise to optimize infrastructures -
making better use of existing systems and reducing operating
costs while increasing energy efficiency and improving safety
and security.
In fiscal 2014, the Sector consisted of five Divisions: Rail Sys-
tems; Mobility and Logistics; Low and Medium Voltage; Smart
Grid; and Building Technologies. Financial results of the Rail
Systems and the Mobility and Logistics Divisions were com-
bined and reported together as the results of the Sector's Trans-
portation & Logistics Business. Financial results of the Divisions
Low and Medium Voltage and Smart Grid were combined and
reported together as the Sector's Power Grid Solutions & Prod-
ucts Business.
The offerings of the former Rail Systems Division comprise
Siemens' rail vehicle business - including high-speed trains,
commuter trains, passenger coaches, metros, people movers,
light rail vehicles, locomotives, bogies, traction systems and
rail-related services. We combine our expertise in the fields of
mass transit, regional and long-distance transportation, driver-
less systems, traction systems, bogies and onboard power
supplies in order to offer comprehensive know-how for reliable
and efficient rail vehicles.
The business activities of the former Mobility and Logistics
Division hold leading positions as global providers of the inte-
grated technologies that enable people and goods to be trans-
ported safely, efficiently and in an environmentally friendly
manner. Our offerings encompass rail automation and intelli-
gent traffic and transportation systems. The products, services
and IT-based solutions in our portfolio combine innovation
with comprehensive industry know-how. In fiscal 2014, our of-
ferings also comprised our airport logistics business for cargo
tracking and baggage handling and our postal automation
business for letter and parcel sorting. In the third quarter of
fiscal 2014, Siemens announced that it no longer intends to sell
this business. The activities are to be carved out and operated
as a separate business under the Siemens umbrella so that this
business can operate better and more flexible in its medium-
sized competitive environment. Beginning with fiscal 2015, the
airport logistics and postal automation business is reported
within Centrally managed portfolio activities, which are part of
the Reconciliation to Consolidated Financial Statements.
The principal customers of the businesses included in our for-
mer Rail Systems and Mobility and Logistics Divisions are pub-
lic and state-owned companies in the transportation and logis-
tics sectors. Markets served by these businesses are driven
primarily by public spending. Customers of these businesses
usually have multi-year planning and implementation hori-
zons, and their contract tenders therefore tend to be indepen-
dent of short-term economic trends.
Beginning with fiscal 2015, the business activities of the former
Rail Systems and Mobility and Logistics Divisions are combined
to form the Mobility Division. The Mobility Division also includes
the rail electrification business of the former Smart Grid Division.
The business activities of the former Low and Medium Volt-
age Division supply public energy providers, industrial compa-
nies and municipal utilities with a complete range of products,
systems and solutions for power distribution infrastructures.
Our portfolio includes highly reliable power supply solutions
for conventional power plants and renewable energy systems
as well as intelligent, compact substations for urban and rural
distribution networks. We also offer energy-efficient solutions
for heavy industry, the oil & gas industry and the process
industry. Energy-efficient solutions and energy storage systems
for the integration of renewable energies into power grids
round off our portfolio. Business activities included in our Low
and Medium Voltage Division generally tend to react quickly to
changes in the overall economic environment.
Beginning with fiscal 2015, the business activities of the former
Low and Medium Voltage Division are included in the new
Energy Management Division.
The business activities of the former Smart Grid Division offer
power providers, network operators, industrial enterprises and
cities an end-to-end portfolio of products and solutions for
developing intelligent grid infrastructures. Smart grids enable
a bidirectional flow of energy and information. They are re-
quired for the integration of more renewable energy sources
into conventional power transmission and distribution net-
works. In addition, power providers can run their plants more
efficiently with data gained from smart grids. Software solu-
tions that analyze data from smart grids will continuously gain
importance. Our offerings include both in-house technology
development and systems from software partners. The principal
customers are power producers, grid operators, multi utilities,
108 | A. To our Shareholders
178
171 C.
131 | B. Corporate Governance
Combined Management Report
172 C.1
Business and economic environment
187 C.2
214 C.7
215 C.8
Financial performance system
213 C.6
-
131 | B.
108 | A. To our Shareholders
Annual GDP growth forecast
Annual GDP growth
1 Siemens AG, based on an IHS Global Insight report as of October 15, 2014.
Quarterly GDP growth forecast (seasonally adjusted annual rate)
Quarterly GDP growth (seasonally adjusted annual rate)
===== _--_--_AAD¯¯¯¯|1.4
1.8
_ 2.7
2.7.
2.6-
2.5-
-2.6.
2.41
2.4-2.5 2.4
3.1 3.2
2.9
3.2
3.3
3.2
3.7
3.6
2014
2013
2012
2011
1
With a comprehensive portfolio of services and a global net-
work of experts, our businesses of the former Customer
Services Division support our industrial customers with tech-
nology-based industry services across entire lifecycles of their
plants and machinery from planning and engineering to
operation and modernization.
Beginning with fiscal 2015, we serve the industrial market
with two new Divisions that tailor their strategies to specific
customer industries. The Digital Factory Division primarily
addresses the manufacturing industry and its major markets:
automotive, aerospace, and machine tool and production equip-
ment over the complete product lifecycle of our customers.
The Process Industries and Drives Division focuses largely on
the process industries like pharmaceutical, food & beverage,
chemical and related industries as well as drive solutions for
infrastructure topics. The related business activities within the
former Industry Automation and Drive Technologies Divisions
were accordingly realigned into the two new Divisions. In order
to streamline the process automation activities in the oil & gas
193 C.3
Results of operations
205 C.4
Americas
5
4
3
.2.7-2.6
2.3
2.0
2
1.6
1.1
1
20142
2013
Asia,
Australia
4.8
3
1 Source: Siemens AG, based on an IHS Global Insight as of October 15, 2014.
Growth rates provided by calendar year.
2 Estimate for calendar year 2014.
3 Commonwealth of Independent States.
The partly estimated figures presented here for GDP, fixed
investments and manufacturing value added are calculated by
Siemens based on an IHS Global Insight report dated Octo-
ber 15, 2014.
Our businesses are dependent on the development of raw
material prices. Key materials to which we have significant cost
exposure include copper, various grades and formats of steel,
and aluminum. In addition, within stainless steel we have
exposure related to nickel and ferro-alloy materials.
The average monthly price of copper (denominated in € per
metric ton) for September 2014 was 1% lower than the average
monthly price in September 2013. Prices on a fiscal-year average
2010
7
6
5.1
5
4.8
4.4
Europe, C.I.S.,³
Africa,
Middle East
World
| Real GDP growth per region (change in % compared to prior year)1
reflecting slower growth in China (7.3% against 8% expected
last year), which is largely explained by continued downturns
in real estate and manufacturing investment. India suffered
from investment shifts before the general election that took
place from April to May 2014.
Financial position
210 C.5
Net assets position
cities and rail operators. Changes in the overall economic envi-
ronment generally have a delayed effect on our business activ-
ities. Furthermore, parts of our businesses are driven by public
spending. Customers in the public sector usually have multi-
year planning and implementation horizons, and their contract
tenders therefore tend to be independent of short-term eco-
nomic trends.
Beginning with fiscal 2015, all businesses of the former Smart
Grid Division except for the rail electrification business are in-
cluded in the new Energy Management Division. As described
above, the rail electrification business is included in the new
Mobility Division as of fiscal 2015.
The Building Technologies Division is a leading provider of
automation technologies and services for safe, secure and effi-
cient buildings and infrastructures throughout the lifecycle of
buildings. The Division offers products, solutions and services
for fire safety, security, building automation, heating, venti-
lation, air conditioning and energy management. The large
customer base is widely-dispersed. It includes public and com-
mercial building owners, operators and tenants, building con-
struction general contractors and system houses. Changes in
the overall economic environment generally have a delayed
effect on our business activities.
At the beginning of fiscal 2015, the Building Technologies Divi-
sion includes the same business activities as it did at the end of
fiscal 2014.
Equity Investments
In fiscal 2014, Equity Investments in general comprised equity
stakes held by Siemens that are accounted for by the equity
method or as available-for-sale financial assets and that for
strategic reasons are not allocated to a Sector or a Division, re-
spectively, SFS, Centrally managed portfolio activities, Siemens
Real Estate (SRE), Corporate items or Corporate Treasury. Our
main investments within Equity Investments were our 50%
stake in BSH Bosch und Siemens Hausgeräte GmbH (BSH), our
17% stake in OSRAM Licht AG (OSRAM), our 12% stake in Atos SE
(AtoS) and our 49% stake in Enterprise Networks Holdings
B.V. (EN), which in the fourth quarter of fiscal 2014, was re-
named Unify Holdings B.V. (Unify). In the fourth quarter of fiscal
2014, Siemens signed an agreement to sell its stake in BSH to
Robert Bosch GmbH. The transaction is expected to be com-
pleted in the first half of calendar 2015. Equity Investments
ceased to be a reportable segment beginning with fiscal 2015.
As of October 1, 2014, equity stakes formerly included in Equity
Investments are reported within Centrally managed portfolio
activities, which are part of the Reconciliation to Consolidated
Financial Statements.
Financial Services
Financial Services (SFS) provides business-to-business finan-
cial solutions. With its specialist financing and technology
expertise in the areas of Siemens businesses, SFS supports cus-
tomer investments with leasing solutions and equipment,
project and structured financing. SFS provides capital for
Siemens customers as well as other companies and manages
financial risks of Siemens.
SFS operates the Corporate Treasury of the Siemens Group,
which includes managing liquidity, cash and interest risks as
well as certain foreign exchange, credit and commodities risks.
Business activities and tasks of Corporate Treasury are reported
in the segment information within Reconciliation to Consoli-
dated Financial Statements. For further information on Corpo-
rate Treasury activities see → c.4.1 PRINCIPLES AND OBJECTIVES OF
FINANCIAL MANAGEMENT.
C.1.2 Economic environment
Corporate Governance
2
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
179
3.6% in 2014 and not by 5.2% as expected in October 2013,
global value added in manufacturing grew by only 3.5% and
not by the expected 4.0%, hurting Siemens' industrial and
energy-related businesses in particular.
From a geographical perspective, the region Europe, C.I.S.,
Africa, Middle East was the only of our three reporting regions
delivering faster GDP growth in 2014 than in 2013. However,
with 1.6% the level of growth is still lower than in the other re-
porting regions. In addition, last year's expectation was 0.5 per-
centage points higher. The main reasons for the disappointing
performance are the still very sluggish development in Europe,
in particular the Euro zone, and recessions in both Russia and
Ukraine. In Germany, the fiscal year started promisingly with
sentiment indicators continuously improving, followed by a
strong first quarter of calendar 2014 (which was partly due to
mild winter weather). However, in the course of year 2014 the
uncertainties caused by the geopolitical conflicts increasingly
weighed on economic activity and slowed down GDP growth
for the full year.
In the Americas region, growth slowed down slightly to 2.0%.
A year earlier, the expectation was for growth of 2.7%. The
harsh winter mentioned above, which reduced consumption
and factory output in some areas of the U.S. and Canada, was
one reason for the slowdown. In addition, the economies of
most Latin American countries grew substantially slower than
estimated last year. For example GDP growth for Brazil was
marked down from 3.1% to a negative 0.1% from October 2013
to October 2014. The pattern was similar for Argentina, Chile,
Venezuela and Peru. One important driver for this weak perfor-
mance was globally weaker commodity markets.
In Asia, Australia, GDP growth for calendar 2014 is estimated
at 4.8%, virtually the same level as in previous years. Compared
to last year's expectation this is 0.3 percentage points lower,
| World real GDP growth (in % compared to previous period)1
213 C.6
4
171 C.
180
Combined Management Report
Financial position
205 C.4
Results of operations
3.7-3.5-
Financial performance system
187 C.2
Business and economic environment
172 C.1
193 C.3
131 | B.
108 | A. To our Shareholders
In fiscal 2014, markets served by our Industry Sector, consist-
ing of our Industry Automation and Drive Technologies Divi-
sions, grew slightly year-over-year. At the beginning of the
fiscal year, growth came mainly from stronger demand in
long-cycle industries and restocking by customers in China.
Towards the end of the fiscal year, demand also began to pick
up in short-cycle industries. Within the main industries served
by our Divisions, demand in the automotive industry was par-
ticularly strong, with many countries reporting significant in-
creases in production, especially in Europe. The machine build-
ing industry developed less favorable in the beginning of the
fiscal year due to weaker growth in many emerging economies,
which are important markets for export-oriented industrialized
countries. In the last months of fiscal 2014, demand in the
machine building industries picked up somewhat. On a regional
basis, our markets in Europe experienced a slight recovery in
fiscal 2014, due to a more positive overall economic environ-
ment year-over-year, particularly including Spain, Poland and
the Netherlands. While markets in Germany grew year-over-
year, growth was held back by stagnation in original equip-
ment manufacturing (OEM) industries, which were impacted
by lower demand from emerging markets. Overall, demand in
Europe for industrial investment goods was held back as pro-
duction capacities of our customers still did not reach full utili-
zation. In the Americas, except the U.S., growth in end-cus-
tomer markets slowed down in fiscal 2014 compared to fiscal
2013. This was particularly evident in Brazil. Within the U.S.,
demand in the oil and gas industries grew strongly. In contrast
markets for electrical investment goods expanded modestly.
Within the Asia, Australia region, growth slowed down year-
over-year in several countries, particularly including Australia,
India, Indonesia and Thailand. Growth in China was solid year-
over-year. While growth in China benefited from restocking ef-
fects, it was supported also by strong demand from the coun-
try's automotive and infrastructure industries, and, to a lesser
extent, by demand in parts of the construction machinery mar-
kets and food machinery, elevators and rubber machines mar-
kets. Competition of Industry's business activities can be
grouped into two categories: multinational companies that of-
fer a relatively broad portfolio and companies that are active
only in certain geographic or product markets. Consolidation is
taking place mostly in particular market segments and not
China are experiencing a shift in demand, from an emphasis on
large clinics to increased investment in small and midsize
regional clinics. Along with this change, competitive and price
pressure rose, due mainly to increasing numbers of local ven-
dors. Overall, the trend toward consolidation in the healthcare
industry continues. Competition among the leading companies
is strong, including with respect to price.
In fiscal 2014, markets served by our Healthcare Sector grew
slightly year-over-year. Growth was again driven by emerging
markets, which continued to build up their healthcare infra-
structures and expand access to modern medical technology
for a broader population. Market development in industrialized
countries remained weak, impacted by healthcare reforms and
budgetary constraints. On a regional basis, markets in the
Americas grew moderately. Market conditions in our large U.S.
market remained challenging as service providers faced ongo-
ing pressure on utilization and reimbursement rates associated
with medical devices. The U.S. market for Healthcare IT contin-
ues to grow, but at a slower pace than in previous years.
Healthcare markets in the Europe, C.I.S., Africa, Middle East
region declined slightly. During fiscal 2014, European health-
care markets saw some stabilization. The market situation in
Germany was challenging. Demand stagnated and price pres-
sure was strong. Decreasing public grants to the country's
health insurance system is burdening the financial situation of
hospitals and thus their willingness to invest. Growth in China
slowed down compared to the previous fiscal year. Markets in
181
markets differs between the market segments. In the market
for onshore wind farms, competition is widely dispersed with-
out any one company holding a dominant share of the market.
In contrast, there are only a few major players in the market for
offshore wind farms, which are technologically more complex.
Several competitors have managed to return to profitability
through cost reduction measures and restructuring. Previously
existing overcapacities have been adjusted to better match
demand. Consolidation is moving forward in both on- and off-
shore wind power through the market exit of smaller players,
and especially in offshore through joint ventures between
established players and new market entrants. The key drivers
for consolidation are technology and market access challenges,
which increase development costs and the importance of risk
sharing in offshore wind power.
Consolidated Financial Statements
Additional Information
247 D.
337
FY 2014
FY 2013
Markets addressed by our Power Transmission Division grew
slightly in fiscal 2014 compared to fiscal 2013, due mainly
to strong demand from parts of Europe and the Middle East,
including Germany, the U.K. and Saudi Arabia, where large
transmission projects were awarded. In contrast, investments
in Russian electrical infrastructure went down significantly in
fiscal 2014. Markets in Asia remained stable year-over-year.
While growth in China slowed down somewhat, India awarded
a new contract for a large high-voltage direct current (HVDC)
project. On a currency-adjusted basis, market volume in the
Americas increased slightly year-over-year. Including currency
translation effects, markets in the Americas declined slightly
year-over-year.
Corporate Governance
Combined Management Report
182
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
across the broad base of our portfolio, with the exception of
the acquisition of Invensys by Schneider Electric. Consolidation
in solution-driven markets is going in the direction of in-depth
niche market expertise, whereas consolidation of the product-
driven market follows the line of convergence. Most major
competitors have established global bases for their businesses.
In addition, competition has become increasingly focused on
technological improvements and cost position.
171 C.
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Sustainability and citizenship
Our main exposure to the prices of copper, aluminum and
related products is in the new Divisions Energy Management
and Process Industries and Drives. Our main price exposure
related to carbon steel and stainless steel is in our new Divi-
sions Power and Gas and Wind Power and Renewables. In addi-
tion, Siemens is generally exposed to energy and fuel prices,
both directly (electricity, gas, oil) and indirectly (energy used
in the manufacturing processes of suppliers, fuels included in
logistics costs).
Siemens employs various strategies to reduce the price risk in
its project and product businesses, such as long-term contract-
ing with suppliers, physical and financial hedging and price
escalation clauses with customers.
C.1.2.2 MARKET DEVELOPMENT
In fiscal 2014, the addressed market of our Energy Sector devel-
oped stable year-over-year. Wind power markets showed the
strongest growth (both onshore and offshore). Markets for
power transmission grew slightly while market volume for
large gas turbines declined year-over-year.
Markets of the Power Generation Division declined in fiscal
2014 compared to fiscal 2013. In particular the advanced gas
turbine market remained difficult with a market size in fiscal
2014 clearly below fiscal 2013. In addition, production over-
capacities have been resulting in increased price pressure.
During the fiscal year, the overall market environment for fossil
power generation faced project shifts in various regions lead-
ing to tough competition. While key countries such as the
U.S. or China have been facing market delays, countries of the
Middle East, especially Saudi-Arabia showed higher invest-
ments in gas-fired power plants year-over-year. Demand for
industrial gas and steam turbines developed roughly flat.
Markets served by our Wind Power Division grew clearly in fis-
cal 2014 fueled by strong demand in Europe, which is the most
mature geographic market in the world for onshore and off-
shore wind power. In particular, Europe is home to almost all
offshore installations currently active worldwide. Within the
Americas, growth in the U.S. was driven by onshore wind proj-
ects, following the extension of an existing production tax
credit (PTC) for renewable energy into the first quarter of fiscal
2014. Market development in the Asia, Australia region was
characterized by intense local competition, particularly in
China. While China has the largest wind market in the world,
market access for foreign companies remains to be very diffi-
cult and limited. The competitive situation in the wind power
| Development of raw material prices (Index: Beginning of fiscal 2010 = 100)
170
160
150
140
130
120
110
100
90
80
FY 2010
FY 2011
FY 2012
Copper
Aluminium (HG)
Steel HRC
Source: London Metal Exchange (LME) for copper and aluminium, CRU HRC Germany for steel; cash prices in € per ton.
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
225 C.9
In fiscal 2014, the broad overall market for the offerings of the
Infrastructure & Cities Sector grew slightly. The market for rail
systems showed growth, non-residential construction markets
were recovering, and the market for power grid solutions and
products remained challenging.
In fiscal 2014, markets addressed by our Building Technol-
ogies Division grew slightly in aggregate year-over-year. Within
our non-residential construction markets, some segments
developed more favorably than the market overall. Among
them were data centers and the pharmaceutical industry,
which showed clear growth in construction activities compared
In fiscal 2014, markets for our Power Grid Solutions & Prod-
ucts Business declined slightly year-over-year including weaker
demand from some emerging markets countries. Overall, the
decline is caused by weak demand in the Europe, C.I.S., Africa,
Middle East region. The market situation in southern Europe
remained particularly challenging. In Germany, which is under-
taking a massive shift to renewable energy ("Energiewende"),
utilities continued to delay major grid investments due to un-
certainty in the regulatory environment. The Americas re-
ported modest growth in real terms, particularly in the U.S.,
where the economy is gaining momentum in construction and
oil and gas markets. The overall market development was more
positive in the Asia, Australia region, particularly including
demand in the utility business within emerging economies.
Furthermore, markets in the oil and gas business and in the
non-residential construction business grew year-over-year, par-
ticularly in China.
> Governance; and
> our management model "One Siemens."
a) Ownership culture
One engine of sustainable business is our ownership culture,
in which every employee takes personal responsibility for our
Company's success. "Always act as if it were your own Company" -
this maxim applies to everyone at Siemens, from Managing
Board member to trainee.
b) Customer and business focus
We expect that the megatrends digital transformation, global-
ization, urbanization, demographic change and climate change
will provide growth opportunities. We are focusing on our posi-
tioning along the value chain of electrification. This is where
our core business lies. From power generation to power trans-
mission, power distribution and smart grid to the efficient
application of electrical energy in every one of these inter-
related fields, electrification, automation and digitalization are
the key business drivers.
-
> Power generation: The field of efficient power generation
encompassing conventional and renewable energy sources
as well as comprehensive services - is addressed by our
Divisions Power and Gas, Wind Power and Renewables, and
Power Generation Services.
> Power transmission, power distribution and smart grid:
Solutions for power transmission and distribution as well as
technologies for smart grids are all bundled at our Energy
Management Division.
> Energy application: Our Divisions Building Technologies,
Mobility, Digital Factory and Process Industries and Drives
are delivering technologies for the efficient application of
energy in building technology, transportation and industry.
> Imaging and in-vitro diagnostics: Healthcare is responsible
for our medical imaging and in-vitro diagnostics businesses.
In all areas related to project financing, Financial Services is a
reliable partner to our customers.
We want to set clear priorities for resource allocation and
address promising growth fields, for example:
> Flexible and small gas turbines;
> Offshore wind power;
> Distribution grid automation and software;
> Urban and interurban mobility;
> Digital-twin software;
> Key sectors in process industries;
> Image-guided therapy and molecular diagnostics; and
> Business analytics and data-driven services, software and
IT solutions.
Flexible and small gas turbines: In the area of power genera-
tion, the trend is increasingly toward decentralized energy
supply. Customers worldwide are relying more and more on
individualized energy supplies and demanding tailor-made
solutions. As a result, we see major growth potential in the
field of flexible and small gas turbines.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
184
> Customer and business focus;
Markets served by the Transportation & Logistics Business
grew moderately in fiscal 2014, fueled e.g. by large contract
awards in the U.K. and in Saudi Arabia within the Europe, C.I.S.,
Africa, Middle East region. Europe remained the largest market
for the Business. Growth in the Americas region benefited from
demand for passenger locomotives and urban transport prod-
ucts in the U.S. The Asia, Australia region showed the highest
growth rates of all regions. This growth was fueled, amongst
others, by a recovery in China, which began to increase its
investments in high-speed trains.
> Ownership culture;
C.1.3.2 STRATEGIC FRAMEWORK
to fiscal 2013. Within Europe, non-residential construction
markets saw some stabilization in fiscal 2014, but remained
weak due to the economic situation and austerity programs in
some southern and western European countries. In contrast,
markets in the Middle East, in Asia and Australia grew consid-
erably year-over-year. In the Americas, growth in non-residen-
tial construction markets began to accelerate during the fiscal
year. There is usually a time lag of three to four quarters be-
fore Building Technologies businesses begin to participate in
such growth.
Infrastructure & Cities principal competitors are multinational
companies. The Sector also faces competition from niche com-
petitors and from new entrants, such as utility companies and
consulting firms, exploiting the fragmented energy efficiency
market. The Sector's solution businesses also compete with en-
gineering, procurement and construction providers, and com-
petitors in the service field often include small local players.
C.1.3.1 VISION 2020
In May 2014, we presented our entrepreneurial concept
"Vision 2020."
Shaped by our history, culture and values, our mission defines
how we understand ourselves. As an expression of a strong
brand, it formulates our aspiration: We make real what matters,
by setting the benchmark in the way we electrify, automate
and digitalize the world around us. Ingenuity drives us and
what we create is yours. Together we deliver.
There are three stages in which we will lead our Company into
the future:
> In the short term, we want to "drive performance." To
achieve this aim, we are retailoring our structures and re-
sponsibilities. We are also focusing on business excellence.
In addition, we want to get those businesses back on track
that have not reached their full potential and make them
competitive again.
> "Strengthen core" is our aim in the medium term. We in-
tend to strengthen our successful businesses along the value
chain of electrification by, among other things, allocating
resources in a more rigorous way in order to expand in
strategic growth fields.
> In the long term, we want to "scale up." We will intensify our
efforts to seize further growth opportunities and tap new
fields.
213 C.6
214 C.7
215 C.8
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
183
We have linked the success of Vision 2020 to the attainment of
seven overarching goals:
> Implement stringent corporate governance: We want to
simplify and accelerate our processes, while reducing com-
plexity in our Company and strengthening our corporate
governance functions. We expect that these measures en-
able us to reduce our costs by roughly €1 billion. The savings
are expected to be mainly effective in fiscal 2016.
> Create value sustainably: We are tapping attractive growth
fields and getting those businesses that have not yet reached
their full potential back on track.
> Execute financial target system: We are rigorously imple-
menting our financial target system.
> Expand global management: To reflect our global orienta-
tion more strongly in the future, we want more than 30% of
our Division and Business Unit managers to be based outside
Germany.
> Be partner of choice for our customers: We want to be our
customers' partner of choice. To measure customer satisfac-
tion, we use the Net Promoter Score (NPS) – a comprehensive
customer satisfaction survey that we conduct every year. Our
goal is to improve our score by at least 20%.
> Be an employer of choice: Highly committed and satisfied
employees are the basis of our success. We are - and want to
remain - an attractive employer. That is why we conduct a
global engagement survey to measure employee satisfaction.
In the categories Leadership and Diversity, we aim to achieve
an approval rating of over 75% on a sustainable basis.
> Foster an ownership culture: In the future, our employees
will have an even greater stake in their company's success.
We want to increase the current number of employee share-
holders by at least 50%.
We have defined a comprehensive strategic framework that
integrates the key fields of company management. These key
fields are:
C.1.3 Strategy
Profit after tax of SFS
The average monthly steel prices for September 2014 declined
by 8% compared to the average monthly prices in Septem-
ber 2013. Prices on a fiscal-year average were 7% lower in fiscal
2014 than the average for fiscal 2013.
FY 2013
FY 2014
Infrastructure & Cities
9.4%
3.7%
FY 2013
1 Adjusted EBITDA margins of respective markets through business cycle.
Target range
8-12%
13.1%
In line with common practice in the financial services busi-
ness, our financial indicator for measuring capital efficiency at
Financial Services (SFS) is return on equity after tax, or ROE
(after tax). For information on the calculation of ROE (after
tax) and its components, see → C.2.6.1 RETURN ON EQUITY (ROE)
(AFTER TAX).
Comparable1
FY 2014
FY 2013
1%
(1)%
1 Excluding currency translation and portfolio effects.
SFS' profit after tax
SFS' average allocated equity
| Return on equity (ROE) (after tax)
11-17%
16.4%
Industry
FY 2014
ORDERS AND REVENUE BY REGION.
| Revenue growth
Revenue current period
Revenue prior-year period
Actual
FY 2014
(2)%
FY 2013
(2)%
小
× 100%
Healthcare
FY 2014
20.5%
15-20%
FY 2013
20.7%
FY 2014
FY 2013
Within the framework of One Siemens, we aim to grow our rev-
enue faster than the average weighted revenue growth of our
most relevant competitors. In fiscal 2014, we calculated our rev-
enue growth for this comparison using actual revenue as pre-
sented in the Consolidated Financial Statements. Our primary
measure for managing and controlling our revenue growth is
comparable growth, which excludes currency translation and
portfolio effects. We provide figures for both comparable and
actual revenue growth in this Annual Report, within c.3.1
18.1%
17.1%
C.2.3 Profitability and capital efficiency
Income from continuing operations before interest after tax
Average capital employed
FY 2014
FY 2013
17.2%
13.7%
Target range: 15-20%
× 100%
Power and Gas
| (continuing operations)
Wind Power and Renewables
Margin range
11-15%
5-8%
7-10%
8-11%
6-9%
Beginning with fiscal 2015 and within the scope of further
development of One Siemens, we intend to use ROCE for con-
tinuing and discontinued operations as the primary measure for
managing and controlling our capital efficiency. Going forward
all activities of the Group are included in this financial measure.
We continue to aim for a ROCE in the range of 15% to 20%. ROCE
for continuing and discontinued operations amounted to 17.3%
in fiscal 2014, compared to 13.5% a year earlier.
Building Technologies
Mobility
Digital Factory
14-20%
Energy Management
Return on capital employed (ROCE)
Within the framework of One Siemens we seek to work profit-
ably and as efficiently as possible with the capital provided by
our shareholders and lenders. For purposes of managing and
controlling our capital efficiency in fiscal 2014, we used return
on capital employed, or ROCE, for continuing operations as
our primary measure. We aimed to achieve a range of 15% to
20%. An analysis of this financial measure is provided in
→ C.3.3 INCOME. For information on the calculation of ROCE and
its components, see → C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE).
| Profit margin ranges
Within the framework of One Siemens, we aim to achieve mar-
gins through the entire business cycle that are comparable to
those of our relevant competitors. For purposes of this compar-
ison in fiscal 2014, we used defined adjusted EBITDA margin
ranges, which are based on the results of the respective rele-
vant competitors of our four Sectors. Information regarding
the calculation of adjusted EBITDA is presented in → c.3.4
RECONCILIATION TO ADJUSTED EBITDA.
Target range: 15-20%
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This
measure is the main driver of basic earnings per share (EPS)
from net income, which we use for communicating with
the capital markets. For an analysis of this measure, refer to
→ C.3.3 INCOME.
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
242 C.11
Sustainability and citizenship
242 C.10 Compensation Report and legal disclosures
Siemens AG (Discussion on basis
of German Commercial Code)
225 C.9
Report on expected developments and
associated material opportunities and risks
247 D.
337
Consolidated Financial Statements
Additional Information
187
Beginning with fiscal 2015, we defined profit margin ranges for
our Industrial Business (for the new organizational set up of
Siemens, see → C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION),
which are based on the profit margins of the respective rele-
vant competitors. Their determination is based on our en-
hanced profit definition for our Industrial Business, which is
also effective beginning with fiscal 2015. In contrast to the
profit definition we used for fiscal 2014, the enhanced defini-
tion eliminates income statement effects resulting from amor-
tization of intangible assets acquired in business combinations.
This type of amortization is basically a technical consequence
of the purchase price allocation resulting from an acquisition,
and therefore has nearly no operational business relevance.
Moreover, by eliminating these income statement effects, we
improve the comparability of our Industrial Businesses's profits
with that of their relevant competitors. Beginning with fiscal
2015, profit for SFS is also presented excluding amortization
of intangible assets acquired in business combinations. Except
for this adjustment, the profit definition remains unchanged.
× 100%
C.2.2 Revenue growth
9.9%
FY 2013
> We have removed layers from our Company, thus bringing
our businesses closer to customers and key markets. We re-
placed our 14 Regional Clusters with 30 Lead Countries. The
CEOs of these countries now report directly to our Managing
Board.
> We have also eliminated the Sector level and consolidated
our business activities into nine Divisions and one separately
managed unit, Healthcare. This change is increasing our
customer proximity and accelerating our decision-making.
> In addition, we have made governance even more stringent
across all levels of our organization. Our Managing Board
leads the Company and maintains the balance between our
businesses and regions. It is supported by strong, efficient
governance functions, our Corporate Core. This Corporate
Core ensures fast, unbureaucratic decision-making across
key company functions.
d) Management model "One Siemens"
To enable us to manage our Company more effectively, we have
expanded "One Siemens" into an integrated management
model that combines under one roof the overarching targets
and priorities with which we are implementing our strategy
throughout the Company. It encompasses a financial frame-
work, an operating system and Corporate Memory as well as
sustainability and citizenship.
Financial framework
To measure and compare our development against the market
and in our competitive environment, we used a system of
defined key indicators. We have now refined and expanded
this financial target system, which is explained in more detail
in c.2 FINANCIAL PERFORMANCE SYSTEM.
We want to lead Siemens in such a way that we focus on our
customers at all times and further expand our market penetra-
tion while maintaining lean and flexible structures. That is why
we have selected a market-integrative setup that combines a
common regional organization with a coordinated vertical
approach. Against this backdrop, we have retailored the struc-
tures and responsibilities of our businesses, our Regions and
our corporate governance functions:
213 C.6
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
214 C.7
215 C.8
c) Governance
customers' business processes. In the future, we want to lever-
age this knowledge even better by analyzing the data gener-
ated in these processes, providing recommendations for im-
provement and action, and thus creating value. The resulting
competitive advantages for our customers are increasingly
derived from cloud-based solutions and services powered
by data-analytics software.
Business analytics and data-driven services, software and
IT solutions: We have a comprehensive understanding of our
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Offshore wind power: Among renewable sources of energy,
wind power will play a key role over the long term. Offshore
wind turbines deliver high yields and are subject to less fluctu-
ation than other renewables. We want to continue building on
the leading position in offshore wind power that we have cap-
tured in recent years. We consider double-digit market growth
realistic in this field in the medium term.
Distribution grid automation and software: Energy manage-
ment is becoming increasingly vital - for distribution grids as
well as industrial and private energy producers and consumers.
Energy management systems make it possible to integrate in-
creasingly decentralized power supplies into the energy cycle,
while mitigating the negative impact of the fluctuations that
occur when power is generated from renewable sources - thus
improving the utilization of existing power grids. Our intelli-
gent, integrated automation solutions offer customers decisive
added value.
Urban and interurban mobility: In strong demand, intelligent
mobility solutions are providing major impulses for growth -
particularly in the areas of urban transportation and automated
traffic-control solutions. We see stronger growth potential in
this area as well.
Digital-twin software: The virtual and real worlds are merging
more and more. Already today, our software solutions are help-
ing customers develop products much faster, more flexibly and
more efficiently. Not only products but also the plants in which
they are produced have digital twins that can be used to co-
ordinate and integrate product design and production plan-
ning. The digital models are always up-to-date – as planned, as
built, as maintained - while allowing improvements through-
out entire lifecycles.
-
Key sectors in process industries: Some industry sectors
oil & gas and food & beverage, for example are growing at
above-average rates. We want to participate in this growth.
That is why we are bundling our expertise in process industries
and drive technologies and continuing to expand our related
portfolio of products and software solutions.
Image-guided therapy and molecular diagnostics: The in-
creasing use of molecular biological methods and progress in
the life sciences are accelerating technological change in health-
care. To improve quality and efficiency, societies worldwide are
also demanding new solutions for next-generation healthcare.
185
Operating system and Corporate Memory
We manage our Company in accordance with specific, clearly
defined priorities. Our One Siemens operating system sets the
following four priorities: Customer proximity, innovation, busi-
ness excellence, as well as people excellence and care. In addi-
tion, the Corporate Memory - our knowledge management -
ensures that we learn from mistakes and keep our work focused
on success.
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
II | C.2 Financial performance system
| Adjusted EBITDA margins
Margin
Target range
C.2.1 Overview
Within One Siemens, we have established a financial frame-
work - for revenue growth, for profitability and capital effi-
ciency, for our capital structure, and for our dividend policy.
Energy
FY 2014
8.1%
10-15%
187 C.2
172 C.1
Business and economic environment
186
Customer proximity: Profitable growth is based on proximity
to our customers and on an understanding of their individual
requirements. To meet and exceed our customers' expecta-
tions, we invest in local sales presence and support for spe-
cific groups of market partners. Our key account management
approach is just one successful example of this. We are repre-
sented in virtually every country in the world by Regional Com-
panies that operate as local partners to our customers. We also
exploit our in-depth knowledge of customer processes and
continually develop our offerings for key verticals in a targeted
manner - across organizational boundaries. To regularly gauge
the satisfaction of our customers around the world, we use a
uniform measure, the Net Promoter Score.
-
Innovation: Innovation is essential for ensuring long-term
competitiveness. This applies to our entire portfolio of prod-
ucts, solutions and services. Added value for our customers is
based increasingly on software and IT solutions. As a result, we
have made this field a particular focus of our attention for
example, through research and development activities in soft-
ware architecture and platforms. Tools such as partner net-
works are enabling us to manage highly effective innovation
processes and an open innovation culture. We are concentrat-
ing on new technology-driven growth areas as well as innova-
tive business models.
Business excellence: We want to do an excellent job of man-
aging our businesses while pursuing our aim of continuous
improvement. For this, we have developed outstanding tools
that we intend to apply with even greater rigor in the future.
These tools enable us, for instance, to benchmark our per-
formance against the best and to increase our productivity.
Tightening our risk management approach is helping us iden-
tify project risks while still in the bidding phase and thus
avoid costly project delays. Last but not least, we are fostering
our service business across organizational boundaries - for
example, by developing service platforms.
People excellence and care: Excellent employees are the
heart and soul of Siemens. That is how it has always been. And
we want it to be even more so in the future. Therefore we are
anchoring an ownership culture at our Company. For us, this is
not an abstract idea but a concrete goal that we are pursuing
with measures we can track. After all, the behavior, motivation
and values of the people who work for Siemens mold our cul-
ture. In an attractive working environment, we promote lifelong
learning and personal development. Integrity – supported by a
well-established compliance system
remains the principle
that guides our conduct. Our share programs are enabling us
to increase employee participation in our Company's success,
while bringing us closer every day to a lived ownership culture.
Sustainability and citizenship
-
We contribute to sustainable development by maintaining a
responsible balance at company level between profit, planet
and people.
> Profit: by having a range of products, solutions and services
that makes a difference worldwide, because it provides cus-
tomers with decisive competitive advantages.
> Planet: by utilizing our planet's limited resources responsibly
and by enabling our customers to improve their own environ-
mental performance.
> People: by living a culture that strengthens our employees'
sense of responsibility worldwide, fosters their development
and places integrity at the center of our Company's activities.
As good corporate citizens, we are also contributing to the
sustainable development of society through our portfolio, our
local presence worldwide and our role as a thought leader.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
172 C.1
Average monthly prices of aluminum traded on the London
Metal Exchange recently rebounded and were 17% higher
in September 2014 compared to September 2013. Prices on a
fiscal-year average were nevertheless 8% lower in fiscal 2014
than the average of fiscal 2013. Significantly rising premiums
for physically delivered aluminum have added to the prices of
the London Metal Exchange contracts. The aluminum industry
is in a situation of a global oversupply due to rapid expansion
of capacities, while regional markets in the western world face
a tighter supply.
Process Industries and Drives
Healthcare
465
89
107
30%
30%
298
358
(26)
(41)
(85)
(66)
409
465
2013
2014
Year ended September 30,
(I)/(II) ROE (after tax) of SFS
(II) Average allocated equity of SFS³
(I) Profit after tax of SFS
ROE (after tax) of SFS
Less: Calculated income taxes of SFS
Profit of SFS (IBIT)
Profit after tax of SFS
Calculated income taxes of SFS
Tax rate (flat)
Tax basis
Less: Income of SFS from investments accounted for using the equity method, net¹
Less: Tax-free income components and others²
409
(107)
(89)
357
were still 10% lower in fiscal 2014 than the average for fiscal
2013, reflecting modest demand during fiscal 2014.
8-12%
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
172 C.1
Business and economic environment
190
Profit of SFS (Income before income taxes, IBIT)
Combined Management Report
Corporate Governance
131 | B.
108 | A. To our Shareholders
3 Average allocated equity of SFS for a fiscal year is deter-
mined as a five-point average in allocated equity of SFS
of the respective quarters starting with the allocated
equity of SFS as of September 30 of the previous fiscal
year.
are classified from at equity to available-for-sale financial
assets and are therefore not included in the (Income) loss
of SFS from investments accounted for using the equity
method, net. Such results are already taxed or generally
tax free. Others may also comprise an adjustment for
material taxable Income (loss) of SFS from investments
accounted for using the equity method, net.
2 Tax-free income components include forms of financing
which are generally exempted from income taxes.
Others comprise result components related to the
(partial) sale/divestment of equity investments, which
1 For information on Income (loss) of SFS from invest-
ments accounted for using the equity method net,
see → C.3.4 RECONCILIATION TO ADJUSTED EBITDA.
17.1%
1,874
1,976
320
357
320
171 C.
Calculation of income taxes of SFS
18.1%
The following table reports the calculation of ROE (after tax) of
SFS as defined under One Siemens.
FY 2014
Adjusted EBITDA
Industrial net debt
Dividend payout percentage
The proposed dividend of €3.30 per share for fiscal 2014 rep-
resents a total payout of €2.706 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on net income of €5.507 billion
for fiscal 2014, the dividend payout percentage is 49%. The per-
centage for fiscal 2013 was 57%, based on a total dividend pay-
out of €2.533 billion and a net income of €4.409 billion.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the follow-
ing proposal to allocate the unappropriated net income of
Siemens AG for the fiscal year ended September 30, 2014: to
distribute a dividend of €3.30 on each share of no-par value
entitled to the dividend for fiscal year 2014 existing at the date
of the Annual Shareholders' Meeting, with the remaining
amount to be carried forward. Payment of the proposed divi-
dend is contingent upon approval by Siemens shareholders
at the Annual Shareholders' Meeting on January 27, 2015. The
prior-year dividend was €3.00 per share.
| Capital structure (continuing operations)
Sustainable revenue and profit development is supported by a
healthy capital structure. A key consideration within the frame-
work of One Siemens is to maintain ready access to the capital
markets through various debt products and preserve our ability
to repay and service our debt obligations over time. Our pri-
mary measure for managing and controlling our capital struc-
ture is the ratio of industrial net debt to adjusted EBITDA.
This financial measure indicates the approximate amount of
time in years that would be needed to cover industrial net debt
through income from continuing operations, without taking
into account interest, taxes, depreciation and amortization. In
fiscal 2014, we aimed to achieve a ratio in the range of 0.5 to
1.0. For more information regarding adjusted EBITDA and for an
analysis of our capital structure ratio, see → C.3.4 RECONCILIA-
TION TO ADJUSTED EBITDA and C.4.2 CAPITAL STRUCTURE.
C.2.4 Capital structure
Net assets position
210 C.5
Financial position
205 C.4
FY 2013
Results of operations
187 C.2
Business and economic environment
172 C.1
188
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
Beginning with fiscal 2015, we incorporated a measure called
total cost productivity into our One Siemens framework, to em-
phasize and evaluate our continuous efforts to improve produc-
tivity. We define this measure as the ratio of cost savings from
defined productivity improvement measures to the aggregate
of functional costs for the Siemens Group. We aim to achieve
an annual value of 3% to 5% for Total cost productivity.
15-19%
15-20%
(in millions of €)
SFS (ROE (after taxes))
193 C.3
0.15
0.35
Financial performance system
Total dividend payout
C.2.6 Additional information
189
Consolidated Financial Statements
Additional Information
247 D.
337
Siemens AG (Discussion on basis
of German Commercial Code)
C.2.6.1 RETURN ON EQUITY (ROE) (AFTER TAX)
242 C.11
242 C.10 Compensation Report and legal disclosures
Report on expected developments and
associated material opportunities and risks
225 C.9
Sustainability and citizenship
for financial performance measures
Overall assessment of the economic position
Subsequent events
214 C.7
215 C.8
Beginning with fiscal 2015, we intend to realize a dividend pay-
out range, without the effect of share buybacks, of 40% to 60%
of net income, which for this purpose we may adjust to exclude
selected exceptional non-cash effects. As in the past, we intend
to fund the dividend payout from Free cash flow.
The percentage for fiscal 2013 was 26% with outlays for share
buybacks in the amount of €1.152 billion.
In November 2013, we announced a share buyback of up to
€4 billion ending latest on October 31, 2015. In May 2014, we
started to repurchase shares. Through the end of fiscal 2014,
outlays for our publicly announced share buybacks (excluding
incidental transaction charges) totaled €1.079 billion and repre-
sent 20% of net income.
|
We intend to continue providing an attractive return to share-
holders. In fiscal 2014, we intended to propose a dividend pay-
out which, combined with outlays during the fiscal year for
publicly announced share buybacks, results in a sum represent-
ing 40% to 60% of net income, which for this purpose we may
adjust to exclude selected exceptional non-cash effects.
C.2.5 Dividend and share buybacks
Beginning with fiscal 2015, we intend to achieve a ratio of up to
1.0, and thereby maintain our healthy capital structure.
Target range: 0.5 - 1.0
49%
57%
FY 2013
FY 2014
× 100%
Net income
213 C.6
We're rigorously implementing our financial target
system in order to consistently achieve our capital
efficiency target – an ROCE of 15% to 20%. Our aim is
to grow faster than our most relevant competitors.
Execute financial target system
We're tapping attractive growth fields and getting
those businesses that haven't yet reached their full
potential back on track.
Goal:
Growth
⠀⠀⠀⠀⠀⠀⠀⠀ Create value sustainably
Goal:
ROCE of
most relevant
competitors
Our path
Cut costs by
~€1
billion
to
20%
15%
|||||||| ||
17
Goal:
=
|
get underperforming
Drive performance
Expand global management ||||||
Strengthen core
#
+
2015 2016 2017 2018 2019 2020
| Vision 2020
Stages
16
| | | |||||||||| Our path
||||||| | || |
|| | Goals
Only those who set demanding goals can be successful over the long term.
That's why we've linked the success of Vision 2020 to the attainment of
seven overarching goals - goals that will provide us with a yardstick and a
compass on the path to 2020. In particular, we aim to:
Implement stringent corporate governance
We're simplifying and accelerating our processes while
reducing complexity in our Company and strengthening
our corporate governance functions. In this way, we plan
to reduce our costs by roughly €1 billion. The savings are
expected to be mainly effective in 2016.
Goal:
Tap growth fields and
businesses back on track
We want more than 30% of our Division and Business
Unit managers to be based outside Germany by 2020.
We now have business activities in virtually every
country of the world, generating some 85% of our
revenue outside Germany. We want our management
to reflect this global orientation more strongly in
the future.
Ownership culture
>30%
| | | |||||||||| Our path
||||||| | || |
|| | Strategic framework
To be successful, a company needs more than concrete financial targets.
It also requires a comprehensive strategic framework that closely aligns
the central fields of company management. Vision 2020 defines this frame-
work for Siemens.
|
The most important guarantee for the long-term success of our strategy
is a strong culture. It's the origin and foundation for all our consider-
ations. We want to reflect the basic values of responsible action within
a strong ownership culture - throughout the entire Company.
18
→ SEE PAGE 42
We're sharpening our customer and business focus through rigorous
positioning and clear priorities for stringent resource allocation. For
this reason, we're concentrating our efforts on selected growth fields.
Last but not least, we're further expanding the original One Siemens
financial concept to make it a comprehensive management model
encompassing our financial targets, our operating system and our
underlying approach to sustainability. → SEE PAGE 94
Management model
We're also strengthening our internal setup by streamlining our Company
structure and making our management even more effective – in a word,
we're ensuring strong governance. → SEE PAGE 92
Governance
Scale up
|
Customer and business focus
In the future, our employees will have an even greater
stake in their Company's success. We want to increase
the current number of employee shareholders by at
least 50%.
Foster an ownership culture
number of employee
shareholders
of Division and
Business Unit management
outside Germany
Goal:
≥ 20%
improvement in
Net Promoter Score
1-
Be a partner of choice for our customers
-
We want to be our customers' partner of choice - both
now and in the future. To measure customer satisfac-
tion, we use the Net Promoter Score – a comprehensive
customer satisfaction survey that we conduct every
year. Our goal is to improve our score in the survey by
at least 20%.
Be an employer of choice
Highly committed and satisfied employees are the basis
of our success. We are - and want to remain - an
attractive employer. That's why we conduct a global
engagement survey to measure employee satisfaction.
In the categories Leadership and Diversity, we
aim to achieve an approval rating of over 75% on
a sustainable basis.
Goal:
>75% 1
approval rating in the
categories Leadership
and Diversity in our global
engagement survey
Goal:
≥50%
increase in the
Goal:
15
electrify, automate and digitalize
||||
|||||| Ingenuity drives us
||| and what we create is
Together we deliver.
yours.
Our path
|||||||| ||
11
the world around us. |||
|
We make real what matters
Grounded in reality, we're inspired by the desire to shape the future – in cooperation
with our partners. Leveraging our passion for engineering, we make real what
matters, working with our customers to help improve the lives of people today and
in the generations to come. Customers all around the world trust us and count on
our knowhow and our reliability to make them more competitive.
By setting the benchmark
-
We empower our customers to set benchmarks – with our power of innovation,
our leading technologies, our global presence and, last but not least, our financial
solidity. We generate value by transforming the value chain of electrification,
reaching across both the digital and physical worlds. Our highly qualified and
committed employees are the foundation for achieving this.
| Together we deliver
Our knowledge is the basis of our performance. We partner with our customers,
leveraging sustainable business practices. With determination and ingenuity, we
deliver engineering excellence, taking personal ownership until we jointly succeed.
Shaped by our history, culture and values, our mission defines
how we understand ourselves. As an expression of a strong brand,
it formulates our aspiration.
||||in the way we |||
by setting the benchmark
We make real what matters
→ SEE PAGE 88
Our path
defines an entrepreneurial concept that will enable our
Company to consistently occupy attractive growth fields,
sustainably strengthen our core business and outpace
our competitors in efficiency and performance. It's our
path to long-term success. And we're measuring our
progress: seven overarching goals support this aim.
→ SEE PAGE 16
We'll be working on the three areas outlined above. They
describe the key factors that are enabling us to lead
Siemens into a successful future. Throughout this process,
we will gear all our actions to the requirements of our
customers, our owners and our employees as well as to the
values of society. I personally intend to ensure that the
next generation will inherit a better Company. That's my
vision. That's my responsibility. That's my promise.
Sincerely yours,
Kem
Joe Kaeser
President and CEO of Siemens AG
Vision 2020
|
We make real what matters
| | | ||||||||||
9
10
|| | |||||||||| Our path
|||||||||| |
|| | Mission
This is the foundation on which we've been tackling the challenges
of our time ever since Werner von Siemens and Johann Georg Halske
founded our Company in Berlin more than 165 years ago.
12
| | | |||||||||| Our path
||||||| | || |
Imaging and
in-vitro diagnostics
| | | | | | |
13
14
| | | |||||||||| Our path
||||||| | || |
||| Stages
Our positioning and our strategic direction are closely linked to defined
milestones - the stages in which we'll lead our Company into a successful
future. We're not only focusing on the next one or two quarters or the
next reporting season but on the years and, perhaps, even decades to come.
With this future in view, we now have to take all the right steps to create
value - for the short, medium and long term.
|
Short term: Drive performance
|
Our first task is to boost our performance. To achieve this aim, we're retai-
loring our structures and responsibilities. We're also focusing on business
excellence, in other words, the reliable management of our businesses.
We want to get even those businesses that aren't reaching their full potential
back on a successful track and make them competitive again.
Medium term: Strengthen core
To achieve long-term success, you have to focus on the things that make you
strong and put other things aside. In line with this philosophy, we intend to
strengthen our successful businesses along the value chain of electrification.
Among other things, we want to allocate resources in a more rigorous way
in order to expand in strategic growth fields. → SEE PAGE 90
| Long term: Scale up
But we won't stop there. With the same resolve, we'll intensify our efforts to
seize further growth opportunities and tap new fields.
Value
Power transmission,
power distribution and
smart grid
Our path
Energy
application
Our path
|| | Positioning
How can we achieve long-term success? And how are we positioning
ourselves to make it happen? Our setup is aligned with framework
conditions worldwide, with the long-term trends that define our markets,
with our competitive environment and with the requirements of
customers, partners and societies. Focused on the long term, it stands
for what all our business activities have in common.
|
|
Electrification
We're positioned along the value chain of electrification. Our products are
designed to generate, transmit, distribute and utilize electrical energy with
particularly high efficiency. Our roots are in electrification. We've been lead-
ers in this field until now, and it's here that our future lies.
Automation
We've been successfully automating customer processes for years. In auto-
mation, too, we've already captured leading market positions worldwide.
We intend to maintain and expand these positions.
Digitalization
We want to exploit the opportunities offered by digitalization even better.
Because added value for our customers lies more and more in software
solutions and intelligent data analysis.
Across the areas of electrification, automation and digitalization, there
are concrete growth fields - fields in which we see major potential. We're
rigorously aligning ourselves to exploit this potential in order to achieve
long-term success. Our setup reflects this aspiration.
→ SEE PAGE 88
Digitalization
Automation
Electrification
Power
generation
|||||||||
D
|
19,928
33,665
Q2 2014 16,865
18,027
Q2 2014
1.09
17,692
Q3 2014
19,284
Q3 2014
1.01
20,621
Q4 2014
20,733
Q4 2014
Book-to-bill ratio
Revenue
Orders
Orders and revenue by quarter (in millions of €)
193
Consolidated Financial Statements
Additional Information
247 D.
337
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Report on expected developments and
associated material opportunities and risks
225 C.9
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
1.07
214 C.7
215 C.8
Q1 2014
Q1 2014
Reconciliation to Consolidated Financial Statements includes
Centrally managed portfolio activities, Siemens Real Estate
(SRE) and various categories of items which are not allocated to
the Sectors and to SFS because the Company's management
has determined that such items are not indicative of the Sec-
tors' and SFS' respective performance.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
200
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Q3 2013
0.99
20,559
Q4 2013
20,298
Q4 2013
1.21
16,742
20,306
213 C.6
year-over-year.
While revenue in Asia, Australia came in near the prior-year
level, it included double-digit revenue growth in China that
resulted from a sharp increase in Infrastructure & Cities and a
solid contribution from Industry. In the Americas, revenue was
lower year-over-year in all Sectors, due in part to currency trans-
lation headwinds as mentioned above. A double-digit decrease
in Energy revenue in Europe, C.I.S., Africa, Middle East more
than offset clear growth in Infrastructure & Cities. Emerging
markets reported a 2% decline compared to fiscal 2013 and
accounted for €24.312 billion, or 34%, of total revenue in fiscal
2014. Comparable revenue growth in emerging markets was 3%
Port-
Cur-
Compa-
rable¹ rency folio
2013 Actual
2014
(in millions of €)
therein
% Change
Year ended
September 30,
Americas
38,732 39,390 (2)% (1)% (1)% 0%
10,857 10,652
2% 2% 0% 0%
therein Germany
Port-
folio
Cur-
rency
Compa-
Actual rable¹
2013
2014
(in millions of €)
Europe, C.I.S.,²
Africa, Middle East
% Change
Year ended
September 30,
therein
| Revenue (location of customer)
On a global basis, orders from emerging markets, as these mar-
kets are defined by the International Monetary Fund, remained
level year-over-year, and accounted for €27.471 billion, or 35%,
of total orders for fiscal 2014. Comparable order growth in
emerging markets was 6% year-over-year.
| Orders (location of customer)
The order backlog (defined as the sum of order backlogs of the
Sectors) was €100 billion as of September 30, 2014, up from
€94 billion a year earlier.
Europe, C.I.S.,²
Africa, Middle East
41,542 43,889 (5)% (4)% (1)%
0%
Revenue related to external customers declined 2% com-
pared to fiscal 2013. Clear revenue growth year-over-year in
Infrastructure & Cities resulting from the continuing execution
of large rolling-stock projects, was more than offset by a clear
decline in Energy, which saw revenue fall in many of its
businesses and in all three reporting regions. Industry revenue
came in near the prior-year level and Healthcare reported
a slight decline, both including unfavorable currency trans-
lation effects.
In the region Europe, C.I.S., Africa, Middle East, the decline
in orders was due mainly to a double-digit decrease in Infra-
structure & Cities caused by a lower volume from large orders
compared to a year earlier. Orders came in slightly lower in
the Americas, despite 9% order growth in the U.S. Key growth
drivers here included Siemens' largest-ever order for light rail
vehicles in the U.S. and a rebound in the U.S. wind business
after a sharp drop in the previous year. Clear order growth in
Asia, Australia was due in part to a higher volume from large
orders in Energy. In addition, China contributed to the regional
development with a sharp increase in Infrastructure & Cities
and double-digit order growth in Industry.
Orders related to external customers in fiscal 2014 decreased
2%, largely due to a moderate decline in Infrastructure & Cities
where prior-year orders included a €3.0 billion contract for
trains and maintenance in the U.K. Slight decreases in Health-
care and Energy were only partially offset by order growth in
Industry.
2 Commonwealth of Independent States.
1 Excluding currency translation and portfolio effects.
0%
(3)%
0%
(2)%
(4)% 0%
1 Excluding currency translation and portfolio effects.
Commonwealth of Independent States.
2
C.3.2.7 RECONCILIATION TO CONSOLIDATED
FINANCIAL STATEMENTS
1%
1%
(5)%
0%
0%
10,986 11,616 (5)% (5)%
20,880 21,070 (1)% 4%
14,842 13,592 9% 11%
15,929 14,796 8% 12%
6,641 6,053 10% 12%
78,350 79,755 (2)% 1%
therein China
Siemens
therein U.S.
Asia, Australia
Americas
therein Germany
1%
18,756 19,644 (5)% 0% (5)% 0%
12,876 13,110 (2)%
(3)% 1%
14,433 14,411 0% 4% (4)% 0%
6,442 5,866 10% 12% (2)% 0%
71,920 73,445 (2)% 1% (3)% 0%
therein U.S.
Asia, Australia
therein China
Siemens
(3)%
Orders for fiscal 2014 totaled €78.350 billion, and revenue came
in at €71.920 billion. Both represented a 2% decrease year-over-
year, due in part to unfavorable currency translation effects.
The resulting book-to-bill ratio was 1.09 for Siemens in fiscal
2014. On a comparable basis, excluding currency translation
and portfolio effects, orders and revenue both grew 1% year-
over-year.
SFS delivered €465 million in profit (defined as income before
income taxes) in fiscal 2014. For comparison, profit of €409 mil-
lion in the prior-year period was burdened primarily by a
€52 million impairment of an equity stake in a power plant
project in the U.S. SFS continued to successfully support
Siemens business and grow in its focus areas leading to higher
interest income and associated expenses. Total assets rose to
€21.970 billion at the end of fiscal 2014, compared to €18.661 bil-
lion at the end of fiscal 2013, including positive currency trans-
lation effects and substantial early terminations of financings.
409
18,661
therein
Currency
Portfolio
(1)%
5%
6,481
6,392
1%
6%
(5)%
0%
5,587
5,769
(3)%
(1)%
(2)%
0%
Year ended September 30,
2014
2013
Actual
% Change
Comparable¹
therein
Currency
Portfolio
% Change
Comparable¹
(13)%
7,615
(9)%
9,184
Transportation & Logistics
Power Grid Solutions & Products
Building Technologies
| 1 Excluding currency translation and portfolio effects.
Revenue by Business
(in millions of €)
Transportation & Logistics
Power Grid Solutions & Products
Building Technologies
1 Excluding currency translation and portfolio effects.
Profit and Profit margin by Business
(in millions of €)
Transportation & Logistics
Power Grid Solutions & Products
Building Technologies
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
Year ended September 30,
2014
2013
Actual
10,040
6,318
21%
14%
41%
9.4%
6.6%
501
351
43%
9.0%
6.1%
242 C.11
242 C.10 Compensation Report and legal disclosures
Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
199
Transportation & Logistics contributed a profit of €440 mil-
lion in the current fiscal year, compared to a loss of €448 mil-
lion a year earlier. Profit development in the current fiscal was
driven primarily by significantly higher revenue and solid proj-
ect execution. Profit also benefited from a €55 million net effect
from the release of accruals related to the "Siemens 2014" pro-
gram and a €27 million positive effect stemming from a change
in risk assessment for a rail project. For comparison, the loss in
the prior fiscal year was due to substantial profit impacts, in-
cluding the above-mentioned €270 million in project charges,
which stemmed from delays for receiving certification for new
high-speed trains, and €267 million in "Siemens 2014" charges.
Prior-year profit was also burdened by €76 million in trans-
action and integration costs and PPA effects of €23 million
related to the acquisition of Invensys Rail, which closed during
the third quarter of fiscal 2013. In fiscal 2014, full-year PPA ef-
fects related to the acquisition of Invensys Rail were €53 mil-
lion and integration costs amounted to €34 million. Revenue at
Transportation & Logistics rose substantially year-over-year, as
the Business has been executing a number of its large roll-
ing-stock orders. Orders declined 9% compared to fiscal 2013,
due primarily to lower volume from large orders. For example,
fiscal 2014 included the Business's share of the above-men-
tioned €1.6 billion order from Saudi Arabia, while the prior fis-
cal year included the entire €3.0 billion order from the U.K.
mentioned above. Both revenue and order development in
fiscal 2014 benefited from the acquisition of Invensys rail.
Profit at Power Grid Solutions & Products rose to €566 million
from €403 million in the prior fiscal year. Profit grew on im-
proved productivity as well as a more favorable revenue mix.
For comparison, profit in fiscal 2013 was burdened by €97 mil-
lion in "Siemens 2014" charges. Slightly lower revenue year-
over-year included declines in the Americas and the Asia,
Australia regions. A slight increase in orders included the Busi-
ness's share of the above-mentioned order from Saudi Arabia.
Revenue and order development in fiscal 2014 was strongly
affected by negative currency translation effects. On an organic
basis, revenue was up 3% and orders rose 6% year-over-year.
Building Technologies increased its profit to €501 million
compared to €351 million in the prior fiscal year. Profit growth
year-over-year was supported by higher productivity and a
more favorable business mix related to the Division's high-
er-margin product and service businesses. For comparison,
profit in fiscal 2013 was held back by €100 million in "Siemens
2014" charges. Both revenue and orders declined 3% year-over-
year. On a regional basis, lower volume was due mainly to the
Americas.
C.3.2.5 EQUITY INVESTMENTS
In fiscal 2014, Equity Investments generated €328 million in
profit, down from €411 million a year earlier. Profit at Equity
Investments in both fiscal years included equity investment
income related to our stake in BSH. Beginning with the second
quarter of fiscal 2014, we started to report results related to our
stake in BSH in phase with results of Siemens, rather than with
the lag of one quarter. This one-time catch-up effect contrib-
uted €59 million to profit at Equity Investments in fiscal 2014.
Late in the fourth quarter of fiscal 2014, we announced an
agreement to sell our stake in BSH to Robert Bosch GmbH.
Profit at Equity Investments in the prior year benefited from a
positive effect of €301 million stemming from a partial reversal
of a fiscal 2009 impairment of our stake in NSN, which was sold
at the end of fiscal 2013. This positive effect was only partly
offset by an equity investment loss related to our share in Unify
Holdings B.V. (formerly named Enterprise Networks) of €96 mil-
lion. This loss was due largely to additions to our net invest-
ment in Unify, which required us to recognize previously un-
recognized losses.
C.3.2.6 FINANCIAL SERVICES (SFS)
(in millions of €)
Income before income taxes
Total assets
Year ended September 30,
2014
% Change
2013
465
21,970
403
566
(7.1)%
5.8%
(2)%
8%
6,005
6,102
(2)%
3%
(4)%
0%
5,569
5,754
(3)%
(1)%
14%
18%
(2)%
Profit
Profit margin
Year ended September 30,
Year ended September 30,
2014
2013
% Change
2014
2013
440
(448)
n/a
0%
(in millions of €)
C.3.1 Orders and revenue by region
Net assets position
3,656
1,944
Plus: Short-term debt and current maturities of long-term debt
16,880
16,651
20,182
19,140
18,509
Plus: Long-term debt
31,424
30,551
26,620
27,909
28,625
Total equity
Capital employed Fiscal 2013
09/30/2012
12/31/2012
03/31/2013
06/30/2013
09/30/2013
(in millions of €)
258
31,195
232
33,138
20
33,354
2,752
33,898
3,709
Less: Cash and cash equivalents
(1,247)
Less: Fair value hedge accounting adjustment¹
(14,558)
(14,490)
(14,879)
(15,004)
(15,600)
Less: SFS Debt
9,801
9,856
9,890
9,325
9,265
Plus: Post-employment benefits
(524)
(517)
(533)
(506)
(601)
Less: Current available-for-sale financial assets
(10,891)
(7,823)
(7,892)
(6,071)
(9,190)
3,826
1,275
1,559
32,297
Capital employed (continuing operations)
Plus: Post-employment benefits
(601)
(666)
(799)
(907)
(925)
Less: Current available-for-sale financial assets
(9,190)
(8,885)
(8,585)
(8,210)
(8,013)
Less: Cash and cash equivalents
1,944
2,883
3,757
4,092
1,620
Plus: Short-term debt and current maturities of long-term debt
18,509
18,377
18,587
18,364
19,326
Plus: Long-term debt
9,324
10,473
9,614
8,771
presented as discontinued operations
Plus: Liabilities associated with assets classified as held for disposal
(768)
(758)
(14)
(1,689)
(2,325)
Less: Assets classified as held for disposal presented as discontinued operations
31,706
33,348
34,313
33,063
(1,323)
Capital employed (continuing and discontinued operations)
(1,166)
(1,134)
(1,114)
(1,121)
Less: Fair value hedge accounting adjustment¹
(15,600)
(16,022)
(16,428)
(17,017)
(18,663)
Less: SFS Debt
9,265
(1,247)
|| | C.3 Results of operations
(1,473)
(1,670)
5,632
(I) Income from continuing operations before interest after tax
(II) Average capital employed (continuing operations)³
(I)/(II) ROCE (continuing operations)
Return on capital employed (ROCE) (continuing operations)
(1)/(II) ROCE (continuing and discontinued operations)
13.5%
17.3%
34,831
33,219
(II) Average capital employed (continuing and discontinued operations)³
4,695
5,739
(I) Income before interest after tax
Return on capital employed (ROCE) (continuing and discontinued operations)
4,465
5,632
Income from continuing operations before interest after tax
(231)
(108)
Less: Income from discontinued operations, net of income taxes
4,695
5,739
(111)
(87)
297
295
4,465
556
32,777
17.2%
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
192
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
There is no standard system for compiling and calculating or-
ders and order backlog information that applies across compa-
nies. Accordingly, our orders and order backlog may not be
comparable with orders and order backlog measures reported
by other companies. We subject our orders and our order back-
log to internal documentation and review requirements. We
may change our policies for recognizing orders and order back-
log in the future without previous notice.
Order backlog represents an indicator for the future revenues
of our Company resulting from already recognized orders. Order
backlog is calculated by adding the orders of the current fiscal
year to the balance of the order backlog as of the end of the
prior fiscal year and then subtracting the revenue recognized in
the current fiscal year. If the amount of an order already recog-
nized in the current or the previous fiscal years is modified or
if an order from the current fiscal year is cancelled, we adjust
orders for the current quarter and also our order backlog
accordingly, but do not retroactively adjust previously pub-
lished orders. However, if an order from a previous fiscal year is
cancelled, orders of the current quarter and, accordingly, the
current fiscal year are generally not adjusted; instead, the exist-
ing order backlog is revised directly. Aside from cancellations,
the order backlog is also subject to currency translation and
portfolio effects.
Under our policy for the recognition of orders, we generally
recognize the total contract amount for an order when we enter
into a contract that we consider legally effective and compul-
sory based on a number of different criteria. The contract
amount is the agreed price or fee for that portion of the contract
for which the delivery of goods and/or the provision of services
has been irrevocably agreed. Future revenue from long-term
service, maintenance and outsourcing contracts is recognized
as orders in the amount of the total contract value only if there
is adequate assurance that the contract will remain in effect for
its entire duration (e.g., due to high exit barriers for the cus-
tomer). Orders are generally recognized immediately when the
relevant contract is considered legally effective and compul-
sory. The only exceptions are orders with short overall contract
terms. In this case, a separate reporting of orders would provide
no significant additional information regarding our perfor-
mance. For orders of this type, the recognition of orders thus
occurs when the corresponding revenue is recognized.
We also use other financial measures in addition to the mea-
sures described above, such as orders and order backlog for the
assessment of our future revenue potential. We define and cal-
culate orders and order backlog as follows:
C.2.6.3 DEFINITIONS OF OTHER
FINANCIAL MEASURES
3 Average capital employed for a fiscal year is determined
as a five-point average in capital employed of the
respective quarters starting with the capital employed
as of September 30 of the previous fiscal year.
SOLIDATED STATEMENTS OF INCOME.
2 Effective tax rate for the determination of taxes on
interest adjustments is calculated by dividing Income
tax expenses by Income from continuing operations
before income taxes, both as reported in → D.1 CON-
1 SFS Other interest expenses/income is included in Other
interest expenses/income, net. Adding back SFS Other
interest expenses/income in the numerator corresponds
to the adjustment for SFS Debt in the denominator.
13.7%
32,583
630
(455)
(606)
figure for the calculation presented above. For further
information on fair value hedges see NOTE 30 in
→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
value mainly due to changes in interest rates. Accord-
ingly, we deduct these changes in market value in order
to end up with an amount of debt that approximately
will be repaid, which we believe is a more meaningful
1 Debt is generally reported with a value representing
approximately the amount to be repaid. However, for
debt designated in a hedging relationship (fair value
hedges), this amount is adjusted by changes in market
31,606
2,010
2,045
33,823
1,948
31,999
1,948
34,291
31,195
Capital employed (continuing operations)
258
presented as discontinued operations
Plus: Liabilities associated with assets classified as held for disposal
(4,693)
(4,589)
(4,616)
(4,783)
(768)
Less: Assets classified as held for disposal presented as discontinued operations
34,289
36,367
34,667
37,127
31,706
Capital employed (continuing and discontinued operations)
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
242 C.11
Less:
Net interest expenses from post-employment benefits
Plus:
SFS Other interest expenses/income¹
Plus:
Less:
Income before interest after tax
Taxes on interest adjustments²
4,409
5,507
2013
2014
(1,570)
Other interest expenses/income, net
Income from continuing operations before interest after tax
(in millions of €)
Year ended September 30,
191
Additional Information
Consolidated Financial Statements
D.
247
337
Report on expected developments and
associated material opportunities and risks
225 C.9
242 C.10 Compensation Report and legal disclosures
Siemens AG (Discussion on basis
of German Commercial Code)
Sustainability and citizenship
Net income
28,625
Orders by Business
In fiscal 2014, Infrastructure & Cities executed its projects
solidly, improved its productivity, and again won a number of
very large infrastructure orders. Profit for the Sector rose to
€1.487 billion and all its Businesses contributed to the increase
year-over-year. For comparison, profit of €291 million in the
prior year was impacted by €468 million in "Siemens 2014"
charges as well as project charges including charges of
€270 million related to high-speed trains. Transportation &
Logistics, which posted a loss in the prior fiscal year due to the
project charges just mentioned and a majority share of the Sec-
tor's "Siemens 2014" charges, delivered a profit of €440 million
in fiscal 2014 and made the strongest contribution to the
Sector's profit improvement year-over-year. Power Grid Solu-
tions & Products and Building Technologies improved their prof-
its sharply year-over-year, to €566 million and €501 million, re-
spectively. While both Businesses posted lower revenue, they
improved productivity and generated a more favorable revenue
mix year-over-year.
(3)%
0%
(10)%
(3)%
0%
Profit
Profit margin
Year ended September 30,
Year ended September 30,
2014
2013
% Change
2014
2013
2,186
2,126
3%
15.7%
13.9%
(15)
(636)
306
(156)
n/a
>(200)%
(0.3)%
(12.0)%
5.9%
9%
(2.5)%
6%
(14)%
5,310
19%
(2)%
0%
5,586
5,700
(2)%
2%
(4)%
0%
Year ended September 30,
% Change
therein
2014
2013
Actual
13,909
15,242
(9)%
Comparable¹
(4)%
Currency
Portfolio
(3)%
(2)%
5,500
5,174
6,167
Profit at Power Generation in fiscal 2014 increased moderately
year-over-year to €2.186 billion, despite a 9% revenue decline.
The current period benefited from a €73 million gain on the sale
of the Division's turbo fan business and a positive €72 million
effect from a successful project completion in the turnkey busi-
ness. The Division continues to face challenges in an increas-
ingly competitive market for large gas turbines. For comparison,
profit development a year earlier was held back by €163 million
in "Siemens 2014" charges and €46 million in charges related to
compliance with sanctions on Iran. Revenue for the Division
decreased 9% year-over-year on declines in all three reporting
regions, due in part to negative currency translation. Order in-
take was below the level of the prior year, including strong neg-
ative currency translation effects, as declines in the Americas
and Europe, C.I.S., Africa, Middle East were only partially offset
by an increase in Asia, Australia. On an organic basis, order
intake was on the same level as in the prior year.
Wind Power reported a loss of €15 million in fiscal 2014, com-
pared to a profit of €306 million in fiscal 2013. The Division
recorded charges of €272 million for inspecting and replacing
main bearings in onshore wind turbines and for repairing
offshore and onshore wind blades. The revenue mix was
clearly less favorable year-over-year, due to a significantly lower
contribution from the higher-margin offshore business. In addi-
tion, the Division's production costs were higher compared to
the prior year. For comparison, fiscal 2013 profit was burdened
by €94 million in charges related to inspecting and retrofitting
onshore turbine blades, but benefited from positive effects re-
lated to project completions and the settlement of a claim
related to an offshore wind-farm project. Revenue was up 6% as
an increase in the onshore business, particularly in the Ameri-
cas, more than offset the above-mentioned decline in the off-
shore business. Order intake was up significantly year-over-
year as order intake in the Americas region grew sharply, driven
mainly by a recovery in the U.S., the Division's largest national
market for onshore wind power, from a low basis of comparison
in the prior year that resulted from uncertainty about continu-
ation of production tax incentives.
16.1%
12,819
13,004
(1)%
3%
12,429
12,649
(2)%
2%
(4)%
(4)%
0%
0%
12,401
12,626
(2)%
Profit margin
Orders
Total revenue
External revenue
therein:
Europe, C.I.S., Africa, Middle East
4,391
4,392
0%
therein Germany
880
16.3%
0%
Portfolio
Currency
Power Transmission reported a loss of €636 million, substan-
tially wider than the loss a year earlier mainly due to project
execution challenges. In the current year, the Division took
charges totaling €298 million related to two high voltage direct
current (HVDC) transmission line projects in Canada, resulting
from revised estimates for civil engineering and infrastructure
provided by suppliers as well as penalties for associated project
delays, among other factors. In addition, the Division took
213 C.6
214 C.7
215 C.8
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
195
18%
charges of €240 million primarily related to grid connections to
offshore wind-farms resulting from transport, installation and
commissioning costs, compared to charges of €171 million in
the prior year. The Division reached several material milestones
with respect to its North Sea grid connection projects in fiscal
2014. Finally, profit development in fiscal 2014 was also held
back by a less favorable revenue mix due to a high proportion
of projects with low or negligible profit margins. In the prior
C.3.2.2 HEALTHCARE
| Sector
(in millions of €)
Profit
Year ended September 30,
2014
2013
2,027
2,033
Actual
% Change
Comparable¹
therein
year, the Division recorded €129 million in charges for the
"Siemens 2014" program. Revenue was down 14% on decreases
in all reporting regions, due mainly to selective order intake in
prior periods primarily in the solutions business. Order intake
was down 2% year-over-year on decreases in the Americas
and Asia, Australia, held back by negative currency translation
effects. On an organic basis, orders grew 2%. Legacy projects
are expected to hold back results going forward.
903
6,593
(2)%
Orders
28,646
28,797
(1)%
4%
Total revenue
24,631
26,638
(8)%
(3)%
(3)%
(3)%
(1)%
(1)%
External revenue
24,380
26,425
(8)%
therein:
Europe, C.I.S., Africa, Middle East
12,766
14,382
(11)%
therein Germany
2,507
2,246
12%
7.3%
Americas
6.4%
(20)%
18,363
1.09
Q2 2013
20,761
Q2 2013 17,226
1.21
Q1 2013
18,767
Q1 2013
17,297
1.09
|
C.3.2 Segment information analysis
C.3.2.1 ENERGY
| Sector
(in millions of €)
Profit
Year ended September 30,
2014
2013
Actual
% Change
Comparable¹
Currency
therein
Portfolio
1,569
1,955
Profit margin
7,013
7,155
(2)%
Revenue by Business
(in millions of €)
Power Generation
Wind Power
Power Transmission
1 Excluding currency translation and portfolio effects.
| Profit and Profit margin by Business
(in millions of €)
Power Generation
Wind Power
Power Transmission
Year ended September 30,
% Change
therein
2014
2013
Actual
Comparable¹
Currency
Portfolio
15,478
16,366
(5)%
0%
(4)%
| 1 Excluding currency translation and portfolio effects.
Power Transmission
Wind Power
Power Generation
Asia, Australia
4,601
4,888
(6)%
| 1 Excluding currency translation and portfolio effects.
2 Commonwealth of Independent States.
Energy Sector profit of €1.569 billion in fiscal 2014 was down
significantly compared to a year earlier, due mainly to continu-
ing profitability challenges including a revenue decline and a
less favorable business mix. Both periods included substantial
burdens on profit. In the current period, the impacts included
€538 million in charges at Power Transmission and €272 mil-
lion in charges at Wind Power. Burdens on Sector profit a year
ago included €301 million in charges for the "Siemens 2014"
program, a loss of €255 million at Siemens' solar activities,
€171 million in charges at Power Transmission, among others,
€94 million in charges related to onshore wind turbine blades
and €46 million in charges related to compliance with sanc-
tions on Iran at Power Generation. The Power Generation Divi-
sion increased its profit year-over-year, benefiting from a gain
on the sale of the Division's turbo fan business and a positive
effect from a successful project completion. Power Trans-
mission posted a sharply higher loss year-over-year, and Wind
Power reported a loss compared to a profit in fiscal 2013.
Revenue for the Sector came in 8% lower than a year ago on
decreases in all three reporting regions, reflecting weak order
development at Power Generation and selective order intake at
Power Transmission in the past. Power Generation and Power
Transmission posted revenue declines compared to the prior
year, while Wind Power clearly increased its revenue. Orders
for the Sector came in 1% lower than in the prior year. On a
regional basis, an increase in the Asia, Australia reporting
region was more than offset by a decline in the Americas.
Negative currency translation effects took three percentage
points from both revenue and order development during the
year. The book-to-bill ratio for Energy was 1.16, and its order
backlog was €58 billion at the end of the fiscal year. Out of the
order backlog as of September 30, 2014, orders of €19 billion
are expected to be converted into revenue in fiscal 2015 and the
remainder in the periods thereafter.
108 | A. To our Shareholders
194
131 | B.
Corporate Governance
7,748
171 C.
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Orders by Business
(in millions of €)
Combined Management Report
Sector revenue in fiscal 2014 rose 6% compared to the prior
fiscal year, due to a double-digit increase at Transportation &
Logistics. This business continued to execute large rolling stock
projects won in prior periods, and also recorded four quarters of
revenue from the acquisition of Invensys Rail which closed
during the third quarter of the prior year. Large orders in the
current period included a contract worth €1.6 billion for two
driverless subway lines in Saudi Arabia. A year earlier, large
orders included among others a contract worth €3.0 billion for
trains and maintenance in the U.K., and as a result fiscal 2014
orders for the Sector came in 4% lower year-over-year. On a geo-
graphic basis, the Sector reported double-digit revenue in-
creases in Asia, Australia and Europe, C.I.S, Africa, Middle East,
only partly offset by a decline in the Americas. For orders,
double-digit increases in the Americas and Asia, Australia
were more than offset by a double-digit decline in Europe,
C.I.S., Africa, Middle East. On a book-to-bill ratio of 1.11, Infra-
structure & Cities' order backlog rose to €31 billion at the end of
fiscal 2014. Out of the order backlog as of September 30, 2014,
orders of €10 billion are expected to be converted into revenue
in fiscal 2015 and the remainder in the periods thereafter.
(2)%
4,729
2014
2013
1,401
843
1,038
527
35%
60%
16.8%
12.7%
9.1%
5.7%
Profit at Industry Automation increased substantially year-
over year to €1.401 billion on an improved business mix and
higher results in all businesses, up from €1.038 billion in the
prior-year period which included €114 million in "Siemens 2014"
charges. Profit development further included higher revenue
and lower acquisition-related effects. In particular, PPA effects
related to the acquisition of UGS Corp. in fiscal 2007 were
€93 million in the current period compared to €147 million a
year earlier. In addition, the Division recorded PPA effects of
€44 million related to LMS International NV (LMS), acquired in
the second quarter of fiscal 2013. For comparison, PPA effects
related to LMS in the prior year were €33 million, while de-
ferred revenue adjustments and inventory step-ups totaled
€43 million.
Order and revenue development for the Division was driven
mainly by double-digit growth in Asia, Australia, led by China.
In addition, order growth of 3% year-over-year included a mod-
erate increase in the Americas. Revenue came in 2% above
the prior year and included a slight increase in Europe, C.I.S.,
Africa, Middle East. Reported revenue in the Americas showed
a slight decline due to unfavorable currency translation effects.
Profit at Drive Technologies in fiscal 2014 increased to
€843 million on contributions from most of its businesses.
Profit development included a higher share of revenue from
the Division's higher-margin motion control business and an
improved cost position. For comparison, profit of €527 million a
year earlier was burdened by €243 million in "Siemens 2014"
charges. Due to unfavorable currency translation effects,
reported revenue was level year-over-year while orders grew
2% on a higher volume of large internal orders from Siemens'
rail business.
On a geographic basis, double-digit order growth in China drove
a moderate increase in Asia, Australia while orders in Europe,
C.I.S., Africa, Middle East came in slightly above their prior-year
level. Revenue was flat in these two reporting regions. Both
orders and revenue came in lower in the Americas, held back
by unfavorable currency translation effects.
C.3.2.4 INFRASTRUCTURE & CITIES
| Sector
(in millions of €)
Profit
Profit margin
Orders
Year ended September 30,
2014
2013
Actual
% Change
Comparable¹
% Change
Currency
2013
Year ended September 30,
therein
Portfolio
2%
9,211
9,208
0%
4%
3%
(3)%
1%
(2)%
0%
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
197
| Profit and Profit margin by Business
(in millions of €)
Industry Automation
Drive Technologies
Profit
Profit margin
Year ended September 30,
2014
therein
Portfolio
1,487
291
Asia, Australia
4,075
4,288
(5)%
2,656
2,367
12%
1 Excluding currency translation and portfolio effects.
2 Commonwealth of Independent States.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
198
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Americas
5%
2,635
2,763
>200%
7.9%
1.6%
21,001
21,894
(4)%
(4)%
(2)%
2%
18,934
17,879
6%
Currency
6%
3%
18,291
17,149
7%
Total revenue
External revenue
therein:
Europe, C.I.S., Africa, Middle East
11,560
10,494
10%
therein Germany
(3)%
Americas
% Change
Comparable¹
2013
8,194
(in millions of €)
Profit
Profit margin
Year ended September 30,
2014
% Change
therein
2013
Actual
Comparable¹
Currency
Portfolio
2,252
1,563
44%
13.2%
9.2%
Orders
17,103
16,688
2%
5%
Total revenue
17,064
16,896
1%
Sector
4%
C.3.2.3 INDUSTRY
210 C.5
Asia, Australia
3,281
4,815
3,419
(2)%
(4)%
1 Excluding currency translation and portfolio effects.
2 Commonwealth of Independent States.
The Healthcare Sector delivered €2.027 billion in profit in fiscal
2014, close to the level of the prior year. Results in the current
period include burdens on profit from currency effects due to
the greater strength of the euro compared to fiscal 2013. These
unfavorable effects were strongest at the Sector's imaging and
therapy systems businesses and at Diagnostics, and they more
than offset a €66 million positive effect related to the sale of a
particle therapy installation in Marburg, Germany. For compar-
ison, Sector profit in fiscal 2013 was burdened by €80 million in
charges associated with the Sector's "Agenda 2013" initiative.
Despite negative currency effects, profit at Diagnostics rose
significantly to €417 million. For comparison, profit of €350 mil-
lion a year earlier was held back by €35 million in charges for
the Sector's "Agenda 2013" initiative. Purchase price allocation
(PPA) effects related to past acquisitions at Diagnostics were
€163 million in fiscal 2014. A year earlier, Diagnostics recorded
€169 million in PPA effects.
Revenue and orders for Healthcare in fiscal 2014 declined
slightly year-over-year. Negative currency translation effects
affected reported results for most of the Sector's businesses,
and also reduced reported revenue and orders in Asia, Australia
and the Americas compared to fiscal 2013. On a comparable
basis, both revenue and orders were up. The book-to-bill ratio
was 1.03, and Healthcare's order backlog was €4 billion at the
end of fiscal 2014. Out of the order backlog as of September 30,
2014, orders of €3 billion are expected to be converted into rev-
enue in fiscal 2015 and the remainder in the periods thereafter.
The Diagnostics business reported revenue of €3.834 billion in
fiscal 2014, a 3% decrease from €3.942 billion a year earlier.
A clear decline in the Americas was due primarily to headwinds
from currency translation as mentioned above. On a compara-
ble basis, Diagnostics revenue was up 1% year-over-year.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
196
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
Net assets position
(3)%
(3)%
0%
0%
External revenue
(in millions of €)
Industry Automation
Drive Technologies
1 Excluding currency translation and portfolio effects.
213 C.6
214 C.7
215 C.8
225 C.9
Year ended September 30,
% Change
2014
8,412
2013
8,143
Actual
Comparable¹
Currency
3%
5%
(3)%
therein
Portfolio
1%
9,210
9,024
2%
5%
(3)%
0%
Year ended September 30,
2014
8,353
| Revenue by Business
| 1 Excluding currency translation and portfolio effects.
Drive Technologies
Industry Automation
15,346
15,256
1%
therein:
Europe, C.I.S., Africa, Middle East
8,906
8,839
1%
therein Germany
4,141
4,145
0%
Actual
Americas
2,718
(5)%
Asia, Australia
3,848
3,699
4%
1 Excluding currency translation and portfolio effects.
2 Commonwealth of Independent States.
In fiscal 2014, profit at Industry rose sharply to €2.252 billion,
supported by a more favorable revenue mix and improved pro-
ductivity compared to the prior year. For comparison, profit in
the prior-year period was burdened by €375 million in “Siemens
2014" charges. Through most of fiscal 2014, the market environ-
ment for the Sector's businesses was clearly more favorable
than a year earlier. While reported orders and revenue for the
year were up 2% and 1%, respectively, both were held back by
negative currency translation effects that took away three per-
centage points from reported growth.
On a geographic basis, order and revenue development was
supported largely by growth in Asia, Australia, driven by China,
and by a slight increase in Europe, C.I.S., Africa, Middle East.
Reported orders and revenue in the Americas region were
lower compared to the prior-year period, held back by negative
currency translation effects. The book-to-bill ratio was 1.00, and
Industry's order backlog was €7 billion at the end of fiscal 2014.
Out of the order backlog as of September 30, 2014, orders of
€5 billion are expected to be converted into revenue in fiscal
2015 and the remainder in the periods thereafter.
Orders by Business
(in millions of €)
2,592
30,372
Q3 2013
28,633
C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE)
As part of One Siemens, we managed and controlled our capital
efficiency in fiscal 2014 using the financial measure ROCE for
continuing operations. The following tables report this financial
measure as defined under One Siemens and also provide a rec-
onciliation to ROCE for continuing and discontinued operations.
|
28,336
09/30/2014
06/30/2014
(in millions of €)
12/31/2013
09/30/2013
Capital employed Fiscal 2014
Total equity
31,514
03/31/2014
4,336
Q3 2013
1,053
Q2 2013
Q1 2013
1,335
225 C.9
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Q4 2013
(1,395)
(699)
Q4 2014
1,402
Q2 2014
1,048
Q3 2014
3,450
Report on expected developments and
associated material opportunities and risks
Free cash flow (in millions of €)1
Free cash flow from continuing and discontinued operations
of €5.201 billion in fiscal 2014 was near the high level of the
prior year. On a sequential basis, Free cash flow during fiscal
2014 and fiscal 2013 developed as follows:
Discontinued operations provided cash of €339 million in fiscal
2014, compared to cash used of €317 million in the prior year.
The current period included proceeds (excluding cash sold)
of €0.5 billion related to the sale of the Water Technologies
Business Unit.
For comparison, the prior year included cash outflows from the
financing activities at SFS of €2.175 billion and additions to in-
tangible assets and property, plant and equipment of €1.808 bil-
lion. In the prior year, cash outflows for acquisitions of
businesses, net of cash acquired, totaled €2.786 billion. This
total included the preliminary purchase price (excluding cash
acquired) of €1.987 billion related to Infrastructure & Cities' ac-
quisition of Invensys Rail, and €670 million related to Indus-
try's acquisitions of LMS International NV. Also in the prior year
cash inflows from the disposal of investments, intangibles and
property, plant and equipment were €2.462 billion. This total
included proceeds of €1.7 billion relating to the sale of our 50%
stake in NSN and €0.3 billion relating to the sale of our AtoS
convertible bonds.
Cash flows from investing activities - Cash used in investing
activities for continuing operations amounted to €4.364 billion
in fiscal 2014, compared to cash used of €4.759 billion in the
prior year. In the current period, cash outflows from investing
activities were due mainly to two factors. Firstly, SFS executed
its planned asset growth during fiscal 2014 and we recorded
cash outflows totaling €2.501 billion for a net increase in new
business volume at SFS. Secondly, we had additions to intan-
gible assets and property, plant and equipment of €1.831 bil-
lion, which related mainly to investments within the Sectors.
Discontinued operations used cash of €131 million in fiscal
2014, compared to cash provided of €154 million in the prior
year, which included significant cash inflows at OSRAM.
Cash flows from operating activities - Continuing operations
provided cash from operating activities of €7.230 billion in fis-
cal 2014, nearly unchanged from the level a year earlier. In both
periods, the major component of cash inflows was income
from continuing operations, which increased to €5.400 billion
in fiscal 2014 from €4.179 billion in the prior year. Included
therein were amortization, depreciation and impairments of
€2.411 billion in the current period and €2.804 billion in the
prior year. A decrease in operating net working capital led to
cash inflows of €0.1 billion in the current period compared to
outflows of €1.7 billion due to a build-up in operating net work-
ing capital a year earlier. The positive change year-over-year in
operating net working capital related mainly to Energy, in par-
ticular to the Wind Power Division, and to Infrastructure &
Cities' Transportation & Logistics Business. In fiscal 2014 we
recorded negative effects related to changes in other assets and
liabilities, particularly personnel-related liabilities, compared to
positive effects in the prior year. The current period included
cash outflows of approximately €0.5 billion corresponding to
charges to income taken for the "Siemens 2014" program, com-
pared to €0.4 billion in such outflows in the prior year.
Q1 2014
1 Continuing and discontinued operations.
C.4.5 Capital resources
and requirements
247 | D.
337
We have three credit facilities at our disposal for general corpo-
rate purposes. The credit facilities as of September 30, 2014
consisted of €6.8 billion in committed, unused lines of credit.
In order to optimize the Company's position with regard to in-
terest income and interest expense, and to manage the associ-
ated interest rate risk, Corporate Treasury uses derivative finan-
cial instruments to comprehensively and actively manage our
interest rate risk relative to a benchmark. The interest rate risk
relating to SFS is managed separately, considering the term
structure of SFS's financial assets and liabilities.
2 We may redeem, at any time, all or some of US$-notes, issued in August
2006, at the early redemption amount (call) according to the conditions of
the notes.
1 The maturity of the hybrid bond depends on the exercise of a call option:
the bond is callable by us in September 2016 and thereafter, with a final legal
maturity ending in September 2066.
2015 2016 2017 2018 2019 2020 2021 2025 2026 2028 2042 2066
0.8
1.1
1.4²
0.4
As of September 30, 2014 we recorded in total €18.2 billion in
bonds, €1.7 billion in loans from banks, €0.9 billion in other
financial indebtedness, primarily consisted of US$-commercial
paper, and €0.1 billion in obligations under finance leases.
DEBT AND CREDIT FACILITIES
Our capital requirements include, among others, scheduled
debt service, regular capital spending, ongoing cash require-
ments from operating and SFS financing activities, dividend
payments, pension plan funding, portfolio activities and share
buybacks.
Our capital resources consist of a variety of short- and long-
term instruments including debt instruments and credit facili-
ties. In addition to cash and cash equivalents and available-for-
sale financial assets, liquid resources consist of future cash
flows from operating activities.
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
-0.3 0.5
1.3
2.5
4.62
1.91
2.3
| (nominal amounts outstanding in billions of €)
Bonds and loans maturity profile
Below we present the maturity profile of our assignable and
term loans and our bonds, issued mainly in Euro and US$ and
to a lower extent in £, as of September 30, 2014:
(3,396)
Cash flows from financing activities – Financing activities for
continuing operations used cash of €4.485 billion in fiscal 2014,
compared to cash used of €3.715 billion a year earlier. In the
current period, the major cash outflows were dividends of
€2.533 billion paid (for fiscal 2013) to shareholders of
Siemens AG and the repayment of €1.452 billion in long-term
debt. In addition we recorded cash outflows of €1.066 billion for
the purchase of treasury shares under Siemens' share buyback
program and paid interest totaling €617 million. These cash
outflows were partly offset by cash inflows of €801 million from
the change in short-term debt and other financing activities
related to the issuance of commercial paper and by proceeds of
€527 million from the issuance of long-term debt, related to a
total of US$700 million in privately placed floating-rate instru-
ments. For comparison, in the prior year we paid dividends of
€2.528 billion (for fiscal 2012) to shareholders of Siemens AG
and €2.927 billion for the repayment of long-term debt. We re-
corded €1.394 billion in cash outflows for the purchase of treas-
ury shares and €479 million for the payment of interest. In the
prior year these cash outflows were partly offset by cash inflows
from the issuance of long-term debt totaling €3.772 billion.
-
207
Consolidated Financial Statements
Additional Information
2.0161.91
(4,487)
5,378
(3,715)
(2)
Year ended September 30,
Continuing and
discontinued operations
2013
Year ended September 30,
2014
2013
2014
Year ended September 30,
Discontinued operations
Continuing operations
Cash flows from:
(in millions of €)
Cash flows
C.4.4 Cash flows
2014
Net assets position
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
206
Combined Management Report
171 C.
Corporate Governance
131 | B.
210 C.5
319
2013
7,230
5,328
5,201
(50)
(198)
Further information about our debt and credit facilities, interest
rate risk management and the use of financial instruments
for hedging purposes is provided in → NOTES 21, 30 AND 31 in
(4,485)
Financing activities
5,399
Free cash flow
(2,012)
(1,898)
(204)
(67)
Operating activities
(1,808)
therein: Additions to intangible assets and property,
plant and equipment
(5,076)
(4,026)
(317)
339
(4,759)
(4,364)
Investing activities
7,340
7,100
154
(131)
7,186
(1,831)
→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
172 C.1
131 | B.
601
925
Available-for-sale financial assets
9,190
8,013
Cash and cash equivalents
3%
Total liabilities
and equity
3%
Total assets
2013
2014
(in millions of €)
Trade and other receivables
September 30,
Structure of Consolidated Statements
C.5 Net assets position
|
209
Consolidated Financial Statements
Additional Information
247 D.
337
of German Commercial Code)
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
225 C.9
214 C.7
215 C.8
of Financial Position (in millions of €)
213 C.6
14,526
104,879
79,781
72,396
73,414
Profit
Profit margin
(in millions of €)
Year ended September 30,
2014
2013
Year ended September 30,
2014
2013
Power and Gas
2,215
2,129
14,853
17.4%
Wind Power and Renewables
6
7
Total current
15,560
15,100
Inventories
101,936
101,936
3,250
3,710
Other current financial assets
104,879
15.2%
108 | A. To our Shareholders
With our ability to generate positive operating cash flows,
our total liquidity of €8.9 billion and our €6.8 billion in unused
lines of credit and given our credit ratings at year-end, we
believe that we have sufficient flexibility to fund our capital
requirements. Also in our opinion, our working capital is
sufficient for our present requirements.
For information related to expected cash inflows and outflows
in connection with portfolio transactions, see → NOTE 4 in
Available-for-sale financial assets (current)
Total liquidity
Net debt¹
(8,013) (9,190)
20,947 20,453
18,509
19,326
1,944
1,620
2013
September 30,
2014
Short-term debt and current maturities
of long-term debt
Long-term debt
Total debt
(in millions of €)
Net debt results from total debt less total liquidity. Total liquid-
ity refers to the liquid financial assets we have available at the
end of a reporting period to fund our business operations and
pay for near-term obligations. Total liquidity comprises Cash
and cash equivalents as well as current Available-for-sale finan-
cial assets, as stated in the Consolidated Statements of Finan-
cial Position. Management uses the Net debt measure for inter-
nal finance management, as well as for external communication
with investors, analysts and rating agencies.
(925)
(8,938) (9,790)
NET DEBT
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
108 | A. To our Shareholders
208
Combined Management Report
171 C.
Corporate Governance
Net assets position
→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
(601)
10,663
OTHER CAPITAL RESOURCES AND REQUIREMENTS
For information related to the expected payments for dividend
and share buybacks, see → C.2.5 DIVIDEND AND SHARE BUYBACKS.
asset-based lending transactions, meaning that the respective
loans can be drawn only after the borrower has provided suffi-
cient collateral. The increase in these commitments year-over-
year was due mainly to new business volume at SFS, including
positive currency translation effects.
As of September 30, 2014 and 2013 we recorded also irrevoca-
ble loan commitments of €3.604 billion and €2.950 billion.
A considerable portion of these commitments resulted from
FINANCIAL STATEMENTS.
Further information about these off-balance-sheet commit-
ments is provided in → NOTE 27 in → D.6 NOTES TO CONSOLIDATED
As of September 30, 2014 and 2013 we recorded €6.687 billion
and €5.970 billion, respectively, of the undiscounted amount of
maximum potential future payments related to guarantees. The
increase in these commitments included guarantees related to
the disposition of businesses and agreements related to our
project businesses. As of September 30, 2014 and 2013 we
recorded also €3.217 billion and €3.120 billion, respectively, of
future payment obligations under non-cancellable operating
leases and €132 million and €223 million, respectively, for com-
mitments to make capital contributions to the equity of various
companies.
OFF-BALANCE-SHEET COMMITMENTS
3 Included cash flows relating to certain financing activities
such as dividends paid and purchase of treasury shares
as well as effects without cash flow impact such as from
currency translations.
payables of €205 million and cash outflows for billings
in excess of costs and in estimated earnings on uncom-
pleted contracts and related advances of €657 million.
2 Continuing operations.
1 In fiscal 2014, cash inflows for the decrease in operating
net working capital included cash inflows for inventories
less advance payments received of €336 million, for
trade and other receivables of €200 million, for trade
Net debt as of
September 30, 2014
Changes in certain
financing activities³
Cash flows from
investing activities²
12,008
Total cash flows from operating activities²
decrease in operating
net working capital¹
Cash inflows for the
Net debt as of
September 30, 2013
12,008
4,211
4,364
(7,147)
(83)
10,663
1 We typically need a considerable portion of our cash and cash equivalents and
our current available-for-sale financial assets for purposes other than debt reduc-
tion. The deduction of these items from total debt in the calculation of Net debt
therefore should not be understood to mean that these items are available exclu-
sively for debt reduction at any given time.
| Changes in Net debt (in millions of €)
The changes in Net debt from fiscal 2013 to 2014 may also be
presented as follows:
Cash and cash equivalents
Income and other changes
in cash flows from
operating activities
→ C.1.1.2 BUSINESS DESCRIPTION.
FY 2014
FY 2013
3%
577
794
48,076
46,937
36,598
(37%)
(46%)
(46%)
(35%)
Other current assets
1,290
1,297
therein:
Current income tax assets
Assets classified as held for disposal
1,393
Total liquidity
9,790
Total
8,938
(10%)
non-current
Total current assets
48,076 46,937
(9%)
liabilities
36,767
35,443
(35%)
3,935
Total
37,868
assets
2,072
Healthcare
5.2%
8.0%
510
773
14.8%
18.3%
1,320
1,681
Process Industries and Drives
Digital Factory
(4.0)%
liabilities
7.3%
532
6.6%
9.2%
377
511
Mobility
Building Technologies
2.2%
(0.8)%
254
(86)
Energy Management
Total current
(232)
2,123
non-current
(35%)
3,022
Other financial assets
18,416
15,117
Deferred tax assets
3,334
3,234
Other assets
945
872
Total non-current assets
56,803
54,999
2,127
108 | A. To our Shareholders
Corporate Governance
171 C.
Combined Management Report
210
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
131 | B.
assets
56,803
the equity method
9,815
54,999
(54%)
(54%)
Total equity
31,514
(30%)
28,625
(28%)
Sep. 30,
2014
Sep. 30,
2013
Sep. 30,
2014
Sep. 30,
2013
Cash and cash equivalents decreased by €1.177 billion from the
prior-year level. For detailed information regarding the change,
see c.4.4 CASH FLOWS.
Our total assets in fiscal 2014 were influenced by positive cur-
rency translation effects of €2.8 billion, led by the US$. Within
total assets of €104.879 billion, total assets related to SFS
increased to €21.970 billion as of September 30, 2014 from
€18.661 billion a year earlier. Within total liabilities, SFS debt
increased to €18.663 billion from €15.600 billion a year earlier.
Both changes were driven by planned asset growth at SFS
during fiscal 2014. SFS assets represented 21% of Siemens' total
assets as of September 30, 2014, compared to 18% a year earlier.
SFS debt represented 18% of Siemens total liabilities and equity,
compared to 15% at the end of fiscal 2013.
During fiscal 2014 we classified a number of businesses as held
for disposal. These classifications affected a number of line
items in our Consolidated Statements of Financial Position,
which are noted in the discussion below. The relevant busi-
nesses include the following: the Metals Technologies busi-
ness formerly within Industry, the Hospital Information System
business and Microbiology business formerly within Health-
care, and our equity investment stake in BSH.
Investments accounted for using
The line items Trade and other receivables and Inventories
decreased by €328 million and €461 million, respectively, year-
over-year. The main factor in the decreases was assets related
to the Metals Technologies business, which were classified as
held for disposal. These decreases were partly offset by positive
currency translation effects.
Assets classified as held for disposal increased by €2.542 billion
due mainly to the classification of assets related to the Metals
Technologies business, our stake in BSH and the Hospital Infor-
mation System business. This increase was partly offset by a
reduction in assets due to the sale of the Water Technologies
business.
(in millions of €)
Goodwill
September 30,
2014
2013
17,783
17,883
Other intangible assets
4,560
5,057
Property, plant and equipment
9,638
The line item Other current financial assets increased by
€461 million year-over-year, which included higher loans receiv-
ables of SFS.
For information with respect to acquisitions of businesses, see
17.7%
Industrial business
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Report on expected developments and
associated material opportunities and risks
225 C.9
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
214 C.7
215 C.8
213 C.6
We believe that sustainable revenue and profit development is
supported by a healthy capital structure. A key consideration of
our capital structure management is to maintain ready access
to the capital markets through various debt products and to
preserve our ability to repay and service our debt obligations
ASSETS POSITION.
For information on changes in equity and debt, see → c.5 NET
7%
48,564
51,900
247 D.
337
(total equity and total debt)
40%
As percentage of total capital
Total capital
2%
20,453
20,947
18,509
19,326
1,944
1,620
10%
28,111
58%
60%
30,954
42%
2013
Consolidated Financial Statements
Additional Information
over time. In fiscal 2014, the target range for our capital struc-
ture was 0.5 - 1.0. The ratio is defined as the item Industrial net
debt divided by the item Adjusted EBITDA. This financial perfor-
mance measure indicates the approximate amount of time in
years that would be needed to cover industrial net debt through
continuing income, without taking into account interest, taxes,
depreciation and amortization.
(7)%
Infrastructure & Cities Sector
FY 2014
247
FY 2013
239
358
384
79,158
Industry Sector
241
26%
303
Healthcare Sector
FY 2014
FY 2013
6%
1%
449
425
FY 2013
205
FY 2014
1,831
1,808
| plant and equipment (in millions of €)
Siemens (continuing operations)
FY 2014
FY 2013
Additions to intangible assets and property,
The changes of additions to intangible assets and property,
plant and equipment from fiscal 2013 to 2014 were as follows:
The businesses of the former Infrastructure & Cities Sector
spend large amounts of their additions to intangible assets and
property, plant and equipment for investments in innovations
at the former Power Grid Solutions & Products Business, partic-
ularly including the business activities of the former Low and
Medium Voltage Division, and at the Building Technologies
Division. The businesses also invest significant amounts in the
replacement and expansion of technical equipment in order to
improve productivity and their respective positions in grow-
ing market segments, particularly at the former Transporta-
tion & Logistics Business.
The businesses of the former Industry Sector spend a large por-
tion of its additions to intangible assets, particularly software,
and property, plant and equipment for additional capacities for
innovative products, for optimization of its global footprint;
and for the replacement of fixed assets.
Healthcare's investments are mainly driven by the medical
imaging and therapy systems and laboratory diagnostics busi-
nesses. Large parts of the additions are related to intangible
assets, such as licenses as well as developing and implement-
ing software and IT solutions.
The businesses of the former Energy Sector includes invest-
ments mainly in improving its global footprint to secure com-
petitiveness by improving its cost position and strengthening
technological innovations. These investments include mainly
spending in capacities and facilities related to the business of
the former Power Generation Division, such as new test facili-
ties for highly efficient gas turbines, and for the technology-
driven wind power market, particularly in northern Europe.
Additions to intangible assets and property, plant and equip-
ment from continuing operations was €1.831 billion in fiscal
2014, nearly unchanged from the level in the same period a
year earlier. In fiscal 2014, we directed €1.356 billion of these.
additions to intangible assets and property, plant and equip-
ment within the Sectors to investments for technological inno-
vations, extending our capacities for designing, manufacturing
and marketing new solutions and for the necessary replace-
ments of fixed assets. The majority of the additions in fiscal
2014 took place in the focus areas of investing activities of the
former Sectors described below, which will basically continue
to be the focus areas regarding the investing activities of the
Industrial Business in fiscal 2015. The remaining portion in fis-
cal 2014, €475 million, related mainly to SRE and its responsibil-
ity for uniform and comprehensive management of Company
real estate worldwide.
C.4.3 Investing activities
FINANCIAL STATEMENTS.
For further information on the calculation of adjusted EBITDA
and its changes, see c.3.4 RECONCILIATION TO ADJUSTED EBITDA.
For further information with respect to our capital structure,
the calculation of industrial net debt and its changes, and our
credit rating, see → NOTE 26 in → D.6 NOTES TO CONSOLIDATED
Our capital structure ratio as of September 30, 2014 decreased
to 0.15 from 0.35 a year earlier. The change was due to a de-
crease in industrial net debt and an increase in adjusted EBITDA
compared to the prior year. We actively manage this ratio
through our ongoing share buybacks. Our announced acquisi-
tions and divestments of businesses will also have a noticeable
impact on it in fiscal 2015.
Energy Sector
17.7%
2014
September 30,
Corporate Governance
131 | B.
108 | A. To our Shareholders
4,409
5,507
Net income
340
215
Income from discontinued operations, net of income taxes
4,070
5,292
Income from continuing operations
(1,652)
171 C.
(2,014)
5,722
7,306
Income from continuing operations before income taxes
(1,177)
(862)
Reconciliation to Consolidated Financial Statements
410
466
Financial Services
8.8%
10.6%
6,488
7,703
Income tax expenses
% Change
Combined Management Report
172 C.1
Total equity attributable to
shareholders of Siemens AG
As percentage of total capital
Short-term debt and current
maturities of long-term debt
Long-term debt
Total debt
(in millions of €)
As of September 30, 2014 and 2013 our capital structure was
as follows:
C.4.2 Capital structure
To effectively manage Siemens' capital structure, Siemens
seeks to maintain ready access to the capital markets through
various debt products and to preserve its ability to repay and
service its debt obligations over time.
CAPITAL STRUCTURE MANAGEMENT
SOLIDATED FINANCIAL STATEMENTS.
MANAGEMENT OF POST-EMPLOYMENT BENEFITS
Siemens' funding policy for post-employment-benefits is part
of its overall commitment to sound financial management,
which includes a continuous analysis of the structure of its pen-
sion liabilities. For more detailed information about Siemens'
pension plan funding, see → NOTE 22 in → D.6 NOTES TO CON-
and uses financial derivative instruments in transactions with
external financial institutions to offset such concentrated expo-
sures. Especially since the beginning of the global financial
market crisis, Siemens monitors very closely the counterparty
risk in its financial assets and financial derivative instruments.
For more detailed information about financial risk manage-
ment at Siemens, see → NOTE 31 in → D.6 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
Investments of cash and cash equivalents are subject to credit
requirements and counterparty limits. Corporate Treasury
pools and centrally manages Siemens' interest rate exposure as
well as certain commodity, currency and credit risk exposures
FINANCIAL RISK MANAGEMENT
Cash management comprises the management of bank partner
relationships and bank accounts as well as the execution of
payments, including the administration of cash pools, on a
global level. Siemens strives to raise efficiency and transpar-
ency through a high level of standardization and continuous
advancement of payment processes. Where permissible, the
execution of intercompany and third party payments is effected
centrally through group-wide tools with central controls to en-
sure compliance with internal and external guidelines and
requirements. To ensure efficient management of Siemens'
funds, Corporate Treasury has established a central cash man-
agement approach: to the extent legally and economically fea-
sible, funds are pooled and managed centrally by Corporate
Treasury. Conversely, funding needs within Siemens are cov-
ered centrally by Corporate Treasury via intercompany current
accounts and/or loans where legally and economically feasible.
CASH MANAGEMENT
204
Siemens' principal source of financing is cash inflows from
operating activities. Corporate Treasury generally manages
cash and cash equivalents for Siemens and has primary respon-
sibility for raising funds in the capital markets for Siemens
through various debt products, with the exception of countries
with conflicting capital market controls. The relevant consoli-
dated subsidiaries in these countries obtain financing primarily
from local banks. Siemens follows a prudent borrowing policy
that is aimed towards a balanced financing portfolio, a diversi-
fied maturity profile and a comfortable liquidity cushion. Espe-
cially since the beginning of the global financial markets crisis,
Siemens monitors very closely the funding options available in
the capital markets, trends in the availability of funds and the
cost of such funding in order to evaluate possible strategies
regarding its financial and risk profile.
Financial management at Siemens is executed according
to applicable laws and internal guidelines and regulations. It
includes the following activities:
Siemens is committed to a strong financial profile, which pro-
vides the financial flexibility to achieve growth and portfolio
optimization goals largely independent of capital market con-
ditions.
C.4.1 Principles and objectives
of financial management
II | C.4 Financial position
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
LIQUIDITY MANAGEMENT
Industrial business
9,645
11,736
26
440
(448)
16
18
566
403
10
8
501
351
2
7,335
5,842
165
(10)
328
411
297
372
465
409
66
85
44
(113)
55
28
291
1,487
(5)
(39)
2,186
2,126
32
32
(15)
306
52
(8)
(636)
(156)
29
20
69
2,027
6
8
417
350
2,252
1,563
2
(4)
1,401
1,038
843
527
2
2,033
241
168
(938)
impairments of
property, plant and
equipment and goodwill
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
impairment of other
intangible assets
2013
(27)
1,481
2,022
101
132
406
478
1,988
(22)
(16)
2,177
2,110
57
(41)
129
Adjusted EBITDA margin
Depreciation and
(836)
(2)
(48)
(70)
1
(6)
7,427
5,813
582
510
131 | B.
Corporate Governance
171 C.
Adjusted EBITDA
Combined Management Report
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Financial income
(expenses), net
Adjusted EBIT
Amortization and
172 C.1
1,955
2013
2014
>200%
7,335
5,842
0.1%
26%
328
411
(20)%
465
409
14%
Reconciliation to Consolidated Financial Statements
(700)
291
(850)
Income from continuing operations before income taxes
7,427
5,813
28%
Income tax expenses
(2,028)
(1,634)
(24)%
Income from continuing operations
5,400
4,179
29%
Income from discontinued operations, net of income taxes
17%
108
1,487
1,563
Net assets position
Centrally managed portfolio activities
Centrally managed portfolio activities reported a profit of
€44 million in fiscal 2014, compared to a loss of €113 million
in fiscal 2013. Results for the prior year included €100 million in
charges related to two large projects remaining from the Metals
Technologies business, formerly reported within Industry, that
were not classified as discontinued operations.
Siemens Real Estate (SRE)
Income before income taxes at SRE was €241 million in fiscal
2014, compared to €168 million in fiscal 2013. As in the past,
income from SRE continues to be highly dependent on dis-
posals of real estate.
Corporate items and pensions
Corporate items and pensions reported a loss of €938 million in
fiscal 2014, compared to a loss of €836 million in fiscal 2013.
Within these figures, the loss at Corporate items was €545 mil-
lion, compared to a loss of €419 million in fiscal 2013. The
current period included expenses resulting from changes in
the fair value of warrants issued together with US$3 billion in
bonds in fiscal 2012, as well as negative effects related to legal
and regulatory matters. The fair value of the warrants depends
on the underlying Siemens and OSRAM share prices as well as
their respective volatilities. Because this effect is accounted
for in Corporate items, results for Corporate items are expected
to remain variable in coming periods. Centrally carried pen-
sion expense totaled €393 million in fiscal 2014, compared to
€416 million in fiscal 2013.
Eliminations, Corporate Treasury
and other reconciling items
Income before income taxes from Eliminations, Corporate
Treasury and other reconciling items was a negative €48 mil-
lion in fiscal 2014, compared to a negative €70 million in
the same period a year earlier. The change year-over-year in-
cluded higher interest income from liquidity at Corporate
Treasury.
C.3.3 Income
Equity Investments
(in millions of €)
44%
Energy
Industry
Infrastructure & Cities
Total Sectors profit
Financial Services (SFS)
Year ended September 30,
2014
2013
1,569
1,955
% Change
(20)%
2,027
2,033
0%
2,252
Healthcare
68
231
Net income
Wind Power
Power Transmission
Healthcare Sector
therein: Diagnostics
Industry Sector
therein: Industry Automation
Drive Technologies
Infrastructure & Cities Sector
therein: Transportation & Logistics
Total Sectors
Power Grid Solutions & Products
Building Technologies
Equity Investments
therein: Power Generation
Financial Services (SFS)
Centrally managed portfolio activities
Siemens Real Estate (SRE)
Corporate items and pensions
Eliminations, Corporate Treasury and other reconciling items
Siemens
Beginning with fiscal 2015, we calculate EBITDA without the
elimination of income (loss) from investments accounted for
using the equity method, net.
108 | A. To our Shareholders
Profit
Income (loss) from
investments accounted
for using the
equity method, net
2014
2013
Reconciliation to Consolidated Financial Statements
(53)%
Energy Sector
(in millions of €)
5,507
4,409
25%
Net income attributable to non-controlling interests
Net income attributable to shareholders of Siemens AG
134
5,373
126
4,284
25%
As a result of the developments described in → C.3.2 SEGMENT
INFORMATION ANALYSIS, Income from continuing operations
before income taxes increased 28% year-over-year. With a
lower effective tax rate compared to fiscal 2013 (27% in fiscal
2014 vs. 28% in fiscal 2013), Income from continuing opera-
tions increased 29% year-over-year.
In fiscal 2014, the hospital information system business, for-
merly included in the Healthcare Sector, and nearly all of the
Metals Technology business, formerly included in the Industry
Sector, were classified as discontinued operations. Income
from discontinued operations, net of income taxes in fiscal
2014 was €108 million compared to €231 million a year earlier.
Overall assessment of the economic position
Subsequent events
213 C.6
214 C.7
215 C.8
225 C.9
Report on expected developments and
associated material opportunities and risks
Sectors
Sustainability and citizenship
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
201
202
While Income from discontinued operations in the current
period benefited from a positive €64 million tax effect related
to former Communications activities, the prior year included
Income from discontinued operations of €277 million related to
OSRAM, which was spun off in the fourth quarter of fiscal 2013.
As a result of the changes in Income from continuing opera-
tions and Income from discontinued operations, Net income
and Net income attributable to shareholders were 25% higher
than a year earlier.
Corresponding basic EPS rose 25% to €6.37 compared to €5.08
in the prior year, primarily reflecting higher Net income attri-
butable to shareholders of Siemens AG.
In fiscal 2014, ROCE from continuing operations was 17.2%,
thus clearly returning to our target range of 15 to 20%. In fiscal
2013, ROCE from continuing operations was 13.7%. The increase
was due primarily to the substantial increase in Income from
continuing operations and a slightly lower average capital
employed. For more detail on the calculation of ROCE, see
→ C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE).
C.3.4 Reconciliation to adjusted EBITDA
The following table gives additional information on topics
included in Profit and Income before income taxes and pro-
vides a reconciliation to adjusted EBITDA based on continuing
operations.
For the fiscal years ended September 30, 2014 and 2013
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
204
222
2,438
1
263
307
608
586
(360)
(246)
(576)
(590)
19
9
17
59
1
74
(498)
35
30
118
9
(83)
6,728
(94)
5,293
-
(29)
(34)
(112)
(128)
741
(498)
873
278
(109)
29
23
1
16
1
16
-
552
389
(153)
(64)
5
5
344
190
41
166
(2)
(2)
(9)
(180)
1
2
3
2
(5)
(177)
(103)
225
8,131
1,670
9,139
5,567
5,382
11,210
11,405
10,708
11,672
Building Technologies
5,587
5,769
5,569
5,754
Mobility
9,280
6,870
9,707
5,823
Digital Factory
9,233
8,897
9,201
8,950
Process Industries and Drives
9,968
9,695
9,834
Healthcare
12,126
12,338
7,249
1,931
7,759
12,720
8,097
213 C.6
214 C.7
215 C.8
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
203
C.3.5 Selected information based
2013
14,016
on new organizational structure
if the new organizational structure as of beginning of fiscal
year 2015 had already been in place. As described in more detail
in → C.7 SUBSEQUENT EVENTS, Audiology Solutions, formerly
reported within Healthcare, was classified as discontinued op-
erations in the first quarter of fiscal 2015. This classification is
already reflected in the numbers presented. Profit amounts are
reported in accordance with our enhanced definition of seg-
ment profit, which is described in more detail in → C.2 FINAN-
CIAL PERFORMANCE SYSTEM.
Orders
Revenue
(in millions of €)
Power and Gas
Wind Power and Renewables
Energy Management
Year ended September 30,
2014
2013
Year ended September 30,
2014
13,996
15,100
In May 2014, we announced a new organizational structure
that became effective with the beginning of fiscal 2015. In gen-
eral, financial measures presented in this Combined Manage-
ment Report are based on our organizational structure during
fiscal 2014. In this subchapter, we present selected financial
results for fiscal 2014 and fiscal 2013 as they would have looked
11,983
9,103
1,185
2,622
20.5%
20.7%
25
(27)
392
377
184
196
200
211
776
784
2,551
2
2,248
1,583
242
296
302
342
2,792
2,220
16.4%
13.1%
4
(4)
1,396
(16)
1,041
311
266
2,631
2,399
8.1%
9.9%
(12)
(6)
(55)
320
31
32
109
103
85
454
308
(10)
(655)
(167)
14
13
89
114
(552)
(39)
23
(19)
1,999
2,045
245
(10)
1,356
196
119
99
556
(321)
(3)
(6)
560
401
22
57
70
78
652
536
57
(2)
352
40
58
40
46
581
456
(33)
(75)
7,203
5,928
715
848
501
240
39
(459)
123
1,711
1,404
(2)
(11)
843
542
45
56
182
219
1,070
817
65
(17)
1,476
279
127
154
170
226
1,772
658
9.4%
3.7%
(12)
(7)
435
(14)
0,1%
1,569
2014
1,620
1,184
Other current financial liabilities
1,717
1,515
Other liabilities
1,874
2,074
Current provisions
4,354
Other financial liabilities
4,485
36,767
35,443
Current income tax liabilities
1,762
2,151
Other current liabilities
17,954
19,701
Liabilities associated with assets
classified as held for disposal
Total non-current liabilities
7,599
7,594
Trade payables
(in millions of €)
28.8
September 30,
2013
September 30,
Long-term debt
19,326
18,509
(in millions of €)
2014
2013
Post-employment benefits
9,324
9,265
Short-term debt and current
Deferred tax liabilities
552
504
maturities of long-term debt
1,620
1,944
Provisions
4,071
3,907
1,597
|
Total current liabilities
473
37,868
30%
560
28,111
28%
514
104,879
101,936
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
30,954
212
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
|| | C.6 Overall assessment of the economic position
172 C.1
Total liabilities and equity
Non-controlling interests
to shareholders of Siemens AG
Equity ratio
Long-term debt increased by €817 million as of September 30,
2014, compared to the prior year, due mainly to positive cur-
rency translation effects and the issuance of US$700 million in
privately placed floating-rate instruments.
213 C.6
214 C.7
Overall assessment of the economic position
Subsequent events
242 C.10 Compensation Report and legal disclosures
242
C.11
Siemens AG (Discussion on basis
215 C.8
Sustainability and citizenship
of German Commercial Code)
225 C.9
Report on expected developments and
associated material opportunities and risks
247 D.
337
Consolidated Financial Statements
Additional Information
211
As of September 30, 2014, the funded status of our defined ben-
efit plans showed an underfunding of €9.1 billion, unchanged
from the prior year. Within these figures, underfunding for
pension plans amounted to €8.5 billion, as of September 30,
2014 and 2013, respectively. An increase in our defined benefit
obligation (DBO) by €2.418 billion mainly resulted from the im-
pact of decreasing market interest rates which was offset partly
by the effect of a refined determination of the discount rate. At
the same time, plan assets increased by €2.427 billion due
mainly to a positive return, primarily driven by fixed-income
and equity investments.
2014
September 30,
2013
Total equity attributable to shareholders of Siemens AG in-
creased from €28.111 billion at the end of fiscal 2013 to
€30.954 billion at the end of fiscal 2014. In fiscal 2014, the main
factors relating to the increase in total equity attributable to
shareholders of Siemens AG were €5.373 billion in net income
attributable to shareholders of Siemens AG and €825 million in
other comprehensive income, net of income taxes. These in-
creases were partly offset by dividend payments of €2.533 bil-
lion (paid for fiscal 2013) and the repurchase of 11,331,922
treasury shares at average costs per share of €95.27 totaling
€1.080 billion (including incidental transaction charges).
For additional information on our net assets position, see the
corresponding notes in → D.6 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
(in millions of €)
Total equity attributable
36,598
Liabilities associated with assets classified as held for disposal
increased to €1.597 billion as of September 30, 2014 from
€473 million a year earlier. The main factor in the increase was
the above-mentioned classification of liabilities associated
within Metals Technologies business.
Other current liabilities decreased to €17.954 billion as of Sep-
tember 30, 2014 from €19.701 billion a year earlier. The main
factors were a decrease in billings in excess of costs and esti-
mated earnings on uncompleted contracts and related ad-
vances, mainly in Energy and Industry, and, to a lesser extent,
lower personnel-related liabilities. The decrease in Industry re-
lated primarily to the Metals Technologies business, where lia-
bilities were classified as liabilities associated with assets clas-
sified as held for disposal.
Short-term debt and current maturities of long-term debt de-
creased by €324 million year-over-year. The main factors in the
decrease were the redemption of €1.0 billion in 5.375% p.a.
instruments and €400 million in 0.375% p.a. instruments,
partly offset by the issuance of commercial paper.
Another focus area is automating clinical work processes and
optimizing laboratory diagnostics, with a goal of enabling physi-
cians to identify diseases more precisely and at an earlier stage.
Physicians are then able to monitor the effect of medications
more accurately and benefit from the evaluation and analytical
capabilities of modern computer technology. As a result, thera-
pies can be tailored more closely to a patient's needs. Healthcare
also develops products that meet the specific, targeted require-
ments of the healthcare systems of emerging countries.
One of the R&D fields involves the development of systems that
help physicians make precise diagnoses of large numbers of
patients and are also robust, easy to use, and inexpensive to
purchase and maintain. Examples include interventional radiol-
ogy or catheter labs. Ultrasound with wireless transducers is
also ideally suited for minimally-invasive procedures such as
nerve blockades, access to blood vessels, and positioning for
therapeutic interventions and biopsies.
The R&D activities in the businesses of our former Healthcare
Sector are focused on meeting customer requirements, which
are the result of two major trends: the world's population con-
tinues to grow steadily and to get older. These trends increase
the pressure on healthcare providers to treat more and more
people at increasingly lower costs in order to stabilize rising
healthcare expenditures. To overcome the challenges of mak-
ing healthcare more efficient and more effective, the health-
care measures have to focus on the individual patient and the
success of the treatment.
219
Consolidated Financial Statements
Additional Information
247 D.
337
of German Commercial Code)
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
One of the R&D priorities of the businesses in our former
Industry Sector is the software-based integration of product
development, production planning, production processes and
services within the framework of product lifecycle manage-
ment. The objective is to accelerate processes at every point
along the value chain. Innovative technologies can cut the time
from design to market in the manufacturing industry by up to
50%. The further development of automation and drive tech-
nology, and industrial software in particular, plays a major role
here. This applies to the product development and production
process as well as to the integration of the drive system. More-
over, the businesses of the former Industry Sector are striving
to achieve greater energy efficiency, reduce raw material con-
sumption, and lower emissions. These objectives also guide
the development of technology-based service concepts such as
energy management and remote maintenance systems.
Overall assessment of the economic position
Subsequent events
214 C.7
215 C.8
213 C.6
The R&D activities of the businesses in our former Energy
Sector are focused on developing methods for the efficient
generation and transmission of electrical energy, including
advanced gas turbines that increase the efficiency and reduce
emissions of power plants, combined cycle power plants, to
increase the availability of electricity through higher flexibility
and efficient and reliable power supply for decentralized struc-
tures such as those in the oil and gas industries, innovations
for reducing the cost of wind turbines, innovations for increas-
ing the efficiency of wind turbines (offshore and onshore), the
development of an HVDC super grid and the development of a
subsea power grid to make deep-sea oil and gas extraction
more profitable.
C.8.3.3 RESEARCH AND DEVELOPMENT
IN OUR BUSINESSES
In our continuing operations, we had an average of approxi-
mately 13,200 R&D employees in Germany and approximately
15,600 employees in approximately 30 other countries during
fiscal 2014.
4.1%
3.8%
Infrastructure & Cities
7.1%
7.2%
225 C.9
R&D activities of the businesses in our former Infrastruc-
ture & Cities Sector focus on urban growth issues. Main research
fields therefore cover sustainable technologies for major metro-
politan areas and their infrastructures. The main aims are to in-
crease energy efficiency, reduce burdens on the environment,
increase cost-effectiveness, and improve the quality of life in
cities. To this end, the businesses develop building technologies
that conserve energy, solutions for ensuring an efficient and
secure supply of electricity in cities, and intelligent traffic and
transport systems. In addition, researchers are looking for ways
to integrate buildings into smart grids. Through such integration,
the buildings can feed the electricity they produce into the grids
and provide additional power during times of peak demand.
C.8.4 Supply chain management
2013
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
Combined Management Report
220
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
Sustainability requirements - as a guiding principle for our
supply chain management - are an integral part of all relevant
supplier management processes - such as supplier selection,
supplier qualification and evaluation, and supplier develop-
ment. We require all of our suppliers to comply with the princi-
ples of our Code of Conduct for Siemens Suppliers, which in-
clude, besides others, respect for the basic rights of employees,
strong safety & health and environmental protection standards
as well as zero-tolerance on corruption & bribery. We also re-
quire them to support its implementation in their own supply
We also continue to strengthen Siemens' innovation power by
benefiting from the innovative strength in our supplier net-
work. In May 2014, we held our "1st Siemens Supplier Innova-
tion Day," the first event of its kind on Siemens corporate level.
With this event, we established a platform for regular dialogue
with our top innovative suppliers at the CEO level. With this
dialogue, we aim to increase our innovation capabilities, realize
shared growth potential and ensure long-term cost leadership.
The successful restructuring of our SCM function since the end
of fiscal 2013 led to a substantial decrease of the cost for the
SCM organization, driven by optimizing towards a less complex
setup and process improvements. Going forward, we will con-
tinue with reshaping the SCM function in alignment with Vision
2020 to support the new Siemens organization structure overall.
> Sourcing from emerging markets, and
> E-sourcing.
> Siemens-wide managed volume,
The principal goal of supply chain management (SCM) at
Siemens is to ensure the availability and quality of the materi-
als we require to serve our customers also considering innova-
tion strength and sustainability of our suppliers. We aim to
strengthen our competitiveness by achieving substantial sav-
ings in our purchasing volume. In fiscal 2014, Siemens' pur-
chasing volume amounted to approximately €37 billion, which
equaled roughly half of our total revenue. Our primary strate-
gies for achieving savings in purchasing include:
Industry
8.3%
8.1%
2013
3.3%
2
2
Europe European Patent Office (EPO)
3
4
and Trade Mark Office (DPMA)
Germany German Patent
2012
2013
| Rank in patent office statistics
As of September 30, 2014, Siemens held approximately 56,100
granted patents worldwide in its continuing operations. As of
September 30, 2013, it held approximately 56,000 granted pat-
ents. In terms of the number of published patent applications
in calendar year 2013, Siemens ranked fourth in Germany and
second in Europe. Siemens was also ranked thirteenth in the
statistics for patents issued in the U.S. in calendar year 2013.
First filings as part of inventions submitted to patent offices.
4
3 Number of inventions reported by the Business Units in an internal report.
4.0
4.3
8.3
8.6
28.1
Goodwill decreased slightly to €17.783 billion as of Septem-
ber 30, 2014 compared to €17.883 billion a year earlier. The
decrease was mainly related to goodwill in the Metals Techno-
logies, Hospital Information System and Microbiology busi-
nesses, which were classified as assets classified as held for
disposal. This decrease was nearly offset by positive currency
translation effects.
Other intangible assets decreased to €4.560 billion as of Sep-
tember 30, 2014, compared to €5.057 billion a year earlier. The
major factor in the decrease was amortization.
Investments accounted for using the equity method decreased
by €894 million year-over-year. The main factor was the classi-
fication of our stake in BSH as assets classified as held for dis-
posal, partly offset by an investment in the joint venture re-
lated to the TurboCare Business Unit within Energy.
The line item Other financial assets increased to €18.416 billion
as of September 30, 2014 compared to €15.117 billion a year ear-
lier. The change was due primarily to higher loans receivable
driven by planned asset growth at SFS in fiscal 2014 and also to
a minor extent positive currency effects.
5.5%
We reached most of the goals for fiscal 2014 that we set in our
Annual Report for fiscal 2013, particularly including 1% organic
revenue growth and net income and basic EPS (net income)
growth of well over 15% compared to the prior year. We also
achieved a return on capital employed (ROCE) in our target
range. Among the primary measures of our economic position,
only our capital structure ratio was outside the target range, as
we kept our capital structure conservative in fiscal 2014.
U.S.- United States Patent
and Trademark Office (US PTO)
11
3.5%
Year ended September 30,
2014
Healthcare
Energy
| R&D intensity
Healthcare
1,048
1,204
731
719
Infrastructure & Cities
1,229
Industry
1,010
872
873
2013
2014
Year ended September 30,
Energy
(in millions of €)
| R&D expenses
R&D expenses and intensity for the Sectors in fiscal 2014 and
2013:
R&D intensity is defined as the ratio of R&D expenses and revenue.
1
13
During the fiscal year, we finished the remaining measures
from the "Siemens 2014" program, which helped to increase our
cost productivity. Furthermore, we initiated "Vision 2020," a
long-term and comprehensive concept for sustainable value
creation. With this concept we aim to achieve profitable growth
through greater customer proximity and accelerated innova-
tion, while further optimizing our portfolio, streamlining our
management structures and processes, and fostering an "owner-
ship culture" throughout the Company.
2014
Orders for fiscal 2014 were €78.350 billion, fulfilling our expec-
tation for a book-to-bill ratio above 1, which came in at 1.09.
Order development followed the pattern for revenue: while
reported orders were 2% lower year-over-year, organic orders
were up 1% on increases in three of the four Sectors. Energy
and Infrastructure & Cities again won large order volumes from
major contract wins, demonstrating the trust that customers
place in our ability to execute large projects despite setbacks in
certain project businesses in recent years. While Energy's Wind
Power Division achieved a strong order increase year-over-year,
the volume from large orders at Infrastructure & Cities came in
lower than a year earlier, when the Sector won an extraordi-
narily large contract worth €3.0 billion in the U.K.
193 C.3
Financial performance system
187 C.2
Business and economic environment
172 C.1
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
Results of operations
CT is also networked with leading universities and research
institutes worldwide. Close collaborative approaches with such
partners are also a substantial part of our Open Innovation (OI)
concept, in which we receive input from internal as well as
external experts that significantly contributes to the innovative
power of the Company. With OI we aim to overcome the bar-
riers of silo thinking, to prove and truly leverage the potential
of an open network enterprise.
Across all focus areas, we recognize the vital importance of
sophisticated software solutions. This is true not just for the
areas mentioned above but also in nearly all of the other fields
in which Siemens is active.
Another major focus is promoting more efficient energy use in
buildings, industrial facilities, and the transport sector. Exam-
ples include the development of electric drives and mass trans-
portation systems such as local and long-distance trains and
subways.
> making medical imaging, in-vitro diagnostics, and health-
care IT an integral part of outcome oriented treatment plans.
> using smart analytical systems and our domain expertise to
develop new services from previously unstructured data
(Examples of such services include anticipatory maintenance
work and cost-efficient warehousing offers.), and
> further development of industrial software to accelerate pro-
cesses at every point along the value chain,
> developing new solutions for smart grids and technologies
for storing energy from fluctuating renewable sources,
> increasing the efficiency of renewable and conventional en-
ergy sources for power generation and improving low-loss
electricity transmission systems,
Our R&D activities are geared toward ensuring economically
sustainable energy supplies and developing software solutions,
which are essential to maintaining the long-term competitive-
ness of our businesses. Accordingly, major focus areas include:
> enhancing technological competitiveness, and
> optimizing the allocation of R&D resources.
> ensuring long-term future viability,
R&D activities are carried out by the businesses of our former
Sectors and our Corporate Technology (CT) department. CT is a
worldwide network with primary locations in Germany, the
U.S., China, Russia, India, and Austria. The more than 7,400 CT
employees contribute their in-depth understanding of funda-
mental technologies, models, and trends, as well as their
wealth of software and process expertise. The businesses focus
their R&D efforts on the next generations of their products and
solutions. In contrast, the aim of CT is to work with our operat-
ing units to develop the Group's technology and innovation
strategies, especially for the next generation of their products
and solutions. In addition, CT strives to secure the technologi-
cal and innovative future through commonly developed core
technology initiatives such as future of automation, data to
business or system integration. With its global network of ex-
perts, our corporate research unit serves as a strategic partner
for Siemens' operating units. CT makes important contributions
along the entire value chain, from research and development
to production technology, manufacturing processes, and the
testing of products and solutions. All of CT's activities are cho-
sen to optimize the allocation of R&D resources, with a balance
between support the current offerings of our businesses and
development of longer-term opportunities.
205 C.4
Financial position
210 C.5
> we want to achieve diversity of thinking across our Company.
We've developed our management recruitment processes to
ensure that the preliminary selection of candidates reflects the
diversity of our customers and employees at all levels and in all
regions. For example the percentage of women in management
at Siemens globally has nearly doubled since fiscal 2002 to
15.6%.
C.8.2.2 TALENT ACQUISITION AND EMPLOYEE
Revenue for fiscal 2014 was €71.920 billion, a 2% decline com-
pared to the prior fiscal year. Within the change, Infrastruc-
ture & Cities and Industry reported higher revenue while Energy
and Healthcare reported declines. Overall, the decline was due
to negative currency translation effects. On an organic basis,
excluding currency translation and portfolio effects, revenue
was up 1% year-over-year, with three Sectors contributing to
the increase and only Energy reporting a decline year-over-year.
This fulfilled our expectation that organic revenue would
remain near the prior-year level in fiscal 2014.
Year ended September 30,
2 Average number of employees in fiscal year.
1 Continuing operations.
Patent first filings4
Inventions³
(in thousands)
Employees²
| R&D indicators¹
CT incurred additional R&D expenses.
Research and
development
intensity1
5.7%
(in billions of €)
Research and development expenses
4.065
4.048
FY 2014
FY 2013
| R&D intensity
In fiscal 2014, we reported research and development expenses
of €4.065 billion, compared to €4.048 billion in fiscal 2013. The
resulting R&D intensity, defined as the ratio of R&D expenses
and revenue, was 5.7%, above the R&D intensity in fiscal 2013.
C.8.3.2 RESEARCH AND DEVELOPMENT FIGURES
CT offers extensive process and production consulting services
for development and manufacturing units at Siemens. CT em-
ploys more than 4,200 software developers at locations in Asia,
Europe, and the Americas. These specialists help our Business
Units develop concepts from the initial idea to the finished
product. In addition, CT strategically handles the intellectual
property of Siemens. Around 440 experts help the Company
register patents and trademarks, establish them, and put them
to profitable use.
In addition, Siemens takes part in publicly funded research pro-
grams. The most important research areas include the develop-
ment of sustainable technologies including recycling, the com-
munication of machines, the creation of new materials and
bio-technology.
Net assets position
In fiscal 2014, we continued to focus on the following areas in
research and development (R&D):
> we want to provide opportunities for diversity
of experience and interaction, and
-
C.8.3 Research and development
Siemens Learning Campus and Siemens Leadership Excellence,
two corporate-level organizations, are responsible for imple-
menting the global learning portfolio: Siemens Learning
Campus offers regional learning opportunities to employees in
all countries, ranging from courses for employees and manag-
ers, through tailored training programs and services for groups,
to solutions for entire organizations. Additionally Siemens
Leadership Excellence (SLE) is addressing our current and
future senior and top leaders. Siemens continues to be one of
Germany's largest providers of professional education for sec-
ondary school graduates (7,100 places for Siemens trainees and
2,800 places for trainees from other companies). As in previous
years, we again made 10% of our trainee positions available to
disadvantaged youths.
We encourage our employees at all locations to develop their
qualifications and expertise. In fiscal 2014, we invested around
€276 million for continuing education (without travel ex-
penses), which equals about €769 per employee. The expenses
include courses and training programs both for individual em-
ployees and for entire company units.
C.8.2.3 LEARNING AND CONTINUING EDUCATION
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
C.8.2.4 SIEMENS EQUITY CULTURE
187 C.2
172 C.1
216
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
In order to meet our requirements for qualified staff, we attract
new talent to Siemens and also work on retaining our existing
workforce for the long term. To attract new talents, Siemens has
a wide array of programs in place. The Performance Manage-
ment Process (PMP) helps leaders and employees determine
clear personal goals and share the feedback necessary to
achieve them. The process also supports us in setting compen-
sation, providing professional development opportunities and
identifying talents throughout the Company. To reflect the focus
on high-performance within Siemens, our compensation sys-
tem for our top executives and senior management worldwide
includes a variable component.
Attracting, contacting, hiring, promoting and systematically
developing the best employees worldwide for Siemens – that is
our goal in Talent Acquisition and Employee Development.
DEVELOPMENT
Business and economic environment
We are convinced that empowering employees with shares
motivates them to assume greater responsibilities and helps
them identify more closely with the company they work for - a
fundamental prerequisite for the sustainable development of
Siemens.
C.8.2.5 EMPLOYEE RIGHTS AND RELATIONS
TO EMPLOYEE REPRESENTATIVES
Fair-minded collaboration among Company management, em-
ployees and employee representatives plays a central role at
Siemens. As one of the largest corporate employers in Germany
and worldwide, we are committed to our social responsibil-
ity and respect and uphold the fundamental rights of our
-
Promoting health - Siemens has established a high standard
of occupational health and safety to avoid work-related health
risks and promote employees' health. We help our employees
assume responsibility for their own personal behavior in
health-related matters, and support health-promoting general
conditions within the Company. We promote the physical,
mental and social well-being of our employees through a range
of activities governing the five topics of healthy work environ-
ment, psychosocial well-being, physical activity, healthy nutri-
tion and medical care.
In fiscal 2014 the overall number of fatalities was lower than in
fiscal 2013. We attribute this to the numerous and rigorous
actions and specific initiated projects. An implemented process
for the assessment of suppliers is supporting these activities.
Furthermore, Supply Chain Management and Business have
developed collaborative plans to improve the EHS profile of
suppliers. Regrettably, we report seven fatalities. Of that three
fatalities are with contractors (all are work-related fatalities)
and four with Siemens employees (one business trip fatality
and three commuting accidents). In the previous year, there
were five fatalities involving Siemens employees and ten in-
volving contractors.
Therefore, the responsible CEO of the affected unit shows com-
mitment by personally reporting every work related fatality, its
cause and the measures taken to the Siemens Managing Board.
218
217
Consolidated Financial Statements
Additional Information
247 D.
337
of German Commercial Code)
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
225 C.9
214 C.7
215 C.8
213 C.6
In addition to this global approach of "Zero Harm Culture @
Siemens," our businesses and countries themselves improve
safety locally through various activities depending on the cur-
rent safety performance and the business needs. Management
attention is of utmost importance to foster and improve safety.
> Health and safety - no compromises!
> We take care of each other!
> Zero incidents - it is achievable.
Our customers, suppliers and regulatory authorities expect
high safety standards from us. Safe behavior is governed not
only by complying with laws, regulations and procedures,
but also by the personal values of managers and employees.
Our "Zero Harm Culture @ Siemens" program, which has been
launched in fiscal 2012 is having an increasingly positive
impact. It contains three principles:
Promote a culture of safety - In the past, occupational safety
was often characterized by a focus on technical protective
measures, an approach which achieved considerable success.
We are convinced, however, that further improvement can be
achieved only through an actively practiced occupational
safety culture and optimal working conditions – in every coun-
try and for all Siemens employees as well as those of our con-
tractors. Both, as a company and as individuals, we are respon-
sible for ensuring that the working environment at Siemens is
safe at all times and for every employee. At present, local man-
agement systems and best practices exist which we can build
on. We will achieve sustainability, however, only through a
global and consistent approach.
Occupational safety and health management are key elements
of our Company's sustainable strategy and an integral part of
our business processes. We therefore develop central programs
and processes that are applied locally and adapted to the respec-
tive business needs. Occupational safety and health manage-
ment are an integral part of our Business Conduct Guidelines,
our internal monitoring systems, and our risk management and
internal controls. In addition, occupational safety is part of an
international framework agreement between Siemens AG, the
Central Works Council of Siemens AG, IG Metall and the global
union IndustriAll.
C.8.2.6 OCCUPATIONAL SAFETY AND
HEALTH MANAGEMENT
employees which already apply worldwide and are firmly
anchored in our Business Conduct Guidelines. Underscoring
this commitment, Siemens, the Siemens Central Works Coun-
cil, the German trade union IG Metall and the global industrial
union IndustriAll have signed an international framework
agreement on the principles of corporate responsibility.
C.8.3.1 RESEARCH AND DEVELOPMENT
ORGANIZATION AND STRATEGY
> we want to have the best person for every position,
Siemens established its first employee share program in
Germany as early as 1969. Building on this successful program
in Germany, Siemens decided in 2008 to extend employee and
management participation. Today, Siemens offers approxi-
mately 97% of its employees in 60 countries the opportunity to
acquire Siemens shares with the Company's financial support.
The Share Matching Plan is based on a simple principle: Em-
ployees participating in the plan will receive one Siemens share
without payment of consideration (matching share) for every
three Siemens shares bought and continuously held over a
period of three years. Only condition: The employee still needs
to be employed by Siemens. The main idea of the plan has
always been to make stock ownership available to employees at
all income levels.
As a global player, the vast and diverse range of our employees'
capabilities, experience and qualifications forms a substantial
competitive advantage and supports our value proposition as
an employer.
171 C.
Combined Management Report
214
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
3 (1%)
Corporate Governance
205 C.4
210 C.5
Net assets position
|||C.8 Sustainability and citizenship
C.8.1 Sustainability at Siemens
C.8.1.1 OVERVIEW
Siemens has defined sustainability to mean achieving profit-
able and long-term growth, acting responsibly on behalf of
future generations and to keep the three dimensions of sus-
tainability - people, planet, profit - in balance. We are aware of
the associated high standards and the possibility of conflicting
goals. Nevertheless, we are convinced that sustainability,
especially in the sense of resource efficiency is a business
opportunity, and worth seizing.
Sustainability is a guiding principle within our Company, incor-
porated in our philosophy, central theme of our corporate strat-
egy, and integral part of the Siemens Management model. In
our Sustainability activities we focus on three areas: "Sustain-
able business practices," "Contribution to our customers' com-
petiveness," and "Contribution to sustainable development of
societies" in order to achieve sustainable progress for Siemens,
its customers and societies.
> "Sustainable business practices" comprises our commitment
to embedding sustainability throughout our organization
and operations. We want to be a role model ourselves and
walk the talk across all areas of the Company covering oper-
ational businesses, countries, and corporate functions.
> The second area means that we contribute to our customers'
competitiveness with our products, solutions and services
and enable them to increase energy efficiency, save re-
sources and reduce carbon emissions at a significant cost
advantage.
> Siemens contributes to the sustainable development of soci-
eties with its innovative products and solutions, local opera-
tions, thought leadership and the fostering of long-term
relationships with local communities through Corporate
Citizenship projects with partners.
Financial position
131 | B.
108 | A. To our Shareholders
In November 2014, we announced the sale of our hearing aid
business to the investment company EQT and the German
entrepreneurial family Strüngmann as co-investors. The trans-
action volume is €2.15 billion plus an earn-out component and
includes that the new owners will also be allowed to continue
using the Siemens product brand for the hearing aid business
over the medium term. The hearing aid business so far rep-
resents a Business Unit within Healthcare. The transaction is
subject to approval by the regulatory authorities. Closing is
expected in the first quarter of calendar year 2015. The hearing
aid business is presented as held for disposal and discontinued
operations since the first quarter of fiscal 2015.
Infrastructure & Cities:
88 (26%)
All our activities, measures and programs fostering Diversity
follow these principles:
Total Sectors profit for fiscal 2014 was €7.335 billion. As ex-
pected, this was a substantial increase from €5.842 billion a
year earlier, when the Sectors took €1.2 billion in charges for
the "Siemens 2014" productivity improvement program.
Higher Total Sectors profit was the main driver for growth in
net income and basic EPS from net income. These primary
Total Sectors profit margin in fiscal 2014 was 10.0%, in the mid-
dle of our forecast of 9.5% to 10.5% given in our Annual Report
for fiscal 2013. Infrastructure & Cities and Industry were key
drivers in meeting this expectation, as both Sectors showed im-
pressive performance improvements in fiscal 2014. Healthcare
maintained its profit and profit margin near the high level
achieved in the prior fiscal year. In contrast, the performance of
the Energy Sector was disappointing. Profit fell significantly and,
contrary to our expectation, profit margin also declined year-
over-year due mainly to sharply higher project-related charges.
The Sectors' results regarding adjusted EBITDA margin followed
the same pattern. Infrastructure & Cities and Industry increased
their EBITDA margins significantly year-over-year, with the for-
mer re-entering its target range and the latter approaching the
top of its target range. Healthcare again achieved an EBITDA
margin above its target corridor. Energy fell even further below
its EBITDA margin range than it was in fiscal 2013.
ROCE is a primary measure of our capital efficiency. As we fore-
cast in our Annual Report for fiscal 2013, ROCE for continuing
operations for fiscal 2014 returned to the target range of 15% to
20%. We increased our income compared to a year earlier and
decreased our average capital employed slightly year-over-year.
As a result, ROCE for continuing operations rose to 17.2% from
13.7% in fiscal 2013.
Free cash flow from continuing and discontinued operations
for fiscal 2014 came in at €5.201 billion, 2% lower than the high
level we achieved a year earlier. While cash inflows from oper-
ating activities declined moderately year-over-year, we partly
offset this change by reducing cash outflows for investments in
intangible assets and property, plant and equipment.
Our primary measure for evaluating our capital structure is
defined as the ratio of industrial net debt to adjusted EBITDA.
Our target for this ratio in fiscal 2014 was 0.5 to 1.0. As the net
result of the portfolio measures that we initiated in fiscal 2014
is expected to result in a significant net cash outflow in fiscal
2015, we kept our capital structure in fiscal 2014 more conser-
vative. As a result of a combination of sharply lower industrial
net debt and clearly higher EBITDA from continuing operations
year-over-year the ratio declined to 0.15, down from 0.35 a
year earlier. Thus we did not fulfill our forecast for the capital
structure ratio, which was to approach the lower end of the
target range.
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
213
Our "Vision 2020″ concept mentioned above, which was initi-
ated in fiscal 2014, focuses Siemens on profitable growth
along the value chain of electrification. During the year we
announced a number of portfolio changes for this purpose,
including acquisition of two major energy businesses: the
Rolls-Royce aero-derivative gas turbine and compressor busi-
ness and the Dresser-Rand oil and gas equipment business. We
have also announced planned divestments of our hearing aid
business and our stake in the home appliance business BSH. To
streamline our processes, we reduced layers of management by
eliminating the Sector structure and reducing the number of
our Divisions, effective with the beginning of fiscal 2015. We
also streamlined our regional go-to-market structure, with a
smaller number of entities that have greater ability to penetrate
attractive geographic markets and get closer to our customers.
With regard to innovation, we expect to intensify R&D activi-
ties e.g. to shorten product development cycles and increase
our application of new technologies, such as data analytics. To
better balance risks and rewards when we take on innovative
projects, we intend to explicitly rely on our so-called corporate
memory as an early-warning system that takes advantage of
the experience and expertise we already possess.
We intend to continue providing an attractive return to share-
holders. As in the past, we intend to fund the dividend payout
from Free cash flow. The Siemens Managing Board, in agree-
ment with the Supervisory Board, proposes a dividend of €3.30
per share, up from €3.00 a year earlier.
||| C.7 Subsequent events
C.8.1.2 SUSTAINABILITY MANAGEMENT
AND ORGANIZATION
The importance we attach to the topic of sustainability is evi-
dent in its central position within the Company's organization
and in our programs and the measures we execute. Efficient
sustainability management is a company-wide task that requires
a clear organizational structure and a thorough anchoring of
sustainability in our corporate culture. All our sustainability ac-
tivities are steered by the Chief Sustainability Officer, who is a
member of our Managing Board. In order to coordinate and
manage our sustainability activities efficiently, we established
the Siemens Sustainability Board, the Sustainability Office and
the Siemens Sustainability Advisory Board.
indicators of our economic performance rose 25% year-over-year
to €5.507 billion and €6.37, respectively, which clearly fulfilled
our forecast for an increase of basic EPS from net income of at
least 15%.
To help us maintain an objective perspective on our sustain-
ability challenges and performance, we have also created the
Siemens Sustainability Advisory Board, composed of eight
eminent figures in science and industry from a range of disci-
plines and regions of the world. None are employees of
Siemens. Furthermore, a network of assigned Sustainability
Managers in the businesses and regional units ensure that sus-
tainability measures are implemented and multiplied through-
out the Company.
276
265
Expenses per employee for continuing
education (in €) 4
769
670
1 Continuing and discontinued operations.
2 Employee turnover rate is defined as the ratio of voluntary and involuntary
exits from Siemens during the fiscal year to the average number of employees.
3 Employees in management positions include all managers with disciplinary
responsibility, plus project managers.
4 Without travel expenses.
Excellent employees are one of Siemens' vital strengths. They
have made Siemens what it is today and their expertise, capa-
bilities and high level of engagement are laying the foundation
for our future success. To stay competitive, we need to contin-
uously win and retain the best and brightest employees world-
wide. As an employer of choice, we empower our diverse and
engaged people worldwide with a high-performance culture,
encourage life-long learning and development, offer an attrac-
tive working environment and ensure occupational health
and safety.
Employees by segments as of September 30, 2014
(in thousands)'
Energy: 81 (24%)
Other: 33 (10%)
Financial Services:
Healthcare: 48 (14%)
343
Industry: 90 (26%)
│1 Continuing operations.
Siemens believes that employee engagement is a key driver for
sustainable company performance. An engaged workforce
drives innovation, growth and profitability. Since 2010, the
Siemens Global Engagement Survey has been seen as an im-
portant management tool. In general the Engagement Survey
will be conducted on a biennial basis to allow more time to set
Demographic change, lifelong employability and cross-gener-
ation collaboration are Siemens' key employee-related chal-
lenges to be mastered, and we see differences between regions
and labor markets. To remain an employer of choice, we are
taking appropriate action based on local needs.
C.8.2.1 DIVERSITY
The Siemens Sustainability Board, which is chaired by the
Chief Sustainability Officer, is the central steering committee
for sustainability at Siemens. In its regular meetings it directs
our sustainability activities as part of our sustainable strategy
and adopts appropriate measures and initiatives. Our Chief Sus-
tainability Officer also manages the Sustainability Office,
which is responsible for driving sustainability further within
Siemens and for coordinating the sustainability activities and
other company-wide programs and measures.
(in millions of €) 4
Expenses for continuing education
measures and to follow-up on improvements. Due to the
launch of our "Vision 2020" concept and the related organiza-
tional changes the survey originally scheduled for 2014 was
postponed to 2015.
15.6%
15.6%
Furthermore, we believe that close collaboration with stake-
holders supports us in addressing complex, interlocking sus-
tainability challenges and topics. Maintaining an intensive dia-
logue with partners along the supply chain and with external
stakeholder groups and organizations is important for us:
Siemens is actively engaged with leading global sustainability
organizations, such as the World Business Council for Sustain-
able Development (WBCSD) and the World Resources Institute
(WRI). We also liaise regularly with a broad group of stakehold-
ers on key sustainability issues, track their most material topics
and use them as guide for our activities.
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
In addition, we are committed to international standards and
guidelines for sustainability. For example, we signed on to the
United Nations Global Compact in 2003 and became a signatory
to the Global Compact's CEO Water Mandate in 2008; since fiscal
2011, we are a member of the steering committee of the Global
Compact's "Caring for Climate" initiative. We regularly report on
our sustainability performance using the guidelines (G3.0) of
the Global Reporting Initiative (GRI), which aim at high transpar-
ency and comparability for corporate sustainability reporting.
C.8.2 Employees
10.8%
215
2013
9.1%
2014
C.8.1.3 COLLABORATING FOR SUSTAINABILITY
Our sustainability efforts are based on our Business Conduct
Guidelines, which provide the ethical and legal framework
within which we conduct our business activities. They contain
the basic principles and rules for our conduct internally and
externally. Specific issues, such as those relating to the environ-
ment, are covered in more detailed regulations and guidelines.
The Business Conduct Guidelines are binding for all companies
controlled by Siemens.
positions (percentage of all management
positions)³
Female employees in management
Employee turnover rate²
Year ended September 30,
Indicators
1 Continuing operations.
standard defines requirements to reduce the environmental
impact of our products and systems during the production, use
and disposal phase and is an integral part of our business pro-
cesses. We conduct regular internal reviews of our environmen-
tal performance and progress, in order to create a cycle of con-
tinual improvement.
Net assets position
210 C.5
Financial position
205 C.4
Results of operations
193 C.3
Financial performance system
187 C.2
172 C.1
Combined Management Report
222
171 C.
108 | A. To our Shareholders
To meet today's global ecological challenges responsibly,
Siemens has a comprehensive EHS (Environmental Protection,
Health Management and Safety) management system. The pro-
cess requirements of this management system help our operat-
ing units comply with applicable laws, regulations and customer
requirements, satisfy our corporate requirements properly and
achieve our Siemens-wide environmental targets. The environ-
mental protection management system requires that our rele-
vant production and office sites must implement an environ-
mental management system which fulfills the requirements of
the internationally recognized ISO 14001 standard and also our
own internal standard, known as "Specifications on environ-
mentally compatible product and system design." This internal
2 Indicator incorporates weighted calculations related to the primary fuels
consumed in generating the energy used at our sites and the amount of energy
used to extract, convert and distribute the fuels consumed.
14%
Our commitment to continual improvement led to two environ-
mental protection programs in fiscal 2012: "Serve the Environ-
ment" for industrial environmental protection and "Product Eco
Excellence" for product-related environmental protection. Both
programs were reconfirmed and extended in fiscal 2014. The
general objectives to improve energy and resource efficiency, to
fulfill growing international requirements with regard to envi-
ronmental protection, to increase customer benefits, and to
proactively strengthen our position as a sustainable company
will be kept. The two reconfirmed programs will run from 2015
to 2020.
20%
Business and economic environment
131 | B. Corporate Governance
214 C.7
215 C.8
> to improve the waste efficiency each year by 1%; and
> to reduce waste for disposal each year by 1%.
Siemens is committed to providing long-term benefits to the
societies in which we operate, through corporate citizenship
activities. These activities can take a variety of forms ranging
from philanthropic disaster relief to more strategic shared
value or inclusive business approaches like our mobile clinics
in India.
10%
C.8.8 Corporate citizenship
223
Additional Information
Consolidated Financial Statements
247 D.
337
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Report on expected developments and
associated material opportunities and risks
225 C.9
Sustainability and citizenship
Overall assessment of the economic position
Subsequent events
213 C.6
> Establishment of a harmonized procedure on the basis of ISO
14040/44 (Life-cycle-assessment) for determining the “eco-
logical footprint" of our products and thereof derived envi-
ronmental product declarations based on the requirements
of ISO 14025.
> Transparency was enhanced with our list of declarable sub-
stances (LoDS), comprising substances that are restricted in
use due to regional or application-specific regulations.
> Development and application of a methodological approach
for better assessing risks such as environmental, toxicologi-
cal and future availability risks associated with used materi-
als and substances. The application has been verified within
our business.
The major focus of product-related environmental protection is
to improve the overall environmental performance of our prod-
ucts and systems. Therefore the existing "Product Eco Excel-
lence" program will continue its approach regarding elements
related to the product life cycle by integrating aspects of the
circular economy and resource efficiency. The program has a
modular design and offers innovative solutions to accomplish
a higher transparency in terms of declarable substances, to de-
velop and integrate a set of measures to improve resource effi-
ciency of materials (e.g. scarcity, criticality) and to increase our
claim on product environmental footprint information. On the
basis of mandatory requirements as defined in our internal
environmental standard, we support the reduction of the envi-
ronmental impacts of our products and systems during product
development, production, use and end of life. Additionally, the
program aims to better prepare the operating units for future
regulatory and customer requirements, to strengthen environ-
mental communication, and to broaden environmental aware-
ness among our employees. In the time period fiscal 2012 to
fiscal 2014 for the main elements of the program following
objectives have been reached:
ENVIRONMENTAL PROTECTION
C.8.7.2 PRODUCT-RELATED
management systems. Due to this and to reasonable energy
procurement and increased share of renewable energy in elec-
tricity mix the CO2 efficiency was increased considerably.
We achieved the targets we set ourselves for fiscal 2014. The
energy efficiency could be improved due to implementation of
energy efficiency measures and implementation of energy
Furthermore, Siemens continued with the water risk manage-
ment approach: In locations where there are particular water
risks or negative impacts on the environment (for example as a
result of aridity, high waste-water loads or poorly developed
technical infrastructure), the local sites need to define targets
matched to local conditions. Finally, our "Serve the Environ-
ment" program also addressed air pollution by seeking alterna-
tive solutions for any ozone-depleting substances still in legally
permissible use and control VOC (Volatile organic compounds)
emissions. For continuation of the Serve the Environment pro-
gram energy and waste efficiency aspects will be integrated
into our supply chain. Air pollution control will be considered
holistically, taking account not only of own emissions but also
of the local air immission situation at our production plants
and offices. Climate change induced impacts of water use in
our businesses will also be integrated.
C.8.7.1 INDUSTRIAL ENVIRONMENTAL PROTECTION
Our industrial environmental protection efforts focus on opti-
mizing energy and resource efficiency at our sites. With the
current "Serve the Environment” program we have been com-
mitted to the following Siemens-wide main targets in the time
period fiscal 2011 to 2014:
8%
Overall assessment of the economic position
Subsequent events
12%
With our Environmental Portfolio, we intend, among other
things, to help our customers reduce their carbon dioxide foot-
print, cut their energy costs and improve their profitability
In fiscal 2010, we set ourselves a revenue target for the Environ-
mental Portfolio within the One Siemens framework: to exceed
€40 billion in revenue from the Environmental Portfolio by the
end of fiscal 2014. Due to recent and ongoing portfolio changes
we have not been able to achieve this target. Siemens' strategic
focus on technologies for energy efficiency and climate and en-
vironmental protection will nevertheless remain in place. For
fiscal year 2014, almost three-quarter of the revenue from our
Environmental Portfolio were already generated with products
and solutions for energy efficiency.
In addition to its environmental benefits, our Environmental
Portfolio enables us to compete successfully in attractive mar-
kets and generate profitable growth. In fiscal 2014, revenue
from continuing operations from the Environmental Portfolio
amounted to €33.0 billion, which accounted for 46% of our rev-
enue from continuing operations in this fiscal year. This rev-
enue includes revenue from newly developed and additionally
qualified elements, and excludes revenue from elements that
no longer fulfill our qualifications.
Our Environmental Portfolio serves as an example of how we
strive to align our business activities with the aforementioned
megatrends, in this case climate change. The Environmental
Portfolio consists of products, systems, solutions and services
(Environmental Portfolio elements) that reduce negative im-
pacts on the environment and emissions of carbon dioxide and
other greenhouse gases (defined together in the following as
carbon dioxide emissions) responsible for climate change.
369
428
31.9
33.0
1 Continuing operations.
Revenue generated by the Siemens
Environmental Portfolio (in billions of €)
Accumulated annual customer reductions
of carbon dioxide emissions generated by
elements from the Siemens Environmental
Portfolio (in millions of metric tons)
Our business success is strongly dependent on the satisfaction
of our customers. For this reason, we measure customer satis-
faction in every unit of the Company using the Net Promoter
Score (NPS). This internationally recognized and commonly ap-
plied managerial performance indicator, which we determine
annually on a worldwide basis by means of customer surveys,
measures the referral rate of our customers. The NPS for fiscal
2014 was based on the results of more than 25,500 interviews,
compared to more than 25,200 interviews in fiscal 2013. In
fiscal 2014, our company-wide NPS once again increased com-
pared to previous fiscal year.
Sustainable customer relationships are the basis for our long-
term success. We employ a structured key account manage-
ment (KAM) approach throughout the Company to take care of
our key customers. This means that we tailor our products and
solutions to their size and regional site structures. We also
ensure that our key account managers continually develop and
maintain relationships with them over the long term. This
approach is supplemented by our Executive Relationship Pro-
gram. In this program, members of the Company's Executive
Management stay in direct contact with selected customers
and maintain an ongoing dialogue with them to familiarize
Siemens with their needs.
Our Divisions have global responsibility for their business,
sales and results. They are able to support customers around
the world directly from their respective headquarters, espe-
cially for large contracts and projects. However, most of our
customers are small and medium-sized companies and organi-
zations that require local support. To address local business
opportunities with them, we are able to draw upon a large
global sales force steered by our regional companies. They are
responsible for serving our customers in the respective coun-
tries, leveraging our global network of market partners like
consultants, distributors, integrators, EPCs and machine build-
ers. We are currently selling products and services in almost
every country in the world.
C.8.5 Distribution and customer relations
2013
Year ended September 30,
2014
Indicators¹
C.8.6 Environmental Portfolio
An elementary component of all our global marketing and sell-
ing activities is compliance with applicable laws and internal
rules and regulations. Therefore, Siemens values and compli-
ance are an integral part of our training program.
chains. We have established and continually further develop
a risk-based system of appropriate processes to enable us to
systematically identify potential risks in our supply chain. It
consists of sustainability self-assessments by suppliers, risk
evaluation conducted by our purchasing department, sustain-
ability questions within supplier quality audits and sustainabil-
ity audits by external auditors. To further encourage sustain-
able business conduct throughout our entire global supply
chain, we are committed to building our suppliers' competence
and intensifying knowledge transfers related to sustainability.
The responsibility for choosing and carrying out charitable
activities lies with the local units in each country. This ensures
that we provide support where it is needed most. In doing so,
we apply high management standards and strategically focus
our corporate citizenship activities in areas where our company
competencies, resources and employee volunteering can make
a meaningful difference:
213 C.6
8%
214 C.7
215 C.8
225 C.9
5%
11%
Energy efficiency improvement
compared to baseline in fiscal 2010²
Waste efficiency improvement
compared to baseline in fiscal 2010
Waste for disposal reduction
compared to baseline in fiscal 2010
Carbon dioxide emission efficiency
improvement compared to baseline
in fiscal 2010
2013
Year ended September 30,
2014
Indicators¹
C.8.7 Environmental protection
We report the revenue from our Environmental Portfolio and
annual customer reductions of carbon dioxide emissions gener-
ated by it in accordance with internal regulations defined in our
Environmental Portfolio Guideline. This Guideline is based on
the Reporting Principles of the Greenhouse Gas Protocol Corpo-
rate Accounting and Reporting Standard, revised edition, and
the Greenhouse Gas Protocol for Project Accounting. The rev-
enue generated by the Environmental Portfolio is recognized in
accordance with revenue recognition policies as described in
→ NOTE 2 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
as well as the integration of additionally qualified elements
where evidence of fulfillment of the qualification criteria was
not available in prior reporting periods. For additionally quali-
fied Environmental Portfolio elements, we report their pri-
or-year revenue and prior-year contribution to reducing cus-
tomer carbon dioxide emissions on a comparable basis.
Elements that no longer fulfill our qualification criteria are ex-
cluded from our Environmental Portfolio.
C.8.6.2 GOVERNANCE AND REPORTING APPROACH
The qualification of Environmental Portfolio elements as well
as their respective reporting is based on defined processes and
criteria. The business portfolio of Siemens' continuing opera-
tions is reviewed annually regarding the qualification of Envi-
ronmental Portfolio elements based on the criteria described
before. This covers the inclusion of newly developed elements
> Environmental technologies: This criterion is related to wa-
ter and wastewater treatment, air pollution control, waste
reduction, recycling, e-car infrastructure and its core compo-
nents. It also includes the Siemens Consulting Service which
analyzes customers' environmental impact. Additionally, a
criterion for the Healthcare Sector is an environmental
impact reduction in terms of noise, radiation or total weight
of at least 25% compared to the baseline.
> Renewable energy: This criterion covers technologies in the
field of renewable energy sources such as wind turbines or
smart grid applications and their respective core compo-
nents.
> Energy efficiency: The criteria for energy efficiency are an
improvement in energy efficiency of 20% or more during the
customer use phase compared to the applicable baseline, or
a reduction of at least 100,000 metric tons of carbon dioxide
equivalents per reporting period in the customer use phase.
Examples of elements that meet the energy efficiency crite-
rion are combined cycle power plants and intelligent build-
ing technology systems.
An Environmental Portfolio element can be a product, a system,
a solution or a service. Furthermore, a core component of a
system or solution may qualify as an Environmental Portfolio
element if the component provided by Siemens is key to en-
abling environmental benefits resulting from the system's or
solution's overall application. To qualify for inclusion in the
Environmental Portfolio, an element must meet one of the se-
lection criteria described below, which are energy efficiency,
renewable energy or environmental technologies. Products,
systems, solutions and services with planned application in
military use or nuclear power are not included in the Environ-
mental Portfolio.
C.8.6.1 SELECTION CRITERIA
through an increase in productivity. Taking together all ele-
ments of the Environmental Portfolio that were installed at cus-
tomer locations since the beginning of fiscal 2002 and remain
in use today, we have reduced customer carbon dioxide emis-
sions by 428 million metric tons in fiscal 2014, which is the
equivalent of the following thirteen cities' combined yearly
emissions: Berlin, Bogotá, Cape Town, Hong Kong, London, Los
Angeles, Melbourne, Mexico City, Moscow, New York City, São
Paulo, Seoul and Tokyo.
221
Consolidated Financial Statements
Additional Information
247 D.
337
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
> Education and Science: Our goal is to maintain a continu-
ous dialogue with young people and to identify and foster
talent from an early age on. We support educational and re-
search activities particularly in natural sciences, engineering
and healthcare.
> to continue our systematic effort to improve
energy efficiency, and thereby achieve corresponding
improvement in our carbon dioxide efficiency;
> Environment: We want to make an effective contribution
towards protecting the environment, particularly through
our core competencies, and raise environmental awareness
among younger generations.
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Overall, the actual development for Siemens and its Segments
may vary, positively or negatively, from our expectations due to
the risks and opportunities described below. See → C.9.3 RISKS
as well as c.9.4 OPPORTUNITIES. This report on expected devel-
opments should be read in conjunction with → E.6 NOTES AND
FORWARD-LOOKING STATEMENTS.
C.9.2 Risk management
C.9.2.1 BASIC PRINCIPLES OF THE RISK
MANAGEMENT
Our risk management policy stems from a philosophy of pursu-
ing sustainable growth and creating economic value while
avoiding and managing inappropriate risks. As risk manage-
ment is an integral part of how we plan and execute our busi-
ness strategies, our risk management policy is set by the Man-
aging Board. Our organizational and accountability structure as
of September 30, 2014 requires each of the respective manage-
ments of our Sectors, SFS, SRE, regions and Corporate Units to
implement risk management programs that are tailored to their
specific industries and responsibilities, while being consistent
with the overall policy established by the Managing Board.
C.9.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk manage-
ment and control systems which support us in the early recog-
nition of developments jeopardizing the continuity of our busi-
ness. The most important of these systems include our
enterprise-wide processes for strategic planning and manage-
ment reporting. Strategic planning is intended to support us in
considering potential risks well in advance of major business
decisions, while management reporting is intended to enable
us to monitor such risks more closely as our business pro-
gresses. Our internal auditors regularly review the adequacy
and effectiveness of our risk management system. Accordingly,
if deficits are detected, it is possible to adopt appropriate mea-
sures for their elimination. This coordination of processes and
procedures is intended to help ensure that the Managing Board
and the Supervisory Board are fully informed about significant
risks in a timely manner.
Risk management at Siemens is based on a comprehensive, in-
teractive and management-oriented Enterprise Risk Manage-
ment (ERM) approach that is integrated into the organization
and that addresses both risks and opportunities. Our ERM
approach is based on the worldwide accepted Enterprise Risk
Management - Integrated Framework (2004) developed by the
Committee of Sponsoring Organizations of the Treadway Com-
mission (COSO). The framework connects the ERM process
with our financial reporting process and our internal control
system. It considers a company's strategy, the efficiency and
effectiveness of its business operations, the reliability of its
financial reporting as well as compliance with relevant laws
and regulations to be equally important.
The ERM process aims for early identification and evaluation of,
and response regarding, risks and opportunities that could ma-
terially affect the achievement of our strategic, operational,
financial and compliance objectives. Our ERM is based on a net
risk approach, covering risks and opportunities remaining after
the execution of existing control measures. In order to provide
a comprehensive view on our business activities, risks and op-
portunities are identified in a structured way combining ele-
ments of both top-down and bottom-up approaches. Risks and
opportunities are generally reported on a quarterly basis. This
regular reporting process is complemented by an ad-hoc
reporting process that aims to escalate critical issues in a timely
manner. Relevant risks and opportunities are prioritized in
terms of impact and likelihood, considering different perspec-
tives, including business objectives, reputation and regulatory
matters. The bottom-up identification and prioritization pro-
cess is supported by workshops with the respective manage-
ment of the Sector, SFS, SRE, regional and Corporate Unit orga-
nizations. This top-down element ensures that potential new
risks and opportunities are discussed at the management level
and are included in the subsequent reporting process, if found
to be relevant. Reported risks and opportunities are analyzed
regarding potential cumulative effects and are aggregated at
Sector, SFS, SRE, regional and corporate level.
Responsibilities are assigned for all relevant risks and opportu-
nities with the hierarchical level of responsibility depending on
the significance of the respective risk or opportunity. In a first
step, assuming responsibility for a specific risk or opportunity
involves deciding upon one of our general response strategies,
or a combination of them. Our general response strategies with
respect to risks are avoidance, transfer, reduction or acceptance
of the relevant risk. Our general response strategies with
respect to opportunities are partial or complete realization of
the relevant opportunity. In a second step, responsibility for a
risk or opportunity also involves the development, initiation
and monitoring of appropriate response measures correspond-
ing to the chosen response strategy. These response measures
have to be specifically tailored to allow for effective risk man-
agement. Accordingly, we have developed a variety of response
measures with different characteristics: For example, we miti-
gate the risk of fluctuations in currency and interest rates by
engaging in hedging activities. Regarding our long-term proj-
ects, systematic and comprehensive project management with
standardized project milestones, including provisional accep-
tances during project execution, and complemented by clearly
Combined Management Report
Overall assessment of the economic position
Subsequent events
> Social: Projects in this area aim to bring about a systematic
and lasting improvement in people's living conditions. In
addition, we provide urgent humanitarian relief, including
financial and technical assistance after natural disasters.
131 | B.
Digital Factory
14-20%
Process Industries and Drives
8-12%
Healthcare
SFS (ROE (after taxes))
15-19%
15-20%
We expect that nearly all of our Divisions and Healthcare will
reach their margin ranges in fiscal 2015. Our Energy Manage-
ment Division and our Wind Power and Renewables Division,
whose profit margins were below their respective ranges in fis-
cal 2014, are expected to significantly improve their profitability
in fiscal 2015. While we expect the profit margin for our Power
and Gas Division to be in the target range in fiscal 2015, we ex-
pect it will come in significantly below the margin of 17.4%
achieved in fiscal 2014. Besides the above-mentioned market
conditions, the reasons for this development are targeted
expense increases for growth and innovation as well as consol-
idation early in fiscal 2015 of our acquisition of the aero-deriva-
tive turbine and compressor business of Rolls-Royce, among
other factors. Overall, we expect an aggregate profit margin for
our Industrial Business of 10% to 11%, compared to 10.6% in
fiscal 2014. We expect profit for SFS, which is outside our Indus-
trial Business, to be near the prior-year level.
Within our Reconciliation to Consolidated Financial State-
ments, profit from Centrally managed portfolio activities is
expected to rise sharply year-over-year, benefiting from a gain
on the sale of our stake in BSH. This positive effect is expected
to be partly offset by burdens that may arise from remaining
Centrally managed portfolio activities. While we anticipate
that SRE will continue with real estate disposals depending on
market conditions, we expect gains from disposals to be lower
in fiscal 2015 than in fiscal 2014. Corporate items are expected
to cost approximately €0.6 billion in fiscal 2015, with costs in
the second half-year higher than in the first half. Among other
factors, results from Corporate items are dependent on
changes in the fair value of warrants we issued together with
US$3 billion in bonds in fiscal 2012. Centrally carried pen-
sion expenses are expected to total approximately €0.5 billion
in fiscal 2015. Because our enhanced profit definition now
excludes expenses from amortization of intangible assets
acquired in business combinations, we report these expenses
separately within our Reconciliation to Consolidated Financial
Statements. In fiscal 2014, these expenses were a negative
€0.5 billion and we expect them to be on a similar level in
fiscal 2015.
Income from discontinued operations in fiscal 2015 is expected
to rise sharply year-over-year, benefiting particularly from a
substantial gain on the sale of our hearing aid business.
Capital efficiency
Our primary measure for managing and controlling our capital
efficiency is return on capital employed from continuing and dis-
continued operations (ROCE). Due mainly to our expectations
regarding the development of net income, we expect to achieve
ROCE clearly in our target range of 15% to 20% in fiscal 2015.
Capital structure
To measure our capital structure we use the ratio of industrial
net debt to EBITDA, and seek to achieve a ratio of up to 1.0. We
expect to achieve a ratio below 1.0 in fiscal 2015, but clearly
above the fiscal 2014 level of 0.15, due to portfolio measures
that we initiated in fiscal 2014 and our share buyback program,
which are expected to result in significant net cash outflows
in fiscal 2015.
Dividend
We intend to continue providing an attractive return to share-
holders. Therefore in the years ahead we intend to propose a
dividend payout of 40% to 60% of net income, which for this
purpose we may adjust to exclude selected exceptional non-
cash effects. As in the past, we intend to fund the dividend pay-
out from Free cash flow.
C.9.1.4 OVERALL ASSESSMENT
We believe that our business environment will be complex in
fiscal 2015, among other things due to geopolitical tensions. We
expect revenue on an organic basis to remain flat year-over-year,
and orders to exceed revenue for a book-to-bill ratio above 1. Fur-
thermore, we expect that gains from divestments will enable us
to increase basic EPS from net income by at least 15% from €6.37
in fiscal 2014. For our Industrial Business, we expect a profit
margin of 10% to 11%. This outlook excludes impacts from legal
and regulatory matters.
108 | A. To our Shareholders
228
Corporate Governance
6-9%
213 C.6
225 C.9
Implement ERM system and ensure management and monitoring of risks and opportunities in their respective organization.
The term "Sector" in this chart comprises Sectors, SFS and SRE.
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with
legal and operational requirements, the Managing Board estab-
lished a Corporate Risk and Internal Control Department,
headed by the Chief Risk & Internal Control Officer, and a Cor-
porate Risk and Internal Control Committee (CRIC). The CRIC
obtains risk and opportunity information from the Risk Com-
mittees established at the Sector, SFS, SRE and regional level as
well as from the Heads of Corporate Units, which then forms
the basis for the evaluation of the company-wide risk and op-
portunity situation. The CRIC reports to and supports the Man-
aging Board on matters relating to the implementation, opera-
tion and oversight of the risk and internal control system and
assists the Managing Board in reporting to the Audit Commit-
tee of the Supervisory Board. The CRIC is composed of the Chief
Risk & Internal Control Officer, as the chairperson, and mem-
bers of senior management such as the Sector and SFS CEOs,
the CFO of Siemens, and selected Heads of Corporate Units.
C.9.3 Risks
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and
reputation. The order in which the risks are presented in each
of the four categories reflects the currently estimated relative
exposure for Siemens associated with these risks and thus
provides an indication of the risks' current importance to us.
Nevertheless, risks currently considered to entail a lower risk
exposure could potentially result in a higher negative impact
on Siemens than risks currently considered to entail a higher
risk exposure. Additional risks not known to us or that we cur-
rently consider immaterial may also negatively impact our busi-
ness operations. Unless otherwise stated, the risks described
below relate to all of our segments.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
230
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
Heads of Corporate Units
214 C.7
215 C.8
Lead Country Management
Oversee the risk and internal control activities for their area of responsibility and provide
the Management with information necessary to report to the CRIC.
Report on expected developments and
associated material opportunities and risks
Sustainability and citizenship
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
229
defined approval processes assists us in identifying and re-
sponding to project risks at an early stage, even before entering
the bidding phase. Furthermore, we maintain appropriate
insurance levels for potential cases of damage and liability risks
in order to reduce our exposure to such risks and to avoid or
minimize potential losses. Among others, we address the risk
of fluctuations in economic activity and customer demand by
closely monitoring the macroeconomic conditions and devel-
opments in relevant industries, and by adjusting capacity and
implementing cost-reduction measures in a timely and consis-
tent manner, if deemed necessary.
C.9.2.3 RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
| Operational and organizational structure of the Enterprise Risk Management (ERM) process as of September 30, 2014
Managing Board
Overall responsibility for the Risk and Internal Control System.
Defines risk policy and ERM strategy.
Corporate Risk & Internal Control Committee (CRIC)
Reports to and supports the Managing Board in matters relating
to the implementation, operation and oversight of an effective
Risk and Internal Control System.
Audit Committee
Oversees the effectiveness of the risk management and
internal control system.
Chief Risk & Internal Control Officer
Chairman of the CRIC. Defines and monitors application of ERM strategy,
policy and methodology. Consolidates Siemens wide risk and opportunity
profile for CRIC.
Sector Risk & Internal
Control Committees
Lead Country Risk & Internal
Control Committees
Sector Management¹
Mobility
171 C.
Building Technologies
As in past years, Asia, Australia is expected to exhibit the high-
est GDP growth. We expect China to contribute the main part of
the region's growth. However, the Chinese economy still suf-
fers from overcapacities in several industries and fragile real
estate and banking sectors. However, the government should
be able to contain these problems if they become more severe.
China's gradual shift from an investment-driven to a consump-
tion-driven economy is expected to slow down its economy in
the near term. For India, the outlook for next year is better than
in 2014. Growth should pick up slightly. However, similar to
Brazil, the country needs structural reforms and substantial
improvements in infrastructure.
All in all, for 2015 we expect growth of the global economy to
accelerate slightly compared to 2014. However, there is an un-
usually high number of downside risks, which - even if only
some of them materialize - could substantially weigh on global
economic activity. On the upside, a quick solution of political
conflicts together with strong economic growth in the U.S.
could boost global demand.
The forecasts presented here for GDP, gross fixed investments
and manufacturing value added are based on a report from IHS
Global Insight dated October 15, 2014.
C.9.1.2 MARKET DEVELOPMENT
In fiscal 2015, we expect growth in the markets served by the
Power and Gas Division to remain on a low level. While we
anticipate slightly increasing market volume year-over-year in
advanced gas turbine markets - especially in the large-scale
range (H class) - we also expect continued price declines due
to manufacturing overcapacities and increased competitive
pressure. We expect growth in the Division's oil and gas mar-
kets to accelerate in South America and Eastern Europe (e.g.
Turkey, Azerbaijan). Investments in markets in the Americas
are likely to pick up, despite delays, due mainly to demand for
gas-fired power plants. We anticipate flat development for the
coal-fired steam power plant market, due to an anticipated
slow-down in China. We expect that clear growth in distributed
power generation will continue to support growth for the
Divisions' markets as a whole.
For the markets served by our Wind Power and Renewables
Division, we expect growth in fiscal 2015 to come in slightly
lower than in fiscal 2014, which saw particularly strong growth
rates. For onshore wind power markets, investments in the U.S.
are expected to decline in fiscal 2015, following the strong prior
213 C.6
214 C.7
215 C.8
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
225
fiscal year. In Europe, we expect the onshore market to see con-
tinuous moderate growth. In both cases, market development
strongly depends on the energy policy framework, including
tax incentives in the U.S. and regulatory frameworks in Ger-
many and the U.K. We expect these latter factors to have a sim-
ilar effect on growth in the offshore wind power market, which
is dominated by Europe. We expect the offshore wind power
markets in Asia, Australia and the Americas to remain largely
undeveloped in the short term.
For the markets served by our Energy Management Division,
we expect overall moderate growth in fiscal 2015. Within the
Division's utility markets, we expect a slight increase in fiscal
2015. On a regional basis, the strongest growth in the utility
markets is expected to come from the Europe, C.I.S., Africa,
Middle East region. Here we expect strong demand from the
Middle East and growth in transmission investments due to the
integration of renewable sources into existing power distribu-
tion networks. This growth may be partly offset by lower
demand from major European utility companies which have an-
nounced plans to reduce their capital expenditures. We expect
utility markets in the Americas to grow slightly in fiscal 2015.
Markets in the Asia, Australia region are expected to grow
slightly, benefiting from demand from utility companies in the
emerging countries of the region. We expect the Division's oil
and gas market to grow moderately, with the strongest growth
rates in the Americas. Production of unconventional oil and gas
is expected to be the main growth driver in the Americas, while
growth in the Asia, Australia region is driven by investments in
liquefied natural gas (LNG) infrastructure. The Division's miner-
als markets are expected to grow slightly in fiscal 2015 driven by
demand in the Asia, Australia region. Overcapacities burden the
Division's metals markets, which are expected to grow even
more slowly than the minerals markets. We expect a more posi-
tive outlook in the Division's chemicals and non-residential con-
struction markets. Both markets are forecast to grow moderately
in fiscal 2015 year-over-year. In all regions the chemical industry
is contributing to growth. For the non-residential construction
markets, we expect growth to be driven by the recovery of U.S.
markets and by ongoing construction investments in Asia,
Australia, particularly in China.
For the markets served by our Building Technologies Division,
we expect moderate growth in fiscal 2015. On a regional basis,
we expect growth in Europe, C.I.S., Africa, Middle East to pick
up in fiscal 2015. Within the region, we expect growth rates in
Europe including Germany to increase slightly year-over-year.
For the Middle East we expect moderate growth rates year-
over-year. Within the Americas, we expect the Division to ben-
efit from a slow but continued recovery in U.S. construction
markets. We expect markets in the Asia, Australia region to
grow moderately as in fiscal 2014.
We expect markets served by our Mobility Division to grow
slightly in fiscal 2015. Within Europe and the Middle East we
expect decisions on large contract tenders in fiscal 2015, stem-
ming from major public rail investments in the U.K. and the
Middle East. Liberalization of the Turkish rail industry is on-
going and large contract tenders are expected in the upcoming
years. Within the Americas, we expect a continued high level of
investments in mainline passenger and urban transport infra-
structures in the U.S. Within the Asia, Australia region, we ex-
pect growth in fiscal 2015 to benefit from a recovery of China's
high-speed rail infrastructure market. In Australia, we expect
demand to be held back by lower investments in infrastructure
industries.
growth rate of 2014. The newly re-elected government has to
enact substantial structural reforms to increase the growth
potential of the country.
In fiscal 2015, we do not expect growth momentum to acceler-
ate in markets served by our Digital Factory and Process
Industries and Drives Divisions compared to fiscal 2014. With
the exception of the oil and gas industry, we expect conserva-
tive investments in industries served by both Divisions over-
all, particularly in Europe. Furthermore, we expect demand
from emerging markets, which were growth drivers in the
past, to be weak in fiscal 2015, with the exception of China.
Within the region Europe, C.I.S., Africa, Middle East, we expect
markets in Europe to continue to grow, albeit at a slow pace.
While we expect moderate growth rates in some central Euro-
pean countries, we expect growth to remain weak in the
industrial markets of some large economies, such as France
and Italy. While we expect currency-related headwinds for
export-oriented industries in the Euro-zone to recede in fiscal
2015 compared to fiscal 2014, we expect weak demand from
emerging markets to limit growth opportunities for those
industries in fiscal 2015. The latter development is expected to
be particularly evident in Germany's export-oriented OEM
businesses, such as the machine building industry. Also, we
expect growth in Germany's large automotive industry to slow
in fiscal 2015 compared to fiscal 2014, resulting in less expan-
sive investments year-over-year. Within the Americas, we
expect that growth will be driven mainly by the U.S., which
will also benefit manufacturing industries in Canada and Mex-
ico. We expect a less favorable development in Brazil and
other Latin American countries, where industrial growth is
largely dependent on mining industries. Within the Asia, Aus-
tralia region, we expect industrial markets in China to grow
moderately in fiscal 2015, but below the growth rates in previ-
ous years, as development in the country's export-oriented
industries is held back by a stronger currency, higher labor
costs and weakness in many other emerging economies which
are important for Chinese exports. Growth in Asia, Australia is
expected to benefit from a pick-up of industrial markets in
South Korea. Industrial markets in India are expected to im-
prove slightly. Overall, rising regional political uncertainties
may further limit investment behavior.
For the Americas, we expect the U.S. economy to be the deci-
sive force. The U.S. recovery seems to be broad-based and sup-
ported by improving labor markets. The possible start of tight-
ening monetary measures should not disrupt the underlying
recovery. The outlook for Brazil, the second-largest economy in
the Americas region, is less optimistic. The expected GDP
growth rate of 1.0% for 2015 (a little more than the population
growth rate) has to be regarded as very low, given the poor
For the year 2015 we expect world GDP to expand by 3.2% with
fixed investment and manufacturing value added growing
even more strongly at 4.5% and 3.9%, respectively. The slight
acceleration compared to 2.7% GDP growth anticipated in 2014
is expected to be driven mainly by the U.S. economy which
seems to be on a stable recovery path. The monetary environ-
ment is still expansive which should further support growth
especially in the housing market. Nevertheless the outlook for
the world economy remains uncertain, as indicated by the
deterioration of many early indicators (especially for the Euro
zone and China), the increased volatility in equity markets in
October, and the severe decline in oil prices since summer
2014. On the one hand, the oil price decline is a symptom of
slack global demand relative to supply. On the other hand it is
a stabilizing factor for oil importing countries, because it in-
creases purchasing power for consumers and reduces costs for
many businesses. The biggest downside risks stem from geo-
political tensions. An escalation of the Ukraine conflict would
lead to a steep decline in investment activity. Similarly, further
expansion of the "Islamic State" (including control over import-
ant oil fields) could disrupt global oil markets and hit the global
economy. Further downside risks would also emerge from an
uncontrolled spread of the Ebola epidemic outside West-Africa.
> Arts and Culture: We support Arts and Culture because a
society's cultural heritage is a key aspect of its identity.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
224
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
|||C.9 Report on expected developments and associated
material opportunities and risks
C.9.1 Report on expected developments
C.9.1.1 WORLDWIDE ECONOMY
5-8%
7-10%
8-11%
108 | A. To our Shareholders
In the region Europe, C.I.S., Africa, Middle East the condition
of many Euro zone economies is a cause for concern. Given the
latest indicators, there is some danger of a possible premature
lapse of the recovery in the Euro zone. In the near term, defla-
tion is the most important threat to these economies. While
the German economy is expected to still suffer from Euro zone
weakness and geopolitical tensions, it should also benefit from
stabilizing factors, such as a relatively strong service sector,
solid consumer demand, strong employment data, a weaker
Euro and cheaper energy. For Russia, the outlook for 2015
depends on the future course of the Ukraine conflict and the
reaction of western countries, which is not foreseeable now.
While many African countries have achieved a steeper growth
path in recent years, they might be negatively affected by lower
raw material prices and by the Ebola epidemic in West-Africa.
Corporate Governance
Profitability
In fiscal 2015, we expect substantial gains from divestments
mentioned in this Annual Report, particularly including the sale
of our stake in BSH and the sale of our hearing aid business. We
expect that these gains will more than offset charges associated
with our "Vision 2020" concept, which includes efforts to increase
customer proximity, accelerate innovation, and streamline our
management and internal service processes. We anticipate that
such charges during fiscal 2015 will be in the mid-to-high triple-
digit-million euro range. We expect a significant rise in net
income in fiscal 2015, which will enable us to increase basic
earnings per share (EPS) from net income by at least 15% from
€6.37 in fiscal 2014. In this forecast we also expect EPS growth
to benefit modestly from our current program to repurchase
Siemens shares in a volume of up to €4 billion; repurchases
under this program in fiscal 2014 totaled €1.1 billion.
Our assumptions regarding net income for fiscal 2015 in-
clude targeted increases in selling and R&D expenses, aimed at
organic volume growth and strengthening our capacities for
innovation. As part of our One Siemens framework, we target a
total cost productivity increase of 3% to 4%. Furthermore, we
expect a significant reduction in project charges compared to
fiscal 2014.
213 C.6
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
247 D.
337
Consolidated Financial Statements
Additional Information
227
Additionally, we assume pricing pressure on our offerings of
around 2.5% in fiscal 2015, with the Wind Power and Renew-
ables Division, the Power and Gas Division and Healthcare
being affected the most. Furthermore, we expect upward pres-
sure on costs from wage inflation of around 3% to 4%.
Beginning with fiscal 2015, we defined profit margin ranges for
our Industrial Business and SFS, which are based on the profit
margins of the respective relevant competitors. The profit mar-
gin ranges for our Industrial Business and for SFS are as follows:
| Profit margin ranges
Power and Gas
Wind Power and Renewables
Energy Management
Margin range
11-15%
131 | B.
Given our complex economic and market developments, as
described in the previous section, we expect that fiscal 2015
revenue for Siemens on an organic basis, excluding currency
translation and portfolio effects, will be flat year-over-year. We
expect that a moderate organic revenue decline particularly in
our Power and Gas Division will be offset by organic revenue
growth in other Divisions. Also, we expect a stabilizing effect
on revenue from conversion of our order backlog (defined as
the sum of order backlogs of our Industrial Business) which
totaled €100 billion as of September 30, 2014. From this back-
log we expect to convert approximately €37 billion of past
orders into current revenue in fiscal 2015. We expect that orders
for fiscal 2015 will exceed revenue, leading to a book-to-bill
ratio above 1.
Revenue growth
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
we have improved our natural hedge on a global basis through
geographic distribution of our production facilities during the
past. Nevertheless, Siemens is still a net exporter from the Euro
zone to the rest of the world, so a weak Euro is principally
favorable for our business and a strong Euro is principally un-
favorable. In addition to the natural hedging strategy just men-
tioned, we also hedge currency risk in our export business
using derivative financial instruments, see → NOTE 30 in → D.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. We expect these
steps to help us limit effects on income related to currency in
fiscal 2015.
171 C.
226
Combined Management Report
172 C.1
Business and economic environment
187 C.2
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Financial performance system
Net assets position
-
-
For fiscal 2015, we expect slight growth in the markets served
by Healthcare. We expect markets in emerging countries to
grow faster than markets in the industrialized countries. In
emerging markets, we expect continued strong demand, in
particular for entry-level products and solutions, as these coun-
tries build up their healthcare infrastructure to provide their
populations with affordable access to modern medical technol-
ogy, including in rural areas. In contrast, demand in industrial-
ized countries is expected to be held back by healthcare
reforms and budgetary constraints. We expect industrialized
countries especially those more reliant on government
healthcare expenditures – to continue to focus on improving
the efficiency of healthcare and on slowing the growth of
healthcare spending, thus driving demand for cost-efficient
and high-throughput products and solutions. For the healthcare
market overall, we anticipate that the trends towards entry-level
solutions, higher efficiency and focus on patient outcomes will
continue. On a regional basis, we expect that growth in the
Americas in fiscal 2015 will be supported by moderate growth
in the U.S., where we expect the trends towards higher effi-
ciency and increased accountability of healthcare providers to
continue. Our customers continue to face legislative and regu-
latory reimbursement risks as governments and regulators
seek to curb healthcare costs. Within the Europe, C.I.S., Africa,
Middle East region, we expect the gradual stabilizing of Euro-
pean markets to continue in fiscal 2015. While we expect the
markets in the region Asia, Australia to grow faster than other
regions in fiscal 2015, we expect growth to slow down year-
over-year. This is expected to be particularly evident in China,
where we expect increasing price and competitive pressure due
mainly to increasing numbers of local vendors.
Our SFS Division is geared to Siemens' Industrial Business and
its markets. As such SFS is, among other factors, influenced by
the overall business development of the markets served by our
Industrial Business.
C.9.1.3 SIEMENS GROUP
We are basing our outlook for fiscal 2015 for the Siemens Group
and its segments on the above-mentioned expectations regard-
ing the overall economic situation and specific market condi-
tions for the next fiscal year.
This outlook excludes impacts related to legal and regulatory
matters.
We are exposed to currency translation effects, particularly in-
volving the US$, British £ and currencies of emerging markets,
such as China, India and Brazil. During fiscal 2014, the average
exchange rate conversion for our large volume of US$-denomi-
nated revenue was US$1.357 per Euro. While we expect vola-
tility in global currency markets to continue in fiscal 2015,
Results of operations
193 C.3
Financial performance system
187 C.2
Business and economic environment
171 C.
Combined Management Report
232
Corporate Governance
205 C.4
172 C.1
210 C.5
Overall assessment of the economic position
Subsequent events
the former Diagnostics Division and the former Imaging &
Therapy Systems Division of Healthcare, and the former Indus-
try Automation Division of the former Industry Sector. If we
were to encounter continuing adverse business developments
including negative effects on our revenues, profits or cash, or
adverse effects from an increase in the weighted average cost of
capital (WACC) or from foreign exchange rate developments, or
if we were otherwise to perform worse than expected at acqui-
sition activities, then these intangible assets, including good-
will, might have to be written off, which could adversely affect
our business, financial condition and results of operations. The
likelihood of such adverse business developments increases in
times of difficult or uncertain macroeconomic conditions.
Our business, financial condition and results of operations
may be adversely affected by our equity interests, other
investments and strategic alliances: Our strategy includes
strengthening our business interests through joint ventures,
associated companies and strategic alliances. Certain of our
investments, particularly in our former segment Equity Invest-
ments, are accounted for using the equity method, including,
among others, Unify (formerly EN) and, after contractual clos-
ing of the transaction, our Metals Technologies joint venture
with Mitsubishi Heavy Industries. Furthermore, we hold other
investments, for example Atos SE and OSRAM Licht AG. Any
factors negatively influencing the profitability of our equity and
other investments, including negative effects on revenues,
profits or cash, could have an adverse effect on our equity
pick-up related to these equity interests or may result in a write-
off of these investments. In addition, our business, financial
condition and results of operations could also be adversely
affected in connection with loans, guarantees or non-compli-
ance with financial covenants related to these equity and other
investments. Furthermore, such investments are inherently
risky as we may not be able to sufficiently influence corporate
governance processes or business decisions taken by our
equity investments, other investments and strategic alliances
that may have a negative effect on our business. In addition,
joint ventures bear the risk of difficulties that may arise when
integrating people, operations, technologies and products.
Strategic alliances may also pose risks for us because we com-
pete in some business areas with companies with which we
have strategic alliances.
We are subject to changes of regulations, laws and policies
concerning our products: As a diversified company with global
businesses we are exposed to various product-related regula-
tions, laws and policies influencing our processes. Recently,
some jurisdictions around the world have adopted certain reg-
ulations, laws and policies requiring us to extend our recycling
efforts, limit the sourcing and usage of certain raw materials,
and request that suppliers provide additional due diligence and
disclosures on sourcing and usage of the regulated raw materi-
als. In particular, there is U.S. legislation concerning the sourc-
ing of "conflict minerals" from mines located in the conflict
zones of the Democratic Republic of Congo (DRC) and its
adjoining countries. This U.S. legislation requires manufactur-
ers listed on U.S. stock exchanges to investigate and disclose
their use of any conflict minerals originating in the DRC or ad-
joining countries. Many of our customers fall into this category.
If their (sub-)suppliers do not provide them with requested in-
formation and do not take other steps to ensure that no such
conflict minerals are included in minerals or components sup-
plied to them, they may be forced to disclose information about
the use of conflict minerals in their supply chain in filings with
the SEC. Thus, our customers pass on these transparency obli-
gations within their supply chain in which we are also involved.
We exercise our duty within the supply chain, as our customers
request transparency in the supply chain and as the obligation
to do so already forms an element of customer contracts. If we
are unable to achieve sufficient confidence throughout our
supply chain, or if any of these risks or similar risks associated
with these kinds of regulations, laws and policies were to
materialize, our business, financial condition, results of opera-
tions and reputation could be adversely affected.
C.9.3.2 OPERATIONAL RISKS
Our business, financial condition and results of operations
may be adversely affected by cost overruns or additional
payment obligations related to the management of our
long-term, fixed-price or turnkey projects: We perform a por-
tion of our business, especially large projects, under long-term
contracts that are awarded on a competitive bidding basis.
Some of these contracts are inherently risky because we may
assume substantially all of the risks associated with complet-
ing a project and the post-completion warranty obligations. For
example, we face the risk that we must satisfy technical re-
quirements of a project even though we may not have gained
experience with those requirements before we win the project.
The profit margins realized on fixed-priced contracts may vary
from original estimates as a result of changes in costs and pro-
ductivity over their term. We sometimes bear the risk of unan-
ticipated project modifications, shortage of key personnel,
quality problems, financial difficulties of our customers, cost
overruns or contractual penalties caused by unexpected tech-
nological problems, unforeseen developments at the project
sites, unforeseen changes or difficulties in the regulatory or
political environment, performance problems with our suppli-
ers, subcontractors and consortium partners or other logistical
difficulties. Certain of our multi-year contracts also contain
demanding installation and maintenance requirements in
addition to other performance criteria relating to timing, unit
cost and compliance with government regulations require-
ments, which, if not satisfied, could subject us to substantial
213 C.6
214 C.7
215 C.8
225 C.9
Sustainability and citizenship
131 | B.
Net assets position
108 | A. To our Shareholders
Furthermore, we see a risk that suppliers (and to some extent
even smaller customers), especially from emerging countries
(e.g. China), could develop into serious competitors for
Siemens resulting in even more competition and thus in re-
duced volume, loss of market share, and/or lower profit margin.
With respect to divestments, we may not be able to divest some
of our activities as planned, and the divestitures we do carry
out could have a negative impact on our business, financial
condition, results of operations and our reputation. As a major
divestment, we agreed that Bosch will acquire Siemens' stake
in BSH Bosch und Siemens Hausgeräte GmbH.
Report on expected developments and
associated material opportunities and risks
C.9.3.1 STRATEGIC RISKS
We operate in highly competitive markets, which are sub-
ject to price pressures and rapid changes: The worldwide
markets for our products and solutions are highly competitive
in terms of pricing, product and service quality, product devel-
opment and introduction time, customer service and financ-
ing terms. In many of our businesses, we face downward price
pressure and we are or could be exposed to market downturns
or slower growth, which may increase in times of declining
investment activities and consumer demand. We face strong
competitors, some of which are larger and may have greater
resources in a given business area, and also competitors from
emerging markets, which may have a better cost structure.
Some industries in which we operate are undergoing con-
solidation, which may result in stronger competition and a
change in our relative market position. Certain competitors
may be more effective and faster in capturing available market
opportunities, such as through heavy investments or new
entrance of IT companies into emerging service fields (e.g.
data-driven services). These factors alone or in combination
may negatively impact our business, financial condition, and
results of operations.
Our business, financial condition and results of operations
may be affected by the uncertainties of economic and polit-
ical conditions, particularly in the current macroeconomic
environment, which is characterized by a high degree of un-
certainty and modest recovery as well as the continuing risk
of resurgence of crisis in financial markets and/or renewed
global economic downturn: Our business environment is in-
fluenced by both domestic and global demand, which in turn is
influenced by economic conditions. These conditions and, in
consequence, the speed of economic growth and the sustain-
ability of our market environment are dependent upon the evo-
lution of a number of global and local factors. We still see a
high level of uncertainty regarding the global economic out-
look, primarily as a result of the anemic economic recovery in
the Euro zone, sluggish growth in various emerging countries,
and ongoing geopolitical tensions. The main downside risks
stem from these political tensions. A severe escalation of the
conflict in Eastern Europe would strongly affect the European
and world economy and lead to a steep decline in investment
activity. Similarly, an escalation of the conflicts in the Middle
East could disrupt global oil markets and hit the global econ-
omy. Additional risks for our market environment include such
possibilities as a prolonged decline in investment sentiment,
a renewed crisis in financial and credit markets, a renewed
banking crisis in Europe, a hard landing of the Chinese econ-
omy, a supra-regional spread of the Ebola epidemic, fluctuating
commodity prices, bankruptcies, natural disasters, political
crises including further independence debates, social unrest
and other challenges.
In general, due to the significant proportion of long-cycle busi-
nesses in our former Sectors and the importance of long-term
contracts for Siemens, there is usually a time lag between the
development of macroeconomic conditions and their impact on
our financial results. Important exceptions include our short-
cycle businesses in the former Industry Sector, particularly
those in the former Industry Automation Division and parts of
the former Drive Technologies Division as well as parts of the
former Power Grid Solutions & Products Business within the for-
mer Infrastructure & Cities Sector, which are highly sensitive to
volatility in market demand. If the moderate recovery of macro-
economic growth stalls again and if we are not successful in
adapting our production and cost structure to subsequent
changes to conditions in the markets in which we operate,
there can be no assurance that we will not experience adverse
effects (e.g. underutilization of manufacturing and engineer-
ing capacities) that may be material to our business, financial
condition and results of operations. For example, it may be-
come more difficult for our customers to obtain financing and
as a result they may modify, delay or cancel plans to purchase
our products and services or to follow through on purchases or
contracts already executed. Furthermore, prices may decline as
a result of adverse market conditions to a greater extent than
currently anticipated. In addition, contracted payment terms,
especially regarding the level of advance payments by our cus-
tomers relating to long-term projects, may become less favor-
able, which could negatively impact our cash flows. Addition-
ally, if customers are not successful in generating sufficient
revenue or securing access to the capital markets, they may not
be able to pay, or may delay payment of, the amounts they owe
us, which may adversely affect our business, financial condi-
tion and results of operations.
Numerous other headwinds continue to constrain the world
economy, such as the increasing popular support for anti-EU and
anti-business parties, ongoing high public debt, and significant
fluctuations in exchange rates, energy prices and raw material
prices. These and other factors could impact macroeconomic
parameters and the international capital and credit markets, and
the resulting uncertainty could have an adverse impact on our
business, financial condition and results of operations.
Our business is affected by a variety of market conditions and
regulations. For example, our former Energy Sector is exposed
to the development of global demand for energy and strongly
213 C.6
214 C.7
215 C.8
225 C.9
Mergers and acquisitions are inherently risky because of diffi-
culties that may arise when integrating people, operations,
technologies and products. There can be no assurance that any
of the businesses we acquire can be integrated successfully and
as timely as originally planned, or that they will perform as
anticipated once integrated. In addition, we may incur signifi-
cant acquisition, administrative and other costs in connection
with these transactions, including costs related to integration
of acquired businesses. For example, in September 2014, we
entered into an agreement with Dresser-Rand to acquire all of
its issued and outstanding common shares by way of a friendly
takeover bid. At the beginning of May 2014, we announced the
acquisition of the Rolls-Royce Energy aero-derivative gas
turbine and compressor business of Rolls-Royce plc, U.K. (Rolls-
Royce). Furthermore, portfolio measures may result in addi-
tional financing needs and adversely affect our financial
leverage and our debt-to-equity ratio. Acquisitions may also
lead to substantial increases in intangible assets, including
goodwill. Our Statements of Financial Position reflect a signifi-
cant amount of intangible assets, including goodwill. Among
our businesses, the largest amount of goodwill is allocated to
Overall assessment of the economic position
Subsequent events
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
231
affected by regulations and policies related to energy and the
environment. Healthcare is dependent on policy development
and regulations affecting healthcare systems around the world,
particularly in the important U.S. healthcare market. Our for-
mer Industry Sector is vulnerable to unfavorable market condi-
tions in certain segments of the automotive and manufac-
turing industries. Our former Infrastructure & Cities Sector
focuses, among other things, on business with public authori-
ties around the world and is thus vulnerable to restrictions in
public budgets.
Our business, financial condition and results of operations
may be adversely affected by continued strategic alignments
and cost-cutting initiatives: We are in a continuous process of
strategic alignments and constantly engage in cost-cutting
initiatives, including ongoing capacity adjustment measures
and structural initiatives. Capacity adjustments through
consolidation of business activities and manufacturing facili-
ties, and the streamlining of product portfolios are also part of
these cost reduction efforts. These measures may not be imple-
mented as planned, may turn out to be less effective than an-
ticipated, may become effective later than estimated or may
not become effective at all. Each of these factors alone or in
combination may negatively impact our business, financial
condition, and results of operations. Any future contribution of
these measures to our profitability will be influenced by the
actual savings achieved and by our ability to sustain them.
Our businesses must keep pace with technological
changes and develop new products and services to remain
competitive: The markets in which our businesses operate ex-
perience rapid and significant changes due to the introduction
of innovative technologies. To meet our customers' needs, we
must continuously design new products and services and up-
date existing ones, while investing in and developing new
technologies. Introducing new products and technologies
requires a significant commitment to research and develop-
ment, which in return requires expenditure of considerable
financial resources that may not always result in success. Our
sales and profitability may suffer if we invest in technologies
that do not operate or may not be integrated as expected, or
that are not accepted in the market place as anticipated, or if
our products or systems are not introduced to the market in a
timely manner, particularly compared to our competitors, or
become obsolete. We constantly apply for new patents and
actively manage our intellectual property portfolio to secure
our technological position. However, our patents and other
intellectual property may not prevent competitors from inde-
pendently developing or selling products and services that are
similar to or duplicates of ours. There can be no assurance that
the resources we invest to protect our intellectual property
will be sufficient or that our intellectual property portfolio will
adequately deter misappropriation or improper use of our
technology. Furthermore, in some of our markets, the need to
develop and introduce new products rapidly in order to cap-
ture available opportunities may lead to quality problems. Our
operating results depend to a significant extent on our ability
to anticipate and adapt to changes in our markets and to
reduce the costs of producing high-quality products. Among
recent technology trends, we are carefully evaluating the
potential and relevance of digitalization. We believe that the
potential and usage scenarios of this technology vary among
our products, solutions and services depending on the degree
of information technology utilized. However, we also believe
that this trend needs to be monitored closely, because it might
bear the potential to change the competitive landscape. Any
inability to adapt to the aforementioned factors could have an
adverse effect on our business, financial condition and results
of operations.
Our business, financial condition and results of operations
may be adversely affected by portfolio measures: Our strat-
egy includes divesting activities in some business areas and
strengthening others through portfolio measures, including
mergers and acquisitions.
Sustainability and citizenship
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Financial position
Consolidated Financial Statements
Additional Information
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
relate to all of our segments. The order in which the opportuni-
ties are presented reflects the currently estimated relative ex-
posure for Siemens associated with these opportunities and
thus provides an indication of the opportunities' current impor-
tance to us. Nevertheless, opportunities currently considered
to entail a lower opportunity exposure could potentially result
in a higher positive impact on Siemens than opportunities cur-
rently considered to entail a higher opportunity exposure. The
described opportunities are necessarily not the only ones we
encounter. In addition, our assessment of opportunities is sub-
ject to change as our Company, our markets and technologies
are constantly developing. As a consequence, new opportuni-
ties may arise, existing opportunities may cease to be relevant,
or the significance of an opportunity may change. Generally,
opportunities are assessed to the best of our knowledge, con-
sidering certain assumptions, including market development,
market potential of technologies or solutions, and anticipated
developments in customer demand or prices, among other
things. When opportunities materialize, they may have a lower
effect than previously estimated on the basis of the underlying
assumptions. It is also possible that opportunities we see today
will never materialize.
In our view, the overall opportunity situation did not change
significantly as compared to the prior year.
We constantly strive to develop new technologies, offer new
products, solutions and services, and improve existing ones:
We invest in new technologies that we expect will meet future
demands in accordance with the megatrends demographic
change, urbanization, climate change, globalization and digital
transformation (for further information see c.1.3 STRATEGY).
Furthermore, a growing awareness for cyber security could lead
to additional business for high quality solutions offered by the
former Industry Sector's Industry Automation Division.
We see further opportunities in the growth potential of
emerging markets as well as established markets: We ex-
pect that in coming years growth in our markets will be driven
by countries in Asia and the Middle East, in particular by coun-
tries such as Indonesia and Turkey. Within One Siemens, we
take measures aimed at continuously increasing our share of
revenue from emerging markets. Our "Vision 2020" concept,
which puts a stronger focus on getting close to customers is
expected to result in higher market penetration (for further
information, see → C.1.3 STRATEGY).
We believe that developing the capability to design, manufac-
ture and sell so-called SMART products (simple, maintenance-
friendly, affordable, reliable, and timely-to-market) will pro-
vide us with opportunities to gain market share and enhance
our local presence in these strategic growth markets. Adding
further SMART products to our portfolio and developing stron-
ger sales channels would enable us to increase our revenues by
serving large and fast-growing geographic markets, where cus-
tomers making a purchase decision may consider price more
strongly than product features without compromising on prod-
uct quality and reliability.
172 C.1
Through selective acquisitions, equity investments and
partnerships we constantly strive to strengthen our lead-
ing technology position, open up additional potential mar-
kets and further develop our product portfolio: We con-
stantly monitor our current and future markets for opportunities
for strategic acquisitions, equity investments or partnerships to
complement organic growth. Such activities could help us to
strengthen our market position in our existing markets, provide
access to new markets or complement our technological port-
folio in selected areas.
Combined Management Report
171 C.
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
247 D.
337
Consolidated Financial Statements
Additional Information
237
In addition, future developments in ongoing and potential
future investigations, such as responding to the requests of
governmental authorities and cooperating with them, could
divert management's attention and resources from other issues
facing our business. The materialization of any of these risks
could have an adverse effect on our business, financial condi-
tion and results of operations and on our reputation.
We are subject to environmental and other governmental
regulations: Some of the industries in which we operate are
highly regulated. Current and future environmental and other
governmental regulations or changes thereto may require us
to change the way we run our operations and could result in
significant increases in our operating or production costs. In
addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct
of our business operations, it cannot be excluded that viola-
tions of applicable governmental regulations may be caused
either by us or by third parties that we contract with, including
suppliers or service providers, whose activities may be at-
tributed to us. Any such violations expose us to the risk of lia-
bility, reputational damage or loss of licenses or permits that
are important to our business operations. In particular, we
could also face liability for damage or remediation for environ-
mental contamination at the facilities we design or operate. For
example, we are required to bear environmental clean-up costs
mainly related to remediation and environmental protection
liabilities, which have been accrued based on the estimated
costs of decommissioning facilities for the production of ura-
nium and mixed-oxide fuel elements in Hanau, Germany, as well
as a nuclear research and service center in Karlstein, Germany.
For further information, see NOTE 23 in D.6 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS. Under certain circum-
stances, we establish provisions for environmental risks. With
regard to certain environmental risks, we maintain liability in-
surance at levels that our management believes are appropri-
ate and consistent with industry practice. We may incur envi-
ronmental losses beyond the limits, or outside the coverage, of
such insurance, and such losses may have an adverse effect on
our business, financial condition and results of our operations.
In addition, our provisions for environmental liabilities may
not be sufficient to cover our ultimate losses or expenditures
resulting therefrom.
Our business, financial condition and results of operations
could suffer as a result of current or future litigation: We are
subject to numerous risks relating to legal, governmental and
regulatory proceedings to which we are currently a party or to
which we may become a party in the future. We routinely be-
come subject to legal, governmental and regulatory investiga-
tions and proceedings involving, among other things, requests
for arbitration, allegations of improper delivery of goods or
services, product liability, product defects, quality problems,
intellectual property infringement, non-compliance with tax reg-
ulations and/or alleged or suspected violations of applicable
laws. In addition, we may face further claims in connection with
the circumstances that led to the corruption charges. For addi-
tional information with respect to specific proceedings, see
→ NOTE 28 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
There can be no assurance that the results of these or any other
proceedings will not materially harm our business, financial con-
dition and results of operations. Moreover, even if we ultimately
prevail on the merits in any such proceedings, we may have to
incur substantial legal fees and other costs defending ourselves
against the underlying allegations. Under certain circumstances
we record a provision for risks arising from legal disputes and
proceedings. In addition, we maintain liability insurance for cer-
tain legal risks at levels our management believes are appropriate
and consistent with industry practice. Our insurance policy, how-
ever, does not protect us against reputational damage. Moreover,
we may incur losses relating to legal proceedings beyond the lim-
its, or outside the coverage, of such insurance or exceeding any
provisions made for legal proceedings related losses. Finally,
there can be no assurance that we will be able to maintain ade-
quate insurance coverage on commercially reasonable terms in
the future. Each of these risks may have an adverse effect on
our business, financial condition and results of operations.
C.9.3.5 ASSESSMENT OF THE OVERALL
RISK SITUATION
The most significant challenges have been mentioned first in
each of the four categories Strategic, Operations, Financial and
Compliance with the risks caused by highly competitive mar-
kets currently being our most significant. Even though the as-
sessments of individual risk exposures have changed during
fiscal 2014 due to developments in the external environment as
well as the effects of our own mitigation measures, the overall
risk situation for Siemens did not change significantly as com-
pared to the prior year. At present, no risks have been identified
that either individually or in combination could endanger our
ability to continue as a going concern. We are confident that we
can continue to successfully counter the challenges arising
from the risks mentioned above.
C.9.4 Opportunities
Within our comprehensive, interactive and management-ori-
ented Enterprise Risk Management (ERM) approach that is inte-
grated into the organization and that addresses both risks and
opportunities, we regularly identify, evaluate and respond to
opportunities that present themselves in our various fields of
activity. Below we describe our most significant opportunities.
Unless otherwise stated, the opportunities described below
108 | A. To our Shareholders
238
131 | B. Corporate Governance
Localizing value chain activities in low-cost countries could
further improve our cost position: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service in markets such as the BRIC countries, other
emerging markets, and the Middle East could enable us to re-
duce costs and strengthen our global competitive position, in
particular compared to competitors based in countries with a
more favorable cost structure.
We are in the process of continuously developing and im-
plementing initiatives to reduce costs, adjust capacities,
improve our processes and streamline our portfolio: In an
increasingly competitive market environment, a competitive
cost structure complements the competitive advantage of
being innovative. We believe that further improvements in our
cost position can strengthen our global competitive position
and secure our market presence against emerging and incum-
bent competitors. For example, we expect to create sustainable
value from productivity measures in connection with our
"Vision 2020" (for further information, see → C.1.3 STRATEGY).
Moreover, fostering a stringent claim management process can
help materialize opportunities by enforcing our claims towards
our contract partners even stronger.
213 C.6
131 | B. Corporate Governance
171 C.
Combined Management Report
240
172 C.1
Business and economic environment
187 C.2
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
247 D.
337
108 | A. To our Shareholders
The base data used in preparing the Consolidated Financial
Statements consists of the closing data reported by the opera-
tions of Siemens AG and its subsidiaries, which are derived
from the various accounting records. The preparation of the
closing data of most of our subsidiaries is supported by an
internal shared services organization. Furthermore, other ac-
counting activities, such as governance and monitoring related
activities, are bundled on regional level. In addition, for some
areas requiring specialized know-how such as valuations relat-
ing to post-employment benefits support from external service
providers is obtained and used. The reported closing data is
used to prepare the Consolidated Financial Statements in the
consolidation system. The steps necessary to prepare the Con-
solidated Financial Statements are subject to both manual and
automated controls at all levels.
Our Consolidated Financial Statements are prepared on the ba-
sis of a conceptual framework which primarily consists of com-
pany-wide uniform Financial Reporting Guidelines and a chart
of accounts, both issued centrally and to be applied consistently
throughout Siemens. New laws, accounting standards, and
other official announcements are analyzed on an ongoing basis
with regard to their relevance and impact on the Consolidated
Financial Statements and the Combined Management Report
and where necessary, our Financial Reporting Guidelines and
the chart of accounts are adjusted accordingly. In quarterly clos-
ing letters, accounting departments of Siemens AG and its sub-
sidiaries are informed about current topics from an accounting
and closing process perspective and any deadlines that must be
met for the respective closing processes.
Our management is responsible for establishing and maintain-
ing adequate internal control over financial reporting. At the
end of each fiscal year, our management performs an evalua-
tion of the effectiveness of its control system, both in design
and operating effectiveness. We have a standardized procedure
under which necessary controls are defined, documented in
accordance with uniform standards, and tested regularly on
their effectiveness. Nevertheless, there are inherent limitations
in the effectiveness of any control system, and no system, in-
cluding one determined to be effective, may prevent or detect
all misstatements.
214 C.7
215 C.8
225 C.9
Overall assessment of the economic position
Subsequent events
Sustainability and citizenship
Report on expected developments and
associated material opportunities and risks
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
Report on expected developments and
associated material opportunities and risks
247 D.
337
239
As of October 1, 2014, we have also eliminated the Sector level
and consolidated our business activities into nine Divisions and
one separately managed unit, Healthcare (for details see
→ C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION). This change is
expected to increase our customer proximity and accelerate our
decision-making. In addition, we have made governance even
more stringent across all levels of our organization. Our Man-
aging Board leads the Company and maintains the balance be-
tween our businesses and Regions. It is supported by strong,
efficient corporate governance functions, our Corporate Core,
which is expected to ensure fast, nonbureaucratic deci-
sion-making across key company functions (for details, see
→ C.1.3 STRATEGY).
C.9.5 Significant characteristics
of the accounting-related internal
control and risk management system
The following discussion describes information required pursu-
ant to Section 289 (5) and Section 315 (2) no. 5 of the German
Commercial Code (Handelsgesetzbuch) and explanatory report.
The overarching objective of our accounting-related internal
control and risk management system is to ensure that finan-
cial reporting is conducted in a proper manner such that the
Consolidated Financial Statements and the Combined Man-
agement Report are prepared in accordance with all relevant
regulations.
As described in → C.9.2 RISK MANAGEMENT, Our ERM approach is
based on the worldwide accepted "Enterprise Risk Manage-
ment - Integrated Framework" developed by the COSO. As one of
the objectives of this framework is reliability of a company's
financial reporting, it also includes an accounting-related per-
spective. The accounting-related internal control system (control
system) implemented by us is based on Internal Control
Integrated Framework (2013), an internationally recognized
framework also developed by the COSO. The two systems are
complementary.
-
Consolidated Financial Statements
Additional Information
Sustainability and citizenship
We are realigning our organization: As of November, 2013,
we disbanded our Regional Cluster organization. Following this
organizational change, we have designated 30 Lead Countries
which are individually responsible for managing a number
of other countries regarding market penetration. Each Lead
Country reports directly to the Managing Board. By implement-
ing this move, Siemens intends to intensify its customer access
and expand its regional business. We expect this new setup to
further enhance our local market penetration and our customer
proximity going forward.
225 C.9
Results of operations
Financial position
210 C.5
Net assets position
risk of delays and interruptions of the supply chain as a conse-
quence of natural disasters in case we are unable to identify
alternative sources of supply or ways of transportation in
a timely manner or at all. A general shortage of materials, com-
ponents or sub-components as a result of natural disasters also
bears the risk of unforeseeable fluctuations in prices and
demand, which might adversely affect our business, financial
condition and results of operations.
Our former Sectors purchase raw materials including so-called
rare-earth metals, copper, steel, aluminum and oil, which ex-
pose them to fluctuations in energy and raw material prices. In
recent times, commodities prices have been subject to volatile
markets, and such volatility is expected to continue. If we are
not able to compensate for our increased costs or pass them on
to customers, price increases could have an adverse impact on
our business, financial condition and results of operations. In
contrast, in times of falling commodity prices, we may not fully
profit from such price decreases as we attempt to reduce the
risk of rising commodity prices by several means, such as long-
term contracting or physical and financial hedging. In addition
to price pressure that we may face from our customers expect-
ing to benefit from falling commodity prices or adverse market
conditions, this could also adversely affect our business, finan-
cial condition and results of operations.
C.9.3.3 FINANCIAL RISKS
We are exposed to market price risks: We are exposed to fluc-
tuations in exchange rates, especially between the U.S. dollar
and the euro, because a high percentage of our business
volume is conducted in the U.S. and as exports from Europe. In
addition, we are exposed to currency effects involving the
currencies of emerging markets, in particular the Chinese
Yuan. A strengthening of the euro (particularly against the U.S.
dollar) may change our competitive position, as many of our
competitors may benefit from having a substantial portion of
their costs based in weaker currencies, enabling them to offer
their products at lower prices. As a result, a strong euro in rela-
tion to the U.S. dollar and other currencies could have an
adverse impact on our revenues and results of operations.
Certain currency risks as well as interest rate risks are hedged
using derivative financial instruments. Depending on the
development of foreign currency exchange and interest rates,
our hedging activities could have significant effects on our
business, financial condition and results of operations.
Changes in the fair value of warrants issued together with
US$3 billion bonds in fiscal 2012 depends mainly on the under-
lying Siemens and OSRAM share prices as well as their respec-
tive volatilities, irrespective of the fact that our potential
obligation related to the warrant writer position to physically
deliver Siemens and OSRAM shares could be covered out of
existing stock. Accordingly, exchange rate, interest rate and
share price fluctuations may lead to higher volatility and
adverse effects on our business, financial condition and results
of operations.
We are exposed to volatile credit spreads: Regarding our
Corporate Treasury activities, widening credit spreads due to
uncertainty and risk aversion in the financial markets might
lead to adverse changes of fair market values of our financial
assets, in particular concerning our derivative financial instru-
ments. In addition, widening credit spreads could lead to
increasing refinancing costs if the Euro zone sovereign debt
crisis with its ongoing significant impact on global financial
markets and the European financial sector in particular, contin-
ues or even worsens. Any such development could also further
increase the costs for buying protection against credit risks due
to a potential increase of counterparty risks.
Our future financing via Corporate Treasury may particu-
larly be affected by the uncertainty of economic condi-
tions and the developments of capital and financial mar-
kets: Our Corporate Treasury is responsible for the financing
of the Company. Negative developments in foreign exchange,
money or capital markets, such as limited availability of funds
(particularly U.S. dollar funds), may increase our overall cost
of funding. The ongoing Euro zone sovereign debt crisis con-
tinues to have an impact on global capital markets. The result-
ing higher risk awareness of governments led to more regula-
tions on the use of financial instruments through (1) the
Regulation on OTC derivatives, central counterparties and
trade repositories (European Market Infrastructure Regula-
tion) and (2) other similar regulations in other jurisdictions,
which may have an impact on the future availability or the
costs of adequate hedging instruments for the Company.
It may even lead to further regulations of the financial sector
as well as to the use of financial instruments that could
adversely influence our future possibilities of obtaining debt
financing, and/or may increase our refinancing costs. Deterio-
rating credit quality or even default of business partners may
adversely affect our business, financial condition and results
of operations.
Downgrades of our rating could increase our cost of capital
and therefore could negatively affect our business: Our
business, financial condition and results of operations are influ-
enced significantly by the actual and expected performance of
the former Sectors and SFS, as well as our portfolio measures.
An actual or expected negative development of our business,
financial condition or results of operations could result in the
deterioration of our credit rating. Downgrades by rating agen-
cies could increase our cost of capital, may reduce our potential
investor base and may negatively affect our business, financial
condition and results of operations.
Overall assessment of the economic position
Subsequent events
213 C.6
214 C.7
215 C.8
193 C.3
225 C.9
Financial performance system
Business and economic environment
contractual penalties, damages, non-payment and contract ter-
mination. There can be no assurance that contracts and proj-
ects, in particular those with long-term duration and fixed-
price calculation, can be completed profitably.
233
Overall assessment of the economic position
Subsequent events
Increased IT security threats and higher levels of profes-
sionalism in computer crime could pose a risk to our
systems, networks, products, solutions and services as well
as to those of our service providers: Our business portfolio
includes a broad array of systems, networks, products, solu-
tions and services across our businesses that rely on digital
technologies. We observe a global increase in IT security
threats and higher levels of professionalism in computer crime,
which pose a risk to the security of systems and networks and
the confidentiality, availability and integrity of data. We attempt
to mitigate these risks by employing a number of measures,
including employee training, comprehensive monitoring of
our networks and systems, and maintenance of backup and
protective systems such as firewalls and virus scanners. To the
extent we employ service providers, such as in the area of IT
infrastructure, we have contractual arrangements in place in
order to ensure that these risks are reduced in a similar man-
ner. Nonetheless, our systems, networks, products, solutions
and services, as well as those of our service providers remain
potentially vulnerable to attacks. Depending on their nature
and scope, such attacks could potentially lead to the leakage of
confidential information, improper use of our systems and net-
works, manipulation and destruction of data, defective prod-
ucts, production downtimes and supply shortages, which in
turn could adversely affect our business, financial condition,
results of operations and reputation.
We may face operational failures and quality problems in
our value chain processes: Our value chain comprises all
steps, from research and development to supply chain manage-
ment, production, marketing, sales and services. Operational
failures in our value chain processes could result in quality
problems or potential product, labor safety, regulatory or envi-
ronmental risks. Such risks are particularly present in our
former Sectors in relation to our production and construction
facilities, which are located all over the world and have a high
degree of organizational and technological complexity. From
time to time, some of the products we sell might have quality
issues resulting from the design or manufacture of such prod-
ucts or from the software integrated into them. Our Healthcare
business, for example, is subject to regulatory authorities
including the U.S. Food and Drug Administration and the Euro-
pean Commission's Health and Consumer Policy Department,
which require us to make certain efforts to safeguard our prod-
uct quality. If we are not able to comply with these require-
ments, our business, financial condition, results of operations
and reputation may be adversely affected.
Furthermore, failures on the part of service providers we
employ, such as in the area of IT, may have an adverse effect on
our processes and operations and our ability to meet our com-
mitments to customers or increase our operating costs. Any
operational failures or quality issues could have an adverse
effect on our business, financial condition, results of opera-
tions and reputation.
We are dependent upon hiring, developing and retaining
highly qualified management and technical personnel:
Competition for highly qualified personnel remains intense
in the industries and regions in which our businesses operate.
In many of our business areas, we intend to expand our busi-
ness activities, for which we will need highly skilled employ-
ees. Our future success depends in part on our continued abil-
ity to hire, integrate, develop and retain engineers and other
qualified personnel. We address this risk with various measures,
for example succession planning, employer branding, retention
and career management. However, there can be no assurance
that we will continue to be successful in attracting and retain-
ing all the highly qualified employees and key personnel needed
in the future, including in appropriate geographic locations, and
any inability to do so could have an adverse effect on our busi-
ness, financial condition, results of operations and reputation.
We may face interruption of our supply chain, including the
inability of third parties to deliver parts, components and
services on time and in the contractually agreed quality,
and we may be subject to rising raw material prices: Our
financial performance depends in part on reliable and effective
supply chain management for components, sub-assemblies
and other materials. Capacity constraints and supply shortages
resulting from ineffective supply chain management may lead
to delays and additional cost. We rely on third parties to supply
us with parts, components and services. Using third parties to
manufacture, assemble and test our products reduces our con-
trol over manufacturing yields, quality assurance, product
delivery schedules and costs. The third parties that supply us
with parts and components also have other customers and may
not have sufficient capacity to meet all of their customers'
needs, including ours, during periods of excess demand. Com-
ponent supply delays can affect the performance of our former
Sectors. Although we work closely with our suppliers to avoid
supply-related problems, there can be no assurance that we
will not encounter supply problems in the future or that we will
be able to replace a supplier that is not able to meet our
demand. This risk is particularly evident in businesses with a
very limited number of suppliers. Shortages and delays could
materially harm our business. Unanticipated increases in the
price of components or raw materials due to market shortages
or other reasons could also adversely affect the performance of
our former Sectors. Furthermore, we may be exposed to the
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
234
Combined Management Report
172 C.1
187 C.2
Report on expected developments and
associated material opportunities and risks
205 C.4
242 C.10 Compensation Report and legal disclosures
242 C.11 Siemens AG (Discussion on basis
of German Commercial Code)
172 C.1
Business and economic environment
187 C.2
Financial performance system
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
countries in which we do business may result in a curtailment
of our existing business in such countries or indirectly in other
countries and in amendments to our policies. We are also aware
of initiatives by institutional investors, such as pension funds or
other companies, to adopt or consider adopting policies prohib-
iting investment in and transactions with, or requiring divest-
ment of interests in entities doing business with, Iran and other
countries identified as state sponsors of terrorism by the U.S.
Secretary of State. It is possible that such initiatives may result
in us being unable to gain or retain investors, customers or sup-
pliers. In addition, the termination of our activities in sanctioned
countries may expose us to customer claims and other actions.
Our reputation could also suffer due to our activities with coun-
terparties in or affiliated with these countries. As previously
disclosed, Siemens has decided that, subject to certain limited
exceptions, it will not enter into new contracts with customers
in Iran and has issued group-wide policies establishing the
details of its general decision.
We expect that sales to emerging markets will account for an
increasing portion of our total revenue, as our business natu-
rally evolves and as developing nations and regions around the
world increase their demand for our offering. Emerging market
operations involve various risks, including civil unrest, health
concerns, cultural differences such as employment and busi-
ness practices, volatility in gross domestic product, economic
and governmental instability, the potential for nationalization
of private assets and the imposition of exchange controls. The
Asian markets, in particular, are important for our long-term
growth strategy, and our sizeable operations in China are influ-
enced by a legal system that is still developing and is subject
to change. Our growth strategy could be limited by govern-
ments supporting local industries. Our former Sectors, partic-
ularly those that derive their revenue from large projects,
could be adversely affected if future demand, prices and gross
domestic product in the markets in which those former Sectors
operate do not develop as favorably as expected due to such
regulatory measures. If any of these risks or similar risks asso-
ciated with our international operations were to materialize,
our business, financial condition and results of operations
could be adversely affected.
Current and future investigations regarding allegations of
public corruption, antitrust violations and other illegal acts
could have an adverse effect on our business, financial
condition and results of operations and on our reputation:
We engage in a substantial amount of business with govern-
ments and government-owned enterprises around the world.
We also participate in a number of projects funded by govern-
ment agencies and intergovernmental and supranational orga-
nizations such as multilateral development banks. If we are
found to have been engaged in public corruption, antitrust
violations and other illegal acts, such activities may impair our
ability to do business with these or other organizations. Cor-
ruption, antitrust and related proceedings may lead to criminal
and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of busi-
ness, the loss of business licenses or permits or other restric-
tions. Accordingly, we may be required to record material pro-
visions to cover potential liabilities arising in connection with
such investigations and proceedings, including potential tax
penalties. Moreover, any findings related to public corruption
that are not covered by the 2008 and 2009 corruption charge
settlements, which were concluded with American and German
authorities, may endanger our business with government
agencies and intergovernmental and supranational organiza-
tions, further monitors could be appointed to review future
business practices and we may otherwise be required to further
modify our business practices and our compliance program.
Sustainability and citizenship
Our involvement in ongoing and potential future corruption or
antitrust proceedings could damage our reputation and have
an adverse impact on our ability to compete for business from
public and private sector customers around the world. If we or
our subsidiaries are found to have engaged in certain illegal
acts or not to have taken effective steps to address allegations
or findings of corruption or antitrust violations in our business,
this may impair our ability to participate in business with gov-
ernments or intergovernmental organizations and may result
in our formal exclusion from such business. Even if we are not
formally excluded from participating in government business,
government agencies or intergovernmental or supranational
organizations may informally exclude us from tendering for or
participating in certain contracts. For example, legislation of
member states of the European Union could in certain cases
result in our mandatory or discretionary exclusion from public
contracts in case of a conviction for bribery and certain other
offences or for other reasons. As described in more detail in
→ NOTE 28 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,
we and certain of our subsidiaries have in the past been ex-
cluded or currently are excluded from some contracting, in-
cluding with governments, development banks and multilat-
eral financial institutions, as a result of findings of corruption
or other misconduct. Ongoing or potential future investiga-
tions into allegations of corruption or antitrust violations could
also impair existing relationships with, and our ability to ac-
quire new private sector business partners. For instance, such
investigations may adversely affect our ability to pursue poten-
tially important strategic projects and transactions, such as
strategic alliances, joint ventures or other business combina-
tions, or could result in the cancellation of certain of our exist-
ing contracts and third parties, including our competitors,
could initiate significant third-party litigation.
213 C.6
214 C.7
215 C.8
Combined Management Report
236
193 C.3
235
247 D.
337
Consolidated Financial Statements
Additional Information
171 C.
Our financing activities subject us to various risks, includ-
ing credit, interest rate and foreign exchange risk: We pro-
vide our customers with various forms of direct and indirect
financing in connection with large projects. We also finance a
large number of customer orders, for example, the leasing of
medical equipment, mainly through SFS. SFS also bears credit
risk by financing third-party equipment or by taking direct or
indirect participation in financings, such as syndicated loans.
In part, we take a security interest in the assets we finance or
we receive additional collateral. Our business, financial condi-
tion and results of operations may be adversely affected if the
credit quality of our customers deteriorates or if they default on
their payment obligation to us, if the value of the assets in
which we have taken a security interest or additional collateral
declines, if interest rates or foreign exchange rates fluctuate, or
if the projects in which we invest are unsuccessful. Potential
adverse changes in economic conditions could cause a decline
in the fair market values of assets, derivative instruments as
well as collateral, resulting in losses which could have an
adverse effect on our business, financial condition and results
of operations.
Our business, financial condition and results of operations
may be adversely affected by several parameters influenc-
ing the funded status of our pension benefit plans: The
funded status of our pension plans may be affected by an
increase or decrease in the defined benefit obligation (DBO), as
well as by an increase or decrease in the value of plan assets.
A significant increase in the underfunding may have a negative
effect on our rating. Pensions are accounted for in accordance
with actuarial valuations, which rely on statistical and other
factors in order to anticipate future events. These factors
include key pension plan valuation assumptions such as the
discount rate, rate of future compensation increases and
pension progression. Actual developments may differ from
assumptions due to changing market and economic conditions,
thereby resulting in an increase or decrease in the DBO. Signif-
icant movements in financial markets or a change in the port-
folio mix of invested assets could result in corresponding
increases or decreases in the value of plan assets, particularly
equity securities. Also, changes in pension plan assumptions
could affect defined benefit costs. For example, a change in dis-
count rates may result in changes in the defined benefit costs
in the following fiscal year. In order to comply with local pen-
sion regulations in selected foreign countries, we may face a
risk of increasing cash outflows to reduce an underfunding of
our pension plans in these countries, if any.
With respect to sales-related bank guarantees to be issued
in the course of orders or supplies, we are exposed to cer-
tain risks arising from our banks' rating and its develop-
ment: Frequently customers request from the supplier that
guarantees customary for the business are procured from banks,
such as down-payment or warranty bonds, as part of the order.
Sometimes customers may also set minimum requirements as
to the creditworthiness of acceptable guarantors. Accordingly,
situations may arise with respect to existing orders that, during
the order's execution phase, customers request the provision of
alternative security upon the deterioration of a guaranteeing
bank's creditworthiness.
For further information on derivative financial instruments,
hedging activities and financial risk management, see → NOTE
30 AND 31 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Examinations by tax authorities and changes in tax regula-
tions could adversely affect our business, financial condi-
tion and results of operations: We operate in nearly all coun-
tries of the world and therefore are subject to many different tax
regulations. Changes in tax law in any of these jurisdictions
could result in higher tax expense and payments. Furthermore,
legislative changes could impact our tax receivables and liabil-
ities as well as deferred tax assets and deferred tax liabilities. In
addition, the uncertain tax environment in some regions could
limit our ability to enforce our rights. As a globally operating
organization, we conduct business in countries subject to com-
plex tax rules, which may be interpreted in different ways. Future
interpretations or developments of tax regimes may affect our
business, financial condition and results of operations. We are
regularly examined by tax authorities in various jurisdictions.
We are subject to regulatory risks associated with our inter-
national operations: Protectionist trade policies and changes
in the political and regulatory environment in the markets in
which we operate, such as import and export controls, tariffs
and other trade barriers including debarment from certain mar-
kets and price or exchange controls, could affect our business
in several national markets, impact our sales and profitability
and make the repatriation of profits difficult, and may expose
us to penalties, sanctions and reputational damage. In addi-
tion, the uncertainty of the legal environment in some regions
could limit our ability to enforce our rights and subject us to
continually increasing costs related to designing and imple-
menting appropriate compliance programs and protocols.
As a globally operating organization, we conduct business with
customers in countries, such as Iran, Syria, Cuba and countries
in Eastern Europe, that are subject to export control regulations,
embargoes, economic sanctions or other forms of trade restric-
tions imposed by the U.S., the European Union or other coun-
tries or organizations. New or expanded export control regu-
lations, economic sanctions, embargoes or other forms of
trade restrictions imposed on Iran, Syria or on other sanctioned
108 | A. To our Shareholders
131 | B.
Corporate Governance
C.9.3.4 COMPLIANCE RISKS
Currency translation differences
Net income
(in millions of €)
For the fiscal years ended September 30, 2014 and 2013
Remeasurements of defined benefit plans
Items that will not be reclassified to profit or loss
therein: Expenses from investments accounted for using the equity method
Available-for-sale financial assets
Attributable to:
Shareholders of Siemens AG
Items that may be reclassified subsequently to profit or loss
therein: Expenses from investments accounted for using the equity method
Other comprehensive income, net of income taxes
Non-controlling interests
|| | D.2 Consolidated Statements of Comprehensive Income
Total comprehensive income
Derivative financial instruments
Combined Management Report
5,373
6.31
248
134
|
126
4,284
34
6.24
4.81
0.13
0.27
6.37
5.08
34
6.18
4.76
0.13
0.26
5.03
247
857
248 D.1
940
(1,062)
10
(56)
183
29, 30
(316)
45
569
(834)
(85)
(136)
(440)
6,364
165
3,969
108 | A. To our Shareholders
(121)
D. Consolidated Financial Statements
(37)
288
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
Note
2014
2013
5,507
4,409
22
288
394
394
171 | C
D. Consolidated Financial Statements
131 | B.
20,755
20,135
Research and development expenses
(4,065)
(4,048)
Selling and general administrative expenses
(10,424)
(10,869)
Other operating income
6
656
500
Other operating expenses
7
(194)
(424)
5
(53,309)
582
73,445
2013
317
NOTE 39 - Corporate Governance
317 NOTE 40 - Subsequent events
318 NOTE 41 - List of subsidiaries and
associated companies pursuant
to Section 313 para. 2 of the
German Commercial Code
330 | D.7
330 D.7.1
Supervisory Board and
Managing Board
Supervisory Board
334 D.7.2 Managing Board
247
81
||| D.1 Consolidated Statements of Income
For the fiscal years ended September 30, 2014 and 2013
(in millions of €, per share amounts in €)
Revenue
Cost of sales
Gross profit
Note
2014
71,920
(51,165)
Corporate Governance
510
8
4
108
231
Net income
5,507
4,409
Attributable to:
Non-controlling interests
Shareholders of Siemens AG
Basic earnings per share
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share
Income from continuing operations
Income from discontinued operations
Net income
|
Income from discontinued operations, net of income taxes
Interest income
4,179
Income from continuing operations
1,058
947
Interest expenses
8
(764)
(784)
Other financial income (expenses), net
8
(177)
(154)
Income from continuing operations before income taxes
7,427
5,813
Income tax expenses
9
(2,028)
(1,634)
5,400
6,199
104,879
337 | E.
21
19,326
18,509
Post-employment benefits
22
9,324
9,265
Deferred tax liabilities
9
552
504
Provisions
23
4,071
3,907
Other financial liabilities
Other liabilities
Long-term debt
Total non-current liabilities
37,868
Total current liabilities
1,717
1,515
Current provisions
23
4,354
4,485
Current income tax liabilities
1,762
2,151
Other current liabilities
20
17,954
19,701
Liabilities associated with assets classified as held for disposal
4
1,597
473
36,598
19
Total liabilities
Issued capital, no par value
268
(3,747)
(2,946)
Total equity attributable to shareholders of Siemens AG
30,954
28,111
Non-controlling interests
Total equity
Total liabilities and equity
560
31,514
104,879
514
28,625
101,936
131 | B.
Corporate Governance
171 | C
Combined Management Report
314 NOTE 36 - Information about geographies
315 NOTE 37 - Related party transactions
317 NOTE 38 - Principal accountant fees
and services
803
Equity
Treasury shares, at cost
22,663
1,620
1,184
24
1,874
2,074
36,767
35,443
73,365
73,312
25
2,643
2,643
Capital reserve
5,525
5,484
Retained earnings
25,729
Other components of equity
3,888
Other current financial liabilities
7,594
11
14,526
601
14,853
12
3,710
3,250
13
15,100
15,560
577
794
14
1,290
1,297
Assets classified as held for disposal
4
3,935
925
1,393
10
8,013
Additional Information
249
1 D.3 Consolidated Statements of Financial Position
As of September 30, 2014 and 2013
(in millions of €)
Assets
Cash and cash equivalents
Available-for-sale financial assets
Trade and other receivables
Other current financial assets
Inventories
Current income tax assets
Other current assets
September, 30
Note
2014
2013
9,190
7,599
Total current assets
Other intangible assets
Other assets
Total non-current assets
Total assets
9
3,334
3,234
945
872
56,803
54,999
101,936
Liabilities and equity
Short-term debt and current maturities of long-term debt
21
1,620
1,944
Trade payables
Deferred tax assets
Goodwill
15,117
18
48,076
46,937
15
17,783
17,883
16
4,560
5,057
Property, plant and equipment
17
9,638
9,815
Investments accounted for using the equity method
5
2,127
3,022
Other financial assets
18,416
310 NOTE 35 - Segment information
Unlike our Consolidated Financial Statements, which are
prepared in accordance with the International Financial Report-
ing Standards (IFRS), the Annual Financial Statements of
Siemens AG have been prepared in accordance with the rules
set out in the German Commercial Code (Handelsgesetzbuch).
301 NOTE 31 - Financial risk management
306 NOTE 32- Share-based payment
309 NOTE 33 - Personnel costs
Financial performance system
193 C.3
Results of operations
205 C.4
Financial position
210 C.5
Net assets position
187 C.2
The increase in Revenue is due primarily to revenue increases
of €1.002 billion in the Energy Sector, €251 million in the Indus-
try Sector and €73 million in the Infrastructure & Cities Sector.
These increases were partly offset by revenue declines of
€419 million in the Healthcare Sector and €16 million in
Siemens Real Estate. As a consequence of the mutual agree-
ment procedure with tax authorities related to transfer pricing,
Siemens AG received compensatory payments from Siemens
Healthcare U.S. The payments amounted to €259 million, com-
pared to €670 million in the prior year, and were booked as rev-
enue by the Healthcare Sector. On a geographic basis, revenue
grew 31% year-over-year in the Asia, Australia region and de-
clined 12% in the Americas region and 3% in the Europe, C.I.S.,
Africa, Middle East region. Exports from Germany accounted
for 73% and 70% of revenue in fiscal 2014 and 2013, respec-
tively. In fiscal 2014, orders for Siemens AG amounted to
€32.3 billion, nearly level compared to the prior year.
Research and development (R&D) expenses decreased due
primarily to a reduction of €196 million in the Infrastructure &
Cities Sector. This decrease was partly offset by increases of
€46 million in the Energy Sector and €16 million in the Health-
care Sector. R&D expenses as a percentage of revenue (R&D
intensity) decreased by one percentage point, to 9% year-over
year. On an average basis, we employed 12,600 people in R&D
in fiscal 2014, compared to 12,500 in fiscal 2013. For additional
information see c.8.3 RESEARCH AND DEVELOPMENT.
The improvement in Other operating income (expenses), net
resulted from an increase in other operating income of
€161 million, only slightly offset by an increase of €4 million in
other operating expenses. Within other operating income, pos-
itive effects included €137 million from higher allocation of
central infrastructure and support services to Sectors and
Divisions outside Siemens AG, and gains totaling €110 million
related to the sale of concessions and industrial property rights
to Siemens Schweiz AG.
The decline in Financial income, net was primarily attribut-
able to lower income from investments, which decreased by
€1.023 billion. Other financial income was €395 million lower
compared to the prior year, while net interest income came in
€29 million higher.
The primary factor for the decrease in income from invest-
ments was lower dividend payments. In fiscal 2013, we received
a dividend payment of €3.000 billion from Siemens Beteiligungs-
verwaltung GmbH & Co. OHG. We received no such dividend
payment in fiscal 2014. In contrast, income from profit transfers
from Siemens Beteiligungen Inland GmbH increased by
€909 million. In addition, gains (losses) from the disposal of
investments came in €755 million higher year-over-year, in-
cluding a gain of €321 million from the sale of our 17% stake in
OSRAM Licht AG to Siemens Beteiligungen Inland GmbH.
The decrease in other financial income resulted mainly from a
realized loss related to interest and foreign currency derivatives
amounting to €309 million, compared to income amounting to
€548 million in the prior year. In addition, expenses from com-
pounding of pension provisions increased by €161 million.
These factors were partly offset by reversals of impairments of
shares in investments of €214 million.
The decline in Income tax expenses was due mainly to prior-
year one-time special effects.
213 C.6
The increase in Gross profit included increases of €421 million
in the Energy Sector, €279 million in the Industry Sector
and €269 million in the Infrastructure & Cities Sector. These
increases were partly offset by a decrease of €335 million in the
Healthcare Sector. A year earlier, gross profit was burdened by
charges for the company-wide "Siemens 2014" productivity im-
provement program. While both years included project charges,
these were higher in fiscal 2014. In particular, the Energy
Sector's Power Transmission Division took charges including
€361 million related primarily to grid-connections to offshore
wind-farms and €197 million related to onshore HVDC trans-
mission line projects.
Business and economic environment
172 C.1
242
115
(4)%
Assets reduction due
to spin-off
(1,800)
100%
Allocation to other
retained earnings
Unappropriated net income
(988)
2,907
476
2,643
n/a
10%
108 | A. To our Shareholders
131 | B. Corporate Governance
171 C.
Combined Management Report
214 C.7
215 C.8
Overall assessment of the economic position
Subsequent events
C.11
242 C.10 Compensation Report and legal disclosures
242
Siemens AG (Discussion on basis
44,540
42,967
(1)%
4%
4%
Current assets
Receivables and other assets
15,816
17,032
(7)%
Cash and cash equivalents,
securities
2,672
2,282
18,488
19,313
Prepaid expenses
111
75
2,437
40,530
110
42,121
2,419
Sustainability and citizenship
of German Commercial Code)
225 C.9
Report on expected developments and
associated material opportunities and risks
247 D.
337
Consolidated Financial Statements
Additional Information
243
C.11.3 Net assets and financial position
Statement of Financial Position of Siemens AG in
accordance with German Commercial Code (condensed)
2014
September 30,
2013
% Change
(in millions of €)
Assets
Non-current assets
Intangible and tangible assets
Financial assets
Profit carried forward
(2)%
3,852
Additional Information
241
||| C.10 Compensation Report and legal disclosures
The Compensation Report outlines the principles underlying
the determination of the total compensation of the members of
the Managing Board of Siemens AG, and sets out the structure
and level of the remuneration of the Managing Board mem-
bers. It also describes the policies governing and levels of com-
pensation paid to Supervisory Board members. The Compensa-
tion Report is an integral part of the Combined Management
Report and is presented in → B.4 COMPENSATION REPORT.
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code is an integral part of the Com-
bined Management Report and is presented in → B.2 CORPORATE
GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
COMMERCIAL CODE.
The Takeover-relevant information (pursuant to Sections 289
para. 4 and 315 para. 4 of the German Commercial Code) and
explanatory report are an integral part of the Combined Man-
agement Report and are presented in → B.5 TAKEOVER-RELEVANT
INFORMATION (PURSUANT TO SECTIONS 289 PARA. 4 AND 315 PARA. 4 OF
THE GERMAN COMMERCIAL CODE) AND EXPLANATORY REPORT.
The Compliance Report outlines the principles of our Compli-
ance System which aims to ensure that all our worldwide busi-
ness practices are in line with our Business Conduct Guidelines
and in compliance with all applicable laws. In addition, it de-
scribes our approach on compliance risk management, busi-
ness partner compliance due diligence, cooperation with third
parties and the Siemens Integrity Initiative. The Compliance
Report is an integral part of the Combined Management Report
and is presented in → B.3 COMPLIANCE REPORT.
||| C.11 Siemens AG (Discussion on basis of German Commercial Code)
C.11.1 Business and economic environment
Siemens AG is the parent company of the Siemens Group.
Siemens AG is a technology company with core activities in the
fields of electrification, automation and digitalization. Siemens AG
includes one additional operating business, Siemens Real Estate.
Furthermore Siemens AG is significantly influenced by directly
or indirectly owned subsidiaries and investments. Siemens AG
holds directly and indirectly 640 legal entities including
non-controlling interests. Siemens AG also includes the Group's
corporate headquarters functions.
The economic environment for Siemens AG is largely the same
as for the Siemens Group and is described in detail in → c.1.2
ECONOMIC ENVIRONMENT.
C.11.2 Results of operations
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
(in millions of €)
Revenue
September 30,
Consolidated Financial Statements
% Change
247 D.
337
242 C.10 Compensation Report and legal disclosures
Siemens AG (Discussion on basis
of German Commercial Code)
108 | A. To our Shareholders
The specialist skills required of employees involved in the ac-
counting process are assessed when the employees are initially
selected; thereafter, the employees receive regular training. As
a fundamental principle, at the different levels and based on
materiality considerations, items must be verified by at least
one other person (four eyes principle) and specific procedures
must be adhered to for the authorization of the data. Additional
control mechanisms include target-performance comparisons
and analyses of the composition of, and changes in, individual
line items, both in the closing data reported by units and in the
Consolidated Financial Statements. Accounting-related IT sys-
tems provide for defined access rules in order to ensure that
accounting related data is protected from unauthorized access,
use or modification. Every unit included in our Consolidated
Financial Statements is subject to the rules and regulations of
the Corporate Information Security Guide.
On a quarterly basis, an internal certification process is ex-
ecuted. Management of different levels of our organization,
supported by confirmations of management of entities under
their responsibility, confirms the accuracy of the financial data
that has been reported to Siemens' corporate headquarters and
reports on the effectiveness of the related control systems.
In addition, we have set up a Disclosure Committee - compris-
ing selected heads of Corporate Units – which is responsible for
reviewing certain financial and non-financial information prior
to publication.
The Supervisory Board, through the Audit Committee, is also
integrated into our control system. In particular, the Audit
Committee oversees the accounting process, the effectiveness
of the control system, the risk management system and the
internal audit system, and the independent audit of financial
statements. In addition, it conducts an audit of the documents
related to the Annual Financial Statements of Siemens AG and
the Consolidated Financial Statements and discusses the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements and Combined Management Report of
these statements with the Managing Board and the indepen-
dent auditors.
Through audits on a continuous and Siemens wide basis our
internal corporate audit function monitors compliance with
our guidelines and the reliability and functional operation of
our control system as well as the adequacy and effectiveness
of our risk management system.
In addition we have rules for accounting-related complaints
and a Code of Ethics for Financial Matters.
ADDITIONAL INFORMATION RELATED TO THE
ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG
(GERMAN COMMERCIAL CODE)
Siemens AG as the parent company of the Siemens Group is
integrated into the company-wide accounting-related internal
control system described above. Generally, the information set
out above also applies for Annual Financial Statements of
Siemens AG prepared in accordance with the German Com-
mercial Code.
The Consolidated Financial Statements are prepared in accor-
dance with IFRS. Where required, i.e. for purposes of preparing
statements for local regulatory or tax purposes, data is adopted
in accordance with relevant regulations by means of reconcili-
ation at account level. Accordingly, accurately determined IFRS
closing data also forms an important basis for the Annual
Financial Statements of Siemens AG. In the case of Siemens AG
and other group companies required to prepare financial state-
ments in accordance with German Commercial Code, the
conceptual framework described above is complemented by
mandatory regulations specific to German Commercial Code
within our Financial Reporting Guidelines and a German Com-
mercial Code chart of accounts. The manual and system-based
control mechanisms referred to above generally also apply
when reconciling the IFRS closing data to the Annual Financial
Statements of Siemens AG.
213 C.6
214 C.7
Overall assessment of the economic position
Subsequent events
215 C.8
Sustainability and citizenship
225 C.9
Report on expected developments and
associated material opportunities and risks
242 C.11
Deferred tax assets
2014
Cost of sales
Other operating income
(expenses), net
Financial income, net
thereof income from
investments 2,870
(prior year 3,893)
Result from
(20)
(178)
89%
2,243
3,631
(38)%
ordinary activities
4,230
4,692
(10)%
Income taxes
(444)
(840)
47%
Net income
3,786
3%
2013
(4,173)
administrative expenses
30,934
(22,109)
30,305
2%
(22,016)
0%
Gross profit
8,824
8,289
6%
as percentage of revenue
Research and development
29%
27%
expenses
(2,781)
(2,878)
3%
Selling and general
(4,036)
2,222
2,467
Active difference resulting
For additional information see c.8.2 EMPLOYEES.
C.11.5 Subsequent events
There have been no events of particular significance since the
end of fiscal 2014.
C.11.7 Outlook
Due to the interrelations between Siemens AG and its subsid-
iaries and the relative size of Siemens AG within the Group, the
outlook of the Group also largely reflects our expectations for
Siemens AG. We expect that the anticipated market and rev-
enue developments for fiscal 2015 described in statements made
by the Siemens Group will be mainly reflected in the revenue of
Siemens AG. In fiscal 2015, we continue to execute the Group's
"Vision 2020" concept. In particular, we expect that gains
from divestments will significantly influence the profit of
Siemens AG. For additional information see c.9.1 REPORT ON
EXPECTED DEVELOPMENTS.
We intend to continue providing an attractive return to share-
holders. Therefore in the years ahead we intend to propose a
dividend payout of 40% to 60% of net income of Siemens
Group, which for this purpose we may adjust to exclude
selected exceptional non-cash effects.
213 C.6
214 C.7
Overall assessment of the economic position
Subsequent events
242 C.10
Compensation Report and legal disclosures
242 C.11
Siemens AG (Discussion on basis
215 C.8
Sustainability and citizenship
of German Commercial Code)
225 C.9
Infrastructure & Cities:
26 (24%)
Report on expected developments and
associated material opportunities and risks
2 (2%)
107
919
864
1 Employee turnover rate is defined as the ratio of voluntary and involuntary exits
from Siemens AG during the fiscal year to the average number of employees.
2 Employees in management positions include all managers with disciplinary
responsibility, plus project managers.
3 Without travel expenses.
As of September 30, 2014 and 2013, the numbers of employees
were 106,860 and 108,234 respectively.
Employees of Siemens AG
as of September 30, 2014 (in thousands)
As the parent company of the Siemens Group, Siemens AG is
integrated into the group-wide risk management system. For
additional information see C.9.2 RISK MANAGEMENT.
The description of the internal control system for Siemens AG
required by Section 289 para. 5 of the German Commercial Code
is included in c.9.5 SIGNIFICANT CHARACTERISTICS OF THE ACCOUNT-
ING RELATED INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM.
For additional information regarding the use of financial
instruments see 7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF
SIEMENS AG.
Energy: 25 (24%)
Other: 8 (8%)
Siemens Real Estate:
Healthcare: 10 (10%)
Industry: 36 (33%)
94
247 D.
Consolidated Financial Statements
Additional Information
262 NOTE 3 - Critical accounting estimates
264 NOTE 4 - Acquisitions, dispositions and
discontinued operations
267 NOTE 5 - Interests in other entities
268 NOTE 6- Other operating income
268 NOTE 7-Other operating expenses
268 NOTE 8 Interest income, interest
expenses and other financial income
(expenses), net
269 NOTE 9 - Income taxes
271 NOTE 10 - Available-for-sale financial assets
271 NOTE 11 - Trade and other receivables
273 NOTE 12 - Other current financial assets
273 | NOTE 13 - Inventories
273 NOTE 14 - Other current assets
274 NOTE 15 - Goodwill
275 NOTE 16 - Other intangible assets
276 NOTE 17 - Property, plant and equipment
278 NOTE 18 - Other financial assets
278 NOTE 19 - Other current financial liabilities
278 NOTE 20 - Other current liabilities
278 NOTE 21 - Debt
281 NOTE 22 - Post-employment benefits
287 NOTE 23 - Provisions
288 NOTE 24 - Other liabilities
289 NOTE 25 - Equity
290 NOTE 26 - Additional capital disclosures
292 NOTE 27 - Commitments and contingencies
293 NOTE 28 - Legal proceedings
296 NOTE 29 - Additional disclosures on
financial instruments
300 NOTE 30 - Derivative financial instruments
and hedging activities
254 NOTE 2 - Summary of significant
accounting policies
337
254 NOTE 1 - Basis of presentation
Consolidated Statements
of Changes in Equity
245
246
The Consolidated Financial Statements
are prepared in accordance with Inter-
national Financial Reporting Standards
(IFRS) as adopted by the European Union
(EU), the supplementary requirements
of German law pursuant to Section
315a (1) of the German Commercial Code
(Handelsgesetzbuch) and full IFRS as
issued by the International Accounting
Standards Board (IASB). They give a true
and fair view of the net assets, financial
position and results of operations
of the group in accordance with these
requirements.
WWW.SIEMENS.COM/AR/CONSOLIDATED-FINANCIAL-STATEMENTS
D.
Consolidated
Financial Statements
248 | D.1
249 | D.2
250 | D.3
251 | D.4
252 | D.5
254 | D.6
Consolidated Statements
of Income
Consolidated Statements
of Comprehensive Income
Consolidated Statements
of Financial Position
Consolidated Statements
of Cash Flows
Notes to Consolidated
Financial Statements
309 NOTE 34 - Earnings per share
98
Expenses per employee for continuing
Other provisions
11,103
7,369
18,472
10,432
7,827
18,260
6%
(6)%
1%
Liabilities
Liabilities to banks
208
Advanced payments received
677
138
1,349
51%
(50)%
Trade payables, liabilities
to affiliated companies and
other liabilities
26,189
Deferred income
Total liabilities and equity
commitments
27,075
296
65,400
Pensions and similar
(1)%
from offsetting
40
Total assets
65,400
46
64,868
(13)%
1%
17%
(4)%
48%
(10)%
Liabilities and equity
Equity
18,798
18,295
3%
Special reserve with
an equity portion
759
767
Provisions
education (in €)³
25,771
27,257
290
64,868
2%
1%
210 C.5
Net assets position
C.11.4 Employees
Indicators
Employee turnover rate¹
Female employees in management positions
(percentage of all management positions)²
Year ended September 30,
2014
4.1%
2013
3.0%
11.8%
11.3%
C.11.6 Risks and opportunities
The business development of Siemens AG is fundamentally
subject to the same risks and opportunities as the Siemens
Group. Siemens AG generally participates in the risks of its sub-
sidiaries and equity investments in line with its percentage of
each holding. For additional information see → C.9.3 RISKS and
→ C.9.4 OPPORTUNITIES.
Expenses for continuing education
(in millions of €)³
Financial position
2%
(1)%
205 C.4
193 C.3
The increase in Financial assets was due primarily to the pur-
chase of a 14.26% stake in Atos SE from Siemens Beteiligungen
Inland GmbH amounting to €779 million and a capital increase
of €500 million relating to Siemens Bank GmbH. In addition,
loans increased €297 million and securities in non-current
assets came in €350 million higher. These increases were partly
offset by the sale of our 17% stake in OSRAM Licht AG to
Siemens Beteiligungen Inland GmbH. The sale price amounted
to €715 million and the book value amounted to €395 million.
The decline in Receivables and other assets was due primar-
ily to lower receivables from affiliated companies as a result of
intra-group financing activities.
Cash and cash equivalents and marketable securities
are significantly affected by the liquidity management of
Siemens AG. The liquidity management is based on the finance
strategy of the Siemens Group. Therefore, the change in liquid-
ity of Siemens AG resulted not only from business activities of
Siemens AG.
The increase in Equity was attributable to net income for
the year of €3.786 billion and issuance of treasury stock of
€330 million in conjunction with our share-based compensa-
tion program. These factors were partly offset by dividends paid
in fiscal 2014 (for fiscal 2013) of €2.533 billion (for additional
information see → C.2.5 DIVIDEND AND SHARE BUYBACKS). In addi-
tion, the equity reduction was due to share buybacks during
the year amounting to €1.079 billion. The equity ratios at Sep-
tember 30, 2014 and 2013 were 29% and 28%, respectively.
The increase in Pension and similar commitments included
interest and service costs amounting to €1.007 billion and the
effect from the adjustment of the discount rate amounting to
€277 million. These factors were partly offset by pension pay-
ments amounting to €514 million.
The decrease in Other provisions was due primarily to a de-
crease of €176 million in provisions for personnel expenses and
a decline of €98 million in provisions for operating expenses.
The increase in Trade payables, liabilities to affiliated com-
panies and other liabilities was due primarily to higher liabil-
ities to affiliated companies as a result of intra-group financing
activities.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
244
172 C.1
Business and economic environment
187 C.2
Financial performance system
Results of operations
250
Income from investments accounted for using the equity method, net
Income taxes paid
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
Consolidated Financial Statements
31,514
560
337 | E.
30,954
(314)
373
745
5
(6)
(37)
(3)
(34)
310
310
(1,080)
(1,080)
(3,747)
Additional Information
253
|||D.6 Notes to Consolidated Financial Statements
Year-end exchange
rate €1 quoted into
Currency
U.S. dollar
The exchange rate of the U.S. dollar, Siemens' significant cur-
rency outside the euro zone used in the preparation of the
Consolidated Financial Statements is as follows:
Foreign currency translation - The assets, including good-
will, and liabilities of foreign subsidiaries, where the functional
currency is other than the euro, are translated using the spot
exchange rate at the end of the reporting period, while the
Consolidated Statements of Income are translated using aver-
age exchange rates during the period. Differences arising from
such translations are recognized within equity and reclassified
to net income when the gain or loss on disposal of the foreign
subsidiary is recognized. The Consolidated Statements of Cash
Flow are translated at average exchange rates during the
period, whereas cash and cash equivalents are translated at the
spot exchange rate at the end of the reporting period.
Joint operations - A joint operation is a jointly controlled
arrangement whereby the parties have rights to the assets and
obligations for the liabilities relating to the arrangement.
Siemens as joint operator recognizes in relation to its interest
in the joint operation the assets and liabilities controlled by
Siemens, its share of any jointly held assets or jointly incurred
liabilities and revenues from the sale of its output and any
related expenses including its share in revenues and expenses
incurred jointly, in relation to the joint operation.
measures and recognizes any retaining investment at its fair
value. Any difference between the carrying amount of the as-
sociate or joint venture upon loss of significant influence or
joint control and the fair value of the retaining investment and
proceeds from disposal is recognized in profit or loss.
The following policies equally apply to associates and joint ven-
tures. Where necessary, adjustments are made to bring the
accounting policies in line with those of Siemens. The excess
of Siemens' initial investment in associates over Siemens' own-
ership percentage in the underlying net assets of those compa-
nies is attributed to certain fair value adjustments with the
remaining portion recognized as goodwill. Goodwill relating to
the acquisition of associates is included in the carrying amount
of the investment and is not amortized but is tested for impair-
ment as part of the overall investment in the associate.
Siemens' share of its associate's post-acquisition profits or
losses is recognized in the Consolidated Statements of Income,
and its share of post-acquisition movements in equity that
have not been recognized in the associate's profit or loss is rec-
ognized directly in equity. The cumulative post-acquisition
movements are adjusted against the carrying amount of the
investment in the associate. When Siemens' share of losses in
an associate equals or exceeds its interest in the associate,
Siemens does not recognize further losses, unless it incurs
obligations or makes payments on behalf of the associate. The
interest in an associate is the carrying amount of the invest-
ment in the associate together with any long-term interests
that, in substance, form part of Siemens' net investment in the
associate. Intercompany results arising from transactions be-
tween Siemens and its associates are eliminated to the extent
of Siemens' interest in the associate. Siemens determines at
each reporting date whether there is any objective evidence
that the investment in the associate is impaired. If this is the
case, Siemens calculates the amount of impairment as the
difference between the recoverable amount of the associate
and its carrying value. Upon loss of significant influence over
the associate or joint control over the joint venture, Siemens
through direct or indirect ownership of 20% to 50% of the vot-
ing rights). These are recorded in the Consolidated Financial
Statements using the equity method and are initially recog-
nized at cost. When Siemens holds less than 20% of the voting
power of the investee, other facts and circumstances may
result in the Company exercising significant influence. Joint
arrangements are arrangements over which Siemens and one
or more parties have joint control. Joint control is the contrac-
tually agreed sharing of control that exists only when decisions
about the relevant activities require the unanimous consent of
the parties sharing control. Joint arrangements that are struc-
tured through a separate vehicle are classified as joint ventures
if the parties to the arrangement have rights to its net assets.
Joint ventures are accounted for using the equity method
and are initially recognized at cost. The equity method is
applied from the date when Siemens obtains significant influ-
ence or joint control, and is discontinued from the date when
Siemens ceases to have significant influence or joint control
over an investee.
Combined Management Report
171 C.
Corporate Governance
131 | B.
254
108 | A. To our Shareholders
Associates and joint ventures - Associates are companies
over which Siemens has the ability to exercise significant
influence over operating and financial policies (generally
Business combinations Business combinations are ac-
counted for under the acquisition method. Siemens as the
acquirer and the acquiree may have a relationship that existed
before they contemplated the business combination, referred to
as a pre-existing relationship. If the business combination in
effect settles a pre-existing relationship, Siemens as the ac-
quirer recognizes a gain or loss for the pre-existing relationship.
The cost of an acquisition is measured at the fair value of the
assets given and liabilities incurred or assumed at the date of
exchange. Any contingent consideration to be transferred by
Siemens as the acquirer will be recognized at fair value at the
acquisition date. Subsequent changes to the fair value of the
contingent consideration that is deemed to be an asset or liabil-
ity will be recognized either in profit or loss or as a change to
other comprehensive income. If the contingent consideration
is classified as equity, it will not be remeasured; subsequent
settlement is accounted for within equity. Acquisition-related
costs are expensed in the period incurred. Identifiable assets
acquired and liabilities assumed in a business combination
(including contingent liabilities) are measured initially at their
fair values at the acquisition date, irrespective of the extent of
any non-controlling interest. Uniform accounting policies are
applied. Non-controlling interests may be measured at their fair
value (full goodwill method) or at the proportional fair value
of assets acquired and liabilities assumed (partial goodwill
method). After initial recognition non-controlling interests may
show a deficit balance since both profits and losses are allocated
to the shareholders based on their equity interests. In business
combinations achieved in stages, any previously held equity
interest in the acquiree is remeasured to its acquisition date fair
value. If there is no loss of control, transactions with non-con-
trolling interests are accounted for as equity transactions not
affecting profit and loss. At the date control is lost, any retained
equity interests are remeasured to fair value. In case of a written
put on non-controlling interests the Company distinguishes
whether the prerequisites for the transfer of present ownership
interest are fulfilled at the balance sheet date. Provided that the
Company is not the beneficial owner of the shares underlying
the put option, the exercise of the put option will be assumed at
each balance sheet date and treated as equity transaction be-
tween shareholders with the recognition of a purchase liability
at the respective exercise price. The non-controlling interests
participate in profits and losses during the reporting period.
loses control of the subsidiary. For Consolidated Financial
Statements, all assets, liabilities, income, expenses and cash
flows of Siemens AG with those of its subsidiaries are com-
bined. Intra-group transactions are eliminated in full.
Basis of consolidation The Consolidated Financial State-
ments include the accounts of Siemens AG and its subsidiaries
over which the Company has control. Siemens controls an in-
vestee if it has power over the investee that is, Siemens has
existing rights that give Siemens the current ability to direct
the relevant activities, which are the activities that significantly
affect Siemens' return. In addition, Siemens is exposed to, or
has rights to, variable returns from the involvement with
the investee and Siemens has the ability to use its power over
the investee to affect the amount of Siemens' return. When
Siemens holds less than the majority of voting rights, other
facts and circumstances including contractual arrangements
that give Siemens power over the investee may result in the
Company controlling the investee. Siemens reassesses whether
it controls an investee if, and when, facts and circumstances
indicate that there are changes to the elements evidencing
control. Consolidation begins when the Company obtains
control of the subsidiary and ceases from the date that Siemens
-
The accounting policies set out below have been applied con-
sistently to all periods presented in these Consolidated Finan-
cial Statements.
NOTE 2 Summary of significant
accounting policies
SIGNIFICANT ACCOUNTING POLICIES.
The Consolidated Financial Statements were authorized for
issue by the Managing Board on November 26, 2014. The Con-
solidated Financial Statements are generally prepared on the
historical cost basis, except as stated in → NOTE 2 SUMMARY OF
Siemens is a German based multinational technology company
with core activities in the fields of electrification, automation
and digitalization.
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may
not add up precisely to totals provided.
The accompanying Consolidated Financial Statements present
the operations of Siemens AG with registered offices in Berlin
and Munich, Germany, and its subsidiaries (the Company or
Siemens). They have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315a (1) of the German Commercial Code (HGB).
The financial statements are also in accordance with IFRS as
issued by the International Accounting Standards Board (IASB).
NOTE 1 Basis of presentation
(1,080)
279
currencies
specified below
(13)
(2,654)
(10)
(52)
304
304
(1,349)
(1,349)
(1,349)
300
(18)
(18)
(2,647)
(119)
(2,528)
(62)
(440)
(396)
43
183
(1,017)
4,409
126
4,284
31,424
569
30,855
Total equity
Non-controlling
interests
(44)
(2,433)
(2,433)
(556)
(121)
(2,533)
857
31
825
(314)
(56)
905
5,507
134
5,373
28,625
514
28,111
(2,946)
(1)
428
(160)
28,625
514
28,111
(2,946)
(1)
428
(160)
(564)
(8)
(13)
Annual average
rate €1 quoted into
currencies
specified below
Year ended
September 30,
first-out method. Production costs comprise direct material
and labor and applicable manufacturing overheads, including
depreciation charges. Net realizable value is the estimated sell-
ing price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
Inventories - Inventories are valued at the lower of acquisi-
tion or production costs and net realizable value, costs being
generally determined on the basis of an average or first-in,
Income taxes - The Company applies IAS 12, Income taxes.
Current taxes are calculated based on the profit (loss) of the
fiscal year and in accordance with local tax rules of the tax
jurisdiction respectively. Expected and executed additional tax
payments respectively tax refunds for prior years are also taken
into account. Under the liability method, deferred tax assets
and liabilities are recognized for future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the income
statement, unless related to items directly recognized in equity,
in the period the new laws are enacted or substantively
enacted. Deferred tax assets are recognized to the extent that it
is probable that future taxable income will be available against
which the deductible temporary differences, unused tax losses
and unused tax credits can be utilized.
Siemens classifies a non-current asset or a disposal group as
held for disposal if its carrying amount will be recovered princi-
pally through a sale transaction or through distribution to
shareholders rather than through continuing use. For this to be
the case, the asset or disposal group must be available for im-
mediate sale or distribution in its present condition subject
only to terms that are usual and customary for sales or distribu-
tions of such assets or disposal groups and its sale or distribu-
tion must be highly probable. The disclosures in the Notes to
Consolidated Financial Statements outside → NOTE 4 ACQUISI-
TIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer to the
Consolidated Statements of Financial Position generally relate
to assets that are not held for disposal. Siemens reports
non-current assets or disposal groups held for disposal sepa-
rately in NOTE 4 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED
OPERATIONS. Non-current assets classified as held for disposal
and disposal groups are measured at the lower of their carrying
amount and fair value less costs to sell, unless these items pre-
sented in the disposal group are not part of the measurement
scope as defined in IFRS 5, Non-current Assets held for Sale and
Discontinued Operations.
Siemens reports discontinued operations separately in → NOTE 4
ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS. In order
to present the financial effects of a discontinued operation, rev-
enue and expenses arising from intragroup transactions are
eliminated except for those revenue and expenses that are con-
sidered to continue after the disposal of the discontinued oper-
ation. In any case, no profit or loss is recognized for intragroup
transactions.
258
108 | A. To our Shareholders
Combined Management Report
171 C.
Corporate Governance
131 | B.
Discontinued operations and non-current assets held for
disposal - Discontinued operations are reported when a com-
ponent of an entity comprising operations and cash flows that
can be clearly distinguished, operationally and for financial
reporting purposes, from the rest of the entity is classified as
held for disposal or has been disposed of, if the component
either (1) represents a separate major line of business or geo-
graphical area of operations and (2) is part of a single co-
ordinated plan to dispose of a separate major line of business or
geographical area of operations or (3) is a subsidiary acquired
exclusively with a view to resale. In the Consolidated State-
ments of Income, income (loss) from discontinued operations
is reported separately from income and expenses from continu-
ing operations; prior periods are presented on a comparable
basis. In the Consolidated Statements of Cash Flow, the cash
flows from discontinued operations are presented separately
from cash flows of continuing operations; prior periods are pre-
sented on a comparable basis. The disclosures in the Notes
to the Consolidated Financial Statements outside → NOTE 4
ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer
to the Consolidated Statements of Income and the Consoli-
dated Statements of Cash Flow relate to continuing operations.
Defined benefit plans - Siemens measures the entitlements
of the defined benefit plans by applying the projected unit
credit method. The approach reflects an actuarially calculated
net present value of the future benefit entitlement for services
already rendered. In determining the net present value of the
future benefit entitlement for service already rendered (Defined
Benefit Obligation (DBO)), Siemens considers future compensa-
tion and benefit increases, because the employee's final benefit
entitlement at regular retirement age depends on future com-
pensation or benefit increases. The assumptions used for the
calculation of the DBO as of the period-end of the preceding
fiscal year are used to determine the calculation of service cost
and interest income and expense of the following year. The net
interest income or expense for the fiscal year will be based on
the discount rate for the respective year multiplied by the net
liability at the preceding fiscal year's period-end date. The fair
value of plan assets and DBO and thus the interest income on
plan assets and the interest expenses on DBO are adjusted for
significant events after the preceding fiscal year end, such as a
supplemental funding, plan changes or business combinations
and disposals. The DBO includes the present value from the
effects of taxes payable by the plan on contributions or bene-
fits relating to services already rendered.
The Company's property, plant and equipment and other intan-
gible assets to be disposed of are recorded at the lower of
carrying amount or fair value less costs to sell and depreciation
is ceased.
20 to 50 years
5 to 10 years
5 to 10 years
generally 5 years
generally 3 to 5 years
Furniture & office equipment
Equipment leased to others
Technical machinery & equipment
Factory and office buildings
Other buildings
If the costs of certain components of an item of property, plant
and equipment are significant in relation to the total cost of the
item, they are accounted for and depreciated separately. Depre-
ciation expense is recognized using the straight-line method.
Residual values and useful lives are reviewed annually and, if
expectations differ from previous estimates, adjusted accord-
ingly. Costs of construction of qualifying assets, i.e. assets that
require a substantial period of time to be ready for its intended
use, include capitalized interest, which is amortized over the
estimated useful life of the related asset. The following useful
lives are assumed:
Property, plant and equipment - Property, plant and equip-
ment, including investment property, is valued at cost less
accumulated depreciation and impairment losses.
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for
patents, licenses and other similar rights generally range from
three to five years, except for intangible assets with finite use-
ful lives acquired in business combinations. Intangible assets
acquired in business combinations primarily consist of cus-
tomer relationships and technology. Useful lives in specific
acquisitions ranged from eleven to twenty years for customer
relationships and from three to 18 years for technology. Intan-
gible assets which are determined to have indefinite useful
lives as well as intangible assets not yet available for use are
not amortized, but instead tested for impairment at least
annually.
allocated to this cash-generating unit or this group of cash-
generating units is recognized. The recoverable amount is the
higher of the cash-generating unit's or the group of cash-
generating units' fair value less costs to sell and its value in
use. If either of these amounts exceeds the carrying amount,
it is not always necessary to determine both amounts. These
values are generally determined based on discounted cash flow
calculations. Impairment losses on goodwill are not reversed
in future periods if the recoverable amount exceeds the carry-
ing amount of the cash-generating unit or the group of cash-
generating units to which the goodwill is allocated.
257
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment when-
ever events or changes in circumstances indicate that the car-
rying amount of an asset may not be recoverable. In addition,
intangible assets with indefinite useful lives as well as intangi-
ble assets not yet available for use are subject to an annual im-
pairment test. Recoverability of assets is measured by the com-
parison of the carrying amount of the asset to the recoverable
amount, which is the higher of the asset's value in use and its
fair value less costs to sell. If assets do not generate cash in-
flows that are largely independent of those from other assets or
groups of assets, the impairment test is not performed at an
individual asset level, instead, it is performed at the level of the
cash-generating unit the asset belongs to. If such assets are
considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the
assets or cash-generating unit exceeds their recoverable
amount. If the fair value cannot be determined, the assets'
value in use is applied as their recoverable amount. The assets'
value in use is measured by discounting their estimated future
cash flows. If there is an indication that the reasons which
caused the impairment no longer exist, Siemens assesses the
need to reverse all or a portion of the impairment.
Service cost and past service cost for post-employment benefits
as well as other administration costs which are unrelated to the
management of plan assets are allocated among functional
costs (line items Cost of sales, Research and development
expenses, Selling and general administrative expenses) follow-
ing the functional area of the corresponding profit and cost
centers. Past service cost and settlement gains (losses) are rec-
ognized immediately in profit or loss when the plan amend-
ment, curtailment or settlement occurs. Administration Costs
which are related to the management of plan assets and taxes
directly linked to the return on plan assets and payable by the
plan itself are included in the return on plan assets and are rec-
ognized in Other comprehensive income, net of income taxes.
For unfunded plans, Siemens recognizes a post-employment
benefit liability equal to the DBO. For funded plans, Siemens
offsets the fair value of the plan assets with the benefit obliga-
tions. Siemens recognizes the net amount, after adjustments
for effects relating to any asset ceiling, in line item Post-employ-
ment benefits or in line item Other current assets.
Remeasurements comprise actuarial gains and losses, resulting
for example from an adjustment of the discount rate, as well as
247
Note
131 | B. Corporate Governance
Combined Management Report
171 C.
108 | A. To our Shareholders
When available-for-sale financial assets incur a decline in fair
value below acquisition cost and there is objective evidence
Available-for-sale financial assets - Investments in equity
instruments, debt instruments and fund shares are all classi-
fied as available-for-sale financial assets and are measured at
fair value, if reliably measurable. Unrealized gains and losses,
net of applicable deferred income tax expenses, are recognized
in line item Other comprehensive income, net of income taxes.
Provided that fair value cannot be reliably determined, Siemens
measures available-for-sale financial instruments at cost. This
applies to equity instruments that do not have a quoted market
price in an active market, and decisive parameters cannot be
reliably estimated to be used in valuation models for the deter-
mination of fair value.
Cash and cash equivalents - The Company considers all
highly liquid investments with less than three months matu-
rity from the date of acquisition to be cash equivalents. Cash
and cash equivalents are measured at cost.
-
Initially, financial instruments are recognized at their fair value.
Transaction costs directly attributable to the acquisition or
issue of financial instruments are only included in determining
the carrying amount, if the financial instruments are not
measured at fair value through profit or loss. Receivables from
finance leases are recognized at an amount equal to the net
investment in the lease. Subsequently, financial assets and
liabilities are measured according to the category cash and
cash equivalents, available-for-sale financial assets, loans and
receivables, financial liabilities measured at amortized cost or
financial assets and liabilities classified as held for trading - to
which they are assigned.
Financial instruments are recognized on the Consolidated State-
ments of Financial Position when Siemens becomes a party to
the contractual obligations of the instrument. Regular way
purchases or sales of financial assets, i.e. purchases or sales
under a contract whose terms require delivery of the asset
within the time frame established generally by regulation or
convention in the market place concerned, are accounted for at
the trade date.
mainly comprise notes and bonds, loans from banks, trade pay-
ables, obligations under finance leases and derivative financial
instruments with a negative fair value. Siemens does not make
use of the option to designate financial assets or financial liabil-
ities at fair value through profit or loss at inception (Fair Value
Option). Based on their nature, financial instruments are classi-
fied as financial assets and financial liabilities measured at cost
or amortized cost and financial assets and financial liabilities
measured at fair value and as receivables from finance leases.
Financial instruments - A financial instrument is any con-
tract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity. Finan-
cial assets of the Company mainly include cash and cash equiv-
alents, available-for-sale financial assets, trade receivables,
loans receivables, receivables from finance leases and derivative
financial instruments with a positive fair value. Cash and cash
equivalents are not included within the category available-for-
sale financial assets as these financial instruments are not sub-
ject to fluctuations in value. Siemens does not make use of the
category held to maturity. Financial liabilities of the Company
Provisions - A provision is recognized in the Statement of
Financial Position when the Company has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation. If the effect is material, provisions are
recognized at present value by discounting the expected future
cash flows at a pretax rate that reflects current market assess-
ments of the time value of money. When a contract becomes
onerous, the present obligation under the contract is recog-
nized as a provision and measured at the lower of the expected
cost of fulfilling the contract and the expected cost of terminat-
ing the contract as far as they exceed the expected economic
benefits of the contract. Additions to provisions and reversals
are generally recognized in the Consolidated Statements of
Income. The present value of the recognized obligations associ-
ated with the retirement of property, plant and equipment
(asset retirement obligations) that result from the acquisition,
construction, development or normal use of an asset is added to
the carrying amount of the related asset. The additional carry-
ing amount is depreciated over the useful life of the related
asset. Additions to and reductions from the present value of
asset retirement obligations that result from changes in esti-
mates are generally recognized by adjusting the carrying
amount of the related asset and provision. If the asset retirement
obligation is settled for other than the carrying amount of the
liability, the Company recognizes a gain or loss on settlement.
Termination benefits - Termination benefits are provided as
a result of an entity's offer made in order to encourage volun-
tary redundancy before the normal retirement date or from an
entity's decision to terminate the employment. Termination
benefits in accordance with IAS 19, Employee Benefits, are rec-
ognized as a liability and an expense when the entity can no
longer withdraw the offer of those benefits.
the difference between the return on plan assets and the
amounts included in net interest on the net defined benefits
liability (asset) and are recognized in Other comprehensive
income, net of income taxes.
260
259
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
252 D.5
254 D.6
330 D.7
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
During project execution, variation orders by the customer for a
change in the scope of the work to be performed under the con-
tract may be received leading to an increase or a decrease in
contract revenue. Examples of such variations are changes
in the specifications or design of the asset and changes in the
duration of the contract. As the scope of work to be performed
changes also in case of contract terminations, such termina-
tions are considered to be a subset of variations. Therefore
the requirements of IAS 11 relating to variations are applied to
contract terminations, irrespective of whether the contract is
terminated by the customer, Siemens or both. In accordance
with the requirements of IAS 11 relating to changes in estimates,
Sales from construction contracts: A construction contract is a
contract specifically negotiated for the construction of an asset
or a combination of assets that are closely interrelated or inter-
dependent in terms of their design, technology and function or
their ultimate purpose or use. When the outcome of a construc-
tion contract can be estimated reliably, revenues from con-
struction-type projects are recognized under the percent-
age-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.
An expected loss on the construction contract is recognized as
an expense immediately. When the outcome of a construction
contract cannot be estimated reliably (1) revenue is recognized
only to the extent contract costs incurred are probable of being
recoverable, and (2) contract costs are recognized as an
expense in the period in which they are incurred.
Sale of goods: Revenue from the sale of goods is recognized
when the significant risks and rewards of ownership of the
goods have passed to the buyer, usually on delivery of the goods.
Revenue recognition - Under the condition that persuasive
evidence of an arrangement exists revenue is recognized to the
extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured, regard-
less of when the payment is being made. In cases where the
inflow of economic benefits is not probable due to customer
related credit risks the revenue recognized is subject to the
amount of payments irrevocably received. Revenue is mea-
sured at the fair value of the consideration received or receiv-
able net of discounts and rebates and excluding taxes or duty.
The Company assesses its revenue arrangements against spe-
cific criteria in order to determine if it is acting as principal or
agent. The following specific recognition criteria must also be
met before revenue is recognized:
from these foreign currency revaluations are recognized in net
income. Those foreign currency-denominated transactions
which are classified as non-monetary are remeasured using the
historical spot exchange rate.
256
255
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
Foreign currency transaction Transactions that are
denominated in a currency other than the functional currency
of an entity, are recorded at that functional currency applying
the spot exchange rate at the date when the underlying trans-
actions are initially recognized. At the end of the reporting
period, foreign currency-denominated monetary assets and lia-
bilities are revalued to functional currency applying the spot
exchange rate prevailing at that date. Gains and losses arising
-
1.313
2013
2014
1.357
2013
1.351
2014
1.258
September 30,
the estimates of the total contract revenue and the total con-
tract costs are adjusted reflecting the reduced scope of work to
be performed, typically leading to a reversal of revenue recog-
nized. This methodology is also applied to contracts for which it
is management's best estimate that a termination is the most
likely scenario, but which have not yet been terminated.
of Siemens AG
Rendering of services: Revenues from service transactions are
recognized as services are performed. For long-term service
contracts, revenues are recognized on a straight-line basis over
the term of the contract or, if the performance pattern is other
than straight-line, as the services are provided, i.e. under the
percentage-of-completion method as described above.
Interest income: Interest is recognized using the effective inter-
est method.
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
For the purpose of impairment testing, goodwill acquired in
a business combination is allocated to the cash-generating
unit or the group of cash-generating units that is expected to
benefit from the synergies of the business combination. If the
carrying amount of the cash-generating unit or the group of
cash-generating units, to which the goodwill is allocated, ex-
ceeds its recoverable amount, an impairment loss on goodwill
purposes.
The goodwill impairment test is performed at the level of a
cash-generating unit or a group of cash-generating units repre-
sented by a Division or equivalent, which is the lowest level
at which goodwill is monitored for internal management
Goodwill - Goodwill is not amortized, but instead tested for
impairment annually, as well as whenever there are events or
changes in circumstances (triggering events) which suggest
that the carrying amount may not be recoverable. Goodwill is
carried at cost less accumulated impairment losses.
Earnings per share - Basic earnings per share are computed
by dividing income from continuing operations, income from
discontinued operations and net income, all attributable to
ordinary shareholders of Siemens AG by the weighted average
number of shares outstanding during the year. Diluted earn-
ings per share are calculated by assuming conversion or exer-
cise of all potentially dilutive securities and share-based pay-
ment plans.
Government grants for research and development activities are
offset against research and development costs. They are recog-
nized as income over the periods in which the research and
development costs incur that are to be compensated. Govern-
ment grants for future research and development costs are
recorded as deferred income.
Costs for development activities, whereby research findings are
applied to a plan or design for the production of new or sub-
stantially improved products and processes, are capitalized if
(1) development costs can be measured reliably, the product
or process is (2) technically and (3) commercially feasible,
(4) future economic benefits are probable and (5) Siemens
intends, and (6) has sufficient resources, to complete develop-
ment and to use or sell the asset. The costs capitalized include
the cost of materials, direct labour and other directly attribut-
able expenditure that serves to prepare the asset for use. Such
capitalized costs are included in line item Other intangible
assets as software and other internally generated intangible
assets. Other development costs are expensed as incurred.
Capitalized development costs are stated at cost less accumu-
lated amortization and impairment losses with an amortization
period of generally three to ten years.
Research and development costs - Costs of research activi-
ties undertaken with the prospect of gaining new scientific or
technical knowledge and understanding are expensed as
incurred.
Product-related expenses and losses from onerous con-
tracts - Provisions for estimated costs related to product war-
ranties are recorded in line item Cost of sales at the time the
related sale is recognized, and are established on an individual
basis, except for the standard product business. The estimates
reflect historic experience of warranty costs, as well as infor-
mation regarding product failure experienced during construc-
tion, installation or testing of products. In the case of new
products, expert opinions and industry data are also taken
into consideration in estimating product warranty provisions.
Expected losses from onerous contracts are recognized in the
period when the current estimate of total contract costs
exceeds contract revenue.
Government grants
Government grants are recognized
when there is reasonable assurance that the conditions at-
tached to the grants are complied with and the grants will be
received. Grants awarded for the purchase or the production
of fixed assets (grants related to assets) are generally offset
against the acquisition or production costs of the respective
assets and reduce future depreciations accordingly. Grants
awarded for other than non-current assets (grants related to
income) are reported in the Consolidated Statements of Income
under the same functional area as the corresponding expenses.
They are recognized as income over the periods necessary
to match them on a systematic basis to the costs that are
intended to be compensated. Government grants for future
expenses are recorded as deferred income.
-
→ NOTE 33 PERSONNEL COSTS.
Functional costs - In general, operating expenses by types
are assigned to the functions following the functional area
of the corresponding profit and cost centers. Expenses relating
to cross-functional initiatives or projects are assigned to the
respective functional costs based on an appropriate allocation
principle. Regarding amortization see → NOTE 16 OTHER INTANGIBLE
ASSETS, regarding depreciation see → NOTE 17 PROPERTY, PLANT
AND EQUIPMENT and regarding employee benefit expenses see
Dividends: Dividends are recognized when the right to receive
payment is established.
manufacturing leases is recognized based on the policies for
outright sales. Profit from sale and leaseback transactions is rec-
ognized immediately if significant risks and rewards of owner-
ship have passed to the buyer, the leaseback results in an
operating lease and the transaction is established at fair value.
Combined Management Report
171 C.
Corporate Governance
131 | B.
108 | A. To our Shareholders
Income from lease arrangements: Operating lease income for
equipment rentals is recognized on a straight-line basis over the
lease term. An arrangement that is not in the legal form of a
lease is accounted for as a lease if it is dependent on the use of
a specific asset or assets and the arrangement conveys a right
to use the asset. Receivables from finance leases, in which
Siemens as lessor transfers substantially all the risks and re-
wards incidental to ownership to the customer are recognized
at an amount equal to the net investment in the lease. Finance
income is subsequently recognized based on a pattern reflecting
a constant periodic rate of return on the net investment using
the effective interest method. A selling profit component on
Royalties: Royalties are recognized on an accrual basis in accor-
dance with the substance of the relevant agreement.
Sales from multiple element arrangements: Sales of goods
and services as well as software arrangements sometimes
involve the provision of multiple elements. In these cases, the
Company determines whether the contract or arrangement
contains more than one unit of accounting. If certain criteria
are met, foremost if the delivered element(s) has (have) value
to the customer on a stand-alone basis, the arrangement is sep-
arated and the appropriate revenue recognition convention is
then applied to each separate unit of accounting. Generally, the
total arrangement consideration is allocated to the separate
units of accounting based on their relative fair values. How-
ever, if in rare cases fair value evidence is available for the un-
delivered but not for one or more of the delivered elements, the
amount allocated to the delivered element(s) equals the total
arrangement consideration less the aggregate fair value of
the undelivered element(s) (residual method). If the criteria for
the separation of units of accounting are not met, revenue is
deferred until such criteria are met or until the period in which
the last undelivered element is delivered.
able to shareholders
ISO Code
USD
D.
76
317
Disposal of current available-for-sale financial assets
(26)
112
Disposal of businesses, net of cash disposed
2,462
518
Disposal of investments, intangibles and property, plant and equipment
(2,175)
(2,501)
(157)
Cash flows from investing activities – continuing operations
(613)
(346)
(335)
Change in receivables from financing activities
Purchase of investments
(2,786)
(31)
Acquisitions of businesses, net of cash acquired
(1,808)
(1,831)
Additions to intangible assets and property, plant and equipment
Cash flows from investing activities
7,340
Purchase of current available-for-sale financial assets
(4,364)
(4,759)
Cash flows from investing activities – discontinued operations
(2,528)
(2,533)
25
Dividends paid to shareholders of Siemens AG
(479)
(617)
Interest paid
8
801
Change in short-term debt and other financing activities
(2,927)
(1,452)
Repayment of long-term debt (including current maturities of long-term debt)
(15)
3,772
(20)
527
21
Issuance of long-term debt
Other transactions with owners
(1,394)
(1,066)
25
Purchase of treasury shares
Cash flows from financing activities
(5,076)
(317)
339
(4,026)
Cash flows from investing activities - continuing and discontinued operations
7,100
154
(131)
Cash flows from operating activities - discontinued operations
2,804
2,411
(231)
(108)
4,409
5,507
2013
2014
| D.4 Consolidated Statements of Cash Flows
For the fiscal years ended September 30, 2014 and 2013
(in millions of €)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
(Income) from discontinued operations, net of income taxes
Amortization, depreciation and impairments
Income tax expenses
Interest (income) expenses, net
(Gains) losses on disposals of assets related to investing activities, net
Other (income) losses from investments
Other non-cash (income) expenses
Change in assets and liabilities
Inventories
Trade and other receivables
Trade payables
Other assets and liabilities
Total equity attribut-
Additions to assets leased to others in operating leases
2,028
Dividends attributable to non-controlling interests
1,634
(164)
7,186
7,230
Cash flows from operating activities - continuing operations
837
977
Interest received
356
333
Dividends received
(2,164)
(1,828)
(377)
(371)
818
(1,203)
(208)
205
(326)
200
(256)
336
671
92
(326)
(526)
(292)
(527)
(295)
Cash flows from financing activities - continuing operations
Cash flows from operating activities – continuing and discontinued operations
(152)
5,484
22,663
5,484
2,643
(3)
(553)
(2,270)
(52)
(163)
-
5
-
(40)
395
(2,528)
4,284
22,877
21
6,173
2,643
Retained earnings
Capital reserve
Issued capital
Balance as of September 30, 2014
Other changes in equity
Transactions with non-controlling interests
Re-issuance of treasury shares
Purchase of treasury shares
22,663
Share-based payment
5,373
(2,533)
247
(1,897)
(125)
(4,485)
(44)
245
857
Treasury
shares at cost
instruments
financial assets
differences
Derivative financial
Available-for-sale
Currency translation
Combined Management Report
252
108 | A. To our Shareholders
171 | C
Corporate Governance
131 | B.
25,729
5,525
2,643
(6)
(34)
31
(24)
11
290
Dividends
2,643
Less: Cash and cash equivalents of assets classified as held for disposal
D.
247
44
9,190
21
9,234
8,034
10,950
9,234
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
and discontinued operations at end of period
Cash and cash equivalents at end of period
Cash and cash equivalents at beginning of period
(1,717)
(1,199)
Change in cash and cash equivalents
(108)
214
Effect of changes in exchange rates on cash and cash equivalents
(476)
Effect of deconsolidation of OSRAM on cash and cash equivalents
(3,396)
319
(2)
(4,487)
Cash flows from financing activities – continuing and discontinued operations
Other comprehensive income, net of income taxes
Cash flows from financing activities – discontinued operations
(3,715)
Consolidated Financial Statements
248 D.1
8,013
Dividends
Balance as of October 1, 2013
Balance as of September 30, 2013
Other changes in equity
Spin-off related changes in equity
Transactions with non-controlling interests
Re-issuance of treasury shares
Purchase of treasury shares
Share-based payment
Consolidated Statements of Income
Other comprehensive income, net of income taxes
Net income
Balance as of October 1, 2012
For the fiscal years ended September 30, 2014 and 2013
(in millions of €)
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
Net income
251
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
252 D.5
254 D.6
330 D.7
D.5 Consolidated Statements of Changes in Equity
251 D.4
249 D.2
250 D.3
Year ended September 30,
Expected income tax expenses
2014
(in millions of €)
2,730
312
6,910
7,133
280
Deferred tax liabilities
Total deferred tax assets, net
2,302
2,782
2013
1,802
2013
Non-deductible losses and expenses
Tax-free income
282
(236)
Taxes for prior years
78
377
(343)
56
Change in realizability of deferred tax assets
and tax credits
11
21
Other
Change in tax rates
(1)
Increase (decrease) in income taxes resulting
from:
670
547
Liabilities
2014
Foreign tax rate differential
433
Inventories and receivables
September 30,
1,445
1,240
Post-employment benefits
3,112
2,954
Liabilities
3,991
3,699
787
Other
282
Tax loss and credit carryforward
Deferred tax assets
706
918
9,915
9,640
Liabilities:
Non-current assets
2,185
2,452
Inventories and receivables
3,882
3,476
229
(244)
Interest income
for using the equity method
45
Income (expenses) from available-for-sale
financial assets, net
(784)
(764)
Interest expenses
(490)
(469)
post-employment benefits
Interest expenses other than from
(294)
(295)
post-employment benefits
Interest expenses from
(80)
947
944
1,058
Interest income other than from
post-employment benefits
3
1
2013
2014
Year ended September 30,
Interest income from post-employment
benefits
(in millions of €)
Non-current assets
NOTE 8 Interest income, interest expenses
and other financial income (expenses),
net
1,058
Tax effect of investments accounted
Miscellaneous financial income (expenses), net
Other financial income (expenses), net
(74)
(163)
(74)
Other, net
(1)
Actual income tax expenses
2,028
1,634
(31)
(175)
1
The tax free income in fiscal 2014 is impacted by several Port-
folio activities, whereas 2013 is amongst others attributable to
the NSN disposal.
In assessing the realizability of deferred tax assets, manage-
ment considers the extent to which it is probable that the
deferred tax asset will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future
taxable profits during the periods in which those temporary
differences and tax loss carryforwards become deductible.
Management considers the expected reversal of deferred tax
liabilities and projected future taxable income in making this
assessment. Based upon the level of historical taxable income
and projections for future taxable income over the periods in
which the deferred tax assets are deductible, management
believes it is probable the Company will realize the benefits
of these deductible differences. As of September 30, 2014,
the Company has certain tax losses subject to significant lim-
itations. For those losses deferred tax assets are not recog-
nized, as it is not probable that gains will be generated to offset
those losses.
As of September 30, 2014 and 2013, the Company had
€2,425 million and €3,341 million, respectively of gross tax loss
carryforwards. The Company assumes that future operations
will generate sufficient taxable income to realize the deferred
tax assets.
108 | A. To our Shareholders
(221)
131 | B.
171 | C
Combined Management Report
270
(42)
4
(72)
(33)
30
2013
2014
Year ended September 30,
(154)
(177)
Corporate Governance
Assets:
Other operating expenses in fiscal 2014 and 2013 include losses
on sales of property, plant and equipment and intangible assets,
impairment losses on goodwill and effects from insurance, legal
and regulatory matters.
Deferred income tax assets and liabilities on a gross basis are
summarized as follows:
Combined Management Report
108 | A. To our Shareholders
268
Item Interest income (expense) other than from post-employ-
ment benefits includes the following with respect to financial
assets (financial liabilities) not at fair value through profit or
loss:
NOTE 9 Income taxes
Income from continuing operations before income tax is attrib-
utable to the following geographic regions:
Year ended September 30,
(in millions of €)
2014
2013
Total interest income on financial assets
Total interest expenses on financial liabilites
1,050
931
171 | C
(in millions of €)
Germany
(766)
Foreign
The components of item Income (expense) from available-for-
sale financial assets, net were as follows:
(in millions of €)
Dividends received
Gains on sales, net
Impairment
Other
Income (expenses) from available-for-sale
financial assets, net
Year ended September 30,
2014
2013
2,295
(643)
1,304
Corporate Governance
Item Interest income (expense) of operations, net includes
interest income and expense primarily related to receivables
from customers and payables to suppliers, interest on advances
from customers and advanced financing of customer contracts.
Item Other interest income (expense), net includes all other
interest amounts primarily consisting of interest relating to
corporate debt, and related hedging activities, as well as inter-
est income on corporate assets.
(30)
|
Total amounts of item Interest income and (expense), other
than from post-employment benefits, were as follows:
NOTE 6 Other operating income
In fiscal 2014 and 2013, Other operating income includes gains
on sales of property, plant and equipment and intangible assets
of €355 million and €227 million, respectively, including gains
from real estate sold and leased back; gains from the sale of
businesses of €143 million and €10 million, respectively; as well
as income in connection with legal and regulatory matters.
NOTE 7 Other operating expenses
Year ended September 30,
(in millions of €)
2014
2013
Interest income other than from
post-employment benefits
1,058
131 | B.
944
post-employment benefits
(469)
(490)
Interest income (expenses), net, other than
from post-employment benefits
589
454
Thereof: Interest income (expenses)
of operations, net
(17)
(2)
Thereof: Other interest income (expenses),
net
606
455
Interest expenses other than from
(in millions of €)
5,132
7,427
(376)
306
(120)
2,028
1,634
Item Miscellaneous financial income (expense), net, in fiscal
2014 and 2013, includes gains (losses) of €(293) million and
€95 million, respectively, from the accretion of provisions
and the increase (decrease) in the discount rate, as well as
expenses as a result of allowances and write offs of finance
receivables, net of reversals of €40 million and €80 million,
respectively. Furthermore, gains (losses) related to derivative
financial instruments are included.
Changes in the fair value of warrants issued together with
US$3 billion bonds in fiscal 2012 resulted in a pretax loss of
€42 million and a pretax gain of €11 million, respectively, in fis-
cal 2014 and 2013. In fiscal 2014, the fair value increased mainly
due to an increase in the underlying Siemens and OSRAM share
prices as well as increased implied volatilities. The gain (loss)
is disclosed in Other financial income (expenses), net and in
Corporate items for segment reporting purposes.
Income tax expenses
The current income tax expenses in fiscal 2014 and 2013
include adjustments recognized for current tax of prior years
in the amount of €106 million and €87 million, respectively.
The current tax expense in 2013 is positively impacted by the
closing of a mutual agreement procedure regarding transfer
prices between Germany and the U.S. leading to an increase
of German current taxes and an overcompensating decrease of
foreign income taxes.
The deferred tax expense (benefit) in fiscal 2014 and 2013
includes tax effects of the origination and reversal of tempo-
rary differences of €119 million and €(302) million, respectively.
The German deferred tax expense in fiscal 2014 and 2013 is
mainly related to the utilization of tax loss carryforwards,
partly compensated by tax effects in connection with positive
appeal proceedings in 2014.
247
D.
Consolidated Financial Statements
99
248 D.1
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
269
In Germany, the calculation of current tax is based on a corpo-
rate tax rate of 15% and a solidarity surcharge thereon of 5.5%,
for all distributed and retained earnings. In addition to corpo-
rate taxation, trade tax is levied on profits earned in Germany.
As the German trade tax is a non deductible expense, the aver-
age trade tax rate amounts to 15% and the combined total tax
rate results in 31%. Deferred tax assets and liabilities are mea-
sured at tax rates that are expected to apply to the period when
the asset is realized or the liability is settled.
For foreign subsidiaries, current taxes are calculated based on
the local tax laws and applicable tax rates in the individual for-
eign countries. Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply to the period when
the asset is realized or the liability is settled.
Income tax expense (current and deferred) differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
Consolidated Statements of Income
4,509
256
Germany
Foreign
5,813
Income tax expense (benefit) consists of the following:
Year ended September 30,
2014
2013
(in millions of €)
Year ended September 30,
2014
2013
16
18
Current tax:
40
207
17
469
542
(11)
(117)
Foreign income taxes
1,253
1,212
2
1,722
1,754
Deferred tax:
45
(80)
German corporation and trade taxes
Total comprehensive income
net of income taxes
Other comprehensive income,
18
123
59
1,597
473
337 | E.
Additional Information
265
266
ba) Dispositions not qualifying for
110
discontinued operations
In September 2014, Robert Bosch GmbH and Siemens agreed
that Robert Bosch GmbH will acquire Siemens' 50% stake in
the joint venture BSH. The transaction volume amounts to
€3.25 billion. The agreement includes the permission to pro-
duce and market household appliances under the Siemens
brand over the long term as well as a distribution of €250 mil-
lion from BSH prior to the completion of the transaction. The
transaction is subject to approval by the regulatory authorities.
Closing is expected in the first half of calendar year 2015.
Siemens' stake in BSH is presented as held for disposal since
the fourth quarter of fiscal 2014. No impairment was identified
either upon reclassification or at year end.
Microbiology business
In July 2014, Siemens signed an agreement to sell its Micro-
biology business of the Healthcare Sector to Beckman Coulter
Inc., a subsidiary of Danaher Corporation. The activities of the
Microbiology business include systems for the identification
and antibiotic susceptibility testing of microorganisms. The
regulatory authorities approved the transaction. Closing is ex-
pected in the first half of fiscal 2015. The microbiology business
(the disposal group) is presented as held for disposal since the
third quarter of fiscal 2014. No impairment was identified
either upon reclassification or at year end.
bb) Dispositions not qualifying for discontinued
operations: closed transactions
TurboCare business
In May 2014, the TurboCare Business Unit of the Energy Sec-
tor - which was previously presented as held for disposal - was
contributed into a joint venture with John Wood Group plc.
The joint venture is a service provider of rotating equipment
services to the industry, with a focus on power and oil & gas
markets. Siemens' interest in the new company is accounted
for using the equity method.
bc) Discontinued operations
Customer Solutions Health Services
In August 2014, Siemens announced its plans to sell its hospital
information system business (Customer Solutions Health Ser-
vices Business Unit), formerly included in the Healthcare Sec-
tor, to the US-based company Cerner Corp. for a consideration
of US$1.3 billion (€1 billion as of September 30, 2014) in cash.
The regulatory authorities approved the transaction. Closing
is expected in the second quarter of fiscal 2015. The hospital
information system business (the disposal group) is presented
as held for disposal and discontinued operations since the
fourth quarter of fiscal 2014. No impairment was identified
either upon reclassification or at year end.
Metals Technologies
In May 2014, Siemens signed an agreement to contribute
nearly all of its metallurgical solutions business (Business
Unit Metals Technologies), formerly included in the Industry
Sector, into a joint venture with Mitsubishi-Hitachi Metals
Machinery Inc., a company majority owned by Mitsubishi
Heavy Industries, Ltd. As a result of this transaction, Siemens
will lose control over its metallurgical solutions business
upon closing. Siemens will hold an equity interest of 49%
in the new company which will be accounted for using the
equity method. The transaction is subject to approval by
the regulatory authorities. Closing is expected in the second
quarter of fiscal 2015. The respective metallurgical solutions
business (the disposal group) is presented as held for disposal
and discontinued operations since the third quarter of fiscal
2014. No impairment was identified either upon reclassifica-
tion or at year end.
BSH Bosch und Siemens Hausgeräte GmbH (BSH)
bd) Discontinued operations: closed transactions
The results presented in Income (loss) from discontinued oper-
ations in the Company's Consolidated Statements of Income
also include the results of businesses that have been disposed
of prior to the end of fiscal 2014.
183
60
Assets classified as held for disposal
3,935
1,393
Trade payables
Current provisions
Other current liabilities
Post employment benefits
Other non-current liabilities
Liabilities associated with assets classified as held for disposal
247
856
D. Consolidated Financial Statements
249 D.2
250 D.3
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
381
153
126
248 D.1
Water Technologies
The Water Technologies Business Unit, formerly included in the
Industry Sector, is presented as held for disposal and discontin-
ued operations since the fourth quarter of fiscal 2013. In Octo-
ber 2013, Siemens signed an agreement to sell the disposal
group to funds managed by American European Associates
Investors LP, U.S. On January 15, 2014, Siemens closed the
transaction for a preliminary cash consideration of €612 mil-
lion. Assets and liabilities held for disposal of €794 million and
of €214 million, respectively, were derecognized upon closing.
The major classes of assets held for disposal were Property,
plant and equipment of €164 million, Goodwill of €154 million,
Inventories of €136 million, Trade and other receivables of
€125 million, and Cash and cash equivalents of €75 million.
OSRAM, Siemens IT Solutions and Services,
Siemens VDO Automotive and Communications
Income from discontinued operations,
net of income taxes
108
231
Thereof attributable to the shareholders of
Siemens AG
107
225
NOTE 5 Interests in other entities
For information on the composition of the Siemens Group refer
to the list of our subsidiaries, joint ventures and associates in
fiscal 2014 in NOTE 41 LIST OF SUBSIDIARIES AND ASSOCIATED
COMPANIES PURSUANT TO SECTION 313 PARA. 2 OF THE GERMAN COM-
MERCIAL CODE and → NOTE 4 ACQUISITIONS, DISPOSITIONS AND DIS-
CONTINUED OPERATIONS.
net of income taxes
manufacturer. In the second quarter of fiscal 2014, Siemens
started to report results related to its stake in BSH using the
equity method in phase with results of Siemens, rather than
with the lag of one quarter. Due to the one-time catch-up effect
associated with this change, item Share of profit (loss), net for
fiscal 2014 therefore includes results related to BSH for approx-
imately five quarters rather than the usual four. This one-time
catch-up effect increased the income from Siemens' invest-
ment in BSH by €59 million. At the end of the fourth quarter of
fiscal 2014, BSH was classified as held for disposal and the use
of the equity method was ceased.
Items Share of profit (loss), net, Gains (losses) on sales, net and
Impairment and reversals of impairment include the effects
of disposing of Siemens' share in NSN in the fourth quarter of
fiscal 2013. In fiscal 2013, item Impairment and reversals of
impairment includes €(97) million related to an investment of
Siemens' solar business.
b) Associates
As of September 30, 2014 and 2013, the carrying amount of all
individually not material associates amounts to €1,417 million
and €1,483 million, respectively. Summarized financial infor-
mation for all individually not material associates adjusted
for the percentage of ownership held by Siemens, is presented
below. Items included in the Statements of Comprehensive
Income are presented for the twelve month period applied
under the equity method.
INVESTMENTS ACCOUNTED FOR
USING THE EQUITY METHOD
a) Income (loss) from investments accounted
for using the equity method, net
(in millions of €)
Year ended September 30,
2014
2013
Income (loss) from continuing operations
Income (loss) from discontinued operations
Item Share of profit (loss), net, also includes Siemens' share in
BWI Informationstechnik GmbH's (BWI IT) earnings of €55 mil-
lion and €69 million in fiscal 2014 and 2013.
9
the discontinued operations
disposal of the disposal groups constituting
Net results from discontinued operations of OSRAM, Siemens
IT Solutions and Services, Siemens VDO Automotive and the
former operating segment Communications presented in the
Consolidated Statements of Income in fiscal 2014 and 2013
amounted to €89 million (thereof €66 million income tax) and
€222 million (thereof €(165) million income tax), respectively.
Net results from discontinued operations in fiscal 2013 include
€277 million relating to OSRAM, thereof the pretax spin-off gain
of €54 million. Income tax in fiscal 2014 and 2013 includes
€64 million and €(80) million, respectively, related to former
Communications activities.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 C.
Combined Management Report
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
In fiscal 2014 and 2013, the major line items of income from
discontinued operations were as follows:
(in millions of €)
Revenue
Year ended September 30,
2014
2,951
2013
7,757
Expenses
(2,916)
(7,501)
Income on the measurement to fair value less
costs to sell or on the disposal of the disposal
groups constituting the discontinued operations
Pretax income from discontinued operations
Income taxes on ordinary activities
23
129
57
41
385
(174)
Income taxes on the income on the measure-
ment to fair value less costs to sell or on the
56
158
Other assets
72
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
In July 2014, the IASB completed its project to replace IAS 39,
Financial Instruments: Recognition and Measurement by pub-
lishing the final version of IFRS 9: Financial Instruments. IFRS 9
introduces a single approach for the classification and measure-
ment of financial assets according to their cash flow character-
istics and the business model they are managed in, and pro-
vides a new impairment model based on expected credit losses.
IFRS 9 also includes new regulations regarding the application
of hedge accounting to better reflect an entity's risk manage-
ment activities especially with regard to managing non-finan-
cial risks. The new standard is effective for annual reporting
periods beginning on or after January 1, 2018, while early
application is permitted. The European Financial Reporting
Advisory Group postponed its endorsement advice on IFRS 9.
The Company is currently assessing the impacts of adopting
IFRS 9 on the Company's Consolidated Financial Statements.
In May 2014, the IASB issued IFRS 15, Revenue from Contracts
with Customers. According to the new standard, revenue is rec-
ognized to depict the transfer of promised goods or services to
a customer in an amount that reflects the consideration to
which the Company expects to be entitled in exchange for
those goods or services. Revenue is recognized when, or as,
the customer obtains control of the goods or services. IFRS 15
also includes guidance on the presentation of contract bal-
ances, that is, assets and liabilities arising from contracts with
customers, depending on the relationship between the entity's
performance and the customer's payment. In addition, the new
standard requires a set of quantitative and qualitative disclo-
sures to enable users of the Company's Consolidated Financial
Statements to understand the nature, amount, timing, and un-
certainty of revenue and cash flows arising from contracts with
customers. IFRS 15 supersedes IAS 11, Construction Contracts
and IAS 18, Revenue as well as related interpretations. The
standard is effective for annual periods beginning on or after
January 1, 2017; early application is permitted. The Company
is currently assessing the impact of adopting IFRS 15 on the
Company's Consolidated Financial Statements and will deter-
mine the adoption date as well as the transition method.
NOTE 3 Critical accounting estimates
Siemens' Consolidated Financial Statements are prepared in
accordance with IFRS as issued by the IASB and as adopted by
the EU. Siemens' significant accounting policies, as described
in NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES are
essential to understanding the Company's results of operations,
financial positions and cash flows. Certain of these accounting
policies require critical accounting estimates that involve com-
plex and subjective judgments and the use of assumptions,
some of which may be for matters that are inherently uncertain
and susceptible to change. Such critical accounting estimates
could change from period to period and have a material impact
on the Company's results of operations, financial positions and
cash flows. Critical accounting estimates could also involve
estimates where management reasonably could have used a
different estimate in the current accounting period. Manage-
ment cautions that future events often vary from forecasts and
that estimates routinely require adjustment.
-
The
Revenue recognition on construction contracts
Company's Sectors, particularly Energy, Industry and Infra-
structure & Cities, conduct a significant portion of their
business under construction contracts with customers.
The Company accounts for construction projects using the
percentage-of-completion method, recognizing revenue as
performance on contract progresses. Certain long-term ser-
vice contracts are accounted for under the percentage-of-
completion method as well. This method places considerable
importance on accurate estimates of the extent of progress
towards completion and may involve estimates on the scope
of deliveries and services required for fulfilling the contractu-
ally defined obligations. These significant estimates include
total contract costs, total contract revenues, contract risks,
including technical, political and regulatory risks, and other
judgments. Under the percentage-of-completion method,
changes in estimates may lead to an increase or decrease of
revenue. The creditworthiness of our customers is taken into
account in estimating the probability that economic benefits
associated with a contract will flow to the Company. In addi-
tion, we need to assess whether the contract is expected to
continue or to be terminated. In determining whether the con-
tinuation or termination of a contract is expected to be the
most likely scenario, all relevant facts and circumstances relat-
ing to the contract are considered on an individual basis. For
contracts expected to be continued, amounts already included
in revenue for which collectability ceases to be probable are
recognized as an expense. For contracts expected to be termi-
nated, including terminations due to expected payment de-
faults of our customers or terminations due to force majeure
events, the estimates on the scope of deliveries and services
provided under the contracts are revised accordingly, typically
108 | A. To our Shareholders
As of October 1, 2013, Siemens adopted IFRS 13, Fair Value
Measurement. The new standard defines fair value and
standardizes disclosures on fair value measurements of both
financial and non-financial instrument items. The standard
is applied on a prospective basis. The adoption of IFRS 13 did
not have a material impact on the Company's Consolidated
Financial Statements.
262
Corporate Governance
171 C.
Combined Management Report
resulting in a decrease of revenue in the respective reporting
period. Management of the operating Divisions continually
reviews all estimates involved in such construction contracts
and adjusts them as necessary.
Trade and other receivables - The allowance for doubtful
accounts involves significant management judgment and
review of individual receivables based on individual customer
creditworthiness, current economic trends and analysis of
historical bad debts on a portfolio basis. For the determination
of the country-specific component of the individual allowance,
Siemens also consider country credit ratings, which are cen-
trally determined based on information from external rating
agencies. Regarding the determination of the valuation allow-
ance derived from a portfolio-based analysis of historical bad
debts, a decline of receivables in volume results in a corre-
sponding reduction of such provisions and vice versa. As of
September 30, 2014 and 2013, Siemens recorded a total valua-
tion allowance for trade and other receivables of €1,073 million
and €1,147 million, respectively.
Impairment - Siemens tests at least annually whether good-
will has incurred any impairment, in accordance with its
accounting policy. The determination of the recoverable
amount of a cash-generating unit or a group of cash-generat-
ing units to which goodwill is allocated involves the use of
estimates by management. The outcome predicted by these
estimates is influenced e.g. by the successful integration of
acquired entities, volatility of capital markets, interest rate
developments, foreign exchange rate fluctuations and the
outlook on economic trends. The recoverable amount is the
higher of the cash-generating unit's or the group of cash-
generating units' fair value less costs to sell and its value in
use. The Company generally uses discounted cash flow based
methods to determine these values. These discounted cash
flow calculations use five-year projections that are based on
financial forecasts. Cash flow projections take into account
past experience and represent management's best estimate
about future developments. Cash flows after the planning
period are extrapolated using individual growth rates. Key
assumptions on which management has based its determina-
tion of fair value less costs to sell and value in use include
estimated growth rates, weighted average cost of capital and
tax rates. These estimates, including the methodology used,
can have a material impact on the respective values and ulti-
mately the amount of any goodwill impairment. Likewise,
whenever property, plant and equipment, other intangible
assets and investments accounted for using the equity method
are tested for impairment, the determination of the assets'
recoverable amount involves the use of estimates by manage-
ment that can have a material impact on the respective values
and ultimately the amount of any impairment.
-
Non-current assets and disposal groups classified as
held for disposal Assets held for disposal and disposal
groups are measured at the lower of their carrying amount
and their fair value less costs to sell. The determination of the
fair value less costs to sell includes the use of management
estimates and assumptions that tend to be uncertain.
Employee benefit accounting - Post-employment benefits -
Obligations for pension and other post-employment benefits
and related net periodic benefit costs are determined in accor-
dance with actuarial valuations. These valuations rely on key
assumptions including discount rates, expected compensation
increases, rate of pension progression and mortality rates. The
discount rate assumptions are determined by reference to
yields on high-quality corporate bonds of appropriate duration
and currency at the end of the reporting period. In case such
yields are not available discount rates are based on govern-
ment bonds yields. Due to changing market, economic and
social conditions the underlying key assumptions may differ
from actual developments and may lead to significant changes
in pension and other post-employment benefit obligations.
Such differences are recognized in full through line item Other
comprehensive income, net of income taxes in the period in
which they occur without affecting profit or loss.
Provisions - Significant estimates are involved in the determi-
nation of provisions related to onerous contracts, warranty
costs, asset retirement obligations and legal proceedings.
A significant portion of the business of certain operating divi-
sions is performed pursuant to long-term contracts, often for
large projects, in Germany and abroad, awarded on a competi-
tive bidding basis. Siemens records a provision for onerous
sales contracts when current estimates of total contract costs
exceed expected contract revenue. Such estimates are subject
to change based on new information as projects progress to-
wards completion. Onerous sales contracts are identified by
monitoring the progress of the project and updating the esti-
mate of total contract costs which also requires significant
judgment relating to achieving certain performance standards
as well as estimates involving warranty costs and estimates
regarding project delays including the assessment of respon-
sibility splits between the contract partners for these delays.
Significant estimates and assumptions are also involved in the
determination of provisions related to major asset retirement
obligations. Uncertainties surrounding the amount to be rec-
ognized include, for example, the estimated costs of decom-
missioning because of the long time frame over which future
cash outflows are expected to occur including the respective
interest accretion. Amongst others, the estimated cash out-
flows could alter significantly if, and when, political develop-
ments affect the government's plans to develop the final
storage.
131 | B.
261
337 | E. Additional Information
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
that the asset is impaired, the cumulative loss that has been
recognized in equity is removed from equity and recognized in
the Consolidated Statements of Income. The Company consid-
ers all available evidence such as market conditions and prices,
investee-specific factors and the duration as well as the extent
to which fair value is less than acquisition cost in evaluating
potential impairment of its available-for-sale financial assets.
The Company considers a decline in fair value as objective
evidence of impairment, if the decline exceeds 20% of costs or
continues for more than six months. An impairment loss is
reversed in subsequent periods, if the reasons for the impair-
ment no longer exist. The reversal of impairment losses on
debt instruments is recognized in the Consolidated Statement
of Income, while any reversal of impairment losses on equity
instruments is recognized in line item Other comprehensive
income, net of income taxes.
Loans and receivables - Financial assets classified as loans
and receivables are measured at amortized cost using the ef-
fective interest method less any impairment losses. Impair-
ment losses on trade and other receivables are recognized
using separate allowance accounts. Loans and receivables
bearing no or lower interest rates compared to market rates
with a maturity of more than one year are discounted.
Financial liabilities - Siemens measures financial liabilities,
except for derivative financial instruments, at amortized cost
using the effective interest method.
-
Derivative financial instruments Derivative financial
instruments, such as foreign currency exchange contracts and
interest rate swap contracts, are measured at fair value. Deriv-
ative financial instruments are classified as held for trading un-
less they are designated as hedging instruments, for which
hedge accounting is applied. Changes in the fair value of deriv-
ative financial instruments are recognized periodically either in
net income or, in the case of a cash flow hedge, in line item
Other comprehensive income, net of income taxes (applicable
deferred income tax). Certain derivative instruments embed-
ded in host contracts are also accounted for separately as
derivatives.
Fair value hedges - The carrying amount of the hedged item
is adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair
value is recognized as a separate financial asset or liability with
corresponding gain or loss recognized in net income.
For hedged items carried at amortized cost, the adjustment is
amortized until maturity of the hedged item. For hedged
firm commitments the initial carrying amount of the assets or
liabilities that result from meeting the firm commitments are
adjusted to include the cumulative changes in the fair value
that were previously recognized as separate financial assets or
liabilities.
Cash flow hedges - The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net
of income taxes (applicable deferred income tax), and any inef-
fective portion is recognized immediately in net income.
Amounts accumulated in equity are reclassified into net in-
come in the same periods in which the hedged item affects net
income.
Share-based payment – IFRS 2, Share-based payment, distin-
guishes between cash-settled and equity-settled share-based
payment transactions. For both types, the fair value is mea-
sured at grant date and compensation expense is recognized
over the vesting period during which the employees become
unconditionally entitled to the awards granted. Cash-settled
awards are re-measured at fair value at the end of each report-
ing period and upon settlement. The fair value of share-based
awards, such as stock awards, matching shares, and shares
granted under the Jubilee Share Program, is determined as the
market price of Siemens shares, considering dividends during
the vesting period the grantees are not entitled to and market
conditions and non-vesting conditions, if applicable.
Prior-year information - The presentation of certain prior-
year information has been reclassified to conform to the cur-
rent year presentation. To enhance transparency, the Company
changed retrospectively the presentation of financing of dis-
continued operations in the Consolidated Statements of Cash
Flows in fiscal 2014.
RECENTLY ADOPTED ACCOUNTING
PRONOUNCEMENTS
As of October 1, 2013, Siemens adopted IFRS 10, Consolidated
Financial Statements, IFRS 11, Joint Arrangements, IFRS 12, Dis-
closure of Interests in Other Entities and consequential amend-
ments to IAS 27, Separate Financial Statements (amended
2011) and IAS 28, Investments in Associates and Joint Ventures
(amended 2011). IFRS 10 provides a comprehensive concept of
control in determining whether an entity is to be consolidated,
IFRS 11 provides guidance on accounting for joint arrangements
by focusing on rights and obligations of the arrangement and
IFRS 12 provides comprehensive disclosure requirements for all
forms of interests in other entities. The standards are applied
on a retrospective basis. The adoption of the new standards did
not have a material impact on the Company's Consolidated
Financial Statements. The application of IFRS 12 resulted in
additional disclosures.
247
D. Consolidated Financial Statements
248 D.1
249 D.2
250 D.3
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
247
102
D. Consolidated Financial Statements
249 D.2
(in millions of €)
Trade and other receivables
Inventories
2014
2013
606
310
479
340
Goodwill
September 30,
846
Other intangible assets
246
111
Property, plant and equipment
311
317
Investments previously accounted for using the equity method
1,156
Other financial assets
132
187
As of September 30, 2014 and 2013, the carrying amounts of
the major classes of assets and liabilities held for disposal were
as follows:
B) DISPOSITIONS AND DISCONTINUED OPERATIONS
Assets and liabilities held for disposal
At the beginning of January 2013, Siemens acquired all of the
shares in LMS International NV, Belgium, a leading provider of
mechatronic simulation solutions, which was integrated in the
Industry Sector's Industry Automation Division. The purchase
price allocation was finalized in the second quarter of fiscal
2014. No significant adjustments were made to the preliminary
purchase price allocation as of September 30, 2013. The final
consideration amounts to €702 million (including €32 million
cash acquired); €352 million were allocated to Goodwill which
comprises intangible assets that are not separable such as
employee know-how and expected synergy effects.
250 D.3
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
263
Siemens is subject to legal and regulatory proceedings in vari-
ous jurisdictions. Such proceedings may result in criminal or
civil sanctions, penalties, damage claims and other claims, or
disgorgements against the Company. If it is more likely than
not that an obligation of the Company exists and will result in
an outflow of resources, a provision is recorded if the amount
of the obligation can be reliably estimated. Regulatory and
legal proceedings as well as government investigations often
involve complex legal issues and are subject to substantial un-
certainties. Accordingly, management exercises considerable
judgment in determining whether there is a present obligation
as a result of a past event at the end of the reporting period,
whether it is more likely than not that such a proceeding
will result in an outflow of resources and whether the amount
of the obligation can be reliably estimated. The Company
periodically reviews the status of these proceedings with both
inside and outside counsel. These judgments are subject to
change as new information becomes available. The required
amount of a provision may change in the future due to new
developments in the particular matter. Revisions to estimates
may significantly impact future net income. Upon resolution,
Siemens may incur charges in excess of the recorded provi-
sions for such matters. It cannot be excluded that the financial
position or results of operations of Siemens will be materially
affected by an unfavorable outcome of legal or regulatory pro-
ceedings or government investigations.
Income taxes - Siemens operates in various tax jurisdictions
and therefore has to determine tax positions under respective
local tax laws and tax authorities' views which can be complex
and subject to different interpretations of tax payers and local
tax authorities. As an effect of tax audits, different interpreta-
tions of tax laws may result in additional tax payments for prior
years and are taken into account based on management's
considerations. Deferred tax assets are recognized if sufficient
future taxable profit is available, including income from
forecasted operating earnings, the reversal of existing taxable
temporary differences and established tax planning opportuni-
ties. As of each period-end, management evaluates the
recoverability of deferred tax assets, based on projected future
taxable profits. As future developments are uncertain and
partly beyond management's control, assumptions are neces-
sary to estimate future taxable profits as well as the period in
which deferred tax assets will recover. Estimates are revised in
the period in which there is sufficient evidence to revise the
assumption. If management considers it probable that all or a
portion of a deferred tax asset cannot be realized, that portion
would not be recognized.
NOTE 4 Acquisitions, dispositions
and discontinued operations
A) ACQUISITIONS
In September 2014, Siemens has entered into an agreement
with Dresser-Rand to acquire all of its issued and outstanding
common shares by way of a friendly takeover bid. With its com-
prehensive portfolio of compressors, steam turbines, gas tur-
bines and engines, Dresser-Rand is a leading supplier for the
oil & gas, process, power and other industries in the related
energy infrastructure markets worldwide. The acquisition com-
plements Siemens' existing offerings, notably for the global
oil & gas industry and for distributed power generation.
Siemens offers US$83 per share in cash or US$6.5 billion in
total if the transaction is closed prior to March 1, 2015 (€5.2 bil-
lion as of September 30, 2014). Thereafter, the price increases
by US$0.55 per share or US$43 million (€34 million as of Sep-
tember 30, 2014) on the first day of each month starting
March 1, 2015 (ticking fee). As part of the transaction, Siemens
will assume Dresser-Rand's net debt, currently estimated at
US$1.1 billion (€0.9 billion as of September 30, 2014), resulting
in a transaction volume without ticking fee of approximately
US$7.6 billion (approximately €6 billion as of September 30,
2014). The transaction is subject to approval by regulatory
authorities. Closing is expected in summer 2015.
At the beginning of May 2014, Siemens announced the acquisi-
tion of the Rolls-Royce Energy aero-derivative gas turbine
and compressor business of Rolls-Royce plc, U.K. (Rolls-Royce).
With the acquisition Siemens intends to strengthen its position
in the growing oil and gas industry as well as in the field of
decentralized power generation. The preliminary purchase
price amounts to £785 million (€1 billion as of September 30,
2014). In addition, as part of the transaction, Siemens will I pay
Rolls-Royce £200 million (€257 million as of September 30,
2014) for a 25 year technology licensing agreement granting
exclusive access to future Rolls-Royce aero-turbine technology
developments in the four to 85 megawatt power output range
as well as preferred access to supply and engineering services
of Rolls-Royce. The regulatory authorities approved the trans-
action after fiscal year end. Closing is expected in the first quar-
ter of fiscal 2015.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 | C
Combined Management Report
264
At the beginning of May 2013, Siemens acquired all of the
shares of several entities constituting the rail automation busi-
ness of Invensys plc, U.K. (Invensys), which were integrated
in the Infrastructure & Cities Sector's Mobility and Logistics
Division. With the acquisition, Siemens expanded and comple-
mented the Infrastructure & Cities Sector's rail automation busi-
ness. The purchase price allocation was finalized in the third
quarter of fiscal 2014 following the final agreement on the pur-
chase price and the completion of post-closing project reviews.
Adjustments mainly relate to Intangible assets, Inventories,
Liabilities and Deferred income tax liabilities. The final consid-
eration amounts to €2,024 million (including €53 million cash
acquired) of which €472 million were paid to the Invensys
Pension Trust. The following figures reflect the amounts rec-
ognized as of the acquisition date for each major class of assets
acquired and liabilities assumed: Intangible assets €883 million,
Inventories €159 million, Receivables €127 million, Deferred in-
come tax assets €65 million, Liabilities €537 million and Deferred
income tax liabilities €116 million. Intangible assets mainly relate
to customer relationships of €616 million with a useful life of
18 years and technology of €245 million with a useful life of
18 years. Goodwill of €1,315 million comprises intangible assets
that are not separable such as employee know-how and expected
synergy effects. Including earnings effects from purchase price
allocation and integration costs, the acquired business contrib-
uted revenues of €335 million and a net loss of €44 million to
Siemens for the period from acquisition to September 30, 2013. If
the acquired business had been included as of October 1, 2012,
the impact on consolidated revenues and consolidated net in-
come for the twelve months ended September 30, 2013 would
have been €915 million and €(9) million, respectively.
248 D.1
163
20
Impairment and reversals of impairment
Income (loss) from investments accounted
for using the equity method, net
78
6
Gains (losses) on sales, net
247
575
2013
1
2014
(in millions of €)
(33)
130
71
Total comprehensive income
Year ended September 30,
(52)
Share of profit (loss), net
The accumulated unrecognized share of losses in associates
amounts to €84 million and €11 million, respectively, as of
September 30, 2014 and 2013. Within fiscal 2014 and 2013 the
unrecognized share of losses amounts to €74 million and
€11 million.
185
582
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
September 30, 2014 and 2013 amounts to €1,621 million and
€2,044 million. BWI IT finances its operations on its own.
250 D.3
248 D.1
D. Consolidated Financial Statements
247
The carrying amount of all individually not material associates
includes the carrying amount of BWI IT, amounting to €131 mil-
lion and €154 million as of September 30, 2014 and 2013.
Siemens holds a 50.05% stake in BWI IT. BWI IT is not controlled
by Siemens due to significant participating rights of the two
other shareholders. Together with the HERKULES obliga-
tions disclosed in → NOTE 27, COMMITMENTS AND CONTINGENCIES,
the Company's maximum exposure to loss from BWI IT as of
As of September 30, 2014 and 2013, Siemens has one principal
joint venture, BSH Bosch und Siemens Hausgeräte GmbH
(BSH), Munich, Germany which is a worldwide home appliances
510
249 D.2
Other comprehensive income,
22
c) Joint ventures
Additional Information
Income (loss) from continuing operations
267
As of September 30, 2014 and 2013, the carrying amount of all
individually not material joint ventures amounts to €710 mil-
lion and €393 million, respectively. Summarized financial infor-
mation for all individually not material joint ventures adjusted
for the percentage of ownership held by Siemens, is presented
below. Items in the Statements of Comprehensive Income
are presented for the twelve month period applied under the
equity method of accounting.
(in millions of €)
€
7,076
(177)
30
269
284
(463)
7,020
(4,594)
2,426
(510)
Furniture and office
equipment
5,664
27
681
(614)
Equipment leased to others
3,372
(117)
377
(7)
(689)
5,740 (4,352)
2,936 (1,662)
1,387
(698)
1,274
(362)
(149)
131
Loans from banks
Valuation allowance as of beginning
994
1,000
€
995
1,000
€
1.5%/2012/March 2020/EUR fixed-rate instruments
2.75%/2012/September 2025/GBP fixed-rate instruments
400
400
€
-
0.375%/2012/September 2014/EUR fixed-rate instruments²
296
400
US$
£
equipment
350
£
1,242
1,250
€
1,276
1,250
€
760
650
£
819
650
£
3.75%/2012/September 2042/GBP fixed-rate instruments
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
1.5%/2013/March 2018/US$ fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
2013/June 2020/US$ floating-rate instruments
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
Total Debt Issuance Program
416
350
448
Technical machinery and
(286)
4,027
1,632
738
(346)
Income and expenses recognized directly
in equity
154
(50)
Discontinued operations
1,634
2,028
Continuing operations
2013
2,526
2014
NOTE 11 Trade and other receivables
Non-current available-for-sale financial assets, which are in-
cluded in line item Other financial assets are measured at fair
value, if reliably measurable. They primarily consist of equity
instruments, including shares in AtoS and in OSRAM. As of
September 30, 2014 and 2013 non-current available-for-sale
financial assets measured at cost amount to €192 million and
€167 million, respectively; non-current available-for-sale finan-
cial assets measured at fair value amount to €1,611 million and
€1,394 million, respectively. Unrealized gains (losses) in fiscal
2014 and 2013 resulting from non-current available-for-sale
financial assets at fair value were €317 million and €401 mil-
lion, respectively.
(1)
21
601
580
16
211
195
3
382
Year ended September 30,
378
(in millions of €)
September 30,
2013
(in millions of €)
Minimum future lease payments to be received are as follows:
Changes to the valuation allowance of current and long-term
receivables presented in → NOTE 11, 12 AND 18, which belong to
the class of financial assets measured at (amortized) cost are as
follows (excluding receivables from finance leases):
271
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
2014
249 D.2
Consolidated Statements of Income
248 D.1
D. Consolidated Financial Statements
247
14,853
1,921
1,988
14,526
Receivables from finance leases
12,932
12,537
Trade receivables from the sale of goods
and services
252 D.5
318
2
6
gain
Unrealized
Fair value
Cost
941
760
Tax loss carryforward
150
155
Deductible temporary differences
2013
915
2014
September 30, 2014
Unrealized
loss
September 30,
The following tables summarize the current portion of the
Company's investment in available-for-sale financial assets:
NOTE 10 Available-for-sale financial assets
Deferred tax assets have not been recognized with respect of
the following items (gross amounts):
(189)
68
187
150
(824)
7,677 (3,651)
(in millions of €)
8
1,091
1
(in millions of €)
Equity instruments
Debt instruments
Fund shares
loss
gain
Unrealized Unrealized
Fair value
Cost
September 30, 2013
(in millions of €)
Including the items charged or credited directly to equity
and the expense (benefit) from continuing and discontinued
operations, the income tax expense (benefit) consists of the
following:
The Company recorded deferred tax liabilities for income taxes
and foreign withholding taxes on future dividend distributions
from subsidiaries which are actually intended to be repatriated.
Apart from this liability, the Company has not recognized de-
ferred tax liabilities for income taxes or foreign withholding
taxes on the cumulative earnings of subsidiaries of €21,115 mil-
lion and €19,214 million, respectively in fiscal 2014 and 2013
because the earnings are intended to be permanently rein-
vested in the subsidiaries.
The Company has ongoing regular tax audits concerning open
income tax years in a number of jurisdictions. Adequate provi-
sions for all open tax years have been foreseen. The Company
has applied for several mutual agreement procedures to avoid
double taxation.
(in millions of €)
Equity instruments
As of September 30, 2014 and 2013, €152 million and €221 mil-
lion, respectively the major part of the unrecognized tax loss
carryforwards expire over the periods to 2018.
925
888
28
222
195
Fund shares
9
702
693
Debt instruments
1
37
400
US$
US$ 3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
25,255
(658)
129
1,979
(2,623)
24,083
(14,268) 9,815
(1,862)
1 Includes Property, plant and equipment reclassified to
Assets classified as held for disposal and dispositions of
those entities.
2 Includes impairment expenses of €141 million in fiscal
2013, thereof €55 million at SRE, €34 million at Industry,
€31 million at Energy, €10 million at Infrastructure &
Cities, €8 million at SFS and €2 million at Healthcare.
equipment
3 Includes €594 million expenditures for property,
plant and equipment under construction.
In fiscal 2014 and 2013, government grants awarded for the
purchase or the production of property, plant and equipment
amounted to €6 million and €9 million, respectively. The award
of further government grants of €65 million and €60 million in
fiscal 2014 and 2013, respectively, related to costs incurred and
future costs.
As of September 30, 2014 and 2013, minimum future lease pay-
ments receivable from lessees under operating leases are as
follows:
Payments from lessees under operating leases primarily relate
to buildings, medical equipment and transportation systems.
Total contingent rent recognized in income in fiscal 2014 and
2013 amounts to €223 million and €214 million, respectively.
INVESTMENT PROPERTY
The carrying amount of investment property amounts to
€113 million and €116 million compared to a fair value of
€214 million and €258 million as of September 30, 2014 and
2013, respectively. Fair value is generally a level 2 measurement
and is determined based on sales of similar property, bid prices
for similar property, external independent appraisals or internal
fair value measurements which rely on the income approach or
on adjusted official standard land values depending on the
nature of the property.
September 30,
(in millions of €)
2014
2013
Within one year
338
Depreciation and impairment is included in line items Cost of
sales, Research and development expenses or Selling and gen-
eral administrative expenses, depending on the use of the asset.
As of September 30, 2014 and 2013, contractual commitments
for purchases of property, plant and equipment amount to
€351 million and €434 million, respectively.
321
Property, plant and
701
18,165
Notes and bonds (maturing until 2066)
Long-term
NOTE 19 Other current financial liabilities
1,944
1,620
Short-term debt and current maturities
of long-term debt
20
21
82
826
(6)
412
1,431
Advances to suppliers and
construction in progress
859
(26)
5
465
(559)
(33)
7103
(9)
773
Loans from banks (maturing until 2023)
After one year but not more than five years
590
10,919
Item Loans receivable primarily relate to long-term loan trans-
actions of SFS.
8,012
Receivables from finance leases, see
NOTE 21 Debt
→ NOTE 11 TRADE AND OTHER RECEIVABLES
3,357
3,340
Derivative financial instruments
2,111
1,894
Loans receivable
Available-for-sale financial assets
1,560
Other
226
18,416
311
(in millions of €)
15,117
September 30,
2014
2013
Short-term
Notes and bonds
1,803
Obligations under finance leases
2013
(in millions of €)
578
More than five years
117
137
1,045
1,035
247
D.
Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
2014
252 D.5
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
277
NOTE 18 Other financial assets
Item Other employee related costs primarily includes vacation
payments, accrued overtime and service anniversary awards,
severance payments, as well as liabilities related to termination
benefits.
September 30,
249 D.2
Other financial indebtedness
968
Other financial indebtedness
5.625%/2006/March 2016/US$ fixed-rate instruments
(interest/issued/maturity)
amount in
Carrying
September 30, 2013
Currency
notional amount
amount in
notional amount
Carrying
Currency
September 30, 2014
5.375%/2008/June 2014/EUR fixed-rate instruments²
2. BONDS
Combined Management Report
171 | C
Corporate Governance
131 | B.
108 | A. To our Shareholders
19,701
17,954
923
682
Other
101
278
56
(in millions)
(in millions)
2,136
2,000
€
2,122
2,000
€
5.125%/2009/February 2017/EUR fixed-rate instruments
1,844
1,600
€
1,839
millions of €1
1,600
5.625%/2008/June 2018/EUR fixed-rate instruments
1,031
1,000
€
412
500
US$
425
500
US$
millions of €1
€
17,060
1,233
Deferred reservation fees received
663
1,717
944
826
221
210
Accrued interest expense
Other
20,453
20,947
350
680
see NOTES 29 AND 30
1,515
18,509
110
108
Obligations under finance leases
Long-term debt
Derivative financial instruments,
2013
2014
(in millions of €)
106
85
(maturing until 2027)
September 30,
19,326
669
NOTE 20 Other current liabilities
September 30,
2013
Miscellaneous tax liabilities
1,683
1,785
Bonus obligations
1,067
1,059
Accruals for pending invoices
1,035
1,068
Deferred income
2,103
I
1,644
1,561
1,438
Payroll obligations and social security taxes
10,559
9,559
Billings in excess of costs and estimated earn-
ings on uncompleted contracts and related
advances
2014
(in millions of €)
Siemens has a US$ 9.0 billion (€7.2 billion as of September 30,
2014) multi-currency commercial paper program in place includ-
ing US$ extendible notes capabilities. As of September 30, 2014
US$ 1.0 billion (€795 million as of September 30, 2014) were out-
standing. As of September 30, 2013 no commercial papers were
outstanding. Siemens' commercial papers have a maturity of
generally less than 90 days. Interest rates ranged from 0.1% to
0.2% in fiscal 2014 and from 0.01% to 0.37% in fiscal 2013.
1. COMMERCIAL PAPER PROGRAM
Interest rates in this Note are per annum. In fiscal 2014 and
2013, weighted-average interest rates for loans from banks,
other financial indebtedness and obligations under finance
leases were 3.0% (2013: 2.7%), 0.3% (2013: 3.1%) and 4.0%
(2013: 4.1%), respectively.
Other employee related costs
of fiscal year
2014
Write-offs charged against the allowance
Recoveries of amounts previously written-off
Foreign exchange translation differences
Reclassifications to line item Assets held for
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
Other intangible assets
11,415
388
21
78
390
(370)
(1,389)
8,077
10,826
(4,741)
(6,266)
3,336
(558)
4,560
(741)
1 Includes Other intangible assets reclassified to Assets
classified as held for disposal and dispositions of those
entities.
247
D.
21
Consolidated Financial Statements
277
and similar rights
Retirements Gross carrying | Accumulated
amortization
09/30/2014
and
impairment
Carrying
amount as of
09/30/2014
Amortization
and impair-
ment in fiscal
Software and other internally
generated intangible assets
3,346
111
312
(1,019)
2,750
(1,526)
1,224
(183)
Patents, licenses
8,070
248 D.1
Consolidated Statements of Income
252 D.5
amount as of
Carrying Amortization
and impair-
and
09/30/2013
ment in fiscal
combinations
impairment
20132
Software and other internally
generated intangible assets
3,270
(78)
2
265
amortization
amount as of
09/30/2013
Accumulated
Additions Retirements Gross carrying
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
amount as of
Additional Information
(in millions of €)
Gross carrying
Translation
amount as of
differences
10/01/2012
Additions
through
business
275
(114)
Additions
Translation
differences
1,719
(204)
(70)
17,761
Financial Services (SFS)
Siemens
121
2
122
17,069
(632)
1,719
(204)
(70)
17,883
131 B.
(633)
Corporate Governance
16,949
2,930
8,314
(362)
(3)
7,950
Industry
4,173
(146)
418
(169)
4,276
Infrastructure & Cities
1,742
(65)
1,299
(47)
Total Sectors
171 | C
Combined Management Report
108 | A. To our Shareholders
1.7%
8.5%
2,986
1.7%
8.5%
2,603
2.2%
7.5%
2,483
2.2%
7.5%
In fiscal 2013, an impairment loss of €46 million resulted from
the logistics and airport solutions business of the Mobility &
Logistics Division of the Infrastructure & Cities Sector.
NOTE 16 Other intangible assets
(in millions of €)
Gross carrying
amount as of
10/01/2013
3,105
Industry Automation of the Industry Sector
Imaging & Therapy Systems of the Healthcare Sector
6.0%
2.3%
274
Siemens performs the mandatory annual impairment test
in the three months ended September 30. The recoverable
amounts for the annual impairment test 2014 for Divisions or
equivalents were generally estimated to be higher than the
carrying amounts. Key assumptions on which management
has based its determinations of the fair value less costs to sell
for the Divisions' or equivalents' carrying amount include ter-
minal value growth rates up to 2.9% in fiscal 2014 and 2.3% in
fiscal 2013, respectively and after-tax discount rates of 6.5% to
9.0% in fiscal 2014 and 6.0% to 10.8% in fiscal 2013. Where pos-
sible, reference to market prices is made.
For the purpose of estimating the fair value less costs to sell of
the Divisions or equivalents, cash flows were projected for
the next five years based on past experience, actual operating
results and management's best estimate about future develop-
ments as well as market assumptions. The determined fair
value of the Divisions or equivalents is assigned to level 3 of
the fair value hierarchy.
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each Division or
equivalent. Discount rates reflect the current market assess-
ment of the risks specific to each Division or equivalent and are
based on the weighted average cost of capital for the Divisions
or equivalents (for SFS the discount rate represents cost of
equity). Terminal value growth rates take into consideration
external macroeconomic sources of data and industry
specific trends.
The following table presents the key assumptions used to
determine fair value less costs to sell for impairment test
purposes for the Divisions to which a significant amount of
goodwill is allocated:
Goodwill
(in millions of €)
Additions
through
business
combinations
Diagnostics of the Healthcare Sector
Goodwill
Year ended September 30, 2013
Terminal value |After-tax discount
growth rate
rate
4,765
2.4%
6.5%
4,758
Year ended September 30, 2014
Terminal value |After-tax discount
growth rate
rate
Healthcare
3,346
1,241
(25)
7603
(10)
750
Property, plant and
equipment
24,083
475
1,927
-
(2,515)
23,968
(14,330)
9,638
(1,666)
(449)
1 Includes Property, plant and equipment reclassified to
Assets classified as held for disposal and dispositions of
those entities.
516
710
81
(751)
5,786
(4,440)
1,347
(653)
371
1
(485)
2,927
(1,705)
1,222
(316)
Advances to suppliers and
construction in progress
7
2 Includes impairment expenses of €29 million in fiscal
2014, therein €19 million at SRE.
3 Includes €670 million expenditures for property,
plant and equipment under construction.
108 | A. To our Shareholders
business
as of
ciation and
of
impairment
10/01/2012
combina-
09/30/2013
impairment
09/30/2013
in fiscal
(in millions of €)
tions
2013²
1,000
as of
tion and
Deprecia-
Carrying
amount as
131 | B.
Corporate Governance
171 | C
Combined Management Report
276
Gross carry-
Translation
608
Additions Additions
differences
through
Reclassi-
fications
Retire-
ments¹
Gross carry-
ing amount
Accumu-
lated depre-
ing amount
(2,104)
21
2,936
5,057
(873)
1 Includes Other intangible assets reclassified to Assets
classified as held for disposal and dispositions of those
entities.
2 Includes impairment expenses of €53 million in fis-
cal 2013, thereof €25 million at Infrastructure & Cities,
€19 million at Energy, €8 million at Industry and
€2 million at Healthcare.
Amortization and impairment on intangible assets is contained
in line items Cost of sales, Research and development expenses
or Selling and general administrative expenses, depending on
the use of the asset.
As of September 30, 2014 and 2013, contractual commitments
for purchases of other intangible assets amount to €18 million
and €14 million.
NOTE 17
Property, plant and equipment
Gross Translation
carrying differences
amount
as of
Additions Additions
through
Reclassi-
fications
Retire-
ments¹
Gross
business
combi-
(6,358)
(in millions of €)
11,415
(648)
(224)
Patents, licenses
and similar rights
7,154
(253)
1,363
Other intangible assets
10,424
(332)
1,365
65
330
(259)
8,070
(4,254)
3,816
(372)
10/01/2013
nations
carrying
amount
as of
09/30/2014
7,020
122
4
277
239
(521)
7,140
(4,687)
2,453
(456)
Furniture and office
equipment
5,740
106
Equipment leased to others
equipment
Technical machinery and
(242)
3,868
Accumu-
lated depre-
ciation and
impairment
Carrying
amount as
of
Deprecia-
tion and
impairment
09/30/2014
in fiscal
2014²
104
Land and buildings
136
(7)
155
128
(733)
7,356
(3,489)
7,677
Increase in valuation allowances recorded in
the Consolidated Statements of Income in the
current period
2,606
(34)
payments receivable
5,266
5,176
Within one year
2,013
1,946
One to five years
3,037
3,035
Thereafter
215
195
108 | A. To our Shareholders
131 | B.
Corporate Governance
Present value of minimum future lease
171 | C
218
Thereafter
2014
2013
Assets held for disposal and dispositions
of those entities
Gross investment in leases
6,124
6,034
Within one year
2,433
2,345
Valuation allowance as of fiscal year-end
135
124
One to five years
3,449
3,472
242
Combined Management Report
272
Investments in finance leases primarily relate to industrial
machinery, medical equipment, transportation systems, equip-
ment for information technology and office machines. Actual
cash flows will vary from contractual maturities due to future
sales of finance receivables, prepayments and write-offs.
2014
2013
Raw materials and supplies
2,389
2,476
Work in process
3,436
|
3,502
Costs and earnings in excess of billings
September 30,
on uncompleted contracts
8,329
8,604
(in millions of €)
September 30,
NOTE 14 Other current assets
Advance payments received on construction contracts in prog-
ress were €7,704 million and €8,239 million as of Septem-
ber 30, 2014 and 2013. Retentions in connection with construc-
tion contracts were €245 million and €452 million in fiscal 2014
and 2013, respectively.
The aggregate amount of costs incurred and recognized profits
less recognized losses for construction contracts in progress,
as of September 30, 2014 and 2013 amounted to €86,140 mil-
lion and €79,296 million, respectively. Revenue from construc-
tion contracts amounted to €29,735 million and €30,441 mil-
lion, respectively, for fiscal 2014 and 2013.
NOTE 12 Other current financial assets
September 30,
2013
435
1,861
(in millions of €)
2014
Derivative financial instruments
458
Loans receivable
(in millions of €)
2,111
1,141
3,710
3,250
NOTE 13 Inventories
(in millions of €)
954
Item Costs and earnings in excess of billings on uncompleted
contracts relates to construction contracts, with net asset bal-
ances where contract costs plus recognized profits less recog-
nized losses exceed progress billings. Construction contracts,
here and as follows, include service contracts accounted for
under the percentage of completion method. Liabilities from
contracts for which progress billings exceed costs and recog-
nized profits less recognized losses are recognized in line item
Other current liabilities.
Other
2014
Reclassifications to and from line item
(4)
205
(126)
(208)
6
9
5
(38)
(33)
938
1,023
The following table shows a reconciliation of minimum future
lease payments to the gross and net investment in leases and
to the present value of the minimum future lease payments
receivable:
September 30,
(in millions of €)
2014
2013
62
In fiscal 2014 and 2013, receivables from finance leases, current
amount to €1,988 million and €1,921 million, respectively; the
long-term portion amounts to €3,357 million and €3,340 mil-
lion, respectively. The valuation allowance on current and long-
term receivables from finance leases changed as follows:
1,056
5,938
September 30,
(in millions of €)
2014
2013
Within one year
2,406
2,318
Year ended September 30,
2014
2013
After one year but not more than five years
More than five years
3,393
3,406
233
214
6,033
1,023
Minimum future lease payments
Plus: Unguaranteed residual values
Gross investment in leases
Less: Unearned finance income
Net investment in leases
6,033
5,938
Valuation allowance as of beginning
of fiscal year
124
134
Increase in valuation allowances recorded in
the Consolidated Statements of Income in the
current period
47
35
The gross investment in leases and the present value of mini-
mum future lease payments receivable are due as follows:
Write-offs charged against the allowance
(46)
(47)
Recoveries of amounts previously written-off
5
5
Foreign exchange translation differences
5
2013
2014
(in millions of €)
5,176
91
97
6,124
6,034
(643)
(649)
5,481
September 30,
5,385
(135)
(124)
(80)
(85)
Year ended September 30,
Present value of minimum future lease
payments receivable
5,266
Less: Allowance for doubtful accounts
Less: Present value of unguaranteed residual
value
(23)
2013
2,312
373
7
(426)
(4)
7,900
Industry
4,276
147
(1)
(419)
4,003
Infrastructure & Cities
2,930
99
36
7,950
(3)
Healthcare
(2)
17,069
17,883
Carrying amount as
of 10/01/2013
Translation
differences
and other
Acquisitions and
purchase accounting
Dispositions,
reclassifications incl.
Impairments
adjustments
reclassifications
to assets classified as
held for disposal
Carrying amount as
of 09/30/2014
2,606
71
14
2,688
(1)
3,061
Total Sectors
Energy
Carrying amount as
of 10/01/2012
Translation
differences
and other
Acquisitions and
purchase accounting
adjustments
Dispositions,
reclassifications incl.
Impairments
Carrying amount as
of 09/30/2013
reclassifications
to assets classified as
held for disposal
2,718
(61)
5
Sectors
(in millions of €)
17,783
(5)
17,761
691
55
(851)
(5)
17,651
Financial Services (SFS)
17,883
17,783
122
4
132
Siemens
17,883
696
60
(851)
5
Finished goods and products held for resale
Energy
(in millions of €)
D.
Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
273
NOTE 15 Goodwill
247
(in millions of €)
Cost of sales include inventories recognized as expense
amounting to €49,453 million and €52,039 million, respec-
tively, in fiscal 2014 and 2013. Raw materials and supplies, work
in process as well as finished goods and products held for re-
sale are valued at the lower of acquisition or production cost
and net realizable value. The respective write-downs, as com-
pared to prior year, increased by €1 million and €39 million as
of September 30, 2014 and 2013.
1,290
2,311
Miscellaneous tax receivables
707
735
Advances to suppliers
528
16,994
Advance payments received
707
17,601
(1,895) (2,040)
15,100 15,560
Prepaid expenses
229
227
Other
354
335
1,297
Cost
Year ended September 30,
2014
Dispositions and reclassifications to assets classified as held for disposal
1,681
1,448
82
(66)
5
70
(5)
229
1,763
1,681
Balance at year-end
Carrying amount
Balance at beginning of year
Balance at year-end
Impairment losses recognized during the period
Translation differences and other
Balance at beginning of year
Accumulated impairment losses and other changes
2013
Balance at beginning of year
19,564
18,517
Translation differences and other
777
(697)
Sectors
Acquisitions and purchase accounting adjustments
1,719
Dispositions and reclassifications to assets classified as held for disposal
(856)
25
Balance at year-end
19,546
19,564
60
996
8,285
1,000
5. OTHER FINANCIAL INDEBTEDNESS
Item Other financial indebtedness includes €27 million and
€111 million as of September 30, 2014 and 2013, respectively, for
the Company's real estate assets that were sold or transferred
and in which Siemens has retained significant risks and re-
wards of ownership, including circumstances in which Siemens
participates directly or indirectly in the change in market
value of the property. Therefore, these transactions have been
accounted for as financing obligations. These real estate prop-
erties are carried on the Company's Consolidated Statements of
Financial Position and no sale and profit has been recognized.
OBLIGATIONS UNDER FINANCE LEASES
September 30, 2014
28
21
Minimum future
lease payment
As of September 30, 2014 and 2013, €6.8 billion and €6.7 billion
of these lines of credit remained unused. Commitment fees for
the years ended September 30, 2014 and 2013 amount to
€6 million and €6 million, respectively. The facilities are for
general business purposes.
(in millions of €)
Due
Present value of
minimum future
lease payment
obligation
Within one year
49
After one year but not
more than five years
More than five years
Total
92
7
Unamortized
obligation interest expense
The credit facilities at September 30, 2014 and 2013 consisted of
€6.8 billion and €6.7 billion, respectively, in committed lines of
credit. As of September 30, 2014, those include: (1) a €4.0 bil-
lion undrawn syndicated multi-currency revolving credit facil-
ity; in June 2014, the facility has been amended and extended
to June 27, 2019 with two one-year extension options remain-
ing; (2) a US$ 3.0 billion (€2.4 billion as of September 30, 2014)
undrawn syndicated multi-currency revolving credit facility; in
2014 its maturity has been extended by one year to Septem-
ber 27, 2019 with one one-year extension option remaining; (3)
a €450 million revolving credit facility provided by a domestic
bank expiring September 30, 2015.
4. CREDIT FACILITIES
In March 2014, the two bilateral US$500 million term loan facil-
ities (in aggregate €795 million in notional and carrying
amount as of September 30, 2014) that the company signed
and fully drew in fiscal 2013 bearing floating-rate interest of
0.79% above three months LIBOR with an original term of five
years were extended by one year and are now due on March 26,
2019 with a remaining one year extension option.
Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
279
Bond with Warrant Units
In February 2012, Siemens issued US$ fixed-rate bonds with
warrant units in an aggregate principal amount of US$3 billion
in two tranches, comprising: (1) US$1.5 billion (€1.2 billion as
of September 30, 2014) in 1.05% instruments maturing on
August 16, 2017 and (2) US$1.5 billion (€1.2 billion as of Sep-
tember 30, 2014) in 1.65% instruments maturing on August 16,
2019. Each of the US$1.5 billion instruments were issued with
6,000 detachable warrants. The warrants' exercise price was
fixed in Euro. The warrants entitle the holders, at their option,
to receive 1,806.1496 Siemens AG shares per warrant at an
exercise price per share of €104.0018 during the exercise period
which matures on August 1, 2017 and August 1, 2019 for instru-
ments (1) and instruments (2), respectively. After the spin-off
of OSRAM in fiscal 2013, the warrants entitle the holders to
obtain 169.4234 OSRAM shares in addition to Siemens shares.
The number of additional shares remains subject to the adjust-
ment provisions under the terms and conditions of warrants.
Since the approval of the OSRAM spin-off in January 2013 the
warrants are accounted for as other financial liability. The war-
rants result in option rights relating to a total of 21.7 million
Siemens AG shares.
3. ASSIGNABLE AND TERM LOANS
The Company has a 5.435% fixed rate assignable loan for gen-
eral corporate purposes due on June 12, 2015 with a notional
amount of €333 million as of September 30, 2014 and 2013 and
a carrying amount of €343 million and €356 million, respec-
tively, as of September 30, 2014 and 2013.
85
76
52
24
78
53
25
204
74
130
(20)
110
|
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 | C
Combined Management Report
280
Land and buildings
€
86
D.
9
32
217
87
130
(21)
Less: Current portion
(in millions of €)
Due
108
September 30, 2013
Minimum future
lease payment
minimum future
Unamortized
lease payment
obligation interest expense
obligation
12
20
Within one year
After one year but not
more than five years
More than five years
Total
Less: Current portion
94
247
Present value of
Hybrid Capital Bond
238
US$
400
317
10,582
11,262
5.75%/2006/October 2016/US$ fixed-rate instruments
US$
1,750
1,457
US$
1,750
1,389
6.125%/2006/August 2026/US$ fixed-rate instruments
Total US$ Bonds
US$
1,750
1,843
300
US$
US$
400
US$
995
In September 2006, the Company issued a subordinated hybrid
bond in a EUR tranche of €900 million and a GBP tranche of
£750 million (€965 million as of September 30, 2014), both
with a legal final maturity on September 14, 2066 and with a
call option for Siemens in 2016 or thereafter. The instruments
bear fixed-rate interests until September 14, 2016; thereafter,
floating-rate interest is applied according to the conditions of
the bond.
500
396
US$
500
368
US$
100
77
US$
100
72
US$
400
US$
295
1,750
317
3,301
1,500
1,068
US$
1,500
1,140
US$
1,500
In March 2014, Siemens issued US$300 million (€238 million as
of September 30, 2014) privately placed floating-rate instru-
ments due March 6, 2019. Furthermore, Siemens redeemed at
face value €1.0 billion in 5.375% fixed-rate instruments on
June 11, 2014. In September 2014 Siemens issued US$400 mil-
lion (€318 million as of September 30, 2014) privately placed
2,298
18,165
2,120
18,491
| 1 Includes adjustments for fair value hedge accounting.
2 Redeemed at face value at maturity in fiscal 2014.
Debt Issuance Program
1,759
floating-rate instruments due September 10, 2021 and redeemed
at face value €400 million in 0,375% fixed-rate instruments on
September 10, 2014.
The Company has a program for the issuance of debt instru-
ments under which it may issue instruments up to €15.0 billion
as of September 30, 2014 and 2013, respectively. As of Septem-
ber 30, 2014 and 2013 €10.2 billion and €10.9 billion in notional
amounts were issued and are outstanding.
US$
1,158
1,052
US$
5.25%/2006/September 2066/EUR fixed-rate instruments
6.125%/2006/September 2066/GBP fixed-rate instruments
Total Hybrid Capital Bond
€
1,500
900
959
900
976
£
€
1,025
1.05%/2012/August 2017/US$ fixed-rate instruments
1.65%/2012/August 2019/US$ fixed-rate instruments
Total Bond with Warrant Units
1,962
750
1,984
3,147
750
£
986
528
U.K.
(1,476)
Benefits paid
(7)
105
122
Settlement payments
Plan participants' contributions
(1,514)
and net interest expenses
Employer contributions
U.S.
Germany
507
2,098
amounts included in net interest income
Return on plan assets excluding
Remeasurements:
24,057
745
24,078
802
533
(67)
Assumed discount rates, compensation increase rates, pension
progression rates and mortality rates used in calculating the
DBO vary according to the economic and other conditions of
the country in which the retirement plans are situated.
(122)
U.S.
Fair value of plan assets at beginning of year
Interest income
Germany
Discount rate
A one-half-percentage-point change of the established assump-
tions mentioned before, used for the calculation of the DBO as
of September 30, 2014 and 2013, would result in the following
increase (decrease) of the DBO:
Sensitivity analysis
The DBO is also affected by assumed future inflation rates. The
effect of inflation is recognized within the assumptions above
where applicable.
The rates of compensation increase for countries with signifi-
cant effects with regard to this assumption were as follows in
fiscal 2014 and 2013: U.K.: 4.80% and 4.80%, Switzerland: 1.50%
and 1.50%. The rates of pension progression for countries with
significant effects with regard to this assumption were as fol-
lows in fiscal 2014 and 2013: Germany: 1.69% and 1.69%, U.K.:
3.2% and 3.2%.
The weighted-average discount rate used for the actuarial valu-
ation of the DBO at period-end was as follows:
Actuarial assumptions
Line item Business combinations, disposals and other in the
tables above contains reclassifications to assets and to liabili-
ties held for disposal.
for Self Administered Pension Schemes
(SAPS) with allowance for future
mortality improvements)
BVG 2010 G
Heubeck Richttafeln 2005 G (modified)
RP2000 Combined Healthy
Fully Generational Mortality Table and
longevity improvement scale BB2D
S1PxA (Standard mortality tables
(397)
24,078
26,505
Fair value of plan assets at end of year
525
Foreign currency translation effects
(16)
(8)
Liability administration costs
CH
93
Business combinations, disposals and other
Change in plan assets:
19,273
The data selection criteria used to derive the discount rate in
the major currency zones (EUR, GBP, USD, CHF) and the extra-
polation were refined as of September 30, 2014. The discount
rate was derived from high-quality corporate bonds with an
issuing volume of more than 100 million units in the respective
currency zones, which have been awarded an AA rating (or
equivalent) by at least one of the two rating agencies Moody's
Investor Service or Standard & Poor's Rating Services.
(548)
benefit plans
Funded status of other post-employment
24,078
(8,520)
(8,537)
Funded status of pension benefit plans
26,505
Total fair value of plan assets
17,761
4,645
4,958
Former employees with vested rights
Retirees and surviving dependants
5
5
post-employment benefit plans
Fair value of plan assets of other
10,767
11,360
Active employees
24,073
26,500
benefit plans
U.K.
CH
(575)
The mortality tables used for the actuarial valuation of the DBO
were as follows (most significant countries):
Total funded status (excluding effects
in connection with asset ceiling)
(9,095)
2013
Year ended September 30,
2014
(in millions of €)
A detailed reconciliation of the changes in the fair value of plan
assets for fiscal 2014 and 2013 is provided in the following table:
The net interest income/expense for fiscal year 2015 improves by
€19 million due to the refined determination of discount rate.
283
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
Consolidated Financial Statements
D.
247
Actuarial (gains) losses from changes in financial assumptions
include losses from decreasing market interest rates which
were compensated by gains of total €2,214 million from the
refined extrapolation and data selection used to derive the dis-
count rate in the major currency zones (EUR, GBP, USD, CHF).
Actuarial (gains) losses from changes in demographic assump-
tions include losses from modified assumptions of German and
US mortality tables of total €441 million and gains of €102 mil-
lion from adjusted turnover rates in Switzerland.
|
(9,086)
September 30,
1,463
2013
6,604
7,050
Equity securities
9,069
2020-2024
Asset class
1,725
2019
2013
2014
U.S. equities
(in millions of €)
2018
September 30,
1,668
2017
1,659
2016
1,687
2015
September 30, 2014
(in millions of €)
1,706
Fair value of plan assets of pension
(in millions of €)
September 30, 2013
4,216
Government bonds
12,768
1,668
14,694
Fixed income securities
2017
1,624
1,517
1,947
2016
Global equities
1,613
1,457
1,611
2015
Emerging markets
2,214
2,030
European equities
1,647
2014
1,416
Expected benefit payments
The asset allocation of the plan assets of the defined benefit
plans is as follows:
Disaggregation of plan assets
285
171 | C
Corporate Governance
131 | B.
108 | A. To our Shareholders
2,361
(90)
(1,441)
1,590
95
(2,100)
Effect on DBO due to a
one-half percentage-point
as of September 2014
increase
decrease
Rate of pension progression
Rate of compensation increase
Discount rate
2.1%
1.8%
(in millions of €)
4.5%
4.5%
3.7%
4.6%
3.1%
2.4%
3.4%
3.0%
Combined Management Report
2014
284
Discount rate
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
Consolidated Financial Statements
D.
247
Derivatives are used for risk reducing purposes to either reduce
the fluctuations in the value of plan assets or reduce funded
status volatility as part of an integrated risk management
approach for assets and liabilities. Main risks mitigated are
interest rate, credit, equity, currency and inflation risk. All over-
the-counter derivatives are collateralized on a daily basis to
eliminate counterparty risk. In addition, derivatives are permit-
ted for investment managers to use as substitutes for tradi-
tional securities where appropriate, to manage exposure to
foreign exchange and interest rate risks.
Siemens' funding policy for its funded defined benefit plans is
part of the overall commitment to sound financial manage-
ment, which also includes an ongoing analysis of the structure
of Siemens' defined benefit liabilities. To balance return and
risk, Siemens has developed a benefit risk management con-
cept. The Company has identified as a major risk a decline in
the plans' funded status as a result of the adverse development
of plan assets and/or defined benefit obligations. Siemens
monitors its investments and its defined benefit obligations in
order to measure such risk. The risk quantifies the expected
maximum decline in the principle plans' funded status for a
given confidence level over a given time horizon. A risk limit on
the Group level forms the basis for the determination of the
Company's investment strategy, i.e. the strategic asset class
allocation of principle plan assets and the degree of interest
rate risk hedging. Both the risk limit and investment strategy
are regularly reviewed with the participation of senior external
experts of the international asset management and insurance
industry to allow for an integral view on plan assets and benefit
liabilities. The Company selects asset managers based on quan-
titative and qualitative analysis and subsequently constantly
monitors their performance and risk, both on a stand-alone
basis, and in the broader portfolio context. Siemens reviews
the asset allocation of each plan in light of the duration of the
related benefit liabilities and analyzes trends and events that
may affect asset values in order to inform about appropriate
measures at a very early stage.
Asset Liability Matching Strategies
When calculating the sensitivity of the defined benefit obliga-
tion to significant actuarial assumptions the same method
(present value of the defined benefit obligation calculated with
the projected unit credit method) has been applied as when cal-
culating the post-employment benefit obligation recognized in
the Consolidated Statement of Financial Position. Increases and
decreases in the discount rate, rate of compensation increase,
rate of pension progression and mortality rates which are used
in determining the DBO do not have a symmetrical effect on the
DBO primarily due to the compound interest effect created
when determining the net present value of the future benefit. If
more than one of the assumptions are changed simultaneously,
the combined impact due to the changes would not necessarily
be the same as the sum of the individual effects due to the
changes. Furthermore, the sensitivities reflect a change in the
DBO only for a change in the assumptions in this specific mag-
nitude, i.e. 0.5%. If the assumptions change at a different level,
the effect on the DBO is not necessarily in a linear relation.
The reduction of the mortality rates by 10% results in an
increase of life expectancy depending on the individual age of
each beneficiary. That means for example, that the life expec-
tancy of a 55 years old male Siemens employee as of Sep-
tember 30, 2014 increases by approximately 1 year. In order to
determine the longevity sensitivity the mortality rates were
reduced by 10% for all beneficiaries. The effect on DBO due to
a 10% reduction in mortality rates would result in an increase
of €1,027 million and €985 million as of September 30, 2014
and 2013.
2,159
(105)
(1,339)
(1,919)
136
1,492
Effect on DBO due to a
one-half percentage-point
as of September 2013
increase decrease
Rate of compensation increase
Rate of pension progression
(in millions of €)
33,173
> Future cash flows.
Defined benefit obligation at end of year
Thereof:
1,753
1,818
Other
(388)
(170)
(49)
(59)
2,489
2,673
2,828
1,021
2,784
(498)
(125)
(65)
(97)
4,022
4,818
4,455
4,845
U.K.
(1,194)
CH
975
(46)
(32)
(in millions of €)
> Reconciliation of defined benefit obligations and plan assets,
> Actuarial assumptions,
The Company's defined benefit plans are explicitly explained in
the subsequent sections with regard to:
Year ended September 30,
2014
Defined benefit costs are as follows:
282
108 | A. To our Shareholders
Combined Management Report
171 | C
Corporate Governance
131 | B.
The net defined benefit balance of €9,288 million and
€9,241 million as of September 30, 2014 and 2013 comprises
€9,324 million and €9,265 million net defined benefit liability
and €36 million and €24 million net defined benefit asset,
respectively.
(9,241)
(9,288)
(146)
(202)
24,078
26,505
33,173
35,591
Total
(810)
(843)
(842)
2,575
2,888
3,769
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
Siemens plc in the U.K. sponsors a frozen defined benefit plan
and a defined contribution plan for all new employees and for
the active service of those members who have participated
in the frozen defined benefit plan. There are several smaller
defined benefit plans which result from previous acquisitions,
those plans are in the process of being de-risked. For most of
U.K.:
The defined benefit plan assets are held in a Master Trust.
Siemens Corporation, as the sponsoring employer, has dele-
gated investment oversight of the plans' assets to the Invest-
ment Committee. The Investment Committee members have
a fiduciary duty to act solely in the best interests of the bene-
ficiaries according to the trust agreement and U.S. law. The
Committee has established an Investment Policy Statement
which articulates the goals and objectives of the plans' invest-
ment management, including diversifying the assets of the
Master Trust with the intention of appropriately addressing
concentration risks. The trustee of the Master Trust acts only
by direction of the Investment Committee. It is responsible for
the safekeeping of the trust, but generally has no decision
making authority over the plan assets. The legal and regulatory
framework for the plans is based on the applicable U.S. legisla-
tion Employee Retirement Income Security Act (ERISA). Based
on this legislation a funding valuation is prepared annually.
Annual contributions are determined by the plans' indepen-
dent actuaries as prescribed under the rules and regulations of
ERISA and the Internal Revenue Code. There is a regulatory
requirement to maintain a minimum funding level of 80% in
the defined benefit plans in order to avoid benefit restrictions.
Siemens Corporation in the U.S. sponsors one major defined
benefit plan, the Siemens Pension Plan, which is frozen to new
entrants and accretion of new benefits (with the exception of
one small group of union employees). Employees of Siemens
U.S. companies hired prior to April 1st, 2006 participate in the
Siemens Pension Plan. Most of the defined benefit plan par-
ticipants' benefits are calculated using a cash balance formula;
although a small group of participants are eligible for a benefit
based on a final average pay formula. This frozen defined ben-
efit plan exposes the Company to actuarial risks such as invest-
ment risk, interest rate risk and longevity risk.
U.S.:
these plans. However, these frozen plans still expose the
Company to actuarial risks such as investment risk, interest
rate risk and longevity risk. Furthermore, deferred compen-
sation plans are offered which are also funded via a CTA. In
Germany no legal or regulatory minimum funding require-
ments apply. The Trusts, which are legally separate from the
Company, manage their plan assets as trustees, in accordance
with the respective trust agreements with the Company.
In Germany, Siemens AG provides pension benefits through the
cash-balance plan BSAV (Beitragsorientierte Siemens Alters-
versorgung), frozen legacy plans and deferred compensation
plans. The majority of Siemens' active employees in Germany
participate in the BSAV introduced in fiscal 2004, which is a
funded defined benefit pension plan whose benefits are pre-
dominantly based on contributions made by the Company and
returns earned on such contributions, subject to a minimum
return guaranteed by the Company. The BSAV is funded via a
contractual trust arrangement (CTA), the BSAV Trust. Individual
benefits under the frozen legacy plans are based on eligible
compensation levels or ranking within the Company hierarchy
and years of service. In connection with the implementation of
the BSAV, benefits provided under the frozen legacy plans
funded via a CTA, the Siemens Pension Trust, were modified to
substantially eliminate the effects of compensation increases
by freezing the accretion of benefits under the majority of
Germany:
In order to reduce the Company's exposure to certain risks
associated with defined benefit plans, such as longevity, infla-
tion, effects of compensation increases, Siemens regularly
reviews and continuously improves the design of its post-
employment defined benefit plans. The benefits of defined
benefit plans open to new entrants are based predominantly on
contributions made by the Company and are still affected by
longevity, inflation adjustments and compensation increases,
but only to a significant lesser extent. The Company's major
defined benefit plans are funded with assets in segregated en-
tities. The defined benefit plans cover 494,000 participants,
including 210,000 active employees, 85,000 former employees
with vested benefits and 199,000 retirees and surviving depen-
dents. Individual benefits are generally based on eligible com-
pensation levels and/or ranking within the Company hierarchy
and years of service. The characteristics of the defined benefit
plans and the risks associated with them vary depending on
legal, fiscal and economic requirements in each country. For
the major defined benefit plans of Siemens the characteristics
and risks are as follows:
DEFINED BENEFIT PLANS
Post-employment benefits provided by Siemens are organized
through defined benefit plans as well as defined contribution
plans which cover almost all of the Company's domestic em-
ployees and the majority of the Company's foreign employees.
Post-employment defined benefit plans include pension bene-
fits and other post-employment benefits, which primarily
consist of transition payments to German employees after
retirement as well as post-employment health care and life
insurance benefits to employees in the U.S. and Canada.
NOTE 22 Post-employment benefits
Additional Information
Current service cost
281
Switzerland:
3,730
U.S.
(6,350)
(7,309)
14,017
15,105
20,367
22,414
Germany
2014
Net defined
benefit balance
September 30,
Effects in connection
with asset ceiling
September 30,
2013
2014
2013
2014
2013
2014
(in millions of €)
Fair value
of plan assets
September 30,
September 30,
Defined benefit
obligation (DBO)
The amounts included in the Company's Consolidated Financial
Statements arising from its post-employment defined benefit
plans are as follows:
Siemens Switzerland sponsors several funded defined benefit
(cash-balance) plans following the Swiss law of occupational
benefits (BVG) according to which each employer has to grant
post-employment benefits for qualifying employees. These
plans are administered by foundations that are legally sepa-
rated from the entity. For the main pension fund, which rep-
resents almost all of the defined benefit obligation in Switzer-
land, the board of the pension fund is composed of equally
many employer and employee representatives. The board of
each pension fund is required by law and by the regulations to
act in the fund's and all stakeholders' best interest, i.e. in the
interest of all active employees and retirees. The board of the
pension fund is responsible for the investment policy and the
asset management, as well as for any changes in the plan rules,
in which it determines the necessary contributions to finance
the benefits. The Company is required to make total contribu-
tions at least as high as the sum of the employee contributions
set out in the plan rules. Employer's and employees' contribu-
tions are determined by the respective foundation boards.
About 40% of the necessary contributions are financed by
the employees. In the case of an underfunding in a plan the
Company together with the employees may be asked to pay
extra contributions in a well defined framework of recovery
measures. The plans expose the Company to various actuarial
and financial risks such as longevity, interest rate risks and
salary increases.
the defined benefit plan members an inflation increase of the
accrued benefits until the start of retirement is mandatory.
Furthermore, the plans expose the Company to actuarial risks
such as investment risk, interest rate risk, longevity risk and
salary increase risk. The funding environment is determined by
the Pension Regulator and the applicable social and labor laws.
The defined benefit plans are each governed by a benefit trust
whose decision making body is a Board of Trustees who have a
fiduciary duty to act in the best interests of the beneficiaries
according to the trust agreement and law. The required fund-
ing is determined by a funding valuation carried out every third
year based on legal requirements, which measures the liabili-
ties on a government bond basis rather than under a high qual-
ity corporate bond basis as under IAS 19, thus the technical
funding deficit is usually larger. The funding valuation assump-
tions are negotiated between the Company and the Trustees.
The latest funding valuation, for the largest plan, in UK in cal-
endar year 2011 resulted in a technical underfunding of GBP 939
(€1,208) million, based on the assumptions at that date. As a
result, in fiscal 2013, Siemens entered into an agreement with
the trustees to provide an annual payment of GBP 31 (€40) mil-
lion for the next 20 years, beginning in fiscal 2014. The agree-
ment also provides for a cumulative advance payment by
Siemens AG compensating the remaining annual payments at
the date of early termination of the agreement due to cancella-
tion or insolvency. In addition to these payments the Company
is obliged to pay GBP 5 (€6) million until the next funding valu-
ation, when the funding requirements will be updated based
on new assumptions. This valuation process will start in calen-
dar year 2014.
Past service (benefit) cost
Settlement (gains) losses
Net interest expenses
156
Experience (gains) losses
(245)
1,602
in financial assumptions
Actuarial (gains) losses from changes
43
370
in demographic assumptions
Actuarial (gains) losses from changes
Remeasurements:
A reconciliation of the funded status to the amounts recog-
nized in the Consolidated Statements of Financial Position is as
follows:
1,029
1,089
Interest expenses
(7)
1
Settlement (gains) losses
(9)
3
Past service (benefit) cost
505
477
(in millions of €)
Current service cost
2014
Plan participants' contributions
(507)
635
Foreign currency translation effects
579
33,173
35,591
Total defined benefit obligation
554
post-employment benefit plans
Defined benefit obligation of other
135
(224)
Business combinations, disposals and other
32,594
35,037
(67)
(7)
Settlement payments
Defined benefit obligation of pension
benefit plans
(1,612)
(1,649)
Benefits paid
105
122
September 30,
2013
35,591
218
Defined benefit costs
16
8
(3)
(1)
294
295
(7)
1
(9)
3
> Sensitivity analysis,
505
477
2013
> Asset-liability matching strategies,
Return on plan assets
795
784
Statements of Income
costs recognized in the Consolidated
Components of defined benefit
Liability administration expenses
Net interest income
> Disaggregation of plan assets, and
701
3,003
A detailed reconciliation for the changes in the DBO for fiscal
2014 and 2013 is provided in the following table:
33,650
33,173
Defined benefit obligation at beginning of year
(577)
(83)
of Comprehensive Income
recognized in the Consolidated Statements
Change in defined benefit obligations:
Remeasurements of defined benefit plans
2013
2014
Year ended September 30,
(in millions of €)
(23)
43
Effect from asset ceiling
(47)
1,972
Actuarial (gains) and losses
(507)
(2,098)
expenses and net interest income)
(excluding amounts included in net interest
Reconciliation for defined benefit obligations
and plan assets
2018
908
Corporate bonds
AUTHORIZED CAPITAL (NOT ISSUED)
As of September 30, 2014 and 2013, the Company has a total of
1,087,200 thousand and 1,084,600 thousand authorized shares.
881,000
2,643,000
610,800
203,600 1,027,517 342,506
(520,800) (173,600) (426,951) (142,317)
528,600 176,200 240,000 80,000
618,600 206,200 840,566 280,189
-
-
The Company's shareholders authorized the Managing Board,
with the approval of the Supervisory Board, to increase capital
stock through the issuance of no par value shares registered in
the names of the holders and to determine the further content
of the rights embodied in the shares, whereas subscription
rights are or may be excluded:
881,000
342,506
shares
in thousand
(not issued)
1,027,517
of €
in thousands
1,713
Authorized Capital 2014 resolved on January 28, 2014, permits
the increase of capital stock by up to €528.6 million or 176.2 mil-
lion shares for contributions in cash or in kind until January 27,
2019. Authorized Capital 2011 permits the increase of capital
stock by up to €90 million or 30 million shares for contributions
in cash until January 24, 2016; new shares are solely issuable to
employees of Siemens. Authorized Capital 2009 expired on Jan-
uary 26, 2014; it permitted the issuance of up to 173.6 million
shares, equaling €520.8 million.
CONDITIONAL CAPITAL (NOT ISSUED)
Conditional Capital is primarily provided for the purpose of
serving the issuance of bonds with conversion rights and (or)
with warrants; subscription rights are or may be excluded:
Conditional Capital 2014 approved on January 28, 2014 and
expiring on January 27, 2019, permits the issuance of convert-
ible and/or warrant bonds in aggregate of up to €15 billion,
entitling the holders to subscribe to up to 80 million no par
value shares (representing up to €240 million capital stock
increase), issuable for contributions in cash and, in certain
circumstances, contributions in kind.
Until January 24, 2016, the Company is authorized by its share-
holders to acquire treasury shares of up to 10% of its capital
stock as of the date of the shareholders' resolution or, if this
value is less, 10% of capital stock as of the date on which the
authorization is exercised. Repurchased shares may only be
used for purposes stipulated in the Articles of Association of
Siemens AG.
TREASURY SHARES
289
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
Conditional Capital 2011 was cancelled on January 28, 2014,
which permitted the issuance of convertible bonds and/or
warrant bonds in aggregate of up to €15 billion, entitling the
holders to subscribe to up to 90 million no par value shares
(representing up to €270 million capital stock increase). Condi-
tional Capital to service the 2001 and 1999 Siemens Stock
Option Plans was cancelled on January 28, 2014, since the last
tranche of stock options expired in November 2010 and from
that date on, no further shares were to be issued. It amounted
to €157 million, representing 52.32 million shares.
Conditional Capital 2010 permits the issuance of bonds with
conversion rights and/or with warrants in aggregate of up to
€15 billion, entitling the holders to subscribe to up to 200 mil-
lion no par value shares (representing up to €600 million
capital stock increase) against contribution in cash until
January 2015.
Conditional capital
In November 2013, Siemens announced a share buyback of up
to €4 billion ending latest on October 31, 2015. Buybacks are
made under the current authorization, which allows for further
share repurchases of a maximum of 47.8 million shares as
of the date of the buyback announcement. Siemens started to
repurchase shares in May 2014.
203,600
(not issued)
108 | A. To our Shareholders
Combined Management Report
171 | C
Corporate Governance
131 | B.
Other
2,074
288
1,874
210
76
39
39
34
German pension insurance association -
Pensionssicherungsverein (PSV)
Insurance liabilities
133
317
NOTE 25
Equity
CAPITAL STOCK
610,800
in thousands
of €
Authorized capital
881,000
in thousand
shares
Issued capital
2,643,000
in thousands
of €
|
As of September 30, 2014
Newly approved capital
Expired or cancelled
As of September 30, 2013
Approved, expired or cancelled capital
As of September 30, 2012
|
Siemens' issued capital is composed of no par value shares
with a notional value of €3.00 per share. Each share of issued
capital is entitled to one vote.
in thousand
shares
In fiscal 2014 and 2013, Siemens repurchased 11,331,922 trea-
sury shares and 17,150,820 treasury shares at average costs per
share of €95.27 and €78.66, respectively. In fiscal 2014 and
2013, Siemens transferred 3,584,370 shares and 3,878,899
shares, respectively, in connection with share-based payment
plans. As of September 30, 2014 and 2013, the Company has
treasury shares of 45,745,147 and 37,997,595, respectively.
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAXES
The changes in line item Other comprehensive income, net of
income taxes including non-controlling interest holders are as
follows:
89
480
(1,062)
(1,062)
940
940
45
569
(27)
(316)
102
(418)
(50)
21
(70)
(14)
72
(805)
(29)
(834)
290
108 | A. To our Shareholders
Combined Management Report
171 | C
131 | B. Corporate Governance
Siemens believes that sustainable revenue and profit develop-
ment is supported by a healthy capital structure. A key consid-
eration of our capital structure management is to maintain
ready access to the capital markets through various debt prod-
ucts and to preserve our ability to repay and service our debt
obligations over time. In fiscal 2014, Siemens set a capital struc-
ture target range of 0.5 - 1.0. The ratio is defined as the item
Industrial net debt divided by the item Adjusted EBITDA
(continuing operations). This financial performance measure
NOTE 26 Additional capital disclosures
payments. Payment of the proposed dividend is contingent
upon approval by the shareholders at the Annual Shareholders'
Meeting on January 27, 2015.
The Managing Board and the Supervisory Board proposed a div-
idend of €3.30 per share of the fiscal 2014 Siemens AG earnings,
in total representing approximately €2.7 billion in expected
Under the German Stock Corporation Act (Aktiengesetz), the
amount of dividends available for distribution to shareholders
is based upon the earnings of Siemens AG as reported in its
statutory financial statements determined in accordance with
the German Commercial Code (Handelsgesetzbuch). In fiscal
2014, Siemens AG management distributed to its shareholders
an ordinary dividend of €2,533 million (€3.00 per share) of
the fiscal 2013 earnings to its shareholders. In fiscal 2013,
Siemens AG management distributed an ordinary dividend of
€2,528 million (€3.00 per share) of the fiscal 2012 earnings to
its shareholders.
MISCELLANEOUS
(440)
(178)
(262)
857
338
519
10
(24)
94
(48)
394
(149)
543
288
249
39
Net
Year ended September 30, 2013
Tax effect
Pretax
Net
Tax effect
Pretax
Year ended September 30, 2014
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Unrealized holding gains (losses) on available-for-sale financial assets
Reclassification adjustments for gains (losses) included in net income
Net unrealized gains (losses) on available-for-sale financial assets
Unrealized gains (losses) on derivative financial instruments
Reclassification adjustments for gains (losses) included in net income
Net unrealized gains (losses) on derivative financial instruments
Foreign-currency translation differences
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
(in millions of €)
(31)
118
(13)
182
142
(301)
92
(394)
183
(2)
185
(56)
(13)
(43)
4
1
4
(12)
(12)
179
(3)
(44)
96
2,643,000
Accruals for pending invoices
Severance payments
Balance as of October 1, 2013
(in millions of €)
NOTE 23 Provisions
DEFINED CONTRIBUTION PLANS AND STATE PLANS
The amount recognized as expense for defined contribution
plans amounts to €535 million and €594 million in fiscal 2014
and 2013, respectively. Contributions to state plans amount
to €1,317 million and €1,354 million in fiscal 2014 and 2013,
respectively.
286
108 | A. To our Shareholders
Combined Management Report
Thereof non-current
171 | C
Siemens expects contributions to multi-employer defined ben-
efit plans accounted for as defined contribution plans for the
next fiscal year of €27 million.
Siemens is not aware of any probable significant risk due to
multi-employer defined benefit plans accounted for as defined
contribution plans.
In the U.S. the Company may be liable for other entities' obliga-
tions in case of failure of other participating employers to make
required contributions. In case of withdrawal from a plan the
Company may be subject to a liability for the potential future
statutory underfunding for its share in the plan. The Company
has only a minor share in these plans compared to other partic-
ipating entities and has no intention to withdraw from one of
these plans.
In the Netherlands the Company is not liable for other enti-
ties' obligations under the terms and conditions of the multi-
employer plan.
MULTI-EMPLOYER DEFINED BENEFIT PLANS
Multi-employer plans mainly exist in the Netherlands and in
the U.S. These plans are industry specific plans based on local
laws, which are accounted for as defined contribution plans as
Siemens has no right to obtain the necessary data for defined
benefit plan accounting. These plans may expose the Company
to investment and actuarial risk in case of a deficit.
The weighted average duration of the DBO for Siemens defined
benefit plans was 13 years as of September 30, 2014 and 2013.
Employer contributions expected to be paid to the post-em-
ployment defined benefit plans in fiscal 2015 are €655 million.
At the end of fiscal 2013 the Company expected to pay €631 mil-
lion employer contributions for fiscal 2014.
131 | B. Corporate Governance
Additions
Usage
Reversals
686
1,200
8,392
1,976
1,138
1,929
3,350
Total
Other
Asset
retirement
obligations
losses and risks
Order related
Warranties
Balance as of September 30, 2014
Thereof non-current
Other changes
Accretion expense and effect of changes in discount rates
Translation differences
Future cash flows
1,113
The plan assets include own transferable financial instruments
of the Company with a fair value of €110 million and €89 mil-
lion as of September 30, 2014 and 2013.
Virtually all equity securities have quoted prices in active mar-
kets. The fair value of fixed income securities is based on prices
provided by price service agencies. The fixed income securities
are traded in highly liquid markets and almost all fixed income
securities are investment grade. In addition, the asset class
Other assets includes assets with quoted prices in active mar-
kets in the amount of €67 million and €78 million as of Septem-
ber 30, 2014 and 2013.
Derivatives
Real estate
497
626
Private Equity
|
978
1,337
1,211
2,961
3,174
Alternative investments
9,765
8,958
10,479
2019-2023
Hedge Funds
1,487
646
175
422
24,078
26,505
485
Other assets
Total
1,148
76
Cash and cash equivalents
(141)
(458)
Credit/Inflation/Price risks
53
(45)
Foreign currency risk
263
1,149
Interest risk
As of September 30, 2013, the major part of cash and cash
equivalents is marked as cash in transition into corporate bond
mandates.
3,907
456
881
287
337 | E. Additional Information
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
Consolidated Financial Statements
D.
247
Environmental clean-up costs relate to remediation and envi-
ronmental protection liabilities which have been accrued based
on the estimated costs of decommissioning facilities for
the production of uranium and mixed-oxide fuel elements
in Hanau, Germany (Hanau facilities), as well as a nuclear
research and service center in Karlstein, Germany (Karlstein
facilities). According to the German Atomic Energy Act, when
such a facility is closed, the resulting radioactive waste must be
collected and delivered to a government-developed final stor-
age facility. In this regard, the Company has developed a plan
to decommission the Hanau and Karlstein facilities in the fol-
lowing steps: clean-out, decontamination and disassembly of
Asset retirement obligations - The Company is subject to
asset retirement obligations related to certain items of prop-
erty, plant and equipment. Such asset retirement obligations
are primarily attributable to environmental clean-up costs
which amounted to €1,347 million and €1,096 million, respec-
tively, as of September 30, 2014 and 2013 (the non-current por-
tion thereof being €1,339 million and €1,086 million, respec-
tively) and to costs primarily associated with the removal of
leasehold improvements at the end of the lease term.
wind blades; in fiscal 2013 charges related to inspecting and
retrofitting onshore turbine blades amounted to €94 million.
equipment and installations, decontamination of the facilities
and buildings, sorting of radioactive materials, and inter-
mediate and final storage of the radioactive waste. This process
will be supported by continuing engineering studies and radio-
active sampling under the supervision of German federal and
state authorities. The decontamination, disassembly and final
waste conditioning are planned to continue until 2018; there-
after, the Company is responsible for intermediate storage of
the radioactive materials until a final storage facility is avail-
able. With respect to the Hanau facility, the process of setting
up intermediate storage for radioactive waste has nearly
reached completion; on September 21, 2006, the Company
received official notification from the authorities that the
Hanau facility has been released from the scope of application
of the German Atomic Energy Act and that its further use is
unrestricted. The ultimate costs of the remediation are contin-
gent on the decision of the federal government on the location
of the final storage facilities and the date of their availability.
Consequently, the provision is based on a number of significant
estimates and assumptions. Several parameters relating to the
development of a final storage facility for radioactive waste are
based on the assumptions for the so called Schacht Konrad
final storage. Parameters related to the life-span of the German
nuclear reactors reflect a planned phase-out until 2022. The val-
uation uses assumptions to reflect the current and detailed cost
estimates, price inflation and discount rates as well as a contin-
uous outflow until the 2070's related to the costs for disman-
tling as well as intermediate and final storage.
In fiscal 2014, the Power Transmission Division of the Energy
Sector incurred charges totaling €298 million related to two
high voltage direct current (HVDC) transmission line projects in
Canada, resulting from revised estimates for civil engineering
and infrastructure provided by suppliers as well as penalties for
associated project delays, among other factors. In addition,
Power Transmission incurred charges of €240 million primarily
related to grid connections to offshore wind-farms resulting
from transport, installation and commissioning costs, com-
pared to charges of €171 million in fiscal 2013. The Wind Power
Division of the Energy Sector recorded charges of €272 million
in fiscal 2014 for inspecting and replacing main bearings in
onshore wind turbines and for repairing offshore and onshore
Using the input of an independent advisor, management up-
dated its valuation of the liability due to changes in estimates
which resulted in minor adjustments in fiscal 2014 and 2013.
The determination of the provisions related to major asset
retirement obligations will continue to involve significant esti-
mates and assumptions. Uncertainties surrounding the amount
to be recognized include, for example, the estimated costs of
decommissioning and final storage because of the long time
frame over which future cash outflows are expected to occur.
Amongst others, the estimated cash outflows related to the
asset retirement obligation could alter significantly if, and
when, political developments affect the government's plans to
The Company recognizes the accretion of the provision for en-
vironmental clean-up costs using the effective interest method
applying current interest rates prevailing at the period-end
date. In fiscal 2014 and 2013, the Company recognized €22 mil-
lion and €22 million, respectively, in accretion expense for
environmental clean-up costs in line item Other Financial
income (expenses), net. Changes in discount rates increased
the carrying amount of provisions by €242 million as of Sep-
tember 30, 2014 and decreased it by €128 million as of Septem-
ber 30, 2013.
1,776
275
228
534
618
in the U.S. not qualifying for presentation
as Post-employment benefits
Deferred income
Liabilities due to employees and retirees
604
550
Employee related liabilities
2013
2014
September 30,
(in millions of €)
NOTE 24 Other liabilities
Other Other includes transaction-related and post-closing
provisions in connection with portfolio activities as well as pro-
visions for legal and regulatory matters.
-
develop the so called Schacht Konrad. As of September 30,
2014 and 2013, the provision totals €1,347 million and
€1,096 million, respectively, and is recorded net of a present
value discount of €977 million and €1,259 million, respectively
reflecting the assumed continuous outflow of the total
expected payments until the 2070's.
Warranties - mainly relate to products sold. Order related
losses and risks - are provided for anticipated losses and
risks on uncompleted construction, sales and leasing contracts.
2013
Item Other changes contains reclassifications to line item
Liabilities associated with assets classified as held for disposal
including the disposal of those entities of €131 million.
10
2
31
59
(1,513)
(528)
(8)
(320)
(657)
(337)
(8)
(725)
(771)
3,128
469
3
Except for asset retirement obligations, the majority of the
Company's provisions are generally expected to result in cash
outflows during the next one to 15 years.
102
1
(1,842)
264
4,071
8
1,377
580
691
8,425
1,561
1,398
1,423
3,721
(127)
(38)
7
(59)
(37)
1,745
284
10
22
Fuel efficiency of up to 95% can
be achieved with combined heat
and power (CHP) systems.
95%
High compressor pressure enhances
efficiency and cuts emissions.
Less is more | To boost efficiency, you have to eliminate
unnecessary losses. Intelligent solutions can cut these to a
minimum, enabling the Siemens SGT-750 gas turbine to
achieve a mechanical efficiency of more than 40%. This
requires farsighted planning early on. That's why our engi-
neers leveraged the advantages of digitalization already
during the design phase. Using multi-layered 3D models,
they simulated and planned future maintenance work while
still working on first drafts of the new turbines.
|| | || | ||
22
24 bar
True greatness lies in the details | Efficiency, cost effec-
tiveness and reliability are the three main requirements for
gas turbines. Improvements to details make it possible to
constantly push the limits of what is feasible. A prime
example is our Dry Low Emissions combustion system, which
G703
23
| |
Power generation |||||||
6332
1845
THE
01-Unit Operation GT3
ration
Start indication
development engineer
optimizes fuel use and minimizes harmful NOx emissions.
With its advanced materials and precision processing, our
SGT-750 is deployable worldwide under all possible climatic
conditions - in the desert as well as in the Arctic, on the high
seas as well as on land.
Siemens sales manager,
product manager and
Governance
"Already during the
design phase, we placed
great importance on
the turbine's future ease
of service as well as its
efficiency."
Customer and
business focus
Our path
IIIII
19
Ownership
culture
Siemens <
Stop Indicat
Management
model
Strategic framework
|
Anders Hellberg,
Power generation | Power transmission, power distribution and smart grid |||||||||||||| Energy application ||||||||||||| Imaging and in-vitro diagnostics
||| Efficient power generation requires intelligent solutions like those
offered by our SGT-750 gas turbine. With a capacity of 37 megawatts,
the SGT-750 is one of our smaller gas turbines - but its capabilities are
enormous. On the Baltic Sea in Lubmin, Germany, exhaust heat from
the turbine is used to heat natural gas arriving on site through the
Nord Stream pipeline, thus keeping the gas transportable. In addition,
the electricity generated by the turbine is fed into the public grid. This
two-fold benefit is further enhanced by the turbine's high efficiency and
low emissions, which make the SGT-750 one of the most ecofriendly
turbines in its class.
+60%
Experts expect global demand
for electricity to increase signi-
ficantly by 2030.
20
2x
The demand for electricity
is growing twice as fast
as the global population.
21
21
| | | | |
Power generation |||||||
More IQ per megawatt -
Generating power more
efficiently
Sequences Power
10
G
70
80
°C
9G
90
100
1* SUBD
1105919858
Combating ice with 459°C | The Joule-Thomson effect
describes the phenomenon whereby natural gas in pipelines
cools when the pressure is reduced. At temperatures near the
freezing point, a great deal of energy is needed to heat the
gas in order to prevent icing. In the past, gas-fired boiler
plants with a heat output of 40 megawatts each were used
for this purpose. The SGT-750 offers technology that is both
more efficient and more ecofriendly: exhaust heat produced
during power generation is ideal for heating the natural gas.
Reaching temperatures as high as 459°C, the exhaust airflow
supplies enough energy to heat the gas at the pipeline's
landfall facility in Lubmin, even during the cold winter
months - thus enabling the gas to be further transported.
27
28
Power generation |||||||
Experts are predicting that the demand for electricity
will grow twice as fast as the global population, surging
around 60% by the year 2030. Since resources are scarce,
power generation will increasingly require highly effi-
cient, customized solutions - just like the ones offered
by our flexible and small gas turbines. These gas tur-
bines help secure a stable energy supply since they're
well suited for decentralized applications. Thanks to
decades of experience in the manufacture of gas tur-
bines, we're ideally positioned in this dynamic growth
market, drawing upon extensive expertise to support
customers worldwide.
Striking features of the new SGT-750
include its efficiency and ecofriendliness,
combined with high availability and
reliability. The turbine has an electrical
efficiency of 39.5% and achieves an
efficiency of 40.7% when used as a
mechanical drive. When exhaust heat
is used in a combined heat and power
system, fuel efficiency can be as high
as 95%.
WWW.SIEMENS.COM/SGT-750
Decentralized energy supply made reliable
Gas-fired I power plants are considered an ideal supplement to renewable energy
sources because they're available at short notice when the wind isn't blowing or
the sun isn't shining.
Decentralized energy supplies play a key role in an intelligent power mix. An
increasing number of companies maintain their own power plants that, using a
combined heat and power system, supply valuable process heat that can be used
in manufacturing or for building services - all at competitive electricity prices.
Our portfolio of gas turbines is already ideally tailored to meet the needs of this
market environment. Models with a capacity of 5 to 400 megawatts cover a broad
spectrum of applications and ensure efficiency, reliability, flexibility and environ-
mental compatibility. Low lifecycle costs and high profitability round off this
positive picture.
Our acquisition of Rolls-Royce's aero-derivative gas turbines business will close
an important gap in our portfolio. Originally developed for use in aviation, the
gas turbines from Rolls-Royce feature an efficient, compact and weight-optimized
design. This makes them particularly attractive for energy supplies in the oil and
gas industry. They're also used in decentralized power supplies because they can
start up very quickly when needed and rapidly generate power. These advantages
are particularly useful for managing energy peaks or power reserves for industry
or for stabilizing power grids. As a result, we're expanding our access to the
attractive market of flexible and small gas turbines. We expect high growth poten-
tial in this market in the years to come.
10
60
40 50
-20
T7L NOG
24
Energy supply security according to plan | Ensuring
the continued successful provision of energy in the future
will require sophisticated energy management. To get a grip
on rising energy costs, power generation must become more
efficient. Our online monitoring system performs tasks such
as controlling the capacity utilization of systems and continu-
ously monitoring sensitive components - enabling potential
errors to be detected and resolved at an early stage. The
advantage: the turbine can operate at full load for nearly eight
years, or 68,000 hours, before it has to be comprehensively
overhauled. With rigorous monitoring, this service interval
can be extended even further. That's what we call energy
supply security according to plan.
ENS
17/17
Only 17 maintenance
days are scheduled over
a period of 17 years -
a clear promise.
68,000
The gas turbine can operate
at full load for 68,000 hours
before it's due for its first
comprehensive overhaul.
Maintenance with minimum downtimes | Downtime
is costly and impairs processes. To minimize it, we designed
the SGT-750. Our aim was to ensure that the new turbine
would have the least downtime in its class. And our engi-
neers have kept their word: the SGT-750 has just 17 scheduled
Venb
maintenance days over a period of 17 years. That's the stand-
ard we've set - a benchmark made possible by a design that
offers ease of service and ready access to all important parts.
In addition, high-quality materials and components minimize
the likelihood of failures.
Power generation |||||||
26
How the SGT-750 is helping safeguard Europe's gas
supplies Along its route from Siberia's large natural gas
reserves, the Nord Stream pipeline transports natural gas
through the cold Baltic Sea. Not only does the temperature of
the gas drop during transport, but the pressure also falls - from
about 215 bar at the Russian city of Portovaya to a maximum
of 120 bar in Lubmin, Germany - resulting in a challenging
situation. On the one hand, the pressure is still not low enough
for further transport, for which 100 bar is required. On the
other hand, the gas has already cooled down to such an extent
that a further reduction in pressure could cause the pipelines
to become iced. That's where our SGT-750 gas turbine comes
in, helping ensure the smooth provision of gas to Europe with
its exhaust heat. The fact that the power generated by the
turbine is fed into the grid and can supply up to 50,000 house-
holds with electricity rounds off this success story.
-0
30
30
20
20
-10
25
27
Total
108 | A. To our Shareholders
-
1,612
Debt instruments
-
382
382
Derivative financial instruments
-
2,330
-
2,330
1,612
2,712
-
4,324
-
Total
1,994
382
at fair value
Derivative financial instruments
-
1,749
-
1,749
Level 1
Level 2
September 30, 2013
Level 3
Total
(in millions of €)
Financial assets measured
at fair value
Available-for-sale financial assets
Equity instruments
1,612
1,612
-
Financial liabilities measured
Financial liabilities measured
at fair value
1,047
(1)
Year ended September 30,
2014
19
29
(99)
58
(172)
Financial liabilities measured at amortized cost
(844)
408
(283)
370
Financial assets and financial liabilities
held for trading
Net gains (losses) in fiscal 2014 and 2013 on available-for-sale
financial assets include net gains on derecognition as well as
impairment losses.
2013
Derivative financial instruments
Available-for-sale financial assets
Cash and cash equivalents
1,047
The levels of the fair value hierarchy and its application to our
financial assets and financial liabilities are described below:
Level 1: quoted prices in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted prices that are observ-
able for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices); and
Level 3: inputs for assets or liabilities, not based on observ-
able market data.
The unquoted equity instrument allocated to level 3 of the fair
value hierarchy relates to an investment in an offshore wind
farm. The fair value is determined based on discounted cash
flow calculations. The most significant unobservable input
used to determine the fair value is the cash flow forecast which
is mainly based on the future power generation income. This
income is generally subject to future market developments and
thus price volatility. Since a long-term power purchase agree-
ment is in place that mitigates price volatility, significant
changes to the cash flow forecast are unlikely and thus, no
significant effects on Other comprehensive income, net of
income taxes, are expected.
At the end of the reporting period the Company assesses
whether transfers from one level of the fair value hierarchy to
another level have to be made. In fiscal 2014, there were no
such transfers.
|
131 | B.
Corporate Governance
171 | C
108 | A. To our Shareholders
298
Net gains (losses) of financial instruments are as follows:
(in millions of €)
Loans and receivables
Net losses on loans and receivables contain changes in valua-
tion allowances, gains or losses on derecognition as well as
1,527 3,272
-
212
118
5,105
4,324
1,749
1,047
1,308
765
5
8
In connection with cash flow hedges (main-
ly foreign currency exchange derivatives)
Embedded derivatives
406
152
30
122
153
1,749
98
476
September 30,
2014
2013
Financial assets measured at fair value
Available-for-sale financial assets
Derivative financial instruments
Not designated in a hedge accounting
relationship
2,536
1,994
2,569
2,330
1,783
1,587
In connection with fair value hedges
(mainly interest rate derivatives)
In connection with cash flow hedges (main-
ly foreign currency exchange derivatives)
Embedded derivatives
Financial liabilities measured at fair value
Derivative financial instruments
Not designated in a hedge accounting
relationship
In connection with fair value hedges
472
Total
1,047
The Company limits default risks resulting from derivative
financial instruments by a careful counterparty selection.
Derivative financial instruments are generally transacted with
financial institutions with investment grade credit ratings. The
fair valuation of derivative financial instruments at Siemens
incorporates all factors that market participants would con-
sider. This includes credit risks for which a credit valuation
adjustment is determined based on Siemens' net exposure
towards each counterparty. The exact calculation of fair values
of derivative financial instruments depends on the specific
type of instrument:
In determining the fair values of the derivative financial instru-
ments, no compensating effects from underlying transactions
(e.g. firm commitments and forecast transactions) are taken
into consideration.
The following table allocates financial assets and financial
liabilities measured at fair value to the three levels of the fair
value hierarchy.
(in millions of €)
Financial assets measured
September 30, 2014
Total
Level 1 Level 2 Level 3
307
2,536
307 1,834
702
2,569
307 5,105
at fair value
Available-for-sale financial assets
1,527
Equity instruments
1,527
Debt instruments
Derivative financial instruments
703
1
702
2,569
The warrants issued together with US$3 billion bonds in fiscal
2012 are valued based on an option pricing model. The most
significant inputs used are the underlying Siemens and OSRAM
share price and the implied volatility.
The fair value of available-for-sale financial assets quoted in an
active market is based on price quotations at the period-end
date. The fair value of debt instruments is either based on
prices provided by price service agencies or estimated by dis-
counting future cash flows using current market interest rates.
Derivative commodity contracts - The fair value of commodity
swaps is based on forward commodity prices. Commodity
options are valued on the basis of quoted market prices or on
estimates based on option pricing models.
Derivative interest rate contracts - The fair values of derivative
interest rate contracts (e.g. interest rate swap agreements) are
estimated by discounting expected future cash flows using cur-
rent market interest rates and yield curves over the remaining
term of the instrument. Interest rate futures and interest rate
options are valued on the basis of quoted market prices when
available. If quoted market prices are not available, interest rate
options are valued based on option pricing models.
247
D. Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
297
Derivative currency contracts - The fair value of foreign cur-
rency exchange contracts is based on forward exchange rates.
Currency options are valued on the basis of quoted market
prices or on estimates based on option pricing models.
(in millions of €)
recoveries of amounts previously written-off. Net gains (losses)
in fiscal 2014 and 2013 on financial liabilities measured at amor-
tized cost are comprised of gains (losses) from derecogni-
tion and the ineffective portion of fair value hedges. Net gains
(losses) in fiscal 2014 and 2013 on financial assets and financial
liabilities held for trading consist of changes in the fair value of
derivative financial instruments, including interest income and
expense, for which hedge accounting is not applied.
Offsetting
combined interest/currency
swaps
1,769
456
1,637
261
Commodity swaps
43
46
35
49
Embedded derivatives
212
30
118
Interest rate swaps and
122
331
901
337 | E.
Additional Information
299
NOTE 30 Derivative financial instruments
and hedging activities
As part of the Company's risk management program, a variety
of derivative financial instruments is used to reduce risks
resulting primarily from fluctuations in foreign currency ex-
change rates, interest rates and commodity prices.
The fair values of each type of derivative financial instruments
recorded as financial assets or financial liabilities are as follows:
(in millions of €)
September 30, 2013
Asset Liability
Hedging activities
The Company's operating units apply hedge accounting for cer-
tain significant forecast transactions and firm commitments
denominated in foreign currencies. Particularly, the Company
has entered into foreign currency exchange contracts to reduce
the risk of variability of future cash flows resulting from fore-
cast sales and purchases as well as firm commitments. This risk
results mainly from contracts denominated in US$ both from
Siemens' operating units entering into long-term contracts,
e.g. project business, and from the standard product business.
Cash flow hedges - As of September 30, 2014 and 2013, the
ineffective portion of cash flow hedges is not significant indi-
vidually or in aggregate.
Periods in which the hedged forecast transactions or the firm
commitments denominated in foreign currency are expected to
impact profit or loss:
September 30, 2014
Asset Liability
Foreign currency exchange
contracts
352
416
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
Options
316
6
FOREIGN CURRENCY EXCHANGE RATE
RISK MANAGEMENT
Derivative financial instruments
not designated in a hedging relationship
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through
a Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various
derivative financial instruments, primarily foreign currency
exchange contracts, foreign currency swaps and options, are
utilized to minimize such risks. Such a strategy does not qualify
for hedge accounting treatment. Accordingly, all such deriva-
tive financial instruments are recorded at fair value on the Con-
solidated Statements of Financial Position, either in line items
Other current financial assets (liabilities) or line items Other
financial assets (liabilities); changes in fair values are charged
to net income (loss).
The Company also has foreign currency derivatives, which are
embedded in sale and purchase contracts denominated in a
currency that is neither the functional currency of the substan-
tial parties to the contract nor a currency which is commonly
used in the economic environment in which the contract
takes place. Gains (losses) relating to such embedded foreign
currency derivatives are reported in line item Cost of sales in
the Consolidated Statements of Income.
INTEREST RATE RISK MANAGEMENT
Interest rate risk arises from the sensitivity of financial assets
and liabilities to changes in market interest rates. The Company
seeks to mitigate that risk by entering into interest rate deriva-
tives such as interest rate swaps, options, interest rate futures
and forward rate agreements.
Derivative financial instruments
not designated in a hedging relationship
For the interest rate risk management relating to the Group
excluding SFS' business, derivative financial instruments are
used under a portfolio-based approach to manage interest risk
actively relative to a benchmark. The interest rate management
relating to the SFS business remains to be managed separately,
considering the term structure of SFS' financial assets and lia-
bilities on a portfolio basis. Neither approach qualifies for
hedge accounting treatment. Accordingly, all interest rate de-
rivatives held in this relation are recorded at fair value, either in
line items Other current financial assets (liabilities) or in line
items Other financial assets (liabilities), and changes in the fair
values are charged to line item Other financial income (ex-
penses), net. Net cash receipts and payments relating to inter-
est rate swaps used in offsetting relationships are also recorded
in line item Other financial income (expenses), net.
300
131 | B.
Corporate Governance
171 | C
Combined Management Report
(94)
192
(62)
net of income taxes into revenue
or cost of sales
123
281
Credit Default Swaps
4
(in millions of €)
Year ended September 30,
2015
2016
2017 to 2020 and
2019 thereafter
2,569
1,749
2,330
1,047
Expected gain (loss)
to be reclassified from line item
Other comprehensive income,
(166)
The amounts presented include foreign currency gains and
losses from the realization and valuation of the financial assets
and liabilities mentioned above.
208
774
400
Total
2,764
7
2,757
1,355
1,402
Financial liabilities
Derivative financial liabilities
1,533
7
1,526
905
621
(in millions of €)
400
Financial assets
400
1,402
Siemens enters into master netting agreements and similar
agreements for derivative financial instruments and reverse
repurchase agreements. The requirements to offset recognized
financial instruments are usually not met. The following table
reflects financial assets and financial liabilities that are subject
to netting agreements and similar agreements:
|
(in millions of €)
Financial assets
Gross amounts
Amounts
set off in the
Statement
of Financial
Position
Net amounts
in the
Statement
of Financial
Position
Related
amounts not
set off in the
Statement
of Financial
Position
September 30, 2014
Net amounts
Derivative financial assets
2,364
7
2,357
955
Reverse repurchase agreements
566
Derivative financial assets
Financial liabilities
2,234
22
2,212
587
1,625
100
100
100
2,334
22
2,312
687
1,625
796
22
Position
Reverse repurchase agreements
Net amounts
Related
amounts not
set off in the
Statement
of Financial
Derivative financial liabilities
247
D. Consolidated Financial Statements
248 D.1
249 D.2
250 D.3
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
Gross amounts
Amounts
set off in the
Statement
of Financial
Position
Net amounts
in the
Statement
of Financial
Position
September 30, 2013
Financial instruments categorized as financial assets and
financial liabilities measured at fair value are presented in the
following table:
Combined Management Report
Fixed-rate and variable-rate receivables with a remaining term
of more than twelve months, including receivables from
finance leases, are evaluated by the Company based on para-
meters such as interest rates, specific country risk factors, indi-
vidual creditworthiness of the customer, and the risk character-
istics of the financed project. Based on this evaluation,
allowances for these receivables are recognized. As of Septem-
ber 30, 2014 and 2013, the carrying amounts of such receiv-
ables, net of allowances, approximate their fair values.
HERKULES obligations
1,490
Other
2,362
6,687
1,890
1,864
5,970
622
1,593
Item Credit guarantees cover the financial obligations of third
parties in cases where Siemens is the vendor and (or) contrac-
tual partner. These guarantees generally provide that in the
event of default or non-payment by the primary debtor,
Siemens will be required to settle such financial obligations.
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which include performance bonds and guarantees of
advanced payments in cases where Siemens is the general or
subsidiary partner in a consortium. In the event of non-fulfill-
ment of contractual obligations by the consortium partner(s),
Siemens will be required to pay up to an agreed-upon maxi-
mum amount. These agreements span the term of the con-
tract, typically ranging from three months to ten years in fiscal
2014 and 2013. Generally, consortium agreements provide for
fallback guarantees as a recourse provision among the consor-
tium partners. As of September 30, 2014 and 2013, the Company
accrued €3 million and €66 million, respectively, relating to
performance guarantees.
In fiscal 2007, The Federal Republic of Germany commissioned a
consortium consisting of Siemens and IBM Deutschland GmbH
(IBM) to modernize and operate the non-military information
and communications technology of the German Federal Armed
Forces (Bundeswehr). This project is called HERKULES. A project
company, BWI Informationstechnik GmbH (BWI), provides the
services required by the terms of the contract. Siemens is a
shareholder in the project company. The total contract value
amounts to a maximum of approximately €6 billion. In connec-
tion with this project, Siemens issued several guarantees con-
nected to each other legally and economically in favor of the
Federal Republic of Germany and of the consortium member
IBM in December 2006. The guarantees ensure that BWI has
sufficient resources to provide the required services and to fulfill
its contractual obligations. These guarantees are listed as a sepa-
rate item HERKULES obligations in the table above due to their
compound and multilayer nature. Total future payments poten-
tially required by Siemens amount to €1.49 billion and €1.89 bil-
lion as of September 30, 2014 and 2013, respectively and will be
reduced by approximately €400 million per year over the re-
maining three-year contract period as of September 30, 2014.
Yearly payments under these guarantees are limited to €400 mil-
lion plus, if applicable, a maximum of €90 million in unused
guarantees carried forward from the prior year.
108 | A. To our Shareholders
292
131 | B.
Corporate Governance
In addition, Siemens provides credit guarantees generally as
guarantees for credit-lines with variable utilization for obliga-
tions of joint ventures and associates accounted for using the
equity method. The maximum amount of these guarantees is
equal to the outstanding balance of the credit or, in case where
a credit line is subject to variable utilization, the nominal
amount of the credit line. These guarantees have terms up to
19 years and twelve years, respectively, in fiscal 2014 and 2013.
Except for statutory recourse provisions against the primary
debtor, credit guarantees are generally not subject to additional
contractual recourse provisions. The Company accrued €49 mil-
lion and €38 million relating to credit guarantees as of Septem-
ber 30, 2014 and 2013, respectively.
2,061
Guarantees of third-party performance
Credit guarantees
P-1
A-1+
337 | E.
Additional Information
291
Moody's made no rating changes in fiscal 2014. Moody's long-
term credit rating for Siemens is "Aa3" and the rating outlook is
"negative." Within Moody's long-term credit rating scale, the
classification "Aa" is the second highest category. The numeri-
cal modifier "3" indicates a ranking in the lower end of that
category. The rating outlook is an opinion regarding the likely
direction of an issuer's long-term credit rating over the
medium-term. Rating outlooks of Moody's fall into the follow-
ing six categories: "positive," "negative," "stable," "developing,"
"ratings under review" or "no outlook."
Moody's short-term credit rating is "P-1." The classification "P-1"
is the highest available rating in the prime rating system of
Moody's, which assesses issuers' ability to honor senior finan-
cial obligations and contracts. It applies to senior unsecured
obligations with an original maturity of less than one year.
S&P made also no rating changes in fiscal 2014. S&P's long-
term credit rating for Siemens is "A+" and the rating outlook is
"stable." Within S&P's long-term credit rating scale, "A" is the
third highest long-term rating category. The modifier "+" indi-
cates that our long-term debt ranks in the upper end of the "A"
category. Rating outlooks of S&P fall into the following four
categories: "positive," "negative," "stable" or "developing." S&P's
short-term rating is "A-1+," which is the highest rating within
S&P's short-term rating scale.
NOTE 27 Commitments and contingencies
GUARANTEES AND OTHER COMMITMENTS
The following table presents the undiscounted amount of
maximum potential future payments for each major group of
guarantees:
(in millions of €)
Guarantees
2014
September 30,
2013
171 C.
A-1+
Combined Management Report
As of September 30, 2014 and 2013, future payment obligations
under non-cancellable operating leases are as follows:
During fiscal year 2014 Siemens Industrial Turbomachinery Ltd.,
UK was sued before an Iranian Court. The alleged damage claims
are not quantified. Siemens will defend itself against the action.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, Siemens AG agreed on a settlement
with nine out of eleven former members of the Managing and
Supervisory Board in January 2010. The settlement relates to
claims of breaches of organizational and supervisory duties
in view of the accusations of illegal business practices that oc-
curred in the course of international business transactions
in calendar 2003 to 2006 and the resulting financial burdens
for the Company. In January 2013, Siemens AG agreed on a
settlement with Dr. Thomas Ganswindt. In August 2014,
Siemens AG reached a settlement with Mr. Joachim Neubürger.
The settlement is subject to the approval of the annual share-
holders' meeting of Siemens AG and will terminate the litiga-
tion proceeding.
As previously reported in July 2008, Hellenic Telecommunica-
tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
with the district court of Munich, Germany, seeking to compel
247
D. Consolidated Financial Statements
248 D.1
As previously reported, Essent Wind Nordsee Ost Planungs-
und Betriebsgesellschaft mbH filed a request for arbitration
against Siemens AG in October 2013 alleging breaches of a con-
tract for the delivery of a High Voltage Substation entered into
by the parties in 2010. The claimant claims damages in an
amount of €256 million plus interest and a determination that
Siemens AG shall be liable for any further damages claimed to
amount to €152 million. Siemens AG filed a motion to dismiss
the request for arbitration. In addition, Siemens filed counter-
claims of €48 million plus interest and requested a determina-
tion concerning compensation for all future damages.
249 D.2
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
250 D.3
Completion of the power plant has been delayed for reasons
which are in dispute. In December 2008, the supplier consor-
tium filed a request for arbitration against TVO demanding an
extension of the construction time, additional compensation,
milestone payments, damages and interest. In 2013, the sup-
plier consortium increased its monetary claims to €2.71 billion.
TVO rejected the claims and made counterclaims against the
supplier consortium consisting primarily of damages due to
the delay. As of September 2012, TVO's counterclaims amounted
to €1.59 billion based on a delay of up to 56 months. In Octo-
ber 2014, TVO estimated that its counterclaims, based on a de-
lay of 116 months, may be increased to €2.3 billion in calendar
year 2015. The supplier consortium increased its monetary
claims in October 2014 to €3.39 billion. The arbitration proceed-
ings may continue for several years. The amounts claimed by
the parties may be updated further.
As previously reported, Siemens AG is a member of a supplier
consortium that has been contracted to construct the nuclear
power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
(TVO) on a turnkey basis. The agreed completion date for the
nuclear power plant was April 30, 2009. Siemens AG's share of
the contract value is approximately 27%. The other member of
the supplier consortium is a further consortium consisting of
Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
September 30,
2013
807
1,556
(in millions of €)
2014
Within one year
815
After one year but not more than five years
More than five years
1,574
828
3,217
757
3,120
Total operating rental expense for the years ended Septem-
ber 30, 2014 and 2013 were €1,122 million and €1,049 million,
respectively. Total sublease income amounts to €51 million and
€62 million, respectively in fiscal 2014 and 2013. Total future
minimum sublease payments expected to be received under
non-cancellable subleases as of September 30, 2014 and 2013
amount to €94 million and €139 million, respectively.
As of September 30, 2014 and 2013, the Company has commit-
ments to make capital contributions to the equity of various
companies of €132 million and €223 million, respectively.
The Company is jointly and severally liable and has capital con-
tribution obligations as a partner in commercial partnerships
and as a participant in various consortiums.
NOTE 28
Legal proceedings
Item Other includes indemnifications issued in connection
with dispositions of business entities. Such indemnifications, if
customary to the relevant transactions, may protect the buyer
from potential tax, legal and other risks in conjunction with the
purchased business entity. Indemnifications include those for
Unify (EN), disposed of in fiscal 2008 and Siemens IT Solutions
and Services disposed of in fiscal 2011. As of September 30,
2014 and 2013, the total amount accrued for guarantees in item
Other is €168 million and €242 million, respectively.
Additional Information
P-1
Aa3
1,944
19,326 18,509
(8,013) (9,190)
(601)
10,663
8.05
15,600
18,663
8.69
1,938
2,148
(in millions of €)
2013
September 30,
Debt to equity ratio
(in millions of €)
Allocated equity
SFS debt
Siemens calculates the item Industrial net debt as set forth in
the table below:
indicates the approximate amount of time in years that would
be needed to cover Industrial net debt through continuing
income, without taking into account interest, taxes, deprecia-
tion and amortization.
The fair value of notes and bonds is based on prices provided
by price service agencies at the period-end date (Level 2). The
fair value of loans from banks and other financial indebted-
ness, obligations under finance leases as well as other non-
current financial liabilities is estimated by discounting future
cash flows using rates currently available for debt of similar
terms and remaining maturities (Level 2).
2014
2014
September 30,
2013
Short-term debt and current maturities of
long-term debt¹
Less: 50% nominal amount hybrid bond4
Plus: Credit guarantees
9,265
9,324
Plus: Post-employment benefits³
(15,600)
(18,663)
Less: SFS Debt²
12,008
Net debt
(925)
Less: Current available-for-sale financial assets
Less: Cash and cash equivalents
Plus: Long-term debt¹
1,620
Less: Fair value hedge accounting adjustment
Industrial net debt
A+
Adjusted EBITDA (continuing operations)
Industrial net debt/Adjusted EBITDA
(continuing operations)
0.15
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
September 30, 2014
249 D.2
September 30, 2013
S&P
Service
Moody's
Investors
Service
S&P
Aa3
A+
Moody's
Investors
252 D.5
Consolidated Statements of Income
248 D.1
0.35
1 The item Short-term debt and current maturities of long-term debt as well as the
item Long-term debt included, in total, fair value hedge accounting adjustments
of €1,121 million and €1,247 million in fiscal 2014 and 2013, respectively.
2 The adjustment considers that both Moody's and S&P view SFS as a captive finance
company. These rating agencies generally recognize and accept higher levels
of debt attributable to captive finance subsidiaries in determining credit ratings.
Following this concept, Siemens excludes SFS Debt in order to derive an industrial
net debt which is not affected by SFS's financing activities.
3 To reflect Siemens' total post-employment benefit liability, industrial net debt
includes line item Post-employment benefits as presented in the Consolidated
Statements of Financial Position.
4 The adjustment for our hybrid bond considers the calculation of this financial ratio
applied by rating agencies to classify 50% of our hybrid bond as equity and 50% as
debt. This assignment reflects the characteristics of our hybrid bond such as a long
maturity date and subordination to all senior and debt obligations.
5 Debt is generally reported with a value representing approximately the amount to
be repaid. However, for debt designated in a hedging relationship (fair value
hedges), this amount is adjusted for changes in market value mainly due to changes
in interest rates. Accordingly, Siemens deducts these changes in market value in
order to end up with an amount of debt that approximately will be repaid. Siemens
believes this is a more meaningful figure for the calculation presented above.
To measure capital efficiency at SFS, equity capital is allocated
to SFS. Allocated equity capital differs from book capital as it is
mainly determined and influenced by the size and quality of its
portfolio of commercial finance as well as project and struc-
tured finance assets (primarily loans and leases) and equity
investments. This allocation is designed to cover the risks of
the underlying business. The actual risk of the SFS portfolio is
evaluated and controlled on a regular basis.
In November 2013, Siemens announced that Siemens intends
to further optimize the Company's capital structure through a
share buyback of up to €4 billion in volume in the time period
until October 31, 2015. In May 2014, we started to repurchase
shares. The share buyback serves exclusively the purpose of
retiring shares and reducing capital, for issuing shares to
employees, board members of associated companies and mem-
bers of the Managing Board, and for meeting obligations under
convertible and/or warrant bonds. For additional information,
see NOTE 25 EQUITY.
In fiscal 2015, Siemens may again fulfill commitments for
share-based compensation through treasury shares.
A key factor in maintaining a strong financial profile is our
credit rating which is affected by, among other factors,
Siemens' capital structure, profitability, ability to generate cash
flows, geographic and product diversification and Siemens'
competitive market position. Siemens' current corporate credit
ratings from Moody's Investors Service (Moody's) and Stan-
dard & Poor's Ratings Services (S&P) are noted as follows:
SFS' capital structure differs from the capital structure of
Siemens' industrial business, as SFS' business is capital inten-
sive and requires a larger amount of debt to finance its opera-
tions, in particular to finance SFS's expanding asset base. The
following table provides information on the capital structure of
SFS as of September 30, 2014 and 2013:
Long-term debt
Short-term debt
247
D.
Consolidated Financial Statements
774
622
(932) (899)
(1,121) (1,247)
1,390 2,805
9,139 8,097
293
774
As previously reported, in June 2008, the Republic of Iraq filed
an action requesting unspecified damages against 93 named
defendants with the United States District Court for the South-
ern District of New York on the basis of findings made in the
"Report of the Independent Inquiry Committee into the United
Nations Oil-for-Food Programme." Siemens S.A.S. France,
Siemens Sanayi ve Ticaret A.S., Turkey, and the former Siemens
subsidiary OSRAM Middle East FZE, Dubai, are among the 93
named defendants. In February 2013, the trial court dismissed
the Republic of Iraq's action. The Republic of Iraq appealed the
decision, which was then affirmed by the court of appeals. The
Republic of Iraq thereafter petitioned for an "en banc" review of
the appellate decision. The court of appeals has not yet granted
the request for review.
12,558
12,558
12,944
12,944
5,345
5,345
amount
5,261
8,013
8,013
9,190
9,190
14,378
14,378
5,261
Fair value
18,165
Carrying
amount
Trade payables³
Loans from banks and other financial indebtedness
Obligations under finance leases
Other non-derivative financial liabilities
30,128
29,704
1,338
887
411
160
31,877
30,751
September 30, 2014
Fair value
September 30, 2013
11,126
Notes and bonds
11,126
167
130
167
130
186
1,588
1,832
1,821
1,588
2,652
7,599
7,599
7,594
7,594
18,491
18,742
2,635
1,651
1,651
1 Consists of (1) €12,537 million and €12,932 million trade
receivables from the sale of goods and services in fiscal
2014 and 2013, respectively, as well as (2) €20 million
and €11 million receivables included in line item Other
financial assets in fiscal 2014 and 2013, respectively. As
of September 30, 2014 and 2013, trade receivables from
Siemens AG to disclose the outcome of its internal investiga-
tions with respect to OTE. OTE seeks to obtain information with
respect to allegations of undue influence and/or acts of bribery
in connection with contracts concluded between Siemens AG
and OTE from calendar 1992 to 2006. At the end of July 2010,
OTE expanded its claim and requested payment of damages by
Siemens AG of at least €57 million to OTE for alleged bribery
payments to OTE employees. At the end of October 2014 OTE
increased its damage claim to the amount of at least €68 mil-
lion. Siemens AG continues to defend itself against the ex-
panded claim.
18,787
The carrying amounts of cash and cash equivalents, trade and
other receivables and trade payables with a remaining term of
up to twelve months, other current financial assets and liabili-
ties represent a reasonable approximation of their fair values,
mainly due to the short-term maturities of these instruments.
As of September 30, 2014 and 2013, the carrying amount of
financial assets Siemens has pledged as collateral amounted to
€271 million and €344 million, respectively.
Cash and cash equivalents includes €429 million and €320 mil-
lion as of September 30, 2014 and 2013, respectively, which are
not available for use by Siemens mainly due to minimum
reserve requirements with banks.
296
108 | A. To our Shareholders
Combined Management Report
171 | C
Corporate Governance
131 | B.
3 As of September 30, 2014 and 2013, trade payables of
€40 million and €32 million have a remaining term of
more than twelve months.
2 Consists of equity instruments classified as available-for-
sale, for which a fair value could not be reliably measured
and which are therefore recognized at cost.
€686 million have a remaining term of more than twelve
months.
the sale of goods and services of €788 million and
192
Financial liabilities measured at cost or amortized cost
Carrying
Other non-derivative financial assets
As previously reported, the Inter-American Development Bank
(IADB) conducted administrative proceedings in two Latin-
American countries against, among others, Siemens alleging
misconduct in connection with public invitations to tender in
calendar 2003. In April 2014, a settlement was reached with the
IADB which involves a payment of a single digit million €
amount and a voluntary restraint from IADB-financed projects
for three years by two Latin-American businesses, one of which
is no longer owned by Siemens.
For legal proceedings information required under IAS 37, Provi-
sions, Contingent Liabilities and Contingent Assets is not dis-
closed, if the Company concludes that the disclosure can be
expected to seriously prejudice the outcome of the litigation.
In addition to the investigations and legal proceedings described
above, Siemens AG and its subsidiaries have been named as de-
fendants in various other legal actions and proceedings arising
in connection with their activities as a global diversified group.
Some of these pending proceedings have been previously dis-
closed. Some of the legal actions include claims or potential
claims for compensatory and in some cases punitive damages
for indeterminate amounts. Siemens is from time to time also
involved in regulatory or other investigations in several jurisdic-
tions beyond those described above. Siemens cooperates with
the relevant authorities and, where appropriate, conducts inter-
nal investigations with the assistance of in-house and external
counsel. In some instances, criminal or civil sanctions could be
brought against the Company itself or against certain of its em-
ployees in connection with possible violations of law. In addi-
tion, the scope of pending investigations may be expanded and
new investigations commenced in connection with allegations
of bribery or other illegal acts. The Company's operating activi-
ties, financial results and reputation may also be negatively
affected, particularly as a result of penalties, fines, disgorge-
ments, compensatory damages, third-party litigation, including
with competitors, the formal or informal exclusion from public
invitations to tender, or the loss of business licenses or permits.
Additional expenses and provisions, which could be material,
may need to be recorded in the future for penalties, fines, dam-
ages or other charges in connection with the investigations.
Given the number of legal actions and other proceedings to
which Siemens is subject, some may result in adverse decisions.
Siemens contests actions and proceedings when it considers it
appropriate. In view of the inherent difficulty of predicting the
outcome of such matters, particularly in cases in which claim-
ants seek indeterminate damages, Siemens may not be able to
predict what the eventual loss or range of loss related to such
matters will be. The final resolution of the matters discussed in
this paragraph could have a material effect on Siemens' busi-
ness, results of operations and financial condition for any report-
ing period in which an adverse decision is rendered. There can
be no assurance that the results of any additional legal matter
not separately discussed in this paragraph will not have a mate-
rial negative impact on the Company's net worth, financial con-
dition and operational results. However, Siemens currently does
not expect its net worth, financial condition or operational
results to be materially affected by such additional legal matters
not separately discussed in this paragraph.
247
D. Consolidated Financial Statements
248 D.1
As previously reported, the Vienna public prosecutor in Austria
is conducting an investigation into payments between calendar
1999 and calendar 2006 relating to Siemens AG Österreich for
which adequate services rendered could not be identified. In
September 2011, the Vienna public prosecutor extended the
investigations to include a tax evasion matter for which
Siemens AG Österreich is potentially liable. Siemens is cooper-
ating with the authorities.
249 D.2
251 D.4
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
252 D.5
254 D.6
330 D.7
Available-for-sale financial assets²
337 | E.
250 D.3
As previously reported, in August 2013, a Brazilian Appellate
Court upheld a decision to suspend Siemens Ltda. Brazil from
participating in public tenders and signing contracts with
public administrations in Brazil for a five year term, based on
alleged irregularities in calendar 1999 and 2004 public tenders
with the Brazilian Postal Authorities. Siemens Ltda. Brazil has
further appealed the decision. In March 2014, upon request of
Siemens Ltda. Brazil, said exclusion from public tenders and
contracts was temporarily suspended until a final court deci-
sion is reached.
As previously reported, CADE is conducting – unrelated to the
above mentioned proceedings - two further investigations into
possible antitrust behavior in the field of gas-insulated and
air-insulated switchgear in the 1990's calendar years to 2006.
Siemens is cooperating with the authorities.
-
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position
regarding an alleged anti-competitive arrangement between
April 1988 and April 2004 in the field of gas-insulated switch-
gear. In September 2013, the Israeli Antitrust Authority con-
cluded that Siemens AG was a party to an illegal restrictive
arrangement regarding the Israeli gas-insulated switchgear
market between 1988 and 2004, with an interruption from
October 1999 to February 2002. The Company appealed against
this decision in May 2014.
Based on the above mentioned conclusion of the Israeli Anti-
trust Authority, two electricity consumer groups filed each a
motion to certify a class action for cartel damages against a
number of companies including Siemens AG with an Israeli
District Court in September 2013. Both class actions seek com-
pensation for alleged damages, which are claimed to be in a
range of ILS 2 billion (approximately €400 million) to ILS
2.8 billion (approximately €600 million). In addition, the Israel
Electric Corporation (IEC) filed at the end of December 2013 a
separate claim for damages with the Israeli state court against
Siemens AG and other companies that allegedly formed a cartel
in the Israeli gas insulated switchgear market in the amount of
ILS 3.8 billion (approximately €800 million). Siemens AG is
defending itself against the actions.
As previously reported, claims are being asserted against
Siemens in connection with a decision of the European Com-
mission rendered in January 2007 regarding antitrust violations
in the high-voltage gas-insulated switchgear market, which has
become binding and final. Among such claims is a claim as-
serted by National Grid Electricity Transmission Plc. (National
Grid) with the High Court of England and Wales in Novem-
ber 2008. The Parties are no longer in dispute with each other
and settled the High Court action in fiscal year 2014.
As previously reported, in May 2013, Siemens Ltda. in Brazil
(Siemens Ltda. Brazil) entered into a leniency agreement with
the Administrative Council for Economic Defense (CADE) and
other relevant Brazilian authorities relating to possible anti-
trust violations in connection with several Brazilian metro
transport projects. In March 2014, CADE commenced adminis-
trative proceedings, confirming Siemens Ltda. Brazil's immu-
nity from administrative fines for the reported potential mis-
conduct. In connection with the above mentioned metro
transport projects, several Brazilian authorities initiated inves-
tigations relating to alleged criminal acts (corruptive payments,
anti-competitive conduct, undue influence on public tenders).
In March 2014, Siemens Ltda. Brazil signed an agreement with
the Public Prosecutor's Office of the State of São Paulo ("Public
Prosecutor's Office São Paulo") that formalizes and structures
the cooperation in the investigations.
In March 2014, Siemens was informed that in connection with
the above mentioned metro transport projects the Public Pros-
ecutor's Office São Paulo has requested criminal proceedings at
court into alleged violations of Brazilian antitrust law against a
number of individuals including current and former Siemens
employees.
In May 2014 the Public Prosecutor's Office São Paulo initiated a
law suit against Siemens Ltda. Brazil as well as other companies
and several individuals in the amount of BRL 2.5 billion
(approximately €800 million) in relation to a train refurbish-
ment project that is not part of the above cooperation agree-
ment. A technical note issued by the Brazilian cartel authority
CADE earlier in calendar 2014 had not identified any anticompet-
itive wrongdoing by Siemens Ltda. Brazil in relation to this proj-
ect. Siemens Ltda. Brazil is defending itself against the action.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 | C
Combined Management Report
294
It cannot be excluded that further significant damages claims
will be brought by customers or the state against Siemens based
on the outcome of the above mentioned investigations.
Additional Information
295
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
The following table presents the carrying amounts of each
category of financial assets and financial liabilities:
September 30,
1,995
Financial assets held for trading
625
574
Derivatives designated in a hedge accounting relationship
NOTE 29 Additional disclosures on financial
instruments
9,190
Cash and cash equivalents
29,331
32,281
Loans and receivables
2013
2014
8,013
1,705
Financial assets:
2,728
(in millions of €)
Cash and cash equivalents
Receivables from finance leases
Trade and other receivables¹
Financial assets measured at cost or amortized cost
(in millions of €)
The following table presents the fair values and carrying
amounts of financial assets and financial liabilities measured at
cost or amortized cost:
Available-for-sale financial assets
Derivatives designated in a hedge accounting relationship
Financial liabilities measured at amortized cost
Financial liabilities:
43,010
45,591
2,161
Financial liabilities held for trading
Share-based payment awards at Siemens, including Bonus
Awards, Stock Awards, the Share Matching Program and its
underlying plans as well as the Jubilee Share Program are pre-
dominately designed as equity-settled plans and to a limited
extent as cash-settled plans. If participating Siemens compa-
nies cease to be part of the Siemens Group, they are no longer
eligible to participate in future share-based payment awards at
Siemens. In such cases the participating Siemens companies
have the right to settle the share-based payment awards pre-
maturely. Total pretax expense for share-based payment recog-
nized in line item Income from continuing operations
amounted to €184 million and €181 million for the years ended
September 30, 2014 and 2013, respectively, and refers primar-
ily to equity-settled awards, including the Company's Base
Share Program.
STOCK AWARDS
4,876,455
4,985,998
(149,942)
(324,665)
306
Combined Management Report
171 | C
Corporate Governance
131 | B.
108 | A. To our Shareholders
In fiscal 2014 and 2013, agreements were entered into which
entitle members of the Managing Board to stock awards contin-
gent upon attaining a prospective performance-based target of
Siemens stock relative to five competitors (for fiscal 2014 Philips
was replaced by Alstom). The fair value of these entitlements
amounting to €5 million and €7 million, respectively, in fiscal
2014 and 2013, was calculated by applying a valuation model.
Inputs to that model include an expected weighted volatility of
Siemens shares of 22% in fiscal 2014 and 24% in fiscal 2013 and
a market price of €98.36 in fiscal 2014 and €78.94 in fiscal 2013
per Siemens share. Expected volatility was determined by refer-
ence to historic volatilities. The model applies a risk-free inter-
est rate of up to 1.0% in fiscal 2014 and up to 0.8% in fiscal 2013
and an expected dividend yield of 3.1% in fiscal 2014 and 3.8%
in fiscal 2013. Assumptions concerning share price correlations
were determined by reference to historic correlations.
In fiscal 2014 and 2013, agreements were entered into which
entitle members of the Managing Board to stock awards contin-
gent upon attaining an EPS-based target. The fair value of these
entitlements amounting to €5 million and €6 million, respec-
tively, in fiscal 2014 and 2013, was determined by calculating
the present value of the target amount.
Additionally one portion of the variable compensation com-
ponent (bonus) for members of the Managing Board is granted
in the form of non-forfeitable awards of Siemens stock (Bonus
Awards).
The other half of the annual target amount for stock awards
is based on the share price performance of Siemens shares
relative to the share price performance of five important
Siemens competitors (ABB, General Electric, Philips, Rockwell,
Schneider) during the four-year restriction period. The target
attainment is determined during the four-year restriction
period for the stock awards and accordingly, determines the
number of Siemens shares ultimately transferred following
the restriction period. If the target attainment is up to 100%,
settlement is in shares. If the target attainment exceeds 100%
(up to 200%) an additional cash payment corresponding to the
outperformance results.
Half of the annual target amount for stock awards is based on
the average of earnings per share (EPS, basic) of the past three
fiscal years. The target attainment determines the number of
stock awards upon allocation. Settlement of these stock awards
is in shares following the four-year restriction period.
Since fiscal 2012, the allocation of stock awards as a share-
based payment has been increasingly tied to corporate perfor-
mance criteria. The target attainment for the performance
criteria ranges between 0% and 200%.
awards may occur in newly issued shares of capital stock of
Siemens AG, treasury shares or in cash. The settlement method
will be determined by the Managing Board and the Supervisory
Board. Each fiscal year, the Company decides whether or not
to grant stock awards. The Supervisory Board decides about
the number of stock awards to the Managing Board and the
Managing Board decides about the number of stock awards
to members of the senior management and other eligible
employees.
The Company grants stock awards as a means for providing
share-based compensation to members of the Managing
Board, members of the senior management of Siemens AG
and its domestic and foreign subsidiaries and other eligible
employees. Stock awards are subject to a restriction period of
about four years and entitle the beneficiary to Siemens shares
without payment of consideration following the restriction
period. Stock awards granted in fiscal 2008 to 2011 were gener-
ally subject to a restriction period of three years. In principle,
stock awards forfeit if the beneficiary's employment with the
Company terminates prior to the expiration of the restriction
period. During the restriction period, beneficiaries are not
entitled to dividends. Stock awards may not be transferred,
sold, pledged or otherwise encumbered. Settlement of stock
Commitments to members of the Managing Board
The remuneration system for the Managing Board was revised
by the Supervisory Board, effective as of fiscal 2014, which
is explained in detail in the Compensation Report within the
Corporate Governance Report.
Non-vested, end of period
Compensation expense related to stock awards is generally rec-
ognized over five years until they vest, including a restriction
period of four years.
Commitments to members of the senior
management and other eligible employees
(101,192)
(120,350)
(1,073,355)
(1,041,376)
Vested and transferred
Forfeited
2013
Awards
4,217,588
2,158,079
In fiscal 2014 and 2013, agreements were entered into which
entitle members of the Managing Board to Bonus Awards con-
tingent upon the target attainment. The fair value of these en-
titlements amounting to €2 million and €5 million, respec-
tively, in fiscal 2014 and 2013, was determined by calculating
the present value of the target amount. Compensation expense
related to Bonus Awards is generally recognized over the vest-
ing period of one year. Beneficiaries will receive one Siemens
share without payment of consideration for each Bonus Award,
following an additional waiting period of four years.
1,421,211
Non-vested, beginning of period
Granted
Year ended September 30,
2014
Awards
The following table shows the changes in the stock awards
held by members of the senior management and other eligible
employees:
24%, respectively, and a market price of €95.62 and €79.70 per
Siemens share. Expected volatility was determined by reference
to historic volatilities. The model applies a risk-free interest rate
of up to 0.9% in fiscal 2014 and up to 0.6% in fiscal 2013 and an
expected dividend yield of 3.1% in fiscal 2014 and 3.8% in fiscal
2013. Assumptions concerning share price correlations were
determined by reference to historic correlations. Compensation
expense related to these stock awards is recognized over four
years until they vest.
In fiscal 2014 and 2013, 652,162 and 849,908 stock awards, re-
spectively, were granted to members of the senior manage-
ment and other eligible employees contingent upon attaining a
prospective performance-based target of the Siemens stock
relative to five competitors. The fair value of these stock awards
amounting to €56 million and €53 million, respectively, in fis-
cal 2014 and 2013, of which €40 million and €41 million relate
to equity instruments, was calculated by applying a valuation
model. In fiscal 2014 and 2013, inputs to that model include an
expected weighted volatility of Siemens shares of 23% and
In fiscal 2014 and 2013, 769,049 and 1,308,171 stock awards, re-
spectively, were granted to members of the senior manage-
ment and other eligible employees contingent upon attaining
an EPS-based target. The fair value of these stock awards
amounts to €62 million and €85 million, respectively, in fiscal
2014 and 2013 and corresponds to the target amount represent-
ing the EPS target attainment.
4,876,455
NOTE 31 Financial risk management
Corporate Governance
The Company's corporate procurement applies cash flow hedge
accounting for certain firm commitments to purchase copper.
The ineffective portion as well as resulting gains and (losses)
were not significant individually or in aggregate.
Under the Jubilee Share Program, eligible employees of
Siemens AG and participating domestic Siemens companies
receive jubilee shares after having been continuously em-
ployed by the Company for 25 and 40 years (vesting period),
respectively. Generally, settlement of jubilee grants is in shares.
Jubilee shares are measured at fair value considering bio-
metrical factors. The fair value is determined as the market
price of Siemens shares at grant date less the present value of
dividends expected to be paid during the vesting period for
which the employees are not entitled to. The weighted average
fair value of each jubilee share granted in fiscal 2014 for the 25th
and the 40th anniversary is €49.36 and €32.86, respectively,
based on the number of shares granted. The weighted average
fair value of each jubilee share granted adjusted by biometrical
factors (considering fluctuation) is €31.58 and €18.97, respec-
tively, in fiscal 2014. The weighted average fair value of each
jubilee share granted in fiscal 2013 for the 25th and the 40th
anniversary is €36.92 and €24.55 respectively, based on the
number of shares granted. The weighted average fair value
of each jubilee share granted adjusted by biometrical factors
(considering fluctuation) is €18.24 and €9.99 respectively, in
fiscal 2013.
JUBILEE SHARE PROGRAM
Fair value was determined as the market price of Siemens
shares less the present value of expected dividends during the
vesting period as matching shares do not carry dividend rights
during the vesting period. Non-vesting conditions, i.e. the con-
dition neither to transfer, sell, pledge nor otherwise encumber
the underlying shares, were considered in determining the fair
value. In fiscal 2014 and 2013, the weighted average grant-
date fair value of the resulting matching shares is €73.00 and
€57.77 per share respectively, based on the number of instru-
ments granted.
1,733,497
1,750,176
(33,475)
131 | B.
(63,055)
(92,035)
(351,548)
(437,989)
609,758
1,545,582
Entitlements
to Matching
Shares
(140,307)
171 | C
Combined Management Report
108 | A. To our Shareholders
Statutory social welfare contributions and
NOTE 32 Share-based payment
Year ended September 30,
20,988
20,142
Wages and salaries
2013
Year ended September 30,
2014
(in millions of €)
Earnings per share
NOTE 34
The average number of employees in fiscal years 2014 and 2013
is 359.2 thousand and 394.9 thousand, respectively (based on
continuing and discontinued operations). Thereof, in fiscal
2014 and 2013, 223.7 and 248.3 thousand employees were
engaged in manufacturing and services, 71.2 thousand and
78.2 thousand were engaged in sales and marketing, 30.4 thou-
sand and 31.8 thousand employees were in research and devel-
opment and 34.0 thousand and 36.6 thousand employees were
in administration and general services, respectively.
NOTE 33 Personnel costs
In fiscal 2014 and 2013, 0.22 million and 0.29 million jubilee
shares were granted; 0.20 million and 0.18 million were trans-
ferred, 0.14 million and 0.12 million forfeited, resulting in an
outstanding balance of 4.56 million and 4.68 million jubilee
shares as of September 30, 2014 and 2013. Considering bio-
metrical factors as of September 30, 2014 and 2013, 3.60 million
and 3.28 million jubilee shares were expected to vest.
308
2013
1,733,497
Entitlements
to Matching
Shares
2014
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
D. Consolidated Financial Statements
247
In fiscal 2014 and 2013, the Company issued a new tranche un-
der the Share Matching Plan. Senior managers of Siemens AG
and participating Siemens companies may invest a specified
percentage of their compensation in Siemens shares. Within a
predetermined period in the first quarter of each fiscal year,
plan participants decide on their investment amount for which
investment shares are purchased. The shares are purchased at
the market price at a predetermined date in the second quarter.
Plan participants receive the right to one Siemens share with-
out payment of consideration (matching share) for every three
investment shares continuously held over a period of three
years (vesting period) provided the plan participant has been
continuously employed by Siemens AG or another Siemens
company until the end of the vesting period. During the vesting
period, matching shares are not entitled to dividends. The right
to receive matching shares forfeits if the underlying investment
shares are transferred, sold, pledged or otherwise encumbered.
Matching shares may be settled in newly issued shares of capi-
tal stock of Siemens AG, treasury shares or in cash. The settle-
ment method will be determined by the Managing Board. Each
fiscal year, the Managing Board decides whether or not to issue
a new tranche under the Share Matching Plan.
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS
1. Share Matching Plan
Settled
Fair value hedges of fixed-rate debt obligations
Under the interest rate swap agreements outstanding during
the years ended September 30, 2014 and 2013, the Company has
agreed to pay a variable rate of interest multiplied by a notional
principle amount, and receives in return an amount equal to a
specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset
an impact of future changes in interest rates designated as the
hedged risk on the fair value of the underlying fixed-rate debt
obligations. The interest rate swap contracts are recorded at
fair value in the Company's Consolidated Statements of Finan-
cial Position and the related portion of fixed-rate debt being
hedged is recorded at an amount equal to the sum of its carrying
amount plus an adjustment representing the change in fair
value of the debt obligations attributable to the respective inter-
est rate risk being hedged. Changes in the fair value of interest
rate swap contracts and the offsetting changes in the adjusted
carrying amount of the related portion of fixed-rate debt being
hedged are recognized in line item Other financial income
(expenses), net in the Consolidated Statements of Income.
Adjustments in the carrying amount of the debt obligations
resulted in a gain (loss) of €(8) million and €293 million, respec-
tively, in fiscal 2014 and 2013. During the same period, the re-
lated swap agreements resulted in a gain (loss) of €3 million and
€(305) million, respectively. Accordingly, the net effect recog-
nized in line item Other financial income (expenses), net, repre-
senting the ineffective portion of the hedging relationship,
amounts to €(5) million and €(12) million, in fiscal 2014 and 2013,
respectively. Net cash receipts and payments relating to such
interest rate swap agreements are recorded as interest expenses.
The Company had interest rate swap contracts to pay variable
rates of interest of an average of 0.3% and 0.3% as of Septem-
ber 30, 2014 and 2013, respectively and received fixed rates of
interest (average rate of 4.0% and 3.5%, as of September 30,
2014 and 2013, respectively). The notional amount of indebted-
ness hedged as of September 30, 2014 and 2013 was €6,645 mil-
lion and €7,100 million, respectively. This changed 41% and
41% of the Company's underlying notes and bonds from fixed
interest rates into variable interest rates as of September 30,
2014 and 2013, respectively. The notional amounts of these
contracts mature at varying dates based on the maturity of the
underlying hedged items. The net fair value of interest rate
swap contracts (excluding accrued interest) used to hedge in-
debtedness as of September 30, 2014 and 2013 was €386 mil-
lion and €385 million, respectively.
COMMODITY PRICE RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
The Company applies a portfolio approach to manage the
Company-wide risks associated with fluctuations in commodity
prices from firm commitments and forecast transactions by
entering into commodity swaps and commodity options. Such
a strategy does not qualify for hedge accounting treatment.
Cash flow hedging activities
250 D.3
It is expected that €73 million of net deferred losses in line item
Other comprehensive income, net of income taxes will be
reclassified into line item Cost of sales in fiscal 2015, when the
consumption of the hedged commodity purchases is recog-
nized in line item Cost of sales. As of September 30, 2014 and
2013, the maximum length of time over which the Company is
hedging its future commodity purchases is 75 months and
87 months, respectively.
251 D.4
254 D.6
330 D.7
Year ended September 30,
Outstanding, end of period
Vested and transferred
Forfeited
Settled
Granted
Outstanding, beginning of period
4. Resulting Matching Shares
In fiscal 2014 and 2013, the Company issued a new tranche
under the Base Share Program. Employees of Siemens AG and
participating domestic Siemens companies can invest a fixed
amount of their compensation into Siemens shares, sponsored
by Siemens with a tax beneficial allowance. The shares are
bought at market price at a predetermined date in the second
quarter and grant the right to receive matching shares under
the same conditions applying to the Share Matching Plan
described above. Each fiscal year, the Managing Board decides
whether or not to issue a new tranche under the Base Share
Program. The fair value of the base share program equals the
amount of the tax beneficial allowance sponsored by Siemens.
In fiscal 2014 and 2013, the Company incurred pretax expense
from continuing operations of €32 million and €30 million,
respectively.
3. Base Share Program
The Managing Board decided that shares acquired under the
tranches issued in fiscal 2013 and 2012 are transferred to the
Share Matching Plan as of February 2014 and February 2013,
respectively.
In fiscal 2014 and 2013, the Company issued a new tranche
under the Monthly Investment Plan that is a further compo-
nent of the Share Matching Plan and which is available for
employees - other than senior managers - of Siemens AG and
participating Siemens companies. Plan participants may invest
a specified percentage of their compensation in Siemens shares
on a monthly basis over a period of twelve months. The shares
are purchased at market price at a predetermined date once a
month. The Managing Board of the Company will decide annu-
ally, whether shares acquired under the Monthly Investment
Plan (investment shares) may be transferred to the Share
Matching Plan the following year. If the Managing Board
decides that shares acquired under the Monthly Investment
Plan are transferred to the Share Matching Plan, plan partici-
pants will receive the right to matching shares under the same
conditions applying to the Share Matching Plan described
above. Each fiscal year the Managing Board decides, whether
or not to issue a new tranche under the Monthly Invest-
ment Plan.
2. Monthly Investment Plan
307
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
Concerning trade receivables and other receivables, as well as
loans or receivables included in line item Other financial assets
that are neither impaired nor past due, there were no indica-
tions as of September 30, 2014, that defaults in payment obliga-
tions will occur, which lead to a decrease in the net assets of
Siemens. Overdue financial instruments are generally impaired
on a portfolio basis in order to reflect losses incurred within
the respective portfolios. When substantial expected payment
delays become evident, overdue financial instruments are
assessed individually for additional impairment and are further
allowed for as appropriate.
Within the various methodologies to analyze and manage risk,
Siemens has implemented a system based on parametric vari-
ance-covariance Value at Risk (VaR). The VaR methodology pro-
vides a quantification of market risks based on historical vola-
tilities and correlations of the different risk factors under the
assumptions of the parametric variance-covariance Value at
Risk model. The VaR figures are calculated based on
305
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
D. Consolidated Financial Statements
247
250 D.3
Siemens has established a commodity price risk management
system to reduce earnings and cash flow volatility. Each
Siemens unit is responsible for recording, assessing, monitor-
ing, reporting and hedging its risks from forecast and pending
commodity purchase transactions (commodity price risk expo-
sure). The binding guideline for Siemens operating units pro-
vides the concept for the identification and determination of
the commodity price risk exposure and commits the units to
hedge it within a narrow band of 75% to 100% of the commod-
ity price risk exposure in the product business for the next three
months and 95% to 100% of the commodity price risk exposure
in the project business after receipt of order. Siemens operating
units are prohibited from speculative transactions.
COMMODITY PRICE RISK
Assuming historical volatilities and correlations, a ten day
holding period and a confidence level of 99.5% the interest rate
VaR was €220 million as of September 30, 2014, compared to
a VaR of €236 million in the year before.
If there are no conflicting country-specific regulations, all
Siemens operating units generally obtain any required financ-
ing through Corporate Treasury in the form of loans or inter-
company clearing accounts. The same concept is adopted for
deposits of cash generated by the units.
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of
changes in market interest rates. This risk arises whenever
interest terms of financial assets and liabilities are different. In
order to optimize the Company's position with regard to inter-
est income and interest expenses and to manage the interest
rate risk, Corporate Treasury performs a comprehensive corpo-
rate interest rate risk management by using derivative financial
instruments. The interest rate risk relating to the Group, ex-
cluding SFS' business, is mitigated by managing interest rate
risk actively relatively to a benchmark. The interest rate risk
relating to the SFS' business is managed separately, consider-
ing the term structure of SFS's financial assets and liabilities.
The Company's interest rate risk results primarily from the
funding in U.S. dollar, GBP and euro.
INTEREST RATE RISK
Many Siemens units are located outside the euro zone. Since
the financial reporting currency of Siemens is the euro, the
financial statements of these subsidiaries are translated into
euro for the preparation of the Consolidated Financial State-
ments. To consider the effects of foreign currency translation in
the risk management, the general assumption is that invest-
ments in foreign-based operations are permanent and that re-
investment is continuous. Effects from foreign currency
exchange rate fluctuations on the translation of net asset
amounts into euro are reflected in the Company's consolidated
equity position.
Siemens' production operations expose the Company to vari-
ous commodity price risks in the ordinary course of business.
Especially in the Sectors Industry and Energy a continuous
supply of copper was necessary for the operating activities.
Commodity price risk fluctuations may create unwanted and
unpredictable earnings and cash flow volatility. The Company
employs various strategies discussed below involving the use
of derivative financial instruments to mitigate or eliminate
certain of those exposures.
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
The following table reflects all contractually fixed pay-offs for
settlement, repayments and interest resulting from recognized
financial liabilities as well as from credit guarantees and irrevo-
cable loan commitments. It includes expected net cash out-
flows from derivative financial liabilities that are in place as per
September 30, 2014. Such expected net cash outflows are de-
termined based on each particular settlement date of an instru-
ment. The amounts disclosed are undiscounted net cash out-
flows for the respective upcoming fiscal years, based on the
earliest date on which Siemens could be required to pay. Cash
outflows for financial liabilities (including interest) without
fixed amount or timing are based on the conditions existing at
September 30, 2014.
In addition to the above-mentioned sources of liquidity,
Siemens constantly monitors funding options available in the
capital markets, as well as trends in the availability and costs of
such funding, with a view to maintaining financial flexibility
and limiting repayment risks.
Liquidity risk results from the Company's potential inability to
meet its financial liabilities, e.g. for the settlement of its finan-
cial debt or for ongoing cash requirements from operating and
SFS financing activities, dividend payments, pension plan fund-
ing and portfolio activities. In addition to having implemented
effective working capital and cash management, Siemens miti-
gates liquidity risk by arranged credit facilities with highly
rated financial institutions, via a debt issuance program and via
a global multi-currency commercial paper program. Liquidity
risk may also be mitigated by the Siemens Bank GmbH, which
increases the flexibility of depositing cash or refinancing by
using European Central Bank accounts.
LIQUIDITY RISK
Based on historical volatilities and correlations, a ten day hold-
ing period and a confidence level of 99.5%, the VaR as of Sep-
tember 30, 2014 of Siemens' equity investments was €122 mil-
lion compared to €81 million the year before.
These investments are monitored based on their current
market value, affected primarily by fluctuations in the volatile
technology-related markets worldwide. The market value of
Siemens' portfolio in publicly traded companies decreased from
€1,444 million as of September 30, 2013 to €1,351 million as of
September 30, 2014.
Siemens' investment portfolio consists of direct and indirect
investments in publicly traded companies held for purposes
other than trading. The direct participations result mainly from
strategic partnerships, strengthening Siemens' focus on its core
business activities or compensation from M&A transactions;
indirect investments in fund shares are mainly transacted for
financial reasons.
EQUITY PRICE RISK
Using historical volatilities and correlations, a ten day holding
period and a confidence level of 99.5%, the VaR, which com-
prises the net position of commodity derivatives and the com-
modity purchase transactions with price risk, was €13 million
as of September 30, 2014 compared to €19 million as of Septem-
ber 30, 2013. The prior-year amount has been adjusted in order
to take into consideration modified principles with regard to
commodity price risk management.
The aggregated commodity price risk exposure is hedged
with external counterparties through derivative financial hedg-
ing instruments by Corporate Treasury. Derivative financial
hedging instruments designated for hedge accounting are
directly entered into with external counterparties. Additionally,
Siemens applies a Company-wide portfolio approach which
optimizes the Company's position of the overall financial com-
modity price risk.
303
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
330 D.7
Effects of foreign currency translation
Siemens defines foreign currency exchange rate exposure
generally as items of the Consolidated Statement of Financial
Position in addition to firm commitments which are denomi-
nated in foreign currencies, as well as foreign currency denomi-
nated cash inflows and cash outflows from forecast trans-
actions for the following twelve months. This foreign currency
exchange rate exposure is determined based on the respective
functional currencies of the exposed Siemens' entities.
The VaR relating to foreign currency exchange rates is calcu-
lated by aggregating the net foreign currency positions after
hedging by the operating units. As of September 30, 2014 the
foreign currency exchange rate risk based on historical volatili-
ties and correlations, a ten day holding period and a confidence
level of 99.5% resulted in a VaR of €47 million compared to a
VaR of €72 million in the year before. The prior-year amount has
been adjusted in order to take into consideration modified
principles with regard to foreign currency exchange rate risk
management. Changes in euro values of future cash flows
denominated in foreign currency due to volatile foreign cur-
rency exchange rates might influence the unhedged portion of
revenues, but would also affect the unhedged portion of cost of
materials. Future changes in the foreign currency exchange
rates can impact sales prices and may lead to margin changes,
the extent of which is determined by the matching of foreign
currency revenues and
expenses.
Siemens has a Company-wide portfolio approach which gener-
ates a benefit from any potential off-set of divergent cash flows
in the same currency, as well as optimized transaction costs.
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
301
Additional Information
337 | E.
Consolidated Financial Statements
D.
247
Increasing market fluctuations may result in significant earn-
ings and cash flow volatility risk for Siemens. The Company's
operating business as well as its investment and financing
activities are affected by changes in foreign exchange rates,
interest rates, commodity prices and equity prices. In order to
optimize the allocation of the financial resources across the
Siemens segments and entities, as well as to secure an optimal
return for its shareholders, Siemens identifies, analyzes and
proactively manages the associated market risks. The Company
seeks to manage and control these risks primarily through its
regular operating and financing activities, and uses derivative
financial instruments when deemed appropriate.
Siemens' financial risk management is an integral part of how
to plan and execute its business strategies. Siemens' financial
risk management policy is set by the Managing Board. Siemens'
organizational and accountability structure as of September 30,
2014 requires each of the respective managements of Siemens
Sectors, Financial Services, SRE, regions and Corporate Units
to implement financial risk management programs that are
tailored to their specific industries and responsibilities, while
being consistent with the overall policy established by the
Managing Board.
expenses for optional support payments
Expenses relating to post-employment benefits
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
(in millions of €)
254 D.6
330 D.7
> historical volatilities and correlations,
302
108 | A. To our Shareholders
Combined Management Report
171 | C
131 | B. Corporate Governance
Siemens has established a foreign currency exchange rate risk
management system that has an established track record for
years. Each Siemens unit is responsible for recording, assess-
ing, monitoring, reporting and hedging its foreign currency
transaction exposure. The binding guideline for Siemens'
oper-
ating units provides the concept for the identification and
determination of a single net foreign currency position for each
affected unit and commits these units to hedge this aggregated
position within a narrow band of at least 75% but no more than
100% of their net foreign currency position. In addition, the
guideline provides a framework of the organizational structure
necessary for foreign currency exchange rate risk management,
proposes hedging strategies and defines the hedging instru-
ments available to the entities: foreign currency exchange
contracts, foreign currency put and call options and stop-loss
orders. If there are no conflicting country specific regulations,
hedging activities of the operating units are transacted inter-
nally with Corporate Treasury. Hedging transactions with exter-
nal counterparties in the global financial markets are carried
out under these limitations by Corporate Treasury. This includes
hedging instruments which qualify for hedge accounting.
Operating units (total Sectors and SFS) are prohibited from
borrowing or investing in foreign currencies on a speculative
basis. Intercompany financing or investments of operating
units are preferably carried out in their functional currency or
on a hedged basis.
Foreign currency exchange rate fluctuations may create un-
wanted and unpredictable earnings and cash flow volatility.
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. Foreign cur-
rency exchange rate exposure is partly balanced by purchasing
of goods, commodities and services in the respective curren-
cies as well as production activities and other contributions
along the value chain in the local markets.
Siemens' international operations expose the Company to
foreign currency exchange rate risks, particularly regarding
fluctuations between the U.S. dollar and the euro, in the ordi-
nary course of business. The Company employs various strate-
gies discussed below involving the use of derivative financial
instruments to mitigate or eliminate certain of those exposures.
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk and foreign currency
exchange rate risk management
Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise to
some limitations including the following. A ten day holding
period assumes that it is possible to dispose of the underlying
positions within this period. While this is considered to be a
realistic assumption in almost all cases, it may not be valid
during prolonged periods of severe market illiquidity. A 99.5%
confidence level does not reflect losses that may occur beyond
this level. There is a 0.5% statistical probability that losses
could exceed the calculated VaR. The use of historical data as
a basis for estimating the statistic behavior of the relevant
markets and finally determining the possible range of the
future outcomes on the basis of this statistic behavior may
not always cover all possible scenarios, especially those of an
exceptional nature. Any market sensitive instruments, including
equity and interest bearing investments, that our Company's
pension plans hold are not included in the following quantita-
tive and qualitative disclosures.
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive
Income may differ substantially from VaR figures due to funda-
mental conceptual differences. The Consolidated Statements
of Income and Consolidated Statements of Comprehensive
Income are prepared in accordance with IFRS. The VaR figures
are the output of a model with a purely financial perspective
and represent the potential financial loss which will not be
exceeded within ten days with a probability of 99.5%. The
concept of VaR is also used for internal management of the
Corporate Treasury activities.
for foreign currency exchange rate risk, interest rate risk,
commodity price risk and equity price risk as discussed below.
> a 99.5% confidence level
> a ten day holding period, and
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
€1,320 million, respectively, mainly in the form of inventories
and receivables. Credit risks arising from credit guarantees are
described in → NOTE 27 COMMITMENTS AND CONTINGENCIES. There
were no significant concentrations of credit risk as of Septem-
ber 30, 2014 and 2013.
Year ended September 30,
2020 and
thereafter
2016
Credit risk is defined as an unexpected loss in cash and earn-
ings if the customer is unable to pay its obligations in full and
on time or if the value of collateral declines.
CREDIT RISK
are the maximum amounts Siemens could be required to settle
in the event of default or non-payment by the primary debtor.
For additional information regarding credit guarantees see
→ NOTE 27 COMMITMENTS AND CONTINGENCIES. To monitor existing
financial assets and liabilities as well as to enable an effective
controlling of future risks, Siemens has established a compre-
hensive risk reporting covering its worldwide business units.
304
Combined Management Report
171 C.
Siemens provides its customers with various forms of direct
and indirect financing particularly in connection with large
projects. Siemens finances a large number of smaller customer
orders, for example the leasing of medical equipment, in part
through SFS. SFS is also exposed to credit risk by financing
third-party equipment or by taking direct or indirect participa-
tions in financings, such as syndicated loans. In part, Siemens
takes a security interest in the assets Siemens finances or
Siemens receives additional collateral. Siemens may incur
losses if the credit quality of its customers deteriorates or if
they default on their payment obligations to Siemens, such as
a consequence of a financial or political crisis and a global
downturn.
Corporate Governance
108 | A. To our Shareholders
The risk implied from the values shown in the table above
reflects the one-sided scenario of cash outflows only. Obliga-
tions under finance leases, trade payables and other financial
liabilities mainly originate from the financing of assets used in
Siemens' ongoing operations such as property, plant, equip-
ment and investments in working capital e.g. inventories
and trade receivables. These assets are considered in the
Company's overall liquidity risk management. A considerable
portion of the irrevocable loan commitments result from asset-
based lending transactions meaning that the respective loans
can only be drawn after sufficient collateral has been provided
by the borrower. The amounts included for credit guarantees
1
174
215
3,214
131 | B.
The effective monitoring and controlling of credit risk is a core
competency of our risk management system. Siemens has im-
plemented a binding credit policy for all entities. Hence, credit
evaluations and ratings are performed for all customers with an
exposure or requiring credit beyond centrally defined limits.
Customer ratings, analyzed and defined by SFS, and individual
customer limits are based on generally accepted rating meth-
odologies, with the input consisting of information obtained
from the customer, external rating agencies, data service pro-
viders and Siemens' customer default experiences. Ratings and
credit limits are carefully considered in determining the condi-
tions under which direct or indirect financing will be offered to
customers. As part of the process, internal risk assessment spe-
cialists determine and continuously update ratings and credit
limits for Siemens' public and private customers. For public
customers our policy provides that the rating applied to individ-
ual customers cannot be better than the weakest of the sover-
eign ratings provided by Moody's, S&P's and Fitch for the
respective country.
Credit risk is recorded, analyzed and monitored on an ongoing
basis applying different systems and processes dependent on
the financial instrument. Central systems are used for ongoing
monitoring of counterparty risk. In addition, SFS uses own
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
The maximum exposure to credit risk of financial assets, with-
out taking account of any collateral, is represented by their car-
rying amount. As of September 30, 2014 and 2013 the collateral
for financial instruments classified as financial assets measured
at fair value in the form of netting agreements for derivatives
in the event of insolvency of the respective counterparty
amounted to €955 million and €587 million, respectively. As of
September 30, 2014 and 2013 the collateral held for financial
instruments classified as receivables from finance leases
amounted to €2,072 million and €1,902 million, respectively,
mainly in the form of the leased equipment. As of Septem-
ber 30, 2014 and 2013 the collateral held for financial instru-
ments classified as financial assets measured at cost or amor-
tized cost amounted to €2,425 million and €2,141 million,
respectively. The collateral mainly consisted of property, plant
and equipment. In addition, for this class Siemens holds collat-
eral in the form of securities related to reverse repurchase
agreements that can be sold or re-pledged in absence of default
by the owner of the collateral. As of September 30, 2014 and
2013 the fair value of the collateral held amounted to €408 mil-
lion and €103 million, respectively. In fiscal 2014 and 2013
Siemens has not exercised the right to sell or re-pledge the col-
lateral. Credit risks arising from irrevocable loan commitments
are equal to the expected future pay-offs resulting from these
commitments. As of September 30, 2014 and 2013 the collateral
held for these commitments amounted to €1,646 million and
To increase transparency with regard to credit risk Corporate
Treasury has established the Siemens Credit Warehouse to
which numerous operating units from the Siemens Group reg-
ularly transfer business partner data as a basis for a centralized
rating process. In addition, numerous operating units transfer
their trade receivables with a remaining term up to one year
along with the inherent credit risk to the Siemens Credit
Warehouse, but remain responsible for servicing activities
such as collections and receivables management. The Siemens
Credit Warehouse actively identifies, quantifies and manages
the credit risk in its portfolio, such as by hedging exposure
to specific customers, countries and industries. In addition to
an increased transparency with regard to credit risk, the
Siemens Credit Warehouse may provide Siemens with an addi-
tional source of liquidity and strengthens Siemens' funding
flexibility.
systems for its financing activities. There are also a number of
decentralized tools used for management of individual credit
risks within the operating units. A central IT application pro-
cesses data from the operating units together with rating and
default information and calculates an estimate which may be
used as a basis for individual bad debt provisions. In addition to
this automated process, qualitative information is considered,
in particular to incorporate the latest developments.
|
Irrevocable loan
commitments
774
56
33
45
9
828
9
843
133
834
8,383
9,361
2,911
649
Notes and bonds
Loans from banks
Other financial
indebtedness
Obligations under
finance leases
Non-derivative financial
liabilities
2017 to
2019
Trade payables
2015
22
49
487
278
933
Derivative financial liabilities
Credit guarantees
8
432
65
1,014
Other financial liabilities
1
18
16
7,697
97
34
27
3,220
713,245
120
Intersegment revenue
External revenue
Orders¹
Total Sectors
Infrastructure & Cities
Industry
Healthcare
Energy
Total revenue
Sectors
As of and for the fiscal years ended September 30, 2014 and 2013
Segment information is presented for continuing operations.
NOTE 35 Segment information
309
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
(in millions of €)
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
2014
2014
29
12,626
12,401
13,004
12,819
26,638
24,631
212
2013
251
24,380
28,797
28,646
2013
2014
2013
2014
2013
26,425
251 D.4
250 D.3
249 D.2
4.76
6.18
Diluted earnings per share
(from continuing operations)
The average number of employees in fiscal years 2014 and 2013
was 344.4 thousand and 348.7 thousand, respectively (based
on continuing operations). Part-time employees are included
on a proportionate basis. The employees were engaged in the
following activities:
Wages and salaries, statutory social welfare contributions
and expenses for optional support payments as well as ex-
penses relating to post-employment benefits for continuing
and discontinued operations amounts to €25,533 million and
€28,163 million in fiscal 2014 and 2013, respectively.
Item Expenses relating to post-employment benefits includes
service costs for the period. Interest from post-employment
benefits is included in line items interest income (expenses).
|
4.81
The dilutive earnings per share computation in fiscal 2014 and
2013 does not contain 21,674 thousand shares relating to war-
rants issued with bonds. The inclusion of those shares would
have been antidilutive in the years presented. In the future, the
warrants could potentially dilute basic earnings per share.
6.24
8,433
852,252
851,934
Weighted average shares outstanding - diluted
Basic earnings per share
8,485
843,819
843,449
4,059
5,267
(from continuing operations)
Year ended September 30,
(in thousands)
2014
252 D.5
Consolidated Statements of Income
248 D.1
D. Consolidated Financial Statements
247
348.7
344.4
34.4
33.5
Administration and general services
28.8
Research and development
71.1
68.6
Sales and marketing
215.0
213.6
Manufacturing and services
2013
22
Income from continuing operations
attributable to shareholders of Siemens AG
Weighted average shares outstanding - basic
Effect of dilutive share-based payment
12,429
17,103
and other reconciling items
Eliminations, Corporate Treasury
472
310
163
309
190
471
(5,169)
305
2,491
2,405
2,159
2,136
332
270
2,490
2,405
Corporate items and pensions
Siemens Real Estate (SRE)
(4,956)
(5,048)
Combined Management Report
310
108 | A. To our Shareholders
171 | C
Corporate Governance
131 | B.
Financial Statements subject to the audit opinion.
on a voluntary basis. It is not part of the Consolidated
(5,098)
This supplementary information on Orders is provided
73,445
(5,048)
(5,098)
71,920
73,445
71,920
79,755
78,350
Siemens
1
396
306
10
70,418
80,382
79,569
17,879
18,934
730
643
17,149
71,456
18,291
21,001
16,896
17,064
1,640
1,718
15,256
15,346
16,688
21,894
2,641
2,605
73,059
9
386
297
296
302
Centrally managed portfolio activities
Statements
Reconciliation to Consolidated Financial
1,072
937
111
191
961
746
1,072
937
Financial Services (SFS)
Equity Investments
74,061
12,649
(120)
28.1
4,179
5,400
2013
2014
(shares in thousands; earnings per share in €)
Income from continuing operations
Less: Portion attributable to non-controlling
interest
25,330
24,406
1,114
1,044
3,228
(133)
September 30, 2014
para. 2 of the German Commercial Code
NOTE 41 List of subsidiaries and associated
companies pursuant to Section 313
317
Additional Information
254 D.6
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
330 D.7
September 30, 2014
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
337 | E.
messMa GmbH, Irxleben
100
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt
Tübingen KG, Grünwald
Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
Equity interest
in %
251 D.4
51
Equity interest
thereof U.S.
26,245
25,484
thereof foreign countries
54,525
Omnetric GmbH, Munich
250 D.3
Consolidated Financial Statements
252 D.5
The Managing Board and the Supervisory Board of Siemens
Aktiengesellschaft provided the declaration required by
Section 161 of the German stock corporation law (AktG) as of
October 1, 2014, which is available on the Company's website
at: www.SIEMENS.COM/GCG-CODE.
NOTE 40
Subsequent events
In November 2014, Siemens announced the sale of its hearing
aid business to the investment company EQT and the German
entrepreneurial family Strüngmann as co-investors. The trans-
action volume is €2.15 billion plus an earn-out component and
includes that the new owners will also be allowed to continue
using the Siemens product brand for the hearing aid business
over the medium term. The hearing aid business so far rep-
resents a Business Unit within Healthcare. The transaction is
subject to approval by the regulatory authorities. Closing is
expected in the first quarter of calendar year 2015. The hearing
aid business is presented as held for disposal and discontinued
operations since the first quarter of fiscal 2015.
(in millions of €)
Type of fees
Audit Services
Other Attestation Services
Tax Services
Other services
Total
43.5
45.6
5.9
10.2
0.2
0.1
0.4
49.6
56.3
247
D.
10,861
53,009
248 D.1
Consolidated Statements of Income
249 D.2
6,510
31,981
thereof Germany
(1,987)
(1,859)
Assets of Corporate items and pensions¹
Eliminations, Corporate Treasury and other
Commonwealth of Independent States.
1
4,747
4,697
Assets SRE
(234)
(154)
Assets Centrally managed portfolio activities
Reconciliation:
13,793 14,887
53,318 54,501
38,732 39,390 42,383 43,426
18,756 19,644 18,425 19,555
14,433 14,411 11,112 10,463
71,920 73,445 71,920 73,445
10,857 10,652 18,602 18,944
61,063 62,792
13,110
12,876
thereof foreign countries
thereof U.S.
44,884
49,187
Total Segment Assets
thereof Germany
18,661
21,970
Assets of SFS
2,488
reconciling items of Segment information:
Asset-based adjustments:
Non-current assets
September 30,
Total Eliminations, Corporate Treasury and
other reconciling items of Segment information
Total assets in Siemens' Consolidated
Statements of Financial Position
32,755
NOTE 39 Corporate Governance
Siemens
2,752
2,753
Asia, Australia
39,244
(29,492)
(32,043)
Eliminations, Corporate Treasury, other items¹
39,232
Liabilities
6,497
12,598
Liability-based adjustments:
17,404
17,053
Europe, C.I.S., Africa, Middle East
Americas
2013
2014
(in millions of €)
40,850
3,924
42,037
3,782
Tax-related assets
and investments
Intragroup financing receivables
12,175
Audit Services relate primarily to services provided by EY for
auditing Siemens' Consolidated Financial Statements and for
auditing the statutory financial statements of Siemens AG and
its subsidiaries. Other Attestation Services include primarily
audits of financial statements in connection with M&A activi-
ties, comfort letters and other attestation services required
under regulatory requirements, agreements or requested on a
voluntary basis. Tax Services are primarily for transitional sup-
port, where EY was the historical tax service provider, with tax
audits and other follow-up tax compliance services. Other ser-
vices in fiscal 2013 consist of advisory services provided by EY
for a transitional period after they acquired one of Siemens'
IT-suppliers in the area of supply chain management in
June 2013.
and services
2013
336
23
Associates
747
1,008
165
214
977
1,345
188
226
|
12
Receivables from joint ventures and associates and liabilities
to joint ventures and associates are as follows:
Receivables
September 30,
(in millions of €)
2014
2013
2014
Liabilities
September 30,
2013
Joint ventures
198
54
72
Associates
230
82
Joint ventures
2013
11,205
104,879 101,936
1
Commonwealth of Independent States.
1 Includes assets and liabilities reclassified in connection with discontinued
operations.
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 | C
Combined Management Report
314
NOTE 37 Related party transactions
JOINT VENTURES AND ASSOCIATES
Siemens has relationships with many joint ventures and asso-
ciates in the ordinary course of business whereby Siemens
buys and sells a wide variety of products and services generally
on arm's length terms. For information regarding our subsidiar-
ies, joint ventures and associated in fiscal 2014 see → NOTE 5
INTERESTS IN OTHER ENTITIES and → NOTE 41 LIST OF SUBSIDIARIES
AND ASSOCIATED COMPANIES PURSUANT TO SECTION 313 PARA. 2 OF THE
GERMAN COMMERCIAL CODE. Information regarding our subsidiar-
ies, joint ventures and associates for fiscal 2013 are presented
in the List of subsidiaries and associated companies published
separately in the German Electronic Federal Gazette (elektro-
nischer Bundesanzeiger).
Sales of goods and services and other income from trans-
actions with joint ventures and associates as well as purchase
of goods and services and other expenses from transactions
with joint ventures and associates are as follows:
Sales of goods and services.
and other income
Purchases of goods and
services and other expenses
Year ended
September 30,
2013
Year ended
September 30,
2,571
(in millions of €)
2014
2014
222
255
280
In connection with the mutually agreed termination of Peter Y.
Solmssen's activity on the Managing Board as of December 31,
2013, it was agreed that his contract with the Company would
remain in effect until March 31, 2015. The entitlements agreed
under the contract will remain in effect until that date. These
will not include the fringe benefits under the contract, partic-
ularly the Company car and contributions toward the cost of
insurance, which will be covered until the contract ends by
a monthly lump-sum payment of €11,500. The 51,582 Stock
Awards already granted in the past for fiscal 2011, 2012 and
2013, for which the restriction period is still in progress, will be
absolutely maintained. The respective fair value of these Stock
Awards at grant date amounted to €3.47 million. Mr. Solmssen
was also reimbursed for relocation costs, in accordance
with the commitment he received when he took office. The
Company furthermore reimbursed Mr. Solmssen for out-of-
pocket expenses of €100,000 plus value-added tax.
In connection with the mutually agreed termination of Dr. Michael
Süẞ's activity on the Managing Board as of May 6, 2014, it was
agreed that his current contract with the Company would termi-
nate as of September 30, 2014. The entitlements agreed under
the contract remained in effect until that date. Dr. Süß received a
compensatory payment in the gross amount of €4.3 million in
connection with the mutually agreed premature termination of
his activity as a member of the Managing Board, together with a
one-time special contribution of €0.8 million to the BSAV, to be
credited in January 2015. It was also agreed with Dr. Süß that the
long-term stock-based compensation (8,126 Stock Awards) for
fiscal 2014 will be calculated once the actual target attainment is
available, and will be granted at the usual date. The 46,399 Stock
Awards already granted in the past and those for fiscal 2014, for
which the restriction period is still running, will be absolutely
maintained (54,525 Stock Awards), in accordance with the terms
of his contract with the Company, and will be settled in cash in
September 2015 at the closing price of Siemens stock in Xetra
trading on May 6, 2014 (€93.91). The respective fair value of the
Stock Awards already granted in the past at grant date amounted
to €3.16 million. The Stock Awards for fiscal 2014 are included in
the above mentioned stock-based compensation amount. Dr. Süß
agreed not to take up activities for any of significant competitor
of Siemens for a period of one year after the end of his employ-
ment contract that is, until September 30, 2015. For this
post-contractual non-compete commitment, he will be paid a
monthly total of gross €65,000.
-
In fiscal 2013, in connection with termination of Managing
Board membership, compensatory payments amounting to
€20.4 million (gross) and one-time special contributions amount-
ing to €3.1 million to the BSAV were agreed. It was also agreed
that these members of the Managing Board receive their long-
term stock-based compensation for fiscal 2013 (41,554 Stock
Awards), which will be settled in cash, and is included in the
above mentioned stock-based compensation amount. The
Company has furthermore agreed to reimburse out-of-pocket
expenses up to a maximum of €130,000 plus value-added tax.
The 175,382 Stock Awards that were granted in the past and for
which the restriction period is still in effect, will be absolutely
maintained. The respective fair value of these Stock Awards at
grant date amounted to €11.5 million.
In fiscal 2014 and 2013, expense related to share-based pay-
ment and to the Share Matching Program amounted to €16.1
million (including the above mentioned Stock Awards in con-
nection with the departure from members of the Managing
Board) and €23.2 million (including the above mentioned
Stock Awards in connection with the departure from members
of the Managing Board), respectively. For additional informa-
tion regarding the Share Matching Program see → NOTE 32
SHARE-BASED PAYMENT.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€24.2 million (including €7.9 million in connection with the
above mentioned departure from members of the Managing
Board) and €33.1 million (including €18.2 million in connection
with the above mentioned departure from a member of the
Managing Board) in fiscal 2014 and 2013.
108 | A. To our Shareholders
131 | B.
Corporate Governance
171 | C
Combined Management Report
316
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their
survivors as of September 30, 2014 and 2013 amounted to
€234.4 million and €192.5 million. For additional information
see → NOTE 22 POST-EMPLOYMENT BENEFITS.
Compensation attributable to members of the Supervisory Board
comprises in fiscal 2014 and 2013 of a base compensation and
additional compensation for committee work and amounted
to €5.1 million and €4.9 million (including meeting fees),
respectively.
No loans and advances from the Company are provided to mem-
bers of the Managing Board and Supervisory Board.
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
Combined Management Report. The chapter → B.4 COMPEN-
SATION REPORT is presented within the chapter → B. CORPORATE
GOVERNANCE.
In fiscal 2014 and 2013, no other major transactions took place
between the Company and the other members of the Manag-
ing Board and the Supervisory Board.
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities.
We have relationships with almost all of these entities in the
ordinary course of our business whereby we buy and sell a wide
variety of products and services on arm's length terms.
NOTE 38
Principal accountant fees
Fees related to professional services rendered by the Com-
pany's principal accountant, EY, for fiscal 2014 and 2013 were as
follows:
Year ended September 30,
2014
As Barbara Kux's appointment to the Managing Board expired
regularly on November 16, 2013, no compensatory payments
were agreed upon. The 51,582 Stock Awards already granted in
the past for fiscal 2011, 2012 and 2013, for which the restriction
period is still running, will be absolutely maintained, in accor-
dance with the terms of her contract with the Company. The
respective fair value of these Stock Awards at grant date
amounted to €3.47 million.
In fiscal 2014, the following settlements have been agreed in
connection with termination of Managing Board memberships:
In compensation for the forfeiture of stock, pension benefits,
health benefits and transitional remuneration from her former
employer, the Supervisory Board granted Ms. Davis a one-time
amount of € 5.5 million. This amount will be provided 20% in
cash, 30% in the form of Siemens Stock Awards and the re-
maining 50% as a special contribution to the pension plan.
Therefore in fiscal 2014 and 2013, compensation and benefits,
attributable to members of the Managing Board amounted to
€33.7 million and €41.0 million in total, respectively.
276
327
12
121
133
As of September 30, 2014 and 2013, loans given to joint ven-
tures and associates amounted to €21 million and €17 million,
respectively. In the normal course of business the Company
regularly reviews loans and receivables associated with joint
ventures and associates. In fiscal 2014 and 2013, the review
resulted in net gains related to valuation allowances totaling
€13 million and net losses related to valuation allowances
totaling €27 million, respectively. As of September 30, 2014 and
2013, valuation allowances amounted to €26 million and
€42 million, respectively.
As of September 30, 2014 and 2013, guarantees to joint ventures
and associates amounted to €2,904 million and €2,789 million,
respectively, including the HERKULES obligations of €1,490 mil-
lion and €1,890 million, respectively. For additional information
regarding the HERKULES obligations as well as for information
regarding guarantees in connection with the contribution of
the SEN operations into Unify (EN) see → NOTE 27 COMMITMENTS
AND CONTINGENCIES. As of September 30, 2014 and 2013, guaran-
tees to joint ventures amounted to €593 million and €431 mil-
lion, respectively. As of September 30, 2014 and 2013, the
Company had commitments to make capital contributions of
€107 million and €187 million to its joint ventures and asso-
ciates, therein €56 million and €107 million related to joint ven-
tures, respectively. For a loan raised by a joint venture, which is
secured by a Siemens guarantee, Siemens granted an addi-
tional collateral. As of September 30, 2014 and 2013 the out-
standing amount totaled to €129 million and €134 million, re-
spectively. As of September 30, 2014 and 2013 there were loan
commitments to joint ventures and associates amounting to
€81 million and €90 million, respectively, therein €81 million
and €90 million, respectively related to joint ventures.
PENSION ENTITIES
For information regarding the funding of our pension plans
refer to NOTE 22 POST-EMPLOYMENT BENEFITS.
RELATED INDIVIDUALS
Related individuals include the members of the Managing
Board and Supervisory Board.
In fiscal 2014 and 2013 members of the Managing Board
received cash compensation of €17.9 million and €17.0 million.
The fair value of stock-based compensation amounted to €10.7
million and €17.6 million for 170,444 and 213,394 Stock Awards,
respectively, in fiscal 2014 and 2013. In fiscal 2014 and 2013 the
Company granted contributions under the BSAV to members of
the Managing Board totaling €5.1 million and €6.4 million.
247
D.
In fiscal 2014 and 2013, 44% and 50%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungs-
gesellschaft, Germany.
Consolidated Financial Statements
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
315
248 D.1
Assets of Equity Investments
Siemens Ltd. for Trading, Cairo/Egypt
23,736
(113)
44
230
194
69
31
857
522
18,661
21,970
409
465
126
81
2,488
2,571
411
328
2,204
1,900
1,289
1,356
6,473
7,108
23,736
(154)
24,646
(234)
(142)
(48)
91
78
83
70
(422)
(675)
(1,987)
(1,859)
(836)
(938)
309
264
364
370
(112)
(170)
4,747
4,697
168
241
4
4
7
6
(37)
5,842
7,335
379
507
425
449
1,595
1,591
1,621
1,680
1,955
1,569
2013
2014
2013
2014
2013
2014
09/30/2013
09/30/2014
2013
2014
and impairments
Amortization, depreciation
Additions to intangible
assets and property, plant
and equipment
Free cash flow
Assets
Profit
610
2,027
2,033
11,126
296
239
247
372
1,280
4,973
5,180
291
1,487
638
544
384
(70)
358
2,170
6,410
6,661
1,563
2,252
577
553
241
303
2,227
2,067
10,732
2,280
Siemens
53,009
(1,430)
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
248 D.1
D. Consolidated Financial Statements
247
Segment information discloses Free cash flow and Additions
to property, plant and equipment and intangible assets. Free
cash flow of the Sectors and Equity Investments constitutes
cash flows from operating activities less additions to intangi-
ble assets and property, plant and equipment. It excludes
Financing interest, except for cases where interest on qualify-
ing assets is capitalized or classified as contract costs and it
also excludes non-cash income tax as well as certain other
payments and proceeds. Free cash flow of Equity Investments
includes interest from shareholder loans granted to invest-
ments reported in Equity Investments. Pension curtailments
are a partial payback with regard to past service cost that
affect segment Free cash flow. Free cash flow of SFS, a finan-
cial services business, includes related financing interest pay-
ments and proceeds; income tax payments and proceeds of
SFS are excluded.
Free cash flow definition:
Orders are determined principally as estimated revenue of
accepted purchase orders and order value changes and adjust-
ments, excluding letters of intent. New orders are supplemen-
tary information, provided on a voluntary basis. It is not part of
the audited Consolidated Financial Statements.
Orders:
Management determined Assets as a measure to assess capital
intensity of the Sectors and Equity Investments (Net capital
employed). Its definition corresponds to the Profit measure. It
is based on Total assets of the Consolidated Statements of
Financial Position, primarily excluding intragroup financing
receivables, tax related assets and assets of discontinued
operations, since the corresponding positions are excluded
from Profit. A Division of Infrastructure & Cities includes the
project-specific intercompany financing of a long-term project.
The remaining assets are reduced by non-interest-bearing
liabilities other than tax related liabilities, e.g. trade payables,
to derive Assets. In contrast, Assets of SFS is Total assets.
Asset measurement principles:
Profit of the segment SFS is Income before income taxes. In
contrast to performance measurement principles applied to the
Sectors and Equity Investments interest income and expenses
is an important source of revenue and expense of SFS.
Profit of the segment SFS:
(loss) from the sale of interests in investments, impairment of
investments and reversals of impairments. It also includes
interest and impairments as well as reversals of impairments
on long-term loans granted to investments reported in Equity
Investments.
Profit of Equity Investments mainly comprises income (loss)
from investments presented in Equity Investments, such as the
share in the earnings of associates or dividends from invest-
ments not accounted for under the equity method, income
Central infrastructure costs are primarily allocated to the
Sectors. The total amount to be allocated is determined at the
beginning of the fiscal year and is charged in installments in all
four quarters.
The effect of certain litigation and compliance issues is
excluded from Profit, if such items are not indicative of the
Sectors' and Equity Investments' performance, since their
related results of operations may be distorted by the amount
and the irregular nature of such events. This may also be the
case for items that refer to more than one reportable segment,
SRE and (or) Centrally managed portfolio activities or have a
corporate or central character.
Furthermore, income taxes are excluded from Profit since
income tax is subject to legal structures, which typically do not
correspond to the structure of the segments.
Similarly, decision-making regarding essential pension items is
done centrally. Accordingly, Profit primarily includes amounts
related to service cost of pension plans only, while all other reg-
ularly recurring pension related costs – including charges for
the German pension insurance association and plan adminis-
tration costs are included in line item Corporate items and
pensions. Curtailments are a partial payback with regard to past
service cost that affect Segment Profit.
-
337 | E.
Financing interest, excluded from Profit, is any interest income
or expense other than interest income related to receivables
from customers, from cash allocated to the Sectors and Equity
Investments and interest expenses on payables to suppliers.
Borrowing costs capitalized as part of qualifying long-term
projects are not part of financing interest. Financing interest is
excluded from Profit because decision-making regarding finan-
cing is typically made at the corporate level. Equity Invest-
ments include interest and impairments as well as reversals
of impairments on long-term loans granted to investments
reported in Equity Investments.
Additional Information
Amortization, depreciation and impairments:
Amortization, depreciation and impairments presented in Seg-
ment information includes depreciation and impairments of
property, plant and equipment, net of reversals of impairments
as well as amortization and impairments of intangible assets,
net of reversals of impairment.
24,646
Asia, Australia
2013
2014
Assets of Sectors
(in millions of €)
Americas
September 30,
(in millions of €)
Europe, C.I.S., Africa,
Middle East
2013
2014
of companies
Year ended
September 30,
Revenue by location
2014
of customer
Year ended
September 30,
2013
Revenue by location
NOTE 36 Information about geographies
In fiscal 2014 and 2013, Profit of SFS includes interest income
of €966 million and €873 million, respectively and interest
expenses of €336 million and €317 million, respectively.
ADDITIONAL SEGMENT INFORMATION
In fiscal 2014 and 2013, Corporate items and pensions in column
Profit includes €(545) million and €(419) million related to Cor-
porate items, as well as €(393) million and €(416) million related
to Pensions, respectively. Corporate items include effects from
legal and regulatory matters. In fiscal 2014, column Profit in-
cludes a one-time effect of €186 million regarding insurance
matters, which were mainly included in Eliminations.
The following table reconciles total Assets of the Sectors,
Equity Investments and SFS to Total assets of Siemens' Con-
solidated Statements of Financial Position:
CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATION TO SIEMENS'
Centrally managed portfolio activities follow the measure-
ment principles of the Sectors. SRE applies the measurement
principles of SFS; Total assets of SRE nets certain intercom-
pany finance receivables with certain intercompany finance
liabilities.
MEASUREMENT - CENTRALLY MANAGED
PORTFOLIO ACTIVITIES AND SRE:
313
Sectors and Equity Investments, which management does not
regard as indicative of their performance. Profit represents a
performance measure focused on operational success exclud-
ing the effects of capital market financing issues; for financing
issues regarding Equity Investments see paragraph below.
The major categories of items excluded from Profit are pre-
sented below.
312
108 | A. To our Shareholders
254 D.6
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
D. Consolidated Financial Statements
247
2,804
2,411
1,808
1,831
5,378
5,399
101,936
104,879
5,813
7,427
(34)
(29)
(4)
(3)
(1,403)
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
Combined Management Report
171 | C
131 | B. Corporate Governance
Profit of the Sectors and of Equity Investments:
Siemens' Managing Board is responsible for assessing the per-
formance of the segments. The Company's profitability mea-
sure of the Sectors and Equity Investments is earnings before
financing interest, certain pension costs, and income taxes as
determined by the chief operating decision maker (Profit).
Profit excludes various categories of items, not allocated to the
Accounting policies for Segment information are generally
the same as those used for Siemens, described in → NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. Lease transactions,
however, are classified as operating leases for internal and seg-
ment reporting purposes. Intersegment transactions are based
on market prices.
MEASUREMENT - SEGMENTS
10010
Eliminations, Corporate Treasury and other reconciling
items - comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items and the
activities of the Company's Corporate Treasury. It also includes
interest income and expense, such as, for example, interest not
allocated to segments or Centrally managed portfolio activities
(referred to as financing interest), interest related to Corporate
Treasury activities or resulting consolidation and reconciliation
effects on interest.
Corporate items and pensions - includes corporate charges
such as personnel costs for corporate headquarters, corporate
projects and non-operating investments or results of corpo-
rate-related derivative activities and costs for carve out activi-
ties managed by corporate, which are charged to the respective
segment when the disposal gain or loss is realized or when the
activities are classified as discontinued operations. Pensions
includes the Company's pension related income (expense) not
allocated to the segments, SRE or Centrally managed portfolio
activities.
Siemens Real Estate (SRE) - is the real estate service pro-
vider at Siemens, who manages the Group's entire real estate
business portfolio, operates the properties, and is responsible
for building projects and the purchase and sale of real estate.
Centrally managed portfolio activities - generally includes
activities intended for divestment or closure as well as activities
remaining from divestments and discontinued operations.
TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation to Consolidated Financial Statements contains
businesses and items not directly related to Siemens' report-
able segments:
54,525
RECONCILIATION
Equity Investments in general, comprises equity stakes
held by Siemens that are accounted for by the equity method or
as available-for-sale financial assets and that for strategic rea-
sons are not allocated to a Sector or a Division, respectively,
SFS, Centrally managed portfolio activities, Siemens Real Estate
(SRE), Corporate items or Corporate Treasury.
-
Infrastructure & Cities - offers a wide range of technologies
that increase the functionality and sustainability of metropoli-
tan centers and urban infrastructures worldwide, such as inte-
grated mobility solutions, building and security systems, power
distribution equipment, grid automation and control products
and solutions, smart grid applications and low and medium-
voltage products.
a supplier of innovative and environmentally
friendly products and solutions for industrial companies, par-
ticularly those in the process and manufacturing industries.
Industry's end-to-end automation solutions, drive technolo-
gies, industrial IT and industry software, in-depth industry
expertise and technology-based services help Industry's cus-
tomers use resources and energy more efficiently, improve
productivity, and increase flexibility.
-
Industry
Healthcare offers customers a comprehensive portfolio of
medical solutions across the treatment chain - from preven-
tion and early detection to diagnosis, treatment and follow-up
care. Healthcare also provides technical maintenance, profes-
sional and consulting services, and, together with Financial
Services (SFS), financing to assist customers in purchasing our
products.
-
Energy - offers a wide spectrum of products, solutions and
services for generating and transmitting power, and for extract-
ing, converting and transporting oil and gas.
The four Sectors comprise manufacturing, industrial and com-
mercial goods, solutions and services in areas more or less
related to Siemens' origins in the electrical business field.
DESCRIPTION OF REPORTABLE SEGMENTS
311
Financial Services (SFS) - provides business-to-business
financial solutions. With its specialist financing and technology
expertise in the areas of Siemens businesses, SFS supports cus-
tomer investments with leasing solutions and equipment, proj-
ect and structured financing. SFS provides capital for Siemens
customers as well as other companies and manages financial
risks of Siemens.
in %
85
Subsidiaries
Siemens Industry Software SAS, Vélizy-Villacoublay/France
100
Siemens Electrical & Electronic Services K.S.C.C.,
Kuwait City/Kuwait
492
Siemens Lease Services SAS, Saint-Denis/France
SIEMENS Postal Parcel Airport Logistics S.A.S., Paris/France
Siemens S.A.S., Saint-Denis/France
100
Tecnomatix Technologies SARL, Luxembourg/Luxembourg
100
1008
100
TFM International S.A. i.L., Luxembourg/Luxembourg
Siemens d.o.o. Podgorica, Podgorica/Montenegro
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108 | A. To our Shareholders
100
320
Siemens Healthcare Diagnostics S.A.S., Saint-Denis/France
Siemens Kenya Ltd., Nairobi/Kenya
Siemens Renting S.p.A. in Liquidazione, Milan/Italy
100
LMS Imagine, Roanne/France
100
Siemens S.p.A., Milan/Italy
100
PETNET Solutions SAS, Saint-Denis/France
100
Siemens Transformers S.p.A., Trento/Italy
100
Samtech France, Massy/France
100
Combined Management Report
Siemens VAI Metals Technologies S.r.I., Marnate/Italy
1008
Siemens Audiologie S.A.S., Saint-Denis/France
100
Trench Italia S.r.l., Savona/Italy
100
Siemens Financial Services SAS, Saint-Denis/France
100
Siemens TOO, Almaty/Kazakhstan
100
Siemens France Holding, Saint-Denis/France
100
100
131 | B.
Corporate Governance
Equity interest
100
Siemens Healthcare Diagnostics SA, Brussels/Belgium
10011
Trench Germany GmbH, Bamberg
79
Samtech SA, Angleur/Belgium
10011
51
Siemens W.L.L., Manama/Bahrain
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
100
Vienna/Austria
1008
Sky Eye Transportation Systems GmbH i.L., Braunschweig
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH,
100
SKAG Principals, Munich
100
52
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
Trench Austria GmbH, Leonding/Austria
100
SKAG Fonds S8, Munich
100
SKAG Fonds S7, Munich
100
Turbine Airfoil Coating and Repair GmbH, Berlin
100
Siemens Industry Software NV, Leuven/Belgium
100
Equity interest
319
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
250 D.3
249 D.2
252 D.5
Consolidated Statements of Income
100
248 D.1
247 | D.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
10 Exemption pursuant to Section 264 b German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
8 Not consolidated due to immateriality.
7 Significant influence due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
1 Control due to a majority of voting rights.
Consolidated Financial Statements
Siemens VAI Metals Technologies GmbH, Linz/Austria
LMS France S.A.R.L, Vélizy-Villacoublay/France
Siemens Postal, Parcel & Airport Logistics S.r.L., Milan/Italy
Siemens, s.r.o., Prague/Czech Republic
100
Robcad Limited, Airport City/Israel
1008
Ostrava/Czech Republic
100
Siemens Limited, Dublin/Ireland
Siemens VAI Metals Technologies, s.r.o.,
100
iMetrex Technologies Limited, Dublin/Ireland
100
Siemens Industry Software, s.r.o., Prague/Czech Republic
100
Europlex Technologies (Ireland) Limited, Dublin/Ireland
100
97
Islamic Republic of
100
Siemens Sherkate Sahami (Khass), Teheran/Iran,
100
Siemens Audiologická Technika s.r.o., Prague/Czech Republic
Siemens Convergence Creators, s.r.o., Prague/Czech Republic
Siemens Electric Machines s.r.o., Drasov/Czech Republic
100
100
Siemens Zrt., Budapest/Hungary
100
100
Siemens PSE Program- és Rendszerfejlesztő Kft.,
Budapest/Hungary
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
Siemens A/S, Ballerup/Denmark
100
HV-Turbo Italia S.r.I., Mornago/Italy
100
Siemens Healthcare Diagnostics S.A.E, Cairo/Egypt
100
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
NEM Energy Egypt LLC, Alexandria/Egypt
100
Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
Airport City/Israel
100
Siemens Wind Power A/S, Brande/Denmark
100
Siemens Industry Software A/S, Ballerup/Denmark
1008
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
100
Siemens Höreapparater A/S, Ballerup/Denmark
100
Siemens Israel Ltd., Tel Aviv/Israel
100
Siemens Healthcare Diagnostics ApS, Ballerup/Denmark
100
Siemens Industry Software Ltd., Airport City/Israel
100
100
100
J. N. Kelly Security Holding Limited, Larnaka/Cyprus
OEZ s.r.o., Letohrad/Czech Republic
100
Trench France S.A.S., Saint-Louis/France
100
100
Siemens VAI Metals Technologies SAS, Savigneux/France
Siemens Product Lifecycle Management Software II (BE) BVBA,
Anderlecht/Belgium
in %
September 30, 2014
in %
September 30, 2014
Samtech Italia S.r.l., Milan/Italy
100
Siemens Technologies S.A.E., Cairo/Egypt
90
Siemens Healthcare Diagnostics S.r.I., Milan/Italy
100
Siemens Healthcare Diagnostics OY, Espoo/Finland
100
Siemens Hearing Instruments S.r.l., Milan/Italy
100
Siemens Osakeyhtiö, Espoo/Finland
100
Siemens Industry Software S.r.I., Milan/Italy
100
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
100
100
Siemens S.A./N.V., Beersel/Belgium
100
Tecnomatix Technologies (Gibraltar) Limited,
Siemens d.d., Zagreb/Croatia
100
Siemens Audiológiai Technika Kereskedelmi és Szolgáltató
Korlátolt Felelősségü Társaság, Budapest/Hungary
100
Siemens Convergence Creators d.o.o., Zagreb/Croatia
51
Koncar Power Transformers d.o.o., Zagreb/Croatia
100
evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
100
Siemens EOOD, Sofia/Bulgaria
100
100
Siemens Healthcare Diagnostics ABEE, Athens/Greece
Siemens Pty. Ltd., Gaborone/Botswana
100
Athens/Greece
100
Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
100
Siemens d.o.o., Banja Luka/Bosnia and Herzegovina
100
Gibraltar/Gibraltar
1008
Siemens VAI Metal Technologies S.A/N.V, Beersel/Belgium
100
10011
100
75
IBS Aktiengesellschaft excellence, collaboration,
manufacturing, Höhr-Grenzhausen
10010
Siemens Fuel Gasification Technology GmbH & Co. KG,
Freiberg
10011
HSP Hochspannungsgeräte GmbH, Troisdorf
74
10011
Kommunikationsdienstleistungen mbH, Hamburg
Siemens Fonds Invest GmbH, Munich
HanseCom Gesellschaft für Informations- und
10011
Siemens Financial Services GmbH, Munich
10010
10011
Siemens Finance & Leasing GmbH, Munich
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
100
1008
10010
Siemens Convergence Creators GmbH & Co. KG, Hamburg
Siemens Convergence Creators Management GmbH, Hamburg
Siemens Energy Automation GmbH, Erlangen
10011
1008
EDI - USS Verwaltungsgesellschaft mbH, Munich
evosoft GmbH, Nuremberg
10010
1008
10011
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Fuel Gasification Technology Verwaltungs GmbH,
Freiberg
ILLIT Grundstücks-Verwaltungsgesellschaft mbH & Co. KG i.L.,
Grünwald
10011
100
100
100
Siemens Healthcare Diagnostics Holding GmbH, Eschborn
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
Siemens Industriegetriebe GmbH, Penig
100
Mannesmann Demag Krauss-Maffei GmbH, Munich
100
Lincas Electro Vertriebsgesellschaft mbH, Hamburg
1008
Kyros 46 Verwaltungs GmbH, Constance
10011
KompTime GmbH, Munich
100
Siemens Healthcare Diagnostics GmbH, Eschborn
10011
Jawa Power Holding GmbH, Erlangen
10010
Siemens Grundstücksmanagement GmbH & Co. OHG,
Grünwald
100
100
ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
1008
Siemens Global Innovation Partners Management GmbH,
Munich
10010
1008
EDI - USS Umsatzsteuersammelrechnungen und Signaturen
GmbH & Co. KG, Munich
1008
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
100
100
Siemens Audiologische Technik GmbH, Erlangen
Siemens Bank GmbH, Munich
10011
Berliner Vermögensverwaltung GmbH, Berlin
100
Atecs Mannesmann GmbH, Erlangen
100
100
10011
10011
100
R&S Restaurant Services GmbH, Munich
REMECH Systemtechnik GmbH, Kamsdorf
RHG Vermögensverwaltung GmbH, Berlin
RISICOM Rückversicherung AG, Grünwald
Samtech Deutschland GmbH, Hamburg
100
AS AUDIO-SERVICE Gesellschaft mit beschränkter Haftung,
Herford
1008
Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
100
10011
Alpha Verteilertechnik GmbH, Cham
Airport Munich Logistics and Services GmbH, Hallbergmoos
10011
Projektbau-Arena-Berlin GmbH, Grünwald
Germany (115 companies)
10011
Project Ventures Butendiek Holding GmbH, Erlangen
Blitz 14-658 GmbH, Munich
1008
Siemens Beteiligungen Inland GmbH, Munich
10011
100
Dade Behring Grundstücks GmbH, Marburg
100
Dade Behring Beteiligungs GmbH, Eschborn
10010
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG, Grünwald
100
DA Creative GmbH, Munich
10010
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
100
Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
Mechanik Center Erlangen GmbH, Erlangen
10010
10010
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
10011
BWI Services GmbH, Meckenheim
10011
Siemens Beteiligungen USA GmbH, Berlin
1008
Blitz 14-661 GmbH, Munich
1008
Siemens Beteiligungen Management GmbH, Grünwald
1008
Blitz 14-660 GmbH, Munich
CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
SKAG Fonds C1, Munich
10011
10010
10011
Siemens Turbomachinery Equipment GmbH, Frankenthal
Siemens VAI Metals Technologies GmbH, Willstätt-Legelshurst
Siemens Venture Capital GmbH, Munich
100
Saudi VOEST-ALPINE GmbH, Linz/Austria
10011
100
Omnetric GmbH, Vienna/Austria
100
100
100
Landis & Staefa (Österreich) GmbH, Vienna/Austria
Landis & Staefa GmbH, Vienna/Austria
10010
100
100
KDAG Beteiligungen GmbH, Vienna/Austria
10010
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
Siemens Technopark Mülheim Verwaltungs GmbH, Grünwald
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg Verwaltungs GmbH, Grünwald
Siemens Treasury GmbH, Munich
69
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
100
10011
Siemens Spezial-Investmentaktiengesellschaft mit TGV, Munich
Siemens Technology Accelerator GmbH, Munich
100
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
1008
Siemens Real Estate Management GmbH, Grünwald
Siemens Aktiengesellschaft Österreich, Vienna/Austria
100
100
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
SIM 16. Grundstücksverwaltungs- und -beteiligungs-
GmbH & Co. KG, Munich
100
Siemens Personaldienstleistungen GmbH, Vienna/Austria
Siemens Urban Rail Technologies Holding GmbH,
Vienna/Austria
10011
SIMOS Real Estate GmbH, Munich
10011
SIMAR West Grundstücks-GmbH, Grünwald
10011
100
10011 Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
100
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
10011
100
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
10011
10010
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
SIMAR Süd Grundstücks-GmbH, Grünwald
100
100
100
100
Siemens Convergence Creators GmbH, Eisenstadt/Austria
Siemens Convergence Creators GmbH, Vienna/Austria
Siemens Convergence Creators Holding GmbH, Vienna/Austria
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
10010
100
100
10011
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
ETM professional control GmbH, Eisenstadt/Austria
Siemens Real Estate GmbH & Co. OHG, Grünwald
Verwaltung SeaRenergy Offshore Projects GmbH i.L., Hamburg
in %
September 30, 2014
in %
10011
Siemens Industry Automation Holding AG, Munich
Siemens Industry Software GmbH & Co. KG, Cologne
Siemens Industry Software Management GmbH, Cologne
Siemens Insulation Center GmbH & Co. KG, Zwönitz
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
Siemens Medical Solutions Health Services GmbH, Erlangen
September 30, 2014
Equity interest
Equity interest
Combined Management Report
171 | C
Corporate Governance
131 | B.
318
108 | A. To our Shareholders
11 Exemption pursuant to Section 264 (3) German Commercial Code.
10 Exemption pursuant to Section 264b German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
8 Not consolidated due to immateriality.
7 Significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
1 Control due to a majority of voting rights.
6 No significant influence due to contractual arrangements or legal circumstances.
100
10010
10010
VIB Verkehrsinformationsagentur Bayern GmbH, Munich
VMZ Berlin Betreibergesellschaft mbH, Berlin
51
Siemens S.A., Luanda/Angola
10011
100
Siemens Spa, Algiers/Algeria
10011
51
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (260 companies)
ESTEL Rail Automation SPA, Algiers/Algeria
Siemens Project Ventures GmbH, Erlangen
Siemens Private Finance Versicherungs- und
Kapitalanlagenvermittlungs-GmbH, Munich
10011
1008
1008
Siemens Postal, Parcel & Airport Logistics GmbH, Constance
Siemens Power Control GmbH, Langen
10011
100
Weiss Spindeltechnologie GmbH, Schweinfurt
100
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Siemens Novel Businesses GmbH, Munich
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
100
1008
943
VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
10010
100
51
10011
171 | C
Combined Management Report
330
1 Control due to a majority of voting rights.
100
Chemtech Servicos de Engenharia e Software Ltda.,
Rio de Janeiro/Brazil
100
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
Canoas/Brazil
100
LMS da América do Sul Servicos de Engenharia Ltda,
São Caetano do Sul/Brazil
100
Siemens Industry Software, SA de CV, México, D.F./Mexico
Siemens Inmobiliaria S.A. de C.V., México, D.F./Mexico
Siemens Innovaciones S.A. de C.V., México, D.F./Mexico
Siemens Servicios S.A. de C.V., México, D.F./Mexico
Siemens VAI Metals Technologies, S. de R.L. de C.V.,
Apodaca/Mexico
100
100
100
100
1008
Siemens Aparelhos Auditivos Ltda., São Paulo/Brazil
100
Siemens, S.A. de C.V., México, D.F./Mexico
100
Siemens Healthcare Diagnostics, S. de R.L. de C.V., México,
D.F./Mexico
100
Siemens Soluciones Tecnologicas S.A., Santa Cruz de la
Sierra/Bolivia, Plurinational State of
100
VTW Anlagen UK Ltd., Banbury, Oxfordshire/United Kingdom
100
Siemens S.A., Guatemala/Guatemala
100
Siemens S.A., Tegucigalpa/Honduras
100
Americas (96 companies)
Dade Behring, S.A. de C.V., México, D.F./Mexico
1 Control due to a majority of voting rights.
100
100
Grupo Siemens S.A. de C.V., México, D.F./Mexico
100
Siemens S.A., Buenos Aires/Argentina
100
VA TECH International Argentina SA, Buenos Aires/Argentina
100
Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad
Juárez/Mexico
Siemens IT Services S.A., Buenos Aires/Argentina
100
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
4 No control due to substantive removal or participation rights held by other parties.
Equity interest
September 30, 2014
in %
September 30, 2014
in %
Siemens S.A., Managua/Nicaragua
100
Siemens Healthcare Diagnostics Panama, S.A.,
Siemens Medical Solutions USA, Inc., Wilmington,
DE/United States
100
Panama City/Panama
100
Siemens Molecular Imaging, Inc., Wilmington,
Siemens S.A., Panama City/Panama
100
DE/United States
100
Equity interest
323
Additional Information
337 | E.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
247 | D.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
Consolidated Financial Statements
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
248 D.1
Guatemala/Guatemala
100
VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
100
Siemens Hearing Instruments Inc., Ontario/Canada
100
Siemens Rail Automation Holdings Limited, Frimley,
Siemens Industry Software Ltd., Ontario/Canada
100
Surrey/United Kingdom
100
Siemens Postal, Parcel & Airport Logistics Ltd., Oakville/Canada
100
Siemens Rail Automation Limited, Frimley,
Siemens Transformers Canada Inc., Trois-Rivières/Canada
100
Surrey/United Kingdom
100
Trench Ltd., Saint John/Canada
100
Surrey/United Kingdom
100
Siemens Financial Ltd., Oakville/Canada
Siemens Protection Devices Limited, Frimley,
100
Siemens Pension Funding Limited, Frimley,
Siemens Rail Automation Ltda., São Paulo/Brazil
100
Surrey/United Kingdom
100
Siemens VAI Metals Services Ltda., Volta Redonda/Brazil
100
Siemens Rail Systems Project Holdings Limited, Frimley,
Siemens plc, Frimley, Surrey/United Kingdom
Siemens Postal, Parcel & Airport Logistics Limited, Frimley,
VAI - INGDESI Automation Ltda., Belo Horizonte/Brazil
Hearcanada Inc., Oakville/Canada
100
100
Surrey/United Kingdom
100
Siemens Canada Ltd., Ontario/Canada
100
100
Wheelabrator Air Pollution Control (Canada) Inc.,
Surrey/United Kingdom
100
The Preactor Group Limited, Frimley, Surrey/United Kingdom
100
Siemens S.A., San José/Costa Rica
100
Tronic Ltd., Frimley, Surrey/United Kingdom
100
Siemens, S.R.L., Santo Domingo/Dominican Republic
100
100
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
Siemens S.A., Quito/Ecuador
100
VA Tech Reyrolle Distribution Ltd., Frimley,
Siemens S.A., San Salvador/El Salvador
100
Surrey/United Kingdom
100
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
100
Siemens S.A.C., Lima/Peru
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
Surrey/United Kingdom
Ontario/Canada
100
Siemens Rail Systems Project Limited, Frimley,
Siemens Healthcare Diagnostics Manufacturing Limited,
Surrey/United Kingdom
100
George Town/Cayman Islands
100
100
Siemens Transmission & Distribution Limited, Frimley,
100
Surrey/United Kingdom
100
Siemens Manufacturing S.A., Bogotá/Colombia
100
Siemens VAI Metals Technologies Limited, Frimley,
Siemens S.A., Costado Sur - Tenjo/Colombia
100
Siemens S.A., Santiago de Chile/Chile
100
Siemens Postal, Parcel & Airport Logistics LLC, Wilmington,
Audiology Distribution, LLC, Wilmington, DE/United States
Siemens Industry, Inc., Wilmington, DE/United States
100
Siemens Hearing Instruments Pty. Ltd., Bayswater/Australia
Siemens Ltd., Bayswater/Australia
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108 | A. To our Shareholders
100
100
100
100
100
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
1008
100
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
Exemplar Health (SCUH) Holdings 3 Pty Limited,
1008
100
Bayswater/Australia
324
100
100
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Bayswater/Australia
100
Siemens Healthcare Diagnostics Inc., Los Angeles,
CA/United States
100
Siemens Hearing Instruments, Inc., Wilmington,
DE/United States
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
Memcor Australia Pty. Ltd., South Windsor/Australia
Siemens Government Technologies, Inc., Wilmington,
DE/United States
131 | B.
Corporate Governance
171 | C
85
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
DPC (Tianjin) Co., Ltd., Tianjin/China
100
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
80
100
GIS Steel & Aluminum Products Co., Ltd. Hangzhou,
Hangzhou/China
Siemens PLM Software (Shenzhen) Limited, Shenzhen/China
Siemens Power Automation Ltd., Nanjing/China
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd.,
Wuxi/China
100
51
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
Siemens Power Equipment Packages Co. Ltd., Shanghai,
Shanghai/China
65
100
Siemens Power Plant Automation Ltd., Nanjing/China
100
MWB (Shanghai) Co Ltd., Shanghai/China
100
Siemens Financial, Inc., Wilmington, DE/United States
Siemens Fossil Services, Inc., Wilmington, DE/United States
Siemens Generation Services Company, Wilmington,
DE/United States
100
Westinghouse McKenzie-Holland Pty Ltd, Clayton/Australia
Siemens Bangladesh Ltd., Dhaka/Bangladesh
Combined Management Report
Equity interest
Equity interest
September 30, 2014
in %
September 30, 2014
in %
Siemens Rail Automation Holding Pty. Ltd., Clayton/Australia
100
100
SIEMENS RAIL AUTOMATION INVESTMENT PTY. LTD.,
Clayton/Australia
Shanghai/China
51
100
SIEMENS RAIL AUTOMATION PTY. LTD., Clayton/Australia
100
Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
Tianjin/China
100
Siemens Manufacturing and Engineering Centre Ltd.,
100
100
100
100
Mannesmann Corporation, New York, NY/United States
100
NEM USA Corp., Wilmington, DE/United States
100
Siemens USA Holdings, Inc., Wilmington, DE/United States
Siemens VAI Metals Technologies LLC, Wilmington,
DE/United States
100
1008
Nimbus Technologies, LLC, Bingham Farms, MI/United States
100
SMI Holding LLC, Wilmington, DE/United States
100
Omnetric Corp., Wilmington, DE/United States
100
P.E.T.NET Houston, LLC, Austin, TX/United States
51
Wheelabrator Air Pollution Control Inc., Baltimore,
MD/United States
IBS America, Inc., Wilmington, DE/United States
100
Siemens Public, Inc., Wilmington, DE/United States
100
100
DE/United States
100
eMeter Corporation, Wilmington, DE/United States
100
Siemens Power Generation Service Company, Ltd.,
FCE International, LLC, Huntingdon Valley, PA/United States
100
100
Wilmington, DE/United States
HearUSA IPA, Inc., New York, NY/United States
100
Siemens Product Lifecycle Management Software Inc.,
HearX West LLC, Wilmington, DE/United States
502
Wilmington, DE/United States
100
HearX West, Inc., Los Angeles, CA/United States
100
PETNET Indiana LLC, Indianapolis, IN/United States
501
PETNET Solutions Cleveland, LLC, Wilmington,
DE/United States
Tortola/Virgin Islands, British
100
100
Siemens Demag Delaval Turbomachinery, Inc., Wilmington,
DE/United States
Asia, Australia (133 companies)
100
Australia Hospital Holding Pty Limited, Bayswater/Australia
100
Siemens Credit Warehouse, Inc., Wilmington,
DE/United States
Siemens Electrical, LLC, Wilmington, DE/United States
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
1008
Siemens Energy, Inc., Wilmington, DE/United States
100
Exemplar Health (NBH) Holdings 2 Pty Limited,
Siemens Financial Services, Inc., Wilmington,
DE/United States
Bayswater/Australia
100
100
Exemplar Health (NBH) Trust 2, Bayswater/Australia
Dade Behring Hong Kong Holdings Corporation,
Siemens Corporation, Wilmington, DE/United States
Winergy Drive Systems Corporation, Wilmington,
DE/United States
100
63
Siemens S.A., Montevideo/Uruguay
100
PETNET Solutions, Inc., Knoxville, TN/United States
100
Siemens Telecomunicaciones S.A., Montevideo/Uruguay
100
100
100
Siemens Convergence Creators Corp., Wilmington,
Siemens Rail Automation, C.A., Caracas/Venezuela,
Bolivarian Republic of
100
DE/United States
100
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
Siemens Capital Company LLC, Wilmington, DE/United States
100
Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens Ltda., São Paulo/Brazil
100
60
Audio SAT Sp. z o.o., Poznan/Poland
100
Siemens Finance Sp. z o.o., Warsaw/Poland
100
Siemens Program and System Engineering s.r.o.,
Bratislava/Slovakia
100
Siemens Industry Software Sp. z o.o., Warsaw/Poland
100
Siemens s.r.o., Bratislava/Slovakia
100
Siemens Sp. z o.o., Warsaw/Poland
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Siemens VAI Metals Technologies Spólka z ograniczona
odpowiedzialnoscia, Cracow/Poland
Siemens d.o.o., Ljubljana/Slovenia
60
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
75
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
Siemens Ltd., Lagos/Nigeria
100
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
51
Siemens AS, Oslo/Norway
100
Westinghouse Saudi Arabia Ltd., Riyadh/Saudi Arabia
1008
100
Siemens Healthcare Diagnostics AS, Oslo/Norway
Siemens d.o.o. Beograd, Belgrade/Serbia
100
Siemens Höreapparater AS, Oslo/Norway
100
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
100
Siemens L.L.C., Muscat/Oman
51
100
1008
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
03
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
Exemption pursuant to Section 264 b German Commercial Code.
247 | D.
Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
11 Exemption pursuant to Section 264 (3) German Commercial Code.
51
1 Control due to a majority of voting rights.
Siemens Employee Share Ownership Trust,
Johannesburg/South Africa
Siemens Healthcare Diagnostics, Unipessoal Lda.,
Marqott (Proprietory) Limited, Pretoria/South Africa
100
Amadora/Portugal
100
Marqott Holdings (Pty.) Ltd., Pretoria/South Africa
100
Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
03
Siemens (Proprietary) Limited, Midrand/South Africa
Lisbon/Portugal
100
Siemens Building Technologies (Pty) Ltd., Midrand/South Africa
100
Siemens S.A., Amadora/Portugal
100
Siemens W.L.L., Doha/Qatar
402
70
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
51
100
Siemens Pty. Ltd., Windhoek/Namibia
100
SIMEA SIBIU S.R.L., Sibiu/Romania
100
Castor III B.V., Amsterdam/Netherlands
100
000 Legion II, Moscow/Russian Federation
100
LMS Instruments BV, Breda/Netherlands
NEM Energy B.V., Leiden/Netherlands
100
000 Russian Turbo Machinery, Perm/Russian Federation
100
100
000 Siemens, Moscow/Russian Federation
100
NEM Energy Holding B.V., The Hague/Netherlands
100
Siemens S.R.L., Bucharest/Romania
100
Siemens Lda., Maputo/Mozambique
September 30, 2014
in %
September 30, 2014
in %
SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
Casablanca/Morocco
100
100
Bucharest/Romania
Siemens Plant Operations Tahaddart SARL, Tanger/Morocco
100
Siemens Convergence Creators S.R.L., Brasov/Romania
100
Siemens S.A., Casablanca/Morocco
100
Siemens Industry Software S.R.L., Brasov/Romania
100
100
000 Siemens Elektroprivod, St. Petersburg/Russian Federation
66
Omnetric B.V., The Hague/Netherlands
The Hague/Netherlands
65
Siemens Healthcare Diagnostics B.V., Breda/Netherlands
Siemens Industry Software B.V., 's-Hertogenbosch/
Netherlands
100
000 Siemens VAI Metals Technologies, Moscow/
Russian Federation
1008
Siemens Finance LLC, Vladivostok/Russian Federation
100
100
100
100
Siemens Research Center Limited Liability Company,
Moscow/Russian Federation
100
Siemens Medical Solutions Diagnostics Holding | B.V.,
The Hague/Netherlands
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
51
100
Siemens Nederland N.V., The Hague/Netherlands
Siemens International Holding B.V., The Hague/Netherlands
ISCOSA Industries and Maintenance Ltd., Riyadh/Saudi Arabia
Siemens Ltd., Riyadh/Saudi Arabia
100
000 Siemens Industry Software, Moscow/Russian Federation
000 Siemens Transformers, Voronezh/Russian Federation
000 Siemens Urban Rail Technologies, Moscow/Russian
Federation
100
000 Siemens Gas Turbine Technologies, Novoe
Pollux III B.V., Amsterdam/Netherlands
100
Devyatkino/Russian Federation
100
Siemens Audiologie Techniek B.V., The Hague/Netherlands
100
100
Siemens Diagnostics Holding II B.V., The Hague/Netherlands
000 Siemens High Voltage Products, Ufimsky
District/Russian Federation
100
Siemens Finance B.V., The Hague/Netherlands
100
Siemens Financieringsmaatschappij N.V.,
The Hague/Netherlands
100
Siemens Gas Turbine Technologies Holding B.V.,
100
65
254 D.6
330 D.7
337 | E.
Siemens Healthcare Diagnostics Ltd., Frimley,
Siemens Power Holding AG, Zug/Switzerland
100
Surrey/United Kingdom
100
Siemens Schweiz AG, Zurich/Switzerland
100
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley,
Stadt/Land Immobilien AG, Zurich/Switzerland
100
Surrey/United Kingdom
100
Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
United Republic of
Siemens Healthcare Diagnostics Products Ltd, Frimley,
100
Surrey/United Kingdom
100
100
100
Buckinghamshire/United Kingdom
Siemens Postal, Parcel & Airport Logistics AG,
Zurich/Switzerland
Huba Control AG, Würenlos/Switzerland
100
Surrey/United Kingdom
100
Siemens Audiologie AG, Adliswil/Switzerland
100
Siemens Fuel Gasification Technology Holding AG,
Zug/Switzerland
Sea Generation (Wales) Ltd., Frimley, Surrey/United Kingdom
Sea Generation Limited, Frimley, Surrey/United Kingdom
Siemens S.A., Tunis/Tunisia
100
100
Siemens Healthcare Diagnostics AG, Zurich/Switzerland
100
Siemens Financial Services Holdings Ltd., Stoke Poges,
Buckinghamshire/United Kingdom
100
Siemens Industry Software AG, Zurich/Switzerland
100
Siemens Financial Services Ltd., Stoke Poges,
100
100
Siemens Hearing Instruments Ltd., Crawley,
Siemens Finansal Kiralama A.S., Istanbul/Turkey
322
131 | B.
Corporate Governance
171 | C
Combined Management Report
Equity interest
Equity interest
September 30, 2014
108 | A. To our Shareholders
in %
in %
Siemens Industry Software Limited, Frimley,
Siemens Eletroeletronica Limitada, Manaus/Brazil
100
Surrey/United Kingdom
100
Siemens Pension Funding (General) Limited, Frimley,
Surrey/United Kingdom
September 30, 2014
Sea Generation (Kyle Rhea) Limited, Frimley,
11 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
100
West Sussex/United Kingdom
100
Siemens Isitme Cihazlari Sanayi Ve Ticaret Anonim Sirketi,
Istanbul/Turkey
Siemens Holdings plc, Frimley, Surrey/United Kingdom
100
100
Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
10 Exemption pursuant to Section 264 b German Commercial Code.
100
100
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
Siemens Industrial Turbomachinery Ltd., Frimley,
Surrey/United Kingdom
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
100
100
LIMITED LIABILITY COMPANY "SIEMENS VAI METALS
TECHNOLOGIES", Kiev/Ukraine
1008
Petnet Soluciones, S.L., Sociedad Unipersonal,
Madrid/Spain
100
Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
SD (Middle East) LLC, Dubai/United Arab Emirates
100
492
Samtech Iberica Engineering & Software Services S.L.,
Siemens LLC, Abu Dhabi/United Arab Emirates
492
Barcelona/Spain
100
Siemens Healthcare Diagnostics S.L., Barcelona/Spain
100
Siemens Middle East Limited, Masdar City/
United Arab Emirates
100
Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
100
Johannesburg/South Africa
Additional Information
321
Equity interest
Equity interest
September 30, 2014
in %
September 30, 2014
in %
100
Siemens Healthcare Diagnostics (Pty.) Limited,
100
Siemens VAI Metal Teknolojileri Sanayi ve Ticaret A.S.,
Istanbul/Turkey
1008
Siemens Hearing Solution (Pty.) Ltd., Randburg/South Africa
100
100% foreign owned subsidiary "Siemens Ukraine",
Kiev/Ukraine
100
Siemens IT Solutions and Services (Pty) Ltd.,
Isando/South Africa
Siemens Holding S.L., Madrid/Spain
100
Siemens Industry Software S.L., Barcelona/Spain
Preactor International Limited, Frimley, Surrey/United Kingdom
Project Ventures Rail Investments | Limited, Frimley,
Surrey/United Kingdom
100
100
Madrid/Spain
100
Samtech UK Limited, Frimley, Surrey/United Kingdom
100
Siemens AB, Upplands Väsby/Sweden
Telecomunicación, Electrónica y Conmutación S.A.,
100
100
SBS Pension Funding (Scotland) Limited Partnership,
Edinburgh/United Kingdom
573
Siemens Healthcare Diagnostics AB, Södertälje/Sweden
Siemens Industrial Turbomachinery AB, Finspång/Sweden
100
Sea Generation (Brough Ness) Limited, Frimley,
100
Surrey/United Kingdom
Siemens Financial Services AB, Stockholm/Sweden
Siemens Industry Software AB, Kista/Sweden
100
100
100
Electrium Sales Limited, Frimley, Surrey/United Kingdom
GYM Renewables Limited, Frimley, Surrey/United Kingdom
100
100
SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS, S.L. Sociedad
Unipersonal, Madrid/Spain
100
GYM Renewables ONE Limited, Frimley, Surrey/United Kingdom
Leuven Measurement & Systems UK Limited, Frimley,
Siemens S.A., Madrid/Spain
100
100
Surrey/United Kingdom
100
Siemens Rail Automation S.A.U., Madrid/Spain
100
Marine Current Turbines Limited, Frimley, Surrey/United Kingdom
100
Siemens Renting S.A., Madrid/Spain
Siemens Rail Automation Holding S.A., Madrid/Spain
Equity interest
Siemens Building Technologies (Tianjin) Ltd., Tianjin/China
Siemens Business Information Consulting Co., Ltd, Beijing/China
Siemens Circuit Protection Systems Ltd., Shanghai,
Shanghai/China
Siemens Rail Automation Technical Consulting Services
(Beijing) Co. Ltd., Beijing/China
40
259
Shanghai Electric Wind Energy Co., Ltd., Shanghai/China
49
259
32
Siemens Traction Equipment Ltd., Zhuzhou,
Zhuzhou/China
50
33
Xi'An X-Ray Target Ltd., Xi'an/China
43
Power Properties Inc., Boston, MA/United States
259
Rether networks, Inc., Berkeley, CA/United States
30
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
50
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
23
309
509
in %
September 30, 2014
in %
SMart Wind SPC 6 Limited, London/United Kingdom
SMart Wind SPC 7 Limited, London/United Kingdom
SMart Wind SPC 8 Limited, London/United Kingdom
Americas (10 companies)
Cia Técnica de Engenheria Eletrica Sucursal Argentina
VA TECH ARGENTINA S.A. Union transitoria de Empresas,
Buenos Aires/Argentina
Brockton Power Company LLC, Boston, MA/United States
Brockton Power Holdings Inc., Boston, MA/United States
Brockton Power Properties, Inc., Boston, MA/United States
Cyclos Semiconductor, Inc., Wilmington, DE/United States
PhSiTh LLC, New Castle, DE/United States
509
Siemens First Capital Commercial Finance, LLC, Oklahoma City,
OK/United States
509
509
GSP China Technology Co., Ltd., Beijing/China
309
50
ROSE Power Transmission Technology Co., Ltd,
Anshan/China
50
Saitong Railway Electrification (Nanjing) Co., Ltd.,
Nanjing/China
FCE (Beijing) Heat Treatment Technology Co., Ltd.,
Beijing/China
September 30, 2014
Bangalore International Airport Ltd., Bangalore/India
515
Yaskawa Siemens Automation & Drives Corp.,
Kitakyushu/Japan
50
309
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Beijing/China
25
Power Automation Pte. Ltd., Singapore/Singapore
Modern Engineering and Consultants Co. Ltd.,
Bangkok/Thailand
49
409
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7
Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
ChinaInvent (Shanghai) Instrument Co., Ltd,
Shanghai/China
219
Magellan Technology Pty. Ltd., Annandale/Australia
439
Innovex Capital En Tecnologia, C.A., Caracas/Venezuela,
Bolivarian Republic of
Transparent Energy Systems Private Limited,
Pune/India
259
207,9
P.T. Jawa Power, Jakarta/Indonesia
50
PT Asia Care Indonesia, Jakarta/Indonesia
40
26
Asia, Australia (24 companies)
259
Exemplar Health (NBH) Partnership, Melbourne/Australia
50
Kikoeno Soudanshitsu Co., Ltd., Tochigi/Japan
509
Exemplar Health (SCUH) Partnership, Sydney/Australia
50
Koden Co., Ltd., Hiroshima/Japan
Kanto Hochouki Co., Ltd., Ibaragi/Japan
Equity interest
Equity interest
327
Ethos Energy Group Limited, Aberdeen/United Kingdom
49
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
Vassiliko/Greece
Heron Wind Limited, London/United Kingdom
33
48
Metropolitan Transportation Solutions Ltd.,
Lincs Renewable Energy Holdings Limited,
London/United Kingdom
50
Rosh HaAyin/Israel
209
Njord Limited, London/United Kingdom
33
Transfima GEIE, Milan/Italy
429
Odos Imaging Ltd., Edinburgh/United Kingdom
509
25
TRIXELL S.A.S., Moirans/France
33
Cross London Trains Holdco 2 Limited,
London/United Kingdom
Termica AFAP S.A., Villacanas/Spain
239
T-Power NV, Brussels/Belgium
20
Certas AG, Zurich/Switzerland
50
Meomed s.r.o., Prerov/Czech Republic
479
Transfima S.p.A., Milan/Italy
Interessengemeinschaft TUS, Männedorf/Switzerland
A2SEA A/S, Fredericia/Denmark
49
Breesea Limited, London/United Kingdom
50
Noliac A/S, Kvistgaard/Denmark
249
Compagnie Electrique de Bretagne, S.A.S., Paris/France
40
50
499
Optimus Wind Limited, London/United Kingdom
50
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
247 | D.
Consolidated Financial Statements
248 D.1
6 No significant influence due to contractual arrangements or legal circumstances.
Consolidated Statements of Income
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
252 D.5
9 Not accounted for using the equity method due to immateriality.
5 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
VAL 208 Torino GEIE, Milan/Italy
865,9
Temir Zhol Electrification LLP, Astana/Kazakhstan
49
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
Pyreos Limited, Edinburgh/United Kingdom
509
349
Electrogas Malta Limited, St. Julian's/Malta
4 No control due to substantive removal or participation rights held by other parties.
209
Sesmos Limited, Edinburgh/United Kingdom
SMart Wind Limited, London/United Kingdom
509
50
50
SMart Wind SPC 5 Limited, London/United Kingdom
509
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
Solutions & Infrastructure Services Limited,
Gzira/Malta
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108 | A. To our Shareholders
D.7.1 Supervisory Board
Gerhard Cromme, Dr. iur.
Chairman
Chairman of the Supervisory
Board of Siemens AG
Date of birth: February 25, 1943
Member since: January 23, 2003
Berthold Huber*
First Deputy Chairman
President of IndustriALL
Global Union
Date of birth: February 15, 1950
Member since: July 1, 2004
External positions
German supervisory board
positions:
> Audi AG, Ingolstadt
(Deputy Chairman)
> Porsche Automobil Holding SE,
Stuttgart
> Volkswagen AG, Wolfsburg
(Deputy Chairman)
Werner Wenning
Second Deputy Chairman
Chairman of the Supervisory
Boards of Bayer AG and E.ON SE
Date of birth: October 21, 1946
Member since: January 23, 2013
External positions
| D.7 Supervisory Board and Managing Board
329
Additional Information
337 | E.
9 Not accounted for using the equity method due to immateriality.
10
Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
12 Interests in the capital of 2.5% are held by Siemens Pension Trust e.V.
13 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
247
D.
German supervisory board
positions:
Consolidated Financial Statements
Consolidated Statements of Income
252 D.5
249 D.2
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
248 D.1
> Bayer AG, Leverkusen
(Chairman)
> E.ON SE, Düsseldorf (Chairman)
> Henkel AG & Co. KGaA,
Düsseldorf¹
German supervisory board
positions:
> BDO AG Wirtschaftsprüfungs-
gesellschaft, Hamburg
(Deputy Chairman)
> HSBC Trinkaus & Burkhardt AG,
Düsseldorf
Peter Gruss, Prof. Dr. rer. nat.
Scientific Member of the
Max Planck Society
Date of birth: June 28, 1949
Member since: January 24, 2008
External positions
German supervisory board
positions:
> Münchener Rückversicherungs-
Gesellschaft Aktiengesellschaft
in München, Munich
Positions outside Germany:
> Actelion Ltd., Switzerland
Date of birth: March 2, 1942
Member since: January 24, 2008
External positions
Date of birth: July 24, 1952
Member since: July 11, 2014
Chairwoman of the Combine
Works Council of Siemens AG
Date of birth: March 14, 1959
Member since: April 1, 2007
Hans-Jürgen Hartung*
Chairman of the Works Council
of Siemens Erlangen Süd,
Germany
Date of birth: March 10, 1952
Member since: January 27, 2009
108 | A. To our Shareholders
131 | B.
Corporate Governance
Bettina Haller*
8
Supervisory Board Member
> Allianz S.p.A., Italy
> Henkel Management AG,
Düsseldorf
Lothar Adler*
(until May 31, 2014)
Supervisory Board Member
Date of birth: February 22, 1949
Member since: January 23, 2003
Olaf Bolduan*
(since July 11, 2014)
Chairman of the Works Council
of Siemens Dynamowerk,
Berlin, Germany
Hans Michael Gaul, Dr. iur.
Gerd von Brandenstein
Supervisory Board Member
Date of birth: April 6, 1942
Member since: January 24, 2008
Chairman of the Board of
Management of Allianz SE
Date of birth: December 23, 1954
Member since: January 24, 2008
External positions
German supervisory board
positions:
> Allianz Asset Management AG,
Munich (Chairman)
> Allianz Deutschland AG, Munich
> BASF SE, Ludwigshafen am
Rhein (Deputy Chairman)
> Linde AG, Munich (Deputy
Chairman)
Positions outside Germany:
> Allianz France S.A., France
(Deputy Chairman)
Michael Diekmann
259
7 Significant influence due to contractual arrangements or legal circumstances.
Not consolidated due to immateriality.
(36)
in millions of
in millions of
in %
€
€
1005,6
0
1
1005,6
2
(42)
1005,6
1
66
1005,6
1
66
interest
Equity
Net income
Equity
131 | B.
Corporate Governance
171 | C
Combined Management Report
328
September 30, 2014
Other investments 13
Germany (9 companies)
975,6
Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW), Paderborn
BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
Kyros Beteiligungsverwaltung GmbH, Grünwald
MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
OSRAM Licht AG, Munich
Siemens Global Innovation Partners | GmbH & Co. KG, Munich
Siemens Pensionsfonds AG, Grünwald
SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (5 companies)
Dils Energie NV, Hasselt/Belgium
Atos SE, Bezons/France
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
3
(98)
206,12
506
(1)
12
260
(1)
2,939
456
5
84
6 No significant influence due to contractual arrangements or legal circumstances.
1005,6
6,800
744,6
0
0
9
(3)
34
7
88
810
5 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
24
2,268
506
1
61
1005,6
0
1005,6
4 No control due to substantive removal or participation rights held by other parties.
0
Medical Systems S.p.A., Genoa/Italy
Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
Americas (2 companies)
¡BAHN Corporation, South Jordan, UT/United States
Longview Intermediate Holdings B, LLC, Wilmington, DE/United States
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
8
50
Solucia Renovables 1, S.L., Lebrija/Spain
50
250 D.3
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
325
Equity interest
Equity interest
September 30, 2014
in %
September 30, 2014
in %
Siemens X-Ray Vacuum Technology Ltd.,Wuxi, Wuxi/China
Smart Metering Solutions (Changsha) Co. Ltd., Changsha/China
Trench High Voltage Products Ltd., Shenyang, Shenyang/China
Winergy Drive Systems (Tianjin) Co. Ltd., Tianjin/China
100
Siemens Ltd. Seoul, Seoul/Korea, Republic of
249 D.2
252 D.5
Consolidated Statements of Income
248 D.1
Siemens Ltd., China, Beijing/China
100
Siemens Wiring Accessories Shandong Ltd., Zibo/China
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
100
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10
Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
247 | D.
Consolidated Financial Statements
6 No significant influence due to contractual arrangements or legal circumstances.
60
Siemens PETNET Korea Co. Ltd., Seoul/Korea, Republic of
100
100
100
100
100
LMS India Engineering Solutions Pvt Ltd, Chennai/India
100
PETNET Solutions Private Limited, Singapore/Singapore
100
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
New Delhi/India
Powerplant Performance Improvement Ltd., New Delhi/India
Preactor Software India Private Limited, Bangalore/India
Siemens Convergence Creators Private Limited, Mumbai/India
Siemens Financial Services Private Limited, Mumbai/India
Siemens Hearing Instruments Pvt. Ltd., Bangalore/India
501
100
Siemens Industry Software Pte. Ltd., Singapore/Singapore
Siemens Medical Instruments Pte. Ltd., Singapore/Singapore
Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
Singapore/Singapore
100
100
100
100
100
492
100
100
65
100
Siemens VAI Metals Technologies Limited, Seoul/Korea,
Republic of
1008
Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
Hangzhou/China
51
Asia Care Holding Limited, Hong Kong/Hong Kong
100
SAMTECH HK Ltd, Hong Kong/Hong Kong
Siemens Industry Software Limited, Hong Kong/Hong Kong
100
Siemens Ltd., Hong Kong/Hong Kong
100
Siemens Postal, Parcel & Airport Logistics Limited,
Hong Kong/Hong Kong
100
HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Subsea Systems SDN. BHD, Kuala Lumpur/Malaysia
VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
Siemens Power Operations, Inc., Manila/Philippines
Siemens, Inc., Manila/Philippines
1008
100
Siemens Pte. Ltd., Singapore/Singapore
Siemens Wind Power Turbines (Shanghai) Co. Ltd.,
Shanghai/China
100
100
Siemens Special Electrical Machines Co. Ltd., Changzhi/China
Siemens Standard Motors Ltd., Yizheng/China
77
100
Siemens Finance and Leasing Ltd., Beijing/China
100
Siemens Surge Arresters Ltd., Wuxi/China
100
Siemens Financial Services Ltd., Beijing/China
100
Siemens Switchgear Ltd., Shanghai, Shanghai/China
55
Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
51
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
90
Siemens Factory Automation Engineering Ltd., Beijing/China
85
Siemens Electrical Drives Ltd., Tianjin/China
70
100
100
Siemens Real Estate Management (Beijing) Ltd., Co.,
Beijing/China
100
75
Siemens Eco-City Innovation Technologies (Tianjin) Co., Ltd.,
Tianjin/China
Siemens Sensors & Communication Ltd., Dalian/China
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
100
Shanghai/China
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
100
Shenzhen/China
100
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
100
Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
60
100
Siemens Transformer (Guangzhou) Co., Ltd.,
Siemens Hearing Instruments (Suzhou) Co. Ltd., Suzhou/China
100
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Shanghai/China
100
Huludao/China
84
Siemens Venture Capital Co., Ltd., Beijing/China
100
Siemens VAI Manufacturing (Taicang) Co., Ltd., Taicang/China
Siemens VAI Metals Technologies Co., Ltd., Shanghai,
Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
Siemens Water Technologies Ltd., Beijing/China
100
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai/China
Siemens Wind Power Blades (Shanghai) Co., Ltd.,
100
Shanghai/China
100
Siemens International Trading Ltd., Shanghai, Shanghai/China
Siemens Investment Consulting Co., Ltd., Beijing/China
100
100
100
94
100
Guangzhou/China
63
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
90
Hangzhou/China
51
Siemens Industrial Automation Ltd., Shanghai, Shanghai/China
Siemens High Voltage Switchgear Co., Ltd. Shanghai,
100
Shanghai/China
51
Siemens VAI International Trading Co., Ltd., Shanghai,
Siemens High Voltage Switchgear Guangzhou Ltd.,
Shanghai/China
1008
Guangzhou/China
Siemens Transformer (Wuhan) Company Ltd.,
Wuhan City/China
70
100
Siemens Rail Automation Pte. Ltd., Singapore/Singapore
499
23
Power Vermögensbeteiligungsgesellschaft mbH Die Erste,
Hamburg
509
PTZ Partikeltherapiezentrum Kiel Management GmbH,
Wiesbaden
Buitengaats Management B.V., Eemshaven/Netherlands
Infraspeed Maintainance B.V., Zoetermeer/Netherlands
Unify Holdings B.V., Amsterdam/Netherlands
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
209
46
49
50
509
ZeeEnergie C.V., Amsterdam/Netherlands
207
Siemens Venture Capital Fund 1 GmbH, Munich
Siemens-Electrogeräte GmbH, Munich
1005,9
1005,9
ZeeEnergie Management B.V., Eemshaven/Netherlands
VOEST-ALPINE Technical Services Ltd., Abuja/Nigeria
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
OWP Butendiek GmbH & Co. KG, Bremen
207
20
Energie Electrique de Tahaddart S.A., Tanger/Morocco
Buitengaats C.V., Amsterdam/Netherlands
10 Exemption pursuant to Section 264 b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108 | A. To our Shareholders
326
131 | B.
Corporate Governance
171 | C
Combined Management Report
209
Equity interest
September 30, 2014
Maschinenfabrik Reinhausen GmbH, Regensburg
MeVis BreastCare GmbH & Co. KG, Bremen
in %
September 30, 2014
in %
26
49
Equity interest
409
Siemens EuroCash, Munich
87
000 VIS Automation mit Zusatz "Ein Gemeinschaftsunter-
nehmen von VIS und Siemens", Moscow/Russian Federation
ZAO Interautomatika, Moscow/Russian Federation
ZAO Nuclearcontrol, Moscow/Russian Federation
49
46
409
259
ZAO Systema-Service, St. Petersburg/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
26
31
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (61 companies)
Arelion GmbH, Pasching b. Linz/Austria
Aspern Smart City Research GmbH, Vienna/Austria
Aspern Smart City Research GmbH & Co KG, Vienna/Austria
E-Mobility Provider Austria GmbH, Vienna/Austria
44
Nertus Mantenimiento Ferroviario y Servicios S.A.,
Barcelona/Spain
515
509
Soleval Renovables S.L., Sevilla/Spain
50
E-Mobility Provider Austria GmbH & Co KG, Vienna/Austria
Oil and Gas ProServ LLC, Baku/Azerbaijan
449
9 Not accounted for using the equity method due to immateriality.
359
Voith Hydro Holding GmbH & Co. KG, Heidenheim
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
Wirescan AS, Torp/Norway
339
Siemens Qualität & Dividende Europa, Munich
97
Rousch (Pakistan) Power Ltd., Lahore/Pakistan
26
Symeo GmbH, Neubiberg
655,9
35
Windfarm Polska II Sp. z o.o., Koszalin/Poland
Transrapid International Verwaltungsgesellschaft
mbH i.L., Berlin
000 Transconverter, Moscow/Russian Federation
359
509
ubimake GmbH, Berlin
50
000 UniPower Transmission Solutions, Region Moskau
Krasnogorsky District/Russian Federation
50
509
100
8 Not consolidated due to immateriality.
6 No significant influence due to contractual arrangements or legal circumstances.
100
Siemens Technology and Services Private Limited,
Mumbai/India
Advanced Power AG und Siemens Project Ventures GmbH
in GbR, Hamburg
50
100
ATS Projekt Grevenbroich GmbH, Schüttorf, Schüttorf
259
P.T. Siemens Indonesia, Jakarta/Indonesia
100
BELLIS GmbH, Braunschweig
499
PT. Siemens Industrial Power, Kota Bandung/Indonesia
60
BSH Bosch und Siemens Hausgeräte GmbH, Munich
50
Siemens Hearing Instruments Batam, PT, Batam/Indonesia
100
Siemens Rail Automation Pvt. Ltd., Bangalore/India
Germany (30 companies)
100
Associated companies and joint ventures
100
100
Siemens Industry Software (India) Private Limited,
New Delhi/India
Siemens Industry Software (TW) Co., Ltd., Taipei/Taiwan,
Province of China
100
100
Siemens Ltd., Taipei/Taiwan, Province of China
100
BWI Informationstechnik GmbH, Meckenheim
Siemens Ltd., Mumbai/India
Siemens Limited, Bangkok/Thailand
99
Siemens Postal and Parcel Logistics Technologies Private
Siemens Ltd., Ho Chi Minh City/Viet Nam
100
Limited, Mumbai/India
1008
Siemens Postal Parcel & Airport Logistics Private Limited,
Mumbai/India
75
505
Acrorad Co., Ltd., Okinawa/Japan
57
Siemens Japan Holding K.K., Tokyo/Japan
100
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
40
Siemens Japan K.K., Tokyo/Japan
100
Siemens Energy Solutions Limited, Seoul/Korea, Republic of
Siemens Industry Software Ltd., Seoul/Korea, Republic of
100
50
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
Innovative Wind Concepts GmbH, Husum
100
LIB Verwaltungs-GmbH, Leipzig
50
509
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
409
7 Significant influence due to contractual arrangements or legal circumstances.
IFTEC GmbH & Co. KG, Leipzig
Kanagawa/Japan
Caterva GmbH, Pullach i. Isartal
50
Best Sound K.K., Sagamihara/Japan
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
499
100
Siemens Hearing Instruments K.K., Tokyo/Japan
EMIS Electrics GmbH, Lübbenau/Spreewald
49
Siemens Industry Software K.K., Tokyo/Japan
100
Siemens Industry Software Simulation and Test K.K.,
FEAG Fertigungscenter für Elektrische Anlagen GmbH, Erlangen
HANSATON Akustik GmbH, Hamburg
499
509
100
Equity interest
171 | C
Deputy Chairman of the Central
Works Council of Siemens AG
Date of birth: March 13, 1971
Member since: January 23, 2013
Term expires: July 31, 2019
External positions
Positions outside Germany:
> Spectris plc, U.K.
First appointed: August 1, 2014
Date of birth: October 15, 1963
Lisa Davis
Switzerland (Chairman)
> Siemens Schweiz AG,
> Siemens Ltd., India
> Siemens Ltd., China (Chairman)
Positions outside Germany:
Group Company positions
> Atos SE, France
> Osram GmbH, Munich
(Deputy Chairman)
Positions outside Germany:
> OSRAM Licht AG, Munich
(Deputy Chairman)
German supervisory board
positions:
Group Company positions
Roland Busch, Dr. rer. nat.
Date of birth: November 22, 1964
First appointed: April 1, 2011
Term expires: March 31, 2016
External positions
Netherlands
> NXP Semiconductors B.V.,
> Allianz Deutschland AG, Munich
> Daimler AG, Stuttgart
Positions outside Germany:
German supervisory board
positions:
Date of birth: June 23, 1957
First appointed: May 1, 2006
Term expires: July 31, 2018
External positions
President and Chief Executive
Officer of Siemens AG
Joe Kaeser
D.7.2 Managing Board
333
Additional Information
337 | E.
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
254 D.6
330 D.7
252 D.5
Group Company positions
Positions outside Germany:
> Siemens Ltd., India
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
Positions outside Germany:
Klaus Helmrich
> Siemens Ltd., South Africa
(Chairman)
(Chairman)
> Siemens Holdings plc, U.K.
> Siemens Aktiengesellschaft
Österreich, Austria (Chairman)
> BSH Bosch und Siemens
Hausgeräte GmbH, Munich
Positions outside Germany:
> Siemens AB, Sweden
(Chairman)
Group Company positions
German supervisory board
positions:
> Deutsche Messe AG, Hanover
German supervisory board
positions:
Date of birth: June 27, 1963
First appointed: January 1, 2008
Term expires: March 31, 2017
External positions
Siegfried Russwurm,
Prof. Dr.-Ing.
> Siemens S.A., Colombia
(Chairman)
> Siemens Japan K.K., Japan
(Chairman)
> Siemens Japan Holding K.K.,
Japan (Chairman)
> Software AG, Darmstadt
Group Company positions
Positions outside Germany:
> Siemens Corp., USA
(Chairwoman)
German supervisory board
positions:
Prof. Dr. phil. nat.
Hermann Requardt,
> Total S.A., France
> Firmenich International SA,
Switzerland
Positions outside Germany:
> Henkel AG & Co. KGaA,
Düsseldorf
German supervisory board
positions:
(until November 16, 2013)
Date of birth: February 26, 1954
First appointed: November 17, 2008
Term expired: November 16, 2013
External positions¹
Barbara Kux
> BSH Bosch und Siemens
Hausgeräte GmbH, Munich
Group Company positions
German supervisory board
positions:
> EOS Holding AG, Krailling
> inpro Innovationsgesellschaft
für fortgeschrittene Produk-
tionssysteme in der Fahrzeug-
industrie mbH, Berlin
German supervisory board
positions:
Date of birth: May 24, 1958
First appointed: April 1, 2011
Term expires: March 31, 2016
External positions
Date of birth: February 11, 1955
First appointed: May 1, 2006
Term expires: March 31, 2016
External positions
251 D.4
250 D.3
249 D.2
Committee
1 decision
and Finance
4
Innovation
5
Compliance
Committee
Members as of
September 30, 2014
Duties and responsibilities
Meetings in
fiscal 2014
Committees
Combined Management Report
171 C.
Corporate Governance
by notational
voting using
written
circulations
131 |B.
108 | A. To our Shareholders
1 Fulfills the requirements of Section 100 para. 5 and Section 107 para. 4 of the German Stock Corporation Act (Aktiengesetz).
Jim Hagemann Snabe
Birgit Steinborn
Robert Kensbock
Jürgen Kerner
Hans Michael Gaul,
Dr. iur. (Chairman)1
Gerd von Brandenstein
Gerhard Cromme, Dr. iur.
Bettina Haller
The Audit Committee oversees, in particular, the accounting process and
conducts a preliminary review of the Annual Financial Statements of
Siemens AG, the Consolidated Financial Statements of the Siemens Group
and the Combined Management Report. On the basis of the independent
auditors' report on their audit of the annual financial statements, the Audit
Committee makes, after its preliminary review, recommendations regard-
ing Supervisory Board approval of the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements of the Siemens
Group. In addition to the work performed by the independent auditors, the
Audit Committee discusses the Company's quarterly financial statements
and half-year financial reports, which are prepared by the Managing Board,
as well as the report on the auditors' review of the quarterly financial state-
ments and the half-year financial report (condensed financial statements
and interim management report). It concerns itself with the Company's risk
monitoring system and oversees the effectiveness of the internal control
system as this relates, in particular, to financial reporting, the risk manage-
ment system and the internal audit system. The Audit Committee receives
regular reports from the Internal Audit Department. It prepares the Super-
visory Board's recommendation to the Annual Shareholders' Meeting con-
cerning the election of the independent auditors and submits the corre-
sponding proposal to the Supervisory Board. It awards the audit contract to
the independent auditors elected by the Annual Shareholders' Meeting and
monitors the independent audit of the financial statements - including, in
particular, the auditors' independence, professional expertise and services.
Gerhard Cromme, Dr. iur.
Michael Diekmann
Berthold Huber
Robert Kensbock
Birgit Steinborn
Werner Wenning
(Chairman)
The Compensation Committee prepares, in particular, the proposals for
decisions by the Supervisory Board's plenary meetings regarding the system
of Managing Board compensation, including the implementation of this
system in the Managing Board contracts, the definition of the targets for
variable Managing Board compensation, the determination and review
of the appropriateness of the total compensation of individual Managing
Board members and the approval of the annual Compensation Report.
6
Audit
Committee
6
Compensation
Committee
Berthold Huber
Birgit Steinborn
Werner Wenning
332
The Compliance Committee concerns itself, in particular, with the Com-
pany's adherence to statutory provisions, official regulations and internal
Company policies.
Based on the Company's overall strategy, the Innovation and Finance
Committee discusses, in particular, the Company's focuses of innovation
and prepares the Supervisory Board's discussions and resolutions regard-
ing questions relating to the Company's financial situation and structure -
including annual planning (budget) - as well as the Company's fixed asset
investments and its financial measures. In addition, the Innovation and
Finance Committee has been authorized by the Supervisory Board to
decide on the approval of transactions and measures that require Super-
visory Board approval and have a value of less than €600 million.
Gerhard Cromme, Dr. iur.
(Chairman)
248 D.1
D. Consolidated Financial Statements
247
Further information on corporate governance at Siemens is available at
WWW.SIEMENS.DE/CORPORATE-GOVERNANCE
Berthold Huber
Birgit Steinborn
Werner Wenning
Gerhard Cromme, Dr. iur.
(Chairman)
The Mediation Committee submits proposals to the Supervisory Board in
the event that the Supervisory Board cannot reach the two-thirds majority
required for the appointment or dismissal of a Managing Board member.
tion Act
Codetermina-
of the German
Section 31
para. 3 and 5
27 para.3 and
under Section
0
Mediation
Committee,
Hans Michael Gaul, Dr. iur.
Nicola Leibinger-
Kammüller, Dr. phil.
Werner Wenning
Gerhard Cromme, Dr. iur.
(Chairman)
Gerd von Brandenstein
Hans Michael Gaul, Dr. iur.
Bettina Haller
Harald Kern
Jim Hagemann Snabe
Birgit Steinborn
Sibylle Wankel
Gerhard Cromme, Dr. iur.
(Chairman)
Peter Gruss, Prof. Dr. rer. nat.
Robert Kensbock
> Siemens Sanayi ve Ticaret A.Ş.,
Turkey
Harald Kern
Jim Hagemann Snabe
Birgit Steinborn
Werner Wenning
Nominating
Committee
1
1 decision
by notational
voting using
written
circulations
The Nominating Committee is responsible for making recommendations
to the Supervisory Board on suitable candidates for election as shareholder
representatives on the Supervisory Board by the Annual Shareholders'
Meeting.
Jürgen Kerner
250 D.3
> Siemens VAI Metals
> Siemens W.L.L., Qatar
Love
Lisa Davis
5. Pla
Maus ih
Klaus Helmrich
Prof. Dr. Hermann Requardt
Prof. Dr. Siegfried Russwurm
Dr. Ralf P. Thomas
338
108 |A.
131 | B.
Corporate Governance
171 | C
Combined Management Report
Report for Siemens Aktiengesellschaft, includes a fair review
of the development and performance of the business and the
position of the Group, together with a description of the ma-
terial opportunities and risks associated with the expected
development of the Group.
To our Shareholders
To Siemens Aktiengesellschaft, Berlin and Munich
REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
We have audited the accompanying consolidated financial
statements of Siemens Aktiengesellschaft, Berlin and Munich,
and its subsidiaries, which comprise the consolidated state-
ments of income, comprehensive income, financial position,
cash flow and changes in equity, and notes to the consolidated
financial statements for the business year from October 1, 2013
to September 30, 2014.
Management's Responsibility for the
Consolidated Financial Statements
The management of Siemens Aktiengesellschaft is responsible
for the preparation of these consolidated financial statements.
This responsibility includes preparing these consolidated finan-
cial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union
(EU), the supplementary requirements of German law pursuant
to Sec. 315a (1) HGB ["Handelsgesetzbuch“: German Commer-
cial Code] and full IFRS as issued by the International Account-
ing Standards Board (IASB), to give a true and fair view of the
net assets, financial position and results of operations of the
group in accordance with these requirements. The company's
management is also responsible for the internal controls that
management determines are necessary to enable the prepa-
ration of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consoli-
dated financial statements based on our audit. We conducted
our audit in accordance with Sec. 317 HGB and German gener-
ally accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer [Institute of
Public Auditors in Germany] (IDW) as well as in supplementary
compliance with International Standards on Auditing (ISA).
Accordingly, we are required to comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free
from material misstatement.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor's professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or
error. In assessing those risks, the auditor considers the inter-
nal control system relevant to the entity's preparation of the
consolidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that are
appropriate in the given circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the group's
internal control system. An audit also includes evaluating the
appropriateness of accounting policies used and the reason-
ableness of accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our audit opinion.
Audit Opinion
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the consolidated financial statements has not led to any
reservations.
In our opinion, based on the findings of our audit, the consol-
idated financial statements comply in all material respects
with IFRS as adopted by the EU, the supplementary require-
ments of German commercial law pursuant to Sec. 315a (1)
HGB and full IFRS as issued by the IASB and give a true and
fair view of the net assets and financial position of the Group
as at September 30, 2014 as well as the results of operations
for the business year then ended, in accordance with these
requirements.
247
|||E.2 Independent Auditor's Report
Consolidated Financial Statements
Њ Линя
P.R
251 D.4
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
254 D.6
330 D.7
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
337 | E.
Additional Information
335
336
How have the Company's key business
figures developed over the past five
years? What are the key financial dates
for the next twelve months? How
is the Company structured? All this
information is available here.
WWW.SIEMENS.COM/AR/ADDITIONAL-INFORMATION
E.
Additional
Information
338 | E.1 | Responsibility Statement
Dr. Roland Busch
339 | E.2 | Independent Auditor's Report
342 | E.4 | Company structure
344 | E.5 | Five-year summary
345 | E.6 | Notes and forward-looking
statements
346 | E.7 | Further information and
information resources
347 | E.8 | Financial calendar
337
E. Additional Information
11E.1 Responsibility Statement
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial State-
ments give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group, and the Group Manage-
ment Report, which has been combined with the Management
Munich, November 26, 2014
Siemens Aktiengesellschaft
The Managing Board
Лиш
Joe Kaeser
341 | E.3 | Statement of the Managing Board
337 |E. Additional Information
338 E.1 Responsibility Statement
339 E.2
344 E.5
Klaus Helmrich 1
Siegfried Russwurm,
Prof. Dr.-Ing.²
Ralf P. Thomas, Dr. rer. pol.
Joe Kaeser
(Chairman)
The Equity and Employee Stock Committee oversees, in particular, the
utilization of authorized capital in connection with the issuance of employee
stock as well as the implementation of certain capital measures. It also
determines the scope and conditions of the share-based compensation
components and/or compensation programs for employees and managers
(with the exception of the Managing Board).
6 decisions
by notational
voting using
written
circulations
Equity and
Employee Stock
Committee
Members as of
September 30, 2014
Duties and responsibilities
Meetings in
fiscal 2014
Committee
D.7.2.1 MANAGING BOARD COMMITTEES
334
Combined Management Report
171 | C
Corporate Governance
1
131 | B.
As of September 30, 2014.
2 As of May 6, 2014.
1 As of November 16, 2013.
(Deputy Chairman)
> Siemens Corp., USA
> Siemens Aktiengesellschaft
Österreich, Austria
> BSH Bosch und Siemens
Hausgeräte GmbH, Munich
(Deputy Chairman)
Positions outside Germany:
Ralf P. Thomas, Dr. rer. pol.
Date of birth: March 7, 1961
First appointed: September 18, 2013
Term expires: September 17, 2018
Group Company positions
German supervisory board
positions:
> Herrenknecht AG, Schwanau
External positions²
German supervisory board
positions:
Date of birth: December 25, 1963
First appointed: April 1, 2011
Term originally to have expired:
March 31, 2016
Michael Süß, Dr. rer. pol.
(until May 6, 2014)
Date of birth: January 24, 1955
First appointed: October 1, 2007
Term originally to have expired:
March 31, 2017
Peter Y. Solmssen
(until December 31, 2013)
108 | A. To our Shareholders
Until September 30, 2014.
2 Since October 1, 2014.
247
341 E.3
342 E.4
Independent Auditor's Report
Statement of the Managing Board
Company structure
345 E.6
346 E.7
347 E.8
Five-year summary
Notes and forward-looking statements
Further information and information resources
Financial calendar
339
340
REPORT ON THE GROUP MANAGEMENT REPORT
We have audited the accompanying group management report,
which is combined with the management report of Siemens
Aktiengesellschaft, for the business year from October 1, 2013
to September 30, 2014. The management of the company is
responsible for the preparation of the group management
report in compliance with the applicable requirements of
German commercial law pursuant to Sec. 315a (1) HGB. We are
required to conduct our audit in accordance with Sec. 317 (2)
HGB and German generally accepted standards for the audit of
the group management report promulgated by the IDW.
Accordingly, we are required to plan and perform the audit of
the group management report to obtain reasonable assurance
about whether the group management report is consistent
with the consolidated financial statements and the audit
findings, and as a whole provides a suitable view of the Group's
position and suitably presents the opportunities and risks of
future development.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the group management report has not led to any reservations.
In our opinion, based on the findings of our audit of the consoli-
dated financial statements and group management report, the
group management report is consistent with the consolidated
financial statements, and as a whole provides a suitable view of
the Group's position and suitably presents the opportunities
and risks of future development.
Munich, November 26, 2014
Ernst & Young GmbH
Wiftschaftsprüfungsgesellschaft
дашия
D. Consolidated Financial Statements
248 D.1
Consolidated Statements of Income
252 D.5
Combined Management Report
171 | C
Technologies GmbH, Austria
Corporate Governance
To our Shareholders
108
[German Public Auditor]
Prof. Dr. Hayn
Wirtschaftsprüfer
[German Public Auditor]
Spannagl
Wirtschaftsprüfer
131 | B.
Gerhard Cromme, Dr. iur.
(Chairman)
249 D.2
Consolidated Statements of Changes in Equity
Notes to Consolidated Financial Statements
Supervisory Board and Managing Board
248 D.1
Consolidated Financial Statements
247 | D.
As of September 30, 2014.
1 Shareholders' Committee.
The Supervisory Board of Siemens AG has 20 members. As stipulated by the German Codetermination Act
(Mitbestimmungsgesetz), half of the members represent Company shareholders, and half represent Company
employees. The shareholder representatives were elected at the Annual Shareholders' Meeting on January 23,
2013 (or in a by-election at the Annual Shareholders' Meeting on January 28, 2014). The employee representatives,
whose names are marked with an asterisk (*), either were elected in accordance with the provisions of the German
Codetermination Act on September 25, 2012, effective as of the end of the Annual Shareholders' Meeting on
January 23, 2013, or replaced an employee representative, who had resigned/retired. The present Supervisory Board's
term of office will expire at the conclusion of the Annual Shareholders' Meeting in 2018.
> Audi AG, Ingolstadt
Consolidated Statements of Income
Date of birth: March 3, 1964
Member since: April 1, 2009
External positions
German supervisory board
positions:
Sibylle Wankel*
Chairwoman of the Central
Works Council of Siemens AG
Date of birth: March 26, 1960
Member since: January 24, 2008
Birgit Steinborn*
> Danske Bank A/S, Denmark
> Bang & Olufsen A/S, Denmark
(Deputy Chairman)
> SAP SE, Walldorf
Positions outside Germany:
> Allianz SE, Munich
Attorney, Bavarian Regional
Headquarters of IG Metall
German supervisory board
positions:
252 D.5
250 D.3
The Chairman's Committee makes proposals, in particular, regarding the
appointment and dismissal of Managing Board members and handles
contracts with members of the Managing Board. In preparing recommen-
dations on the appointment of Managing Board members, the Chairman's
Committee takes into account the candidates' professional qualifications,
international experience and leadership qualities, the age limit specified for
Managing Board members, the Managing Board's long-range plans for suc-
cession as well as its diversity and, in particular, the appropriate consider-
ation of women. The Chairman's Committee concerns itself with questions
regarding the Company's corporate governance and prepares the resolu-
tions to be approved by the Supervisory Board regarding the Declaration of
Conformity with the Code - including the explanation of deviations from
the Code - and regarding the approval of the Corporate Governance Report
as well as the Report of the Supervisory Board to the Annual Shareholders'
Meeting. Furthermore, the Chairman's Committee submits recommenda-
tions to the Supervisory Board regarding the composition of the Supervisory
Board committees and decides whether to approve contracts and business
transactions with Managing Board members and parties related to them.
1 decision
by notational
voting using
written
circulations
Members as of
September 30, 2014
Duties and responsibilities
7
Chairman's
Committee
Meetings in
fiscal 2014
249 D.2
Committees
D.7.1.1 SUPERVISORY BOARD COMMITTEES
331
Additional Information
337 | E.
254 D.6
330 D.7
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Cash Flows
251 D.4
The Supervisory Board of Siemens AG has established seven
standing committees. Information on their activities in fiscal
2014 is provided in → A.3 REPORT OF THE SUPERVISORY BOARD On
pages 118-125 of this Annual Report.
Jim Hagemann Snabe
Supervisory Board Member
Date of birth: October 27, 1965
Member since: October 1, 2013
External positions
> Vaillant GmbH, Remscheid
Chairman of the Committee of
Spokespersons of the Siemens
Group; Chairman of the Central
Committee of Spokespersons
of Siemens AG
Date of birth: December 15, 1959
Member since: January 24, 2008
External positions
President and Chairwoman of
the Managing Board of TRUMPF
GmbH + Co. KG
Nicola Leibinger-
Kammüller, Dr. phil.
Augsburg (Deputy Chairman)
> Premium Aerotec GmbH,
(Deputy Chairman)
> MAN SE, Munich
German supervisory board
positions:
> Airbus Operations GmbH,
Hamburg
Date of birth: January 22, 1969
Member since: January 25, 2012
External positions
Executive Managing Board
Member of IG Metall
Jürgen Kerner*
Date of birth: March 16, 1960
Member since: January 24, 2008
Chairman of the Siemens Europe
Committee
Harald Kern*
Robert Kensbock*
Date of birth: September 13, 1957
Member since: March 1, 2014
> Axel Springer SE, Berlin
> Deutsche Lufthansa AG,
Cologne
German supervisory board
positions:
Gérard Mestrallet
Chairman of the Board and
Chief Executive Officer of
GDF SUEZ S.A.
> Voith GmbH, Heidenheim
Michael Sigmund*
(since March 1, 2014)
Rainer Sieg, Prof. Dr. iur.*
(until February 28, 2014)
Supervisory Board Member
Date of birth: December 20, 1948
Member since: January 24, 2008
Date of birth: August 14, 1955
Member since: January 23, 2013
Chairwoman and Managing
Director of Hacı Ömer Sabancı
Holding A.Ş.
> Suez Environnement Company
S.A., France (Chairman)
Barcelona S.A., Spain
(Deputy Chairman)
> Sociedad General de Aguas de
> International Power Ltd., U.K.
Güler Sabancı
> GDF Suez Energie Services S.A.,
France (Chairman)
> GDF Suez Energy Management
Trading CVBA, Belgium
(Chairman)
> Electrabel S.A., Belgium
(Chairman)
> Compagnie de Saint-Gobain
S.A., France
Positions outside Germany:
> GDF Suez Rassembleurs
d'Energies SAS, France
(Chairman)
Date of birth: April 1, 1949
Member since: January 23, 2013
External positions
914
881
881
Market capitalization5
in millions of €
881
66,455
75,078
914
59,554
67,351
in millions
78,823
Number of shares issued (September 30)
2.17
(5.16)
(3.01)
2.55
(2.89)
in %-points
Compared to MSCI World
15.53
(12.57)
3.67
Credit rating of long-term debt
(0.92)
18.53
Standard & Poor's Ratings Services
5.01
A+
Aa3
in %-points
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
This document includes - in IFRS not clearly defined - supple-
mental financial measures that are or may be non-GAAP finan-
cial measures. These supplemental financial measures should
not be viewed in isolation or as alternatives to measures of
Siemens' net assets and financial positions or results of opera-
tions as presented in accordance with IFRS in its Consolidated
Financial Statements. Other companies that report or describe
similarly titled financial measures may calculate them differ-
ently.
This document contains statements related to our future busi-
ness and financial performance and future events or develop-
ments involving Siemens that may constitute forward-looking
statements. These statements may be identified by words such
as "expect," "look forward to," "anticipate" "intend,” “plan,”
"believe," "seek," "estimate," "will," "project" or words of similar
meaning. We may also make forward-looking statements in
other reports, in presentations, in material delivered to share-
holders and in press releases. In addition, our representatives
may from time to time make oral forward-looking statements.
Such statements are based on the current expectations and
certain assumptions of Siemens' management, of which many
are beyond Siemens' control. These are subject to a number of
risks, uncertainties and factors, including, but not limited to
those described in disclosures, in particular in the chapter Risks
in this Annual Report. Should one or more of these risks or
uncertainties materialize, or should underlying expectations
not occur or assumptions prove incorrect, actual results, per-
formance or achievements of Siemens may (negatively or
positively) vary materially from those described explicitly or
implicitly in the relevant forward-looking statement. Siemens
neither intends, nor assumes any obligation, to update or
revise these forward-looking statements in light of develop-
ments which differ from those anticipated.
|| | E.6 Notes and forward-looking statements
344
Combined Management Report
171 | C
Corporate Governance
131 | B.
108 | A. To our Shareholders
Moody's Investors Service
4 To be proposed to the Annual Shareholders' Meeting.
5 On the basis of outstanding shares.
3 Amortization, depreciation and impairments includes
depreciation and impairments of property, plant and
equipment, net of reversals of impairments as well as
comprises cash and cash equivalents as well as available-
for-sale financial assets (current).
2 Net debt results from total debt less total liquidity. Total
debt comprises short-term debt and current maturities of
long-term debt as well as long-term debt. Total liquidity
1 Regarding activities classified as discontinued operations,
prior years are presented on a comparable basis.
A1
A1
Aa3
A+
A+
A+
A+
Aa3
amortization and impairments of intangible assets, net
of reversals of impairment.
Compared to DAX®
Joe Kaeser
77.43
||| E.3 Statement of the Managing Board
The Managing Board of Siemens Aktiengesellschaft is respon-
sible for preparing the Consolidated Financial Statements and
the Group Management Report. The Consolidated Financial
Statements have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315a (1) of the German Commercial Code (Han-
delsgesetzbuch). The financial statements are also in accor-
dance with IFRS as issued by the International Accounting Stan-
dards Board (IASB). The Group Management Report is consistent
with the Consolidated Financial Statements and is combined
with the Management Report of Siemens Aktiengesellschaft.
Siemens employs extensive internal controls, company-wide
uniform reporting guidelines and additional measures, includ-
ing employee training and continuing education, with the
intention that the Consolidated Financial Statements and the
Group Management Report are conducted correctly and in
accordance with the applicable legal requirements. Members
of the management of the Company Units have confirmed to us
the correctness of the financial data they have reported to
Siemens' corporate headquarters and the effectiveness of the
related control systems. Compliance with the guidelines as well
as the reliability and effectiveness of the control systems are
continuously examined by Internal Corporate Audit throughout
the Siemens Group. Our risk management system complies
with the requirements of the German Stock Corporation Act
(Aktiengesetz). Our risk management system is designed to
enable the Managing Board to recognize potential risks early
on and initiate timely countermeasures.
In accordance with the resolution adopted at the Annual Share-
holders' Meeting, Ernst & Young GmbH Wirtschaftsprüfungs-
gesellschaft has audited the Consolidated Financial Statements
and Group Management Report, which is combined with the
Management Report of Siemens Aktiengesellschaft, and issued
an unqualified opinion. Together with the independent audi-
tors, the Supervisory Board has thoroughly examined the
Consolidated Financial Statements, the Group Management
Report, and the Independent Auditors' Report. The result of this
examination is included in the Report of the Supervisory Board
(→ A.3 OF THIS ANNUAL REPORT).
Munich, December 3, 2014
The Managing Board
Кии
This document is an English language translation of the
German document. In case of discrepancies, the German
language document is the sole authoritative and universally
valid version.
P.R
Dr. Roland Busch
Њ Линя
Prof. Dr. Hermann Requardt
Lisa Davis
She
Pla
S.
Prof. Dr. Siegfried Russwurm
247
Consolidated Financial Statements
337 |E. Additional Information
338 E.1 Responsibility Statement
339 E.2
341 E.3
344 E.5
342 E.4
7.12
in €
3.304
3.00
68.12
77.61
89.06
94.37
in €
60.20
64.45
63.06
76.00
88.71
in €
Siemens stock price performance year-over-year
79.37
79.71
90.33
101.35
in €
Fiscal year-end
Low
High
Siemens stock price (Xetra closing price)
2.70
3.00
3.00
99.38
For technical reasons, there may be differences between the
accounting records appearing in this document and those
published pursuant to legal requirements.
The Siemens Annual Report for 2014 is available online at:
Consolidated Financial Statements
May
Second-quarter
financial report
7
WWW.SIEMENS.COM/FINANCIAL-CALENDAR
1 Provisional. Updates will be published at:
Ex-dividend date
January
2015
28
Meeting for fiscal 2014
Annual Shareholders'
2015
financial report
January
27 First-quarter
|||E.8 Financial calendar¹
346
Combined Management Report
171 | C
Corporate Governance
131 | B.
108 | A. To our Shareholders
© 2014 by Siemens AG, Berlin and Munich
This Annual Report has been produced using chlorine-free
bleached materials and climate-neutral production processes.
In accordance with the guidelines of the Forest Stewardship
Council (FSC), all the paper used in this Annual Report comes
from controlled sources such as sustainable forests. The mill
in which the paper was produced is certified in accordance
with ISO 9001, 14001 and 18001 guidelines. It uses only
chlorine-free bleached pulps (ECF), which are subsequently
processed without the use of elemental chlorine.
2015
12 Preliminary figures
for fiscal 2015
November
Order no. AR2014-E
siemens.com/annual-report
347
Notes and forward-looking statements
Further information and information resources
Financial calendar
Five-year summary
347 E.8
346 E.7
345 E.6
Independent Auditor's Report
Statement of the Managing Board
Company structure
342 E.4
341 E.3
Ecofriendly production
339 E.2
338 E.1 Responsibility Statement
337 |E. Additional Information
Consolidated Financial Statements
247
Annual Shareholders'
Meeting for fiscal 2015
January
2016
26
2015
Third-quarter
financial report
July
2015
30
344 E.5
247
Designations used in this document may be trademarks,
the use of which by third parties for their own purposes
could violate the rights of the trademark owners.
WWW.SIEMENS.COM/POF
Phone
WWW.SIEMENS.COM/ORDER-ANNUALREPORT
+49 7237-1736
Fax
Internet
E-mail
Copies of the Annual Report can be ordered at:
siemens@bek-gmbh.de
Germany
80333 Munich
Wittelsbacherplatz 2
Siemens AG
of this Annual Report is available from:
Address
Further information on the contents
E.7 Further information and information resources
345
Five-year summary
Notes and forward-looking statements
Further information and information resources
Financial calendar
347 E.8
346 E.7
345 E.6
339 E.2 Independent Auditor's Report
341 E.3 Statement of the Managing Board
Company structure
342 E.4
344 E.5
338 E.1 Responsibility Statement
337 | E. Additional Information
Fax
E-mail
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
+49 89 636-32830 (Investor Relations)
press@siemens.com
investorrelations@siemens.com
The Magazine for Research and Innovation is available at:
The Siemens publication Pictures of the Future:
Further information on research, development
and innovation at Siemens is available at:
WWW.SIEMENS.COM/INNOVATION
WWW.SIEMENS.COM/FINANCIAL-REPORTS
In addition to our Annual Report at the end of each fiscal year,
we publish quarterly consolidated financial statements in the
form of press releases. Conference calls and press conferences
supplement these publications, giving journalists and analysts
further opportunities to review developments in our businesses.
Financial reporting for the first three quarters is complemented
by interim reports and shareholder letters for private investors,
in particular. All these financial reports are available at:
Layout/Production
hw.design GmbH
Controlling and Finance
Dr. Marcus Mayer
Communications and Government Affairs
Dr. Johannes von Karczewski
Annette Häfelinger
Concept and coordination
WWW.SIEMENS.COM/SUSTAINABILITY-FIGURES
WWW.SIEMENS.COM/SUSTAINABILITY
Copyright notice
The Annual Report combines our annual and sustainability
reporting to provide an integrated overview of our Company's
key topics. Further information on our commitment to
sustainability and additional sustainability-related indicators
are available at:
WWW.SIEMENS.COM/ANNUAL-REPORT
Independent Auditor's Report
Statement of the Managing Board
Company structure
Additional information
Employees should include their postal address and complete
order data (Org-ID and cost center information) when ordering.
Order no. JB2014-D
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English
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Siemens employees may obtain copies at:
Combined reporting
345 E.6
Klaus Helmrich
347 E.8
Notes and forward-looking statements
345 E.6
339 E.2 Independent Auditor's Report
341 E.3 Statement of the Managing Board
Company structure
342 E.4
Five-year summary
344 E.5
346 E.7
338 E.1 Responsibility Statement
Consolidated Financial Statements
247
Roland Chalons-Browne
Financial Services
Healthcare
Hermann Requardt
Global Services
Hannes Apitzsch
337 | E. Additional Information
347 E.8
Further information and information resources
Financial calendar
343
Gross profit
65,067
69,607
74,734
73,445
71,920
in millions of €
FY 2010
FY 2011
FY 2012
FY 2013
FY 2014
Revenue
Revenue and profit¹
||| E.5 Five-year summary
Peter Herweck
in millions of €
and Drives
Anton Sebastian Huber
Klaus Helmrich
Combined Management Report
171 | C
Corporate Governance
131 | B.
342
| Hermann Requardt |
108 | A. To our Shareholders
The members of the Supervisory Board are listed in
As of January 1, 2015.
Randy Zwirn
Power Generation
Services
Wind Power
and Renewables
Markus Tacke
Power and Gas
Roland Fischer
→ D.7 SUPERVISORY BOARD AND MANAGING BOARD, pages 330-331.
| Siegfried Russwurm |
Ralf P. Thomas
Labor Director
Digital Factory
Dietmar Siersdorfer
Saudi Arabia | Arja Talakar
United Arab Emirates |
Russian Federation | Dietrich Möller
Commonwealth of
Independent States,
Middle East
United Kingdom | Jürgen Maier
Turkey | Hüseyin Gelis
Switzerland | Siegfried Gerlach
Sweden | Ulf Troedsson
Spain | Rosa María García
Austria | Wolfgang Hesoun
Belgium | André Bouffioux
Czech Republic | Eduard Palisek
France | Christophe de Maistre
Germany | Rudolf Martin Siegers
Italy | Federico Vilfredo Golla
Netherlands | Ab van der Touw
Poland | Peter Baudrexl
Portugal | Carlos Melo Ribeiro
South Africa | Sabine Dall'Omo
Europe, Africa
Controlling and Finance
Ralf P. Thomas
Corporate Technology
Siegfried Russwurm
Human Resources
Siegfried Russwurm
Process Industries
Jochen Eickholt
30
in millions of €
in %
FY 2014
FY 2013
FY 2012
FY 2011
FY 2010
Current assets
Assets, liabilities and equity
in millions of €
46,937
52,128
52,540
50,179
Current liabilities
in millions of €
48,076
3,881
5,899
4,282
21,160
20,755
19,045
Income from continuing operations
in millions of €
5,400
4,179
4,565
6,469
3,991
Net income
346 E.7
in millions of €
5,507
4,409
36,598
31,514
37,868
43,549
14,280
17,497
in millions of €
12,008
10,663
9,292
16,880
4,995
in millions of €
9,324
9,265
9,801
7,188
8,342
5,560
18,509
19,326
in millions of €
40,602
Debt
Long-term debt
Net debt²
Post-employment benefits
Equity (including non-controlling interests)
as a percentage of total assets
Total assets
Cash flows¹
in millions of €
20,947
20,453
20,707
17,940
19,913
42,627
Mobility
Building Technologies
Matthias Rebellius
Energy Management
Ralf Christian | Jan Mrosik
FY 2012
FY 2011
FY 2010
Basic earnings per share - continuing and discontinued operations
in €
6.37
FY 2013
5.08
6.55
4.28
Basic earnings per share - continuing operations¹
in €
6.24
4.81
4.74
FY 2014
316
FY 2010
5,378
4,871
4.37
5,889
6,781
Employees¹ - continuing operations
FY 2014
FY 2013
Employees (September 30)
Stock market information
in thousands
343
348
FY 2012
352
FY 2011
341
5.06
5,399
7.19
Diluted earnings per share - continuing and discontinued operations
Mariel von Schumann
Governance & Markets
Joe Kaeser
Corporate Development
| | | Corporate Core
Chief Executive Officer
Communications and
Government Affairs
Stephan Heimbach
Joe Kaeser
President and
|||E.4 Company structure
341
Notes and forward-looking statements
Further information and information resources
Financial calendar
Five-year summary
Dr. Ralf P. Thomas
Dividend per share
| | | Managing Board
of Siemens AG
Legal and Compliance
Andreas Christian Hoffmann
| | | Corporate Services
in €
6.31
5.03
4.69
6.48
4.23
Diluted earnings per share - continuing operations¹
in €
6.18
4.76
Asia, Australia
Lisa Davis
Roland Busch
|
|| | Regions
4.41
in millions of €
Free cash flow - continuing operations
7,109
FY 2014
FY 2013
FY 2012
FY 2011
FY 2010
Cash flows from operating activities - continuing operations
Amortization, depreciation and impairments³
102,791
in millions of €
7,186
6,992
7,979
8,640
in millions of €
2,406
7,230
104,210
108,251
101,936
Separately managed
business
| | | Divisions,
Brazil | Paulo Ricardo Stark
Canada | Robert Hardt
Colombia | Daniel Fernández
Mexico | Louise Koopman Goeser
United States | Eric Spiegel
Americas
Republic of Korea | Jongkap Kim
Singapore | Armin Bruck
28,625
28
31,424
32,271
29,222
29
31
28
Australia | Jeffery Connolly
China | Lothar Herrmann
India | Sunil Mathur
Indonesia | Josef Winter
Japan | Junichi Obata
in millions of €
104,879
2,735
2,625
2,379
2,454
(5,591)
(2,735)
Change in cash and cash equivalents
in millions of €
(1,199)
(1,717)
(1,561)
(1,715)
4,023
Free cash flow - continuing and discontinued operations
in millions of €
5,201
5,328
4,700
5,282
(3,017)
21,128
(3,715)
in millions of €
Cash flows from investing activities – continuing operations
Additions to intangible assets and property,
in millions of €
(4,364)
(4,759)
(4,906)
(2,835)
(2,230)
plant and equipment
in millions of €
(1,831)
(1,808)
(2,121)
(2,091)
(1,859)
Cash flows from financing activities - continuing operations
(4,485)
20,135
29
Puwer Grid
the country's electricity.
> 120 gigawatts
Total grid capacity
wwwwwwww
31
32
The grid supplies nearly all
Power transmission, power distribution and smart grid |||||||
from hydropower plants. Monitoring this huge and complex
system is the role of ONS, Brazil's national grid operator. As
part of a strategic plan, ONS invested in a unique solution to
increase the reliability and flexibility of the power grid and
avoid the risk of blackouts and faults.
"The combined expertise of
CEPEL and Siemens, plus the
mutual trust and respect
among all partners, were key
to the project's major success.”
Albert Melo,
General Director of CEPEL
"Our new system places the
country in the global van-
guard of energy management
technology - thanks to
the close cooperation and
outstanding competence
of Siemens, CEPEL and ONS."
Hermes Chipp,
General Director of ONS
Reliable power is a prerequisite for growth | Brazil's
power grid is a system of superlatives. Its more than 100,000
kilometers of high-voltage lines can transport over 120 giga-
watts of electricity - compared to around 65 gigawatts at the
turn of the century. In addition, around 80% of the country's
electricity comes from renewable energy sources, mainly
A grid built on experience | In 2009, a consortium com-
prising Siemens and CEPEL, the research branch of the
Eletrobras Group, was selected by ONS to develop a state-of-
the-art energy management system. Known as REGER, the
system is now monitoring and controlling Brazil's power
grid. Leveraging its wide-ranging experience in installing
similar systems worldwide, Siemens cooperated with CEPEL
to develop an intelligent power transmission solution or
97%
Two-thirds of Brazil is
covered by the power grid.
4:33 PM
SGT-750 | Finspång, Sweden
The SGT-750 sees the light of day: in November 2010, the benefits of our SGT-750 gas turbines
were presented to the general public for the very first time in Finspång, Sweden.
SGT-750 | Lubmin, Germany
Doubly efficient: in Lubmin, our SGT-750 feeds electricity into the local power
grid and safeguards Europe's gas supply with its exhaust heat.
SIEMENS
ASTER
SGT-750 | Altamira, Mexico
100 %
30
Power generation | Power transmission, power distribution and smart grid Energy application | Imaging and in-vitro diagnostics
Everything under
control - Thanks to
reliable power grids
|| | Brazil's social and economic structure has been transformed in the past
few years, strengthening the country's domestic market and increasing the
supply of and demand for goods and services. To prevent power blackouts,
which can take a heavy toll on a nation's infrastructure and hamper its
economic development, Brazil's booming market requires a robust power
grid. By implementing a centrally managed smart grid solution, Siemens
and its partners are helping make the country's power grid more reliable,
flexible and efficient. The solution, which is enabling Brazil to close the
gap to the leaders in infrastructure technology, has placed the nation in the
vanguard of a development that is set to spread to many other countries
around the world in the years ahead.
5 million km²
Textile production using on-site power generation: in Mexico, our SGT-750 is supplying power
to the factories of a textile manufacturer - one example of a decentralized power supply.
in real time, the grid adapts more effectively to variations
in demand and makes more intelligent use of available
resources. REGER has been a major success, as represen-
tatives of ONS, CEPEL and Siemens can confirm: Carlos
Adolfo de Souza Pereira of Siemens, Albert Melo of CEPEL,
Guilherme Vieira de Mendonça of Siemens and Hermes Chipp
of ONS (from left to right).
"smart grid." Monitoring and controlling power transmission
34
Wind power plant
Hydro power plans
Thermal power plant
Florianópolis
South Regional
Operations Center
36
Nuclear power plant
Always up-to-date | Brazil's power grid covers around five
million square kilometers or about two-thirds of the country
and supplies 97% of the nation's electricity requirements.
Developed by Siemens and CEPEL, the proven hardware and
software that control and monitor the grid combine high
performance with outstanding reliability while minimizing
PO
Generating value with innovative solutions | Brazil's
smart grid has already convincingly demonstrated its value:
the resources available to the grid are now being used more
flexibly and efficiently. REGER situational awareness tools
are reducing the risk of blackouts - an important advantage
not only for car manufacturers. However, if outages do occur,
the causes can be identified, impacts minimized and power
restored much faster than ever before. And smart grids hold
even more potential for the future. They're a prerequisite for
making power grids more intelligent and thus simplifying
the management and control of tomorrow's energy flows.
37
38
Power transmission, power distribution and smart grid |||||||
maintenance. To safeguard the grid's long-term performance,
Siemens and CEPEL have pledged to keep the hardware and
software up-to-date, which is made easier thanks to the use
of evergreen technology. Their ongoing partnership ensures
that Brazil's smart grid will always operate reliably through-
out its entire lifecycle.
33
Supply regions
35
Power transmission, power distribution and smart grid |||||||
Monitoring the Brazilian grid | One of Brazil's four
regional control centers is located in Rio de Janeiro. Respon-
sible for the southeast region, the center monitors data points
from the country's most developed area - which accounts
for around 80% of Brazil's energy consumption. Monitoring
and control systems support all the grid's operating functions.
And if one regional control center becomes very busy, another
can always back it up. The new energy management system
utilizes available resources better than the heterogeneous
grid monitoring system that preceded it - thereby reducing
operating costs and making Brazil's energy system more
reliable, more flexible and more efficient.
Adaptability is a matter of intelligence | Brazil's grid
operators face a huge challenge: ensuring the reliable and
economical transport of energy over great distances from
many different parts of the country. Roughly 80% of Brazil's
electricity is currently generated by hydropower plants, of
which there are now more than 1,100 in the country. To meet
the nation's growing energy requirements, the government
is planning to build up to 50 additional hydropower plants
by 2020. Since rainfall volumes are not always constant,
however, the amount of electricity supplied by hydropower
is subject to natural fluctuations. Declines must be compen-
sated for in real time. Grid operators also have to plan for
foreseeable demand peaks - at midday, for example, when
large numbers of air conditioners are switched on - and
make additional power plant capacity available as quickly
as possible.
Rio de Janeiro
Southeast Regional
Operations Center a
Power transmission, power distribution and smart grid |||||||
Brasilia
National Control Center and
Northwest Regional Operations Center
Population
202 million
Area
8.5 million km²
Recife
Northeast Regional
Operations Center
Ownership culture is an asset as well as
a prerequisite for our global success.
Georgia Davari
Enituxia Las.
|| |
Apprentice
Europeans@Siemens
Smart grids are being implemented or planned world-
wide as an energy-efficient, ecofriendly solution for the
reliable supply of power. This complex undertaking
requires new strategies and partnerships, innovative
technologies and tailor-made solutions. As one of the
world's largest providers in the industry, Siemens offers
a comprehensive portfolio of products, solutions and
services that support energy producers, grid operators
and power utilities.
Пазковна
The transformation of Brazil's power system into a smart grid has been driven
primarily by a consortium comprising Brazil's Electrical Energy Research Center
(CEPEL) and Siemens. Our Company was selected as a partner for the project on
the basis of its virtually unparalleled experience in designing and implementing
smart grid applications worldwide.
For me, Ownership Culture means that everyone in
the company feels they have the ability and the
opportunity to rea make a difference and contribut
||||||||||
Our culture
| | | | | | || |
Workshop Test Manager
Rickard Olsson
Together with my team, I work hard and with dedication to ease the
workload for the colleagues who take over where we've left off.
Jag, tillsammans med min grupp, arbetar hårt och
målinriktat med att underlätta arbetsbördan
för kollegor som tar över där vi slutar.
Our culture
| | | | | ||||||||
46
45
Head of Governance & Markets
Mariel von Schumann
as
zally
of performance and zigor to every ochon you to he
si) you would take them for your own company.
to the success of fiemens
And that
A smart grid for Brazil
προϋπόθεση
Cal
στοιχείο, καθώς
Eva
eiva
Las notiekos
Siuos
Перошенало
Ja Tuv
Our culture
||
48
47
Chief Diversity Officer
Head of HR People & Leadership
Janina Kugel
союдоис
is elicowaged to do so.
Ownership culture for me means to apply the level
withere
|||||
Our culture
42
Acting entrepreneurially
Our culture
40
40
a culture must be lived. All around the world,
we want to foster a culture that appeals
to the commitment, creative drive and
entrepreneurial spirit of every individual -
in short, an ownership culture.
A culture can't be dictated or imposed:
39
An IT revolution has begun in the area of
power grids: information and communica-
tion technologies are boosting security of
supply and enhancing the efficiency of grid
infrastructure operations. At the same time,
grid control software and company software
are becoming increasingly integrated,
opening up new business models for utili-
ties. Siemens offers the energy industry a
complete range of products, solutions and
services from a single source - from grid
protection, automation, planning, control,
monitoring and diagnostics systems to
products and turnkey solutions.
Intelligent and networked energy systems are complex - not only in design, but
also in operation. But there's also a payoff: the systems offer far more than just
a failsafe power supply. Advanced Smart Metering solutions make it possible,
for example, to balance generation and consumption more closely while manag-
ing - and not merely reacting to - the demand for power. They also enable grid
operators to provide pricing incentives to customers who save electricity during
periods of high demand or shift their consumption to off-peak periods. The advan-
tages - flattened demand peaks and improved customer behavior - enhance
energy efficiency, particularly for decentralized power plants and large-scale
consumers, while ultimately making a further active contribution to environmen-
tal protection by increasing the share of renewables.
The development of intelligent grids is one of the key challenges of the future
for the global energy industry. For the first time, the unilateral flow of energy is
being transformed into a multidimensional exchange of energy and information.
Intelligent grids: the key to saving electricity
REGER is one of the safest, most advanced and most reliable systems implemented
to date. Brazil has thus closed the gap to the world's leading industrialized nations
and paved the way for the ongoing growth of its economy and infrastructure.
|||||| | | | |
Initial planning for the new system in Brazil began in 2009. In 2013, the country's
national grid operator, ONS, commissioned the project. Known as REGER, the
system integrates five energy management systems as well as four regional oper-
ating centers into a nationwide power grid.
| | | | | | | |
Our culture
The amount of power being consumed and
generated worldwide is continually increas-
ing. The share of electricity in the energy mix
is on the rise, as is the percentage of power
being produced from renewable, decentral-
ized sources. The greatly fluctuating feed-in
from renewables is a further burden for grids
that are already overloaded. Leveraging
its worldwide experience in designing and
operating grids, Siemens develops intelligent
solutions that better integrate power grids
under such conditions and make them smarter.
|| | Culture makes the difference
Human Resources Manager
| | | | | | | | |
| | | | | | | |
Lena Ikejiri de Medeiros
It is genuinely demonstrating commitment and responsibility
to do my best and what is best for the Company.
Our culture
44
of Siemens AG
「企業にとってのベストは何かを
に念頭に、自分のベストを尽くすこ
とへの責任とコミットメントを、誠
実に表したい」
| | ||||||||||
Joe Kaeser
Even the best strategy can't succeed unless it's supported by
a strong culture. That's why we at Siemens live and foster an
ownership culture - a culture that encourages every indi-
vidual in our Company to give his or her best in his or her
position in order to help build Siemens' long-term success.
Always act as
act as 
if it were
your own Company.
|||||||||| │││ 43
Our culture
President and CEO
We've asked employees to explain what they understand by
an ownership culture. You'll meet some of them on the pages
that follow.
Our culture
55
56
| | | |||||||||| Our culture ||||
trusting and respecting one another -
у
un buen ambiente de trabajo, confiando
respetando el uno al otro, eso es lo que
segnifica para mi ca propia avetura del trabajo.
Senior Manager
Engineering for Angiography
Creating a good working environment,
Crear
Michael Cheng
54 | | | |||||||||| Our culture |||||||||||│
PERSONAL OWNERSHIP SCREAMS, "I CARE!"
FROM WITHIN; AND WHEN ALL TEAM MEMBERS
TRULY CARE, SUCCESS USUALLY FOLLOWS.
Corporate Strategies
Devina Pasta
shareholders.
For me, Ownership Culture is my personal responsibility to make
intelligent business decisions and act in a manner that generates
positive impact for our company and our customers, partriers and
Sales Support Manager
Juliana Furlanetto Odoni
você ocupa.
Ownership culture is being self-motivated by continuous
improvement for sustainable success, whatever your position is.
independentemente do cargo que
that's what ownership culture means to me.
o sucesso sustentavel
A
SIEMENS
57
Elena Rubio López
continua para
Rickard Olsson is a workshop test manager at our Siemens
Industrial Turbomachinery AB site in Finspång, a town in the
Swedish province of Östergötland. Once famous for its cannon
production, the locality now pursues peaceful activities, build-
ing the most modern and efficient gas turbine in its class.
Rickard looks back on many years of experience in this field.
He started his career as a trainee, followed by on-site assembly
and commissioning work. Before assuming his current duties,
he held various positions in a transfer project in the Middle
East and worked as a warranty engineer in Europe.
Rickard Olsson
Finspång, Sweden
Mariel von Schumann joined Siemens in 1999. After serving
the Company in various capacities, she was appointed head of
Governance & Markets in November 2013. In her current func-
tion, she combines internal management of governance topics
with the external view from the capital market. This includes,
for instance, communicating with the shareholder community,
coordinating remuneration of Siemens' Managing Board and
top executives, and managing the Company's organizational
structure and internal equity programs. In addition, she orches-
trates our initiative for fostering an ownership culture at
Siemens, one of the main building blocks of our Vision 2020.
She's eager to be a role model in that respect - living this
ownership culture drives her actions.
|
Munich, Germany
Mariel von Schumann
After graduating with a degree in business administration and
specializing in HR, Lena Ikejiri de Medeiros joined Siemens in 1996
as an intern and has worked in human resources with passion ever
since. Lena's core competencies are employee and leadership develop-
ment, succession planning and learning – the areas for which she's
currently responsible at Siemens Brazil. Drawing on two cultural her-
itages, Brazilian and Japanese, Lena lives both cultures' values with
great enthusiasm. She's further enhanced her intercultural capabilities
by working in a variety of Latin American countries.
Lena Ikejiri de Medeiros
São Paulo, Brazil
| | | |||||||||| Our culture
58
|||||||||||
SIEME
Siemens Brazil
| Sergio Souza
Ownership culture is exercising a sense of belonging, taking the
responsibility for doing your best, unconditionally, every day.
A CADA Did.
IN CONDICIONALMENts, o
Mos Libr
Fazere
HOMANDO PARA sí
O SENSO DE Pertencimento
A RESPONSIBilidios OS
È EXERCITAR
| | | |||||||||| Our culture
Europeans@Siemens
Apprentice
Program Manager
Transformation Program
ser automotivado pela melhoria
Leadership
53
|
|
| | | | | | |||||||
| | | | | || ||||||| Our culture
Behaviors
Our culture
People
orientation
Ownership
culture
Values
Equity
It's not just strategy that makes the difference; it's also
a company's culture, its values and what it stands for.
||| Ownership culture
|
| || | || | || | || |
| | | | | | |||||||
50
49
||||||||||
Oil & Gas
Hamad Al Khayyat
a culture for the people around me that will motivate them
to do their best.
For me, ownership culture is having both feet on the ground,
knowing the local context like the back of my hand and creating
سيمينز جي حويني
حد الشعور بالانتماء الكلي لعملك ؟
والمشايرة الجادة والعطاء المستمر من الجميع للوصول للكمان
Our culture
| | | ||||||||||
Our culture
E
|
Siemens is a company that was led for generations by owners who
had a passionate interest in the firm's long-term successful develop-
ment. They all knew that every individual makes a contribution
every day to the Company's enduring success. We're following this
conviction and want to foster an ownership culture worldwide that
includes all of our people. We believe the following principles are
especially important here:
Our culture |||||||||||
I
Electrician
Jesper Rönnbäck
SIEMENS
|
framtid.
Be a role model and follow safe routines for a safer future.
Säkrare
en
Var en förebild och följ Säkra
rutiner för
Our culture
|
52
51
We strongly believe that employee shareholders act responsibly and are oriented to
the long term when they directly participate in their Company's success. That's why
the equity culture is an integral part of our ownership culture. → see PAGE 63
Owners identify themselves fully with Siemens
If everyone in the Company acts responsibly, achieves excellent results and is
innovative, they will personally contribute to the sustainable success of Siemens.
Responsible, excellent, innovative – these values are the foundation of our
ownership culture.
Ownership culture is based on our Company values
of experience and expertise. If this is reflected in all that we do, we'll improve the
performance of our Company.
We strive for a people-oriented approach that values and clearly fosters diversity
Owners care for each individual
Entrepreneurial behavior should be the standard and foundation for how we act
at Siemens. This applies to each individual in the Company - since only then can
behaviors constantly evolve and improve.
Our behaviors bring the ownership culture to life
Our managers should serve as role models for the Company's strategic direction
and ensure the sustainable and efficient use of available resources – thus inspiring
and empowering their teams to give their best for the Company.
Owners ensure our business success
62
General Manager
Entering uncharted territory | For the Hamad Inter-
national Airport project, engineers working at computers
in Böblingen, Germany, pushed fully loaded flight-service
carts onto waiting trolleys, transported them to the supply
station, unloaded them, cleaned them in the designated area
and then conveyed them to the appropriate terminals
all in a virtual environment and up to 20,000 times a day.
Janina Kugel
Michael Cheng
Chicago, USA
|
Michael Cheng works at Siemens in the Chicago area. He
holds a degree in actuarial mathematics from the University
of Michigan. After working for 16 years as a pension con-
sultant, applications specialist, tester and quality assurance
manager in the defined benefits industry, he joined Siemens
in 2007. Michael successfully led a test center for six years
before moving on to manage a team in systems engineering.
||||||||||
Our culture
|||||||||| │
61
Juliana Furlanetto Odoni holds a bachelor's degree in environmental
engineering and a master's degree in business management. The
28-year-old Brazilian first came to Siemens in 2008 as an intern in cor-
porate quality management before joining a trainee program in 2010.
Since 2011, she's been working as a sales support manager. Always
motivated to improve processes, Juliana has participated in several
projects and programs focused on making Siemens Brazil a benchmark
in leadership, productivity and customer satisfaction. Very committed
to sustainability issues, she's also been serving as an environmental
education volunteer and panelist.
|
Munich, Germany
An electrical engineer, Devina Pasta joined Siemens
India in 2006, where she held positions in the area of
motion control - first in product management, later in
business development. There, she launched a product
for the Asian market and created new business models.
After driving business in Asia, she now works at
Corporate Strategies in Munich, managing aspects of
digital transformation - such as a Siemens CEO commu-
nity - in order to address the key opportunities arising
from digitalization. Devina has studied, worked and
lived in Asia, America and Europe and thrives in interna-
tional environments.
|||||||||| Sergio Souza
São Paulo, Brazil
|
Sergio Souza joined Siemens in 1990 as a field service technician
in the area of telecommunications. Since then, he's held a wide
range of positions in Brazil and other countries. Since August
2013, Sergio has headed the Transformation Program, a Regional
initiative aimed at making Siemens Brazil an agile organization
with an excellent working environment and at enabling the com-
pany to better serve its customers, better fulfill its responsibilities
to society and consistently outpace its competitors.
62
Devina Pasta
Juliana Furlanetto Odoni
|
Jesper Rönnbäck plays a key role in keeping production
running smoothly at our gas turbine plant in the Swedish
town of Finspång. Starting out as a technical assistant
and moving up to the position of foreman in 2010, Jesper is
responsible for all the plant's electrical installation work,
including the connecting up of the SGT-750, one of our
latest gas turbines. A smaller gas turbine in the Siemens
portfolio, the SGT-750 is capable of generating 37 mega-
watts of power. Its outstanding features include versatility,
high efficiency and low emissions - all of which make it one
of the most environmentally friendly turbines in its class.
Munich, Germany
|
Janina Kugel is responsible for strategic personnel topics and executive
development at Siemens. After studying at universities in Mainz and
Verona, she began work as a management consultant in 1997. Since
joining Siemens in 2001, she's been involved in the Company's develop-
ment in various capacities. From 2012 to 2013, Janina headed the global
HR organization at OSRAM and prepared the business for the IPO that
was completed in July 2013. Since 2014, she's been Chief Diversity Officer
at Siemens AG.
||||||||||
Our culture
|||||||||| │ 59
|
Georgia Davari | Elena Rubio López
Berlin, Germany
In many EU countries, one out of every two young people
has neither a job nor a vocational trainee position. Through
the Europeans@Siemens initiative, we're helping improve
this situation by giving young people the chance to com-
plete a dual education-and-training program in Germany.
Since 2012, 90 young Europeans from 18 EU member
countries have been selected by their respective Siemens
Regional Companies and sent to Berlin. Among them are
Georgia Davari and Elena López, who entered the program
on August 1, 2014. Whereas 24-year-old Georgia had
already earned a college degree in automation engineer-
ing in her home country of Greece, 18-year-old Elena left
Spain after attaining the "Bachillerato," which is a college
entrance qualification. In the coming years, in alternating
phases of theoretical instruction and hands-on practice,
these two women will learn the occupation of electronics
technician. After that, they intend to take the knowledge
and skills acquired in the program back to their home coun-
tries. But first, they need to become proficient in German,
the language in which the final examination is conducted.
60
| | | ||||||||||
Our culture
Hamad Al Khayyat
General Manager Oil & Gas, Qatar
Hamad Al Khayyat joined Siemens WLL Qatar in December 2010
as General Manager of the company's oil and gas business
in the Gulf state. As a highly respected expert in Qatar's oil, gas
and petrochemicals industry, Hamad boasts vast experience
in strategic planning and in fostering business relationships with
other organizations and the representatives of governmental
and non-governmental institutions. As a large number of projects
impressively attest, he's helped strengthen Siemens' successful,
trust-based partnership with the nation of Qatar.
Jesper Rönnbäck
Finspång, Sweden
62
| | | |||||||||| Our culture
São Paulo, Brazil
Joe Kaeser
Total length of electrified
monorail system
Ab
القطرية
AR
65
Energy application |||||||
Intelligent planning is the key | Machine and system
suppliers such as Eisenmann SE are now faced with enor-
mous complexities as well as growing time and cost pres-
sures. The key to mastering these challenges is intelligent
planning and meticulous preparation from the very begin-
ning - with the help of innovative software. "Just a few
years ago, we would've had to send a team of engineers to
1.6 km
Qatar for on-site testing of the system in order to spot and
eliminate weaknesses in the software," says Dr. Monika
Schneider, simulation expert at Eisenmann. Today, every-
thing is simpler: "Thanks to Siemens' Tecnomatix Plant
Simulation software, we were able to test the entire system
right here in Böblingen - even though the airport itself was
still under construction."
It's best to spot errors before they're made | Eisenmann
opted for Siemens' Tecnomatix software solution, which
enables engineers to fully visualize, simulate and analyze a
system using a "digital twin" model. Potential faults or weak-
nesses can be detected early on and corrected before the
system is actually installed. For the Hamad International
Airport project, the engineers conducted a detailed analysis
of all the parameters for the electrified monorail system on
the computer before virtually simulating all its processes.
And the processes are numerous: 130 carts move indepen-
dently along the 1.6-kilometer electrified monorail system,
making around 20,000 deliveries every day. There's no room
here for error.
67
||
68
"The programmers had to foresee every scenario with the
potential to cause problems," says Monika Schneider - for
example, when a trolley fails to reach its station or the stor-
age area for empty trolleys is too small. "When we used the
real electrified monorail system for the first time, everything
worked just as we'd planned in the virtual world."
Owners identify themselves
with their Company
and thus give their best.
now
a day
66
President and CEO
20,000 deliveries
of Siemens AG
| | | | | | | |
Our culture
||| Strengthening our equity culture
| | | | | | ||||||||
63
Power generation | Power transmission, power distribution and smart grid | Energy application |||||||||||||| Imaging and in-vitro diagnostics
A company owes its existence to the fact that its employees
identify with it, trust it and commit themselves to its
positive development. We're proud that around 140,000
of our employees are today expressing these feelings
by owning Siemens shares. We intend to increase this
figure by at least 50%. Therefore, we want employees
below the management level to participate in their
Company's success on an annual basis. Because the more
our people trust their own Company, the more personal
commitment they will feel and the greater each individual's
sense of belonging and sense of responsibility will be.
This is the culture we're striving to create at Siemens –
a culture that will be decisive for our Company's long-
term success.
-
|| | In May 2014, the word was "ready for take-off" at Hamad International
Airport in Doha. Each year, some 30 million passengers arrive in or depart from
Qatar by air a logistical challenge that also encompasses catering services.
Every day, around 82,000 meals are loaded onto specially prepared trolleys that
convey them to the aircraft and have to be cleaned on return. The whole sys-
tem runs smoothly, thanks to sophisticated technology and logistics based on
German engineering. Eisenmann SE – a global supplier of industrial systems
headquartered in Böblingen, Germany - was commissioned to provide a fully
automated electrified monorail system that enables the trolleys to be trans-
ported within the airport's huge logistics center. The engineers from southern
Germany relied on industry software from Siemens that allowed them to plan,
test and optimize the entire system in a virtual environment before it was
actually installed.
Energy application |||||||
64
130 carts
simultaneously coordinated
and controlled
Ready for take-off –
Thanks to virtual
planning
Whether revolution or evolution, one thing is certain: the growing demands being
placed on industrial production and the introduction of new technologies have
ushered in irreversible change. And we'll play a key role in shaping this change -
because we're better equipped for the job than virtually any of our competitors.
As a world-leading provider of automation technology and industry software,
we not only boast decades of experience in industrial production; we're also one
of Europe's biggest software companies, with some 17,500 software engineers.
We offer a complete portfolio of industry software, encompassing everything
from the automotive, shipping and aviation industries to the production of chem-
icals, pharmaceuticals and food. We're shaping the future of industry - today.
2,3 The design of the passenger terminal
complex is inspired by the waves of the
Arabian Gulf. Planned to handle some
30 million passengers a year, the building
includes over 40,000 square meters of
shops, cafés and restaurants.
On the way to the Fourth Industrial Revolution
Scenarios that sounded like science fiction just a few years ago are increasingly
becoming a reality. Machines are largely organizing themselves, supply chains
are automatically coordinating themselves, and products are supplying all their
production data to the machines on which they'll be manufactured. A new kind
of industrial production - sometimes referred to as the Fourth Industrial Revolu-
tion or Industry 4.0 – is now blazing its own trail.
New competitors, global value chains and highly transparent markets are all
increasing competitive pressures. Industrial companies have to boost their pro-
ductivity - using innovative technologies that make production more cost-effective
and flexible while cutting time-to-market.
Linking the virtual and real worlds
The future of industry -
4 - At the end of 2015, 19 Siemens trams
will begin operation in Qatar's Education
City, linking 25 stations along 11.5 kilometers
of track without any overhead contact
lines - thanks to an innovative energy
storage system.
1- Hamad International Airport is one of
the world's newest aviation hubs.
QACC
As the development and commissioning of the electri-
fied monorail system for Hamad International Airport
in Doha impressively demonstrates, industrial produc-
tion is now inconceivable without integrated software
solutions. Thanks to industry software, product devel-
opment is now digitalized and production systems and
processes are networked - making efficient, flexibly
reacting production environments possible. With our
comprehensive offerings in the areas of automation
technology, industrial switchgear, industrial drive sys-
tems, industry software and services, we supply and
support customers along the entire value chain - from
product design, production planning and engineering
to actual production and service.
|| |
47
Al Maha Loung
Ovens Baggage O
72
22
Eisenmann is a leading international supplier
of systems and services for surface finishing
and paint technologies, material flow auto-
mation, thermal process engineering and
environmental technology. Located in south-
ern Germany, the company's been building
highly flexible, energy- and resource-efficient
manufacturing, assembly and logistics
facilities for over 60 years.
+2
WWW.EISENMANN.COM
Partnering as equals | To provide the best possible con-
sulting services in the area of healthcare, you must have a
fundamental understanding of clinical workflow processes.
That's why Bernard F. Peculis, Administrative Director at Rush
(pictured on the left), places his trust in Siemens. By consult-
ing with Jim Gurney, project head for Siemens (pictured on
the right), Peculis was able not only to clarify product-specific
questions but also to discuss the project as a whole. He
WWW.SIEMENS.COM/
FUTURE-OF-MANUFACTURING
Energy application |||||||
76
Imaging and in-vitro diagnostics |||||||
75
יויייו.
CARE CLEAR
咖啡
Artis
川
SIEMENS
| |
SIEMENS
|| | Hospital operators around the world are faced with the challenge of
delivering the best possible healthcare, based on state-of-the-art technol-
ogy, at affordable prices. And Rush University Medical Center in Chicago,
Illinois, is no exception. That's why the facility's management team
decided ten years ago to embark on a major project that would make the
medical center one of the leading hospitals in the U.S. The ambitious plan
called for existing buildings to undergo extensive modernization, a new
building to be constructed and the entire campus to be equipped with
leading-edge healthcare technology - while the complex remained in oper-
ation. The hospital's project team was looking for a partner with worldwide
experience, outstanding technological competence and a proven track
record of implementing complex projects – and chose Siemens.
Moving into the lead -
In partnership with
Siemens
Power generation Power transmission, power distribution and smart grid | Energy application |||||||||||||| Imaging and in-vitro diagnostics
74
73
As the first company in the world to bundle
all offerings for the digital factory under
one roof, we're ideally positioned to reinforce
and expand our leading role in turning the
digitalized company into reality.
71
65009 RON
Integration as a success factor | In the future, Eisen-
mann will standardize its various processes - everything
from sales to service - worldwide. For example, the cross-
border exchange of data within the company's international
project teams will be significantly simplified. Product devel-
opers and system designers are now using Siemens software
solutions: Teamcenter (PLM) as a shared engineering data
Errors cost hard cash | "How does an increase in flight
operations affect catering? How can items of different sizes
be transported? What can be done to ensure that system
processes don't interfere with one other?" By answering
questions like these before a system goes into actual opera-
tion, Tecnomatix offers decisive advantages for mid-sized
Eisenmann. "Development times were shortened. There was
AND
N
MAN/BUTKUS ASSOCIATES
ET, SUITE 300
ALUMNOS 60201
926000 ON 29
no need for tedious, labor-intensive on-site work, and we
were able to quantify our business risks, because the possibil-
ity of project delays could be completely eliminated," explains
Monika Schneider. This approach will enable Eisenmann to
continue shortening its delivery times in the future - a key
competitive edge.
ENERGY CONSERVATE CODE COMPLIANCE
walked by staff and patients? How can the highest standards
of hygiene be maintained? How can IT be embedded to
accelerate workflow? In the post-9/11 era, the list of ques-
tions also included how to ensure the provision of basic
medical services for millions of city residents in the wake of
an event like a terrorist attack or an epidemic. These are only
some of the topics the project team considered and dis-
cussed with Siemens.
77
Imaging and in-vitro diagnostics |||||||
78
Saving time can save lives | When discussing ideas
for enhancing clinical workflow, the project team always
returned to the key priority: optimizing patient treatment and
outcomes. In the case of a medical emergency like a stroke,
patients need to obtain medical treatment as quickly as pos-
sible. Here, too, Siemens is a competent partner for Rush:
we've designed a consulting model that builds upon an
analysis of the processes used at some of the world's leading
hospitals as well as the latest scientific insights into treating
stroke victims. Based on this model, numerous suggestions
for improvements were developed and implemented that
save time- and can thus save lives. As a result, clinicians at
many other hospitals in the U.S. now consider Rush Univer-
sity Medical Center a benchmark in stroke treatment.
concurs with Peter Butler, President and Chief Operating
Officer of Rush, who says, "I was very involved in the selec-
tion of Siemens. We knew a lot about their culture and their
impact on healthcare worldwide, and the depth and breadth
of what they could bring to our partnership. We felt there was
really a lot more intellectual capital than other vendors could
bring to the table."
A made-to-measure hospital | The extensive modern-
ization and expansion of a hospital complex is an opportu-
nity that comes along at best once in a career - and the
opportunity was tackled with great determination at Rush
University Medical Center. Once the decision to implement
the project had been made, a team was formed to address
fundamental questions relating to the planned changes.
How can a building be designed to minimize the distances
platform and NX software (MCad), from which data can
be effortlessly transferred to Tecnomatix. Gerd Schneider,
Corporate Vice President at Eisenmann, sums it all up: "This
integration is bringing our worldwide project teams even
closer together. So its advantages extend far beyond the
benefits of the individual software solutions."
69
70
Services - Customer service
and support throughout
all steps of the value chain
5.
Production execution -
Scalable data process
information in real time
company-wide
4.
Production engineering -
Integrated plant manage-
ment throughout the entire
lifecycle
3.
Production planning -
Digital planning, simulat-
ing and optimizing of
production and factory
automation
69
2.
1.
QATAR AJEWAYS
QATAR AIRWAYS
the case of large and complex systems. Scenarios and prob-
lems can be tested interactively: Does the system still run
smoothly when operating at full capacity? Where do bottle-
necks arise, and how can they be prevented? What's more,
every euro invested in the Tecnomatix simulation solution
results in savings of up to 12 euros by the time the system is
completed.
In a world full of questions, software provides the
answers In a globalized world, the question is always the
same: How can companies boost their productivity and flex-
ibility while cutting costs? Tecnomatix software adds a new
dimension to planning. Thanks to 3D simulations, users can
obtain a networked overview of a nearly limitless abundance
of variables that are nevertheless clearly visualized – even in
Magnus Edholm,
Siemens software developer
"Our software solutions
enable us to connect
productivity and
efficiency across the
entire product and
production lifecycle –
from product design
to services."
Energy application |||||||
Product design - Digital
planning, designing and
validating of products
Eatert Acclications Transfer Edt Yew Image Tools Scroll Evaluation System Options b
E
2
In all areas related to project financing, Financial Services is a reliable
partner to our customers.
|| |
With the demand for healthcare continually increasing
worldwide, solutions that offer better treatment at
lower cost are needed. At Siemens, we've been working
for years to improve medical care around the globe with
our imaging and laboratory diagnostics systems and
related IT solutions. We partner with hospital oper-
ators throughout the world - providing everything from
consulting for the construction of new facilities to inno-
vative healthcare technologies, intelligent software
solutions and staff training.
A hospital at its best
-
"Our goal was for Rush University Medical Center to rank among the top ten percent
of the nation's hospitals." Formulated by CEO Larry Goodman, MD, this ambitious
aim was the basis for all planning. Together with the project team, Goodman set
out to make his university hospital in the heart of Chicago one of the country's
most advanced facilities – a hospital that sets standards for medical care as well
as for university research and education. The project called for modernizing older
sections of the complex, building a new hospital tower shaped around patients'
needs and fully integrating the entire healthcare infrastructure, including an
intelligent IT system. The acquisition of new medical technologies - particularly
in the field of imaging - was also part of the plan, and Rush formed a special
team for that task.
Rush is a not-for-profit healthcare, educa-
tion and research enterprise headquartered
in Chicago, Illinois. Over 2,000 students are
enrolled at Rush University in preparation
for careers in the medical field. With around
700 beds, Rush University Medical Center
is one of the biggest hospitals in Chicago.
With areas of specialization including neuro-
science, orthopedics, oncology and cardiol-
ogy, the hospital has received many awards
in recent years. In particular, its outstanding
nursing care and exceptional patient satis-
faction have made Rush one of the top-rated
hospitals in the United States.
WWW.RUSH.EDU
A trustworthy partner
To achieve all this, the hospital team was looking for a partner who could not
only deliver the technological solutions but also accompany the project with its
expertise and competence. And they chose Siemens. Company employees advised
the hospital management and the project team throughout all key phases of the
facility's modernization. Siemens was also involved in the construction phase,
supplying building technology systems, for instance. In addition, the Company
equipped the hospital with numerous imaging systems, provided staff training
and developed a solution for ongoing services. For example, the facility's com-
puted tomography (CT) systems, which are vitally important for emergency care,
are constantly monitored. Networked with the Siemens Guardian Program, the
systems are watched online by Siemens technicians around the clock. What's the
advantage? Potential system errors can be corrected proactively and maintenance
can be planned at an early stage. And an analysis of the captured data can also
lead to suggestions for enhancing system-related processes - thus creating value
for the hospital.
Dr. Goodman and Peter Butler still have lots of plans for Rush. They intend to
continue developing the hospital on an ongoing basis: "Our foremost concern is
the patients and their optimal care. That's why we want to become even better
and make Rush a leading healthcare center." And in pursuing this vision, they'll
continue to rely on Siemens.
The statements described herein are based on results that were achieved in the customer's unique setting. Since there is no "typical"
hospital and many variables exist (e.g., hospital size, case mix, level of IT adoption), there can be no guarantee that other customers
will achieve the same results.
Together with customers and partners, we're
working on improving healthcare throughout
the world. We measure our progress in
three key areas. During fiscal 2014, we sus-
tained the positive trend of the previous
years, achieving or even exceeding the tar-
gets we'd set for ourselves.
WWW.SIEMENS.COM/
HEALTHCARE-INDICATORS
✓ ✓
3
4
1 - Peter Butler, President and Chief Operating
Officer, Rush University Medical Center
2- Exterior view of the new hospital tower
3 - Interior view of the entry pavilion
with circular skylights
Imaging and in-vitro diagnostics |||||||
82
81
at the Siemens training center and on-site at Rush. Around
150 Rush employees have taken part in training sessions so
far, thus ensuring that all equipment is optimally utilized.
Dr. Goodman is thrilled with his employees' learning curve
and commitment. "The key was that the entire team was
enthusiastic about the project and also willing to take the
extra time for training. I'm really proud of how the entire
organization got on board. We had the spirit and everyone
said, 'We can do it!""
Revealing what's hidden | Rush University Medical
Center is aiming to set standards in healthcare imaging as
well. The intelligent networking of newly acquired imaging
systems was an important part of the hospital's moderni-
zation. From computed tomography systems that generate
images faster and minimize radiation doses to magnetic
resonance imaging systems for neurological applications and
fluoroscopy systems that are used in connection with contrast
media, for example, to examine internal organs: Siemens
supplied the systems and adapted them to the facility's
requirements. That's one of the reasons why the medical
center chose Siemens, as the facility's CEO Larry Goodman,
MD, confirms: "When we pick a technology, we also pick the
company and the people. They're the ones who are critical
to the smooth implementation of the new technology. Our
partnership with Siemens has been very successful."
|||
79
Imaging and in-vitro diagnostics |||||||
AXOM
e test test
VOIGE H21-2
PAY manly dubled
4 - Larry Goodman, MD, Chief Executive
Officer, Rush University Medical Center
WC 1400
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00:00
9000
SIEMENS
Artis
80
Information is the key to success | In healthcare, as in
many other areas, information technology now plays a vital
role. That's why IT experts from Siemens helped Rush Uni-
versity Medical Center intelligently integrate its medical
systems and optimize the flow of information. Peter Butler
recalls, "In 1982, the last time we renovated the facility, I still
saw patients being rolled down the hall with X-rays on their
knees." Those days are long gone. Working closely with the
building planners, Siemens defined all requirements early
on. The challenge was not only to install new systems and
get them up and running but also to integrate systems from
other manufacturers that were already in operation. And all
the systems had to be incorporated into the Medical Center's
IT system without a hitch. When the new hospital tower
opened its doors in January 2012, everything worked per-
fectly. And Siemens employees at the facility are ensuring
that this will continue to be the case.
Creating knowledge by sharing | Comprehensive health-
care requires knowledge - or, in Dr. Goodman's words, "Train-
ing is incredibly important." That's why it was essential to
familiarize hospital personnel with the systems' capabilities
as quickly as possible. To accomplish this, a training plan was
developed for every work group and every function from
doctors and nursing staff to technicians. In addition, the train-
ing time for participants was significantly reduced by offering
online training to supplement classroom-based courses held
-
000
83
Tools
84
President and CEO
of Siemens AG
Financial Services
| | | |||||||||| Our strategy |||||||||| ││
|| | Customer and business focus
We're focusing on our positioning along the value chain of electrification.
This is where our core business lies. From power generation to power
transmission, power distribution and smart grid to the efficient application
of electrical energy - in every one of these interrelated fields, electrification,
automation and digitalization are the key business drivers. Our integrated
setup not only enables us to leverage opportunities in individual markets;
it also allows us to exploit the potential at their interfaces. A worldwide
go-to-market setup and an organization geared toward shared customer
markets are making this possible.
| Power generation
|
The field of efficient power generation - encompassing conventional
and renewable energy sources as well as comprehensive services – is
addressed by our Power and Gas Division, Wind Power and Renewables
Division and Power Generation Services Division.
Power transmission, power distribution
and smart grid
Solutions and products for power transmission and distribution as
well as technologies for smart grids are all bundled at our Energy
Management Division.
|
Energy application
Our Building Technologies Division, Mobility Division, Digital Factory
Division and Process Industries and Drives Division are delivering
technologies for the efficient application of energy in building technol-
ogy, transportation and industry.
|
Imaging and in-vitro diagnostics
|
Siemens Healthcare is responsible for our medical imaging and in-vitro
diagnostics businesses.
Successful company management demands
more than financial targets - it requires
a comprehensive strategic framework that
integrates the key fields of corporate govern-
ance: a strategy that sets the course.
Joe Kaeser
forward and set clear priorities.
88
the
=4
Our strategy
| Setting the course
|
86
| | | | | | | |
way
| | | | | | | | |
||| Strategy sets the course
To leverage the diverse opportunities of our complex world,
a company needs a clear direction, a strong internal setup,
and people who follow the set course and turn plans and
ideas into reality. And that's exactly what our strategy does:
it includes a sharper customer and business focus, streamlined
governance and an integrated management model that
defines the concrete targets and measures required to closely
follow the course we've set.
Our strategy
Our strategy
||||||||||
87
To leverage the diverse opportunities
ов
our
complex world, a company
|||||||||
needs a strategy to point
p 62
of Cash Flows
A.6
P 20
Overall assessment
statements
B.5
Notes and forward-looking
Consolidated Statements
p 128
Financial position
C.5
p 61
B.4
p 16
A.5
Corporate Governance
of Financial Position
Net assets position
of the economic position
p 136
Consolidated Statements
Financial Statements
p21
Combined Management Report
A.
о
C.4
Notes to Consolidated
p 64
B.6
of Changes in Equity
Takeover-relevant information
p 53
A.11
Compensation Report
P 38
Siemens AG
p 35
A.9
and associated material opportunities
and risks
Report on expected developments
p22
A.8
Subsequent events
A.7
Consolidated Statements
Responsibility Statement
A.4
A.1
Additional Information
Consolidated Financial Statements
C.
B.
Combined Management Report
A.
Table of contents
siemens.com
Annual Report
2015
001
00100111
1 1 1 1
1
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0 0 1 1 1 0
A.1 Business and economic environment
0 1 0 1 1 0 0 0 1
1010
Ingenuity for life
SIEMENS
p2
P 15
B.1
C.1
Report of the Supervisory Board
p 60
B.3
Results of operations
P 125
C.3
of Comprehensive Income
p 10
A.3
Consolidated Statements
Independent Auditor's Report
p 59
B.2
Financial performance system
p 123
C.2
p 8
A.2
P 122
Consolidated Statements
of Income
Business and economic environment
p 58
A.1.1 The Siemens Group
A.10
Following the organizational changes described in the Annual
Report for fiscal 2014, we have the following reportable seg-
ments beginning with fiscal 2015: the Divisions Power and
Gas; Wind Power and Renewables; Energy Management;
Building Technologies; Mobility; Digital Factory; and Pro-
cess Industries and Drives as well as the separately managed
business Healthcare, which together form our Industrial Busi-
ness. The Division Financial Services (SFS) supports the activ-
ities of our Industrial Business and also conducts its own busi-
ness with external customers. As "global entrepreneurs" our
Divisions and Healthcare carry business responsibility world-
wide, including with regard to their operating results.
In line with common practice in the financial services business,
our financial indicator for measuring capital efficiency at Finan-
cial Services (SFS) is return on equity after tax, or ROE (after
tax). ROE is defined as SFS' profit after tax, divided by the Divi-
sions' average allocated equity.
FOR FISCAL 2014.
Within One Siemens, we have established a financial frame-
work - for revenue growth, for profitability and capital effi-
ciency, for our capital structure, and for our dividend policy.
Beginning with fiscal 2015 we modified our financial frame-
work in the course of organizational changes and due to our
new strategy "Vision 2020", as described in the 7 ANNUAL REPORT
A.2.1 Overview
A.2 Financial performance system
7
Combined Management Report
In fiscal 2015, markets served by Healthcare continued to
grow. Growth was again driven by emerging markets, which
continued to build up their healthcare infrastructures and ex-
pand access to modern medical technology for their growing
populations. Market development in industrialized countries
remained weak, impacted by healthcare reforms and budgetary
constraints. Healthcare's imaging customers saw growing de-
mand for diagnostic imaging procedures but also experienced
increasing public pressure to slow the growth of healthcare
costs. Growth in the large Chinese imaging market was weak
compared to prior years. Together with market entries of local
vendors this led to increased price pressure. Within the mar-
kets for clinical products, demand in the low-end product seg-
ment in emerging markets was the main growth driver, while
demand in industrialized countries remained stable year-over-
year. Within emerging economies, the market for clinical prod-
ucts increasingly includes incentives for local production,
particularly in China, Brazil and Russia. Growth in in-vitro diag-
nostics markets is benefiting from increasing test volumes as
populations are aging. Overall, demand for in-vitro diagnostics
solutions from emerging markets, particularly China, grew
faster than markets in industrialized countries. For the health-
care market as a whole, the trend towards consolidation con-
tinues. Competition among the leading companies is strong,
including with respect to price.
broad portfolio and companies that are active only in certain
geographic or product markets. Consolidation is taking place
mostly in particular market segments and not across the broad
base of the Division's portfolio. Consolidation in solution-driven
markets is going in the direction of in-depth niche market ex-
pertise, whereas consolidation of the product-driven market
follows the line of convergence. Most major competitors have
established global bases for their businesses. In addition, the
competition has become increasingly focused on technological
improvements and cost position.
Markets served by the Process Industries and Drives Division
grew slightly in fiscal 2015. While all regions contributed to
growth and growth rates in Europe, C.I.S., Africa, Middle East
were lower than in the Americas and Asia, Australia, growth
rates in the latter two regions came in below the levels in prior
years. Within the Division's main industries, demand from the
chemicals, food and beverage, and pharmaceuticals industries
grew year-over-year. This growth was largely offset by lower
demand from the oil and gas and the mining industries. Com-
petitors of the Division's business activities can be grouped into
two categories: multinational companies that offer a relatively
In fiscal 2015, markets for the Digital Factory Division grew in
all regions. Markets in Asia, Australia grew more strongly than
in other regions but growth dynamics lost momentum signifi-
cantly compared to fiscal 2014, particularly in China. While
growth in Europe accelerated somewhat year-over-year, markets
in the Americas showed a mixed picture: In the U.S. demand
from consumer-oriented manufacturing industries was strong,
whereas factory automation investment slowed down in coun-
tries affected by reduced global demand for export commodi-
ties including oil and gas. Within the Division's customer seg-
ments, markets for the manufacturing and machine building
industries grew slightly overall in fiscal 2015, with decelerating
growth during the course of the fiscal year. A slow-down in
growth was particularly evident in the global automotive in-
dustry, which showed strong growth at the beginning of the
fiscal year but started to cut investments due to lower demand
for cars in emerging countries. The competition for Digital
Factory's business activities can be grouped into two catego-
ries: multinational companies that offer a relatively broad port-
folio and companies that are active only in certain geographic
or product markets.
Markets for the Mobility Division grew moderately in fiscal
2015, with all regions contributing to growth. Market develop-
ment in the Europe, C.I.S., Africa, Middle East region was char-
acterized by continuous investment and awards of large orders.
This was particularly evident in Germany, the U.K. and Russia.
Demand in the Middle East and in Africa was mainly driven by
turnkey and rail infrastructure projects. In the Americas region,
growth continued to benefit from demand for passenger loco-
motives and urban transport products in the U.S. Chinese mar-
kets saw ongoing investments in high-speed trains, urban
transport and rail infrastructure. The Division's principal com-
petitors are multinational companies. Consolidation among
Mobility's competitors is continuing.
business also competes with system integrators and small local
companies. The Division faces continuing price pressure, par-
ticularly in its solutions business, due to strong competition
from system houses and some larger competitors.
Combined Management Report
6
Markets for the Building Technologies Division grew moder-
ately in fiscal 2015. Growth was driven by rising demand from
the U.S. and Asia, despite weaker growth in China. Within the
Europe, C.I.S., Africa, Middle East region, markets in the Middle
East grew stronger than the region overall. The European mar-
ket grew modestly with growth in Germany, the U.K., and Scan-
dinavian countries above average. The Division's principal com-
petitors are multinational companies. Its solutions and services
In fiscal 2015, markets for the Energy Management Division
saw demand growth overall. The utilities market, the Division's
most important customer segment, showed moderate growth.
There was also stronger demand from the chemicals, metals
and construction industries year-over-year. Within the chemi-
cals industry, drivers of growth were sustainability and energy
efficiency. In the Americas, growth in the chemicals industry
benefited from process industries, which showed a trend to-
wards re-industrialization in the U.S. and a build-up of capac-
ities within the region overall. Within the metals markets,
demand was held back by continued overcapacities and re-
duced investment activity, particularly in the region Europe,
C.I.S., Africa, Middle East. Construction markets grew in all
regions. In contrast, demand in the Division's oil and gas and
minerals and mining markets declined year-over-year. The oil
and gas industry has significantly reduced capital expenditures
due to the global oil price decline. The minerals and mining
industry suffers from lower demand for raw materials, mainly
driven by the economic slowdown in China, and also by over-
capacities and higher extraction costs. Competitors of the
Energy Management Division consist mainly of a small number
of large multinational companies. International competition is
increasing from manufacturers in emerging countries such as
China, India and Korea.
remains difficult. Policy and regulatory frameworks continue to
influence regional wind power markets. For example, the pro-
duction tax credit remained pertinent for the U.S. market. In
Germany, the scheduled expiration of feed-in-tariffs beginning
with calendar 2017 for newly build onshore wind power plants
fueled demand in fiscal 2015. Market growth also benefited
from stronger demand from some emerging countries in the
Middle East, in Africa and Latin America. The competitive situ-
ation in wind power differs in the two major market :
segments.
In the markets for onshore wind farms, competition is widely
dispersed without any one company holding a dominant share
of the market. In contrast, markets for offshore wind farms con-
tinue to be dominated by a few experienced market players.
Consolidation is moving forward in both on- and offshore seg-
ments, including exits of smaller players. The key drivers of
consolidation are technology challenges and market access
challenges, which increase development costs and the impor-
tance of risk sharing in offshore wind power.
Markets served by the Wind Power and Renewables Division
grew moderately in fiscal 2015. Overall growth was driven by
the onshore wind power market segment, while the relatively
smaller offshore wind power market segment saw a slight de-
cline year-over-year. On a geographic basis, growth was strong
in China, which has the largest national wind market in the
world, but where market access for foreign manufacturers
The markets of the Power and Gas Division remained challeng-
ing in fiscal 2015. This was particularly evident in the market for
steam turbines where volume shrank substantially year-over-
year due including to an ongoing shift from coal-fired to gas-
fired power generation in the U.S. and emission regulation e.g.
in China. Demand in compression markets declined year-over-
year. This was due mainly to a fall in capital expenditure for oil
and gas upstream applications following the global oil price
decline in 2014. In contrast, demand in the gas turbine market
grew in fiscal 2015, driven by demand for replacement of aged
existing inefficient and inflexible power plants, particularly
in the U.S.; energy market reform in Mexico; and rising de-
mand for energy in emerging countries, particularly China and
countries in Latin America and the Middle East. The Division's
competition consists mainly of two groups: a relatively small
number of equipment manufacturers, some with very strong
positions in their domestic markets, and on the other hand a
large number of engineering, procurement and construction
contractors. The gas turbine market is experiencing overcapac-
ity among original equipment manufacturers and engineering,
procurement and construction contractors, which is leading to
market consolidation.
A.1.2.2 MARKET DEVELOPMENT
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This
measure is the main driver of basic earnings per share (EPS)
from net income, which we use in communication to the capital
markets.
A.2.2 Revenue growth
Within the framework of One Siemens, we aim to grow our rev-
enue faster than the average weighted revenue growth of our
most relevant competitors. Our primary measure for managing
and controlling our revenue growth is comparable growth,
which excludes currency translation and portfolio effects.
A.2.3 Profitability and capital efficiency
A.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION
We are a technology company with core activities in the fields
of electrification, automation and digitalization, and activi-
ties in nearly all countries of the world. Siemens comprises
Siemens AG, a stock corporation under the Federal laws of
Germany, as the parent company and its subsidiaries. Our
Company is incorporated in Germany, with our corporate head-
quarters situated in Munich. As of September 30, 2015, Siemens
had around 348,000 employees.
8 Combined Management Report
Sustainable revenue and profit development is supported by a
healthy capital structure. Accordingly, a key consideration within
the framework of One Siemens is to maintain ready access to the
capital markets through various debt products and preserve
our ability to repay and service our debt obligations over time.
Our primary measure for managing and controlling our capital
structure is the ratio of industrial net debt to EBITDA. This
financial measure indicates the approximate amount of time in
years that would be needed to cover industrial net debt through
income from continuing operations, without taking into account
interest, taxes, depreciation and amortization. We aim to achieve
a ratio of up to 1.0.
A.2.4 Capital structure
15 - 19%
15-20%
8-12%
14 -20%
5-8%
7-10%
8-11%
6-9%
Margin range
11-15%
|
The partly estimated figures presented here for GDP and fixed
investments are calculated by Siemens based on an IHS Global
Insight report dated October 15, 2015.
SFS ((ROE) (after taxes))
Process Industries and Drives
Digital Factory
Mobility
Building Technologies
Energy Management
Wind Power and Renewables
Power and Gas
Within the framework of One Siemens, we seek to work profit-
ably and as efficiently as possible with the capital provided
by our shareholders and lenders. For purposes of managing
and controlling our capital efficiency, we use return on capital
employed, or ROCE, as our primary measure. We aim to achieve
a range of 15% to 20%.
To emphasize and evaluate our continuous efforts to improve
productivity, we incorporated a measure called total cost pro-
ductivity into our One Siemens framework. We define this
measure as the ratio of cost savings from defined productivity
improvement measures to the aggregate of functional costs for
the Siemens Group. We aim to achieve an annual value of 3% to
5% for Total cost productivity.
Within the framework of One Siemens, we aim to achieve mar-
gins through the entire business cycle that are comparable to
those of our relevant competitors. Therefore, we have defined
profit margin ranges for our Industrial Business, which are based
on the profit margins of the respective relevant competitors.
Healthcare
All in all the negative effects outweighed the positive ones,
leading to declining worldwide gross domestic product (GDP)
forecasts for 2015 in the course of the year, down to 2.5%
growth from 3.2% expected in October 2014. Fixed investments
are forecast to expand by 2.4% in calendar 2015, down from
4.5% expected in October 2014.
| Profit margin ranges
5
equipment, project and structured financing. SFS provides cap-
ital for Siemens customers as well as other companies and also
manages financial risks of Siemens. SFS operates the Corporate
Treasury of the Siemens Group, which includes managing
liquidity, cash and interest risks as well as certain foreign
exchange, credit and commodities risks. Business activities
and tasks of Corporate Treasury are reported in the segment
information within Reconciliation to Consolidated Financial
Statements.
Combined Management Report 3
The Financial Services (SFS) Division provides business-to-
business financial solutions. With specialist financing and
technology expertise in the areas of Siemens businesses, SFS
supports customer investments with leasing solutions and
Healthcare is one of the world's largest suppliers of technol-
ogy to the healthcare industry and a leader in medical imaging
and laboratory diagnostics. We provide medical technology and
software solutions as well as clinical consulting services, sup-
ported by a comprehensive training and service portfolio. There-
fore, we offer our customers a comprehensive portfolio of med-
ical solutions along the healthcare continuum of care – from
prevention and early detection to diagnosis, treatment and fol-
low-up care. Because large portions of our revenue stem from
recurring business, our business activities are to a certain ex-
tent resilient to short-term economic trends but dependent on
regulatory and policy developments around the world. During
fiscal 2015, we completed the sale of several businesses, in par-
ticular the hearing aid business and the hospital information
business. With the beginning of fiscal 2016, Healthcare is stra-
tegically reorganized into six newly defined business areas
and six regions. The Business Areas are Diagnostic Imaging,
Laboratory Diagnostics, Advanced Therapies, Ultrasound, Point
of Care Diagnostics and Services.
The Process Industries and Drives Division offers its custom-
ers standard products including converters, gears, motors,
drives and couplings on the one hand and also customized, ap-
plication-specific systems and solutions on the other hand. In
addition, the Division supplies machine-to-machine communi-
cation products and sensors that measure pressure, tempera-
ture or flow rate for example. The Division's products, systems
and industry-specific solutions as well as end-to-end services
are designed to increase productivity, energy efficiency and re-
liability of machinery and installations, mainly in industries
such as oil & gas, shipbuilding, mining, cement, pulp and paper,
chemicals, food and beverage, and pharmaceuticals. In addi-
tion, the Division sells gears, couplings and drive solutions to
other Divisions of the Siemens Group, which use them in rail
transport and wind turbines. Demand within the industries
served by the Division generally shows a delayed response to
changes in the overall economic environment. Even so, the
Division is strongly dependent on investment cycles in its key
industries. In basic process industries such as oil & gas or min-
ing, these cycles are driven mainly by commodity price fluctu-
ations rather than changes in produced volumes.
Because demand depends directly on the investment decisions
of end customers as well as indirectly on orders from OEMs, a
downturn or upswing in the overall economic environment
impacts the Division's business results more timely than those
of other Siemens businesses.
The Digital Factory Division offers a range of products and
system solutions for automation technologies and industrial
controls used in manufacturing industries. The Division is a
leading provider of industry software together with a compre-
hensive product and service portfolio that covers all aspects of
"Industrie 4.0" - a German high-tech industrial strategy. The
Division supports customers in transforming their traditional
companies into digital enterprises, in increasing the flexibility
and efficiency of their production processes and in reducing
the time to market for new products. The Division's lifecycle
services and data-driven services complement its products and
system solutions. The Divisions' offerings are geared largely
to the manufacturing industry and its major markets such as
automotive, aerospace, machine tools and plant installations.
The Mobility Division combines all Siemens businesses in
the area of passenger and freight transportation, including rail
vehicles, rail automation systems, rail electrification systems,
road traffic technology, IT solutions and related services. The
Division also provides its customers with consulting, plan-
ning, financing, construction, service and operation of turnkey
mobility systems. Integrated mobility solutions for networking
of different traffic systems round off Mobility's offerings. The
principal customers of the Mobility Division are public and
state-owned companies in the transportation and logistics sec-
tors. Markets served by Mobility are driven primarily by public
spending. Customers usually have multi-year planning and
implementation horizons, and their contract tenders therefore
tend to be independent of short-term economic trends.
The Building Technologies Division is a leading provider of
automation technologies and services for safe, secure and effi-
cient buildings and infrastructures throughout their lifecycles.
The Division offers products, solutions and services for fire
safety, security, building automation, heating, ventilation, air
conditioning and energy management. The large customer
base is widely dispersed. It includes public and commercial
building owners, operators and tenants, building construction
general contractors and system houses. Changes in the over-
all economic environment generally have a delayed effect on
the Division's business activities. Particularly in the solutions
and service businesses, Building Technologies is affected by
changes in the non-residential construction markets with a
time lag of two to four quarters.
Combined Management Report
2
The Energy Management Division offers a wide spectrum of
products, systems, solutions, software and services for trans-
mitting and distributing power and for developing intelligent
grid infrastructure. The Division's customers include power
providers, network operators, industrial companies, infrastruc-
ture developers and construction companies. The offerings are
used to process and transmit electrical power from the source
down to various load points along the power transmission and
distribution networks to the power consumers. Our solutions
for smart grids enable a bidirectional flow of energy and infor-
mation, which is required for the integration of more renew-
able energy sources into conventional power transmission and
distribution networks. In addition, the Division's portfolio in-
cludes power supply solutions for conventional power plants
The Power Generation Services Division offers comprehen-
sive services for products, solutions and technologies, covering
performance enhancements, maintenance services, customer
trainings and consulting services for the Divisions Power
and Gas and Wind Power and Renewables. Financial results of
these two Divisions include the respective financial results of
the Power Generation Services Division, which itself is not a
reportable segment. Based on the business model, all discus-
sions of the services business for Power and Gas as well as
Wind Power and Renewables concern the Power Generation
Services Division.
The Wind Power and Renewables Division designs, manufac-
tures and installs wind turbines for onshore and offshore appli-
cations. This includes both geared turbines and direct drive tur-
bines. The product portfolio is based on four product platforms,
two for each of the onshore and offshore applications. The Divi-
sion serves a variety of customers, in particular large utilities
and independent power producers. Due to the significant off-
shore business of the Division and its activities in the Northern
hemisphere, production and installations are typically higher
during spring and summer months because of the more favor-
able weather and marine conditions during those seasons. The
revenue mix of these businesses may vary from reporting pe-
riod to reporting period depending on the project mix between
onshore and offshore projects in the respective period. The Divi-
sion also includes a minority stake in a hydro power business.
With Dresser-Rand on board, we have a comprehensive port-
folio of equipment and capability for the oil and gas industry
and a much expanded installed base, allowing us to address
the needs of the market with products, solutions and services.
In December 2014, Siemens acquired the Rolls-Royce Energy
aero-derivative gas turbine and compressor business of Rolls-
Royce plc, U.K. (Rolls-Royce). By acquiring Rolls-Royce's small
and medium aero-derivative gas turbines business, we closed a
technology gap in our extensive gas turbine portfolio.
The Power and Gas Division offers a broad spectrum of prod-
ucts and solutions for generating electricity from fossil fuels
and for producing and transporting oil and gas. The portfolio
includes gas turbines, steam turbines, generators to be applied
to gas or steam power plants, compressors, integrated power
plant solutions, and instrumentation and control systems for
power generation. Customers are public utilities and indepen-
dent power producers, companies in engineering, procurement
and construction that serve these companies, and companies
that generate power for their own consumption. Due to the
broad range of its offerings, the Division's revenue mix may
vary from reporting period to reporting period depending on
the share of revenue attributable to products, solutions and
services. Because typical profitability levels differ among these
three revenue sources, the revenue mix in a reporting period
accordingly affects Division profit for that period. In June 2015,
Siemens acquired all shares of Dresser-Rand Group Inc. (Dresser-
Rand), a world-leading supplier for the oil and gas industry.
STATEMENTS.
For more information on the portfolio transactions described
below, see NOTE 3 in → B.6 NOTES TO CONSOLIDATED FINANCIAL
A.1.1.2 BUSINESS DESCRIPTION
The U.S. economy experienced a slowdown during the start of
the year as a result of a harsh winter and disruptions caused by
port strikes. The acceleration in the succeeding quarters
showed that the underlying recovery trend was intact, mainly
because of strong domestic demand. In particular, fixed invest-
ments performed better than the overall economy, although
capital expenditures related to oil and gas production declined
significantly due to lower oil prices. Strong consumption ex-
penditures were fueled by a steadily improving labor market.
Our reportable segments may do business with each other,
leading to corresponding orders and revenue. Such orders and
revenue are eliminated on the Group level.
A.1.1.3 RESEARCH AND DEVELOPMENT
Our research and development (R&D) activities are ultimately
geared to developing innovative, sustainable solutions for our
customers and the Siemens businesses - and simultaneously
safeguarding our competitiveness. For these reasons, we focus
in particular
and renewable energy systems as well as substations for urban
and rural distribution networks. We also offer energy-efficient
solutions for heavy industry, the oil and gas industry and the
process industries. The portfolio is rounded off by solutions
and energy storage systems for integrating renewable energy
into power grids, together with vertical IT software applica-
tions that link energy consumers and producers.
> further enhancing efficiency in the generation of renewable
and conventional power and minimizing losses during power
transmission;
Combined Management Report
In the European economies, growth improved slightly in the
first half of calendar 2015. Uncertainties stemming from the
Greek bailout renegotiations and Greece's snap referendum
on the bailout proposal had only minor impact on economic
activity outside Greece itself, which is again in a deep recession
after the economy started to stabilize last year. The German
economy grew a solid 1.7%, with fixed investments expanding
even faster at 2.4%.
> on enabling energy supplies that are also economically sus-
tainable;
A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
The global economic outlook deteriorated during fiscal year
2015, particularly for many emerging economies. The main rea-
son for the deceleration in commodity exporting countries is
globally weaker demand for raw materials and a further soften-
ing of the Chinese economy that suffered from weaker foreign
demand, slower investment activity, a correction in real estate
markets, and overcapacities in several industries. Additional
stress for emerging countries resulted from capital outflows and
exchange rates depreciation. Severe recessions have followed
in Russia and Brazil, both countries having to deal with addi-
tional adverse shocks. A rare exception amongst the emerging
economies is India, where the recovery has gained traction.
A.1.2 Economic environment
The R&D activities of our Healthcare business are directed to-
wards our growth fields in therapy, molecular diagnostics, and
services. We want to tap the full potential of imaging solutions
in therapy and to establish a closer connection between diag-
nostics and therapy in cardiology, interventional clinical disci-
plines, surgery, and radiation oncology. Strategic partnerships
are an essential part of our strategy to reach this goal. Expand-
ing our innovation map beyond our established portfolio, and
investing in new ideas will help us tap new business fields. As
an example, we will drive our activities in the highly dynamic
growth field of molecular diagnostics. We will expand our ser-
vices business beyond product-related services by adding a dig-
ital services portfolio and increasing enterprise transformation
services to help customers in their transition to value-based
care within more and more provider organizations across geo-
graphical borders.
and simulations are prerequisites for end-to-end digitalization
and automation and require, for example, consistent engineer-
ing, optimized and more efficient processes, and intelligent
and predictive service concepts. The Division is also developing
technologies for the digital oil field and the electric propeller
pod drive. Our gears portfolio will be expanded and gears will
be integrated into a digitalized condition monitoring and con-
trolling system while increasing energy efficiency, reducing
material costs and further cutting emissions.
The R&D strategy of the Process Industries and Drives Divi-
sion is focusing on the digitalization of crucial portfolio ele-
ments across the complete lifecycle of processing plants. Inno-
vative technologies for sensors, actuators, communications
The Mobility Division's R&D strategy addresses customers' de-
mand for maximum availability, high throughput and enhanced
passenger experience. Although there is a growing need for
mobility worldwide, possibilities for building new roads and
railways are limited. Meeting the demand for mobility requires
intelligent solutions that make transport more efficient, safe
and environmentally friendly. Reflecting this, Mobility's R&D
activities strongly emphasize digitalization in developing state-
of-the art rail vehicles, automation solutions for rail and road
traffic, and rail electrification systems. Most of these goals can
be achieved only with intelligent IT solutions such as WLAN-
based control systems for driverless and conductorless metro
train operation, decentralized wayside architecture for rail au-
tomation, cloud-based product solutions, or Integrated Mobility
Platforms that intelligently network passengers, mobility ser-
vice providers and traffic management centers.
R&D work at the Building Technologies Division focuses on
optimizing comfort, operational and energy efficiency in build-
ings and infrastructures, protecting against fire and security
hazards, and minimizing related risks. We aim to create a port-
folio of products and services ranging from the field level to
the cloud, based on open standards wherever possible. This
includes data-based services for new ways of optimizing energy
consumption, easily scalable and reasonably priced services, a
new and harmonized system landscape with particularly effec-
tive integration of electrical consumption, fire detection and
HVAC (heating, ventilation, air conditioning) systems, and a
complete range of field-level products tailored specifically to
growing markets.
Combined Management Report
4
One of the R&D priorities at the Digital Factory Division is the
Digital Enterprise Software Suite. Using Teamcenter software
for central data management, the Digital Enterprise Software
Suite creates a seamless data connection across the entire
value chain - from product design to production planning and
set-up all the way to real production and subsequent service.
Innovative data services are another field of research: Siemens
has already developed an open cloud solution for analyzing
large datasets in industry. Data-based services such as pre-
dictive maintenance, asset and energy data management can
be hosted on this platform. Control of Hybrid Manufacturing
is another example. Additive manufacturing (e.g. 3D printing)
is combined with subtractive procedures (e.g. milling) in
one machine to ensure that components or products with a
high degree of individualization can be manufactured quickly
and efficiently.
The R&D activities of our Energy Management Division focus
on preparing our portfolio for changes on all voltage levels in
the world of electricity. The increasing infeed of renewable
energy to power grids requires that those grids become more
flexible and efficient, particularly with distributed generation
on the rise. The digitalization of future grids will enable intel-
ligent grid operation and data-driven services. Cost-out pro-
grams and optimization of our footprint are improving the
competitiveness of our product portfolio on global markets.
Our innovations are centered on power electronics, digitaliza-
tion or grid stabilization. The full integration of energy supply
systems with process automation is a core portfolio element for
industrial applications and infrastructures.
At Siemens' Wind Power and Renewables Division, our R&D
efforts are focused on innovative products and solutions that
allow us to take the lead in performance, improve our compet-
itiveness, and build a stronger business case to present to our
customers. This includes finding ways to more intelligently
monitor and analyze turbine conditions, and smart diagnostic
services. Our R&D efforts also focus on digitalization. At our
remote diagnostics center in Brande, Denmark, we collect digi-
tal data from nearly 10,000 turbines in more than 30 countries:
a total of more than 24 million data sets annually. We use this
data to provide value for our customers: in 85% of cases, prob-
lems can be corrected and turbines restarted without the need
to send out a service team.
> finding novel solutions for smart grids and for the storage of
energy from renewable sources with irregular availability;
Research and Development in our businesses
R&D at the Power and Gas Division concentrates on develop-
ing products and solutions for enhancing efficiency, flexibility
and economy in power generation and in the oil and gas indus-
try. These products and solutions include turbomachinery -
primarily high-performance, low-emission gas turbines for
single operation or for combined cycle power plants - and com-
pressor solutions for various process industries. The Division's
technology initiative started in fiscal 2015 is aimed at intensify-
ing R&D in innovative materials, advanced manufacturing
methods and plant optimization. Along with promoting digita-
lization in overall product lifecycles, Power and Gas is on track
preparing for changing energy markets and their increasingly
diversified centralized and decentralized structures.
In fiscal 2015, we reported research and development expenses
of €4.5 billion, compared to €4.0 billion in fiscal 2014. The re-
sulting R&D intensity, defined as the ratio of R&D expenses
and revenue, was 5.9%, thus above the R&D intensity of 5.6%
in fiscal 2014. As of September 30, 2015, Siemens held approx-
imately 56,200 granted patents worldwide in its continuing
operations. As of September 30, 2014, it held approximately
56,100 granted patents. On average, we had 32,100 R&D
employees in fiscal 2015.
Corporate Technology is both a creative driver of disruptive
innovations and a partner to the Siemens businesses. The R&D
activities are focused on the company's core activities in the
fields of electrification, automation, and digitization. In many
research projects, CT works closely with scholars from leading
universities and research institutions. These partnerships, along
with a close collaboration with start-ups, are an important part
of Siemens' open innovation concept, which is designed to
make the company even more innovative.
Beyond these points of focus, we recognize how important
highly sophisticated software solutions are for all the fields of
business in which Siemens is active. R&D activities are carried
out by our businesses as well as our Corporate Technology (CT)
department.
> creating the highly flexible, connected factories of tomorrow
using advanced automation and digitalization technologies;
> turn unstructured data into value-adding information, e.g.
when providing services such as preventive maintenance;
> advancing the integration of medical imaging technology, in
vitro diagnostics and IT for medical engineering to support
achievement of improved patient outcomes.
> promoting the efficient utilization of energy, especially in
buildings, industry and transportation, e.g. through highly
efficient drives for production facilities or for local and
long-distance trains;
Other financial
957
80
783
liabilities
9,175
13,746
3,243
5,667
indebtedness
Notes and bonds
Loans from banks
1,737
Trade payables
16
50
Obligations under
finance leases
37
19
71
7,740
23
(in millions of €)
12
Other financial liabilities
3
7
Consolidated Financial Statements 95
2018 to
2020
1,189
Any market sensitive instruments, including equity and inter-
est bearing investments, that our Company's pension plans
hold are not included in the following quantitative and qualita-
tive disclosures.
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. In the ordi-
nary course of business Siemens units are exposed to foreign
currency exchange rate fluctuations, particularly between the
U.S. dollar and the euro. Foreign currency exchange rate expo-
sure is partly balanced by purchasing of goods, commodities
and services in the respective currencies as well as production
activities and other contributions along the value chain in the
local markets.
Operating units (Industrial business and SFS) are prohibited
from borrowing or investing in foreign currencies on a specula-
tive basis. Intercompany financing or investments of operating
units are preferably carried out in their functional currency or
on a hedged basis.
According to the company policy each Siemens unit is respon-
sible for recording, assessing and monitoring its foreign
currency transaction exposure. The net foreign currency posi-
tion of each unit serves as a central performance measure and
has to be hedged within a band of at least 75% but no more
than 100%.
Generally, the operating units conclude their hedging activities
internally with Corporate Treasury. By applying a cost-optimiz-
ing portfolio approach Corporate Treasury itself hedges foreign
currency exchange rate risks with external counterparties and
limits them Company-wide.
As of September 30, 2015 and 2014 the VaR relating to foreign
currency exchange rates was €179 million and €47 million. This
VaR was calculated under consideration of items of the Consol-
idated Statement of Financial Position in addition to firm com-
mitments which are denominated in foreign currencies, as well
as foreign currency denominated cash flows from forecast
transactions for the following twelve months. A higher volatil-
ity between the U.S. dollar and the euro in comparison to prior
year resulted in an increase of the VaR. Furthermore, the VaR
was influenced by changes to hedging level and hedging hori-
zon with regard to foreign currency denominated cash flows
from forecast transactions.
Translation risk
Many Siemens units are located outside the euro zone. Since
the financial reporting currency of Siemens is the euro, the fi-
nancial statements of these subsidiaries are translated into
euro for the preparation of the Consolidated Financial State-
ments. To consider the effects of foreign currency translation in
the risk management, the general assumption is that invest-
ments in foreign-based operations are permanent and that re-
investment is continuous. Effects from foreign currency ex-
change rate fluctuations on the translation of net asset
amounts into euro are reflected in the Company's consolidated
equity position.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates. This risk arises whenever interest terms
of financial assets and liabilities are different. In order to man-
age the Company's position with regard to interest rate risk, in-
terest income and interest expenses, Corporate Treasury per-
forms a comprehensive corporate interest rate risk management
by using fixed or variable interest rates from bond issuances
and derivative financial instruments when appropriate. The in-
terest rate risk relating to the Group, excluding SFS' business, is
mitigated by managing interest rate risk actively relatively to a
benchmark. The interest rate risk relating to the SFS' business is
managed separately, considering the term structure of SFS's fi-
nancial assets and liabilities. The Company's interest rate risk
results primarily from the funding in U.S. dollar, GBP and euro.
If there are no conflicting country-specific regulations, all
Siemens operating units generally obtain any required financ-
ing through Corporate Treasury in the form of loans or inter-
company clearing accounts. The same concept is adopted for
deposits of cash generated by the units.
As of September 30, 2015 and 2014 the VaR relating to the inter-
est rate was €500 million and €220 million. In fiscal 2015 the
interest VaR mainly increased due to the issuance of fixed-rate
US$ bonds and higher interest rate volatilities for EUR and US$.
The issuance of fixed-rate U.S. dollar bonds locked in a fixed
rate and thus avoided additional cash flow risk.
EQUITY PRICE RISK
Siemens' investment portfolio consists of direct and indirect
investments in publicly traded companies held for purposes
other than trading. The direct participations result mainly from
strategic partnerships, strengthening Siemens' focus on its
core business activities or compensation from merger and ac-
quisitions transactions; indirect investments in fund shares are
mainly transacted for financial reasons.
These investments are monitored based on their current mar-
ket value, affected primarily by fluctuations in the volatile tech-
nology-related markets worldwide. As of September 30, 2015
and 2014 the market value of Siemens' portfolio in publicly
traded companies was €1,814 million compared to €1,351 mil-
lion in the prior year. The increase is due mainly to higher mar-
ket values of our stakes in OSRAM and Atos.
As of September 30, 2015 and 2014, the VaR relating to the eq-
uity price was €189 and €122 million. The increase is due
mainly to higher market values related to the above-mentioned
stakes and an increased volatility.
LIQUIDITY RISK
Liquidity risk results from the Company's inability to meet its
financial liabilities. Siemens follows a deliberated financing
policy that is aimed towards a balanced financing portfolio, a
diversified maturity profile and a comfortable liquidity cushion.
Siemens mitigates liquidity risk by the implementation of an
effective working capital and cash management, arranged
credit facilities with highly rated financial institutions, via a
debt issuance program and via a global multi-currency com-
mercial paper program. Liquidity risk may also be mitigated by
the Siemens Bank GmbH, which increases the flexibility of de-
positing cash or refinancing.
In addition, Siemens constantly monitors funding options
available in the capital markets, as well as trends in the avail-
ability and costs of such funding, with a view to maintaining
financial flexibility and limiting repayment risks.
The following table reflects the contractually fixed pay-offs for
settlement, repayments and interest. The disclosed expected
undiscounted net cash outflows from derivative financial liabil-
ities are determined based on each particular settlement date
of an instrument and based on the earliest date on which
Siemens could be required to pay. Cash outflows for financial
liabilities (including interest) without fixed amount or timing
are based on the conditions existing at September 30, 2015.
96 Consolidated Financial Statements
Non-derivative financial
2016
2017
Fiscal year
2021 and
thereafter
145
(1,041,376)
16
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earn-
ings per share (EPS, basic) of the past three fiscal years and/or
to the share price performance of Siemens relative to the share
price performance of five important competitors during the
four-year restriction period. The target attainment for the per-
formance criteria ranges between 0% and 200%. If the target
attainment of the prospective performance-based target of
Siemens stock relative to five competitors exceeds 100%, an ad-
ditional cash payment results corresponding to the outperfor-
mance. The vesting period is four years and five years for stock
awards granted to members of the Managing Board in fiscal
2014, respectively.
Until fiscal 2014, additionally one portion of the variable com-
pensation component (bonus) for members of the Managing
Board was granted in the form of non-forfeitable awards of
Siemens stock (Bonus Awards) subject to a vesting period of
one year. Beneficiaries will receive one Siemens share without
payment of consideration for each Bonus Award, following an
additional waiting period of four years.
Commitments to members of the Managing Board
In fiscal 2015 and 2014, agreements were entered into which
entitle members of the Managing Board to stock awards contin-
gent upon attaining the prospective performance-based target
of Siemens stock relative to five competitors. The fair value of
these entitlements amounting to €9 million and €5 million, re-
spectively, in fiscal 2015 and 2014, was calculated by applying a
valuation model. In fiscal 2015 and 2014, inputs to that model
include an expected weighted volatility of Siemens shares of
22% and 22%, respectively, and a market price of €88.03 and
€98.36 per Siemens share. Expected volatility was determined
by reference to historic volatilities. The model applies a risk-free
interest rate of up to 0.3% in fiscal 2015 and up to 1.0% in fiscal
2014 and an expected dividend yield of 3.8% in fiscal 2015 and
3.1% in fiscal 2014. Assumptions concerning share price cor-
relations were determined by reference to historic correlations.
In addition, in fiscal 2014, agreements were entered into which
entitle members of the Managing Board to EPS-based stock
awards and Bonus Awards contingent upon the target attain-
ment. The fair value of these entitlements amounting to
€5 million and €2 million was determined by calculating the
present value of the target amount.
Commitments to members of the senior
management and other eligible employees
In fiscal 2015 and 2014, 366,929 and 769,049 stock awards, re-
spectively, were granted based on the EPS target. The fair value
of these stock awards amounts to €27 million and €62 million,
respectively, in fiscal 2015 and 2014, and corresponds to the
amount representing the EPS target attainment.
In fiscal 2015 and 2014, 1,162,028 and 652,162 stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounting to €57 million and €40 million, respectively, in fis-
cal 2015 and 2014, was calculated by applying a valuation
model. In fiscal 2015 and 2014, inputs to that model include an
expected weighted volatility of Siemens shares of 22% and 23%,
respectively, and a market price of €88.03 and €95.62 per
Siemens share. Expected volatility was determined by reference
to historic volatilities. The model applies a risk-free interest rate
of up to 0.3% in fiscal 2015 and up to 0.9% in fiscal 2014 and an
expected dividend yield of 3.8% in fiscal 2015 and 3.1% in fiscal
2014. Assumptions concerning share price correlations were
determined by reference to historic correlations.
Changes in the stock awards held by members of the senior
management and other eligible employees are:
Vested and fulfilled
Forfeited
2015
Fiscal year
2014
Non-vested, beginning of period
Granted
4,985,998
1,528,957
4,876,455
1,421,211
(159,754)
(120,350)
(305,951)
(149,942)
Non-vested, end of period
6,049,250
4,985,998
|
Settled
98 Consolidated Financial Statements
represent the potential financial loss which will not be exceeded
within ten days with a probability of 99.5%. Although VaR is an
important tool for measuring market risk, the assumptions on
which the model is based give rise to some limitations including
the following. A ten day holding period assumes that it is possi-
ble to dispose of the underlying positions within this period.
This may not be valid during continuing periods of illiquidity
markets. A 99.5% confidence level means, that there is a 0.5%
statistical probability that losses could exceed the calculated
VaR. The use of historical data as a basis for estimating the sta-
tistic behavior of the relevant markets and finally determining
the possible range of the future outcomes on the basis of this
statistic behavior may not always cover all possible scenarios,
especially those of an exceptional nature.
The Company grants stock awards to members of the Manag-
ing Board, members of the senior management and other eligi-
ble employees. Stock awards are subject to a restriction period
of about four years and entitle the beneficiary to Siemens
shares without payment of consideration following the restric-
tion period.
98
STOCK AWARDS
NOTE 25 Share-based payment
Derivative financial
liabilities
943
508
537
23
Credit guarantees¹
859
Irrevocable loan
commitments²
3,300
158
125
101
7
1 Based on the maximum amounts Siemens could be required to settle in the event
of default by the primary debtor.
2 A considerable portion result from asset-based lending transactions meaning
that the respective loans can only be drawn after sufficient collateral has been
provided by the borrower.
CREDIT RISK
Credit risk is defined as an unexpected loss in financial instru-
ments if the contractual partner is failing to discharge its obli-
gations in full and on time or if the value of collateral declines.
Siemens provides its customers with various forms of direct
and indirect financing particularly in connection with large
projects. Hence, credit risks arise are determined by the sol-
vency of the debtors, the recoverability of the collaterals and
the global economic development.
The effective monitoring and controlling of credit risk through
credit evaluations and ratings is a core competency of our risk
management system. In this context, Siemens has imple-
mented a binding credit policy for all entities.
Ratings, defined and analyzed by SFS, and individually defined
credit limits are based on generally accepted rating methodolo-
gies, with the input consisting of information obtained from
the customer, external rating agencies, data service providers
and Siemens' credit default experiences. Ratings and credit lim-
its for financial institutions as well as Siemens' public and pri-
vate customers, which are determined by internal risk assess-
ment specialists, are continuously updated and considered by
investments in cash and cash equivalents, and in determining
the conditions under which direct or indirect financing will be
offered to customers.
For analysis and monitoring of the credit risk the Company ap-
plies different systems and processes. A central IT application
processes data from the operating units together with rating
and default information and calculates an estimate which may
be used as a basis for individual bad debt provisions. In addi-
tion to this automated process, qualitative information is con-
sidered, in particular to incorporate the latest developments.
Furthermore Corporate Treasury has established the Siemens
Credit Warehouse to which numerous operating units from the
Siemens Group regularly transfer business partner data as a ba-
sis for a centralized rating process. Furthermore, the Siemens
Credit Warehouse purchases trade receivables from numerous
operating units with a remaining term up to one year. Due to
the identification, quantification and active management of
the credit risk the Siemens Credit Warehouse increases the
transparency with regard to credit risk. In addition, the Siemens
Credit Warehouse may provide Siemens with an additional
source of liquidity and strengthens Siemens' funding flexibility.
The maximum exposure to credit risk of financial assets, with-
out taking account of any collateral, is represented by their car-
rying amount. As of September 30, 2015 and 2014 the collateral
for financial instruments classified as financial assets measured
at fair value in the form of netting agreements for derivatives
in the event of insolvency of the respective counterparty
amounted to €1,065 million and €955 million, respectively. As
of September 30, 2015 and 2014 the collateral held for financial
instruments classified as receivables from finance leases
amounted to €2,003 million and €2,057 million, respectively,
mainly in the form of the leased equipment. As of Septem-
ber 30, 2015 and 2014 the collateral held for financial instru-
ments classified as financial assets measured at cost or amor-
tized cost amounted to €3,165 million and €2,841 million,
respectively. The collateral mainly consisted of property, plant
and equipment. Credit risks arising from irrevocable loan com-
mitments are equal to the expected future pay-offs resulting
from these commitments. As of September 30, 2015 and 2014
the collateral held for these commitments amounted to
€1,445 million and €1,466 million, respectively, mainly in the
form of inventories and receivables.
Concerning trade receivables and other receivables, as well as
loans or receivables included in line item Other financial assets
that are neither impaired nor past due, there were no indica-
tions that defaults in payment obligations will occur, which
lead to a decrease in the net assets of Siemens. Overdue finan-
cial instruments are generally impaired on a portfolio basis in
order to reflect losses incurred within the respective portfolios.
When substantial expected payment delays become evident,
overdue financial instruments are assessed individually for ad-
ditional impairment and are further allowed for as appropriate.
Consolidated Financial Statements 97
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of
the vesting period. Total pretax expense for share-based pay-
ment amounted to €203 million and €183 million for the years
ended September 30, 2015 and 2014, respectively, and refers
primarily to equity-settled awards.
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive In-
come may differ substantially from VaR figures due to funda-
mental conceptual differences. While the Consolidated State-
ments of Income and Consolidated Statements of Comprehensive
Income are prepared in accordance with IFRS, the VaR figures are
the output of a model with a purely financial perspective and
exchange contracts
Increasing market fluctuations may result in significant earn-
ings and cash flow volatility risk for Siemens. The Company's
operating business as well as its investment and financing ac-
tivities are affected particularly by changes in foreign exchange
rates, interest rates and equity prices. In order to optimize the
allocation of the financial resources across the Siemens seg-
ments and entities, as well as to achieve its aims, Siemens iden-
tifies, analyzes and manages the associated market risks. The
Company seeks to manage and control these risks primarily
through its regular operating and financing activities, and uses
derivative financial instruments when deemed appropriate.
279
279
Financial liabilities measured at fair value - Derivative financial instruments
1,919
1,919
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with cash flow hedges
1,383
In connection with cash flow hedges
534
534
|
Consolidated Financial Statements 91
(in millions of €)
Financial assets measured at fair value
1,383
Available-for-sale financial assets: Equity instruments
Available-for-sale financial assets: Debt instruments
329
In connection with fair value hedges
1,980
318
2,299
Available-for-sale financial assets: Debt instruments
1,131
10
1,141
329
Derivative financial instruments
46
3,228
Not designated in a hedge accounting relationship
(including embedded derivatives)
2,574
46
2,620
3,181
Available-for-sale financial assets: Equity instruments
Derivative financial instruments
(including embedded derivatives)
2,569
1,995
1,995
476
476
98
98
2,569
1,749
1,338
406
1,338
406
The fair value of available-for-sale financial equity instruments
quoted in an active market is based on price quotations at the
period-end date. The fair value of debt instruments is either
based on prices provided by price service agencies or esti-
mated by discounting future cash flows using current market
interest rates.
Non-current available-for-sale financial assets measured at
fair value include interests in Atos SE (AtoS) and OSRAM of
€1,703 million and €1,241 million as of September 30, 2015 and
2014. Unrealized gains (losses) in fiscal 2015 and 2014 resulting
from non-current available-for-sale financial assets measured
at fair value are €367 million and €(48) million, respectively.
Siemens determines the fair values of derivative financial instru-
ments depending on the specific type of instrument. Fair values
of derivative interest rate contracts are estimated by discount-
ing expected future cash flows using current market interest
rates and yield curves over the remaining term of the instru-
ment. Interest rate futures are valued on the basis of quoted
market prices, if available. Fair values of foreign currency deriv-
atives are based on forward exchange rates. Options are gener-
ally valued based on quoted market prices or based on option
pricing models. In determining the fair values of the derivative
financial instruments, no compensating effects from underly-
ing transactions (e.g. firm commitments and forecast transac-
tions) are taken into consideration.
The Company limits default risks resulting from derivative
financial instruments by generally transacting with financial
institutions with a minimum credit rating of investment grade.
1,749
Not designated in a hedge accounting relationship
702
1,834
In connection with fair value hedges
In connection with cash flow hedges
Financial liabilities measured at fair value - Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with cash flow hedges
Sep 30, 2014
Level 1
Level 2
702
Level 3
1,527
3,272
307
5,105
1,527
1
307
Total
Based on Siemens' net risk exposure towards the counterparty,
the resulting credit risk is taken into account via a credit valua-
tion adjustment.
6,668
4,313
9,957
8,013
608
574
2,620
1,995
3,639
32,281
2,728
45,591
Financial liabilities measured
at amortized cost³
39,067
30,128
Financial liabilities held for trading4
Derivatives designated in a hedge
accounting relationship4
Financial liabilities
1,383
53,092
1,338
Sep 30,
2014
Loans and receivables1
Cash and cash equivalents
Derivatives designated in a hedge
accounting relationship
Financial assets held for trading
Available-for-sale financial assets²
Financial assets
As previously reported, in May 2013, Siemens Ltda., Brazil,
(Siemens Ltda.) entered into a leniency agreement with the
Administrative Council for Economic Defense (CADE) and other
relevant Brazilian authorities relating to possible antitrust vio-
lations in connection with alleged anticompetitive irregulari-
ties in metro and urban train projects, in which Siemens Ltda.
and partially Siemens AG, as well as a number of other compa-
nies participated as contractor. In March 2014, CADE com-
menced administrative proceedings, confirming Siemens
Ltda.'s immunity from administrative fines for the reported po-
tential misconduct. In connection with the above mentioned
metro and urban train projects, several Brazilian authorities
initiated investigations relating to alleged criminal acts (cor-
ruptive payments, anti-competitive conduct, undue influence
on public tenders).
As previously reported, in March 2014, Siemens was informed
that in connection with the above mentioned metro and urban
train projects the Public Prosecutor's Office São Paulo has re-
quested criminal proceedings at court into alleged violations of
Brazilian antitrust law against a number of individuals includ-
ing current and former Siemens employees. The proceedings
continue; the Public Prosecutor's Office São Paulo has, in the
meantime, appealed all decisions where the courts denied
opening criminal trials.
As previously reported, in May 2014, the Public Affairs Office
(Ministério Público) São Paulo initiated a lawsuit against
Siemens Ltda. as well as other companies and several indivi-
duals claiming, inter alia, damages in an amount of BRL2.5 bil-
lion (approximately €558 million as of September 2015) plus
adjustments for inflation and related interest in relation to train
refurbishment contracts entered into between 2008 and 2011.
A technical note issued by the Brazilian cartel authority CADE
earlier in 2014 had not identified evidence suggesting Siemens
Ltda.'s involvement in anticompetitive conduct in relation to
these refurbishment contracts. In January 2015 the district
court of São Paulo admitted a lawsuit of the State of São Paulo
and two customers against Siemens Ltda., Siemens AG and
other companies and individuals claiming damages in an un-
specified amount. In March 2015, the district court of São Paulo
admitted a lawsuit of the Public Affairs Office (Ministério
Público) São Paulo against Siemens Ltda. and other companies
claiming, inter alia, damages in an amount of BRL487 million
(approximately €109 million as of September 2015) plus adjust-
ments for inflation and related interest in relation to train main-
tenance contracts entered into in 2000 and 2002. In Septem-
ber 2015, the district court of São Paulo admitted another
lawsuit of the Public Affairs Office (Ministério Público) São Paulo
against Siemens Ltda. and other companies claiming, inter
alia, damages in an amount of BRL918 million (approximately
€205 million as of September 2015) plus adjustments for infla-
tion and related interest in relation to train maintenance con-
tracts entered into in 2006 and 2007. Siemens will defend itself
against these actions. It cannot be excluded that further signif-
icant damage claims will be brought by customers or the state
against Siemens.
As previously reported, CADE is conducting - unrelated to the
above mentioned proceedings - two further investigations into
possible antitrust behavior in the field of gas-insulated and
air-insulated switchgear from the 1990's to 2006. Siemens is
cooperating with the authorities.
Consolidated Financial Statements 89
00
2015
36,268
90
As previously reported, the Vienna public prosecutor in Austria
is conducting an investigation into payments between calendar
1999 and calendar 2006 relating to Siemens Aktiengesellschaft
Österreich, Austria, for which adequate services rendered
could not be identified. In September 2011, the Vienna public
prosecutor extended the investigations to include a tax evasion
matter for which Siemens AG Österreich is potentially liable.
Siemens is cooperating with the authorities.
Siemens is in the course of its normal business operations in-
volved in numerous Legal Proceedings in various jurisdictions.
These Legal Proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages,
equitable remedies or criminal or civil sanctions, fines or dis-
gorgement of profit. In individual cases this may also lead to
formal or informal exclusion from tenders or the revocation or
loss of business licenses or permits. In addition, further Legal
Proceedings may be commenced or the scope of pending Legal
Proceedings may be expanded. Asserted claims are generally
subject to interest rates.
Some of these Legal Proceedings could result in adverse deci-
sions for Siemens that may have material effects on its finan-
cial position, the results of its operations and/or its cash flows
in the respective reporting period. At present, Siemens does
not expect any matters not described in this Note to have mate-
rial effects on its financial position, the results of its operations
and/or its cash flows.
For Legal Proceedings information required under IAS 37, Provi-
sions, Contingent Liabilities and Contingent Assets is not dis-
closed if the Company concludes that disclosure can be expected
to seriously prejudice the outcome of the matter.
NOTE 22 Additional disclosures on financial
instruments
The following table discloses the carrying amounts of each cat-
egory of financial assets and financial liabilities:
(in millions of €)
As previously reported, in June 2015, Siemens Ltda. once again
appealed to the Supreme Court against a decision confirming
the decision of the previous court to suspend Siemens Ltda.
from participating in public tenders and signing contracts
with public administrations in Brazil for a five year term based
on alleged irregularities in calendar 1999 and 2004 public ten-
ders with the Brazilian Postal authorities. In July 2015, the
court suspended enforcement of the debarment decision pend-
ing the appeal.
374
536
40,986
31,877
18,165
3,544
207
3,559
147
2,605
216
2,626
156
Fixed-rate and variable-rate receivables with a remaining
term of more than twelve months, including receivables from
finance leases, are evaluated by the Company based on pa-
rameters such as interest rates, specific country risk factors,
individual creditworthiness of the customer, and the risk
characteristics of the financed project. Based on this evalua-
tion, allowances for these receivables are recognized.
18,787
The fair value of notes and bonds is based on prices provided
by price service agencies at the period-end date (Level 2). The
fair value of loans from banks and other financial indebted-
ness, obligations under finance leases as well as other non-cur-
rent financial liabilities is estimated by discounting future cash
flows using rates currently available for debt of similar terms
and remaining maturities (Level 2).
(in millions of €)
Level 1
Level 2
Level 3
Sep 30, 2015
Total
Financial assets measured at fair value
1,980
The following table allocates financial assets and financial lia-
bilities measured at fair value to the three levels of the fair
value hierarchy:
411
25,955
amount
1 Reported in the following line items of the Statements of Financial Position: Trade
and other receivables, Other current financial assets and Other financial assets,
except for separately disclosed €2,464 million and €1,803 million available-for-sale
financial assets and €3,228 million and €2,569 million derivative financial instru-
ments as of September 30, 2015 and 2014, respectively. Includes €13,909 million
and €12,537 million trade receivables from the sale of goods and services in fiscal
2015 and 2014, thereof €726 million and €788 million with a term of more than
twelve months.
2 Includes equity instruments classified as available-for-sale, for which a fair value
could not be reliably measured and which are therefore recognized at cost.
3 Reported in the following line items of the Statements of Financial Position:
Short-term debt and current maturities of long-term debt, Trade payables, Other
current financial liabilities, Long-term debt and Other financial liabilities, except
for separately disclosed derivative financial instruments of €1,919 million and
€1,749 million, respectively, as of September 30, 2015 and 2014.
4 Reported in line items Other current financial liabilities and Other financial liabilities.
Cash and cash equivalents includes €378 million and €429 mil-
lion as of September 30, 2015 and 2014, respectively, which are
not available for use by Siemens mainly due to minimum re-
serve requirements with banks. As of September 30, 2015 and
2014, the carrying amount of financial assets Siemens has
pledged as collateral amounted to €345 million and €271 mil-
lion, respectively.
Consolidated Financial Statements
The following table presents the fair values and carrying
amounts of financial assets and financial liabilities measured at
cost or amortized cost for which the carrying amounts do not
approximate fair value:
26,516
(in millions of €)
Loans from banks and other financial indebtedness
Obligations under finance leases
Fair value
Sep 30, 2015
Carrying
amount
Fair value
Sep 30, 2014
Carrying
Notes and bonds
In order to quantify market risks Siemens has implemented a
system based on parametric variance-covariance Value at Risk
(VAR), which is also used for internal management of the Cor-
porate Treasury activities. The VaR figures are calculated based
on historical volatilities and correlations of various risk factors,
a ten day holding period, and a 99.5% confidence level.
The unquoted equity instrument allocated to level 3 of the fair
value hierarchy relates to an investment in an offshore wind
farm. The fair value is determined based on discounted cash
flow calculations. The most significant unobservable input
used to determine the fair value is the cash flow forecast which
is mainly based on the future power generation income. This
income is generally subject to future market developments and
thus price volatility. Since a long-term power purchase agree-
ment is in place that mitigates price volatility, significant
changes to the cash flow forecast are unlikely and thus, no sig-
nificant effects on Other comprehensive income, net of income
taxes, are expected.
(in millions of €)
(in millions of €)
2016
2017
2018 to
2020
2021 and
thereafter
(in millions of €)
Asset
Fiscal year
Sep 30, 2015
Liability
Sep 30, 2014
Liability
Foreign currency
Expected gain (loss) to be
reclassified from line item
Other comprehensive in-
In October 2015, Siemens AG and Siemens Israel Ltd., Israel,
were asked to present their position before the Israeli District
Attorney (DA) regarding potentially illegal payments that were
allegedly paid to Israeli Electric Company-representatives in the
early 2000's. In August 2015, the Israeli Exchange Supervisory
Authority (ISA) concluded its investigation and transferred
the investigation files to the DA, who will make the decision
whether or not to take any legal steps against any of the sus-
pects named in the ISA investigation. Siemens has not been
served with any charges so far. Siemens is cooperating with
the Israeli authorities.
713
1,297
352
Asset
901
Periods in which the hedged forecast transactions or the firm
commitments denominated in foreign currency are expected to
impact profit or loss:
NOTE 23 Derivative financial instruments
and hedging activities
7
2,357
955
1,402
Reverse repurchase agreements
400
400
Fair values of each type of derivative financial instruments
recorded as financial assets or financial liabilities are:
400
1,533
7
1,526
905
621
|
Consolidated Financial Statements 93
Financial liabilities - Derivative financial liabilities
2,364
Interest rate swaps
(163)
Derivative financial instruments
not designated in a hedging relationship
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a
Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various de-
rivative financial instruments, primarily foreign currency ex-
change contracts, foreign currency swaps and options, are uti-
lized to minimize such risks. Such a strategy does not qualify
for hedge accounting treatment. The Company also accounts
for foreign currency derivatives, which are embedded in sale
and purchase contracts.
Cash flow hedges
The Company's operating units apply hedge accounting for cer-
tain significant forecast transactions and firm commitments
denominated in foreign currencies. Particularly, the Company
has entered into foreign currency exchange contracts to reduce
the risk of variability of future cash flows resulting from fore-
cast sales and purchases as well as firm commitments. This risk
results mainly from contracts denominated in US$ both from
Siemens' operating units entering into long-term contracts e.g.
project business and from standard product business.
INTEREST RATE RISK MANAGEMENT
Derivative financial instruments
not designated in a hedging relationship
For the interest rate risk management relating to the Group ex-
cluding SFS' business, derivative financial instruments are used
under a portfolio-based approach to manage interest risk ac-
tively relative to a benchmark. The interest rate management
relating to the SFS business remains to be managed separately,
considering the term structure of SFS' financial assets and lia-
bilities on a portfolio basis. Neither approach qualifies for
hedge accounting treatment. Net cash receipts and payments
in connection with interest rate swap agreements are recorded
as interest expense in Other financial income (expenses), net.
RISK MANAGEMENT
Cash flow hedges of floating-rate
commercial papers
Fair value hedges of fixed-rate debt obligations
Under the interest rate swap agreements outstanding during
the years ended September 30, 2015 and 2014, the Company
has agreed to pay a variable rate of interest multiplied by a no-
tional principle amount, and to receive in return an amount
equal to a specified fixed rate of interest multiplied by the same
notional principal amount. These interest rate swap agree-
ments offset an impact of future changes in interest rates des-
ignated as the hedged risk on the fair value of the underlying
fixed-rate debt obligations. Carrying amount adjustments to
debt for fair value changes attributable to the respective interest
rate risk being hedged are included in Other financial income
94
94
Consolidated Financial Statements
(expenses), net resulted in a gain (loss) of €103 million and
€(8) million, respectively, in fiscal 2015 and 2014; the related
swap agreements resulted in a gain (loss) of €(135) million and
€3 million, respectively. Net cash receipts and payments relat-
ing to such interest rate swap agreements are recorded as inter-
est expenses.
The Company had interest rate swap contracts to pay variable
rates of interest of an average of 0.1% and 0.3% as of Septem-
ber 30, 2015 and 2014, respectively and received fixed rates of
interest (average rate of 4.3% and 4.0%, as of September 30,
2015 and 2014, respectively). The notional amount of indebted-
ness hedged as of September 30, 2015 and 2014 was €6,012 mil-
lion and €6,645 million, respectively. This changed 26% and
41% of the Company's underlying notes and bonds from fixed
interest rates into variable interest rates as of September 30,
2015 and 2014, respectively. The notional amounts of these
contracts mature at varying dates based on the maturity of the
underlying hedged items. The net fair value of interest rate
swap contracts (excluding accrued interest) used to hedge in-
debtedness as of September 30, 2015 and 2014 was €242 mil-
lion and €386 million, respectively.
NOTE 24 Financial risk management
Since fiscal 2015, Siemens applies cash flow hedge accounting
to a revolving portfolio of floating-rate commercial papers of
nominal US$700 million. To benefit from low interest rates in
the USA, Siemens pays a fixed rate of interest and receives a
variable rate of interest, offsetting future changes in interest
payments of the underlying floating-rate commercial papers.
Net cash receipts and payments are recorded as interest ex-
penses.
come, net of income taxes
into revenue or cost of sales
FOREIGN CURRENCY EXCHANGE RATE
448
2,569
(87)
(72)
23
and combined interest
and currency swaps
1,824
381
391
1,749
1,769
Other (embedded
derivatives, options,
commodity swaps)
691
241
3,228
1,919
456
Net gains (losses) of financial instruments are:
Derivative financial assets
1,355
Total interest income on financial assets
Total interest expenses on financial liabilities
Fiscal year
2015
2014
1,248
1,048
(739)
(in millions of €)
(643)
OFFSETTING
Siemens enters into master netting agreements and similar
agreements for derivative financial instruments and reverse
repurchase agreements. The requirements to offset recognized
financial instruments are usually not met. The following table
reflects financial assets and financial liabilities that are subject
to netting agreements and similar agreements:
(in millions of €)
Derivative financial assets
Reverse repurchase agreements
Gross
amounts
Amounts set
In fiscal 2015 and 2014, gains (losses) reclassified from Other
comprehensive income to the Consolidated Statements of
Income relating to cash flow hedges were €(268) million and
€14 million, respectively; unrealized gains (losses) recognized
in Other comprehensive income amounted €(311) million and
€(301) million, respectively.
Net amounts
Interest income (expense) other than from post-employment
benefits includes interest from financial assets and financial
liabilities not at fair value through profit or loss:
92 Consolidated Financial Statements
2015
Fiscal year
2014
Cash and cash equivalents
Available-for-sale financial assets
Loans and receivables
(24)
19
39
29
Net gains (losses) in fiscal 2015 and 2014 on financial liabilities
measured at amortized cost are comprised of gains (losses)
from derecognition and the ineffective portion of fair value
hedges. Net gains (losses) in fiscal 2015 and 2014 on financial
assets and financial liabilities held for trading consist of
changes in the fair value of derivative financial instruments,
including interest income and expense, for which hedge ac-
counting is not applied. The amounts presented include foreign
currency gains and losses from the realization and valuation of
the financial assets and liabilities mentioned above.
(42)
Financial liabilities measured
at amortized cost
(1,049)
(844)
(945)
(283)
Financial assets and financial
liabilities held for trading
60
1,402
off in the
Statement of
Position
Gross
amounts
Amounts set
Net amounts
off in the
Statement of
in the
Statement of
Financial
Position
Financial
Position
843
Related
amounts not
set off in the
Statement of
Financial
Position
Net
amounts
(in millions of €)
Financial assets
2,764
7
2,757
Sep 30, 2014
Financial
1,032
11
in the
Statement of
Financial
Position
Related
amounts not
set off in the
Statement of
Financial
Position
Sep 30, 2015
Net
amounts
2,678
10
2,668
1,874
1,065
2,678
10
2,668
1,065
1,604
Financial liabilities - Derivative financial liabilities
1,885
1,604
Financial assets
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position
regarding an alleged anti-competitive arrangement between
April 1988 and April 2004 in the field of gas-insulated switch-
gear. In September 2013, the Israeli Antitrust Authority con-
cluded that Siemens AG was a party to an illegal restrictive ar-
rangement regarding the Israeli gas-insulated switchgear
market between 1988 and 2004, with an interruption from Oc-
tober 1999 to February 2002. The Company appealed against
this decision in May 2014.
Based on the above mentioned conclusion of the Israeli Anti-
trust Authority, two electricity consumer groups filed motions to
certify a class action for cartel damages against a number of
companies including Siemens AG with an Israeli State Court in
September 2013. Both class actions seek compensation for al-
leged damages, which are claimed to be in a range of ILS2 billion
to ILS2.8 billion (approximately €455 million to €636 million as
of September 2015). The court dismissed one of the two class
actions claiming ILS2 billion. This proceeding is therefore final-
ized. In addition, the Israel Electric Corporation (IEC) filed at the
end of December 2013 with an Israeli State Court a separate
ILS3.8 billion (approximately €864 million as of September 2015)
claim for damages against Siemens AG and other companies
that allegedly formed a cartel in the Israeli gas insulated switch-
gear market. Siemens AG is defending itself against the actions.
2,753
HanseCom Gesellschaft für Informations- und
Kommunikationsdienstleistungen mbH, Hamburg
Siemens Convergence Creators Management GmbH, Hamburg
Siemens Finance & Leasing GmbH, Munich
1008
10011
74
Siemens Financial Services GmbH, Munich
10011
HSP Hochspannungsgeräte GmbH, Troisdorf
10011
Siemens Fonds Invest GmbH, Munich
10011
ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
85
Jawa Power Holding GmbH, Erlangen
100
10011
Siemens Fuel Gasification Technology GmbH & Co. KG, Freiberg
Siemens Fuel Gasification Technology Verwaltungs GmbH,
Freiberg
10010
1008
10010
10010
1008
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Convergence Creators GmbH & Co. KG, Hamburg
Dresser-Rand GmbH, Oberhausen
100
EDI - USS Umsatzsteuersammelrechnungen und Signaturen
GmbH & Co. KG, Munich
10010
EDI - USS Verwaltungsgesellschaft mbH, Munich
1008
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
10010
KompTime GmbH, Munich
10010
10010
10010
10010
10010
1008
evosoft GmbH, Nuremberg
10011
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
10010
Kyra 1 GmbH, Erlangen
Kyros 48 GmbH, Munich
10011
Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
6
10010
No significant influence due to contractual arrangements or legal circumstances.
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108
Consolidated Financial Statements
The reportable segments HC and SFS primarily remained
unchanged; Equity Investments ceased to be a reportable seg-
ment and became part of the reconciling item Centrally man-
aged portfolio activities. Prior period information has been
reclassified to correspond to the new reporting structure.
> Financial Services (SFS), a provider of business-to-business
financial solutions.
8
100
10011
100
10011
Siemens Global Innovation Partners Management GmbH,
Munich
1008
1008
Kyros 49 GmbH, Munich
1008
Siemens Grundstücksmanagement GmbH & Co. OHG,
Grünwald
100
100
Lincas Electro Vertriebsgesellschaft mbH, Hamburg
Siemens Healthcare Diagnostics GmbH, Eschborn
100
Mannesmann Demag Krauss-Maffei GmbH, Munich
100
Omnetric GmbH, Munich
51
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt
Tübingen KG, Grünwald
Siemens Healthcare Diagnostics Holding GmbH, Eschborn
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Healthcare GmbH, Erlangen
100
D-R Holdings (Germany) GmbH, Oberhausen
100
Dade Behring Grundstücks GmbH, Marburg
Other services
In fiscal 2015 and 2014, 45% and 44%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungs-
gesellschaft, Germany.
106 Consolidated Financial Statements
Audit Services relate primarily to services provided by EY for
auditing Siemens' Consolidated Financial Statements and for
auditing the statutory financial statements of Siemens AG and
its subsidiaries. Other Attestation Services include primarily
audits of financial statements in connection with M&A activi-
ties, comfort letters and other attestation services required un-
der regulatory requirements, agreements or requested on a
voluntary basis.
NOTE 32 Corporate Governance
The Managing Board and the Supervisory Board of Siemens
Aktiengesellschaft provided the declaration required by Sec-
tion 161 of the German stock corporation law (AktG) as of Octo-
ber 1, 2015, which is available on the Company's website at:
WWW.SIEMENS.COM/GCG-CODE
NOTE 33 Subsequent events
49.6
In November 2015, Siemens announced the extension of its
seven-year IT outsourcing contract with AtoS through Decem-
ber 2021, with minimum committed volumes increasing by
€3.23 billion to €8.73 billion. Furthermore Siemens announced
the extension of its current lock-up shareholder commitment in
Atos through September 2020.
Consolidated Financial Statements
107
September 30, 2015
Subsidiaries
Germany (113 companies)
Airport Munich Logistics and Services GmbH, Hallbergmoos
100
NOTE 34 List of subsidiaries and associated
companies pursuant to Section 313
para. 2 of the German Commercial Code
Also in November 2015, Siemens announced the sale of its 49%
stake in Unify to Atos. While ownership of the Unify stake has
adversely affected Siemens' financial results in fiscal 2015 and
prior fiscal years, the transaction is not expected to result in a
material effect. Closing of the transaction is subject to the ap-
provals of the regulatory and antitrust authorities. Closing is
expected in the second quarter of fiscal 2016.
Equity interest
in %
51.0
0.2
Compensation attributable to members of the Supervisory
Board comprises in fiscal 2015 and 2014 of a base compensation
and additional compensation for committee work and
amounted to €5.1 million and €5.1 million (including meeting
fees), respectively.
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
combined management report.
In fiscal 2015 and 2014, no other major transactions took place
between the Company and the members of the Managing
Board and the Supervisory Board.
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities. We
have relationships with almost all of these entities in the ordi-
nary course of our business whereby we buy and sell a wide
variety of products and services on arm's length terms.
NOTE 31 Principal accountant fees
and services
Fees related to professional services rendered by the Compa-
ny's principal accountant, EY, for fiscal 2015 and 2014 are:
Fiscal year
(in millions of €)
0.1
2015
Audit services
43.7
43.5
Other attestation services
7.1
5.9
Tax services
0.1
2014
September 30, 2015
Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
Project Ventures Butendiek Holding GmbH, Erlangen
Projektbau-Arena-Berlin GmbH, Grünwald
Siemens Beteiligungen Management GmbH, Grünwald
Siemens Beteiligungen USA GmbH, Berlin
1008
10011
Berliner Vermögensverwaltung GmbH, Berlin
10011
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
10010
BWI Services GmbH, Meckenheim
100
10011
10010
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
10010
Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
DA Creative GmbH, Munich
100
100
Dade Behring Beteiligungs GmbH, Eschborn
100
CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
AXIT GmbH, Frankenthal
100
Atecs Mannesmann GmbH, Erlangen
R&S Restaurant Services GmbH, Munich
REMECH Systemtechnik GmbH, Kamsdorf
RHG Vermögensverwaltung GmbH, Berlin
RISICOM Rückversicherung AG, Grünwald
Samtech Deutschland GmbH, Hamburg
Equity interest
in %
10011
10011
10011
100
10011
100
100
100
Alpha Verteilertechnik GmbH, Cham
10011
Siemens Bank GmbH, Munich
100
Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
1008
Siemens Beteiligungen Inland GmbH, Munich
10011
> Healthcare (HC), a technology supplier to the healthcare in-
dustry with products in medical imaging, laboratory diagnos-
tics and IT solutions,
> Process Industries and Drives (PD), which offers standard
and customized products, systems, solutions and services to
industry sectors,
> Digital Factory (DF), which offers products and solutions for
automation technology and industrial controls sold primarily
to the manufacturing industry,
> Mobility (MO), a provider of passenger and freight transpor-
tation systems and solutions,
13,996
15,666
Power and Gas
2014
2015
Fiscal year
Fiscal year
2014
2015
13,105
Fiscal year
2014
Fiscal year
2014
2015
(in millions of €)
Total revenue
Intersegment Revenue
External revenue
Orders¹
The dilutive earnings per share computation in fiscal 2015 and
2014 does not contain 22,7 million and 21,7 million shares,
respectively, relating to warrants issued with bonds. The inclu-
sion of those shares would have been antidilutive in the years
presented. In the future, the warrants could potentially dilute
basic earnings per share.
2015
6.06
12,668
52
568
578
10,139
11,344
11,210
12,956
Energy Management
5,567
88
5,660
2
5,566
5,658
7,759
6,136
Wind Power and Renewables
12,720
13,193
1
11,922
6.30
NOTE 28
Less: Portion attributable to
Income from continuing operations
2014
2015
(shares in thousands; earnings per share in €)
Fiscal year
NOTE 27 Earnings per share
Consolidated Financial Statements 99
non-controlling interest
359
339
345
34
35
33
34
and general services
Administration
349
Segment information
5,349
(98)
(from continuing operations)
Diluted earnings per share
6.12
6.38
(from continuing operations)
Basic earnings per share
8,485
851,934
832,832
5,292
Weighted average shares outstanding - diluted
843,449
823,408
Weighted average shares outstanding – basic
Effect of dilutive share-based payment
5,159
5,251
attributable to shareholders of Siemens AG
Income from continuing operations
(134)
9,425
10,708
Building Technologies
6,099
(3,772)
1,396
1,298
(2,438)
(2,527)
Reconciliation to
937
1,048
Consolidated Financial Statements
72,396
11,736
12,930
29
3,311
191
3,579
193
69,085
746
855
937
1,048
77,062
Financial Services (SFS)
(3,502)
(2,106)
> Building Technologies (BT), a provider of automation tech-
nologies and services for save, secure and efficient buildings
and infrastructure systems,
> Energy Management (EM), a supplier of products, systems,
solutions, software and services for transmission and distri-
bution of electrical energy and for developing intelligent grid
infrastructure,
> Wind Power and Renewables (WP), a provider of solutions for
on- and offshore wind power,
> Power and Gas (PG), which offers products and solutions for
generating electricity from fossil fuels and for producing and
transporting oil and gas,
As of October 1, 2014, Siemens realigned its organizational struc-
ture. Siemens eliminated the Sector level and arranged its busi-
ness primarily based on its Divisions managing Healthcare sepa-
rately. Instead of the previously six reportable segments composed
of the four Sectors Energy, Healthcare, Industry and Infrastruc-
ture & Cities, and of SFS and Equity Investments, Siemens has
nine reportable segments as of October 1, 2014, being:
DESCRIPTION OF REPORTABLE SEGMENTS
Consolidated Financial Statements
100
(2,475)
It is not part of the Consolidated Financial Statements subject to the audit opinion.
71,227
75,636
-
71,227
75,636
77,657
82,340
Siemens (continuing operations)
1 This supplemental information on Orders is provided on a voluntary basis.
73,483
79,158
83,819
10,014
Digital Factory
7,249
7,508
17
31
7,232
7,477
9,233
9,280
Mobility
5,569
5,999
123
139
5,446
5,860
5,587
10,262
9,030
8,430
926
Industrial Business
35
11,707
12,896
12,126
13,349
Healthcare
9,645
9,894
1,749
1,780
7,896
8,113
9,968
9,337
Process Industries and Drives
9,201
9,956
771
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their
survivors as of September 30, 2015 and 2014 amounted to
€228.3 million and €234.4 million.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€30.5 million (including €9.6 million in connection with the
above mentioned departure from members of the Managing
Board) and €24.2 million (including €7.9 million in connection
with the above mentioned departure from members of the
Managing Board) in fiscal 2015 and 2014.
In fiscal 2015 and 2014, expense related to share-based pay-
ment and to the Share Matching Program amounted to
€8.1 million (including the above mentioned Stock Awards in
connection with the departure from members of the Managing
Board) and 16.1 million (including the above mentioned Stock
Awards in connection with the departure from members of the
Managing Board) respectively.
105
31
219
194
(1,138)
(862)
60,855
58,351
(3,359)
17
(2,219)
450
338
326
7,218
7,306
120,348
104,879
4,984
468
5,278
522
21,970
1,927
346
284
545
529
7,755
7,703
34,522
884
24,559
6,975
1,413
1,331
1,993
1,866
600
466
24,970
7,460
2,048
1,897
2,549
Asset measurement principles:
Management determined Assets (Net capital employed) as a
measure to assess capital intensity of the segments except for
SFS. Its definition corresponds to the Profit measure except for
amortization expenses of intangible assets acquired in busi-
ness combinations which are not part of Profit, however, the
related intangible assets are included in the segments' Assets.
Segment Assets is based on Total assets of the Consolidated
Statements of Financial Position, primarily excluding intra-
group financing receivables, tax related assets and assets of
discontinued operations, since the corresponding positions are
excluded from Profit. Mobility includes in Assets the project-
specific intercompany financing of a long-term project. The re-
maining assets are reduced by non-interest-bearing liabilities
other than tax related liabilities, e.g. trade payables, to derive
Assets. In contrast, Assets of SFS is Total assets.
Orders:
Orders are determined principally as estimated revenue of ac-
cepted purchase orders and order value changes and adjust-
ments, excluding letters of intent.
Free cash flow definition:
Free cash flow of the segments except for SFS constitutes cash
flows from operating activities less additions to intangible as-
sets and property, plant and equipment. It excludes Financing
interest, except for cases where interest on qualifying assets is
capitalized or classified as contract costs and it also excludes
income tax as well as certain other payments and proceeds.
Free cash flow of SFS includes related financing interest pay-
ments and proceeds; income tax payments and proceeds of SFS
are excluded.
Amortization, depreciation and impairments:
Amortization, depreciation and impairments includes depreci-
ation and impairments of property, plant and equipment as
well as amortization and impairments of intangible assets each
net of reversals of impairment.
MEASUREMENT - CENTRALLY MANAGED
PORTFOLIO ACTIVITIES AND SRE:
102 Consolidated Financial Statements
Centrally managed portfolio activities follow the measurement
principles of the segments except for SFS. SRE applies the mea-
surement principles of SFS.
CONSOLIDATED FINANCIAL STATEMENTS
| Profit
(in millions of €)
Fiscal year
2015
2014
Centrally managed portfolio activities
Siemens Real Estate
714
RECONCILIATION TO
1,813
Profit of the segment SFS differs from the other segments since
SFS uses Income before income taxes as a measure of profit.
In contrast to performance measurement principles applied to
other segments interest income and expenses is an important
source of revenue and expense of SFS.
The effect of certain litigation and compliance issues is ex-
cluded from Profit, if such items are not indicative of perfor-
mance. This may also be the case for items that refer to more
than one reportable segment, SRE and (or) Centrally managed
portfolio activities or have a corporate or central character. Costs
for support functions are primarily allocated to the segments.
2,387
Consolidated Financial Statements
101
RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Centrally managed portfolio activities (CMPA) - in gen-
eral, comprises equity stakes held by Siemens that are ac-
counted for by the equity method or as available-for-sale finan-
cial assets and that for strategic reasons are not allocated to a
segment, Siemens Real Estate (SRE), Corporate items or Corpo-
rate Treasury. CMPA also includes activities generally intended
for divestment or closure as well as activities remaining from
divestments and discontinued operations.
Siemens Real Estate (SRE) - manages the Group's entire real
estate business portfolio, operates the properties, and is re-
sponsible for building projects and the purchase and sale of
real estate.
Corporate items - includes corporate charges such as person-
nel costs for corporate headquarters, corporate projects and
non-operating investments or results of corporate-related de-
rivative activities.
Pensions - includes the Company's pension related income
(expense) not allocated to the segments, SRE or Centrally man-
aged portfolio activities.
Profit of the segment SFS:
Eliminations, Corporate Treasury and other reconciling
items comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items and the
activities of the Company's Corporate Treasury. It also includes
interest income and expense, such as, for example, interest not
allocated to segments or Centrally managed portfolio activities
(referred to as financing interest), interest related to Corporate
Treasury activities or resulting consolidation and reconciliation
effects on interest.
-
SEGMENTS
Accounting policies for Segment information are generally the
same as those used for Siemens. Lease transactions, however,
are classified as operating leases for internal and segment re-
porting purposes. Intersegment transactions are based on mar-
ket prices.
Profit
Siemens' Managing Board is responsible for assessing the per-
formance of the segments (chief operating decision maker).
The Company's profitability measure of the segments except
for SFS is earnings before financing interest, certain pension
costs, income taxes and amortization expenses of intangible
assets acquired in business combinations as determined by the
chief operating decision maker (Profit). The major categories of
items excluded from Profit are presented below.
Financing interest, excluded from Profit, is any interest income
or expense other than interest income related to receivables
from customers, from cash allocated to the segments and inter-
est expenses on payables to suppliers. Financing interest is ex-
cluded from Profit because decision-making regarding financ-
ing is typically made at the corporate level.
Decisions on essential pension items are made centrally.
Accordingly, Profit primarily includes amounts related to ser-
vice cost of pension plans only, while all other regularly recur-
ring pension related costs are included in reconciliations in line
item Centrally carried pension expense.
Amortization expenses of intangible assets acquired in busi-
ness combinations are not part of Profit. Furthermore, income
taxes are excluded from Profit since income tax is subject to
legal structures, which typically do not correspond to the struc-
ture of the segments.
MEASUREMENT
10,822
11,153
2,072
350
238
160
6
(346)
(146)
389
552
225
119
132
140
570
(86)
3,929
3,986
691
(105)
145
185
225
1,331
Fiscal year
Fiscal year
Additions to intangible assets
and property, plant & equipment
Fiscal year
Amortization,
depreciation & impairments
Fiscal year
2015
2014
Sep 30, 2015
Sep 30, 2014
1,517
2015
2015
2014
2015
2014
1,426
2,215
8,873
(275)
2014
184
230
212
4,652
1,840
1,454
184
197
277
320
536
4,840
773
2,169
496
732
170
168
248
227
2,184
2,211
1,681
1,738
119
553
511
1,337
1,250
546
544
57
43
86
81
588
532
2,526
2,102
118
353
127
85
126
280
34
205
Corporate items
10,861
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
NOTE 30 Related party transactions
JOINT VENTURES AND ASSOCIATES
Siemens has relationships with many joint ventures and asso-
ciates in the ordinary course of business whereby Siemens
buys and sells a wide variety of products and services generally
on arm's length terms.
and services
Purchases of goods
and services
Sales of goods
17,296
and other income
(in millions of €)
2015
2014
2015
and other expenses
Fiscal year
2014
Joint ventures
365
341
Fiscal year
39
13,565
12,647
41,453
31,981
thereof Germany
11,244
10,781
18,443
18,485
6,748
16,540
6,497
64,392
60,446
57,194
52,742
34,705
25,484
therein U.S.
15,263
thereof foreign countries
71,227
23
687
638
255
280
280
1,015
327
As of September 30, 2015 and 2014, guarantees to joint ven-
tures and associates amounted to €2,145 million and
€2,263 million, respectively, including the HERKULES obliga-
tions of €1,090 million and €1,490 million, respectively. As of
September 30, 2015 and 2014, guarantees to joint ventures
amounted to €472 million and €593 million, respectively. As of
September 30, 2015 and 2014, the Company had commitments
to make capital contributions of €38 million and €107 million to
its joint ventures and associates, therein €26 million and
€56 million related to joint ventures, respectively. For a loan
raised by a joint venture, which is secured by a Siemens guar-
antee, Siemens granted an additional collateral. As of Septem-
ber 30, 2015 and 2014 the outstanding amount totaled to
€124 million and €129 million, respectively. As of September 30,
2015 and 2014 there were loan commitments to joint ventures
and associates amounting to €134 million and €52 million, re-
spectively, therein €58 million and €52 million, respectively
related to joint ventures.
RELATED INDIVIDUALS
82
In fiscal 2015 and 2014, members of the Managing Board re-
ceived cash compensation of €19.6 million and €17.9 million.
The fair value of stock-based compensation amounted to
€7.9 million and €10.7 million for 113,281 and 170,444 Stock
Awards, respectively, in fiscal 2015 and 2014. In fiscal 2015 and
2014, the Company granted contributions under the BSAV to
members of the Managing Board totaling €4.8 million and
€5.1 million.
Therefore in fiscal 2015 and 2014, compensation and benefits,
attributable to members of the Managing Board amounted to
€32.2 million and €33.7 million in total, respectively.
In connection with the mutually agreed-upon termination of
Prof. Dr. Hermann Requardt's activity on the Managing Board as
of January 31, 2015, it was agreed that his current employment
contract with the Company would terminate as of Septem-
ber 30, 2015. The entitlements agreed upon under the contract
remained in effect until that date. A gross compensatory pay-
ment of €1,888,566 and a one-time special contribution of
€279,552 to the BSAV were agreed upon with Prof. Dr. Hermann
Requardt in connection with the mutually agreed-upon prema-
ture termination of his Managing Board membership. The
86,281 Stock Awards already granted and for which the restric-
tion period is still in effect, will be maintained, in accordance
with the terms of his employment contract, and will be settled
in cash at the closing price of Siemens stock in Xetra trading on
September 30, 2015 (€79.94). The respective fair value of the
Stock Awards already granted in the past at grant date
amounted to €5.77 million. The Stock Awards for fiscal 2015 are
included in the above mentioned stock-based compensation
amount. In addition, non-monetary benefits were covered by a
payment amounting to 5% of the compensatory payment. The
Company also reimbursed Prof. Dr. Requardt for out-of-pocket
expenses of €5,000 plus value-added tax.
In fiscal 2014, in compensation for the forfeiture of stock, pen-
sion benefits, health benefits and transitional remuneration from
her former employer, the Supervisory Board granted Ms. Davis a
one-time amount of €5.5 million. This amount was provided 20%
in cash, 30% in the form of Siemens Stock Awards and the re-
maining 50% as a special contribution to the pension plan.
In fiscal 2014, the following settlements have been agreed in
connection with termination of Managing Board memberships:
As Barbara Kux's appointment to the Managing Board expired
regularly on November 16, 2013, no compensatory payments
were agreed upon. The 51,582 Stock Awards already granted in
the past for fiscal 2011, 2012 and 2013, for which the restriction
period was still running, were maintained, in accordance with
the terms of her contract with the Company. The respective fair
value of these Stock Awards at grant date amounted to
€3.47 million.
In connection with the mutually agreed termination of Peter Y.
Solmssen's activity on the Managing Board as of December 31,
2013, it was agreed that his contract with the Company would
remain in effect until March 31, 2015. The entitlements agreed
under the contract remained in effect until that date. These did
not include the fringe benefits under the contract, particularly
the Company car and contributions toward the cost of insur-
ance, which was covered until the contract ends by a monthly
lump-sum payment of €11,500. The 51,582 Stock Awards al-
ready granted in the past for fiscal 2011, 2012 and 2013, for
which the restriction period was still in progress, were main-
tained. The respective fair value of these Stock Awards at grant
date amounted to €3.47 million. Mr. Solmssen was also reim-
bursed for relocation costs, in accordance with the commit-
ment he received when he took office. The Company further-
more reimbursed Mr. Solmssen for out-of-pocket expenses of
€100,000 plus value-added tax.
In connection with the mutually agreed termination of
Dr. Michael Süẞ's activity on the Managing Board as of May 6,
2014, it was agreed that his current contract with the Company
would terminate as of September 30, 2014. The entitlements
agreed under the contract remained in effect until that date.
Dr. Süẞ received a compensatory payment in the gross amount
of €4.3 million in connection with the mutually agreed prema-
ture termination of his activity as a member of the Managing
Board, together with a one-time special contribution of
€0.8 million to the BSAV, credited in January 2015. It was also
agreed with Dr. Süß that the long-term stock-based compensa-
tion (8,126 Stock Awards) for fiscal 2014 were calculated once
the actual target attainment was available, and were granted at
the usual date. The 46,399 Stock Awards already granted in the
past and those for fiscal 2014, for which the restriction period
was still running, were maintained (54,525 Stock Awards), in
accordance with the terms of his contract with the Company,
and were settled in cash in September 2015 at the closing price
of Siemens stock in Xetra trading on May 6, 2014 (€93.91). The
respective fair value of the Stock Awards already granted in the
past at grant date amounted to €3.16 million. The Stock Awards
for fiscal 2014 were included in the above mentioned stock-
based compensation amount. Dr. Süß agreed not to take up ac-
tivities for any significant competitor of Siemens for a period of
one year after the end of his employment contract - that was,
until September 30, 2015. For this post-contractual non-compete
commitment, he has been paid a monthly total of gross €65,000.
Consolidated Financial Statements
104 Consolidated Financial Statements
Associates
113
377
732
197
165
1,052
1,074
236
188
Liabilities
72
Sep 30,
2014
Sep 30,
(in millions of €)
2015
2014
2015
Joint ventures
Associates
167
198
Receivables
75,636
71,227
75,636
1,322
2,116
4,895
4,696
Assets Corporate items and pensions
(2,007) (1,779)
Asset-based adjustments:
Intragroup financing receivables
Assets Centrally managed portfolio activities
Assets Siemens Real Estate
and investments
42,129
Tax-related assets
3,103
3,781
Liability-based adjustments
42,282
37,779
Eliminations, Corporate Treasury, other items
Reconciliation to
45,576
(34,315)
Sep 30,
2014
(in millions of €)
(709)
(446)
Centrally carried pension expense
(440)
(393)
Amortization of intangible assets
acquired in business combinations
(543)
2015
(498)
(365)
(48)
Consolidated Financial Statements
(1,138)
(862)
In fiscal 2015, Corporate items included €196 million in sever-
ance charges for corporate reorganization of support functions.
In fiscal 2014, Profit includes a one-time effect of €186 million
regarding insurance matters, which were mainly included in
Eliminations.
In fiscal 2015 and 2014, Profit of SFS includes interest income
of €1,086 million and €966 million, respectively and interest
expenses of €340 million and €336 million, respectively.
Assets
Eliminations, Corporate Treasury,
and other reconciling items
Reconciliation to
(30,372)
Consolidated Financial Statements
60,855
42,145
20,085
17,053
Americas
21,702
18,494
21,440
18,173
42,432
18,577
Asia, Australia
15,135
14,283
11,765
10,909
2,791
Profit
Siemens
12,175
38,449
38,799
Europe, C.I.S., Africa, Middle East
58,351
Consolidated Financial Statements
103
NOTE 29 Information about geographies
Revenue by location
of customer
Revenue by location
of companies
Fiscal year
Fiscal year
Non-current
assets
Sep 30,
(in millions of €)
2015
2014
2015
2014
2015
2014
242
33
31
32
Granted
610,771
609,758
Vested and fulfilled
(548,947)
(437,989)
1,733,497
(85,056)
(71,164)
(63,055)
Outstanding, end of period
1,655,780
1,750,176
Forfeited
(92,035)
Settled
1,750,176
2014
Free cash flow
SHARE MATCHING PROGRAM AND
ITS UNDERLYING PLANS
In fiscal 2015, Siemens issued a new tranche under each of the
plans of the Share Matching Program.
Share Matching Plan
Under the Share Matching Plan senior managers may invest a
specified part of their variable compensation in Siemens
shares (investment shares). The shares are purchased at the
market price at a predetermined date in the second quarter.
Plan participants receive the right to one Siemens share with-
out payment of consideration (matching share) for every three
investment shares continuously held over a period of about
three years (vesting period) provided the plan participant has
been continuously employed by Siemens until the end of the
vesting period.
Outstanding, beginning of period
Monthly Investment Plan
Base Share Program
Under the Base Share Program employees of Siemens AG and
participating domestic Siemens companies may invest a fixed
amount of their compensation in Siemens shares, sponsored
by Siemens with a tax beneficial allowance. The shares are
bought at market price at a predetermined date in the second
quarter and grant the right to receive matching shares under
the same conditions applying to the Share Matching Plan de-
scribed above. The fair value of the Base Share Program equals
the amount of the tax beneficial allowance sponsored by
Siemens and totaled €33 million and €32 million in fiscal 2015
and 2014, respectively.
Resulting Matching Shares
The fair value of matching shares granted in fiscal 2015 and
2014 amounting to €69.43 and €73.00 per share was deter-
mined as the market price of Siemens shares less the present
value of expected dividends taking into account non-vesting
conditions.
Fiscal year
2015
Under the Monthly Investment Plan employees other than se-
nior managers may invest a specified part of their compensa-
tion in Siemens shares on a monthly basis over a period of
twelve months. Shares are purchased at market price at a pre-
determined date once a month. If the Managing Board decides
that shares acquired under the Monthly Investment Plan are
transferred to the Share Matching Plan, plan participants will
receive the right to matching shares under the same conditions
applying to the Share Matching Plan described above. The
Managing Board decided that shares acquired under the
tranches issued in fiscal 2014 and 2013 are transferred to the
Share Matching Plan as of February 2015 and February 2014,
respectively.
JUBILEE SHARE PROGRAM
Assets
NOTE 26 Personnel costs
2015
2014
2015
2014
Manufacturing and services
Sales and marketing
208
(in thousands)
214
67
67
68
71
Research and development
For their 25th and 40th service anniversary eligible employees
receive jubilee shares. There were 4.46 million and 4.56 million
entitlements to jubilee shares outstanding as of September 30,
2015 and 2014, respectively.
220
Continuing
and discontinued
operations
Fiscal year
212
Continuing
operations
Wages and salaries
(in millions of €)
Fiscal year
Statutory social welfare contributions
and expenses for optional support
Expenses relating to post-employment
benefits
|
Fiscal year
2014
22,611
2015
3,404
3,190
1,163
27,177
1,040
24,161
Severance charges amount to €804 million in fiscal 2015.
Item Expenses relating to post-employment benefits includes
service costs for the period. Personnel costs for continuing
and discontinued operations amount to €27,584 million and
€25,533 million, respectively, in fiscal 2015 and 2014, respec-
tively. Employees were engaged in (averages; part time em-
ployees are included proportionally):
19,931
51
Camstar Systems (Hong Kong) Limited, Hong Kong/Hong Kong
Asia Care Holding Limited, Hong Kong/Hong Kong
1008
Dresser-Rand & Enserv Services Sdn. Bhd.,
Kuala Lumpur/Malaysia
492,8
100
Siemens Industry Software Limited, Hong Kong/Hong Kong
100
SAMTECH HK Ltd, Hong Kong/Hong Kong
100
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
100
100
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
Camstar Systems Sdn. Bhd., Penang/Malaysia
100
100
100
Siemens K.K., Tokyo/Japan
Siemens Ltd., Hong Kong/Hong Kong
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
100
Dresser-Rand Korea, Ltd., Chungnam-do/Korea, Republic of
100
Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
Hangzhou/China
Smart Metering Solutions (Changsha) Co. Ltd.,
Changsha/China
100
60
Siemens Industry Software Ltd., Seoul/Korea, Republic of
100
Trench High Voltage Products Ltd., Shenyang, Shenyang/China
65
Siemens Ltd. Seoul, Seoul/Korea, Republic of
Siemens Energy Solutions Limited, Seoul/Korea, Republic of
100
100
Hong Kong/Hong Kong
Powerplant Performance Improvement Ltd., New Delhi/India
Preactor Software India Private Limited, Bangalore/India
501
CSI Services Pte. Ltd., Singapore/Singapore
100
100
Siemens Healthcare Pte. Ltd., Singapore/Singapore
100
100
Siemens Convergence Creators Private Limited, Mumbai/India
Siemens Financial Services Private Limited, Mumbai/India
Siemens Healthcare Private Limited, Mumbai/India
Siemens Industry Software Pte. Ltd., Singapore/Singapore
100
100
1008
Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
Singapore/Singapore
100
Siemens Industry Software (India) Private Limited,
New Delhi/India
100
Siemens Postal, Parcel & Airport Logistics Limited,
Siemens, Inc., Manila/Philippines
100
100
HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
100
100
100
100
100
100
100
100
LMS India Engineering Solutions Pvt Ltd, Chennai/India
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
New Delhi/India
Siemens Healthcare Limited, Auckland/New Zealand
Siemens Healthcare Inc., Manila/Philippines
Siemens Power Operations, Inc., Manila/Philippines
Siemens Wiring Accessories Shandong Ltd., Zibo/China
1008
Dresser-Rand India Private Limited, Mumbai/India
100
PT. Siemens Industrial Power, Kota Bandung/Indonesia
Acrorad Co., Ltd., Okinawa/Japan
100
116 Consolidated Financial Statements
Equity interest
September 30, 2015
in %
September 30, 2015
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen/China
Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
100
Siemens Ltd., Mumbai/India
Equity interest
in %
75
100
70
Siemens Postal and Parcel Logistics Technologies
Private Limited, Mumbai/India
1008
11 Exemption pursuant to Section 264 (3) German Commercial Code.
10 Exemption pursuant to Section 264b German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
Not consolidated due to immateriality.
100
75
Siemens Eco-City Innovation Technologies (Tianjin) Co., Ltd.,
Tianjin/China
Siemens Real Estate Management (Beijing) Ltd., Co.,
Beijing/China
100
60
Siemens Sensors & Communication Ltd., Dalian/China
Siemens Special Electrical Machines Co. Ltd., Changzhi/China
Siemens Standard Motors Ltd., Yizheng/China
100
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
6
No significant influence due to contractual arrangements or legal circumstances.
8
1 Control due to a majority of voting rights.
77
100
Siemens Postal Parcel & Airport Logistics Private Limited,
Mumbai/India
90
Siemens Pte. Ltd., Singapore/Singapore
60
63
Siemens Transformer (Wuhan) Company Ltd., Wuhan City/China
100
Dresser Rand Japan K.K., Tokyo/Japan
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
100
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
Siemens Wind Power Blades (Shanghai) Co., Ltd.,
Siemens Japan Holding K.K., Tokyo/Japan
100
Shanghai/China
Siemens Venture Capital Co., Ltd., Beijing/China
Siemens Japan K.K., Tokyo/Japan
63
100
100
Siemens Surge Arresters Ltd., Wuxi/China
100
Siemens Rail Automation Pvt. Ltd., Mumbai/India
100
Siemens Switchgear Ltd., Shanghai, Shanghai/China
55
Guangzhou/China
Siemens Technology and Services Private Limited,
Mumbai/India
100
90
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Siemens Transformer (Guangzhou) Co., Ltd.,
PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
100
Consolidated Financial Statements
Siemens Rail Automation Pte. Ltd., Singapore/Singapore
Electrogas Malta Limited, St. Julian's/Malta
33
Magazino GmbH, Munich
50
Maschinenfabrik Reinhausen GmbH, Regensburg
26
Energie Electrique de Tahaddart S.A., Tanger/Morocco
Buitengaats C.V., Amsterdam/Netherlands
259
20
MeVis BreastCare GmbH & Co. KG, Bremen
49
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
499
OWP Butendiek GmbH & Co. KG, Bremen
23
Power Vermögensbeteiligungsgesellschaft mbH Die Erste,
Hamburg
207
509
Ludwig Bölkow Campus GmbH, Taufkirchen
Temir Zhol Electrification LLP, Astana/Kazakhstan
Metropolitan Transportation Solutions Ltd., Rosh HaAyin/Israel
20
IFTEC GmbH & Co. KG, Leipzig
50
Transfima GEIE, Milan/Italy
429
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
49
40
499
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
409
VAL 208 Torino GEIE, Milan/Italy
865,9
LIB Verwaltungs-GmbH, Leipzig
509
Transfima S.p.A., Milan/Italy
499
Buitengaats Management B.V., Eemshaven/Netherlands
Infraspeed Maintainance B.V., Zoetermeer/Netherlands
Unify Holdings B.V., Amsterdam/Netherlands
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
46
000 UniPower Transmission Solutions,
Transrapid International Verwaltungsgesellschaft mbH i.L., Berlin
509
Region Moscow Krasnogorsky District/Russian Federation
50
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
655,9
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
118 Consolidated Financial Statements
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
209
Symeo GmbH, Neubiberg
000 Transconverter, Moscow/Russian Federation
49
50
PTZ Partikeltherapiezentrum Kiel Management GmbH,
Wiesbaden
ZeeEnergie C.V., Amsterdam/Netherlands
207
509
Siemens EuroCash, Munich
26
359
87
209
339
Siemens Venture Capital Fund 1 GmbH, Munich
1005,9
Rousch (Pakistan) Power Ltd., Lahore/Pakistan
Sternico GmbH, Wendeburg
207,9
ZeeEnergie Management B.V., Eemshaven/Netherlands
Wirescan AS, Torp/Norway
48
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
Vassiliko/Greece
FEAG Fertigungscenter für Elektrische Anlagen GmbH,
Erlangen
Siemens Healthcare Limited, Taichung/Taiwan,
ubimake GmbH, Berlin
Province of China
1008
Veja Mate Offshore Project GmbH, Hamburg
Siemens Industry Software (TW) Co., Ltd., Taipei/Taiwan,
Province of China
Voith Hydro Holding GmbH & Co. KG, Heidenheim
September 30, 2015
100
Equity interest
in %
50
41
35
359
Siemens Ltd., Taipei/Taiwan, Province of China
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
100
in %
Equity interest
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
September 30, 2015
6
8
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens Rail Automation Technical Consulting Services
(Beijing) Co. Ltd., Beijing/China
117
No significant influence due to contractual arrangements or legal circumstances.
Dresser-Rand (Thailand) Limited, Rayong/Thailand
100
Siemens Healthcare Limited, Bangkok/Thailand
479
BELLIS GmbH, Braunschweig
499
A2SEA A/S, Fredericia/Denmark
49
BWI Informationstechnik GmbH, Meckenheim
505
Meomed s.r.o., Prerov/Czech Republic
Noliac A/S, Kvistgaard/Denmark
Caterva GmbH, Pullach i. Isartal
50
Compagnie Electrique de Bretagne, S.A.S., Paris/France
40
TRIXELL S.A.S., Moirans/France
25
499
249
259
ATS Projekt Grevenbroich GmbH, Schüttorf
20
100
Siemens Limited, Bangkok/Thailand
99
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (55 companies)
Arelion GmbH, Pasching b. Linz/Austria
259
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
Siemens Ltd., Ho Chi Minh City / Viet Nam
1008
100
Aspern Smart City Research GmbH, Vienna/Austria
Aspern Smart City Research GmbH & Co KG, Vienna/Austria
E-Mobility Provider Austria GmbH, Vienna/Austria
449
44
239
Associated companies and joint ventures
OIL AND GAS PROSERV LLC, Baku/Azerbaijan
259
Germany (27 companies)
T-Power NV, Brussels/Belgium
100
100
100
Siemens Power Plant Automation Ltd., Nanjing/China
DE/United States
100
Siemens Postal, Parcel & Airport Logistics LLC, Wilmington,
Dresser-Rand International Inc., Wilmington, DE/United States
100
DE/United States
100
100
Dresser-Rand LLC, Wilmington, DE/United States
Siemens Power Generation Service Company, Ltd.,
Dresser-Rand Power LLC, Wilmington, DE/United States
100
Wilmington, DE/United States
100
Dresser-Rand Services, LLC, Wilmington, DE/United States
100
100
Siemens Product Lifecycle Management Software Inc.,
DE/United States
Siemens Molecular Imaging, Inc., Wilmington,
Dresser-Rand Energy Services LLC, Wilmington, DE/United States
Dresser-Rand Global Services, Inc., Wilmington,
DE/United States
100
Siemens Healthcare Diagnostics Inc., Los Angeles,
CA/United States
100
100
Siemens Industry, Inc., Wilmington, DE/United States
Dresser-Rand International Holdings, LLC, Wilmington,
100
100
Siemens Medical Solutions USA, Inc., Wilmington,
Dresser-Rand Holding (Luxembourg) LLC, Wilmington,
DE/United States
100
DE/United States
100
Dresser-Rand Group Inc., Wilmington, DE/United States
100
eMeter Corporation, Wilmington, DE/United States
Wilmington, DE/United States
Omnetric Corp., Wilmington, DE/United States
100
MD/United States
100
P.E.T.NET Houston, LLC, Austin, TX/United States
51
PETNET Indiana LLC, Indianapolis, IN/United States
Wheelabrator Air Pollution Control Inc., Baltimore,
501
100
PETNET Solutions Cleveland, LLC, Wilmington,
DE/United States
Engines Rental, S.A., Montevideo/Uruguay
100
63
Siemens S.A., Montevideo/Uruguay
100
Winergy Drive Systems Corporation, Wilmington,
DE/United States
100
100
100
100
Guascor Inc., Baton Rouge, LA/United States
100
Siemens Public, Inc., Wilmington, DE/United States
100
IBS America, Inc., Wilmington, DE/United States
100
Nimbus Technologies, LLC, Bingham Farms, MI/United States
Siemens USA Holdings, Inc., Wilmington, DE/United States
Mannesmann Corporation, New York, NY/United States
100
SMI Holding LLC, Wilmington, DE/United States
100
NEM USA Corp., Wilmington, DE/United States
100
Synchrony, Inc., Glen Allen, VA/United States
100
PETNET Solutions, Inc., Knoxville, TN/United States
Siemens Government Technologies, Inc., Wilmington,
DE/United States
Dresser-Rand Company, Bath, NY/United States
Siemens Industry Software Ltd., Ontario/Canada
100
Siemens, S.A. de C.V., México, D.F./Mexico
100
Siemens Postal, Parcel & Airport Logistics Ltd.,
Oakville/Canada
Siemens S.A., Managua/Nicaragua
100
100
100
Siemens Transformers Canada Inc., Trois-Rivières/Canada
Trench Ltd., Saint John/Canada
100
Panama City/Panama
100
100
Siemens S.A., Panama City/Panama
100
Siemens Healthcare Diagnostics Panama, S.A.,
Wheelabrator Air Pollution Control (Canada) Inc.,
Ontario/Canada
Siemens Servicios S.A. de C.V., México, D.F./Mexico
Siemens Healthcare Limited, Oakville/Canada
100
Siemens Ltda., São Paulo/Brazil
100
Siemens Healthcare Servicios S de RL de CV, México,
D.F./Mexico
1008
Dresser-Rand Canada, Inc., Calgary/Canada
100
1008
Siemens Canada Limited, Ontario/Canada
Siemens Industry Software, SA de CV, México, D.F./Mexico
Siemens Inmobiliaria S.A. de C.V., México, D.F./Mexico
100
100
Siemens Financial Ltd., Oakville/Canada
100
Siemens Innovaciones S.A. de C.V., México, D.F./Mexico
100
100
100
Siemens Healthcare S.A.C., Surquillo/Peru
100
September 30, 2015
Equity interest
in %
Siemens Fossil Services, Inc., Wilmington,
100
DE/United States
100
in %
D-R Acquisition LLC, Dallas, TX/United States
Siemens Generation Services Company, Wilmington,
D-R International Sales Inc., Wilmington, DE/United States
100
DE/United States
100
D-R Steam LLC, Wilmington, DE/United States
100
100
1008
Couva/Trinidad and Tobago
September 30, 2015
Siemens S.A.C., Lima/Peru
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
Dresser-Rand Trinidad & Tobago Limited,
7 Significant influence due to contractual arrangements or legal circumstances.
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
114
Consolidated Financial Statements
Equity interest
8
100
100
100
Siemens Industrial Automation Ltd., Shanghai,
Siemens Ltd., Bayswater/Australia
100
Shanghai/China
100
Siemens Rail Automation Holding Pty. Ltd., Clayton/Australia
100
100
SIEMENS RAIL AUTOMATION INVESTMENT PTY. LTD.,
Clayton/Australia
84
100
SIEMENS RAIL AUTOMATION PTY. LTD., Clayton/Australia
100
Westinghouse McKenzie-Holland Pty Ltd, Clayton/Australia
Siemens Bangladesh Ltd., Dhaka/Bangladesh
100
Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai China
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Huludao/China
100
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Guangzhou/China
Bayswater/Australia
100
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Bayswater/Australia
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Hangzhou/China
51
100
Siemens High Voltage Switchgear Co., Ltd. Shanghai,
94
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
Shanghai/China
51
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
100
Siemens High Voltage Switchgear Guangzhou Ltd.,
Memcor Australia Pty. Ltd., South Windsor/Australia
100
100
100
100
Siemens International Trading Ltd., Shanghai, Shanghai/China
Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
Tianjin/China
GIS Steel & Aluminum Products Co., Ltd. Hangzhou,
Hangzhou/China
51
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd.,
Wuxi/China
85
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai China
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
100
80
MWB (Shanghai) Co Ltd., Shanghai/China
65
Siemens PLM Software (Shenzhen) Limited, Shenzhen/China
Siemens Power Automation Ltd., Nanjing/China
100
100
Siemens Building Technologies (Tianjin) Ltd., Tianjin/China
Siemens Business Information Consulting Co., Ltd, Beijing/China
Siemens Circuit Protection Systems Ltd., Shanghai,
Shanghai/China
70
100
100
Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
Shanghai/China
Shanghai/China
100
Beijing Siemens Automotive E-Drive Systems Co., Ltd.,
Siemens Investment Consulting Co., Ltd., Beijing/China
100
60
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
100
51
Siemens Logistics Automation Systems (Beijing) Co., Ltd,
Beijing/China
Camstar Systems Software (Shanghai) Co. Ltd.,
Shanghai/China
Siemens Ltd., China, Beijing/China
100
100
Siemens Manufacturing and Engineering Centre Ltd.,
DPC (Tianjin) Co., Ltd., Tianjin/China
100
100
Siemens Telecomunicaciones S.A., Montevideo/Uruguay
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
Shanghai/China
1008
1008
100
Siemens Rail Automation, C.A., Caracas/Venezuela,
Siemens Electrical, LLC, Wilmington, DE/United States
100
Bolivarian Republic of
100
Bolivarian Republic of
Siemens Energy, Inc., Wilmington, DE/United States
Siemens Financial Services, Inc., Wilmington, DE/United States
Siemens Financial, Inc., Wilmington, DE/United States
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
100
100
Dade Behring Hong Kong Holdings Corporation,
Tortola/Virgin Islands, British
100
1 Control due to a majority of voting rights.
100
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
Siemens Demag Delaval Turbomachinery, Inc., Wilmington,
DE/United States
100
Siemens Capital Company LLC, Wilmington, DE/United States
100
Via Stylos S.A., Montevideo/Uruguay
1008
Siemens Convergence Creators Corp.,
Wilmington, DE/United States
100
Siemens Healthcare S.A., Caracas/Venezuela,
Dresser-Rand de Venezuela, S.A., Caracas/Venezuela,
Bolivarian Republic of
Siemens Corporation, Wilmington, DE/United States
100
Guascor Venezuela S.A., Caracas/Venezuela,
Siemens Credit Warehouse, Inc., Wilmington,
Bolivarian Republic of
100
DE/United States
100
Exemplar Health (SCUH) Holdings 3 Pty Limited,
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
5 No control due to contractual arrangements or legal circumstances.
100
100
85
Exemplar Health (NBH) Holdings 2 Pty Limited,
Bayswater/Australia
100
Siemens Factory Automation Engineering Ltd., Beijing/China
Siemens Finance and Leasing Ltd., Beijing/China
100
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
Siemens Electrical Drives Ltd., Tianjin/China
100
100
Siemens Financial Services Ltd., Beijing/China
100
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
1008
Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
51
Exemplar Health (NBH) Trust 2, Bayswater/Australia
4 No control due to substantive removal or participation rights held by other parties.
1008
Australia Hospital Holding Pty Limited, Bayswater/Australia
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
100
Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2015
in %
September 30, 2015
in %
Asia, Australia (138 companies)
115
Changzhou, Changzhou/China
Siemens Healthcare Diagnostics, S. de R.L. de C.V., México,
D.F./Mexico
Equity interest
Siemens Industry Software AB, Kista/Sweden
100
Guascor Bioenergía, S.L., Vitoria-Gasteiz/Spain
100
SKR Lager 20 KB, Finspång/Sweden
100
Guascor Borja AIE, Zumaia/Spain
708
Dresser-Rand Sales Company S.A., Freiburg/Switzerland
99
Guascor Explotaciones Energéticas, S.A., Vitoria-Gasteiz/Spain
100
Dresser-Rand Services, S.a.r.l., Freiburg/Switzerland
100
Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
100
Huba Control AG, Würenlos/Switzerland
100
Guascor Isolux AIE, Vitoria-Gasteiz/Spain
608
Siemens Fuel Gasification Technology Holding AG,
Guascor Postensa AIE, Zumaia/Spain
898
100
Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
100
Siemens Industrial Turbomachinery AB, Finspång/Sweden
100
Desimpacte de Purines Altorricón S.A., Altorricón/Spain
Desimpacto de Purines Turégano, S.A., Turégano/Spain
Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
Empresa de Reciclajes de Residuos Ambientales, S.A.,
Vitoria-Gasteiz/Spain
70
Siemens S.A., Madrid/Spain
100
100
Sistemas y Nuevas Energias, S.A, Vitoria-Gasteiz/Spain
1008
100
Telecomunicación, Electrónica y Conmutación S.A.,
Madrid/Spain
100
Zug/Switzerland
678
100
Engines Rental, S.L., Zumaia/Spain
1008
Siemens Financial Services AB, Stockholm/Sweden
100
Enviroil Vasca, S.A., Vitoria-Gasteiz/Spain
100
Siemens Healthcare AB, Stockholm/Sweden
100
Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
100
Siemens AB, Upplands Väsby/Sweden
100
Guascor Power Investigacion y Desarollo, S.A.,
Siemens Healthcare AG, Zurich/Switzerland
Equity interest
September 30, 2015
in %
September 30, 2015
Equity interest
in %
Siemens Power Holding AG, Zug/Switzerland
100
Siemens Healthcare Diagnostics Ltd., Frimley,
Siemens Schweiz AG, Zurich/Switzerland
100
112 Consolidated Financial Statements
Surrey/United Kingdom
Stadt/Land Immobilien AG Zürich, Zurich/Switzerland
100
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley,
Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
Surrey/United Kingdom
100
United Republic of
100
Siemens Healthcare Diagnostics Products Ltd, Frimley,
Siemens S.A., Tunis/Tunisia
100
100
Siemens Renting S.A., Madrid/Spain
11 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
100
Vitoria-Gasteiz/Spain
100
Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
100
Guascor Power, S.A., Zumaia/Spain
100
Siemens Industry Software AG, Zurich/Switzerland
100
Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
100
10 Exemption pursuant to Section 264b German Commercial Code.
Siemens Postal, Parcel & Airport Logistics AG,
1008
Zurich/Switzerland
100
1 Control due to a majority of voting rights.
6 No significant influence due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8
Not consolidated due to immateriality.
Guascor Proyectos, S.A., Madrid/Spain
858
B2B Energía, S.A., Vitoria-Gasteiz/Spain
100
8
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
111
Equity interest
Equity interest
September 30, 2015
in %
7 Significant influence due to contractual arrangements or legal circumstances.
September 30, 2015
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
Guascor Servicios, S.A., Madrid/Spain
100
60
Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
100
Siemens Healthcare s.r.o., Bratislava/Slovakia
100
Siemens Program and System Engineering s.r.o.,
Guascor Solar Operacion and Mantenimiento, S.L.,
Vitoria-Gasteiz/Spain
100
in %
Bratislava/Slovakia
6 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
501
The Hague/Netherlands
501
Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
100
ISCOSA Industries and Maintenance Ltd., Riyadh/Saudi Arabia
Siemens Ltd., Riyadh/Saudi Arabia
51
51
Siemens Ltd., Lagos/Nigeria
100
5 No control due to contractual arrangements or legal circumstances.
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
Dresser-Rand AS, Kongsberg/Norway
100
Siemens d.o.o. Beograd, Belgrade/Serbia
100
Siemens AS, Oslo/Norway
100
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
51
Surrey/United Kingdom
100
100
100
70
Siemens Employee Share Ownership Trust,
Johannesburg/South Africa
Samtech Iberica Engineering & Software Services S.L.,
Barcelona/Spain
100
03
SIEMENS HEALTHCARE, S L, Getafe/Spain
100
Siemens Healthcare Diagnostics (Pty.) Limited,
Siemens Holding S.L., Madrid/Spain
100
Petnet Soluciones, S.L., Sociedad Unipersonal, Madrid/Spain
Isando/South Africa
Siemens Industry Software S.L., Barcelona/Spain
100
Siemens Healthcare Proprietary Limited,
SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
Halfway House/South Africa
100
S.L. Sociedad Unipersonal, Madrid/Spain
100
Axastse Solar, S.L., Vitoria-Gasteiz/Spain
100
Siemens Rail Automation S.A.U., Madrid/Spain
100
Guascor Solar S.A., Vitoria-Gasteiz/Spain
03
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens s.r.o., Bratislava/Slovakia
100
Guascor Wind, S.L., Vitoria-Gasteiz/Spain
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Siemens d.o.o., Ljubljana /Slovenia
100
Siemens Healthcare d.o.o, Ljubljana/Slovenia
100
Dresser-Rand Property (Pty) Ltd., Centurion/South Africa
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
Siemens (Proprietary) Limited, Midrand/South Africa
100
100
100
1008
1008
Dresser-Rand Service Centre (Pty) Ltd., Centurion/South Africa
100
Microenergía Vasca, S.A., Vitoria-Gasteiz/Spain
100
Dresser-Rand Southern Africa (Pty) Ltd., Centurion/South Africa
100
Opción Fotovoltaica 1 S.L., Vitoria-Gasteiz/Spain
Inversiones Analcima 6 S.L., Vitoria-Gasteiz/Spain
Inversiones Analcima 7 S.L., Vitoria-Gasteiz/Spain
Inversiones Ortosa 13 S.L., Vitoria-Gasteiz/Spain
Microenergía 21, S.A., Zumaia/Spain
Termotron Rail Automation Holding B.V.,
100
100
100
Siemens S.A., Santiago de Chile/Chile
100
Siemens S.A., Buenos Aires/Argentina
100
Dresser-Rand Colombia S.A.S., Bogotá/Colombia
100
VA TECH International Argentina SA, Buenos Aires/Argentina
Siemens Soluciones Tecnologicas S.A.,
100
Siemens S.A., Costado Sur - Tenjo/Colombia
100
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
100
Santa Cruz de la Sierra/Bolivia, Plurinational State of
100
Siemens S.A., San José/Costa Rica
100
Chemtech Servicos de Engenharia e Software Ltda.,
Rio de Janeiro/Brazil
Siemens, S.R.L., Santo Domingo/Dominican Republic
100
100
Sociedad Energética Del Caribe, S.R.L.,
Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
Siemens IT Services S.A., Buenos Aires/Argentina
1008
Santiago de Chile/Chile
1008
6
No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
Not consolidated due to immateriality.
8
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
113
Equity interest
Equity interest
100
September 30, 2015
September 30, 2015
in %
Americas (126 companies)
Artadi S.A., Buenos Aires/Argentina
1008
Siemens Healthcare Diagnostics Manufacturing Limited,
Grand Cayman/Cayman Islands
100
Guascor Argentina, S.A., Buenos Aires/Argentina
69
Siemens Healthcare Equipos Médicos Limitada,
Siemens Healthcare S.A., Buenos Aires/Argentina
in %
Higüey/Dominican Republic
Dresser-Rand Comercio e Industria Ltda., Campinas/Brazil
100
Dade Behring, S.A. de C.V., México, D.F./Mexico
100
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
Canoas/Brazil
Dresser-Rand de Mexico S.A. de C.V., Tlalnepantla/Mexico
100
100
Dresser-Rand Services, S. de R.L. de C.V.,
Jaguarí Energética, S.A., Jaguari/Brazil
89
Tlalnepantla/Mexico
Minuano Participações Eólicas Ltda., São Paulo/Brazil
90
75
100
100
OMNETRIC Group Tecnologia e Servicos de Consultoria Ltda.,
Belo Horizonte/Brazil
Indústria de Trabajos Eléctricos S.A. de C.V.,
1008
Ciudad Juárez/Mexico
100
Siemens Eletroeletronica Limitada, Manaus/Brazil
100
Siemens Healthcare Diagnósticos S.A., São Paulo/Brazil
100
Grupo Siemens S.A. de C.V., México, D.F./Mexico
5 No control due to contractual arrangements or legal circumstances.
Guascor Wind do Brasil, Ltda., São Paulo/Brazil
Siemens S.A., Tegucigalpa/Honduras
Siemens S.A., Quito/Ecuador
100
100
Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
Dresser-Rand Participações Ltda., São Paulo/Brazil
100
Siemens Healthcare, Sociedad Anonima,
100
Antiguo Cuscatlán/El Salvador
1008
Guascor do Brasil Ltda., São Paulo/Brazil
85
100
Siemens S.A., San Salvador/El Salvador
Guascor Empreendimentos Energéticos, Ltda.,
Taboão da Serra/Brazil
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
90
Guatemala/Guatemala
100
Guascor Serviços Ltda., Taboão da Serra/Brazil
60
Siemens S.A., Guatemala/Guatemala
100
Guascor Solar do Brasil, Taboão da Serra/Brazil
90
100
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
Cambridgeshire/United Kingdom
Dresser-Rand (U.K.) Limited, Peterborough,
Cambridgeshire/United Kingdom
492
Siemens Industry Software Simulation and Test Limited,
Frimley, Surrey/United Kingdom
100
492
Siemens Pension Funding (General) Limited, Frimley,
Surrey/United Kingdom
100
100
D-R Holdings (UK) Ltd., Peterborough,
Siemens Pension Funding Limited, Frimley,
100
100
Siemens plc, Frimley, Surrey/United Kingdom
100
Siemens Postal, Parcel & Airport Logistics Limited, Frimley,
100
Surrey/United Kingdom
100
Siemens Protection Devices Limited, Frimley,
100
Surrey/United Kingdom
Surrey/United Kingdom
100
D-R Dormant Ltd., Peterborough,
Cambridgeshire/United Kingdom
Siemens Middle East Limited,
Siemens Healthcare Limited, Frimley,
Siemens Healthcare Saglýk Anonim Sirketi, Istanbul/Turkey
Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
1008
Surrey/United Kingdom
1008
100
Siemens Holdings plc, Frimley, Surrey/United Kingdom
100
Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
100
Siemens Industrial Turbomachinery Ltd., Frimley,
Masdar City/United Arab Emirates
100% foreign owned subsidiary "Siemens Ukraine", Kiev/Ukraine
Dresser-Rand Field Operations Middle East LLC,
Surrey/United Kingdom
100
Siemens Industry Software Limited, Frimley,
Abu Dhabi/United Arab Emirates
492
Surrey/United Kingdom
100
Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
100
SD (Middle East) LLC, Dubai/United Arab Emirates
Siemens LLC, Abu Dhabi/United Arab Emirates
100
Siemens Finansal Kiralama A.S., Istanbul/Turkey
Dresser-Rand Company Ltd., Peterborough,
Cambridgeshire/United Kingdom
The Preactor Group Limited, Frimley, Surrey/United Kingdom
100
Samtech UK Limited, Frimley, Surrey/United Kingdom
100
Tronic Ltd., Frimley, Surrey/United Kingdom
100
SBS Pension Funding (Scotland) Limited Partnership,
Edinburgh/United Kingdom
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
573
VA Tech Reyrolle Distribution Ltd., Frimley,
100
Siemens Financial Services Holdings Ltd., Stoke Poges,
100
Buckinghamshire/United Kingdom
100
Siemens Financial Services Ltd., Stoke Poges,
Buckinghamshire/United Kingdom
100
VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
VTW Anlagen UK Ltd., Banbury, Oxfordshire/United Kingdom
Zenco Systems Limited, Frimley, Surrey/United Kingdom
100
100
100
1 Control due to a majority of voting rights.
Surrey/United Kingdom
Siemens Rail Automation Holdings Limited, Frimley,
100
Project Ventures Rail Investments I Limited, Frimley,
Surrey/United Kingdom
100
Surrey/United Kingdom
100
Electrium Sales Limited, Frimley, Surrey/United Kingdom
100
Siemens Rail Automation Limited, Frimley,
GYM Renewables Limited, Frimley, Surrey/United Kingdom
100
Surrey/United Kingdom
100
GYM Renewables ONE Limited, Frimley,
Surrey/United Kingdom
Siemens Rail Systems Project Holdings Limited, Frimley,
100
Surrey/United Kingdom
100
Industrial Turbine Company (UK) Limited, Frimley,
Surrey/United Kingdom
Siemens Rail Systems Project Limited, Frimley,
100
Surrey/United Kingdom
100
Preactor International Limited, Frimley, Surrey/United Kingdom
100
Siemens Transmission & Distribution Limited, Frimley,
Surrey/United Kingdom
100
51
100
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
109
Equity interest
Equity interest
September 30, 2015
in %
September 30, 2015
in %
Samtech SA, Angleur/Belgium
79
Siemens S.A.S., Saint-Denis/France
100
Siemens Healthcare Diagnostics SA, Beersel/Belgium
100
Trench France S.A.S., Saint-Louis/France
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
1 Control due to a majority of voting rights.
10011
Trench Austria GmbH, Leonding/Austria
100
SIMAR Ost Grundstücks-GmbH, Grünwald
10011
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH,
SIMAR Süd Grundstücks-GmbH, Grünwald
10011
Vienna/Austria
100
SIMAR West Grundstücks-GmbH, Grünwald
100
10011
51
SIMOS Real Estate GmbH, Munich
10011
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
Limited Liability Company Siemens Technologies,
Minsk/Belarus
100
10011
Trench Germany GmbH, Bamberg
10011
Dresser-Rand Machinery Repair Belgie N.V.,
Antwerp/Belgium
100
Siemens W.L.L., Manama/Bahrain
Siemens Industry Software NV, Leuven/Belgium
100
Tecnomatix Technologies (Gibraltar) Limited, Gibraltar/Gibraltar
100
Islamic Republic of
97
Siemens d.d., Zagreb/Croatia
100
J. N. Kelly Security Holding Limited, Larnaka/Cyprus
100
Siemens Healthcare Medical Solutions Limited, Swords,
County Dublin/Ireland
1008
OEZ s.r.o., Letohrad/Czech Republic
100
Siemens Convergence Creators d.o.o., Zagreb/Croatia
Siemens Limited, Dublin/Ireland
Siemens Convergence Creators, s.r.o., Prague/Czech Republic
Siemens Electric Machines s.r.o., Drasov/Czech Republic
100
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
100
100
Siemens Industry Software Ltd., Airport City/Israel
100
Siemens Healthcare, s.r.o., Prague/Czech Republic
1008
Siemens Israel Ltd., Tel Aviv/Israel
100
100
52
Siemens Sherkate Sahami (Khass), Teheran/Iran,
Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
100
Siemens Product Lifecycle Management Software II (BE) BVBA,
Anderlecht/Belgium
Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
100
Athens/Greece
100
Siemens S.A./N.V., Beersel/Belgium
100
Siemens Healthcare Industrial and Commercial
Siemens d.o.o. Sarajevo, Sarajevo /Bosnia and Herzegovina
100
51
Société Anonyme, Athens/Greece
Siemens Medicina d.o.o, Sarajevo / Bosnia and Herzegovina
Siemens EOOD, Sofia/Bulgaria
100
evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
100
100
Siemens Healthcare Kft., Budapest/Hungary
100
Siemens Healthcare EOOD, Sofia/Bulgaria
100
Siemens Zrt., Budapest/Hungary
100
100
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
10011
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
Siemens Nixdorf Informationssysteme GmbH, Grünwald
100
Siemens Novel Businesses GmbH, Munich
10011
Siemens Postal, Parcel & Airport Logistics GmbH, Constance
10011
Siemens Power Control GmbH, Langen
10011
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (298 companies)
ESTEL Rail Automation SPA, Algiers/Algeria
51
Siemens Private Finance Versicherungsvermittlungs-
100
Siemens Spa, Algiers/Algeria
gesellschaft mbH, Munich
10011
Siemens S.A., Luanda/Angola
51
Siemens Project Ventures GmbH, Erlangen
10011
Siemens Real Estate GmbH & Co. OHG, Grünwald
10010
ETM professional control GmbH, Eisenstadt/Austria
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
100
100
100
Siemens Real Estate Management GmbH, Grünwald
Weiss Spindeltechnologie GmbH, Schweinfurt
Siemens Medical Solutions Health Services GmbH, Erlangen
Equity interest
September 30, 2015
Siemens Industriegetriebe GmbH, Penig
in %
10011
September 30, 2015
in %
Verwaltung SeaRenergy Offshore Projects GmbH i.L., Hamburg
100
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
10010
Siemens Industry Software GmbH, Cologne
100
10011
51
100
Siemens Insulation Center GmbH & Co. KG, Zwönitz
10010
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
1008
Siemens Liquidity One, Munich
100
VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
943
10011
VIB Verkehrsinformationsagentur Bayern GmbH, Munich
VMZ Berlin Betreibergesellschaft mbH, Berlin
Siemens Industry Software, s.r.o., Prague/Czech Republic
1008
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
100
100
Siemens-Fonds Principals, Munich
100
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
100
Siemens-Fonds S-7, Munich
100
Siemens-Fonds S-8, Munich
100
100
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
Siemens Metals Technologies Vermögensverwaltungs GmbH,
Vienna/Austria
100
100
SIM 16. Grundstücksverwaltungs- und -beteiligungs-
GmbH & Co. KG, Munich
Siemens Personaldienstleistungen GmbH, Vienna/Austria
100
10010
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
10010
Siemens Urban Rail Technologies Holding GmbH,
Vienna/Austria
75
100
Siemens Spezial-Investmentaktiengesellschaft mit TGV, Munich
Siemens-Fonds C-1, Munich
Siemens Venture Capital GmbH, Munich
ITH icoserve technology for healthcare GmbH, Innsbruck/Austria
KDAG Beteiligungen GmbH, Vienna/Austria
69
100
Siemens Technology Accelerator GmbH, Munich
10011
Omnetric GmbH, Vienna/Austria
100
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
Siemens Technopark Mülheim Verwaltungs GmbH, Grünwald
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg Verwaltungs GmbH, Grünwald
Siemens Treasury GmbH, Munich
10010
Siemens Aktiengesellschaft Österreich, Vienna/Austria
100
10011
100
100
10010
100
Siemens Convergence Creators GmbH, Vienna/Austria
Siemens Convergence Creators Holding GmbH, Vienna/Austria
100
100
10011
Siemens Turbomachinery Equipment GmbH, Frankenthal
10011
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
100
Siemens Convergence Creators GmbH, Eisenstadt/Austria
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
100
1008
Siemens Plant Operations Tahaddart SARL, Tanger/Morocco
100
Siemens S.A., Amadora/Portugal
100
Siemens S.A., Casablanca/Morocco
100
Siemens W.L.L., Doha/Qatar
402
Siemens Lda., Maputo/Mozambique
100
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
Siemens Pty. Ltd., Windhoek/Namibia
100
Bucharest/Romania
100
Castor III B.V., Amsterdam/Netherlands
100
Siemens Convergence Creators S.R.L., Brasov/Romania
100
Dresser-Rand B.V., Spijkenisse/Netherlands
100
Siemens Industry Software S.R.L., Brasov/Romania
100
100
Lisbon/Portugal
100
Casablanca/Morocco
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
AXIT Sp. z o.o., Wroclaw / Poland
75
100
Siemens Finance Sp. z o.o., Warsaw/Poland
100
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
100
Tecnomatix Technologies SARL, Luxembourg/Luxembourg
TFM International S.A. i.L., Luxembourg/Luxembourg
100
Siemens Industry Software Sp. z o.o., Warsaw/Poland
Dresser-Rand International B.V., Spijkenisse/Netherlands
100
Siemens Sp. z o.o., Warsaw/Poland
100
Siemens d.o.o. Podgorica, Podgorica/Montenegro
100
Siemens Healthcare Diagnostics, Unipessoal Lda.,
Guascor Maroc, S.A.R.L, Agadir/Morocco
100
Amadora/Portugal
100
SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
100
100
Siemens S.R.L., Bucharest/Romania
100
Leningrad oblast/Russian Federation
100
Siemens Gas Turbine Technologies Holding B.V.,
The Hague/Netherlands
65
Siemens Healthcare Diagnostics B.V., Breda / Netherlands
100
000 Siemens Industry Software, Moscow/Russian Federation
000 Siemens Transformers, Voronezh / Russian Federation
000 Siemens Urban Rail Technologies,
100
100
Siemens Industry Software B.V., 's-Hertogenbosch/Netherlands
100
100
100
Siemens International Holding B.V., The Hague/Netherlands
100
Siemens Finance LLC, Vladivostok/Russian Federation
100
Siemens Medical Solutions Diagnostics Holding I B.V.,
The Hague/Netherlands
Siemens Healthcare Limited Liability Company,
100
Moscow/Russian Federation
1008
Siemens Nederland N.V., The Hague/Netherlands
Moscow/Russian Federation
100
The Hague/Netherlands
000 Siemens Elektroprivod, St. Petersburg/Russian Federation
000 Siemens Gas Turbine Technologies,
Dresser-Rand Services B.V., Spijkenisse/Netherlands
100
SIMEA SIBIU S.R.L., Sibiu/Romania
100
NEM Energy B.V., The Hague/Netherlands
100
NEM Energy Holding B.V., The Hague/Netherlands
100
Obschestwo s ogranitschennoj Otwetstwennostju (in parts)
"Dresser-Rand", Moscow / Russian Federation
100
Omnetric B.V., The Hague/Netherlands
66
100
100
Pollux III B.V., Amsterdam/Netherlands
100
Siemens Diagnostics Holding II B.V., The Hague/Netherlands
100
000 Russian Turbo Machinery, Perm/Russian Federation
000 Siemens, Moscow/Russian Federation
100
100
Siemens Finance B.V., The Hague/Netherlands
100
Siemens Financieringsmaatschappij N.V.,
000 Legion II, Moscow/Russian Federation
100
51
100
100
Siemens Technologies S.A.E., Cairo/Egypt
90
Samtech Italia S.r.I., Milan/Italy
100
Siemens Healthcare Oy, Espoo/Finland
100
Siemens Healthcare Diagnostics S.r.I., Milan/Italy
100
Siemens Osakeyhtiö, Espoo/Finland
100
Officine Solari Kaggio S.r.I., Gela/Italy
Siemens Industry Software S.r.I., Milan/Italy
D-R Holdings (France) S.A.S., Le Havre/France
100
Siemens Postal, Parcel & Airport Logistics S.r.L., Milan/Italy
100
Dresser-Rand S.A., Le Havre/France
100
Siemens Renting S.p.A. in Liquidazione, Milan/Italy
100
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
100
Siemens S.p.A., Milan/Italy
100
100
100
100
Siemens, s.r.o., Prague/Czech Republic
100
Siemens A/S, Ballerup/Denmark
100
Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
Airport City/Israel
100
Siemens Healthcare Diagnostics ApS, Ballerup/Denmark
100
Siemens Industry Software A/S, Ballerup/Denmark
100
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
Denesa Italia, S.R.L., Mirandola/Italy
Siemens Limited for Trading, Cairo/Egypt
100
Siemens Wind Power A/S, Brande/Denmark
100
Dresser-Rand Italia S.r.I., Genoa/Italy
100
NEM Energy Egypt LLC, Alexandria/Egypt
100
Guascor Italia, S.R.L., Mirandola/Italy
100
Siemens Healthcare Diagnostics S.A.E, Cairo/Egypt
100
Officine Solari Aquila S.R.L, Gela/Italy
100
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
PETNET Solutions SAS, Lisses/France
Siemens Transformers S.p.A., Trento/Italy
D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
492
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances.
8
Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
100
10 Exemption pursuant to Section 264b German Commercial Code.
110 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2015
in %
September 30, 2015
in %
D-R Luxembourg Holding 2, SARL, Luxembourg/Luxembourg
D-R Luxembourg Holding 3, SARL, Luxembourg/Luxembourg
D-R Luxembourg International SARL, Luxembourg/Luxembourg
D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
Dresser-Rand Holding (Delaware) LLC, SARL,
Luxembourg/Luxembourg
100
100
Siemens Healthcare Diagnostics AS, Oslo/Norway
Siemens L.L.C., Muscat/Oman
11 Exemption pursuant to Section 264 (3) German Commercial Code.
100
SIEMENS Postal Parcel Airport Logistics S.A.S., Paris/France
100
100
Samtech France SAS, Massy/France
100
Trench Italia S.r.l., Savona/Italy
100
Siemens Financial Services SAS, Saint-Denis/France
100
Siemens Healthcare Limited Liability Partnership,
Siemens France Holding, Saint-Denis/France
100
Almaty/Kazakhstan
Kuwait City/Kuwait
1008
100
Siemens TOO, Almaty/Kazakhstan
100
Siemens Healthcare S.A.S, Saint-Denis/France
100
Siemens Kenya Ltd., Nairobi/Kenya
100
Siemens Industry Software SAS, Vélizy-Villacoublay/France
100
Siemens Electrical & Electronic Services K.S.C.C.,
Siemens Lease Services SAS, Saint-Denis/France
Siemens Healthcare Diagnostics S.A.S., Saint-Denis/France
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
100
Equity interest
Additional Information
127
C.4 Corporate Governance
C.4.1 Management and control structure
Siemens AG is subject to German corporate law. Therefore, it
has a two-tier board structure, consisting of a Managing Board
and a Supervisory Board.
C.4.1.1 SUPERVISORY BOARD
The Supervisory Board of Siemens AG has 20 members. As stip-
ulated by the German Codetermination Act (Mitbestimmungs-
gesetz), half of the members represent Company shareholders,
and half represent Company employees. The employee repre-
sentatives' names are marked below with an asterisk (*). The
present Supervisory Board's term of office will expire at the
conclusion of the Annual Shareholders' Meeting in 2018.
As of September 30, 2015, the Supervisory Board comprised
the following members:
Name
Gerhard Cromme, Dr. iur.
Chairman
Berthold Huber*
First Deputy Chairman
(until January 27, 2015)
Occupation
Chairman of the Supervisory Board
of Siemens AG
Date of birth
Member since
February 25, January 23,
1943
2003
President of IndustriALL Global
Union
February 15,
1950
July 1,
2004
Dr. Gerhard Cromme
Chairman
Gerhard
дремал Сложие
For the Supervisory Board
CORPORATE GOVERNANCE CODE
At the Supervisory Board meeting of July 29, 2015, we con-
cerned ourselves with the amendments made to the German
Corporate Governance Code in the new version of May 5, 2015.
At the subsequent Supervisory Board meeting, on Septem-
ber 23, 2015, the Supervisory Board established a limit of three
complete terms for length of service (15 years) and adjusted
the concrete targets for its composition, which are specified
in chapter → c.4.1 MANAGEMENT AND CONTROL STRUCTURE. We ap-
proved an unqualified Declaration of Conformity in accordance
with Section 161 of the German Stock Corporation Act (Aktien-
gesetz). Information on corporate governance at Siemens is
available in chapter → C.4 CORPORATE GOVERNANCE. Our Decla-
ration of Conformity has been made permanently available to
our shareholders on our website. The current Declaration
of Conformity is also available in chapter → C.4.2 CORPORATE
GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
COMMERCIAL CODE.
WORK IN THE SUPERVISORY BOARD COMMITTEES
The Supervisory Board has established seven standing commit-
tees, which prepare proposals and issues to be dealt with at the
Board's plenary meetings. The Supervisory Board's decision-
making powers have also been delegated to these committees
within the permissible legal framework. The committee chair-
persons report to the Supervisory Board on their committees'
work at the subsequent Board meetings. A list of the members
and a detailed explanation of the tasks of the individual Super-
visory Board committees are contained in chapter → C.4.1 MAN-
AGEMENT AND CONTROL STRUCTURE.
The Chairman's Committee met six times. It also made one
decision by written circulation. Between meetings, I discussed
topics of major importance with the members of the Chair-
man's Committee. The Committee concerned itself, in particu-
lar, with personnel topics and corporate governance issues as
well as with the assumption by Managing Board members of
positions at other companies and institutions.
The Nominating Committee met twice. It prepared recommen-
dations regarding the candidates to be proposed to the Super-
visory Board for a by-election of shareholder representatives at
the Annual Shareholders' Meeting on January 27, 2015, and was
supported in this process by an external personnel consultant. In
searching for and evaluating succession candidates, the Nomi-
nating Committee took into account the requirements of the Ger-
man Stock Corporation Act, the German Corporate Governance
Code and the Bylaws for the Supervisory Board as well as the tar-
gets that the Supervisory Board had set for its own composition.
The Compliance Committee met four times. It primarily dis-
cussed the quarterly reports and the annual report submitted
by the Chief Compliance Officer.
The Mediation Committee was not required to meet.
Membership in supervisory boards whose establishment
is required by law or in comparable domestic or foreign
controlling bodies of business enterprises
The Compensation Committee met four times. It also made
two decisions by written circulation. The Compensation Com-
mittee prepared, in particular, proposals for the full Supervisory
Board regarding the determination of targets for variable com-
pensation, the determination and review of the appropriate-
ness of Managing Board compensation and the approval of the
Compensation Report.
The Audit Committee met six times. In the presence of the
independent auditors as well as the President and Chief Execu-
tive Officer and the Chief Financial Officer, the Committee dis-
cussed the financial statements and the Combined Manage-
ment Report for Siemens AG and the Siemens Group. In
addition, the Audit Committee addressed the half-year and
quarterly financial reports and, in the presence of the indepen-
dent auditors, discussed their audit reviews. The Committee
recommended that the Supervisory Board propose to the An-
nual Shareholders' Meeting the election of Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft as the independent auditors.
The Committee appointed the independent auditors for fiscal
2015, defined the audit focal points and determined the audi-
tors' fee. The Committee monitored the independence and
qualifications of the independent auditors. Furthermore, the
Audit Committee dealt with the Company's financial reporting
and risk management systems and with the effectiveness,
126 Additional Information
resources and findings of the internal audit as well as with
reports concerning potential and pending legal disputes.
DETAILED DISCUSSION OF THE
FINANCIAL STATEMENTS
The independent auditors, Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft, audited the Annual Financial Statements
of Siemens AG, the Consolidated Financial Statements of the
Siemens Group and the Combined Management Report for
Siemens AG and the Siemens Group for fiscal 2015 and issued
an unqualified opinion. The Annual Financial Statements of
Siemens AG and the Combined Management Report for
Siemens AG and the Siemens Group were prepared in accord-
ance with the requirements of German law. The Consolidated
Financial Statements of the Siemens Group were prepared in
accordance with the International Financial Reporting Stand-
ards (IFRS) as adopted by the European Union (EU) and with
the additional requirements of German law set out in Sec-
tion 315a (1) of the German Commercial Code (Handelsgesetz-
buch). These financial statements also comply with the IFRS as
issued by the International Accounting Standards Board (IASB).
The independent auditors conducted their audit in accordance
with Section 317 of the German Commercial Code and in com-
pliance with the generally accepted German standards for the
audit of financial statements promulgated by the Institut der
Wirtschaftsprüfer (IDW) and with the International Standards
on Auditing (ISA). The abovementioned documents as well as
the Managing Board's proposal for the appropriation of net in-
come were submitted to us by the Managing Board in advance.
The Audit Committee discussed the dividend proposal in detail
at its meeting on November 10, 2015. It discussed the Annual
Financial Statements of Siemens AG, the Consolidated Finan-
cial Statements of the Siemens Group and the Combined Man-
agement Report in detail at its meeting on December 1, 2015.
The audit reports prepared by the independent auditors were
distributed to all members of the Supervisory Board and com-
prehensively reviewed at the Supervisory Board's meeting on
December 2, 2015, in the presence of the independent auditors,
who reported on the scope, focal points and main findings of
their audit. No major weaknesses in the Company's internal
control or risk management systems were reported. At this
meeting, the Managing Board explained the financial state-
ments of Siemens AG and the Siemens Group as well as the
Company's risk management system. The Supervisory Board
concurs with the results of the audit. Following the definitive
findings of the Audit Committee's examination and our own
examination, we have no objections. The Managing Board pre-
pared the Annual Financial Statements of Siemens AG and the
Consolidated Financial Statements of the Siemens Group. We
approved the Annual Financial Statements and the Consoli-
dated Financial Statements. In view of our approval, the finan-
cial statements are accepted as submitted. We endorsed the
Managing Board's proposal that the net income available for
distribution be used to pay out a dividend of €3.50 per share
entitled to a dividend and that the amount of net income attrib-
utable to shares of stock not entitled to receive a dividend for
fiscal 2015 be carried forward.
CHANGES IN THE COMPOSITION OF THE
SUPERVISORY AND MANAGING BOARDS
Effective the end of the Annual Shareholders' Meeting on Janu-
ary 27, 2015, Deputy Chairman Berthold Huber, Gerd von Bran-
denstein and Prof. Dr. Peter Gruss resigned from their positions
on the Supervisory Board of Siemens AG. The Supervisory
Board would like to express its appreciation to the members
who have left the Board for their professional commitment and
contributions to the success of the Company as well as for their
many years of loyal support. Dr. Nathalie von Siemens and
Dr. Norbert Reithofer were elected by the 2015 Annual Share-
holders' Meeting to succeed the two departing shareholder rep-
resentatives. At the same time, Reinhard Hahn was appointed
by court order to succeed Mr. Huber on the Supervisory Board.
The Supervisory Board elected Birgit Steinborn to serve as Dep-
uty Chairwoman of the Board.
Prof. Dr. Hermann Requardt resigned from the Managing Board,
effective January 31, 2015. The Supervisory Board would like to
thank him for his many years of successful work as a member
of the Managing Board. Under Prof. Dr. Requardt's leadership,
Siemens' Healthcare business succeeded in further consolidat-
ing its leading position on the world market. The Supervisory
Board appointed Janina Kugel a full member of the Managing
Board, effective February 1, 2015.
On behalf of the Supervisory Board, I would like to thank the
members of the Managing Board as well as the employees and
employee representatives of Siemens AG and all Group compa-
nies for their outstanding commitment and constructive coop-
eration in fiscal 2015.
The Innovation and Finance Committee met four times and
made one decision by written circulation. The focuses of its
meetings included the Committee's recommendation regarding
the budget for fiscal 2015 as well as the preparation and/or
approval of investment and divestment projects. In addition,
the Committee intensively addressed the Company's innova-
tion focuses. At the Committee meeting on July 29, 2015 -
which all Supervisory Board members were invited to attend -
Prof. Dr. Peter Gruss reported, as the Chairman of the recently
established Siemens Technology & Innovation Council, on its
work for the first time. As a precaution, Jim Hagemann Snabe
abstained from voting on proposals submitted by the Innova-
tion and Finance Committee and the Supervisory Board on
November 4 and 5, 2014, respectively, regarding the sale of the
audiology business since he held minor private investments in
the EQT fund involved in the acquisition.
(as of September 30, 2015)
German positions:1
> Audi AG, Ingolstadt (Deputy Chairman)
Prof. Dr. rer. nat.
(until January 27, 2015)
Scientific Member of the
Max Planck Society
June 28,
1949
January 24,
2008
Reinhard Hahn*
Trade Union Secretary of the
Managing Board of IG Metall
June 24,
1956
January 27,
2015
1 As of January 27, 2015.
Peter Gruss,
2
128 Additional Information
German positions:
> Bayer AG, Leverkusen (Chairman)
> E.ON SE, Düsseldorf (Chairman)
> Henkel AG & Co. KGaA, Düsseldorf²
> Henkel Management AG, Düsseldorf
German positions:
> BASF SE, Ludwigshafen am Rhein
(Deputy Chairman)
> Fresenius Management SE, Bad Homburg
> Fresenius SE & Co. KGaA, Bad Homburg
Shareholders' Committee.
of women to men on the Managing Board of Siemens AG at at
least its current level until June 30, 2017. This proportion is 2/7 (or
28.57%) of the Board's members. The Managing Board informed
us about the status of the integration of Dresser-Rand Group Inc.,
which had been acquired, and of the aeroderivative gas turbine
and compressor business acquired from Rolls-Royce. At an execu-
tive session, we discussed the efficiency review of our activities.
January 24,
2008
Supervisory Board Member
> Porsche Automobil Holding SE, Stuttgart
> Volkswagen AG, Wolfsburg (Deputy Chairman)
Birgit Steinborn*
First Deputy Chairwoman
Werner Wenning
Second Deputy Chairman
Olaf Bolduan*
Gerd von Brandenstein
(until January 27, 2015)
Michael Diekmann
Chairwoman of the Central Works
Council of Siemens AG
March 26,
1960
January 24,
2008
Chairman of the Supervisory Boards
of Bayer AG and E.ON SE
March 2,
1942
October 21,
1946
Chairman of the Works Council
of Siemens Dynamowerk, Berlin,
Germany
July 24,
1952
July 11,
2014
Supervisory Board Member
April 6,
1942
January 24,
2008
Supervisory Board Member
December
23, 1954
January 24,
2008
January 23,
2013
(Deputy Chairman)
125
At the Supervisory Board meeting of September 23, 2015, the
Managing Board reported to us on the state of the Company. In
addition, we extended the Managing Board appointments of
Dr. Roland Busch and Klaus Helmrich, effective April 1, 2016 to
March 31, 2021. As part of our regular review, we adjusted the
amount of Managing Board compensation. The Supervisory Board
also set the gender-quota target of maintaining the proportion
Not consolidated due to immateriality.
9
Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11
Exemption pursuant to Section 264 (3) German Commercial Code.
12 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
N/A = No financial data available.
120 Consolidated Financial Statements
C.
Additional Information
C.1 Responsibility Statement
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial State-
ments give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Group, and the Group Manage-
ment Report, which has been combined with the Management
> Siemens Healthcare GmbH, Munich
Munich, November 30, 2015
Siemens Aktiengesellschaft
The Managing Board
Au
Joe Kaeser
2.гл
Dr. Roland Busch
1. Ye
8
7 Significant influence due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
456
8
92
1005,6
49
7,454
744,6
0
0
506
Janina Kugel
N/A
9
(3)
34
7
(36)
810
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
N/A
Report for Siemens Aktiengesellschaft, includes a fair review
of the development and performance of the business and the
position of the Group, together with a description of the
material opportunities and risks associated with the expected
development of the Group.
Shan
Lisa Davis
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the group management report has not led to any reservations.
In our opinion, based on the findings of our audit of the consoli-
dated financial statements and group management report, the
group management report is consistent with the consolidated
financial statements, and as a whole provides a suitable view of
the Group's position and suitably presents the opportunities
and risks of future development.
Munich, November 30, 2015
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
Дения
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
Prof. Dr. Hayn
Wirtschaftsprüfer
[German Public Auditor]
124 Additional Information
We have audited the accompanying group management report,
which is combined with the management report of Siemens
Aktiengesellschaft, for the business year from October 1, 2014
to September 30, 2015. The management of the company is
responsible for the preparation of the group management
report in compliance with the applicable requirements of
German commercial law pursuant to Sec. 315a (1) HGB. We are
required to conduct our audit in accordance with Sec. 317 (2)
HGB and German generally accepted standards for the audit of
the group management report promulgated by the IDW.
Accordingly, we are required to plan and perform the audit of
the group management report to obtain reasonable assurance
about whether the group management report is consistent
with the consolidated financial statements and the audit
findings, and as a whole provides a suitable view of the Group's
position and suitably presents the opportunities and risks of
future development.
C.3 Report of the Supervisory Board
In fiscal 2015, the Supervisory Board performed, in accordance
with its obligations, the duties assigned to it by law, the
Siemens Articles of Association and the Bylaws for the Super-
visory Board. We regularly advised the Managing Board on the
management of the Company and monitored the Managing
Board's activities. We were directly involved at an early stage in
all major decisions regarding the Company. In written and oral
reports, the Managing Board regularly provided us with timely
and comprehensive information on Company planning and
business operations as well as on the strategic development
and current state of the Company. On the basis of reports sub-
mitted by the Managing Board, we considered in detail busi-
ness development and all decisions and transactions of major
significance to the Company. Deviations from business plans
were explained to us in detail and intensively discussed. The
Managing Board coordinated the Company's strategic orienta-
tion with us. The proposals made by the Managing Board were
approved by the Supervisory Board and/or the relevant Super-
visory Board committees after in-depth examination and con-
sultation. In my capacity as Chairman of the Supervisory Board,
I was also in regular contact with the Managing Board and, in
particular, with the President and Chief Executive Officer and
was kept up-to-date on current developments in the Company's
business situation and on key business transactions.
TOPICS AT THE PLENARY MEETINGS
OF THE SUPERVISORY BOARD
We held a total of six regular plenary meetings in fiscal 2015.
In addition, we made one decision outside meetings. Attend-
ance at Supervisory Board meetings by members was 95%.
Topics of discussion at our regular plenary meetings were reve-
nue, profit and employment development at Siemens AG, at the
Company's operating units and at the Siemens Group as well as
the Company's financial situation and profitability. We also con-
cerned ourselves as required with major investment and divest-
ment projects and with particular risks to the Company.
At our meeting of November 5, 2014, we discussed the Compa-
ny's key financial figures for fiscal 2014 and approved the budget
for 2015. On the basis of reported target achievement, we
also defined the compensation of the Managing Board mem-
bers for fiscal 2014. The appropriateness of this compensation
was confirmed by an external review. On the recommendation
of the Compensation Committee, we also approved the targets
for Managing Board compensation for fiscal 2015. On Janu-
ary 27, 2015, the Annual Shareholders' Meeting approved by a
majority of over 92% the remuneration system for the Manag-
ing Board members for fiscal 2015. At our meeting on Novem-
ber 5, 2014, the Managing Board also informed us about its
plans regarding the future setup of Siemens' Healthcare busi-
ness and the implementation of Siemens Vision 2020. At this
meeting, we also approved the sale of the hearing aid business.
On December 3, 2014, we discussed the financial statements
and the Combined Management Report for Siemens AG and
the Siemens Group as of September 30, 2014, and the Annual
Report for 2014, including the Report of the Supervisory Board
and the Corporate Governance Report as well as the agenda for
the Annual Shareholders' Meeting on January 27, 2015. The
Managing Board reported on the current status of acquisitions
and divestments. We also discussed Siemens' compliance sys-
tem and enterprise risk management system.
At our meeting of January 26, 2015, the Managing Board
reported to us on the Company's business and financial posi-
tion following the conclusion of the first quarter. The Super-
visory Board approved the termination by mutual consent of
Prof. Dr. Hermann Requardt's appointment as a member of the
Managing Board, effective January 31, 2015, as well as the ter-
mination agreement regarding his Managing Board employ-
ment contract. Janina Kugel was appointed a full member of
the Managing Board, effective February 1, 2015. We also ap-
proved a reassignment of responsibilities in the Managing
Board. Ms. Kugel was appointed to succeed Prof. Dr. Siegfried
Russwurm as head of Human Resources and Labor Director.
We transferred to Prof. Dr. Russwurm Board-level responsibility
for the separately managed Healthcare business, whereby he
will retain his regional responsibilities for the Middle East and
the CIS as well as his position as Chief Technology Officer. The
Managing Board also reported at this meeting on the further
development of the Power and Gas Division's regional setup.
At our meeting of May 6, 2015, the Managing Board reported on
the Company's business and financial position following the
conclusion of the second quarter as well as on the status of the
implementation of Siemens Vision 2020. We also discussed the
strategic orientation of the Power and Gas Division. In addition,
the Managing Board reported in detail on regional business de-
velopments in China.
At our meeting of July 29, 2015, the Managing Board reported
on the Company's business and financial position following the
conclusion of the third quarter. We also dealt with the business
situation and strategic orientation of the Building Technologies
Division and of the separately managed Healthcare business.
Berlin and Munich, December 2, 2015
Additional Information
REPORT ON THE GROUP MANAGEMENT REPORT
Additional Information
586
Prof. Dr. Siegfried Russwurm
Alaus Helms h
Klaus Helmrich
Миг
wang
Dr. Ralf P. Thomas
122 Additional Information
C.2 Independent Auditor's Report
To Siemens Aktiengesellschaft, Berlin and Munich
123
REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
Management's Responsibility for the
Consolidated Financial Statements
The management of Siemens Aktiengesellschaft is responsible
for the preparation of these consolidated financial statements.
This responsibility includes preparing these consolidated finan-
cial statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union
(EU), the supplementary requirements of German law pursuant
to Sec. 315a (1) HGB ["Handelsgesetzbuch": German Commercial
Code] and full IFRS as issued by the International Accounting
Standards Board (IASB), to give a true and fair view of the net
assets, financial position and results of operations of the group
in accordance with these requirements. The company's man-
agement is also responsible for the internal controls that man-
agement determines are necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consoli-
dated financial statements based on our audit. We conducted
our audit in accordance with Sec. 317 HGB and German gener-
ally accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer [Institute of
Public Auditors in Germany] (IDW) as well as in supplementary
compliance with International Standards on Auditing (ISA).
Accordingly, we are required to comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free
from material misstatement.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor's professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or
error. In assessing those risks, the auditor considers the inter-
nal control system relevant to the entity's preparation of the
consolidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that are
appropriate in the given circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the group's
internal control system. An audit also includes evaluating the
appropriateness of accounting policies used and the reason-
ableness of accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our audit opinion.
Audit Opinion
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the consolidated financial statements has not led to any
reservations.
In our opinion, based on the findings of our audit, the consol-
idated financial statements comply in all material respects
with IFRS as adopted by the EU, the supplementary require-
ments of German commercial law pursuant to Sec. 315a (1)
HGB and full IFRS as issued by the IASB and give a true and
fair view of the net assets and financial position of the Group
as at September 30, 2015 as well as the results of operations
for the business year then ended, in accordance with these
requirements.
We have audited the accompanying consolidated financial
statements of Siemens Aktiengesellschaft, Berlin and Munich,
and its subsidiaries, which comprise the consolidated state-
ments of income, comprehensive income, financial position,
cash flow and changes in equity, and notes to the consolidated
financial statements for the business year from October 1, 2014
to September 30, 2015.
> Linde AG, Munich (Deputy Chairman)
Hans Michael Gaul,
Dr. iur.
> BDO AG Wirtschaftsprüfungsgesellschaft,
Hamburg (Deputy Chairman)
German positions:
Odos Imaging Ltd., Edinburgh/United Kingdom
50
GSP China Technology Co., Ltd., Beijing/China
50
25
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Beijing/China
Lincs Renewable Energy Holdings Limited,
London/United Kingdom
49
Ethos Energy Group Limited, Aberdeen/United Kingdom
Saitong Railway Electrification (Nanjing) Co., Ltd.,
309
50
50
Exemplar Health (NBH) Partnership, Melbourne/Australia
Exemplar Health (SCUH) Partnership, Sydney/Australia
Magellan Technology Pty. Ltd., Annandale/Australia
ChinaInvent (Shanghai) Instrument Co., Ltd, Shanghai/China
33
Cross London Trains Holdco 2 Limited, London/United Kingdom
50
Interessengemeinschaft TUS, Männedorf/Switzerland
50
Certas AG, Zurich/Switzerland
50
219
Tusso Energía, S.L., Sevilla/Spain
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
Nanjing/China
50
259
26
Bangalore International Airport Ltd., Bangalore/India
Transparent Energy Systems Private Limited, Pune/India
P.T. Jawa Power, Jakarta/Indonesia
309
Cia Técnica de Engenheria Eletrica Sucursal Argentina
VA TECH ARGENTINA S.A. Union transitoria de Empresas,
Buenos Aires/Argentina
50
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
Americas (17 companies)
43
509
50
49
50
RWG (Repair & Overhauls) Limited, Aberdeen/United Kingdom
Joint Venture Service Center, Chirchik/Uzbekistan
40
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
349
Pyreos Limited, Edinburgh/United Kingdom
49
Primetals Technologies, Limited, London/United Kingdom
509
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
Xi'An X-Ray Target Ltd., Xi'an/China
Bethel Holdco LLC, Houston, TX/United States
Brockton Power Company LLC, Boston, MA/United States
Brockton Power Holdings Inc., Boston, MA/United States
Brockton Power Properties, Inc., Boston, MA/United States
BuildingIQ, Inc., San Mateo, CA/United States
Asia, Australia (19 companies)
Solucia Renovables 1, S.L., Lebrija/Spain
31
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
219
Powerit Holdings, Inc., Seattle, WA/United States
26
ZAO Systema-Service, St. Petersburg/Russian Federation
259
Power Properties Inc., Boston, MA/United States
409
33
Rether networks, Inc., Berkeley, CA/United States
PhSiTh LLC, New Castle, DE/United States
37
Panda Stonewall Intermediate Holdings I, LLC, Wilmington,
DE/United States
49
in %
September 30, 2015
in %
ZAO Interautomatika, Moscow/Russian Federation
ZAO Nuclearcontrol, Moscow/Russian Federation
000 VIS Automation mit Zusatz „Ein Gemeinschaftsunter-
nehmen von VIS und Siemens", Moscow/Russian Federation
September 30, 2015
Equity interest
46
50
30
359
50
Soleval Renovables S.L., Sevilla/Spain
207,9
Innovex Capital En Tecnologia, C.A., Caracas/Venezuela,
Bolivarian Republic of
515
Barcelona/Spain
Nertus Mantenimiento Ferroviario y Servicios S.A.,
409
Caracas/Venezuela, Bolivarian Republic of
50
Ardora, S.A., Vigo/Spain
Hydrophytic, S.L., Vitoria-Gasteiz/Spain
50
Gate Solar, S.L., Vitoria-Gasteiz/Spain
259
USARAD Holdings, Inc., Fort Lauderdale, FL/United States
509
Explotaciones y Mantenimientos Integrales, S.L., Getxo/Spain
515
Siemens First Capital Commercial Finance, LLC, Wilmington,
DE/United States
509
Desgasificación de Vertederos, S.A, Madrid/Spain
Empresa Nacional Maquinas Eléctricas, S.A.,
67
509
40
1
1005,6
8
(1)
1005,6
72
6
506
2,422
151
18
SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
Siemens Pensionsfonds AG, Grünwald
Siemens Global Innovation Partners I GmbH & Co. KG, Munich
OSRAM Licht AG, Munich
(91)
5
975,6
398
35
1005,6
8
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (6 companies)
SMATRICS GmbH & Co KG, Vienna/Austria
506
(2)
> HSBC Trinkaus & Burkhardt AG, Düsseldorf
German positions:1
> Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München, Munich
Positions outside Germany:1
> Actelion Ltd., Switzerland
German positions:
> Pfleiderer GmbH, Neumarkt
(Deputy Chairman)
3,402
265
12
(1)
84
(2)
Longview Intermediate Holdings B, LLC, Wilmington, DE/United States
¡BAHN Corporation, South Jordan, UT/United States
Guascor México S.A. de CV, México, D.F./Mexico
Americas (3 companies)
Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
Medical Systems S.p.A., Genoa/Italy
ATOS SE, Bezons / France
Dils Energie NV, Hasselt/Belgium
PT Asia Care Indonesia, Jakarta/Indonesia
506
3
1
MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
7 Significant influence due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the key
management personnel.
1 Control due to a majority of voting rights.
409
Bangkok/Thailand
32
Modern Engineering and Consultants Co. Ltd.,
8 Not consolidated due to immateriality.
Cyclos Semiconductor, Inc., Wilmington, DE/United States
Echogen Power Systems LLC, Wilmington, DE/United States
43
Power Automation Pte. Ltd., Singapore/Singapore
209
Advance Gas Turbine Solutions SDN. BHD.,
Kuala Lumpur/Malaysia
259
259
50
Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
23
1005,6
49
9 Not accounted for using the equity method due to immateriality.
32
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Kyros Beteiligungsverwaltung GmbH, Grünwald
10 Exemption pursuant to Section 264b German Commercial Code.
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
(39)
2
1005,6
2
1005,6
Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW), Paderborn
BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
€
€
in millions of
0
in millions of
interest
in %
Equity
Net income
Equity
Germany (9 companies)
Other investments 12
September 30, 2015
119
Consolidated Financial Statements
136 Additional Information
Further information and
information resources
COPIES OF THE ANNUAL REPORT
CAN BE ORDERED AT:
E-mail
Address
siemens@bek-gmbh.de
+49 7237-1736
IS AVAILABLE FROM:
FURTHER INFORMATION ON THE
CONTENTS OF THIS ANNUAL REPORT
For technical reasons, there may be differences between the
accounting records appearing in this document and those pub-
lished pursuant to legal requirements.
Fax
This document is an English language translation of the German
document. In case of discrepancies, the German language doc-
ument is the sole authoritative and universally valid version.
C.4.2.3 OPERATION OF THE MANAGING BOARD
AND THE SUPERVISORY BOARD, AND COMPOSITION
AND OPERATION OF THEIR COMMITTEES
This document includes - in IFRS not clearly defined - supple-
mental financial measures that are or may be non-GAAP financial
measures. These supplemental financial measures should not be
viewed in isolation or as alternatives to measures of Siemens' net
assets and financial positions or results of operations as pre-
sented in accordance with IFRS in its Consolidated Financial
Statements. Other companies that report or describe similarly
titled financial measures may calculate them differently.
This document contains statements related to our future busi-
ness and financial performance and future events or develop-
ments involving Siemens that may constitute forward-looking
statements. These statements may be identified by words such
as "expect," "look forward to," "anticipate" "intend," "plan,"
"believe," "seek," "estimate," "will," "project" or words of similar
meaning. We may also make forward-looking statements in
other reports, in presentations, in material delivered to share-
holders and in press releases. In addition, our representatives
may from time to time make oral forward-looking statements.
Such statements are based on the current expectations and
certain assumptions of Siemens' management, of which many
are beyond Siemens' control. These are subject to a number of
risks, uncertainties and factors, including, but not limited to
those described in disclosures, in particular in the chapter Risks
in this Annual Report. Should one or more of these risks or
uncertainties materialize, or should underlying expectations
not occur or assumptions prove incorrect, actual results, per-
formance or achievements of Siemens may (negatively or
positively) vary materially from those described explicitly or
implicitly in the relevant forward-looking statement. Siemens
neither intends, nor assumes any obligation, to update or
revise these forward-looking statements in light of develop-
ments which differ from those anticipated.
C.5 Notes and forward-looking statements
135
Additional Information
WWW.
SIEMENS.COM/289A
This information and these documents, including the Code
and the Business Conduct Guidelines, are available at:
A general description of the functions and operation of the
Managing Board and the Supervisory Board can be found in
chapter → c.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further
details can be derived from the bylaws for the corporate bodies
concerned.
-
Phone
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to maintain our successful
activities. They contain the basic principles and rules for our
conduct within our Company and in relation to our external
partners and the general public. They set out how we meet our
ethical and legal responsibility as a Company and give expres-
sion to our corporate values of being "Responsible" - "Excel-
lent" "Innovative".
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Fax
0 1 0 1 1 1 0 0 10
10 10 10
Siemens AG
In the 168 years of its existence, our Company has built an ex-
cellent reputation around the world. Technical performance,
innovation, quality reliability, and international engagement
have made Siemens one of the leading companies in electron-
ics and electrical engineering. It is top performance with the
highest ethics that has made Siemens strong. This is what the
Company should continue to stand for in the future.
Order no. CGXX-C10013-00-7600
0101011100101
0100010
001
101 010111
1 0 0 0 1 0 1 1 0 0 0 1 0
0 1 1 1 0 1 0 0 1
0010
siemens.com
© 2015 by Siemens AG, Berlin and Munich
WWW.SIEMENS.COM/INVESTORS
The "Sustainability Information 2015" which reports on
Sustainability and Citizenship at Siemens is available at:
Employees should include their postal address and complete
order data (Org-ID and cost center information) when ordering.
Order no. CGXX-C10013-00-7600
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Our Company's values and
Business Conduct Guidelines
Prof. Dr.-Ing.
Further corporate governance practices applied beyond legal
requirements are contained in our Business Conduct Guide-
> The composition of the Supervisory Board of Siemens AG
shall be such that qualified control and advising for the Man-
aging Board is ensured. The candidates proposed for election
to the Supervisory Board shall have the expertise, skills and
professional experience necessary to carry out the functions
of a Supervisory Board member in a multinational company
and safeguard the reputation of Siemens in public. In partic-
ular, care shall be taken in regard to the personality, integrity,
commitment, professionalism and independence of the indi-
viduals proposed for election. The goal is to ensure that,
in the Supervisory Board, as a group, all know-how and expe-
rience is available that is considered essential in view of
Siemens' activities.
-
The composition of the Supervisory Board is to be such that its
members as a group have the knowledge, skills and profes-
sional experience necessary to carry out its proper functions.
At its meeting on September 23, 2015, the Supervisory Board
adjusted taking into account the recommendations of the
German Corporate Governance Code (Code) - the concrete ob-
jectives for its composition most recently defined in fiscal 2013
and made the following decisions in this regard:
129
Additional Information
> Vaillant GmbH, Remscheid
> Audi AG, Ingolstadt
German positions:
> Danske Bank A/S, Denmark
(Deputy Chairman)
> Bang & Olufsen A/S, Denmark
Positions outside Germany:
> SAP SE, Walldorf
> Allianz SE, Munich
> Taking the Company's international orientation into account,
care shall also be taken to ensure that the Supervisory Board
has an adequate number of members with extensive inter-
national experience. Our goal is to make sure that the pres-
ent considerable share of Supervisory Board members with
extensive international experience is maintained.
German positions:
Positions outside Germany:
> Siemens Healthcare GmbH, Munich
> Messer Group GmbH, Sulzbach
German positions:
Shareholders' Committee.
2
As of January 27, 2015.
1
April 1,
2009
March 3,
1964
Attorney, Bavarian Regional
Headquarters of IG Metall
Sibylle Wankel*
October 1,
2013
October 27,
1965
> Unify Holdings B. V., Netherlands
March 1,
2014
> In its election proposals, the Supervisory Board shall also pay
particular close attention to ensuring diversity. In accordance
with the German Law for Equal Participation of Women and
Men in Management Positions in the Private and Public
Sectors, the Supervisory Board is composed of at least 30 per-
cent women and at least 30 percent men. The Nominating
Committee shall continue to include at least one female
member. Qualified women shall be included during the
initial process of selecting potential candidates for new elec-
tions or for the filling of Supervisory Board positions that
have become vacant, and they shall be given appropriate
consideration in nominations.
representatives in the meaning of Section 5.4.2 of the Code
is achieved. In addition, the Supervisory Board members
shall have sufficient time to be able to devote the necessary
regularity and diligence to their mandate.
The Managing Board prepares the Company's interim reports,
the Annual Financial Statements of Siemens AG, the Consoli-
dated Financial Statements of the Siemens Group and the Com-
bined Management Report of Siemens AG and the Siemens
Group. In addition, the Managing Board must ensure that the
Company adheres to statutory requirements, official regula-
tions and internal Company policies (compliance) and works to
achieve compliance with these provisions and policies within
the Siemens Group. The Managing Board and the Supervisory
Board cooperate closely for the benefit of the Company. The
Managing Board informs the Supervisory Board regularly, com-
prehensively and without delay on all issues of importance to
the Company with regard to strategy, planning, business devel-
opment, financial position, earnings, compliance and risks.
When filling managerial positions at the Company, the Manag-
ing Board takes diversity into consideration and, in particular,
aims for an appropriate consideration of women and inter-
nationality. The Managing Board defines targets for the propor-
tion of women at the two management levels below the
Managing Board.
As the Company's top management body, the Managing Board
is committed to serving the interests of the Company and
achieving sustainable growth in Company value. The members
of the Managing Board are jointly responsible for the entire
management of the Company and decide on the basic issues of
business policy and corporate strategy as well as on the Com-
pany's annual and multi-year plans.
C.4.1.2 MANAGING BOARD
Information on the work of the Supervisory Board is provided
in chapter → c.3 REPORT OF THE SUPERVISORY BOARD. The compen-
sation paid to the members of the Supervisory Board is explained
in chapter A.10 COMPENSATION REPORT.
As of September 30, 2015, the Innovation and Finance Commit-
tee comprised Dr. Gerhard Cromme (chairman), Robert Kens-
bock, Harald Kern, Jürgen Kerner, Dr. Norbert Reithofer, Jim
Hagemann Snabe, Birgit Steinborn and Werner Wenning.
-
The Innovation and Finance Committee discusses, in partic-
ular, based on the Company's overall strategy, the Company's
focuses of innovation and prepares the Supervisory Board's dis-
cussions and resolutions regarding questions relating to the
Company's financial situation and structure – including annual
planning (budget) – as well as the Company's fixed asset in-
vestments and its financial measures. In addition, the Innova-
tion and Finance Committee has been authorized by the Super-
visory Board to decide on the approval of transactions and
measures that require Supervisory Board approval and have a
value of less than €600 million.
As of September 30, 2015, the Mediation Committee comprised
Dr. Gerhard Cromme (chairman), Jürgen Kerner, Birgit Stein-
born and Werner Wenning.
The Mediation Committee submits proposals to the Supervi-
sory Board in the event that the Supervisory Board cannot
reach the two-thirds majority required for the appointment or
dismissal of a Managing Board member.
As of September 30, 2015, the Nominating Committee com-
prised Dr. Gerhard Cromme (chairman), Dr. Hans Michael Gaul,
Dr. Leibinger-Kammüller and Werner Wenning.
The Nominating Committee is responsible for making recom-
mendations to the Supervisory Board on suitable candidates for
election as shareholder representatives on the Supervisory
Board by the Annual Shareholders' Meeting. In preparing these
recommendations, the objectives specified by the Supervisory
Board regarding its composition – including, in particular, inde-
pendence and diversity - are to be taken into account as well as
the required knowledge, abilities and professional experience
of the proposed candidates. Attention shall also be paid to an
appropriate participation of women and men in accordance
with the legal requirements relating to the gender quota.
As of September 30, 2015, the Compliance Committee com-
prised Dr. Gerhard Cromme (chairman), Dr. Hans Michael Gaul,
Bettina Haller, Harald Kern, Dr. Nicola Leibinger-Kammüller,
Jim Hagemann Snabe, Birgit Steinborn and Sibylle Wankel.
132
131
> An adequate number of independent members shall belong
to the Supervisory Board. Material and not only temporary
conflicts of interest, such as organizational functions or advi-
sory capacities with major competitors of the Company, shall
be avoided. Under the presumption that the mere exercise of
Supervisory Board duties as an employee representative
gives no cause to doubt the compliance with the independ-
ence criteria pursuant to Section 5.4.2 of the Code, the
Supervisory Board shall have a minimum of sixteen members
who are independent in the meaning of the Code. In any
case, the Supervisory Board shall be composed in such a
way that a number of at least six independent shareholder
Additional Information
As of September 30, 2015, the Audit Committee comprised
Dr. Hans Michael Gaul (chairman), Dr. Gerhard Cromme, Bettina
Haller, Robert Kensbock, Jürgen Kerner, Dr. Nicola Leibin-
ger-Kammüller, Jim Hagemann Snabe and Birgit Steinborn.
According to the German Stock Corporation Act, the Audit
Committee must include at least one independent Supervisory
Board member with knowledge and experience in the applica-
tion of accounting principles or the auditing of financial state-
ments. The Chairman of the Audit Committee, Dr. Hans
Michael Gaul, fulfills these statutory requirements.
The Audit Committee oversees, in particular, the accounting
process and conducts a preliminary review of the Annual Fi-
nancial Statements of Siemens AG, the Consolidated Financial
Statements of the Siemens Group and the Combined Manage-
ment Report. On the basis of the independent auditors' report
on their audit of the annual financial statements, the Audit
Committee makes, after its preliminary review, recommenda-
tions regarding Supervisory Board approval of the Annual Fi-
nancial Statements of Siemens AG and the Consolidated Finan-
cial Statements of the Siemens Group. In addition to the work
performed by the independent auditors, the Audit Committee
discusses the Company's interim reports, which are prepared
by the Managing Board, as well as the report on the auditors'
review of interim reports. It concerns itself with the Company's
risk monitoring system and oversees the effectiveness of the
internal control system as this relates, in particular, to financial
reporting, the risk management system and the internal audit
system. The Audit Committee receives regular reports from the
Internal Audit Department. It prepares the Supervisory Board's
recommendation to the Annual Shareholders' Meeting con-
cerning the election of the independent auditors and submits
the corresponding proposal to the Supervisory Board. It awards
the audit contract to the independent auditors elected by the
Annual Shareholders' Meeting and monitors the independent
audit of the financial statements - including, in particular, the
auditors' independence, professional expertise and services.
As of September 30, 2015, the Compensation Committee com-
prised Werner Wenning (chairman), Dr. Gerhard Cromme,
Michael Diekmann, Robert Kensbock, Jürgen Kerner and Birgit
Steinborn.
appropriateness of the total compensation of individual
Managing Board members and the approval of the annual
Compensation Report.
The Compensation Committee prepares, in particular, the
proposals for decisions by the Supervisory Board's plenary meet-
ings regarding the system of Managing Board compensation,
including the implementation of this system in Managing Board
contracts, the definition of the targets for variable Managing
Board compensation, the determination and review of the
As of September 30, 2015, the Chairman's Committee comprised
Dr. Gerhard Cromme (chairman), Jürgen Kerner, Birgit Stein-
born and Werner Wenning.
The Chairman's Committee makes proposals, in particular,
regarding the appointment and dismissal of Managing Board
members and handles contracts with members of the Manag-
ing Board. When making recommendations for first-time ap-
pointments, it takes into account that the terms of these ap-
pointments shall not, as a rule, exceed three years. In preparing
recommendations on the appointment of Managing Board
members, the Chairman's Committee takes into account the
candidates' professional qualifications, international experi-
ence and leadership qualities, the age limit specified for Man-
aging Board members, the Managing Board's long-range plans
for succession as well as its diversity. It also takes into account
the targets for the proportion of women on the Managing
Board specified by the Supervisory Board. The Chairman's Com-
mittee concerns itself with questions regarding the Company's
corporate governance and prepares the resolutions to be ap-
proved by the Supervisory Board regarding the Declaration of
Conformity with the Code – including the explanation of devia-
tions from the Code - and regarding the approval of the Corpo-
rate Governance Report as well as the Report of the Supervisory
Board to the Annual Shareholders' Meeting. Furthermore, the
Chairman's Committee submits recommendations to the
Supervisory Board regarding the composition of the Super-
visory Board committees and decides whether to approve
contracts and business transactions with Managing Board
members and parties related to them.
The Supervisory Board has seven committees, whose duties,
responsibilities and procedures fulfill the requirements of the
German Stock Corporation Act (Aktiengesetz) and the Code.
The chairmen of these committees provide the Supervisory
Board with regular reports on their committees' activities.
Board decisions such as those regarding major acquisitions,
divestments, fixed asset investments and financial measures -
require Supervisory Board approval, unless the Bylaws for the
Supervisory Board specify that such authority be delegated to
the Innovation and Finance Committee of the Supervisory
Board. In the Bylaws for the Managing Board, the Supervisory
Board has established the rules that govern the Managing
Board's work.
-
130 Additional Information
The Supervisory Board oversees and advises the Managing
Board in its management of the Company's business. At regular
intervals, the Supervisory Board discusses business develop-
ment, planning, strategy and strategy implementation. It re-
views the Annual Financial Statements of Siemens AG and the
Consolidated Financial Statements of the Siemens Group, the
Combined Management Report of Siemens AG and the Siemens
Group, and the proposal for the appropriation of net income. It
approves the Annual Financial Statements of Siemens AG as
well as the Consolidated Financial Statements of the Siemens
Group, based on the results of the preliminary review con-
ducted by the Audit Committee and taking into account the re-
ports of the independent auditors. The Supervisory Board de-
cides on the Managing Board's proposal for the appropriation
of net income and the Report of the Supervisory Board to the
Annual Shareholders' Meeting. In addition, the Supervisory
Board or the Compliance Committee, which is described in
more detail below, concern themselves with monitoring the
Company's adherence to statutory provisions, official regu-
lations and internal Company policies (compliance). The Super-
visory Board also appoints the members of the Managing Board
and determines each member's portfolios. Important Managing
These objectives for the Supervisory Board's composition have
been fully achieved: a considerable number of Supervisory
Board members are currently engaged in international activi-
ties and/or have many years of international experience. Since
the Supervisory Board election in 2015, the Supervisory Board
has had six female members. Dr. Nicola Leibinger-Kammüller is
a member of the Nominating Committee. The Supervisory
Board has an adequate number of independent members. In
the opinion of the Supervisory Board, a minimum of 16 Super-
visory Board members are independent in the meaning of Sec-
tion 5.4.2 of the Code. Some Supervisory Board members
hold or have held in the past fiscal year - high-ranking posi-
tions at other companies with which Siemens does business.
Transactions between Siemens and such companies are carried
out on an arm's-length basis. We believe that these transactions
do not compromise the independence of the Supervisory Board
members in question. The regulations establishing limits on
age and limiting membership in the Supervisory Board to three
full terms of office (15 years) are complied with.
> The limits on age and length of membership established in
the Bylaws for the Supervisory Board will be taken into con-
sideration. In addition, no more than two former members of
the Managing Board of Siemens AG shall belong to the
Supervisory Board.
The Compliance Committee concerns itself, in particular, with
monitoring the Company's adherence to statutory provisions,
official regulations and internal Company policies.
September
13, 1957
Supervisory Board Member
Chairman of the Committee of
Spokespersons of the Siemens
Group; Chairman of the Central
Committee of Spokespersons of
Siemens AG
April 1,
1949
Chairman of the Board and Chief
Executive Officer of ENGIE
Gérard Mestrallet
January 24,
2008
December
15, 1959
of the Managing Board of
TRUMPF GmbH + Co. KG
President and Chairwoman
January 22,
1969
January 24,
2008
March 16,
1960
January 23,
2013
March 13,
1971
January 27,
2009
March 10,
1952
January 23,
2013
April 1,
2007
Member since
Date of birth
Executive Managing Board Member
of IG Metall
Chairman of the Siemens Europe
Committee
Chairman of the Works Council of
Siemens Erlangen Süd, Germany
Deputy Chairman of the Central
Works Council of Siemens AG
Chairwoman of the Combine Works
Council of Siemens AG
Occupation
Nicola Leibinger-
Kammüller, Dr. phil.
Jürgen Kerner*
Harald Kern*
Robert Kensbock*
Hans-Jürgen Hartung*
Bettina Haller*
Name
March 14,
1959
Membership in supervisory boards whose establishment
is required by law or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2015)
January 25,
2012
German positions:
Jim Hagemann Snabe
Michael Sigmund*
January 27,
2015
July 14,
1971
Managing Director and
Spokesperson of Siemens Stiftung
Nathalie von Siemens,
Dr. phil.
January 23,
2013
August 14,
1955
Chairwoman and Managing
Director of Hacı Ömer Sabancı
Holding A.Ş.
Güler Sabancı
January 27,
2015
May 29,
1956
Chairman of the Supervisory Board
of Bayerische Motoren Werke AG
Norbert Reithofer, Dr.-Ing.
Dr.-Ing. E.h.
> Henkel AG & Co. KGaA, Düsseldorf²
> Bayerische Motoren Werke AG, Munich (Chairman)
German positions:
> Airbus Operations GmbH, Hamburg
> MAN SE, Munich (Deputy Chairman)
> Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
German positions:
> Axel Springer SE, Berlin
> Deutsche Lufthansa AG, Cologne
> Voith GmbH, Heidenheim
Currently, there is one Managing Board committee, the Equity
and Employee Stock Committee. This committee oversees, in
particular, the utilization of authorized capital in connection
with the issuance of employee stock and the implementation
of certain capital measures. It also determines the scope and
conditions of the share-based compensation components and/
or programs for employees and managers (with the exception
of the Managing Board). In fiscal 2015, the committee made
seven decisions by notational voting using written circulations.
Positions outside Germany:
> GDF Suez Energy Management Trading CVBA,
Belgium (Chairman)
> GDF Suez Energie Services S.A., France
(Chairman)
> International Power Ltd., United Kingdom
> Société Générale, France
> Suez Environnement Company S.A., France
(Chairman)
> Electrabel S.A., Belgium (Chairman)
lines.
As of September 30, 2015, the committee comprised Joe Kaeser
(chairman), Janina Kugel and Dr. Ralf P. Thomas.
REPORT.
Additional Information
As of January 31, 2015.
1
(Deputy Chairman)
> Siemens Corp., USA
> Siemens Aktiengesellschaft
Österreich, Austria
Positions outside Germany:
> Siemens Healthcare GmbH,
Munich
German positions:
Saudi Arabia
> VA TECH T&D Co. Ltd.,
> Siemens W.L.L., Qatar
> Siemens Ltd., Saudi Arabia
> Arabia Electric Ltd. (Equipment),
Saudi Arabia
133
Positions outside Germany:
German positions:
> Siemens S. A., Colombia (Chairman)
Japan (Chairman)
> Siemens Japan K. K.,
Japan (Chairman)
> Siemens Japan Holding K. K.,
Positions outside Germany:1
> Siemens Healthcare GmbH,
Munich
German positions:
> Siemens Schweiz AG, Switzerland
(Chairman)
> Siemens (Proprietary) Ltd.,
South Africa (Chairman)
> Siemens AB, Sweden (Chairman)
> Siemens Aktiengesellschaft
Österreich, Austria (Chairman)
> Siemens Corp., USA (Chairman)
Positions outside Germany:
Positions outside Germany:
> Siemens Healthcare GmbH,
Munich
> Siemens Ltd., India
134
As of September 30, 2015, the Managing Board's current mem-
bers held a total of 161,167 Siemens shares representing 0.02%
of the capital stock of Siemens AG, which totaled 881,000,000
shares.
Securities Acquisition and Takeover Act (Wertpapiererwerbs-
und Übernahmegesetz) – is an organizational challenge for
large publicly listed companies. It appears doubtful whether
the associated effort is justified in cases where no relevant
decisions by the shareholders' meeting are intended. There-
fore, extraordinary shareholders' meetings shall be convened
only in appropriate cases.
-
-
Pursuant to Section 3.7 para. 3 of the Code, in the case of a
takeover offer, a management board should convene an
extraordinary general meeting at which shareholders dis-
cuss the takeover offer and may decide on corporate actions.
The convening of a shareholders' meeting – even taking into
account the shortened time limits stipulated in the German
Siemens voluntarily complies with the Code's non-binding
suggestions, with the following exception:
Suggestions of the Code
C.4.2.2 INFORMATION ON CORPORATE
GOVERNANCE PRACTICES
The Managing Board The Supervisory Board"
Siemens Aktiengesellschaft
Berlin and Munich, October 1, 2015
Since making its last Declaration of Conformity dated Octo-
ber 1, 2014, Siemens AG has complied with the recommen-
dations of the Code in the prior version of June 24, 2014.
Siemens AG fully complies and will continue to comply
with the recommendations of the German Corporate
Governance Code ("Code") in the version of May 5, 2015,
published by the Federal Ministry of Justice in the official
section of the Federal Gazette ("Bundesanzeiger").
"Declaration of Conformity by the Managing Board and the
Supervisory Board of Siemens Aktiengesellschaft with the
German Corporate Governance Code
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of Octo-
ber 1, 2015:
C.4.1.3 SHARE OWNERSHIP AND SHARE TRANS-
ACTIONS BY MEMBERS OF THE MANAGING AND
SUPERVISORY BOARDS
C.4.2.1 DECLARATION OF CONFORMITY WITH THE
GERMAN CORPORATE GOVERNANCE CODE
C.4.2 Corporate Governance statement
pursuant to Section 289a of the German
Commercial Code
Additional Information
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
website at:
Our Articles of Association, the Bylaws for the Supervisory
Board, the Bylaws for the most important Supervisory Board
committees, the Bylaws for the Managing Board, all our
Declarations of Conformity with the Code and a variety of other
corporate-governance-related documents are posted on our
As part of our investor relations activities, we inform our inves-
tors comprehensively about developments within the Company.
For communication purposes, Siemens makes extensive use of
the Internet. We publish interim and annual reports, earnings
releases, ad hoc announcements, analyst presentations, letters
to shareholders and press releases as well as the financial calen-
dar for the current year, which contains the publication dates of
significant financial communications and the date of the Annual
Shareholders' Meeting, at: ☐ WWW.SIEMENS.COM/INVESTORS
at the venue and without a proxy and to exercise some or all of
their rights fully or partially by means of electronic communi-
cations. Shareholders may submit proposals regarding the pro-
posals of the Managing and Supervisory Boards and may con-
test decisions of the Annual Shareholders' Meeting.
Shareholders owning Siemens stock with an aggregate no-
tional value of €100,000 or more may also demand the judicial
appointment of special auditors to examine specific issues.
The reports, documents and information required by law, in-
cluding the Annual Report, may be downloaded from our web-
site. The same applies to the agenda for the Annual Sharehold-
ers' Meeting and to any counterproposals or shareholders'
nominations that require disclosure.
-
Shareholders exercise their rights in the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things,
on the appropriation of unappropriated net income, the ratifi-
cation of the acts of the Managing and Supervisory Boards,
and the appointment of the independent auditors. Amend-
ments to the Articles of Association and measures that change
the Company's capital stock are approved at the Annual Share-
holders' Meeting and are implemented by the Managing Board.
The Managing Board facilitates shareholder participation in
this meeting through electronic communications – in particu-
lar, via the Internet – and enables shareholders who are un-
able to attend the meeting to vote by proxy. Furthermore,
shareholders may exercise their right to vote in writing or by
means of electronic communications (absentee voting). The
Managing Board may enable shareholders to participate in the
Annual Shareholders' Meeting without the need to be present
C.4.1.4 ANNUAL SHAREHOLDERS' MEETING AND
INVESTOR RELATIONS
WWW.SIEMENS.COM/DIRECTORS-DEALINGS
Pursuant to Section 15a of the German Securities Trading Act
(Wertpapierhandelsgesetz), members of the Managing Board
and the Supervisory Board are legally required to disclose the
purchase or sale of shares of Siemens AG or of financial instru-
ments based thereon if the total value of such transactions
entered into by a board member or any closely associated per-
son reaches or exceeds €5,000 in any calendar year. All trans-
actions reported to Siemens AG in accordance with this re-
quirement have been duly published and are available on the
Company's website at:
-
As of the same date, the Supervisory Board's current members
held Siemens shares representing less than 0.01% of the capital
stock of Siemens AG, which totaled 881,000,000 shares. These
figures do not include the 10,878,836 shares (as of Septem-
ber 30, 2015) or 1.23% of the capital stock of Siemens AG, which
totaled 881,000,000 shares, over which the von Siemens-
Vermögensverwaltung GmbH (vSV) has voting control under
powers of attorney based on an agreement between among
others - members of the Siemens family, including Dr. Natalie
von Siemens, and VSV. These shares are voted together by vSV,
taking into account the proposals of a family partnership estab-
lished by the family's members or of one of its governing bodies.
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code (Handelsgesetzbuch) is an in-
tegral part of the Combined Management Report. In accord-
ance with Section 317 para. 2 sentence 3 of the German Com-
mercial Code, the disclosures made within the scope of
Section 289a of the German Commercial Code are not subject
to the audit by the auditors.
> Siemens Ltd., China (Chairman)
Positions outside Germany:
> Siemens Ltd., India
Prof. Dr. phil. nat.
(until January 31, 2015)
Hermann Requardt,
January 31,
2020
February 1,
2015
January 12,
1970
Janina Kugel
March 31,
2021
April 1,
2011
May 24,
1958
Klaus Helmrich
July 31,
2019
August 1,
2014
October 15,
1963
Lisa Davis
February 11,
1955
March 31,
2021
November
22, 1964
Dr. rer. nat.
Roland Busch,
July 31,
2018
May 1,
2006
June 23,
1957
President and Chief
Executive Officer
Joe Kaeser
Term expires
First
appointed
Date of birth
Name
As of September 30, 2015 the Managing Board comprised the
following members:
Additional Information
April 1,
2011
May 1,
2006
Term origi-
nally to have
expired on
Positions outside Germany:
(as of September 30, 2015)
Group Company positions
> Deutsche Messe AG, Hannover
German positions:
> Software AG, Darmstadt
German positions:1
> EOS Holding AG, Krailling
> inpro Innovationsgesellschaft
für fortgeschrittene Produk-
tionssysteme in der Fahrzeug-
industrie mbH, Berlin
> Spectris plc, United Kingdom
German positions:
Positions outside Germany:
(Deputy Chairman)
Positions outside Germany:
> Atos SE, France
> OSRAM GmbH, Munich
> OSRAM Licht AG, Munich
(Deputy Chairman)
German positions:
> NXP Semiconductors B.V.,
Netherlands
Positions outside Germany:
> Daimler AG, Stuttgart
March 31,
2016
Siegfried Russwurm,
June 27,
1963
January 1,
2008
March 31,
2017
Ralf P. Thomas,
Dr. rer. pol.
Information on the compensation paid to the members of the
Managing Board is provided in chapter → A.10 COMPENSATION
March 7,
1961
September
17, 2018
Membership in supervisory boards whose establishment is required by law or in comparable
domestic or foreign controlling bodies of business enterprises
External positions
(as of September 30, 2015)
German positions:
> Allianz Deutschland AG, Munich
September
18, 2013
Plus: SFS Other interest expenses/income
(606)
Cash flows from operating activities - continuing and discontinued operations
(5,827)
(2,700)
7,213
(354)
351
(596)
(2,728)
(135)
1,051
5
1,056
The conversion of profit into cash inflows from operating
activities was mainly driven by Healthcare as well as the
Digital Factory and Power and Gas Divisions.
The cash outflows due to the build-up of operating net work-
ing capital were primarily driven by the Mobility Division, due
mainly to an increase in the line item inventories. Significant
cash inflows in the Power and Gas and in Wind Power and
Renewables Divisions related to increases in the line item bill-
ings in excess of costs and estimated earnings on uncompleted
contract and related advances. These cash inflows were offset
in the Power and Gas Division particularly by an increase in the
line item inventories and in the Wind Power and Renewables
Division particularly by an increase in the line item trade and
other receivables.
The cash outflows for acquisitions of businesses, net of cash
acquired, primarily included payments totaling €6.8 billion
related to the acquisition of Dresser-Rand and €1.3 billion re-
lated to the acquisition of Rolls-Royce Energy aero-derivative
gas turbine and compressor business.
The cash outflows for other purchases of assets primarily
included additions of assets eligible as central-bank-collateral
and additional funding to Unify.
The cash inflows from other disposals of assets included
€2.8 billion from the sale of Siemens' stake in BSH, disposals
from above-mentioned eligible collateral, proceeds from the
sale of businesses and real estate disposals at SRE.
The cash inflows from investing activities - discontinued
operations - included €1.9 billion from the sale of the hearing
aid business and €1.2 billion from the sale of the hospital infor-
mation business.
2,889
Combined Management Report
(8,716)
(1,467)
Other purchases of assets
Other disposals of assets
Cash flows from investing activities - continuing operations
Cash flows from investing activities - discontinued operations
Cash flows from investing activities - continuing and discontinued operations
Cash flows from financing activities
Purchase of treasury shares
Issuance of long-term debt
Repayment of long-term debt (including current maturities of long-term debt)
Change in short-term debt and other financing activities
Interest paid
Dividends paid to shareholders of Siemens AG
Other cash flows from financing activities - continuing operations
Cash flows from financing activities - continuing operations
Cash flows from financing activities - discontinued operations
Cash flows from financing activities - continuing and discontinued operations
(1,897)
(8,254)
(1,667)
4,570
Change in receivables from financing activities of SFS
(270)
6,881
For further information about our debt see →NOTE 15 in
→ B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further
information about functions and objectives of the financial
management see NOTE 24 in B.6 NOTES TO CONSOLIDATED
We have three credit facilities at our disposal for general corpo-
rate purposes. These credit facilities amounted to €7.1 billion
and were unused as of September 30, 2015.
In order to optimize the Company's position with regard to
interest income and interest expense, and to manage the asso-
ciated interest rate risk relating to the Group excluding SFS'
business, we use derivative financial instruments under a port-
folio-based approach to manage interest risk actively relative to
a benchmark. The interest rate management relating to the SFS
business is managed separately, considering the term structure
of SFS' financial assets and liabilities on a portfolio basis.
As of September 30, 2015 we recorded, in total, €26.0 billion in
notes and bonds (maturing until 2066), €1.8 billion in loans
from banks (maturing until 2023), €1.8 billion in other financial
indebtedness (maturing until 2027), primarily consisting of
US$-commercial paper, and €0.1 billion in obligations under
finance leases. Notes, bonds and loans from banks were is-
sued mainly in Euro and U.S. dollar, and to a lower extent in
British pound.
Debt and credit facilities
After the end of fiscal 2015 we repurchased additional 2,370,869
treasury shares. We thus completed the share buyback program
in October 2015 with a total volume of €4.0 billion and an aver-
age costs per share of €92.75 (including incidental transaction
charges).
Our capital structure ratio as of September 30, 2015 increased
to 0.6 from 0.1 a year earlier, which is within our target ratio of
up to 1.0. The change was due to the increase in industrial
net debt compared to the prior year, reflecting the above-
mentioned issuance of long-term debt and the impact of our
share buybacks.
Capital structure ratio
€9.1 billion). Within these figures, the underfunding for pension
benefit plans amounted to €9.0 billion (September 30, 2014:
€8.5 billion) and the underfunding of other post-employment
benefit plans amounted to €0.5 billion (September 30, 2014:
€0.5 billion).
Combined Management Report
16
The funded status of our defined benefit plans - meaning de-
fined benefit obligation (DBO) less fair value of plan assets -
showed an underfunding of €9.5 billion (September 30, 2014:
Post-employment benefits
The main factors relating to the increase in total equity attrib-
utable to shareholders of Siemens AG were €7.3 billion in net
income attributable to shareholders of Siemens AG and €1.0 bil-
lion in other comprehensive income, net of income taxes. This
increase was partly offset by dividend payments of €2.7 billion
(paid for fiscal 2014) and the repurchase of 29,419,671 treasury
shares at an average costs per share of €91.89, totaling €2.7 bil-
lion (including incidental transaction charges).
The issuance of instruments totaling US$7.75 billion in six
tranches with different maturities up to 30 years was the main
factor for the increase in long-term debt.
The contribution of the metals technologies business into a
joint venture with Mitsubishi-Hitachi Metals Machinery Inc.
led mainly to the decrease in liabilities associated with assets
classified as held for disposal.
The project business of the Divisions Power and Gas, including
additions related to the acquisitions of Dresser-Rand and Rolls-
Royce Energy aero-derivative gas turbine and compressor busi-
ness, and Wind Power and Renewables was the main factor for
an increase in higher billings in excess of costs and estimated
earnings on uncompleted contracts and related advances,
which drove mainly the increase in other current liabilities.
FINANCIAL STATEMENTS.
Cash flows from operating activities - discontinued operations
Off-balance-sheet commitments
Other commitments, including indemnifications issued in con-
nection with dispositions of businesses, amounted to €1.9 bil-
lion (September 30, 2014: €1.3 billion) to the extent future
claims are not considered remote. The increase in other com-
mitments related mainly to transactions closed in fiscal 2015.
Cash flows from operating activities – continuing operations
437
Other reconciling items to cash flows from operating activities - continuing operations
(936)
Change in operating net working capital
7,380
2015
Fiscal year
Net income
Cash flows from operating activities
(in millions of €)
A.5.2 Cash flows
18
17
Combined Management Report
Irrevocable loan commitments amounted to €3.6 billion (Sep-
tember 30, 2014: €3.4 billion). A considerable portion of these
commitments resulted from asset-based lending transactions,
meaning that the respective loans can be drawn only after the
borrower has provided sufficient collateral.
Future payment obligations under non-cancellable operating
leases amounted to €3.4 billion (September 30, 2014: €3.2 bil-
lion).
As of September 30, 2015 the undiscounted amount of maxi-
mum potential future payments related to credit guarantees,
guarantees of third-party performance and HERKULES obliga-
tions amounted to €4.2 billion (September 30, 2014: €4.3 billion).
The classification of US$ 500 million long-term fixed-rate in-
struments as current maturity and the issuance of commercial
paper were the main factors for the increase in short-term
debt and current maturities of long-term debt.
Acquisitions of businesses, net of cash acquired
Cash flows from investing activities
(36)%
160
6
>200%
570
(86)
n/a
553
511
8%
588
532
11%
1,738
1,681
3%
536
2,215
773
1,426
2015
Energy Management
Building Technologies
Mobility
Digital Factory
Process Industries and Drives
Healthcare
Industrial Business
Profit margin Industrial Business
Financial Services (SFS)
Reconciliation to Consolidated Financial Statements
Income from continuing operations before income taxes
Income tax expenses
Income from continuing operations
Income from discontinued operations, net of income taxes
Net income
Basic earnings per share
ROCE
Fiscal year
% Change
2014
Additions to intangible assets and property, plant and equipment
(31)%
2,072
2,031
215
>200%
7,380
8.84
19.6%
6.37
34%
39%
17.2%
As a result of the development described for the segments,
Income from continuing operations before income taxes
decreased 1%. This amount also included higher expenses - as
planned for selling and research and development, primarily
at Power and Gas and to a lesser degree at Digital Factory and
Healthcare. Severance charges for continuing operations were
€804 million, of which €566 million were in the Industrial Busi-
ness. The tax rate of 26% was lower than in the prior year, due
mainly to the disposition of the stake in BSH, which was mostly
tax-free. For this reason, Income from continuing operations
increased 1%.
Income from discontinued operations, net of income taxes,
primarily included gains from the disposal of the hearing aid
and hospital information businesses, totaling €1.7 billion and
€0.2 billion, respectively.
The increase in Basic earnings per share benefited substan-
tially from the disposal gains mentioned above. The percentage
increase was higher than for Net income due mainly to share buy-
backs which reduced the number of average shares outstanding.
Despite a significant increase in average capital employed with
the acquisitions at Power and Gas, ROCE rose due to the dis-
posal gains and was at the upper end of our target range.
Combined Management Report
A.4 Net assets position
Sep 30,
% Change
(in millions of €)
1%
2,184
5,292
7%
5%
7,755
7,703
1%
10.1%
10.6%
600
466
29%
(1,138)
(862)
(32)%
7,218
7,306
(1)%
(1,869)
(2,014)
5,349
15%
104,879
120,348
2,947
2,127
39%
Other financial assets
20,821
18,416
13%
Deferred tax assets
Other assets
Total non-current assets
Total assets
2,591
3,334
(22)%
1,094
945
16%
Investments accounted for using the equity method
68,906
6%
10,210
1,151
1,290
(11)%
122
3,935
(97)%
51,442
48,076
7%
23,166
17,783
30%
Other intangible assets
8,077
4,560
77%
Property, plant and equipment
9,638
12%
56,803
120,348
7,774
7,594
2%
Other current financial liabilities
2,085
1,717
21%
Current provisions
4,489
4,354
3%
Current income tax liabilities
1,828
1,762
4%
Other current liabilities
20,368
Trade payables
21%
84%
2,979
104,879
15%
Our total assets in fiscal 2015 were influenced by positive cur-
rency translation effects of €3.6 billion, led by the U.S. dollar.
In fiscal 2015, the acquisitions of Dresser-Rand and Rolls-Royce
Energy aero-derivative gas turbine and compressor business
were the major factors related to the increases in goodwill and
other intangible assets with a total amount of €4.5 billion and
€3.7 billion, respectively, and the largest factors related to the
increase in inventories and trade and other receivables with
a total amount of €1.0 billion and €0.6 billion, respectively.
Apart from these acquisitions, the increase in inventories was
also driven by a substantial build-up in other businesses from
the Power and Gas and in the Mobility Divisions, while the
Wind Power and Renewables Division contributed significantly
to the increase in trade and other receivables.
Higher loans receivable driven by asset growth at SFS in fiscal
2015 resulted in the increases in other current financial assets
and in other financial assets.
Mainly the following transactions led to the decrease in assets
classified as held for disposal: Completion of the contribu-
tion of the metals technologies business into a joint venture
with Mitsubishi-Hitachi Metals Machinery Inc. (the new invest-
ment in Primetals Technologies Ltd. is recognized as invest-
ments accounted for using the equity method); completion of
the sale of our 50% stake in the joint venture BSH to Robert
Bosch GmbH and completion of the sale of the hospital infor-
mation business to Cerner Corp.
Combined Management Report
15
A.5 Financial position
A.5.1 Capital structure
Our capital structure developed as follows:
Sep 30,
% Change
(in millions of €)
2015
2014
Short-term debt and current maturities of long-term debt
1,620
577
644
14%
Total liabilities
Total non-current liabilities
Other liabilities
(9)%
1,620
1,466
20%
4,071
4,865
10%
552
609
5%
6,612
9,324
9,811
38%
Debt ratio
19,326
2,297
23%
4%
560
30%
11%
30,954
34,474
29%
581
Total liabilities and equity
Non-controlling interests
Total equity attributable to shareholders of Siemens AG
Equity ratio
70%
71%
16%
73,365
85,292
24%
36,767
45,730
1,874
26,682
Other financial liabilities
Provisions
27%
Trade and other receivables
15,982
14,526
10%
Other current financial assets
5,157
3,710
39%
Inventories
Current income tax assets
Other current assets
Assets classified as held for disposal
Total current assets
Goodwill
17,253
15,100
925
1,175
Available-for-sale financial assets
24%
Deferred tax liabilities
Post-employment benefits
Long-term debt
8%
36,598
2015
39,562
Total current liabilities
Wind Power and Renewables
(98)%
39
Liabilities associated with assets classified as held for disposal
13%
17,954
2014
Cash and cash equivalents
9,957
8,013
1,597
Power and Gas
5,507
A.3.3 Income
5,507
Less: Other interest expenses/income, net¹
(in millions of €, earnings per share in €)
(662)
Siemens
therein: emerging markets
82,340
29,769
24,769 20,619
17,357 14,613
15,033 15,779
6,605
77,657
27,345
10%
20%
5%
19% (1)%
(5)% (14)%
0% (12)%
6% (1)%
9%
2%
Reported orders related to external customers in the region
Europe, C.I.S., Africa, Middle East increased moderately,
as substantial growth in Mobility, including among others a
€1.7 billion order in Germany, and in Power and Gas, more than
offset a sharp decline in Wind Power and Renewables due to
a lower volume of large orders. Key growth drivers in the
Americas included Power and Gas and Energy Management,
both with a strong increase due to a higher volume of large
orders in the region, and Healthcare which reported substantial
growth in the U.S. Orders declined in the region Asia, Australia
due mainly to a lower volume from large orders in Power and
Gas and in Mobility that could only be partially offset by growth
in Wind Power and Renewables, Energy Management, and in
Digital Factory. The development in China showed a similar
pattern, with a sharp order decline in Mobility offset by growth
in the three Divisions just mentioned.
As expected, given our complex business environment in fiscal
2015, organic revenue was flat year-over-year, including a
mixed picture for our industrial businesses. Reported revenue
related to external customers in Europe, C.I.S., Africa, Middle
East came in near the prior-year level, as growth in Energy
Management and in Healthcare offset declines in Mobility
and in Power and Gas. Moderate revenue growth in Germany
was driven by a sharp increase in Wind Power and Renewables
resulting from the continuing execution of large offshore con-
tracts won in prior periods. In the Americas, revenue came in
higher year-over-year, driven by double-digit increases in the
U.S. across our industrial businesses, due mainly to currency
translation tailwinds. The major contributions to growth in the
U.S. as well as in the region came from Healthcare and Power
and Gas. Revenue growth in Asia, Australia resulted mainly
from solid increases in Digital Factory, Mobility and Healthcare
that more than offset declines in Power and Gas and Wind
Power and Renewables. Growth in China included nearly all of
our industrial businesses, due in part to positive currency
translation effects, while revenue in Power and Gas decreased
substantially.
10
Combined Management Report
A.3.2 Segment information analysis
A.3.2.1 POWER AND GAS
A.3.2.2 WIND POWER AND RENEWABLES
Fiscal year
7,380
% Change
Net income
2015
A.2.5 Dividend
We intend to continue providing an attractive return to our
shareholders. Therefore, we intend to realize a dividend payout
range, of 40% to 60% of net income, which we may adjust for
this purpose to exclude selected exceptional non-cash effects.
As in the past, we intend to fund the dividend payout from Free
cash flow.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the follow-
ing proposal to allocate the unappropriated net income of
Siemens AG for the fiscal year 2015: to distribute a dividend of
€3.50 on each share of no par value entitled to the dividend for
fiscal year 2015 existing at the date of the Annual Shareholders'
Meeting, with the remaining amount to be carried forward. Pay-
ment of the proposed dividend is contingent upon approval by
Siemens shareholders at the Annual Shareholders' Meeting on
January 26, 2016. The prior-year dividend was €3.30 per share.
The proposed dividend of €3.50 per share for fiscal 2015 rep-
resents a total payout of €2.8 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on net income of €7.4 billion for
fiscal 2015, the dividend payout percentage is 38%.
A.2.6 Calculation of return
on capital employed
| Calculation of ROCE
Average capital employed for a fiscal year is determined as a
five-point average in capital employed of the respective quar-
ters, starting with the capital employed as of September 30 of
the previous fiscal year.
| Calculation of capital employed
Total equity
Plus: Long-term debt
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Less: Current available-for-sale financial assets
Plus: Post-employment benefits
Less: SFS Debt
Less: Fair value hedge accounting adjustment
Plus: Adjustments from assets classified as held for disposal and
liabilities associated with assets classified as held for disposal
Capital employed (continuing and discontinued operations)
Beginning with fiscal 2016, deferred taxes on actuarial gains
and losses within equity will be eliminated in the calculation of
capital employed. By making this adjustment, we treat actuarial
gains and losses consistently in the ROCE calculation.
Fiscal year
(in millions of €)
2014
746
(in millions of €)
2014
2%
(26)%
(3)%
Profit
160
6
>200%
Profit margin
2.8%
0.1%
|
Revenue and orders benefited significantly from currency
translation and portfolio effects. Dresser-Rand and the Rolls-
Royce Energy aero-derivative gas turbine and compressor busi-
ness, which were both acquired in fiscal 2015, contributed
eight and ten percentage points to order and revenue develop-
ment, respectively. Orders were almost on the level of the prior
year on a comparable basis, as a decline in the solutions busi-
ness, due to a lower volume from large orders, was almost off-
set by order growth in other businesses. The regional picture
was mixed; order intake increased in Europe, C.I.S., Africa,
Middle East and the Americas and declined in Asia, Australia.
Revenue was down significantly on a comparable basis, due
mainly to declines in the large gas turbine and solutions busi-
nesses. On a regional basis, revenue increased in the Americas
and declined in the other two reporting regions. Profit was
down substantially year-over-year, due mainly to lower mar-
gins, particularly in the large gas turbine business, severance
charges of €192 million, charges of €106 million related to a
project which incurred higher costs for materials and from cus-
tomer delays, and higher R&D and selling expenses related in
part to the acquisitions mentioned above. For comparison, the
prior year benefited from a €73 million gain on the sale of the
Division's turbo fan business and a positive €72 million effect
from a successful project completion in the turnkey business.
The Division continues to face challenges in an increasingly
competitive market for large gas turbines. Beginning with fiscal
2016, the Division includes the E-Houses and Modules busi-
ness segment that was previously included within the Process
Industries and Drives Division. If this change had already been
effective in fiscal 2015, profit margin for Power and Gas would
have been 10.5%.
Order intake was down year-over-year, due mainly to a sharply
lower volume of large orders, particularly in the offshore
business, which for Siemens means primarily in Europe. Asia,
Australia showed strong growth from a small base. Revenue
was down on a comparable basis, as increases in the offshore
and service businesses were more than offset by a decline in
the onshore business. On a regional basis, an increase in the
Americas was more than offset by declines in the two other
reporting regions. Profit was up sharply compared to fiscal
2014, when the Division recorded charges of €272 million for
inspecting and replacing main bearings in onshore wind tur-
bines and for repairing offshore and onshore wind blades. In
the current year, profit development was held back by reduced
margins in the offshore business due partly to increased com-
petition and expenses for ramping up commercial-scale pro-
duction of turbine offerings.
A.3.2.3 ENERGY MANAGEMENT
(in millions of €)
Orders
2015
Fiscal year
2014
Revenue
5,567
2015
5,660
Comp.
Actual
Comp.
(in millions of €)
2015
Fiscal year
2014
% Change
Orders
6,136
7,759
(21)%
Orders
15,666
Revenue
13,193
Profit
Profit margin
Actual
13,996
12% (1)%
12,720
4% (11)%
1,426 2,215 (36)%
10.8% 17.4%
Revenue
630
Plus: Net interest expenses from
post-employment benefits
5%
(1)%
6%
(4)%
8%
6,405
6,938
75,636 71,227
25,285 24,146
therein: emerging markets
Siemens
therein: China
(4)%
6%
14,283
15,135
1%
21%
1%
(3)%
17%
2015
% Change
6,623
therein: China
Asia, Australia
therein: U.S.
Americas
10%
11,991 10,910
therein: Germany
1%
3%
41,259
42,539
Middle East
Europe, C.I.S., Africa,
(in millions of €)
Comp.
Actual
Fiscal year
2014
4%
4%
(2)%
19.6%
(1)/(II) ROCE
33,238
38,833
(II) Average capital employed
5,732
7,623
(I) Income before interest after tax
(96)
(104)
(tax rate (flat) 30%)
Less: Taxes on interest adjustments
1
(discontinued operations)
Less: Interest adjustments
295
263
17.2%
1
Item Other interest expenses/income, net primarily consists of interest relating to
corporate debt, and related hedging activities, as well as interest income on
corporate assets.
Combined Management Report 9
1%
38,449
38,799
11,244 10,781
21,702 18,494
15,263 12,647
therein: U.S.
therein: Germany
Americas
Comp.
Actual
2014
12,956
11,922
2015
Fiscal year
Asia, Australia
(in millions of €)
Europe, C.I.S., Africa,
Middle East
| Revenue (location of customer)
| Orders (location of customer)
The increase in orders and revenue year-over-year was due
mostly to favorable currency translation effects that added six
percentage points to volume development. The resulting ratio
of orders to revenue (book-to-bill) for Siemens in fiscal 2015
was 1.09, again well above 1. The order backlog (defined as the
sum of order backlogs of the Industrial Business) was €110 bil-
lion as of September 30, 2015.
A.3.1 Orders and revenue by region
A.3 Results of operations
% Change
11,210
10,708
% Change
Comp.
9%
11%
2014
Income before income taxes
ROE (after taxes)
600
466
20.9%
18.1%
Sep 30,
2015
24,970
2015
2014
(in millions of €)
Total assets
SFS recorded a higher income contribution from the equity
business, primarily relating to a net gain in connection with the
sale of renewable energy projects. Higher interest results asso-
ciated with growth in total assets were largely offset by a higher
level of credit hits related mainly to business in China. Despite
substantial early terminations of financings, total assets have
increased since the end of fiscal 2014, including positive cur-
rency translation effects.
A.3.2.10 RECONCILIATION TO CONSOLIDATED
FINANCIAL STATEMENTS
| Profit
Fiscal year
(in millions of €)
2015
2014
21,970
Fiscal year
(in millions of €)
A.3.2.9 FINANCIAL SERVICES (SFS)
Orders
9,337
9,968
(6)%
Comp.
(10)%
Revenue
9,894
9,645
3%
(3)%
Profit
536
773 (31)%
Profit margin
5.4%
8.0%
The weak market environment for process industries in fiscal
2015 was particularly evident in commodity-related markets and
those influenced by low oil prices. As a result, the Division saw
a sharp decrease in orders in its oil & gas and marine business
and a moderate order decline in its large drives business, due
mainly to a lower volume from large orders. Reported revenue
increased in nearly all businesses, driven by currency trans-
lation effects. In the Division's largest business, large drives,
revenue was flat and comparable revenue decreased moder-
ately. On a regional basis, the order decline was due largely to a
double-digit decrease in Europe, C.I.S., Africa, Middle East and
lower orders in Asia, Australia. Reported revenue increased in all
three regions, however, in the Americas and in Asia, Australia
growth was driven by favorable currency translation effects. De-
spite currency tailwinds, fiscal 2015 profit margin declined, due
in part to ongoing operational challenges in the large drives and
the oil & gas and marine businesses. In addition, profitability
was held back by a warranty charge of €96 million in the large
drives business and €74 million in severance charges for the
Division overall. Beginning with fiscal 2016, parts of the Divi-
sion's business activities are reported within other Divisions,
as previously described for the Power and Gas and the Digital
Factory Division. If these changes had already been effective in
fiscal 2015, profit margin would have been 6.1%.
A.3.2.8 HEALTHCARE
benefited from currency translation effects, most notably in the
Americas. Profit growth was driven mainly by the imaging and
therapy systems business and benefited from currency tail-
winds mainly due to the greater strength of the US$ compared
to fiscal 2014. In fiscal 2015, Healthcare recorded €62 million in
severance charges and a €64 million gain from the divestment
of the microbiology business. For comparison, profit in fiscal
2014 included a €66 million positive effect related to the sale of
a particle therapy installation in Germany.
Centrally managed portfolio activities
Actual
16%
714
Siemens Real Estate
(543)
(498)
Eliminations, Corporate Treasury
and other reconciling items
(366)
(48)
Reconciliation to Consolidated
Financial Statements
acquired in business combinations
(1,138)
All businesses posted order and revenue growth, with the
largest increase coming from the imaging and therapy sys-
tems business. All regions contributed to volume growth and
Combined Management Report
13
14
Centrally managed portfolio activities (CMPA) included a gain
of €1.4 billion on the disposal of Siemens' stake in BSH Bosch
und Siemens Hausgeräte GmbH (BSH). This was partly offset
by an equity investment loss of €275 million related to Unify
Holdings B.V. (Unify), an impairment of €138 million related to
Siemens' stake in Primetals Technologies Ltd. and losses from
other businesses. For comparison, fiscal 2014 included equity
investment income from BSH.
As in the past, income from Siemens Real Estate continues to
be highly dependent on disposals of real estate. In fiscal 2015,
the disposals of real estate were lower than in the prior-year.
Corporate items were influenced by a number of items, includ-
ing €196 million in severance charges for corporate reorganiza-
tion of support functions.
The change in Eliminations, Corporate Treasury and other rec-
onciling items included primarily negative effects related to the
change in fair value of interest rate derivatives.
(862)
Amortization of intangible assets
3%
(393)
205
242
(in millions of €)
Orders
Revenue
Profit
Profit margin
2015
13,349 12,126
12,930 11,736
2,184 2,072
16.9% 17.7%
Fiscal year
2014
% Change
Actual
Comp.
Corporate items
(709)
(446)
10%
10%
5%
3%
Centrally carried pension expense
(440)
280
2014
Actual
(in millions of €)
511
8%
8%
Profit margin
9.2%
9.2%
% Change
Comp.
2%
1%
every quarter. In contrast, the Division's rolling stock busi-
nesses generated lower revenue in the second half of fiscal
2015 due to timing of large rail projects following completion of
older projects while new large projects are beginning to ramp
up. This held back full-year revenue development for Mobility
overall. On a geographic basis, revenue growth was stron-
gest in Asia, Australia. Revenue and order development ben-
efited strongly from currency translation effects. In fiscal 2015,
Mobility continued its solid project execution. Profit for the
Division rose significantly year-over-year, despite €68 million in
severance charges. The profit improvement was driven by a
more favorable business mix compared to fiscal 2014, particu-
larly including a higher share from the rail infrastructure busi-
ness. For comparison, profit in the prior fiscal year benefited
from a €55 million net effect from the release of accruals
related to the "Siemens 2014" program.
A.3.2.6 DIGITAL FACTORY
553
Due largely to positive currency translation effects, orders and
revenue for Building Technologies grew in all regions, particu-
larly the Americas and Asia, Australia. The Division further in-
creased its productivity and continued to improve its business
mix to include a larger share of higher-margin product and
service businesses year-over-year. These factors contributed to
a clear increase in profit and the Division kept its profitability
stable year-over-year despite impacts from a substantial appre-
ciation of the Swiss franc early in the second quarter of the
fiscal year and €24 million in severance charges.
|
Fiscal year
(in millions of €)
2015
2014
Orders
10,262
9,280
A.3.2.5 MOBILITY
Profit
5,569
5,999
5%
Profit
Profit margin
570
4.8%
(86)
n/a
(0.8)%
Orders and revenue were higher in all businesses, in particular
in the solutions, transformer and low voltage businesses. Ben-
efiting from currency translation effects, all reporting regions
showed order and revenue growth, in particular the Americas
region. The major factor in the profit improvement year-over-
year was sharply lower charges related to project execution. In
addition, margins in the solutions business improved signifi-
cantly year-over-year, including a lower share of projects with
Combined Management Report
11
low or negligible margins. The Division recorded €88 million in
severance charges in fiscal 2015. In fiscal 2014, the Division
took charges totaling €298 million related to two high voltage
direct current (HVDC) transmission line projects in Canada. It
also recorded charges of €240 million in fiscal 2014 primarily
related to grid connections to offshore wind-farms in the North
Sea, which were handed over to the customer in fiscal 2015.
A.3.2.4 BUILDING TECHNOLOGIES
(in millions of €)
2015
Fiscal year
2014
Orders
6,099
5,587
Actual
9%
Revenue
2015
7,508
Revenue
Profit
Profit margin
1,681
1,738
3%
8%
9,201
9,956
% Change
Comp.
3%
Actual
8%
9,233
7,249
10,014
18.3%
Revenue
Profit
Profit margin
The softening market environment for production equipment,
particularly including the industrial deceleration in China during
fiscal 2015, limited growth opportunities for Digital Factory's
high-margin factory automation business, which reported flat
revenue and orders on a comparable basis. Conditions were
more favorable for the Division's software and motion control
businesses, which delivered clear comparable growth in both
revenue and orders. On a regional basis, orders and revenue in-
creased in all three reporting regions, led by Asia, Australia and
the Americas, due largely to positive currency translation ef-
fects. Despite currency tailwinds, profitability was held back by
the less favorable revenue mix and higher expenses for R&D
and selling targeted at future growth. In addition, Division profit
included €54 million in severance charges for the fiscal year.
Beginning with fiscal 2016, the Division includes the geared
motors segment that was previously reported in the Process
Industries and Drives Division. In addition, minor business ac-
tivities of the Division were bundled centrally and are reported
within Corporate Items. If these changes had already been
effective in fiscal 2015, profit margin would have been 16.9%.
3%
12 Combined Management Report
Fiscal year
588
7.8%
532
Actual
11%
4%
11%
7.3%
% Change
Comp.
6%
(1)%
Mobility again won a number of large orders, driving order
growth year-over-year. Contract wins in fiscal 2015 included an
order worth €1.7 billion for regional trains and maintenance in
Germany and a €1.6 billion long-term order for maintenance in
Russia. For comparison, large orders in fiscal 2014 included a
contract worth €1.6 billion for two driverless subway-lines in
Saudi Arabia. Revenue for Mobility grew moderately compared
to the prior fiscal year. The Division's rail infrastructure and
turnkey project businesses increased revenue year-over-year in
Fiscal year
(in millions of €)
Orders
2015
2014
% Change
A.3.2.7 PROCESS INDUSTRIES AND DRIVES
17.5%
(1,897)
4,984
6,612
(40)
6,881
We report Free cash flow as a supplemental liquidity measure:
| Free cash flow
(in millions of €)
Cash flows from operating activities
Additions to intangible assets and property, plant and equipment
Free cash flow
Continuing
operations
Discontinued
Fiscal year 2015
Continuing and
The change in short-term debt and other financing activi-
ties included the net proceeds from the issuance of commer-
cial paper, partly offset by cash outflows related to the settle-
ment of financial derivatives used to hedge currency exposure
in our financing activities.
(310)
velopment of macroeconomic conditions and their impact on
our financial results. In contrast, many activities of the Digital
Factory Division and parts of Process Industries and Drives Divi-
sion and in the Energy Management Division, react quickly to
volatility in market demand. If the moderate recovery of macro-
economic growth stalls again and if we are not successful in
adapting our production and cost structure to subsequent
changes to conditions in the markets in which we operate,
there can be no assurance that we will not experience adverse
effects. For example, it may become more difficult for our cus-
tomers to obtain financing and as a result they may modify, de-
lay or cancel plans to purchase our products and services or to
follow through on purchases or contracts already executed.
Furthermore, prices may decline as a result of adverse market
conditions to a greater extent than currently anticipated. In ad-
dition, contracted payment terms, especially regarding the
level of advance payments by our customers relating to long-
term projects, may become less favorable, which could nega-
tively impact our financial condition. Siemens' global setup
with operations in almost all relevant economies, the wide
variety of our offerings following different business cycles as
well as different business models (e.g. product, software, solu-
tion, project and service-business) help us to soften the impact
of an adverse development in a single market.
With our ability to generate positive operating cash flows, our
total liquidity (defined as cash and cash equivalents as well
as available-for-sale financial assets) of €11.1 billion, and our
€7.1 billion in unused lines of credit, and given our credit ratings
at year-end, we believe that we have sufficient flexibility to fund
our capital requirements. Also in our opinion, our operating net
working capital is sufficient for our present requirements.
A.8.2 Risk management
Overall, the actual development for Siemens and its Segments
may vary, positively or negatively, from our outlook due to the
risks and opportunities described below or if our expectations
and assumptions do not materialize.
We anticipate further softening in the macroeconomic environ-
ment and continuing complexity in the geopolitical environ-
ment in fiscal 2016. Nevertheless, we expect moderate revenue
growth, net of effects from currency translation. We anticipate
that orders will materially exceed revenue for a book-to-bill ratio
clearly above 1. For our Industrial Business, we expect a profit
margin of 10% to 11%. Furthermore, we expect basic EPS from
net income in the range of €5.90 to €6.20 as compared to €5.18,
which we achieved in fiscal 2015 excluding €3.66 per share in
portfolio gains from the divestments of the hearing aid business
and our stake in BSH. This outlook assumes that momentum in
the market environment for our high-margin short-cycle busi-
nesses will pick up in the second half of fiscal 2016. Additionally,
it excludes charges related to legal and regulatory matters.
A.8.1.4 OVERALL ASSESSMENT
Following the financing measures executed during fiscal 2015,
we expect our capital structure ratio in fiscal 2016 to be below
but near 1.0. In November 2015, we announced a new share
buyback of up to €3 billion ending at the latest on Novem-
ber 15, 2018. The buybacks will be made under the current
authorization granted at the Annual Shareholders' Meeting on
January 27, 2015. Shares repurchased may be used for cancel-
ling and reducing capital stock; for issuing shares to employ-
ees, to members of the Managing Board and board members of
affiliated companies; and for meeting obligations from or in
connection with convertible bonds or warrant bonds.
Capital structure
Within our One Siemens financial framework, we in general
aim to achieve a ROCE in the range of 15% to 20%. For fiscal
2016, we expect ROCE to show a double-digit result but to come
in substantially below the amount reached in fiscal 2015, which
benefited from the sale of businesses described earlier.
Capital efficiency
We do not expect significant effects from discontinued opera-
tions in fiscal 2016. For comparison, income from discontinued
operations of €2.0 billion in fiscal 2015 included the €1.7 billion
gain from the sale of our hearing aid business. We anticipate
our tax rate for fiscal 2016 to be in the range of 26% to 30%.
year level despite higher interest expense related primarily to
issuance of bonds in fiscal 2015.
Combined Management Report
24
Within our Reconciliation to Consolidated Financial Statements
we expect CMPA to turn negative in fiscal 2016 and results to
be volatile during the year. Expenses for Corporate items are
expected to be approximately €0.5 billion, with costs in the
second half-year higher than in the first half. While we antici-
pate that SRE will continue with real estate disposals depend-
ing on market conditions, we expect gains from disposals to be
lower in fiscal 2016 than in fiscal 2015. Centrally carried pen-
sion expenses are expected to total approximately €0.5 billion
in fiscal 2016. Amortization of intangible assets acquired in
business combinations rose substantially to €168 million in the
fourth quarter of fiscal 2015 and we expect a similar level in the
four quarters of fiscal 2016. Eliminations, Corporate Treasury
and other reconciling items are anticipated to be on the prior-
Overall, we expect an aggregate profit margin for our Industrial
Business of 10% to 11%, compared to 10.1% in fiscal 2015. We
expect SFS, which is reported outside Industrial Business, to
continue to be highly profitable and achieve a return on equity
(ROE) within its target range in fiscal 2016.
For fiscal 2016, we expect all our industrial businesses to be in
or at least close to their target ranges for profit margin as de-
fined in our financial performance system (see → A.2 FINANCIAL
PERFORMANCE SYSTEM) excluding severance charges and integra-
tion costs.
Our forecast for net income and corresponding basic EPS is
based on a number of other assumptions: We assume that
momentum in the market environment for our high-margin
short-cycle businesses will pick up in the second half of fiscal
2016. As part of our One Siemens framework, we target a total
cost productivity improvement of 3% to 4% in fiscal 2016.
Therein, we expect execution of »Vision 2020«< measures to im-
prove our cost position by an additional approximately €0.4 bil-
lion to €0.5 billion in fiscal 2016, following cost savings of ap-
proximately €0.4 billion already achieved in fiscal 2015. Also,
we assume continued solid project execution. Furthermore, we
expect modest positive currency effects on income in the first
half of fiscal 2016. Offsetting effects include pricing pressure
on our offerings estimated at around 2% in fiscal 2016, with the
Power and Gas Division, the Wind Power and Renewables Divi-
sion and Healthcare being affected the most. Furthermore, we
expect upward pressure on costs from wage inflation of around
3% to 4%. Also, we plan for continued targeted investments in
selling and R&D expenses aimed at organic volume growth
and strengthening our capacities for innovation.
from net income in the range of €5.90 to €6.20 as compared to
€5.18, which we achieved in fiscal 2015 excluding €3.66 per
share in portfolio gains from the divestments of the hearing aid
business and our stake in BSH.
We expect net income in fiscal 2016 to increase significantly
compared to €4.4 billion, which we achieved in fiscal 2015 ex-
cluding €3.0 billion in portfolio gains from the divestment of
the hearing aid business and our stake in BSH. Including those
gains in the basis of comparison, we expect net income in fiscal
2016 to decline significantly year-over-year. We expect basic EPS
Profitability
We anticipate that orders in fiscal 2016 will materially exceed
revenue for a book-to-bill ratio clearly above 1. In particular, we
expect order growth driven by substantial increases in the
Power and Gas and Wind Power and Renewables Divisions,
with particularly Power and Gas benefiting from a large con-
tract win in Egypt, among other factors.
We expect revenue growth to benefit from conversion of our
order backlog (defined as the sum of order backlogs of our
Industrial Business) which totaled €110 billion as of Septem-
ber 30, 2015. From this backlog, we expect to convert approxi-
mately €39 billion of past orders into current revenue in fiscal
2016. Within this amount, we expect for fiscal 2016 approxi-
mately €11 billion in revenue conversion from the €42 billion
backlog of the Power and Gas Division, approximately €8 billion
in revenue conversion from the €12 billion backlog of the En-
ergy Management Division, approximately €6 billion in revenue
conversion from the €27 billion backlog of the Mobility Divi-
sion, approximately €5 billion in revenue conversion from the
€14 billion backlog of the Wind Power and Renewables Division,
approximately €4 billion in revenue conversion from the €6 bil-
lion backlog of the Process Industries and Drives Division, ap-
proximately €2 billion in revenue conversion from the €3 billion
backlog of the Building Technologies Division, approximately
€2 billion in revenue conversion from the €4 billion backlog of
Healthcare and approximately €2 billion in revenue conversion
from the €2 billion backlog of the Digital Factory Division.
We expect all industrial businesses to contribute to organic rev-
enue growth, except for the Process Industries and Drives Divi-
sion, which has been impacted by lower order intake in previ-
ous quarters. We assume that Mobility will be a main growth
driver, with a clear increase in organic revenue. We also expect
low to mid single-digit organic growth at the other industrial
businesses, led by Wind Power and Renewables. Furthermore,
we expect that Power and Gas will increase its reported revenue
significantly, benefiting from the acquisition of Dresser-Rand.
portfolio effects, particularly the acquisition of Dresser-Rand at
the end of the third quarter of fiscal 2015, to add approximately
2 percentage points to our revenue growth rate in fiscal 2016.
Furthermore, we assume that momentum in the market environ-
ment for our high-margin short-cycle businesses will pick up in
the second half of fiscal 2016.
23
Combined Management Report
Despite anticipated further softening in the macroeconomic
environment and continuing complexity in the geopolitical
environment in fiscal 2016, we expect moderate revenue
growth, net of effects from currency translation. We expect
Revenue growth
A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursu-
ing sustainable growth and creating economic value while
managing appropriate risks or opportunities and avoiding inap-
propriate risks. As risk management is an integral part of how
we plan and execute our business strategies, our risk manage-
ment policy is set by the Managing Board. Our organizational
and accountability structure as of September 30, 2015 requires
each of the respective managements of our Industrial Business,
SFS, regions and Corporate Units to implement risk manage-
ment programs that are tailored to their specific industries and
responsibilities, while being consistent with the overall policy.
A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk manage-
ment and control systems which support us in the early recog-
nition of developments that could jeopardize the continuity of
our business. The most important of these systems include our
enterprise-wide processes for strategic planning and manage-
ment reporting. Strategic planning is intended to support us in
considering potential risks well in advance of major business
decisions, while management reporting is intended to enable
us to monitor such risks more closely as our business pro-
gresses. Our internal auditors regularly review the adequacy
and effectiveness of our risk management system. Accordingly,
if deficits are detected, it is possible to adopt appropriate mea-
sures for their elimination. This coordination of processes and
procedures is intended to help ensure that the Managing Board
and the Supervisory Board are fully informed about significant
risks in a timely manner.
Risk management at Siemens builds on a comprehensive, inter-
active and management-oriented Enterprise Risk Management
(ERM) approach that is integrated into the organization and
that addresses both risks and opportunities. Our ERM approach
is based on the worldwide accepted Enterprise Risk Manage-
ment - Integrated Framework (2004) developed by the Commit-
tee of Sponsoring Organizations of the Treadway Commission
(COSO). The framework connects the ERM process with our
financial reporting process and our internal control system. It
considers a company's strategy, the efficiency and effective-
ness of its business operations, the reliability of its financial
reporting as well as compliance with relevant laws and regula-
tions to be equally important.
The ERM process aims for early identification and evaluation
of, and response regarding, risks and opportunities that could
materially affect the achievement of our strategic, operational,
financial and compliance objectives. The time horizon covered
by ERM is typically three years. Our ERM is based on a net risk
operations
(270)
28 Combined Management Report
Operational failures and quality problems in our value
chain processes: Our value chain comprises all steps, from
research and development to supply chain management, pro-
duction, marketing, sales and services. Operational failures in
our value chain processes could result in quality problems or
potential product, labor safety, regulatory or environmental
risks. Such risks are particularly present in our Industrial Busi-
ness in relation to our production and construction facilities,
which are located all over the world and have a high degree of
organizational and technological complexity. From time to
time, some of the products we sell might have quality issues
resulting from the design or manufacture of such products or
of the commissioning of such products or from the software
integrated into them. Our Healthcare business, for example, is
subject to regulatory authorities including the U.S. Food and
Drug Administration and the European Commission's Health
and Consumer Policy Department, which require us to make
specific efforts to safeguard our product quality. If we are not
able to comply with these requirements, also our reputation
may be adversely affected. Several measures for quality im-
provement and claim prevention are established and the in-
creased use of quality management tools is improving visibil-
ity and assists us strengthen the root cause and prevention
process.
IT security: Our business portfolio is dependent on digital tech-
nologies. We observe a global increase of IT security threats and
higher levels of professionalism in computer crime, which pose
a risk to the security of products, systems and networks and the
confidentiality, availability and integrity of data. We are facing
active cyber threats from sophisticated adversaries that are
supported by organized crime and nation states engaged in
economic espionage. We attempt to mitigate these risks by
employing a number of measures, including employee training,
comprehensive monitoring of our networks and systems, and
maintenance of backup and protective systems such as fire-
walls and virus scanners. Our contractual arrangements with
service providers aim to ensure that these risks are reduced in
an adequate manner. Nonetheless, our systems, products, solu-
tions and services, as well as those of our service providers re-
main potentially vulnerable to attacks. Such attacks could po-
tentially lead to the publication, manipulation, espionage or
leakage of information, improper use of our systems, defective
products, production downtimes and supply shortages, with
potential adverse effects on our reputation, our competitive-
ness and results of our operations.
A.8.3.2 OPERATIONAL RISKS
areas of mergers, acquisitions, divestments and carve outs.
This includes post closing actions as well as claim management
and centrally managed portfolio activities.
Portfolio measures, at-equity investments, other invest-
ments and strategic alliances: Our strategy includes divesting
activities in some business areas and strengthening others
through portfolio measures, including mergers and acquisi-
tions. With respect to divestments, we may not be able to divest
some of our activities as planned, and the divestitures we
do carry out could have a negative impact on our business,
financial condition, results of operations and our reputation.
Mergers and acquisitions are inherently risky because of diffi-
culties that may arise when integrating people, operations,
technologies and products. There can be no assurance that any
of the businesses we acquired recently can be integrated suc-
cessfully and in a timely manner as originally planned, or that
they will perform as anticipated once integrated. In addition,
we may incur significant acquisition, administrative and other
costs in connection with these transactions, including costs
related to integration of acquired businesses. Furthermore,
portfolio measures may result in additional financing needs
and adversely affect our capital structure. Acquisitions led to
substantial addition to intangible assets, including goodwill in
our Statements of Financial Position. If we were to encounter
continuing adverse business developments or if we were other-
wise to perform worse than expected at acquisition activities,
then these intangible assets, including goodwill, might have to
be impaired, which could adversely affect our business, finan-
cial condition and results of operations. Our investment port-
folio consists of investments held for purposes other than trad-
ing. Furthermore, we hold other investments, for example,
Atos SE and OSRAM Licht AG. Any factors negatively influenc-
ing the financial condition and results of operations of our
at-equity investments and other investments, could have an
adverse effect on our equity pick-up related to these invest-
ments or may result in a related write-off. In addition, our busi-
ness, financial condition and results of operations could also be
adversely affected in connection with loans, guarantees or
non-compliance with financial covenants related to these
at-equity investments and other investments. Furthermore,
such investments are inherently risky as we may not be able to
sufficiently influence corporate governance processes or busi-
ness decisions taken by our equity investments, other invest-
ments and strategic alliances that may have a negative effect
on our business. In addition, joint ventures bear the risk of dif-
ficulties that may arise when integrating people, operations,
technologies and products. Strategic alliances may also pose
risks for us because we compete in some business areas with
companies with which we have strategic alliances. Besides
other measures, we handle these risks with standardized pro-
cesses as well as dedicated roles and responsibilities in the
and by our ability to sustain them. We constantly control and
monitor the progress of these projects and initiatives using
standardized controlling and milestone tracking approaches.
27
Combined Management Report
Strategic alignments and cost-cutting initiatives: We are in a
continuous process of strategic alignments and constantly
engage in cost-cutting initiatives, including ongoing capacity
adjustment measures and structural initiatives. Consolidation
of business activities and manufacturing facilities, and the
streamlining of product portfolios are also part of these cost
reduction efforts. These measures may not be implemented as
planned, may turn out to be less effective than anticipated, may
become effective later than estimated or may not become effec-
tive at all. Any future contribution of these measures to our
profitability will be influenced by the actual savings achieved
Changes of regulations, laws and policies: As a diversified
company with global businesses we are exposed to various
product-related regulations, laws and policies influencing our
processes. Some jurisdictions around the world have adopted
certain regulations, laws and policies requiring us to extend
our recycling efforts, limit the sourcing and usage of certain
raw materials, and request that suppliers provide additional
due diligence and disclosures on sourcing and usage of the reg-
ulated raw materials. We exercise our duty within the supply
chain, as our customers request transparency in the supply
chain and as the obligation to do so already forms an element
of customer contracts. If we are unable to achieve sufficient
confidence throughout our supply chain, or if any risks associ-
ated with these kinds of regulations, laws and policies were to
materialize, our reputation could also be adversely affected.
In general, due to the significant proportion of long-cycle busi-
nesses in our Divisions and the importance of long-term con-
tracts for Siemens, there is usually a time lag between the de-
We are exposed to currency translation effects, particularly in-
volving the US$ and currencies of emerging markets, particu-
larly the Chinese Yuan. During fiscal 2015, the average exchange
rate conversion for our large volume of US$-denominated reve-
nue was US$1.15 per €. While we expect volatility in global cur-
rency markets to continue in fiscal 2016, we have improved our
natural hedge on a global basis through geographic distribu-
tion of our production facilities during the past. Nevertheless,
Siemens is still a net exporter from the Euro zone to the rest of
the world, so a weak Euro is principally favorable for our busi-
ness and a strong Euro is principally unfavorable. In addition to
the natural hedging strategy just mentioned, we also hedge
currency risk in our export business using derivative financial
instruments. We expect these steps to help us limit effects on
income related to currency in fiscal 2016.
Economic and political conditions (macroeconomic environ-
ment): We still see a high level of uncertainty regarding the
global economic outlook. The main downside risks stem from
the weakening growth in China and potential corrections or
even a collapse in real estate, the banking sectors or the stock
markets. The downturn could get worse, if Chinese authorities
fail to reform the state-owned enterprises in the industry and
banking sector as well, to liberalize and open the economy fur-
ther. A rapid tightening of monetary policy by the U.S. Federal
Reserve could cause a depreciation spiral among emerging
market currencies. This could lead to a renewed emerging mar-
ket crisis as debt levels of emerging market enterprises have
risen, making them dependent on favorable global financial
conditions to service foreign currency-denominated debts. Fur-
ther risks stem from increased global danger of terrorism, polit-
ical tensions (e.g. Syria and Ukraine), raw material prices, con-
fidence in the automotive sector, and low oil and gas prices.
With the closing of the acquisition of Dresser-Rand we are
further exposed to volatility in global oil and gas markets.
Combined Management Report
Competitive markets and technology changes: The world-
wide markets for our products and solutions are highly compet-
itive in terms of pricing, product and service quality, product
development and introduction time, customer service, financing
terms, disruptive technologies and shifts in market demands.
We face strong existing competitors and also competitors from
emerging markets, which may have a better cost structure.
Some industries in which we operate are undergoing consoli-
dation, which may result in stronger competition and a change
A.8.3.1 STRATEGIC RISKS
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and rep-
utation. The order in which the risks are presented in each of
the four categories reflects the currently estimated relative ex-
posure for Siemens associated with these risks and thus pro-
vides an indication of the risks' current importance to us. Addi-
tional risks not known to us or that we currently consider
immaterial may also negatively impact our business objectives
and operations. Unless otherwise stated, the risks described
below relate to all of our segments.
A.8.3 Risks
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with
legal and operational requirements, the Managing Board estab-
lished a Risk Management and Internal Control Organization,
headed by the Chief Risk & Internal Control Officer, and a Corpo-
rate Risk and Internal Control Committee (CRIC). The CRIC ob-
tains risk and opportunity information from the Risk Commit-
tees established at the Industrial Business, SFS, and regional
organizations and from the heads of Corporate Units. In order
to allow for a meaningful discussion on Siemens group level
individual risk and opportunities of similar cause-and-effect
nature are aggregated into risk and opportunity themes. This
aggregation naturally results in a mixture of risks with a pri-
marily qualitative and primarily quantitative risk assessment.
Accordingly, a purely quantitative assessment of risk themes is
not foreseen. This information then forms the basis for the
evaluation of the company-wide risk and opportunity situation.
The CRIC reports to and supports the Managing Board on mat-
ters relating to the implementation, operation and oversight of
the risk and internal control system and assists the Managing
Board for example in reporting to the Audit Committee of the
Supervisory Board. The CRIC is composed of the Chief Risk &
Internal Control Officer, as the chairperson, members of the
Managing Board and selected heads of Corporate Units.
AND RESPONSIBILITIES
A.8.2.3 RISK MANAGEMENT ORGANIZATION
Responsibilities are assigned for all relevant risks and opportu-
nities with the hierarchical level of responsibility depending on
the significance of the respective risk or opportunity. In a first
step, assuming responsibility for a specific risk or opportunity
involves deciding upon one of our general response strategies.
Our general response strategies with respect to risks are avoid-
ance, transfer, reduction or acceptance of the relevant risk. Our
general response strategies with respect to opportunities are
partial or complete realization of the relevant opportunity. In a
second step, responsibility for a risk or opportunity also involves
the development, initiation and monitoring of appropriate re-
sponse measures corresponding to the chosen response strat-
egy. These response measures have to be specifically tailored to
allow for effective risk management. Accordingly, we have de-
veloped a variety of response measures with different charac-
teristics. For example, we mitigate the risk of fluctuations in
currency and interest rates by engaging in hedging activities.
Regarding our long-term projects, systematic and comprehen-
sive project management with standardized project milestones,
including provisional acceptances during project execution, and
complemented by clearly defined approval processes assists us
in identifying and responding to project risks at an early stage,
even before entering the bidding phase. Furthermore, we main-
tain appropriate insurance levels for potential cases of damage
and liability risks in order to reduce our exposure to such risks
and to avoid or minimize potential losses. Among others, we
address the risk of fluctuation in economic activity and cus-
tomer demand by closely monitoring the macroeconomic con-
ditions and developments in relevant industries, and by adjust-
ing capacity and implementing cost-reduction measures in a
timely and consistent manner, if deemed necessary.
approach, addressing risks and opportunities remaining after
the execution of existing control measures. In order to provide
a comprehensive view on our business activities, risks and
opportunities are identified in a structured way combining ele-
ments of both top-down and bottom-up approaches. Risks and
opportunities are generally reported on a quarterly basis. This
regular reporting process is complemented by an ad-hoc report-
ing process that aims to escalate critical issues in a timely man-
ner. Relevant risks and opportunities are prioritized in terms of
impact and likelihood, considering different perspectives, in-
cluding business objectives, reputation and regulatory matters.
The bottom-up identification and prioritization process is sup-
ported by workshops with the respective managements of the
Industrial Business, SFS, regions and Corporate Units. This top-
down element ensures that potential new risks and opportuni-
ties are discussed at management level and are included in the
subsequent reporting process, if found to be relevant. Reported
risks and opportunities are analyzed regarding potential cumu-
lative effects and are aggregated within and for each of the
organizations mentioned above.
26
25
Combined Management Report
in our relative market position. Furthermore, we see a risk that
suppliers (and to some extent even customers), especially from
emerging countries (e.g. China), could develop into serious
competitors for Siemens. We address this risk with various mea-
sures, for example, benchmarking, strategic initiatives, sales
push initiatives, executing productivity measures and target
cost projects, rightsizing of factories, exporting from low-cost
countries to price sensitive markets, and optimizing our product
portfolio. The markets in which our businesses operate experi-
ence rapid and significant changes due to the introduction of
innovative technologies. Our operating results depend to a sig-
nificant extent on our ability to anticipate and adapt to changes
in our markets and to reduce the costs of producing our prod-
ucts. Introducing new products and technologies requires a sig-
nificant commitment to research and development, which in
return requires expenditure of considerable financial resources
that may not always result in success. Our results of opera-
tions may suffer if we invest in technologies that do not oper-
ate or may not be integrated as expected, or that are not ac-
cepted in the market place as anticipated, or if our products or
systems are not introduced to the market in a timely manner,
particularly compared to our competitors, or become obsolete.
We constantly apply for new patents and actively manage our
intellectual property portfolio to secure our technological posi-
tion. However, our patents and other intellectual property may
not prevent competitors from independently developing or
selling products and services that are similar to or duplicates
of ours.
(1,938)
4,674
matters.
We are basing our outlook for fiscal 2016 for the Siemens Group
and its segments on the above-mentioned expectations and
assumptions regarding the overall economic situation and spe-
cific market conditions for the next fiscal year.
Combined Management Report
20
20
Net income rose by 34% to €7.4 billion and basic EPS from net
income climbed 39% year-over-year to €8.84. We thus achieved
our forecast, which was to increase net income significantly
and to grow EPS from net income by at least 15%. As we fore-
cast for fiscal 2015, these increases include gains from divest-
ments. In particular net income included a gain of €1.7 billion
Profit outside Industrial Business included a gain of €1.4 billion
from the sale of our stake in BSH, which was more than offset
by a number of factors. Burdens from Centrally managed port-
folio activities included losses from equity investments com-
pared to income a year earlier, and Corporate Treasury activities
posted a loss.
The profit margin of the Industrial Business was 10.1%. We thus
reached the range of 10% to 11% forecast for fiscal 2015. As ex-
pected, the Wind Power and Renewables Division and the
Energy Management Division improved their profit margins
year-over-year but remained below their target ranges. Process
Industries and Drives and Power and Gas, which reached their
targets in the prior year, came in below their respective ranges
in fiscal 2015. SFS, which is outside our Industrial Business,
achieved a return on equity after tax of 20.9%, above the upper
end of its target range.
Industrial Business profit was €7.8 billion in fiscal 2015, up
slightly from €7.7 billion a year earlier despite €0.6 billion in
severance charges. Healthcare, Digital Factory, Mobility and
Building Technologies continued to operate very successfully
in their markets and increased their profits compared to fiscal
2014. The Energy Management Division achieved the largest
profit improvement year-over-year, following a loss on substan-
tial project charges in the prior year. The Wind Power and Re-
newables Division sharply improved profit compared to fiscal
2014, but profit came in below our expectations as the Division
faced reduced margins in the offshore business due partly to
increased competition and expenses for ramping up commer-
cial-scale production of turbine offerings. The profit improve-
ments mentioned above were largely offset by declines in the
Power and Gas and the Process Industries and Drives Divisions.
Orders for fiscal 2015 were €82.3 billion, fulfilling our expecta-
tion for a book-to-bill ratio above one, which came in at 1.09. As
with revenue, orders rose 6% year-over-year, due mostly to
strong currency translation effects while declining 1% on an
organic basis. Except for Wind Power and Renewables and Pro-
cess Industries and Drives, all our industrial businesses re-
ported nominal order growth. The majority increased their
orders year-over-year on an organic basis.
Overall, revenue thus matched the forecast for fiscal 2015 that
revenue on an organic basis would be flat year-over-year.
Revenue for fiscal 2015 was €75.6 billion, up 6% compared to
the prior fiscal year. While all industrial businesses posted
increases, growth was due primarily to strong currency trans-
lation effects. On an organic basis, excluding currency trans-
lation and portfolio effects, revenue came in 1% lower year-
over-year, with half of the industrial businesses increasing
revenue and the other half reporting a decline year-over-year.
From a financial perspective, in fiscal 2015, we reached all our
targets set for our primary measures in the Annual Report for
fiscal 2014. Revenue on an organic basis remained nearly on the
prior-year level, and net income and basic earnings per share
(EPS) (net income) rose by more than a third year-over-year.
Return on capital employed (ROCE) reached the upper end of
our target range and our capital structure ratio came in below 1.
In fiscal 2015, we accomplished numerous objectives included
in our "Vision 2020" concept. We started the fiscal year with a
leaner organizational setup more geared towards our growth
markets. We got closer to customers and enhanced our innova-
tion capacity with targeted spending increases for selling and
R&D. This has already improved customer satisfaction. Further-
more, we made significant progress in adjusting our portfolio.
With the acquisitions of Dresser-Rand and Roll-Royce's aero-de-
rivative gas turbine and compressor business, we strengthened
our position in the area of distributed power generation. Mean-
while we sold our hearing aid business and our stake in BSH,
among others. Our market environment in fiscal 2015 was soft-
ening towards the end of the fiscal year. While we saw growth,
such as in consumer-oriented markets, and continued strong
demand for infrastructure solutions, some of our key industries
like the oil and gas industry and mining were under severe pres-
sure, and a number of emerging economies that were growth
drivers in recent years showed signs of weakness. Thus strin-
gent execution of "Vision 2020" became even more important.
In fiscal 2015, we began to implement measures to reduce costs
by €1 billion on a sustainable basis. With cost savings of approx-
imately €0.4 billion already achieved in fiscal 2015, we are
ahead of our plans. Also we improved our project execution,
resulting in sharply lower project charges year-over-year. While
we have already successfully addressed several businesses that
were not fulfilling our expectations regarding profitability, we
have completed a review of our remaining underperforming
businesses during fiscal 2015 and decided to restructure those
businesses primarily through our own efforts, with clear goals
and timetables. At the end of October 2015, shortly after the
end of fiscal 2015, we completed the share buyback program we
launched in May 2014. Between these dates we repurchased
43.1 million Siemens shares in the amount of €4.0 billion.
Within this total, during fiscal 2015 we repurchased 29.4 million
Siemens shares in the amount of €2.7 billion.
A.6 Overall assessment of the economic position
19
Combined Management Report
Healthcare's investments are mainly driven by the diagnostics
business, including large amounts relating to intangible assets,
particularly capitalized R&D expenses for new platforms.
The investments of Process Industries and Drives are focused
on upgrading production machines and replacement of fixed
assets, particularly relating to the large drives business.
Major spending of Digital Factory relates to the factory auto-
mation and control products businesses, including investments
in production facilities in China.
Mobility is spending large portions of its capital expenditures
for improving its respective positions in growing market seg-
ments, including investments into its infrastructure, capital-
ized R&D expenses as well as project related investments.
The investments of Building Technologies mainly relate to the
control products and systems business, particularly innovation
projects.
Energy Management is spending the larger portion of its cap-
ital expenditures for innovation, particularly in the low voltage
and product business. Further investments are related to re-
placement of fixed assets and expansion of factories and tech-
nical equipment.
The investments of Wind Power and Renewables are focused
on the extension, modernization and optimization of existing
plants to allow for the large-scale manufacturing of innovative
products, including new production and service facilities for
blades in the U.K. and an offshore wind power turbines plant in
Germany.
The investments of Power and Gas are focused on enhancing
productivity and strategic localization, mainly relating to our
large gas turbines and generators business, including a burner
test center for gas turbines in Germany.
Focus areas of ongoing investing activities of the Industrial
Business are:
With regard to capital expenditures for continuing operations,
we expect a spending increase year-over-year in fiscal 2016.
Additions to intangible assets and property, plant and equip-
ment from continuing operations was €1.9 billion in fiscal 2015.
Within the Industrial Business ongoing investments related
mainly to technological innovations; extending our capacities
for designing, manufacturing and marketing new solutions; im-
proving productivity and our global footprint, such as in Brazil,
Egypt and India; and replacements of fixed assets. These invest-
ments amounted to €1.4 billion in fiscal 2015. The remaining
portion in fiscal 2015, €0.5 billion, related mainly to SRE, includ-
ing significant amounts related to office projects, such as new
corporate office buildings in Germany. SRE is responsible for
uniform and comprehensive management of Company real es-
tate worldwide, and supports the Industrial Business and cor-
porate activities with customer-specific real estate solutions.
Investing activities
from the sale of our hearing aid business and the above-men-
tioned gain from the sale of our stake in BSH. Basic EPS from
net income also benefited from execution of our share buyback
program. Overall, our continuous efforts to increase our pro-
ductivity contributed positively. Our total cost productivity im-
provement reached the upper end of our target for fiscal 2015,
which was to increase total cost productivity by 3% to 4%.
ROCE for continuing and discontinued operations increased to
19.6% in fiscal 2015, up from 17.2% in the prior fiscal year. We
thus reached the upper end of our forecast for fiscal 2015,
which was to achieve a ROCE for continuing and discontinued
operations in our target range of 15% to 20%. The main driver of
the improvement was higher net income, which more than off-
set an increase in average capital employed.
We evaluate our capital structure using the ratio of industrial
net debt to EBITDA. For fiscal 2015, this ratio was 0.6. We thus
achieved our forecast, which was to achieve a ratio below 1.0
but clearly above the fiscal 2014 level of 0.1.
Free cash flow from continuing and discontinued operations
for fiscal 2015 came in at €4.7 billion, 10% lower than in the
prior fiscal year.
A.8.1.3 SIEMENS GROUP
Our SFS Division is geared to Siemens' Industrial Business and
its markets. As such SFS is, among other factors, influenced by
the overall business development of the markets served by our
Industrial Business and will continue to focus its business
scope on those areas of intense domain know-how limiting risk
and exposure going forward.
to grow moderately in the U.S. and in major emerging markets
such as China, India and Brazil, while demand in Europe, largely
consisting of replacement business, is anticipated to stay on the
prior-year level. The market for imaging products and solutions
is expected to remain on the prior-year level as growing demand
for imaging procedures is largely absorbed by higher utilization
of existing systems, while continued price aggressiveness in
the market affects revenue growth from new systems. The trend
to expand healthcare access is expected to benefit markets for
clinical products and suppliers with a broad spectrum of prod-
ucts and services. For diagnostics solutions, we expect consoli-
dation to continue leading to an increasing industrialization of
laboratories, playing into suppliers with experience in automa-
tion and digitalization.
For fiscal 2016, we expect markets for Healthcare to continue its
growth based on demographic trends. In emerging markets, we
expect continued demand, in particular for entry-level products
and solutions, as these countries build up their healthcare infra-
structure to provide their populations with affordable access to
modern medical technology, including cost efficient solutions
in rural areas. On a regional basis we expect healthcare markets
The markets served by the Process Industries and Drives
Division are expected to be flat in fiscal 2016. In general, we ob-
serve a trend towards increased demand for technology to im-
prove competitiveness through increased productivity, flexibility
and reliability. We expect growth to be driven by the food and
beverage sector as well as the chemical and pharmaceuticals in-
dustries. Demand from the oil and mining industries is expected
to decline further year-over-year, mostly in upstream markets.
For fiscal 2016, we expect markets for the Digital Factory Divi-
sion to be slow, with momentum picking up in the second half
of the fiscal year. Differences in growth rates between Siemens'
reporting regions are expected to be less pronounced than in
prior years. Overall, we expect market growth to benefit from
consumer-oriented manufacturing industries, especially in in-
dustrialized countries. The trend towards digitalization related
businesses is expected to continue and drives the industry soft-
ware market, which is forecast to grow clearly. As for China, we
expect the decline of growth in industrial output to take a toll
on our business development, but expect the local market to
continue to be attractive in the mid and long-term. While we
expect the current decline in raw material prices to reach a bot-
tom in fiscal 2016, we do not expect a rebound in the short
term. We therefore anticipate demand from the mining and the
oil and gas industries to continue to be weak in fiscal 2016.
For fiscal 2016, we expect markets served by the Mobility Divi-
sion to continue to grow moderately. Investments by rail oper-
ators in Germany are expected to stay on a high level. Market
growth in Russia depends on improvement of economic condi-
tions and geopolitical ease. For the Middle East and Africa,
we expect tenders of further large turnkey and infrastructure
projects. In China, we expect investments in high-speed trains,
urban transport and rail infrastructure to continue to drive
growth. In India, market growth should continue from planned
projects for commuter and high-speed passenger lines, freight
rail, and related infrastructure as part of the infrastructure
build out and reforms by the Government. Overall, local rail
transport is expected to gain importance as urbanization is pro-
gressing. In emerging countries, rising incomes are expected
to result in greater demand for public transport solutions.
price pressure, particularly in its solutions business, mainly
due to aggressive competition.
22 Combined Management Report
For the markets served by the Building Technologies Division,
we expect solid growth in fiscal 2016. On a geographic basis,
we expect the U.S., China, India and the Middle East to be the
main growth drivers. Most of the European countries are antic-
ipated to continue their recovery, led by Germany and some of
the Northern European countries. In countries with relatively
strong dependence on the development of commodity mar-
kets, we anticipate growth in the Division's markets to slow
down in fiscal 2016. We expect the Division to see continuing
For the markets served by the Energy Management Division,
we expect slight overall growth in fiscal 2016. The Division's
markets are experiencing rising power consumption due to on-
going urbanization and electrification in emerging countries.
Also the energy mix is changing, with a rising share of renew-
able energy. Furthermore, there is a trend towards decentral-
ized power generation, including an increasing number of
energy consumers who are also energy producers via solar
technology and other means. Within the Division's key indus-
tries we expect demand from utilities in fiscal 2016 to remain
on the prior-year level. Demand from the oil driven industry is
anticipated to decline further in fiscal 2016, as we expect addi-
tional cuts in investments, particularly in the Americas. For
minerals and mining markets we expect slight growth, with all
regions contributing. However, there is a risk that a further
slowdown in growth in China may impact investment activities
in the minerals and mining industry.
For the markets served by the Wind Power and Renewables
Division, we expect a slight decline in fiscal 2016 with long-
term outlook still intact. Within this change, we expect lower
demand in the larger market for onshore wind power, particu-
larly in the U.S. and Brazil, only partly offset by substantial
growth in the smaller market for offshore wind power, which is
driven by Europe. Market development depends strongly on
energy policy, including tax incentives in the U.S. and regula-
tory frameworks in Germany and the U.K. While we expect Asia
and the Americas to offer good growth prospects for offshore
wind power in the medium term, we expect only limited mar-
ket volume in these markets in the short term. Overall, we ex-
pect a continuation of the trend towards an increasing share of
renewable energy within the energy mix. Within the onshore
wind power market, we expect a continued rise in demand in
the low-wind segment.
demand in fiscal 2016 to stay on the low level of fiscal 2015 due
mainly to continuously low capital expenditures for up- and
downstream applications in the oil and gas industry. Overall,
we assume a shift to more flexible, decentralized power gener-
ation and stronger demand for combined heat and power gen-
eration and off-grid oil and gas applications, particularly in
Europe, China and the U.S.
This outlook excludes charges related to legal and regulatory
Following weak demand in fiscal 2015, we expect markets for
the Power and Gas Division to pick up in fiscal 2016, particu-
larly with regard to fossil power generation markets, which are
anticipated to grow year-over-year due to large projects in
emerging countries. For the compression market, we expect
The forecasts presented here for GDP and fixed investments are
based on a report from IHS Global Insight dated October 15,
2015.
Despite some positive developments expected for the world
economy in 2016, the risk assessment is clearly biased to the
downside (see → A.8.3. RISKS) due to a number of factors. First
and foremost geopolitical risks can dampen the mood for capi-
tal expenditures. China is on a long-term rebalancing path, and
some emerging markets are vulnerable to further capital flight
and exposed to considerable foreign currency debt.
The Chinese economy is expected to continue its rebalancing
path towards a more consumption- and service-driven econ-
omy, with GDP growth of 6.3%, which is lower than in calendar
2015. In this view, industries that have been driving the econ-
omy in the past will keep on consolidating while consump-
tion-oriented sectors and the service sector gain importance.
Meanwhile, fixed investments are likely to grow more slowly
than the overall economy, at around 4.4% in calendar 2016. For
other emerging markets the outlook is mixed. While Brazil and
Russia are expected to remain in recession, the Indian economy
is expected to continue developing strongly, with GDP growth
rates forecast at 7.5% to 8% in the coming years. Europe is ex-
pected to remain on a moderate recovery path, with Italy and
France again the slowest-growing among the larger economies
and Spain and the U.K. growing the fastest. The German econ-
omy is expected to benefit from the ongoing European recov-
ery, and growth should accelerate compared to calendar 2015.
For the U.S., GDP growth should also pick up slightly. While the
negative effects of low oil prices on oil and gas-related invest-
ments should start to ease, the positive effects, especially on
private consumption, should support economic growth in that
sector. The U.S. housing recovery is expected to continue.
Deceleration in emerging markets and especially China weigh
on the outlook for 2016 as well. Global GDP is expected to ex-
pand by 2.9%, with fixed investments growing by 3.4%. Fixed
investments in advanced countries (+3.6%) are expected to
grow more strongly than in emerging countries (+3.3%) be-
cause of some investment backlog in the former and over-
capacities in the latter.
A.8.1.1 WORLDWIDE ECONOMY
A.8.1 Report on expected developments
A.8 Report on expected developments
and associated material opportunities and risks
21
Combined Management Report
Also in November 2015, Siemens announced the sale of its 49%
stake in Unify to Atos. While ownership of the Unify stake has
adversely affected Siemens' financial results in fiscal 2015 and
prior fiscal years, the transaction is not expected to result in a
material effect. Closing of the transaction, which is subject to
the approvals of the regulatory and antitrust authorities, is
expected in the second quarter of fiscal 2016.
In November 2015, Siemens announced the extension of its ex-
isting seven-year IT outsourcing contract with Atos SE (AtoS)
through December 2021, with minimum committed volumes
increasing by €3.23 billion to €8.73 billion. Furthermore,
Siemens announced the extension of its current lock-up share-
holder commitment in Atos through September 2020.
A.7 Subsequent events
We intend to continue providing an attractive return to share-
holders. As in the past, we intend to fund the dividend payout
from Free cash flow. The Siemens Managing Board, in agree-
ment with the Supervisory Board, proposes a dividend of €3.50
per share, up from €3.30 a year earlier.
A.8.1.2 MARKET DEVELOPMENT
discontinued operations
The decrease in other financial income (expenses), net resulted
mainly from a higher realized loss related to interest and for-
eign currency derivatives of €0.7 billion and from higher ex-
penses from compounding of pension provisions of €0.4 bil-
lion. In addition, impairments of loan receivables of Unify
Holdings B.V. and Unify Germany Holdings B.V. amounting to
€0.2 billion were included. For comparison, fiscal 2014 included
€0.2 billion reversals of impairments of shares in investments.
Managing
Board
member:
ments 8,142 (prior year 2,870)
thereof Income from invest-
Financial income, net
(20) >(200)%
(270)
Other operating income
(expenses), net
6%
(4,036)
(3,810)
administrative expenses
Selling and general
13%
(2,781)
(2,417)
6,122
29%
as percentage of revenue
Research and development
(29)%
8,824
6,293
(14)%
9%
(22,109)
(20,161)
30,934
26,454
2014
2015
% Change
Fiscal year
expenses
24%
Cost of Sales
Gross profit
2,242
Result from ordinary activities
Income taxes
The decrease in Other operating income (expenses), net re-
sulted from an increase of €0.5 billion in other operating ex-
penses, only partly offset by an increase in other operating
income of €0.2 billion. Within other operating expenses, nega-
tive effects included additions to post-closing provisions in
connection with the disposal of businesses.
AND DEVELOPMENT.
Research and development (R&D) expenses decreased due
primarily to the above mentioned carve-out of Healthcare. R&D
expenses as a percentage of revenue (R&D intensity) remained
at 9%. On an average basis, we employed 11,700 people in R&D
in fiscal 2015. For additional information see A.1.1.3 RESEARCH
The decrease in Gross profit resulted primarily from the above
mentioned carve-out of Healthcare, which contributed €2.1 bil-
lion to Gross Profit in fiscal 2014. In fiscal 2015, the strongest
contributions to Gross Profit came from Digital Factory, Power
and Gas as well as Process Industries and Drives. Fiscal 2015
included lower project charges compared to the prior year.
In fiscal 2014, in particular, the Energy Management Division
took charges including €0.4 billion related primarily to grid-
connections to offshore wind-farms and €0.2 billion related to
onshore HVDC transmission line projects. In fiscal 2015,
Siemens handed over the four North Sea grid connection plat-
forms to the customer.
35
Combined Management Report
The decrease in Revenue is due primarily to the carve-out of
Healthcare, which posted €4.8 billion in revenue in fiscal 2014.
In fiscal 2015, the highest contributions to revenue came from
Digital Factory amounting to €6.1 billion, Energy Management
amounting to €5.4 billion, Power and Gas amounting to €5.4 bil-
lion and Process Industries and Drives amounting to €5.2 bil-
lion. On a geographical basis, 74% of revenue was generated in
the Europe, C.I.S., Africa, Middle East region, 19% in the Asia,
Australia region and 7% in the Americas region. Exports from
Germany accounted for 62% of overall revenue. In fiscal 2015,
orders for Siemens AG amounted to €31.8 billion.
As of September 30, 2015, the number of employees was
100,900.
As part of the carve-out of Healthcare, Siemens AG transferred
its healthcare business to the newly founded Siemens Health-
care GmbH by way of singular succession. Beginning with fiscal
2015, the results of the Siemens Healthcare GmbH are trans-
ferred to Siemens AG based on the profit-and-loss transfer
agreement between the Siemens AG and the Siemens Health-
care GmbH.
We intend to continue providing an attractive return to share-
holders. Therefore, in the years ahead we intend to propose a
dividend payout of 40% to 60% of net income of Siemens
Group, which for this purpose we may adjust to exclude se-
lected exceptional non-cash effects.
2,907
(175)%
(988)
(2,714)
3,084
173%
Unappropriated net income
64%
110
179
Profit carried forward
48%
3,786
5,618
Net income
32%
(444)
(300)
40%
4,230
5,918
Allocation to other retained
earnings
The improvement in Financial income, net was primarily at-
tributable to higher income from investments, which increased
by €5.3 billion. Other financial income (expenses), net was
€1.4 billion lower compared to the prior year.
(in millions of €)
Revenue
A.9.1 Results of operations
31
Combined Management Report
Current or future litigation: We are subject to numerous risks
relating to legal, governmental and regulatory proceedings
to which we are currently a party or to which we may become a
party in the future. We routinely become subject to legal, gov-
ernmental and regulatory investigations and proceedings in-
volving, among other things, requests for arbitration, allega-
tions of improper delivery of goods or services, product liability,
product defects, quality problems, intellectual property infringe-
ment, non-compliance with tax regulations and/or alleged or
suspected violations of applicable laws. In addition, we may
face further claims in connection with the circumstances that
led to the corruption charges. For additional information with
respect to specific proceedings, see → NOTE 21 in → B.6 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS. There can be no assur-
ance that the results of these or any other proceedings will not
Besides other measures, Siemens established a global compli-
ance organization including compliance risk mitigation pro-
cesses such as Compliance Risk Assessments which has been
reviewed recently by external compliance experts.
In addition, future developments in ongoing and potential
future investigations, such as responding to the requests of
governmental authorities and cooperating with them, could
divert management's attention and resources from other issues
facing our business. Furthermore, we might be exposed to
compliance risks in connection with recently acquired opera-
tions that are in the ongoing process of integration.
A considerable part of our business activities involve govern-
ments and companies with a public shareholder. We also partic-
ipate in a number of projects funded by government agencies
and intergovernmental and supranational organizations such
as multilateral development banks. Ongoing or potential future
investigations into allegations of corruption, antitrust or other
law violations could also impair relationships with such busi-
ness partners or could result in the exclusion of public con-
tracts. Such investigations may also adversely affect existing
private business relationships and our ability to pursue poten-
tially important strategic projects and transactions, such as
strategic alliances, joint ventures or other business coopera-
tion, or could result in the cancellation of certain of our exist-
ing contracts and third parties, including our competitors,
could initiate significant third-party litigation.
by the 2008 and 2009 corruption charge settlements, which
were concluded with American and German authorities, may
endanger our business with government agencies and inter-
governmental and supranational organizations. Further moni-
tors could be appointed to review future business practices and
we may otherwise be required to further modify our business
practices and our compliance program.
Current and future investigations regarding allegations of
corruption, antitrust violations and other illegal acts: Cor-
ruption, antitrust and related proceedings may lead to criminal
and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of busi-
ness, the loss of business licenses or permits or other restric-
tions. Accordingly, we may be required to comply with poten-
tial liabilities arising in connection with such investigations
and proceedings, including potential tax penalties. Moreover,
any findings related to public corruption that are not covered
Environmental and other governmental regulations: Some
of the industries in which we operate are highly regulated. Cur-
rent and future environmental and other governmental regula-
tions or changes thereto may require us to change the way we
run our operations and could result in significant increases in
our operating or production costs. In addition, while we have
procedures in place to ensure compliance with applicable gov-
ernmental regulations in the conduct of our business opera-
tions, it cannot be excluded that violations of applicable gov-
ernmental regulations may be caused either by us or by third
parties that we contract with, including suppliers or service
providers, whose activities may be attributed to us. Any such
violations expose us to the risk of liability, reputational damage
or loss of licenses or permits that are important to our business
operations. In particular, we could also face liability for damage
or remediation for environmental contamination at the facili-
ties we design or operate. With regard to certain environmental
risks, we maintain liability insurance at levels that our manage-
ment believes are appropriate and consistent with industry
practice. We may incur environmental losses beyond the limits,
or outside the coverage, of such insurance, and such losses
may have an adverse effect on our business, financial condition
and results of our operations.
Our business naturally evolves and develops in nations and re-
gions around the world, increasing their demand for our offer-
ings. Emerging market operations involve various risks, includ-
ing civil unrest, health concerns, cultural differences such as
employment and business practices, volatility in gross domes-
tic product, economic and governmental instability, the poten-
tial for nationalization of private assets and the imposition of
exchange controls. The Asian markets, in particular, are impor-
tant for our long-term growth strategy, and our sizeable activi-
ties in China operate under a legal system that is still develop-
ing and is subject to change. Our long-term growth strategy
could be limited by governments preferentially supporting local
competitors. With our dedicated regional organizations we
tackle these risks by constantly monitoring the latest trends
and defining our response strategies which include an ongoing
evaluation of our localization approach.
Combined Management Report
30
As a globally operating organization, we conduct business with
customers in countries which are subject to export control reg-
ulations, embargoes, economic sanctions or other forms of
trade restrictions (hereafter referred to as "sanctions") imposed
by the U.S., the European Union or other countries or organiza-
tions. New or expanded sanctions in countries in which we do
business may result in a curtailment of our existing business in
such countries or indirectly in other countries. We are also
aware of initiatives by institutional investors, such as pension
funds or other companies, to adopt or consider adopting poli-
cies prohibiting investment in and transactions with, or requir-
ing divestment of interests in entities doing business with,
countries identified as state sponsors of terrorism by the U.S.
Secretary of State. It is possible that such initiatives may result
in us being unable to gain or retain investors, customers or sup-
pliers. In addition, the termination of our activities in sanc-
tioned countries may expose us to customer claims and other
actions. Our reputation could also suffer due to our activities
with counterparties in or affiliated with these countries. Due to
the political agreement based on the Joint Comprehensive Plan
of Action (JCPOA) regarding the Iranian nuclear program,
Siemens has revised its internal guidelines in October 2015
which stated that apart from certain limited exceptions no new
business activities with customers in Iran are permitted. New
business activities with customers or end customers in Iran
that are not designated on the EU or U.S. sanctions lists are
now allowed, provided that these activities do not breach the
EU sanctions regulations or the U.S. Secondary Sanctions (if
applicable). Siemens has issued group-wide policies establish-
ing the details of its general decision.
Regulatory risks and potential sanctions: Protectionist trade
policies and changes in the political and regulatory environ-
ment in the markets in which we operate, such as import and
export controls, tariffs and other trade barriers including de-
barment from certain markets and price or exchange controls,
could affect our business in several national markets, impact
our business, financial position and results of operations, and
may expose us to penalties, other sanctions and reputational
damage. In addition, the uncertainty of the legal environment
in some regions could limit our ability to enforce our rights and
subject us to increasing costs related to appropriate compliance
programs.
32
A.8.3.4 COMPLIANCE RISKS
by tax authorities in various jurisdictions and we continuously
identify and assess resulting risks.
Examinations by tax authorities and changes in tax regula-
tions: We operate in nearly all countries of the world and there-
fore are subject to many different tax regulations. Changes in
tax law in any of these jurisdictions could result in higher tax
expense and payments. Furthermore, legislative changes could
impact our tax receivables and liabilities as well as deferred tax
assets and deferred tax liabilities. In addition, the uncertain tax
environment in some regions could limit our ability to enforce
our rights. As a globally operating organization, we conduct
business in countries subject to complex tax rules, which may
be interpreted in different ways. Future interpretations or de-
velopments of tax regimes may affect our business, financial
condition and results of operations. We are regularly examined
Risks from pension obligations: The funded status of our
pension plans may be affected by change in actuarial assump-
tions, including the discount rate, as well as movements in
financial markets or a change in the portfolio mix of invested
assets. A significant increase in the underfunding may have a
negative effect on our capital structure and rating and thus
may tighten refinancing options and increase costs. In order to
comply with local pension regulations in selected foreign coun-
tries, we may face a risk of increasing cash outflows to reduce
an underfunding of our pension plans in these countries.
Credit Risks: We provide our customers with various forms of
direct and indirect financing of orders and projects. Particularly
SFS bears credit risks out of its financing activities. In part, we
take a security interest in the assets we finance or we receive
additional collateral. Our business, financial condition and re-
sults of operations may be adversely affected if the credit qual-
ity of our customers deteriorates or if they default on their pay-
ment obligation to us, if the value of the assets in which we
have taken a security interest or additional collateral declines
or if the projects in which we invest are unsuccessful. Positive
market values from derivatives and deposits with banks induce
credit risk against these banks. We monitor these market value
developments very closely. A default of a major trading partner
may have negative impact on our financial position and the
results of financial operations.
assets, in particular concerning our derivative financial instru-
ments. Negative developments could also further increase
the costs for buying protection against credit risks due to a
potential increase of counterparty risks. Through diversifica-
tion into different funding instruments, currencies, markets
and investor groups, Siemens reduces funding risks. Liquidity
risks are mitigated by depositing cash into different categories
of instruments and with a range of counterparties of invest-
ment grade credit quality, at which counterparty risks are cen-
trally and closely monitored (including risks resulting from
derivatives).
29
Combined Management Report
Liquidity and financing risks: The ongoing euro zone sover-
eign debt crisis continues to have an impact on global capital
markets. Regarding our treasury and financing activities, nega-
tive developments related to financial markets such as (1) lim-
ited availability of funds (particularly U.S. dollar funds) and
hedging instruments, (2) an updated evaluation of our sol-
vency, particularly from rating agencies and (3) impacts from
enhanced regulations of the financial sector/central bank pol-
icy or financial instruments, could result in adverse deposit
and/or financing conditions. Widening credit spreads due to
uncertainty and risk aversion in the financial markets might
lead to adverse changes of fair market values of our financial
Market price risks: We are exposed to fluctuations in exchange
rates, especially between the U.S. dollar and the euro, because
a high percentage of our business volume is conducted in the
U.S. and as exports from Europe. In addition, we are exposed to
currency effects involving the currencies of emerging markets,
in particular the Chinese yuan. A strengthening of the euro
(particularly against the U.S. dollar) may change our competi-
tive position, as many of our competitors may benefit from hav-
ing a substantial portion of their costs based in weaker curren-
cies, enabling them to offer their products at lower prices. As a
result, a strong euro in relation to the U.S. dollar and other cur-
rencies could have an adverse impact on our results of opera-
tions. We are also exposed to fluctuations in interest rates. Neg-
ative developments in the financial markets and changes in the
central bank policies may negatively impact our results. Certain
currency risks as well as interest rate risks are hedged using
derivative financial instruments. Depending on the develop-
ment of foreign currency exchange and interest rates, hedging
activities could have significant effects on our business, finan-
cial condition and results of operations.
A.8.3.3 FINANCIAL RISKS
Skilled personnel: Competition for highly qualified personnel
remains intense in the industries and regions in which our
businesses operate. We have an ongoing demand in highly
skilled employees. Our future success depends in part on our
continued ability to hire, integrate, develop and retain engi-
neers and other qualified personnel. We address this risk for
example with structured succession planning, employer brand-
ing, retention and career management.
raw materials due to market shortages or other reasons could
also adversely affect the performance. Furthermore, we may be
exposed to the risk of delays and interruptions of the supply
chain as a consequence of catastrophic events in case we are
unable to identify alternative sources of supply or ways of
transportation in a timely manner or at all. Besides other mea-
sures, we mitigate fluctuation in the global raw material mar-
kets with various hedging instruments.
Interruption of the supply chain: The financial performance
of our Industrial Business depends on reliable and effective
supply chain management for components, sub-assemblies
and other materials. Capacity constraints and supply shortages
resulting from ineffective supply chain management may lead
to delays and additional cost. We rely on third parties to supply
us with parts, components and services. Using third parties to
manufacture, assemble and test our products reduces our con-
trol over manufacturing yields, quality assurance, product de-
livery schedules and costs. Although we work closely with our
suppliers to avoid supply-related problems, there can be no
assurance that we will not encounter supply problems in the
future. Shortages and delays could materially harm our busi-
ness. Unanticipated increases in the price of components or
Cost overruns or additional payment obligations related to
the management of our long-term, fixed-price or turnkey
projects: Particularly our Divisions Power and Gas, Wind Power
and Renewables, Mobility as well as parts of Energy Manage-
ment and Process Industries and Drives perform business, es-
pecially large projects, under long-term contracts that are
awarded on a competitive bidding basis. Some of these con-
tracts are inherently risky because we may assume substan-
tially all of the risks associated with completing a project and
meeting post-completion warranty obligations. For example,
we face the risk that we must satisfy technical requirements of
a project even though we may not have gained experience with
those requirements before we win the project. The profit mar-
gins realized on fixed-priced contracts may vary from original
estimates as a result of changes in costs and productivity over
their term. We sometimes bear the risk of unanticipated project
modifications, shortage of key personnel, quality problems,
financial difficulties of our customers, cost overruns or contrac-
tual penalties caused by unexpected technological problems,
unforeseen developments at the project sites, unforeseen
changes or difficulties in the regulatory or political environ-
ment, performance problems with our suppliers, subcontrac-
tors and consortium partners or other logistical difficulties.
Some of our multi-year contracts also contain demanding in-
stallation and maintenance requirements in addition to other
performance criteria relating to timing, unit cost and compli-
ance with government regulations requirements, which, if not
satisfied, could subject us to substantial contractual penalties,
damages, non-payment and contract termination. There can be
no assurance that contracts and projects, in particular those
with long-term duration and fixed-price calculation, can be
completed profitably. To tackle those risks we implemented a
global project management organization to systematically im-
prove the know-how of the project management personnel. For
very complex technical projects we conduct dedicated techni-
cal risk assessments in very early stages of the sales phase be-
fore we decide to hand over a binding offer to our customer.
For further information on post-employment benefits, deriva-
tive financial instruments, hedging activities, financial risk
management and measurements, see → NOTE 16, 23 AND 24 in
→ B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Statement of Income of Siemens AG in accordance
| with German Commercial Code (condensed)
materially harm our business, financial condition and results of
operations. Moreover, even if we ultimately prevail on the mer-
its in any such proceedings, we may have to incur substantial
legal fees and other costs defending ourselves against the un-
derlying allegations. We maintain liability insurance for certain
legal risks at levels our management believes are appropriate
and consistent with industry practice. Our insurance policy,
however, does not protect us against reputational damage.
Moreover, we may incur losses relating to legal proceedings
beyond the limits, or outside the coverage, of such insurance
or exceeding any provisions made for legal proceedings related
losses. Finally, there can be no assurance that we will be able
to maintain adequate insurance coverage on commercially rea-
sonable terms in the future.
The most significant challenges have been mentioned first in
each of the four categories - Strategic, Operations, Financial
and Compliance – with the risks caused by highly competitive
markets and technology changes currently being the most sig-
nificant. Even though the assessments of individual risk expo-
sures have changed during fiscal 2015 due to developments in
the external environment as well as the effects of our own mit-
igation measures, the overall risk situation for Siemens did not
change significantly as compared to the prior year. At pres-
ent, no risks have been identified that either individually or in
combination could endanger our ability to continue as a going
Siemens AG is the parent company of the Siemens Group.
Results for Siemens AG are significantly influenced by directly
or indirectly owned subsidiaries and investments. The business
development of Siemens AG is fundamentally subject to the
same risks and opportunities as the Siemens Group. Due to the
interrelations between Siemens AG and its subsidiaries and the
relative size of Siemens AG within the Group, the outlook of
the Group also largely reflects our expectations for Siemens AG.
Therefore, the above mentioned explanations for the Siemens
Group apply also for the Siemens AG. We expect that income
from investments will significantly influence the profit of
Siemens AG.
The Annual Financial Statements of Siemens AG have been pre-
pared in accordance with the rules set out in the German Com-
mercial Code (Handelsgesetzbuch).
A.9 Siemens AG
34 Combined Management Report
Our internal audit function systematically evaluates our finan-
cial reporting integrity, the effectiveness of the control system
and the risk management system, and the adherence to our
compliance policies. In addition, the Audit Committee is inte-
grated into our control system. In particular, it oversees the
accounting process and the effectiveness of the control system,
the risk management system and the internal audit system.
Furthermore, we have set up a Disclosure Committee which is
responsible for reviewing certain financial and non-financial
information prior to publication. Moreover, we have rules for
accounting-related complaints.
On a quarterly basis, an internal certification process is exe-
cuted. Management of different levels of our organization, sup-
ported by confirmations of management of entities under their
responsibility, confirms the accuracy of the financial data that
has been reported to Siemens' corporate headquarters and re-
ports on the effectiveness of the related control systems.
Qualification of employees involved in the accounting process
is ensured through appropriate selection processes and regular
training. As a fundamental principle, based on materiality con-
siderations, the four eyes principle applies and specific proce-
dures must be adhered to for data authorization. Additional
control mechanisms include target-performance comparisons
and analyses of the composition of and changes in individual
line items, both in the closing data submitted by reporting
units and in the Consolidated Financial Statements. In line with
our information security requirements, accounting-related IT
systems contain defined access rules protecting them from un-
authorized access. The manual and system-based control
mechanisms referred to above generally also apply when rec-
onciling the IFRS closing data to the Annual Financial State-
ments of Siemens AG.
33
Combined Management Report
The base data used in preparing our financial statements
consists of the closing data reported by the operations of
Siemens AG and its subsidiaries. The preparation of the closing
data of most of our entities is supported by an internal shared
services organization. Furthermore, other accounting activi-
ties, such as governance and monitoring related activities, are
usually bundled on regional level. In particular cases, such as
valuations relating to post-employment benefits, external
experts are used. The reported closing data is used to prepare
the financial statements in the consolidation system. The steps
necessary to prepare the financial statements are subject to
both manual and automated controls.
Our Consolidated Financial Statements are prepared on the ba-
sis of a centrally issued conceptual framework which primarily
consists of uniform Financial Reporting Guidelines and a chart
of accounts. For Siemens AG and other companies within the
Siemens group required to prepare financial statements in ac-
cordance with German Commercial Code, this conceptual
framework is complemented by mandatory regulations specific
to the German Commercial Code. The need for adjustments in
the conceptual framework due to regulatory changes is ana-
lyzed on an ongoing basis. Accounting departments are in-
formed quarterly about current topics and deadlines from an
accounting and closing process perspective.
At the end of each fiscal year, our management performs an
evaluation of the effectiveness of the implemented control sys-
tem, both in design and operating effectiveness. We have a
standardized procedure under which necessary controls are
defined, documented in accordance with uniform standards,
and tested regularly on their effectiveness. Nevertheless, there
are inherent limitations on the effectiveness of any control sys-
tem, and no system, including one determined to be effective,
may prevent or detect all misstatements.
Our ERM approach is based on COSO's "Enterprise Risk Manage-
ment - Integrated Framework". As one of the objectives of this
framework is reliability of a company's financial reporting, it
includes an accounting-related perspective. Our accounting-
related internal control system (control system) is based on
the internationally recognized "Internal Control - Integrated
Framework" also developed by COSO. The two systems are com-
plementary.
The overarching objective of our accounting-related internal
control and risk management system is to ensure that financial
reporting is conducted in a proper manner, such that the Con-
solidated Financial Statements and the Combined Management
Report of Siemens group as well as the Annual Financial State-
ments of Siemens AG as the parent company are prepared in
accordance with all relevant regulations.
A.8.3.5 ASSESSMENT OF THE
OVERALL RISK SITUATION
The following discussion describes information required pursu-
ant to Section 289 (5) and Section 315 (2) no. 5 of the German
Commercial Code (Handelsgesetzbuch) and explanatory report.
Even though the assessment of individual opportunities have
changed during fiscal year 2015 due to developments in the
external environment as well as the effects of our endeavors to
harvest them, the overall opportunity situation did not change
significantly as compared to the prior year.
Localizing value chain activities: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service in emerging markets, could enable us to re-
duce costs and strengthen our global competitive position, in
particular compared to competitors based in countries with a
more favorable cost structure. Moreover, our local footprint in
many countries might help us to take advantage of a possible
recovery of markets and leverage a shift in markets, resulting in
increased market penetration and market share.
Excellent project execution: By expanding project manage-
ment efforts as well as learning from our mistakes in project
execution through a formalized lessons learned approach, we
see an opportunity to continuously reduce non-conformance
costs and ensure on-time delivery of our projects and solutions.
Furthermore, stringent project risk and opportunity manage-
ment, time schedule management, performance bonuses and
highly professional management of consortium partners and
suppliers help us to avoid liquidated damages and ultimately
improve our profit position. In addition, improvements of our
claim management processes enable us to reduce costs in-
curred as a result of customer claims by finding a consensus
with customers while also improving customer relationship
management. At the same time, we reduce quality problems by
proactively addressing supplier issues up front.
competitive cost structure complements the competitive ad-
vantage of being innovative. We believe that further improve-
ments in our cost position can strengthen our global competi-
tive position and secure our market presence against emerging
and incumbent competitors. For example, we expect to create
sustainable value from productivity measures in connection
with our "Vision 2020" concept. Moreover, establishing a strin-
gent claim management process can help materialize opportu-
nities by enforcing our claims towards our contract partners
even stronger.
Combined Management Report
Continuously developing and implementing initiatives to
reduce costs, boost sales efforts, adjust capacities, improve
our processes, realize synergies and streamline our port-
folio: In an increasingly competitive market environment, a
Political stabilization of critical countries and recovery of
worldwide economic environment: We see an opportunity
that political stabilization of critical countries may lead to
higher volume because it gives us the opportunity to catch up
revenue that was unavailable in past years. Furthermore, a
rapid worldwide recovery of the economic environment could
also lead to additional volume and profit for Siemens.
Success from innovation: Innovation is a central part of
Siemens "Vision 2020", an entrepreneurial concept, leading
Siemens into the future in the three stages: first we "drive per-
formance", then we "strengthen core" and finally we "scale up”
to attain our goals. We do this by investing significantly in R&D
in order to develop innovative, sustainable solutions for our
customers and to simultaneously safeguard our competitive-
ness. We are an innovative company and invent new technolo-
gies that we expect will meet future demands in accordance
with the megatrends of demographic change, urbanization,
climate change and globalization. We are granted thousands of
new patents every year and continuously develop new con-
cepts and convincing business models. We open up access to
new markets and customers through new marketing and sales
strategies as well as Divisional master plans.
Electrification, automation and digitalization: Siemens is
positioned along the value chains of electrification, automa-
tion and digitalization in order to increase future market
penetration. Along these value chains, we have identified sev-
eral growth fields in which we see our greatest long-term
potential. We are orienting our resource allocation toward these
growth fields and have announced concrete measures in this
direction. For example, we see an opportunity to leverage busi-
ness analytics across verticals and introduce cloud-enabled soft-
ware and IT services (e.g. predictive maintenance) resulting in
additional business volume, market share and customer reten-
tion. We intend to fully exploit the potential of increasing digita-
lization not just in manufacturing. Utilizing software and simu-
lations, the Digital Factory Division makes product development
considerably faster and more efficient. Data-driven services,
software and IT solutions are of decisive importance as they
have a substantial influence on all of our future growth fields.
could help us to strengthen our position in our existing mar-
kets, provide access to new markets or complement our techno-
logical portfolio in selected areas. Opportunities might also
arise from well executed divestments further optimizing our
portfolio and generating divestment gains.
Acquisitions, equity investments, partnerships and divest-
ments: We constantly monitor our current and future markets
for opportunities for strategic acquisitions, equity investments
or partnerships to complement organic growth. Such activities
Within our Enterprise Risk Management (ERM) we regularly
identify, evaluate and respond to opportunities that present
themselves in our various fields of activity. Below we describe
our most significant opportunities. Unless otherwise stated,
the opportunities described below relate to all of our segments.
The order in which the opportunities are presented reflects the
currently estimated relative exposure for Siemens associated
with these opportunities and thus provides an indication of the
opportunities' current importance to us. The described oppor-
tunities are not necessarily the only ones we encounter. In ad-
dition, our assessment of opportunities is subject to change as
our Company, our markets and technologies are constantly de-
veloping. It is also possible that opportunities we see today will
never materialize.
A.8.4 Opportunities
concern.
A.8.5 Significant characteristics of
the accounting-related internal control
and risk management system
2 times
base com-
pensation
The primary factors for the increase in income from investments
was a gain of €2.8 billion on the disposal of Siemens' stake in
BSH and higher income from profit transfers of €2.6 billion, in
particular €1.7 billion from Siemens Beteiligungen Inland GmbH
and €0.8 billion from Siemens Healthcare GmbH.
A.9.2 Net assets and financial position
Maximum amounts of compensation
| Remuneration system for Managing Board members as of fiscal 2015
Target compensation
The system and levels for the Managing Board's remuneration
are determined and regularly reviewed by the full Supervisory
Board, based on proposals by the Compensation Committee.
The Supervisory Board reviews remuneration levels annually to
ensure that they are appropriate. In this process, the Company's
economic situation, performance and outlook as well as the
tasks and performance of the individual Managing Board mem-
bers are taken into account. In addition, the Supervisory Board
considers the common level of remuneration in comparison
with peer companies and with the compensation structure in
place in other areas of the Company. It also takes due account
of the relationship between the Managing Board's remunera-
tion and that of senior management and staff, both overall and
with regard to its development over time. For this purpose, the
Supervisory Board has also determined how senior manage-
ment and the relevant staff are to be differentiated. The remu-
neration system that was in place for Managing Board members
in fiscal 2015 was approved by a majority of 92.79% at the Annual
Shareholders' Meeting on January 27, 2015. The individual com-
ponents of compensation - base compensation, variable com-
pensation (Bonus) and long-term stock-based compensation
are weighted equally, and each comprises about one-third of
target compensation. This equal weighting is also applied to
the three target parameters of variable compensation.
The remuneration system for the Siemens Managing Board is
intended to provide an incentive for successful corporate man-
agement with an emphasis on sustainability. Managing Board
members are expected to make a long-term commitment to
and on behalf of the Company and may benefit from any sus-
tained increase in the Company's value. For this reason, a sub-
stantial portion of their total remuneration is linked to the
long-term performance of Siemens stock. Their remuneration
is to be commensurate with the Company's size and economic
position. Exceptional achievements are to be rewarded ade-
quately, while falling short of targets is to result in an apprecia-
ble reduction in remuneration. The compensation is also struc-
tured so as to be attractive in comparison to that of competitors,
with a view to attracting outstanding managers to the Company
and retaining them for the long term.
A.10.1.1 REMUNERATION SYSTEM
A.10.1 Remuneration of Managing Board
members
This report is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of the
German Commercial Code (Handelsgesetzbuch), the German
Accounting Standards (Deutsche Rechnungslegungs Standards)
and the International Financial Reporting Standards (IFRS).
A.10 Compensation Report
37
Combined Management Report
RATE GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE
GERMAN COMMERCIAL CODE.
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code is an integral part of the Com-
bined Management Report and is presented in → c.4.2 CORPO-
A.9.3 Corporate Governance statement
The increase in Trade payables, liabilities to affiliated com-
panies and other liabilities was due primarily to higher liabil-
ities to affiliated companies as a result of intra-group financing
activities.
Share Ownership Guidelines
The increase in Other provisions was due primarily to an in-
crease of €0.5 billion in provisions for probable losses for guar-
antees. This was partly offset by a decline of €0.2 billion in pro-
visions for outstanding deliveries and services.
The increase in Equity was attributable to net income for the
year of €5.6 billion and issuance of treasury stock of €0.3 bil-
lion in conjunction with our share-based payments. These fac-
tors were partly offset by dividends paid in fiscal 2015 (for fiscal
2014) of €2.7 billion. In addition, the equity was reduced due to
share buybacks during the year amounting to €2.7 billion. The
equity ratios at September 30, 2015 and 2014 were 27% and
29%, respectively.
Cash and cash equivalents and marketable securities
are significantly affected by the liquidity management of
Siemens AG. The liquidity management is based on the finance
strategy of the Siemens Group. Therefore, the change in liquid-
ity of Siemens AG was not driven only from business activities
of Siemens AG.
The increase in Receivables and other assets was due primar-
ily to higher receivables from affiliated companies as a result of
intra-group financing activities.
Combined Management Report
36
The increase in Financial assets was due primarily to the addi-
tion of Siemens' 49% stake in the Primetals Technologies Ltd.
joint venture amounting to €0.7 billion - less a €0.1 billion
impairment in fiscal 2015 - and the addition of the newly
founded Siemens Healthcare GmbH amounting to €0.6 billion.
The Siemens Medical Solutions Health Services GmbH
was transferred into this newly founded company with a
carrying amount of €0.3 billion. In addition, a capital increase
of €0.3 billion relating to Siemens Beteiligungsverwaltung
GmbH & Co. OHG was included. Loans and securities within
non-current assets increased by €0.2 billion and €0.2 billion,
respectively.
10%
24%
296
65,400
20%
27,075
32,494
367
71,880
20%
26,190
The increase in Pension and similar commitments included
interest and service costs amounting to €0.7 billion and nega-
tive effects amounting to €0.8 billion from adjustment of the
discount rate. These factors were partly offset by pension pay-
ments amounting to €0.6 billion and a transfer of pension
obligations, net to Siemens Healthcare GmbH amounting to
€0.4 billion.
31,545
Long-term stock-based compensation
compared to 5 competitors
President
and CEO:
3 times
base com-
pensation
Combined Management Report
38
Obligation to hold shares during term of office on the Managing Board
Performance-based component
Performance-based component with deferred payout
Non-performance-based component
target amount
max. 300% of
(Stock Awards):
component
Stock-based
ודי"
adjustment
add. +20%
> Target parameter: stock price
compensation
Max. 1.7 times target
Compensation overall
compensation
Base
compensation
Base
compensation
Base
add. ±20% adjustment
> Variability: 0-200%
one-third each
> 3 targets
Variable compensation (Bonus)
> Variability: 0-200%
Bonus: 0-200%
The decline in Income tax expenses was due mainly to higher
deferred tax assets resulting from provisions. This was partly
offset by prior-year tax effects.
Deferred income
Total liabilities and equity
Trade payables, liabilities
5%
(25)%
26%
18,488
111
2,222
2,333
23,308
83
43%
2,672
3,816
23%
15,816
19,492
Receivables and other assets
Cash and cash equivalents,
securities
Current assets
29
4%
46,127
4%
42,121
43,688
1%
2,419
2,439
Intangible and tangible assets
Financial assets
Non-current assets
% Change
Sep 30,
2014
2015
(in millions of €)
Assets
Statement of Financial Position of Siemens AG in accordance
with German Commercial Code (condensed)
44,540
to affiliated companies
and other liabilities
40
71,880
31%
677
887
(70)%
208
62
Liabilities to banks
Advance payments received
Liabilities
3%
18,472
19,064
2%
7,369
7,511
(28)%
Other provisions
11,103
11,553
Pensions and similar
commitments
(7)%
759
708
Special reserve
with an equity portion
Provisions
2%
18,798
19,247
Liabilities and equity
Equity
Prepaid expenses
Deferred tax assets
Active difference resulting
from offsetting
Total assets
10%
65,400
4%
6%
5 Prof. Dr. Hermann Requardt resigned from the Managing
Board effective the end of the day on January 31, 2015. His
48
604
540
5,807
3,730
580
1,615
832
2,148
3,284
1,070 1,376
3,463
1,046
3,270
1,035
1,410
3,486
451
1,149
Lisa Davis €1,040,036 (2014: €907,076), Klaus Helmrich
€1,040,036 (2014: €500,027), Janina Kugel €693,357 (2014:
€0), Prof. Dr. Siegfried Russwurm €1,040,036 (2014:
€500,027), and Dr. Ralf P. Thomas €1,040,036 (2014:
€500,027). The corresponding monetary values for former
Managing Board members were as follows: Barbara Kux €0
(2014: €63,913), Prof. Dr. Hermann Requardt €346,679 (2014:
€625,034), Peter Y. Solmssen €0 (2014: €125,007) and
Dr. Michael Süß €0 (2014: €299,756). Because Janina Kugel
joined the Managing Board during the fiscal year, the mone-
tary value relating to 100% target achievement was prorated
and, instead of Stock Awards, she received an equivalent
amount of Phantom Stock Awards. At the end of the restric-
tion period, these awards will be settled in cash rather than
via a stock transfer. Otherwise, the regulations are the same
as those for Stock Awards.
6 Total maximum compensation for fiscal 2015 represents the
contractual maximum amount for overall compensation,
excluding fringe benefits and pension benefit commitments.
At 1.7 times target compensation (base compensation, target
amount for the Bonus and the target amount for long-term
stock-based compensation), the maximum amount is less
than the total of the individual contractual caps for perfor-
mance-based components.
7 Total compensation reflects the current fair value of stock-
based compensation components on the award date. On
the basis of the current monetary values of stock-based
compensation components, total compensation amounted
to €27,756,633 (2014: €29,109,709).
8 Ms. Davis's compensation is paid out in Germany in euros.
It has been agreed that any tax liability that arises due to
tax rates that are higher in Germany than in the U.S. will be
reimbursed. For base compensation of calendar year 2014 as
well as for the cash Bonus of fiscal 2014, a currency-adjust-
ment payment was granted.
9 Prof. Dr. Hermann Requardt resigned from the Managing
Board effective the end of the day on January 31, 2015. His
employment contract ended effective September 30, 2015.
In addition to the total compensation shown above for his
work as a member of the Managing Board, Prof. Dr. Requardt
received the following compensation for the remaining term
of his contract from February 1 to September 30, 2015: fixed
compensation of €673,600, fringe benefits of €68,203,
variable compensation (Bonus) of €902,624 and Siemens
Stock Awards in the amount of €665,258. In accordance
with the provisions of his contract, his Stock Awards will be
settled in cash at the closing price of Siemens stock in Xetra
trading on September 30, 2015.
Allocations
The following table shows allocations for fiscal 2015 for fixed
compensation, fringe benefits, one-year variable compensation
and multi-year variable compensation -by reference year - as
well as the expense of pension benefits. In deviation from the
1,021
3,463
multi-year variable compensation granted for fiscal 2015 and
shown above, this table includes the actual figure for multi-
year variable compensation granted in previous years and allo-
cated in fiscal 2015. Due to rounding, the figures presented in
the table may not add up precisely to the totals provided.
3,190
419
-
480
-
600
665
0 2,080
335
998
-
333
1,942
103
2,045
103
103
754 3,410
2,963
560
3,523
3,097 1,088
603
603
3,700 1,691
0 3,120
5,203
603
5,806
335
998
2,972 3,086
230
604
3,202 3,690 1,682
1,078
604
0 3,120
5,203
651 3,307
480
| Managing Board members serving as of September 30, 2015
Non-performance-
Service cost
Total (Code)
1 Fringe benefits include the costs, or the cash equiva-
lent, of non-monetary benefits and other perquisites,
such as the provision of company cars in the amount
of €158,131 (2014: €181,638), contributions toward the
cost of insurance in the amount of €134,170 (2014:
€71,776), the reimbursement of expenses for legal
advice and tax advice, accommodation and moving
expenses, including any taxes due in this regard,
currency adjustment payments and costs relating to
preventive medical examinations in the amount of
€330,620 (2014: €194,498).
2 The cash component of one-year variable compensa-
tion (Bonus) presented above therefore represents the
amount awarded for fiscal 2015, which will be paid out
in January 2016.
46 Combined Management Report
Joe Kaeser
President and CEO
Dr. Roland Busch
Managing Board member
Total
Lisa Davis
Klaus Helmrich
Managing Board member
2015
2014
2015
2014
2015
2014
2015
2014
Managing Board member
(Amounts in thousands of €)
Other4
One-year variable compensation (Bonus) - Cash component²
Multi-year variable compensation³
based components
Performance-based
components
Fixed compensation (base compensation)
Fringe benefits¹
Total
without long-term incentive effect, non-stock-based
with long-term incentive effect, stock-based
One-year variable compensation (Bonus) - Cash component²
Multi-year variable compensation³
Siemens Stock Awards (restriction period: 2010-2013)
Share Matching Plan (vesting period: 2012 - 2014)
Share Matching Plan (vesting period: 2011 - 2013)
Total
Siemens Stock Awards (restriction period: 2010-2013)
Share Matching Plan (vesting period: 2012 - 2014)
Share Matching Plan (vesting period: 2011-2013)
Service cost
| Managing Board members serving as of September 30, 2015
(Amounts in thousands of €)
Non-performance-
based components
Performance-based
components
Fixed compensation (base compensation)
Fringe benefits¹
Total
without long-term incentive effect, non-stock-based
with long-term incentive effect, stock-based
Total (Code)
1,878
-
-
2015
2015
2014
2015
(max)
(min)
(max)
626
626
2015
626
1,010
1,010
1,010
998
1,010
1,010
1,010
998
337
998
25
2014
2015
(min)
1,826
1,477
3,713
1,046 1,376
3,271 3,427
Janina Kugel
Managing Board member
since February 1, 2015
Prof. Dr. Siegfried Russwurm
Managing Board member
Dr. Ralf P. Thomas
Prof. Dr. Hermann Requardt⁹
2015
CFO
until January 31, 2015
2014
2015
2015
2015
2014
2015
(min)
(max)
Managing Board member
340
25
44
0 2,080
749
1,172
1,010
998
0
2,425
0 3,120
749
1,164
1,010
998
0
665
2,425
337
0 3,120
1,359
333
-
=
357
-
349
749
25
1,502
626
651
651
651
1,042
78
1,088
78
1,088
78
61
1,088
0
1,060
67
67
84
28
1,078
1,078
1,082
365
_
67
1,078
1,845
1,010
998
28
84
651
1,088
1,042
1,078
1,060
365
1,082
61
832
1,070
1,410
1,046
451
1,021
0
0
1,392
177
1,376
535
67
78
Prof. Dr. Hermann Requardt5
Managing Board member
since February 1, 2015
until January 31, 2015
2015
2014
2015
2014
2015
44
2014
2014
626
1,010
998
1,010
998
337
998
25
2015
CFO
0
0
22
0
62
1,482
103
1,586
2,465
3,560
2,665
2,662
0
817
603
3,068
560
4,120
604
3,269
230
2,892
580
1,397
540
4,224
3 Starting with the Siemens Stock Awards tranche of 2011, the
restriction period was extended from three to four years.
Shares from the Siemens Stock Awards for 2011 will thus only
be transferred in November 2015. Therefore, no allocation
for Siemens Stock Awards was made in fiscal 2015.
4 "Other" includes the adjustment of the Siemens Stock
Awards for 2010 (transfer in November 2013) in accordance
with Section 23 and Section 125 of the German Transforma-
tion Act (Umwandlungsgesetz) due to the spin-off of
OSRAM. For Ms. Davis, "Other" represents the cash compo-
nent of the compensatory payment made in December 2014
for the forfeiture of benefits from her former employer.
3,684
1,519
56
0
0
1,392
0
520
0
1,392
0
0
0
0
177
0
0
0
0
0
0
15
0
127
0
Dr. Ralf P. Thomas
Managing Board member
Managing Board member
1,477
125
1,376
1,046
0
1,595
0
269
0
1,210
0
367
0
1,392
0
269
0
0
0
366
0
0
1,444
2,683
1,010
166
1,010
998
102
95
53
51
227
2,016
15
62
1,980
1,940
1,063
1,049
1,238
181
1,052
1,061
42
0
0
0
1,404
2,429
2,488
1,096
1,059
604
5,760
6,676
3,111
2,715
561
3,100
2,819
604
521
3,326
4,223
3,032
3,009
Janina Kugel
Prof. Dr. Siegfried Russwurm
611
2,539
2,507
5,617
0
0
0
0
0
203
0
0
0
0
0
0
0
66
0
11
0
1,098
0
15
4,664
125
1,444
3,505
1,210
3,478
6,535
-
In the event of a change of control that results in a substantial
change in a Managing Board member's position – for example,
due to a change in corporate strategy or a change in the Man-
aging Board member's duties and responsibilities – the Manag-
ing Board member has the right to terminate his or her contract
with the Company. A change of control exists if one or more
shareholders acting jointly or in concert acquire a majority of
the voting rights in Siemens AG and exercise a controlling in-
fluence or if Siemens AG becomes a dependent enterprise as a
result of entering into an intercompany agreement within the
meaning of Section 291 of the German Stock Corporation Act
(Aktiengesetz) or if Siemens AG is to be merged into an existing
corporation or other entity. If this right of termination is exer-
cised, the Managing Board member is entitled to a severance
payment in the amount of not more than two years' compensa-
tion. The calculation of the annual compensation will include
not only the base compensation and the target amount for the
Bonus, but also the target amount for Stock Awards, in each
case based on the most recent fiscal year completed prior to
the termination of the member's contract. The stock-based
components for which a firm commitment already exists will
remain unaffected. There is no entitlement to a severance pay-
ment if the Managing Board member receives benefits from
third parties in connection with a change of control. Moreover,
there is no right to terminate if the change of control occurs
within a period of twelve months prior to a Managing Board
member's retirement.
Compensatory or severance payments also cover non-mone-
tary benefits by including an amount of 5% of the total com-
pensation or severance amount. Compensatory or severance
payments will be reduced by 10% as a lump-sum allowance for
discounted values and for income earned elsewhere. However,
this reduction will apply only to the portion of the compensa-
tory or severance payment that was calculated without taking
into account the first six months of the remaining term of the
Managing Board member's employment contract.
Combined Management Report
41
Stock commitments that were made as long-term stock-based
compensation and for which the restriction period is still in
effect will be forfeited without replacement if the employment
agreement is not extended after the end of an appointment
period, either at the Managing Board member's request or
because there is serious cause that would have entitled the
Company to revoke the appointment or terminate the contract.
However, once granted, Stock Awards are not forfeited if the
employment agreement is terminated by mutual agreement at
the Company's request, or because of retirement, disability or
death or in connection with a spinoff, the transfer of an opera-
tion or a change of activity within the corporate group. In these
cases, the Stock Awards will remain in effect upon termination
of the employment agreement and will be honored on expira-
tion of the restriction period.
A.10.1.2 REMUNERATION OF MANAGING BOARD
MEMBERS FOR FISCAL 2015
At the beginning of the fiscal year, the Supervisory Board set
the target parameters return on capital employed (ROCE) and
earnings per share (EPS), in each case on the basis of continu-
ing and discontinued operations. The target values for the EPS
component were defined on a multi-year basis. In defining the
target for variable compensation, the Supervisory Board also
defined individual targets for all members of the Managing
Board so as to take fuller account of their individual perfor-
mance. As a rule, up to five individual targets were defined for
this purpose. These targets take account of business-related
targets such as market coverage and business performance as
well as targets such as customer and employee satisfaction, in-
novation and sustainability. An internal review of the appropri-
ateness of Managing Board compensation for fiscal 2015 has
confirmed that the remuneration of the Managing Board result-
ing from target achievement for fiscal 2015 is to be considered
appropriate. In light of this review and following a review of the
achievement of the targets defined at the beginning of the fis-
cal year, the Supervisory Board has decided to define the
amounts of variable compensation, stock commitments and
pension benefit contributions as follows:
term stock-based compensation actually received during the
last fiscal year before termination. The compensatory payment
is payable in the month when the member leaves the Managing
Board. In addition, a one-time special contribution is made to
the BSAV. The amount of this contribution is based on the BSAV
contribution that the Managing Board member received in the
previous year and on the remaining term of his or her appoint-
ment, but is limited to not more than two years' contributions
(cap). The above benefits are not paid if an amicable termina-
tion of the member's activity on the Managing Board is agreed
upon at the member's request, or if there is serious cause for
the Company to terminate the employment relationship.
Variable compensation (Bonus)
|
Target parameter
Return on capital employed, ROCE¹
Earnings per share, basic EPS1 (02013-2015)
1 Continuing and discontinued operations.
100% of target
15.96%
€5.40
Actual FY 2015 figure
19.63%
Target achievement²
The following targets were set and attained with respect to the
two target parameters ROCE and EPS for variable compensation:
€6.76
Managing Board employment contracts provide for a compen-
satory payment if membership on the Managing Board is termi-
nated prematurely by mutual agreement and without serious
cause. The amount of this payment must not exceed the value
of two years' compensation and compensate no more than the
remaining term of the contract (cap). The amount of the com-
pensatory payment is calculated on the basis of base compen-
sation, together with the variable compensation and the long-
Managing Board members who were employed by the Company
on or before September 30, 1983, are entitled to receive transi-
tion payments for the first six months after retirement, equal to
the difference between their final base compensation and the
retirement benefits payable under the corporate pension plan.
ROCE
Earnings
per share
Individual
targets
1/3
Long-term
stock-based compensation
(Siemens Stock Awards)
Performance of Siemens stock
compared to 5 competitors
Maximum amount for compensation overall
In addition to the maximum amounts of compensation for
variable compensation and long-term stock-based compensa-
tion, a maximum amount for compensation overall has been
defined. Since fiscal 2014, this amount cannot be more than
1.7 times higher than target compensation. Target compensa-
tion comprises base compensation, the target amount for
variable compensation and the target amount for long-term
stock-based compensation, excluding fringe benefits and pen-
sion benefit commitments. When fringe benefits and pension
benefit commitments for a given fiscal year are included, the
maximum amount of compensation overall for that year will
increase accordingly.
Share Ownership Guidelines
Commitments in connection with the termination
of Managing Board membership
-
The Siemens Share Ownership Guidelines are an integral part
of the remuneration system for the Managing Board and senior
executives. These guidelines require that – after a specified
buildup phase - Managing Board members hold Siemens stock
worth a multiple of their base compensation 300% for the
President and CEO, 200% for the other members of the Manag-
ing Board - throughout their terms of office on the Managing
Board. The determining figure in this context is the average
base compensation that a member of the Managing Board has
received over the four years before the applicable dates of proof
of compliance. Changes that have been made to base compen-
sation in the meantime are included. Non-forfeitable stock
commitments (Bonus Awards) which were granted until fiscal
2014 are taken into account in determining compliance with
the Share Ownership Guidelines.
employment contract ended effective September 30, 2015.
In addition to the total compensation shown above for his
work as a member of the Managing Board, Prof. Dr. Requardt
received the following compensation for the remaining term
of his contract from February 1 to September 30, 2015: fixed
compensation of €673,600, fringe benefits of €68,203, and
variable compensation (Bonus) of €902,624.
Pension benefit commitments
Like employees of Siemens AG, the members of the Managing
Board are included in the Siemens Defined Contribution Benefit
Plan (BSAV). Under the BSAV, Managing Board members re-
ceive contributions that are credited to their personal pension
accounts. The amount of these annual contributions is based
on a predetermined percentage related to their base compensa-
tion and the target amount for their Bonuses. This percentage is
decided upon annually by the Supervisory Board. Most recently
it was set at 28%. In making its decisions, the Supervisory Board
takes account of the intended level of provision for each individ-
ual and the length of time he or she has been a Managing Board
member as well as the annual and long-term expense to the
Company resulting from that provision. The non-forfeitability
Combined Management Report
of pension benefit commitments is determined in compliance
with the provisions of the German Company Pensions Act
(Betriebsrentengesetz). Special contributions may be granted to
Managing Board members on the basis of individual decisions
by the Supervisory Board. If a member of the Managing Board
earned a pension benefit entitlement from the Company before
the BSAV was introduced, a portion of his or her contributions
went toward financing that prior commitment.
Managing Board members are eligible to receive benefits under
the BSAV at the age of 60 or - in the case of benefit commit-
ments made on or after January 1, 2012 – the age of 62. As a
rule, the accrued pension benefit balance is paid out to Manag-
ing Board members in twelve annual installments. A Managing
Board member or his or her surviving dependents may also re-
quest that his or her pension benefit balance be paid out in
fewer installments or as a lump sum, subject to the Company's
consent. The accrued pension benefit balance may also be paid
out as a pension. As a further alternative, Managing Board
members may choose to combine pension payments with pay-
ments in one to twelve installments. If the pension option is
chosen, a decision must be made as to whether the payout
should include pensions for surviving dependents. If a member
of the Managing Board dies while receiving a pension, benefits
will be paid to his or her surviving dependents if the member
has chosen such benefits. The Company will then provide a
limited-term pension to surviving children until they reach the
age of 27 or, in the case of benefit commitments made on or
after January 1, 2007, until they reach the age of 25.
Benefits from the retirement benefit system that was in place
before the BSAV was established are normally granted as pen-
sion benefits with a surviving dependent's pension. In this case
also, payout in installments or a lump sum payment may be
chosen instead of pension payments.
-
1/3
128.00%
2 Calculative target achievement ROCE was 200% (cap). The Supervisory Board adjusted this target achievement due to the sale of the hearing aid business (Audiology).
with long-term incentive effect,
stock-based
One-year variable compensation (Bonus) -
Cash component (Code)
Multi-year variable compensation 2,3
Variable compensation (Bonus) - Bonus Awards 4
Siemens Stock Awards (restriction period: 4 years)
Target achievement depending on EPS for past three fiscal years 4
Target achievement depending on future stock performance 5
Total 6
Service cost
effect, non-stock-based
Total (Code)7
Performance-based
components
Total compensation
without long-term incentive
effect, non-stock-based
One-year variable compensation (Bonus) -
Cash component
| Managing Board members serving as of September 30, 2015
(Amounts in thousands of €)
Non-performance-
based components
Total compensation of all Managing Board members for fiscal 2015, in accordance with the applicable reporting standards, amounted to €27.42 million
(2014: €28.57 million). The granted payout amount presented below is to be used instead of the target value according to the Code for one-year variable
compensation. Service costs for pension benefits are not included.
190.67%
without long-term incentive
Fringe benefits¹
The achievement of individual targets was also taken into
account when determining overall target achievement. In its
overall assessment, the Supervisory Board decided not to make
any discretionary adjustments to the Bonus payout amounts. In
fiscal 2015, Bonus-related target achievement by Managing
Board members was between 132.89% and 146.22%.
42
42
Combined Management Report
Long-term stock-based compensation
Since beneficiaries are not entitled to receive dividends, the
number of stock commitments granted was based on the clos-
ing price of Siemens stock in Xetra trading on the date of award
less the present value of dividends expected during the restric-
tion period. The share price used to determine the number of
stock commitments was €72.30 for 2015 as well as for 2014.
Benefits related to the termination of Managing
Board membership
In connection with the mutually agreed-upon termination of
Prof. Dr. Hermann Requardt's activity on the Managing Board as
of January 31, 2015, it was agreed that his current employment
contract with the Company would terminate as of Septem-
ber 30, 2015. The entitlements agreed upon under the contract
remained in effect until that date. A gross compensatory pay-
ment of €1,888,566 and a one-time special contribution of
€279,552 to the BSAV were agreed upon with Prof. Dr. Hermann
Requardt in connection with the mutually agreed-upon prema-
ture termination of his Managing Board membership. The Stock
Awards already granted and for which the restriction period is
still in effect will be maintained in accordance with the terms
of his employment contract and will be settled in cash at the
closing price of Siemens stock in Xetra trading on Septem-
ber 30, 2015 (€79.94). Pursuant to the terms of his employment
contract, Prof. Dr. Hermann Requardt's base compensation for
fiscal 2015 as well as the variable compensation and long-term
stock-based compensation that he received for fiscal 2014 were
used to determine the amount of his compensatory payment
and limited to a total of his compensation for the remaining
term of his appointment. In addition, non-monetary benefits
were covered by a payment amounting to 5% of the compensa-
tory payment. The Company also reimbursed Prof. Dr. Hermann
Requardt for out-of-pocket expenses of €5,000 plus value-
added tax.
Total
Total compensation
The compensation presented on the following pages was
granted to the members of the Managing Board for fiscal 2015
(individualized disclosure). Due to rounding, the figures pre-
sented in the table may not add up precisely to the totals
provided.
Combined Management Report
43
| Managing Board members serving as of September 30, 2015
(Amounts in thousands of €)
Non-performance-
based components
Performance-based
components
Fixed compensation (base compensation)
On the basis of the Supervisory Board's decisions described
above, Managing Board compensation for fiscal 2015 totaled
€27.42 million, a decrease of 4% (2014: €28.57 million). Of this
total amount, €19.56 million (2014: €17.89 million) was attribut-
able to cash compensation and €7.86 million (2014: €10.68 mil-
lion) to stock-based compensation.
1/3
1/3
Variable compensation
(Bonus)
565,824
438,713
350,560
Total
Prof. Dr. Hermann Requardt 5
Former members of the Managing Board
Dr. Ralf P. Thomas
Prof. Dr. Siegfried Russwurm
Janina Kugel 4
559,104
3,047,911
559,104
565,824
Klaus Helmrich
2,818,722
3,126,396
93,184
565,824
Lisa Davis
2,769,337
3,522,681
3,243,101
4,824,749
565,824
pensation for the remaining term of his employment contract -
that is, from February 1 to September 30, 2015 - and a special
contribution to the BSAV. For the period from February 1
through September 30, 2015, Prof. Dr. Hermann Requardt received
9,590 Stock Awards, which will be settled in cash in accordance
with the provisions of his employment contract and in connec-
tion with the mutually agreed-upon termination of his Manag-
ing Board membership. Mr. Solmssen received 7,193 Stock
Awards for the period from October 2014 through March 2015.
Other than this, former Managing Board members and their
surviving dependents received 0 (2014: 18,912) Stock Awards.
In fiscal 2015, former members of the Managing Board and
their surviving dependents received emoluments within the
meaning of Section 314 para. 1 No. 6 b of the German Commer-
cial Code totaling €30.5 million (2014: €24.2 million). This fig-
ure includes the compensation for former Managing Board
member Peter Y. Solmssen for the remaining period of his em-
ployment contract from October 2014 through March 2015, the
cash compensation for Bonus Awards granted in the past as
well as the pro rata contribution to the BSAV. It also includes
the compensatory payment connected with the mutually
agreed-upon termination of the Managing Board membership
of Prof. Dr. Hermann Requardt as of January 31, 2015, the com-
5 Prof. Dr. Hermann Requardt resigned from the Managing
Board effective the end of the day on January 31, 2015.
His employment contract ended effective September 30,
2015.
4 Janina Kugel was elected a full member of the Managing
Board effective February 1, 2015.
€1,385,898 for Prof. Dr. Hermann Requardt (2014:
€1,381,365) and €0 for Peter Y. Solmssen (2014: €454,790).
3 Deferred compensation totals €4,947,717 (2014:
€10,057,923), including €3,207,002 for Joe Kaeser (2014:
€3,171,486), €305,023 for Klaus Helmrich (2014: €302,595)
and €49,794 for Dr. Ralf P. Thomas (2014: €49,732). De-
ferred compensation for former Managing Board members
is as follows: €0 for Barbara Kux (2014: €4,697,955),
obligations amounted to €0 (2014: €2,745,615) for
Lisa Davis, €279,552 (2014: €0) for Prof. Dr. Hermann
Requardt and €0 (2014: €812,700) for Dr. Michael Süß.
2 The defined benefit obligations reflect one-time special
contributions to the BSAV of €279,552 (2014:
€3,558,315) for new appointments from outside the
Company and for special contributions in connection
with departures from the Managing Board. These
The expenses (service cost) recognized in accordance
with the IFRS in fiscal 2015 for Managing Board
members' entitlements under the BSAV in fiscal 2015
amounted to €4,804,639 (2014: €7,913,201).
4,390,368
1
6,273,529
33,415,101
6,977,620
559,104
3,921,904
4,797,184
565,824
2,742,051
3,225,678
559,104
29,216,559
559,104
565,824
Dr. Roland Busch
Variable compensation (Bonus) is based on the Company's busi-
ness performance in the past fiscal year. The Bonus depends on
an equal one-third weighting of target achievement of the tar-
get parameters return on capital employed, earnings per share
and individual targets. To achieve a consistent target system
Company-wide, corresponding targets - in addition to other fac-
- also apply to senior managers.
tors
For 100% target achievement (target amount), the amount of
the Bonus equals the amount of base compensation. The Bonus
is subject to a ceiling (cap) of 200%. If targets are substantially
missed, variable compensation may not be paid at all (0%).
At its duty-bound discretion, the Supervisory Board may revise
the amount resulting from target achievement upward or down-
ward by as much as 20%; the adjusted amount of the bonus paid
can thus be as much as 240% of the target amount. In choosing
the factors to be considered in deciding on possible revisions of
the bonus payouts (±20%), the Supervisory Board takes account
of incentives for sustainable corporate management. Decisions
to make discretionary adjustments may take factors such as the
results of an employee survey or a customer satisfaction survey
into account as well as the Company's economic situation. The
revision option may also be exercised in recognition of Manag-
ing Board members' individual achievements. The Bonus is paid
entirely in cash.
Long-term stock-based compensation
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards) at the beginning of
the fiscal year. Beneficiaries receive one free share of Siemens
stock per Stock Award after an approximately four-year restric-
tion period. In the event of extraordinary unforeseen develop-
ments that impact the share price, the Supervisory Board may
decide to reduce the number of promised Stock Awards retro-
actively, or it may decide that in lieu of a transfer of Siemens
stock only a cash settlement in a defined and limited amount
will be paid, or it may decide to postpone transfers of Siemens
stock for payable Stock Awards until the developments have
ceased to impact the share price.
In the event of 100% target achievement, the annual target
amount for the monetary value of the Stock Awards commit-
ment is €1,950,000 for the President and CEO (effective Octo-
ber 1, 2014) and €1,040,000 for each of the other members of
the Managing Board. Since fiscal 2015, the Supervisory Board
has had the option of increasing the target amount for each
member of the Managing Board, on an individual basis, by as
much as 75% for one fiscal year at a time. This option enables
the Supervisory Board to take account of each Managing Board
member's individual accomplishments and experience as well
as the scope and demands of his or her position.
-
Long-term stock-based compensation is linked to the perfor-
mance of Siemens stock compared to its competitors. The Super-
visory Board will decide on a target system (target value for
100% and target line) for the performance of Siemens stock
relative to the stock of - at present five competitors (ABB,
General Electric, Rockwell, Schneider Electric and Toshiba). If
significant changes occur among these competitors during the
period under consideration, the Supervisory Board may take
these changes into account, as appropriate, in determining the
values for comparison and/or calculating the relevant stock
prices of those competitors.
Performance-based components
Variable compensation (Bonus)
Changes in the share price are measured on the basis of a
twelve-month reference period (compensation year) over three
years (performance period), while Stock Awards are restricted
for a period of four years. When this restriction period expires,
the Supervisory Board determines how much better or worse
Siemens stock has performed relative to the stock of its com-
petitors. This determination yields a target achievement of be-
tween 0% and 200% (cap). If target attainment is above 100%,
an additional cash payment corresponding to the outperfor-
mance will be made. If target attainment is less than 100%, a
number of stock commitments equivalent to the shortfall from
the target will expire without replacement.
39
40
The value of the Siemens stock to be transferred for Stock
Awards after the end of the restriction period is subject to a
ceiling of 300% of the respective target amount. If this maxi-
mum amount of compensation is exceeded, the correspond-
ing entitlement to stock commitments will be forfeited without
replacement.
With regard to the further terms of the Stock Awards, the same
principles apply in general to the Managing Board and to sen-
ior managers. These principles are discussed in more detail in
→ NOTE 25 in → B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Transparency through simplicity:
Three equally balanced components within the remuneration system and three equally balanced targets within the Bonus
1/3
Base compensation
1/3
Combined Management Report
Fringe benefits include the costs, or the cash equivalent, of non-
monetary benefits and other perquisites, such as the provision
of a company car, contributions toward the cost of insurance,
the reimbursement of expenses for legal advice and tax advice,
accommodation and moving expenses, including a gross-up for
any taxes due in this regard, currency adjustment payments
and costs relating to preventive medical examinations.
Fringe benefits
Base compensation is paid as a monthly salary. Since October 1,
2014, the base compensation of President and CEO Joe Kaeser
has amounted to €1,878,000 per year. The base compensation
of the CFO and of those members of the Managing Board who
are responsible for Divisions (including Healthcare) has been
€1,010,400 per year. For the other members of the Managing
Board, it has been €939,000 per year.
7,174,641
8,056,153
1,033,200
1,051,680
Joe Kaeser
serving as of September 30, 2015
Managing Board members
2014
2015
2014
Defined benefit obligation² for all pension
commitments excluding deferred compensation³
Total contributions' for
2015
(Amounts in €)
The following table shows individualized details of the contri-
butions (allocations) under the BSAV for fiscal 2015 as well as
the defined benefit obligations for pension commitments.
The contributions under the BSAV are added to the personal
pension accounts each January, following the close of the fiscal
year. Until a beneficiary's date of retirement, his or her pension
account is credited with an annual interest payment (guaran-
teed interest) on January 1 of each year. The interest rate is cur-
rently 1.25%.
For fiscal 2015, the members of the Managing Board were
granted contributions under the BSAV totaling €4.8 million
(2014: €5.1 million), based on a resolution of the Supervisory
Board dated November 11, 2015. Of this amount, €0.1 million
(2014: €0.1 million) related to the funding of pension commit-
ments earned prior to transfer to the BSAV.
Pension benefit commitments
47
In fiscal 2015, the Managing Board's remuneration system had
the following components:
Non-performance-based components
Base compensation
Performance-based
components
Combined Management Report
Fixed compensation (base compensation)
Total
0
3,120 1,164
998
0
3,120
672
403
42
-
998
349
480
-
871
-
480
637
1,871
0
5,850
912
335
1,520
0
0
4,507
749
1,010
0
2,425
125
1,010
0
3,120
2,425
1,010
0
2,425
2,221
1,871
0
5,850
1,218
998
749
1,878
998
3,120
3,246
611
3,857
1,238
5,203
2,973
3,061
1,052
5,203
611
1,848
604 2,819
4,645
611
5,814 3,494
604
604
604
3,664
1,656
5,807
2,016
2,683
6,177
521
0
5,807
1,826
608
998
0
3,120
335
998
0
3,120
5,545
604
1,667
Combined Management Report
1,980
1,059
1,096
1,096
6,603 6,825
3,076
9,700 3,017 3,071
1,096
561
604
10,796 3,578 3,675
1,063
5,203
5,729
1,384
1,052
1,052
The monetary values relating to 100% target achieve-
ment were €8,190,219 (2014: €4,970,916). The amounts
for individual Managing Board members were as
follows: Joe Kaeser €1,950,003 (2014: €950,022),
Dr. Roland Busch €1,040,036 (2014: €500,027),
Joe Kaeser
President and CEO
Dr. Roland Busch
Managing Board member
Lisa Davis 8
Managing Board member
Klaus Helmrich
Managing Board member
2014
For Stock Awards granted in fiscal 2014 for which the
target attainment depends on the EPS for the past
three fiscal years and for Bonus Awards granted in
fiscal 2014, the fair value at the date of award is equiva-
lent to the respective monetary value. As of fiscal 2015,
the Bonus is granted entirely in cash; Stock Awards are
linked solely to the performance of Siemens stock in
comparison to its competitors.
2015
2015
2014
2015
2015
2015
2014
2015
2015
(min)
2015
(max)
(2014: €1,254,756), Peter Y. Solmssen €141,258 (2014:
€3,430,484), and Dr. Michael Süẞ €28,666 (2014:
€2,742,885).
4
without long-term incentive
effect, non-stock-based
with long-term incentive effect,
stock-based
One-year variable compensation (Bonus) -
Cash component (Code)
Multi-year variable compensation 2,3
Variable compensation (Bonus) - Bonus Awards 4
Siemens Stock Awards (restriction period: 4 years)
Target achievement depending on EPS for past three fiscal years 4
Target achievement depending on future stock performance 5
Total 6
5
Service cost
Total compensation of all Managing Board members for fiscal 2015, in accordance with the applicable reporting standards, amounted to €27.42 million
(2014: €28.57 million). The granted payout amount presented below is to be used instead of the target value according to the Code for one-year variable
compensation. Service costs for pension benefits are not included.
Performance-based
components
Total compensation
without long-term incentive
effect, non-stock-based
One-year variable compensation (Bonus) -
Cash component
1 Fringe benefits include the costs, or the cash equiva-
lent, of non-monetary benefits and other perquisites,
such as the provision of company cars in the amount
of €158,131 (2014: €181,638), contributions toward
the cost of insurance in the amount of €134,170 (2014:
€71,776), the reimbursement of expenses for legal
advice and tax advice, accommodation and moving
expenses, including any taxes due in this regard,
currency adjustment payments and costs relating to
preventive medical examinations in the amount of
€330,620 (2014: €194,498).
2 The figures for individual maximums for multi-year
variable compensation reflect the possible maximum
value in accordance with the maximum amount agreed
upon for fiscal 2015, that is, 300% of the applicable
target amount.
3 The expenses recognized for stock-based compensa-
tion for members of the Managing Board in accordance
with the IFRS in fiscal 2015 and fiscal 2014 amounted
to €8,109,155 and €16,141,235, respectively. The fol-
lowing amounts pertained to the members of the
Managing Board in fiscal 2015: Joe Kaeser €2,003,783
(2014: €1,822,932), Dr. Roland Busch €1,129,224 (2014:
€922,535), Lisa Davis €284,928 (2014: €1,337,996),
Klaus Helmrich €1,076,237 (2014: €949,521), Janina
Kugel €140,185 (2014: €0), Prof. Dr. Siegfried Russ-
wurm €1,239,596 (2014: €1,118,839), and Dr. Ralf P.
Thomas €516,915 (2014: €446,570). The corresponding
expense, determined in the same way, for former
Managing Board members was as follows: Brigitte
Ederer €105,227 (2014: €35,373), Barbara Kux €105,227
(2014: €1,971,611), Peter Löscher €230,387 (2014:
€107,733), Prof. Dr. Hermann Requardt €1,107,522
Total (Code)7
(min)
(max)
(min)
53
15
227
227
227
1,940
1,980 1,980
1,980
1,049
53
1,063 1,063
181
1,238
1,238
1,238
998 1,010
62
42
1,061 1,052
1,010
1,010
42
42
1,063
53
51
102
2015
(max)
2014
2015
2015
(min)
2015
(max)
1,845
1,878
1,878
1,878
998
1,010
1,010
1,010
166
1,010
1,010
1,010
95
102
102
Fringe benefits¹
Compliance with these guidelines must be proven for the first
time after a four-year buildup phase. Thereafter, it must be
proven annually. If the value of a Managing Board member's
accrued holdings declines below the required minimum due to
fluctuations in the market price of Siemens stock, he or she
must acquire additional shares.
Other4
45,314
2,031
215
Net income
7,380
5,507
Attributable to:
Non-controlling interests
Shareholders of Siemens AG
Basic earnings per share
Income from continuing operations
Income from discontinued operations
Net income
98
7,282
134
5,373
3
27
Income from discontinued operations, net of income taxes
5,349
1,058
Interest expenses
(818)
(764)
Other financial income (expenses), net
(500)
(177)
Income from continuing operations before income taxes
7,218
7,306
Income tax expenses
7
(1,869)
(2,014)
Income from continuing operations
5,292
6.38
6.12
2.47
committee
compen-
sation for
Additional
2014
Base com-
pensation
Total
Meeting
attend-
ance fee
work
compen-
sation for
committee
Base com-
pensation
Additional
2015
Supervisory Board members
(Amounts in €)
The compensation shown below was determined for each of
the members of the Supervisory Board for fiscal 2015 (individu-
alized disclosure).
work
Meeting
attend-
ance fee
Total
serving as of September 30, 2015
0.25
8.84
6.37
Diluted earnings per share
Income from continuing operations
Income from discontinued operations
Net income
1,260
58 Consolidated Financial Statements
6.30
6.06
2.44
0.25
8.74
6.31
Dr. Gerhard Cromme
27
51
Interest income
1,235
Combined Management Report
55
56
the counterparty a right of termination if a third party acquires
beneficial ownership of equity securities that enable it to elect a
majority of Siemens AG's Supervisory Board or otherwise acquire
the power to control Siemens AG's material policy-making deci-
sions and if the creditworthiness of Siemens AG is materially
weaker than it was immediately prior to such an event. In ei-
ther situation, ISDA Agreements are designed such that upon
termination all outstanding payment claims documented un-
der them are to be netted.
In February 2012, Siemens issued bonds with warrant units
with a volume of US$3 billion. Siemens exchanged the major
part of the warrants issued in 2012 against new warrants in
September 2015. In case of a change of control, the terms and
conditions of each warrant enable their holders to receive a
higher number of Siemens shares in accordance with an ad-
justed strike price if they exercise their option rights within a
certain period of time after the change of control. This period
of time shall end either (1) not less than 30 days and no more
than 60 days after publication of the notice of the issuer re-
garding the change of control, as determined by the issuer or
(2) 30 days after the change of control first becomes publicly
known. The strike price adjustment decreases depending on
the remaining term of the warrants and is determined in detail
in the terms and conditions of the warrants. In this context, a
change of control occurs if control of Siemens AG is acquired
by a person or by persons acting in concert.
A.11.6 Compensation agreements with
members of the Managing Board or
employees in the event of a takeover bid
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member's duties and responsibilities), the
member of the Managing Board has the right to terminate his
or her contract with the Company for good cause. A change of
control exists if one or several shareholders acting jointly or in
concert acquire a majority of the voting rights in Siemens AG
and exercise a controlling influence, or if Siemens AG becomes
a dependent enterprise as a result of entering into an intercom-
pany agreement within the meaning of Section 291 of the Ger-
man Stock Corporation Act, or if Siemens AG is to be merged
into an existing corporation or other entity. If this right of ter-
mination is exercised, the Managing Board member is entitled
to a severance payment in the amount of no more than two
years' compensation. The calculation of the annual compensa-
tion includes not only the base compensation and the target
amount for the bonus, but also the target amount for the stock
awards, in each case based on the most recent completed fiscal
year prior to termination of the contract. The stock-based com-
pensation components for which a firm commitment already
exists will remain unaffected. Additionally, the severance pay-
ments cover non-monetary benefits by including an amount of
5% of the total severance amount. Severance payments will be
reduced by 10% as a lump-sum allowance for discounted values
and for income earned elsewhere. However, this reduction will
apply only to the portion of the severance payment that was
calculated without taking account of the first six months of the
remaining term of the Managing Board member's contract.
There is no entitlement to a severance payment if the Manag-
ing Board member receives benefits from third parties in con-
nection with a change of control. A right to terminate the con-
tract does not exist if the change of control occurs within a
period of twelve months prior to a Managing Board member's
retirement.
A.11.7 Other takeover-relevant
information
We are not aware of, nor have we during the last fiscal year
been notified of, any shareholder directly or indirectly holding
10% or more of the voting rights. There are no shares with spe-
cial rights conferring powers of control. Shares of stock issued
by Siemens AG to employees under its employee share pro-
gram and/or as share-based compensation are transferred di-
rectly to the employees. The beneficiary employees who hold
shares of employee stock may exercise their control rights in
the same way as any other shareholder directly in accordance
with applicable laws and the Articles of Association.
Combined Management Report
B.
Consolidated Financial Statements
0010010
0 1 1 1 0 1 0 0 1 1 0
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documenta-
tion (ISDA Agreements) grant the counterparty a right of termi-
nation when Siemens AG consolidates with, merges into, or
transfers substantially all its assets to a third party. However,
this right of termination exists only, if (1) the resulting entity's
creditworthiness is materially weaker than Siemens AG's im-
mediately prior to such event or (2) the resulting entity fails to
simultaneously assume Siemens AG's obligations under the
ISDA Agreement. Additionally, some ISDA Agreements grant
011000101001110
In March 2013, a consolidated subsidiary as borrower and
Siemens AG as guarantor entered into two bilateral loan agree-
ments, each of which has been drawn in the full amount of
US$500 million. Both agreements provide their respective lend-
ers with a right of termination in the event that (1) Siemens AG
becomes a subsidiary of another company or (2) a person or a
group of persons acting in concert acquires effective control
over Siemens AG by being able to exercise decisive influence
over its activities (Art. 3(2) of Council Regulation (EC) 139/2004).
A.11.5 Significant agreements which
take effect, alter or terminate upon
a change of control of the Company
following a takeover bid
The total amount of new shares issued or to be issued under
Authorized Capital 2014 or in accordance with the bonds men-
tioned above, in exchange for contributions in cash and in kind
and with shareholders' subscription rights excluded, may in
certain cases be subject to further restrictions, such as the
restriction that they may not exceed 20% of the capital stock.
The details of those restrictions are described in the relevant
authorization.
In February 2012, Siemens issued bonds with warrant units
with a volume of US$3 billion. Siemens exchanged the major
part of the warrants issued in 2012 against new warrants in
September 2015; for this purpose, Siemens issued new bonds
with warrants. At exchange, the new warrants resulted in op-
tion rights entitling their holders to receive approximately
20.3 million Siemens shares. The terms and conditions of the
warrants enable Siemens to service exercised option rights
using either conditional capital or treasury stock, and also
enable Siemens to buy back the warrants.
The Company may not repurchase its own shares unless so
authorized by a resolution duly adopted by the shareholders at
a general meeting or in other very limited circumstances set
forth in the German Stock Corporation Act. On January 27,
2015, the Shareholders' Meeting authorized the Company to
acquire until January 26, 2020 up to 10% of its capital stock ex-
isting at the date of adopting the resolution or – if this value is
lower - as of the date on which the authorization is exercised.
The aggregate of shares of stock of Siemens AG repurchased
under this authorization and any other Siemens shares previ-
ously acquired and still held in treasury by the Company or at-
tributable to the Company pursuant to Sections 71d and 71e of
the German Stock Corporation Act may at no time exceed 10%
of the then existing capital stock. Any repurchase of Siemens
shares shall be accomplished at the discretion of the Managing
Board either (1) by acquisition over the stock exchange or
(2) through a public share repurchase offer. The Managing
Board is additionally authorized to complete, with the approval
of the Supervisory Board, the repurchase of Siemens shares in
accordance with the authorization described above by using
certain derivatives (put and call options, forward purchases
and any combination of these derivatives). In exercising this
authorization, all stock repurchases based on the derivatives
are limited to a maximum volume of 5% of Siemens' capital
Combined Management Report
stock existing at the date of adopting the resolution at the
Shareholders' Meeting. A derivative's term of maturity may not,
in any case, exceed 18 months and must be chosen in such a
way that the repurchase of Siemens shares upon exercise of
the derivative will take place no later than January 26, 2020.
In addition to selling them over the stock exchange or through
a public sales offer to all shareholders, the Managing Board
is authorized by resolution of the Shareholders' Meeting on
January 27, 2015 to also use Siemens shares repurchased on the
basis of this or any previously given authorization for every
permissible purpose, in particular as follows: Such Siemens
shares may be
> retired
> used in connection with share-based compensation pro-
grams and/or employee share programs of the Company or
any of its affiliated companies and issued to individuals cur-
rently or formerly employed by the Company or any of its
affiliated companies as well as to board members of any of
the Company's affiliated companies
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
> sold, with the approval of the Supervisory Board, to third par-
ties against payment in cash if the price at which such
Siemens shares are sold is not significantly lower than the
market price of Siemens stock (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutan-
dis application of Section 186 para. 3 sentence 4 German
Stock Corporation Act) or
> used to service or secure obligations or rights to acquire
Siemens shares arising particularly from or in connection
with convertible bonds or warrant bonds issued by the Com-
pany or any of its consolidated subsidiaries (exclusion of
subscription rights, limited to 10% of the capital stock, by
mutatis mutandis application of Section 186 para. 3 sen-
tence 4 German Stock Corporation Act).
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authoriza-
tion to meet obligations or rights to acquire Siemens shares
that were or will be agreed with members of the Managing
Board within the framework of rules governing Managing
Board compensation.
In November 2013, the Company announced that it would carry
out a share buyback of up to €4 billion in volume within the
following up to 24 months. The buyback commenced on
May 12, 2014 using the authorizations given by the Annual
Shareholders' Meeting on January 25, 2011 and continued on
January 29, 2015 based on the authorizations resolved by the
Annual Shareholders' Meeting on January 27, 2015. Under this
share buyback Siemens repurchased 40,751,593 shares by
September 30, 2015. The total consideration paid for these
shares amounted to about €3.782 billion (excluding incidental
transaction charges). The buyback may serve only to cancel
and reduce the capital stock, issue shares to employees, board
members of affiliated companies and members of the Manag-
ing Board of Siemens AG, or service convertible bonds and
warrant bonds. As of September 30, 2015, the Company held
72,376,759 shares of stock in treasury.
For details on the authorizations referred to above, especially
with the restrictions to exclude subscription rights and the
terms to include shares when calculating such restrictions,
please refer to the relevant resolution and to Section 4 of the
Articles of Association.
Siemens AG maintains two lines of credit in an amount of
€4 billion and an amount of US$3 billion, respectively, which
provide its lenders with a right of termination in the event that
(1) Siemens AG becomes a subsidiary of another company or
(2) a person or a group of persons acting in concert acquires
effective control over Siemens AG by being able to exercise de-
cisive influence over its activities (Art. 3(2) of Council Regula-
tion (EC) 139/2004).
0111001010001
1% 1
1 0 1 0 1 0 1 1 1 0 10
(4,483)
(4,020)
Selling and general administrative expenses
(11,409)
(10,190)
Other operating income
5
476
654
Other operating expenses
6
(389)
(194)
Income from investments accounted for using the equity method, net
4
Research and development expenses
20,357
21,847
(50,869)
011010
1001
0101011100101
0100010
B.1 Consolidated Statements of Income
Fiscal year
(in millions of €, per share amounts in €)
582
Revenue
Gross profit
Note
2015
2014
75,636
71,227
(53,789)
Cost of sales
Combined Management Report
No loans or advances from the Company are provided to mem-
bers of the Supervisory Board.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties
and for any value-added taxes to be paid on their remuneration.
For the performance of his duties, the Chairman of the Super-
visory Board is also entitled to an office with secretarial support
and the use of a carpool service.
Prof. Dr. Siegfried Russwurm
30,503
54,952
4,934
6,639
21,301
Dr. Ralf P. Thomas
206
23,184
4,824
6,639
21,301
Former members
of the Managing Board
Prof. Dr. Hermann Requardt4
Total
32,403
138,794
-
54,952
303,543
10,992
3,999
44,443
5,578
6,639
21,301
Lisa Davis
576
12,044
26,931
Klaus Helmrich
22,409
Obligations under Share Ownership Guidelines
4,824
6,639
21,301
Janina Kugel³
664
4,709
34,741
8,299
60,178
23,030
186,268
Combined Management Report
49
Shares from the Share Matching Plan
Fiscal 2011 was the last year in which Managing Board members
were entitled to participate in the Siemens Share Matching
Plan. Under the plan, they were entitled to invest up to 50% of
the annual gross amount of their variable cash compensation,
as determined for fiscal 2010, in Siemens shares. After the expi-
ration of a vesting period of approximately three years, plan
participants are entitled to receive one free matching share of
Siemens stock for every three Siemens shares acquired and
continuously held under the plan, provided the participants
were employed without interruption at Siemens AG or a
Siemens company until the end of the vesting period. At the
beginning of fiscal 2015, the following members of the Manag-
ing Board had entitlements to matching shares, which they ac-
quired before joining the Managing Board: Dr. Ralf P. Thomas,
2,685 shares. In fiscal 2015 the following entitlements to match-
ing shares were acquired: Janina Kugel, 3 shares. In fiscal 2015
the following entitlements to matching shares were due: 1,905
shares, Dr. Ralf P. Thomas. During fiscal 2015, no entitlements
to matching shares were forfeited. Entitlements to matching
shares at the end of fiscal 2015 show the following balance:
Janina Kugel, 3 shares and Dr. Ralf P. Thomas, 780 shares. These
entitlements have the following fair values: Janina Kugel, €174
(2014: €0) and Dr. Ralf P. Thomas, €42,657 (2014: €133,392).
Share Ownership Guidelines
The deadlines by which the individual Managing Board mem-
bers must provide first-time proof of compliance with the
Siemens Share Ownership Guidelines vary from member to
member, depending on when he or she was appointed to the
Managing Board. The following table shows the number of
Siemens shares that were held by Managing Board members in
office at September 30, 2015, as of the March 2015 deadline for
proving compliance with the Share Ownership Guidelines as
well as the number that are to be held permanently with a view
to future deadlines.
(Amounts in number of units or €)
Managing Board members serving
as of September 30, 2015, and required
to show proof as of March 13, 2015
Joe Kaeser
Prof. Dr. Siegfried Russwurm
Total
1 The amount of the obligation is based on the average
base compensation for the four years prior to the respec-
tive dates of proof.
50
Prof. Dr. Hermann Requardt resigned from the Managing
Board effective the end of the day on January 31, 2015.
His employment contract ended effective September 30,
2015. In accordance to the provisions of his contract, the
Siemens Stock Awards will be settled in cash at the
closing price of Siemens stock in Xetra trading on Sep-
tember 30, 2015.
4
3 Janina Kugel was elected a full member of the Managing
Board effective February 1, 2015. Because she joined the
Managing Board during the fiscal year, the target
amount for her stock-based compensation was prorated
and, instead of Stock Awards, she received an equivalent
amount of Phantom Stock Awards. At the end of the
restriction period, these awards will be settled in cash
rather than via a stock transfer. Otherwise, the regula-
tions are the same as those for Stock Awards.
2 Amounts also include stock commitments (Stock Awards
and Phantom Stock Awards) granted in November 2014
for fiscal 2015. These amounts may further include stock
commitments received as compensation by the Manag-
ing Board member before joining the Managing Board.
41,025
27,122
129,425
72,383
576
38,975
-
27,233
21,544
73,254
15,655
35,437
5,030
82,892
51,124
-
37,112 86,281
173,535 549,989
1 The weighted average fair value as of the grant date for
fiscal 2015 was €66.20 per granted share.
-
40,111
12,615
9,296
Value¹
Percentage
of base
compensation¹
Proven
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their
surviving dependents as of September 30, 2015, amounted to
€228.3 million (2014: €234.4 million). This figure is included in
→ NOTE 16 in → B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Other
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
A.10.1.3 ADDITIONAL INFORMATION ON
STOCK-BASED COMPENSATION INSTRUMENTS
IN FISCAL 2015
Stock commitments
The following table shows the changes in the balance of the
stock commitments held by Managing Board members in fiscal
2015:
Balance at beginning
of fiscal 2015
Non-
forfeitable
commit-
ments of
Bonus
Number of
shares²
Percentage
of base
compensation¹
Value²
Number of
shares³
In addition, the members of the Supervisory Board are entitled
to receive a fee of €1,500 for each meeting of the Supervisory
Board and its committees that they attend.
If a Supervisory Board member does not attend a meeting of
the Supervisory Board, one-third of the aggregate compensa-
tion due to that member is reduced by the percentage of Super-
visory Board meetings not attended by the member in relation
to the total number of Supervisory Board meetings held during
the fiscal year. In the event of changes in the composition of
the Supervisory Board and/or its committees, compensation is
paid on a pro rata basis, rounding up to the next full month.
Innovation and Finance Committee receives €80,000, and
each of the other members of the Committee receives €40,000;
the Chairman of the Compliance Committee receives €80,000,
and each of the other members of the Committee receives
€40,000. However, no additional compensation is paid for
work on the Compliance Committee if a member of that Com-
mittee is already entitled to compensation for work on the
Audit Committee.
The members of the Supervisory Board committees receive the
following additional fixed compensation for their committee
work: the Chairman of the Audit Committee receives €160,000,
and each of the other members of the Committee receives
€80,000; the Chairman of the Chairman's Committee receives
€120,000, and each of the other members of the Committee
receives €80,000; the Chairman of the Compensation Commit-
tee receives €100,000, and each of the other members of the
Committee receives €60,000 (compensation for any work on
the Chairman's Committee counts toward compensation for
work on the Compensation Committee); the Chairman of the
Under current rules, the members of the Supervisory Board
receive an annual base compensation of €140,000; the Chair-
man of the Supervisory Board receives a base compensation of
€280,000, and each of the Deputy Chairmen receives €220,000.
The current remuneration policies for the Supervisory Board
were authorized at the Annual Shareholders' Meeting held on
January 28, 2014, and are effective as of fiscal 2014. Details are
set out in Section 17 of the Articles of Association of Siemens AG.
The remuneration of the Supervisory Board consists entirely of
fixed compensation; it reflects the responsibilities and scope of
the work of the Supervisory Board members. The Chairman and
Deputy Chairmen of the Supervisory Board as well as the Chair-
men and members of the Audit Committee, the Chairman's Com-
mittee, the Compensation Committee, the Compliance Commit-
tee and the Innovation and Finance Committee receive additional
compensation.
A.10.2 Remuneration of Supervisory
Board members
(Amounts in number of units)
As of March 13, 2015 (date of proof), including
Bonus Awards.
2 Based on the average Xetra opening price of €89.98 for
the fourth quarter of 2014 (October-December).
105,041
84,789
189,830
9,451,589
7,629,314
17,080,903
732%
801%
43,062
21,182
64,244
3,874,688
1,905,950
5,780,638
300%
200%
3
> The exclusion is necessary in order to grant holders of con-
version or option rights or conversion or option obligations
on Siemens shares a compensation for the effects of dilution.
Awards
serving as of
Non-
forfeitable
commit-
ments of
Bonus
Awards
past three
perfor-
fiscal years)
mance)
on EPS for
stock
Commit-
ments
Balance at end
of fiscal 2015²
Forfeitable
commit-
ments of
Stock
Awards
31,729
76,699
on future
Bonus
Awards
of Stock
Awards
Non-
forfeitable
commit-
ments of
September 30, 2015
Joe Kaeser
Dr. Roland Busch
Forfeitable
commit-
ments
of Stock
Awards
Granted during
fiscal year¹
Forfeitable commitments
of Stock Awards
(Target
attainment
Managing Board members
depending
fulfilled
during
fiscal year
Forfeited
during
fiscal year
(Target
attainment
depending
Commit-
ments
of Bonus
Awards
and Stock
Awards
Vested and
> The exclusion is necessary with regard to fractional amounts
resulting from the subscription ratio.
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
> The issue price of the new shares/bonds is not significantly
lower than the stock market price of the Siemens shares
already listed or the theoretical market price of the bonds
computed in accordance with generally accepted actuarial
methods (exclusion of subscription rights, limited to 10% of
the capital stock, in accordance with or by mutatis mutandis
273,667
27,000
106,667
140,000
350,000
30,000
180,000
140,000
Robert Kensbock1
153,500
13,500
Harald Kern¹
140,000
Combined Management Report
140,000
Hans-Jürgen Hartung
248,500
28,500
80,000
140,000
244,000
24,000
80,000
140,000
149,000
Bettina Haller¹
140,000
21,000
140,000
Gérard Mestrallet
134,944
10,500
124,444
188,333
15,000
33,333
140,000
Dr. Nicola Leibinger-Kammüller
288,500
80,000
28,500
140,000
333,722
31,500
170,000
132,222
Jürgen Kerner¹
242,167
25,500
76,667
140,000
241,000
120,000
9,000
109,500
105,000
134,815
211,852
393,000
33,000
140,000
220,000
Werner Wenning
370,167
43,500
186,667
140,000
39,000
445,000
200,000
200,000
Birgit Steinborn¹
615,500
55,500
280,000
280,000
48,000
608,000
280,000
280,000
45,000
4,500
385,667
140,000
Reinhard Hahn 1,2
330,000
30,000
160,000
140,000
327,000
27,000
160,000
140,000
Dr. Hans Michael Gaul
205,778
Olaf Bolduan¹
18,000
134,815
202,389
13,500
56,667
132,222
Michael Diekmann
39,500
4,500
35,000
149,000
9,000
52,963
149,000
9,000
5,679
the insured in cases of financial loss associated with their activ-
ities on behalf of the Company. The insurance policy for fiscal
2015 includes a deductible for the members of the Managing
Board and the Supervisory Board that complies with the re-
quirements of the German Stock Corporation Act and the Code.
The Company provides a group insurance policy for Supervisory
and Managing Board members and certain other employees of
the Siemens Group. The policy is taken out for one year at a
time and renewed annually. It covers the personal liability of
A.10.3 Other
4 The total figure, compared to the amount presented in
the 2014 Compensation Report, does not include the total
compensation of €289,833 paid to former Supervisory
Board members Lothar Adler and Prof. Dr. Rainer Sieg.
succeed Gerd von Brandenstein and Prof. Dr. Peter Gruss,
who resigned from the Supervisory Board effective the
same date.
3 Dr. Norbert Reithofer and Dr. Nathalie von Siemens were
elected to the Supervisory Board effective the end of the
Annual Shareholders' Meeting on January 27, 2015. They
2 Reinhard Hahn was appointed to the Supervisory Board
by court order effective the end of the Annual Shareholders'
Meeting on January 27, 2015, succeeding Berthold Huber,
who resigned from the Supervisory Board effective the
same date.
1 These employee representatives on the Supervisory
Board and the representatives of the trade unions on
the Supervisory Board have declared their willingness
to transfer their compensation to the Hans Boeckler
Foundation, in accordance with the guidelines of the
Confederation of German Trade Unions (DGB).
4,843,358
462,000
1,533,580
62
314,389
77,037
185,123
15,000
35,309
134,815
67,500
110,500 211,852
5,118,833 2,847,778
7,500
10,500
415,500
26,667
1,609,630
73,333
3,093,704
Total4
Berthold Huber 1,2
25,500
13,333
52
A.11 Takeover-relevant information
The new shares under Authorized Capital 2014 and the bonds
under these authorizations are to be issued against cash or
non-cash contributions. They are, as a matter of principle, to be
offered to shareholders for subscription. The Managing Board is
authorized to exclude, with the approval of the Supervisory
Board, subscription rights of shareholders in the event of capi-
tal increases against contributions in kind. In the event of cap-
ital increases against contributions in cash, the Managing
Board is authorized to exclude shareholders' subscription
rights with the approval of the Supervisory Board in the follow-
ing cases:
By resolutions of the Shareholders' Meetings of January 28,
2014 and January 27, 2015, the Managing Board is authorized to
issue bonds with conversion rights or with warrants attached,
or a combination of these instruments, each entitling the
holders to subscribe to up to 80 million registered shares of
Siemens AG of no par value. Based on these two authorizations
the Company or consolidated subsidiaries of the Company
may issue bonds until January 27, 2019 and January 26, 2020,
respectively, each in an aggregate principal amount of up to
€15 billion. In order to grant shares of stock to holders/creditors
of such convertible bonds or warrant bonds, the capital stock
was conditionally increased by resolutions of the Shareholders'
Meetings 2014 and 2015, each by up to 80 million registered
shares of no par value (Conditional Capitals 2014 and 2015), i.e.
in total by up to €480 million through the issuance of up to
160 million shares of no par value.
As of September 30, 2015, the total unissued authorized capital
of Siemens AG therefore consisted of €618.6 million nominal
that may be issued, with varying terms by issuance, in install-
ments of up to 206.2 million registered shares of no par value.
Furthermore, the Managing Board is authorized to increase,
with the approval of the Supervisory Board, the capital stock
until January 27, 2019 by up to €528.6 million through the
issuance of up to 176.2 million registered shares of no par value
against cash contributions and/or contributions in kind
(Authorized Capital 2014).
shares is covered by that part of the annual net income which
the Managing Board and the Supervisory Board may allocate to
other retained earnings under Section 58 para. 2 of the German
Stock Corporation Act.
54
53
Combined Management Report
The Managing Board is authorized to increase, with the ap-
proval of the Supervisory Board, the capital stock until Janu-
ary 24, 2016 by up to €90 million through the issuance of up to
30 million registered shares of no par value against contribu-
tions in cash (Authorized Capital 2011). Subscription rights of
existing shareholders are excluded. The new shares shall be
issued under the condition that they are offered exclusively to
employees of Siemens AG and its consolidated subsidiaries. To
the extent permitted by law, employee shares may also be is-
sued in such a manner that the contribution to be paid on such
A.11.4 Powers of the Managing Board
to issue and repurchase shares
119,259
Combined Management Report
According to Section 179 of the German Stock Corporation
Act, any amendment to the Articles of Association requires a
resolution of the Shareholders' Meeting. The authority to adopt
purely formal amendments to the Articles of Association was
transferred to the Supervisory Board under Section 13 para. 2 of
the Articles of Association. In addition, by resolutions of the
Shareholders' Meetings on January 25, 2011, January 28, 2014
and January 27, 2015, the Supervisory Board has been autho-
rized to amend Section 4 of the Articles of Association in accord-
ance with the utilization of the Authorized Capitals 2011 and
2014, Conditional Capitals 2014 and 2015, and after expiration
of the then-applicable authorization period.
A.11.3 Legislation and provisions
of the Articles of Association applicable
to the appointment and removal
of members of the Managing Board and
governing amendment to the Articles
of Association
are part of the total number of shares held by the family's
members. The powers of attorney are based on an agreement
between the VSV and, among others, members of the Siemens
family. The shares are voted together by VSV, taking into account
the proposals of a family partnership established by the family's
members or of one of this partnership's governing bodies.
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 10,878,836 shares (as of September 30, 2015)
on behalf of members of the Siemens family. These shares
Shares issued to employees worldwide under the employee
share program implemented since the beginning of fiscal 2009,
in particular the Share Matching Plan, are freely transferable
unless applicable local laws provide otherwise. Under the rules
of the program, however, in order to receive one matching
share free of charge for each three shares purchased, partici-
pants are required to hold the shares purchased by them for a
vesting period of several years, during which the participants
have to be continuously employed by Siemens AG or another
Siemens company. The right to receive matching shares is for-
feited if the purchased shares are sold, transferred, hedged on,
pledged or hypothecated in any way during the vesting period.
At the Shareholders' Meeting, each share of stock has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. An exception from this rule applies
with regard to treasury shares held by the Company, which do
not entitle the Company to any rights. Under Section 136 of the
German Stock Corporation Act the voting right of the affected
shares is excluded by law.
A.11.2 Restrictions on voting rights
or transfer of shares
the same rights and obligations. The shareholders' rights and
obligations are governed in detail by the provisions of the Ger-
man Stock Corporation Act, in particular by Sections 12, 53a et
seq., 118 et seq. and 186 of the German Stock Corporation Act.
As of September 30, 2015, the Company's common stock to-
taled €2.643 billion. The capital stock is divided into 881 million
registered shares with no par value and a notional value of
€3.00 per share. The shares are fully paid in. All shares confer
A.11.1 Composition of common stock
and explanatory report
(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German
Codetermination Act (Mitbestimmungsgesetz). According to
Section 8 para. 1 of the Articles of Association, the Managing
Board is comprised of several members, the number of which
is determined by the Supervisory Board.
46,667
Resolutions of the Shareholders' Meeting require a simple ma-
jority vote, unless a greater majority is required by law. Pursu-
ant to Section 179 para. 2 of the German Stock Corporation Act,
amendments to the Articles of Association require a majority of
at least three-quarters of the capital stock represented at the
time of the casting of the votes, unless another capital majority
is prescribed by the Articles of Association.
250,000
81,667
149,000
9,000
140,000
Michael Sigmund
109,500
4,500
105,000
Dr. Nathalie von Siemens³
140,130
10,500
9,000
129,630
9,000
140,000
Güler Sabancı
112,648
4,500
14,815
93,333
Dr. Norbert Reithofer³
132,438
7,500
Prof. Dr. Peter Gruss³
149,000
90,667
Required
132,222
30,000
Jim Hagemann Snabe
80,000
140,000
9,000
23,704
41,481
Gerd von Brandenstein³
Former Supervisory Board members
201,000
21,000
40,000
74,185
183,500
140,000
113,333
274,056
97,778
19,500
124,444
Sibylle Wankel¹
132,222
37,778
13,500
241,722
28,500
5 to 10 years
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for pat-
ents, licenses and other similar rights generally range from
three to five years, except for intangible assets with finite use-
ful lives acquired in business combinations. Intangible assets
acquired in business combinations primarily consist of cus-
tomer relationships and trademarks as well as technology. Use-
ful lives in specific acquisitions ranged from four to 20 years
for customer relationships and trademarks and from seven to
25 years for technology.
5 to 10 years
20 to 50 years
Technical machinery & equipment
Furniture & office equipment
Equipment leased to others
Factory and office buildings
Other buildings
Property, plant and equipment - Property, plant and equip-
ment, is valued at cost less accumulated depreciation and im-
pairment losses. Depreciation expense is recognized using the
straight-line method. The following useful lives are assumed:
Earnings per share - Basic earnings per share are computed
by dividing income from continuing operations, income from
discontinued operations and net income, all attributable to or-
dinary shareholders of Siemens AG by the weighted average
number of shares outstanding during the year. Diluted earn-
ings per share are calculated by assuming conversion or exer-
cise of all potentially dilutive securities and share-based pay-
ment plans.
The determination of the recoverable amount of a cash-gener-
ating unit or a group of cash-generating units to which good-
will is allocated involves the use of estimates by management.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit
or the group of cash-generating units that is expected to bene-
fit from the synergies of the business combination. If the carry-
ing amount of the cash-generating unit or the group of
cash-generating units, to which the goodwill is allocated, ex-
ceeds its recoverable amount, an impairment loss on goodwill
allocated to this cash-generating unit or this group of cash-gen-
erating units is recognized. The recoverable amount is the
higher of the cash-generating unit's or the group of cash-gen-
erating units' fair value less costs to sell and its value in use. If
either of these amounts exceeds the carrying amount, it is not
always necessary to determine both amounts. These values are
generally determined based on discounted cash flow calcula-
tions. Impairment losses on goodwill are not reversed in future
periods.
The goodwill impairment test is performed at the level of a
cash-generating unit or a group of cash-generating units gen-
erally represented by a segment and for Healthcare one level
below the segment. This is the lowest level at which goodwill
is monitored for internal management purposes.
Goodwill - Goodwill is not amortized, but instead tested for
impairment annually, as well as whenever there are events or
changes in circumstances (triggering events) which suggest
that the carrying amount may not be recoverable. Goodwill is
carried at cost less accumulated impairment losses.
Research and development costs - Costs of research activi-
ties are expensed as incurred. Costs of development activities
are capitalized when the recognition criteria in IAS 38 are met.
Capitalized development costs are stated at cost less accumu-
lated amortization and impairment losses with an amortization
period of generally three to ten years.
Product-related expenses
Provisions for estimated costs
related to product warranties are recorded in line item Cost of
sales at the time the related sale is recognized.
-
Consolidated Financial Statements 65
generally 5 years
generally 3 to 5 years
The outcome predicted by these estimates is influenced e.g. by
the successful integration of acquired entities, volatility of cap-
ital markets, interest rate developments, foreign exchange rate
fluctuations and the outlook on economic trends. In determin-
ing recoverable amounts, discounted cash flow calculations
use five-year projections that are based on financial forecasts.
Cash flow projections take into account past experience and
represent management's best estimate about future develop-
ments. Cash flows after the planning period are extrapolated
using individual growth rates. Key assumptions on which man-
agement has based its determination of fair value less costs
to sell and value in use include estimated growth rates and
weighted average cost of capital. These estimates, including
the methodology used, can have a material impact on the
respective values and ultimately the amount of any goodwill
impairment.
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment when-
ever events or changes in circumstances indicate that the car-
rying amount of an asset may not be recoverable. In addition,
intangible assets not yet available for use are subject to an an-
nual impairment test. Impairment testing of property, plant
and equipment and other intangible assets involves the use of
Consolidated Financial Statements 67
estimates in determining the assets' recoverable amount which
can have a material impact on the respective values and ulti-
mately the amount of any impairment.
Cash and cash equivalents - The Company considers all
highly liquid investments with less than three months matu-
rity from the date of acquisition to be cash equivalents. Cash
and cash equivalents are measured at cost.
Financial instruments - A financial instrument is any con-
tract that gives rise to a financial asset of one entity and a fi-
nancial liability or equity instrument of another entity. Siemens
does not use the category held to maturity and does not use
the option to designate financial assets or financial liabilities at
fair value through profit or loss at inception (Fair Value Option).
Based on their nature, financial instruments are classified as
financial assets and financial liabilities measured at cost or
amortized cost and financial assets and financial liabilities
measured at fair value and as receivables from finance leases.
Regular way purchases or sales of financial assets are ac-
counted for at the trade date. Initially, financial instruments are
recognized at their fair value. Transaction costs are only in-
cluded in determining the carrying amount, if the financial in-
struments are not measured at fair value through profit or loss.
Receivables from finance leases are recognized at an amount
equal to the net investment in the lease. Subsequently, finan-
cial assets and liabilities are measured according to the cate-
gory to which they are assigned-cash and cash equivalents,
available-for-sale financial assets, loans and receivables, finan-
cial liabilities measured at amortized cost or financial assets
and liabilities classified as held for trading.
Termination benefits - Termination benefits are provided as
a result of an entity's offer made in order to encourage volun-
tary redundancy before the normal retirement date or from an
entity's decision to terminate the employment. Termination
benefits in accordance with IAS 19, Employee Benefits, are rec-
ognized as a liability and an expense when the entity can no
longer withdraw the offer of those benefits.
necessary, to record a provision for an ongoing Legal Proceed-
ing or to adjust the amount of a previously recognized provi-
sion. Upon resolution of a Legal Proceeding, Siemens may incur
charges in excess of the recorded provisions for such matters.
The outcome of Legal Proceedings may have a material effect
on Siemens' financial position, its results of operations and/or
its cash flows.
Legal Proceedings often involve complex legal issues and are
subject to substantial uncertainties. Accordingly, considerable
judgment is part of determining whether it is probable that
there is a present obligation as a result of a past event at the
end of the reporting period, whether it is probable that such a
Legal Proceeding will result in an outflow of resources and
whether the amount of the obligation can be reliably esti-
mated. Internal and external counsels are generally part of the
determination process. Due to new developments, it may be
Significant estimates are involved in the determination of pro-
visions related to onerous contracts, warranty costs, asset re-
tirement obligations, legal and regulatory proceedings as well
as governmental investigations (Legal Proceedings). Siemens
records a provision for onerous sales contracts when current
estimates of total contract costs exceed expected contract rev-
enue. Onerous sales contracts are identified by monitoring the
progress of the project and updating the estimate of total con-
tract costs which also requires significant judgment relating to
achieving certain performance standards as well as estimates
involving warranty costs and estimates regarding project de-
lays including the assessment of responsibility splits between
the contract partners for these delays. Uncertainties regarding
asset retirement obligations include the estimated costs of de-
commissioning and final storage because of the long time
frame over which future cash outflows are expected to occur
including the respective interest accretion. Amongst others,
the estimated cash outflows could alter significantly if, and
when, political developments affect the government's plans to
develop the final storage.
Provisions
A provision is recognized in the Statement of
Financial Position when it is probable that the Company has a
present legal or constructive obligation as a result of a past
event, it is probable that an outflow of economic benefits will
be required to settle the obligation and a reliable estimate can
be made of the amount of the obligation. If the effect is mate-
rial, provisions are recognized at present value by discounting
the expected future cash flows at a pretax rate that reflects cur-
rent market assessments of the time value of money. When a
contract becomes onerous, the present obligation under the
contract is recognized as a provision.
-
Actuarial valuations rely on key assumptions including dis-
count rates, expected compensation increases, rate of pension
progression and mortality rates. Discount rates used are deter-
mined by reference to yields on high-quality corporate bonds of
appropriate duration and currency at the end of the reporting
period. In case such yields are not available discount rates are
based on government bonds yields. Due to changing market,
economic and social conditions the underlying key assump-
tions may differ from actual developments.
Functional costs - In general, operating expenses by types
are assigned to the functions following the functional area of
the corresponding profit and cost centers. Amortization, depre-
ciation and impairment of intangible assets and property, plant
and equipment are included in functional costs depending on
the use of the assets.
Remeasurements comprise actuarial gains and losses as well as
the difference between the return on plan assets and the
amounts included in net interest on the net defined benefits
liability (asset) and are recognized in Other comprehensive
income, net of income taxes.
Service cost and past service cost for post-employment benefits
and administration costs unrelated to the management of plan
assets are allocated among functional costs. Past service cost
and settlement gains (losses) are recognized immediately in
profit or loss. For unfunded plans, the amount of line item
Post-employment benefits equals the DBO. For funded plans,
Siemens offsets the fair value of the plan assets with the DBO.
Siemens recognizes the net amount, after adjustments for
effects relating to any asset ceiling.
Defined benefit plans - Siemens measures the entitlements
by applying the projected unit credit method. The approach re-
flects an actuarially calculated net present value of the future
benefit entitlement for services already rendered. In determin-
ing the net present value of the future benefit entitlement for
service already rendered (Defined Benefit Obligation (DBO)),
the expected rates of future salary increase and expected rates
of future pension progression are considered. The assumptions
used for the calculation of the DBO as of the period-end of the
preceding fiscal year are used to determine the calculation of
service cost and interest income and expense of the following
year. The net interest income or expense for the fiscal year will
be based on the discount rate for the respective year multiplied
by the net liability (asset) at the preceding fiscal year's peri-
od-end date.
Inventories - Inventories are valued at the lower of acquisi-
tion or production costs and net realizable value, costs being
generally determined on the basis of an average or first-in, first-
out method.
existing taxable temporary differences and established tax
planning opportunities. As of each period-end, Siemens evalu-
ates the recoverability of deferred tax assets, based on pro-
jected future taxable profits. Based upon the level of historical
taxable income and projections for future taxable income over
the periods in which the deferred tax assets are deductible,
Siemens believes it is probable the Company will realize the
benefits of these deductible differences. As future develop-
ments are uncertain and partly beyond Siemens's control,
assumptions are necessary to estimate future taxable profits as
well as the period in which deferred tax assets will recover.
Estimates are revised in the period in which there is sufficient
evidence to revise the assumption.
Income taxes - Tax positions under respective local tax laws
and tax authorities' views can be complex and subject to differ-
ent interpretations of tax payers and local tax authorities.
Different interpretations of tax laws may result in additional tax
payments for prior years and are taken into account based on
management's considerations. Under the liability method, de-
ferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets are recog-
nized if sufficient future taxable profit is available, including
income from forecasted operating earnings, the reversal of
assets classified as held for disposal and disposal groups are
measured at the lower of their carrying amount and fair value
less costs to sell. Depreciation and amortization ceases. The
determination of the fair value less costs to sell includes the
use of estimates and assumptions that tend to be uncertain.
Siemens classifies a non-current asset or a disposal group as
held for disposal if its carrying amount will be recovered princi-
pally through a sale transaction rather than through continu-
ing use. The disclosures in the Notes to Consolidated Financial
Statements outside NOTE 3 ACQUISITIONS, DISPOSITIONS AND
DISCONTINUED OPERATIONS that refer to the Consolidated State-
ments of Financial Position generally relate to assets that are
not held for disposal. Siemens reports non-current assets or
disposal groups held for disposal separately in → NOTE 3 ACQUI-
SITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS. Non-current
Discontinued operations and non-current assets held for
disposal - Discontinued operations are reported when a com-
ponent of an entity is classified as held for disposal or has been
disposed of, if the component represents a separate major line
of business or geographical area of operations and is part of
a single co-ordinated plan to dispose of a separate major line of
business or geographical area of operations. In the Consoli-
dated Statements of Income, income (loss) from discontinued
operations is reported separately from income and expenses
from continuing operations; prior periods are presented on
a comparable basis. In the Consolidated Statements of Cash
Flow, the cash flows from discontinued operations are pre-
sented separately from cash flows of continuing operations;
prior periods are presented on a comparable basis. The disclo-
sures in the Notes to the Consolidated Financial Statements
outside → NOTE 3 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED
OPERATIONS that refer to the Consolidated Statements of Income
and the Consolidated Statements of Cash Flow relate to con-
tinuing operations.
66 Consolidated Financial Statements
Income from operating leases: operating lease income for
equipment rentals is recognized on a straight-line basis over
the lease term.
cash equivalents are translated at the spot exchange rate at the
end of the reporting period.
Income from royalties: royalties are recognized on an accrual
basis in accordance with the substance of the relevant agree-
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may
not add up precisely to totals provided.
NOTE 1 Basis of presentation
B.6 Notes to Consolidated Financial Statements
Consolidated Financial Statements 63
35,056
581
34,474
(6,218)
Siemens is a German based multinational technology company
with core activities in the fields of electrification, automation
and digitalization.
(357)
1,794
129
33
96
289
289
256
256
726
ment.
any non-controlling interest. Non-controlling interests are
measured at the proportional fair value of assets acquired and
liabilities assumed (partial goodwill method). If there is no loss
of control, transactions with non-controlling interests are ac-
counted for as equity transactions not affecting profit and loss.
At the date control is lost, any retained equity interests are
remeasured to fair value. In case of a written put option on
non-controlling interests the Company assesses whether the
prerequisites for the transfer of present ownership interest are
fulfilled at the balance sheet date. If the Company is not the
beneficial owner of the shares underlying the put option, the
exercise of the put option will be assumed at each balance
sheet date and treated as equity transaction between share-
holders with the recognition of a purchase liability at the re-
spective exercise price. The non-controlling interests partici-
pate in profits and losses during the reporting period.
NOTE 2 Summary of significant accounting its associate's post-acquisition profits or losses is recognized in
Income from interest: interest is recognized using the effective
interest method.
Sales from multiple element arrangements: Sales of goods and
services as well as software arrangements sometimes involve
the provision of multiple elements. In these cases, the Com-
pany determines whether the contract or arrangement con-
tains more than one unit of accounting. If certain criteria are
met, foremost if the delivered element(s) has (have) value to
the customer on a stand-alone basis, the arrangement is sepa-
rated and the appropriate revenue recognition convention is
then applied to each separate unit of accounting. Generally, the
total arrangement consideration is allocated to the separate
units of accounting based on their relative fair values. If the
criteria for the separation of units of accounting are not met,
revenue is deferred until such criteria are met or until the pe-
riod in which the last undelivered element is delivered.
Rendering of services: for long-term service contracts, reve-
nues are recognized on a straight-line basis over the term of
the contract or, if the performance pattern is other than
straight-line, as the services are provided, i.e. under the per-
centage-of-completion method as described above.
assess whether the contract is expected to continue or to be
terminated. In determining whether the continuation or termi-
nation of a contract is expected to be the most likely scenario,
all relevant facts and circumstances relating to the contract are
considered on an individual basis. For contracts expected to be
continued, amounts already included in revenue for which col-
lectability ceases to be probable are recognized as an expense.
For contracts expected to be terminated, including termina-
tions due to expected payment defaults of our customers or
terminations due to force majeure events, the estimates on the
scope of deliveries and services provided under the contracts
are revised accordingly, typically resulting in a decrease of rev-
enue in the respective reporting period.
The percentage-of-completion method places considerable im-
portance on accurate estimates of the extent of progress to-
wards completion and may involve estimates on the scope of
deliveries and services required for fulfilling the contractually
defined obligations. These significant estimates include total
contract costs, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments.
Under the percentage-of-completion method, changes in esti-
mates may lead to an increase or decrease of revenue. The cred-
itworthiness of our customers is taken into account in estimat-
ing the probability that economic benefits associated with a
contract will flow to the Company. In addition, we need to
Sales from construction contracts: When the outcome of a con-
struction contract can be estimated reliably, revenues from
construction-type projects are recognized under the percent-
age-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.
An expected loss on the construction contract is recognized as
an expense immediately. Siemens applies the requirements of
IAS 11 regarding contract variations to contract terminations,
since contract terminations are also changes to the agreed de-
livery and service scope.
Sale of goods: Revenue is recognized when the significant risks
and rewards of ownership of the goods have passed to the
buyer, usually on delivery of the goods.
Revenue recognition - Under the condition that persuasive
evidence of an arrangement exists revenue is recognized to the
extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured, re-
gardless of when the payment is being made. In cases where
the inflow of economic benefits is not probable due to cus-
tomer related credit risks the revenue recognized is subject to
the amount of payments irrevocably received.
Associates - Associates are companies over which Siemens
has the ability to exercise significant influence over operating
and financial policies (generally through direct or indirect own-
ership of 20% to 50% of the voting rights). These are recorded
in the Consolidated Financial Statements using the equity
method and are initially recognized at cost. Siemens' share of
Foreign currency transaction Transactions that are de-
nominated in a currency other than the functional currency of
an entity, are recorded at that functional currency applying the
spot exchange rate at the date when the underlying transac-
tions are initially recognized. At the end of the reporting
period, foreign currency-denominated monetary assets and lia-
bilities are revalued to functional currency applying the spot
exchange rate prevailing at that date. Gains and losses arising
from these foreign currency revaluations are recognized in net
income. Those foreign currency-denominated transactions
which are classified as non-monetary are remeasured using the
historical spot exchange rate.
64 Consolidated Financial Statements
Foreign currency translation - assets and liabilities of for-
eign subsidiaries, where the functional currency is other than
the euro, are translated using the spot exchange rate at the end
of the reporting period, while the Consolidated Statements of
Income are translated using average exchange rates during the
period. Differences arising from such translations are recog-
nized within equity and reclassified to net income when the
gain or loss on disposal of the foreign subsidiary is recognized.
The Consolidated Statements of Cash Flow are translated at
average exchange rates during the period, whereas cash and
Joint ventures - Joint ventures are entities over which
Siemens and one or more parties have joint control. Joint con-
trol requires unanimous consent of the parties sharing control
in decision making on relevant activities.
the Consolidated Statements of Income, and its share of
post-acquisition changes in equity that have not been recog-
nized in the associate's profit or loss is recognized directly in
equity. The cumulative post-acquisition changes are adjusted
against the carrying amount of the investment in the associ-
ate. When Siemens' share of losses in an associate equals or
exceeds its interest in the associate, Siemens does not recog-
nize further losses, unless it incurs obligations or makes pay-
ments on behalf of the associate. The interest in an associate is
the carrying amount of the investment in the associate to-
gether with any long-term interests that, in substance, form
part of Siemens' net investment in the associate.
(2,703)
233
Basis of consolidation - The Consolidated Financial State-
ments include the accounts of Siemens AG and its subsidiaries
over which the Company has control. Siemens controls an in-
vestee if it has power over the investee. In addition, Siemens is
exposed to, or has rights to, variable returns from the involve-
ment with the investee and Siemens has the ability to use its
power over the investee to affect the amount of Siemens' return.
Certain of these accounting policies require critical accounting
estimates that involve complex and subjective judgments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Such criti-
cal accounting estimates could change from period to period
and have a material impact on the Company's results of opera-
tions, financial positions and cash flows. Critical accounting
estimates could also involve estimates where Siemens reason-
ably could have used a different estimate in the current account-
ing period. Siemens cautions that future events often vary from
forecasts and that estimates routinely require adjustment.
policies and critical accounting estimates
-
The accompanying Consolidated Financial Statements present
the operations of Siemens AG with registered offices in Berlin
and Munich, Germany, and its subsidiaries (the Company or
Siemens). They have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315a (1) of the German Commercial Code (HGB).
The financial statements are also in accordance with IFRS as
issued by the International Accounting Standards Board (IASB).
The Consolidated Financial Statements were authorized for is-
sue by the Managing Board on November 30, 2015.
Cash flows from investing activities - continuing operations
B.2 Consolidated Statements of Comprehensive Income
Dividends attributable to non-controlling interests
(2,533)
(2,728)
Dividends paid to shareholders of Siemens AG
(617)
(596)
Interest paid
801
351
Change in short-term debt and other financing activities
(1,452)
(354)
(145)
Repayment of long-term debt (including current maturities of long-term debt)
7,213
Issuance of long-term debt
(20)
10
Other transactions with owners
(1,066)
(2,700)
Purchase of treasury shares
Cash flows from financing activities
(4,026)
(5,827)
Cash flows from investing activities - continuing and discontinued operations
527
(125)
Cash flows from financing activities - continuing operations
1,051
Dividends
Other comprehensive income, net of income taxes
Net income
Balance as of October 1, 2013
(in millions of €)
B.5 Consolidated Statements of Changes in Equity
Consolidated Financial Statements 61
21
8,013
9,957
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
8,034
9,958
Cash and cash equivalents at end of period
9,234
8,034
Cash and cash equivalents at beginning of period
214
(1,199)
1,923
Change in cash and cash equivalents
83
(2)
(4,487)
1,056
Cash flows from financing activities - continuing and discontinued operations
Effect of changes in exchange rates on cash and cash equivalents
5
Cash flows from financing activities - discontinued operations
(4,485)
314
Share-based payment
2,889
(4,340)
(270)
Cash flows from operating activities - discontinued operations
7,090
6,881
977
1,138
333
495
(1,809)
(2,306)
(558)
852
9
Cash flows from operating activities - continuing operations
Dividends received
Income taxes paid
Change in other assets and liabilities
(371)
(451)
(657)
914
Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
Additions to assets leased to others in operating leases
204
(247)
Trade payables
201
Interest received
Cash flows from operating activities - continuing and discontinued operations
6,612
7,100
(8,716)
(2,703)
317
651
112
445
517
3,474
Disposal of investments, intangibles and property, plant and equipment
(2,501)
(1,667)
(613)
(899)
(335)
(568)
Disposal of current available-for-sale financial assets
Disposal of businesses, net of cash disposed
Change in receivables from financing activities
Purchase of current available-for-sale financial assets
Purchase of investments
(23)
(8,254)
Acquisitions of businesses, net of cash acquired
(1,813)
(1,897)
Additions to intangible assets and property, plant and equipment
Cash flows from investing activities
Cash flows from investing activities - discontinued operations
Purchase of treasury shares
Re-issuance of treasury shares
Transactions with non-controlling interests
(37)
(3)
(34)
310
310
(13)
(1,080)
(1,080)
(1,080)
279
(13)
(2,654)
(121)
(2,533)
(6)
857
825
(314)
(56)
905
5,507
134
5,373
28,625
514
28,111
(2,946)
Total equity
31
5
745
373
36
36
(2,873)
(145)
(2,728)
1,029
35
993
(42)
354
1,049
7,380
98
7,282
-
31,514
560
30,954
(3,747)
(314)
373
745
31,514
560
30,954
(3,747)
(314)
Non controlling
interests
of Siemens AG
able to shareholders
Total equity attribut-
-
31
(24)
11
(2,533)
290
22,663
5,373
5,484
2,643
Retained earnings
Capital reserve
Issued capital
Consolidated Financial Statements
62
62
Balance as of September 30, 2015
Other changes in equity
Transactions with non-controlling interests
Re-issuance of treasury shares
Purchase of treasury shares
Share-based payment
Dividends
Other comprehensive income, net of income taxes
Net income
Balance as of October 1, 2014
Balance as of September 30, 2014
Other changes in equity
(34)
(811)
(6)
5,525
Treasury
shares at cost
(1)
428
(160)
instruments
financial assets
differences
Derivative financial
Available-for-sale
Currency translation
30,152
5,733
2,643
(10)
106
289
23
(43)
79
(2,728)
(367)
7,282
-
25,729
5,525
2,643
25,729
2,643
Available-for-sale financial assets - Investments in equity
instruments, debt instruments and fund shares are measured
at fair value, if reliably measurable. Unrealized gains and
losses, net of applicable deferred income tax expenses, are rec-
ognized in line item Other comprehensive income, net of in-
come taxes. Provided that fair value cannot be reliably deter-
mined, Siemens measures available-for-sale financial assets at
cost. This applies to equity instruments that do not have a
Trade and other receivables
(793)
1,290
1,151
577
644
15,100
17,253
10
3,710
5,157
9
14,526
15,982
Assets classified as held for disposal
8
1,175
8,013
9,957
2014
2015
Note
September, 30
Other current assets
Current income tax assets
Inventories
Other current financial assets
Trade and other receivables
925
3
122
3,935
7
Total non-current assets
Other assets
Deferred tax assets
18,416
20,821
13
Other financial assets
2,127
2,947
4
Investments accounted for using the equity method
9,638
10,210
12
Property, plant and equipment
4,560
8,077
12
17,783
23,166
11
48,076
51,442
Other intangible assets
Goodwill
Total current assets
Available-for-sale financial assets
2,591
Cash and cash equivalents
(in millions of €)
(370)
16
5,507
7,380
2014
2015
Note
Fiscal year
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Total comprehensive income
288
Other comprehensive income, net of income taxes
Items that may be reclassified subsequently to profit or loss
therein: Income tax effects
Derivative financial instruments
therein: Income tax effects
Available-for-sale financial assets
Currency translation differences
therein: Income (loss) from investments accounted for using the equity method, net
Items that will not be reclassified to profit or loss
therein: Income tax effects
Remeasurements of defined benefit plans
Net income
(in millions of €)
therein: Income (loss) from investments accounted for using the equity method, net
(107)
249
(370)
B.3 Consolidated Statements of Financial Position
Consolidated Financial Statements 59
165
6,199
8,275
133
6,364
8,408
857
1,029
(85)
149
569
1,399
102
(7)
(316)
(43)
22, 23
(13)
(7)
(56)
354
940
1,089
(37)
(42)
288
Assets
3,334
1,094
945
31,514
104,879
560
581
35,056
120,348
30,954
34,474
Total equity attributable to shareholders of Siemens AG
(3,747)
(6,218)
803
2,163
25,729
30,152
|
5,525
Total liabilities and equity
Total equity
Non-controlling interests
Treasury shares, at cost
Other components of equity
Retained earnings
Capital reserve
2,643
2,643
18
73,365
85,292
5,733
60 Consolidated Financial Statements
B.4 Consolidated Statements of Cash Flows
(in millions of €)
Inventories
90
366
(1,054)
(1,603)
(294)
(442)
2,014
1,869
Change in operating net working capital
Other non-cash (income) expenses
(Income) loss related to investing activities
Interest (income) expenses, net
Income tax expenses
2,387
2,549
Amortization, depreciation and impairments
(215)
(2,031)
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
Income from discontinued operations, net of income taxes
5,507
7,380
Net income
Cash flows from operating activities
2014
2015
Fiscal year
36,767
45,730
1,874
2,297
17,954
20,368
14
Other current liabilities
1,762
1,828
Current income tax liabilities
4,354
4,489
17
Current provisions
1,717
2,085
Other current financial liabilities
7,594
7,774
Trade payables
1,620
2,979
15
Short-term debt and current maturities of long-term debt
Liabilities and equity
104,879
120,348
Total assets
56,803
68,906
Liabilities associated with assets classified as held for disposal
335
3
1,597
1,620
1,466
Issued capital
Equity
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
4,071
4,865
17
552
609
9,324
9,811
16
19,326
26,682
15
5677
Provisions
Deferred tax liabilities
Post-employment benefits
Long-term debt
36,598
39,562
Total current liabilities
39
68 Consolidated Financial Statements
Business combinations - Cost of an acquisition is measured
at the fair value of the assets given and liabilities incurred or
assumed at the date of exchange. Identifiable assets acquired
and liabilities assumed in a business combination (including
contingent liabilities) are measured initially at their fair
values at the acquisition date, irrespective of the extent of
(2,703)
Income from discontinued operations,
9
(196)
the discontinued operations
ment to fair value less costs to sell or on the
disposal of the disposal groups constituting
Income taxes on the income on the measure-
27
(14)
Income taxes on ordinary activities
net of income taxes
178
operations
Pretax income from discontinued
25
2,243
the discontinued operations
of the disposal groups constituting
value less costs to sell or on the disposal
Income on the measurement to fair
(924)
2,241
2,031
215
Thereof attributable to the
582
1,235
for using the equity method, net
Income (loss) from investments accounted
1
(155)
Impairment and reversals of impairment
6
1,477
Gains (losses) on sales, net
(87)
Share of profit (loss), net
2015
Fiscal year
2014
575
(in millions of €)
Investments accounted for using the equity method
NOTE 4 Interests in other entities
The total consideration received for all above-described dispo-
sitions and discontinued operations amounts to €6.8 billion
(thereof €6 billion in cash). The carrying amounts of the major
classes of assets and liabilities derecognized were as follows:
Trade and other receivables €732 million, Inventories €508 mil-
lion, Goodwill €867 million, Other intangible assets €293 mil-
lion, Property, Plant & Equipment €294 million, Investments
accounted for using the equity method €1.2 billion, Deferred
tax assets €114 million, Miscellaneous assets €339 million,
Trade payables €437 million, Current provisions €143 million,
Other current liabilities €790 million, Miscellaneous liabilities
€313 million.
215
2,031
shareholders of Siemens AG
Expenses
|
922
2015
122
158
6
132
1
1,156
311
76
246
3,935
846
479
17
606
10
2014
2015
Sep 30,
Liabilities associated with assets classified as held for disposal
Other non-current liabilities
12
15
381
5
(in millions of €)
2014
3,643
(3,491)
Fiscal year
| Income (loss) from discontinued operations
Consolidated Financial Statements 71
The results presented in Income (loss) from discontinued oper-
ations in the Company's Consolidated Statements of Income
also include the results of businesses that have been disposed
of prior to fiscal 2015.
In February 2015, Siemens completed the sale of its hospital
information business – formerly included in Healthcare – to
Cerner Corp. Siemens recognized a pretax gain on disposal of
€516 million in fiscal 2015.
Industries Ltd.). Siemens initially recognized the new invest-
ment in Primetals Technologies Ltd. at fair value.
-
In January 2015, Siemens completed the contribution of its
metals technologies business - formerly included in the former
Industry Sector into a joint venture with Mitsubishi-Hitachi
Metals Machinery Inc. (majority-owned by Mitsubishi Heavy
In January 2015, Siemens completed the sale of its hearing aid
business formerly included in Healthcare - to the investment
company EQT and the German entrepreneurial family Strüng-
mann as co-investors. The sold entities are allowed to continue
using the Siemens product brand for the hearing aid business
over the medium term. The consideration includes contingent
components. Siemens recognized a pretax gain on disposal of
€1.7 billion in fiscal 2015.
DISCONTINUED OPERATIONS
DISPOSITIONS NOT QUALIFYING FOR DISCON-
TINUED OPERATIONS CLOSED TRANSACTIONS
In January 2015, Siemens completed the sale of its 50% stake in
the joint venture BSH Bosch und Siemens Hausgeräte GmbH
(BSH) - formerly included in Centrally managed portfolio activi-
ties to Robert Bosch GmbH. Siemens recognized a pretax gain
on disposal of €1.4 billion in Income (expenses) from invest-
ments accounted for using the equity method, net in fiscal 2015.
-
1,597
39
123
110
856
18
126
Revenue
In January 2015, Siemens committed itself to provide additional
funding of €293 million to Unify Holdings B.V. disclosed in Cen-
trally managed portfolio activities. Part of the funding was paid
out to Unify in fiscal 2015. As a consequence of the commit-
ment, Siemens recognized proportionate losses of €275 million
in fiscal 2015.
Item Impairment and Reversals of impairments includes an
impairment loss of € 138 million relating to Siemens' invest-
ment in Primetals presented within Centrally Managed Port-
folio Activities. The adverse development of the market envi-
ronment triggered an impairment test of the investment. The
recoverable amount of €524 million was determined based on
a discounted cash flow calculation (level 3 of the fair value
hierarchy). To determine the recoverable amount, cash flow
projections were used that take into account past experience
and represent management's best estimate about future devel-
opments. The calculation is based on a terminal value growth
rate of 1.5% and an after-tax discount rate of 8.3%.
As of September 30, 2015 and 2014, the carrying amount of all
individually not material associates amounts to €2,046 million
and €1,417 million, respectively. Summarized financial informa-
tion for all individually not material associates adjusted for the
percentage of ownership held by Siemens, is presented below.
Items included in the Statements of Comprehensive Income
are presented for the twelve month period applied under the
equity method.
2014
2015
Fiscal year
Income tax expenses
Deferred tax
Current tax
(in millions of €)
2,014
1,869
2,014
Actual income tax expenses
2
Other, net
(163)
26
for using the equity method
Tax effect of investments accounted
(222)
(107)
Foreign tax rate differential
1
1,710
(145)
1,869
305
Tax loss and credit carryforward
Deferred tax assets
9,915
10,322
706
610
229
237
7,103
7,539
Liabilities and Post-employment benefits
Other
1,878
1,936
Non-current and current assets
2014
2015
Sep 30,
(in millions of €)
Assets
In Germany, the calculation of current tax is based on a com-
bined tax rate of 31%, consisting of a corporate tax rate of 15%,
a solidarity surcharge thereon of 5.5% and an average trade tax
rate of 15%. For foreign subsidiaries, current taxes are calcu-
lated based on the local tax laws and applicable tax rates in the
individual foreign countries. Deferred tax assets and liabilities
in Germany and abroad are measured at the tax rates that are
expected to apply to the period when the asset is realized or
the liability is settled.
The current income tax expenses in fiscal 2015 and 2014 in-
clude adjustments recognized for current tax of prior years in
the amount of €79 million and €107 million, respectively. The
deferred tax expense (benefit) in fiscal 2015 and 2014 includes
tax effects of the origination and reversal of temporary differ-
ences of €(30) million and €120 million, respectively.
Deferred income tax assets and liabilities on a gross basis are
summarized as follows:
2,014
(1)
(43)
Change in tax rates
11
In fiscal 2015 and 2014, Other operating income includes
gains on sales of property, plant and equipment and intangi-
ble assets of €232 million and €355 million, respectively, and
gains from the sale of businesses of €80 million and €143 mil-
lion, respectively.
NOTE 5 Other operating income
Consolidated Financial Statements
22
72
Item Share of profit (loss), net, includes Siemens' share in BWI
Informationstechnik GmbH's (BWI IT) earnings of €27 million
and €55 million, respectively, in fiscal 2015 and 2014. The car-
rying amount of all individually not material associates in-
cludes the carrying amount of BWI IT, amounting to €114 mil-
lion and €131 million, respectively, as of September 30, 2015
and 2014. Siemens holds a 50.05% stake in BWI IT. BWI IT is not
controlled by Siemens due to significant participating rights of
the two other shareholders. Together with the HERKULES obli-
gations the Company's maximum exposure to loss from BWI IT
as of September 30, 2015 and 2014 amounts to €1,204 million
and €1,621 million, respectively. BWI IT finances its operations
on its own.
(52)
71
58
20
22
1
102
38
2014
2015
Fiscal year
Total comprehensive income
net of income taxes
Other comprehensive income,
Income (loss) from continuing operations
Income (loss) from discontinued operations
(in millions of €)
NOTE 6 Other operating expenses
Post-employment benefits
Other operating expenses in fiscal 2015 and 2014 include losses
on sales of property, plant and equipment and intangible as-
sets, and effects from insurance, legal and regulatory matters.
Income tax expense (benefit) consists of the following:
8
tax assets and tax credits
Change in realizability of deferred
79
(20)
Taxes for prior years
(235)
(709)
Tax-free income
280
474
Non-deductible losses and expenses
Increase (decrease) in income
taxes resulting from:
Expected income tax expenses
2,265
2,238
2014
2015
Fiscal year
(in millions of €)
Income tax expense (current and deferred) differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
NOTE 7 Income taxes
Other current liabilities
Current provisions
Trade payables
(204)
78
16
130
3,505
and similar rights
including patents, licenses
Acquired technology
111
3,525
3,346
Internally generated
(174)
1,224
(1,526)
2,750
(1,019)
312
in fiscal
2014
impairment
technology
(2,461)
1,064
(246)
155
(7)
136
7,677
Land and bulidings
(730)
(6,266) 4,560
(309)
2,273
(2,280)
(166) 4,552
(1,389) 10,826
390
21
388
11,415
Other intangible assets
5
148
4,565
and trademarks
Customer relationships
zation and
Deprecia-
tion/amorti-
amount
09/30/2014
2,018
487
566
23,968
and equipment
Property, plant
6
855
(1)
856
(7)
(467)
500
66
66
5
760
construction in progress
Advances to suppliers and
(345)
1,287
(1,805)
128
25,234
10,210
deprecia-
tion/amorti-
zation and
impairment
nations
09/30/2014
combi-
10/01/2013
Carrying
Accumu-
lated
Gross
carrying
amount
business
amount
Retire-
ments¹
Reclassi-
fications
through
differences
carrying
Additions
Additions
Gross Translation
(in millions of €)
│1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
(1,769)
(15,024)
Liabilities
(733)
(3,489) 3,868
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
The presentation of certain pri-
or-year information has been reclassified to conform to the cur-
rent year presentation.
-
Prior-year information
Share-based payment Share-based payment awards at
Siemens are predominately designed as equity-settled. Fair
value is measured at grant date and is expensed over the vest-
ing period. Fair value is determined as the market price of
Siemens shares, considering dividends during the vesting
period the grantees are not entitled to and market conditions
and non-vesting conditions, if applicable.
-
Cash flow hedges: The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net
of income taxes (applicable deferred income tax), and any inef-
fective portion is recognized immediately in net income.
Amounts accumulated in equity are reclassified into net in-
come in the same periods in which the hedged item affects net
income.
corresponding gain or loss recognized in net income. For
hedged items carried at amortized cost, the adjustment is
amortized until maturity of the hedged item. For hedged firm
commitments the initial carrying amount of the assets or liabil-
ities that result from meeting the firm commitments are ad-
justed to include the cumulative changes in the fair value that
were previously recognized as separate financial assets or lia-
bilities.
In July 2014, the IASB issued IFRS 9, Financial Instruments.
IFRS 9 introduces a single approach for the classification and
measurement of financial assets according to their cash flow
characteristics and the business model they are managed in,
and provides a new impairment model based on expected
credit losses. IFRS 9 also includes new regulations regarding
the application of hedge accounting to better reflect an entity's
risk management activities especially with regard to managing
non-financial risks. The new standard is effective for annual re-
porting periods beginning on or after January 1, 2018, while
early application is permitted. The Company is currently assess-
ing the impacts of adopting IFRS 9 on the Company's Consoli-
dated Financial Statements.
Fair value hedges: The carrying amount of the hedged item is
adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair
value is recognized as a separate financial asset or liability with
Financial liabilities - Siemens measures financial liabilities,
except for derivative financial instruments, at amortized cost
using the effective interest method.
Loans and receivables - Financial assets classified as loans
and receivables are measured at amortized cost using the ef-
fective interest method less any impairment losses. Impair-
ment losses on trade and other receivables are recognized us-
ing separate allowance accounts. The allowance for doubtful
accounts involves significant management judgment and re-
view of individual receivables based on individual customer
creditworthiness, current economic trends and analysis of his-
torical bad debts on a portfolio basis. For the determination of
the country-specific component of the individual allowance,
Siemens also considers country credit ratings, which are cen-
trally determined based on information from external rating
agencies. Regarding the determination of the valuation allow-
ance derived from a portfolio-based analysis of historical bad
debts, a decline of receivables in volume results in a corre-
sponding reduction of such provisions and vice versa. As of
September 30, 2015 and 2014, Siemens recorded a valuation
allowance for trade and other receivables (including leases) of
€1,123 million and €1,073 million, respectively.
quoted market price in an active market, and decisive parame-
ters cannot be reliably estimated to be used in valuation mod-
els for the determination of fair value. Siemens considers all
available evidence such as market conditions and prices, in-
vestee-specific factors and the duration as well as the extent to
which fair value is less than acquisition cost in evaluating po-
tential impairment of its available-for-sale financial assets. The
Company considers a decline in fair value as objective evidence
of impairment, if the decline exceeds 20% of costs or continues
for more than six months.
equipment
Consolidated Financial Statements
78
│1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
9,638 (1,652)
(14,330)
Derivative financial instruments - Derivative financial in-
struments, such as foreign currency exchange contracts and
interest rate swap contracts are measured at fair value and clas-
sified as held for trading unless they are designated as hedging
instruments, for which hedge accounting is applied. Changes
in the fair value of derivative financial instruments are recog-
nized either in net income or, in the case of a cash flow hedge,
in line item Other comprehensive income, net of income taxes
(applicable deferred income tax). Certain derivative instru-
ments embedded in host contracts are also accounted for sep-
arately as derivatives.
In May 2014, the IASB issued IFRS 15, Revenue from Contracts
with Customers. According to the new standard, revenue is rec-
ognized to depict the transfer of promised goods or services to
Consolidated Financial Statements
69
Assets classified as held for disposal
Other assets
Other financial assets
Investments previously accounted for using the equity method
Property, plant and equipment
Other intangible assets
Goodwill
Inventories
Trade and other receivables
(in millions of €)
| Carrying amounts of major classes of assets and liabilities held-for-disposal
DISPOSITIONS AND DISCONTINUED OPERATIONS
Revenue and net income of the combined entity in fiscal 2015
would have been €77,474 million and €7,227 million, respec-
tively, had both acquired businesses been included as of Octo-
ber 1, 2014.
Consolidated Financial Statements
70
In December 2014, Siemens acquired the Rolls-Royce Energy
aero-derivative gas turbine and compressor business of Rolls-
Royce plc, U.K. (Rolls-Royce). By acquiring Rolls-Royce's small
and medium derivative gas turbines business, Siemens closed
a technology gap in its gas turbine portfolio. The acquired
business will be integrated in the Division Power and Gas. The
contractually agreed purchase price amounts to £785 million
(€990 million as of the acquisition date). That amount was
subject to post-closing adjustments amounting to £29 million
(€37 million as of the acquisition date). The purchase price
was paid in cash. In addition, as part of the transaction,
Siemens paid Rolls-Royce £200 million (€252 million as of the
acquisition date) for a 25 year technology licensing agreement
granting exclusive access to future Rolls-Royce aero-turbine
technology developments in the four to 85 megawatt power
output range as well as preferred access to supply and engi-
neering services of Rolls-Royce. The following figures result
from the preliminary purchase price allocation as of the acqui-
sition date: Other intangible assets €764 million, Property,
plant and equipment €134 million, Trade and other receivables
€238 million, Inventories €463 million, Deferred tax assets
€103 million, Provisions €316 million, Trade payables €156 mil-
lion and Other current liabilities €322 million. Other intangible
assets mainly relate to technology including licences and sim-
ilar rights of €459 million and customer relationships of
€292 million. Preliminary goodwill amounts to €437 million
and is largely based on synergies, such as cost synergies, espe-
cially in manufacturing, purchasing, research and develop-
ment, as well as general administration functions, and sales
synergies mainly resulting from the extension of the gas tur-
bine portfolio. Including pre-tax earnings effects from amor-
tization of intangible assets acquired in the business combina-
tion (€42 million) and integration costs (€33 million), the
acquired business contributed revenues of €786 million and
a net income of €(29) million to Siemens for the period from
acquisition to September 30, 2015.
liabilities €989 million. Intangible assets mainly relate to tech-
nology of €426 million, customer relationships of €2,275 mil-
lion and trademarks of €256 million. The gross contractual
amount of the trade and other receivables acquired is €455 mil-
lion. Preliminary goodwill amounts to €4,058 million and is
largely based on synergies, such as sales synergies mainly
resulting from the extended portfolio and enhanced service
opportunities, and cost synergies, especially in research and
development, purchasing, general administration functions, as
well as manufacturing. Including pre-tax earnings effects from
amortization of intangible assets acquired in the business com-
bination (€44 million) and integration costs (€19 million), the
acquired business contributed revenues of €533 million and a
net income of €(33) million to Siemens for the period from
acquisition to September 30, 2015.
In June 2015, Siemens acquired all shares of Dresser-Rand
Group Inc., Houston, Texas (U.S.) and Paris (France), a
world-leading supplier for the oil and gas industry and for dis-
tributed power generation. With Dresser-Rand on board,
Siemens has a comprehensive portfolio of equipment and ca-
pability for the oil and gas industry and a much expanded in-
stalled base, allowing Siemens to address the needs of the mar-
ket with products, solutions and services. The acquired business
will be integrated in the Division Power and Gas. The purchase
price amounts to US$6,692 million (€5,981 million as of the ac-
quisition date) paid in cash. It comprises US$6,555 million
(€5,858 million as of the acquisition date) for all outstanding
shares and US$138 million (€123 million as of the acquisition
date) to settle the outstanding equity-based compensation pro-
grams. Siemens assumed cash amounting to US$197 million
(€176 million as of the acquisition date). Further, Siemens set-
tled outstanding financial debt of US$1,142 million (€1,021 mil-
lion as of the acquisition date). The following figures result
from the preliminary purchase price allocation as of the acqui-
sition date: Other intangible assets €2,957 million, Property,
plant and equipment €352 million, Trade and other receivables
€352 million, Inventories €538 million, Other current financial
assets €131 million, Cash and cash equivalents €176 million,
Deferred tax assets €201 million, Debt including outstanding
financial debt settled €1,033 million, Trade payables €229 mil-
lion, Other current liabilities €382 million and Deferred tax
ACQUISITIONS
NOTE 3 Acquisitions, dispositions
and discontinued operations
a customer in an amount that reflects the consideration to
which the Company expects to be entitled in exchange for
those goods or services. Revenue is recognized when, or as,
the customer obtains control of the goods or services. IFRS 15
also includes guidance on the presentation of contract bal-
ances, that is, assets and liabilities arising from contracts with
customers, depending on the relationship between the entity's
performance and the customer's payment. In addition, the new
standard requires a set of quantitative and qualitative disclo-
sures to enable users of the Company's Consolidated Financial
Statements to understand the nature, amount, timing, and un-
certainty of revenue and cash flows arising from contracts with
customers. IFRS 15 supersedes IAS 11, Construction Contracts
and IAS 18, Revenue as well as related interpretations. In
July 2015 the IASB deferred the standard's effective date to an-
nual periods beginning on or after January 1, 2018; early appli-
cation is permitted. The Company is currently assessing the
impact of adopting IFRS 15 on the Company's Consolidated
Financial Statements and will determine the adoption date as
well as the transition method.
23,968
(2,515)
1,927
475
Equipment leased to others
(751)
81
608
2
106
5,740
equipment
Furniture and office
(453)
2,453
(4,687)
(521) 7,140
239
277
4
122
7,020
equipment
Technical machinery and
(238)
2,936
7,356
104
371
24,083
and equipment
Property, plant
750
(10)
760
(25)
(449)
516
7
710
construction in progress
Advances to suppliers and
(316)
1,222
(645)
1,347
(4,440)
(1,705)
5,786
2,927
(485)
1
-
Non-current and current assets
Liabilities
7,140
6,067
1.7%
2,613
6.5%
2.0%
2,790
8.5%
1.7%
3,328
8.0%
8.0%
1.7%
6.5%
2.5%
5,108
discount rate
After-tax
Terminal value
growth rate
Goodwill
Sep 30, 2015
The sensitivity analysis for the groups of cash-generating units
to which a significant amount of goodwill is allocated was
based on an increase in after-tax discount rates of one percent-
age point or a reduction in the terminal value growth rate of
one percentage point. Siemens concluded that no impairment
loss would need to be recognized on goodwill in any of the
groups of cash-generating units.
3,587
Sep 30, 2014
Goodwill
Terminal value
growth rate
fications
through
differences
Reclassi-
Additions
Additions
Gross Translation
carrying
(in millions of €)
NOTE 12 Other intangible assets and
property, plant and equipment
77
Consolidated Financial Statements
7.5%
2.2%
2,603
8.5%
1.7%
3,105
6.5%
2.4%
4,765
After-tax
discount rate
Imaging & Therapy Systems of the Healthcare Sector
Industry Automation of the Industry Sector
Diagnostics of the Healthcare Sector
(in millions of €)
3
82
140
1,681
1,763
Balance at year-end
Dispositions and reclassifications to assets classified as held for disposal
Impairment losses recognized during the period
Translation differences and other
Balance at beginning of year
Accumulated impairment losses and other changes
19,546
25,071
Balance at year-end
(856)
(261)
Dispositions and reclassifications to assets classified as held for disposal
60
4,599
Acquisitions and purchase accounting adjustments
777
5
Retire-
ments¹
(1)
1,905
Revenue figures in the 5-year planning period of the groups of
cash-generating units to which a significant amount of good-
will is allocated include average revenue organic growth rates
of between 2.6% and 5.9%.
Power Generation Services (part of Power and Gas)
Imaging & Therapy Systems of Healthcare
Digital Factory
Power and Gas (without part of Power Generation Services)
Diagnostics of Healthcare
(in millions of €)
The following table presents key assumptions used to deter-
mine fair value less costs to sell for impairment test purposes
for the groups of cash-generating units to which a significant
amount of goodwill is allocated:
Consolidated Financial Statements
76
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each group of
cash-generating units. Discount rates are based on the weighted
average cost of capital (WACC) for the groups of cash-generat-
ing units (for SFS the discount rate represents cost of equity).
The discount rates are calculated based on a risk-free rate of in-
terest and a market risk premium. In addition, the discount rates
reflect the current market assessment of the risks specific to
each group of cash-generating units by taking into account spe-
cific peer group information on beta factors, leverage and cost
of debt. The parameters for calculating the discount rates are
based on external sources of information. The peer group is
subject to an annual review and adjusted, if necessary. Terminal
value growth rates take into consideration external macroeco-
nomic sources of data and industry specific trends.
for the next five years based on past experience, actual operat-
ing results and management's best estimate about future de-
velopments as well as market assumptions. The determined
fair value of the groups of cash-generating units is assigned to
level 3 of the fair value hierarchy.
For the purpose of estimating the fair value less costs to sell of
the groups of cash-generating units, cash flows were projected
Siemens performs the mandatory annual impairment test
in the three months ended September 30. The recoverable
amounts for the annual impairment test 2015 for Siemens'
groups of cash-generating units were generally estimated to be
higher than the carrying amounts. Key assumptions on which
Siemens based its determinations of the fair value less costs to
sell for the groups of cash-generating units include terminal
value growth rates up to 2.5% in fiscal 2015 and 2.9% in fiscal
2014, respectively and after-tax discount rates of 6.0% to 9.5%
in fiscal 2015 and 6.5% to 9.0% in fiscal 2014. Where possible,
reference to market prices is made.
As of October 1, 2014, Siemens realigned its organizational and
reporting structure. Goodwill has been reallocated to the reor-
ganized reporting structure generally based on relative values.
The reallocation did not result in goodwill impairments.
The Siemens' groups of cash-generating units to which good-
will is allocated are generally represented by a segment and for
Healthcare one level below the segment. Prior year disclosures
are based on the reporting structure before reorganization.
17,783
17,883
17,783
23,166
Balance at beginning of year
Balance at year-end
Carrying amount
1,763
(5)
1,187
Gross
Carrying
57
457
(4)
(521)
3,033
(1,746)
Technical machinery and
(256)
4,089
117
(3,656)
(257)
135
199
143
169
7,356
Land and bulidings
(778)
8,077
7,745
2,927
Equipment leased to others
(662)
7,272
167
172
282
263
(252)
7,770
(5,111)
2,660
(513)
Furniture and office
equipment
5,786
109
49
580
73
(768)
5,829
(4,510)
1,319
(7,185)
15,262
(444)
390
Acquired technology
211
2,750
technology
Internally generated
(176)
1,376
(1,619)
2,995
(302)
337
in fiscal
2015
Deprecia-
tion/amorti-
zation and
impairment
tion/amorti-
zation and
impairment
amount
09/30/2015
lated
deprecia-
carrying
amount
09/30/2015
combi-
10/01/2014
business
amount
including patents, licenses
Accumu-
and similar rights
190
3,796
693
10,826
Other intangible assets
(370)
4,827
(2,715)
7,542
(176)
2,873
293
4,552
and trademarks
Customer relationships
(231)
1,874
(2,851)
4,725
34
53
923
3,525
Translation differences and other
nations
19,546
7
(126)
(145)
Write-offs charged against the allowance
Recoveries of amounts previously written-off
Foreign exchange translation differences
Reclassifications to line item Assets held for
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
1,632
2,218
(346)
139
directly in equity
Income and expenses recognized
6
2,014
(37)
Discontinued operations
1,869
Continuing operations
62
168
of Income in the current period
Fiscal year
2014
2015
(in millions of €)
recorded in the Consolidated Statements
210
(9)
5
(26)
2015
Sep 30,
6,033
6,042
233
246
More than five years
3,393
3,322
After one year but not more than five years
2,406
2,474
Within one year
2014
2015
(in millions of €)
Sep 30,
Minimum future lease payments to be received are as follows:
Consolidated Financial Statements
74
938
933
(33)
1,023
938
beginning of fiscal year
Valuation allowance as of
2014
2015
Sep 30,
(in millions of €)
Sep 30,
NOTE 8 Trade and other receivables
the following items (gross amounts):
Deferred tax assets have not been recognized with respect of
Consolidated Financial Statements 73
As of September 30, 2015, the Company has certain tax losses
subject to significant limitations. For those losses deferred tax
assets are not recognized, as it is not probable that gains will be
generated to offset those losses.
|
2,782
1,983
Total deferred tax assets, net
7,133
8,339
Deferred tax liabilities
280
336
Other
787
19,564
732
(in millions of €)
Minimum future lease payments
2015
Deductible temporary differences
Tax loss carryforward
2014
2015
Fiscal year
(in millions of €)
Changes to the valuation allowance of current and long-term
receivables which belong to the class of financial assets mea-
sured at (amortized) cost are as follows (excluding receivables
from finance leases):
In fiscal 2015 and 2014, the long-term portion of receivables
from finance leases is reported in Other financial assets and
amounts to €3,264 million and €3,357 million, respectively.
Including items charged or credited directly to equity and the
expense (benefit) from continuing and discontinued operations,
the income tax expense (benefit) consists of the following:
Siemens has not recognized deferred tax liabilities for income
taxes or foreign withholding taxes on the cumulative earnings
of subsidiaries of €27,507 million and €21,115 million, respec-
tively in fiscal 2015 and 2014 because the earnings are intended
to be permanently reinvested in the subsidiaries.
As of September 30, 2015 and 2014, €458 and €152 million of
the unrecognized tax loss carryforwards expire over the peri-
ods to 2028.
14,526
15,982
915
1,334
1,988
2,073
760
Receivables from finance leases
1,142
12,537
13,909
Trade receivables from the sale
of goods and services
155
192
2014
6,042
Increase in valuation allowances
The following table shows a reconciliation of minimum future
lease payments to the gross and net investment in leases and
to the present value of the minimum future lease payments
receivable:
2,433
2,492
Within one year
2015
2014
2015
(in millions of €)
Sep 30,
in leases
Gross investment
15,100
17,253
The gross investment in leases and the present value of mini-
mum future lease payments receivable are due as follows:
(1,895)
(2,554)
Advance payments received
16,994
19,807
528
2,072
551
One to five years
Thereafter
3,449
Balance at beginning of year
2014
2014
6,033
2015
Fiscal Year
Cost
(in millions of €)
NOTE 11 Goodwill
Consolidated Financial Statements 75
Construction contracts, here and as follows, include service
contracts accounted for under the percentage of completion
method. The aggregate amount of costs incurred and recog-
nized profits less recognized losses for construction contracts
in progress, as of September 30, 2015 and 2014 amounted to
€81,341 million and €86,542 million, respectively. Revenue
from construction contracts amounted to €30,288 million and
€29,765 million, respectively, for fiscal 2015 and 2014. Advance
payments received on construction contracts in progress were
€8,644 million and €7,707 million as of September 30, 2015 and
2014. Retentions in connection with construction contracts
were €225 million and €245 million in fiscal 2015 and 2014,
respectively.
Cost of sales include inventories recognized as expense
amounting to €51,735 million and €49,177 million, respectively,
in fiscal 2015 and 2014. Compared to prior year write-downs in-
creased by €97 million and €1 million as of September 30, 2015
and 2014.
Investments in finance leases primarily relate to industrial ma-
chinery, medical equipment, transportation systems, equip-
ment for information technology and office machines. Actual
cash flows will vary from contractual maturities due to future
sales of finance receivables, prepayments and write-offs.
2014
2,013
3,037
215
5,266
228
5,265
6,124
6,129
242
263
2,965
3,374
Advances to suppliers
Present value of minimum
future lease payments
receivable
Sep 30,
3,046
Work in progress
Less: Present value of unguaranteed
2,389
2,631
Raw materials and supplies
(135)
(190)
Less: Allowance for doubtful accounts
2014
2015
(in millions of €)
5,481
5,527
4,417
Net investment in leases
(643)
(601)
2,312
6,124
6,129
Gross investment in leases
91
87
Plus: Unguaranteed residual values
NOTE 10 Inventories
As of September 30, 2015 and 2014, Other current financial as-
sets include loans receivables of €3,128 million and €2,111 mil-
lion, respectively and derivative financial instruments of
€830 million and €458 million, respectively.
NOTE 9 Other current financial assets
(in millions of €)
Sep 30,
3,436
Less: Unearned finance income
(72)
(80)
Costs and earnings in excess
Present value of minimum future
lease payments receivable
of billings on uncompleted contracts
9,162
8,329
residual value
Finished goods and products held for resale
5,265
5,266
1,276
1,250
€
1,278
1,250
650
2013/June 2020/US$ floating-rate instruments
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
Total Debt Issuance Program
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
1.5%/2013/March 2018/US$ fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
819
£
863
€
€
1,000
996
€
996
US$
500
445
US$
500
396
US$
100
87
US$
1,000
650
350
3.75%/2012/September 2042/GBP fixed-rate instruments
100
€
996
1,000
€
1.5%/2012/March 2020/EUR fixed-rate instruments
5.125%/2009/February 2017/EUR fixed-rate instruments
318
400
US$
357
400
US$
£
US$ 3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
2,000
€
2,090
2,000
1,000
€
995
2.75%/2012/September 2025/GBP fixed-rate instruments
£
350
472
£
448
2,122
77
1,114
400
US$ 3m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
US$
500
446
1.45%/2015/May 2018/US$-fixed-rate-instruments
US$
1,250
2.15%/2015/May 2020/US$-fixed-rate-instruments
5.25%/2006/September 2066/EUR fixed-rate instruments
6.125%/2006/September 2066/GBP fixed-rate instruments
3,301
10,497
1,539
1,750
US$
4.40%/2015/May 2045/US$-fixed-rate-instruments
Total US$ Bonds
1,331
1,500
US$
3.25%/2015/May 2025/US$-fixed-rate-instruments
1,557
1,750
US$
1,839
2.90%/2015/May 2022/US$-fixed-rate-instruments
889
1,000
US$
1,843
1,750
US$
2,023
356
US$
400
317
US$
300
267
US$
300
238
US$
400
357
US$
US$
317
10,799
10,582
5.75%/2006/October 2016/US$ fixed-rate instruments
US$
1,750
1,600
US$
1,750
1,457
6.125%/2006/August 2026/US$ fixed-rate instruments
US$
1,750
400
1,600
60
1,779
Within one year
319
338
Obligations under
finance leases
After one year but not more than five years
652
590
Total debt
More than five years
31
2,979
23
1,620 26,682
115
134
19,326
92
117
1,063
1,045
NOTE 13 Other financial assets
|
(in millions of €)
3,357
2015
Sep 30,
2014
Loans receivable
2014
2015
(in millions of €)
68
The gross carrying amount of Advances to suppliers and con-
struction in progress includes €787 million and €670 million,
respectively of property, plant and equipment under construc-
tion in fiscal 2015 and 2014. As of September 30, 2015 and 2014,
contractual commitments for purchases of property, plant and
equipment are €474 million and €351 million, respectively.
Minimum future lease payments under operating leases are:
NOTE 15 Debt
(in millions of €)
Notes and bonds
(maturing until 2066)
Current debt
Non-current debt
2015
Sep 30,
2014
Sep 30,
2015
2014
456
-
12,477
25,498
Loans from banks
(maturing until 2023)
€
755
773
1,000
968
Other financial
Sep 30,
indebtedness
(maturing until 2027)
1,737
825
18,165
10,919
Receivables from finance leases
3,264
2,708
2,455
20,368
17,954
Consolidated Financial Statements 79
NOTES AND BONDS
Sep 30, 2015
Currency
notional amount
(interest/issued/maturity)
5.625%/2006/March 2016/US$ fixed-rate instruments
(in millions)
Carrying
amount in
millions of €1
Other
Currency
Sep 30, 2014
Carrying
amount in
(in millions)
millions of €1
US$
500
456
US$
500
425
5.625%/2008/June 2018/EUR fixed-rate instruments
€
1,600
notional amount
€
1,059
Accruals for pending invoices
Derivative financial instruments
2,398
2,111
Available-for-sale financial assets
2,464
1,803
Other
217
226
20,821
18,416
Item Loans receivable primarily relate to long-term loan trans-
actions of SFS.
Interest rates in this Note are per annum. In fiscal 2015 and
2014, weighted-average interest rates for loans from banks,
other financial indebtedness and obligations under finance
leases were 2.8% (2014: 3.5%), 0.2% (2014: 0.1%) and 4.7%
(2014: 4.3%), respectively.
1,242
CREDIT FACILITIES
NOTE 14 Other current liabilities
(in millions of €)
Sep 30,
2015
2014
Billings in excess of costs and
estimated earnings on uncompleted
contracts and related advances
10,982
9,559
Liabilities to personnel
5,437
4,880
As of September 30, 2015 and 2014, €7.1 billion and €6.8 billion
of lines of credit are unused. The facilities are for general corpo-
rate purposes. The €4.0 billion syndicated credit facility was
extended by one year until June 26, 2020 with one extension
option remaining. The US$ 3.0 billion syndicated credit facility
was extended by one year until September 27, 2020 with no
more extension option remaining. The €450 million revolving
bilateral credit facility is unused and has been extended to Sep-
tember 30, 2016.
900
(1,123)
€
133
122
133
122
Benefits paid
(1,753)
(1,649)
(1,616)
(1,514)
(137)
(134)
Settlement payments
(47)
(7)
(47)
(7)
Business combinations, disposals and other
602
(224)
515
(122)
1
88
(102)
Foreign currency translation effects
897
635
Plan participants' contributions
(533)
(611)
(83)
2,098
(41)
1,972
Effects of asset ceiling
-
245
(2,098)
-
(41)
1,972
1
43
1
793
43
in the Consolidated Statements
of Comprehensive Income
(41)
1,972
(245)
2,098
1
43
33
Employer contributions
611
533
205
Remeasurements recognized
525
(1)
6
2,888
1,435
842
5,612
4,845
5,696
4,818
107
97
22
125
3,432
2,784
3,162
2,947
59
551
170
1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
82 Consolidated Financial Statements
The net defined benefit balance of €9,737 million and €9,288 mil-
lion as of September 30, 2015 and 2014 comprised €9,811 million
and €9,324 million net defined benefit liability and €75 million
and €36 million net defined benefit asset, respectively. Net in-
terest expenses amounted to €263 million and €295 million,
respectively, in fiscal 2015 and 2014. Consistent with prior year,
the DBO is attributable to active employees 32%, to former em-
ployees with vested rights 14% and to retirees and surviving
dependants 54%.
The remeasurements comprise actuarial (gains) and losses
resulting from:
The discount rate was derived from high-quality corporate
bonds with an issuing volume of more than 100 million units in
the respective currency zones, which have been awarded an AA
rating (or equivalent) by at least one of the three rating agen-
cies Moody's Investor Service, Standard & Poor's Rating Services
or Fitch Ratings.
Applied mortality tables are:
Germany
U.S.
U.K.
Fiscal year
2,673
(245)
3,730
7,309
103
115
Other reconciling items
(167)
390
(463)
6
(557)
(654)
Balance at fiscal year-end
36,818
35,591
27,296
4,597
26,505
202
9,737
9,288
thereof:
Germany
U.S.
U.K.
CH
21,469
22,414
14,539
15,105
6,930
214
934
Actuarial (gains) losses
amounts included in net interest
2,298
18,165
1 Includes adjustments for fair value hedge accounting.
Debt Issuance Program - The Company has a program for
the issuance of debt instruments in place under which instru-
ments up to €15.0 billion can be issued as of September 30,
2015 and 2014, respectively. As of September 30, 2015 and 2014
€10.5 billion and €10.2 billion in notional amounts were issued
and are outstanding.
US$ Bonds - In May 2015, Siemens issued instruments total-
ing US$7.75 billion (€6.92 billion as of September 30, 2015) in
six tranches.
Hybrid Capital Bond - Siemens may call the option on the
hybrid bond in 2016 or thereafter. The instruments bear fixed-
rate interests until September 14, 2016; thereafter, floating-rate
interest is applied according to the conditions of the bond.
80 Consolidated Financial Statements
Bond with Warrant Units - Each of the US$1.5 billion instru-
ments were issued with 6,000 detachable warrants. In the
three months ended September 30, 2015, Siemens made an ex-
change offer to institutional investors to replace the existing
warrants relating to Siemens and OSRAM Licht AG (OSRAM)
shares with new warrants relating only to Siemens shares;
10,661 warrants were offered for exchange by warrant holders
and accepted by Siemens; the previous warrants submitted
for exchange were cancelled. Since September 11, 2015, holders
of the new warrants are entitled, at their option, to receive
1,902.0024 Siemens AG shares per warrant at an exercise price
per share of €98.7606. To facilitate the exchange, in total, float-
ing-rate instruments of €64 million were issued. 1,339 warrants
were not exchanged and retain the original rights to receive
1,811.9349 Siemens AG shares per warrant and 160.4987 OSRAM
shares at an exercise price of €187,842.81 (since February 26,
2015). The number of shares remains subject to the adjustment
provisions under the terms and conditions of the warrants. As
of September 30, 2015 and 2014, respectively, the warrants of-
fer option rights to 22.7 million and 21.7 million Siemens AG
shares. The new warrants are classified as equity instruments
with a fair value of €108 million at issuance; they are presented
in Capital reserve in line item Other changes in equity. The pre-
vious warrants not exchanged continue to be recognized as
other financial liability.
ASSIGNABLE AND TERM LOANS
In fiscal 2015, the two bilateral US$500 million term loan facili-
ties (in aggregate €893 million) were extended by one year un-
til March 26, 2020 with no extension option remaining. In
June 2015, Siemens redeemed a €333 million assignable loan.
COMMERCIAL PAPER PROGRAM
Siemens has a US$ 9.0 billion (€8.0 billion as of September 30,
2015) commercial paper program in place including US$ ex-
tendible notes capabilities. As of September 30, 2015 and 2014,
US$ 1.7 billion (€1.5 billion) and US$ 1.0 billion (€0.8 billion),
respectively, were outstanding. Siemens' commercial papers
have a maturity of generally less than 90 days. Interest rates
ranged from 0.11% to 0.32% in fiscal 2015 and from 0.1% to 0.2%
in fiscal 2014.
NOTE 16 Post-employment benefits
Siemens provides post-employment defined benefit plans or
defined contribution plans to almost all of the Company's do-
mestic employees and the majority of the Company's foreign
employees.
DEFINED BENEFIT PLANS
The defined benefit plans open to new entrants are based pre-
dominantly on contributions made by the Company. Only to a
certain extent, those plans are affected by longevity, inflation
and compensation increases and take into account country
specific differences. The Company's major plans are funded
with assets in segregated entities. In accordance with local
laws and bilateral agreements with benefit trusts (trust agree-
ment) those plans are managed in the interest of the beneficia-
ries. The defined benefit plans cover 500,000 participants, in-
cluding 218,000 active employees, 80,000 former employees
with vested benefits and 202,000 retirees and surviving depen-
dents.
Germany:
In Germany, Siemens AG provides pension benefits through
the plan BSAV (Beitragsorientierte Siemens Altersversorgung),
frozen legacy plans and deferred compensation plans. The ma-
jority of Siemens' active employees participate in the BSAV.
Those benefits are predominantly based on contributions made
by the Company and returns earned on such contributions,
subject to a minimum return guaranteed by the Company. In
connection with the implementation of the BSAV, benefits pro-
vided under the frozen legacy plans were modified to substan-
tially eliminate the effects of compensation increases. How-
ever, these frozen plans still expose the Company to investment
risk, interest rate risk and longevity risk. The pension plans are
funded via contractual trust arrangements (CTA). In Germany
no legal or regulatory minimum funding requirements apply.
U.S.:
Siemens Corporation sponsors the Siemens Pension Plan,
which is vastly frozen to new entrants and accretion of new
benefits. Most of the plan participants' benefits are calculated
using a cash balance formula. The plan assets are held in a
Master Trust. Siemens Corporation has delegated investment
oversight of the assets to the Investment Committee. The
trustee of the Master Trust, who is responsible for the safe-
keeping of the trust, acts only by direction of the Investment
Committee. Annual contributions are determined by indepen-
dent actuaries. There is a regulatory requirement to maintain a
minimum funding level of 80% in the defined benefit plans in
order to avoid benefit restrictions.
Consolidated Financial Statements 81
U.K.:
Siemens plc offers benefits through the Siemens Benefit Scheme
for which, until the start of retirement, an inflation increase of
the accrued benefits is mandatory. The required funding is de-
termined by a funding valuation carried out every third year
based on legal requirements. Due to deviating guidelines for the
determination of the discount rates, the technical funding defi-
cit is usually larger than the IFRS funding deficit. To reduce the
deficit Siemens entered into an agreement with the trustees to
provide annual payments of GBP 31 (€42) million until fiscal
2033. The agreement also provides for a cumulative advance
payment by Siemens AG compensating the remaining annual
payments at the date of early termination of the agreement due
to cancellation or insolvency.
Switzerland:
Following the Swiss law of occupational benefits (BVG) each em-
ployer has to grant post-employment benefits for qualifying em-
ployees. Accordingly Siemens in Switzerland sponsors several
cash balance plans. These plans are administered by founda-
tions. The board of the main foundation is composed of equally
many employer and employee representatives. The board of the
foundation is responsible for investment policy and the asset
management, as well as for any changes in the plan rules and the
determination of contributions to finance the benefits. The Com-
pany is required to make total contributions at least as high as
the sum of the employee contributions set out in the plan rules.
In case of an underfunded plan the Company together with the
employees may be asked to pay supplementary contributions ac-
cording to a well defined framework of recovery measures.
Development of the defined benefit plans
in fiscal 2015 and 2014
Defined benefit
obligation (DBO)
Fair value of
plan assets
2,670
25,955
31
31
€
900
959
£
750
1,055
£
750
1,025
Total Hybrid Capital Bonds
1,989
1,984
1.05%/2012/August 2017 US$ fixed-rate instruments
1.65%/2012/August 2019 US$ fixed-rate instruments
US$
(1)
1,500
US$
1,500
1,158
US$
1,500
1,292
US$
1,500
1,140
3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
Total Bonds with Warrant Units
€
33
33
1,314
(11)
Effects of asset
ceiling
(III)
Net defined
benefit balance
11
7
1,087
1,096
Interest income
Other¹
(177)
4
825
(179)
802
-
(825)
(802)
1,089
(8)
12
Components of defined benefit
costs recognized in the
Consolidated Statements of income
1,436
1,570
646
793
11
7
801
784
Return on plan assets excluding
2
income and net interest expenses
1,076
477
(1 - 11 + 111)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
(in millions of €)
2015
2014
2015
2014
2015
2014
2015
Interest expenses
2014
35,591
33,173
26,505
24,078
202
146
9,288
9,241
Current service cost
536
477
-
536
Balance at begin of fiscal year
66
Dividends paid per share were €3.30 and €3.00, respectively, in
fiscal 2015 and 2014. The Managing Board and the Supervisory
Board I propose to distribute a dividend of €3.50 per share enti-
tled to the dividend, in total representing approximately €2.8
billion in expected payments. Payment of the proposed divi-
dend is contingent upon approval at the Shareholders' Meeting
on January 26, 2016.
10,479
1,423
580
1,377
691
4,071
2,101
911
2
830
3,845
(1,023)
(807)
(8)
(313)
8,425
(2,150)
(355)
(283)
(278)
(1,629)
80
6
3
(17)
71
1
(13)
300
3
291
(713)
1,561
1,398
1,745
Asset Liability Matching Strategies
As a significant risk, the Company considers a decline in the
plans' funded status due to adverse developments of plan as-
sets and/or defined benefit obligations resulting from chang-
ing parameters. Accordingly, Siemens implemented a risk man-
agement concept aligned with the defined benefit obligations
(Asset Liability Matching). Risk management is based on a
worldwide defined risk threshold (value-at-risk). The concept,
the value at risk and the asset development including the in-
vestment strategy are monitored and adjusted on an ongoing
basis under consultation of senior external experts. Indepen-
dent asset managers are selected based on quantitative and
qualitative analysis, which includes their performance and risk
evaluation. Derivatives are used to reduce risks as part of risk
management.
Real estate
Foreign currency risk
Credit/Inflation/Price risks
Total
1 Multi strategy funds comprise absolute return funds and diversified growth funds
that invest in various asset classes within a single fund and aim to stabilize return
and reduce volatility.
Virtually all equity securities have quoted prices in active mar-
kets. The fair value of fixed income securities is based on prices
provided by price service agencies. The fixed income securities
are traded in highly liquid markets and almost all fixed income
securities are investment grade.
Future cash flows
Employer contributions expected to be paid to defined benefit
plans in fiscal 2016 are €667 million. Over the next ten fiscal
years, average annual benefit payments of €1,912 million and
€1,751 million, respectively, are expected as of September 30,
2015 and 2014. The weighted average duration of the DBO for
Siemens defined benefit plans was 13 years as of September 30,
2015 and 2014.
84 Consolidated Financial Statements
DEFINED CONTRIBUTION PLANS AND STATE PLANS
The amount recognized as expense for defined contribution
plans amounts to €594 million and €535 million in fiscal 2015
and 2014, respectively. Contributions to state plans amount to
€1,372 million and €1,317 million in fiscal 2015 and 2014, respec-
tively.
NOTE 17 Provisions
(in millions of €)
Balance as of October 1, 2014
Thereof non-current
Additions
3,721
Total
Other
Asset
retirement
obligations
losses and risks
Order related
53
Warranties
Balance as of September 30, 2015
Other changes
Accretion expense and effect of changes in discount rates
Translation differences
Reversals
Usage
Thereof non-current
342
3
102
Less: Cash and cash equivalents
(9,957)
(8,013)
Less: Current available-for-sale financial assets
Net debt
(1,175)
(925)
18,528
12,008
Less: SFS Debt¹
(21,198)
(18,663)
Plus: Post-employment benefits
Plus: Credit guarantees
9,811
9,324
859
774
Less: 50% nominal amount hybrid bond
Less: Fair value hedge accounting adjustment²
Industrial net debt
2,387
2,549
(117)
58
Plus/Less: Interest income, interest expenses
and other financial income (expenses), net
Plus: Amortization,
depreciation and impairments
EBITDA
7,306
19,326
7,218
1,390
6,107
(1,121)
(936)
(932)
(958)
Income from continuing operations
before income taxes
As in prior year, sensitivity determinations apply the same
methodology as applied for the determination of the post-em-
ployment benefit obligation. Sensitivities reflect changes in the
DBO solely for the assumption changed.
26,682
1,620
4,220
1,829
1,981
689
1,415
1,393
1,888
801
9,353
4,865
|
Except for asset retirement obligations, the majority of the
Company's provisions are generally expected to result in cash
outflows during the next one to 15 years.
Warranties mainly relate to products sold. Order related losses
and risks are provided for anticipated losses and risks on un-
completed construction, sales and leasing contracts.
The Company is subject to asset retirement obligations related
to certain items of property, plant and equipment. Such asset
retirement obligations are primarily attributable to environ-
mental clean-up costs and to costs primarily associated with
the removal of leasehold improvements at the end of the
lease term.
Environmental clean-up costs relate to remediation and envi-
ronmental protection liabilities which have been accrued based
on the estimated costs of decommissioning facilities for the
production of uranium and mixed-oxide fuel elements in
Hanau, Germany (Hanau facilities), as well as a nuclear re-
search and service center in Karlstein, Germany (Karlstein facil-
ities). According to the German Atomic Energy Act, when such
a facility is closed, the resulting radioactive waste must be col-
lected and delivered to a government-developed final storage
facility. In this regard, the Company has developed a plan to
decommission the Hanau and Karlstein facilities in the follow-
ing steps: clean-out, decontamination and disassembly of
equipment and installations, decontamination of the facilities
and buildings, sorting of radioactive materials, and intermedi-
ate and final storage of the radioactive waste. This process will
be supported by continuing engineering studies and radioac-
tive sampling under the supervision of German federal and state
authorities. The decontamination, disassembly and final waste
conditioning are planned to continue until 2018; thereafter,
the Company is responsible for intermediate storage of the ra-
dioactive materials until they are handed over to a final storage
facility. With respect to the Hanau facility, the asset retirement
has been completed and intermediate storage has been set up.
On September 21, 2006, the Company received official notifica-
tion from the authorities that the Hanau facility has been re-
leased from the scope of application of the German Atomic
Energy Act and that its further use is unrestricted. The ulti-
mate costs of the remediation are contingent on the decision
of the federal government on the location of the final storage
facilities and the date of their availability. Several parameters
relating to the development of a final storage facility for radio-
active waste are based on the assumptions for the so called
Schacht Konrad final storage. Parameters related to the life-
span of the German nuclear reactors assume a phase-out until
2022. The valuation uses assumptions to reflect the current
and detailed cost estimates, price inflation and discount rates
as well as a continuous outflow until the 2070's related to the
costs for dismantling as well as intermediate and final storage.
Amongst others, the estimated cash outflows related to the
asset retirement obligation could alter significantly if, and
when, political developments affect the government's plans to
develop the so called Schacht Konrad. For discounting the
cash outflows, the Company uses current interest rates as of
the balance sheet date.
As of September 30, 2015 and 2014, the provision totals
€1,359 million and €1,347 million, respectively, and is recorded
net of a present value discount of €594 million and €977 mil-
lion, respectively, reflecting the assumed continuous outflow
of the total expected payments until the 2070's. Declined dis-
count rates increased the carrying amount of provisions by
€283 million as of September 30, 2015 and by €242 million as
of September 30, 2014. At the same time, the provisions were
Consolidated Financial Statements 85
decreased by €282 million as of September 30, 2015, mainly
due to reduced assumed inflation rates.
2,979
Short-term debt and current maturities of
long-term debt
Sep 30,
2014
2015
(in millions of €)
The carrying amount of a liability resulting from a non-con-
trolling interest holder's option to put its interest to Siemens
decreased by €287 million in fiscal 2015 and increased Retained
earnings, accordingly.
Plus: Long-term debt
As of September 30, 2015, total authorized capital of Siemens AG
is €618.6 million nominal, issuable in installments based on var-
ious time-limited authorizations, by issuance of up to 206.2 mil-
lion registered shares of no par value. In addition, as of Septem-
ber 30, 2015, Siemens AG's conditional capital is €1,080.6 million
nominal or 360.2 million shares. It can primarily be used for
serving convertible bonds or warrants under warrant bonds
that could or can be issued based on various time-limited autho-
rizations approved by the Shareholders' Meetings.
Siemens' issued capital is divided into 881 million registered
shares with no par value and a notional value of €3.00 per
share. The shares are fully paid in. At the Shareholders' Meet-
ing, each share has one vote and accounts for the shareholders'
proportionate share in the Company's net income. All shares
confer the same rights and obligations.
Equity
NOTE 18
A key consideration of our capital structure management is to
maintain ready access to capital markets through various debt
instruments and to sustain our ability to repay and service our
debt obligations over time. In order to achieve this, Siemens
intends to maintain an Industrial net debt divided by EBITDA
(continuing operations) ratio of up to 1.0, commencing with
fiscal 2015. The ratio indicates the approximate number of
years that would be needed to cover the Industrial net debt
through continuing income, without taking into account inter-
est, taxes, depreciation and amortization.
NOTE 19 Additional capital disclosures
Other includes transaction-related and post-closing provisions
in connection with portfolio activities as well as provisions for
Legal Proceedings, as far as the risks that are subject to such
Legal Proceedings are not already covered by project account-
ing. Provisions for Legal Proceedings amounted to €398 mil-
lion and €433 million as of September 30, 2015 and 2014,
respectively.
In fiscal 2015 and 2014, Siemens repurchased 29,419,671 and
11,331,922 shares, respectively. In fiscal 2015 and 2014, Siemens
transferred 2,788,059 and 3,584,370 treasury shares, respec-
tively, in connection with share-based payments. As of Septem-
ber 30, 2015 and 2014, the Company has treasury shares of
72,376,759 and 45,745,147, respectively.
The DBO effect of a 10% reduction in mortality rates for all
beneficiaries would be an increase of €1,021 million and
€1,027 million, respectively, as of September 30, 2015 and 2014.
26,505
27,296
4.8%
3.0%
3.0%
CH
1.5%
1.5%
2.7%
2.4%
Pension progression
4.3%
4.6%
Germany
3.9%
4.5%
U.K.
1.7%
1.7%
Effect on DBO due to a one-half percentage-point
2014
2015
(in millions of €)
Sep 30,
Disaggregation of plan assets
3.6%
A one-half-percentage-point change of the above assumptions
would result in the following increase (decrease) of the DBO:
Consolidated Financial Statements 83
|
1.8%
1.0%
3.2%
2.9%
Sensitivity analysis
Equity securities
U.K.
2015
(in millions of €)
2015
2014
Changes in demographic assumptions
26
370
CH
Changes in financial assumptions
(8)
1,602
Experience (gains) losses
(59)
Total
(41)
1,972
Heubeck Richttafeln 2005G (modified)
RP-2014 mortality table with MP-2014
generational projection
SAPS S2 (Standard mortality tables
for Self Administered Pension Schemes
with allowance for future mortality
improvements)
Compensation increase
Sep 30,
Sep 30,
2014
2015
|
CH
2014
U.K.
Germany
Discount rate
The rates of compensation increase and pension progression
for countries with significant effects are shown in the following
table. Inflation effects, if applicable, are included in the assump-
tions below.
The weighted-average discount rate used for the actuarial valu-
ation of the DBO at period-end was as follows:
Actuarial assumptions
BVG 2010 G
U.S.
9,825
6,285
Sep 30, 2015
4,216
Corporate bonds
10,488
Alternative investments
3,526
3,174
Hedge Funds
1,403
1,211
Private Equity
772
626
1,351
1,337
Multi strategy funds'
733
Derivatives
485
572
456
483
Cash and cash equivalents
Other assets
(458)
(1,441)
(614)
26
1,149
1,079
Interest risk
646
491
(45)
7,050
1,590
1,717
Sep 30, 2014
U.S. equities
1,366
1,463
(in millions of €)
Discount rate
increase
decrease
increase
(2,121)
2,380
(2,100)
decrease
2,361
European equities
1,783
2,030
Emerging markets
1,143
4,718
Government bonds
14,694
15,206
Fixed income securities
(90)
(1,379)
95
101
1,947
1,993
Global equities
Rate of compen-
sation increase
Rate of pension
progression
1,611
(93)
9,576
500
0.15
Future payment obligations under non-cancellable operating
leases are:
88
Consolidated Financial Statements 87
In addition to guarantees described above, the Company issued
other commitments. To the extent future claims are not consid-
ered remote, maximum future payments from these obliga-
tions amount to €1,912 million and €1,305 million as of Sep-
tember 30, 2015 and 2014, respectively. These commitments
include indemnifications issued in connection with disposi-
tions of businesses. Such indemnifications may protect the
buyer from potential tax, legal and other risks in conjunction
with the purchased business. As of September 30, 2015 and
2014, the accrued amount for such other commitments is
€559 million and €168 million, respectively.
In fiscal 2007, The Federal Republic of Germany commissioned
a consortium consisting of Siemens and IBM Deutschland
GmbH (IBM) to modernize and operate the non-military infor-
mation and communications technology of the German Federal
Armed Forces (Bundeswehr). This project is called HERKULES.
A project company, BWI Informationstechnik GmbH (BWI), pro-
vides the services required by the terms of the contract.
Siemens is a shareholder in the project company. Siemens is-
sued several guarantees connected to each other legally and
economically in favor of the Federal Republic of Germany and
of the consortium member IBM. The guarantees ensure that
BWI has sufficient resources to provide the required services
and to fulfill its contractual obligations. Future payments po-
tentially required by Siemens will be reduced successively over
the remaining two-year contract period.
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which mainly include performance bonds and guaran-
tees of advanced payments in a consortium. In the event of
non-fulfillment of contractual obligations by the consortium
partner(s), Siemens will be required to pay up to an agreed-
upon maximum amount. These agreements typically have
terms of up to ten years. Generally, consortium agreements
provide for fallback guarantees as a recourse provision among
the consortium partners. As of September 30, 2015 and 2014,
the Company accrued €3 million relating to performance guar-
antees at each year-end date.
be required to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding bal-
ance of the credit or, in case where a credit line is subject to
variable utilization, the nominal amount of the credit line.
These guarantees have terms up to 18 years and 19 years, re-
spectively, in fiscal 2015 and 2014. For credit guarantees
amounting to €271 million and €260 million as of Septem-
ber 30, 2015 and 2014, respectively, the Company held collateral
mainly in the form of inventories and trade receivables. The
Company accrued €93 million and €49 million relating to credit
guarantees as of September 30, 2015 and 2014, respectively.
(in millions of €)
Item Credit guarantees cover the financial obligations of third
parties generally in cases where Siemens is the vendor and (or)
contractual partner or Siemens is liable for obligations of asso-
ciated companies accounted for using the equity method. Addi-
tionally, credit guarantees are issued in the course of the SFS
business. Credit guarantees generally provide that in the event
of default or non-payment by the primary debtor, Siemens will
1,090
4,241
2,061
2,292
Guarantees of third-party performance
HERKULES obligations
2014
774
859
Credit guarantees
1,490
4,325
0.62
2015
773
Consolidated Financial Statements
As previously reported, in June 2008, the Republic of Iraq filed
an action requesting unspecified damages against 93 named
defendants with the United States District Court for the South-
ern District of New York on the basis of findings made in the
"Report of the Independent Inquiry Committee into the United
Nations Oil-for-Food Program". Siemens S.A.S., France, Siemens
Sanayi ve Ticaret A.S., Turkey, and the former Siemens subsidi-
ary OSRAM Middle East FZE, Dubai, are among the 93 named
defendants. In February 2013, the trial court dismissed the Re-
public of Iraq's action. The Republic of Iraq appealed the deci-
sion, which was then affirmed by the court of appeals. The Re-
public of Iraq thereafter petitioned for an "en banc" review of
the appellate decision. The court of appeals rejected the Repub-
lic of Iraq's request in December 2014. In March 2015, the Re-
public of Iraq filed a petition for U.S. Supreme Court review,
which was denied in June 2015.
As previously reported, in July 2008, Hellenic Telecommunica-
tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
with the district court of Munich, Germany, seeking to compel
Siemens AG to disclose the outcome of its internal investiga-
tions with respect to OTE. OTE seeks to obtain information with
respect to allegations of undue influence and/or acts of bribery
in connection with contracts concluded between Siemens AG
and OTE from calendar 1992 to 2006. At the end of July 2010,
OTE expanded its claim and requested payment of damages by
Siemens AG of at least €57 million to OTE for alleged bribery
payments to OTE employees. In October 2014 OTE increased its
damage claim to the amount of at least €68 million. Siemens AG
continues to defend itself against the expanded claim.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, Siemens AG agreed on a settlement
with nine out of eleven former members of the Managing and
Supervisory Board in January 2010 relating to claims of
breaches of organizational and supervisory duties. In Janu-
ary 2013, Siemens AG agreed on a settlement with Dr. Thomas
Ganswindt. In August 2014, Siemens AG reached a settlement
with Mr. Joachim Neubürger. The Annual Shareholders' Meet-
ing of Siemens AG approved the proposed settlement between
the Company and Mr. Neubürger on January 27, 2015.
As previously reported, during fiscal year 2014, Siemens Indus-
trial Turbomachinery Ltd., United Kingdom, was sued before an
Iranian Court. The alleged damage claims are not quantified.
Siemens is defending itself against the action.
Siemens AG in October 2013 alleging breaches of a contract for
the delivery of a high-voltage substation entered into by the par-
ties in 2010. The parties settled the dispute in December 2014.
As previously reported, Essent Wind Nordsee Ost Planungs- und
Betriebsgesellschaft mbH filed a request for arbitration against
Within one year
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
As previously reported, Siemens AG is a member of a supplier
consortium that has been contracted to construct the nuclear
power plant "Olkiluoto 3″ in Finland for Teollisuuden Voima Oyj
(TVO) on a turnkey basis. The agreed completion date for the
nuclear power plant was April 30, 2009. Siemens AG's share of
the contract value is approximately 27%. The other member of
the supplier consortium is a further consortium consisting of
Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
Completion of the power plant has been delayed for reasons
which are in dispute. In December 2008, the supplier consor-
tium filed a request for arbitration against TVO demanding an
extension of the construction time, additional compensation,
milestone payments, damages and interest. In August 2015, the
supplier consortium updated its monetary claims in the
amount of approximately €3.4 billion. TVO rejected the claims
and asserted counterclaims against the supplier consortium
consisting primarily of damages due to the delay. Also in Au-
gust 2015, TVO increased its counterclaims to approximately
€2.3 billion. The arbitration proceedings may continue for sev-
eral years. Partial Awards on certain aspects could be rendered
during fiscal year 2016. The amounts claimed by the parties do
not cover the total period of delay and may be updated further.
The Company is jointly and severally liable and has capital con-
tribution obligations as a partner in commercial partnerships
and as a participant in various consortiums.
Total operating rental expenses for the years ended Septem-
ber 30, 2015 and 2014 were €1,118 million and €1,105 million,
respectively.
828
3,217
3,428
993
Sep 30,
2014
815
1,574
After one year but not more than five years
More than five years
NOTE 21 Legal proceedings
2015
1,662
2,417
Moody's
Investors
Sep 30, 2015
Standard &
Poor's Ratings
Services
Siemens' current corporate credit ratings are:
Equity allocated to SFS differs from the carrying amount of
equity as it is mainly allocated based on the risks of the under-
lying business.
18,663
8.69
21,198
8.77
2015
2,148
Sep 30,
2014
Debt to equity ratio
SFS debt
Allocated equity
(in millions of €)
The SFS business is capital intensive and requires a larger
amount of debt to finance its operations compared to the in-
dustrial business.
86 Consolidated Financial Statements
2 Debt is generally reported with a value representing approximately the amount
to be repaid. However, for debt designated in a hedging relationship (fair value
hedges), this amount is adjusted for changes in market value mainly due to changes
in interest rates. Accordingly, Siemens deducts these changes in market value in
order to end up with an amount of debt that approximately will be repaid.
1 The adjustment considers that both Moody's and S&P view SFS as a captive
finance company. These rating agencies generally recognize and accept higher
levels of debt attributable to captive finance subsidiaries in determining credit
ratings. Following this concept, Siemens excludes SFS Debt in order to derive an
industrial net debt which is not affected by SFS's financing activities.
Industrial net debt/EBITDA
Standard &
Poor's Ratings
Sep 30, 2014
Services
Sep 30,
The following table presents the undiscounted amount of maxi-
mum potential future payments for major groups of guarantees:
Service
A+
A-1+
P-1
A-1+
Aa3
NOTE 20 Commitments and contingencies
(in millions of €)
A1
P-1
Short-term debt
Long-term debt
Moody's
Investors
Service
A+
As in recent years, sluggish aggregate demand, particularly for
investment goods, held back growth. This was influenced signifi-
cantly by high levels of political and economic uncertainty arising
from conflicts in Syria and Iraq, the failed coup in Turkey and
U.K.'s vote to leave the European Union, among other factors.
The growth slowdown was especially evident in the U.S. econ-
omy in the second and third quarters of fiscal 2016, followed by
modest acceleration of economic activity in the fourth quarter.
The main reason for this development was an inventory reduc-
tion which was substantially resolved by the end of the fiscal
year. In addition, the strong US$ weighed on U.S. exports and
improved conditions for imports.
The Chinese economy continued its path of rebalancing toward
a more consumption- and domestic-demand-driven economy,
which has so far been accompanied by a steady decline in eco-
nomic growth rates. However, the stability of China's economy
was partly caused by stimulus measures which have slowed the
country's progress on this path.
Markets addressed by the Energy Management Division grew
moderately in fiscal 2016. The utilities market, the Division's single
largest customer segment, showed clear growth, benefiting from
major energy transmission investments in Egypt and Qatar and
from large interconnection projects, particularly in China and
India. The chemicals and the construction industries grew slightly.
Growth in the chemicals industry was driven by the Americas,
where some process industries showed a trend towards re-indus-
trialization in the U.S. and a build-up of capacities within the
region overall. Within the construction industry, increased invest-
ments in North America were largely offset by a slow-down in
investing activities in Asia, particularly in China. Demand from
the metals industry remained on the prior-year level, while the
oil and gas industry continued to reduce capital expenditures due
to low oil prices. Competitors of the Energy Management Division
consist mainly of a small number of large multinational compa-
nies. International competition is increasing from manufacturers
in emerging countries such as China, India and Korea.
and cost reduction, dependency on subsidy schemes is expected
to decrease in the long term.
Combined Management Report
While raw material prices increased following a slump in the sec-
ond quarter of fiscal 2016, commodity exporting countries still
were burdened with overcapacities due to former investment
overhangs in extractive sectors. Associated reductions in govern-
ment spending further weighed on economic activity.
The markets of the Power and Gas Division remained challeng-
ing in fiscal 2016. This was again particularly evident in the mar-
ket for steam turbines, where volume shrank substantially year-
over-year due to an ongoing shift from coal-fired to gas-fired
power generation in the U.S. and emission regulation such as in
China. Demand in compression markets also fell year-over-year
due to continued reduction in capital expenditure for oil and gas
upstream applications. In contrast, demand in the gas turbine
market continued to grow in fiscal 2016, driven by rising demand
for energy in emerging countries, demand for replacement of
aged, inefficient and inflexible power plants; the above-men-
tioned shift from coal to gas, particularly in the U.S.; an energy
market reform in Mexico; large projects in Egypt; diversification
towards gas power plants in China and countries in Latin America
and the Middle East. The Division's competition consists mainly
of two groups: a relatively small number of equipment manufac-
turers, some with very strong positions in their domestic markets,
and on the other hand a large number of engineering, procure-
ment and construction contractors. The gas turbine market is
experiencing overcapacity among original equipment manufac-
turers and engineering, procurement and construction contrac-
tors, which is leading to market consolidation.
A.1.2.2 MARKET DEVELOPMENT
The partly estimated figures presented here for GDP and fixed
investments are calculated by Siemens based on an IHS Markit
report dated October 15, 2016.
A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
The development of the world economy in fiscal 2016 again
resulted in diminished expectations through the course of the
year. After a slight improvement in sentiment indicators in the
first quarter, economic activity unexpectedly slowed down in
the second and third quarters of fiscal 2016. The growth slow-
down was also evident in the development of international
trade volume.
In Europe, economic activity also decelerated considerably in the
second and third quarters of fiscal 2016. Risks in the European
banking system resurfaced. The largely unexpected Brexit vote in
June 2016 added uncertainty - though the consequences in the
following months did not match the initial concerns.
All in all, the negative effects outweighed the positive ones.
During the course of the fiscal year, growth forecasts for global
gross domestic product (GDP) for calendar 2016 declined from
2.9% in October 2015 to 2.4% in October 2016. Fixed investments
are expected to expand by 1.7% in calendar 2016, down from
3.4% previously forecast in October 2015.
6
Following strong demand in fiscal 2015, market volume for the
markets served by the Wind Power and Renewables Division
declined moderately in fiscal 2016. The decline was due to the
onshore wind power market segment, only partly offset by
growth in the relatively smaller offshore wind power market seg-
ment. On a regional basis, the decline was most evident in the
Americas, particularly including Brazil and the U.S., and in Asia,
Australia, particularly including China, where the largest national
wind market in the world remains largely closed to foreign man-
ufacturers. In Europe, in contrast, demand for wind power grew
in both the onshore and the offshore market segments. The com-
petitive situation in wind power differs in the two major market
segments. In the markets for onshore wind farms, competition is
widely dispersed without any one company holding a dominant
share of the market, while markets for offshore wind farms con-
tinue to consist of a few experienced players. Consolidation is
moving forward in both on- and offshore segments, including
exits of smaller players. The key drivers of consolidation are in-
creasing price pressure as well as technology challenges and
market access challenges, which increase development costs and
the importance of risk-sharing in offshore wind power. Market
development continues to depend strongly on energy policy, in-
cluding tax incentives in the U.S. and regulatory frameworks in
Germany and the U.K. With continued technological progress
To emphasize and evaluate our continuous efforts to improve
productivity, we incorporated a measure called total cost produc-
tivity into our One Siemens framework. We define this measure
as the ratio of cost savings from defined productivity improve-
ment measures to the aggregate of functional costs for the
Siemens Group. We aim to achieve an annual value of 3% to 5%
for total cost productivity.
5
At the Wind Power and Renewables Division, our R&D efforts
are focused on innovative products and solutions that allow us to
take the lead in performance, improve our competitiveness, and
build a stronger business case for customers. This includes find-
ing ways to more intelligently monitor and analyze turbine con-
ditions, and smart diagnostic services. Our R&D efforts also fo-
cus on digitalization. At our remote diagnostics center in Brande,
Denmark, we collect digital data from more than 10,000 turbines
in more than 30 countries, which total more than 24 million data
sets annually. We use this data to provide value for our custom-
ers: in 85% of cases, issues can be corrected and turbines re-
started without sending out a service team.
4
Combined Management Report
The R&D activities of our Energy Management Division focus
on preparing our portfolio for changes on all voltage levels in the
world of electricity. The increasing infeed of renewable energy
to power grids requires that those grids become more flexible
and efficient, particularly with distributed generation on the rise.
The digitalization of future grids will enable intelligent grid oper-
ation and data-driven services. Cost-out programs and optimiza-
tion of our footprint are improving the competitiveness of our
product portfolio on global markets. Our innovations are cen-
tered on power electronics, digitalization or grid stabilization.
The full integration of energy supply systems with process auto-
mation is a core portfolio element for industrial applications and
infrastructures.
R&D work at the Building Technologies Division focuses on op-
timizing comfort, operational and energy efficiency in buildings
and infrastructures, protecting against fire and security hazards,
and minimizing related risks. We aim to create a portfolio of prod-
ucts and services ranging from the field to the cloud, based on
open standards wherever possible. This includes data-based ser-
vices for new ways of optimizing energy consumption, easily
scalable and reasonably priced services, a new and harmonized
system landscape with effective integration of electrical con-
sumption, fire detection and HVAC (heating, ventilation, air con-
ditioning) systems, and a complete range of products tailored
specifically to growing markets.
The Mobility Division's R&D strategy addresses customers'
demand for maximum availability, high throughput and en-
hanced passenger experience. Although there is a growing need
for mobility worldwide, possibilities for building new roads and
railways are limited. Meeting the demand for mobility requires
intelligent solutions that make transport more efficient, safe and
environmentally friendly. Reflecting this, Mobility's R&D activi-
ties emphasize digitalization in developing state-of-the art rail
vehicles, automation solutions for rail and road traffic, and rail
electrification systems. Most of these goals can be achieved only
with intelligent IT solutions such as WLAN-based control systems
for driverless and conductorless metro train operation, decentral-
ized wayside architecture for rail automation, cloud-based prod-
uct solutions, and Integrated Mobility Platforms that intelli-
gently network passengers, mobility service providers and traffic
management centers.
A.1.2 Economic environment
One of the R&D priorities at the Digital Factory Division is the
Digital Enterprise Software Suite. It includes Teamcenter software.
Serving as a data backbone, Teamcenter digitizes the entire prod-
uct lifecycle management (PLM) process from product design
through planning and engineering to production and service. In
addition, the TIA (Totally Integrated Automation) Portal engi-
neering platform is being intensively improved. Thanks to its
open interfaces, it exchanges data with other systems. The seam-
less link to simulation tools enhances the benefits of virtual com-
missioning, which is used to identify flaws at an early stage and
in a cost-effective manner. Data-based services are another field
of research. Siemens offers MindSphere, an industry cloud that
industrial companies can use to develop and provide their own
digital services. As a result, new types of services such as predic-
tive maintenance and resource optimization can be provided.
Machinery and plant builders can use it to monitor production
operations around the world. MindSphere helps them reduce
downtimes and offer new business models.
Markets for the Building Technologies Division grew moderately
in fiscal 2016. Growth was driven by solid demand from the U.S.
and Asia, despite softening growth rates in China. Within the
Europe, C.I.S., Africa, Middle East region, markets in the Middle
East grew stronger than the region overall. The recovery of the
European market was weaker than expected but included sta-
ble growth in Germany. The Division's principal competitors are
multinational companies. Its solutions and services business also
competes with system integrators and small local companies.
The Division faces continuing price pressure, particularly in its
solutions business, due to strong competition from system houses
and some larger competitors.
The focus of R & D activities in the Process Industries and Drives
Division is on the digital transformation of products, solutions
and services for all sectors in the process industry, such as oil and
gas, chemicals and pharmaceuticals. Information and communi-
cation technologies (ICT) play a crucial role in areas such as im-
provements in instrumentation, analytics, industrial communi-
cation and process control systems. The end-to-end use of ICT is
as essential a prerequisite for the expansion of drive and trans-
mission platforms by means of integrated condition monitoring
and service cloud connections as it is for the commissioning and
operation of processing plants or the use of computer-assisted
simulations to support their operators. The same applies for new
service offerings that complement operational engineering data
with additional condition-related data (condition monitoring)
and use it for purposes such as asset management. The digitali-
zation of our comprehensive process automation and industrial
communication portfolio includes a holistic industrial security
concept. Another central objective of our R&D activities is to fur-
ther increase energy efficiency while reducing the consump-
tion of raw materials and cutting emissions. This applies to our
own product creation processes as well as to our customers' pro-
cesses that are facilitated by our products (systems, solutions
and services).
The R&D activities of Healthineers are directed toward our
growth fields in therapy, molecular diagnostics, and services. We
want to tap the full potential of imaging solutions in therapy and
to establish a closer connection between diagnostics and therapy
in cardiology, interventional clinical disciplines, surgery, and ra-
diation oncology. Strategic partnerships are an essential part of
our strategy to reach this goal. Expanding our innovation map
beyond our established portfolio, and investing in new ideas will
help us tap new business fields. For example, we will extend our
activities in the highly dynamic growth field of molecular diag-
nostics. We will expand our services business beyond product-
related services by adding a digital services portfolio and increas-
ing enterprise transformation services to help customers in their
transition to value-based care within more and more provider
organizations across geographical borders.
Combined Management Report
-
Markets for the Mobility Division grew moderately in fiscal 2016,
with all regions contributing to growth. Market development in
the Europe, C.I.S., Africa, Middle East region was characterized by
continuous investment and awards of large orders. This was par-
ticularly evident in Germany and the U.K. Demand in the Middle
East and in Africa was mainly driven by turnkey and rail infrastruc-
ture projects. In the Americas region, growth continued to bene-
fit from demand for passenger locomotives and urban transport
products in the U.S. Within the Asia, Australia region, Chinese
markets saw ongoing investments in high-speed trains, urban
transport and rail infrastructure, while India awarded large orders
as part of the country's transportation infrastructure build-out.
The Division's principal competitors are multinational companies.
Consolidation among Mobility's competitors is continuing.
11-15%
2015. Global manufacturing production grew only modestly
but showed some signs of growth stabilization towards the end
of the fiscal year. Consumer-oriented industries and the global
automotive industry, which is one of the most important end-
customer industries of the Division, remained on a stable growth
path. In contrast, mining- and oil-related industries continued to
suffer from low raw material prices. Demand from the machine-
building industry declined modestly year-over-year as invest-
ments were held back due mainly to uncertainties in the global
political and economic environment. The competition for Digital
Factory's business activities can be grouped into two categories:
multinational companies that offer a relatively broad portfolio
and companies that are active only in certain geographic or prod-
uct markets.
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This
measure is the main driver of basic earnings per share (EPS)
from net income, which we use in communication to the capital
markets.
In line with common practice in the financial services business,
our financial indicator for measuring capital efficiency at the
Financial Services Division (SFS) is return on equity after tax, or
ROE after tax. ROE is defined as SFS' profit after tax, divided by
the Division's average allocated equity.
15-20%
SFS (ROE after tax)
Digital Factory
15-19%
8-12%
Process Industries and Drives
Healthineers
14-20%
Research and Development in our Businesses
R&D at the Power and Gas Division concentrates on developing
products and solutions for enhancing efficiency, flexibility and
economy in power generation and in the oil and gas industry.
These products and solutions include turbomachinery - primarily
high-performance, low-emission gas turbines for single operation
or for combined cycle power plants - and compressor solutions
for various process industries. The Division's current technology
initiative, which started in fiscal 2015, is aimed at intensifying
R&D in innovative materials, advanced manufacturing methods
and plant optimization. Along with promoting digitalization in
overall product lifecycles, Power and Gas is on track preparing for
changing energy markets and their increasingly diversified cen-
tralized and decentralized structures.
6-9%
8-11%
7-10%
5-8%
In fiscal 2016, market volume for the markets addressed by the
Digital Factory Division came in slightly below the level in fiscal
Margin range
Power and Gas
Profit margin ranges
Within the framework of One Siemens, we aim to achieve margins
through the entire business cycle that are comparable to those of
our relevant competitors. Therefore, we have defined profit mar-
gin ranges for our industrial businesses, which are based on the
profit margins of the respective relevant competitors.
A.2.3 Profitability and capital
efficiency
Currency translation effects are the difference between revenue
for the current period calculated using the exchange rates of
the current period and revenue for the current period calculated
using the exchange rates of the comparison period. For calculat-
ing the percentage change year-over-year, this absolute differ-
ence is divided by revenue for the comparison period. A portfolio
effect arises in the case of an acquisition or a disposition and is
calculated as the change year-over-year in revenue of the relevant
business resulting specifically from the acquisition or disposition.
For calculating the percentage change, this absolute change is
divided by revenue for the comparison period. For orders, we
apply the same calculations for currency translation and portfolio
effects as described above.
Within the framework of One Siemens, we aim to grow our reve-
nue faster than the average weighted revenue growth of our most
relevant competitors. Our primary measure for managing and
controlling our revenue growth is comparable growth, because it
shows the development in our business net of currency transla-
tion effects, which arise from the external environment outside
of our control, and portfolio effects, which involve business activ-
ities which are either new to or no longer a part of our business.
A.2.2 Revenue growth
Within One Siemens, we have established a financial framework –
for revenue growth, for profitability and capital efficiency, for our
capital structure, and for our dividend policy.
A.2.1 Overview
A.2 Financial performance system
7
Combined Management Report
Markets served by Healthineers grew moderately in fiscal 2016
as growth in the U.S. and in Europe more than offset weakness
in Latin America. Growth in China was stabilizing, though growth
rates came in lower than at the beginning of the decade. The
diagnostic imaging market segment grew slightly. While demand
for imaging procedures continued to grow, this trend was partly
offset by price pressure and increased utilization rates. The mar-
kets for ultrasound and in-vitro diagnostics grew moderately.
Development in the ultrasound market segment benefits from
increasing access to healthcare services. The market for in-vitro
diagnostics is expanding due to population and income growth
in emerging markets and the rising importance of diagnostics
in improving healthcare quality. For the healthcare industry as
a whole, the trend towards consolidation continues. Competi-
tion among the leading companies is strong, including with re-
spect to price.
Market volume for the markets addressed by the Process Indus-
tries and Drives Division declined moderately in fiscal 2016. This
was due mainly to reductions in capital expenditures by custom-
ers in commodity-related industries such as oil and gas, mining,
cement and metals. Towards the end of the fiscal year, demand
from those industries began to stabilize. As described for Digital
Factory above, global manufacturing production grew only mod-
estly while the consumer-oriented industries served by Process
Industries and Drives, such as food and beverage and pharma-
ceuticals continued their growth path. Competitors of the Divi-
sion's business activities can be grouped into two categories:
multinational companies that offer a relatively broad portfolio
and companies that are active only in certain geographic or prod-
uct markets. Consolidation is taking place mostly in particular
market segments and not across the broad base of the Division's
portfolio. In particular, consolidation in solution-driven markets
is going in the direction of in-depth niche market expertise. Most
major competitors have established global bases for their busi-
nesses. In addition, the competition has become increasingly
focused on technological improvements and cost position.
Wind Power and Renewables
Energy Management
Building Technologies
Mobility
In fiscal 2016, we reported research and development expenses
of €4.7 billion, compared to €4.5 billion in fiscal 2015. The result-
ing R&D intensity, defined as the ratio of R&D expenses and
revenue, was 5.9% - the same level as in fiscal 2015. Additions to
capitalized development expenses amounted to €0.3 billion in
both fiscal 2016 and 2015, mainly at Healthineers. As of Septem-
ber 30, 2016, Siemens held approximately 59,800 granted patents
worldwide in its continuing operations. As of September 30,
2015, it held approximately 56,200 granted patents. On average,
we had 33,000 R&D employees in fiscal 2016.
MANAGEMENT REPORT
Corporate Technology is both a creative driver of disruptive inno-
vations and a partner to the Siemens businesses. Its R & D activi-
ties are focused on the Company's core activities in the fields of
electrification, automation and digitalization. In many research
projects, CT works closely with scholars from leading universities
and research institutions. These partnerships, along with close
collaborations with start-ups, are an important part of Siemens'
open innovation concept, which is designed to make the Com-
pany even more innovative.
Within the framework of One Siemens, we seek to work as prof-
itably and efficiently as possible with the capital provided by our
shareholders and lenders. For purposes of managing and con-
trolling our capital efficiency, we use return on capital employed,
or ROCE, as our primary measure. We aim to achieve a range of
15% to 20%.
COMBINED
Notes and forward-looking
statements
p 133
Corporate Governance
p 124
Report of the Supervisory Board
Takeover-relevant information
p 51
A.11
Compensation Report
p 37
A.10
Siemens AG
p 35
A.9
and associated material opportunities
and risks
p 60
of the economic position
Consolidated Statements
of Changes in Equity
A.7
P 21
A.1 Business and economic environment
Subsequent events
p 62
A.8
P 22
Notes to Consolidated
Financial Statements
Report on expected developments
B.6
In fiscal 2016, Siemens announced the creation of an autono-
mous unit that will place the Company's partnership with start-
ups on a much higher level: next47. The unit went into operation
in October 2016. It has been given a budget of €1 billion for its
first five years. With the creation of next47, Siemens plans to
further enhance its innovativeness and speed up the introduction
of innovations to the marketplace. next47 is focusing on five in-
novation fields: artificial intelligence, distributed electrification,
autonomous machines, blockchain applications and connected
electric mobility. Electrically powered flight is an example of a
disruptive development being pursued by next47. In cooperation
with Airbus, Siemens intends to demonstrate by 2020 that elec-
tricity can be used to power large planes.
A.1.1 The Siemens Group
We are a technology company with core activities in the fields of
electrification, automation and digitalization, and activities in
nearly all countries of the world. Siemens comprises Siemens AG,
a stock corporation under the Federal laws of Germany, as the
parent company and its subsidiaries. Our Company is incorpo-
rated in Germany, with our corporate headquarters situated in
Munich. As of September 30, 2016, Siemens had around 351,000
employees.
Beyond these points of focus, we recognize how important
highly sophisticated software solutions are for all the fields of
business in which Siemens is active. R&D activities are carried
out by our businesses as well as our Corporate Technology (CT)
department.
> turning unstructured data into value-adding information, e.g.
when providing services such as preventive maintenance;
> advancing the integration of medical imaging technology, in
vitro diagnostics and IT for medical engineering to support
improved patient outcomes.
> creating the highly flexible, connected factories of tomorrow
using advanced automation and digitalization technologies;
> promoting the efficient utilization of energy, especially in
buildings, industry and transportation, e.g. through highly
efficient drives for production facilities or for local and long-
distance trains;
➤ finding novel solutions for smart grids and for the storage of
energy from renewable sources with irregular availability;
enabling energy supplies that are economically sustainable;
> further enhancing efficiency in the generation of renewable
and conventional power and minimizing losses during power
transmission;
Our research and development (R&D) activities are ultimately
geared to developing innovative, sustainable solutions for our
customers and the Siemens businesses - and simultaneously
safeguarding our competitiveness. For these reasons, we focus
in particular on
A.1.1.3 RESEARCH AND DEVELOPMENT
structured financing in the form of debt and equity investments.
Based on its comprehensive financing know-how and specialist
technology expertise in the areas of Siemens businesses, SFS pro-
vides financial solutions for Siemens customers as well as other
companies, and also manages financial risks of Siemens. SFS op-
erates the Corporate Treasury of the Siemens Group, which in-
cludes managing liquidity, cash and interest risks as well as cer-
tain foreign exchange, credit and commodities risks. Business
activities and tasks of Corporate Treasury are reported in the seg-
ment information within Reconciliation to Consolidated Financial
Statements.
Combined Management Report 3
The Financial Services (SFS) Division supports its customers'
investments with leasing solutions and equipment, project and
-
Healthineers ("Healthcare" before renaming in May 2016) is one
of the world's largest suppliers of technology to the healthcare
industry and a leader in medical imaging and laboratory diagnos-
tics. We provide medical technology and software solutions as
well as clinical consulting services, supported by a complete set of
training and service offerings. Therefore, we offer our customers
a comprehensive portfolio of medical solutions along the contin-
uum of care from prevention and early detection to diagnosis,
treatment and follow-up care. Because large portions of our rev-
enue stem from recurring business, our business activities are to
a certain extent resilient to short-term economic trends. They are,
however, dependent on regulatory and public policy develop-
ments around the world. Healthineers is organized into six busi-
ness areas: Diagnostic Imaging, Laboratory Diagnostics, Advanced
Therapies, Ultrasound, Point of Care Diagnostics and Services.
The Process Industries and Drives Division offers a comprehen-
sive product, software, solution and service portfolio for moving,
measuring, controlling and optimizing all kinds of mass flows.
With its know-how in vertical industries including oil and gas,
shipbuilding, mining, cement, fiber, chemicals, food and bever-
age, and pharmaceuticals, the Division increases productivity,
reliability and flexibility of machinery and installations along
their entire life cycle jointly with its customers. Based on data
models and analysis methods, Process Industries and Drives
paves the way together with its customers to create a "Digital
Enterprise," from process simulation via plant design and docu-
mentation through to asset and performance management. The
Division's offerings include an integrated portfolio with prod-
ucts, components and systems such as couplings, gears, motors
and converters, process instrumentation systems, process ana-
lytics devices, wired and wireless communication, industrial
identification and power supplies up to systems level with de-
centralized control systems, industrial software as well as cus-
tomized, application-specific systems and solutions. It also sells
gears, couplings and drive solutions to other Siemens Divisions,
which use them in rail transport and wind turbines. Demand
within the industries served by the Division generally shows a
delayed response to changes in the overall economic environ-
ment. Even so, the Division is strongly dependent on invest-
ment cycles in its key industries. In commodity-based process
industries such as oil and gas or mining, these cycles are driven
mainly by commodity price fluctuations rather than changes in
produced volumes.
CONSOLIDATED FINANCIAL STATEMENTS.
expanded its software business by acquiring CD-adapco, a U.S.-
based provider of simulation software. For more information on
the acquisition of CD-adapco, see NOTE 3 in → B.6 NOTES TO
The Digital Factory Division offers a comprehensive product
portfolio and system solutions used in manufacturing industries,
complemented by lifecycle and data-driven services. These offer-
ings enable customers to optimize entire value chains from prod-
uct design and development to production and services. With its
comprehensive offering, the Division supports manufacturing
companies with the transformation towards the "Digital Enter-
prise," resulting in increased flexibility and efficiency of produc-
tion processes and reduced time to market for new products.
The Division supplies customers in discrete, process and hybrid
manufacturing industries. Changes in the level of demand are
strongly driven by macroeconomic cycles, and can lead to signif-
icant short-term variation in market performance. In the third
quarter of fiscal 2016, Digital Factory further strengthened and
Siemens has the following reportable segments: the Divisions
Power and Gas; Wind Power and Renewables; Energy Man-
agement; Building Technologies; Mobility; Digital Factory;
and Process Industries and Drives as well as the separately
managed business Healthineers (formerly called Healthcare),
which together form our Industrial Business. The Division Finan-
cial Services (SFS) supports the activities of our Industrial Busi-
ness and also conducts its own business with external customers.
As "global entrepreneurs" our Divisions and Healthineers carry
business responsibility worldwide, including with regard to their
operating results.
Our reportable segments may do business with each other, lead-
ing to corresponding orders and revenue. Such orders and reve-
nue are eliminated on the Group level.
A.1.1.2 BUSINESS DESCRIPTION
The Power and Gas Division offers a broad spectrum of products
and solutions for generating electricity from fossil fuels and for
producing and transporting oil and gas. The portfolio includes
gas turbines, steam turbines, generators to be applied to gas or
steam power plants, compressor trains, integrated power plant
solutions, and instrumentation and control systems for power
generation. Customers are public utilities and independent power
producers; companies in engineering, procurement and construc-
tion that serve these companies; international and national oil
companies; and industrial customers that generate power for
their own consumption. Due to the broad range of its offerings,
the Division's revenue mix may vary from reporting period to re-
porting period depending on the share of revenue attributable to
products, solutions and services. Because typical profitability levels
differ among these three revenue sources, the revenue mix in a
reporting period accordingly affects Division profit for that period.
The Wind Power and Renewables Division designs, manufac-
tures and installs wind turbines for onshore and offshore appli-
cations. This includes both geared turbines and direct drive tur-
bines. The product portfolio is based on four product platforms,
two each for onshore and offshore applications. The Division
primarily serves large utilities and independent power producers.
Due to the significant offshore business of the Division and its
activities in the Northern hemisphere, production and installa-
tions are typically higher during spring and summer months be-
cause of the more favorable weather and marine conditions
during those seasons. The Division's revenue mix may vary from
reporting period to reporting period depending on the project
mix between onshore and offshore projects in the respective
period. The Division also includes a minority stake in a hydro
power business.
A.1.1.1 ORGANIZATION AND BASIS
OF PRESENTATION
In June 2016, Siemens and Gamesa Corporación Tecnológica, S.A.
(Gamesa) signed binding agreements to merge the Siemens wind
power business, including service, with Gamesa. The two busi-
nesses are highly complementary regarding global footprint, ex-
isting product portfolios and technologies. The combined busi-
ness is expected to have a global reach across all relevant regions
and manufacturing footprints on all continents. Accordingly, the
transaction will result in a product offering covering all wind
classes and addressing all key market segments. Siemens will own
59% of the shares of the combined entity. As part of the merger,
Siemens will fund a cash payment of €1 billion which will be dis-
tributed to Gamesa's shareholders (excluding Siemens) immedi-
ately following the completion of the merger. Closing of the trans-
action is subject to the approvals of the antitrust and regulatory
authorities.
The Energy Management Division offers a wide spectrum of
products, systems, solutions, software and services for transmit-
ting and distributing power and for developing intelligent grid
infrastructure. The Division's customers include power providers,
network operators, industrial companies, infrastructure develop-
ers and construction companies. The offerings are used to pro-
cess and transmit electrical power from the source down to var-
ious load points along the power transmission and distribution
networks to the power consumers. Our solutions for smart grids
enable a bidirectional flow of energy and information, which is
required for the integration of more renewable energy sources
into conventional power transmission and distribution networks.
The Division also offers solutions and energy storage systems for
integrating renewable energy into power grids, together with
2
Combined Management Report
vertical IT software applications that link energy consumers and
producers. In addition, the Division's portfolio includes power
supply solutions for conventional power plants and renewable
energy systems as well as substations for urban and rural distri-
bution networks. The Division also offers energy-efficient solu-
tions for heavy industry, the oil and gas industry and the process
industries.
The Building Technologies Division is a leading provider of au-
tomation technologies and digital services for safe, secure and
efficient buildings and infrastructures throughout their lifecycles.
The Division offers products, solutions, services and software for
fire safety, security, building automation, heating, ventilation,
air conditioning and energy management. The large customer
base is widely dispersed. It includes owners, operators and ten-
ants for both public and commercial buildings; building construc-
tion general contractors; and system houses. Changes in the
overall economic environment generally have a delayed effect on
the Division's business activities. Particularly in the solutions and
service businesses, Building Technologies is affected by changes
in the non-residential construction markets with a time lag of two
to four quarters.
The Mobility Division combines all Siemens businesses in the
area of passenger and freight transportation, including rail vehi-
cles, rail automation systems, rail electrification systems, road
traffic technology, IT solutions and related services. The Division
provides its customers with consulting, planning, financing, con-
struction, service and operation of turnkey mobility systems.
Mobility also provides integrated mobility solutions for network-
ing of different types of traffic systems. The principal customers
of the Mobility Division are public and state-owned companies
in the transportation and logistics sectors. Markets served by
Mobility are driven primarily by public spending. Customers usu-
ally have multi-year planning and implementation horizons, and
their contract tenders therefore tend to be independent of short-
term economic trends.
The Power Generation Services Division offers a comprehensive
set of services for products, solutions and technologies of the
Power and Gas and Wind Power and Renewables Divisions, cov-
ering performance enhancements, maintenance services, cus-
tomer training and professional consulting. Financial results of
these two Divisions include the corresponding financial results of
the Power Generation Services Division, which itself is not a re-
portable segment. Based on this business model, all discussions
of the services business for Power and Gas as well as Wind Power
and Renewables concern the Power Generation Services Division.
8 Combined Management Report
Overall assessment
P 20
Financial performance system
P 10
A.3
p 8
A.2
Consolidated Statements
of Income
Business and economic environment
SIEMENS
Ingenuity for life
Annual Report
2016
siemens.com
Table of contents
A.
Combined Management Report
B.
C.
Consolidated Financial Statements
Additional Information
Responsibility Statement
Independent Auditor's Report
A.1
p2
B.1
p 56
C.1
C.2
p 118
p 119
p 57
of Cash Flows
Consolidated Statements
Financial position
A.6
C.5
p 59
B.4
p 16
A.5
of Financial Position
B.5
Net assets position
C.4
Consolidated Statements
P 15
A.4
p 58
B.3
P 121
Results of operations
C.3
of Comprehensive Income
Consolidated Statements
B.2
87,802
2015
77,573
(2,432)
(2,300)
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of the
vesting period. Total pretax expense for share-based payment
amounted to €332 million and €203 million for the years ended
September 30, 2016 and 2015, respectively, and refers primarily
to equity-settled awards.
Industrial Business
Reconciliation to
1,048
979
76,978
83,723
81,112
154
855
824
1,048
979
Financial Services (SFS)
3,539
73,481
3,497
193
12,930
Healthineers
35
10,036
9,390
9,140
781
847
10,172
9,988
Process Industries and Drives
8,939
9,144
13,535
7,285
1,753
1,777
9,038
9,553
Siemens (continuing operations)
13,830
13,349
13,497
12,896
38
7,777
2016
86,480
1,247
79,644
375
691
195
185
218
230
577
553
1,324
1,337
598
546
66
57
85
86
678
588
2,868
2,526
497
3,929
4,335
570
895
2016
2015
1,872
1,415
9,066
8,871
1,149
1,272
206
225
118
522
464
160
(190)
(346)
330
389
223
119
137
132
350
82,340
99
132
Corporate items - includes corporate costs, such as group man-
aging costs, basic research of Corporate Technology, corporate
projects and non-operating investments or results of corpo-
rate-related derivative activities.
Siemens Real Estate (SRE) - manages the Group's entire real
estate business portfolio, operates the properties, and is respon-
sible for building projects and the purchase and sale of real estate.
the equity method or as available-for-sale financial assets and
that for strategic reasons are not allocated to a segment, Siemens
Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
also includes activities generally intended for divestment or clo-
sure as well as activities remaining from divestments and discon-
tinued operations.
CONSOLIDATED FINANCIAL STATEMENTS
Centrally managed portfolio activities (CMPA) – in general,
comprises equity stakes held by Siemens that are accounted for
RECONCILIATION TO
> Financial Services (SFS) supports its customers' investments
with leasing solutions and equipment, project and structured
financing in the form of debt and equity investments.
> Healthineers, a supplier of technology to the healthcare indus-
try and a leader in medical imaging and laboratory diagnostics,
> Process Industries and Drives (PD) offers a comprehensive
product, software, solution and service portfolio for moving,
measuring, controlling and optimizing all kinds of mass flows,
> Digital Factory (DF) offers a comprehensive product portfolio
and system solutions used in manufacturing industries, com-
plemented by lifecycle and data-driven services,
> Mobility (MO) combines all Siemens businesses in the area of
passenger and freight transportation, including rail vehicles,
rail automation systems, rail electrification systems, road traf-
fic technology, IT solutions and related services,
> Building Technologies (BT) is a provider of automation tech-
nologies and digital services for safe, secure and efficient
buildings and infrastructures throughout their lifecycles,
> Energy Management (EM) offers a wide spectrum of prod-
ucts, systems, solutions, software and services for transmit-
ting and distributing power and for developing intelligent grid
infrastructure,
> Power and Gas (PG), which offers a broad spectrum of prod-
ucts, solutions and services for generating electricity from
fossil fuels and for producing and transporting oil and gas,
> Wind Power and Renewables (WP) designs, manufactures and
installs wind turbines and provides services for onshore and
offshore applications,
DESCRIPTION OF REPORTABLE SEGMENTS
Siemens has nine reportable segments, being:
It is not part of the Consolidated Financial Statements subject to the audit opinion.
1 This supplemental information on Orders is provided on a voluntary basis.
(2,391)
75,636
(2,447)
79,644
(3,690)
(3,694)
1,299
75,636
96 Consolidated Financial Statements
Profit
Assets
Free cash flow
126
1,690
1,685
5,731
4,906
1,771
1,790
179
184
304
127
281
2015
2016
Sep 30, 2015
Sep 30, 2016
2015
Fiscal year
Amortization,
depreciation & impairments
Additions to intangible assets
and property, plant & equipment
Fiscal year
Fiscal year
Fiscal year
243
2016
OFFSETTING
10,332
65
214
216
212
216
Manufacturing and services
Sales and marketing
Research and development
Administration
and general services
2015
2016
2015
2016
Fiscal year
Fiscal year
operations
operations
discontinued
Continuing
Continuing and
(in thousands)
For their 25th and 40th service anniversary eligible employees re-
ceive jubilee shares. There were 4.39 million and 4.46 million
entitlements to jubilee shares outstanding as of September 30,
2016 and 2015, respectively.
JUBILEE SHARE PROGRAM
The Managing Board decides annually on the issuance of a new
Siemens Profit Sharing tranche and determines the targets to be
met for the current fiscal year. At fiscal year-end, based on the
actual target achievement, the Managing Board decides in its
discretion on the amount to be transferred to the Profit-Shar-
ing-Pool; this transfer is limited to a maximum of €400 million
annually. If the Pool amounts to a minimum of €400 million after
one or more fiscal years, it will be transferred to eligible employ-
ees below senior management in full or partially through the
grant of free Siemens shares. As of September 30, 2016,
€200 million are in the Profit-Sharing-Pool. Expense is recognized
pro rata over the estimated vesting period.
67
65
68
33
Income from continuing operations
attributable to shareholders of Siemens AG
Weighted average shares outstanding - basic
Effect of dilutive share-based payment
(98)
(134)
5,349
5,396
2015
2016
Fiscal year
(shares in thousands; earnings per share in €)
Income from continuing operations
Less: Portion attributable to
non-controlling interest
Earnings per share
SIEMENS PROFIT SHARING
NOTE 27
349
345
349
35
35
34
35
33
33
32
349
5,262
The weighted average fair value of matching shares granted in
fiscal 2016 and 2015 amounting to €64.56 and €69.43 per share
was determined as the market price of Siemens shares less the
present value of expected dividends taking into account non-vest-
ing conditions.
1,767,980
(159,754)
(305,951)
6,049,250
2,044,213
(834,605)
(1,029,991)
(57,437)
6,171,430
Non-vested, end of period
Settled
Forfeited
Vested and fulfilled
Granted
6,049,250
Non-vested, beginning of period
Fiscal year
2015
2016
4,985,998
1,528,957
Changes in the stock awards held by members of the senior man-
agement and other eligible employees are:
In fiscal 2016 and 2015, 2,044,213 and 1,162,028 stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounting to €117 million and €57 million, respectively, in fiscal
2016 and 2015, was calculated by applying a valuation model. In
fiscal 2016 and 2015, inputs to that model include an expected
weighted volatility of Siemens shares of 22% and 22%, respec-
tively, and a market price of €92.86 and €88.03 per Siemens
share. Expected volatility was determined by reference to historic
volatilities. The model applies a risk-free interest rate of up to
0.1% in fiscal 2016 and up to 0.3% in fiscal 2015 and an expected
dividend yield of 3.8% in fiscal 2016 and 3.8% in fiscal 2015. As-
sumptions concerning share price correlations were determined
by reference to historic correlations.
Commitments to members of the senior
management and other eligible employees
model. In fiscal 2016 and 2015, inputs to that model include an
expected weighted volatility of Siemens shares of 22% and 22%,
respectively, and a market price of €92.86 and €88.03 per
Siemens share. Expected volatility was determined by reference
to historic volatilities. The model applies a risk-free interest rate
of up to 0.1% and 0.3% in fiscal 2016 and 2015, respectively and
an expected dividend yield of 3.8% in fiscal 2016 and 2015. As-
sumptions concerning share price correlations were determined
by reference to historic correlations.
Consolidated Financial Statements 93
Commitments to members of the Managing Board
In fiscal 2016 and 2015, agreements were entered into which en-
title members of the Managing Board to stock awards contingent
upon attaining the prospective performance-based target of
Siemens stock relative to five competitors. The fair value of these
entitlements amounting to €9 million and €9 million, respectively,
in fiscal 2016 and 2015, was calculated by applying a valuation
Until fiscal 2014, additionally one portion of the variable compen-
sation component (bonus) for members of the Managing Board
was granted in the form of non-forfeitable awards of Siemens
stock (Bonus Awards) subject to a vesting period of one year.
Beneficiaries will receive one Siemens share without payment of
consideration for each Bonus Award, following an additional
waiting period of four years.
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earnings
per share (EPS, basic) of the past three fiscal years and/or to the
share price performance of Siemens relative to the share price
performance of five important competitors during the four-year
restriction period. The target attainment for the performance
criteria ranges between 0% and 200%. If the target attainment
of the prospective performance-based target of Siemens stock
relative to five competitors exceeds 100%, an additional cash pay-
ment results corresponding to the outperformance. The vesting
period is four years and five years for stock awards granted to
members of the Managing Board until fiscal 2014.
The Company grants stock awards to members of the Managing
Board, members of the senior management and other eligible em-
ployees. Stock awards are subject to a restriction period of about
four years and entitle the beneficiary to Siemens shares without
payment of consideration following the restriction period.
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS
In fiscal 2016, Siemens issued a new tranche under each of the
plans of the Share Matching Program.
Share Matching Plan
Outstanding, end of period
(71,164)
(85,056)
(95,658)
(38,304)
Settled
Forfeited
1,750,176
785,000
610,771
(538,837) (548,947)
Vested and fulfilled
Granted
1,655,780
1,655,780
Outstanding, beginning of period
2016
Consolidated Financial Statements
94
94
Resulting Matching Shares
Under the Base Share Program employees of Siemens AG and par-
ticipating domestic Siemens companies may invest a fixed amount
of their compensation in Siemens shares, sponsored by Siemens.
The shares are bought at market price at a predetermined date in
the second quarter and grant the right to receive matching shares
under the same conditions applying to the Share Matching Plan
described above. The fair value of the Base Share Program amounted
to €35 million and €33 million in fiscal 2016 and 2015, respectively.
Base Share Program
Under the Monthly Investment Plan employees other than senior
managers may invest a specified part of their compensation in
Siemens shares on a monthly basis over a period of twelve
months. Shares are purchased at market price at a predetermined
date once a month. If the Managing Board decides that shares
acquired under the Monthly Investment Plan are transferred to the
Share Matching Plan, plan participants will receive the right to
matching shares under the same conditions applying to the Share
Matching Plan described above with a vesting period of about two
years since fiscal 2016 (previously about three years). The Manag-
ing Board decided that shares acquired under the tranches issued
in fiscal 2015 and 2014 are transferred to the Share Matching Plan
as of February 2016 and February 2015, respectively.
Monthly Investment Plan
Under the Share Matching Plan senior managers may invest a
specified part of their variable compensation in Siemens shares
(investment shares). The shares are purchased at the market
price at a predetermined date in the second quarter. Plan partic-
ipants receive the right to one Siemens share without payment
of consideration (matching share) for every three investment
shares continuously held over a period of about three years (vest-
ing period) provided the plan participant has been continuously
employed by Siemens until the end of the vesting period.
Fiscal year
2015
581
5,251
823,408
12,963
Energy Management
5,660
5,976
2
2
5,658
5,974
6,136
7,973
Wind Power and Renewables
13,418
16,471
88
58
13,330
16,412
15,742
19,454
Power and Gas
2015
12,956
11,238
11,344
702
Digital Factory
7,508
7,825
31
31
7,477
7,794
10,262
7,875
Mobility
2016
5,999
139
174
5,860
5,982
6,099
6,435
Building Technologies
11,922
11,940
578
6,156
808,686
2015
2015
22,611
23,431
Wages and salaries
2015
2016
(in millions of €)
6.30
6.42
(from continuing operations)
Fiscal year
Diluted earnings per share
6.38
6.51
(from continuing operations)
Basic earnings per share
832,832
819,914
Weighted average shares outstanding - diluted
NOTE 26 Personnel costs
9,425
11,228
Statutory social welfare contributions
and expenses for optional support
3,562
3,404
2016
2015
2016
(in millions of €)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Total revenue
Intersegment Revenue
2016
External revenue
Segment information
NOTE 28
Consolidated Financial Statements 95
The dilutive earnings per share computation in fiscal 2016 and
2015 does not contain 22,8 million and 22,7 million shares, re-
spectively, relating to warrants issued with bonds. The inclusion
of those shares would have been antidilutive in the years pre-
sented. In the future, the warrants could potentially dilute basic
earnings per share.
Severance charges amount to €598 million and €804 million
(thereof at segment Process Industries and Drives €254 million
and €74 million) in fiscal 2016 and 2015, respectively. Item
Expenses relating to post-employment benefits includes service
costs for the period. Personnel costs for continuing and discon-
tinued operations amount to €28,232 million and €27,584 million,
respectively, in fiscal 2016 and 2015. Employees were engaged
in (averages; part time employees are included proportionally):
1,163
27,177
28,210
1,218
post-employment benefits
Expenses relating to
Orders¹
1,800
Consolidated Financial Statements
618
Many Siemens units are located outside the euro zone. Since the
financial reporting currency of Siemens is the euro, the financial
statements of these subsidiaries are translated into euro for the
preparation of the Consolidated Financial Statements. To con-
sider the effects of foreign currency translation in the risk man-
agement, the general assumption is that investments in for-
eign-based operations are permanent and that reinvestment is
continuous. Effects from foreign currency exchange rate fluctu-
ations on the translation of net asset amounts into euro are re-
flected in the Company's consolidated equity position.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market interest rates. This risk arises whenever interest terms of
financial assets and liabilities are different. In order to manage
the Company's position with regard to interest rate risk, interest
income and interest expenses, Corporate Treasury performs a
comprehensive corporate interest rate risk management by using
fixed or variable interest rates from bond issuances and deriva-
tive financial instruments when appropriate. The interest rate risk
relating to the Group, excluding SFS' business, is mitigated by
managing interest rate risk actively relatively to a benchmark.
The interest rate risk relating to the SFS' business is managed
Consolidated Financial Statements 91
separately, considering the term structure of SFS's financial
assets and liabilities. The Company's interest rate risk results
primarily from the funding in U.S. dollar, British pound and euro.
If there are no conflicting country-specific regulations, all Siemens
operating units generally obtain any required financing through
Corporate Treasury in the form of loans or intercompany clearing
accounts. The same concept is adopted for deposits of cash gen-
erated by the units.
As of September 30, 2016 and 2015 the VaR relating to the inter-
est rate was €485 million and €500 million.
EQUITY PRICE RISK
Translation risk
Siemens' investment portfolio consists of direct and indirect in-
vestments in publicly traded companies held for purposes other
than trading. The direct participations result mainly from strate-
gic partnerships, strengthening Siemens' focus on its core busi-
ness activities or compensation from merger and acquisitions
transactions; indirect investments in fund shares are mainly
transacted for financial reasons.
LIQUIDITY RISK
Liquidity risk results from the Company's inability to meet its finan-
cial liabilities. Siemens follows a deliberated financing policy that
is aimed towards a balanced financing portfolio, a diversified
maturity profile and a comfortable liquidity cushion. Siemens
mitigates liquidity risk by the implementation of an effective
working capital and cash management, arranged credit facilities
with highly rated financial institutions, via a debt issuance pro-
gram and via a global multi-currency commercial paper program.
Liquidity risk may also be mitigated by the Siemens Bank GmbH,
which increases the flexibility of depositing cash or refinancing.
In addition, Siemens constantly monitors funding options avail-
able in the capital markets, as well as trends in the availability
and costs of such funding, with a view to maintaining financial
flexibility and limiting repayment risks.
The following table reflects the contractually fixed pay-offs for
settlement, repayments and interest. The disclosed expected
undiscounted net cash outflows from derivative financial liabilities
are determined based on each particular settlement date of an
instrument and based on the earliest date on which Siemens
could be required to pay. Cash outflows for financial liabilities
(including interest) without fixed amount or timing are based on
the conditions existing at September 30, 2016.
(in millions of €)
Fiscal year
2022
These investments are monitored based on their current market
value, affected primarily by fluctuations in the volatile technol-
ogy-related markets worldwide. As of September 30, 2016 and
2015 the market value of Siemens' portfolio in publicly traded
companies was €2,169 million compared to €1,814 million in the
prior year. As of September 30, 2016 and 2015, the VaR relating
to the equity price was €227 and €189 million. The increases in
the market value and of the VaR were due mainly to higher mar-
ket values of our stakes in OSRAM and Atos.
2019
As of September 30, 2016 and 2015 the VaR relating to foreign
currency exchange rates was €86 million and €179 million. This
VaR was calculated under consideration of items of the Consoli-
dated Statement of Financial Position in addition to firm commit-
ments which are denominated in foreign currencies, as well as
foreign currency denominated cash flows from forecast transac-
tions for the following twelve months. A lower volatility between
the U.S. dollar and the euro in comparison to the prior year re-
sulted in a decrease of the VaR.
According to the company policy each Siemens unit is responsi-
ble for recording, assessing and monitoring its foreign currency
transaction exposure. The net foreign currency position of each
unit serves as a central performance measure and has to be
hedged within a band of at least 75% but no more than 100%.
67
30
INTEREST RATE RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
Interest rate risk management relating to the Group, excluding
SFS' business, uses derivative financial instruments under a port-
folio-based approach to manage interest risk actively relative to
a benchmark. The interest rate management relating to the SFS
business remains to be managed separately, considering the
term structure of SFS' financial assets and liabilities on a portfolio
basis. Neither approach qualifies for hedge accounting treat-
ment. Net cash receipts and payments in connection with inter-
est rate swap agreements are recorded as interest expense in
Other financial income (expenses), net.
Cash flow hedges of floating-rate commercial
papers
Since fiscal 2015, Siemens applies cash flow hedge accounting to
a revolving portfolio of floating-rate commercial papers of nom-
inal US$700 million. To benefit from low interest rates in the USA,
Siemens pays a fixed rate of interest and receives a variable rate
of interest, offsetting future changes in interest payments of the
underlying floating-rate commercial papers. Net cash receipts
and payments are recorded as interest expenses.
Fair value hedges of fixed-rate debt obligations
Under the interest rate swap agreements outstanding during the
years ended September 30, 2016 and 2015, the Company has
agreed to pay a variable rate of interest multiplied by a notional
principle amount, and to receive in return an amount equal to a
specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset an
impact of future changes in interest rates designated as the
hedged risk on the fair value of the underlying fixed-rate debt
obligations. Carrying amount adjustments to debt for fair value
changes attributable to the respective interest rate risk being
hedged are included in Other financial income (expenses),
net resulted in a gain (loss) of €149 million and €103 million,
respectively, in fiscal 2016 and 2015; the related swap agreements
resulted in a gain (loss) of €(152) million and €(135) million,
respectively. Net cash receipts and payments relating to such
interest rate swap agreements are recorded as interest expenses.
The Company had interest rate swap contracts to pay variable
rates of interest of an average of (0.2)% and 0.1% as of Septem-
ber 30, 2016 and 2015, respectively and received fixed rates of
interest (average rate of 3.3% and 4.3%, as of September 30,
2016 and 2015, respectively). The notional amount of indebted-
ness hedged as of September 30, 2016 and 2015 was €3,650 mil-
lion and €6,012 million, respectively. This changed 14% and 26%
of the Company's underlying notes and bonds from fixed interest
rates into variable interest rates as of September 30, 2016 and
2015, respectively. The notional amounts of these contracts ma-
ture at varying dates based on the maturity of the underlying
hedged items. The net fair value of interest rate swap contracts
(excluding accrued interest) used to hedge indebtedness as of
September 30, 2016 and 2015 was €93 million and €242 million,
respectively.
Generally, the operating units conclude their hedging activities
internally with Corporate Treasury. By applying a cost-optimizing
portfolio approach Corporate Treasury itself hedges foreign cur-
rency exchange rate risks with external counterparties and limits
them Company-wide.
NOTE 24 Financial risk management
90 Consolidated Financial Statements
In order to quantify market risks Siemens has implemented a sys-
tem based on parametric variance-covariance Value at Risk (VAR),
which is also used for internal management of the Corporate
Treasury activities. The VaR figures are calculated based on his-
torical volatilities and correlations of various risk factors, a ten
day holding period, and a 99.5% confidence level.
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive Income
may differ substantially from VaR figures due to fundamental
conceptual differences. While the Consolidated Statements of
Income and Consolidated Statements of Comprehensive Income
are prepared in accordance with IFRS, the VaR figures are the
output of a model with a purely financial perspective and repre-
sent the potential financial loss which will not be exceeded
within ten days with a probability of 99.5%. Although VaR is an
important tool for measuring market risk, the assumptions on
which the model is based give rise to some limitations including
the following. A ten day holding period assumes that it is possible
to dispose of the underlying positions within this period. This
may not be valid during continuing periods of illiquidity markets.
A 99.5% confidence level means, that there is a 0.5% statistical
probability that losses could exceed the calculated VaR. The use
of historical data as a basis for estimating the statistic behavior
of the relevant markets and finally determining the possible
range of the future outcomes on the basis of this statistic behav-
ior may not always cover all possible scenarios, especially those
of an exceptional nature.
Any market sensitive instruments, including equity and inter-
est bearing investments, that our Company's pension plans
hold are not included in the following quantitative and quali-
tative disclosures.
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. In the ordinary
course of business Siemens units are exposed to foreign currency
exchange rate fluctuations, particularly between the U.S. dollar
and the euro. Foreign currency exchange rate exposure is partly
balanced by purchasing of goods, commodities and services in
the respective currencies as well as production activities and
other contributions along the value chain in the local markets.
Operating units (Industrial business and SFS) are prohibited
from borrowing or investing in foreign currencies on a specula-
tive basis. Intercompany financing or investments of operating
units are preferably carried out in their functional currency or on
a hedged basis.
Increasing market fluctuations may result in significant earnings
and cash flow volatility risk for Siemens. The Company's operat-
ing business as well as its investment and financing activities are
affected particularly by changes in foreign exchange rates, inter-
est rates and equity prices. In order to optimize the allocation of
the financial resources across the Siemens segments and entities,
as well as to achieve its aims, Siemens identifies, analyzes and
manages the associated market risks. The Company seeks to
manage and control these risks primarily through its regular op-
erating and financing activities, and uses derivative financial in-
struments when deemed appropriate.
2017
2018
to
2021
8,006
31
6
5
Other financial liabilities
Derivative financial liabilities
Credit guarantees¹
1,264
118
84
107
25
277
526
177
799
Irrevocable loan commitments²
3,068
184
125
768
30
56
23
and
there-
after
Non-derivative financial
liabilities
Notes and bonds
5,793
4,271
9,585
15,570
Loans from banks
Other financial
414
89
941
6
indebtedness
818
22
15
50
Obligations under
finance leases
Trade payables
6
(22)
2022
and
there-
after
Fiscal year
Sep 30, 2015
Gross
Financial
(in millions of €)
Financial assets
amounts
Position
Amounts set
amounts
1,640
595
Net amounts
in the
Statement of
Financial
Position
Related
amounts not
set off in the
Statement of
Financial
Position
Net
amounts
2,678
10
2,668
off in the
Statement of
838
1,433
6
2,152
Siemens enters into master netting agreements and similar agree-
ments for derivative financial instruments. The requirements to
offset recognized financial instruments are usually not met. The
following table reflects financial assets and financial liabilities that
are subject to netting agreements and similar agreements:
(in millions of €)
Financial assets
Financial liabilities - Derivative financial liabilities
Sep 30, 2016
Amounts set
off in the
Statement of
Gross
Financial
amounts
Position
Net amounts
in the
Statement of
Financial
Position
Related
amounts not
set off in the
Statement of
Financial
Position
Net
2,641
1,440
7
2,634
994
Financial liabilities - Derivative financial liabilities
11
1,885
1,874
596
3,051
129
1,500
691
3,228
241
1,919
FOREIGN CURRENCY EXCHANGE RATE
RISK MANAGEMENT
Derivative financial instruments
not designated in a hedging relationship
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a
Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various deriv-
ative financial instruments, primarily foreign currency exchange
contracts, foreign currency swaps and options, are utilized to
minimize such risks. Such a strategy does not qualify for hedge
accounting treatment. The Company also accounts for foreign
currency derivatives, which are embedded in sale and purchase
contracts.
381
Consolidated Financial Statements 89
The Company's operating units apply hedge accounting for cer-
tain significant forecast transactions and firm commitments de-
nominated in foreign currencies. Particularly, the Company has
entered into foreign currency exchange contracts to reduce the
risk of variability of future cash flows resulting from forecast sales
and purchases as well as firm commitments. This risk results
mainly from contracts denominated in US$ both from Siemens'
operating units entering into long-term contracts e.g. project
business and from standard product business.
Periods in which the hedged forecast transactions or the firm
commitments denominated in foreign currency are expected to
impact profit or loss:
(in millions of €)
2017
2018
2019
to
2021
Expected gain (loss) to be
reclassified from line item
Other comprehensive income,
net of income taxes into
revenue or cost of sales
Cash flow hedges
1,824
491
1,885
1,065
1,032
1,604
843
NOTE 23 Derivative financial
instruments and hedging activities
Fair values of each type of derivative financial instruments recorded
as financial assets or financial liabilities are:
570
880
713
1,297
(in millions of €)
Asset
Sep 30, 2016
Liability
Asset
Sep 30, 2015
Liability
Foreign currency
exchange contracts
Interest rate swaps
and combined interest
and currency swaps
Other (embedded
derivatives, options,
commodity swaps)
11
1 Based on the maximum amounts Siemens could be required to settle in the event of default
by the primary debtor.
STOCK AWARDS
CREDIT RISK
Consolidated Financial Statements 97
Amortization expenses of intangible assets acquired in business
combinations are not part of Profit. Furthermore, income taxes
are excluded from Profit since income tax is subject to legal
structures, which typically do not correspond to the structure of
the segments. The effect of certain litigation and compliance
issues is excluded from Profit, if such items are not indicative of
Decisions on essential pension items are made centrally. Accord-
ingly, Profit primarily includes amounts related to service cost of
pension plans only, while all other regularly recurring pension
related costs are included in reconciliations in line item Centrally
carried pension expense.
Financing interest, excluded from Profit, is any interest income or
expense other than interest income related to receivables from
customers, from cash allocated to the segments and interest ex-
penses on payables to suppliers. Financing interest is excluded
from Profit because decision-making regarding financing is typi-
cally made at the corporate level.
earnings before financing interest, certain pension costs, income
taxes and amortization expenses of intangible assets acquired in
business combinations as determined by the chief operating de-
cision maker (Profit). The major categories of items excluded
from Profit are presented below.
Siemens' Managing Board is responsible for assessing the perfor-
Imance of the segments (chief operating decision maker). The
Company's profitability measure of the segments except for SFS is
Profit
Accounting policies for Segment information are generally the
same as those used for the Consolidated Financial Statements.
Lease transactions, however, are classified as operating leases for
internal and segment reporting purposes. Intersegment transac-
tions are based on market prices.
performance. This may also be the case for items that refer to
more than one reportable segment, SRE and (or) Centrally man-
aged portfolio activities or have a corporate or central character.
Costs for support functions are primarily allocated to the seg-
SEGMENTS
Eliminations, Corporate Treasury and other reconciling
items - comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items and the
activities of the Company's Corporate Treasury. It also includes
interest income and expense, such as, for example, interest not
allocated to segments or Centrally managed portfolio activities
(referred to as financing interest), interest related to Corporate
Treasury activities or resulting consolidation and reconciliation
effects on interest.
Pensions - includes the Company's pension related income (ex-
pense) not allocated to the segments, SRE or Centrally managed
portfolio activities.
2,549
2,764
1,897
2,135
341
357
MEASUREMENT
471
ments.
Profit of the segment SFS is Income before income taxes. In con-
trast to performance measurement principles applied to other
segments, interest income and expenses is an important source
of revenue and expense of SFS.
2015
2016
Fiscal year
(in millions of €)
Profit
CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATION TO
Centrally managed portfolio activities follow the measurement
principles of the segments except for SFS. SRE applies the mea-
surement principles of SFS.
Profit of the segment SFS:
CENTRALLY MANAGED
PORTFOLIO ACTIVITIES AND SRE
MEASUREMENT
Amortization, depreciation and impairments:
Amortization, depreciation and impairments includes deprecia-
tion and impairments of property, plant and equipment as well
as amortization and impairments of intangible assets each net of
reversals of impairment.
Free cash flow of the segments, except for SFS, constitutes cash
flows from operating activities less additions to intangible assets
and property, plant and equipment. It excludes financing inter-
est, except for cases where interest on qualifying assets is capi-
talized or classified as contract costs and it also excludes income
tax as well as certain other payments and proceeds. Free cash
flow of SFS includes related financing interest payments and pro-
ceeds; income tax payments and proceeds of SFS are excluded.
Free cash flow definition:
Orders are determined principally as estimated revenue of ac-
cepted purchase orders and order value changes and adjust-
ments, excluding letters of intent.
Orders:
Management determined Assets (Net capital employed) as a
measure to assess capital intensity of the segments except for
SFS. Its definition corresponds to the Profit measure except for
amortization expenses of intangible assets acquired in business
combinations which are not part of Profit, however, the related
intangible assets are included in the segments' Assets. Segment
Assets is based on Total assets of the Consolidated Statements
of Financial Position, primarily excluding intragroup financing
receivables, tax related assets and assets of discontinued opera-
tions, since the corresponding positions are excluded from Profit.
Assets of Mobility include the project-specific intercompany
financing of a long-term project. The remaining assets are re-
duced by non-interest-bearing liabilities other than tax related
liabilities, e.g. trade payables, to derive Assets. In contrast, Assets
of SFS is Total assets.
Asset measurement principles:
-
597
(3,346)
4,984
(2,640)
5,533
7,737
8,744
545
563
346
392
2,048
2,154
36,145
11,153
2,184
2,325
240
231
165
160
591
2 A considerable portion result from asset-based lending transactions meaning that the respective
loans can only be drawn after sufficient collateral has been provided by the borrower.
11,211
34,527
7,493
7,446
120,348
125,717
60,851
63,126
(1,119)
7,218
(1,994)
7,404
219
17
18
884
680
24,970
26,446
600
653
1,990
2,191
1,409
1,521
Centrally managed portfolio activities
Siemens Real Estate
Corporate items
(215)
216
132
47,072
45,576
4,089
3,103
Liability-based adjustments
Eliminations, Corporate Treasury, other items
Reconciliation to Consolidated Financial
Statements
42,086
42,282
(35,423)
(34,315)
63,126
60,851
98 Consolidated Financial Statements
Intragroup financing receivables
Tax-related assets
714
The effective monitoring and controlling of credit risk through
credit evaluations and ratings is a core competency of our risk
management system. In this context, Siemens has implemented
a binding credit policy for all entities.
Ratings, defined and analyzed by SFS, and individually defined
credit limits are based on generally accepted rating method-
ologies, with the input consisting of information obtained from
the customer, external rating agencies, data service providers
and Siemens' credit default experiences. Ratings and credit limits
for financial institutions as well as Siemens' public and private
customers, which are determined by internal risk assessment
22
92
Consolidated Financial Statements
specialists, are continuously updated and considered by invest-
ments in cash and cash equivalents, and in determining the con-
ditions under which direct or indirect financing will be offered to
customers.
reflect losses incurred within the respective portfolios. When sub-
stantial expected payment delays become evident, overdue
financial instruments are assessed individually for additional
impairment and are further allowed for as appropriate.
For analysis and monitoring of the credit risk the Company
applies different systems and processes. A central IT application
processes data from the operating units together with rating
and default information and calculates an estimate which may
be used as a basis for individual bad debt provisions. In addition
to this automated process, qualitative information is considered,
in particular to incorporate the latest developments.
Corporate Treasury has established the Siemens Credit Ware-
house to which numerous operating units from the Siemens
Group regularly transfer business partner data as a basis for a
centralized rating process. Furthermore, the Siemens Credit
Warehouse purchases trade receivables from numerous operat-
ing units with a remaining term up to one year. Due to the iden-
tification, quantification and active management of the credit
risk the Siemens Credit Warehouse increases the transparency
with regard to credit risk. In addition, the Siemens Credit Ware-
house may provide Siemens with an additional source of liquidity
and strengthens Siemens' funding flexibility.
The maximum exposure to credit risk of financial assets, without
taking account of any collateral, is represented by their carrying
amount. As of September 30, 2016 and 2015 the collateral for
financial instruments classified as financial assets measured at
fair value in the form of netting agreements for derivatives in the
event of insolvency of the respective counterparty amounted to
€994 million and €1,065 million, respectively. As of Septem-
ber 30, 2016 and 2015 the collateral held for financial instru-
ments classified as receivables from finance leases amounted to
€1,949 million and €2,003 million, respectively, mainly in the
form of the leased equipment. As of September 30, 2016 and
2015 the collateral held for financial instruments classified as fi-
nancial assets measured at cost or amortized cost amounted to
€3,590 million and €3,165 million, respectively. The collateral
mainly consisted of property, plant and equipment. Credit risks
arising from irrevocable loan commitments are equal to the ex-
pected future pay-offs resulting from these commitments. As of
September 30, 2016 and 2015 the collateral held for these com-
mitments amounted to €1,177 million and €1,445 million, respec-
tively, mainly in the form of inventories and receivables.
Concerning trade receivables and other receivables, as well as
loans or receivables included in line item Other financial assets
that are neither impaired nor past due, there were no indications
that defaults in payment obligations will occur, which lead to
a decrease in the net assets of Siemens. Overdue financial instru-
ments are generally impaired on a portfolio basis in order to
Siemens provides its customers with various forms of direct and
indirect financing particularly in connection with large projects.
Hence, credit risks arise are determined by the solvency of the
debtors, the recoverability of the collaterals and the global eco-
nomic development.
Credit risk is defined as an unexpected loss in financial instru-
ments if the contractual partner is failing to discharge its obliga-
tions in full and on time or if the value of collateral declines.
(2,012)
NOTE 25 Share-based payment
Assets Corporate items and pensions
Asset-based adjustments:
(674)
acquired in business combinations
Eliminations, Corporate Treasury,
and other reconciling items
Reconciliation to
Amortization of intangible assets
(440)
(439)
Centrally carried pension expense
(690)
(449)
(366)
205
(1,474)
(1,994)
(543)
(349)
2016
Consolidated Financial Statements
In fiscal 2016 and 2015, Profit of SFS includes interest income of
€1,161 million and €1,086 million, respectively and interest ex-
penses of €377 million and €340 million, respectively.
4,895
Assets
4,964
Sep 30,
(in millions of €)
(1,119)
2015
Assets Centrally managed portfolio activities
Assets Siemens Real Estate
1,812
1,322
100
000 Siemens Transformers, Voronezh/Russian Federation
Siemens Finance LLC, Vladivostok/Russian Federation
100
Termotron Rail Automation Holding B.V.,
The Hague/Netherlands
Siemens Nederland N.V., The Hague/Netherlands
501
Siemens Healthcare Limited Liability Company,
Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
100
Moscow/Russian Federation
100
100
100
100
100
100
"Dresser-Rand", Moscow/Russian Federation
100
Siemens Gas Turbine Technologies Holding B.V.,
000 Legion II, Moscow/Russian Federation
100
The Hague/Netherlands
Siemens Ltd., Lagos/Nigeria
000 Siemens, Moscow/Russian Federation
100
Siemens Healthcare Nederland B.V., The Hague/Netherlands
100
000 Siemens Elektroprivod,
Siemens Industry Software B.V.,
St. Petersburg/Russian Federation
100
's-Hertogenbosch/Netherlands
100
000 Siemens Gas Turbine Technologies, Leningrad
Siemens International Holding B.V., The Hague/Netherlands
100
Oblast/Russian Federation
Siemens Medical Solutions Diagnostics Holding I B.V.,
000 Siemens Industry Software,
The Hague/Netherlands
Moscow/Russian Federation
65
Siemens L.L.C., Muscat/Oman
Dresser-Rand AS, Kongsberg/Norway
51
AXIT Sp. z o.o., Wroclaw/Poland
100
Siemens d.o.o. Beograd, Belgrade/Serbia
100
Siemens Finance Sp. z o.o., Warsaw/Poland
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
100
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
100
Siemens Industry Software Sp. z o.o., Warsaw/Poland
100
Siemens Sp. z o.o., Warsaw/Poland
100
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
60
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
75
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
51
100
Technologies of Rail Transport Limited Liability Company,
Moscow/Russian Federation
1008
Siemens AS, Oslo/Norway
100
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
51
Siemens Healthcare AS, Oslo/Norway
100
100
Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
Siemens Wind Power AS, Oslo/Norway
1008
The Hague/Netherlands
51
ISCOSA Industries and Maintenance Ltd.,
Riyadh/Saudi Arabia
51
Siemens Healthcare (Private) Limited, Lahore/Pakistan
100
Siemens Ltd., Riyadh/Saudi Arabia
501
Obschestwo s ogranitschennoj Otwetstwennostju (in parts)
7 Significant influence due to contractual arrangements or legal circumstances
100
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
1008
Amsterdam/Netherlands
100
Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
Dresser-Rand B.V., Spijkenisse/Netherlands
100
Airport City/Israel
100
Dresser-Rand International B.V., Spijkenisse/Netherlands
D-R International Holdings (Netherlands) B.V.,
100
100
Dresser-Rand Services B.V., Spijkenisse/Netherlands
100
Dresser-Rand Italia S.r.I., Tribogna/Italy
100
Ellessrob 20-V B.V., Amsterdam/Netherlands
100
Samtech Italia S.r.I., Milan/Italy
100
Ellessrob 3-VIII B.V., Amsterdam/Netherlands
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
Siemens Israel Ltd., Rosh HaAyin/Israel
100
Siemens Healthcare SARL, Casablanca/Morocco
1008
Siemens Healthcare Medical Solutions Limited,
Swords, County Dublin/Ireland
100
Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
Siemens S.A., Casablanca/Morocco
100
100
Siemens Limited, Dublin/Ireland
100
Siemens Wind Power Blades, SARL AU, Tangier/Morocco
100
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
100
Siemens Lda., Maputo/Mozambique
100
Siemens HealthCare Ltd., Rosh HaAyin/Israel
100
Siemens Pty. Ltd., Windhoek/Namibia
100
Siemens Industry Software Ltd., Airport City/Israel
100
Castor III B.V., Amsterdam/Netherlands
100
Siemens Healthcare S.r.I., Milan/Italy
100
Ellessrob 5-VI B.V., Amsterdam/Netherlands
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
Siemens Healthcare, Lda., Amadora/Portugal
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
105
Equity interest
Equity interest
September 30, 2016
in %
September 30, 2016
in %
Siemens D-R Holding B.V., The Hague/Netherlands
100
Siemens S.R.L., Bucharest/Romania
100
Siemens Finance B.V., The Hague/Netherlands
100
SIMEA SIBIU S. R.L., Sibiu/Romania
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Financieringsmaatschappij N.V.,
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
100
Siemens Industry Software S.r.I., Milan/Italy
100
Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
100
Ellessrob 5-VII B.V., Amsterdam/Netherlands
NEM Energy B.V., The Hague/Netherlands
100
100
Siemens Renting s.r.l. in Liquidazione, Milan/Italy
100
next47 B.V., The Hague/Netherlands
1008
Siemens S.p.A., Milan/Italy
100
Omnetric B.V., The Hague/Netherlands
100
Siemens Transformers S.p.A., Trento/Italy
100
Pollux III B.V., Amsterdam/Netherlands
100
Trench Italia S.r.I., Savona/Italy
100
Siemens Diagnostics Holding II B.V., The Hague/Netherlands
1 Control due to a majority of voting rights.
100
100
100
Guascor Borja AIE, Zumaia/Spain
708
Siemens Industry Software AB, Kista/Sweden
100
Guascor Explotaciones Energéticas, S.A.,
SKR Lager 20 KB, Finspång/Sweden
100
Vitoria-Gasteiz/Spain
100
Dresser-Rand Sales Company S.A., Freiburg/Switzerland
100
Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
100
Huba Control AG, Würenlos/Switzerland
100
Guascor Isolux AIE, Vitoria-Gasteiz/Spain
608
Komykrieng AG, Gossau/Switzerland
100
Guascor Postensa AIE, Zumaia/Spain
898
100
Polarion AG, Gossau/Switzerland
Finspång/Sweden
Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
Desimpacte de Purines Altorricón S.A., Altorricón/Spain
Desimpacto de Purines Turégano, S.A., Turégano/Spain
Dresser-Rand Holdings Spain S. L. U., Vitoria-Gasteiz/Spain
Empresa de Reciclajes de Residuos Ambientales, S.A.,
Vitoria-Gasteiz/Spain
70
100
Sistemas y Nuevas Energias, S.A, Vitoria-Gasteiz/Spain
1008
Telecomunicación, Electrónica y Conmutación S.A.,
ay
100
Madrid/Spain
100
Siemens AB, Upplands Väsby/Sweden
100
678
Siemens Financial Services AB, Stockholm/Sweden
100
Enviroil Vasca, S.A., Vitoria-Gasteiz/Spain
100
Siemens Healthcare AB, Stockholm/Sweden
100
Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
100
Siemens Industrial Turbomachinery AB,
100
100
100
Siemens Fuel Gasification Technology Holding AG,
100
Vitoria-Gasteiz/Spain
100
Siemens Schweiz AG, Zurich/Switzerland
100
Guascor Solar S.A., Vitoria-Gasteiz/Spain
100
systransis AG, Risch/Switzerland
100
Guascor Wind, S. L., Vitoria-Gasteiz/Spain
100
Inversiones Analcima 6 S.L., Vitoria-Gasteiz/Spain
100
Microenergía Vasca, S.A., Vitoria-Gasteiz/Spain
100
Siemens S.A., Tunis/Tunisia
1008
Microenergía 21, S.A., Zumaia/Spain
100
Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
United Republic of
100
Siemens Power Holding AG, Zug/Switzerland
Guascor Power Investigacion y Desarollo, S.A.,
Guascor Solar Operacion and Mantenimiento, S.L.,
Zurich/Switzerland
Vitoria-Gasteiz/Spain
100
Zug/Switzerland
100
Guascor Power, S.A., Zumaia/Spain
100
Siemens Healthcare AG, Zurich/Switzerland
100
Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
100
Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
100
Guascor Proyectos, S.A., Madrid/Spain
1008
Siemens Industry Software AG, Zurich/Switzerland
100
Guascor Servicios, S.A., Madrid/Spain
100
Siemens Postal, Parcel & Airport Logistics AG,
Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
100
100
Siemens Wind HoldCo, S.L., Zamudio/Spain
858
B2B Energía, S.A., Vitoria-Gasteiz/Spain
Siemens Healthcare S.R.L., Bucharest/Romania
100
Dresser-Rand Southern Africa (Pty) Ltd.,
Siemens Industry Software S.R.L., Brasov/Romania
100
Midrand/South Africa
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
10 Exemption pursuant to Section 264b German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
8 Not consolidated due to immateriality.
7 Significant influence due to contractual arrangements or legal circumstances
6 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
Dresser-Rand Service Centre (Pty) Ltd., Midrand/South Africa
100
100
100
Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
Siemens Healthcare s.r.o., Bratislava/Slovakia
100
Lisbon/Portugal
100
Siemens s.r.o., Bratislava/Slovakia
100
Siemens S.A., Amadora/Portugal
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Siemens W.L.L., Doha/Qatar
402
Siemens d.o.o., Ljubljana/Slovenia
100
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
Siemens Healthcare d.o.o, Ljubljana/Slovenia
100
Bucharest/Romania
100
Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
Siemens Convergence Creators S.R.L., Brasov/Romania
Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
100
SIEMENS HEALTHCARE, S.L.U., Getafe/Spain
100
Siemens Employee Share Ownership Trust,
Siemens Industry Software S.L., Barcelona/Spain
100
Johannesburg/South Africa
03
Siemens Healthcare Proprietary Limited,
SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS, S.L.
Sociedad Unipersonal, Madrid/Spain
100
Halfway House/South Africa
100
Siemens Rail Automation S.A.U., Madrid/Spain
100
Siemens Proprietary Limited, Midrand/South Africa
70
Siemens Renting S.A., Madrid/Spain
100
Axastse Solar, S. L., Vitoria-Gasteiz/Spain
100
Siemens S.A., Madrid/Spain
100
Siemens Holding S.L., Madrid/Spain
03
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
in %
100
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
100
Samtech Iberica Engineering & Software Services S.L.,
Barcelona/Spain
100
97
Siemens Finansal Kiralama A.S., Istanbul/Turkey
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
Siemens Convergence Creators, s. r. o., Bratislava/Slovakia
7 Significant influence due to contractual arrangements or legal circumstances
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
106
Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2016
in %
September 30, 2016
8 Not consolidated due to immateriality.
97
100
100
Materials Solutions Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Rail Systems Project Holdings Limited,
Preactor International Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Rail Systems Project Limited,
Project Ventures Rail Investments | Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Transmission & Distribution Limited,
Samtech UK Limited, Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
Siemens Rail Automation Limited,
100
100
100
Electrium Sales Limited, Frimley, Surrey/United Kingdom
100
Siemens plc, Frimley, Surrey/United Kingdom
100
GYM Renewables Limited, Frimley, Surrey/United Kingdom
100
Siemens Postal, Parcel & Airport Logistics Limited,
GYM Renewables ONE Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Protection Devices Limited,
Industrial Turbine Company (UK) Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Rail Automation Holdings Limited,
Materials Solutions Holdings Limited,
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
100
1 Control due to a majority of voting rights.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
100
gesellschaft mbH, Munich
10011
Siemens Project Ventures GmbH, Erlangen
10011
VIB Verkehrsinformationsagentur Bayern GmbH, Munich
VMZ Berlin Betreibergesellschaft mbH, Berlin
51
100
Siemens Real Estate GmbH & Co. KG, Grünwald
10010
VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
943
Siemens Real Estate Management GmbH, Grünwald
Siemens Spezial-Investmentaktiengesellschaft mit TGV,
Munich
1008
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
100
Weiss Spindeltechnologie GmbH, Maroldsweisach
10011
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
Hamburg
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
Siemens Private Finance Versicherungsvermittlungs-
Siemens Power Control GmbH, Langen
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
108
Consolidated Financial Statements
SBS Pension Funding (Scotland) Limited Partnership,
Edinburgh/United Kingdom
10011
100
Siemens Nixdorf Informationssysteme GmbH, Grünwald
100
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
10011
Siemens Postal, Parcel & Airport Logistics GmbH, Constance
10011
Trench Germany GmbH, Bamberg
10011
10011
4 No control due to substantive removal or participation rights held by other parties.
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
100
SIMAR West Grundstücks-GmbH, Grünwald
10011
Siemens Medical Solutions Health Services GmbH,
Grünwald
SIMOS Real Estate GmbH, Munich
573
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
Kiev/Ukraine
Siemens Financial Services Holdings Ltd., Stoke Poges,
100
Buckinghamshire/United Kingdom
100
Dresser-Rand Field Operations Middle East LLC,
Siemens Financial Services Ltd.,
Abu Dhabi/United Arab Emirates
492
Stoke Poges, Buckinghamshire/United Kingdom
100
Gulf Steam Generators L.L.C.,
Siemens Healthcare Diagnostics Ltd.,
Dubai/United Arab Emirates
100
Siemens Liquidity One, Munich
Frimley, Surrey/United Kingdom
10011
1008
107
Equity interest
Equity interest
September 30, 2016
in %
September 30, 2016
in %
100% foreign owned subsidiary "Siemens Ukraine",
Kiev/Ukraine
100
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
SIMAR Nordost Grundstücks-GmbH, Grünwald
10010
10011
Siemens Industry Software GmbH, Cologne
10011
SIMAR Nordwest Grundstücks-GmbH, Grünwald
10011
Siemens Insulation Center GmbH & Co. KG, Zwönitz
10010
SIMAR Ost Grundstücks-GmbH, Grünwald
10011
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
SIMAR Süd Grundstücks-GmbH, Grünwald
100
100
492
Computational Dynamics Limited,
Siemens Industry Software Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
D-R Dormant Ltd., Frimley, Surrey/United Kingdom
100
Siemens Industry Software Simulation and Test Limited,
D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Dresser-Rand (U.K.) Limited,
Siemens Pension Funding (General) Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Dresser-Rand Company Ltd.,
Siemens Pension Funding Limited,
100
SD (Middle East) LLC, Dubai/United Arab Emirates
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
Siemens Healthcare Diagnostics Manufacturing Ltd,
Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
100
Frimley, Surrey/United Kingdom
100
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
492
Siemens Healthcare Diagnostics Products Ltd,
Siemens LLC, Abu Dhabi/United Arab Emirates
492
Frimley, Surrey/United Kingdom
100
Siemens Middle East Limited,
Siemens Healthcare Limited, Frimley, Surrey/United Kingdom
100
Masdar City/United Arab Emirates
100
Siemens Holdings plc, Frimley, Surrey/United Kingdom
100
CD-adapco New Hampshire Co., Ltd.,
Siemens Industrial Turbomachinery Ltd.,
100
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
104 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2016
in %
September 30, 2016
in %
Siemens Financial Services SAS, Saint-Denis/France
Siemens France Holding SAS, Saint-Denis/France
Siemens Healthcare SAS, Saint-Denis/France
100
Siemens Healthcare Limited Liability Partnership,
100
Samtech France SAS, Massy/France
Almaty/Kazakhstan
79
100
100
100
Siemens Osakeyhtiö, Espoo/Finland
100
Siemens W.L.L., Manama/Bahrain
51
CD-adapco France SAS, Bobigny/France
100
Limited Liability Company Siemens Technologies,
D-R Holdings (France) SAS, Le Havre/France
100
Minsk/Belarus
100
Dresser-Rand SAS, Le Havre/France
100
Dresser-Rand Machinery Repair Belgie N.V.,
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
100
Antwerp/Belgium
100
PETNET Solutions SAS, Lisses/France
Samtech SA, Angleur/Belgium
Siemens Healthcare Oy, Espoo/Finland
100
Siemens TOO, Almaty/Kazakhstan
Siemens Healthcare Industrial and Commercial Société
Anonyme, Athens/Greece
Dresser-Rand Holding (Delaware) LLC, SARL,
100
Luxembourg/Luxembourg
100
evosoft Hungary Szamitastechnikai Kft.,
TFM International S.A. i.L., Luxembourg/Luxembourg
100
Budapest/Hungary
100
Siemens d.o.o., Podgorica/Montenegro
100
Siemens Healthcare Kft., Budapest/Hungary
Siemens Zrt., Budapest/Hungary
Siemens Sherkate Sahami (Khass),
100
Guascor Maroc, S.A.R.L., Agadir/Morocco
100
100
SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
Casablanca/Morocco
100
100
D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
100
100
Siemens Industry Software SAS, Châtillon/France
100
Siemens Lease Services SAS, Saint-Denis/France
100
Siemens Electrical & Electronic Services K.S.C.C.,
Kuwait City/Kuwait
492
SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
100
Siemens SAS, Saint-Denis/France
100
Trench France SAS, Saint-Louis/France
100
Siemens Oil & Gas Equipment Limited, Accra/Ghana
90
D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
D-R Luxembourg Holding 2, SARL, Luxembourg/Luxembourg
D-R Luxembourg Holding 3, SARL, Luxembourg/Luxembourg
D-R Luxembourg International SARL,
100
100
100
Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
Athens/Greece
Luxembourg/Luxembourg
100
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
GmbH, Vienna/Austria
90
Siemens Technologies S.A.E., Cairo/Egypt
51
ETM professional control GmbH, Eisenstadt/Austria
100
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
100
Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
Siemens Medicina d.o.o, Sarajevo/Bosnia and Herzegovina
Siemens EOOD, Sofia/Bulgaria
100
100
100
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
Siemens Healthcare EOOD, Sofia/Bulgaria
100
69
51
KDAG Beteiligungen GmbH, Vienna/Austria
Omnetric GmbH, Vienna/Austria
100
100
Siemens Convergence Creators d.o.o., Zagreb/Croatia
Siemens d.d., Zagreb/Croatia
100
100
Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
Siemens Aktiengesellschaft Österreich, Vienna/Austria
Siemens Convergence Creators GmbH, Eisenstadt/Austria
Siemens Convergence Creators GmbH, Vienna/Austria
Siemens S.A., Luanda/Angola
100
100
100
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
103
Equity interest
Equity interest
September 30, 2016
in %
September 30, 2016
in %
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
(310 companies)
Siemens Healthcare SA/NV, Beersel/Belgium
100
Siemens Industry Software NV, Leuven/Belgium
100
ESTEL Rail Automation SPA, Algiers/Algeria
Siemens Spa, Algiers/Algeria
51
100
Siemens Product Lifecycle Management Software II (BE)
BVBA, Anderlecht/Belgium
Siemens S.A./N.V., Beersel/Belgium
Siemens Healthcare d.o.o., Zagreb/Croatia
100
100
Siemens Healthcare A/S, Ballerup/Denmark
100
Siemens Industry Software A/S, Ballerup/Denmark
100
100
Siemens Wind Power A/S, Brande/Denmark
100
Siemens Personaldienstleistungen GmbH, Vienna/Austria
Siemens Urban Rail Technologies Holding GmbH,
Vienna/Austria
100
NEM Energy Egypt LLC, Alexandria/Egypt
100
Siemens Health Care LLC, Cairo/Egypt
1008
75
Siemens Healthcare S.A.E., Cairo/Egypt
100
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
Trench Austria GmbH, Leonding/Austria
52
Siemens Limited for Trading, Cairo/Egypt
100
100
100
100
Siemens A/S, Ballerup/Denmark
100
100
J. N. Kelly Security Holding Limited, Larnaka/Cyprus
OEZ s.r.o., Letohrad/Czech Republic
100
100
100
Siemens Convergence Creators Holding GmbH,
Vienna/Austria
Polarion Software s.r.o., Prague/Czech Republic
Siemens Convergence Creators, s.r.o.,
100
100
Prague/Czech Republic
Teheran/Iran, Islamic Republic of
100
100
Siemens Electric Machines s.r.o., Drasov/Czech Republic
Siemens Healthcare, s.r.o., Prague/Czech Republic
100
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
Siemens Metals Technologies Vermögensverwaltungs
GmbH, Vienna/Austria
100
100
Siemens Industry Software, s.r.o., Prague/Czech Republic
Siemens, s.r.o., Prague/Czech Republic
100
100
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
Consolidated Financial Statements
Siemens Global Innovation Partners Management GmbH,
Munich
43.7
Other attestation services
3.2
7.1
Tax services
0.4
0.1
45.9
Other services
49.5
51.0
In fiscal 2016 and 2015, 41% and 45%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
schaft, Germany.
100
Consolidated Financial Statements
Audit Services relate primarily to services provided by EY for au-
diting Siemens' Consolidated Financial Statements and for audit-
ing the statutory financial statements of Siemens AG and its sub-
sidiaries. Other Attestation Services include primarily audits of
financial statements in connection with M&A activities, comfort
letters and other attestation services required under regulatory
requirements, agreements or requested on a voluntary basis.
NOTE 32
0.1
Corporate Governance
Audit services
2016
Consolidated Financial Statements 99
RELATED INDIVIDUALS
In fiscal 2016 and 2015, members of the Managing Board
received cash compensation of €20.2 million and €19.6 million.
The fair value of stock-based compensation amounted to
€8.7 million and €7.9 million for 113,230 and 113,281 Stock
Awards, respectively, in fiscal 2016 and 2015. In fiscal 2016 and
2015, the Company granted contributions under the BSAV to
members of the Managing Board totaling €4.6 million and
€4.8 million, respectively.
Therefore in fiscal 2016 and 2015, compensation and benefits,
attributable to members of the Managing Board amounted to
€33.5 million and €32.2 million in total, respectively.
In fiscal 2016 and 2015, expense related to share-based pay-
ment and to the Share Matching Program amounted to
€8.3 million and 8.1 million (including Stock Awards in connec-
tion with the departure from members of the Managing Board),
respectively.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€52.3 million and €30.5 million (including €9.6 million in con-
nection with the departure from members of the Managing
Board) in fiscal 2016 and 2015, respectively.
The defined benefit obligation (DBO) of all pension commitments
to former members of the Managing Board and their survivors as
of September 30, 2016 and 2015 amounted to €216.3 million and
€228.3 million, respectively.
2015
Compensation attributable to members of the Supervisory Board
comprises in fiscal 2016 and 2015 of a base compensation and
additional compensation for committee work and amounted to
€5.2 million and €5.1 million (including meeting fees), respectively.
In fiscal 2016 and 2015, no other major transactions took place
between the Company and the members of the Managing Board
and the Supervisory Board.
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary
course of our business whereby we buy and sell a wide variety of
products and services on arm's length terms.
NOTE 31
Principal accountant fees
and services
Fees related to professional services rendered by the Company's
principal accountant, EY, for fiscal 2016 and 2015 are:
Fiscal year
(in millions of €)
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
combined management report.
The Managing Board and the Supervisory Board of Siemens
Aktiengesellschaft provided the declaration required by Sec-
tion 161 of the German stock corporation law (AktG) as of Octo-
ber 1, 2016, which is available on the Company's website at:
WWW.SIEMENS.COM/GCG-CODE
NOTE 33
Equity interest
in %
Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
10011
SUBSIDIARIES
Project Ventures Butendiek Holding GmbH, Erlangen
Projektbau-Arena-Berlin GmbH, Grünwald
10011
10011
September 30, 2016
Germany (117 companies)
100
Airport Munich Logistics and Services GmbH, Hallbergmoos
10011
REMECH Systemtechnik GmbH, Kamsdorf
10011
Alpha Verteilertechnik GmbH, Cham
10011
R&S Restaurant Services GmbH, Munich
10010
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
Objekt Tübingen KG, Grünwald
51
Subsequent events
In June 2016, Siemens and Gamesa Corporación Tecnológica, S.A.
(Gamesa) signed binding agreements to merge the Siemens
wind power business, including service, with Gamesa. Siemens
will own 59% of the shares of the combined entity. As part of the
merger, Siemens will fund a cash payment of €1 billion, which
will be distributed to Gamesa's shareholders (excluding Siemens)
immediately following the completion of the merger. In Octo-
ber 2016, the Gamesa shareholders approved the merger. Closing
of the transaction is subject to the approvals of the antitrust and
regulatory authorities.
In November 2016, Siemens announced the acquisition of Mentor
Graphics (U.S.), a design automation and industrial software pro-
vider. The purchase price is US$37.25 per share in cash, which
represents an enterprise value of US$4.5 billion. Mentor Graphics
will be integrated in the Digital Factory Division. Closing of the
transaction is subject to customary conditions and is expected in
the third quarter of fiscal 2017.
In November 2016, Siemens announced its intention to further
strengthen Healthineers in Siemens for the future and is there-
fore planning to publicly list its healthcare business. Siemens will
announce more precise details regarding the date and scope of
the placement when plans for the public listing are further ad-
vanced. The listing will also depend, among other things, on the
stock market environment.
Consolidated Financial Statements
101
NOTE 34 List of subsidiaries and
associated companies pursuant to
Section 313 para. 2 of the German
Commercial Code
Equity interest
September 30, 2016
in %
Mannesmann Demag Krauss-Maffei GmbH, Munich
100
NEO New Oncology GmbH, Cologne
100
next47 GmbH, Munich
10011
Omnetric GmbH, Munich
As of September 30, 2016 and 2015, guarantees to joint ventures
and associates amounted to €1,500 million and €2,145 million,
respectively, including the HERKULES obligations of €600 million
and €1,090 million, respectively. As of September 30, 2016 and
2015, guarantees to joint ventures amounted to €553 million and
€472 million, respectively. As of September 30, 2016 and 2015,
loans given to joint ventures and associates amounted to €82 mil-
lion and €68 million, therein €78 million and €54 million related
to joint ventures, respectively. As of September 30, 2016 and
2015, the Company had commitments to make capital contribu-
tions of €48 million and €38 million to its joint ventures and as-
sociates, therein €39 million and €26 million related to joint ven-
tures, respectively. For a loan raised by a joint venture, which is
secured by a Siemens guarantee, Siemens granted an additional
collateral. As of September 30, 2016 and 2015 the outstanding
amount totaled to €116 million and €124 million, respectively.
As of September 30, 2016 and 2015 there were loan commit-
ments to joint ventures and associates amounting to €72 million
and €134 million, respectively, therein €72 million and €58 mil-
lion, respectively related to joint ventures.
Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
1,015
280
79,644
75,636
2,791
41,453
10,739
68,905
64,392
18,579
61,065
15,118
18,443
16,769
15,263
17,776
16,540
34,546
17,576
6,748
34,705
17,296
11,244
57,194
7,511
18,577
20,085
2015
42,432
21,440
2016
19,912
19,013
3,132
Non-current
21,702
111
11,959
79,644
11,765
75,636
42,057
assets
Sep 30,
2015
15,135
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
NOTE 30 Related party transactions
JOINT VENTURES AND ASSOCIATES
Sep 30,
2016
2015
2016
Sep 30,
2015
Joint ventures
333
Liabilities
167
377
Associates
114
113
343
638
447
227
Receivables
39
197
236
223
Siemens has relationships with many joint ventures and associ-
ates in the ordinary course of business whereby Siemens buys
and sells a wide variety of products and services generally on
arm's length terms.
Sales of goods
and services and
other income
Purchases of goods
and services
and other expenses
Fiscal year
2015
(in millions of €)
2016
Fiscal year
2015
2016
Joint ventures
1,052
365
48
Associates
1,379
687
174
2,431
1,052
569
1008
RISICOM Rückversicherung AG, Grünwald
Samtech Deutschland GmbH, Hamburg
100
Siemens Technopark Mülheim Verwaltungs GmbH,
Grünwald
100
Siemens Finance & Leasing GmbH, Munich
10011
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
10010
Siemens Financial Services GmbH, Munich
1008
10011
10011
Siemens Technopark Nürnberg Verwaltungs GmbH,
Grünwald
100
Siemens Fuel Gasification Technology GmbH & Co. KG,
Freiberg
Siemens Treasury GmbH, Munich
10011
10010
Siemens Fonds Invest GmbH, Munich
Siemens Turbomachinery Equipment GmbH, Frankenthal
Siemens Convergence Creators Management GmbH,
Hamburg
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
102 Consolidated Financial Statements
Equity interest
September 30, 2016
10010
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Convergence Creators GmbH & Co. KG, Hamburg
in %
September 30, 2016
in %
1008
Siemens Technology Accelerator GmbH, Munich
10011
10010
Equity interest
10011
Siemens Fuel Gasification Technology Verwaltungs GmbH,
Freiberg
Siemens Venture Capital GmbH, Munich
Siemens-Fonds S-8, Munich
100
Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
Siemens Immobilien GmbH & Co. KG, Grünwald
100
10010
SILLIT Grundstücks-Verwaltungsgesellschaft mbH,
Munich
100
10011
Siemens Immobilien Management GmbH, Grünwald
Siemens Industriegetriebe GmbH, Penig
10011
SIM 16. Grundstücksverwaltungs- und -beteiligungs-
GmbH & Co. KG, Munich
10010
Siemens Industriepark Karlsruhe GmbH & Co. KG,
Grünwald
10010
11 Exemption pursuant to Section 264 (3) German Commercial Code.
1008
100
Siemens-Fonds S-7, Munich
100
10011
1008
Siemens Wind Power GmbH & Co. KG, Hamburg
1008
Siemens Wind Power Management GmbH, Hamburg
1008
1008
Siemens-Fonds C-1, Munich
100
Siemens Healthcare Diagnostics GmbH, Eschborn
100
Siemens-Fonds Pension Captive, Munich
100
Siemens Healthcare Diagnostics Holding GmbH, Eschborn
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Healthcare GmbH, Erlangen
100
Siemens-Fonds Principals, Munich
100
7 Significant influence due to contractual arrangements or legal circumstances
6 No significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
1008
100
Siemens Beteiligungen USA GmbH, Berlin
10011
Dade Behring Beteiligungs GmbH, Eschborn
100
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
Siemens Beteiligungen Management GmbH, Grünwald
10010
100
Dresser-Rand GmbH, Oberhausen
10011
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
10010
evosoft GmbH, Nuremberg
10011
Dade Behring Grundstücks GmbH, Marburg
100
Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
DA Creative GmbH, Munich
10011
100
Atecs Mannesmann GmbH, Erlangen
100
AXIT GmbH, Frankenthal
100
Berliner Vermögensverwaltung GmbH, Berlin
10011
Siemens Automotive ePowertrain Systems GmbH, Erlangen
Siemens Automotive ePowertrain Systems Holding GmbH,
Erlangen
100
100
BWI Services GmbH, Meckenheim
100
Siemens Bank GmbH, Munich
100
CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
10010
Siemens Beteiligungen Inland GmbH, Munich
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
Fiscal year
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
Grünwald
10010
10010
Kyra 1 GmbH, Erlangen
10011
Kyros 51 GmbH, Munich
1008
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
Grünwald
10010
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
Grünwald
Kyros 52 GmbH, Munich
Lincas Electro Vertriebsgesellschaft mbH, Hamburg
100
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
1008
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
1008
10011
KompTime GmbH, Munich
10011
HanseCom Gesellschaft für Informations- und
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
Grünwald
10010
Kommunikationsdienstleistungen mbH, Hamburg
HanseCom Public Transport Ticketing Solutions GmbH,
Hamburg
74
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
Grünwald
10010
74
HSP Hochspannungsgeräte GmbH, Troisdorf
10011
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
Grünwald
10010
ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
Jawa Power Holding GmbH, Erlangen
85
100
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
Grünwald
10010
10010
of companies
(in millions of €)
45,325
22,360
NOTE 29 Information about geographies
(in millions of €)
Europe, C.I.S., Africa, Middle East
Asia, Australia
Siemens
thereof Germany
thereof foreign countries
therein U.S.
Americas
41,819
Revenue by location
of customers
Revenue by location
22,707
Fiscal year
2015
38,799
2016
2016
359
Ardora, S.A., Vigo/Spain
249
31
49
ZAO Systema-Service, St. Petersburg/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
339
BioMensio Oy, Tampere/Finland
239
26
Desgasificación de Vertederos, S.A, Madrid/Spain
8 Not consolidated due to immateriality.
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
Noliac A/S, Kvistgaard/Denmark
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
509
Kriegers Flak ApS, Copenhagen/Denmark
T-Power NV, Brussels/Belgium
46
Wirescan AS, Trollaasen/Norway
339
Arelion GmbH in Liqu., Pasching b. Linz/Austria
259
Rousch (Pakistan) Power Ltd., Lahore/Pakistan
26
Aspern Smart City Research GmbH, Vienna/Austria
449
000 Transconverter, Moscow/Russian Federation
359
Aspern Smart City Research GmbH & Co KG, Vienna/Austria
44
OIL AND GAS PROSERV LLC, Baku/Azerbaijan
259
OOO VIS Automation mit Zusatz »>Ein Gemeinschafts-
unternehmen von VIS und Siemens<<,
Consolidated Financial Statements
20
Moscow/Russian Federation
49
40
Meomed s.r.o., Prerov/Czech Republic
479
ZAO Interautomatika, Moscow/Russian Federation
A2SEA A/S, Fredericia/Denmark
100
515
Equity interest
207,9
509
50
Asia, Australia (20 companies)
50
Cross London Trains Holdco 2 Limited,
London/United Kingdom
Exemplar Health (NBH) Partnership, Melbourne/Australia
Exemplar Health (SCUH) Partnership, Sydney/Australia
33
PHM Technology Pty Ltd, Melbourne/Australia
50
50
259
Ethos Energy Group Limited, Aberdeen/United Kingdom
49
ChinaInvent (Shanghai) Instrument Co., Ltd,
Galloper Wind Farm Holding Company Limited, Swindon,
Wiltshire/United Kingdom
Shanghai/China
309
25
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Lincs Renewable Energy Holdings Limited,
Beijing/China
Caracas/Venezuela, Bolivarian Republic of
Equity interest
50
Certas AG, Zurich/Switzerland
September 30, 2016
in %
September 30, 2016
in %
Explotaciones y Mantenimientos Integrales, S.L.,
Getxo/Spain
509
Siemens First Capital Commercial Finance, LLC,
Wilmington, DE/United States
209
Gate Solar Gestión, S.L. Unipersonal, Vitoria-Gasteiz/Spain
Hydrophytic, S.L., Vitoria-Gasteiz/Spain
509
509
USARAD Holdings, Inc., Fort Lauderdale, FL/United States
Veo Robotics, Inc., Cambridge, MA/United States
309
279
Nertus Mantenimiento Ferroviario y Servicios S.A.,
Barcelona/Spain
515
Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
Caracas/Venezuela, Bolivarian Republic of
409
Soleval Renovables S.L., Sevilla/Spain
50
Innovex Capital En Tecnologia, C.A.,
Solucia Renovables 1, S.L., Lebrija/Spain
Tusso Energía, S.L., Sevilla/Spain
Interessengemeinschaft TUS, Männedorf/Switzerland
ZeeEnergie Management B.V., Eemshaven/Netherlands
259
ZeeEnergie C.V., Amsterdam/Netherlands
25
50
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
40
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
Vassiliko/Greece
48
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
409
Parallel Graphics Ltd., Dublin/Ireland
575,9
LIB Verwaltungs-GmbH, Leipzig
509
Metropolitan Transportation Solutions Ltd.,
Ludwig Bölkow Campus GmbH, Taufkirchen
259
Rosh HaAyin/Israel
20
Magazino GmbH, Munich
50
Transfima GEIE, Milan/Italy
429
Maschinenfabrik Reinhausen GmbH, Regensburg
26
TRIXELL SAS, Moirans/France
Transfima S.p.A., Milan/Italy
499
Compagnie Electrique de Bretagne SAS, Paris/France
499
1 Control due to a majority of voting rights.
6 No significant influence due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
113
114
Equity interest
Equity interest
September 30, 2016
FEAG Fertigungscenter für Elektrische Anlagen GmbH,
Erlangen
IFTEC GmbH & Co. KG, Leipzig
in %
September 30, 2016
in %
40
499
MeVis BreastCare GmbH & Co. KG, Bremen
49
Buitengaats C.V., Amsterdam/Netherlands
207
509
ubimake GmbH, Berlin
50
Buitengaats Management B.V., Eemshaven/Netherlands
Infraspeed Maintainance B.V., Zoetermeer/Netherlands
209
50
Veja Mate Offshore Project GmbH, Gadebusch
41
Voith Hydro Holding GmbH & Co. KG, Heidenheim
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
WERKBLIQ GmbH, Bielefeld
35
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
50
359
Windpark Monarch C.V., Amsterdam/Netherlands
25
g|
50
Windpark Monarch Management B.V.,
Amsterdam/Netherlands
259
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
(58 companies)
Transrapid International Verwaltungsgesellschaft mbH i.L.,
Berlin
339
Admiraal De Ruyter Windpark Management B.V.,
Amsterdam/Netherlands
29
VAL 208 Torino GEIE, Milan/Italy
865,9
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
499
Temir Zhol Electrification LLP, Astana/Kazakhstan
49
OWP Butendiek GmbH & Co. KG, Bremen
23
Electrogas Malta Limited, Marsaskala/Malta
33
Siemens EuroCash, Munich
207
67
20
Siemens Venture Capital Fund 1 GmbH, Munich
1005,9
Admiraal de Ruyter Windpark C.V.,
Sternico GmbH, Wendeburg
329
Amsterdam/Netherlands
339
Symeo GmbH, Neubiberg
655,9
thinkstep AG, Leinfelden-Echterdingen
Energie Electrique de Tahaddart S.A., Tangier/Morocco
London/United Kingdom
509
GSP China Technology Co., Ltd., Beijing/China
1,312
456
6
98
Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
1005,6
14
7,402
MEASD SPC DWC-LLC, Dubai/United Arab Emirates
1005,6
Dresser-Rand Company Retirement Plan Trustees Limited, Frimley, Surrey/United Kingdom
Pyreos Limited, Edinburgh/United Kingdom
1005,6
0
0
236
(4)
(6)
Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
744,6
0
0
Americas (3 companies)
Guascor México S.A. de CV, Mexico City/Mexico
(56)
BuildingIQ, Inc., San Mateo, CA/United States
1005,6
437
18
157
2,488
506
7
80
100 5,6
0
8
1005,6
(2)
6
Siemens Pensionsfonds AG, Grünwald
SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (9 companies)
SMATRICS GmbH & Co KG, Vienna/Austria
ATOS SE, Bezons/France
Oceanic Global Investment Funds PLC, Dublin/Ireland
Medical Systems S.p.A., Genoa/Italy
506
(3)
4
12
4,097
¡BAHN Corporation, South Jordan, UT/United States
Asia, Australia (1 company)
Atlantis Resources Limited, Singapore/Singapore
116 Consolidated Financial Statements
C.
ADDITIONAL
INFORMATION
C.1 Responsibility Statement
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial Statements
give a true and fair view of the assets, liabilities, financial posi-
tion and profit or loss of the Group, and the Group Management
Report, which has been combined with the Management Report
Munich, November 28, 2016
Siemens Aktiengesellschaft
The Managing Board
An
Joe Kaeser
2.гл
Dr. Roland Busch
Lisa Davis
for Siemens Aktiengesellschaft, includes a fair review of the
development and performance of the business and the position
of the Group, together with a description of the material oppor-
tunities and risks associated with the expected development
of the Group.
Sha
Alaus Helmch
Klaus Helmrich
да пошел
Janina Kuge
Prof.Dr Siegfried Russwurm
Dr. Ralf P. Thomas
1.1
118 Additional Information
N/A No financial data available.
12 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
Exemption pursuant to Section 264 (3) German Commercial Code.
11
506
N/A
N/A
19
(4)
16
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
9
(3)
34
8
(89)
3
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10
Exemption pursuant to Section 264b German Commercial Code.
78
50
5
Siemens Global Innovation Partners | GmbH & Co. KG, Munich
27
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
50
Cyclos Semiconductor, Inc., Wilmington, DE/United States
329
Echogen Power Systems, Inc., Wilmington, DE/United States
32
Frustum, Inc., New York, NY/United States
219
Bangalore International Airport Ltd., Bangalore/India
Transparent Energy Systems Private Limited, Pune/India
P.T. Jawa Power, Jakarta/Indonesia
26
259
50
Panda Hummel Station Intermediate Holdings I LLC,
PT Asia Care Indonesia, Jakarta/Indonesia
40
Wilmington, DE/United States
32
Panda Stonewall Intermediate Holdings I, LLC,
Wilmington, DE/United States
37
Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
Advance Gas Turbine Solutions SDN. BHD.,
Kuala Lumpur/Malaysia
50
CEF-L Holding, LLC, Wilmington, DE/United States
43
23
43
50
Odos Imaging Ltd., Edinburgh/United Kingdom
509
Saitong Railway Electrification (Nanjing) Co., Ltd.,
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
509
Nanjing/China
Primetals Technologies, Limited, London/United Kingdom
49
RWG (Repair & Overhauls) Limited,
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
40
40
Aberdeen/United Kingdom
50
Siemens Traction Equipment Ltd., Zhuzhou,
Joint Venture Service Center, Chirchik/Uzbekistan
499
Zhuzhou/China
50
Americas (15 companies)
Tianjin ZongXi Traction Motor Ltd., Tianjin/China
Xi'An X-Ray Target Ltd., Xi'an/China
50
Bytemark Inc., New York, NY/United States
PhSiTh LLC, New Castle, DE/United States
33
Power Automation Pte. Ltd., Singapore/Singapore
Germany (10 companies)
Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW),
Paderborn
1005,6
0
1
BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
1005,6
3
(36)
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
INPRO Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
Kyros Beteiligungsverwaltung GmbH, Grünwald
1005,6
5
125
206
0
3
1005,6
47
452
MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
OSRAM Licht AG, Munich
OTHER INVESTMENTS 12
in millions of €
in millions of €
Equity
49
Powerit Holdings, Inc., Seattle, WA/United States
219
Modern Engineering and Consultants Co. Ltd.,
Rether networks, Inc., Berkeley, CA/United States
309
Bangkok/Thailand
409
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
975,6
4 No control due to substantive removal or participation rights held by other parties.
6 No significant influence due to contractual arrangements or legal circumstances.
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
115
September 30, 2016
Equity interest
in %
Net income
5 No control due to contractual arrangements or legal circumstances.
100
Siemens Healthcare Diagnósticos S.A., São Paulo/Brazil
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens Ltda., São Paulo/Brazil
Guascor Empreendimentos Energéticos, Ltda.,
Taboão da Serra/Brazil
Siemens Industry Software (TW) Co., Ltd.,
100
Taipei/Taiwan, Province of China
100
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Siemens Technology and Services Private Limited,
Mumbai/India
Siemens Ltd., Taipei/Taiwan, Province of China
PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
PT. Siemens Industrial Power, Kota Bandung/Indonesia
100
Dresser-Rand (Thailand) Limited, Rayong/Thailand
100
60
Siemens Healthcare Limited, Bangkok/Thailand
100
100
100
100
75
Siemens Healthcare Pte. Ltd., Singapore/Singapore
100
Siemens Postal and Parcel Logistics Technologies Private
Limited, Mumbai/India
Siemens Industry Software Pte. Ltd., Singapore/Singapore
100
Siemens Healthcare Limited, Taipei/Taiwan, Province of China
1008
Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
Singapore/Singapore
100
100
Siemens Pte. Ltd., Singapore/Singapore
100
Siemens Rail Automation Pvt. Ltd., Mumbai/India
Siemens Postal Parcel & Airport Logistics Private Limited,
Mumbai/India
Siemens Ltd., Mumbai/India
Acrorad Co., Ltd., Okinawa/Japan
Siemens Limited, Bangkok/Thailand
100
ATS Projekt Grevenbroich GmbH, Schüttorf
259
CD-adapco Korea, Ltd., Seoul/Korea, Republic of
100
BELLIS GmbH, Braunschweig
Siemens K.K., Tokyo/Japan
499
100
BWI Informationstechnik GmbH, Meckenheim
505
Siemens Healthcare Limited, Seoul/Korea, Republic of
100
Caterva GmbH, Pullach i. Isartal
Dresser-Rand Korea, Ltd., Seoul/Korea, Republic of
63
Germany (27 companies)
Siemens Japan Holding K.K., Tokyo/Japan
99
CD-adapco Co., Ltd., Yokohama/Japan
100
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
100
Dresser Rand Japan K.K., Tokyo/Japan
100
100
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
Siemens Healthcare K.K., Tokyo/Japan
100
ASSOCIATED COMPANIES AND JOINT VENTURES
Siemens Ltd., Ho Chi Minh City/Viet Nam
100
CSI Services Pte. Ltd., Singapore/Singapore
100
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
112 Consolidated Financial Statements
6 No significant influence due to contractual arrangements or legal circumstances.
Equity interest
Siemens Postal, Parcel & Airport Logistics Limited,
Hong Kong/Hong Kong
CD-adapco India Private Limited, Bangalore/India
Dresser-Rand India Private Limited, Mumbai/India
in %
September 30, 2016
Equity interest
in %
September 30, 2016
100
5 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Medium Voltage Switching Technologies (Wuxi)
Ltd., Wuxi/China
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
85
Siemens Industry Software Limited,
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
Siemens Power Automation Ltd., Nanjing/China
4 No control due to substantive removal or participation rights held by other parties.
80
100
Siemens Ltd., Hong Kong/Hong Kong
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
Hong Kong/Hong Kong
Dresser-Rand & Enserv Services Sdn. Bhd.,
Kuala Lumpur/Malaysia
492,8
100
100
100
100
100
Mumbai/India
100
100
Siemens Healthcare Private Limited, Mumbai/India
Siemens Power Operations, Inc., Manila/Philippines
Siemens, Inc., Manila/Philippines
100
100
Siemens Industry Software (India) Private Limited,
New Delhi/India
CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
100
100
100
100
100
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
New Delhi/India
100
Powerplant Performance Improvement Ltd.,
New Delhi/India
501
Preactor Software India Private Limited, Bangalore/India
100
Siemens Convergence Creators Private Limited,
Mumbai/India
100
Siemens Financial Services Private Limited,
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Industry Software Sdn. Bhd., Penang/Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
Siemens Healthcare Limited, Auckland/New Zealand
Siemens Healthcare Inc., Manila/Philippines
100
100
50
Siemens Industry Software Ltd., Seoul/Korea, Republic of
Siemens Ltd. Seoul, Seoul/Korea, Republic of
100
Frimley, Surrey/United Kingdom
100
Siemens S.A., Guatemala/Guatemala
100
Wilmington, DE/United States
100
Guatemala/Guatemala
Siemens S.A., Tegucigalpa/Honduras
Dresser-Rand International Inc.,
in %
Equity interest
September 30, 2016
in %
September 30, 2016
Equity interest
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
109
100
100
NEM USA Corp., Wilmington, DE/United States
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
100
100
100
100
Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
100
Dresser-Rand LLC, Wilmington, DE/United States
Dresser-Rand Power LLC, Wilmington, DE/United States
Dresser-Rand Services, LLC, Wilmington, DE/United States
eMeter Corporation, Wilmington, DE/United States
Guascor Inc., Baton Rouge, LA/United States
Mannesmann Corporation, New York, NY/United States
100
Ciudad Juárez/Mexico
Indústria de Trabajos Eléctricos S.A. de C.V.,
100
Grupo Siemens S.A. de C.V., Mexico City/Mexico
100
Consolidated Financial Statements
11 Exemption pursuant to Section 264 (3) German Commercial Code.
10 Exemption pursuant to Section 264b German Commercial Code.
100
100
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
90
Guascor Wind do Brasil, Ltda., São Paulo/Brazil
Siemens S.A., Quito/Ecuador
1008
90
Higüey/Dominican Republic
60
Guascor Serviços Ltda., Taboão da Serra/Brazil
Sociedad Energética Del Caribe, S.R.L.,
90
100
Guascor Solar do Brasil, Taboão da Serra/Brazil
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
Canoas/Brazil
Siemens Healthcare, Sociedad Anonima,
100
9 Not accounted for using the equity method due to immateriality.
8 Not consolidated due to immateriality.
7 Significant influence due to contractual arrangements or legal circumstances
6 No significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
Siemens S.A., San Salvador/El Salvador
89
Jaguarí Energética, S.A., Jaguari/Brazil
Antiguo Cuscatlán/El Salvador
100
100
Mexico City/Mexico
Nimbus Technologies, LLC,
Equity interest
Couva/Trinidad and Tobago
100
Wilmington, DE/United States
Dresser-Rand Trinidad & Tobago Limited,
Siemens Credit Warehouse, Inc.,
Equity interest
100
100
Siemens Corporation, Wilmington, DE/United States
100
Siemens Healthcare S.A.C., Surquillo/Peru
100
Wilmington, DE/United States
Siemens S.A.C., Lima/Peru
100
September 30, 2016
in %
VA Tech Reyrolle Distribution Ltd.,
100
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
Siemens Eletroeletronica Limitada, Manaus/Brazil
100
Siemens Wind Power Limited,
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
75
Minuano Participações Eólicas Ltda., São Paulo/Brazil
OMNETRIC Group Tecnologia e Servicos de Consultoria
Ltda., Belo Horizonte/Brazil
The Preactor Group Limited,
1008
in %
September 30, 2016
100
Siemens S.A., Panama City/Panama
Siemens Convergence Creators Corp.,
100
PETNET Indiana LLC, Indianapolis, IN/United States
100
Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
51
P.E.T.NET Houston, LLC, Austin, TX/United States
100
501
Siemens Industry Software, S.A. de C.V., Mexico City/Mexico
Omnetric Corp., Wilmington, DE/United States
100
Mexico City/Mexico
100
Bingham Farms, MI/United States
Siemens Healthcare Servicios S. de R.L. de C.V.,
100
Siemens Innovaciones S.A. de C.V., Mexico City/Mexico
100
PETNET Solutions Cleveland, LLC,
Panama City/Panama
100
Siemens Capital Company LLC, Wilmington, DE/United States
Siemens Healthcare Diagnostics Panama, S.A.,
100
Red Cedar Technology, Inc., East Lansing, MI/United States
100
Siemens S.A., Managua/Nicaragua
100
PETNET Solutions, Inc., Knoxville, TN/United States
100
63
Wilmington, DE/United States
100
Siemens Servicios S.A. de C.V., Mexico City/Mexico
Siemens, S.A. de C.V., Mexico City/Mexico
100
Samtech HK Limited, Hong Kong/Hong Kong
100
100
100
Siemens USA Holdings, Inc., Wilmington, DE/United States
Siemens Wind Power Inc., Wilmington, DE/United States
100
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Siemens Ltd., Bayswater/Australia
100
100
Siemens Demag Delaval Turbomachinery, Inc.,
100
SMI Holding LLC, Wilmington, DE/United States
Synchrony, Inc., Salem, VA/United States
Wheelabrator Air Pollution Control Inc.,
Baltimore, MD/United States
Winergy Drive Systems Corporation,
Wilmington, DE/United States
Engines Rental, S.A., Montevideo/Uruguay
1008
Siemens S.A., Montevideo/Uruguay
Analysis & Design Application Co. Ltd.,
100
100
Wilmington, DE/United States
100
Wilmington, DE/United States
Siemens Financial Services, Inc.,
D-R International Sales Inc.,
Wilmington, DE/United States
100
502
CD-adapco Battery Design LLC, Dover, DE/United States
100
Siemens Electrical, LLC, Wilmington, DE/United States
100
Melville, NY/United States
Siemens Energy, Inc., Wilmington, DE/United States
100
SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
Siemens Wind Power Pty. Ltd., Bayswater/Australia
100
CD-adapco Software Technology (Shanghai) Co.,Ltd.,
Shanghai/China
100
Maracaibo/Venezuela, Bolivarian Republic of
100
DPC (Tianjin) Co., Ltd., Tianjin/China
100
Dresser-Rand de Venezuela, S.A.,
Guascor Venezuela S.A.,
Caracas/Venezuela, Bolivarian Republic of
100
Shanghai/China
100
Siemens Healthcare S.A.,
Caracas/Venezuela, Bolivarian Republic of
Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
100
Via Stylos S.A., Montevideo/Uruguay
100
1008
100
Siemens Bangladesh Ltd., Dhaka/Bangladesh
100
Siemens Healthcare Ltd., Dhaka/Bangladesh
1008
100
Beijing Siemens Automotive E-Drive Systems Co., Ltd.,
Changzhou, Changzhou/China
60
100
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
100
100
100
Camstar Systems, Software (Shanghai) Company Limited,
Shanghai/China
D-R Steam LLC, Wilmington, DE/United States
1008
100
100
1008
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
100
Wilmington, DE/United States
100
Exemplar Health (NBH) Trust 2, Bayswater/Australia
Siemens Molecular Imaging, Inc., Wilmington, DE/United States
Siemens Medical Solutions USA, Inc.,
September 30, 2016
in %
September 30, 2016
Equity interest
Equity interest
110 Consolidated Financial Statements
in %
11 Exemption pursuant to Section 264 (3) German Commercial Code.
100
1008
100
100
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
Siemens Product Lifecycle Management Software Inc.,
Wilmington, DE/United States
100
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Bayswater/Australia
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
100
Siemens Power Generation Service Company, Ltd.,
100
Exemplar Health (SCUH) Holdings 3 Pty Limited,
Bayswater/Australia
100
Wilmington, DE/United States
Siemens Postal, Parcel & Airport Logistics LLC,
Wilmington, DE/United States
10 Exemption pursuant to Section 264b German Commercial Code.
9 Not accounted for using the equity method due to immateriality.
8 Not consolidated due to immateriality.
Dresser-Rand Holding (Luxembourg) LLC,
Siemens Government Technologies, Inc.,
100
Dresser-Rand Group Inc., Wilmington, DE/United States
100
Wilmington, DE/United States
Wilmington, DE/United States
100
Siemens Generation Services Company,
Dresser-Rand Global Services, Inc.,
100
Siemens Fossil Services, Inc., Wilmington, DE/United States
100
Dresser-Rand Company, Bath, NY/United States
Wilmington, DE/United States
100
Wilmington, DE/United States
100
7 Significant influence due to contractual arrangements or legal circumstances
6 No significant influence due to contractual arrangements or legal circumstances.
5 No control due to contractual arrangements or legal circumstances.
4 No control due to substantive removal or participation rights held by other parties.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
Siemens Industry, Inc., Wilmington, DE/United States
100
Wilmington, DE/United States
Los Angeles, CA/United States
Dresser-Rand International Holdings, LLC,
Siemens Healthcare Diagnostics Inc.,
Siemens Financial, Inc., Wilmington, DE/United States
Siemens, S.R.L., Santo Domingo/Dominican Republic
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
Siemens Rail Automation, C.A.,
90
Shanghai, Shanghai/China
51
Siemens High Voltage Switchgear Guangzhou Ltd.,
Siemens Transformer (Guangzhou) Co., Ltd.,
Guangzhou/China
63
90
Guangzhou/China
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
90
Siemens Industrial Automation Products Ltd.,
Chengdu, Chengdu/China
100
Siemens Transformer (Wuhan) Company Ltd.,
Wuhan City/China
94
100
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
51
51
Siemens Special Electrical Machines Co. Ltd.,
Changzhi/China
77
100
Siemens Standard Motors Ltd., Yizheng/China
Siemens High Voltage Switchgear Co., Ltd.,
100
100
Siemens Surge Arresters Ltd., Wuxi/China
100
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Hangzhou/China
Siemens Switchgear Ltd., Shanghai, Shanghai/China
55
Siemens Healthcare Ltd., Shanghai/China
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Huludao/China
Siemens Venture Capital Co., Ltd., Beijing/China
100
Trench High Voltage Products Ltd., Shenyang,
Shenyang/China
65
100
Siemens Ltd., China, Beijing/China
100
Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
Hangzhou/China
Siemens Logistics Automation Systems (Beijing) Co., Ltd,
Beijing/China
51
Asia Care Holding Limited, Hong Kong/Hong Kong
1008
Shanghai/China
51
Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
Tianjin/China
Camstar Systems (Hong Kong) Limited,
Hong Kong/Hong Kong
Siemens Manufacturing and Engineering Centre Ltd.,
100
Siemens Investment Consulting Co., Ltd., Beijing/China
60
84
Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
100
Siemens Wind Power Blades (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Industry Software (Shanghai) Co., Ltd.,
Siemens Wiring Accessories Shandong Ltd., Zibo/China
100
Shanghai/China
100
Siemens International Trading Ltd., Shanghai,
Shanghai/China
100
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
Smart Metering Solutions (Changsha) Co. Ltd.,
Changsha/China
100
Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
Shanghai/China
100
70
Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
100
Siemens Circuit Protection Systems Ltd., Shanghai,
Shanghai/China
75
1008
Siemens Eco-City Innovation Technologies (Tianjin) Co.,
Ltd., Tianjin/China
60
100
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to substantive removal or participation rights held by other parties.
5 No control due to contractual arrangements or legal circumstances.
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
6 No significant influence due to contractual arrangements or legal circumstances.
Australia Hospital Holding Pty Limited, Bayswater/Australia
CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
Exemplar Health (NBH) Holdings 2 Pty Limited,
Bayswater/Australia
Siemens Business Information Consulting Co., Ltd,
Beijing/China
MWB (Shanghai) Co Ltd., Shanghai/China
65
Caracas/Venezuela, Bolivarian Republic of
100
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
100
Siemens Automotive ePowertrain Systems (Shanghai) Co.,
Ltd., Shanghai/China
Dade Behring Hong Kong Holdings Corporation,
Tortola/Virgin Islands, British
100
Siemens Building Technologies (Tianjin) Ltd.,
Tianjin/China
70
10
Asia, Australia (140 companies)
100
7 Significant influence due to contractual arrangements or legal circumstances
8 Not consolidated due to immateriality.
9 Not accounted for using the equity method due to immateriality.
Beijing/China
100
Siemens Sensors & Communication Ltd., Dalian/China
100
Siemens Finance and Leasing Ltd., Beijing/China
100
100
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
Siemens Financial Services Ltd., Beijing/China
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
Yixing/China
Shenzhen/China
100
100
Siemens Real Estate Management (Beijing) Ltd., Co.,
Beijing/China
Siemens Factory Automation Engineering Ltd.,
85
10 Exemption pursuant to Section 264b German Commercial Code.
11 Exemption pursuant to Section 264 (3) German Commercial Code.
Consolidated Financial Statements
111
Equity interest
September 30, 2016
in %
September 30, 2016
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
100
Siemens Power Plant Automation Ltd., Nanjing/China
Equity interest
in %
100
Siemens Electrical Drives Ltd., Tianjin/China
100
Siemens Public, Inc., Wilmington, DE/United States
100
Siemens S.A., San José/Costa Rica
100
Artadi S.A., Buenos Aires/Argentina
100
Guascor Argentina, S.A., Buenos Aires/Argentina
100
Siemens Postal, Parcel & Airport Logistics Ltd.,
Oakville/Canada
100
Siemens Healthcare S.A., Buenos Aires/Argentina
100
Siemens Transformers Canada Inc.,
Siemens IT Services S.A., Buenos Aires/Argentina
100
Trois-Rivières, Québec/Canada
Siemens S.A., Buenos Aires/Argentina
100
Siemens Wind Power Limited, Oakville/Canada
VA TECH International Argentina SA,
Siemens Industry Software Ltd., Oakville/Canada
Americas (129 companies)
100
Siemens Healthcare Limited, Oakville/Canada
100
100
100
100
VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
100
Siemens Wind Power Ergia Eolica LTDA, São Paulo/Brazil
1008
Trench Ltd., Saint John/Canada
VTW Anlagen UK Ltd., Banbury,
100
Oxfordshire/United Kingdom
100
100
Zenco Systems Limited, Frimley, Surrey/United Kingdom
100
Siemens Financial Ltd., Oakville/Canada
100
Dresser-Rand Canada, ULC, Vancouver/Canada
100
Siemens Canada Limited, Oakville/Canada
100
Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
100
Dresser-Rand Colombia S.A.S., Bogotá/Colombia
100
Dresser-Rand Comercio e Industria Ltda., Campinas/Brazil
Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
100
Siemens Healthcare S.A.S., Tenjo/Colombia
100
100
85
100
Dresser-Rand Participações Ltda., São Paulo/Brazil
100
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
100
Guascor do Brasil Ltda., São Paulo/Brazil
1008
100
Siemens S.A., Santiago de Chile/Chile
Siemens S.A., Tenjo/Colombia
Rio de Janeiro/Brazil
Buenos Aires/Argentina
100
100
Wheelabrator Air Pollution Control (Canada) Inc.,
Siemens Soluciones Tecnologicas S.A.,
100
Santa Cruz de la Sierra/Bolivia, Plurinational State of
100
Siemens Healthcare Diagnostics Manufacturing Limited,
Ontario/Canada
Grand Cayman/Cayman Islands
100
São Paulo/Brazil
100
Siemens Healthcare Equipos Médicos Sociedad por
Chemtech Servicos de Engenharia e Software Ltda.,
100
CD-adapco Solucoes Cae Suporte de Programas Ltda.,
Acciones, Santiago de Chile/Chile
German positions:
> Siemens Healthcare GmbH, Munich
German positions:
> Siemens Schweiz AG, Switzerland
(Chairman)
> Siemens AB, Sweden (Chairman)
> Siemens Aktiengesellschaft
Österreich, Austria (Chairman)
Positions outside Germany:
> Siemens Corp., USA (Chairwoman)
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
>Arabia Electric Ltd. (Equipment),
Saudi Arabia
Positions outside Germany:
> Siemens Proprietary Ltd., South
Africa (Chairman)
> ISCOSA Industries and Maintenance
Ltd., Saudi Arabia (Deputy Chairman)
> Siemens Corp., USA
> Siemens W.L.L., Qatar
> VA TECH T&D Co. Ltd., Saudi Arabia
German positions:
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
> Siemens Aktiengesellschaft
Österreich, Austria
(Deputy Chairman)
Additional Information
125
C.4.1.2 SUPERVISORY BOARD
The Supervisory Board oversees and advises the Managing Board
in its management of the Company's business. At regular inter-
vals, the Supervisory Board discusses business development,
planning, strategy and strategy implementation. It reviews the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements and the Combined Management Report of
Siemens AG and the Siemens Group, and the proposal for the
appropriation of net income. It approves the Annual Financial
Statements of Siemens AG as well as the Consolidated Financial
Statements, based on the results of the preliminary review con-
ducted by the Audit Committee and taking into account the re-
ports of the independent auditors. The Supervisory Board de-
cides on the Managing Board's proposal for the appropriation of
net income and the Report of the Supervisory Board to the An-
nual Shareholders' Meeting. In addition, the Supervisory Board
or the Compliance Committee, which is described in more detail
below, concern themselves with monitoring the Company's
adherence to statutory provisions, official regulations and inter-
nal Company policies (compliance). The Supervisory Board also
appoints the members of the Managing Board and determines
each member's portfolios. Important Managing Board deci-
sions - such as those regarding major acquisitions, divestments,
fixed asset investments or financial measures require Super-
visory Board approval, unless the Bylaws for the Supervisory
> Siemens Ltd., Saudi Arabia
> Siemens Ltd., India
> NXP Semiconductors B.V.,
Netherlands
Logistics GmbH, Constance
Positions outside Germany:
Board specify that such authority be delegated to the Innovation
and Finance Committee of the Supervisory Board. In the Bylaws
for the Managing Board, the Supervisory Board has established
the rules that govern the Managing Board's work.
March 7,
1961
September 18, September 17,
2013
2018
Memberships in supervisory boards whose establishment is required by law
or in comparable domestic or foreign controlling bodies of business enterprises
External positions
(as of September 30, 2016)
German positions:
> Allianz Deutschland AG, Munich
> Daimler AG, Stuttgart
Positions outside Germany:
German positions:
> OSRAM Licht AG, Munich
(Deputy Chairman)
> OSRAM GmbH, Munich
(Deputy Chairman)
Positions outside Germany:
> Atos SE, France
> Siemens Ltd., China (Chairman)
German positions:
> inpro Innovationsgesellschaft
für fortgeschrittene Produktions-
systeme in der Fahrzeugindustrie
mbH, Berlin
German positions:
> Pensions-Sicherungs-Verein
Versicherungsverein auf Gegen-
seitigkeit, Cologne
Positions outside Germany:
> Konecranes Plc., Finland
German positions:
> Deutsche Messe AG, Hanover
Group company positions
(as of September 30, 2016)
Positions outside Germany:
> Siemens Ltd., India
German positions:
> Siemens Postal, Parcel & Airport
> EOS Holding AG, Krailling
Information on the work of the Supervisory Board is provided in
chapter c.3 REPORT OF THE SUPERVISORY BOARD. The compensa-
tion paid to the members of the Supervisory Board is explained
in chapter A.10 COMPENSATION REPORT.
> Fresenius SE & Co. KGaA, Bad Homburg
(Deputy Chairman)
Members of the Supervisory Board and positions
held by Supervisory Board members
> Henkel Management AG, Düsseldorf
December 23, January 24,
1954
March 2,
1942
2008
January 24,
2008
German positions:
> BASF SE, Ludwigshafen am Rhein
(Deputy Chairman)
> Fresenius Management SE, Bad Homburg
Dr. rer. pol.
> Linde AG, Munich (Deputy Chairman)
German positions:
> BDO AG Wirtschaftsprüfungsgesellschaft,
Hamburg (Deputy Chairman)
> HSBC Trinkaus & Burkhardt AG, Düsseldorf
Name
Reinhard Hahn*
Occupation
Trade Union Secretary of
the Managing Board of IG Metall
Bettina Haller*
Hans-Jürgen Hartung*
Robert Kensbock*
Harald Kern*
Jürgen Kerner*
Chairwoman of the Combine Works
Council of Siemens AG
Chairman of the Works Council
of Siemens Erlangen Süd, Germany
Deputy Chairman of the Central
Works Council of Siemens AG
Chairman of the Siemens Europe
Committee
➤ Bayer AG, Leverkusen (Chairman)
> Henkel AG & Co. KGaA, Düsseldorf¹
German positions:
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2016)
126 Additional Information
In fiscal 2016, the Supervisory Board comprised the following
members:
Name
Gerhard Cromme, Dr. iur.
Chairman
Birgit Steinborn*
First Deputy Chairwoman
Werner Wenning
Second Deputy Chairman
Occupation
Chairman of the Supervisory Board
of Siemens AG
Chairwoman of the Central Works
Council of Siemens AG
Chairman of the Supervisory Board
of Bayer AG
Olaf Bolduan*
Michael Diekmann
Date of birth
February 25,
1943
The Supervisory Board of Siemens AG has 20 members. As stipu-
lated by the German Codetermination Act (Mitbestimmungs-
gesetz), half of the members represent Company shareholders,
and half represent Company employees. The employee represen-
tatives' names are marked below with an asterisk (*). The terms
of office of the Supervisory Board members will, as a general rule,
expire at the conclusion of the Annual Shareholders' Meeting in
2018. The terms of office of Dr. Leibinger-Kammüller, Mr. Snabe
and Mr. Wenning will expire at the conclusion of the Annual
Shareholders' Meeting in 2021.
Member since
March 26,
1960
January 24,
2008
October 21,
1946
January 23,
2013
Chairman of the Works Council
of Siemens Dynamowerk, Berlin,
Germany
July 24,
1952
July 11,
2014
Supervisory Board Member
Hans Michael Gaul, Dr. iur. Supervisory Board Member
1 Shareholders' Committee.
January 23,
2003
Ralf P. Thomas,
C.4.1.1 MANAGING BOARD
January 1,
2008
Berlin and Munich, November 30, 2016
In fiscal 2016, the Supervisory Board performed, in accordance
with its obligations, the duties assigned to it by law, the Siemens
Articles of Association and the Bylaws for the Supervisory Board.
We regularly advised the Managing Board on the management
of the Company and monitored the Managing Board's activities.
We were directly involved at an early stage in all major decisions
regarding the Company. In written and oral reports, the Manag-
ing Board regularly provided us with timely and comprehensive
information on Company planning and business operations as
well as on the strategic development and current state of the
Company. On the basis of reports submitted by the Managing
Board, we considered in detail business development and all de-
cisions and transactions of major significance to the Company.
Deviations from business plans were explained to us in detail and
intensively discussed. The Managing Board coordinated the Com-
pany's strategic orientation with us. The proposals made by the
Managing Board were approved by the Supervisory Board and/or
the relevant Supervisory Board committees after in-depth exam-
ination and consultation. In my capacity as Chairman of the Su-
pervisory Board, I was also in regular contact with the Managing
Board and, in particular, with the President and Chief Executive
Officer and was kept up-to-date on current developments in the
Company's business situation and on key business transactions.
TOPICS AT THE PLENARY MEETINGS
OF THE SUPERVISORY BOARD
We held a total of six regular plenary meetings and one extraor-
dinary Supervisory Board meeting in fiscal 2016. Topics of discus-
sion at our regular plenary meetings were revenue, profit and
employment development at Siemens AG, at the Company's op-
erating units and at the Siemens Group as well as the Company's
financial position and the results of its operations. We also con-
cerned ourselves as required with major investment and divest-
ment projects and with particular risks to the Company.
At our meeting on November 11, 2015, we discussed the Compa-
ny's key financial figures for fiscal 2015 and approved the budget
for 2016. On the basis of reported target achievement, we also
defined the compensation of the Managing Board members for
fiscal 2015. The appropriateness of this compensation was con-
firmed by an internal review. On the recommendation of the
Compensation Committee, we also approved the targets for Man-
aging Board compensation for fiscal 2016. The remuneration sys-
tem for the Managing Board members for fiscal 2016 is un-
changed vis-à-vis the remuneration system for fiscal 2015, which
the Annual Shareholders' Meeting approved by a majority of
more than 92% on January 27, 2015. At our meeting on Novem-
ber 11, 2015, the Managing Board also informed us about the
Company's business position, plans for the future setup of
Siemens' Process Industries and Drives Division, and the sale of
the Company's stake in Unify Holdings B.V. At this meeting, we
also approved a share buyback with a volume of up to €3 billion
extending through November 15, 2018 at the latest.
On December 2, 2015, we discussed the financial statements and
the Combined Management Report for Siemens AG and the
Siemens Group as of September 30, 2015, and the Annual Report
for 2015, including the Report of the Supervisory Board, the Cor-
porate Governance Report and the Compensation Report as well
as the agenda for the Annual Shareholders' Meeting on Janu-
ary 26, 2016. The Managing Board reported on the current status
of acquisitions and divestments – in particular, on the status of
the integration of the Dresser Rand Group Inc., which had been
acquired, and of the aeroderivative gas turbine and compressor
business acquired from Rolls-Royce plc as well as on the status of
the implementation of the Siemens "Vision 2020" strategy. We
also discussed the annual report of the Chief Compliance Officer.
At our meeting on January 25, 2016, the Managing Board re-
ported to us on the Company's business and financial position
following the conclusion of the first quarter. The Supervisory
Board approved the acquisition of the U.S.-based simulation soft-
ware company CD-adapco Ltd. The Managing Board also reported
on the further development of the organizational setup of the
Process Industries and Drives Division.
At our extraordinary meeting on February 9, 2016, we approved
the planned merger of Siemens' wind power business with the
publicly-listed Spanish company Gamesa Corporación Tecno-
lógica, S.A.
At our meeting on May 3, 2016, the Managing Board reported to
us on the Company's current business and financial position fol-
lowing the conclusion of the second quarter. We also discussed
the strategic orientation of the Digital Factory Division. In addi-
tion, the Managing Board reported in detail on the Company's
participation in the 2016 Hannover Messe. The Managing Board
also provided a report on the personnel strategy that the Com-
pany was pursuing in order to foster leadership development.
Following preparation by the Audit Committee, the Supervisory
Board concerned itself with the changed legal requirements re-
sulting from the European Union (EU) rules on statutory audits
and the German Audit Reform Act and, in this context, approved
an amendment to the Bylaws for the Audit Committee.
At our meeting on August 3, 2016, the Managing Board reported
to us on the Company's business and financial position follow-
ing the conclusion of the third quarter - in particular, on the
status of the planned merger of Siemens Wind Power with the
publicly-listed Spanish company Gamesa Corporación Tecno-
lógica, S.A. as well as on the status of the implementation of
Siemens "Vision 2020". We also dealt with the business model and
Additional Information
C.3 Report of the Supervisory Board
121
At our meeting on September 23, 2016, the Managing Board re-
ported to us on the state of the Company and on the business
position of the Energy Management, Power and Gas, and Power
Generation Services Divisions. As part of our regular review, we
adjusted - following preparation by the Compensation Commit-
tee - the amount of Managing Board compensation for fiscal 2017.
After the Supervisory Board and Prof. Dr. Siegfried Russwurm had
mutually agreed that his contract, which expires on March 31,
2017, would not be renewed, the Supervisory Board decided, as
recommended by the Chairman's Committee, not to extend
Prof. Dr. Siegfried Russwurm's Managing Board appointment,
which is in effect until March 31, 2017. Finally, we discussed the
efficiency review of our activities.
CORPORATE GOVERNANCE CODE
At our meeting on September 23, 2016, we approved an unqual-
ified Declaration of Conformity in accordance with Section 161 of
the German Stock Corporation Act (Aktiengesetz). Information
on corporate governance at Siemens is available in chapter
→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
been made permanently available to our shareholders on our
website. The current Declaration of Conformity is also available
in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
SECTION 289A OF THE GERMAN COMMERCIAL CODE.
WORK IN THE SUPERVISORY BOARD COMMITTEES
The Supervisory Board has established seven standing commit-
tees, which prepare proposals and issues to be dealt with at its
plenary meetings. Some of the Supervisory Board's decision-
making powers have also been delegated to these committees
within the permissible legal framework. The committee chairper-
sons report to the Supervisory Board on their committees' work
at the subsequent Board meetings. A list of the members and a
detailed explanation of the tasks of the individual Supervisory
Board committees are contained in chapter c.4.1 MANAGEMENT
AND CONTROL STRUCTURE.
The Chairman's Committee met five times. It also made five
decisions by written circulation. Between meetings, I discussed
topics of major importance with the members of the Chairman's
Committee. The Committee concerned itself, in particular, with
personnel topics and corporate governance issues as well as with
the assumption by Managing Board members of positions at
other companies and institutions.
The Nominating Committee met once. It concerned itself with
the long-term succession planning for the Supervisory Board and
prepared the Supervisory Board's proposal to the Annual Share-
holders' Meeting on January 26, 2016, regarding the early reelec-
tion of three shareholder representatives on the Supervisory
Board. The Nominating Committee based this decision on the
consideration that a high degree of continuity beyond the year
2018 and the regular election of Supervisory Board members
scheduled for that year would also have to be guaranteed in the
work of the Supervisory Board in order to ensure the successful
implementation of Siemens "Vision 2020".
The Compliance Committee met four times. It primarily dis-
cussed the quarterly reports and the annual report of the Chief
Compliance Officer.
The Mediation Committee did not have to meet.
The Compensation Committee met three times. It also made
one decision by written circulation. The Compensation Commit-
tee prepared, in particular, proposals for the full Supervisory
Board regarding the determination of targets for variable com-
pensation, the determination and review of the appropriateness
of Managing Board compensation and the approval of the Com-
pensation Report.
business situation of the Financial Services Division. In addition,
the Managing Board informed us in detail about regional busi-
ness developments in the U.S. At the same meeting, the Super-
visory Board also approved various Managing Board proposals
regarding financing measures. Finally, as part of a focus on tech-
nology, the Supervisory Board concerned itself with the next47
initiative, the establishment of a separate unit for startups, and
with the activities and recommendations of the Siemens Tech-
nology & Innovation Council.
-
120 Additional Information
Wirtschaftsprüferin
C.2 Independent Auditor's Report
To Siemens Aktiengesellschaft, Berlin and Munich
REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
We have audited the accompanying consolidated financial state-
ments of Siemens Aktiengesellschaft, Berlin and Munich, and its
subsidiaries, which comprise the consolidated statements of in-
come, comprehensive income, financial position, cash flow and
changes in equity, and notes to the consolidated financial state-
ments for the business year from October 1, 2015 to Septem-
ber 30, 2016.
Management's Responsibility for the
Consolidated Financial Statements
The management of Siemens Aktiengesellschaft is responsible
for the preparation of these consolidated financial statements.
This responsibility includes preparing these consolidated finan-
cial statements in accordance with International Financial Re-
porting Standards (IFRS) as adopted by the European Union (EU),
the supplementary requirements of German law pursuant to
Sec. 315a (1) HGB ["Handelsgesetzbuch": German Commercial
Code] and full IFRS as issued by the International Accounting
Standards Board (IASB), to give a true and fair view of the net
assets, financial position and results of operations of the group
in accordance with these requirements. The company's manage-
ment is also responsible for the internal controls that manage-
ment determines are necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit
in accordance with Sec. 317 HGB and German generally accepted
standards for the audit of financial statements promulgated by
the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW) as well as in supplementary compliance with
International Standards on Auditing (ISA). Accordingly, we are
required to comply with ethical requirements and plan and per-
form the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material mis-
statement.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consolidated
financial statements. The selection of audit procedures depends
on the auditor's professional judgment. This includes the assess-
ment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In assessing
those risks, the auditor considers the internal control system rel-
evant to the entity's preparation of the consolidated financial
statements that give a true and fair view. The aim of this is to plan
and perform audit procedures that are appropriate in the given
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the group's internal control system. An
audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presen-
tation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Audit Opinion
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the consolidated financial statements has not led to any reser-
vations.
[German Public Auditor]
In our opinion, based on the findings of our audit, the consoli-
dated financial statements comply in all material respects with
IFRS as adopted by the EU, the supplementary requirements of
German commercial law pursuant to Sec. 315a (1) HGB and full
IFRS as issued by the IASB and give a true and fair view of the net
assets and financial position of the Group as at September 30,
2016 as well as the results of operations for the business year
then ended, in accordance with these requirements.
119
REPORT ON THE GROUP MANAGEMENT REPORT
We have audited the accompanying group management report,
which is combined with the management report of Siemens
Aktiengesellschaft, for the business year from October 1, 2015 to
September 30, 2016. The management of the company is respon-
sible for the preparation of the group management report in
compliance with the applicable requirements of German commer-
cial law pursuant to Sec. 315a (1) HGB. We are required to conduct
our audit in accordance with Sec. 317 (2) HGB and German gener-
ally accepted standards for the audit of the group management
report promulgated by the IDW. Accordingly, we are required to
plan and perform the audit of the group management report to
obtain reasonable assurance about whether the group manage-
ment report is consistent with the consolidated financial state-
ments and the audit findings, and as a whole provides a suitable
view of the Group's position and suitably presents the opportuni-
ties and risks of future development.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
of the group management report has not led to any reservations.
In our opinion, based on the findings of our audit of the consol-
idated financial statements and group management report, the
group management report is consistent with the consolidated
financial statements, and as a whole provides a suitable view of
the Group's position and suitably presents the opportunities and
risks of future development.
Munich, November 28, 2016
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
дашия
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
Buiber
Breitsameter
Additional Information
March 31,
2017
The Innovation and Finance Committee met four times. The
focuses of its meetings included the Committee's recommenda-
tion regarding the budget for fiscal 2016, the discussion of the
Company's strategy and pension system as well as the prepara-
tion and approval of investment and divestment projects. The
Committee also concerned itself intensively with the Company's
innovation and technology focuses. For example, at the Commit-
tee's meeting on December 1, 2015, the Managing Board re-
ported as part of a technology focus - on Germany's Energy
Transition 2.0. At this meeting, the Committee also received a
report on the organization of and business situation at the Wind
Power and Renewables Division. At the Committee's meeting on
May 2, 2016, the Managing Board reported in detail on the Com-
pany's participation in the 2016 Hannover Messe. Finally, at its
meeting on August 2, 2016, the Innovation and Finance Commit-
tee discussed the technology focus "decentralized energy sys-
tems" and the next47 initiative, the establishment of a separately
managed unit for startups.
122 Additional Information
Chief Executive Officer
Date of birth
June 23,
1957
First
appointed
May 1,
2006
Term expires
July 31,
2018
Roland Busch,
November 22, April 1,
Dr. rer. nat.
1964
2011
March 31,
2021
President and
Lisa Davis
August 1,
2014
July 31,
2019
Klaus Helmrich
May 24,
1958
April 1,
2011
March 31,
2021
Janina Kugel
January 12,
1970
February 1,
2015
January 31,
2020
Siegfried Russwurm,
Prof. Dr.-Ing.
June 27,
1963
October 15,
1963
The Audit Committee met six times. In the presence of the inde-
pendent auditors as well as the President and Chief Executive
Officer and the Chief Financial Officer, the Committee dealt with
the financial statements and the Combined Management Report
Joe Kaeser
In fiscal 2016, the Managing Board comprised the following
members:
for Siemens AG and the Siemens Group. The Audit Committee
discussed the Half-year Financial Report and the quarterly state-
ments with the Managing Board and the independent auditors.
In the presence of the independent auditors, it also discussed the
report on the auditors' review of the Company's Half-year Con-
solidated Financial Statements and of its Interim Group Manage-
ment Report. The Committee recommended that the Supervisory
Board propose to the Annual Shareholders' Meeting the election
of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as the
independent auditors. The Committee appointed the indepen-
dent auditors for fiscal 2016, defined the audit focal points and
determined the auditors' fee. The Committee monitored the se-
lection, independence, qualification, rotation and efficiency of
the independent auditors. Furthermore, the Audit Committee
dealt with the Company's accounting process, risk management
system and the effectiveness, resources and findings of the inter-
nal audit as well as with reports concerning potential and pend-
ing legal disputes.
DETAILED DISCUSSION OF THE AUDIT
OF THE FINANCIAL STATEMENTS
The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft, audited the Annual Financial Statements of
Siemens AG, the Consolidated Financial Statements of the
Siemens Group and the Combined Management Report for
Siemens AG and the Siemens Group for fiscal 2016 and issued an
unqualified opinion. Ernst & Young GmbH Wirtschaftsprüfungs-
gesellschaft, of Stuttgart, Germany, has served as independent
auditors of Siemens AG and the Siemens Group since fiscal 2009.
Katharina Breitsameter has signed as auditor since fiscal 2016, and
Thomas Spannagl has signed as auditor responsible for the audit
since fiscal 2014. The Annual Financial Statements of Siemens AG
and the Combined Management Report for Siemens AG and the
Siemens Group were prepared in accordance with the require-
ments of German law. The Consolidated Financial Statements of
the Siemens Group were prepared in accordance with the Inter-
national Financial Reporting Standards (IFRS) as adopted by the
EU and with the additional requirements of German law set out
in Section 315a (1) of the German Commercial Code (Handels-
gesetzbuch). The Consolidated Financial Statements of the
Siemens Group also comply with the IFRS as issued by the Inter-
national Accounting Standards Board (IASB). The independent
auditors conducted their audit in accordance with Section 317 of
the German Commercial Code and German generally accepted
standards for the audit of financial statements promulgated by
the Institut der Wirtschaftsprüfer (IDW) as well as in supplemen-
tary compliance with the International Standards on Auditing
(ISA). The abovementioned documents as well as the Managing
Board's proposal for the appropriation of net income were sub-
mitted to us by the Managing Board in advance. The Audit Com-
mittee discussed the dividend proposal in detail at its meeting on
November 8, 2016. It discussed the Annual Financial Statements
of Siemens AG, the Consolidated Financial Statements of the
Siemens Group and the Combined Management Report in detail
at its meeting on November 29, 2016. The audit reports prepared
by the independent auditors were distributed to all members of
the Supervisory Board and comprehensively reviewed at the
Supervisory Board's meeting on November 30, 2016, in the pres-
ence of the independent auditors, who reported on the scope,
focal points and main findings of their audit. No major weak-
nesses in the Company's internal control or risk management
systems were reported. At this meeting, the Managing Board ex-
plained the financial statements of Siemens AG and the Siemens
Group as well as the Company's risk management system.
The Supervisory Board concurs with the results of the audit.
Following the definitive findings of the Audit Committee's exam-
ination and our own examination, we have no objections. The
Managing Board prepared the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements of the
Siemens Group. We approved the Annual Financial Statements
and the Consolidated Financial Statements. In view of our ap-
proval, the Annual Financial Statements of Siemens AG are ad-
opted as submitted. We endorsed the Managing Board's proposal
that the net income available for distribution be used to pay out
a dividend of €3.60 per share entitled to a dividend and that the
amount of net income attributable to shares of stock not entitled
to receive a dividend for fiscal 2016 be carried forward.
CHANGES IN THE COMPOSITION OF THE
SUPERVISORY AND MANAGING BOARDS
The Annual Shareholders' Meeting on January 26, 2016, approved
the early reelection of Dr. Nicola Leibinger-Kammüller, Jim Hage-
mann Snabe and Werner Wenning for additional five-year terms
as shareholder representatives on the Supervisory Board. There
were no changes in the Managing Board in fiscal 2016.
On behalf of the Supervisory Board, I would like to thank the
members of the Managing Board as well as the employees and
employee representatives of Siemens AG and all Group compa-
nies for their outstanding commitment and constructive cooper-
ation in fiscal 2016.
For the Supervisory Board
Gerhard Comme
Dr. Gerhard Cromme
Chairman
Additional Information
123
Name
C.4 Corporate Governance
and control structure
Siemens AG is subject to German corporate law. Therefore, it has
a two-tier board structure, consisting of a Managing Board and a
Supervisory Board.
Executive Managing Board Member
of IG Metall
As the Company's top management body, the Managing Board is
committed to serving the interests of the Company and achieving
sustainable growth in company value. The members of the Man-
aging Board are jointly responsible for the entire management of
the Company and decide on the basic issues of business policy
and corporate strategy as well as on the Company's annual and
multi-year plans.
The Managing Board prepares the Company's Quarterly State-
ments and Half-year Financial Report, the Annual Financial State-
ments of Siemens AG, the Consolidated Financial Statements
and the Combined Management Report of Siemens AG and the
Siemens Group. In addition, the Managing Board must ensure
that the Company adheres to statutory requirements, official reg-
ulations and internal Company policies (compliance) and works
to achieve compliance with these provisions and policies within
the Siemens Group. The Managing Board and the Supervisory
Board cooperate closely for the benefit of the Company. The
Managing Board informs the Supervisory Board regularly, com-
prehensively and without delay on all issues of importance to the
Company with regard to strategy, planning, business develop-
ment, financial position, earnings, compliance and risks. When
filling managerial positions at the Company, the Managing Board
takes diversity into consideration and, in particular, aims for an
appropriate consideration of women and internationality. The
Managing Board has defined targets for the proportion of women
at the two management levels below the Managing Board.
Currently, there is one Managing Board committee, the Equity
and Employee Stock Committee. This committee oversees, in par-
ticular, the utilization of authorized capital in connection with
the issuance of employee stock and the implementation of cer-
tain capital measures. It also determines the scope and condi-
tions of the share-based compensation components and/or pro-
grams for employees and managers (with the exception of the
Managing Board).
In fiscal 2016, the committee comprised Joe Kaeser (Chairman),
Janina Kugel and Dr. Ralf P. Thomas.
Information on the compensation paid to the members of the
Managing Board is provided in chapter → A.10 COMPENSATION
REPORT.
124 Additional Information
Members of the Managing Board and positions
held by Managing Board members
C.4.1 Management
Date of birth
May 29,
1956
Member since
> Siemens Healthcare GmbH, Munich
> Messer Group GmbH, Sulzbach
German positions:
1 Shareholders' Committee.
April 1,
2009
March 3,
1964
General Counsel, Managing Board
of IG Metall
Sibylle Wankel*
October 1,
2013
October 27,
1965
Supervisory Board Member
September 13, March 1,
1957
2014
1971
Chairman of the Committee
of Spokespersons of the Siemens
Group; Chairman of the Central
Committee of Spokespersons
of Siemens AG
Chairwoman and Managing Director
of Hacı Ömer Sabancı Holding A.Ş.
Managing Director and Spokesperson July 14,
of Siemens Stiftung
January 27,
2015
January 23,
2013
German positions:
> SAP SE, Walldorf
Positions outside Germany:
> A.P. Møller-Mærsk A/S, Denmark
June 24,
1956
128 Additional Information
The Chairman's Committee makes proposals, in particular,
regarding the appointment and dismissal of Managing Board
members and handles contracts with members of the Managing
Board. When making recommendations for first-time appoint-
ments, it takes into account that the terms of these appoint-
ments shall not, as a rule, exceed three years. In preparing rec-
ommendations on the appointment of Managing Board members,
the Chairman's Committee takes into account the candidates'
professional qualifications, international experience and leader-
ship qualities, the age limit specified for Managing Board mem-
bers, the Managing Board's long-range plans for succession as
well as its diversity. It also takes into account the targets for the
proportion of women on the Managing Board specified by the
Supervisory Board. The Chairman's Committee concerns itself
with questions regarding the Company's corporate governance
and prepares the resolutions to be approved by the Supervisory
Board regarding the Declaration of Conformity with the Code -
The Supervisory Board has seven committees, whose duties, re-
sponsibilities and procedures fulfill the requirements of the Ger-
man Stock Corporation Act (Aktiengesetz) and the Code. The
chairmen of these committees provide the Supervisory Board
with regular reports on their committees' activities.
Supervisory Board Committees
-
These objectives for the Supervisory Board's composition have
been fully achieved: a considerable number of Supervisory Board
members are currently engaged in international activities and/or
have many years of international experience. Since the Super-
visory Board election in 2015, the Supervisory Board has had six
female members. Dr. Nicola Leibinger-Kammüller is a member of
the Nominating Committee. The Supervisory Board has an ade-
quate number of independent members. In the opinion of the
Supervisory Board, a minimum of 16 Supervisory Board members
are independent in the meaning of Section 5.4.2 of the Code.
Some Supervisory Board members hold – or have held in the past
fiscal year high-ranking positions at other companies with
which Siemens does business. Transactions between Siemens
and such companies are carried out on an arm's-length basis. We
believe that these transactions do not compromise the indepen-
dence of the Supervisory Board members in question. The regu-
lations establishing limits on age and limiting membership in the
Supervisory Board to three full terms of office (15 years) are com-
plied with.
> The limits on age and length of membership established in the
Bylaws for the Supervisory Board will be taken into consider-
ation. In addition, no more than two former members of the
Managing Board of Siemens AG shall belong to the Super-
visory Board.
August 14,
1955
be able to devote the necessary regularity and diligence to
their mandate.
> In its election proposals, the Supervisory Board shall also pay
particular close attention to ensuring diversity. In accordance
with the German Law for Equal Participation of Women and
Men in Management Positions in the Private and Public Sec-
tors, the Supervisory Board is composed of at least 30 percent
women and at least 30 percent men. The Nominating Commit-
tee shall continue to include at least one female member.
Qualified women shall be included during the initial process
of selecting potential candidates for new elections or for the
filling of Supervisory Board positions that have become va-
cant, and they shall be given appropriate consideration in
nominations.
> The composition of the Supervisory Board of Siemens AG shall
be such that qualified control and advice for the Managing
Board is ensured. The candidates proposed for election to the
Supervisory Board shall have the expertise, skills and profes-
sional experience necessary to carry out the functions of a
Supervisory Board member in a multinational company and
safeguard the reputation of Siemens in public. In particular,
care shall be taken in regard to the personality, integrity, com-
mitment, professionalism and independence of the individuals
proposed for election. The goal is to ensure that, in the Super-
visory Board, as a group, all know-how and experience is avail-
able that is considered essential in view of Siemens' activities.
➤ Taking the Company's international orientation into account,
care shall also be taken to ensure that the Supervisory Board
has an adequate number of members with extensive inter-
national experience. Our goal is to make sure that the present
considerable share of Supervisory Board members with exten-
sive international experience is maintained.
Objectives of the Supervisory Board's composition
The composition of the Supervisory Board is to be such that its
members as a group have the knowledge, skills and professional
experience necessary to perform its duties properly. In fiscal
2015, the Supervisory Board - taking into account the recom-
mendations of the German Corporate Governance Code (Code)
– approved the following concrete objectives for its composition:
127
Additional Information
> Daimler AG, Stuttgart
German positions:
Bang & Olufsen A/S, Denmark
(Deputy Chairman)
> An adequate number of independent members shall belong to
the Supervisory Board. Material and not only temporary con-
flicts of interest, such as organizational functions or advisory
capacities with major competitors of the Company, shall be
avoided. Under the presumption that the mere exercise of
Supervisory Board duties as an employee representative gives
no cause to doubt the compliance with the independence cri-
teria pursuant to Section 5.4.2 of the Code, the Supervisory
Board shall have a minimum of sixteen members who are in-
dependent in the meaning of the Code. In any case, the Super-
visory Board shall be composed in such a way that a number
of at least six independent shareholder representatives in the
meaning of Section 5.4.2 of the Code is achieved. In addition,
the Supervisory Board members shall have sufficient time to
Jim Hagemann Snabe
> Allianz SE, Munich
Nathalie von Siemens,
Dr. phil.
Nicola Leibinger-
Kammüller, Dr. phil.
January 25,
2012
1969
January 22,
January 24,
2008
March 16,
1960
March 13,
1971
January 27,
2009
Gérard Mestrallet
March 10,
1952
March 14,
1959
> Siemens Healthcare GmbH, Munich
(Deputy Chairman)
> Pfleiderer GmbH, Neumarkt
German positions:
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2016)
Michael Sigmund*
January 27,
2015
April 1,
2007
Norbert Reithofer, Dr.-Ing.
Dr.-Ing. E.h.
January 23,
2013
> Axel Springer SE, Berlin
> Henkel AG & Co. KGaA, Düsseldorf¹
President and Chairwoman of the
Managing Board of TRUMPF GmbH
+ Co. KG
Aktiengesellschaft, Munich (Chairman)
Bayerische Motoren Werke
> ENGIE S.A., France (Chairman)
> Société Générale S.A., France
> Suez S.A., France (Chairman)
German positions:
> Voith GmbH, Heidenheim
Positions outside Germany:
German positions:
> Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
Güler Sabancı
> Airbus Operations GmbH, Hamburg
> MAN SE, Munich (Deputy Chairman)
January 27,
2015
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
January 23,
2013
April 1,
1949
Chairman of the Board of Directors
of ENGIE S.A.
2008
December 15, January 24,
1959
German positions:
29
29
100%
Gerhard Cromme, Dr. iur.
(Chairman)
20
100%
20
(Second Deputy Chairman)
30
Birgit Steinborn
Presence
Participation
and Committee meetings
Supervisory Board
Werner Wenning
(First Deputy Chairwoman)
100%
30
Olaf Bolduan
Hans-Jürgen Hartung
6
Supervisory Board Members
7
100%
17
17
Bettina Haller
100%
7
7
Reinhard Hahn
100%
18
18
Hans Michael Gaul, Dr. iur.
90%
9
10
Michael Diekmann
86%
7
Disclosure of participation by individual Super-
visory Board members in meetings of the Super-
visory Board of Siemens AG and its Committees
in fiscal 2016
DIGITALIZATION
and resolutions regarding questions relating to the Company's
financial situation and structure - including annual planning
(budget) - as well as the Company's fixed asset investments and
its financial measures. In addition, the Innovation and Finance
Committee has been authorized by the Supervisory Board to
decide on the approval of transactions and measures that require
Supervisory Board approval and have a value of less than
€600 million.
WWW.SIEMENS.
Additional Information
133
Address
Internet
Siemens AG
Wittelsbacherplatz 2
80333 Munich
Germany
WWW.SIEMENS.COM
Phone
Fax
E-mail
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
+49 89 636-1332474 (Investor Relations)
press@siemens.com
investorrelations@siemens.com
© 2016 by Siemens AG, Berlin and Munich
7
ELECTRIFICATION
AUTOMATION
COM/INVESTOR/EN/
In fiscal 2016, the Innovation and Finance Committee comprised
Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
Steinborn and Werner Wenning.
The "Sustainability Information 2016” which reports on Sustain-
ability and Citizenship at Siemens is available at:
This document is an English language translation of the German
document. In case of discrepancies, the German language docu-
ment is the sole authoritative and universally valid version.
―
129
Additional Information
The Innovation and Finance Committee discusses, in particular,
based on the Company's overall strategy, the Company's focuses
of innovation and prepares the Supervisory Board's discussions
In fiscal 2016, the Mediation Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
The Mediation Committee submits proposals to the Supervisory
Board in the event that the Supervisory Board cannot reach the
two-thirds majority required for the appointment or dismissal of
a Managing Board member.
In fiscal 2016, the Nominating Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Leibinger-
Kammüller and Werner Wenning.
The Nominating Committee is responsible for making recom-
mendations to the Supervisory Board on suitable candidates for
election as shareholder representatives on the Supervisory Board
by the Annual Shareholders' Meeting. In preparing these recom-
mendations, the objectives specified by the Supervisory Board
regarding its composition - including, in particular, indepen-
dence and diversity – are to be taken into account as well as the
required knowledge, abilities and professional experience of the
proposed candidates. Attention shall also be paid to an appropri-
ate participation of women and men in accordance with the legal
requirements relating to the gender quota.
In fiscal 2016, the Compliance Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Harald
Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
Birgit Steinborn and Sibylle Wankel.
The Compliance Committee concerns itself, in particular, with
monitoring the Company's adherence to statutory provisions,
official regulations and internal Company policies.
In fiscal 2016, the Audit Committee comprised Dr. Hans Michael
Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
Hagemann Snabe and Birgit Steinborn. Pursuant to the German
Stock Corporation Act, the Audit Committee must include at least
one Supervisory Board member with knowledge and experience
in the areas of accounting or the auditing of financial statements.
Pursuant to the Code, the chairman or chairwoman of the Audit
Committee shall have specialist knowledge and experience in the
application of accounting principles and internal control pro-
cesses, shall be independent and may not be a former Managing
Board member whose appointment ended less than two years
ago. The Chairman of the Audit Committee, Dr. Hans Michael
Gaul, fulfills these requirements.
The Audit Committee oversees, in particular, the accounting
process and conducts a preliminary review of the Annual Finan-
cial Statements of Siemens AG, the Consolidated Financial State-
ments and the Combined Management Report of Siemens AG
and the Siemens Group. On the basis of the independent audi-
tors' report on their audit of the annual financial statements, the
Audit Committee makes, after its preliminary review, recom-
mendations regarding Supervisory Board approval of the Annual
Financial Statements of Siemens AG and the Consolidated Finan-
cial Statements. The Audit Committee discusses the Quarterly
Statements and Half-year Financial Report with the Managing
Board and independent auditors and deals with the auditors' re-
port on the review of the Half-year Consolidated Financial State-
ments and Interim Group Management Report. It concerns itself
with the Company's risk monitoring system and oversees the
effectiveness of the internal control, risk management and the
internal audit systems. The Audit Committee receives regular re-
ports from the Internal Audit Department. It prepares the Super-
visory Board's recommendation to the Annual Shareholders'
Meeting concerning the election of the independent auditors and
submits the corresponding proposal to the Supervisory Board. It
awards the audit contract to the independent auditors elected by
the Annual Shareholders' Meeting and monitors the independent
audit of the financial statements as well as the auditors' selec-
tion, independence, qualification, rotation and efficiency.
In fiscal 2016, the Compensation Committee comprised Werner
Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
The Compensation Committee prepares, in particular, the pro-
posals for decisions by the Supervisory Board's plenary meetings
regarding the system of Managing Board compensation, includ-
ing the implementation of this system in Managing Board con-
tracts, the definition of the targets for variable Managing Board
compensation, the determination and review of the appropriate-
ness of the total compensation of individual Managing Board
members and the approval of the annual Compensation Report.
In fiscal 2016, the Chairman's Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
including the explanation of deviations from the Code and
regarding the approval of the Corporate Governance Report as
well as the Report of the Supervisory Board to the Annual Share-
holders' Meeting. Furthermore, the Chairman's Committee sub-
mits recommendations to the Supervisory Board regarding the
composition of the Supervisory Board committees and decides
whether to approve contracts and business transactions with
Managing Board members and parties related to them.
-
This document includes - in the applicable financial reporting
framework not clearly defined – supplemental financial mea-
sures that are or may be alternative performance measures
(non-GAAP-measures). These supplemental financial measures
should not be viewed in isolation or as alternatives to measures
of Siemens' net assets and financial positions or results of opera-
tions as presented in accordance with the applicable financial
reporting framework in its Consolidated Financial Statements.
Other companies that report or describe similarly titled alterna-
tive performance measures may calculate them differently.
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
For technical reasons, there may be differences between the
accounting records appearing in this document and those pub-
lished pursuant to legal requirements.
100%
Sibylle Wankel
20
Siemens AG fully complies and will continue to comply with
the recommendations of the German Corporate Governance
Code ("Code") in the version of May 5, 2015, published by the
Federal Ministry of Justice in the official section of the Fed-
eral Gazette ("Bundesanzeiger").
"Declaration of Conformity by the Managing Board and the
Supervisory Board of Siemens Aktiengesellschaft with the
German Corporate Governance Code
THE GERMAN CORPORATE GOVERNANCE CODE
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of Octo-
ber 1, 2016:
C.4.2.1 DECLARATION OF CONFORMITY WITH
131
Additional Information
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code (Handelsgesetzbuch) is an inte-
gral part of the Combined Management Report. In accordance
with Section 317 para. 2 sentence 3 of the German Commercial
Code, the disclosures made within the scope of Section 289a
of the German Commercial Code are not subject to the audit by
the auditors.
C.4.2 Corporate Governance
statement pursuant to Section 289a
of the German Commercial Code
Since making its last Declaration of Conformity dated Octo-
ber 1, 2015, Siemens AG has complied with the recommenda-
tions of the Code.
C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
AND INVESTOR RELATIONS
Shareholders exercise their rights in the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of unappropriated net income, the ratification
of the acts of the Managing and Supervisory Boards, and the
appointment of the independent auditors. Amendments to the
Articles of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders' Meeting
and are implemented by the Managing Board. The Managing
Board facilitates shareholder participation in this meeting
through electronic communications – in particular, via the Inter-
net and enables shareholders who are unable to attend the
Our Articles of Association, the Bylaws for the Supervisory Board,
the Bylaws for the most important Supervisory Board commit-
tees, the Bylaws for the Managing Board, all our Declarations
of Conformity with the Code and a variety of other corporate-
governance-related documents are posted on our website at:
WWW.SIEMENS.COM/INVESTORS
As part of our investor relations activities, we inform our inves-
tors comprehensively about developments within the Company.
For communication purposes, Siemens makes extensive use of
the Internet. We publish quarterly statements, half-year financial
and annual reports, earnings releases, ad hoc announcements,
analyst presentations, letters to shareholders and press releases
as well as the financial calendar for the current year, which con-
tains the publication dates of significant financial communica-
tions and the date of the Annual Shareholders' Meeting, at:
meeting to vote by proxy. Furthermore, shareholders may exer-
cise their right to vote in writing or by means of electronic com-
munications (absentee voting). The Managing Board may enable
shareholders to participate in the Annual Shareholders' Meeting
without the need to be present at the venue and without a proxy
and to exercise some or all of their rights fully or partially by
means of electronic communications. Shareholders may submit
proposals regarding the proposals of the Managing and Super-
visory Boards and may contest decisions of the Annual Share-
holders' Meeting. Shareholders owning Siemens stock with an
aggregate notional value of €100,000 or more may also demand
the judicial appointment of special auditors to examine specific
issues. The reports, documents and information required by law,
including the Annual Report, may be downloaded from our web-
site. The same applies to the agenda for the Annual Shareholders'
Meeting and to any counterproposals or shareholders' nomina-
tions that require disclosure.
WWW.SIEMENS.COM/DIRECTORS-DEALINGS
Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
pean Parliament and Council on market abuse (Market Abuse
Regulation), members of the Managing Board and the Super-
visory Board are legally required to disclose all transactions con-
ducted on their own account relating to the shares or debt instru-
ments of Siemens AG or to derivatives or financial instruments
linked thereto if the total value of such transactions entered into
by a board member or any closely associated person reaches or
exceeds €5,000 in any calendar year. All transactions reported to
Siemens AG in accordance with this requirement have been duly
published and are available on the Company's website at:
-
As of the same date, the Supervisory Board's current members
held Siemens shares representing less than 0.01% of the capital
stock of Siemens AG, which totaled 850,000,000 shares. These
figures do not include the 10,878,800 shares (as of Septem-
ber 30, 2016) or 1.28% of the capital stock of Siemens AG, which
totaled 850,000,000 shares, over which the von Siemens-
Vermögensverwaltung GmbH (vSV) has voting control under
powers of attorney based on an agreement between among
others - members of the Siemens family, including Dr. Natalie
von Siemens, and VSV. These shares are voted together by vSV,
taking into account the proposals of a family partnership estab-
lished by the family's members or of one of its governing bodies.
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
Berlin and Munich, October 1, 2016
Siemens Aktiengesellschaft
The Managing Board The Supervisory Board"
-
This document contains statements related to our future business
and financial performance and future events or developments
involving Siemens that may constitute forward-looking state-
ments. These statements may be identified by words such as
"expect," "look forward to," "anticipate," "intend," "plan," "believe,"
"seek," "estimate," "will," "project" or words of similar meaning.
We may also make forward-looking statements in other reports,
in presentations, in material delivered to shareholders and in
press releases. In addition, our representatives may from time to
time make oral forward-looking statements. Such statements are
based on the current expectations and certain assumptions of
Siemens' management, of which many are beyond Siemens' con-
trol. These are subject to a number of risks, uncertainties and
factors, including, but not limited to those described in disclo-
sures, in particular in the chapter Risks in this Annual Report.
Should one or more of these risks or uncertainties materialize,
or should underlying expectations not occur or assumptions
prove incorrect, actual results, performance or achievements of
Siemens may (negatively or positively) vary materially from those
described explicitly or implicitly in the relevant forward-looking
statement. Siemens neither intends, nor assumes any obligation,
to update or revise these forward-looking statements in light of
developments which differ from those anticipated.
C.5 Notes and forward-looking statements
Additional Information
132
The composition of the Supervisory Board fulfilled the legal re-
quirements regarding the minimum gender quota in the report-
ing period.
At Siemens AG, the target for the share of women on the Manag-
ing Board has been set at a minimum of 2/7 and the correspond-
ing target for each of the two management levels immediately
below the Managing Board has been set at 10%, applicable in
each case until June 30, 2017.
C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
ON THE MANAGING BOARD AND AT THE TWO
MANAGEMENT LEVELS IMMEDIATELY BELOW
THE MANAGING BOARD; INFORMATION ON SUPER-
VISORY BOARD COMPLIANCE WITH MINIMUM
GENDER QUOTA REQUIREMENTS
This information and these documents, including the Code and
the Business Conduct Guidelines, are available at: www.
SIEMENS.COM/289A
A general description of the functions and operation of the Man-
aging Board and the Supervisory Board can be found in chapter
C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
be derived from the bylaws for the corporate bodies concerned.
C.4.2.3 OPERATION OF THE MANAGING BOARD
AND THE SUPERVISORY BOARD, AND COMPOSITION
AND OPERATION OF THEIR COMMITTEES
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to maintain our successful ac-
tivities. They contain the basic principles and rules for our con-
duct within our Company and in relation to our external partners
and the general public. They set out how we meet our ethical and
legal responsibility as a Company and give expression to our cor-
porate values of being "Responsible" - "Excellent" - "Innovative".
In the 169 years of its existence, our Company has built an excel-
lent reputation around the world. Technical performance, inno-
vation, quality, reliability, and international engagement have
made Siemens one of the leading companies in electronics and
electrical engineering. It is top performance with the highest eth-
ics that has made Siemens strong. This is what the Company
should continue to stand for in the future.
Our Company's values and Business Conduct
Guidelines
Further corporate governance practices applied beyond legal
requirements are contained in our Business Conduct Guidelines.
Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
over offer, a management board should convene an extraordi-
nary general meeting at which shareholders discuss the takeover
offer and may decide on corporate actions. The convening of a
shareholders' meeting – even taking into account the shortened
time limits stipulated in the German Securities Acquisition and
Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
organizational challenge for large publicly listed companies. It
appears doubtful whether the associated effort is justified in
cases where no relevant decisions by the shareholders' meeting
are intended. Therefore, extraordinary shareholders' meetings
shall be convened only in appropriate cases.
Siemens voluntarily complies with the Code's non-binding sug-
gestions, with the following exception:
Suggestions of the Code
C.4.2.2 INFORMATION ON CORPORATE
GOVERNANCE PRACTICES
As of September 30, 2016, the Managing Board's current mem-
bers held a total of 205,009 Siemens shares, representing 0.02%
of the capital stock of Siemens AG, which totaled 850,000,000
shares.
C.4.1.3 SHARE OWNERSHIP AND SHARE TRANS-
ACTIONS BY MEMBERS OF THE MANAGING AND
SUPERVISORY BOARDS
Additional Information
130
Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
71%
5
7
Gérard Mestrallet
100%
18
18
Nicola Leibinger-Kammüller, Dr. phil.
88%
22
25
Jürgen Kerner
100%
15
15
Harald Kern
100%
20
11
Robert Kensbock
10
Güler Sabancı
100%
11
11
100%
21
21
Jim Hagemann Snabe
100%
7
7
Michael Sigmund
siemens.com
100%
7
7
Nathalie von Siemens, Dr. phil.
100%
7
7
91%
Order no. CGXX-C10020-00-7600
609
Revenue
Combined Management Report
Revenue and orders benefited from portfolio effects. Dresser-
Rand and the Rolls-Royce Energy aero-derivative gas turbine and
compressor business, which were both acquired in fiscal 2015,
contributed nine and 12 percentage points to fiscal 2016 order
and revenue growth, respectively. Orders increased year-over-
year, due mainly to a higher volume from large orders in the
solutions business, including in particular large orders for power
plants, including service, from Egypt totaling €4.7 billion. The
regional picture was mixed; order intake increased substantially
in the reporting regions Europe, C.I.S., Africa, Middle East and
the Americas and declined clearly in Asia, Australia. Revenue was
also up, due mainly to growth in the solutions and large gas tur-
bine businesses. On a regional basis, strong order execution led
to substantial revenue growth in Europe, C.I.S., Africa, Middle
East, particularly including in Egypt. Revenue also increased in
the other two reporting regions. Profit was substantially higher
year-over-year and included a continuing strong contribution
from the service business. In fiscal 2016, profit benefited from
positive effects totaling €118 million from the measurement of
inventories. Both years included positive and negative effects
related to large projects. In total, the effect in fiscal 2016 was
positive, including €130 million from revised estimates related to
resumption of long-term construction and service contracts in
Iran following the ending or easing of EU and U.S. sanctions. In
contrast, it was negative in fiscal 2015, including charges of
€106 million related to a project which incurred higher costs for
materials and from customer delays. Costs for the integration of
Dresser-Rand were €59 million in fiscal 2016 compared to
€19 million in fiscal 2015. Finally, severance charges were sharply
lower in fiscal 2016, at €69 million compared to €192 million in
fiscal 2015. The Division continues to face challenges in an ag-
gressively competitive market for large gas turbines arising from
overcapacities across the industry, which results in increased
price pressure.
A.3.2.2 WIND POWER AND RENEWABLES
(in millions of €)
2016
Fiscal year
2015
Orders
7,973
6,136
The tax rate of 27% was positively influenced by successful ap-
peals of tax decisions for prior years. In fiscal 2015, the tax rate
was lower, due mainly to the disposition of the stake in BSH
which was mostly tax-free. As a result, Income from continuing
operations increased 1%.
10
5,976
Profit
464
160
Actual
30%
6%
190%
Profit margin
7.8%
2.8%
% Change
Comp.
35%
9%
number of orders for large offshore wind-farms in the U.K., in-
cluding service. Order intake in the Americas and Asia, Australia
showed a double-digit decline year-over-year. Revenue was up
clearly due to strong conversion from the backlog, which resulted
in increases in all of the Division's businesses. On a regional basis,
substantial increases in Europe, C.I.S., Africa, Middle East and
Asia, Australia more than offset a substantial decline in the Amer-
icas. Strong profitability in fiscal 2016 included a more favorable
revenue mix including a higher share from the offshore and ser-
vice businesses, lower production and installation costs, and pos-
itive effects from project execution and completion. In fiscal 2015,
profit was held back by expenses from ramping up commercial-
scale production of certain turbine offerings.
A.3.2.3 ENERGY MANAGEMENT
5,660
(in millions of €)
Orders
10
11.4%
A.3.2 Segment information analysis
A.3.2.1 POWER AND GAS
(in millions of €)
Orders
2016
Fiscal year
2015
% Change
Actual
Comp.
19,454
15,742
10.5%
24%
Revenue
16,471
13,418
23%
12%
Profit
1,872
1,415
32%
Profit margin
16%
2016
Fiscal year
2015
% Change
Comp.
(in millions of €)
2016
2015
Actual
Comp.
Orders
6,435
6,099
6%
Actual
6%
10,332
10,036
3%
3%
Revenue
6,156
5,999
3%
3%
Revenue
Orders
2015
2016
(in millions of €)
Actual
Comp.
12,963
12,956
0%
2%
11,940
Profit margin
895
7.5%
11,922
570
4.8%
0%
57%
2%
Revenue
Profit
Order intake was flat year-over-year, burdened by negative cur-
rency translation effects, as a decline in the solutions business
was offset by growth in the Division's other businesses. On a re-
gional basis, a substantial increase in Asia, Australia and slight
growth in Europe, C.I.S., Africa, Middle East were offset by a sig-
nificant decline in the Americas. Revenue was also burdened by
negative currency translation effects. A decline in the medium
voltage and system business was offset by growth in the Divi-
sion's other businesses, in particular in the solutions, high volt-
age products and transformer businesses. On a regional basis,
moderate growth in the Americas was offset by a moderate de-
cline in Europe, C.I.S., Africa, Middle East, while revenue in Asia,
Australia was flat year-over-year. Stronger profitability in a major-
ity of the Division's businesses compared to the prior-year in-
cluded significant improvements in the high voltage products
business and in the solutions business due to stringent project
execution. The prior year included a higher proportion of projects
with low margins. Severance charges were €71 million and
€88 million in fiscal 2016 and fiscal 2015, respectively.
Order intake reached a new high for a fiscal year, due mainly to
a higher volume from large orders, particularly in the offshore
business, which for Siemens means primarily in Europe. As a
result, orders more than doubled in the Europe, C.I.S., Africa,
Middle East reporting region and included, among others, a
Combined Management Report 11
A.3.2.4 BUILDING TECHNOLOGIES
A.3.2.6 DIGITAL FACTORY
Fiscal year
% Change
Fiscal year
% Change
Reported revenue related to external customers went up moder-
ately year-over-year and increased in most industrial businesses.
Key growth drivers in Europe, C.I.S., Africa, Middle East in-
cluded Power and Gas, Wind Power and Renewables and Mobility
due to strong conversion from their respective order backlogs.
These increases were partly offset by declines in Energy Manage-
ment and in Process Industries and Drives. In Germany, revenues
decreased moderately, primarily due to Wind Power and Renew-
ables. In the Americas, revenue came in higher year-over-year,
driven primarily by increases in Power and Gas, in Healthineers
and in Mobility. Wind Power and Renewables reported a substan-
tial decline. The pattern in the U. S. was nearly the same as for
the region. Revenue in Asia, Australia came in near the prior-
year level, as declines in Mobility and Process Industries and
Drives offset growth in all other industrial businesses. In China,
only Power and Gas, Healthineers and Building Technologies were
able to increase revenue for the fiscal year.
1 As defined by the International Monetary Fund.
Despite further softening in the macroeconomic environment
in fiscal 2016, reported orders related to external customers in-
creased moderately year-over-year. Within the regions, order de-
velopment depended strongly on the timing and location of large
contract wins in the Divisions that typically take in such orders.
In the Europe, C.I.S., Africa, Middle East region, orders in-
creased clearly, as substantial growth in Wind Power and Renew-
ables and in Power and Gas more than offset a substantial decline
in Mobility. All three results were due to changes in the volume
from large orders. Orders came in significantly lower in Germany,
due to lower levels of large orders in Wind Power and Renewables
and in Mobility compared to fiscal 2015. Orders in the Americas
region were flat year-over-year, as growth primarily in Power and
Gas, in Building Technologies and in Healthineers offset double-
digit declines in Wind Power and Renewables and in Energy Man-
agement, both due to a lower volume of large orders. U.S. orders
increased moderately, supported by portfolio and currency trans-
lation effects, and mainly followed the pattern for the region,
with the exception that Energy Management came in near the
prior-year level. Orders went up in the Asia, Australia region due
mainly to a higher volume from large orders in Energy Manage-
ment and a clear increase in Healthineers, only partially offset by
declines primarily in Power and Gas and in Wind Power and Re-
newables. China increased orders moderately, in particular with
double-digit growth in Power and Gas, in Energy Management
1 As defined by the International Monetary Fund.
Europe, C.I.S., Africa,
Middle East
therein: Germany
Americas
41,819 38,799
10,739 11,244
22,707
21,702
8%
8%
(4)%
(5)%
5%
1%
Orders (location of customer)
% Change
Comp.
therein: U.S.
10%
3%
Asia, Australia
15,118
15,135
0%
(1)%
(in millions of €)
2016
Fiscal year
2015
16,769 15,263
Actual
Fiscal year
2015
2016
7,623
41,573
36,367
14.3%
21.0%
(II) Average capital employed
(I)/(II) ROCE
1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
debt, and related hedging activities, as well as interest income on corporate assets.
Average capital employed is determined using the average of the
respective balances as of the quarterly reporting dates in the
period under review.
Calculation of capital employed
Total equity
Plus: Long-term debt
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Less: Current available-for-sale financial assets
Plus: Post-employment benefits
Less: SFS Debt
Less: Fair value hedge accounting adjustment
Plus: Adjustments from assets classified as held for disposal and
liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated
actuarial gains/losses on post-employment benefits
Capital employed (continuing and discontinued operations)
Combined Management Report 9
A.3 Results of operations
A.3.1 Orders and revenue by region
Negative currency translation effects took one percentage point
each from order and revenue development; portfolio effects
added one percentage point to order development and two per-
centage points to revenue growth. The resulting ratio of orders
to revenue (book-to-bill) for Siemens in fiscal 2016 was 1.09,
again well above 1. The order backlog (defined as the sum of
order backlogs of the industrial businesses) was €113 billion as of
September 30, 2016.
and in Healthineers. These increases were partly offset by de-
creases in Mobility, in Wind Power and Renewables and in Process
Industries and Drives.
Revenue (location of customer)
(in millions of €)
% Change
10,172
therein: China
6,938
5%
(2)%
Asia, Australia
15,501 15,033
3%
3%
therein: China
6,850
6,623
3%
18,162 17,357
7%
86,480
82,340
5%
4%
therein: emerging
markets¹
30,512
29,730
3%
5%
Siemens
therein: U.S.
(3)%
0%
(7)%
(6)%
Actual
Comp.
Siemens
79,644
75,636
5%
4%
Europe, C.I.S., Africa,
Middle East
46,185
therein: Germany
Americas
42,539
10,525 11,991 (12)%
24,794 24,769
9%
9%
therein: emerging
markets¹
27,268
25,239
8%
9%
(13)%
6,439
9,988
2%
2%
A.3.3 Income
Fiscal year
(in millions of €, earnings per share in €)
2016
2015
% Change
Power and Gas
1,872
1,415
32%
13
Wind Power and Renewables
160
190%
Energy Management
Building Technologies
Mobility
Digital Factory
Process Industries and Drives
Healthineers
Industrial Business
895
464
Combined Management Report
Expenses in Eliminations, Corporate Treasury and other rec-
onciling items were lower despite an increase in interest ex-
penses mainly associated with US$7.75 billion in bonds issued
end of May 2015. For comparison, fiscal 2015 was burdened even
more by negative effects from changes in the fair value of inter-
est rate derivatives related to interest rate management at Cor-
porate Treasury.
Corporate items were influenced by a number of items, includ-
ing €43 million in severance charges for corporate reorganization
of support functions compared to €198 million in such charges in
fiscal 2015.
16.9%
Eliminations, Corporate Treasury
and other reconciling items
Reconciliation to Consolidated
Financial Statements
(349)
(366)
(1,994)
(1,119)
All businesses posted order increases and nearly all recorded rev-
enue growth, led by the diagnostic imaging business. Orders
grew in the Asia, Australia region, most notably in China, and in
the Americas region, due to the U.S. All regions contributed to
revenue growth, particularly the Americas region, due to the U.S,
and the Asia, Australia region. Profit growth was driven by the
diagnostic imaging business, which continued to account for the
largest share of Healthineers profit overall. Profit was burdened
by severance charges in both periods, totaling €61 million in fis-
cal 2016 and €62 million in fiscal 2015. Profit development in
fiscal 2016 benefited from currency tailwinds. For comparison,
fiscal 2015 included a €64 million gain from divestment of the
microbiology business.
A.3.2.9 FINANCIAL SERVICES
(in millions of €)
2016
Income before income taxes
653
ROE (after taxes)
21.6%
(in millions of €)
Total assets
Fiscal year
2015
600
20.9%
2016
Sep 30,
2015
26,446
24,970
Centrally managed portfolio activities (CMPA) included pri-
marily a loss from at-equity investments (including impairments)
after a positive result in the prior year. In particular, fiscal 2015
included a gain of €1.4 billion on the disposal of Siemens' stake
in BSH Bosch und Siemens Hausgeräte GmbH (BSH). This was
partly offset by an equity investment loss of €275 million related
to Unify Holdings B.V. (Unify), an impairment of €138 million re-
lated to Siemens' stake in Primetals Technologies Ltd. and losses
from other businesses.
Income from Siemens Real Estate continues to be highly depen-
dent on the disposals of real estate. In fiscal 2016, the profit of
disposals of real estate were lower than in the prior year.
570
6%
57%
553
7,218
3%
Income tax expenses
(2,008)
(1,869)
(7)%
Income from continuing operations
5,396
5,349
1%
7,404
Income from discontinued operations, net of income taxes
Net income
2,031
(91)%
5,584
7,380
(24)%
Basic earnings per share
ROCE
6.74
14.3%
8.84
(24)%
21.0%
188
Income from continuing operations before income taxes
9%
(78)%
600
(1,119)
5%
678
588
15%
1,690
1,685
0%
243
581
(58)%
2,325
2,184
6%
8,744
7,737
13%
Profit margin Industrial Business
10.8%
10.1%
Financial Services (SFS)
653
Reconciliation to Consolidated Financial Statements
(1,994)
577
5,949
2,184
Profit margin
678
588
(23)%
4%
15%
Comp.
(22)%
6%
Profit margin
8.7%
7.8%
Despite challenging market conditions, Digital Factory increased
orders, revenue and profit year-over-year. The driving force for all
three was the Division's PLM software business, which achieved
double-digit growth in orders and revenue, supported by the ac-
quisition of CD-adapco which closed in the third quarter of fiscal
2016. The Division's high-margin factory automation business
contributed to order and revenue growth to a significantly lesser
extent, while volume in the motion control business declined
slightly year-over-year. On a regional basis, orders and revenue
increased in all regions, with the strongest growth coming from
the Europe, C.I.S., Africa, Middle East region. Profit came in
slightly above the prior-year level as a double-digit increase in the
PLM business and a slight increase in the factory automation
business were largely offset by declines in other businesses. Prof-
itability in fiscal 2016 was held back by deferred revenue adjust-
ments and transaction and integration costs related to the acqui-
sition of CD-adapco, totaling €43 million. In addition, Division
profit included severance charges in both periods, €49 million in
fiscal 2016 compared to €53 million in fiscal 2015.
A.3.2.7 PROCESS INDUSTRIES AND DRIVES
Profit
Orders in Mobility declined due mainly to a sharply lower volume
from large orders year-over-year. The largest contract wins in fis-
cal 2016 included an order for light rail vehicles in the U.S., a
commuter rail contract in Germany and a rail automation order in
Algeria, totaling €1.2 billion. Large orders in fiscal 2015 included
an order worth €1.7 billion for regional trains and maintenance
in Germany and a €1.6 billion long-term order for maintenance
in Russia. Revenue grew in all businesses except for the rail infra-
structure business where revenue was down moderately year-
over-year. The strongest contribution to revenue growth came
from execution of large rolling stock projects. On a geographic
basis, strong revenue increases in Europe, C.I.S., Africa, Middle
East and the Americas more than offset a decline in Asia, Austra-
lia, which reported a sharp drop in China. Profit development
benefited from positive effects related to solid project execution
on large contracts, and from a sharp reduction in severance
charges which fell to €16 million from €68 million a year earlier.
% Change
(in millions of €)
Orders
2016
2015
Actual
Comp.
8,939
9,144
(2)%
(1)%
Fiscal year
7,508
7,825
Revenue
Profit
577
553
5%
Profit margin
9.4%
9.2%
Profit
Profit margin
1,690
1,685
0%
16.6%
16.9%
Orders and revenue in Building Technologies increased in both
the solutions and service business and the product and systems
business. On a geographic basis, orders were up in all regions,
while revenue rose in the Americas and Asia, Australia but de-
clined slightly in the Europe, C.I.S., Africa, Middle East region.
Growth was particularly strong in the U.S., for both orders and
revenue. Profit improvement was due to an increase in the Divi-
sion's product business, only partly offset by a modest decline in
profit in the solutions and service business. Profit in both periods
included severance charges, which were €16 million in fiscal
2016, down from €24 million in fiscal 2015.
A.3.2.5 MOBILITY
% Change
(in millions of €)
2016
Fiscal year
2015
Actual
Orders
7,875
10,262
9,038
2,325
17.2%
9,553
(4)%
Fiscal year
2015
13,349
% Change
Corporate items
(449)
(690)
Actual
Comp.
Centrally carried pension expense
(439)
(440)
13,830
Amortization of intangible assets
4%
acquired in business combinations
(674)
(543)
Revenue
13,535
12,930
5%
5%
Profit
4%
Orders
2016
(in millions of €)
Profit
Profit margin
243
581
(58)%
2.7%
6.1%
Revenue
The global weakness in oil and gas and other commodity-related
markets continued to impact Process Industries and Drives. This
was particularly evident in the Division's oil & gas and marine busi-
ness, where orders fell by a quarter compared to fiscal 2015, and
in its large drives business, which saw a moderate decline in or-
ders. These decreases were only partly offset by order growth in
the Division's wind power components business. Revenue shows
a similar development, as both the oil & gas and marine and the
large drives businesses saw considerable declines in revenue only
12 Combined Management Report
partly offset by growth from the wind power components busi-
ness. On a regional basis, orders were down in Asia, Australia,
particularly in China, and in Europe, C.I.S., Africa, Middle East,
while they increased in the Americas, due mainly to strong de-
Imand for the Division's offerings for the wind power industry.
Revenue was down in all three reporting regions. Underutiliza-
tion and a shift in demand particularly in the large drives and the
oil & gas and marine businesses heavily impacted the Division's
profit in fiscal 2016. To reduce the size of its manufacturing ca-
pacity and align its global footprint to changed market demand,
the Division took €254 million in severance charges. For compar-
ison, profit in the prior fiscal year was burdened by a warranty
charge of €96 million and severance charges of €74 million.
A.3.2.8 HEALTHINEERS
Financial Services (SFS) recorded stable results in the debt busi-
ness. Results from the equity investments business came in above
the high level of fiscal 2015, due primarily to a positive effect of
€92 million resulting from an at-equity investment. Fiscal 2015
included a net gain in connection with the sale of renewable
energy projects. Despite substantial early terminations of financ-
ings, total assets have increased since the end of fiscal 2015.
A.3.2.10 RECONCILIATION TO CONSOLIDATED
FINANCIAL STATEMENTS
Profit
(in millions of €)
Fiscal year
2016
2015
Centrally managed portfolio activities
Siemens Real Estate
(215)
714
132
205
(5)%
(I) Income before interest after tax
(104)
(156)
51,442
8%
24,159
23,166
4%
Other intangible assets
7,742
8,077
(4)%
Property, plant and equipment
10,157
10,210
(1)%
Investments accounted for using the equity method
3,012
2,947
2%
70,388
125,717
17%
1,094
1,279
32%
2,591
55,329
3,431
Other assets
Deferred tax assets
(1)%
20,821
20,610
Other financial assets
Total non-current assets
Total assets
56%
122
190
Other current financial assets
2%
15,982
16,287
Trade and other receivables
10%
Inventories
1,175
Available-for-sale financial assets
6%
9,957
10,604
% Change
2015
1,293
-
Current income tax assets
Assets classified as held for disposal
5%
1,151
1,204
23%
644
790
Other current assets
5%
18,160
32%
5,157
6,800
Goodwill
Total current assets
17,253
36%
2%
120,348
Long-term debt
8%
39,562
42,916
Total current liabilities
5%
24,761
39
Liabilities associated with assets classified as held for disposal
0%
20,368
20,437
Other current liabilities
14%
40
1,828
26,682
Post-employment benefits
829
40%
9,811
13,695
Total liabilities and equity
Non-controlling interests
(7)%
Total equity attributable to shareholders of Siemens AG
Equity ratio
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
Debt ratio
2016
2,085
(7)%
(in millions of €)
Sep 30,
Our capital structure developed as follows:
A.5.1 Capital structure
A.5 Financial position
16
2016
15
Deferred tax assets increased mainly due to income tax effects
related to remeasurement of defined benefits plans.
The increase in goodwill included the acquisition of CD-adapco.
The increase in inventories was driven mainly by a build-up in
Energy Management, Power and Gas and Wind Power and
Renewables.
The increase in other current financial assets was driven by
higher loans receivable at SFS. These higher current loans receiv-
ables were mainly due to new business and the reclassification of
non-current loans receivables.
Our total assets in fiscal 2016 were influenced by negative cur-
rency translation effects of €1.1 billion, primarily involving the
British pound.
4%
Combined Management Report
Current income tax liabilities
2015
Short-term debt and current maturities of long-term debt
4,489
4,166
Current provisions
(7)%
2,085
1,933
% Change
Other current financial liabilities
7,774
8,048
Trade payables
108%
2,979
6,206
4%
Cash and cash equivalents
68,906
Sep 30,
120,348
125,717
4%
581
29%
(1)%
4%
34,474
71%
72%
7%
85,292
90,901
5%
34,211
28%
605
45,730
The increase in short-term debt and current maturities of
long-term debt was due mainly to reclassifications of long-term
fixed-rate instruments totaling €5.0 billion. This increase was
partly offset by repayments of commercial paper of €0.9 billion
and fixed-rate instruments of €0.5 billion.
The main factors relating to the change in total equity attribut-
able to shareholders of Siemens AG were a negative €2.9 bil-
lion in other comprehensive income, net of income taxes, mainly
due to remeasurements of defined benefit plans, and dividend
payments of €2.8 billion (for fiscal 2015). These negative factors
were nearly offset by fiscal 2016 net income attributable to share-
holders of Siemens AG of €5.5 billion.
In addition to these commitments, we issued other guarantees.
To the extent future claims are not considered remote, maximum
future payments from these commitments amounting to €0.9 bil-
lion (September 30, 2015: €1.8 billion). The decrease in other
guarantees is related to indemnifications issued in connection
with dispositions of businesses.
As of September 30, 2016 the undiscounted amount of maximum
potential future payments related to credit guarantees, guaran-
tees of third-party performance and HERKULES obligations
amounted to €3.7 billion (September 30, 2015: €4.2 billion).
Off-balance-sheet commitments
STATEMENTS.
For further information about our debt see → NOTE 15 in → B.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
tion about the functions and objectives of our financial manage-
ment see NOTE 24 in →B.6 NOTES TO CONSOLIDATED FINANCIAL
We have three credit facilities at our disposal for general corpo-
rate purposes. These credit facilities amounted to €7.1 billion and
were unused as of September 30, 2016.
Long-term debt decreased mainly due to the above mentioned
reclassifications and the redemption of hybrid capital bonds to-
taling €1.8 billion. This decrease was partly offset by the issu-
ance in September 2016 of instruments totaling US$6.0 billion
(€5.4 billion) in six tranches with different maturities up to
30 years.
As of September 30, 2016 we recorded, in total, €28.6 billion in
notes and bonds (maturing until 2046), €1.4 billion in loans from
banks (maturing until 2023), €0.9 billion in other financial in-
debtedness (maturing until 2027) and €0.1 billion in obligations
under finance leases. Notes, bonds and loans from banks were
issued mainly in the euro and U.S. dollar, and to a lower extent
in the British pound.
In November 2015, we announced a share buyback of up to €3 bil-
lion ending at the latest on November 15, 2018. The buybacks will
be made under the current authorization granted at the Annual
Shareholders' Meeting on January 27, 2015. Shares repurchased
may be used solely for cancelling and reducing capital stock; for
issuing shares to employees, to members of the Managing Board
and board members of affiliated companies; and for meeting ob-
ligations from or in connection with convertible bonds or warrant
bonds. Under the program we repurchased 2,517,727 treasury
shares at an average cost per share of €91.24, totaling €0.2 bil-
lion (including incidental transaction charges).
Our capital structure ratio as of September 30, 2016 increased
from 0.6 a year earlier to 1.0, which was in line with our target
established in our One Siemens financial framework. The change
was due primarily to the increase in post-employment benefits
compared to the prior year, reflecting the above-mentioned in-
crease in the underfunding of our defined benefit plans.
Capital structure ratio
The funded status of our defined benefit plans - meaning de-
fined benefit obligation (DBO) less fair value of plan assets -
showed an underfunding of €13.4 billion as of September 30,
2016 (€9.5 billion as of September 30, 2015). Within these fig-
ures, the underfunding for pension benefit plans amounted to
€12.8 billion as of September 30, 2016 (€9.0 billion as of Septem-
ber 30, 2015) and the underfunding of other post-employment
benefit plans amounted to €0.5 billion (€0.5 billion as of Sep-
tember 30, 2015). The increase in the underfunding of our de-
fined benefit plans was mainly due to lower discount rate as-
sumptions. This effect was partly offset by a significant increase
in return on plan assets and a lower pension progression assump-
tion in Germany.
Post-employment benefits
Combined Management Report
Debt and credit facilities
Future payment obligations under non-cancellable operating
leases amounted to €3.5 billion (September 30, 2015: €3.4 bil-
lion).
47,986
2,297
7,380
(544)
(662)
784
746
282
5,584
263
We intend to continue providing an attractive return to our share-
holders. Therefore, we intend to propose a dividend whose dis-
tribution volume is within a dividend payout range of 40% to
60% of net income, which we may adjust for this purpose to ex-
clude selected exceptional non-cash effects. As in the past, we
intend to fund the dividend payout from Free cash flow.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the follow-
ing proposal to allocate the unappropriated net income of
Siemens AG for fiscal 2016: to distribute a dividend of €3.60 on
each share of no par value entitled to the dividend for fiscal year
2016 existing at the date of the Annual Shareholders' Meeting,
with the remaining amount to be carried forward. Payment of the
proposed dividend is contingent upon approval by Siemens
shareholders at the Annual Shareholders' Meeting on February 1,
2017. The prior-year dividend was €3.50 per share.
The proposed dividend of €3.60 per share for fiscal 2016 rep-
resents a total payout of €2.9 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on net income of €5.6 billion for
fiscal 2016, the dividend payout percentage is 52%.
Less: Interest adjustments
(discontinued operations)
Less: Taxes on interest adjustments
(tax rate (flat) 30%)
A.2.5 Dividend
8%
2015
Fiscal year
2,471
(22)%
1,466
1,142
5%
4,865
2016
(in millions of €)
A.2.4 Capital structure
Sustainable revenue and profit development is supported by a
healthy capital structure. Accordingly, a key consideration within
the framework of One Siemens is to maintain ready access to the
capital markets through various debt products and preserve our
ability to repay and service our debt obligations over time. Our
primary measure for managing and controlling our capital struc-
ture is the ratio of industrial net debt to EBITDA. This financial
measure indicates the approximate amount of time in years that
would be needed to cover industrial net debt through income
from continuing operations, without taking into account inter-
est, taxes, depreciation and amortization. We aim to achieve a
ratio of up to 1.0.
A.2.6 Calculation of return
on capital employed
Calculation of ROCE
(in millions of €)
Net income
Less: Other interest expenses/income, net¹
Plus: SFS Other interest expenses/income
Plus: Net interest expenses from
post-employment benefits
5,087
Irrevocable loan commitments amounted to €3.4 billion (Septem-
ber 30, 2015: €3.6 billion). A considerable portion of these com-
mitments resulted from asset-based lending transactions, mean-
ing that the respective loans can be drawn only after the borrower
has provided sufficient collateral.
As a result of the development described for the segments,
Income from continuing operations before income taxes
increased 3%. This amount also included higher expenses - as
planned for selling and R&D, primarily at Digital Factory and
Healthineers, as we continued targeted investments aimed at
organic volume growth and strengthening our capacities for
innovation. Severance charges for continuing operations were
€598 million, of which €541 million were in the Industrial Busi-
ness. In fiscal 2015, severance charges for continuing operations
were €804 million, of which €564 million were in the Industrial
Business.
17
The change in short-term debt and other financing activities
included the net cash outflows related to commercial paper and
from loans to banks.
18
Combined Management Report
Income from discontinued operations, net of income taxes
was substantially lower compared to the prior year. In fiscal 2016,
it primarily included a gain of €102 million from the sale of the
remaining assets in the hearing aid business and €76 million re-
lated to the former Siemens IT Solutions and Services activities.
In the prior year, the line item primarily included gains from the
disposal of the hearing aid and hospital information businesses,
totaling €1.7 billion and €0.2 billion, respectively.
The decrease in Basic earnings per share reflects the lower net
income compared to fiscal 2015, which included the substantial
disposal gains related to the sale of the hearing aid business and
the BSH stake that added €3.66 to basic earnings per share.
At 14.3%, ROCE was below the range established in our One
Siemens financial framework, as expected. ROCE declined com-
pared to fiscal 2015 due to lower net income and a significant
increase in average capital employed with the acquisition of
Dresser-Rand at the end of the third quarter of fiscal 2015.
14
The cash inflows from investing activities
operations - included proceeds from the sale of the remaining
assets in the hearing aid business.
Combined Management Report
Change in short-term debt and other financing activities
(2,253)
5,300
Repayment of long-term debt (including current maturities of long-term debt)
Issuance of long-term debt
(463)
A.4 Net assets position
Purchase of treasury shares
discontinued
The cash outflows for other purchases of assets primarily in-
cluded additions of assets eligible as central bank collateral and
to a lesser extent payments related to equity investments.
Combined Management Report
Dividends paid to shareholders of Siemens AG
Interest paid
(1,408)
(809)
(2,827)
The cash inflows from other disposals of assets primarily in-
cluded disposals from above-mentioned eligible collateral, pro-
ceeds from the sale of shares in a fund at Corporate Treasury, and
real estate disposals at SRE.
Other cash flows from financing activities - continuing operations
Cash flows from financing activities - continuing operations
Cash flows from financing activities - discontinued operations
Cash flows from financing activities - continuing and discontinued operations
(2,710)
The conversion of profit into cash inflows from operating activ-
ities was mainly driven by Healthineers as well as the Digital Fac-
tory and Power and Gas Divisions. This conversion was affected
by a build-up of operating net working capital primarily driven
by an increase in the line items Inventories and Trade and other
receivables in the Industrial Business, which was primarily due to
Power and Gas and Energy Management.
The cash outflows for acquisitions of businesses, net of cash
acquired, primarily included payments totaling €0.9 billion re-
lated to the acquisition of CD-adapco.
(2,710)
Cash flows from financing activities
(249)
Cash flows from investing activities - continuing and discontinued operations
Cash flows from operating activities - discontinued operations
7,668
Cash flows from operating activities – continuing operations
3,324
Other reconciling items to cash flows from operating activities – continuing operations
(1,241)
(57)
Change in operating net working capital
Net income
Fiscal year
Cash flows from operating activities
(in millions of €)
(4,144)
A.5.2 Cash flows
5,584
Cash flows from operating activities - continuing and discontinued operations
2016
Cash flows from investing activities
7,611
262
(4,406)
1,417
Other disposals of assets
(1,409)
Cash flows from investing activities - continuing operations
Cash flows from investing activities – discontinued operations
(1,356)
Change in receivables from financing activities of SFS
(922)
Acquisitions of businesses, net of cash acquired
Other purchases of assets
(2,135)
Additions to intangible assets and property, plant and equipment
Industrial Business profit grew 13% to €8.7 billion. As with reve-
nue, all industrial businesses except for Process Industries and
Drives increased their profit year-over-year. Wind Power and Re-
newables nearly tripled its profit compared to fiscal 2015, sup-
ported by a number of factors including successful implementa-
tion of measures for ramping up commercial-scale production of
turbine offerings. The Energy Management Division continued
its strong turnaround, with high double-digit profit growth.
Power and Gas achieved double-digit profit growth, benefiting
from among others a positive effect following the ending or eas-
ing of sanctions on Iran; Power and Gas took significant project
charges and higher severance in the prior year. Mobility contin-
ued its solid project execution and also achieved double-digit
profit growth. Healthineers and our Digital Factory and Building
Technologies Divisions exceeded the already high profit levels
they had reached in fiscal 2015. The decline in profit at Process
Industries and Drives was due to the above-mentioned market
conditions and charges related to measures taken to address
those challenges.
Revenue rose to €79.6 billion, also up 5% compared to fiscal
2015. All our industrial businesses increased revenue year-over-
year, except for the Process Industries and Drives Division. Exclud-
ing currency translation effects, overall revenue rose 6%. Our
forecast was to achieve moderate revenue growth excluding cur-
rency translation effects. As expected, portfolio effects added
2 percentage points to growth. The strongest contribution to
revenue growth came from the Power and Gas Division, which
achieved a double-digit growth rate even after excluding positive
portfolio effects, primarily related to the acquisition of Dresser-
Rand at the end of the third quarter of fiscal 2015. Revenue
growth at Power and Gas included strong contributions from
project execution on orders from Egypt.
Orders increased 5% year-over-year to €86.5 billion, for a book-
to-bill ratio of 1.09, thus fulfilling our expectation for a ratio
clearly above 1.0. All industrial businesses contributed to order
growth except for the Mobility Division, which recorded lower
volume from large orders year-over-year, and the Process Indus-
tries and Drives Division, which is suffering from weak demand
in commodity-related markets. Order growth was particularly
impressive in the Power and Gas and the Wind Power and Renew-
ables Divisions. While Power and Gas recorded among others
large orders for power plants in Egypt, Wind Power and Renew-
ables won among others a number of contracts for large offshore
wind-farms including service in the U.K.
In fiscal 2016, we were particularly successful in executing on our
financial target system, enabling us to twice raise our forecast for
basic earnings per share (EPS) (net income) and to gain market
share in most of our businesses. Despite an unfavorable economic
environment and rising global uncertainties, we reached or ex-
ceeded the targets set for our primary measures for fiscal 2016.
We achieved revenue growth of 6%, net of effects from currency
translation, including two percentage points from portfolio
effects. Net income and basic earnings per share (EPS) (net
income) rose by more than a quarter compared to fiscal 2015
excluding the portfolio gains from the divestment of the hearing
aid business and our stake in BSH. As forecast, Return on capital
employed (ROCE) was double-digit. Our capital structure ratio
was 1.0, close to our forecast.
Healthineers' investments are mainly driven by enhancing com-
petitiveness and innovation notably in the diagnostics busi-
nesses, including large amounts relating to intangible assets,
particularly capitalized development expenses for new platforms
and to upcoming spending for factories, especially in China.
A.6 Overall assessment of the economic position
19
The profit margin of the Industrial Business increased to 10.8%,
up from 10.1% in fiscal 2015. We thus reached the upper end of
the range of 10% to 11% that was forecast for fiscal 2016. All
industrial businesses except for Process Industries and Drives
reached their margin ranges, with three Divisions that were
below their margin ranges in fiscal 2015, entering their ranges
in fiscal 2016: Power and Gas, Wind Power and Renewables and
Energy Management. SFS, which is outside our Industrial Business,
achieved a return on equity after tax of 21.6%, again above the
upper end of its margin range.
Combined Management Report
We also made further progress in streamlining our management
structures and processes. Following cost savings of approximately
€0.4 billion in fiscal 2015, we reduced cost by an additional
€0.6 billion in fiscal 2016, thus achieving cost savings of €1.0 bil-
lion compared to fiscal 2014.
In fiscal 2016, we successfully continued implementing our "Vision
2020" concept. We made further significant steps to strengthen
our business focus in electrification, automation and digitaliza-
tion by acquiring CD-adapco, a U.S.-based provider of simulation
software, and by signing binding agreements to merge our wind
power business, including service, with Gamesa to strengthen
our wind power business both regionally and in the global on-
shore market. We sold our remaining financial assets in the hear-
ing aid business and our share in Unify Holdings B.V. to Atos SE.
For Process Industries and Drives we implemented measures to
address the Division's structural challenges with regard to adjust-
ing regional footprint and reducing overcapacities. We also
made substantial progress in our ongoing initiative to improve
profitability of low-margin businesses throughout our Industrial
Business. Beginning with fiscal 2017 we founded next47, a sepa-
rate unit that pools our existing startup activities to foster disrup-
tive ideas more vigorously and accelerate the development of
new technologies.
Free cash flow from continuing and discontinued operations
for fiscal 2016 rose to €5.5 billion, up 17% compared to the prior
fiscal year.
20 Combined Management Report
A.7 Subsequent events
Net income in fiscal 2016 was €5.6 billion and basic EPS from net
income was €6.74 both down 24% compared to the prior fiscal
year, which included a gain of €3.0 billion within net income and
€3.66 within earnings per share from the sale of our hearing aid
business and our stake in BSH. Excluding these gains, net income
rose 28%. We thus exceeded our fiscal 2016 forecast for a signif-
icant increase in net income excluding these gains. This in turn
enabled us to exceed our forecast for basic EPS from net income,
which we raised twice during fiscal 2016: first from the range of
€5.90 to €6.20 to the range of €6.00 to €6.40, and then from the
latter range to €6.50 to €6.70. Net income development bene-
fited from our continuous efforts to increase productivity. In fiscal
2016, total cost productivity improved by 5%, above our fiscal
2016 target of 3% to 4%.
ROCE was 14.3% in fiscal 2016. We thus reached our forecast for
fiscal 2016, which was to achieve a double-digit ROCE but to
come in substantially below the amount of fiscal 2015, which
was 21.0%. This decline was due to a combination of lower net
income, which in the prior fiscal year benefited from the
above-mentioned divestment gains, and an increase in average
capital employed, resulting mainly from the acquisition of
Dresser-Rand.
We evaluate our capital structure using the ratio of industrial net
debt to EBITDA. For fiscal 2016, this ratio was 1.0, up from 0.6 in
fiscal 2015. This was close to our forecast, which was to reach a
ratio below but near 1.0.
We intend to continue providing an attractive return to share-
holders. As in the past, we intend to fund our dividend payout
from Free cash flow. The Siemens Managing Board, in agreement
with the Supervisory Board, proposes a dividend of €3.60 per
share, up from €3.50 a year earlier.
In October 2016, the shareholders of Gamesa approved binding
agreements to merge Siemens's wind power business, including
service, with Gamesa. Closing of the transaction is subject to the
approval of the antitrust and regulatory authorities.
In November 2016, Siemens announced the acquisition of Mentor
Graphics (U.S.), a design automation and industrial software pro-
vider. The purchase price is US$37.25 per share in cash, which
represents an enterprise value of US$4.5 billion. Mentor Graphics
will be integrated in the Digital Factory Division. Closing of the
transaction is subject to customary conditions and is expected in
the third quarter of fiscal 2017.
In November 2016, Siemens announced its intention to further
strengthen Healthineers in Siemens for the future and is there-
fore planning to publicly list its healthcare business. Siemens will
announce more precise details regarding the date and scope of
the placement when plans for the public listing are further ad-
vanced. The listing will also depend, among other things, on the
stock market environment.
Combined Management Report
Process Industries and Drives makes most of its capital expen-
ditures for the purpose of rationalization, replacement and mod-
ification required for transition to innovative products, particu-
larly relating to the large drives business.
21
Outside the Industrial Business, the loss was higher than in fiscal
2015, which included a gain of €1.4 billion from the sale of our
stake in BSH. In contrast, the loss from other at-equity invest-
ments was lower and costs related to Corporate Items declined
substantially compared to the prior year.
Major spending of Digital Factory relates to the factory automa-
tion, motion control systems and control products businesses,
including investments in production facilities in China.
(57)
The investments of Building Technologies mainly relate to the
products and systems business, particularly innovation projects,
such as control and service platforms.
A.8 Report on expected developments
We report Free cash flow as a supplemental liquidity measure:
Free cash flow
(in millions of €)
Cash flows from operating activities
Additions to intangible assets and property, plant and equipment
Free cash flow
Continuing
operations
Discontinued
operations
7,668
(57)
(2,135)
5,533
Fiscal year 2016
Continuing and
discontinued operations
7,611
(2,135)
5,476
With our ability to generate positive operating cash flows, our
total liquidity (defined as cash and cash equivalents as well as
available-for-sale financial assets) of €11.9 billion, our €7.1 billion
in unused lines of credit, and given our credit ratings at year-end,
we believe that we have sufficient flexibility to fund our capital
requirements. Also in our opinion, our operating net working
capital is sufficient for our present requirements.
Investing activities
Additions to intangible assets and property, plant and equipment
from continuing operations totaled €2.1 billion in fiscal 2016.
Within the Industrial Business ongoing investments related
mainly to technological innovations; extending our capacities for
designing, manufacturing and marketing new solutions; improv-
ing productivity and our global footprint; and replacements of
fixed assets. These investments amounted to €1.5 billion in fiscal
2016. The remaining portion in fiscal 2016, €0.6 billion, related
mainly to SRE, including significant amounts related to office proj-
ects, such as new corporate office buildings in Germany, and to
support investing activities particularly at Wind Power and Renew-
ables. SRE is responsible for uniform and comprehensive manage-
ment of Company real estate worldwide, and supports the Indus-
trial Business and corporate activities with customer-specific real
estate solutions.
With regard to capital expenditures for continuing operations, we
expect a moderate spending increase in fiscal 2017. In addition
we plan to invest significant amounts in coming years in attrac-
tive innovation fields in connection with next47.
Focus areas of ongoing investing activities of the Industrial
Business are:
The investments of Power and Gas are focused on replacement,
enhancing productivity and innovation, mainly relating to our
large gas turbines and generators business, including upcoming
spending for a new technology platform.
The investments of Wind Power and Renewables are focused
on the extension, modernization and optimization of existing
plants to allow for the large-scale manufacturing of innovative
products, including construction of production and service facil-
ities such as in the U.K., Germany, Morocco and Egypt. To a lesser
extent, Wind Power and Renewables also focuses on transporta-
tion solutions particularly for delivering large turbines.
Energy Management is spending the larger portion of its capital
expenditures for innovation, particularly in the low voltage and
products business. Further investments are primarily related to
the expansion of factories and technical equipment and to the
replacement of fixed assets.
Mobility's investments mainly focus on meeting project de-
mands and maintaining or enhancing its production and service
facilities, including capital expenditures for improving its respec-
tive positions in growing market segments.
and associated material opportunities and risks
We are exposed to currency translation effects, particularly involv-
ing the US$, the British £ and currencies of emerging markets,
particularly the Chinese yuan. During fiscal 2016, the average ex-
change rate conversion for our large volume of US$-denominated
revenue was US$1.11 per €. While we expect volatility in global
currency markets to continue in fiscal 2017, we have improved
our natural hedge on a global basis through geographic distribu-
tion of our production facilities during the past. Nevertheless,
Siemens is still a net exporter from the Euro zone to the rest of
the world, so a weak Euro is principally favorable for our business
and a strong Euro is principally unfavorable. In addition to the
natural hedging strategy just mentioned, we also hedge currency
risk in our export business using derivative financial instruments.
We expect these steps to help us limit effects on income related
to currency in fiscal 2017.
A.8.1.1 WORLDWIDE ECONOMY
uation of the company-wide risk and opportunity situation. The
CRIC reports to and supports the Managing Board on matters
relating to the implementation, operation and oversight of the
risk and internal control system and assists the Managing Board
for example in reporting to the Audit Committee of the Super-
visory Board. The CRIC is composed of the Chief Risk & Internal
Control Officer, as the chairperson, members of the Managing
Board and selected heads of Corporate Units.
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with legal
and operational requirements, the Managing Board established
a Risk Management and Internal Control Organization, headed by
the Chief Risk & Internal Control Officer, and a Corporate Risk and
Internal Control Committee (CRIC). The CRIC obtains risk and op-
portunity information from the Risk Committees established at
the Industrial Business, SFS, and regional organizations and from
the heads of Corporate Units. In order to allow for a meaningful
discussion on Siemens group level individual risk and opportuni-
ties of similar cause-and-effect nature are aggregated into risk
and opportunity themes. This aggregation naturally results in a
mixture of risks, including those with a primarily qualitative as-
sessment and those with a primarily quantitative risk assessment.
Accordingly, we do not foresee a purely quantitative assessment
of risk themes. This information then forms the basis for the eval-
A.8.2.3 RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
effects and are aggregated within and for each of the organiza-
tions mentioned above.
26
25
Combined Management Report
A.8.3 Risks
The ERM process aims for early identification and evaluation of,
and response regarding, risks and opportunities that could mate-
rially affect the achievement of our strategic, operational, finan-
cial and compliance objectives. The time horizon covered by ERM
is typically three years. Our ERM is based on a net risk approach,
addressing risks and opportunities remaining after the execution
of existing control measures. If risks have already been consid-
ered in plans, budgets, forecasts or the financial statements (e.g.
as a provision or risk contingency), they are supposed to be in-
corporated with their financial impact in the entity's business
objectives. As a consequence, only additional risks arising from
the same subject (e.g. deviations from business objectives, dif-
ferent impact perspectives) should be considered for the ERM. In
order to provide a comprehensive view on our business activities,
risks and opportunities are identified in a structured way combin-
ing elements of both top-down and bottom-up approaches. Risks
and opportunities are generally reported on a quarterly basis.
This regular reporting process is complemented by an ad-hoc
reporting process that aims to escalate critical issues in a timely
manner. Relevant risks and opportunities are prioritized in terms
of impact and likelihood, considering different perspectives, in-
cluding business objectives, reputation and regulatory matters.
The bottom-up identification and prioritization process is supple-
mented by workshops with the respective managements of the
Industrial Business, SFS, regions and Corporate Units. This top-
down element ensures that potential new risks and opportunities
are discussed at management level and are included in the sub-
sequent reporting process, if found to be relevant. Reported risks
and opportunities are analyzed regarding potential cumulative
tor such risks more closely as our business progresses. Our inter-
nal auditors regularly review the adequacy and effectiveness of
our risk management system. Accordingly, if deficits are de-
tected, it is possible to adopt appropriate measures for their elim-
ination. This coordination of processes and procedures is in-
tended to help ensure that the Managing Board and the
Supervisory Board are fully informed about significant risks in a
timely manner.
A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk manage-
ment and control systems which support us in the early recogni-
tion of developments that could jeopardize the continuity of our
business. The most important of these systems include our en-
terprise-wide processes for strategic planning and management
reporting. Strategic planning is intended to support us in consid-
ering potential risks well in advance of major business decisions,
while management reporting is intended to enable us to moni-
A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursuing
sustainable growth and creating economic value while managing
appropriate risks and opportunities and avoiding inappropriate
risks. As risk management is an integral part of how we plan and
execute our business strategies, our risk management policy is
set by the Managing Board. Our organizational and accountabil-
ity structure requires each of the respective managements of our
Industrial Business, SFS, regions and Corporate Units to imple-
ment risk management programs that are tailored to their spe-
cific industries and responsibilities, while being consistent with
the overall policy.
A.8.2 Risk management
Overall, the actual development for Siemens and its Segments
may vary, positively or negatively, from our outlook due to the
risks and opportunities described below or if our expectations
and assumptions do not materialize.
This outlook assumes stabilization in the market environment
for our high-margin short-cycle businesses. It further excludes
charges related to legal and regulatory matters as well as poten-
tial burdens associated with pending portfolio matters.
We continue to anticipate headwinds for macroeconomic growth
and investment sentiment in our markets due to the complex
geopolitical environment. Therefore, we expect modest growth
in revenue, net of effects from currency translation and portfolio
transactions. We further anticipate that orders will exceed reve-
nue for a book-to-bill ratio above 1. For our Industrial Business,
we expect a profit margin of 10.5% to 11.5%. We expect basic
EPS from net income in the range of €6.80 to €7.20, compared
to €6.74 in fiscal 2016 which included €0.23 from discontinued
operations.
Risk management at Siemens builds on a comprehensive, inter-
active and management-oriented Enterprise Risk Management
(ERM) approach that is integrated into the organization and that
addresses both risks and opportunities. Our ERM approach is
based on the worldwide accepted Enterprise Risk Management -
Integrated Framework (2004) developed by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
The framework connects the ERM process with our financial re-
porting process and our internal control system. It considers a
company's strategy, the efficiency and effectiveness of its busi-
ness operations, the reliability of its financial reporting as well
as compliance with relevant laws and regulations to be equally
important.
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and repu-
tation. The order in which the risks are presented in each of the
four categories reflects the currently estimated relative exposure
for Siemens associated with these risks and thus provides an in-
dication of the risks' current importance to us. Additional risks
not known to us or that we currently consider immaterial may
also negatively impact our business objectives and operations.
Unless otherwise stated, the risks described below relate to all of
our segments.
A.8.3.1 STRATEGIC RISKS
Competitive environment: The worldwide markets for our prod-
ucts and solutions are highly competitive in terms of pricing,
product and service quality, product development and introduc-
tion time, customer service, financing terms and shifts in market
demands. We face strong existing competitors and also compet-
itors from emerging markets, which may have a better cost struc-
ture. Some industries in which we operate are undergoing con-
solidation, which may result in stronger competition and a
change in our relative market position. Furthermore, we notice
that suppliers (and to some extent even customers), especially
from emerging countries (e.g. China), could develop into serious
competitors for Siemens. We address these risks with various
measures, for example, benchmarking, strategic initiatives, sales
push initiatives, executing productivity measures and target cost
projects, rightsizing of our factory footprint, exporting from low-
cost countries to price-sensitive markets, and optimizing our
product portfolio. We continuously monitor and analyze compet-
itive and market information in order to be able to anticipate
unfavorable changes in the competitive environment rather than
reacting to such changes.
28 Combined Management Report
Operational optimization alignments and cost reduction ini-
tiatives: We are in a continuous process of operational optimiza-
tion alignments and constantly engage in cost-reduction initia-
tives, including ongoing capacity adjustment measures and
structural initiatives. Consolidation of business activities and
Operational failures and quality problems in our value chain
processes: Our value chain comprises all steps, from research
and development to supply chain management, production, mar-
keting, sales and services. Operational failures in our value chain
processes could result in quality problems or potential product,
labor safety, regulatory or environmental risks. Such risks are par-
ticularly present in our Industrial Business in relation to our pro-
duction and manufacturing facilities, which are located all over
the world and have a high degree of organizational and techno-
logical complexity. From time to time, some of the products we
sell might have quality issues resulting from the design or man-
ufacture of the products or of the commissioning of the products
or from the software integrated into them. Our Healthineers
business, for example, is subject to regulatory authorities includ-
ing the U.S. Food and Drug Administration and the European
Commission's Health and Consumer Policy Department, which
require us to make specific efforts to safeguard our product
safety. If we are not able to comply with these requirements, our
business and reputation may be adversely affected. Several mea-
sures for quality improvement and claim prevention are estab-
lished and the increased use of quality management tools is im-
proving visibility and assists us strengthen the root cause and
prevention process.
IT security: Our business portfolio is dependent on digital tech-
nologies. We observe a global increase of IT security threats and
higher levels of professionalism in computer crime, which pose a
risk to the security of products, systems and networks and the
confidentiality, availability and integrity of data. Like other large
multinational companies we are facing active cyber threats from
sophisticated adversaries that are supported by organized crime
and nation states engaged in economic espionage. We attempt
to mitigate these risks by employing a number of measures, in-
cluding employee training, comprehensive monitoring of our
networks and systems through Cyber Security Operation Centers,
and maintenance of backup and protective systems such as fire-
walls and virus scanners. Our contractual arrangements with ser-
vice providers, aim to ensure that these risks are reduced. None-
theless, our systems, products, solutions and services, as well as
those of our service providers remain potentially vulnerable to
attacks. Such attacks could potentially lead to the publication,
manipulation, espionage or leakage of information, improper use
of our systems, defective products, production downtimes and
supply shortages, with potential adverse effects on our reputa-
tion, our competitiveness and results of our operations.
A.8.3.2 OPERATIONAL RISKS
Portfolio measures, at-equity investments, other investments
and strategic alliances: Our strategy includes divesting activi-
ties in some business areas and strengthening others through
portfolio measures, including mergers and acquisitions. With
respect to divestments, we may not be able to divest some of our
activities as planned, and the divestitures we do carry out could
have a negative impact on our business, financial condition, re-
sults of operations and our reputation. Mergers and acquisitions
are inherently risky because of difficulties that may arise when
integrating people, operations, technologies and products. There
can be no assurance that any of the businesses we acquired can
be integrated successfully and in a timely manner as originally
planned, or that they will perform as anticipated once integrated.
In addition, we may incur significant acquisition, administrative,
tax and other expenditure in connection with these transactions,
including costs related to integration of acquired businesses. Fur-
thermore, portfolio measures may result in additional financing
needs and adversely affect our capital structure. Acquisitions led
to substantial addition to intangible assets, including goodwill in
our Statements of Financial Position. If we were to encounter
continuing adverse business developments or if we were other-
wise to perform worse than expected at acquisition activities,
then these intangible assets, including goodwill, might have to
be impaired, which could adversely affect our business, financial
condition and results of operations. Our investment portfolio
consists of investments held for purposes other than trading.
Furthermore, we hold other investments, for example, Atos SE
and OSRAM Licht AG. Any factors negatively influencing the fi-
nancial condition and results of operations of our at-equity in-
vestments and other investments, could have an adverse effect
on our equity pick-up related to these investments or may result
in a related write-off. In addition, our business, financial condi-
tion and results of operations could also be adversely affected in
connection with loans, guarantees or non-compliance with fi-
nancial covenants related to these at-equity investments and
other investments. Furthermore, such investments are inherently
risky as we may not be able to sufficiently influence corporate
governance processes or business decisions taken by our equity
investments, other investments and strategic alliances that may
have a negative effect on our business. In addition, joint ventures
bear the risk of difficulties that may arise when integrating peo-
ple, operations, technologies and products. Strategic alliances
may also pose risks for us because we compete in some business
areas with companies with which we have strategic alliances.
Besides other measures, we handle these risks with standardized
processes as well as dedicated roles and responsibilities in the
areas of mergers, acquisitions, divestments and carve outs. This
includes post closing actions as well as claim management and
centrally managed portfolio activities.
maintain strict cost management, and conduct ongoing discus-
sions with all concerned interest groups.
27
Combined Management Report
Footprint: The risk is that we are not flexible enough in adjusting
our manufacturing footprint to quickly respond to changing mar-
kets, resulting in a non-competitive cost position and a loss of
business. To mitigate this risk, we continuously monitor and
analyze competitive and market information. Furthermore, we
closely monitor the implementation of the planned measures,
Continuous low Oil/Commodity Prices: The longer than ex-
pected low oil price could reduce demand for Oil & Gas products.
Additionally, countries depending on high oil and commodity
prices (e.g. Russia, Venezuela, Middle East) might reduce public
spending. Both would result in a decline in order intake and reve-
nue for our businesses that serve oil and gas markets, as well as
underutilization of resources. We attempt to mitigate these risks
by close monitoring of the market situation, especially in the oil
and gas business. We consistently strive to adjust our capacity,
improve our cost structure, and increase our competitiveness in
this market.
Disruptive Technologies (incl. Digitalization): The markets in
which our businesses operate experience rapid and significant
changes due to the introduction of innovative and disruptive tech-
nologies. In the fields of digitalization (e.g. internet of things,
web of systems, Industrie 4.0), there are risks of new competi-
tors, substitutions of existing products/solutions/services, new
business models (e.g. in terms of pricing) and finally the risk that
our competitors may have faster time-to-market strategies and
introduce their digital products and solutions faster than
Siemens. Our operating results depend to a significant extent on
our ability to anticipate and adapt to changes in our markets and
to reduce the costs of producing our products. Introducing new
products and technologies requires a significant commitment to
research and development, which in return requires expenditure
of considerable financial resources that may not always result in
success. Our results of operations may suffer if we invest in tech-
nologies that do not operate or may not be integrated as ex-
pected, or that are not accepted in the marketplace as antici-
pated, or if our products or systems are not introduced to the
market in a timely manner, particularly compared to our compet-
itors, or become obsolete. We constantly apply for new patents
and actively manage our intellectual property portfolio to secure
our technological position. However, our patents and other intel-
lectual property may not prevent competitors from independently
developing or selling products and services that are similar to or
duplicates of ours.
which could negatively impact our financial condition. Siemens'
global setup with operations in almost all relevant economies,
the wide variety of our offerings following different business
cycles, and our varying business models (e.g. product, software,
solution, project and service-business) help us to absorb the im-
pact of an adverse development in a single market.
In general, due to the significant proportion of long-cycle busi-
nesses in our Divisions and the importance of long-term con-
tracts for Siemens, there is usually a time lag between the devel-
opment of macroeconomic conditions and their impact on our
financial results. In contrast, short-cycle business activities of the
Digital Factory Division and parts of Process Industries and Drives
Division and in the Energy Management Division react quickly to
volatility in market demand. If the moderate recovery of macro-
economic growth stalls again and if we are not successful in
adapting our production and cost structure to subsequent
changes in conditions in the markets in which we operate, there
can be no assurance that we will not experience adverse effects.
For example, it may become more difficult for our customers
to obtain financing. As a result, they may modify, delay or cancel
plans to purchase our products and services, or fail to follow
through on purchases or contracts already executed. Further-
more, the prices for our products and services may decline, as a
result of adverse market conditions, to a greater extent than we
currently anticipate. In addition, contracted payment terms, es-
pecially regarding the level of advance payments by our custom-
ers relating to long-term projects, may become less favorable,
process could heighten business and consumer uncertainty, re-
duce investment in the U.K., pose risks to financial markets and
may increase the uncertainties about the future of the EU in the
course of the U.K. exit negotiations. A further and massive loss
of economic confidence and a prolonged period of reluctance in
investment decisions and awarding of new orders would hit our
businesses. We continuously monitor the exit process and es-
tablished, for example, a task force team coordinating our local
and global mitigation measures. Further, a substantial business
risk stems from a significant weakening of Chinese economic
growth and the potential for corrections or even a collapse in
the country's real estate market, banking sector or stock market.
The downturn could get worse, if Chinese authorities fail to re-
form the state-owned enterprises in the industry and banking
sector and to further liberalize and open the economy. Both
global and regional investment climates could collapse due to
political upheavals, further independence debates within coun-
tries in the European Union, or sustained success for protection-
ist, anti-EU and anti-business parties and policy. A rapid tighten-
ing of monetary policy by the U.S. Federal Reserve could cause
a depreciation spiral among emerging market currencies. This
could lead to a renewed emerging market crisis because debt
levels of emerging market enterprises have risen, making them
dependent on favorable global financial conditions to ser-
vice debts denominated in foreign currencies. A terrorist mega-
attack, or a series of such attacks in major economies, could
depress economic activity globally and undermine consumer
and business confidence. Further risks stem from political ten-
sions (e.g. Syria, Turkey, Ukraine) and a loss of confidence in the
automotive sector.
Combined Management Report
Economic, political and geopolitical conditions (macroeco-
nomic environment): We see a high level of uncertainty regard-
ing the global economic outlook. Significant downside risks stem
e.g. from consequences of the Brexit vote in June of 2016, from
political uncertainty in the wake of the U.S. presidential election
and from an increasing trend towards populism. The U.K. exit
A.8.1.4 OVERALL ASSESSMENT
We aim in general for a capital structure, defined as the ratio of
industrial net debt to EBITDA, of up to 1.0, and expect to achieve
this in fiscal 2017.
Capital structure
Combined Management Report
such as centralized tendering and reimbursement budget con-
trol. For Brazil, the recession is expected to continue to impact
healthcare investments.
For fiscal 2017, we expect markets for Healthineers to stay on a
moderate growth path. Healthineers' markets continue to benefit
from long-term trends such as growing and aging populations
and from broader access to healthcare, but are restricted by
public spending constraints and by consolidation of healthcare
providers. On a geographic basis, we expect slight to moderate
growth in the U.S., held back by continued pressure to increase
utilization of existing equipment and to reduce reimbursement
rates. For Europe, we expect slight growth, with equipment re-
placement and business with large customers such as hospital
chains gaining further importance. For China, we expect health-
care spending to rise, due to an aging population, urbanization,
growing chronic disease incidence and expanded access to
health insurance, partly held back by governmental restrictions
In fiscal 2017, market volume for the markets served by the Pro-
cess Industries and Drives Division is expected to come in
slightly below the level of fiscal 2016. While this decline is fore-
cast to be driven by an ongoing fall in investments in the oil and
gas and the mining markets, we expect this downturn to gradu-
ally come to an end during fiscal 2017.
Conditions for the markets addressed by the Digital Factory
Division are expected to improve modestly in fiscal 2017. Global
manufacturing production is forecasted to grow slightly in fiscal
2017, though global political and economic uncertainties are ex-
pected to continue to restrain investment decisions of key cus-
tomers. Market growth is expected to benefit from ongoing rising
demand from consumer-oriented manufacturing industries, es-
pecially in industrialized countries. Also, price stabilization in
some raw material markets is anticipated to end the economic
downturn in a number of emerging countries. Overall, we see
potential for the machine-building industry to return to slight
growth during the course of fiscal 2017, and the trend towards
digitalization is expected to continue to drive growth in the
industry software market.
For fiscal 2017, we expect markets served by the Mobility Divi-
sion to continue to grow moderately. We anticipate that rail op-
erators in Germany will continue to make significant invest-
ments. In the Middle East and Africa, we expect tenders of
further large turnkey and rolling stock projects. In China, we
expect investments in high-speed trains, urban transport and
rail infrastructure to continue to drive growth. In India, market
growth should continue from planned projects for commuter
and high-speed passenger lines, freight rail, and related infra-
structure as part of the transportation infrastructure build-out.
Overall, local rail transport is expected to gain importance as
urbanization is progressing. In emerging countries, rising in-
comes are expected to result in greater demand for public trans-
port solutions.
22 Combined Management Report
For the markets served by the Building Technologies Division,
we expect solid growth in fiscal 2017. The regional differences in
growth dynamics are narrowing further, with modestly increas-
ing growth rates in developed countries and slowing growth in
emerging markets. Above-average growth is anticipated in the
Middle East, China, India and the U.S. A majority of the European
countries are anticipated to continue their recovery, led by Ger-
many, Spain and some of the Northern European countries. On
the other hand, growth might be impacted in countries with sig-
nificant exposure to weak commodity markets and in countries
with geopolitical uncertainties.
For the markets served by the Energy Management Division, we
expect slight overall growth in fiscal 2017. The Division's markets
are experiencing rising power consumption due to urbanization
and electrification in emerging countries. Also the energy mix is
changing, with a rising share of renewable energy. Furthermore,
there is a trend towards decentralized power generation. Within
the Division's key industries, we expect moderate growth in de-
mand from the metals markets, driven by the Europe, C.I.S.,
Africa, Middle East and the Asia, Australia regions and from the
construction markets. For the oil and gas market, a slight recov-
ery is expected. Demand from data centers is also expected to
contribute to growth. The base market for utilities is expected
to continue to grow, but with large investments such as in the
Middle East not reaching the level of fiscal 2016.
We expect the markets served by the Wind Power and Renew-
ables Division to return to moderate growth in fiscal 2017.
Growth is expected to be driven by the Americas, particularly the
U.S. and continued growth in the offshore wind power market
segment. Overall, we expect a continuation of the trend towards
an increasing share of renewable energy within the energy mix.
Within the onshore wind power market, we expect demand in
the low-wind segment to remain significant.
For fiscal 2017, we expect market volume for the markets served
by the Power and Gas Division to remain near the level of fiscal
2016. We anticipate a decline in the gas turbine market and a
slight recovery in the compression market. Our expectation for
the compression market is based on the assumptions that oil
prices will continue to recover and replacement demand will
grow, particularly to support enhanced extraction techniques
employed in partially depleted fields. We expect flat demand in
the steam turbine market, and a decline in demand for coal-fired
power plants in China. Overall, we assume a shift to more flexible
power generation and stronger demand for combined heat and
power generation.
A.8.1.2 MARKET DEVELOPMENT
The forecasts presented here for GDP and fixed investments are
based on a report from IHS Markit dated October 15, 2016.
Despite the positive developments expected for the world econ-
omy in 2017, first and foremost the acceleration of the U.S. econ-
omy, the risks remain substantial, particularly in the geopolitical
sphere (see A.8.3. RISKS). In addition, central banks raising
interest rates might induce financial turbulence, substantial
swings in capital flows, and readjustment of exchange rates.
Emerging markets might be especially vulnerable to these
shocks.
In Europe, economic activity is expected to remain hampered by
political risks. Negotiations between the U.K. and the European
Union regarding the U.K.'s exit from the EU have been announced
for spring 2017 and could become contentious. The exit process
could heighten business and consumer uncertainty, reduce in-
vestment in the U.K., and pose some risk to financial markets.
This is also true for the banking sector which in some countries
suffers from non-performing loans and a capital shortage. GDP
growth is forecast at 1.5% in 2017 after 1.8% in 2016.
In China, economic growth is projected to slow to 6.3% in 2017
after 6.6% in 2016. Some questions exist about the sustainability
of development in the country's financial and real estate sectors.
With China's debt-to-GDP ratio rising strongly in recent years,
the risks of a financial imbalance have increased. In addition,
large housing price increases in several large cities have raised
concerns about another real estate bubble.
The U.S. has substantially resolved its inventory reduction, en-
abling GDP to grow substantially faster (+2.2%) than in 2016
(+1.4%). The good shape of the country's labor markets and in-
creasing wage growth support consumer spending, which is ex-
pected to remain the mainstay of the economy. Improved trends
in housing and capital spending are also expected to support
growth. In particular, business fixed investment is expected to
pick up, as a recovery in commodity prices is increasing capital
spending in resource extraction and related industries. Never-
theless, potential impacts resulting from political uncertainty in
the wake of the U.S. presidential election have to be monitored.
In fiscal year 2017, the world economy is expected to grow only
slightly faster than in fiscal 2016, but still well below the long-
term historical trend. Global GDP is expected to expand by 2.8%,
with fixed investments growing by 3.2%. Fixed investments in
emerging countries (+4.4%) are expected to grow faster than in
advanced economies (+1.9%).
Our SFS Division is geared to Siemens' Industrial Business and its
markets. As such SFS is, among other factors, influenced by the
business development of the markets served by our Industrial
Business. SFS will continue to focus its business scope on areas
of intense domain know-how, thereby limiting risk and exposure
going forward.
A.8.1 Report on expected
developments
A.8.1.3 SIEMENS GROUP
Revenue growth
24
Within our One Siemens financial framework, we aim in general
to achieve a ROCE in the range of 15% to 20%. We expect ROCE
for fiscal 2017 to come close to or reach the lower end of our
target range, compared to 14.3% for fiscal 2016. Burdens from
pending portfolio matters, which are excluded from our outlook,
could materially reduce our expectation for ROCE for fiscal 2017.
Capital efficiency
We do not expect material influence on financial results from
discontinued operations in fiscal 2017. For comparison, income
from discontinued operations in fiscal 2016 was €0.2 billion. We
anticipate our tax rate for fiscal 2017 to be in the range of 26%
to 30%.
Within our Reconciliation to Consolidated Financial Statements,
we expect results related to CMPA to continue to be highly vola-
tile from quarter to quarter during fiscal 2017. Expenses for Cor-
porate items are expected to be approximately €0.6 billion, with
costs in the second half-year higher than in the first half and
to include expenses related to our newly founded next47 startup
unit. While we anticipate that SRE will continue with real estate
disposals depending on market conditions, we expect gains from
disposals to be lower in fiscal 2017 than in fiscal 2016. Centrally
carried pension expenses are expected to total approximately
€0.5 billion in fiscal 2017. Amortization of intangible assets ac-
quired in business combinations was €674 million in fiscal 2016
and we expect a similar level in fiscal 2017, based on our current
business portfolio. Eliminations, Corporate Treasury and other
reconciling items are also anticipated to be on the prior-year level
despite higher interest expense related primarily to bonds issued
in fiscal 2016.
For fiscal 2017, we expect all but one of our industrial businesses
to be in their ranges for profit margin as defined in our financial
performance system (see → A.2 FINANCIAL PERFORMANCE SYSTEM).
The exception is Process Industries and Drives, which initiated
measures during fiscal 2016 to reduce the size of its manufactur-
ing capacity and align its global footprint to changed market
demand. We expect these measures to become effective largely
after fiscal 2017. Overall, we expect a profit margin for our Indus-
trial Business of 10.5% to 11.5%, compared to 10.8% in fiscal 2016,
in part due to our ongoing initiative to improve profitability of
low-margin businesses. We expect SFS, which is reported outside
Industrial Business, to achieve a return on equity (ROE) within its
margin range in fiscal 2017 and to keep its profit near the prior-
year level excluding the positive effect of €92 million, which re-
sulted from an at-equity investment.
capacities for innovation and organic growth. Our forecast for net
income and corresponding basic EPS further excludes charges
related to legal and regulatory matters.
Our forecast for net income and corresponding basic EPS is based
on a number of assumptions: We assume stabilization in the mar-
ket environment for our high-margin short-cycle businesses in
fiscal 2017. As part of our One Siemens framework, we target a
total cost productivity improvement of 3% to 5% in fiscal 2017.
Also, we assume continued solid project execution. Furthermore,
we anticipate no material currency-related effects on income.
Along with these assumptions, we anticipate pricing pressure on
our offerings of around 2% to 3% in fiscal 2017 along the lines of
fiscal 2016, with the Power and Gas Division and the Wind Power
and Renewables Division being affected the most. Furthermore,
we expect wage inflation of around 3% to 4%. Also, we plan to
increase R&D and selling expenses aimed at strengthening our
We expect higher net income year-over-year, and basic EPS from
net income in the range of €6.80 to €7.20 as compared to €6.74
in fiscal 2016 which included €0.23 from discontinued operations.
Profitability
We anticipate that orders will exceed revenue for a book-to-bill
ratio above 1.
We expect revenue growth to benefit from conversion of our or-
der backlog (defined as the sum of order backlogs of our indus-
trial businesses) which totaled €113 billion as of September 30,
2016. From this backlog, we expect to convert approximately
€39 billion of past orders into current revenue in fiscal 2017.
Within this amount, we expect for fiscal 2017 approximately
€12 billion in revenue conversion from the €44 billion backlog of
the Power and Gas Division, approximately €7 billion in revenue
conversion from the €12 billion backlog of the Energy Manage-
ment Division, approximately €7 billion in revenue conversion
from the €26 billion backlog of the Mobility Division, approxi-
mately €4 billion in revenue conversion from the €15 billion
backlog of the Wind Power and Renewables Division, approxi-
mately €3 billion in revenue conversion from the €5 billion back-
log of the Process Industries and Drives Division, approximately
€2 billion in revenue conversion from the €3 billion backlog of
the Building Technologies Division, approximately €2 billion in
revenue conversion from the €2 billion backlog of the Digital Fac-
tory Division and approximately €2 billion in revenue conversion
from the €5 billion backlog of Healthineers.
In fiscal 2016, most of our industrial businesses contributed to
organic revenue growth, and we expect a similar development in
fiscal 2017. The principle exception is the Power and Gas Division,
which contributed double-digit growth in fiscal 2016.
complex geopolitical environment. Therefore, we expect modest
growth in revenue, net of effects from currency translation and
portfolio transactions.
23
Combined Management Report
We continue to anticipate headwinds for macroeconomic growth
and investment sentiment in our markets in fiscal 2017 due to the
We are basing our outlook for fiscal 2017 for the Siemens Group
and its segments on the above-mentioned expectations and
assumptions regarding the overall economic situation and spe-
cific market conditions for the next fiscal year. Furthermore, this
outlook is based on the current business portfolio of Siemens,
excluding potential burdens associated with pending portfolio
matters in fiscal 2017. An acquisition of Mentor Graphics to ex-
pand our digital industrial leadership and a merger of our wind
power business, including service with Gamesa would among
other things result in additional revenue, purchase price allo-
cation effects, integration costs as well as assets and liabilities.
The merger with Gamesa would also result in increases in
non-controlling interests. In addition, we are further strengthening
Healthineers in Siemens for the future and are therefore planning
to publicly list our healthcare business. We will announce more
precise details regarding the date and scope of the placement
when plans for the public listing are further advanced. The listing
will also depend, among other things, on the stock market
environment.
Responsibilities are assigned for all relevant risks and opportuni-
ties, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step,
assuming responsibility for a specific risk or opportunity involves
choosing one of our general response strategies. Our general
response strategies with respect to risks are avoidance, transfer,
reduction or acceptance of the relevant risk. Our general re-
sponse strategy with respect to opportunities is to 'seize' the rel-
evant opportunity. In a second step, responsibility for a risk or
opportunity also involves the development, initiation and moni-
toring of appropriate response measures corresponding to the
chosen response strategy. These response measures have to be
specifically tailored to allow for effective risk management.
Accordingly, we have developed a variety of response measures
with different characteristics. For example, we mitigate the risk
of fluctuations in currency and interest rates by engaging in
hedging activities. Regarding our long-term projects, systematic
and comprehensive project management with standardized proj-
ect milestones, including provisional acceptances during project
execution and complemented by clearly defined approval pro-
cesses, assists us in identifying and responding to project risks at
an early stage, even before the bidding phase. Furthermore, we
maintain appropriate insurance levels for potential cases of dam-
age and liability risks in order to reduce our exposure to such risks
and to avoid or minimize potential losses. Among others, we ad-
dress the risk of fluctuation in economic activity and customer
demand by closely monitoring the macroeconomic conditions
and developments in relevant industries, and by adjusting capac-
ity and implementing cost-reduction measures in a timely and
consistent manner, if deemed necessary.
Provisions
Combined Management Report
(270)
134
7%
(3,558) (3,810)
administrative expenses
Selling and general
n/a
(2)%
(2,454)
development expenses
Research and
2%
(6)%
6,293
24%
23%
(2,417)
as percentage of revenue
Other operating income
(expenses), net
thereof Income from invest-
Profit carried forward
5,618
2,999
Net income
(300)
(160)
Financial income, net
Income taxes
3,158
Result from ordinary activities
(49)%
6,122
3,092
ments 3,732 (prior year 8,142)
5,918
256
5,945
Cost of Sales
Qualification of employees involved in the accounting process is
ensured through appropriate selection processes and regular
training. As a fundamental principle, based on materiality con-
siderations, the four eyes principle applies and specific proce-
dures must be adhered to for data authorization. Additional con-
trol mechanisms include target-performance comparisons and
analyses of the composition of and changes in individual line
items, both in the closing data submitted by reporting units and
in the Consolidated Financial Statements. In line with our infor-
mation security requirements, accounting-related IT systems
contain defined access rules protecting them from unauthorized
access. The manual and system-based control mechanisms re-
ferred to above generally also apply when reconciling the IFRS
closing data to the Annual Financial Statements of Siemens AG.
level. In particular cases, such as valuations relating to post-
employment benefits, external experts are used. The reported
closing data is used to prepare the financial statements in the
consolidation system. The steps necessary to prepare the financial
statements are subject to both manual and automated controls.
The base data used in preparing our financial statements consists
of the closing data reported by the operations of Siemens AG and
its subsidiaries. The preparation of the closing data of most of our
entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance
and monitoring related activities, are usually bundled on regional
Our Consolidated Financial Statements are prepared on the basis
of a centrally issued conceptual framework which primarily con-
sists of uniform Financial Reporting Guidelines and a chart of
accounts. For Siemens AG and other companies within the
Siemens group required to prepare financial statements in accor-
dance with German Commercial Code, this conceptual frame-
work is complemented by mandatory regulations specific to the
German Commercial Code. The need for adjustments in the con-
ceptual framework due to regulatory changes is analyzed on an
ongoing basis. Accounting departments are informed quarterly
about current topics and deadlines from an accounting and clos-
ing process perspective.
At the end of each fiscal year, our management performs an eval-
uation of the effectiveness of the implemented control system,
both in design and operating effectiveness. We have a standard-
ized procedure under which necessary controls are defined, doc-
umented in accordance with uniform standards, and tested reg-
ularly on their effectiveness. Nevertheless, there are inherent
limitations on the effectiveness of any control system, and no
system, including one determined to be effective, may prevent
or detect all misstatements.
Our ERM approach is based on COSO's "Enterprise Risk Manage-
ment - Integrated Framework". As one of the objectives of
this framework is reliability of a company's financial reporting, it
includes an accounting-related perspective. Our accounting-
related internal control system (control system) is based on
the internationally recognized "Internal Control - Integrated
Framework" also developed by COSO. The two systems are com-
plementary.
On a quarterly basis, an internal certification process is executed.
Management of different levels of our organization, supported
by confirmations of management of entities under their respon-
sibility, confirms the accuracy of the financial data that has been
reported to Siemens' corporate headquarters and reports on the
effectiveness of the related control systems.
33
The overarching objective of our accounting-related internal con-
trol and risk management system is to ensure that financial re-
porting is conducted in a proper manner, such that the Consoli-
dated Financial Statements and the Combined Management
Report of Siemens group as well as the Annual Financial State-
ments of Siemens AG as the parent company are prepared in
accordance with all relevant regulations.
The following discussion describes information required pursu-
ant to Section 289 (5) and Section 315 (2) no. 5 of the German
Commercial Code (Handelsgesetzbuch) and explanatory report.
A.8.5 Significant characteristics of
the accounting-related internal
control and risk management system
Assessment of the overall opportunities situation: The most
significant opportunity for Siemens is "Success from innovation
along electrification, automation and digitalization" compared to
"Mergers, acquisitions, equity investments, partnerships and di-
vestments" as disclosed in our prior year reporting. Even though
our assessment of individual opportunities has changed during
fiscal year 2016 due to developments in the external environ-
ment, our endeavors to profit from them and the revision of our
plans, the overall opportunity situation did not change signifi-
cantly compared to the prior year.
Climate change: While climate change is widely considered a
risk, we consider climate change mitigation an opportunity for
Siemens. In line with the global agreement in Paris (COP21) which
entered into force in November 2016. Siemens strives to support
a trend towards reducing CO2 emissions both in own operations
as well as for our customers based on technologies from our en-
vironmental portfolio, such as low-carbon power generation
from renewable energy sources.
Localizing value chain activities: Localizing certain value chain
activities, such as procurement, manufacturing, maintenance
and service in emerging markets, could enable us to reduce costs
and strengthen our global competitive position, in particular
compared to competitors based in countries where they can op-
erate with more favorable cost structures. Moreover, our local
footprint in many countries might help us to take advantage of a
possible growth of markets and leverage a shift in markets, re-
sulting in increased market penetration and market share.
Combined Management Report
Gross profit
Our internal audit function systematically evaluates our financial
reporting integrity, the effectiveness of the control system and
the risk management system, and the adherence to our compli-
ance policies. In addition, the Audit Committee is integrated into
our control system. In particular, it oversees the accounting pro-
cess and the effectiveness of the control system, the risk manage-
ment system and the internal audit system. Furthermore, we have
set up a Disclosure Committee which is responsible for reviewing
certain financial and non-financial information prior to publica-
tion. Moreover, we have rules for accounting-related complaints.
Combined Management Report
Revenue
(in millions of €)
(3)%
% Change
25,763 26,454
(19,818) (20,161)
Fiscal year
2015
34
2016
A.9.1 Results of operations
As of September 30, 2016, the number of employees was 94,363.
We intend to continue providing an attractive return to share-
holders. Therefore, we intend to propose a dividend whose distri-
bution volume is within a dividend payout range of 40% to 60%
of net income of the Siemens Group, which we may adjust for this
purpose to exclude selected exceptional non-cash effects.
Siemens AG is the parent company of the Siemens Group. Results
for Siemens AG are significantly influenced by directly or indi-
rectly owned subsidiaries and investments. The business devel-
opment of Siemens AG is fundamentally subject to the same risks
and opportunities as the Siemens Group. Due to the interrela-
tions between Siemens AG and its subsidiaries and the relative
size of Siemens AG within the Group, the outlook of the Group
also largely reflects our expectations for Siemens AG. Therefore,
the foregoing explanations for the Siemens Group apply also for
Siemens AG. We expect that income from investments will sig-
nificantly influence the profit of Siemens AG.
The Annual Financial Statements of Siemens AG have been pre-
pared in accordance with the rules set out in the German Com-
mercial Code (Handelsgesetzbuch).
A.9 Siemens AG
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
finding a consensus with customers while also improving cus-
tomer relationship management. At the same time, we reduce
quality problems by proactively addressing supplier issues up front.
179
Allocation to other
(5)%
(13)%
3,816
23,308
83
2,333
2,256
Deferred tax assets
81
Prepaid expenses
(3)%
(3)%
20,359
securities
Cash and cash equivalents,
(14)%
19,492
16,717
Receivables and other assets
3,642
Current assets
Active difference
35
(1)%
708
700
with an equity portion
Special reserve
1%
resulting from offsetting
19,247
Equity
Liabilities and equity
23%
(3)%
29
71,880
69,814
Total assets
19,368
(47)%
47%
(47)%
43%
1%
2%
2%
47,083
-
Income from investments, net declined due to a decrease of
€2.1 billion in income from profit transfers - in particular from
Siemens Beteiligungen Inland GmbH, which came in €2.0 billion
lower and an increase of €0.1 billion from losses from the dis-
posal of investments. These factors were only partly offset by an
increase of €0.5 billion from profit distribution - in particular
from Siemens Beteiligungsverwaltung GmbH & Co. OHG amount-
ing to €0.9 billion and a decline of €0.2 billion from impair-
ments on investments. For comparison, fiscal 2015 included a
gain of €2.8 billion on the disposal of Siemens' stake in BSH.
The decrease in Financial income, net was primarily attributable
to lower income from investments, net which decreased by
€4.4 billion. Other financial income (expenses), net increased by
€1.3 billion compared to the prior year.
Other operating income (expenses), net came in higher year-
over-year due to a decrease of €0.5 billion in other operating
expenses, only partly offset by a decline of €0.1 billion in other
operating income. The increase is explained mainly by factors in
the prior year. For comparison, fiscal 2015 included, within other
operating expenses, additions to post-closing provisions in con-
nection with the disposal of businesses.
Research and development (R&D) expenses as a percentage
of revenue (R&D intensity) increased by one percentage point
year-over year, to 10%. On an average basis, we employed 10,100
people in R&D in fiscal 2016. For additional information see
→ A.1.1.3 RESEARCH AND DEVELOPMENT.
ment.
-
Gross profit was lower year-over-year due mainly to declines of
€0.5 billion in Power and Gas and €0.1 billion in Energy Manage-
93%
(1)%
(2,714)
3,084
3,060
Unappropriated net income
(195)
retained earnings
Revenue decreased moderately as declines of €1.3 billion in En-
ergy Management and €0.2 billion in Power and Gas more than
offset a sharp increase of €0.9 billion in Wind Power and Renew-
ables. On a geographical basis, 73% of revenue was generated in
the Europe, C.I.S., Africa, Middle East region, 18% in the Asia,
Australia region and 9% in the Americas region. Exports from Ger-
many accounted for 64% of overall revenue. In fiscal 2016, orders
for Siemens AG amounted to €28.9 billion. Within Siemens AG,
the development of revenue, primarily in connection with large
orders, depends strongly on the completion of contracts.
2,439
43,688
46,127
The improvement in other financial income (expenses), net re-
sulted mainly from a €0.8 billion reduction in expenses from accre-
tion of pension provisions – due to a regulatory change which in-
creased the weighted average discount rate - and from a €0.7 billion
decrease in the realized loss related to interest and foreign currency
derivatives. These positive factors were only partly offset by €0.3
billion lower gains on the realization of monetary balance sheet
items denominated in foreign currencies and provisions for risks in
35
44,611
Financial assets
2,472
Intangible and tangible assets
Non-current assets
Assets
Combined Management Report
(in millions of €)
Sep 30,
2015
2016
Statement of Financial Position of Siemens AG in accordance
with German Commercial Code (condensed)
A.9.2 Net assets and financial position
The decline in Income taxes resulted from lower income tax ex-
penses due to the absence of burdens of tax audits from the prior
year as well as tax refunds that arose from positive appeal deci-
sions for prior years in fiscal 2016. That was partly offset by changes
in deferred taxes due primarily to an adjusted discount rate ap-
plied for the provision for Pensions and similar commitments.
derivatives, which were €0.2 billion higher. For comparison, fiscal
2015 included impairments of loan receivables of Unify Holdings
B.V. and Unify Germany Holdings B.V. amounting to €0.2 billion.
% Change
Pensions and similar
Excellent project execution: By expanding project management
efforts as well as learning from our mistakes in project execution
through a formalized lessons learned approach, we see an oppor-
tunity to continuously reduce non-conformance costs and ensure
on-time delivery of our projects and solutions. Furthermore, strin-
gent project risk and opportunity management, time schedule
management, performance bonuses and highly professional man-
agement of consortium partners and suppliers all help us to avoid
liquidated damages and ultimately improve our profit position. In
addition, improvements of our claim management processes en-
able us to reduce costs incurred as a result of customer claims by
Continuously developing and implementing initiatives to
reduce costs, boost sales efforts, adjust capacities, improve
our processes, realize synergies: In an increasingly competitive
market environment, a competitive cost structure complements
the competitive advantage of being innovative. We believe that
further improvements in our cost position can strengthen our
global competitive position and secure our market presence
against emerging and incumbent competitors. For example, we
expect to create sustainable value from productivity measures in
connection with our "Vision 2020" concept. Moreover, establish-
ing a stringent claim management process can help us realize
opportunities by enforcing our claims on our contract partners
even more strongly.
Target compensation
Maximum amounts of compensation
Share Ownership Guidelines
Stock-based
component
(Stock Awards):
max. 300% of
target amount
Long-term stock-based compensation
Remuneration system for Managing Board members
> Target parameter: stock price
> Variability: 0-200%
Variable compensation (Bonus)
> 3 targets
one-third each
> Variability: 0-200%
add. ±20% adjustment
compared to 5 competitors
Bonus: 0-200%
add. +20%
adjustment
The system and levels for the Managing Board's remuneration are
determined and regularly reviewed by the full Supervisory Board,
based on proposals by the Compensation Committee. The Super-
visory Board reviews remuneration levels annually to ensure that
they are appropriate. In this process, the Company's economic
situation, performance and outlook as well as the tasks and per-
formance of the individual Managing Board members are taken
into account. In addition, the Supervisory Board considers the
common level of remuneration in comparison with peer compa-
nies and with the compensation structure in place in other areas
of the Company. It also takes due account of the relationship
between the Managing Board's remuneration and that of senior
management and staff, both overall and with regard to its devel-
opment over time. For this purpose, the Supervisory Board has
also determined how senior management and the relevant staff
are to be differentiated. The remuneration system that has been
in place for Managing Board members since fiscal 2015 was ap-
proved at the Annual Shareholders' Meeting on January 27, 2015.
The individual components of compensation - base compensa-
tion, variable compensation (Bonus) and long-term stock-based
compensation - are weighted equally, and each comprises about
one-third of target compensation. This equal weighting is also
applied to the three target parameters of variable compensation.
A.10.1.1 REMUNERATION SYSTEM
GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
COMMERCIAL CODE.
Deferred income
Total liabilities and equity
29,118
29,752
385
69,814
31,545
32,494
(8)%
(8)%
The remuneration system for the Siemens Managing Board is in-
tended to provide an incentive for successful corporate manage-
ment with an emphasis on sustainability. Managing Board mem-
bers are expected to make a long-term commitment to and on
behalf of the Company and may benefit from any sustained in-
crease in the Company's value. For this reason, a substantial
portion of their total remuneration is linked to the long-term
performance of Siemens stock. Their remuneration is to be com-
mensurate with the Company's size and economic position. Ex-
ceptional achievements are to be rewarded adequately, while
falling short of targets is to result in an appreciable reduction in
remuneration. Their compensation is also structured so as to be
attractive in comparison to that of competitors, with a view to
attracting outstanding managers to the Company and retaining
them for the long term.
367
5%
(3)%
36
Combined Management Report
A.10 Compensation Report
This report is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of the
German Commercial Code (Handelsgesetzbuch), the German
Accounting Standards (Deutsche Rechnungslegungs Standards)
and the International Financial Reporting Standards (IFRS).
A.10.1 Remuneration of Managing
Board members
71,880
The Corporate Governance statement pursuant to Section 289a
of the German Commercial Code is an integral part of the Com-
bined Management Report and is presented in → C.4.2 CORPORATE
Compensation
target compensation
Non-performance-based components
Base compensation
Base compensation is paid as a monthly salary. Since October 1,
2015, the base compensation of President and CEO Joe Kaeser
has amounted to €2,034,000 per year. The base compensation
of the CFO and of those members of the Managing Board who
are responsible for Divisions (including Healthineers) has been
€1,042,800 per year. For the other member of the Managing
Board, it has been €988,800 per year.
Fringe benefits
Fringe benefits include the costs, or the cash equivalent, of non-
monetary benefits and other perquisites, such as the provision of
a company car, contributions toward the cost of insurance, the
reimbursement of expenses for legal advice and tax advice, ac-
commodation and moving expenses, including a gross-up
for
any
taxes due in this regard, currency adjustment payments and costs
relating to preventive medical examinations.
Performance-based components
Variable compensation (Bonus)
Variable compensation (Bonus) is based on the Company's busi-
ness performance in the past fiscal year. The Bonus depends on
an equal one-third weighting of target achievement of the target
parameters return on capital employed, earnings per share and
individual targets. To achieve a consistent target system Compa-
ny-wide, corresponding targets - in addition to other factors -
also apply to senior managers.
In fiscal 2016, the Managing Board's remuneration system had
the following components:
For 100% target achievement (target amount), the amount of the
Bonus equals the amount of base compensation. The Bonus is
subject to a ceiling (cap) of 200%. If targets are substantially
missed, variable compensation may not be paid at all (0%).
Long-term stock-based compensation
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards) at the beginning of
the fiscal year. Beneficiaries receive one free share of Siemens
stock per Stock Award after an approximately four-year restriction
period and subject to target achievement. If the employment
agreement begins during the fiscal year, an equivalent number
of Siemens Phantom Stock Awards will be granted instead of
Stock Awards. In lieu of a transfer of shares, only a cash equiva-
lent is given at the end of the restriction period for Siemens Phan-
tom Stock Awards. Beyond that, the same provisions agreed upon
for Siemens Stock Awards apply. In the event of extraordinary
unforeseen developments that impact the share price, the Super-
visory Board may decide to reduce the number of promised Stock
Awards retroactively, or it may decide that in lieu of a transfer of
Siemens stock only a cash settlement in a defined and limited
amount will be paid, or may decide to postpone transfers of
Siemens stock for payable Stock Awards until the developments
have ceased to impact the share price.
In the event of 100% target achievement, the annual target
amount for the monetary value of the Stock Awards commitment
is €2,120,000 for the President and CEO (effective October 1,
2015). For the CFO and for those members of the Managing
Board who are responsible for Divisions (including Healthineers)
it is €1,080,000. For the other member of the Managing Board,
it is €1,040,000. Since fiscal 2015, the Supervisory Board has had
the option of increasing the target amount for each member of
the Managing Board, on an individual basis, by as much as 75%
for one fiscal year at a time. This option enables the Supervisory
Board to take account of each Managing Board member's indi-
vidual accomplishments and experience as well as the scope and
demands of his or her position.
-
Long-term stock-based compensation is linked to the performance
of Siemens stock compared to its competitors. The Supervisory
Board will decide on a target system (target value for 100% and
target line) for the performance of Siemens stock relative to the
stock of - at present – five competitors (ABB, General Electric,
Rockwell, Schneider Electric and Toshiba). If significant changes
occur among these competitors during the period under consid-
eration, the Supervisory Board may take these changes into ac-
count, as appropriate, in determining the values for comparison
and/or calculating the relevant stock prices of those competitors.
Changes in the share price are measured on the basis of a twelve-
month reference period (compensation year) over three years
(performance period), while Stock Awards are restricted for a
period of four years. When this restriction period expires, the
Supervisory Board determines how much better or worse
Siemens stock has performed relative to the stock of its compet-
itors. This determination yields a target achievement of between
At its duty-bound discretion, the Supervisory Board may revise
the amount resulting from target achievement upward or down-
ward by as much as 20%; the adjusted amount of the Bonus paid
can thus be as much as 240% of the target amount. In choosing
the factors to be considered in deciding on possible revisions of
the Bonus payouts (±20%), the Supervisory Board takes account
of incentives for sustainable corporate management. Decisions
to make discretionary adjustments may take factors such as the
results of an employee survey or a customer satisfaction survey
into account as well as the Company's economic situation. The
revision option may also be exercised in recognition of Managing
Board members' individual achievements. The Bonus is paid en-
tirely in cash.
overall
max. 1.7 times
38
Combined Management Report
Base
compensation
Performance-based component with deferred payout
Non-performance-based component
Base
compensation
Performance-based component
37
Base
יו
Obligation to hold shares during term of office on the Managing Board
President
and CEO:
3 times base
compensation
Managing
Board
member:
2 times
base com-
pensation
compensation
Political stabilization of certain critical countries and resil-
ience of worldwide economic environment: We see an oppor-
tunity that political stabilization of certain critical countries and
lifting of sanctions (e.g. Iran) may lead to higher revenue volume
that was unavailable in past years. Furthermore, a return to more
robust macroeconomic growth could also lead to additional vol-
ume and profit for Siemens.
A.9.3 Corporate Governance
statement
Other provisions increased due primarily to higher provisions for
losses from derivative financial transactions, increased tax provi-
sions and higher provisions for personnel costs, each of which
increased by €0.3 billion.
Combined Management Report
In addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct of
our business operations, it cannot be excluded that violations of
applicable governmental regulations may be caused either by us
or by third parties that we contract with, including suppliers or
service providers, whose activities may be attributed to us. Any
such violations expose us to the risk of liability, reputational dam-
age or loss of licenses or permits that are important to our busi-
ness operations. In particular, we could also face liability for
damage or remediation for environmental contamination at
the facilities we design or operate. With regard to certain envi-
ronmental risks, we maintain liability insurance at levels that
our management believes are appropriate and consistent with
industry practice. We may incur environmental losses beyond the
limits, or outside the coverage, of such insurance, and such
Environmental, health & safety and other governmental reg-
ulations: Some of the industries in which we operate are highly
regulated. Current and future environmental, health & safety and
other governmental regulations or changes thereto may require
us to change the way we run our operations and could result in
significant increases in our operating or production costs. Fur-
thermore, we see the risk of potential environment, health & safety
incidents as well as potential non-compliance with environment,
health & safety regulations affecting Siemens and our contractors
or sub-suppliers, resulting in e.g. serious injuries, penalties, loss
of reputation and internal or external investigations.
Changes of regulations, laws and policies: As a diversified com-
pany with global businesses we are exposed to various product-
and country-related regulations, laws and policies influencing our
processes. We exercise our duty within the supply chain, as our
customers request transparency in the supply chain and as the
obligation to do so already forms an element of customer con-
tracts. If we are unable to achieve sufficient confidence through-
out our supply chain, or if any risks associated with these kinds
of regulations, laws and policies were to materialize, our reputa-
tion could also be adversely affected. We continuously monitor
the political and regulatory landscape in all our key markets to
anticipate potential problem areas, so that we are able to quickly
adjust our business activities accordingly upon any change in
conditions.
Besides other measures, Siemens established a global compliance
organization which conducts among others compliance risk miti-
gation processes such as Compliance Risk Assessments, and which
has been reviewed by external compliance experts.
ment's attention and resources from other issues facing our busi-
ness. Furthermore, we might be exposed to compliance risks in
connection with recently acquired operations that are in the
ongoing process of integration.
31
In addition, future developments in ongoing and potential future
investigations, such as responding to the requests of governmen-
tal authorities and cooperating with them, could divert manage-
Current and future investigations regarding allegations of
corruption, of antitrust violations and of other violations of
law: Proceedings against us regarding allegations of corruption,
of antitrust violations and of other violations of law may lead to
criminal and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of business,
the loss of business licenses or permits or other restrictions and
legal consequences. Accordingly, we may among other things be
required to comply with potential obligations and liabilities
arising in connection with such investigations and proceedings,
including potential tax penalties. Moreover, any findings related
to public corruption that are not covered by the 2008 and
2009 corruption charge settlements, which we concluded with
American and German authorities, may endanger our business
with government agencies and intergovernmental and supra-
national organizations. Monitors could again be appointed to
review future business practices and we may otherwise be
required to further modify our business practices and our com-
pliance program.
uct, economic and governmental instability, the potential for
nationalization of private assets and the imposition of exchange
controls. Asian markets in particular are important for our long-
term growth strategy, and our sizeable activities in China operate
under a legal system that is still developing and is subject to
change. Our long-term growth strategy could be limited by gov-
ernments preferentially supporting local competitors. With our
dedicated regional organizations we tackle these risks by con-
stantly monitoring the latest trends and defining our response
strategies which include an ongoing evaluation of our localiza-
tion approach.
30 Combined Management Report
Emerging market operations involve various risks, including civil
unrest, health concerns, cultural differences such as employ-
ment and business practices, volatility in gross domestic prod-
Regulatory risks and potential sanctions: As a globally operat-
ing organization, we conduct business with customers in coun-
tries which are subject to export control regulations, embargoes,
economic sanctions or other forms of trade restrictions (hereaf-
ter referred to as "sanctions") imposed by the U.S., the European
Union or other countries or organizations. New or expanded
sanctions in countries in which we do business may result in a
curtailment of our existing business in such countries or indirectly
in other countries. We are also aware of initiatives by institutional
investors, such as pension funds or insurance companies, to
adopt or consider adopting policies prohibiting investment in and
transactions with, or requiring divestment of interests in entities
doing business with, countries identified as state sponsors of ter-
rorism by the U.S. Department of State. It is possible that such
initiatives may result in us being unable to gain or retain inves-
tors, customers or suppliers. In addition, the termination of our
activities in sanctioned countries may expose us to customer
claims and other actions. Our reputation could also suffer due to
our activities with counterparties in or affiliated with these coun-
tries. Due to the political agreement based on the Joint Compre-
hensive Plan of Action (JCPOA) regarding the Iranian nuclear
program, Siemens has revised its group-wide policies to allow
new business activities with customers or end customers in Iran
that are not designated on the EU or U.S. sanctions lists, provided
that these activities do not breach the EU sanctions regulations
or the U.S. Secondary Sanctions (if applicable).
A.8.3.4 COMPLIANCE RISKS
A considerable part of our business activities involve govern-
ments and companies with public shareholders. We also partici-
pate in a number of projects funded by government agencies and
intergovernmental and supranational organizations, such as mul-
tilateral development banks. Ongoing or potential future investi-
gations into allegations of corruption, of antitrust violations or of
other violations of law could also impair relationships with such
business partners or could result in the exclusion of public con-
tracts. Such investigations may also adversely affect existing pri-
vate business relationships and our ability to pursue potentially
important strategic projects and transactions, such as strategic
alliances, joint ventures or other business cooperation, or could
result in the cancellation of certain of our existing contracts.
Moreover, third parties, including our competitors, could initiate
significant litigation.
TO CONSOLIDATED FINANCIAL STATEMENTS.
32
Protectionism (incl. Localization): Protectionist trade policies
and changes in the political and regulatory environment in the
markets in which we operate, such as import and export controls,
tariffs and other trade barriers including debarment from certain
markets and price or exchange controls, could affect our business
in several national markets; could impact our business, financial
position and results of operations; and may expose us to penal-
ties, other sanctions and reputational damage. In addition, the
uncertainty of the legal environment in some regions could limit
our ability to enforce our rights and subject us to increasing costs
related to appropriate compliance programs.
Mergers, acquisitions, equity investments, partnerships di-
vestments and streamline our portfolio: We constantly monitor
our current and future markets for opportunities for strategic
mergers and acquisitions, equity investments or partnerships to
complement our organic growth. Such activities may help us to
strengthen our position in our existing markets, provide access to
new markets or complement our technological portfolio in selected
areas. Opportunities might also arise from well executed divest-
ments that further optimize our portfolio while generating gains.
chains, we have identified several growth fields in which we see
our greatest long-term potential. We are orienting our resource
allocation toward these growth fields and have announced con-
crete measures in this direction. Across all Divisions, Siemens is
profiting from its undisputed strength in the digital enterprise. For
example, the company's new cloud based MindSphere platform
enhances the availability of customers' digital products and sys-
tems and improves their productivity and efficiency.
Combined Management Report
Success from innovation along electrification, automation
and digitalization: Innovation is a central part of Siemens "Vision
2020," an entrepreneurial concept leading Siemens into the
future in three stages: first we "drive performance," then we
"strengthen core," and finally we "scale up" to attain our Vision
2020 goals. We do this by investing significantly in R&D in order
to develop innovative, sustainable solutions for our customers and
to simultaneously safeguard our competitiveness. We are an in-
novative company and invent new technologies that we expect
will meet future demands arising from the megatrends of demo-
graphic change, urbanization, climate change and globalization.
We are granted thousands of new patents every year and contin-
uously develop new concepts and convincing business models.
We open up access to new markets and customers through new
marketing and sales strategies as well as Divisional master plans.
For example, we established next47, an independent unit de-
signed to found, partner with and invest in start-ups with innova-
tive ideas for shaping the future of electrification, automation and
digitalization, and thereby turn those ideas into viable businesses.
This will help Siemens create the next generation of path-break-
ing innovations in such fields as artificial intelligence, decentral-
ized electrification, autonomous machines, block chain applica-
tions and connected e-mobility. Siemens is positioned along the
value chains of electrification, automation and digitalization in
order to increase future market penetration. Along these value
Within our Enterprise Risk Management (ERM) we regularly iden-
tify, evaluate and respond to opportunities that present them-
selves in our various fields of activity. Below we describe our most
significant opportunities. Unless otherwise stated, the opportu-
nities described below relate to all of our segments. The order in
which the opportunities are presented reflects the currently esti-
mated relative exposure for Siemens associated with these oppor-
tunities and thus provides an indication of the opportunities'
current importance to us. The described opportunities are not
necessarily the only ones we encounter. In addition, our assess-
ment of opportunities is subject to change as our Company, our
markets and technologies are constantly developing. It is also
possible that opportunities we see today will never materialize.
A.8.4 Opportunities
losses may have an adverse effect on our business, financial con-
dition and results of our operations.
At present, no risks have been identified that either individually
or in combination could endanger our ability to continue as a
going concern.
The most significant challenges have been mentioned first in
each of the four categories Strategic, Operations, Financial and
Compliance. The risks caused by highly competitive environment
continue to be the most significant as in the prior year.
A.8.3.5 ASSESSMENT OF THE
OVERALL RISK SITUATION
For additional information with respect to specific proceedings, see
NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Siemens maintains liability insurance for certain legal risks at lev-
els our management believes are appropriate and consistent with
industry practice. The insurance policy, however, does not protect
Siemens against reputational damage. Moreover, Siemens may
incur losses relating to legal proceedings beyond the limits, or out-
side the coverage, of such insurance or exceeding any provisions
made for legal proceedings related losses. Finally, there can be no
assurance that Siemens will be able to maintain adequate insur-
ance coverage on commercially reasonable terms in the future.
Some of these legal disputes and proceedings could result in ad-
verse decisions for Siemens that may have material effects on our
financial position, the results of operations and/or cash flows.
Current or future litigation: Siemens is and will be in the course
of its normal business operations involved in numerous legal dis-
putes and proceedings in various jurisdictions. These legal dis-
putes and proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages,
equitable remedies or criminal or civil sanctions, fines or dis-
gorgement of profit. In individual cases this may also lead to for-
mal or informal exclusion from tenders or the revocation or loss
of business licenses or permits. In addition, further legal disputes
and proceedings may be commenced or the scope of pending
legal disputes and proceedings may be expanded. Asserted
claims are generally subject to interest rates.
Even though the assessments of individual risk exposures have
changed during fiscal 2016 due to developments in the external
environment, effects of our own mitigation measures and the
revision of our plans, the overall risk situation for Siemens did not
change significantly as compared to the prior year.
The decrease in Trade payables, liabilities to affiliated compa-
nies and other liabilities was due primarily to lower liabilities to
affiliated companies as a result of intra-group financing activities.
For further information on post-employment benefits, derivative
financial instruments, hedging activities, financial risk manage-
ment and measurements, see → NOTE 16, 23 AND 24 in → B.6 NOTES
Risks from pension obligations: The funded status of our pen-
sion plans may be affected by change in actuarial assumptions,
including the discount rate, as well as movements in financial
markets or a change in the mix of assets in our investment port-
folio. A significant increase in the underfunding may have a neg-
ative effect on our capital structure and rating, and thus may
tighten refinancing options and increase costs. In order to com-
ply with local pension regulations in selected foreign countries,
we may face a risk of increasing cash outflows to reduce an
underfunding of our pension plans in these countries.
619
62
887
(78)%
(30)%
Trade payables, liabilities
to affiliated companies
and other liabilities
Advance payments received
11,250
8,360
11,553
7,511
19,064
(3)%
11%
3%
The decrease in Receivables and other assets was due primarily
to lower receivables from affiliated companies as a result of intra-
group financing activities.
Cash and cash equivalents and marketable securities are sig-
nificantly affected by the liquidity management of Siemens AG.
The liquidity management is based on the finance strategy of the
Siemens Group. Therefore, the change in liquidity of Siemens AG
was not driven only by business activities of Siemens AG.
The increase in Equity was attributable to net income for the year
of €3.0 billion and issuance of treasury stock of €0.4 billion in
conjunction with our share-based compensation program. These
factors were partly offset by dividends paid in fiscal 2016 (for
fiscal 2015) of €2.8 billion. In addition, equity was reduced due
to share buybacks during the year amounting to €0.4 billion. The
equity ratios at September 30, 2016 and 2015 were 28% and 27%,
respectively.
The decrease in Pension and similar commitments resulted
mainly from a €0.8 billion reduction related to the above-men-
tioned adjustments of the discount rate and from lower interest
and service costs, which declined €0.3 billion, partly offset by a
decrease of €0.4 billion in transfers of pension obligations.
19,610
Examinations by tax authorities and changes in tax regula-
tions: We operate in nearly all countries of the world and there-
fore are subject to many different tax regulations. Changes in tax
law in any of these jurisdictions could result in higher tax ex-
pense and payments. Furthermore, legislative changes could
impact our tax receivables and liabilities as well as deferred tax
assets and deferred tax liabilities. In addition, the uncertain tax
environment in some regions could limit our ability to enforce
our rights. As a globally operating organization, we conduct busi-
ness in countries subject to complex tax rules, which may be
interpreted in different ways. Future interpretations or develop-
ments of tax regimes may affect our business, financial condi-
tion and results of operations. We are regularly examined by tax
authorities in various jurisdictions and we continuously identify
and assess resulting risks.
14
Liabilities
Credit Risks: We provide our customers with various forms of
direct and indirect financing of orders and projects. SFS in partic-
ular bears credit risks due to its financing activities. In part, we
take a security interest in the assets we finance, or we receive
additional collateral. Our business, financial condition and results
of operations may be adversely affected if the credit quality of
our customers deteriorates or if they default on their payment
obligation to us, if the value of the assets in which we have taken
a security interest or additional collateral declines, or if the proj-
ects in which we invest are unsuccessful. Positive market values
from derivatives and deposits with banks induce credit risk
against these banks. We monitor these market value develop-
ments very closely. A default by a major trading partner may have
negative impact on our financial position and the results of finan-
cial operations.
Liquidity and financing risks: Political and economic develop-
ments in the EU as well as the ongoing euro zone sovereign debt
crisis continue to influence global capital markets. Our treasury
and financing activities could face adverse deposit and/or financ-
ing conditions from negative developments related to financial
markets, such as (1) limited availability of funds (particularly U.S.
dollar funds) and hedging instruments; (2) an updated evalua-
tion of our solvency, particularly from rating agencies; (3) nega-
tive interest rates; and (4) impacts arising from more restrictive
regulation of the financial sector, central bank policy, or financial
instruments. Widening credit spreads due to uncertainty and risk
aversion in the financial markets might lead to adverse changes
of fair market values of our financial assets, in particular our de-
rivative financial instruments. Negative developments could also
further increase the costs for buying protection against credit risks
due to a potential increase in counterparty risks. Siemens reduces
funding risks through diversification into different funding instru-
ments, currencies, markets and investor groups. Liquidity risks are
mitigated by depositing cash into different categories of instru-
ments and with a range of counterparties of investment grade
credit quality; the associated counterparty risks are centrally and
closely monitored (including risks resulting from derivatives).
significant effects on our business, financial condition and results
of operations.
29
Combined Management Report
Market price risks: We are exposed to fluctuations in exchange
rates, especially between the U.S. dollar and the euro, because a
high percentage of our business volume is conducted in U.S. dol-
lar and as exports from Europe. In addition, we are exposed to
currency effects involving the currencies of emerging markets, in
particular the Chinese yuan. A strengthening of the euro (partic-
ularly against the U.S. dollar) may change our competitive posi-
tion, as many of our competitors may benefit from having a
substantial portion of their costs based in weaker currencies,
enabling them to offer their products at lower prices. As a result,
a strong euro in relation to the U.S. dollar and other currencies
could have an adverse impact on our results of operations. We
are also exposed to fluctuations in interest rates. Negative devel-
opments in the financial markets and changes in the central bank
policies may negatively impact our results. Certain currency risks
as well as interest rate risks are hedged using derivative financial
instruments. Depending on the development of foreign cur-
rency exchange and interest rates, hedging activities could have
Liabilities to banks
A.8.3.3 FINANCIAL RISKS
tense in the industries and regions in which our businesses oper-
ate. We have ongoing demand for highly skilled employees. Our
future success depends in part on our continued ability to hire,
integrate, develop and retain engineers and other qualified per-
sonnel. We address this risk for example with structured succes-
sion planning, employer branding, retention and career manage-
ment. Furthermore the company is strengthening the capabilities
and skills of our Talent Acquisition teams and has defined a strat-
egy of pro-active search for people with the required skills in our
respective industries and markets.
Shortage of Skilled Personnel: Competition for highly qualified
personnel (e.g. specialists, experts, "digital" talents) remains in-
Cost overruns or additional payment obligations related to
the management of our long-term, fixed-price or turnkey proj-
ects: A number of our industrial businesses conduct activities,
especially large projects, under long-term contracts that are
awarded on a competitive bidding basis. Such contracts typically
arise in Power and Gas, Wind Power and Renewables, Mobility,
and parts of Energy Management and Process Industries and
Drives. Some of these contracts are inherently risky because we
may assume substantially all of the risks associated with complet-
ing a project and meeting post-completion warranty obligations.
For example, we may face the risk that we must satisfy technical
requirements of a project even though we have not gained expe-
rience with those requirements before we win the project. The
profit margins realized on fixed-priced contracts may vary from
original estimates as a result of changes in costs and productivity
over the contract's term. We sometimes bear the risk of unantic-
ipated project modifications, shortage of key personnel, quality
problems, financial difficulties of our customers and/or signifi-
cant partners, cost overruns or contractual penalties caused by
unexpected technological problems, unforeseen developments
at the project sites, unforeseen changes or difficulties in the reg-
ulatory or political environment, performance problems with our
suppliers, subcontractors and consortium partners or other logis-
tical difficulties. Some of our multi-year contracts also contain
demanding installation and maintenance requirements in addi-
tion to other performance criteria relating to timing, unit cost
and compliance with government regulations requirements,
which, if not satisfied, could subject us to substantial contractual
penalties, damages, non-payment and contract termination.
There can be no assurance that contracts and projects, in partic-
ular those with long-term duration and fixed-price calculation,
can be completed profitably. To tackle those risks we imple-
mented a global project management organization to systemat-
ically improve the know-how of the project management person-
nel. For very complex projects we conduct dedicated risk
assessments in very early stages of the sales phase before we
decide to hand over a binding offer to our customer.
manufacturing facilities, and the streamlining of product port-
folios, are also part of these cost-reduction efforts. These mea-
sures may not be implemented as planned, may turn out to be
less effective than anticipated, may become effective later than
estimated or may not become effective at all. Any future contri-
bution of these measures to our profitability will be influenced
by the actual savings achieved and by our ability to sustain them.
Furthermore, a delay in critical R&D projects could lead to nega-
tive impacts in running projects. We constantly control and mon-
itor the progress of these projects and initiatives using standard-
ized controlling and milestone tracking approaches.
commitments
Other provisions
Interruption of the supply chain: The financial performance of
our Industrial Business depends on reliable and effective supply
chain management for components, sub-assemblies and materi-
als. Capacity constraints and supply shortages resulting from
ineffective supply chain management may lead to delays and
additional cost. We rely on third parties to supply us with parts,
components and services. Using third parties to manufacture,
assemble and test our products reduces our control over manu-
facturing yields, quality assurance, product delivery schedules
and costs. Although we work closely with our suppliers to avoid
supply-related problems, there can be no assurance that we will
not encounter supply problems in the future. Shortages and de-
lays could materially harm our business. Unanticipated increases
in the price of components or raw materials due to market short-
ages or other reasons could also adversely affect performance.
Furthermore, we may be exposed to the risk of delays and inter-
ruptions in the supply chain as a consequence of catastrophic
events, particularly if we are unable to identify alternative sources
of supply or means of transportation in a timely manner or at all.
Besides other measures, we mitigate fluctuation in the global raw
material markets with various hedging instruments.
Financial assets went up due to a €0.5 billion increase in loans
and an increase of €0.3 billion in shares in affiliated companies.
3,071
2,683
Dr. Roland Busch
Managing Board member
Lisa Davis'
Managing Board member
Klaus Helmrich
Managing Board member
2015
2016
2016
(min) (max)
2016
2015
2016
2016
2016
(min) (max)
2015
2016
1,878
102
2,034
102
1,980
2,034 2,034
102
102
2,136 2,136 2,136
1,010
53
President and CEO
1,043
Joe Kaeser
€105,227), Barbara Kux - €42,052 (2015: €105,227), Peter
Löscher - €103,403 (2015: €230,387), Prof. Dr. Hermann
Requardt - €5,624 (2015: €1,107,522), Peter Y. Solmssen -
€35,857 (2015: €141,258), and Dr. Michael Süß - €248
(2015: €28,666). In fiscal 2016, the development of the
OSRAM share price lead to a respective adjustment of the
OSRAM cash compensation and thus to earnings in the
amount of €301,027. Especially for former Managing
Board members those earnings are evident, since they
were set off against the usual liabilities arising from other
share based payments and with respect to former Manag-
ing Board members, no essential amount of accruals has
been built up for the remaining tranches.
components
Fixed compensation (base compensation)
Fringe benefits¹
Total
without long-term incentive effect,
non-stock-based
with long-term incentive effect,
stock-based
Total 5
Service Cost
Total (Code) 6
One-year variable compensation
(Bonus) - Target amount
Multi-year variable compensation 2,3
Siemens Stock Awards4
(restriction period: 4 years)
Total compensation of all Managing Board members for fiscal 2016, in accordance with the applicable reporting standards, amounted to €28.90 million
(2015: €27.42 million). The payout amount presented below is to be used instead of the target value according to the Code for one-year variable
compensation. Service costs for pension benefits are not included.
Performance-based
components
without long-term incentive effect,
non-stock-based
One-year variable compensation
(Bonus) Payout amount
Total compensation
1 Fringe benefits include the costs, or the cash equivalent,
of non-monetary benefits and other perquisites, such as
the provision of company cars in the amount of €159,687
(2015: €158,131), contributions toward the cost of insur-
ance in the amount of €139,795 (2015: €134,170), the
reimbursement of expenses for legal advice and tax advice,
accommodation and moving expenses, including any
taxes due in his regard, currency adjustment payments
and costs relating to preventive medical examinations
in the amount of €765,327 (2015: €330,620).
2 The figures for individual maximums for multi-year vari-
able compensation reflect the possible maximum value in
accordance with the maximum amount agreed upon for
fiscal 2016 - that is, 300% of the applicable target amount.
3 The expenses recognized for stock-based compensation
for members of the Managing Board in accordance with
the IFRS in fiscal 2016 and fiscal 2015 amounted to
€8,294,921 and €8,109,155, respectively. The following
amounts pertained to the members of the Managing
Board in fiscal 2016: Joe Kaeser €2,378,584 (2015:
€2,003,783), Dr. Roland Busch €1,283,779 (2015:
€1,129,224), Lisa Davis €698,432 (2015: €284,928), Klaus
Helmrich €1,284,349 (2015: €1,076,237), Janina Kugel
€704,026 (2015: €140,185), Prof. Dr. Siegfried Russwurm
€1,302,593 (2015: €1,239,596), and Dr. Ralf P. Thomas
€872,394 (2015: €516,915). The corresponding expense,
determined in the same way, for former Managing Board
members was as follows: Brigitte Ederer - €42,052 (2015:
Combined Management Report
1,043
1,043
1,010
48
227
683
53
55
102
102
1,010
1,043
1,010
1,043
1,010
1,043
1,878
2,034
2015
2016
2015
2016
42
2,136
1,980
1,098
55
55
55
1,063
1,098
1,098
1,098
227
1,238
683
1,726
Performance-based
1,043 1,043
683
1,726
2016
2016
2015
2016 (min)
1,052
1,091
1,238
1,726
1,063
2016
2016
(min) (max)
1,043
683
1,726
2015
Non-performance-
based components
Managing Board members serving as of September 30, 2016
Maximum amount for compensation overall
In addition to the maximum amounts of compensation for vari-
able compensation and long-term stock-based compensation, a
maximum amount for compensation overall has been defined.
Since fiscal 2014, this amount cannot be more than 1.7 times
higher than target compensation. Target compensation comprises
base compensation, the target amount for variable compensation
and the target amount for long-term stock-based compensation,
excluding fringe benefits and pension benefit commitments.
When fringe benefits and pension benefit commitments for a
given fiscal year are included, the maximum amount of compen-
sation overall for that year will increase accordingly.
Share Ownership Guidelines
-
The Siemens Share Ownership Guidelines are an integral part of
the remuneration system for the Managing Board and senior ex-
ecutives. These guidelines require that – after a specified buildup
phase Managing Board members hold Siemens stock worth a
multiple of their base compensation – 300% for the President
and CEO, 200% for the other members of the Managing Board -
throughout their terms of office on the Managing Board. The
determining figure in this context is the average base compensa-
tion that a member of the Managing Board has received over the
four years before the applicable dates of proof of compliance.
Changes that have been made to base compensation in the mean-
time are included. Non-forfeitable stock commitments (Bonus
Awards) which were granted until fiscal 2014 are taken into
account in determining compliance with the Share Ownership
Guidelines.
Compliance with these guidelines must be proven for the first
time after a four-year buildup phase. Thereafter, it must be proven
annually. If the value of a Managing Board member's accrued
holdings declines below the required minimum due to fluctua-
tions in the market price of Siemens stock, he or she must acquire
additional shares.
Pension benefit commitments
Like employees of Siemens AG, the members of the Managing
Board are included in the Siemens Defined Contribution Benefit
Plan (BSAV). Under the BSAV, Managing Board members receive
contributions that are credited to their personal pension accounts.
The amount of these annual contributions is based on a pre-
determined percentage related to their base compensation and
the target amount for their Bonuses. This percentage is decided
upon annually by the Supervisory Board. Most recently it was
set at 28%. In making its decisions, the Supervisory Board takes
account of the intended level of provision for each individual and
Combined Management Report
39
40
the length of time he or she has been a Managing Board member
as well as the annual and long-term expense to the Company
resulting from that provision. The non-forfeitability of pension
benefit commitments is determined in compliance with the pro-
visions of the German Company Pensions Act (Betriebsrentenge-
setz). Special contributions may be granted to Managing Board
members on the basis of individual decisions by the Supervisory
Board. If a member of the Managing Board earned a pension ben-
efit entitlement from the Company before the BSAV was intro-
duced, a portion of his or her contributions went toward
financing that prior commitment.
Managing Board members are eligible to receive benefits under
the BSAV at the age of 60 or - in the case of benefit commitments
made on or after January 1, 2012 - the age of 62. As a rule, the
accrued pension benefit balance is paid out to Managing Board
members in twelve annual installments. A Managing Board mem-
ber or his or her surviving dependents may also request that his
or her pension benefit balance be paid out in fewer installments
or as a lump sum, subject to the Company's consent. The accrued
pension benefit balance may also be paid out as a pension. As a
further alternative, Managing Board members may choose to
combine pension payments with payments in one to twelve install-
ments. If the pension option is chosen, a decision must be made
as to whether the payout should include pensions for surviving
dependents. If a member of the Managing Board dies while receiv-
ing a pension, benefits will be paid to his or her surviving depen-
dents if the member has chosen such benefits. The Company will
then provide a limited-term pension to surviving children until
they reach the age of 27 or, in the case of benefit commitments
made on or after January 1, 2007, until they reach the age of 25.
Benefits from the retirement benefit system that was in place
before the BSAV was established are normally granted as pension
benefits with a surviving dependent's pension. In this case also,
payout in installments or a lump-sum payment may be chosen
instead of pension payments.
Like other eligible employees of Siemens AG, Managing Board
members who were employed by the Company on or before Sep-
tember 30, 1983, are entitled to receive transition payments for
the first six months after retirement, equal to the difference be-
tween their final base compensation and the retirement benefits
payable under the corporate pension plan if they retire immedi-
ately after the termination of their Managing Board membership.
The provisions of the German Company Pensions Act (Betriebs-
rentengesetz) do not apply to this benefit.
Commitments in connection with the termination
of Managing Board membership
Managing Board employment contracts provide for a compensa-
tory payment if membership on the Managing Board is termi-
nated prematurely by mutual agreement and without serious
cause. The amount of this payment must not exceed the value of
two years' compensation and compensate no more than the re-
maining term of the contract (cap). The amount of the compen-
satory payment is calculated on the basis of base compensation,
together with the variable compensation and the long-term
stock-based compensation actually received during the last fiscal
year before termination. The compensatory payment is payable
in the month when the member leaves the Managing Board. In
addition, a one-time special contribution is made to the BSAV.
The amount of this contribution is based on the BSAV contribu-
tion that the Managing Board member received in the previous
year and on the remaining term of his or her appointment, but
is limited to not more than two years' contributions (cap). The
above benefits are not paid if an amicable termination of the
member's activity on the Managing Board is agreed upon at the
member's request, or if there is serious cause for the Company
to terminate the employment relationship.
In the event of a change of control that results in a substantial
change in a Managing Board member's position - for example,
due to a change in corporate strategy or a change in the Manag-
ing Board member's duties and responsibilities - the Managing
Board member has the right to terminate his or her contract with
the Company. A change of control exists one or more share-
holders acting jointly or in concert acquire a majority of the vot-
ing rights in Siemens AG and exercise a controlling influence or if
Siemens AG becomes a dependent enterprise as a result of enter-
ing into an intercompany agreement within the meaning of Sec-
tion 291 of the German Stock Corporation Act (Aktiengesetz) or
if Siemens AG is to be merged into an existing corporation or
other entity. If this right of termination is exercised, the Manag-
ing Board member is entitled to a severance payment in the
amount of not more than two years' compensation. The calcula-
tion of the annual compensation will include not only the base
compensation and the target amount for the Bonus, but also the
target amount for Stock Awards, in each case based on the most
recent fiscal year completed prior to the termination of the mem-
ber's contract. The stock-based components for which a firm
commitment already exists will remain unaffected. There is no
entitlement to a severance payment if the Managing Board mem-
ber receives benefits from third parties in connection with a
change of control. Moreover, there is no right to terminate if the
change of control occurs within a period of twelve months prior
to a Managing Board member's retirement.
Performance of Siemens stock
compared to 5 competitors
Compensatory or severance payments also cover non-monetary
benefits by including an amount of 5% of the total compensation
or severance amount. Compensatory or severance payments will
be reduced by 10% as a lump-sum allowance for discounted val-
ues and for income earned elsewhere. However, this reduction
will apply only to the portion of the compensatory or severance
stock-based compensation
(Siemens Stock Awards)
1/3
1,477
1,387
1,444
0% and 200% (cap). If target attainment is above 100%, an addi-
tional cash payment corresponding to the outperformance will
be made. If target attainment is less than 100%, a number of
stock commitments equivalent to the shortfall from the target
will expire without replacement.
The value of the Siemens stock to be transferred for Stock Awards
after the end of the restriction period is subject to a ceiling of
300% of the respective target amount. If this maximum amount
of compensation is exceeded, the corresponding entitlement to
stock commitments will be forfeited without replacement.
With regard to the further terms of the Stock Awards, the same
principles apply in general to the Managing Board and to senior
managers. These principles are discussed in more detail in
→ NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Transparency through simplicity:
Three equally balanced components within the remuneration system and three equally balanced targets within the Bonus
1/3
13
Base compensation
Variable compensation
(Bonus)
1/3
1/3
1/3
ROCE
Earnings
per share
Individual
targets
Long-term
Combined Management Report
payment that was calculated without taking into account the first
six months of the remaining term of the Managing Board mem-
ber's employment contract.
Stock commitments that were made as long-term stock-based
compensation and for which the restriction period is still in effect
will be forfeited without replacement if the employment agree-
ment is not extended after the end of an appointment period,
either at the Managing Board member's request or because there
is serious cause that would have entitled the Company to revoke
the appointment or terminate the contract. However, once
granted, Stock Awards are not forfeited if the employment agree-
ment is terminated by mutual agreement at the Company's re-
quest, or because of retirement, disability or death or in connec-
tion with a spinoff, the transfer of an operation, or a change of
activity within the corporate group. In these cases, the Stock
Awards will remain in effect upon termination of the employ-
ment agreement and will be honored on expiration of the restric-
tion period.
Non-performance-
based components
Performance-based
components
Fixed compensation (base compensation)
Fringe benefits¹
Total
without long-term incentive effect,
non-stock-based
with long-term incentive effect,
stock-based
Total 5
Service Cost
Total (Code) 6
One-year variable compensation
(Bonus) - Target amount
Multi-year variable compensation 2,3
Siemens Stock Awards 4
(restriction period: 4 years)
Total compensation of all Managing Board members for fiscal 2016, in accordance with the applicable reporting standards, amounted to €28.90 million
(2015: €27.42 million). The payout amount presented below is to be used instead of the target value according to the Code for one-year variable
compensation. Service costs for pension benefits are not included.
Performance-based
Total compensation
without long-term incentive effect,
non-stock-based
One-year variable compensation
(Bonus) - Payout amount
(Amounts in thousands of €)
Managing Board members serving as of September 30, 2016
42
41
A.10.1.2 REMUNERATION OF MANAGING BOARD
MEMBERS FOR FISCAL 2016
At the beginning of the fiscal year, the Supervisory Board set the
target parameters return on capital employed (ROCE) and earn-
ings per share (EPS) for all members of the Managing Board, in
each case on the basis of continuing and discontinued opera-
tions. The target values for the EPS component were defined on
a multi-year basis. In defining the target for variable compensa-
tion, the Supervisory Board also defined individual targets so as
to take fuller account of the individual performance of each Man-
aging Board member. As a rule, up to five individual targets were
defined for this purpose. These targets take account of business-
related targets such as market coverage and business perfor-
mance as well as targets such as customer and employee satis-
faction, innovation and sustainability. An internal review of the
appropriateness of Managing Board compensation for fiscal 2016
has confirmed that the remuneration of the Managing Board re-
sulting from target achievement for fiscal 2016 is to be consid-
ered appropriate. In light of this review and following a review of
the achievement of the targets defined at the beginning of the
fiscal year, the Supervisory Board has decided to define the
amounts of variable compensation, stock commitments and pen-
sion benefit contributions as follows:
Variable compensation (Bonus)
The following targets were set and attained with respect to the
two target parameters ROCE and EPS for variable compensation:
Target parameter
Return on capital employed, ROCE¹
Earnings per share, basic EPS1 (02014-2016)
1 Continuing and discontinued operations.
(Amounts in thousands of €)
100% of target
12.76%
€6.76
14.31%
€7.32
Target achievement
151.67%
137.33%
The achievement of individual targets was also taken into ac-
count when determining overall target achievement. In its overall
assessment, the Supervisory Board decided not to make any dis-
cretionary adjustments to the Bonus payout amounts. In fiscal
2016, Bonus-related target achievement by Managing Board
members was between 126.34% and 136.33%.
Long-term stock-based compensation
Since beneficiaries are not entitled to receive dividends, the num-
ber of stock commitments granted was based on the closing
price of Siemens stock in Xetra trading on the date of award less
the present value of dividends expected during the restriction
period. The share price used to determine the number of stock
commitments was €75.60 (2015: €72.30).
Total compensation
On the basis of the Supervisory Board's decisions described
above, Managing Board compensation for fiscal 2016 totaled
€28.90 million, an increase of 5.4% (2015: €27.42 million). Of this
total amount, €20.19 million (2015: €19.56 million) was attribut-
able to cash compensation and €8.71 million (2015: €7.86 mil-
lion) to stock-based compensation.
The compensation presented on the following pages was granted
to the members of the Managing Board for fiscal 2016 (individual
disclosure). Due to rounding, the figures presented in the table
may not add up precisely to the totals provided.
Combined Management Report
Actual FY 2016 figure
1,370
2016
2016
3,505 3,584
1,387
1,444
2,683 2,773
6,535 7,066
5,984
1,693
3,664 3,835
602
602
602
604
5,382
1,091
3,233
3,061
3,240
0
1,099
998
1,477 1,387
3,713 4,212
0 3,240
1,726 5,382
576
576
2,301 5,957
1,376 1,370
3,427 3,560
Prof. Dr. Siegfried Russwurm
Managing Board member
2016
2016
2016 (min) (max)
1,043
1,043 1,043
78
78
78
1,121 1,121 1,121
1,010
78
1,088
1,027 1,027
2,773
1,027
651
989
39
39
39
25
989
989
626
2015
2016
2016
(min) (max)
2016
2015
Managing Board member
Dr. Ralf P. Thomas
Janina Kugel
1,099
3,868
611
576
3,857 4,443
5,984
1,700
0
1,043
1,010
4,882
0
2,034
1,878
1,091
1,091
1,091
48
48
48
1,043
1,043
1,043
1,010
42
1,052
(max)
1,387
2,503
1,010
1,043
0
3,843
3,675
603
603
603
604
998
3,246
5,382
1,098
CFO
3,240
0
1,099
998
0 6,360
5,729 6,328 2,136 10,520
1,096 1,101 1,101 1,101
6,825 7,428 3,236 11,620
1,871 2,158
2,503
0
1,010 1,043
2,503
3,240
2015
2016
2015
(Amounts in thousands of €)
Managing Board members serving as of September 30, 2016
Total (Code)
Service Cost
Total
Other5
Siemens Stock Awards (restriction period: 2011-2015)³
Bonus Awards (waiting period: 2011-2015)4
Share Matching Plan (vesting period: 2013-2015)
Share Matching Plan (vesting period: 2012 - 2014)
One-year variable compensation (Bonus) - Payout amount²
Multi-year variable compensation
without long-term incentive effect, non-stock-based
with long-term incentive effect, stock-based
Total
Fixed compensation (base compensation)
Fringe benefits¹
components
Performance-based
Non-performance-
based components
(Amounts in thousands of €)
Managing Board members serving as of September 30, 2016
multi-year variable compensation granted for fiscal 2016 and
shown above, this table includes the actual figure for multi-year
variable compensation granted in previous years and allocated in
fiscal 2016. Due to rounding, the figures presented in the table
may not add up precisely to the totals provided.
The following table shows allocations for fiscal 2016 for fixed
compensation, fringe benefits, one-year variable compensation
and multi-year variable compensation - by reference year - as
well as the expense of pension benefits. In deviation from the
Allocations
Non-performance-
based components
43
Performance-based
components
Total
Managing Board member
Klaus Helmrich
Managing Board member
Lisa Davis
Managing Board member
Dr. Roland Busch
President and CEO
Joe Kaeser
44 Combined Management Report
3 Starting with the Siemens Stock Awards tranche of 2011,
the restriction period was extended from three to four
years. Shares from the Siemens Stock Awards 2011 were
thus only transferred in November 2015. Therefore, no
allocation for Siemens Stock Awards was made in fiscal
2015. For one half of these Stock Awards target attainment
depended on the EPS for the past three fiscal years and
2 The payout amount of one-year variable compensation
(Bonus) presented above therefore represents the amount
awarded for fiscal 2016, which will be paid out in January
2017.
any taxes due in this regard, currency adjustment pay-
ments and costs relating to preventive medical examina-
tions in the amount of €765,327 (2015: €330,620).
1 Fringe benefits include the costs, or the cash equivalent,
of non-monetary benefits and other perquisites, such as
the provision of company cars in the amount of €159,687
(2015: €158,131), contributions toward the cost of insur-
ance in the amount of €139,795 (2015: €134,170), the
reimbursement of expenses for legal advice and tax
advice, accommodation and moving expenses, including
Service Cost
Total (Code)
Total
Other5
Siemens Stock Awards (restriction period: 2011-2015)³
Bonus Awards (waiting period: 2011 - 2015)4
Share Matching Plan (vesting period: 2013-2015)
Share Matching Plan (vesting period: 2012 - 2014)
One-year variable compensation (Bonus) - Payout amount²
Multi-year variable compensation
without long-term incentive effect, non-stock-based
with long-term incentive effect, stock-based
Fixed compensation (base compensation)
Fringe benefits¹
Combined Management Report
7 Ms. Davis's compensation is paid out in Germany in euros. It has
been agreed that any tax liability that arises due to tax rates that
are higher in Germany than in the U.S. will be reimbursed. For
base compensation of calendar year 2015 as well as for the
Bonus of fiscal 2015, a currency-adjustment payment was
granted.
6 Total compensation reflects the current fair value of stock-based
compensation components on the award date. On the basis of
the current monetary values of stock-based compensation
components, total compensation amounted to €28,747,477
(2015: €27,756,633).
2,503
0
1,043
1,010
2,373
0
989
626
1,104
1,104
1,104
61
61
1,043
1,043
(max)
(min)
2016
1,043
61
1,010
67
1,078
1,010 1,043
0
2,503
665
nents.
5 Total maximum compensation for fiscal 2016 represents the
contractual maximum amount for overall compensation, exclud-
ing fringe benefits and pension benefit commitments. At 1.7
times target compensation (base compensation, target amount
for the Bonus and the target amount for long-term stock-based
compensation), the maximum amount is less than the total of
the individual contractual caps for performance-based compo-
4 For Stock Awards granted in fiscal 2016, target attainment
depends solely on the performance of Siemens stock compared
to defined competitors. The monetary values relating to 100%
target achievement were €8,560,190 (2015: €8,190,219). The
amounts for individual Managing Board members were as
follows: Joe Kaeser €2,120,051 (2015: €1,950,003), Dr. Roland
Busch €1,080,022 (2015: €1,040,036), Lisa Davis €1,080,022
(2015: €1,040,036), Klaus Helmrich €1,080,022 (2015:
€1,040,036), Janina Kugel €1,040,029 (2015: €693,357),
Prof. Dr. Siegfried Russwurm €1,080,022 (2015: €1,040,036),
Dr. Ralf P. Thomas €1,080,022 (2015: €1,040,036) and for former
Managing Board member Prof. Dr. Hermann Requardt €0 (2015:
€346,679).
1,370
3,573
1,410
3,486
1,317
3,538
1,376
3,463
832 1,282
2,148 3,368
5,984
2016
603
1,104
603
3,240
0
998 1,099
3,086 3,246
604
603
3,690 3,849 1,707
0 3,240
1,121 5,382
602
602
1,723 5,983
998 1,099
3,097 3,263
603
602
3,700 3,865
3,120
1,027 5,130
530 530
1,557 5,660
0
1,059
1,942 3,075
103
530
2,045 3,604
5,382
1,376
components
0
129,425
41,025
Joe Kaeser
serving as of September 30, 2016
Managing Board members
Awards
(Amounts in number of units)
of Stock
Awards
Forfeitable
commitments
Balance at end of
fiscal 20163
of Bonus
Awards
forfeitable
commitments
Non-
of Stock
Awards
of Bonus
Awards and
Stock Awards
Commitments
Forfeited
during
fiscal year²
Commitments
Vested and
fulfilled
during
fiscal year
28,043
of Stock
25,273
25,631
14,286
73,254
27,233
2,310
53,261
576
14,286
38,975
576
Lisa Davis
75,263
19,425
5,330
13,773
14,286
72,383
27,122
Dr. Roland Busch
138,923
8,666
commitments
Forfeitable
of Stock
Awards
26,437,481
34,624,669
3,225,678
4,297,199
565,824
4,231,360
4,612,608
583,968
4,824,749
6,083,534
565,824
583,968
438,713
1,084,971
350,560
553,728
3,522,681
4,607,800
565,824
583,968
1 Compared to the amount presented in the 2015 Compensa-
tion Report, the total figure for 2015 does not include the
contribution of €565,824 for former Managing Board
member Prof. Dr. Hermann Requardt or this defined benefit
obligation of €6,977,620.
2 The expenses (service cost) recognized in accordance with
the IFRS in fiscal 2016 for Managing Board members' entitle-
ments under the BSAV in fiscal 2016 amounted to
€4,615,543 (2015: €4,804,639).
3 The defined benefit obligations reflect one-time special
contributions to the BSAV for new appointments from
outside the Company and for special contributions in
connection with departures from the Managing Board,
amounting to €0 (2015: €279,552).
of Bonus
Awards
Forfeitable
commitments
commitments
Non-
forfeitable
Granted
during
fiscal year¹
fiscal 2016
Balance at beginning of
The following table shows the changes in the balance of the
stock commitments held by Managing Board members in fiscal
2016:
Stock commitments
14,237
IN FISCAL 2016
A.10.1.3 ADDITIONAL INFORMATION ON
Combined Management Report
46
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
Other
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
The defined benefit obligation (DBO) of all pension commitments
to former members of the Managing Board and their surviving
dependents as of September 30, 2016, amounted to €216,3 (2015:
€228.3) million. This figure is included in → NOTE 16 in → B.6
In fiscal 2016, former members of the Managing Board and their
surviving dependents received emoluments within the meaning
of Section 314 para. 1 No. 6 b of the German Commercial Code
totaling €52.3 million (2015: €30.5 million). This figure includes
the lump-sum payments of the pension benefit balance of the
former Managing Board members Prof. Dr. Hermann Requardt
and Peter Y. Solmssen. In the case of Mr. Solmssen, the special
contribution to the pension benefit balance allocated in Janu-
ary 2009 in the amount of €10.518 million takes effect. This
special contribution was promised at appointment to compen-
sate him for short-term and long-term pecuniary disadvantages
with his former employer. The figure also includes the agreed-
upon cash settlement for Stock Awards granted in the past to
Prof. Dr. Hermann Requardt.
4 Deferred compensation totals €3,829,397 (2015: €4,947,717),
including €3,428,243 for Joe Kaeser (2015: €3,207,002),
€343,953 for Klaus Helmrich (2015: €305,023) and €57,201
for Dr. Ralf P. Thomas (2015: €49,794) as well as €0 (2015:
€1,385,898) for former Managing Board member
Prof. Dr. Hermann Requardt.
STOCK-BASED COMPENSATION INSTRUMENTS
3,126,396
5,737
75,263
21,861
1,967,900
200%
104,110
9,371,982
604%
51,732
4,656,938
300%
Total
Prof. Dr. Siegfried Russwurm
Klaus Helmrich
Dr. Roland Busch
Joe Kaeser
to show proof as of March 11, 2016
as of September 30, 2016, and required
Managing Board members serving
of shares 3
Value²
324%
Number
3,190,849
200%
3 As of March 11, 2016 (date of proof), including Bonus
Awards.
48 Combined Management Report
2 Based on the average Xetra opening price of €90.02 for the
fourth quarter of 2015 (October-December).
1 The amount of the obligation is based on the average base
compensation for the four years prior to the respective dates
of proof.
258,895
23,305,728
116,940
10,526,888
81,702
7,354,814
747%
21,861
1,967,900
200%
37,637
3,388,083
350%
21,486
1,934,150
35,446
Percentage
of base
compensation¹
Number
of shares²
Value¹
3,813
4,347
14,286
51,124
5,030
136,423
Total
Dr. Ralf P. Thomas
78,633
20,043
8,666
25,273
14,286
82,892
35,437
Prof. Dr. Siegfried Russwurm
29,412
13,757
15,655
Janina Kugel
5,030
57,250
463,708
113,230
Percentage
of base
compensation¹
(Amounts in number of units or €)
Proven
Required
Obligations under Share Ownership Guidelines
Board. The following table shows the number of Siemens shares
that were held by Managing Board members in office at Septem-
ber 30, 2016, as of the March 2016 deadline for proving compli-
ance with the Share Ownership Guidelines as well as the number
that are to be held permanently with a view to future deadlines.
The deadlines by which the individual Managing Board members
must provide first-time proof of compliance with the Siemens
Share Ownership Guidelines vary from member to member, de-
pending on when he or she was appointed to the Managing
Share Ownership Guidelines
47
19,536
Combined Management Report
Shares from the Share Matching Plan
Fiscal 2011 was the last year in which Managing Board members
were entitled to participate in the Siemens Share Matching Plan.
Under the plan, they were entitled to invest up to 50% of the
annual gross amount of their variable cash compensation, as de-
termined for fiscal 2010, in Siemens shares. After the expiration
of a vesting period of approximately three years, plan partici-
pants are entitled to receive one free matching share of Siemens
stock for every three Siemens shares acquired and continuously
held under the plan, provided the participants were employed
without interruption at Siemens AG or a Siemens company until
3 Amounts also include stock commitments (Stock Awards)
granted in November 2015 for fiscal 2016. These amounts
may further include stock commitments received as com-
pensation by the Managing Board member before joining
the Managing Board.
was linked to the performance of Siemens stock compared
to defined competitors during the four-year vesting period.
It amounted to 0%. Siemens Stock Awards 2011 that had
already been granted were thus forfeited without replace-
ment in accordance with the plan rules.
2 For one half of the Stock Awards 2011, target attainment
depended on the EPS value for the past three fiscal years
and amounted to 114%. For the other half, target attainment
1 The weighted average fair value as of the grant date for
fiscal 2016 was €76.95 per granted share.
508,005
90,241
32,212
82,903
the end of the vesting period. At the beginning of fiscal 2016, the
following members of the Managing Board had entitlements to
matching shares, which they had acquired before joining the
Managing Board: Dr. Ralf P. Thomas, 780 shares and Janina Kugel,
three shares. In fiscal 2016, no entitlements to matching shares
were acquired. In fiscal 2016, the following entitlements to
matching shares were due: 780 shares, Dr. Ralf P. Thomas. During
fiscal 2016, no entitlements to matching shares were forfeited.
Entitlements to matching shares at the end of fiscal 2016 show
the following balance: Janina Kugel, three shares with a fair value
of €174.
3,817,196
Klaus Helmrich
583,968
3,032
604
602
4,418
611
3,326
576
3,688
604
3,111
4,399
5,760
8,416
603
1,096
1,101
2,429
3,816
2,715
3,113
2,507
3,797
4,664
Janina Kugel
7,316
Prof. Dr. Siegfried Russwurm
Managing Board member
61
78
78
25
39
1,010
1,043
1,010
1,043
626
989
2015
2016
2015
2016
2015
2016
CFO
Managing Board member
Dr. Ralf P. Thomas
0
55
0
0
0
703
0
1,407
0
598
0
0
0
555
0
903
0
1,301
565,824
0
0
1,259
0
703
0
0
0
0
53
0
97
0
0
0
0
67
0
0
0
0
0
0
0
0
0
0
0
1,027
0
1,121
The following table shows individualized details of the contribu-
tions (allocations) under the BSAV for fiscal 2016 as well as the
defined benefit obligations for pension commitments.
The contributions under the BSAV are added to the personal pen-
sion accounts each January, following the close of the fiscal year.
Until a beneficiary's date of retirement, his or her pension ac-
count is credited with an annual interest payment (guaranteed
interest) on January 1 of each year. The interest rate is currently
1.25%.
For fiscal 2016, the members of the Managing Board were granted
contributions under the BSAV totaling €4.6 million (2015: €4.8 mil-
lion), based on a resolution of the Supervisory Board dated No-
vember 9, 2016. Of this amount, €0.1 million (2015: €0.1 million)
related to the funding of pension commitments earned prior to
transfer to the BSAV.
Pension benefit commitments
45
Combined Management Report
5 "Other" includes the adjustment of the Siemens Stock
Awards 2011 and Bonus Awards 2011 (transfer in Novem-
ber 2015) in accordance with Section 23 and Section 125 of
the German Transformation Act (Umwandlungsgesetz)
due to the spin-off of OSRAM.
4 One half of the Bonus for fiscal 2011 was granted in the
form of non-forfeitable awards of Siemens stock (Bonus
Awards). After the expiration of the four-year waiting
period in November 2015, the beneficiaries received one
share of Siemens stock for each Bonus Award.
amounted to 114%. For the other half, target attainment
was linked to the performance of Siemens stock compared
to defined competitors during the four-year vesting period.
It amounted to 0%. Siemens Stock Awards 2011 that had
already been granted were thus forfeited without replace-
ment in accordance with the plan rules.
604
3,269
603
3,561
603
3,068
602
5,447
103
1,586
530
2,839
0
2,665
2,958
2,465
4,845
(Amounts in €)
Managing Board members
serving as of September 30, 2016
Joe Kaeser
3,243,101
651
4,342,427
583,968
8,056,163
10,391,542
1,051,680
1,139,040
2015
1,482
2016
Total
contributions² for
2015
2016
Total¹
Dr. Ralf P. Thomas
Prof. Dr. Siegfried Russwurm
Janina Kugel
Klaus Helmrich
Lisa Davis
Dr. Roland Busch
Defined benefit obligation³ for all pension
commitments excluding deferred compensation4
2,309
565,824
0
0
903
0
0
177
465
0
2,310
0
0
1,410
1,370
1,376
1,317
832
1,282
1,104
20
1,088
397
0
1,078
0
0
0
97
177
0
0
0
0
0
0
67
0
0
0
0
0
1,407
0
0
0
80,000
350,000
Harald Kern¹
22,500
30,000
140,000
242,500
241,000
80,000
21,000
Jürgen Kerner¹
140,000
200,000
180,000
33,000
373,000
140,000
140,000
10,500
30,000
109,500
Bettina Haller¹
140,000
80,000
25,500
245,500
140,000
80,000
24,000
244,000
Hans-Jürgen Hartung
140,000
150,500
140,000
9,000
149,000
Robert Kensbock¹
140,000
180,000
350,000
132,222
133,333
31,500
4,500
112,648
Güler Sabancı
140,000
10,500
150,500
140,000
9,000
149,000
Dr. Nathalie von Siemens
140,000
10,500
150,500
105,000
4,500
109,500
Michael Sigmund
4,500
140,000
14,815
170,000
93,333
15,000
333,722
Dr. Nicola Leibinger-Kammüller
140,000
80,000
27,000
247,000
140,000
33,333
15,000
188,333
Gérard Mestrallet
126,667
7,500
134,167
140,000
9,000
149,000
Dr. Norbert Reithofer
38,095
186,429
105,000
220,000
10,500
compen-
sation
compen-
sation for
committee
work
Meeting
attendance
fee
Total
Base
compen-
sation
compen-
sation for
committee
work
Base
Meeting
fee
Total
280,000
280,000
45,000
605,000
280,000
280,000
attendance
2015
Additional
2016
10,500
A.10.2 Remuneration of Supervisory
Board members
The current remuneration policies for the Supervisory Board were
authorized at the Annual Shareholders' Meeting held on Janu-
ary 28, 2014, and are effective as of fiscal 2014. Details are set out
in Section 17 of the Articles of Association of Siemens AG. The
remuneration of the Supervisory Board consists entirely of fixed
compensation; it reflects the responsibilities and scope of the
work of the Supervisory Board members. The Chairman and Dep-
uty Chairmen of the Supervisory Board as well as the Chairmen
and members of the Audit Committee, the Chairman's Commit-
tee, the Compensation Committee, the Compliance Committee
and the Innovation and Finance Committee receive additional
compensation.
Under current rules, the members of the Supervisory Board re-
ceive an annual base compensation of €140,000; the Chair-
man of the Supervisory Board receives a base compensation of
€280,000, and each of the Deputy Chairmen receives €220,000.
The members of the Supervisory Board committees receive the
following additional fixed compensation for their committee
work: the Chairman of the Audit Committee receives €160,000,
and each of the other members of the Committee receives
€80,000; the Chairman of the Chairman's Committee receives
€120,000, and each of the other members of the Committee re-
ceives €80,000; the Chairman of the Compensation Committee
receives €100,000, and each of the other members of the Com-
mittee receives €60,000 (compensation for any work on the
Chairman's Committee counts toward compensation for work on
the Compensation Committee); the Chairman of the Innovation
and Finance Committee receives €80,000, and each of the other
members of the Committee receives €40,000; the Chairman of
the Compliance Committee receives €80,000, and each of the
other members of the Committee receives €40,000. However, no
additional compensation is paid for work on the Compliance
Committee if a member of that Committee is already entitled to
compensation for work on the Audit Committee.
If a Supervisory Board member does not attend a meeting of the
Supervisory Board, one-third of the aggregate compensation due
to that member is reduced by the percentage of Supervisory
Board meetings not attended by the member in relation to the
total number of Supervisory Board meetings held during the fis-
cal year. In the event of changes in the composition of the Super-
visory Board and/or its committees, compensation is paid on a
pro rata basis, rounding up to the next full month.
In addition, the members of the Supervisory Board are entitled to
receive a fee of €1,500 for each meeting of the Supervisory Board
and its committees that they attend.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties and
for any value-added taxes to be paid on their remuneration. For
the performance of his duties, the Chairman of the Supervisory
Board is also entitled to an office with secretarial support and the
use of a carpool service.
No loans or advances from the Company are provided to mem-
bers of the Supervisory Board.
Combined Management Report
49
The compensation shown below was determined for each of the
members of the Supervisory Board for fiscal 2016 (individualized
disclosure).
(Amounts in €)
Supervisory Board members
serving as of
September 30, 2016
Dr. Gerhard Cromme
Additional
48,000
608,000
Birgit Steinborn¹
Werner Wenning
133,333
57,143
13,500
203,976
132,222
56,667
13,500
202,389
Dr. Hans Michael Gaul
140,000
160,000
27,000
327,000
140,000
160,000
27,000
327,000
Reinhard Hahn¹
140,000
Michael Diekmann
150,500
149,000
140,000
200,000
43,500
463,500
200,000
200,000
45,000
445,000
220,000
140,000
30,000
390,000
220,000
140,000
33,000
393,000
Olaf Bolduan¹
133,333
9,000
142,333
9,000
150,500
The Managing Board is authorized to increase, with the approval
of the Supervisory Board, the capital stock until January 25, 2021
by up to €90 million through the issuance of up to 30 million
registered shares of no par value against contributions in cash
(Authorized Capital 2016). Subscription rights of existing share-
holders are excluded. The new shares shall be issued under the
condition that they are offered exclusively to employees of
Siemens AG and any of its affiliated companies. To the extent
permitted by law, employee shares may also be issued in such a
manner that the contribution to be paid on such shares is covered
by that part of the annual net income which the Managing Board
9,000
1,175
1,293
9,957
10,604
2015
Note
September 30,
Total assets
Total non-current assets
8
Other assets
Other financial assets
Investments accounted for using the equity method
Property, plant and equipment
Other intangible assets
Goodwill
Total current assets
Assets classified as held for disposal
Other current assets
Current income tax assets
Deferred tax assets
16,287
15,982
9
10,157
8,077
7,742
23,166
24,159
122437
11
51,442
55,329
122
190
3
1,151
1,204
644
790
17,253
18,160
10
5,157
6,800
Inventories
10,210
Other current financial assets
Available-for-sale financial assets
434
1,089
(888)
(42)
(370)
(2,636)
(107)
1,065
(370)
354
(2,636)
7,380
5,584
2015
2016
Note
Fiscal year
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
16
4
(7)
22, 23
Cash and cash equivalents
Assets
(in millions of €)
B.3 Consolidated Statements of Financial Position
Consolidated Financial Statements 57
40
133
8,275
2,571
134
8,408
2,705
1,029
(2,879)
149
(141)
1,399
(244)
(7)
(89)
(43)
210
Trade and other receivables
Total comprehensive income
3,012
20,610
Issued capital
18
85,292
90,901
45,730
47,986
2,297
2,471
1,466
Capital reserve
1,142
5,087
609
829
9,811
13,695
26,682
24,761
5677
17
4,865
Retained earnings
Other components of equity
Treasury shares, at cost
58 Consolidated Financial Statements
120,348
35,056
581
605
34,816
125,717
Total liabilities and equity
Total equity
Non-controlling interests
34,474
34,211
Total equity attributable to shareholders of Siemens AG
(6,218)
(3,605)
2,163
1,921
30,152
27,454
5,733
5,890
2,643
2,550
Equity
2,947
Total liabilities
Other liabilities
2,085
1,933
Other current financial liabilities
7,774
8,048
Trade payables
2,979
6,206
15
Current provisions
Short-term debt and current maturities of long-term debt
120,348
125,717
68,906
70,388
1,094
1,279
2,591
3,431
20,821
Liabilities and equity
17
4,166
4,489
Other financial liabilities
Provisions
Deferred tax liabilities
16
Post-employment benefits
15
Long-term debt
39,562
42,916
Total current liabilities
39
40
3
Liabilities associated with assets classified as held for disposal
20,368
20,437
14
Other current liabilities
1,828
2,085
Current income tax liabilities
Total non-current liabilities
Other comprehensive income, net of income taxes
therein: Income (loss) from investments accounted for using the equity method, net
Items that may be reclassified subsequently to profit or loss
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
used in connection with share-based compensation programs
and/or employee share programs of the Company or any of its
affiliated companies and issued to individuals currently or for-
merly employed by the Company or any of its affiliated com-
panies as well as to board members of any of the Company's
affiliated companies
> retired
In addition to selling them over the stock exchange or through a
public sales offer to all shareholders, the Managing Board is au-
thorized by resolution of the Shareholders' Meeting on Janu-
ary 27, 2015 to also use Siemens shares repurchased on the basis
of this or any previously given authorization for every permissible
purpose, in particular as follows: Such Siemens shares may be
Combined Management Report
52
62
The Company may not repurchase its own shares unless so au-
thorized by a resolution duly adopted by the shareholders at a
general meeting or in other very limited circumstances set forth
in the German Stock Corporation Act. On January 27, 2015, the
Shareholders' Meeting authorized the Company to acquire until
January 26, 2020 up to 10% of its capital stock existing at the
date of adopting the resolution or - if this value is lower - as of
the date on which the authorization is exercised. The aggregate
of shares of stock of Siemens AG repurchased under this autho-
rization and any other Siemens shares previously acquired and
still held in treasury by the Company or attributable to the Com-
pany pursuant to Sections 71d and 71e of the German Stock Cor-
poration Act may at no time exceed 10% of the then existing
capital stock. Any repurchase of Siemens shares shall be accom-
plished at the discretion of the Managing Board either (1) by ac-
quisition over the stock exchange or (2) through a public share
repurchase offer. The Managing Board is additionally authorized
to complete the repurchase of Siemens shares in accordance with
the authorization described above by using certain derivatives
(put and call options, forward purchases and any combination of
these derivatives). In exercising this authorization, all stock re-
purchases based on the derivatives are limited to a maximum
volume of 5% of Siemens' capital stock existing at the date of
adopting the resolution at the Shareholders' Meeting. A deriva-
tive's term of maturity may not, in any case, exceed 18 months
and must be chosen in such a way that the repurchase of Siemens
shares upon exercise of the derivative will take place no later
than January 26, 2020.
In February 2012, Siemens issued bonds with warrant units with
a volume of US$3 billion. Siemens exchanged the major part of
the warrants issued in 2012 against new warrants in Septem-
ber 2015; for this purpose, Siemens issued new bonds with war-
rants. At exchange, the new warrants resulted in option rights
entitling their holders to receive approximately 20.3 million
Siemens shares. The terms and conditions of the warrants enable
Siemens to service exercised option rights using either condi-
tional capital or treasury stock, and also enable Siemens to buy
back the warrants.
> sold, with the approval of the Supervisory Board, to third par-
ties against payment in cash if the price at which such Siemens
shares are sold is not significantly lower than the market price
of Siemens stock (exclusion of subscription rights, limited to
10% of the capital stock, by mutatis mutandis application of
Section 186 para. 3 sentence 4 German Stock Corporation
Act) or
The total amount of new shares issued or to be issued under
Authorized Capitals or in accordance with the bonds mentioned
above, in exchange for contributions in cash and in kind and with
shareholders' subscription rights excluded, may in certain cases
be subject to further restrictions, such as the restriction that they
may not exceed 20% of the capital stock. The details of those
restrictions are described in the relevant authorization.
> The exclusion is necessary with regard to fractional amounts
resulting from the subscription ratio.
> The issue price of the new shares/bonds is not significantly
lower than the stock market price of the Siemens shares al-
ready listed or the theoretical market price of the bonds com-
puted in accordance with generally accepted actuarial meth-
ods (exclusion of subscription rights, limited to 10% of the
capital stock, in accordance with or by mutatis mutandis
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
The new shares under Authorized Capital 2014 and the bonds
under the aforementioned authorizations are to be issued
against cash or non-cash contributions. They are, as a matter of
principle, to be offered to shareholders for subscription. The
Managing Board is authorized to exclude, with the approval of
the Supervisory Board, subscription rights of shareholders in the
event of capital increases against contributions in kind. In the
event of capital increases against contributions in cash, the Man-
aging Board is authorized to exclude shareholders' subscription
rights with the approval of the Supervisory Board in the follow-
ing cases:
By resolutions of the Shareholders' Meetings of January 28, 2014
and January 27, 2015, the Managing Board is authorized to issue
bonds with conversion rights or with warrants attached, or a
combination of these instruments, each entitling the holders to
subscribe to up to 80 million registered shares of Siemens AG of
no par value. Based on these two authorizations the Company or
consolidated subsidiaries of the Company may issue bonds until
January 27, 2019 and January 26, 2020, respectively, each in an
aggregate principal amount of up to €15 billion. In order to grant
shares of stock to holders/creditors of such convertible bonds or
warrant bonds, the capital stock was conditionally increased by
resolutions of the Shareholders' Meetings 2014 and 2015, each
by up to 80 million registered shares of no par value (Condi-
tional Capitals 2014 and 2015), i.e. in total by up to €480 million
through the issuance of up to 160 million shares of no par value.
As of September 30, 2016, the total unissued authorized capital
of Siemens AG therefore consisted of €618.6 million nominal
that may be issued, with varying terms by issuance, in install-
ments of up to 206.2 million registered shares of no par value.
Furthermore, the Managing Board is authorized to increase, with
the approval of the Supervisory Board, the capital stock until Jan-
uary 27, 2019 by up to €528.6 million through the issuance of up
to 176.2 million registered shares of no par value against cash con-
tributions and/or contributions in kind (Authorized Capital 2014).
and the Supervisory Board may allocate to other retained earnings
under Section 58 para. 2 of the German Stock Corporation Act.
51
Combined Management Report
> The exclusion is necessary in order to grant holders of conver-
sion or option rights or conversion or option obligations on
Siemens shares a compensation for the effects of dilution.
> used to service or secure obligations or rights to acquire
Siemens shares arising particularly from or in connection with
convertible bonds or warrant bonds issued by the Company or
any of its consolidated subsidiaries (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutandis
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authorization
to meet obligations or rights to acquire Siemens shares that were
or will be agreed with members of the Managing Board within the
framework of rules governing Managing Board compensation.
In November 2015, the Company announced that it would carry
out a share buyback of up to €3 billion in volume within the fol-
lowing up to 36 months. The buyback commenced on Febru-
ary 2, 2016 using the authorizations given by the Annual Share-
holders' Meeting on January 27, 2015. Under this share buyback
Siemens repurchased 2,517,727 shares by September 30, 2016.
The total consideration paid for these shares amounted to about
€230 million (excluding incidental transaction charges). The buy-
back has the sole purposes of retirement, of issuing shares to
employees, board members of affiliated companies and mem-
bers of the Managing Board of Siemens AG, as well as of servic-
ing/securing the obligations or rights to acquire Siemens shares
arising particularly from or in connection with convertible bonds
and warrant bonds. As of September 30, 2016, the Company held
41,721,682 shares of stock in treasury.
STATEMENTS
FINANCIAL
CONSOLIDATED
B.
Combined Management Report
We are not aware of, nor have we during the last fiscal year been
notified of, any shareholder directly or indirectly holding 10%
or more of the voting rights. There are no shares with special
rights conferring powers of control. Shares of stock issued by
Siemens AG to employees under its employee share program
and/or as share-based compensation are transferred directly to
the employees. The beneficiary employees who hold shares of
employee stock may exercise their control rights in the same way
as any other shareholder directly in accordance with applicable
laws and the Articles of Association.
A.11.7 Other takeover-relevant
information
severance payment if the Managing Board member receives ben-
efits from third parties in connection with a change of control.
A right to terminate the contract does not exist if the change
of control occurs within a period of twelve months prior to a
Managing Board member's retirement.
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member's duties and responsibilities), the
member of the Managing Board has the right to terminate his or
her contract with the Company for good cause. A change of con-
trol exists if one or several shareholders acting jointly or in con-
cert acquire a majority of the voting rights in Siemens AG and
exercise a controlling influence, or if Siemens AG becomes a de-
pendent enterprise as a result of entering into an intercompany
agreement within the meaning of Section 291 of the German
Stock Corporation Act, or if Siemens AG is to be merged into an
existing corporation or other entity. If this right of termination is
exercised, the Managing Board member is entitled to a severance
payment in the amount of no more than two years' compensa-
tion. The calculation of the annual compensation includes not
only the base compensation and the target amount for the bo-
nus, but also the target amount for the stock awards, in each case
based on the most recent completed fiscal year prior to termina-
tion of the contract. The stock-based compensation components
for which a firm commitment already exists will remain un-
affected. Additionally, the severance payments cover non-mone-
tary benefits by including an amount of 5% of the total severance
amount. Severance payments will be reduced by 10% as a lump-
sum allowance for discounted values and for income earned else-
where. However, this reduction will apply only to the portion of
the severance payment that was calculated without taking ac-
count of the first six months of the remaining term of the Man-
aging Board member's contract. There is no entitlement to a
A.11.6 Compensation agreements
with members of the Managing
Board or employees in the event
of a takeover bid
concert.
the warrants issued in 2012 against new warrants in Septem-
ber 2015. In case of a change of control, the terms and conditions
of each warrant enable their holders to receive a higher number
of Siemens shares in accordance with an adjusted strike price if
they exercise their option rights within a certain period of time
after the change of control. This period of time shall end either
(1) not less than 30 days and no more than 60 days after publica-
tion of the notice of the issuer regarding the change of control,
as determined by the issuer or (2) 30 days after the change
of control first becomes publicly known. The strike price adjust-
ment decreases depending on the remaining term of the war-
rants and is determined in detail in the terms and conditions of
the warrants. In this context, a change of control occurs if control
of Siemens AG is acquired by a person or by persons acting in
54
53
Combined Management Report
In February 2012, Siemens issued bonds with warrant units with
a volume of US$3 billion. Siemens exchanged the major part of
Framework agreements concluded by Siemens AG under Interna-
tional Swaps and Derivatives Association Inc. documentation
(ISDA Agreements) grant the counterparty a right of termination
when Siemens AG consolidates with, merges into, or transfers
substantially all its assets to a third party. However, this right of
termination exists only, if (1) the resulting entity's creditworthi-
ness is materially weaker than Siemens AG's immediately prior to
such event or (2) the resulting entity fails to simultaneously as-
sume Siemens AG's obligations under the ISDA Agreement. Addi-
tionally, some ISDA Agreements grant the counterparty a right of
termination if a third party acquires beneficial ownership of eq-
uity securities that enable it to elect a majority of Siemens AG's
Supervisory Board or otherwise acquire the power to control
Siemens AG's material policy-making decisions and if the credit-
worthiness of Siemens AG is materially weaker than it was imme-
diately prior to such an event. In either situation, ISDA Agree-
ments are designed such that upon termination all outstanding
payment claims documented under them are to be netted.
In March 2013, a consolidated subsidiary as borrower and
Siemens AG as guarantor entered into two bilateral loan agree-
ments, each of which has been drawn in the full amount of
US$500 million. Both agreements provide their respective lend-
ers with a right of termination in the event that (1) Siemens AG
becomes a subsidiary of another company or (2) a person or a
group of persons acting in concert acquires effective control over
Siemens AG by being able to exercise decisive influence over its
activities (Art. 3(2) of Council Regulation (EC) 139/2004).
Siemens AG maintains two lines of credit in an amount of €4 bil-
lion and an amount of US$3 billion, respectively, which provide its
lenders with a right of termination in the event that (1) Siemens AG
becomes a subsidiary of another company or (2) a person or a
group of persons acting in concert acquires effective control over
Siemens AG by being able to exercise decisive influence over its
activities (Art. 3(2) of Council Regulation (EC) 139/2004).
A.11.5 Significant agreements which
take effect, alter or terminate upon
a change of control of the Company
following a takeover bid
For details on the authorizations referred to above, especially
with the restrictions to exclude subscription rights and the terms
to include shares when calculating such restrictions, please re-
fer to the relevant resolution and to Section 4 of the Articles of
Association.
of the total number of shares held by the family's members. The
powers of attorney are based on an agreement between the VSV
and, among others, members of the Siemens family. The shares
are voted together by VSV, taking into account the proposals of a
family partnership established by the family's members or of one
of this partnership's governing bodies.
B.1 Consolidated Statements of Income
behalf of members of the Siemens family. These shares are part to issue and repurchase shares
Resolutions of the Shareholders' Meeting require a simple major-
ity vote, unless a greater majority is required by law. Pursuant to
Section 179 para. 2 of the German Stock Corporation Act, amend-
ments to the Articles of Association require a majority of at least
three-quarters of the capital stock represented at the time of the
casting of the votes, unless another capital majority is prescribed
by the Articles of Association.
132,222
2,932,221
5,150,905
429,000
1,655,238
196,500
16,500
40,000
140,000
3,066,667
Total²
37,778
1,545,926
Sibylle Wankel¹
28,500
113,333
132,222
291,500
31,500
120,000
140,000
Jim Hagemann Snabe
149,000
274,056
13,500
388,500
183,500
4,866,648
According to Section 179 of the German Stock Corporation Act,
any amendment to the Articles of Association requires a resolu-
tion of the Shareholders' Meeting. The authority to adopt purely
formal amendments to the Articles of Association was trans-
ferred to the Supervisory Board under Section 13 para. 2 of the
Articles of Association. In addition, by resolutions of the Share-
holders' Meetings the Supervisory Board has been authorized to
amend Section 4 of the Articles of Association in accordance with
the utilization of the Authorized and Conditional Capitals, and
after expiration of the then-applicable authorization and utiliza-
tion period.
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German
Codetermination Act (Mitbestimmungsgesetz). According to Sec-
tion 8 para. 1 of the Articles of Association, the Managing Board
is comprised of several members, the number of which is deter-
mined by the Supervisory Board.
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 10,878,800 shares (as of September 30, 2016) on
Shares issued to employees worldwide under the employee share
program implemented since the beginning of fiscal 2009, in par-
ticular the Share Matching Plan, are freely transferable unless
applicable local laws provide otherwise. Under the rules of the
program, however, in order to receive one matching share free
of charge for each three shares purchased, participants are re-
quired to hold the shares purchased by them for a vesting period
of several years, during which the participants have to be contin-
uously employed by Siemens AG or another Siemens company.
The right to receive matching shares is forfeited if the purchased
shares are sold, transferred, hedged on, pledged or hypothecated
in any way during the vesting period.
At the Shareholders' Meeting, each share of stock has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. An exception from this rule applies with
regard to treasury shares held by the Company, which do not
entitle the Company to any rights. Under Section 136 of the Ger-
man Stock Corporation Act the voting right of the affected shares
is excluded by law.
A.11.2 Restrictions on voting rights
or transfer of shares
are governed in detail by the provisions of the German Stock Cor-
poration Act, in particular by Sections 12, 53a et seq., 118 et seq.
and 186 of the German Stock Corporation Act.
As of September 30, 2016, the Company's common stock totaled
€2.550 billion. The capital stock is divided into 850 million regis-
tered shares with no par value and a notional value of €3.00 per
share. The shares are fully paid in. All shares confer the same
A.11.3 Legislation and provisions of
the Articles of Association applicable
to the appointment and removal
of members of the Managing Board
and governing amendment to the
rights and obligations. The shareholders' rights and obligations Articles of Association
A.11.1 Composition of common stock
(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
and explanatory report
A.11 Takeover-relevant information
Combined Management Report
50
of the Company. The insurance policy for fiscal 2016 includes a
deductible for the members of the Managing Board and the
Supervisory Board that complies with the requirements of the
German Stock Corporation Act and the Code.
The Company provides a group insurance policy for Supervisory
and Managing Board members and certain other employees of
the Siemens Group. The policy is taken out for one year at a time
renewed annually. It covers the personal liability of the insured
in cases of financial loss associated with their activities on behalf
A.10.3 Other
compensation of €252,185 paid to former Supervisory Board
members Gerd von Brandenstein, Prof. Dr. Peter Gruss and
Berthold Huber.
2 The total figure, compared to the amount presented in the
2015 Compensation Report, does not include the total
dance with the guidelines of the Confederation of German
Trade Unions (DGB).
1 These employee representatives on the Supervisory Board
and the representatives of the trade unions on the Super-
visory Board have declared their willingness to transfer their
compensation to the Hans Boeckler Foundation, in accor-
A.11.4 Powers of the Managing Board
Fiscal year
(in millions of €, per share amounts in €)
Revenue
7,282
98
134
5,450
22
27
56 Consolidated Financial Statements
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share
Net income
6.51
Income from discontinued operations
Basic earnings per share
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Net income
Income from discontinued operations, net of income taxes
Income from continuing operations
7,380
5,584
Income from continuing operations
6.38
0.23
2.47
therein: Income tax effects
Derivative financial instruments
therein: Income tax effects
Available-for-sale financial assets
Currency translation differences
therein: Income (loss) from investments accounted for using the equity method, net
Items that will not be reclassified to profit or loss
therein: Income tax effects
Remeasurements of defined benefit plans
Net income
(in millions of €)
B.2 Consolidated Statements of Comprehensive Income
8.74
6.65
2.44
0.23
6.30
6.42
27
8.84
6.74
2,031
188
3
5,349
476
328
5
Other operating income
(11,409)
(11,669)
Selling and general administrative expenses
(4,483)
(4,732)
Research and development expenses
21,847
23,819
(53,789)
(55,826)
75,636
79,644
2015
2016
Note
Gross profit
Cost of sales
Other operating expenses
140,000
6
(389)
5,396
(1,869)
(2,008)
7
Income tax expenses
7,218
7,404
Income from continuing operations before income taxes
(500)
(373)
Other financial income (expenses), net
(818)
(989)
Interest expenses
1,260
1,314
Interest income
1,235
134
4
Income (loss) from investments accounted for using the equity method, net
(427)
2016
Financial instruments - A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Siemens does not
use the category held to maturity and does not use the option to
designate financial assets or financial liabilities at fair value
through profit or loss at inception (Fair Value Option). Based on
their nature, financial instruments are classified as financial as-
sets and financial liabilities measured at cost or amortized cost
and financial assets and financial liabilities measured at fair value
and as receivables from finance leases. Regular way purchases or
sales of financial assets are accounted for at the trade date. Ini-
tially, financial instruments are recognized at their fair value.
Transaction costs are only included in determining the carrying
amount, if the financial instruments are not measured at fair
value through profit or loss. Receivables from finance leases are
recognized at an amount equal to the net investment in the
lease. Subsequently, financial assets and liabilities are measured
according to the category to which they are assigned cash and
cash equivalents, available-for-sale financial assets, loans and
receivables, financial liabilities measured at amortized cost or
financial assets and liabilities classified as held for trading.
Consolidated Financial Statements
(145)
(2,728)
1,029
35
993
(42)
354
1,049
7,380
98
7,282
31,514
560
Total equity
interests
Non controlling
30,954
Total equity
attributable to
shareholders
of Siemens AG
(3,747)
(2,873)
36
36
(2,703)
233
(6,218)
(357)
726
1,794
35,056
581
34,474
(6,218)
(357)
(314)
726
129
33
96
289
289
256
256
(2,703)
(2,703)
1,794
34,474
373
Treasury
shares at cost
23
(43)
79
(2,728)
(367)
7,282
25,729
Retained earnings
Capital reserve
5,525
Issued capital
2,643
60 Consolidated Financial Statements
Balance as of September 30, 2016
Other changes in equity
Transactions with non-controlling interests
Cancellation of treasury shares
Re-issuance of treasury shares
Purchase of treasury shares
Share-based payment
Dividends
289
106
(10)
Cash and cash equivalents - The Company considers all highly
liquid investments with less than three months maturity from the
date of acquisition to be cash equivalents. Cash and cash equiv-
alents are measured at cost.
Derivative financial
instruments
financial assets
Available-for-sale
Currency trans-
lation differences
27,454
5,890
2,550
(2,575)
(42)
(93)
745
(1)
158
(2,827)
(2,637)
5,450
30,152
5,733
2,643
30,152
5,733
(67)
581
35,056
5,450
its determination of fair value less costs to sell and value in use
include estimated growth rates and weighted average cost of
capital. These estimates, including the methodology used, can
have a material impact on the respective values and ultimately
the amount of any goodwill impairment.
The determination of the recoverable amount of a cash-generat-
ing unit or a group of cash-generating units to which goodwill
is allocated involves the use of estimates by management. The
outcome predicted by these estimates is influenced e.g. by the
successful integration of acquired entities, volatility of capital
markets, interest rate developments, foreign exchange rate fluc-
tuations and the outlook on economic trends. In determining
recoverable amounts, discounted cash flow calculations use five-
year projections that are based on financial forecasts. Cash flow
projections take into account past experience and represent
management's best estimate about future developments. Cash
flows after the planning period are extrapolated using individual
growth rates. Key assumptions on which management has based
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit or
the group of cash-generating units that is expected to benefit
from the synergies of the business combination. If the carrying
amount of the cash-generating unit or the group of cash-gener-
ating units, to which the goodwill is allocated, exceeds its recov-
erable amount, an impairment loss on goodwill allocated to this
cash-generating unit or this group of cash-generating units is
recognized. The recoverable amount is the higher of the
cash-generating unit's or the group of cash-generating units' fair
value less costs to sell and its value in use. If either of these
amounts exceeds the carrying amount, it is not always necessary
to determine both amounts. These values are generally deter-
mined based on discounted cash flow calculations. Impairment
losses on goodwill are not reversed in future periods.
The goodwill impairment test is performed at the level of a cash-
generating unit or a group of cash-generating units, generally
represented by a segment. As of fiscal 2016, this also applies to
Healthineers as a result of a change in the organization of the
business and the related reporting structure. In fiscal 2015, the
impairment tests for Healthineers were performed one level be-
low the segment. This is the lowest level at which goodwill is
monitored for internal management purposes.
Goodwill - Goodwill is not amortized, but instead tested for im-
pairment annually, as well as whenever there are events or
changes in circumstances (triggering events) which suggest that
the carrying amount may not be recoverable. Goodwill is carried
at cost less accumulated impairment losses.
Earnings per share - Basic earnings per share are computed by
dividing income from continuing operations, income from dis-
continued operations and net income, all attributable to ordinary
shareholders of Siemens AG by the weighted average number of
shares outstanding during the year. Diluted earnings per share
are calculated by assuming conversion or exercise of all poten-
tially dilutive securities and share-based payment plans.
Consolidated Financial Statements 63
Research and development costs - Costs of research activities
are expensed as incurred. Costs of development activities are
capitalized when the recognition criteria in IAS 38 are met. Capi-
talized development costs are stated at cost less accumulated
amortization and impairment losses with an amortization period
of generally three to ten years.
Product-related expenses - Provisions for estimated costs re-
lated to product warranties are recorded in line item Cost of sales
at the time the related sale is recognized.
Functional costs - In general, operating expenses by types are
assigned to the functions following the functional area of the cor-
responding profit and cost centers. Amortization, depreciation and
impairment of intangible assets and property, plant and equipment
are included in functional costs depending on the use of the assets.
term.
Income from operating leases: Operating lease income for equip-
ment rentals is recognized on a straight-line basis over the lease
Income from royalties: Royalties are recognized on an accrual ba-
sis in accordance with the substance of the relevant agreement.
Income from interest: Interest is recognized using the effective
interest method.
Sales from multiple element arrangements: Sales of goods and
services as well as software arrangements sometimes involve the
provision of multiple elements. In these cases, the Company de-
termines whether the contract or arrangement contains more
than one unit of accounting. If certain criteria are met, foremost
if the delivered element(s) has (have) value to the customer on
a stand-alone basis, the arrangement is separated and the appro-
priate revenue recognition convention is then applied to each
separate unit of accounting. Generally, the total arrangement
consideration is allocated to the separate units of accounting
based on their relative fair values. If the criteria for the separation
of units of accounting are not met, revenue is deferred until such
criteria are met or until the period in which the last undelivered
element is delivered.
Rendering of services: For long-term service contracts, revenues
are recognized on a straight-line basis over the term of the con-
tract or, if the performance pattern is other than straight-line, as
the services are provided, i.e. under the percentage-of-comple-
tion method as described above.
is expected to be the most likely scenario, all relevant facts and
circumstances relating to the contract are considered on an in-
dividual basis.
The percentage-of-completion method places considerable im-
portance on accurate estimates of the extent of progress to-
wards completion and may involve estimates on the scope of
deliveries and services required for fulfilling the contractually
defined obligations. These significant estimates include total
contract costs, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments.
Under the percentage-of-completion method, changes in esti-
mates may lead to an increase or decrease of revenue. The cred-
itworthiness of our customers is taken into account in estimating
the probability that economic benefits associated with a contract
will flow to the Company. In addition, we need to assess whether
the contract is expected to continue or to be terminated. In de-
termining whether the continuation or termination of a contract
Sales from construction contracts: When the outcome of a con-
struction contract can be estimated reliably, revenues from con-
struction-type projects are recognized under the percent-
age-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.
An expected loss on the construction contract is recognized as an
expense immediately. Siemens applies the requirements of IAS 11
regarding contract variations to contract terminations, since con-
tract terminations are also changes to the agreed delivery and
service scope.
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for pat-
ents, licenses and other similar rights generally range from three
to five years, except for intangible assets with finite useful lives
acquired in business combinations. Intangible assets acquired in
business combinations primarily consist of customer relation-
ships and trademarks as well as technology. Useful lives in spe-
cific acquisitions ranged from four to 20 years for customer rela-
tionships and trademarks and from seven to 25 years for
technology.
Property, plant and equipment - Property, plant and equip-
ment, is valued at cost less accumulated depreciation and impair-
ment losses. Depreciation expense is recognized using the
straight-line method. The following useful lives are assumed:
Factory and office buildings
Other buildings
Technical machinery & equipment
Furniture & office equipment
Equipment leased to others
Termination benefits - Termination benefits are provided as a
result of an entity's offer made in order to encourage voluntary
redundancy before the normal retirement date or from an enti-
ty's decision to terminate the employment. Termination benefits
in accordance with IAS 19, Employee Benefits, are recognized as
a liability and an expense when the entity can no longer with-
draw the offer of those benefits.
Legal Proceedings often involve complex legal issues and are
subject to substantial uncertainties. Accordingly, considerable
judgment is part of determining whether it is probable that
there is a present obligation as a result of a past event at the
end of the reporting period, whether it is probable that such a
Legal Proceeding will result in an outflow of resources and
whether the amount of the obligation can be reliably estimated.
Internal and external counsels are generally part of the deter-
mination process. Due to new developments, it may be neces-
sary, to record a provision for an ongoing Legal Proceeding or
to adjust the amount of a previously recognized provision. Upon
resolution of a Legal Proceeding, Siemens may incur charges in
excess of the recorded provisions for such matters. The out-
come of Legal Proceedings may have a material effect on
Siemens' financial position, its results of operations and/or its
cash flows.
Significant estimates are involved in the determination of provi-
sions related to onerous contracts, warranty costs, asset retire-
ment obligations, legal and regulatory proceedings as well as
governmental investigations (Legal Proceedings). Siemens re-
cords a provision for onerous sales contracts when current esti-
mates of total contract costs exceed expected contract revenue.
Onerous sales contracts are identified by monitoring the prog-
ress of the project and updating the estimate of total contract
costs which also requires significant judgment relating to
achieving certain performance standards as well as estimates
involving warranty costs and estimates regarding project delays
including the assessment of responsibility splits between the
contract partners for these delays. Uncertainties regarding asset
retirement obligations include the estimated costs of decom-
missioning and final waste storage because of the long time
frame over which future cash outflows are expected to occur
including the respective interest accretion. Amongst others, the
estimated cash outflows could alter significantly if, and when,
political developments affect the government's plans to develop
the final storage.
amount of the obligation. If the effect is material, provisions are
recognized at present value by discounting the expected future
cash flows at a pretax rate that reflects current market assess-
ments of the time value of money. When a contract becomes
onerous, the
present obligation under the contract is recognized
as a provision.
Consolidated Financial Statements 65
Provisions - A provision is recognized in the Statement of Finan-
cial Position when it is probable that the Company has a present
legal or constructive obligation as a result of a past event, it is
probable that an outflow of economic benefits will be required
to settle the obligation and a reliable estimate can be made of the
Actuarial valuations rely on key assumptions including discount
rates, expected compensation increases, rate of pension progres-
sion and mortality rates. Discount rates used are determined
by reference to yields on high-quality corporate bonds of appro-
priate duration and currency at the end of the reporting period.
In case such yields are not available discount rates are based on
government bonds yields. Due to changing market, economic
and social conditions the underlying key assumptions may differ
from actual developments.
Remeasurements comprise actuarial gains and losses as well as
the difference between the return on plan assets and the
amounts included in net interest on the net defined benefit lia-
bility (asset). They are recognized in Other comprehensive in-
come, net of income taxes.
Service cost and past service cost for post-employment benefits
and administration costs unrelated to the management of plan
assets are allocated among functional costs. Past service cost and
settlement gains (losses) are recognized immediately in profit or
loss. For unfunded plans, the amount of line item Post-employ-
ment benefits equals the DBO. For funded plans, Siemens offsets
the fair value of the plan assets with the DBO. Siemens recog-
nizes the net amount, after adjustments for effects relating to
any asset ceiling.
Sale of goods: Revenue is recognized when the significant risks
and rewards of ownership of the goods have passed to the buyer,
usually on delivery of the goods.
Defined benefit plans - Siemens measures the entitlements by
applying the projected unit credit method. The approach reflects
an actuarially calculated net present value of the future benefit
entitlement for services already rendered. In determining the
net present value of the future benefit entitlement for service
already rendered (Defined Benefit Obligation (DBO)), the ex-
pected rates of future salary increase and expected rates of fu-
ture pension progression are considered. The assumptions used
for the calculation of the DBO as of the period-end of the preced-
ing fiscal year are used to determine the calculation of service
cost and interest income and expense of the following year. The
net interest income or expense for the fiscal year will be based
on the discount rate for the respective year multiplied by the net
defined benefit liability (asset) at the preceding fiscal year's pe-
riod-end date.
Income taxes - Tax positions under respective local tax laws
and tax authorities' views can be complex and subject to differ-
ent interpretations of tax payers and local tax authorities.
Different interpretations of tax laws may result in additional tax
payments for prior years and are taken into account based on
management's considerations. Under the liability method,
deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets are recog-
nized if sufficient future taxable profit is available, including
income from forecasted operating earnings, the reversal of
existing taxable temporary differences and established tax
planning opportunities. As of each period-end, Siemens evalu-
ates the recoverability of deferred tax assets, based on pro-
jected future taxable profits. Based upon the level of historical
taxable income and projections for future taxable income over
the periods in which the deferred tax assets are deductible,
Siemens believes it is probable the Company will realize the
benefits of these deductible differences. As future develop-
ments are uncertain and partly beyond Siemens's control,
assumptions are necessary to estimate future taxable profits as
well as the period in which deferred tax assets will recover.
Estimates are revised in the period in which there is sufficient
evidence to revise the assumption.
Siemens classifies a non-current asset or a disposal group as held
for disposal if its carrying amount will be recovered principally
through a sale transaction rather than through continuing use.
The disclosures in the Notes to Consolidated Financial State-
ments outside NOTE 3 ACQUISITIONS, DISPOSITIONS AND DISCON-
TINUED OPERATIONS that refer to the Consolidated Statements of
Financial Position generally relate to assets that are not held for
disposal. Siemens reports non-current assets or disposal groups
held for disposal separately in → NOTE 3 ACQUISITIONS, DISPOSITIONS
AND DISCONTINUED OPERATIONS. Non-current assets classified as
held for disposal and disposal groups are measured at the lower
of their carrying amount and fair value less costs to sell. Depreci-
ation and amortization ceases. The determination of the fair
value less costs to sell includes the use of estimates and assump-
tions that tend to be uncertain.
separately from income and expenses from continuing opera-
tions; prior periods are presented on a comparable basis. In the
Consolidated Statements of Cash Flow, the cash flows from dis-
continued operations are presented separately from cash flows
of continuing operations; prior periods are presented on a com-
parable basis. The disclosures in the Notes to the Consolidated
Financial Statements outside NOTE 3 ACQUISITIONS, DISPOSITIONS
AND DISCONTINUED OPERATIONS that refer to the Consolidated State-
ments of Income and the Consolidated Statements of Cash Flow
relate to continuing operations.
64 Consolidated Financial Statements
Discontinued operations and non-current assets held for dis-
posal - Discontinued operations are reported when a component
of an entity is classified as held for disposal or has been disposed
of, if the component represents a separate major line of business
or geographical area of operations and is part of a single co-ordi-
nated plan to dispose of a separate major line of business or geo-
graphical area of operations. In the Consolidated Statements of
Income, income (loss) from discontinued operations is reported
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In addition, intangi-
ble assets not yet available for use are subject to an annual im-
pairment test. Impairment testing of property, plant and equip-
ment and other intangible assets involves the use of estimates in
determining the assets' recoverable amount which can have a
material impact on the respective values and ultimately the
amount of any impairment.
5 to 10 years
generally 5 years
generally 3 to 5 years
5 to 10 years
20 to 50 years
Inventories - Inventories are valued at the lower of acquisition
or production costs and net realizable value, costs being gener-
ally determined on the basis of an average or first-in, first-out
method.
Revenue recognition - Under the condition that persuasive
evidence of an arrangement exists, revenue is recognized to the
extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured, regard-
less of when the payment is being made. In cases where the in-
flow of economic benefits is not probable due to customer re-
lated credit risks, the revenue recognized is subject to the amount
of payments irrevocably received.
Foreign currency transaction - Transactions that are denomi-
nated in a currency other than the functional currency of an en-
tity, are recorded at that functional currency applying the spot
exchange rate at the date when the underlying transactions are
initially recognized. At the end of the reporting period, foreign
currency-denominated monetary assets and liabilities are reval-
ued to functional currency applying the spot exchange rate pre-
vailing at that date. Gains and losses arising from these foreign
currency revaluations are recognized in net income. Those for-
eign currency-denominated transactions which are classified as
non-monetary are remeasured using the historical spot ex-
change rate.
62 Consolidated Financial Statements
(42)
2,668
390
390
391
(446)
(446)
(446)
91
92
91
(239)
(2,827)
(2,879)
(2,879)
208
434
(885)
5,584
134
(3,066)
Other comprehensive income, net of income taxes
51
36
Foreign currency translation - Assets and liabilities of foreign
subsidiaries, where the functional currency is other than the
euro, are translated using the spot exchange rate at the end of
the reporting period, while the Consolidated Statements of In-
come are translated using average exchange rates during the
period. Differences arising from such translations are recognized
within equity and reclassified to net income when the gain or loss
on disposal of the foreign subsidiary is recognized. The Consoli-
dated Statements of Cash Flow are translated at average ex-
change rates during the period, whereas cash and cash equiva-
lents are translated at the spot exchange rate at the end of the
reporting period.
Joint ventures - Joint ventures are entities over which Siemens
and one or more parties have joint control. Joint control requires
unanimous consent of the parties sharing control in decision
making on relevant activities.
Associates - Associates are companies over which Siemens has
the ability to exercise significant influence over operating and
financial policies (generally through direct or indirect ownership
of 20% to 50% of the voting rights). These are recorded in the
Consolidated Financial Statements using the equity method and
are initially recognized at cost. Siemens' share of its associate's
post-acquisition profits or losses is recognized in the Consolidated
Statements of Income, and its share of post-acquisition changes
in equity that have not been recognized in the associate's profit
or loss is recognized directly in equity. The cumulative post-acqui-
sition changes are adjusted against the carrying amount of the
investment in the associate. When Siemens' share of losses in an
associate equals or exceeds its interest in the associate, Siemens
does not recognize further losses, unless it incurs obligations or
makes payments on behalf of the associate. The interest in an
associate is the carrying amount of the investment in the associ-
ate together with any long-term interests that, in substance, form
part of Siemens' net investment in the associate.
tional fair value of assets acquired and liabilities assumed (partial
goodwill method). If there is no loss of control, transactions with
non-controlling interests are accounted for as equity transactions
not affecting profit and loss. At the date control is lost, any re-
tained equity interests are remeasured to fair value. In case of a
written put option on non-controlling interests the Company as-
sesses whether the prerequisites for the transfer of present own-
ership interest are fulfilled at the balance sheet date. If the Com-
pany is not the beneficial owner of the shares underlying the put
option, the exercise of the put option will be assumed at each
balance sheet date and treated as equity transaction between
shareholders with the recognition of a purchase liability at the
respective exercise price. The non-controlling interests partici-
pate in profits and losses during the reporting period.
Business combinations - Cost of an acquisition is measured at
the fair value of the assets given and liabilities incurred or as-
sumed at the date of exchange. Identifiable assets acquired and
liabilities assumed in a business combination (including contin-
gent liabilities) are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling
interest. Non-controlling interests are measured at the propor-
Basis of consolidation - The Consolidated Financial Statements
include the accounts of Siemens AG and its subsidiaries over
which the Company has control. Siemens controls an investee if
it has power over the investee. In addition, Siemens is exposed
to, or has rights to, variable returns from the involvement with
the investee and Siemens has the ability to use its power over the
investee to affect the amount of Siemens' return.
Certain of these accounting policies require critical accounting
estimates that involve complex and subjective judgments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Such critical
accounting estimates could change from period to period and
have a material impact on the Company's results of operations,
financial positions and cash flows. Critical accounting estimates
could also involve estimates where Siemens reasonably could
have used a different estimate in the current accounting period.
Siemens cautions that future events often vary from forecasts
and that estimates routinely require adjustment.
NOTE 2 Significant accounting policies
and critical accounting estimates
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may not
add up precisely to totals provided. Siemens is a German based
multinational technology company with core activities in the
fields of electrification, automation and digitalization.
37
The accompanying Consolidated Financial Statements present
the operations of Siemens AG with registered offices in Berlin
and Munich, Germany, and its subsidiaries (the Company or
Siemens). They have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315a (1) of the German Commercial Code (HGB).
The financial statements are also in accordance with IFRS as is-
sued by the International Accounting Standards Board (IASB).
The Consolidated Financial Statements were authorized for issue
by the Managing Board on November 28, 2016.
B.6 Notes to Consolidated Financial Statements
Consolidated Financial Statements 61
34,816
605
34,211
(3,605)
(148)
1,160
909
NOTE 1 Basis of presentation
Net income
2,643
Balance as of September 30, 2015
914
20
Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
Additions to assets leased to others in operating leases
(247)
327
Trade payables
(811)
(579)
Trade and other receivables
(793)
(1,009)
Inventories
Change in operating net working capital
Other non-cash (income) expenses
(Income) loss related to investing activities
366
400
(1,603)
(373)
(484)
(451)
Balance as of October 1, 2015
(281)
Cash flows from investing activities
6,612
7,611
Cash flows from operating activities - continuing and discontinued operations
(270)
(57)
Cash flows from operating activities - discontinued operations
6,881
7,668
(442)
Cash flows from operating activities - continuing operations
1,219
Interest received
495
302
(2,306)
(1,718)
Dividends received
Income taxes paid
852
1,138
Additions to intangible assets and property, plant and equipment
(325)
2,008
Cash flow hedges: The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net of
income taxes (applicable deferred income tax), and any ineffec-
tive portion is recognized immediately in net income. Amounts
accumulated in equity are reclassified into net income in the
same periods in which the hedged item affects net income.
Share-based payment - Share-based payment awards at Siemens
are predominately designed as equity-settled. Fair value is mea-
sured at grant date and is expensed over the vesting period.
Fair value is determined as the market price of Siemens shares,
considering dividends during the vesting period the grantees are
not entitled to and market conditions and non-vesting condi-
tions, if applicable.
Prior-year information - The presentation of certain prior-year
information has been reclassified to conform to the current year
presentation.
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
introduces a single approach for the classification and measure-
ment of financial assets according to their cash flow characteris-
tics and the business model they are managed in, and provides a
new impairment model based on expected credit losses. IFRS 9
also includes new regulations regarding the application of hedge
accounting to better reflect an entity's risk management activi-
ties especially with regard to managing non-financial risks. The
new standard is effective for annual reporting periods beginning
on or after January 1, 2018, while early application is permitted.
The Company will adopt IFRS 9 for the fiscal year beginning as of
October 1, 2018 and is currently assessing the impacts of its adop-
tion on the Company's Consolidated Financial Statements.
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with
Customers. According to the new standard, revenue is recog-
nized to depict the transfer of promised goods or services to a
customer in an amount that reflects the consideration to which
the Company expects to be entitled in exchange for those goods
or services. Revenue is recognized when, or as, the customer ob-
tains control of the goods or services. IFRS 15 also includes guid-
ance on the presentation of contract balances, that is, assets and
liabilities arising from contracts with customers, depending on
the relationship between the entity's performance and the cus-
tomer's payment. IFRS 15 supersedes IAS 11, Construction Con-
tracts and IAS 18, Revenue as well as related interpretations. The
standard is effective for annual periods beginning on or after
January 1, 2018; early application is permitted. The Company will
adopt the standard for the fiscal year beginning as of October 1,
2017 retrospectively, i.e. the comparable period will be presented
in accordance with IFRS 15. Currently, it is expected that changes
in the total amount of revenue to be recognized for a customer
contract will be very limited. In addition, for certain types of con-
tracts, the timing for recognizing revenue will change, in partic-
ular revenue may be recognized earlier if variable consideration
components exist, re-allocations of the transaction price be-
tween performance obligations take place or licenses are trans-
ferred to the customer. Based on analyses performed, the vast
majority of construction-type contracts currently accounted for
Consolidated Financial Statements 67
under the percentage-of-completion method is expected to fulfill
the requirements for revenue recognition over time. Besides,
changes to the Statement of Financial Position are expected, e.g.
separate line items for contract assets and contract liabilities are
required, and quantitative and qualitative disclosures are added.
The Company does not expect significant impacts on its Consol-
idated Financial Statements.
In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
nates the current classification model for lessee's lease contracts
as either operating or finance leases and, instead, introduces a
single lessee accounting model requiring lessees to recognize
right-of-use assets and lease liabilities for leases with a term of
more than twelve months. This brings the previous off-balance
leases on the balance sheet in a manner largely comparable to
current finance lease accounting. IFRS 16 is effective for annual
periods beginning on or after January 1, 2019; earlier application
is permitted if IFRS 15 is already applied. The Company is cur-
rently assessing the impact of adopting IFRS 16 on the Company's
Consolidated Financial Statements and will adopt the standard
for the fiscal year beginning as of October 1, 2019.
NOTE 3 Acquisitions, dispositions
and discontinued operations
ACQUISITIONS
In April 2016, Siemens acquired all shares of CD-adapco Ltd.,
U.S., a global engineering simulation company with software
solutions covering a wide range of engineering disciplines. The
acquisition supplements Siemens' industry software portfolio
and delivers on Siemens' strategy to further expand the digital
enterprise portfolio. The acquired business will be integrated in
the Digital Factory Division. The purchase price amounts to
US$971 million (€853 million as of the acquisition date) paid in
cash and is subject to customary cash/debt and working capital
adjustments. The preliminary purchase price allocation as of the
acquisition date resulted in Other intangible assets of €395 mil-
lion and Deferred tax liabilities of €105 million. Other intangible
assets mainly relate to technology of €273 million and customer
relationships of €118 million. Preliminary goodwill of €569 mil-
lion comprises intangible assets that are not separable such as
employee know-how and expected synergy effects. Including
earnings effects from purchase price allocation and integration
costs, the acquired business contributed revenue of €63 million
and a net income of €(27) million to Siemens for the period from
acquisition to September 30, 2016. Revenue and net income of
the combined entity in fiscal 2016 would have been €79,722 mil-
lion and €5,566 million, respectively, had CD-adapco been in-
cluded as of October 1, 2015.
In June 2015, Siemens acquired all shares of Dresser-Rand Group
Inc., Houston, Texas (U.S.) and Paris (France). The purchase price
allocation was finalized in the third quarter of fiscal 2016. The
purchase price amounts to US$6,692 million (€5,981 million as
of the acquisition date) paid in cash. The following figures result
from the purchase price allocation as of the acquisition date:
Other intangible assets €2,839 million, Property, plant and equip-
ment €240 million, Trade and other receivables €318 million,
Inventories €480 million, Other current financial assets €145 mil-
lion, Cash and cash equivalents €175 million, Debt including out-
standing financial debt settled €1,043 million, Trade payables
€219 million, Provisions €118 million, Other current liabilities
€386 million and Deferred tax liabilities €935 million. Intangible
assets mainly relate to customer relationships of €2,383 million
and technology of €393 million. The gross contractual amount of
the trade and other receivables acquired is €469 million. Good-
will amounts to €4,580 million and is largely based on synergies,
such as sales synergies mainly resulting from the extended port-
folio and enhanced service opportunities, and cost synergies,
especially in research and development, purchasing, general ad-
ministration functions, as well as manufacturing.
In December 2014, Siemens acquired the Rolls-Royce Energy aero-
derivative gas turbine and compressor business of Rolls-Royce
plc, U.K. (Rolls-Royce). The purchase price allocation was final-
ized in the first quarter of fiscal 2016. The contractually agreed
purchase price amounts to £785 million (€990 million as of the
acquisition date) paid in cash. That amount was subject to
post-closing adjustments amounting to £29 million (€37 million
as of the acquisition date). In addition, as part of the transaction,
Siemens paid Rolls-Royce £200 million (€252 million as of the
acquisition date) for a 25 year exclusive technology licensing
agreement and for preferred access to supply and engineering
services of Rolls-Royce. Goodwill amounts to €408 million and is
largely based on synergies, such as cost synergies, especially in
manufacturing, purchasing, research and development, as well
as general administration functions, and sales synergies mainly
resulting from the extension of the gas turbine portfolio.
DISCONTINUED OPERATIONS
In fiscal 2016 and 2015, Income from discontinued operations,
net of income taxes, includes gains related to the sale of the
hearing aid business of €102 million and €1.7 billion, respec-
tively; in fiscal 2015, Siemens recognized a pretax gain on
disposal for the sale of its hospital information business of
€516 million.
68
Fair value hedges: The carrying amount of the hedged item is
adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair value
is recognized as a separate financial asset or liability with corre-
sponding gain or loss recognized in net income. For hedged
items carried at amortized cost, the adjustment is amortized un-
til maturity of the hedged item. For hedged firm commitments
the initial carrying amount of the assets or liabilities that result
from meeting the firm commitments are adjusted to include the
cumulative changes in the fair value that were previously recog-
nized as separate financial assets or liabilities.
Derivative financial instruments - Derivative financial instru-
ments, such as foreign currency exchange contracts and interest
rate swap contracts are measured at fair value and classified as
held for trading unless they are designated as hedging instru-
ments, for which hedge accounting is applied. Changes in the fair
value of derivative financial instruments are recognized either in
net income or, in the case of a cash flow hedge, in line item Other
comprehensive income, net of income taxes (applicable deferred
income tax). Certain derivative instruments embedded in host
contracts are also accounted for separately as derivatives.
Financial liabilities - Siemens measures financial liabilities, ex-
cept for derivative financial instruments, at amortized cost using
the effective interest method.
economic trends and analysis of historical bad debts on a port-
folio basis. For the determination of the country-specific compo-
nent of the individual allowance, Siemens also considers country
credit ratings, which are centrally determined based on informa-
tion from external rating agencies. Regarding the determination
of the valuation allowance derived from a portfolio-based analy-
sis of historical bad debts, a decline of receivables in volume re-
sults in a corresponding reduction of such provisions and vice
versa. As of September 30, 2016 and 2015, Siemens recorded a
valuation allowance for trade and other receivables (including
leases) of €1,211 million and €1,123 million, respectively.
Interest (income) expenses, net
Income tax expenses
2,549
2,764
Amortization, depreciation and impairments
(2,031)
(188)
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
Income from discontinued operations, net of income taxes
7,380
1,869
5,584
Cash flows from operating activities
2015
2016
Fiscal year
(in millions of €)
B.4 Consolidated Statements of Cash Flows
Available-for-sale financial assets - Investments in equity instru-
ments, debt instruments and fund shares are measured at fair
value, if reliably measurable. Unrealized gains and losses, net of
applicable deferred income tax expenses, are recognized in line
item Other comprehensive income, net of income taxes. Pro-
vided that fair value cannot be reliably determined, Siemens
measures available-for-sale financial assets at cost. This applies
to equity instruments that do not have a quoted market price in
an active market, and decisive parameters cannot be reliably es-
timated to be used in valuation models for the determination of
fair value. Siemens considers all available evidence such as mar-
ket conditions and prices, investee-specific factors and the dura-
tion as well as the extent to which fair value is less than acquisi-
tion cost in evaluating potential impairment of its available-for-sale
financial assets. The Company considers a decline in fair value as
objective evidence of impairment, if the decline exceeds 20% of
costs or continues for more than six months.
Loans and receivables - Financial assets classified as loans and
receivables are measured at amortized cost using the effective
interest method less any impairment losses. Impairment losses on
trade and other receivables are recognized using separate allow-
ance accounts. The allowance for doubtful accounts involves
significant management judgment and review of individual re-
ceivables based on individual customer creditworthiness, current
66 Consolidated Financial Statements
Net income
(2,135)
Change in other assets and liabilities
Acquisitions of businesses, net of cash acquired
660
Change in cash and cash equivalents
83
(98)
Effect of changes in exchange rates on cash and cash equivalents
1,056
(2,710)
Cash flows from financing activities - continuing and discontinued operations
5
Cash flows from financing activities - discontinued operations
1,051
(2,710)
Cash flows from financing activities - continuing operations
(145)
(236)
Dividends attributable to non-controlling interests
(2,728)
(2,827)
Dividends paid to shareholders of Siemens AG
1,923
Cash and cash equivalents at beginning of period
(1,897)
8,034
Other changes in equity
Transactions with non-controlling interests
Re-issuance of treasury shares
Purchase of treasury shares
Share-based payment
Dividends
Other comprehensive income, net of income taxes
Net income
Balance as of October 1, 2014
(596)
(in millions of €)
Consolidated Financial Statements 59
9,957
10,604
13
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
9,958
10,618
Cash and cash equivalents at end of period
B.5 Consolidated Statements of Changes in Equity
(809)
9,958
351
651
1,031
Disposal of current available-for-sale financial assets
445
9
3,474
377
Disposal of investments, intangibles and property, plant and equipment
(1,667)
Cash flows from investing activities - continuing operations
(899)
(568)
(271)
(8,254)
(922)
Disposal of businesses, net of cash disposed
Change in receivables from financing activities
Purchase of current available-for-sale financial assets
Purchase of investments
Interest paid
(1,139)
(4,406)
(1,356)
Cash flows from investing activities - discontinued operations
(1,408)
(8,716)
Change in short-term debt and other financing activities
(354)
(2,253)
Repayment of long-term debt (including current maturities of long-term debt)
7,213
Issuance of long-term debt
10
(13)
5,300
(2,700)
(463)
Purchase of treasury shares
Cash flows from financing activities
(5,827)
(4,144)
Cash flows from investing activities - continuing and discontinued operations
Other transactions with owners
2,889
262
38
20
58
(31)
257
Total comprehensive income
Income (loss) from discontinued operations
Other comprehensive income,
1
Item Income (loss) from investments accounted for using the eq-
uity method, net, includes Siemens' share in BWI Informations-
technik GmbH's (BWI) earnings of €16 million and €27 million,
respectively, in fiscal 2016 and 2015. The carrying amount of all
individually not material associates includes the carrying amount
of BWI, amounting to €95 million and €114 million, respectively,
as of September 30, 2016 and 2015. Siemens holds a 50.05%
stake in BWI. BWI is not controlled by Siemens due to significant
participating rights of the two other shareholders. Together with
the HERKULES obligations the Company's maximum exposure to
loss from BWI as of September 30, 2016 and 2015 amounts to
€695 million and €1,204 million, respectively. BWI finances its
operations on its own.
net of income taxes
NOTE 5 Other operating income
2016
NOTE 6 Other operating expenses
Other operating expenses in fiscal 2016 and 2015 include losses
on sales of property, plant and equipment, and effects from in-
surance, legal and regulatory matters.
NOTE 7 Income taxes
Income tax expense (benefit) consists of the following:
(in millions of €)
Current tax
Deferred tax
Income tax expenses
Fiscal year
2015
288
In fiscal 2016 and 2015, Other operating income includes gains
on sales of property, plant and equipment of €177 million and
€232 million, respectively.
2016
(in millions of €)
Income (loss) from continuing operations
NOTE 4 Interests in other entities
Investments accounted for using the equity method
Fiscal year
2015
(87)
2016
Share of profit (loss), net
316
Gains (losses) on sales, net
(53)
Fiscal year
2015
1,477
(129)
(155)
Income (loss) from
investments accounted for
using the equity method, net
134
1,235
In fiscal 2015, Siemens recognized proportionate losses of
€275 million as a consequence of a funding commitment pro-
vided to Unify Holdings B.V. The investment was sold in the
second quarter of fiscal 2016.
As of September 30, 2016 and 2015, the carrying amount of all
individually not material associates amounts to €2,242 million
and €2,046 million, respectively. Summarized financial infor-
mation for all individually not material associates adjusted for
the percentage of ownership held by Siemens, is presented be-
low. Items included in the Statements of Comprehensive In-
come are presented for the twelve month period applied under
the equity method.
(in millions of €)
Impairment and reversals of impairment
(145)
2,014
350
US$
400
358
US$
400
357
1.5%/2012/March 2020/EUR fixed-rate instruments
€
1,000
997
€
1,000
996
2.75%/2012/September 2025/GBP fixed-rate instruments
235
405
£
1,285
1,250
€
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
Total Debt Issuance Program
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
1.5%/2013/March 2018/US$ fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
2013/June 2020/US$ floating-rate instruments
863
US$3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
650
740
650
£
3.75%/2012/September 2042/GBP fixed-rate instruments
472
350
£
2,090
2,000
€
Carrying
amount
Sep 30, 2015
Currency
notional
in millions
of €¹
Carrying
amount
amount
Sep 30, 2016
amount
Currency
notional
5.625%/2006/March 2016/US$ fixed-rate instruments
(interest/issued/maturity)
NOTES AND BONDS
76
(in millions)
€
in millions
of €¹
2,028
2,000
€
5.125%/2009/February 2017/EUR fixed-rate instruments
1,779
1,600
(in millions)
€
1,600
€
5.625%/2008/June 2018/EUR fixed-rate instruments
456
500
US$
1,719
1,250
1,278
€
US$3m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
2,023
1,750
1,982 US$
1,750
US$
US$
6.125%/2006/August 2026/US$ fixed-rate instruments
1,750
1,570 US$
1,750
US$
5.75%/2006/October 2016/US$ fixed-rate instruments
10,799
1,600
10,048
500
500
889
1,000
893 US$
1,000
US$
2.15%/2015/May 2020/US$-fixed-rate-instruments
448 US$
1,114
US$
1,119
1,250
US$
1.45%/2015/May 2018/US$-fixed-rate-instruments
446
1,250
Consolidated Financial Statements 75
357
US$
87
100
US$
445
500
US$
US$
447
US$
996
1,000
€
996
1,000
500
400
100
US$
358
400
US$
267
300
US$
87
268
US$
356
400
US$
358
400
300
2.90%/2015/May 2022/US$-fixed-rate-instruments
20,368
2,708
and equipment
23,968
566
487
2,018
(1,805) 25,234
(15,024) 10,210
(1,769)
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
74
Consolidated Financial Statements
The gross carrying amount of Advances to suppliers and con-
struction in progress includes €677 million and €787 million, re-
spectively of property, plant and equipment under construction
in fiscal 2016 and 2015. As of September 30, 2016 and 2015, con-
tractual commitments for purchases of property, plant and
equipment are €643 million and €474 million, respectively.
Minimum future lease payments under operating leases are:
NOTE 15 Debt
(in millions of €)
Notes and bonds
(maturing until 2046)
Loans from banks
(maturing until 2023)
Current debt
Sep 30,
Non-current debt
Sep 30,
Other financial indebted-
1,000
992
755
380
Property, plant
25,498
4,994
2015
2016
2015
2016
Sep 30,
456 23,560
6
855
(1)
2,927
Equipment leased to others
(662)
1,319
(4,510)
5,829
117
(768)
580
49
109
5,786
equipment
Furniture and office
73
ness (maturing until 2027)
57
(4)
856
(7)
(467)
500
66
5
457
760
Advances to suppliers and
(345)
1,287
(1,746)
3,033
(521)
construction in progress
817
1,737
87
Item Loans receivable primarily relate to long-term loan trans-
actions of SFS.
20,821
20,610
260
Other
2,464
NOTE 14 Other current liabilities
2,662
2,398
2,293
Derivative financial instruments
3,557
Receivables from finance leases
12,477
Available-for-sale financial assets
11,838
(in millions of €)
2016
2,968
Other
1,242
1,175
Accruals for pending invoices
5,437
Sep 30,
5,401
10,982
10,892
contracts and related advances
estimated earnings on uncompleted
Billings in excess of costs and
2015
Liabilities to personnel
20,437
Loans receivable
(in millions of €)
15
Total debt
652
689
After one year but not more than five years
finance leases
31
319
Within one year
Obligations under
2015
2016
(in millions of €)
68
326
2016
123
6,206
As of September 30, 2016 and 2015, €7.1 billion and €7.1 billion
of lines of credit are unused. The facilities are for general corpo-
rate purposes. The €4.0 billion syndicated credit facility was
extended by one year until June 25, 2021. The US$3.0 billion
syndicated credit facility matures on September 27, 2020. The
€450 million revolving bilateral credit facility is unused and was
extended from September 30, 2016 to September 30, 2017.
CREDIT FACILITIES
Interest rates in this Note are per annum. In fiscal 2016 and 2015,
weighted-average interest rates for loans from banks, other finan-
cial indebtedness and obligations under finance leases were
3.9% (2015: 2.8%), 0.5% (2015: 0.2%) and 4.8% (2015: 4.7%),
respectively.
217
3,264
Sep 30,
2015
115
NOTE 13 Other financial assets
1,099
92
85
More than five years
26,682
2,979 24,761
1,063
US$
1,750
1,564 US$
1
(109)
1
Remeasurements recognized
in the Consolidated Statements
of Comprehensive Income
6,284
(41)
2,473
(245)
(109)
1
3,703
205
Employer contributions
618
611
(137)
(160)
(1,616)
(1,694)
(1,753)
(1,854)
(109)
Benefits paid
144
133
144
Plan participants' contributions
(611)
(618)
133
(41)
6,284
245
Consolidated Statements of income
costs recognized in the
Components of defined benefit
2
(4)
(179)
1,605
8
5
Other¹
(825)
(809)
825
809
(177)
Settlement payments
1,436
646
(2,473)
Effects of asset ceiling
(41)
6,284
(245)
2,473
818
Actuarial (gains) losses
amounts included in net interest
Return on plan assets excluding
801
795
11
7
income and net interest expenses
(53)
(47)
(45)
6,188
1,435
1,512
3,162
3,347
4,597
5,612
4,859
10,184
14,539
15,275
21,469
25,460
CH
6,930
U.K.
6,047
9
Consolidated Financial Statements
78
1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
551
675
66
5,696
68
3,064
3,432
3,671
22
151
107
2,947
Interest income
U.S.
thereof:
793
(792)
897
(758)
Foreign currency translation effects
88
7
(2)
(9)
602
(10)
Business combinations, disposals and other
(8)
(47)
515
Germany
(1)
103
9,737
13,486
214
119
27,296
(557)
40
(749)
390
(167) (1,777)
36,818 28,809
42,176
Balance at fiscal year-end
(2,531)
Other reconciling items
7
1,087
1,085
11
1.65%/2012/August 2019 US$ fixed-rate instruments
1.05%/2012/August 2017 US$ fixed-rate instruments
1,989
1,055
750
£
US$
US$
6.125%/2006/September 2066/GBP fixed-rate instruments
Total Hybrid Capital Bonds
900
€
5.25%/2006/September 2066/EUR fixed-rate instruments
10,497
15,801
887
934
1,000
1,500
US$
33
33
€
33
33
€
1,332
3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
Total Bonds with Warrant Units
1,500
US$
1,309
1,500
1,314
1,500
1,292
€
US$
1,700
1,750
US$
1,546
1,750
US$
4.40%/2015/May 2045/US$-fixed-rate-instruments
1,539
1,331
1,336 US$
1,500
US$
3.25%/2015/May 2025/US$-fixed-rate-instruments
1,557
1,750
1,500
1,517
US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
350
US$
666
750
US$
2.00%/2016/September 2023/US$-fixed-rate-instruments
2.35%/2016/October 2026/US$-fixed-rate-instruments
3.30%/2016/September 2046/US$-fixed-rate-instruments
Total US$ Bonds
983
US$
1,100
1.70%/2016/September 2021/US$-fixed-rate-instruments
984
1,100
US$
1.30%/2016/September 2019/US$-fixed-rate-instruments
308
US$
(513)
31
€
2015
2016
2015
2016
2015
2016
2016
(in millions of €)
Fiscal year
Fiscal year
Fiscal year
(III)
(11)
(1)
(1 - 11 + 111)
Fiscal year
Net defined
benefit balance
2015
36,818
7
536
523
536
1,076
523
1,078
Interest expenses
Balance at begin of fiscal year
Current service cost
9,737
202
214
26,505
27,296
35,591
9,288
31
Effects of
asset ceiling
obligation (DBO)
As of September 30, 2016 and 2015, two bilateral US$500 million
term loan facilities (in aggregate €896 million and €893 million
respectively) are outstanding until March 26, 2020.
ASSIGNABLE AND TERM LOANS
Bond with Warrant Units - Each of the US$1.5 billion instru-
ments were issued with 6,000 detachable warrants. As of Sep-
tember 30, 2016 and 2015, terms for 10,661 warrants exchanged
in fiscal 2015 entitle the holder to receive 1,914.0511 and
1,902.0024 Siemens AG shares, respectively, per warrant at an
exercise price of €98.1389 and €98.7606, respectively, per share;
terms for the 1,339 not exchanged warrants entitle the holder to
receive 1,823.4130 and 1,811.9349 Siemens AG shares, respec-
tively, per warrant as well as 151.5630 and 160.4987 OSRAM
shares, respectively, at an exercise price of €187,842.81. As of
September 30, 2016, one warrant was exercised. The number of
shares may be adjusted under the terms of the warrants. As of
September 30, 2016 and 2015, the warrants offer option rights to
22.8 million and 22.7 million Siemens AG shares, respectively.
Hybrid Capital Bond - On August 1, 2016 Siemens has irrevoca-
bly called for redemption of the hybrid bonds and redeemed
them at face value on September 14, 2016.
US$ Bonds - In September 2016, Siemens issued instruments
totaling US$6 billion (€5.4 billion as of September 30, 2016) in
six tranches.
Debt Issuance Program - The Company has a program for the
issuance of debt instruments in place under which instruments
up to €15.0 billion can be issued as of September 30, 2016 and
2015, respectively. As of September 30, 2016 and 2015 €9.9 bil-
lion and €10.5 billion in notional amounts were issued and are
outstanding. Siemens redeemed the 5.625% US$ 500 million
fixed-rate instrument at face value on March 16, 2016 as due.
COMMERCIAL PAPER PROGRAM
Consolidated Financial Statements
25,955
28,554
2,670
2,705
31
31
1 Includes adjustments for fair value hedge accounting.
Fair value of
plan assets
Siemens has a US$9.0 billion (€8.1 billion as of September 30,
2016) commercial paper program in place including US$ extend-
ible notes capabilities. As of September 30, 2016 and 2015,
US$700 million (€627 million) and US$1.7 billion (€1.5 billion),
respectively, were outstanding. Siemens' commercial papers
have a maturity of generally less than 90 days. Interest rates
ranged from 0.13% to 0.74% in fiscal 2016 and from 0.11% to
0.32% in fiscal 2015.
Post-employment benefits
Defined benefit
Development of the defined benefit plans
Following the Swiss law of occupational benefits (BVG) each em-
ployer has to grant post-employment benefits for qualifying em-
ployees. Accordingly Siemens in Switzerland sponsors several
cash balance plans. These plans are administered by foundations.
The board of the main foundation is composed of equally many
employer and employee representatives. The board of the foun-
dation is responsible for investment policy and the asset manage-
ment, as well as for any changes in the plan rules and the deter-
mination of contributions to finance the benefits. The Company
is required to make total contributions at least as high as the sum
of the employee contributions set out in the plan rules. In case of
an underfunded plan the Company together with the employees
may be asked to pay supplementary contributions according to a
well defined framework of recovery measures.
Switzerland:
Siemens plc offers benefits through the Siemens Benefit Scheme
for which, until the start of retirement, an inflation increase of
the accrued benefits is mandatory. The required funding is deter-
mined by a funding valuation carried out every third year based
on legal requirements. Due to deviating guidelines for the deter-
mination of the discount rates, the technical funding deficit is
usually larger than the IFRS funding deficit. To reduce the deficit
Siemens entered into an agreement with the trustees to provide
annual payments of GB£31 (€42) million until fiscal 2033. The
agreement also provides for a cumulative advance payment by
Siemens AG compensating the remaining annual payments at
the date of early termination of the agreement due to cancella-
tion or insolvency.
U.K.:
NOTE 16
Consolidated Financial Statements 77
U.S.:
In Germany, Siemens AG provides pension benefits through the
plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
zen legacy plans and deferred compensation plans. The majority
of Siemens' active employees participate in the BSAV. Those ben-
efits are predominantly based on contributions made by the
Company and returns earned on such contributions, subject to a
minimum return guaranteed by the Company. In connection with
the implementation of the BSAV, benefits provided under the
frozen legacy plans were modified to substantially eliminate the
effects of compensation increases. However, these frozen plans
still expose the Company to investment risk, interest rate risk and
longevity risk. The pension plans are funded via contractual trust
arrangements (CTA). In Germany no legal or regulatory minimum
funding requirements apply.
Germany:
The defined benefit plans open to new entrants are based pre-
dominantly on contributions made by the Company. Only to a
certain extent, those plans are affected by longevity, inflation
and compensation increases and take into account country spe-
cific differences. The Company's major plans are funded with
assets in segregated entities. In accordance with local laws and
bilateral agreements with benefit trusts (trust agreement) those
plans are managed in the interest of the beneficiaries. The de-
fined benefit plans cover 509,000 participants, including 214,000
active employees, 93,000 former employees with vested benefits
and 202,000 retirees and surviving dependents.
DEFINED BENEFIT PLANS
Siemens provides post-employment defined benefit plans or de-
fined contribution plans to almost all of the Company's domestic
employees and the majority of the Company's foreign employees.
Siemens Corporation sponsors the Siemens Pension Plans, which
for the most part have been frozen to new entrants and to future
benefit accruals, except for interest credits on cash balance ac-
counts. Siemens Corporation has appointed the Investment Com-
mittee as the named fiduciary for the management of the assets
of the Plans. The Plans' assets are held in a Master Trust and the
trustee of the Master Trust is responsible for the administration
of the assets of the trust, taking directions from the Investment
Committee. The Plans are subject to the funding requirements
under the Employee Retirement Income Security Act of 1974 as
amended, (ERISA). There is a regulatory requirement to maintain
a minimum funding level of 80% in the defined benefit plans in
order to avoid benefit restrictions. At its discretion, Siemens Cor-
poration may contribute in excess of this regulatory requirement.
Annual contributions are calculated by independent actuaries.
2,660
£
7,770
5,457
lease payments receivable
Present value of minimum future
(72)
(108)
residual value
Less: Present value of unguaranteed
(190)
(198)
Less: Allowance for doubtful accounts
5,527
5,762
Net investment in leases
(601)
(1,078)
Less: Unearned finance income
17,253
18,160
6,129
5,265
6,840
Cost of sales include inventories recognized as expense amount-
ing to €54,706 million and €51,735 million, respectively, in fiscal
2016 and 2015. Compared to prior year, write-downs increased
(decreased) by €(3) million and €97 million as of September 30,
2016 and 2015.
In the second quarter of fiscal 2016, Siemens revised project calcu-
lations related to the resumption of long-term contracts with cus-
tomers in Iran following the ending or easing of EU and U.S. sanc-
tions in accordance with accounting guidance for construction
and service contracts. The resulting adjustments increased reve-
nue by €174 million as well as profit at Power and Gas and Income
from continuing operations before income taxes by €130 million.
(20)
Dispositions and reclassifications to assets classified as held for disposal
4,599
1,144
Acquisitions and purchase accounting adjustments
1,187
(127)
19,546
25,071
2015
2016
Fiscal year
Translation differences and other
Balance at beginning of year
Cost
(in millions of €)
NOTE 11 Goodwill
The aggregate amount of costs incurred and recognized profits
less recognized losses for construction contracts in progress, as
of September 30, 2016 and 2015 amounted to €83,556 million
and €82,196 million, respectively. Revenue from construction
contracts amounted to €32,635 million and €30,261 million, re-
spectively, for fiscal 2016 and 2015. Advance payments received
on construction contracts in progress were €8,705 million and
€8,674 million as of September 30, 2016 and 2015. Retentions in
connection with construction contracts were €288 million and
€225 million in fiscal 2016 and 2015, respectively.
Construction contracts, here and as follows, include service con-
tracts accounted for under the percentage of completion method.
Consolidated Financial Statements 71
(261)
Gross investment in leases
(2,506)
Work in progress
2,631
2,487
Raw materials and supplies
2015
2016
Sep 30,
(in millions of €)
The following table shows a reconciliation of minimum future lease
payments to the gross and net investment in leases and to the
present value of the minimum future lease payments receivable:
NOTE 10 Inventories
2,474
3,322
246
6,042
6,488
752
3,358
After one year but not more than five years
More than five years
2,378
Within one year
2016
(in millions of €)
4,281
(2,554)
4,417
of billings on uncompleted contracts
Advance payments received
87
353
Plus: Unguaranteed residual values
19,807
20,666
551
591
3,046
3,261
Finished goods and products held for resale
Advances to suppliers
6,042
6,488
Minimum future lease payments
Sep 30,
2015
2016
(in millions of €)
9,162
10,046
Costs and earnings in excess
Sep 30,
Balance at year-end
25,071
8.5%
1.7%
3,328
Digital Factory
8.0%
1.7%
3,587
Power and Gas (without part of Power Generation Services)
6.5%
2.5%
Sep 30, 2015
After-tax
discount rate
Terminal value
growth rate
Goodwill
5,108
Diagnostics of Healthineers
(in millions of €)
8.0%
1.7%
3,158
8.0%
Imaging & Therapy Systems of Healthineers
1.7%
2,790
6.5%
ciation/
amortiza-
lated depre-
Accumu-
carrying
business
lation
carrying
Gross
through
Trans-
Gross
Additions
NOTE 12 Other intangible assets and
property, plant and equipment
Consolidated Financial Statements 73
The sensitivity analysis for the groups of cash-generating units
to which a significant amount of goodwill is allocated was based
on a reduction in after-tax future cash flows by 10% or an in-
crease in after-tax discount rates by one percentage point or a
reduction in the terminal value growth rate by one percentage
point. Siemens concluded that no impairment loss would need
to be recognized on goodwill in any of the groups of cash-gen-
erating units.
8.0%
1.7%
2,613
Power Generation Services (part of Power and Gas)
2.0%
26,068
3,552
1.7%
17,783
23,166
24,159
1,905
1,909
(1)
1
3
1
140
2
1,763
1,905
Balance at beginning of year
Balance at year-end
Carrying amount
Dispositions and reclassifications to assets classified as held for disposal
Balance at year-end
Impairment losses recognized during the period
Translation differences and other
Balance at beginning of year
Accumulated impairment losses and other changes
23,166
8.0%
The goodwill impairment test is performed at the level of a
cash-generating unit or a group of cash-generating units, gener-
ally represented by a segment. As of fiscal 2016, this also applies
to Healthineers as a result of a change in the organization of the
business and the related reporting structure. In fiscal 2015, the
impairment tests for Healthineers were performed one level be-
low the segment.
cash-generating units include terminal value growth rates up to
1.7% in fiscal 2016 and 2.5% in fiscal 2015, respectively and af-
ter-tax discount rates of 5.0% to 9.0% in fiscal 2016 and 6.0% to
9.5% in fiscal 2015. Where possible, reference to market prices is
made.
3,933
6.5%
1.7%
8,301
Sep 30, 2016
After-tax
discount rate
growth rate
Goodwill
Terminal value
Revenue figures in the five-year planning period of the groups of
cash-generating units to which a significant amount of goodwill
is allocated include average revenue growth rates (excluding
portfolio effects) of between 0.3% and 5.3% (2.6% and 5.9% in
fiscal 2015).
Power and Gas (without part of Power Generation Services)
Power Generation Services (part of Power and Gas)
Digital Factory
Healthineers
(in millions of €)
The following table presents key assumptions used to determine
fair value less costs to sell for impairment test purposes for the
groups of cash-generating units to which a significant amount of
goodwill is allocated:
group information on beta factors, leverage and cost of debt.
The parameters for calculating the discount rates are based on
external sources of information. The peer group is subject to an
annual review and adjusted, if necessary. Terminal value growth
rates take into consideration external macroeconomic sources of
data and industry specific trends.
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each group of
cash-generating units. Discount rates are based on the weighted
average cost of capital (WACC) for the groups of cash-generating
units (for SFS the discount rate represents cost of equity). The
discount rates are calculated based on a risk-free rate of interest
and a market risk premium. In addition, the discount rates reflect
the current market assessment of the risks specific to each group
of cash-generating units by taking into account specific peer
Consolidated Financial Statements
72
For the purpose of estimating the fair value less costs to sell of
the groups of cash-generating units, cash flows were projected
for the next five years based on past experience, actual operating
results and management's best estimate about future develop-
ments as well as market assumptions. The determined fair value
of the groups of cash-generating units is assigned to level 3 of
the fair value hierarchy.
Siemens performs the mandatory annual impairment test in the
three months ended September 30. The recoverable amounts for
the annual impairment test 2016 for Siemens' groups of cash-
generating units were estimated to be higher than the carrying
amounts. Key assumptions on which Siemens based its determi-
nations of the fair value less costs to sell for the groups of
As of September 30, 2016 and 2015, Other current financial as-
sets include loans receivables of €4,910 million and €3,128 mil-
lion, respectively and derivative financial instruments of
€758 million and €830 million, respectively.
NOTE 9 Other current financial assets
Investments in finance leases primarily relate to industrial ma-
chinery, medical equipment, transportation systems, equipment
for information technology and office machines. Actual cash
flows will vary from contractual maturities due to future sales of
finance receivables, prepayments and write-offs.
Sep 30,
2015
2016
(in millions of €)
Fiscal year
Including items charged or credited directly to equity and the
expense (benefit) from continuing and discontinued operations,
the income tax expense (benefit) consists of the following:
Siemens has not recognized deferred tax liabilities for income
taxes or foreign withholding taxes on the cumulative earnings of
subsidiaries of €26,585 million and €27,507 million, respectively
in fiscal 2016 and 2015 because the earnings are intended to be
permanently reinvested in the subsidiaries.
As of September 30, 2016 and 2015, €953 and €458 million of the
unrecognized tax loss carryforwards expire over the periods to 2031.
Deferred income tax assets and liabilities on a gross basis are
summarized as follows:
1,869
2,008
Actual income tax expenses
2
(6)
Other, net
26
(92)
for using the equity method
Tax effect of investments accounted
(107)
(in millions of €)
(280)
2016
Continuing operations
114
Other
2,218
1,010
139
(996)
Income and expenses recognized
directly in equity
7,539
8,742
Liabilities and Post-employment benefits
1,936
1,836
Non-current and current assets
210
(2)
Discontinued operations
Assets
1,869
2,008
2015
237
Foreign tax rate differential
(15)
192
188
Deductible temporary differences
2015
2016
2015
2016
(in millions of €)
Fiscal year
Sep 30,
(in millions of €)
Deferred tax assets have not been recognized with respect of the
following items (gross amounts):
Income tax expense (current and deferred) differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
70
Consolidated Financial Statements 69
In Germany, the calculation of current tax is based on a com-
bined tax rate of 31%, consisting of a corporate tax rate of 15%,
a solidarity surcharge thereon of 5.5% and an average trade tax
rate of 15%. For foreign subsidiaries, current taxes are calculated
based on the local tax laws and applicable tax rates in the indi-
vidual foreign countries. Deferred tax assets and liabilities in
Germany and abroad are measured at the tax rates that are ex-
pected to apply to the period when the asset is realized or the
liability is settled.
The current income tax expenses in fiscal 2016 and 2015 include
adjustments recognized for current tax of prior years in the
amount of €(29) million and €79 million, respectively. The de-
ferred tax expense (benefit) in fiscal 2016 and 2015 includes tax
effects of the origination and reversal of temporary differences
of €54 million and €(30) million, respectively.
1,869
2,008
2,295
8
(43)
2,238
2,013
Change in tax rates
(44)
deferred tax assets and tax credits
Change in realizability of
(20)
(223)
Taxes for prior years
(709)
(227)
Tax-free income
474
600
Non-deductible losses and expenses
income taxes resulting from:
Increase (decrease) in
Expected income tax expenses
1,334
2,201
1,142
Tax loss carryforward
Tax loss and credit carryforward
(5,111)
610
228
564
263
1,038
2,965
2,940
3,374
3,405
2,072
1,952
2,492
2,397
Within one year
One to five years
Thereafter
938
933
2015
2016
2015
2016
6,840
(in millions of €)
6,129
5,265
2015
Minimum future lease payments to be received are as follows:
933
1,013
(26)
(9)
(33)
7
9
(145)
(181)
Write-offs charged against the allowance
Recoveries of amounts previously written-off
Foreign exchange translation differences
Reclassifications to line item Assets held for
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
168
284
of Income in the current period
recorded in the Consolidated Statements
Increase in valuation allowances
beginning of fiscal year
Valuation allowance as of
5,457
2015
2016
Sep 30,
2,602
Total deferred tax assets, net
8,339
8,638
Deferred tax liabilities
336
120
Other
732
930
Liabilities
NOTE 8 Trade and other receivables
7,272
7,588
Non-current and current assets
Liabilities
10,322
11,240
Deferred tax assets
1,983
(in millions of €)
2016
Sep 30,
2015
Sep 30,
Fiscal year
(in millions of €)
Present value of
minimum future lease
payments receivable
in leases
Gross investment
The gross investment in leases and the present value of minimum
future lease payments receivable are due as follows:
Changes to the valuation allowance of current and long-term re-
ceivables which belong to the class of financial assets measured
at (amortized) cost are as follows (excluding receivables from
finance leases):
In fiscal 2016 and 2015, the long-term portion of receivables from
finance leases is reported in Other financial assets and amounts
to €3,557 million and €3,264 million, respectively.
Deprecia-
Consolidated Financial Statements
16,287
2,073
2,007
Receivables from finance leases
As of September 30, 2016, the Company has certain tax losses
subject to significant limitations. For those losses deferred tax
assets are not recognized, as it is not probable that gains will be
generated to offset those losses.
1,773
13,909
14,280
Trade receivables from the sale
of goods and services
15,982
tion/amor-
547
Carrying and impair-
amount
diffe-
combi-
(in millions of €)
10/01/2014
rences
nations Additions fications
Gross
carrying
Retire-
amount
ments¹ 09/30/2015
Accumu-
lated depre-
ciation/
amortiza-
tion and
impairment
Carrying
amount
09/30/2015
Deprecia-
tion/amor-
tization
and impair-
ment in
fiscal 2015
Internally generated
technology
2,750
211
337
(302)
2,995
(1,619)
business
lation
through
Trans-
(40)
595
(582)
(12)
801
(2)
799
2
Property, plant
and equipment
1,376
25,234
(14)
2,273
(1,516)
25,717
(15,560)
10,157
(1,831)
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
Additions
Gross
carrying
(260)
(176)
Acquired technology
including patents, licenses
(2,715)
7,542
(444) 15,262
390
3,796
693
10,826
Other intangible assets
(176)
2,873
293
4,827
4,552
Customer relationships
(231)
1,874
(2,851)
4,725
34
53
923
190
tization
and trademarks
(16)
(370)
8,077
and similar rights
3,525
(252)
263
282
172
167
7,140
and equipment
Technical machinery
(7,185)
(256)
(3,656)
7,745
(257)
135
199
143
169
7,356
Land and bulidings
(778)
4,089
856
Reclassi-
Advances to suppliers and
(37)
260
construction in progress
(143)
4,870
(2,974)
1,896
(253)
Customer relationships
and trademarks
7,542
(77)
68
7,532
(3,191)
4,341
(490)
Other intangible assets
15,262
(115)
328
4,725
and similar rights
including patents, licenses
Acquired technology
amount
diffe-
combi-
(in millions of €)
10/01/2015
rences
nations Additions
Reclassi-
fications
Retire-
amount
ments¹ 09/30/2016
tion and
impairment
388
amount
09/30/2016
fiscal 2016
Internally generated
technology
2,995
324
(252)
3,067
(1,562)
1,505
(189)
ment in
(395)
64
(7,727) 7,742
7,950
(5,412)
2,539
(542)
Furniture and office
equipment
5,829
(29)
22
632
85
(448)
6,092
(4,764)
1,328
(690)
Equipment leased to others
3,033
(83)
23
484
10
15,469
3,015
(1,710)
1,305
(348)
(271)
270
(452)
288
(932)
7,745
Land and bulidings
(65)
20
274
218
7,859
(333)
4,186
(253)
Technical machinery
and equipment
7,770
(67)
(39)
(3,673)
2,292
Guarantees of third-party performance
HERKULES obligations
2,319
600
Consolidated Financial Statements 83
1,090
4,241
Item Credit guarantees covers the financial obligations of third
parties generally in cases where Siemens is the vendor and (or)
contractual partner or Siemens is liable for obligations of associ-
ated companies accounted for using the equity method. Addi-
tionally, credit guarantees are issued in the course of the SFS
business. Credit guarantees generally provide that in the event of
default or non-payment by the primary debtor, Siemens will be
required to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding balance
of the credit or, in case where a credit line is subject to variable
utilization, the nominal amount of the credit line. These guaran-
tees have terms up to 22 years and 18 years, respectively, in fiscal
2016 and 2015. For credit guarantees amounting to €270 million
and €271 million as of September 30, 2016 and 2015, respec-
tively, the Company held collateral mainly in the form of inven-
tories and trade receivables. The Company accrued €73 million
and €93 million relating to credit guarantees as of September 30,
2016 and 2015, respectively.
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which mainly include performance bonds and guaran-
tees of advanced payments in a consortium. In the event of
non-fulfillment of contractual obligations by the consortium
partner(s), Siemens will be required to pay up to an agreed-upon
maximum amount. These agreements typically have terms of up
to ten years. Generally, consortium agreements provide for fall-
back guarantees as a recourse provision among the consortium
partners. As of September 30, 2016 and 2015, the Company ac-
crued €4 million and €3 million, respectively, relating to perfor-
mance guarantees.
In fiscal 2007, The Federal Republic of Germany commissioned
a consortium consisting of Siemens and IBM Deutschland
GmbH (IBM) to modernize and operate the non-military infor-
mation and communications technology of the German Federal
Armed Forces (Bundeswehr). This project is called HERKULES.
A project company, BWI Informationstechnik GmbH, provides
the services required by the terms of the contract. Siemens is
a shareholder in the project company. The guarantees issued
by Siemens in connection with the project are connected to
each other legally and economically. The guarantees ensure
that BWI has sufficient resources to provide the required ser-
vices and to fulfill its contractual obligations. After expiration
of the contract in December 2016, there will be a maximum
remaining guarantee amount of €200 million until April 2019
at the latest.
In addition to guarantees disclosed in the table above, the Com-
pany issued other guarantees. To the extent future claims are not
considered remote, maximum future payments from these obli-
gations amount to €853 million and €1,755 million as of Septem-
ber 30, 2016 and 2015, respectively. These commitments include
indemnifications issued in connection with dispositions of busi-
nesses. Such indemnifications may protect the buyer from po-
tential tax, legal and other risks in conjunction with the pur-
chased business. As of September 30, 2016 and 2015, the
accrued amount for such other commitments is €456 million
and €559 million, respectively.
859
3,718
799
The following table presents the undiscounted amount of maxi-
mum potential future payments for major groups of guarantees:
2015
2016
Sep 30,
(in millions of €)
Future payment obligations under non-cancellable operating
leases are:
NOTE 20 Commitments and
contingencies
A+
A-1+
P-1
A-1+
P-1
Short-term debt
A1
A+
A1
Credit guarantees
(in millions of €)
1,707
2016
Based on the above mentioned conclusion of the Israeli Antitrust
Authority, two electricity consumer groups filed motions to certify
a class action for cartel damages against a number of companies
including Siemens AG with an Israeli State Court in Septem-
ber 2013. One of the class actions has been dismissed by the court
in fiscal year 2015. The remaining class action seeks compensation
for alleged damages amounting to ILS2.8 billion (approximately
€667 million as of September 2016). In addition, the Israel Electric
Corporation (IEC) filed at the end of December 2013 with an Israeli
State Court a separate ILS3.8 billion (approximately €898 million as
of September 2016) claim for damages against Siemens AG and
other companies that allegedly formed a cartel in the Israeli gas-
insulated switchgear market. Siemens AG is defending itself against
the actions.
As previously reported, the Israeli Exchange Supervisory Authority
(ISA) concluded its investigation regarding potentially illegal
payments that were allegedly paid to Israeli Electric Company-
representatives in the early 2000's, and transferred the investigation
files to the Israeli District Attorney (DA) in August 2015, in order to
decide whether or not to take any legal steps against any of the
suspects named in the ISA investigation. Siemens fully cooperated
84 Consolidated Financial Statements
with the Israeli authorities. On May 2, 2016, the DA filed criminal
charges versus Siemens Israel Ltd. Siemens AG was not indicted, as
it was possible for Siemens AG to conclude a non-prosecution
agreement with the DA that obliged Siemens AG to pay an amount
in the mid double-digit euro million range.
As previously reported, in May 2013, Siemens Ltda., Brazil, (Siemens
Ltda.) entered into a leniency agreement with the Administrative
Council for Economic Defense (CADE) and other relevant Brazilian
authorities relating to possible antitrust violations in connection with
alleged anticompetitive irregularities in metro and urban train proj-
ects, in which Siemens Ltda. and partially Siemens AG, as well as a
number of other companies participated as contractor. In March 2014,
CADE commenced administrative proceedings, confirming Siemens
Ltda.'s immunity from administrative fines for the reported potential
misconduct. In connection with the above mentioned metro and
urban train projects, several Brazilian authorities initiated investiga-
tions relating to alleged criminal acts (corruptive payments, anti-
competitive conduct, undue influence on public tenders).
As previously reported, in March 2014, Siemens was informed that
in connection with the above mentioned metro and urban train proj-
ects the Public Prosecutor's Office São Paulo has requested criminal
proceedings at court into alleged violations of Brazilian antitrust law
against a number of individuals including current and former
Siemens employees. The proceedings continue; the Public Prosecu-
tor's Office São Paulo has, in the meantime, appealed all decisions
where the courts denied opening criminal trials.
As previously reported, in May 2014, the Public Affairs Office
(Ministério Público) São Paulo initiated a lawsuit against Siemens
Ltda. as well as other companies and several individuals claiming,
inter alia, damages in an amount of BRL2.5 billion (approximately
€687 million as of September 2016) plus adjustments for inflation
and related interest in relation to train refurbishment contracts en-
tered into between 2008 and 2011. A technical note issued by the
Brazilian cartel authority CADE earlier in 2014 had not identified ev-
idence suggesting Siemens Ltda.'s involvement in anticompetitive
conduct in relation to these refurbishment contracts. In January 2015
the district court of São Paulo admitted a lawsuit of the State of São
Paulo and two customers against Siemens Ltda., Siemens AG and
other companies and individuals claiming damages in an unspeci-
fied amount. In March 2015, the district court of São Paulo admitted
a lawsuit of the Public Affairs Office (Ministério Público) São Paulo
against Siemens Ltda. and other companies claiming, inter alia, dam-
ages in an amount of BRL487 million (approximately €134 million as
of September 2016) plus adjustments for inflation and related inter-
est in relation to train maintenance contracts entered into in 2000
and 2002. In September 2015, the district court of São Paulo admit-
ted another lawsuit of the Public Affairs Office (Ministério Público)
São Paulo against Siemens Ltda. and other companies claiming,
inter alia, damages in an amount of BRL918 million (approximately
Siemens is in the course of its normal business operations involved
in numerous Legal Proceedings in various jurisdictions. These Legal
Proceedings could result, in particular, in Siemens being subject to
payment of damages and punitive damages, equitable remedies or
criminal or civil sanctions, fines or disgorgement of profit. In individ-
ual cases this may also lead to formal or informal exclusion from
tenders or the revocation or loss of business licenses or permits. In
addition, further Legal Proceedings may be commenced or the scope
of pending Legal Proceedings may be expanded. Asserted claims are
generally subject to interest rates.
€252 million as of September 2016) plus adjustments for inflation
and related interest in relation to train maintenance contracts
entered into in 2006 and 2007. Siemens will defend itself against
these actions. It cannot be excluded that further significant damage
claims will be brought by customers or the state against Siemens.
As previously reported, CADE is conducting unrelated to the
above mentioned proceedings two further investigations into
possible antitrust behavior in the field of gas-insulated and air-
insulated switchgear from the 1990's to 2006. Siemens is cooperat-
ing with the authorities.
As previously reported, in June 2015, Siemens Ltda. once again
appealed to the Supreme Court against a decision confirming the
decision of the previous court to suspend Siemens Ltda. from par-
ticipating in public tenders and signing contracts with public ad-
ministrations in Brazil for a five year term based on alleged irregu-
larities in calendar 1999 and 2004 public tenders with the Brazilian
Postal authorities. In July 2015, the court suspended enforcement
of the debarment decision pending the appeal.
As previously reported, the Vienna public prosecutor in Austria is
conducting an investigation into payments between calendar 1999
and calendar 2006 relating to Siemens Aktiengesellschaft Österre-
ich, Austria, for which adequate services rendered could not be iden-
tified. In September 2011, the Vienna public prosecutor extended the
investigations to include a tax evasion matter for which Siemens AG
Österreich is potentially liable. In November 2016, the proceedings
against Siemens Aktiengesellschaft Österreich were stopped.
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position regard-
ing an alleged anti-competitive arrangement between April 1988
and April 2004 in the field of gas-insulated switchgear. In Septem-
ber 2013, the Israeli Antitrust Authority concluded that Siemens AG
was a party to an illegal restrictive arrangement regarding the
Israeli gas-insulated switchgear market between 1988 and 2004,
with an interruption from October 1999 to February 2002. The
Company appealed against this decision in May 2014.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, in July 2008, Hellenic Telecommunications
Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
district court of Munich, Germany, seeking to compel Siemens AG to
disclose the outcome of its internal investigations with respect to
OTE. OTE seeks to obtain information with respect to allegations of
undue influence and/or acts of bribery in connection with contracts
concluded between Siemens AG and OTE from calendar 1992 to
2006. At the end of July 2010, OTE expanded its claim and requested
payment of damages by Siemens AG of at least €57 million to OTE
for alleged bribery payments to OTE employees. In October 2014 OTE
increased its damage claim to the amount of at least €68 million.
Siemens AG continues to defend itself against the expanded claim.
Sep 30,
As previously reported, during fiscal year 2014, Siemens Indus-
trial Turbomachinery Ltd., United Kingdom, was sued before an
Iranian Court. The Parties have finalized their dispute at the end
of calendar year 2015.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
Legal proceedings
NOTE 21
The Company is jointly and severally liable and has capital contri-
bution obligations as a partner in commercial partnerships and
as a participant in various consortiums.
Total operating rental expenses for the years ended September 30,
2016 and 2015 were €1,158 million and €1,118 million, respectively.
1,662
993
3,428
3,458
870
Long-term debt
After one year but not more than five years
More than five years
773
882
Within one year
2015
As previously reported, Siemens AG is a member of a supplier con-
sortium that has been contracted to construct the nuclear power
plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj (TVO) on
a turnkey basis. The agreed completion date for the nuclear power
plant was April 30, 2009. Siemens AG's share of the contract value
is approximately 27%. The other member of the supplier consor-
tium is a further consortium consisting of Areva NP S.A.S. and its
wholly-owned subsidiary, Areva GmbH. Completion of the power
plant has been delayed for reasons which are in dispute. In De-
cember 2008, the supplier consortium filed a request for arbitra-
tion against TVO demanding an extension of the construction
time, additional compensation, milestone payments, damages
and interest. TVO rejected the claims and asserted counterclaims
against the supplier consortium consisting primarily of damages
due to the delay. In August 2015, TVO updated its counterclaims
to approximately €2.3 billion. In February 2016, the supplier con-
sortium updated its monetary claims to approximately €3.5 bil-
lion. The amounts claimed by the parties do not cover the total
period of delay and may be updated further. On November 7, 2016
a partial award on certain preliminary questions identified for
early treatment was issued. The majority of the facts underlying
the claims regarding delay and disruption that occurred during
project execution are not covered by the partial award. A further
partial award on additional preliminary questions for early treat-
ment is expected during the first half of calendar year 2017. A final
arbitration judgment on the claims and counterclaims is expected
at the earliest during the second half of calendar year 2017.
Standard &
Poor's
Ratings
Services
total expected payments until the 2070's. Declined discount rates
increased the carrying amount of the provision by €355 million
as of September 30, 2016 and by €283 million as of Septem-
ber 30, 2015. At the same time, the provision was decreased by
€170 million as of September 30, 2016, due to reduced cost esti-
mates, and €282 million as of September 30, 2015, mainly due to
reduced assumed inflation rates.
Moody's
Investors
The Company is subject to asset retirement obligations related to
certain items of property, plant and equipment. Such asset retire-
ment obligations are primarily attributable to environmental
clean-up costs and to costs primarily associated with the removal
of leasehold improvements at the end of the lease term.
Environmental clean-up costs relate to remediation and environ-
mental protection liabilities which have been accrued based on
the estimated costs of decommissioning facilities for the produc-
tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
many (Hanau facilities), as well as a nuclear research and service
center in Karlstein, Germany (Karlstein facilities). According to
the German Atomic Energy Act, when such a facility is closed, the
resulting radioactive waste must be collected and delivered to a
government-developed final storage facility. In this regard, the
Company has developed a plan to decommission the Hanau and
Karlstein facilities in the following steps: clean-out, decontami-
nation and disassembly of equipment and installations, decon-
tamination of the facilities and buildings, sorting of radioactive
materials, and intermediate and final storage of the radioactive
waste. This process will be supported by continuing engineering
studies and radioactive sampling under the supervision of Ger-
man federal and state authorities. The decontamination, disas-
sembly and final waste conditioning are planned to continue
until 2018; thereafter, the Company is responsible for intermedi-
ate storage of the radioactive materials until they are handed
over to a final storage facility. With respect to the Hanau facility,
the asset retirement has been completed and intermediate stor-
age has been set up. On September 21, 2006, the Company re-
ceived official notification from the authorities that the Hanau
facility has been released from the scope of application of the
German Atomic Energy Act and that its further use is unrestricted.
The ultimate costs of the remediation are contingent on the de-
cision of the federal government on the location of the final stor-
age facilities and the date of their availability. Several parameters
relating to the development of a final storage facility for radioac-
tive waste are based on the assumptions for the so called Schacht
Konrad final storage. Parameters related to the life-span of the
German nuclear reactors assume a phase-out until 2022. The val-
uation uses assumptions to reflect the current and detailed cost
estimates, price inflation and discount rates as well as a continu-
ous outflow until the 2070's related to the costs for dismantling
as well as intermediate and final storage. Amongst others, the
estimated cash outflows related to the asset retirement obliga-
tion could alter significantly if, and when, political developments
affect the government's plans to develop the so called Schacht
Konrad. For discounting the cash outflows, the Company uses
current interest rates as of the balance sheet date.
As of September 30, 2016 and 2015, the provision totals
€1,551 million and €1,359 million, respectively, and is recorded
net of a present value discount of €206 million and €594 million,
respectively, reflecting the assumed continuous outflow of the
Consolidated Financial Statements 81
Some of these Legal Proceedings could result in adverse decisions
for Siemens that may have material effects on its financial position,
the results of its operations and/or its cash flows in the respective
reporting period. At present, Siemens does not expect any matters
not described in this Note to have material effects on its financial
position, the results of its operations and/or its cash flows.
Other includes transaction-related and post-closing provisions in
connection with portfolio activities as well as provisions for Legal
Proceedings, as far as the risks that are subject to such Legal
Proceedings are not already covered by project accounting. Pro-
visions for Legal Proceedings amounted to €430 million and
€398 million as of September 30, 2016 and 2015, respectively.
NOTE 19 Additional capital disclosures
A key consideration of our capital structure management is to
maintain ready access to capital markets through various debt
instruments and to sustain our ability to repay and service our
debt obligations over time. In order to achieve this, Siemens in-
tends to maintain an Industrial net debt divided by EBITDA (con-
tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
proximate number of years that would be needed to cover the
Industrial net debt through continuing income, without taking
into account interest, taxes, depreciation and amortization.
NOTE 18
Equity
In fiscal 2016, order related losses and risks include project
charges for the construction of a power plant mainly due to in-
creased cost estimates which reduced earnings by €172 million
(primarily presented in cost of sales).
Siemens' issued capital is divided into 850 million and 881 million
registered shares with no par value and a notional value of €3.00
per share as of September 30, 2016 and 2015, respectively;
31 million shares were retired in fiscal 2016. The shares are fully
paid in. At the Shareholders' Meeting, each share has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. All shares confer the same rights and
obligations.
As of September 30, 2016 and 2015, total authorized capital of
Siemens AG is €618.6 million nominal, issuable in installments
based on various time-limited authorizations, by issuance of up
to 206.2 million registered shares of no par value. In addition, as
of September 30, 2016 and 2015, Siemens AG's conditional capi-
tal is €1,080.6 million nominal or 360.2 million shares. It can
primarily be used for serving convertible bonds or warrants un-
der warrant bonds that could or can be issued based on various
time-limited authorizations approved by the respective Share-
holders' Meeting.
Dividends paid per share were €3.50 and €3.30, respectively, in
fiscal 2016 and 2015. The Managing Board and the Supervisory
Board propose to distribute a dividend of €3.60 per share entitled
to the dividend, in total representing approximately €2.9 billion
in expected payments. Payment of the proposed dividend is con-
tingent upon approval at the Shareholders' Meeting on Febru-
ary 1, 2017.
(in millions of €)
2016
Sep 30,
2015
Short-term debt and current maturities
of long-term debt
6,206
2,979
Plus: Long-term debt
24,761
26,682
In fiscal 2016 and 2015, Siemens repurchased 4,888,596 and
29,419,671 shares, respectively. In fiscal 2016 and 2015, Siemens
transferred 4,543,673 and 2,788,059 treasury shares, respec-
tively, in connection with share-based payments. As of Septem-
ber 30, 2016 and 2015, the Company has treasury shares of
41,721,682 and 72,376,759, respectively.
Less: Cash and cash equivalents
Warranties mainly relate to products sold. Order related losses
and risks are provided for anticipated losses and risks on uncom-
pleted construction, sales and leasing contracts.
5,087
(822)
(393)
(175)
(391)
(1,781)
(21)
(24)
5
(41)
(2)
3
Except for asset retirement obligations, the majority of the Com-
pany's provisions are generally expected to result in cash out-
flows during the next one to 15 years.
369
378
15
23
5
34
77
4,249
2,022
1,517
675
1,611
1,593
1,877
796
9,253
9
(10,604)
(9,957)
Less: Current available-for-sale financial assets
Net debt
1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
These rating agencies generally recognize and accept higher levels of debt attributable to
captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
financing activities.
2 Debt is generally reported with a value representing approximately the amount to be repaid.
However, for debt designated in a hedging relationship (fair value hedges), this amount is
adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
Siemens deducts these changes in market value in order to end up with an amount of debt
that approximately will be repaid.
82 Consolidated Financial Statements
The SFS business is capital intensive and operates a larger
amount of debt to finance its operations compared to the indus-
trial business.
(in millions of €)
Allocated equity
SFS debt
Debt to equity ratio
2016
2,623
22,418
8.55
Sep 30,
0.6
2015
8.77
Equity allocated to SFS differs from the carrying amount of equity
as it is mainly allocated based on the risks of the underlying busi-
ness.
Siemens' current corporate credit ratings are:
Standard &
Sep 30, 2015
Sep 30, 2016
Moody's
Investors
Poor's
Service
Ratings
Services
2,417
21,198
1.0
2,549
9,825
2,764
10,216
(1,293)
(1,175)
19,071
18,528
(22,418) (21,198)
13,695
9,811
799
859
(958)
(643)
(936)
10,505
6,107
Less: SFS Debt¹
Plus: Post-employment benefits
Plus: Credit guarantees
Less: 50% nominal amount hybrid bond
Less: Fair value hedge accounting adjustment²
Industrial net debt
Income from continuing operations
before income taxes
Plus/Less: Interest income, interest expenses
and other financial income (expenses), net
Plus: Amortization,
depreciation and impairments
EBITDA
Industrial net debt/EBITDA
7,404
7,218
48
58
Service
For Legal Proceedings information required under IAS 37, Provisions,
Contingent Liabilities and Contingent Assets is not disclosed if the
Company concludes that disclosure can be expected to seriously
prejudice the outcome of the matter.
28,554
NOTE 22 Additional disclosures
2,299
1,131
10
1,141
3,181
46
3,228
Not designated in a hedge accounting relationship
(including embedded derivatives)
318
In connection with fair value hedges
Financial liabilities measured at fair value -
Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with cash flow hedges
2,574
46
2,620
329
In connection with cash flow hedges
1,980
6,667
374
163
163
371
371
1,500
1,500
1,190
1,190
305
305
Sep 30, 2015
(in millions of €)
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value:
Available-for-sale financial assets: equity instruments
Available-for-sale financial assets: debt instruments
Derivative financial instruments
1,980
4,313
329
2,518
279
1,919
Financial liabilities measured
at amortized cost
168
(1,049)
(211)
(945)
Financial assets and financial
liabilities held for trading
Net gains (losses) in fiscal 2016 and 2015, on financial liabilities
measured at amortized cost are comprised of gains (losses) from
derecognition and the ineffective portion of fair value hedges.
Net gains (losses) in fiscal 2016 and 2015 on financial assets and
financial liabilities held for trading consist of changes in the fair
value of derivative financial instruments, including interest in-
come and expense, for which hedge accounting is not applied.
The amounts presented include foreign currency gains and losses
from the realization and valuation of the financial assets and lia-
bilities mentioned above.
Interest income (expense) includes interest from financial assets
and financial liabilities not at fair value through profit or loss:
(42)
(in millions of €)
Fiscal year
2016
2015
1,291
1,248
(874)
(739)
In fiscal 2016 and 2015, gains (losses) reclassified from Other
comprehensive income to the Consolidated Statements of In-
come relating to cash flow hedges were €(61) million and €(268)
million, respectively; unrealized gains (losses) recognized in
Other comprehensive income amounted to €149 million and
€(311) million, respectively.
Total interest income on financial assets
Total interest expenses on financial liabilities
(442)
39
70
1,919
1,383
1,383
534
534
Consolidated Financial Statements 87
The fair value of available-for-sale financial equity instruments
quoted in an active market is based on price quotations at the
period-end date. The fair value of debt instruments is either based
on prices provided by price service agencies or estimated by dis-
counting future cash flows using current market interest rates.
Non-current available-for-sale financial assets measured at
fair value include interests in Atos SE (Atos) and OSRAM of
€2,156 million and €1,703 million, respectively, as of Septem-
ber 30 2016 and 2015. Unrealized gains (losses) in fiscal 2016 and
2015 resulting from non-current available-for-sale financial as-
sets measured at fair value are €445 million and €367 million
and, respectively.
Siemens determines the fair values of derivative financial instru-
ments depending on the specific type of instrument. Fair values
of derivative interest rate contracts are estimated by discounting
expected future cash flows using current market interest rates
and yield curves over the remaining term of the instrument. In-
terest rate futures are valued on the basis of quoted market
prices, if available. Fair values of foreign currency derivatives are
based on forward exchange rates. Options are generally valued
based on quoted market prices or based on option pricing mod-
els. In determining the fair values of the derivative financial in-
struments, no compensating effects from underlying transac-
tions (e.g. firm commitments and forecast transactions) are
taken into consideration.
The Company limits default risks resulting from derivative finan-
cial instruments by generally transacting with financial institu-
tions with a minimum credit rating of investment grade. Based
on Siemens' net risk exposure towards the counterparty, the re-
sulting credit risk is taken into account via a credit valuation ad-
justment.
The unquoted equity instrument allocated to level 3 of the fair
value hierarchy relates to an investment in an offshore wind
farm. The fair value is determined based on discounted cash flow
calculations. The most significant unobservable input used to
determine the fair value is the cash flow forecast which is mainly
based on the future power generation income. This income is
generally subject to future market developments and thus price
volatility. Since a long-term power purchase agreement is in
place that mitigates price volatility, significant changes to the
cash flow forecast are unlikely and thus, no significant effects on
Other comprehensive income, net of income taxes, are expected.
Net gains (losses) of financial instruments are:
(in millions of €)
Fiscal year
2016
2015
Cash and cash equivalents
Available-for-sale financial assets
Loans and receivables
(19)
(24)
279
2,518
3,051
3,051
3,955
3,639
55,594
53,092
40,591
39,067
1,190
1,383
2,620
310
42,091
40,986
1 Reported in the following line items of the Statements
of Financial Position: Trade and other receivables, Other
current financial assets and Other financial assets, except
for separately disclosed €2,662 million and €2,464 million
available-for-sale financial assets and €3,051 million
and €3,228 million derivative financial instruments as
of September 30, 2016 and 2015, respectively. Includes
€14,280 million and €13,909 million trade receivables from
the sale of goods and services in fiscal 2016 and 2015,
thereof €665 million and €726 million with a term of more
than twelve months.
2 Includes equity instruments classified as available-for-sale,
for which a fair value could not be reliably measured and
which are therefore recognized at cost.
3 Reported in the following line items of the Statements of
Financial Position: Short-term debt and current maturities
of long-term debt, Trade payables, Other current financial
liabilities, Long-term debt and Other financial liabilities,
except for separately disclosed derivative financial instru-
ments of €1,500 million and €1,919 million, respectively,
as of September 30, 2016 and 2015.
4 Reported in line items Other current financial liabilities and
Other financial liabilities.
Cash and cash equivalents includes €330 million and €378 million
as of September 30, 2016 and 2015, respectively, which are not
available for use by Siemens mainly due to minimum reserve re-
quirements with banks. As of September 30, 2016 and 2015, the
carrying amount of financial assets Siemens has pledged as col-
lateral amounted to €214 million and €345 million, respectively.
536
2,518
608
534
on financial instruments
The following table discloses the carrying amounts of each
category of financial assets and financial liabilities:
(in millions of €)
Loans and receivables¹
Cash and cash equivalents
Derivatives designated in a hedge accounting relationship
Financial assets held for trading
Available-for-sale financial assets²
Financial assets
Financial liabilities measured at amortized cost³
Financial liabilities held for trading4
Derivatives designated in a hedge accounting relationship4
Financial liabilities
Sep 30,
2016
37,984
2015
36,268
10,604
9,957
The following table presents the fair values and carrying amounts
of financial assets and financial liabilities measured at cost or
amortized cost for which the carrying amounts do not approxi-
mate fair value:
(in millions of €)
Notes and bonds
Loans from banks and other financial indebtedness
Obligations under finance leases
Financial liabilities measured at fair value -
Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with cash flow hedges
Sep 30, 2016
Level 1
Level 2
Level 3
Total
2,191
4,311
310
6,812
2,191
301
2,492
1,259
10
1,269
In connection with cash flow hedges
Consolidated Financial Statements 85
In connection with fair value hedges
Financial assets measured at fair value:
Available-for-sale financial assets: equity instruments
Available-for-sale financial assets: debt instruments
Derivative financial instruments
86 Consolidated Financial Statements
Sep 30, 2016
Fair value
30,235
2,270
203
Carrying
amount
Sep 30, 2015
Carrying
Fair value
amount
(1,891)
2,276
138
26,516
3,544
25,955
3,559
207
147
Fixed-rate and variable-rate receivables with a remaining term of
more than twelve months, including receivables from finance
leases, are evaluated by the Company based on parameters such
as interest rates, specific country risk factors, individual credit-
worthiness of the customer, and the risk characteristics of the
financed project. Based on this evaluation, allowances for these
receivables are recognized.
The fair value of notes and bonds is based on prices provided
by price service agencies at the period-end date (Level 2). The fair
value of loans from banks and other financial indebtedness, ob-
ligations under finance leases as well as other non-current finan-
cial liabilities is estimated by discounting future cash flows using
rates currently available for debt of similar terms and remaining
maturities (Level 2).
The following table allocates financial assets and financial liabil-
ities measured at fair value to the three levels of the fair value
hierarchy:
(in millions of €)
Not designated in a hedge accounting relationship
(including embedded derivatives)
(364)
DEFINED CONTRIBUTION PLANS AND STATE PLANS
The amount recognized as expense for defined contribution
plans amounts to €676 million and €594 million in fiscal 2016
and 2015, respectively. Contributions to state plans amount to
€1,423 million and €1,372 million in fiscal 2016 and 2015, respec-
tively.
(493)
2.4%
Rate of compen-
4.3%
3.6%
Sep 30, 2015
decrease
2,380
increase
(2,121)
Sep 30, 2016
decrease
3,174
(2,774)
increase
3.9%
(in millions of €)
Discount rate
1.0%
3.0%
1.7%
2015
2016
Effect on DBO due to a one-half percentage-point
Sep 30,
CH
U.K.
2.7%
sation increase
113
(105)
Future cash flows
Virtually all equity securities have quoted prices in active mar-
kets. The fair value of fixed income securities is based on prices
provided by price service agencies. The fixed income securities
are traded in highly liquid markets and almost all fixed income
securities are investment grade.
2015
Sep 30,
(in millions of €)
Disaggregation of plan assets
As a significant risk, the Company considers a decline in the
plans' funded status due to adverse developments of plan assets
and/or defined benefit obligations resulting from changing pa-
rameters. Accordingly, Siemens implemented a risk management
concept aligned with the defined benefit obligations (Asset Lia-
bility Matching). Risk management is based on a worldwide de-
fined risk threshold (value-at-risk). The concept, the value at risk
and the asset development including the investment strategy are
monitored and adjusted on an ongoing basis under consultation
of senior external experts. Independent asset managers are se-
lected based on quantitative and qualitative analysis, which in-
cludes their performance and risk evaluation. Derivatives are
used to reduce risks as part of risk management.
Asset Liability Matching Strategies
Consolidated Financial Statements 79
As in prior year, sensitivity determinations apply the same meth-
odology as applied for the determination of the post-employ-
ment benefit obligation. Sensitivities reflect changes in the DBO
solely for the assumption changed.
The DBO effect of a 10% reduction in mortality rates for all ben-
eficiaries would be an increase of €1,395 million and €1,021 mil-
lion, respectively, as of September 30, 2016 and 2015.
The discount rate was derived from high-quality corporate bonds
with an issuing volume of more than 100 million units in the re-
spective currency zones, which have been awarded an AA rating
(or equivalent) by at least one of the three rating agencies
Moody's Investor Service, Standard & Poor's Rating Services or
Fitch Ratings.
(1,379)
1,717
(1,858)
2,107
Rate of pension
progression
1.0%
0.4%
(93)
101
U.S.
Employer contributions expected to be paid to defined benefit
plans in fiscal 2017 are €690 million. Over the next ten fiscal
years, average annual benefit payments of €1,908 million and
€1,912 million, respectively, are expected as of September 30,
2016 and 2015. The weighted average duration of the DBO for
Siemens defined benefit plans was 14 years as of September 30,
2016 and 13 years as of September 30, 2015.
Germany
A one-half-percentage-point change of the above assumptions
would result in the following increase (decrease) of the DBO:
Experience (gains) losses
(8)
6,506
Changes in financial assumptions
26
(7)
Changes in demographic assumptions
Fiscal year
2015
2016
(93)
(in millions of €)
SAPS S2 (Standard mortality tables
for Self Administered Pension Schemes
with allowance for future mortality
improvements)
CH
U.K.
Heubeck Richttafeln 2005G (modified)
RP-2015 mortality table with MP-2015
generational projection
Germany
U.S.
Applied mortality tables are:
The remeasurements comprise actuarial (gains) and losses result-
ing from:
The net defined benefit balance of €13,486 million and
€9,737 million as of September 30, 2016 and 2015 comprised
€13,695 million and €9,811 million net defined benefit liability
and €209 million and €75 million net defined benefit asset, re-
spectively. Net interest expenses amounted to €282 million and
€263 million, respectively, in fiscal 2016 and 2015. Similar to the
prior year, the DBO is attributable to active employees 33%, to
former employees with vested rights 15% and to retirees and sur-
viving dependants 52%.
88
BVG 2015 G
(59)
Total
6,284
2.9%
2.9%
1.7%
1.4%
Sensitivity analysis
Germany
U.K.
Pension progression
1.5%
1.5%
CH
3.6%
3.6%
Compensation increase
U.K.
The weighted-average discount rate used for the actuarial valua-
tion of the DBO at period-end was as follows:
Actuarial assumptions
The changes in financial assumptions include a reduction of the
pension progression rate for a German frozen legacy plan from
1.8% as of September 30, 2015 to 1.5% as of September 30, 2016
due to a lower inflation assumption which reduced the DBO by
€487 million.
2015
2016
Sep 30,
The rates of compensation increase and pension progression for
countries with significant effects are shown in the following table.
Inflation effects, if applicable, are included in the assumptions below.
(41)
Discount rate
2016
(129)
5,206
Balance as of September 30, 2016
Thereof non-current
Other changes
Accretion expense and effect of changes in discount rates
Translation differences
Reversals
Usage
Additions
Thereof non-current
Balance as of October 1, 2015
(in millions of €)
NOTE 17 Provisions
80 Consolidated Financial Statements
1 Multi strategy funds comprise absolute return funds and diversified growth funds that invest
in various asset classes within a single fund and aim to stabilize return and reduce volatility.
27,296
28,809
Total
572
928
Other assets
483
465
Asset
Cash and cash equivalents
Order related
Warranties
(1,027)
Equity securities
3,158
696
4
572
1,887
4,865
801
1,393
689
1,981
9,353
1,888
1,415
1,829
4,220
Total
Other
obligations
losses and risks
retirement
(614)
Consolidated Financial Statements
Credit/Inflation/Price risks
10,899
Corporate bonds
4,718
5,496
Government bonds
15,206
16,395
Fixed income securities
1,993
1,903
Global equities
1,143
821
Emerging markets
1,783
1,610
1,366
872
6,285
(572)
U.S. equities
10,488
Alternative investments
European equities
3,526
3,622
26
Foreign currency risk
47
1,022
Interest risk
491
497
Derivatives
733
1,079
Multi strategy funds'
1,696
2,074
Private Equity
827
1,403
772
Real estate
721
1,351
Hedge Funds
of the combined entity. For more information on the merger, see
→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The
merged businesses are highly complementary regarding global
footprint, existing product portfolios and technologies. SGRE of-
fers wind turbines utilizing various pitch and speed technologies,
and is active in the development, construction and sale of wind
farms. The current product offering comprises geared as well as
direct drive turbines, both for onshore and offshore application.
In addition, SGRE provides services for the management, opera-
tion and maintenance of wind farms. Its primary customers are
large utilities and independent power producers. SGRE's revenue
mix may vary from reporting period to reporting period depend-
ing on the mix of onshore and offshore projects in the respective
periods. The share of renewable energy in the global energy mix
will continue to increase, but the trend toward evaluating com-
peting power sources using life-cycle costs will continue to put
pressure on the prices of wind power providers. To address this
trend, SGRE focuses on improving its supply chain and signifi-
cantly decreasing costs by leveraging synergies in the manufac-
turing footprint subsequent to the merger. A higher share of re-
newable energy in electrical grids also increases the demand for
predictability of the energy supply and increased capability for
integrating it into the overall energy mix, which SGRE addresses
by pursuing innovation areas such as digitalization.
industries served by the Division generally shows a delayed re-
sponse to changes in the overall economic environment. Even so,
the Division is strongly dependent on investment cycles in its key
industries. In commodity-based process industries such as oil and
gas or mining, these cycles are driven mainly by commodity price
fluctuations rather than changes in produced volumes.
As part of the above-mentioned memorandum of understanding
to combine Siemens' mobility businesses with Alstom, Process
Industries and Drives will transfer its rail traction drives business
to the combined company.
-
Healthineers is one of the world's largest suppliers of technol-
ogy to the healthcare industry and a leader in diagnostic imaging
and laboratory diagnostics. It provides medical technology and
software solutions as well as clinical consulting services, sup-
ported by a complete set of training and service offerings. This
comprehensive portfolio supports customers along the contin-
uum of care from prevention and early detection to diagnosis,
treatment and follow-up care. Its business activities are to a cer-
tain extent resilient to short-term economic trends as large por-
tions of its revenue stem from recurring business. They are, how-
ever, dependent on regulatory and public policy developments
around the world. The global healthcare market served by
Healthineers is transforming, putting healthcare providers under
pressure for better outcomes at lower cost. Drivers of this trans-
formation include increasing societal resistance to healthcare
costs, payers becoming more professional, a shift to value-based
reimbursement, chronic disease burdens, and rapid scientific
progress. As a result, healthcare providers are consolidating into
networked structures, resulting in larger clinic and laboratory
chains often internationally - which act increasingly like large
enterprises. Applying this industrial logic to the healthcare mar-
ket can lead to systematic improvements in quality, while at the
same time reducing costs. To capture these benefits, regulatory
schemes around the world increasingly seek to shift healthcare
incentive systems away from a basis in number of procedures to
a basis in outcomes achieved. In fiscal 2017, Healthineers was
organized into six business areas: Diagnostic Imaging, Laboratory
Diagnostics, Advanced Therapies, Ultrasound, Point of Care Diag-
nostics and Services. During fiscal 2017, the Managing Board of
Siemens AG announced that it intends to publicly list a minority
stake in the Healthineers business in the first half of calendar
2018, depending on market conditions.
Siemens Gamesa Renewable Energy (SGRE) - In April 2017,
Siemens contributed its wind power business, including service,
into the publicly listed company Gamesa Corporación Tecnológica,
S.A., Spain (Gamesa), and in return received newly issued shares
of the combined entity Siemens Gamesa Renewable Energy, S.A.,
Spain. Siemens as majority shareholder holds 59% of the shares
Combined Management Report 3
4 Combined Management Report
A.1.1.3 RESEARCH AND DEVELOPMENT
Our research and development (R&D) activities are ultimately
geared to developing innovative, sustainable solutions for our
customers - and the Siemens businesses - and simultaneously
safeguarding our competitiveness. To this end, we are focusing
our R&D activities on a number of selected technologies and in-
novation fields. Examples include the following:
The stable operating of power grids in the presence of inter-
mittent, renewable power generation depends, amongst
other factors, on further advances in power electronics as well
as the availability of economically viable large energy storage
units. These are also key ingredients for distributed energy
systems, which combine onsite generation with local con-
sumption to offer secure power supply at lower cost.
> Turbo machinery, switching gear and other power equipment
stand to benefit from novel materials enabling higher gener-
ation efficiency and fewer losses in power transmission and
distribution. In particular, the ability to print parts with novel
topologies using 3D printers embedded in an integrated, dig-
ital tool chain is a key innovation driver.
> Automation technologies continue to evolve. Our R & D activ-
ities aim to reduce engineering efforts, enhance flexibility and
increase our customers' productivity.
> Future mobility systems will be increasingly electrified and
connected. Amongst others, our R&D efforts are aiming for
ubiquitous electric charging as well as the digitally supported
integration and management of multi-modal transportation
systems.
The Financial Services (SFS) Division supports its customers'
investments with leasing solutions and equipment, project and
structured financing in the form of debt and equity investments.
Based on its comprehensive financing know-how and specialist
technology expertise in the areas of Siemens businesses, SFS
provides financial solutions for Siemens customers as well as
other companies, and also manages financial risks of Siemens.
SFS operates the Corporate Treasury of the Siemens Group,
which includes managing liquidity, cash and interest risks as well
as certain foreign exchange, credit and commodities risks. Busi-
ness activities and tasks of Corporate Treasury are reported in
the segment information within Reconciliation to Consolidated
Financial Statements.
The Process Industries and Drives Division offers a comprehen-
sive product, software, solution and service portfolio for moving,
measuring, controlling and optimizing all kinds of mass flows.
With its know-how in vertical industries including oil and gas,
shipbuilding, mining, cement, fiber, chemicals, food and bever-
age, and pharmaceuticals, the Division increases productivity,
reliability and flexibility of machinery and installations along their
entire life cycle jointly with its customers. Based on data models
and analysis methods, Process Industries and Drives paves the
way together with its customers to create a "Digital Enterprise,"
from process simulation via plant design and documentation
through to asset and performance management. The Division's
offerings include an integrated portfolio with products, compo-
nents and systems such as couplings, gears, motors and convert-
ers, process instrumentation systems, process analytics devices,
wired and wireless communication, industrial identification and
power supplies up to systems level with decentralized control sys-
tems, industrial software as well as customized, application-spe-
cific systems and solutions. It also sells gears, couplings and drive
solutions to other Siemens Divisions and Strategic Units, which
use them in rail transport and wind turbines. Demand within the
The Power Generation Services Division offers a comprehensive
set of services for products, solutions and technologies of the
Power and Gas Division, covering performance enhancements,
maintenance services, customer training and professional con-
sulting. Financial results of the Power and Gas Division include
the financial results of the Power Generation Services Division,
which itself is not a reportable segment. Based on this business
model, all discussions of the services business for Power and Gas
concern the Power Generation Services Division.
ject to Alstom's shareholders' approval, anticipated in the second
quarter of calendar 2018. The transaction is also subject to clear-
ance from relevant antitrust and regulatory authorities. Closing
of the transaction is expected at the end of calendar 2018.
> An example of a disruptive development is electrically pow-
ered flight. In cooperation with Airbus, Siemens intends to
demonstrate by 2020 that electricity can be used to power
large planes.
A.1 Business and economic environment
A.1.1 The Siemens Group
A.1.1.1 ORGANIZATION AND BASIS
OF PRESENTATION
We are a technology company with core activities in the fields of
electrification, automation and digitalization, and activities in
nearly all countries of the world. Siemens comprises Siemens AG,
a stock corporation under the Federal laws of Germany, as the
parent company and its subsidiaries. Our Company is incorpo-
rated in Germany, with our corporate headquarters situated in
Munich. As of September 30, 2017, Siemens had around 372,000
employees (part time employees are included proportionally).
Siemens has the following reportable segments: the Divisions
Power and Gas; Energy Management; Building Technologies;
Mobility; Digital Factory and Process Industries and Drives;
as well as the Strategic Units Healthineers and Siemens Gamesa
Renewable Energy, which together form our Industrial Business.
The Division Financial Services (SFS) supports the activities of
our Industrial Business and also conducts its own business with
external customers. As "global entrepreneurs” our Divisions and
Strategic Units carry business responsibility worldwide, including
with regard to their operating results.
Our reportable segments may do business with each other, lead-
ing to corresponding orders and revenue. Such orders and reve-
nue are eliminated on the Group level.
A.1.1.2 BUSINESS DESCRIPTION
The Power and Gas Division offers a broad spectrum of products
and solutions for generating electricity from fossil fuels and for
producing and transporting oil and gas. The portfolio includes
gas turbines, steam turbines, generators to be applied to gas or
steam power plants, compressor trains, integrated power plant
solutions, and instrumentation and control systems for power
generation. Customers include public utilities and independent
power producers; companies in engineering, procurement and
construction that serve utilities and power producers; sovereign
and multinational oil companies; and industrial customers that
generate power for their own consumption (prosumers). Due to
the broad range of its offerings, the Division's revenue mix may
vary from reporting period to reporting period depending on the
share of revenue attributable to products, solutions and services.
Because typical profitability levels differ among these three rev-
enue sources, the revenue mix in a reporting period accordingly
affects Division profit for that period. Several trends are affecting
the Division's businesses. The ongoing strong growth in demand
for renewable power generation and the associated volatility in
power generation shift market demand from fossil baseload
generation to highly flexible, highly efficient and affordable
gas power plants with low emissions, in particularly in Europe,
China, and the U.S. A second trend is that the development and
execution of large projects increasingly requires financing by the
original equipment manufacturer (OEM), including equity partic-
ipation, particularly in Latin America, the Middle East and Africa.
For the Division, this role is fulfilled by Financial Services, which
can offer customers a range of financing and equity options
backed by domain know-how. In addition, the markets of the
Division are strongly affected by changes in national energy reg-
ulations, such as support of renewable energy, the security of
supply through capacity markets or strategic reserve capacity,
carbon pricing and climate change targets, and energy and elec-
tricity market design. After years of strong public sector support
for renewable energy, the cost of energy and electricity as a com-
petitive factor is gaining more relevance in investment decisions
involving choices between renewable and fossil generation.
The Energy Management Division offers a wide spectrum of
software, products, systems, solutions, and services for transmit-
ting, distributing and managing electrical power and for provid-
ing intelligent power infrastructure. The Division's customers
encompass a wide range of direct customers and channel part-
ners including power providers, transmission and distribution
system operators, industrial companies, infrastructure develop-
ers, construction companies, distributors and OEMs. Its activities
across many regional and vertical markets as well as its participa-
tion in long-cycle and short-cycle businesses provide a balanced
and resilient business mix. The Division's revenue and portfolio
mix may vary across reporting periods. In particular, orders, rev-
enue and profit development can be influenced by the relative
contribution from its transmission solutions business. End cus-
tomers and OEMs use the Division's offerings to process, transmit
and manage electrical power from the source down to various
load points along multiple voltage levels. The Division's distrib-
uted, intelligent solutions for smart grids enable a bidirectional
flow of energy and information, which, among other things, is
required for integrating fluctuating renewable energy sources,
electrical storage or manageable loads. Energy Management
generally benefits from major trends and changes in global elec-
trical power systems, in particular decarbonization, decentraliza-
tion and digitalization. Decarbonization involves the buildup of
generation capacities from renewable sources and the electrifi-
cation of heat and transport sectors. Another trend is decentral-
ization - the integration of wind power, photovoltaics, biomass,
2
Combined Management Report
storage and other intermittent or distributed energy resources
into highly efficient and reliable power networks. The digitaliza-
tion trend involves providing intelligent solutions for connectiv-
ity, the management of complex energy networks, and services
that are enabled by digital technologies.
The Building Technologies Division is a leading provider of au-
tomation technologies and digital services for safe, secure and
efficient buildings and infrastructures throughout their lifecycles.
The Division offers products, solutions, services and software for
fire safety, security, building automation, heating, ventilation, air
conditioning and energy management. The large customer base
is widely dispersed. It includes owners, operators and tenants for
both public and commercial buildings; building construction gen-
eral contractors; and system houses. Changes in the overall eco-
nomic environment generally have a delayed effect on the Divi-
sion's business activities. Particularly in the solutions and service
businesses, Building Technologies is affected by changes in the
non-residential construction markets with a time lag of two to
four quarters.
The Mobility Division combines all Siemens businesses in the
area of passenger and freight transportation, including rail vehi-
cles, rail automation systems, rail electrification systems, road
traffic technology, digital solutions and related services. The Di-
vision also provides its customers with consulting, planning, fi-
nancing, construction, service and operation of turnkey mobility
systems. Moreover, Mobility offers integrated mobility solutions
for networking of different types of traffic systems. The principal
customers of the Mobility Division are public and state-owned
companies in the transportation and logistics sectors. Markets
served by Mobility are driven primarily by public spending. Cus-
tomers usually have multi-year planning and implementation
horizons, and their contract tenders therefore tend to be inde-
pendent of short-term economic trends.
In September 2017, Siemens and Alstom SA, France (Alstom)
signed a memorandum of understanding to combine Siemens'
mobility business including the rail traction drives business,
which is included in the Process Industries and Drives Division,
with the publicly listed company Alstom. The two businesses are
largely complementary in terms of activities and geographies.
The combined entity is expected to offer a significantly increased
range of diversified product and solution offerings to meet
multi-facetted, customer-specific needs. According to the mem-
orandum, Siemens will receive newly issued shares in the com-
bined company representing 50% of Alstom's share capital as-
suming full dilution through exercise of all potentially dilutive
securities and share-based payment plans. Further, Siemens will
receive warrants allowing it to acquire Alstom shares represent-
ing 2% of its share capital, which can be exercised earliest four
years after closing of the transaction. The transaction will be sub-
The Digital Factory Division offers a comprehensive product
portfolio and system solutions used in manufacturing industries,
complemented by product lifecycle and data-driven services.
These offerings enable customers to optimize entire value chains
from product design and development to production and ser-
vices. This is supplemented by the MindSphere platform that
connects machines and physical infrastructure to the digital
world. With its comprehensive offering, the Division supports
manufacturing companies with their transformation towards the
"Digital Enterprise," resulting in increased flexibility and effi-
ciency of production processes and reduced time to market for
new products. The Division supplies customers mainly in discrete
and hybrid manufacturing industries. Changes in the level of cus-
tomer demand are strongly driven by macroeconomic cycles, and
can lead to significant short-term variation in the Division's prof-
itability. In the second quarter of fiscal 2017, Digital Factory fur-
ther strengthened and expanded its industrial software business
by acquiring Mentor Graphics Corporation (Mentor Graphics),
a U.S.-based provider of electronic design automation software.
For more information on the acquisition of Mentor Graphics, see
→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. In
the first quarter of fiscal 2017, Digital Factory contributed its eCar
business to a newly formed joint venture, Valeo Siemens eAuto-
motive; Siemens' share in the joint venture is reported within
Centrally managed portfolio activities (CMPA).
> We are continuously adopting and developing foundational
digital technologies, such as data analytics and artificial intel-
ligence or modeling and simulation technologies. The former
are essential to generate value and impact out of the growing
amount of data generated in the field; the latter enable the
creation of a digital twin for physical products, systems and
infrastructures, e.g. for the purpose of virtually testing and
commissioning a system prior to building it.
The global upswing was broad-based on a regional and structural
basis. In both emerging markets and advanced countries, eco-
nomic activity gained strength. Growth forecasts for 2017 im-
proved in particular for Europe from 1.5% at the beginning of
fiscal 2017 to 2.3% and for China from 6.3% to 6.8%. The only
negative surprise was the Middle East region. The 2017 growth
projection decreased to 1.4% after starting at 2.8% at the begin-
ning of fiscal 2017. Lower oil prices and oil production cuts had
bigger impact than anticipated.
> We also invest in industrial cyber security - a key enabler for
the digitalization of industries as well as a growing source of
competitive advantage - and test the emerging blockchain
technology in various application scenarios.
-
From a structural perspective, all components of GDP – private
consumption, fixed investment, trade and to a lesser extent
government expenditure - contributed to growth, giving the
acceleration of the global economy a solid and well balanced
foundation.
Uncertainties mainly stemming from (geo) political risks had very
limited effects on the global economy: International tensions
with North Korea and Iran increased; negotiations regarding the
U.K. leaving the European Union are complicated and separatist
tensions in Spain added significant uncertainty. These develop-
ments potentially weigh on investment decisions but this barely
materialized in fiscal 2017.
The partly estimated figures presented here for GDP and fixed
investments are based on an IHS Markit report dated Octo-
ber 15, 2017.
A.1.2.2 MARKET DEVELOPMENT
In a highly competitive market environment, markets served by
the Power and Gas Division declined significantly in fiscal 2017.
This development was again particularly evident in the market for
steam turbines where volume shrank substantially year-over-year
due to an ongoing shift from coal-fired to gas-fired and renew-
able power generation and due to emission regulation such as in
China. Volume in the market segment for large gas turbines also
declined substantially due mainly to delays of large projects in
the Middle East and customer restraint due to ongoing uncer-
tainty regarding changes in the market design and weak power
demand growth. Volume in compression markets remained on
a low level as customers continued to hold back investments.
The Division's competition consists mainly of two groups: a rela-
tively small number of equipment manufacturers, some with
very strong positions in their domestic markets, and on the other
hand a large number of engineering, procurement and construc-
tion contractors. The gas turbine market is experiencing overca-
pacity among OEMs and engineering, procurement and con-
struction contractors, which is leading to market consolidation.
Global markets addressed by the Energy Management Division
grew slightly in fiscal 2017. Weaknesses in the Middle East and
global commodity markets including oil and gas, metals and min-
ing were offset by growth in transmission interconnections, in-
telligent energy and storage solutions and critical infrastructure
such as data centers. North America and Asia were key growth
contributors. Markets in Europe showed stable development,
with pockets of growth such as integration of renewable energy
sources into the grid. Competitors of the Energy Management
Division consist mainly of a small number of large multinational
companies. International competition is increasing from manu-
facturers in emerging countries including China, India and Korea.
Markets for the Building Technologies Division grew solidly in
fiscal 2017. Growth was driven by solid demand from the U.S. and
Asia. Within the Europe, C.I.S., Africa, Middle East region, mar-
kets in the Middle East grew more strongly than the region over-
all. The recovery of the European market was weaker than ex-
pected but included stable growth in Germany. The Division's
principal competitors are multinational companies. Its solutions
and services business also competes with system integrators and
small local companies. The Division faces continuing price pres-
sure, particularly in its solutions business, due to strong compe-
tition from system houses and some larger competitors.
Overall, markets for the Mobility Division remained strong in fis-
cal 2017, with different dynamics among the regions. Market
development in the Europe, C.I.S., Africa, Middle East region was
characterized by continuing awards of mid-size and large orders,
particularly in Germany and the U.K. Demand in the Middle East
Combined Management Report 7
and Africa was held back by ongoing uncertainties related to
budget constraints and political climates. In the Americas region,
stable investment activities were driven by demand for urban
transport, especially in the U.S. Within the Asia, Australia region,
Chinese markets saw ongoing investments in high-speed trains,
urban transport and rail infrastructure, while India continues to
invest in modernizing the country's transportation infrastruc-
ture. The Division's principal competitors are multinational com-
panies. Consolidation among Mobility's competitors is continu-
ing. This has already led to the formation of a strong market
leader in China, which is changing global market dynamics.
Markets served by the Digital Factory Division returned to growth
in fiscal 2017. Within its main markets, global manufacturing pro-
duction grew moderately in real terms, driven mainly by consum-
er-related industries such as electronics and automotive and by
demand from infrastructure-related production industries.
Growth in the machine-building and equipment industries bene-
fited from a growing investment propensity. On a geographic
basis, the Division's markets grew in all three reporting regions,
with the highest growth rates in the region Asia, Australia, par-
ticularly including China, where strong market growth also ben-
efited from governmental investment programs. The competition
for Digital Factory's business activities can be grouped into two
categories: multinational companies that offer a relatively broad
portfolio and companies that are active only in certain geo-
graphic or product markets.
Market volume for the markets addressed by the Process Indus-
tries and Drives Division grew moderately in fiscal 2017. This
was due mainly to improved market conditions in global manu-
facturing production, particularly in China. Consumer-related
industries, such as food and beverage and pharmaceuticals, con-
tinued on their growth path. Growth in the Division's markets
overall continued to be held back by weakness in commodity-re-
lated industries such as oil and gas, metals and mining. Following
a recovery in raw materials prices at low levels in the first half of
fiscal 2017 and stable price development thereafter, the environ-
ment for capital expenditures began to improve towards the end
of the fiscal year in mining, oil and gas and, to a lesser extent, the
metals industry. The Division's competitors can be grouped into
two categories: multinational companies that offer a relatively
broad portfolio and companies that are active only in certain geo-
graphic or product markets. Consolidation is taking place mostly
in particular market segments and not across the broad base of
the Division's portfolio. In particular, consolidation in solu-
tion-driven markets is going in the direction of in-depth niche
market expertise. Most major competitors have established
global bases for their businesses. In addition, the competition has
become increasingly focused on technological improvements
and cost position.
Markets served by Healthineers grew moderately in fiscal 2017
driven by growth in Latin America and Asia, Australia, including
further stabilization in China. In contrast, market volume in Eu-
rope and the U.S. remained near prior-year levels. The diagnostic
imaging market segment grew moderately. While demand for
imaging procedures continued to grow, this trend was partly off-
set by price pressure on new purchases and increased utilization
rates for installed systems. The markets for ultrasound and in-vi-
tro diagnostics grew even more strongly. The development in the
ultrasound market segment benefits from a wider range of appli-
cations and increasing patient access to diagnostic imaging tech-
nology. The market for in-vitro diagnostics is expanding due to
population and income growth in emerging markets and the
rising importance of diagnostics in improving healthcare quality.
Growth in the area of molecular diagnostics was particularly
strong, driven by technological advances and a broader spectrum
of applications. For the healthcare industry as a whole, the trend
towards consolidation continues. Competition among the lead-
ing companies is strong, including with respect to price.
Following a decline in market volume in fiscal 2016, the market
served by SGRE grew in fiscal 2017 due to higher demand in both
the onshore and the offshore markets, with the latter growing
faster. On a regional basis, growth was driven by the U.S. Market
growth in the region Asia, Australia, was held back by lower de-
mand in China, where the largest national wind market in the
world remains largely closed to foreign manufacturers, as well as
by a halt in the Indian market during the fiscal year following the
introduction of an auction system for new power generation con-
tracts. Market volume in the region Europe, C.I.S., Africa, Middle
East came in slightly lower year-over-year. The competitive situ-
ation in wind power differs in the two major market segments.
In the markets for onshore wind farms, competition is widely
dispersed without any one company holding a dominant share of
the market, while markets for offshore wind farms continue to be
served by a few experienced players. Consolidation is moving
forward in both on- and offshore segments, including exits of
smaller players. The key drivers of consolidation are increasing
price pressure as well as technology challenges and market ac-
cess challenges, which increase development costs and the im-
portance of risk-sharing in offshore wind power. Market develop-
ment continues to depend strongly on energy policy, including
tax incentives in the U.S. and regulatory frameworks in Germany
and the U.K. With continued technological progress and cost re-
duction, dependency on subsidy schemes is expected to decrease
even further.
8 Combined Management Report
Management Report
> The growing connectivity of field devices gives rise to the In-
dustrial Internet of Things (IoT), and hence to the potential
for massively distributed industrial systems. With MindSphere,
we have introduced an open, cloud-based operating system
for this IIoT. MindSphere allows our businesses, customers
and partners to develop and deploy applications and digital
services based on data gathered from assets, such as a prod-
uct or in the field, e.g. to predict equipment failure, increase
asset availability, improve product designs or increase product
or plant performances.
A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
The global economy started to accelerate at the beginning of
fiscal 2017 and gained further momentum in the subsequent
quarters. Expansion of world gross domestic product (GDP),
which in 2016 was the weakest since the global financial crisis at
2.5%, is projected to rise to 3.1% in 2017 (based on market ex-
change rates).
The R&D efforts of Siemens Gamesa Renewable Energy are
focused on innovative products and solutions that allow it to take
the lead in wind power performance, improve competitiveness,
and build a stronger business case for its customers. Using digi-
talization, among other efforts, includes more intelligent moni-
toring and analysis of turbine conditions as well as smart diag-
nostic services.
Both within and beyond these focus areas, R&D activities are
carried out by cross-functional teams involving both our busi-
nesses and our central R&D department Corporate Technology
(CT). In addition, we work closely with scholars from leading
universities and research institutions. These partnerships, along
with close collaborations with start-up companies and the use of
crowd innovation methods, are an important part of Siemens'
open innovation concept.
Siemens' unit for partnership with start-ups, next47, is focusing
on three pillars: Capital, Catalyst and Create. The unit provides
capital to help start-ups expand and scale. As a catalyst, next47
can accelerate growth for start-ups by making it easy to access
and use the powerful Siemens ecosystem. And next47 serves as
the creator of next-generation businesses for Siemens by build-
ing, buying and partnering with start-ups at any stage. The
next47 unit is focused on anticipating how technologies includ-
ing 3D printing, robotics and drones, artificial intelligence and
virtual reality will impact and potentially disrupt our end markets.
This intelligence enables Siemens and Siemens' customers to
grow and thrive in the age of digitalization.
In fiscal 2017, we reported research and development expenses
of €5.2 billion, compared to €4.7 billion in fiscal 2016. The result-
ing R&D intensity, defined as the ratio of R&D expenses and
revenue, was 6.2%, thus above the R & D intensity of 5.9% in fiscal
2016. Additions to capitalized development expenses amounted
to €0.4 billion in fiscal 2017, compared to €0.3 billion in fiscal
2016. As of September 30, 2017, Siemens held approximately
63,000 granted patents worldwide in its continuing operations.
As of September 30, 2016, we held approximately 59,800 granted
patents. On average, we had 37,800 R&D employees in fiscal
2017.
Research and Development in our Businesses
R&D at the Power and Gas Division concentrates on developing
products and solutions for enhancing efficiency, flexibility and
economy in power generation as well as in the oil and gas indus-
try. These products and solutions include turbomachinery – pri-
marily high-performance, low-emission gas turbines for single
operation or for combined cycle power plants - and compressor
solutions for various process industries. The Division's current
technology initiative, which started in fiscal 2015, is aimed at
intensifying R & D in innovative materials, advanced manufactur-
ing methods and plant optimization. In fiscal 2017, Siemens
introduced a new 44-megawatt aeroderivative gas turbine for
mobile power generation which currently is the most powerful
mobile unit on the market. The Division announced that it
will test and validate its largest gas turbine (HL-class) under re-
al-world conditions. This will pave the way for achieving the next
level of efficiency; we aim for 63 percent efficiency near-term,
with a mid-term goal to reach 65 percent.
The R&D activities of our Energy Management Division focus on
preparing our portfolio for changes on all voltage levels in the
world of electricity. The increasing infeed of renewable energy to
power grids requires that those grids become more flexible and
efficient, particularly with distributed generation on the rise. The
digitalization of future grids will enable intelligent grid operation
and data-driven services. Our innovations are centered on power
electronics, digitalization and grid stabilization. The development
Combined Management Report
5
of new technologies, e.g. Process Bus communication for appli-
cations in energy management or NCITS (Non-Conventional
Instrument Transformer), enables a cost-effective investment
and economic operation of digital substations as well as a secure
and reliable grid operation.
R&D work at the Building Technologies Division focuses on op-
timizing comfort and operational and energy efficiency in build-
ings and infrastructures, protecting against fire and security
hazards, and minimizing related risks. We drive the digital trans-
formation of the building industry by creating open-standards-
based Building Information Modeling (BIM)-ready products and
services. Digitalization improves productivity across the entire
building life cycle, enabling new product ordering and configu-
ration options through our online store Siemens Industry Mall.
New mobile device apps close the feedback loop to building oc-
cupants, enabling increased comfort and safety with lower en-
ergy consumption. The digitalization portfolio will expand on the
basis of Siemens MindSphere.
The Mobility Division's R&D strategy aims to fulfill customers'
demand for maximum availability, high throughput and en-
hanced
passenger experience. Although there is a growing need
for mobility worldwide, possibilities for building new roads and
railways are limited. Meeting the demand for mobility requires
intelligent solutions that make transport more efficient, safe and
environmentally friendly. Decarbonization and seamlessly con-
nected intermodal (e)mobility are key factors for the future of
transportation. Reflecting this, Mobility's R&D activities empha-
size digitalization in developing state-of-the art mobility solu-
tions for rail and road combined with new business models such
as availability-as-a-service (AaaS) via our data analytics platform
Railigent and other MindSphere based applications. Together
with next47, Mobility invests in the future mobility landscape
together with other partners in areas such as sensor technolo-
gies, connectivity/loT solutions, software for intermodal trans-
port and additive manufacturing.
R&D activities at the Digital Factory Division are aimed at fur-
ther enhancing speed, flexibility, quality and efficiency within
companies of the discrete manufacturing industry. The key lever
is to automate and digitalize the entire value-added process -
from product development through production design to actual
production - with the highest possible IT security. The focus of
research lies on further developing the Digital Enterprise portfo-
lio. This involves preparing an integrated digital twin for physical
products, production processes and production facilities and
then implementing these facilities and efficiently manufacturing
the products in the real world. This close dovetailing between the
virtual and real worlds enables customers to simulate and opti-
mize their products, their machinery and facilities at an early
stage, while assuring high-performance production. The acquisi-
tion of Mentor Graphics further extends the possibilities of the
digital twin: In addition to designing and testing the mechanics
and software of new products, it is now also possible to develop
and simulate electrical and electronic systems in an integrated
way. A further core area of development is MindSphere, the
open, cloud-based operating system for the Industrial Internet of
Things (IoT). MindSphere is used as a basis for innovative appli-
cations (MindApps) and new digital services based on these
apps, such as predictive maintenance. Open application pro-
gramming interfaces (APIs) enable MindSphere users to easily
and efficiently develop and sell their own apps. MindSphere
therefore makes it possible for customers to clearly expand their
portfolios and tap into the additional business potential offered
by their installed base. A network of partners in the fields of app
development, connectivity and technology further enriches the
open ecosystem.
The R & D activities in the Process Industries and Drives Division
are continuously concentrating on the digital transformation of
products, solutions and services, especially via focused integra-
tion of information and communication technologies. The digital
enhancement of automation and drives platforms is a key en-
abler for additional customer value for all verticals in the process
industry, such as oil & gas, chemicals and pharmaceuticals. Exam-
ples are connecting motors to MindSphere and Digital Enterprise
for process industries. Increased operational efficiency and digi-
tal services such as condition monitoring or predictive mainte-
nance are examples for benefits in process plant operation. The
digitalization of our process automation and industrial commu-
nication portfolio includes a holistic industrial security concept.
Another central objective of our R&D activities is to further in-
crease energy efficiency while reducing the consumption of raw
materials and cutting emissions.
Healthineers' R&D activities are strongly focused on the devel-
opment of innovative product lines which use new technologies
such as artificial intelligence. This will, amongst other results,
enable faster handling of medical information and can lead to
more precise and personalized clinical decisions. It also promises
added value: New computer algorithms can detect hidden pat-
terns in the data and give physicians valuable support for diagno-
sis and therapy decisions. Besides constantly innovating its port-
folio, Healthineers continuously extends existing products and
solutions. Diagnostics performance for customers improves with
systems such as the recently launched Atellica. This laboratory
diagnostics platform transports samples ten times faster than pre-
vious systems and it is also more flexible. Expanding the innova-
tion map beyond the established portfolio, and investing in new
ideas, strengthen the ability to tap opportunities in new fields.
The services business is expanding beyond product related ser-
vices by adding a digital services portfolio and increasing enter-
prise transformation services to help customers in their transition
6
Combined Management Report
to outcome-focused care. A major step forward is the Digital Eco-
system platform to link healthcare providers and solution provid-
ers with one another as well as to bring together their data, ap-
plications and services. Users gain new insights through data
analytics and use it to network with their peers.
A.1.2 Economic environment
Combined
A.7
Notes and forward-looking
statements
p9
C.2
p 127
Financial performance system
B.2
p 59
Consolidated Statements
A.3
p 11
of Comprehensive Income
C.3
p 133
Results of operations
B.3
A.4
p 17
Consolidated Statements
A.2
C.4
Consolidated Statements
of Income
C.1
SIEMENS
Ingenuity for life
Annual Report
2017
siemens.com
Table of contents
A.
Combined Management Report
B.
C.
Consolidated Financial Statements
Additional Information
P 126
Responsibility Statement
Independent Auditor's Report
A.1
p2
B.1
p 58
Business and economic environment
A.
p 137
of Financial Position
Report on expected developments
and associated material opportunities
and risks
A.9
p 36
Siemens AG
A.10
P 39
Compensation Report
A.11
p 53
Takeover-relevant information
B.6
p 64
Notes to Consolidated
Financial Statements
Report of the Supervisory Board
Corporate Governance
p24
Net assets position
A.8
p 23
A.5
P 18
B.4
p 61
C.5
p 147
Financial position
Consolidated Statements
of Cash Flows
A.6
p22
B.5
p 62
Overall assessment
of the economic position
Consolidated Statements
of Changes in Equity
Non-financial matters
p 60
Notes and bonds
(in millions of €)
70
3
operations
Fiscal year
Fiscal year
(in thousands)
2017
2016
2017
2016
Manufacturing and services
223
216
223
216
Sales and marketing
66
Continuing and
discontinued
65
operations
NOTE 26 Personnel costs
Granted
Vested and fulfilled
Forfeited
Settled
710,356
(473,113) (538,837)
(106,160)
(49,011)
1,655,780
785,000
(95,658)
Outstanding, end of period
1,850,052
(38,304)
1,767,980
The weighted average fair value of matching shares granted in
fiscal 2017 and 2016 amounting to €92.68 and €64.56 per share
was determined as the market price of Siemens shares less the
present value of expected dividends taking into account non-vest-
ing conditions.
SIEMENS PROFIT SHARING
The Managing Board decides annually on the issuance of a new
Siemens Profit Sharing tranche and determines the targets to be
met for the current fiscal year. At fiscal year-end, based on the
actual target achievement, the Managing Board decides in its
discretion on the amount to be transferred to the Profit-Shar-
ing-Pool; this transfer is limited to a maximum of €400 million
annually. If the Pool amounts to a minimum of €400 million after
one or more fiscal years, it will be transferred to eligible employ-
ees below senior management in full or partially through the
grant of free Siemens shares. As of September 30, 2017, €300 mil-
lion are in the Profit-Sharing-Pool. Expense is recognized pro rata
over the estimated vesting period. In November 2017, €100 mil-
lion were transferred to the Profit-Sharing-Pool; it was decided
that the Pool amounting to €400 million will be transferred to
eligible employees in March 2018.
JUBILEE SHARE PROGRAM
For their 25th and 40th service anniversary eligible employees re-
ceive jubilee shares. There were 4.26 million and 4.39 million
entitlements to jubilee shares outstanding as of September 30,
2017 and 2016, respectively.
Continuing
66
65
Research and development
Administration
and general services
(134)
Income from continuing operations
attributable to shareholders of Siemens AG
Weighted average shares outstanding - basic
Effect of dilutive share-based payment
Effect of dilutive warrants
5,993
5,262
812,180
808,686
13,591
11,228
3,392
Weighted average shares outstanding - diluted
829,164
819,914
(from continuing operations)
7.38
6.51
(133)
5,396
6,126
2016
38
33
38
33
36
35
36
1,767,980
35
349
363
349
Earnings per share
(shares in thousands; earnings per share in €)
Income from continuing operations
Less: Portion attributable to
non-controlling interest
Fiscal year
2017
363
Basic earnings per share
Outstanding, beginning of period
Employees were engaged in (averages; part time employees are
included proportionally):
94
Consolidated Financial Statements
For analysis and monitoring of the credit risk the Company ap-
plies different systems and processes. A central IT application
processes data from operating units together with rating and
default information and calculates an estimate which may be
used as a basis for individual bad debt provisions. In addition to
this automated process, qualitative information is considered, in
particular to incorporate the latest developments.
Corporate Treasury has established the Siemens Credit Ware-
house to which numerous operating units from the Siemens
Group regularly transfer business partner data as a basis for a
centralized rating and credit limit recommendation process. Fur-
thermore, the Siemens Credit Warehouse purchases trade receiv-
ables from numerous operating units with a remaining term up
to one year. Due to the identification, quantification and active
management of the credit risk the Siemens Credit Warehouse
increases the transparency with regard to credit risk. In addition,
the Siemens Credit Warehouse may provide Siemens with an ad-
ditional source of liquidity and strengthens Siemens' funding
flexibility.
The maximum exposure to credit risk of financial assets, without
taking account of any collateral, is represented by their carrying
amount. As of September 30, 2017 and 2016 the collateral for fi-
nancial instruments classified as financial assets measured at fair
value in the form of netting agreements for derivatives in the
event of insolvency of the respective counterparty amounted to
€647 million and €994 million, respectively. As of September 30,
2017 and 2016 the collateral held for financial instruments classi-
fied as receivables from finance leases amounted to €1,967 mil-
lion and €1,949 million, respectively, mainly in the form of the
leased equipment. As of September 30, 2017 and 2016 the collat-
eral held for financial instruments classified as financial assets
measured at cost or amortized cost amounted to €3,347 million
and €3,590 million, respectively. The collateral mainly consisted
of property, plant and equipment. Credit risks arising from irre-
vocable loan commitments are equal to the expected future pay-
offs resulting from these commitments. As of September 30,
2017 and 2016 the collateral held for these commitments
amounted to €843 million and €1,177 million, respectively,
mainly in the form of inventories and receivables.
Concerning trade receivables and other receivables, as well as
loans or receivables included in line item Other financial assets
that are neither impaired nor past due, there were no indications
that defaults in payment obligations will occur, which lead to a
decrease in the net assets of Siemens. Overdue financial instru-
ments are generally impaired on a portfolio basis in order to re-
flect losses incurred within the respective portfolios. When sub-
stantial expected payment delays become evident, overdue
financial instruments are assessed individually for additional
impairment and are further allowed for as appropriate.
NOTE 25 Share-based payment
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of the
vesting period. Total pretax expense for share-based payment
amounted to €512 million and €332 million for the years ended
September 30, 2017 and 2016, respectively, €416 million and
€287 million relate to equity-settled awards in fiscal 2017 and
2016. The carrying amount of liabilities from share-based pay-
ment transactions is €124 million and €65 million as of Septem-
ber 30, 2017 and 2016.
STOCK AWARDS
The Company grants stock awards to members of the Managing
Board, members of the senior management and other eligible em-
ployees. Stock awards are subject to a restriction period of about
four years and entitle the beneficiary to Siemens shares without
payment of consideration following the restriction period.
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earnings
per share (EPS, basic) of the past three fiscal years and/or to the
share price performance of Siemens relative to the share price
performance of five important competitors during the four-year
restriction period. The target attainment for the performance
criteria ranges between 0% and 200%. If the target attainment
of the prospective performance-based target of Siemens stock
relative to five competitors exceeds 100%, an additional cash pay-
ment results corresponding to the outperformance. The vesting
period is four years and five years for stock awards granted to
members of the Managing Board until fiscal 2014.
Until fiscal 2014, additionally one portion of the variable compen-
sation component (bonus) for members of the Managing Board
was granted in the form of non-forfeitable awards of Siemens
stock (Bonus Awards) subject to a vesting period of one year.
Beneficiaries will receive one Siemens share without payment of
consideration for each Bonus Award, following an additional
waiting period of four years.
Since related taxation is not yet entirely certain, Stock Awards of
Siemens AG that vested in November 2016 were settled in cash
rather than in equity instruments. The fair value of €107 million
at modification date was reclassified from equity to liabilities.
Consolidated Financial Statements 95
Commitments to members of the Managing Board
94
In fiscal 2017 and 2016, agreements were entered into which en-
title members of the Managing Board to stock awards most of
which are contingent upon attaining the prospective perfor-
mance-based target of Siemens stock relative to five competitors.
The fair value of these entitlements amounting to €13 million
and €9 million, respectively, in fiscal 2017 and 2016, was calcu-
lated by applying a valuation model. In fiscal 2017 and 2016, in-
puts to that model include for the majority of the stock awards
granted an expected weighted volatility of Siemens shares of
22.72% and 22%, respectively, and a market price of €106.40 and
€92.86 per Siemens share. Expected volatility was determined by
reference to historic volatilities. The model applies a risk-free in-
terest rate of up to (0.02)% and 0.1% in fiscal 2017 and 2016, re-
spectively and an expected dividend yield of 3.38% in fiscal 2017
and 3.8% in fiscal 2016. Assumptions concerning share price cor-
relations were determined by reference to historic correlations.
tomers.
The effective monitoring and controlling of credit risk through
credit evaluations and ratings is a core competency of our risk
management system. In this context, Siemens has implemented
a binding credit policy.
420
205
176
61
639
Irrevocable loan commitments²
2,875
303
177
2
1 Based on the maximum amounts Siemens could be required to settle in the event of default
by the primary debtor.
2 A considerable portion result from asset-based lending transactions meaning that the respective
loans can only be drawn after sufficient collateral has been provided by the borrower.
CREDIT RISK
Credit risk is defined as an unexpected loss in financial instru-
ments if the contractual partner is failing to discharge its obliga-
tions in full and on time or if the value of collateral declines.
Siemens provides its customers with various forms of direct and
indirect financing particularly in connection with large projects.
Hence, credit risks are determined by the solvency of the debtors,
the recoverability of the collaterals, the success of projects we
invested in and the global economic development.
Ratings, defined and analyzed by SFS, and individually defined
credit limits are based on generally accepted rating methodolo-
gies, with the input consisting of information obtained from the
customer, external rating agencies, data service providers and
Siemens' credit default experiences. Ratings and credit limits for
financial institutions as well as Siemens' public and private cus-
tomers, which are determined by internal risk assessment spe-
cialists, are continuously updated and considered by investments
in cash and cash equivalents, and in determining the conditions
under which direct or indirect financing will be offered to cus-
Commitments to members of the senior
management and other eligible employees
In fiscal 2017 and 2016, 2,078,828 and 2,044,213 stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounted to €138 million and €117 million, respectively, in fiscal
2017 and 2016; fair value was calculated by applying a valuation
model. In fiscal 2017 and 2016 inputs to that model include an
expected weighted volatility of Siemens shares of 22.79% and
22%, respectively, and a market price of €107.95 and €92.86 per
Siemens share. Expected volatility was determined by reference
to historic volatilities. The model applies a risk-free interest rate
of up to 0.03% in fiscal 2017 and up to 0.1% in fiscal 2016 and an
expected dividend yield of 3.33% and 3.8% in fiscal 2017 and
2016, respectively. Assumptions concerning share price correla-
tions were determined by reference to historic correlations.
Changes in the stock awards held by members of the senior man-
agement and other eligible employees are:
(224,952) (1,029,991)
Modified from equity-settled
to cash-settled
(856,355)
Settled
(27,501)
(57,437)
Non-vested, end of period
6,416,946
6,171,430
96 Consolidated Financial Statements
Resulting Matching Shares
Fiscal year
2016
Severance charges amount to €466 million and €598 million in
fiscal 2017 and 2016, respectively. Item Expenses relating to
post-employment benefits includes service costs for the period.
Personnel costs for continuing and discontinued operations
amount to €29,622 million and €28,232 million, respectively, in
fiscal 2017 and 2016.
Forfeited
(834,605)
(724,504)
Vested and fulfilled
Fiscal year
2016
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS
In fiscal 2017, Siemens issued a new tranche under each of the
plans of the Share Matching Program.
Share Matching Plan
Under the Share Matching Plan senior managers may invest a
specified part of their variable compensation in Siemens shares
(investment shares). The shares are purchased at the market
price at a predetermined date in the second quarter. Plan partic-
ipants receive the right to one Siemens share without payment
of consideration (matching share) for every three investment
shares continuously held over a period of about three years (vest-
ing period) provided the plan participant has been continuously
employed by Siemens until the end of the vesting period.
Monthly Investment Plan
2017
Under the Monthly Investment Plan employees other than senior
managers may invest a specified part of their compensation in
Siemens shares on a monthly basis over a period of twelve
months. Shares are purchased at market price at a predetermined
date once a month. If the Managing Board decides that shares
acquired under the Monthly Investment Plan are transferred to
the Share Matching Plan, plan participants will receive the right
to matching shares under the same conditions applying to the
Share Matching Plan described above with a vesting period of
about two years since fiscal 2016 (previously about three years).
The Managing Board decided that shares acquired under the
tranches issued in fiscal 2016 and 2015 are transferred to the
Share Matching Plan as of February 2017 and February 2016, re-
spectively.
Under the Base Share Program employees of Siemens AG and
participating domestic Siemens companies may invest a fixed
amount of their compensation in Siemens shares, sponsored by
Siemens. The shares are bought at market price at a predeter-
mined date in the second quarter and grant the right to receive
matching shares under the same conditions applying to the
Share Matching Plan described above. The fair value of the Base
Share Program amounted to €36 million and €35 million in fiscal
2017 and 2016, respectively.
2017
Non-vested, beginning of period
6,171,430
Granted
2,078,828
6,049,250
2,044,213
Base Share Program
Diluted earnings per share
(from continuing operations)
7.23
6.42
13,789
13,535
Siemens Gamesa Renewable Energy
8,768
7,973
7,919
5,974
2
7,922
5,976
Industrial Business
86,477
87,802
81,009
Financial Services (SFS)
38
921
42
13,748
781
11,378
10,172
Process Industries and Drives
9,034
8,939
7,195
7,285
1,681
1,753
8,876
9,038
Healthineers
14,218
13,830
13,497
979
774
77,573
824
It is not part of the Consolidated Financial Statements subject to the audit opinion.
DESCRIPTION OF REPORTABLE SEGMENTS
Siemens has nine reportable segments, being:
> Power and Gas, which offers a broad spectrum of products,
solutions and services for generating electricity from fossil
fuels and for producing and transporting oil and gas,
> Energy Management offers a wide spectrum of software,
products, systems, solutions, and services for transmitting,
distributing and managing electrical power and for providing
intelligent power infrastructure,
> Building Technologies is a provider of automation technolo-
gies and digital services for safe, secure and efficient build-
ings and infrastructures throughout their lifecycles,
> Mobility combines all Siemens businesses in the area of pas-
senger and freight transportation, including rail vehicles, rail
automation systems, rail electrification systems, road traffic
technology, digital solutions and related services,
> Digital Factory offers a comprehensive product portfolio and
system solutions used in manufacturing industries, comple-
mented by product lifecycle and data-driven services,
> Process Industries and Drives offers a comprehensive product,
software, solution and service portfolio for moving, measur-
ing, controlling and optimizing all kinds of mass flows,
> Healthineers, a supplier of technology to the healthcare in-
dustry and a leader in diagnostic imaging and laboratory di-
agnostics,
> Siemens Gamesa Renewable Energy offers wind turbines uti-
lizing various pitch and speed technologies, and is active in
the development, construction and sale of wind farms; it pro-
vides services including management, operation and mainte-
nance of wind farms,
> Financial Services (SFS) supports its customers' investments
with leasing solutions and equipment, project and structured
financing in the form of debt and equity investments.
RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Centrally managed portfolio activities (CMPA) – in general,
comprises equity stakes held by Siemens that are accounted for
by the equity method or as available-for-sale financial assets and
that for strategic reasons are not allocated to a segment, Siemens
Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
also includes activities generally intended for divestment or clo-
sure as well as activities remaining from divestments and discon-
tinued operations.
Siemens Real Estate (SRE) - except for SGRE, SRE manages the
Group's entire real estate business portfolio, operates the prop-
erties, and is responsible for building projects and the purchase
and sale of real estate.
98 Consolidated Financial Statements
1 This supplemental information on Orders is provided on a voluntary basis.
(2,447)
79,644
(2,202)
83,049
(3,694)
3,321
3,539
147
154
84,331
921
81,112
979
720
Reconciliation to
(1,730)
Siemens (continuing operations)
85,669
(2,300)
86,480
1,266
83,049
1,247
79,644
(3,468)
Consolidated Financial Statements
9,390
10,658
10,332
Segment information
Orders¹
External revenue
Intersegment Revenue
Total revenue
Fiscal year
(in millions of €)
2017
2016
2017
Fiscal year
2016
2017
Fiscal year
2016
Fiscal year
2017
NOTE 28
Consolidated Financial Statements 97
40
28,210
Fiscal year
(in millions of €)
2017
2016
Wages and salaries
24,632
23,431
2016
Statutory social welfare contributions
3,766
3,562
Expenses relating to
post-employment benefits
1,214
1,218
29,613
and expenses for optional support
13
Power and Gas
19,454
166
174
6,523
6,156
Mobility
8,963
7,875
8,081
7,794
18
31
8,099
7,825
Digital Factory
11,532
5,982
6,356
6,435
6,913
15,413
16,412
53
58
15,467
16,471
Energy Management
13,422
13,628
11,639
11,238
638
702
12,277
11,940
Building Technologies
12,963
290
NOTE 27
1,079
1,190
1,190
In connection with cash flow hedges
305
305
Consolidated Financial Statements 89
The fair value of available-for-sale financial equity instruments
quoted in an active market is based on price quotations at the
period-end date. The fair value of debt instruments is either based
on prices provided by price service agencies or estimated by dis-
counting future cash flows using current market interest rates.
Available-for-sale financial assets measured at fair value include
interests in Atos SE (Atos) and OSRAM Licht AG (Osram) of
€2,871 million and €2,156 million, respectively, as of Septem-
ber 30, 2017 and 2016. Unrealized pre-tax gains (losses) in fiscal
2017 and 2016 resulting from non-current available-for-sale fi-
nancial assets measured at fair value are €700 million and
€445 million, respectively. In September 2017, 18.155 million
shares in Osram representing a 17.34% stake in Osram met the
criteria for asset held for disposal classification. Those Osram
shares were previously reported as non-current available-for-sale
equity instruments and are held in Centrally managed portfolio
activities. Upon the sale of the shares for €1.2 billion in cash in
October 2017, €649 million accumulated fair value changes rec-
ognized in equity will be reclassified through Other comprehen-
sive income, net of income taxes to Net income. Siemens retains
108,414 shares in Osram to service the warrants relating to
Siemens and Osram shares.
Siemens determines the fair values of derivative financial instru-
ments depending on the specific type of instrument. Fair values
of derivative interest rate contracts are estimated by discounting
expected future cash flows using current market interest rates
and yield curves over the remaining term of the instrument. In-
terest rate futures are valued on the basis of quoted market
prices, if available. Fair values of foreign currency derivatives are
based on forward exchange rates. Options are generally valued
based on quoted market prices or based on option pricing mod-
els. In determining the fair values of the derivative financial in-
struments, no compensating effects from underlying transac-
tions (e.g. firm commitments and forecast transactions) are
taken into consideration.
The Company limits default risks resulting from derivative finan-
cial instruments by generally transacting with financial institu-
tions with a minimum credit rating of investment grade. Based
on Siemens' net risk exposure towards the counterparty, the re-
sulting credit risk is taken into account via a credit valuation ad-
justment.
The unquoted equity instrument allocated to level 3 of the fair
value hierarchy relates to an investment in an offshore wind
farm. The fair value is determined based on discounted cash flow
calculations. The most significant unobservable input used to
determine the fair value is the cash flow forecast which is mainly
based on the future power generation income. This income is
generally subject to future market developments and thus price
volatility. Since a long-term power purchase agreement is in
place that mitigates price volatility, significant changes to the
cash flow forecast are unlikely and thus, no significant effects on
Other comprehensive income, net of income taxes, are expected.
Net gains (losses) of financial instruments are:
(in millions of €)
Fiscal year
(including embedded derivatives)
2017
Not designated in a hedge accounting relationship
1,500
2,191
301
2,492
1,259
10
1,269
3,051
3,051
2,518
2,518
163
163
371
371
Financial liabilities measured at fair value - Derivative financial instruments
1,500
2016
Cash and cash equivalents
Available-for-sale financial assets
Loans and receivables
(5)
(901)
(874)
In fiscal 2017 and 2016, gains (losses) reclassified from Other
comprehensive income to the Consolidated Statements of In-
come relating to cash flow hedges were €54 million and €(61)
million, respectively; unrealized gains (losses) recognized in
Other comprehensive income amounted to €232 million and
€149 million, respectively.
90 Consolidated Financial Statements
OFFSETTING
Siemens enters into master netting agreements and similar
agreements for derivative financial instruments. The require-
ments to offset recognized financial instruments are usually not
met. The following table reflects financial assets and financial
liabilities that are subject to netting agreements and similar
agreements:
(in millions of €)
Financial assets
Financial liabilities - Derivative financial liabilities
Sep 30, 2017
Gross
amounts
Financial
Position
Amounts set
off in the
Statement of
1,291
1,467
2016
2017
(19)
(4)
(174)
(442)
Financial liabilities measured
at amortized cost
1,662
6,812
168
(163)
(211)
Amounts presented include foreign currency gains and losses
from realizing and measuring financial assets and liabilities; in
particular, fiscal 2017 includes net gains from financial liabilities
measured at amortized cost due to foreign currency changes on
issued bonds denominated in US$ due to an appreciation of the
EUR as well as an increase in nominal amounts outstanding due
to newly issued US$ bonds, which are offset in the income state-
ment by compensating measurement effects on the correspond-
ing internal foreign currency financing transactions. Net gains
(losses) in fiscal 2017 and 2016 on financial assets and financial
liabilities held for trading consist of changes in the fair value of
derivative financial instruments, including interest income and
expense, for which hedge accounting is not applied.
Interest income (expense) includes interest from financial assets
and financial liabilities not at fair value through profit or loss:
(in millions of €)
Total interest income on financial assets
Total interest expenses on financial liabilities
Fiscal year
Financial assets and financial
liabilities held for trading
310
4,311
2,191
Available-for-sale financial assets: equity instruments
Sep 30, 2017
Level 1
2,877
Level 2
3,587
129
Total
346
6,810
2,877
95
281
3,253
1,232
11
1,243
Financial assets measured at fair value
(in millions of €)
The following table allocates financial assets and financial liabil-
ities measured at fair value to the three levels of the fair value
hierarchy:
loans from banks and other financial indebtedness, obligations
under finance leases as well as other non-current financial liabil-
ities is estimated by discounting future cash flows using rates
currently available for debt of similar terms and remaining ma-
turities (Level 2).
Loans from banks and other financial indebtedness
Obligations under finance leases
Sep 30, 2017
Fair value
Carrying
amount
Fair value
Sep 30, 2016
Carrying
amount
2,261
32,303
3,299
178
30,235
28,554
3,312
115
2,270
203
2,276
138
Fixed-rate and variable-rate receivables with a remaining term of
more than twelve months, including receivables from finance leases,
are evaluated by the Company based on parameters such as interest
rates, specific country risk factors, individual creditworthiness of the
customer, and the risk characteristics of the financed project. Based
on this evaluation, allowances for these receivables are recognized.
The fair value of notes and bonds is based on prices provided by price
service agencies at the period-end date (Level 2). The fair value of
28,797
Net amounts
54
1,882
140
140
(in millions of €)
Financial assets measured at fair value
Available-for-sale financial assets: equity instruments
Available-for-sale financial assets: debt instruments
Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
Sep 30, 2016
Level 1
Level 2
Level 3
Total
682
682
823
In connection with cash flow hedges
54
1,935
46
46
333
333
Available-for-sale financial assets: debt instruments
2,314
Derivative financial instruments
(including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
Financial liabilities measured at fair value - Derivative financial instruments
823
Not designated in a hedge accounting relationship
(including embedded derivatives)
Not designated in a hedge accounting relationship
in the
Statement of
Financial
Position
Level 3
Net
amounts
Any market sensitive instruments, including equity and interest
bearing investments, that our Company's pension plans hold are not
included in the following quantitative and qualitative disclosures.
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. In the ordinary
course of business Siemens units are exposed to foreign currency
exchange rate fluctuations, particularly between the U.S. dollar
and the euro. Foreign currency exchange rate exposure is partly
balanced by purchasing of goods, commodities and services in
the respective currencies as well as production activities and
other contributions along the value chain in the local markets.
Operating units (Industrial business and SFS) are prohibited from
borrowing or investing in foreign currencies on a speculative basis.
Intercompany financing or investments of operating units are pref-
erably carried out in their functional currency or on a hedged basis.
According to the company policy Siemens units are responsible
for recording, assessing and monitoring its foreign currency trans-
action exposure. The net foreign currency position of Siemens
units serves as a central performance measure and has to be
hedged within a band of at least 75% but no more than 100%.
Generally, the operating units conclude their hedging activities
internally with Corporate Treasury. By applying a cost-optimiz-
ing portfolio approach Corporate Treasury itself hedges foreign
currency exchange rate risks with external counterparties and
limits them.
As of September 30, 2017 and 2016 the VaR relating to foreign
currency exchange rates was €87 million and €86 million. This
VaR was calculated under consideration of items of the Consoli-
dated Statement of Financial Position in addition to firm commit-
ments which are denominated in foreign currencies, as well as
foreign currency denominated cash flows from forecast transac-
tions for the following twelve months.
Translation risk
Many Siemens units are located outside the euro zone. Since the
financial reporting currency of Siemens is the euro, the financial
statements of these subsidiaries are translated into euro for the
preparation of the Consolidated Financial Statements. To con-
sider the effects of foreign currency translation in the risk man-
agement, the general assumption is that investments in for-
eign-based operations are permanent and that reinvestment is
continuous. Effects from foreign currency exchange rate fluctu-
ations on the translation of net asset amounts into euro are re-
flected in the Company's consolidated equity position.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market interest rates. This risk arises whenever interest terms of
financial assets and liabilities are different. In order to manage
the Company's position with regard to interest rate risk, interest
income and interest expenses, Corporate Treasury performs a
comprehensive corporate interest rate risk management by using
fixed or variable interest rates from bond issuances and deriva-
tive financial instruments when appropriate. The interest rate risk
relating to the Group, excluding SFS' and SGRE' businesses, is
mitigated by managing interest rate risk actively relatively to a
benchmark. The interest rate risk relating to the SFS's and SGRE's
businesses is managed separately, considering the term structure
of financial assets and liabilities. The Company's interest rate risk
results primarily from the funding in U.S. dollar, British pound
and euro.
If there are no conflicting country-specific regulations, all Siemens
operating units generally obtain any required financing through
Corporate Treasury in the form of loans or intercompany clearing
accounts. The same concept is adopted for deposits of cash gen-
erated by the units.
As of September 30, 2017 and 2016 the VaR relating to the inter-
est rate was €479 million and €485 million.
Consolidated Financial Statements 93
EQUITY PRICE RISK
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive Income
may differ substantially from VaR figures due to fundamental
conceptual differences. While the Consolidated Statements of
Income and Consolidated Statements of Comprehensive Income
are prepared in accordance with IFRS, the VaR figures are the
output of a model with a purely financial perspective and repre-
sent the potential financial loss which will not be exceeded
within ten days with a probability of 99.5%. Although VaR is an
important tool for measuring market risk, the assumptions on
which the model is based give rise to some limitations including
the following. A ten day holding period assumes that it is possible
to dispose of the underlying positions within this period. This
may not be valid during continuing periods of illiquid markets. A
99.5% confidence level means, that there is a 0.5% statistical
probability that losses could exceed the calculated VaR. The use
of historical data as a basis for estimating the statistic behavior
of the relevant markets and finally determining the possible
range of the future outcomes on the basis of this statistic behav-
ior may not always cover all possible scenarios, especially those
of an exceptional nature.
volatilities and correlations of various risk factors, a ten day hold-
ing period, and a 99.5% confidence level.
Consolidated Financial Statements
22
2023
and
there-
after
80
15
87
38
INTEREST RATE RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
Siemens' investment portfolio consists of direct and indirect in-
vestments in publicly traded companies held for purposes other
than trading. The direct participations result mainly from strate-
gic partnerships, strengthening Siemens' focus on its core busi-
ness activities or compensation from merger and acquisitions
transactions; indirect investments in fund shares are mainly
transacted for financial reasons.
Interest rate risk management relating to the Group, excluding
SFS' business, uses derivative financial instruments under a port-
folio-based approach to manage interest risk actively relative to
a benchmark. The interest rate management relating to the SFS
business remains to be managed separately, considering the
term structure of SFS' financial assets and liabilities on a portfolio
basis. Neither approach qualifies for hedge accounting treat-
ment. Net cash receipts and payments in connection with inter-
est rate swap agreements are recorded as interest expense in
Other financial income (expenses), net.
Since fiscal 2015, Siemens applies cash flow hedge accounting
to a revolving portfolio of floating-rate commercial papers of
nominal US$700 million. To benefit from low interest rates in the
USA, Siemens pays a fixed rate of interest and receives a variable
rate of interest, offsetting future changes in interest payments of
the underlying floating-rate commercial papers. Net cash receipts
and payments are recorded as interest expenses.
Fair value hedges of fixed-rate debt obligations
Under the interest rate swap agreements outstanding during the
years ended September 30, 2017 and 2016, the Company has
agreed to pay a variable rate of interest multiplied by a notional
principal amount, and to receive in return an amount equal to a
specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset an
impact of future changes in interest rates designated as the
hedged risk on the fair value of the underlying fixed-rate debt
obligations. Carrying amount adjustments to debt for fair value
changes attributable to the respective interest rate risk being
hedged are included in Other financial income (expenses), net
and resulted in a gain (loss) of €57 million and €149 million, re-
spectively, in fiscal 2017 and 2016; the related swap agreements
resulted in a gain (loss) of €(57) million and €(152) million, re-
spectively. Net cash receipts and payments relating to such inter-
est rate swap agreements are recorded as interest expenses.
The Company had interest rate swap contracts to pay variable
rates of interest of an average of (0.3)% and (0.2)% as of Septem-
ber 30, 2017 and 2016, respectively and received fixed rates of
interest (average rate of 1.1% and 3.3%, as of September 30, 2017
and 2016, respectively). The notional amount of indebtedness
hedged as of September 30, 2017 and 2016 was €1,650 million
and €3,650 million, respectively. This changed 7% and 14% of the
Company's underlying notes and bonds from fixed interest rates
into variable interest rates as of September 30, 2017 and 2016,
respectively. The notional amounts of these contracts mature at
varying dates based on the maturity of the underlying hedged
items. The net fair value of interest rate swap contracts (excluding
accrued interest) used to hedge indebtedness as of September 30,
2017 and 2016 was €37 million and €93 million, respectively.
NOTE 24 Financial risk management
Increasing market fluctuations may result in significant earnings
and cash flow volatility risk for Siemens. The Company's operat-
ing business as well as its investment and financing activities are
affected particularly by changes in foreign exchange rates, inter-
est rates and equity prices. In order to optimize the allocation of
the financial resources across the Siemens segments and entities,
as well as to achieve its aims, Siemens identifies, analyzes and
manages the associated market risks. The Company seeks to man-
age and control these risks primarily through its regular operating
and financing activities, and uses derivative financial instruments
when deemed appropriate.
In order to quantify market risks Siemens has implemented a sys-
tem based on parametric variance-covariance Value at Risk (VaR),
which is also used for internal management of the Corporate Trea-
sury activities. The VaR figures are calculated based on historical
92
Cash flow hedges of floating-rate
commercial papers
Fiscal year
These investments are monitored based on their current market
value, affected primarily by fluctuations in the volatile technolo-
gy-related markets worldwide. As of September 30, 2017 and
2016 the market value of Siemens' portfolio in publicly traded
companies was €2,875 million compared to €2,169 million in the
prior year. As of September 30, 2017 and 2016, the VaR relating
to the equity price was €208 and €227 million. The increase in
the market values, due mainly to our stakes in Atos and OSRAM,
was more than offset by a decline in the volatilities of these
stakes, resulting in an overall decrease of the VaR. The major part
of our stake in OSRAM has been sold in October 2017.
Liquidity risk results from the Company's inability to meet its fi-
nancial liabilities. Siemens follows a deliberated financing policy
that is aimed towards a balanced financing portfolio, a diversified
maturity profile and a comfortable liquidity cushion. Siemens
mitigates liquidity risk by the implementation of an effective
working capital and cash management, arranged credit facilities
with highly rated financial institutions, via a debt issuance pro-
gram and via a global multi-currency commercial paper program.
Liquidity risk may also be mitigated by the Siemens Bank GmbH,
which increases the flexibility of depositing cash or refinancing.
Other financial
indebtedness
Obligations under
finance leases
27
23
61
Trade payables
35
18
36
112
9,730
19
3
3
Other financial liabilities
Derivative financial liabilities
Credit guarantees¹
Related
amounts not
set off in the
Statement of
Financial
Position
17,659
3
328 1,037
1,303
Loans from banks
In addition, Siemens constantly monitors funding options avail-
able in the capital markets, as well as trends in the availability
and costs of such funding, with a view to maintaining financial
flexibility and limiting repayment risks.
The following table reflects the contractually fixed pay-offs for
settlement, repayments and interest. The disclosed expected un-
discounted net cash outflows from derivative financial liabilities
are determined based on each particular settlement date of an
instrument and based on the earliest date on which Siemens
could be required to pay. Cash outflows for financial liabilities
(including interest) without fixed amount or timing are based on
the conditions existing at September 30, 2017.
(in millions of €)
Fiscal year
2023
2020
and
LIQUIDITY RISK
2018
to
2022
there-
after
Non-derivative financial
liabilities
Notes and bonds
4,328
3,790
11,102
2019
revenue or cost of sales
677
Expected gain (loss) to be
reclassified from line item
Financial
Position
Net
amounts
2,641
7
2,634
994
1,640
Financial liabilities - Derivative financial liabilities
1,440
6
1,433
838
595
NOTE 23 Derivative financial
instruments and hedging activities
amounts not
set off in the
Statement of
Related
Net amounts
in the
Statement of
Financial
Position
Financial
Position
2,035
Other comprehensive income,
net of income taxes into
5
2,030
647
1,383
697
Fair values of each type of derivative financial instruments recorded
as financial assets or financial liabilities are:
5
153
Sep 30, 2016
Amounts set
off in the
Statement of
(in millions of €)
Financial assets
Gross
amounts
691
653
538
570
823
596
3,051
129
1,500
FOREIGN CURRENCY EXCHANGE RATE
RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a
Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various deriv-
ative financial instruments, primarily foreign currency exchange
contracts, foreign currency swaps and options, are utilized to
minimize such risks. Such a strategy does not qualify for hedge
accounting treatment. The Company also accounts for foreign
currency derivatives, which are embedded in sale and purchase
2,314
contracts.
The Company's operating units apply hedge accounting for cer-
tain significant forecast transactions and firm commitments de-
nominated in foreign currencies. Particularly, the Company has
entered into foreign currency exchange contracts to reduce the
risk of variability of future cash flows resulting from forecast sales
and purchases as well as firm commitments. This risk results
mainly from contracts denominated in US$ both from Siemens'
operating units entering into long-term contracts e.g. project
business and from standard product business.
Periods in which the hedged forecast transactions or the firm
commitments denominated in foreign currency are expected to
impact profit or loss:
(in millions of €)
2018
2020
to
2022
475
2019
Consolidated Financial Statements 91
192
Cash flow hedges
derivatives, options,
commodity swaps)
311
(in millions of €)
Asset
Sep 30, 2017
Liability
Foreign currency
exchange contracts
Interest rate swaps
Asset
880
1,350
Sep 30, 2016
Liability
156
491
and combined interest
and currency swaps
Other (embedded
1,885
100
Siemens Wind Power BVBA, Beersel/Belgium
69
100
Siemens S.A./N.V., Beersel/Belgium
100
Siemens Industry Software NV, Leuven/Belgium
Siemens Healthcare SA/NV, Beersel/Belgium
KDAG Beteiligungen GmbH, Vienna/Austria
Omnetric GmbH, Vienna/Austria
100
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
100
Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
Gamesa Wind Bulgaria, EOOD, Sofia/Bulgaria
Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
100
100
Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
Siemens Aktiengesellschaft Österreich, Vienna/Austria
Siemens Convergence Creators GmbH, Eisenstadt/Austria
Siemens Convergence Creators GmbH, Vienna/Austria
100
100
100
100
Siemens EOOD, Sofia/Bulgaria
100
Siemens Healthcare EOOD, Sofia/Bulgaria
Siemens SARL, Abidjan/Côte d'Ivoire
100
100
100
100
ETM professional control GmbH, Eisenstadt/Austria
ESTEL Rail Automation SPA, Algiers/Algeria
Siemens Gamesa Renewable Energy Belgium, SPRL,
Brussels/Belgium
Siemens Gamesa Renevable Energy Limited Liability
Company, Baku/Azerbaijan
100
Windfarm Ringstedt II GmbH, Oldenburg
100
100
Siemens W.L.L., Manama/Bahrain
51
Limited Liability Company Siemens Technologies,
Minsk/Belarus
100
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
Dresser-Rand Machinery Repair Belgie N.V.,
(519 companies)
Antwerp/Belgium
1007
51
Flender S.P.R.L., Beersel/Belgium
1007
Siemens Spa, Algiers/Algeria
100
Mentor Graphics (Belgium) BVBA, Brussels/Belgium
100
Siemens S.A., Luanda/Angola
51
Samtech SA, Angleur/Belgium
77
Mentor Graphics Development Services Closed Joint Stock
Company, Yerevan/Armenia
100
100
100
100
Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
Siemens Wind Power GmbH, Vienna/Austria
Siemens Electric Machines s.r.o., Drasov/Czech Republic
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens AG is a shareholder with unlimited liability of this company.
11
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
106 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Siemens Healthcare, s.r.o., Prague/Czech Republic
100
100
100
Siemens Industry Software, s.r.o., Prague/Czech Republic
Siemens, s.r.o., Prague/Czech Republic
100
Siemens Convergence Creators Holding GmbH,
Vienna/Austria
Prague/Czech Republic
Siemens Convergence Creators, s.r.o.,
51
100
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
Siemens Convergence Creators d.o.o., Zagreb/Croatia
Siemens d.d., Zagreb/Croatia
100
100
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
100
Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
Siemens Healthcare d.o.o., Zagreb/Croatia
100
100
100
Mentor Graphics (Netherlands Antilles) N.V.,
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
Siemens Metals Technologies Vermögensverwaltungs
GmbH, Vienna/Austria
100
Willemstad/Curaçao
100
100
Siemens Gamesa Renewable Energy Limited,
Nicosia/Cyprus
100
100
OEZ s.r.o., Letohrad/Czech Republic
100
Siemens Personaldienstleistungen GmbH, Vienna/Austria
Siemens Urban Rail Technologies Holding GmbH,
Vienna/Austria
100
Polarion Software s.r.o., Prague/Czech Republic
100
75
Windfarm Groß Haßlow GmbH, Oldenburg
100
Windfarm Ganderkesee-Lemwerder GmbH, Oldenburg
100
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
100
Siemens Healthcare GmbH, Erlangen
10010
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
1009
Siemens Immobilien GmbH & Co. KG, Grünwald
1009
Siemens Immobilien Management GmbH, Grünwald
1007
Siemens Industriegetriebe GmbH, Penig
100
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
100⁹
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
SIMAR Süd Grundstücks-GmbH, Grünwald
10010
10010
10010
10010
Siemens Industry Software GmbH, Cologne
SIMAR West Grundstücks-GmbH, Grünwald
10010
Siemens Insulation Center GmbH & Co. KG, Zwönitz
1009
SIMOS Real Estate GmbH, Munich
10010
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
1007
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Liquidity One, Munich
100
100
Societe d'Exploitation du Parc Eolien de Champsevraine,
SARL, Saint-Priest/France
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg Verwaltungs GmbH,
Grünwald
1009
100
Siemens Fonds Invest GmbH, Munich
10010
Siemens Treasury GmbH, Munich
10010
Siemens Fuel Gasification Technology GmbH & Co. KG,
Freiberg
1009
Siemens Turbomachinery Equipment GmbH, Frankenthal
Siemens Wind Power GmbH & Co. KG, Hamburg
10010
1009
Siemens Fuel Gasification Technology Verwaltungs GmbH,
Freiberg
1007
Siemens Wind Power Management GmbH, Hamburg
Siemens-Fonds C-1, Munich
1007
100
Siemens Global Innovation Partners Management GmbH,
Munich
Siemens-Fonds Pension Captive, Munich
100
1007
Siemens-Fonds Principals, Munich
100
Siemens Healthcare Diagnostics GmbH, Eschborn
100
Siemens-Fonds S-7, Munich
100
Siemens Healthcare Diagnostics Holding GmbH, Eschborn
Siemens-Fonds S-8, Munich
100
100
10010
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
105
September 30, 2017
Windfarm 33 GmbH, Oldenburg
Windfarm 35 GmbH, Oldenburg
Equity interest
in %
Equity interest
September 30, 2017
in %
100
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
52
100
Trench Austria GmbH, Leonding/Austria
100
Windfarm 40 GmbH, Oldenburg
100
Windfarm 41 GmbH, Oldenburg
100
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
GmbH, Vienna/Austria
100
4 No control due to contractual arrangements or legal circumstances.
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
1 Control due to a majority of voting rights.
Siemens Medical Solutions Health Services GmbH,
Grünwald
TASS International GmbH, Wiesbaden
100
100
Trench Germany GmbH, Bamberg
10010
Siemens Middle East Holding GmbH & Co. KG, Grünwald
1007
Siemens Middle East Management GmbH, Grünwald
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Siemens Postal, Parcel & Airport Logistics GmbH, Constance
Siemens Power Control GmbH, Langen
1007
Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
Hamburg
100
100
10010
VIB Verkehrsinformationsagentur Bayern GmbH, Munich
VMZ Berlin Betreibergesellschaft mbH, Berlin
517
100
10010
VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
943
Siemens Private Finance Versicherungsvermittlungs-
gesellschaft mbH, Munich
10010
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
10010
Siemens Project Ventures GmbH, Erlangen
10010
Weiss Spindeltechnologie GmbH, Maroldsweisach
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
100
Societe d'Exploitation du Parc Eolien de Chepniers SARL,
Trench France SAS, Saint-Louis/France
100
100
100
SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
Siemens SAS, Saint-Denis/France
Societe d'Exploitation du Parc Eolien de Saint Loup de
Saintonge SAS, Saint-Priest/France
100
Saint-Priest/France
100
Siemens Lease Services SAS, Saint-Denis/France
Societe d'Exploitation du Parc Eolien de Saint Bon SARL,
100
Siemens Industry Software SAS, Châtillon/France
100
100
100
Siemens Healthcare SAS, Saint-Denis/France
Societe d'Exploitation du Parc Eolien de Saint Amand SARL,
100
Siemens Gamesa Renewable Energy S.A.S.,
Saint-Denis Cedex/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Romigny SARL,
100
Siemens Gamesa Renewable Energy France SAS,
Saint-Priest/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Pringy SARL,
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Saint-Lumier en
Champagne SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Sambourg SARL,
100
100
Siemens Gamesa Renewable Energy AE, Athens/Greece
Siemens Gamesa Renewable Energy Greece E.P.E.,
Athens/Greece
Societe d'Exploitation du Parc Eolien de Soude SARL,
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Songy SARL,
100
86
Eoliki Peloponnisou Lakka Energiaki S.A., Athens/Greece
Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
Athens/Greece
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Sommesous SARL,
100
Saint-Priest/France
100
86
86
86
86
86
90
Siemens Oil & Gas Equipment Limited, Accra/Ghana
Elliniki Eoliki Attikis Energiaki S.A., Athens/Greece
Elliniki Eoliki Energiaki Pirgos S.A., Athens/Greece
Elliniki Eoliki Kopriseza S.A., Athens/Greece
Elliniki Eoliki Kseropousi S.A., Athens/Greece
Elliniki Eoliki Likourdi S.A., Athens/Greece
Energiaki Arvanikou M.E.P.E., Athens/Greece
Societe d'Exploitation du Parc Eolien de Sceaux SARL,
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Savoisy SARL,
100
Saint-Priest/France
in %
September 30, 2017
in %
September 30, 2017
100
Societe d'Exploitation du Parc Eolien de Moulins du Puits
SAS, Saint-Priest/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Bouclans SARL,
100
Saint-Priest/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Margny SARL,
Societe d'Exploitation du Parc Eolien de Bonboillon SARL,
100
Saint-Priest/France
100
PETNET Solutions SAS, Lisses/France
Societe d'Exploitation du Parc Eolien de Mantoche SARL,
100
Meta Systems SARL, Meudon La Forêt/France
100
Societe d'Exploitation du Parc Eolien de Mailly-le-Camp
SARL, Saint-Priest/France
100
not-Saint-Martin/France
Mentor Graphics Development Crolles SARL, Monbon-
100
Societe d'Exploitation du Parc Eolien de Longueville sur
Aube SARL, Saint-Priest/France
100
100
Mentor Graphics (France) SARL, Meudon La Forêt/France
Mentor Graphics Development (France) SAS, Paris/France
10010
Societe d'Exploitation du Parc Eolien de Broyes SARL,
Saint-Priest/France
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Orge et Ornain
SARL, Saint-Priest/France
Equity interest
Equity interest
108
107
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
Societe d'Exploitation du Parc Eolien de
Pouilly-sur-Vingeanne SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Chaintrix Bierges
SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Plancy l'Abbaye
SARL, Saint-Priest/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Cernon SARL,
100
100
100
Siemens Healthcare Industrial and Commercial Société
Societe d'Exploitation du Parc Eolien de Source de Seves
SARL, Saint-Priest/France
100
Saint-Priest/France
100
Mentor Graphics (Finland) OY, Espoo/Finland
100
Mentor Graphics Development (Finland) OY, Turku/Finland
100
Societe d'Exploitation du Parc Eolien de la Brie des Etangs
SARL, Saint-Priest/France
100
Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
100
Siemens Healthcare Oy, Espoo/Finland
100
Societe d'Exploitation du Parc Eolien de la Côte du Cerisat
SAS, Saint-Priest/France
100
Siemens Osakeyhtiö, Espoo/Finland
Adwen France SAS, Puteaux/France
D-R Holdings (France) SAS, Le Havre/France
Dresser-Rand SAS, Le Havre/France
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
Gamesa Eolica France, S.A.R.L., Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de la Loye SARL,
100
Saint-Priest/France
100
100
100
Societe d'Exploitation du Parc Eolien de la Tete des Boucs
SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Guerfand SARL,
100
90
Saint-Priest/France
Siemens A/S, Ballerup/Denmark
100
Saint-Priest/France
100
Siemens Gamesa Renewable Energy A/S, Brande/Denmark
100
Societe d'Exploitation du Parc Eolien de Clamanges SARL,
Siemens Healthcare A/S, Ballerup/Denmark
100
Saint-Priest/France
100
Siemens Industry Software A/S, Ballerup/Denmark
100
Societe d'Exploitation du Parc Eolien de Coupetz SARL,
Mentor Graphics Egypt Company (A Limited Liability
Saint-Priest/France
100
Company - Private Free Zone), Cairo/Egypt
100
Societe d'Exploitation du Parc Eolien de Dampierre
NEM Energy Egypt LLC, Alexandria/Egypt
Siemens Healthcare S.A.E., Cairo/Egypt
100
Prudemanche SAS, Saint-Priest/France
100
100
Societe d'Exploitation du Parc Eolien de Germainville SAS,
Siemens Limited for Trading, Cairo/Egypt
Siemens Technologies S.A.E., Cairo/Egypt
Siemens Wind Power LLC, Cairo/Egypt
100
100
100
Societe d'Exploitation du Parc Eolien de Landresse SARL,
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Societe d'Exploitation du Parc Eolien d'Orchamps SARL,
97
Teheran/Iran, Islamic Republic of
100
Siemens Sherkate Sahami (Khass),
Societe d'Exploitation du Parc Eolien de Vernierfontaine
SARL, Saint-Priest/France
100
Siemens Zrt., Budapest/Hungary
100
Siemens Wind Power Kft., Budapest/Hungary
100
Siemens Healthcare Kft., Budapest/Hungary
100
100
100
evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
Mentor Graphics Magyarország Kft., Budapest/Hungary
Siemens Gamesa Megújuló Energia Hungary Kft,
Budapest/Hungary
888
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Vaudrey SARL,
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Trepot SARL,
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Souvans SARL,
100
100
Anonyme, Athens/Greece
Gamesa Ireland Limited, Dublin/Ireland
Consolidated Financial Statements
100
100
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
Mentor Graphics Development Services Limited,
Shannon, County Clare/Ireland
100
Siemens France Holding SAS, Saint-Denis/France
100
Saint-Denis/France
100
Shannon, County Clare/Ireland
Siemens Financial Services SAS,
Mentor Graphics (Ireland) Limited,
100
Saint-Priest/France
10012
Shannon, County Clare/Ireland
Societe d'Exploitation du Parc Eolien du Vireaux SAS,
Mentor Graphics (Holdings) Unlimited Company,
Saint-Priest/France
Siemens Financial Services GmbH, Munich
Europe, C.I.S., Africa, Middle East
Siemens Finance & Leasing GmbH, Munich
488
(215)
187
132
Corporate items
(714)
(449)
Centrally carried pension expense
Amortization of intangible assets
acquired in business combinations
Eliminations, Corporate Treasury,
and other reconciling items
Reconciliation to
Consolidated Financial Statements
(407)
(439)
(1,016)
(674)
(323)
Centrally managed portfolio activities
Siemens Real Estate
(349)
(1,994)
In fiscal 2017 and 2016, Profit of SFS includes interest income of
€1,241 million and €1,161 million, respectively and interest ex-
penses of €442 million and €377 million, respectively. In fiscal
2017, CMPA includes the following effects from asset retirement
obligations for environmental clean-up costs: €543 million gains
due to changes in interest rates, €312 million gains due to re-
duced assumed inflation rates and a loss of €179 million from
interest rate swaps not designated in a hedge relationship in con-
nection with those asset retirement obligations.
Assets
(in millions of €)
2017
Sep 30,
2016
Assets Centrally managed portfolio activities
Assets Siemens Real Estate
3,448
1,812
4,533
4,964
Assets Corporate items and pensions
(1,346)
(1,785)
2016
2017
(in millions of €)
2,764
Corporate items - includes corporate costs, such as group man-
aging costs, basic research of Corporate Technology, corporate
projects and non-operating investments or results of corpo-
rate-related derivative activities.
Pension - includes the Company's pension related income (ex-
pense) not allocated to the segments, SRE or CMPA.
Eliminations, Corporate Treasury and other reconciling
items - comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items and the
activities of the Company's Corporate Treasury. It also includes
interest income and expense, such as, for example, interest not
allocated to segments or CMPA (referred to as financing interest),
interest related to Corporate Treasury activities or resulting con-
solidation and reconciliation effects on interest.
MEASUREMENT - SEGMENTS
Accounting policies for Segment information are generally the
same as those used for the Consolidated Financial Statements.
Lease transactions, however, are classified as operating leases for
internal and segment reporting purposes. Intersegment transac-
tions are based on market prices.
Profit
Siemens' Managing Board is responsible for assessing the perfor-
Imance of the segments (chief operating decision maker). The
Company's profitability measure of the segments except for SFS
is earnings before financing interest, certain pension costs,
income taxes and amortization expenses of intangible assets
acquired in business combinations as determined by the chief
operating decision maker (Profit). The major categories of items
excluded from Profit are presented below.
Financing interest, excluded from Profit, is any interest income or
expense other than interest income related to receivables from
customers, from cash allocated to the segments and interest ex-
penses on payables to suppliers. Financing interest is excluded
from Profit because decision-making regarding financing is typi-
cally made at the corporate level.
Decisions on essential pension items are made centrally. Accord-
ingly, Profit primarily includes amounts related to service cost of
pension plans only, while all other regularly recurring pension
related costs are included in reconciliations in line item Centrally
carried pension expense.
Consolidated Financial Statements 99
Amortization expenses of intangible assets acquired in business
combinations are not part of Profit. Furthermore, income taxes
are excluded from Profit since income tax is subject to legal struc-
tures, which typically do not correspond to the structure of the
segments. The effect of certain litigation and compliance issues
is excluded from Profit, if such items are not indicative of perfor-
mance. This may also be the case for items that refer to more
than one reportable segment, SRE and (or) CMPA or have a cor-
porate or central character. Costs for support functions are pri-
marily allocated to the segments.
Profit of the segment SFS:
Profit of the segment SFS is Income before income taxes. In con-
trast to performance measurement principles applied to other
segments, interest income and expenses is an important source
of revenue and expense of SFS.
Asset measurement principles:
Management determined Assets (Net capital employed) as a
measure to assess capital intensity of the segments except for
SFS. Its definition corresponds to the Profit measure except for
amortization expenses of intangible assets acquired in business
combinations which are not part of Profit, however, the related
intangible assets are included in the segments' Assets. Segment
Assets is based on Total assets of the Consolidated Statements of
Financial Position, primarily excluding intragroup financing re-
ceivables, tax related assets and assets of discontinued opera-
tions, since the corresponding positions are excluded from Profit.
The remaining assets are reduced by non-interest-bearing liabili-
ties other than tax related liabilities, e.g. trade payables, to derive
Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
include the project-specific intercompany financing of a long-
term project. Assets of SGRE include real estate, while real estate
of all other Siemens segments is carried at SRE.
Orders:
Orders are determined principally as estimated revenue of ac-
cepted purchase orders and order value changes and adjust-
ments, excluding letters of intent.
Free cash flow definition:
Free cash flow of the segments, except for SFS, constitutes cash
flows from operating activities less additions to intangible assets
and property, plant and equipment. It excludes financing inter-
est, except for cases where interest on qualifying assets is capi-
talized or classified as contract costs and it also excludes income
tax as well as certain other payments and proceeds. Free cash
flow of SFS includes related financing interest payments and pro-
ceeds; income tax payments and proceeds of SFS are excluded.
Amortization, depreciation and impairments:
Amortization, depreciation and impairments includes deprecia-
tion and impairments of property, plant and equipment as well
as amortization and impairments of intangible assets each net of
reversals of impairment.
MEASUREMENT – CENTRALLY MANAGED
-
PORTFOLIO ACTIVITIES AND SRE
Centrally managed portfolio activities follow the measurement
principles of the segments except for SFS. SRE applies the mea-
surement principles of SFS.
RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Profit
Fiscal year
(1,474)
Asset-based adjustments:
Intragroup financing receivables
45,475
22,607
of companies
Fiscal year
2016
45,325
22,360
2017
25,574
19,886
111
13,088
83,049
11,959
Non-current
assets
Sep 30,
2016
19,912
41,819
23,516
22,707
19,013
16,166
15,118
4,349
3,132
83,049
79,644
42,057
11,142
10,739
47,355
3,211
2017
Fiscal year
47,072
Tax-related assets
3,258
4,089
Liability-based adjustments
43,161
42,082
Eliminations, Corporate Treasury, other items
(36,100)
(35,419)
Reconciliation to Consolidated Financial
Statements
62,430
63,126
100
Consolidated Financial Statements
NOTE 29 Information about geographies
(in millions of €)
100
Americas
Asia, Australia
Siemens
thereof Germany
thereof foreign countries
therein U.S.
Revenue by location
of customers
Revenue by location
2017
43,367
2016
2,135
2,406
357
1,002
375
198
195
213
218
784
577
1,241
1,324
820
598
47
66
89
85
743
678
2,734
2,868
1,046
497
105
99
135
132
2,135
1,690
9,217
4,335
5,731
4,178
932
Profit
Assets
Free cash flow
Additions to intangible assets
and property, plant & equipment
Amortization,
depreciation & impairments
Fiscal year
Fiscal year
Fiscal year
Fiscal year
2017
2016
Sep 30, 2017
Sep 30, 2016
2017
2016
2017
2016
2017
2016
1,591
1,872
9,976
9,066
392
1,149
222
206
501
522
895
19,876
1,963
195
9,453
8,744
44,984
36,145
7,471
7,493
1,835
1,521
2,649
2,191
639
653
26,390
26,446
734
680
29
18
207
216
(1,785)
8,306
(1,994)
7,404
62,430
133,804
63,126
125,717
(3,386)
4,819
(2,640)
5,533
543
597
354
137
1,771
510
476
179
450
304
440
243
2,002
1,800
373
618
164
160
213
231
2,490
2,325
10,973
11,211
2,153
2,154
427
392
538
563
338
464
4,663
(190)
(279)
330
223
10010
71,907
63,173
Dade Behring Grundstücks GmbH, Marburg
100
Siemens Beteiligungen Inland GmbH, Munich
10010
Dresser-Rand GmbH, Oberhausen
10010
EBV Holding Verwaltung GmbH, Oldenburg
100
Siemens Beteiligungen Management GmbH, Grünwald
Siemens Beteiligungen USA GmbH, Berlin
1007
10010
evosoft GmbH, Nuremberg
10010
100
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
1009,11
1009
Flender GmbH, Bocholt
100
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
1009
Flowmaster GmbH, Frankfurt
100
Fluence Energy GmbH, Erlangen
1007
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
Grünwald
1009
Gamesa Energie Deutschland GmbH, Oldenburg
Siemens Beteiligungsverwaltung GmbH & Co. OHG,
Grünwald
Siemens Bank GmbH, Munich
100
100
Omnetric GmbH, Munich
51
Adwen GmbH, Bremerhaven
100
Adwen Verwaltungs GmbH, Bremerhaven
100
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
Objekt Tübingen KG, Grünwald
1009
Airport Munich Logistics and Services GmbH, Hallbergmoos
10010
Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
10010
Alpha Verteilertechnik GmbH, Cham
10010
Atecs Mannesmann GmbH, Erlangen
100
Project Ventures Butendiek Holding GmbH, Erlangen
Projektbau-Arena-Berlin GmbH, Grünwald
10010
10010
AXIT GmbH, Frankenthal
100
R&S Restaurant Services GmbH, Munich
100
Berliner Vermögensverwaltung GmbH, Berlin
10010
REMECH Systemtechnik GmbH, Kamsdorf
10010
Capta Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald
RISICOM Rückversicherung AG, Grünwald
100
Gamesa Wind GmbH, Aschaffenburg
100
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
Grünwald
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
104 Consolidated Financial Statements
Equity interest
September 30, 2017
in %
September 30, 2017
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
Grünwald
1009
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
1007
Siemens Real Estate GmbH & Co. KG, Grünwald
Siemens Real Estate Management GmbH, Grünwald
Siemens Spezial-Investmentaktiengesellschaft mit TGV,
Munich
Equity interest
in %
1009
1007
100
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Compressor Systems GmbH, Leipzig
1007
10010
Siemens Convergence Creators GmbH & Co. KG, Hamburg
1009
Siemens Convergence Creators Management GmbH,
Hamburg
Siemens Technology Accelerator GmbH, Munich
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
Siemens Technopark Mülheim Verwaltungs GmbH,
Grünwald
10010
1009
100
1007
10 Exemption pursuant to Section 264 (3) German Commercial Code.
100
Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
1009
HaCon Ingenieurgesellschaft mbH, Hanover
100
HSP Hochspannungsgeräte GmbH, Troisdorf
10010
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
Grünwald
1009
ILLIT Grundstücksverwaltungs-Management GmbH,
Grünwald
59
85
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
Grünwald
1009
IPGD Grundstücksverwaltungs-Gesellschaft mbH,
Grünwald
100
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
Grünwald
1009
Jawa Power Holding GmbH, Erlangen
KompTime GmbH, Munich
10010
10010
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
Grünwald
1009
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
9
Adwen Blades GmbH, Stade
10010
next47 Services GmbH, Munich
2,442
336
316
As of September 30, 2017 and 2016, guarantees to joint ventures
and associates amounted to €726 million and €1,500 million, re-
spectively. As of September 30, 2017 and 2016, guarantees to
joint ventures amounted to €488 million and €553 million, re-
spectively. As of September 30, 2017 and 2016, loans given to
joint ventures and associates amounted to €222 million and
€82 million, therein €218 million and €78 million related to joint
ventures, respectively. As of September 30, 2017 and 2016, the
Company had commitments to make capital contributions of
€76 million and €48 million to its joint ventures and associates,
therein €16 million and €39 million related to joint ventures, re-
spectively. For a loan raised by a joint venture, which is secured
by a Siemens guarantee, Siemens granted an additional collat-
eral. As of September 30, 2017 and 2016 the outstanding amount
totaled to €113 million and €116 million, respectively. As of Sep-
tember 30, 2017 and 2016 there were loan commitments to joint
ventures amounting to €147 million and €72 million, respectively.
Receivables
Liabilities
Sep 30,
Sep 30,
(in millions of €)
2017
2016
2017
2016
Joint ventures
277
333
126
236
Associates
43
114
266
343
320
447
392
579
Consolidated Financial Statements 101
RELATED INDIVIDUALS
2,632
In fiscal 2017 and 2016, members of the Managing Board received
cash compensation of €20.7 million and €20.2 million. The fair
value of stock-based compensation amounted to €13.2 million
and €8.7 million for 132,831 and 113,230 Stock Awards, respec-
tively, in fiscal 2017 and 2016. In fiscal 2017 and 2016, the Com-
pany granted contributions (including one-time special contribu-
tions) under the BSAV to members of the Managing Board
totaling €6.6 million and €4.6 million, respectively.
174
1,379
61,065
41,485
16,976
16,769
17,934
17,776
18,108
7,511
34,546
17,576
79,644
18,579
49,809
8,324
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
NOTE 30 Related party transactions
JOINT VENTURES AND ASSOCIATES
Siemens has relationships with many joint ventures and associ-
ates in the ordinary course of business whereby Siemens buys
and sells a wide variety of products and services generally on
arm's length terms.
Sales of goods
and services and
other income
Purchases of goods
and services
and other expenses
Fiscal year
2016
(in millions of €)
2017
Fiscal year
2016
2017
Joint ventures
2,094
1,062
119
142
Associates
538
218
68,905
Therefore in fiscal 2017 and 2016, compensation and benefits,
attributable to members of the Managing Board amounted to
€40.5 million and €33.5 million in total, respectively.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€34.1 million and €52.3 million in fiscal 2017 and 2016, respec-
tively.
Consolidated Financial Statements
103
NOTE 34 List of subsidiaries and
associated companies pursuant to
Section 313 para. 2 of the German
Commercial Code
September 30, 2017
Kyra 1 GmbH, Erlangen
Kyros 52 GmbH, Hanover
Kyros 53 GmbH, Munich
Equity interest
in %
10010
1007
1007
Kyros 54 GmbH, Munich
1007
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
100
Equity interest
Mentor Graphics (Deutschland) GmbH, Munich
100
September 30, 2017
in %
Mentor Graphics Development (Deutschland) GmbH,
Villingen-Schwenningen
100
SUBSIDIARIES
Germany (129 companies)
AD 8MW GmbH & Co. KG, Bremerhaven
NEO New Oncology GmbH, Cologne
100
next47 GmbH, Munich
10010
100
as well as the potential sale of locations.
In fiscal 2017 and 2016, expense related to share-based payment
and to the Share Matching Program amounted to €19.0 million
and 8.3 million, respectively.
In November 2017, Siemens announced its plans for capacity
adjustment measures at Power and Gas, SGRE and Process
Industries and Drives, which are expected to result in significant
severance charges and also include the closure, consolidation
NOTE 33
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2017 and 2016 amounted
to €191.5 million and €216.3 million, respectively.
Compensation attributable to members of the Supervisory Board
comprises in fiscal 2017 and 2016 of a base compensation and
additional compensation for committee work and amounted
€5.2 million (including meeting fees), which is unchanged com-
pared to prior year.
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
combined management report.
In fiscal 2017 and 2016, no other major transactions took place
between the Company and the members of the Managing Board
and the Supervisory Board.
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary
course of our business whereby we buy and sell a wide variety of
products and services on arm's length terms.
NOTE 31
Principal accountant fees
and services
Fees related to professional services rendered by the Company's
principal accountant, EY, for fiscal 2017 and 2016 are:
Fiscal year
(in millions of €)
2017
2016
Audit services
52.6
45.9
Other attestation services
Tax services
3.7
3.2
0.2
0.4
56.5
49.5
In fiscal 2017 and 2016, 40% and 41%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
schaft, Germany.
Audit Services relate primarily to services provided by EY for au-
diting Siemens' Consolidated Financial Statements and for audit-
ing the statutory financial statements of Siemens AG and its sub-
sidiaries. Other attestation services include primarily audits of
financial statements in connection with M&A activities, comfort
letters and other attestation services required under regulatory
requirements, agreements or requested on a voluntary basis.
102 Consolidated Financial Statements
NOTE 32 Corporate Governance
The Managing Board and the Supervisory Board of Siemens Ak-
tiengesellschaft provided the declaration required by Section 161
of the German stock corporation law (AktG) as of October 1, 2017,
which is available on the Company's website at:
COM/GCG-CODE
WWW.SIEMENS.
Subsequent events
Saint-Priest/France
D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
Equity interest
100
International Wind Farm Development VII, S.L.,
Zamudio/Spain
Sistema Eléctrico de Conexión Montes Orientales, S.L.,
Granada/Spain
83
100
International Wind Farm Developments II, S.L.,
Sistemas Energéticos Alcohujate, S.A. Unipersonal,
Toledo/Spain
100
Zamudio/Spain
100
International Wind Farm Developments IX, S.L.,
Sistemas Energéticos Alto da Croa, S.A. Unipersonal,
Santiago de Compostela/Spain
100
Zamudio/Spain
100
Mentor Graphics (Espana) SL, Madrid/Spain
100
Sistemas Energéticos Argañoso, S. L. Unipersonal,
Zamudio/Spain
100
100
Microenergía 21, S.A., Zumaia/Spain
Siemens Wind Power, S.L., Tres Cantos/Spain
100
Siemens Gamesa Renewable Finance, S.A., Zamudio/Spain
SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
100
100
Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
Guascor Solar S.A., Vitoria-Gasteiz/Spain
100
Siemens Holding S.L., Madrid/Spain
100
100
Guascor Wind, S. L., Vitoria-Gasteiz/Spain
1007
International Wind Farm Development IV, S.L.,
Zamudio/Spain
100
International Wind Farm Development V, S.L.,
Zamudio/Spain
100
Siemens Industry Software S.L., Barcelona/Spain
SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
S.L. Sociedad Unipersonal, Madrid/Spain
Siemens Rail Automation S.A.U., Madrid/Spain
Siemens Renting S.A., Madrid/Spain
Siemens S.A., Madrid/Spain
100
100
100
100
International Wind Farm Development VI, S.L.,
Zamudio/Spain
100
1007
100
100
Siemens Gamesa Renewable Energy Europa S.L.,
Sistemas Energéticos Campoliva, S.A. Unipersonal,
Zamudio/Spain
100
Zaragoza/Spain
100
Siemens Gamesa Renewable Energy
Sistemas Energéticos Carril, S.L. Unipersonal,
Innovation & Technology, S.L., Sarriguren/Spain
100
Zamudio/Spain
100
Siemens Gamesa Renewable Energy
International Wind Services, S.A., Zamudio/Spain
100
Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
Sevilla/Spain
100
1 Control due to a majority of voting rights.
Zaragoza/Spain
Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
100
Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
Sistemas Energéticos Arinaga, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Samtech Iberica Engineering & Software Services S.L.,
Barcelona/Spain
100
Sistemas Energéticos Balazote, S.A. Unipersonal,
Zamudio/Spain
100
Siemens Gamesa Renewable Energy 9REN, S.L.,
Sistemas Energéticos Barandon, S.A., Valladolid/Spain
100
Madrid/Spain
100
Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
60
Siemens Gamesa Renewable Energy Apac, S.L.,
Sarriguren/Spain
100
Sistemas Energéticos Cabanelas, S.A. Unipersonal,
Santiago de Compostela/Spain
100
Siemens Gamesa Renewable Energy Eolica, S.L.,
Sarriguren/Spain
6 Significant influence due to contractual arrangements or legal circumstances.
Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
Guascor Power, S.A., Zumaia/Spain
Johannesburg/South Africa
03
Estructuras Metalicas Singulares, S.A. Unipersonal,
Tajonar/Spain
100
Siemens Healthcare Proprietary Limited, Halfway
Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
100
House/South Africa
100
Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
100
Siemens Proprietary Limited, Midrand/South Africa
70
SIEMENS WIND POWER (PTY) LTD, Midrand/South Africa
100
Gamesa Energy Transmission, S.A. Unipersonal,
Zamudio/Spain
100
Siemens Wind Power Employee Share Ownership Trust,
Midrand/South Africa
03
Siemens Employee Share Ownership Trust,
Gerr Grupo Energético XXI, S.A. Unipersonal,
Barcelona/Spain
677
100
Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
1007
Dresser-Rand Service Centre (Pty) Ltd.,
Midrand/South Africa
100
Convertidor Solar Trescientos Veinte, S.L.U., Madrid/Spain
Convertidor Solar Trescientos, S. L. U., Madrid/Spain
Convertidor Solar Uno, S. L. U., Madrid/Spain
100
100
100
Dresser-Rand Southern Africa (Pty) Ltd.,
Midrand/South Africa
100
Gamesa Wind South Africa (Proprietary) Limited,
Cape Town/South Africa
100
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
03
Desimpacto de Purines Altorricón S.A., Altorricón/Spain
Desimpacto de Purines Turégano, S.A., Turégano/Spain
Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
Empresa de Reciclajes de Residuos Ambientales, S.A.,
Vitoria-Gasteiz/Spain
70
100
100
Adwen Offshore, S.L., Zamudio/Spain
Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
in %
707,12
Guascor Explotaciones Energéticas, S.A.,
Vitoria-Gasteiz/Spain
Siemens Gamesa Renewable Energy Invest, S.A.,
Zamudio/Spain
100
100
Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
100
Siemens Gamesa Renewable Energy Latam, S.L.,
Sarriguren/Spain
100
Guascor Isolux AIE, Vitoria-Gasteiz/Spain
607,12
Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
59
Guascor Power Investigacion y Desarollo, S.A.,
Vitoria-Gasteiz/Spain
100
Siemens Gamesa Renewable Energy Wind Farms, S.A.,
Zamudio/Spain
100
September 30, 2017
100
in %
September 30, 2017
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
111
Equity interest
Equity interest
Guascor Borja AIE, Zumaia/Spain
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
4 No control due to contractual arrangements or legal circumstances.
100
Zamudio/Spain
100
Mentor Graphics Tunisia SARL, Tunis/Tunisia
100
Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
Zamudio/Spain
Siemens S.A., Tunis/Tunisia
100
100
Siemens Finansal Kiralama A.S., Istanbul/Turkey
100
Sistemas Energéticos Sierra de Las Estancias,
Siemens Gamesa Turkey Renewable Energy Limited
S.A. Unipersonal, Sevilla/Spain
100
Company, Istanbul/Turkey
100
Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
United Republic of
100
Sistemas Energéticos Monte Genaro, S.L.U.,
78
100
100
Siemens Industry Software AG, Zurich/Switzerland
100
Sistemas Energéticos Loma del Reposo, S.L. Unipersonal,
Zamudio/Spain
Siemens Postal, Parcel & Airport Logistics AG,
100
Zurich/Switzerland
100
Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
Sevilla/Spain
Siemens Power Holding AG, Zug/Switzerland
100
100
Siemens Schweiz AG, Zurich/Switzerland
100
Sistemas Energéticos Mansilla, S.L.,
systransis AG, Risch/Switzerland
100
Villarcayo de Merindad de Castilla la Vieja/Spain
28
Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
Zamudio/Spain
Sistemas Energéticos Sierra del Carazo, S.L.U.,
Zamudio/Spain
in %
September 30, 2017
Equity interest
in %
Dresser-Rand Turkmen Company,
Ashgabat/Turkmenistan
100
Materials Solutions Holdings Limited,
Frimley, Surrey/United Kingdom
100
100% foreign owned subsidiary "Siemens Ukraine",
Materials Solutions Limited,
Kiev/Ukraine
100
Frimley, Surrey/United Kingdom
100
Gamesa Ukraine, LLC, Kiev/Ukraine
100
Mentor Graphics (UK) Limited,
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
Equity interest
100
September 30, 2017
113
100
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
Siemens Wind Power Rüzgar Enerjisi Anonim Sirketi,
Kartal/Istanbul/Turkey
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10
Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
114
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
Siemens Healthcare AG, Zurich/Switzerland
Sistemas Energéticos Tomillo, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Sistemas Energéticos del Sur S.A., Sevilla/Spain
70
Sistemas Energéticos del Umia, S.A. Unipersonal,
Telecomunicación, Electrónica y Conmutación S.A.,
Madrid/Spain
100
Santiago de Compostela/Spain
100
Fanbyn2 Vindenergi AB, Solna/Sweden
100
Sistemas Energéticos Edreira, S.A. Unipersonal,
Gamesa Wind Sweden AB, Stockholm/Sweden
100
Santiago de Compostela/Spain
100
Lindom Vindenergi AB, Solna/Sweden
100
Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
100
100
Zamudio/Spain
100
5 No significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens AG is a shareholder with unlimited liability of this company.
11
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
112 Consolidated Financial Statements
Equity interest
September 30, 2017
in %
September 30, 2017
Equity interest
in %
Sistemas Energéticos Cuntis, S.A. Unipersonal,
Santiago de Compostela/Spain
100
Sistemas Energéticos Tablero Tabordo, S.L.,
Las Palmas de Gran Canaria/Spain
Sistemas Energéticos de Tarifa, S.L. Unipersonal,
100
Lingbo SPW AB, Solna/Sweden
Sistemas Energéticos Finca San Juan, S.L.U.,
Las Palmas de Gran Canaria/Spain
100
Dresser Rand Sales Company GmbH, Zurich/Switzerland
100
Sistemas Energéticos Jaralón, S.A. Unipersonal,
Huba Control AG, Würenlos/Switzerland
100
Zamudio/Spain
100
Komykrieng AG, Zurich/Switzerland
100
Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
100
Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
Polarion AG, Zurich/Switzerland
100
100
Villanueva de Gállego/Spain
90
100
100
Siemens Wind Power AB, Upplands Väsby/Sweden
100
Mentor Graphics (Scandinavia) AB, Kista/Sweden
100
Las Palmas de Gran Canaria/Spain
100
Siemens AB, Upplands Väsby/Sweden
100
Sistemas Energéticos Fonseca, S.A. Unipersonal,
Siemens Financial Services AB, Stockholm/Sweden
100
Zamudio/Spain
100
Siemens Healthcare AB, Stockholm/Sweden
100
Sistemas Energéticos Fuerteventura, S.A. Unipersonal,
Siemens Industrial Turbomachinery AB, Finspång/Sweden
100
San Cristóbal de La Laguna/Spain
100
Siemens Industry Software AB, Kista/Sweden
Sistemas Energeticos Islas Canarias, S.L.U.,
Newbury, Berkshire/United Kingdom
San Cristóbal de La Laguna/Spain
Crabtree South Africa Pty. Limited, Midrand/South Africa
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
109
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Siemens D-R Holding II B.V., The Hague/Netherlands
100
5 No significant influence due to contractual arrangements or legal circumstances.
Siemens Finance B.V., The Hague/Netherlands
4 No control due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
Siemens Healthcare Limited Liability Partnership,
Omnetric B.V., The Hague/Netherlands
Almaty/Kazakhstan
100
Pollux III B.V., Amsterdam/Netherlands
100
100
100
100
Siemens TOO, Almaty/Kazakhstan
100
Siemens Diagnostics Holding II B.V.,
Siemens Gamesa Renewable Energy Limited,
Nairobi/Kenya
The Hague/Netherlands
100
Siemens D-R Holding B.V., The Hague/Netherlands
100
100
1 Control due to a majority of voting rights.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
NEM Energy B.V., Zoeterwoude/Netherlands
100
100
Siemens Healthineers Holding III B.V.,
Siemens Wind Power Sp. z o.o., Warsaw/Poland
100
The Hague/Netherlands
100
Smardzewo Windfarm Sp. z o.o., Slawno/Poland
100
Siemens Industry Software B.V.,
Ujazd Sp. z o.o., Warsaw/Poland
100
's-Hertogenbosch/Netherlands
100
Siemens Gamesa Renewable Energy, S.A.,
Siemens International Holding B.V.,
Venda do Pinheiro/Portugal
100
The Hague/Netherlands
100
Siemens Healthcare, Lda., Amadora/Portugal
100
Gamesa Energia Polska Sp. z o.o., Warsaw/Poland
Lichnowy Windfarm Sp. z o.o., Warsaw/Poland
Siemens Sp. z o.o., Warsaw/Poland
The Hague/Netherlands
100
Siemens Financieringsmaatschappij N.V.,
Mentor Graphics Polska Sp. z o.o., Poznan/Poland
100
The Hague/Netherlands
100
Osiek Sp. z o.o., Warsaw/Poland
100
Siemens Gas Turbine Technologies Holding B.V.,
Siemens Finance Sp. z o.o., Warsaw/Poland
100
The Hague/Netherlands
65
65
Siemens Healthcare Sp. z o.o., Warsaw/Poland
100
Siemens Healthcare Nederland B.V.,
Siemens Industry Software Sp. z o.o., Warsaw/Poland
100
100
100
100
Eindhoven/Netherlands
Siemens Product Lifecycle Management Software 2 (IL)
Siemens d.o.o., Podgorica/Montenegro
100
Ltd., Airport City/Israel
100
Gamesa Morocco, SARL, Tangier/Morocco
100
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
Guascor Maroc, S.A.R.L., Agadir/Morocco
1007
9REN Services Italia S.r.I., Milan/Italy
100
Dresser-Rand Italia S.r.I., Tribogna/Italy
100
Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
Siemens Healthcare SARL, Casablanca/Morocco
100
100
Mentor Graphics Torino S.R.L., Turin/Italy
100
100
Cybercity/Mauritius
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
100
Mentor Graphics Development Services (Israel) Ltd.,
Rehovot/Israel
Dresser-Rand Holding (Delaware) LLC, SARL,
100
Luxembourg/Luxembourg
100
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
100
TFM International S.A. i.L., Luxembourg/Luxembourg
100
Siemens HealthCare Ltd., Rosh HaAyin/Israel
100
Siemens Industry Software Ltd., Airport City/Israel
100
Siemens Gamesa Renewable Energy, SARL,
Nouakchott/Mauritania
100
Siemens Israel Ltd., Rosh HaAyin/Israel
100
Siemens Gamesa Renewable Energy, Ltd,
1007
Trench Italia S.r.I., Savona/Italy
Parco Eolico Banzy S.r.I., Rome/Italy
Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
Siemens S.A., Casablanca/Morocco
Dresser-Rand B.V., Spijkenisse/Netherlands
100
Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
100
Dresser-Rand International B.V., Spijkenisse/Netherlands
100
Siemens Renting s.r.l. in Liquidazione, Milan/Italy
100
Dresser-Rand Services B.V., Spijkenisse/Netherlands
100
Siemens S.p.A., Milan/Italy
100
Flowmaster Group NV, Eindhoven/Netherlands
100
Siemens Transformers S. p.A., Trento/Italy
100
Mentor Graphics (Netherlands) B.V.,
Siemens Wind Power S.r.I., Milan/Italy
100
100
100
Siemens Industry Software S.r.I., Milan/Italy
Spijkenisse/Netherlands
100
100
Parco Eolico Manca Vennarda S.r.I., Rome/Italy
100
Siemens Wind Energy, SARL, Casablanca/Morocco
100
Samtech Italia S.r.I., Milan/Italy
100
Siemens Wind Power Blades, SARL AU, Tangier/Morocco
100
Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
100
Castor III B.V., Amsterdam/Netherlands
100
Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
100
D-R International Holdings (Netherlands) B.V.,
Siemens Healthcare S.r.I., Milan/Italy
100
100
1007
Siemens Medical Solutions Diagnostics Holding | B.V.,
The Hague/Netherlands
Madrid/Spain
100
1007
Convertidor Solar Doscientos Noventa y Nueve, S.L.U.,
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
51
Madrid/Spain
100
Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
501
Convertidor Solar Doscientos Noventa y Siete, S.L.U.,
ISCOSA Industries and Maintenance Ltd.,
Madrid/Spain
100
Riyadh/Saudi Arabia
51
Convertidor Solar G.F. Dos, S.L.U., Madrid/Spain
100
Siemens Healthcare Limited, Riyadh/Saudi Arabia
Technologies of Rail Transport Limited Liability Company,
Moscow/Russian Federation
51
Convertidor Solar Ciento Veintisiete, S.L.U.,
100
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens AG is a shareholder with unlimited liability of this company.
11
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
110 Consolidated Financial Statements
Equity interest
September 30, 2017
in %
September 30, 2017
Siemens Healthcare Limited Liability Company,
Moscow/Russian Federation
Aljaraque Solar, S.L., Madrid/Spain
Equity interest
in %
100
4 No control due to contractual arrangements or legal circumstances.
Convertidor Solar G.F. Tres, S. L.U, Madrid/Spain
Siemens Ltd., Riyadh/Saudi Arabia
Bratislava/Slovakia
100
Convertidor Solar Trescientos Sesenta y Nueve, S.L.U.,
San Cristóbal de La Laguna/Spain
100
Siemens Healthcare s.r.o., Bratislava/Slovakia
100
Siemens s.r.o., Bratislava/Slovakia
100
Convertidor Solar Trescientos Sesenta y Ocho, S.L.U.,
San Cristóbal de La Laguna/Spain
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Siemens d.o.o., Ljubljana/Slovenia
100
Convertidor Solar Trescientos Sesenta y Siete, S.L.U.,
San Cristóbal de La Laguna/Spain
100
Siemens Healthcare d.o.o., Ljubljana/Slovenia
100
Convertidor Solar Trescientos Setenta, S.L.U.,
Siemens Convergence Creators, s. r. o.,
100
100
60
51
Convertidor Solar G.F. Uno S. L. U., Madrid/Spain
100
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
51
Convertidor Solar Trescientos Diecinueve, S.L.U.,
Siemens d.o.o. Beograd, Belgrade/Serbia
100
Madrid/Spain
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Convertidor Solar Trescientos Dieciocho, S.L.U.,
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
100
Madrid/Spain
100
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
60
Convertidor Solar Trescientos Diecisiete, S.L.U.,
Madrid/Spain
Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
1 Control due to a majority of voting rights.
GER Baneasa, S.R.L., Bucharest/Romania
100
GER Baraganu, S.R.L, Bucharest/Romania
100
TASS International Safety Center B.V.,
GER Independenta, S.R.L., Bucharest/Romania
Mentor Graphics Romania SRL, Bucharest/Romania
100
100
Helmond/Netherlands
100
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
TASS International Software and Services B.V.,
Bucharest/Romania
100
Rijswijk/Netherlands
100
TASS International Software B.V., Rijswijk/Netherlands
100
Siemens Convergence Creators S.R.L., Brasov/Romania
Siemens Healthcare S.R.L., Bucharest/Romania
100
100
Gamesa Wind Romania, S.R.L., Bucharest/Romania
Gamesa Energy Romania, S.R.L., Bucharest/Romania
100
Siemens Nederland N.V., The Hague/Netherlands
100
Siemens Wind Power B.V., The Hague/Netherlands
100
TASS International B.V., Rijswijk/Netherlands
100
TASS International Homologations B.V.,
Helmond/Netherlands
100
TASS International Mobility Center B.V.,
Helmond/Netherlands
100
888888
Lisbon/Portugal
100
Siemens S.A., Amadora/Portugal
100
Siemens W.L.L., Doha/Qatar
402
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
100
St. Petersburg/Russian Federation
100
Gamesa Pakistan (Private) Limited, Karachi/Pakistan
1007
000 Siemens Gas Turbine Technologies,
Mentor Graphics Pakistan Development (Private) Limited,
Lahore/Pakistan
Leningrad Oblast/Russian Federation
100
100
000 Siemens Industry Software,
Siemens Healthcare (Private) Limited, Lahore/Pakistan
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
AXIT Sp. z o.o., Wroclaw/Poland
100
Moscow/Russian Federation
100
75
100
000 Siemens Transformers, Voronezh/Russian Federation
Siemens Finance LLC, Vladivostok/Russian Federation
100
100
51
Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
Siemens L.L.C., Muscat/Oman
100
Siemens Industry Software S.R.L., Brasov/Romania
100
Siemens Ltd., Lagos/Nigeria
100
Siemens S.R.L., Bucharest/Romania
100
Dresser-Rand AS, Kongsberg/Norway
100
SIMEA SIBIU S.R.L., Sibiu/Romania
100
Siemens AS, Oslo/Norway
100
000 Legion II, Moscow/Russian Federation
100
Siemens Healthcare AS, Oslo/Norway
100
000 Siemens, Moscow/Russian Federation
100
Siemens Wind Power AS, Oslo/Norway
000 Siemens Elektroprivod,
100
Kiev/Ukraine
100
100
100
Siemens Medical Solutions USA, Inc.,
Omnetric Corp., Wilmington, DE/United States
100
Wilmington, DE/United States
100
P.E.T.NET Houston, LLC, Austin, TX/United States
51
Siemens Molecular Imaging, Inc.,
PETNET Indiana LLC, Indianapolis, IN/United States
501
Wilmington, DE/United States
100
PETNET Solutions Cleveland, LLC,
Siemens Postal, Parcel & Airport Logistics LLC,
Wilmington, DE/United States
63
Wilmington, DE/United States
Siemens Industry, Inc., Wilmington, DE/United States
100
Nimbus Technologies, LLC, Bingham Farms,
MI/United States
Wilmington, DE/United States
Wilmington, DE/United States
100
Mentor Graphics Corporation,
Siemens Government Technologies, Inc.,
Wilsonville, OR/United States
100
Wilmington, DE/United States
100
Mentor Graphics Global Holdings, LLC,
Siemens Healthcare Diagnostics Inc.,
Wilmington, DE/United States
100
Los Angeles, CA/United States
100
Navitas Energy Inc, Minneapolis, MN/United States
97
Siemens Healthcare Laboratory, LLC,
NEM USA Corp., Wilmington, DE/United States
100
100
100
PETNET Solutions, Inc., Knoxville, TN/United States
Siemens Power Generation Service Company, Ltd.,
Siemens Credit Warehouse, Inc.,
TASS International Inc., Livonia, MI/United States
100
Wilmington, DE/United States
100
Wheelabrator Air Pollution Control Inc.,
Siemens Demag Delaval Turbomachinery, Inc.,
Baltimore, MD/United States
100
Wilmington, DE/United States
100
Whitehall Wind, LLC, Missoula, MT/United States
100
Siemens Electrical, LLC, Wilmington, DE/United States
100
Wind Portfolio Memberco, LLC, Dover, DE/United States
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
100
100
100
Pocahontas Prairie Wind, LLC, Wilmington, DE/United States
100
Wilmington, DE/United States
100
Pocahontas Wind, LLC, Dover, DE/United States
100
Siemens Product Lifecycle Management Software Inc.,
Siemens Capital Company LLC,
Wilmington, DE/United States
100
Wilmington, DE/United States
100
Siemens Convergence Creators Corp.,
Siemens Public, Inc., Wilmington, DE/United States
Siemens USA Holdings, Inc., Wilmington, DE/United States
100
100
Wilmington, DE/United States
100
Siemens Corporation, Wilmington, DE/United States
SMI Holding LLC, Wilmington, DE/United States
Synchrony, Inc., Salem, VA/United States
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Generation Services Company,
eMeter Corporation, Wilmington, DE/United States
Mannesmann Corporation, New York, NY/United States
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
116 Consolidated Financial Statements
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10
Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Equity interest
Equity interest
D-R International Sales Inc., Wilmington, DE/United States
D-R Steam LLC, Wilmington, DE/United States
Wilmington, DE/United States
1007
Salem, OR/United States
100
Siemens S.A., Guatemala/Guatemala
100
Advanced Airfoil Components LLC,
GESA Eólica Honduras, S.A., Tegucigalpa/Honduras
Siemens S.A., Tegucigalpa/Honduras
100
Wilmington, DE/United States
51
100
Central Eólica de México S.A. de C.V., Mexico City/Mexico
Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
Gesa Energia, S. de R.L. de C.V., Mexico City/Mexico
Gesa Eólica Mexico, S.A. de C.V., Mexico City/Mexico
Gesa Oax | Sociedad Anomima de Capital Variable,
Mexico City/Mexico
100
CD-adapco Battery Design LLC, Dover, DE/United States
Cedar Cap Wind, LLC, Dover, DE/United States
502
100
1007
100
Dedicated2Imaging LLC, Wilmington, DE/United States
Diversified Energy Transmissions, LLC,
80
100
100
100
September 30, 2017
Dresser-Rand Global Services, Inc.,
100
Wilmington, DE/United States
100
Siemens Gamesa Renewable Energy PA, LLC,
Dresser-Rand International Inc.,
Wilmington, DE/United States
100
Wilmington, DE/United States
100
Siemens Gamesa Renewable Energy USA, INC,
Dresser-Rand LLC, Wilmington, DE/United States
100
Dover, DE/United States
100
EcoHarmony West Wind, LLC, Minneapolis, MN/United
States
Siemens Gamesa Renewable Energy Wind, LLC,
100
Dover, DE/United States
100
Wilmington, DE/United States
Dresser-Rand Company, Bath, NY/United States
Dresser-Rand International Holdings, LLC,
100
Dresser-Rand Group Inc., Wilmington, DE/United States
100
100
in %
September 30, 2017
in %
100
Siemens Energy, Inc., Wilmington, DE/United States
100
Siemens Financial Services, Inc.,
Dresser-Rand Holding (Luxembourg) LLC,
Wilmington, DE/United States
100
888
Wilmington, DE/United States
100
Siemens Financial, Inc., Wilmington, DE/United States
100
Siemens Fossil Services, Inc., Wilmington, DE/United States
Siemens Gamesa Renewable Energy Inc.,
Couva/Trinidad and Tobago
4 No control due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
100
Gamesa Australia Pty. Ltd., Melbourne/Australia
100
J.R.B. Engineering Pty Ltd, Bayswater/Australia
100
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
Siemens Electrical Drives Ltd., Tianjin/China
100
100
85
MRX Rail Services Pty Ltd, Bayswater/Australia
100
Siemens Gamesa Renewable Pty Ltd, Bayswater/Australia
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Siemens Ltd., Bayswater/Australia
100
Siemens Factory Automation Engineering Ltd.,
Beijing/China
100
100
Siemens Finance and Leasing Ltd., Beijing/China
Siemens Financial Services Ltd., Beijing/China
100
100
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
100
60
100
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
1007
Siemens Building Technologies (Tianjin) Ltd.,
Tianjin/China
70
70
1007
Exemplar Health (SCUH) Holdings 3 Pty Limited,
Siemens Business Information Consulting Co., Ltd,
Beijing/China
100
Bayswater/Australia
100
Siemens Circuit Protection Systems Ltd.,
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Shanghai, Shanghai/China
15
75
Bayswater/Australia
100
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
Siemens Eco-City Innovation Technologies (Tianjin) Co.,
Ltd., Tianjin/China
100
1 Control due to a majority of voting rights.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
100
Luxembourg/Luxembourg
100
Siemens Limited, Dublin/Ireland
D-R Luxembourg Holding 2, SARL,
100
100
D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
Siemens Healthcare Medical Solutions Limited,
Swords, County Dublin/Ireland
492
Siemens Electrical & Electronic Services K.S.C.C.,
Kuwait City/Kuwait
100
Dublin/Ireland
Siemens Gamesa Renewable Energy Limited,
in %
September 30, 2017
in %
September 30, 2017
Equity interest
Mentor Graphics International Unlimited,
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
D-R Luxembourg Holding 3, SARL,
10012
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
118 Consolidated Financial Statements
Luxembourg/Luxembourg
100
Gamesa Israel, Ltd, Tel Aviv/Israel
D-R Luxembourg International SARL,
100
9REN Israel Ltd., Tel Aviv/Israel
100
Luxembourg/Luxembourg
Douglas/Isle of Man
5 No significant influence due to contractual arrangements or legal circumstances.
Exemplar Health (NBH) Trust 2, Bayswater/Australia
Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
Yongzhou/China
Siemens Healthcare Ltd., Dhaka/Bangladesh
100
Gamesa Uruguay S.R.L., Montevideo/Uruguay
100
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
100
Siemens S.A., Montevideo/Uruguay
100
Siemens Uruguay S.A., Montevideo/Uruguay
100
Camstar Systems Software (Shanghai) Company Limited,
Shanghai/China
100
Dresser-Rand de Venezuela, S.A.,
Maracaibo/Venezuela, Bolivarian Republic of
100
CD-adapco Software Technology (Shanghai) Co.,Ltd.,
Shanghai/China
100
Gamesa Eólica VE, C.A.,
DPC (Tianjin) Co., Ltd., Tianjin/China
1007
100
Engines Rental, S.A., Montevideo/Uruguay
Siemens Bangladesh Ltd., Dhaka/Bangladesh
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
117
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Winergy Drive Systems Corporation,
Wilmington, DE/United States
SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
100
100
100
100
Caracas/Venezuela, Bolivarian Republic of
Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
Jilin Gamesa Wind Co., Ltd., Da'an/China
100
100
Asia, Australia (218 companies)
Mentor Graphics (Shanghai) Electronic Technology Co.,
Ltd., Shanghai/China
100
Australia Hospital Holding Pty Limited, Bayswater/Australia
100
CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
100
Mentor Graphics Technology (Shenzhen) Co., Ltd.,
Shenzhen/China
100
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
1007
MWB (Shanghai) Co Ltd., Shanghai/China
65
Exemplar Health (NBH) Holdings 2 Pty Limited,
Bayswater/Australia
100
100
100
Dade Behring Hong Kong Holdings Corporation,
Tortola/Virgin Islands, British
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
Guascor Venezuela S.A.,
Shanghai/China
100
Caracas/Venezuela, Bolivarian Republic of
1007
Siemens Healthcare S.A.,
Gamesa (Beijing) Wind Energy System Development Co,
Ltd, Beijing/China
100
Caracas/Venezuela, Bolivarian Republic of
1007
Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
100
Siemens Rail Automation, C.A.,
Gamesa Wind (Tianjin) Co., Ltd., Tianjin/China
100
Caracas/Venezuela, Bolivarian Republic of
100
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
100
100
Guatemala/Guatemala
Dresser-Rand Trinidad & Tobago Limited,
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
Equity interest
September 30, 2017
in %
September 30, 2017
Equity interest
in %
Siemens Industry Software Computational Dynamics
Limited, Frimley, Surrey/United Kingdom
Siemens Soluciones Tecnologicas S.A.,
100
Siemens Industry Software Limited,
Frimley, Surrey/United Kingdom
100
Santa Cruz de la Sierra/Bolivia, Plurinational State of
Chemtech Servicos de Engenharia e Software Ltda.,
Rio de Janeiro/Brazil
100
100
Siemens Industry Software Simulation and Test Limited,
11
Frimley, Surrey/United Kingdom
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
GYM Renewables ONE Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Industrial Turbine Company (UK) Limited,
Siemens Holdings plc, Frimley, Surrey/United Kingdom
Siemens Industrial Turbomachinery Ltd.,
100
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
Siemens Healthcare Limited,
100
Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
Dresser-Rand Participações Ltda., Belém/Brazil
Industrial Turbine Brasil Geracao de Energia Ltda.,
São Luís/Brazil
100
Frimley, Surrey/United Kingdom
100
Siemens Rail Automation Holdings Limited,
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
Canoas/Brazil
100
Frimley, Surrey/United Kingdom
100
Jaguarí Energética, S.A., Jaguari/Brazil
89
Siemens Rail Automation Limited,
Frimley, Surrey/United Kingdom
100
MINUANO PROMOÇÕES E PARTICIPAÇÕES EÓLICAS LTDA.,
Belém/Brazil
1007
Siemens Rail Systems Project Holdings Limited,
Frimley, Surrey/United Kingdom
100
Siemens Protection Devices Limited,
Siemens Pension Funding (General) Limited,
100
1007
1007
100
1007
Frimley, Surrey/United Kingdom
100
Guascor do Brasil Ltda., São Paulo/Brazil
100
Siemens Pension Funding Limited,
Frimley, Surrey/United Kingdom
100
Guascor Empreendimentos Energéticos, Ltda., Belém/Brazil
Guascor Serviços Ltda., Taboão da Serra/Brazil
100
100
Siemens plc, Frimley, Surrey/United Kingdom
100
Guascor Solar do Brasil Ltda., Manaus/Brazil
907
Siemens Postal, Parcel & Airport Logistics Limited,
Guascor Wind do Brasil, Ltda., São Paulo/Brazil
Frimley, Surrey/United Kingdom
OMNETRIC Group Tecnologia e Servicos de Consultoria
Ltda., Belo Horizonte/Brazil
100
100
Siemens Middle East Limited,
SBS Pension Funding (Scotland) Limited Partnership,
Masdar City/United Arab Emirates
100
Edinburgh/United Kingdom
573
Adwen UK Limited, London/United Kingdom
100
Sellafirth Renewable Energy Park Limited,
Bargrennan Renewable Energy Park Limited,
London/United Kingdom
100
London/United Kingdom
100
Siemens Financial Services Holdings Ltd.,
CD-adapco New Hampshire Co., Ltd.,
Stoke Poges, Buckinghamshire/United Kingdom
100
Frimley, Surrey/United Kingdom
100
100
Samtech UK Limited, Frimley, Surrey/United Kingdom
100
MRX Rail Services UK Limited,
Dresser-Rand Field Operations Middle East LLC,
Abu Dhabi/United Arab Emirates
Frimley, Surrey/United Kingdom
100
492
MRX Technologies Limited, Frimley, Surrey/United Kingdom
100
Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
100
Preactor International Limited,
SD (Middle East) LLC, Dubai/United Arab Emirates
492
Frimley, Surrey/United Kingdom
100
Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
Siemens LLC, Abu Dhabi/United Arab Emirates
100
Project Ventures Rail Investments | Limited,
492
Frimley, Surrey/United Kingdom
492
GYM Renewables Limited, Frimley, Surrey/United Kingdom
Siemens Financial Services Ltd.,
Stoke Poges, Buckinghamshire/United Kingdom
Siemens Gamesa Renewable Energy Wind Limited,
London/United Kingdom
100
Flomerics Group Limited,
Siemens Healthcare Diagnostics Ltd.,
Hampton Court, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Flowmaster Limited,
Siemens Healthcare Diagnostics Manufacturing Ltd,
Alderton, Northamptonshire/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Glenouther Renewables Energy Park Limited,
Siemens Healthcare Diagnostics Products Ltd,
London/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Conworx Medical IT Ltd.,
Electrium Sales Limited, Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
100
Marlow, Buckinghamshire/United Kingdom
100
D-R Dormant Ltd., Frimley, Surrey/United Kingdom
1007
Siemens Gamesa Renewable Energy B9 Limited,
Larne/United Kingdom
100
D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
100
Siemens Gamesa Renewable Energy Limited,
Dresser-Rand (U.K.) Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Gamesa Renewable Energy UK Limited,
Dresser-Rand Company Ltd.,
London/United Kingdom
100
100
100
Siemens Rail Systems Project Limited,
Siemens Eletroeletronica Limitada, Manaus/Brazil
Siemens Healthcare S.A.S., Tenjo/Colombia
100
Siemens S.A., Tenjo/Colombia
100
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
Mexico City/Mexico
100
Gamesa Eólica Costa Rica, S.R.L., San Rafael/Costa Rica
100
Siemens Healthcare Servicios S. de R.L. de C.V.,
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
100
Mexico City/Mexico
100
Siemens S.A., San José/Costa Rica
100
Siemens Industry Software, S.A. de C.V.,
Gamesa Dominicana, S.A.S.,
Mexico City/Mexico
100
100
Santo Domingo/Dominican Republic
Servicios Eólicos Globales S. de R.L. de C.V.,
Mexico City/Mexico
Dresser-Rand Colombia S.A.S., Bogotá/Colombia
1007
Gamesa Chile SpA, Santiago de Chile/Chile
100
Nimbic Chile S.p.A., Las Condes/Chile
100
Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
Gesan I S.A.P.I de C.V., Mexico City/Mexico
100
100
Siemens Healthcare Equipos Médicos Sociedad por
Grupo Siemens S.A. de C.V., Mexico City/Mexico
100
Acciones, Santiago de Chile/Chile
100
Siemens S.A., Santiago de Chile/Chile
100
Indústria de Trabajos Eléctricos S.A. de C.V.,
Ciudad Juárez/Mexico
100
Siemens Wind Power SpA, Santiago de Chile/Chile
100
100
Gesa Oax III Sociedad Anomima de Capital Variable,
Mexico City/Mexico
100
100
Siemens Healthcare, Sociedad Anonima,
Siemens S.A., Panama City/Panama
100
Antiguo Cuscatlán/El Salvador
100
Siemens Healthcare S.A.C., Surquillo/Peru
100
Siemens S.A., Antiguo Cuscatlán/El Salvador
100
Siemens S.A.C., Lima/Peru
100
SIEMENS GAMESA RENEWABLE ENERGY INSTALLATION &
Siemens Wind Power Sociedad Anonima Cerrada, Lima/Peru
100
MAINTENANCE COMPAÑÍA LIMITADA, Guatemala/Guatemala
1007
Gamesa Puerto Rico, CRL, San Juan/Puerto Rico
100
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
100
Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
Panama City/Panama
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
Parques Eólicos del Caribe, S.A.,
Santo Domingo/Dominican Republic
57
Siemens Postal, Parcel & Airport Logistics S. de R.L. de C.V.,
Mexico City/Mexico
1007
Siemens, S.R.L., Santo Domingo/Dominican Republic
100
Siemens Servicios S.A. de C.V., Mexico City/Mexico
100
Sociedad Energética Del Caribe, S.R.L.,
Siemens, S.A. de C.V., Mexico City/Mexico
100
Higüey/Dominican Republic
100
Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
100
Siemens S.A., Quito/Ecuador
100
Siemens Healthcare Diagnostics Panama, S.A.,
100
100
Siemens Healthcare Diagnostics Manufacturing Limited,
Grand Cayman/Cayman Islands
1007
Frimley, Surrey/United Kingdom
100
Gamesa Canada ULC, Halifax/Canada
10012
VA TECH T&D UK Ltd.,
Mentor Graphics (Canada) Limited, Kanata/Canada
100
Frimley, Surrey/United Kingdom
100
Siemens Canada Limited, Oakville/Canada
100
Siemens Financial Ltd., Oakville/Canada
100
Americas (165 companies)
Siemens Healthcare Limited, Oakville/Canada
100
Artadi S.A., Buenos Aires/Argentina
100
Siemens Industry Software Ltd., Oakville/Canada
10012
100
Dresser-Rand Canada, ULC, Vancouver/Canada
100
100
Frimley, Surrey/United Kingdom
100
Siemens Transmission & Distribution Limited,
Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
100
100
Frimley, Surrey/United Kingdom
100
The Preactor Group Limited,
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens Ltda., São Paulo/Brazil
100
100
Frimley, Surrey/United Kingdom
100
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
10367079 CANADA INC., Oakville/Canada
100
VA Tech Reyrolle Distribution Ltd.,
Guascor Argentina, S.A., Buenos Aires/Argentina
100
Siemens Healthcare S.A., Buenos Aires/Argentina
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
115
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Wheelabrator Air Pollution Control (Canada) Inc.,
Ontario/Canada
100
Gesa Oax II Sociedad de Responsabilidad Limitada de
Capital Variable, Mexico City/Mexico
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
100
Siemens Postal, Parcel & Airport Logistics Ltd.,
Oakville/Canada
100
Siemens IT Services S.A., Buenos Aires/Argentina
100
Siemens Transformers Canada Inc., Trois-Rivières,
Siemens S.A., Buenos Aires/Argentina
100
Québec/Canada
100
100
Siemens Wind Power Limited, Oakville/Canada
100
Buenos Aires/Argentina
100
Trench Limited, Saint John/Canada
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
VA TECH International Argentina SA,
Sistemas Energéticos La Plana, S.A.,
100
Kintech Santalpur Wind Park Private Limited, Chennai/India
Transparent Energy Systems Private Limited, Pune/India
P.T. Jawa Power, Jakarta/Indonesia
in %
September 30, 2017
in %
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Shenzhen/China
100
Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
Shanghai/China
51
Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
70
Siemens Special Electrical Machines Co. Ltd.,
100
Changzhi/China
77
Siemens Healthcare Diagnostics Manufacturing Ltd.,
Shanghai, Shanghai/China
1007
Siemens Standard Motors Ltd., Yizheng/China
Siemens Surge Arresters Ltd., Wuxi/China
100
100
Siemens Healthcare Ltd., Shanghai/China
100
Siemens Switchgear Ltd., Shanghai, Shanghai/China
55
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Hangzhou/China
51
Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
Yixing/China
September 30, 2017
Equity interest
Equity interest
100
VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
338
Blitz F17-813 GmbH, Frankfurt
100
33
Blitz F17-814 GmbH & Co. KG, Frankfurt
100
498
BELLIS GmbH, Braunschweig
100
258
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
ATS Projekt Grevenbroich GmbH, Schüttorf
Germany (32 companies)
100
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Industry Software Sdn. Bhd., Penang/Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
ASSOCIATED COMPANIES AND JOINT VENTURES
492,7
100
100
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
Siemens Ltd., Ho Chi Minh City/Viet Nam
100
TASS International Co. Ltd., Seoul/Korea, Republic of
Dresser-Rand & Enserv Services Sdn. Bhd.,
Kuala Lumpur/Malaysia
100
Siemens Wind Power Limited, Seoul/Korea, Republic of
100
Caterva GmbH, Pullach i. Isartal
90
51
100
Trench High Voltage Products Ltd., Shenyang,
Siemens Investment Consulting Co., Ltd., Beijing/China
100
Shenyang/China
65
Siemens Logistics Automation Systems (Beijing) Co., Ltd,
Beijing/China
XS Embedded (Shanghai) Co., Ltd., Shanghai/China
100
100
Yangtze Delta Manufacturing Co. Ltd.,
Siemens Ltd., China, Beijing/China
100
Hangzhou, Hangzhou/China
51
Siemens Manufacturing and Engineering Centre Ltd.,
Shanghai/China
51
Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
Tianjin/China
Asia Care Holding Limited, Hong Kong/Hong Kong
Camstar Systems (Hong Kong) Limited,
Hong Kong/Hong Kong
1007
100
100
Siemens Medium Voltage Switching Technologies (Wuxi)
Ltd., Wuxi/China
International Wind Farm Development | Limited,
Hong Kong/Hong Kong
Shanghai/China
100
60
TASS International Co. Ltd., Shanghai/China
Siemens Transformer (Guangzhou) Co., Ltd.,
Guangzhou/China
63
Siemens High Voltage Switchgear Guangzhou Ltd.,
Guangzhou/China
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
90
94
94
Siemens Industrial Automation Products Ltd., Chengdu,
Chengdu/China
Siemens Transformer (Wuhan) Company Ltd.,
Wuhan City/China
100
100
Siemens Venture Capital Co., Ltd., Beijing/China
Siemens High Voltage Switchgear Co., Ltd., Shanghai,
Shanghai/China
100
84
Siemens Wind Power Blades (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Industry Software (Beijing) Co., Ltd.,
Beijing/China
100
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Wiring Accessories Shandong Ltd., Zibo/China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
Smart Metering Solutions (Changsha) Co. Ltd.,
Changsha/China
100
100
Siemens International Trading Ltd., Shanghai,
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Huludao/China
50
100
Siemens Gamesa Renewable Energy New Zealand Limited,
Auckland/New Zealand
VAL 208 Torino GEIE, Milan/Italy
1004,8
Siemens Venture Capital Fund 1 GmbH, Munich
498
Transfima S.p.A., Milan/Italy
66
Siemens EuroCash, Munich
428,12
Transfima GEIE, Milan/Italy
23
OWP Butendiek GmbH & Co. KG, Bremen
50
Trickster Howell LTD, Ramat/Israel
498
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
33
Reindeer Energy Ltd., Kokhav Ya'ir-Tzur Yigal/Israel
49
MeVis BreastCare GmbH & Co. KG, Bremen
20
Metropolitan Transportation Solutions Ltd.,
Rosh HaAyin/Israel
26
Maschinenfabrik Reinhausen GmbH, Regensburg
50
Magazino GmbH, Munich
864,8,11,12
Sternico GmbH, Wendeburg
328
Temir Zhol Electrification LLP, Astana/Kazakhstan
206,12
ZeeEnergie C.V., Amsterdam/Netherlands
35
Voith Hydro Holding GmbH & Co. KG, Heidenheim
50
50
208
Buitengaats Management B.V., Eemshaven/Netherlands
Infraspeed Maintainance B.V., Zoetermeer/Netherlands
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
41
Veja Mate Offshore Project GmbH, Gadebusch
50
Valeo Siemens eAutomotive GmbH, Erlangen
50
508
508
206,12
20
Energie Electrique de Tahaddart S.A., Tangier/Morocco
Buitengaats C.V., Amsterdam/Netherlands
Transrapid International Verwaltungsgesellschaft mbH i.L.,
Berlin
29
thinkstep AG, Leinfelden-Echterdingen
33
Electrogas Malta Limited, Marsaskala/Malta
554,8
Symeo GmbH, Neubiberg
49
ubimake GmbH i.L., Berlin
Frontline P.C.B. Solutions Limited Partnership,
Rehovot/Israel
258
Ludwig Bölkow Campus GmbH, Taufkirchen
Gamesa Singapore Private Limited, Singapore/Singapore
50
IFTEC GmbH & Co. KG, Leipzig
100
CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
498
FEAG Fertigungscenter für Elektrische Anlagen GmbH,
Erlangen
100
Siemens, Inc., Manila/Philippines
100
Siemens Wind Power, Inc., Manila/Philippines
624
100
EOS Uptrade GmbH, Hamburg
Siemens Power Operations, Inc., Manila/Philippines
498
egrid applications & consulting GmbH, Kempten
100
Siemens Healthcare Inc., Manila/Philippines
644,8
EBV Windpark Almstedt-Breinum GmbH & Co. Betriebs-KG,
Bremen
100
Siemens Healthcare Limited, Auckland/New Zealand
100
498
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
100
1007
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
1 Control due to a majority of voting rights.
508
LIB Verwaltungs-GmbH, Leipzig
508
in %
Equity interest
Frontline P.C.B. Solutions (1998) Ltd, Rehovot/Israel
408
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
September 30, 2017
in %
September 30, 2017
Equity interest
40
Consolidated Financial Statements 121
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
85
International Wind Farm Development II Limited,
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens AG is a shareholder with unlimited liability of this company.
11
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
120 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Zalki Renewable Private Limited, Chennai/India
1007
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Mentor Graphics Asia Pte Ltd, Singapore/Singapore
Siemens Healthcare Pte. Ltd., Singapore/Singapore
1 Control due to a majority of voting rights.
100
100
1007
100
Siemens Postal Parcel & Airport Logistics Private Limited,
Navi Mumbai/India
100
100
Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
100
100
Siemens Technology and Services Private Limited,
Koppal Renewable Private Limited, Chennai/India
Kurnool Wind Farms Private Limited, Chennai/India
100
Mumbai/India
100
100
100
100
Latur Renewable Private Limited, Chennai/India
100
Mathak Wind Farms Private Limited, Chennai/India
Mentor Graphics (India) Private Limited, New Delhi/India
Mentor Graphics (Sales and Services) Private Limited,
Bangalore/India
100
100
100
Siemens Wind Power Private Limited, Navi Mumbai/India
Thoothukudi Renewable Private Limited, Chennai/India
Tirupur Renewable Private Limited, Chennai/India
Tuljapur Wind Farms Private Limited, Chennai/India
Umrani Renewable Private Limited, Chennai/India
Uppal Renewable Private Limited, Chennai/India
VIRALIPATTI RENEWABLE Pvt. Ltd., Chennai/India
100
100
100
100
Kutch Renewable Pvt Ltd, Chennai/India
100
PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
PT. Siemens Industrial Power, Kota Bandung/Indonesia
100
Taipei/Taiwan, Province of China
100
Siemens PLM Software Computational Dynamics K.K.,
Siemens Ltd., Taipei/Taiwan, Province of China
100
Yokohama/Japan
100
Dresser-Rand (Thailand) Limited, Rayong/Thailand
100
TASS International K.K., Yokohama/Japan
100
Mentor Graphics (Korea) Co., Limited, Bundang-gu,
100
Seongnam-si, Gyeonggi-do/Korea, Republic of
Gamesa (Thailand) Co. Ltd., Bangkok/Thailand
Siemens Healthcare Limited, Bangkok/Thailand
Siemens Limited, Bangkok/Thailand
100
100
99
Siemens Healthcare Limited, Seoul/Korea, Republic of
100
Siemens Wind Power Limited, Bangkok/Thailand
100
Siemens Industry Software Ltd., Seoul/Korea, Republic of
Siemens Ltd. Seoul, Seoul/Korea, Republic of
100
Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
100
100
100
Siemens K.K., Tokyo/Japan
100
Siemens Industry Software Pte. Ltd., Singapore/Singapore
100
60
Acrorad Co., Ltd., Okinawa/Japan
63
Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
Singapore/Singapore
100
Dresser Rand Japan K.K., Tokyo/Japan
1007
Siemens Pte. Ltd., Singapore/Singapore
100
Gamesa Japan K.K., Kanagawa/Japan
Siemens Industry Software (TW) Co., Ltd.,
100
Mentor Graphics Japan Co., Ltd., Tokyo/Japan
100
Colombo/Sri Lanka
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
Siemens Healthcare Limited,
Siemens Healthcare K.K., Tokyo/Japan
100
Taipei/Taiwan, Province of China
100
Siemens Japan Holding K.K., Tokyo/Japan
Siemens Gamesa Renewable Energy Lanka Pvt. Ltd.,,
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
Wiepkenhagen
75
1007
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
119
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
Siemens Industry Software Limited, Hong Kong/Hong Kong
100
Neelagund Renewable Private Limited, Chennai/India
Nellore Renewable Pvt Ltd, Chennai/India
1007
100
Siemens Ltd., Hong Kong/Hong Kong
100
Siemens Postal, Parcel & Airport Logistics Limited,
Nirlooti Renewable Private Limited, Chennai/India
Osmanabad Renewable Private Limited, Chennai/India
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
80
Hong Kong/Hong Kong
1007
Siemens Power Automation Ltd., Nanjing/China
100
International Wind Farm Development IV Limited,
Siemens Power Plant Automation Ltd., Nanjing/China
100
Hong Kong/Hong Kong
1007
Siemens Real Estate Management (Beijing) Ltd., Co.,
International Wind Farm Development V Limited,
1007
Beijing/China
Hong Kong/Hong Kong
1007
Siemens Sensors & Communication Ltd., Dalian/China
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
100
International Wind Farm Development VII Limited,
100
Hong Kong/Hong Kong
1007
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
100
100
Hong Kong/Hong Kong
100
100
Sanchore Renewable Private Limited, Chennai/India
Sankanur Renewable Private Limited, Chennai/India
Saunshi Renewable Private Limited, Chennai/India
Siemens Convergence Creators Private Limited,
Navi Mumbai/India
100
100
1007
100
100
SIEMENS FACTORING PRIVATE LIMITED, Mumbai/India
100
Gadag Renewable Private Limited, Chennai/India
Gagodar Renewable Energy Pvt. Ltd., Chennai/India
Ghatpimpri Renewable Pvt. Ltd., Chennai/India
100
100
100
100
100
100
100
GM Navarra Wind Energy Private Limited, Chennai/India
Gudadanal Renewable Private Limited, Chennai/India
Hattarwat Renewable Private Limited, Chennai/India
Haveri Renewable Private Limited, Chennai/India
Hungund Renewable Private Limited, Chennai/India
Jalore Wind Park Private Limited, Chennai/India
Jodhpur Wind Farms Private Limited, Chennai/India
Kadapa Wind Farms Private Limited, Chennai/India
Kod Renewable Pvt. Ltd., Chennai/India
100
1007
Siemens Industry Software (India) Private Limited,
New Delhi/India
100
1007
1007
Siemens Industry Software Computational Dynamics India
Pvt. Ltd., Bangalore/India
100
Siemens Financial Services Private Limited, Mumbai/India
Siemens Gamesa Renewable Private Limited, Chennai/India
Siemens Healthcare Private Limited, Mumbai/India
Siemens Ltd., Mumbai/India
100
100
Anantapur Wind Farms Private Limited, Chennai/India
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
New Delhi/India
100
Bapuram Renewable Private Limited, Chennai/India
100
Poovani Wind Farms Pvt. Ltd., Chennai/India
100
Beed Renewable Energy Private Limited, Chennai/India
Berkely Design Automation India Private Limited,
New Delhi/India
100
Powerplant Performance Improvement Ltd.,
New Delhi/India
501
1007
100
100
Bhuj Renewable Private Limited, Chennai/India
Bidwal Renewable Private Limited, Chennai/India
CALYPTO DESIGN SYSTEMS INDIA PRIVATE LIMITED,
New Delhi/India
100
Pugalur Renewable Private Limited, Chennai/India
100
100
100
Rajgarh Wind Park Private Limited, Chennai/India
Rangareddy Renewable Pvt Ltd, Chennai/India
RSR Power Private Limited, Chennai/India
99
100
100
Channapura Renewable Private Limited, Chennai/India
Chikkodi Renewable Private Limited, Chennai/India
Devarabanda Renewable Energy Pvt. Ltd., Chennai/India
Dhone Renewable Private Limited, Chennai/India
Dresser-Rand India Private Limited, Mumbai/India
Flomerics India Private Limited, Mumbai/India
Preactor Software India Private Limited, Bangalore/India
City/Viet Nam
358
208
Equity interest
in %
Bentley Systems, Incorporated, Wilmington, DE/United States
Americas (1 company)
Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
Automotive Facilities Brainport Holding N.V., Helmond/Netherlands
Medical Systems S.p.A., Genoa/Italy
ATOS SE, Bezons/France
Uhre Vindmollelaug I/S, Brande/Denmark
Africa, Middle East (without Germany) (5 companies)
Europe, Commonwealth of Independent States (C.I.S.),
OSRAM Licht AG, Munich
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
Kyros Beteiligungsverwaltung GmbH, Grünwald
Germany (3 companies)
OTHER INVESTMENTS11
September 30, 2017
Net income
Equity
in millions of €
in millions of €
4
455
4,835
632
12
1
0
123
1913
315
17
485
33
167
7
1004,5
1004,5
2,473
101
Consolidated Financial Statements
Siemens AG is a shareholder with unlimited liability of this company.
43
Advance Gas Turbine Solutions SDN. BHD.,
Kuala Lumpur/Malaysia
218
318
50
Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
32
40
PT Asia Care Indonesia, Jakarta/Indonesia
328
Cyclos Semiconductor, Inc., Wilmington, DE/United States
Echogen Power Systems, Inc., Wilmington, DE/United States
First State Marine Wind LLC, Newark, DE/United States
Frustum, Inc., New York, NY/United States
50
258
49
27
Hickory Run Holdings, LLC, Wilmington, DE/United States
206
Power Automation Pte. Ltd., Singapore/Singapore
49
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
5 No significant influence due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
408
Modern Engineering and Consultants Co. Ltd.,
Bangkok/Thailand
32
Panda Hummel Station Intermediate Holdings I LLC,
Wilmington, DE/United States
4 No control due to contractual arrangements or legal circumstances.
19
0
0
We conducted our audit of the consolidated financial statements
and the group management report in accordance with Sec. 317
HGB and Regulation (EU) No 537/2014 (EU Audit Regulation)
as well as German generally accepted standards on auditing
promulgated by the Institut der Wirtschaftsprüfer [Institute of
Public Auditors in Germany] (IDW). We conducted the audit of
the consolidated financial statements in supplementary compli-
ance with International Standards on Auditing (ISA). Our respon-
sibilities under those laws, rules and standards are further
described in the "Auditor's responsibilities for the audit of the
consolidated financial statements and the group management
report" section of our report. We are independent of the group
companies in accordance with European and German commer-
cial law and professional provisions, and we have fulfilled our
other German ethical responsibilities in accordance with these
requirements. Furthermore, in accordance with Art. 10 (2) f) of
the EU Audit Regulation, we declare that we have not provided
any prohibited non-audit services referred to in Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinions on the consolidated financial statements and on the
group management report.
BASIS FOR OPINIONS
In accordance with Sec. 322 (3) Sentence 1 HGB, we hereby state
that our audit has not led to any reservations regarding the com-
pliance of the consolidated financial statements and the group
management report.
➤ the accompanying group management report as a whole pro-
vides a suitable view of the Group's position. In all material
respects, this group management report is consistent with the
consolidated financial statements, complies with the provi-
sions of German law and suitably presents the opportunities
and risks of future development.
> the accompanying consolidated financial statements comply,
in all material respects, with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and
the supplementary provisions of German law pursuant to
Sec. 315 a (1) HGB ["Handelsgesetzbuch": German Commercial
Code] and full IFRS as issued by the International Accounting
Standards Board (IASB), and give a true and fair view of the
net assets and financial position of the Group as of Septem-
ber 30, 2017 and its results of operations for the fiscal year
from October 1, 2016 to September 30, 2017 in accordance
with these requirements, and
In our opinion, based on the findings of our audit,
We have audited the consolidated financial statements of Siemens
Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
Group), which comprise the consolidated statements of income
and comprehensive income for the fiscal year from October 1,
2016 to September 30, 2017, the consolidated statements of
financial position as of September 30, 2017, the consolidated
statements of cash flows and changes in equity for the fiscal year
then ended, and the notes to the consolidated financial state-
ments, including a summary of significant accounting policies.
We have also audited the group management report of Siemens
Aktiengesellschaft, which is combined with the management
report of Siemens Aktiengesellschaft, for the fiscal year from
October 1, 2016 to September 30, 2017.
OPINIONS
Report on the audit of the Consoli-
dated Financial Statements and
the Group Management Report
To Siemens Aktiengesellschaft, Berlin and Munich
C.2 Independent Auditor's Report
126 Additional Information
Michael Sen
بایستیار
Klaus Helmrich
KEY AUDIT MATTERS IN THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the fiscal year from October 1,
2016 to September 30, 2017. These matters were addressed in
the context of our audit of the consolidated financial statements
as a whole, and in forming our auditor's opinion thereon, and we
do not provide a separate opinion on these matters.
Below, we describe what we consider to be the key audit matters:
Merger of the Siemens wind power business
with Gamesa
Additional Information
As part of our substantive audit procedures, we evaluated man-
agement's estimates and assumptions based on a risk-based se-
lection of a sample of contracts. Our sample particularly included
projects that are subject to significant future uncertainties and
risks, such as fixed-price or turnkey projects, projects with com-
plex technical requirements or with a large portion of materials
and services to be provided by suppliers, subcontractors or con-
sortium partners, cross-border projects, and projects with
changes in cost estimates, delays and/or low or negative mar-
gins. Our audit procedures included, among others, review of
the sample contracts and their terms and conditions including
contractually agreed partial deliveries and services, termination
Audit approach: As part of our audit, we obtained an under-
standing of the Group's internally established methods, pro-
cesses and control mechanisms for project management in the
bid and execution phase of construction contracts. We also as-
sessed the design and operating effectiveness of the account-
ing-related internal controls by examining business transactions
specific to construction contracts, from the initiation of the trans-
action through recognition in the consolidated financial state-
ments, and testing internal controls over these processes.
Revenue recognition on construction contracts
Reasons why the matter was determined to be a key audit
matter: The Group conducts a significant portion of its business
under construction contracts, particularly in the Divisions Power
and Gas, Energy Management and Mobility as well as in the Stra-
tegic Unit Siemens Gamesa Renewable Energy. Revenue from
long-term construction contracts is recognized in accordance
with IAS 11, Construction Contracts, based on the extent of prog-
ress towards completion. We consider the accounting for con-
struction contracts to be an area posing a significant risk of ma-
terial misstatement (including the potential risk of management
override of internal controls) and accordingly a key audit matter,
because management's assessments significantly impact the de-
termination of the extent of progress towards completion. These
assessments include, in particular, the scope of deliveries and
services required to fulfill contractually defined obligations, total
contract costs, remaining costs to completion and total contract
revenues, as well as contract risks including technical, political,
regulatory and legal risks. Revenues, contract costs and profit
recognition may deviate significantly from original estimates
based on new knowledge about cost overruns and changes in
project scope over the term of a construction contract.
CONSOLIDATED FINANCIAL STATEMENTS.
refer to NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL
ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS. Explanations of the transaction as well as disclosures
on the preliminary purchase price allocation are included in
→ NOTE 3 ACQUISITIONS AND DISPOSITIONS in the NOTES TO THE
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in connection with
the merger of the Siemens wind power business with Gamesa,
Mans Muril
Our audit procedures did not lead to any reservations relating to
the accounting for the merger of the Siemens wind power busi-
ness with Gamesa.
An area of focus was the determination of the fair values of tech-
nologies and the measurement of warranty obligations associ-
ated with projects. In this regard, among other procedures, we
assessed the appropriateness as audit evidence of the valuation
report as well as the reports of the external experts in the wind
power sector engaged by management through inquiries of the
experts, and evaluated whether the assumptions used reflect
the perspective of an external market participant as of the acqui-
sition date.
Our audit procedures in relation to the preliminary purchase price
allocation included, in addition to assessing the consideration
transferred by Siemens, the evaluation of the methodological
approach of the external expert engaged by management with
respect to the identification of assets acquired as well as the con-
ceptual evaluation of valuation models considering the require-
ments of IFRS 3. With the assistance of our internal valuation
specialists, we examined the valuation methods applied in terms
of the requirements defined in IFRS 13, Fair Value Measurement.
Furthermore, we analyzed whether assumptions and estimates
(such as growth rates, cost of capital, royalty rates or remaining
useful lives) used in determining the fair value of identifiable
assets acquired and liabilities assumed (including contingent
liabilities) as of the acquisition date correspond to general and
industry-specific market expectations. Additionally, we reper-
formed the calculations in the models and reconciled the expected
future cash flows underlying the measurements with, inter alia,
internal business plans.
Audit approach: As part of our group audit, among other pro-
cedures, we analyzed management's assertion that Siemens has
control over the combined entity based on agreements under
corporate law and the criteria defined in IFRS 10, Consolidated
Financial Statements.
128
127
Additional Information
Reasons why the matter was determined to be a key audit
matter: On April 3, 2017, the merger of the Siemens wind power
business with Gamesa Corporación Tecnológica S.A., Spain
("Gamesa") was completed. The Siemens Group holds 59% of the
shares while Gamesa's former shareholders hold 41% of the
shares in the combined entity. Siemens accounts for the business
combination in accordance with IFRS 3, Business Combinations.
Due to the complexity of the transaction and the associated
significant risk of material misstatement, and considering the
assumptions and estimates required to be made by management
as part of the purchase price allocation, the accounting for this
business combination was a key audit matter.
Furthermore, we analyzed the application of uniform accounting
policies of the entities of the wind power business, the tax effects
of the merger, and the processing of the initial consolidation of
the Gamesa entities, including non-controlling interests, in the
Siemens consolidation system. In addition, we evaluated the dis-
closures in the notes to the consolidated financial statements
regarding the merger of the Siemens wind power business with
Gamesa in terms of their compliance with the requirements
defined in IFRS 3.
for Siemens Aktiengesellschaft, includes a fair review of the
development and performance of the business and the position
of the Group, together with a description of the material oppor-
tunities and risks associated with the expected development
of the Group.
Cedrik Neike
Lisa Davis
11
이 의
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
Values according to the latest available local GAAP financial statements; the underlying
fiscal year may differ from the Siemens fiscal year.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
1 Control due to a majority of voting rights.
(5)
80
7
N/A
N/A
ZeeEnergie Management B.V., Eemshaven/Netherlands
Wirescan AS, Trollaasen/Norway
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
CEF-L Holding, LLC, Wilmington, DE/United States
12 Siemens AG is a shareholder with unlimited liability of this company.
A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Dr. Ralf P. Thomas
Momen
Janina Kugel
Hel
Dr. Roland Busch
27
? 
Pul
Joe Kaeser
13
Ни
Munich, November 27, 2017
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial Statements
give a true and fair view of the assets, liabilities, financial posi-
tion and profit or loss of the Group, and the Group Management
Report, which has been combined with the Management Report
C.1 Responsibility Statement
Additional Information
C.
124 Consolidated Financial Statements
N/A = No financial data available.
Siemens Aktiengesellschaft
The Managing Board
46
10
508
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
508
Hydrophytic, S.L., Vitoria-Gasteiz/Spain
574,8
Parallel Graphics Ltd., Dublin/Ireland
308
Generación Eólica Extremeña, S.L., Plasencia/Spain
48
508
Vitoria-Gasteiz/Spain
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
37
Panda Stonewall Intermediate Holdings I, LLC,
Wilmington, DE/United States
514
Barcelona/Spain
in %
September 30, 2017
in %
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
Vassiliko/Greece
Nertus Mantenimiento Ferroviario y Servicios S.A.,
Equity interest
Equity interest
122 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
11
Siemens AG is a shareholder with unlimited liability of this company.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
September 30, 2017
Gate Solar Gestión, S.L. Unipersonal,
25
TRIXELL SAS, Moirans/France
ZAO Interautomatika, Moscow/Russian Federation
ZAO Systema-Service, St. Petersburg/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
Ardora, S.A., Vigo/Spain
44
Vienna/Austria
Aspern Smart City Research GmbH & Co KG,
448
258
Arelion GmbH in Liqu., Pasching b. Linz/Austria
Aspern Smart City Research GmbH, Vienna/Austria
46
49
26
Rousch (Pakistan) Power Ltd., Lahore/Pakistan
000 Transconverter, Moscow/Russian Federation
000 VIS Automation mit Zusatz „Ein Gemeinschafts-
unternehmen von VIS und Siemens",
Moscow/Russian Federation
(C.I.S.), Africa, Middle East (without Germany)
(61 companies)
Europe, Commonwealth of Independent States
50
338
Bytemark Inc., New York, NY/United States
358
Nuevas Estrategias de Mantenimiento, S.L.,
26
358
508
Explotaciones y Mantenimientos Integrales, S.L.,
Getxo/Spain
40
Compagnie Electrique de Bretagne SAS, Paris/France
238
BioMensio Oy, Tampere/Finland
45
31
Energías Renovables San Adrián de Juarros, S.A.,
San Adrián de Juarros/Spain
Meomed s.r.o., Prerov/Czech Republic
20
T-Power NV, Brussels/Belgium
508
Desgasificación de Vertederos, S.A, Madrid/Spain
258
OIL AND GAS PROSERV LLC, Baku/Azerbaijan
478
PhSiTh LLC, New Castle, DE/United States
1007
San Sebastián/Spain
London/United Kingdom
40
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
Primetals Technologies, Limited,
508
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
508
Saitong Railway Electrification (Nanjing) Co., Ltd.,
Nanjing/China
508
Odos Imaging Limited, Edinburgh/United Kingdom
50
London/United Kingdom
25
25
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Beijing/China
49
Aberdeen/United Kingdom
50
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
Tianjin ZongXi Traction Motor Ltd., Tianjin/China
Xi'An X-Ray Target Ltd., Xi'an/China
33
Baja Wind US LLC, Wilmington, DE/United States
26
Bangalore International Airport Ltd., Bangalore/India
50
Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
50
Lincs Renewable Energy Holdings Limited,
Zhi Dao Railway Equipment Ltd., Taiyuan/China
50
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
498
Joint Venture Service Center, Chirchik/Uzbekistan
43
50
50
Americas (17 companies)
25
RWG (Repair & Overhauls) Limited,
308
278
308
308
218
Powerit Holdings, Inc., Seattle, WA/United States
Rether networks, Inc., Berkeley, CA/United States
USARAD Holdings, Inc., Fort Lauderdale, FL/United States
Veo Robotics, Inc., Cambridge, MA/United States
Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
Caracas/Venezuela, Bolivarian Republic of
Windar Renovables, S.L., Avilés/Spain
508
408
Tusso Energía, S.L., Sevilla/Spain
Solucia Renovables 1, S.L., Lebrija/Spain
50
Soleval Renovables S.L., Sevilla/Spain
50
50
Swindon, Wiltshire/United Kingdom
Sistemes Electrics Espluga, S.A., Barcelona/Spain
50
WS Tech Energy Global S.L., Viladecans/Spain
32
Galloper Wind Farm Holding Company Limited,
ChinaInvent (Shanghai) Instrument Co., Ltd,
Shanghai/China
49
49
Ethos Energy Group Limited, Aberdeen/United Kingdom
298
PHM Technology Pty Ltd, Melbourne/Australia
London/United Kingdom
50
33
Exemplar Health (NBH) Partnership, Melbourne/Australia
Exemplar Health (SCUH) Partnership, Sydney/Australia
Cross London Trains Holdco 2 Limited,
5012
Interessengemeinschaft TUS, Männedorf/Switzerland
Asia, Australia (21 companies)
50
Certas AG, Zurich/Switzerland
50
> Allianz Deutschland AG, Munich
> OSRAM Licht AG, Munich
> Daimler AG, Stuttgart
Positions outside Germany:
> NXP Semiconductors B.V., Netherlands
German positions:
(Deputy Chairman)
German positions:
Positions outside Germany:
> Atos SE, France
Positions outside Germany:
> Penske Automotive Group Inc., USA
German positions:
> Deutsche Messe AG, Hanover
> EOS Holding AG, Krailling
>inpro Innovationsgesellschaft für
fortgeschrittene Produktions-
systeme in der Fahrzeugindustrie
mbH, Berlin
German positions:
> OSRAM GmbH, Munich
(Deputy Chairman)
(as of September 30, 2017)
April 1,
2017
or in comparable domestic or foreign controlling bodies of business enterprises
> Pensions-Sicherungs-Verein
Versicherungsverein auf Gegen-
seitigkeit, Cologne
Positions outside Germany:
March 7,
1973
May 31,
2020
Siegfried Russwurm,
Prof. Dr.-Ing.
June 27,
1963
January 1,
2008
March 31,
2017
(until March 31, 2017)
Michael Sen
November
17, 1968
April 1,
2017
March 31,
2022
Ralf P. Thomas,
Dr. rer. pol.
March 7,
1961
138 Additional Information
Memberships in supervisory boards whose establishment is required by law
External positions
> Konecranes Plc., Finland
Österreich, Austria
Positions outside Germany:
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
> Siemens Ltd., China (Chairman)
> Siemens Ltd., India
September 18, September 17,
2013
2023
German positions:
German positions:
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
German positions:
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
> Siemens Aktiengesellschaft
Cedrik Neike
> Siemens Corp., USA (Deputy Chairman)
> Siemens Gamesa Renewable Energy
S.A., Spain
> Siemens Gamesa Renewable Energy
S.A., Spain
Siemens Schweiz AG, Switzerland
(Chairman)
South Africa (Chairman)
> Siemens Proprietary Ltd.,
> Siemens Ltd., India
German positions:
> Siemens Postal, Parcel & Airport
Logistics GmbH, Constance
Positions outside Germany:
>Arabia Electric Ltd. (Equipment),
Saudi Arabia
> ISCOSA Industries and Maintenance
Ltd., Saudi Arabia (Deputy Chairman)
> Siemens Ltd., Saudi Arabia
> Siemens W.L.L., Qatar
> VA TECH T&D Co. Ltd., Saudi Arabia
Positions outside Germany:
> Siemens Corp., USA
(Chairwoman and CEO)
> Siemens Gamesa Renewable Energy
S.A., Spain
Positions outside Germany:
> Siemens AB, Sweden (Chairman)
> Siemens Aktiengesellschaft
Österreich, Austria (Chairman)
Group company positions
(as of September 30, 2017)
January 31,
2020
As the Company's top management body, the Managing Board
is committed to serving the interests of the Company and achiev-
ing sustainable growth in company value. The members of the
Managing Board are jointly responsible for the entire manage-
ment of the Company and decide on the basic issues of business
policy and corporate strategy as well as on the Company's annual
and multi-year plans.
January 12,
1970
including portfolio measures, as well as the preparation and ap-
proval of investment and divestment projects. For example, the
Committee prepared proposals for the Supervisory Board regard-
ing the acquisition of Mentor Graphics Corporation, regarding
the preparation of the public listing of the strategic unit Health-
ineers and regarding actions relating to the strategic orientation
of the Mobility Division. At its meeting on September 19, 2017,
the Committee also approved the Managing Board decision con-
cerning an investment in a combined cycle power plant project
in the United Arab Emirates and prepared the proposal for the
Supervisory Board regarding Managing Board decisions relating
to financial measures. In addition, the Innovation and Finance
Committee intensively discussed the Company's strategic orien-
tation and its innovation and technology focuses. In particular,
it discussed the activities and recommendations of the Siemens
Technology & Innovation Council.
The Audit Committee met six times. In the presence of the inde-
pendent auditors as well as the President and Chief Executive
Officer and the Chief Financial Officer, the Committee dealt with
the financial statements and the Combined Management Report
for Siemens AG and the Siemens Group. The Audit Committee
discussed the Half-year Financial Report and the quarterly state-
ments with the Managing Board and the independent auditors.
In the presence of the independent auditors, it also discussed the
report on the auditors' review of the Company's Half-year Con-
solidated Financial Statements and of its Interim Group Manage-
ment Report. The Committee recommended that the Supervisory
Board propose to the Annual Shareholders' Meeting the election
of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (Stutt-
gart, Germany) as the independent auditors. The Committee
appointed the independent auditors for fiscal 2017, defined the
audit focal points and determined the auditors' fee. The Commit-
tee monitored the selection, independence, qualification, rota-
tion and efficiency of the independent auditors. Furthermore,
the Audit Committee dealt with the Company's accounting and
accounting process, the effectiveness of its internal control sys-
tem, its risk management system and the effectiveness, re-
sources and findings of the internal audit as well as with reports
concerning potential and pending legal disputes.
DETAILED DISCUSSION OF THE AUDIT
OF THE FINANCIAL STATEMENTS
The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft (Stuttgart, Germany), audited the Annual Finan-
cial Statements of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group and the Combined Management
Report for Siemens AG and the Siemens Group for fiscal 2017 and
issued an unqualified opinion. Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft (Stuttgart, Germany) has served as inde-
pendent auditors of Siemens AG and the Siemens Group since
fiscal 2009. Katharina Breitsameter has signed as auditor since
fiscal 2016, and Thomas Spannagl has signed as auditor respon-
sible for the audit since fiscal 2014. The Annual Financial State-
ments of Siemens AG and the Combined Management Report for
Siemens AG and the Siemens Group were prepared in accordance
with the requirements of German law. The Consolidated Financial
Statements of the Siemens Group were prepared in accordance
with the International Financial Reporting Standards (IFRS) as
adopted by the EU and with the additional requirements of Ger-
man law set out in Section 315 a (1) of the German Commercial
Code (Handelsgesetzbuch). The Consolidated Financial State-
ments of the Siemens Group also comply with the IFRS as issued
by the International Accounting Standards Board (IASB). The in-
dependent auditors conducted their audit in accordance with
Section 317 of the German Commercial Code, the EU Audit Regu-
lation (Regulation (EU) No. 537/2014 of the European Parliament
and of the Council of 16 April 2014 on specific requirements re-
garding statutory audit of public-interest entities and repealing
Commission Decision 2005/909/EC, "EU Audit Regulation") and
German generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschaftsprüfer
(IDW) as well as in supplementary compliance with the Interna-
tional Standards on Auditing (ISA). The abovementioned docu-
ments as well as the Managing Board's proposal for the appropri-
ation of net income were submitted to us by the Managing Board
in advance. The Audit Committee discussed the dividend proposal
in detail at its meeting on November 7, 2017. It discussed the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report in detail at its meeting on November 28,
2017. In this context, the Audit Committee concerned itself, in
particular, with key audit matters, including the audit procedures
implemented. The audit reports prepared by the independent au-
ditors were distributed to all members of the Supervisory Board
and comprehensively reviewed at the Supervisory Board's meet-
ing on November 29, 2017, in the presence of the independent
auditors, who reported on the scope, focal points and main find-
ings of their audit, addressing, in particular, key audit matters and
the audit procedures implemented. No major weaknesses in the
Company's internal control or risk management systems were
reported. At this meeting, the Managing Board explained the
financial statements of Siemens AG and the Siemens Group as
well as the Company's risk management system. At its meeting
on November 29, 2017, the Supervisory Board also approved the
proposal to the Annual Shareholders' Meeting, taking into ac-
count the Audit Committee's recommendation regarding the
election of the independent auditors. This proposal was based on
the Audit Committee's declaration that its recommendation was
free of undue influence by third parties and that it had not en-
tered into any contractual clause that could restrict the choice
within the meaning of Art. 16, para. 6 of the EU Audit Regulation.
Additional Information
135
Additional Information
The Supervisory Board concurs with the results of the audit.
Following the definitive findings of the Audit Committee's exam-
ination and our own examination, we have no objections. The
Managing Board prepared the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements of the
Siemens Group. We approved the Annual Financial Statements
and the Consolidated Financial Statements. In view of our ap-
proval, the Annual Financial Statements of Siemens AG are
adopted as submitted. We endorsed the Managing Board's pro-
posal that the net income available for distribution be used to pay
out a dividend of €3.70 per share entitled to a dividend and that
the amount of net income attributable to shares of stock not
entitled to receive a dividend for fiscal 2017 be carried forward.
Prof. Dr. Siegfried Russwurm left the Managing Board, effective
March 31, 2017. The Supervisory Board appointed Michael Sen
and Cedrik Neike full members of the Managing Board, effective
April 1, 2017. There were no changes in the composition of the
Supervisory Board during the year under review. Effective at the
end of the day on September 30, 2017, Hans-Jürgen Hartung left
the Supervisory Board. Dorothea Simon was appointed a mem-
ber of the Supervisory Board by order of the district court of Char-
lottenburg, Germany, effective from October 1, 2017 until the end
of the Annual Shareholders' Meeting on January 31, 2018.
On behalf of the Supervisory Board, I would like to thank the
members of the Managing Board as well as the employees and
employee representatives of Siemens AG and all Group compa-
nies for their outstanding commitment and constructive cooper-
ation in fiscal 2017.
For the Supervisory Board
Gerhard Comme
Dr. Gerhard Cromme
Chairman
не
136 Additional Information
CHANGES IN THE COMPOSITION OF THE
SUPERVISORY AND MANAGING BOARDS
134
The Innovation and Finance Committee held three ordinary
and two extraordinary meetings. The focuses of its meetings
included the Committee's recommendation regarding the bud-
get for fiscal 2017 and the discussion of the Company's strategy,
The Compensation Committee met three times. It also made
one decision by written circulation. The Compensation Commit-
tee prepared, in particular, proposals for the Supervisory Board
regarding the determination of targets for variable compensa-
tion, the determination and review of the appropriateness of
Managing Board compensation and the approval of the Compen-
sation Report.
NANCE STATEMENT PURSUANT TO SECTIONS 289 A AND 315 PARA. 5 OF THE
GERMAN COMMERCIAL CODE. As part of a strategy focus, we con-
cerned ourselves comprehensively and in detail with the Compa-
ny's strategic orientation, taking into account current technology
and innovation topics and the status of the implementation of
the "Vision 2020" strategy.
At our meeting on August 2, 2017, the Managing Board reported
to us on the Company's business and financial position following
the conclusion of the third quarter. On the recommendation of
the Chairman's Committee, we extended Joe Kaeser's term of
office as a member of the Managing Board and as President and
CEO, effective from August 1, 2018, until the end of the Annual
Shareholders' Meeting that will decide on the ratification of
the acts of the members of the Managing Board for fiscal 2020.
Additional Information
The Supervisory Board considered in detail the strategic setup of
the Mobility Division and discussed the further actions planned
regarding the preparation of the public listing of the strategic
unit Healthineers. In addition, the Supervisory Board concerned
itself with the recommendations of the Siemens Technology &
Innovation Council and, in a continuation of the strategy focus
of May 3, 2017, discussed the Company's strategic orientation.
At our meeting on September 20, 2017, the Managing Board
reported to us on the state of the Company and on the business
position of the Process Industries and Drives Division and on the
business position of next47, the separate unit for startups. On the
recommendation of the Chairman's Committee, we extended
Dr. Ralf Thomas's term of office as a member of the Managing
Board, effective from September 18, 2018, until September 17,
2023. In addition, we discussed the Mobility Division's strategic
orientation. As part of our regular review, we adjusted - follow-
ing preparation and a recommendation by the Compensation
Committee the amount of Managing Board compensation for
fiscal 2018. In a further continuation of the strategy focus of
May 3, 2017, the Supervisory Board also concerned itself with the
Company's strategic orientation. Finally, we discussed the effi-
ciency review of our activities.
-
At an extraordinary meeting on September 26, 2017, the Super-
visory Board approved the planned merger of Siemens' mobility
business with the publicly listed company Alstom SA (France).
CORPORATE GOVERNANCE CODE
At our meeting on September 20, 2017, we approved an unqual-
ified Declaration of Conformity in accordance with Section 161 of
the German Stock Corporation Act (Aktiengesetz). Information
on corporate governance at Siemens is available in chapter
→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
been made permanently available to our shareholders on our
website. The current Declaration of Conformity is also available
in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
SECTIONS 289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
WORK IN THE SUPERVISORY BOARD COMMITTEES
The Supervisory Board has established seven standing commit-
tees, which prepare proposals and issues to be dealt with at its
plenary meetings. Some of the Supervisory Board's decision-mak-
ing powers have also been delegated to these committees within
the permissible legal framework. The committee chairpersons
report to the Supervisory Board on their committees' work at the
subsequent Board meetings. A list of the members and a detailed
explanation of the tasks of the individual Supervisory Board
committees are contained in chapter c.4.1 MANAGEMENT AND
CONTROL STRUCTURE.
The Chairman's Committee met seven times. It also made one
decision by written circulation. Between meetings, I discussed
topics of major importance with the members of the Chairman's
Committee. The Committee concerned itself, in particular, with
personnel topics and corporate governance issues, including the
assumption by Managing Board members of positions at other
companies and institutions.
The Nominating Committee met six times. Outside these
meetings, it also concerned itself intensively with the long-term
succession planning for the Supervisory Board and, in particu-
lar, with succession to the Chairmanship of the Supervisory
Board and to the Chairmanship of the Audit Committee. At its
meeting on January 31, 2017, the Nominating Committee ap-
proved the nomination of Jim Hagemann Snabe as a candidate
for election by the Supervisory Board to the position of Super-
visory Board Chairman, with the election to take place at the
Supervisory Board's constituent meeting after the elections to
the Supervisory Board at the Annual Shareholders' Meeting on
January 31, 2018. The Nominating Committee prepared the Su-
pervisory Board's proposal to the Annual Shareholders' Meeting
on January 31, 2018, regarding the upcoming regular election
of seven shareholder representatives on the Supervisory Board.
When searching for and evaluating candidates, the Nominating
Committee took into consideration - in addition to the require-
ments of the German Stock Corporation Act, the German Cor-
porate Governance Code and the Bylaws for the Supervisory
Board - the targets established by the Supervisory Board for its
composition and the profile of skills and expertise defined by
the Supervisory Board for its composition. The Nominating
Committee was supported in its activities by an external person-
nel consultant.
The Compliance Committee met four times. It primarily dis-
cussed the quarterly reports and the annual report of the Chief
Compliance Officer.
The Mediation Committee had no need to meet.
C.4 Corporate Governance
February 1,
2015
C.4.1 Management
Siemens AG is subject to German corporate law. Therefore, it has
a two-tier board structure, consisting of a Managing Board and a
Supervisory Board.
Roland Busch,
November 22, April 1,
Dr. rer. nat.
1964
2011
March 31,
2021
Lisa Davis
Term expires
At the
end of the
2021 Annual
Sharehold-
ers' Meeting
October 15,
1963
July 31,
2019
Klaus Helmrich
May 24,
1958
April 1,
2011
March 31,
2021
Janina Kugel
August 1,
2014
First
appointed
May 1,
2006
June 23,
1957
Chief Executive Officer
C.4.1.1 MANAGING BOARD
The Managing Board prepares the Company's Quarterly State-
ments and Half-year Financial Report, the Annual Financial
Statements of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group and the Combined Management
Report of Siemens AG and the Siemens Group. In addition, the
Managing Board ensures that the Company adheres to statutory
requirements, official regulations and internal Company policies
and works to achieve compliance with these provisions and pol-
icies within the Siemens Group. The Managing Board has estab-
lished a comprehensive compliance management system. De-
tails are available on the Siemens Global Website at www.
SIEMENS.COM/SUSTAINABILITY-FIGURES
The Managing Board and the Supervisory Board cooperate
closely for the benefit of the Company. The Managing Board in-
forms the Supervisory Board regularly, comprehensively and
without delay on all issues of importance to the Company with
regard to strategy, planning, business development, financial
position, earnings, compliance and risks. When filling managerial
positions at the Company, the Managing Board takes diversity
into consideration and, in particular, aims for an appropriate con-
sideration of women and internationality.
The Supervisory Board has defined for a second time a target for
the proportion of women in the Managing Board of Siemens AG
and has set a deadline for its attainment. The Managing Board
has defined again targets for the proportion of women at the
two management levels below the Managing Board and has set
a deadline for their attainment. Details are set out in chapter
→ C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN ON THE MANAGING BOARD
AND AT THE TWO MANAGEMENT LEVELS IMMEDIATELY BELOW THE MANAGING
BOARD.
The Managing Board has one committee, the Equity and Com-
pensation Committee. This committee, to which the former
Equity and Employee Stock Committee has been transferred,
comprises the President and CEO, the Chief Financial Officer,
the Chief Human Resources Officer and, as a consultative mem-
ber, the Chief of Staff of Siemens AG. It is responsible for the
duties assigned to it by decision of the Managing Board and has
assumed the duties previously assigned to the Equity and Em-
ployee Stock Committee - including, in particular, duties in con-
nection with capital measures and equity-linked financial instru-
ments, relating to the compensation of the employees and
managers of the Siemens Group (except for the compensation
of the members of the Managing Board and Top Management)
and relating to share-based compensation components and em-
ployee share plans.
The Equity and Compensation Committee comprises Joe Kaeser
(Chairman), Dr. Ralf P. Thomas, Janina Kugel and, as a consultative
member, Mariel von Schumann (as of September 30, 2017).
Information on the areas of responsibility and the curricula vitae of
the members of the Managing Board are available on the Siemens
Global Website at www.SIEMENS.COM/COMPANY-STRUCTURE. Infor-
mation on the compensation paid to the members of the Managing
Board is provided in chapter → A.10 COMPENSATION REPORT.
Additional Information
137
Members of the Managing Board and positions
held by Managing Board members
In fiscal 2017, the Managing Board comprised the following
members:
Name
Date of birth
Joe Kaeser
President and
and control structure
133
The Supervisory Board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and the group management report.
At our meeting on May 3, 2017, the Managing Board reported to
us on the Company's current business and financial position fol-
lowing the conclusion of the second quarter. The Supervisory
Board defined the target – effective from July 1, 2017 - for the
proportion of women on the Managing Board by June 30, 2022,
as explained in greater detail in chapter c.4.2 CORPORATE GOVER-
Management is responsible for the following other information:
➤ the Responsibility Statement in chapter → c.1 of the Annual
Report 2017, and
> Corporate Governance in chapter c.4 of the Annual Report
2017.
The Supervisory Board is responsible for the following other
information:
> the Report of the Supervisory Board in chapter
Annual Report 2017.
C.3 of the
130
Additional Information
Other information
Our opinions on the consolidated financial statements and the
group management report do not cover the other information
and we do not express an opinion or any other form of assurance
conclusion thereon.
> is materially inconsistent with the consolidated financial
statements, the group management report or our knowledge
obtained in the audit, or
> otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are re-
quired to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THE
SUPERVISORY BOARD FOR THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE GROUP
MANAGEMENT REPORT
Management is responsible for the preparation of consolidated
financial statements that comply, in all material respects, with
IFRSS as adopted by the EU and the supplementary provisions of
German law pursuant to Sec. 315 a (1) HGB and full IFRS as issued
by the IASB, for the preparation of consolidated financial state-
ments that give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance
with these requirements and for such internal control as manage-
ment determines is necessary to enable the preparation of con-
solidated financial statements that are free from material mis-
statement, whether due to fraud or error.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
In addition, management is responsible for the preparation of
the group management report that as a whole provides a suitable
view of the Group's position and, in all material respects, is con-
sistent with the consolidated financial statements, complies with
the provisions of German law and suitably presents the opportu-
nities and risks of future development and for such arrangements
and measures (systems) as management deems necessary to
enable the preparation of a group management report in accor-
dance with the applicable provisions of German law and to fur-
nish sufficient appropriate evidence for the statements in the
group management report.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT
OF THE CONSOLIDATED FINANCIAL STATEMENTS
AND THE GROUP MANAGEMENT REPORT
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
whether the group management report as a whole provides a
suitable view of the Group's position and, in all material respects,
is consistent with the consolidated financial statements and our
audit findings, complies with the provisions of German law and
suitably presents the opportunities and risks of future develop-
ment, and to issue an independent auditor's report that includes
our opinions on the consolidated financial statements and the
group management report.
In connection with our audit, our responsibility is to read the
other information, and, in doing so, consider whether the other
information
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for uncer-
tain tax positions and deferred taxes, refer to → NOTE 2 SIGNIFI-
CANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in
the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. With respect
to disclosures for deferred tax assets and liabilities, refer to
→ NOTE 7 INCOME TAXES in the NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.
Our audit procedures did not lead to any reservations relating to
the accounting for uncertain tax positions and deferred taxes.
In assessing the recoverability of deferred tax assets, we particu-
larly analyzed management's assumptions with respect to pro-
jected future taxable income and compared them to internal
business plans. As part of our audit procedures for deferred tax
liabilities, we especially assessed management's assumptions
regarding the permanent reinvestment of undistributed earnings
of subsidiaries considering the dividend plans.
-
rights, penalties for delay and breach of contract as well as liqui-
dated damages. In order to evaluate whether revenues were rec-
ognized on an accrual basis for the selected projects, we ana-
lyzed billable revenues and corresponding cost of sales to be
recognized in the statement of income in the reporting period
considering the extent of progress towards completion, and ex-
amined the accounting for the associated positions in the state-
ment of financial position. Considering the requirements of
IAS 11, we also assessed the accounting for contract amendments
or contractually agreed options. We further performed inquiries
of project management (both commercial and technical project
managers) with respect to the development of the projects, the
reasons for deviations between planned and actual costs, the
current estimated costs to complete the projects, and manage-
ment's assessments on probabilities that contract risks will mate-
rialize. In designing our audit procedures, we also considered
results from project audits conducted by the internal audit func-
tion. Furthermore, we obtained evidence from third parties for
selected projects (e.g. project acceptance documentation, con-
tractual terms and conditions, and legal confirmations regarding
alleged breaches of contract and asserted claims) and inspected
plant and project locations. To identify anomalies in margin de-
velopment throughout the projects' execution, we also applied
data analysis procedures.
Due to the large contract volume and risk profile, our audit pro-
cedures especially focused on large contracts for the construc-
tion of power plants on a turnkey basis, high-voltage-direct-cur-
rent solutions, the delivery of high-speed and commuter trains,
and the construction of offshore wind farms.
Our audit procedures did not lead to any reservations relating to
revenue recognition on construction contracts.
Provisions for proceedings out of or in connection
with alleged breaches of contract and compliance
violations as well as provisions for asset retirement
obligations
Reasons why the matter was determined to be a key audit
matter: We considered the accounting for provisions for pro-
ceedings out of or in connection with alleged breaches of contract
and compliance violations, including allegations of corruption
and antitrust violations, and for asset retirement obligations to
be a key audit matter. These matters are subject to inherent un-
certainties and require estimates that could have a significant
impact on the recognition and measurement of the respective
provision and, accordingly, on net assets and results of opera-
tions. Proceedings out of or in connection with alleged breaches
of contract and compliance violations are subject to uncertain-
ties because they frequently involve complex legal issues and
accordingly, considerable management judgment, in particular
when determining whether and in what amount a provision is
required to account for the risks. The uncertainties and estimates
with respect to asset retirement obligations pertain especially to
the estimated costs of decommissioning, the estimated time
frame over which cash outflows are expected, and the relevant
discount rates.
Audit approach: During our audit of the financial reporting of
proceedings out of or in connection with alleged breaches of
contract and compliance violations, we analyzed the processes
and internal controls implemented by Siemens for the identifica-
tion, assessment and accounting of legal and regulatory proceed-
ings. To determine what potentially significant pending legal
proceedings or claims asserted are known and whether manage-
ment's estimates of the expected cash outflows are reasonable,
our audit procedures included inquiries of management and
other persons within the Group entrusted with these matters,
obtaining written statements from in-house legal counsels with
respect to the assessment of estimated cash outflows and their
probability, obtaining confirmations from external legal advisors
and evaluating internal statements concerning the accounting in
the consolidated financial statements. Furthermore, we exam-
ined legal consulting expense accounts for any indications of
legal matters not yet considered, and inspected additional appro-
priate evidence.
We further considered alleged or substantiated non-compliance
with statutory provisions, official regulations and internal com-
pany policies (compliance violations) by inspecting internal and
external statements on specific matters, obtaining written state-
ments from external legal advisors, and by inquiring of the com-
pliance organization. In this regard, we, among other procedures,
evaluated the conduct and results of internal investigations by
inspecting internal reports and the measures taken to remediate
identified weaknesses, and assessed whether any risks are to be
reflected in the consolidated financial statements.
Based on the above described uncertainties, our audit proce-
dures with respect to asset retirement obligations focused on the
remediation and environmental protection liabilities for the de-
commissioning of the facilities in Hanau, Germany (Hanau facil-
ities), as well as for the nuclear research and service center in
Karlstein, Germany (Karlstein facilities). Our audit procedures
included, among others, assessing the appropriateness as audit
evidence of an independent expert's report commissioned by
Additional Information
129
management, evaluating the valuation methods used by drawing
on the expertise of our valuation specialists, and assessing the
significant estimates resulting from the long-term nature.
Through inquiries of persons entrusted with the matter and in-
spections of internal and external documents, we evaluated man-
agement's assessment that Siemens is, as of September 30, 2017,
not covered by the regulations for nuclear waste disposal which
were partly amended in fiscal year 2017 ("Gesetz zur Neuordnung
der Verantwortung in der kerntechnischen Entsorgung"), and
therefore continues to adhere to the German Atomic Energy Act
("deutsches Atomgesetz"), whereby radioactive waste resulting
from the closure of the nuclear facility must be collected and de-
livered to a government-developed final storage facility. In addi-
tion, we assessed the adjustments to the assumed inflation rates
and the changes to the applied interest yield curve in fiscal year
2017 by inquiring of management and, with the assistance of our
internal valuation specialists, by comparing the above-mentioned
changes to publicly available market data.
Furthermore, we evaluated the disclosures on proceedings out of
or in connection with alleged breaches of contract and compli-
ance violations as well as on asset retirement obligations in the
notes to the consolidated financial statements.
Our audit procedures did not lead to any reservations relating
to the accounting for proceedings out of or in connection with
alleged breaches of contract and compliance violations as well as
for asset retirement obligations.
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for provi-
sions, refer to → NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRIT-
ICAL ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS. With respect to proceedings out of or in
connection with alleged breaches of contract and compliance
violations, refer to → NOTE 21 LEGAL PROCEEDINGS. With respect to
the uncertainties and estimates relating to asset retirement obli-
gations, refer to → NOTE 17 PROVISIONS.
Uncertain tax positions and deferred taxes
Reasons why the matter was determined to be a key audit
matter: Siemens operates in numerous countries and is subject
to different local tax regulations. The accounting for uncertain
tax positions as well as deferred taxes requires management to
exercise considerable judgment and make estimates and assump-
tions, and was therefore a key audit matter. This particularly per-
tains to the measurement and completeness of uncertain tax
positions, the recoverability of deferred tax assets and the mea-
surement and completeness of deferred tax liabilities.
Audit approach: With the assistance of internal tax specialists
who have knowledge of relevant tax regulations, we assessed
management's processes and tested internal controls imple-
mented for the identification, recognition and measurement of
tax positions. As part of our audit procedures for uncertain tax
positions, we evaluated whether management's assessment of
the tax effects of significant business transactions and events in
fiscal year 2017, which could result in uncertain tax positions or
impact the measurement of existing uncertain tax positions,
comply with applicable tax law. This includes, in particular, tax
effects from the acquisition or disposal of businesses, corporate
(intragroup) restructuring activities, results of examinations by
tax authorities, and cross-border transactions including the de-
termination of transfer prices. In order to assess measurement
and completeness, we also obtained confirmations from external
tax advisors and inspected expert tax reports commissioned by
Siemens for individual matters. Further, we evaluated manage-
ment's assessments with respect to the prospects of success of
appeal and tax court proceedings by inquiring of the Siemens tax
department and by considering current tax case law.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec. 317
HGB and the EU Audit Regulation as well as generally accepted
standards on auditing promulgated by the IDW and in supple-
mentary compliance with ISA will always detect a material mis-
statement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggre-
gate, they could reasonably be expected to influence the eco-
nomic decisions of users taken on the basis of these consolidated
financial statements and the group management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for con-
structing contracts, refer to → NOTE 2 SIGNIFICANT ACCOUNTING
POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS. With respect to provisions for
order related losses and risks, refer to NOTE 17 PROVISIONS in
the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
> obtain an understanding of internal control relevant to the au-
dit of the consolidated financial statements and the arrange-
ments and measures relevant to the audit of the group man-
agement report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of these systems;
> evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related dis-
closures made by management;
дения
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
Buits an
Breitsameter
Wirtschaftsprüferin
[German Public Auditor]
Additional Information
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
C.3 Report of the Supervisory Board
In fiscal 2017, the Supervisory Board performed, in accordance
with its obligations, the duties assigned to it by law, the Siemens
Articles of Association and the Bylaws for the Supervisory Board.
We regularly advised the Managing Board on the management
of the Company and monitored the Managing Board's activities.
We were directly involved at an early stage in all major decisions
regarding the Company. In written and oral reports, the Managing
Board regularly provided us with timely and comprehensive
information on Company planning and business operations as
well as on the strategic development and current state of the
Company. On the basis of reports submitted by the Managing
Board, we considered in detail business development and all de-
cisions and transactions of major significance to the Company.
Deviations from business plans were explained to us in detail and
intensively discussed. The Managing Board coordinated the Com-
pany's strategic orientation with us. The proposals made by the
Managing Board were approved by the Supervisory Board and/or
the relevant Supervisory Board committees after in-depth exam-
ination and consultation. In my capacity as Chairman of the Super-
visory Board, I was also in regular contact with the Managing
Board and, in particular, with the President and Chief Executive
Officer and was kept up-to-date on current developments in the
Company's business situation and on key business transactions.
TOPICS AT THE PLENARY MEETINGS
OF THE SUPERVISORY BOARD
We held a total of six regular plenary meetings and one extraor-
dinary meeting in fiscal 2017. Topics of discussion at our regular
plenary meetings were revenue, profit and employment develop-
ment at Siemens AG, the Company's operating units and the
Siemens Group as well as the Company's financial position and
the results of its operations. We also concerned ourselves as re-
quired with major investment and divestment projects and with
certain risks to the Company.
At our meeting on November 9, 2016, we discussed the Compa-
ny's key financial figures for fiscal 2016 and approved the budget
for 2017. On the basis of reported target achievement, we also
defined the compensation of the Managing Board members for
fiscal 2016. The appropriateness of this compensation was con-
firmed by an internal review. On the recommendation of the
Compensation Committee, we also approved the targets for
Managing Board compensation for fiscal 2017. The remuneration
system for the Managing Board members for fiscal 2017 is un-
changed vis-à-vis the remuneration system for fiscal 2015, which
the Annual Shareholders' Meeting approved by a majority of
more than 92% on January 27, 2015. At our meeting on Novem-
ber 9, 2016, we also approved the preparation of the public list-
ing of the strategic unit Healthineers as well as the acquisition of
Mentor Graphics Corporation.
On November 30, 2016, we discussed the financial statements
and the Combined Management Report for Siemens AG and the
Siemens Group as of September 30, 2016, the Annual Report for
2016 (including the Report of the Supervisory Board, the Corpo-
rate Governance Report and the Compensation Report) and the
agenda for the Annual Shareholders' Meeting on February 1,
2017. The Managing Board informed us about the current status
of acquisitions and divestments in particular, the planned
merger of Siemens' wind power business with the publicly listed
company Gamesa Corporación Tecnológica S.A. (Spain) and the
status of the integration of the two previously acquired compa-
nies Dresser Rand Group Inc. and CD-adapco Ltd. In addition, the
Managing Board reported on the status of the implementation of
the "Vision 2020" strategy. We also discussed the annual report
of the Chief Compliance Officer and the pension system. In addi-
tion, the Managing Board informed us about the Mobility Divi-
sion's business position and business development. Finally, at
this meeting, the Supervisory Board approved the recommenda-
tion of the Chairman's Committee that Michael Sen and Cedrik
Neike be appointed full members of the Managing Board, effec-
tive April 1, 2017.
At our meeting on January 31, 2017, the Managing Board reported
to us on the Company's business and financial position following
the conclusion of the first quarter. The Supervisory Board ap-
proved Managing Board decisions regarding financing measures.
In addition, the Supervisory Board was informed about the Nom-
inating Committee's decision that Jim Hagemann Snabe be nom-
inated as a candidate for election by the Supervisory Board to the
position of Supervisory Board Chairman on January 31, 2018.
> identify and assess the risks of material misstatement of the
consolidated financial statements and the group manage-
ment report, whether due to fraud or error, design and per-
form audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for one re-
sulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control;
Berlin and Munich, November 29, 2017
Munich, November 27, 2017
-
We provide those charged with governance with a statement that
we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and
The auditor responsible for the audit is Thomas Spannagl.
131
> conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit evi-
dence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Group's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in
the consolidated financial statements and the group manage-
ment report or, if such disclosures are inadequate, to modify
our respective opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report.
other matters that may reasonably be thought to bear on our
independence, and related safeguards.
From the matters communicated with those charged with gover-
nance, we determine those matters that were of most signi-
ficance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We
describe each key audit matter in our auditor's report unless laws
or regulations preclude public disclosure about the matter.
However, future events or conditions may cause the Group to Report on other legal and regulatory
cease to continue as a going concern;
> evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent
the underlying transactions and events in a manner that
achieves a true and fair view of the net assets, financial posi-
tion and results of operations of the Group in accordance with
IFRS as adopted by the EU and the supplemental provisions of
German law applicable pursuant to Sec. 315 a (1) HGB and full
IFRS as issued by the IASB;
> obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and the group management report.
We are responsible for the direction, supervision and perfor-
mance of the group audit. We remain solely responsible for
our audit opinions;
132
requirements
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant de-
ficiencies in internal control that we identify during our audit.
> evaluate the group management report's consistency with the
> perform procedures on the forward-looking statements made
by management in the group management report. In partic-
ular, on the basis of sufficient appropriate audit evidence, we
walk through the significant assumptions underlying manage-
ment's forward-looking statements and assess whether the
forward-looking statements were appropriately derived from
these assumptions. We do not provide a separate opinion on
the forward-looking statements and underlying assumptions.
There is a significant unavoidable risk that future events will
differ materially from the forward-looking statements.
legal provisions and the view it gives of the Group's position;
Additional Information
consolidated financial statements, its compliance with the Responsible auditor
We confirm that the audit opinions included in this auditor's
report are consistent with the additional report to the Audit
Committee in accordance with Art. 11 of the EU Audit Regulation
(audit report).
We were elected as auditor of the consolidated financial state-
ments by the Annual Shareholders' Meeting on February 1, 2017.
We were engaged by the Supervisory Board on February 1, 2017.
We have been the auditor of Siemens Aktiengesellschaft for an
uninterrupted period since the audit of the consolidated financial
statements for the fiscal year from October 1, 2008 to Septem-
ber 30, 2009.
OTHER REPORTING ITEMS IN ACCORDANCE WITH
ART. 10 OF THE EU AUDIT REGULATION
January 23,
2013
July 14,
1971
January 27,
2015
German positions:
> Messer Group GmbH, Sulzbach
Michael Sigmund*
Chairman of the Committee
of Spokespersons of the Siemens
Group; Chairman of the Central
Committee of Spokespersons
of Siemens AG
Jim Hagemann Snabe
Sibylle Wankel*
September 13, March 1,
1957
2014
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
October 1,
2017
Chairman of the Board of Directors
of A.P. Møller-Mærsk A/S
October 27,
1965
August 14,
1955
October 1,
2013
Dorothea Simon*
(since October 1, 2017)
August 3,
1969
> MAN SE, Munich (Deputy Chairman)
Aktiengesellschaft, Munich (Chairman)
Chairman of the Board of Directors
of ENGIE S.A.
General Counsel, Managing Board
of IG Metall
April 1,
1949
January 23,
2013
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
Chairwoman and Managing Director
of Hacı Ömer Sabancı Holding A.Ş.
Managing Director and Spokesperson
of Siemens Stiftung
May 29,
1956
January 27,
2015
German positions:
> Airbus Operations GmbH, Hamburg
> MAN Diesel & Turbo SE, Augsburg
> Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
German positions:
> Axel Springer SE, Berlin
> Voith GmbH, Heidenheim
Positions outside Germany:
> ENGIE S.A., France (Chairman)
> Société Générale S.A., France
> Suez S.A., France (Chairman)
German positions:
➤ Bayerische Motoren Werke
> Henkel AG & Co. KGaA, Düsseldorf¹
March 3,
1964
Diversity
1 Shareholders' Committee.
An adequate number of independent members shall belong to
the Supervisory Board. Material and not merely temporary con-
flicts of interest, such as governing or advisory body functions at
major competitors of the Company shall be avoided. Under the
presumption that the mere exercise of Supervisory Board duties
as an employee representative gives no cause to doubt compli-
ance with the independence criteria pursuant to Section 5.4.2 of
the Code, the Supervisory Board shall have a minimum of sixteen
members who are independent in the meaning of the Code. In
any case, the Supervisory Board shall be composed in such a way
that a number of at least six independent shareholder represen-
tatives in the meaning of Section 5.4.2 of the Code is achieved.
No more than two former members of the Managing Board of
Siemens AG shall belong to the Supervisory Board.
The Supervisory Board members shall have sufficient time to be
able to exercise their mandates with the necessary regularity and
diligence.
Limits on age and on length of membership
In compliance with the age limit stipulated by the Supervisory
Board in its Bylaws, only individuals who are no older than
70 years of age shall, as a rule, be nominated for election to the
Supervisory Board. Nominations shall take into account the reg-
ular limit established by the Supervisory Board, which restricts
membership on the Supervisory Board to a maximum of three
full terms of office (15 years). The aim is to ensure that the
Supervisory Board has an appropriate age structure and range of
experience.
Additional Information 141
Status of implementation of the objectives of the
Supervisory Board's composition and profile of
required skills and expertise; independent Super-
visory Board members
Independence
With its current membership, the Supervisory Board meets all the
above-mentioned objectives for its composition and fulfills the
profile of required skills and expertise. The Supervisory Board
members have the specialist and personal qualifications consid-
ered necessary. As a group, they are familiar with the sector in
which the Company operates and have the knowledge, skills and
experience essential for Siemens. A considerable number of Super-
visory Board members are engaged in international activities
and/or have many years of international experience. Appropriate
consideration has been given to diversity in the Supervisory
Board. In fiscal 2017, the Supervisory Board had six female mem-
bers. Since October 1, 2017, it has had seven female members,
of whom three are shareholder representatives and four are em-
ployee representatives. The mandatory minimum quota stipu-
lated in Section 96, para. 2, sent. 1 of the German Stock Corpo-
ration Act (Aktiengesetz) has therefore been met. Dr. Nicola
Leibinger-Kammüller is a member of the Nominating Committee.
Supervisory Board Committees
The Supervisory Board has seven committees, whose duties,
responsibilities and procedures fulfill the requirements of the
German Stock Corporation Act (Aktiengesetz) and the Code. The
chairmen of these committees provide the Supervisory Board
with regular reports on their committees' activities.
The Chairman's Committee makes proposals, in particular, re-
garding the appointment and dismissal of Managing Board mem-
bers and handles contracts with members of the Managing
Board. When making recommendations for first-time appoint-
ments, it takes into account that the terms of these appoint-
ments shall not, as a rule, exceed three years. In preparing rec-
ommendations on the appointment of Managing Board
members, the Chairman's Committee takes into account the
candidates' professional qualifications, international experience
and leadership qualities, the age limit specified for Managing
Board members, the long-range plans for succession as well as
diversity. It also takes into account the targets for the proportion
of women on the Managing Board specified by the Supervisory
Board. The Chairman's Committee concerns itself with questions
regarding the Company's corporate governance and prepares the
resolutions to be approved by the Supervisory Board regarding
the Declaration of Conformity with the Code - including the ex-
planation of deviations from the Code - and regarding the ap-
proval of the Corporate Governance Report as well as the Report
of the Supervisory Board to the Annual Shareholders' Meeting.
Furthermore, the Chairman's Committee submits recommenda-
tions to the Supervisory Board regarding the composition of the
Supervisory Board committees and decides whether to approve
contracts and business transactions with Managing Board mem-
bers and parties related to them.
The Compensation Committee prepares, in particular, the pro-
posals for decisions by the Supervisory Board's plenary meetings
regarding the system of Managing Board compensation, includ-
ing the implementation of this system in Managing Board con-
tracts, the definition of the targets for variable Managing Board
compensation, the determination and review of the appropriate-
ness of the total compensation of individual Managing Board
members and the approval of the annual Compensation Report.
In fiscal 2017, the Compensation Committee comprised Werner
Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
2008
The Supervisory Board also has an adequate number of indepen-
dent members. In the opinion of the Supervisory Board, there are
currently at least 17 Supervisory Board members who are indepen-
dent in the meaning of Section 5.4.2 of the Code. Of these inde-
pendent members, at least seven - namely, Michael Diekmann,
Dr. Hans Michael Gaul, Gérard Mestrallet, Dr. Norbert Reithofer,
Güler Sabancı, Jim Hagemann Snabe and Werner Wenning - are
shareholder representatives. The regulations establishing limits
on age and limiting membership in the Supervisory Board to three
full terms of office (15 years) are complied with.
In accordance with the German Law for Equal Participation of
Women and Men in Management Positions in the Private and
Public Sectors (Gesetz für die gleichberechtigte Teilhabe von
Frauen und Männern an Führungspositionen in der Privatwirt-
schaft und im öffentlichen Dienst), the Supervisory Board is com-
posed of at least 30 percent women and at least 30 percent men.
The Nominating Committee shall continue to include at least one
female member.
With regard to the composition of the Supervisory Board, atten-
tion shall be paid to achieving sufficient diversity. Not only is
appropriate consideration to be given to women. Diversity of
cultural heritage, religion and ethnic background and a wide
range of different professional backgrounds, experiences and
ways of thinking are also to be promoted. When considering pos-
sible candidates for new elections or for filling Supervisory Board
positions that have become vacant, the Supervisory Board shall
give appropriate consideration to diversity at an early stage in the
selection process.
Taking the Company's international orientation into account,
care shall be taken to ensure that the Supervisory Board has an
adequate number of members with extensive international expe-
rience. The goal is to make sure that the present considerable
share of Supervisory Board members with extensive international
experience is maintained.
140 Additional Information
> Siemens Healthcare GmbH, Munich
German positions:
> Siemens Healthcare GmbH, Munich
German positions:
> Allianz SE, Munich
Positions outside Germany:
> A.P. Møller-Mærsk A/S, Denmark (Chairman)
German positions:
> Daimler AG, Stuttgart
Objectives of the Supervisory Board's
composition and profile of required skills
and expertise of the Supervisory Board
On September 20, 2017, the Supervisory Board - taking into ac-
count the recommendations of the German Corporate Gover-
nance Code (Code) - newly approved the objectives of its com-
position, including a profile of the skills and expertise that the
Supervisory Board should possess. The composition of the Super-
visory Board of Siemens AG shall be such that qualified control
and advice for the Managing Board is ensured.
Profile of required skills and expertise
The candidates proposed for election to the Supervisory Board
shall have the knowledge, skills and experience necessary to
carry out the functions of a Supervisory Board member in a mul-
tinational company and safeguard the reputation of Siemens in
public. In particular, care shall be taken in regard to the person-
ality, integrity, commitment and professionalism of the individu-
als proposed for election.
The goal is to ensure that, in the Supervisory Board, as a group,
all knowhow and experience is available that is considered essen-
tial in view of Siemens' activities. This includes, for instance,
knowledge and experience in the areas of technology (including
information technology and digitalization), procurement, manu-
facturing and sales, finance, law (including compliance) and hu-
man resources. In addition, the members of the Supervisory
Board shall collectively have knowledge and experience in the
business areas that are important for Siemens, in particular in the
areas of industry, energy, healthcare and infrastructure. As a
group, the members of the Supervisory Board are to be familiar
with the sector in which the Company operates. At least one in-
dependent member of the Supervisory Board shall have knowl-
edge and expertise in the areas of accounting or the auditing of
financial statements and specific knowledge and experience in
applying accounting principles and internal control processes.
In particular, the Supervisory Board shall also include members
who have leadership experience as senior executives or members
of a supervisory board (or comparable body) at a major company
with international operations.
When a new member is to be appointed, a review shall be per-
formed to determine which of the areas of expertise deemed
desirable for the Supervisory Board are to be strengthened.
Internationality
April 1,
2009
December 15, January 24,
1959
(Deputy Chairman)
Nathalie von Siemens,
Dr. phil.
Michael Diekmann
Chairman of the Supervisory Board
of Allianz SE
1 Shareholders' Committee.
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2017)
Positions outside Germany:
> AUTO1 N.V., Netherlands (Chairman)
> ODDO BHF SCA, France (Co-Chairman)
July 11,
2014
German positions:
> Henkel Management AG, Düsseldorf
December 23, January 24,
1954
2008
German positions:
> Allianz SE, Munich (Chairman)
> BASF SE, Ludwigshafen am Rhein
(Deputy Chairman)
> Fresenius Management SE, Bad Homburg
➤ Bayer AG, Leverkusen (Chairman)
> Henkel AG & Co. KGaA, Düsseldorf¹
July 24,
1952
Chairman of the Works Council
of Siemens Dynamowerk, Berlin,
Germany
Olaf Bolduan*
Information on the work of the Supervisory Board is provided in
chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula vitae
of the members of the Supervisory Board are available on the
Siemens Global Website at www.SIEMENS.COM/SUPERVISORY-
BOARD. The compensation paid to the members of the Supervi-
sory Board is provided in chapter → A.10 COMPENSATION REPORT.
The Supervisory Board of Siemens AG has 20 members. As stipu-
lated by the German Codetermination Act (Mitbestimmungs-
gesetz), half of the members represent Company shareholders, and
half represent Company employees. The employee representatives'
names are marked below with an asterisk (*). In general, the terms
of office of the current Supervisory Board members will expire at
the conclusion of the Annual Shareholders' Meeting in 2018. The
terms of office of Dr. Nicola Leibinger-Kammüller, Jim Hagemann
Snabe and Werner Wenning will expire at the conclusion of the
Annual Shareholders' Meeting in 2021. Effective from October 1,
2017, until the end of the ordinary Annual Shareholders' Meeting
on January 31, 2018, Dorothea Simon has been appointed by court
order as employee representative on the Supervisory Board. She
succeeds Hans-Jürgen Hartung, who left the Supervisory Board at
the end of September 30, 2017. The future Supervisory Board's em-
ployee representatives were newly elected on October 5, 2017, in
accordance with the provisions of the German Codetermination Act
(Mitbestimmungsgesetz). Their election will take effect at the end
of the ordinary Annual Shareholders' Meeting on January 31, 2018.
Members of the Supervisory Board and positions
held by Supervisory Board members
In fiscal 2017, the Supervisory Board comprised the following
members:
Name
Occupation
Gerhard Cromme, Dr. iur.
Chairman
Chairman of the Supervisory Board
of Siemens AG
Date of birth
February 25,
1943
Member since
January 23,
2003
Birgit Steinborn*
First Deputy Chairwoman
Werner Wenning
Second Deputy Chairman
Chairwoman of the Central Works
Council of Siemens AG
Chairman of the Supervisory Board
of Bayer AG
March 26,
1960
January 24,
2008
October 21,
1946
January 23,
2013
> Fresenius SE & Co. KGaA, Bad Homburg
The Audit Committee oversees, in particular, the accounting
and the accounting process and conducts a preliminary review of
the Annual Financial Statements of Siemens AG, the Consoli-
dated Financial Statements of the Siemens Group and the Com-
bined Management Report of Siemens AG and the Siemens
Group. On the basis of the independent auditors' report on their
audit of the annual financial statements, the Audit Committee
makes, after its preliminary review, recommendations regarding
Supervisory Board approval of the Annual Financial Statements
of Siemens AG and the Consolidated Financial Statements of the
Siemens Group. The Audit Committee discusses the Quarterly
Statements and Half-year Financial Report with the Managing
Board and the independent auditors and deals with the auditors'
report on the review of the Half-year Consolidated Financial
Statements and Interim Group Management Report. It concerns
itself with the Company's risk monitoring system and oversees
the effectiveness of the internal control, risk management and
the internal audit systems. The Audit Committee receives regular
reports from the Internal Audit Department. It prepares the
Supervisory Board's recommendation to the Annual Share-
holders' Meeting concerning the election of the independent
Additional Information
139
March 2,
1942
June 24,
1956
January 27,
2015
March 14,
1959
April 1,
2007
March 10,
1952
January 27,
2009
March 13,
1971
January 23,
2013
March 16,
1960
January 24,
2008
January 22,
1969
January 25,
2012
Nicola Leibinger-
Kammüller, Dr. phil.
Gérard Mestrallet
Norbert Reithofer, Dr.-Ing.
Dr.-Ing. E.h.
Güler Sabancı
Date of birth
President and Chairwoman of the
Managing Board of TRUMPF GmbH
+ Co. KG
> Siemens Healthcare GmbH, Munich
German positions:
Name
Hans Michael Gaul, Dr. iur.
Reinhard Hahn*
Bettina Haller*
Hans-Jürgen Hartung*
(until September 30, 2017)
Robert Kensbock*
Harald Kern*
Jürgen Kerner*
Occupation
Supervisory Board Member
Trade Union Secretary of
the Managing Board of IG Metall
Chairwoman of the Combine Works
Council of Siemens AG
Member of the Works Council of
Siemens Erlangen Süd, Germany
Deputy Chairman of the Central
Works Council of Siemens AG
Chairman of the Siemens Europe
Committee
Treasurer and full-time member
of the Executive Committee of
IG Metall
Member since
January 24,
2008
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2017)
> HSBC Trinkaus & Burkhardt AG, Düsseldorf
German positions:
142 Additional Information
100%
In fiscal 2017, the Audit Committee comprised Dr. Hans Michael
Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
Hagemann Snabe and Birgit Steinborn. The members of the Audit
Committee are, as a group, familiar with the sector in which the
Company operates. Pursuant to the German Stock Corporation
Act, the Audit Committee must include at least one Supervisory
Board member with knowledge and experience in the areas of
accounting or the auditing of financial statements. Pursuant to
the Code, the chairman or chairwoman of the Audit Committee
shall have specialist knowledge and experience in the application
of accounting principles and internal control processes, shall be
independent and may not be a former Managing Board member
whose appointment ended less than two years ago. The Chair-
man of the Audit Committee, Dr. Hans Michael Gaul, fulfills these
requirements.
As part of our investor relations activities, we inform our investors
comprehensively about developments within the Company. For
communication purposes, Siemens makes extensive use of the
Internet. We publish Quarterly Statements, Half-year Financial
and Annual Reports, earnings releases, ad hoc announcements,
analyst presentations, letters to shareholders and press releases
as well as the financial calendar for the current year, which con-
tains the publication dates of significant financial communica-
tions and the date of the Annual Shareholders' Meeting, at:
WWW.SIEMENS.COM/INVESTORS
Our Articles of Association, the Bylaws for the Supervisory Board,
the Bylaws for the most important Supervisory Board commit-
tees, the Bylaws for the Managing Board, all our Declarations of
Conformity with the Code and a variety of other corporate-
governance-related documents are posted on our website at:
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
C.4.2 Corporate Governance
statement pursuant to Sections
289 a and 315 para. 5 of
the German Commercial Code
The Corporate Governance statement pursuant to Sections 289 a
and 315 para. 5 of the German Commercial Code (Handelsgesetz-
buch) is an integral part of the Combined Management Report.
In accordance with Section 317 para. 2 sentence 4 of the German
Commercial Code, the disclosures made within the scope of Sec-
tions 289 a and 315 para. 5 of the German Commercial Code are
not subject to the audit by the auditors.
without the need to be present at the venue and without a proxy
and to exercise some or all of their rights fully or partially by
means of electronic communications. Shareholders may submit
proposals regarding the proposals of the Managing and Supervi-
sory Boards and may contest decisions of the Annual Sharehold-
ers' Meeting. Shareholders owning Siemens stock with an aggre-
gate notional value of €100,000 or more may also demand the
judicial appointment of special auditors to examine specific is-
sues. The reports, documents and information required by law for
the Annual Shareholders' Meeting, including the Annual Report,
may be downloaded from our website. The same applies to the
agenda for the Annual Shareholders' Meeting and to any counter-
proposals or shareholders' nominations that require disclosure.
C.4.2.1 DECLARATION OF CONFORMITY WITH
"Declaration of Conformity by the Managing Board and the
Supervisory Board of Siemens Aktiengesellschaft with the
German Corporate Governance Code
Siemens AG fully complies and will continue to comply with
the recommendations of the German Corporate Governance
Code ("Code") in the version of February 7, 2017, published
by the Federal Ministry of Justice in the official section of the
Federal Gazette ("Bundesanzeiger").
Since making its last Declaration of Conformity dated Octo-
ber 1, 2016, Siemens AG has complied with the recommen-
dations of the Code.
Berlin and Munich, October 1, 2017
Siemens Aktiengesellschaft
The Managing Board The Supervisory Board"
C.4.2.2 INFORMATION ON
CORPORATE GOVERNANCE PRACTICES
THE GERMAN CORPORATE GOVERNANCE CODE
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of October 1,
2017:
Additional Information
144
Shareholders exercise their rights in the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of unappropriated net income, the ratification
of the acts of the Managing and Supervisory Boards, and the
appointment of the independent auditors. Amendments to the
Articles of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders' Meeting
and are implemented by the Managing Board. The Managing
Board facilitates shareholder participation in this meeting
through electronic communications – in particular, via the Inter-
net and enables shareholders who are unable to attend the
meeting to vote by proxy. Furthermore, shareholders may exer-
cise their right to vote in writing or by means of electronic com-
munications (absentee voting). The Managing Board may enable
shareholders to participate in the Annual Shareholders' Meeting
7
100%
Michael Sigmund
7
7
100%
Jim Hagemann Snabe
Sibylle Wankel
22
21
95%
11
11
100%
C.4.1.3 SHARE TRANSACTIONS BY MEMBERS
OF THE MANAGING AND SUPERVISORY BOARDS
Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
pean Parliament and Council on market abuse (Market Abuse
Regulation), members of the Managing Board and the Super-
visory Board are legally required to disclose all transactions con-
ducted on their own account relating to the shares or debt instru-
ments of Siemens AG or to derivatives or financial instruments
linked thereto, if the total value of such transactions entered into
by a board member or any closely associated person reaches or
exceeds €5,000 in any calendar year. All transactions reported
to Siemens AG in accordance with this requirement have been
duly published and are available on the Company's website at:
WWW.SIEMENS.COM/DIRECTORS-DEALINGS
C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
AND INVESTOR RELATIONS
Suggestions of the Code
Siemens voluntarily complies with the Code's non-binding sug-
gestions, with the following exception:
Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
over offer, a management board should convene an extraordinary
general meeting at which shareholders discuss the takeover offer
and may decide on corporate actions. The convening of a share-
holders' meeting - even taking into account the shortened time
limits stipulated in the German Securities Acquisition and Take-
over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
organizational challenge for large publicly listed companies. It
appears doubtful whether the associated effort is justified in
cases where no relevant decisions by the shareholders' meeting
are intended. Therefore, extraordinary shareholders' meetings
shall be convened only in appropriate cases.
Further corporate governance practices applied beyond legal
requirements are contained in our Business Conduct Guidelines.
COM/INVESTOR/EN/
WWW.SIEMENS.
Additional Information
147
Address
Internet
Phone
Fax
E-mail
Siemens AG
Werner-von-Siemens-Str. 1
80333 Munich
Germany
WWW.SIEMENS.COM
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
+49 89 636-1332474 (Investor Relations)
press@siemens.com
investorrelations@siemens.com
© 2017 by Siemens AG, Berlin and Munich
The "Sustainability Information 2017" which reports on Sustain-
ability and Citizenship at Siemens is available at:
7
For technical reasons, there may be differences between the
accounting records appearing in this document and those pub-
lished pursuant to legal requirements.
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Additional Information
145
Our Company's values and
Business Conduct Guidelines
In the 170 years of its existence, our Company has built an excel-
lent reputation around the world. Technical performance, inno-
vation, quality, reliability, and international engagement have
made Siemens one of the leading companies in electronics and
electrical engineering. It is top performance with the highest eth-
ics that has made Siemens strong. This is what the Company
should continue to stand for in the future.
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to maintain our successful ac-
tivities. They contain the basic principles and rules for our con-
duct within our Company and in relation to our external partners
and the general public. They set out how we meet our ethical and
legal responsibility as a Company and give expression to our cor-
porate values of being "Responsible" - "Excellent" - "Innovative".
C.4.2.3 OPERATION OF THE MANAGING BOARD
AND THE SUPERVISORY BOARD, AND COMPOSITION
AND OPERATION OF THEIR COMMITTEES
A general description of the functions and operation of the
Managing Board and the Supervisory Board can be found in chapter
→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
be derived from the bylaws for the corporate bodies concerned.
This information and these documents, including the Code and
the Business Conduct Guidelines, are available at: www.
SIEMENS.COM/289A
C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
ON THE MANAGING BOARD AND AT THE
TWO MANAGEMENT LEVELS IMMEDIATELY
BELOW THE MANAGING BOARD; INFORMATION
ON SUPERVISORY BOARD COMPLIANCE WITH
MINIMUM GENDER QUOTA REQUIREMENTS
At Siemens AG, the target for the share of women on the Managing
Board has been set at a minimum of 2/8, and the corresponding
target for each of the two management levels immediately
below the Managing Board has been set at 20%, applicable in
each case until June 30, 2022. Due to the appointment of
Mr. Neike and Mr. Sen to the expanded Managing Board, which
now has eight members, the target for the Managing Board of
2/7 until June 30, 2017 has been missed since April 1, 2017. The
target for the share of women for each of the two management
levels immediately below the Managing Board at 10% was ful-
filled until June 30, 2017. Until June 30, 2017, assignments to
those two management levels were based on a global system of
position levels. At the end of the reporting period, the company
completely abolished this global system of position levels. As a
result, the management levels on which the new targets are
based have been redefined, and the new targets are not compa-
rable to those in effect up to June 30, 2017.
The composition of the Supervisory Board fulfilled the legal re-
quirements regarding the minimum gender quota in the report-
ing period.
146
Additional Information
C.5 Notes and forward-looking statements
This document contains statements related to our future business
and financial performance and future events or developments
involving Siemens that may constitute forward-looking state-
ments. These statements may be identified by words such as "ex-
pect," "look forward to," "anticipate,” “intend," "plan," "believe,"
"seek," "estimate," "will," "project" or words of similar meaning.
We may also make forward-looking statements in other reports,
in presentations, in material delivered to shareholders and in
press releases. In addition, our representatives may from time to
time make oral forward-looking statements. Such statements are
based on the current expectations and certain assumptions of
Siemens' management, of which many are beyond Siemens' con-
trol. These are subject to a number of risks, uncertainties and
factors, including, but not limited to those described in disclo-
sures, in particular in the chapter Risks in this Annual Report.
Should one or more of these risks or uncertainties materialize, or
should underlying expectations not occur or assumptions prove
incorrect, actual results, performance or achievements of Siemens
may (negatively or positively) vary materially from those de-
scribed explicitly or implicitly in the relevant forward-looking
statement. Siemens neither intends, nor assumes any obligation,
to update or revise these forward-looking statements in light of
developments which differ from those anticipated.
-
This document includes - in the applicable financial reporting
framework not clearly defined – supplemental financial mea-
sures that are or may be alternative performance measures
(non-GAAP-measures). These supplemental financial measures
should not be viewed in isolation or as alternatives to measures
of Siemens' net assets and financial positions or results of opera-
tions as presented in accordance with the applicable financial
reporting framework in its Consolidated Financial Statements.
Other companies that report or describe similarly titled alterna-
tive performance measures may calculate them differently.
This document is an English language translation of the German
document. In case of discrepancies, the German language docu-
ment is the sole authoritative and universally valid version.
Nathalie von Siemens, Dr. phil.
100%
7
38
100%
32
32
100%
(Second Deputy Chairman)
28
28
100%
Olaf Bolduan
7
7
100%
Michael Diekmann
10
9
90%
38
Hans Michael Gaul, Dr. iur.
Presence
and Committee meetings
The Compliance Committee concerns itself, in particular, with
monitoring the Company's adherence to statutory provisions,
official regulations and internal Company policies (compliance).
In fiscal 2017, the Compliance Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Har-
ald Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
Birgit Steinborn and Sibylle Wankel.
The Nominating Committee is responsible for making recom-
mendations to the Supervisory Board on suitable candidates for
election by the Annual Shareholders' Meeting as shareholder
representatives on the Supervisory Board. In preparing these rec-
ommendations, the objectives defined by the Supervisory Board
for its composition – in particular, independence and diversity -
are to be appropriately considered, as are the proposed candi-
dates' required knowledge, abilities and professional experience.
Fulfillment of the required profile of skills and expertise is also to
be aimed at. Attention shall be paid to an appropriate participa-
tion of women and men in accordance with the legal require-
ments relating to the gender quota as well as to ensuring that the
members of the Supervisory Board are, as a group, familiar with
the sector in which the Company operates.
In fiscal 2017, the Nominating Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Nicola Leibin-
ger-Kammüller and Werner Wenning.
The Mediation Committee submits proposals to the Supervisory
Board in the event that the Supervisory Board cannot reach the
two-thirds majority required for the appointment or dismissal of
a Managing Board member on the first ballot.
In fiscal 2017, the Mediation Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
The Innovation and Finance Committee discusses, in particular,
based on the Company's overall strategy, the Company's fo-
cuses of innovation and prepares the Supervisory Board's discus-
sions and resolutions regarding questions relating to the Com-
pany's financial situation and structure including annual
planning (budget) - as well as the Company's fixed asset invest-
ments and its financial measures. In addition, the Innovation
and Finance Committee has been authorized by the Supervisory
Board to decide on the approval of transactions and measures
that require Supervisory Board approval and have a value of less
than €600 million.
In fiscal 2017, the Innovation and Finance Committee comprised
Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
Steinborn and Werner Wenning.
Additional Information
143
Disclosure of participation by individual
Supervisory Board members in meetings
of the Supervisory Board of Siemens AG
and its committees in fiscal 2017
Supervisory Board Members
Gerhard Cromme, Dr. iur
(Chairman)
Birgit Steinborn
(First Deputy Chairwoman)
Werner Wenning
Supervisory Board
Participation
auditors and submits the corresponding proposal to the Super-
visory Board. It awards the audit contract to the independent
auditors elected by the Annual Shareholders' Meeting and moni-
tors the independent audit of the financial statements as well as
the auditors' selection, independence, qualification, rotation and
efficiency.
23
The Supervisory Board oversees and advises the Managing Board
in its management of the Company's business. At regular inter-
vals, the Supervisory Board discusses business development,
planning, strategy and strategy implementation. It reviews the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report of Siemens AG and the Siemens Group, and
the proposal for the appropriation of net income. It approves the
Annual Financial Statements of Siemens AG as well as the Consol-
idated Financial Statements of the Siemens Group, based on the
results of the preliminary review conducted by the Audit Commit-
tee and taking into account the reports of the independent audi-
tors. The Supervisory Board decides on the Managing Board's
proposal for the appropriation of net income and the Report of
the Supervisory Board to the Annual Shareholders' Meeting. In
addition, the Supervisory Board or the Compliance Committee,
which is described in more detail below, concern themselves with
monitoring the Company's adherence to statutory provisions, of-
ficial regulations and internal Company policies (compliance). The
Supervisory Board also appoints the members of the Managing
Board and determines each member's portfolios. Important
Managing Board decisions – such as those regarding major acqui-
sitions, divestments, fixed asset investments or financial meas-
ures - require Supervisory Board approval, unless the Bylaws for
the Supervisory Board specify that such authority be delegated to
the Innovation and Finance Committee of the Supervisory Board.
In the Bylaws for the Managing Board, the Supervisory Board has
established the rules that govern the Managing Board's work.
28
27
96%
Nicola Leibinger-Kammüller, Dr. phil.
23
22
96%
Gérard Mestrallet
7
7
100%
Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
12
11
92%
Güler Sabancı
7
Jürgen Kerner
23
81%
16
Reinhard Hahn
7
7
100%
Bettina Haller
17
14
82%
Hans-Jürgen Hartung
7
7
100%
Robert Kensbock
21
21
100%
Harald Kern
13
C.4.1.2 SUPERVISORY BOARD
In fiscal 2017, the Chairman's Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
siemens.com
Order no. CGXX-C10029-00-7600
440
12%
7,404
8,306
Income from continuing operations before income taxes
10%
(1,994)
Income tax expenses
(1,785)
(2)%
653
639
Financial Services (SFS)
10.8%
11.2%
Profit margin Industrial Business
8%
Reconciliation to Consolidated Financial Statements
8,744
(2,180)
(9)%
Income from discontinued operations, net of income taxes
was sharply lower compared to the prior year. In fiscal 2016, it
primarily included a gain of €102 million from the sale of the re-
maining assets in the hearing aid business and €76 million re-
lated to the former Siemens IT Solutions and Services activities.
The tax rate for fiscal 2017 was 26%, positively influenced by uti-
lization of previously impaired tax loss carryforwards and by de-
cisions arising from tax audits. The tax rate 27% in the prior year
was positively influenced by successful appeals of tax decisions
for prior years. As a result, Income from continuing operations
increased 14%.
As a result of the development described for the segments,
Income from continuing operations before income taxes
increased 12%. This amount also included higher expenses - as
planned - for selling and R&D, primarily at Digital Factory and
Healthineers, as we continued targeted investments aimed at
organic volume growth and strengthening our capacities for in-
novation, such as for MindSphere at Digital Factory and Atellica
at Healthineers. Severance charges for continuing operations
were €466 million, of which €385 million were in the Industrial
Business. In fiscal 2016, severance charges for continuing opera-
tions were €598 million, of which €541 million were in the Indus-
trial Business.
10%
6.74
14.3%
7.44
13.5%
Basic earnings per share
ROCE
11%
(2,008)
5,584
(72)%
188
53
Income from discontinued operations, net of income taxes
Net income
14%
5,396
6,126
Income from continuing operations
6,179
9,453
(27)%
464
Healthineers
Process Industries and Drives
Digital Factory
Mobility
Building Technologies
Energy Management
(15)%
1,872
1,591
Power and Gas
% Change
2016
2017
(in millions of €, earnings per share in €)
Fiscal year
A.3.3 Income
15
Siemens Gamesa Renewable Energy
The increase in Basic earnings per share reflects the higher net
income compared to fiscal 2016, while the weighted average
number of shares outstanding increased slightly year-over-year.
At 13.5%, ROCE was below the range established in our One
Siemens financial framework, as expected. The decline year-over-
year was due primarily to the merger with Gamesa and the acqui-
sition of Mentor Graphics, which led to a significant increase in
average capital employed (the denominator for ROCE). Net in-
come, the main component for the numerator, was also nega-
tively affected by burdens related to these transactions.
Industrial Business
895
338
7%
2,325
2,490
81%
243
440
26%
1,690
2,135
10%
678
743
36%
577
784
4%
932
16
Combined Management Report
A.4 Net assets position
Deferred tax assets
(8)%
20,610
19,044
Other financial assets
(9)%
3,012
2,727
Investments accounted for using the equity method
8%
10,157
10,977
Property, plant and equipment
41%
7,742
10,926
Other intangible assets
Other assets
Total non-current assets
Total assets
2,297
A.5.1 Capital structure
A.5 Financial position
17
Combined Management Report
Deferred tax assets decreased mainly due to income tax effects
related to remeasurement of defined benefits plans.
Assets classified as held for disposal increased mainly due to
reclassification of shares in OSRAM Licht AG (OSRAM) in an
amount of €1.2 billion from other financial assets.
The increase in other current financial assets was driven by
higher loans receivable at SFS, which were mainly due to new
business and reclassification of non-current loans receivable.
In fiscal 2017, the acquisition of Mentor Graphics and the merger
with Gamesa were the major factors related to the increase in
trade and other receivables, partly offset by the Power and Gas
Division due to declining business volume. While these transac-
tions were also the largest factors for the increased goodwill and
other intangible assets, the increase in inventories was mainly
driven by the merger with Gamesa.
16%
Our total assets in fiscal 2017 were influenced by negative cur-
rency translation effects of €4.7 billion, led by the U.S. dollar.
133,804
17%
7%
70,388
75,375
1,279
1,498
(33)%
3,431
125,717
24,159
27,906
6%
7,664
Other current financial assets
5%
16,287
17,160
Trade and other receivables
(4)%
1,293
6,800
1,242
(21)%
10,604
8,375
Cash and cash equivalents
% Change
Sep 30,
2016
2017
(in millions of €)
Available-for-sale financial assets
Combined Management Report
13%
Current income tax assets
55,329
58,429
> 200%
190
1,482
22%
1,204
1,467
Inventories
39%
1,098
10%
18,160
19,942
Goodwill
Total current assets
Assets classified as held for disposal
Other current assets
790
Our capital structure developed as follows:
The positive swing at Centrally managed portfolio activities
(CMPA) related primarily to the measurement of a major asset
retirement obligation, including a net gain of €364 million result-
ing from interest rate effects and €312 million attributable mainly
to a reduced expected inflation rate. These positive effects were
partly offset by higher losses from at-equity investments includ-
ing a €230 million impairment of Siemens' stake in Primetals
Technologies Ltd. in fiscal 2017, related to continuing adverse
conditions in the market environment. Additionally in the current
(1,785)
(27)%
4.3%
7.8%
Portfolio effects from the merger added 13 percentage points
to order growth and 28 percentage points to revenue growth.
Reported orders were up year-over-year on growth in Asia,
Australia, while orders in Europe, C.I.S., Africa, Middle East and
the Americas were close to the prior-year level. Order intake in
the major onshore market India was impacted by the introduc-
tion of an auction system for new wind-farm tenders. Reported
revenue was up in all three reporting regions. Lower profit year-
over-year included burdens of €134 million, primarily from in-
ventory write-downs, and €103 million for integration costs and
capacity adjustments including severance. Profitability was held
back by sharp price declines in India and the U.S.
(in millions of €)
2017
Fiscal year
2016
% Change
Actual
Comp.
Orders
14,218
13,830
3%
4%
Revenue
13,789
464
338
7%
33%
5.0%
2.7%
Orders for Process Industries and Drives increased slightly, as
growth in the process automation and solution businesses and
stabilization in demand for the Division's offerings in oil and gas
and other commodity-related markets towards the end of the
fiscal year more than offset a decline in demand for wind power
components during the course of fiscal 2017. A decline in reve-
nue in the solutions and the large drives businesses more than
offset revenue growth in the process automation business. On a
geographic basis, order growth came mainly from China, while
the decline in revenue was due to the Americas region. Profit for
the Division increased due primarily to sharply lower severance
charges year-over-year, which were €48 million in fiscal 2017,
down from €254 million in fiscal 2016. Within the Division's busi-
nesses, the process automation business showed a strong oper-
ating performance. Overall, profit and profitability for the Divi-
sion were held back by ongoing operational challenges,
particularly in the large drives business, and by charges related
to capacity adjustments.
A.3.2.7 HEALTHINEERS
Fiscal year
% Change
(in millions of €)
Orders
2017
13,535
2016
Comp.
8,768
7,973
10%
(2)%
Revenue
Profit
Profit margin
7,922
5,976
Actual
Profit margin
2%
Profit
26,390
26,446
Financial Services (SFS) again delivered strong earnings includ-
ing lower credit hits. Within the equity business, the current year
included a gain from the sale of SFS's stake in an offshore wind-
farm project, while the prior year included a larger positive ef-
fect, €92 million, resulting from an at-equity investment. Despite
growth in new business, total assets were on the level of the end
of fiscal 2016, due mainly to substantial early terminations of fi-
nancings along with negative currency translation effects.
A.3.2.10 RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
period we recorded gains from reversals of provisions for guaran-
tees related to a previous divestment. Effective with the begin-
ning of fiscal 2018, CMPA includes the Olkiluoto project in Finland
which was formerly part of Power and Gas.
Corporate items were influenced by a number of factors, includ-
ing severance charges of €71 million (€43 million in fiscal 2016)
for corporate reorganization of support functions as well as ex-
penses in connection with creation of next47 beginning in Octo-
ber 2016.
The increase of Amortization of intangible assets acquired in
business combinations related mainly to the merger with
Gamesa and the acquisition of Mentor Graphics.
Profit
Fiscal year
(in millions of €)
2017
2016
Centrally managed portfolio activities
488
(215)
Siemens Real Estate
2017
Sep 30,
2016
Total assets
(in millions of €)
2,490
2,325
7%
Profit margin
18.1%
17.2%
Order intake grew moderately on increases in a majority of the
businesses, led by the diagnostic imaging business. On a re-
gional basis, Europe, C.I.S., Africa and Middle East posted the
highest increase, followed by growth in Asia, Australia, driven by
China. Revenue was also up in a majority of the businesses,
again led by the diagnostic imaging business. On a geographic
basis, China accounted for more than half of the revenue in-
crease year-over-year. Profit growth was driven by the diagnostic
Combined Management Report
3%
A.3.2.9 FINANCIAL SERVICES
2016
(in millions of €)
2017
Income before income taxes
639
ROE (after taxes)
19.9%
653
21.6%
Fiscal year
81%
243
A.2 Financial performance system
14.3%
13.5%
41,573
47,836
5,949
6,479
(I) Income before interest after tax
(156)
(129)
(tax rate (flat) 30%)
Less: Taxes on interest adjustments
The proposed dividend of €3.70 per share for fiscal 2017 repre-
sents a total payout of €3.0 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on net income of €6.2 billion for
fiscal 2017, the dividend payout percentage is 49%.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the follow-
ing proposal to allocate the unappropriated net income of
Siemens AG for fiscal 2017: to distribute a dividend of €3.70 on
each share of no par value entitled to the dividend for fiscal year
2017 existing at the date of the Annual Shareholders' Meeting,
with the remaining amount to be carried forward. Payment of the
proposed dividend is contingent upon approval by Siemens
shareholders at the Annual Shareholders' Meeting on January 31,
2018. The prior-year dividend was €3.60 per share.
We intend to continue providing an attractive return to our share-
holders. Therefore, we intend to propose a dividend whose dis-
tribution volume is within a dividend payout range of 40% to
60% of net income, which we may adjust for this purpose to ex-
clude selected exceptional non-cash effects. As in the past, we
intend to fund the dividend payout from Free cash flow.
A.2.5 Dividend
282
198
(II) Average capital employed
(1)/(II) ROCE
1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
debt, and related hedging activities, as well as interest income on corporate assets.
For purposes of calculating ROCE in interim periods, income be-
fore interest after tax is annualized. Average capital employed is
determined using the average of the respective balances as of
the quarterly reporting dates in the period under review.
Calculation of capital employed
(349)
(323)
(674)
(1,016)
Amortization of intangible assets
acquired in business combinations
Eliminations, Corporate Treasury
and other reconciling items
Reconciliation to Consolidated
Financial Statements
(439)
(407)
Centrally carried pension expense
784
(449)
Corporate items
132
187
Less: SFS Debt
Less: Current available-for-sale financial assets
Plus: Post-employment benefits
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Plus: Long-term debt
Total equity
(714)
799
(544)
(568)
6-9%
8-11%
7-10%
11-15%
Margin range
Siemens Gamesa Renewable Energy
SFS (ROE after tax)
Process Industries and Drives
Healthineers
Digital Factory
14-20%
Energy Management
Building Technologies
Mobility
Profit margin ranges
Within the framework of One Siemens, we aim to achieve mar-
gins through the entire business cycle that are comparable to
those of our relevant competitors. Therefore, we have defined
profit margin ranges for our industrial businesses, which are
based on the profit margins of the respective relevant competi-
tors. Profit margin is defined as profit of the respective business
divided by its revenue.
A.2.3 Profitability and capital
efficiency
Currency translation effects are the difference between revenue
for the current period calculated using the exchange rates of the
current period and revenue for the current period calculated us-
ing the exchange rates of the comparison period. For calculating
the percentage change year-over-year, this absolute difference is
divided by revenue for the comparison period. A portfolio effect
arises in the case of an acquisition or a disposition and is calcu-
lated as the change year-over-year in revenue of the relevant
business resulting specifically from the acquisition or disposition.
For calculating the percentage change, this absolute change is
divided by revenue for the comparison period. For orders, we
apply the same calculations for currency translation and portfolio
effects as described above.
Within the framework of One Siemens, we aim to grow our rev-
enue faster than the average weighted revenue growth of our
most relevant competitors. Our primary measure for managing
and controlling our revenue growth is comparable growth, be-
cause it shows the development in our business net of currency
translation effects, which arise from the external environment
outside of our control, and portfolio effects, which involve busi-
ness activities which are either new to or no longer a part of our
business.
A.2.2 Revenue growth
Within One Siemens, we have established a financial frame-
work - for revenue growth, for profitability and capital efficiency,
for our capital structure, and for our dividend policy.
A.2.1 Overview
Power and Gas
(1,994)
8-12%
5-8%
5,584
6,179
2016
2017
Fiscal year
Less: Interest adjustments
(discontinued operations)
Less: Other interest expenses/income, net'
Plus: SFS Other interest expenses/income
Plus: Net interest expenses from
post-employment benefits
(in millions of €)
Net income
15-19%
Calculation of ROCE
Sustainable revenue and profit development is supported by a
healthy capital structure. Accordingly, a key consideration within
the framework of One Siemens is to maintain ready access to the
capital markets through various debt products and preserve our
ability to repay and service our debt obligations over time. Our
primary measure for managing and controlling our capital struc-
ture is the ratio of industrial net debt to EBITDA. This financial
measure indicates the approximate amount of time in years that
would be needed to cover industrial net debt through income
from continuing operations, without taking into account inter-
est, taxes, depreciation and amortization. We aim to achieve a
ratio of up to 1.0.
A.2.4 Capital structure
Combined Management Report 9
Within the framework of One Siemens, we seek to work profit-
ably and as efficiently as possible with the capital provided by our
shareholders and lenders. For purposes of managing and con-
trolling our capital efficiency, we use return on capital employed,
or ROCE, as our primary measure. We aim to achieve ROCE within
a range of 15% to 20%.
To emphasize and evaluate our continuous efforts to improve
productivity, we incorporated a measure called total cost produc-
tivity into our One Siemens framework. We define this measure
as the ratio of cost savings from defined productivity improve-
ment measures to the aggregate of functional costs for the
Siemens Group. We aim to achieve an annual value of 3% to 5%
for total cost productivity.
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This mea-
sure is the main driver of basic earnings per share (EPS) from net
income, which we use in communication to the capital markets.
In line with common practice in the financial services business,
our financial indicator for measuring capital efficiency at the Fi-
nancial Services Division (SFS) is return on equity after tax, or
ROE after tax. ROE is defined as SFS' profit after tax, divided by
the Division's average allocated equity.
15-20%
A.2.6 Calculation of return
on capital employed
Sep 30,
6%
2017
Revenue
(30)%
(31)%
19,454
13,422
Orders
3%
3%
11,940
12,277
Revenue
Comp.
Actual
2016
2017
(in millions of €)
5%
15,467
16,471
Profit
1,591
2017
(in millions of €)
Fiscal year
A.3.2.3 BUILDING TECHNOLOGIES
12 Combined Management Report
Orders grew moderately year-over-year, due mainly to a higher
volume from large orders in the solutions business, including an
order totaling €0.8 billion for an offshore grid connection project
in Germany, an order totaling €0.6 billion for substations in Qatar
and a high-voltage direct current (HVDC) order totaling €0.4 bil-
lion in India. The medium voltage and systems business and the
low voltage and products business also posted higher orders
year-over-year. These increases were partly offset by declines in
the Division's other businesses. On a regional basis, orders were
up in all three reporting regions, predominantly in Europe, C.I.S.,
Africa, Middle East. Revenue was also up moderately with most
of the Division's businesses recording moderate to clear in-
creases. On a regional basis, revenue increased in all three re-
porting regions, with significant growth in Asia, Australia. All of
the Division's businesses delivered a positive contribution to
profit, benefiting from lower severance charges that were
€39 million and €71 million in fiscal 2017 and fiscal 2016, respec-
tively. The high voltage products and transformer businesses
showed significant improvement year-over-year.
Orders declined substantially year-over-year, due mainly to a
sharply lower volume from large orders in the solutions business,
which had recorded large orders for power plants, including ser-
vice, from Egypt totaling €4.7 billion in fiscal 2016. In contracting
markets for the Division's offerings, order intake was down in all
businesses and in all three reporting regions. As a result of this
continuing market weakness, revenue declined clearly and in all
reporting regions, as a decrease in the new-unit business was
only partly offset by an increase in the service business. Profit
was significantly lower year-over-year despite a continuing
strong contribution from the service business, on reduced capac-
ity utilization following the weaker order intake, price declines,
and higher net charges related to project execution and comple-
tion year-over-year. In addition, profit in fiscal 2016 benefited
from positive effects totaling €130 million from revised estimates
related to resumption of long-term construction and service con-
tracts in Iran following the ending or easing of EU and U.S. sanc-
tions and €118 million from the measurement of inventories.
Costs for the integration of Dresser-Rand were €33 million in
fiscal 2017 compared to €59 million in fiscal 2016. Finally, sever-
ance charges were lower in fiscal 2017, at €19 million compared
to €69 million in fiscal 2016. Global energy trends continue to
structurally reduce overall demand in markets for the Division's
offerings, resulting in declining new-unit business and corre-
sponding price pressure due to current overcapacities.
11.4%
5%
10.3%
4%
895
7.5%
7.6%
932
Profit
Profit margin
(5)%
(6)%
(15)%
1,872
Profit margin
2016
12,963
Orders
1 As defined by the International Monetary Fund.
(11)%
27,239 30,448 (11)%
therein: emerging
markets¹
(2)%
(1)%
3%
(in millions of €)
27,195
28,464
markets¹
therein: emerging
10%
9%
6,850
86,480
7,484
85,669
Siemens
1 As defined by the International Monetary Fund.
Orders related to external customers came in only slightly below
the high level a year ago despite substantial, ongoing contraction
in markets for Power and Gas. The Division reported a sharply
lower volume from large orders compared to the prior year, when
it had won large contracts totaling €4.7 billion in Egypt. This fac-
tor also influenced the decline in emerging markets. All other
industrial businesses took in higher orders year-over-year. Digital
Factory and Mobility recorded double-digit order growth, while
higher orders at SGRE benefited from significant portfolio effects.
In the Europe, C.I.S., Africa, Middle East region, with the excep-
tion of Power and Gas, all industrial businesses posted order
growth, including double-digit growth in Mobility and Energy
Management. Orders came in substantially higher in Germany,
due to higher levels of large orders in SGRE, Energy Management
and Mobility compared to fiscal 2016.
Orders in the Americas region were down clearly year-over-year
on a substantial decline in Power and Gas. In addition, order intake
at Mobility declined significantly, while Building Technologies and
Digital Factory posted double-digit growth, the latter primarily due
to portfolio effects from the acquisition of Mentor Graphics. The
pattern of order development in the U.S. was roughly the same as
in the Americas region, with double-digit growth at Building Tech-
nologies and Digital Factory more than offset by substantial de-
clines in Power and Gas, Mobility and SGRE.
% Change
Fiscal year
Comp.
Actual
2016
2017
(in millions of €)
% Change
13,628
Fiscal year
A.3.2.1 POWER AND GAS
A.3.2 Segment information analysis
11
Combined Management Report
Revenue in Asia, Australia was up clearly year-over-year,
as growth in Digital Factory, SGRE, Energy Management and
Healthineers was partly offset by declines in Power and Gas and
Mobility. China's growth outpaced the region overall, as all in-
dustrial businesses except Mobility recorded higher revenue,
with Digital Factory, SGRE and Energy Management posting the
highest increases.
In the Americas, revenue came in higher year-over-year, driven
primarily by the merger with Gamesa, which brought new vol-
ume in Latin America, and revenue growth in Digital Factory and
Building Technologies. In the U.S., increases in Digital Factory,
Building Technologies and Mobility were offset by declines in
Power and Gas and in Process Industries and Drives.
Growth drivers in Europe, C.I.S., Africa, Middle East included
SGRE, Digital Factory and Mobility. These increases were partly
offset by a clear revenue decline in Power and Gas. In Germany,
revenue was up with increases in the majority of industrial busi-
nesses partly offset by declines at Energy Management and
Power and Gas.
Revenue related to external customers went up moderately year-
over-year and increased in the majority of industrial businesses,
offsetting declines in Power and Gas and Process Industries and
Drives. Higher revenue at SGRE benefited from substantial port-
folio effects following the merger.
A.3.2.2 ENERGY MANAGEMENT
therein: China
Actual
6,913
Combined Management Report
In a more favorable market environment, Digital Factory in-
creased order intake and revenue in all its businesses year-over-
year. Improvements in the market conditions were most notable
in the automotive and the machine building industries, support-
ing an excellent performance by the Division's short-cycle busi-
nesses, which expanded their leading market positions during
the fiscal year. Orders and revenue in the product lifecycle man-
agement software (PLM) business grew substantially due to
strong demand combined with new volume resulting from the
acquisition of Mentor Graphics at the end of the second quarter
of fiscal 2017. On a geographic basis, orders and revenue were up
in all reporting regions, with the strongest increase from Asia,
Australia, particularly including China. The Division's profit im-
provement was driven by the short-cycle businesses. Profit in the
PLM business was held back by ongoing expenses related to fur-
ther advancing Siemens' MindSphere platform. Furthermore, the
business' profitability was impacted by deferred revenue adjust-
ments and transaction and integration costs related to the acqui-
sition of Mentor Graphics, totaling €104 million. In fiscal 2016,
deferred revenue adjustments and transaction and integration
costs related to the acquisition of CD-adapco totaled €43 million.
Profit for the Division benefited from a gain of €175 million re-
lated to the eCar business, which Digital Factory contributed to
the joint venture Valeo Siemens eAutomotive. This positive effect
was partly offset by higher severance charges, which increased
to €134 million in fiscal 2017, up from €49 million in fiscal 2016.
16.6%
18.8%
26%
1,690
2,135
Profit
Profit margin
9%
12%
10,172
11,378
Revenue
8%
12%
10,332
11,532
13
14
A.3.2.6 PROCESS INDUSTRIES AND DRIVES
% Change
(1)%
(2)%
9,038
8,876
Revenue
2%
1%
8,939
% Change
Comp.
9,034
Comp.
Actual
2016
2017
(in millions of €)
Fiscal year
A.3.2.8 SIEMENS GAMESA RENEWABLE ENERGY
imaging business, which continued to account for the largest
share of Healthineers profit overall, and by the advanced thera-
pies business. Profit benefited from currency tailwinds in both
periods. Severance charges were €57 million in fiscal 2017 and
€61 million in fiscal 2016.
Orders
Orders
Actual
2017
Successfully executing its growth initiatives in both the regions
and across its businesses, Building Technologies increased orders
and revenue and grew faster than its market and major compet-
itors. On a geographic basis, orders and revenue were up in all
three reporting regions with the strongest growth contribution
coming from the U.S. Profit and profitability increased due mainly
to higher revenue and improvements in productivity. Profit devel-
opment in fiscal 2017 benefited from a €94 million gain related
to pension plan amendments. Severance charges were similar in
both periods, at €18 million in fiscal 2017 and €16 million a year
earlier.
7%
8%
Comp.
% Change
9.4%
12.0%
Profit margin
6%
36%
577
784
Profit
6,156
6,523
Revenue
7%
6,435
A.3.2.4 MOBILITY
(in millions of €)
2017
Fiscal year
2016
(in millions of €)
Orders
A.3.2.5 DIGITAL FACTORY
rolling stock business in the second half. The Division's rail infra-
structure business also contributed to revenue growth for the
whole fiscal year. On a geographic basis, revenue increases in
Europe, C.I.S., Africa, Middle East and the Americas more than
offset a decline in Asia, Australia, which reported a sharp drop in
China. Profit improved in the majority of the businesses, driven
by higher revenue and successful project execution. The increase
in severance charges, which were €46 million in the current pe-
riod up from €16 million a year earlier, was largely offset by a
€28 million gain related to pension plan amendments.
Order growth at Mobility was driven primarily by the rolling stock
business and supported by a higher volume from large orders.
The current period included a number of significant contract
wins in all three reporting regions, most notably in the region
Europe, C.I.S. Africa, Middle East region, including an order for
commuter rail and an order for a driverless metro, both in Austria,
and large orders for the Division's new commuter rail platform
Mireo in Germany. In the Asia, Australia region, the Division won
a large turnkey project for the extension of a rapid transit system
in Thailand. The largest contract wins in fiscal 2016 included an
order for light rail vehicles in the U.S., a commuter rail contract
in Germany and a rail automation order in Algeria. While revenue
in the rolling stock business declined in the first half of the fiscal
year due mainly to timing factors related to large rail projects,
Mobility successfully executed on its large rolling stock and loco-
motive orders, resulting in double-digit revenue growth in the
% Change
Comp.
16%
6%
8.7%
9.2%
Profit margin
Fiscal year
2016
Actual
14%
4%
10%
743
Profit
7,825
8,099
Revenue
7,875
8,963
Orders
678
3%
5%
79,644
2,445
(21)%
1,142
902
Debt ratio
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
(10)%
5,087
4,579
Provisions
93%
829
1,599
Deferred tax liabilities
2,471
(1)%
45,884
47,986
125,717
138%
605
1,438
133,804
28%
33%
26%
34,211
(30)%
43,089
4%
Total equity attributable to shareholders of Siemens AG
Equity ratio
72%
67%
(2)%
90,901
89,278
(4)%
Total liabilities and equity
6%
13,695
Provisions for pensions and similar obligations
4,166
4,247
Current provisions
(25)%
1,933
1,444
Other current financial liabilities
21%
8,048
9,755
Trade payables
(12)%
6,206
5,447
Short-term debt and current maturities of long-term debt
% Change
2016
2%
Current income tax liabilities
2,355
2,085
8%
24,761
26,777
Long-term debt
1%
42,916
43,394
Total current liabilities
9,582
Profit
40
97
Liabilities associated with assets classified as held for disposal
(2)%
20,437
20,049
Other current liabilities
13%
139%
The decrease in short-term debt and current maturities of
long-term debt was due mainly to the repayment of fixed-rate
instruments totaling €4.9 billion. This was partly offset by reclas-
sifications of long-term fixed-/floating-rate instruments totaling
€3.7 billion.
Non-controlling interests
Long-term debt increased mainly due to the issuance of fixed-/
floating-rate instruments totaling US$7.5 billion (€7.0 billion)
in seven tranches with different maturities of up to 30 years.
This was partly offset by the above mentioned reclassifications to
short-term debt and current maturities of long-term debt.
(1)%
1%
16,769
16,976
therein: U.S.
32%
The increase in trade payables was due mainly to the merger
with Gamesa.
10,525
13,943
22,921 24,794
Americas
therein: Germany
(1)%
4%
2%
4%
10,739
4%
(8)%
(10)%
Asia, Australia
16,166
83,049
Siemens
13%
14%
13%
12%
6,439
7,209
4%
therein: China
(7)%
18,162
16,905
17,700 15,501
Asia, Australia
therein: U.S.
6%
7%
15,118
(9)%
41,819
32%
Americas
Revenue (location of customer)
Orders were up significantly in the Asia, Australia region due to
growth in all industrial businesses other than Power and Gas, with
SGRE and Digital Factory recording the largest increases. A num-
ber of countries within the region posted significant growth.
China posted the largest increase, with order growth at Digital
Factory, SGRE and Process Industries and Drives partly offset by a
substantial decline in Energy Management.
Negative currency translation effects took one percentage point
each from order development and revenue growth; portfolio
transactions, primarily the merger of the wind power business
with Gamesa and the acquisition of Mentor Graphics, added two
percentage points to order development and three percentage
points to revenue growth. The resulting ratio of orders to revenue
(book-to-bill) for Siemens in fiscal 2017 was 1.03.
A.3.1 Orders and revenue by region
A.3 Results of operations
Combined Management Report
10
Capital employed (continuing and discontinued operations)
43,367
11,142
23,516 22,707
Less: Fair value hedge accounting adjustment
Combined Management Report
18
The increase in non-controlling interests was due mainly to
the merger with Gamesa.
The main factors for the change in total equity attributable to
shareholders of Siemens AG were €6.0 billion in net income
attributable to shareholders of Siemens AG, €2.5 billion in other
comprehensive income, net of income taxes, mainly due to
remeasurements of defined benefit plans, and €2.5 billion in
changes in equity resulting from the merger with Gamesa. This
increase was partly offset by dividend payments of €2.9 billion
(for fiscal 2016).
-
The merger with Gamesa and the acquisition of Mentor Graphics
were the primary factors in the increase in deferred tax liabili-
ties. While the merger with Gamesa also brought substantial
new provisions, this effect was more than offset by positive
factors mainly related to a major asset retirement obligation -
resulting in a net decrease.
Provisions for pensions and similar obligations fell on a reduc-
tion of Siemens' defined benefit obligation (DBO) mainly due to
increased discount rate assumptions.
Orders (location of customer)
(in millions of €)
Plus: Adjustments from assets classified as held for disposal and
liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated
actuarial gains/losses on post-employment benefits
% Change
Fiscal year
(2)%
(2)%
46,185
45,048
therein: Germany
Europe, C.I.S., Africa,
Comp.
Actual
Middle East
Europe, C.I.S., Africa,
Middle East
% Change
Fiscal year
2016
2017
(in millions of €)
Comp.
Actual
2016
2017
Risk management at Siemens builds on a comprehensive, interac-
tive and management-oriented Enterprise Risk Management
(ERM) approach that is integrated into the organization and that
addresses both risks and opportunities. Our ERM approach is based
on the globally accepted COSO (Committee of Sponsoring Organi-
zations of the Treadway Commission) 'Enterprise Risk Manage-
ment - Integrated Framework' (2004) and is adapted to Siemens
requirements. It additionally conforms to ISO (International Orga-
nization for Standardization) Standard 31000 (2009). The frame-
work connects the ERM process with our financial reporting pro-
cess and our internal control system. It considers a company's
strategy, the efficiency and effectiveness of its business opera-
tions, the reliability of its financial reporting as well as compliance
with relevant laws and regulations to be equally important.
while management reporting is intended to enable us to monitor
such risks more closely as our business progresses. Our internal
auditors regularly review the adequacy and effectiveness of our
risk management system. Accordingly, if deficits are detected,
it is possible to adopt appropriate measures for their elimination.
This coordination of processes and procedures is intended to help
ensure that the Managing Board and the Supervisory Board are
fully informed about significant risks in a timely manner.
A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk management
and control systems which support us in the early recognition of
developments that could jeopardize the continuity of our busi-
ness. The most important of these systems include our enter-
prise-wide processes for strategic planning and management
reporting. Strategic planning is intended to support us in consid-
ering potential risks well in advance of major business decisions,
A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursuing
sustainable growth and creating economic value while managing
appropriate risks and opportunities and avoiding inappropriate
risks. As risk management is an integral part of how we plan and
execute our business strategies, our risk management policy is
set by the Managing Board. Our organizational and accountabil-
ity structure requires each of the respective managements of
our Industrial Business, Financial Services (SFS), regions and
Corporate Units to implement risk management programs that
are tailored to their specific industries and responsibilities, while
being consistent with the overall policy.
We expect a mixed picture in our market environment in fiscal
2018, ranging from strong markets for our short-cycle businesses
to unfavorable dynamics in our energy generation markets, as
well as geopolitical uncertainties that may restrict investment
sentiment. For fiscal 2018 we expect modest growth in revenue,
net of effects from currency translation and portfolio transac-
tions, and anticipate that orders will exceed revenue for a book-
to-bill ratio above 1. We expect a profit margin of 11.0% to 12.0%
for our Industrial Business and basic EPS from net income in the
range of €7.20 to €7.70, both excluding severance charges.
Overall, the actual development for Siemens and its Segments
may vary, positively or negatively, from our outlook due to the
risks and opportunities described below or if our expectations
and assumptions do not materialize.
This outlook excludes charges related to legal and regulatory
matters, effects on EPS associated with minorities holding shares
in Healthineers following the planned IPO, and potential effects
which may follow the introduction of a new strategic program.
A.8.1.4 OVERALL ASSESSMENT
Our ERM process aims for early identification and evaluation of,
and response regarding, risks and opportunities that could mate-
rially affect the achievement of our strategic, operational, financial
and compliance objectives. The time horizon covered by ERM is
typically three years. Our ERM is based on a net risk approach,
addressing risks and opportunities remaining after the execution
of existing control measures. If risks have already been considered
in plans, budgets, forecasts or the financial statements (e.g. as a
provision or risk contingency), they are supposed to be incorpo-
rated with their financial impact in the entity's business objectives.
As a consequence, only additional risks arising from the same sub-
ject (e.g. deviations from business objectives, different impact
perspectives) should be considered for the ERM. In order to pro-
vide a comprehensive view on our business activities, risks and
opportunities are identified in a structured way combining ele-
ments of both top-down and bottom-up approaches. Reporting
generally follows a quarterly cycle while this regular reporting
process is complemented by an ad-hoc reporting process that aims
to escalate critical issues in a timely manner. Relevant risks and
opportunities are prioritized in terms of impact and likelihood,
considering different perspectives, including business objectives,
reputation and regulatory matters. The bottom-up identification
and prioritization process is supplemented by workshops with the
respective managements of the Industrial Business, SFS, regions
and Corporate Units. This top-down element ensures that poten-
tial new risks and opportunities are discussed at the management
level and are included in the subsequent reporting process, if
found to be relevant. Reported risks and opportunities are ana-
lyzed regarding potential cumulative effects and are aggregated
within and for each of the organizations mentioned above.
A.8.2 Risk management
Combined Management Report
Economic, political and geopolitical conditions (macroeco-
nomic environment): We see a high level of uncertainty regard-
ing the global economic outlook. Significant downside risks stem
e.g. from an increasing trend towards populism and from the
consequences of the Brexit negotiations. The U.K. exit process
could heighten business and consumer uncertainty, reduce in-
vestment in the U.K., pose risks to financial markets and may
increase the uncertainties about the future of the European
Union (EU) in general. A further and massive loss of economic
confidence and a prolonged period of reluctance in investment
Responsibilities are assigned for all relevant risks and opportuni-
ties, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step,
assuming responsibility for a specific risk or opportunity involves
choosing one of our general response strategies. Our general re-
sponse strategies with respect to risks are avoidance, transfer,
reduction or acceptance of the relevant risk. Our general response
strategy with respect to opportunities is to 'seize' the relevant
opportunity. In a second step, responsibility for a risk or opportu-
nity also involves the development, initiation and monitoring of
appropriate response measures corresponding to the chosen re-
sponse strategy. These response measures have to be specifically
tailored to allow for effective risk management. Accordingly, we
have developed a variety of response measures with different
characteristics. For example, we mitigate the risk of fluctuations
in currency and interest rates by engaging in hedging activities.
Regarding our long-term projects, systematic and comprehensive
project management with standardized project milestones, in-
cluding provisional acceptances during project execution and
complemented by clearly defined approval processes, assists us
in identifying and responding to project risks at an early stage,
even before the bidding phase. Furthermore, we maintain appro-
priate insurance levels for potential cases of damage and liability
risks in order to reduce our exposure to such risks and to avoid
or minimize potential losses. Among others, we address the risk
of fluctuation in economic activity and customer demand by
closely monitoring the macroeconomic conditions and develop-
ments in relevant industries, and by adjusting capacity and im-
plementing cost-reduction measures in a timely and consistent
manner, if deemed necessary.
A.8.2.3 RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with legal
and operational requirements, the Managing Board established
a Risk Management and Internal Control Organization, headed by
the Chief Risk & Internal Control Officer, and a Corporate Risk and
Internal Control Committee (CRIC). The CRIC obtains risk and op-
portunity information from the Risk Committees established at
the Industrial Business, SFS, regions and Corporate Units. In order
to allow for a meaningful discussion on Siemens group level in-
dividual risk and opportunities of similar cause-and-effect nature
are aggregated into risk and opportunity themes. This aggrega-
tion naturally results in a mixture of risks, including those with
a primarily qualitative assessment and those with a primarily
quantitative risk assessment. Accordingly, we do not foresee a
purely quantitative assessment of risk themes. This information
then forms the basis for the evaluation of the company-wide risk
and opportunity situation. The CRIC reports to and supports the
Managing Board on matters relating to the implementation,
operation and oversight of the risk and internal control system
and assists the Managing Board for example in reporting to the
Audit Committee of the Supervisory Board. The CRIC is composed
of the Chief Risk & Internal Control Officer, as the chairperson,
members of the Managing Board and selected heads of Corpo-
rate Units.
A.8.3 Risks
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and repu-
tation. The order in which the risks are presented in each of the
four categories reflects the currently estimated relative exposure
for Siemens associated with these risks and thus provides an in-
dication of the risks' current importance to us. Additional risks
not known to us or that we currently consider immaterial may
also negatively impact our business objectives and operations.
Unless otherwise stated, the risks described below relate to all of
our segments.
A.8.3.1 STRATEGIC RISKS
Competitive environment: The worldwide markets for our
products, solutions and services are highly competitive in terms
of pricing, product and service quality, product development and
introduction time, customer service, financing terms and shifts
in market demands. We face strong existing competitors and also
competitors from emerging markets, which may have a better
cost structure. Some industries in which we operate are under-
going consolidation, which may result in stronger competition,
a change in our relative market position, or unexpected price
erosion. Furthermore, there is a risk of take-overs of crucial sup-
pliers by competitors and a risk that competitors are increasingly
offering services for our installed base. We address these risks
with various measures, for example benchmarking, strategic
initiatives, sales push initiatives, executing productivity measures
and target cost projects, rightsizing of our footprint, outsourc-
ings, mergers and joint ventures, exporting from low-cost
countries to price-sensitive markets, and optimizing our product
portfolio. We continuously monitor and analyze competitive and
market information in order to be able to anticipate unfavorable
changes in the competitive environment rather than merely
reacting to such changes.
28
Combined Management Report
We aim in general for a capital structure, defined as the ratio of
industrial net debt to EBITDA, of up to 1.0, and expect to achieve
this in fiscal 2018.
27
Capital structure
Other disposals of assets
Combined Management Report
(1,000)
(2,914)
Cash flows from financing activities - continuing and discontinued operations
Cash flows from financing activities - discontinued operations
Cash flows from financing activities - continuing operations
Dividends attributable to non-controlling interests
Dividends paid to shareholders of Siemens AG
Interest paid
260
(187)
Change in short-term debt and other financing activities
6,958
1,123
(931)
Repayment of long-term debt (including current maturities of long-term debt)
Issuance of long-term debt
Re-issuance of treasury shares and other transactions with owners
Purchase of treasury shares
Cash flows from financing activities
(4,868)
(1,560)
(1,560)
The conversion of profit into cash inflows from operating activ-
ities was mainly driven by Healthineers and the Digital Factory
Division. This conversion was held back by a build-up of operat-
ing net working capital primarily due to an increase in invento-
ries at SGRE and a decrease in billings in excess of costs and esti-
mated earnings on uncompleted contracts and related advances
at the Power and Gas Division.
4,819
(2,406)
(50)
7,225
Discontinued
operations
Continuing
operations
Additions to intangible assets and property, plant and equipment
Free cash flow
Cash flows from operating activities
(in millions of €)
Free cash flow
We report Free cash flow as a supplemental liquidity measure:
Combined Management Report
20
20
The cash inflows from the re-issuance of treasury shares and
other transactions with owners resulted from the exercise of
warrants in connection with the redemption of the US$1.5 billion
bonds with warrant units.
The cash inflows from other disposals of assets primarily in-
cluded disposals from above-mentioned eligible collateral, pro-
ceeds from real estate disposals at SRE and from the sale of invest-
ments such as the stake in an offshore windfarm project at SFS.
to payments related to several investments such as in connection
with our Bentley Systems strategic alliance and the Valeo Siemens
eAutomotive joint venture.
The cash outflows for other purchases of assets primarily in-
cluded additions of assets eligible as central bank collateral and
The cash outflows for acquisitions of businesses, net of cash
acquired, primarily included payments totaling €4.1 billion re-
lated to the acquisition of Mentor Graphics.
(7,457)
Cash flows from investing activities - continuing and discontinued operations
(1)
Cash flows from investing activities – discontinued operations
Cash flows from operating activities
(in millions of €)
A.5.2 Cash flows
19
Combined Management Report
Irrevocable loan commitments amounted to €3.4 billion (Sep-
tember 30, 2016: €3.4 billion). A considerable portion of these
commitments resulted from asset-based lending transactions,
meaning that the respective loans can be drawn only after the
borrower has provided sufficient collateral.
Future payment obligations under non-cancellable operating
leases amounted to €3.3 billion (September 30, 2016: €3.5 bil-
lion).
In addition to these commitments, we issued other guarantees.
To the extent future claims are not considered remote, maximum
future payments from these commitments amount to €0.6 bil-
lion (September 30, 2016: €0.9 billion). The decrease in other
guarantees is related to indemnifications issued in connection
with dispositions of businesses.
As of September 30, 2017 the undiscounted amount of maximum
potential future payments related primarily to credit guarantees
and guarantees of third-party performance amounted to €3.1 bil-
lion (September 30, 2016: €3.7 billion).
Off-balance-sheet commitments
STATEMENTS.
For further information about our debt see NOTE 15 in B.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
tion about the functions and objectives of our financial risk man-
agement see NOTE 24 in B.6 NOTES TO CONSOLIDATED FINANCIAL
We have credit facilities totaling €7.8 billion which were unused
as of September 30, 2017.
As of September 30, 2017 we recorded, in total, €28.8 billion in
notes and bonds (maturing until 2047), €2.5 billion in loans from
banks (maturing until 2027), €0.8 billion in other financial in-
debtedness (maturing until 2029) and €0.1 billion in obligations
under finance leases. Notes, bonds and loans from banks were
issued mainly in U.S. dollar and euro, and to a lower extent in the
British pound.
Debt and credit facilities
In November 2015, we announced a share buyback of up to
€3 billion ending at the latest on November 15, 2018. The buy-
backs will be made under the current authorization granted at
the Annual Shareholders' Meeting on January 27, 2015. Shares
repurchased may be used solely for retirement; for issuing shares
to employees, to members of the Managing Board and board
members of affiliated companies; and for servicing/securing the
obligations or rights from or in connection with convertible
bonds or warrant bonds. In fiscal 2017 we repurchased 7,922,129
treasury shares under the program at an average cost per share
of €117.85, totaling €0.9 billion (including incidental transaction
charges).
Our capital structure ratio as of September 30, 2017 decreased to
0.9 from 1.0 a year earlier, both results being in line with the
target established in our One Siemens financial framework. The
change was due primarily to the above-mentioned decrease of
provisions for pensions and similar obligations.
Capital structure ratio
Gamesa, we expect ROCE to show a double-digit result in fiscal
2018 but to come in below the lower end of our target range.
Net income
(50)
Change in operating net working capital
Cash flows from operating activities - discontinued operations
1,404
(7,456)
(1,382)
Cash flows from investing activities - continuing operations
Other purchases of assets
(686)
(4,385)
(2,406)
7,176
(50)
7,225
2,641
(1,595)
2017
Fiscal year
Change in receivables from financing activities of SFS
Acquisitions of businesses, net of cash acquired
Additions to intangible assets and property, plant and equipment
Cash flows from investing activities
Cash flows from operating activities - continuing and discontinued operations
Other reconciling items to cash flows from operating activities – continuing operations
Cash flows from operating activities – continuing operations
Fiscal year 2017
6,179
discontinued operations
ers and corresponding EPS. Effects on EPS associated with minori-
ties holding shares in Healthineers following the planned IPO are
excluded from this outlook. Furthermore, charges related to legal
and regulatory matters are excluded from this outlook.
We are basing our outlook for fiscal 2018 for the Siemens Group and
its segments on the above-mentioned expectations and assump-
tions regarding the overall economic situation and specific market
conditions for the next fiscal year. We plan to publicly list a minority
stake in Healthineers in the first half of calendar 2018, depending
on market conditions, to further strengthen Healthineers in Siemens
for the future. The public listing of a minority stake in Healthineers
will among others result in an increase in non-controlling interests,
which reduces net income attributable to Siemens AG's sharehold-
A.8.1.3 SIEMENS GROUP
Our SFS Division is geared to Siemens' Industrial Business and its
markets. As such SFS is influenced by the business development
of the markets served by our Industrial Business, among other
factors. SFS will continue to focus its business scope on areas of
intense domain know-how.
For SGRE, we expect global wind installations to grow in fiscal
2018, with growth driven by higher demand for onshore installa-
tions, while offshore installations are expected to remain near
the prior-year level. Some of the SGRE more relevant onshore
markets like India and the U.S. will continue to experience higher
than normal levels of volatility driven by the transition to fully
competitive wind markets. This transition is expected to result in
a low double-digit price decline in the onshore markets in fiscal
2018. As a result volume for SGRE's markets measured in Euro is
expected to decline year-over-year.
For fiscal 2018, markets for Healthineers are expected to stay on
a moderate growth path. Healthineers' markets continue to ben-
efit from long-term trends such as growing and aging populations
and from broader access to healthcare, but are restricted by pub-
lic spending constraints and by consolidation of healthcare pro-
viders. On a geographic basis, we expect slight growth in the U.S.,
held back by continued pressure to increase utilization of existing
equipment, reduced reimbursement rates and policy uncertainty.
For Europe, we also expect slight growth, with equipment re-
placement and business with large customers such as hospital
chains gaining further importance. For China, we expect moder-
ate growth due to continuously growing government spending on
healthcare, promoting the private segment and expanding access
on county level, pronounced effects of aging and growing inci-
dence of chronic disease, partly held back by governmental re-
strictions such as centralized tendering and regulatory oversight
of large-scale equipment allocation and use. Governments in a
number of countries show the intention to establish protectionist
initiatives and policies which support local suppliers.
we expect challenging market conditions for our wind-related
components due to higher pricing pressure resulting from the on-
going transition towards mature, fully competitive wind energy
markets. On a geographic basis, the market growth momentum
in China is expected to moderate in fiscal 2018 year-over-year,
while markets in Europe and in the U.S. are expected to improve.
Combined Management Report
In fiscal 2018, nominal volume for the markets served by the
Process Industries and Drives Division is expected to decline
slightly due to currency translation effects. Excluding this effect,
market volume is anticipated to grow slightly. Within commodity-
related markets (e.g. oil and gas, mining, minerals), a gradual re-
covery in capital expenditures is expected to continue on a low
level. Chemicals market is expected to further stabilize, whereas
For fiscal 2018, markets addressed by the Digital Factory Division
are expected to continue to grow. Global manufacturing produc-
tion is forecast to grow moderately again, although growth rates
in the automotive industries are expected to slow following
strong growth in prior years. The machine-building industry is
also forecast to grow as customers upgrade and modernize pro-
duction facilities in an increasingly dynamic market environment.
The trend towards digitalization is expected to continue to drive
growth in the industrial software market. On a geographic basis,
the strong growth rates experienced in China in fiscal 2017 are
not expected to continue in fiscal 2018.
For fiscal 2018, we expect markets served by the Mobility Divi-
sion to grow moderately. We anticipate that rail operators in
Europe, particularly in Germany and the U.K., will continue to
make significant investments. Markets in the Americas region are
expected to remain strong, especially due to ongoing invest-
ments in urban transport and infrastructure in the U.S. as well as
demand for commuter transport in Argentina. In the Middle East
and Africa, we expect tenders of further rolling stock and turnkey
projects. In China, we expect investments in high-speed trains,
urban transport and rail infrastructure to continue to drive
growth. In India, market growth should continue from projects
for commuter and urban transport as well as high-speed passen-
ger lines, freight rail, and related infrastructure as part of the
country's transportation infrastructure modernization. Overall,
local rail transport and intermodal mobility solutions are ex-
pected to gain importance as urbanization continues to progress
around the world. In emerging countries, rising incomes are ex-
pected to result in greater demand for public transport solutions.
For the markets served by the Building Technologies Division, we
expect solid growth again in fiscal 2018. Highest growth dynamics
are forecast for Asia, with above-average growth in China and
India. Markets in the Middle East are also expected to grow faster
than the Division's markets overall. The U.S. is expected to grow in
line with the global average and the majority of European coun-
tries are anticipated to continue their recovery, led by Spain and
some Eastern European countries.
currency translation effects. We expect negative currency trans-
lation effects from a weaker US$ and related currencies. Customers
are expected to continue their effort to strengthen transmission and
distribution grids to integrate the growing amount of decentralized
renewable energy. We expect first signs of stabilization in the oil and
gas and the metals and mining markets, though from low levels.
In fiscal 2018, markets served by the Energy Management Division
are expected to provide moderate, low single-digit growth excluding
For fiscal 2018, we expect the markets served by our Power and
Gas Division to remain challenging with market volume poten-
tially declining again, even below the low level of fiscal 2017.
However, the need for small and medium gas turbines, particu-
larly in countries with a less developed energy infrastructure,
is anticipated to continue. Volume in the compression market
is expected to remain on a low level but we expect to see growing
signs of a recovery during fiscal 2018 as some customers in the
oil and gas industry revive investment plans. The steam turbine
market is expected to continue to be impacted by the shift from
coal to gas and renewable sources for power generation.
In fiscal 2018, market volume measured in Euro is expected to be
held back by negative currency translation effects.
A.8.1.2 MARKET DEVELOPMENT
The forecasts presented here for GDP and fixed investments are
based on a report from IHS Markit dated October 15, 2017.
GDP growth in China is expected to moderate further in calendar
2018 to 6.5%, down from 6.8% in 2017. However, the near-term
strength masks longer-term fragilities, especially very high debt
levels. Also, the government has made only slow progress in re-
ducing overcapacities.
For fiscal 2018, we expect market-driven headwinds to continue
to significantly impact volume development and profitability of
Power and Gas, SGRE and Process Industries and Drives. These
units are in the process of preparing capacity adjustment mea-
sures, which we expect to result in significant severance charges.
There are high uncertainties regarding the extent of the financial
burdens for fiscal 2018, as these depend on the results of consul-
tations with the relevant employee representatives and the im-
plementation of the planned measures is expected to take seve-
ral years. Therefore, we exclude all severance charges from this
outlook. Severance charges in fiscal 2017 were €385 million for
our Industrial Business and €466 million (pre-tax) for Siemens.
We assume that severance charges in fiscal 2018 will be higher
than in fiscal 2017. Furthermore, this outlook excludes potential
effects which may follow the introduction of a new strategic pro-
gram, which we expect to announce during fiscal 2018.
The expansion in Europe is expected to continue, with GDP fore-
cast to grow 2.5%; especially the Eurozone should proceed with
its recovery after a prolonged period of stagnation and recession.
Supportive factors include continued monetary stimulus, re-
duced headwinds from fiscal policy and improving confidence of
companies and households.
We are exposed to currency translation effects, particularly involv-
ing the US$, the British £ and currencies of emerging markets,
particularly the Chinese yuan. While we expect volatility in global
currency markets to continue in fiscal 2018, we have improved our
natural hedge on a global basis through geographic distribution
of our production facilities during the past. Nevertheless, Siemens
is still a net exporter from the Euro zone to the rest of the world,
so a weak Euro is principally favorable for our business and a
strong Euro is principally unfavorable. In addition to the natural
hedging strategy just mentioned, we also hedge currency risk in
our export business using derivative financial instruments. We
expect these steps to help us limit effects on income related to
currency in fiscal 2018. Based on currency exchange rates as of
beginning of November 2017, we nevertheless expect negative
currency effects to significantly influence nominal order and
revenue development, and to adversely affect Industrial Business
profit with an impact in the mid-triple-digit millions of Euros.
Combined Management Report
26
Continuing and
26
Within our One Siemens financial framework, we aim in general
to achieve a ROCE in the range of 15% to 20%. Due mainly to
burdens on net income and average capital employed resulting
from the acquisition of Mentor Graphics and the merger with
Capital efficiency
We do not expect material influence on financial results from
discontinued operations in fiscal 2018. We anticipate our tax rate
for fiscal 2018 to be in the range of 27% to 33%, up from 26% in
fiscal 2017. We expect the increase in the tax rate to be driven by
tax burdens related to the preparations of the initial public offer-
ing of a minority stake in Healthineers and the merger of our
mobility business with Alstom.
Within our Reconciliation to Consolidated Financial Statements, we
expect expenses for Corporate items to be approximately €0.6 bil-
lion and to include significant centrally carried expenses related to
innovation and digitalization. Despite burdens such as carve-out
related expenses stemming from portfolio measures, particularly
including the planned public listing of a minority share in Healthi-
neers in the first half of calendar 2018 and the planned merger of
our mobility business with Alstom by the end of calendar 2018, we
expect results related to CMPA to be positive due among other fac-
tors to a €0.6 billion (after-tax) gain from the sale of our shares in
OSRAM Licht AG at the beginning of fiscal 2018. Results related to
CMPA are also expected to be highly volatile from quarter to quar-
ter during the fiscal year. We anticipate that SRE will continue with
real estate disposals depending on market conditions and generate
results near the prior-year level. Centrally carried pension expenses
are expected to total approximately €0.4 billion in fiscal 2018.
Amortization of intangible assets acquired in business combina-
tions are expected to rise to approximately €1.2 billion in fiscal 2018
due primarily to the merger with Gamesa and the acquisition of
Mentor Graphics. Eliminations, Corporate Treasury and other rec-
onciling items, which were a negative €0.3 billion in fiscal 2017, are
expected to increase by approximately €0.1 billion in fiscal 2018
due mainly to higher interest expenses.
For fiscal 2018, taking into account the above-mentioned as-
sumptions and exclusions, we expect all but two of our industrial
businesses to be in or above their ranges for profit margin as
defined in our financial performance system (see → A.2 FINAN-
CIAL PERFORMANCE system). The exceptions are Power and Gas and
Process Industries and Drives. Overall, we expect a profit margin
for our Industrial Business of 11.0% to 12.0%. Taking into account
the retrospective adoption of IFRS 15 as mentioned above, Indus-
trial Business profit margin was 11.1% in fiscal 2017. We expect
SFS, which is reported outside Industrial Business, to achieve a
return on equity (ROE) within its margin range in fiscal 2018 and
to keep its profit near the prior-year level.
tion of around 3% to 4%. Also, we plan to increase R&D expenses
aimed at strengthening our capacities for innovation.
Our forecast for net income and corresponding basic EPS is based
on a number of additional assumptions: As part of our One
Siemens framework, we target a total cost productivity improve-
ment of 3% to 5% in fiscal 2018. Also, we assume continued solid
project execution. Furthermore, we anticipate clear currency-re-
lated impacts on net income. Along with these assumptions, we
anticipate pricing pressure on our offerings of around 2.5% over-
all in fiscal 2018, with SGRE and the Power and Gas Division
clearly above this average. Furthermore, we expect wage infla-
For fiscal 2018, we expect net income to result in basic EPS from
net income in the range of €7.20 to €7.70. Net income and basic
EPS from net income for fiscal 2017 were €6.1 billion and €7.34,
respectively, taking into account the retrospective adoption of
IFRS 15 as mentioned above.
Profitability
We anticipate that orders in fiscal 2018 will exceed revenue for a
book-to-bill ratio above 1.
As of September 30, 2017, our order backlog totaled €126 billion.
Thereof Power and Gas had an order backlog of €40 billion, Mo-
bility of €26 billion, SGRE of €21 billion, Healthineers of €15 bil-
lion, Energy Management of €13 billion, Process Industries and
Drives and Building Technologies of €5 billion each and Digital
Factory of €3 billion. We expect revenue growth in fiscal 2018 to
benefit from conversion of our order backlog. From Siemens' back-
log, we expect to convert approximately €44 billion of past orders
into current revenue in fiscal 2018. Within this amount, we expect
our segments involved in large long-term project business to con-
tribute the following conversions of backlog into revenue for fiscal
2018: For Power and Gas we expect approximately a €9 billion in
revenue conversion, for Mobility, Energy Management and SGRE
approximately €7 billion in revenue conversion each.
In fiscal 2017, most of our industrial businesses contributed to or-
ganic revenue growth, and we expect a similar development in fis-
cal 2018. The principal exceptions are Power and Gas and SGRE,
which continue to be impacted by market headwinds.
We expect a mixed picture in our market environment in fiscal 2018,
ranging from strong markets for our short-cycle businesses to un-
favorable dynamics in our energy generation markets, as well as
geopolitical uncertainties that may restrict investment sentiment.
Therefore, for fiscal 2018 we expect modest growth in revenue, net
of effects from currency translation and portfolio transactions.
Revenue growth
Business, eliminations for transactions between the businesses,
and changes arising from the adoption of IFRS 15.
25
We are basing this outlook on our preliminary numbers under
IFRS 15, Revenue from Contracts with Customers, which we will
adopt beginning with fiscal 2018 retrospectively, i.e. results for fis-
cal 2017 will be presented on a comparable basis. We do not expect
the adoption of IFRS 15 to have a significant effect on Siemens'
Consolidated Financial Statements. On a preliminary basis, the
adoption of IFRS 15 is expected to reduce reported revenue for fiscal
2017 by approximately €0.2 billion and reported basic EPS for fiscal
2017 by approximately €0.10, resulting mainly from Profit Industrial
Business. Reported Industrial Business profit margin for fiscal 2017
is expected to decline by approximately 0.1 percentage points. As
a result of the IFRS 15 adoption, below we report the backlog of the
Siemens Group which, compared to the previous definition, now
also includes the order backlog in businesses outside the Industrial
The U.S. economy is anticipated to see moderate growth of 2.4%
even without stimulus in the form of substantial tax cuts or a big
infrastructure program. GDP growth is driven by consumer spending,
which is supported by declining unemployment, rising incomes and
household wealth. Fixed investments are expected to increase by
2.7% and should benefit from firming global markets. Interest rates
are anticipated to continue to gradually rise led by central bank rates.
Based on these assumptions and exclusions, our outlook is as
follows:
A.8.1.1 WORLDWIDE ECONOMY
In fiscal 2017, we continued to stringently execute on our "Vision
2020" concept. We reached significant milestones for the stra-
tegic development of Siemens and initiated important measures
to further strengthen our portfolio. At the beginning of fiscal
2017, we founded next47, which pools our existing startup activ-
ities to foster disruptive ideas more vigorously and accelerate the
development of new technologies. In the second quarter, we
acquired Mentor Graphics, an electronic design automation soft-
ware provider, to further strengthen and expand our industrial
software portfolio. At the beginning of the third quarter we
closed the merger of our wind power business with Gamesa to
form SGRE, a leading global wind power player in the onshore
and offshore markets. In the fourth quarter, we announced our
plans to publicly list a minority stake in the Healthineers business
in the first half of calendar year 2018, depending on market
conditions, in order to strengthen this Strategic Unit within
Siemens by increasing the entrepreneurial and capital flexibility
it needs to drive its strategic growth plans. Also in the fourth
quarter, we signed a memorandum of understanding to combine
our mobility business, including the rail traction drives business,
with Alstom SA, France, in order to provide our customers around
the world with an even more innovative and competitive product
and solution portfolio. This transaction is expected to close at the
end of calendar year 2018.
A.6 Overall assessment of the economic position
21
Combined Management Report
The investments of Siemens Gamesa Renewable Energy con-
tinue to focus on the expansion of production capacity in Germany
for offshore wind turbines as well as in Morocco for onshore
blades, while in parallel the production capacities in other regions
are reduced to address changing market conditions. Further
investments relate to the emerging markets India and China to
allow for the production of the next turbine generation.
Healthineers' investments are driven mainly by enhancing com-
petitiveness and innovation notably in the diagnostics busi-
nesses, including large amounts relating to intangible assets,
particularly capitalized development expenses for new platforms.
Healthineers is also spending for factories, especially in China
and the United States.
Process Industries and Drives makes most of its capital expen-
ditures for the purpose of rationalization, replacement, and ad-
justment of innovative new or successor products, particularly
in Europe.
Major spending of Digital Factory in fiscal 2017 related to the
factory automation, motion control systems, software and con-
trol products businesses, including investments in production
facilities in China. The portion of capital expenditures associated
with software is expected to increase considerably in fiscal 2018.
Mobility's investments focus mainly on meeting project de-
mands and maintaining or enhancing its production facilities.
Also with regard to executing our financial target system, fiscal
2017 was another very successful year for Siemens and for most
of our industrial businesses and SFS. We raised our guidance for
basic earnings per share (EPS) from net income after the first
quarter. After the second quarter, we confirmed this raised fore-
cast and included in the EPS guidance previously excluded bur-
dens resulting from portfolio changes. We reached or exceeded
all the targets set for our primary measures for fiscal 2017. We
achieved revenue growth of 3% net of currency translation and
portfolio effects. Net income and basic EPS from net income rose
11% and 10%, respectively. Excluding burdens related to the
acquisition of Mentor Graphics and the merger with Gamesa,
Return on capital employed (ROCE) was slightly above the lower
end of our target range of 15% to 20%. Our capital structure ratio
came in slightly below 1.
Energy Management is spending the larger portion of its capital
expenditures for innovation, particularly in digital and low-volt-
age grid edge products and solutions. Further investments are
primarily related to the replacement of fixed assets, the expan-
sion or relocation of factories and technical equipment.
ness are:
Focus areas of ongoing investing activities of the Industrial Busi-
With regard to capital expenditures for continuing operations, we
expect a significant spending increase in fiscal 2018. In addition,
we plan to invest significant amounts in coming years in attrac-
tive innovation fields in connection with next47.
Additions to intangible assets and property, plant and equipment
from continuing operations totaled €2.4 billion in fiscal 2017.
Within the Industrial Business, ongoing investments related
mainly to technological innovations; extending our capacities for
designing, manufacturing and marketing new solutions; improv-
ing productivity; and replacements of fixed assets. These invest-
ments amounted to €1.8 billion in fiscal 2017. The remaining
portion in fiscal 2017 related mainly to SRE, including significant
amounts related to office projects such as new office buildings in
Germany. SRE is responsible for uniform and comprehensive
management of Company real estate worldwide (except for
SGRE), and supports the Industrial Business and corporate activ-
ities with customer-specific real estate solutions.
Investing activities
With our ability to generate positive operating cash flows, our
total liquidity (defined as cash and cash equivalents as well as
available-for-sale financial assets) of €9.6 billion, our €7.8 billion
in unused lines of credit, and our credit ratings at year-end, we
believe that we have sufficient flexibility to fund our capital re-
quirements. Also in our opinion, our operating net working cap-
ital is sufficient for our present requirements.
In fiscal 2018, the world economy is expected to grow slightly
faster than in fiscal 2017. Global GDP is projected to expand by
3.2% in calendar 2018, the highest growth rate since 2010. Fixed
investments are anticipated to grow by 3.6%, with a higher rate
in emerging countries than in advanced economies. Emerging
markets are forecast to benefit from stronger global growth and
rising commodity prices.
(2,406)
4,769
7,176
The investments of Power and Gas are focused on the enhance-
ment of productivity and selective strategic localization. Invest-
ing activities mainly relate to our gas turbines and turbine com-
ponents.
Orders for fiscal 2017 were €85.7 billion, down 1% year-over-year.
The decline was due to contracting markets for Power and Gas,
which in the prior fiscal year had recorded large orders for power
plants in Egypt. All other industrial businesses recorded increases.
Orders grew at double-digit rates at Mobility and Digital Factory,
the latter on the particular strength of its short-cycle businesses
and supported by new volume from the Mentor Graphics acqui-
sition. Order growth at SGRE was due to new volume from the
merger with Gamesa. At 1.03, our book-to-bill ratio fulfilled our
expectation of a ratio above 1.0.
The investments of Building Technologies relate mainly to the
products and systems business, particularly innovation projects
such as control and digital platforms.
Industrial Business profit rose 8% to €9.5 billion. All industrial
businesses except Power and Gas and SGRE increased their profit
year-over-year. The strongest increases came from Digital Factory
and Building Technologies, which together with Healthineers and
Mobility achieved excellent results for the fiscal year. Energy
Management continued its solid improvement. While profit at
Process Industries and Drives grew, this increase was due pri-
marily to lower severance charges year-over-year. As planned, we
increased R&D and selling expenses in our industrial businesses,
with a strong emphasis on digitalization, including the further
advancement of our MindSphere platform.
24
A.8 Report on expected developments
and associated material opportunities and risks
Revenue rose to €83.0 billion, up 4% year-over-year. Except for
Power and Gas and Process Industries and Drives, all industrial
businesses contributed to revenue growth. Revenue growth was
led by substantial growth at SGRE, due mainly to new volume
from the merger with Gamesa, and by significant growth at
Digital Factory due to the strength of the Division's short-cycle
businesses and to the Mentor Graphics acquisition. Excluding
currency translation and portfolio effects, overall revenue grew
3%. For fiscal 2017, we had forecast modest growth in revenue,
net of currency translation and portfolio effects.
23
Combined Management Report
TEMBER 30, 2017. These disclosures are - contrary to the disclo-
sures in our separately available "Sustainability Information 2017"
document - not subject to a specific framework to inform the
users of the financial reports in a focused manner.
We intend to continue providing an attractive return to share-
holders. As in the past, we intend to fund our dividend payout
from Free cash flow. The Siemens Managing Board, in agreement
with the Supervisory Board, proposes a dividend of €3.70 per
share, up from €3.60 a year earlier.
Free cash flow from continuing and discontinued operations for
fiscal 2017 was €4.8 billion, down 13% compared to the prior
fiscal year.
We evaluate our capital structure using the ratio of industrial net
debt to EBITDA. For fiscal 2017, this ratio was 0.9, compared to
1.0 in fiscal 2016. We thus reached our forecast, which was to
achieve a ratio of up to 1.0.
A.8.1 Report on expected
developments
Siemens has policies for environmental, employee and social
matters, for the respect of human rights, and anti-corruption and
bribery matters, among others. Reportable information which
also relates to these non-financial matters is included in the
→ COMBINED MANAGEMENT REPORT, in → NOTES 16, 17, 21, 25, and 26
OF B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, and in
NOTES 16, 17, 20, 21, and 25 OF THE NOTES TO THE FINANCIAL STATE-
MENTS in the ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG AS OF SEP-
A.7 Non-financial matters
Combined Management Report
72
22
The profit margin of our Industrial Business increased to 11.2%,
up from 10.8% in the prior fiscal year. We thus reached our fore-
cast as of the end of the first quarter of fiscal 2017, which was
raised from a range of between 10.5% and 11.5% to a range of
between 11.0% and 12.0%. Six of our eight industrial businesses
improved their margins year-over-year, and five reached or
exceeded their margin ranges. In challenging market environ-
ments, Power and Gas, SGRE and Process Industries and Drives
missed their target ranges in fiscal 2017. With a return on equity
after tax of 19.9%, SFS, which is reported outside our Industrial
Business, reached the upper end of its margin range.
The loss outside the Industrial Business came in lower year-over-
year. This was due mainly to positive effects related to the mea-
surement of a major asset retirement. These effects were partly
offset by higher amortization of intangible assets acquired in
business combinations, mainly related to the merger with
Gamesa and to the Mentor Graphics acquisition.
ROCE for fiscal 2017 was 13.5%, down from 14.3% in fiscal 2016.
This decline was due primarily to burdens related to the merger
with Gamesa and the acquisition of Mentor Graphics, which we
had excluded from our ROCE forecast for fiscal 2017. Excluding
these burdens, ROCE reached the lower end of the 15% to 20%
range that we generally aim to achieve. We thus reached our
forecast, which was to come close to or reach the lower end of
our target range.
Net income in fiscal 2017 rose 11% to €6.2 billion, and basic EPS
from net income was up 10% to €7.44. We thus reached our
raised forecast, which was for an increase in basic EPS from net
income in the range of €7.20 to €7.70, up from the range of
€6.80 to €7.20 that was forecast in our Annual Report for fiscal
2016. Net income development benefited from our continuous
efforts to increase productivity. In fiscal 2017, total cost produc-
tivity improved 5%, reaching the upper end of our fiscal 2017
target of 3% to 5%.
ments 3,798 (prior year 3,732)
3,828
3,092
24%
4,462
3,158
Income taxes
(160)
thereof Income from invest-
(385)
Income from business activity
Financial income, net
(3,627)
134
(30)
(expenses), net
Other operating income
(2)%
(3,558)
administrative expenses
Selling and general
(7)%
development expenses
Net income
(2,619)
(2,454)
n/a
4,076
A.9.2 Net assets and financial position Cash, cash equivalents and securities are significantly affected
Profit carried forward
Intangible and tangible assets
Non-current assets
Research and
Assets
(in millions of €)
% Change
Sep 30,
2016
2017
with German Commercial Code (condensed)
Statement of Financial Position of Siemens AG in accordance
37
Combined Management Report
The change in Income taxes resulted from higher income tax
expenses, corresponding to a higher taxable share of Income
from business activity and increased burdens from withholding
taxes. In addition, this item included deferred tax expenses and
income resulting from the generation and reversal of temporary
differences between the accounting and tax-based valuation and
the use of loss carry-forwards.
2,999
The increase in Financial income, net was primarily attributable
to an improvement in other financial income (expenses), from a
negative €0.9 billion in the prior-year period to a negative
€0.3 billion. This was mainly due to a positive effect of €0.8 bil-
lion from changes in provisions for risks in derivative financial
instruments. This factor was partly offset by a negative effect of
€0.4 billion from changes in provision for pensions and similar
commitments related to changes in the discount rate assump-
tions. Income from investments was slightly higher compared to
the prior-year period, which included an increase in income from
profit transfer agreements with affiliated companies by €1.0 bil-
lion. However, positive results from investments were nearly off-
set by impairments of investments, which included primarily an
impairment of Siemens AG's investment at Siemens Gamesa
Renewable Energy, S.A., Spain, of €1.2 billion.
Gross profit was higher year-over-year due mainly to increases
of €0.3 billion in Digital Factory, €0.2 billion in Mobility and
€0.2 billion in Power and Gas.
Increases in Revenue at Mobility and Power and Gas, of €1.0 bil-
lion and €0.5 billion respectively, were more than offset by the
effect of the above-mentioned carve-out of the Siemens Wind
Power business. In fiscal 2016, we recorded revenue of €2.1 bil-
lion at Wind Power and Renewables. On a geographical basis,
75% of revenue was generated in the Europe, C.I.S., Africa, Mid-
dle East region, 18% in the Asia, Australia region and 7% in the
Americas region. Exports from Germany accounted for 71% of
overall revenue. In fiscal 2017, orders for Siemens AG amounted
to €25.6 billion. Within Siemens AG, the development of revenue
depends strongly on the completion of contracts, primarily in
connection with large orders.
The initial application of the Accounting Directive Implementa-
tion Act (Bilanzrichtlinie-Umsetzungsgesetz, BilRUG) resulted in
changes in presentation in the income statement in fiscal 2017.
Prior periods are not reported on a comparable basis. Compara-
ble amounts for fiscal 2016 are: revenue €27,043 million, cost of
sales €20,920 million and other operating income (expenses),
net €(44) million.
3%
41%
(141)%
36%
(43)%
>(200)%
(195)
3,060
(1,077)
3,145
Unappropriated net income
retained earnings
Allocation to other
256
146
Despite an increase of €0.2 billion in Research and develop-
ment (R&D) expenses year-over-year, the R&D intensity (R&D
as a percentage of revenue) increased only slightly by 0.2 per-
centage point year-over-year due to the above-mentioned
changes in presentation according to BiIRUG. On an average ba-
sis, we employed 9,600 people in R&D in fiscal 2017.
23%
an opportunity to continuously reduce non-conformance costs
and ensure on-time delivery of our projects and solutions. Fur-
thermore, stringent project risk and opportunity management,
time schedule management, performance bonuses and highly
professional management of consortium partners and suppliers
all help us to avoid liquidated damages and ultimately improve
our profit position. In addition, improvements of our claim man-
agement processes enable us to reduce costs incurred as a result
of customer claims by finding a consensus with customers while
also improving customer relationship management. At the same
time, we reduce quality problems by proactively addressing sup-
plier issues up front.
as percentage of revenue
After the merger of the Siemens wind power business with
Gamesa, we have commenced to integrate the former Gamesa
entities into our accounting-related internal control and risk
management system. These integration efforts will continue in
fiscal 2018.
At the end of each fiscal year, our management performs an eval-
uation of the effectiveness of the implemented control system,
both in design and operating effectiveness. We have a standard-
ized procedure under which necessary controls are defined, doc-
umented in accordance with uniform standards, and tested reg-
ularly on their effectiveness. Nevertheless, there are inherent
limitations on the effectiveness of any control system, and no
system, including one determined to be effective, may prevent
or detect all misstatements.
Our ERM approach is based on COSO's "Enterprise Risk Manage-
ment - Integrated Framework". As one of the objectives of this
framework is reliability of a company's financial reporting, it in-
cludes an accounting-related perspective. Our accounting-related
internal control system (control system) is based on the interna-
tionally recognized "Internal Control - Integrated Framework"
also developed by COSO. The two systems are complementary.
Report of Siemens group as well as the Annual Financial State-
ments of Siemens AG as the parent company are prepared in
accordance with all relevant regulations.
The overarching objective of our accounting-related internal con-
trol and risk management system is to ensure that financial
reporting is conducted in a proper manner, such that the Consol-
idated Financial Statements and the Combined Management
A.8.5 Significant characteristics of
the accounting-related internal
control and risk management system
Assessment of the overall opportunities situation: The most
significant opportunity for Siemens continues to be success from
innovation along electrification, automation and digitalization as
disclosed in our prior year reporting. Even though our assess-
ment of individual opportunities has changed during fiscal year
2017 due to developments in the external environment, our en-
deavors to profit from them and the revision of our plans, the
overall opportunity situation did not change significantly com-
pared to the prior year.
Climate change: While climate change is widely considered a
risk, we consider climate change mitigation an opportunity for
Siemens. In line with the global agreement in Paris (COP21) that
entered into force in November 2016, Siemens strives to support
a trend towards reducing CO2 emissions both in own operations
as well as for our customers based on technologies from our en-
vironmental portfolio, such as low-carbon power generation
from renewable energy sources.
Localizing value chain activities: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service in emerging markets could enable us to reduce
costs and strengthen our global competitive position, in particu-
lar compared to competitors based in countries where they can
operate with more favorable cost structures. Moreover, our local
footprint in many countries might help us to take advantage of a
possible growth of markets and leverage a shift in markets, result-
ing in increased market penetration and market share.
Combined Management Report
Excellent project execution: By expanding project manage-
ment efforts as well as learning from our mistakes in project ex-
ecution through a formalized lessons learned approach, we see
Continuously developing and implementing initiatives to
reduce costs, boost sales efforts, adjust capacities, improve
our processes, realize synergies: In an increasingly competi-
tive market environment, a competitive cost structure comple-
ments the competitive advantage of being innovative. We be-
lieve that further improvements in our cost position can
strengthen our global competitive position and secure our mar-
ket presence against emerging and incumbent competitors. For
example, we expect to create sustainable value from productivity
measures in connection with our "Vision 2020" concept. More-
over, in course of the digital transformation, we seek to standard-
ize, automate and digitize our processes and make them leaner
and more efficient.
Economic/political stabilization of certain (critical) coun-
tries and resilience of worldwide economic environment:
We see an opportunity that political stabilization of certain criti-
cal countries and (further) lifting of sanctions may lead to higher
revenue volume that was unavailable in past years. Furthermore,
a return to more robust macroeconomic growth could also lead
to additional volume and profit for the company.
Favorable political and regulatory environment: Govern-
ment initiatives and subsidies (including tax benefits etc.) may
lead to more government spending (investments in new projects,
modernization of projects etc.) and ultimately result in an in-
crease of revenue and profit for the company.
Increased market penetration: Through divisional sales initia-
tives and masterplans, we continuously strive to grow and ex-
pand our business in established markets, open up new markets
for existing portfolio elements and strengthen our installed base
in order to gain a higher market share and increased profits.
Mergers, acquisitions, equity investments, partnerships,
divestments and streamlining our portfolio: We constantly
monitor our current and future markets for opportunities for stra-
tegic mergers and acquisitions, equity investments or partner-
ships to complement our organic growth. Such activities may help
us to strengthen our position in our existing markets, provide
access to new or underserved markets or complement our tech-
nological portfolio in selected areas. Opportunities might also
arise from well executed divestments, carve outs and joint ven-
tures which further optimize our portfolio while generating gains.
applications for an optimization of energy consumption, opera-
tion of highly efficient energy grids as well as scalable solutions
for distributed and renewable energy generation.
Success from innovation along electrification, automation
and digitalization: Innovation is a central part of our "Vision
2020," an entrepreneurial concept leading Siemens into the future
in three stages: first we "drive performance," then we "strengthen
core," and finally we "scale up" to attain our Vision 2020 goals.
We do this by investing significantly in R&D in order to develop
innovative, sustainable solutions for our customers and to simul-
taneously safeguard our competitiveness. We are an innovative
company and invent new technologies that we expect will meet
future demands arising from the megatrends of demographic
change, urbanization, climate change and globalization. We are
granted thousands of new patents every year and continuously
develop new concepts and convincing business models. We open
up access to new markets and customers through new marketing
and sales strategies as well as Divisional master plans. In 2016
we established next47, an independent unit designed to found,
partner with and invest in start-ups with innovative ideas for
shaping the future of electrification, automation and digitaliza-
tion, and thereby turn those ideas into viable businesses. This will
help Siemens create the next generation of path-breaking inno-
vations in such fields as artificial intelligence, decentralized elec-
trification, autonomous machines, block chain applications and
connected e-mobility. Siemens is positioned along the value
chains of electrification, automation and digitalization in order to
increase future market penetration. Along these value chains,
we have identified several growth fields in which we see our
greatest long-term potential. We are orienting our resource allo-
cation toward these growth fields and have announced concrete
measures in this direction. Across all Divisions, Siemens is profit-
ing from its undisputed strength in the digital enterprise. For
example, the Company's cloud based MindSphere platform en-
hances the availability of customers' digital products and systems
and improves their productivity and efficiency. In addition, we try
to generate additional volume and profit from new and innova-
tive digital products, services and solutions, including cyber secu-
rity for our customers, preventive maintenance, data analytics,
Within our Enterprise Risk Management (ERM) we regularly iden-
tify, evaluate and respond to opportunities that present them-
selves in our various fields of activity. Below we describe our most
significant opportunities. Unless otherwise stated, the opportu-
nities described below relate to all of our segments. The order in
which the opportunities are presented reflects the currently esti-
mated relative exposure for Siemens associated with these op-
portunities and thus provides an indication of the opportunities'
current importance to us. The described opportunities are not
necessarily the only ones we encounter. In addition, our assess-
ment of opportunities is subject to change as the Company, our
markets and technologies are constantly developing. It is also
possible that opportunities we see today will never materialize.
A.8.4 Opportunities
34
33
Combined Management Report
At present, no risks have been identified that either individually
or in combination could endanger our ability to continue as a
going concern.
Even though the assessments of individual risk exposures have
changed during fiscal 2017 due to developments in the external
environment, effects of our own mitigation measures and the
revision of our plans, the overall risk situation for Siemens did not
change significantly as compared to the prior year.
2,348
The most significant challenges have been mentioned first in
each of the four categories strategic, operational, financial and
compliance risks. The risks caused by highly competitive environ-
ment continue to be the most significant, as in the prior year.
Our Consolidated Financial Statements are prepared on the basis
of a centrally issued conceptual framework which primarily con-
sists of uniform Financial Reporting Guidelines and a chart of
accounts. For Siemens AG and other companies within the
Siemens group required to prepare financial statements in accor-
dance with German Commercial Code, this conceptual frame-
work is complemented by mandatory regulations specific to the
German Commercial Code. The need for adjustments in the con-
ceptual framework due to regulatory changes is analyzed on an
ongoing basis. Accounting departments are informed quarterly
about current topics and deadlines from an accounting and clos-
ing process perspective.
The base data used in preparing our financial statements consists
of the closing data reported by the operations of Siemens AG and
its subsidiaries. The preparation of the closing data of most of our
entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance
and monitoring related activities, are usually bundled on regional
level. In particular cases, such as valuations relating to post-em-
ployment benefits, external experts are used. The reported clos-
ing data is used to prepare the financial statements in the con-
solidation system. The steps necessary to prepare the financial
statements are subject to both manual and automated controls.
Combined Management Report
35
16%
5,945
6,909
Gross profit
4%
(1)%
(19,979) (19,818)
Cost of Sales
25,763
26,888
Revenue
% Change
2016
2017
26%
(in millions of €)
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
A.9.1 Results of operations
Combined Management Report
As of September 30, 2017, the number of employees was 92,300.
In the first quarter of fiscal 2017, as part of the merger with
Gamesa, Siemens AG transferred its Siemens wind power busi-
ness to entities held by Siemens AG.
We intend to continue providing an attractive return to share-
holders. Therefore, we intend to propose a dividend whose dis-
tribution volume is within a dividend payout range of 40% to
60% of net income of the Siemens Group, which we may adjust
for this purpose to exclude selected exceptional non-cash effects.
For fiscal 2018, we expect a net income of Siemens AG sufficient
to fund the distribution of a corresponding dividend.
Siemens AG is the parent company of the Siemens Group. Results
for Siemens AG comprise the fields of business activities mainly of
Power and Gas, Energy Management, Building Technologies, Mo-
bility, Digital Factory, Process Industries and Drives as well as the
activities of Siemens Real Estate and are significantly influenced
by directly or indirectly owned subsidiaries and investments. The
business development of Siemens AG is fundamentally subject to
the same risks and opportunities as the Siemens Group. Due to
the interrelations between Siemens AG and its subsidiaries and
the relative size of Siemens AG within the Group, the outlook of
the Group also largely reflects our expectations for Siemens AG.
Therefore, the foregoing explanations for the Siemens Group ap-
ply also for Siemens AG. We expect that income from investments
will significantly influence the profit of Siemens AG.
The Annual Financial Statements of Siemens AG have been pre-
pared in accordance with the rules set out in the German Com-
mercial Code (Handelsgesetzbuch).
Our internal audit function systematically evaluates our financial
reporting integrity, the effectiveness of the control system and
the risk management system, and the adherence to our compli-
ance policies. In addition, the Audit Committee is integrated into
our control system. In particular, it oversees the accounting and
the accounting process and the effectiveness of the internal con-
trol system, the risk management system and the internal audit
system. Furthermore, we have set up a Disclosure Committee
which is responsible for reviewing certain financial and non-
financial information prior to publication. Moreover, we have
rules for accounting-related complaints.
On a quarterly basis, an internal certification process is executed.
Management of different levels of our organization, supported
by confirmations of management of entities under their respon-
sibility, confirms the accuracy of the financial data that has been
reported to Siemens' corporate headquarters and reports on the
effectiveness of the related control systems.
Qualification of employees involved in the accounting process is
ensured through appropriate selection processes and regular
training. As a fundamental principle, based on materiality con-
siderations, the "four eyes" principle applies and specific proce-
dures must be adhered to for data authorization. Additional con-
trol mechanisms include target-performance comparisons and
analyses of the composition of and changes in individual line
items, both in the closing data submitted by reporting units and
in the Consolidated Financial Statements. In line with our infor-
mation security requirements, accounting-related IT systems
contain defined access rules protecting them from unauthorized
access. The manual and system-based control mechanisms re-
ferred to above generally also apply when reconciling the IFRS
closing data to the Annual Financial Statements of Siemens AG.
A.9 Siemens AG
36
Fiscal year
Financial assets
organizations. Monitors could again be appointed to review fu-
ture business practices and we may otherwise be required to fur-
ther modify our business practices and our compliance program.
2,472
44,611
A.8.3.4 COMPLIANCE RISKS
Current and future investigations regarding allegations of
corruption, of antitrust violations and of other violations of
law: Proceedings against us regarding allegations of corruption,
of antitrust violations and of other violations of law may lead to
criminal and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of business,
the loss of business licenses or permits or other restrictions and
legal consequences. Accordingly, we may, among other things,
be required to comply with potential obligations and liabilities
arising in connection with such investigations and proceedings,
including potential tax penalties. Moreover, any findings related
to public corruption that are not covered by the 2008 and 2009
corruption charge settlements, which we concluded with Ameri-
can and German authorities, may endanger our business with
government agencies and intergovernmental and supranational
A considerable part of our business activities involve govern-
ments and companies with public shareholders. We also partici-
pate in a number of projects funded by government agencies and
intergovernmental and supranational organizations, such as mul-
tilateral development banks. Ongoing or potential future investi-
gations into allegations of corruption, of antitrust violations or of
other violations of law could as well impair relationships with
such business partners or could result in the exclusion of public
contracts. Such investigations may also adversely affect existing
private business relationships and our ability to pursue poten-
tially important strategic projects and transactions, such as stra-
tegic alliances, joint ventures or other business cooperations, or
could result in the cancellation of certain of our existing con-
tracts. Moreover, third parties, including our competitors, could
initiate significant litigation.
In addition, future developments in ongoing and potential future
investigations, such as responding to the requests of governmen-
tal authorities and cooperating with them, could divert manage-
ment's attention and resources from other issues facing our busi-
ness. Furthermore, we might be exposed to compliance risks in
connection with recently acquired operations that are in the
ongoing process of integration.
Besides other measures, Siemens established a global compli-
ance organization that conducts among others compliance risk
mitigation processes such as Compliance Risk Assessments, and
which has been reviewed by external compliance experts.
Regulatory risks and potential sanctions: As a globally oper-
ating organization, we conduct business with customers in coun-
tries which are subject to export control regulations, embargoes,
economic sanctions or other forms of trade restrictions (hereafter
referred to as "sanctions") imposed by the U.S., the European
Union or other countries or organizations. New or expanded sanc-
tions in countries in which we do business may result in a curtail-
ment of our existing business in such countries or indirectly in
other countries. We are also aware of initiatives by institutional
investors, such as pension funds or insurance companies, to
adopt or consider adopting policies prohibiting investment in and
transactions with, or requiring divestment of interests in entities
doing business with, countries identified as state sponsors of ter-
rorism by the U.S. Department of State. It is possible that such
initiatives may result in us being unable to gain or retain investors,
customers or suppliers. In addition, the termination of our activi-
ties in sanctioned countries may expose us to customer claims
and other actions. Our reputation could also suffer due to our
activities with counterparties in or affiliated with these countries.
32 Combined Management Report
Changes of regulations, laws and policies: As a diversified
company with global businesses we are exposed to various prod-
uct- and country-related regulations, laws and policies influenc-
ing our business activities and processes. We monitor the political
and regulatory landscape in all our key markets to anticipate po-
tential problem areas, with the aim to quickly adjust our business
activities and processes to changed conditions. However, any
changes of regulations, laws and policies can adversely affect our
business activities and processes as well as our financial condi-
tion and results of operations.
Protectionism (incl. localization): Protectionist trade policies
and changes in the political and regulatory environment in the
markets in which we operate, such as import and export controls,
tariffs and other trade barriers including debarment from certain
markets and price or exchange controls, could affect our business
in several national markets and could impact our business, finan-
cial position and results of operations; and may expose us to pen-
alties, other sanctions and reputational damage. In addition, the
uncertainty of the legal environment in some regions could limit
our ability to enforce our rights and subject us to increasing costs
related to appropriate compliance programs.
Environmental, health & safety and other governmental
regulations: Some of the industries in which we operate are
highly regulated. Current and future environmental, health & safety
and other governmental regulations or changes thereto may re-
quire us to change the way we run our operations and could re-
sult in significant increases in our operating or production costs.
Furthermore, we see the risk of potential environmental and
health & safety incidents as well as potential non-compliance
with environmental and health & safety regulations affecting
Siemens and our contractors or sub-suppliers, resulting in e.g.
serious injuries, penalties, loss of reputation and internal or ex-
ternal investigations.
In addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct of
our business operations, it cannot be excluded that violations of
applicable governmental regulations may be caused either by us
or by third parties that we contract with, including suppliers or
service providers, whose activities may be attributed to us. Any
such violations expose us to the risk of liability, reputational dam-
age or loss of licenses or permits that are important to our busi-
ness operations. In particular, we could also face liability for dam-
age or remediation for environmental contamination at the
facilities we design or operate. With regard to certain environ-
mental risks, we maintain liability insurance at levels that our
management believes are appropriate and consistent with indus-
try practice. We may incur environmental losses beyond the lim-
its, or outside the coverage, of such insurance, and such losses
may have an adverse effect on our business, financial condition
and results of our operations.
Current or future litigation: Siemens is and will be in the
course of its normal business operations involved in numerous
legal disputes and proceedings in various jurisdictions. These le-
gal disputes and proceedings could result, in particular, in
Siemens being subject to payment of damages and punitive dam-
ages, equitable remedies or criminal or civil sanctions, fines or
disgorgement of profit. In individual cases this may also lead to
formal or informal exclusion from tenders or the revocation or
loss of business licenses or permits. In addition, further legal dis-
putes and proceedings may be commenced or the scope of pend-
ing legal disputes and proceedings may be expanded. Asserted
claims are generally subject to interest rates.
Some of these legal disputes and proceedings could result in ad-
verse decisions for Siemens that may have material effects on our
financial position, the results of operations and cash flows.
Siemens maintains liability insurance for certain legal risks at lev-
els our management believes are appropriate and consistent with
industry practice. The insurance policy, however, does not pro-
tect Siemens against reputational damage. Moreover, Siemens
may incur losses relating to legal proceedings beyond the limits,
or outside the coverage, of such insurance or exceeding any pro-
visions made for losses related to legal proceedings. Finally, there
can be no assurance that Siemens will be able to maintain ade-
quate insurance coverage on commercially reasonable terms in
the future.
For additional information with respect to specific proceed-
ings, see NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
Combined Management Report
38
The Corporate Governance statement pursuant to Sections 289 a
and 315 para. 5 of the German Commercial Code is an integral
part of the Combined Management Report and is presented in
→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
A.9.3 Corporate Governance
statement
The decrease in Trade payables, liabilities to affiliated compa-
nies and other liabilities was due primarily to lower liabilities to
affiliated companies as a result of intra-group financing activities.
Other provisions decreased due to several factors. The largest
was a decrease of €0.5 billion in provisions for losses from deri-
vative financial transactions. Additionally, provisions for post-
closing guarantees decreased by €0.2 billion and provisions for a
major asset retirement obligation decreased by €0.2 billion, due
primarily to reduced inflation rate assumptions.
The increase in Pension and similar commitments resulted
mainly from a €0.7 billion increase related to interest and service
costs and a €0.4 billion increase related to an adjustment of the
discount rate from 4.08% in fiscal 2016 to 3.77% in fiscal 2017.
This increase was partly offset by €0.6 billion for payments of
pension obligations.
The Increase in Receivables and other assets was due primarily
to higher receivables from affiliated companies as a result of in-
tra-group financing activities, including higher receivables from
SFS companies and higher receivables resulting from profit trans-
fer agreements.
1%
(4)%
(3)%
(6)%
Audits by tax authorities and changes in tax regulations:
We operate in nearly all countries of the world and therefore are
subject to many different tax regulations. Changes in tax laws in
any of these jurisdictions could result in higher tax expense and
payments. Furthermore, legislative changes could impact our tax
receivables and liabilities as well as deferred tax assets and de-
ferred tax liabilities. In addition, the uncertain tax environment in
some regions could limit our ability to enforce our rights. As a
globally operating organization, we conduct business in countries
subject to complex tax rules, which may be interpreted in differ-
ent ways. Future interpretations or developments of tax regimes
may affect our business, financial condition and results of opera-
tions. We are regularly audited by tax authorities in various juris-
dictions and we continuously identify and assess resulting risks.
TO CONSOLIDATED FINANCIAL STATEMENTS.
For further information on post-employment benefits, derivative
financial instruments, hedging activities, financial risk manage-
ment and related measures, see → NOTES 16, 23 and 24 in B.6 NOTES
Risks from pension obligations: The funded status of our pen-
sion plans may be affected by change in actuarial assumptions,
including the discount rate, as well as movements in financial
markets or a change in the mix of assets in our investment port-
folio. A significant increase in the underfunding may have a neg-
ative effect on our capital structure and rating, and thus may
tighten refinancing options and increase costs. In order to com-
ply with local pension regulations in selected foreign countries,
we may face a risk of increasing cash outflows to reduce an un-
derfunding of our pension plans in these countries.
A.8.3.5 ASSESSMENT OF
decisions and awarding of new orders would hit our businesses.
We continuously monitor the exit process and established, for
example, a task force coordinating our local and global mitiga-
tion measures. Significant business risk stems from an abrupt
weakening of Chinese economic growth. Both global and re-
gional investment climates could collapse due to political up-
heavals, further independence debates within countries in the
EU (e.g. the Catalan endeavor for independence), or sustained
success of protectionist, anti EU and anti-business parties and
policy. A rapid tightening of monetary policy by the U.S. Federal
Reserve could cause a depreciation spiral among emerging mar-
ket currencies. This could lead to a renewed emerging market
crisis because debt levels of emerging market enterprises have
risen, making them dependent on favorable global financial con-
ditions to service debts denominated in foreign currencies.
Emerging market operations involve further various risks, includ-
ing civil unrest, health concerns, cultural differences such as em-
ployment and business practices, volatility in gross domestic
product, economic and governmental instability, the potential
for nationalization of private assets and the imposition of ex-
change controls. A terrorist mega-attack or a significant cyber-
crime incident, or a series of such attacks or incidents in major
economies, could depress economic activity globally and under-
mine consumer and business confidence. Further risks stem from
geopolitical tensions (e.g. in Syria, Ukraine, Turkey, and North
Korea), and from an increasing vulnerability of the connected
global economy to natural disasters. In addition we are depend-
ing on the economic momentum of specific industries, especially
on the continued confidence in the automotive sector.
In general, due to the significant proportion of long-cycle busi-
nesses in our Industrial Business and the importance of long-term
contracts for Siemens, there is usually a time lag between the
development of macroeconomic conditions and their impact on
our financial results. In contrast, short-cycle business activities of
the Digital Factory Division and parts of Process Industries and
Drives Division and of the Energy Management Division react
quickly to volatility in market demand. If the moderate recovery
of macroeconomic growth stalls again and if we are not success-
ful in adapting our production and cost structure to subsequent
changes in conditions in the markets in which we operate, there
can be no assurance that we will not experience adverse effects.
For example, it may become more difficult for our customers to
obtain financing. As a result, they may modify, delay or cancel
plans to purchase our products, solutions and services, or fail to
follow through on purchases or contracts already executed. Fur-
thermore, the prices for our products, solutions and services may
decline, as a result of adverse market conditions, to a greater
extent than we currently anticipate. In addition, contracted pay-
ment terms, especially regarding the level of advance payments
by our customers relating to long-term projects, may become less
favorable, which could negatively impact our financial condi-
tions. Siemens' global setup with operations in almost all relevant
economies, the wide variety of our offerings following different
business cycles, and our varying business models (e.g. products,
software, solutions, projects and services) help us to absorb the
impact of an adverse development in a single market.
Disruptive technologies: The markets in which our businesses
operate experience rapid and significant changes due to the in-
troduction of innovative and disruptive technologies. In the fields
of digitalization (e.g. internet of things, web of systems, cloud
offerings, Industry 4.0), there are risks of new competitors, sub-
stitutions of existing products/solutions/services, niche players,
new business models (e.g. in terms of pricing, financing, ex-
tended scopes for project business or subscription models in soft-
ware business) and finally the risk that our competitors may have
faster time-to-market strategies and introduce their digital prod-
ucts and solutions faster than Siemens. Our operating results
depend to a significant extent on our technological leadership,
our ability to anticipate and adapt to changes in our markets and
to reduce the costs of producing our products. Introducing new
products and technologies requires a significant commitment to
research and development, which in return requires expenditure
of considerable financial resources that may not always result in
success. Our results of operations may suffer if we invest in tech-
nologies that do not operate or may not be integrated as ex-
pected, or that are not accepted in the marketplace as antici-
pated, or if our products, solutions or systems are not introduced
to the market in a timely manner, particularly compared to our
competitors, or even become obsolete. We constantly apply for
new patents and actively manage our intellectual property port-
folio to secure our technological position. However, our patents
and other intellectual property may not prevent competitors from
independently developing or selling products and services that
are similar to or duplicates of ours.
Footprint: The risk is that we are not flexible enough in adjusting
our organizational and manufacturing footprint in order to
quickly respond to changing markets, resulting in a non-compet-
itive cost position and consequent loss of business. To mitigate
this risk, we continuously monitor and analyze competitive and
market information. Furthermore, we closely monitor the imple-
mentation of the planned measures, maintain strict cost man-
agement, and conduct ongoing discussions with all concerned
interest groups.
Portfolio measures, at-equity investments, other invest-
ments and strategic alliances: Our strategy includes divesting
activities in some business areas and strengthening others
through portfolio measures, including mergers and acquisitions.
With respect to divestments, we may not be able to divest some
of our activities as planned, and the divestitures we do carry out
could have a negative impact on our business, financial condi-
tion, results of operations and our reputation. Mergers and acqui-
sitions are inherently risky because of difficulties that may arise
Combined Management Report
29
30
when integrating people, operations, technologies and products.
There can be no assurance that any of the businesses we ac-
quired can be integrated successfully and in a timely manner as
originally planned, or that they will perform as anticipated once
integrated. In addition, we may incur significant acquisition, ad-
ministrative, tax and other expenditures in connection with these
transactions, including costs related to integration of acquired
businesses. Furthermore, portfolio measures may result in addi-
tional financing needs and adversely affect our capital structure.
Acquisitions lead to substantial additions to intangible assets,
including goodwill in our statements of financial position. If we
were to encounter continuing adverse business developments or
if we were otherwise to perform worse than expected at acquisi-
tion activities, then these intangible assets, including goodwill,
might have to be impaired, which could adversely affect our busi-
ness, financial conditions and results of operations. Our invest-
ment portfolio consists of investments held for purposes other
than trading. Furthermore, we hold other investments, for exam-
ple, Atos SE. Any factors negatively influencing the financial con-
dition and results of operations of our at-equity investments and
other investments, could have an adverse effect on our equity
pick-up related to these investments or may result in a related
write-off. In addition, our business, financial condition and re-
sults of operations could also be adversely affected in connection
with loans, guarantees or non-compliance with financial cove-
nants related to these at-equity investments and other invest-
ments. Furthermore, such investments are inherently risky as we
may not be able to sufficiently influence corporate governance
processes or business decisions taken by our equity investments,
other investments and strategic alliances that may have a nega-
tive effect on our business. In addition, joint ventures bear the
risk of difficulties that may arise when integrating people, oper-
ations, technologies and products. Strategic alliances may also
pose risks for us because we compete in some business areas
with companies with which we have strategic alliances. Besides
other measures, we handle these risks with standardized pro-
cesses as well as dedicated roles and responsibilities in the areas
of mergers, acquisitions, divestments and carve outs. This in-
cludes post-closing actions as well as claim management and
centrally managed portfolio activities.
A.8.3.2 OPERATIONAL RISKS
Cyber/Information security: Our business portfolio is depen-
dent on digital technologies. We observe a global increase of IT
security threats and higher levels of professionalism in computer
crime, which pose a risk to the security of products, systems and
networks and the confidentiality, availability and integrity of
data. Like other large multinational companies we are facing ac-
tive cyber threats from sophisticated adversaries that are sup-
ported by organized crime and nation-states engaged in eco-
nomic espionage or even sabotage. We attempt to mitigate these
risks by employing a number of measures, including employee
training, comprehensive monitoring of our networks and systems
29,118
29,752
385
69,814
through Cyber Security Operation Centers, and maintenance of
backup and protective systems such as firewalls and virus scan-
ners. Our contractual arrangements with service providers, aim
to ensure that these risks are reduced. Nonetheless our systems,
products, solutions and services, as well as those of our service
providers, remain potentially vulnerable to attacks. Such attacks
could potentially lead to the publication, manipulation or leakage
information such as through industrial espionage, improper use
of our systems, defective products, production downtimes and
supply shortages, with potential adverse effects on our reputa-
tion, our competitiveness and results of our operations.
Operational optimization and cost reduction initiatives:
We are in a continuous process of operational optimization and
constantly engage in cost-reduction initiatives, including ongo-
ing capacity adjustment measures and structural initiatives. Con-
solidation of business activities and manufacturing facilities,
outsourcings/carve outs, joint ventures and the streamlining of
product portfolios are all part of these cost-reduction efforts.
These measures may not be implemented as planned, may turn
out to be less effective than anticipated, may become effective
later than estimated or may not become effective at all. Any fu-
ture contribution of these measures to our profitability will be
influenced by the actual savings achieved and by our ability to
sustain them. In case of restructuring and outsourcing activities,
there can be no assurance that there are no delays in product
deliveries or we might even experience delivery failures. Further-
more, a delay in critical R&D projects could lead to negative im-
pacts in running projects. We constantly control and monitor the
Combined Management Report
progress of these projects and initiatives using standardized con-
trolling and milestone tracking approaches.
Cost overruns or additional payment obligations related to
the management of our long-term, fixed-price or turnkey
and service projects: A number of our Industrial Businesses
conduct activities, especially large projects, under long-term con-
tracts that are awarded on a competitive bidding basis. Such con-
tracts typically arise in Power and Gas, Siemens Gamesa Renew-
able Energy, Mobility, and in various activities of Energy
Management and Process Industries and Drives. Some of these
contracts are inherently risky because we may assume substan-
tially all of the risks associated with completing a project and
meeting post-completion warranty obligations. For example, we
may face the risk that we must satisfy technical requirements of
a project even though we have not gained experience with those
requirements before we win the project. The profit margins real-
ized on fixed-priced contracts may vary from original estimates
as a result of changes in costs and productivity over the contract's
term. We sometimes bear the risk of unanticipated project mod-
ifications, shortage of key personnel, quality problems, financial
difficulties of our customers and/or significant partners, cost
overruns or contractual penalties caused by unexpected techno-
logical problems, unforeseen developments at the project sites,
unforeseen changes or difficulties in the regulatory or political
environment, performance problems with our suppliers, subcon-
tractors and consortium partners or other logistical difficulties.
Some of our multi-year contracts also contain demanding instal-
lation and maintenance requirements in addition to other perfor-
mance criteria relating to timing, unit cost and compliance with
government regulations, which, if not satisfied, could subject us
to substantial contractual penalties, damages, non-payment and
contract termination. There can be no assurance that contracts
and projects, in particular those with long-term duration and
fixed-price calculation, can be completed profitably. To tackle
those risks we implemented a global project management orga-
nization to systematically improve the know-how of our project
management personnel. For very complex projects we conduct
dedicated risk assessments in very early stages of the sales phase
before we decide to hand over a binding offer to our customer.
Interruption of the supply chain: The financial performance of
our Industrial Business depends on reliable and effective supply
chain management for components, sub-assemblies and materi-
als. Capacity constraints and supply shortages resulting from
ineffective supply chain management may lead to delays and
additional cost. We rely on third parties to supply us with parts,
components and services. Using third parties to manufacture,
assemble and test our products reduces our control over manu-
facturing yields, quality assurance, product delivery schedules
and costs. Although we work closely with our suppliers to avoid
supply-related problems, there can be no assurance that we will
not encounter supply problems in the future, especially if we use
single-source suppliers for critical components. Shortages and de-
lays could materially harm our business. Unanticipated increases
in the price of components or raw materials due to market short-
ages or other reasons could also adversely affect performance.
Furthermore, we may be exposed to the risk of delays and inter-
ruptions in the supply chain as a consequence of catastrophic
events or suppliers' financial difficulties, particularly if we are
unable to identify alternative sources of supply or means of trans-
portation in a timely manner or at all. Besides other measures,
we mitigate fluctuation in the global raw material markets with
various hedging instruments.
Shortage of skilled personnel: Competition for highly quali-
fied personnel (e.g. specialists, experts, "digital" talents) remains
intense in the industries and regions in which our businesses
operate. We have ongoing demand for highly skilled employees.
Our future success depends in part on our continued ability to
hire, integrate, develop and retain engineers and other qualified
personnel. We address this risk for example with structured suc-
cession planning, employer branding, retention and career man-
agement. Furthermore, the company is strengthening the capa-
bilities and skills of our talent acquisition teams and has defined
a strategy of pro-active search for people with the required skills
in our respective industries and markets. A strong focus on im-
plementing a technology for talent acquisition helps us to sup-
port efficient processes and effective search for key talent.
A.8.3.3 FINANCIAL RISKS
Market price risks: We are exposed to fluctuations in exchange
rates, especially between the U.S. dollar and the euro, because a
high percentage of our business volume is conducted as exports
from Europe to areas using the U.S. dollar. In addition, we are
exposed to currency effects involving the currencies of emerging
markets, in particular the Chinese yuan. A strengthening of the
euro may change our competitive position. We are also exposed
to fluctuations in interest rates. Negative developments in the
financial markets and changes in the central bank policies may
negatively impact our results. Depending on the development of
foreign currency exchange and interest rates, hedging activities
could have significant effects on our business, financial condition
and results of operations.
Liquidity and financing risks: Our treasury and financing activ-
ities could face adverse deposit and/or financing conditions from
negative developments related to financial markets, such as (1)
limited availability of funds (particularly U.S. dollar funds) and
hedging instruments; (2) an updated evaluation of our solvency,
particularly from rating agencies; (3) negative interest rates; and
(4) impacts arising from more restrictive regulation of the finan-
cial sector, central bank policy, or financial instruments. Widening
credit spreads due to uncertainty and risk aversion in the financial
markets might lead to adverse changes of fair market values of our
financial assets, in particular our derivative financial instruments.
Combined Management Report
31
Credit Risks: We provide our customers with various forms of
direct and indirect financing of orders and projects. SFS in partic-
ular bears credit risks due to its financing activities.
Operational failures and quality problems in our value
chain processes: Our value chain comprises all steps, from re-
search and development to supply chain management, produc-
tion, marketing, sales and services. Operational failures in our
value chain processes could result in quality problems or poten-
tial product, labor safety, regulatory or environmental risks. Such
risks are particularly present in our Industrial Business in relation
to our production and manufacturing facilities, which are located
all over the world and have a high degree of organizational and
technological complexity. From time to time, some of the prod-
ucts we sell might have quality issues resulting from the design
or manufacture of these products or the commissioning of these
products or the software integrated into them. Our Healthineers'
business, for example, is subject to regulatory authorities includ-
ing the U.S. Food and Drug Administration and the European
Commission's Health and Consumer Policy Department, which
require us to make specific efforts to safeguard our product
safety. If we are not able to comply with these requirements, our
business and reputation may be adversely affected. We have es-
tablished multiple measures for quality improvement and claim
prevention. The increased use of quality management tools is
improving visibility and enables us to strengthen our root cause
and prevention processes.
44,802
28,896
361
70,239
Deferred income
Total assets
69%
35
60
resulting from offsetting
Active difference
Deferred tax assets
Prepaid expenses
The increase in Equity was attributable to net income for the year
of €4.1 billion, the settlement of exercised warrants of €1.1 bil-
lion and issuance of treasury stock of €0.4 billion in conjunction
with our share-based payments and employee share programs.
These factors were partly offset by dividends paid in fiscal 2017
(for fiscal 2016) of €2.9 billion. In addition, equity was reduced
due to share buybacks during the year amounting to €0.9 billion.
The equity ratios at September 30, 2017 and 2016 were 30% and
28%, respectively. For explanations relating to treasury shares we
refer to NOTE 15 in NOTES TO OUR ANNUAL FINANCIAL STATEMENTS
OF SIEMENS AG.
by the liquidity management of the Corporate Treasury of
Siemens AG. The liquidity management is based on the financing
policy of the Siemens Group, which is aimed towards a balanced
financing portfolio, a diversified maturity profile and a comfort-
able liquidity cushion. Therefore, the change in liquidity of
Siemens AG was not only driven by business activities of
Siemens AG.
(76)%
2%
8%
(4)%
19%
81
2,256
2,174
87
3,642
20,359
20,769
884
securities
Cash and cash equivalents,
16,717
19,884
Receivables and other assets
Current assets
(5)%
0%
0%
47,083
47,150
70,239
69,814
1%
Liabilities and equity
28,065
and other liabilities
to affiliated companies
Trade payables, liabilities
>200%
21%
14
619
750
Advance payments received
81
Liabilities to banks
Liabilities
5%
(11)%
(2)%
11,250
8,360
19,610
Total liabilities and equity
19,178
Other provisions
commitments
Pensions and similar
Provisions
(3)%
700
681
with an equity portion
Special reserve
9%
19,368
21,123
Equity
11,761
7,417
THE OVERALL RISK SITUATION
2 The defined benefit obligations reflect one-time special
contributions to the BSAV for new appointments from out-
side the Company, amounting to €1,525,000 (2016: €0).
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
1,051 1,051
40
40
39
1,027
1,117
1,117
1,117
1,091
52
40
1,051
52
48
1,011
1,011 1,011
989
1,065
1,065
1,065
1,043
1,065 1,065 1,065
512
512
512
1,577 1,577 1,577
52
1,043
1,065
2,556
1,059
0 3,300
1,117 5,491
621
621
1,738 6,112
3,300 1,099 1,048
1,577 5,491 3,233 3,230
566 566
602
621
2,143 6,057 3,835 3,851
3,855 1,742 6,113 4,443 4,256
0
1,099 1,048
3,868 3,690
576 566
0
3,300
3,240 3,233 1,120 5,491
603 622
622
622
3,843
1,099 1,048
2,426
0
1,011
989
2,556
0
1,065
1,043
2,556
0
1,065
1,043
(Max)
1,005
2017 (Min)
(Max)
Klaus Helmrich
Managing Board member
Lisa Davis?
Managing Board member
Dr. Roland Busch
7 Ms. Davis's compensation is paid out in Germany in euros. It
has been agreed that any tax liability that arises due to tax rates
that are higher in Germany than in the U.S. will be reimbursed.
For base compensation of calendar years 2015 and 2016 as well
as for the Bonus for fiscal years 2015 and 2016, a currency-ad-
justment payment was granted.
individual contractual caps for performance-based components.
6 Total compensation reflects the current fair value of stock-based
compensation components on the grant date. On the basis of
the current monetary values of stock-based compensation
components, total compensation amounted to €33,657,370
(2016: €28,747,477).
5 Total maximum compensation for fiscal 2017 represents the con-
tractual maximum amount for overall compensation, excluding
fringe benefits and pension benefit commitments. At 1.7 times
target compensation (base compensation, target amount for the
Bonus and the target amount for long-term stock-based compen-
sation), the maximum amount is less than the total of the
€8,560,190). The amounts for individual Managing Board mem-
bers were as follows: Joe Kaeser €2,200,081 (2016: 2,120,051),
Dr. Roland Busch €1,100,041 (2016: €1,080,022), Lisa Davis
€1,100,041 (2016: €1,080,022), Klaus Helmrich €1,100,041 (2016:
€1,080,022), Janina Kugel €1,055,020 (2016: €1,040,029),
Cedrike Neike €3,700,065 (2016: €0), Michael Sen €1,025,067
(2016: €0), Dr. Ralf P. Thomas €1,100,041 (2016: €1,080,022) and
for former Managing Board member Prof. Dr. Siegfried Russwurm
€550,020 (2016: €1,080,022).
Managing Board member
4 Of the Stock Awards granted in fiscal 2017, most are contingent
upon attaining the prospective performance-based target for
Siemens stock relative to five competitors. The monetary values
relating to 100% target achievement were €12,930,417 (2016:
3 The expenses recognized for stock-based compensation for members of the
Managing Board in accordance with the IFRS in fiscal 2017 and fiscal 2016 amounted
to €19,031,892 and €8,294,921, respectively. The following amounts pertained
the members of the Managing Board in fiscal 2017: Joe Kaeser €3,344,690 (2016:
€2,378,584), Dr. Roland Busch €1,781,634 (2016: €1,283,779), Lisa Davis €1,301,296
2 The figures for individual maximums for multi-year variable compensation reflect the
possible maximum value in accordance with the maximum amount agreed upon for
fiscal 2017 - that is, 300% of the applicable target amount.
in the amount of €746,537 (2016: €765,327).
1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
and other perquisites, such as the provision of company cars in the amount of
€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
advice, accommodation and moving expenses, including any taxes due in this regard,
currency adjustment payments and costs relating preventive medical examinations
6,969
2,773 2,639
7,066
0 6,600
6,328 6,460 2,234 10,982
1,101 1,193 1,193 1,193
7,428 7,653 3,427 12,175
One-year variable compensation
(Bonus) Payout amount
without long-term incentive effect,
non-stock-based
(2016: €698,432), Klaus Helmrich €1,784,593 (2016: €1,284,349),
Janina Kugel €1,278,363 (2016: €704,026), Cedrik Neike
€2,978,584 (2016: €0), Michael Sen €135,659 (2016: €0) and
Dr. Ralf P. Thomas €1,393,673 (2016: €872,394). The correspond-
ing expense, determined in the same way, for former Managing
Board members was as follows: Brigitte Ederer €218,614 (2016:
- €42,052), Barbara Kux €218,614 (2016: - €42,052), Peter
Löscher €538,356 (2016: - €103,403), Prof. Dr. Hermann Requardt
€32,566 (2016: - €5,624), Prof. Dr. Siegfried Russwurm
€3,303,141 (2016: €1,302,593), Peter Y. Solmssen €692,506
(2016: €35,857), and Dr. Michael Süß €29,604 (2016: - €248).
Janina Kugel
Managing Board member
2016
(Min)
2017
2016
2017
2017
2017
2017
2017
2017
(Min) (Max)
2017
2016
1,043
683
1,726
1,120 1,120
1,120
55
55
55
55
1,098
1,065 1,065
1,065
1,043
2017
2017
(Min) (Max)
2017
2016
Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
instead of the target value according to the Code for one-year variable compensation. Service costs for pension
benefits are not included.
0
3,075
530
3,604 3,659
1,065
1,065
69
1,134
61
1,104
648
648
648
548
548
548
1,065
115
115
15
15
15
1,043
533
533
533
533
115
1,043
533
69
1,134
5,159 548 2,746
1,214 1,214 1,214
6,373 1,762 3,959
1,347
1,650
0
4,079
533
1,043
0 2,556
1,065
1,043
1,278
0
533
0 1,278
533
572
1,121
1,134
39
78
69
533
3,165
533
2016
Managing Board member
Cedrik Neike 8,9
1,151
3,207
1,282
3,368
1,284
3,448
3,560
1,370
1,248
3,873
4,212
Michael Sen 10
3,452
1,387
1,387 1,284
1,643 5,823
593
593
593
5,231
1,051
3,067
3,584
Dr. Ralf P. Thomas
Managing Board member
since April 1, 2017
(Max)
2017
2017
(Min)
2017
2016
(Max)
(Min)
2017
2016
(Max)
(Min)
2017
2016
2017
2017
2017
2017
until March 31, 2017
CFO
since April 1, 2017
Prof. Dr. Siegfried Russwurm¹¹
Managing Board member
2017
Total (Code)6
Service Cost
Total5
Remuneration
Variable compensation (Bonus) and long-term stock-based compensation
With regard to the further terms of the Stock Awards, the same
principles apply in general to the Managing Board and to senior
managers. These principles are discussed in more detail in
NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
If an employment contract begins during the fiscal year, an equiv-
alent number of Siemens Phantom Stock Awards will be granted
instead of Stock Awards. In lieu of a transfer of shares, only a cash
equivalent is given at the end of the restriction period for Siemens
Phantom Stock Awards. Beyond that, the same provisions agreed
upon for Siemens Stock Awards apply.
discretion to revoke without replacement all or some of the
Siemens Stock Awards, depending on the gravity of the compli-
ance violation.
If a member of the Managing Board violates compliance regu-
lations, the Supervisory Board is entitled at its duty-bound
If significant changes occur among the relevant competitors
during the period under consideration, the Supervisory Board
may take these changes into account, as appropriate, in deter-
mining the values for comparison and/or calculating the relevant
stock prices of those competitors. In the event of extraordinary
unforeseen developments that impact the share price, the Super-
visory Board may decide to reduce the number of committed
Stock Awards retroactively, or it may decide that in lieu of a trans-
fer of Siemens stock only a cash settlement in a defined and lim-
ited amount will be paid, or it may decide to postpone transfers
of Siemens stock for payable Stock Awards until the develop-
ments have ceased to impact the share price.
Combined Management Report
Target attainment relating to long-term stock-based compensa-
tion is linked to the performance of Siemens stock compared to its
competitors. At the beginning of the fiscal year, the Supervisory
Board decides on a target system (target value for 100% and target
line) for the performance of Siemens stock relative to the stock
of – at present – five competitors (ABB, General Electric, Mitsu-
bishi Heavy Industries, Rockwell and Schneider Electric). Changes
in the share price are measured on the basis of a twelve-month
reference period (compensation year) over three years (perfor-
mance period), while Stock Awards are restricted for a period of
four years. When this restriction period expires, the Supervisory
Board determines how much better or worse Siemens stock has
performed relative to the stock of its competitors. This determina-
tion yields a target attainment of between 0% and 200% (cap).
component
-
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards) at the beginning of
the fiscal year. In the event of 100% target achievement, the an-
nual target amount for the monetary value of the Stock Awards
commitment is €2,200,000 for the President and CEO (effective
October 1, 2016). For the CFO and for those members of the Man-
aging Board who are responsible for Divisions and for Health-
ineers it is €1,100,000. For the other member of the Managing
Board, it is €1,055,000. Since fiscal 2015, the Supervisory Board
has had the option of increasing the target amount for each
member of the Managing Board, on an individual basis, by as
much as 75% for one fiscal year at a time. This option enables the
Supervisory Board to take account of each Managing Board mem-
ber's individual accomplishments and experience as well as the
scope and demands of his or her function.
Long-term stock-based compensation
At its duty-bound discretion, the Supervisory Board may revise
the amount resulting from target achievement downward or up-
ward by as much as 20%; the adjusted amount of the Bonus paid
can thus be as much as 240% of the target amount. In choosing
the factors to be considered in deciding on possible revisions of
the Bonus payouts (±20%), the Supervisory Board takes account
of incentives for sustainable corporate management. Decisions
to make discretionary adjustments may take factors such as the
results of an employee survey or a customer satisfaction survey
into account as well as the Company's economic situation. The
revision option may also be exercised in recognition of Managing
Board members' individual achievements. The Bonus is paid en-
tirely in cash.
For 100% target achievement (target amount), the amount of the
Bonus equals the amount of base compensation. The Bonus is
subject to a ceiling (cap) of 200%. If targets are substantially
missed, variable compensation may not be paid at all (0%).
Variable compensation (Bonus) is based on the Company's busi-
ness performance in the past fiscal year. The Bonus depends on
an equal one-third weighting of target achievement of the target
parameters return on capital employed, earnings per share and
individual targets. To achieve a consistent target system Compa-
ny-wide, corresponding targets - in addition to other factors -
also apply to senior managers.
Performance-based components
Variable compensation (Bonus)
Fringe benefits include the costs, or the cash equivalent, of non-
monetary benefits and other perquisites, such as the provision
of a company car, contributions toward the cost of insurance,
the reimbursement of expenses for legal advice and tax advice,
accommodation and moving expenses, including a gross-up for
any taxes due in this regard, currency adjustment payments and
costs relating to preventive medical examinations.
Fringe benefits
Base compensation is paid as a monthly salary. Since October 1,
2016, the base compensation of President and CEO Joe Kaeser
has amounted to €2,130,000 per year. The base compensation of
the CFO and of those members of the Managing Board who are
responsible for Divisions or for Healthineers has been €1,065,000
per year. For the other member of the Managing Board, it has
been €1,011,000 per year.
Beneficiaries receive one free share of Siemens stock per Stock
Award after an approximately four-year restriction period and
subject to target attainment. The value of the Siemens shares
to be transferred for Stock Awards after the end of the restric-
tion period depends on the price of the Siemens share at the
time of transfer and on target attainment as defined by the
underlying target system. If target attainment is above 100%,
the members of the Managing Board will receive - in addition
to the Siemens shares committed - a cash payment correspond-
ing to the outperformance. If target attainment is less than
100%, a number of stock commitments equivalent to the short-
fall from the target will be forfeited without replacement. The
total value of the Siemens stock and of the cash payment is
subject to a ceiling of 300% of the relevant target amount. If
this maximum amount of compensation is exceeded, the corre-
sponding entitlement to stock commitments will be forfeited
without replacement.
Variable
Share of target
compensation
compensation ~ 33%
(Bonus)
on target
achievement
Dependent
240% of the
respective
target amount
add. +/- 20%
adjustment
0-200
Value at allo-
cation/transfer
Maximum
amounts of
compensation
Target
achievement
a twelve-month reference
period (compensation
year) over three years
(performance period)
Change in share price
measured on the basis of
Annual
basis
0 3 years
Annual
basis
Basis for
assessment
Performance of
Siemens stock
compared to
5 competitors
per share, basic EPS
1/3 Individual
targets
1/3 Earnings
1/3 Return on capital
employed (ROCE)
Target
parameter
~ 34%
Long-term
stock-based
compensation
Non-performance-based components
Base compensation
0-200%
In fiscal 2017, the Managing Board's remuneration system had
the following components:
39
Maximum amounts of compensation
Managing Board
member
and CEO
President
base
compensation
2 times
base
compensation
3 times
1/3 Base compensation
100%
Structure of target compensation
Share Ownership Guidelines
Remuneration system for Managing Board members
The system and levels for the Managing Board's remuneration are
determined and regularly reviewed by the full Supervisory Board,
based on proposals by the Compensation Committee. The Super-
visory Board reviews remuneration levels annually to ensure that
they are appropriate. In this process, the Company's economic
situation, performance and outlook as well as the tasks and per-
formance of the individual Managing Board members are taken
into account. In addition, the Supervisory Board considers the
common level of remuneration in comparison with peer compa-
nies and with the compensation structure in place in other areas
of the Company. It also takes due account of the relationship
between the Managing Board's remuneration and that of senior
management and staff, both overall and with regard to its devel-
opment over time. For this purpose, the Supervisory Board has
also determined how senior management and the relevant staff
are to be differentiated. The remuneration system that has been
in place for Managing Board members since fiscal 2015 was ap-
proved at the Annual Shareholders' Meeting on January 27, 2015.
The individual components of compensation - base compensa-
tion, variable compensation (Bonus) and long-term stock-based
compensation - are weighted equally, and each comprises about
one-third of target compensation. This equal weighting is also
applied to the three target parameters of variable compensation
(Bonus).
The remuneration system for the Siemens Managing Board is in-
tended to provide an incentive for successful corporate manage-
ment with an emphasis on sustainability. Managing Board mem-
bers are expected to make a long-term commitment to and on
behalf of the Company and may benefit from any sustained in-
crease in the Company's value. For this reason, a substantial
portion of their total remuneration is linked to the long-term
performance of Siemens stock. Their remuneration is to be com-
mensurate with the Company's size and economic position.
Exceptional achievements are to be rewarded adequately, while
falling short of targets is to result in an appreciable reduction in
remuneration. Their compensation is also structured so as to be
attractive in comparison to that of competitors, with a view to
attracting outstanding managers to the Company and retaining
them for the long term.
A.10.1.1 REMUNERATION SYSTEM
A.10.1 Remuneration of Managing
Board members
This report is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of the
German Commercial Code (Handelsgesetzbuch), the German
Accounting Standards (Deutsche Rechnungslegungs Standards)
and the International Financial Reporting Standards (IFRS).
A.10 Compensation Report
48 Combined Management Report
Requirement to hold Siemens stock
as a multiple of base compensation
throughout the terms of office
Base compensation
1/3 Long-term
stock-based compensation
Siemens Stock Awards
> Variability of target
achievement:
0-200%
> Performance of Siemens stock
compared to five competitors
Restriction period
four years
Combined Management Report
Compensation
overall
stock-based compensation
Long-term
Variable
compensation (Bonus)
300%
target compensation¹
1.7 times
240%
as a percentage of the respective target amount
1 Plus fringe benefits and pension benefit commitments.
Individual
targets
1/3
Earnings
per share
1/3
1/3 ROCE
Target parameter:
compensation
Performance-
based
1/3 Variable compensation (Bonus)
> Variability of target achievement:
0-200% add. ±20% adjustment
2/3
40
300% of the
respective
target amount
Dependent on
- Target
achievement
without long-term incentive effect,
non-stock-based
Total
Fixed compensation (base compensation)
Fringe benefits¹
Total compensation
components
Performance-based
components
Performance-based
(Amounts in thousands of €)
Non-performance-
based components
with long-term incentive effect,
stock-based
Combined Management Report
Managing Board members serving as of September 30, 2017
Total compensation
Performance-based
components
components
Performance-based
(Amounts in thousands of €)
Non-performance-
based components
Managing Board members serving as of September 30, 2017
The compensation presented on the following pages was
granted to the members of the Managing Board for fiscal
2017 (individual disclosure).
On the basis of the Supervisory Board's decisions described
above, Managing Board compensation for fiscal 2017 totaled
€33.97 million (2016: €28.90 million), an increase of 17.5%.
Of this total amount, €20.73 million (2016: €20.19 million)
was attributable to cash compensation and €13.24 million
(2016: €8.71 million) to stock-based compensation.
44
Joe Kaeser
President and CEO
2016
Multi-year variable compensation 2.3
Siemens Stock Awards4
(restriction period: four years)
One-year variable compensation
(Bonus) Target amount
with long-term incentive effect,
stock-based
without long-term incentive effect,
non-stock-based
Total
Fixed compensation (base compensation)
Fringe benefits'
One-year variable compensation
(Bonus) Payout amount
without long-term incentive effect,
non-stock-based
Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
instead of the target value according to the Code for one-year variable compensation. Service costs for pension
benefits are not included.
Total (Code) 6
Service Cost
Total5
2,158 2,096
Multi-year variable compensation 2.3
Siemens Stock Awards4
(restriction period: four years)
One-year variable compensation
(Bonus) Target amount
5,112
0
2,130
2,034
2017
2017
(Min) (Max)
2,034 2,130 2,130 2,130
102
104 104 104
2,136 2,234 2,234 2,234
2017
Total compensation
Commitments in connection with the
termination of Managing Board membership
Because Prof. Dr. Russwurm left the Managing Board at the
end of his term of office on March 31, 2017, no commit-
ments were agreed upon in connection with the termina-
tion of his Managing Board membership. In accordance with
his contract with the Company, the previously granted Stock
Awards, for which the restriction period is still in effect, will
be absolutely maintained.
Since beneficiaries are not entitled to receive dividends, the
number of stock commitments granted was based on the
closing price of Siemens stock in Xetra trading on the date
of award less the present value of dividends expected during
the restriction period. The share price used to determine the
number of stock commitments was €91.32 (2016: €75.60).
Long-term stock-based compensation
In the event of a change of control that results in a substantial
change in a Managing Board member's position - for example,
due to a change in corporate strategy or a change in the Manag-
ing Board member's duties and responsibilities – the Managing
Board member has the right to terminate his or her contract with
the Company. A change of control exists if one or more share-
holders acting jointly or in concert acquire a majority of the vot-
ing rights in Siemens AG and exercise a controlling influence or
if Siemens AG becomes a dependent enterprise as a result of
entering into an intercompany agreement within the meaning of
Section 291 of the German Stock Corporation Act (Aktiengesetz)
or if Siemens AG is to be merged into an existing corporation or
other entity. If this right of termination is exercised, the Manag-
ing Board member is entitled to a severance payment in the
amount of not more than two years' compensation. The calcula-
tion of the annual compensation will include not only the base
compensation and the target amount for the Bonus, but also the
target amount for Stock Awards, in each case based on the most
recent fiscal year completed prior to the termination of the mem-
ber's contract. The stock-based components for which a firm
commitment already exists will remain unaffected. There is no
Managing Board employment contracts provide for a compensa-
tory payment if membership on the Managing Board is termi-
nated prematurely by mutual agreement and without serious
cause. The amount of this payment must not exceed the value of
two years' compensation and must compensate no more than
the remaining term of the contract (cap). The amount of the
compensatory payment is calculated on the basis of base com-
pensation, together with the variable compensation and the
long-term stock-based compensation actually received during
the last fiscal year before termination. The compensatory pay-
ment is payable in the month when the member leaves the Man-
aging Board. In addition, a one-time special contribution is made
to the BSAV. The amount of this contribution is based on the
BSAV contribution that the Managing Board member received in
the previous year and on the remaining term of his or her ap-
pointment, but is limited to not more than two years' contribu-
tions (cap). The above benefits are not paid if an amicable termi-
nation of the member's activity on the Managing Board is agreed
upon at the member's request, or if there is serious cause for the
Company to terminate the employment relationship.
Commitments in connection with the termination
of Managing Board membership
September 30, 1983, are entitled to receive transition payments
for the first six months after retirement, equal to the difference
between their final base compensation and the retirement ben-
efits payable under the corporate pension plan if they retire im-
mediately after the termination of their Managing Board mem-
bership. The provisions of the German Company Pensions Act
(Betriebsrentengesetz) do not apply to this benefit.
Like other eligible employees of Siemens AG, Managing Board
members who were employed by the Company on or before
Benefits from the retirement benefit system that was in place
before the BSAV was established are normally granted as pension
benefits with a surviving dependent's pension. In this case also,
payout in installments or a lump-sum payment may be chosen
instead of pension payments.
Managing Board members are eligible to receive benefits under
the BSAV at the age of 60 or - in the case of benefit commit-
ments made on or after January 1, 2012 – the age of 62. As a rule,
the accrued pension benefit balance is paid out to Managing
Board members in twelve annual installments. A Managing Board
member or his or her surviving dependents may also request that
his or her pension benefit balance will be paid out in fewer in-
stallments or as a lump sum, subject to the Company's consent.
The accrued pension benefit balance may also be paid out as a
pension. Furthermore, Managing Board members may choose a
combination of lump sum payments, installment payments (two
to twelve) and pension payments. If the pension option is chosen,
a decision must be made as to whether the payout should include
pensions for surviving dependents. If a member of the Managing
Board dies while receiving a pension, benefits will be paid to his
or her surviving dependents if the member has chosen such
benefits. The Company will then provide a limited-term pension
to surviving children until they reach the age of 27 or, in the case
of benefit commitments made on or after January 1, 2007, until
they reach the age of 25.
Like employees of Siemens AG, the members of the Managing
Board are included in the Siemens Defined Contribution Benefit
Plan (BSAV). Under the BSAV, Managing Board members receive
contributions that are credited to their personal pension ac-
counts. The amount of these annual contributions is based on a
predetermined percentage related to their base compensation
and the target amount for their Bonuses. This percentage is de-
cided upon annually by the Supervisory Board. Most recently it
was set at 28%. In making its decisions, the Supervisory Board
takes account of the intended level of provision for each individ-
ual and the length of time he or she has been a Managing Board
member as well as the annual and long-term expense to the
Company resulting from that provision. The non-forfeitability of
pension benefit commitments is determined in compliance with
the provisions of the German Company Pensions Act (Betriebsren-
tengesetz). Special contributions may be granted to Managing
Board members on the basis of individual decisions by the Super-
visory Board. If a member of the Managing Board earned a pen-
sion benefit entitlement from the Company before the BSAV was
introduced, a portion of his or her contributions went toward
financing that prior commitment.
Pension benefit commitments
42
41
Combined Management Report
Compliance with these guidelines must be proven for the first
time after a four-year buildup phase. Thereafter, it must be
proven annually. If the value of a Managing Board member's
accrued holdings declines below the required minimum due to
fluctuations in the market price of Siemens stock, he or she must
acquire additional shares.
worth a multiple of their base compensation 300% for the
President and CEO, 200% for the other members of the Managing
Board - throughout their terms of office on the Managing Board.
The determining figure in this context is the average base com-
pensation that a member of the Managing Board has received
over the four years before the applicable dates of proof of com-
pliance. Hence, changes that have been made to base compensa-
tion in the meantime are included. Non-forfeitable stock commit-
ments (Bonus Awards) which were granted until fiscal 2014 are
taken into account in determining compliance with the Share
Ownership Guidelines.
buildup phase Managing Board members hold Siemens stock
-
The Siemens Share Ownership Guidelines are an integral part of
the remuneration system for the Managing Board and senior
executives. These guidelines require that after a specified
Share Ownership Guidelines
Maximum amount for compensation overall
In addition to the maximum amounts of compensation for vari-
able compensation and long-term stock-based compensation,
a maximum amount for compensation overall has been defined.
Since fiscal 2014, this amount cannot be more than 1.7 times
higher than target compensation. Target compensation com-
prises base compensation, the target amount for variable com-
pensation and the target amount for long-term stock-based com-
pensation, excluding fringe benefits and pension benefit
commitments. When fringe benefits and pension benefit commit-
ments for a given fiscal year are included, the maximum amount
of compensation overall for that year will increase accordingly.
at transfer
- Stock price
Combined Management Report
2,528
entitlement to a severance payment if the Managing Board mem-
ber receives benefits from third parties in connection with a
change of control. Moreover, there is no right to terminate if the
change of control occurs within a period of twelve months prior
to a Managing Board member's retirement.
Stock commitments that were made as long-term stock-based
compensation and for which the restriction period is still in effect
will be forfeited without replacement if the employment contract
is not extended after the end of an appointment period, either at
the Managing Board member's request or because there is seri-
ous cause that would have entitled the Company to revoke the
appointment or terminate the contract. However, once granted,
Stock Awards are not forfeited if the employment contract is ter-
minated by mutual agreement at the Company's request, or be-
cause of retirement, disability or death or in connection with a
spinoff, the transfer of an operation, or a change of activity
within the corporate group. In these cases, the Stock Awards will
remain in effect upon termination of the employment contract
and will be honored on expiration of the restriction period.
43
Combined Management Report
assessment, the Supervisory Board decided not to make any dis-
cretionary adjustments to the Bonus payout amounts.
100-130%
In fiscal 2017, Bonus-related target attainment by Managing
Board members was between 113.89% and 123.89%. In its overall
2 Calculative target achievement for ROCE was 51.33%. The Supervisory Board adjusted this figure to reflect the acquisition of
Mentor Graphics and the merger of Siemens' wind power business with Gamesa Corporación Tecnológica S.A. (Gamesa).
Focus topics 2017: Growth, Innovation,
Digitalization and Excellence
Target achievement²
118.33%
123.33%
Actual FY 2017 figure
13.54%
€7.67
100% of target
15.00%
€7.32
1 Continuing and discontinued operations.
Individual targets
Earnings per share, basic EPS1 (02015-2017)
Return on capital employed, ROCE¹
Target parameter
The following targets were set and attained with respect to the
target parameters for variable compensation:
Variable compensation (Bonus)
At the beginning of the fiscal year, the Supervisory Board set the
target parameters return on capital employed (ROCE) and earn-
ings per share (EPS) for the variable compensation (Bonus) for all
members of the Managing Board, in each case on the basis of
continuing and discontinued operations. The target values for
the EPS component were defined on a multi-year basis. In defin-
ing the target for variable compensation, the Supervisory Board
also defined individual targets so as to take fuller account of the
individual performance of each Managing Board member. As a
rule, up to five individual targets were defined for this purpose.
An internal review of the appropriateness of Managing Board
compensation for fiscal 2017 has confirmed that the remunera-
tion of the Managing Board resulting from target achievement
for fiscal 2017 is to be considered appropriate. In light of this re-
view and following a review of the achievement of the targets
defined at the beginning of the fiscal year, the Supervisory Board
has decided to define the amounts of variable compensation,
stock commitments and pension benefit contributions as follows:
A.10.1.2 REMUNERATION OF MANAGING BOARD
MEMBERS FOR FISCAL 2017
compensation for secondary activities. The holding of positions
in Siemens companies is considered to be covered by contractual
Managing Board remuneration. As a rule, Managing Board mem-
bers are obligated to waive any compensation that may be due
to them in connection with such positions. Should a waiver not
be possible under the legal or tax regulations applicable to a
Siemens company, the compensation paid to a Managing Board
member in connection with such a position will be set off against
the remuneration due to him or her in connection with his or her
Managing Board activities. Memberships in supervisory boards
whose establishment is required by law or in comparable domes-
tic or foreign controlling bodies of business enterprises are listed
in Section c.4.1 in c.4 CORPORATE GOVERNANCE.
Secondary activities of Managing Board members
Members of the Managing Board may take on secondary activi-
ties – in particular, supervisory board positions outside the
Company - only with the approval of the Chairman's Committee
of the Supervisory Board. The full Supervisory Board remains
responsible for decisions regarding any adjustments to Manag-
ing Board compensation necessary to take account of possible
Compensatory or severance payments also cover non-monetary
benefits by including an amount of 5% of the total compensation
or severance amount. Compensatory or severance payments will
be reduced by 10% as a lump-sum allowance for discounted val-
ues and for income earned elsewhere. However, this reduction
will apply only to the portion of the compensatory or severance
payment that was calculated without taking into account the first
six months of the remaining term of the Managing Board mem-
ber's employment contract.
703
Target parameter
0 3,075
648 2,746
703 703
1,351 3,449
4,532,350
3,817,196
Klaus Helmrich
596,400
583,968
5,007,306
4,607,800
Janina Kugel
Cedrik Neike4
583,968
566,160
1,628,418
1,084,971
298,200
1,213,897
Michael Sen 5
Dr. Ralf P. Thomas
298,200
703,169
596,400
553,728
596,400
Lisa Davis
4,342,427
Pension benefit commitments
For fiscal 2017, the members of the Managing Board were
granted contributions under the BSAV totaling €5.0 million
(2016: €4.6 million), based on a resolution of the Supervisory
Board dated November 8, 2017. Of this amount, €0.1 million
(2016: €0.1 million) related to the funding of pension commit-
ments earned prior to transfer to the BSAV.
The contributions under the BSAV are added to the personal pen-
sion accounts each January, following the close of the fiscal year.
Until a beneficiary's date of retirement, his or her pension account
is credited with an annual interest payment (guaranteed interest)
on January 1 of each year. The interest rate is currently 0.90%.
The following table shows individualized details of the contribu-
tions (allocations) under the BSAV for fiscal 2017 as well as the
defined benefit obligations for pension commitments.
(Amounts in €)
Managing Board members
2017
Total
contributions' for
2016
Defined benefit obligation² for all pension
commitments excluding deferred compensation³
2017
2016
serving as of September 30, 2017
Joe Kaeser
1,192,800
1,139,040
11,195,488
10,391,542
Dr. Roland Busch
596,400
583,968
4,742,811
583,968
47
4,727,702
Former members of the Managing Board
Prof. Dr. Siegfried Russwurm 6
Total
4,399
6,104
603
622
2,309
2,202
3,816
5,586
3,113
566
3,391
2,825
5,482
0
0
55
133
0
0
53
129
3,797
576
3,688
621
6,207
298,200
5,039,160
583,968
4,612,608
6,317,937
40,069,078
6,083,534
34,624,669
1 The expenses (service cost) recognized in accordance with
the IFRS in fiscal 2017 for Managing Board members' entitle-
ments under the BSAV in fiscal 2017 amounted to
€6,754,665 (2016: €4,615,543).
3 Deferred compensation totals €4,001,386 (2016: €3,829,397),
including €3,590,178 for Joe Kaeser (2016: €3,428,243),
€354,801 for Klaus Helmrich (2016: €343,953) and €56,407
for Dr. Ralf P. Thomas (2016: €57,201).
4 Mr. Neike was appointed a full member of the Managing
Board effective April 1, 2017.
5 Mr. Sen was appointed a full member of the Managing
Board effective April 1, 2017.
6 Prof. Dr. Russwurm left the Managing Board effective the
end of March 31, 2017.
In fiscal 2017, former members of the Managing Board and their
surviving dependents received emoluments within the meaning
of Section 314 para. 1 No. 6 b of the German Commercial Code
totaling €34.1 million (2016: €52.3 million). The previous year's
figure includes the lump-sum payments of the former Managing
Board members Prof. Dr. Requardt and Mr. Solmssen.
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2017, amounted to
€191.5 million (2016: €216.3 million). This figure is included in
NOTE 16 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3,231
9 To compensate for the forfeiture of stock and pension contri-
butions at his previous employer, the Supervisory Board has
granted Mr. Sen a one-time sum of €950,000. Half of this
amount was awarded in the form of Siemens Phantom Stock
Awards and the other half as a special pension benefit contri-
bution.
Other
Dr. Ralf P. Thomas
Michael Sen⁹
Cedrik Neike7,8
2,839
530
593
2,795
602
4,418
4,297,199
0
Combined Management Report
Managing Board member
0
0
1,407
0
0
0
0
0
0
0
1,028
0
0
0
903
0
397
0
0
0
0
67
0
0
fringe benefits reported here, an amount of €7,778 was granted
and paid by Siemens Ltd. China. In addition, it has been agreed
that Siemens AG will offset, as a net amount, any personal tax
burden that, due to Mr. Neike's two employment relationships,
exceeds the burden that he would incur if he paid tax solely
on the benefits granted to him in his employment contract
with Siemens AG in Germany. Siemens AG will also offset any
burdens due to charges and contributions to social insurance
or comparable statutory systems in China additional to those
he incurs in Germany.
8 Mr. Neike was appointed Executive Chairman of the Board of
Directors of Siemens Ltd. China, effective May 1, 2017. Of the
fixed compensation and one-year variable compensation (pay-
out amount) reported here, an amount of €222,802 was granted
and paid by Siemens Ltd. China and set off against the remune-
ration for his Managing Board activities at Siemens AG. Of the
Stock Awards fell due and was honored in September 2017. The
other half will fall due and be honored in September 2018. The
value of these Siemens Phantom Stock Awards depends solely
on the performance of Siemens stock.
602
5,447
621
4,984
603
3,561
622
3,969
703
1,975
1,214
3,770
4,845
4,363
2,958
3,347
1,272
2,556
97
133
20
39
0
1,402
0
Managing Board member
2,024
891
15
1,043
533
1,043
1,065
533
533
2016
2017
115
2016
2016
2017
2016
2017
until March 31, 2017
CFO
since April 1, 2017
since April 1, 2017
Prof. Dr. Siegfried Russwurm 10
Managing Board member
2017
69
61
39
0
0
2,310
3,052
465
891
0
0
1,317
606
1,370
1,284
624
606
1,121
572
1,104
1,134
648
548
78
0
0
10 Prof. Dr. Russwurm left the Managing Board effective the end
of March 31, 2017.
0
1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
and other perquisites, such as the provision of company cars in the amount of
€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
advice, accommodation and moving expenses, including any taxes due in this regard,
currency adjustment payments and costs relating preventive medical examinations
in the amount of €746,537 (2016: €765,327).
2 The payout amount of one-year variable compensation (Bonus) presented above
therefore represents the amount awarded for fiscal 2017, which will be paid out in
January 2018.
3 For one half of the Siemens Stock Awards 2012, target attain-
ment depended on the EPS for the last three years and
amounted to 154%. For the other half, target attainment was
linked to the performance of Siemens stock compared to defined
competitors during the four-year restriction period. It amounted
to 87%. Of the Siemens Stock Awards 2012, which were granted
on the basis of 100% target attainment, a number equivalent to
the shortfall from that target expired without replacement in
accordance with plan rules.
4 For one half of the Siemens Stock Awards 2011 target attainment
depended on the EPS for the past three fiscal years and amounted
to 114%. For the other half, target attainment was linked to the
performance of Siemens stock compared to defined competitors
during the four-year vesting period. It amounted to 0%. There-
fore, Siemens Stock Awards 2011 that had already been granted
were forfeited without replacement in accordance with the plan
rules.
5 One half of the Bonus for fiscal 2011 and fiscal 2012 was granted
in the form of non-forfeitable awards of Siemens stock (Bonus
Awards).After the expiration of the four-year waiting period in
November 2015 and November 2016, respectively, the beneficia-
ries received one share of Siemens stock for each Bonus Award.
6 "Other" includes the adjustment of the Siemens Stock Awards
2011 and 2012 and Bonus Awards 2011 and 2012 (transfer in
November 2015 and 2016, respectively) in accordance with
Section 23 and Section 125 of the German Transformation Act
(Umwandlungsgesetz) due to the spin-off of OSRAM.
Total (Code)
7 To compensate for the forfeiture of stock at his previous em-
ployer, the Supervisory Board has granted Mr. Neike a one-time
sum of €4,200,000. Seventy-five percent of this amount was
awarded in the form of Siemens Phantom Stock Awards and the
remaining 25% as a special pension benefit contribution. One
half of the total amount of these granted Siemens Phantom
Managing Board member
Lisa Davis
Managing Board member
Klaus Helmrich
Managing Board member
Janina Kugel
Managing Board member
2017
2016
Dr. Roland Busch
Service Cost
Total
Other6
1,407
0
0
Other6
Total
200
97
9,643
7,316
Service Cost
Total (Code)
1,193
10,835
1,101
8,416
Fixed compensation (base compensation)
Fringe benefits¹
Total
without long-term incentive effect,
non-stock-based
with long-term incentive effect, stock-based
One-year variable compensation
(Bonus) - Payout amount²
Multi-year variable compensation
Siemens Stock Awards (restriction period: 2012-2016)³
Siemens Stock Awards (restriction period: 2011-2015)4
Bonus Awards (waiting period: 2012-2016)5
Bonus Awards (waiting period: 2011-2015)5
Share Matching Plan (vesting period: 2013-2015)
2017
0
2016
2016
1,027
1,284
1,387
1,248
1,387
1,284
1,370
1,151
1,282
1,051
1,259
0
3,052
1,301
0
0
2,024
0
0
0
0
1,091
1,117
1,726
2017
2016
1,065
1,043
1,065
1,043
1,065
1,043
1,011
989
55
55
512
683
52
48
40
39
1,120
1,098
1,577
2017
0
2,949
Bonus Awards (waiting period: 2012-2016)5
Bonus Awards (waiting period: 2011-2015)5
Share Matching Plan (vesting period: 2013-2015)
0
555
0
0
0
0
2,024
0
1,099 1,048
3,300
3,246 3,247 1,134 5,491
603
622
622 622
3,849 3,869 1,756
0
0
524
3,263
1,628
602
621
6,113
3,865
2,249
606
5,233
1,099
0
598
0
0
1,028
0
0
0
0
0
0
0
0
703
0
0
0
0
1,028
0
0
0
925
0
624
2,619
1,370 1,284
3,573 3,466
703
606
1,702
2017
2016
2,130
2,034
104
102
2,234
2,136
One-year variable compensation
(Bonus) Payout amount²
2,639
2,773
with long-term incentive effect, stock-based
Multi-year variable compensation
4,570
2,310
Siemens Stock Awards (restriction period: 2012-2016)³
Siemens Stock Awards (restriction period: 2011-2015)4
0
1,317
3,538
903
0
President and CEO
Joe Kaeser
3,542
Total
9 Mr. Neike was appointed Executive Chairman of the Board of
Directors of Siemens Ltd. China, effective May 1, 2017. Of the
fixed compensation and one-year (payout amount) and multi-
year variable compensation reported here, an amount of
€359,769 was granted and paid by Siemens Ltd. China and set
off against the remuneration for his Managing Board activities at
Siemens AG. Of the fringe benefits reported here, an amount of
€7,778 was granted and paid by Siemens Ltd. China. In addition,
it has been agreed that Siemens AG will offset, as a net amount,
any personal tax burden that, due to Mr. Neike's two employ-
ment relationships, exceeds the burden that he would incur
if he paid tax solely on the benefits granted to him under his
employment contract with Siemens AG in Germany. Siemens AG
will also offset any burdens due to charges and contributions
10 To compensate for the forfeiture of stock and pension contri-
butions at his previous employer, the Supervisory Board has
granted Mr. Sen a one-time sum of €950,000. One half of this
amount was awarded in the form of Siemens Phantom Stock
Awards and the other half as a special pension benefit contri-
bution.
without long-term incentive effect,
non-stock-based
8 To compensate for the forfeiture of stock at his previous em-
ployer, the Supervisory Board has granted Mr. Neike a one-time
sum of €4,200,000. Seventy-five percent of this amount was
awarded in the form of Siemens Phantom Stock Awards and the
remaining 25% as a special pension benefit contribution. One
half of the total amount of these granted Siemens Phantom
Stock Awards fell due and was honored in September 2017. The
other half will fall due and be honored in September 2018. The
value of these Siemens Phantom Stock Awards depends solely
on the performance of Siemens stock. As compensation for
the forfeiture of stock at his previous employer, these Siemens
Phantom Stock Awards are not taken into account when deter-
mining target compensation and hence are not included in
the individual minimum and maximum amounts specified.
11 Prof. Dr. Russwurm left the Managing Board effective the end
of March 31, 2017.
Combined Management Report
45
46
Allocations
The following table shows allocations for fiscal 2017 for
fixed compensation, fringe benefits, one-year variable
compensation and multi-year variable compensation - by
reference year - as well as the expense of pension benefits.
In deviation from the multi-year variable compensation
granted for fiscal 2017 and shown above, this table in-
cludes the actual figure for multi-year variable compensa-
tion granted in previous years and allocated in fiscal 2017.
Managing Board members serving as of September 30, 2017
to social insurance or comparable statutory systems in China
additional to those he incurs in Germany.
(Amounts in thousands of €)
Non-performance-
based components
Performance-based
components
Combined Management Report
Managing Board members serving as of September 30, 2017
(Amounts in thousands of €)
Non-performance-
based components
Fringe benefits¹
Fixed compensation (base compensation)
Performance-based
components
retired
In addition to selling them over the stock exchange or through a
public sales offer to all shareholders, the Managing Board is au-
thorized by resolution of the Shareholders' Meeting on Janu-
ary 27, 2015 to also use Siemens shares repurchased on the basis
of this or any previously given authorization for every permissible
purpose, in particular as follows: Such Siemens shares may be
shares upon exercise of the derivative will take place no later
than January 26, 2020.
Combined Management Report
The Company may not repurchase its own shares unless so au-
thorized by a resolution duly adopted by the shareholders at a
general meeting or in other very limited circumstances set forth
in the German Stock Corporation Act. On January 27, 2015, the
Shareholders' Meeting authorized the Company to acquire until
January 26, 2020 up to 10% of its capital stock existing at the date
of adopting the resolution or if this value is lower - as of the
date on which the authorization is exercised. The aggregate of
shares of stock of Siemens AG repurchased under this authoriza-
tion and any other Siemens shares previously acquired and still
held in treasury by the Company or attributable to the Company
pursuant to Sections 71 d and 71e of the German Stock Corpora-
tion Act may at no time exceed 10% of the then existing capital
stock. Any repurchase of Siemens shares shall be accomplished
at the discretion of the Managing Board either (1) by acquisition
over the stock exchange or (2) through a public share repurchase
offer. The Managing Board is additionally authorized to complete
the repurchase of Siemens shares in accordance with the autho-
rization described above by using certain derivatives (put and
call options, forward purchases and any combination of these
derivatives). In exercising this authorization, all stock repur-
chases based on the derivatives are limited to a maximum vol-
ume of 5% of Siemens' capital stock existing at the date of adopt-
ing the resolution at the Shareholders' Meeting. A derivative's
term of maturity may not, in any case, exceed 18 months and
must be chosen in such a way that the repurchase of Siemens
In February 2012, Siemens issued bonds with warrant units with
a volume of US$3 billion. Siemens exchanged the major part of
the warrants issued in 2012 against new warrants in Septem-
ber 2015; for this purpose, Siemens issued new bonds with war-
rants. After redemption of the first tranche with a volume of
US$1.5 billion at maturity in August 2017, the remaining war-
rants correspond to option rights entitling their holders to receive
approximately 11.5 million Siemens shares. The terms and condi-
tions of the warrants enable Siemens to service exercised option
rights using either conditional capital or treasury stock, and also
enable Siemens to buy back the warrants.
> The issue price of the new shares/bonds is not significantly
lower than the stock market price of the Siemens shares al-
ready listed or the theoretical market price of the bonds com-
puted in accordance with generally accepted actuarial meth-
ods (exclusion of subscription rights, limited to 10% of the
capital stock, in accordance with or by mutatis mutandis ap-
plication of Section 186 para. 3 sentence 4 German Stock Cor-
poration Act).
> The exclusion is necessary in order to grant holders of conver-
sion or option rights or conversion or option obligations on
Siemens shares a compensation for the effects of dilution.
> The exclusion is necessary with regard to fractional amounts
resulting from the subscription ratio.
54
cases:
The new shares under Authorized Capital 2014 and the bonds
under the aforementioned authorizations are to be issued against
cash or non-cash contributions. They are, as a matter of principle,
to be offered to shareholders for subscription. The Managing
Board is authorized to exclude, with the approval of the Super-
visory Board, subscription rights of shareholders in the event of
capital increases against contributions in kind. In the event of
capital increases against contributions in cash, the Managing
Board is authorized to exclude shareholders' subscription rights
with the approval of the Supervisory Board in the following
By resolutions of the Shareholders' Meetings of January 28, 2014
and January 27, 2015, the Managing Board is authorized to issue
bonds with conversion rights or with warrants attached, or a
combination of these instruments, each entitling the holders to
subscribe to up to 80 million registered shares of Siemens AG of
no par value. Based on these two authorizations, the Company
or consolidated subsidiaries of the Company may issue bonds
until January 27, 2019 and January 26, 2020, respectively, each
in an aggregate principal amount of up to €15 billion. In order to
grant shares of stock to holders/creditors of such convertible
bonds or warrant bonds, the capital stock was conditionally in-
creased by resolutions of the Shareholders' Meetings 2014 and
2015, each by up to 80 million registered shares of no par value
(Conditional Capitals 2014 and 2015), i.e. in total by up to
€480 million through the issuance of up to 160 million shares of
no par value.
As of September 30, 2017, the total unissued authorized capital
of Siemens AG therefore consisted of €618.6 million nominal
that may be issued, with varying terms by issuance, in install-
ments of up to 206.2 million registered shares of no par value.
Furthermore, the Managing Board is authorized to increase,
with the approval of the Supervisory Board, the capital stock
until January 27, 2019 by up to €528.6 million through the issu-
ance of up to 176.2 million registered shares of no par value
against cash contributions and/or contributions in kind (Autho-
rized Capital 2014).
> used in connection with share-based compensation programs
and/or employee share programs of the Company or any of its
affiliated companies and issued to individuals currently or for-
merly employed by the Company or any of its affiliated com-
panies as well as to board members of any of the Company's
affiliated companies
The total amount of new shares issued or to be issued under
Authorized Capitals or in accordance with the bonds mentioned
above, in exchange for contributions in cash and in kind and with
shareholders' subscription rights excluded, may in certain cases
be subject to further restrictions, such as the restriction that they
may not exceed 20% of the capital stock. The details of those
restrictions are described in the relevant authorization.
the Supervisory Board may allocate to other retained earnings
under Section 58 para. 2 of the German Stock Corporation Act.
Siemens AG maintains two lines of credit in an amount of €4 bil-
lion and an amount of US$3 billion, respectively, which provide
its lenders with a right of termination in the event that (1)
Siemens AG becomes a subsidiary of another company or (2) a
person or a group of persons acting in concert acquires effective
control over Siemens AG by being able to exercise decisive influ-
ence over its activities (Art. 3(2) of Council Regulation (EC)
139/2004).
> sold, with the approval of the Supervisory Board, to third
parties against payment in cash if the price at which such
Siemens shares are sold is not significantly lower than the
market price of Siemens stock (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutan-
dis application of Section 186 para. 3 sentence 4 German
Stock Corporation Act) or
56 Combined Management Report
53
We are not aware of, nor have we during the last fiscal year been
notified of, any shareholder directly or indirectly holding 10% or
more of the voting rights. There are no shares with special rights
conferring powers of control. Shares of stock issued by
Siemens AG to employees under its employee share program
and/or as share-based compensation are transferred directly to
the employees. The beneficiary employees who hold shares of
employee stock may exercise their control rights in the same way
as any other shareholder directly in accordance with applicable
laws and the Articles of Association.
A.11.7 Other takeover-relevant
information
the severance payment that was calculated without taking ac-
count of the first six months of the remaining term of the Man-
aging Board member's contract. There is no entitlement to a
severance payment if the Managing Board member receives ben-
efits from third parties in connection with a change of control.
A right to terminate the contract does not exist if the change of
control occurs within a period of twelve months prior to a Man-
aging Board member's retirement.
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member's duties and responsibilities), the
member of the Managing Board has the right to terminate his or
her contract with the Company for good cause. A change of con-
trol exists if one or several shareholders acting jointly or in con-
cert acquire a majority of the voting rights in Siemens AG and
exercise a controlling influence, or if Siemens AG becomes a de-
pendent enterprise as a result of entering into an intercompany
agreement within the meaning of Section 291 of the German
Stock Corporation Act, or if Siemens AG is to be merged into an
existing corporation or other entity. If this right of termination is
exercised, the Managing Board member is entitled to a severance
payment in the amount of no more than two years' compensa-
tion. The calculation of the annual compensation includes not
only the base compensation and the target amount for the bo-
nus, but also the target amount for the stock awards, in each case
based on the most recent completed fiscal year prior to termina-
tion of the contract. The stock-based compensation components
for which a firm commitment already exists will remain unaf-
fected. Additionally, the severance payments cover non-mone-
tary benefits by including an amount of 5% of the total severance
amount. Severance payments will be reduced by 10% as a lump-
sum allowance for discounted values and for income earned else-
where. However, this reduction will apply only to the portion of
A.11.6 Compensation agreements
with members of the Managing
Board or employees in the event
of a takeover bid
In case of a change of control, the terms and conditions of the
remaining warrants issued with the bonds with warrant units in
February 2012 enable their holders to receive a higher number of
Siemens shares in accordance with an adjusted strike price if they
exercise their option rights within a certain period of time after
the change of control. This period of time shall end either (1) not
less than 30 days and no more than 60 days after publication of
the notice of the issuer regarding the change of control, as deter-
mined by the issuer or (2) 30 days after the change of control first
becomes publicly known. The strike price adjustment decreases
depending on the remaining term of the warrants and is deter-
mined in detail in the terms and conditions of the warrants. In
this context, a change of control occurs if control of Siemens AG
is acquired by a person or by persons acting in concert.
such an event. In either situation, ISDA Agreements are designed
such that upon termination all outstanding payment claims docu-
mented under them are to be netted.
55
Combined Management Report
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documentation
(ISDA Agreements) grant the counterparty a right of termination
when Siemens AG consolidates with, merges into, or transfers sub-
stantially all its assets to a third party. However, this right of termi-
nation exists only, if (1) the resulting entity's creditworthiness is
materially weaker than Siemens AG's immediately prior to such
event or (2) the resulting entity fails to simultaneously assume
Siemens AG's obligations under the ISDA Agreement. Additionally,
some ISDA Agreements grant the counterparty a right of termina-
tion if a third party acquires beneficial ownership of equity securi-
ties that enable it to elect a majority of Siemens AG's Supervisory
Board or otherwise acquire the power to control Siemens AG's
material policy-making decisions and if the creditworthiness of
Siemens AG is materially weaker than it was immediately prior to
In addition, in March 2013, a consolidated subsidiary as borrower
and Siemens AG as guarantor entered into two bilateral loan
agreements, each of which has been drawn in the full amount of
US$500 million. Each agreement provides its respective lender
with a right of termination in the event that (1) Siemens AG be-
comes a subsidiary of another company or (2) a person or a group
of persons acting in concert acquires effective control over
Siemens AG by being able to exercise decisive influence over its
activities (Art. 3(2) of Council Regulation (EC) 139/2004).
A.11.5 Significant agreements which
take effect, alter or terminate upon
a change of control of the Company
following a takeover bid
For details on the authorizations referred to above, especially
with the restrictions to exclude subscription rights and the
terms to include shares when calculating such restrictions, please
refer to the relevant resolution and to Section 4 of the Articles of
Association.
ing/securing the obligations or rights to acquire Siemens shares
arising particularly from or in connection with convertible bonds
and warrant bonds. As of September 30, 2017, the Company held
34,481,120 shares of stock in treasury.
In November 2015, the Company announced that it would carry
out a share buyback of up to €3 billion in volume within the fol-
lowing up to 36 months. The buyback commenced on Febru-
ary 2, 2016 using the authorizations given by the Annual Share-
holders' Meeting on January 27, 2015. Under this share buyback
Siemens repurchased 10,439,856 shares by September 30, 2017.
The total consideration paid for these shares amounted to about
€1.163 billion (excluding incidental transaction charges). The
buyback has the exclusive purposes of retirement, of issuing
shares to employees, board members of affiliated companies and
members of the Managing Board of Siemens AG, and of servic-
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authoriza-
tion to meet obligations or rights to acquire Siemens shares that
were or will be agreed with members of the Managing Board
within the framework of rules governing Managing Board com-
pensation.
> used to service or secure obligations or rights to acquire
Siemens shares arising particularly from or in connection with
convertible bonds or warrant bonds issued by the Company or
any of its consolidated subsidiaries (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutandis
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
Combined Management Report
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared their willingness to transfer their compensation to the
Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions (DGB).
A.11.4 Powers of the Managing Board
to issue and repurchase shares
3,066,667
5,176,595
196,500
16,500
40,000
140,000
196,500
16,500
478,500
1,655,238
40,000
1,638,095
Total
Sibylle Wankel¹
291,500
31,500
120,000
140,000
279,119
31,500
140,000
3,060,000
The Managing Board is authorized to increase, with the approval
of the Supervisory Board, the capital stock until January 25, 2021
by up to €90 million through the issuance of up to 30 million reg-
istered shares of no par value against contributions in cash
(Authorized Capital 2016). Subscription rights of existing share-
holders are excluded. The new shares shall be issued under the
condition that they are offered exclusively to employees of
Siemens AG and any of its affiliated companies. To the extent per-
mitted by law, employee shares may also be issued in such a man-
ner that the contribution to be paid on such shares is covered by
that part of the annual net income which the Managing Board and
429,000
A.10.3 Other
Resolutions of the Shareholders' Meeting require a simple major-
ity vote, unless a greater majority is required by law. Pursuant to
Section 179 para. 2 of the German Stock Corporation Act, amend-
ments to the Articles of Association require a majority of at least
three-quarters of the capital stock represented at the time of the
casting of the votes, unless another capital majority is prescribed
by the Articles of Association.
According to Section 179 of the German Stock Corporation Act,
any amendment to the Articles of Association requires a resolu-
tion of the Shareholders' Meeting. The authority to adopt purely
formal amendments to the Articles of Association was trans-
ferred to the Supervisory Board under Section 13 para. 2 of the
Articles of Association. In addition, by resolutions of the Share-
holders' Meetings the Supervisory Board has been authorized to
amend Section 4 of the Articles of Association in accordance with
the utilization of the Authorized and Conditional Capitals, and
after expiration of the then-applicable authorization and utiliza-
tion period.
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German Co-
determination Act (Mitbestimmungsgesetz). According to Sec-
tion 8 para. 1 of the Articles of Association, the Managing Board
is comprised of several members, the number of which is deter-
mined by the Supervisory Board.
A.11.3 Legislation and provisions of
the Articles of Association applicable
to the appointment and removal
of members of the Managing Board
and governing amendment to the
Articles of Association
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 10,814,609 shares (as of September 30, 2017) on
behalf of members of the Siemens family. These shares are part
of the total number of shares held by the family's members. The
powers of attorney are based on an agreement between the VSV
and, among others, members of the Siemens family. The shares
are voted together by VSV, taking into account the proposals of a
family partnership established by the family's members or of one
of this partnership's governing bodies.
Shares issued to employees worldwide under the employee share
program implemented since the beginning of fiscal 2009, in par-
ticular the Share Matching Plan, are freely transferable unless
applicable local laws provide otherwise. Under the rules of the
program, however, in order to receive one matching share free
of charge for each three shares purchased, participants are re-
quired to hold the shares purchased by them for a vesting period
of several years, during which the participants have to be contin-
uously employed by Siemens AG or another Siemens company.
The right to receive matching shares is forfeited if the purchased
shares are sold, transferred, hedged on, pledged or hypothecated
in any way during the vesting period.
At the Shareholders' Meeting, each share of stock has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. An exception to this rule applies with
regard to treasury shares held by the Company, which do not
entitle the Company to any rights. Under Section 136 of the Ger-
man Stock Corporation Act the voting right of the affected shares
is excluded by law.
A.11.2 Restrictions on voting rights
or transfer of shares
5,150,905
As of September 30, 2017, the Company's common stock totaled
€2.550 billion. The capital stock is divided into 850 million regis-
tered shares with no par value. The shares are fully paid in. All
shares confer the same rights and obligations. The shareholders'
rights and obligations are governed in detail by the provisions of
the German Stock Corporation Act, in particular by Sections 12, 53 a
et seq., 118 et seq. and 186 of the German Stock Corporation Act.
(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
and explanatory report
A.11 Takeover-relevant information
Combined Management Report
52
62
of the Company. The insurance policy for fiscal 2017 includes a
deductible for the members of the Managing Board and the
Supervisory Board that complies with the requirements of the
German Stock Corporation Act and the Code.
in cases of financial loss associated with their activities on behalf
The Company provides a group insurance policy for Supervisory
and Managing Board members and certain other employees of
the Siemens Group. The policy is taken out for one year at a time
or renewed annually. It covers the personal liability of the insured
A.11.1 Composition of common stock
B.
7,404
B.1 Consolidated Statements of Income
Income from discontinued operations
Net income
Income from continuing operations
Basic earnings per share
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Net income
Income from discontinued operations, net of income taxes
Diluted earnings per share
Income from continuing operations
6,179
188
53
5,396
6,126
(2,008)
(2,180)
7
5,584
Income tax expenses
Income from continuing operations
Income from discontinued operations
Net income
133
6,046
114,286
6.65
7.29
0.23
0.06
6.42
7.23
27
58 Consolidated Financial Statements
6.74
0.23
0.07
6.51
7.38
2
27
5,450
134
7.44
Consolidated
8,306
(373)
Selling and general administrative expenses
(4,732)
(5,164)
Research and development expenses
23,819
25,029
(55,826)
(58,021)
(12,225)
79,644
2016
2017
Note
Gross profit
Cost of sales
Revenue
(in millions of €, per share amounts in €)
Fiscal year
83,049
Income from continuing operations before income taxes
(11,669)
5
135
Other financial income (expenses), net
(989)
(1,051)
Interest expenses
1,314
1,487
Interest income
Other operating income
134
4
Income (loss) from investments accounted for using the equity method, net
(427)
(595)
6
Other operating expenses
328
647
43
133,333
140,000
150,500
8 Mr. Sen was appointed a full member of the Managing
Board effective April 1, 2017.
9 Prof. Dr. Siegfried Russwurm left the Managing Board
effective the end of March 31, 2017.
Combined Management Report
49
Shares from the Share Matching Plan
Fiscal 2011 was the last year in which Managing Board members
were entitled to participate in the Siemens Share Matching Plan.
Under the plan, they were entitled to invest up to 50% of the
annual gross amount of their variable cash compensation, as de-
termined for fiscal 2010, in Siemens shares. After the expiration
of a vesting period of approximately three years, plan partici-
pants are entitled to receive one free matching share of Siemens
stock for every three Siemens shares acquired and continuously
held under the plan, provided the participants were employed
without interruption at Siemens AG or a Siemens company until
the end of the vesting period. At the beginning of fiscal 2017,
Janina Kugel had three entitlements to matching shares, which
she had acquired before joining the Managing Board. In fiscal
2017, no entitlements to matching shares were acquired, due or
are forfeited. Entitlements to matching shares at the end of fiscal
2017 show the following balance: Janina Kugel, three shares with
a fair value of €174.
7 Amounts also include the non-forfeitable Stock Awards,
which Mr. Neike received as forfeiture of stock at his previous
employer. One half of the total amount of these granted
Siemens Phantom Stock Awards fell due and was honored in
September 2017. The other half will fall due and be honored
in September 2018. The value of these Siemens Phantom
Stock Awards depends solely on the performance of Siemens
stock.
Share Ownership Guidelines
(Amounts in number of units or €)
Managing Board members serving
as of September 30, 2017, and required
to show proof as of March 10, 2017
Joe Kaeser
Dr. Roland Busch
Klaus Helmrich
Total
The deadlines by which the individual Managing Board mem-
bers must provide first-time proof of compliance with the
Siemens Share Ownership Guidelines vary from member to
member, depending on when he or she was appointed to the
Managing Board. The following table shows the number of
Siemens shares that were held by Managing Board members in
office at September 30, 2017, as of the March 2017 deadline for
proving compliance with the Share Ownership Guidelines as
well as the number that are to be held permanently with a view
to future deadlines.
6 The amounts shown include the Stock Awards granted to
Mr. Neike by Siemens Ltd. China in his capacity as Executive
Chairman of the Board of Directors of Siemens Ltd. China.
5 Since Mr. Neike und Mr. Sen were appointed full members
of the Managing Board during the fiscal year, the target
amount for their stock-based compensation was prorated
and, instead of Stock Awards, they received an equivalent
amount of Siemens Phantom Stock Awards. In lieu of a trans-
fer of shares, only a cash equivalent is given for these awards
at the end of the restriction period. Otherwise, the same
provisions agreed upon for Siemens Stock Awards apply.
4 Mr. Neike was appointed a full member of the Managing
Board effective April 1, 2017.
5,030
60,690
Former members of the
Managing Board
Prof. Dr. Siegfried Russwurm⁹
Total
20,043
90,241
78,633
508,005
6,023
132,831
27,984
145,735
1,001
5,196
10,618
53,483
65,096
526,664
1 The weighted average fair value as of the grant date for
fiscal 2017 was €99.70 per granted share.
2 For one half of the Siemens Stock Awards 2012, target
attainment depended on the EPS value for the past three
fiscal years and amounted to 154%. For the other half, target
attainment was linked to the performance of Siemens stock
compared to defined competitors during the four-year
restriction period. It amounted to 87%. Of the Siemens Stock
Awards 2012, which were granted on the basis of 100%
target attainment, a number equivalent to the shortfall from
that target expired, accordingly, without replacement in
accordance with plan rules
3 Amounts also include stock commitments (Stock Awards)
granted in November 2016 for fiscal 2017. These amounts
may further include stock commitments received as com-
pensation by the relevant Managing Board member before
joining the Managing Board.
Obligations under Share Ownership Guidelines
Required
Proven
Percentage
of base
compensation'
152,392
1 The amount of the obligation is based on the average base
compensation for the four years prior to the respective dates
of proof.
2 Based on the average Xetra opening price of €108.08 for the
fourth quarter of 2016 (October-December).
50 Combined Management Report
3 As of March 10, 2017 (date of proof), including Bonus
Awards.
A.10.2 Remuneration of Supervisory
Board members
The current remuneration policies for the Supervisory Board
were authorized at the Annual Shareholders' Meeting held on
January 28, 2014, and are effective as of fiscal 2014. Details are
set out in Section 17 of the Articles of Association of Siemens AG.
The remuneration of the Supervisory Board consists entirely of
fixed compensation; it reflects the responsibilities and scope of
the work of the Supervisory Board members. The Chairman and
Deputy Chairmen of the Supervisory Board as well as the Chair-
men and members of the Audit Committee, the Chairman's Com-
mittee, the Compensation Committee, the Compliance Commit-
tee and the Innovation and Finance Committee receive additional
compensation.
Under current rules, the members of the Supervisory Board re-
ceive an annual base compensation of €140,000; the Chairman
of the Supervisory Board receives a base compensation of
€280,000, and each of the Deputy Chairmen receives €220,000.
The members of the Supervisory Board committees receive the
following additional fixed compensation for their committee
work: the Chairman of the Audit Committee receives €160,000,
and each of the other members of the Committee receives
€80,000; the Chairman of the Chairman's Committee receives
€120,000, and each of the other members of the Committee re-
ceives €80,000; the Chairman of the Compensation Committee
receives €100,000, and each of the other members of the Com-
mittee receives €60,000 (compensation for any work on the
Chairman's Committee counts toward compensation for work on
the Compensation Committee); the Chairman of the Innovation
and Finance Committee receives €80,000, and each of the other
members of the Committee receives €40,000; the Chairman of
the Compliance Committee receives €80,000, and each of the
other members of the Committee receives €40,000. However, no
additional compensation is paid for work on the Compliance
Committee if a member of that Committee is already entitled to
compensation for work on the Audit Committee.
If a Supervisory Board member does not attend a meeting of the
Supervisory Board, one-third of the aggregate compensation due
to that member is reduced by the percentage of Supervisory Board
meetings not attended by the member in relation to the total
number of Supervisory Board meetings held during the fiscal year.
In the event of changes in the composition of the Supervisory
Board and/or its committees, compensation is paid on a pro rata
basis, rounding up to the next full month.
In addition, the members of the Supervisory Board are entitled
to receive a fee of €1,500 for each meeting of the Supervisory
Board and its committees that they attend.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties and
for any value-added taxes to be paid on their remuneration. For
the performance of his duties, the Chairman of the Supervisory
Board is also entitled to an office with secretarial support and the
use of a carpool service.
No loans or advances from the Company are provided to mem-
bers of the Supervisory Board.
Combined Management Report
51
The compensation shown below was determined for each of the
members of the Supervisory Board for fiscal 2017 (individualized
disclosure).
28,619
440
3,093,142
16,470,527
308%
Value¹
Number
of shares2
Percentage
of base
compensation¹
Value²
Number
of shares 3
300%
200%
200%
5,516,344
2,029,863
51,039
18,781
567%
291%
10,424,316
96,450
2,953,070
27,323
2,010,175
9,556,381
18,599
88,419
8,166
12,046
57,250
Non-forfeitable
commitments
of Bonus
Awards
Balance at end of
fiscal 20173
Forfeitable
commitments
of Stock
Awards
(Amounts in number of units)
Managing Board members
serving as of September 30, 2017
Joe Kaeser
25,631
138,923
24,092
41,904
1,752
Dr. Roland Busch
19,425
75,263
Commitments
of Stock
Awards
12,046
of Bonus
Awards and
Stock Awards
Commitments
A.10.1.3 ADDITIONAL INFORMATION ON
STOCK-BASED COMPENSATION INSTRUMENTS
IN FISCAL 2017
Stock commitments
The following table shows the changes in the balance of the stock
commitments held by Managing Board members in fiscal 2017:
Balance at beginning of
fiscal 2017
Non-forfeitable
commitments
Forfeitable
commitments
of Bonus
Awards
of Stock
Awards
Granted
during
fiscal year¹
Forfeitable
commitments
of Stock
Awards
Vested and
fulfilled
during
fiscal year
Forfeited
during
fiscal year²
(Amounts in €)
27,042
16,206
10,942
Cedrik Neike 4, 5, 6
31,7547
0
12,6557
0
0
40,965
0
0
19,099
Michael Sen 5,8
11,225
0
0
0
11,225
Dr. Ralf P. Thomas
5,030
11,553
1,001
29,412
67,749
128,784
67,749
Lisa Davis
576
53,261
12,046
0
0
576
65,307
Klaus Helmrich
19,536
75,263
12,046
27,984
1,001
10,111
Janina Kugel
Jim Hagemann Snabe
Supervisory Board members
September 30, 2017
229,024
140,000
80,000
22,500
242,500
Jürgen Kerner¹
140,000
19,500
200,000
380,500
140,000
200,000
33,000
373,000
Dr. Nicola Leibinger-Kammüller
133,333
40,500
76,190
133,333
Harald Kern¹
245,500
Hans-Jürgen Hartung
140,000
10,500
150,500
140,000
10,500
150,500
Robert Kensbock¹
140,000
180,000
31,500
351,500
140,000
180,000
30,000
350,000
76,190
33,000
242,524
140,000
10,500
150,500
10,500
150,500
Dr. Nathalie von Siemens
140,000
10,500
150,500
140,000
10,500
150,500
Michael Sigmund
140,000
10,500
150,500
140,000
10,500
140,000
25,500
Güler Sabancı
15,000
80,000
27,000
247,000
Gérard Mestrallet
140,000
10,500
150,500
126,667
7,500
134,167
Dr. Norbert Reithofer
133,333
38,095
16,500
187,929
133,333
38,095
186,429
80,000
140,000
230,524
57,000
617,000
280,000
280,000
45,000
605,000
Birgit Steinborn¹
Werner Wenning
220,000
200,000
48,000
468,000
220,000
200,000
43,500
463,500
220,000
280,000
140,000
280,000
fee
Dr. Gerhard Cromme
Additional
2017
Additional
2016
Base
compen-
sation
compen-
sation for
committee
work
Meeting
attendance
Base
fee
Total
compen-
sation
compen-
sation for
committee
work
Meeting
attendance
Total
serving as of
42,000
220,000
34,500
334,500
140,000
160,000
27,000
327,000
Reinhard Hahn¹
140,000
10,500
150,500
140,000
10,500
150,500
Bettina Haller¹
133,333
76,190
21,000
160,000
402,000
140,000
203,976
140,000
30,000
390,000
Olaf Bolduan¹
140,000
10,500
150,500
133,333
9,000
Michael Diekmann
133,333
57,143
13,500
203,976
133,333
57,143
13,500
Dr. Hans Michael Gaul
142,333
Financial Statements
Fiscal year
Cash and cash equivalents at end of period
10,618
8,389
9,958
10,618
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
15
8,375
Cash and cash equivalents at beginning of period
13
Consolidated Financial Statements 61
B.5 Consolidated Statements of Changes in Equity
(in millions of €)
Balance as of October 1, 2015
Net income
Other comprehensive income, net of income taxes
Dividends
10,604
660
(2,228)
Change in cash and cash equivalents
(809)
Dividends paid to shareholders of Siemens AG
(2,914)
(2,827)
Dividends attributable to non-controlling interests
(187)
(236)
Cash flows from financing activities - continuing operations
(1,560)
(2,710)
Cash flows from financing activities - discontinued operations
Cash flows from financing activities - continuing and discontinued operations
(1,560)
(2,710)
Effect of changes in exchange rates on cash and cash equivalents
(387)
(98)
Share-based payment
(1,000)
Purchase of treasury shares
Cancellation of treasury shares
27,454
Net income
6,046
Other comprehensive income, net of income taxes
2,737
Dividends
(2,914)
5,890
279
Purchase of treasury shares
Re-issuance of treasury shares
Changes in equity resulting from major portfolio transactions
Other transactions with non-controlling interests
Other changes in equity
Balance as of September 30, 2017
62
(86)
2,550
Balance as of October 1, 2016
27,454
Transactions with non-controlling interests
Other changes in equity
Balance as of September 30, 2016
Issued capital
2,643
Capital reserve
5,733
Retained earnings
30,152
5,450
(2,637)
(2,827)
158
(67)
(1)
(93)
(2,575)
(42)
2,550
5,890
Re-issuance of treasury shares
Interest paid
(1,408)
260
1,219
Cash flows from operating activities - continuing operations
7,225
7,668
Cash flows from operating activities - discontinued operations
(50)
(57)
1,375
Cash flows from operating activities - continuing and discontinued operations
7,611
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment
(2,406)
(2,135)
Acquisitions of businesses, net of cash acquired
Purchase of investments
7,176
Interest received
302
381
148
(1,009)
(579)
Trade payables
306
327
Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
Additions to assets leased to others in operating leases
(799)
20
(482)
(484)
Change in other assets and liabilities
(1,719)
(281)
Income taxes paid
Dividends received
(2,039)
(1,718)
Purchase of current available-for-sale financial assets
Change in receivables from financing activities
Disposal of businesses, net of cash disposed
(4,385)
Cash flows from investing activities - continuing and discontinued operations
(7,457)
(4,144)
Cash flows from financing activities
Purchase of treasury shares
(931)
(463)
Re-issuance of treasury shares and other transactions with owners
1,123
(13)
Issuance of long-term debt
6,958
5,300
Repayment of long-term debt (including current maturities of long-term debt)
(4,868)
(2,253)
Change in short-term debt and other financing activities
262
Consolidated Financial Statements
(1)
(4,406)
(922)
(500)
(271)
(882)
(1,139)
(686)
(1,356)
Disposal of investments, intangibles and property, plant and equipment
542
377
(69)
9
Disposal of current available-for-sale financial assets
931
1,031
Cash flows from investing activities - continuing operations
(7,456)
Cash flows from investing activities – discontinued operations
199
2,473
(11)
Basis of consolidation - The Consolidated Financial Statements
include the accounts of Siemens AG and its subsidiaries over
which the Company has control. Siemens controls an investee if
it has power over the investee. In addition, Siemens is exposed
to, or has rights to, variable returns from the involvement with
the investee and Siemens has the ability to use its power over the
investee to affect the amount of Siemens' return.
Business combinations - Cost of an acquisition is measured at
the fair value of the assets given and liabilities incurred or as-
sumed at the date of exchange. Identifiable assets acquired and
liabilities assumed in a business combination (including contin-
gent liabilities) are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling
interest. Non-controlling interests are measured at the propor-
tional fair value of assets acquired and liabilities assumed (partial
goodwill method). If there is no loss of control, transactions with
non-controlling interests are accounted for as equity transactions
not affecting profit and loss. At the date control is lost, any re-
tained equity interests are remeasured to fair value. In case of a
written put option on non-controlling interests the Company as-
sesses whether the prerequisites for the transfer of present own-
ership interest are fulfilled at the balance sheet date. If the Com-
pany is not the beneficial owner of the shares underlying the put
option, the exercise of the put option will be assumed at each
balance sheet date and treated as equity transaction between
shareholders with the recognition of a purchase liability at the
respective exercise price. The non-controlling interests partici-
pate in profits and losses during the reporting period.
Associates - Associates are companies over which Siemens has
the ability to exercise significant influence over operating and
financial policies (generally through direct or indirect ownership
of 20% to 50% of the voting rights). These are recorded in the
Consolidated Financial Statements using the equity method and
are initially recognized at cost. Siemens' share of its associate's
post-acquisition profits or losses is recognized in the Consoli-
dated Statements of Income, and its share of post-acquisition
changes in equity that have not been recognized in the associ-
ate's profit or loss is recognized directly in equity. The cumula-
tive post-acquisition changes are adjusted against the carrying
amount of the investment in the associate. When Siemens'
share of losses in an associate equals or exceeds its interest in
the associate, Siemens does not recognize further losses, unless
it incurs obligations or makes payments on behalf of the associ-
ate. The interest in an associate is the carrying amount of the
investment in the associate together with any long-term inter-
ests that, in substance, form part of Siemens' net investment in
the associate.
Joint ventures - Joint ventures are entities over which Siemens
and one or more parties have joint control. Joint control requires
unanimous consent of the parties sharing control in decision
making on relevant activities.
Foreign currency translation - Assets and liabilities of foreign
subsidiaries, where the functional currency is other than the
euro, are translated using the spot exchange rate at the end of
the reporting period, while the Consolidated Statements of In-
come are translated using average exchange rates during the
period. Differences arising from such translations are recognized
within equity and reclassified to net income when the gain or loss
on disposal of the foreign subsidiary is recognized. The Consoli-
dated Statements of Cash Flow are translated at average ex-
change rates during the period, whereas cash and cash equiva-
lents are translated at the spot exchange rate at the end of the
reporting period.
64 Consolidated Financial Statements
Certain of these accounting policies require critical accounting
estimates that involve complex and subjective judgments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Such critical
accounting estimates could change from period to period and
have a material impact on the Company's results of operations,
financial positions and cash flows. Critical accounting estimates
could also involve estimates where Siemens reasonably could
have used a different estimate in the current accounting period.
Siemens cautions that future events often vary from forecasts
and that estimates routinely require adjustment.
Foreign currency transaction - Transactions that are denom-
inated in a currency other than the functional currency of an
entity, are recorded at that functional currency applying the spot
exchange rate at the date when the underlying transactions are
initially recognized. At the end of the reporting period, foreign
currency-denominated monetary assets and liabilities are reval-
ued to functional currency applying the spot exchange rate pre-
vailing at that date. Gains and losses arising from these foreign
currency revaluations are recognized in net income. Those for-
eign currency-denominated transactions which are classified
as non-monetary are remeasured using the historical spot ex-
change rate.
Sale of goods: Revenue is recognized when the significant risks
and rewards of ownership of the goods have passed to the buyer,
usually on delivery of the goods.
Sales from construction contracts: When the outcome of a con-
struction contract can be estimated reliably, revenues from con-
struction-type projects are recognized under the percent-
age-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.
An expected loss on the construction contract is recognized as an
expense immediately. Siemens applies the requirements of IAS 11
regarding contract variations to contract terminations, since con-
tract terminations are also changes to the agreed delivery and
service scope.
The percentage-of-completion method places considerable im-
portance on accurate estimates of the extent of progress to-
wards completion and may involve estimates on the scope of
deliveries and services required for fulfilling the contractually
defined obligations. These significant estimates include total
contract costs, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments.
Under the percentage-of-completion method, changes in esti-
mates may lead to an increase or decrease of revenue. The cred-
itworthiness of our customers is taken into account in estimating
the probability that economic benefits associated with a contract
will flow to the Company. In addition, we need to assess whether
the contract is expected to continue or to be terminated. In de-
termining whether the continuation or termination of a contract
is expected to be the most likely scenario, all relevant facts and
circumstances relating to the contract are considered on an in-
dividual basis.
Rendering of services: For long-term service contracts, revenues
are recognized on a straight-line basis over the term of the con-
tract or, if the performance pattern is other than straight-line, as
the services are provided, i.e. under the percentage-of-comple-
tion method as described above.
Sales from multiple element arrangements: Sales of goods and
services as well as software arrangements sometimes involve the
provision of multiple elements. In these cases, the Company de-
termines whether the contract or arrangement contains more
than one unit of accounting. If certain criteria are met, foremost
if the delivered element(s) has (have) value to the customer on
a stand-alone basis, the arrangement is separated and the appro-
priate revenue recognition convention is then applied to each
separate unit of accounting. Generally, the total arrangement
consideration is allocated to the separate units of accounting
based on their relative fair values. If the criteria for the separation
of units of accounting are not met, revenue is deferred until such
criteria are met or until the period in which the last undelivered
element is delivered.
Income from interest: Interest is recognized using the effective
interest method.
Revenue recognition - Under the condition that persuasive
evidence of an arrangement exists, revenue is recognized to the
extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured, regard-
less of when the payment is being made. In cases where the in-
flow of economic benefits is not probable due to customer re-
lated credit risks, the revenue recognized is subject to the amount
of payments irrevocably received.
NOTE 2 Significant accounting policies
and critical accounting estimates
Siemens is a German based multinational technology company
with core activities in the fields of electrification, automation and
digitalization.
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may not
add up precisely to totals provided.
(11)
(8)
(20)
(3)
51
48
(175)
1,845
1
(3,196)
43,089
1,438
44,527
Consolidated Financial Statements 63
B.6 Notes to Consolidated Financial Statements
NOTE 1 Basis of presentation
The accompanying Consolidated Financial Statements present
the operations of Siemens Aktiengesellschaft with registered of-
fices in Berlin (registry number HRB 12300) and Munich (registry
number HRB 6684), Germany, and its subsidiaries (the Company
or Siemens). They have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315 a (1) of the German Commercial Code (HGB).
The financial statements are in accordance with IFRS as issued by
the International Accounting Standards Board (IASB). The Consol-
idated Financial Statements were authorized for issue by the
Managing Board on November 27, 2017.
Income from royalties: Royalties are recognized on an accrual
basis in accordance with the substance of the relevant agree-
ment.
Income from operating leases: Operating lease income for equip-
ment rentals is recognized on a straight-line basis over the lease
term.
Functional costs - In general, operating expenses by types are
assigned to the functions following the functional area of the
corresponding profit and cost centers. Amortization, deprecia-
tion and impairment of intangible assets and property, plant and
equipment are included in functional costs depending on the use
of the assets.
Defined benefit plans – Siemens measures the entitlements by
applying the projected unit credit method. The approach reflects
an actuarially calculated net present value of the future benefit
entitlement for services already rendered. In determining the net
present value of the future benefit entitlement for service al-
ready rendered (Defined Benefit Obligation (DBO)), the expected
rates of future salary increase and expected rates of future pen-
sion progression are considered. The assumptions used for the
calculation of the DBO as of the period-end of the preceding fis-
cal I year are used to determine the calculation of service cost and
interest income and expense of the following year. The net inter-
est income or expense for the fiscal year will be based on the
discount rates for the respective year multiplied by the net de-
fined benefit liability (asset) at the preceding fiscal year's peri-
od-end date.
Service cost, past service cost and settlement gains (losses) for
pensions and similar obligations as well as administration costs
unrelated to the management of plan assets are allocated among
functional costs. Past service cost and settlement gains (losses)
are recognized immediately in profit or loss. For unfunded plans,
the amount of the line item Provisions for pensions and similar
obligations equals the DBO. For funded plans, Siemens offsets
the fair value of the plan assets with the DBO. Siemens recog-
nizes the net amount, after adjustments for effects relating to
any asset ceiling.
Remeasurements comprise actuarial gains and losses as well as
the difference between the return on plan assets and the amounts
included in net interest on the net defined benefit liability (asset).
They are recognized in Other comprehensive income, net of in-
come taxes.
Actuarial valuations rely on key assumptions including discount
rates, expected compensation increases, rate of pension progres-
sion and mortality rates. Discount rates used are determined by
reference to yields on high-quality corporate bonds of appropri-
ate duration and currency at the end of the reporting period. In
case such yields are not available, discount rates are based on
government bond yields. Due to changing market, economic and
social conditions, the underlying key assumptions may differ
from actual developments.
Provisions - A provision is recognized in the Statement of Finan-
cial Position when it is probable that the Company has a present
legal or constructive obligation as a result of a past event, it is
probable that an outflow of economic benefits will be required
to settle the obligation and a reliable estimate can be made of
the amount of the obligation. If the effect is material, provisions
are recognized at present value by discounting the expected fu-
ture cash flows at a pretax rate that reflects current market as-
sessments of the time value of money. When a contract becomes
onerous, the present obligation under the contract is recognized
as a provision.
Significant estimates are involved in the determination of provi-
sions related to onerous contracts, warranty costs, asset retire-
ment obligations, legal and regulatory proceedings as well as
governmental investigations (Legal Proceedings). Siemens re-
cords a provision for onerous sales contracts when current esti-
mates of total contract costs exceed expected contract revenue.
Onerous sales contracts are identified by monitoring the prog-
ress of the project and updating the estimate of total contract
costs which also requires significant judgment relating to
achieving certain performance standards as well as estimates
involving warranty costs and estimates regarding project delays
including the assessment of responsibility splits between the
contract partners for these delays. Uncertainties regarding asset
retirement obligations include the estimated costs of decommis-
sioning and final waste storage because of the long time frame
over which future cash outflows are expected to occur including
the respective interest accretion. The estimated cash outflows
could be impacted significantly by changes of the regulatory
environment.
Consolidated Financial Statements 67
Legal Proceedings often involve complex legal issues and are sub-
ject to substantial uncertainties. Accordingly, considerable judg-
ment is part of determining whether it is probable that there is a
present obligation as a result of a past event at the end of the
reporting period, whether it is probable that such a Legal Pro-
ceeding will result in an outflow of resources and whether the
amount of the obligation can be reliably estimated. Internal and
external counsels are generally part of the determination process.
Due to new developments, it may be necessary, to record a pro-
vision for an ongoing Legal Proceeding or to adjust the amount
of a previously recognized provision. Upon resolution of a Legal
Proceeding, Siemens may incur charges in excess of the recorded
provisions for such matters. The outcome of Legal Proceedings
may have a material effect on Siemens' financial position, its re-
sults of operations and/or its cash flows.
Termination benefits - Termination benefits are provided as a
result of an entity's offer made in order to encourage voluntary
redundancy before the normal retirement date or from an enti-
ty's decision to terminate the employment. Termination benefits
in accordance with IAS 19, Employee Benefits, are recognized as
a liability and an expense when the entity can no longer with-
draw the offer of those benefits.
Financial instruments - A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Siemens does
not use the category held to maturity and does not use the op-
tion to designate financial assets or financial liabilities at fair
value through profit or loss at inception (Fair Value Option).
Based on their nature, financial instruments are classified as fi-
nancial assets and financial liabilities measured at cost or amor-
tized cost and financial assets and financial liabilities measured
at fair value and as receivables from finance leases. Regular way
purchases or sales of financial assets are accounted for at the
trade date. Initially, financial instruments are recognized at their
fair value. Transaction costs are only included in determining
the carrying amount, if the financial instruments are not mea-
sured at fair value through profit or loss. Receivables from fi-
nance leases are recognized at an amount equal to the net in-
vestment in the lease. Subsequently, financial assets and
liabilities are measured according to the category to which they
are assigned cash and cash equivalents, available-for-sale fi-
nancial assets, loans and receivables, financial liabilities mea-
sured at amortized cost or financial assets and liabilities classi-
fied as held for trading.
Cash and cash equivalents - The Company considers all highly
liquid investments with less than three months maturity from the
date of acquisition to be cash equivalents. Cash and cash equiv-
alents are measured at cost.
Available-for-sale financial assets - Investments in equity in-
struments, debt instruments and fund shares are measured at
fair value, if reliably measurable. Unrealized gains and losses, net
of applicable deferred income tax expenses, are recognized in
line item Other comprehensive income, net of income taxes. Pro-
vided that fair value cannot be reliably determined, Siemens
measures available-for-sale financial assets at cost. This applies
to equity instruments that do not have a quoted market price in
an active market, and decisive parameters cannot be reliably es-
timated to be used in valuation models for the determination of
fair value. Siemens considers all available evidence such as mar-
ket conditions and prices, investee-specific factors and the dura-
tion as well as the extent to which fair value is less than acquisi-
tion cost in evaluating potential impairment of its available-for-sale
financial assets. The Company considers a decline in fair value as
objective evidence of impairment, if the decline exceeds 20% of
costs or continues for more than six months.
Loans and receivables - Financial assets classified as loans and
receivables are measured at amortized cost using the effective
interest method less any impairment losses. Impairment losses
on trade and other receivables are recognized using separate al-
lowance accounts. The allowance for doubtful accounts involves
significant management judgment and review of individual re-
ceivables based on individual customer creditworthiness, current
economic trends and analysis of historical bad debts on a portfo-
lio basis. For the determination of the country-specific compo-
nent of the individual allowance, Siemens also considers country
credit ratings, which are centrally determined based on informa-
tion from external rating agencies. Regarding the determination
of the valuation allowance derived from a portfolio-based analy-
sis of historical bad debts, a decline of receivables in volume re-
sults in a corresponding reduction of such provisions and vice
versa. As of September 30, 2017 and 2016, Siemens recorded a
valuation allowance for trade and other receivables (including
leases) of €1,388 million and €1,211 million, respectively.
Financial liabilities - Siemens measures financial liabilities, ex-
cept for derivative financial instruments, at amortized cost using
the effective interest method.
Derivative financial instruments - Derivative financial instru-
ments, such as foreign currency exchange contracts and interest
rate swap contracts are measured at fair value and classified as
held for trading unless they are designated as hedging instru-
ments, for which hedge accounting is applied. Changes in the fair
value of derivative financial instruments are recognized either in
net income or, in the case of a cash flow hedge, in line item Other
comprehensive income, net of income taxes (applicable deferred
income tax). Certain derivative instruments embedded in host
contracts are also accounted for separately as derivatives.
B.2 Consolidated Statements of Comprehensive Income
-
3,393
Inventories - Inventories are valued at the lower of acquisition
or production costs and net realizable value, costs being gener-
ally determined on the basis of an average or first-in, first-out
method.
66 Consolidated Financial Statements
Product-related expenses - Provisions for estimated costs re-
lated to product warranties are recorded in line item Cost of sales
at the time the related sale is recognized.
Research and development costs - Costs of research activities
are expensed as incurred. Costs of development activities are
capitalized when the recognition criteria in IAS 38 are met. Capi-
talized development costs are stated at cost less accumulated
amortization and impairment losses with an amortization period
of generally three to ten years.
Consolidated Financial Statements 65
Earnings per share - Basic earnings per share are computed by
dividing income from continuing operations, income from dis-
continued operations and net income, all attributable to ordinary
shareholders of Siemens AG by the weighted average number of
shares outstanding during the year. Diluted earnings per share
are calculated by assuming conversion or exercise of all poten-
tially dilutive securities and share-based payment plans.
Goodwill - Goodwill is not amortized, instead, goodwill is tested
for impairment annually, as well as whenever there are events or
changes in circumstances (triggering events) which suggest that
the carrying amount may not be recoverable. Goodwill is carried
at cost less accumulated impairment losses. The goodwill impair-
ment test is performed at the level of a cash-generating unit or a
group of cash-generating units, generally represented by a seg-
ment and for Siemens Gamesa Renewable Energy one level be-
low the segment. This is the lowest level at which goodwill is
monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit or
the group of cash-generating units that is expected to benefit
from the synergies of the business combination. If the carrying
amount of the cash-generating unit or the group of cash-gen-
erating units, to which the goodwill is allocated, exceeds its re-
coverable amount, an impairment loss on goodwill allocated to
this cash-generating unit or this group of cash-generating units
is recognized. The recoverable amount is the higher of the
cash-generating unit's or the group of cash-generating units' fair
value less costs to sell and its value in use. If either of these val-
ues exceeds the carrying amount, it is not always necessary to
determine both values. These values are generally determined
based on discounted cash flow calculations. Impairment losses
on goodwill are not reversed in future periods.
The determination of the recoverable amount of a cash-generat-
ing unit or a group of cash-generating units to which goodwill is
allocated involves the use of estimates by management. The out-
come predicted by these estimates is influenced e.g. by the suc-
cessful integration of acquired entities, volatility of capital mar-
kets, interest rate developments, foreign exchange rate
fluctuations and the outlook on economic trends. In determining
recoverable amounts, discounted cash flow calculations use five-
year projections that are based on financial forecasts. Cash flow
projections take into account past experience and represent
management's best estimate about future developments. Cash
flows after the planning period are extrapolated using individual
growth rates. Key assumptions on which management has based
its determination of fair value less costs to sell and value in use
include estimated growth rates and weighted average cost of
capital. These estimates, including the methodology used, can
have a material impact on the respective values and ultimately
the amount of any goodwill impairment.
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for pat-
ents, licenses and other similar rights generally range from
three to five years, except for intangible assets with finite useful
lives acquired in business combinations. Intangible assets ac-
quired in business combinations primarily consist of customer
relationships and trademarks as well as technology. Useful lives
in specific acquisitions ranged from four to 20 years for cus-
tomer relationships and trademarks and from five to 25 years for
technology.
Property, plant and equipment - Property, plant and equip-
ment, is valued at cost less accumulated depreciation and impair-
ment losses. Depreciation expense is recognized using the
straight-line method. The following useful lives are assumed:
Factory and office buildings
Other buildings
Technical machinery & equipment
Furniture & office equipment
Equipment leased to others
20 to 50 years
5 to 10 years
5 to 10 years
generally 5 years
generally 3 to 5 years
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In addition, intangi-
ble assets not yet available for use are subject to an annual im-
pairment test. Impairment testing of property, plant and equip-
ment and other intangible assets involves the use of estimates in
determining the assets' recoverable amount which can have a
material impact on the respective values and ultimately the
amount of any impairment.
Discontinued operations and non-current assets held for
disposal - Discontinued operations are reported when a compo-
nent of an entity is classified as held for disposal or has been
disposed of, if the component represents a separate major line of
business or geographical area of operations and is part of a single
coordinated plan to disposal. A non-current asset or a disposal
group is held for disposal if its carrying amount will be recovered
principally through a sale transaction rather than through con-
tinuing use.
Income taxes - Tax positions under respective local tax laws and
tax authorities' views can be complex and subject to different
interpretations of tax payers and local tax authorities. Different
interpretations of tax laws may result in additional tax payments
for prior years and are taken into account based on manage-
ment's considerations. Under the liability method, deferred tax
assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement car-
rying amounts of existing assets and liabilities and their respec-
tive tax bases. Deferred tax assets are recognized if sufficient
future taxable profit is available, including income from fore-
casted operating earnings, the reversal of existing taxable tem-
porary differences and established tax planning opportunities.
As of each period-end, Siemens evaluates the recoverability of
deferred tax assets, based on projected future taxable profits.
Based upon the level of historical taxable income and projections
for future taxable income over the periods in which the deferred
tax assets are deductible, Siemens believes it is probable the
Company will realize the benefits of these deductible differences.
As future developments are uncertain and partly beyond
Siemens's control, assumptions are necessary to estimate future
taxable profits as well as the period in which deferred tax assets
will recover. Estimates are revised in the period in which there is
sufficient evidence to revise the assumption.
Trade and other receivables
919
1,541
5,450
134
5,584
(885)
434
208
(2,879)
35,056
(2,879)
(239)
(3,066)
91
91
(446)
(446)
(446)
(2,827)
581
34,474
(6,218)
(3)
2,550
6,368
35,696
Currency trans-
lation differences
Available-for-sale
Derivative financial
financial assets
instruments
1,794
726
(357)
Treasury
shares at cost
Total equity
attributable to
shareholders
of Siemens AG
Non controlling
interests
Total equity
391
390
390
2,668
6,179
(1,084)
685
149
2,487
(78)
2,409
(2,914)
(184)
(3,098)
193
193
(934)
(934)
(934)
1,342
1,541
133
2,473
6,046
605
(42)
92
51
37
36
909
1,160
(148)
(3,605)
34,211
605
34,816
909
1,160
(148)
(3,605)
34,211
34,816
(1,250)
Share-based payment
Change in operating net working capital
1,204
1,467
790
1,098
18,160
19,942
10
Other current assets
Current income tax assets
Inventories
6,800
7,664
Assets classified as held for disposal
9
16,287
17,160
8
Trade and other receivables
1,293
1,242
Available-for-sale financial assets
10,604
8,375
2016
2017
Note
Other current financial assets
68 Consolidated Financial Statements
3,22
190
Other assets
Deferred tax assets
20,610
19,044
13
3,012
2,727
4
10,157
10,977
12
7,742
1,482
10,926
24,159
27,906
11
WANNE
Other financial assets
Investments accounted for using the equity method
Property, plant and equipment
55,329
58,429
Other intangible assets
Goodwill
Total current assets
12
September 30,
Cash and cash equivalents
Assets
22
22
(796)
(1,118)
(2,636)
2,735
1,065
(1,070)
(2,636)
2,734
16
16
687
Derivative financial instruments
Available-for-sale financial assets
Currency translation differences
Inventories
therein: Income tax effects
Remeasurements of defined benefit plans
5,584
6,179
Net income
2016
2017
Note
(in millions of €)
therein: Income tax effects
436
(7)
4
(in millions of €)
B.3 Consolidated Statements of Financial Position
Consolidated Financial Statements 59
134
2,571
8,533
55
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Total comprehensive income
2,705
8,588
(2,879)
2,409
Other comprehensive income, net of income taxes
(244)
(326)
Items that may be reclassified subsequently to profit or loss
(141)
(30)
Income (loss) from investments accounted for using the equity method, net
(89)
(63)
therein: Income tax effects
256
136
22, 23
Total non-current assets
Total assets
Items that will not be reclassified to profit or loss
2,297
1,438
Total liabilities and equity
Total equity
Non-controlling interests
34,211
43,089
Total equity attributable to shareholders of Siemens AG
(3,605)
(3,196)
1,921
1,671
27,454
35,696
5,890
6,368
2,550
2,550
Other components of equity
Retained earnings
Capital reserve
Issued capital
18
90,901
89,278
47,986
45,884
2,471
605
44,527
133,804
34,816
125,717
60 Consolidated Financial Statements
7
Other non-cash (income) expenses
(Income) loss related to investing activities
400
552
(373)
(329)
(325)
(436)
2,008
2,180
2,764
3,211
2,445
(188)
Interest (income) expenses, net
Income tax expenses
Amortization, depreciation and impairments
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
Income from discontinued operations, net of income taxes
5,584
6,179
Net income
Cash flows from operating activities
2016
2017
Fiscal year
(in millions of €)
B.4 Consolidated Statements of Cash Flows
(53)
1,142
Treasury shares, at cost
17
20,049
20,437
Liabilities associated with assets classified as held for disposal
3
902
97
40
Total current liabilities
43,394
Long-term debt
15
Provisions for pensions and similar obligations
Equity
14
16
Provisions
17
5677
26,777
9,582
42,916
24,761
13,695
1,599
829
Total liabilities
3,431
4,579
5,087
Other financial liabilities
Deferred tax liabilities
Other liabilities
Other current liabilities
2,355
1,498
1,279
75,375
70,388
133,804
125,717
Liabilities and equity
2,085
15
5,447
6,206
Short-term debt and current maturities of long-term debt
9,755
Current income tax liabilities
Trade payables
4,247
Current provisions
4,166
1,444
Other current financial liabilities
8,048
1,933
Total non-current liabilities
1,013
1,208
(9)
(33)
(80)
9
(181)
NOTE 9 Other current financial assets
Consolidated Financial Statements 73
(155)
35
As of September 30, 2017 and 2016, Other current financial assets
include loans receivables of €5,985 million and €4,910 million,
respectively, and derivative financial instruments of €530 million
and €758 million, respectively.
NOTE 10 Inventories
Cost of sales include inventories recognized as expense amount-
ing to €57,171 million and €54,706 million, respectively, in fiscal
2017 and 2016. Compared to prior year, write-downs increased
(decreased) by €15 million and €(3) million as of September 30,
2017 and 2016.
(in millions of €)
Raw materials and supplies
2017
2,955
Work in progress
4,242
Investments in finance leases primarily relate to industrial ma-
chinery, medical equipment, transportation systems, equipment
for information technology and office machines. Actual cash
flows will vary from contractual maturities due to future sales of
finance receivables, prepayments and write-offs.
Write-offs charged against the allowance
Recoveries of amounts previously written-off
Foreign exchange translation differences
Reclassifications to line item Assets held for
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
5,457
5,500
(944)
17,160
16,287
Net investment in leases
5,798
5,762
Less: Allowance for doubtful accounts
(180)
(198)
Less: Present value of unguaranteed
residual value
(118)
(108)
Present value of minimum future
lease payments receivable
5,500
5,457
(934)
In fiscal 2017 and 2016, the long-term portion of receivables from
finance leases is reported in Other financial assets and amounts
to €3,699 million and €3,557 million, respectively.
Less: Unearned finance income
1,919
2017
2016
Minimum future lease payments
6,510
6,488
Trade receivables from the sale
of goods and services
Plus: Unguaranteed residual values
222
219
15,242
14,280
Gross investment in leases
6,732
6,706
Receivables from finance leases
2,007
Changes to the valuation allowance of current and long-term re-
ceivables which belong to the class of financial assets measured
at (amortized) cost are as follows (excluding receivables from
finance leases):
The gross investment in leases and the present value of minimum
future lease payments receivable are due as follows:
Gross investment
1,924
1,952
3,481
3,405
3,010
2,940
893
904
566
564
of Income in the current period
404
284
6,732
6,706
2,397
2,358
2016
2017
in leases
Present value of
minimum future lease
payments receivable
(in millions of €)
2017
Fiscal year
2016
Sep 30,
Sep 30,
Sep 30,
2016
2,487
4,281
Valuation allowance as of
1,013
933
Increase in valuation allowances
recorded in the Consolidated Statements
(in millions of €)
Within one year
One to five years
Thereafter
2017
2016
beginning of fiscal year
Costs and earnings in excess
3,552
10,970
Sep 30, 2017
After-tax
discount rate
Terminal value
growth rate
Goodwill
(in millions of €)
Healthineers
Power and Gas
Digital Factory
The following table presents key assumptions used to determine
fair value less costs to sell for impairment test purposes for the
groups of cash-generating units to which a significant amount of
goodwill is allocated:
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each cash-gener-
ating unit or group of cash-generating units. Discount rates are
based on the weighted average cost of capital (WACC) for the
cash-generating units or groups of cash-generating units (for
SFS the discount rate represents cost of equity). The discount
rates are calculated based on a risk-free rate of interest and a
market risk premium. In addition, the discount rates reflect the
current market assessment of the risks specific to each
cash-generating unit or group of cash-generating units by tak-
ing into account specific peer group information on beta fac-
tors, leverage and cost of debt. The parameters for calculating
the discount rates are based on external sources of information.
The peer group is subject to an annual review and adjusted, if
necessary. Terminal value growth rates take into consideration
external macroeconomic sources of data and industry specific
trends.
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
For the purpose of estimating the fair value less costs to sell of
the cash-generating units or groups of cash-generating units,
cash flows were projected for the next five years based on past
experience, actual operating results and management's best es-
timate about future developments as well as market assump-
tions. The determined fair value of the cash-generating units or
groups of cash-generating units is assigned to level 3 of the fair
value hierarchy.
Siemens performs the mandatory annual impairment test in the
three months ended September 30. The recoverable amounts for
the annual impairment test 2017 for Siemens' cash-generating
units or groups of cash-generating units were estimated to be
higher than the carrying amounts. Key assumptions on which
Siemens based its determinations of the fair value less costs to
sell for the cash-generating units or groups of cash-generating
units include terminal value growth rates up to 1.7% in fiscal 2017
and 1.7% in fiscal 2016, respectively and after-tax discount rates
of 6.0% to 8.5% in fiscal 2017 and 5.0% to 9.0% in fiscal 2016.
Consolidated Financial Statements
74
24,159
27,906
23,166
24,159
Balance at year-end
Balance at beginning of year
Carrying amount
1,909
1,847
1
7,992
(1)
1.7%
6,440
8.0%
1.7%
3,933
6.5%
1.7%
8,301
Sep 30, 2016
After-tax
discount rate
growth rate
Goodwill
Terminal value
Power and Gas (without part of Power Generation Services)
Power Generation Services (part of Power and Gas)
Digital Factory
Healthineers
(in millions of €)
allocated include average revenue growth rates (excluding portfolio
effects) of between 0.1% and 9.1% (0.3% and 5.3% in fiscal 2016).
Revenue figures in the five-year planning period of the groups of
cash-generating units to which a significant amount of goodwill is
8.5%
1.7%
5,575
8.5%
1.7%
7.0%
Dispositions and reclassifications to assets classified as held for disposal
Balance at year-end
1
Impairment losses recognized during the period
(in millions of €)
NOTE 11 Goodwill
18,160
19,942
(2,506)
8.0%
(2,966)
3,158
1.7%
8.0%
(in millions of €)
Advance payments received
The sensitivity analysis for the groups of cash-generating units to
which a significant amount of goodwill is allocated was based on
a reduction in after-tax future cash flows by 10% or an increase
in after-tax discount rates by one percentage point or a reduction
1.7%
20,666
22,907
10,046
3,261
591
790
Advances to suppliers
3,951
Finished goods and products held for resale
Cost
Construction contracts, here and as follows, include service con-
tracts accounted for under the percentage of completion method.
The aggregate amount of costs incurred and recognized profits
less recognized losses for construction contracts in progress, as
of September 30, 2017 and 2016 amounted to €88,571 million
and €83,789 million, respectively. Revenue from construction
contracts amounted to €34,280 million and €32,695 million, re-
spectively, for fiscal 2017 and 2016. Advance payments received
on construction contracts in progress were €7,791 million and
€8,749 million as of September 30, 2017 and 2016. Retentions in
connection with construction contracts were €217 million and
€288 million in fiscal 2017 and 2016, respectively.
Fiscal year
2017
2
(61)
Translation differences and other
1,905
1,909
Balance at beginning of year
Accumulated impairment losses and other changes
26,068
29,754
Balance at year-end
of billings on uncompleted contracts
(20)
Dispositions and reclassifications to assets classified as held for disposal
1,144
4,757
Acquisitions and purchase accounting adjustments
(127)
25,071
26,068
(1,025)
Translation differences and other
Balance at beginning of year
2016
(46)
Sep 30,
2016
600
(227)
(in millions of €)
Consolidated Financial Statements
DISPOSITIONS
Dispositions not qualifying for discontinued
operations closed transactions
-
In December 2016, Siemens contributed its eCar powertrain sys-
tems business - formerly included in the Digital Factory Division -
into a newly formed joint venture, Valeo Siemens eAutomotive
GmbH. Siemens recognized a pre-tax gain on disposal of €173 mil-
lion in Other operating income, thereof €159 million relating
to measuring Siemens' stake in the joint venture at fair value.
Siemens' 50% stake in the joint venture is disclosed in Centrally
managed portfolio activities.
NOTE 4 Interests in other entities
Investments accounted for using the equity method
(in millions of €)
Fiscal year
2016
316
2017
Share of profit (loss), net
224
Gains (losses) on sales, net
63
Impairment and reversals of impairment
(243)
(53)
(129)
Income (loss) from
investments accounted for
using the equity method, net
43
70
134
Revenue and net income of the combined entity in fiscal 2017
Iwould have been €86,761 million and €5,774 million, respec-
tively, had both acquired businesses been included as of Octo-
ber 1, 2016.
trade and other receivables acquired is €1,137 million. Goodwill
amounts to €2,625 million and comprises intangible assets that
are not separable such as employee know-how and expected syn-
ergy effects from highly complementary businesses entailing an
enhanced market position (including anticipated cost savings
mainly in R&D, procurement and administration as well as reve-
nue synergies). The purchase price allocation is preliminary as a
detailed analysis of the assets and liabilities has not been final-
ized. Goodwill is allocated within the segment SGRE to the units
Wind Turbines as well as Operation and Maintenance. Effects on
equity resulting from this transaction are included in line Changes
in equity resulting from major portfolio transactions. Including
earnings effects from purchase price allocation and integration
costs, the acquired business contributed revenue of €1,659 mil-
lion and a net income of €(209) million to Siemens for the period
from acquisition to September 30, 2017. The non-controlling in-
terests of 41% amount to €721 million at the acquisition date and
are measured at the proportionate share in the recognized
amounts of the acquired net assets (excluding goodwill).
11,240
9,704
Deferred tax assets
547
788
Tax loss and credit carryforward
Share-based payment Share-based payment awards at
Siemens are predominately designed as equity-settled. Fair value
is measured at grant date and is expensed over the vesting pe-
riod. Fair value is determined as the market price of Siemens
shares, considering dividends during the vesting period the
grantees are not entitled to and market conditions and non-vest-
ing conditions, if applicable.
Prior-year information - The presentation of certain prior-year
information has been reclassified to conform to the current year
presentation.
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
introduces a single approach for the classification and measure-
ment of financial assets according to their cash flow characteris-
tics and the business model they are managed in, and provides a
new impairment model based on expected credit losses. IFRS 9
also includes new regulations regarding the application of hedge
accounting to better reflect an entity's risk management activi-
ties especially with regard to managing non-financial risks. The
new standard is effective for annual reporting periods beginning
on or after January 1, 2018. The Company will adopt IFRS 9 for the
fiscal year beginning as of October 1, 2018 and will not adjust
comparative figures for the preceding fiscal year, in accordance
with IFRS 9 transitional provisions. Siemens is currently assessing
the effects of the adoption of IFRS 9 and expects only limited
impact on the Consolidated Financial Statements: Debt instru-
ments that would not be eligible to be carried at amortized cost
are expected to occur only to an insignificant extent. The impact
of the new impairment model of IFRS 9 on the valuation allow-
ances on debt instruments is currently under evaluation. Based
on the analyses so far, Siemens does not expect the valuation
allowances to change significantly. Siemens will adopt the IFRS 9
hedge accounting rules prospectively from October 1, 2018. It is
expected that all existing hedge accounting relationships will
also meet the hedge accounting requirements under IFRS 9.
In May 2014, the IASB issued IFRS 15, Revenue from Contracts
with Customers. According to the new standard, revenue is rec-
ognized to depict the transfer of promised goods or services to a
customer in an amount that reflects the consideration to which
the Company expects to be entitled in exchange for those goods
or services. Revenue is recognized when, or as, the customer ob-
tains control of the goods or services. IFRS 15 supersedes IAS 11,
Construction Contracts and IAS 18, Revenue as well as related
interpretations. The standard is effective for annual periods be-
ginning on or after January 1, 2018; early application is permit-
ted. The Company will adopt the standard for the fiscal year be-
ginning as of October 1, 2017 retrospectively, i.e. the comparable
period will be presented in accordance with IFRS 15. Further as-
sessments resulting from the implementation of IFRS 15 con-
firmed that there will be no significant impacts on Siemens' Con-
solidated Financial Statements. Retained earnings as of October 1,
2016 will increase by €0.18 billion. The increase mainly results
from a change in the timing of recognizing revenue for certain
types of contracts, in particular, revenue may be recognized ear-
lier if variable consideration components exist, re-allocations of
the transaction price between performance obligations take
place or licenses are transferred to the customer. In the compa-
rable period fiscal 2017, changes in the total amount of revenue
to be recognized for a customer contract are very limited. The
vast majority of construction-type contracts currently accounted
for under the percentage-of-completion method fulfills the re-
quirements for revenue recognition over time. Besides, there will
be changes to the Statement of Financial Position, e.g. separate
line items for contract assets and contract liabilities are required,
and quantitative and qualitative disclosures are added.
In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
nates the current classification model for lessee's lease contracts
as either operating or finance leases and, instead, introduces a
single lessee accounting model requiring lessees to recognize
right-of-use assets and lease liabilities for leases with a term of
more than twelve months. This brings the previous off-balance
leases on the balance sheet in a manner largely comparable to
current finance lease accounting. IFRS 16 is effective for annual
Consolidated Financial Statements 69
periods beginning on or after January 1, 2019. Siemens will adopt
the standard for the fiscal year beginning as of October 1, 2019,
presumably by applying the modified retrospective approach, i.e.
comparative figures for the preceding year would not be ad-
justed. Currently, it is expected that the majority of the transition
effect relates to real estate leased by Siemens. The Company is
currently assessing the impact of adopting IFRS 16 on the Consol-
idated Financial Statements.
In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
Tax Treatments. The interpretation clarifies the recognition and
measurement requirements when there is uncertainty over in-
come tax treatments. In assessing the uncertainty, an entity shall
consider whether it is probable that a taxation authority will ac-
cept the uncertain tax treatment. IFRIC23 is effective for annual
reporting periods beginning on or after January 1, 2019, while
earlier application is permitted. The Company is currently assess-
ing the impacts of adopting the interpretation on the Company's
Consolidated Financial Statements.
NOTE 3
Acquisitions and dispositions
ACQUISITIONS
In April 2017, Siemens contributed its wind power business, in-
cluding service, into the publicly listed company Gamesa Corpo-
ración Tecnológica, S.A., Spain (Gamesa), and in return received
newly issued shares of the combined entity Siemens Gamesa
Renewable Energy, S.A., Spain (SGRE). The two businesses are
highly complementary regarding global footprint, existing prod-
uct portfolios and technologies. Siemens as majority share-
holder holds 59% of the shares of the combined entity. As part of
the merger, Siemens paid €999 million in cash which was distrib-
uted to the Gamesa shareholders (without Siemens) following
the completion of the merger. The consideration transferred by
Siemens equals 59% of Gamesa's market capitalization at closing
of the merger and amounts to €3,669 million. The preliminary
purchase price allocation as of the acquisition date resulted in:
Other intangible assets €2,533 million, Property, plant and equip-
ment €628 million, Trade and other receivables €1,073 million,
Cash and cash equivalents €1,003 million, Inventories €1,116 mil-
lion, Other financial assets €413 million (current and non-cur-
rent), Other current assets €206 million, Current income tax as-
sets €179 million, Deferred tax assets €432 million, Long-term
debt €656 million, Provisions €1,229 million (current and non-cur-
rent), Other financial liabilities €217 million, Short-term debt and
current maturities of long-term debt €363 million, Trade payables
€1,745 million, Current income tax liabilities €118 million, Other
current liabilities €662 million and Deferred tax liabilities
€824 million. Intangible assets mainly relate to technology of
€1,147 million, customer relationships of €958 million and order
backlog of €429 million. The gross contractual amount of the
In March 2017, Siemens acquired all shares of Mentor Graphics
Corporation, U.S., a design automation and industrial software
provider. The acquired business is integrated in the Digital Fac-
tory Division. The purchase price paid in cash amounts to
€4,063 million as of the acquisition date. The preliminary pur-
chase price allocation as of the acquisition date resulted in: Other
intangible assets €1,878 million, Property, plant and equipment
€252 million, Trade and other receivables €657 million, Cash and
cash equivalents €369 million, Deferred tax assets €86 million,
Current liabilities €809 million and Deferred tax liabilities
€318 million. Other intangible assets mainly relate to technology
of €1,482 million and customer-related intangible assets of
€362 million. Goodwill of €1,865 million comprises intangible
assets that are not separable such as employee know-how and
expected synergy effects from expanding our software business
and from expanding our role in the digital sector. The purchase
price allocation is preliminary as a detailed analysis of the assets
and liabilities has not been finalized. Compared to the status of
the purchase price allocation as of the end of the second quarter
of fiscal year 2017, the fair value of the acquired technology in-
creased at the amount of €472 million based on further analysis
on the underlying useful life and royalty rate. Including earnings
effects from purchase price allocation and integration costs, the
acquired business contributed revenue of €404 million and a net
income of €(239) million to Siemens for the period from acquisi-
tion to September 30, 2017.
Liabilities
Income from investments accounted for using the equity method
includes an impairment loss of €230 million in fiscal 2017 relat-
ing to Siemens' investment in Primetals Technologies Ltd., which
is disclosed within Centrally managed portfolio activities. The
continuing adverse conditions in the market environment trig-
gered an impairment test on the investment. The recoverable
amount of €204 million was determined based on a discounted
cash flow calculation (level 3 of the fair value hierarchy). To de-
termine the recoverable amount, cash flow projections were
used that take into account past experience and represent man-
agement's best estimate about future developments. The calcu-
lation is based on a terminal value growth rate of 1.5% and an
after-tax discount rate of 7.4%.
Income (loss) from continuing operations
Other comprehensive income,
net of income taxes
Total comprehensive income
(in millions of €)
Sep 30,
2017
2016
2017
2016
Assets
2,042
1,773
Non-current and current assets
1,829
1,836
138
2,180
235
2,008
Liabilities and Post-employment benefits
6,799
8,742
Other
288
114
in the terminal value growth rate by one percentage point.
Siemens concluded that no impairment loss would need to be
recognized on goodwill in any of the groups of cash-generating
units.
Fiscal year
(in millions of €)
Income tax expenses
Current tax
SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS
Fiscal year
2017
2016
227
288
8
(31)
235
257
As of September 30, 2017, non-controlling interests of 41%
amounting to €788 million relate to SGRE, registered in Zamudio,
Spain. Net income attributable to non-controlling interests
for the six month period from acquisition to September 30, 2017
was €(39) million. Dividends paid to non-controlling interests
amounted to €31 million. Summarized financial information in
accordance with IFRS before inter-company eliminations are: As
of September 30, 2017 current assets €6,963 million, non-cur-
rent assets €9,504 million, current liabilities €6,891 million,
non-current liabilities €3,126 million and equity €6,450 million;
for the six month period from acquisition to September 30, 2017
revenue €5,022 million, income from continuing operations
€(135) million, other comprehensive income, net of income
taxes €(75) million, total comprehensive income €(210) million
and total cash flows €(1,611) million (including €999 million in
cash distribution to the Gamesa shareholders (without Siemens)
as part of the merger).
NOTE 5 Other operating income
In fiscal 2017 and 2016, Other operating income includes gains
related to the sale of businesses of €172 million and €1 million
and gains on sales of property, plant and equipment of €176 mil-
lion and €177 million, respectively. Fiscal 2017 includes gains of
€171 million from reversals of provisions for guarantees related
to a previous divestment.
As of September 30, 2017 and 2016, the carrying amount of all
individually not material associates amounts to €1,836 million
and €2,242 million, respectively. Summarized financial informa-
tion for all individually not material associates adjusted for the
percentage of ownership held by Siemens, is presented below.
Items included in the Statements of Comprehensive Income are
presented for the twelve month period applied under the equity
method.
NOTE 6 Other operating expenses
Other operating expenses in fiscal 2017 and 2016 include losses
on sales of property, plant and equipment, losses from the sale
of businesses, transaction costs and effects from insurance, legal
and regulatory matters.
Consolidated Financial Statements 71
NOTE 7 Income taxes
Income tax expense (benefit) consists of the following:
Deferred income tax assets and liabilities on a gross basis are
summarized as follows:
(in millions of €)
Deferred tax
Non-current and current assets
Liabilities
7,914
7,588
2,378
2,340
Within one year
Fiscal year
2016
2017
(in millions of €)
Sep 30,
Minimum future lease payments to be received are as follows:
Including items charged or credited directly to equity and the
expense (benefit) from continuing and discontinued operations,
the income tax expense (benefit) consists of the following:
Consolidated Financial Statements
22
72
(92)
(6)
2,008
2,180
Actual income tax expenses
3
Other, net
(62)
for using the equity method
Tax effect of investments accounted
(in millions of €)
(44)
(15)
(280)
2017
Continuing operations
Sep 30,
The following table shows a reconciliation of minimum future
lease payments to the gross and net investment in leases and
to the present value of the minimum future lease payments
receivable:
Trade and other receivables
NOTE 8
1,010
3,269
(996)
1,084
Income and expenses recognized
directly in equity
6,488
6,510
(2)
5
Discontinued operations
752
734
3,358
3,436
After one year but not more than five years
More than five years
2,008
2,180
2016
(371)
Foreign tax rate differential
(9)
Deductible temporary differences
Tax loss carryforward
2016
2017
(in millions of €)
Sep 30,
(in millions of €)
Deferred tax assets have not been recognized with respect of the
following items (gross amounts):
As of September 30, 2017, the Company has certain tax losses
subject to significant limitations. For those losses deferred tax
assets are not recognized, as it is not probable that gains will be
generated to offset those losses.
Deferred tax liabilities
Total deferred tax assets, net
Other
Income tax expense (current and deferred) differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
In Germany, the calculation of current tax is based on a combined
tax rate of 31%, consisting of a corporate tax rate of 15%, a solidar-
ity surcharge thereon of 5.5% and an average trade tax rate of
15%. For foreign subsidiaries, current taxes are calculated based
on the local tax laws and applicable tax rates in the individual for-
eign countries. Deferred tax assets and liabilities in Germany and
abroad are measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled.
The current income tax expenses in fiscal 2017 and 2016 include
adjustments recognized for current tax of prior years in the
amount of €100 million and €(29) million, respectively. The de-
ferred tax expense (benefit) in fiscal 2017 and 2016 includes tax
effects of the origination and reversal of temporary differences
of €172 million and €54 million, respectively.
2,602
698
8,638
9,006
120
218
930
874
743
188
3,673
2,013
Change in tax rates
(197)
deferred tax assets and tax credits
Change in realizability of
(223)
(8)
Taxes for prior years
(309)
Tax-free income
558
2017
Non-deductible losses and expenses
Increase (decrease) in
Expected income tax expenses
Siemens has not recognized deferred tax liabilities for income
taxes or foreign withholding taxes on the cumulative earnings of
subsidiaries of €36,157 million and €26,585 million, respectively
in fiscal 2017 and 2016 because the earnings are intended to be
permanently reinvested in the subsidiaries.
As of September 30, 2017 and 2016, €1,361 million and €953 mil-
lion of the unrecognized tax loss carryforwards expire over the
periods to 2031.
2,295
2,575
2,201
4,416
Fiscal year
2016
2017
income taxes resulting from:
Consolidated Financial Statements 75
15,262
Additions
(65)
20
274
218
(333)
7,859
(3,673)
4,186
(253)
Technical machinery
and equipment
7,770
(67)
(39)
288
270
(271)
7,950
(5,412)
2,539
(542)
7,745
Furniture and office
Land and bulidings
7,742
(143)
4,870
(2,974)
1,896
(253)
Customer relationships
and trademarks
7,542
(77)
68
7,532
(3,191)
4,341
(490)
Other intangible assets
(115)
328
388
(395)
15,469
(7,727)
(932)
64
equipment
(29)
(582)
(12)
801
(2)
799
2
Property, plant
and equipment
25,234
(260)
(14)
2,273
(1,516) 25,717
(15,560)
10,157
(1,831)
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
76
Consolidated Financial Statements
The gross carrying amount of Advances to suppliers and con-
struction in progress includes €908 million and €677 million, re-
spectively of property, plant and equipment under construction
in fiscal 2017 and 2016. As of September 30, 2017 and 2016, con-
tractual commitments for purchases of property, plant and
equipment are €665 million and €643 million, respectively.
Minimum future lease payments under operating leases are:
595
5,829
(40)
856
22
632
85
(448)
6,092
(4,764)
1,328
(690)
Equipment leased to others
3,033
(83)
23
484
10
(452)
3,015
(1,710)
1,305
(348)
Advances to suppliers and
construction in progress
(16)
260
(37)
4,725
(532)
6,435
(4,898)
1,537
(729)
Equipment leased to others
3,015
(92)
443
10
(378)
2,998
(1,703)
1,295
(338)
Advances to suppliers and
construction in progress
801
(25)
78
796
157
(580)
672
(136)
Cash flow hedges: The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net of
income taxes (applicable deferred income tax), and any ineffec-
tive portion is recognized immediately in net income. Amounts
accumulated in equity are reclassified into net income in the
same periods in which the hedged item affects net income.
(247)
8,129
(3,754)
4,374
(272)
Technical machinery
and equipment
7,950
(170)
323
334
207
(235)
8,410
(5,685)
2,724
(588)
Furniture and office
equipment
6,092
183
(23)
1,046
1,047
Reclassi-
Retire-
amount
nations Additions fications
ments' 09/30/2016
tion and
impairment
amount
09/30/2016
ment in
fiscal 2016
Internally generated
technology
2,995
324
(252)
3,067
(1,562)
1,505
(189)
Acquired technology
including patents, licenses
and similar rights
combi-
diffe-
rences
10/01/2015
(in millions of €)
(3)
Property, plant
and equipment
25,717
(607)
891
2,432
(1,416) 27,017
(16,041)
10,977
NOTE 15 Debt
(1,930)
Additions
Gross
carrying
amount
Trans-
through
lation
business
Gross
carrying
Accumu-
lated depre-
ciation/
amortiza-
Deprecia-
tion/amor-
tization
Carrying and impair-
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
NOTE 12 Other intangible assets and
property, plant and equipment
(in millions of €)
Notes and bonds
Non-current debt
US$
400
308
(184)
7,859
Land and bulidings
(1,281)
10,926
(8,487)
19,413
(250)
451
4,542
(799)
15,469
Other intangible assets
(624)
5,240
(3,629)
8,870
(39)
339
1,825
400
US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
in millions
Notional
Currency
Sep 30, 2016
Carrying
amount
amount
in millions
of €1
(in millions)
of €1
5.625%/2008/June 2018/EUR fixed-rate instruments
€
1,600
1,649
€
1,600
1,719
5.125%/2009/February 2017/EUR fixed-rate instruments
€
2,000
2,028
US$
Carrying
amount
(447)
and trademarks
tization
Deprecia-
tion/amor-
amount
09/30/2017
Carrying
tion and
impairment
Retire-
amount
ments¹ 09/30/2017
Reclassi-
fications
combi-
nations Additions
rences
10/01/2016
(in millions of €)
diffe-
amount
ciation/
amortiza-
lated depre-
Accumu-
Gross
carrying
through
business
Trans-
lation
carrying
Gross
and impair-
7,532
ment in
fiscal 2017
technology
Customer relationships
(454)
4,056
(3,264)
7,320
(73)
77
2,717
(272)
4,870
and similar rights
including patents, licenses
Acquired technology
(203)
1,630
(1,594)
3,224
(138)
374
(79)
3,067
Internally generated
Sep 30, 2017
amount
(in millions)
Currency
Notional
2016
Obligations under
Within one year
344
326
finance leases
After one year but not more than five years
679
689
Total debt
27
5,447
15
6,206
88
123
26,777
24,761
More than five years
101
85
1,124
2017
1,099
(in millions of €)
111
Sep 30,
2017
2016
2017
2016
(maturing until 2047)
3,554
4,994
25,243
23,560
Loans from banks
(maturing until 2027)
1,191
380
1,334
992
Other financial indebted-
Sep 30,
ness (maturing until 2029)
675
817
87
NOTE 13 Other financial assets
(in millions of €)
2017
Liabilities to personnel
5,505
5,401
Deferred Income
1,470
1,292
Accruals for pending invoices
1,116
1,175
Other
1,698
1,676
20,049
20,437
Interest rates in this Note are per annum. In fiscal 2017 and 2016,
weighted-average interest rates for loans from banks, other fi-
nancial indebtedness and obligations under finance leases were
2.9% (2016: 3.9%), 1.0% (2016: 0.5%) and 5.8% (2016: 4.8%),
respectively.
CREDIT FACILITIES
As of September 30, 2017 and 2016, €7.0 billion and €7.1 billion
of lines of credit are unused. The facilities are for general corpo-
rate purposes. The €4.0 billion syndicated credit facility matures
on June 25, 2021. The US$3.0 billion syndicated credit facility ma-
tures on September 27, 2020. The €450 million revolving bilateral
credit facility is unused and was extended from September 2017
to September 2018. As of September 30, 2017, a subsidiary has an
additional unused credit line of €750 million maturing in 2022.
Consolidated Financial Statements
77
NOTES AND BONDS
(interest/issued/maturity)
10,892
10,259
contracts and related advances
estimated earnings on uncompleted
Sep 30,
2016
Loans receivable
11,062
11,838
Receivables from finance leases
3,699
Derivative financial instruments
1,784
Available-for-sale financial assets
2,290
Current debt
Sep 30,
3,557
2,293
2,662
208
19,044
260
20,610
Item Loans receivable primarily relate to long-term loan transac-
tions of SFS.
NOTE 14 Other current liabilities
(in millions of €)
Sep 30,
2017
2016
Billings in excess of costs and
Other
Fair value hedges: The carrying amount of the hedged item is
adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair value
is recognized as a separate financial asset or liability with corre-
sponding gain or loss recognized in net income. For hedged
items carried at amortized cost, the adjustment is amortized un-
til maturity of the hedged item. For hedged firm commitments
the initial carrying amount of the assets or liabilities that result
from meeting the firm commitments are adjusted to include the
cumulative changes in the fair value that were previously recog-
nized as separate financial assets or liabilities.
188
15,801
1,119
1,250
1,058 US$
1,250
US$
1.45%/2015/May 2018/US$-fixed-rate-instruments
448
500
423 US$
500
US$
US$3 m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
1,982
1,750
1,830 US$
1,750
US$
6.125%/2006/August 2026/US$ fixed-rate instruments
1,570
1,750
US$
5.75%/2006/October 2016/US$ fixed-rate instruments
10,048
7,812
358
400
US$
2.15%/2015/May 2020/US$-fixed-rate-instruments
US$
1,000
845 US$
1,100
US$
1,100
US$
1.30%/2016/September 2019/US$-fixed-rate-instruments
350
US$
US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
1,546
1,750
1,461 US$
1,750
US$
339
4.40%/2015/May 2045/US$-fixed-rate-instruments
1,500
1,264 US$
1,500
US$
3.25%/2015/May 2025/US$-fixed-rate-instruments
1,564
1,750
1,479 US$
1,750
US$
2.90%/2015/May 2022/US$-fixed-rate-instruments
893
1,000
1,336
2.00%/2016/September 2023/US$-fixed-rate-instruments
400
268
1,274
1,250
€
2013/June 2020/US$ floating-rate instruments
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
Total Debt Issuance Program
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
1.5%/2013/March 2018/US$ fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
740
650
£
723
650
£
3.75%/2012/September 2042/GBP fixed-rate instruments
405
350
£
395
350
£
2.75%/2012/September 2025/GBP fixed-rate instruments
997
1,000
€
998
1,000
€
1.5%/2012/March 2020/EUR fixed-rate instruments
358
€
1,250
1,285
€
300
US$
254
300
US$
358
400
US$
338
400
US$
87
100
US$
US$
100
US$
447
500
US$
423
500
US$
996
1,000
€
997
1,000
83
US$
1.70%/2016/September 2021/US$-fixed-rate-instruments
296 US$
930 US$
929 US$
630 US$
850
US$
US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
843
1,000
US$
2.70%/2017/March 2022/US$-fixed-rate-instruments
718
930
US$
2.20%/2017/March 2020/US$-fixed-rate-instruments
677
800
US$
US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
887
1,100
1,000
3.125%/2017/March 2024/US$-fixed-rate-instruments
1,000
205
1,332
1,500
US$
1.05%/2012/August 2017/US$ fixed-rate instruments
19,737
Total US$ Bonds
US$
1,257
750
4.20%/2017/March 2047/US$-fixed-rate-instruments
1,054
1,250
US$
3.40%/2017/March 2027/US$-fixed-rate-instruments
843
1,500
838 US$
US$
US$
1.65%/2012/August 2019/US$ fixed-rate instruments
1,517
1,700
1,431 US$
1,700
US$
2.35%/2016/October 2026/US$-fixed-rate-instruments
666
750
983
1,100
1,100
308
350
1,000
US$
1,500
984
1,500
3.30%/2016/September 2046/US$-fixed-rate-instruments
1,249 US$
Consolidated Financial Statements
78
28,554
28,797
2,705
1,249
1 Includes adjustments for fair value hedge accounting.
31
€
33
1,309
33
€
31
3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
Total Bonds with Warrant Units
U.K.
Germany
Pension progression
1.5%
1.5%
3.7%
Compensation increase
U.K.
CH
2016
1.4%
2017
Sep 30,
3.6%
1.4%
Changes in demographic assumptions
2.9%
Sensitivity analysis
A one-half-percentage-point change of the above assumptions
would result in the following increase (decrease) of the DBO:
Effect on DBO due to a one-half percentage-point
200
2016
799
2,319
Fiscal year
2016
2017
(in millions of €)
BVG 2015 G
Heubeck Richttafeln 2005G (modified)
RP-2016 with generational projection from
the US Social Security Administration's
Long Range Demographic Assumptions
SAPS S2 (Standard mortality tables
for Self Administered Pension Schemes
with allowance for future mortality
improvements)
The rates of compensation increase and pension progression for
countries with significant effects are shown in the following table.
Inflation effects, if applicable, are included in the assumptions below.
3.0%
0.4%
tion of the DBO at period-end was as follows:
2.4%
CH
Changes in financial assumptions
(3,714)
6,506
Experience (gains) losses
Total
(93)
(3,919)
(93)
6,284
Actuarial assumptions
The weighted-average discount rate used for the actuarial valua-
Discount rate
0.8%
EUR
GBP
CHF
Sep 30,
2017
2016
2.4%
1.7%
2.1%
1.0%
3.8%
3.6%
2.8%
USD
U.K.
1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
(112)
693
7
4
818
444
1,605
1,133
Consolidated Statements of income
costs recognized in the
Components of defined benefit
(4)
(112)
795
8
5
(150)
Other¹
(809)
(482)
809
482
Interest income
1,085
675
7
4
(38)
1,078
Return on plan assets excluding
income and net interest expenses
Employer contributions
3,703
(3,805)
(109)
(60)
2,473
(174)
6,284
(3,919)
of Comprehensive Income
in the Consolidated Statements
Remeasurements recognized
amounts included in net interest
(109)
(109)
(60)
6,284
(3,919)
6,284
(3,919)
(2,473)
174
2,473
(174)
Effects of asset ceiling
Actuarial (gains) losses
(60)
672
Interest expenses
523
plan assets
Fair value of
Defined benefit
obligation (DBO)
Development of the defined benefit plans
ployees. Accordingly, Siemens in Switzerland sponsors several
cash balance plans. These plans are administered by foundations.
The board of the main foundation is composed of equally many
employer and employee representatives. The board of the foun-
dation is responsible for investment policy and the asset manage-
ment, as well as for any changes in the plan rules and the deter-
mination of contributions to finance the benefits. The Company
is required to make total contributions at least as high as the sum
of the employee contributions set out in the plan rules. In case of
an underfunded plan the Company together with the employees
may be asked to pay supplementary contributions according to a
well-defined framework of recovery measures.
Following the Swiss law of occupational benefits (BVG) each em-
ployer has to grant post-employment benefits for qualifying em-
Switzerland:
on legal requirements. Due to deviating guidelines for the determi-
nation of the discount rates, the technical funding deficit is usually
larger than the IFRS funding deficit. To reduce the deficit Siemens
entered into an agreement with the trustees to provide annual pay-
ments of GB£31 (€34) million until fiscal 2033. The agreement also
provides for a cumulative advance payment by Siemens AG com-
pensating the remaining annual payments at the date of early ter-
mination of the agreement due to cancellation or insolvency.
Consolidated Financial Statements 79
Siemens plc offers benefits through the Siemens Benefit Scheme for
which, until the start of retirement, an inflation increase of the ma-
jority of accrued benefits is mandatory. The required funding is de-
termined by a funding valuation carried out every third year based
U.K.:
Siemens Corporation sponsors the Siemens Pension Plans, which
for the most part have been frozen to new entrants and to future
benefit accruals, except for interest credits on cash balance ac-
counts. Siemens Corporation has appointed the Investment Com-
mittee as the named fiduciary for the management of the assets
of the Plans. The Plans' assets are held in a Master Trust and the
trustee of the Master Trust is responsible for the administration of
the assets of the trust, taking directions from the Investment Com-
mittee. The Plans are subject to the funding requirements under
the Employee Retirement Income Security Act of 1974 as amended,
(ERISA). There is a regulatory requirement to maintain a minimum
funding level of 80% in the defined benefit plans in order to avoid
benefit restrictions. At its discretion, Siemens Corporation may
contribute in excess of this regulatory requirement. Annual contri-
butions are calculated by independent actuaries.
Effects of
asset ceiling
U.S.:
Germany:
The defined benefit plans open to new entrants are based pre-
dominantly on contributions made by the Company. Only to a
certain extent, those plans are affected by longevity, inflation
and compensation increases and take into account country spe-
cific differences. The Company's major plans are funded with
assets in segregated entities. In accordance with local laws and
bilateral agreements with benefit trusts (trust agreement) those
plans are managed in the interest of the beneficiaries. The de-
fined benefit plans cover 506,000 participants, including 217,000
active employees, 89,000 former employees with vested benefits
and 200,000 retirees and surviving dependents.
DEFINED BENEFIT PLANS
NOTE 16 Post-employment benefits
Siemens has a US$9.0 billion (€7.6 billion as of September 30,
2017) commercial paper program in place including US$ extend-
ible notes capabilities. As of September 30, 2017 and 2016,
US$720 million (€610 million) and US$700 million (€627 mil-
lion), respectively, were outstanding. Siemens' commercial pa-
pers have a maturity of generally less than 90 days. Interest rates
ranged from 0.37% to 1.47% in fiscal 2017 and from 0.13% to
0.74% in fiscal 2016.
COMMERCIAL PAPER PROGRAM
As of September 30, 2017, a subsidiary has loans of €424 million
outstanding maturing in 2018 and 2019 which were subject to
covenants, all of which were complied with.
As of September 30, 2017 and 2016, two bilateral US$500 million
term loan facilities (in aggregate €847 million and €896 million
respectively) are outstanding until March 26, 2020.
ASSIGNABLE AND TERM LOANS
Bond with Warrant Units - Each of the US$1.5 billion instru-
ments were issued with 6,000 detachable warrants exercisable
until August 1, 2017 (Warrants 2017) and August 1, 2019 (Warrants
2019). As of September 30, 2017, almost all Warrants 2017 and no
Warrants 2019 were exercised. As of September 30, 2017 and
2016, terms for 5,236 Warrants 2019 and 10,661 Warrants, respec-
tively, entitle the holder to receive 1,924.1160 and 1,914.0511
Siemens AG shares per warrant at an exercise price of €97.6255
and €98.1389 per share, respectively; terms for 764 Warrants
2019 and 1,339 warrants, respectively entitle the holder to receive
1,833.0013 and 1,823.4130 Siemens AG shares per warrant as well
as 146.0092 and 151.5630 OSRAM shares, respectively, at an ex-
ercise price of €187,842.81. The number of shares may be ad-
justed under the terms of the warrants. As of September 30, 2017
and 2016, the Warrants 2019 offer option rights to 11.5 million
and the Warrants 2017 and 2019 to 22.8 million Siemens AG
shares, respectively. Siemens redeemed the 1.05% US$1.5 billion
fixed-rate instrument at face value as due. The 3 m EURIBOR+0.2%
€33 million and the 3m EURIBOR+0.2% €31 million floating-rate
instruments were redeemed at face value as due.
US$ Bonds - In March 2017, Siemens issued instruments totaling
US$7.5 billion (€6.4 billion as of September 30, 2017) in seven
tranches. Siemens redeemed the 5.75% US$1.75 billion fixed-rate
instrument at face value as due.
Debt Issuance Program - The Company has a program for the
issuance of debt instruments in place under which instruments
up to €15.0 billion can be issued as of September 30, 2017 and
2016, respectively. As of September 30, 2017 and 2016 €7.8 bil-
lion and €9.9 billion in notional amounts were issued and are
outstanding. Siemens redeemed the 5.125% €2.0 billion fixed-
rate instrument at face value as due.
In Germany, Siemens AG provides pension benefits through the
plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
zen legacy plans and deferred compensation plans. The majority
of Siemens' active employees participate in the BSAV. Those ben-
efits are predominantly based on contributions made by the
Company and returns earned on such contributions, subject to a
minimum return guaranteed by the Company. In connection with
the implementation of the BSAV, benefits provided under the
frozen legacy plans were modified to substantially eliminate the
effects of compensation increases. However, these frozen plans
still expose the Company to investment risk, interest rate risk and
longevity risk. The pension plans are funded via contractual trust
arrangements (CTA). In Germany no legal or regulatory minimum
funding requirements apply.
Net defined
benefit balance
(1)
(11)
612
523
612
Current service cost
9,737
13,486
214
119
27,296
28,809
36,818
42,176
Balance at begin of fiscal year
2016
2017
2016
2017
2016
2017
2016
2017
(in millions of €)
(1 - 11 +111)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
(III)
861
Germany
U.S.
618
(618)
1,126
1,997
1,914
675
130
68
6
3,064
3,007
3,671
3,131
151
1,075
(219)
14
6,047
5,883
6,188
5,650
1,512
1,158
3,347
3,031
4,859
4,189
Other countries
9
CH
43
36,871
Applied mortality tables are:
The remeasurements comprise actuarial (gains) and losses result-
ing from:
Fiscal 2017 includes a gain of €138 million (€137 million due to
plan amendments in the position "other") in connection with ad-
justed benefit levels for plan participants in Switzerland.
Net interest expenses related to provisions for pensions and sim-
ilar obligations amounted to €198 million and €282 million, re-
spectively, in fiscal 2017 and 2016. The DBO is attributable to ac-
tive employees 31% and 33%, to former employees with vested
rights 14% and 15%, to retirees and surviving dependents 54%
and 52%, respectively, in fiscal 2017 and 2016.
209
317
Consolidated Financial Statements
80
The discount rate was derived from high-quality corporate bonds
with an issuing volume of more than 100 million units in the re-
spective currency zones, which have been awarded an AA rating
(or equivalent) by at least one of the three rating agencies
Moody's Investor Service, Standard & Poor's Rating Services or
Fitch Ratings.
(presented in Other assets)
thereof net defined benefit assets
13,695
Total
9,582
thereof provisions for pensions
13,486
9,265
119
964
831
42
32
62
28,809
27,668
42,176
and similar obligations
U.K.
U.S.
10,184
Foreign currency translation effects
(2)
6
(9)
15
(10)
22
Business combinations, disposals and other
(8)
(45)
(6)
(53)
(620)
(6)
(160)
(121)
(1,694)
(1,924)
(1,854)
(2,045)
Benefits paid
144
130
144
130
Plan participants' contributions
Settlement payments
(758)
(488)
(792)
7,364
15,275
14,622
25,460
21,986
Germany
13,486
9,265
119
62
28,809
27,668
42,176
36,871
Balance at fiscal year-end
(749)
(1,109)
7
(1)
(1,777)
(2,531) (1,411)
(2,520)
Other reconciling items
40
(134)
7
(1)
(861)
(in millions of €)
Discount rate
Rate of compen-
sation increase
Rate of pension
progression
(129)
Sep 30, 2017
decrease
2,472
NOTE 20 Commitments and
contingencies
A+
A-1+
P-1
A-1+
P-1
Short-term debt
A1
A+
A1
Long-term debt
Service
Moody's
Investors
Ratings
Services
Service
Investors
The following table presents the undiscounted amount of maxi-
mum potential future payments for major groups of guarantees:
(in millions of €)
business. Credit guarantees generally provide that in the event of
default or non-payment by the primary debtor, Siemens will be
required to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding balance
of the credit or, in case where a credit line is subject to variable
utilization, the nominal amount of the credit line. These guaran-
tees have residual terms of up to 14 years and 15 years, respec-
tively, in fiscal 2017 and 2016. For credit guarantees amounting
to €189 million and €270 million, respectively, as of Septem-
ber 30, 2017 and 2016, the Company held collateral mainly in the
form of inventories and trade receivables. The Company accrued
€33 million and €73 million relating to credit guarantees as of
September 30, 2017 and 2016, respectively.
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which mainly include performance bonds and guaran-
tees of advanced payments in a consortium. In the event of
non-fulfillment of contractual obligations by the consortium
partner(s), Siemens will be required to pay up to an agreed-upon
maximum amount. These agreements typically have terms of up
to ten years. Generally, consortium agreements provide for fall-
back guarantees as a recourse provision among the consortium
partners. As of September 30, 2017 and 2016, the Company ac-
crued €3 million and €4 million, respectively, relating to perfor-
mance guarantees.
1 Reported in the following line items of the Statements
of Financial Position: Trade and other receivables, Other
current financial assets and Other financial assets, except
for separately disclosed €2,290 million and €2,662 million
available-for-sale financial assets and €2,314 million and
€3,051 million derivative financial instruments as of
September 30, 2017 and 2016, respectively. Includes
€15,242 million and €14,280 million trade receivables from
the sale of goods and services in fiscal 2017 and 2016,
thereof €918 million and €665 million with a term of more
than twelve months.
2 Includes equity instruments classified as available-for-sale,
for which a fair value could not be reliably measured and
which are therefore recognized at cost.
3 Reported in the following line items of the Statements of
Financial Position: Short-term debt and current maturities of
long-term debt, Trade payables, Other current financial
liabilities, Long-term debt and Other financial liabilities,
except for separately disclosed derivative financial instru-
ments of €823 million and €1,500 million, respectively,
as of September 30, 2017 and 2016.
4 Reported in line items Other current financial liabilities and
Other financial liabilities.
Cash and cash equivalents includes €266 million and €330 mil-
lion as of September 30, 2017 and 2016, respectively, which are
not available for use by Siemens mainly due to minimum reserve
requirements with banks. As of September 30, 2017 and 2016, the
carrying amount of financial assets Siemens has pledged as col-
lateral amounted to €182 million and €214 million, respectively.
Moody's
The following table presents the fair values and carrying amounts
of financial assets and financial liabilities measured at cost or
amortized cost for which the carrying amounts do not approxi-
Imate fair value:
Guarantees of third-party performance
Miscellaneous guarantees
639
Credit guarantees
2017
Sep 30,
Future payment obligations under non-cancellable operating
leases are:
In addition to guarantees disclosed in the table above, the Com-
pany issued other guarantees. To the extent future claims are not
considered remote, maximum future payments from these obli-
gations amount to €611 million and €853 million as of Septem-
ber 30, 2017 and 2016, respectively. These commitments include
indemnifications issued in connection with dispositions of busi-
nesses. Such indemnifications may protect the buyer from
potential tax, legal and other risks in conjunction with the
purchased business. As of September 30, 2017 and 2016, the ac-
crued amount for such other commitments is €243 million and
€456 million, respectively.
2,283
Ratings
Services
Sep 30, 2016
Standard &
Poor's
Poor's
48
(571)
7,404
8,306
Industrial net debt/EBITDA
Plus/Less: Interest income, interest expenses
and other financial income (expenses), net
Plus: Amortization,
depreciation and impairments
EBITDA
Income from continuing operations
before income taxes
2,764
10,216
Less: Fair value hedge accounting adjustment²
Industrial net debt
Plus: Provisions for pensions
and similar obligations
Less: SFS Debt¹
10,505
9,876
(643)
(421)
799
Plus: Credit guarantees
310
42,091
0.9
1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
These rating agencies generally recognize and accept higher levels of debt attributable to
captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
financing activities.
Standard &
Sep 30, 2017
Siemens' current corporate credit ratings are:
ness.
Equity allocated to SFS differs from the carrying amount of equity
as it is mainly allocated based on the risks of the underlying busi-
2,623
22,418
8.55
2016
1.0
Sep 30,
Debt to equity ratio
SFS debt
Allocated equity
(in millions of €)
The SFS business is capital intensive and operates a larger
amount of debt to finance its operations compared to the indus-
trial business.
84 Consolidated Financial Statements
2 Debt is generally reported with a value representing approximately the amount to be repaid.
However, for debt designated in a hedging relationship (fair value hedges), this amount is
adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
Siemens deducts these changes in market value in order to end up with an amount of debt
that approximately will be repaid.
2017
2,607
22,531
8.64
44,325
140
1,190
Total operating rental expenses for the years ended Septem-
ber 30, 2017 and 2016 were €1,242 million and €1,158 million,
respectively.
The Company is jointly and severally liable and has capital contri-
bution obligations as a partner in commercial partnerships and
as a participant in various consortiums.
NOTE 21 Legal proceedings
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
As previously reported, Siemens AG is a member of a supplier
consortium that has been contracted to construct the nuclear
power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
(TVO) on a turnkey basis. The agreed completion date for the
nuclear power plant was April 30, 2009. Siemens AG's share of
the contract value is approximately 27%. The other member of
the supplier consortium is a further consortium consisting of
Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
Completion of the power plant has been delayed for reasons
which are in dispute. In December 2008, the supplier consortium
filed a request for arbitration against TVO demanding an exten-
sion of the construction time, additional compensation, mile-
stone payments, damages and interest. TVO rejected the claims
and asserted counterclaims against the supplier consortium con-
sisting primarily of damages due to the delay. In August 2015,
TVO updated its counterclaims to approximately €2.3 billion. The
supplier consortium's monetary claims as last updated amount
to approximately €3.6 billion. The amounts claimed by the par-
ties do not cover the total period of delay and may be updated
further. In November 2016 a partial award on certain preliminary
questions identified for early treatment was issued. A further par-
tial award on document handling issues was rendered in
July 2017. In this further partial award certain key facts underly-
ing the claims regarding delay and disruption that occurred
during project execution were decided in favor of TVO. Another
partial award on project management issues and the use of ad-
vanced construction methods was rendered in November 2017.
While the Tribunal granted some of TVO's requests, most of TVO's
material allegations in this respect were dismissed or their deci-
sion was deferred to a later stage. None of the partial awards have
dealt with the amounts claimed by the parties. A final arbitration
award on the merits of the claims and counterclaims is expected
during the first half of calendar year 2018.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, in July 2008, Hellenic Telecommunica-
tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
with the district court of Munich, Germany, seeking to compel
Siemens AG to disclose the outcome of its internal investigations
with respect to OTE. OTE seeks to obtain information with respect
to allegations of undue influence and/or acts of bribery in con-
nection with contracts concluded between Siemens AG and OTE
from calendar 1992 to 2006. At the end of July 2010, OTE ex-
panded its claim and requested payment of damages by
Siemens AG of at least €57 million to OTE for alleged bribery pay-
ments to OTE employees. In October 2014 OTE increased its dam-
age claim to the amount of at least €68 million. Siemens AG
continues to defend itself against the expanded claim.
86
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position re-
garding an alleged anti-competitive arrangement between
April 1988 and April 2004 in the field of gas-insulated switchgear.
In September 2013, the Israeli Antitrust Authority concluded that
Siemens AG was a party to an illegal restrictive arrangement re-
garding the Israeli gas-insulated switchgear market between
1988 and 2004, with an interruption from October 1999 to Feb-
ruary 2002. The Company appealed against this decision in
May 2014.
As previously reported, the Israeli Exchange Supervisory Author-
ity (ISA) concluded its investigation regarding potentially illegal
payments that were allegedly paid to Israeli Electric Compa-
ny-representatives in the early 2000's, and transferred the inves-
tigation files to the Israeli District Attorney (DA) in August 2015,
in order to decide whether or not to take any legal steps against
any of the suspects named in the ISA investigation. Siemens fully
cooperated with the Israeli authorities. In May 2016, the DA filed
criminal charges versus Siemens Israel Ltd. Siemens AG was not
indicted, as it was possible for Siemens AG to conclude a non-
prosecution agreement with the DA that obliged Siemens AG to
pay an amount in the mid double-digit euro million range.
In November 2017, the Israeli Criminal court approved a plea
agreement proposed by the DA and Siemens Israel Ltd. Based on
the plea agreement, Siemens Israel Ltd. was convicted for the
Consolidated Financial Statements
misconduct of its former management and agreed to pay a fine
in a low double-digit euro million range.
As previously reported, in May 2013, Siemens Ltda., Brazil
(Siemens Ltda.) entered into a leniency agreement with the Ad-
ministrative Council for Economic Defense (CADE) and other rel-
evant Brazilian authorities relating to possible antitrust violations
in connection with alleged anticompetitive irregularities in metro
and urban train projects, in which Siemens Ltda. and partially
Siemens AG, as well as a number of other companies participated
as contractor. In March 2014, CADE commenced administrative
proceedings, confirming Siemens Ltda.'s immunity from admin-
istrative fines for the reported potential misconduct. In connec-
tion with the above mentioned metro and urban train projects,
several Brazilian authorities initiated investigations relating to
alleged criminal acts (corruptive payments, anti-competitive con-
duct, undue influence on public tenders).
As previously reported, in March 2014, Siemens was informed
that in connection with the above mentioned metro and urban
train projects the Public Prosecutor's Office São Paulo has re-
quested criminal proceedings at court into alleged violations of
Brazilian antitrust law against a number of individuals including
current and former Siemens employees. The proceedings con-
tinue; the Public Prosecutor's Office São Paulo has, in the mean-
time, appealed all decisions where the courts denied opening
criminal trials.
As previously reported, in May 2014, the Public Affairs Office
(Ministério Público) São Paulo initiated a lawsuit against Siemens
Ltda. as well as other companies and several individuals claiming,
inter alia, damages in an amount of BRL2.5 billion (approximately
€665 million as of September 2017) plus adjustments for infla-
tion and related interest in relation to train refurbishment con-
tracts entered into between 2008 and 2011. A technical note is-
sued by the Brazilian cartel authority CADE earlier in 2014 had not
identified evidence suggesting Siemens Ltda.'s involvement in
anticompetitive conduct in relation to these refurbishment con-
tracts. In January 2015 the district court of São Paulo admitted a
lawsuit of the State of São Paulo and two customers against
Siemens Ltda., Siemens AG and other companies and individuals
claiming damages in an unspecified amount. In March 2015, the
district court of São Paulo admitted a lawsuit of the Public Affairs
Office (Ministério Público) São Paulo against Siemens Ltda. and
other companies claiming, inter alia, damages in an amount of
BRL487 million (approximately €130 million as of September 2017)
plus adjustments for inflation and related interest in relation to
train maintenance contracts entered into in 2000 and 2002. In
September 2015, the district court of São Paulo admitted another
lawsuit of the Public Affairs Office (Ministério Público) São Paulo
against Siemens Ltda. and other companies claiming, inter alia,
damages in an amount of BRL918 million (approximately €244 mil-
lion as of September 2017) plus adjustments for inflation and
related interest in relation to train maintenance contracts
entered into in 2006 and 2007. Siemens will defend itself against
these actions. It cannot be excluded that further significant
damage claims will be brought by customers or the state against
Siemens.
Based on the above mentioned conclusion of the Israeli Antitrust
Authority, two electricity consumer groups filed motions to cer-
tify a class action for cartel damages against a number of compa-
nies including Siemens AG with an Israeli State Court in Septem-
ber 2013. One of the class actions has been dismissed by the
court in fiscal year 2015. The remaining class action seeks com-
pensation for alleged damages amounting to ILS2.8 billion (ap-
proximately €673 million as of September 2017). In addition, the
Israel Electric Corporation (IEC) filed at the end of December 2013
with an Israeli State Court a separate ILS3.8 billion (approxi-
mately €909 million as of September 2017) claim for damages
against Siemens AG and other companies that allegedly formed
a cartel in the Israeli gas-insulated switchgear market. Siemens AG
is defending itself against the actions.
As previously reported, CADE conducted - unrelated to the above
mentioned proceedings - two further investigations into possible
antitrust behavior in the field of gas-insulated and air-insulated
switchgear from the 1990's to 2006. Siemens cooperated with
the authorities. In February 2017, Siemens AG entered into a set-
tlement agreement with CADE relating to alleged antitrust viola-
tions in the field of gas-insulated switchgear for an amount in a
low single-digit euro million range. In October 2017, Siemens
Ltda. entered into a settlement agreement with CADE relating to
alleged antitrust violations in the field of air-insulated switchgear
for an amount in a mid double-digit euro million range.
Consolidated Financial Statements 85
3,341
3,121
600
3,718
Sep 30,
(in millions of €)
2017
2016
Within one year
3,458
825
Item Credit guarantees covers the financial obligations of third
parties generally in cases where Siemens is the vendor and (or)
contractual partner or Siemens is liable for obligations of associ-
ated companies accounted for using the equity method. Addi-
tionally, credit guarantees are issued in the course of the SFS
After one year but not more than five years
More than five years
increase
(2,227)
1,684
1,707
832
870
882
13,695
As previously reported, in June 2015, Siemens Ltda. once again
appealed to the Supreme Court against a decision confirming
the decision of the previous court to suspend Siemens Ltda.
from participating in public tenders and signing contracts with
public administrations in Brazil for a five year term based on
alleged irregularities in calendar 1999 and 2004 public tenders
with the Brazilian Postal authorities. In July 2015, the court sus-
pended enforcement of the debarment decision pending the
appeal.
Siemens has received credible information that four gas turbines
intended for a project in Taman, Russia, which were delivered by
000 Siemens Gas Turbines Technologies (SGTT) to its customer
OAO VO TechnoPromExport in summer of 2016 had been al-
legedly brought to Crimea against contractual agreements with
SGTT. Allegedly, these four gas turbines had been sold by OAO
VO TechnoPromExport to OOO VO TechnoProm Export, had then
been locally modified and moved to Crimea, a location under
sanctions. Siemens AG together with SGTT and SGTT separately
have filed lawsuits before the Commercial State Court of Moscow
against OAO VO TechnoProm Export and OOO VO TechnoProm-
Export for the return of the gas turbines. The proceedings are
ongoing.
2016
39,264
37,984
8,375
10,604
379
534
2017
1,935
4,758
3,955
54,710
55,594
43,502
40,591
682
2,518
As previously reported, the Vienna public prosecutor in Austria
conducted an investigation into payments between calendar
1999 and calendar 2006 relating to Siemens Aktiengesellschaft
Österreich, Austria, for which adequate services rendered could
not be identified. In September 2011, the Vienna public prosecu-
tor extended the investigations to include a tax evasion matter
for which Siemens Aktiengesellschaft Österreich is potentially
liable. In November 2016, the proceedings against Siemens
Aktiengesellschaft Österreich were stopped.
Sep 30,
Financial liabilities held for trading4
Consolidated Financial Statements 87
88
Siemens is in the course of its normal business operations in-
volved in numerous Legal Proceedings in various jurisdictions.
These Legal Proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages,
equitable remedies or criminal or civil sanctions, fines or dis-
gorgement of profit. In individual cases this may also lead to
formal or informal exclusion from tenders or the revocation or
loss of business licenses or permits. In addition, further Legal
Proceedings may be commenced or the scope of pending Legal
Proceedings may be expanded. Asserted claims are generally
subject to interest rates.
Some of these Legal Proceedings could result in adverse decisions
for Siemens that may have material effects on its financial position,
the results of its operations and/or its cash flows in the respective
reporting period. At present, Siemens does not expect any matters
not described in this Note to have material effects on its financial
position, the results of its operations and/or its cash flows.
For Legal Proceedings information required under IAS 37, Provi-
sions, Contingent Liabilities and Contingent Assets is not dis-
closed if the Company concludes that disclosure can be expected
to seriously prejudice the outcome of the matter.
NOTE 22 Additional disclosures
on financial instruments
Derivatives designated in a hedge accounting relationship4
Financial liabilities
The following table discloses the carrying amounts of each cate-
gory of financial assets and financial liabilities:
Loans and receivables¹
Cash and cash equivalents
Derivatives designated in a hedge accounting relationship
Financial assets held for trading
Available-for-sale financial assets²
Financial assets
Financial liabilities measured at amortized cost³
(in millions of €)
9,582
639
3,211
10,946
19,071
62
DEFINED CONTRIBUTION PLANS AND STATE PLANS
The amount recognized as expense for defined contribution plans
amounts to €686 million and €676 million in fiscal 2017 and 2016,
respectively. Contributions to state plans amount to €1,450 mil-
lion and €1,423 million in fiscal 2017 and 2016, respectively.
Employer contributions expected to be paid to defined benefit
plans in fiscal 2018 are €826 million. Over the next ten fiscal
years, average annual benefit payments of €1,843 million and
€1,908 million, respectively, are expected as of September 30,
2017 and 2016. The weighted average duration of the DBO for
Siemens defined benefit plans was 13 years as of September 30,
2017 and 14 years as of September 30, 2016.
Consolidated Financial Statements
Future cash flows
Virtually all equity securities have quoted prices in active markets.
The fair value of fixed income securities is based on prices pro-
vided by price service agencies. The fixed income securities are
traded in highly liquid markets and almost all fixed income securi-
ties are investment grade. Alternative investments mostly include
hedge funds; additionally, private equity and real estate invest-
ments are included. Multi strategy funds mainly comprise abso-
lute return funds and diversified growth funds that invest in vari-
ous asset classes within a single fund and aim to stabilize return
and reduce volatility. Derivatives predominantly consist of finan-
cial instruments for hedging interest rate risk and inflation risk.
28,809
82
27,668
928
811
Other assets
465
578
Cash and cash equivalents
497
Total
290
Consolidated Financial Statements
Asset
2,022
9,253
1,877
1,611
1,517
4,249
Total
NOTE 17 Provisions
Other
losses and risks
Warranties
Thereof non-current
Balance as of October 1, 2016
(in millions of €)
retirement
(22,418)
obligations
675
Derivatives
2,028
As a significant risk, the Company considers a decline in the
plans' funded status due to adverse developments of plan assets
and/or defined benefit obligations resulting from changing pa-
rameters. Accordingly, Siemens implemented a risk management
concept aligned with the defined benefit obligations (Asset Lia-
bility Matching). Risk management is based on a worldwide de-
fined risk threshold (value-at-risk). The concept, the value at risk
and the asset development including the investment strategy are
monitored and adjusted on an ongoing basis under consultation
of senior external experts. Independent asset managers are se-
lected based on quantitative and qualitative analysis, which in-
cludes their performance and risk evaluation. Derivatives are
used to reduce risks as part of risk management.
Asset Liability Matching Strategies
Consolidated Financial Statements 81
As in prior year, sensitivity determinations apply the same meth-
odology as applied for the determination of the post-employ-
ment benefit obligation. Sensitivities reflect changes in the DBO
solely for the assumption changed.
The DBO effect of a 10% reduction in mortality rates for all ben-
eficiaries would be an increase of €1,103 million and €1,395 mil-
lion, respectively, as of September 30, 2017 and 2016.
(1,858)
2,107
Disaggregation of plan assets
(1,433)
(105)
113
(96)
102
Sep 30, 2016
decrease
3,174
(2,774)
increase
1,620
1,696
Sep 30,
2016
2017
Multi strategy funds
3,622
4,016
Alternative investments
10,899
9,823
Corporate bonds
(in millions of €)
5,496
Government bonds
16,395
15,230
Fixed income securities
5,206
4,716
Equity securities
5,407
1,593
Order related
5,087
NOTE 19 Additional capital disclosures
dividend, in total representing approximately €3.0 billion in ex-
pected payments. Payment of the proposed dividend is contingent
upon approval at the Shareholders' Meeting on January 31, 2018.
Other includes transaction-related and post-closing provisions in
connection with portfolio activities as well as provisions for Legal
Proceedings, as far as the risks that are subject to such Legal
Proceedings are not already covered by project accounting. Pro-
visions for Legal Proceedings amounted to €437 million and
€430 million as of September 30, 2017 and 2016, respectively.
present value discount of €359 million and €206 million, respec-
tively, reflecting the assumed continuous outflow of the total
expected payments until the 2060's (2070's in fiscal 2016). In-
creased discount rates decreased the carrying amount of the
provision by €543 million as of September 30, 2017, mainly due
to a change of the applied yield curve in order to more specifically
reflect interest rate expectations, particularly regarding long-
term interest rates; declined discount rates increased the carry-
ing amount by €355 million as of September 30, 2016. The pro-
vision was decreased by €312 million as of September 30, 2017,
mainly due to reduced assumed inflation rates, and €170 million
as of September 30, 2016, due to reduced cost estimates.
Consolidated Financial Statements 83
As of September 30, 2017 and 2016, the provision totals €697 mil-
lion and €1,551 million, respectively, and is recorded net of a
storage, transport to and final storage of the radioactive waste.
This
process will be supported by continuing engineering studies
and radioactive sampling under the supervision of German fed-
eral and state authorities. The decontamination and disassembly
are planned to continue until 2018, whereas final waste condi-
tioning and packaging is planned to continue until the 2020's.
Thereafter, the Company is responsible for intermediate storage
of the radioactive materials until they are transported and
handed over to a final storage facility. With respect to the Hanau
facility, the asset retirement has been completed and inter-
mediate storage has been set up. On September 21, 2006, the
Company received official notification from the authorities that
the Hanau facility has been released from the scope of applica-
tion of the German Atomic Energy Act and that its further use is
unrestricted. The ultimate costs of the remediation are contin-
gent on the decision of the federal government on the location
of the final storage facilities and the date of their availability.
Several parameters relating to the development of a final storage
facility for radioactive waste are based on the assumptions for
the so called Schacht Konrad final storage. Parameters related to
the life-span of the German nuclear reactors assume a phase-out
until 2022. The valuation uses assumptions to reflect the current
and detailed cost estimates, price inflation and discount rates as
well as a continuous outflow until the 2060's related to the costs
for dismantling as well as intermediate and final storage. The
estimated cash outflows related to the asset retirement obliga-
tion could alter significantly if political developments affect the
government's timeline to finalize the so called Schacht Konrad.
For discounting the cash outflows, the Company uses current
interest rates as of the balance sheet date.
796
Environmental clean-up costs relate to remediation and environ-
mental protection liabilities which have been accrued based on
the estimated costs of decommissioning facilities for the produc-
tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
many (Hanau facilities), as well as a nuclear research and service
center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
2017, parts of the regulation for nuclear waste disposal were
amended by way of law ("Gesetz zur Neuordnung der Verantwor-
tung in der kerntechnischen Entsorgung"), Siemens is not covered
by these regulations and consequently continues to adhere to the
German Atomic Energy Act ("deutsches Atomgesetz"), which
states that when a nuclear facility is closed, the resulting radioac-
tive waste must be collected and delivered to a government-de-
veloped final storage facility. In this regard, the Company has
developed a plan to decommission the Hanau and Karlstein facil-
ities in the following steps: asset retirement (including clean-out,
decontamination and disassembly of equipment and installa-
tions, decontamination of the facilities and buildings), waste con-
ditioning and packaging of nuclear waste, as well as intermediate
Warranties mainly relate to products sold. Order related losses
and risks are provided for anticipated losses and risks on uncom-
pleted construction, sales and leasing contracts.
Except for asset retirement obligations, the majority of the Com-
pany's provisions are generally expected to result in cash out-
flows during the next one to 15 years.
4,579
8,826
1,603
664
743
759
The Company is subject to asset retirement obligations related to
certain items of property, plant and equipment. Such asset retire-
ment obligations are primarily attributable to environmental
clean-up costs and to costs primarily associated with the removal
of leasehold improvements at the end of the lease term.
1,832
750
(in millions of €)
Sep 30,
2016
22,607
(22,531)
(1,293)
(1,242)
Less: Current available-for-sale financial assets
Net debt
(8,375) (10,604)
Less: Cash and cash equivalents
6,206
24,761
2017
5,447
26,777
Short-term debt and current maturities
of long-term debt
Dividends paid per share were €3.60 and €3.50, respectively, in fis-
cal 2017 and 2016. The Managing Board and the Supervisory Board
propose to distribute a dividend of €3.70 per share entitled to the
As of September 30, 2017 and 2016, total authorized capital of
Siemens AG is €618.6 million nominal, issuable in installments
based on various time-limited authorizations, by issuance of up
to 206.2 million registered shares of no par value. In addition, as
of September 30, 2017 and 2016, Siemens AG's conditional capi-
tal is €1,080.6 million nominal or 360.2 million shares. It can
primarily be used for serving convertible bonds or warrants un-
der warrant bonds that could or can be issued based on various
time-limited authorizations approved by the respective Share-
holders' Meeting.
In fiscal 2017 and 2016, Siemens repurchased 7,922,129 shares
and 4,888,596 shares, respectively. In fiscal 2017 and 2016,
Siemens transferred 15,162,691 and 4,543,673 treasury shares,
respectively. As of September 30, 2017 and 2016, the Company
has treasury shares of 34,481,120 and 41,721,682, respectively.
Siemens' issued capital is divided into 850 million registered shares
with no par value and a notional value of €3.00 per share as of
September 30, 2017 and 2016, respectively. The shares are fully
paid in. At the Shareholders' Meeting, each share has one vote and
accounts for the shareholders' proportionate share in the Compa-
ny's net income. All shares confer the same rights and obligations.
Equity
NOTE 18
Plus: Long-term debt
4,631
2,422
A key consideration of our capital structure management is to
maintain ready access to capital markets through various debt
instruments and to sustain our ability to repay and service our
debt obligations over time. In order to achieve this, Siemens in-
tends to maintain an Industrial net debt divided by EBITDA (con-
tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
proximate number of years that would be needed to cover the
Industrial net debt through continuing income, without taking
into account interest, taxes, depreciation and amortization.
Balance as of September 30, 2017
(316)
(200)
(972)
Reversals
(2,049)
(486)
(10)
(532)
(393)
Usage
3,069
585
6
658
1,820
Thereof non-current
(1,160)
(2,020)
Additions
1,252
186
5
285
777
Translation differences
(542)
(1)
(533)
Other changes
(6)
Accretion expense and effect of changes in discount rates
(137)
(24)
(3)
(33)
(77)
(1)
p9
C.2
p 127
Financial performance system
B.2
p 59
Consolidated Statements
A.4
p 11
of Comprehensive Income
C.3
p 133
Results of operations
B.3
p 60
A.2
A.3
Consolidated Statements
of Income
Additional Information
C.1
SIEMENS
Ingenuity for life
Annual Report
2017
siemens.com
Table of contents
A.
Combined Management Report
B.
Business and economic environment
C.
P 126
Responsibility Statement
Independent Auditor's Report
A.1
p2
B.1
p 58
Consolidated Financial Statements
p 17
A.1.1 The Siemens Group
C.4
Combined Management Report
The R&D activities of our Energy Management Division focus on
preparing our portfolio for changes on all voltage levels in the
world of electricity. The increasing infeed of renewable energy to
power grids requires that those grids become more flexible and
efficient, particularly with distributed generation on the rise. The
digitalization of future grids will enable intelligent grid operation
and data-driven services. Our innovations are centered on power
electronics, digitalization and grid stabilization. The development
Research and Development in our Businesses
R&D at the Power and Gas Division concentrates on developing
products and solutions for enhancing efficiency, flexibility and
economy in power generation as well as in the oil and gas indus-
try. These products and solutions include turbomachinery – pri-
marily high-performance, low-emission gas turbines for single
operation or for combined cycle power plants - and compressor
solutions for various process industries. The Division's current
technology initiative, which started in fiscal 2015, is aimed at
intensifying R & D in innovative materials, advanced manufactur-
ing methods and plant optimization. In fiscal 2017, Siemens
introduced a new 44-megawatt aeroderivative gas turbine for
mobile power generation which currently is the most powerful
mobile unit on the market. The Division announced that it
will test and validate its largest gas turbine (HL-class) under re-
al-world conditions. This will pave the way for achieving the next
level of efficiency; we aim for 63 percent efficiency near-term,
with a mid-term goal to reach 65 percent.
In fiscal 2017, we reported research and development expenses
of €5.2 billion, compared to €4.7 billion in fiscal 2016. The result-
ing R&D intensity, defined as the ratio of R&D expenses and
revenue, was 6.2%, thus above the R & D intensity of 5.9% in fiscal
2016. Additions to capitalized development expenses amounted
to €0.4 billion in fiscal 2017, compared to €0.3 billion in fiscal
2016. As of September 30, 2017, Siemens held approximately
63,000 granted patents worldwide in its continuing operations.
As of September 30, 2016, we held approximately 59,800 granted
patents. On average, we had 37,800 R&D employees in fiscal
2017.
Siemens' unit for partnership with start-ups, next47, is focusing
on three pillars: Capital, Catalyst and Create. The unit provides
capital to help start-ups expand and scale. As a catalyst, next47
can accelerate growth for start-ups by making it easy to access
and use the powerful Siemens ecosystem. And next47 serves as
the creator of next-generation businesses for Siemens by build-
ing, buying and partnering with start-ups at any stage. The
next47 unit is focused on anticipating how technologies includ-
ing 3D printing, robotics and drones, artificial intelligence and
virtual reality will impact and potentially disrupt our end markets.
This intelligence enables Siemens and Siemens' customers to
grow and thrive in the age of digitalization.
Both within and beyond these focus areas, R&D activities are
carried out by cross-functional teams involving both our busi-
nesses and our central R&D department Corporate Technology
(CT). In addition, we work closely with scholars from leading
universities and research institutions. These partnerships, along
with close collaborations with start-up companies and the use of
crowd innovation methods, are an important part of Siemens'
open innovation concept.
> We also invest in industrial cyber security - a key enabler for
the digitalization of industries as well as a growing source of
competitive advantage - and test the emerging blockchain
technology in various application scenarios.
> The growing connectivity of field devices gives rise to the In-
dustrial Internet of Things (IoT), and hence to the potential
for massively distributed industrial systems. With MindSphere,
we have introduced an open, cloud-based operating system
for this IIoT. MindSphere allows our businesses, customers
and partners to develop and deploy applications and digital
services based on data gathered from assets, such as a prod-
uct or in the field, e.g. to predict equipment failure, increase
asset availability, improve product designs or increase product
or plant performances.
> We are continuously adopting and developing foundational
digital technologies, such as data analytics and artificial intel-
ligence or modeling and simulation technologies. The former
are essential to generate value and impact out of the growing
amount of data generated in the field; the latter enable the
creation of a digital twin for physical products, systems and
infrastructures, e.g. for the purpose of virtually testing and
commissioning a system prior to building it.
> An example of a disruptive development is electrically pow-
ered flight. In cooperation with Airbus, Siemens intends to
demonstrate by 2020 that electricity can be used to power
large planes.
> Future mobility systems will be increasingly electrified and
connected. Amongst others, our R&D efforts are aiming for
ubiquitous electric charging as well as the digitally supported
integration and management of multi-modal transportation
systems.
> Automation technologies continue to evolve. Our R & D activ-
ities aim to reduce engineering efforts, enhance flexibility and
increase our customers' productivity.
> Turbo machinery, switching gear and other power equipment
stand to benefit from novel materials enabling higher gener-
ation efficiency and fewer losses in power transmission and
distribution. In particular, the ability to print parts with novel
topologies using 3D printers embedded in an integrated, dig-
ital tool chain is a key innovation driver.
units. These are also key ingredients for distributed energy
systems, which combine onsite generation with local con-
sumption to offer secure power supply at lower cost.
4 Combined Management Report
The stable operating of power grids in the presence of inter-
mittent, renewable power generation depends, amongst
other factors, on further advances in power electronics as well
as the availability of economically viable large energy storage
Our research and development (R&D) activities are ultimately
geared to developing innovative, sustainable solutions for our
customers - and the Siemens businesses - and simultaneously
safeguarding our competitiveness. To this end, we are focusing
our R&D activities on a number of selected technologies and in-
novation fields. Examples include the following:
A.1.1.3 RESEARCH AND DEVELOPMENT
The Financial Services (SFS) Division supports its customers'
investments with leasing solutions and equipment, project and
structured financing in the form of debt and equity investments.
Based on its comprehensive financing know-how and specialist
technology expertise in the areas of Siemens businesses, SFS
provides financial solutions for Siemens customers as well as
other companies, and also manages financial risks of Siemens.
SFS operates the Corporate Treasury of the Siemens Group,
which includes managing liquidity, cash and interest risks as well
as certain foreign exchange, credit and commodities risks. Busi-
ness activities and tasks of Corporate Treasury are reported in
the segment information within Reconciliation to Consolidated
Financial Statements.
of the combined entity. For more information on the merger, see
→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The
merged businesses are highly complementary regarding global
footprint, existing product portfolios and technologies. SGRE of-
fers wind turbines utilizing various pitch and speed technologies,
and is active in the development, construction and sale of wind
farms. The current product offering comprises geared as well as
direct drive turbines, both for onshore and offshore application.
In addition, SGRE provides services for the management, opera-
tion and maintenance of wind farms. Its primary customers are
large utilities and independent power producers. SGRE's revenue
mix may vary from reporting period to reporting period depend-
ing on the mix of onshore and offshore projects in the respective
periods. The share of renewable energy in the global energy mix
will continue to increase, but the trend toward evaluating com-
peting power sources using life-cycle costs will continue to put
pressure on the prices of wind power providers. To address this
trend, SGRE focuses on improving its supply chain and signifi-
cantly decreasing costs by leveraging synergies in the manufac-
turing footprint subsequent to the merger. A higher share of re-
newable energy in electrical grids also increases the demand for
predictability of the energy supply and increased capability for
integrating it into the overall energy mix, which SGRE addresses
by pursuing innovation areas such as digitalization.
Siemens Gamesa Renewable Energy (SGRE) - In April 2017,
Siemens contributed its wind power business, including service,
into the publicly listed company Gamesa Corporación Tecnológica,
S.A., Spain (Gamesa), and in return received newly issued shares
of the combined entity Siemens Gamesa Renewable Energy, S.A.,
Spain. Siemens as majority shareholder holds 59% of the shares
Healthineers is one of the world's largest suppliers of technol-
ogy to the healthcare industry and a leader in diagnostic imaging
and laboratory diagnostics. It provides medical technology and
software solutions as well as clinical consulting services, sup-
ported by a complete set of training and service offerings. This
comprehensive portfolio supports customers along the contin-
uum of care from prevention and early detection to diagnosis,
treatment and follow-up care. Its business activities are to a cer-
tain extent resilient to short-term economic trends as large por-
tions of its revenue stem from recurring business. They are, how-
ever, dependent on regulatory and public policy developments
around the world. The global healthcare market served by
Healthineers is transforming, putting healthcare providers under
pressure for better outcomes at lower cost. Drivers of this trans-
formation include increasing societal resistance to healthcare
costs, payers becoming more professional, a shift to value-based
reimbursement, chronic disease burdens, and rapid scientific
progress. As a result, healthcare providers are consolidating into
networked structures, resulting in larger clinic and laboratory
chains often internationally - which act increasingly like large
enterprises. Applying this industrial logic to the healthcare mar-
ket can lead to systematic improvements in quality, while at the
same time reducing costs. To capture these benefits, regulatory
schemes around the world increasingly seek to shift healthcare
incentive systems away from a basis in number of procedures to
a basis in outcomes achieved. In fiscal 2017, Healthineers was
organized into six business areas: Diagnostic Imaging, Laboratory
Diagnostics, Advanced Therapies, Ultrasound, Point of Care Diag-
nostics and Services. During fiscal 2017, the Managing Board of
Siemens AG announced that it intends to publicly list a minority
stake in the Healthineers business in the first half of calendar
2018, depending on market conditions.
-
As part of the above-mentioned memorandum of understanding
to combine Siemens' mobility businesses with Alstom, Process
Industries and Drives will transfer its rail traction drives business
to the combined company.
industries served by the Division generally shows a delayed re-
sponse to changes in the overall economic environment. Even so,
the Division is strongly dependent on investment cycles in its key
industries. In commodity-based process industries such as oil and
gas or mining, these cycles are driven mainly by commodity price
fluctuations rather than changes in produced volumes.
Combined Management Report 3
The Process Industries and Drives Division offers a comprehen-
sive product, software, solution and service portfolio for moving,
measuring, controlling and optimizing all kinds of mass flows.
With its know-how in vertical industries including oil and gas,
shipbuilding, mining, cement, fiber, chemicals, food and bever-
age, and pharmaceuticals, the Division increases productivity,
reliability and flexibility of machinery and installations along their
entire life cycle jointly with its customers. Based on data models
and analysis methods, Process Industries and Drives paves the
way together with its customers to create a "Digital Enterprise,"
from process simulation via plant design and documentation
through to asset and performance management. The Division's
offerings include an integrated portfolio with products, compo-
nents and systems such as couplings, gears, motors and convert-
ers, process instrumentation systems, process analytics devices,
wired and wireless communication, industrial identification and
power supplies up to systems level with decentralized control sys-
tems, industrial software as well as customized, application-spe-
cific systems and solutions. It also sells gears, couplings and drive
solutions to other Siemens Divisions and Strategic Units, which
use them in rail transport and wind turbines. Demand within the
5
of new technologies, e.g. Process Bus communication for appli-
cations in energy management or NCITS (Non-Conventional
Instrument Transformer), enables a cost-effective investment
and economic operation of digital substations as well as a secure
and reliable grid operation.
The Mobility Division's R&D strategy aims to fulfill customers'
demand for maximum availability, high throughput and en-
hanced
passenger experience. Although there is a growing need
for mobility worldwide, possibilities for building new roads and
railways are limited. Meeting the demand for mobility requires
intelligent solutions that make transport more efficient, safe and
environmentally friendly. Decarbonization and seamlessly con-
nected intermodal (e)mobility are key factors for the future of
transportation. Reflecting this, Mobility's R&D activities empha-
size digitalization in developing state-of-the art mobility solu-
tions for rail and road combined with new business models such
as availability-as-a-service (AaaS) via our data analytics platform
Railigent and other MindSphere based applications. Together
with next47, Mobility invests in the future mobility landscape
together with other partners in areas such as sensor technolo-
gies, connectivity/loT solutions, software for intermodal trans-
port and additive manufacturing.
R&D activities at the Digital Factory Division are aimed at fur-
ther enhancing speed, flexibility, quality and efficiency within
companies of the discrete manufacturing industry. The key lever
is to automate and digitalize the entire value-added process -
from product development through production design to actual
production - with the highest possible IT security. The focus of
research lies on further developing the Digital Enterprise portfo-
lio. This involves preparing an integrated digital twin for physical
products, production processes and production facilities and
then implementing these facilities and efficiently manufacturing
the products in the real world. This close dovetailing between the
virtual and real worlds enables customers to simulate and opti-
mize their products, their machinery and facilities at an early
stage, while assuring high-performance production. The acquisi-
Consolidated Statements
8 Combined Management Report
Following a decline in market volume in fiscal 2016, the market
served by SGRE grew in fiscal 2017 due to higher demand in both
the onshore and the offshore markets, with the latter growing
faster. On a regional basis, growth was driven by the U.S. Market
growth in the region Asia, Australia, was held back by lower de-
mand in China, where the largest national wind market in the
world remains largely closed to foreign manufacturers, as well as
by a halt in the Indian market during the fiscal year following the
introduction of an auction system for new power generation con-
tracts. Market volume in the region Europe, C.I.S., Africa, Middle
East came in slightly lower year-over-year. The competitive situ-
ation in wind power differs in the two major market segments.
In the markets for onshore wind farms, competition is widely
dispersed without any one company holding a dominant share of
the market, while markets for offshore wind farms continue to be
served by a few experienced players. Consolidation is moving
forward in both on- and offshore segments, including exits of
smaller players. The key drivers of consolidation are increasing
price pressure as well as technology challenges and market ac-
cess challenges, which increase development costs and the im-
portance of risk-sharing in offshore wind power. Market develop-
ment continues to depend strongly on energy policy, including
tax incentives in the U.S. and regulatory frameworks in Germany
and the U.K. With continued technological progress and cost re-
duction, dependency on subsidy schemes is expected to decrease
even further.
Markets served by Healthineers grew moderately in fiscal 2017
driven by growth in Latin America and Asia, Australia, including
further stabilization in China. In contrast, market volume in Eu-
rope and the U.S. remained near prior-year levels. The diagnostic
imaging market segment grew moderately. While demand for
imaging procedures continued to grow, this trend was partly off-
set by price pressure on new purchases and increased utilization
rates for installed systems. The markets for ultrasound and in-vi-
tro diagnostics grew even more strongly. The development in the
ultrasound market segment benefits from a wider range of appli-
cations and increasing patient access to diagnostic imaging tech-
nology. The market for in-vitro diagnostics is expanding due to
population and income growth in emerging markets and the
rising importance of diagnostics in improving healthcare quality.
Growth in the area of molecular diagnostics was particularly
strong, driven by technological advances and a broader spectrum
of applications. For the healthcare industry as a whole, the trend
towards consolidation continues. Competition among the lead-
ing companies is strong, including with respect to price.
market expertise. Most major competitors have established
global bases for their businesses. In addition, the competition has
become increasingly focused on technological improvements
and cost position.
Market volume for the markets addressed by the Process Indus-
tries and Drives Division grew moderately in fiscal 2017. This
was due mainly to improved market conditions in global manu-
facturing production, particularly in China. Consumer-related
industries, such as food and beverage and pharmaceuticals, con-
tinued on their growth path. Growth in the Division's markets
overall continued to be held back by weakness in commodity-re-
lated industries such as oil and gas, metals and mining. Following
a recovery in raw materials prices at low levels in the first half of
fiscal 2017 and stable price development thereafter, the environ-
ment for capital expenditures began to improve towards the end
of the fiscal year in mining, oil and gas and, to a lesser extent, the
metals industry. The Division's competitors can be grouped into
two categories: multinational companies that offer a relatively
broad portfolio and companies that are active only in certain geo-
graphic or product markets. Consolidation is taking place mostly
in particular market segments and not across the broad base of
the Division's portfolio. In particular, consolidation in solu-
tion-driven markets is going in the direction of in-depth niche
Markets served by the Digital Factory Division returned to growth
in fiscal 2017. Within its main markets, global manufacturing pro-
duction grew moderately in real terms, driven mainly by consum-
er-related industries such as electronics and automotive and by
demand from infrastructure-related production industries.
Growth in the machine-building and equipment industries bene-
fited from a growing investment propensity. On a geographic
basis, the Division's markets grew in all three reporting regions,
with the highest growth rates in the region Asia, Australia, par-
ticularly including China, where strong market growth also ben-
efited from governmental investment programs. The competition
for Digital Factory's business activities can be grouped into two
categories: multinational companies that offer a relatively broad
portfolio and companies that are active only in certain geo-
graphic or product markets.
and Africa was held back by ongoing uncertainties related to
budget constraints and political climates. In the Americas region,
stable investment activities were driven by demand for urban
transport, especially in the U.S. Within the Asia, Australia region,
Chinese markets saw ongoing investments in high-speed trains,
urban transport and rail infrastructure, while India continues to
invest in modernizing the country's transportation infrastruc-
ture. The Division's principal competitors are multinational com-
panies. Consolidation among Mobility's competitors is continu-
ing. This has already led to the formation of a strong market
leader in China, which is changing global market dynamics.
Combined Management Report 7
Overall, markets for the Mobility Division remained strong in fis-
cal 2017, with different dynamics among the regions. Market
development in the Europe, C.I.S., Africa, Middle East region was
characterized by continuing awards of mid-size and large orders,
particularly in Germany and the U.K. Demand in the Middle East
Markets for the Building Technologies Division grew solidly in
fiscal 2017. Growth was driven by solid demand from the U.S. and
Asia. Within the Europe, C.I.S., Africa, Middle East region, mar-
kets in the Middle East grew more strongly than the region over-
all. The recovery of the European market was weaker than ex-
pected but included stable growth in Germany. The Division's
principal competitors are multinational companies. Its solutions
and services business also competes with system integrators and
small local companies. The Division faces continuing price pres-
sure, particularly in its solutions business, due to strong compe-
tition from system houses and some larger competitors.
Global markets addressed by the Energy Management Division
grew slightly in fiscal 2017. Weaknesses in the Middle East and
global commodity markets including oil and gas, metals and min-
ing were offset by growth in transmission interconnections, in-
telligent energy and storage solutions and critical infrastructure
such as data centers. North America and Asia were key growth
contributors. Markets in Europe showed stable development,
with pockets of growth such as integration of renewable energy
sources into the grid. Competitors of the Energy Management
Division consist mainly of a small number of large multinational
companies. International competition is increasing from manu-
facturers in emerging countries including China, India and Korea.
In a highly competitive market environment, markets served by
the Power and Gas Division declined significantly in fiscal 2017.
This development was again particularly evident in the market for
steam turbines where volume shrank substantially year-over-year
due to an ongoing shift from coal-fired to gas-fired and renew-
able power generation and due to emission regulation such as in
China. Volume in the market segment for large gas turbines also
declined substantially due mainly to delays of large projects in
the Middle East and customer restraint due to ongoing uncer-
tainty regarding changes in the market design and weak power
demand growth. Volume in compression markets remained on
a low level as customers continued to hold back investments.
The Division's competition consists mainly of two groups: a rela-
tively small number of equipment manufacturers, some with
very strong positions in their domestic markets, and on the other
hand a large number of engineering, procurement and construc-
tion contractors. The gas turbine market is experiencing overca-
pacity among OEMs and engineering, procurement and con-
struction contractors, which is leading to market consolidation.
The Digital Factory Division offers a comprehensive product
portfolio and system solutions used in manufacturing industries,
complemented by product lifecycle and data-driven services.
These offerings enable customers to optimize entire value chains
from product design and development to production and ser-
vices. This is supplemented by the MindSphere platform that
connects machines and physical infrastructure to the digital
world. With its comprehensive offering, the Division supports
manufacturing companies with their transformation towards the
"Digital Enterprise," resulting in increased flexibility and effi-
ciency of production processes and reduced time to market for
new products. The Division supplies customers mainly in discrete
and hybrid manufacturing industries. Changes in the level of cus-
tomer demand are strongly driven by macroeconomic cycles, and
can lead to significant short-term variation in the Division's prof-
itability. In the second quarter of fiscal 2017, Digital Factory fur-
ther strengthened and expanded its industrial software business
by acquiring Mentor Graphics Corporation (Mentor Graphics),
a U.S.-based provider of electronic design automation software.
For more information on the acquisition of Mentor Graphics, see
→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. In
the first quarter of fiscal 2017, Digital Factory contributed its eCar
business to a newly formed joint venture, Valeo Siemens eAuto-
motive; Siemens' share in the joint venture is reported within
Centrally managed portfolio activities (CMPA).
A.1.2.2 MARKET DEVELOPMENT
Uncertainties mainly stemming from (geo) political risks had very
limited effects on the global economy: International tensions
with North Korea and Iran increased; negotiations regarding the
U.K. leaving the European Union are complicated and separatist
tensions in Spain added significant uncertainty. These develop-
ments potentially weigh on investment decisions but this barely
materialized in fiscal 2017.
From a structural perspective, all components of GDP – private
consumption, fixed investment, trade and to a lesser extent
government expenditure - contributed to growth, giving the
acceleration of the global economy a solid and well balanced
foundation.
-
The global upswing was broad-based on a regional and structural
basis. In both emerging markets and advanced countries, eco-
nomic activity gained strength. Growth forecasts for 2017 im-
proved in particular for Europe from 1.5% at the beginning of
fiscal 2017 to 2.3% and for China from 6.3% to 6.8%. The only
negative surprise was the Middle East region. The 2017 growth
projection decreased to 1.4% after starting at 2.8% at the begin-
ning of fiscal 2017. Lower oil prices and oil production cuts had
bigger impact than anticipated.
A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
The global economy started to accelerate at the beginning of
fiscal 2017 and gained further momentum in the subsequent
quarters. Expansion of world gross domestic product (GDP),
which in 2016 was the weakest since the global financial crisis at
2.5%, is projected to rise to 3.1% in 2017 (based on market ex-
change rates).
A.1.2 Economic environment
The R&D efforts of Siemens Gamesa Renewable Energy are
focused on innovative products and solutions that allow it to take
the lead in wind power performance, improve competitiveness,
and build a stronger business case for its customers. Using digi-
talization, among other efforts, includes more intelligent moni-
toring and analysis of turbine conditions as well as smart diag-
nostic services.
to outcome-focused care. A major step forward is the Digital Eco-
system platform to link healthcare providers and solution provid-
ers with one another as well as to bring together their data, ap-
plications and services. Users gain new insights through data
analytics and use it to network with their peers.
Combined Management Report
6
Healthineers' R&D activities are strongly focused on the devel-
opment of innovative product lines which use new technologies
such as artificial intelligence. This will, amongst other results,
enable faster handling of medical information and can lead to
more precise and personalized clinical decisions. It also promises
added value: New computer algorithms can detect hidden pat-
terns in the data and give physicians valuable support for diagno-
sis and therapy decisions. Besides constantly innovating its port-
folio, Healthineers continuously extends existing products and
solutions. Diagnostics performance for customers improves with
systems such as the recently launched Atellica. This laboratory
diagnostics platform transports samples ten times faster than pre-
vious systems and it is also more flexible. Expanding the innova-
tion map beyond the established portfolio, and investing in new
ideas, strengthen the ability to tap opportunities in new fields.
The services business is expanding beyond product related ser-
vices by adding a digital services portfolio and increasing enter-
prise transformation services to help customers in their transition
The R & D activities in the Process Industries and Drives Division
are continuously concentrating on the digital transformation of
products, solutions and services, especially via focused integra-
tion of information and communication technologies. The digital
enhancement of automation and drives platforms is a key en-
abler for additional customer value for all verticals in the process
industry, such as oil & gas, chemicals and pharmaceuticals. Exam-
ples are connecting motors to MindSphere and Digital Enterprise
for process industries. Increased operational efficiency and digi-
tal services such as condition monitoring or predictive mainte-
nance are examples for benefits in process plant operation. The
digitalization of our process automation and industrial commu-
nication portfolio includes a holistic industrial security concept.
Another central objective of our R&D activities is to further in-
crease energy efficiency while reducing the consumption of raw
materials and cutting emissions.
tion of Mentor Graphics further extends the possibilities of the
digital twin: In addition to designing and testing the mechanics
and software of new products, it is now also possible to develop
and simulate electrical and electronic systems in an integrated
way. A further core area of development is MindSphere, the
open, cloud-based operating system for the Industrial Internet of
Things (IoT). MindSphere is used as a basis for innovative appli-
cations (MindApps) and new digital services based on these
apps, such as predictive maintenance. Open application pro-
gramming interfaces (APIs) enable MindSphere users to easily
and efficiently develop and sell their own apps. MindSphere
therefore makes it possible for customers to clearly expand their
portfolios and tap into the additional business potential offered
by their installed base. A network of partners in the fields of app
development, connectivity and technology further enriches the
open ecosystem.
The partly estimated figures presented here for GDP and fixed
investments are based on an IHS Markit report dated Octo-
ber 15, 2017.
ject to Alstom's shareholders' approval, anticipated in the second
quarter of calendar 2018. The transaction is also subject to clear-
ance from relevant antitrust and regulatory authorities. Closing
of the transaction is expected at the end of calendar 2018.
R&D work at the Building Technologies Division focuses on op-
timizing comfort and operational and energy efficiency in build-
ings and infrastructures, protecting against fire and security
hazards, and minimizing related risks. We drive the digital trans-
formation of the building industry by creating open-standards-
based Building Information Modeling (BIM)-ready products and
services. Digitalization improves productivity across the entire
building life cycle, enabling new product ordering and configu-
ration options through our online store Siemens Industry Mall.
New mobile device apps close the feedback loop to building oc-
cupants, enabling increased comfort and safety with lower en-
ergy consumption. The digitalization portfolio will expand on the
basis of Siemens MindSphere.
The Mobility Division combines all Siemens businesses in the
area of passenger and freight transportation, including rail vehi-
cles, rail automation systems, rail electrification systems, road
traffic technology, digital solutions and related services. The Di-
vision also provides its customers with consulting, planning, fi-
nancing, construction, service and operation of turnkey mobility
systems. Moreover, Mobility offers integrated mobility solutions
for networking of different types of traffic systems. The principal
customers of the Mobility Division are public and state-owned
companies in the transportation and logistics sectors. Markets
served by Mobility are driven primarily by public spending. Cus-
tomers usually have multi-year planning and implementation
horizons, and their contract tenders therefore tend to be inde-
pendent of short-term economic trends.
A.9
and associated material opportunities
and risks
Report on expected developments
p24
A.8
Non-financial matters
p 23
A.7
of Changes in Equity
Consolidated Statements
of the economic position
Overall assessment
B.5
p 36
p22
of Cash Flows
Consolidated Statements
Financial position
p 147
C.5
p 61
B.4
P 18
A.5
of Financial Position
Net assets position
In September 2017, Siemens and Alstom SA, France (Alstom)
signed a memorandum of understanding to combine Siemens'
mobility business including the rail traction drives business,
which is included in the Process Industries and Drives Division,
with the publicly listed company Alstom. The two businesses are
largely complementary in terms of activities and geographies.
The combined entity is expected to offer a significantly increased
range of diversified product and solution offerings to meet
multi-facetted, customer-specific needs. According to the mem-
orandum, Siemens will receive newly issued shares in the com-
bined company representing 50% of Alstom's share capital as-
suming full dilution through exercise of all potentially dilutive
securities and share-based payment plans. Further, Siemens will
receive warrants allowing it to acquire Alstom shares represent-
ing 2% of its share capital, which can be exercised earliest four
years after closing of the transaction. The transaction will be sub-
p 137
A.6
Siemens AG
p 62
A.10
The Building Technologies Division is a leading provider of au-
tomation technologies and digital services for safe, secure and
efficient buildings and infrastructures throughout their lifecycles.
The Division offers products, solutions, services and software for
fire safety, security, building automation, heating, ventilation, air
conditioning and energy management. The large customer base
is widely dispersed. It includes owners, operators and tenants for
both public and commercial buildings; building construction gen-
eral contractors; and system houses. Changes in the overall eco-
nomic environment generally have a delayed effect on the Divi-
sion's business activities. Particularly in the solutions and service
businesses, Building Technologies is affected by changes in the
non-residential construction markets with a time lag of two to
four quarters.
Combined Management Report
2
The Energy Management Division offers a wide spectrum of
software, products, systems, solutions, and services for transmit-
ting, distributing and managing electrical power and for provid-
ing intelligent power infrastructure. The Division's customers
encompass a wide range of direct customers and channel part-
ners including power providers, transmission and distribution
system operators, industrial companies, infrastructure develop-
ers, construction companies, distributors and OEMs. Its activities
across many regional and vertical markets as well as its participa-
tion in long-cycle and short-cycle businesses provide a balanced
and resilient business mix. The Division's revenue and portfolio
mix may vary across reporting periods. In particular, orders, rev-
enue and profit development can be influenced by the relative
contribution from its transmission solutions business. End cus-
tomers and OEMs use the Division's offerings to process, transmit
and manage electrical power from the source down to various
load points along multiple voltage levels. The Division's distrib-
uted, intelligent solutions for smart grids enable a bidirectional
flow of energy and information, which, among other things, is
required for integrating fluctuating renewable energy sources,
electrical storage or manageable loads. Energy Management
generally benefits from major trends and changes in global elec-
trical power systems, in particular decarbonization, decentraliza-
tion and digitalization. Decarbonization involves the buildup of
generation capacities from renewable sources and the electrifi-
cation of heat and transport sectors. Another trend is decentral-
ization - the integration of wind power, photovoltaics, biomass,
The Power Generation Services Division offers a comprehensive
set of services for products, solutions and technologies of the
Power and Gas Division, covering performance enhancements,
maintenance services, customer training and professional con-
sulting. Financial results of the Power and Gas Division include
the financial results of the Power Generation Services Division,
which itself is not a reportable segment. Based on this business
model, all discussions of the services business for Power and Gas
concern the Power Generation Services Division.
execution of large projects increasingly requires financing by the
original equipment manufacturer (OEM), including equity partic-
ipation, particularly in Latin America, the Middle East and Africa.
For the Division, this role is fulfilled by Financial Services, which
can offer customers a range of financing and equity options
backed by domain know-how. In addition, the markets of the
Division are strongly affected by changes in national energy reg-
ulations, such as support of renewable energy, the security of
supply through capacity markets or strategic reserve capacity,
carbon pricing and climate change targets, and energy and elec-
tricity market design. After years of strong public sector support
for renewable energy, the cost of energy and electricity as a com-
petitive factor is gaining more relevance in investment decisions
involving choices between renewable and fossil generation.
The Power and Gas Division offers a broad spectrum of products
and solutions for generating electricity from fossil fuels and for
producing and transporting oil and gas. The portfolio includes
gas turbines, steam turbines, generators to be applied to gas or
steam power plants, compressor trains, integrated power plant
solutions, and instrumentation and control systems for power
generation. Customers include public utilities and independent
power producers; companies in engineering, procurement and
construction that serve utilities and power producers; sovereign
and multinational oil companies; and industrial customers that
generate power for their own consumption (prosumers). Due to
the broad range of its offerings, the Division's revenue mix may
vary from reporting period to reporting period depending on the
share of revenue attributable to products, solutions and services.
Because typical profitability levels differ among these three rev-
enue sources, the revenue mix in a reporting period accordingly
affects Division profit for that period. Several trends are affecting
the Division's businesses. The ongoing strong growth in demand
for renewable power generation and the associated volatility in
power generation shift market demand from fossil baseload
generation to highly flexible, highly efficient and affordable
gas power plants with low emissions, in particularly in Europe,
China, and the U.S. A second trend is that the development and
A.1.1.2 BUSINESS DESCRIPTION
Our reportable segments may do business with each other, lead-
ing to corresponding orders and revenue. Such orders and reve-
nue are eliminated on the Group level.
Siemens has the following reportable segments: the Divisions
Power and Gas; Energy Management; Building Technologies;
Mobility; Digital Factory and Process Industries and Drives;
as well as the Strategic Units Healthineers and Siemens Gamesa
Renewable Energy, which together form our Industrial Business.
The Division Financial Services (SFS) supports the activities of
our Industrial Business and also conducts its own business with
external customers. As "global entrepreneurs” our Divisions and
Strategic Units carry business responsibility worldwide, including
with regard to their operating results.
We are a technology company with core activities in the fields of
electrification, automation and digitalization, and activities in
nearly all countries of the world. Siemens comprises Siemens AG,
a stock corporation under the Federal laws of Germany, as the
parent company and its subsidiaries. Our Company is incorpo-
rated in Germany, with our corporate headquarters situated in
Munich. As of September 30, 2017, Siemens had around 372,000
employees (part time employees are included proportionally).
A.1.1.1 ORGANIZATION AND BASIS
OF PRESENTATION
A.1 Business and economic environment
Management Report
storage and other intermittent or distributed energy resources
into highly efficient and reliable power networks. The digitaliza-
tion trend involves providing intelligent solutions for connectiv-
ity, the management of complex energy networks, and services
that are enabled by digital technologies.
Takeover-relevant information
A.
Notes and forward-looking
statements
Corporate Governance
Report of the Supervisory Board
Financial Statements
Notes to Consolidated
p 64
B.6
Combined
p 53
A.11
Compensation Report
P 39
216
(in thousands)
66
65
Sales and marketing
223
2016
223
Manufacturing and services
2016
2017
66
2017
216
65
35
38
33
38
33
36
36
35
363
349
363
349
Earnings per share
NOTE 27
Research and development
Administration
and general services
Fiscal year
96 Consolidated Financial Statements
operations
(shares in thousands; earnings per share in €)
Income from continuing operations
Less: Portion attributable to
non-controlling interest
6,171,430
Resulting Matching Shares
Fiscal year
2016
Severance charges amount to €466 million and €598 million in
fiscal 2017 and 2016, respectively. Item Expenses relating to
post-employment benefits includes service costs for the period.
Personnel costs for continuing and discontinued operations
amount to €29,622 million and €28,232 million, respectively, in
fiscal 2017 and 2016.
Employees were engaged in (averages; part time employees are
included proportionally):
2017
Outstanding, beginning of period
1,767,980
Granted
Vested and fulfilled
Forfeited
Settled
710,356
(473,113) (538,837)
(106,160)
(49,011)
1,655,780
785,000
(95,658)
Outstanding, end of period
1,850,052
(38,304)
1,767,980
The weighted average fair value of matching shares granted in
fiscal 2017 and 2016 amounting to €92.68 and €64.56 per share
was determined as the market price of Siemens shares less the
present value of expected dividends taking into account non-vest-
ing conditions.
SIEMENS PROFIT SHARING
The Managing Board decides annually on the issuance of a new
Siemens Profit Sharing tranche and determines the targets to be
met for the current fiscal year. At fiscal year-end, based on the
actual target achievement, the Managing Board decides in its
discretion on the amount to be transferred to the Profit-Shar-
ing-Pool; this transfer is limited to a maximum of €400 million
annually. If the Pool amounts to a minimum of €400 million after
one or more fiscal years, it will be transferred to eligible employ-
ees below senior management in full or partially through the
grant of free Siemens shares. As of September 30, 2017, €300 mil-
lion are in the Profit-Sharing-Pool. Expense is recognized pro rata
over the estimated vesting period. In November 2017, €100 mil-
lion were transferred to the Profit-Sharing-Pool; it was decided
that the Pool amounting to €400 million will be transferred to
eligible employees in March 2018.
JUBILEE SHARE PROGRAM
For their 25th and 40th service anniversary eligible employees re-
ceive jubilee shares. There were 4.26 million and 4.39 million
entitlements to jubilee shares outstanding as of September 30,
2017 and 2016, respectively.
NOTE 26 Personnel costs
Continuing
operations
Continuing and
discontinued
Fiscal year
Fiscal year
19,454
2016
Expenses relating to
post-employment benefits
1,214
1,218
29,613
28,210
40
Consolidated Financial Statements 97
NOTE 28
Segment information
Orders¹
External revenue
Intersegment Revenue
Total revenue
Fiscal year
(in millions of €)
2017
2016
2017
Fiscal year
2016
2017
Fiscal year
2016
Fiscal year
2017
2016
13,422
15,413
16,412
6,416,946
3,562
2017
3,766
Statutory social welfare contributions
6,126
5,396
(133)
(134)
Income from continuing operations
attributable to shareholders of Siemens AG
Weighted average shares outstanding - basic
Effect of dilutive share-based payment
Effect of dilutive warrants
5,993
5,262
812,180
808,686
13,591
11,228
3,392
Weighted average shares outstanding - diluted
829,164
819,914
(from continuing operations)
7.38
6.51
Basic earnings per share
Diluted earnings per share
(from continuing operations)
7.23
6.42
Fiscal year
(in millions of €)
2017
2016
Wages and salaries
24,632
23,431
and expenses for optional support
Non-vested, end of period
58
(27,501)
70
(174)
(442)
Financial liabilities measured
at amortized cost
1,662
168
Financial assets and financial
liabilities held for trading
(163)
(211)
Amounts presented include foreign currency gains and losses
from realizing and measuring financial assets and liabilities; in
particular, fiscal 2017 includes net gains from financial liabilities
measured at amortized cost due to foreign currency changes on
issued bonds denominated in US$ due to an appreciation of the
EUR as well as an increase in nominal amounts outstanding due
to newly issued US$ bonds, which are offset in the income state-
ment by compensating measurement effects on the correspond-
ing internal foreign currency financing transactions. Net gains
(losses) in fiscal 2017 and 2016 on financial assets and financial
liabilities held for trading consist of changes in the fair value of
derivative financial instruments, including interest income and
expense, for which hedge accounting is not applied.
Interest income (expense) includes interest from financial assets
and financial liabilities not at fair value through profit or loss:
(in millions of €)
Total interest income on financial assets
Total interest expenses on financial liabilities
Fiscal year
2017
2016
1,467
1,291
(4)
(19)
(5)
Cash and cash equivalents
Available-for-sale financial assets
Loans and receivables
1,500
Not designated in a hedge accounting relationship
(including embedded derivatives)
1,190
1,190
In connection with cash flow hedges
305
305
Consolidated Financial Statements 89
(901)
The fair value of available-for-sale financial equity instruments
quoted in an active market is based on price quotations at the
period-end date. The fair value of debt instruments is either based
on prices provided by price service agencies or estimated by dis-
counting future cash flows using current market interest rates.
Siemens determines the fair values of derivative financial instru-
ments depending on the specific type of instrument. Fair values
of derivative interest rate contracts are estimated by discounting
expected future cash flows using current market interest rates
and yield curves over the remaining term of the instrument. In-
terest rate futures are valued on the basis of quoted market
prices, if available. Fair values of foreign currency derivatives are
based on forward exchange rates. Options are generally valued
based on quoted market prices or based on option pricing mod-
els. In determining the fair values of the derivative financial in-
struments, no compensating effects from underlying transac-
tions (e.g. firm commitments and forecast transactions) are
taken into consideration.
The Company limits default risks resulting from derivative finan-
cial instruments by generally transacting with financial institu-
tions with a minimum credit rating of investment grade. Based
on Siemens' net risk exposure towards the counterparty, the re-
sulting credit risk is taken into account via a credit valuation ad-
justment.
The unquoted equity instrument allocated to level 3 of the fair
value hierarchy relates to an investment in an offshore wind
farm. The fair value is determined based on discounted cash flow
calculations. The most significant unobservable input used to
determine the fair value is the cash flow forecast which is mainly
based on the future power generation income. This income is
generally subject to future market developments and thus price
volatility. Since a long-term power purchase agreement is in
place that mitigates price volatility, significant changes to the
cash flow forecast are unlikely and thus, no significant effects on
Other comprehensive income, net of income taxes, are expected.
Net gains (losses) of financial instruments are:
(in millions of €)
Fiscal year
2017
2016
Available-for-sale financial assets measured at fair value include
interests in Atos SE (Atos) and OSRAM Licht AG (Osram) of
€2,871 million and €2,156 million, respectively, as of Septem-
ber 30, 2017 and 2016. Unrealized pre-tax gains (losses) in fiscal
2017 and 2016 resulting from non-current available-for-sale fi-
nancial assets measured at fair value are €700 million and
€445 million, respectively. In September 2017, 18.155 million
shares in Osram representing a 17.34% stake in Osram met the
criteria for asset held for disposal classification. Those Osram
shares were previously reported as non-current available-for-sale
equity instruments and are held in Centrally managed portfolio
activities. Upon the sale of the shares for €1.2 billion in cash in
October 2017, €649 million accumulated fair value changes rec-
ognized in equity will be reclassified through Other comprehen-
sive income, net of income taxes to Net income. Siemens retains
108,414 shares in Osram to service the warrants relating to
Siemens and Osram shares.
1,500
(874)
90 Consolidated Financial Statements
153
Sep 30, 2016
Amounts set
off in the
Statement of
(in millions of €)
Financial assets
Gross
amounts
Financial
Position
Net amounts
in the
Statement of
Financial
Position
Related
amounts not
set off in the
Statement of
Financial
Position
Net
amounts
2,641
7
2,634
994
1,640
Financial liabilities - Derivative financial liabilities
538
691
5
697
OFFSETTING
Siemens enters into master netting agreements and similar
agreements for derivative financial instruments. The require-
ments to offset recognized financial instruments are usually not
met. The following table reflects financial assets and financial
liabilities that are subject to netting agreements and similar
agreements:
(in millions of €)
Financial assets
Financial liabilities - Derivative financial liabilities
Sep 30, 2017
Gross
amounts
Financial
Position
In fiscal 2017 and 2016, gains (losses) reclassified from Other
comprehensive income to the Consolidated Statements of In-
come relating to cash flow hedges were €54 million and €(61)
million, respectively; unrealized gains (losses) recognized in
Other comprehensive income amounted to €232 million and
€149 million, respectively.
Amounts set
Net amounts
in the
Statement of
Financial
Position
Related
amounts not
set off in the
Statement of
Financial
Position
Net
amounts
2,035
5
2,030
647
1,383
off in the
Statement of
Financial liabilities measured at fair value - Derivative financial instruments
371
371
Level 2
3,587
Level 3
Total
346
6,810
2,877
95
281
3,253
1,232
11
1,243
2,261
54
2,314
1,882
54
1,935
46
Level 1
2,877
Sep 30, 2017
Available-for-sale financial assets: equity instruments
Financial assets measured at fair value
(in millions of €)
Notes and bonds
Loans from banks and other financial indebtedness
Obligations under finance leases
Sep 30, 2017
Fair value
Carrying
amount
Fair value
Sep 30, 2016
Carrying
amount
46
28,797
28,554
3,312
115
2,270
203
2,276
138
Fixed-rate and variable-rate receivables with a remaining term of
more than twelve months, including receivables from finance leases,
are evaluated by the Company based on parameters such as interest
rates, specific country risk factors, individual creditworthiness of the
customer, and the risk characteristics of the financed project. Based
on this evaluation, allowances for these receivables are recognized.
The fair value of notes and bonds is based on prices provided by price
service agencies at the period-end date (Level 2). The fair value of
loans from banks and other financial indebtedness, obligations
under finance leases as well as other non-current financial liabil-
ities is estimated by discounting future cash flows using rates
currently available for debt of similar terms and remaining ma-
turities (Level 2).
The following table allocates financial assets and financial liabil-
ities measured at fair value to the three levels of the fair value
hierarchy:
(in millions of €)
30,235
333
333
Available-for-sale financial assets: debt instruments
Level 1
Level 2
Level 3
Total
2,191
4,311
310
6,812
2,191
Sep 30, 2016
301
1,259
10
1,269
3,051
3,051
2,518
2,518
163
163
2,492
1,440
In connection with cash flow hedges
(including embedded derivatives)
Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
Financial liabilities measured at fair value - Derivative financial instruments
823
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
682
682
140
140
(in millions of €)
Financial assets measured at fair value
Available-for-sale financial assets: equity instruments
Available-for-sale financial assets: debt instruments
Derivative financial instruments
Not designated in a hedge accounting relationship
823
6
1,433
838
1,079
129
290
13
420
205
176
61
639
Irrevocable loan commitments²
2,875
303
177
2
1 Based on the maximum amounts Siemens could be required to settle in the event of default
by the primary debtor.
2 A considerable portion result from asset-based lending transactions meaning that the respective
loans can only be drawn after sufficient collateral has been provided by the borrower.
CREDIT RISK
Credit risk is defined as an unexpected loss in financial instru-
ments if the contractual partner is failing to discharge its obliga-
tions in full and on time or if the value of collateral declines.
Siemens provides its customers with various forms of direct and
indirect financing particularly in connection with large projects.
Hence, credit risks are determined by the solvency of the debtors,
the recoverability of the collaterals, the success of projects we
invested in and the global economic development.
Other financial liabilities
Derivative financial liabilities
Credit guarantees¹
3
3
19
Non-derivative financial
liabilities
Notes and bonds
4,328
3,790
11,102
Loans from banks
1,303
328 1,037
17,659
3
The effective monitoring and controlling of credit risk through
credit evaluations and ratings is a core competency of our risk
management system. In this context, Siemens has implemented
a binding credit policy.
Other financial
indebtedness
Obligations under
finance leases
27
23
61
Trade payables
35
18
36
112
9,730
677
Ratings, defined and analyzed by SFS, and individually defined
credit limits are based on generally accepted rating methodolo-
gies, with the input consisting of information obtained from the
customer, external rating agencies, data service providers and
Siemens' credit default experiences. Ratings and credit limits for
financial institutions as well as Siemens' public and private cus-
tomers, which are determined by internal risk assessment spe-
cialists, are continuously updated and considered by investments
in cash and cash equivalents, and in determining the conditions
under which direct or indirect financing will be offered to cus-
tomers.
94
Under the Share Matching Plan senior managers may invest a
specified part of their variable compensation in Siemens shares
(investment shares). The shares are purchased at the market
price at a predetermined date in the second quarter. Plan partic-
ipants receive the right to one Siemens share without payment
of consideration (matching share) for every three investment
shares continuously held over a period of about three years (vest-
ing period) provided the plan participant has been continuously
employed by Siemens until the end of the vesting period.
Monthly Investment Plan
Under the Monthly Investment Plan employees other than senior
managers may invest a specified part of their compensation in
Siemens shares on a monthly basis over a period of twelve
months. Shares are purchased at market price at a predetermined
date once a month. If the Managing Board decides that shares
acquired under the Monthly Investment Plan are transferred to
the Share Matching Plan, plan participants will receive the right
to matching shares under the same conditions applying to the
Share Matching Plan described above with a vesting period of
about two years since fiscal 2016 (previously about three years).
The Managing Board decided that shares acquired under the
tranches issued in fiscal 2016 and 2015 are transferred to the
Share Matching Plan as of February 2017 and February 2016, re-
spectively.
Base Share Program
Under the Base Share Program employees of Siemens AG and
participating domestic Siemens companies may invest a fixed
amount of their compensation in Siemens shares, sponsored by
Siemens. The shares are bought at market price at a predeter-
mined date in the second quarter and grant the right to receive
matching shares under the same conditions applying to the
Share Matching Plan described above. The fair value of the Base
Share Program amounted to €36 million and €35 million in fiscal
2017 and 2016, respectively.
2017
Non-vested, beginning of period
6,171,430
Granted
Share Matching Plan
2,078,828
Vested and fulfilled
(724,504)
(834,605)
Forfeited
(224,952) (1,029,991)
Modified from equity-settled
to cash-settled
(856,355)
Settled
6,049,250
2,044,213
there-
after
In fiscal 2017, Siemens issued a new tranche under each of the
plans of the Share Matching Program.
SHARE MATCHING PROGRAM
94
Consolidated Financial Statements
For analysis and monitoring of the credit risk the Company ap-
plies different systems and processes. A central IT application
processes data from operating units together with rating and
default information and calculates an estimate which may be
used as a basis for individual bad debt provisions. In addition to
this automated process, qualitative information is considered, in
particular to incorporate the latest developments.
Corporate Treasury has established the Siemens Credit Ware-
house to which numerous operating units from the Siemens
Group regularly transfer business partner data as a basis for a
centralized rating and credit limit recommendation process. Fur-
thermore, the Siemens Credit Warehouse purchases trade receiv-
ables from numerous operating units with a remaining term up
to one year. Due to the identification, quantification and active
management of the credit risk the Siemens Credit Warehouse
increases the transparency with regard to credit risk. In addition,
the Siemens Credit Warehouse may provide Siemens with an ad-
ditional source of liquidity and strengthens Siemens' funding
flexibility.
The maximum exposure to credit risk of financial assets, without
taking account of any collateral, is represented by their carrying
amount. As of September 30, 2017 and 2016 the collateral for fi-
nancial instruments classified as financial assets measured at fair
value in the form of netting agreements for derivatives in the
event of insolvency of the respective counterparty amounted to
€647 million and €994 million, respectively. As of September 30,
2017 and 2016 the collateral held for financial instruments classi-
fied as receivables from finance leases amounted to €1,967 mil-
lion and €1,949 million, respectively, mainly in the form of the
leased equipment. As of September 30, 2017 and 2016 the collat-
eral held for financial instruments classified as financial assets
measured at cost or amortized cost amounted to €3,347 million
and €3,590 million, respectively. The collateral mainly consisted
of property, plant and equipment. Credit risks arising from irre-
vocable loan commitments are equal to the expected future pay-
offs resulting from these commitments. As of September 30,
2017 and 2016 the collateral held for these commitments
amounted to €843 million and €1,177 million, respectively,
mainly in the form of inventories and receivables.
Concerning trade receivables and other receivables, as well as
loans or receivables included in line item Other financial assets
that are neither impaired nor past due, there were no indications
that defaults in payment obligations will occur, which lead to a
decrease in the net assets of Siemens. Overdue financial instru-
ments are generally impaired on a portfolio basis in order to re-
flect losses incurred within the respective portfolios. When sub-
stantial expected payment delays become evident, overdue
financial instruments are assessed individually for additional
impairment and are further allowed for as appropriate.
NOTE 25 Share-based payment
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of the
vesting period. Total pretax expense for share-based payment
amounted to €512 million and €332 million for the years ended
September 30, 2017 and 2016, respectively, €416 million and
€287 million relate to equity-settled awards in fiscal 2017 and
2016. The carrying amount of liabilities from share-based pay-
ment transactions is €124 million and €65 million as of Septem-
ber 30, 2017 and 2016.
STOCK AWARDS
AND ITS UNDERLYING PLANS
The Company grants stock awards to members of the Managing
Board, members of the senior management and other eligible em-
ployees. Stock awards are subject to a restriction period of about
four years and entitle the beneficiary to Siemens shares without
payment of consideration following the restriction period.
Until fiscal 2014, additionally one portion of the variable compen-
sation component (bonus) for members of the Managing Board
was granted in the form of non-forfeitable awards of Siemens
stock (Bonus Awards) subject to a vesting period of one year.
Beneficiaries will receive one Siemens share without payment of
consideration for each Bonus Award, following an additional
waiting period of four years.
Since related taxation is not yet entirely certain, Stock Awards of
Siemens AG that vested in November 2016 were settled in cash
rather than in equity instruments. The fair value of €107 million
at modification date was reclassified from equity to liabilities.
Consolidated Financial Statements 95
Commitments to members of the Managing Board
In fiscal 2017 and 2016, agreements were entered into which en-
title members of the Managing Board to stock awards most of
which are contingent upon attaining the prospective perfor-
mance-based target of Siemens stock relative to five competitors.
The fair value of these entitlements amounting to €13 million
and €9 million, respectively, in fiscal 2017 and 2016, was calcu-
lated by applying a valuation model. In fiscal 2017 and 2016, in-
puts to that model include for the majority of the stock awards
granted an expected weighted volatility of Siemens shares of
22.72% and 22%, respectively, and a market price of €106.40 and
€92.86 per Siemens share. Expected volatility was determined by
reference to historic volatilities. The model applies a risk-free in-
terest rate of up to (0.02)% and 0.1% in fiscal 2017 and 2016, re-
spectively and an expected dividend yield of 3.38% in fiscal 2017
and 3.8% in fiscal 2016. Assumptions concerning share price cor-
relations were determined by reference to historic correlations.
Commitments to members of the senior
management and other eligible employees
In fiscal 2017 and 2016, 2,078,828 and 2,044,213 stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounted to €138 million and €117 million, respectively, in fiscal
2017 and 2016; fair value was calculated by applying a valuation
model. In fiscal 2017 and 2016 inputs to that model include an
expected weighted volatility of Siemens shares of 22.79% and
22%, respectively, and a market price of €107.95 and €92.86 per
Siemens share. Expected volatility was determined by reference
to historic volatilities. The model applies a risk-free interest rate
of up to 0.03% in fiscal 2017 and up to 0.1% in fiscal 2016 and an
expected dividend yield of 3.33% and 3.8% in fiscal 2017 and
2016, respectively. Assumptions concerning share price correla-
tions were determined by reference to historic correlations.
Changes in the stock awards held by members of the senior man-
agement and other eligible employees are:
Fiscal year
2016
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earnings
per share (EPS, basic) of the past three fiscal years and/or to the
share price performance of Siemens relative to the share price
performance of five important competitors during the four-year
restriction period. The target attainment for the performance
criteria ranges between 0% and 200%. If the target attainment
of the prospective performance-based target of Siemens stock
relative to five competitors exceeds 100%, an additional cash pay-
ment results corresponding to the outperformance. The vesting
period is four years and five years for stock awards granted to
members of the Managing Board until fiscal 2014.
(57,437)
to
2022
2018
2,314
823
596
3,051
129
1,500
FOREIGN CURRENCY EXCHANGE RATE
RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a
Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various deriv-
ative financial instruments, primarily foreign currency exchange
contracts, foreign currency swaps and options, are utilized to
minimize such risks. Such a strategy does not qualify for hedge
accounting treatment. The Company also accounts for foreign
currency derivatives, which are embedded in sale and purchase
contracts.
Consolidated Financial Statements 91
Cash flow hedges
The Company's operating units apply hedge accounting for cer-
tain significant forecast transactions and firm commitments de-
nominated in foreign currencies. Particularly, the Company has
entered into foreign currency exchange contracts to reduce the
risk of variability of future cash flows resulting from forecast sales
and purchases as well as firm commitments. This risk results
mainly from contracts denominated in US$ both from Siemens'
operating units entering into long-term contracts e.g. project
business and from standard product business.
Periods in which the hedged forecast transactions or the firm
commitments denominated in foreign currency are expected to
impact profit or loss:
(in millions of €)
2018
2019
2020
to
2022
Expected gain (loss) to be
reclassified from line item
Other comprehensive income,
net of income taxes into
192
311
derivatives, options,
commodity swaps)
491
595
NOTE 23 Derivative financial
instruments and hedging activities
Fair values of each type of derivative financial instruments recorded
as financial assets or financial liabilities are:
653
475
570
Sep 30, 2016
Liability
880
revenue or cost of sales
(in millions of €)
Sep 30, 2017
Liability
Asset
Foreign currency
exchange contracts
Interest rate swaps
and combined interest
and currency swaps
Other (embedded
1,350
156
1,885
Asset
Fiscal year
2023
and
there-
after
80
As of September 30, 2017 and 2016 the VaR relating to foreign
currency exchange rates was €87 million and €86 million. This
VaR was calculated under consideration of items of the Consoli-
dated Statement of Financial Position in addition to firm commit-
ments which are denominated in foreign currencies, as well as
foreign currency denominated cash flows from forecast transac-
tions for the following twelve months.
Translation risk
Many Siemens units are located outside the euro zone. Since the
financial reporting currency of Siemens is the euro, the financial
statements of these subsidiaries are translated into euro for the
preparation of the Consolidated Financial Statements. To con-
sider the effects of foreign currency translation in the risk man-
agement, the general assumption is that investments in for-
eign-based operations are permanent and that reinvestment is
continuous. Effects from foreign currency exchange rate fluctu-
ations on the translation of net asset amounts into euro are re-
flected in the Company's consolidated equity position.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market interest rates. This risk arises whenever interest terms of
financial assets and liabilities are different. In order to manage
the Company's position with regard to interest rate risk, interest
income and interest expenses, Corporate Treasury performs a
comprehensive corporate interest rate risk management by using
fixed or variable interest rates from bond issuances and deriva-
tive financial instruments when appropriate. The interest rate risk
relating to the Group, excluding SFS' and SGRE' businesses, is
mitigated by managing interest rate risk actively relatively to a
benchmark. The interest rate risk relating to the SFS's and SGRE's
businesses is managed separately, considering the term structure
of financial assets and liabilities. The Company's interest rate risk
results primarily from the funding in U.S. dollar, British pound
and euro.
If there are no conflicting country-specific regulations, all Siemens
operating units generally obtain any required financing through
Corporate Treasury in the form of loans or intercompany clearing
accounts. The same concept is adopted for deposits of cash gen-
erated by the units.
As of September 30, 2017 and 2016 the VaR relating to the inter-
est rate was €479 million and €485 million.
Consolidated Financial Statements 93
EQUITY PRICE RISK
Generally, the operating units conclude their hedging activities
internally with Corporate Treasury. By applying a cost-optimiz-
ing portfolio approach Corporate Treasury itself hedges foreign
currency exchange rate risks with external counterparties and
limits them.
Siemens' investment portfolio consists of direct and indirect in-
vestments in publicly traded companies held for purposes other
than trading. The direct participations result mainly from strate-
gic partnerships, strengthening Siemens' focus on its core busi-
ness activities or compensation from merger and acquisitions
transactions; indirect investments in fund shares are mainly
transacted for financial reasons.
LIQUIDITY RISK
Liquidity risk results from the Company's inability to meet its fi-
nancial liabilities. Siemens follows a deliberated financing policy
that is aimed towards a balanced financing portfolio, a diversified
maturity profile and a comfortable liquidity cushion. Siemens
mitigates liquidity risk by the implementation of an effective
working capital and cash management, arranged credit facilities
with highly rated financial institutions, via a debt issuance pro-
gram and via a global multi-currency commercial paper program.
Liquidity risk may also be mitigated by the Siemens Bank GmbH,
which increases the flexibility of depositing cash or refinancing.
In addition, Siemens constantly monitors funding options avail-
able in the capital markets, as well as trends in the availability
and costs of such funding, with a view to maintaining financial
flexibility and limiting repayment risks.
The following table reflects the contractually fixed pay-offs for
settlement, repayments and interest. The disclosed expected un-
discounted net cash outflows from derivative financial liabilities
are determined based on each particular settlement date of an
instrument and based on the earliest date on which Siemens
could be required to pay. Cash outflows for financial liabilities
(including interest) without fixed amount or timing are based on
the conditions existing at September 30, 2017.
(in millions of €)
Fiscal year
2023
2020
and
These investments are monitored based on their current market
value, affected primarily by fluctuations in the volatile technolo-
gy-related markets worldwide. As of September 30, 2017 and
2016 the market value of Siemens' portfolio in publicly traded
companies was €2,875 million compared to €2,169 million in the
prior year. As of September 30, 2017 and 2016, the VaR relating
to the equity price was €208 and €227 million. The increase in
the market values, due mainly to our stakes in Atos and OSRAM,
was more than offset by a decline in the volatilities of these
stakes, resulting in an overall decrease of the VaR. The major part
of our stake in OSRAM has been sold in October 2017.
2019
According to the company policy Siemens units are responsible
for recording, assessing and monitoring its foreign currency trans-
action exposure. The net foreign currency position of Siemens
units serves as a central performance measure and has to be
hedged within a band of at least 75% but no more than 100%.
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. In the ordinary
course of business Siemens units are exposed to foreign currency
exchange rate fluctuations, particularly between the U.S. dollar
and the euro. Foreign currency exchange rate exposure is partly
balanced by purchasing of goods, commodities and services in
the respective currencies as well as production activities and
other contributions along the value chain in the local markets.
15
87
38
INTEREST RATE RISK MANAGEMENT
Derivative financial instruments not designated
in a hedging relationship
Interest rate risk management relating to the Group, excluding
SFS' business, uses derivative financial instruments under a port-
folio-based approach to manage interest risk actively relative to
a benchmark. The interest rate management relating to the SFS
business remains to be managed separately, considering the
term structure of SFS' financial assets and liabilities on a portfolio
basis. Neither approach qualifies for hedge accounting treat-
ment. Net cash receipts and payments in connection with inter-
est rate swap agreements are recorded as interest expense in
Other financial income (expenses), net.
Cash flow hedges of floating-rate
commercial papers
Since fiscal 2015, Siemens applies cash flow hedge accounting
to a revolving portfolio of floating-rate commercial papers of
nominal US$700 million. To benefit from low interest rates in the
USA, Siemens pays a fixed rate of interest and receives a variable
rate of interest, offsetting future changes in interest payments of
the underlying floating-rate commercial papers. Net cash receipts
and payments are recorded as interest expenses.
Fair value hedges of fixed-rate debt obligations
Under the interest rate swap agreements outstanding during the
years ended September 30, 2017 and 2016, the Company has
agreed to pay a variable rate of interest multiplied by a notional
principal amount, and to receive in return an amount equal to a
specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset an
impact of future changes in interest rates designated as the
hedged risk on the fair value of the underlying fixed-rate debt
obligations. Carrying amount adjustments to debt for fair value
changes attributable to the respective interest rate risk being
hedged are included in Other financial income (expenses), net
and resulted in a gain (loss) of €57 million and €149 million, re-
spectively, in fiscal 2017 and 2016; the related swap agreements
resulted in a gain (loss) of €(57) million and €(152) million, re-
spectively. Net cash receipts and payments relating to such inter-
est rate swap agreements are recorded as interest expenses.
Operating units (Industrial business and SFS) are prohibited from
borrowing or investing in foreign currencies on a speculative basis.
Intercompany financing or investments of operating units are pref-
erably carried out in their functional currency or on a hedged basis.
The Company had interest rate swap contracts to pay variable
rates of interest of an average of (0.3)% and (0.2)% as of Septem-
ber 30, 2017 and 2016, respectively and received fixed rates of
interest (average rate of 1.1% and 3.3%, as of September 30, 2017
and 2016, respectively). The notional amount of indebtedness
hedged as of September 30, 2017 and 2016 was €1,650 million
and €3,650 million, respectively. This changed 7% and 14% of the
Company's underlying notes and bonds from fixed interest rates
into variable interest rates as of September 30, 2017 and 2016,
respectively. The notional amounts of these contracts mature at
varying dates based on the maturity of the underlying hedged
items. The net fair value of interest rate swap contracts (excluding
accrued interest) used to hedge indebtedness as of September 30,
2017 and 2016 was €37 million and €93 million, respectively.
Increasing market fluctuations may result in significant earnings
and cash flow volatility risk for Siemens. The Company's operat-
ing business as well as its investment and financing activities are
affected particularly by changes in foreign exchange rates, inter-
est rates and equity prices. In order to optimize the allocation of
the financial resources across the Siemens segments and entities,
as well as to achieve its aims, Siemens identifies, analyzes and
manages the associated market risks. The Company seeks to man-
age and control these risks primarily through its regular operating
and financing activities, and uses derivative financial instruments
when deemed appropriate.
In order to quantify market risks Siemens has implemented a sys-
tem based on parametric variance-covariance Value at Risk (VaR),
which is also used for internal management of the Corporate Trea-
sury activities. The VaR figures are calculated based on historical
92
22
Consolidated Financial Statements
volatilities and correlations of various risk factors, a ten day hold-
ing period, and a 99.5% confidence level.
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive Income
may differ substantially from VaR figures due to fundamental
conceptual differences. While the Consolidated Statements of
Income and Consolidated Statements of Comprehensive Income
are prepared in accordance with IFRS, the VaR figures are the
output of a model with a purely financial perspective and repre-
sent the potential financial loss which will not be exceeded
within ten days with a probability of 99.5%. Although VaR is an
important tool for measuring market risk, the assumptions on
which the model is based give rise to some limitations including
the following. A ten day holding period assumes that it is possible
to dispose of the underlying positions within this period. This
may not be valid during continuing periods of illiquid markets. A
99.5% confidence level means, that there is a 0.5% statistical
probability that losses could exceed the calculated VaR. The use
of historical data as a basis for estimating the statistic behavior
of the relevant markets and finally determining the possible
range of the future outcomes on the basis of this statistic behav-
ior may not always cover all possible scenarios, especially those
of an exceptional nature.
Any market sensitive instruments, including equity and interest
bearing investments, that our Company's pension plans hold are not
included in the following quantitative and qualitative disclosures.
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk
NOTE 24 Financial risk management
32,303
3,299
178
Power and Gas
Consolidated Financial Statements
979
81,112
84,331
921
154
147
3,539
3,321
77,573
824
774
979
921
Reconciliation to
Financial Services (SFS)
86,477
Industrial Business
5,976
7,922
2
3
5,974
7,919
7,973
8,768
Siemens Gamesa Renewable Energy
81,009
13,535
(1,730)
85,669
53
98 Consolidated Financial Statements
Siemens Real Estate (SRE) - except for SGRE, SRE manages the
Group's entire real estate business portfolio, operates the prop-
erties, and is responsible for building projects and the purchase
and sale of real estate.
CONSOLIDATED FINANCIAL STATEMENTS
Centrally managed portfolio activities (CMPA) – in general,
comprises equity stakes held by Siemens that are accounted for
by the equity method or as available-for-sale financial assets and
that for strategic reasons are not allocated to a segment, Siemens
Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
also includes activities generally intended for divestment or clo-
sure as well as activities remaining from divestments and discon-
tinued operations.
RECONCILIATION TO
> Financial Services (SFS) supports its customers' investments
with leasing solutions and equipment, project and structured
financing in the form of debt and equity investments.
> Siemens Gamesa Renewable Energy offers wind turbines uti-
lizing various pitch and speed technologies, and is active in
the development, construction and sale of wind farms; it pro-
vides services including management, operation and mainte-
nance of wind farms,
> Healthineers, a supplier of technology to the healthcare in-
dustry and a leader in diagnostic imaging and laboratory di-
agnostics,
> Process Industries and Drives offers a comprehensive product,
software, solution and service portfolio for moving, measur-
ing, controlling and optimizing all kinds of mass flows,
> Digital Factory offers a comprehensive product portfolio and
system solutions used in manufacturing industries, comple-
mented by product lifecycle and data-driven services,
> Mobility combines all Siemens businesses in the area of pas-
senger and freight transportation, including rail vehicles, rail
automation systems, rail electrification systems, road traffic
technology, digital solutions and related services,
Siemens (continuing operations)
> Building Technologies is a provider of automation technolo-
gies and digital services for safe, secure and efficient build-
ings and infrastructures throughout their lifecycles,
> Power and Gas, which offers a broad spectrum of products,
solutions and services for generating electricity from fossil
fuels and for producing and transporting oil and gas,
DESCRIPTION OF REPORTABLE SEGMENTS
Siemens has nine reportable segments, being:
It is not part of the Consolidated Financial Statements subject to the audit opinion.
1 This supplemental information on Orders is provided on a voluntary basis.
(2,447)
79,644
(2,202)
83,049
(3,694)
(3,468)
1,247
79,644
1,266
83,049
(2,300)
86,480
> Energy Management offers a wide spectrum of software,
products, systems, solutions, and services for transmitting,
distributing and managing electrical power and for providing
intelligent power infrastructure,
13,789
87,802
42
7,794
8,081
7,875
8,963
Mobility
6,156
6,523
174
166
5,982
38
6,435
6,913
Building Technologies
11,940
12,277
702
638
11,238
11,639
12,963
13,628
Energy Management
16,471
15,467
18
31
6,356
8,099
13,497
13,748
13,830
14,218
Healthineers
9,038
8,876
1,681
7,285
7,195
8,939
1,753
Process Industries and Drives
7,825
9,034
11,532
10,332
10,658
9,390
Digital Factory
781
11,378
10,172
720
100
100
Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
Siemens Healthcare d.o.o., Zagreb/Croatia
100
100
100
Mentor Graphics (Netherlands Antilles) N.V.,
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
Siemens Metals Technologies Vermögensverwaltungs
GmbH, Vienna/Austria
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
100
Willemstad/Curaçao
100
75
Nicosia/Cyprus
100
100
OEZ s.r.o., Letohrad/Czech Republic
100
Siemens Personaldienstleistungen GmbH, Vienna/Austria
Siemens Urban Rail Technologies Holding GmbH,
Vienna/Austria
100
Polarion Software s.r.o., Prague/Czech Republic
100
Siemens Convergence Creators, s.r.o.,
Prague/Czech Republic
100
Siemens Gamesa Renewable Energy Limited,
100
2,649
Siemens Convergence Creators d.o.o., Zagreb/Croatia
Siemens d.d., Zagreb/Croatia
100
100
KDAG Beteiligungen GmbH, Vienna/Austria
Omnetric GmbH, Vienna/Austria
100
Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
100
100
Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
100
Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
Siemens Aktiengesellschaft Österreich, Vienna/Austria
Siemens Convergence Creators GmbH, Eisenstadt/Austria
Siemens Convergence Creators GmbH, Vienna/Austria
100
Gamesa Wind Bulgaria, EOOD, Sofia/Bulgaria
100
100
Siemens EOOD, Sofia/Bulgaria
100
100
100
Siemens Healthcare EOOD, Sofia/Bulgaria
Siemens SARL, Abidjan/Côte d'Ivoire
100
100
Siemens Convergence Creators Holding GmbH,
Vienna/Austria
Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
51
100
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
100
Siemens Wind Power GmbH, Vienna/Austria
Prudemanche SAS, Saint-Priest/France
Siemens Electric Machines s.r.o., Drasov/Czech Republic
Siemens A/S, Ballerup/Denmark
100
Saint-Priest/France
100
Siemens Gamesa Renewable Energy A/S, Brande/Denmark
100
Societe d'Exploitation du Parc Eolien de Clamanges SARL,
Siemens Healthcare A/S, Ballerup/Denmark
100
Saint-Priest/France
100
Siemens Industry Software A/S, Ballerup/Denmark
100
Societe d'Exploitation du Parc Eolien de Coupetz SARL,
Mentor Graphics Egypt Company (A Limited Liability
Saint-Priest/France
100
Company - Private Free Zone), Cairo/Egypt
100
Societe d'Exploitation du Parc Eolien de Dampierre
NEM Energy Egypt LLC, Alexandria/Egypt
Siemens Healthcare S.A.E., Cairo/Egypt
100
Siemens Wind Power BVBA, Beersel/Belgium
100
100
Societe d'Exploitation du Parc Eolien de Chepniers SARL,
100
100
Societe d'Exploitation du Parc Eolien de Champsevraine,
SARL, Saint-Priest/France
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
100
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
106 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Siemens Healthcare, s.r.o., Prague/Czech Republic
100
Siemens Industry Software, s.r.o., Prague/Czech Republic
Siemens, s.r.o., Prague/Czech Republic
100
11
69
100
Siemens S.A./N.V., Beersel/Belgium
10010
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
10010
Siemens Project Ventures GmbH, Erlangen
10010
Weiss Spindeltechnologie GmbH, Maroldsweisach
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
105
September 30, 2017
Windfarm 33 GmbH, Oldenburg
Windfarm 35 GmbH, Oldenburg
Equity interest
in %
gesellschaft mbH, Munich
Siemens Private Finance Versicherungsvermittlungs-
943
VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
SIMOS Real Estate GmbH, Munich
10010
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
1007
Siemens Liquidity One, Munich
100
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
10010
Siemens Medical Solutions Health Services GmbH,
Grünwald
TASS International GmbH, Wiesbaden
100
100
Equity interest
Trench Germany GmbH, Bamberg
Siemens Middle East Holding GmbH & Co. KG, Grünwald
1007
Siemens Middle East Management GmbH, Grünwald
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Siemens Postal, Parcel & Airport Logistics GmbH, Constance
Siemens Power Control GmbH, Langen
1007
Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
Hamburg
100
100
10010
VIB Verkehrsinformationsagentur Bayern GmbH, Munich
VMZ Berlin Betreibergesellschaft mbH, Berlin
517
100
10010
10010
100
September 30, 2017
100
ESTEL Rail Automation SPA, Algiers/Algeria
51
Flender S.P.R.L., Beersel/Belgium
1007
Siemens Spa, Algiers/Algeria
100
Mentor Graphics (Belgium) BVBA, Brussels/Belgium
100
Siemens S.A., Luanda/Angola
51
Samtech SA, Angleur/Belgium
77
Mentor Graphics Development Services Closed Joint Stock
Company, Yerevan/Armenia
100
Siemens Gamesa Renewable Energy Belgium, SPRL,
Brussels/Belgium
100
ETM professional control GmbH, Eisenstadt/Austria
100
Siemens Healthcare SA/NV, Beersel/Belgium
100
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
100
Siemens Industry Software NV, Leuven/Belgium
100
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
1007
Antwerp/Belgium
(519 companies)
Dresser-Rand Machinery Repair Belgie N.V.,
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
52
Societe d'Exploitation du Parc Eolien de Germainville SAS,
Trench Austria GmbH, Leonding/Austria
100
Windfarm 40 GmbH, Oldenburg
100
Windfarm 41 GmbH, Oldenburg
100
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
GmbH, Vienna/Austria
100
Windfarm Ganderkesee-Lemwerder GmbH, Oldenburg
in %
100
100
Siemens Gamesa Renevable Energy Limited Liability
Company, Baku/Azerbaijan
100
Windfarm Ringstedt II GmbH, Oldenburg
100
Siemens W.L.L., Manama/Bahrain
51
Limited Liability Company Siemens Technologies,
Minsk/Belarus
100
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
Windfarm Groß Haßlow GmbH, Oldenburg
Siemens Limited for Trading, Cairo/Egypt
Saint-Priest/France
100
100
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Sommesous SARL,
Saint-Priest/France
100
Eoliki Peloponnisou Lakka Energiaki S.A., Athens/Greece
Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
Athens/Greece
86
100
Societe d'Exploitation du Parc Eolien de Songy SARL,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Soude SARL,
Siemens Gamesa Renewable Energy AE, Athens/Greece
Siemens Gamesa Renewable Energy Greece E.P.E.,
Athens/Greece
100
100
Saint-Priest/France
100
Siemens Healthcare Industrial and Commercial Société
Societe d'Exploitation du Parc Eolien de Source de Seves
SARL, Saint-Priest/France
Anonyme, Athens/Greece
100
100
Societe d'Exploitation du Parc Eolien de Souvans SARL,
Saint-Priest/France
86
86
86
86
Siemens Industry Software SAS, Châtillon/France
100
Societe d'Exploitation du Parc Eolien de Saint Bon SARL,
Siemens Lease Services SAS, Saint-Denis/France
100
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Saint Loup de
Saintonge SAS, Saint-Priest/France
SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
Siemens SAS, Saint-Denis/France
100
100
100
100
Trench France SAS, Saint-Louis/France
Societe d'Exploitation du Parc Eolien de Saint-Lumier en
Champagne SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Sambourg SARL,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Savoisy SARL,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Sceaux SARL,
Siemens Oil & Gas Equipment Limited, Accra/Ghana
Elliniki Eoliki Attikis Energiaki S.A., Athens/Greece
Elliniki Eoliki Energiaki Pirgos S.A., Athens/Greece
Elliniki Eoliki Kopriseza S.A., Athens/Greece
Elliniki Eoliki Kseropousi S.A., Athens/Greece
Elliniki Eoliki Likourdi S.A., Athens/Greece
Energiaki Arvanikou M.E.P.E., Athens/Greece
90
86
100
100
Societe d'Exploitation du Parc Eolien de Trepot SARL,
100
Mentor Graphics (Ireland) Limited,
Siemens Financial Services SAS,
Shannon, County Clare/Ireland
100
Saint-Denis/France
100
Siemens France Holding SAS, Saint-Denis/France
100
Mentor Graphics Development Services Limited,
Shannon, County Clare/Ireland
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
100
Saint-Priest/France
10012
Shannon, County Clare/Ireland
Societe d'Exploitation du Parc Eolien de Vaudrey SARL,
Saint-Priest/France
100
888
evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
Mentor Graphics Magyarország Kft., Budapest/Hungary
Siemens Gamesa Megújuló Energia Hungary Kft,
Budapest/Hungary
100
100
100
Siemens Healthcare Kft., Budapest/Hungary
100
Siemens Wind Power Kft., Budapest/Hungary
100
Saint-Priest/France
Siemens Zrt., Budapest/Hungary
Societe d'Exploitation du Parc Eolien de Vernierfontaine
SARL, Saint-Priest/France
Siemens Sherkate Sahami (Khass),
100
Teheran/Iran, Islamic Republic of
97
Societe d'Exploitation du Parc Eolien d'Orchamps SARL,
Gamesa Ireland Limited, Dublin/Ireland
100
Saint-Priest/France
100
Mentor Graphics (Holdings) Unlimited Company,
Societe d'Exploitation du Parc Eolien du Vireaux SAS,
100
Siemens Technologies S.A.E., Cairo/Egypt
Siemens Wind Power LLC, Cairo/Egypt
Saint-Priest/France
Siemens Healthcare SAS, Saint-Denis/France
100
Societe d'Exploitation du Parc Eolien de la Tete des Boucs
SARL, Saint-Priest/France
100
100
Societe d'Exploitation du Parc Eolien de Landresse SARL,
100
Saint-Priest/France
100
Mentor Graphics (France) SARL, Meudon La Forêt/France
Mentor Graphics Development (France) SAS, Paris/France
100
100
Societe d'Exploitation du Parc Eolien de Longueville sur
Aube SARL, Saint-Priest/France
100
Mentor Graphics Development Crolles SARL, Monbon-
not-Saint-Martin/France
100
Societe d'Exploitation du Parc Eolien de Mailly-le-Camp
SARL, Saint-Priest/France
100
Meta Systems SARL, Meudon La Forêt/France
100
Societe d'Exploitation du Parc Eolien de Mantoche SARL,
PETNET Solutions SAS, Lisses/France
100
1009
100
100
100
Saint-Priest/France
100
Saint-Priest/France
100
90
Societe d'Exploitation du Parc Eolien de Guerfand SARL,
100
Saint-Priest/France
100
Mentor Graphics (Finland) OY, Espoo/Finland
100
Mentor Graphics Development (Finland) OY, Turku/Finland
100
Societe d'Exploitation du Parc Eolien de la Brie des Etangs
SARL, Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Bonboillon SARL,
100
100
Siemens Healthcare Oy, Espoo/Finland
100
Societe d'Exploitation du Parc Eolien de la Côte du Cerisat
SAS, Saint-Priest/France
100
Siemens Osakeyhtiö, Espoo/Finland
Adwen France SAS, Puteaux/France
D-R Holdings (France) SAS, Le Havre/France
Dresser-Rand SAS, Le Havre/France
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
Gamesa Eolica France, S.A.R.L., Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de la Loye SARL,
Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
100
Societe d'Exploitation du Parc Eolien de Margny SARL,
100
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements
107
108
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Societe d'Exploitation du Parc Eolien de Pringy SARL,
Saint-Priest/France
100
Siemens Gamesa Renewable Energy France SAS,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Romigny SARL,
Saint-Priest/France
100
Siemens Gamesa Renewable Energy S.A.S.,
Saint-Denis Cedex/France
100
Societe d'Exploitation du Parc Eolien de Saint Amand SARL,
9
8 Not accounted for using the equity method due to immateriality.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Bouclans SARL,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Moulins du Puits
SAS, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Broyes SARL,
Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Orge et Ornain
SARL, Saint-Priest/France
100
Saint-Priest/France
Societe d'Exploitation du Parc Eolien de Cernon SARL,
100
Societe d'Exploitation du Parc Eolien de Plancy l'Abbaye
SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de Chaintrix Bierges
SARL, Saint-Priest/France
100
Societe d'Exploitation du Parc Eolien de
Pouilly-sur-Vingeanne SARL, Saint-Priest/France
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Saint-Priest/France
Siemens Insulation Center GmbH & Co. KG, Zwönitz
10010
SIMAR West Grundstücks-GmbH, Grünwald
45,475
Intragroup financing receivables
Asset-based adjustments:
(1,474)
(1,346)
Assets Corporate items and pensions
47,072
4,964
1,812
3,448
Assets Centrally managed portfolio activities
Assets Siemens Real Estate
Sep 30,
2016
2017
(in millions of €)
4,533
Assets
Tax-related assets
4,089
(in millions of €)
NOTE 29 Information about geographies
Consolidated Financial Statements
100
63,126
62,430
3,258
Statements
(35,419)
(36,100)
Eliminations, Corporate Treasury, other items
42,082
43,161
Liability-based adjustments
Reconciliation to Consolidated Financial
Europe, C.I.S., Africa, Middle East
In fiscal 2017 and 2016, Profit of SFS includes interest income of
€1,241 million and €1,161 million, respectively and interest ex-
penses of €442 million and €377 million, respectively. In fiscal
2017, CMPA includes the following effects from asset retirement
obligations for environmental clean-up costs: €543 million gains
due to changes in interest rates, €312 million gains due to re-
duced assumed inflation rates and a loss of €179 million from
interest rate swaps not designated in a hedge relationship in con-
nection with those asset retirement obligations.
(1,785)
Fiscal year
Profit
CONSOLIDATED FINANCIAL STATEMENTS
RECONCILIATION TO
Centrally managed portfolio activities follow the measurement
principles of the segments except for SFS. SRE applies the mea-
surement principles of SFS.
PORTFOLIO ACTIVITIES AND SRE
(in millions of €)
-
Amortization, depreciation and impairments:
Amortization, depreciation and impairments includes deprecia-
tion and impairments of property, plant and equipment as well
as amortization and impairments of intangible assets each net of
reversals of impairment.
Free cash flow of the segments, except for SFS, constitutes cash
flows from operating activities less additions to intangible assets
and property, plant and equipment. It excludes financing inter-
est, except for cases where interest on qualifying assets is capi-
talized or classified as contract costs and it also excludes income
tax as well as certain other payments and proceeds. Free cash
flow of SFS includes related financing interest payments and pro-
ceeds; income tax payments and proceeds of SFS are excluded.
Free cash flow definition:
Orders are determined principally as estimated revenue of ac-
cepted purchase orders and order value changes and adjust-
ments, excluding letters of intent.
Orders:
Management determined Assets (Net capital employed) as a
measure to assess capital intensity of the segments except for
SFS. Its definition corresponds to the Profit measure except for
amortization expenses of intangible assets acquired in business
combinations which are not part of Profit, however, the related
intangible assets are included in the segments' Assets. Segment
Assets is based on Total assets of the Consolidated Statements of
Financial Position, primarily excluding intragroup financing re-
ceivables, tax related assets and assets of discontinued opera-
tions, since the corresponding positions are excluded from Profit.
The remaining assets are reduced by non-interest-bearing liabili-
ties other than tax related liabilities, e.g. trade payables, to derive
Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
include the project-specific intercompany financing of a long-
term project. Assets of SGRE include real estate, while real estate
of all other Siemens segments is carried at SRE.
MEASUREMENT – CENTRALLY MANAGED
(1,994)
2017
Centrally managed portfolio activities
Siemens Real Estate
(349)
(323)
(674)
(1,016)
(439)
(407)
2016
Centrally carried pension expense
Amortization of intangible assets
acquired in business combinations
Eliminations, Corporate Treasury,
and other reconciling items
Reconciliation to
Consolidated Financial Statements
(714)
Corporate items
132
187
(215)
488
(449)
Americas
Asia, Australia
Siemens
7,511
34,546
17,576
18,108
17,776
17,934
16,769
16,976
79,644
41,485
63,173
68,905
71,907
19,876
10,739
42,057
61,065
79,644
18,579
8,324
142
119
1,062
2,094
Joint ventures
2017
49,809
Fiscal year
2016
(in millions of €)
Purchases of goods
and services
and other expenses
Fiscal year
2016
Sales of goods
and services and
other income
Siemens has relationships with many joint ventures and associ-
ates in the ordinary course of business whereby Siemens buys
and sells a wide variety of products and services generally on
arm's length terms.
JOINT VENTURES AND ASSOCIATES
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
2017
83,049
3,132
4,349
2016
of companies
Fiscal year
22,607
47,355
2017
2016
45,325
Fiscal year
2017
Revenue by location
Revenue by location
of customers
therein U.S.
thereof foreign countries
thereof Germany
43,367
22,360
2017
25,574
15,118
16,166
19,013
22,707
23,516
41,819
19,912
Sep 30,
2016
assets
Non-current
11,959
83,049
13,088
111
19,886
Asset measurement principles:
Associates
Profit of the segment SFS is Income before income taxes. In con-
trast to performance measurement principles applied to other
segments, interest income and expenses is an important source
of revenue and expense of SFS.
Amortization expenses of intangible assets acquired in business
combinations are not part of Profit. Furthermore, income taxes
are excluded from Profit since income tax is subject to legal struc-
tures, which typically do not correspond to the structure of the
segments. The effect of certain litigation and compliance issues
is excluded from Profit, if such items are not indicative of perfor-
mance. This may also be the case for items that refer to more
than one reportable segment, SRE and (or) CMPA or have a cor-
porate or central character. Costs for support functions are pri-
marily allocated to the segments.
135
132
2,135
1,690
9,217
5,731
99
1,963
195
179
450
304
440
243
1,771
2,002
105
1,046
784
577
1,241
1,324
820
598
497
47
89
85
743
678
2,734
2,868
66
218
1,800
618
(279)
330
476
223
510
137
(190)
9,453
44,984
36,145
7,471
7,493
1,835
1,521
8,744
373
4,663
338
164
160
213
231
2,490
2,325
464
10,973
2,153
2,154
427
392
538
563
11,211
213
195
198
(2,640)
5,533
(3,386)
4,819
63,126
125,717
62,430
133,804
(1,994)
7,404
(1,785)
8,306
543
216
18
29
680
734
26,446
26,390
207
653
597
357
Consolidated Financial Statements 99
Decisions on essential pension items are made centrally. Accord-
ingly, Profit primarily includes amounts related to service cost of
pension plans only, while all other regularly recurring pension
related costs are included in reconciliations in line item Centrally
carried pension expense.
Financing interest, excluded from Profit, is any interest income or
expense other than interest income related to receivables from
customers, from cash allocated to the segments and interest ex-
penses on payables to suppliers. Financing interest is excluded
from Profit because decision-making regarding financing is typi-
cally made at the corporate level.
Siemens' Managing Board is responsible for assessing the perfor-
Imance of the segments (chief operating decision maker). The
Company's profitability measure of the segments except for SFS
is earnings before financing interest, certain pension costs,
income taxes and amortization expenses of intangible assets
acquired in business combinations as determined by the chief
operating decision maker (Profit). The major categories of items
excluded from Profit are presented below.
Profit
Accounting policies for Segment information are generally the
same as those used for the Consolidated Financial Statements.
Lease transactions, however, are classified as operating leases for
internal and segment reporting purposes. Intersegment transac-
tions are based on market prices.
354
MEASUREMENT - SEGMENTS
Pension - includes the Company's pension related income (ex-
pense) not allocated to the segments, SRE or CMPA.
Corporate items - includes corporate costs, such as group man-
aging costs, basic research of Corporate Technology, corporate
projects and non-operating investments or results of corpo-
rate-related derivative activities.
2,764
3,211
2,135
2,406
Eliminations, Corporate Treasury and other reconciling
items - comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items and the
activities of the Company's Corporate Treasury. It also includes
interest income and expense, such as, for example, interest not
allocated to segments or CMPA (referred to as financing interest),
interest related to Corporate Treasury activities or resulting con-
solidation and reconciliation effects on interest.
639
Profit
Assets
9,976
9,066
392
1,149
222
206
1,872
501
932
895
4,178
4,335
1,002
375
522
1,591
2016
2017
Free cash flow
Additions to intangible assets
and property, plant & equipment
Amortization,
depreciation & impairments
Fiscal year
Fiscal year
Fiscal year
Fiscal year
2017
2016
Sep 30, 2017
Sep 30, 2016
2017
2016
2017
2016
Profit of the segment SFS:
2,191
538
218
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
8 Not accounted for using the equity method due to immateriality.
1 Control due to a majority of voting rights.
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
Grünwald
10010
10010
KompTime GmbH, Munich
Jawa Power Holding GmbH, Erlangen
1009
1009
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
Grünwald
9
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Equity interest
Siemens Real Estate GmbH & Co. KG, Grünwald
Siemens Real Estate Management GmbH, Grünwald
Siemens Spezial-Investmentaktiengesellschaft mit TGV,
Munich
1007
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
1009
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
Grünwald
Exemption pursuant to Section 264b German Commercial Code.
September 30, 2017
September 30, 2017
Equity interest
104 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
in %
in %
100
1009
1007
Fluence Energy GmbH, Erlangen
100
Flowmaster GmbH, Frankfurt
1009
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
Grünwald
100
1009
1009,11
Siemens Beteiligungsverwaltung GmbH & Co. OHG,
Grünwald
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
10010
evosoft GmbH, Nuremberg
Flender GmbH, Bocholt
IPGD Grundstücksverwaltungs-Gesellschaft mbH,
Grünwald
1009
100
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
Grünwald
85
59
ILLIT Grundstücksverwaltungs-Management GmbH,
Grünwald
1009
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
Grünwald
Gamesa Energie Deutschland GmbH, Oldenburg
10010
100
HaCon Ingenieurgesellschaft mbH, Hanover
1009
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
Grünwald
100
Gamesa Wind GmbH, Aschaffenburg
HSP Hochspannungsgeräte GmbH, Troisdorf
1009
1007
100
Siemens Healthcare GmbH, Erlangen
100
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
100
Siemens Healthcare Diagnostics Products GmbH, Marburg
100
10010
Siemens-Fonds S-8, Munich
Siemens Healthcare Diagnostics Holding GmbH, Eschborn
100
Siemens-Fonds S-7, Munich
100
Siemens Healthcare Diagnostics GmbH, Eschborn
100
100
Siemens-Fonds Principals, Munich
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
Siemens Immobilien GmbH & Co. KG, Grünwald
100
Siemens Industry Software GmbH, Cologne
10010
10010
10010
10010
1009
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
SIMAR Süd Grundstücks-GmbH, Grünwald
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
100
Siemens Industriegetriebe GmbH, Penig
1007
Siemens Immobilien Management GmbH, Grünwald
1009
100⁹
1007
100
Siemens-Fonds Pension Captive, Munich
Siemens Financial Services GmbH, Munich
10010
Siemens Finance & Leasing GmbH, Munich
1007
100
1009
10010
10010
Siemens Convergence Creators Management GmbH,
Hamburg
1009
Siemens Convergence Creators GmbH & Co. KG, Hamburg
10010
1007
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Compressor Systems GmbH, Leipzig
Siemens Technology Accelerator GmbH, Munich
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
Siemens Technopark Mülheim Verwaltungs GmbH,
Grünwald
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg Verwaltungs GmbH,
Grünwald
1009
100
Siemens Global Innovation Partners Management GmbH,
Munich
100
1007
Siemens Wind Power Management GmbH, Hamburg
Siemens-Fonds C-1, Munich
1007
Siemens Fuel Gasification Technology Verwaltungs GmbH,
Freiberg
1009
10010
Siemens Turbomachinery Equipment GmbH, Frankenthal
Siemens Wind Power GmbH & Co. KG, Hamburg
1009
Siemens Fuel Gasification Technology GmbH & Co. KG,
Freiberg
10010
Siemens Treasury GmbH, Munich
10010
Siemens Fonds Invest GmbH, Munich
10010
1,379
1007
100
45.9
52.6
Audit services
2016
2017
(in millions of €)
Other attestation services
Tax services
Fiscal year
Principal accountant fees
and services
NOTE 31
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary
course of our business whereby we buy and sell a wide variety of
products and services on arm's length terms.
In fiscal 2017 and 2016, no other major transactions took place
between the Company and the members of the Managing Board
and the Supervisory Board.
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
combined management report.
Compensation attributable to members of the Supervisory Board
comprises in fiscal 2017 and 2016 of a base compensation and
additional compensation for committee work and amounted
€5.2 million (including meeting fees), which is unchanged com-
pared to prior year.
Fees related to professional services rendered by the Company's
principal accountant, EY, for fiscal 2017 and 2016 are:
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2017 and 2016 amounted
to €191.5 million and €216.3 million, respectively.
3.7
0.2
as well as the potential sale of locations.
In November 2017, Siemens announced its plans for capacity
adjustment measures at Power and Gas, SGRE and Process
Industries and Drives, which are expected to result in significant
severance charges and also include the closure, consolidation
Subsequent events
NOTE 33
WWW.SIEMENS.
COM/GCG-CODE
3.2
The Managing Board and the Supervisory Board of Siemens Ak-
tiengesellschaft provided the declaration required by Section 161
of the German stock corporation law (AktG) as of October 1, 2017,
which is available on the Company's website at:
102 Consolidated Financial Statements
Audit Services relate primarily to services provided by EY for au-
diting Siemens' Consolidated Financial Statements and for audit-
ing the statutory financial statements of Siemens AG and its sub-
sidiaries. Other attestation services include primarily audits of
financial statements in connection with M&A activities, comfort
letters and other attestation services required under regulatory
requirements, agreements or requested on a voluntary basis.
In fiscal 2017 and 2016, 40% and 41%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
schaft, Germany.
49.5
56.5
0.4
NOTE 32 Corporate Governance
Consolidated Financial Statements
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€34.1 million and €52.3 million in fiscal 2017 and 2016, respec-
tively.
Therefore in fiscal 2017 and 2016, compensation and benefits,
attributable to members of the Managing Board amounted to
€40.5 million and €33.5 million in total, respectively.
2017
2016
2017
(in millions of €)
Sep 30,
Sep 30,
2016
Liabilities
As of September 30, 2017 and 2016, guarantees to joint ventures
and associates amounted to €726 million and €1,500 million, re-
spectively. As of September 30, 2017 and 2016, guarantees to
joint ventures amounted to €488 million and €553 million, re-
spectively. As of September 30, 2017 and 2016, loans given to
joint ventures and associates amounted to €222 million and
€82 million, therein €218 million and €78 million related to joint
ventures, respectively. As of September 30, 2017 and 2016, the
Company had commitments to make capital contributions of
€76 million and €48 million to its joint ventures and associates,
therein €16 million and €39 million related to joint ventures, re-
spectively. For a loan raised by a joint venture, which is secured
by a Siemens guarantee, Siemens granted an additional collat-
eral. As of September 30, 2017 and 2016 the outstanding amount
totaled to €113 million and €116 million, respectively. As of Sep-
tember 30, 2017 and 2016 there were loan commitments to joint
ventures amounting to €147 million and €72 million, respectively.
316
336
2,442
2,632
174
Receivables
In fiscal 2017 and 2016, expense related to share-based payment
and to the Share Matching Program amounted to €19.0 million
and 8.3 million, respectively.
Joint ventures
333
In fiscal 2017 and 2016, members of the Managing Board received
cash compensation of €20.7 million and €20.2 million. The fair
value of stock-based compensation amounted to €13.2 million
and €8.7 million for 132,831 and 113,230 Stock Awards, respec-
tively, in fiscal 2017 and 2016. In fiscal 2017 and 2016, the Com-
pany granted contributions (including one-time special contribu-
tions) under the BSAV to members of the Managing Board
totaling €6.6 million and €4.6 million, respectively.
RELATED INDIVIDUALS
Consolidated Financial Statements 101
579
392
447
277
320
266
114
43
Associates
236
126
343
103
NOTE 34 List of subsidiaries and
associated companies pursuant to
Section 313 para. 2 of the German
Commercial Code
September 30, 2017
R&S Restaurant Services GmbH, Munich
100
AXIT GmbH, Frankenthal
10010
10010
Project Ventures Butendiek Holding GmbH, Erlangen
Projektbau-Arena-Berlin GmbH, Grünwald
100
100
10010
Alpha Verteilertechnik GmbH, Cham
10010
Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
10010
Airport Munich Logistics and Services GmbH, Hallbergmoos
Atecs Mannesmann GmbH, Erlangen
1009
Berliner Vermögensverwaltung GmbH, Berlin
REMECH Systemtechnik GmbH, Kamsdorf
EBV Holding Verwaltung GmbH, Oldenburg
10010
Dresser-Rand GmbH, Oberhausen
10010
Siemens Beteiligungen Inland GmbH, Munich
100
10010
Dade Behring Grundstücks GmbH, Marburg
Siemens Bank GmbH, Munich
100
100
RISICOM Rückversicherung AG, Grünwald
Capta Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald
10010
100
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
Objekt Tübingen KG, Grünwald
100
Adwen Verwaltungs GmbH, Bremerhaven
September 30, 2017
100
Mentor Graphics (Deutschland) GmbH, Munich
Equity interest
100
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
in %
1007
1007
1007
10010
in %
Equity interest
Kyra 1 GmbH, Erlangen
Kyros 52 GmbH, Hanover
Kyros 53 GmbH, Munich
Kyros 54 GmbH, Munich
Mentor Graphics Development (Deutschland) GmbH,
Villingen-Schwenningen
100
SUBSIDIARIES
100
Adwen GmbH, Bremerhaven
51
Omnetric GmbH, Munich
100
Adwen Blades GmbH, Stade
10010
next47 Services GmbH, Munich
100
10010
next47 GmbH, Munich
100
NEO New Oncology GmbH, Cologne
AD 8MW GmbH & Co. KG, Bremerhaven
Germany (129 companies)
Siemens Beteiligungen Management GmbH, Grünwald
Siemens Beteiligungen USA GmbH, Berlin
NOTE 30 Related party transactions
11,142
SD (Middle East) LLC, Dubai/United Arab Emirates
Siemens Healthcare Limited Liability Partnership,
NEM Energy B.V., Zoeterwoude/Netherlands
100
Trench Italia S.r.I., Savona/Italy
Eindhoven/Netherlands
100
Siemens Wind Power S.r.I., Milan/Italy
Mentor Graphics (Netherlands) B.V.,
100
Siemens Transformers S. p.A., Trento/Italy
100
Flowmaster Group NV, Eindhoven/Netherlands
100
Siemens S.p.A., Milan/Italy
100
Dresser-Rand Services B.V., Spijkenisse/Netherlands
100
Siemens Renting s.r.l. in Liquidazione, Milan/Italy
100
Omnetric B.V., The Hague/Netherlands
Dresser-Rand International B.V., Spijkenisse/Netherlands
Almaty/Kazakhstan
Pollux III B.V., Amsterdam/Netherlands
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
Siemens D-R Holding B.V., The Hague/Netherlands
100
The Hague/Netherlands
Siemens Gamesa Renewable Energy Limited,
Nairobi/Kenya
Siemens Diagnostics Holding II B.V.,
100
Siemens TOO, Almaty/Kazakhstan
100
100
100
100
100
7 Not consolidated due to immateriality.
100
100
100
Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
Siemens S.A., Casablanca/Morocco
100
Parco Eolico Banzy S.r.I., Rome/Italy
100
Mentor Graphics Torino S.R.L., Turin/Italy
100
100
Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
Siemens Healthcare SARL, Casablanca/Morocco
100
Dresser-Rand Italia S.r.I., Tribogna/Italy
100
9REN Services Italia S.r.I., Milan/Italy
1007
Guascor Maroc, S.A.R.L., Agadir/Morocco
100
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
Gamesa Morocco, SARL, Tangier/Morocco
100
Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
Parco Eolico Manca Vennarda S.r.I., Rome/Italy
Siemens Wind Energy, SARL, Casablanca/Morocco
Dresser-Rand B.V., Spijkenisse/Netherlands
100
Siemens Industry Software S.r.I., Milan/Italy
100
Spijkenisse/Netherlands
100
Siemens Healthcare S.r.I., Milan/Italy
D-R International Holdings (Netherlands) B.V.,
100
Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
100
Castor III B.V., Amsterdam/Netherlands
100
Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
100
Siemens Wind Power Blades, SARL AU, Tangier/Morocco
100
Samtech Italia S.r.I., Milan/Italy
100
100
100
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
100
The Hague/Netherlands
Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
Siemens Medical Solutions Diagnostics Holding | B.V.,
100
Siemens Healthcare, Lda., Amadora/Portugal
100
The Hague/Netherlands
100
Venda do Pinheiro/Portugal
Siemens International Holding B.V.,
Siemens Gamesa Renewable Energy, S.A.,
100
's-Hertogenbosch/Netherlands
100
Ujazd Sp. z o.o., Warsaw/Poland
Siemens Industry Software B.V.,
100
Smardzewo Windfarm Sp. z o.o., Slawno/Poland
Siemens Nederland N.V., The Hague/Netherlands
100
100
100
GER Baneasa, S.R.L., Bucharest/Romania
100
Gamesa Wind Romania, S.R.L., Bucharest/Romania
100
Gamesa Energy Romania, S.R.L., Bucharest/Romania
402
Siemens W.L.L., Doha/Qatar
100
Siemens S.A., Amadora/Portugal
100
Lisbon/Portugal
888888
100
Helmond/Netherlands
TASS International Mobility Center B.V.,
100
TASS International Homologations B.V.,
Helmond/Netherlands
100
TASS International B.V., Rijswijk/Netherlands
Siemens Wind Power B.V., The Hague/Netherlands
9
The Hague/Netherlands
Siemens Wind Power Sp. z o.o., Warsaw/Poland
100
100
Gamesa Energia Polska Sp. z o.o., Warsaw/Poland
Lichnowy Windfarm Sp. z o.o., Warsaw/Poland
100
Siemens Finance B.V., The Hague/Netherlands
100
Siemens D-R Holding II B.V., The Hague/Netherlands
in %
September 30, 2017
in %
September 30, 2017
Equity interest
Equity interest
109
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens Financieringsmaatschappij N.V.,
100
Mentor Graphics Polska Sp. z o.o., Poznan/Poland
The Hague/Netherlands
Siemens Healthineers Holding III B.V.,
100
Siemens Sp. z o.o., Warsaw/Poland
100
The Hague/Netherlands
100
Siemens Industry Software Sp. z o.o., Warsaw/Poland
Siemens Healthcare Nederland B.V.,
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
65
65
The Hague/Netherlands
100
Siemens Finance Sp. z o.o., Warsaw/Poland
Siemens Gas Turbine Technologies Holding B.V.,
100
Osiek Sp. z o.o., Warsaw/Poland
100
100
Ltd., Airport City/Israel
100
Siemens d.o.o., Podgorica/Montenegro
100
Siemens Industry Software AG, Zurich/Switzerland
100
100
Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Siemens Healthcare AG, Zurich/Switzerland
90
Villanueva de Gállego/Spain
100
100
Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
Polarion AG, Zurich/Switzerland
Sistemas Energéticos La Plana, S.A.,
100
Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
100
Komykrieng AG, Zurich/Switzerland
100
Sistemas Energéticos Loma del Reposo, S.L. Unipersonal,
Zamudio/Spain
Zamudio/Spain
Siemens Postal, Parcel & Airport Logistics AG,
Zurich/Switzerland
100
Siemens Healthcare AB, Stockholm/Sweden
Zamudio/Spain
100
Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
United Republic of
Sistemas Energéticos Monte Genaro, S.L.U.,
28
78
Villarcayo de Merindad de Castilla la Vieja/Spain
100
systransis AG, Risch/Switzerland
Sistemas Energéticos Mansilla, S.L.,
100
Siemens Schweiz AG, Zurich/Switzerland
100
100
Siemens Power Holding AG, Zug/Switzerland
Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
Sevilla/Spain
100
100
Zamudio/Spain
100
Sistemas Energéticos Jaralón, S.A. Unipersonal,
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
100
Siemens Finance and Leasing Ltd., Beijing/China
Siemens Financial Services Ltd., Beijing/China
100
100
Siemens Factory Automation Engineering Ltd.,
Beijing/China
100
Siemens Gamesa Renewable Pty Ltd, Bayswater/Australia
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Siemens Ltd., Bayswater/Australia
100
MRX Rail Services Pty Ltd, Bayswater/Australia
85
100
100
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
Siemens Electrical Drives Ltd., Tianjin/China
5 No significant influence due to contractual arrangements or legal circumstances.
Huba Control AG, Würenlos/Switzerland
6 Significant influence due to contractual arrangements or legal circumstances.
9 Exemption pursuant to Section 264b German Commercial Code.
100
Dresser Rand Sales Company GmbH, Zurich/Switzerland
100
Las Palmas de Gran Canaria/Spain
100
Siemens Wind Power AB, Upplands Väsby/Sweden
Sistemas Energeticos Islas Canarias, S.L.U.,
100
Siemens Industry Software AB, Kista/Sweden
100
San Cristóbal de La Laguna/Spain
100
Siemens Industrial Turbomachinery AB, Finspång/Sweden
Sistemas Energéticos Fuerteventura, S.A. Unipersonal,
118 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
7 Not consolidated due to immateriality.
100
Siemens Financial Services AB, Stockholm/Sweden
Sistemas Energéticos Fonseca, S.A. Unipersonal,
100
D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
100
Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
100
Luxembourg/Luxembourg
100
Gamesa Israel, Ltd, Tel Aviv/Israel
D-R Luxembourg International SARL,
100
9REN Israel Ltd., Tel Aviv/Israel
100
Luxembourg/Luxembourg
10012
Douglas/Isle of Man
D-R Luxembourg Holding 3, SARL,
Mentor Graphics International Unlimited,
100
Luxembourg/Luxembourg
Mentor Graphics Development Services (Israel) Ltd.,
Rehovot/Israel
100
Dresser-Rand Holding (Delaware) LLC, SARL,
Luxembourg/Luxembourg
Siemens Product Lifecycle Management Software 2 (IL)
100
Cybercity/Mauritius
1007
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
Siemens Gamesa Renewable Energy, Ltd,
100
Siemens Israel Ltd., Rosh HaAyin/Israel
100
Siemens Gamesa Renewable Energy, SARL,
Nouakchott/Mauritania
100
Siemens Industry Software Ltd., Airport City/Israel
100
Siemens HealthCare Ltd., Rosh HaAyin/Israel
100
TFM International S.A. i.L., Luxembourg/Luxembourg
100
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
100
100
Siemens Limited, Dublin/Ireland
D-R Luxembourg Holding 2, SARL,
100
100
Sistemas Energéticos Edreira, S.A. Unipersonal,
Gamesa Wind Sweden AB, Stockholm/Sweden
100
Santiago de Compostela/Spain
100
Lindom Vindenergi AB, Solna/Sweden
100
Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
100
Lingbo SPW AB, Solna/Sweden
100
Sistemas Energéticos Finca San Juan, S.L.U.,
Mentor Graphics (Scandinavia) AB, Kista/Sweden
100
Las Palmas de Gran Canaria/Spain
100
Siemens AB, Upplands Väsby/Sweden
100
Fanbyn2 Vindenergi AB, Solna/Sweden
100
Santiago de Compostela/Spain
100
100
D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
Siemens Healthcare Medical Solutions Limited,
Swords, County Dublin/Ireland
492
Siemens Electrical & Electronic Services K.S.C.C.,
Kuwait City/Kuwait
100
Dublin/Ireland
Siemens Gamesa Renewable Energy Limited,
in %
100
September 30, 2017
September 30, 2017
Equity interest
Equity interest
Sistemas Energéticos Tomillo, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Sistemas Energéticos del Sur S.A., Sevilla/Spain
70
Sistemas Energéticos del Umia, S.A. Unipersonal,
Telecomunicación, Electrónica y Conmutación S.A.,
Madrid/Spain
in %
100
GER Baraganu, S.R.L, Bucharest/Romania
TASS International Safety Center B.V.,
100
Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
100
Guascor Power, S.A., Zumaia/Spain
100
Siemens Gamesa Renewable Energy Wind Farms, S.A.,
Zamudio/Spain
100
Vitoria-Gasteiz/Spain
Guascor Power Investigacion y Desarollo, S.A.,
59
Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
607,12
Guascor Isolux AIE, Vitoria-Gasteiz/Spain
100
Siemens Gamesa Renewable Energy Latam, S.L.,
Sarriguren/Spain
100
Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
100
100
Siemens Gamesa Renewable Finance, S.A., Zamudio/Spain
SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
Siemens Gamesa Renewable Energy Invest, S.A.,
Zamudio/Spain
100
Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
Guascor Solar S.A., Vitoria-Gasteiz/Spain
100
Siemens Wind Power, S.L., Tres Cantos/Spain
International Wind Farm Development VI, S.L.,
Zamudio/Spain
100
100
100
100
100
Siemens Industry Software S.L., Barcelona/Spain
SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
S.L. Sociedad Unipersonal, Madrid/Spain
Siemens Rail Automation S.A.U., Madrid/Spain
Siemens Renting S.A., Madrid/Spain
Siemens S.A., Madrid/Spain
100
International Wind Farm Development V, S.L.,
Zamudio/Spain
100
International Wind Farm Development IV, S.L.,
Zamudio/Spain
1007
Guascor Wind, S. L., Vitoria-Gasteiz/Spain
100
100
Siemens Holding S.L., Madrid/Spain
100
100
100
Guascor Explotaciones Energéticas, S.A.,
Vitoria-Gasteiz/Spain
in %
Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
100
Adwen Offshore, S.L., Zamudio/Spain
Gerr Grupo Energético XXI, S.A. Unipersonal,
Barcelona/Spain
03
Siemens Wind Power Employee Share Ownership Trust,
Midrand/South Africa
100
Gamesa Energy Transmission, S.A. Unipersonal,
Zamudio/Spain
100
SIEMENS WIND POWER (PTY) LTD, Midrand/South Africa
70
Siemens Proprietary Limited, Midrand/South Africa
100
Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
100
House/South Africa
100
Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
Siemens Healthcare Proprietary Limited, Halfway
100
100
707,12
1 Control due to a majority of voting rights.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
September 30, 2017
in %
Guascor Borja AIE, Zumaia/Spain
September 30, 2017
Equity interest
Equity interest
111
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
International Wind Farm Development VII, S.L.,
Zamudio/Spain
83
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
6 Significant influence due to contractual arrangements or legal circumstances.
1 Control due to a majority of voting rights.
100
Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
Sevilla/Spain
100
International Wind Services, S.A., Zamudio/Spain
Siemens Gamesa Renewable Energy
100
Zamudio/Spain
100
Innovation & Technology, S.L., Sarriguren/Spain
Sistemas Energéticos Carril, S.L. Unipersonal,
Siemens Gamesa Renewable Energy
100
Zaragoza/Spain
100
5 No significant influence due to contractual arrangements or legal circumstances.
Zamudio/Spain
7 Not consolidated due to immateriality.
9
100
Zamudio/Spain
Sistemas Energéticos de Tarifa, S.L. Unipersonal,
100
Sistemas Energéticos Tablero Tabordo, S.L.,
Las Palmas de Gran Canaria/Spain
100
Sistemas Energéticos Cuntis, S.A. Unipersonal,
Santiago de Compostela/Spain
in %
Equity interest
September 30, 2017
in %
September 30, 2017
Equity interest
112 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
11
Siemens AG is a shareholder with unlimited liability of this company.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
Sistema Eléctrico de Conexión Montes Orientales, S.L.,
Granada/Spain
Sistemas Energéticos Campoliva, S.A. Unipersonal,
100
100
Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
1007
Microenergía 21, S.A., Zumaia/Spain
100
Sistemas Energéticos Argañoso, S. L. Unipersonal,
Zamudio/Spain
100
Mentor Graphics (Espana) SL, Madrid/Spain
100
Zamudio/Spain
100
Sistemas Energéticos Alto da Croa, S.A. Unipersonal,
Santiago de Compostela/Spain
International Wind Farm Developments IX, S.L.,
100
Zamudio/Spain
100
Sistemas Energéticos Alcohujate, S.A. Unipersonal,
Toledo/Spain
International Wind Farm Developments II, S.L.,
100
Sistemas Energéticos Arinaga, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
Siemens Gamesa Renewable Energy Europa S.L.,
100
100
Zaragoza/Spain
100
Sarriguren/Spain
Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
Siemens Gamesa Renewable Energy Eolica, S.L.,
100
Sistemas Energéticos Cabanelas, S.A. Unipersonal,
Santiago de Compostela/Spain
100
Sarriguren/Spain
Siemens Gamesa Renewable Energy Apac, S.L.,
60
Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
100
Madrid/Spain
100
Sistemas Energéticos Barandon, S.A., Valladolid/Spain
Siemens Gamesa Renewable Energy 9REN, S.L.,
100
Sistemas Energéticos Balazote, S.A. Unipersonal,
Zamudio/Spain
Samtech Iberica Engineering & Software Services S.L.,
Barcelona/Spain
Estructuras Metalicas Singulares, S.A. Unipersonal,
Tajonar/Spain
03
Johannesburg/South Africa
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
000 Siemens Transformers, Voronezh/Russian Federation
Siemens Finance LLC, Vladivostok/Russian Federation
100
75
100
Moscow/Russian Federation
100
Siemens Healthcare (Private) Limited, Lahore/Pakistan
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
AXIT Sp. z o.o., Wroclaw/Poland
000 Siemens Industry Software,
100
100
Leningrad Oblast/Russian Federation
Mentor Graphics Pakistan Development (Private) Limited,
Lahore/Pakistan
000 Siemens Gas Turbine Technologies,
5 No significant influence due to contractual arrangements or legal circumstances.
1007
6 Significant influence due to contractual arrangements or legal circumstances.
8 Not accounted for using the equity method due to immateriality.
Technologies of Rail Transport Limited Liability Company,
Moscow/Russian Federation
Convertidor Solar Ciento Veintisiete, S.L.U.,
100
100
in %
Equity interest
Aljaraque Solar, S.L., Madrid/Spain
Siemens Healthcare Limited Liability Company,
Moscow/Russian Federation
September 30, 2017
in %
September 30, 2017
Equity interest
110 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
11
Siemens AG is a shareholder with unlimited liability of this company.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
7 Not consolidated due to immateriality.
Madrid/Spain
Gamesa Pakistan (Private) Limited, Karachi/Pakistan
St. Petersburg/Russian Federation
100
Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
100
100
Siemens Convergence Creators S.R.L., Brasov/Romania
Siemens Healthcare S.R.L., Bucharest/Romania
100
TASS International Software B.V., Rijswijk/Netherlands
100
Rijswijk/Netherlands
492
100
Bucharest/Romania
TASS International Software and Services B.V.,
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
100
Helmond/Netherlands
100
100
GER Independenta, S.R.L., Bucharest/Romania
Mentor Graphics Romania SRL, Bucharest/Romania
Siemens Industry Software S.R.L., Brasov/Romania
100
100
100
51
Siemens L.L.C., Muscat/Oman
000 Siemens Elektroprivod,
100
Siemens Wind Power AS, Oslo/Norway
100
000 Siemens, Moscow/Russian Federation
100
Siemens Healthcare AS, Oslo/Norway
100
000 Legion II, Moscow/Russian Federation
100
Siemens AS, Oslo/Norway
100
SIMEA SIBIU S.R.L., Sibiu/Romania
100
Dresser-Rand AS, Kongsberg/Norway
100
Siemens S.R.L., Bucharest/Romania
Siemens Ltd., Lagos/Nigeria
100
1007
Convertidor Solar Doscientos Noventa y Nueve, S.L.U.,
100
San Cristóbal de La Laguna/Spain
1007
Crabtree South Africa Pty. Limited, Midrand/South Africa
Convertidor Solar Trescientos Setenta, S.L.U.,
100
Siemens Healthcare d.o.o., Ljubljana/Slovenia
100
Convertidor Solar Trescientos Sesenta y Siete, S.L.U.,
San Cristóbal de La Laguna/Spain
100
Siemens d.o.o., Ljubljana/Slovenia
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Convertidor Solar Trescientos Sesenta y Ocho, S.L.U.,
San Cristóbal de La Laguna/Spain
100
Siemens s.r.o., Bratislava/Slovakia
100
Siemens Healthcare s.r.o., Bratislava/Slovakia
Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
100
1007
Midrand/South Africa
Siemens Employee Share Ownership Trust,
677
100
100
70
Desimpacto de Purines Altorricón S.A., Altorricón/Spain
Desimpacto de Purines Turégano, S.A., Turégano/Spain
Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
Empresa de Reciclajes de Residuos Ambientales, S.A.,
Vitoria-Gasteiz/Spain
03
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
100
Cape Town/South Africa
Gamesa Wind South Africa (Proprietary) Limited,
100
Midrand/South Africa
Dresser-Rand Southern Africa (Pty) Ltd.,
100
100
100
Convertidor Solar Trescientos Veinte, S.L.U., Madrid/Spain
Convertidor Solar Trescientos, S. L. U., Madrid/Spain
Convertidor Solar Uno, S. L. U., Madrid/Spain
100
Dresser-Rand Service Centre (Pty) Ltd.,
Convertidor Solar Trescientos Sesenta y Nueve, S.L.U.,
San Cristóbal de La Laguna/Spain
100
Bratislava/Slovakia
Siemens Ltd., Riyadh/Saudi Arabia
100
Convertidor Solar G.F. Tres, S. L.U, Madrid/Spain
51
Siemens Healthcare Limited, Riyadh/Saudi Arabia
100
Convertidor Solar G.F. Dos, S.L.U., Madrid/Spain
51
Riyadh/Saudi Arabia
100
Madrid/Spain
ISCOSA Industries and Maintenance Ltd.,
Convertidor Solar Doscientos Noventa y Siete, S.L.U.,
501
Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
100
Madrid/Spain
51
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
51
Convertidor Solar G.F. Uno S. L. U., Madrid/Spain
100
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
Siemens Convergence Creators, s. r. o.,
100
Convertidor Solar Trescientos Diecisiete, S.L.U.,
Madrid/Spain
60
60
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
100
Madrid/Spain
100
100
100
Convertidor Solar Trescientos Dieciocho, S.L.U.,
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Madrid/Spain
100
Siemens d.o.o. Beograd, Belgrade/Serbia
Convertidor Solar Trescientos Diecinueve, S.L.U.,
51
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
J.R.B. Engineering Pty Ltd, Bayswater/Australia
8 Not accounted for using the equity method due to immateriality.
Gamesa Australia Pty. Ltd., Melbourne/Australia
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
Trench Limited, Saint John/Canada
100
Buenos Aires/Argentina
115
100
Equity interest
September 30, 2017
100
100
Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
Gesan I S.A.P.I de C.V., Mexico City/Mexico
100
Nimbic Chile S.p.A., Las Condes/Chile
100
Gamesa Chile SpA, Santiago de Chile/Chile
1007
Gesa Oax III Sociedad Anomima de Capital Variable,
Mexico City/Mexico
100
Siemens Healthcare Diagnostics Manufacturing Limited,
Grand Cayman/Cayman Islands
1007
Gesa Oax II Sociedad de Responsabilidad Limitada de
Capital Variable, Mexico City/Mexico
100
Ontario/Canada
Wheelabrator Air Pollution Control (Canada) Inc.,
in %
September 30, 2017
in %
Equity interest
Siemens Healthcare Equipos Médicos Sociedad por
Siemens Wind Power Limited, Oakville/Canada
100
100
Frimley, Surrey/United Kingdom
100
Mentor Graphics (Canada) Limited, Kanata/Canada
VA TECH T&D UK Ltd.,
10012
Gamesa Canada ULC, Halifax/Canada
100
Frimley, Surrey/United Kingdom
10012
Dresser-Rand Canada, ULC, Vancouver/Canada
VA Tech Reyrolle Distribution Ltd.,
100
100
Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
10367079 CANADA INC., Oakville/Canada
100
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
Siemens Canada Limited, Oakville/Canada
VA TECH International Argentina SA,
100
100
Québec/Canada
100
Siemens S.A., Buenos Aires/Argentina
Siemens Transformers Canada Inc., Trois-Rivières,
100
Siemens IT Services S.A., Buenos Aires/Argentina
100
Siemens Postal, Parcel & Airport Logistics Ltd.,
Oakville/Canada
100
Siemens Healthcare S.A., Buenos Aires/Argentina
100
Guascor Argentina, S.A., Buenos Aires/Argentina
100
Siemens Industry Software Ltd., Oakville/Canada
100
Artadi S.A., Buenos Aires/Argentina
100
Siemens Healthcare Limited, Oakville/Canada
Americas (165 companies)
Siemens Financial Ltd., Oakville/Canada
100
Grupo Siemens S.A. de C.V., Mexico City/Mexico
Acciones, Santiago de Chile/Chile
Siemens S.A., Antiguo Cuscatlán/El Salvador
100
Siemens Healthcare S.A.C., Surquillo/Peru
100
Antiguo Cuscatlán/El Salvador
100
Siemens S.A., Panama City/Panama
Siemens Healthcare, Sociedad Anonima,
100
Panama City/Panama
100
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
Siemens Healthcare Diagnostics Panama, S.A.,
100
Siemens S.A., Quito/Ecuador
100
Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
100
Higüey/Dominican Republic
100
100
100
SIEMENS GAMESA RENEWABLE ENERGY INSTALLATION &
51
Wilmington, DE/United States
100
GESA Eólica Honduras, S.A., Tegucigalpa/Honduras
Siemens S.A., Tegucigalpa/Honduras
Advanced Airfoil Components LLC,
100
Siemens S.A., Guatemala/Guatemala
100
Couva/Trinidad and Tobago
100
Guatemala/Guatemala
Dresser-Rand Trinidad & Tobago Limited,
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
100
Gamesa Puerto Rico, CRL, San Juan/Puerto Rico
1007
MAINTENANCE COMPAÑÍA LIMITADA, Guatemala/Guatemala
100
Siemens Wind Power Sociedad Anonima Cerrada, Lima/Peru
100
100
Siemens, S.A. de C.V., Mexico City/Mexico
100
100
Gamesa Eólica Costa Rica, S.R.L., San Rafael/Costa Rica
100
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
Mexico City/Mexico
100
Siemens S.A., Tenjo/Colombia
100
Siemens Healthcare S.A.S., Tenjo/Colombia
100
Servicios Eólicos Globales S. de R.L. de C.V.,
Mexico City/Mexico
100
Dresser-Rand Colombia S.A.S., Bogotá/Colombia
100
Siemens Wind Power SpA, Santiago de Chile/Chile
100
Indústria de Trabajos Eléctricos S.A. de C.V.,
Ciudad Juárez/Mexico
100
Siemens S.A., Santiago de Chile/Chile
100
Siemens Healthcare Servicios S. de R.L. de C.V.,
Sociedad Energética Del Caribe, S.R.L.,
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
Mexico City/Mexico
Siemens Servicios S.A. de C.V., Mexico City/Mexico
100
Siemens, S.R.L., Santo Domingo/Dominican Republic
1007
Siemens Postal, Parcel & Airport Logistics S. de R.L. de C.V.,
Mexico City/Mexico
57
Santo Domingo/Dominican Republic
Parques Eólicos del Caribe, S.A.,
100
Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
100
Santo Domingo/Dominican Republic
100
Mexico City/Mexico
Gamesa Dominicana, S.A.S.,
Siemens Industry Software, S.A. de C.V.,
100
Siemens S.A., San José/Costa Rica
100
100
100
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens Ltda., São Paulo/Brazil
The Preactor Group Limited,
100
Frimley, Surrey/United Kingdom
100
Hampton Court, Surrey/United Kingdom
Siemens Healthcare Diagnostics Ltd.,
Flomerics Group Limited,
100
Siemens Gamesa Renewable Energy Wind Limited,
London/United Kingdom
100
Electrium Sales Limited, Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
London/United Kingdom
Dresser-Rand Company Ltd.,
Siemens Gamesa Renewable Energy UK Limited,
100
Frimley, Surrey/United Kingdom
100
Flowmaster Limited,
Frimley, Surrey/United Kingdom
Siemens Healthcare Diagnostics Manufacturing Ltd,
100
100
Siemens Holdings plc, Frimley, Surrey/United Kingdom
Siemens Industrial Turbomachinery Ltd.,
Industrial Turbine Company (UK) Limited,
100
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
GYM Renewables ONE Limited,
Siemens Healthcare Limited,
100
GYM Renewables Limited, Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
London/United Kingdom
Siemens Healthcare Diagnostics Products Ltd,
Glenouther Renewables Energy Park Limited,
100
Frimley, Surrey/United Kingdom
Alderton, Northamptonshire/United Kingdom
Frimley, Surrey/United Kingdom
Dresser-Rand (U.K.) Limited,
100
100
Adwen UK Limited, London/United Kingdom
573
Edinburgh/United Kingdom
100
Masdar City/United Arab Emirates
SBS Pension Funding (Scotland) Limited Partnership,
Siemens Middle East Limited,
100
Samtech UK Limited, Frimley, Surrey/United Kingdom
492
100
Frimley, Surrey/United Kingdom
492
Project Ventures Rail Investments | Limited,
100
Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
Siemens LLC, Abu Dhabi/United Arab Emirates
100
Frimley, Surrey/United Kingdom
Sellafirth Renewable Energy Park Limited,
Siemens Gamesa Renewable Energy Limited,
Bargrennan Renewable Energy Park Limited,
100
D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
100
Siemens Gamesa Renewable Energy B9 Limited,
Larne/United Kingdom
1007
D-R Dormant Ltd., Frimley, Surrey/United Kingdom
100
Marlow, Buckinghamshire/United Kingdom
100
Stoke Poges, Buckinghamshire/United Kingdom
Conworx Medical IT Ltd.,
Siemens Financial Services Ltd.,
100
Frimley, Surrey/United Kingdom
100
Stoke Poges, Buckinghamshire/United Kingdom
CD-adapco New Hampshire Co., Ltd.,
Siemens Financial Services Holdings Ltd.,
100
London/United Kingdom
London/United Kingdom
100
Frimley, Surrey/United Kingdom
100
100
Frimley, Surrey/United Kingdom
100
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
Canoas/Brazil
Siemens Rail Automation Holdings Limited,
100
Frimley, Surrey/United Kingdom
100
Industrial Turbine Brasil Geracao de Energia Ltda.,
São Luís/Brazil
Siemens Protection Devices Limited,
100
Frimley, Surrey/United Kingdom
1007
Guascor Wind do Brasil, Ltda., São Paulo/Brazil
Siemens Postal, Parcel & Airport Logistics Limited,
907
Guascor Solar do Brasil Ltda., Manaus/Brazil
100
Siemens plc, Frimley, Surrey/United Kingdom
Jaguarí Energética, S.A., Jaguari/Brazil
100
89
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
100
Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
Siemens Transmission & Distribution Limited,
100
Frimley, Surrey/United Kingdom
100
Siemens Eletroeletronica Limitada, Manaus/Brazil
Siemens Rail Systems Project Limited,
100
OMNETRIC Group Tecnologia e Servicos de Consultoria
Ltda., Belo Horizonte/Brazil
100
Frimley, Surrey/United Kingdom
Siemens Rail Systems Project Holdings Limited,
1007
MINUANO PROMOÇÕES E PARTICIPAÇÕES EÓLICAS LTDA.,
Belém/Brazil
100
Siemens Rail Automation Limited,
100
Guascor Empreendimentos Energéticos, Ltda., Belém/Brazil
Guascor Serviços Ltda., Taboão da Serra/Brazil
100
Equity interest
September 30, 2017
in %
September 30, 2017
Equity interest
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
in %
Siemens Industry Software Computational Dynamics
Limited, Frimley, Surrey/United Kingdom
Siemens Soluciones Tecnologicas S.A.,
100
Frimley, Surrey/United Kingdom
Siemens Pension Funding Limited,
100
Guascor do Brasil Ltda., São Paulo/Brazil
100
Frimley, Surrey/United Kingdom
1007
100
1007
100
Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
Dresser-Rand Participações Ltda., Belém/Brazil
100
Frimley, Surrey/United Kingdom
Siemens Industry Software Simulation and Test Limited,
100
100
Santa Cruz de la Sierra/Bolivia, Plurinational State of
Chemtech Servicos de Engenharia e Software Ltda.,
Rio de Janeiro/Brazil
100
Frimley, Surrey/United Kingdom
Siemens Industry Software Limited,
Siemens Pension Funding (General) Limited,
Central Eólica de México S.A. de C.V., Mexico City/Mexico
Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
Gesa Energia, S. de R.L. de C.V., Mexico City/Mexico
Gesa Eólica Mexico, S.A. de C.V., Mexico City/Mexico
Gesa Oax | Sociedad Anomima de Capital Variable,
Mexico City/Mexico
Siemens S.A.C., Lima/Peru
CD-adapco Battery Design LLC, Dover, DE/United States
Cedar Cap Wind, LLC, Dover, DE/United States
CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
100
Australia Hospital Holding Pty Limited, Bayswater/Australia
100
Mentor Graphics (Shanghai) Electronic Technology Co.,
Ltd., Shanghai/China
Asia, Australia (218 companies)
100
100
Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
Jilin Gamesa Wind Co., Ltd., Da'an/China
100
Dade Behring Hong Kong Holdings Corporation,
Tortola/Virgin Islands, British
100
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
100
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
Caracas/Venezuela, Bolivarian Republic of
100
Gamesa Wind (Tianjin) Co., Ltd., Tianjin/China
100
Siemens Rail Automation, C.A.,
Mentor Graphics Technology (Shenzhen) Co., Ltd.,
Shenzhen/China
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
100
Siemens Business Information Consulting Co., Ltd,
Beijing/China
Exemplar Health (SCUH) Holdings 3 Pty Limited,
1007
70
70
Siemens Building Technologies (Tianjin) Ltd.,
Tianjin/China
1007
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
100
Exemplar Health (NBH) Trust 2, Bayswater/Australia
100
Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
Yongzhou/China
100
Bayswater/Australia
Exemplar Health (NBH) Holdings 2 Pty Limited,
65
MWB (Shanghai) Co Ltd., Shanghai/China
1007
100
100
100
1007
Siemens Uruguay S.A., Montevideo/Uruguay
100
Siemens S.A., Montevideo/Uruguay
100
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
100
Gamesa Uruguay S.R.L., Montevideo/Uruguay
100
Siemens Healthcare Ltd., Dhaka/Bangladesh
1007
Engines Rental, S.A., Montevideo/Uruguay
100
Siemens Bangladesh Ltd., Dhaka/Bangladesh
100
100
SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
Winergy Drive Systems Corporation,
Wilmington, DE/United States
in %
September 30, 2017
100
Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
Camstar Systems Software (Shanghai) Company Limited,
Shanghai/China
Dresser-Rand de Venezuela, S.A.,
Caracas/Venezuela, Bolivarian Republic of
100
Gamesa (Beijing) Wind Energy System Development Co,
Ltd, Beijing/China
Siemens Healthcare S.A.,
1007
Caracas/Venezuela, Bolivarian Republic of
100
Shanghai/China
Guascor Venezuela S.A.,
Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
100
Caracas/Venezuela, Bolivarian Republic of
100
DPC (Tianjin) Co., Ltd., Tianjin/China
Gamesa Eólica VE, C.A.,
100
CD-adapco Software Technology (Shanghai) Co.,Ltd.,
Shanghai/China
100
Maracaibo/Venezuela, Bolivarian Republic of
100
in %
Mentor Graphics Tunisia SARL, Tunis/Tunisia
Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
Zamudio/Spain
Dresser-Rand Field Operations Middle East LLC,
Abu Dhabi/United Arab Emirates
MRX Rail Services UK Limited,
100
Kiev/Ukraine
100
Newbury, Berkshire/United Kingdom
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
Mentor Graphics (UK) Limited,
100
Gamesa Ukraine, LLC, Kiev/Ukraine
100
Frimley, Surrey/United Kingdom
100
Kiev/Ukraine
Materials Solutions Limited,
100% foreign owned subsidiary "Siemens Ukraine",
100
Materials Solutions Holdings Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
Ashgabat/Turkmenistan
100
MRX Technologies Limited, Frimley, Surrey/United Kingdom
100
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
60
Siemens Eco-City Innovation Technologies (Tianjin) Co.,
Ltd., Tianjin/China
100
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
100
Bayswater/Australia
75
15
Shanghai, Shanghai/China
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Siemens Circuit Protection Systems Ltd.,
100
Bayswater/Australia
Preactor International Limited,
100
Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
100
492
100
Dresser-Rand Turkmen Company,
Equity interest
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
Siemens Wind Power Rüzgar Enerjisi Anonim Sirketi,
Kartal/Istanbul/Turkey
100
Sistemas Energéticos Sierra del Carazo, S.L.U.,
Zamudio/Spain
100
Zamudio/Spain
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
100
Company, Istanbul/Turkey
100
S.A. Unipersonal, Sevilla/Spain
Siemens Gamesa Turkey Renewable Energy Limited
Sistemas Energéticos Sierra de Las Estancias,
100
Siemens Finansal Kiralama A.S., Istanbul/Turkey
100
100
Siemens S.A., Tunis/Tunisia
100
in %
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
September 30, 2017
in %
Equity interest
September 30, 2017
114
113
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
Exemption pursuant to Section 264 (3) German Commercial Code.
10
9 Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
1 Control due to a majority of voting rights.
September 30, 2017
100
Equity interest
Wilmington, DE/United States
100
Wilmington, DE/United States
Dresser-Rand International Inc.,
Siemens Gamesa Renewable Energy PA, LLC,
100
Wilmington, DE/United States
100
Wilmington, DE/United States
Dresser-Rand International Holdings, LLC,
Siemens Gamesa Renewable Energy Inc.,
100
Siemens Fossil Services, Inc., Wilmington, DE/United States
100
Siemens Financial, Inc., Wilmington, DE/United States
100
Wilmington, DE/United States
888
100
100
Wilmington, DE/United States
Equity interest
100
100
Wilmington, DE/United States
100
Wilsonville, OR/United States
Siemens Government Technologies, Inc.,
Mentor Graphics Corporation,
100
Wilmington, DE/United States
100
Siemens Generation Services Company,
100
eMeter Corporation, Wilmington, DE/United States
Mannesmann Corporation, New York, NY/United States
100
Dover, DE/United States
100
Siemens Gamesa Renewable Energy Wind, LLC,
EcoHarmony West Wind, LLC, Minneapolis, MN/United
States
100
Dover, DE/United States
Dresser-Rand LLC, Wilmington, DE/United States
Mentor Graphics Global Holdings, LLC,
Dresser-Rand Holding (Luxembourg) LLC,
100
116 Consolidated Financial Statements
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
100
D-R International Sales Inc., Wilmington, DE/United States
D-R Steam LLC, Wilmington, DE/United States
1007
100
Salem, OR/United States
100
80
Dedicated2Imaging LLC, Wilmington, DE/United States
Diversified Energy Transmissions, LLC,
100
1007
100
502
6 Significant influence due to contractual arrangements or legal circumstances.
Siemens Financial Services, Inc.,
7 Not consolidated due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
Siemens Energy, Inc., Wilmington, DE/United States
100
in %
September 30, 2017
in %
100
100
Dresser-Rand Group Inc., Wilmington, DE/United States
Dresser-Rand Global Services, Inc.,
Dresser-Rand Company, Bath, NY/United States
September 30, 2017
Wilmington, DE/United States
Equity interest
Equity interest
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
Exemption pursuant to Section 264 (3) German Commercial Code.
10
8 Not accounted for using the equity method due to immateriality.
Siemens Healthcare Diagnostics Inc.,
Siemens Gamesa Renewable Energy USA, INC,
100
100
Baltimore, MD/United States
Siemens Demag Delaval Turbomachinery, Inc.,
Wheelabrator Air Pollution Control Inc.,
100
Wilmington, DE/United States
100
TASS International Inc., Livonia, MI/United States
Siemens Credit Warehouse, Inc.,
100
100
SMI Holding LLC, Wilmington, DE/United States
Synchrony, Inc., Salem, VA/United States
100
Siemens Corporation, Wilmington, DE/United States
100
Wilmington, DE/United States
100
100
Siemens Public, Inc., Wilmington, DE/United States
Siemens USA Holdings, Inc., Wilmington, DE/United States
Wilmington, DE/United States
Siemens Convergence Creators Corp.,
Wilmington, DE/United States
100
117
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
Wind Portfolio Memberco, LLC, Dover, DE/United States
100
Siemens Electrical, LLC, Wilmington, DE/United States
Whitehall Wind, LLC, Missoula, MT/United States
100
100
100
51
P.E.T.NET Houston, LLC, Austin, TX/United States
100
Wilmington, DE/United States
100
Omnetric Corp., Wilmington, DE/United States
Siemens Medical Solutions USA, Inc.,
100
Siemens Industry, Inc., Wilmington, DE/United States
Siemens Molecular Imaging, Inc.,
Nimbus Technologies, LLC, Bingham Farms,
MI/United States
Wilmington, DE/United States
100
NEM USA Corp., Wilmington, DE/United States
Siemens Healthcare Laboratory, LLC,
97
Navitas Energy Inc, Minneapolis, MN/United States
100
Los Angeles, CA/United States
Wilmington, DE/United States
100
PETNET Indiana LLC, Indianapolis, IN/United States
100
501
Wilmington, DE/United States
Siemens Capital Company LLC,
Siemens Product Lifecycle Management Software Inc.,
100
Pocahontas Wind, LLC, Dover, DE/United States
100
100
Pocahontas Prairie Wind, LLC, Wilmington, DE/United States
Siemens Power Generation Service Company, Ltd.,
100
Wilmington, DE/United States
100
Wilmington, DE/United States
63
Wilmington, DE/United States
Siemens Postal, Parcel & Airport Logistics LLC,
PETNET Solutions Cleveland, LLC,
100
PETNET Solutions, Inc., Knoxville, TN/United States
Wilmington, DE/United States
55
Siemens Transformer (Guangzhou) Co., Ltd.,
Guangzhou/China
51
Siemens High Voltage Switchgear Co., Ltd., Shanghai,
Shanghai/China
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Hangzhou/China
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
51
63
90
Siemens High Voltage Switchgear Guangzhou Ltd.,
Guangzhou/China
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Huludao/China
90
94
94
Siemens Transformer (Wuhan) Company Ltd.,
Wuhan City/China
100
100
Siemens Venture Capital Co., Ltd., Beijing/China
100
84
Siemens Switchgear Ltd., Shanghai, Shanghai/China
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
100
Equity interest
100
Siemens Wind Power Blades (Shanghai) Co., Ltd.,
Shanghai/China
Equity interest
September 30, 2017
Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
Yixing/China
in %
September 30, 2017
in %
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Shenzhen/China
100
Siemens Healthcare Ltd., Shanghai/China
Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
Shanghai/China
Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
70
Siemens Special Electrical Machines Co. Ltd.,
100
Changzhi/China
77
Siemens Healthcare Diagnostics Manufacturing Ltd.,
Shanghai, Shanghai/China
1007
Siemens Standard Motors Ltd., Yizheng/China
Siemens Surge Arresters Ltd., Wuxi/China
100
51
100
Siemens Industrial Automation Products Ltd., Chengdu,
Chengdu/China
Beijing/China
ZeeEnergie Management B.V., Eemshaven/Netherlands
Wirescan AS, Trollaasen/Norway
208
338
50
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
(61 companies)
Rousch (Pakistan) Power Ltd., Lahore/Pakistan
000 Transconverter, Moscow/Russian Federation
000 VIS Automation mit Zusatz „Ein Gemeinschafts-
unternehmen von VIS und Siemens",
Moscow/Russian Federation
26
358
49
Arelion GmbH in Liqu., Pasching b. Linz/Austria
Aspern Smart City Research GmbH, Vienna/Austria
358
258
Aspern Smart City Research GmbH & Co KG,
Vienna/Austria
44
ZAO Interautomatika, Moscow/Russian Federation
ZAO Systema-Service, St. Petersburg/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
Ardora, S.A., Vigo/Spain
46
26
31
358
OIL AND GAS PROSERV LLC, Baku/Azerbaijan
258
Desgasificación de Vertederos, S.A, Madrid/Spain
448
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
Wiepkenhagen
206,12
ZeeEnergie C.V., Amsterdam/Netherlands
Temir Zhol Electrification LLP, Astana/Kazakhstan
49
Symeo GmbH, Neubiberg
554,8
Electrogas Malta Limited, Marsaskala/Malta
33
thinkstep AG, Leinfelden-Echterdingen
29
Transrapid International Verwaltungsgesellschaft mbH i.L.,
Berlin
Energie Electrique de Tahaddart S.A., Tangier/Morocco
Buitengaats C.V., Amsterdam/Netherlands
20
206,12
508
ubimake GmbH i.L., Berlin
508
Valeo Siemens eAutomotive GmbH, Erlangen
50
Veja Mate Offshore Project GmbH, Gadebusch
41
Buitengaats Management B.V., Eemshaven/Netherlands
Infraspeed Maintainance B.V., Zoetermeer/Netherlands
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
208
50
50
Voith Hydro Holding GmbH & Co. KG, Heidenheim
35
508
T-Power NV, Brussels/Belgium
20
Meomed s.r.o., Prerov/Czech Republic
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Siemens AG is a shareholder with unlimited liability of this company.
As part of our substantive audit procedures, we evaluated man-
agement's estimates and assumptions based on a risk-based se-
lection of a sample of contracts. Our sample particularly included
projects that are subject to significant future uncertainties and
risks, such as fixed-price or turnkey projects, projects with com-
plex technical requirements or with a large portion of materials
and services to be provided by suppliers, subcontractors or con-
sortium partners, cross-border projects, and projects with
changes in cost estimates, delays and/or low or negative mar-
gins. Our audit procedures included, among others, review of
the sample contracts and their terms and conditions including
contractually agreed partial deliveries and services, termination
Audit approach: As part of our audit, we obtained an under-
standing of the Group's internally established methods, pro-
cesses and control mechanisms for project management in the
bid and execution phase of construction contracts. We also as-
sessed the design and operating effectiveness of the account-
ing-related internal controls by examining business transactions
specific to construction contracts, from the initiation of the trans-
action through recognition in the consolidated financial state-
ments, and testing internal controls over these processes.
Revenue recognition on construction contracts
Reasons why the matter was determined to be a key audit
matter: The Group conducts a significant portion of its business
under construction contracts, particularly in the Divisions Power
and Gas, Energy Management and Mobility as well as in the Stra-
tegic Unit Siemens Gamesa Renewable Energy. Revenue from
long-term construction contracts is recognized in accordance
with IAS 11, Construction Contracts, based on the extent of prog-
ress towards completion. We consider the accounting for con-
struction contracts to be an area posing a significant risk of ma-
terial misstatement (including the potential risk of management
override of internal controls) and accordingly a key audit matter,
because management's assessments significantly impact the de-
termination of the extent of progress towards completion. These
assessments include, in particular, the scope of deliveries and
services required to fulfill contractually defined obligations, total
contract costs, remaining costs to completion and total contract
revenues, as well as contract risks including technical, political,
regulatory and legal risks. Revenues, contract costs and profit
recognition may deviate significantly from original estimates
based on new knowledge about cost overruns and changes in
project scope over the term of a construction contract.
CONSOLIDATED FINANCIAL STATEMENTS.
refer to NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL
ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS. Explanations of the transaction as well as disclosures
on the preliminary purchase price allocation are included in
→ NOTE 3 ACQUISITIONS AND DISPOSITIONS in the NOTES TO THE
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in connection with
the merger of the Siemens wind power business with Gamesa,
Our audit procedures did not lead to any reservations relating to
the accounting for the merger of the Siemens wind power busi-
ness with Gamesa.
Furthermore, we analyzed the application of uniform accounting
policies of the entities of the wind power business, the tax effects
of the merger, and the processing of the initial consolidation of
the Gamesa entities, including non-controlling interests, in the
Siemens consolidation system. In addition, we evaluated the dis-
closures in the notes to the consolidated financial statements
regarding the merger of the Siemens wind power business with
Gamesa in terms of their compliance with the requirements
defined in IFRS 3.
An area of focus was the determination of the fair values of tech-
nologies and the measurement of warranty obligations associ-
ated with projects. In this regard, among other procedures, we
assessed the appropriateness as audit evidence of the valuation
report as well as the reports of the external experts in the wind
power sector engaged by management through inquiries of the
experts, and evaluated whether the assumptions used reflect
the perspective of an external market participant as of the acqui-
sition date.
Our audit procedures in relation to the preliminary purchase price
allocation included, in addition to assessing the consideration
transferred by Siemens, the evaluation of the methodological
approach of the external expert engaged by management with
respect to the identification of assets acquired as well as the con-
ceptual evaluation of valuation models considering the require-
ments of IFRS 3. With the assistance of our internal valuation
specialists, we examined the valuation methods applied in terms
of the requirements defined in IFRS 13, Fair Value Measurement.
Furthermore, we analyzed whether assumptions and estimates
(such as growth rates, cost of capital, royalty rates or remaining
useful lives) used in determining the fair value of identifiable
assets acquired and liabilities assumed (including contingent
liabilities) as of the acquisition date correspond to general and
industry-specific market expectations. Additionally, we reper-
formed the calculations in the models and reconciled the expected
future cash flows underlying the measurements with, inter alia,
internal business plans.
Audit approach: As part of our group audit, among other pro-
cedures, we analyzed management's assertion that Siemens has
control over the combined entity based on agreements under
corporate law and the criteria defined in IFRS 10, Consolidated
Financial Statements.
128
127
Additional Information
Reasons why the matter was determined to be a key audit
matter: On April 3, 2017, the merger of the Siemens wind power
business with Gamesa Corporación Tecnológica S.A., Spain
("Gamesa") was completed. The Siemens Group holds 59% of the
shares while Gamesa's former shareholders hold 41% of the
shares in the combined entity. Siemens accounts for the business
combination in accordance with IFRS 3, Business Combinations.
Due to the complexity of the transaction and the associated
significant risk of material misstatement, and considering the
assumptions and estimates required to be made by management
as part of the purchase price allocation, the accounting for this
business combination was a key audit matter.
Merger of the Siemens wind power business
with Gamesa
Below, we describe what we consider to be the key audit matters:
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the fiscal year from October 1,
2016 to September 30, 2017. These matters were addressed in
the context of our audit of the consolidated financial statements
as a whole, and in forming our auditor's opinion thereon, and we
do not provide a separate opinion on these matters.
KEY AUDIT MATTERS IN THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
We conducted our audit of the consolidated financial statements
and the group management report in accordance with Sec. 317
HGB and Regulation (EU) No 537/2014 (EU Audit Regulation)
as well as German generally accepted standards on auditing
promulgated by the Institut der Wirtschaftsprüfer [Institute of
Public Auditors in Germany] (IDW). We conducted the audit of
the consolidated financial statements in supplementary compli-
ance with International Standards on Auditing (ISA). Our respon-
sibilities under those laws, rules and standards are further
described in the "Auditor's responsibilities for the audit of the
consolidated financial statements and the group management
report" section of our report. We are independent of the group
companies in accordance with European and German commer-
cial law and professional provisions, and we have fulfilled our
other German ethical responsibilities in accordance with these
requirements. Furthermore, in accordance with Art. 10 (2) f) of
the EU Audit Regulation, we declare that we have not provided
any prohibited non-audit services referred to in Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinions on the consolidated financial statements and on the
group management report.
7 Not consolidated due to immateriality.
328
6 Significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
478
Energías Renovables San Adrián de Juarros, S.A.,
San Adrián de Juarros/Spain
45
BioMensio Oy, Tampere/Finland
238
Compagnie Electrique de Bretagne SAS, Paris/France
40
Explotaciones y Mantenimientos Integrales, S.L.,
Getxo/Spain
508
TRIXELL SAS, Moirans/France
25
Gate Solar Gestión, S.L. Unipersonal,
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
Vassiliko/Greece
Vitoria-Gasteiz/Spain
508
48
Generación Eólica Extremeña, S.L., Plasencia/Spain
308
Parallel Graphics Ltd., Dublin/Ireland
574,8
Hydrophytic, S.L., Vitoria-Gasteiz/Spain
508
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
5 No significant influence due to contractual arrangements or legal circumstances.
BASIS FOR OPINIONS
Sternico GmbH, Wendeburg
VAL 208 Torino GEIE, Milan/Italy
498
100
Siemens Healthcare Limited, Auckland/New Zealand
100
EBV Windpark Almstedt-Breinum GmbH & Co. Betriebs-KG,
Bremen
644,8
Siemens Healthcare Inc., Manila/Philippines
100
egrid applications & consulting GmbH, Kempten
498
Siemens Power Operations, Inc., Manila/Philippines
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
100
624
Siemens Wind Power, Inc., Manila/Philippines
100
Siemens, Inc., Manila/Philippines
100
FEAG Fertigungscenter für Elektrische Anlagen GmbH,
Erlangen
498
CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
100
50
Gamesa Singapore Private Limited, Singapore/Singapore
EOS Uptrade GmbH, Hamburg
Siemens Gamesa Renewable Energy New Zealand Limited,
Auckland/New Zealand
100
50
TASS International Co. Ltd., Seoul/Korea, Republic of
Dresser-Rand & Enserv Services Sdn. Bhd.,
Kuala Lumpur/Malaysia
100
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
Siemens Ltd., Ho Chi Minh City/Viet Nam
100
100
492,7
ASSOCIATED COMPANIES AND JOINT VENTURES
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Industry Software Sdn. Bhd., Penang/Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
100
Germany (32 companies)
100
ATS Projekt Grevenbroich GmbH, Schüttorf
258
100
BELLIS GmbH, Braunschweig
498
100
Blitz F17-814 GmbH & Co. KG, Frankfurt
33
100
Blitz F17-813 GmbH, Frankfurt
338
VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
100
Caterva GmbH, Pullach i. Isartal
100
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
40
1 Control due to a majority of voting rights.
50
Magazino GmbH, Munich
50
Maschinenfabrik Reinhausen GmbH, Regensburg
26
Metropolitan Transportation Solutions Ltd.,
Rosh HaAyin/Israel
20
MeVis BreastCare GmbH & Co. KG, Bremen
49
Reindeer Energy Ltd., Kokhav Ya'ir-Tzur Yigal/Israel
33
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
498
Trickster Howell LTD, Ramat/Israel
50
OWP Butendiek GmbH & Co. KG, Bremen
23
Transfima GEIE, Milan/Italy
428,12
Siemens EuroCash, Munich
66
Transfima S.p.A., Milan/Italy
498
Siemens Venture Capital Fund 1 GmbH, Munich
1004,8
Frontline P.C.B. Solutions Limited Partnership,
Rehovot/Israel
864,8,11,12
258
508
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Consolidated Financial Statements 121
Equity interest
September 30, 2017
in %
September 30, 2017
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
408
Frontline P.C.B. Solutions (1998) Ltd, Rehovot/Israel
Equity interest
in %
508
LIB Verwaltungs-GmbH, Leipzig
Ludwig Bölkow Campus GmbH, Taufkirchen
In accordance with Sec. 322 (3) Sentence 1 HGB, we hereby state
that our audit has not led to any reservations regarding the com-
pliance of the consolidated financial statements and the group
management report.
➤ the accompanying group management report as a whole pro-
vides a suitable view of the Group's position. In all material
respects, this group management report is consistent with the
consolidated financial statements, complies with the provi-
sions of German law and suitably presents the opportunities
and risks of future development.
> the accompanying consolidated financial statements comply,
in all material respects, with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and
the supplementary provisions of German law pursuant to
Sec. 315 a (1) HGB ["Handelsgesetzbuch": German Commercial
Code] and full IFRS as issued by the International Accounting
Standards Board (IASB), and give a true and fair view of the
net assets and financial position of the Group as of Septem-
ber 30, 2017 and its results of operations for the fiscal year
from October 1, 2016 to September 30, 2017 in accordance
with these requirements, and
Joint Venture Service Center, Chirchik/Uzbekistan
43
50
50
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
Tianjin ZongXi Traction Motor Ltd., Tianjin/China
Xi'An X-Ray Target Ltd., Xi'an/China
50
Aberdeen/United Kingdom
RWG (Repair & Overhauls) Limited,
49
London/United Kingdom
40
498
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
508
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
508
Saitong Railway Electrification (Nanjing) Co., Ltd.,
Nanjing/China
508
Odos Imaging Limited, Edinburgh/United Kingdom
50
London/United Kingdom
25
25
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Beijing/China
Primetals Technologies, Limited,
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
50
Americas (17 companies)
218
318
50
Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
32
40
PT Asia Care Indonesia, Jakarta/Indonesia
328
Cyclos Semiconductor, Inc., Wilmington, DE/United States
Echogen Power Systems, Inc., Wilmington, DE/United States
First State Marine Wind LLC, Newark, DE/United States
Frustum, Inc., New York, NY/United States
50
258
49
Kintech Santalpur Wind Park Private Limited, Chennai/India
Transparent Energy Systems Private Limited, Pune/India
P.T. Jawa Power, Jakarta/Indonesia
27
CEF-L Holding, LLC, Wilmington, DE/United States
46
Bytemark Inc., New York, NY/United States
508
Baja Wind US LLC, Wilmington, DE/United States
26
Bangalore International Airport Ltd., Bangalore/India
50
Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
50
Zhi Dao Railway Equipment Ltd., Taiyuan/China
Lincs Renewable Energy Holdings Limited,
25
Swindon, Wiltshire/United Kingdom
308
50
Solucia Renovables 1, S.L., Lebrija/Spain
50
Soleval Renovables S.L., Sevilla/Spain
50
Sistemes Electrics Espluga, S.A., Barcelona/Spain
50
San Sebastián/Spain
33
PhSiTh LLC, New Castle, DE/United States
Nuevas Estrategias de Mantenimiento, S.L.,
37
Panda Stonewall Intermediate Holdings I, LLC,
Wilmington, DE/United States
514
Barcelona/Spain
in %
September 30, 2017
in %
Nertus Mantenimiento Ferroviario y Servicios S.A.,
September 30, 2017
Equity interest
Equity interest
122 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
11
Tusso Energía, S.L., Sevilla/Spain
Advance Gas Turbine Solutions SDN. BHD.,
Kuala Lumpur/Malaysia
508
32
ChinaInvent (Shanghai) Instrument Co., Ltd,
Shanghai/China
Galloper Wind Farm Holding Company Limited,
49
Ethos Energy Group Limited, Aberdeen/United Kingdom
298
PHM Technology Pty Ltd, Melbourne/Australia
33
London/United Kingdom
50
50
Exemplar Health (NBH) Partnership, Melbourne/Australia
Exemplar Health (SCUH) Partnership, Sydney/Australia
Cross London Trains Holdco 2 Limited,
5012
Interessengemeinschaft TUS, Männedorf/Switzerland
Asia, Australia (21 companies)
50
Certas AG, Zurich/Switzerland
49
WS Tech Energy Global S.L., Viladecans/Spain
408
278
308
308
218
Powerit Holdings, Inc., Seattle, WA/United States
Rether networks, Inc., Berkeley, CA/United States
USARAD Holdings, Inc., Fort Lauderdale, FL/United States
Veo Robotics, Inc., Cambridge, MA/United States
Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
Caracas/Venezuela, Bolivarian Republic of
Windar Renovables, S.L., Avilés/Spain
43
Hickory Run Holdings, LLC, Wilmington, DE/United States
206
124 Consolidated Financial Statements
N/A = No financial data available.
A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
13
12 Siemens AG is a shareholder with unlimited liability of this company.
Values according to the latest available local GAAP financial statements; the underlying
fiscal year may differ from the Siemens fiscal year.
11
이 의
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
(5)
80
7
N/A
N/A
10
0
0
19
C.
101
Additional Information
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial Statements
give a true and fair view of the assets, liabilities, financial posi-
tion and profit or loss of the Group, and the Group Management
Report, which has been combined with the Management Report
In our opinion, based on the findings of our audit,
We have audited the consolidated financial statements of Siemens
Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
Group), which comprise the consolidated statements of income
and comprehensive income for the fiscal year from October 1,
2016 to September 30, 2017, the consolidated statements of
financial position as of September 30, 2017, the consolidated
statements of cash flows and changes in equity for the fiscal year
then ended, and the notes to the consolidated financial state-
ments, including a summary of significant accounting policies.
We have also audited the group management report of Siemens
Aktiengesellschaft, which is combined with the management
report of Siemens Aktiengesellschaft, for the fiscal year from
October 1, 2016 to September 30, 2017.
OPINIONS
Report on the audit of the Consoli-
dated Financial Statements and
the Group Management Report
To Siemens Aktiengesellschaft, Berlin and Munich
C.2 Independent Auditor's Report
126 Additional Information
Michael Sen
Siemens Industry Software (Beijing) Co., Ltd.,
بایستیار
Klaus Helmrich
Mans Muril
for Siemens Aktiengesellschaft, includes a fair review of the
development and performance of the business and the position
of the Group, together with a description of the material oppor-
tunities and risks associated with the expected development
of the Group.
Cedrik Neike
Lisa Davis
Dr. Ralf P. Thomas
Momen
Janina Kugel
Hel
Dr. Roland Busch
27
? 
Pul
Joe Kaeser
Ни
Siemens Aktiengesellschaft
The Managing Board
Munich, November 27, 2017
C.1 Responsibility Statement
100
4
4,835
Germany (3 companies)
OTHER INVESTMENTS11
September 30, 2017
123
Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
Siemens AG is a shareholder with unlimited liability of this company.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
408
Modern Engineering and Consultants Co. Ltd.,
Bangkok/Thailand
32
Panda Hummel Station Intermediate Holdings I LLC,
Wilmington, DE/United States
49
Power Automation Pte. Ltd., Singapore/Singapore
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
Kyros Beteiligungsverwaltung GmbH, Grünwald
455
OSRAM Licht AG, Munich
Africa, Middle East (without Germany) (5 companies)
632
12
1
0
1913
2,473
315
17
485
33
167
7
1004,5
1004,5
in millions of €
in millions of €
Equity
Net income
Equity interest
in %
Bentley Systems, Incorporated, Wilmington, DE/United States
Americas (1 company)
Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
Automotive Facilities Brainport Holding N.V., Helmond/Netherlands
Medical Systems S.p.A., Genoa/Italy
ATOS SE, Bezons/France
Uhre Vindmollelaug I/S, Brande/Denmark
Europe, Commonwealth of Independent States (C.I.S.),
Siemens Wind Power Limited, Seoul/Korea, Republic of
IFTEC GmbH & Co. KG, Leipzig
City/Viet Nam
100
Poovani Wind Farms Pvt. Ltd., Chennai/India
100
Beed Renewable Energy Private Limited, Chennai/India
Berkely Design Automation India Private Limited,
New Delhi/India
100
Powerplant Performance Improvement Ltd.,
New Delhi/India
501
100
Preactor Software India Private Limited, Bangalore/India
100
Bhuj Renewable Private Limited, Chennai/India
Bidwal Renewable Private Limited, Chennai/India
CALYPTO DESIGN SYSTEMS INDIA PRIVATE LIMITED,
New Delhi/India
100
Pugalur Renewable Private Limited, Chennai/India
100
Bapuram Renewable Private Limited, Chennai/India
100
Rajgarh Wind Park Private Limited, Chennai/India
Rangareddy Renewable Pvt Ltd, Chennai/India
RSR Power Private Limited, Chennai/India
99
100
100
Channapura Renewable Private Limited, Chennai/India
Chikkodi Renewable Private Limited, Chennai/India
Devarabanda Renewable Energy Pvt. Ltd., Chennai/India
Dhone Renewable Private Limited, Chennai/India
Dresser-Rand India Private Limited, Mumbai/India
Flomerics India Private Limited, Mumbai/India
100
1007
100
100
100
Sanchore Renewable Private Limited, Chennai/India
Sankanur Renewable Private Limited, Chennai/India
Saunshi Renewable Private Limited, Chennai/India
Siemens Convergence Creators Private Limited,
Navi Mumbai/India
100
100
1007
100
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
New Delhi/India
100
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11
Siemens AG is a shareholder with unlimited liability of this company.
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
119
Equity interest
Equity interest
September 30, 2017
in %
September 30, 2017
in %
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
Anantapur Wind Farms Private Limited, Chennai/India
100
Hong Kong/Hong Kong
100
1007
Nirlooti Renewable Private Limited, Chennai/India
Osmanabad Renewable Private Limited, Chennai/India
100
Siemens Postal, Parcel & Airport Logistics Limited,
Siemens Ltd., Hong Kong/Hong Kong
100
1007
Neelagund Renewable Private Limited, Chennai/India
Nellore Renewable Pvt Ltd, Chennai/India
100
Siemens Industry Software Limited, Hong Kong/Hong Kong
100
100
SIEMENS FACTORING PRIVATE LIMITED, Mumbai/India
100
100
Latur Renewable Private Limited, Chennai/India
100
Mathak Wind Farms Private Limited, Chennai/India
Mentor Graphics (India) Private Limited, New Delhi/India
Mentor Graphics (Sales and Services) Private Limited,
Bangalore/India
100
100
100
Siemens Wind Power Private Limited, Navi Mumbai/India
Thoothukudi Renewable Private Limited, Chennai/India
Tirupur Renewable Private Limited, Chennai/India
Tuljapur Wind Farms Private Limited, Chennai/India
Umrani Renewable Private Limited, Chennai/India
Uppal Renewable Private Limited, Chennai/India
VIRALIPATTI RENEWABLE Pvt. Ltd., Chennai/India
100
100
100
100
1007
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1007
120 Consolidated Financial Statements
12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
of this company.
11
Siemens AG is a shareholder with unlimited liability of this company.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Kutch Renewable Pvt Ltd, Chennai/India
Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
9
6 Significant influence due to contractual arrangements or legal circumstances.
100
Mumbai/India
Gadag Renewable Private Limited, Chennai/India
Gagodar Renewable Energy Pvt. Ltd., Chennai/India
Ghatpimpri Renewable Pvt. Ltd., Chennai/India
100
100
100
Siemens Financial Services Private Limited, Mumbai/India
Siemens Gamesa Renewable Private Limited, Chennai/India
Siemens Healthcare Private Limited, Mumbai/India
100
100
100
GM Navarra Wind Energy Private Limited, Chennai/India
Gudadanal Renewable Private Limited, Chennai/India
Hattarwat Renewable Private Limited, Chennai/India
Haveri Renewable Private Limited, Chennai/India
Hungund Renewable Private Limited, Chennai/India
Jalore Wind Park Private Limited, Chennai/India
Jodhpur Wind Farms Private Limited, Chennai/India
Kadapa Wind Farms Private Limited, Chennai/India
Kod Renewable Pvt. Ltd., Chennai/India
100
1007
Siemens Industry Software (India) Private Limited,
New Delhi/India
100
1007
1007
Siemens Industry Software Computational Dynamics India
Pvt. Ltd., Bangalore/India
100
100
Koppal Renewable Private Limited, Chennai/India
Kurnool Wind Farms Private Limited, Chennai/India
Siemens Technology and Services Private Limited,
100
100
Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
100
100
Siemens Postal Parcel & Airport Logistics Private Limited,
Navi Mumbai/India
100
100
75
Siemens Ltd., Mumbai/India
1007
100
5 No significant influence due to contractual arrangements or legal circumstances.
Consolidated Financial Statements
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Healthcare Limited,
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
Colombo/Sri Lanka
100
Mentor Graphics Japan Co., Ltd., Tokyo/Japan
Siemens Gamesa Renewable Energy Lanka Pvt. Ltd.,,
100
Gamesa Japan K.K., Kanagawa/Japan
100
Siemens Pte. Ltd., Singapore/Singapore
1007
Dresser Rand Japan K.K., Tokyo/Japan
100
Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
Singapore/Singapore
63
Zalki Renewable Private Limited, Chennai/India
1007
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Mentor Graphics Asia Pte Ltd, Singapore/Singapore
Siemens Healthcare Pte. Ltd., Singapore/Singapore
100
Siemens Healthcare K.K., Tokyo/Japan
100
4 No control due to contractual arrangements or legal circumstances.
Siemens Industry Software Pte. Ltd., Singapore/Singapore
100
60
Acrorad Co., Ltd., Okinawa/Japan
100
PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
PT. Siemens Industrial Power, Kota Bandung/Indonesia
in %
100
100
100
Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
100
Siemens Industry Software Ltd., Seoul/Korea, Republic of
Siemens Ltd. Seoul, Seoul/Korea, Republic of
100
Siemens Wind Power Limited, Bangkok/Thailand
100
Siemens Healthcare Limited, Seoul/Korea, Republic of
99
100
100
Gamesa (Thailand) Co. Ltd., Bangkok/Thailand
Siemens Healthcare Limited, Bangkok/Thailand
Siemens Limited, Bangkok/Thailand
100
Seongnam-si, Gyeonggi-do/Korea, Republic of
Mentor Graphics (Korea) Co., Limited, Bundang-gu,
100
TASS International K.K., Yokohama/Japan
Siemens Japan Holding K.K., Tokyo/Japan
100
Siemens Industry Software (TW) Co., Ltd.,
Siemens K.K., Tokyo/Japan
100
Taipei/Taiwan, Province of China
Taipei/Taiwan, Province of China
100
Siemens Ltd., Taipei/Taiwan, Province of China
100
Yokohama/Japan
100
Dresser-Rand (Thailand) Limited, Rayong/Thailand
100
Siemens PLM Software Computational Dynamics K.K.,
September 30, 2017
100
September 30, 2017
100
Siemens Medium Voltage Switching Technologies (Wuxi)
Ltd., Wuxi/China
International Wind Farm Development | Limited,
Hong Kong/Hong Kong
1007
85
International Wind Farm Development II Limited,
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
80
Hong Kong/Hong Kong
in %
Siemens Power Automation Ltd., Nanjing/China
100
International Wind Farm Development IV Limited,
Siemens Power Plant Automation Ltd., Nanjing/China
100
Hong Kong/Hong Kong
1007
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
1007
Hong Kong/Hong Kong
100
International Wind Farm Development VII Limited,
100
100
1007
Hong Kong/Hong Kong
100
Beijing/China
International Wind Farm Development V Limited,
Siemens Real Estate Management (Beijing) Ltd., Co.,
Siemens Sensors & Communication Ltd., Dalian/China
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
1007
1007
Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
Tianjin/China
Equity interest
Equity interest
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Wiring Accessories Shandong Ltd., Zibo/China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
Smart Metering Solutions (Changsha) Co. Ltd.,
Changsha/China
Asia Care Holding Limited, Hong Kong/Hong Kong
Camstar Systems (Hong Kong) Limited,
Hong Kong/Hong Kong
100
Siemens International Trading Ltd., Shanghai,
Additional Information
TASS International Co. Ltd., Shanghai/China
60
100
Shanghai/China
100
Trench High Voltage Products Ltd., Shenyang,
100
100
51
Siemens Investment Consulting Co., Ltd., Beijing/China
Shanghai/China
Siemens Manufacturing and Engineering Centre Ltd.,
Hangzhou, Hangzhou/China
100
Siemens Ltd., China, Beijing/China
51
100
Shenyang/China
100
XS Embedded (Shanghai) Co., Ltd., Shanghai/China
Siemens Logistics Automation Systems (Beijing) Co., Ltd,
Beijing/China
Yangtze Delta Manufacturing Co. Ltd.,
65
Furthermore, we evaluated the disclosures on proceedings out of
or in connection with alleged breaches of contract and compli-
ance violations as well as on asset retirement obligations in the
notes to the consolidated financial statements.
Our audit procedures did not lead to any reservations relating
to the accounting for proceedings out of or in connection with
alleged breaches of contract and compliance violations as well as
for asset retirement obligations.
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for provi-
sions, refer to → NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRIT-
ICAL ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS. With respect to proceedings out of or in
connection with alleged breaches of contract and compliance
violations, refer to → NOTE 21 LEGAL PROCEEDINGS. With respect to
the uncertainties and estimates relating to asset retirement obli-
gations, refer to → NOTE 17 PROVISIONS.
Audit approach: With the assistance of internal tax specialists
who have knowledge of relevant tax regulations, we assessed
management's processes and tested internal controls imple-
mented for the identification, recognition and measurement of
tax positions. As part of our audit procedures for uncertain tax
positions, we evaluated whether management's assessment of
the tax effects of significant business transactions and events in
fiscal year 2017, which could result in uncertain tax positions or
impact the measurement of existing uncertain tax positions,
comply with applicable tax law. This includes, in particular, tax
effects from the acquisition or disposal of businesses, corporate
(intragroup) restructuring activities, results of examinations by
tax authorities, and cross-border transactions including the de-
termination of transfer prices. In order to assess measurement
and completeness, we also obtained confirmations from external
tax advisors and inspected expert tax reports commissioned by
Siemens for individual matters. Further, we evaluated manage-
ment's assessments with respect to the prospects of success of
appeal and tax court proceedings by inquiring of the Siemens tax
department and by considering current tax case law.
In assessing the recoverability of deferred tax assets, we particu-
larly analyzed management's assumptions with respect to pro-
jected future taxable income and compared them to internal
business plans. As part of our audit procedures for deferred tax
liabilities, we especially assessed management's assumptions
regarding the permanent reinvestment of undistributed earnings
of subsidiaries considering the dividend plans.
management, evaluating the valuation methods used by drawing
on the expertise of our valuation specialists, and assessing the
significant estimates resulting from the long-term nature.
Through inquiries of persons entrusted with the matter and in-
spections of internal and external documents, we evaluated man-
agement's assessment that Siemens is, as of September 30, 2017,
not covered by the regulations for nuclear waste disposal which
were partly amended in fiscal year 2017 ("Gesetz zur Neuordnung
der Verantwortung in der kerntechnischen Entsorgung"), and
therefore continues to adhere to the German Atomic Energy Act
("deutsches Atomgesetz"), whereby radioactive waste resulting
from the closure of the nuclear facility must be collected and de-
livered to a government-developed final storage facility. In addi-
tion, we assessed the adjustments to the assumed inflation rates
and the changes to the applied interest yield curve in fiscal year
2017 by inquiring of management and, with the assistance of our
internal valuation specialists, by comparing the above-mentioned
changes to publicly available market data.
Our audit procedures did not lead to any reservations relating to
the accounting for uncertain tax positions and deferred taxes.
Uncertain tax positions and deferred taxes
Reasons why the matter was determined to be a key audit
matter: Siemens operates in numerous countries and is subject
to different local tax regulations. The accounting for uncertain
tax positions as well as deferred taxes requires management to
exercise considerable judgment and make estimates and assump-
tions, and was therefore a key audit matter. This particularly per-
tains to the measurement and completeness of uncertain tax
positions, the recoverability of deferred tax assets and the mea-
surement and completeness of deferred tax liabilities.
129
Provisions for proceedings out of or in connection
with alleged breaches of contract and compliance
violations as well as provisions for asset retirement
obligations
Based on the above described uncertainties, our audit proce-
dures with respect to asset retirement obligations focused on the
remediation and environmental protection liabilities for the de-
commissioning of the facilities in Hanau, Germany (Hanau facil-
ities), as well as for the nuclear research and service center in
Karlstein, Germany (Karlstein facilities). Our audit procedures
included, among others, assessing the appropriateness as audit
evidence of an independent expert's report commissioned by
We further considered alleged or substantiated non-compliance
with statutory provisions, official regulations and internal com-
pany policies (compliance violations) by inspecting internal and
external statements on specific matters, obtaining written state-
ments from external legal advisors, and by inquiring of the com-
pliance organization. In this regard, we, among other procedures,
evaluated the conduct and results of internal investigations by
inspecting internal reports and the measures taken to remediate
identified weaknesses, and assessed whether any risks are to be
reflected in the consolidated financial statements.
Audit approach: During our audit of the financial reporting of
proceedings out of or in connection with alleged breaches of
contract and compliance violations, we analyzed the processes
and internal controls implemented by Siemens for the identifica-
tion, assessment and accounting of legal and regulatory proceed-
ings. To determine what potentially significant pending legal
proceedings or claims asserted are known and whether manage-
ment's estimates of the expected cash outflows are reasonable,
our audit procedures included inquiries of management and
other persons within the Group entrusted with these matters,
obtaining written statements from in-house legal counsels with
respect to the assessment of estimated cash outflows and their
probability, obtaining confirmations from external legal advisors
and evaluating internal statements concerning the accounting in
the consolidated financial statements. Furthermore, we exam-
ined legal consulting expense accounts for any indications of
legal matters not yet considered, and inspected additional appro-
priate evidence.
certainties and require estimates that could have a significant
impact on the recognition and measurement of the respective
provision and, accordingly, on net assets and results of opera-
tions. Proceedings out of or in connection with alleged breaches
of contract and compliance violations are subject to uncertain-
ties because they frequently involve complex legal issues and
accordingly, considerable management judgment, in particular
when determining whether and in what amount a provision is
required to account for the risks. The uncertainties and estimates
with respect to asset retirement obligations pertain especially to
the estimated costs of decommissioning, the estimated time
frame over which cash outflows are expected, and the relevant
discount rates.
Reasons why the matter was determined to be a key audit
matter: We considered the accounting for provisions for pro-
ceedings out of or in connection with alleged breaches of contract
and compliance violations, including allegations of corruption
and antitrust violations, and for asset retirement obligations to
be a key audit matter. These matters are subject to inherent un-
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for con-
structing contracts, refer to → NOTE 2 SIGNIFICANT ACCOUNTING
POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS. With respect to provisions for
order related losses and risks, refer to NOTE 17 PROVISIONS in
the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
Our audit procedures did not lead to any reservations relating to
revenue recognition on construction contracts.
Due to the large contract volume and risk profile, our audit pro-
cedures especially focused on large contracts for the construc-
tion of power plants on a turnkey basis, high-voltage-direct-cur-
rent solutions, the delivery of high-speed and commuter trains,
and the construction of offshore wind farms.
rights, penalties for delay and breach of contract as well as liqui-
dated damages. In order to evaluate whether revenues were rec-
ognized on an accrual basis for the selected projects, we ana-
lyzed billable revenues and corresponding cost of sales to be
recognized in the statement of income in the reporting period
considering the extent of progress towards completion, and ex-
amined the accounting for the associated positions in the state-
ment of financial position. Considering the requirements of
IAS 11, we also assessed the accounting for contract amendments
or contractually agreed options. We further performed inquiries
of project management (both commercial and technical project
managers) with respect to the development of the projects, the
reasons for deviations between planned and actual costs, the
current estimated costs to complete the projects, and manage-
ment's assessments on probabilities that contract risks will mate-
rialize. In designing our audit procedures, we also considered
results from project audits conducted by the internal audit func-
tion. Furthermore, we obtained evidence from third parties for
selected projects (e.g. project acceptance documentation, con-
tractual terms and conditions, and legal confirmations regarding
alleged breaches of contract and asserted claims) and inspected
plant and project locations. To identify anomalies in margin de-
velopment throughout the projects' execution, we also applied
data analysis procedures.
Reference to related disclosures: With regard to the account-
ing and measurement policies applied in accounting for uncer-
tain tax positions and deferred taxes, refer to → NOTE 2 SIGNIFI-
CANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in
the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. With respect
to disclosures for deferred tax assets and liabilities, refer to
→ NOTE 7 INCOME TAXES in the NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS.
Additional Information
Other information
In addition, management is responsible for the preparation of
the group management report that as a whole provides a suitable
view of the Group's position and, in all material respects, is con-
sistent with the consolidated financial statements, complies with
the provisions of German law and suitably presents the opportu-
nities and risks of future development and for such arrangements
and measures (systems) as management deems necessary to
enable the preparation of a group management report in accor-
dance with the applicable provisions of German law and to fur-
nish sufficient appropriate evidence for the statements in the
group management report.
➤ the Responsibility Statement in chapter → c.1 of the Annual
Report 2017, and
CONTROL STRUCTURE.
The Chairman's Committee met seven times. It also made one
decision by written circulation. Between meetings, I discussed
topics of major importance with the members of the Chairman's
Committee. The Committee concerned itself, in particular, with
personnel topics and corporate governance issues, including the
assumption by Managing Board members of positions at other
companies and institutions.
The Nominating Committee met six times. Outside these
meetings, it also concerned itself intensively with the long-term
succession planning for the Supervisory Board and, in particu-
lar, with succession to the Chairmanship of the Supervisory
Board and to the Chairmanship of the Audit Committee. At its
meeting on January 31, 2017, the Nominating Committee ap-
proved the nomination of Jim Hagemann Snabe as a candidate
for election by the Supervisory Board to the position of Super-
visory Board Chairman, with the election to take place at the
Supervisory Board's constituent meeting after the elections to
the Supervisory Board at the Annual Shareholders' Meeting on
January 31, 2018. The Nominating Committee prepared the Su-
pervisory Board's proposal to the Annual Shareholders' Meeting
on January 31, 2018, regarding the upcoming regular election
of seven shareholder representatives on the Supervisory Board.
When searching for and evaluating candidates, the Nominating
Committee took into consideration - in addition to the require-
ments of the German Stock Corporation Act, the German Cor-
porate Governance Code and the Bylaws for the Supervisory
Board - the targets established by the Supervisory Board for its
composition and the profile of skills and expertise defined by
the Supervisory Board for its composition. The Nominating
Committee was supported in its activities by an external person-
nel consultant.
The Compliance Committee met four times. It primarily dis-
cussed the quarterly reports and the annual report of the Chief
Compliance Officer.
The Mediation Committee had no need to meet.
The Compensation Committee met three times. It also made
one decision by written circulation. The Compensation Commit-
tee prepared, in particular, proposals for the Supervisory Board
regarding the determination of targets for variable compensa-
tion, the determination and review of the appropriateness of
Managing Board compensation and the approval of the Compen-
sation Report.
The Innovation and Finance Committee held three ordinary
and two extraordinary meetings. The focuses of its meetings
included the Committee's recommendation regarding the bud-
get for fiscal 2017 and the discussion of the Company's strategy,
134
Additional Information
including portfolio measures, as well as the preparation and ap-
proval of investment and divestment projects. For example, the
Committee prepared proposals for the Supervisory Board regard-
ing the acquisition of Mentor Graphics Corporation, regarding
the preparation of the public listing of the strategic unit Health-
ineers and regarding actions relating to the strategic orientation
of the Mobility Division. At its meeting on September 19, 2017,
the Committee also approved the Managing Board decision con-
cerning an investment in a combined cycle power plant project
in the United Arab Emirates and prepared the proposal for the
Supervisory Board regarding Managing Board decisions relating
to financial measures. In addition, the Innovation and Finance
Committee intensively discussed the Company's strategic orien-
tation and its innovation and technology focuses. In particular,
it discussed the activities and recommendations of the Siemens
Technology & Innovation Council.
The Audit Committee met six times. In the presence of the inde-
pendent auditors as well as the President and Chief Executive
Officer and the Chief Financial Officer, the Committee dealt with
the financial statements and the Combined Management Report
for Siemens AG and the Siemens Group. The Audit Committee
discussed the Half-year Financial Report and the quarterly state-
ments with the Managing Board and the independent auditors.
In the presence of the independent auditors, it also discussed the
report on the auditors' review of the Company's Half-year Con-
solidated Financial Statements and of its Interim Group Manage-
ment Report. The Committee recommended that the Supervisory
Board propose to the Annual Shareholders' Meeting the election
of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (Stutt-
gart, Germany) as the independent auditors. The Committee
appointed the independent auditors for fiscal 2017, defined the
audit focal points and determined the auditors' fee. The Commit-
tee monitored the selection, independence, qualification, rota-
tion and efficiency of the independent auditors. Furthermore,
the Audit Committee dealt with the Company's accounting and
accounting process, the effectiveness of its internal control sys-
tem, its risk management system and the effectiveness, re-
sources and findings of the internal audit as well as with reports
concerning potential and pending legal disputes.
WORK IN THE SUPERVISORY BOARD COMMITTEES
The Supervisory Board has established seven standing commit-
tees, which prepare proposals and issues to be dealt with at its
plenary meetings. Some of the Supervisory Board's decision-mak-
ing powers have also been delegated to these committees within
the permissible legal framework. The committee chairpersons
report to the Supervisory Board on their committees' work at the
subsequent Board meetings. A list of the members and a detailed
explanation of the tasks of the individual Supervisory Board
committees are contained in chapter c.4.1 MANAGEMENT AND
DETAILED DISCUSSION OF THE AUDIT
OF THE FINANCIAL STATEMENTS
fiscal 2009. Katharina Breitsameter has signed as auditor since
fiscal 2016, and Thomas Spannagl has signed as auditor respon-
sible for the audit since fiscal 2014. The Annual Financial State-
ments of Siemens AG and the Combined Management Report for
Siemens AG and the Siemens Group were prepared in accordance
with the requirements of German law. The Consolidated Financial
Statements of the Siemens Group were prepared in accordance
with the International Financial Reporting Standards (IFRS) as
adopted by the EU and with the additional requirements of Ger-
man law set out in Section 315 a (1) of the German Commercial
Code (Handelsgesetzbuch). The Consolidated Financial State-
ments of the Siemens Group also comply with the IFRS as issued
by the International Accounting Standards Board (IASB). The in-
dependent auditors conducted their audit in accordance with
Section 317 of the German Commercial Code, the EU Audit Regu-
lation (Regulation (EU) No. 537/2014 of the European Parliament
and of the Council of 16 April 2014 on specific requirements re-
garding statutory audit of public-interest entities and repealing
Commission Decision 2005/909/EC, "EU Audit Regulation") and
German generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschaftsprüfer
(IDW) as well as in supplementary compliance with the Interna-
tional Standards on Auditing (ISA). The abovementioned docu-
ments as well as the Managing Board's proposal for the appropri-
ation of net income were submitted to us by the Managing Board
in advance. The Audit Committee discussed the dividend proposal
in detail at its meeting on November 7, 2017. It discussed the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report in detail at its meeting on November 28,
2017. In this context, the Audit Committee concerned itself, in
particular, with key audit matters, including the audit procedures
implemented. The audit reports prepared by the independent au-
ditors were distributed to all members of the Supervisory Board
and comprehensively reviewed at the Supervisory Board's meet-
ing on November 29, 2017, in the presence of the independent
auditors, who reported on the scope, focal points and main find-
ings of their audit, addressing, in particular, key audit matters and
the audit procedures implemented. No major weaknesses in the
Company's internal control or risk management systems were
reported. At this meeting, the Managing Board explained the
financial statements of Siemens AG and the Siemens Group as
well as the Company's risk management system. At its meeting
on November 29, 2017, the Supervisory Board also approved the
proposal to the Annual Shareholders' Meeting, taking into ac-
count the Audit Committee's recommendation regarding the
election of the independent auditors. This proposal was based on
the Audit Committee's declaration that its recommendation was
free of undue influence by third parties and that it had not en-
tered into any contractual clause that could restrict the choice
within the meaning of Art. 16, para. 6 of the EU Audit Regulation.
Additional Information
135
The Supervisory Board concurs with the results of the audit.
Following the definitive findings of the Audit Committee's exam-
ination and our own examination, we have no objections. The
Managing Board prepared the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements of the
Siemens Group. We approved the Annual Financial Statements
and the Consolidated Financial Statements. In view of our ap-
proval, the Annual Financial Statements of Siemens AG are
adopted as submitted. We endorsed the Managing Board's pro-
posal that the net income available for distribution be used to pay
out a dividend of €3.70 per share entitled to a dividend and that
the amount of net income attributable to shares of stock not
entitled to receive a dividend for fiscal 2017 be carried forward.
CHANGES IN THE COMPOSITION OF THE
SUPERVISORY AND MANAGING BOARDS
Prof. Dr. Siegfried Russwurm left the Managing Board, effective
March 31, 2017. The Supervisory Board appointed Michael Sen
and Cedrik Neike full members of the Managing Board, effective
April 1, 2017. There were no changes in the composition of the
Supervisory Board during the year under review. Effective at the
end of the day on September 30, 2017, Hans-Jürgen Hartung left
the Supervisory Board. Dorothea Simon was appointed a mem-
ber of the Supervisory Board by order of the district court of Char-
lottenburg, Germany, effective from October 1, 2017 until the end
of the Annual Shareholders' Meeting on January 31, 2018.
On behalf of the Supervisory Board, I would like to thank the
members of the Managing Board as well as the employees and
employee representatives of Siemens AG and all Group compa-
nies for their outstanding commitment and constructive cooper-
ation in fiscal 2017.
For the Supervisory Board
Gerhard Comme
Dr. Gerhard Cromme
Chairman
не
The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft (Stuttgart, Germany), audited the Annual Finan-
cial Statements of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group and the Combined Management
Report for Siemens AG and the Siemens Group for fiscal 2017 and
issued an unqualified opinion. Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft (Stuttgart, Germany) has served as inde-
pendent auditors of Siemens AG and the Siemens Group since
SECTIONS 289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
At our meeting on September 20, 2017, we approved an unqual-
ified Declaration of Conformity in accordance with Section 161 of
the German Stock Corporation Act (Aktiengesetz). Information
on corporate governance at Siemens is available in chapter
→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
been made permanently available to our shareholders on our
website. The current Declaration of Conformity is also available
in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
CORPORATE GOVERNANCE CODE
Breitsameter
Wirtschaftsprüferin
[German Public Auditor]
Additional Information
C.3 Report of the Supervisory Board
Berlin and Munich, November 29, 2017
In fiscal 2017, the Supervisory Board performed, in accordance
with its obligations, the duties assigned to it by law, the Siemens
Articles of Association and the Bylaws for the Supervisory Board.
We regularly advised the Managing Board on the management
of the Company and monitored the Managing Board's activities.
We were directly involved at an early stage in all major decisions
regarding the Company. In written and oral reports, the Managing
Board regularly provided us with timely and comprehensive
information on Company planning and business operations as
well as on the strategic development and current state of the
Company. On the basis of reports submitted by the Managing
Board, we considered in detail business development and all de-
cisions and transactions of major significance to the Company.
Deviations from business plans were explained to us in detail and
intensively discussed. The Managing Board coordinated the Com-
pany's strategic orientation with us. The proposals made by the
Managing Board were approved by the Supervisory Board and/or
the relevant Supervisory Board committees after in-depth exam-
ination and consultation. In my capacity as Chairman of the Super-
visory Board, I was also in regular contact with the Managing
Board and, in particular, with the President and Chief Executive
Officer and was kept up-to-date on current developments in the
Company's business situation and on key business transactions.
TOPICS AT THE PLENARY MEETINGS
OF THE SUPERVISORY BOARD
We held a total of six regular plenary meetings and one extraor-
dinary meeting in fiscal 2017. Topics of discussion at our regular
plenary meetings were revenue, profit and employment develop-
ment at Siemens AG, the Company's operating units and the
Siemens Group as well as the Company's financial position and
the results of its operations. We also concerned ourselves as re-
quired with major investment and divestment projects and with
certain risks to the Company.
At our meeting on November 9, 2016, we discussed the Compa-
ny's key financial figures for fiscal 2016 and approved the budget
for 2017. On the basis of reported target achievement, we also
defined the compensation of the Managing Board members for
fiscal 2016. The appropriateness of this compensation was con-
firmed by an internal review. On the recommendation of the
Compensation Committee, we also approved the targets for
Managing Board compensation for fiscal 2017. The remuneration
system for the Managing Board members for fiscal 2017 is un-
changed vis-à-vis the remuneration system for fiscal 2015, which
the Annual Shareholders' Meeting approved by a majority of
more than 92% on January 27, 2015. At our meeting on Novem-
ber 9, 2016, we also approved the preparation of the public list-
ing of the strategic unit Healthineers as well as the acquisition of
Mentor Graphics Corporation.
-
On November 30, 2016, we discussed the financial statements
and the Combined Management Report for Siemens AG and the
Siemens Group as of September 30, 2016, the Annual Report for
2016 (including the Report of the Supervisory Board, the Corpo-
rate Governance Report and the Compensation Report) and the
agenda for the Annual Shareholders' Meeting on February 1,
2017. The Managing Board informed us about the current status
of acquisitions and divestments in particular, the planned
merger of Siemens' wind power business with the publicly listed
company Gamesa Corporación Tecnológica S.A. (Spain) and the
status of the integration of the two previously acquired compa-
nies Dresser Rand Group Inc. and CD-adapco Ltd. In addition, the
Managing Board reported on the status of the implementation of
the "Vision 2020" strategy. We also discussed the annual report
of the Chief Compliance Officer and the pension system. In addi-
tion, the Managing Board informed us about the Mobility Divi-
sion's business position and business development. Finally, at
this meeting, the Supervisory Board approved the recommenda-
tion of the Chairman's Committee that Michael Sen and Cedrik
Neike be appointed full members of the Managing Board, effec-
tive April 1, 2017.
At our meeting on January 31, 2017, the Managing Board reported
to us on the Company's business and financial position following
the conclusion of the first quarter. The Supervisory Board ap-
proved Managing Board decisions regarding financing measures.
In addition, the Supervisory Board was informed about the Nom-
inating Committee's decision that Jim Hagemann Snabe be nom-
inated as a candidate for election by the Supervisory Board to the
position of Supervisory Board Chairman on January 31, 2018.
At our meeting on May 3, 2017, the Managing Board reported to
us on the Company's current business and financial position fol-
lowing the conclusion of the second quarter. The Supervisory
Board defined the target – effective from July 1, 2017 - for the
proportion of women on the Managing Board by June 30, 2022,
as explained in greater detail in chapter c.4.2 CORPORATE GOVER-
-
NANCE STATEMENT PURSUANT TO SECTIONS 289 A AND 315 PARA. 5 OF THE
Management is responsible for the following other information:
At our meeting on August 2, 2017, the Managing Board reported
to us on the Company's business and financial position following
the conclusion of the third quarter. On the recommendation of
the Chairman's Committee, we extended Joe Kaeser's term of
office as a member of the Managing Board and as President and
CEO, effective from August 1, 2018, until the end of the Annual
Shareholders' Meeting that will decide on the ratification of
the acts of the members of the Managing Board for fiscal 2020.
Additional Information
133
The Supervisory Board considered in detail the strategic setup of
the Mobility Division and discussed the further actions planned
regarding the preparation of the public listing of the strategic
unit Healthineers. In addition, the Supervisory Board concerned
itself with the recommendations of the Siemens Technology &
Innovation Council and, in a continuation of the strategy focus
of May 3, 2017, discussed the Company's strategic orientation.
At our meeting on September 20, 2017, the Managing Board
reported to us on the state of the Company and on the business
position of the Process Industries and Drives Division and on the
business position of next47, the separate unit for startups. On the
recommendation of the Chairman's Committee, we extended
Dr. Ralf Thomas's term of office as a member of the Managing
Board, effective from September 18, 2018, until September 17,
2023. In addition, we discussed the Mobility Division's strategic
orientation. As part of our regular review, we adjusted - follow-
ing preparation and a recommendation by the Compensation
Committee the amount of Managing Board compensation for
fiscal 2018. In a further continuation of the strategy focus of
May 3, 2017, the Supervisory Board also concerned itself with the
Company's strategic orientation. Finally, we discussed the effi-
ciency review of our activities.
-
At an extraordinary meeting on September 26, 2017, the Super-
visory Board approved the planned merger of Siemens' mobility
business with the publicly listed company Alstom SA (France).
136 Additional Information
Buits an
C.4 Corporate Governance
and control structure
Lisa Davis
October 15,
1963
August 1,
2014
July 31,
2019
Klaus Helmrich
May 24,
1958
April 1,
2011
March 31,
2021
Janina Kugel
January 12,
1970
March 31,
2021
February 1,
2015
Cedrik Neike
March 7,
1973
April 1,
2017
May 31,
2020
Siegfried Russwurm,
Prof. Dr.-Ing.
June 27,
1963
January 1,
2008
March 31,
2017
(until March 31, 2017)
Michael Sen
January 31,
2020
2011
1964
Dr. rer. nat.
Siemens AG is subject to German corporate law. Therefore, it has
a two-tier board structure, consisting of a Managing Board and a
Supervisory Board.
C.4.1.1 MANAGING BOARD
As the Company's top management body, the Managing Board
is committed to serving the interests of the Company and achiev-
ing sustainable growth in company value. The members of the
Managing Board are jointly responsible for the entire manage-
ment of the Company and decide on the basic issues of business
policy and corporate strategy as well as on the Company's annual
and multi-year plans.
The Managing Board prepares the Company's Quarterly State-
ments and Half-year Financial Report, the Annual Financial
Statements of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group and the Combined Management
Report of Siemens AG and the Siemens Group. In addition, the
Managing Board ensures that the Company adheres to statutory
requirements, official regulations and internal Company policies
and works to achieve compliance with these provisions and pol-
icies within the Siemens Group. The Managing Board has estab-
lished a comprehensive compliance management system. De-
tails are available on the Siemens Global Website at www.
SIEMENS.COM/SUSTAINABILITY-FIGURES
The Managing Board and the Supervisory Board cooperate
closely for the benefit of the Company. The Managing Board in-
forms the Supervisory Board regularly, comprehensively and
without delay on all issues of importance to the Company with
regard to strategy, planning, business development, financial
position, earnings, compliance and risks. When filling managerial
positions at the Company, the Managing Board takes diversity
into consideration and, in particular, aims for an appropriate con-
sideration of women and internationality.
The Supervisory Board has defined for a second time a target for
the proportion of women in the Managing Board of Siemens AG
and has set a deadline for its attainment. The Managing Board
has defined again targets for the proportion of women at the
two management levels below the Managing Board and has set
a deadline for their attainment. Details are set out in chapter
→ C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN ON THE MANAGING BOARD
AND AT THE TWO MANAGEMENT LEVELS IMMEDIATELY BELOW THE MANAGING
BOARD.
The Managing Board has one committee, the Equity and Com-
pensation Committee. This committee, to which the former
Equity and Employee Stock Committee has been transferred,
comprises the President and CEO, the Chief Financial Officer,
the Chief Human Resources Officer and, as a consultative mem-
ber, the Chief of Staff of Siemens AG. It is responsible for the
duties assigned to it by decision of the Managing Board and has
assumed the duties previously assigned to the Equity and Em-
ployee Stock Committee - including, in particular, duties in con-
nection with capital measures and equity-linked financial instru-
ments, relating to the compensation of the employees and
managers of the Siemens Group (except for the compensation
of the members of the Managing Board and Top Management)
and relating to share-based compensation components and em-
ployee share plans.
The Equity and Compensation Committee comprises Joe Kaeser
(Chairman), Dr. Ralf P. Thomas, Janina Kugel and, as a consultative
member, Mariel von Schumann (as of September 30, 2017).
Information on the areas of responsibility and the curricula vitae of
the members of the Managing Board are available on the Siemens
Global Website at www.SIEMENS.COM/COMPANY-STRUCTURE. Infor-
mation on the compensation paid to the members of the Managing
Board is provided in chapter → A.10 COMPENSATION REPORT.
Additional Information
137
Members of the Managing Board and positions
held by Managing Board members
In fiscal 2017, the Managing Board comprised the following
members:
Name
Date of birth
Joe Kaeser
President and
Chief Executive Officer
June 23,
1957
First
appointed
May 1,
2006
Term expires
At the
end of the
2021 Annual
Sharehold-
ers' Meeting
Roland Busch,
November 22, April 1,
C.4.1 Management
[German Public Auditor]
GERMAN COMMERCIAL CODE. As part of a strategy focus, we con-
cerned ourselves comprehensively and in detail with the Compa-
ny's strategic orientation, taking into account current technology
and innovation topics and the status of the implementation of
the "Vision 2020" strategy.
дения
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
German positions:
2023
September 18, September 17,
2013
> Siemens Ltd., India
> Siemens Ltd., China (Chairman)
Spannagl
Wirtschaftsprüfer
> Siemens Healthcare GmbH, Munich
German positions:
Siemens Schweiz AG, Switzerland
(Chairman)
South Africa (Chairman)
> Siemens Gamesa Renewable Energy
S.A., Spain
> Siemens Proprietary Ltd.,
> Siemens Aktiengesellschaft
> Siemens AB, Sweden (Chairman)
Positions outside Germany:
> Siemens Gamesa Renewable Energy
S.A., Spain
> Siemens Corp., USA
(Chairwoman and CEO)
Positions outside Germany:
> VA TECH T&D Co. Ltd., Saudi Arabia
> Siemens W.L.L., Qatar
> Siemens Ltd., Saudi Arabia
Ltd., Saudi Arabia (Deputy Chairman)
> ISCOSA Industries and Maintenance
Österreich, Austria (Chairman)
German positions:
> Siemens Healthcare GmbH, Munich
Positions outside Germany:
> Corporate Governance in chapter c.4 of the Annual Report
2017.
The Supervisory Board is responsible for the following other
information:
> the Report of the Supervisory Board in chapter
Annual Report 2017.
C.3 of the
130
Additional Information
Our opinions on the consolidated financial statements and the
group management report do not cover the other information
and we do not express an opinion or any other form of assurance
conclusion thereon.
In connection with our audit, our responsibility is to read the
other information, and, in doing so, consider whether the other
information
> is materially inconsistent with the consolidated financial
statements, the group management report or our knowledge
obtained in the audit, or
> otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are re-
quired to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF MANAGEMENT AND THE
SUPERVISORY BOARD FOR THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE GROUP
MANAGEMENT REPORT
Management is responsible for the preparation of consolidated
financial statements that comply, in all material respects, with
IFRSS as adopted by the EU and the supplementary provisions of
German law pursuant to Sec. 315 a (1) HGB and full IFRS as issued
by the IASB, for the preparation of consolidated financial state-
ments that give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance
with these requirements and for such internal control as manage-
ment determines is necessary to enable the preparation of con-
solidated financial statements that are free from material mis-
statement, whether due to fraud or error.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
The Supervisory Board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and the group management report.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT
OF THE CONSOLIDATED FINANCIAL STATEMENTS
AND THE GROUP MANAGEMENT REPORT
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
whether the group management report as a whole provides a
suitable view of the Group's position and, in all material respects,
is consistent with the consolidated financial statements and our
audit findings, complies with the provisions of German law and
suitably presents the opportunities and risks of future develop-
ment, and to issue an independent auditor's report that includes
our opinions on the consolidated financial statements and the
group management report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec. 317
HGB and the EU Audit Regulation as well as generally accepted
standards on auditing promulgated by the IDW and in supple-
mentary compliance with ISA will always detect a material mis-
statement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggre-
gate, they could reasonably be expected to influence the eco-
nomic decisions of users taken on the basis of these consolidated
financial statements and the group management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
> identify and assess the risks of material misstatement of the
consolidated financial statements and the group manage-
ment report, whether due to fraud or error, design and per-
form audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for one re-
sulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control;
> obtain an understanding of internal control relevant to the au-
dit of the consolidated financial statements and the arrange-
ments and measures relevant to the audit of the group man-
agement report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of these systems;
> evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related dis-
closures made by management;
Additional Information
S.A., Spain
> Siemens Corp., USA (Deputy Chairman)
> Siemens Gamesa Renewable Energy
Österreich, Austria
> Siemens Aktiengesellschaft
>Arabia Electric Ltd. (Equipment),
Saudi Arabia
Logistics GmbH, Constance
Positions outside Germany:
Positions outside Germany:
German positions:
March 31,
2022
April 1,
2017
November
17, 1968
131
132
> conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit evi-
dence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Group's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in
the consolidated financial statements and the group manage-
ment report or, if such disclosures are inadequate, to modify
our respective opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report.
other matters that may reasonably be thought to bear on our
independence, and related safeguards.
From the matters communicated with those charged with gover-
nance, we determine those matters that were of most signi-
ficance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We
describe each key audit matter in our auditor's report unless laws
or regulations preclude public disclosure about the matter.
However, future events or conditions may cause the Group to Report on other legal and regulatory
cease to continue as a going concern;
> evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent
the underlying transactions and events in a manner that
achieves a true and fair view of the net assets, financial posi-
tion and results of operations of the Group in accordance with
IFRS as adopted by the EU and the supplemental provisions of
German law applicable pursuant to Sec. 315 a (1) HGB and full
IFRS as issued by the IASB;
> obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and the group management report.
We are responsible for the direction, supervision and perfor-
mance of the group audit. We remain solely responsible for
our audit opinions;
> evaluate the group management report's consistency with the
requirements
OTHER REPORTING ITEMS IN ACCORDANCE WITH
ART. 10 OF THE EU AUDIT REGULATION
We were elected as auditor of the consolidated financial state-
ments by the Annual Shareholders' Meeting on February 1, 2017.
We were engaged by the Supervisory Board on February 1, 2017.
We have been the auditor of Siemens Aktiengesellschaft for an
uninterrupted period since the audit of the consolidated financial
statements for the fiscal year from October 1, 2008 to Septem-
ber 30, 2009.
We confirm that the audit opinions included in this auditor's
report are consistent with the additional report to the Audit
Committee in accordance with Art. 11 of the EU Audit Regulation
(audit report).
consolidated financial statements, its compliance with the Responsible auditor
> Siemens Postal, Parcel & Airport
> perform procedures on the forward-looking statements made
by management in the group management report. In partic-
ular, on the basis of sufficient appropriate audit evidence, we
walk through the significant assumptions underlying manage-
ment's forward-looking statements and assess whether the
forward-looking statements were appropriately derived from
these assumptions. We do not provide a separate opinion on
the forward-looking statements and underlying assumptions.
There is a significant unavoidable risk that future events will
differ materially from the forward-looking statements.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant de-
ficiencies in internal control that we identify during our audit.
We provide those charged with governance with a statement that
we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and
The auditor responsible for the audit is Thomas Spannagl.
Munich, November 27, 2017
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
Ralf P. Thomas,
Dr. rer. pol.
March 7,
1961
legal provisions and the view it gives of the Group's position;
Memberships in supervisory boards whose establishment is required by law
138 Additional Information
> Siemens Ltd., India
Positions outside Germany:
Group company positions
(as of September 30, 2017)
> Pensions-Sicherungs-Verein
Versicherungsverein auf Gegen-
seitigkeit, Cologne
Positions outside Germany:
German positions:
> Deutsche Messe AG, Hanover
> EOS Holding AG, Krailling
>inpro Innovationsgesellschaft für
fortgeschrittene Produktions-
systeme in der Fahrzeugindustrie
mbH, Berlin
German positions:
> Penske Automotive Group Inc., USA
Positions outside Germany:
> Atos SE, France
Positions outside Germany:
> Konecranes Plc., Finland
> OSRAM GmbH, Munich
(Deputy Chairman)
External positions
or in comparable domestic or foreign controlling bodies of business enterprises
German positions:
> Allianz Deutschland AG, Munich
(as of September 30, 2017)
Positions outside Germany:
> NXP Semiconductors B.V., Netherlands
German positions:
> OSRAM Licht AG, Munich
(Deputy Chairman)
> Daimler AG, Stuttgart
-
This document contains statements related to our future business
and financial performance and future events or developments
involving Siemens that may constitute forward-looking state-
ments. These statements may be identified by words such as "ex-
pect," "look forward to," "anticipate,” “intend," "plan," "believe,"
"seek," "estimate," "will," "project" or words of similar meaning.
We may also make forward-looking statements in other reports,
in presentations, in material delivered to shareholders and in
press releases. In addition, our representatives may from time to
time make oral forward-looking statements. Such statements are
based on the current expectations and certain assumptions of
Siemens' management, of which many are beyond Siemens' con-
trol. These are subject to a number of risks, uncertainties and
factors, including, but not limited to those described in disclo-
sures, in particular in the chapter Risks in this Annual Report.
Should one or more of these risks or uncertainties materialize, or
should underlying expectations not occur or assumptions prove
incorrect, actual results, performance or achievements of Siemens
may (negatively or positively) vary materially from those de-
scribed explicitly or implicitly in the relevant forward-looking
statement. Siemens neither intends, nor assumes any obligation,
to update or revise these forward-looking statements in light of
developments which differ from those anticipated.
C.5 Notes and forward-looking statements
Additional Information
146
The composition of the Supervisory Board fulfilled the legal re-
quirements regarding the minimum gender quota in the report-
ing period.
C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
ON THE MANAGING BOARD AND AT THE
TWO MANAGEMENT LEVELS IMMEDIATELY
BELOW THE MANAGING BOARD; INFORMATION
ON SUPERVISORY BOARD COMPLIANCE WITH
MINIMUM GENDER QUOTA REQUIREMENTS
At Siemens AG, the target for the share of women on the Managing
Board has been set at a minimum of 2/8, and the corresponding
target for each of the two management levels immediately
below the Managing Board has been set at 20%, applicable in
each case until June 30, 2022. Due to the appointment of
Mr. Neike and Mr. Sen to the expanded Managing Board, which
now has eight members, the target for the Managing Board of
2/7 until June 30, 2017 has been missed since April 1, 2017. The
target for the share of women for each of the two management
levels immediately below the Managing Board at 10% was ful-
filled until June 30, 2017. Until June 30, 2017, assignments to
those two management levels were based on a global system of
position levels. At the end of the reporting period, the company
completely abolished this global system of position levels. As a
result, the management levels on which the new targets are
based have been redefined, and the new targets are not compa-
rable to those in effect up to June 30, 2017.
SIEMENS.COM/289A
Our Company's values and
Business Conduct Guidelines
A general description of the functions and operation of the
Managing Board and the Supervisory Board can be found in chapter
→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
be derived from the bylaws for the corporate bodies concerned.
C.4.2.3 OPERATION OF THE MANAGING BOARD
AND THE SUPERVISORY BOARD, AND COMPOSITION
AND OPERATION OF THEIR COMMITTEES
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to maintain our successful ac-
tivities. They contain the basic principles and rules for our con-
duct within our Company and in relation to our external partners
and the general public. They set out how we meet our ethical and
legal responsibility as a Company and give expression to our cor-
porate values of being "Responsible" - "Excellent" - "Innovative".
In the 170 years of its existence, our Company has built an excel-
lent reputation around the world. Technical performance, inno-
vation, quality, reliability, and international engagement have
made Siemens one of the leading companies in electronics and
electrical engineering. It is top performance with the highest eth-
ics that has made Siemens strong. This is what the Company
should continue to stand for in the future.
145
Additional Information
Further corporate governance practices applied beyond legal
requirements are contained in our Business Conduct Guidelines.
This document includes - in the applicable financial reporting
framework not clearly defined – supplemental financial mea-
sures that are or may be alternative performance measures
(non-GAAP-measures). These supplemental financial measures
should not be viewed in isolation or as alternatives to measures
of Siemens' net assets and financial positions or results of opera-
tions as presented in accordance with the applicable financial
reporting framework in its Consolidated Financial Statements.
Other companies that report or describe similarly titled alterna-
tive performance measures may calculate them differently.
This information and these documents, including the Code and
the Business Conduct Guidelines, are available at: www.
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Werner-von-Siemens-Str. 1
For technical reasons, there may be differences between the
accounting records appearing in this document and those pub-
lished pursuant to legal requirements.
Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
over offer, a management board should convene an extraordinary
general meeting at which shareholders discuss the takeover offer
and may decide on corporate actions. The convening of a share-
holders' meeting - even taking into account the shortened time
limits stipulated in the German Securities Acquisition and Take-
over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
organizational challenge for large publicly listed companies. It
appears doubtful whether the associated effort is justified in
cases where no relevant decisions by the shareholders' meeting
are intended. Therefore, extraordinary shareholders' meetings
shall be convened only in appropriate cases.
© 2017 by Siemens AG, Berlin and Munich
investorrelations@siemens.com
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
+49 89 636-1332474 (Investor Relations)
press@siemens.com
WWW.SIEMENS.COM
Germany
80333 Munich
Siemens AG
This document is an English language translation of the German
document. In case of discrepancies, the German language docu-
ment is the sole authoritative and universally valid version.
E-mail
Phone
Internet
Address
147
Additional Information
WWW.SIEMENS.
COM/INVESTOR/EN/
The "Sustainability Information 2017" which reports on Sustain-
ability and Citizenship at Siemens is available at:
Fax
Siemens voluntarily complies with the Code's non-binding sug-
gestions, with the following exception:
> Henkel Management AG, Düsseldorf
C.4.2.2 INFORMATION ON
CORPORATE GOVERNANCE PRACTICES
German positions:
> Airbus Operations GmbH, Hamburg
> MAN Diesel & Turbo SE, Augsburg
> MAN SE, Munich (Deputy Chairman)
> Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
German positions:
> Axel Springer SE, Berlin
January 27,
2015
> Voith GmbH, Heidenheim
Positions outside Germany:
> Suez S.A., France (Chairman)
German positions:
➤ Bayerische Motoren Werke
Aktiengesellschaft, Munich (Chairman)
> Henkel AG & Co. KGaA, Düsseldorf¹
August 14,
1955
January 23,
2013
> ENGIE S.A., France (Chairman)
> Société Générale S.A., France
July 14,
1971
May 29,
1956
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
January 22,
1969
January 25,
2012
Nicola Leibinger-
Kammüller, Dr. phil.
Gérard Mestrallet
Norbert Reithofer, Dr.-Ing.
Dr.-Ing. E.h.
Chairwoman and Managing Director
of Hacı Ömer Sabancı Holding A.Ş.
Managing Director and Spokesperson
of Siemens Stiftung
Güler Sabancı
President and Chairwoman of the
Managing Board of TRUMPF GmbH
+ Co. KG
December 15, January 24,
1959
2008
Chairman of the Board of Directors
of ENGIE S.A.
April 1,
1949
January 23,
2013
Nathalie von Siemens,
Dr. phil.
January 27,
2015
German positions:
> Messer Group GmbH, Sulzbach
> Siemens Healthcare GmbH, Munich
German positions:
> Allianz SE, Munich
Positions outside Germany:
> A.P. Møller-Mærsk A/S, Denmark (Chairman)
German positions:
German positions:
> Daimler AG, Stuttgart
On September 20, 2017, the Supervisory Board - taking into ac-
count the recommendations of the German Corporate Gover-
nance Code (Code) - newly approved the objectives of its com-
position, including a profile of the skills and expertise that the
Supervisory Board should possess. The composition of the Super-
visory Board of Siemens AG shall be such that qualified control
and advice for the Managing Board is ensured.
Profile of required skills and expertise
The candidates proposed for election to the Supervisory Board
shall have the knowledge, skills and experience necessary to
carry out the functions of a Supervisory Board member in a mul-
tinational company and safeguard the reputation of Siemens in
public. In particular, care shall be taken in regard to the person-
ality, integrity, commitment and professionalism of the individu-
als proposed for election.
The goal is to ensure that, in the Supervisory Board, as a group,
all knowhow and experience is available that is considered essen-
tial in view of Siemens' activities. This includes, for instance,
knowledge and experience in the areas of technology (including
information technology and digitalization), procurement, manu-
facturing and sales, finance, law (including compliance) and hu-
man resources. In addition, the members of the Supervisory
Board shall collectively have knowledge and experience in the
business areas that are important for Siemens, in particular in the
areas of industry, energy, healthcare and infrastructure. As a
group, the members of the Supervisory Board are to be familiar
with the sector in which the Company operates. At least one in-
dependent member of the Supervisory Board shall have knowl-
edge and expertise in the areas of accounting or the auditing of
financial statements and specific knowledge and experience in
applying accounting principles and internal control processes.
In particular, the Supervisory Board shall also include members
who have leadership experience as senior executives or members
of a supervisory board (or comparable body) at a major company
with international operations.
When a new member is to be appointed, a review shall be per-
formed to determine which of the areas of expertise deemed
desirable for the Supervisory Board are to be strengthened.
Internationality
Objectives of the Supervisory Board's
composition and profile of required skills
and expertise of the Supervisory Board
> Siemens Healthcare GmbH, Munich
140 Additional Information
1 Shareholders' Committee.
Michael Sigmund*
Chairman of the Committee
of Spokespersons of the Siemens
Group; Chairman of the Central
Committee of Spokespersons
of Siemens AG
Dorothea Simon*
(since October 1, 2017)
Jim Hagemann Snabe
September 13, March 1,
1957
2014
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
August 3,
1969
October 1,
2017
Chairman of the Board of Directors
of A.P. Møller-Mærsk A/S
October 27,
1965
October 1,
2013
Sibylle Wankel*
General Counsel, Managing Board
of IG Metall
March 3,
1964
April 1,
2009
January 24,
2008
March 16,
1960
January 23,
2013
March 13,
1971
Olaf Bolduan*
Chairman of the Works Council
of Siemens Dynamowerk, Berlin,
Germany
July 24,
1952
July 11,
2014
Michael Diekmann
Chairman of the Supervisory Board
of Allianz SE
January 23,
2013
1 Shareholders' Committee.
Positions outside Germany:
> AUTO1 N.V., Netherlands (Chairman)
> ODDO BHF SCA, France (Co-Chairman)
German positions:
➤ Bayer AG, Leverkusen (Chairman)
> Henkel AG & Co. KGaA, Düsseldorf¹
December 23, January 24,
1954
2008
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2017)
October 21,
1946
January 24,
2008
March 26,
1960
C.4.1.2 SUPERVISORY BOARD
The Supervisory Board oversees and advises the Managing Board
in its management of the Company's business. At regular inter-
vals, the Supervisory Board discusses business development,
planning, strategy and strategy implementation. It reviews the
Annual Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Combined
Management Report of Siemens AG and the Siemens Group, and
the proposal for the appropriation of net income. It approves the
Annual Financial Statements of Siemens AG as well as the Consol-
idated Financial Statements of the Siemens Group, based on the
results of the preliminary review conducted by the Audit Commit-
tee and taking into account the reports of the independent audi-
tors. The Supervisory Board decides on the Managing Board's
proposal for the appropriation of net income and the Report of
the Supervisory Board to the Annual Shareholders' Meeting. In
addition, the Supervisory Board or the Compliance Committee,
which is described in more detail below, concern themselves with
monitoring the Company's adherence to statutory provisions, of-
ficial regulations and internal Company policies (compliance). The
Supervisory Board also appoints the members of the Managing
Board and determines each member's portfolios. Important
Managing Board decisions – such as those regarding major acqui-
sitions, divestments, fixed asset investments or financial meas-
ures - require Supervisory Board approval, unless the Bylaws for
the Supervisory Board specify that such authority be delegated to
the Innovation and Finance Committee of the Supervisory Board.
In the Bylaws for the Managing Board, the Supervisory Board has
established the rules that govern the Managing Board's work.
Information on the work of the Supervisory Board is provided in
chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula vitae
of the members of the Supervisory Board are available on the
Siemens Global Website at www.SIEMENS.COM/SUPERVISORY-
BOARD. The compensation paid to the members of the Supervi-
sory Board is provided in chapter → A.10 COMPENSATION REPORT.
The Supervisory Board of Siemens AG has 20 members. As stipu-
lated by the German Codetermination Act (Mitbestimmungs-
gesetz), half of the members represent Company shareholders, and
half represent Company employees. The employee representatives'
names are marked below with an asterisk (*). In general, the terms
of office of the current Supervisory Board members will expire at
the conclusion of the Annual Shareholders' Meeting in 2018. The
terms of office of Dr. Nicola Leibinger-Kammüller, Jim Hagemann
Snabe and Werner Wenning will expire at the conclusion of the
Annual Shareholders' Meeting in 2021. Effective from October 1,
2017, until the end of the ordinary Annual Shareholders' Meeting
on January 31, 2018, Dorothea Simon has been appointed by court
order as employee representative on the Supervisory Board. She
succeeds Hans-Jürgen Hartung, who left the Supervisory Board at
the end of September 30, 2017. The future Supervisory Board's em-
ployee representatives were newly elected on October 5, 2017, in
accordance with the provisions of the German Codetermination Act
(Mitbestimmungsgesetz). Their election will take effect at the end
of the ordinary Annual Shareholders' Meeting on January 31, 2018.
Members of the Supervisory Board and positions
held by Supervisory Board members
In fiscal 2017, the Supervisory Board comprised the following
members:
Name
Occupation
Gerhard Cromme, Dr. iur.
Chairman
Chairman of the Supervisory Board
of Siemens AG
Date of birth
February 25,
1943
Member since
January 23,
2003
Birgit Steinborn*
First Deputy Chairwoman
Werner Wenning
Second Deputy Chairman
Chairwoman of the Central Works
Council of Siemens AG
Chairman of the Supervisory Board
of Bayer AG
German positions:
Taking the Company's international orientation into account,
care shall be taken to ensure that the Supervisory Board has an
adequate number of members with extensive international expe-
rience. The goal is to make sure that the present considerable
share of Supervisory Board members with extensive international
experience is maintained.
> Allianz SE, Munich (Chairman)
(Deputy Chairman)
Member since
January 24,
2008
Memberships in supervisory boards whose establish-
ment is required by law or in comparable domestic
or foreign controlling bodies of business enterprises
(as of September 30, 2017)
German positions:
> HSBC Trinkaus & Burkhardt AG, Düsseldorf
German positions:
> Siemens Healthcare GmbH, Munich
Treasurer and full-time member
of the Executive Committee of
IG Metall
Date of birth
June 24,
1956
January 27,
2015
March 14,
1959
April 1,
2007
March 10,
1952
Suggestions of the Code
March 2,
1942
Chairman of the Siemens Europe
Committee
Member of the Works Council of
Siemens Erlangen Süd, Germany
Deputy Chairman of the Central
Works Council of Siemens AG
Chairwoman of the Combine Works
Council of Siemens AG
> Fresenius Management SE, Bad Homburg
> Fresenius SE & Co. KGaA, Bad Homburg
(Deputy Chairman)
Additional Information
139
Name
Hans Michael Gaul, Dr. iur.
Reinhard Hahn*
Bettina Haller*
Hans-Jürgen Hartung*
(until September 30, 2017)
Robert Kensbock*
Harald Kern*
Jürgen Kerner*
Occupation
Supervisory Board Member
Trade Union Secretary of
the Managing Board of IG Metall
> BASF SE, Ludwigshafen am Rhein
Diversity
January 27,
2009
In accordance with the German Law for Equal Participation of
Women and Men in Management Positions in the Private and
Public Sectors (Gesetz für die gleichberechtigte Teilhabe von
Frauen und Männern an Führungspositionen in der Privatwirt-
schaft und im öffentlichen Dienst), the Supervisory Board is com-
posed of at least 30 percent women and at least 30 percent men.
The Nominating Committee shall continue to include at least one
female member.
Nicola Leibinger-Kammüller, Dr. phil.
23
22
Gérard Mestrallet
7
7
100%
Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
12
11
92%
Güler Sabancı
7
7
100%
96%
27
28
Jürgen Kerner
Bettina Haller
17
14
82%
Hans-Jürgen Hartung
7
7
Nathalie von Siemens, Dr. phil.
100%
21
21
100%
Harald Kern
16
13
81%
Robert Kensbock
100%
7
100%
WWW.SIEMENS.COM/INVESTORS
Our Articles of Association, the Bylaws for the Supervisory Board,
the Bylaws for the most important Supervisory Board commit-
tees, the Bylaws for the Managing Board, all our Declarations of
Conformity with the Code and a variety of other corporate-
governance-related documents are posted on our website at:
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
C.4.2 Corporate Governance
statement pursuant to Sections
289 a and 315 para. 5 of
the German Commercial Code
The Corporate Governance statement pursuant to Sections 289 a
and 315 para. 5 of the German Commercial Code (Handelsgesetz-
buch) is an integral part of the Combined Management Report.
In accordance with Section 317 para. 2 sentence 4 of the German
Commercial Code, the disclosures made within the scope of Sec-
tions 289 a and 315 para. 5 of the German Commercial Code are
not subject to the audit by the auditors.
C.4.2.1 DECLARATION OF CONFORMITY WITH
THE GERMAN CORPORATE GOVERNANCE CODE
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of October 1,
2017:
"Declaration of Conformity by the Managing Board and the
Supervisory Board of Siemens Aktiengesellschaft with the
German Corporate Governance Code
Siemens AG fully complies and will continue to comply with
the recommendations of the German Corporate Governance
Code ("Code") in the version of February 7, 2017, published
by the Federal Ministry of Justice in the official section of the
Federal Gazette ("Bundesanzeiger").
Since making its last Declaration of Conformity dated Octo-
ber 1, 2016, Siemens AG has complied with the recommen-
dations of the Code.
Berlin and Munich, October 1, 2017
Siemens Aktiengesellschaft
The Managing Board The Supervisory Board"
With regard to the composition of the Supervisory Board, atten-
tion shall be paid to achieving sufficient diversity. Not only is
appropriate consideration to be given to women. Diversity of
cultural heritage, religion and ethnic background and a wide
range of different professional backgrounds, experiences and
ways of thinking are also to be promoted. When considering pos-
sible candidates for new elections or for filling Supervisory Board
positions that have become vacant, the Supervisory Board shall
give appropriate consideration to diversity at an early stage in the
selection process.
As part of our investor relations activities, we inform our investors
comprehensively about developments within the Company. For
communication purposes, Siemens makes extensive use of the
Internet. We publish Quarterly Statements, Half-year Financial
and Annual Reports, earnings releases, ad hoc announcements,
analyst presentations, letters to shareholders and press releases
as well as the financial calendar for the current year, which con-
tains the publication dates of significant financial communica-
tions and the date of the Annual Shareholders' Meeting, at:
without the need to be present at the venue and without a proxy
and to exercise some or all of their rights fully or partially by
means of electronic communications. Shareholders may submit
proposals regarding the proposals of the Managing and Supervi-
sory Boards and may contest decisions of the Annual Sharehold-
ers' Meeting. Shareholders owning Siemens stock with an aggre-
gate notional value of €100,000 or more may also demand the
judicial appointment of special auditors to examine specific is-
sues. The reports, documents and information required by law for
the Annual Shareholders' Meeting, including the Annual Report,
may be downloaded from our website. The same applies to the
agenda for the Annual Shareholders' Meeting and to any counter-
proposals or shareholders' nominations that require disclosure.
Additional Information
144
Michael Sigmund
7
7
100%
Jim Hagemann Snabe
Sibylle Wankel
22
7
21
11
11
100%
C.4.1.3 SHARE TRANSACTIONS BY MEMBERS
OF THE MANAGING AND SUPERVISORY BOARDS
Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
pean Parliament and Council on market abuse (Market Abuse
Regulation), members of the Managing Board and the Super-
visory Board are legally required to disclose all transactions con-
ducted on their own account relating to the shares or debt instru-
ments of Siemens AG or to derivatives or financial instruments
linked thereto, if the total value of such transactions entered into
by a board member or any closely associated person reaches or
exceeds €5,000 in any calendar year. All transactions reported
to Siemens AG in accordance with this requirement have been
duly published and are available on the Company's website at:
WWW.SIEMENS.COM/DIRECTORS-DEALINGS
C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
AND INVESTOR RELATIONS
Shareholders exercise their rights in the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of unappropriated net income, the ratification
of the acts of the Managing and Supervisory Boards, and the
appointment of the independent auditors. Amendments to the
Articles of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders' Meeting
and are implemented by the Managing Board. The Managing
Board facilitates shareholder participation in this meeting
through electronic communications – in particular, via the Inter-
net and enables shareholders who are unable to attend the
meeting to vote by proxy. Furthermore, shareholders may exer-
cise their right to vote in writing or by means of electronic com-
munications (absentee voting). The Managing Board may enable
shareholders to participate in the Annual Shareholders' Meeting
95%
7
96%
The Chairman's Committee makes proposals, in particular, re-
garding the appointment and dismissal of Managing Board mem-
bers and handles contracts with members of the Managing
Board. When making recommendations for first-time appoint-
ments, it takes into account that the terms of these appoint-
ments shall not, as a rule, exceed three years. In preparing rec-
ommendations on the appointment of Managing Board
members, the Chairman's Committee takes into account the
candidates' professional qualifications, international experience
and leadership qualities, the age limit specified for Managing
Board members, the long-range plans for succession as well as
diversity. It also takes into account the targets for the proportion
In fiscal 2017, the Mediation Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
The Innovation and Finance Committee discusses, in particular,
based on the Company's overall strategy, the Company's fo-
cuses of innovation and prepares the Supervisory Board's discus-
sions and resolutions regarding questions relating to the Com-
pany's financial situation and structure including annual
planning (budget) - as well as the Company's fixed asset invest-
ments and its financial measures. In addition, the Innovation
and Finance Committee has been authorized by the Supervisory
Board to decide on the approval of transactions and measures
that require Supervisory Board approval and have a value of less
than €600 million.
In fiscal 2017, the Innovation and Finance Committee comprised
Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
Steinborn and Werner Wenning.
Additional Information
143
Disclosure of participation by individual
Supervisory Board members in meetings
of the Supervisory Board of Siemens AG
and its committees in fiscal 2017
Supervisory Board Members
Gerhard Cromme, Dr. iur
(Chairman)
Birgit Steinborn
(First Deputy Chairwoman)
Werner Wenning
Supervisory Board
and Committee meetings
Participation
38
38
100%
32
32
100%
(Second Deputy Chairman)
The Mediation Committee submits proposals to the Supervisory
Board in the event that the Supervisory Board cannot reach the
two-thirds majority required for the appointment or dismissal of
a Managing Board member on the first ballot.
28
In fiscal 2017, the Nominating Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Nicola Leibin-
ger-Kammüller and Werner Wenning.
In fiscal 2017, the Compliance Committee comprised Dr. Gerhard
Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Har-
ald Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
Birgit Steinborn and Sibylle Wankel.
Independence
An adequate number of independent members shall belong to
the Supervisory Board. Material and not merely temporary con-
flicts of interest, such as governing or advisory body functions at
major competitors of the Company shall be avoided. Under the
presumption that the mere exercise of Supervisory Board duties
as an employee representative gives no cause to doubt compli-
ance with the independence criteria pursuant to Section 5.4.2 of
the Code, the Supervisory Board shall have a minimum of sixteen
members who are independent in the meaning of the Code. In
any case, the Supervisory Board shall be composed in such a way
that a number of at least six independent shareholder represen-
tatives in the meaning of Section 5.4.2 of the Code is achieved.
No more than two former members of the Managing Board of
Siemens AG shall belong to the Supervisory Board.
The Supervisory Board members shall have sufficient time to be
able to exercise their mandates with the necessary regularity and
diligence.
Limits on age and on length of membership
In compliance with the age limit stipulated by the Supervisory
Board in its Bylaws, only individuals who are no older than
70 years of age shall, as a rule, be nominated for election to the
Supervisory Board. Nominations shall take into account the reg-
ular limit established by the Supervisory Board, which restricts
membership on the Supervisory Board to a maximum of three
full terms of office (15 years). The aim is to ensure that the
Supervisory Board has an appropriate age structure and range of
experience.
Additional Information 141
Status of implementation of the objectives of the
Supervisory Board's composition and profile of
required skills and expertise; independent Super-
visory Board members
With its current membership, the Supervisory Board meets all the
above-mentioned objectives for its composition and fulfills the
profile of required skills and expertise. The Supervisory Board
members have the specialist and personal qualifications consid-
ered necessary. As a group, they are familiar with the sector in
which the Company operates and have the knowledge, skills and
experience essential for Siemens. A considerable number of Super-
visory Board members are engaged in international activities
and/or have many years of international experience. Appropriate
consideration has been given to diversity in the Supervisory
Board. In fiscal 2017, the Supervisory Board had six female mem-
bers. Since October 1, 2017, it has had seven female members,
of whom three are shareholder representatives and four are em-
ployee representatives. The mandatory minimum quota stipu-
lated in Section 96, para. 2, sent. 1 of the German Stock Corpo-
ration Act (Aktiengesetz) has therefore been met. Dr. Nicola
Leibinger-Kammüller is a member of the Nominating Committee.
The Supervisory Board also has an adequate number of indepen-
dent members. In the opinion of the Supervisory Board, there are
currently at least 17 Supervisory Board members who are indepen-
dent in the meaning of Section 5.4.2 of the Code. Of these inde-
pendent members, at least seven - namely, Michael Diekmann,
Dr. Hans Michael Gaul, Gérard Mestrallet, Dr. Norbert Reithofer,
Güler Sabancı, Jim Hagemann Snabe and Werner Wenning - are
shareholder representatives. The regulations establishing limits
on age and limiting membership in the Supervisory Board to three
full terms of office (15 years) are complied with.
Supervisory Board Committees
The Supervisory Board has seven committees, whose duties,
responsibilities and procedures fulfill the requirements of the
German Stock Corporation Act (Aktiengesetz) and the Code. The
chairmen of these committees provide the Supervisory Board
with regular reports on their committees' activities.
of women on the Managing Board specified by the Supervisory
Board. The Chairman's Committee concerns itself with questions
regarding the Company's corporate governance and prepares the
resolutions to be approved by the Supervisory Board regarding
the Declaration of Conformity with the Code - including the ex-
planation of deviations from the Code - and regarding the ap-
proval of the Corporate Governance Report as well as the Report
of the Supervisory Board to the Annual Shareholders' Meeting.
Furthermore, the Chairman's Committee submits recommenda-
tions to the Supervisory Board regarding the composition of the
Supervisory Board committees and decides whether to approve
contracts and business transactions with Managing Board mem-
bers and parties related to them.
In fiscal 2017, the Chairman's Committee comprised Dr. Gerhard
Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
Wenning.
The Compensation Committee prepares, in particular, the pro-
posals for decisions by the Supervisory Board's plenary meetings
regarding the system of Managing Board compensation, includ-
ing the implementation of this system in Managing Board con-
tracts, the definition of the targets for variable Managing Board
compensation, the determination and review of the appropriate-
ness of the total compensation of individual Managing Board
members and the approval of the annual Compensation Report.
In fiscal 2017, the Compensation Committee comprised Werner
Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
The Audit Committee oversees, in particular, the accounting
and the accounting process and conducts a preliminary review of
the Annual Financial Statements of Siemens AG, the Consoli-
dated Financial Statements of the Siemens Group and the Com-
bined Management Report of Siemens AG and the Siemens
Group. On the basis of the independent auditors' report on their
audit of the annual financial statements, the Audit Committee
makes, after its preliminary review, recommendations regarding
Supervisory Board approval of the Annual Financial Statements
of Siemens AG and the Consolidated Financial Statements of the
Siemens Group. The Audit Committee discusses the Quarterly
Statements and Half-year Financial Report with the Managing
Board and the independent auditors and deals with the auditors'
report on the review of the Half-year Consolidated Financial
Statements and Interim Group Management Report. It concerns
itself with the Company's risk monitoring system and oversees
the effectiveness of the internal control, risk management and
the internal audit systems. The Audit Committee receives regular
reports from the Internal Audit Department. It prepares the
Supervisory Board's recommendation to the Annual Share-
holders' Meeting concerning the election of the independent
142 Additional Information
auditors and submits the corresponding proposal to the Super-
visory Board. It awards the audit contract to the independent
auditors elected by the Annual Shareholders' Meeting and moni-
tors the independent audit of the financial statements as well as
the auditors' selection, independence, qualification, rotation and
efficiency.
In fiscal 2017, the Audit Committee comprised Dr. Hans Michael
Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
Hagemann Snabe and Birgit Steinborn. The members of the Audit
Committee are, as a group, familiar with the sector in which the
Company operates. Pursuant to the German Stock Corporation
Act, the Audit Committee must include at least one Supervisory
Board member with knowledge and experience in the areas of
accounting or the auditing of financial statements. Pursuant to
the Code, the chairman or chairwoman of the Audit Committee
shall have specialist knowledge and experience in the application
of accounting principles and internal control processes, shall be
independent and may not be a former Managing Board member
whose appointment ended less than two years ago. The Chair-
man of the Audit Committee, Dr. Hans Michael Gaul, fulfills these
requirements.
The Compliance Committee concerns itself, in particular, with
monitoring the Company's adherence to statutory provisions,
official regulations and internal Company policies (compliance).
The Nominating Committee is responsible for making recom-
mendations to the Supervisory Board on suitable candidates for
election by the Annual Shareholders' Meeting as shareholder
representatives on the Supervisory Board. In preparing these rec-
ommendations, the objectives defined by the Supervisory Board
for its composition – in particular, independence and diversity -
are to be appropriately considered, as are the proposed candi-
dates' required knowledge, abilities and professional experience.
Fulfillment of the required profile of skills and expertise is also to
be aimed at. Attention shall be paid to an appropriate participa-
tion of women and men in accordance with the legal require-
ments relating to the gender quota as well as to ensuring that the
members of the Supervisory Board are, as a group, familiar with
the sector in which the Company operates.
28
Presence
Hans Michael Gaul, Dr. iur.
Olaf Bolduan
7
7
100%
Michael Diekmann
10
9
90%
7
100%
23
23
100%
Reinhard Hahn
Order no. CGXX-C10029-00-7600
siemens.com
1,204
75,375
22%
1,482
58,429
1,279
1,498
(33)%
1,467
3,431
190
39%
Assets classified as held for disposal
1,098
10%
18,160
19,942
Goodwill
Total current assets
2,297
Other current assets
Current income tax assets
Inventories
13%
790
Total assets
(9)%
Other assets
6,800
55,329
6%
27,906
24,159
16%
Other intangible assets
10,926
7,742
41%
Property, plant and equipment
10,977
10,157
8%
Investments accounted for using the equity method
2,727
3,012
Other financial assets
19,044
> 200%
20,610
(8)%
Deferred tax assets
Total non-current assets
7,664
Income tax expenses
5%
7,404
The increase in Basic earnings per share reflects the higher net
income compared to fiscal 2016, while the weighted average
number of shares outstanding increased slightly year-over-year.
At 13.5%, ROCE was below the range established in our One
Siemens financial framework, as expected. The decline year-over-
year was due primarily to the merger with Gamesa and the acqui-
sition of Mentor Graphics, which led to a significant increase in
average capital employed (the denominator for ROCE). Net in-
come, the main component for the numerator, was also nega-
tively affected by burdens related to these transactions.
Income from discontinued operations, net of income taxes
was sharply lower compared to the prior year. In fiscal 2016, it
primarily included a gain of €102 million from the sale of the re-
maining assets in the hearing aid business and €76 million re-
lated to the former Siemens IT Solutions and Services activities.
The tax rate for fiscal 2017 was 26%, positively influenced by uti-
lization of previously impaired tax loss carryforwards and by de-
cisions arising from tax audits. The tax rate 27% in the prior year
was positively influenced by successful appeals of tax decisions
for prior years. As a result, Income from continuing operations
increased 14%.
As a result of the development described for the segments,
Income from continuing operations before income taxes
increased 12%. This amount also included higher expenses - as
planned - for selling and R&D, primarily at Digital Factory and
Healthineers, as we continued targeted investments aimed at
organic volume growth and strengthening our capacities for in-
novation, such as for MindSphere at Digital Factory and Atellica
at Healthineers. Severance charges for continuing operations
were €466 million, of which €385 million were in the Industrial
Business. In fiscal 2016, severance charges for continuing opera-
tions were €598 million, of which €541 million were in the Indus-
trial Business.
10%
6.74
14.3%
7.44
13.5%
Basic earnings per share
ROCE
11%
5,584
6,179
(72)%
188
53
Income from discontinued operations, net of income taxes
Net income
14%
5,396
6,126
Income from continuing operations
(9)%
(2,008)
(2,180)
8,306
Income from continuing operations before income taxes
10%
(1,994)
16,287
17,160
Trade and other receivables
(4)%
1,293
1,242
Available-for-sale financial assets
(21)%
10,604
8,375
Cash and cash equivalents
Other current financial assets
% Change
2017
(in millions of €)
A.4 Net assets position
Combined Management Report
16
12%
70,388
653
(2)%
Reconciliation to Consolidated Financial Statements
(1,785)
Sep 30,
2016
17%
7%
902
125,717
(4)%
47,986
45,884
(1)%
2,471
639
2,445
(21)%
1,142
Debt ratio
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
(10)%
5,087
4,579
Provisions
93%
829
1,599
Deferred tax liabilities
(30)%
89,278
90,901
(2)%
67%
Combined Management Report
18
The increase in non-controlling interests was due mainly to
the merger with Gamesa.
The main factors for the change in total equity attributable to
shareholders of Siemens AG were €6.0 billion in net income
attributable to shareholders of Siemens AG, €2.5 billion in other
comprehensive income, net of income taxes, mainly due to
remeasurements of defined benefit plans, and €2.5 billion in
changes in equity resulting from the merger with Gamesa. This
increase was partly offset by dividend payments of €2.9 billion
(for fiscal 2016).
-
The merger with Gamesa and the acquisition of Mentor Graphics
were the primary factors in the increase in deferred tax liabili-
ties. While the merger with Gamesa also brought substantial
new provisions, this effect was more than offset by positive
factors mainly related to a major asset retirement obligation -
resulting in a net decrease.
Provisions for pensions and similar obligations fell on a reduc-
tion of Siemens' defined benefit obligation (DBO) mainly due to
increased discount rate assumptions.
Long-term debt increased mainly due to the issuance of fixed-/
floating-rate instruments totaling US$7.5 billion (€7.0 billion)
in seven tranches with different maturities of up to 30 years.
This was partly offset by the above mentioned reclassifications to
short-term debt and current maturities of long-term debt.
The increase in trade payables was due mainly to the merger
with Gamesa.
The decrease in short-term debt and current maturities of
long-term debt was due mainly to the repayment of fixed-rate
instruments totaling €4.9 billion. This was partly offset by reclas-
sifications of long-term fixed-/floating-rate instruments totaling
€3.7 billion.
6%
13,695
125,717
605
1,438
133,804
28%
33%
26%
34,211
43,089
Total liabilities and equity
Non-controlling interests
Total equity attributable to shareholders of Siemens AG
Equity ratio
72%
138%
133,804
9,582
8%
8,048
9,755
Trade payables
(12)%
6,206
5,447
Short-term debt and current maturities of long-term debt
% Change
2016
2017
(in millions of €)
Sep 30,
Our capital structure developed as follows:
A.5.1 Capital structure
A.5 Financial position
17
Combined Management Report
Deferred tax assets decreased mainly due to income tax effects
related to remeasurement of defined benefits plans.
Assets classified as held for disposal increased mainly due to
reclassification of shares in OSRAM Licht AG (OSRAM) in an
amount of €1.2 billion from other financial assets.
The increase in other current financial assets was driven by
higher loans receivable at SFS, which were mainly due to new
business and reclassification of non-current loans receivable.
In fiscal 2017, the acquisition of Mentor Graphics and the merger
with Gamesa were the major factors related to the increase in
trade and other receivables, partly offset by the Power and Gas
Division due to declining business volume. While these transac-
tions were also the largest factors for the increased goodwill and
other intangible assets, the increase in inventories was mainly
driven by the merger with Gamesa.
Our total assets in fiscal 2017 were influenced by negative cur-
rency translation effects of €4.7 billion, led by the U.S. dollar.
6%
21%
Other current financial liabilities
1,444
1,933
24,761
26,777
Long-term debt
1%
42,916
43,394
Total current liabilities
139%
40
97
Liabilities associated with assets classified as held for disposal
Provisions for pensions and similar obligations
(2)%
20,049
Other current liabilities
13%
2,085
2,355
Current income tax liabilities
2%
4,166
4,247
Current provisions
(25)%
20,437
Financial Services (SFS)
(in millions of €)
11.2%
A.3.2.1 POWER AND GAS
A.3.2.2 ENERGY MANAGEMENT
Fiscal year
% Change
(in millions of €)
2017
2016
Actual
Comp.
Fiscal year
% Change
Orders
13,628
12,963
5%
5%
(in millions of €)
(30)%
(31)%
19,454
13,422
Orders
3%
A.3.2 Segment information analysis
3%
12,277
Revenue
Comp.
Actual
2016
2017
11,940
Revenue
11
Revenue in Asia, Australia was up clearly year-over-year,
as growth in Digital Factory, SGRE, Energy Management and
Healthineers was partly offset by declines in Power and Gas and
Mobility. China's growth outpaced the region overall, as all in-
dustrial businesses except Mobility recorded higher revenue,
with Digital Factory, SGRE and Energy Management posting the
highest increases.
13%
Siemens
83,049
79,644
4%
3%
therein: China
Siemens
7,484
85,669
6,850
86,480
9%
10%
therein: emerging
markets¹
28,464
27,195
5%
In the Americas, revenue came in higher year-over-year, driven
primarily by the merger with Gamesa, which brought new vol-
ume in Latin America, and revenue growth in Digital Factory and
Building Technologies. In the U.S., increases in Digital Factory,
Building Technologies and Mobility were offset by declines in
Power and Gas and in Process Industries and Drives.
Growth drivers in Europe, C.I.S., Africa, Middle East included
SGRE, Digital Factory and Mobility. These increases were partly
offset by a clear revenue decline in Power and Gas. In Germany,
revenue was up with increases in the majority of industrial busi-
nesses partly offset by declines at Energy Management and
Power and Gas.
Revenue related to external customers went up moderately year-
over-year and increased in the majority of industrial businesses,
offsetting declines in Power and Gas and Process Industries and
Drives. Higher revenue at SGRE benefited from substantial port-
folio effects following the merger.
Orders in the Americas region were down clearly year-over-year
on a substantial decline in Power and Gas. In addition, order intake
at Mobility declined significantly, while Building Technologies and
Digital Factory posted double-digit growth, the latter primarily due
to portfolio effects from the acquisition of Mentor Graphics. The
pattern of order development in the U.S. was roughly the same as
in the Americas region, with double-digit growth at Building Tech-
nologies and Digital Factory more than offset by substantial de-
clines in Power and Gas, Mobility and SGRE.
In the Europe, C.I.S., Africa, Middle East region, with the excep-
tion of Power and Gas, all industrial businesses posted order
growth, including double-digit growth in Mobility and Energy
Management. Orders came in substantially higher in Germany,
due to higher levels of large orders in SGRE, Energy Management
and Mobility compared to fiscal 2016.
Orders related to external customers came in only slightly below
the high level a year ago despite substantial, ongoing contraction
in markets for Power and Gas. The Division reported a sharply
lower volume from large orders compared to the prior year, when
it had won large contracts totaling €4.7 billion in Egypt. This fac-
tor also influenced the decline in emerging markets. All other
industrial businesses took in higher orders year-over-year. Digital
Factory and Mobility recorded double-digit order growth, while
higher orders at SGRE benefited from significant portfolio effects.
Combined Management Report
1 As defined by the International Monetary Fund.
(11)%
27,239 30,448 (11)%
therein: emerging
markets¹
(2)%
(1)%
3%
1 As defined by the International Monetary Fund.
15,467
16,471
10.8%
Comp.
8%
7%
Successfully executing its growth initiatives in both the regions
and across its businesses, Building Technologies increased orders
and revenue and grew faster than its market and major compet-
itors. On a geographic basis, orders and revenue were up in all
three reporting regions with the strongest growth contribution
coming from the U.S. Profit and profitability increased due mainly
to higher revenue and improvements in productivity. Profit devel-
opment in fiscal 2017 benefited from a €94 million gain related
to pension plan amendments. Severance charges were similar in
both periods, at €18 million in fiscal 2017 and €16 million a year
earlier.
A.3.2.4 MOBILITY
(in millions of €)
2017
Fiscal year
2016
Orders
8,963
7,875
Revenue
8,099
7,825
Profit
743
678
11,532
% Change
Comp.
Actual
Fiscal year
2016
2017
(in millions of €)
Orders
% Change
A.3.2.5 DIGITAL FACTORY
Order growth at Mobility was driven primarily by the rolling stock
business and supported by a higher volume from large orders.
The current period included a number of significant contract
wins in all three reporting regions, most notably in the region
Europe, C.I.S. Africa, Middle East region, including an order for
commuter rail and an order for a driverless metro, both in Austria,
and large orders for the Division's new commuter rail platform
Mireo in Germany. In the Asia, Australia region, the Division won
a large turnkey project for the extension of a rapid transit system
in Thailand. The largest contract wins in fiscal 2016 included an
order for light rail vehicles in the U.S., a commuter rail contract
in Germany and a rail automation order in Algeria. While revenue
in the rolling stock business declined in the first half of the fiscal
year due mainly to timing factors related to large rail projects,
Mobility successfully executed on its large rolling stock and loco-
motive orders, resulting in double-digit revenue growth in the
% Change
Comp.
16%
6%
8.7%
9.2%
Profit margin
Actual
14%
4%
10%
rolling stock business in the second half. The Division's rail infra-
structure business also contributed to revenue growth for the
whole fiscal year. On a geographic basis, revenue increases in
Europe, C.I.S., Africa, Middle East and the Americas more than
offset a decline in Asia, Australia, which reported a sharp drop in
China. Profit improved in the majority of the businesses, driven
by higher revenue and successful project execution. The increase
in severance charges, which were €46 million in the current pe-
riod up from €16 million a year earlier, was largely offset by a
€28 million gain related to pension plan amendments.
9.4%
12.0%
Profit margin
Orders grew moderately year-over-year, due mainly to a higher
volume from large orders in the solutions business, including an
order totaling €0.8 billion for an offshore grid connection project
in Germany, an order totaling €0.6 billion for substations in Qatar
and a high-voltage direct current (HVDC) order totaling €0.4 bil-
lion in India. The medium voltage and systems business and the
low voltage and products business also posted higher orders
year-over-year. These increases were partly offset by declines in
the Division's other businesses. On a regional basis, orders were
up in all three reporting regions, predominantly in Europe, C.I.S.,
Africa, Middle East. Revenue was also up moderately with most
of the Division's businesses recording moderate to clear in-
creases. On a regional basis, revenue increased in all three re-
porting regions, with significant growth in Asia, Australia. All of
the Division's businesses delivered a positive contribution to
profit, benefiting from lower severance charges that were
€39 million and €71 million in fiscal 2017 and fiscal 2016, respec-
tively. The high voltage products and transformer businesses
showed significant improvement year-over-year.
Orders declined substantially year-over-year, due mainly to a
sharply lower volume from large orders in the solutions business,
which had recorded large orders for power plants, including ser-
vice, from Egypt totaling €4.7 billion in fiscal 2016. In contracting
markets for the Division's offerings, order intake was down in all
businesses and in all three reporting regions. As a result of this
continuing market weakness, revenue declined clearly and in all
reporting regions, as a decrease in the new-unit business was
only partly offset by an increase in the service business. Profit
was significantly lower year-over-year despite a continuing
strong contribution from the service business, on reduced capac-
ity utilization following the weaker order intake, price declines,
and higher net charges related to project execution and comple-
tion year-over-year. In addition, profit in fiscal 2016 benefited
from positive effects totaling €130 million from revised estimates
related to resumption of long-term construction and service con-
tracts in Iran following the ending or easing of EU and U.S. sanc-
tions and €118 million from the measurement of inventories.
Costs for the integration of Dresser-Rand were €33 million in
fiscal 2017 compared to €59 million in fiscal 2016. Finally, sever-
ance charges were lower in fiscal 2017, at €19 million compared
to €69 million in fiscal 2016. Global energy trends continue to
structurally reduce overall demand in markets for the Division's
offerings, resulting in declining new-unit business and corre-
sponding price pressure due to current overcapacities.
11.4%
10.3%
Profit margin
4%
12 Combined Management Report
895
7.5%
932
Profit
Profit margin
(5)%
(6)%
(15)%
1,872
1,591
7.6%
14%
A.3.2.3 BUILDING TECHNOLOGIES
(in millions of €)
6%
36%
577
784
Profit
6,156
6,523
Fiscal year
Revenue
6,435
6,913
Orders
Actual
2016
2017
7%
13%
12%
6,439
Fiscal year
2017
2016
6,179
5,584
(568)
(544)
799
784
198
282
A.2.5 Dividend
We intend to continue providing an attractive return to our share-
holders. Therefore, we intend to propose a dividend whose dis-
tribution volume is within a dividend payout range of 40% to
60% of net income, which we may adjust for this purpose to ex-
clude selected exceptional non-cash effects. As in the past, we
intend to fund the dividend payout from Free cash flow.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the follow-
ing proposal to allocate the unappropriated net income of
Siemens AG for fiscal 2017: to distribute a dividend of €3.70 on
each share of no par value entitled to the dividend for fiscal year
2017 existing at the date of the Annual Shareholders' Meeting,
with the remaining amount to be carried forward. Payment of the
proposed dividend is contingent upon approval by Siemens
shareholders at the Annual Shareholders' Meeting on January 31,
2018. The prior-year dividend was €3.60 per share.
The proposed dividend of €3.70 per share for fiscal 2017 repre-
sents a total payout of €3.0 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on net income of €6.2 billion for
fiscal 2017, the dividend payout percentage is 49%.
Less: Taxes on interest adjustments
(tax rate (flat) 30%)
Total equity
Calculation of capital employed
For purposes of calculating ROCE in interim periods, income be-
fore interest after tax is annualized. Average capital employed is
determined using the average of the respective balances as of
the quarterly reporting dates in the period under review.
1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
debt, and related hedging activities, as well as interest income on corporate assets.
(II) Average capital employed
(1)/(II) ROCE
14.3%
Less: Interest adjustments
(discontinued operations)
13.5%
47,836
5,949
6,479
(I) Income before interest after tax
(156)
(129)
41,573
Less: Other interest expenses/income, net'
Plus: SFS Other interest expenses/income
Plus: Net interest expenses from
post-employment benefits
(in millions of €)
Net income
Calculation of ROCE
Siemens Gamesa Renewable Energy
SFS (ROE after tax)
Process Industries and Drives
Healthineers
Digital Factory
Energy Management
Building Technologies
Mobility
Power and Gas
Profit margin ranges
Margin range
Within the framework of One Siemens, we aim to achieve mar-
gins through the entire business cycle that are comparable to
those of our relevant competitors. Therefore, we have defined
profit margin ranges for our industrial businesses, which are
based on the profit margins of the respective relevant competi-
tors. Profit margin is defined as profit of the respective business
divided by its revenue.
Currency translation effects are the difference between revenue
for the current period calculated using the exchange rates of the
current period and revenue for the current period calculated us-
ing the exchange rates of the comparison period. For calculating
the percentage change year-over-year, this absolute difference is
divided by revenue for the comparison period. A portfolio effect
arises in the case of an acquisition or a disposition and is calcu-
lated as the change year-over-year in revenue of the relevant
business resulting specifically from the acquisition or disposition.
For calculating the percentage change, this absolute change is
divided by revenue for the comparison period. For orders, we
apply the same calculations for currency translation and portfolio
effects as described above.
Within the framework of One Siemens, we aim to grow our rev-
enue faster than the average weighted revenue growth of our
most relevant competitors. Our primary measure for managing
and controlling our revenue growth is comparable growth, be-
cause it shows the development in our business net of currency
translation effects, which arise from the external environment
outside of our control, and portfolio effects, which involve busi-
ness activities which are either new to or no longer a part of our
business.
A.2.2 Revenue growth
Within One Siemens, we have established a financial frame-
work - for revenue growth, for profitability and capital efficiency,
for our capital structure, and for our dividend policy.
A.2.1 Overview
A.2 Financial performance system
A.2.3 Profitability and capital
efficiency
Plus: Long-term debt
11-15%
8-11%
A.2.6 Calculation of return
on capital employed
Sustainable revenue and profit development is supported by a
healthy capital structure. Accordingly, a key consideration within
the framework of One Siemens is to maintain ready access to the
capital markets through various debt products and preserve our
ability to repay and service our debt obligations over time. Our
primary measure for managing and controlling our capital struc-
ture is the ratio of industrial net debt to EBITDA. This financial
measure indicates the approximate amount of time in years that
would be needed to cover industrial net debt through income
from continuing operations, without taking into account inter-
est, taxes, depreciation and amortization. We aim to achieve a
ratio of up to 1.0.
A.2.4 Capital structure
Combined Management Report 9
Within the framework of One Siemens, we seek to work profit-
ably and as efficiently as possible with the capital provided by our
shareholders and lenders. For purposes of managing and con-
trolling our capital efficiency, we use return on capital employed,
or ROCE, as our primary measure. We aim to achieve ROCE within
a range of 15% to 20%.
To emphasize and evaluate our continuous efforts to improve
productivity, we incorporated a measure called total cost produc-
tivity into our One Siemens framework. We define this measure
as the ratio of cost savings from defined productivity improve-
ment measures to the aggregate of functional costs for the
Siemens Group. We aim to achieve an annual value of 3% to 5%
for total cost productivity.
7-10%
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This mea-
sure is the main driver of basic earnings per share (EPS) from net
income, which we use in communication to the capital markets.
15-20%
5-8%
15-19%
8-12%
14-20%
6-9%
In line with common practice in the financial services business,
our financial indicator for measuring capital efficiency at the Fi-
nancial Services Division (SFS) is return on equity after tax, or
ROE after tax. ROE is defined as SFS' profit after tax, divided by
the Division's average allocated equity.
10,332
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Less: SFS Debt
10,739
4%
2%
4%
(1)%
therein: Germany
Americas
13,943
22,921 24,794
10,525
32%
32%
therein: U.S.
16,976
16,769
1%
(1)%
(8)%
7,209
therein: China
(9)%
(7)%
18,162
16,905
17,700 15,501
4%
Asia, Australia
6%
7%
15,118
16,166
Asia, Australia
(10)%
therein: U.S.
4%
41,819
43,367
11,142
23,516 22,707
2017
% Change
Fiscal year
Orders (location of customer)
Revenue (location of customer)
Orders were up significantly in the Asia, Australia region due to
growth in all industrial businesses other than Power and Gas, with
SGRE and Digital Factory recording the largest increases. A num-
ber of countries within the region posted significant growth.
China posted the largest increase, with order growth at Digital
Factory, SGRE and Process Industries and Drives partly offset by a
substantial decline in Energy Management.
2016
Negative currency translation effects took one percentage point
each from order development and revenue growth; portfolio
transactions, primarily the merger of the wind power business
with Gamesa and the acquisition of Mentor Graphics, added two
percentage points to order development and three percentage
points to revenue growth. The resulting ratio of orders to revenue
(book-to-bill) for Siemens in fiscal 2017 was 1.03.
A.3 Results of operations
Combined Management Report
10
Capital employed (continuing and discontinued operations)
Plus: Adjustments from assets classified as held for disposal and
liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated
actuarial gains/losses on post-employment benefits
Less: Fair value hedge accounting adjustment
A.3.1 Orders and revenue by region
Less: Current available-for-sale financial assets
Plus: Post-employment benefits
Actual
(in millions of €)
Americas
(2)%
(2)%
46,185
45,048
Middle East
Comp.
therein: Germany
Comp.
Actual
Europe, C.I.S., Africa,
Middle East
% Change
Fiscal year
2016
2017
Europe, C.I.S., Africa,
12%
Profit
Profit
7.8%
4.3%
(27)%
464
338
7%
33%
5,976
7,922
Revenue
Profit
Profit margin
(2)%
10%
7,973
8,768
Comp.
Actual
2016
2017
(in millions of €)
Orders
Portfolio effects from the merger added 13 percentage points
to order growth and 28 percentage points to revenue growth.
Reported orders were up year-over-year on growth in Asia,
Australia, while orders in Europe, C.I.S., Africa, Middle East and
the Americas were close to the prior-year level. Order intake in
the major onshore market India was impacted by the introduc-
tion of an auction system for new wind-farm tenders. Reported
revenue was up in all three reporting regions. Lower profit year-
over-year included burdens of €134 million, primarily from in-
ventory write-downs, and €103 million for integration costs and
capacity adjustments including severance. Profitability was held
back by sharp price declines in India and the U.S.
% Change
(in millions of €)
Fiscal year
2016
17.2%
18.1%
7%
2,325
2,490
Profit
3%
2%
13,535
13,789
Revenue
4%
3%
13,830
14,218
Orders
Comp.
Actual
% Change
2017
Fiscal year
A.3.2.7 HEALTHINEERS
Orders for Process Industries and Drives increased slightly, as
growth in the process automation and solution businesses and
stabilization in demand for the Division's offerings in oil and gas
and other commodity-related markets towards the end of the
fiscal year more than offset a decline in demand for wind power
components during the course of fiscal 2017. A decline in reve-
nue in the solutions and the large drives businesses more than
offset revenue growth in the process automation business. On a
geographic basis, order growth came mainly from China, while
the decline in revenue was due to the Americas region. Profit for
the Division increased due primarily to sharply lower severance
charges year-over-year, which were €48 million in fiscal 2017,
down from €254 million in fiscal 2016. Within the Division's busi-
nesses, the process automation business showed a strong oper-
ating performance. Overall, profit and profitability for the Divi-
sion were held back by ongoing operational challenges,
particularly in the large drives business, and by charges related
to capacity adjustments.
imaging business, which continued to account for the largest
share of Healthineers profit overall, and by the advanced thera-
pies business. Profit benefited from currency tailwinds in both
periods. Severance charges were €57 million in fiscal 2017 and
€61 million in fiscal 2016.
% Change
A.3.2.6 PROCESS INDUSTRIES AND DRIVES
14
13
Combined Management Report
In a more favorable market environment, Digital Factory in-
creased order intake and revenue in all its businesses year-over-
year. Improvements in the market conditions were most notable
in the automotive and the machine building industries, support-
ing an excellent performance by the Division's short-cycle busi-
nesses, which expanded their leading market positions during
the fiscal year. Orders and revenue in the product lifecycle man-
agement software (PLM) business grew substantially due to
strong demand combined with new volume resulting from the
acquisition of Mentor Graphics at the end of the second quarter
of fiscal 2017. On a geographic basis, orders and revenue were up
in all reporting regions, with the strongest increase from Asia,
Australia, particularly including China. The Division's profit im-
provement was driven by the short-cycle businesses. Profit in the
PLM business was held back by ongoing expenses related to fur-
ther advancing Siemens' MindSphere platform. Furthermore, the
business' profitability was impacted by deferred revenue adjust-
ments and transaction and integration costs related to the acqui-
sition of Mentor Graphics, totaling €104 million. In fiscal 2016,
deferred revenue adjustments and transaction and integration
costs related to the acquisition of CD-adapco totaled €43 million.
Profit for the Division benefited from a gain of €175 million re-
lated to the eCar business, which Digital Factory contributed to
the joint venture Valeo Siemens eAutomotive. This positive effect
was partly offset by higher severance charges, which increased
to €134 million in fiscal 2017, up from €49 million in fiscal 2016.
16.6%
18.8%
26%
1,690
2,135
Profit
Profit margin
9%
12%
10,172
11,378
Revenue
8%
A.3.2.8 SIEMENS GAMESA RENEWABLE ENERGY
Fiscal year
(in millions of €)
2017
2.7%
5.0%
Profit margin
81%
243
440
Profit
(1)%
(2)%
Order intake grew moderately on increases in a majority of the
businesses, led by the diagnostic imaging business. On a re-
gional basis, Europe, C.I.S., Africa and Middle East posted the
highest increase, followed by growth in Asia, Australia, driven by
China. Revenue was also up in a majority of the businesses,
again led by the diagnostic imaging business. On a geographic
basis, China accounted for more than half of the revenue in-
crease year-over-year. Profit growth was driven by the diagnostic
9,038
Revenue
2%
1%
8,939
9,034
Orders
Comp.
Actual
2016
8,876
Combined Management Report
Profit margin
Fiscal year
932
Industrial Business
Siemens Gamesa Renewable Energy
Healthineers
Process Industries and Drives
Digital Factory
Mobility
Building Technologies
Energy Management
(15)%
1,872
1,591
Power and Gas
% Change
2016
2017
(in millions of €, earnings per share in €)
A.3.2.9 FINANCIAL SERVICES
A.3.3 Income
895
4%
784
577
Profit margin Industrial Business
8%
8,744
9,453
(27)%
464
338
7%
2,325
15
2,490
243
440
26%
1,690
2,135
10%
678
743
36%
81%
Combined Management Report
Fiscal year
(1,994)
Corporate items were influenced by a number of factors, includ-
ing severance charges of €71 million (€43 million in fiscal 2016)
for corporate reorganization of support functions as well as ex-
penses in connection with creation of next47 beginning in Octo-
ber 2016.
period we recorded gains from reversals of provisions for guaran-
tees related to a previous divestment. Effective with the begin-
ning of fiscal 2018, CMPA includes the Olkiluoto project in Finland
which was formerly part of Power and Gas.
The positive swing at Centrally managed portfolio activities
(CMPA) related primarily to the measurement of a major asset
retirement obligation, including a net gain of €364 million result-
ing from interest rate effects and €312 million attributable mainly
to a reduced expected inflation rate. These positive effects were
partly offset by higher losses from at-equity investments includ-
ing a €230 million impairment of Siemens' stake in Primetals
Technologies Ltd. in fiscal 2017, related to continuing adverse
conditions in the market environment. Additionally in the current
A.3.2.10 RECONCILIATION TO
Financial Services (SFS) again delivered strong earnings includ-
ing lower credit hits. Within the equity business, the current year
included a gain from the sale of SFS's stake in an offshore wind-
farm project, while the prior year included a larger positive ef-
fect, €92 million, resulting from an at-equity investment. Despite
growth in new business, total assets were on the level of the end
of fiscal 2016, due mainly to substantial early terminations of fi-
nancings along with negative currency translation effects.
26,446
26,390
2017
Sep 30,
2016
Total assets
(in millions of €)
653
21.6%
19.9%
ROE (after taxes)
639
Income before income taxes
2017
(in millions of €)
2016
The increase of Amortization of intangible assets acquired in
business combinations related mainly to the merger with
Gamesa and the acquisition of Mentor Graphics.
Fiscal year
CONSOLIDATED FINANCIAL STATEMENTS
Amortization of intangible assets
acquired in business combinations
Eliminations, Corporate Treasury
and other reconciling items
Reconciliation to Consolidated
Financial Statements
(1,785)
(349)
(323)
(674)
(1,016)
(in millions of €)
(439)
(407)
(449)
Centrally carried pension expense
Corporate items
132
187
Siemens Real Estate
(215)
488
Centrally managed portfolio activities
2016
2017
(714)
Below we describe the risks that could have a material adverse
effect on our business, financial condition (including effects on
assets, liabilities and cash flows), results of operations and repu-
tation. The order in which the risks are presented in each of the
four categories reflects the currently estimated relative exposure
for Siemens associated with these risks and thus provides an in-
dication of the risks' current importance to us. Additional risks
not known to us or that we currently consider immaterial may
also negatively impact our business objectives and operations.
Unless otherwise stated, the risks described below relate to all of
our segments.
Audit Committee of the Supervisory Board. The CRIC is composed
of the Chief Risk & Internal Control Officer, as the chairperson,
members of the Managing Board and selected heads of Corpo-
rate Units.
A.8.3 Risks
A.8.3.1 STRATEGIC RISKS
21
Economic, political and geopolitical conditions (macroeco-
nomic environment): We see a high level of uncertainty regard-
ing the global economic outlook. Significant downside risks stem
e.g. from an increasing trend towards populism and from the
consequences of the Brexit negotiations. The U.K. exit process
could heighten business and consumer uncertainty, reduce in-
vestment in the U.K., pose risks to financial markets and may
increase the uncertainties about the future of the European
Union (EU) in general. A further and massive loss of economic
confidence and a prolonged period of reluctance in investment
28
Combined Management Report
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with legal
and operational requirements, the Managing Board established
a Risk Management and Internal Control Organization, headed by
the Chief Risk & Internal Control Officer, and a Corporate Risk and
Internal Control Committee (CRIC). The CRIC obtains risk and op-
portunity information from the Risk Committees established at
the Industrial Business, SFS, regions and Corporate Units. In order
to allow for a meaningful discussion on Siemens group level in-
dividual risk and opportunities of similar cause-and-effect nature
are aggregated into risk and opportunity themes. This aggrega-
tion naturally results in a mixture of risks, including those with
a primarily qualitative assessment and those with a primarily
quantitative risk assessment. Accordingly, we do not foresee a
purely quantitative assessment of risk themes. This information
then forms the basis for the evaluation of the company-wide risk
and opportunity situation. The CRIC reports to and supports the
Managing Board on matters relating to the implementation,
operation and oversight of the risk and internal control system
and assists the Managing Board for example in reporting to the
Competitive environment: The worldwide markets for our
products, solutions and services are highly competitive in terms
of pricing, product and service quality, product development and
introduction time, customer service, financing terms and shifts
in market demands. We face strong existing competitors and also
competitors from emerging markets, which may have a better
cost structure. Some industries in which we operate are under-
going consolidation, which may result in stronger competition,
a change in our relative market position, or unexpected price
erosion. Furthermore, there is a risk of take-overs of crucial sup-
pliers by competitors and a risk that competitors are increasingly
offering services for our installed base. We address these risks
with various measures, for example benchmarking, strategic
initiatives, sales push initiatives, executing productivity measures
and target cost projects, rightsizing of our footprint, outsourc-
ings, mergers and joint ventures, exporting from low-cost
countries to price-sensitive markets, and optimizing our product
portfolio. We continuously monitor and analyze competitive and
market information in order to be able to anticipate unfavorable
changes in the competitive environment rather than merely
reacting to such changes.
A.8.2.3 RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
Combined Management Report
27
Other disposals of assets
Cash flows from investing activities - continuing operations
(1,382)
1,404
(7,456)
Cash flows from investing activities – discontinued operations
(1)
Cash flows from investing activities - continuing and discontinued operations
(7,457)
Cash flows from financing activities
Other purchases of assets
Purchase of treasury shares
Issuance of long-term debt
Repayment of long-term debt (including current maturities of long-term debt)
(931)
1,123
6,958
(4,868)
Change in short-term debt and other financing activities
260
Interest paid
Re-issuance of treasury shares and other transactions with owners
(686)
(4,385)
(2,406)
19
A.5.2 Cash flows
(in millions of €)
Cash flows from operating activities
Net income
Change in operating net working capital
Other reconciling items to cash flows from operating activities – continuing operations
Cash flows from operating activities – continuing operations
Cash flows from operating activities - discontinued operations
Cash flows from operating activities - continuing and discontinued operations
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment
Acquisitions of businesses, net of cash acquired
Change in receivables from financing activities of SFS
Fiscal year
2017
6,179
(1,595)
2,641
7,225
(50)
7,176
Dividends paid to shareholders of Siemens AG
Combined Management Report
Dividends attributable to non-controlling interests
Cash flows from financing activities - discontinued operations
Fiscal year 2017
Continuing and
discontinued operations
7,176
(2,406)
4,769
With our ability to generate positive operating cash flows, our
total liquidity (defined as cash and cash equivalents as well as
available-for-sale financial assets) of €9.6 billion, our €7.8 billion
in unused lines of credit, and our credit ratings at year-end, we
believe that we have sufficient flexibility to fund our capital re-
quirements. Also in our opinion, our operating net working cap-
ital is sufficient for our present requirements.
Investing activities
Additions to intangible assets and property, plant and equipment
from continuing operations totaled €2.4 billion in fiscal 2017.
Within the Industrial Business, ongoing investments related
mainly to technological innovations; extending our capacities for
designing, manufacturing and marketing new solutions; improv-
ing productivity; and replacements of fixed assets. These invest-
ments amounted to €1.8 billion in fiscal 2017. The remaining
portion in fiscal 2017 related mainly to SRE, including significant
amounts related to office projects such as new office buildings in
Germany. SRE is responsible for uniform and comprehensive
management of Company real estate worldwide (except for
SGRE), and supports the Industrial Business and corporate activ-
ities with customer-specific real estate solutions.
With regard to capital expenditures for continuing operations, we
expect a significant spending increase in fiscal 2018. In addition,
we plan to invest significant amounts in coming years in attrac-
tive innovation fields in connection with next47.
(50)
Focus areas of ongoing investing activities of the Industrial Busi-
The investments of Power and Gas are focused on the enhance-
ment of productivity and selective strategic localization. Invest-
ing activities mainly relate to our gas turbines and turbine com-
ponents.
Energy Management is spending the larger portion of its capital
expenditures for innovation, particularly in digital and low-volt-
age grid edge products and solutions. Further investments are
primarily related to the replacement of fixed assets, the expan-
sion or relocation of factories and technical equipment.
The investments of Building Technologies relate mainly to the
products and systems business, particularly innovation projects
such as control and digital platforms.
Mobility's investments focus mainly on meeting project de-
mands and maintaining or enhancing its production facilities.
Major spending of Digital Factory in fiscal 2017 related to the
factory automation, motion control systems, software and con-
trol products businesses, including investments in production
facilities in China. The portion of capital expenditures associated
with software is expected to increase considerably in fiscal 2018.
Process Industries and Drives makes most of its capital expen-
ditures for the purpose of rationalization, replacement, and ad-
justment of innovative new or successor products, particularly
in Europe.
Healthineers' investments are driven mainly by enhancing com-
petitiveness and innovation notably in the diagnostics busi-
nesses, including large amounts relating to intangible assets,
particularly capitalized development expenses for new platforms.
Healthineers is also spending for factories, especially in China
and the United States.
The investments of Siemens Gamesa Renewable Energy con-
tinue to focus on the expansion of production capacity in Germany
for offshore wind turbines as well as in Morocco for onshore
blades, while in parallel the production capacities in other regions
are reduced to address changing market conditions. Further
investments relate to the emerging markets India and China to
allow for the production of the next turbine generation.
Responsibilities are assigned for all relevant risks and opportuni-
ties, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step,
assuming responsibility for a specific risk or opportunity involves
choosing one of our general response strategies. Our general re-
sponse strategies with respect to risks are avoidance, transfer,
reduction or acceptance of the relevant risk. Our general response
strategy with respect to opportunities is to 'seize' the relevant
opportunity. In a second step, responsibility for a risk or opportu-
nity also involves the development, initiation and monitoring of
appropriate response measures corresponding to the chosen re-
sponse strategy. These response measures have to be specifically
tailored to allow for effective risk management. Accordingly, we
have developed a variety of response measures with different
characteristics. For example, we mitigate the risk of fluctuations
in currency and interest rates by engaging in hedging activities.
Regarding our long-term projects, systematic and comprehensive
project management with standardized project milestones, in-
cluding provisional acceptances during project execution and
complemented by clearly defined approval processes, assists us
in identifying and responding to project risks at an early stage,
even before the bidding phase. Furthermore, we maintain appro-
priate insurance levels for potential cases of damage and liability
risks in order to reduce our exposure to such risks and to avoid
or minimize potential losses. Among others, we address the risk
of fluctuation in economic activity and customer demand by
closely monitoring the macroeconomic conditions and develop-
ments in relevant industries, and by adjusting capacity and im-
plementing cost-reduction measures in a timely and consistent
manner, if deemed necessary.
ness are:
4,819
(2,406)
(50)
Cash flows from financing activities - continuing and discontinued operations
(1,000)
(2,914)
(187)
(1,560)
(1,560)
The conversion of profit into cash inflows from operating activ-
ities was mainly driven by Healthineers and the Digital Factory
Division. This conversion was held back by a build-up of operat-
ing net working capital primarily due to an increase in invento-
ries at SGRE and a decrease in billings in excess of costs and esti-
mated earnings on uncompleted contracts and related advances
at the Power and Gas Division.
The cash outflows for acquisitions of businesses, net of cash
acquired, primarily included payments totaling €4.1 billion re-
lated to the acquisition of Mentor Graphics.
The cash outflows for other purchases of assets primarily in-
cluded additions of assets eligible as central bank collateral and
to payments related to several investments such as in connection
with our Bentley Systems strategic alliance and the Valeo Siemens
eAutomotive joint venture.
The cash inflows from other disposals of assets primarily in-
cluded disposals from above-mentioned eligible collateral, pro-
ceeds from real estate disposals at SRE and from the sale of invest-
ments such as the stake in an offshore windfarm project at SFS.
20
20
Combined Management Report
We report Free cash flow as a supplemental liquidity measure:
Free cash flow
(in millions of €)
Cash flows from operating activities
Additions to intangible assets and property, plant and equipment
Free cash flow
Continuing
operations
Discontinued
operations
7,225
Cash flows from financing activities - continuing operations
Irrevocable loan commitments amounted to €3.4 billion (Sep-
tember 30, 2016: €3.4 billion). A considerable portion of these
commitments resulted from asset-based lending transactions,
meaning that the respective loans can be drawn only after the
borrower has provided sufficient collateral.
The cash inflows from the re-issuance of treasury shares and
other transactions with owners resulted from the exercise of
warrants in connection with the redemption of the US$1.5 billion
bonds with warrant units.
In addition to these commitments, we issued other guarantees.
To the extent future claims are not considered remote, maximum
future payments from these commitments amount to €0.6 bil-
lion (September 30, 2016: €0.9 billion). The decrease in other
guarantees is related to indemnifications issued in connection
with dispositions of businesses.
Profitability
We anticipate that orders in fiscal 2018 will exceed revenue for a
book-to-bill ratio above 1.
As of September 30, 2017, our order backlog totaled €126 billion.
Thereof Power and Gas had an order backlog of €40 billion, Mo-
bility of €26 billion, SGRE of €21 billion, Healthineers of €15 bil-
lion, Energy Management of €13 billion, Process Industries and
Drives and Building Technologies of €5 billion each and Digital
Factory of €3 billion. We expect revenue growth in fiscal 2018 to
benefit from conversion of our order backlog. From Siemens' back-
log, we expect to convert approximately €44 billion of past orders
into current revenue in fiscal 2018. Within this amount, we expect
our segments involved in large long-term project business to con-
tribute the following conversions of backlog into revenue for fiscal
2018: For Power and Gas we expect approximately a €9 billion in
revenue conversion, for Mobility, Energy Management and SGRE
approximately €7 billion in revenue conversion each.
In fiscal 2017, most of our industrial businesses contributed to or-
ganic revenue growth, and we expect a similar development in fis-
cal 2018. The principal exceptions are Power and Gas and SGRE,
which continue to be impacted by market headwinds.
We expect a mixed picture in our market environment in fiscal 2018,
ranging from strong markets for our short-cycle businesses to un-
favorable dynamics in our energy generation markets, as well as
geopolitical uncertainties that may restrict investment sentiment.
Therefore, for fiscal 2018 we expect modest growth in revenue, net
of effects from currency translation and portfolio transactions.
Revenue growth
Based on these assumptions and exclusions, our outlook is as
follows:
Business, eliminations for transactions between the businesses,
and changes arising from the adoption of IFRS 15.
25
For fiscal 2018, we expect net income to result in basic EPS from
net income in the range of €7.20 to €7.70. Net income and basic
EPS from net income for fiscal 2017 were €6.1 billion and €7.34,
respectively, taking into account the retrospective adoption of
IFRS 15 as mentioned above.
Combined Management Report
We are exposed to currency translation effects, particularly involv-
ing the US$, the British £ and currencies of emerging markets,
particularly the Chinese yuan. While we expect volatility in global
currency markets to continue in fiscal 2018, we have improved our
natural hedge on a global basis through geographic distribution
of our production facilities during the past. Nevertheless, Siemens
is still a net exporter from the Euro zone to the rest of the world,
so a weak Euro is principally favorable for our business and a
strong Euro is principally unfavorable. In addition to the natural
hedging strategy just mentioned, we also hedge currency risk in
our export business using derivative financial instruments. We
expect these steps to help us limit effects on income related to
currency in fiscal 2018. Based on currency exchange rates as of
beginning of November 2017, we nevertheless expect negative
currency effects to significantly influence nominal order and
revenue development, and to adversely affect Industrial Business
profit with an impact in the mid-triple-digit millions of Euros.
For fiscal 2018, we expect market-driven headwinds to continue
to significantly impact volume development and profitability of
Power and Gas, SGRE and Process Industries and Drives. These
units are in the process of preparing capacity adjustment mea-
sures, which we expect to result in significant severance charges.
There are high uncertainties regarding the extent of the financial
burdens for fiscal 2018, as these depend on the results of consul-
tations with the relevant employee representatives and the im-
plementation of the planned measures is expected to take seve-
ral years. Therefore, we exclude all severance charges from this
outlook. Severance charges in fiscal 2017 were €385 million for
our Industrial Business and €466 million (pre-tax) for Siemens.
We assume that severance charges in fiscal 2018 will be higher
than in fiscal 2017. Furthermore, this outlook excludes potential
effects which may follow the introduction of a new strategic pro-
gram, which we expect to announce during fiscal 2018.
ers and corresponding EPS. Effects on EPS associated with minori-
ties holding shares in Healthineers following the planned IPO are
excluded from this outlook. Furthermore, charges related to legal
and regulatory matters are excluded from this outlook.
We are basing our outlook for fiscal 2018 for the Siemens Group and
its segments on the above-mentioned expectations and assump-
tions regarding the overall economic situation and specific market
conditions for the next fiscal year. We plan to publicly list a minority
stake in Healthineers in the first half of calendar 2018, depending
on market conditions, to further strengthen Healthineers in Siemens
for the future. The public listing of a minority stake in Healthineers
will among others result in an increase in non-controlling interests,
which reduces net income attributable to Siemens AG's sharehold-
A.8.1.3 SIEMENS GROUP
Our SFS Division is geared to Siemens' Industrial Business and its
markets. As such SFS is influenced by the business development
of the markets served by our Industrial Business, among other
factors. SFS will continue to focus its business scope on areas of
intense domain know-how.
For SGRE, we expect global wind installations to grow in fiscal
2018, with growth driven by higher demand for onshore installa-
tions, while offshore installations are expected to remain near
the prior-year level. Some of the SGRE more relevant onshore
markets like India and the U.S. will continue to experience higher
than normal levels of volatility driven by the transition to fully
competitive wind markets. This transition is expected to result in
a low double-digit price decline in the onshore markets in fiscal
2018. As a result volume for SGRE's markets measured in Euro is
expected to decline year-over-year.
For fiscal 2018, markets for Healthineers are expected to stay on
a moderate growth path. Healthineers' markets continue to ben-
efit from long-term trends such as growing and aging populations
and from broader access to healthcare, but are restricted by pub-
lic spending constraints and by consolidation of healthcare pro-
viders. On a geographic basis, we expect slight growth in the U.S.,
held back by continued pressure to increase utilization of existing
equipment, reduced reimbursement rates and policy uncertainty.
For Europe, we also expect slight growth, with equipment re-
placement and business with large customers such as hospital
chains gaining further importance. For China, we expect moder-
ate growth due to continuously growing government spending on
healthcare, promoting the private segment and expanding access
on county level, pronounced effects of aging and growing inci-
dence of chronic disease, partly held back by governmental re-
strictions such as centralized tendering and regulatory oversight
of large-scale equipment allocation and use. Governments in a
number of countries show the intention to establish protectionist
initiatives and policies which support local suppliers.
we expect challenging market conditions for our wind-related
components due to higher pricing pressure resulting from the on-
going transition towards mature, fully competitive wind energy
markets. On a geographic basis, the market growth momentum
in China is expected to moderate in fiscal 2018 year-over-year,
while markets in Europe and in the U.S. are expected to improve.
We are basing this outlook on our preliminary numbers under
IFRS 15, Revenue from Contracts with Customers, which we will
adopt beginning with fiscal 2018 retrospectively, i.e. results for fis-
cal 2017 will be presented on a comparable basis. We do not expect
the adoption of IFRS 15 to have a significant effect on Siemens'
Consolidated Financial Statements. On a preliminary basis, the
adoption of IFRS 15 is expected to reduce reported revenue for fiscal
2017 by approximately €0.2 billion and reported basic EPS for fiscal
2017 by approximately €0.10, resulting mainly from Profit Industrial
Business. Reported Industrial Business profit margin for fiscal 2017
is expected to decline by approximately 0.1 percentage points. As
a result of the IFRS 15 adoption, below we report the backlog of the
Siemens Group which, compared to the previous definition, now
also includes the order backlog in businesses outside the Industrial
Our forecast for net income and corresponding basic EPS is based
on a number of additional assumptions: As part of our One
Siemens framework, we target a total cost productivity improve-
ment of 3% to 5% in fiscal 2018. Also, we assume continued solid
project execution. Furthermore, we anticipate clear currency-re-
lated impacts on net income. Along with these assumptions, we
anticipate pricing pressure on our offerings of around 2.5% over-
all in fiscal 2018, with SGRE and the Power and Gas Division
clearly above this average. Furthermore, we expect wage infla-
tion of around 3% to 4%. Also, we plan to increase R&D expenses
aimed at strengthening our capacities for innovation.
For fiscal 2018, taking into account the above-mentioned as-
sumptions and exclusions, we expect all but two of our industrial
businesses to be in or above their ranges for profit margin as
defined in our financial performance system (see → A.2 FINAN-
CIAL PERFORMANCE system). The exceptions are Power and Gas and
Process Industries and Drives. Overall, we expect a profit margin
for our Industrial Business of 11.0% to 12.0%. Taking into account
the retrospective adoption of IFRS 15 as mentioned above, Indus-
trial Business profit margin was 11.1% in fiscal 2017. We expect
SFS, which is reported outside Industrial Business, to achieve a
return on equity (ROE) within its margin range in fiscal 2018 and
to keep its profit near the prior-year level.
Combined Management Report
Future payment obligations under non-cancellable operating
leases amounted to €3.3 billion (September 30, 2016: €3.5 bil-
lion).
Our ERM process aims for early identification and evaluation of,
and response regarding, risks and opportunities that could mate-
rially affect the achievement of our strategic, operational, financial
and compliance objectives. The time horizon covered by ERM is
typically three years. Our ERM is based on a net risk approach,
addressing risks and opportunities remaining after the execution
of existing control measures. If risks have already been considered
in plans, budgets, forecasts or the financial statements (e.g. as a
provision or risk contingency), they are supposed to be incorpo-
rated with their financial impact in the entity's business objectives.
As a consequence, only additional risks arising from the same sub-
ject (e.g. deviations from business objectives, different impact
perspectives) should be considered for the ERM. In order to pro-
vide a comprehensive view on our business activities, risks and
opportunities are identified in a structured way combining ele-
ments of both top-down and bottom-up approaches. Reporting
generally follows a quarterly cycle while this regular reporting
process is complemented by an ad-hoc reporting process that aims
to escalate critical issues in a timely manner. Relevant risks and
opportunities are prioritized in terms of impact and likelihood,
considering different perspectives, including business objectives,
reputation and regulatory matters. The bottom-up identification
and prioritization process is supplemented by workshops with the
respective managements of the Industrial Business, SFS, regions
and Corporate Units. This top-down element ensures that poten-
tial new risks and opportunities are discussed at the management
level and are included in the subsequent reporting process, if
found to be relevant. Reported risks and opportunities are ana-
lyzed regarding potential cumulative effects and are aggregated
within and for each of the organizations mentioned above.
Risk management at Siemens builds on a comprehensive, interac-
tive and management-oriented Enterprise Risk Management
(ERM) approach that is integrated into the organization and that
addresses both risks and opportunities. Our ERM approach is based
on the globally accepted COSO (Committee of Sponsoring Organi-
zations of the Treadway Commission) 'Enterprise Risk Manage-
ment - Integrated Framework' (2004) and is adapted to Siemens
requirements. It additionally conforms to ISO (International Orga-
nization for Standardization) Standard 31000 (2009). The frame-
work connects the ERM process with our financial reporting pro-
cess and our internal control system. It considers a company's
strategy, the efficiency and effectiveness of its business opera-
tions, the reliability of its financial reporting as well as compliance
with relevant laws and regulations to be equally important.
while management reporting is intended to enable us to monitor
such risks more closely as our business progresses. Our internal
auditors regularly review the adequacy and effectiveness of our
risk management system. Accordingly, if deficits are detected,
it is possible to adopt appropriate measures for their elimination.
This coordination of processes and procedures is intended to help
ensure that the Managing Board and the Supervisory Board are
fully informed about significant risks in a timely manner.
A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk management
and control systems which support us in the early recognition of
developments that could jeopardize the continuity of our busi-
ness. The most important of these systems include our enter-
prise-wide processes for strategic planning and management
reporting. Strategic planning is intended to support us in consid-
ering potential risks well in advance of major business decisions,
A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursuing
sustainable growth and creating economic value while managing
appropriate risks and opportunities and avoiding inappropriate
risks. As risk management is an integral part of how we plan and
execute our business strategies, our risk management policy is
set by the Managing Board. Our organizational and accountabil-
ity structure requires each of the respective managements of
our Industrial Business, Financial Services (SFS), regions and
Corporate Units to implement risk management programs that
are tailored to their specific industries and responsibilities, while
being consistent with the overall policy.
A.8.2 Risk management
Overall, the actual development for Siemens and its Segments
may vary, positively or negatively, from our outlook due to the
risks and opportunities described below or if our expectations
and assumptions do not materialize.
This outlook excludes charges related to legal and regulatory
matters, effects on EPS associated with minorities holding shares
in Healthineers following the planned IPO, and potential effects
which may follow the introduction of a new strategic program.
We expect a mixed picture in our market environment in fiscal
2018, ranging from strong markets for our short-cycle businesses
to unfavorable dynamics in our energy generation markets, as
well as geopolitical uncertainties that may restrict investment
sentiment. For fiscal 2018 we expect modest growth in revenue,
net of effects from currency translation and portfolio transac-
tions, and anticipate that orders will exceed revenue for a book-
to-bill ratio above 1. We expect a profit margin of 11.0% to 12.0%
for our Industrial Business and basic EPS from net income in the
range of €7.20 to €7.70, both excluding severance charges.
A.8.1.4 OVERALL ASSESSMENT
We aim in general for a capital structure, defined as the ratio of
industrial net debt to EBITDA, of up to 1.0, and expect to achieve
this in fiscal 2018.
Capital structure
Gamesa, we expect ROCE to show a double-digit result in fiscal
2018 but to come in below the lower end of our target range.
Combined Management Report
26
26
Within our One Siemens financial framework, we aim in general
to achieve a ROCE in the range of 15% to 20%. Due mainly to
burdens on net income and average capital employed resulting
from the acquisition of Mentor Graphics and the merger with
We do not expect material influence on financial results from
discontinued operations in fiscal 2018. We anticipate our tax rate
for fiscal 2018 to be in the range of 27% to 33%, up from 26% in
fiscal 2017. We expect the increase in the tax rate to be driven by
tax burdens related to the preparations of the initial public offer-
ing of a minority stake in Healthineers and the merger of our
mobility business with Alstom.
Within our Reconciliation to Consolidated Financial Statements, we
expect expenses for Corporate items to be approximately €0.6 bil-
lion and to include significant centrally carried expenses related to
innovation and digitalization. Despite burdens such as carve-out
related expenses stemming from portfolio measures, particularly
including the planned public listing of a minority share in Healthi-
neers in the first half of calendar 2018 and the planned merger of
our mobility business with Alstom by the end of calendar 2018, we
expect results related to CMPA to be positive due among other fac-
tors to a €0.6 billion (after-tax) gain from the sale of our shares in
OSRAM Licht AG at the beginning of fiscal 2018. Results related to
CMPA are also expected to be highly volatile from quarter to quar-
ter during the fiscal year. We anticipate that SRE will continue with
real estate disposals depending on market conditions and generate
results near the prior-year level. Centrally carried pension expenses
are expected to total approximately €0.4 billion in fiscal 2018.
Amortization of intangible assets acquired in business combina-
tions are expected to rise to approximately €1.2 billion in fiscal 2018
due primarily to the merger with Gamesa and the acquisition of
Mentor Graphics. Eliminations, Corporate Treasury and other rec-
onciling items, which were a negative €0.3 billion in fiscal 2017, are
expected to increase by approximately €0.1 billion in fiscal 2018
due mainly to higher interest expenses.
Combined Management Report
In fiscal 2018, nominal volume for the markets served by the
Process Industries and Drives Division is expected to decline
slightly due to currency translation effects. Excluding this effect,
market volume is anticipated to grow slightly. Within commodity-
related markets (e.g. oil and gas, mining, minerals), a gradual re-
covery in capital expenditures is expected to continue on a low
level. Chemicals market is expected to further stabilize, whereas
Capital efficiency
For fiscal 2018, we expect markets served by the Mobility Divi-
sion to grow moderately. We anticipate that rail operators in
Europe, particularly in Germany and the U.K., will continue to
make significant investments. Markets in the Americas region are
expected to remain strong, especially due to ongoing invest-
ments in urban transport and infrastructure in the U.S. as well as
demand for commuter transport in Argentina. In the Middle East
and Africa, we expect tenders of further rolling stock and turnkey
projects. In China, we expect investments in high-speed trains,
urban transport and rail infrastructure to continue to drive
growth. In India, market growth should continue from projects
for commuter and urban transport as well as high-speed passen-
ger lines, freight rail, and related infrastructure as part of the
country's transportation infrastructure modernization. Overall,
local rail transport and intermodal mobility solutions are ex-
pected to gain importance as urbanization continues to progress
around the world. In emerging countries, rising incomes are ex-
pected to result in greater demand for public transport solutions.
72
22
Net income in fiscal 2017 rose 11% to €6.2 billion, and basic EPS
from net income was up 10% to €7.44. We thus reached our
raised forecast, which was for an increase in basic EPS from net
income in the range of €7.20 to €7.70, up from the range of
€6.80 to €7.20 that was forecast in our Annual Report for fiscal
2016. Net income development benefited from our continuous
efforts to increase productivity. In fiscal 2017, total cost produc-
tivity improved 5%, reaching the upper end of our fiscal 2017
target of 3% to 5%.
The loss outside the Industrial Business came in lower year-over-
year. This was due mainly to positive effects related to the mea-
surement of a major asset retirement. These effects were partly
offset by higher amortization of intangible assets acquired in
business combinations, mainly related to the merger with
Gamesa and to the Mentor Graphics acquisition.
The profit margin of our Industrial Business increased to 11.2%,
up from 10.8% in the prior fiscal year. We thus reached our fore-
cast as of the end of the first quarter of fiscal 2017, which was
raised from a range of between 10.5% and 11.5% to a range of
between 11.0% and 12.0%. Six of our eight industrial businesses
improved their margins year-over-year, and five reached or
exceeded their margin ranges. In challenging market environ-
ments, Power and Gas, SGRE and Process Industries and Drives
missed their target ranges in fiscal 2017. With a return on equity
after tax of 19.9%, SFS, which is reported outside our Industrial
Business, reached the upper end of its margin range.
Industrial Business profit rose 8% to €9.5 billion. All industrial
businesses except Power and Gas and SGRE increased their profit
year-over-year. The strongest increases came from Digital Factory
and Building Technologies, which together with Healthineers and
Mobility achieved excellent results for the fiscal year. Energy
Management continued its solid improvement. While profit at
Process Industries and Drives grew, this increase was due pri-
marily to lower severance charges year-over-year. As planned, we
increased R&D and selling expenses in our industrial businesses,
with a strong emphasis on digitalization, including the further
advancement of our MindSphere platform.
Revenue rose to €83.0 billion, up 4% year-over-year. Except for
Power and Gas and Process Industries and Drives, all industrial
businesses contributed to revenue growth. Revenue growth was
led by substantial growth at SGRE, due mainly to new volume
from the merger with Gamesa, and by significant growth at
Digital Factory due to the strength of the Division's short-cycle
businesses and to the Mentor Graphics acquisition. Excluding
currency translation and portfolio effects, overall revenue grew
3%. For fiscal 2017, we had forecast modest growth in revenue,
net of currency translation and portfolio effects.
Orders for fiscal 2017 were €85.7 billion, down 1% year-over-year.
The decline was due to contracting markets for Power and Gas,
which in the prior fiscal year had recorded large orders for power
plants in Egypt. All other industrial businesses recorded increases.
Orders grew at double-digit rates at Mobility and Digital Factory,
the latter on the particular strength of its short-cycle businesses
and supported by new volume from the Mentor Graphics acqui-
sition. Order growth at SGRE was due to new volume from the
merger with Gamesa. At 1.03, our book-to-bill ratio fulfilled our
expectation of a ratio above 1.0.
Also with regard to executing our financial target system, fiscal
2017 was another very successful year for Siemens and for most
of our industrial businesses and SFS. We raised our guidance for
basic earnings per share (EPS) from net income after the first
quarter. After the second quarter, we confirmed this raised fore-
cast and included in the EPS guidance previously excluded bur-
dens resulting from portfolio changes. We reached or exceeded
all the targets set for our primary measures for fiscal 2017. We
achieved revenue growth of 3% net of currency translation and
portfolio effects. Net income and basic EPS from net income rose
11% and 10%, respectively. Excluding burdens related to the
acquisition of Mentor Graphics and the merger with Gamesa,
Return on capital employed (ROCE) was slightly above the lower
end of our target range of 15% to 20%. Our capital structure ratio
came in slightly below 1.
In fiscal 2017, we continued to stringently execute on our "Vision
2020" concept. We reached significant milestones for the stra-
tegic development of Siemens and initiated important measures
to further strengthen our portfolio. At the beginning of fiscal
2017, we founded next47, which pools our existing startup activ-
ities to foster disruptive ideas more vigorously and accelerate the
development of new technologies. In the second quarter, we
acquired Mentor Graphics, an electronic design automation soft-
ware provider, to further strengthen and expand our industrial
software portfolio. At the beginning of the third quarter we
closed the merger of our wind power business with Gamesa to
form SGRE, a leading global wind power player in the onshore
and offshore markets. In the fourth quarter, we announced our
plans to publicly list a minority stake in the Healthineers business
in the first half of calendar year 2018, depending on market
conditions, in order to strengthen this Strategic Unit within
Siemens by increasing the entrepreneurial and capital flexibility
it needs to drive its strategic growth plans. Also in the fourth
quarter, we signed a memorandum of understanding to combine
our mobility business, including the rail traction drives business,
with Alstom SA, France, in order to provide our customers around
the world with an even more innovative and competitive product
and solution portfolio. This transaction is expected to close at the
end of calendar year 2018.
As of September 30, 2017 the undiscounted amount of maximum
potential future payments related primarily to credit guarantees
and guarantees of third-party performance amounted to €3.1 bil-
lion (September 30, 2016: €3.7 billion).
Capital structure ratio
Our capital structure ratio as of September 30, 2017 decreased to
0.9 from 1.0 a year earlier, both results being in line with the
target established in our One Siemens financial framework. The
change was due primarily to the above-mentioned decrease of
provisions for pensions and similar obligations.
In November 2015, we announced a share buyback of up to
€3 billion ending at the latest on November 15, 2018. The buy-
backs will be made under the current authorization granted at
the Annual Shareholders' Meeting on January 27, 2015. Shares
repurchased may be used solely for retirement; for issuing shares
to employees, to members of the Managing Board and board
members of affiliated companies; and for servicing/securing the
obligations or rights from or in connection with convertible
bonds or warrant bonds. In fiscal 2017 we repurchased 7,922,129
treasury shares under the program at an average cost per share
of €117.85, totaling €0.9 billion (including incidental transaction
charges).
Debt and credit facilities
As of September 30, 2017 we recorded, in total, €28.8 billion in
notes and bonds (maturing until 2047), €2.5 billion in loans from
banks (maturing until 2027), €0.8 billion in other financial in-
debtedness (maturing until 2029) and €0.1 billion in obligations
under finance leases. Notes, bonds and loans from banks were
issued mainly in U.S. dollar and euro, and to a lower extent in the
British pound.
We have credit facilities totaling €7.8 billion which were unused
as of September 30, 2017.
For further information about our debt see NOTE 15 in B.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
tion about the functions and objectives of our financial risk man-
agement see NOTE 24 in B.6 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
For fiscal 2018, markets addressed by the Digital Factory Division
are expected to continue to grow. Global manufacturing produc-
tion is forecast to grow moderately again, although growth rates
in the automotive industries are expected to slow following
strong growth in prior years. The machine-building industry is
also forecast to grow as customers upgrade and modernize pro-
duction facilities in an increasingly dynamic market environment.
The trend towards digitalization is expected to continue to drive
growth in the industrial software market. On a geographic basis,
the strong growth rates experienced in China in fiscal 2017 are
not expected to continue in fiscal 2018.
Off-balance-sheet commitments
Combined Management Report
A.7 Non-financial matters
A.6 Overall assessment of the economic position
We evaluate our capital structure using the ratio of industrial net
debt to EBITDA. For fiscal 2017, this ratio was 0.9, compared to
1.0 in fiscal 2016. We thus reached our forecast, which was to
achieve a ratio of up to 1.0.
currency translation effects. We expect negative currency trans-
lation effects from a weaker US$ and related currencies. Customers
are expected to continue their effort to strengthen transmission and
distribution grids to integrate the growing amount of decentralized
renewable energy. We expect first signs of stabilization in the oil and
gas and the metals and mining markets, though from low levels.
ROCE for fiscal 2017 was 13.5%, down from 14.3% in fiscal 2016.
This decline was due primarily to burdens related to the merger
with Gamesa and the acquisition of Mentor Graphics, which we
had excluded from our ROCE forecast for fiscal 2017. Excluding
these burdens, ROCE reached the lower end of the 15% to 20%
range that we generally aim to achieve. We thus reached our
forecast, which was to come close to or reach the lower end of
our target range.
In fiscal 2018, markets served by the Energy Management Division
are expected to provide moderate, low single-digit growth excluding
For fiscal 2018, we expect the markets served by our Power and
Gas Division to remain challenging with market volume poten-
tially declining again, even below the low level of fiscal 2017.
However, the need for small and medium gas turbines, particu-
larly in countries with a less developed energy infrastructure,
is anticipated to continue. Volume in the compression market
is expected to remain on a low level but we expect to see growing
signs of a recovery during fiscal 2018 as some customers in the
oil and gas industry revive investment plans. The steam turbine
market is expected to continue to be impacted by the shift from
coal to gas and renewable sources for power generation.
In fiscal 2018, market volume measured in Euro is expected to be
held back by negative currency translation effects.
A.8.1.2 MARKET DEVELOPMENT
GDP growth in China is expected to moderate further in calendar
2018 to 6.5%, down from 6.8% in 2017. However, the near-term
strength masks longer-term fragilities, especially very high debt
levels. Also, the government has made only slow progress in re-
ducing overcapacities.
The expansion in Europe is expected to continue, with GDP fore-
cast to grow 2.5%; especially the Eurozone should proceed with
its recovery after a prolonged period of stagnation and recession.
Supportive factors include continued monetary stimulus, re-
duced headwinds from fiscal policy and improving confidence of
companies and households.
The U.S. economy is anticipated to see moderate growth of 2.4%
even without stimulus in the form of substantial tax cuts or a big
infrastructure program. GDP growth is driven by consumer spending,
which is supported by declining unemployment, rising incomes and
household wealth. Fixed investments are expected to increase by
2.7% and should benefit from firming global markets. Interest rates
are anticipated to continue to gradually rise led by central bank rates.
In fiscal 2018, the world economy is expected to grow slightly
faster than in fiscal 2017. Global GDP is projected to expand by
3.2% in calendar 2018, the highest growth rate since 2010. Fixed
investments are anticipated to grow by 3.6%, with a higher rate
in emerging countries than in advanced economies. Emerging
markets are forecast to benefit from stronger global growth and
rising commodity prices.
The forecasts presented here for GDP and fixed investments are
based on a report from IHS Markit dated October 15, 2017.
For the markets served by the Building Technologies Division, we
expect solid growth again in fiscal 2018. Highest growth dynamics
are forecast for Asia, with above-average growth in China and
India. Markets in the Middle East are also expected to grow faster
than the Division's markets overall. The U.S. is expected to grow in
line with the global average and the majority of European coun-
tries are anticipated to continue their recovery, led by Spain and
some Eastern European countries.
A.8.1 Report on expected
developments
A.8 Report on expected developments
and associated material opportunities and risks
24
23
Combined Management Report
TEMBER 30, 2017. These disclosures are - contrary to the disclo-
sures in our separately available "Sustainability Information 2017"
document - not subject to a specific framework to inform the
users of the financial reports in a focused manner.
Siemens has policies for environmental, employee and social
matters, for the respect of human rights, and anti-corruption and
bribery matters, among others. Reportable information which
also relates to these non-financial matters is included in the
→ COMBINED MANAGEMENT REPORT, in → NOTES 16, 17, 21, 25, and 26
OF B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, and in
NOTES 16, 17, 20, 21, and 25 OF THE NOTES TO THE FINANCIAL STATE-
MENTS in the ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG AS OF SEP-
A.8.1.1 WORLDWIDE ECONOMY
We intend to continue providing an attractive return to share-
holders. As in the past, we intend to fund our dividend payout
from Free cash flow. The Siemens Managing Board, in agreement
with the Supervisory Board, proposes a dividend of €3.70 per
share, up from €3.60 a year earlier.
Free cash flow from continuing and discontinued operations for
fiscal 2017 was €4.8 billion, down 13% compared to the prior
fiscal year.
The base data used in preparing our financial statements consists
of the closing data reported by the operations of Siemens AG and
its subsidiaries. The preparation of the closing data of most of our
entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance
and monitoring related activities, are usually bundled on regional
level. In particular cases, such as valuations relating to post-em-
ployment benefits, external experts are used. The reported clos-
ing data is used to prepare the financial statements in the con-
solidation system. The steps necessary to prepare the financial
statements are subject to both manual and automated controls.
Combined Management Report
35
36
A.9 Siemens AG
We intend to continue providing an attractive return to share-
holders. Therefore, we intend to propose a dividend whose dis-
tribution volume is within a dividend payout range of 40% to
60% of net income of the Siemens Group, which we may adjust
for this purpose to exclude selected exceptional non-cash effects.
For fiscal 2018, we expect a net income of Siemens AG sufficient
to fund the distribution of a corresponding dividend.
On a quarterly basis, an internal certification process is executed.
Management of different levels of our organization, supported
by confirmations of management of entities under their respon-
sibility, confirms the accuracy of the financial data that has been
reported to Siemens' corporate headquarters and reports on the
effectiveness of the related control systems.
Our internal audit function systematically evaluates our financial
reporting integrity, the effectiveness of the control system and
the risk management system, and the adherence to our compli-
ance policies. In addition, the Audit Committee is integrated into
our control system. In particular, it oversees the accounting and
the accounting process and the effectiveness of the internal con-
trol system, the risk management system and the internal audit
system. Furthermore, we have set up a Disclosure Committee
which is responsible for reviewing certain financial and non-
financial information prior to publication. Moreover, we have
rules for accounting-related complaints.
Siemens AG is the parent company of the Siemens Group. Results
for Siemens AG comprise the fields of business activities mainly of
Power and Gas, Energy Management, Building Technologies, Mo-
bility, Digital Factory, Process Industries and Drives as well as the
activities of Siemens Real Estate and are significantly influenced
by directly or indirectly owned subsidiaries and investments. The
business development of Siemens AG is fundamentally subject to
the same risks and opportunities as the Siemens Group. Due to
the interrelations between Siemens AG and its subsidiaries and
the relative size of Siemens AG within the Group, the outlook of
the Group also largely reflects our expectations for Siemens AG.
Therefore, the foregoing explanations for the Siemens Group ap-
ply also for Siemens AG. We expect that income from investments
will significantly influence the profit of Siemens AG.
In the first quarter of fiscal 2017, as part of the merger with
Gamesa, Siemens AG transferred its Siemens wind power busi-
ness to entities held by Siemens AG.
Our Consolidated Financial Statements are prepared on the basis
of a centrally issued conceptual framework which primarily con-
sists of uniform Financial Reporting Guidelines and a chart of
accounts. For Siemens AG and other companies within the
Siemens group required to prepare financial statements in accor-
dance with German Commercial Code, this conceptual frame-
work is complemented by mandatory regulations specific to the
German Commercial Code. The need for adjustments in the con-
ceptual framework due to regulatory changes is analyzed on an
ongoing basis. Accounting departments are informed quarterly
about current topics and deadlines from an accounting and clos-
ing process perspective.
Qualification of employees involved in the accounting process is
ensured through appropriate selection processes and regular
training. As a fundamental principle, based on materiality con-
siderations, the "four eyes" principle applies and specific proce-
dures must be adhered to for data authorization. Additional con-
trol mechanisms include target-performance comparisons and
analyses of the composition of and changes in individual line
items, both in the closing data submitted by reporting units and
in the Consolidated Financial Statements. In line with our infor-
mation security requirements, accounting-related IT systems
contain defined access rules protecting them from unauthorized
access. The manual and system-based control mechanisms re-
ferred to above generally also apply when reconciling the IFRS
closing data to the Annual Financial Statements of Siemens AG.
The Annual Financial Statements of Siemens AG have been pre-
pared in accordance with the rules set out in the German Com-
mercial Code (Handelsgesetzbuch).
an opportunity to continuously reduce non-conformance costs
and ensure on-time delivery of our projects and solutions. Fur-
thermore, stringent project risk and opportunity management,
time schedule management, performance bonuses and highly
professional management of consortium partners and suppliers
all help us to avoid liquidated damages and ultimately improve
our profit position. In addition, improvements of our claim man-
agement processes enable us to reduce costs incurred as a result
of customer claims by finding a consensus with customers while
also improving customer relationship management. At the same
time, we reduce quality problems by proactively addressing sup-
plier issues up front.
At the end of each fiscal year, our management performs an eval-
uation of the effectiveness of the implemented control system,
both in design and operating effectiveness. We have a standard-
ized procedure under which necessary controls are defined, doc-
umented in accordance with uniform standards, and tested reg-
ularly on their effectiveness. Nevertheless, there are inherent
limitations on the effectiveness of any control system, and no
system, including one determined to be effective, may prevent
or detect all misstatements.
Our ERM approach is based on COSO's "Enterprise Risk Manage-
ment - Integrated Framework". As one of the objectives of this
framework is reliability of a company's financial reporting, it in-
cludes an accounting-related perspective. Our accounting-related
internal control system (control system) is based on the interna-
tionally recognized "Internal Control - Integrated Framework"
also developed by COSO. The two systems are complementary.
Report of Siemens group as well as the Annual Financial State-
ments of Siemens AG as the parent company are prepared in
accordance with all relevant regulations.
The overarching objective of our accounting-related internal con-
trol and risk management system is to ensure that financial
reporting is conducted in a proper manner, such that the Consol-
idated Financial Statements and the Combined Management
A.8.5 Significant characteristics of
the accounting-related internal
control and risk management system
Assessment of the overall opportunities situation: The most
significant opportunity for Siemens continues to be success from
innovation along electrification, automation and digitalization as
disclosed in our prior year reporting. Even though our assess-
ment of individual opportunities has changed during fiscal year
2017 due to developments in the external environment, our en-
deavors to profit from them and the revision of our plans, the
overall opportunity situation did not change significantly com-
pared to the prior year.
Climate change: While climate change is widely considered a
risk, we consider climate change mitigation an opportunity for
Siemens. In line with the global agreement in Paris (COP21) that
entered into force in November 2016, Siemens strives to support
a trend towards reducing CO2 emissions both in own operations
as well as for our customers based on technologies from our en-
vironmental portfolio, such as low-carbon power generation
from renewable energy sources.
Localizing value chain activities: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service in emerging markets could enable us to reduce
costs and strengthen our global competitive position, in particu-
lar compared to competitors based in countries where they can
operate with more favorable cost structures. Moreover, our local
footprint in many countries might help us to take advantage of a
possible growth of markets and leverage a shift in markets, result-
ing in increased market penetration and market share.
Combined Management Report
Excellent project execution: By expanding project manage-
ment efforts as well as learning from our mistakes in project ex-
ecution through a formalized lessons learned approach, we see
Continuously developing and implementing initiatives to
reduce costs, boost sales efforts, adjust capacities, improve
our processes, realize synergies: In an increasingly competi-
tive market environment, a competitive cost structure comple-
ments the competitive advantage of being innovative. We be-
lieve that further improvements in our cost position can
strengthen our global competitive position and secure our mar-
ket presence against emerging and incumbent competitors. For
example, we expect to create sustainable value from productivity
measures in connection with our "Vision 2020" concept. More-
over, in course of the digital transformation, we seek to standard-
ize, automate and digitize our processes and make them leaner
and more efficient.
Favorable political and regulatory environment: Govern-
ment initiatives and subsidies (including tax benefits etc.) may
lead to more government spending (investments in new projects,
modernization of projects etc.) and ultimately result in an in-
crease of revenue and profit for the company.
Economic/political stabilization of certain (critical) coun-
tries and resilience of worldwide economic environment:
We see an opportunity that political stabilization of certain criti-
cal countries and (further) lifting of sanctions may lead to higher
revenue volume that was unavailable in past years. Furthermore,
a return to more robust macroeconomic growth could also lead
to additional volume and profit for the company.
After the merger of the Siemens wind power business with
Gamesa, we have commenced to integrate the former Gamesa
entities into our accounting-related internal control and risk
management system. These integration efforts will continue in
fiscal 2018.
As of September 30, 2017, the number of employees was 92,300.
Research and
A.9.1 Results of operations
(3,558)
Increased market penetration: Through divisional sales initia-
tives and masterplans, we continuously strive to grow and ex-
pand our business in established markets, open up new markets
for existing portfolio elements and strengthen our installed base
in order to gain a higher market share and increased profits.
(3,627)
administrative expenses
Selling and general
(7)%
(2,454)
(2,619)
development expenses
23%
26%
as percentage of revenue
16%
Combined Management Report
5,945
Gross profit
4%
(1)%
(19,979) (19,818)
Cost of Sales
25,763
26,888
Revenue
% Change
2016
2017
(in millions of €)
Fiscal year
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
6,909
Mergers, acquisitions, equity investments, partnerships,
divestments and streamlining our portfolio: We constantly
monitor our current and future markets for opportunities for stra-
tegic mergers and acquisitions, equity investments or partner-
ships to complement our organic growth. Such activities may help
us to strengthen our position in our existing markets, provide
access to new or underserved markets or complement our tech-
nological portfolio in selected areas. Opportunities might also
arise from well executed divestments, carve outs and joint ven-
tures which further optimize our portfolio while generating gains.
Operational optimization and cost reduction initiatives:
We are in a continuous process of operational optimization and
constantly engage in cost-reduction initiatives, including ongo-
ing capacity adjustment measures and structural initiatives. Con-
solidation of business activities and manufacturing facilities,
outsourcings/carve outs, joint ventures and the streamlining of
product portfolios are all part of these cost-reduction efforts.
These measures may not be implemented as planned, may turn
out to be less effective than anticipated, may become effective
later than estimated or may not become effective at all. Any fu-
ture contribution of these measures to our profitability will be
influenced by the actual savings achieved and by our ability to
sustain them. In case of restructuring and outsourcing activities,
there can be no assurance that there are no delays in product
deliveries or we might even experience delivery failures. Further-
more, a delay in critical R&D projects could lead to negative im-
pacts in running projects. We constantly control and monitor the
Success from innovation along electrification, automation
and digitalization: Innovation is a central part of our "Vision
2020," an entrepreneurial concept leading Siemens into the future
in three stages: first we "drive performance," then we "strengthen
core," and finally we "scale up" to attain our Vision 2020 goals.
We do this by investing significantly in R&D in order to develop
innovative, sustainable solutions for our customers and to simul-
taneously safeguard our competitiveness. We are an innovative
company and invent new technologies that we expect will meet
future demands arising from the megatrends of demographic
change, urbanization, climate change and globalization. We are
granted thousands of new patents every year and continuously
develop new concepts and convincing business models. We open
up access to new markets and customers through new marketing
and sales strategies as well as Divisional master plans. In 2016
we established next47, an independent unit designed to found,
partner with and invest in start-ups with innovative ideas for
shaping the future of electrification, automation and digitaliza-
tion, and thereby turn those ideas into viable businesses. This will
help Siemens create the next generation of path-breaking inno-
vations in such fields as artificial intelligence, decentralized elec-
trification, autonomous machines, block chain applications and
connected e-mobility. Siemens is positioned along the value
chains of electrification, automation and digitalization in order to
increase future market penetration. Along these value chains,
we have identified several growth fields in which we see our
greatest long-term potential. We are orienting our resource allo-
cation toward these growth fields and have announced concrete
measures in this direction. Across all Divisions, Siemens is profit-
ing from its undisputed strength in the digital enterprise. For
example, the Company's cloud based MindSphere platform en-
hances the availability of customers' digital products and systems
and improves their productivity and efficiency. In addition, we try
to generate additional volume and profit from new and innova-
tive digital products, services and solutions, including cyber secu-
rity for our customers, preventive maintenance, data analytics,
Credit Risks: We provide our customers with various forms of
direct and indirect financing of orders and projects. SFS in partic-
ular bears credit risks due to its financing activities.
31
Combined Management Report
Liquidity and financing risks: Our treasury and financing activ-
ities could face adverse deposit and/or financing conditions from
negative developments related to financial markets, such as (1)
limited availability of funds (particularly U.S. dollar funds) and
hedging instruments; (2) an updated evaluation of our solvency,
particularly from rating agencies; (3) negative interest rates; and
(4) impacts arising from more restrictive regulation of the finan-
cial sector, central bank policy, or financial instruments. Widening
credit spreads due to uncertainty and risk aversion in the financial
markets might lead to adverse changes of fair market values of our
financial assets, in particular our derivative financial instruments.
Market price risks: We are exposed to fluctuations in exchange
rates, especially between the U.S. dollar and the euro, because a
high percentage of our business volume is conducted as exports
from Europe to areas using the U.S. dollar. In addition, we are
exposed to currency effects involving the currencies of emerging
markets, in particular the Chinese yuan. A strengthening of the
euro may change our competitive position. We are also exposed
to fluctuations in interest rates. Negative developments in the
financial markets and changes in the central bank policies may
negatively impact our results. Depending on the development of
foreign currency exchange and interest rates, hedging activities
could have significant effects on our business, financial condition
and results of operations.
A.8.3.3 FINANCIAL RISKS
Shortage of skilled personnel: Competition for highly quali-
fied personnel (e.g. specialists, experts, "digital" talents) remains
intense in the industries and regions in which our businesses
operate. We have ongoing demand for highly skilled employees.
Our future success depends in part on our continued ability to
hire, integrate, develop and retain engineers and other qualified
personnel. We address this risk for example with structured suc-
cession planning, employer branding, retention and career man-
agement. Furthermore, the company is strengthening the capa-
bilities and skills of our talent acquisition teams and has defined
a strategy of pro-active search for people with the required skills
in our respective industries and markets. A strong focus on im-
plementing a technology for talent acquisition helps us to sup-
port efficient processes and effective search for key talent.
single-source suppliers for critical components. Shortages and de-
lays could materially harm our business. Unanticipated increases
in the price of components or raw materials due to market short-
ages or other reasons could also adversely affect performance.
Furthermore, we may be exposed to the risk of delays and inter-
ruptions in the supply chain as a consequence of catastrophic
events or suppliers' financial difficulties, particularly if we are
unable to identify alternative sources of supply or means of trans-
portation in a timely manner or at all. Besides other measures,
we mitigate fluctuation in the global raw material markets with
various hedging instruments.
Interruption of the supply chain: The financial performance of
our Industrial Business depends on reliable and effective supply
chain management for components, sub-assemblies and materi-
als. Capacity constraints and supply shortages resulting from
ineffective supply chain management may lead to delays and
additional cost. We rely on third parties to supply us with parts,
components and services. Using third parties to manufacture,
assemble and test our products reduces our control over manu-
facturing yields, quality assurance, product delivery schedules
and costs. Although we work closely with our suppliers to avoid
supply-related problems, there can be no assurance that we will
not encounter supply problems in the future, especially if we use
Cost overruns or additional payment obligations related to
the management of our long-term, fixed-price or turnkey
and service projects: A number of our Industrial Businesses
conduct activities, especially large projects, under long-term con-
tracts that are awarded on a competitive bidding basis. Such con-
tracts typically arise in Power and Gas, Siemens Gamesa Renew-
able Energy, Mobility, and in various activities of Energy
Management and Process Industries and Drives. Some of these
contracts are inherently risky because we may assume substan-
tially all of the risks associated with completing a project and
meeting post-completion warranty obligations. For example, we
may face the risk that we must satisfy technical requirements of
a project even though we have not gained experience with those
requirements before we win the project. The profit margins real-
ized on fixed-priced contracts may vary from original estimates
as a result of changes in costs and productivity over the contract's
term. We sometimes bear the risk of unanticipated project mod-
ifications, shortage of key personnel, quality problems, financial
difficulties of our customers and/or significant partners, cost
overruns or contractual penalties caused by unexpected techno-
logical problems, unforeseen developments at the project sites,
unforeseen changes or difficulties in the regulatory or political
environment, performance problems with our suppliers, subcon-
tractors and consortium partners or other logistical difficulties.
Some of our multi-year contracts also contain demanding instal-
lation and maintenance requirements in addition to other perfor-
mance criteria relating to timing, unit cost and compliance with
government regulations, which, if not satisfied, could subject us
to substantial contractual penalties, damages, non-payment and
contract termination. There can be no assurance that contracts
and projects, in particular those with long-term duration and
fixed-price calculation, can be completed profitably. To tackle
those risks we implemented a global project management orga-
nization to systematically improve the know-how of our project
management personnel. For very complex projects we conduct
dedicated risk assessments in very early stages of the sales phase
before we decide to hand over a binding offer to our customer.
progress of these projects and initiatives using standardized con-
trolling and milestone tracking approaches.
Combined Management Report
Operational failures and quality problems in our value
chain processes: Our value chain comprises all steps, from re-
search and development to supply chain management, produc-
tion, marketing, sales and services. Operational failures in our
value chain processes could result in quality problems or poten-
tial product, labor safety, regulatory or environmental risks. Such
risks are particularly present in our Industrial Business in relation
to our production and manufacturing facilities, which are located
all over the world and have a high degree of organizational and
technological complexity. From time to time, some of the prod-
ucts we sell might have quality issues resulting from the design
or manufacture of these products or the commissioning of these
products or the software integrated into them. Our Healthineers'
business, for example, is subject to regulatory authorities includ-
ing the U.S. Food and Drug Administration and the European
Commission's Health and Consumer Policy Department, which
require us to make specific efforts to safeguard our product
safety. If we are not able to comply with these requirements, our
business and reputation may be adversely affected. We have es-
tablished multiple measures for quality improvement and claim
prevention. The increased use of quality management tools is
improving visibility and enables us to strengthen our root cause
and prevention processes.
through Cyber Security Operation Centers, and maintenance of
backup and protective systems such as firewalls and virus scan-
ners. Our contractual arrangements with service providers, aim
to ensure that these risks are reduced. Nonetheless our systems,
products, solutions and services, as well as those of our service
providers, remain potentially vulnerable to attacks. Such attacks
could potentially lead to the publication, manipulation or leakage
information such as through industrial espionage, improper use
of our systems, defective products, production downtimes and
supply shortages, with potential adverse effects on our reputa-
tion, our competitiveness and results of our operations.
Cyber/Information security: Our business portfolio is depen-
dent on digital technologies. We observe a global increase of IT
security threats and higher levels of professionalism in computer
crime, which pose a risk to the security of products, systems and
networks and the confidentiality, availability and integrity of
data. Like other large multinational companies we are facing ac-
tive cyber threats from sophisticated adversaries that are sup-
ported by organized crime and nation-states engaged in eco-
nomic espionage or even sabotage. We attempt to mitigate these
risks by employing a number of measures, including employee
training, comprehensive monitoring of our networks and systems
A.8.3.2 OPERATIONAL RISKS
when integrating people, operations, technologies and products.
There can be no assurance that any of the businesses we ac-
quired can be integrated successfully and in a timely manner as
originally planned, or that they will perform as anticipated once
integrated. In addition, we may incur significant acquisition, ad-
ministrative, tax and other expenditures in connection with these
transactions, including costs related to integration of acquired
businesses. Furthermore, portfolio measures may result in addi-
tional financing needs and adversely affect our capital structure.
Acquisitions lead to substantial additions to intangible assets,
including goodwill in our statements of financial position. If we
were to encounter continuing adverse business developments or
if we were otherwise to perform worse than expected at acquisi-
tion activities, then these intangible assets, including goodwill,
might have to be impaired, which could adversely affect our busi-
ness, financial conditions and results of operations. Our invest-
ment portfolio consists of investments held for purposes other
than trading. Furthermore, we hold other investments, for exam-
ple, Atos SE. Any factors negatively influencing the financial con-
dition and results of operations of our at-equity investments and
other investments, could have an adverse effect on our equity
pick-up related to these investments or may result in a related
write-off. In addition, our business, financial condition and re-
sults of operations could also be adversely affected in connection
with loans, guarantees or non-compliance with financial cove-
nants related to these at-equity investments and other invest-
ments. Furthermore, such investments are inherently risky as we
may not be able to sufficiently influence corporate governance
processes or business decisions taken by our equity investments,
other investments and strategic alliances that may have a nega-
tive effect on our business. In addition, joint ventures bear the
risk of difficulties that may arise when integrating people, oper-
ations, technologies and products. Strategic alliances may also
pose risks for us because we compete in some business areas
with companies with which we have strategic alliances. Besides
other measures, we handle these risks with standardized pro-
cesses as well as dedicated roles and responsibilities in the areas
of mergers, acquisitions, divestments and carve outs. This in-
cludes post-closing actions as well as claim management and
centrally managed portfolio activities.
30
29
Combined Management Report
Portfolio measures, at-equity investments, other invest-
ments and strategic alliances: Our strategy includes divesting
activities in some business areas and strengthening others
through portfolio measures, including mergers and acquisitions.
With respect to divestments, we may not be able to divest some
of our activities as planned, and the divestitures we do carry out
could have a negative impact on our business, financial condi-
tion, results of operations and our reputation. Mergers and acqui-
sitions are inherently risky because of difficulties that may arise
Footprint: The risk is that we are not flexible enough in adjusting
our organizational and manufacturing footprint in order to
quickly respond to changing markets, resulting in a non-compet-
itive cost position and consequent loss of business. To mitigate
this risk, we continuously monitor and analyze competitive and
market information. Furthermore, we closely monitor the imple-
mentation of the planned measures, maintain strict cost man-
agement, and conduct ongoing discussions with all concerned
interest groups.
Disruptive technologies: The markets in which our businesses
operate experience rapid and significant changes due to the in-
troduction of innovative and disruptive technologies. In the fields
of digitalization (e.g. internet of things, web of systems, cloud
offerings, Industry 4.0), there are risks of new competitors, sub-
stitutions of existing products/solutions/services, niche players,
new business models (e.g. in terms of pricing, financing, ex-
tended scopes for project business or subscription models in soft-
ware business) and finally the risk that our competitors may have
faster time-to-market strategies and introduce their digital prod-
ucts and solutions faster than Siemens. Our operating results
depend to a significant extent on our technological leadership,
our ability to anticipate and adapt to changes in our markets and
to reduce the costs of producing our products. Introducing new
products and technologies requires a significant commitment to
research and development, which in return requires expenditure
of considerable financial resources that may not always result in
success. Our results of operations may suffer if we invest in tech-
nologies that do not operate or may not be integrated as ex-
pected, or that are not accepted in the marketplace as antici-
pated, or if our products, solutions or systems are not introduced
to the market in a timely manner, particularly compared to our
competitors, or even become obsolete. We constantly apply for
new patents and actively manage our intellectual property port-
folio to secure our technological position. However, our patents
and other intellectual property may not prevent competitors from
independently developing or selling products and services that
are similar to or duplicates of ours.
economies, the wide variety of our offerings following different
business cycles, and our varying business models (e.g. products,
software, solutions, projects and services) help us to absorb the
impact of an adverse development in a single market.
In general, due to the significant proportion of long-cycle busi-
nesses in our Industrial Business and the importance of long-term
contracts for Siemens, there is usually a time lag between the
development of macroeconomic conditions and their impact on
our financial results. In contrast, short-cycle business activities of
the Digital Factory Division and parts of Process Industries and
Drives Division and of the Energy Management Division react
quickly to volatility in market demand. If the moderate recovery
of macroeconomic growth stalls again and if we are not success-
ful in adapting our production and cost structure to subsequent
changes in conditions in the markets in which we operate, there
can be no assurance that we will not experience adverse effects.
For example, it may become more difficult for our customers to
obtain financing. As a result, they may modify, delay or cancel
plans to purchase our products, solutions and services, or fail to
follow through on purchases or contracts already executed. Fur-
thermore, the prices for our products, solutions and services may
decline, as a result of adverse market conditions, to a greater
extent than we currently anticipate. In addition, contracted pay-
ment terms, especially regarding the level of advance payments
by our customers relating to long-term projects, may become less
favorable, which could negatively impact our financial condi-
tions. Siemens' global setup with operations in almost all relevant
decisions and awarding of new orders would hit our businesses.
We continuously monitor the exit process and established, for
example, a task force coordinating our local and global mitiga-
tion measures. Significant business risk stems from an abrupt
weakening of Chinese economic growth. Both global and re-
gional investment climates could collapse due to political up-
heavals, further independence debates within countries in the
EU (e.g. the Catalan endeavor for independence), or sustained
success of protectionist, anti EU and anti-business parties and
policy. A rapid tightening of monetary policy by the U.S. Federal
Reserve could cause a depreciation spiral among emerging mar-
ket currencies. This could lead to a renewed emerging market
crisis because debt levels of emerging market enterprises have
risen, making them dependent on favorable global financial con-
ditions to service debts denominated in foreign currencies.
Emerging market operations involve further various risks, includ-
ing civil unrest, health concerns, cultural differences such as em-
ployment and business practices, volatility in gross domestic
product, economic and governmental instability, the potential
for nationalization of private assets and the imposition of ex-
change controls. A terrorist mega-attack or a significant cyber-
crime incident, or a series of such attacks or incidents in major
economies, could depress economic activity globally and under-
mine consumer and business confidence. Further risks stem from
geopolitical tensions (e.g. in Syria, Ukraine, Turkey, and North
Korea), and from an increasing vulnerability of the connected
global economy to natural disasters. In addition we are depend-
ing on the economic momentum of specific industries, especially
on the continued confidence in the automotive sector.
(2)%
Risks from pension obligations: The funded status of our pen-
sion plans may be affected by change in actuarial assumptions,
including the discount rate, as well as movements in financial
markets or a change in the mix of assets in our investment port-
folio. A significant increase in the underfunding may have a neg-
ative effect on our capital structure and rating, and thus may
tighten refinancing options and increase costs. In order to com-
ply with local pension regulations in selected foreign countries,
we may face a risk of increasing cash outflows to reduce an un-
derfunding of our pension plans in these countries.
For further information on post-employment benefits, derivative
financial instruments, hedging activities, financial risk manage-
ment and related measures, see → NOTES 16, 23 and 24 in B.6 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS.
Audits by tax authorities and changes in tax regulations:
We operate in nearly all countries of the world and therefore are
subject to many different tax regulations. Changes in tax laws in
any of these jurisdictions could result in higher tax expense and
payments. Furthermore, legislative changes could impact our tax
receivables and liabilities as well as deferred tax assets and de-
ferred tax liabilities. In addition, the uncertain tax environment in
some regions could limit our ability to enforce our rights. As a
globally operating organization, we conduct business in countries
subject to complex tax rules, which may be interpreted in differ-
ent ways. Future interpretations or developments of tax regimes
may affect our business, financial condition and results of opera-
tions. We are regularly audited by tax authorities in various juris-
dictions and we continuously identify and assess resulting risks.
Within our Enterprise Risk Management (ERM) we regularly iden-
tify, evaluate and respond to opportunities that present them-
selves in our various fields of activity. Below we describe our most
significant opportunities. Unless otherwise stated, the opportu-
nities described below relate to all of our segments. The order in
which the opportunities are presented reflects the currently esti-
mated relative exposure for Siemens associated with these op-
portunities and thus provides an indication of the opportunities'
current importance to us. The described opportunities are not
necessarily the only ones we encounter. In addition, our assess-
ment of opportunities is subject to change as the Company, our
markets and technologies are constantly developing. It is also
possible that opportunities we see today will never materialize.
A.8.4 Opportunities
34
33
Combined Management Report
At present, no risks have been identified that either individually
or in combination could endanger our ability to continue as a
going concern.
Even though the assessments of individual risk exposures have
changed during fiscal 2017 due to developments in the external
environment, effects of our own mitigation measures and the
revision of our plans, the overall risk situation for Siemens did not
change significantly as compared to the prior year.
The most significant challenges have been mentioned first in
each of the four categories strategic, operational, financial and
compliance risks. The risks caused by highly competitive environ-
ment continue to be the most significant, as in the prior year.
THE OVERALL RISK SITUATION
A.8.3.5 ASSESSMENT OF
STATEMENTS.
For additional information with respect to specific proceed-
ings, see NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL
Siemens maintains liability insurance for certain legal risks at lev-
els our management believes are appropriate and consistent with
industry practice. The insurance policy, however, does not pro-
tect Siemens against reputational damage. Moreover, Siemens
may incur losses relating to legal proceedings beyond the limits,
or outside the coverage, of such insurance or exceeding any pro-
visions made for losses related to legal proceedings. Finally, there
can be no assurance that Siemens will be able to maintain ade-
quate insurance coverage on commercially reasonable terms in
the future.
applications for an optimization of energy consumption, opera-
tion of highly efficient energy grids as well as scalable solutions
for distributed and renewable energy generation.
Some of these legal disputes and proceedings could result in ad-
verse decisions for Siemens that may have material effects on our
financial position, the results of operations and cash flows.
may have an adverse effect on our business, financial condition
and results of our operations.
In addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct of
our business operations, it cannot be excluded that violations of
applicable governmental regulations may be caused either by us
or by third parties that we contract with, including suppliers or
service providers, whose activities may be attributed to us. Any
such violations expose us to the risk of liability, reputational dam-
age or loss of licenses or permits that are important to our busi-
ness operations. In particular, we could also face liability for dam-
age or remediation for environmental contamination at the
facilities we design or operate. With regard to certain environ-
mental risks, we maintain liability insurance at levels that our
management believes are appropriate and consistent with indus-
try practice. We may incur environmental losses beyond the lim-
its, or outside the coverage, of such insurance, and such losses
Environmental, health & safety and other governmental
regulations: Some of the industries in which we operate are
highly regulated. Current and future environmental, health & safety
and other governmental regulations or changes thereto may re-
quire us to change the way we run our operations and could re-
sult in significant increases in our operating or production costs.
Furthermore, we see the risk of potential environmental and
health & safety incidents as well as potential non-compliance
with environmental and health & safety regulations affecting
Siemens and our contractors or sub-suppliers, resulting in e.g.
serious injuries, penalties, loss of reputation and internal or ex-
ternal investigations.
Protectionism (incl. localization): Protectionist trade policies
and changes in the political and regulatory environment in the
markets in which we operate, such as import and export controls,
tariffs and other trade barriers including debarment from certain
markets and price or exchange controls, could affect our business
in several national markets and could impact our business, finan-
cial position and results of operations; and may expose us to pen-
alties, other sanctions and reputational damage. In addition, the
uncertainty of the legal environment in some regions could limit
our ability to enforce our rights and subject us to increasing costs
related to appropriate compliance programs.
Changes of regulations, laws and policies: As a diversified
company with global businesses we are exposed to various prod-
uct- and country-related regulations, laws and policies influenc-
ing our business activities and processes. We monitor the political
and regulatory landscape in all our key markets to anticipate po-
tential problem areas, with the aim to quickly adjust our business
activities and processes to changed conditions. However, any
changes of regulations, laws and policies can adversely affect our
business activities and processes as well as our financial condi-
tion and results of operations.
32 Combined Management Report
Regulatory risks and potential sanctions: As a globally oper-
ating organization, we conduct business with customers in coun-
tries which are subject to export control regulations, embargoes,
economic sanctions or other forms of trade restrictions (hereafter
referred to as "sanctions") imposed by the U.S., the European
Union or other countries or organizations. New or expanded sanc-
tions in countries in which we do business may result in a curtail-
ment of our existing business in such countries or indirectly in
other countries. We are also aware of initiatives by institutional
investors, such as pension funds or insurance companies, to
adopt or consider adopting policies prohibiting investment in and
transactions with, or requiring divestment of interests in entities
doing business with, countries identified as state sponsors of ter-
rorism by the U.S. Department of State. It is possible that such
initiatives may result in us being unable to gain or retain investors,
customers or suppliers. In addition, the termination of our activi-
ties in sanctioned countries may expose us to customer claims
and other actions. Our reputation could also suffer due to our
activities with counterparties in or affiliated with these countries.
Besides other measures, Siemens established a global compli-
ance organization that conducts among others compliance risk
mitigation processes such as Compliance Risk Assessments, and
which has been reviewed by external compliance experts.
In addition, future developments in ongoing and potential future
investigations, such as responding to the requests of governmen-
tal authorities and cooperating with them, could divert manage-
ment's attention and resources from other issues facing our busi-
ness. Furthermore, we might be exposed to compliance risks in
connection with recently acquired operations that are in the
ongoing process of integration.
A considerable part of our business activities involve govern-
ments and companies with public shareholders. We also partici-
pate in a number of projects funded by government agencies and
intergovernmental and supranational organizations, such as mul-
tilateral development banks. Ongoing or potential future investi-
gations into allegations of corruption, of antitrust violations or of
other violations of law could as well impair relationships with
such business partners or could result in the exclusion of public
contracts. Such investigations may also adversely affect existing
private business relationships and our ability to pursue poten-
tially important strategic projects and transactions, such as stra-
tegic alliances, joint ventures or other business cooperations, or
could result in the cancellation of certain of our existing con-
tracts. Moreover, third parties, including our competitors, could
initiate significant litigation.
organizations. Monitors could again be appointed to review fu-
ture business practices and we may otherwise be required to fur-
ther modify our business practices and our compliance program.
Current and future investigations regarding allegations of
corruption, of antitrust violations and of other violations of
law: Proceedings against us regarding allegations of corruption,
of antitrust violations and of other violations of law may lead to
criminal and civil fines as well as penalties, sanctions, injunctions
against future conduct, profit disgorgements, disqualifications
from directly and indirectly engaging in certain types of business,
the loss of business licenses or permits or other restrictions and
legal consequences. Accordingly, we may, among other things,
be required to comply with potential obligations and liabilities
arising in connection with such investigations and proceedings,
including potential tax penalties. Moreover, any findings related
to public corruption that are not covered by the 2008 and 2009
corruption charge settlements, which we concluded with Ameri-
can and German authorities, may endanger our business with
government agencies and intergovernmental and supranational
A.8.3.4 COMPLIANCE RISKS
Current or future litigation: Siemens is and will be in the
course of its normal business operations involved in numerous
legal disputes and proceedings in various jurisdictions. These le-
gal disputes and proceedings could result, in particular, in
Siemens being subject to payment of damages and punitive dam-
ages, equitable remedies or criminal or civil sanctions, fines or
disgorgement of profit. In individual cases this may also lead to
formal or informal exclusion from tenders or the revocation or
loss of business licenses or permits. In addition, further legal dis-
putes and proceedings may be commenced or the scope of pend-
ing legal disputes and proceedings may be expanded. Asserted
claims are generally subject to interest rates.
Other operating income
11,761
7,417
(30)
(3)%
700
681
with an equity portion
Special reserve
9%
19,368
21,123
Equity
Liabilities and equity
1%
69,814
70,239
Total assets
69%
35
60
resulting from offsetting
Active difference
Deferred tax assets
Prepaid expenses
The increase in Equity was attributable to net income for the year
of €4.1 billion, the settlement of exercised warrants of €1.1 bil-
lion and issuance of treasury stock of €0.4 billion in conjunction
with our share-based payments and employee share programs.
These factors were partly offset by dividends paid in fiscal 2017
(for fiscal 2016) of €2.9 billion. In addition, equity was reduced
due to share buybacks during the year amounting to €0.9 billion.
The equity ratios at September 30, 2017 and 2016 were 30% and
28%, respectively. For explanations relating to treasury shares we
refer to NOTE 15 in NOTES TO OUR ANNUAL FINANCIAL STATEMENTS
OF SIEMENS AG.
by the liquidity management of the Corporate Treasury of
Siemens AG. The liquidity management is based on the financing
policy of the Siemens Group, which is aimed towards a balanced
financing portfolio, a diversified maturity profile and a comfort-
able liquidity cushion. Therefore, the change in liquidity of
Siemens AG was not only driven by business activities of
Siemens AG.
(76)%
2%
8%
(4)%
19%
81
2,256
2,174
Provisions
Pensions and similar
commitments
Other provisions
Combined Management Report
38
The Corporate Governance statement pursuant to Sections 289 a
and 315 para. 5 of the German Commercial Code is an integral
part of the Combined Management Report and is presented in
→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
A.9.3 Corporate Governance
statement
The decrease in Trade payables, liabilities to affiliated compa-
nies and other liabilities was due primarily to lower liabilities to
affiliated companies as a result of intra-group financing activities.
Other provisions decreased due to several factors. The largest
was a decrease of €0.5 billion in provisions for losses from deri-
vative financial transactions. Additionally, provisions for post-
closing guarantees decreased by €0.2 billion and provisions for a
major asset retirement obligation decreased by €0.2 billion, due
primarily to reduced inflation rate assumptions.
The increase in Pension and similar commitments resulted
mainly from a €0.7 billion increase related to interest and service
costs and a €0.4 billion increase related to an adjustment of the
discount rate from 4.08% in fiscal 2016 to 3.77% in fiscal 2017.
This increase was partly offset by €0.6 billion for payments of
pension obligations.
The Increase in Receivables and other assets was due primarily
to higher receivables from affiliated companies as a result of in-
tra-group financing activities, including higher receivables from
SFS companies and higher receivables resulting from profit trans-
fer agreements.
1%
(4)%
(3)%
(6)%
29,118
29,752
385
69,814
28,896
361
70,239
Total liabilities and equity
87
Deferred income
and other liabilities
to affiliated companies
Trade payables, liabilities
>200%
21%
14
619
750
Advance payments received
81
Liabilities to banks
Liabilities
5%
(11)%
(2)%
11,250
8,360
19,610
19,178
28,065
(expenses), net
3,642
20,359
884
41%
(141)%
36%
(43)%
>(200)%
(195)
3,060
(1,077)
3,145
Unappropriated net income
retained earnings
Allocation to other
256
146
Profit carried forward
2,999
4,076
Net income
(160)
(385)
Income taxes
3,158
4,462
Income from business activity
24%
3,092
3,828
ments 3,798 (prior year 3,732)
thereof Income from invest-
Financial income, net
n/a
134
3%
The initial application of the Accounting Directive Implementa-
tion Act (Bilanzrichtlinie-Umsetzungsgesetz, BilRUG) resulted in
changes in presentation in the income statement in fiscal 2017.
Prior periods are not reported on a comparable basis. Compara-
ble amounts for fiscal 2016 are: revenue €27,043 million, cost of
sales €20,920 million and other operating income (expenses),
net €(44) million.
Increases in Revenue at Mobility and Power and Gas, of €1.0 bil-
lion and €0.5 billion respectively, were more than offset by the
effect of the above-mentioned carve-out of the Siemens Wind
Power business. In fiscal 2016, we recorded revenue of €2.1 bil-
lion at Wind Power and Renewables. On a geographical basis,
75% of revenue was generated in the Europe, C.I.S., Africa, Mid-
dle East region, 18% in the Asia, Australia region and 7% in the
Americas region. Exports from Germany accounted for 71% of
overall revenue. In fiscal 2017, orders for Siemens AG amounted
to €25.6 billion. Within Siemens AG, the development of revenue
depends strongly on the completion of contracts, primarily in
connection with large orders.
Gross profit was higher year-over-year due mainly to increases
of €0.3 billion in Digital Factory, €0.2 billion in Mobility and
€0.2 billion in Power and Gas.
securities
Cash and cash equivalents,
16,717
19,884
Receivables and other assets
Current assets
(5)%
0%
0%
47,083
47,150
2,472
44,611
44,802
Financial assets
2,348
20,769
Intangible and tangible assets
Assets
(in millions of €)
% Change
Sep 30,
2016
2017
with German Commercial Code (condensed)
Statement of Financial Position of Siemens AG in accordance
A.9.2 Net assets and financial position Cash, cash equivalents and securities are significantly affected
37
Combined Management Report
The change in Income taxes resulted from higher income tax
expenses, corresponding to a higher taxable share of Income
from business activity and increased burdens from withholding
taxes. In addition, this item included deferred tax expenses and
income resulting from the generation and reversal of temporary
differences between the accounting and tax-based valuation and
the use of loss carry-forwards.
The increase in Financial income, net was primarily attributable
to an improvement in other financial income (expenses), from a
negative €0.9 billion in the prior-year period to a negative
€0.3 billion. This was mainly due to a positive effect of €0.8 bil-
lion from changes in provisions for risks in derivative financial
instruments. This factor was partly offset by a negative effect of
€0.4 billion from changes in provision for pensions and similar
commitments related to changes in the discount rate assump-
tions. Income from investments was slightly higher compared to
the prior-year period, which included an increase in income from
profit transfer agreements with affiliated companies by €1.0 bil-
lion. However, positive results from investments were nearly off-
set by impairments of investments, which included primarily an
impairment of Siemens AG's investment at Siemens Gamesa
Renewable Energy, S.A., Spain, of €1.2 billion.
Despite an increase of €0.2 billion in Research and develop-
ment (R&D) expenses year-over-year, the R&D intensity (R&D
as a percentage of revenue) increased only slightly by 0.2 per-
centage point year-over-year due to the above-mentioned
changes in presentation according to BiIRUG. On an average ba-
sis, we employed 9,600 people in R&D in fiscal 2017.
Non-current assets
115
15
-
compensation for secondary activities. The holding of positions
in Siemens companies is considered to be covered by contractual
Managing Board remuneration. As a rule, Managing Board mem-
bers are obligated to waive any compensation that may be due
to them in connection with such positions. Should a waiver not
be possible under the legal or tax regulations applicable to a
Siemens company, the compensation paid to a Managing Board
member in connection with such a position will be set off against
the remuneration due to him or her in connection with his or her
Managing Board activities. Memberships in supervisory boards
whose establishment is required by law or in comparable domes-
tic or foreign controlling bodies of business enterprises are listed
in Section c.4.1 in c.4 CORPORATE GOVERNANCE.
Secondary activities of Managing Board members
Members of the Managing Board may take on secondary activi-
ties – in particular, supervisory board positions outside the
Company - only with the approval of the Chairman's Committee
of the Supervisory Board. The full Supervisory Board remains
responsible for decisions regarding any adjustments to Manag-
ing Board compensation necessary to take account of possible
Stock commitments that were made as long-term stock-based
compensation and for which the restriction period is still in effect
will be forfeited without replacement if the employment contract
is not extended after the end of an appointment period, either at
the Managing Board member's request or because there is seri-
ous cause that would have entitled the Company to revoke the
appointment or terminate the contract. However, once granted,
Stock Awards are not forfeited if the employment contract is ter-
minated by mutual agreement at the Company's request, or be-
cause of retirement, disability or death or in connection with a
spinoff, the transfer of an operation, or a change of activity
within the corporate group. In these cases, the Stock Awards will
remain in effect upon termination of the employment contract
and will be honored on expiration of the restriction period.
Compensatory or severance payments also cover non-monetary
benefits by including an amount of 5% of the total compensation
or severance amount. Compensatory or severance payments will
be reduced by 10% as a lump-sum allowance for discounted val-
ues and for income earned elsewhere. However, this reduction
will apply only to the portion of the compensatory or severance
payment that was calculated without taking into account the first
six months of the remaining term of the Managing Board mem-
ber's employment contract.
entitlement to a severance payment if the Managing Board mem-
ber receives benefits from third parties in connection with a
change of control. Moreover, there is no right to terminate if the
change of control occurs within a period of twelve months prior
to a Managing Board member's retirement.
Combined Management Report
In the event of a change of control that results in a substantial
change in a Managing Board member's position - for example,
due to a change in corporate strategy or a change in the Manag-
ing Board member's duties and responsibilities – the Managing
Board member has the right to terminate his or her contract with
the Company. A change of control exists if one or more share-
holders acting jointly or in concert acquire a majority of the vot-
ing rights in Siemens AG and exercise a controlling influence or
if Siemens AG becomes a dependent enterprise as a result of
entering into an intercompany agreement within the meaning of
Section 291 of the German Stock Corporation Act (Aktiengesetz)
or if Siemens AG is to be merged into an existing corporation or
other entity. If this right of termination is exercised, the Manag-
ing Board member is entitled to a severance payment in the
amount of not more than two years' compensation. The calcula-
tion of the annual compensation will include not only the base
compensation and the target amount for the Bonus, but also the
target amount for Stock Awards, in each case based on the most
recent fiscal year completed prior to the termination of the mem-
ber's contract. The stock-based components for which a firm
commitment already exists will remain unaffected. There is no
Managing Board employment contracts provide for a compensa-
tory payment if membership on the Managing Board is termi-
nated prematurely by mutual agreement and without serious
cause. The amount of this payment must not exceed the value of
two years' compensation and must compensate no more than
the remaining term of the contract (cap). The amount of the
compensatory payment is calculated on the basis of base com-
pensation, together with the variable compensation and the
long-term stock-based compensation actually received during
the last fiscal year before termination. The compensatory pay-
ment is payable in the month when the member leaves the Man-
aging Board. In addition, a one-time special contribution is made
to the BSAV. The amount of this contribution is based on the
BSAV contribution that the Managing Board member received in
the previous year and on the remaining term of his or her ap-
pointment, but is limited to not more than two years' contribu-
tions (cap). The above benefits are not paid if an amicable termi-
nation of the member's activity on the Managing Board is agreed
upon at the member's request, or if there is serious cause for the
Company to terminate the employment relationship.
Commitments in connection with the termination
of Managing Board membership
A.10.1.2 REMUNERATION OF MANAGING BOARD
MEMBERS FOR FISCAL 2017
September 30, 1983, are entitled to receive transition payments
for the first six months after retirement, equal to the difference
between their final base compensation and the retirement ben-
efits payable under the corporate pension plan if they retire im-
mediately after the termination of their Managing Board mem-
bership. The provisions of the German Company Pensions Act
(Betriebsrentengesetz) do not apply to this benefit.
Benefits from the retirement benefit system that was in place
before the BSAV was established are normally granted as pension
benefits with a surviving dependent's pension. In this case also,
payout in installments or a lump-sum payment may be chosen
instead of pension payments.
Managing Board members are eligible to receive benefits under
the BSAV at the age of 60 or - in the case of benefit commit-
ments made on or after January 1, 2012 – the age of 62. As a rule,
the accrued pension benefit balance is paid out to Managing
Board members in twelve annual installments. A Managing Board
member or his or her surviving dependents may also request that
his or her pension benefit balance will be paid out in fewer in-
stallments or as a lump sum, subject to the Company's consent.
The accrued pension benefit balance may also be paid out as a
pension. Furthermore, Managing Board members may choose a
combination of lump sum payments, installment payments (two
to twelve) and pension payments. If the pension option is chosen,
a decision must be made as to whether the payout should include
pensions for surviving dependents. If a member of the Managing
Board dies while receiving a pension, benefits will be paid to his
or her surviving dependents if the member has chosen such
benefits. The Company will then provide a limited-term pension
to surviving children until they reach the age of 27 or, in the case
of benefit commitments made on or after January 1, 2007, until
they reach the age of 25.
Like employees of Siemens AG, the members of the Managing
Board are included in the Siemens Defined Contribution Benefit
Plan (BSAV). Under the BSAV, Managing Board members receive
contributions that are credited to their personal pension ac-
counts. The amount of these annual contributions is based on a
predetermined percentage related to their base compensation
and the target amount for their Bonuses. This percentage is de-
cided upon annually by the Supervisory Board. Most recently it
was set at 28%. In making its decisions, the Supervisory Board
takes account of the intended level of provision for each individ-
ual and the length of time he or she has been a Managing Board
member as well as the annual and long-term expense to the
Company resulting from that provision. The non-forfeitability of
pension benefit commitments is determined in compliance with
the provisions of the German Company Pensions Act (Betriebsren-
tengesetz). Special contributions may be granted to Managing
Board members on the basis of individual decisions by the Super-
visory Board. If a member of the Managing Board earned a pen-
sion benefit entitlement from the Company before the BSAV was
introduced, a portion of his or her contributions went toward
financing that prior commitment.
Pension benefit commitments
42
41
Combined Management Report
Compliance with these guidelines must be proven for the first
time after a four-year buildup phase. Thereafter, it must be
proven annually. If the value of a Managing Board member's
accrued holdings declines below the required minimum due to
fluctuations in the market price of Siemens stock, he or she must
acquire additional shares.
worth a multiple of their base compensation 300% for the
President and CEO, 200% for the other members of the Managing
Board - throughout their terms of office on the Managing Board.
The determining figure in this context is the average base com-
pensation that a member of the Managing Board has received
over the four years before the applicable dates of proof of com-
pliance. Hence, changes that have been made to base compensa-
tion in the meantime are included. Non-forfeitable stock commit-
ments (Bonus Awards) which were granted until fiscal 2014 are
taken into account in determining compliance with the Share
Ownership Guidelines.
Like other eligible employees of Siemens AG, Managing Board
members who were employed by the Company on or before
At the beginning of the fiscal year, the Supervisory Board set the
target parameters return on capital employed (ROCE) and earn-
ings per share (EPS) for the variable compensation (Bonus) for all
members of the Managing Board, in each case on the basis of
continuing and discontinued operations. The target values for
the EPS component were defined on a multi-year basis. In defin-
ing the target for variable compensation, the Supervisory Board
also defined individual targets so as to take fuller account of the
individual performance of each Managing Board member. As a
rule, up to five individual targets were defined for this purpose.
An internal review of the appropriateness of Managing Board
compensation for fiscal 2017 has confirmed that the remunera-
tion of the Managing Board resulting from target achievement
for fiscal 2017 is to be considered appropriate. In light of this re-
view and following a review of the achievement of the targets
defined at the beginning of the fiscal year, the Supervisory Board
has decided to define the amounts of variable compensation,
stock commitments and pension benefit contributions as follows:
Variable compensation (Bonus)
The following targets were set and attained with respect to the
target parameters for variable compensation:
The compensation presented on the following pages was
granted to the members of the Managing Board for fiscal
2017 (individual disclosure).
On the basis of the Supervisory Board's decisions described
above, Managing Board compensation for fiscal 2017 totaled
€33.97 million (2016: €28.90 million), an increase of 17.5%.
Of this total amount, €20.73 million (2016: €20.19 million)
was attributable to cash compensation and €13.24 million
(2016: €8.71 million) to stock-based compensation.
Total compensation
Commitments in connection with the
termination of Managing Board membership
Because Prof. Dr. Russwurm left the Managing Board at the
end of his term of office on March 31, 2017, no commit-
ments were agreed upon in connection with the termina-
tion of his Managing Board membership. In accordance with
his contract with the Company, the previously granted Stock
Awards, for which the restriction period is still in effect, will
be absolutely maintained.
Since beneficiaries are not entitled to receive dividends, the
number of stock commitments granted was based on the
closing price of Siemens stock in Xetra trading on the date
of award less the present value of dividends expected during
the restriction period. The share price used to determine the
number of stock commitments was €91.32 (2016: €75.60).
Long-term stock-based compensation
43
Combined Management Report
assessment, the Supervisory Board decided not to make any dis-
cretionary adjustments to the Bonus payout amounts.
100-130%
In fiscal 2017, Bonus-related target attainment by Managing
Board members was between 113.89% and 123.89%. In its overall
2 Calculative target achievement for ROCE was 51.33%. The Supervisory Board adjusted this figure to reflect the acquisition of
Mentor Graphics and the merger of Siemens' wind power business with Gamesa Corporación Tecnológica S.A. (Gamesa).
Focus topics 2017: Growth, Innovation,
Digitalization and Excellence
Target achievement²
118.33%
123.33%
Actual FY 2017 figure
13.54%
€7.67
100% of target
15.00%
€7.32
1 Continuing and discontinued operations.
Individual targets
Earnings per share, basic EPS1 (02015-2017)
Return on capital employed, ROCE¹
Target parameter
buildup phase Managing Board members hold Siemens stock
Managing Board members serving as of September 30, 2017
-
Share Ownership Guidelines
Target
parameter
~ 34%
Long-term
stock-based
compensation
compensation ~ 33%
(Bonus)
Share of target
compensation
Variable
component
Remuneration
Variable compensation (Bonus) and long-term stock-based compensation
1/3 Return on capital
employed (ROCE)
With regard to the further terms of the Stock Awards, the same
principles apply in general to the Managing Board and to senior
managers. These principles are discussed in more detail in
NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
discretion to revoke without replacement all or some of the
Siemens Stock Awards, depending on the gravity of the compli-
ance violation.
If a member of the Managing Board violates compliance regu-
lations, the Supervisory Board is entitled at its duty-bound
If significant changes occur among the relevant competitors
during the period under consideration, the Supervisory Board
may take these changes into account, as appropriate, in deter-
mining the values for comparison and/or calculating the relevant
stock prices of those competitors. In the event of extraordinary
unforeseen developments that impact the share price, the Super-
visory Board may decide to reduce the number of committed
Stock Awards retroactively, or it may decide that in lieu of a trans-
fer of Siemens stock only a cash settlement in a defined and lim-
ited amount will be paid, or it may decide to postpone transfers
of Siemens stock for payable Stock Awards until the develop-
ments have ceased to impact the share price.
Combined Management Report
Target attainment relating to long-term stock-based compensa-
tion is linked to the performance of Siemens stock compared to its
competitors. At the beginning of the fiscal year, the Supervisory
Board decides on a target system (target value for 100% and target
line) for the performance of Siemens stock relative to the stock
of – at present – five competitors (ABB, General Electric, Mitsu-
bishi Heavy Industries, Rockwell and Schneider Electric). Changes
in the share price are measured on the basis of a twelve-month
reference period (compensation year) over three years (perfor-
mance period), while Stock Awards are restricted for a period of
four years. When this restriction period expires, the Supervisory
Board determines how much better or worse Siemens stock has
performed relative to the stock of its competitors. This determina-
tion yields a target attainment of between 0% and 200% (cap).
Beneficiaries receive one free share of Siemens stock per Stock
Award after an approximately four-year restriction period and
subject to target attainment. The value of the Siemens shares
to be transferred for Stock Awards after the end of the restric-
tion period depends on the price of the Siemens share at the
time of transfer and on target attainment as defined by the
underlying target system. If target attainment is above 100%,
the members of the Managing Board will receive - in addition
to the Siemens shares committed - a cash payment correspond-
ing to the outperformance. If target attainment is less than
100%, a number of stock commitments equivalent to the short-
fall from the target will be forfeited without replacement. The
total value of the Siemens stock and of the cash payment is
subject to a ceiling of 300% of the relevant target amount. If
this maximum amount of compensation is exceeded, the corre-
sponding entitlement to stock commitments will be forfeited
without replacement.
Long-term stock-based compensation consists of a grant of for-
feitable stock commitments (Stock Awards) at the beginning of
the fiscal year. In the event of 100% target achievement, the an-
nual target amount for the monetary value of the Stock Awards
commitment is €2,200,000 for the President and CEO (effective
October 1, 2016). For the CFO and for those members of the Man-
aging Board who are responsible for Divisions and for Health-
ineers it is €1,100,000. For the other member of the Managing
Board, it is €1,055,000. Since fiscal 2015, the Supervisory Board
has had the option of increasing the target amount for each
member of the Managing Board, on an individual basis, by as
much as 75% for one fiscal year at a time. This option enables the
Supervisory Board to take account of each Managing Board mem-
ber's individual accomplishments and experience as well as the
scope and demands of his or her function.
Long-term stock-based compensation
At its duty-bound discretion, the Supervisory Board may revise
the amount resulting from target achievement downward or up-
ward by as much as 20%; the adjusted amount of the Bonus paid
can thus be as much as 240% of the target amount. In choosing
the factors to be considered in deciding on possible revisions of
the Bonus payouts (±20%), the Supervisory Board takes account
of incentives for sustainable corporate management. Decisions
to make discretionary adjustments may take factors such as the
results of an employee survey or a customer satisfaction survey
into account as well as the Company's economic situation. The
revision option may also be exercised in recognition of Managing
Board members' individual achievements. The Bonus is paid en-
tirely in cash.
If an employment contract begins during the fiscal year, an equiv-
alent number of Siemens Phantom Stock Awards will be granted
instead of Stock Awards. In lieu of a transfer of shares, only a cash
equivalent is given at the end of the restriction period for Siemens
Phantom Stock Awards. Beyond that, the same provisions agreed
upon for Siemens Stock Awards apply.
1/3 Earnings
per share, basic EPS
1/3 Individual
targets
Performance of
Siemens stock
compared to
5 competitors
Maximum amount for compensation overall
In addition to the maximum amounts of compensation for vari-
able compensation and long-term stock-based compensation,
a maximum amount for compensation overall has been defined.
Since fiscal 2014, this amount cannot be more than 1.7 times
higher than target compensation. Target compensation com-
prises base compensation, the target amount for variable com-
pensation and the target amount for long-term stock-based com-
pensation, excluding fringe benefits and pension benefit
commitments. When fringe benefits and pension benefit commit-
ments for a given fiscal year are included, the maximum amount
of compensation overall for that year will increase accordingly.
at transfer
- Stock price
- Target
achievement
Dependent on
300% of the
respective
target amount
0-200%
on target
achievement
Dependent
240% of the
respective
target amount
add. +/- 20%
adjustment
0-200
Value at allo-
cation/transfer
Maximum
amounts of
compensation
Target
achievement
a twelve-month reference
period (compensation
year) over three years
(performance period)
Change in share price
measured on the basis of
Annual
basis
0 3 years
Annual
basis
Basis for
assessment
The Siemens Share Ownership Guidelines are an integral part of
the remuneration system for the Managing Board and senior
executives. These guidelines require that after a specified
For 100% target achievement (target amount), the amount of the
Bonus equals the amount of base compensation. The Bonus is
subject to a ceiling (cap) of 200%. If targets are substantially
missed, variable compensation may not be paid at all (0%).
(Amounts in thousands of €)
Non-performance-
based components
components
1,043
2017
2017
(Min) (Max)
2017
2016
Managing Board member
Janina Kugel
Managing Board member
Klaus Helmrich
Managing Board member
1,065
Lisa Davis?
Dr. Roland Busch
7 Ms. Davis's compensation is paid out in Germany in euros. It
has been agreed that any tax liability that arises due to tax rates
that are higher in Germany than in the U.S. will be reimbursed.
For base compensation of calendar years 2015 and 2016 as well
as for the Bonus for fiscal years 2015 and 2016, a currency-ad-
justment payment was granted.
individual contractual caps for performance-based components.
6 Total compensation reflects the current fair value of stock-based
compensation components on the grant date. On the basis of
the current monetary values of stock-based compensation
components, total compensation amounted to €33,657,370
(2016: €28,747,477).
5 Total maximum compensation for fiscal 2017 represents the con-
tractual maximum amount for overall compensation, excluding
fringe benefits and pension benefit commitments. At 1.7 times
target compensation (base compensation, target amount for the
Bonus and the target amount for long-term stock-based compen-
sation), the maximum amount is less than the total of the
€8,560,190). The amounts for individual Managing Board mem-
bers were as follows: Joe Kaeser €2,200,081 (2016: 2,120,051),
Dr. Roland Busch €1,100,041 (2016: €1,080,022), Lisa Davis
€1,100,041 (2016: €1,080,022), Klaus Helmrich €1,100,041 (2016:
€1,080,022), Janina Kugel €1,055,020 (2016: €1,040,029),
Cedrike Neike €3,700,065 (2016: €0), Michael Sen €1,025,067
(2016: €0), Dr. Ralf P. Thomas €1,100,041 (2016: €1,080,022) and
for former Managing Board member Prof. Dr. Siegfried Russwurm
€550,020 (2016: €1,080,022).
4 Of the Stock Awards granted in fiscal 2017, most are contingent
upon attaining the prospective performance-based target for
Siemens stock relative to five competitors. The monetary values
relating to 100% target achievement were €12,930,417 (2016:
(2016: €698,432), Klaus Helmrich €1,784,593 (2016: €1,284,349),
Janina Kugel €1,278,363 (2016: €704,026), Cedrik Neike
€2,978,584 (2016: €0), Michael Sen €135,659 (2016: €0) and
Dr. Ralf P. Thomas €1,393,673 (2016: €872,394). The correspond-
ing expense, determined in the same way, for former Managing
Board members was as follows: Brigitte Ederer €218,614 (2016:
- €42,052), Barbara Kux €218,614 (2016: - €42,052), Peter
Löscher €538,356 (2016: - €103,403), Prof. Dr. Hermann Requardt
€32,566 (2016: - €5,624), Prof. Dr. Siegfried Russwurm
€3,303,141 (2016: €1,302,593), Peter Y. Solmssen €692,506
(2016: €35,857), and Dr. Michael Süß €29,604 (2016: - €248).
3 The expenses recognized for stock-based compensation for members of the
Managing Board in accordance with the IFRS in fiscal 2017 and fiscal 2016 amounted
to €19,031,892 and €8,294,921, respectively. The following amounts pertained
the members of the Managing Board in fiscal 2017: Joe Kaeser €3,344,690 (2016:
€2,378,584), Dr. Roland Busch €1,781,634 (2016: €1,283,779), Lisa Davis €1,301,296
2 The figures for individual maximums for multi-year variable compensation reflect the
possible maximum value in accordance with the maximum amount agreed upon for
fiscal 2017 - that is, 300% of the applicable target amount.
Managing Board member
1,065 1,065
55
1,098
55
1,065
1,043
1,065 1,065 1,065
512
512
512
1,577 1,577 1,577
(Max)
2017 (Min)
2016
(Max)
(Min)
2017
2016
2017
2017
2017
2017
2017
2017
(Min) (Max)
2017
2016
1,043
683
1,726
1,120 1,120
1,120
55
55
in the amount of €746,537 (2016: €765,327).
Performance-based
1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
and other perquisites, such as the provision of company cars in the amount of
€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
advice, accommodation and moving expenses, including any taxes due in this regard,
currency adjustment payments and costs relating preventive medical examinations
2,773 2,639
7,066
2,034
2017
2016
President and CEO
Joe Kaeser
with long-term incentive effect,
stock-based
without long-term incentive effect,
non-stock-based
Total
Fixed compensation (base compensation)
Fringe benefits¹
2,130
Total compensation
Performance-based
components
Performance-based
(Amounts in thousands of €)
Non-performance-
based components
Combined Management Report
44
Managing Board members serving as of September 30, 2017
Total compensation
Performance-based
components
components
0
5,112
One-year variable compensation
(Bonus) Target amount
0 6,600
6,328 6,460 2,234 10,982
1,101 1,193 1,193 1,193
7,428 7,653 3,427 12,175
One-year variable compensation
(Bonus) Payout amount
without long-term incentive effect,
non-stock-based
Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
instead of the target value according to the Code for one-year variable compensation. Service costs for pension
benefits are not included.
Total (Code)6
Service Cost
Total5
Multi-year variable compensation 2.3
Siemens Stock Awards4
(restriction period: four years)
One-year variable compensation
(Bonus) Target amount
with long-term incentive effect,
stock-based
without long-term incentive effect,
non-stock-based
Total
Fixed compensation (base compensation)
Fringe benefits'
One-year variable compensation
(Bonus) Payout amount
without long-term incentive effect,
non-stock-based
Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
instead of the target value according to the Code for one-year variable compensation. Service costs for pension
benefits are not included.
Total (Code) 6
Service Cost
Total5
2,158 2,096
Multi-year variable compensation 2.3
Siemens Stock Awards4
(restriction period: four years)
6,969
1,065
Variable compensation (Bonus) is based on the Company's busi-
ness performance in the past fiscal year. The Bonus depends on
an equal one-third weighting of target achievement of the target
parameters return on capital employed, earnings per share and
individual targets. To achieve a consistent target system Compa-
ny-wide, corresponding targets - in addition to other factors -
also apply to senior managers.
Fringe benefits include the costs, or the cash equivalent, of non-
monetary benefits and other perquisites, such as the provision
of a company car, contributions toward the cost of insurance,
the reimbursement of expenses for legal advice and tax advice,
accommodation and moving expenses, including a gross-up for
any taxes due in this regard, currency adjustment payments and
costs relating to preventive medical examinations.
48 Combined Management Report
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
Other
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2017, amounted to
€191.5 million (2016: €216.3 million). This figure is included in
NOTE 16 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
In fiscal 2017, former members of the Managing Board and their
surviving dependents received emoluments within the meaning
of Section 314 para. 1 No. 6 b of the German Commercial Code
totaling €34.1 million (2016: €52.3 million). The previous year's
figure includes the lump-sum payments of the former Managing
Board members Prof. Dr. Requardt and Mr. Solmssen.
6 Prof. Dr. Russwurm left the Managing Board effective the
end of March 31, 2017.
5 Mr. Sen was appointed a full member of the Managing
Board effective April 1, 2017.
4 Mr. Neike was appointed a full member of the Managing
Board effective April 1, 2017.
3 Deferred compensation totals €4,001,386 (2016: €3,829,397),
including €3,590,178 for Joe Kaeser (2016: €3,428,243),
€354,801 for Klaus Helmrich (2016: €343,953) and €56,407
for Dr. Ralf P. Thomas (2016: €57,201).
8 Mr. Neike was appointed Executive Chairman of the Board of
Directors of Siemens Ltd. China, effective May 1, 2017. Of the
fixed compensation and one-year variable compensation (pay-
out amount) reported here, an amount of €222,802 was granted
and paid by Siemens Ltd. China and set off against the remune-
ration for his Managing Board activities at Siemens AG. Of the
2 The defined benefit obligations reflect one-time special
contributions to the BSAV for new appointments from out-
side the Company, amounting to €1,525,000 (2016: €0).
6,083,534
34,624,669
6,317,937
40,069,078
583,968
4,612,608
298,200
5,039,160
Former members of the Managing Board
Prof. Dr. Siegfried Russwurm 6
Total
4,297,199
4,727,702
583,968
596,400
1 The expenses (service cost) recognized in accordance with
the IFRS in fiscal 2017 for Managing Board members' entitle-
ments under the BSAV in fiscal 2017 amounted to
€6,754,665 (2016: €4,615,543).
Stock Awards fell due and was honored in September 2017. The
other half will fall due and be honored in September 2018. The
value of these Siemens Phantom Stock Awards depends solely
on the performance of Siemens stock.
602
5,447
621
4,984
0
0
67
0
0
1,402
0
39
20
133
97
2,556
1,272
3,347
2,958
4,363
4,845
1,214
3,770
703
1,975
622
3,969
603
3,561
703,169
0
298,200
Michael Sen 5
1,139,040
1,192,800
Joe Kaeser
serving as of September 30, 2017
2016
2017
Defined benefit obligation² for all pension
commitments excluding deferred compensation³
Total
contributions' for
2016
2017
11,195,488
Managing Board members
The following table shows individualized details of the contribu-
tions (allocations) under the BSAV for fiscal 2017 as well as the
defined benefit obligations for pension commitments.
The contributions under the BSAV are added to the personal pen-
sion accounts each January, following the close of the fiscal year.
Until a beneficiary's date of retirement, his or her pension account
is credited with an annual interest payment (guaranteed interest)
on January 1 of each year. The interest rate is currently 0.90%.
For fiscal 2017, the members of the Managing Board were
granted contributions under the BSAV totaling €5.0 million
(2016: €4.6 million), based on a resolution of the Supervisory
Board dated November 8, 2017. Of this amount, €0.1 million
(2016: €0.1 million) related to the funding of pension commit-
ments earned prior to transfer to the BSAV.
Pension benefit commitments
47
Combined Management Report
10 Prof. Dr. Russwurm left the Managing Board effective the end
of March 31, 2017.
9 To compensate for the forfeiture of stock and pension contri-
butions at his previous employer, the Supervisory Board has
granted Mr. Sen a one-time sum of €950,000. Half of this
amount was awarded in the form of Siemens Phantom Stock
Awards and the other half as a special pension benefit contri-
bution.
fringe benefits reported here, an amount of €7,778 was granted
and paid by Siemens Ltd. China. In addition, it has been agreed
that Siemens AG will offset, as a net amount, any personal tax
burden that, due to Mr. Neike's two employment relationships,
exceeds the burden that he would incur if he paid tax solely
on the benefits granted to him in his employment contract
with Siemens AG in Germany. Siemens AG will also offset any
burdens due to charges and contributions to social insurance
or comparable statutory systems in China additional to those
he incurs in Germany.
(Amounts in €)
10,391,542
Dr. Roland Busch
596,400
1,213,897
298,200
1,084,971
1,628,418
553,728
566,160
Cedrik Neike4
Janina Kugel
4,607,800
5,007,306
583,968
596,400
Klaus Helmrich
3,817,196
4,532,350
583,968
596,400
Lisa Davis
4,342,427
4,742,811
583,968
Dr. Ralf P. Thomas
Performance-based components
Variable compensation (Bonus)
1,407
0
1/3 Variable compensation (Bonus)
> Variability of target achievement:
0-200% add. ±20% adjustment
2/3
> Performance of Siemens stock
compared to five competitors
Restriction period
four years
Target parameter
1/3 Long-term
stock-based compensation
Siemens Stock Awards
> Variability of target
achievement:
0-200%
Base compensation
100%
Maximum amounts of compensation
Managing Board
member
Performance-
based
and CEO
base
compensation
2 times
base
compensation
3 times
1/3 Base compensation
Structure of target compensation
Requirement to hold Siemens stock
as a multiple of base compensation
throughout the terms of office
Share Ownership Guidelines
Remuneration system for Managing Board members
President
compensation
Target parameter:
1/3 ROCE
Fringe benefits
Base compensation is paid as a monthly salary. Since October 1,
2016, the base compensation of President and CEO Joe Kaeser
has amounted to €2,130,000 per year. The base compensation of
the CFO and of those members of the Managing Board who are
responsible for Divisions or for Healthineers has been €1,065,000
per year. For the other member of the Managing Board, it has
been €1,011,000 per year.
Non-performance-based components
Base compensation
In fiscal 2017, the Managing Board's remuneration system had
the following components:
40
39
Combined Management Report
Compensation
overall
stock-based compensation
Long-term
Variable
compensation (Bonus)
300%
target compensation¹
1.7 times
240%
as a percentage of the respective target amount
1 Plus fringe benefits and pension benefit commitments.
Individual
targets
1/3
Earnings
per share
1/3
The system and levels for the Managing Board's remuneration are
determined and regularly reviewed by the full Supervisory Board,
based on proposals by the Compensation Committee. The Super-
visory Board reviews remuneration levels annually to ensure that
they are appropriate. In this process, the Company's economic
situation, performance and outlook as well as the tasks and per-
formance of the individual Managing Board members are taken
into account. In addition, the Supervisory Board considers the
common level of remuneration in comparison with peer compa-
nies and with the compensation structure in place in other areas
of the Company. It also takes due account of the relationship
between the Managing Board's remuneration and that of senior
management and staff, both overall and with regard to its devel-
opment over time. For this purpose, the Supervisory Board has
also determined how senior management and the relevant staff
are to be differentiated. The remuneration system that has been
in place for Managing Board members since fiscal 2015 was ap-
proved at the Annual Shareholders' Meeting on January 27, 2015.
The individual components of compensation - base compensa-
tion, variable compensation (Bonus) and long-term stock-based
compensation - are weighted equally, and each comprises about
one-third of target compensation. This equal weighting is also
applied to the three target parameters of variable compensation
(Bonus).
0
The remuneration system for the Siemens Managing Board is in-
tended to provide an incentive for successful corporate manage-
ment with an emphasis on sustainability. Managing Board mem-
bers are expected to make a long-term commitment to and on
behalf of the Company and may benefit from any sustained in-
crease in the Company's value. For this reason, a substantial
portion of their total remuneration is linked to the long-term
performance of Siemens stock. Their remuneration is to be com-
mensurate with the Company's size and economic position.
Exceptional achievements are to be rewarded adequately, while
falling short of targets is to result in an appreciable reduction in
remuneration. Their compensation is also structured so as to be
attractive in comparison to that of competitors, with a view to
attracting outstanding managers to the Company and retaining
them for the long term.
A.10.1 Remuneration of Managing
Board members
0
891
0
2,024
0
0
0
0
397
0
0
0
0
0
0
1,028
0
0
0
0
903
2,310
3,052
465
This report is based on the recommendations of the German
Corporate Governance Code (Code) and the requirements of the
German Commercial Code (Handelsgesetzbuch), the German
Accounting Standards (Deutsche Rechnungslegungs Standards)
and the International Financial Reporting Standards (IFRS).
A.10 Compensation Report
69
61
39
78
548
648
1,134
1,104
572
1,121
606
624
1,284
1,370
606
1,317
0
0
891
A.10.1.1 REMUNERATION SYSTEM
1,065
2017
2017
(Min) (Max)
2,034 2,130 2,130 2,130
102
104 104 104
2,136 2,234 2,234 2,234
1,011 1,011
989
1,011
1,043
1,065
1,043
1,065
1,043
1,065
2016
55
2017
2017
2016
2017
2016
2017
Managing Board member
Janina Kugel
Managing Board member
Klaus Helmrich
2016
55
512
683
2,949
1,282
1,151
1,370
1,284
1,387
1,248
1,387
1,284
1,027
1,051
1,091
1,117
1,726
1,577
1,098
1,120
39
40
989
52
Managing Board member
1,259
Lisa Davis
Dr. Roland Busch
Service Cost
Total (Code)
7,316
9,643
97
200
Total
Other6
0
0
1,193
10,835
1,407
0
1,028
Bonus Awards (waiting period: 2012-2016)5
Bonus Awards (waiting period: 2011-2015)5
Share Matching Plan (vesting period: 2013-2015)
903
0
0
3,542
Siemens Stock Awards (restriction period: 2012-2016)³
Siemens Stock Awards (restriction period: 2011-2015)4
2,310
0
1,101
8,416
Fixed compensation (base compensation)
7 To compensate for the forfeiture of stock at his previous em-
ployer, the Supervisory Board has granted Mr. Neike a one-time
sum of €4,200,000. Seventy-five percent of this amount was
awarded in the form of Siemens Phantom Stock Awards and the
remaining 25% as a special pension benefit contribution. One
half of the total amount of these granted Siemens Phantom
6 "Other" includes the adjustment of the Siemens Stock Awards
2011 and 2012 and Bonus Awards 2011 and 2012 (transfer in
November 2015 and 2016, respectively) in accordance with
Section 23 and Section 125 of the German Transformation Act
(Umwandlungsgesetz) due to the spin-off of OSRAM.
5 One half of the Bonus for fiscal 2011 and fiscal 2012 was granted
in the form of non-forfeitable awards of Siemens stock (Bonus
Awards).After the expiration of the four-year waiting period in
November 2015 and November 2016, respectively, the beneficia-
ries received one share of Siemens stock for each Bonus Award.
to 114%. For the other half, target attainment was linked to the
performance of Siemens stock compared to defined competitors
during the four-year vesting period. It amounted to 0%. There-
fore, Siemens Stock Awards 2011 that had already been granted
were forfeited without replacement in accordance with the plan
rules.
4 For one half of the Siemens Stock Awards 2011 target attainment
depended on the EPS for the past three fiscal years and amounted
3 For one half of the Siemens Stock Awards 2012, target attain-
ment depended on the EPS for the last three years and
amounted to 154%. For the other half, target attainment was
linked to the performance of Siemens stock compared to defined
competitors during the four-year restriction period. It amounted
to 87%. Of the Siemens Stock Awards 2012, which were granted
on the basis of 100% target attainment, a number equivalent to
the shortfall from that target expired without replacement in
accordance with plan rules.
therefore represents the amount awarded for fiscal 2017, which will be paid out in
January 2018.
2 The payout amount of one-year variable compensation (Bonus) presented above
in the amount of €746,537 (2016: €765,327).
1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
and other perquisites, such as the provision of company cars in the amount of
€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
advice, accommodation and moving expenses, including any taxes due in this regard,
currency adjustment payments and costs relating preventive medical examinations
Total (Code)
Service Cost
Total
Other6
Siemens Stock Awards (restriction period: 2012-2016)³
Siemens Stock Awards (restriction period: 2011-2015)4
Bonus Awards (waiting period: 2012-2016)5
Bonus Awards (waiting period: 2011-2015)5
Share Matching Plan (vesting period: 2013-2015)
Multi-year variable compensation
One-year variable compensation
(Bonus) - Payout amount²
with long-term incentive effect, stock-based
without long-term incentive effect,
non-stock-based
Total
Fringe benefits¹
Managing Board member
0
0
3,052
530
593
2,795
602
4,418
621
6,207
3,688
576
566
3,391
4,399
6,104
2,839
603
2,309
2,202
3,816
5,586
3,113
2,825
3,797
5,482
0
622
Cedrik Neike7,8
Michael Sen⁹
Dr. Ralf P. Thomas
1,043
533
1,043
1,065
533
533
2016
2017
2016
2017
2016
2017
2016
2017
until March 31, 2017
CFO
since April 1, 2017
since April 1, 2017
Prof. Dr. Siegfried Russwurm 10
Managing Board member
Managing Board member
Managing Board member
0
55
133
0
0
925
0
0
598
0
0
0
555
0
0
0
0
2,024
0
0
0
2,024
0
0
1,301
0
4,570
0
0
0
53
129
0
0
0
0
0
0
0
0
0
0
703
0
0
0
703
0
0
0
1,028
Multi-year variable compensation
48
2,773
until March 31, 2017
CFO
since April 1, 2017
Prof. Dr. Siegfried Russwurm¹¹
Managing Board member
since April 1, 2017
Managing Board member
Dr. Ralf P. Thomas
Michael Sen 10
Managing Board member
2017
Cedrik Neike 8,9
1,282
3,368
1,284
3,448
3,560
1,370
1,248
3,873
4,212
3,452
3,584
1,387
1,151
3,207
2017
2017
2017
533
533
533
533
533
533
2017
2016
(Max)
2017
2017
(Min)
2017
2016
(Max)
(Min)
2017
2016
(Max)
(Min)
2017
2016
1,387 1,284
1,099 1,048
3,868 3,690
576 566
1,643 5,823
593
with long-term incentive effect, stock-based
40
1,051
1,043
1,065
2,556
1,043
1,065
0
2,556
1,051 1,051
1,043
0
2,556
989
1,011
0
2,426
1,099 1,048
3,300
3,240 3,233 1,120 5,491
603 622
622
622
3,843
0
1,065
40
40
39
1,027
593
5,231
1,051
3,067
3,075
530
3,604 3,659
3,165
0
1,005
1,059
0 3,300
1,117 5,491
621
621
1,738 6,112
3,300 1,099 1,048
1,577 5,491 3,233 3,230
566 566
602
621
2,143 6,057 3,835 3,851
3,855 1,742 6,113 4,443 4,256
1,011
48
52
52
52
1,091
1,117
1,117
1,117
593
15
1,043
15
Managing Board members serving as of September 30, 2017
The following table shows allocations for fiscal 2017 for
fixed compensation, fringe benefits, one-year variable
compensation and multi-year variable compensation - by
reference year - as well as the expense of pension benefits.
In deviation from the multi-year variable compensation
granted for fiscal 2017 and shown above, this table in-
cludes the actual figure for multi-year variable compensa-
tion granted in previous years and allocated in fiscal 2017.
Allocations
46
45
Combined Management Report
11 Prof. Dr. Russwurm left the Managing Board effective the end
of March 31, 2017.
10 To compensate for the forfeiture of stock and pension contri-
butions at his previous employer, the Supervisory Board has
granted Mr. Sen a one-time sum of €950,000. One half of this
amount was awarded in the form of Siemens Phantom Stock
Awards and the other half as a special pension benefit contri-
bution.
to social insurance or comparable statutory systems in China
additional to those he incurs in Germany.
(Amounts in thousands of €)
Non-performance-
based components
9 Mr. Neike was appointed Executive Chairman of the Board of
Directors of Siemens Ltd. China, effective May 1, 2017. Of the
fixed compensation and one-year (payout amount) and multi-
year variable compensation reported here, an amount of
€359,769 was granted and paid by Siemens Ltd. China and set
off against the remuneration for his Managing Board activities at
Siemens AG. Of the fringe benefits reported here, an amount of
€7,778 was granted and paid by Siemens Ltd. China. In addition,
it has been agreed that Siemens AG will offset, as a net amount,
any personal tax burden that, due to Mr. Neike's two employ-
ment relationships, exceeds the burden that he would incur
if he paid tax solely on the benefits granted to him under his
employment contract with Siemens AG in Germany. Siemens AG
will also offset any burdens due to charges and contributions
606
1,702
1,317
3,538
1,370 1,284
3,573 3,466
624
2,619
606
5,233
2,249
3,865
6,113
621
8 To compensate for the forfeiture of stock at his previous em-
ployer, the Supervisory Board has granted Mr. Neike a one-time
sum of €4,200,000. Seventy-five percent of this amount was
awarded in the form of Siemens Phantom Stock Awards and the
remaining 25% as a special pension benefit contribution. One
half of the total amount of these granted Siemens Phantom
Stock Awards fell due and was honored in September 2017. The
other half will fall due and be honored in September 2018. The
value of these Siemens Phantom Stock Awards depends solely
on the performance of Siemens stock. As compensation for
the forfeiture of stock at his previous employer, these Siemens
Phantom Stock Awards are not taken into account when deter-
mining target compensation and hence are not included in
the individual minimum and maximum amounts specified.
Performance-based
components
Combined Management Report
Managing Board members serving as of September 30, 2017
2,639
(Bonus) Payout amount²
One-year variable compensation
2,136
2,234
102
104
2,034
2,130
2016
2017
President and CEO
Joe Kaeser
without long-term incentive effect,
non-stock-based
Total
Fringe benefits¹
Fixed compensation (base compensation)
Performance-based
components
based components
Non-performance-
(Amounts in thousands of €)
602
15
1,628
524
1,134
39
78
69
69
1,134
533
1,043
1,065
1,065
1,121
1,065
69
1,134
648
648
648
548
548
548
115
115
115
61
1,104
3,263
572
0 1,278
1,099
0
1,099 1,048
3,300
3,246 3,247 1,134 5,491
603
622
622 622
3,849 3,869 1,756
0 3,075
648 2,746
703 703
1,351 3,449
3,231
703
2,528
5,159 548 2,746
1,214 1,214 1,214
6,373 1,762 3,959
1,347
1,650
533
0
533
1,043
0 2,556
1,065
1,043
1,278
0
533
4,079
0
140,000
30,000
180,000
Dr. Hans Michael Gaul
31,500
10,500
140,000
150,500
10,500
140,000
Reinhard Hahn¹
327,000
150,500
27,000
140,000
334,500
34,500
160,000
140,000
350,000
203,976
160,000
351,500
Bettina Haller¹
76,190
180,000
140,000
Robert Kensbock¹
150,500
10,500
140,000
150,500
133,333
10,500
Hans-Jürgen Hartung
245,500
25,500
80,000
140,000
230,524
21,000
140,000
Harald Kern¹
10,500
76,190
3,066,667
5,176,595
196,500
16,500
40,000
140,000
196,500
16,500
478,500
40,000
1,638,095
140,000
3,060,000
Total
1,655,238
Sibylle Wankel¹
31,500
120,000
140,000
279,119
31,500
114,286
133,333
Jim Hagemann Snabe
150,500
140,000
150,500
291,500
429,000
5,150,905
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared their willingness to transfer their compensation to the
Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions (DGB).
54
13,500
53
Combined Management Report
The Managing Board is authorized to increase, with the approval
of the Supervisory Board, the capital stock until January 25, 2021
by up to €90 million through the issuance of up to 30 million reg-
istered shares of no par value against contributions in cash
(Authorized Capital 2016). Subscription rights of existing share-
holders are excluded. The new shares shall be issued under the
condition that they are offered exclusively to employees of
Siemens AG and any of its affiliated companies. To the extent per-
mitted by law, employee shares may also be issued in such a man-
ner that the contribution to be paid on such shares is covered by
that part of the annual net income which the Managing Board and
A.11.4 Powers of the Managing Board
to issue and repurchase shares
Resolutions of the Shareholders' Meeting require a simple major-
ity vote, unless a greater majority is required by law. Pursuant to
Section 179 para. 2 of the German Stock Corporation Act, amend-
ments to the Articles of Association require a majority of at least
three-quarters of the capital stock represented at the time of the
casting of the votes, unless another capital majority is prescribed
by the Articles of Association.
According to Section 179 of the German Stock Corporation Act,
any amendment to the Articles of Association requires a resolu-
tion of the Shareholders' Meeting. The authority to adopt purely
formal amendments to the Articles of Association was trans-
ferred to the Supervisory Board under Section 13 para. 2 of the
Articles of Association. In addition, by resolutions of the Share-
holders' Meetings the Supervisory Board has been authorized to
amend Section 4 of the Articles of Association in accordance with
the utilization of the Authorized and Conditional Capitals, and
after expiration of the then-applicable authorization and utiliza-
tion period.
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German Co-
determination Act (Mitbestimmungsgesetz). According to Sec-
tion 8 para. 1 of the Articles of Association, the Managing Board
is comprised of several members, the number of which is deter-
mined by the Supervisory Board.
A.11.3 Legislation and provisions of
the Articles of Association applicable
to the appointment and removal
of members of the Managing Board
and governing amendment to the
Articles of Association
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 10,814,609 shares (as of September 30, 2017) on
behalf of members of the Siemens family. These shares are part
of the total number of shares held by the family's members. The
powers of attorney are based on an agreement between the VSV
and, among others, members of the Siemens family. The shares
are voted together by VSV, taking into account the proposals of a
family partnership established by the family's members or of one
of this partnership's governing bodies.
Shares issued to employees worldwide under the employee share
program implemented since the beginning of fiscal 2009, in par-
ticular the Share Matching Plan, are freely transferable unless
applicable local laws provide otherwise. Under the rules of the
program, however, in order to receive one matching share free
of charge for each three shares purchased, participants are re-
quired to hold the shares purchased by them for a vesting period
of several years, during which the participants have to be contin-
uously employed by Siemens AG or another Siemens company.
The right to receive matching shares is forfeited if the purchased
shares are sold, transferred, hedged on, pledged or hypothecated
in any way during the vesting period.
At the Shareholders' Meeting, each share of stock has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. An exception to this rule applies with
regard to treasury shares held by the Company, which do not
entitle the Company to any rights. Under Section 136 of the Ger-
man Stock Corporation Act the voting right of the affected shares
is excluded by law.
A.11.2 Restrictions on voting rights
or transfer of shares
As of September 30, 2017, the Company's common stock totaled
€2.550 billion. The capital stock is divided into 850 million regis-
tered shares with no par value. The shares are fully paid in. All
shares confer the same rights and obligations. The shareholders'
rights and obligations are governed in detail by the provisions of
the German Stock Corporation Act, in particular by Sections 12, 53 a
et seq., 118 et seq. and 186 of the German Stock Corporation Act.
A.11.1 Composition of common stock
(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
and explanatory report
A.11 Takeover-relevant information
Combined Management Report
52
62
of the Company. The insurance policy for fiscal 2017 includes a
deductible for the members of the Managing Board and the
Supervisory Board that complies with the requirements of the
German Stock Corporation Act and the Code.
in cases of financial loss associated with their activities on behalf
The Company provides a group insurance policy for Supervisory
and Managing Board members and certain other employees of
the Siemens Group. The policy is taken out for one year at a time
or renewed annually. It covers the personal liability of the insured
A.10.3 Other
10,500
133,333
140,000
150,500
247,000
27,000
80,000
140,000
242,524
33,000
76,190
133,333
Dr. Nicola Leibinger-Kammüller
373,000
33,000
Gérard Mestrallet
200,000
380,500
40,500
200,000
140,000
Jürgen Kerner¹
242,500
22,500
80,000
140,000
229,024
19,500
140,000
140,000
10,500
150,500
10,500
140,000
150,500
10,500
140,000
Dr. Nathalie von Siemens
150,500
10,500
140,000
150,500
10,500
140,000
Güler Sabancı
186,429
15,000
38,095
133,333
187,929
16,500
38,095
133,333
Dr. Norbert Reithofer
134,167
7,500
126,667
Michael Sigmund
57,143
As of September 30, 2017, the total unissued authorized capital
of Siemens AG therefore consisted of €618.6 million nominal
that may be issued, with varying terms by issuance, in install-
ments of up to 206.2 million registered shares of no par value.
203,976
5,030
Dr. Ralf P. Thomas
11,225
0
0
0
11,225
Michael Sen 5,8
19,099
0
0
57,250
40,965
0
0
12,6557
31,7547
Cedrik Neike 4, 5, 6
11,553
29,412
Janina Kugel
67,749
10,111
1,001
27,984
0
12,046
8,166
440
49
Combined Management Report
9 Prof. Dr. Siegfried Russwurm left the Managing Board
effective the end of March 31, 2017.
8 Mr. Sen was appointed a full member of the Managing
Board effective April 1, 2017.
7 Amounts also include the non-forfeitable Stock Awards,
which Mr. Neike received as forfeiture of stock at his previous
employer. One half of the total amount of these granted
Siemens Phantom Stock Awards fell due and was honored in
September 2017. The other half will fall due and be honored
in September 2018. The value of these Siemens Phantom
Stock Awards depends solely on the performance of Siemens
stock.
6 The amounts shown include the Stock Awards granted to
Mr. Neike by Siemens Ltd. China in his capacity as Executive
Chairman of the Board of Directors of Siemens Ltd. China.
5 Since Mr. Neike und Mr. Sen were appointed full members
of the Managing Board during the fiscal year, the target
amount for their stock-based compensation was prorated
and, instead of Stock Awards, they received an equivalent
amount of Siemens Phantom Stock Awards. In lieu of a trans-
fer of shares, only a cash equivalent is given for these awards
at the end of the restriction period. Otherwise, the same
provisions agreed upon for Siemens Stock Awards apply.
4 Mr. Neike was appointed a full member of the Managing
Board effective April 1, 2017.
pensation by the relevant Managing Board member before
joining the Managing Board.
3 Amounts also include stock commitments (Stock Awards)
granted in November 2016 for fiscal 2017. These amounts
may further include stock commitments received as com-
2 For one half of the Siemens Stock Awards 2012, target
attainment depended on the EPS value for the past three
fiscal years and amounted to 154%. For the other half, target
attainment was linked to the performance of Siemens stock
compared to defined competitors during the four-year
restriction period. It amounted to 87%. Of the Siemens Stock
Awards 2012, which were granted on the basis of 100%
target attainment, a number equivalent to the shortfall from
that target expired, accordingly, without replacement in
accordance with plan rules
1 The weighted average fair value as of the grant date for
fiscal 2017 was €99.70 per granted share.
65,096
526,664
10,618
53,483
1,001
5,196
27,984
145,735
6,023
132,831
78,633
508,005
20,043
90,241
Total
Prof. Dr. Siegfried Russwurm⁹
Managing Board
Former members of the
60,690
5,030
12,046
Shares from the Share Matching Plan
75,263
Klaus Helmrich
Balance at end of
fiscal 20173
of Bonus
Awards
Non-forfeitable
commitments
Commitments
of Stock
Awards
of Bonus
Awards and
Stock Awards
Forfeited
during
fiscal year²
Commitments
fiscal year
Vested and
fulfilled
during
of Stock
Awards
Forfeitable
commitments
Forfeitable
commitments
fiscal year¹
of Stock
Awards
of Bonus
Awards
Forfeitable
commitments
commitments
Non-forfeitable
Balance at beginning of
fiscal 2017
The following table shows the changes in the balance of the stock
commitments held by Managing Board members in fiscal 2017:
Stock commitments
IN FISCAL 2017
STOCK-BASED COMPENSATION INSTRUMENTS
the Supervisory Board may allocate to other retained earnings
under Section 58 para. 2 of the German Stock Corporation Act.
Granted
during
of Stock
Awards
(Amounts in number of units)
Managing Board members
65,307
576
0
0
12,046
53,261
576
Lisa Davis
67,749
10,942
1,001
27,042
12,046
75,263
19,425
Dr. Roland Busch
128,784
16,206
1,752
41,904
24,092
138,923
25,631
Joe Kaeser
serving as of September 30, 2017
19,536
133,333
Fiscal 2011 was the last year in which Managing Board members
were entitled to participate in the Siemens Share Matching Plan.
Under the plan, they were entitled to invest up to 50% of the
annual gross amount of their variable cash compensation, as de-
termined for fiscal 2010, in Siemens shares. After the expiration
of a vesting period of approximately three years, plan partici-
pants are entitled to receive one free matching share of Siemens
stock for every three Siemens shares acquired and continuously
held under the plan, provided the participants were employed
without interruption at Siemens AG or a Siemens company until
the end of the vesting period. At the beginning of fiscal 2017,
Janina Kugel had three entitlements to matching shares, which
she had acquired before joining the Managing Board. In fiscal
2017, no entitlements to matching shares were acquired, due or
Share Ownership Guidelines
605,000
45,000
280,000
280,000
617,000
57,000
280,000
280,000
Total
fee
attendance
Birgit Steinborn¹
Meeting
compen-
sation
Total
fee
Base
Meeting
attendance
compen-
sation for
committee
work
sation
compen-
Base
2016
Additional
compen-
sation for
committee
work
Werner Wenning
220,000
200,000
13,500
57,143
133,333
Michael Diekmann
142,333
9,000
133,333
150,500
10,500
140,000
Olaf Bolduan¹
390,000
30,000
140,000
220,000
402,000
42,000
140,000
220,000
463,500
43,500
200,000
220,000
468,000
48,000
2017
are forfeited. Entitlements to matching shares at the end of fiscal
2017 show the following balance: Janina Kugel, three shares with
a fair value of €174.
Additional
September 30, 2017
10,424,316
567%
291%
18,781
51,039
5,516,344
2,029,863
200%
200%
300%
Number
of shares 3
Value²
Percentage
of base
compensation¹
Number
of shares2
96,450
Value¹
Proven
Required
Obligations under Share Ownership Guidelines
Total
Klaus Helmrich
Dr. Roland Busch
Joe Kaeser
as of September 30, 2017, and required
to show proof as of March 10, 2017
Managing Board members serving
(Amounts in number of units or €)
The deadlines by which the individual Managing Board mem-
bers must provide first-time proof of compliance with the
Siemens Share Ownership Guidelines vary from member to
member, depending on when he or she was appointed to the
Managing Board. The following table shows the number of
Siemens shares that were held by Managing Board members in
office at September 30, 2017, as of the March 2017 deadline for
proving compliance with the Share Ownership Guidelines as
well as the number that are to be held permanently with a view
to future deadlines.
Percentage
of base
compensation'
2,953,070
27,323
2,010,175
9,556,381
serving as of
Supervisory Board members
(Amounts in €)
The compensation shown below was determined for each of the
members of the Supervisory Board for fiscal 2017 (individualized
disclosure).
51
Combined Management Report
No loans or advances from the Company are provided to mem-
bers of the Supervisory Board.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties and
for any value-added taxes to be paid on their remuneration. For
the performance of his duties, the Chairman of the Supervisory
Board is also entitled to an office with secretarial support and the
use of a carpool service.
In addition, the members of the Supervisory Board are entitled
to receive a fee of €1,500 for each meeting of the Supervisory
Board and its committees that they attend.
If a Supervisory Board member does not attend a meeting of the
Supervisory Board, one-third of the aggregate compensation due
to that member is reduced by the percentage of Supervisory Board
meetings not attended by the member in relation to the total
number of Supervisory Board meetings held during the fiscal year.
In the event of changes in the composition of the Supervisory
Board and/or its committees, compensation is paid on a pro rata
basis, rounding up to the next full month.
the Compensation Committee); the Chairman of the Innovation
and Finance Committee receives €80,000, and each of the other
members of the Committee receives €40,000; the Chairman of
the Compliance Committee receives €80,000, and each of the
other members of the Committee receives €40,000. However, no
additional compensation is paid for work on the Compliance
Committee if a member of that Committee is already entitled to
compensation for work on the Audit Committee.
The members of the Supervisory Board committees receive the
following additional fixed compensation for their committee
work: the Chairman of the Audit Committee receives €160,000,
and each of the other members of the Committee receives
€80,000; the Chairman of the Chairman's Committee receives
€120,000, and each of the other members of the Committee re-
ceives €80,000; the Chairman of the Compensation Committee
receives €100,000, and each of the other members of the Com-
mittee receives €60,000 (compensation for any work on the
Chairman's Committee counts toward compensation for work on
Under current rules, the members of the Supervisory Board re-
ceive an annual base compensation of €140,000; the Chairman
of the Supervisory Board receives a base compensation of
€280,000, and each of the Deputy Chairmen receives €220,000.
The current remuneration policies for the Supervisory Board
were authorized at the Annual Shareholders' Meeting held on
January 28, 2014, and are effective as of fiscal 2014. Details are
set out in Section 17 of the Articles of Association of Siemens AG.
The remuneration of the Supervisory Board consists entirely of
fixed compensation; it reflects the responsibilities and scope of
the work of the Supervisory Board members. The Chairman and
Deputy Chairmen of the Supervisory Board as well as the Chair-
men and members of the Audit Committee, the Chairman's Com-
mittee, the Compensation Committee, the Compliance Commit-
tee and the Innovation and Finance Committee receive additional
compensation.
A.10.2 Remuneration of Supervisory
Board members
3 As of March 10, 2017 (date of proof), including Bonus
Awards.
50 Combined Management Report
2 Based on the average Xetra opening price of €108.08 for the
fourth quarter of 2016 (October-December).
1 The amount of the obligation is based on the average base
compensation for the four years prior to the respective dates
of proof.
152,392
28,619
3,093,142
16,470,527
88,419
308%
18,599
Dr. Gerhard Cromme
Furthermore, the Managing Board is authorized to increase,
with the approval of the Supervisory Board, the capital stock
until January 27, 2019 by up to €528.6 million through the issu-
ance of up to 176.2 million registered shares of no par value
against cash contributions and/or contributions in kind (Autho-
rized Capital 2014).
By resolutions of the Shareholders' Meetings of January 28, 2014
and January 27, 2015, the Managing Board is authorized to issue
bonds with conversion rights or with warrants attached, or a
combination of these instruments, each entitling the holders to
subscribe to up to 80 million registered shares of Siemens AG of
no par value. Based on these two authorizations, the Company
or consolidated subsidiaries of the Company may issue bonds
until January 27, 2019 and January 26, 2020, respectively, each
in an aggregate principal amount of up to €15 billion. In order to
grant shares of stock to holders/creditors of such convertible
bonds or warrant bonds, the capital stock was conditionally in-
creased by resolutions of the Shareholders' Meetings 2014 and
2015, each by up to 80 million registered shares of no par value
(Conditional Capitals 2014 and 2015), i.e. in total by up to
€480 million through the issuance of up to 160 million shares of
no par value.
27
6,179
188
53
6,126
(2,008)
(2,180)
7
Income tax expenses
7,404
8,306
Income from continuing operations before income taxes
(373)
135
Other financial income (expenses), net
(989)
(1,051)
Interest expenses
1,314
1,487
Interest income
134
43
4
Income (loss) from investments accounted for using the equity method, net
(427)
(595)
6
5,584
Other operating expenses
Income from continuing operations
Net income
A.10.1.3 ADDITIONAL INFORMATION ON
6.65
7.29
0.23
0.06
6.42
7.23
6.74
7.44
0.23
0.07
6.51
7.38
2
27
5,450
134
133
6,046
58 Consolidated Financial Statements
Income from continuing operations
Income from discontinued operations
Net income
Diluted earnings per share
Income from discontinued operations
Net income
Income from continuing operations
Basic earnings per share
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Income from discontinued operations, net of income taxes
328
5,396
5
In case of a change of control, the terms and conditions of the
remaining warrants issued with the bonds with warrant units in
February 2012 enable their holders to receive a higher number of
Siemens shares in accordance with an adjusted strike price if they
exercise their option rights within a certain period of time after
the change of control. This period of time shall end either (1) not
less than 30 days and no more than 60 days after publication of
the notice of the issuer regarding the change of control, as deter-
mined by the issuer or (2) 30 days after the change of control first
becomes publicly known. The strike price adjustment decreases
depending on the remaining term of the warrants and is deter-
mined in detail in the terms and conditions of the warrants. In
this context, a change of control occurs if control of Siemens AG
is acquired by a person or by persons acting in concert.
such an event. In either situation, ISDA Agreements are designed
such that upon termination all outstanding payment claims docu-
mented under them are to be netted.
55
Combined Management Report
Framework agreements concluded by Siemens AG under Inter-
national Swaps and Derivatives Association Inc. documentation
(ISDA Agreements) grant the counterparty a right of termination
when Siemens AG consolidates with, merges into, or transfers sub-
stantially all its assets to a third party. However, this right of termi-
nation exists only, if (1) the resulting entity's creditworthiness is
materially weaker than Siemens AG's immediately prior to such
event or (2) the resulting entity fails to simultaneously assume
Siemens AG's obligations under the ISDA Agreement. Additionally,
some ISDA Agreements grant the counterparty a right of termina-
tion if a third party acquires beneficial ownership of equity securi-
ties that enable it to elect a majority of Siemens AG's Supervisory
Board or otherwise acquire the power to control Siemens AG's
material policy-making decisions and if the creditworthiness of
Siemens AG is materially weaker than it was immediately prior to
In addition, in March 2013, a consolidated subsidiary as borrower
and Siemens AG as guarantor entered into two bilateral loan
agreements, each of which has been drawn in the full amount of
US$500 million. Each agreement provides its respective lender
with a right of termination in the event that (1) Siemens AG be-
comes a subsidiary of another company or (2) a person or a group
of persons acting in concert acquires effective control over
Siemens AG by being able to exercise decisive influence over its
activities (Art. 3(2) of Council Regulation (EC) 139/2004).
Siemens AG maintains two lines of credit in an amount of €4 bil-
lion and an amount of US$3 billion, respectively, which provide
its lenders with a right of termination in the event that (1)
Siemens AG becomes a subsidiary of another company or (2) a
person or a group of persons acting in concert acquires effective
control over Siemens AG by being able to exercise decisive influ-
ence over its activities (Art. 3(2) of Council Regulation (EC)
139/2004).
A.11.5 Significant agreements which
take effect, alter or terminate upon
a change of control of the Company
following a takeover bid
For details on the authorizations referred to above, especially
with the restrictions to exclude subscription rights and the
terms to include shares when calculating such restrictions, please
refer to the relevant resolution and to Section 4 of the Articles of
Association.
ing/securing the obligations or rights to acquire Siemens shares
arising particularly from or in connection with convertible bonds
and warrant bonds. As of September 30, 2017, the Company held
34,481,120 shares of stock in treasury.
In November 2015, the Company announced that it would carry
out a share buyback of up to €3 billion in volume within the fol-
lowing up to 36 months. The buyback commenced on Febru-
ary 2, 2016 using the authorizations given by the Annual Share-
holders' Meeting on January 27, 2015. Under this share buyback
Siemens repurchased 10,439,856 shares by September 30, 2017.
The total consideration paid for these shares amounted to about
€1.163 billion (excluding incidental transaction charges). The
buyback has the exclusive purposes of retirement, of issuing
shares to employees, board members of affiliated companies and
members of the Managing Board of Siemens AG, and of servic-
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authoriza-
tion to meet obligations or rights to acquire Siemens shares that
were or will be agreed with members of the Managing Board
within the framework of rules governing Managing Board com-
pensation.
> used to service or secure obligations or rights to acquire
Siemens shares arising particularly from or in connection with
convertible bonds or warrant bonds issued by the Company or
any of its consolidated subsidiaries (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutandis
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
A.11.6 Compensation agreements
with members of the Managing
Board or employees in the event
of a takeover bid
> sold, with the approval of the Supervisory Board, to third
parties against payment in cash if the price at which such
Siemens shares are sold is not significantly lower than the
market price of Siemens stock (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutan-
dis application of Section 186 para. 3 sentence 4 German
Stock Corporation Act) or
> used in connection with share-based compensation programs
and/or employee share programs of the Company or any of its
affiliated companies and issued to individuals currently or for-
merly employed by the Company or any of its affiliated com-
panies as well as to board members of any of the Company's
affiliated companies
retired
In addition to selling them over the stock exchange or through a
public sales offer to all shareholders, the Managing Board is au-
thorized by resolution of the Shareholders' Meeting on Janu-
ary 27, 2015 to also use Siemens shares repurchased on the basis
of this or any previously given authorization for every permissible
purpose, in particular as follows: Such Siemens shares may be
shares upon exercise of the derivative will take place no later
than January 26, 2020.
Combined Management Report
The Company may not repurchase its own shares unless so au-
thorized by a resolution duly adopted by the shareholders at a
general meeting or in other very limited circumstances set forth
in the German Stock Corporation Act. On January 27, 2015, the
Shareholders' Meeting authorized the Company to acquire until
January 26, 2020 up to 10% of its capital stock existing at the date
of adopting the resolution or if this value is lower - as of the
date on which the authorization is exercised. The aggregate of
shares of stock of Siemens AG repurchased under this authoriza-
tion and any other Siemens shares previously acquired and still
held in treasury by the Company or attributable to the Company
pursuant to Sections 71 d and 71e of the German Stock Corpora-
tion Act may at no time exceed 10% of the then existing capital
stock. Any repurchase of Siemens shares shall be accomplished
at the discretion of the Managing Board either (1) by acquisition
over the stock exchange or (2) through a public share repurchase
offer. The Managing Board is additionally authorized to complete
the repurchase of Siemens shares in accordance with the autho-
rization described above by using certain derivatives (put and
call options, forward purchases and any combination of these
derivatives). In exercising this authorization, all stock repur-
chases based on the derivatives are limited to a maximum vol-
ume of 5% of Siemens' capital stock existing at the date of adopt-
ing the resolution at the Shareholders' Meeting. A derivative's
term of maturity may not, in any case, exceed 18 months and
must be chosen in such a way that the repurchase of Siemens
In February 2012, Siemens issued bonds with warrant units with
a volume of US$3 billion. Siemens exchanged the major part of
the warrants issued in 2012 against new warrants in Septem-
ber 2015; for this purpose, Siemens issued new bonds with war-
rants. After redemption of the first tranche with a volume of
US$1.5 billion at maturity in August 2017, the remaining war-
rants correspond to option rights entitling their holders to receive
approximately 11.5 million Siemens shares. The terms and condi-
tions of the warrants enable Siemens to service exercised option
rights using either conditional capital or treasury stock, and also
enable Siemens to buy back the warrants.
The total amount of new shares issued or to be issued under
Authorized Capitals or in accordance with the bonds mentioned
above, in exchange for contributions in cash and in kind and with
shareholders' subscription rights excluded, may in certain cases
be subject to further restrictions, such as the restriction that they
may not exceed 20% of the capital stock. The details of those
restrictions are described in the relevant authorization.
647
> The exclusion is necessary with regard to fractional amounts
resulting from the subscription ratio.
> The issue price of the new shares/bonds is not significantly
lower than the stock market price of the Siemens shares al-
ready listed or the theoretical market price of the bonds com-
puted in accordance with generally accepted actuarial meth-
ods (exclusion of subscription rights, limited to 10% of the
capital stock, in accordance with or by mutatis mutandis ap-
plication of Section 186 para. 3 sentence 4 German Stock Cor-
poration Act).
cases:
The new shares under Authorized Capital 2014 and the bonds
under the aforementioned authorizations are to be issued against
cash or non-cash contributions. They are, as a matter of principle,
to be offered to shareholders for subscription. The Managing
Board is authorized to exclude, with the approval of the Super-
visory Board, subscription rights of shareholders in the event of
capital increases against contributions in kind. In the event of
capital increases against contributions in cash, the Managing
Board is authorized to exclude shareholders' subscription rights
with the approval of the Supervisory Board in the following
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
In the event of a change of control that results in a substantial
change in the position of a Managing Board member (for exam-
ple, due to a change in corporate strategy or a change in the
Managing Board member's duties and responsibilities), the
member of the Managing Board has the right to terminate his or
her contract with the Company for good cause. A change of con-
trol exists if one or several shareholders acting jointly or in con-
cert acquire a majority of the voting rights in Siemens AG and
exercise a controlling influence, or if Siemens AG becomes a de-
pendent enterprise as a result of entering into an intercompany
agreement within the meaning of Section 291 of the German
Stock Corporation Act, or if Siemens AG is to be merged into an
existing corporation or other entity. If this right of termination is
exercised, the Managing Board member is entitled to a severance
payment in the amount of no more than two years' compensa-
tion. The calculation of the annual compensation includes not
only the base compensation and the target amount for the bo-
nus, but also the target amount for the stock awards, in each case
based on the most recent completed fiscal year prior to termina-
tion of the contract. The stock-based compensation components
for which a firm commitment already exists will remain unaf-
fected. Additionally, the severance payments cover non-mone-
tary benefits by including an amount of 5% of the total severance
amount. Severance payments will be reduced by 10% as a lump-
sum allowance for discounted values and for income earned else-
where. However, this reduction will apply only to the portion of
> The exclusion is necessary in order to grant holders of conver-
sion or option rights or conversion or option obligations on
Siemens shares a compensation for the effects of dilution.
A.11.7 Other takeover-relevant
information
Other operating income
the severance payment that was calculated without taking ac-
count of the first six months of the remaining term of the Man-
aging Board member's contract. There is no entitlement to a
severance payment if the Managing Board member receives ben-
efits from third parties in connection with a change of control.
A right to terminate the contract does not exist if the change of
control occurs within a period of twelve months prior to a Man-
aging Board member's retirement.
(11,669)
Selling and general administrative expenses
(4,732)
(5,164)
Research and development expenses
23,819
25,029
(55,826)
(58,021)
79,644
83,049
2016
(12,225)
Note
Gross profit
Cost of sales
Revenue
(in millions of €, per share amounts in €)
Fiscal year
B.1 Consolidated Statements of Income
Financial Statements
Consolidated
B.
56 Combined Management Report
We are not aware of, nor have we during the last fiscal year been
notified of, any shareholder directly or indirectly holding 10% or
more of the voting rights. There are no shares with special rights
conferring powers of control. Shares of stock issued by
Siemens AG to employees under its employee share program
and/or as share-based compensation are transferred directly to
the employees. The beneficiary employees who hold shares of
employee stock may exercise their control rights in the same way
as any other shareholder directly in accordance with applicable
laws and the Articles of Association.
2017
20,437
20,049
14
4,247
2,085
2,355
Current income tax liabilities
4,166
17
Other current liabilities
Liabilities associated with assets classified as held for disposal
43,394
97
40
Total current liabilities
Long-term debt
15
Provisions for pensions and similar obligations
16
Deferred tax liabilities
Provisions
5677
Current provisions
17
3
1,933
70,388
Other current financial liabilities
26,777
9,582
13
19,044
20,610
Deferred tax assets
Other assets
Total non-current assets
Total assets
7
2,297
3,431
1,444
1,498
75,375
133,804
125,717
Liabilities and equity
Short-term debt and current maturities of long-term debt
15
5,447
6,206
Trade payables
9,755
8,048
1,279
42,916
24,761
1,375
1,599
1,921
(3,196)
(3,605)
Total equity attributable to shareholders of Siemens AG
43,089
34,211
Non-controlling interests
Total equity
Total liabilities and equity
1,438
605
1,671
44,527
133,804
60 Consolidated Financial Statements
B.4 Consolidated Statements of Cash Flows
(in millions of €)
Fiscal year
2017
2016
Cash flows from operating activities
Net income
6,179
5,584
3,012
34,816
125,717
27,454
35,696
5,890
829
4,579
5,087
Other financial liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Equity
902
1,142
2,445
2,471
45,884
47,986
89,278
90,901
18
Issued capital
Capital reserve
Retained earnings
Other components of equity
Treasury shares, at cost
2,550
2,550
6,368
13,695
2,727
Total comprehensive income
10,157
687
436
(7)
4
22, 23
136
256
therein: Income tax effects
(63)
(89)
Income (loss) from investments accounted for using the equity method, net
22
(30)
Items that may be reclassified subsequently to profit or loss
(326)
(244)
Other comprehensive income, net of income taxes
2,409
(2,879)
8,588
2,705
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
Income from discontinued operations, net of income taxes
Attributable to:
Non-controlling interests
(141)
Shareholders of Siemens AG
22
(1,118)
B.2 Consolidated Statements of Comprehensive Income
Fiscal year
(in millions of €)
Note
2017
2016
Net income
6,179
5,584
Remeasurements of defined benefit plans
therein: Income tax effects
(796)
Items that will not be reclassified to profit or loss
Available-for-sale financial assets
therein: Income tax effects
Derivative financial instruments
16
16
2,734
(2,636)
(1,070)
1,065
2,735
(2,636)
Currency translation differences
4
55
134
2,571
1,098
790
1,467
1,204
Assets classified as held for disposal
3,22
1,482
190
Total current assets
Other intangible assets
58,429
18,160
55,329
Investments accounted for using the equity method
Other financial assets
WANNE
11
27,906
24,159
12
10,926
7,742
12
10,977
Property, plant and equipment
8,533
19,942
Other current assets
Consolidated Financial Statements 59
B.3 Consolidated Statements of Financial Position
(in millions of €)
Assets
Cash and cash equivalents
September 30,
Note
2017
2016
8,375
10,604
10
Available-for-sale financial assets
1,293
Trade and other receivables
8
17,160
16,287
Other current financial assets
9
7,664
6,800
Inventories
Current income tax assets
1,242
Interest received
Amortization, depreciation and impairments
Interest (income) expenses, net
30,152
5,450
(2,637)
(2,827)
158
(67)
(1)
(93)
(2,575)
(42)
2,550
5,890
27,454
Balance as of October 1, 2016
2,550
5,890
27,454
Net income
Retained earnings
Capital reserve
5,733
Issued capital
2,643
Balance as of September 30, 2016
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
15
8,375
13
10,604
Consolidated Financial Statements 61
B.5 Consolidated Statements of Changes in Equity
(in millions of €)
6,046
Balance as of October 1, 2015
Other comprehensive income, net of income taxes
Dividends
Share-based payment
Purchase of treasury shares
Re-issuance of treasury shares
Cancellation of treasury shares
Transactions with non-controlling interests
Other changes in equity
Net income
10,618
Other comprehensive income, net of income taxes
Dividends
financial assets
instruments
1,794
726
(357)
Treasury
shares at cost
Total equity
attributable to
shareholders
of Siemens AG
Non controlling
interests
Total equity
(6,218)
34,474
581
35,056
5,450
134
5,584
Derivative financial
Available-for-sale
Currency trans-
lation differences
35,696
(2,914)
Share-based payment
279
(86)
Purchase of treasury shares
Re-issuance of treasury shares
Changes in equity resulting from major portfolio transactions
Other transactions with non-controlling interests
2,737
Other changes in equity
62
Consolidated Financial Statements
199
2,473
(11)
(3)
2,550
6,368
Balance as of September 30, 2017
9,958
10,618
8,389
Cash and cash equivalents at end of period
(271)
(882)
(1,139)
(686)
(1,356)
Disposal of investments, intangibles and property, plant and equipment
542
377
(69)
9
Disposal of current available-for-sale financial assets
931
1,031
Cash flows from investing activities - continuing operations
(7,456)
(4,406)
Cash flows from investing activities – discontinued operations
(500)
(922)
(4,385)
Disposal of businesses, net of cash disposed
1,219
Cash flows from operating activities - continuing operations
7,225
7,668
Cash flows from operating activities - discontinued operations
(50)
(57)
Cash flows from operating activities - continuing and discontinued operations
(1)
7,176
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment
(2,406)
(2,135)
Acquisitions of businesses, net of cash acquired
Purchase of investments
Purchase of current available-for-sale financial assets
Change in receivables from financing activities
7,611
262
Cash flows from investing activities - continuing and discontinued operations
(7,457)
(2,827)
Dividends attributable to non-controlling interests
(187)
(236)
Cash flows from financing activities - continuing operations
302
(2,710)
Cash flows from financing activities - discontinued operations
(2,914)
Cash flows from financing activities - continuing and discontinued operations
(2,710)
Effect of changes in exchange rates on cash and cash equivalents
(387)
(98)
Change in cash and cash equivalents
(2,228)
660
Cash and cash equivalents at beginning of period
(1,560)
(885)
Dividends paid to shareholders of Siemens AG
(1,000)
(4,144)
Cash flows from financing activities
Purchase of treasury shares
(931)
(463)
Re-issuance of treasury shares and other transactions with owners
1,123
(13)
(809)
Issuance of long-term debt
5,300
Repayment of long-term debt (including current maturities of long-term debt)
(4,868)
(2,253)
Change in short-term debt and other financing activities
260
(1,408)
Interest paid
6,958
434
208
(2,879)
5 to 10 years
5 to 10 years
generally 5 years
generally 3 to 5 years
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In addition, intangi-
ble assets not yet available for use are subject to an annual im-
pairment test. Impairment testing of property, plant and equip-
ment and other intangible assets involves the use of estimates in
determining the assets' recoverable amount which can have a
material impact on the respective values and ultimately the
amount of any impairment.
Discontinued operations and non-current assets held for
disposal - Discontinued operations are reported when a compo-
nent of an entity is classified as held for disposal or has been
disposed of, if the component represents a separate major line of
business or geographical area of operations and is part of a single
coordinated plan to disposal. A non-current asset or a disposal
group is held for disposal if its carrying amount will be recovered
principally through a sale transaction rather than through con-
tinuing use.
66 Consolidated Financial Statements
Income taxes - Tax positions under respective local tax laws and
tax authorities' views can be complex and subject to different
interpretations of tax payers and local tax authorities. Different
interpretations of tax laws may result in additional tax payments
for prior years and are taken into account based on manage-
ment's considerations. Under the liability method, deferred tax
assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement car-
rying amounts of existing assets and liabilities and their respec-
tive tax bases. Deferred tax assets are recognized if sufficient
future taxable profit is available, including income from fore-
casted operating earnings, the reversal of existing taxable tem-
porary differences and established tax planning opportunities.
As of each period-end, Siemens evaluates the recoverability of
deferred tax assets, based on projected future taxable profits.
Based upon the level of historical taxable income and projections
for future taxable income over the periods in which the deferred
tax assets are deductible, Siemens believes it is probable the
Company will realize the benefits of these deductible differences.
As future developments are uncertain and partly beyond
Siemens's control, assumptions are necessary to estimate future
taxable profits as well as the period in which deferred tax assets
will recover. Estimates are revised in the period in which there is
sufficient evidence to revise the assumption.
Inventories - Inventories are valued at the lower of acquisition
or production costs and net realizable value, costs being gener-
ally determined on the basis of an average or first-in, first-out
method.
-
Defined benefit plans – Siemens measures the entitlements by
applying the projected unit credit method. The approach reflects
an actuarially calculated net present value of the future benefit
entitlement for services already rendered. In determining the net
present value of the future benefit entitlement for service al-
ready rendered (Defined Benefit Obligation (DBO)), the expected
rates of future salary increase and expected rates of future pen-
sion progression are considered. The assumptions used for the
calculation of the DBO as of the period-end of the preceding fis-
cal I year are used to determine the calculation of service cost and
interest income and expense of the following year. The net inter-
est income or expense for the fiscal year will be based on the
discount rates for the respective year multiplied by the net de-
fined benefit liability (asset) at the preceding fiscal year's peri-
od-end date.
Service cost, past service cost and settlement gains (losses) for
pensions and similar obligations as well as administration costs
unrelated to the management of plan assets are allocated among
functional costs. Past service cost and settlement gains (losses)
are recognized immediately in profit or loss. For unfunded plans,
the amount of the line item Provisions for pensions and similar
obligations equals the DBO. For funded plans, Siemens offsets
the fair value of the plan assets with the DBO. Siemens recog-
nizes the net amount, after adjustments for effects relating to
any asset ceiling.
Remeasurements comprise actuarial gains and losses as well as
the difference between the return on plan assets and the amounts
included in net interest on the net defined benefit liability (asset).
They are recognized in Other comprehensive income, net of in-
come taxes.
Actuarial valuations rely on key assumptions including discount
rates, expected compensation increases, rate of pension progres-
sion and mortality rates. Discount rates used are determined by
reference to yields on high-quality corporate bonds of appropri-
ate duration and currency at the end of the reporting period. In
case such yields are not available, discount rates are based on
government bond yields. Due to changing market, economic and
social conditions, the underlying key assumptions may differ
from actual developments.
Provisions - A provision is recognized in the Statement of Finan-
cial Position when it is probable that the Company has a present
legal or constructive obligation as a result of a past event, it is
probable that an outflow of economic benefits will be required
to settle the obligation and a reliable estimate can be made of
the amount of the obligation. If the effect is material, provisions
are recognized at present value by discounting the expected fu-
ture cash flows at a pretax rate that reflects current market as-
sessments of the time value of money. When a contract becomes
onerous, the present obligation under the contract is recognized
as a provision.
Significant estimates are involved in the determination of provi-
sions related to onerous contracts, warranty costs, asset retire-
ment obligations, legal and regulatory proceedings as well as
governmental investigations (Legal Proceedings). Siemens re-
cords a provision for onerous sales contracts when current esti-
mates of total contract costs exceed expected contract revenue.
Onerous sales contracts are identified by monitoring the prog-
ress of the project and updating the estimate of total contract
costs which also requires significant judgment relating to
achieving certain performance standards as well as estimates
involving warranty costs and estimates regarding project delays
including the assessment of responsibility splits between the
contract partners for these delays. Uncertainties regarding asset
retirement obligations include the estimated costs of decommis-
sioning and final waste storage because of the long time frame
over which future cash outflows are expected to occur including
the respective interest accretion. The estimated cash outflows
could be impacted significantly by changes of the regulatory
environment.
Consolidated Financial Statements 67
Legal Proceedings often involve complex legal issues and are sub-
ject to substantial uncertainties. Accordingly, considerable judg-
ment is part of determining whether it is probable that there is a
present obligation as a result of a past event at the end of the
reporting period, whether it is probable that such a Legal Pro-
ceeding will result in an outflow of resources and whether the
amount of the obligation can be reliably estimated. Internal and
external counsels are generally part of the determination process.
Due to new developments, it may be necessary, to record a pro-
vision for an ongoing Legal Proceeding or to adjust the amount
of a previously recognized provision. Upon resolution of a Legal
Proceeding, Siemens may incur charges in excess of the recorded
provisions for such matters. The outcome of Legal Proceedings
may have a material effect on Siemens' financial position, its re-
sults of operations and/or its cash flows.
20 to 50 years
Technical machinery & equipment
Furniture & office equipment
Equipment leased to others
Factory and office buildings
Other buildings
Property, plant and equipment - Property, plant and equip-
ment, is valued at cost less accumulated depreciation and impair-
ment losses. Depreciation expense is recognized using the
straight-line method. The following useful lives are assumed:
The percentage-of-completion method places considerable im-
portance on accurate estimates of the extent of progress to-
wards completion and may involve estimates on the scope of
deliveries and services required for fulfilling the contractually
defined obligations. These significant estimates include total
contract costs, total contract revenues, contract risks, including
technical, political and regulatory risks, and other judgments.
Under the percentage-of-completion method, changes in esti-
mates may lead to an increase or decrease of revenue. The cred-
itworthiness of our customers is taken into account in estimating
the probability that economic benefits associated with a contract
will flow to the Company. In addition, we need to assess whether
the contract is expected to continue or to be terminated. In de-
termining whether the continuation or termination of a contract
is expected to be the most likely scenario, all relevant facts and
circumstances relating to the contract are considered on an in-
dividual basis.
Rendering of services: For long-term service contracts, revenues
are recognized on a straight-line basis over the term of the con-
tract or, if the performance pattern is other than straight-line, as
the services are provided, i.e. under the percentage-of-comple-
tion method as described above.
Sales from multiple element arrangements: Sales of goods and
services as well as software arrangements sometimes involve the
provision of multiple elements. In these cases, the Company de-
termines whether the contract or arrangement contains more
than one unit of accounting. If certain criteria are met, foremost
if the delivered element(s) has (have) value to the customer on
a stand-alone basis, the arrangement is separated and the appro-
priate revenue recognition convention is then applied to each
separate unit of accounting. Generally, the total arrangement
consideration is allocated to the separate units of accounting
based on their relative fair values. If the criteria for the separation
of units of accounting are not met, revenue is deferred until such
criteria are met or until the period in which the last undelivered
element is delivered.
Income from interest: Interest is recognized using the effective
interest method.
Income from royalties: Royalties are recognized on an accrual
basis in accordance with the substance of the relevant agree-
ment.
Income from operating leases: Operating lease income for equip-
ment rentals is recognized on a straight-line basis over the lease
term.
Termination benefits - Termination benefits are provided as a
result of an entity's offer made in order to encourage voluntary
redundancy before the normal retirement date or from an enti-
ty's decision to terminate the employment. Termination benefits
in accordance with IAS 19, Employee Benefits, are recognized as
a liability and an expense when the entity can no longer with-
draw the offer of those benefits.
Functional costs - In general, operating expenses by types are
assigned to the functions following the functional area of the
corresponding profit and cost centers. Amortization, deprecia-
tion and impairment of intangible assets and property, plant and
equipment are included in functional costs depending on the use
of the assets.
Research and development costs - Costs of research activities
are expensed as incurred. Costs of development activities are
capitalized when the recognition criteria in IAS 38 are met. Capi-
talized development costs are stated at cost less accumulated
amortization and impairment losses with an amortization period
of generally three to ten years.
Consolidated Financial Statements 65
Earnings per share - Basic earnings per share are computed by
dividing income from continuing operations, income from dis-
continued operations and net income, all attributable to ordinary
shareholders of Siemens AG by the weighted average number of
shares outstanding during the year. Diluted earnings per share
are calculated by assuming conversion or exercise of all poten-
tially dilutive securities and share-based payment plans.
Goodwill - Goodwill is not amortized, instead, goodwill is tested
for impairment annually, as well as whenever there are events or
changes in circumstances (triggering events) which suggest that
the carrying amount may not be recoverable. Goodwill is carried
at cost less accumulated impairment losses. The goodwill impair-
ment test is performed at the level of a cash-generating unit or a
group of cash-generating units, generally represented by a seg-
ment and for Siemens Gamesa Renewable Energy one level be-
low the segment. This is the lowest level at which goodwill is
monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit or
the group of cash-generating units that is expected to benefit
from the synergies of the business combination. If the carrying
amount of the cash-generating unit or the group of cash-gen-
erating units, to which the goodwill is allocated, exceeds its re-
coverable amount, an impairment loss on goodwill allocated to
this cash-generating unit or this group of cash-generating units
is recognized. The recoverable amount is the higher of the
cash-generating unit's or the group of cash-generating units' fair
value less costs to sell and its value in use. If either of these val-
ues exceeds the carrying amount, it is not always necessary to
determine both values. These values are generally determined
based on discounted cash flow calculations. Impairment losses
on goodwill are not reversed in future periods.
The determination of the recoverable amount of a cash-generat-
ing unit or a group of cash-generating units to which goodwill is
allocated involves the use of estimates by management. The out-
come predicted by these estimates is influenced e.g. by the suc-
cessful integration of acquired entities, volatility of capital mar-
kets, interest rate developments, foreign exchange rate
fluctuations and the outlook on economic trends. In determining
recoverable amounts, discounted cash flow calculations use five-
year projections that are based on financial forecasts. Cash flow
projections take into account past experience and represent
management's best estimate about future developments. Cash
flows after the planning period are extrapolated using individual
growth rates. Key assumptions on which management has based
its determination of fair value less costs to sell and value in use
include estimated growth rates and weighted average cost of
capital. These estimates, including the methodology used, can
have a material impact on the respective values and ultimately
the amount of any goodwill impairment.
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for pat-
ents, licenses and other similar rights generally range from
three to five years, except for intangible assets with finite useful
lives acquired in business combinations. Intangible assets ac-
quired in business combinations primarily consist of customer
relationships and trademarks as well as technology. Useful lives
in specific acquisitions ranged from four to 20 years for cus-
tomer relationships and trademarks and from five to 25 years for
technology.
Product-related expenses - Provisions for estimated costs re-
lated to product warranties are recorded in line item Cost of sales
at the time the related sale is recognized.
Financial instruments - A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Siemens does
not use the category held to maturity and does not use the op-
tion to designate financial assets or financial liabilities at fair
value through profit or loss at inception (Fair Value Option).
Based on their nature, financial instruments are classified as fi-
nancial assets and financial liabilities measured at cost or amor-
tized cost and financial assets and financial liabilities measured
at fair value and as receivables from finance leases. Regular way
purchases or sales of financial assets are accounted for at the
trade date. Initially, financial instruments are recognized at their
fair value. Transaction costs are only included in determining
the carrying amount, if the financial instruments are not mea-
sured at fair value through profit or loss. Receivables from fi-
nance leases are recognized at an amount equal to the net in-
vestment in the lease. Subsequently, financial assets and
liabilities are measured according to the category to which they
are assigned cash and cash equivalents, available-for-sale fi-
nancial assets, loans and receivables, financial liabilities mea-
sured at amortized cost or financial assets and liabilities classi-
fied as held for trading.
Cash and cash equivalents - The Company considers all highly
liquid investments with less than three months maturity from the
date of acquisition to be cash equivalents. Cash and cash equiv-
alents are measured at cost.
Available-for-sale financial assets - Investments in equity in-
struments, debt instruments and fund shares are measured at
fair value, if reliably measurable. Unrealized gains and losses, net
of applicable deferred income tax expenses, are recognized in
line item Other comprehensive income, net of income taxes. Pro-
vided that fair value cannot be reliably determined, Siemens
measures available-for-sale financial assets at cost. This applies
to equity instruments that do not have a quoted market price in
an active market, and decisive parameters cannot be reliably es-
timated to be used in valuation models for the determination of
fair value. Siemens considers all available evidence such as mar-
ket conditions and prices, investee-specific factors and the dura-
tion as well as the extent to which fair value is less than acquisi-
tion cost in evaluating potential impairment of its available-for-sale
financial assets. The Company considers a decline in fair value as
objective evidence of impairment, if the decline exceeds 20% of
costs or continues for more than six months.
Trade and other receivables
(1,250)
Inventories
Change in operating net working capital
Other non-cash (income) expenses
(Income) loss related to investing activities
400
552
148
(373)
(325)
(436)
2,008
2,180
2,764
3,211
(188)
(53)
(329)
Sales from construction contracts: When the outcome of a con-
struction contract can be estimated reliably, revenues from con-
struction-type projects are recognized under the percent-
age-of-completion method, based on the percentage of costs
incurred to date compared to the total estimated contract costs.
An expected loss on the construction contract is recognized as an
expense immediately. Siemens applies the requirements of IAS 11
regarding contract variations to contract terminations, since con-
tract terminations are also changes to the agreed delivery and
service scope.
(1,009)
(579)
306
Loans and receivables - Financial assets classified as loans and
receivables are measured at amortized cost using the effective
interest method less any impairment losses. Impairment losses
on trade and other receivables are recognized using separate al-
lowance accounts. The allowance for doubtful accounts involves
significant management judgment and review of individual re-
ceivables based on individual customer creditworthiness, current
economic trends and analysis of historical bad debts on a portfo-
lio basis. For the determination of the country-specific compo-
nent of the individual allowance, Siemens also considers country
credit ratings, which are centrally determined based on informa-
tion from external rating agencies. Regarding the determination
of the valuation allowance derived from a portfolio-based analy-
sis of historical bad debts, a decline of receivables in volume re-
sults in a corresponding reduction of such provisions and vice
versa. As of September 30, 2017 and 2016, Siemens recorded a
valuation allowance for trade and other receivables (including
leases) of €1,388 million and €1,211 million, respectively.
Financial liabilities - Siemens measures financial liabilities, ex-
cept for derivative financial instruments, at amortized cost using
the effective interest method.
Derivative financial instruments - Derivative financial instru-
ments, such as foreign currency exchange contracts and interest
rate swap contracts are measured at fair value and classified as
held for trading unless they are designated as hedging instru-
ments, for which hedge accounting is applied. Changes in the fair
value of derivative financial instruments are recognized either in
net income or, in the case of a cash flow hedge, in line item Other
comprehensive income, net of income taxes (applicable deferred
income tax). Certain derivative instruments embedded in host
contracts are also accounted for separately as derivatives.
68 Consolidated Financial Statements
381
(1,718)
(2,039)
Dividends received
Trade payables
Income taxes paid
(1,719)
Change in other assets and liabilities
(484)
(482)
20
(799)
Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
Additions to assets leased to others in operating leases
327
(281)
Income tax expenses
Sale of goods: Revenue is recognized when the significant risks
and rewards of ownership of the goods have passed to the buyer,
usually on delivery of the goods.
Foreign currency transaction - Transactions that are denom-
inated in a currency other than the functional currency of an
entity, are recorded at that functional currency applying the spot
exchange rate at the date when the underlying transactions are
initially recognized. At the end of the reporting period, foreign
currency-denominated monetary assets and liabilities are reval-
ued to functional currency applying the spot exchange rate pre-
vailing at that date. Gains and losses arising from these foreign
currency revaluations are recognized in net income. Those for-
eign currency-denominated transactions which are classified
as non-monetary are remeasured using the historical spot ex-
change rate.
34,211
605
34,816
909
1,160
(148)
(3,605)
34,211
605
34,816
6,046
133
6,179
(1,084)
685
149
2,487
(3,605)
(148)
1,160
909
(2,879)
(2,827)
(239)
(3,066)
91
91
(446)
(446)
(78)
(446)
390
390
2,668
(42)
92
51
37
36
391
2,409
(2,914)
(184)
43,089
1,438
44,527
Consolidated Financial Statements 63
B.6 Notes to Consolidated Financial Statements
NOTE 1 Basis of presentation
The accompanying Consolidated Financial Statements present
the operations of Siemens Aktiengesellschaft with registered of-
fices in Berlin (registry number HRB 12300) and Munich (registry
number HRB 6684), Germany, and its subsidiaries (the Company
or Siemens). They have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315 a (1) of the German Commercial Code (HGB).
The financial statements are in accordance with IFRS as issued by
the International Accounting Standards Board (IASB). The Consol-
idated Financial Statements were authorized for issue by the
Managing Board on November 27, 2017.
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may not
add up precisely to totals provided.
(3,196)
Siemens is a German based multinational technology company
with core activities in the fields of electrification, automation and
digitalization.
Certain of these accounting policies require critical accounting
estimates that involve complex and subjective judgments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Such critical
accounting estimates could change from period to period and
have a material impact on the Company's results of operations,
financial positions and cash flows. Critical accounting estimates
could also involve estimates where Siemens reasonably could
have used a different estimate in the current accounting period.
Siemens cautions that future events often vary from forecasts
and that estimates routinely require adjustment.
Basis of consolidation - The Consolidated Financial Statements
include the accounts of Siemens AG and its subsidiaries over
which the Company has control. Siemens controls an investee if
it has power over the investee. In addition, Siemens is exposed
to, or has rights to, variable returns from the involvement with
the investee and Siemens has the ability to use its power over the
investee to affect the amount of Siemens' return.
Business combinations - Cost of an acquisition is measured at
the fair value of the assets given and liabilities incurred or as-
sumed at the date of exchange. Identifiable assets acquired and
liabilities assumed in a business combination (including contin-
gent liabilities) are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling
interest. Non-controlling interests are measured at the propor-
tional fair value of assets acquired and liabilities assumed (partial
goodwill method). If there is no loss of control, transactions with
non-controlling interests are accounted for as equity transactions
not affecting profit and loss. At the date control is lost, any re-
tained equity interests are remeasured to fair value. In case of a
written put option on non-controlling interests the Company as-
sesses whether the prerequisites for the transfer of present own-
ership interest are fulfilled at the balance sheet date. If the Com-
pany is not the beneficial owner of the shares underlying the put
option, the exercise of the put option will be assumed at each
balance sheet date and treated as equity transaction between
shareholders with the recognition of a purchase liability at the
respective exercise price. The non-controlling interests partici-
pate in profits and losses during the reporting period.
Associates - Associates are companies over which Siemens has
the ability to exercise significant influence over operating and
financial policies (generally through direct or indirect ownership
of 20% to 50% of the voting rights). These are recorded in the
Consolidated Financial Statements using the equity method and
are initially recognized at cost. Siemens' share of its associate's
post-acquisition profits or losses is recognized in the Consoli-
dated Statements of Income, and its share of post-acquisition
changes in equity that have not been recognized in the associ-
ate's profit or loss is recognized directly in equity. The cumula-
tive post-acquisition changes are adjusted against the carrying
amount of the investment in the associate. When Siemens'
share of losses in an associate equals or exceeds its interest in
the associate, Siemens does not recognize further losses, unless
it incurs obligations or makes payments on behalf of the associ-
ate. The interest in an associate is the carrying amount of the
investment in the associate together with any long-term inter-
ests that, in substance, form part of Siemens' net investment in
the associate.
Joint ventures - Joint ventures are entities over which Siemens
and one or more parties have joint control. Joint control requires
unanimous consent of the parties sharing control in decision
making on relevant activities.
Foreign currency translation - Assets and liabilities of foreign
subsidiaries, where the functional currency is other than the
euro, are translated using the spot exchange rate at the end of
the reporting period, while the Consolidated Statements of In-
come are translated using average exchange rates during the
period. Differences arising from such translations are recognized
within equity and reclassified to net income when the gain or loss
on disposal of the foreign subsidiary is recognized. The Consoli-
dated Statements of Cash Flow are translated at average ex-
change rates during the period, whereas cash and cash equiva-
lents are translated at the spot exchange rate at the end of the
reporting period.
64 Consolidated Financial Statements
NOTE 2 Significant accounting policies
and critical accounting estimates
Revenue recognition - Under the condition that persuasive
evidence of an arrangement exists, revenue is recognized to the
extent that it is probable that the economic benefits will flow to
the Company and the revenue can be reliably measured, regard-
less of when the payment is being made. In cases where the in-
flow of economic benefits is not probable due to customer re-
lated credit risks, the revenue recognized is subject to the amount
of payments irrevocably received.
1
(175)
(3,098)
193
193
(934)
(934)
(934)
1,342
1,541
1,845
1,541
919
3,393
(11)
(8)
(20)
(3)
51
48
2,473
Goodwill
(1,560)
25,234
(61)
Translation differences and other
1,905
1,909
Balance at beginning of year
Accumulated impairment losses and other changes
26,068
29,754
Balance at year-end
(20)
(46)
Dispositions and reclassifications to assets classified as held for disposal
1,144
4,757
Acquisitions and purchase accounting adjustments
(127)
25,071
26,068
(1,025)
Translation differences and other
Balance at beginning of year
2016
2017
Fiscal year
Construction contracts, here and as follows, include service con-
tracts accounted for under the percentage of completion method.
The aggregate amount of costs incurred and recognized profits
less recognized losses for construction contracts in progress, as
of September 30, 2017 and 2016 amounted to €88,571 million
and €83,789 million, respectively. Revenue from construction
contracts amounted to €34,280 million and €32,695 million, re-
spectively, for fiscal 2017 and 2016. Advance payments received
on construction contracts in progress were €7,791 million and
€8,749 million as of September 30, 2017 and 2016. Retentions in
connection with construction contracts were €217 million and
€288 million in fiscal 2017 and 2016, respectively.
Cost
(in millions of €)
NOTE 11 Goodwill
2
18,160
Impairment losses recognized during the period
Dispositions and reclassifications to assets classified as held for disposal
Balance at year-end
1.7%
6,440
7.0%
1.7%
7,992
Sep 30, 2017
After-tax
discount rate
Terminal value
growth rate
Goodwill
(in millions of €)
Healthineers
Power and Gas
Digital Factory
The following table presents key assumptions used to determine
fair value less costs to sell for impairment test purposes for the
groups of cash-generating units to which a significant amount of
goodwill is allocated:
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each cash-gener-
ating unit or group of cash-generating units. Discount rates are
based on the weighted average cost of capital (WACC) for the
cash-generating units or groups of cash-generating units (for
SFS the discount rate represents cost of equity). The discount
rates are calculated based on a risk-free rate of interest and a
market risk premium. In addition, the discount rates reflect the
current market assessment of the risks specific to each
cash-generating unit or group of cash-generating units by tak-
ing into account specific peer group information on beta fac-
tors, leverage and cost of debt. The parameters for calculating
the discount rates are based on external sources of information.
The peer group is subject to an annual review and adjusted, if
necessary. Terminal value growth rates take into consideration
external macroeconomic sources of data and industry specific
trends.
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
For the purpose of estimating the fair value less costs to sell of
the cash-generating units or groups of cash-generating units,
cash flows were projected for the next five years based on past
experience, actual operating results and management's best es-
timate about future developments as well as market assump-
tions. The determined fair value of the cash-generating units or
groups of cash-generating units is assigned to level 3 of the fair
value hierarchy.
Siemens performs the mandatory annual impairment test in the
three months ended September 30. The recoverable amounts for
the annual impairment test 2017 for Siemens' cash-generating
units or groups of cash-generating units were estimated to be
higher than the carrying amounts. Key assumptions on which
Siemens based its determinations of the fair value less costs to
sell for the cash-generating units or groups of cash-generating
units include terminal value growth rates up to 1.7% in fiscal 2017
and 1.7% in fiscal 2016, respectively and after-tax discount rates
of 6.0% to 8.5% in fiscal 2017 and 5.0% to 9.0% in fiscal 2016.
Consolidated Financial Statements
74
24,159
27,906
23,166
24,159
Balance at year-end
Balance at beginning of year
Carrying amount
1,909
1,847
1
(1)
1
19,942
(2,506)
(2,966)
5,457
5,500
6,706
6,732
284
404
of Income in the current period
564
and equipment
904
893
2,940
3,010
3,405
3,481
1,952
1,924
2,397
2,358
2016
2017
2016
2017
(in millions of €)
Within one year
One to five years
Thereafter
recorded in the Consolidated Statements
Increase in valuation allowances
933
Write-offs charged against the allowance
Recoveries of amounts previously written-off
Foreign exchange translation differences
Reclassifications to line item Assets held for
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
(155)
35
(181)
9
Advance payments received
20,666
22,907
10,046
3,261
591
790
Advances to suppliers
3,951
Finished goods and products held for resale
10,970
of billings on uncompleted contracts
Costs and earnings in excess
Sep 30,
2016
2,487
4,281
4,242
8.5%
Work in progress
Raw materials and supplies
(in millions of €)
Cost of sales include inventories recognized as expense amount-
ing to €57,171 million and €54,706 million, respectively, in fiscal
2017 and 2016. Compared to prior year, write-downs increased
(decreased) by €15 million and €(3) million as of September 30,
2017 and 2016.
NOTE 10 Inventories
As of September 30, 2017 and 2016, Other current financial assets
include loans receivables of €5,985 million and €4,910 million,
respectively, and derivative financial instruments of €530 million
and €758 million, respectively.
NOTE 9 Other current financial assets
Consolidated Financial Statements 73
Investments in finance leases primarily relate to industrial ma-
chinery, medical equipment, transportation systems, equipment
for information technology and office machines. Actual cash
flows will vary from contractual maturities due to future sales of
finance receivables, prepayments and write-offs.
1,013
1,208
(9)
(33)
(80)
2017
2,955
5,575
1.7%
8.5%
(8,487)
19,413
(250)
451
4,542
(799)
15,469
Other intangible assets
(624)
5,240
(3,629)
8,870
(39)
1,825
(447)
7,532
and trademarks
Customer relationships
(454)
4,056
(3,264)
7,320
(73)
77
2,717
(272)
4,870
10,926
(1,281)
Land and bulidings
7,859
157
672
183
(136)
6,092
equipment
Furniture and office
(588)
2,724
(5,685)
8,410
(235)
207
and similar rights
334
(170)
7,950
and equipment
Technical machinery
(272)
4,374
(3,754)
8,129
(247)
205
188
308
(184)
323
1,013
including patents, licenses
(203)
Additions
NOTE 12 Other intangible assets and
property, plant and equipment
Consolidated Financial Statements 75
in the terminal value growth rate by one percentage point.
Siemens concluded that no impairment loss would need to be
recognized on goodwill in any of the groups of cash-generating
units.
The sensitivity analysis for the groups of cash-generating units to
which a significant amount of goodwill is allocated was based on
a reduction in after-tax future cash flows by 10% or an increase
in after-tax discount rates by one percentage point or a reduction
8.0%
1.7%
3,158
8.0%
1.7%
3,552
8.0%
1.7%
3,933
6.5%
1.7%
8,301
Sep 30, 2016
After-tax
discount rate
growth rate
Goodwill
Terminal value
Power and Gas (without part of Power Generation Services)
Power Generation Services (part of Power and Gas)
Digital Factory
Healthineers
(in millions of €)
allocated include average revenue growth rates (excluding portfolio
effects) of between 0.1% and 9.1% (0.3% and 5.3% in fiscal 2016).
Revenue figures in the five-year planning period of the groups of
cash-generating units to which a significant amount of goodwill is
Gross
carrying
Trans-
lation
through
business
1,630
(1,594)
3,224
(138)
374
(79)
3,067
technology
Internally generated
ment in
fiscal 2017
and impair-
tization
Deprecia-
tion/amor-
Acquired technology
amount
09/30/2017
ciation/
amortiza-
lated depre-
Accumu-
tion and
impairment
Retire-
amount
ments¹ 09/30/2017
Reclassi-
fications
combi-
nations Additions
rences
10/01/2016
(in millions of €)
diffe-
amount
Gross
carrying
Carrying
(532)
beginning of fiscal year
Sep 30,
288
Other
8,742
6,799
Liabilities and Post-employment benefits
235
2,008
138
2,180
1,836
1,829
Non-current and current assets
1,773
2,042
Assets
2016
2017
2016
2017
Sep 30,
(in millions of €)
Fiscal year
Income tax expenses
Deferred tax
Current tax
(in millions of €)
Deferred income tax assets and liabilities on a gross basis are
summarized as follows:
Income tax expense (benefit) consists of the following:
NOTE 7 Income taxes
114
Consolidated Financial Statements 71
Tax loss and credit carryforward
547
2016
2017
(in millions of €)
Sep 30,
(in millions of €)
Deferred tax assets have not been recognized with respect of the
following items (gross amounts):
As of September 30, 2017, the Company has certain tax losses
subject to significant limitations. For those losses deferred tax
assets are not recognized, as it is not probable that gains will be
generated to offset those losses.
Deferred tax liabilities
Total deferred tax assets, net
Other
Income tax expense (current and deferred) differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
In Germany, the calculation of current tax is based on a combined
tax rate of 31%, consisting of a corporate tax rate of 15%, a solidar-
ity surcharge thereon of 5.5% and an average trade tax rate of
15%. For foreign subsidiaries, current taxes are calculated based
on the local tax laws and applicable tax rates in the individual for-
eign countries. Deferred tax assets and liabilities in Germany and
abroad are measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled.
The current income tax expenses in fiscal 2017 and 2016 include
adjustments recognized for current tax of prior years in the
amount of €100 million and €(29) million, respectively. The de-
ferred tax expense (benefit) in fiscal 2017 and 2016 includes tax
effects of the origination and reversal of temporary differences
of €172 million and €54 million, respectively.
2,602
698
8,638
9,006
120
218
930
874
7,588
7,914
Non-current and current assets
Liabilities
Liabilities
11,240
9,704
Deferred tax assets
788
Other operating expenses in fiscal 2017 and 2016 include losses
on sales of property, plant and equipment, losses from the sale
of businesses, transaction costs and effects from insurance, legal
and regulatory matters.
NOTE 6 Other operating expenses
As of September 30, 2017 and 2016, the carrying amount of all
individually not material associates amounts to €1,836 million
and €2,242 million, respectively. Summarized financial informa-
tion for all individually not material associates adjusted for the
percentage of ownership held by Siemens, is presented below.
Items included in the Statements of Comprehensive Income are
presented for the twelve month period applied under the equity
method.
NOTE 4 Interests in other entities
In December 2016, Siemens contributed its eCar powertrain sys-
tems business - formerly included in the Digital Factory Division -
into a newly formed joint venture, Valeo Siemens eAutomotive
GmbH. Siemens recognized a pre-tax gain on disposal of €173 mil-
lion in Other operating income, thereof €159 million relating
to measuring Siemens' stake in the joint venture at fair value.
Siemens' 50% stake in the joint venture is disclosed in Centrally
managed portfolio activities.
-
Dispositions not qualifying for discontinued
operations closed transactions
DISPOSITIONS
Consolidated Financial Statements
70
Revenue and net income of the combined entity in fiscal 2017
Iwould have been €86,761 million and €5,774 million, respec-
tively, had both acquired businesses been included as of Octo-
ber 1, 2016.
In March 2017, Siemens acquired all shares of Mentor Graphics
Corporation, U.S., a design automation and industrial software
provider. The acquired business is integrated in the Digital Fac-
tory Division. The purchase price paid in cash amounts to
€4,063 million as of the acquisition date. The preliminary pur-
chase price allocation as of the acquisition date resulted in: Other
intangible assets €1,878 million, Property, plant and equipment
€252 million, Trade and other receivables €657 million, Cash and
cash equivalents €369 million, Deferred tax assets €86 million,
Current liabilities €809 million and Deferred tax liabilities
€318 million. Other intangible assets mainly relate to technology
of €1,482 million and customer-related intangible assets of
€362 million. Goodwill of €1,865 million comprises intangible
assets that are not separable such as employee know-how and
expected synergy effects from expanding our software business
and from expanding our role in the digital sector. The purchase
price allocation is preliminary as a detailed analysis of the assets
and liabilities has not been finalized. Compared to the status of
the purchase price allocation as of the end of the second quarter
of fiscal year 2017, the fair value of the acquired technology in-
creased at the amount of €472 million based on further analysis
on the underlying useful life and royalty rate. Including earnings
effects from purchase price allocation and integration costs, the
acquired business contributed revenue of €404 million and a net
income of €(239) million to Siemens for the period from acquisi-
tion to September 30, 2017.
trade and other receivables acquired is €1,137 million. Goodwill
amounts to €2,625 million and comprises intangible assets that
are not separable such as employee know-how and expected syn-
ergy effects from highly complementary businesses entailing an
enhanced market position (including anticipated cost savings
mainly in R&D, procurement and administration as well as reve-
nue synergies). The purchase price allocation is preliminary as a
detailed analysis of the assets and liabilities has not been final-
ized. Goodwill is allocated within the segment SGRE to the units
Wind Turbines as well as Operation and Maintenance. Effects on
equity resulting from this transaction are included in line Changes
in equity resulting from major portfolio transactions. Including
earnings effects from purchase price allocation and integration
costs, the acquired business contributed revenue of €1,659 mil-
lion and a net income of €(209) million to Siemens for the period
from acquisition to September 30, 2017. The non-controlling in-
terests of 41% amount to €721 million at the acquisition date and
are measured at the proportionate share in the recognized
amounts of the acquired net assets (excluding goodwill).
In April 2017, Siemens contributed its wind power business, in-
cluding service, into the publicly listed company Gamesa Corpo-
ración Tecnológica, S.A., Spain (Gamesa), and in return received
newly issued shares of the combined entity Siemens Gamesa
Renewable Energy, S.A., Spain (SGRE). The two businesses are
highly complementary regarding global footprint, existing prod-
uct portfolios and technologies. Siemens as majority share-
holder holds 59% of the shares of the combined entity. As part of
the merger, Siemens paid €999 million in cash which was distrib-
uted to the Gamesa shareholders (without Siemens) following
the completion of the merger. The consideration transferred by
Siemens equals 59% of Gamesa's market capitalization at closing
of the merger and amounts to €3,669 million. The preliminary
purchase price allocation as of the acquisition date resulted in:
Other intangible assets €2,533 million, Property, plant and equip-
ment €628 million, Trade and other receivables €1,073 million,
Cash and cash equivalents €1,003 million, Inventories €1,116 mil-
lion, Other financial assets €413 million (current and non-cur-
rent), Other current assets €206 million, Current income tax as-
sets €179 million, Deferred tax assets €432 million, Long-term
debt €656 million, Provisions €1,229 million (current and non-cur-
rent), Other financial liabilities €217 million, Short-term debt and
current maturities of long-term debt €363 million, Trade payables
€1,745 million, Current income tax liabilities €118 million, Other
current liabilities €662 million and Deferred tax liabilities
€824 million. Intangible assets mainly relate to technology of
€1,147 million, customer relationships of €958 million and order
backlog of €429 million. The gross contractual amount of the
ACQUISITIONS
Acquisitions and dispositions
NOTE 3
In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
Tax Treatments. The interpretation clarifies the recognition and
measurement requirements when there is uncertainty over in-
come tax treatments. In assessing the uncertainty, an entity shall
consider whether it is probable that a taxation authority will ac-
cept the uncertain tax treatment. IFRIC23 is effective for annual
reporting periods beginning on or after January 1, 2019, while
earlier application is permitted. The Company is currently assess-
ing the impacts of adopting the interpretation on the Company's
Consolidated Financial Statements.
periods beginning on or after January 1, 2019. Siemens will adopt
the standard for the fiscal year beginning as of October 1, 2019,
presumably by applying the modified retrospective approach, i.e.
comparative figures for the preceding year would not be ad-
justed. Currently, it is expected that the majority of the transition
effect relates to real estate leased by Siemens. The Company is
currently assessing the impact of adopting IFRS 16 on the Consol-
idated Financial Statements.
Consolidated Financial Statements 69
In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
nates the current classification model for lessee's lease contracts
as either operating or finance leases and, instead, introduces a
single lessee accounting model requiring lessees to recognize
right-of-use assets and lease liabilities for leases with a term of
more than twelve months. This brings the previous off-balance
leases on the balance sheet in a manner largely comparable to
current finance lease accounting. IFRS 16 is effective for annual
In May 2014, the IASB issued IFRS 15, Revenue from Contracts
with Customers. According to the new standard, revenue is rec-
ognized to depict the transfer of promised goods or services to a
customer in an amount that reflects the consideration to which
the Company expects to be entitled in exchange for those goods
or services. Revenue is recognized when, or as, the customer ob-
tains control of the goods or services. IFRS 15 supersedes IAS 11,
Construction Contracts and IAS 18, Revenue as well as related
interpretations. The standard is effective for annual periods be-
ginning on or after January 1, 2018; early application is permit-
ted. The Company will adopt the standard for the fiscal year be-
ginning as of October 1, 2017 retrospectively, i.e. the comparable
period will be presented in accordance with IFRS 15. Further as-
sessments resulting from the implementation of IFRS 15 con-
firmed that there will be no significant impacts on Siemens' Con-
solidated Financial Statements. Retained earnings as of October 1,
2016 will increase by €0.18 billion. The increase mainly results
from a change in the timing of recognizing revenue for certain
types of contracts, in particular, revenue may be recognized ear-
lier if variable consideration components exist, re-allocations of
the transaction price between performance obligations take
place or licenses are transferred to the customer. In the compa-
rable period fiscal 2017, changes in the total amount of revenue
to be recognized for a customer contract are very limited. The
vast majority of construction-type contracts currently accounted
for under the percentage-of-completion method fulfills the re-
quirements for revenue recognition over time. Besides, there will
be changes to the Statement of Financial Position, e.g. separate
line items for contract assets and contract liabilities are required,
and quantitative and qualitative disclosures are added.
the effects of the adoption of IFRS 9 and expects only limited
impact on the Consolidated Financial Statements: Debt instru-
ments that would not be eligible to be carried at amortized cost
are expected to occur only to an insignificant extent. The impact
of the new impairment model of IFRS 9 on the valuation allow-
ances on debt instruments is currently under evaluation. Based
on the analyses so far, Siemens does not expect the valuation
allowances to change significantly. Siemens will adopt the IFRS 9
hedge accounting rules prospectively from October 1, 2018. It is
expected that all existing hedge accounting relationships will
also meet the hedge accounting requirements under IFRS 9.
In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
introduces a single approach for the classification and measure-
ment of financial assets according to their cash flow characteris-
tics and the business model they are managed in, and provides a
new impairment model based on expected credit losses. IFRS 9
also includes new regulations regarding the application of hedge
accounting to better reflect an entity's risk management activi-
ties especially with regard to managing non-financial risks. The
new standard is effective for annual reporting periods beginning
on or after January 1, 2018. The Company will adopt IFRS 9 for the
fiscal year beginning as of October 1, 2018 and will not adjust
comparative figures for the preceding fiscal year, in accordance
with IFRS 9 transitional provisions. Siemens is currently assessing
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
Prior-year information - The presentation of certain prior-year
information has been reclassified to conform to the current year
presentation.
Share-based payment Share-based payment awards at
Siemens are predominately designed as equity-settled. Fair value
is measured at grant date and is expensed over the vesting pe-
riod. Fair value is determined as the market price of Siemens
shares, considering dividends during the vesting period the
grantees are not entitled to and market conditions and non-vest-
ing conditions, if applicable.
Cash flow hedges: The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net of
income taxes (applicable deferred income tax), and any ineffec-
tive portion is recognized immediately in net income. Amounts
accumulated in equity are reclassified into net income in the
same periods in which the hedged item affects net income.
Fair value hedges: The carrying amount of the hedged item is
adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair value
is recognized as a separate financial asset or liability with corre-
sponding gain or loss recognized in net income. For hedged
items carried at amortized cost, the adjustment is amortized un-
til maturity of the hedged item. For hedged firm commitments
the initial carrying amount of the assets or liabilities that result
from meeting the firm commitments are adjusted to include the
cumulative changes in the fair value that were previously recog-
nized as separate financial assets or liabilities.
Investments accounted for using the equity method
(in millions of €)
Fiscal year
2016
316
2017
In fiscal 2017 and 2016, Other operating income includes gains
related to the sale of businesses of €172 million and €1 million
and gains on sales of property, plant and equipment of €176 mil-
lion and €177 million, respectively. Fiscal 2017 includes gains of
€171 million from reversals of provisions for guarantees related
to a previous divestment.
NOTE 5 Other operating income
As of September 30, 2017, non-controlling interests of 41%
amounting to €788 million relate to SGRE, registered in Zamudio,
Spain. Net income attributable to non-controlling interests
for the six month period from acquisition to September 30, 2017
was €(39) million. Dividends paid to non-controlling interests
amounted to €31 million. Summarized financial information in
accordance with IFRS before inter-company eliminations are: As
of September 30, 2017 current assets €6,963 million, non-cur-
rent assets €9,504 million, current liabilities €6,891 million,
non-current liabilities €3,126 million and equity €6,450 million;
for the six month period from acquisition to September 30, 2017
revenue €5,022 million, income from continuing operations
€(135) million, other comprehensive income, net of income
taxes €(75) million, total comprehensive income €(210) million
and total cash flows €(1,611) million (including €999 million in
cash distribution to the Gamesa shareholders (without Siemens)
as part of the merger).
257
235
(31)
8
288
227
2016
2017
Fiscal year
SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS
Deductible temporary differences
Tax loss carryforward
Income (loss) from continuing operations
Other comprehensive income,
net of income taxes
Total comprehensive income
Income from investments accounted for using the equity method
includes an impairment loss of €230 million in fiscal 2017 relat-
ing to Siemens' investment in Primetals Technologies Ltd., which
is disclosed within Centrally managed portfolio activities. The
continuing adverse conditions in the market environment trig-
gered an impairment test on the investment. The recoverable
amount of €204 million was determined based on a discounted
cash flow calculation (level 3 of the fair value hierarchy). To de-
termine the recoverable amount, cash flow projections were
used that take into account past experience and represent man-
agement's best estimate about future developments. The calcu-
lation is based on a terminal value growth rate of 1.5% and an
after-tax discount rate of 7.4%.
134
43
using the equity method, net
investments accounted for
Income (loss) from
(53)
(129)
(243)
Impairment and reversals of impairment
63
Gains (losses) on sales, net
224
Share of profit (loss), net
(in millions of €)
743
188
3,673
Gross investment in leases
14,280
15,242
219
222
Plus: Unguaranteed residual values
Trade receivables from the sale
of goods and services
6,488
6,510
Minimum future lease payments
2016
2017
(in millions of €)
Sep 30,
2016
2017
(in millions of €)
Sep 30,
The following table shows a reconciliation of minimum future
lease payments to the gross and net investment in leases and
to the present value of the minimum future lease payments
receivable:
Trade and other receivables
NOTE 8
1,010
3,269
(996)
1,084
Income and expenses recognized
directly in equity
6,488
6,510
6,732
6,706
Receivables from finance leases
1,919
Sep 30,
Fiscal year
2016
2017
(in millions of €)
Present value of
minimum future lease
payments receivable
in leases
Gross investment
The gross investment in leases and the present value of minimum
future lease payments receivable are due as follows:
Changes to the valuation allowance of current and long-term re-
ceivables which belong to the class of financial assets measured
at (amortized) cost are as follows (excluding receivables from
finance leases):
In fiscal 2017 and 2016, the long-term portion of receivables from
finance leases is reported in Other financial assets and amounts
to €3,699 million and €3,557 million, respectively.
5,457
5,500
Present value of minimum future
lease payments receivable
(2)
(108)
Less: Present value of unguaranteed
residual value
(198)
(180)
Less: Allowance for doubtful accounts
5,762
5,798
Net investment in leases
16,287
17,160
(944)
(934)
Less: Unearned finance income
2,007
(118)
Valuation allowance as of
5
752
(371)
Foreign tax rate differential
(9)
Change in tax rates
(197)
deferred tax assets and tax credits
Change in realizability of
(223)
(8)
Taxes for prior years
600
(227)
(309)
Tax-free income
558
Non-deductible losses and expenses
income taxes resulting from:
Increase (decrease) in
Expected income tax expenses
Siemens has not recognized deferred tax liabilities for income
taxes or foreign withholding taxes on the cumulative earnings of
subsidiaries of €36,157 million and €26,585 million, respectively
in fiscal 2017 and 2016 because the earnings are intended to be
permanently reinvested in the subsidiaries.
As of September 30, 2017 and 2016, €1,361 million and €953 mil-
lion of the unrecognized tax loss carryforwards expire over the
periods to 2031.
2,295
2,575
2,201
4,416
Fiscal year
2016
2017
2,013
(44)
(15)
(280)
Tax effect of investments accounted
for using the equity method
(62)
734
3,358
3,436
After one year but not more than five years
More than five years
2,008
2,180
Continuing operations
2016
2017
(in millions of €)
2,378
2,340
Within one year
Discontinued operations
Fiscal year
2017
(in millions of €)
Sep 30,
Minimum future lease payments to be received are as follows:
Including items charged or credited directly to equity and the
expense (benefit) from continuing and discontinued operations,
the income tax expense (benefit) consists of the following:
Consolidated Financial Statements
22
72
(92)
(6)
2,008
2,180
Actual income tax expenses
3
Other, net
2016
6,435
566
1,537
€
1,250
1,285
€
1,000
997
€
1,000
996
US$
500
423
US$
500
1,274
447
100
83
US$
100
87
US$
400
338
US$
400
358
US$
300
254
US$
US$
1,250
2013/June 2020/US$ floating-rate instruments
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
Total Debt Issuance Program
2,028
US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
US$
400
339
US$
400
358
1.5%/2012/March 2020/EUR fixed-rate instruments
€
1,000
998
€
1,000
€
997
£
350
395
£
350
405
3.75%/2012/September 2042/GBP fixed-rate instruments
£
650
723
£
650
740
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
1.5%/2013/March 2018/US$ fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
2.75%/2012/September 2025/GBP fixed-rate instruments
300
268
US$
2.90%/2015/May 2022/US$-fixed-rate-instruments
US$
1,750
1,479 US$
1,750
1,564
3.25%/2015/May 2025/US$-fixed-rate-instruments
US$
1,500
1,264 US$
1,500
1,336
4.40%/2015/May 2045/US$-fixed-rate-instruments
US$
893
1,750
1,750
1,546
US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
US$
350
1.30%/2016/September 2019/US$-fixed-rate-instruments
US$
1,100
1.70%/2016/September 2021/US$-fixed-rate-instruments
US$
1,100
2.00%/2016/September 2023/US$-fixed-rate-instruments
US$
750
1,461 US$
1,000
845 US$
1,000
400
339
US$
400
358
7,812
10,048
5.75%/2006/October 2016/US$ fixed-rate instruments
US$
1,750
1,570
6.125%/2006/August 2026/US$ fixed-rate instruments
US$
1,750
1,830 US$
1,750
1,982
US$
2.15%/2015/May 2020/US$-fixed-rate-instruments
1,119
1,250
1,058 US$
1,250
2,000
US$
448
500
423 US$
500
US$
US$3 m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
1.45%/2015/May 2018/US$-fixed-rate-instruments
296 US$
930 US$
929 US$
630 US$
€
1,719
ness (maturing until 2029)
675
817
111
87
(in millions of €)
2017
2016
Obligations under
Within one year
344
326
finance leases
After one year but not more than five years
Sep 30,
679
Total debt
27
5,447
15
6,206
88
123
26,777
24,761
More than five years
101
85
1,124
1,099
NOTE 13 Other financial assets
689
(in millions of €)
Other financial indebted-
1,334
(260)
(14)
2,273
(1,516) 25,717
(15,560)
10,157
(1,831)
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
76
Consolidated Financial Statements
Property, plant
Minimum future lease payments under operating leases are:
NOTE 15 Debt
(in millions of €)
Notes and bonds
992
Current debt
Sep 30,
Sep 30,
2017
(4,898)
2017
2016
(maturing until 2047)
3,554
4,994
25,243
23,560
Loans from banks
(maturing until 2027)
1,191
380
Non-current debt
2017
Sep 30,
2016
Loans receivable
1,676
20,049
20,437
Interest rates in this Note are per annum. In fiscal 2017 and 2016,
weighted-average interest rates for loans from banks, other fi-
nancial indebtedness and obligations under finance leases were
2.9% (2016: 3.9%), 1.0% (2016: 0.5%) and 5.8% (2016: 4.8%),
respectively.
CREDIT FACILITIES
As of September 30, 2017 and 2016, €7.0 billion and €7.1 billion
of lines of credit are unused. The facilities are for general corpo-
rate purposes. The €4.0 billion syndicated credit facility matures
on June 25, 2021. The US$3.0 billion syndicated credit facility ma-
tures on September 27, 2020. The €450 million revolving bilateral
credit facility is unused and was extended from September 2017
to September 2018. As of September 30, 2017, a subsidiary has an
additional unused credit line of €750 million maturing in 2022.
Consolidated Financial Statements
77
NOTES AND BONDS
(interest/issued/maturity)
Currency
Notional
amount
(in millions)
Sep 30, 2017
Carrying
amount
1,698
in millions
Currency
Sep 30, 2016
Carrying
amount
amount
in millions
of €1
(in millions)
of €1
5.625%/2008/June 2018/EUR fixed-rate instruments
€
1,600
1,649
€
1,600
Notional
Other
1,175
1,116
11,062
11,838
Receivables from finance leases
3,699
Derivative financial instruments
1,784
Available-for-sale financial assets
2,290
3,557
2,293
2,662
Other
208
19,044
260
20,610
Item Loans receivable primarily relate to long-term loan transac-
tions of SFS.
NOTE 14 Other current liabilities
(in millions of €)
Sep 30,
Accruals for pending invoices
1,292
1,470
Deferred Income
5,401
5,505
5.125%/2009/February 2017/EUR fixed-rate instruments
Liabilities to personnel
10,259
contracts and related advances
estimated earnings on uncompleted
Billings in excess of costs and
2016
2017
10,892
350
2016
The gross carrying amount of Advances to suppliers and con-
struction in progress includes €908 million and €677 million, re-
spectively of property, plant and equipment under construction
in fiscal 2017 and 2016. As of September 30, 2017 and 2016, con-
tractual commitments for purchases of property, plant and
equipment are €665 million and €643 million, respectively.
(452)
3,015
(1,710)
1,305
(348)
Advances to suppliers and
construction in progress
856
(16)
(40)
595
(582)
(12)
801
(2)
799
2
Consolidated Financial Statements
78
1 Includes adjustments for fair value hedge accounting.
28,554
28,797
2,705
10
1,249
484
(83)
(67)
(39)
288
270
(271)
7,950
(5,412)
2,539
(542)
Furniture and office
equipment
5,829
(29)
22
632
85
(448)
6,092
(4,764)
1,328
(690)
Equipment leased to others
3,033
23
31
31
€
850
US$
US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
843
1,000
US$
2.70%/2017/March 2022/US$-fixed-rate-instruments
930
1,100
US$
2.20%/2017/March 2020/US$-fixed-rate-instruments
677
800
US$
US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
887
1,000
838 US$
1,000
US$
3.30%/2016/September 2046/US$-fixed-rate-instruments
1,517
1,700
718
3.125%/2017/March 2024/US$-fixed-rate-instruments
US$
1,000
33
33
€
3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
Total Bonds with Warrant Units
1,309
1,249 US$
1,500
US$
1,332
1,500
US$
7,770
1.05%/2012/August 2017/US$ fixed-rate instruments
1.65%/2012/August 2019/US$ fixed-rate instruments
19,737
Total US$ Bonds
1,257
1,500
US$
4.20%/2017/March 2047/US$-fixed-rate-instruments
1,054
1,250
US$
3.40%/2017/March 2027/US$-fixed-rate-instruments
843
15,801
and equipment
Technical machinery
(253)
(1,416) 27,017
(16,041)
10,977
(1,930)
1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
Additions
Gross
carrying
amount
Trans-
through
lation
business
Gross
carrying
Accumu-
lated depre-
ciation/
amortiza-
Deprecia-
tion/amor-
tization
Carrying and impair-
(in millions of €)
10/01/2015
diffe-
rences
combi-
Reclassi-
Retire-
amount
nations Additions fications
2,432
891
(607)
25,717
(729)
Equipment leased to others
3,015
(92)
443
10
(378)
2,998
(1,703)
1,295
(338)
ments' 09/30/2016
Advances to suppliers and
801
(25)
78
796
(580)
(23)
1,046
1,047
(3)
Property, plant
and equipment
construction in progress
1,431 US$
tion and
impairment
ment in
(3,191)
4,341
(490)
Other intangible assets
15,262
(115)
328
388
(395)
15,469
(7,727)
7,742
(932)
Land and bulidings
7,745
(65)
20
274
218
(333)
7,859
(3,673)
4,186
7,532
68
(77)
7,542
fiscal 2016
Internally generated
technology
2,995
324
(252)
3,067
(1,562)
1,505
(189)
Acquired technology
amount
09/30/2016
including patents, licenses
4,725
(37)
260
64
(143)
4,870
(2,974)
1,896
(253)
Customer relationships
and trademarks
and similar rights
1,700
1,500
2.35%/2016/October 2026/US$-fixed-rate-instruments
666
750
983
1,100
984
1,100
308
US$
(421)
799
13,695
9,582
639
(22,418)
19,071
22,607
(22,531)
Less: Cash and cash equivalents
(1,242)
Less: Current available-for-sale financial assets
Net debt
(8,375) (10,604)
Experience (gains) losses
6,206
24,761
5,447
26,777
Plus: Long-term debt
(1,293)
6,506
(112)
Changes in financial assumptions
Net interest expenses related to provisions for pensions and sim-
ilar obligations amounted to €198 million and €282 million, re-
spectively, in fiscal 2017 and 2016. The DBO is attributable to ac-
tive employees 31% and 33%, to former employees with vested
rights 14% and 15%, to retirees and surviving dependents 54%
and 52%, respectively, in fiscal 2017 and 2016.
Fiscal 2017 includes a gain of €138 million (€137 million due to
plan amendments in the position "other") in connection with ad-
justed benefit levels for plan participants in Switzerland.
The remeasurements comprise actuarial (gains) and losses result-
ing from:
Applied mortality tables are:
Germany
U.S.
U.K.
CH
Heubeck Richttafeln 2005G (modified)
RP-2016 with generational projection from
the US Social Security Administration's
Long Range Demographic Assumptions
SAPS S2 (Standard mortality tables
for Self Administered Pension Schemes
with allowance for future mortality
improvements)
BVG 2015 G
(in millions of €)
2017
Fiscal year
2016
Changes in demographic assumptions
Short-term debt and current maturities
of long-term debt
(129)
(3,714)
Dividends paid per share were €3.60 and €3.50, respectively, in fis-
cal 2017 and 2016. The Managing Board and the Supervisory Board
propose to distribute a dividend of €3.70 per share entitled to the
NOTE 18
In fiscal 2017 and 2016, Siemens repurchased 7,922,129 shares
and 4,888,596 shares, respectively. In fiscal 2017 and 2016,
Siemens transferred 15,162,691 and 4,543,673 treasury shares,
respectively. As of September 30, 2017 and 2016, the Company
has treasury shares of 34,481,120 and 41,721,682, respectively.
1,603
664
743
759
1,832
750
4,631
2,422
Thereof non-current
Balance as of September 30, 2017
1,252
186
5
285
777
Other changes
(542)
(1)
8,826
4,579
Except for asset retirement obligations, the majority of the Com-
pany's provisions are generally expected to result in cash out-
flows during the next one to 15 years.
Warranties mainly relate to products sold. Order related losses
and risks are provided for anticipated losses and risks on uncom-
pleted construction, sales and leasing contracts.
Siemens' issued capital is divided into 850 million registered shares
with no par value and a notional value of €3.00 per share as of
September 30, 2017 and 2016, respectively. The shares are fully
paid in. At the Shareholders' Meeting, each share has one vote and
accounts for the shareholders' proportionate share in the Compa-
ny's net income. All shares confer the same rights and obligations.
Equity
209
Sep 30,
2016
2017
(in millions of €)
A key consideration of our capital structure management is to
maintain ready access to capital markets through various debt
instruments and to sustain our ability to repay and service our
debt obligations over time. In order to achieve this, Siemens in-
tends to maintain an Industrial net debt divided by EBITDA (con-
tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
proximate number of years that would be needed to cover the
Industrial net debt through continuing income, without taking
into account interest, taxes, depreciation and amortization.
As of September 30, 2017 and 2016, total authorized capital of
Siemens AG is €618.6 million nominal, issuable in installments
based on various time-limited authorizations, by issuance of up
to 206.2 million registered shares of no par value. In addition, as
of September 30, 2017 and 2016, Siemens AG's conditional capi-
tal is €1,080.6 million nominal or 360.2 million shares. It can
primarily be used for serving convertible bonds or warrants un-
der warrant bonds that could or can be issued based on various
time-limited authorizations approved by the respective Share-
holders' Meeting.
NOTE 19 Additional capital disclosures
Other includes transaction-related and post-closing provisions in
connection with portfolio activities as well as provisions for Legal
Proceedings, as far as the risks that are subject to such Legal
Proceedings are not already covered by project accounting. Pro-
visions for Legal Proceedings amounted to €437 million and
€430 million as of September 30, 2017 and 2016, respectively.
present value discount of €359 million and €206 million, respec-
tively, reflecting the assumed continuous outflow of the total
expected payments until the 2060's (2070's in fiscal 2016). In-
creased discount rates decreased the carrying amount of the
provision by €543 million as of September 30, 2017, mainly due
to a change of the applied yield curve in order to more specifically
reflect interest rate expectations, particularly regarding long-
term interest rates; declined discount rates increased the carry-
ing amount by €355 million as of September 30, 2016. The pro-
vision was decreased by €312 million as of September 30, 2017,
mainly due to reduced assumed inflation rates, and €170 million
as of September 30, 2016, due to reduced cost estimates.
Consolidated Financial Statements 83
As of September 30, 2017 and 2016, the provision totals €697 mil-
lion and €1,551 million, respectively, and is recorded net of a
storage, transport to and final storage of the radioactive waste.
This
process will be supported by continuing engineering studies
and radioactive sampling under the supervision of German fed-
eral and state authorities. The decontamination and disassembly
are planned to continue until 2018, whereas final waste condi-
tioning and packaging is planned to continue until the 2020's.
Thereafter, the Company is responsible for intermediate storage
of the radioactive materials until they are transported and
handed over to a final storage facility. With respect to the Hanau
facility, the asset retirement has been completed and inter-
mediate storage has been set up. On September 21, 2006, the
Company received official notification from the authorities that
the Hanau facility has been released from the scope of applica-
tion of the German Atomic Energy Act and that its further use is
unrestricted. The ultimate costs of the remediation are contin-
gent on the decision of the federal government on the location
of the final storage facilities and the date of their availability.
Several parameters relating to the development of a final storage
facility for radioactive waste are based on the assumptions for
the so called Schacht Konrad final storage. Parameters related to
the life-span of the German nuclear reactors assume a phase-out
until 2022. The valuation uses assumptions to reflect the current
and detailed cost estimates, price inflation and discount rates as
well as a continuous outflow until the 2060's related to the costs
for dismantling as well as intermediate and final storage. The
estimated cash outflows related to the asset retirement obliga-
tion could alter significantly if political developments affect the
government's timeline to finalize the so called Schacht Konrad.
For discounting the cash outflows, the Company uses current
interest rates as of the balance sheet date.
Environmental clean-up costs relate to remediation and environ-
mental protection liabilities which have been accrued based on
the estimated costs of decommissioning facilities for the produc-
tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
many (Hanau facilities), as well as a nuclear research and service
center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
2017, parts of the regulation for nuclear waste disposal were
amended by way of law ("Gesetz zur Neuordnung der Verantwor-
tung in der kerntechnischen Entsorgung"), Siemens is not covered
by these regulations and consequently continues to adhere to the
German Atomic Energy Act ("deutsches Atomgesetz"), which
states that when a nuclear facility is closed, the resulting radioac-
tive waste must be collected and delivered to a government-de-
veloped final storage facility. In this regard, the Company has
developed a plan to decommission the Hanau and Karlstein facil-
ities in the following steps: asset retirement (including clean-out,
decontamination and disassembly of equipment and installa-
tions, decontamination of the facilities and buildings), waste con-
ditioning and packaging of nuclear waste, as well as intermediate
The Company is subject to asset retirement obligations related to
certain items of property, plant and equipment. Such asset retire-
ment obligations are primarily attributable to environmental
clean-up costs and to costs primarily associated with the removal
of leasehold improvements at the end of the lease term.
dividend, in total representing approximately €3.0 billion in ex-
pected payments. Payment of the proposed dividend is contingent
upon approval at the Shareholders' Meeting on January 31, 2018.
317
(presented in Other assets)
80
Financial assets
Financial liabilities measured at amortized cost³
Financial liabilities held for trading4
Derivatives designated in a hedge accounting relationship4
Financial liabilities
Sep 30,
2017
2016
39,264
37,984
8,375
10,604
379
534
1,935
2,518
Available-for-sale financial assets²
Financial assets held for trading
42,176
Cash and cash equivalents
As previously reported, in May 2014, the Public Affairs Office
(Ministério Público) São Paulo initiated a lawsuit against Siemens
Ltda. as well as other companies and several individuals claiming,
inter alia, damages in an amount of BRL2.5 billion (approximately
€665 million as of September 2017) plus adjustments for infla-
tion and related interest in relation to train refurbishment con-
tracts entered into between 2008 and 2011. A technical note is-
sued by the Brazilian cartel authority CADE earlier in 2014 had not
identified evidence suggesting Siemens Ltda.'s involvement in
anticompetitive conduct in relation to these refurbishment con-
tracts. In January 2015 the district court of São Paulo admitted a
lawsuit of the State of São Paulo and two customers against
Siemens Ltda., Siemens AG and other companies and individuals
claiming damages in an unspecified amount. In March 2015, the
district court of São Paulo admitted a lawsuit of the Public Affairs
Office (Ministério Público) São Paulo against Siemens Ltda. and
other companies claiming, inter alia, damages in an amount of
BRL487 million (approximately €130 million as of September 2017)
plus adjustments for inflation and related interest in relation to
train maintenance contracts entered into in 2000 and 2002. In
September 2015, the district court of São Paulo admitted another
lawsuit of the Public Affairs Office (Ministério Público) São Paulo
against Siemens Ltda. and other companies claiming, inter alia,
damages in an amount of BRL918 million (approximately €244 mil-
lion as of September 2017) plus adjustments for inflation and
related interest in relation to train maintenance contracts
entered into in 2006 and 2007. Siemens will defend itself against
these actions. It cannot be excluded that further significant
damage claims will be brought by customers or the state against
Siemens.
As previously reported, CADE conducted - unrelated to the above
mentioned proceedings - two further investigations into possible
antitrust behavior in the field of gas-insulated and air-insulated
switchgear from the 1990's to 2006. Siemens cooperated with
the authorities. In February 2017, Siemens AG entered into a set-
tlement agreement with CADE relating to alleged antitrust viola-
tions in the field of gas-insulated switchgear for an amount in a
low single-digit euro million range. In October 2017, Siemens
Ltda. entered into a settlement agreement with CADE relating to
alleged antitrust violations in the field of air-insulated switchgear
for an amount in a mid double-digit euro million range.
As previously reported, in June 2015, Siemens Ltda. once again
appealed to the Supreme Court against a decision confirming
the decision of the previous court to suspend Siemens Ltda.
from participating in public tenders and signing contracts with
public administrations in Brazil for a five year term based on
alleged irregularities in calendar 1999 and 2004 public tenders
with the Brazilian Postal authorities. In July 2015, the court sus-
pended enforcement of the debarment decision pending the
appeal.
As previously reported, the Vienna public prosecutor in Austria
conducted an investigation into payments between calendar
1999 and calendar 2006 relating to Siemens Aktiengesellschaft
Österreich, Austria, for which adequate services rendered could
not be identified. In September 2011, the Vienna public prosecu-
tor extended the investigations to include a tax evasion matter
for which Siemens Aktiengesellschaft Österreich is potentially
liable. In November 2016, the proceedings against Siemens
Aktiengesellschaft Österreich were stopped.
Siemens has received credible information that four gas turbines
intended for a project in Taman, Russia, which were delivered by
000 Siemens Gas Turbines Technologies (SGTT) to its customer
OAO VO TechnoPromExport in summer of 2016 had been al-
legedly brought to Crimea against contractual agreements with
SGTT. Allegedly, these four gas turbines had been sold by OAO
VO TechnoPromExport to OOO VO TechnoProm Export, had then
been locally modified and moved to Crimea, a location under
sanctions. Siemens AG together with SGTT and SGTT separately
have filed lawsuits before the Commercial State Court of Moscow
against OAO VO TechnoProm Export and OOO VO TechnoProm-
Export for the return of the gas turbines. The proceedings are
ongoing.
Consolidated Financial Statements 87
4,758
88
Some of these Legal Proceedings could result in adverse decisions
for Siemens that may have material effects on its financial position,
the results of its operations and/or its cash flows in the respective
reporting period. At present, Siemens does not expect any matters
not described in this Note to have material effects on its financial
position, the results of its operations and/or its cash flows.
For Legal Proceedings information required under IAS 37, Provi-
sions, Contingent Liabilities and Contingent Assets is not dis-
closed if the Company concludes that disclosure can be expected
to seriously prejudice the outcome of the matter.
NOTE 22 Additional disclosures
on financial instruments
The following table discloses the carrying amounts of each cate-
gory of financial assets and financial liabilities:
(in millions of €)
Loans and receivables¹
Siemens is in the course of its normal business operations in-
volved in numerous Legal Proceedings in various jurisdictions.
These Legal Proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages,
equitable remedies or criminal or civil sanctions, fines or dis-
gorgement of profit. In individual cases this may also lead to
formal or informal exclusion from tenders or the revocation or
loss of business licenses or permits. In addition, further Legal
Proceedings may be commenced or the scope of pending Legal
Proceedings may be expanded. Asserted claims are generally
subject to interest rates.
Consolidated Financial Statements
3,955
55,594
62
32
42
831
964
119
9,265
13,486
thereof provisions for pensions
and similar obligations
9,582
13,695
thereof net defined benefit assets
(533)
1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
28,809
27,668
42,176
36,871
43,502
40,591
682
1,190
140
44,325
310
42,091
54,710
1 Reported in the following line items of the Statements
of Financial Position: Trade and other receivables, Other
current financial assets and Other financial assets, except
for separately disclosed €2,290 million and €2,662 million
available-for-sale financial assets and €2,314 million and
€3,051 million derivative financial instruments as of
September 30, 2017 and 2016, respectively. Includes
€15,242 million and €14,280 million trade receivables from
the sale of goods and services in fiscal 2017 and 2016,
2 Includes equity instruments classified as available-for-sale,
for which a fair value could not be reliably measured and
which are therefore recognized at cost.
3 Reported in the following line items of the Statements of
Financial Position: Short-term debt and current maturities of
long-term debt, Trade payables, Other current financial
liabilities, Long-term debt and Other financial liabilities,
except for separately disclosed derivative financial instru-
ments of €823 million and €1,500 million, respectively,
as of September 30, 2017 and 2016.
4 Reported in line items Other current financial liabilities and
Other financial liabilities.
Cash and cash equivalents includes €266 million and €330 mil-
lion as of September 30, 2017 and 2016, respectively, which are
not available for use by Siemens mainly due to minimum reserve
requirements with banks. As of September 30, 2017 and 2016, the
carrying amount of financial assets Siemens has pledged as col-
lateral amounted to €182 million and €214 million, respectively.
The following table presents the fair values and carrying amounts
of financial assets and financial liabilities measured at cost or
amortized cost for which the carrying amounts do not approxi-
Imate fair value:
Consolidated Financial Statements
thereof €918 million and €665 million with a term of more
than twelve months.
(1)
(24)
Accretion expense and effect of changes in discount rates
(96)
102
Sep 30, 2016
decrease
3,174
(2,774)
increase
Sep 30, 2017
decrease
2,472
increase
(2,227)
(in millions of €)
Discount rate
Rate of compen-
sation increase
Rate of pension
progression
The discount rate was derived from high-quality corporate bonds
with an issuing volume of more than 100 million units in the re-
spective currency zones, which have been awarded an AA rating
(or equivalent) by at least one of the three rating agencies
Moody's Investor Service, Standard & Poor's Rating Services or
Fitch Ratings.
Effect on DBO due to a one-half percentage-point
A one-half-percentage-point change of the above assumptions
would result in the following increase (decrease) of the DBO:
Sensitivity analysis
2.9%
As previously reported, in March 2014, Siemens was informed
that in connection with the above mentioned metro and urban
train projects the Public Prosecutor's Office São Paulo has re-
quested criminal proceedings at court into alleged violations of
Brazilian antitrust law against a number of individuals including
current and former Siemens employees. The proceedings con-
tinue; the Public Prosecutor's Office São Paulo has, in the mean-
time, appealed all decisions where the courts denied opening
criminal trials.
3.0%
113
1.4%
(105)
(1,433)
Fixed income securities
5,206
4,716
Equity securities
2017
(in millions of €)
Sep 30,
2016
Disaggregation of plan assets
As a significant risk, the Company considers a decline in the
plans' funded status due to adverse developments of plan assets
and/or defined benefit obligations resulting from changing pa-
rameters. Accordingly, Siemens implemented a risk management
concept aligned with the defined benefit obligations (Asset Lia-
bility Matching). Risk management is based on a worldwide de-
fined risk threshold (value-at-risk). The concept, the value at risk
and the asset development including the investment strategy are
monitored and adjusted on an ongoing basis under consultation
of senior external experts. Independent asset managers are se-
lected based on quantitative and qualitative analysis, which in-
cludes their performance and risk evaluation. Derivatives are
used to reduce risks as part of risk management.
Asset Liability Matching Strategies
Consolidated Financial Statements 81
As in prior year, sensitivity determinations apply the same meth-
odology as applied for the determination of the post-employ-
ment benefit obligation. Sensitivities reflect changes in the DBO
solely for the assumption changed.
The DBO effect of a 10% reduction in mortality rates for all ben-
eficiaries would be an increase of €1,103 million and €1,395 mil-
lion, respectively, as of September 30, 2017 and 2016.
(1,858)
2,107
1,620
1.4%
U.K.
Germany
2016
2017
Sep 30,
CHF
GBP
USD
EUR
Discount rate
tion of the DBO at period-end was as follows:
The weighted-average discount rate used for the actuarial valua-
Actuarial assumptions
6,284
(93)
(93)
(3,919)
Total
2.4%
1.7%
2.1%
1.0%
Pension progression
1.5%
1.5%
3.6%
3.7%
Compensation increase
U.K.
CH
2016
15,230
2017
The rates of compensation increase and pension progression for
countries with significant effects are shown in the following table.
Inflation effects, if applicable, are included in the assumptions below.
0.4%
0.8%
2.4%
2.8%
3.6%
3.8%
Sep 30,
16,395
Government bonds
5,407
658
1,820
Additions
5,087
796
1,593
675
2,022
9,253
1,877
1,611
1,517
4,249
Total
Other
6
585
3,069
Usage
(137)
(3)
(33)
(77)
Translation differences
(2,020)
(532)
obligations
(316)
(972)
Reversals
(2,049)
(486)
(10)
(393)
(1,160)
(200)
(6)
losses and risks
Thereof non-current
578
Cash and cash equivalents
497
290
Derivatives
1,696
2,028
Multi strategy funds
3,622
4,016
Alternative investments
10,899
9,823
Corporate bonds
5,496
465
Other assets
811
928
Balance as of October 1, 2016
(in millions of €)
retirement
Order related
Asset
NOTE 17 Provisions
Consolidated Financial Statements
Warranties
82
DEFINED CONTRIBUTION PLANS AND STATE PLANS
The amount recognized as expense for defined contribution plans
amounts to €686 million and €676 million in fiscal 2017 and 2016,
respectively. Contributions to state plans amount to €1,450 mil-
lion and €1,423 million in fiscal 2017 and 2016, respectively.
Employer contributions expected to be paid to defined benefit
plans in fiscal 2018 are €826 million. Over the next ten fiscal
years, average annual benefit payments of €1,843 million and
€1,908 million, respectively, are expected as of September 30,
2017 and 2016. The weighted average duration of the DBO for
Siemens defined benefit plans was 13 years as of September 30,
2017 and 14 years as of September 30, 2016.
Future cash flows
Virtually all equity securities have quoted prices in active markets.
The fair value of fixed income securities is based on prices pro-
vided by price service agencies. The fixed income securities are
traded in highly liquid markets and almost all fixed income securi-
ties are investment grade. Alternative investments mostly include
hedge funds; additionally, private equity and real estate invest-
ments are included. Multi strategy funds mainly comprise abso-
lute return funds and diversified growth funds that invest in vari-
ous asset classes within a single fund and aim to stabilize return
and reduce volatility. Derivatives predominantly consist of finan-
cial instruments for hedging interest rate risk and inflation risk.
28,809
27,668
Total
62
As previously reported, in May 2013, Siemens Ltda., Brazil
(Siemens Ltda.) entered into a leniency agreement with the Ad-
ministrative Council for Economic Defense (CADE) and other rel-
evant Brazilian authorities relating to possible antitrust violations
in connection with alleged anticompetitive irregularities in metro
and urban train projects, in which Siemens Ltda. and partially
Siemens AG, as well as a number of other companies participated
as contractor. In March 2014, CADE commenced administrative
proceedings, confirming Siemens Ltda.'s immunity from admin-
istrative fines for the reported potential misconduct. In connec-
tion with the above mentioned metro and urban train projects,
several Brazilian authorities initiated investigations relating to
alleged criminal acts (corruptive payments, anti-competitive con-
duct, undue influence on public tenders).
36,818
Consolidated Financial Statements
1,512
5,650
6,188
5,883
6,047
14
9
(219)
151
3,131
3,671
1,158
3,007
6
68
130
675
1,914
1,997
1,126
1,075
43
misconduct of its former management and agreed to pay a fine
in a low double-digit euro million range.
Balance at begin of fiscal year
3,064
2016
3,347
4,859
7
(1,109)
(749)
Balance at fiscal year-end
36,871
42,176
27,668
28,809
62
119
9,265
3,031
13,486
21,986
25,460
14,622
15,275
7,364
10,184
U.S.
U.K.
CH
Other countries
4,189
Germany
2017
2016
2017
The defined benefit plans open to new entrants are based pre-
dominantly on contributions made by the Company. Only to a
certain extent, those plans are affected by longevity, inflation
and compensation increases and take into account country spe-
cific differences. The Company's major plans are funded with
assets in segregated entities. In accordance with local laws and
bilateral agreements with benefit trusts (trust agreement) those
plans are managed in the interest of the beneficiaries. The de-
fined benefit plans cover 506,000 participants, including 217,000
active employees, 89,000 former employees with vested benefits
and 200,000 retirees and surviving dependents.
DEFINED BENEFIT PLANS
NOTE 16 Post-employment benefits
Siemens has a US$9.0 billion (€7.6 billion as of September 30,
2017) commercial paper program in place including US$ extend-
ible notes capabilities. As of September 30, 2017 and 2016,
US$720 million (€610 million) and US$700 million (€627 mil-
lion), respectively, were outstanding. Siemens' commercial pa-
pers have a maturity of generally less than 90 days. Interest rates
ranged from 0.37% to 1.47% in fiscal 2017 and from 0.13% to
0.74% in fiscal 2016.
COMMERCIAL PAPER PROGRAM
As of September 30, 2017, a subsidiary has loans of €424 million
outstanding maturing in 2018 and 2019 which were subject to
covenants, all of which were complied with.
As of September 30, 2017 and 2016, two bilateral US$500 million
term loan facilities (in aggregate €847 million and €896 million
respectively) are outstanding until March 26, 2020.
ASSIGNABLE AND TERM LOANS
Bond with Warrant Units - Each of the US$1.5 billion instru-
ments were issued with 6,000 detachable warrants exercisable
until August 1, 2017 (Warrants 2017) and August 1, 2019 (Warrants
2019). As of September 30, 2017, almost all Warrants 2017 and no
Warrants 2019 were exercised. As of September 30, 2017 and
2016, terms for 5,236 Warrants 2019 and 10,661 Warrants, respec-
tively, entitle the holder to receive 1,924.1160 and 1,914.0511
Siemens AG shares per warrant at an exercise price of €97.6255
and €98.1389 per share, respectively; terms for 764 Warrants
2019 and 1,339 warrants, respectively entitle the holder to receive
1,833.0013 and 1,823.4130 Siemens AG shares per warrant as well
as 146.0092 and 151.5630 OSRAM shares, respectively, at an ex-
ercise price of €187,842.81. The number of shares may be ad-
justed under the terms of the warrants. As of September 30, 2017
and 2016, the Warrants 2019 offer option rights to 11.5 million
and the Warrants 2017 and 2019 to 22.8 million Siemens AG
shares, respectively. Siemens redeemed the 1.05% US$1.5 billion
fixed-rate instrument at face value as due. The 3 m EURIBOR+0.2%
€33 million and the 3m EURIBOR+0.2% €31 million floating-rate
instruments were redeemed at face value as due.
US$ Bonds - In March 2017, Siemens issued instruments totaling
US$7.5 billion (€6.4 billion as of September 30, 2017) in seven
tranches. Siemens redeemed the 5.75% US$1.75 billion fixed-rate
instrument at face value as due.
Debt Issuance Program - The Company has a program for the
issuance of debt instruments in place under which instruments
up to €15.0 billion can be issued as of September 30, 2017 and
2016, respectively. As of September 30, 2017 and 2016 €7.8 bil-
lion and €9.9 billion in notional amounts were issued and are
outstanding. Siemens redeemed the 5.125% €2.0 billion fixed-
rate instrument at face value as due.
Germany:
(643)
10,505
Less: SFS Debt¹
Plus: Provisions for pensions
and similar obligations
Plus: Credit guarantees
Less: Fair value hedge accounting adjustment²
Industrial net debt
Income from continuing operations
before income taxes
Plus/Less: Interest income, interest expenses
and other financial income (expenses), net
Plus: Amortization,
depreciation and impairments
EBITDA
Industrial net debt/EBITDA
8,306
7,404
(571)
9,876
In Germany, Siemens AG provides pension benefits through the
plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
zen legacy plans and deferred compensation plans. The majority
of Siemens' active employees participate in the BSAV. Those ben-
efits are predominantly based on contributions made by the
Company and returns earned on such contributions, subject to a
minimum return guaranteed by the Company. In connection with
the implementation of the BSAV, benefits provided under the
frozen legacy plans were modified to substantially eliminate the
effects of compensation increases. However, these frozen plans
still expose the Company to investment risk, interest rate risk and
longevity risk. The pension plans are funded via contractual trust
arrangements (CTA). In Germany no legal or regulatory minimum
funding requirements apply.
U.S.:
Siemens Corporation sponsors the Siemens Pension Plans, which
for the most part have been frozen to new entrants and to future
benefit accruals, except for interest credits on cash balance ac-
counts. Siemens Corporation has appointed the Investment Com-
mittee as the named fiduciary for the management of the assets
of the Plans. The Plans' assets are held in a Master Trust and the
trustee of the Master Trust is responsible for the administration of
the assets of the trust, taking directions from the Investment Com-
mittee. The Plans are subject to the funding requirements under
the Employee Retirement Income Security Act of 1974 as amended,
(ERISA). There is a regulatory requirement to maintain a minimum
funding level of 80% in the defined benefit plans in order to avoid
benefit restrictions. At its discretion, Siemens Corporation may
contribute in excess of this regulatory requirement. Annual contri-
butions are calculated by independent actuaries.
2016
2017
2016
2017
(in millions of €)
(1 - 11 +111)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
(III)
(11)
(1)
Net defined
benefit balance
Effects of
asset ceiling
plan assets
Fair value of
Defined benefit
obligation (DBO)
Development of the defined benefit plans
ployees. Accordingly, Siemens in Switzerland sponsors several
cash balance plans. These plans are administered by foundations.
The board of the main foundation is composed of equally many
employer and employee representatives. The board of the foun-
dation is responsible for investment policy and the asset manage-
ment, as well as for any changes in the plan rules and the deter-
mination of contributions to finance the benefits. The Company
is required to make total contributions at least as high as the sum
of the employee contributions set out in the plan rules. In case of
an underfunded plan the Company together with the employees
may be asked to pay supplementary contributions according to a
well-defined framework of recovery measures.
Following the Swiss law of occupational benefits (BVG) each em-
ployer has to grant post-employment benefits for qualifying em-
Switzerland:
on legal requirements. Due to deviating guidelines for the determi-
nation of the discount rates, the technical funding deficit is usually
larger than the IFRS funding deficit. To reduce the deficit Siemens
entered into an agreement with the trustees to provide annual pay-
ments of GB£31 (€34) million until fiscal 2033. The agreement also
provides for a cumulative advance payment by Siemens AG com-
pensating the remaining annual payments at the date of early ter-
mination of the agreement due to cancellation or insolvency.
Consolidated Financial Statements 79
Siemens plc offers benefits through the Siemens Benefit Scheme for
which, until the start of retirement, an inflation increase of the ma-
jority of accrued benefits is mandatory. The required funding is de-
termined by a funding valuation carried out every third year based
U.K.:
(1)
48
(1,777)
(2,520)
(112)
(4)
Components of defined benefit
costs recognized in the
Consolidated Statements of income
1,133
1,605
444
818
4
7
8
693
Return on plan assets excluding
amounts included in net interest
income and net interest expenses
Actuarial (gains) losses
Effects of asset ceiling
(174)
2,473
174
(2,473)
(3,919)
6,284
795
(3,919)
(38)
(150)
28,809
27,296
119
214
13,486
9,737
Current service cost
612
523
612
523
5
Interest expenses
1,078
4
7
675
1,085
Interest income
482
809
(482)
(809)
Other¹
672
6,284
(60)
(109)
(160)
Settlement payments
(6)
(53)
(6)
(45)
(8)
Business combinations, disposals and other
22
(10)
15
(121)
(9)
(2)
Foreign currency translation effects
(620)
(758)
(488)
(792)
(1)
7
(134)
40
Other reconciling items
6
(1,694)
(1,924)
(1,854)
(60)
(109)
Remeasurements recognized
in the Consolidated Statements
of Comprehensive Income
(3,919)
6,284
(174)
2,473
(60)
(109)
(3,805)
3,703
Employer contributions
861
618
(861)
(618)
Plan participants' contributions
130
144
130
144
Benefits paid
(2,045)
(2,531) (1,411)
3,211
10,946
Total
0.9
200
2016
799
2,319
2,283
Guarantees of third-party performance
Miscellaneous guarantees
639
Credit guarantees
2017
Sep 30,
Future payment obligations under non-cancellable operating
leases are:
In addition to guarantees disclosed in the table above, the Com-
pany issued other guarantees. To the extent future claims are not
considered remote, maximum future payments from these obli-
gations amount to €611 million and €853 million as of Septem-
ber 30, 2017 and 2016, respectively. These commitments include
indemnifications issued in connection with dispositions of busi-
nesses. Such indemnifications may protect the buyer from
potential tax, legal and other risks in conjunction with the
purchased business. As of September 30, 2017 and 2016, the ac-
crued amount for such other commitments is €243 million and
€456 million, respectively.
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which mainly include performance bonds and guaran-
tees of advanced payments in a consortium. In the event of
non-fulfillment of contractual obligations by the consortium
partner(s), Siemens will be required to pay up to an agreed-upon
maximum amount. These agreements typically have terms of up
to ten years. Generally, consortium agreements provide for fall-
back guarantees as a recourse provision among the consortium
partners. As of September 30, 2017 and 2016, the Company ac-
crued €3 million and €4 million, respectively, relating to perfor-
mance guarantees.
3,121
business. Credit guarantees generally provide that in the event of
default or non-payment by the primary debtor, Siemens will be
required to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding balance
of the credit or, in case where a credit line is subject to variable
utilization, the nominal amount of the credit line. These guaran-
tees have residual terms of up to 14 years and 15 years, respec-
tively, in fiscal 2017 and 2016. For credit guarantees amounting
to €189 million and €270 million, respectively, as of Septem-
ber 30, 2017 and 2016, the Company held collateral mainly in the
form of inventories and trade receivables. The Company accrued
€33 million and €73 million relating to credit guarantees as of
September 30, 2017 and 2016, respectively.
The following table presents the undiscounted amount of maxi-
mum potential future payments for major groups of guarantees:
NOTE 20 Commitments and
contingencies
A+
A-1+
P-1
A-1+
P-1
Short-term debt
A1
2,764
10,216
A1
Long-term debt
(in millions of €)
600
3,718
Sep 30,
(in millions of €)
As previously reported, the Israeli Exchange Supervisory Author-
ity (ISA) concluded its investigation regarding potentially illegal
payments that were allegedly paid to Israeli Electric Compa-
ny-representatives in the early 2000's, and transferred the inves-
tigation files to the Israeli District Attorney (DA) in August 2015,
in order to decide whether or not to take any legal steps against
any of the suspects named in the ISA investigation. Siemens fully
cooperated with the Israeli authorities. In May 2016, the DA filed
criminal charges versus Siemens Israel Ltd. Siemens AG was not
indicted, as it was possible for Siemens AG to conclude a non-
prosecution agreement with the DA that obliged Siemens AG to
pay an amount in the mid double-digit euro million range.
In November 2017, the Israeli Criminal court approved a plea
agreement proposed by the DA and Siemens Israel Ltd. Based on
the plea agreement, Siemens Israel Ltd. was convicted for the
Based on the above mentioned conclusion of the Israeli Antitrust
Authority, two electricity consumer groups filed motions to cer-
tify a class action for cartel damages against a number of compa-
nies including Siemens AG with an Israeli State Court in Septem-
ber 2013. One of the class actions has been dismissed by the
court in fiscal year 2015. The remaining class action seeks com-
pensation for alleged damages amounting to ILS2.8 billion (ap-
proximately €673 million as of September 2017). In addition, the
Israel Electric Corporation (IEC) filed at the end of December 2013
with an Israeli State Court a separate ILS3.8 billion (approxi-
mately €909 million as of September 2017) claim for damages
against Siemens AG and other companies that allegedly formed
a cartel in the Israeli gas-insulated switchgear market. Siemens AG
is defending itself against the actions.
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position re-
garding an alleged anti-competitive arrangement between
April 1988 and April 2004 in the field of gas-insulated switchgear.
In September 2013, the Israeli Antitrust Authority concluded that
Siemens AG was a party to an illegal restrictive arrangement re-
garding the Israeli gas-insulated switchgear market between
1988 and 2004, with an interruption from October 1999 to Feb-
ruary 2002. The Company appealed against this decision in
May 2014.
Siemens AG to disclose the outcome of its internal investigations
with respect to OTE. OTE seeks to obtain information with respect
to allegations of undue influence and/or acts of bribery in con-
nection with contracts concluded between Siemens AG and OTE
from calendar 1992 to 2006. At the end of July 2010, OTE ex-
panded its claim and requested payment of damages by
Siemens AG of at least €57 million to OTE for alleged bribery pay-
ments to OTE employees. In October 2014 OTE increased its dam-
age claim to the amount of at least €68 million. Siemens AG
continues to defend itself against the expanded claim.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, in July 2008, Hellenic Telecommunica-
tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
with the district court of Munich, Germany, seeking to compel
As previously reported, Siemens AG is a member of a supplier
consortium that has been contracted to construct the nuclear
power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
(TVO) on a turnkey basis. The agreed completion date for the
nuclear power plant was April 30, 2009. Siemens AG's share of
the contract value is approximately 27%. The other member of
the supplier consortium is a further consortium consisting of
Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
Completion of the power plant has been delayed for reasons
which are in dispute. In December 2008, the supplier consortium
filed a request for arbitration against TVO demanding an exten-
sion of the construction time, additional compensation, mile-
stone payments, damages and interest. TVO rejected the claims
and asserted counterclaims against the supplier consortium con-
sisting primarily of damages due to the delay. In August 2015,
TVO updated its counterclaims to approximately €2.3 billion. The
supplier consortium's monetary claims as last updated amount
to approximately €3.6 billion. The amounts claimed by the par-
ties do not cover the total period of delay and may be updated
further. In November 2016 a partial award on certain preliminary
questions identified for early treatment was issued. A further par-
tial award on document handling issues was rendered in
July 2017. In this further partial award certain key facts underly-
ing the claims regarding delay and disruption that occurred
during project execution were decided in favor of TVO. Another
partial award on project management issues and the use of ad-
vanced construction methods was rendered in November 2017.
While the Tribunal granted some of TVO's requests, most of TVO's
material allegations in this respect were dismissed or their deci-
sion was deferred to a later stage. None of the partial awards have
dealt with the amounts claimed by the parties. A final arbitration
award on the merits of the claims and counterclaims is expected
during the first half of calendar year 2018.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
NOTE 21 Legal proceedings
The Company is jointly and severally liable and has capital contri-
bution obligations as a partner in commercial partnerships and
as a participant in various consortiums.
Total operating rental expenses for the years ended Septem-
ber 30, 2017 and 2016 were €1,242 million and €1,158 million,
respectively.
86
Consolidated Financial Statements 85
3,458
3,341
870
832
1,707
1,684
After one year but not more than five years
More than five years
Item Credit guarantees covers the financial obligations of third
parties generally in cases where Siemens is the vendor and (or)
contractual partner or Siemens is liable for obligations of associ-
ated companies accounted for using the equity method. Addi-
tionally, credit guarantees are issued in the course of the SFS
882
825
Within one year
2016
2017
Service
Moody's
Investors
A+
Moody's
Investors
Ratings
Services
Sep 30, 2016
Standard &
Poor's
Poor's
Standard &
Sep 30, 2017
Siemens' current corporate credit ratings are:
ness.
Equity allocated to SFS differs from the carrying amount of equity
as it is mainly allocated based on the risks of the underlying busi-
2,623
22,418
8.55
Service
2016
2017
2,607
22,531
8.64
Debt to equity ratio
SFS debt
Allocated equity
(in millions of €)
The SFS business is capital intensive and operates a larger
amount of debt to finance its operations compared to the indus-
trial business.
84 Consolidated Financial Statements
2 Debt is generally reported with a value representing approximately the amount to be repaid.
However, for debt designated in a hedging relationship (fair value hedges), this amount is
adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
Siemens deducts these changes in market value in order to end up with an amount of debt
that approximately will be repaid.
1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
These rating agencies generally recognize and accept higher levels of debt attributable to
captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
financing activities.
1.0
Sep 30,
Ratings
Services
Derivatives designated in a hedge accounting relationship
A.3.1 Overall economic conditions
At the end of fiscal 2018, Siemens announced its “Vision 2020+"
company strategy. The main aim of "Vision 2020+" is to give
Siemens' individual businesses significantly more entrepreneurial
freedom under the strong Siemens brand in order to sharpen
their focus on their respective markets. As a result, we imple-
mented a new organizational structure in fiscal 2019 consisting
of the three Operating Companies Digital Industries, Smart In-
frastructure and Gas and Power, and the three Strategic Com-
panies Mobility, Siemens Healthineers and Siemens Gamesa
Renewable Energy. These six industrial businesses are reportable
segments, which together are reported as "Industrial Businesses".
Financial Services (SFS), which supports the activities of our in-
dustrial businesses and also conducts its own business with exter-
nal customers, continues to be a reportable segment outside our
Industrial Businesses. Furthermore, we report Portfolio Compa-
nies, which comprises businesses that are managed separately to
improve their performance. For further information on the reorga-
nization of our businesses, see A.3 SEGMENT INFORMATION. In this
Annual Report, we report financial results for fiscal 2019 according
to the new company structure on a full year basis. Prior-period
amounts are presented on a comparable basis.
Siemens comprises Siemens AG, a stock corporation under the
Federal laws of Germany, as the parent company and its subsid-
iaries. Our Company is incorporated in Germany, with our corpo-
rate headquarters situated in Munich. As of September 30, 2019,
Siemens had around 385,000 employees.
Siemens is a technology company that is active in nearly all coun-
tries of the world, focusing on the areas of automation and digi-
talization in the process and manufacturing industries, intelligent
infrastructure for buildings and distributed energy systems, con-
ventional and renewable power generation and power distribu-
tion, smart mobility solutions for rail and road and medical tech-
nology and digital healthcare services.
A.1 Organization of the Siemens Group
and basis of presentation
Λ
Pages 1-74
Management Report
Combined
statements
Notes and forward-looking
p 174
Corporate Governance
P 162
Report of the Supervisory Board
P 157
Independent Auditor's Report
Financial Statements
Notes to Consolidated
Takeover-relevant information
p 71
A.11
Compensation Report
p 40
A.10
Siemens AG
P 38
and associated material opportunities
and risks
Report on expected developments
A.9
Our reportable segments and Portfolio Companies may do busi-
ness with each other, leading to corresponding orders and reve-
nue. Such orders and revenue are eliminated on the Group level.
p26
Non-financial matters of the Group
Siemens has policies for environmental, employee and social
matters, for the respect of human rights, and anti-corruption and
bribery matters, among others. Our business model is described
in chapters A.1 and A.3 of this Combined Management Report.
Reportable information that is necessary for an understanding of
the development, performance, position and the impact of our
activities on these matters is included in this Combined Manage-
ment Report, in particular in chapters → A.3 through A.7. For-
ward-looking information, including risk disclosures, is presented
in chapter A.8. Chapter →A.9 includes additional informa-
tion that is required to be reported in the Combined Manage-
ment Report related to the parent company Siemens AG. As sup-
plementary information, amounts reported in the Consolidated
Financial Statements and the Annual Financial Statements of
Siemens AG related to such non-financial matters, and additional
explanations thereto, are included in → B.6 NOTES TO CONSOLI-
DATED FINANCIAL STATEMENTS, NOTES 17, 18, 22, 26 and 27, and in the
7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG FOR
THE FISCAL YEAR ENDED SEPTEMBER 30, 2019, NOTES 16, 17, 20, 21 and 25.
These disclosures are not subject to a specific framework in
order to inform the users of the financial reports in a focused
in contrast to the disclosures in our separately
available "Sustainability Information 2019" document, which are
based on the standards developed by the Global Reporting
Initiative (GRI).
(121)
(115)
(I) Income before interest after tax
(II) Average capital employed
(1)/(II) ROCE
Less: Taxes on interest adjustments
(tax rate (flat) 30%)
Less: Interest adjustments
(discontinued operations)
164
148
Siemens Healthineers
9-12%
8-12%
10-15%
17-23%
Margin range
Smart Infrastructure
Digital Industries
Within the Siemens Financial Framework, we aim to achieve mar-
gins that are comparable to those of our relevant competitors.
Therefore, we have defined profit margin ranges for our indus-
trial businesses which are based on the profit margins of their
respective relevant competitors. Profit margin is defined as profit
of the respective business divided by its revenue. For our indus-
trial businesses, profit represents EBITA adjusted for operating
financial income (expenses), net, and amortization of intangible
assets not acquired in business combinations (Adjusted EBITA).
A.2.3 Profitability
and capital efficiency
Currency translation effects are the difference between revenue
for the current period calculated using the exchange rates of the
current period and revenue for the current period calculated us-
ing the exchange rates of the comparison period. For calculating
the percentage change year-over-year, this absolute difference is
divided by revenue for the comparison period. A portfolio effect
arises in the case of an acquisition or a disposition and is calcu-
lated as the change year-over-year in revenue of the relevant
business resulting specifically from the acquisition or disposition.
For calculating the percentage change, this absolute change is
divided by revenue for the comparison period. For orders, we
apply the same calculations for currency translation and portfolio
effects as described above.
In the Siemens Financial Framework we aim to achieve a revenue
growth range of 4% to 5% per year on a comparable basis. Our
primary measure for managing and controlling our revenue
growth is comparable growth, because it shows the development
in our business net of currency translation effects, which arise
from the external environment outside of our control, and port-
folio effects, which involve business activities which are either
new to or no longer a part of the respective business.
A.2.2 Revenue growth
Margin ranges
We have set the following margin ranges in our Siemens Financial
Framework:
The Siemens Financial Framework includes targets that we aim
to achieve over the cycle of the business activities.
A.2.1 Overview
A.2 Financial performance system
Combined Management Report
2
-
manner
and Siemens AG
A.8
of the economic position
p 82
p 77
B.2
p3
A.2
p 151
C.2
Responsibility Statement
p 150
C.1
of Income
Consolidated Statements
p 76
B.1
and basis of presentation
Organization of the Siemens Group
p2
A.1
Additional Information
C
Financial Statements
Consolidated
B
Management Report
Combined
A
Table of contents
siemens.com
Annual Report
2019
SIEMENS
Ingenuity for life
Financial performance system
Consolidated Statements
of Comprehensive Income
C.3
B.6
Overall assessment
p24
A.7
of Changes in Equity
Consolidated Statements
Financial position
p 80
B.5
P 20
A.6
of Cash Flows
Net assets position
Consolidated Statements
5,916
p 19
C.5
p 79
B.4
Results of operations
of Financial Position
p 16
A.4
C.4
Consolidated Statements
P 78
B.3
Segment information
p5
A.3
A.5
A.3 Segment information
6,401
50,715
(1)%
Adjusted EBITA margin
17.9%
18.6%
Orders for Digital Industries declined due to lower demand in the
short-cycle factory automation and motion control businesses,
which faced increasingly adverse market conditions during
the course of the fiscal year, particularly in the automotive and
machine building industries. These declines were only partly off-
set by clear growth in the process automation business and a
moderate increase in the software business, which was due to
positive currency translation effects and new volume from recent
acquisitions, particularly including Mendix. The latter two busi-
nesses were also the drivers for revenue growth, as year-over-
year revenue growth for the short-cycle businesses in the first
half of fiscal 2019 gave way to declines in the second half. On a
geographic basis, orders declined in the regions Europe, C.I.S.,
Africa, Middle East and in the Americas, only partly offset by an
increase in the Asia, Australia region. Revenue rose in all three
reporting regions. The software business strengthened its contri-
bution to Adjusted EBITA with a double-digit increase. Higher
expenses related to new cloud-based offerings were partly offset
by a €50 million gain from the sale of an equity investment.
The process automation business showed a moderate increase in
Adjusted EBITA, due mainly to higher revenue. Nevertheless,
Adjusted EBITA for Digital Industries overall came in slightly lower
year-over-year due to clear declines in the short-cycle businesses.
Severance charges were €92 million in fiscal 2019, up from
€75 million a year earlier. Digital Industries' order backlog was
€5 billion at the end of the fiscal year, of which €4 billion are
expected to be converted into revenue in fiscal 2020.
Digital Industries achieved its results in a market environment
that lost momentum in the course of fiscal 2019. In particular,
demand for investment goods eroded notably in the second half
of the fiscal year. All regions were impacted by the slowdown,
and countries with strong focus on investment goods and strong
export ties to China suffered notably. While process industries
still benefited from positive development of raw material prices,
discrete industries faced headwinds from low demand including
destocking effects. The automotive industry was hit by produc-
tion cuts in Europe and weak demand in China. This, among
other factors, also impacted the machine building industry, par-
ticularly affecting customers in Germany and Japan. Production
growth in the pharmaceutical and chemicals industries flattened
during the course of fiscal 2019, due in part to spillover effects
from the automotive industry on related chemicals segments.
The food and beverage industry grew modestly and global elec-
tronics and semiconductor production expanded but prices were
under pressure. For fiscal 2020, the market environment for Dig-
ital Industries is expected to weaken further. Manufacturing in-
vestments are expected to decrease at least moderately but then
begin to stabilize in the second half of fiscal 2020. An overall
decline in investment sentiment caused by global trade tensions,
among other factors, dampens short-term expectations and fuels
increasing cautiousness for investments globally. A weakening of
growth in China could lead to spillover effects in other Asian
countries and also in Europe.
6
Combined Management Report
A.3.3 Smart Infrastructure
The Operating Company Smart Infrastructure supplies and in-
telligently connects energy systems and building technologies,
to significantly improve efficiency and sustainability and support
its customers to address major technology shifts. Smart Infra-
structure was formed in fiscal 2019, through a combination of the
former Building Technologies Division; the low- and medium-
voltage products and systems and digital grid businesses of the
former Energy Management Division; and the control products
business of the former Digital Factory Division. Smart Infrastruc-
ture brings together energy supply – from intelligent control
across the grid and low- and medium-voltage electrification and
control products - with building technology: from building auto-
mation to fire safety and security to energy efficiency. At the grid
edge, there are high growth markets in energy storage, distrib-
uted energy systems and prosumption, electric vehicle infrastruc-
ture and microgrids. The Operating Company serves its custom-
ers through a broad variety of channels, including its global
product and systems sales organization, distributors, panel build-
ers, original equipment manufacturers (OEM), value added re-
sellers and installers, as well as by direct sales through the branch
offices of its regional solutions and services units worldwide.
Smart Infrastructure's customer base is diverse. It encompasses
infrastructure developers, construction companies and contrac-
tors; owners, operators and tenants of both public and commer-
cial buildings including hospitals, campuses, airports and data
centers; utilities and power distribution network operators; com-
panies in heavy industries such as oil and gas, mining and chem-
icals; and companies in discrete manufacturing industries such
as automotive and machine building. Smart Infrastructure's prin-
cipal competitors consist mainly of large multinational compa-
nies together with smaller manufacturers in emerging countries.
Its solutions and services business also competes with local play-
ers such as system integrators and with facility management
firms. The degree to which Smart Infrastructure's businesses are
impacted by changes in the overall economic environment differs
by customer segments. While customer demand in discrete man-
ufacturing industries changes quickly and strongly with macroeco-
nomic cycles, demand in infrastructure, construction, heavy indus-
tries and the utilities sector reacts more slowly to economic cycles.
Overall, the Operating Company's regional and vertical markets
diversification, its mix of products, systems, solutions and services
businesses, and its participation in both long- and short-cycle mar-
kets, all provide a balanced and resilient business mix.
The markets served are experiencing shifts that offer opportuni-
ties where building technologies and electrification markets
come together. Key trends include rising population and urban-
ization, increasing need for safe, secure and sustainable environ-
ments with interactive, comfortable spaces and low energy, op-
erating and maintenance costs. These trends lead to cross-sector
coupling, such as electrification of heat and transportation to
optimize energy efficiency. Decarbonization is changing the
energy generation mix towards renewable energy sources, which
fluctuate with time of day and weather conditions. As a result,
the energy system is becoming increasingly decentralized, more
strongly influenced by prosumers, and more dependent on inte-
gration of intermittent/distributed energy sources including
wind, photovoltaic and biomass, and increasing the need for
smart storage and efficient and reliable power networks. Both
smarter buildings and the integration of more distributed energy
sources into conventional power networks result in increasing
complexity with rising volumes of data, bi-directional energy and
information flows. These can be reliably managed only through
digitalization of buildings, transportation and energy systems.
Smart Infrastructure's R&D activities on the one hand focus on
addressing the trends of decentralization, decarbonization and
digitalization of energy markets. On the other hand, R&D ex-
penses strengthen Smart Infrastructure's capabilities to create
comfortable, safe and energy-efficient buildings and infrastruc-
tures and to support increased efficiency of occupants, equipment
and the use of building space. The Operating Company is expand-
ing its digital offerings in its existing businesses while integrating
recent acquisitions in the critical power control systems, power
electronics and building loT space. Furthermore, it develops tech-
nologies for environmentally friendly and increasingly renewable
energy systems, ranging from photovoltaic inverter technology to
battery storage and charging solutions for e-mobility. In this re-
gard, data from field devices is the basis to intelligently deliver grid
flexibility and permanently match energy supply and demand
while protecting grid assets. For electrical distribution systems and
industrial plants, Smart Infrastructure continuously drives digitali-
zation of its switching and control products with built-in intelli-
gence, connectivity to the cloud, and increasingly remote diagnos-
tics and edge computing capability. Its digital twins of products,
building systems or grids deliver customer value with online con-
figuration tools, maintenance and service management. Smart
Infrastructure develops data-driven applications and digital
services with the Mindsphere in various cloud environments. Its
investments relate to a large extent to the products businesses
and its factories, with a strong focus on innovation.
(in millions of €)
Orders
Revenue
2019
Fiscal year
2018
% Change
Actual
Comp.
16,244
15,198
7%
4%
15,225
14,445
5%
3%
therein: product
business
2,898
5,530
2,880
8%
In fiscal 2019, global gross domestic product (GDP) growth lost
its momentum. After GDP grew by 3.2% in calendar 2018, growth
is expected to recede to 2.6% in calendar 2019. This cool-down
was hardly expected at the beginning of fiscal 2019: in Octo-
ber 2018, GDP growth for calendar 2019 was forecast at 3.1%.
The main reason for this significant deceleration of the global
economy was the escalating trade dispute between the U.S. and
China. In addition, geopolitical tensions in the Middle East con-
tributed to uncertainty, which weighed on capital investments.
Global exchange of goods started to decline from October 2018,
leading to near-stagnation of industrial production afterwards.
Accordingly, the slowdown of the global economy was attribut-
able in particular to regions and countries where trade and indus-
try are of high importance. In Europe, this was especially true for
Germany and Italy, where industrial production (excluding con-
struction) had started to recede already in calendar 2018. In addi-
tion, European economies suffered from continued uncertainties
regarding the U.K. leaving the European Union (Brexit) and the
budget clash between the European Commission and Italy's gov-
ernment, both weighing especially on business investment envi-
ronment. In the Americas, the slowdown was very pronounced in
Mexico and Canada, and to a smaller extent in the more consump-
tion-driven U.S. economy, where a fiscal boost helped the econ-
omy. In Asia, China continued on its announced path to gradually
rebalance its economy, which has resulted in decelerating overall
GDP growth. Government stimulus programs have partly buffered
the Chinese economy from trade dispute headwinds, but the con-
flict is nevertheless taking a toll. Economic dynamics deteriorated
markedly in India, where a decline in domestic consumption was
the biggest drag on growth. Countries dependent on commodi-
ties and raw material exporting, notably Chile, Brazil and Argen-
tina, saw declines in commodity prices in addition to other ad-
verse factors including domestic political and financial instability.
In advanced countries, calendar 2019 GDP growth is estimated at
1.6%, 0.7 percentage points lower than 2018. For emerging coun-
tries, the GDP growth rate is estimated to recede from 4.6% in
calendar 2018 to 4.1% in 2019.
The partly estimated figures presented here for GDP are based on
an IHS Markit report dated October 15, 2019.
A.3.2 Digital Industries
The Operating Company Digital Industries was formed in fiscal
2019, through a combination of the former Digital Factory Divi-
sion (excluding the control products business) with the process
automation and large drives businesses (excluding the industrial
applications and traction businesses) of the former Process
Industries and Drives Division. It offers a comprehensive product
portfolio and system solutions for automation used in discrete
and process industries; these offerings include automation sys-
tems and software for factories, numerical control systems, mo-
tors, drives and inverters and integrated automation systems for
machine tools and production machines. Digital Industries also
provides process control systems, machine-to-machine commu-
nication products, sensors (including sensors measuring pres-
sure, temperature, level, flow rate, distance or shape) and radio
frequency identification systems. Furthermore, the Operating
Company offers product and production lifecycle software, and
software for simulation and testing of mechatronic systems, sup-
plemented by the electronic design automation software port-
folio of Mentor Graphics (Mentor) and the open, cloud-based
industrial internet of things (IoT) operating system MindSphere,
which connects machines and physical infrastructure to the dig-
ital world. To increase growth and accelerate adoption of Mind-
Sphere, Digital Industries acquired Mendix group (Mendix) at the
beginning of fiscal 2019. Mendix is a pioneer and leader in
cloud-native low-code application development, which can sig-
nificantly reduce app development times through visual repre-
sentation of underlying code (for more information on the acqui-
sition of Mendix, see → NOTE 3 in B.6 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS). Digital Industries also provides customers
with lifecycle and data-driven services. Taken together, the Oper-
ating Company's offerings enable customers to optimize entire
value chains from product design and development to produc-
tion and post-sale services. With its advanced software solutions
in particular, Digital Industries supports customers in the discrete
manufacturing, hybrid and process industries in their evolution
towards the "Digital Enterprise,” resulting in increased flexibility
and efficiency of production processes and reduced time to mar-
ket for new products. Among its most important customer seg-
ments are the automotive industry, the machine building indus-
try, the pharmaceutical and chemicals industry, the food and
beverage industry and the electronics and semiconductor indus-
try. Digital Industries serves its customers through a common
regional sales organization, spanning all its businesses, using
various sales channels depending on the type of customer and
industry. Changes in customer demand, especially for standard
products, are strongly driven by macroeconomic cycles, and can
lead to significant short-term fluctuation in the Operating Com-
pany's profitability. The competition for Digital Industries' busi-
ness activities can be grouped into two categories: multinational
companies that offer a relatively broad portfolio and companies
that are active only in certain geographic or product markets.
Digital Industries sees three basic trends influencing its business
and providing long-term growth opportunities. Producers of in-
vestment goods in today's increasingly digital environment must
Combined Management Report
5
modernize their production capacity to remain competitive. This
environment also spurs producers to complement their core
products with vertical solutions and service offerings, which their
customers either need or want in order to take full advantage of
the investment goods. Further, there is a trend from globalization
to regionalization to either protect local economies or to better
adapt solutions to local needs.
Research & Development (R&D) activities at Digital Industries
are aimed at integrating technologies such as artificial intelli-
gence (AI), edge computing, industrial 5G, autonomous handling
systems and additive manufacturing into Digital Industries' exten-
sive portfolio for industrial automation and digitalization. An ex-
ample of this integrative approach is a new module with an inte-
grated Al-capable chip for the Simatic S7-1500 programable logic
controller, which enables the optimization of robot-based handling
processes. Similarly, the latest version of Digital Industries' NX soft-
ware has been enhanced with machine learning and Al capabili-
ties, so it can predict next steps and help customers use the soft-
ware more efficiently. In Digital Industries' own factories, Al has
already been proven: The integration of edge computing, Al and
MindSphere reduced the number of final inspection processes
during X-ray inspection of printed circuit boards for Simatic prod-
ucts. Digital Industries, along with other Siemens units, is also
running research projects for industrial 5G and establishing sev-
eral 5G interoperability test centers under actual operational tech-
nology conditions. The Operating Company's latest machine tool
controller, Sinumerik ONE, was developed entirely through virtu-
alization of both the product's design and its manufacturing
processes. The newly developed process control system, PCS neo,
is designed for easy, efficient scaling from a small process module
up to the largest process plants in the world. Major investments
of Digital Industries in fiscal 2019 relate to the factory automation,
motion control systems and process automation businesses,
including capital expenditure in production facilities in China.
% Change
Comp.
(4)%
2%
(in millions of €)
Orders
2019
Fiscal year
2018
15,944
16,287
Revenue
16,087
15,587
Actual
(2)%
3%
therein: software
business
4,039
3,560
13%
Adjusted EBITA
5,302
4%
2%
Sustainable revenue and profit development is supported by a
healthy capital structure. Accordingly, a key consideration within
the Siemens Financial Framework is to maintain ready access to
the capital markets through various debt products and preserve
our ability to repay and service our debt obligations over time.
Our primary measure for managing and controlling our capital
structure is the ratio of Industrial net debt to EBITDA (continuing
operations). This financial measure indicates the approximate
amount of time in years that would be needed to cover Industrial
net debt through income from continuing operations, without
taking into account interest, taxes, depreciation and amortiza-
tion. We aim to achieve a ratio of up to 1.0.
A.2.4 Capital structure
3
Combined Management Report
We seek to work profitably and as efficiently as possible with the
capital provided by our shareholders and lenders. For purposes
of managing and controlling our capital efficiency, we use return
on capital employed, or ROCE, as our primary measure in our
Siemens Financial Framework. Our long-term goal is to achieve
ROCE within a range of 15% to 20%.
For purposes of managing and controlling profitability at the
Group level, we use net income as our primary measure. This mea-
sure is the main driver of basic earnings per share (EPS) from net
income, which we use in communication to the capital markets.
In line with common practice in the financial services business,
our financial indicator for measuring capital efficiency at Finan-
cial Services is return on equity after tax, or ROE after tax. ROE is
defined as Financial Services' profit after tax, divided by its aver-
age allocated equity.
Margin ranges for Siemens Healthineers and Siemens Gamesa
Renewable Energy reflect our expectations as a majority share-
holder.
17-22%
Financial Services (ROE after tax)
Gas and Power
Mobility
11-15%
7-11%
Siemens Gamesa Renewable Energy
Industrial Businesses
17-21%
Combined Management Report
4
Plus: Adjustments from assets classified as held for disposal and
liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated actuarial
gains/losses on provisions for pensions and similar obligations
Capital employed (continuing and discontinued operations)
763
Less: Fair value hedge accounting adjustment
Less: Current interest-bearing debt securities
Plus: Provisions for pensions and similar obligations
Less: Financial Services debt
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Plus: Long-term debt
Total equity
Calculation of capital employed
For purposes of calculating ROCE in interim periods, income be-
fore interest after tax is annualized. Average capital employed is
determined using the average of the respective balances as of
the quarterly reporting dates for the periods under review.
1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
debt, and related hedging activities, as well as interest income on corporate assets.
12.6%
11.1%
A.2.5 Liquidity and dividend
We intend to continue providing an attractive return to our share-
holders. Under the Siemens Financial Framework, our intention
is to propose a dividend whose distribution volume is within a
dividend payout range of 40% to 60% of Net income attributable
to shareholders of Siemens AG, which we may adjust for this pur-
pose to exclude selected exceptional non-cash effects. As in the
past, we intend to fund the dividend payout from Free cash flow.
To provide an assessment of our ability to generate cash, and
ultimately to pay dividends, we use the cash conversion rate of
Industrial Businesses, defined as the ratio of Free cash flow from
Industrial Businesses to Adjusted EBITA Industrial Businesses. Be-
cause growth requires investments, we aim to achieve a cash
conversion rate of 1 minus the annual comparable revenue
growth rate of Industrial Businesses.
At the Annual Shareholders' Meeting, the Managing Board, in
agreement with the Supervisory Board, will submit the following
proposal to allocate the unappropriated net income of
Siemens AG for fiscal 2019: to distribute a dividend of €3.90 on
each share of no par value entitled to the dividend for fiscal year
2019 existing at the date of the Annual Shareholders' Meeting; to
allocate €2,069 million to retained earnings; the remaining
amount is to be carried forward. Payment of the proposed divi-
dend is contingent upon approval by Siemens shareholders at the
Annual Shareholders' Meeting on February 5, 2020. The prior-
year dividend was €3.80 per share.
The proposed dividend of €3.90 per share for fiscal 2019 rep-
resents a total payout of €3.2 billion based on the estimated
number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. Based on Net income attributable to
Shareholders of Siemens AG of €5.2 billion for fiscal 2019, the
dividend payout percentage is 61%.
Adjusted EBITA
1,500
1,574
(5)%
Adjusted EBITA margin
9.9%
10.9%
Combined Management Report
7
8
_
Orders and revenue for Smart Infrastructure rose in all three
businesses solutions and services, systems and software, and
the products business – and in all three reporting regions. Order
growth was strongest in the solutions and services business on a
sharply higher volume from large orders in the Americas and
Europe, C.I.S., Africa, Middle East. Revenue rose most strongly in
the systems and software and the solutions and services busi-
nesses, particularly in the Americas. Revenue growth in the prod-
uct business was due to low voltage products, while revenue in
the other products businesses came in close to prior-year levels
due partly to less favorable conditions in short-cycle markets.
Adjusted EBITA declined due mainly to the systems and software
business including negative effects related to grid control proj-
ects early in the year. Adjusted EBITA also included higher
expenses year-over-year related to expansion of smart building
offerings and for grid edge activities. Severance charges were
€48 million in fiscal 2019 compared to €34 million a year earlier.
Smart Infrastructure's order backlog was €10 billion at the end of
the fiscal year, of which €7 billion are expected to be converted
into revenue in fiscal 2020.
Smart Infrastructure achieved its results in overall moderately
growing markets in fiscal 2019. The grid markets benefited from
the need for intelligent and flexible energy networks and for
automation, particularly in Asia, Australia and the Americas.
Heavy industries and the infrastructure industry also developed
favorably during fiscal 2019, driven by investments in oil and gas
markets, in data centers and in transportation infrastructure,
such as for e-mobility. Discrete industries, which started strong
in fiscal 2019, experienced a downturn in the second half of the
fiscal year. Construction markets continued their stable growth
during the fiscal year, particularly in the U.S. and China and in the
non-residential construction market overall. Growth in the im-
portant building electrification and automation market was
driven by demand for building performance and sustainability
offerings, including strong demand for energy efficiency and dig-
ital services. In fiscal 2020, market growth overall is expected to
be lower than in fiscal 2019, due to an expected continuation of
the downturn in the short-cycle markets, economic uncertainty
in a number of countries due to trade conflicts, and other factors.
Beginning with fiscal 2020, the distribution transformer business
will be transferred to the Operating Company Gas and Power. If
this organizational structure had already existed in fiscal 2019,
Smart Infrastructure would have posted orders of €15.590 bil-
lion, revenue of €14.597 billion, Adjusted EBITA of €1.465 billion
and an Adjusted EBITA margin of 10.0%.
53,459
A.3.4 Gas and Power
In the power generation and oil and gas businesses, the portfolio
includes gas turbines, steam turbines, generators for gas or
steam power plants, turbo and reciprocating compressor trains,
reciprocating engines, modular power supply and integrated
power plant solutions, and instrumentation and control systems
for power generation. Customers include public utilities and in-
dependent power producers; companies in engineering, procure-
ment and construction (EPC) that serve utilities and power pro-
ducers; sovereign and multinational oil companies; midstream
operators; independent oil and gas, petrochemical and chemical
companies, and industrial customers that generate power and
heat for their own consumption (prosumers). The competition
consists mainly of two groups: a relatively small number of orig-
inal equipment manufacturers (OEM), some with very strong
positions in their domestic markets, and on the other hand a
large number of EPC contractors.
In the transmission business, the portfolio includes products, sys-
tems and solutions that enable multi-vendor and bidirectional
flow of energy and information. These offerings are key building
blocks of modernized energy grids, which must integrate renew-
able sources with their fluctuating levels of power generation
and also incorporate efficient electrical storage and sophisticated
load management. The portfolio also includes power transform-
ers, high voltage switchgear and components, high-voltage di-
rect current (HVDC) products and HVDC and grid access solutions
as well as relevant transmission services. The transmission busi-
ness serves a broad range of customers including power produc-
ers, transmission and distribution system operators, and indus-
trial and infrastructure customers in industries such as oil and
Combined Management Report
(482)
(529)
Less: Other interest expenses/income, net¹
Plus: SFS Other interest expenses/income
Plus: Net interest expenses related
to provisions for pensions and similar
obligations
6,120
5,648
2018
2019
Fiscal year
(in millions of €)
Net income
Calculation of ROCE
A.2.6 Calculation of return
on capital employed
The Operating Company Gas and Power offers a broad spectrum
of products and solutions for generating electricity, for produc-
tion, transport and downstream operations involving oil and gas,
and for installing and operating transmission grids. In addition,
it offers a comprehensive set of services related to these products
and solutions such as performance enhancements, maintenance
services, customer training and professional consulting. Finally,
Gas and Power offers comprehensive turnkey solutions that inte-
grate the products and systems from its businesses. Gas and
Power was formed in fiscal 2019 through a combination of the
former Power and Gas and Power Generation Services Divisions
with the transmission products, systems and solutions busi-
nesses of the former Energy Management Division. Due to the
broad range of its offerings, the revenue mix for Gas and Power
may vary from reporting period to reporting period depending
on the share of revenue attributable to products, solutions and
services. Because profitability levels typically differ among these
three revenue sources, the revenue mix in a reporting period ac-
cordingly affects Adjusted EBITA of Gas and Power for that period.
721
combi-
NOTE 3
2018
2019
(in millions of €)
98
72
683
Obligations under
803
Sep 30,
Other financial indebted-
1,717
1,076
1,218
1,187
ness (maturing until 2029)
(maturing until 2037)
Loans receivable
11,747
2,239
Derivative financial instruments
27,120
30,414
95
90
12,304
14
5,057
16
Total debt
3,867
4,210
Receivables from finance leases
finance leases
6,034
Loans from banks
25,210
3,142 29,176
After one year but not more than five years
352
336
Within one year
2018
2019
705
(in millions of €)
9,118
9,023
1,914
1,824
1,162
1,204
Sep 30,
653
NOTE 16 Debt
More than five years
4,029
(maturing until 2047)
Notes and bonds
NOTE 14 Other financial assets
(in millions of €)
Sep 30,
2018
2019
Sep 30,
2018
2019
Non-current debt
Current debt
1,142
1,204
136
164
1,287
Equity instruments
890
715
Obligations under finance leases
875
171
(6)
(72)
781
(current and non-current)
(current and non-current)
2,262
(30)
80
30
(752)
2,934
Other financial indebtness
110
(21)
Total debt
10/01/2017
(in millions of €)
Non-cash changes
In addition, other financing activities resulted in €77 million cash
flows in fiscal 2019.
36,449
(118)
405
1,524
24
106
16
1
24
2,436
32,177
(current and non-current)
Accruals for pending invoices
Other
4,029
228
(in millions of €)
(Acquisitions)/
fications
Foreign
Reclassi-
Non-cash changes
Non-current notes and bonds
CHANGES IN LIABILITIES ARISING
FROM FINANCING ACTIVITIES
Item Loans receivable primarily relate to long-term loan trans-
actions of SFS.
17,774
19,843
157
200
Other
Consolidated Financial Statements
10/01/2018
Cash flows
Dispositions
(3,190)
3,142
Loans from banks
Current notes and bonds
29,176
(3,954)
405
1,044
6,471
25,210
09/30/2019
changes
and other
Fair value
changes
currency
translation
3,850
174
156
Deferred Income
and trademarks
Customer relationships
(639)
3,690
(3,883)
7,573
8,870
(55)
178
53
7,320
and similar rights
including patents, licenses
Acquired technology
78
5
57
(34)
221
16
(50)
8,129
Land and buildings
(1,424)
(593)
(4,231) 4,667
(9,807) 10,131
8,898
19,938
(218)
429
235
78
19,413
Other intangible assets
(193)
326
1,774
3,467
diffe-
amount
Accumu-
lated depre-
ciation/
amortiza-
Gross
carrying
business
lation
combi-
through
Gross
carrying
Additions
1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
(2,041)
12,183
(17,765)
Trans-
Reclassi-
(in millions of €)
10/01/2017
(128)
351
20
3,224
technology
Internally generated
fiscal 2018
ment in
and impair-
Deprecia-
tion/amor-
tization
Carrying
amount
09/30/2018
tion and
impairment
Retire-
amount
ments¹ 09/30/2018
nations Additions fications
rences
(1,693)
Cash flows
(270)
(3,833)
37
(176)
27,017
and equipment
Property, plant
(2)
2,787
1,203
1,205
(15)
(680)
853
6
(6)
(2)
(1,626) 28,040
(16,659)
11,381
5,867
5,839
Liabilities to personnel
2018
2019
Sep 30,
(in millions of €)
NOTE 15 Other current liabilities
Minimum future lease payments to be received under operating
leases are:
The gross carrying amount of Advances to suppliers and con-
struction in progress includes €1,335 million and €1,074 million,
respectively of property, plant and equipment under construc-
tion in fiscal 2019 and 2018. As of September 30, 2019 and 2018,
contractual commitments for purchases of property, plant and
equipment are €676 million and €652 million, respectively.
96
96
Consolidated Financial Statements 95
1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
(1,990)
1,046
8,372
construction in progress
(279)
(683)
2,612
(6,104)
8,716
(274)
229
Furniture and office
398
(62)
8,410
and equipment
Technical machinery
(246)
4,538
15
equipment
6,435
(37)
1,483
(1,614)
(488)
11
597
(21)
2,998
Equipment leased to others
(782)
1,545
(5,106)
6,651
(579)
114
719
Advances to suppliers and
(Acquisitions)/
Dispositions
Foreign
currency
translation
Fair value
changes
US$
4.40%/2015/May 2045/US$-fixed-rate-instruments
1,290
1,500
1,432 US$
1,500
1,750
US$
1,509
1,750
1,605 US$
1,750
US$
2.90%/2015/May 2022/US$-fixed-rate-instruments
3.25%/2015/May 2025/US$-fixed-rate-instruments
1,587 US$
1,750
1,491
948
1,100
US$
1,009
1,100
US$
1.70%/2016/September 2021/US$-fixed-rate-instruments
949
1,100
US$
1.30%/2016/September 2019/US$-fixed-rate-instruments
302
350
US$
US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
863
2.00%/2016/September 2023/US$-fixed-rate-instruments
1,000
1,000
500
€
1,005
1,000
€
0%/2019/September 2021/EUR fixed-rate instruments
0%/2019/September 2024/EUR fixed-rate instruments
0.125%/2019/September 2029/EUR fixed-rate instruments
504
938
€
1.75%/2019/February 2039/EUR fixed-rate instruments
875
800
€
689
800
€
1,000
992
US$
2.15%/2015/May 2020/US$-fixed-rate-instruments
1,823
1,750
1,892 US$
1,750
US$
6.125%/2006/August 2026/US$ fixed-rate instruments
8,489
14,695
Total Debt Issuance Program
990
1,000
€
0.5%/2019/September 2034/EUR fixed-rate instruments
918 US$
650
US$
685
US$
4.20%/2017/March 2047/US$-fixed-rate-instruments
1,075
1,250
1,144 US$
1,250
1,500
US$
861
1,000
946 US$
1,000
US$
3.125%/2017/March 2024/US$-fixed-rate-instruments
3.40%/2017/March 2027/US$-fixed-rate-instruments
1,364 US$
1,500
1,282
amount
98 Consolidated Financial Statements
1 Includes adjustments for fair value hedge accounting.
28,352
33,205
1,285
Total Bonds with Warrant Units
1,285
1,500
US$
1.65%/2012/August 2019/US$ fixed-rate instruments
18,577
18,511
Total US$ Bonds
diffe-
733
750
850
1,000
910 US$
1,000
US$
3.30%/2016/September 2046/US$-fixed-rate-instruments
1,461
1,700
1,000
US$
1,700
US$
2.35%/2016/October 2026/US$-fixed-rate-instruments
644
750
US$
1,554
856
US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
US$
949
1,100
690
800
734 US$
1,010 US$
940 US$
780 US$
850
US$
US$3m LIBOR+ 0.61%/2017/March 2022/US$ floating-rate instruments
1,000
US$
2.70%/2017/March 2022/US$-fixed-rate-instruments
1,100
US$
2.20%/2017/March 2020/US$-fixed-rate-instruments
800
852
29,948
€
750
(interest/issued/maturity)
NOTES AND BONDS
Consolidated Financial Statements 97
purposes. In February 2019 the existing €4.0 billion unused syn-
dicated credit facility and the US$3.0 billion unused syndicated
credit facility were cancelled following the signing of a new and
unused €7.0 billion syndicated credit facility maturing in 2024.
The unused €450 million revolving bilateral credit facility was
extended to September 2020. Included in lines of credit is a sub-
sidiary's €2.5 billion syndicated multi-currency term and revolv-
ing credit facility which contains a fully drawn term credit facility
tranche of €500 million maturing in 2021 and an unused revolv-
ing credit facility tranche of €2.0 billion maturing in 2023 with
two one-year extension options; it may be used to refinance the
subsidiary's outstanding debt.
As of September 30, 2019 and 2018, Siemens has €9.95 billion
and €9.5 billion lines of credit, thereof unused €9.45 billion and
€8.3 billion, respectively. The facilities are for general corporate
CREDIT FACILITIES
Currency
Notional
Interest rates in this Note are per annum. In fiscal 2019 and 2018,
weighted-average interest rates for loans from banks, other fi-
nancial indebtedness and obligations under finance leases were
4.4% (2018: 2.1%), 1.5% (2018: 1.8%) and 6.3% (2018: 6.6%), re-
spectively.
32,177
(53)
(29)
506
1
(471)
In addition, other financing activities resulted in €9 million cash
flows in fiscal 2018.
amount
(in millions)
Sep 30, 2019
€
346
400
US$
US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
1.5%/2012/March 2020/EUR fixed-rate instruments
of €1
(in millions)
in millions
amount
Carrying
amount
Sep 30, 2018
Currency
Notional
in millions
of €1
Carrying
amount
32,224
1,000
Total debt
1
(12)
19
25,210
(3,138)
(17)
389
3,083
2,734
(3,502)
Current notes and bonds
25,243
Non-current notes and bonds
09/30/2018
changes
Reclassi-
fications
and other
3,554
3,142
Loans from banks
(current and non-current)
(7)
115
(current and non-current)
Obligations under finance leases
781
129
(134)
786
(current and non-current)
Other financial indebtness
2,934
1
(30)
438
2,526
110
767
1,000
1,000
1,000
€
345
400
US$
367
997
400
259
300
US$
345
400
US$
US$
€
1,000
996
€
0.3%/2019/February 2024/EUR fixed-rate instruments
0.9%/2019/February 2028/EUR fixed-rate instruments
1.25%/2019/February 2031/EUR fixed-rate instruments
993
1,000
€
993
1,000
€
745
750
€
746
750
€
1.0%/2018/September 2027/EUR fixed-rate instruments
1.375%/2018/September 2030/EUR fixed-rate instruments
367
€
400
2013/June 2020/US$ floating-rate instruments
2014/March 2019/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
0.375%/2018/September 2023/EUR fixed-rate instruments
650
£
721
650
£
3.75%/2012/September 2042/GBP fixed-rate instruments
719
393
£
394
350
£
2.75%/2012/September 2025/GBP fixed-rate instruments
999
350
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
€
1,250
85
100
90 US$
100
US$
997
1,000
€
997
1,000
€
1,267
1,250
€
1,263
US$
(1,480)
3,097
26
Deductible temporary differences
Tax loss carryforwards
2018
2019
(in millions of €)
Sep 30,
2,054
524
1,872
8
(49)
Other, net
(34)
2,812
for using the equity method
Actual income tax expenses
1,240
5,062
4,165
(169)
Current assets and liabilities
(2,407)
2,799
3,540
Pensions and similar obligations
(2,496)
Intangible assets
Deferred taxes due to temporary differences
2018
2019
(in millions of €)
Sep 30,
5,405
5,586
Deferred income tax assets and (liabilities) on a net basis are
summarized as follows:
Tax effect of investments accounted
Non-current assets and liabilities
Deferred tax assets have not been recognized with respect of the
following items (gross amounts):
(540)
2,496
2,330
(1,249)
(1,869)
Balance at end of fiscal year of
deferred tax (assets) liabilities
Fiscal year
2018
Expected income tax expenses
2019
12
21
34
(56)
(696)
(564)
(1)
Increase (decrease) in
income taxes resulting from:
Non-deductible losses and expenses
Foreign tax rate differential
(450)
(26)
Change in tax rates
(20)
(85)
deferred tax assets and tax credits
As of September 30, 2019, the Company has certain tax losses
subject to significant limitations. For those losses deferred tax
assets are not recognized, as it is not probable that gains will be
generated to offset those losses.
Change in realizability of
2,041
(715)
(833)
(400)
Taxes for prior years
(330)
Tax-free income
962
(438)
30
(144)
1,138
An uncertain tax regulation arising from a foreign tax reform may
result in potential future tax payments amounting to a middle
three-digit million Euro range. Due to the low probability and the
character of a contingent liability, no tax liability was recognized.
5,667
6,084
(73)
(92)
Less: Present value of unguaranteed
residual value
NOTE 8 Trade and other receivables
(164)
Less: Allowance for doubtful accounts
5,904
6,360
Net investment in leases
2,272
1,195
(184)
Present value of minimum future
lease payments receivable
The gross investment in leases and the present value of minimum
future lease payments receivable are due as follows:
(in millions of €)
2019
(in millions of €)
Within one year
One to five years
Thereafter
16,582
1,874
18,455
18,894
1,966
Receivables from finance leases
16,928
Trade receivables from the sale
of goods and services
Sep 30,
Sep 30,
Present value of
minimum future lease
payments receivable
in leases
Gross investment
Sep 30,
2018
2019
(926)
Tax loss carryforwards and tax credits
(992)
250
Fiscal year
Income and expenses recognized
directly in equity
Discontinued operations
Continuing operations
(in millions of €)
Minimum future lease payments reconcile to the gross and net
investment in leases and to the present value of the minimum
future lease payments receivable as follows:
2019
Including items charged or credited directly to equity and the
expense (benefit) from continuing and discontinued operations,
the income tax expense (benefit) consists of the following:
Siemens has not recognized deferred tax liabilities for income
taxes or foreign withholding taxes on the cumulative earnings of
subsidiaries of €34,075 million and €37,498 million, respectively
in fiscal 2019 and 2018 because the earnings are intended to be
permanently reinvested in the subsidiaries.
As of September 30, 2019 and 2018, €2,186 million and
€1,931 million of the unrecognized tax loss carryforwards expire
over the periods to 2031.
1,249
1,869
Total deferred taxes, net
168
(42)
731
Consolidated Financial Statements 91
2018
(in millions of €)
2019
(698)
6,831
7,352
Gross investment in leases
223
239
Plus: Unguaranteed residual values
(32)
21
6,608
7,112
Minimum future lease payments
2,054
1,872
Sep 30,
2018
Less: Unearned finance income
2018
(648)
2018
registered in
Zamudio, Spain
Siemens Gamesa Renewable Energy S.A.
Siemens Healthineers AG
registered in
Munich, Germany
Non-current liabilities
Current liabilities
Non-current assets
Sep 30, 2019
15%
Current assets
Ownership interests held by non-controlling interests
(in millions of €)
Summarized financial information, in accordance with IFRS and
before inter-company eliminations, is presented below.
NON-CONTROLLING INTERESTS
SUBSIDIARIES WITH MATERIAL
Consolidated Financial Statements 89
Accumulated non-controlling interests
Sep 30, 2018
15%
Sep 30, 2019
Sep 30, 2018
5,605
8,804
8,790
12,559
13,650
7,349
7,899
7,199
7,779
606
668
1,310
1,469
41%
41%
172
5,303
132
(3)
58
186
142
17
2018
2019
Impairment and reversals of impairment
Fiscal year
Investments accounted for using the equity method
NOTE 4 Interests in other entities
In addition, Siemens acquired several businesses in fiscal 2019
and 2018 for a total purchase price of €429 million and €571 mil-
lion, respectively, mainly paid in cash. The (preliminary) purchase
price allocations resulted in Other intangible assets of €124 mil-
lion and €215 million and Goodwill of €311 million and €350 mil-
lion, respectively, which comprises intangible assets that are not
separable such as employee know-how and expected synergy
effects. The purchase price allocation for some of the acquired
businesses is preliminary, as a detailed analysis of the assets and
liabilities has not been finalized.
In October 2018, Siemens acquired the Mendix group for a con-
sideration transferred of €515 million in cash. The final purchase
price allocation as of the acquisition date resulted in Other Intan-
gible assets of €152 million mainly relating to customer relation-
ships, and Goodwill of €448 million. Including earnings effects
from purchase price allocation and integration costs, the ac-
quired business contributed revenue of €57 million and a net
income of €(109) million to Siemens for the period from acquisi-
tion to September 30, 2019.
ACQUISITIONS
Acquisitions
(in millions of €)
Share of profit (loss), net
(4)
(202)
Income (loss) from
(34)
net of income taxes
Other comprehensive income,
176
166
continuing operations
Income (loss) from
2018
2019
Fiscal year
(in millions of €)
As of September 30, 2019 and 2018, the carrying amount of all
individually not material associates amounts to €1,577 million
and €1,867 million, respectively. Summarized financial informa-
tion for all individually not material associates, adjusted for the
percentage of ownership held by Siemens, is presented below.
Items included in the Statements of Comprehensive Income are
presented for the twelve-month period applied under the equity
method.
199
investments accounted for
using the equity method, net
Gains (losses) on sales, net
Total comprehensive income
(1,249)
7,968
6,043
2019
1,842
Fiscal year
Income tax expenses
Deferred tax
(in millions of €)
Current tax
Other operating expenses in fiscal 2019 and 2018 include losses
on sales of property, plant and equipment, transaction costs as
well as effects from insurance, legal and regulatory matters.
2018
NOTE 6 Other operating expenses
NOTE 5 Other operating income
Income tax expense (benefit) consists of the following:
NOTE 7 Income taxes
Non-current assets of Siemens Gamesa Renewable Energy in-
clude the full goodwill resulting from the merger in 2017.
813
(729)
In fiscal 2019 and 2018, Other operating income includes gains
related to the sale of businesses of €50 million and €171 million
and gains on sales of property, plant and equipment of €146 mil-
lion and €103 million, respectively.
2,619
30
(564)
2019
Fiscal year
Additions from acquisitions
not impacting net income
Other
Balance at begin of fiscal year of
deferred tax (assets) liabilities
Income taxes presented in the
Consolidated Statements of Income
Changes in items of the
Consolidated Statements of
Comprehensive Income
(in millions of €)
Deferred tax balances and expenses (benefits) developed as fol-
lows in fiscal 2019 and 2018:
(in millions of €)
Current and deferred income tax expense differs from the
amounts computed by applying a combined statutory German
income tax rate of 31% as follows:
In Germany, the calculation of current tax is based on a combined
tax rate of 31%, consisting of a corporate tax rate of 15%, a soli-
darity surcharge thereon of 5.5% and an average trade tax rate
of 15%. For foreign subsidiaries, current taxes are calculated
based on the local tax law and applicable tax rates in the individ-
ual foreign countries. Deferred tax assets and liabilities in Ger-
many and abroad are measured at the tax rates that are expected
to apply to the period when the asset is realized or the liability
is settled.
Consolidated Financial Statements
90
00
The current income tax expenses in fiscal 2019 and 2018 includes
adjustments recognized for current tax of prior years in the
amount of €(369) and €(980) million, respectively. The deferred
tax expense (benefit) in fiscal 2019 and 2018 includes tax effects
of the origination and reversal of temporary differences of
€398 million and €(241) million, respectively.
2,054
1,872
346
7,104
367
355
118
Dividends paid to non-controlling interests
22
57
Fiscal year 2018
Fiscal year 2019
7
ended Sep 30, 2018
130
Net income attributable to non-controlling interests
Fiscal year 2019
six months
3,118
2,449
5,780
245
Revenue
14,518
7,004
884
1,840
Total comprehensive income, net of income taxes
Total cash flows
(229)
214
218
254
Other comprehensive income, net of income taxes
70
141
666
1,586
Income (loss) from continuing operations, net of income taxes
9,122
10,227
(159)
2019
9
2,368
Acquired technology
(254)
1,979
(1,906)
3,885
(84)
including patents, licenses
416
3,467
technology
Internally generated
fiscal 2019
ment in
and impair-
85
tization
and similar rights
173
9,434
(52)
183
405
8,898
and trademarks
7,573
Customer relationships
3,306
(3,702)
7,008
(923)
88
97
(652)
Deprecia-
tion/amor-
amount
09/30/2019
Carrying
Gross
Additions
NOTE 13 Other intangible assets and
property, plant and equipment
94 Consolidated Financial Statements
in the terminal value growth rate by one percentage point.
Siemens concluded that no impairment loss would need to be
recognized on goodwill in any of these groups of cash-generat-
ing units.
The sensitivity analysis for the groups of cash-generating units to
which a significant amount of goodwill is allocated was based on
a reduction in after-tax future cash flows by 10% or an increase
in after-tax discount rates by one percentage point or a reduction
Trans-
6.5%
5,702
8.5%
1.7%
5,753
8.0%
Sep 30, 2018
After-tax
discount rate
1.7%
through
carrying
lation
ciation/
amortiza-
tion and
impairment
lated depre-
Accumu-
amount
carrying
Gross
09/30/2019
Retire-
ments¹
fications
nations Additions
rences
10/01/2018
(in millions of €)
Reclassi-
business
(4,919)
4,515
(547)
Other intangible assets
3,467
(387)
19
671
67
3,097
(1,704)
Equipment leased to others
1,635
(5,515)
7,150
(535)
154
754
(830)
1,763
(336)
Advances to suppliers and
549
28,040
and equipment
Property, plant
(3)
1,457
(4)
1,461
(18)
(638)
873
1
39
1,205
construction in progress
5
Terminal value
growth rate
1.7%
121
equipment
158
11
171
8,372
Land and buildings
(1,453)
137
9,800
20,326
(1,059)
504
279
663
19,938
(10,526)
(185)
8,664
(4,046)
Furniture and office
2018
2,710
(6,495)
9,205
(355)
327
357
8
151
8,716
and equipment
Technical machinery
(262)
4,619
6,651
6,440
(609)
Imaging of Siemens Healthineers
10,669
699
669
Other
594
775
9,427
Derivative financial instruments
1,331
Interest-bearing debt securities
6,863
7,893
Loans receivable
2018
1,271
92 Consolidated Financial Statements
NOTE 10 Contract assets and liabilities
As of September 30, 2019 and 2018, amounts expected to be set-
tled after twelve months are €2,106 million and €1,954 million
for contract assets and €3,626 million and €3,118 million for con-
tract liabilities, respectively. In fiscal 2019 and 2018, €63 million
and €21 million are included in revenue, relating to performance
obligations satisfied in previous periods. In fiscal 2019 and 2018,
revenue includes €9,449 million and €9,271 million, respectively,
which was included in contract liabilities at the beginning of the
921
3,932
4,258
Finished goods and products held for resale
Advances to suppliers
6,024
5,902
3,165
3,726
Raw materials and supplies
Work in progress
2018
2019
Sep 30,
(in millions of €)
NOTE 11 Inventories
fiscal year.
2019
763
(in millions of €)
7,112
6,831
7,352
627
657
899
920
6,084
3,129
3,610
4,064
1,911
1,930
Goodwill
2,322
3,497
5,667
In fiscal 2019 and 2018, the long-term portion of receivables from
finance leases is reported in Other financial assets amounting to
€4,210 million and €3,867 million, respectively.
Minimum future lease payments to be received are as follows:
Sep 30,
738
751
More than five years
3,563
4,008
After one year but not more than five years
2,308
2,354
Within one year
NOTE 9
Sep 30,
2018
2019
Other current financial assets
Investments in finance leases primarily relate to industrial ma-
chinery, medical equipment, transportation systems, equipment
for information technology and office machines. Actual cash
flows will vary from contractual maturities due to future sales of
finance receivables, prepayments and write-offs.
6,608
14,806
(in millions of €)
NOTE 12 Goodwill
Gas and Power
Digital Industries
(in millions of €)
The following table presents key assumptions used to determine
fair value less costs to sell for impairment test purposes for the
groups of cash-generating units to which a significant amount of
goodwill is allocated:
ing unit or group of cash-generating units. Discount rates are
based on the weighted average cost of capital (WACC). Financial
Services' discount rate represents its specific cost of equity. The
discount rates are calculated based on a risk-free rate of interest
and a market risk premium. In addition, the discount rates reflect
the current market assessment of the risks specific to each
cash-generating unit or group of cash-generating units by taking
into account specific peer group information on beta factors,
leverage and cost of debt. The parameters for calculating the
discount rates are based on external sources of information.
The peer group is subject to an annual review and adjusted, if
necessary. Terminal value growth rates take into consideration
external macroeconomic sources of data and industry specific
trends.
The fair value less costs to sell is mainly driven by the terminal
value which is particularly sensitive to changes in the assump-
tions on the terminal value growth rate and discount rate. Both
assumptions are determined individually for each cash-generat-
For the purpose of estimating the fair value less costs to sell of
the cash-generating units or groups of cash-generating units,
cash flows were projected for the next five years based on past
experience, actual operating results and management's best es-
timate about future developments as well as market assump-
tions. The determined fair value of the cash-generating units or
groups of cash-generating units is assigned to level 3 of the fair
value hierarchy.
Imaging of Siemens Healthineers
Siemens based its determinations of the fair value less costs to
sell for the cash-generating units or groups of cash-generating
units include terminal value growth rates up to 1.7% in fiscal 2019
and 1.7% in fiscal 2018, respectively and after-tax discount rates
of 5.5% to 8.5% in fiscal 2019 and 6.5% to 8.5% in fiscal 2018.
Siemens performs the mandatory annual impairment test in the
three months ended September 30. The recoverable amounts for
the annual impairment test 2019 for Siemens' cash-generating
units or groups of cash-generating units were estimated to be
higher than the carrying amounts. Key assumptions on which
As of April 1, 2019, Siemens adjusted its organizational and report-
ing structure. Goodwill has been reallocated to the reorganized
reporting structure generally based on relative values. The reallo-
cation did not result in goodwill impairments. Fiscal 2018 disclo-
sures are based on the reporting structure before reorganization.
27,906
28,344
28,344
30,160
1,868
1,938
Consolidated Financial Statements 93
Sep 30, 2019
Goodwill
Terminal value
growth rate
Digital Factory
Power and Gas
13,885
(in millions of €)
tribution from the services business as well as a stable market
share in the products and solutions businesses, while dealing
with challenging structural global energy market trends, in par-
ticular for large gas turbines.
Revenue figures in the five-year planning period of the groups of
cash-generating units to which a significant amount of goodwill
is allocated are based on average revenue growth rates (exclud-
ing portfolio effects) of between 2.3% and 6.2% (0.3% and 8.9%
in fiscal 2018). For Gas and Power, Siemens expects a stable con-
6.5%
1.7%
5,951
8.5%
1.7%
6,807
1.7%
7,167
After-tax
discount rate
(3)
4
8.0%
Balance at fiscal year-end
629
742
Acquisitions and purchase accounting adjustments
(140)
1,152
Translation differences and other
29,754
2018
2019
Fiscal year
Cost of sales includes inventories recognized as expense amount-
ing to €60,189 million and €57,029 million, respectively, in fiscal
2019 and 2018. Compared to prior year, write-downs increased
(decreased) by €70 million and €(19) million as of September 30,
2019 and 2018.
(in millions of €)
1
Cost
Balance at begin of fiscal year
Dispositions and reclassifications to assets classified as held for disposal
(9)
30,213
Balance at fiscal year-end
Carrying amount
Dispositions and reclassifications to assets classified as held for disposal
Balance at fiscal year-end
(31)
Balance at begin of fiscal year
(including those relating to disposal groups)
Impairment losses recognized during the period
72
1,847
17
Translation differences and other
Balance at begin of fiscal year
Accumulated impairment losses and other changes
30,213
32,098
1,868
56
(36)
4
(8)
(8)
12
Foreign currency translation effects
436
48
383
(15)
(7)
4
(7)
56
Other reconciling items
(1,281)
(2,254)
(626)
Business combinations, disposals and other
710
4
(27)
(529)
69
(2,824)
(143)
4,448
(65)
(652)
2,601
(107)
(60)
27
1,787
Employer contributions
568
2,824
(84)
(568)
130
Benefits paid
(1,811)
Settlement payments
(84)
124
(1,817)
(529)
130
124
(1,678)
(1,674)
(133)
Plan participants' contributions
(2,970)
(682)
Germany
5,786
19
16
(356)
3,574
3,027
3,424
3,103
32
150
(45)
2,207
1,834
1,190
1,042
14
38
1,031
829
40,317
35,893
of Comprehensive Income
31,307
6,764
5,413
6,064
604
40,317
24,398
35,893 31,307
22,067
28,764
33
86
9,042
7,215
16,588
15,885
7,811
6,182
Balance at fiscal year-end
U.S.
CH
Other countries
Total
thereof provisions for pensions
and similar obligations
thereof net defined benefit assets
4,073
3,553
3,341
2,949
732
U.K.
in the Consolidated Statements
Fiscal year
27
Fair value of
plan assets
Effects of
asset ceiling
Net defined
benefit balance
(1)
(11)
(III)
(1 - 11 +111)
Fiscal year
Fiscal year
Fiscal year
(in millions of €)
2019
2018
2019
2018
2019
2018
2019
2018
Balance at begin of fiscal year
35,893
36,871
28,764
Defined benefit
obligation (DBO)
27,668
Development of the defined benefit plans
Following the Swiss law of occupational benefits (BVG) each
employer has to grant post-employment benefits for qualifying
employees. Accordingly, Siemens in Switzerland sponsors several
cash balance plans. These plans are administered by external
foundations. The board of the main foundation is composed of
equally many employer and employee representatives. The board
of the foundation is responsible for investment policy and asset
28,764
Debt Issuance Program - The Company has a program for the
issuance of debt instruments in place under which instruments
up to €15.0 billion can be issued as of September 30, 2019 and
2018, respectively. As of September 30, 2019 and 2018, €14.5 bil-
lion and €8.5 billion in notional amounts were issued and
are outstanding. Siemens redeemed the 3m LIBOR+1.4%
US$400 million floating-rate instrument and the US$300 million
floating-rate instrument at face value as due. In February 2019,
Siemens issued instruments totaling €3 billion in four tranches.
In September 2019, Siemens issued instruments totaling €3.5 bil-
lion in four tranches.
US$ Bonds In fiscal 2019, Siemens redeemed the 3M-
LIBOR+0.32% US$350 million floating-rate instruments and the
1.3% US$1.1 billion fixed-rate instruments at face value as due.
-
Bond with Warrant Units The US$1.5 billion instruments
were issued with 6,000 detachable warrants exercisable until
August 1, 2019. As of September 30, 2019, all warrants except 26
were exercised. The holders received 11.6 million Siemens AG
shares and 102 thousand OSRAM Licht AG shares for a total price
of €1.1 billion. The 1.65% US$1.5 billion fixed-rate instruments
were redeemed at face value as due.
ASSIGNABLE AND TERM LOANS
As of September 30, 2019 and 2018, two bilateral US$500 million
term loan facilities (in aggregate €918 million and €864 million
respectively) are outstanding, one until March 26, 2020; the sec-
ond term loan facility was extended to June 27, 2024.
As of September 30, 2019, a subsidiary has outstanding loans of
€346 million.
COMMERCIAL PAPER PROGRAM
Siemens has a US$9.0 billion (€8.3 billion as of September 30,
2019) commercial paper program in place including US$ extend-
ible notes capabilities. As of September 30, 2019 and 2018,
US$700 million (€643 million) and US$700 million (€605 mil-
lion), respectively, were outstanding. Siemens' commercial pa-
pers have a maturity of generally less than 90 days. Interest rates
ranged from 1.85% to 2.75% in fiscal 2019 and from 1.08% to
2.33% in fiscal 2018.
NOTE 17
Post-employment benefits
DEFINED BENEFIT PLANS
The defined benefit plans open to new entrants are based pre-
dominantly on contributions made by the Company. Only to a
certain extent, those plans are affected by longevity, inflation
and compensation increases and take into account country spe-
cific differences. The Company's major plans are funded with
assets in segregated entities. In accordance with local laws these
plans are managed in the interest of the beneficiaries by way of
contractual trust agreements with each separate legal entity. The
defined benefit plans cover 493,000 participants, including
224,000 actives, 81,000 deferreds with vested benefits and
188,000 retirees and surviving dependents.
Germany
In Germany, pension benefits are provided through the following
plans: BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
zen legacy plans as well as deferred compensation plans. The
majority of active employees participate in the BSAV. Those ben-
efits are predominantly based on notional contributions and their
respective asset returns, subject to a minimum return guaranteed
by the employer. At inception of the BSAV, benefits provided un-
der the frozen legacy plans were modified to substantially elimi-
nate the effects of compensation increases. However, the frozen
plans still expose Siemens to investment risk, interest rate risk
and longevity risk. The pension plans are funded via contractual
trust arrangements (CTA). In Germany no legal or regulatory min-
imum funding requirements apply.
U.S.
In the US, the Siemens Pension Plans are sponsored, which for
the most part have been frozen to new entrants and to future
benefit accruals, except for interest credits on cash balance ac-
counts. Siemens has appointed the Investment Committee as the
named fiduciary for the management of the assets of the Plans.
The Plans' assets are held in Master Trusts and the trustees of the
Master Trusts are responsible for the administration of the assets
of the trust, taking directions from the Investment Committee.
The Plans are subject to the funding requirements under the
Employee Retirement Income Security Act of 1974 as amended
(ERISA). There is a regulatory requirement to maintain a mini-
mum funding level of 80% in the defined benefit plans in order
to avoid benefit restrictions. At their discretion, sponsoring em-
ployers may contribute in excess of this regulatory requirement.
Annual contributions are calculated by independent actuaries.
U.K.
Pension benefits are mainly offered through the Siemens Benefit
Scheme for which, until the start of retirement, an inflation in-
crease of the majority of accrued benefits is mandatory. The re-
quired funding is determined by a funding valuation carried out
every third year based on legal requirements. Due to deviating
guidelines for the determination of the discount rates, the tech-
nical funding deficit is usually larger than the IFRS funding defi-
cit. To reduce the deficit Siemens entered into an agreement with
the trustees to provide annual payments of GB£31 (€34) million
until fiscal 2033. The agreement also provides for a cumulative
advance payment by Siemens AG compensating the remaining
annual payments at the date of early termination of the agree-
ment due to cancellation or insolvency.
Consolidated Financial Statements 99
Switzerland
management, as well as for any changes in the plan rules and the
determination of contributions to finance the benefits. The
Company is required to make total contributions at least as high
as the sum of the employee contributions set out in the plan
rules. In case of an underfunded plan the Company together with
the employees may be asked to pay supplementary contributions
according to a well-defined framework of recovery measures.
86
62
7,215
1,340
568
493
3
4
692
851
Return on plan assets excluding
amounts included in net interest
income and net interest expenses
Actuarial (gains) losses
2,601
(107)
4,448
(65)
Effects of asset ceiling
(2,601)
107
4,448
(65)
(60)
27
(60)
1,257
Consolidated Statements of income
costs recognized in the
Components of defined benefit
9,265
Current service cost
534
534
534
534
Interest expenses
712
675
3
4
Remeasurements recognized
679
580
523
(580)
(523)
Other¹
12
131
(12)
(30)
24
162
Interest income
33
Sep 30, 2019
9,042
depreciation and impairments
Plus: Amortization,
(1,867)
(430)
and other financial income (expenses), net
The following table presents the undiscounted amount of maxi-
mum potential future payments for major groups of guarantees:
NOTE 21 Commitments and
contingencies
Plus/Less: Interest income, interest expenses
8,050
7,518
3,494
before income taxes
(319)
3,548
6,404
Industrial net debt
(706)
Less: Fair value hedge accounting adjustment²
389
447
Plus: Credit guarantees
7,684
9,896
Income from continuing operations
and similar obligations
EBITDA
3,419
9,602
Allocated equity
2019
(in millions of €)
The SFS business is capital intensive and operates with a larger
amount of debt to finance its operations compared to the indus-
trial business.
2 Debt is generally reported with a value representing approximately the amount to be repaid.
However, for debt designated in a hedging relationship (fair value hedges), this amount is
adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
Siemens deducts these changes in market value in order to end up with an amount of debt
that approximately will be repaid.
1 The adjustment considers that both Moody's and S&P view Financial Services as a captive
finance company. These rating agencies generally recognize and accept higher levels of debt
attributable to captive finance subsidiaries in determining credit ratings. Following this concept,
Siemens excludes Financial Services debt in order to derive an industrial net debt which is not
affected by Financial Services' financing activities.
3,043
3,090
200
2,454
10,582
2,644
389
447
Credit guarantees
0.4
0.6
Industrial net debt/EBITDA
2018
2019
(in millions of €)
Sep 30,
Guarantees of third-party performance
Miscellaneous guarantees
Plus: Provisions for pensions
(24,047)
(25,959)
Plus: Long-term debt
5,057
6,034
of long-term debt
Sep 30, 2018
Short-term debt and current maturities
2018
2019
(in millions of €)
Sep 30,
30,414
Siemens' current corporate credit ratings are:
A key consideration of our capital structure management is to
maintain ready access to capital markets through various debt
instruments and to sustain our ability to repay and service our
debt obligations over time. In order to achieve this, Siemens in-
tends to maintain an Industrial net debt divided by EBITDA (con-
tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
proximate number of years that would be needed to cover the
Industrial net debt through Income from continuing operations,
without taking into account interest, taxes, depreciation and
amortization.
NOTE 20 Additional capital disclosures
In November 2018, Siemens announced a share-buyback pro-
gram of up to €3 billion to be executed until November 15, 2021.
Dividends paid per share were €3.80 and €3.70, respectively, in
fiscal 2019 and 2018. The Managing Board and the Supervisory
Board propose to distribute a dividend of €3.90 per share entitled
to the dividend, in total representing approximately €3.2 billion
in expected payments. Payment of the proposed dividend is con-
tingent upon approval at the Shareholders' Meeting on Febru-
ary 5, 2020.
As of September 30, 2019 and 2018, total authorized capital of
Siemens AG is €600 million and €618.6 million, respectively,
nominal issuable in installments based on various time-limited
authorizations, by issuance of up to 200 million and 206.2 million
registered shares of no par value. In addition, as of September 30,
2019 and 2018, Siemens AG's conditional capital is €1,080.6 mil-
lion nominal or 360.2 million shares. It can primarily be used for
serving convertible bonds or warrants under warrant bonds that
could or can be issued based on various time-limited authoriza-
tions approved by the respective Shareholders' Meeting.
shares (at cost) were transferred to employees of €188 million in
fiscal 2019 and €506 million in fiscal 2018 which decreased Cap-
ital reserve and Retained earnings by €132 million and €56 mil-
lion, respectively in 2019 and by €468 million and €38 million
in fiscal 2018.
Share based payment expenses increased Capital reserve by
€294 million and €306 million (including non-controlling inter-
ests), respectively in fiscal 2019 and 2018. In connection with the
settlement of share based payment awards Siemens treasury
In fiscal 2019 and 2018, Siemens repurchased 13,532,557 shares
and 13,248,262 shares, respectively. In fiscal 2019 and 2018,
Siemens transferred 16,251,968 and 7,777,923 treasury shares,
respectively. As of September 30, 2019 and 2018, the Company
has treasury shares of 37,232,048 and 39,951,459 respectively.
Siemens' issued capital is divided into 850 million registered
shares with no par value and a notional value of €3.00 per share
as of September 30, 2019 and 2018, respectively. The shares are
fully paid in. At the Shareholders' Meeting, each share has one
vote and accounts for the shareholders' proportionate share in
the Company's net income. All shares confer the same rights and
obligations.
Equity
104 Consolidated Financial Statements
27,120
Moody's
Investors
Service
Less: Financial Services debt¹
19,840
22,726
Net debt
A-1+
P-1
A-1+
P-1
Short-term debt
(1,271)
(1,331)
Less: Current interest bearing debt securities
A+
A1
A+
A1
Long-term debt
(11,066)
(12,391)
Less: Cash and cash equivalents
S&P
Global
Ratings
Moody's
Investors
Service
S&P
Global
Ratings
2,864
Financial Services debt
Debt to equity ratio
25,959
9.06
Loans and receivables'
(in millions of €)
Fiscal 2018 amounts are not comparable, since those are under
IAS 39:
4 Reported in line items Other current financial liabilities
and Other financial liabilities.
of long-term debt, Trade payables, Other current financial
liabilities, Long-term debt and Other financial liabilities,
except for separately disclosed derivative financial instru-
ments of €1,273 million.
3 Reported in the following line items of the Statements of
Financial Position: Short-term debt and current maturities
2 Reported in line items other current financial assets and
other financial assets.
Includes €16,928 million trade receivables from the sale
of goods and services, thereof €889 million with a term
of more than twelve months.
1 Reported in the following line items of the Statements of
Financial Position: Trade and other receivables, Other
current financial assets and Other financial assets, except
for separately disclosed €890 million equity instruments
in Other financial assets (thereof €513 at FVOCI) and
€3,014 million derivative financial instruments (thereof in
Other financial assets €2,239) as well as €34 million debt
instruments measured at FVPL in Other financial assets.
50,587
Cash and cash equivalents
384
49,315
Derivatives not designated in a hedge accounting relationship4
Derivatives designated in a hedge accounting relationship4
Financial liabilities
Financial liabilities measured at amortized cost³
61,797
513
2,626
798
12,391
45,467
2019
889
Derivatives designated in a hedge accounting relationship
Financial assets held for trading
Available-for-sale financial assets²
86
45,063
171
567
44,325
56,722
2,001
1,615
267
11,066
41,773
Sep 30,
2018
Consolidated Financial Statements
108
4 Reported in line items Other current financial liabilities
and Other financial liabilities.
except for separately disclosed derivative financial instru-
ments of €738 million.
3 Reported in the following line items of the Statements of
Financial Position: Short-term debt and current maturities
of long-term debt, Trade payables, Other current financial
liabilities, Long-term debt and Other financial liabilities,
2 Includes equity instruments classified as available-for-sale,
for which a fair value could not be reliably measured and
which are therefore recognized at cost.
1 Reported in the following line items of the Statements
of Financial Position: Trade and other receivables, Other
current financial assets and Other financial assets, except
for separately disclosed €715 million available-for-sale
financial assets and €1,882 million derivative financial
instruments. Includes €16,044 million trade receivables
from the sale of goods and services, thereof €810 million
with a term of more than twelve months.
Derivatives designated in a hedge accounting relationship4
Financial liabilities
Financial liabilities held for trading4
Financial liabilities measured at amortized cost³
Financial assets
Sep 30,
NOTE 19
Financial assets
Financial assets measured at FVTPL²
Total operating rental expenses for the years ended Septem-
ber 30, 2019 and 2018 were €1,208 million and €1,249 million,
respectively.
765
3,193
3,518
864
2018
839
1,588
1,767
After one year but not more than five years
More than five years
887
Within one year
2019
The Company is jointly and severally liable and has capital contri-
bution obligations as a partner in commercial partnerships and
as a participant in various consortiums.
Sep 30,
Future payment obligations under non-cancellable operating
leases are:
In addition to guarantees disclosed in the table above, the
Company issued other guarantees. To the extent future claims
are not considered remote, maximum future payments from
these obligations amount to €413 million and €492 million as of
September 30, 2019 and 2018, respectively. These commitments
include indemnifications issued in connection with dispositions
of businesses. Such indemnifications may protect the buyer from
potential tax, legal and other risks in conjunction with the pur-
chased business. As of September 30, 2019 and 2018, the accrued
amount for such other commitments is €146 million and
€204 million, respectively.
to ten years. Generally, consortium agreements provide for fall-
back guarantees as a recourse provision among the consortium
partners. As of September 30, 2019 and 2018, the Company
accrued €3 million and €3 million, respectively, relating to per-
formance guarantees.
105
Consolidated Financial Statements
Furthermore, Siemens issues guarantees of third-party perfor-
mance, which mainly include performance bonds and guaran-
tees of advanced payments in a consortium. In the event of
non-fulfillment of contractual obligations by the consortium
partner(s), Siemens will be required to pay up to an agreed-upon
maximum amount. These agreements typically have terms of up
Item Credit guarantees covers the financial obligations of third
parties generally in cases where Siemens is the vendor and (or)
contractual partner or Siemens is liable for obligations of associ-
ated companies accounted for using the equity method. Addi-
tionally, credit guarantees are issued in the course of the SFS
business. Credit guarantees generally provide that in the event of
default or non-payment by the primary debtor, Siemens will
be required to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding balance
of the credit or, in case a credit line is subject to variable utiliza-
tion, the nominal amount of the credit line. These guarantees
have residual terms of up to 6 years and 7 years, respectively, in
fiscal 2019 and 2018. The Company held collateral mainly through
inventories and trade receivables. Siemens accrued €35 million
and €35 million relating to credit guarantees as of September 30,
2019 and 2018, respectively.
Equity allocated to SFS differs from the carrying amount of equity
as it is mainly allocated based on the risks of the underlying
business.
2,630
24,047
9.14
Sep 30,
2018
(in millions of €)
NOTE 22 Legal proceedings
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED BREACHES OF CONTRACT
In March 2019, a Brazilian company asserted claims to pay an
amount in a higher three-digit million euro amount in local cur-
rency against a consortium of contractors and each member of
the consortium, including Siemens Ltda., Brazil (Siemens Ltda.)
in a lawsuit relating to the construction of a power plant in Brazil
that was completed in 2016. The members of the consortium
are jointly and severally liable, Siemens Ltda.'s share in the con-
sortium is below 3%. The consortium and its members defend
Derivatives designated in a hedge accounting relationship
Loans receivables and other debt instruments measured at amortized cost¹
Cash and cash equivalents
(in millions of €)
The following table discloses the carrying amounts of each cate-
gory of financial assets and financial liabilities:
on financial instruments
NOTE 23 Additional disclosures
Consolidated Financial Statements 107
For Legal Proceedings information required under IAS 37, Provi-
sions, Contingent Liabilities and Contingent Assets is not dis-
closed if the Company concludes that disclosure can be expected
to seriously prejudice the outcome of the matter.
Some of these Legal Proceedings could result in adverse deci-
sions for Siemens, which may have material effects on its busi-
ness activities as well as its financial position, results of opera-
tions and cash flows.
Siemens is involved in numerous Legal Proceedings in various
jurisdictions. These Legal Proceedings could result, in particular,
in Siemens being subject to payment of damages and punitive
damages, equitable remedies or sanctions, fines or disgorgement
of profit. In individual cases this may also lead to formal or infor-
mal exclusion from tenders or the revocation or loss of business
licenses or permits. In addition, further Legal Proceedings may be
commenced or the scope of pending Legal Proceedings may be
extended. Asserted claims are generally subject to interest rates.
As previously reported, four gas turbines intended for a project
in Taman, Russia, which were delivered by OOO Siemens Gas Tur-
bines Technologies (SGTT) to its customer OAO VO TechnoProm-
Export in summer of 2016, had against contractual agreements
with SGTT been allegedly brought to Crimea, a location under
sanctions. The Hamburg public prosecutor initiated criminal pro-
ceedings against Siemens employees in regard of alleged viola-
tions of the German Foreign Trade and Payments Act. Siemens
cooperates with the authorities.
As previously reported, in June 2015, Siemens Ltda. appealed to
the Supreme Court against a decision of a previous court to
suspend Siemens Ltda. from participating in public tenders and
signing contracts with public administrations in Brazil for a five
year term based on alleged irregularities in calendar year 1999
and 2004 in public tenders with the Brazilian Postal authority. In
February 2018, the appeal was rejected. Siemens Ltda. has
introduced another remedy against the decision. In June 2018,
the court accepted Siemens' appeal and declared the earlier in-
stance decision as void. Siemens Ltda. is currently not excluded
from participating in public tenders. In February 2018, the
Ministério Público in Brasilia filed a lawsuit based on the same set
of facts, mainly claiming the exclusion of Siemens Ltda. from
public tenders for a ten year term. Siemens Ltda. is defending
itself against the lawsuit.
against these actions. It cannot be excluded that further signifi-
cant damage claims will be brought by customers or the state
against Siemens.
As previously reported, in May 2014, the Public Affairs Office
(Ministério Público) São Paulo initiated a lawsuit against Siemens
Ltda. as well as other companies and several individuals claiming,
inter alia, damages in an amount of BRL2.5 billion (approximately
€552 million as of September 2019) plus adjustments for in-
flation and related interest in relation to train refurbishment
contracts entered into between 2008 and 2011. In January 2015,
the district court of São Paulo admitted a lawsuit of the State of
São Paulo and two customers against Siemens Ltda., Siemens AG
and other companies and individuals claiming damages in an
unspecified amount. In March 2015, the district court of São
Paulo admitted a lawsuit of the Public Affairs Office (Ministério
Público) São Paulo against Siemens Ltda. and other companies
claiming, inter alia, damages in an amount of BRL487 million
(approximately €108 million as of September 2019) plus ad-
justments for inflation and related interest in relation to train
maintenance contracts entered into in 2000 and 2002. In Sep-
tember 2015, the district court of São Paulo admitted another
lawsuit of the Public Affairs Office (Ministério Público) São Paulo
against Siemens Ltda. and other companies claiming, inter alia,
damages in an amount of BRL918 million (approximately
€203 million as of September 2019) plus adjustments for infla-
tion and related interest in relation to train maintenance con-
tracts entered into in 2006 and 2007. Siemens is defending itself
As previously reported, in March 2014, Siemens was informed
that in connection with the above mentioned metro and urban
train projects the Public Prosecutor's Office São Paulo has re-
quested criminal proceedings at court into alleged violations of
Brazilian antitrust law against a number of individuals including
current and former Siemens employees. The proceedings con-
tinue; the Public Prosecutor's Office São Paulo has appealed all
decisions where the courts denied opening criminal trials.
As previously reported, in May 2013, Siemens Ltda., Brazil
(Siemens Ltda.) entered into a leniency agreement with the
Administrative Council for Economic Defense (CADE) and other
relevant Brazilian authorities relating to possible antitrust viola-
tions in connection with alleged anticompetitive irregularities in
metro and urban train projects, in which Siemens Ltda. and par-
tially Siemens AG, as well as a number of other companies par-
ticipated as contractor. In July 2019, CADE completed the admin-
istrative proceedings, confirming the reported misconduct. Due
to its cooperation, Siemens was granted full immunity from ad-
ministrative fines for the misconduct. In connection with the
above mentioned metro and urban train projects, several Brazil-
ian authorities continue to investigate alleged criminal acts
(corruptive payments, anti-competitive conduct, undue influ-
ence on public tenders).
A settlement agreement was concluded in those proceedings in
December 2018 which is subject to approval.
106 Consolidated Financial Statements
Based on the above mentioned conclusion of the Israeli Antitrust
Authority, two electricity consumer groups filed motions to
certify a class action for cartel damages against a number of
companies including Siemens AG with an Israeli State Court in
September 2013. One of the class actions has been dismissed by
the court in fiscal year 2015. The remaining class action seeks
compensation for alleged damages amounting to ILS2.8 billion
(approximately €739 million as of September 2019). In addition,
the Israel Electric Corporation (IEC) filed at the end of Decem-
ber 2013 with an Israeli State Court a separate ILS3.8 billion (ap-
proximately €997 million as of September 2019) claim for dam-
ages against Siemens AG and other companies that allegedly
formed a cartel in the Israeli gas-insulated switchgear market.
As previously reported, in September 2011, the Israeli Antitrust
Authority requested that Siemens present its legal position
regarding an alleged anti-competitive arrangement between
April 1988 and April 2004 in the field of gas-insulated switchgear.
In September 2013, the Israeli Antitrust Authority concluded that
Siemens AG was a party to an illegal restrictive arrangement re-
garding the Israeli gas-insulated switchgear market between
1988 and 2004, with an interruption from October 1999 to Feb-
ruary 2002. The Company appealed against this decision in
May 2014.
PROCEEDINGS OUT OF OR IN CONNECTION
WITH ALLEGED COMPLIANCE VIOLATIONS
As previously reported, in July 2008, Hellenic Telecommunica-
tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
with the district court of Munich, Germany, seeking to compel
Siemens AG to disclose the outcome of its internal investigations
with respect to OTE. OTE seeks to obtain information with respect
to allegations of undue influence and/or acts of bribery in con-
nection with contracts concluded between Siemens AG and OTE
from calendar year 1992 to 2006. At the end of July 2010, OTE
expanded its claim and requested payment of damages by
Siemens AG of at least €57 million to OTE for alleged bribery pay-
ments to OTE employees. In October 2014, OTE increased its
damage claim to the amount of at least €68 million. Siemens AG
continues to defend itself against the expanded claim.
In June 2019, the City of Jackson, Mississippi, filed a lawsuit
against Siemens Industry, Inc., and Siemens Corporation, USA,
among others, in connection with a performance contract. The
City amended its lawsuit in November 2019 and alleges more
than US$450 million (approximately €409 million) in damages
in addition to further substantial unspecified future losses, inter-
est and punitive damages. Siemens is defending itself against
the action.
themselves against the claim and for their part claim payment in
a lower three-digit million euro amount in local currency.
Equity instruments measured at FVOCI¹
Other includes transaction-related provisions and post-closing
provisions in connection with portfolio activities as well as provi-
sions for Legal Proceedings, as far as the risks that are subject to
such Legal Proceedings are not already covered by project ac-
counting. Provisions for Legal Proceedings amounted to €407 mil-
lion and €375 million as of September 30, 2019 and 2018,
respectively.
715
103
increase
(2,410)
(in millions of €)
Discount rate
Rate of compen-
sation increase
Rate of pension
Effect on DBO due to a one-half percentage-point
A one-half-percentage-point change of the above assumptions
would result in the following increase (decrease) of the DBO:
Sensitivity analysis
The discount rate was derived from high-quality corporate bonds
with an issuing volume of more than 100 million units in the re-
spective currency zones, which have been awarded an AA rating
(or equivalent) by at least one of the three rating agencies
Moody's Investors Service, S&P Global Ratings or Fitch Ratings.
1.1%
0.2%
2.9%
2.0%
Sep 30, 2019
decrease
2,740
4.2%
2.0%
0.8%
3.0%
2.8%
1.4%
1.4%
U.K.
2.4%
1.3%
Germany
3.1%
Sep 30, 2018
increase
(2,068)
decrease
(in millions of €)
DEFINED CONTRIBUTION PLANS AND STATE PLANS
Amounts recognized as expense for defined contribution plans is
€661 million and €643 million in fiscal 2019 and 2018, respec-
tively. Contributions to state plans amount to €1,850 million and
€1,748 million in fiscal 2019 and 2018, respectively.
Employer contributions expected to be paid to defined benefit
plans in fiscal 2020 are €1,013 million. Over the next ten fiscal
years, average annual benefit payments of €1,862 million and
€1,843 million, respectively, are expected as of September 30,
2019 and 2018. The weighted average duration of the DBO for
Siemens defined benefit plans was 13 years as of September 30,
2019 and twelve years as of September 30, 2018.
Future cash flows
Virtually all equity securities have quoted prices in active mar-
kets. The fair value of fixed income securities is based on prices
provided by price service agencies. The fixed income securities
are traded in active markets and almost all fixed income securi-
ties are investment grade. Alternative investments include hedge
funds, private equity and real estate investments. Multi strategy
funds mainly comprise absolute return funds and diversified
growth funds that invest in various asset classes within a single
fund and aim to stabilize return and reduce volatility. Derivatives
predominantly consist of financial instruments for hedging inter-
est rate risk and inflation risk. Other assets include an insured
annuity contract valued at €1,344 million and €1,269 million,
respectively, as of September 30, 2019 and 2018.
Sep 30,
Disaggregation of plan assets
As a significant risk, the Company considers a decline in the
plans' funded status due to adverse developments of plan assets
and/or defined benefit obligations resulting from changing
parameters. Accordingly, Siemens implemented a risk manage-
ment concept aligned with the defined benefit obligations (Asset
Liability Matching). Risk management is based on a worldwide
defined risk threshold (Value at risk). The concept, the Value at
risk and the asset development including the investment strategy
are monitored and adjusted on an ongoing basis under consulta-
tion of senior external experts. Independent asset managers are
selected based on quantitative and qualitative analyses, which
include their performance and risk evaluation. Derivatives are
used to reduce risks as part of risk management.
Asset Liability Matching Strategies
As in prior year, sensitivity determinations apply the same meth-
odology as applied for the determination of the post-employ-
ment benefit obligation. Sensitivities reflect changes in the DBO
solely for the assumption changed.
The DBO effect of a 10% reduction in mortality rates for all ben-
eficiaries would be an increase of €1,318 million and €1,031 mil-
lion, respectively, as of September 30, 2019 and 2018.
101
Consolidated Financial Statements
(1,371)
1,539
(1,541)
1,826
progression
(85)
91
(94)
104
2,307
2018
2019
2019
Sep 30,
2019
(in millions of €)
Fiscal year
SAPS S2 (Standard mortality tables for
Self Administered Pension Schemes with
allowance for future mortality improvements)
BVG 2015 G
Siemens specific tables (Siemens Bio 2017)
Pri-2012 with generational projection from the
US Social Security Administration's Long Range
Demographic Assumptions
CH
U.K.
U.S.
Germany
Applied mortality tables are:
2018
The remeasurements comprise actuarial (gains) and losses result-
ing from:
470
854
Consolidated Financial Statements
100
1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
(presented in Other assets)
7,684
9,896
7,215
As of September 30, 2019 and 2018, the provision totals €630 mil-
lion and €710 million, respectively, including advance payments
to the federal government for the construction of the final stor-
age facility in the amount of €95 million and €85 million, respec-
tively, which were capitalized. The decrease in the carrying
amount is mainly due to new cost estimates of the federal gov-
ernment and taking into account the current trend in the long-
term inflation rate. The provision is recorded net of a present
value discount of €103 million and €338 million, respectively,
reflecting the assumed continuous outflow of the total expected
payments until the 2060's.
Net interest expenses related to provisions for pensions and sim-
ilar obligations amounted to €148 million and €164 million, re-
spectively, in fiscal 2019 and 2018. The DBO is attributable to
actives 32% and 31%, to deferreds with vested benefits 14% and
14% and to retirees and surviving dependents 54% and 55%, re-
spectively, in fiscal 2019 and 2018.
Changes in demographic assumptions
(173)
Changes in financial assumptions
1.3%
1.4%
CH
3.7%
3.5%
Compensation increase
U.K.
2019
Sep 30,
CHF
GBP
USD
EUR
Discount rate
The rates of compensation increase and pension progression for
countries with significant effects are shown in the following
table. Inflation effects, if applicable, are included in the assump-
tions below.
The mortality tables used in Germany (Siemens Bio 2017) are
mainly derived from data of the German Siemens population and
to a lesser extent from data of the Federal Statistical Office in
Germany by applying formulas in accordance with recognized
actuarial standards.
The weighted-average discount rate used for the actuarial valua-
tion of the DBO was as follows:
Actuarial assumptions
Remeasurements in fiscal 2019 include an actuarial gain in the
amount of €768 million due to a change in financial assumptions
in connection with payment options at the start of retirement in
Germany.
(67)
(37)
39
(65)
4,448
52
Experience (gains) losses
Total
4,569
Pension progression
2018
2018
3,910
(1,791)
(262)
(239)
(159)
(1,131)
(1,915)
(346)
(8)
(502)
(1,060)
53
2,541
3
449
1,621
4,216
489
762
575
2,390
8,147
1,320
468
29
3
101
decontamination and disassembly of equipment and installa-
tions, decontamination of the facilities and buildings), waste
conditioning and packaging of nuclear waste, as well as inter-
mediate storage, transport to and final storage of the radioactive
waste. This process will be supported by continuing engineering
studies and radioactive sampling under the supervision of Ger-
man federal and state authorities. The decontamination and dis-
assembly at the Karlstein site were completed until the end of
calendar year 2018, whereas final waste conditioning and pack-
aging is planned to continue until 2025. Thereafter, the Company
is responsible for intermediate storage of the radioactive materi-
als until they are transported and handed over to a final storage
facility. With respect to the Hanau facility, the asset retirement
has been completed and intermediate storage has been set up.
On September 21, 2006, the Company received official notifica-
tion from the authorities that the Hanau facility has been re-
leased from the scope of application of the German Atomic
Energy Act and that its further use is unrestricted. The ultimate
costs of the remediation are contingent on the decision of the
federal government on the location of the final storage facilities
and the date of their availability. Several parameters relating to
the development of a final storage facility for radioactive waste
are based on the assumptions for the so called Schacht Konrad
final storage. The valuation uses assumptions to reflect the cur-
rent and detailed cost estimates, price inflation and discount
rates as well as a continuous outflow until the 2060's related to
the costs for dismantling as well as intermediate and final stor-
age. The estimated cash outflows related to the asset retirement
obligation could alter significantly if political developments af-
fect the government's timeline to finalize the so called Schacht
Konrad. For discounting the cash outflows, the Company uses
current interest rates as of the balance sheet date.
Consolidated Financial Statements
Equity securities
Environmental clean-up costs relate to remediation and environ-
mental protection liabilities which have been accrued based on
the estimated costs of decommissioning the site for the produc-
tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
many (Hanau facilities), as well as a nuclear research and service
center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
2017, parts of the regulation for nuclear waste disposal were
amended by way of law ("Gesetz zur Neuordnung der Verantwor-
tung in der kerntechnischen Entsorgung"), Siemens is not cov-
ered by these regulations and consequently continues to adhere
to the German Atomic Energy Act ("deutsches Atomgesetz") ap-
plicable as of September 30, 2019, which states that when a nu-
clear facility is closed, the resulting radioactive waste from de-
commissioning the nuclear facility must be reprocessed without
causing damage and be delivered to a government-approved
final storage facility. In this regard, the Company has devel-
oped a plan to decommission the Hanau and Karlstein facilities
in the following steps: asset retirement (including clean-out,
The Company is subject to asset retirement obligations related to
certain items of property, plant and equipment. Such asset retire-
ment obligations are primarily attributable to environmental
clean-up costs (disclosed in Corporate items of the Segment in-
formation) and to costs primarily associated with the removal of
leasehold improvements at the end of the lease term.
Warranties mainly relate to products sold. Order related losses
and risks are provided for anticipated losses and risks on uncom-
pleted construction, sales and leasing contracts.
Except for asset retirement obligations, the majority of the
Company's provisions are generally expected to result in cash
outflows during the next one to 15 years.
7,396
3,714
1,282
494
687
700
1,114
425
4,300
2,107
110
82
2
(180)
206
202
3
163
2
35
776
1,475
16
Total
Other assets
933
749
Cash and cash equivalents
595
577
Derivatives
2,853
3,259
3,985
4,181
Alternative investments
9,463
11,053
Corporate bonds
4,475
5,239
Government bonds
13,938
4,575
4,300
16,292
Fixed income securities
2,340
2,162
Multi strategy funds
31,307
losses and risks
Warranties
Total
Other
retirement
Order related
Asset
Thereof non-current
obligations
Other changes
Accretion expense and effect of changes in discount rates
Translation differences
Balance as of September 30, 2019
Usage
Additions
Thereof non-current
Balance as of October 1, 2018
(in millions of €)
NOTE 18 Provisions
Reversals
102 Consolidated Financial Statements
28,764
(57)
Reclassification
16
to net income
(4)
94
September 30, 2019
Balance as of
thereof discontinued
hedge accounting
3
(10)
(16)
(223)
72
presented in OCI
19
reserve
hedging
Cost of
Foreign
currency risk
reserve
35
Cash flow
Amounts reclassified to net income in connection with interest
rate risk hedges and non-operative foreign currency hedges are
presented in Other financial income (expenses), net. Reclassifi-
cations of foreign currency risk hedges with operative business
purposes are presented as functional costs. Costs of hedging re-
serve is the forward element of forward contracts that are not
designated as hedge accounting and which are amortized to in-
terest expense on a straight-line basis as the hedged item is
time-period related.
hedge
hedge
reserve
(42)
FOREIGN CURRENCY EXCHANGE RATE RISK
MANAGEMENT
FOREIGN CURRENCY EXCHANGE RATE RISK
Transaction risk
The Company manages its risks associated with fluctuations in
foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a
Company-wide portfolio approach. Under this approach the
Company-wide risks are aggregated centrally, and various deriv-
ative financial instruments, primarily foreign currency exchange
contracts, foreign currency swaps and options, are utilized to
minimize such risks. Such a strategy does not qualify for hedge
accounting treatment. The Company also accounts for foreign
currency derivatives, which are embedded in sale and purchase
Translation risk
Many Siemens units are located outside the Eurozone. Because
the financial reporting currency of Siemens is the euro, the finan-
cial statements of these subsidiaries are translated into euro for
the preparation of the Consolidated Financial Statements. To
consider the effects of foreign currency translation in the risk
management, the general assumption is that investments in for-
eign-based operations are permanent and that reinvestment is
continuous. Effects from foreign currency exchange rate fluctu-
ations on the translation of net asset amounts into euro are re-
flected in the Company's consolidated equity position.
INTEREST RATE RISK
Cash flow
As of September 30, 2019 and 2018, the VaR relating to foreign
currency exchange rates was €79 million and €103 million. This
VaR was calculated under consideration of items of the Consoli-
dated Statement of Financial Position in addition to firm commit-
ments, which are denominated in foreign currencies, as well as
foreign currency denominated cash flows from forecast transac-
tions for the following twelve months. The decrease in the VaR
resulted mainly from a lower net foreign currency position after
hedging activities and a lower volatility between the U.S. dollar
and the euro.
Generally, the operating units conclude their hedging activities
internally with Corporate Treasury. By applying a cost-optimizing
portfolio approach, Corporate Treasury itself hedges foreign
currency exchange rate risks with external counterparties and
limits them.
According to the Company policy, Siemens units are responsible
for recording, assessing and monitoring their foreign currency
transaction exposure. The net foreign currency position of
Siemens units serves as a central performance measure and has
to be hedged within a band of at least 75% but no more
than 100%.
Operating units are prohibited from borrowing or investing in
foreign currencies on a speculative basis. Intercompany financing
or investments of operating units are preferably carried out in
their functional currency or on a hedged basis.
Each Siemens unit conducting businesses with international
counterparties leading to future cash flows denominated in a
currency other than its functional currency is exposed to risks
from changes in foreign currency exchange rates. In the ordinary
course of business, Siemens units are exposed to foreign cur-
rency exchange rate fluctuations, particularly between the U.S.
dollar and the euro. Foreign currency exchange rate exposure
is partly balanced by purchasing of goods, commodities and
services in the respective currencies as well as production activi-
ties and other contributions along the value chain in the local
markets.
Consolidated Financial Statements
114
Any market sensitive instruments, including equity and inter-
est-bearing investments that our Company's pension plans hold
are not included in the following quantitative and qualitative
disclosures.
Actual results that are included in the Consolidated Statements
of Income or Consolidated Statements of Comprehensive Income
may differ substantially from VaR figures due to fundamental
conceptual differences. While the Consolidated Statements of
Income and Consolidated Statements of Comprehensive Income
are prepared in accordance with IFRS, the VaR figures are the
output of a model with a purely financial perspective and repre-
sent the potential financial loss, which will not be exceeded
within ten days with a probability of 99.5%. Although VaR is an
important tool for measuring market risk, the assumptions on
which the model is based give rise to some limitations including
the following. A ten day holding period assumes that it is possible
to dispose of the underlying positions within this period. This
may not be valid during continuing periods of illiquid markets.
A 99.5% confidence level means that there is a 0.5% statistical
probability that losses could exceed the calculated VaR. The use
of historical data as a basis for estimating the statistic behavior
of the relevant markets and finally determining the possible
range of the future outcomes on the basis of this statistic behav-
ior may not always cover all possible scenarios, especially those
of an exceptional nature.
Derivative financial instruments not designated
in a hedging relationship
In order to quantify market risks Siemens has implemented a sys-
tem based on Value at Risk (VaR), which is also used for internal
management of Corporate Treasury activities. The VaR figures are
calculated based on historical volatilities and correlations of var-
ious risk factors, a ten day holding period, and a 99.5% confi-
dence level.
NOTE 25 Financial risk management
The Company had interest rate swap contracts to pay variable
rates of interest of an average of 0.825% and 1.4% as of Septem-
ber 30, 2019 and 2018, respectively and received fixed rates of
interest (average rate of 1.523% and 2.3%, as of September 30,
2019 and 2018, respectively). The notional amount of indebted-
ness hedged as of September 30, 2019 and 2018 was €6,664 mil-
lion and €1,314 million, respectively. This changed 22% and 5%
of the Company's underlying notes and bonds from fixed interest
rates into variable interest rates as of September 30, 2019 and
2018, respectively. The notional amounts of these contracts
mature at varying dates based on the maturity of the underlying
hedged items. The net fair value of interest rate swap contracts
(excluding accrued interest) used to hedge indebtedness as of
September 30, 2019 and 2018 was €428 million and €17 million,
respectively.
Fair value hedges of fixed-rate debt obligations
Under interest rate swap agreements outstanding in fiscal 2019
and 2018, the Company agreed to pay a variable rate of interest
multiplied by a notional principal amount, and to receive in re-
turn an amount equal to a specified fixed rate of interest multi-
plied by the same notional principal amount. These interest rate
swap agreements offset future changes in interest rates desig-
nated as hedged risk on the fair value of the underlying fixed-rate
debt obligations. As of September 30, 2019 and 2018, the carry-
ing amounts of €7,050 million and €1,320 million, respectively,
of fixed-rate debt obligations (presented in Long-term debt) are
designated in fair value hedges, including €416 million and
€10 million cumulative fair value hedge adjustments. Unamor-
tized fair value hedge adjustments of €281 million and €307 mil-
lion as of September 30, 2019 and 2018, respectively, relate to no
longer applied hedge accounting. The amounts are amortized
over the remaining term of the underlying debt, maturing until
2042. Carrying amount adjustments to debt of €405 million and
€29 million, respectively, in fiscal 2019 and 2018 are included in
Other financial income (expenses); the related swap agreements
resulted in gains (losses) of €(417) million and €(27) million, re-
spectively, in fiscal 2019 and 2018. Net cash receipts and pay-
ments relating to such interest rate swap agreements are re-
corded as interest expenses.
113
Consolidated Financial Statements
Siemens applies cash flow hedge accounting to a revolving port-
folio of floating-rate commercial papers of nominal US$700 mil-
lion. Siemens pays a fixed rate of interest and receives a variable
rate of interest, offsetting future changes in interest payments
of the underlying floating-rate commercial papers. Net cash re-
ceipts and payments are recorded as interest expenses. The Com-
pany had interest rate swap contracts to receive variable rates of
interest of an average of 2.11% and 2.37% as of September 30,
2019 and 2018, respectively and paid fixed rates of interest (aver-
age rate of 1.95% and 1.95%, as of September 30, 2019 and 2018,
respectively).
Cash flow hedges of floating-rate
commercial papers
Interest rate risk management relating to the Group, excluding
SFS' and SGRE's businesses, uses derivative financial instruments
under a portfolio-based approach to manage interest risk actively
relative to a benchmark. Interest rate management of the SFS
and SGRE businesses remains to be managed separately, consid-
ering the term structure of SFS' and SGRE's financial assets and
liabilities on a portfolio basis. Neither approach qualifies for
hedge accounting treatment. Net cash receipts and payments in
connection with interest rate swap agreements are recorded as
interest expense in Other financial income (expenses), net.
Derivative financial instruments not designated
in a hedging relationship
INTEREST RATE RISK MANAGEMENT
The Company's operating units apply hedge accounting to cer-
tain significant forecast transactions and firm commitments de-
nominated in foreign currencies. Particularly, the Company en-
tered into foreign currency exchange contracts to reduce the risk
of variability of future cash flows resulting from forecast sales
and purchases as well as firm commitments. The risk mainly re-
sults from contracts denominated in US$ both from Siemens'
operating units entering into long-term contracts e.g. from the
project business and from the standard product business. The risk
is hedged against the Euro at an average rate of 1.1972 EUR/US$
(forward purchases of US$) and 1.2547 EUR/US$ (forward sales
of US$). The hedging transactions have an average remaining
maturity until 2020 (forward purchases of US$) as well as 2024
(forward sales of US$).
Cash flow hedges
contracts.
Increasing market fluctuations may result in significant earnings
and cash flow volatility risk for Siemens. The Company's operat-
ing business as well as its investment and financing activities are
affected particularly by changes in foreign exchange rates and
interest rates. In order to optimize the allocation of financial re-
sources across Siemens' segments and entities, as well as to
achieve its aims, Siemens identifies, analyzes and manages the
associated market risks. The Company seeks to manage and con-
trol these risks primarily through its regular operating and financ-
ing activities and uses derivative financial instruments when
deemed appropriate.
Interest
rate risk
548
Balance as of October 1, 2018
offset in the Statement
Related amounts not
161
213
340
341
cash flow hedges
661
1,049
1,606
2,568
Financial Position
therein: included in
of Financial Position
the Statement of
792
942
exchange contracts
Net amounts in
Foreign currency
3
7
3
7
Financial Position
Interest rate risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market interest rates. This risk arises whenever interest terms of
financial assets and liabilities are different. In order to manage
the Company's position with regard to interest rate risk, interest
income and interest expenses, Corporate Treasury performs a
comprehensive corporate interest rate risk management by using
fixed or variable interest rates from bond issuances and deriva-
tive financial instruments when appropriate. The interest rate risk
relating to the Group, excluding SFS' and SGRE's businesses, is
mitigated by managing interest rate risk actively relatively to a
benchmark. The interest rate risk relating to SFS' and SGRE's busi-
nesses is managed separately, considering the term structure of
financial assets and liabilities. The Company's interest rate risk
results primarily from funding in the U.S. dollar, British pound
and euro.
Asset
Sep 30, 2018
Liability
717
835
550
658
(in millions of €)
Other components of equity, net of income taxes, relating to
cash flow hedges reconciles as follows:
112 Consolidated Financial Statements
738
1,882
1,273
3,014
119
277
233
434
6
22
457
therein: included in
fair value hedges
Other (embedded
derivatives, options,
commodity swaps)
30
42
therein: included in
cash flow hedges
204
391
1,057
1,733
Net amounts
71
888
248
1,639
Interest rate swaps
and combined interest
and currency swaps
457
Hedging gains (losses)
If there are no conflicting country-specific regulations, all
Siemens operating units generally obtain any required financing
through Corporate Treasury in the form of loans or intercompany
clearing accounts. The same concept is adopted for deposits of
cash generated by the units.
Fiscal year
Consolidated Financial Statements
Consolidated Financial Statements
Stock awards are tied to performance criteria. The annual target
amount for stock awards can be bound to the average of earnings
per share (EPS, basic) of the past three fiscal years and/or to the
share price performance of Siemens relative to the share price
performance of five important competitors during the four-year
restriction period. The target attainment for the performance
criteria ranges between 0% and 200%. For awards granted since
fiscal 2019 settlement is in shares only corresponding to the ac-
tual target attainment. Awards granted prior to fiscal 2019, target
outperformances in excess of 100% are settled in cash. The vest-
ing period is four years and for awards granted until fiscal 2014,
five years.
The Company grants stock awards to members of the Managing
Board, members of the senior management and other eligible
employees. Stock awards are subject to a restriction period of
about four years and entitle the beneficiary to Siemens shares
following the restriction period without payment of consideration.
STOCK AWARDS
Share-based payment awards may be settled in newly issued
shares of capital stock of Siemens AG, in treasury shares or in
cash. Share-based payment awards may forfeit if the employ-
ment of the beneficiary terminates prior to the expiration of the
vesting period. In fiscal 2019 and 2018 expense from equity-set-
tled awards are €294 million and €306 million; cash-settled
awards resulted in a gain of €28 million in fiscal 2019 and ex-
pense of €80 million in fiscal 2018. The carrying amount of liabil-
ities from share-based payment transactions is €88 million and
€176 million, respectively, as of September 30, 2019 and 2018.
NOTE 26 Share-based payment
Amounts above do not represent economic credit risk, since they
consider neither collateral held nor valuation allowances already
recognized.
Trade receivables of operating units are generally rated internally;
approximately 42% have an investment grade rating and 58% have
a non-investment grade rating. Contract assets generally show
similar risk characteristics as trade receivables in operating units.
2,051
4,061
n/a
14
Stage 3
Stage 2
n/a
131
Stage 1
481
2,125
117
Stage 3
n/a
234
12,551
Stage 2
54
6,615
Stage 1
Lease
Receivables
Financial guarantees and
loan commitments
Loans and other debt instruments
under the general approach
Investment Grade Ratings
Non-Investment Grade Ratings
(in millions of €)
SFS' external financing portfolio disaggregates into credit risk
rating grades as of September 30, 2019 as follows (pre valuation
allowances):
at fair value. Those collaterals are provided in connection with
netting agreements for derivatives providing protection from the
risk of a counterparty's insolvency. As of September 30, 2019,
collateral held for credit-impaired receivables from finance leases
amounted to €55 million. As of September 30, 2019 and 2018,
collateral held for financial assets measured at amortized cost
amounted to €3,948 million and €3,608 million, respectively,
including €86 million for credit-impaired loans in SFS' asset
finance business. Those collaterals mainly comprised property,
plant and equipment. Credit risks arising from irrevocable loan
commitments are equal to the expected future pay-offs resulting
from these commitments.
As of September 30, 2019 and 2018, collateral of €835 million
and €550 million, respectively, relate to financial assets measured
The carrying amount is the maximum exposure to a financial as-
set's credit risk, without taking account of any collateral. Collat-
eral reduces the valuation allowance to the extent it mitigates
credit risk. Collateral needs to be specific, identifiable and legally
enforceable to be taken into account. Those collaterals are mostly
held in the portfolio of SFS.
647
Until fiscal 2014, additionally one portion of the variable compen-
sation component (bonus) for members of the Managing Board
was granted in the form of non-forfeitable awards of Siemens
stock (Bonus Awards) subject to a vesting period of one year.
Beneficiaries will receive one Siemens share without payment of
consideration for each Bonus Award, following an additional
waiting period of four years.
Since related taxation was not entirely certain until May 2019,
Stock Awards of Siemens AG that vested in November 2018 and
2017 were settled in cash rather than in equity instruments; the
fair values at modification date of €96 million and €89 million,
respectively, were reclassified from equity to liabilities.
Commitments to members of the Managing Board
In fiscal 2019 and 2018, agreements were entered into which en-
title members of the Managing Board to stock awards most of
which are contingent upon attaining the prospective perfor-
mance-based target of Siemens stock relative to five competitors.
The fair value of these entitlements amounting to €11 million and
€10 million, respectively, in fiscal 2019 and 2018, was calculated
by applying a valuation model. In fiscal 2019 and 2018, inputs to
that model include, for the majority of the stock awards granted,
an expected weighted volatility of Siemens shares of 21.72% and
22.12%, respectively, and a market price of €102.42 and €114.50
per Siemens share. Expected volatility was determined by refer-
ence to historic volatilities. The model applies a risk-free interest
rate of up to 0.14% and 0.08% in fiscal 2019 and 2018, respec-
tively, and an expected dividend yield of 3.71% in fiscal 2019 and
3.24% in fiscal 2018. Assumptions concerning share price correla-
tions were determined by reference to historic correlations.
Monthly Investment Plan
Under the Share Matching Plan, senior managers may invest a
specified part of their variable compensation in Siemens shares
(investment shares). The shares are purchased at the market
price at a predetermined date in the second quarter. Plan partic-
ipants receive the right to one Siemens share without payment
of consideration (matching share) for every three investment
shares continuously held over a period of about three years (vest-
ing period) provided the plan participant has been continuously
employed by Siemens until the end of the vesting period.
Share Matching Plan
In fiscal 2019, Siemens issued a new tranche under each of the
plans of the Share Matching Program.
SHARE MATCHING PROGRAM
AND ITS UNDERLYING PLANS
Settled
Modified
6,641,400
(77,283)
(17,505)
8,742,219
Non-vested, end of period
(780,193)
(643,619)
(271,362)
(386,041)
(545,225)
(603,572)
Vested and fulfilled
Forfeited
1,898,517
3,751,556
6,416,946
6,641,400
Non-vested, beginning of period
Granted
2018
2019
Sep 30, 2019
Liability
Changes in the stock awards held by members of the senior man-
agement and other eligible employees are:
In fiscal 2019 and 2018, 3,751,556 and 1,898,517 stock awards,
respectively, were granted contingent upon attaining the pro-
spective performance-based target of Siemens stock relative to
five competitors. The fair value of equity-settled stock awards
amounted to €168 million and €137 million, respectively, in fiscal
2019 and 2018; fair value was calculated by applying a valuation
model. In fiscal 2019 and 2018 inputs to that model include an
expected weighted volatility of Siemens shares of 21.73% and
22.17%, respectively, and a market price of €98.92 and €114.80
per Siemens share. Expected volatility was determined by refer-
ence to historic volatilities. The model applies a risk-free interest
rate of up to 0.16% in fiscal 2019 and up to 0.05% in fiscal 2018
and an expected dividend yield of 3.84% and 3.23% in fiscal 2019
and 2018, respectively. Assumptions concerning share price cor-
relations were determined by reference to historic correlations.
Commitments to members of the senior
management and other eligible employees
To analyze and monitor credit risks, the Company applies various
systems and processes. A main element is a central IT application
that processes data from operating units together with rating
and default information and calculates an estimate, which may
be used as a basis for individual bad debt provisions. Additionally,
qualitative information is considered to particularly incorporate
the latest developments.
As of September 30, 2019 and 2018, the VaR relating to the inter-
est rate was €722 million and €191 million. The increase was
driven mainly by higher interest rate volatilities, in particular for
the U.S. dollar, and an increase in interest rate sensitivity for the
euro, related to the €3.5 billion instruments issued in Septem-
ber 2019.
116 Consolidated Financial Statements
Ratings and individually defined credit limits are based on gener-
ally accepted rating methodologies, with information obtained
from customers, external rating agencies, data service providers
and Siemens' credit default experiences. Internal ratings consider
appropriate forward-looking information relevant to the specific
financial instrument like expected changes in the debtor's finan-
cial position, ownership, management or operational risks, as
well as broader forward-looking information, such as expected
macroeconomic, industry-related and competitive develop-
ments. The ratings also consider a country-specific risk compo-
nent derived from external country credit ratings. Ratings and
credit limits for financial institutions as well as Siemens' public
and private customers, which are determined by internal risk as-
sessment specialists, are continuously updated and considered
for investments in cash and cash equivalents and in determining
the conditions under which direct or indirect financing will be
offered to customers.
finance leases
Obligations under
62
8
806
indebtedness
Other financial
22,799
4,323 8,863
99 1,019
1,263
Loans from banks
4,789
Notes and bonds
23
liabilities
2022
to
2024
2021
2020
(in millions of €)
3
7
2025
and
there-
after
Fiscal year
The following table reflects our contractually fixed pay-offs for
settlement, repayments and interest. The disclosed expected un-
discounted net cash outflows from derivative financial liabilities
are determined based on each particular settlement date of an
instrument and based on the earliest date on which Siemens
could be required to pay. Cash outflows for financial liabilities
(including interest) without fixed amount or timing are based on
the conditions existing at September 30, 2019.
In addition, Siemens constantly monitors funding options avail-
able in the capital markets, as well as trends in the availability
and costs of such funding, with a view to maintaining financial
flexibility and limiting repayment risks.
Liquidity risk results from the Company's inability to meet its fi-
nancial liabilities. Siemens follows a deliberated financing policy
that is aimed towards a balanced financing portfolio, a diversified
maturity profile and a comfortable liquidity cushion. Siemens
mitigates liquidity risk by the implementation of effective work-
ing capital and cash management, arranged credit facilities with
highly rated financial institutions, via a debt issuance program
and via a global multi-currency commercial paper program.
Liquidity risk may also be mitigated by the Siemens Bank GmbH,
which increases the flexibility of depositing cash or refinancing.
LIQUIDITY RISK
115
Non-derivative financial
20
35
103
Siemens maintains a Credit Risk Intelligence Unit to which
numerous operating units from the Siemens Group regularly
transfer business partner data as a basis for a centralized internal
rating and credit limit recommendation process. Due to the iden-
tification, quantification and active management of credit risks,
this increases credit risk transparency.
The effective monitoring and controlling of credit risk through
credit evaluations and ratings is a core competency of our risk
management system. In this context, Siemens has implemented
a binding credit policy.
Siemens provides its customers with various forms of direct and
indirect financing particularly in connection with large projects.
Hence, credit risks are determined by the solvency of the debtors,
the recoverability of the collaterals, the success of projects we
invested in and the global economic development.
Credit risk is defined as an unexpected loss in financial instru-
ments if the contractual partner is failing to discharge its obliga-
tions in full and on time or if the value of collateral declines.
CREDIT RISK
2 A considerable portion result from asset-based lending transactions meaning that the respective
loans can only be drawn after sufficient collateral has been provided by the borrower.
1 Based on the maximum amounts Siemens could be required to settle in the event of default
by the primary debtor.
2
121
220
2,747
Irrevocable loan commitments²
447
Credit guarantees¹
206
207
180
741
Derivative financial liabilities
39
183
130
1,047
Other financial liabilities
2
3
17
11,388
Trade payables
An exposure is considered defaulted if the debtor is unwilling or
unable to pay its credit obligations. A range of internally defined
events trigger a default rating, including the opening of bank-
ruptcy proceedings, receivables being more than 90 days past
due, or a default rating by an external rating agency.
Asset
Stage 1
the Statement of
In connection with cash flow hedges
at fair value - Derivative financial instruments
Not designated in a hedge accounting relationship
(including embedded derivatives)
Financial liabilities under IAS 39 measured
In connection with cash flow hedges
In connection with fair value hedges
Not designated in a hedge accounting relationship
(including embedded derivatives)
Derivative financial instruments
1,286
15
1,270
Available-for-sale financial assets: debt instruments
425
165
1,823
6
3,592
327
3,259
6
Financial assets under IAS 39 measured at fair value
Total
Level 3
Level 2
Level 1
(in millions of €)
Sep 30, 2018
109
Consolidated Financial Statements
Available-for-sale financial assets: equity instruments
384
58
1,556
110 Consolidated Financial Statements
Amounts include foreign currency gains (losses) from recogniz-
ing and measuring financial assets and liabilities. Net gains
(losses) on financial assets and liabilities measured at FVTPL com-
prise fair value changes of derivative financial instruments, in-
cluding interest income and expense, for which hedge account-
ing is not applied, as well as dividends on equity instruments
measured at FVTPL.
(97)
(1,383)
465
33
2019
Fiscal year
Financial liabilities measured at amortized cost
Financial assets and financial liabilities at FVTPL
Loans, receivables and other debt instruments
measured at amortized cost
Cash and cash equivalents
(in millions of €)
Net gains (losses) of financial instruments are:
Company chose to recognize fair value changes in Other compre-
hensive income since that classification is considered more rele-
vant due to the nature of the investment. The fair value of
€228 million as of September 30, 2019 is determined based on
discounted cash flow calculations. The most significant unob-
servable input used to determine its fair value is the cash flow
forecast, which is mainly based on the future power generation
income. This income is generally subject to future market devel-
opments and thus price volatility. Since a long-term power pur-
chase agreement is in place that mitigates price volatility, signif-
icant changes to the cash flow forecast are unlikely and thus, no
significant effects on Other comprehensive income, net of in-
come taxes, are expected.
The largest equity instrument allocated to level 3 of the fair
value hierarchy is an investment in an offshore wind farm. The
1,882
Level 3 financial assets increased due to equity instruments pre-
viously measured at cost which were reclassified to fair value
measurement upon adopting IFRS 9 as of October 1, 2018. Fur-
thermore, Level 3 financial assets include venture capital invest-
ments of €291 million entered into by the Siemens venture capi-
tal business Next47. In fiscal 2019, new investments and
purchases of investments amounted to €153 million.
Fair values of derivative financial instruments are determined in
accordance with the specific type of instrument. Fair values of
derivative interest rate contracts are estimated by discounting
expected future cash flows using current market interest rates
and yield curves over the remaining term of the instrument. In-
terest rate futures are valued based on quoted market prices, if
available. Fair values of foreign currency derivatives are based on
forward exchange rates. Options are generally valued based on
quoted market prices or based on option pricing models. No com-
pensating effects from underlying transactions (e.g. firm com-
mitments and forecast transactions) are considered.
Fair value of equity instruments quoted in an active market is
based on price quotations at period-end date. Fair value of debt
instruments is either based on prices provided by price service
agencies or is estimated by discounting future cash flows using
current market interest rates.
567
165
165
567
738
738
245
245
22
22
1,615
58
The Company limits default risks resulting from derivative finan-
cial instruments by generally transacting with financial institu-
tions with a minimum credit rating of investment grade. Based on
Siemens' net risk exposure towards the counterparty, the resulting
credit risk is taken into account via a credit valuation adjustment.
384
889
889
In connection with fair value hedges
(including embedded derivatives)
Not designated in a hedge accounting relationship
Derivative financial instruments
Debt instruments measured at FVTPL
Financial assets measured at fair value
Equity instruments measured at FVTPL
Equity instruments measured at FVOCI
(in millions of €)
The following table allocates financial assets and financial liabil-
ities measured at fair value to the three levels of the fair value
hierarchy:
The fair value of notes and bonds is based on prices provided by
price service agencies at the period-end date (Level 2). The fair
value of loans from banks and other financial indebtedness, ob-
ligations under finance leases as well as other non-current finan-
cial liabilities is estimated by discounting future cash flows using
rates currently available for debt of similar terms and remaining
maturities (Level 2).
Fixed-rate and variable-rate receivables with a remaining term of
more than twelve months, including receivables from finance
leases, are evaluated by the Company based on parameters such
as interest rates, specific country risk factors, individual credit-
worthiness of the customer, and the risk characteristics of the
financed project. Based on this evaluation, allowances for these
receivables are recognized.
3,716
110
28,352
28,383
3,705
166
In connection with cash flow hedges
3,137
106
34,758
3,138
176
Sep 30, 2018
Carrying
amount
Fair value
Carrying
amount
Fair value
Sep 30, 2019
Loans from banks and other financial indebtedness
Obligations under finance leases
Notes and bonds
(in millions of €)
The following table presents the fair values and carrying amounts
of financial assets and financial liabilities measured at cost or
amortized cost for which the carrying amounts do not approxi-
Imate fair value:
Cash and cash equivalents includes €142 million and €200 mil-
lion as of September 30, 2019 and 2018, respectively, which are
not available for use by Siemens mainly due to minimum reserve
requirements with banks. As of September 30, 2019 and 2018,
the carrying amount of financial assets Siemens pledged as col-
lateral is €127 million and €126 million, respectively.
118 Consolidated Financial Statements
Under the Monthly Investment Plan employees other than senior
managers may invest a specified part of their compensation in
Siemens shares on a monthly basis over a period of twelve
months. Shares are purchased at market price at a predetermined
date once a month. If the Managing Board decides that shares
acquired under the Monthly Investment Plan are transferred to
the Share Matching Plan, plan participants will receive the right
to matching shares under the same conditions applying to the
Share Matching Plan described above with a vesting period of
about two years. The Managing Board decided that shares ac-
quired under the tranches issued in fiscal 2018 and 2017 are
transferred to the Share Matching Plan as of February 2019 and
February 2018, respectively.
33,205
Sep 30, 2019
Level 1
Level 2
In connection with cash flow hedges
(including embedded derivatives)
Not designated in a hedge accounting relationship
1,273
1,273
Financial liabilities measured at fair value - Derivative financial instruments
342
342
457
457
2,215
2,215
3,014
34
34
513
511
1
1
377
164
206
7
3,938
709
3,221
8
Total
Level 3
Fiscal 2018 net gains (losses) of financial instruments are not
comparable since those are under IAS 39:
(in millions of €)
Interest income (expense) includes interest from financial assets
and financial liabilities not at fair value through profit or loss:
Fiscal year
Foreign exchange translation differences
25
Recoveries of amounts previously written-off
(217)
To hedge foreign currency exchange and interest rate risks, de-
rivatives are contracted to achieve a 1:1 hedge ratio so that the
main characteristics match the underlying hedged items (e.g.
nominal amount, maturity) in a critical term match, which en-
sures an economic relationship between hedging instruments
and hedged items suitable for hedge accounting. The nominal
amounts of hedging instruments by maturity are:
NOTE 24 Derivative financial instru-
ments and hedging activities
198
1,210
2018
Fiscal year
Valuation allowance as of beginning of fiscal year
Increase in valuation allowances recorded in the
Consolidated Statements of Income in the current period
Write-offs charged against the allowance
(in millions of €)
In fiscal 2018, valuation allowances of current and long-term
receivables under the IAS 39 incurred loss model developed as
follows:
(141)
111
Impairment losses on financial instruments are presented in line
items Cost of sales, Selling and general administrative expenses
and Other financial income (expenses), net. Net losses in fiscal
2019 are €267 million, including €20 million on loan commit-
ments and financial guarantees. Impairment losses of €113 mil-
lion are mostly attributable to the SFS business and presented in
Other financial income (expenses), net.
184
198
891
68
12
54
as of September 30, 2019
Valuation allowance
Assets held for disposal and dispositions of
those entities
Reclassifications to line item
7
6
Consolidated Financial Statements
(25)
Reclassifications to line item Assets held for
(64)
Amounts offset in
664
Financial liabilities
Sep 30,
2018
2019
1,056
1,610
Financial assets
Sep 30,
2018
2019
2,575
Gross amounts
(in millions of €)
Fair values of each type of derivative financial instruments re-
ported as financial assets or financial liabilities in line items Other
current financial assets (liabilities) or Other financial assets (lia-
bilities) are:
fair value hedges
therein: included in
Siemens enters into master netting and similar agreements for
derivative financial instruments. Potential offsetting effects are
as follows:
disposal and dispositions of those entities
Valuation allowance as of fiscal year-end
OFFSETTING
1,195
7,842
8,248
More than
12 months
12 months
7,803
Up to
Sep 30, 2019
cash flow hedges
therein: included in
Interest rate swaps
Foreign currency exchange contracts
1,012
(in millions of €)
6,647
14
(2)
(6)
Contract
Assets
and other debt
instruments
under the simpli-
fied approach
Stage 3
Stage 2
Trade receivables
Loans and other debt instruments
under the general approach
Loans, receivables and other debt instruments measured at amortized cost
(in millions of €)
VALUATION ALLOWANCES FOR EXPECTED CREDIT
LOSSES
591
Financial assets and financial liabilities held for trading
(441)
169
Lease
Receivables
(946)
1,454
1,583
Total interest income on financial assets
Total interest expenses on financial liabilities
(5)
1,590
2018
2019
(in millions of €)
2018
Financial liabilities measured at amortized cost
Loans and receivables
Available-for-sale financial assets
Cash and cash equivalents
(in millions of €)
(973)
Valuation allowance
as of October 1, 2018
48
differences and other changes
Foreign exchange translation
2
7
2
n/a
n/a
previously written off
Recoveries of amounts
(72)
(105)
(39)
n/a
n/a
Write-offs charged against the allowance
36
32
136
26
3
13
of Income in the current period
recorded in the Consolidated Statements
Change in valuation allowances
211
160
877
64
11
Fiscal year
3,014
253
Compensation attributable to members of the Supervisory Board
comprises in fiscal 2019 and 2018 of a base compensation and
additional compensation for committee work and amounted to
€5.1 and €5.4 million (including meeting fees), respectively.
1009
Flender Industriegetriebe GmbH, Penig
10010
Gamesa Wind GmbH, Aschaffenburg
100
Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
Grünwald
1009
HaCon Ingenieurgesellschaft mbH, Hanover
100
HSP Hochspannungsgeräte GmbH, Troisdorf
10010
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
Grünwald
1009
ILLIT Grundstücksverwaltungs-Management GmbH,
Grünwald
85
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
Grünwald
1009
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
100
KACO new energy GmbH, Neckarsulm
100
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
Grünwald
1009
KompTime GmbH, Munich
10010
Kyros 52 Aktiengesellschaft, Hanover
1007
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
Grünwald
10010
Flender GmbH, Bocholt
1009
Befund24 GmbH, Erlangen
85
REMECH Systemtechnik GmbH, Unterwellenborn
10010
Berliner Vermögensverwaltung GmbH, Berlin
10010
Capta Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald
RISICOM Rückversicherung AG, Grünwald
Siemens Bank GmbH, Munich
100
100
100
Dade Behring Grundstücks GmbH, Kemnath
100
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
Grünwald
Siemens Beteiligungen Europa GmbH, Munich
Siemens Beteiligungen Inland GmbH, Munich
10010
EBV Holding Verwaltung GmbH, Oldenburg
100
eos.uptrade GmbH, Hamburg
100
Siemens Beteiligungen Management GmbH, Kemnath
Siemens Beteiligungen USA GmbH, Berlin
1007
10010
evosoft GmbH, Nuremberg
100 10
FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
Munich
Siemens Beteiligungsverwaltung GmbH & Co. OHG,
Kemnath
1009,12
10010
1009
Kyros 54 GmbH, Munich
1007
1009
1007
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
1007
Siemens Mobility Real Estate Management GmbH,
Grünwald
1007
Siemens Compressor Systems GmbH, Leipzig
10010
Siemens Digital Logistics GmbH, Frankenthal
10010
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
100
1009
in %
Siemens Finance & Leasing GmbH, Munich
Siemens Financial Services GmbH, Munich
10010
Siemens OfficeCenter Verwaltungs GmbH, Grünwald
Siemens Power Control GmbH, Langen
100
10010
Siemens Fonds Invest GmbH, Munich
10010
Siemens Gamesa Renewable Energy GmbH & Co. KG,
Hamburg
Siemens Private Finance Versicherungsvermittlungs-
gesellschaft mbH, Munich
10010
100⁹
Siemens Project Ventures GmbH, Erlangen
10010
100 10
100
Equity interest
Siemens Campus Erlangen Objektmanagement GmbH,
Grünwald
Kyros 58 GmbH, Munich
1007
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
Grünwald
1009
Kyros 60 GmbH, Munich
1007
Kyros 61 GmbH, Munich
1007
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
Grünwald
1009
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
4 No control due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
126 Consolidated Financial Statements
Equity interest
September 30, 2019
in %
September 30, 2019
5 No significant influence due to contractual arrangements or legal circumstances.
Siemens Gamesa Renewable Energy Management GmbH,
Hamburg
R&S Restaurant Services GmbH, Munich
Atecs Mannesmann GmbH, Erlangen
116
171
42
40
216
243
218
156
388
421
178
As of September 30, 2019 and 2018, guarantees to joint ventures
and associates amounted to €470 million and €438 million, re-
spectively. As of September 30, 2019 and 2018, guarantees to
joint ventures amounted to €328 million and €261 million, re-
spectively. As of September 30, 2019 and 2018, loans given to
joint ventures and associates amounted to €679 million and
€485 million, therein €662 million and €469 million related to
joint ventures, respectively. The related book values amounted
to €481 million and €388 million, therein €477 million and
€385 million related to joint ventures, respectively. Valuation
adjustments recognized in fiscal 2019 and 2018 reduced book
values by €100 million and €17 million, therein €100 million and
€21 million related to joint ventures, respectively. As of Septem-
ber 30, 2019 and 2018, the Company had commitments to make
capital contributions of €145 million and €14 million to its joint
ventures and associates, therein €127 million and €4 million re-
lated to joint ventures, respectively. As of September 30, 2019
and 2018, there were loan commitments to joint ventures
amounting to €361 million and €178 million, respectively.
RELATED INDIVIDUALS
In fiscal 2019 and 2018, members of the Managing Board re-
ceived cash compensation of €22.0 million and €21.9 million.
The fair value of stock-based compensation amounted to
€11.1 million and €9.8 million for 254,693 and 100,511 stock
awards, respectively, in fiscal 2019 and 2018. For awards granted
in fiscal 2019 settlement will be in shares only corresponding to
the actual target attainment. Awards granted in fiscal 2018, tar-
get outperformances in excess of 100% will be settled in cash. In
fiscal 2019 and 2018, the Company granted contributions under
the BSAV to members of the Managing Board totaling €5.6 mil-
lion and €5.4 million, respectively.
Therefore in fiscal 2019 and 2018, compensation and benefits,
attributable to members of the Managing Board amounted to
€38.6 million and €37.1 million in total, respectively.
In fiscal 2019 and 2018, expense related to share-based payment
amounted to €4.7 million and €13.6 million, respectively.
Former members of the Managing Board and their surviving
dependents received emoluments within the meaning of Sec-
tion 314 para. 1 No. 6 b of the German Commercial Code totaling
€21.1 million and €39.9 million in fiscal 2019 and 2018, respec-
tively.
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2019 and 2018 amounted
to €175.7 million and €168.2 million, respectively.
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an indi-
vidual basis in the Compensation Report, which is part of the
Combined Management Report.
In fiscal 2019 and 2018, no other major transactions took place
between the Company and the members of the Managing Board
and the Supervisory Board.
Some of our board members hold, or in the last year have held,
positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary
course of our business whereby we buy and sell a wide variety of
products and services on arm's length terms.
124 Consolidated Financial Statements
NOTE 32
Principal accountant fees
and services
Fees related to professional services rendered by the Company's
principal accountant, EY, for fiscal 2019 and 2018 are:
Fiscal year
2018
175
Joint ventures
Associates
2019
2018
Siemens has relationships with many joint ventures and associ-
ates in the ordinary course of business whereby Siemens buys
and sells a wide variety of products and services generally on
arm's length terms.
Purchases of goods
and services
and other expenses
Fiscal year
2018
Sales of goods
and services and
other income
Fiscal year
(in millions of €)
2019
2018
2019
Joint ventures
629
1,574
121
124
(in millions of €)
Associates
264
245
244
933
1,838
366
368
Liabilities
Sep 30,
2018
Receivables
Sep 30,
(in millions of €)
2019
304
2019
Audit services
51.1
Equity interest
NEO New Oncology GmbH, Cologne
100
September 30, 2019
in %
Next47 GmbH, Munich
10010
Next47 Services GmbH, Munich
10010
SUBSIDIARIES
Omnetric GmbH, Munich
100
Germany (136 companies)
100
Adwen Blades GmbH, Stade
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
Objekt Tübingen KG, Grünwald
1009
Adwen GmbH, Bremerhaven
100
Partikeltherapiezentrum Kiel Holding GmbH i. L., Erlangen
100
Airport Munich Logistics and Services GmbH, Hallbergmoos
10010
Alpha Verteilertechnik GmbH, Cham
10010
Project Ventures Butendiek Holding GmbH, Erlangen
Projektbau-Arena-Berlin GmbH, Grünwald
10010
10010
100
100
Munipolis GmbH, Munich
Mentor Graphics (Deutschland) GmbH, Munich
50.6
Other attestation services
Tax services
6.1
12.9
0.1
57.3
0.2
63.7
In fiscal 2019 and 2018, 35% and 48%, respectively, of the total
fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
schaft, Germany.
Audit Services relate primarily to services provided by EY for au-
diting Siemens' Consolidated Financial Statements, for auditing
financial statements of Siemens AG and its subsidiaries, for re-
views of interim financial statements being integrated into the
audit, for project-accompanying IT audits as well as for audit ser-
vices in connection with the implementation of new accounting
standards. Other Attestation Services include primarily audits of
financial statements as well as other attestation services in con-
nection with M&A activities, attestation services related to the
sustainability reporting, audits of employee benefit plans, com-
fort letters and other attestation services required under regula-
tory requirements, contractually agreed or requested on a volun-
tary basis.
NOTE 33 Corporate governance
The Managing and Supervisory Boards of Siemens Aktiengesell-
schaft and of Siemens Healthineers AG, a publicly listed subsidi-
ary of Siemens, provided as of October 1, 2019, and Septem-
ber 30, 2019, respectively, the declarations required under
Section 161 of the German Stock Corporation Act (AktG) and
made them publicly available on their company websites at
WWW.SIEMENS.COM/GCG-CODE and at
WWW.CORPORATE.SIEMENS-
HEALTHINEERS.COM/INVESTOR-RELATIONS/CORPORATE-GOVERNANCE, re-
100
spectively.
In October 2019, Siemens Healthineers acquired Corindus Vascu-
lar Robotics, Inc., USA, which develops and provides robotic
systems for minimally invasive endovascular procedures. The
acquired business will be integrated into Siemens Healthineers.
By combining Siemens Healthineers' cardiovascular and neuro-
interventional therapy systems with Corindus' innovative tech-
nology, Siemens Healthineers is able to drive procedure optimi-
zation for image-based minimally invasive therapies. The
purchase price paid in cash is €1.0 billion as of the acquisition
date. The purchase price allocation as of the acquisition date is
not yet available. It is expected that the major part of the pur-
chase price will be allocated to Other intangible assets and Good-
will. Resulting Other intangible assets will mainly relate to tech-
nology for robotic systems. Goodwill will comprise intangible
assets that are not separable such as employee know-how and
synergy effects expected by combining Corindus' robotic systems
with Siemens Healthineers' therapy systems as well as its digiti-
zation and artificial intelligence solutions.
In November 2019, Siemens Healthineers acquired 75% of the
ownership interest of ECG Management Consultants (ECG), a
leading consulting company based in the US specializing in
healthcare and providing a comprehensive suite of advisory
services around strategic, financial, operational and technology-
related challenges facing healthcare providers today. The busi-
ness will be integrated into Siemens Healthineers and will allow
its global Enterprise Services business to tap into adjacent
growth markets. The preliminary purchase price paid in cash
amounted to US$261 million (€234 million as of the acquisition
date). In addition, financial liabilities of ECG of US$143 million
(€129 million as of the acquisition date) were redeemed by
Siemens Healthineers. The purchase price allocation as of the
acquisition date is not yet available. It is expected that the major
part of the purchase price will be allocated to Goodwill, which
comprises intangible assets that are not separable such as
employee know-how. The non-controlling interests of 25% will
be measured at the proportionate share in the amounts of the
acquired net assets (excluding goodwill).
Consolidated Financial Statements
125
NOTE 35 List of subsidiaries and
associated companies pursuant to
Section 313 para. 2 of the German
Commercial Code
Equity interest
September 30, 2019
Kyros 62 GmbH, Munich
1007
Kyros 63 GmbH, Munich
1007
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
10010
NOTE 34 Subsequent events
Siemens Real Estate GmbH & Co. KG, Kemnath
100
1007
Flender S.P.R.L., Beersel/Belgium
100
Europe, Commonwealth of Independent States
Samtech SA, Angleur/Belgium
100
(C.I.S.), Africa, Middle East (without Germany)
(525 companies)
Siemens Gamesa Renewable Energy Belgium BVBA,
Beersel/Belgium
100
ESTEL Rail Automation SPA, Algiers/Algeria
51
Siemens Gamesa Renewable Energy BVBA,
Siemens Spa, Algiers/Algeria
100
Beersel/Belgium
100
Siemens S.A., Luanda/Angola
51
Siemens Healthcare NV, Beersel/Belgium
100
Mentor Graphics Development Services CJSC,
Yerevan/Armenia
Siemens Industry Software NV, Leuven/Belgium
100
100
Siemens Mobility S.A./N.V, Beersel/Belgium
100
ETM professional control GmbH, Eisenstadt/Austria
1007
Antwerp/Belgium
100
Zeleni Real Estate GmbH & Co. KG, Kemnath
Trench Austria GmbH, Leonding/Austria
100
Windfarm 35 GmbH, Oldenburg
100
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
Windfarm 40 GmbH, Oldenburg
100
GmbH, Vienna/Austria
100
Windfarm 41 GmbH, Oldenburg
100
Windfarm Groß Haßlow GmbH, Oldenburg
100
100
Siemens Gamesa Renevable Energy Limited Liability
Company, Baku/Azerbaijan
Windfarm Ringstedt II GmbH, Oldenburg
100
Siemens W.L.L., Manama/Bahrain
51
Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
Limited Liability Company Siemens Technologies,
Wiepkenhagen
100
Minsk/Belarus
100
Zeleni Holding GmbH, Kemnath
100
Dresser-Rand Machinery Repair Belgie N.V.,
100
Siemens S.A./N.V., Beersel/Belgium
100
Flender GmbH, Vienna/Austria
100
Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
Siemens d.d., Zagreb/Croatia
51
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Industry Software GmbH, Linz/Austria
100
Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
100
100
Siemens Gas and Power d.o.o., Zagreb/Croatia
Siemens Konzernbeteiligungen GmbH, Vienna/Austria
100
Siemens Healthcare d.o.o., Zagreb/Croatia
Siemens Gebäudemanagement & -Services G.m.b.H.,
Vienna/Austria
1007
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
128 Consolidated Financial Statements
1 Control due to a majority of voting rights.
100
100
1007
100
Siemens d.o.o. Sarajevo - U Likvidaciji,
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
100
Sarajevo/Bosnia and Herzegovina
100
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
100
69
Siemens EOOD, Sofia/Bulgaria
100
KDAG Beteiligungen GmbH, Vienna/Austria
Siemens SARL, Abidjan/Côte d'Ivoire
100
100
Omnetric GmbH, Vienna/Austria
100
Siemens Gas and Power EOOD, Sofia/Bulgaria
1007
Siemens Aktiengesellschaft Österreich, Vienna/Austria
100
Siemens Healthcare EOOD, Sofia/Bulgaria
100
Siemens Gamesa Renewable Energy GmbH, Vienna/Austria
Siemens Gas and Power GmbH, Vienna/Austria
100
Siemens Mobility EOOD, Sofia/Bulgaria
100
Siemens Gamesa Renewable Energy EOOD, Sofia/Bulgaria
Windfarm 33 GmbH, Oldenburg
52
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
Siemens Treasury GmbH, Munich
10010
Siemens Healthineers Beteiligungen GmbH & Co. KG,
Kemnath
Siemens Venture Capital Fund 1 GmbH, Munich
1007
100
Siemens-Fonds C-1, Munich
100
Siemens Healthineers Beteiligungen Verwaltungs-GmbH,
Kemnath
Siemens-Fonds Pension Captive, Munich
100
1007
Siemens-Fonds S-7, Munich
85
100
1009
Siemens-Fonds S-8, Munich
100
Siemens Immobilien Management GmbH, Grünwald
1007
Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
1009
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
1009
Siemensstadt Management GmbH, Grünwald
1007
Siemens Industry Software GmbH, Cologne
100
Siemens Immobilien GmbH & Co. KG, Grünwald
Siemens Insulation Center GmbH & Co. KG, Zwönitz
Siemens Healthineers AG, Munich
Siemens Trademark Management GmbH, Kemnath
Siemens Real Estate Management GmbH, Kemnath
1007
Siemens Gas and Power GmbH & Co. KG, Munich
1007
Siemens Gas and Power Management GmbH, Munich
1007
Siemens Spezial-Investmentaktiengesellschaft mit TGV,
Munich
100
Siemens Gas and Power Real Estate GmbH & Co. KG,
Grünwald
Siemens Technology Accelerator GmbH, Munich
10010
1007,9
Siemens Gas and Power Real Estate Management GmbH,
Grünwald
1007
1007
Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Technopark Nürnberg Verwaltungs GmbH,
Grünwald
1009
1009
100
1007
Siemens Traction Gears GmbH, Penig
100
Siemens Healthcare Diagnostics Products GmbH, Marburg
100
Siemens Trademark GmbH & Co. KG, Kemnath
1009
Siemens Healthcare GmbH, Munich
100
Siemens Global Innovation Partners Management GmbH,
Munich
JOINT VENTURES AND ASSOCIATES
1009
1007
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Consolidated Financial Statements
127
Equity interest
Equity interest
September 30, 2019
in %
September 30, 2019
6 Significant influence due to contractual arrangements or legal circumstances.
in %
10010
VMZ Berlin Betreibergesellschaft mbH, Berlin
100
Siemens Metals Technologies Vermögensverwaltungs
GmbH, Vienna/Austria
100
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
Munich
Siemens Mobility GmbH, Vienna/Austria
100
10010
Siemens Personaldienstleistungen GmbH, Vienna/Austria
100
Weiss Spindeltechnologie GmbH, Maroldsweisach
100
Trench Germany GmbH, Bamberg
Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
5 No significant influence due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Liquidity One, Munich
100
Siemens Logistics GmbH, Constance
10010
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
100
1009
10010
10010
10010
Siemens Medical Solutions Health Services GmbH,
Grünwald
SIMAR Süd Grundstücks-GmbH, Grünwald
10010
4 No control due to contractual arrangements or legal circumstances.
100
10010
Siemens Middle East Holding GmbH & Co. KG, Grünwald
1007
SIMOS Real Estate GmbH, Munich
10010
Siemens Middle East Management GmbH, Grünwald
1007
Siemens Mobility GmbH, Munich
100
SYKATEC Systeme, Komponenten, Anwendungstechnologie
GmbH, Erlangen
10010
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
SIMAR West Grundstücks-GmbH, Grünwald
NOTE 31 Related party transactions
in %
Consolidated Financial Statements
8,870
8,770
45
51
8,916
123
14,506
14,412
13,315
105
110
14,517
13,425
12,749
11,875
10,225
9,119
3
10,227
9,122
93,659
87,341
80,720
77,542
1,915
1,984
82,635
11,025
18,125
17,663
175
2018
14,761
Intersegment Revenue
2019
769
Fiscal year
2018
2019
Total revenue
Fiscal year
2018
15,587
1000
79,526
15,853
15,319
826
16,087
15,198
13,627
803
819
15,225
14,445
18,451
17,473
17,950
190
2019
832
825
777
> Financial Services (SFS) supports its customers' investments
with leasing solutions and equipment, project and structured
financing in the form of debt and equity investments.
In May 2019, Siemens announced its plans to carve out Gas and
Power into a separately managed company and to spin-off the
new company in connection with a subsequent public listing of
the new company while maintaining significant influence. Prior
to the spin-off, Siemens plans to contribute its stake in Siemens
Gamesa Renewable Energy S.A. to the new company. The public
listing is planned before the end of fiscal 2020.
PORTFOLIO COMPANIES (POC)
consists of a broad range of businesses, which, at the end of
fiscal 2019, mainly include the business types application specific
solutions (process solutions), electric motors, converters and
generators (large drive applications), gear units and couplings
(mechanical drives) and sorting technology and solutions for
mail, parcel, baggage and cargo handling (Siemens Logistics).
POC also includes at-equity investments.
120 Consolidated Financial Statements
Profit
Assets
Free cash flow
Fiscal year
Sep 30,
Fiscal year
Additions to intangible assets
and property, plant & equipment
Fiscal year
Amortization,
depreciation & impairments
Siemens Gamesa Renewable Energy, designs, develops and
manufactures wind turbines, and is active in the develop-
ment, construction and sale of wind farms; it provides ser-
vices including management, operation and maintenance of
wind farms,
Fiscal year
2018
2019
2018
2019
2018
2019
2018
2019
2018
2,880
2,898
10,626
9,993
2019
Fiscal year
➤ Siemens Healthineers a supplier of technology to the health-
care industry and a leader in diagnostic imaging and labora-
tory diagnostics
> Gas and Power, offers a broad spectrum of products, solutions
and services for generating electricity, for producing and
transporting oil and gas, as well as for downstream and oil
and gas-related operations, and for installing and operating
transmission grids,
778
55
46
832
5,806
5,569
4,971
4,377
555
554
5,526
4,930
(2,525)
> Mobility, combines all Siemens businesses in the area of pas-
senger and freight transportation, including rail vehicles, rail
automation systems, rail electrification systems, road traffic
technology, digital solutions and related services,
(2,584)
(2,237)
83,044
(2,298)
97,999
(2,438)
91,296
380
86,849
346
83,044
2
825
NEW ORGANIZATIONAL STRUCTURE
In fiscal 2019, Siemens changed its organizational structure and
adjusted the composition of its reportable segments. The previous
Divisions were substituted by the Operating and Strategic Com-
panies to give Siemens' individual businesses more entrepreneur-
ial freedom under the strong Siemens brand in order to sharpen
their focus on their respective markets. Prior year information was
recast to conform to the fiscal 2019 segment reporting format.
DESCRIPTION OF REPORTABLE SEGMENTS
➤ Digital Industries, offers a comprehensive product portfolio
and system solutions for automation used in discrete and pro-
cess industries, complemented by product lifecycle and data-
driven services,
> Smart Infrastructure, supplies and intelligently connects en-
ergy systems and building technologies, to significantly im-
prove efficiency and sustainability and support its customers
to address major technology shifts,
(2,144)
86,849
14,422
External revenue
16,287
Settled
1,850,052
943,399
739,238
(702,125) (758,548)
(99,487)
(105,092)
(43,178)
Research and development
45
42
45
42
Administration
and general services
37
37
37
37
Forfeited
383
383
377
(38,346)
Outstanding, end of period
1,785,913
1,692,909
NOTE 28
Earnings per share
The weighted average fair value of matching shares granted in
fiscal 2019 and 2018 amounting to €76.76 and €89.75 per share
was determined as the market price of Siemens shares less the
present value of expected dividends taking into account non-vest-
ing conditions.
JUBILEE SHARE PROGRAM
For their 25th and 40th service anniversary eligible employees re-
ceive jubilee shares. There were 4.23 million and 4.24 million
entitlements to jubilee shares outstanding as of September 30,
2019 and 2018, respectively.
NOTE 27 Personnel costs
(shares in thousands; earnings per share in €)
Income from continuing operations
Less: Portion attributable to
non-controlling interest
377
Income from continuing operations
attributable to shareholders of Siemens AG
Weighted average shares outstanding - basic
Effect of dilutive share-based payment
Effect of dilutive warrants
Vested and fulfilled
1,692,909
Under the Base Share Program employees of Siemens AG and
participating domestic Siemens companies may invest a fixed
amount of their compensation in Siemens shares, sponsored by
Siemens. The shares are bought at market price at a predeter-
mined date in the second quarter and grant the right to receive
matching shares under the same conditions applying to the
Share Matching Plan described above. The fair value of the Base
Share Program amounted to €33 million and €37 million in fiscal
2019 and 2018, respectively.
Resulting Matching Shares
In fiscal 2019 and 2018, severance charges amount to €619 mil-
lion and €923 million, respectively, thereof at Gas and Power
€242 million and €374 million. Personnel costs for continuing
and discontinued operations amount to €31,222 million and
€30,497 million, respectively, in fiscal 2019 and 2018.
Employees were engaged in (averages; based on headcount):
Continuing
Continuing and
discontinued
operations
operations
Fiscal year
Fiscal year
(in thousands)
2019
2018
Granted
2019
2019
Fiscal year
2018
Manufacturing and services
232
231
232
231
Sales and marketing
69
67
69
67
Outstanding, beginning of period
2018
2,635
Fiscal year
2018
1,368
31,219
30,493
Consolidated Financial Statements
119
NOTE 29
Segment information
(in millions of €)
Digital Industries
Smart Infrastructure
Gas and Power
Mobility
Siemens Healthineers
1,263
Siemens Gamesa Renewable Energy
Financial Services
Portfolio Companies
Reconciliation to
Consolidated Financial Statements
Siemens (continuing operations)
2019
15,944
16,244
19,975
12,894
Orders
Fiscal year
2018
Industrial Businesses
2019
post-employment benefits
3,809
5,646
5,996
474
313
5,172
807,273
10,657
380
5,683
815,063
11,600
Weighted average shares outstanding - diluted
818,309
1,653
828,316
Basic earnings per share
(from continuing operations)
Diluted earnings per share
Expenses relating to
6.41
6.32
6.86
(from continuing operations)
Fiscal year
(in millions of €)
2019
2018
Wages and salaries
25,972
25,316
Statutory social welfare contributions
and expenses for optional support
3,984
6.97
2,610
8,821
341
(1,133)
(1,164)
Asset-based adjustments:
Eliminations, Corporate Treasury,
Intragroup financing receivables
52,771
55,352
and other reconciling items
(215)
(318)
Tax-related assets
4,170
3,236
Reconciliation to
Consolidated Financial Statements
(2,028)
(1,135)
Liability-based adjustments
49,191
46,850
Eliminations, Corporate Treasury, other items
Reconciliation to
(39,702)
(44,133)
Consolidated Financial Statements
69,995
63,653
NOTE 30 Information about geographies
acquired in business combinations
(1,277)
(114)
Assets Corporate items and pensions
122
Consolidated Financial Statements
RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Profit
In fiscal 2019 and 2018, Profit of SFS includes interest income of
€1,331 million and €1,220 million, respectively and interest ex-
penses of €564 million and €495 million, respectively.
Fiscal year
Assets
(in millions of €)
2019
2018
Real Estate Services
145
Revenue by location
140
Corporate items
(562)
631
(in millions of €)
2019
2018
Centrally carried pension expense
(264)
(423)
Assets Real Estate Services
3,678
3,625
Amortization of intangible assets
Sep 30,
of customers
Revenue by location
of companies
Fiscal year
83,044
86,849
83,044
52,143
49,856
thereof Germany
12,282
11,729
18,332
17,270
8,701
8,343
thereof countries outside of Germany
86,849
74,567
68,517
65,773
43,442
41,513
therein U.S.
17,993
16,012
18,516
16,470
20,296
18,767
Non-current assets consist of property, plant and equipment,
goodwill and other intangible assets.
71,315
POC AND REAL ESTATE SERVICES
POC follows the measurement principles of the segments except
for SFS. Real Estate Services applies the measurement principles
of SFS.
Siemens
5,284
(in millions of €)
2019
2018
2019
Fiscal year
2018
2019
Non-current
assets
Sep 30,
2018
Europe, C.I.S., Africa, Middle East
44,360
42,782
48,002
4,946
46,682
24,514
Americas
23,796
22,115
22,992
21,452
316
20,395
Asia, Australia
18,693
18,147
15,854
14,909
25,065
-
21,795
Amortization, depreciation and impairments
Amortization, depreciation and impairments includes deprecia-
tion and impairments of property, plant and equipment as well
as amortization and impairments of intangible assets each net of
reversals of impairment.
2,461
2,221
13,889
12,392
1,618
1,673
575
512
620
519
482
483
3,703
174
3,823
375
498
415
647
645
8,986
8,857
48,438
45,949
8,000
7,084
2,120
1,977
408
184
143
175
MEASUREMENT
668
639
1,500
1,574
5,071
4,702
1,572
1,128
247
236
273
241
679
722
12,103
12,107
863
301
309
330
533
604
983
958
3,045
2,933
903
998
2,924
2,823
Base Share Program
633
3,494
3,419
RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Real Estate Services - manages the Group's real estate business
portfolio, operates the properties, and is responsible for building
projects and the purchase and sale of real estate; excluded are
Siemens Gamesa Renewable Energy, the carved-out real estate
of Mobility and since January 2018 Siemens Healthineers.
Corporate items - includes corporate costs, such as group man-
aging costs, basic research of Corporate Technology, IoT, Siemens
Global Business services, corporate projects and results of corpo-
rate-related derivative activities. Corporate items also include
equity interests, activities generally intended for closure as well
as activities remaining from divestments and discontinued oper-
ations.
Centrally carried pension expense - includes the Company's
pension related income (expense) not allocated to the segments,
POC or Real Estate Services.
Eliminations, Corporate Treasury and other reconciling
items - comprise consolidation of transactions within the seg-
ments, certain reconciliation and reclassification items as well as
central financing activities. It also includes interest income and
expense, such as, for example, interest not allocated to segments
or POC (referred to as financing interest), interest related to cen-
tral financing activities or resulting consolidation and reconcilia-
tion effects on interest.
MEASUREMENT - SEGMENTS
Accounting policies for Segment information are generally the
same as those used for the Consolidated Financial Statements.
Lease transactions, however, are classified as operating leases for
internal and segment reporting purposes. Intersegment trans-
actions are based on market prices.
Revenue
Revenue includes revenue from contracts with customers and
revenue from leasing activities. In fiscal 2019 and 2018, lease rev-
enue is generated mainly at Siemens Healthineers amounting
to €233 million and €179 million, Financial Services €259 mil-
lion and €247 million, and Siemens Real Estate €72 million and
€77 million, respectively. In fiscal 2019 and 2018, Digital indus-
tries recognized €4,039 million and €3,560 million revenue, re-
spectively, from its software business, Smart Infrastructure rec-
ognized €5,530 million and €5,302 million in its product business
and Gas and Power recognized €8,025 million and €7,756 million
in its service business. Revenues of Mobility are mainly derived
from construction-type business.
Profit
2,602
Siemens' Managing Board is responsible for assessing the perfor-
mance of the segments (chief operating decision maker). The
Company's profitability measure of the segments except for SFS
is earnings before financing interest, certain pension costs, in-
come taxes and amortization expenses of intangible assets ac-
quired in business combinations as determined by the chief op-
erating decision maker (Profit). The major categories of items
excluded from Profit are presented below.
121
Financing interest, excluded from Profit, is any interest income or
expense other than interest income related to receivables from
customers, from cash allocated to the segments and interest ex-
penses on payables to suppliers. Financing interest is excluded
from Profit because decision-making regarding financing is typi-
cally made at the corporate level.
Amortization expenses of intangible assets acquired in business
combinations are not part of Profit. Furthermore, income taxes
are excluded from Profit since income tax is subject to legal struc-
tures, which typically do not correspond to the structure of the
segments. The effect of certain litigation and compliance issues
is excluded from Profit, if such items are not indicative of perfor-
mance. This may also be the case for items that refer to more
than one reportable segment, SRE and (or) POC or have a corpo-
rate or central character. Costs for support functions are primarily
allocated to the segments.
Profit of the segment SFS
In contrast to performance measurement principles applied to
other segments, interest income and expenses are included, since
interest is an important source of revenue and expense of SFS.
Asset measurement principles
Management determined Assets (Net capital employed) as a
measure to assess capital intensity of the segments except for
SFS. Its definition corresponds to the Profit measure except for
amortization expenses of intangible assets acquired in business
combinations which are not part of Profit, however, the related
intangible assets are included in the segments' Assets. Segment
Assets is based on Total assets of the Consolidated Statements of
Financial Position, primarily excluding intragroup financing re-
ceivables, tax related assets and assets of discontinued opera-
tions, since the corresponding positions are excluded from Profit.
The remaining assets are reduced by non-interest-bearing liabili-
ties other than tax related liabilities, e.g. trade payables, to derive
Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
include the project-specific intercompany financing of a long-
term project. Assets of Siemens Gamesa Renewable Energy and
Siemens Healthineers include real estate, while real estate of all
other Siemens segments is carried at SRE, except for carved-out
real estate of Mobility.
Orders
Orders are determined principally as estimated revenue of ac-
cepted purchase orders for which enforceable rights and obliga-
tions exist as well as subsequent order value changes and adjust-
ments, excluding letters of intent. To determine orders, Siemens
considers termination rights and customer's creditworthiness.
As of September 30, 2019 and 2018, order backlog totaled
€146 billion and €132 billion; thereof Digital Industries €5 billion
and €5 billion, Smart Infrastructure €10 billion and €9 billion,
Gas and Power €51 billion and €47 billion, Mobility €33 billion
and €29 billion, Siemens Healthineers €18 billion and €16 billion
and Siemens Gamesa Renewable Energy €26 billion and €23 bil-
lion. In fiscal 2020, Siemens expects to convert approximately
€50 billion of the September 30, 2019 order backlog into reve-
nue; thereof at Digital Industries approximately €4 billion, Smart
Infrastructure approximately €7 billion, Gas and Power approxi-
mately €13 billion, Mobility approximately €8 billion, Siemens
Healthineers approximately €6 billion and Siemens Gamesa
Renewable Energy approximately €9 billion.
Free cash flow definition
Free cash flow of the segments, except for SFS, constitutes cash
flows from operating activities less additions to intangible assets
and property, plant and equipment. It excludes financing inter-
est, except for cases where interest on qualifying assets is capi-
talized or classified as contract costs; it also excludes income tax
as well as certain other payments and proceeds. Free cash flow
of SFS includes related financing interest payments and pro-
ceeds; income tax payments and proceeds of SFS are excluded.
632
Consolidated Financial Statements
2,610
Decisions on essential pension items are made centrally. Accord-
ingly, Profit primarily includes amounts related to service cost of
pension plans only, while all other regularly recurring pension
related costs are included in reconciliations in line item Centrally
carried pension expense.
240
27,628
29,901
267
621
553
27
35
208
(71)
(305)
1,915
1,685
45
(14)
220
88
387
77
500
(2,794)
5,872
63,653
138,915
(1,809)
5,814
150,248
69,995
(1,135)
(2,028)
7,518
121
110
8,050
Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
Siemens Rail Systems Project Limited,
100
100
Siemens Participações Ltda., São Paulo/Brazil
100
Frimley, Surrey/United Kingdom
Surrey/United Kingdom
Siemens Mobility Soluções de Mobilidade Ltda.,
São Paulo/Brazil
Siemens Rail Systems Project Holdings Limited,
100
100
Siemens Ltda., São Paulo/Brazil
Siemens Rail Automation Limited, Frimley,
Siemens Infraestrutura e Indústria Ltda., São Paulo/Brazil
Frimley, Surrey/United Kingdom
1007
100
100
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
Siemens Financial Ltd., Oakville/Canada
100
100
VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
100
10013
Mentor Graphics (Canada) ULC, Vancouver/Canada
Siemens Canada Limited, Oakville/Canada
100
100
Frimley, Surrey/United Kingdom
1007
KACO NEW ENERGY CANADA INC., Guelph/Canada
The Preactor Group Limited,
100
10013
Dresser-Rand Canada, ULC, Vancouver/Canada
EPOCAL INC., Toronto/Canada
100
Frimley, Surrey/United Kingdom
Siemens Transmission & Distribution Limited,
Bytemark Canada Inc., Saint John/Canada
Frimley, Surrey/United Kingdom
SBS Pension Funding (Scotland) Limited Partnership,
Edinburgh/United Kingdom
Siemens Industry Software Ltda., São Caetano do Sul/Brazil
Siemens plc, Frimley, Surrey/United Kingdom
573
Siemens Pension Funding Limited, Frimley,
Surrey/United Kingdom
100
100
Frimley, Surrey/United Kingdom
100
100
100
Siemens Mobility Limited, Frimley, Surrey/United Kingdom
Siemens Pension Funding (General) Limited, Frimley,
Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
Preactor International Limited,
100
Siemens Industry Software Simulation and Test Limited,
Frimley, Surrey/United Kingdom
100
Next47 Fund 2020, L.P., London/United Kingdom
100
Project Ventures Rail Investments | Limited,
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
in %
September 30, 2019
in %
Siemens Postal, Parcel & Airport Logistics Limited,
September 30, 2019
Equity interest
Equity interest
137
Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
100
Americas (171 companies)
Québec/Canada
10013
Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
100
Siemens Healthcare Equipos Médicos Sociedad
por Acciones, Santiago de Chile/Chile
89
100
Canoas/Brazil
100
Santiago de Chile/Chile
100
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
100
Duque de Caxias/Brazil
100
Nimbic Chile S.p.A., Las Condes/Chile
Industrial Turbine Brasil Geracao de Energia Ltda.,
100
Flender S.p.A., Santiago de Chile/Chile
100
Siemens Gamesa Renewable Energy Chile SpA,
Guascor do Brasil Ltda., São Paulo/Brazil
Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
Siemens Mobility S.p.A., Santiago de Chile/Chile
Siemens S.A., Santiago de Chile/Chile
Next47 Fund 2019, L.P., London/United Kingdom
138 Consolidated Financial Statements
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
9
100
8
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
7 Not consolidated due to immateriality.
1 Control due to a majority of voting rights.
100
100
6 Significant influence due to contractual arrangements or legal circumstances.
100
Siemens Healthcare Diagnostics Manufacturing Limited,
Grand Cayman/Cayman Islands
100
Siemens Industry Software ULC, Vancouver/Canada
Siemens Logistics Ltd., Oakville/Canada
100
Siemens Mobility S.A., Munro/Argentina
100
100
1007
Siemens Gas and Power Limited, Oakville/Canada
Siemens Healthcare Limited, Oakville/Canada
1007
10013
Siemens Industrial S.A., Buenos Aires/Argentina
Siemens IT Services S.A., Buenos Aires/Argentina
Siemens Healthcare S.A., Buenos Aires/Argentina
100
Oakville/Canada
100
Guascor Argentina, S.A., Buenos Aires/Argentina
Siemens Gamesa Renewable Energy Limited,
100
Artadi S.A., Buenos Aires/Argentina
100
100
Siemens S.A., Buenos Aires/Argentina
100
Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
100
Rio de Janeiro/Brazil
100
Oakville/Canada
Chemtech Servicos de Engenharia e Software Ltda.,
Wheelabrator Air Pollution Control (Canada) Inc.,
100
Santa Cruz de la Sierra/Bolivia, Plurinational State of
100
Trench Limited, Saint John/Canada
Siemens Soluciones Tecnologicas S.A.,
100
100
Buenos Aires/Argentina
Siemens Transformers Canada Inc., Trois-Rivières,
VA TECH International Argentina SA,
100
SIEMENS MOBILITY LIMITED, Oakville/Canada
Siemens Gamesa Renewable Energy Canada ULC,
Halifax/Canada
Jaguarí Energética, S.A., Jaguari/Brazil
100
100
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
6 Significant influence due to contractual arrangements or legal circumstances.
Siemens Healthcare Industrial and Commercial
Société Anonyme, Chalandri/Greece
Société d'Exploitation du Parc Eolien de Saint Loup de
Saintonge SAS, Saint-Priest/France
100
Siemens Gamesa Renewable Energy Greece E.P.E.,
Filothei-Psychiko/Greece
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Saint Bon SARL,
100
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
9
100
100
Siemens Israel Ltd., Rosh HaAyin/Israel
Siemens Mobility Rail and Road Transportation Solutions
Société Anonyme, Athens/Greece
in %
September 30, 2019
in %
September 30, 2019
Equity interest
Equity interest
130 Consolidated Financial Statements
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
100
evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
Filothei-Psychiko/Greece
Saint-Priest/France
Société d'Exploitation du Parc Eolien de
100
Saint-Priest/France
100
Société d'Exploitation du Parc Eolien d'Orchamps SARL,
Société d'Exploitation du Parc Eolien de Plancy l'Abbaye
SARL, Saint-Priest/France
Société d'Exploitation du Parc Eolien du Vireaux SAS,
100
100
SARL, Saint-Priest/France
Société d'Exploitation du Parc Eolien de Orge et Ornain
100
Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Vernierfontaine
SARL, Saint-Priest/France
Pouilly-sur-Vingeanne SARL, Saint-Priest/France
100
Saint-Priest/France
Siemens Gamesa Renewable Energy AE,
Société d'Exploitation du Parc Eolien de Saint Amand SARL,
100
Siemens A.E., Electrotechnical Projects and Products,
Athens/Greece
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Romigny SARL,
100
Siemens Oil & Gas Equipment Limited, Accra/Ghana
100
Saint-Priest/France
100
Trench France SAS, Saint-Louis/France
Société d'Exploitation du Parc Eolien de Pringy SARL,
100
100
100
Siemens Israel Projects Ltd., Rosh HaAyin/Israel
Siemens Mobility Ltd., Rosh HaAyin/Israel
1007
100
Siemens Mobility S.r.I., Milan/Italy
Mentor Graphics (Holdings) Unlimited Company,
100
Siemens Logistics S.r.I., Milan/Italy
97
Shannon, County Clare/Ireland
Teheran/Iran, Islamic Republic of
Siemens Industry Software S.r.I., Milan/Italy
Siemens Sherkate Sahami (Khass),
100
Siemens Healthcare S.r.I., Milan/Italy
100
Teheran/Iran, Islamic Republic of
100
10013
Siemens Renting s.r.l. in Liquidazione, Milan/Italy
100
Almaty/Kazakhstan
Siemens Gamesa Renewable Energy Ireland Limited,
Dublin/Ireland
Siemens Healthcare Limited Liability Partnership,
100
Shannon, County Clare/Ireland
100
Trench Italia S.r.I., Savona/Italy
Mentor Graphics Development Services Limited,
100
Siemens Transformers S.r.I., Trento/Italy
100
Shannon, County Clare/Ireland
100
Siemens S.p.A., Milan/Italy
Mentor Graphics (Ireland) Limited,
1007
Siemens Gas and Power S.r.I., Milan/Italy
Siemens Gamesa Energy Tajdidpazir SSK,
100
100
Mentor Graphics Torino S.R.L., Turin/Italy
Siemens Gamesa Renewable Energy Kft.,
100
KACO new energy Italia S.r.I., Bracciano/Italy
100
Budapest/Hungary
100
Flender Italia S.r.I., Milan/Italy
Siemens Gamesa Megújuló Energia Hungary Kft,
100
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
Mentor Graphics Magyarország Kft., Budapest/Hungary
100
Budapest/Hungary
Société d'Exploitation du Parc Eolien de Vaudrey SARL,
100
100
Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
100
Siemens Zrt., Budapest/Hungary
100
Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
100
Siemens Mobility Kft., Budapest/Hungary
100
Siemens Gamesa Renewable Energy Italia S.r.I., Milan/Italy
100
Siemens Healthcare Kft., Budapest/Hungary
100
Parco Eolico Manca Vennarda S.r.I., Rome/Italy
1007
Siemens Gas and Power Kft., Budapest/Hungary
Parco Eolico Banzy S.r.I., Rome/Italy
100
Société d'Exploitation du Parc Eolien de Moulins du Puits
SAS, Saint-Priest/France
Saint-Priest/France
Saint-Priest/France
100
Aimsun SARL, Paris/France
Société d'Exploitation du Parc Eolien de Chepniers SARL,
100
Adwen France SAS, Puteaux/France
100
100
1007
VIBECO - Virtual Buildings Ecosystem Oy, Espoo/Finland
100
Siemens Osakeyhtiö, Espoo/Finland
100
Société d'Exploitation du Parc Eolien de Chaintrix-Bierges
SARL, Saint-Priest/France
Société d'Exploitation du Parc Eolien de Champsevraine,
SARL, Saint-Priest/France
D-R Holdings (France) SAS, Le Havre/France
100
Société d'Exploitation du Parc Eolien de Clamanges SARL,
Société d'Exploitation du Parc Eolien de Dampierre
Prudemanche SAS, Saint-Priest/France
100
Mentor Graphics Development (France) SAS, Paris/France
100
Mentor Graphics (France) SARL, Meudon La Forêt/France
100
Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Coupetz SARL,
100
Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
KACO new energy SARL, Croissy-Beaubourg/France
100
Saint-Priest/France
100
Dresser-Rand SAS, Le Havre/France
100
100
Siemens Mobility Oy, Espoo/Finland
Siemens Healthcare Oy, Espoo/Finland
100
Siemens Healthcare Logistics LLC, Cairo/Egypt
100
Saint-Priest/France
100
New Cairo City/Egypt
Société d'Exploitation du Parc Eolien de Bouclans SARL,
Société d'Exploitation du Parc Eolien de Bonboillon SARL,
100
Siemens SAS, Saint-Denis/France
100
100
Siemens Mobility SAS, Châtillon/France
(A Limited Liability Company - Private Free Zone),
Cairo/Egypt
Siemens Gamesa Renewable Energy Egypt LLC,
Siemens Healthcare S.A.E., Cairo/Egypt
100
Saint-Priest/France
100
Saint-Priest/France
100
Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
Société d'Exploitation du Parc Eolien de Cernon SARL,
100
Mentor Graphics (Finland) OY, Espoo/Finland
100
Saint-Priest/France
90
Siemens Technologies S.A.E., Cairo/Egypt
Société d'Exploitation du Parc Eolien de Broyes SARL,
100
Siemens Mobility Egypt LLC, Cairo/Egypt
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Société d'Exploitation du Parc Eolien de Soude SARL,
Société d'Exploitation du Parc Eolien de
100
Saint-Priest/France
100
Saint-Priest/France
Longueville-sur-Aube SARL, Saint-Priest/France
Société d'Exploitation du Parc Eolien de Songy SARL,
100
Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Sommesous SARL,
Société d'Exploitation du Parc Eolien de la Tête des Boucs
SARL, Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Landresse SARL,
100
Saint-Priest/France
100
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Trépot SARL,
Société d'Exploitation du Parc Eolien de Margny SARL,
100
Saint-Priest/France
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Souvans SARL,
Société d'Exploitation du Parc Eolien de Mantoche SARL,
100
Société d'Exploitation du Parc Eolien de Source de Sèves
SARL, Saint-Priest/France
100
SARL, Saint-Priest/France
Société d'Exploitation du Parc Eolien de Mailly-le-Camp
Saint-Priest/France
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Sceaux SARL,
in %
September 30, 2019
Equity interest
Equity interest
129
Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
September 30, 2019
100
in %
Saint-Priest/France
Société d'Exploitation du Parc Eolien de la Loye SARL,
100
Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Savoisy SARL,
Société d'Exploitation du Parc Eolien de la Brie des Etangs
SARL, Saint-Priest/France
100
Saint-Priest/France
100
Saint-Priest/France
Société d'Exploitation du Parc Eolien de Sambourg SARL,
Société d'Exploitation du Parc Eolien de Guerfand SARL,
100
Société d'Exploitation du Parc Eolien de Saint-Lumier en
Champagne SARL, Saint-Priest/France
100
Société d'Exploitation du Parc Eolien de Germainville SAS,
100
Siemens TOO, Almaty/Kazakhstan
100
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
9
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
100
Siemens AS, Oslo/Norway
100
100
Dresser-Rand AS, Kongsberg/Norway
100
1 Control due to a majority of voting rights.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
100
Siemens Healthcare AS, Oslo/Norway
100
in %
Equity interest
Mentor Graphics Romania SRL, Bucharest/Romania
100
SIEMENS GAMESA RENEWABLE ENERGY AS, Oslo/Norway
September 30, 2019
in %
September 30, 2019
Equity interest
Consolidated Financial Statements
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
100
Siemens Mobility AS, Oslo/Norway
Siemens Ltd., Lagos/Nigeria
100
Mendix Technology B.V., Rotterdam/Netherlands
100
100
Siemens Mobility Holding B.V., The Hague/Netherlands
Siemens Nederland N.V., The Hague/Netherlands
100
Flowmaster Group NV, Eindhoven/Netherlands
100
100
100
Siemens Mobility B.V., The Hague/Netherlands
100
Enlighted International B.V., Amsterdam/Netherlands
100
Siemens Medical Solutions Diagnostics Holding I B.V.,
The Hague/Netherlands
Flender B.V., Rotterdam/Netherlands
TASS International B.V., Helmond/Netherlands
100
Mentor Graphics (Netherlands) B.V.,
Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
100
Siemens D-R Holding B.V., The Hague/Netherlands
Roos Holding B.V., The Hague/Netherlands
Pollux III B.V., Amsterdam/Netherlands
Omnetric B.V., The Hague/Netherlands
100
Nouméa/New Caledonia
100
Minicare B.V., Amsterdam/Netherlands
SIEMENS GAMESA RENEWABLE ENERGY SARL,
100
Eindhoven/Netherlands
100
TASS International Holding B.V., Helmond/Netherlands
100
100
Bucharest/Romania
100
000 Siemens Industry Software,
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
100
Leningrad region/Russian Federation
1007
Siemens Industry Software Sp. z o.o., Warsaw/Poland
Siemens Gas and Power Sp. z o.o., Warsaw/Poland
100
Warsaw/Poland
100
000 Siemens, Moscow/Russian Federation
Siemens Gamesa Renewable Energy Sp. z o.O.,
100
000 Siemens Gas Turbine Technologies,
100
Moscow/Russian Federation
100
Siemens Gamesa Renewable Energy, S.A.,
Siemens Gamesa Renewable Energy LLC,
100
Ujazd Sp. z o.o., Warsaw/Poland
100
Vladivostok/Russian Federation
100
Smardzewo Windfarm Sp. z o.o., Slawno/Poland
Siemens Finance and Leasing LLC,
100
Siemens Sp. z o.o., Warsaw/Poland
100
000 Siemens Transformers, Voronezh/Russian Federation
100
Siemens Mobility Sp. z o.o., Warsaw/Poland
000 Legion II, Moscow/Russian Federation
100
100
St. Petersburg/Russian Federation
Siemens Healthcare S.R.L., Bucharest/Romania
100
Siemens Healthcare (Private) Limited, Lahore/Pakistan
Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
Mentor Graphics Polska Sp. z o.o., Poznan/Poland
1007
Siemens Gas and Power SRL, Bucharest/Romania
100
100
Siemens Gamesa Renewable Energy Wind Farms S.R.L.,
Bucharest/Romania
Siemens Gamesa Renewable Energy (Private) Limited,
Karachi/Pakistan
100
100
Siemens Gamesa Renewable Energy Romania S.R.L.,
Bucharest/Romania
Mentor Graphics Pakistan Development (Private) Limited,
Lahore/Pakistan
51
Siemens L.L.C., Muscat/Oman
100
100
75
100
Siemens Gamesa Renewable Energy Poland Sp. z o.o.,
Warsaw/Poland
LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD,
100
Siemens Finance Sp. z o.o., Warsaw/Poland
100
SIMEA SIBIU S.R.L., Sibiu/Romania
100
Siemens Digital Logistics Sp. z o.o., Wroclaw/Poland
100
Siemens S.R.L., Bucharest/Romania
100
Osiek Sp. z o.o. w Likwidacji, Warsaw/Poland
100
Siemens Mobility S.R.L., Bucharest/Romania
100
Siemens Industry Software S.R.L., Brasov/Romania
Dresser-Rand Services B.V., Spijkenisse/Netherlands
100
Dresser-Rand International B.V., The Hague/Netherlands
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
1 Control due to a majority of voting rights.
Luxembourg/Luxembourg
100
Siemens Industry Software Ltd., Airport City/Israel
Dresser-Rand Holding (Delaware) LLC, SARL,
1007
Siemens Industrial Israel Ltd., Rosh HaAyin/Israel
100
9
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
100
Siemens D-R Holding II B.V., The Hague/Netherlands
Siemens D-R Holding III B.V., The Hague/Netherlands
100
Esch-sur-Alzette/Luxembourg
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I.,
in %
September 30, 2019
in %
September 30, 2019
Equity interest
Equity interest
132
131
Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
100
Luxembourg/Luxembourg
100
Siemens HealthCare Ltd., Rosh HaAyin/Israel
100
Swords, County Dublin/Ireland
100
492
Crabtree (Pty) Ltd, Maseru/Lesotho
Siemens Healthcare Medical Solutions Limited,
Kuwait City/Kuwait
100
Swords, County Dublin/Ireland
Siemens Electrical & Electronic Services K.S.C.C.,
Siemens Healthcare Diagnostics Manufacturing Limited,
100
Siemens Gamesa Renewable Energy Limited, Nairobi/Kenya
100
Siemens Gamesa Renewable Energy Limited, Dublin/Ireland
D-R Luxembourg Holding 1, SARL,
100
Siemens Limited, Dublin/Ireland
Luxembourg/Luxembourg
D-R Luxembourg International SARL,
100
Siemens Gamesa Renewable Energy Ltd, Tel Aviv/Israel
100
Luxembourg/Luxembourg
100
Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
D-R Luxembourg Holding 3, SARL,
100
100
D-R Luxembourg Holding 2, SARL,
Luxembourg/Luxembourg
Mentor Graphics Development Services (Israel) Ltd.,
Rehovot/Israel
100
Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
100
100
100
Siemens Mobility Holding SARL, Luxembourg/Luxembourg
TFM International S.A. i.L., Luxembourg/Luxembourg
Siemens Finance B.V., The Hague/Netherlands
Siemens Healthcare SARL, Casablanca/Morocco
100
Rijswijk/Netherlands
100
Casablanca/Morocco
Siemens Industry Software and Services B.V.,
100
Siemens Gamesa Renewable Energy SARL,
Zoeterwoude/Netherlands
100
Tangier/Morocco
Siemens Heat Transfer Technology B.V.,
Siemens Gamesa Renewable Energy Morocco SARL,
100
100
Siemens Industry Software B.V.,
Siemens Plant Operations Tahaddart SARL,
's-Hertogenbosch/Netherlands
100
The Hague/Netherlands
100
Dresser-Rand B.V., Spijkenisse/Netherlands
Siemens International Holding B.V.,
100
Castor III B.V., Amsterdam/Netherlands
100
The Hague/Netherlands
100
Siemens S.A., Casablanca/Morocco
Siemens Industry Software Holding II B.V.,
100
Tangier/Morocco
100
The Hague/Netherlands
100
Tangier/Morocco
Siemens Healthineers Holding III B.V.,
100
Nouakchott/Mauritania
100
The Hague/Netherlands
Siemens Gamesa Renewable Energy, SARL,
Siemens Gamesa Renewable Energy B.V.,
100
FTD Europe Ltd, Sliema/Malta
100
The Hague/Netherlands
100
Fast Track Diagnostics Ltd, Sliema/Malta
Siemens Financieringsmaatschappij N.V.,
100
100
Siemens Gas and Power Holding B.V.,
100
Siemens Gamesa Renewable Energy, Ltd,
100
Siemens Gamesa Renewable Energy Blades, SARL AU,
100
The Hague/Netherlands
100
Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
Siemens Healthcare Nederland B.V.,
100
Guascor Maroc, S.A.R.L., Agadir/Morocco
65
The Hague/Netherlands
100
Siemens d.o.o., Podgorica/Montenegro
Siemens Gas Turbine Technologies Holding B.V.,
100
Cybercity/Mauritius
The Hague/Netherlands
Siemens Logistics SAS, Paris/France
Mentor Graphics Egypt Company
100
100
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
100
100
Siemens Healthcare AB, Solna/Sweden
100
Stockholm/Sweden
Siemens Industrial Turbomachinery AB, Finspång/Sweden
100% foreign owned subsidiary "Siemens Ukraine",
Kiev/Ukraine
100
Siemens Industry Software AB, Solna/Sweden
100
Siemens Mobility AB, Solna/Sweden
100
100
SIEMENS GAMESA RENEWABLE ENERGY SWEDEN AB,
100
Siemens Mobility Ulasim Sistemleri Anonim Sirketi,
Istanbul/Turkey
100
100
Siemens Gas and Power Enerji Anonim Sirketi,
Mentor Graphics (Scandinavia) AB, Kista/Sweden
100
Istanbul/Turkey
100
Siemens AB, Solna/Sweden
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
100
Siemens Financial Services AB, Stockholm/Sweden
100
Siemens Gamesa Renewable Energy AB, Stockholm/Sweden
100
Siemens Gamesa Renewable Energy LLC, Kiev/Ukraine
Siemens Gas and Power LLC, Kiev/Ukraine
SIEMENS GAMESA YENILENEBILIR ENERJI IC VE DIS TICARET
LIMITED SIRKETI, Menemen/Izmir/Turkey
100
Dresser Rand Sales Company GmbH, Zurich/Switzerland
Siemens Industry Software GmbH, Zurich/Switzerland
100
SD (Middle East) LLC, Dubai/United Arab Emirates
492
Siemens Logistics AG, Zurich/Switzerland
100
100
Siemens Capital Middle East Ltd,
100
Abu Dhabi/United Arab Emirates
100
Siemens Power Holding AG, Zug/Switzerland
100
Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
Siemens Mobility AG, Wallisellen/Switzerland
100
Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
Samateq FZ LLC, UAE, Abu Dhabi/United Arab Emirates
100
100
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
Huba Control AG, Würenlos/Switzerland
100
Kiev/Ukraine
100
Komykrieng AG in Liquidation, Zurich/Switzerland
100
Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
100
Dresser-Rand Field Operations Middle East LLC,
Abu Dhabi/United Arab Emirates
492
Polarion AG, Zurich/Switzerland
100
Siemens Healthcare AG, Zurich/Switzerland
1007
100
Lingbo SPW AB, Stockholm/Sweden
Lindom Vindenergi AB, Solna/Sweden
Sistemas Energéticos Argañoso, S. L. Unipersonal,
Zamudio/Spain
Sistemas Energéticos Monte Genaro, S.L.U., Zamudio/Spain
100
100
Sistemas Energéticos Arinaga, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
Zamudio/Spain
78
100
Sistemas Energéticos Balazote, S.A. Unipersonal,
Sistemas Energéticos Sierra de Las Estancias, S.A.
Unipersonal, Sevilla/Spain
100
Zamudio/Spain
100
Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
100
Villarcayo de Merindad de Castilla la Vieja/Spain
100
Siemens S.A., Madrid/Spain
Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Siemens Industry Software S.L., Barcelona/Spain
100
Siemens Logistics S. L. Unipersonal, Madrid/Spain
SIEMENS MOBILITY, S. L. U., Tres Cantos/Spain
100
Sistemas Energéticos Loma del Reposo, S. L. Unipersonal,
Zamudio/Spain
100
100
Siemens Rail Automation S.A.U., Tres Cantos/Spain
Siemens Renting S.A., Madrid/Spain
100
Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
Sevilla/Spain
100
100
Sistemas Energéticos Mansilla, S.L.,
60
Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
Zamudio/Spain
100
Sistemas Energéticos Cabanelas, S.A. Unipersonal,
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Consolidated Financial Statements
135
Equity interest
Equity interest
September 30, 2019
in %
September 30, 2019
in %
Fanbyn2 Vindenergi AB, Stockholm/Sweden
100
7 Not consolidated due to immateriality.
100
6 Significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
Santiago de Compostela/Spain
100
Sistemas Energéticos Tablero Tabordo, S.L.,
Las Palmas de Gran Canaria/Spain
100
Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
Zaragoza/Spain
100
Sistemas Energéticos Tomillo, S.A. Unipersonal,
Las Palmas de Gran Canaria/Spain
100
Sistemas Energéticos Carril, S.L. Unipersonal,
Zamudio/Spain
100
Telecomunicación, Electrónica y Conmutación S.A.,
Madrid/Spain
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
5 No significant influence due to contractual arrangements or legal circumstances.
Siemens Schweiz AG, Zurich/Switzerland
100
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Industrial Turbine Company (UK) Limited,
Siemens Gamesa Renewable Energy Wind Limited,
Siemens Gamesa Renewable Energy UK Limited,
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
100
Lightwork Design Limited, Frimley, Surrey/United Kingdom
100
Siemens Healthcare Diagnostics Ltd.,
LIGHTWORKS SOFTWARE LIMITED,
100
GYM Renewables ONE Limited,
100
Frimley, Surrey/United Kingdom
Siemens Financial Services Ltd.,
Flender Limited, Frimley, Surrey/United Kingdom
100
Stoke Poges, Buckinghamshire/United Kingdom
100
Flomerics Group Limited, Frimley, Surrey/United Kingdom
100
Glenouther Renewables Energy Park Limited,
Siemens Gamesa Renewable Energy B9 Limited,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Gamesa Renewable Energy Limited,
GYM Renewables Limited, Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Industrial Turbomachinery Ltd.,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
MRX Rail Services UK Limited,
Siemens Industry Software Computational Dynamics
Frimley, Surrey/United Kingdom
1007
Limited, Frimley, Surrey/United Kingdom
100
MRX Technologies Limited, Frimley, Surrey/United Kingdom
100
Siemens Industry Software Limited, Frimley,
next47 Fund 2018, L.P., London/United Kingdom
Mentor Graphics (UK) Limited,
100
100
100
Materials Solutions Holdings Limited,
Siemens Healthcare Diagnostics Manufacturing Ltd,
Frimley, Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Siemens Healthcare Diagnostics Products Ltd,
Materials Solutions Limited,
Frimley, Surrey/United Kingdom
Mendix Technology Limited,
Frimley, Surrey/United Kingdom
Frimley, Surrey/United Kingdom
100
100
Siemens Healthcare Limited, Frimley,
Surrey/United Kingdom
100
Siemens Holdings plc, Frimley, Surrey/United Kingdom
100
Dunblane/United Kingdom
Buckinghamshire/United Kingdom
Yorkshire/United Kingdom
Anonim Sirketi, Istanbul/Turkey
100
AIMSUN LIMITED, London/United Kingdom
100
100
Flender Mekanik Güc Aktarma Sistemleri Sanayi ve Ticaret
KACO New Enerji Limited Sirketi, Pendik/Turkey
Siemens Finansal Kiralama A.S., Istanbul/Turkey
100
Bargrennan Renewable Energy Park Limited,
Frimley, Surrey/United Kingdom
100
SIEMENS GAMESA RENEWABLE ENERJI ANONIM SIRKETI,
ByteToken, Ltd, Edinburgh/United Kingdom
100
Adwen UK Limited, Kingston Upon Hull,
100
Siemens S.A., Tunis/Tunisia
492
Siemens Tanzania Ltd. i.L.,
Siemens LLC, Abu Dhabi/United Arab Emirates
492
Dar es Salaam/Tanzania, United Republic of
100
Siemens Middle East Limited,
Mentor Graphics Tunisia SARL, Tunis/Tunisia
100
Masdar City/United Arab Emirates
100
Siemens Mobility S.A.R.L., Tunis/Tunisia
100
SIEMENS MOBILITY LLC, Dubai/United Arab Emirates
492
100
Kartal/Istanbul/Turkey
100
Siemens Gamesa Turkey Yenilenebilir Enerji Limited Sirketi,
Kartal/Istanbul/Turkey
September 30, 2019
in %
September 30, 2019
Equity interest
in %
Dresser-Rand Company Ltd., Frimley,
Sellafirth Renewable Energy Park Limited,
Surrey/United Kingdom
100
Frimley, Surrey/United Kingdom
100
Electrium Sales Limited, Frimley, Surrey/United Kingdom
100
Siemens Financial Services Holdings Ltd., Stoke Poges,
FAST TRACK DIAGNOSTICS RESEARCH LIMITED,
Equity interest
100
136 Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
100
D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
Dresser-Rand (U.K.) Limited, Frimley,
Surrey/United Kingdom
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Surrey/United Kingdom
Siemens Holding S.L., Madrid/Spain
SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
51
51
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Siemens Mobility Saudi Ltd, Al Khobar/Saudi Arabia
VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
Siemens d.o.o. Beograd, New Belgrade/Serbia
4 No control due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
9
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
5 No significant influence due to contractual arrangements or legal circumstances.
100
J2 Innovative Concepts Europe SRL, Bucharest/Romania
100
100
Siemens S.A., Amadora/Portugal
Siemens W.L.L., Doha/Qatar
100
ISCOSA Industries and Maintenance Ltd.,
Dammam/Saudi Arabia
51
402
GER Baneasa, S.R.L., Bucharest/Romania
100
Siemens Healthcare Limited, Riyadh/Saudi Arabia
Siemens Ltd., Riyadh/Saudi Arabia
51
51
GER Baraganu, S.R.L, Bucharest/Romania
100
GER Independenta, S.R.L., Bucharest/Romania
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Unipessoal Lda, Lisbon/Portugal
Consolidated Financial Statements
Equity interest
100
SAT Systémy automatizacnej techniky spol. s.r.o.,
Siemens Wind Power Employee Share Ownership Trust,
Midrand/South Africa
Bratislava/Slovakia
60
Adwen Offshore, S. L., Zamudio/Spain
OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
Siemens Healthcare s.r.o., Bratislava/Slovakia
Aimsun S.L., Barcelona/Spain
03
100
100
Siemens Mobility, s.r.o., Bratislava/Slovakia
100
100
70
Siemens Proprietary Limited, Midrand/South Africa
100
Equity interest
September 30, 2019
in %
September 30, 2019
in %
Siemens Gas and Power d.o.o. Beograd,
New Belgrade/Serbia
1007
SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD,
Centurion/South Africa
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Siemens Mobility (Pty) Ltd, Randburg/South Africa
100
Siemens Mobility d.o.o. Cerovac, Kragujevac/Serbia
133
501
51
Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
Saint-Denis Cedex/France
Siemens Gamesa Renewable Energy A/S,
Siemens Gamesa Renewable Energy S.A.S.,
100
Siemens A/S, Ballerup/Denmark
100
100
Siemens Gamesa Renewable Energy France SAS,
Saint-Priest/France
Siemens, s.r.o., Prague/Czech Republic
100
Siemens Mobility, s.r.o., Prague/Czech Republic
100
100
Siemens Financial Services SAS, Saint-Denis/France
Siemens France Holding SAS, Saint-Denis/France
100
Brande/Denmark
100
Siemens Gamesa Renewable Energy Wind SARL,
Siemens Lease Services SAS, Saint-Denis/France
100
Siemens Mobility A/S, Ballerup/Denmark
100
Siemens Industry Software SAS, Châtillon/France
100
Siemens Industry Software A/S, Ballerup/Denmark
100
Siemens Healthcare SAS, Saint-Denis/France
100
Siemens Healthcare A/S, Ballerup/Denmark
100
Saint-Priest/France
100
Siemens Gas & Power A/S, Ballerup/Denmark
100
Siemens Industry Software, s.r.o., Prague/Czech Republic
100
Siemens Healthcare, s.r.o., Prague/Czech Republic
Equity interest
Equity interest
Venda do Pinheiro/Portugal
100
Siemens Healthcare Limited Liability Company,
SIEMENS HEALTHCARE, UNIPESSOAL, LDA,
Moscow/Russian Federation
100
Amadora/Portugal
100
Siemens Mobility LLC, Moscow/Russian Federation
100
SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora/Portugal
100
Siemens Postal, Parcel & Airport Logistics,
September 30, 2019
Dresser-Rand Holdings Spain S.L.U.,
in %
in %
100
PETNET Solutions SAS, Lisses/France
1007
Siemens Gas and Power, s.r.o., Prague/Czech Republic
1007
100
Meta Systems SARL, Meudon La Forêt/France
MG P&S France SAS, Grenoble/France
100
Siemens Electric Machines s.r.o., Drasov/Czech Republic
100
OEZ s.r.o., Letohrad/Czech Republic
100
Mentor Graphics Development Crolles SARL,
Monbonnot-Saint-Martin/France
100
Siemens Gamesa Renewable Energy Limited,
Nicosia/Cyprus
September 30, 2019
Siemens s.r.o., Bratislava/Slovakia
SIPRIN s.r.o., Bratislava/Slovakia
Siemens d.o.o., Ljubljana/Slovenia
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
134 Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2019
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
in %
in %
Siemens Gamesa Renewable Energy Eolica, S.L.,
Valle de Egues/Eguesibar/Spain
100
Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
Sevilla/Spain
100
Siemens Gamesa Renewable Energy Europa S.L.,
September 30, 2019
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
Siemens Healthcare Employee Share Ownership Trust,
Midrand/South Africa
03
Siemens Gamesa Renewable Energy 9REN, S.L.,
Madrid/Spain
100
Siemens Healthcare Proprietary Limited, Halfway
House/South Africa
75
Siemens Gamesa Renewable Energy Apac, S.L.,
Sarriguren/Spain
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
Zamudio/Spain
100
Sistemas Energéticos Cuntis, S.A. Unipersonal,
Santiago de Compostela/Spain
100
Sistemas Energéticos Fonseca, S.A. Unipersonal,
Zamudio/Spain
100
Siemens Gamesa Renewable Energy Latam, S.L.,
Sarriguren/Spain
100
Sistemas Energéticos Jaralón, S.A. Unipersonal,
Zamudio/Spain
100
Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
59
Siemens Gamesa Renewable Energy Wind Farms, S.A.,
Zamudio/Spain
Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
Sistemas Energéticos La Plana, S.A.,
100
100
Villanueva de Gállego/Spain
00
90
100
100
Zamudio/Spain
100
Siemens Gamesa Renewable Energy Iberica S.L.,
Tres Cantos/Spain
100
Sistemas Energéticos de Tarifa, S. L. Unipersonal,
Zamudio/Spain
100
Siemens Gamesa Renewable Energy
Sistemas Energéticos del Sur S.A., Sevilla/Spain
70
Innovation & Technology, S.L., Sarriguren/Spain
100
Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
100
Siemens Gamesa Renewable Energy International
Wind Services, S.A., Zamudio/Spain
100
Sistemas Energéticos Finca San Juan, S.L.U.,
Las Palmas de Gran Canaria/Spain
Siemens Gamesa Renewable Energy Invest, S.A.,
100
100
100
100
Crabtree South Africa Pty. Limited, Midrand/South Africa
100
Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
100
Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
FLOVEA SOLAR, S.L.U., Vitoria-Gasteiz/Spain
1007
Gamesa Energy Transmission, S.A. Unipersonal,
Zamudio/Spain
100
Midrand/South Africa
100
Dresser-Rand Southern Africa (Pty) Ltd., Midrand/South
Africa
Gerr Grupo Energético XXI, S.A. Unipersonal,
Barcelona/Spain
Dresser-Rand Service Centre (Pty) Ltd.,
100
Siemens Mobility d.o.o., Ljubljana/Slovenia
100
100
Vitoria-Gasteiz/Spain
100
100
Estructuras Metalicas Singulares, S.A. Unipersonal,
100
Tajonar/Spain
100
Siemens Gas and Power d.o.o., Ljubljana/Slovenia
1007
Fábrica Electrotécnica Josa, S.A.U., Tres Cantos/Spain
100
Siemens Healthcare d.o.o., Ljubljana/Slovenia
100
FLENDER IBERICA SL, Tres Cantos/Spain
100
100
Guascor Explotaciones Energéticas, S.A.,
Flender (Pty) Ltd, Johannesburg/South Africa
S'Mobility Employee Stock Ownership Trust,
Johannesburg/South Africa
03
International Wind Farm Developments IX, S.L.,
Zamudio/Spain
100
Siemens Employee Share Ownership Trust,
Johannesburg/South Africa
03
SIEMENS GAMESA RENEWABLE ENERGY (PTY) LTD,
Midrand/South Africa
70
Siemens Gas & Power (Pty) Ltd, Midrand/South Africa
1007
INVERSIONES SAMIAC 30, S. L. U., Vitoria-Gasteiz/Spain
Mentor Graphics (España) SL, Madrid/Spain
Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
SIEMENS ENGINES R&D, S.A.U., Vitoria-Gasteiz/Spain
SIEMENS ENGINES SA, Zumaia/Spain
1007
100
100
International Wind Farm Developments II, S.L.,
Zamudio/Spain
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
100
Vitoria-Gasteiz/Spain
100
Gamesa Wind South Africa (Proprietary) Limited,
Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
100
Cape Town/South Africa
100
Guascor Isolux AIE, Vitoria-Gasteiz/Spain
607,13
KACO NEW ENERGY AFRICA (PTY) LTD,
Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
100
Midrand/South Africa
100
03
Leningrad region/Russian Federation
100
September 30, 2019
51
100
Siemens Surge Arresters Ltd., Wuxi/China
Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
Hangzhou/China
100
Siemens Standard Motors Ltd., Yizheng/China
100
Siemens Healthineers Ltd., Shanghai/China
70
Siemens Signalling Co., Ltd., Xi'an/China
100
100
Shenzhen/China
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd.,
Shanghai/China
100
100
100
Siemens Gamesa Renewable Energy (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Mobility Technologies (Beijing) Co., Ltd,
Beijing/China
100
Siemens Gamesa Renewable Energy Technology (China)
Co., Ltd., Tianjin/China
100
Siemens Switchgear Ltd., Shanghai, Shanghai/China
Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
Yixing/China
Siemens Healthcare Diagnostics Manufacturing Ltd.,
Shanghai, Shanghai/China
100
Siemens Numerical Control Ltd., Nanjing, Nanjing/China
Siemens Power Automation Ltd., Nanjing/China
Siemens Power Plant Automation Ltd., Nanjing/China
Siemens Sensors & Communication Ltd., Dalian/China
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
Siemens Shenzhen Magnetic Resonance Ltd.,
80
100
100
100
55
51
90
Siemens Transformer (Jinan) Co., Ltd, Jinan/China
in %
September 30, 2019
Equity interest
Equity interest
in %
September 30, 2019
Consolidated Financial Statements
142
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
9
Not accounted for using the equity method due to immateriality.
8
Siemens Technology Development Co., Ltd. of Beijing,
Beijing/China
90
Siemens Industrial Automation Products Ltd., Chengdu,
Chengdu/China
100
Siemens Transformer (Guangzhou) Co., Ltd.,
Guangzhou/China
83
Siemens High Voltage Switchgear Co., Ltd., Shanghai,
Shanghai/China
63
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
1 Control due to a majority of voting rights.
Tianjin/China
100
Siemens Mobility Rail Equipment (Tianjin) Ltd.,
100
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai/China
Siemens Business Information Consulting Co., Ltd,
Beijing/China
70
70
Tianjin/China
100
Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
Siemens Building Technologies (Tianjin) Ltd.,
84
Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
Huludao/China
100
in %
September 30, 2019
in %
Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
Yongzhou/China
Equity interest
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
100
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Consolidated Financial Statements
141
Equity interest
9
Siemens International Trading Ltd., Shanghai,
Siemens Circuit Protection Systems Ltd.,
Shanghai/China
85
Siemens Medium Voltage Switching Technologies (Wuxi)
Ltd., Wuxi/China
85
Siemens Factory Automation Engineering Ltd.,
Beijing/China
100
Siemens Mobility Electrification Equipment (Shanghai) Co.,
Ltd., Shanghai/China
100
517
100
Siemens Financial Services Ltd., Beijing/China
100
Siemens Mobility Equipment (China) Co., Ltd, Shanghai
Pilot Free Trade Zone/China
100
Siemens Gamesa Renewable Energy (Beijing) Co., Ltd.,
Beijing/China
Siemens Finance and Leasing Ltd., Beijing/China
Siemens Transformer (Wuhan) Company Ltd., Wuhan
City/China
51
100
100
Shanghai, Shanghai/China
75
Siemens Investment Consulting Co., Ltd., Beijing/China
100
Siemens Computational Science (Shanghai) Co., Ltd,
Shanghai/China
Siemens Manufacturing and Engineering Centre Ltd.,
Shanghai/China
100
100
Siemens Eco-City Innovation Technologies (Tianjin) Co.,
Ltd., Tianjin/China
Siemens Ltd., China, Beijing/China
100
60
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
Siemens Electrical Drives Ltd., Tianjin/China
Siemens Logistics Automation Systems (Beijing) Co., Ltd,
Beijing/China
1 Control due to a majority of voting rights.
Devarabanda Renewable Energy Private Limited,
Chennai/India
100
1 Control due to a majority of voting rights.
100
Poovani Wind Farms Private Limited, Chennai/India
100
Chikkodi Renewable Power Private Limited, Chennai/India
100
100
100
100
100
Neelagund Renewable Private Limited, Chennai/India
Nellore Renewable Private Limited, Chennai/India
Nirlooti Renewable Private Limited, Chennai/India
Osmanabad Renewable Private Limited, Chennai/India
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
Mumbai/India
100
Channapura Renewable Private Limited, Chennai/India
100
Bytemark Technology Solutions India Pvt Ltd,
Bangalore/India
100
100
Mentor Graphics (India) Private Limited, New Delhi/India
100
Siemens Logistics Limited, Hong Kong/Hong Kong
100
Siemens Mobility Limited, Hong Kong/Hong Kong
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
Mentor Graphics (Sales and Services) Private Limited,
New Delhi/India
Anantapur Wind Farms Private Limited, Chennai/India
Bapuram Renewable Private Limited, Chennai/India
Beed Renewable Energy Private Limited, Chennai/India
Bhuj Renewable Private Limited, Chennai/India
Bytemark India LLP, Bangalore/India
100
100
Nandikeshwar Renewable Energy Private Limited,
Chennai/India
100
100
100
100
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
5 No significant influence due to contractual arrangements or legal circumstances.
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Rangareddy Renewable Private Limited, Chennai/India
100
Zalki Renewable Private Limited, Chennai/India
99
100
100
Vempalli Renewable Energy Private Limited, Chennai/India
Viralipatti Renewable Private Limited, Chennai/India
100
Preactor Software India Private Limited, Bangalore/India
Rajgarh Windpark Private Limited, Chennai/India
501
New Delhi/India
100
Uppal Renewable Private Limited, Chennai/India
Powerplant Performance Improvement Ltd.,
in %
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
9
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
4 No control due to contractual arrangements or legal circumstances.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
143
Equity interest
Equity interest
September 30, 2019
in %
September 30, 2019
Consolidated Financial Statements
Siemens Limited, Hong Kong/Hong Kong
100
100
100
Hong Kong/Hong Kong
Camstar Systems (Hong Kong) Limited,
100
Longbo town, Yongzhou city/China
Yongzhou Shuangpai Daguping Wind Power Co., Ltd.,
51
Hangzhou, Hangzhou/China
Yangtze Delta Manufacturing Co. Ltd.,
65
Shenyang/China
100
Gadag Renewable Private Limited, Chennai/India
Trench High Voltage Products Ltd., Shenyang,
100
100
Fast Track Diagnostics Asia Private Limited, New Delhi/India
Flomerics India Private Limited, Mumbai/India
Dhone Renewable Private Limited, Chennai/India
100
Siemens Venture Capital Co., Ltd., Beijing/China
100
Dresser-Rand India Private Limited, Navi Mumbai/India
100
International Wind Farm Development I Limited,
Siemens Wiring Accessories Shandong Ltd., Zibo/China
Enlighted Energy Systems Pvt Ltd, Chennai/India
100
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
100
TASS International Co. Ltd., Shanghai/China
100
100
Hong Kong/Hong Kong
100
International Wind Farm Development II Limited,
100
100
100
100
100
100
100
100
100
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
Siemens Industry Software Limited, Hong Kong/Hong Kong
100
Maski Renewable Energy Private Limited, Chennai/India
Mathak Wind Farms Private Limited, Chennai/India
100
100
100
100
Hong Kong/Hong Kong
100
International Wind Farm Development IV Limited,
Hong Kong/Hong Kong
100
International Wind Farm Development VII Limited,
100
Hong Kong/Hong Kong
Siemens Gas and Power Limited, Hong Kong/Hong Kong
1007
Gagodar Renewable Energy Private Limited, Chennai/India
Gangavathi Renewable Private Limited, Chennai/India
Ghatpimpri Renewable Private Limited, Chennai/India
Gudadanal Renewable Private Limited, Chennai/India
Hattarwat Renewable Private Limited, Chennai/India
Haveri Renewable Power Private Limited, Chennai/India
Hungund Renewable Energy Private Limited, Chennai/India
Jalore Wind Park Private Limited, Chennai/India
Jamkhandi Renewable Private Limited, Chennai/India
Kadapa Wind Farms Private Limited, Chennai/India
Kanigiri Renewable Private Limited, Chennai/India
Kod Renewable Private Limited, Chennai/India
Kollapur Renewable Private Limited, Chennai/India
Koppal Renewable Private Limited, Chennai/India
Kurnool Wind Farms Private Limited, Chennai/India
Kutch Renewable Private Limited, Chennai/India
100
100
100
100
100
65
1007
Los Angeles, CA/United States
100
next47 Mid-Tier GP 2018, L.P., Wilmington, DE/United States
Siemens Healthcare Diagnostics Inc.,
100
Next47 Inc., Wilmington, DE/United States
100
Wilmington, DE/United States
100
Wilmington, DE/United States
Siemens Government Technologies, Inc.,
Mentor Graphics Global Holdings, LLC,
100
Wilmington, DE/United States
100
OR/United States
Siemens Generation Services Company,
Flender Corporation, Wilmington, DE/United States
J2 Innovations, Inc., Diamond Bar, CA/United States
100
Siemens Gamesa Renewable Energy PA, LLC,
100
Wilmington, DE/United States
100
100
KACO New Energy, Inc., Wilmington, DE/United States
Siemens Gamesa Renewable Energy, Inc.,
Mannesmann Corporation, New York, NY/United States
100
Wilmington, DE/United States
100
Mentor Graphics Corporation, Wilsonville,
100
100
Next47 Mid-Tier GP 2019, L.P., Wilmington, DE/United States
Siemens Healthcare Laboratory, LLC,
100
PETNET Solutions, Inc., Knoxville, TN/United States
Siemens Molecular Imaging, Inc.,
63
DE/United States
100
Siemens Mobility, Inc, Wilmington, DE/United States
PETNET Solutions Cleveland, LLC, Wilmington,
100
Wilmington, DE/United States
501
PETNET Indiana, LLC, Indianapolis, IN/United States
Siemens Medical Solutions USA, Inc.,
51
P.E.T.NET Houston, LLC, Austin, TX/United States
100
Siemens Logistics LLC, Wilmington, DE/United States
Next47 Mid-Tier GP 2020, L.P., Wilmington, DE/United States
next47 TTGP, L.L.C., Wilmington, DE/United States
100
Wilmington, DE/United States
100
100
Siemens Heat Transfer Technology Corp.,
100
Nimbus Technologies, LLC, Bingham Farms,
MI/United States
100
100
Siemens Industry, Inc., Wilmington, DE/United States
100
Omnetric Corp., Wilmington, DE/United States
100
Wilmington, DE/United States
Siemens Financial, Inc., Wilmington, DE/United States
100
100
Corpus Merger, Inc., Wilmington, DE/United States
100
Pocahontas Prairie Wind, LLC, Dover, DE/United States
100
Cedar Cap Wind, LLC, Dover, DE/United States
in %
September 30, 2019
in %
September 30, 2019
Equity interest
Equity interest
139
Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Not accounted for using the equity method due to immateriality.
Exemption pursuant to Section 264b German Commercial Code.
100
95
100
CD-adapco Battery Design LLC, Dover, DE/United States
502
1 Control due to a majority of voting rights.
100
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8
9
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
Russelectric Inc., Hingham, MA/United States
100
Dedicated2Imaging LLC, Wilmington, DE/United States
100
Dresser-Rand Group Inc., Wilmington, DE/United States
Dresser-Rand LLC, Wilmington, DE/United States
EcoHarmony West Wind, LLC, Minneapolis, MN/United
States
100
Siemens Electrical, LLC, Wilmington, DE/United States
100
100
Hamilton, NJ/United States
Siemens Energy, Inc., Wilmington, DE/United States
100
Siemens Field Staffing, Inc., Wilmington, DE/United States
Siemens Financial Services, Inc.,
100
eMeter Corporation, Wilmington, DE/United States
Enlighted, Inc., Wilmington, DE/United States
100
Wilmington, DE/United States
100
Wilmington, DE/United States
100
Dresser-Rand Global Services, Inc., Wilmington,
DE/United States
80
Siemens Capital Company LLC,
Diversified Energy Transmissions, LLC,
Salem, OR/United States
Wilmington, DE/United States
100
100
Siemens Demag Delaval Turbomachinery, Inc.,
Siemens Corporation, Wilmington, DE/United States
D-R Steam LLC, Wilmington, DE/United States
Dresser-Rand Company, Olean, NY/United States
100
Siemens Credit Warehouse, Inc.,
100
Wilmington, DE/United States
100
100
MWB (Shanghai) Co Ltd., Shanghai/China
100
Siemens Power Generation Service Company, Ltd.,
Dresser-Rand Engineered Equipment (Shanghai) Co., Ltd.,
Shanghai/China
100
Tortola/Virgin Islands, British
100
Camstar Systems Software (Shanghai) Company Limited,
Shanghai/China
Dade Behring Hong Kong Holdings Corporation,
100
Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
100
Beijing Siemens Cerberus Electronics Ltd., Beijing/China
100
Caracas/Venezuela, Bolivarian Republic of
100
Siemens Healthcare Ltd., Dhaka/Bangladesh
Siemens Rail Automation, C.A.,
100
Siemens Bangladesh Ltd., Dhaka/Bangladesh
Maracaibo/Venezuela, Bolivarian Republic of
100
Siemens Ltd., Bayswater/Australia
100
Gamesa Eólica VE, C.A.,
Siemens Mobility Pty Ltd, Bayswater/Australia
100
100
100
Siemens Healthcare S.A.,
SIEMENS RAIL AUTOMATION PTY. LTD.,
Bayswater/Australia
100
Caracas/Venezuela, Bolivarian Republic of
1007
Caracas/Venezuela, Bolivarian Republic of
100
Asia, Australia (234 companies)
100
100
Mentor Graphics Technology (Shenzhen) Co., Ltd.,
Shenzhen/China
1007
Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
100
Exemplar Health (NBH) Trust 2, Bayswater/Australia
100
Mentor Graphics (Shanghai) Electronic Technology Co.,
Ltd., Shanghai/China
100
Exemplar Health (NBH) Holdings 2 Pty Limited,
Bayswater/Australia
100
100
Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
Jilin Gamesa Wind Co., Ltd., Da'an/China
1007
Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
100
Bayswater/Australia
Aimsun Pty Ltd, Sydney/Australia
100
Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
100
Australia Hospital Holding Pty Limited,
Ganquan Chaiguanshan Wind Power Co., Ltd.,
Flender Ltd., China, Tianjin/China
Bayswater/Australia
Yan'an City/China
Bytemark Australia Pty Ltd, Wayville/Australia
100
CARMODY'S HILL INVESTMENT COMPANY PTY LTD,
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
100
100
Siemens Industry Software Pty Ltd, Bayswater/Australia
Dresser-Rand de Venezuela, S.A.,
100
100
Exemplar Health (SCUH) Holdings 3 Pty Limited,
Bayswater/Australia
100
Siemens Product Lifecycle Management Software Inc.,
Wilmington, DE/United States
in %
September 30, 2019
in %
September 30, 2019
Equity interest
Equity interest
Consolidated Financial Statements
140
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
Exemption pursuant to Section 264b German Commercial Code.
Wilmington, DE/United States
100
Wilmington, DE/United States
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
Siemens Public, Inc., Wilmington, DE/United States
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8
Not accounted for using the equity method due to immateriality.
9
4 No control due to contractual arrangements or legal circumstances.
100
Exemplar Health (SCUH) Holdings 4 Pty Limited,
Siemens USA Holdings, Inc., Wilmington, DE/United States
100
SIEMENS GAMESA RENEWABLE ENERGY S.R.L.,
Siemens Gamesa Renewable Energy Australia Pty Ltd,
Melbourne/Australia
100
Montevideo/Uruguay
100
Wind Portfolio Memberco, LLC, Dover, DE/United States
Siemens Gamesa Renewable Energy Pty Ltd,
100
Bayswater/Australia
100
Siemens Uruguay S.A., Montevideo/Uruguay
100
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Siemens S.A., Montevideo/Uruguay
Pocahontas Prairie Holdings, LLC,
100
100
100
Bayswater/Australia
100
SMI Holding LLC, Wilmington, DE/United States
100
Exemplar Health (SCUH) Trust 3, Bayswater/Australia
J.R.B. Engineering Pty Ltd, Bayswater/Australia
100
100
Wheelabrator Air Pollution Control Inc.,
Exemplar Health (SCUH) Trust 4, Bayswater/Australia
Flender Pty. Ltd., Bayswater/Australia
100
100
Baltimore, MD/United States
Synchrony, Inc., Glen Allen, VA/United States
Rayachoty Renewable Private Limited, Chennai/India
100
RSR Power Private Limited, Chennai/India
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
49
Ethos Energy Group Limited, Aberdeen/United Kingdom
218
Screenpoint Medical B.V., Nijmegen/Netherlands
33
Cross London Trains Holdco 2 Limited,
London/United Kingdom
Certas AG, Zurich/Switzerland
Infraspeed Maintainance B.V., Dordrecht/Netherlands
50
Interessengemeinschaft TUS, Männedorf/Switzerland
208
50
12 Siemens AG is a shareholder with unlimited liability of this company.
508
49
50
5013
Locomotive Workshop Rotterdam B.V.,
Zoetermeer/Netherlands
50
32
508,13
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Equity interest
Joint Venture Service Center, Chirchik/Uzbekistan
218
Hertfordshire/United Kingdom
45
Beijing/China
Studio Novitas Ltd., Berkhamsted,
Beijing Jingneng International Energy Technology Co., Ltd.,
50
Aberdeen/United Kingdom
378
50
50
Exemplar Health (NBH) Partnership, Melbourne/Australia
Exemplar Health (SCUH) Partnership, Sydney/Australia
PHM Technology Pty Ltd, Melbourne/Australia
RWG (Repair & Overhauls) Limited,
49
Primetals Technologies, Limited, London/United Kingdom
508
Equity interest
September 30, 2019
Galloper Wind Farm Holding Company Limited, Swindon,
Wiltshire/United Kingdom
in %
September 30, 2019
in %
146 Consolidated Financial Statements
25
408
Lincs Renewable Energy Holdings Limited,
London/United Kingdom
50
Asia, Australia (24 companies)
Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
Caracas/Venezuela, Bolivarian Republic of
Infraspeed EPC Consortium V.O.F., Zoetermeer/Netherlands
WS Tech Energy Global S.L., Viladecans/Spain
40 8,13
508
Vitoria-Gasteiz/Spain
33
Reindeer Energy Ltd., Bnei Berak/Israel
Gate Solar Gestión, S.L. Unipersonal,
574,8
Parallel Graphics Ltd., Dublin/Ireland
508
EXPLOTACIONES Y MANTEMIENTOS INTEGRALES S.L.,
Getxo/Spain
48
Vassiliko/Greece
Eviop-Tempo A.E. Electrical Equipment Manufacturers,
45
Energías Renovables San Adrián de Juarros, S.A.,
San Adrián de Juarros/Spain
25
TRIXELL SAS, Moirans/France
388
49
20
258
Meomed s.r.o., Prerov/Czech Republic
478
ZAO Interautomatika, Moscow/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
Ardora, S.A., Vigo/Spain
COELME - Costruzioni Elettromeccaniche S.p.A.,
46
358
BioMensio Oy, Tampere/Finland
238
Desgasificación de Vertederos, S.A, Madrid/Spain
508
Padam Mobility S.A.S, Paris/France
31
Hydrophytic, S.L., Vitoria-Gasteiz/Spain
508
Santa Maria di Sala/Italy
SISTEMAS ENERGETICOS DE TENERIFE, S.A.,
EGM Holding Limited, Marsaskala/Malta
33
SANTA CRUZ DE TENERIFE/Spain
Energie Electrique de Tahaddart S.A., Tangier/Morocco
20
49
Sistemes Electrics Espluga, S.A., Barcelona/Spain
206,13
Tusso Energía, S.L., Sevilla/Spain
Buitengaats Management B.V., Eemshaven/Netherlands
208
Windar Renovables, S.L., Avilés/Spain
GLT-PLUS V.O.F, Sappemeer/Netherlands
Buitengaats C.V., Amsterdam/Netherlands
498
Temir Zhol Electrification LLP, Astana/Kazakhstan
SIGLO XXI SOLAR, SOCIEDAD ANONIMA, Ciudad Real/Spain
25
Transfima GEIE, Milan/Italy
42 8,13
Nertus Mantenimiento Ferroviario y Servicios S.A.,
Madrid/Spain
514
Transfima S.p.A., Milan/Italy
258
498
VAL 208 Torino GEIE, Milan/Italy
KACO New Energy Co., Amman/Jordan
864,8,13
San Sebastián/Spain
50
49
Nuevas Estrategias de Mantenimiento, S.L.,
Moscow/Russian Federation
DBEST (Beijing) Facility Technology Management Co., Ltd.,
Beijing/China
Guangzhou Suikai Smart Energy Co., Ltd.,
62
1004,5
268
18
1004,5
in millions of €
Equity
Net income
in millions of €
in %
Equity interest
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
Kyros Beteiligungsverwaltung GmbH, Grünwald
Germany (2 companies)
OTHER INVESTMENTS11
September 30, 2019
147
Consolidated Financial Statements
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
30
Power Automation Pte. Ltd., Singapore/Singapore
43
49
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
519
4 No control due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
5 No significant influence due to contractual arrangements or legal circumstances.
Advance Gas Turbine Solutions SDN. BHD.,
Kuala Lumpur/Malaysia
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (2 companies)
1913
148 Consolidated Financial Statements
N/A = No financial data available.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Siemens AG is a shareholder with unlimited liability of this company.
22
12
Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
11
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
150
(95)
5
N/A
N/A
12
7 Not consolidated due to immateriality.
0
1
Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
10
N/A
N/A
Uhre Vindmollelaug I/S, Brande/Denmark
Americas (2 companies)
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
Bentley Systems, Incorporated, Wilmington, DE/United States
ChargePoint, Inc., Campbell, CA/United States
308
USARAD Holdings, Inc., Fort Lauderdale, FL/United States
Wi-Tronix Group Inc., Dover, DE/United States
308
27
CEF-L Holding, LLC, Wilmington, DE/United States
DeepHow Corp., Princeton, NJ/United States
49
Changsha/China
508
Baja Wind US LLC, Wilmington, DE/United States
50
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
Smart Metering Solutions (Changsha) Co. Ltd.,
50
Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
33
Santo Domingo/Dominican Republic
49
Shanghai Meiling Medical Imaging Diagnosis Center Co.,
Ltd., Shanghai/China
Akuo Energy Dominicana, S.R.L,
2013
Santiago de Cali/Colombia
Americas (21 companies)
Guangzhou/China
35
Gas Natural Acu Infraestructura S.A, Rio de Janeiro/Brazil
GNA 1 Geração de Energia S.A., São João da Barra/Brazil
Micropower Comerc Energia S.A., São Paulo/Brazil
56
Saitong Railway Electrification (Nanjing) Co., Ltd.,
238
33
508
20
Union Temporal Recaudo y Tecnologia,
Shanghai Electric Power Generation Equipment Co., Ltd.,
Shanghai/China
40
10
Nanjing/China
Tianjin ZongXi Traction Motor Ltd., Tianjin/China
Xi'An X-Ray Target Ltd., Xi'an/China
50
438
PhSiTh LLC, New Castle, DE/United States
33
Transparent Energy Systems Private Limited, Pune/India
P.T. Jawa Power, Jakarta/Indonesia
258
50
Powerit Holdings, Inc., Seattle, WA/United States
37
218
40
PTG Holdings Company LLC, Dover, DE/United States
26
PT Trafoindo Power Indonesia, Jakarta/Indonesia
49
Rether networks, Inc., Berkeley, CA/United States
PT Asia Care Indonesia, Jakarta/Indonesia
25
26
Orange Sironj Wind Power Private Limited, New Delhi/India
Pune IT City Metro Rail Limited, Pune/India
First State Marine Wind, LLC, Newark, DE/United States
Fluence Energy, LLC, Wilmington, DE/United States
Hickory Run Holdings, LLC, Wilmington, DE/United States
318
50
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
Yangzhong/China
50
206
46
Panda Hummel Station Intermediate Holdings | LLC,
Wilmington, DE/United States
50
20
32
32
Panda Stonewall Intermediate Holdings I, LLC,
Wilmington, DE/United States
Zhi Dao Railway Equipment Ltd., Taiyuan/China
Bangalore International Airport Ltd., Bangalore/India
208
000 VIS Automation mit Zusatz,,Ein Gemeinschafts-
unternehmen von VIS und Siemens",
44
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
100
Siemens Gamesa Renewable Energy New Zealand Limited,
Auckland/New Zealand
100
Umrani Renewable Private Limited, Chennai/India
100
100
Siemens (N.Z.) Limited, Auckland/New Zealand
100
Tirupur Renewable Energy Private Limited, Chennai/India
Tuljapur Wind Farms Private Limited, Chennai/India
100
Siemens Mobility Sdn. Bhd., Kuala Lumpur/Malaysia
Navi Mumbai/India
100
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
100
Sindhanur Renewable Energy Private Limited,
Siemens Industry Software Sdn. Bhd.,
7 Not consolidated due to immateriality.
Chennai/India
George Town, Pulau Pinang/Malaysia
100
Thoothukudi Renewable Energy Private Limited,
Chennai/India
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
100
100
100
1007
8
9
Aimsun Pte Ltd, Singapore/Singapore
100
Siemens, Inc., Manila/Philippines
100
100
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
Siemens Ltd., Ho Chi Minh City/Viet Nam
100
Siemens Power Operations, Inc., Manila/Philippines
100
Siemens Healthcare Inc., Manila/Philippines
100
Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
City/Viet Nam
100
Makati City/Philippines
Siemens Gamesa Renewable Energy, Inc.,
100
Siemens Mobility Limited, Bangkok/Thailand
Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
144 Consolidated Financial Statements
Not accounted for using the equity method due to immateriality.
Equity interest
September 30, 2019
in %
September 30, 2019
in %
Siemens Healthcare Limited, Auckland/New Zealand
100
Equity interest
Siemens Gas and Power Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Technology and Services Private Limited,
100
100
Siemens Healthcare K.K., Tokyo/Japan
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
100
Kanagawa/Japan
100
Siemens Factoring Private Limited, Navi Mumbai/India
Siemens Financial Services Private Limited, Mumbai/India
Siemens Gamesa Renewable Energy Engineering Centre
Private Limited, Navi Mumbai/India
Siemens Gamesa Renewable Energy Japan K.K.,
100
100
Mentor Graphics Japan Co., Ltd., Tokyo/Japan
Shivamogga Renewable Energy Private Limited,
Chennai/India
96
100
PT. Siemens Industrial Power, Kota Bandung/Indonesia
Acrorad Co., Ltd., Okinawa/Japan
100
PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
PT SAMUDIA BAHTERA, Jakarta/Indonesia
100
100
Sankanur Renewable Energy Private Limited, Chennai/India
100
100
SANTALPUR RENEWABLE POWER PRIVATE LIMITED,
95
100
Gujarat/India
99
Saunshi Renewable Energy Private Limited, Chennai/India
100
PT Siemens Gamesa Renewable Energy, Jakarta/Indonesia
PT Siemens Mobility Indonesia, Jakarta/Indonesia
Siemens K.K., Tokyo/Japan
100
SIEMENS GAMESA RENEWABLE ENERGY PROJECTS PRIVATE
LIMITED, Chennai/India
100
100
Siemens Ltd. Seoul, Seoul/Korea, Republic of
100
Siemens Logistics India Private Limited, Navi Mumbai/India
100
Siemens Industry Software Ltd., Seoul/Korea, Republic of
Siemens Mobility Ltd., Seoul/Korea, Republic of
Siemens Ltd., Mumbai/India
75
Dresser-Rand Asia Pacific Sdn. Bhd.,
Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
100
Kuala Lumpur/Malaysia
100
100
Siemens Industry Software Computational Dynamics India
Pvt. Ltd., Bangalore/India
Siemens Healthineers Ltd., Seoul/Korea, Republic of
100
Siemens PLM Software Computational Dynamics K.K.,
Yokohama/Japan
100
Siemens Gamesa Renewable Power Private Limited,
Chennai/India
100
Mentor Graphics (Korea) LLC, Bundang-gu, Seongnam-si,
Gyeonggi-do/Korea, Republic of
100
100
100
Siemens Gamesa Renewable Energy Limited,
Siemens Industry Software (India) Private Limited,
New Delhi/India
Seoul/Korea, Republic of
100
100
Siemens Healthcare Private Limited, Mumbai/India
ASSOCIATED COMPANIES AND JOINT VENTURES
Flender Pte. Ltd., Singapore/Singapore
100
6 Significant influence due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction of the
relevant activities.
2 Control due to rights to appoint, reassign or remove members of the
key management personnel.
1 Control due to a majority of voting rights.
50
Valeo Siemens eAutomotive GmbH, Erlangen
100
458
Sternico GmbH, Wendeburg
Siemens Logistics Automation Systems Ltd.,
Bangkok/Thailand
56
Siemens EuroCash, Munich
99
Siemens Limited, Bangkok/Thailand
23
MeVis BreastCare GmbH & Co. KG, Bremen
49
100
Siemens Gamesa Renewable Energy Limited,
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
Nordlicht Holding GmbH & Co. KG, Frankfurt
498
7 Not consolidated due to immateriality.
33
100
Nordlicht Holding Verwaltung GmbH, Frankfurt
338
Siemens Healthcare Limited, Bangkok/Thailand
100
OWP Butendiek GmbH & Co. KG, Bremen
Bangkok/Thailand
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
ZeeEnergie Management B.V., Eemshaven/Netherlands
208
Wirescan AS, Trollaasen/Norway
368
40
Rousch (Pakistan) Power Ltd., Islamabad/Pakistan
000 Transconverter, Moscow/Russian Federation
206,13
26
Aspern Smart City Research GmbH, Vienna/Austria
448
Aspern Smart City Research GmbH & Co KG, Vienna/Austria
E-Mobility Provider Austria GmbH, Vienna/Austria
SMATRICS GmbH & Co KG, Vienna/Austria
OIL AND GAS PROSERV LLC, Baku/Azerbaijan
358
Siemens Gamesa Renewable Energy (Thailand) Co., Ltd.,
Bangkok/Thailand
ZeeEnergie C.V., Amsterdam/Netherlands
Ural Locomotives Holding Besloten Vennootschap,
The Hague/Netherlands
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Consolidated Financial Statements 145
September 30, 2019
Veja Mate Offshore Project GmbH, Oststeinbek
Voith Hydro Holding GmbH & Co. KG, Heidenheim
Voith Hydro Holding Verwaltungs GmbH, Heidenheim
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (62 companies)
Armpower CJSC, Yerevan/Armenia
50
Equity interest
20
35
358
September 30, 2019
Equity interest
in %
in %
Building Robotics Inc., Wilmington, DE/United States
Bytemark Inc., New York, NY/United States
238
100
100
Siemens Pte. Ltd., Singapore/Singapore
498
egrid applications & consulting GmbH, Kempten
100
Siemens Mobility Pte. Ltd., Singapore/Singapore
498
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
des Stadt- und Regionalverkehrs mbH, Cologne
100
100
30
Curagita Holding GmbH, Heidelberg
Siemens Logistics PTE. LTD., Singapore/Singapore
Siemens Industry Software Pte. Ltd.,
Singapore/Singapore
50
Caterva GmbH, Pullach i. Isartal
100
Germany (29 companies)
Mentor Graphics Asia Pte Ltd, Singapore/Singapore
100
Siemens Gamesa Renewable Energy Singapore Private
Limited, Singapore/Singapore
Alchemist Accelerator Europe Fund I GmbH & Co. KG,
Grünwald
1004,8
Siemens Gamesa Renewable Energy Lanka (Private)
100
258
Siemens Gas and Power Pte. Ltd., Singapore/Singapore
1007
BELLIS GmbH, Braunschweig
498
Siemens Healthcare Pte. Ltd., Singapore/Singapore
ATS Projekt Grevenbroich GmbH, Schüttorf
FEAG Fertigungscenter für Elektrische Anlagen GmbH,
Erlangen
498
Limited, Colombo/Sri Lanka
LIB Verwaltungs-GmbH, Leipzig
508
Siemens Industry Software (TW) Co., Ltd.,
Ludwig Bölkow Campus GmbH, Taufkirchen
258
Taipei/Taiwan, Province of China
100
100
28
Siemens Limited, Taipei/Taiwan, Province of China
100
Maschinenfabrik Reinhausen GmbH, Regensburg
20
Dresser-Rand (Thailand) Limited, Rayong/Thailand
Magazino GmbH, Munich
Metis Motion GmbH, Munich
Province of China
408
100
GuD Herne GmbH, Essen
50
Siemens Gamesa Renewable Energy Offshore Wind Limited,
IFTEC GmbH & Co. KG, Leipzig
50
258
Taipei/Taiwan, Province of China
Siemens Gas and Power Limited, Taipei/Taiwan,
Province of China
1007
Siemens Healthcare Limited, Taipei/Taiwan,
Infineon Technologies Bipolar GmbH & Co. KG, Warstein
Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
INPRO Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
40
100
100
100
100
100
San José/Costa Rica
100
Siemens Gesa Renewable Energy, S.A. de C.V.,
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
100
Mexico City/Mexico
100
Siemens S.A., San José/Costa Rica
100
Gamesa Dominicana, S.A.S.,
Siemens Gesa Renewable Energy México, S. de R.L. de C.V.,
Mexico City/Mexico
Siemens Gesa Renewables Energy Services S. de R.L.
de C.V., Mexico City/Mexico
Santo Domingo/Dominican Republic
100
Siemens Mobility, S.R.L.,
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
Mexico City/Mexico
100
Santo Domingo/Dominican Republic
100
Siemens, S.R.L., Santo Domingo/Dominican Republic
100
Siemens Healthcare Servicios S. de R.L. de C.V.,
Mexico City/Mexico
100
100
100
Siemens S.A., Tenjo/Colombia
1007
Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
Gesan I S.A.P.I de C.V., Mexico City/Mexico
Equity interest
Equity interest
September 30, 2019
Siemens Wind Power SpA, Santiago de Chile/Chile
Dresser-Rand Colombia S.A.S., Bogotá/Colombia
SIEMENS GAMESA RENEWABLE ENERGY S.A.S.,
Bogotá/Colombia
in %
September 30, 2019
in %
100
Grupo Siemens S.A. de C.V., Mexico City/Mexico
100
100
Indústria de Trabajos Eléctricos S.A. de C.V.,
Ciudad Juárez/Mexico
100
100
Siemens Gas and Power S.A.S., Tenjo/Colombia
1007
Siemens Gas and Power Servicios, S. de R.L. de C.V.,
Mexico City/Mexico
1007
Siemens Healthcare S.A.S., Tenjo/Colombia
100
Siemens Gas and Power, S. de R.L. de C.V.,
Siemens Mobility S.A.S., Tenjo/Colombia
100
Mexico City/Mexico
Siemens S.A., Quito/Ecuador
100
SIEMENS GAMESA RENEWABLE ENERGY, S.R.L.,
100
100
100
Siemens S.A., Tegucigalpa/Honduras
100
Siemens Mobility S.A.C., Lima/Peru
100
Central Eólica de México S.A. de C.V., Mexico City/Mexico
100
Siemens S.A.C., Lima/Peru
100
100
Dresser-Rand Trinidad & Tobago Unlimited,
Mexico City/Mexico
100
Couva/Trinidad and Tobago
10013
Gesa Oax II Sociedad de Responsabilidad Limitada
Advanced Airfoil Components LLC,
de Capital Variable, Mexico City/Mexico
100
Wilmington, DE/United States
51
Gesa Oax III Sociedad Anomima de Capital Variable,
Mexico City/Mexico
Aimsun Inc., Dover, DE/United States
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
Siemens Gamesa Renewable Energy S.A.C., Lima/Peru
Siemens Healthcare S.A.C., Surquillo/Peru
100
Gesa Oax | Sociedad Anomima de Capital Variable,
Siemens S.A., Antiguo Cuscatlán/El Salvador
Siemens Industry Software, S.A. de C.V.,
Mexico City/Mexico
Tegucigalpa/Honduras
100
Siemens Healthcare, Sociedad Anonima,
Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
100
Antiguo Cuscatlán/El Salvador
100
100
SIEMENS GAMESA RENEWABLE ENERGY
Siemens Logistics S. de R.L. de C.V., Mexico City/Mexico
Siemens Mobility S. de R.L. de C.V., Mexico City/Mexico
Siemens Servicios S.A. de C.V., Mexico City/Mexico
100
100
INSTALLATION & MAINTENANCE COMPAÑÍA LIMITADA,
SIEMENS GAMESA RENEWABLE ENERGY, S.A.,
100
Siemens S.A., Panama City/Panama
100
Siemens S.A., Guatemala/Guatemala
100
100
100
Guatemala/Guatemala
100
Siemens, S.A. de C.V., Mexico City/Mexico
Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
Pages 149–174
> otherwise appears to be materially misstated.
Additional
Information
> is materially inconsistent with the consolidated financial
statements, with the group management report or our knowl-
edge obtained in the audit, or
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
Klaus Helmrich
Management is responsible for the preparation of the consoli-
dated financial statements that comply, in all material respects,
with IFRSS as adopted by the EU and the additional requirements
of German commercial law pursuant to Sec. 315e (1) HGB as well
as with full IFRSS as issued by the IASB, and that the consolidated
financial statements, in compliance with these requirements,
give a true and fair view of the assets, liabilities, financial position
and financial performance of the Group. In addition, manage-
ment is responsible for such internal control as management has
determined necessary to enable the preparation of consolidated
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern. It also has the responsibility for disclosing, as ap-
plicable, matters related to going concern. In addition, manage-
ment is responsible for financial reporting based on the going
concern basis of accounting, unless there is an intention to liqui-
date the Group or to cease operations, or there is no realistic
alternative but to do so.
Furthermore, management is responsible for the preparation
of the group management report that, as a whole, provides an
appropriate view of the Group's position and is, in all material
respects, consistent with the consolidated financial statements,
complies with German legal requirements and appropriately
presents the opportunities and risks of future development.
In addition, management is responsible for such arrangements
and measures (systems) as management has considered neces-
sary to enable the preparation of a group management report
that is in accordance with the applicable German legal require-
ments, and to be able to provide sufficient appropriate evidence
for the assertions in the group management report.
The Supervisory Board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and of the group management report.
Ը
RESPONSIBILITIES OF MANAGEMENT AND THE
SUPERVISORY BOARD FOR THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE GROUP
MANAGEMENT REPORT
C.1 Responsibility Statement
Klaus Hebraid
Munich, December 3, 2019
Siemens Aktiengesellschaft
The Managing Board
for Siemens Aktiengesellschaft, includes a fair review of the
development and performance of the business and the position
of the Group, together with a description of the material oppor-
tunities and risks associated with the expected development
of the Group.
Joe Kaeser
Ru क
Dr. Roland Busch
Lisa Davis
fifel
Janina Kugel
Jomas
150 Additional Information
To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Consolidated Financial Statements
give a true and fair view of the assets, liabilities, financial posi-
tion and profit or loss of the Group, and the Group Management
Report, which has been combined with the Management Report
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF
THE CONSOLIDATED FINANCIAL STATEMENTS AND
OF THE GROUP MANAGEMENT REPORT
Munich, December 3, 2019
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec. 317
HGB and the EU Audit Regulation as well as in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the IDW and in supplementary com-
pliance with ISA will always detect a material misstatement.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reason-
ably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements and
this group management report.
Cedrik Neike
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
The German Public Auditor responsible for the engagement is
Thomas Spannagl.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
> Perform audit procedures on the prospective information pre-
sented by management in the group management report. On
the basis of sufficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used by manage-
ment as a basis for the prospective information, and evaluate
the proper derivation of the prospective information from
these assumptions. We do not express a separate opinion on
the prospective information and on the assumptions used as
a basis. There is a substantial unavoidable risk that future
events will differ materially from the prospective information.
with German law, and the view of the Group's position it
provides.
with the consolidated financial statements, its conformity
> Evaluate the consistency of the group management report responsible for the engagement
German Public Auditor
We declare that the opinions expressed in this auditor's report are
consistent with the additional report to the Audit Committee pur-
suant to Art. 11 of the EU Audit Regulation (long-form audit report).
We were elected as group auditor by the Annual Shareholders'
Meeting on January 30, 2019. We were engaged by the Supervisory
Board on January 30, 2019. We have been the group auditor of
Siemens Aktiengesellschaft without interruption since the fiscal
year from October 1, 2008 to September 30, 2009.
FURTHER INFORMATION PURSUANT TO ART. 10
OF THE EU AUDIT REGULATION
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
whether the group management report as a whole provides an
appropriate view of the Group's position and, in all material re-
spects, is consistent with the consolidated financial statements
and the knowledge obtained in the audit, complies with the
German legal requirements and appropriately presents the op-
portunities and risks of future development, as well as to issue an
auditor's report that includes our opinions on the consolidated
financial statements and on the group management report.
> Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the group management report.
We are responsible for the direction, supervision and perfor-
mance of the group audit. We remain solely responsible for
our opinions.
the consolidated financial statements, including the disclo- requirements
Other legal and regulatory
From the matters communicated with those charged with gover-
nance, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes
public disclosure about the matter.
We also provide those charged with governance with a statement
that we have complied with the relevant independence require-
ments, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our indepen-
dence and where applicable, the related safeguards.
> Evaluate the overall presentation, structure and content of
> Conclude on the appropriateness of management's use of
the going concern basis of accounting and, based on the au-
dit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant
doubt on the Group's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are re-
quired to draw attention in the auditor's report to the related
disclosures in the consolidated financial statements and in
the group management report or, if such disclosures are in-
adequate, to modify our respective opinions. Our conclu-
sions are based on the audit evidence obtained up to the date
of our auditor's report. However, future events or conditions
may cause the Group to cease to be able to continue as a
going concern.
155
Additional Information
> Evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures.
> Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of arrange-
ments and measures (systems) relevant to the audit of the
group management report in order to design audit procedures
that are appropriate in the circumstances, but not for the pur-
pose of expressing an opinion on the effectiveness of these
systems.
Identify and assess the risks of material misstatement of the
consolidated financial statements and of the group manage-
ment report, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for
our opinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSS as ad-
opted by the EU and the additional requirements of German
commercial law pursuant to Sec. 315e (1) HGB as well as with
full IFRSS as issued by the IASB.
Michael Sen
> Notes and forward-looking statements in chapter
the Annual Report 2019.
To Siemens Aktiengesellschaft, Berlin and Munich
Auditor's response: With the assistance of internal tax special-
ists who have knowledge of relevant local tax law, we examined
the processes installed by management and obtained an under-
standing of internal controls for the identification, recognition
and measurement of tax positions. In the course of our audit
procedures relating to uncertain tax positions, we evaluated
whether management's assessment of the tax implications of
significant business transactions or events in fiscal year 2019,
which could result in uncertain tax positions or influence the
measurement of existing uncertain tax positions, was in compli-
ance with tax law. In particular, this includes the tax implications
arising from the acquisition or disposal of company shares, cor-
porate (intragroup) restructuring activities, the intragroup trans-
fer of trademark rights, results of examinations by tax authorities,
and cross-border matters, such as determining transfer prices.
In order to assess measurement and completeness, we also ob-
tained confirmations from external tax advisors and inspected
expert legal or tax opinions and assessments commissioned by
management. Further, we evaluated management's assessments
with respect to the prospects of success of appeal and tax court
proceedings by inquiring of the employees of the Siemens tax
department and by considering current tax case law.
Additional Information
153
In assessing the recoverability of deferred tax assets, we particu-
larly analyzed management's assumptions with respect to tax
planning strategies and projected future taxable income and
compared them to internal business plans. In the course of our
audit procedures regarding deferred tax liabilities, we examined
in particular the assumptions regarding reinvestment of subsid-
iaries' retained profits for an indefinite period and assessed these
taking into account dividend planning.
We also evaluated management's assessment of the accounting
implications of the changes in US tax legislation and the related
administrative regulations published in this context, consulting
US tax specialists to do so.
In addition, we assessed the disclosures for income taxes in the
notes to the consolidated financial statements including dis-
closures about the expected impact of the adoption of IFRIC 23,
Uncertainty over Income Tax Treatments, for the fiscal year be-
ginning October 1, 2019.
Our audit procedures did not lead to any reservations relating to
the accounting for uncertain tax positions and deferred taxes.
Reference to related disclosures: With regard to the recogni-
tion and measurement policies applied in accounting for in-
come taxes, refer to → NOTE 2 MATERIAL ACCOUNTING POLICIES AND
CRITICAL ACCOUNTING ESTIMATES in the notes to the consolidated
financial statements. With respect to disclosures for deferred
tax assets and liabilities, refer to NOTE 7 INCOME TAXES in the
notes to the consolidated financial statements.
Changes in segment reporting
Reasons why the matter was determined to be a key audit
matter: As part of the implementation of the company strategy
"Vision 2020+", the management of Siemens AG changed the
internal organizational structure as of April 1, 2019. As part of the
new group structure, Siemens bundled its industrial businesses
in three Operating Companies and three Strategic Companies.
Financial Services will continue to be a reportable segment outside
the Industrial Businesses. We considered the change in the report-
able segments to be a key audit matter due to the importance of
the segment reporting as part of capital markets communication,
the high complexity of the reporting structure transition process
and the associated judgments made by management with respect
to the determination of the reportable segments as well as of the
amounts of goodwill and their allocation to the new goodwill-
carrying units.
Auditor's response: As part of our audit, we obtained an under-
standing of management's process for determining the report-
able segments. In this regard, we evaluated whether the seg-
ment definition is consistent with the internal reporting, the full
Managing Board's assessment of performance as well as the al-
location of resources as part of the budgeting process, in partic-
ular by inspecting the minutes of the meetings of the Managing
Board. We further assessed the determination of the good-
will-carrying units and evaluated the consistency with the in-
ternal monitoring of goodwill. With the assistance of our inter-
nal valuation specialists, we also examined the conceptual
approach as well as the valuation methods applied in reallocat-
ing goodwill and evaluated the assumptions and estimates
used (such as growth rates and cost of capital).
Uncertain tax positions and deferred taxes
Reasons why the matter was determined to be a key audit
matter: Siemens operates in numerous countries with different
local tax legislation. The accounting for uncertain tax positions
as well as deferred taxes requires management to exercise con-
siderable judgment and make estimates and assumptions, and
was therefore a key audit matter. In particular, this affects the
measurement and completeness of uncertain tax positions, the
recoverability of deferred tax assets as well as the measurement
and completeness of deferred tax liabilities. In addition, manage-
ment's assessment of the accounting implications of changes in
US tax legislation as well as related administrative regulations
published in this context was of relevance for our audit.
By drawing on the expertise of IT-specialists, we verified the im-
plementation of the new reporting structure in the IT-systems,
including changes to the consolidation entries, and evaluated the
presentation of the prior-year segment information on a compa-
rable basis as well as the presentation of the segment informa-
tion in the notes to the consolidated financial statements and the
combined management report.
Reference to related disclosures: With regard to the disclo-
sures for segment reporting, refer to → NOTE 29 SEGMENT INFOR-
MATION. For information regarding goodwill, refer to → NOTE 12
GOODWILL. Additional disclosures regarding the segments are in-
cluded in the combined management report in chapter → A.1
ORGANIZATION OF THE SIEMENS GROUP AND BASIS OF PRESENTATION and
chapter A.3 SEGMENT INFORMATION.
OTHER INFORMATION
The Supervisory Board is responsible for the Report of the Super-
visory Board in chapter c.3 of the Annual Report 2019. In
all other respects, management is responsible for the other in-
formation.
The other information, of which we received a version prior to
issuing this auditor's report, includes:
the Responsibility Statement in chapter c.1 of the Annual
Report 2019,
> the Report of the Supervisory Board in chapter
Annual Report 2019,
C.3 of the
Corporate Governance in chapter c.4 of the Annual Report
2019, and
Junul
C.5 of
Our opinions on the consolidated financial statements and on
the group management report do not cover the other informa-
tion, and consequently we do not express an opinion or any other
form of assurance conclusion thereon.
154
Our audit procedures did not lead to any reservations relating to
the changes in segment reporting.
Reference to related disclosures: With regard to the recognition
and measurement policies applied in accounting for provisions,
refer to NOTE 2 MATERIAL ACCOUNTING POLICIES AND CRITICAL
ACCOUNTING ESTIMATES in the notes to the consolidated financial
statements. With respect to proceedings out of or in connection
with alleged compliance violations, refer to → NOTE 22 LEGAL PRO-
CEEDINGS. With respect to the uncertainties and estimates relating
to asset retirement obligations, refer to → NOTE 18 PROVISIONS.
Our audit procedures did not lead to any reservations relating
to the accounting for proceedings out of or in connection with
alleged compliance violations as well as for asset retirement
obligations.
on asset retirement obligations in the notes to the consolidated
financial statements.
Report on the audit of the Consoli-
dated Financial Statements and
of the Group Management Report
OPINIONS
We have audited the consolidated financial statements of Siemens
Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
Group), which comprise the consolidated statements of income
and comprehensive income for the fiscal year from October 1,
2018 to September 30, 2019, the consolidated statements of
financial position as of September 30, 2019, the consolidated
statements of cash flows and changes in equity for the fiscal year
from October 1, 2018 to September 30, 2019, and notes to the
consolidated financial statements, including a summary of signif-
icant accounting policies. In addition, we have audited the group
management report of Siemens Aktiengesellschaft, which is
combined with the management report of Siemens Aktienge-
sellschaft, for the fiscal year from October 1, 2018 to Septem-
ber 30, 2019. In accordance with the German legal requirements
we have not audited the content of chapter A.9.3 CORPORATE
GOVERNANCE STATEMENT of the Combined Management Report,
including chapter → c.4.2 of the Annual Report 2019 referred to
in chapter A.9.3.
In our opinion, on the basis of the knowledge obtained in the
audit,
> the accompanying consolidated financial statements comply,
in all material respects, with the International Financial Report-
ing Standards (IFRSs) as adopted by the European Union (EU),
and the additional requirements of German commercial law
pursuant to Sec. 315e (1) HGB ["Handelsgesetzbuch": German
Commercial Code] as well as with full IFRSS as issued by the
International Accounting Standards Board (IASB), and, in com-
pliance with these requirements, give a true and fair view of
the assets, liabilities and financial position of the Group as of
September 30, 2019 and of its financial performance for the
fiscal year from October 1, 2018 to September 30, 2019, and
> the accompanying group management report as a whole pro-
vides an appropriate view of the Group's position. In all mate-
rial respects, this group management report is consistent with
the consolidated financial statements, complies with German
legal requirements and appropriately presents the opportuni-
ties and risks of future development. Our opinion on the
group management report does not cover the content of the
Corporate Governance statement referred to above.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our
audit has not led to any reservations relating to the legal compli-
ance of the consolidated financial statements and of the group
management report.
BASIS FOR THE OPINIONS
We conducted our audit of the consolidated financial statements
and of the group management report in accordance with Sec. 317
HGB and the EU Audit Regulation (No 537/2014, referred to sub-
sequently as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
tute of Public Auditors in Germany] (IDW). In conducting the au-
dit of the consolidated financial statements we also complied
with International Standards on Auditing (ISA). Our responsibili-
ties under those requirements, principles and standards are fur-
ther described in the "Auditor's responsibilities for the audit of
the consolidated financial statements and of the group manage-
ment report" section of our auditor's report. We are independent
of the group entities in accordance with the requirements of
European law and German commercial and professional law, and
we have fulfilled our other German professional responsibilities
in accordance with these requirements. In addition, in accor-
dance with Art. 10 (2) f) of the EU Audit Regulation, we declare
that we have not provided non-audit services prohibited under
Art. 5 (1) of the EU Audit Regulation. We believe that the audit
evidence we have obtained is sufficient and appropriate to pro-
vide a basis for our opinions on the consolidated financial state-
ments and on the group management report.
KEY AUDIT MATTERS IN THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the fiscal year from October 1,
2018 to September 30, 2019. These matters were addressed in
the context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon; we do not pro-
vide a separate opinion on these matters.
Below, we describe what we consider to be the key audit matters:
Revenue recognition on construction contracts
Reasons why the matter was determined to be a key audit
matter: The Group conducts a significant portion of its business
under construction contracts, particularly in the Operating Com-
pany Gas and Power and in the Strategic Companies Mobility and
Siemens Gamesa Renewable Energy. Revenue from long-term
construction contracts is recognized in accordance with IFRS 15,
Revenue from Contracts with Customers, generally over time under
the percentage-of-completion method. We consider the account-
ing for construction contracts to be an area posing a significant
Additional Information 151
risk of material misstatement (including the potential risk of
management override of internal controls) and accordingly a key
audit matter, because management's assessments significantly
impact the determination of the extent of progress towards com-
pletion. These assessments include, in particular, the scope of
deliveries and services required to fulfill contractually defined
obligations, total estimated contract costs, remaining costs to
completion and total estimated contract revenues, as well as con-
tract risks including technical, political, regulatory and legal risks.
Revenues, total estimated contract costs and profit recognition
may deviate significantly from original estimates based on new
knowledge about cost overruns and changes in project scope
over the term of a construction contract.
Auditor's response: As part of our audit, we obtained an under-
standing of the Group's internally established methods, pro-
cesses and control mechanisms for project management in the
bid and execution phase of construction contracts. In this regard,
we assessed the design and operating effectiveness of the
accounting-related internal controls in the project business by
obtaining an understanding of business transactions specific to
construction contracts, from the initiation of the transaction
through presentation in the consolidated financial statements.
We also tested internal controls on management level including
project reviews and controls addressing the timely assessment of
changes in cost estimates and the timely and complete recog-
nition of such changes in the project calculation.
As part of our substantive audit procedures, we evaluated man-
agement's estimates and assumptions based on a risk-based se-
lection of a sample of contracts. Our sample particularly included
projects that are subject to significant future uncertainties and
risks, such as fixed-price or turnkey projects, projects with com-
plex technical requirements or with a large portion of materials
and services to be provided by suppliers, subcontractors or
consortium partners, cross-border projects, and projects with
changes in cost estimates, delays and/or low or negative mar-
gins. Our audit procedures included, among others, review of the
contracts and their terms and conditions including contractually
agreed partial deliveries and services, termination rights, penal-
ties for delay and breach of contract as well as liquidated dam-
ages. In order to evaluate whether revenues were recognized on
an accrual basis for the selected projects, we analyzed billable
revenues and corresponding cost of sales to be recognized in the
statement of income in the reporting period considering the ex-
tent of progress towards completion, and examined the account-
ing for the associated items in the statement of financial position.
Considering the requirements of IFRS 15, we also assessed the
accounting for contract amendments or contractually agreed op-
tions. We further performed inquiries of project management
(both commercial and technical project managers) with respect
to the development of the projects, the reasons for deviations
between planned and actual costs, the current estimated costs
to complete the projects, and management's assessments
on probabilities that contract risks will materialize. To identify
anomalies in the development of margins throughout the proj-
ects' execution, we also applied data analysis procedures. In
designing our audit procedures, we also considered results from
project audits conducted by the internal audit function. Further-
more, we obtained evidence from third parties for selected proj-
ects (e.g., project acceptance documentation, contractual terms
and conditions, and lawyers' confirmations regarding alleged
breaches of contract and asserted claims) and inspected plant
and project locations.
Due to the large contract volume and risk profile, in particular
with respect to the developments of the power generation mar-
kets, our audit procedures especially focused on large contracts
for the turnkey construction of power plants, high-voltage-direct-
current solutions, the delivery of high-speed and commuter
trains, and the construction of offshore wind farms.
Our audit procedures did not lead to any reservations relating to
revenue recognition on construction contracts.
Reference to related disclosures: With regard to the recog-
nition and measurement policies applied in accounting for con-
struction contracts, refer to NOTE 2 MATERIAL ACCOUNTING
POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the notes to the
consolidated financial statements. With respect to contract assets
and liabilities as well as provisions for order related losses and
risks, refer to → NOTE 10 CONTRACT ASSETS AND LIABILITIES and
→ NOTE 18 PROVISIONS in the notes to the consolidated financial
statements.
Provisions for proceedings out of or in connection
with alleged compliance violations as well
as provisions for asset retirement obligations
Reasons why the matter was determined to be a key audit
matter: We considered the accounting for provisions for proceed-
ings out of or in connection with alleged compliance violations,
including allegations of corruption and antitrust violations, and
for asset retirement obligations to be a key audit matter. These
matters are subject to inherent uncertainties and require esti-
mates that could have a significant impact on the recognition and
measurement of the respective provision and, accordingly, on
assets, liabilities and financial performance. Proceedings out of
or in connection with alleged compliance violations are subject
to uncertainties because they frequently involve complex legal
issues and accordingly, considerable management judgment, in
particular when determining whether and in what amount a pro-
vision is required to account for the risks. The uncertainties and
estimates with respect to asset retirement obligations pertain es-
pecially to the estimated costs of decommissioning and final
waste storage, the estimated time frame over which cash out-
flows are expected, and the relevant discount rates.
152
Additional Information
Auditor's response: During our audit of the financial reporting
of proceedings out of or in connection with alleged compliance
violations, we examined the processes implemented by Siemens
for identifying, assessing and accounting for legal and regulatory
proceedings. To determine what potentially significant pending
legal proceedings or claims asserted are known and to assess
management's estimates of the expected cash outflows, our
audit procedures included inquiring of management and other
persons within the Group entrusted with these matters, obtain-
ing written statements from in-house legal counsels with respect
to the assessment of estimated cash outflows and their probabil-
ity, obtaining confirmations from external legal advisors and
evaluating internal statements concerning the accounting treat-
ment in the consolidated financial statements. Furthermore, we
examined legal consulting expense accounts for any indications
of legal matters not yet considered.
We further considered alleged or substantiated non-compliance
with legal provisions, official regulations and internal company
policies (compliance violations) by inspecting internal and exter-
nal statements on specific matters, obtaining written statements
from external legal advisors, and by inquiring of the compliance
organization. In this regard, among other procedures, we evalu-
ated the conduct and results of internal investigations by inspect-
ing internal reports and the measures taken to remediate identi-
fied weaknesses, and assessed whether any risks have to be
accounted for in the consolidated financial statements.
Based on the aforementioned uncertainties, our audit procedures
with respect to asset retirement obligations focused on the reme-
diation and environmental protection liabilities in connection
with the decommissioning of the facilities in Hanau, Germany
(Hanau facilities), as well as for the nuclear research and service
center in Karlstein, Germany (Karlstein facilities). Our audit
procedures included, among others, assessing the estimated
costs for the development, operation and decommissioning of
the final storage facility, the appropriateness as audit evidence
of an independent expert's report commissioned by manage-
ment with regard to the estimated price inflation, evaluating the
valuation methods used by drawing on the expertise of our val-
uation specialists, and assessing the significant estimates result-
ing from the long-term nature of the related obligations. Through
inquiries of persons entrusted with the matter and inspections
of internal and external documents, we evaluated manage-
ment's assessment whether, as of September 30, 2019, Siemens
continues to be subject to the German Atomic Energy Act
("Atomgesetz"), whereby radioactive waste resulting from
decommissioning a nuclear facility must be reprocessed without
causing damage and be delivered to a government-approved
final storage facility.
Furthermore, we evaluated the disclosures on proceedings out
of or in connection with alleged compliance violations as well as
C.2 Independent Auditor's Report
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the other
information
Breitsameter
At our meeting on July 31, 2019, the Managing Board reported to
us on the Company's current business and financial position fol-
lowing the conclusion of the third quarter. We also discussed in
detail the status of the planned spin-off of the Gas and Power
Operating Company and approved the contribution of additional
businesses to the future unit. As part of an innovation focus, we
discussed technology trends having an impact on the Company's
future business and future priorities. Key topics of consideration
were the industrial Internet of Things (IoT) – and, in particular,
so-called loT platforms – as well as critical and potentially disrup-
tive fields of technology and innovation. In addition, we con-
cerned ourselves again with succession planning for the Manag-
ing Board and decided to extend the appointment of Managing
Board member Cedrik Neike for five years until May 31, 2025.
In mutual agreement with Janina Kugel, we also decided not
to extend her appointment as Managing Board member and
Labor Director, which will expire on January 31, 2020.
-
-
Our meeting on September 18, 2019, was held in Zug, Switzer-
land, the global headquarters of Siemens' Smart Infrastructure
Operating Company. During a tour of the facility and its Inspira-
tion Center, we learned, among other things, about products and
solutions for distributed energy systems and intelligent buildings.
At this meeting, the Managing Board reported to us on the state
of the Company, provided us with an overview of Siemens' indus-
trial core and reported on the business situation, development
and strategic orientation of the Smart Infrastructure Operating
Company. As part of our regular review, we adjusted - after
preparation by and on a recommendation of the Compensation
Committee the amount of Managing Board compensation at
the start of fiscal 2020. Against the backdrop of changing regu-
latory conditions and the new Group structure based on the
Vision 2020+ strategy, we approved – after preparation by and on
the recommendation of the Compensation Committee - an ad-
justment of the Managing Board's compensation system, effec-
tive the start of fiscal 2020. After preparation by and on a recom-
mendation of the Compensation Committee, we also defined the
-
performance criteria for the Managing Board's variable com-
pensation for fiscal 2020. Personnel-related decisions and
succession planning for the Managing Board were a further
focus of the meeting. On the recommendation of the Chair-
man's Committee, the Supervisory Board decided to appoint
Roland Busch Deputy CEO, effective October 1, 2019, and succes-
sor to Janina Kugel as Labor Director of Siemens AG, effective
December 1, 2019. In addition, we were informed of a decision
by the Chairman's Committee to approve the appointment of
Michael Sen as Chief Executive Officer (CEO) of the Gas and Power
Operating Company, effective October 1, 2019, whereby he and
Lisa Davis will serve as Co-CEOs of the Operating Company until
the Annual Shareholders' Meeting in 2020. Matters relating to
corporate governance and, in particular, the preparation of
the Declaration of Conformity with the German Corporate
Governance Code were also discussed at this meeting.
Additional Information
At our meeting on September 18, 2019, we approved a Declara-
tion of Conformity in accordance with Section 161 of the German
Stock Corporation Act. Information on corporate governance at
Siemens is available in chapter c.4 CORPORATE GOVERNANCE.
The Company's Declaration of Conformity has been made perma-
nently available to shareholders on the Siemens Global Website.
The current Declaration of Conformity is also available in chapter
→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
289 F AND 315D OF THE GERMAN COMMERCIAL CODE.
WORK IN THE SUPERVISORY BOARD COMMITTEES
The Supervisory Board has established seven standing commit-
tees, which prepare proposals and issues to be dealt with at its
plenary meetings. Some of the Supervisory Board's decision-mak-
ing powers have also been delegated to these committees within
the permissible legal framework. The committee chairpersons
report to the Supervisory Board on their committees' work at the
subsequent Board meetings. A list of the members and a detailed
explanation of the tasks of the individual Supervisory Board
committees are contained in chapter C.4.1 MANAGEMENT AND
CONTROL STRUCTURE.
The Chairman's Committee met 11 times. Between meetings,
some of which were in the form of conference calls, I also dis-
cussed topics of major importance with the members of the
Chairman's Committee. The Committee concerned itself, in par-
ticular, with personnel-related matters, long-term succession
planning for the composition of the Managing Board, corporate
governance issues and the acceptance by Managing Board mem-
bers of positions at other companies and institutions. At a work-
shop, the Chairman's Committee dealt in depth with long-term
succession planning for the Managing Board – and, in particular,
with succession planning for the position of President and CEO.
-
158
Additional Information
Brisan
Digital Industries Operating Company in the structure imple-
mented as of April 1, 2019, and reported on the Operating Com-
pany's business situation, development and strategic orientation.
As part of a strategy focus, we dealt extensively and in detail with
the status of the implementation of the Vision 2020+ strategy,
Siemens' further strategic orientation and the strategic develop-
ment of the Gas and Power Operating Company. We approved
the Managing Board's proposal regarding the carve-out of the
Gas and Power Operating Company and its public listing via a
spin-off, including the contribution of Siemens' majority stake in
Siemens Gamesa Renewable Energy (SGRE). We also concerned
ourselves with succession planning for the Managing Board and
with the efficiency review of Supervisory Board activities.
157
CORPORATE GOVERNANCE CODE
At our meeting on May 7, 2019, the Managing Board reported to
us on the Company's current business and financial position fol-
lowing the conclusion of the second quarter. It presented the
Wirtschaftsprüferin
Additional Information
[German Public Auditor]
156 Additional Information
C.3 Report of the Supervisory Board
Dear Shareholders,
Siemens is positioning itself for the future. With its Vision 2020+
strategy, the Company is giving its businesses greater entrepre-
neurial freedom and focus. Management and employees are driv-
ing this major transformation of the Company with great resolve.
In fiscal 2019, the Supervisory Board closely advised the Managing
Board throughout the implementation of "Vision 2020+". We sup-
port the landmark decision to publicly list an independent Siemens
energy company that will shape the global energy transition.
In fiscal 2019, the Supervisory Board performed in full the duties
assigned to it by law, the Siemens Articles of Association and the
Bylaws for the Supervisory Board. On the basis of detailed written
and oral reports provided by the Managing Board, we monitored
the Managing Board and advised it on the management of the
Company. In addition, I regularly exchanged information with the
President and CEO and the other Managing Board members. As
a result, the Supervisory Board was always kept up to date on
projected business policies, Company planning – including finan-
cial, investment and personnel planning - and the Company's
profitability and business operations as well as on the state of
Siemens AG and the Siemens Group. We were directly involved
at an early stage in all decisions of fundamental importance to
the Company and discussed these decisions with the Managing
Board intensively and in detail. To the extent that Supervisory
Board approval of the decisions and measures of Company man-
agement was required by law, the Siemens Articles of Association
or our Bylaws, the members of the Supervisory Board - prepared
in some cases by the Supervisory Board's committees issued
such approval after intensive review and discussion. The relevant
Managing Board members informed us - within the limits set by
the applicable legal framework - about measures and decisions
of fundamental importance at the Strategic Companies. A partic-
ular focus of our activities in fiscal 2019 was the Company's stra-
tegic realignment, which we dealt with in detail at several of our
meetings. We support the measures necessary for this realign-
ment. A further focus of our activities was succession planning
for the Managing Board. Taking the Company's new alignment
into account, we began setting its future course in personnel-
related matters.
Berlin and Munich, December 4, 2019
OF THE SUPERVISORY BOARD
-
We held a total of six regular plenary meetings in fiscal 2019.
We also made one decision by written circulation. Topics of
discussion at our regular plenary meetings were revenue and
profit and employment development at Siemens AG and the
Siemens Group as well as the Company's financial position and
the results of its operations. In addition, we concerned our-
selves, as occasion required, with acquisition and divestment
projects and with risks to the Company. Further topics of discus-
sion were portfolio measures – in particular, the planned carve-
out and subsequent public listing of the Gas and Power Operating
Company. We received regular updates on the status of the anti-
trust approval process in connection with the planned combi-
nation of Siemens' Mobility business with the publicly listed
company Alstom SA, France. At our meeting on May 7, 2019,
we acknowledged and discussed the results of this process.
We also met regularly for short periods without the Managing
Board in attendance. On these occasions, we dealt with agenda
items that concerned either the Managing Board itself or inter-
nal Supervisory Board matters.
At our meeting on November 7, 2018, we discussed the Compa-
ny's key financial figures for fiscal 2018 and approved the budget
for fiscal 2019. On a recommendation of the Compensation Com-
mittee and on the basis of reported target achievement, we also
defined the compensation of the Managing Board members for
fiscal 2018. The appropriateness of this compensation was con-
firmed by an internal review. On the recommendation of the
Compensation Committee, we also approved the targets for Man-
aging Board compensation for fiscal 2019. At this meeting, we
approved, in addition, a share buyback program, with a volume
of up to €3 billion, to run until November 2021 as well as Manag-
ing Board decisions on financing measures.
On November 28, 2018, we discussed the financial statements
and the Combined Management Report for Siemens AG and the
Siemens Group as of September 30, 2018, the Annual Report
for 2018 - including the Report of the Supervisory Board,
the Corporate Governance Report and the Compensation Re-
port and the agenda for the Annual Shareholders' Meeting on
January 30, 2019. The Managing Board informed us about the
current status of acquisitions and divestments and about the
business situation and business development of the Financial
Services Division. In addition, we concerned ourselves with the
annual report of the Chief Compliance Officer and the report of
the Cybersecurity Officer. At this meeting, we also approved the
Managing Board's decisions regarding investments in two gas-
fired power plants in Brazil.
At our meeting on January 29, 2019, the Managing Board re-
ported to us on the Company's current business and financial
position following the conclusion of the first quarter and on stra-
tegic options for the Power and Gas Division.
TOPICS AT THE PLENARY MEETINGS
Joe Kaeser
June 23,
1957
Date of birth
Roland Busch
(Dr. rer. nat.)
Chief Executive Officer
President and
Name
The Managing Board and the Supervisory Board cooperate
closely for the benefit of the Company. The Managing Board
informs the Supervisory Board regularly, comprehensively and
without delay on all issues of importance to the entire Company
with regard to strategy, planning, business development, finan-
cial position, profit, compliance and entrepreneurial risks. At reg-
ular intervals, the Managing Board also discusses the status of
strategy implementation with the Supervisory Board.
Members of the Managing Board and positions
held by Managing Board members
Information on the areas of responsibility and the curricula vitae of
the members of the Managing Board are available on the Siemens
Global Website at: www.SIEMENS.COM/MANAGEMENT. Information
on the compensation paid to the members of the Managing Board
is provided in chapter → A.10 COMPENSATION REPORT.
162 Additional Information
The Managing Board has one committee, the Equity and Com-
pensation Committee. This committee is responsible for the
duties assigned to it by decision of the Managing Board - includ-
ing, in particular, duties in connection with capital measures
and equity-linked financial instruments relating to the compen-
sation of all employees and managers of the Siemens Group
except the members of the Managing Board and of Top Man-
agement and relating to share-based compensation compo-
nents and employee share plans. The Equity and Compensation
Committee comprises the President and CEO, the Chief Human
Resources Officer, the Chief Financial Officer and, as a consulta-
tive member, the Chief of Staff of Siemens AG (position cur-
rently vacant). Its members (as of September 30, 2019) are
Joe Kaeser (Chairman), Janina Kugel and Prof. Dr. Ralf P. Thomas.
Equity and Compensation Committee
of the Managing Board
-
The members of the Managing Board are subject to a compre-
hensive prohibition on competitive activity for the period of their
employment at Siemens AG. They are committed to serving the
interest of the Company. When making their decisions, they may
not be guided by personal interests nor may they exploit for their
own advantage business opportunities offered to the Company.
Managing Board members may engage in secondary activities -
in particular, supervisory board positions outside the Siemens
Group only with the approval of the Chairman's Committee of
the Supervisory Board. The Supervisory Board is responsible for
decisions regarding any adjustments to Managing Board com-
pensation that are necessary in order to take account of possible
compensation for secondary activities. Every Managing Board
member is under an obligation to disclose conflicts of interest
without delay to the Chairman or Chairwoman of the Super-
visory Board and to inform the other members of the Managing
Board thereof.
WWW.SIEMENS.COM/BYLAWS-MANAGINGBOARD
In fiscal 2019, the Managing Board had the following members:
First
appointed
May 1,
2006
> OSRAM Licht AG, Munich
(Deputy Chairman)
1964
Positions outside Germany:
Positions outside Germany:
> Atos SE, France
> OSRAM GmbH, Munich
(Deputy Chairman)
economic risk require the prior consent of the full Managing
Board. The same applies to activities and transactions for which
the President and CEO or another member of the Managing Board
demands a prior decision by the Managing Board. The President
and CEO is responsible for the coordination of all Managing Board
portfolios. Further details are available in the Bylaws for the Man-
aging Board at:
> European School of Management
and Technology GmbH, Berlin
German positions:
Netherlands
Positions outside Germany:
> NXP Semiconductors N.V.,
November 22, April 1,
Mercedes-Benz AG, Stuttgart
German positions:
(as of September 30, 2019)
External positions
or in comparable domestic or foreign controlling bodies of business enterprises
Memberships in supervisory boards whose establishment is required by law
March 31,
2021
Term expires
At the
end of the
2021 Annual
Shareholders'
Meeting
2011
> Allianz Deutschland AG, Munich
> Daimler AG, Stuttgart
As a rule, a portfolio assigned to an individual member is that mem-
ber's own responsibility. Activities and transactions in a particular
Managing Board portfolio that are considered to be extraordinarily
important for the Company or associated with an extraordinary
The Supervisory Board concurs with the results of the audit.
Following the definitive findings of the Audit Committee's exam-
ination and our own examination, we have no objections. The
Managing Board prepared the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements of the
Siemens Group. We approved the Annual Financial Statements and
the Consolidated Financial Statements. In view of our approval,
the financial statements are accepted as submitted. We endorsed
the Managing Board's proposal that the net income available for
distribution be used to pay out a dividend of €3.90 per share enti-
tled to a dividend and that the amount of net income attributable
to shares of stock not entitled to receive a dividend for fiscal 2019
be carried forward.
WWW.SIEMENS.COM/SUSTAINABILITYINFORMATION
100
100
100
100
98
100
6/6
Gunnar Zukunft
100
4/4
100
6/6
100
6/6
Matthias Zachert
100
6/6
100
The Supervisory Board has issued Bylaws for the Managing Board
that contain the assignment of different portfolios and the rules
for cooperation both within the Managing Board and between
the Managing Board and the Supervisory Board. In accordance
with these Bylaws, the Managing Board is divided into the port-
folio of the President and CEO and a variety of Managing Board
portfolios. The Managing Board members responsible for the
individual Managing Board portfolios are defined in a business
assignment plan as approved by the Supervisory Board. As the
Managing Board member with responsibility for the Human Re-
sources portfolio, the Labor Director (Arbeitsdirektor) is ap-
pointed in accordance with the requirements of Section 33 of the
German Codetermination Act (Mitbestimmungsgesetz). As a
rule, first-time appointments to the Managing Board do not ex-
ceed three years.
160 Additional Information
OF THE FINANCIAL STATEMENTS
The Managing Board prepares the Company's Quarterly State-
ments and Half-year Financial Report, the Annual Financial State-
ments of Siemens AG, the Consolidated Financial Statements of
the Siemens Group and the Combined Management Report of
Siemens AG and the Siemens Group. In addition, the Managing
Board ensures that the Company adheres to statutory require-
ments, official regulations and internal Company policies and
works to achieve compliance with these provisions and policies
within the Siemens Group. The Managing Board has established
a comprehensive compliance management system. Protection is
offered to employees and third parties who provide information
on unlawful behavior within the Company. Details on the compli-
ance management system are available on the Siemens Global
Website at:
As the top management body, the Managing Board is committed
to serving the interests of the Company and achieving sustain-
able growth in company value. The members of the Managing
Board are jointly responsible for the entire management of the
Company and decide on the basic issues of business policy and
corporate strategy as well as on the Company's annual and
multi-year plans.
C.4.1.1 MANAGING BOARD
Siemens AG is subject to German corporate law. Therefore, it has
a two-tier board structure, consisting of a Managing Board and a
Supervisory Board.
and control structure
C.4.1 Management
C.4 Corporate Governance
161
Additional Information
Jim Hagemann Snabe
Chairman
For the Supervisory Board
On behalf of the Supervisory Board, I would like to thank the
members of the Managing Board and all the employees and em-
ployee representatives of Siemens AG and all Group companies
for their outstanding commitment and constructive cooperation
in fiscal 2019.
Reinhard Hahn left the Supervisory Board, effective the end of
the Annual Shareholders' Meeting on January 30, 2019. He
was succeeded by Hagen Reimer, who was appointed to the
Supervisory Board by a decision of the Charlottenburg District
Court, effective the end of the Annual Shareholders' Meeting on
January 30, 2019.
-
CHANGES IN THE COMPOSITION OF THE
SUPERVISORY AND MANAGING BOARDS
There were no changes in the composition of the Managing
Board in fiscal 2019. At our meeting on July 31, 2019, we de-
cided - in mutual agreement with Janina Kugel – not to extend
her appointment as Managing Board member and Labor Director,
which will expire on January 31, 2020.
the Managing Board explained the financial statements of
Siemens AG and the Siemens Group as well as the Company's
risk management system.
The independent auditors, Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft (Stuttgart, Germany), audited the Annual
Financial Statements of Siemens AG, the Consolidated Financial
Statements of the Siemens Group and the Combined Manage-
ment Report for Siemens AG and the Siemens Group for fiscal
2019 and issued unqualified opinions for each. Ernst & Young
GmbH Wirtschaftsprüfungsgesellschaft (Stuttgart, Germany)
has served as independent auditors of Siemens AG and the
Siemens Group since fiscal 2009. Katharina Breitsameter has
signed as auditor since fiscal 2016, and Thomas Spannagl has
signed as auditor responsible for the audit since fiscal 2014. The
Annual Financial Statements of Siemens AG and the Combined
Management Report for Siemens AG and the Siemens Group
were prepared in accordance with the requirements of German
law. The Consolidated Financial Statements of the Siemens Group
were prepared in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the EU and with the
additional requirements of German law set out in Section 315e (1)
of the German Commercial Code (Handelsgesetzbuch). The Con-
solidated Financial Statements of the Siemens Group also comply
with the IFRS as issued by the International Accounting Standards
Board (IASB). The independent auditors conducted their audit
in accordance with Section 317 of the German Commercial Code
and the EU Audit Regulation and German generally accepted
standards for the audit of financial statements as promulgated by
the Institut der Wirtschaftsprüfer (IDW) as well as in supplemen-
tary compliance with the International Standards on Auditing
(ISA). The abovementioned documents as well as the Managing
Board's proposal for the appropriation of net income were sub-
mitted to us by the Managing Board in advance. The Audit Com-
mittee discussed the dividend proposal in detail at its meeting on
November 5, 2019. It discussed the Annual Financial Statements
of Siemens AG, the Consolidated Financial Statements of the
Siemens Group and the Combined Management Report in detail
at its meeting on December 3, 2019. In this context, the Audit
Committee concerned itself, in particular, with the key audit
matters described in the independent auditors' respective opin-
ions, including the audit procedures implemented. The Audit
Committee's review also covered the nonfinancial information
for Siemens AG and the Siemens Group that is included in the
Combined Management Report. The audit reports prepared by
the independent auditors were distributed to all members of
the Supervisory Board and comprehensively reviewed at the
Supervisory Board meeting on December 4, 2019, in the pres-
ence of the independent auditors, who reported on the scope,
focal points and main findings of their audit, addressing, in par-
ticular, key audit matters and the audit procedures imple-
mented. No major weaknesses in the Company's internal con-
trol or risk management systems were reported. At this meeting,
DETAILED DISCUSSION OF THE AUDIT
100
(Dr.-Ing. Dr.-Ing. E.h.)
100
100 11/11
6/6
First Deputy Chairwoman
Birgit Steinborn
100
1/1
100
3/3
100
4/4
100
6/6
100
4/4
100
100
4/4
100
6/6
100
1/1
100
3/3
100
4/4
100
100 11/11
100 11/11
Second Deputy Chairman
Werner Wenning
100
3/3
100
4/4
100
6/6
6/6
Chairman
Jim Hagemann Snabe
Chairman's
Committee
Innovation
Supervisory
Board (plenary
meetings)
DISCLOSURE OF PARTICIPATION BY INDIVIDUAL
SUPERVISORY BOARD MEMBERS IN MEETINGS
The average rate of participation by members in the meetings of
the Supervisory Board and its committees was 99.77%. The partic-
ipation rate of individual members in the meetings of the Super-
visory Board and its committees is set out in the following chart:
159
Additional Information
The Supervisory Board members take part, on their own respon-
sibility, in the educational and training measures necessary in
order to perform their duties – measures relating, for example,
to changes in the legal framework and new, groundbreaking
technologies. They are supported in this regard by the Company.
Internal informational events are offered when necessary to sup-
port targeted educational measures. New Supervisory Board
members can meet with Managing Board members and other
managers with specialist expertise to exchange views on current
topics and topics of fundamental importance and thus gain an
overview of Company-relevant matters (onboarding).
Compensation
Committee
The Audit Committee met six times. In the presence of the inde-
pendent auditors as well as the President and CEO and the Chief
Financial Officer, the Committee dealt with the financial state-
ments and the Combined Management Report for Siemens AG
and the Siemens Group. The Audit Committee discussed the
Half-year Financial Report and the quarterly statements with the
Managing Board and the independent auditors. In the presence
of the independent auditors, it also discussed the report on the
auditors' review of the Company's Half-year Consolidated Finan-
cial Statements and of its Interim Group Management Report. It
awarded the audit contract to the independent auditors for fis-
cal 2019, who had been elected by the Annual Shareholders'
Meeting, defined the audit focal points and determined the au-
ditors' fee. The Committee monitored the selection, indepen-
dence, qualification, rotation and efficiency of the independent
auditors as well as the services they provided. It also dealt with
the Company's accounting and accounting process, the effec-
tiveness of its internal control system, its risk management sys-
tem and the effectiveness, resources and findings of its internal
audit as well as with reports concerning potential and pending
legal disputes.
The Innovation and Finance Committee met three times. The
focuses of its meetings included the Committee's recommenda-
tion regarding the budget for fiscal 2019, the discussion of the
pension system and the Company's strategy, including portfolio
measures as well as the preparation and approval of investment
and divestment projects and/or financial measures. For example,
the Committee prepared proposals for the Supervisory Board re-
garding an investment in two gas-fired power plants in Brazil and
a share buyback program, with a volume of up to €3 billion, to
run until November 2021. It also approved the Managing Board's
The Compensation Committee met four times. It also made one
decision by written circulation. The Committee prepared, in par-
ticular, proposals for the Supervisory Board regarding the defini-
tion of targets for variable compensation, the determination and
review of the appropriateness of Managing Board compensation
and the approval of the Compensation Report. Against the back-
drop of changing regulatory conditions and the new Company
structure based on Siemens' Vision 2020+ strategy, one focus of
the work of the Compensation Committee was the preparation
of a proposal to the Supervisory Board regarding the adjustment
of the compensation system for the Managing Board as of fiscal
2020. Independent external consultants were involved in the
preparation of this proposal.
The Mediation Committee had no need to meet.
The Compliance Committee met four times. It dealt primarily
with the Company's quarterly reports and the annual report of
the Chief Compliance Officer.
-
The Nominating Committee met once. It concerned itself with
long-term succession planning for the Supervisory Board. With a
view to the regular Supervisory Board elections scheduled for
2021 and 2023, the Nominating Committee defined the topics for
its work over the next few years. The Committee also considered
the regulatory framework for the composition of the Supervisory
Board and, in particular, the objectives that the Supervisory
Board had previously approved for its composition, including the
profile of required skills and expertise and the diversity concept
for the Supervisory Board.
The personnel-related matters dealt with by the Chairman's Com-
mittee included the approval of the appointment of the CEOs and
Chief Operating Officers (COOS) of the Operating Companies in
connection with the Company's strategic realignment. In partic-
ular, the Chairman's Committee approved the appointment of
Michael Sen as CEO of the Gas and Power Operating Company,
effective October 1, 2019, whereby he and Lisa Davis will serve as
Co-CEOs of the Operating Company until the Annual Sharehold-
ers' Meeting in 2020.
decision regarding the Siemens Campus Erlangen investment
project. The relevant Managing Board members informed the
Innovation and Finance Committee - within the limits set by the
applicable regulatory framework - about measures and decisions
of fundamental importance at the Strategic Companies.
Werner Brandt (Dr. rer. pol.)
Audit
Committee
and Finance
Committee
in %
No.
in %
No.
in %
No.
in %
Compliance
Committee
No.
No.
in %
No.
in %
No.
(Number of meetings/
participation in %)
Nomination
Committee
in %
6/6
100
6/6
1/1
100
1/1
83
5/6
Benoît Potier
100
100
4/4
6/6 100
(Dr. phil.)
Nicola Leibinger-Kammüller
100
3/3
100
4/4
6/6 100
100
Hagen Reimer
3/3
6/6
Michael Sigmund
100
3/3
100
6/6
Nathalie von Siemens (Dr. phil.)
(since January 30, 2019)
83
Dame Nemat Shafik (DPhil)
3/3 100
83
5/6
> Penske Automotive Group, Inc.,
USA
Norbert Reithofer
100
5/6
Dorothea Simon
6/6
4/4
100
6/6
Bettina Haller
100
3/3
(until January 30, 2019)
Reinhard Hahn
6/6 100
100
100
4/4
100
6/6
Michael Diekmann
4/4 100
100
Andrea Fehrmann (Dr. phil.)
100
4/4 100
6/6
100
6/6 100 11/11
Jürgen Kerner
100
3/3
100
4/4
Robert Kensbock
6/6 100
100
3/3
100
6/6
100
4/4
100
Harald Kern
German positions:
6/6
> inpro Innovationsgesellschaft für
fortgeschrittene Produktionssysteme
168 Additional Information
> EOS Holding AG, Krailling
Chief Executive Officer (CEO) -
Nicola Leibinger-
Kammüller (Dr. phil.)
The Hydrogen Company S.A., France 4
> Danone S.A., France
Shareholders exercise their rights at the Annual Shareholders'
Meeting. An ordinary Annual Shareholders' Meeting normally
takes place within the first four months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of net income, the ratification of the acts of the
Managing and Supervisory Boards, and the appointment of the
independent auditors. Amendments to the Articles of Association
and measures that change the Company's capital stock are ap-
proved at the Annual Shareholders' Meeting and implemented by
the Managing Board. The Managing Board facilitates shareholder
participation in this meeting through electronic communications -
in particular, via the Internet - and enables shareholders who are
> American Air Liquide Holdings, Inc.,
USA 4
> Air Liquide International S.A., France
(Chairman and Chief Executive Officer) 4
> TRUMPF Schweiz AG, Switzerland4
Positions outside Germany:
Positions outside Germany:
> Axel Springer SE, Berlin
German positions:
Traton SE, Munich
> Air Liquide International Corporation
(ALIC), USA (Chairman) 4
(Deputy Chairman)
C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
AND INVESTOR RELATIONS
WWW.SIEMENS.COM/DIRECTORS-DEALINGS
Additional Information
167
The Compliance Committee concerns itself, in particular, with
monitoring the Company's adherence to statutory provisions,
official regulations and internal Company policies (compliance).
As of September 30, 2019, the Compliance Committee com-
prised Jim Hagemann Snabe (Chairman), Dr. Werner Brandt,
Bettina Haller, Harald Kern, Jürgen Kerner, Dr. Nicola Leibinger-
Kammüller, Birgit Steinborn and Matthias Zachert.
The Nominating Committee is responsible for making recom-
mendations to the Supervisory Board on suitable candidates for
election by the Annual Shareholders' Meeting as shareholder
representatives on the Supervisory Board. In preparing these rec-
ommendations, the objectives defined by the Supervisory Board
for its composition and the approved diversity concept - in par-
ticular, independence and diversity – are to be appropriately con-
sidered, as are the proposed candidates' required knowledge,
abilities and professional experience. Fulfillment of the required
profile of skills and expertise is also to be aimed at. Attention
shall be paid to an appropriate participation of women and men
in accordance with the legal requirements relating to the gender
quota as well as to ensuring that the members of the Supervisory
Board are, as a group, familiar with the sector in which the Com-
pany operates.
As of September 30, 2019, the Nominating Committee com-
prised Jim Hagemann Snabe (Chairman), Dr. Nicola Leibinger-
Kammüller, Benoît Potier and Werner Wenning.
Details regarding transactions with members of the Managing
and Supervisory Boards as related individuals are available in
→ NOTE 31 in B. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
The Mediation Committee submits proposals to the Supervisory
Board in the event that the Supervisory Board cannot reach the
two-thirds majority required for the appointment or dismissal of
a Managing Board member on the first ballot.
Based on the Company's overall strategy, the Innovation and
Finance Committee discusses, in particular, the Company's in-
novation focuses and prepares the Supervisory Board's discus-
sions and resolutions regarding questions relating to the Compa-
ny's financial situation and structure - including annual planning
(budget) - as well as the Company's fixed asset investments and
its financial measures. In addition, the Innovation and Finance
Committee has been authorized by the Supervisory Board to de-
cide on the approval of transactions and measures that require
Supervisory Board approval and have a value of less than
€600 million.
As of September 30, 2019, the Innovation and Finance Committee
comprised Jim Hagemann Snabe (Chairman), Robert Kensbock,
Harald Kern, Jürgen Kerner, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
Dr. Nathalie von Siemens, Birgit Steinborn and Werner Wenning.
Supervisory Board efficiency review
The Supervisory Board and its committees regularly conduct
reviews - either internally or with the involvement of external
consultants in order to determine how efficiently they perform
their duties. In fiscal 2019, the Supervisory Board conducted an
internal efficiency review. At its meeting on May 7, 2019, the
Supervisory Board concerned itself intensively with the results of
this review. These results confirm that cooperation within the
Supervisory Board and with the Managing Board is professional,
constructive and characterized by a high degree of trust and
openness. The results also confirm that meetings are organized
and conducted efficiently and that the participants receive suffi-
cient information. The review did not reveal a need for any fun-
damental changes. Individual suggestions for improvement are
also discussed and implemented during the year.
C.4.1.3 SHARE TRANSACTIONS BY MEMBERS OF
THE MANAGING AND SUPERVISORY BOARDS
Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
pean Parliament and Council of April 16, 2014, on market abuse
(Market Abuse Regulation), members of the Managing Board and
the Supervisory Board are legally required to disclose all transac-
tions conducted on their own account relating to the shares or
debt instruments of Siemens AG or to the derivatives or financial
instruments linked thereto if the total value of such transactions
entered into by a board member or any closely associated person
reaches or exceeds €5,000 in any calendar year. All transactions
reported to Siemens AG in accordance with this requirement
have been duly published and are available on the Siemens
Global Website at:
As of September 30, 2019, the Mediation Committee comprised
Jim Hagemann Snabe (Chairman), Jürgen Kerner, Birgit Steinborn
and Werner Wenning.
As of September 30, 2019, the Audit Committee comprised
Dr. Werner Brandt (Chairman), Bettina Haller, Robert Kensbock,
Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim Hagemann
Snabe, Birgit Steinborn and Matthias Zachert. The members of
the Audit Committee are, as a group, familiar with the sector in
which the Company operates. Pursuant to the German Stock
Corporation Act, the Audit Committee must include at least one
Supervisory Board member with knowledge and experience in
the areas of accounting or the auditing of financial statements.
Pursuant to the Code, the chairman or chairwoman of the Audit
Committee shall have specialist knowledge and experience in the
application of accounting principles and internal control pro-
cesses, shall be independent and may not be a former Managing
Board member whose appointment ended less than two years
ago. The Chairman of the Audit Committee, Dr. Werner Brandt,
fulfills these requirements.
> Premium Aerotec GmbH, Augsburg
> MAN SE, Munich (Deputy Chairman)
Bad Homburg
> Fresenius Management SE,
> Allianz SE, Munich (Chairman)
German positions:
> RWE AG, Essen (Chairman)
> ProSiebenSat.1 Media SE, Munich
(Chairman)
> Fresenius SE & Co. KGaA,
> Henkel Management AG, Düsseldorf
German positions:
➤ Bayer AG, Leverkusen (Chairman)
German positions:
> A.P. Møller-Mærsk A/S, Denmark
(Chairman)
Positions outside Germany:
> Allianz SE, Munich
German positions:
> Henkel AG & Co. KGaA, Düsseldorf²
> MAN Truck & Bus SE, Munich
Bad Homburg (Deputy Chairman)
> Siemens Healthcare GmbH, Munich
German positions:
> MAN Energy Solutions SE, Augsburg
> Airbus Operations GmbH, Hamburg
> Flender GmbH, Bocholt
Term
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
Member since expires¹ (as of September 30, 2019)
2023 German positions:
January 25,
2012
January 22,
1969
German positions:³
Chief Treasurer and Executive Member
of the Managing Board of IG Metall
Occupation
Jürgen Kerner*
Name
165
Additional Information
> Siemens Mobility GmbH, Munich
(Deputy Chairwoman)
Date of birth
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2019)
The Audit Committee oversees, in particular, the accounting
and the accounting process and conducts a preliminary review of
the Annual Financial Statements of Siemens AG, the Consoli-
dated Financial Statements of the Siemens Group and the Com-
bined Management Report of Siemens AG and the Siemens
Group. On the basis of the independent auditors' report on their
audit of the annual financial statements, the Audit Committee
makes, after its preliminary review, recommendations regarding
Supervisory Board approval of the Annual Financial Statements
of Siemens AG and the Consolidated Financial Statements of the
Siemens Group. The Audit Committee discusses the Quarterly
Statements and Half-year Financial Report with the Managing
Board and the independent auditors and deals with the auditors'
reports on the review of the Half-year Consolidated Financial
Statements and Interim Group Management Report. It concerns
itself with the Company's risk monitoring system and oversees
the effectiveness of its internal control, risk management and
internal audit systems. The Audit Committee receives regular re-
ports from the Internal Audit Department. It prepares the Super-
visory Board's recommendation to the Annual Shareholders'
Meeting concerning the election of the independent auditors
and submits the corresponding proposal to the Supervisory
Board. Prior to submitting this proposal, the Audit Committee
obtains a statement from the prospective independent auditors
affirming that their independence is not in question. It awards
the audit contract to the independent auditors elected by the
Annual Shareholders' Meeting and monitors the independent
audit of the financial statements as well as the auditors' selec-
tion, independence, qualification, rotation and efficiency and the
services rendered by the auditors. Outside its meetings, the Super-
visory Board is also in regular communication with the indepen-
dent auditors via the Chairman of the Audit Committee.
As of September 30, 2019, the Compensation Committee
comprised Werner Wenning (Chairman), Michael Diekmann,
January 30,
2019
2023
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
May 29,
1956
January 27,
2015
2023
April 26,
1967
Director of the London School
August 13,
1962
Managing Director and Spokesperson July 14,
of Siemens Stiftung
1971
January 31,
2018
January 27,
2015
2023
2023
of Economics
Chairman of the Committee of
Spokespersons of the Siemens Group
and Chairman of the Central
Committee of Spokespersons of
Siemens AG
Trade Union Secretary of the
Managing Board of IG Metall
Matthias Zachert
President and Chairwoman of the
Group Management of TRUMPF
GmbH + Co. KG
December 15, January 24,
1959
2008
2021
Benoît Potier
Chairman and Chief Executive Officer September 3, January 31,
of Air Liquide S.A.
2023
Gunnar Zukunft*
1957
Hagen Reimer*
Norbert Reithofer
(Dr.-Ing. Dr.-Ing. E.h.)
Dame Nemat Shafik
(DPhil)
Nathalie von Siemens
(Dr. phil.)
Michael Sigmund*
Dorothea Simon*
2018
Robert Kensbock, Jürgen Kerner, Jim Hagemann Snabe and
Birgit Steinborn.
September 13, March 1,
1957
2014
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
> Henkel AG & Co. KGaA, Düsseldorf²
German positions:
> Messer Group GmbH, Sulzbach
> Siemens Healthcare GmbH, Munich
> Siemens Healthineers AG, Munich
German positions:
Bayerische Motoren Werke Aktien-
gesellschaft, Munich (Chairman)
> Siemens Healthcare GmbH, Munich
> Siemens Industry Software GmbH,
Cologne
Supervisory Board Committees
The Supervisory Board has seven committees, whose duties,
responsibilities and procedures fulfill the requirements of the
German Stock Corporation Act (Aktiengesetz) and the German
Corporate Governance Code (Code). The chairmen of these com-
mittees provide the Supervisory Board with regular reports on
their committees' activities.
The Chairman's Committee makes proposals, in particular,
regarding the appointment and dismissal of Managing Board
members and is responsible for concluding, amending, extend-
ing and terminating employment contracts with members of the
Managing Board. When making recommendations for first-time
appointments, it takes into account that the terms of these ap-
pointments shall not, as a rule, exceed three years. In preparing
recommendations regarding the appointment of Managing
Board members, the Chairman's Committee takes into account
the candidates' professional qualifications, international experi-
ence and leadership qualities, the age limit specified for Manag-
ing Board members and the long-range plans for succession as
well as diversity. It also takes into account the targets for the
proportion of women on the Managing Board that have been
defined by the Supervisory Board and the diversity concept for
the Managing Board that has been approved by the Supervisory
Board. The Chairman's Committee concerns itself with questions
regarding the Company's corporate governance and prepares the
resolutions to be approved by the Supervisory Board regarding
the Declaration of Conformity with the Code – including the ex-
planation of deviations from the Code - and regarding the ap-
proval of the Corporate Governance Report as well as the Report
of the Supervisory Board to the Annual Shareholders' Meeting.
Furthermore, the Chairman's Committee submits recommenda-
tions to the Supervisory Board regarding the composition of the
Supervisory Board committees and decides whether to approve
contracts and business transactions with Managing Board mem-
bers and parties related to them.
As of September 30, 2019, the Chairman's Committee comprised
Jim Hagemann Snabe (Chairman), Jürgen Kerner, Birgit Steinborn
and Werner Wenning.
The Compensation Committee prepares, in particular, the pro-
posals for decisions at the Supervisory Board's plenary meetings
regarding the system of Managing Board compensation, includ-
ing the implementation of this system in Managing Board con-
tracts, the definition of the targets for variable Managing Board
compensation, the determination and review of the appropriate-
ness of the total compensation of individual Managing Board
members and the approval of the annual Compensation Report.
German positions:
2023
German positions:
4 Group company position.
August 3,
1969
October 1,
2017
2023
Chairman of the Board of
Management of LANXESS AG
November 8, January 31,
1967
2018
2023
166 Additional Information
Deputy Chairman of the Central
Works Council of Siemens Industry
Software GmbH
January 31,
2018
2023
1 As a rule, the term of office ends upon completion of the
(relevant) ordinary Annual Shareholders' Meeting.
2 Shareholders' Committee.
3 As of January 30, 2019.
June 21,
1965
2023
(Deputy Chairman)
March 16,
1960
External positions
or in comparable domestic or foreign controlling bodies of business enterprises
Memberships in supervisory boards whose establishment is required by law
164
163
Additional Information
Name
> Siemens Schweiz AG, Switzerland
(Chairman)
> Siemens Ltd., India
> Siemens France Holding S.A.,
France
Positions outside Germany:
May 31,
2025
April 1,
2017
March 7,
1973
> Siemens Pte. Ltd., Singapore
Cedrik Neike
Date of birth
Term expires
> Siemens Healthineers AG, Munich
(Chairman)
January 24,
2008
German positions:
(as of September 30, 2019)
Group company positions
September 18, September 17,
2013
2023
First
appointed
March 7,
1961
Ralf P. Thomas
March 31,
2022
2017
November 17, April 1,
1968
Michael Sen
(as of September 30, 2019)
(Prof. Dr. rer. pol.)
Positions outside Germany:
January 31,
2020
January 12,
1970
> Siemens W.L.L., Qatar
> Siemens Ltd., Saudi Arabia
➤ISCOSA Industries and Maintenance
Ltd., Saudi Arabia (Deputy Chairman)
Logistics GmbH, Constance
Positions outside Germany:
>Arabia Electric Ltd. (Equipment),
Saudi Arabia
> Siemens Postal, Parcel & Airport
> Siemens Mobility GmbH, Munich
(Chairman)
> VA TECH T&D Co. Ltd., Saudi Arabia
German positions:
Positions outside Germany:
Group company positions
(as of September 30, 2019)
> Konecranes Plc., Finland
> Pensions-Sicherungs-Verein
Versicherungsverein auf
Gegenseitigkeit, Cologne
Positions outside Germany:
German positions:
in der Fahrzeugindustrie mbH,
Berlin
> Siemens Ltd., India
February 1,
2015
Positions outside Germany:
> Siemens Proprietary Ltd.,
South Africa (Chairwoman)
Janina Kugel
March 31,
2021
April 1,
2011
May 24,
1958
Klaus Helmrich
October 31,
2020
> Siemens Gamesa Renewable
Energy, S.A., Spain
August 1,
2014
Lisa Davis
> Siemens Healthcare GmbH, Munich
German positions:
> Siemens Aktiengesellschaft
Österreich, Austria (Chairman)
> Siemens AB, Sweden (Chairman)
Positions outside Germany:
October 15,
1963
> Siemens Gamesa Renewable Energy,
S.A., Spain
> Siemens Healthcare GmbH, Munich
(Chairman)
> Siemens Healthcare GmbH, Munich
4 Group company position.
3 As of January 30, 2019.
2 Shareholders' Committee.
1 As a rule, the term of office ends upon completion of the
(relevant) ordinary Annual Shareholders' Meeting.
Deputy Chairman of the Central
Works Council of Siemens AG
Chairman of the Siemens Europe
Committee
Harald Kern*
January 3,
1954
Robert Kensbock*
Trade Union Secretary of the
Managing Board of IG Metall
IG Metall Regional Office for Bavaria
Trade Union Secretary,
German positions:
Andrea Fehrmann
(Dr. phil.)*
Chairman of the Supervisory Board
of Allianz SE
Chairwoman of the Combine
Works Council of Siemens AG
Michael Diekmann
January 31,
2018
December 23, January 24,
1954
2023
January 23,
2013
March 13,
1971
2023
April 1, 2007
March 14,
1959
2023
2019
June 24,
1956
2023
January 31,
2018
June 21,
1970
2008
2023
January 27,
2015
and of ProSiebenSat.1 Media SE
Reinhard Hahn*
(until January 30, 2019)
Bettina Haller*
Chairman of the
In fiscal 2019, the Supervisory Board had the following members:
Members of the Supervisory Board and positions
held by Supervisory Board members
Supervisory Board of RWE AG
Additional Information
The Supervisory Board of Siemens AG has 20 members. As stipu-
lated by the German Codetermination Act, half of its members
represent Company shareholders, and half represent Company
employees. The employee representatives' names are marked
below with an asterisk (*). The shareholder representatives on
the Supervisory Board are elected at the Annual Shareholders'
Meeting by a simple majority vote. Elections to the Supervisory
Board are conducted, as a rule, on an individual basis. The Super-
visory Board's employee representatives are elected in accor-
dance with the provisions of the German Codetermination Act.
Separate preparatory meetings of the shareholder representatives
and of the employee representatives are held regularly in order to
prepare the Supervisory Board meetings. The Supervisory Board
also meets regularly without the Managing Board in attendance.
Every Supervisory Board member must disclose to the Super-
visory Board conflicts of interest - in particular, those that could
arise through the performance of advisory or governing-body
functions at customers, suppliers, lenders or other third parties.
Information regarding any conflicts of interest that have arisen
and their handling is provided in the Report of the Supervisory
Board. Special informational (onboarding) events are held in or-
der to familiarize new Supervisory Board members with the Com-
pany's business model and the structures of the Siemens Group.
Name
Shareholders' Meeting in February 2020 for approval. Important
Managing Board decisions – such as those regarding major acqui-
sitions, divestments, fixed asset investments or financial mea-
sures - require Supervisory Board approval unless the Bylaws for
the Supervisory Board specify that such authority be delegated to
the Innovation and Finance Committee of the Supervisory Board.
C.4.1.2 SUPERVISORY BOARD
> Siemens Gamesa Renewable Energy,
S.A., Spain
Österreich, Austria
> Siemens Aktiengesellschaft
Positions outside Germany:
> Siemens Healthineers AG, Munich
The Supervisory Board oversees and advises the Managing Board
in its management of the Company's business. At regular intervals,
the Supervisory Board discusses business development, planning,
strategy and strategy implementation. It reviews the Annual Finan-
cial Statements of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group, the Combined Management Report
of Siemens AG and the Siemens Group, and the proposal for the
appropriation of net income. It approves the Annual Financial
Statements of Siemens AG as well as the Consolidated Financial
Statements of the Siemens Group, based on the results of the pre-
liminary review conducted by the Audit Committee and taking into
account the reports of the independent auditors. The Supervisory
Board decides on the Managing Board's proposal for the appropri-
ation of net income and the Report of the Supervisory Board to the
Annual Shareholders' Meeting. In addition, the Supervisory Board
and the Compliance Committee of the Supervisory Board monitor
the Company's adherence to statutory provisions, official regula-
tions and internal Company policies (compliance). The Supervisory
Board also appoints the members of the Managing Board and de-
termines each member's portfolios. The Supervisory Board ap-
proves - on the basis of a proposal by the Compensation Commit-
tee - the compensation system for Managing Board members and
defines their concrete compensation in accordance with this sys-
tem. It sets the individual targets for the variable compensation
and the total compensation of each individual Managing Board
member, reviews the appropriateness of total compensation and
regularly reviews the Managing Board compensation system.
Effective October 1, 2019, the Supervisory Board approved - on the
basis of a proposal by the Compensation Committee - an adjusted
compensation system, which is to be submitted to the Annual
Jim Hagemann Snabe
Chairman
Details regarding the work of the Supervisory Board are provided
in chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula
vitae of the members of the Supervisory Board are published on
the Siemens Global Website at: www.SIEMENS.COM/SUPERVISORY-
BOARD and are updated annually. Information on the compensa-
tion paid to the members of the Supervisory Board is provided in
chapter → A.10 COMPENSATION REPORT.
Chairman of the Supervisory Board
of Siemens AG and of the Board of
Directors of A. P. Møller-Mærsk A/S
Werner Brandt
(Dr. rer. pol.)
2021
Occupation
October 21,
1946
Chairman of the Supervisory Board
of Bayer AG
2008
2023
January 23,
2013
March 26,
1960
Chairwoman of the Central Works
Council of Siemens AG
Werner Wenning
Second Deputy Chairman
Birgit Steinborn*
First Deputy Chairwoman
Term
Member since expires¹
October 1, 2021
2013
Date of birth
October 27,
1965
January 24,
The information and documents referred to in this chapter – in-
cluding the Bylaws for the Managing Board, the Bylaws for the
Supervisory Board, the bylaws for Supervisory Board committees,
the Code and the Business Conduct Guidelines - are publicly
available at:
-
The Corporate Governance statement pursuant to Sections 289f
and 315d of the German Commercial Code (Handelsgesetzbuch)
is an integral part of the Combined Management Report. In ac-
cordance with Section 317 para. 2 sent. 6 of the German Commer-
cial Code, the audit of the disclosures made within the scope of
Sections 289f and 315d of the German Commercial Code is to be
limited to determining whether disclosures have been made.
Sections 289f and 315d of the
German Commercial Code
As part of our investor relations activities, we inform our inves-
tors comprehensively about developments within the Company.
For communication purposes, Siemens makes extensive use of
the Internet. We publish Quarterly Statements, Half-year Finan-
cial and Annual Reports, earnings releases, ad hoc announce-
ments, analyst presentations, letters to shareholders and press
releases as well as the financial calendar for the current year,
which contains the publication dates of significant financial
communications and the date of the Annual Shareholders'
Meeting, at: WWW.SIEMENS.COM/INVESTORS. When required,
the Chairman of the Supervisory Board discusses Supervisory-
Board-specific topics with investors.
The Articles of Association of Siemens AG, the Bylaws for the Super-
visory Board, the bylaws for the most important Supervisory
Board committees, the Bylaws for the Managing Board, our Dec-
larations of Conformity with the Code and a variety of other cor-
porate-governance-related documents are posted on the Siemens
Global Website at: www.SIEMENS.COM/CORPORATE-GOVERNANCE
unable to attend the meeting to vote by proxy. Proxies can also
be reached during the Annual Shareholders' Meeting. Further-
more, shareholders may exercise their right to vote in writing or
by means of electronic communications (absentee voting). The
Managing Board may enable shareholders to participate in the
Annual Shareholders' Meeting without the need to be present at
the venue and without a proxy and to exercise some or all of their
rights fully or partially by means of electronic communications.
The Company enables shareholders to follow the entire Annual
Shareholders' Meeting via the Internet. Shareholders may
submit
proposals regarding the proposals of the Managing and Supervi-
sory Boards and may contest decisions of the Annual Sharehold-
ers' Meeting. Shareholders owning Siemens stock with an aggre-
gate notional value of €100,000 or more may also demand the
judicial appointment of special auditors to examine specific is-
sues. The reports, documents and information required by law
for the Annual Shareholders' Meeting, including the Annual Re-
port, can be downloaded from the Siemens Global Website. The
same applies to the agenda for the Annual Shareholders' Meet-
ing and to any counterproposals or shareholders' nominations
that may require disclosure. For the election of shareholder rep-
resentatives on the Supervisory Board, a detailed curriculum vi-
tae of every candidate is published.
WWW.SIEMENS.COM/289F
C.4.2 Corporate Governance
statement pursuant to
C.4.2.1 DECLARATION OF CONFORMITY WITH THE
GERMAN CORPORATE GOVERNANCE CODE
Instead of regarding the recommended maximum number of
mandates as a rigid upper limit, it is to be possible to perform
a case-by-case assessment to determine if the number of
"Declaration by the Managing Board and the Supervisory
Board of Siemens Aktiengesellschaft with the German Corpo-
rate Governance Code pursuant to Section 161 of the German
Stock Corporation Act
This document contains statements related to our future business
and financial performance and future events or developments
involving Siemens that may constitute forward-looking state-
ments. These statements may be identified by words such as
"expect," "look forward to," "anticipate," "intend," "plan," "believe,"
"seek," "estimate," "will," "project" or words of similar meaning.
We may also make forward-looking statements in other reports,
prospectuses, in presentations, in material delivered to share-
holders and in press releases. In addition, our representatives
may from time to time make oral forward-looking statements.
Such statements are based on the current expectations and cer-
tain assumptions of Siemens' management, of which many are
beyond Siemens' control. These are subject to a number of risks,
uncertainties and factors, including, but not limited to, those
described in disclosures, in particular in the chapter Report on
expected developments and associated material opportunities
and risks in the Annual Report. Should one or more of these
risks or uncertainties materialize, or should underlying expec-
tations including future events occur at a later date or not at all
or assumptions prove incorrect, actual results, performance or
achievements of Siemens may (negatively or positively) vary
materially from those described explicitly or implicitly in the
relevant forward-looking statement. Siemens neither intends,
nor assumes any obligation, to update or revise these forward-
looking statements in light of developments which differ from
those anticipated.
C.5 Notes and forward-looking statements
173
Additional Information
The Supervisory Board is of the opinion that it also has an ade-
quate number of independent members. In its estimation, there
are currently at least 18 Supervisory Board members who are
independent in the meaning of Section 5.4.2 of the Code. Of these
independent members, at least eight - namely, Dr. Werner Brandt,
Michael Diekmann, Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert
Reithofer, Dame Nemat Shafik (DPhil), Jim Hagemann Snabe,
Werner Wenning and Matthias Zachert - are shareholder repre-
sentatives. The regulations establishing limits on age and re-
stricting membership in the Supervisory Board to three full terms
of office (15 years) are complied with.
The Supervisory Board is of the opinion that, with its current
composition, it meets the objectives for its composition and
fulfills the profile of required skills and expertise as well as the
diversity concept. The Supervisory Board members have the spe-
cialist and personal qualifications considered necessary. As a
group, they are familiar with the sector in which the Company
operates and have the knowledge, skills and experience essential
for Siemens. A considerable number of Supervisory Board mem-
bers are engaged in international activities and/or have many
years of international experience. Appropriate consideration has
been given to diversity in the Supervisory Board. In fiscal 2019,
the Supervisory Board had seven female members, of whom
three are shareholder representatives and four are employee rep-
resentatives. As a result, 35% of the Supervisory Board members
are women. Dr. Nicola Leibinger-Kammüller is a member of the
Nominating Committee.
Within the framework of the selection process and the nomina-
tion of candidates for the Supervisory Board, the Supervisory
Board as well as the Nominating Committee of the Supervisory
Board take into account the objectives regarding the Super-
visory Board's composition and the requirements defined in its
diversity concept. Most recently, the Supervisory Board took into
account these objectives and requirements, including those re-
lating to the profile of required skills and expertise, when pro-
posing candidates for election as shareholder representatives to
the Annual Shareholders' Meeting in 2018.
Implementation of the objectives regarding
the Supervisory Board's composition as well as
the profile of required skills and expertise and
the diversity concept for the Supervisory Board;
independent Supervisory Board members
account the regular limit established by the Supervisory
Board, which restricts membership on the Supervisory Board
to a maximum of three full terms of office (15 years). It is
considered helpful if different age groups are represented on
the Supervisory Board."
Additional Information
-
172
The Supervisory Board members shall have sufficient time to
exercise their mandates with the necessary regularity and
diligence.
No more than two former members of the Managing Board
of Siemens AG shall belong to the Supervisory Board.
An adequate number of independent members shall belong
to the Supervisory Board. Material and not merely temporary
conflicts of interest, such as advisory or governing-body
functions at major competitors of the Company, shall be
avoided. Under the presumption that the mere exercise of
Supervisory Board duties as an employee representative
gives no cause to doubt compliance with the independence
criteria pursuant to Section 5.4.2 of the Code, the Supervisory
Board shall have a minimum of 16 members who are inde-
pendent in the meaning of the Code. In any case, the Super-
visory Board shall be composed in such a way that a number
of at least six independent shareholder representatives in the
meaning of Section 5.4.2 of the Code is achieved.
Independence
In accordance with the German Stock Corporation Act, the
Supervisory Board is composed of at least 30% women and
at least 30% men. The Nominating Committee shall continue
to include at least one female member.
With regard to the composition of the Supervisory Board,
attention shall be paid to achieving sufficient diversity. Not
only is appropriate consideration to be given to women.
Diversity of cultural heritage and a wide range of different
educational and professional backgrounds, experiences and
ways of thinking are also to be promoted. When considering
possible candidates for new elections or for filling Super-
visory Board positions that have become vacant, the Super-
visory Board shall give appropriate consideration to diversity
at an early stage in the selection process.
Diversity
Taking the Company's international orientation into account,
care shall be taken to ensure that the Supervisory Board has
an adequate number of members with extensive interna-
tional experience. The goal is to make sure that the present
considerable share of Supervisory Board members with ex-
tensive international experience is maintained.
Internationality
When a new member is to be appointed, a review shall be per-
formed to determine which of the areas of expertise deemed
desirable for the Supervisory Board are to be strengthened.
Limits on age and on length of membership
In compliance with the age limit stipulated by the Super-
visory Board in its Bylaws, only individuals who are no older
than 70 years of age shall, as a rule, be nominated for elec-
tion to the Supervisory Board. Nominations shall take into
The goal is to ensure that, in the Supervisory Board, as a
group, all knowhow and experience is available that is con-
sidered essential in view of Siemens' activities. This includes,
for instance, knowledge and experience in the areas of tech-
nology (including information technology and digitaliza-
tion), procurement, manufacturing and sales, finance, law
(including compliance) and human resources. In addition,
the members of the Supervisory Board shall collectively have
knowledge and experience in the business areas that are im-
portant for Siemens, in particular, in the areas of industry,
energy, healthcare and infrastructure. As a group, the mem-
bers of the Supervisory Board are to be familiar with the sec-
tor in which the Company operates. At least one independent
member of the Supervisory Board shall have knowledge and
expertise in the areas of accounting or the auditing of finan-
cial statements and specific knowledge and experience in
applying accounting principles and internal control pro-
cesses. In particular, the Supervisory Board shall also include
members who have leadership experience as senior execu-
tives or members of a supervisory board (or comparable
body) at a major company with international operations.
This document includes - in the applicable financial reporting
framework not clearly defined – supplemental financial mea-
sures that are or may be alternative performance measures
(non-GAAP-measures). These supplemental financial measures
should not be viewed in isolation or as alternatives to measures
of Siemens' net assets and financial positions or results of opera-
tions as presented in accordance with the applicable financial
reporting framework in its Consolidated Financial Statements.
Other companies that report or describe similarly titled alterna-
tive performance measures may calculate them differently.
This document is an English language translation of the German
document. In case of discrepancies, the German language docu-
ment is the sole authoritative and universally valid version.
The Managing Board and the Supervisory Board of Siemens AG
approved the following Declaration of Conformity pursuant to
Section 161 of the German Stock Corporation Act as of Octo-
ber 1, 2019:
Order no. CMXX-C10003-00-7600
siemens.com
© 2019 by Siemens AG, Berlin and Munich
investorrelations@siemens.com
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
+49 89 636-1332474 (Investor Relations)
press@siemens.com
Fax
Phone
WWW.SIEMENS.COM
Germany
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
80333 Munich
Siemens AG
Internet
Address
Additional Information
14
174
WWW.SIEMENS.
COM/INVESTOR/EN/
The "Sustainability Information 2019" which reports on Sustain-
ability and Citizenship at Siemens is available at:
For technical reasons, there may be differences between the ac-
counting records appearing in this document and those pub-
lished pursuant to legal requirements.
Werner-von-Siemens-Str. 1
The candidates proposed for election to the Supervisory
Board shall have the knowledge, skills and experience neces-
sary to carry out the functions of a Supervisory Board mem-
ber in a multinational company oriented toward the capital
markets and to safeguard the reputation of Siemens in pub-
lic. In particular, care shall be taken in regard to the person-
ality, integrity, commitment and professionalism of the indi-
viduals proposed for election.
E-mail
"The composition of the Supervisory Board of Siemens AG
shall be such that the Supervisory Board's ability to effectively
monitor and advise the Managing Board is ensured. In this
connection, mutually complementary collaboration among
members with a wide range of personal and professional
backgrounds and diversity with regard to internationality, age
and gender are considered helpful.
C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
ON THE MANAGING BOARD AND AT THE TWO
MANAGEMENT LEVELS BELOW THE MANAGING
BOARD; INFORMATION ON SUPERVISORY BOARD
COMPLIANCE WITH MINIMUM GENDER QUOTA
REQUIREMENTS
A general description of the composition and operation of the Man-
aging Board and the Supervisory Board and their committees can
be found in chapter c.4.1 MANAGEMENT AND CONTROL STRUCTURE.
Further details can be derived from the bylaws for the corporate
bodies concerned.
C.4.2.3 OPERATION OF THE MANAGING BOARD
AND THE SUPERVISORY BOARD, AND COMPOSITION
AND OPERATION OF THEIR COMMITTEES
remain on course for success. They contain the basic principles
and rules for our conduct within our Company and in relation
to our external partners and the general public. They set out
how we meet our ethical and legal responsibility as a Company
and give expression to our Company values: "Responsible" -
"Excellent" - "Innovative."
The Business Conduct Guidelines provide the ethical and legal
framework within which we want to conduct our activities and
In the 172 years of its existence, our Company has built an excel-
lent reputation around the world. Technical performance, inno-
vation, quality, reliability, and international engagement have
made Siemens a leading company in electrification, automation
and digitalization. It is top performance with the highest ethics
that has made Siemens strong. This is what the Company will
continue to stand for in the future.
Our Company's values and
Business Conduct Guidelines
Further corporate governance practices applied beyond legal
requirements are contained in our Business Conduct Guidelines.
Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
over offer, the Managing Board should convene an Extraordinary
General Meeting at which shareholders discuss the takeover offer
and may decide on corporate actions. The convening of a share-
holders' meeting - even taking into account the shortened time
limits stipulated in the German Securities Acquisition and Take-
over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
organizational challenge for large publicly listed companies. It
appears doubtful whether the associated effort is justified in
cases where no relevant decisions by the shareholders' meeting
are intended. Therefore, extraordinary shareholders' meetings
shall be convened only in appropriate cases.
Siemens AG voluntarily complies with the Code's suggestions,
with only one exception:
At Siemens AG, the target for the proportion of women on
the Managing Board has been set at a minimum of 2/8 until
June 30, 2022.
Suggestions of the Code
C.4.2.2 INFORMATION ON
This Declaration of Conformity is available on the Siemens Global
Website at: wWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The
website also provides access to the Declarations of Conformity
for the last five years.
The Managing Board The Supervisory Board"
Siemens Aktiengesellschaft
Berlin and Munich, October 1, 2019
mandates accepted by a Managing Board member is deemed
appropriate within the meaning of Section 5.4.5 para. 1
sent. 2 of the Code. This assessment is to consider the ex-
pected personal workload caused by the accepted mandates,
which can differ depending on the specific mandates.
Additional Information
Since September 24, 2019, Siemens AG has not complied
with the recommendation in Section 5.4.5 para. 1 sent. 2 of
the Code. According to this recommendation, members of
the Managing Board of a listed corporation shall not accept
more than a total of three Supervisory Board mandates in
non-group listed corporations or on supervisory bodies of
non-group entities that make similar requirements.
Profile of required skills and expertise
Since making its last Declaration of Conformity dated Octo-
ber 1, 2018, Siemens AG has complied, and will continue to
comply, with all recommendations of the Government Com-
mission on the German Corporate Governance Code ('Code')
in the version of February 7, 2017, published by the Federal
Ministry of Justice and Consumer Protection in the official
section of the Federal Gazette (Bundesanzeiger), with the
following exception:
CORPORATE GOVERNANCE PRACTICES
When filling managerial positions at the Company, the Managing
Board takes diversity into account and, in particular, aims for an
appropriate consideration of women and internationality. In
2017, the Managing Board set the target for the percentage of
women at each of the two management levels below the Man-
aging Board at 20%, applicable in each case until June 30, 2022.
169
C.4.2.5 DIVERSITY CONCEPT FOR THE MANAGING
BOARD AND LONG-TERM SUCCESSION PLANNING
In September 2018, the Supervisory Board approved the follow-
ing diversity concept for the composition of the Managing Board:
Additional Information
The composition of the Supervisory Board fulfilled the legal re-
quirements regarding the minimum gender quota in the report-
ing period.
for the Managing Board
Long-term succession planning
C.4.2.6 OBJECTIVES REGARDING THE SUPERVISORY
BOARD'S COMPOSITION AS WELL AS THE PROFILE
OF REQUIRED SKILLS AND EXPERTISE AND THE
DIVERSITY CONCEPT FOR THE SUPERVISORY BOARD
The diversity concept for the Supervisory Board, together with the
objectives regarding the Supervisory Board's composition and the
profile of required skills and expertise for the Supervisory Board,
were approved by the Supervisory Board in September 2018:
In fiscal 2019, the Managing Board comprised two women and
six men. In fiscal 2019, the proportion of women on the Manag-
ing Board therefore met the target that has been set by the
Supervisory Board and will apply until June 30, 2022. Different
age groups are represented on the Managing Board. No Manag-
ing Board member is currently older than 63 years of age.
With its current composition, the Managing Board meets all the
requirements of its diversity concept. The Managing Board
members have a broad range of knowledge, experience and
educational and professional backgrounds as well as interna-
tional experience. The Managing Board has all the knowledge
and experience that is considered essential in view of Siemens'
activities. As a group, the Managing Board has experience in the
business areas that are important for Siemens - in particular, in
the industry, energy, healthcare and infrastructure sectors - as
well as many years of experience in technology (including infor-
mation technology and digitalization), research and develop-
ment, procurement, manufacturing and sales, finance, law
(including compliance) and human resources.
The diversity concept for the Managing Board is implemented as
part of the process for making appointments to the Managing
Board. When selecting candidates and/or making proposals for
the appointment of Managing Board members, the Supervisory
Board and the Chairman's Committee of the Supervisory Board
take into account the requirements defined in the diversity con-
cept for the Managing Board.
Status of implementation of the
diversity concept for the Managing Board
When making an appointment to a specific Managing Board
position, the decisive factor is always the Company's best in-
terest, taking into consideration all circumstances in the indi-
vidual case."
Jointly with the Managing Board and with the support of the
Chairman's Committee, the Supervisory Board conducts long-
term succession planning for the Managing Board. In its long-
term succession planning, the Supervisory Board considers the
target it has defined for the proportion of women on the Manag-
ing Board and the criteria set out in the diversity concept it has
approved for the Managing Board's composition as well as the
requirements of the German Stock Corporation Act (Aktienge-
setz), the Code and the Bylaws for the Chairman's Committee.
Considering the concrete qualification requirements and the
above-mentioned criteria, the Chairman's Committee prepares
an ideal profile, on the basis of which it compiles a shortlist of the
available candidates. Structured interviews are then conducted
with these candidates. After the interviews, a proposal is submit-
ted to the Supervisory Board for approval. When developing the
profile of requirements and selecting candidates, the Supervisory
Board and the Chairman's Committee are supported, if necessary,
by external consultants.
➤ When selecting individuals for Managing Board positions,
the targets set by the Supervisory Board for the proportion
of women on the Managing Board shall be taken into ac-
count. The Supervisory Board has established as a target
that – until June 30, 2022 - 25% (2/8) of the Managing
Board positions are to be held by women.
"The goal is to achieve a composition that is as diverse as pos-
sible and comprises individuals who complement one an-
other in a Managing Board that provides strong leadership as
well as to ensure that, as a group, the members of the Man-
aging Board have all the knowhow and skills that are consid-
ered essential in view of Siemens' activities.
When selecting members of the Managing Board, the Super-
visory Board pays close attention to candidates' per-
sonal suitability, integrity, convincing leadership qualities,
> It is considered helpful if different age groups are repre-
sented on the Managing Board. In accordance with the
recommendation of the Code, the Supervisory Board
has defined an age limit for the members of the Manag-
ing Board. In keeping with this limit, the members of
the Managing Board are, as a rule, to be not older than
63 years of age.
170 Additional Information
171
> In addition to the expertise and management and leader-
ship experience required for their specific tasks, the Man-
aging Board members shall have the broadest possible
range of knowledge and experience and the widest possi-
ble educational and professional backgrounds.
> As a group, the Managing Board shall have many years of
experience in technology (including information technol-
ogy and digitalization), research and development, pro-
curement, manufacturing and sales, finance, law (includ-
ing compliance) and human resources.
> Taking the Company's international orientation into ac-
count, the composition of the Managing Board shall reflect
internationality with respect to different cultural back-
grounds and international experience (such as extensive
professional experience in foreign countries and responsi-
bility for business activities in foreign countries in areas
that are relevant for Siemens).
> As a group, the Managing Board shall have experience in
the business areas that are important for Siemens - in
particular, in the industry, energy, healthcare and infra-
structure sectors.
international experience, expertise in their prospective
areas of responsibility, achievements to date and knowl-
edge of the Company as well as their ability to adjust busi-
ness models and processes in a changing world. Diversity
with respect to such characteristics as age and gender as
well as professional and educational background is an im-
portant selection criterion for appointments to Managing
Board positions. When selecting members of the Managing
Board, the Supervisory Board also gives special consider-
ation to the following factors:
therein: Germany
markets¹
6%
12%
17,993 16,012
therein: U.S.
therein: emerging
3%
23,796 22,115
Americas
6%
91,296
97,999
Siemens
4%
5%
31,720
12,282 11,729
8%
7%
Siemens
4%
Orders in the Americas region were up significantly year-over-year,
benefiting from positive currency translation effects. Double-digit
Order development was mixed in the Europe, C.I.S., Africa,
Middle East region. The majority of industrial businesses posted
order growth, led by double-digit growth in Mobility, which won
several large contracts in the year under review. This increase
was more than offset by a substantial decline in SGRE due mainly
to a lower volume from large orders and a decrease in Digital
Industries. In contrast to the region overall, orders were up
clearly in Germany, driven by sharp growth in Gas and Power
which recorded, among others, a large high voltage direct cur-
rent (HVDC) order. Mobility recorded a significant increase in
order intake in Germany, while the other industrial businesses
posted declines.
6%
Orders related to external customers were clearly up year-over-
year on growth in nearly all industrial businesses, led by Mobility.
Gas and Power, Siemens Healthineers, Smart Infrastructure and
SGRE all posted clear growth, while orders declined slightly in
Digital Industries. Volume from large orders for Industrial Busi-
nesses overall was up substantially due to a sharp increase at
Mobility, but also due to a significant increase in SGRE and Gas
and Power. Growth in emerging markets was driven by orders
from China, and from Russia where Mobility won a €1.2 billion
contract for high-speed trains including maintenance.
(2)%
(2)%
27,607 28,272
therein: emerging
markets¹
3%
5%
3%
4%
8,102
83,044
8,405
86,849
1 As defined by the International Monetary Fund.
therein: China
2%
3%
18,693 18,147
Asia, Australia
4%
30,564
6%
(in millions of €)
8,989
7%
7%
Revenue (location of customer)
(1)%
(1)%
46,086 46,495
12,021 11,254
therein: Germany
Middle East
Europe, C.I.S., Africa,
(in millions of €)
In the Asia, Australia region, orders also rose significantly due to
growth in nearly all industrial businesses. The primary growth
driver was SGRE, which recorded a sharply higher volume from
large orders, including two large orders for offshore wind-farms
including service in Taiwan totaling €2.3 billion. Orders for Mo-
bility dropped substantially compared to the prior year. Clear
growth in China included a majority of industrial businesses.
growth in nearly all industrial businesses was led by SGRE and
Mobility with particularly sharp increases. The pattern of order
development in the U.S. was largely the same as in the Americas
region.
% Change
Comp.
Actual
Fiscal year
2018
2019
Positive currency translation effects added one percentage point
each to order and revenue growth; portfolio transactions had
only minimal effects on volume growth year-over-year. The re-
sulting ratio of orders to revenue (book-to-bill) for Siemens in
fiscal 2019 was a strong 1.13, again well above 1. The order back-
log was €146 billion as of September 30, 2019, a new high.
1 As defined by the International Monetary Fund.
Orders (location of customer)
Americas
29,812 25,060
19%
14%
therein: China
4%
4%
42,782
44,360
Middle East
11%
12%
22,101 19,742
8,459
Asia, Australia
10%
17%
18,106
21,166
therein: U.S.
% Change
Comp.
Actual
Fiscal year
2018
2019
Europe, C.I.S., Africa,
Revenue related to external customers went up moderately year-
over-year on growth in nearly all industrial businesses. SGRE and
Siemens Healthineers posted the highest growth rates, while
revenue at Gas and Power declined moderately in a difficult mar-
ket environment. The revenue decline in emerging markets was
due mainly to lower revenue in Egypt, where in fiscal 2018 Gas
and Power recorded sharply higher revenue from large orders.
77%
In the Americas, revenue came in clearly higher year-over-year,
benefiting from positive currency translation effects. Siemens
Healthineers, Smart Infrastructure and Gas and Power recorded
the largest increases, while SGRE posted clearly lower revenue in
the region. In the U.S., all industrial businesses posted higher
revenues year-over-year, with SGRE and Smart Infrastructure re-
cording the strongest growth rates.
(98)%
124
3
Income from discontinued operations, net of income taxes
(6)%
5,996
5,646
Income from continuing operations
9%
(2,054)
(1,872)
Income tax expenses
(7)%
8,050
7,518
Income from continuing operations before income taxes
(79)%
(1,135)
(2,028)
Net income
Basic earnings per share
ROCE
5,648
6,120
A.4.1 Orders and revenue by region
Combined Management Report
18
Siemens' global venture capital unit, Next47, provides capital to
help start-ups expand and scale. It serves as the creator of
next-generation businesses for Siemens by building, buying and
partnering with innovative companies at any stage. Next47 is
focused on anticipating how emerging technologies will influ-
ence our end markets. This fore-knowledge enables Siemens and
our customers to grow and thrive in the age of digitalization.
We further develop technologies through our "open innovation"
concept. We are working closely with scholars from leading uni-
versities and research institutions, not only under bilateral coop-
eration agreements but also in publicly funded collective proj-
ects. Our focus here is on our strategic research partners, and
especially the eight Centers of Knowledge Interchange that we
maintain at leading universities worldwide.
Our research and development activities are ultimately geared to
developing innovative, sustainable solutions for our customers -
and the Siemens businesses - while also strengthening our own
competitiveness. Joint implementation by the operating units
and Corporate Technology, our central R&D department, en-
sures that research activities and business strategies are closely
aligned with one another, and that all units benefit equally and
quickly from technological developments. As in fiscal 2018 the
following technologies were the focus in fiscal 2019: additive
manufacturing, autonomous robotics, blockchain applications,
connected (e-)mobility, connectivity and edge devices, cyber
security, data analytics and artificial intelligence, distributed en-
ergy systems, energy storage, future of automation, materials,
power electronics, simulation and digital twins, and software
systems and processes.
In fiscal 2019, we reported research and development (R&D)
expenses of €5.7 billion, compared to €5.6 billion in fiscal 2018.
The resulting R&D intensity, defined as the ratio of R&D expenses
and revenue, was 6.5% (fiscal 2018: 6.7%). Additions to capital-
ized development expenses amounted to €0.4 billion in fiscal
2019, compared to €0.3 billion in fiscal 2018. As of September 30,
2019, Siemens held approximately 68,300 granted patents world-
wide in its continuing operations. As of September 30, 2018, we
held approximately 65,000 granted patents. On average, we had
45,100 R&D employees in fiscal 2019.
A.4.3 Research and development
17
Reconciliation to Consolidated Financial Statements
Combined Management Report
As expected, ROCE at 11.1% was below the target range set in our
Siemens Financial Framework, reflecting in particular the effects
from portfolio transactions in recent years, including the acqui-
sitions of Mentor and Mendix at Digital Industries and the merger
of Siemens' wind power business with Gamesa Corporación
Tecnológica, S.A. that created SGRE. The decline year-over-year
The decline in basic earnings per share reflects the decrease of
Net income attributable to Shareholders of Siemens AG, which
was €5,174 million in fiscal 2019 compared to €5,807 million in
fiscal 2018, partially offset by a lower number of weighted aver-
age shares outstanding. Basic earnings per share excluding sev-
erance charges was €6.93.
Income from discontinued operations, net of income taxes
in the prior year included positive effects from the release of a
provision related to former Communications activities.
The tax rate of 25% for fiscal 2019 was below the tax rate of 26%
for the prior year, benefiting mainly from the reversal of income
tax provisions outside Germany. As a result, Income from con-
tinuing operations declined 6%.
As a result of the development described for the segments,
Income from continuing operations before income taxes
declined 7%. Severance charges for continuing operations were
€619 million, of which €492 million were in Industrial Businesses.
Accordingly, Adjusted EBITA margin Industrial Businesses exclud-
ing severance charges was 11.5% in fiscal 2019. In fiscal 2018,
severance charges for continuing operations were €923 million,
of which €669 million were in Industrial Businesses.
(10)%
7.12
12.6%
6.41
11.1%
(8)%
was due both to lower income before interest after tax and to
higher average capital employed.
(305)
(71)
Portfolio Companies
2,898
2,880
% Change
2018
2019
Financial Services
Adjusted EBITA margin Industrial Businesses
Industrial Businesses
Siemens Gamesa Renewable Energy
(1)%
Siemens Healthineers
Gas and Power
Smart Infrastructure
Digital Industries
(in millions of €, earnings per share in €)
Fiscal year
A.4.2 Income
Revenue in Asia, Australia rose moderately year-over-year on
growth in the majority of industrial businesses, led by Siemens
Healthineers and Digital Industries. Gas and Power and SGRE
posted lower revenue year-over-year. In China, revenue was also
up in the majority of industrial businesses, led by Siemens
Healthineers. In contrast, SGRE posted substantially lower reve-
nue year-over-year in that country.
Combined Management Report
16
Mobility
Revenue in Europe, C.I.S., Africa, Middle East increased mod-
erately on growth in a majority of industrial businesses, driven by
substantial growth at SGRE. Gas and Power posted a clear decline
in a difficult market environment. In Germany, revenue was up
moderately with significant growth in Mobility and Gas and
Power, partly offset by a decline in SGRE.
1,500
(5)%
0%
633
632
11.1%
10.9%
1%
8,857
8,986
0%
1,574
483
11%
2,221
2,461
3%
958
983
(6)%
722
679
482
A.4 Results of operations
(71)
(1.3)%
Combined Management Report
R&D activities at Siemens Healthineers are ultimately geared to-
wards delivering innovative, sustainable solutions to its custom-
ers while safeguarding its competitiveness. Particularly in the
field of artificial intelligence, it has further expanded its activities
and has more than 40 products and applications on the market
that further improve its customers' productivity, while enabling
clinical decisions to be more precise and tailored to the individual
patient. Artificial intelligence-based technology is also used in
sample handling and classification in its Atellica Solution labora-
tory system. As part of growing its portfolio of digital services,
the systematic expansion of the cloud-based Teamplay collabo-
ration platform is a major step to support customers in their tran-
sition to outcome-focused care. In the future, it will cover clinical,
operational and financial activities and functions in the health-
care field, and connect healthcare providers and solution pro-
viders as well as bringing together their data, applications
and services. In addition to continually updating its portfolio,
Siemens Healthineers also improves existing products and solu-
tions. Siemens Healthineers focuses its investments mainly on
enhancing competitiveness and innovation. The main capital
expenditures were for spending for factories to expand manu-
facturing and technical capabilities, in particular in China and
the U.S., and for additions to intangible assets, including capi-
talized development expenses for further products related to
Atellica Solution.
to deliver better outcomes at lower costs, regulatory schemes
around the world increasingly seek to introduce new remunera-
tion models for healthcare services, leading to a shift of health-
care reimbursement systems away from a pay-per-procedure
model towards an outcome-based model. Most developed coun-
tries are currently considering regulatory changes within their
healthcare systems.
The addressable markets of Siemens Healthineers are shaped by
several major trends. The first is demographic, in particular the
growing and aging global population. This development poses
major challenges for global healthcare systems and, at the same
time, offers opportunities as the demand for cost-efficient
healthcare solutions continues to intensify. The second trend is
the economic development in emerging countries, which opens
up improved access to healthcare for many people. As the middle
class continues to grow, significant investment in the expansion
of private and public healthcare systems will persist, driving over-
all demand for healthcare products and services and hence mar-
ket growth. The third trend is the increase in chronic diseases as
a consequence of an aging population as well as environmental
and lifestyle-related changes. This development creates addi-
tional pressure on health systems and leads to increased costs to
address these challenges. The fourth global trend, the transfor-
mation of healthcare providers, is resulting from a combination
of societal and market forces. These are driving healthcare pro-
viders to operate and organize their businesses differently.
Increasing cost pressure on the healthcare sector is prompting the
introduction of new remuneration models for healthcare ser-
vices, such as value-based rather than treatment-based reim-
bursement. Digitalization and artificial intelligence are likely to be
key enablers for healthcare providers as they increasingly focus
on enhancing the overall patient experience, with better out-
comes and overall reduction in cost of care. This development is
driven partly by society's increasing resistance to healthcare
costs, payers' increasing professionalization, burdens from
chronic disease and rapid scientific progress. As a result, health-
care providers are consolidating into networked structures, result-
ing in larger clinic and laboratory chains, often operating interna-
tionally, which act increasingly like large corporations. Applying
this industrial logic to the healthcare market can lead to system-
atic improvements in quality, while at the same time reducing
costs. Driven by the need of healthcare systems worldwide
continuum, from prevention and early detection to diagnosis,
treatment and follow-up care. Customers range from public and
private healthcare providers to pharmaceutical companies and
clinical research institutes. Competition in the imaging and
advanced therapies businesses consists mainly of a small number
of large multinational companies, while the diagnostics market
is fragmented with a variety of global players that compete inter-
nationally across market segments, but that also face competi-
tion from several regional players and specialized companies in
niche technologies. The business activities of Siemens Health-
ineers are to a certain extent resilient to short-term economic
trends as large portions of its revenue stem from recurring busi-
ness. They are, however, directly and indirectly dependent on
trends in healthcare markets and on developments in health pol-
icy, including reimbursement, and on geopolitical developments,
including regulatory topics, around the world.
11
Combined Management Report
Siemens as majority shareholder holds 85% of the shares of the
publicly listed Siemens Healthineers AG, Germany (Siemens
Healthineers). Siemens Healthineers is a global provider of tech-
nology to the healthcare industry. It provides medical technology
and software solutions as well as clinical consulting services,
supported by an extensive set of training and service offerings.
In its imaging business, the most important products are equip-
ment for magnetic resonance, computed tomography, X-ray sys-
tems, molecular imaging and ultrasound. Its diagnostics business
offers in-vitro diagnostic products and services to healthcare
providers in laboratory, molecular and point-of-care diagnostics.
The products in its advanced therapies business facilitate image-
guided minimally invasive treatments, in areas such as cardiol-
ogy, interventional radiology, surgery and radiation oncology.
This comprehensive portfolio supports customers along the care
A.3.6 Siemens Healthineers
Orders at Mobility grew to a record high on a sharp increase in
volume from large orders, which the Strategic Company won
across the businesses, most notably in the rolling stock and the
customer services businesses. Among the major contract wins
were a €1.6 billion order for metro trains in the U.K., a €1.2 bil-
lion contract for high-speed trains including maintenance in
Russia, a €0.8 billion order for trainsets including service in
Canada, a €0.7 billion contract for diesel-electric locomotives
including a service agreement in the U.S. and two orders in
Germany worth €0.4 billion and €0.3 billion, respectively, for
regional multiple-unit trainsets. In fiscal 2018, Mobility also gained
a number of significant contracts across the regions. Revenue
grew slightly as double-digit growth in the customer services
business was largely offset by a decline in the rail infrastructure
Order growth reflected overall strong markets for Mobility in
fiscal 2019, with different dynamics among the regions. Market
development in Europe was characterized by continuing awards
of mid-size and large orders, particularly in the U.K., Germany
and Austria. Within the C.I.S., large projects for high-speed trains
and services were awarded in Russia. Demand in the Middle East
and Africa was held back by ongoing uncertainties related to
budget constraints and political climates. In the Americas region,
stable investment activities were driven by demand for mainline
and urban transport, especially in the U.S. and Canada. Within
the Asia, Australia region, Chinese markets saw ongoing invest-
ments in high-speed trains, urban transport, freight logistics and
rail infrastructure, while India continues to invest in modernizing
the country's transportation infrastructure. For fiscal 2020, we
expect markets served by Mobility to grow moderately with in-
creasing demand for digital solutions. Overall, rail transport and
intermodal mobility solutions are expected to remain a focus as
urbanization continues to progress around the world. In emerg-
ing countries, rising incomes are expected to result in greater
demand for public transport solutions.
business. Revenue in the rolling stock business remained close to
the prior-year level due to unfavorable timing effects related to
the execution of large rail projects, which the business began to
ramp up late in the fiscal year. On a geographic basis, revenue
growth in the Asia, Australia region was held back by slight de-
clines in Europe, C.I.S., Africa, Middle East and the Americas.
Mobility continued to operate with high profitability in fiscal
2019, including a strong contribution to Adjusted EBITA from the
services business. Severance charges were €20 million, up from
€14 million in fiscal 2018. Mobility's order backlog was €33 bil-
lion at the end of the fiscal year, of which €8 billion are expected
to be converted into revenue in fiscal 2020.
% Change
Comp.
16%
0%
Actual
17%
1%
3%
958
10.9%
11,025
8,821
12,894
8,916
983
11.0%
Adjusted EBITA
Adjusted EBITA margin
Revenue
Orders
(in millions of €)
Orders
2019
Fiscal year
2018
15,853
and analysis of turbine conditions as well as smart diagnostic
services. The investments of SGRE in fiscal 2019 focused on pro-
duction equipment for new blade types and capacity expansion
in its factories. Other investments were related to logistic and
construction tools in the onshore business, and special equip-
ment for testing and installation of newly launched products in
the offshore business.
13
Combined Management Report
SGRE's R&D efforts focus on developing the next generation of
technology that leads to improved and more cost-effective prod-
ucts, solutions and services, including becoming a leading com-
pany in mastering the balance between power generation and
power demand for the renewable sector. To accomplish that goal,
SGRE is developing cost-effective energy storage solutions, and
solutions for hybridization that are designed to help utility cus-
tomers optimize utilization of renewable energy and thereby in-
crease profitability. Another focus area is digitalization: advances
in this field are expected to enable more intelligent monitoring
The share of renewable energy in the global energy mix is widely
expected to increase, but the trend toward evaluating competing
power sources using life-cycle costs continues to put pressure on
the prices offered by wind power providers. In addition, price
pressure arises from the introduction of auctions as a mechanism
for allocating renewable energy capacity or production in elec-
tricity markets and the resulting increase in competition among
wind turbine manufacturers. To address this trend, SGRE focuses
on improving its supply chain and significantly decreasing costs
by optimizing production within its manufacturing footprint, in-
cluding the streamlining of its product portfolio. A higher share
of renewable energy in electrical grids also increases the demand
for predictability of the energy supply and increased capability
for integrating it into the overall energy mix. Market develop-
ment has in the past depended strongly on energy policy, includ-
ing tax incentives in the U.S. and regulatory frameworks in the
European Union. However, with continued technological prog-
ress and cost reduction, dependency on subsidy schemes is ex-
pected to continue to decrease.
Siemens as majority shareholder holds 59% of the shares of the
publicly listed Siemens Gamesa Renewable Energy, S.A., Spain
(SGRE). SGRE designs, develops and manufactures wind turbines
for various wind conditions, and is active in the development,
construction and sale of wind farms. In addition, SGRE provides
services for the management, operation and maintenance of
wind farms. Its primary customers are large utilities and indepen-
dent power producers. The competitive situation in wind power
differs in the two major market segments. In the markets for on-
shore wind farms, competition is rather dispersed without any
one company holding a dominant share of the market, while
markets for offshore wind farms continue to be served by a few
experienced players. Consolidation is moving forward in both on-
and offshore markets. The key drivers of consolidation are scale
as well as technology and market access challenges. SGRE's rev-
enue mix may vary from reporting period to reporting period
depending on the mix of onshore and offshore projects in the
respective periods.
A.3.7 Siemens Gamesa
Renewable Energy
While demand in the markets served by Siemens Healthineers
continued to grow in fiscal 2019, these markets also showed price
pressure on new purchases and increased utilization rates for in-
stalled systems. All major served markets were in a healthy state,
which contributed to a slightly higher market growth in Europe,
C.I.S., Africa, Middle East and the Americas, most notably in the
imaging and advanced therapies markets. The markets in Asia,
Australia grew moderately. Markets in the U.S. showed slight
growth in the imaging and clear growth in the advanced thera-
pies business, with continued moderate market growth in diag-
nostics. Still, the U.S. market environment remained challenging
as pressure on reimbursement systems and the focus on more
extended utilization of equipment at customers' sites persist.
Government initiatives and programs, together with a growing
private market segment contributed to the re-stabilization and
growth of markets in China. For the healthcare industry as a
whole, the trend towards consolidation continued in fiscal 2019,
leading to higher utilization rates at customers' sites, which are
counterbalancing procedure volume growth in developed mar-
kets. Competition among the leading healthcare companies re-
mained at a high level. For fiscal 2020, Siemens Healthineers
expects the imaging and advanced therapies equipment markets
to stay on a moderate growth path, while the diagnostics market
is expected to grow clearly. Siemens Healthineers' markets will
continue to benefit from the long-term trends mentioned above,
but are restricted by public spending constraints and by consoli-
dation among healthcare providers. On a geographic basis,
Siemens Healthineers expects markets in the region Asia, Australia
to be the major growth driver. For China, Siemens Healthineers
expects continuing strong growth due to rising government
spending on healthcare, promotion of the private segment and
wider access to healthcare services nationwide, pronounced ef-
fects of an aging population, and a growing incidence of chronic
diseases. Growth in the U.S. is expected to be held back by con-
tinued pressure to increase utilization of existing equipment,
reduced reimbursement rates and uncertainty about policies. For
Europe, Siemens Healthineers expects slight growth, with a likely
increased emphasis on equipment replacement and business
with large customers such as hospital chains.
increases in costs related to its Atellica Solution platform. Sev-
erance charges were €57 million in fiscal 2019 and €96 million
in fiscal 2018. The order backlog for Siemens Healthineers was
€18 billion at the end of the fiscal year, of which €6 billion are
expected to be converted into revenue in fiscal 2020.
Fiscal year
2018
12 Combined Management Report
Revenue
Adjusted EBITA
Adjusted EBITA margin
% Change
Comp.
7%
6%
8%
11%
2,221
16.5%
2,461
17.0%
13,425
14,517
Actual
9%
14,506
Orders and revenue showed strong and similar development in
fiscal 2019: clear growth; increases in all businesses led by the
imaging business, and growth in all three reporting regions,
notably including in China and in the U.S. which benefited from
positive currency translation effects. Adjusted EBITA was
clearly up compared to fiscal 2018, with increases in the imag-
ing and advance therapies businesses. The diagnostics business
recorded lower Adjusted EBITA year-over-year due mainly to
clearly in fiscal 2020, driven by growth in the U.S. and India. Global
offshore wind power markets are expected to grow in fiscal 2020.
The driver of this growth is China which offsets a slight decline in
European markets. Market volume in euros is expected to be sub-
ject to adverse price development in the offshore business, reflect-
ing the trends discussed above, and currency translation effects.
2019
Mobility's R&D strategy is focused on providing maximum avail-
ability of trains and infrastructures, thereby increasing its cus-
tomers' return on investment and improving passenger experi-
ence. Decarbonization and seamlessly connected (e-)mobility
are key factors for the future of transportation. Mobility's major
R&D areas include the development of efficient vehicle plat-
forms with optimized lifecycle cost and maximum customization
flexibility; eco-friendly, alternative power supplies for trains
(batteries, fuel cells, dual mode) and trucks (eHighway); digital
services for railways via its Railigent application suite powered
by MindSphere; "signaling in the cloud", a new system architec-
ture for rail infrastructure and loT/cloud-based concepts; solu-
tions for higher automated and autonomous driving for rail and
road; and digital technologies and solutions like cyber security,
connectivity, digital twin, Al, additive manufacturing or inter-
modal apps and platforms. Mobility's investments focus mainly
on maintaining or enhancing its production facilities and on
meeting project demands.
(4)%
(3)%
18,125
17,663
% Change
Comp.
7%
Actual
8%
18,451
19,975
Fiscal year
2018
2019
(in millions of €)
Orders
Revenue
R&D activities of the power generation and oil and gas busi-
nesses concentrate on developing products and solutions for
enhancing efficiency and flexibility, and for reducing greenhouse
gas emissions in power generation and in the oil and gas indus-
try. These products and solutions include turbomachinery
primarily high-performance, low-emission gas turbines for sim-
ple-cycle operation or for combined-cycle power plants
compressor solutions combining electrical, automation, and
digitalization offerings for oil and gas as well as process indus-
tries. A field of activity is using hydrogen as a renewable fuel in
gas turbines. Gas and Power is also intensifying R&D in innova-
tive materials, advanced manufacturing methods and plant opti-
mization. In the transmission business, R&D activities focus on
preparing the portfolio for a deregulated environment in which
total cost of ownership is decisive. Innovations accordingly focus
on product digitalization, power electronics, software-driven
power control, environmentally friendly products and systems,
and grid stabilization. The increasing infeed of renewable energy
to power grids, with distributed generation on the rise, requires
those grids to become more flexible and efficient. The invest-
ments of Gas and Power are focused on enhancing productivity
through automation and increasing customer proximity via stra-
tegic localization of capacity. Investing activities mainly relate to
gas turbines and turbine components.
- and
increases grid complexity. Holistic asset transparency to increase
efficiency of existing grid assets and performance, enabled by
digitalization, is becoming increasingly important. Digitalization
involves increased product and system connectivity and provid-
ing intelligent solutions for the management of complex energy
networks. Connected assets provide value potential for additional
services and enhanced asset operation. The continuously grow-
ing demand for electricity worldwide requires stable transporta-
tion of greener bulk power with minimal losses from the location
of generation to different demand load centers, some of which
may even be located in other countries.
The transmission business generally benefits from major trends
and changes in global electrical power systems, in particular
decarbonization, digitalization and global electrification. Decar-
bonization is shifting the focus of generation to both central and
decentral renewables. This shift increases demand for offshore
connectivity and grid stability, requiring environmentally friendly
products and systems. The integration of wind power, photo-
voltaics, biomass, storage and other intermittent or distributed
energy resources into efficient and reliable power networks
-
Several trends are affecting the businesses of the Operating Com-
pany. In the power generation business, the ongoing strong
growth in demand for power from renewable sources -
which
come with associated short-term fluctuations in power genera-
tion levels - is shifting market demand from fossil baseload gen-
eration to more flexible, highly efficient and affordable gas power
plants with low emissions, in particular in Europe, Latin America
and Asia. A second trend is that the development and execution
of large projects increasingly requires financing by the OEM, in-
cluding equity participation. For Gas and Power, this role is ful-
filled by Financial Services, which can offer customers a range of
financing and equity options backed by domain know-how. In
general, the markets for the Operating Company are strongly af-
fected by changes in national energy regulations, such as support
of renewable energy, the security of supply through capacity mar-
kets or strategic reserve capacity, carbon pricing and climate
change targets, and modernization of energy and electricity mar-
kets. Fuel efficiency standards in the U.S. and the European Union
are expected to weigh on future demand for fossil transportation
fuels in these regions, contrasting with strong growth in transpor-
tation-related fuel use in other world regions, particularly in Asia.
gas, chemicals, mining, data centers, airports, and rail compa-
nies. Competitors in the transmission business consist mainly of
a small number of large multinational companies, increasingly
joined by smaller, fast-growing manufacturers in emerging coun-
tries including China, India and Korea.
15
therein: service
business
8,025
7,756
Trends in Mobility's markets are characterized by the need for
solutions that make daily mobility simpler, faster, and more flex-
ible, reliable and affordable. Cities and national economies face
the challenge of reducing the costs, space requirements, noise
and CO2 emissions of transportation. The pressure on mobility
providers and policymakers to meet these mobility and transpor-
tation needs is growing as urban populations are expected to
continuously rise.
Combined Management Report
10
10
The Strategic Company Mobility combines all Siemens businesses
in the area of passenger and freight transportation, including rail
vehicles, rail automation systems, rail electrification systems,
road traffic technology, digital solutions and related services. It
also provides its customers with consulting, planning, financing,
construction, service and operation of turnkey mobility systems.
Moreover, Mobility offers integrated mobility solutions for net-
working of different types of traffic systems. It sells its products,
systems and solutions through its worldwide network of sales
units. The principal customers of Mobility are public and state-
owned companies in the transportation and logistics sectors, so
its markets are driven primarily by public spending. Customers
usually have multi-year planning and implementation horizons,
and their contract tenders therefore tend to be independent of
short-term economic trends. Mobility's principal competitors are
multinational companies. Consolidation among Mobility's com-
petitors is continuing. In February 2019, the European Commis-
sion announced its decision to prohibit the proposed combination
of Alstom SA, France (Alstom) with Siemens' mobility businesses.
In August 2019, a large Chinese competitor signed a contract to
acquire a locomotives business in Germany, enabling the Chinese
competitor to gain a foothold in Europe, in line with its ambitious
growth and internationalization strategy. If this transaction were
to be carried out, the above described sequence of events would
probably lead to significantly increased competitive pressure for
all European rail transport businesses, including those of Mobility.
A.3.5 Mobility
Effective with the beginning of fiscal 2020, several businesses
will be transferred to Gas and Power: certain businesses previ-
ously included in Portfolio Companies; the distribution trans-
formers business previously included in Smart Infrastructure; and
the hydrogen solution unit and research activities within the
technology field Power 2X and storage previously included in
Corporate Items. If this organizational structure had already ex-
isted in fiscal 2019, Gas and Power would have posted orders of
€21.711 billion, revenue of €19.304 billion, Adjusted EBITA of
€732 million and an Adjusted EBITA margin of 3.8%.
Markets served by our transmission businesses grew slightly in
fiscal 2019, recovering from the weakness a year earlier as cus-
tomers continued their effort to strengthen transmission and dis-
tribution grids to integrate the growing amount of decentralized
energy. We expect this growth to continue in fiscal 2020, with
markets in Asia anticipated to show the highest growth rates. The
Middle East is expected to benefit from a price recovery in the oil
and gas markets and investments in large infrastructure projects.
Tighter decarbonization goals and grid extensions are expected to
drive growth in Europe, while utilities in North America are ex-
pected to strongly invest in grid modernization and optimization.
Oil and gas markets developed positively in fiscal 2019, driven
by a recovery in liquefied natural gas. They are expected to grow
again in fiscal 2020, driven by the liquefied natural gas and up-
stream markets. Both markets for offshore and onshore explo-
ration are anticipated to recover further based on a growing
number of expected project approvals. Pipelines, downstream,
and oil and gas-related markets are expected to remain stable
in fiscal 2020.
(in millions of €)
These results reflected a highly competitive market environ-
ment. We expect the power generation market overall to remain
challenging with market volume stabilizing at the current level.
After years of continuous decline, the volume of the gas turbine
market in fiscal 2019 remained on the prior-year level, again
being impacted by customer delays of large projects in Asia,
Australia, particularly in China, and strong price pressure result-
ing from intense competition. Customers also showed restraint
due to ongoing weak growth in demand for power, combined
with uncertainty regarding regulatory developments. The gas
turbine market is experiencing overcapacity among OEMs and
EPC contractors, which is fostering market consolidation. In the
market for large steam turbines for power generation, volume
shrank further year-over-year from an already low basis of com-
parison due to an ongoing shift from coal-fired to gas-fired and
renewable power generation, as well as to carbon emission reg-
ulation. We expect these developments to continue in fiscal
2020. In contrast, markets for industrial steam turbines were
stable in fiscal 2019, and the market segment is expected to be
flat in fiscal 2020.
9
Combined Management Report
Orders were up clearly year-over-year, due mainly to higher
orders in the new-unit business. Volume from large orders
increased significantly year-over-year; among the contract wins
4.0%
2%
3%
(6)%
722
679
3.8%
Adjusted EBITA
Adjusted EBITA margin
was a €0.4 billion order for a combined-cycle power plant, in-
cluding service in France; a HVDC order worth €0.4 billion in
Germany; a €0.3 billion order for a large offshore grid connec-
tion project in the U.K.; and a €0.3 billion order in the solutions
business in Brazil. Order intake increased in all three reporting
regions, with the Americas posting double-digit growth. Gas and
Power's revenue decreased moderately year-over-year in a con-
tinuing difficult market environment as the new-unit businesses
recorded lower revenue compared to fiscal 2018 following weak
order entry in prior years. On a geographic basis, revenue de-
creased in the regions Europe, C.I.S., Africa, Middle East and
Asia, Australia, partly offset by growth in the Americas. Despite
a continuing strong contribution from the service business
and positive effects from project execution and completion,
Adjusted EBITA was down year-over-year on lower revenue,
price declines and reduced capacity utilization. In addition,
Adjusted EBITA in fiscal 2018 benefited from gains totaling
€166 million from two divestments. Severance charges were
€242 million in fiscal 2019 compared to €374 million in fiscal
2018. Gas and Power's order backlog was €51 billion at the end
of the fiscal year, of which €13 billion are expected to be con-
verted into revenue in fiscal 2020.
(in millions of €)
In Oil and Gas, the role of natural gas compared to other fossil
fuels is growing from the mid- to long-term perspective, facili-
tated by its lower carbon footprint. Furthermore, declining pro-
duction from maturing oil and gas fields, or depletion, requires
improved recovery technologies as well as additional mechanical
and electrical power, necessitating continuous investments. At
the same time, oil and gas companies increasingly focus on asset
economics and emission footprint, requiring products and solu-
tions offering an improved balance of high asset productivity
with safety and environmental performance. Generally, our oil
and gas business benefits from these major market trends. At the
same time, our diversified and global presence across the oil and
gas value chain and other industries – each following their own
business cycles - offers stable opportunities for our business.
Fiscal year
2018
4%
5,569
5,806
Orders
631
(562)
Corporate items
140
145
Real Estate Services
% Change
Comp.
Actual
Fiscal year
2018
2019
(in millions of €)
2018
2019
(in millions of €)
Fiscal year
3%
Profit
Revenue
4,930
2019
-
(1,135)
(2,028)
(318)
(215)
Eliminations, Corporate Treasury
and other reconciling items
Reconciliation to Consolidated
Financial Statements
(6.2)%
(1,164)
(1,133)
(423)
(264)
Centrally carried pension expense
Amortization of intangible assets
acquired in business combinations
77%
(305)
Adjusted EBITA margin
Adjusted EBITA
11%
12%
5,526
A.3.10 Reconciliation to
Consolidated Financial Statements
Supported by a recovery in commodity-related markets, orders
and revenue showed broad-based growth year-over-year with
strongest increases in the mechanical drives business. Overall,
Portfolio Companies businesses made good progress in achieving
their targets. Adjusted EBITA improved in all fully consolidated
units and turned positive in total, mainly driven by the large
drives applications business. The result from equity investments
in total also improved slightly, though it was negative in both
periods under review. Severance charges decreased to €14 mil-
lion, from €86 million in fiscal 2018. Portfolio Companies' order
backlog was €5 billion at the end of the fiscal year, of which
Beginning with fiscal 2020, the equity investments Ethos Energy
Group Limited and Voith Hydro Holding GmbH & Co. KG, the sub-
sea business, and the majority of the process solutions business
will be transferred to the Operating Company Gas and Power. If
this organizational structure had already existed in fiscal 2019,
Portfolio Companies would have posted orders of €4.746 billion,
revenue of €4.558 billion and Adjusted EBITA of €(115) million.
Order intake increased in all businesses year-over-year due to a
higher volume from large orders. Sharp order growth in Asia,
Australia included two large orders for offshore wind-farms in-
cluding service in Taiwan totaling €2.3 billion. SGRE also re-
corded sharply higher orders in the Americas region, driven by
several large orders in the onshore business mainly in the U.S. In
contrast, orders came in substantially lower in the region Europe,
C.I.S., Africa, Middle East which in the prior year had included an
order for an offshore wind-farm, including service, in the U.K.
worth €1.3 billion. Revenue was up significantly year-over-year,
with substantial growth in the offshore and service businesses
and clear growth in the onshore business. On a geographic basis,
revenue rose substantially in Europe, C.I.S., Africa, Middle East,
while it declined clearly in the other two reporting regions.
Adjusted EBITA was on the prior-year level as positive effects
from productivity improvements and higher revenue were offset
by price declines, a less favorable project mix and higher ex-
penses for integration costs and capacity adjustments including
severance. Severance charges were €32 million in fiscal 2019 and
€77 million in fiscal 2018. SGRE's order backlog was €26 billion at
end of the fiscal year, of which €9 billion are expected to be con-
verted into revenue in fiscal 2020.
Financial Services supports its customers' investments with leas-
ing solutions and equipment, project and structured financing in
the form of debt and equity investments. Based on its comprehen-
sive financing know-how and specialist technology expertise in
the areas of Siemens businesses, Financial Services provides finan-
cial solutions for Siemens customers as well as other companies.
A.3.8 Financial Services
5.3%
4.7%
Adjusted EBITA margin
7%
12%
7%
12%
0%
483
These results were achieved in markets that grew substantially
in fiscal 2019 in terms of installed capacity due to higher demand
in both the onshore and offshore markets, with the latter grow-
ing faster. Market volume in euros was subject to adverse price
development. On a regional basis, growth in the onshore busi-
ness was again driven primarily by China where the largest na-
tional wind market in the world for onshore generation remains
largely closed to foreign manufacturers, and secondarily by the
U.S. In contrast, the onshore market in Germany declined signifi-
cantly. In the offshore market, growth was driven by the U.K. and
China. SGRE expects global onshore wind installations to grow
482
9,122
10,227
Revenue
11,875
12,749
Orders
% Change
Comp.
Mitsubishi-Hitachi Metals Machinery (MHMM) and Siemens AG
reached an agreement in September 2019, that MHMM will ac-
quire Siemens' stake in Primetals Technologies. Closing of the
transaction is subject to customary conditions and is expected by
the beginning of calendar 2020.
Actual
Adjusted EBITA
Fiscal year
The negative swing in Corporate items was mainly due to large
positive effects in fiscal 2018 – the gain of €900 million resulting
from the transfer of Siemens' shares in Atos SE to Siemens Pen-
sion-Trust e. V. and the gain of €655 million from the sale of
OSRAM Licht AG shares. These effects substantially outweighed
a positive result in fiscal 2019 from the measurement of a major
asset retirement obligation, which was previously reported in
Centrally managed portfolio activities. Severance charges within
Corporate items were €99 million (€159 million in fiscal 2018).
2019
(in millions of €)
€3 billion are expected to be converted into revenue in fiscal
2020. Regarding Portfolio Companies' at-equity investments, vol-
atile results are expected in coming quarters.
Portfolio Companies consists of a broad range of businesses,
which at the end of fiscal 2019 mainly included the following fully
consolidated units: application specific solutions (process solu-
tions), electric motors, converters and generators (large drive appli-
cations), gear units and couplings (mechanical drives) and sorting
technology and solutions for mail, parcel, baggage and cargo han-
dling (Siemens Logistics). Within the industries served by fully con-
solidated units, customer demand generally shows a delayed re-
sponse to changes in the overall economic environment. The results
of fully consolidated units are strongly dependent, however, on
customer investment cycles in their key industries. In commodi-
ty-based industries such as oil and gas or mining, these cycles are
driven mainly by commodity price fluctuations. The broad range of
fully consolidated units and their heterogenous industrial customer
base is reflected in its sales and marketing channels. While the me-
chanical drives business and Siemens Logistics require a dedicated
sales approach based on in-depth understanding of specific indus-
tries and customer requirements, the large drives applications busi-
ness and the process solutions business leverage the shared regional
sales organization employed by the Siemens Operating Companies.
Voith Hydro Holding GmbH & Co. KG). Unrealized potential within
these businesses, which are managed separately, requires adjust-
ment in their approach with defined measures including internal
re-organization, digitalization, cost improvements, and optimiz-
ing procurement, production and service activities. After achiev-
ing certain threshold performance targets, businesses may trans-
fer to Siemens industrial businesses, combine with external
business from the same industry or enter into an external private
equity partnership.
Combined Management Report
14
Portfolio Companies was formed in fiscal 2019 and consists
largely of businesses formerly included in the Divisions Process
Industries and Drives (mechanical drives, process solutions, large
drives applications) and Energy Management (subsea), along
with certain other activities that were formerly reported in Cen-
trally managed portfolio activities (Siemens Logistics business and
the at-equity investments: Valeo Siemens eAutomotive GmbH,
Primetals Technologies Limited, Ethos Energy Group Limited and
A.3.9 Portfolio Companies
Financial Services is geared to Siemens' industrial businesses and
its markets. As such Financial Services is influenced by the busi-
ness development of the markets served by our industrial busi-
nesses, among other factors. Financial Services will continue to
focus its business scope on areas of intense domain know-how.
Financial Services again delivered strong earnings before taxes.
While the equity business recorded higher results, the result from
the debt business declined, amongst others due to higher credit
hits. Total assets increased along with a growth in debt business
and in part due to positive currency translation effects.
Markets for Portfolio Companies are generally impacted by rising
uncertainties regarding geopolitical and economic develop-
ments, which weaken investment sentiment. Although the broad
range of businesses are operating in diverse markets, overall,
moderate growth is expected in the coming years for the main
markets served by the Portfolio Companies.
27,628
(in millions of €)
Total assets
Earnings before taxes (EBT)
ROE (after taxes)
632
19.1%
2018
Sep 30,
2018
2019
29,901
633
19.7%
(5,011)
(753)
(3,205)
6,471
1,044
(1,407)
Cash flows from financing activities - continuing and discontinued operations
Cash flows from financing activities - discontinued operations
Dividends attributable to non-controlling interests
Dividends paid to shareholders of Siemens AG
Interest paid
Change in short-term debt and other financing activities
Repayment of long-term debt (including current maturities of long-term debt)
Issuance of long-term debt
Re-issuance of treasury shares and other transactions with owners
Purchase of treasury shares
Cash flows from financing activities
Cash flows from financing activities - continuing operations
(1,123)
(2,277)
(246)
Fiscal year 2019
5,872
(2,610)
8,482
Continuing
operations
Additions to intangible assets and property, plant and equipment
Free cash flow
Cash flows from operating activities
(in millions of €)
Free cash flow
We report Free cash flow as a supplemental liquidity measure:
Cash outflows from the change in short-term debt and other
financing activities mainly included repayments of loans from
banks.
Cash inflows from the re-issuance of treasury shares and other
transactions with owners mainly included €1.1 billion from the
exercise of warrants in connection with US$1.5 billion bonds
with warrant units.
Cash flows from investing activities - continuing and discontinued operations
Cash inflows from other disposals of assets mainly included
disposals of above-mentioned eligible collateral and to a minor
extent proceeds from real estate disposals, from the sale of busi-
nesses or from other investments.
The change in receivables from financing activities of SFS
resulted from growth in SFS' debt business.
Cash outflows for purchase of investments and financial assets
for investment purposes primarily included additions of assets
eligible as central bank collateral and payments related to invest-
ments such as debt or equity investments related to certain projects.
Cash outflows from acquisitions of businesses, net of cash
acquired, mainly included payments of €0.5 billion related to the
acquisition of Mendix.
The main contributors to Cash flows from operating activities
were Digital Industries, followed by Siemens Healthineers and
Smart Infrastructure, in line with their contributions to Adjusted
EBITA. Regarding cash inflows associated with operating net
working capital, a decline in operating net working capital was
driven mainly by an increase in contract liabilities. This factor was
partly offset by cash outflows related to a buildup of contract
assets and inventories, most evidently at SGRE.
(2,277)
(3,060)
22 Combined Management Report
Purchase of investments and financial assets for investment purposes
Cash flows from investing activities – discontinued operations
Cash flows from operating activities
(in millions of €)
A.6.2 Cash flows
21
Combined Management Report
Irrevocable loan commitments amounted to €3.1 billion. A con-
siderable portion of these commitments resulted from as-
set-based lending transactions, meaning that the respective
loans can be drawn only after the borrower has provided suffi-
cient collateral.
Future payment obligations under non-cancellable operating
leases amounted to €3.5 billion.
In addition to these commitments, we issued other guarantees.
To the extent future claims are not considered remote, maxi-
mum future payments from these commitments amounted to
€0.4 billion.
As of September 30, 2019, the undiscounted amount of maxi-
mum potential future payments related primarily to credit guar-
antees and guarantees of third-party performance amounted to
€3.1 billion.
Off-balance-sheet commitments
Out of the above-mentioned treasury shares repurchased in fiscal
2019, 3,343,479 treasury shares were repurchased under the
share buyback initiated in November 2015, which was thus com-
pleted with a total volume of €3.0 billion. The amount of
10,189,078 treasury shares were repurchased under the share
buyback announced in November 2018 of up to €3.0 billion in
volume until November 15, 2021 at the latest.
Share buyback
STATEMENTS.
For further information about our debt see
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
tion about the functions and objectives of our financial risk man-
agement see NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL
NOTE 16 in B.6
We have credit facilities totaling €10.0 billion, thereof €9.5 bil-
lion unused as of September 30, 2019.
As of September 30, 2019, we recorded, in total, €33.2 billion in
notes and bonds (maturing until 2047), €2.3 billion in loans from
banks (maturing until 2037), €0.9 billion in other financial in-
debtedness (maturing until 2029) and €0.1 billion in obligations
under finance leases. Notes and bonds were issued mainly in the
U.S. dollar and euro, and to a lower extent in the British pound.
Discontinued
Debt and credit facilities
Net income
1
Fiscal year
Change in operating net working capital
(5,012)
Cash flows from investing activities - continuing operations
1,689
(1,161)
(1,971)
(958)
Other disposals of assets
Change in receivables from financing activities of SFS
Acquisitions of businesses, net of cash acquired
(2,610)
Additions to intangible assets and property, plant and equipment
Cash flows from investing activities
8,456
Cash flows from operating activities - continuing and discontinued operations
Cash flows from operating activities - discontinued operations
8,482
2,198
Other reconciling items to cash flows from operating activities – continuing operations
Cash flows from operating activities – continuing operations
636
2019
5,648
The forecasts presented here for GDP and fixed investments are
based on a report from IHS Markit dated October 15, 2019.
Continuing and
discontinued operations
Profitability
MENT INFORMATION.
As of September 30, 2019, our order backlog totaled €146 bil-
lion, and we expect conversion from the backlog to strongly
support revenue growth in fiscal 2020. From Siemens' backlog,
we expect to convert approximately €50 billion of past orders
into current revenue in fiscal 2020. For conversion of order
backlog to revenue for our respective segments, see → A.3 SEG-
We expect the Siemens Group to again achieve moderate growth
in comparable revenue, net of currency translation and portfolio
effects, and a book-to-bill ratio above 1 in fiscal 2020.
Revenue growth
Financial Services is expected to achieve a return on equity (ROE)
(after tax) in its margin range of 17% to 22% in fiscal 2020.
SGRE expects comparable revenue growth in the low-single-digit
range in fiscal 2020, driven mainly by the onshore business.
Adjusted EBITA is expected to be impacted by €200 million in
integration and restructuring costs. As a result, Adjusted EBITA
margin is expected to come in below its target margin range of
7% to 11% in fiscal 2020.
While energy markets are assumed to remain challenging with
some signs of stabilization, Gas and Power expects a moderate
comparable revenue growth particularly including execution
on its large order backlog. Adjusted EBITA margin is expected
at 2% to 5%.
In addition to the above-mentioned expectations for our seg-
ments, we expect our fully-consolidated units within Portfolio
Companies to be profitable, while its equity investments are ex-
pected to be volatile and to continue to generate losses. We an-
ticipate that Real Estate Services will continue with real estate
disposals depending on market conditions. Expenses for Corpo-
rate items and Centrally carried pension expenses are estimated
to be in a range of approximately €1.2 billion to €1.4 billion in
fiscal 2020, including significant costs associated with the carve-
out of Gas and Power. Amortization of intangible assets acquired
in business combinations, which was €1.1 billion in fiscal 2019,
and Eliminations, Corporate Treasury and other reconciling
items, which were a negative €0.2 billion in fiscal 2019, are
expected to remain on similar levels, respectively, in fiscal 2020.
We anticipate that net income and corresponding basic EPS will
be impacted by sharply higher tax expenses due largely to the
planned carve-out of Gas and Power.
for Healthineers excluding severance charges and acquisition-
related transaction costs is expected at 17% to 18% in fiscal 2020.
Siemens Healthineers expects to achieve comparable revenue
growth in a mid-single-digit range in fiscal 2020, led by its imag-
ing and advanced therapies businesses. Adjusted EBITA margin
Economic cycles have limited impact on the markets for Mobility,
which anticipates mid-single-digit comparable revenue growth in
fiscal 2020 driven by its rolling stock business, which ramped up
several large rail projects towards the end of fiscal 2019. Adjusted
EBITA margin is expected at 10% to 11%.
Smart Infrastructure expects to achieve moderate comparable
revenue growth in fiscal 2020, driven by its longer-cycle solutions
and service business, even as its short-cycle industrial products
business faces headwinds from a market slowdown. Adjusted
EBITA margin is expected at 10% to 11%.
Digital Industries expects fiscal 2020 comparable revenue to
remain level compared to the prior year, outperforming the
broader market, despite continued weakness in its most import-
ant short-cycle markets, particularly the automotive and ma-
chine building industries. Adjusted EBITA margin is expected at
17% to 18%.
Segments
Based on these assumptions and exclusions, our outlook is as
follows:
We are exposed to currency translation effects, mainly involving
the U.S. dollar, the British pound and currencies of emerging
markets, particularly the Chinese yuan. While we expect volatil-
ity in global currency markets to continue in fiscal 2020, we have
improved our natural hedge on a global basis through geo-
graphic distribution of our production facilities in the past. Nev-
ertheless, Siemens is still a net exporter from the Eurozone to the
rest of the world, so a weak euro is principally favorable for our
business and a strong euro is principally unfavorable. In addition
to the natural hedging strategy just mentioned, we also hedge
currency risk in our export business using derivative financial
instruments. We expect these steps to help us limit effects on
income related to currency in fiscal 2020. Based on currency ex-
change rates as of the beginning of November 2019, we expect
negative currency translation effects, reducing nominal order
and revenue growth slightly in fiscal 2020. We anticipate even
smaller currency-related impacts on the Adjusted EBITA margin
for our Industrial Businesses in fiscal 2020.
matters.
Combined Management Report
As previously announced, we plan to carve out Gas and Power
and to contribute our 59% stake in SGRE to create a new entity,
Siemens Energy. For this entity, we plan a spin-off and public
listing before the end of fiscal 2020, with Siemens Energy becom-
ing part of discontinued operations prior to the spin-off. We ex-
pect this to result in substantial positive effects within discontin-
ued operations, including a substantial gain at spin-off, which
cannot yet be reliably quantified.
For our EPS guidance we assume these positive effects will offset
carve-out costs and tax expenses related to the spin-off and
Group-wide severance charges for the fiscal year. Taken together
with our previously mentioned expectations for fiscal 2020, we
expect this to result in basic EPS from net income in the range
from €6.30 to €7.00 compared to €6.41 in fiscal 2019.
Our forecast for net income and corresponding basic EPS takes into
account a number of additional factors. We expect the solid proj-
ect execution to continue in fiscal 2020, and we plan to slightly
increase R&D expenses year-over-year to strengthen our capacity
for innovation. Severance charges, which were €619 million in fis-
cal 2019, are expected to be on a similar level in fiscal 2020.
Our capital structure ratio as of September 30, 2019 increased
to 0.6 from 0.4 a year earlier, both results being in line with the
target established in our Siemens Financial Framework. The
change was due primarily to the above-mentioned increases
in long-term debt and in provisions for pensions and similar ob-
ligations.
Risk management at Siemens builds on a comprehensive, interac-
tive and management-oriented Enterprise Risk Management
(ERM) approach that is integrated into the organization and that
addresses both risks and opportunities. Our ERM approach is based
on the globally accepted COSO Standard (Committee of Sponsor-
ing Organizations of the Treadway Commission) "Enterprise Risk
Management - Integrating with Strategy and Performance" (2017)
and the ISO (International Organization for Standardization) Stan-
dard 31000 (2018) and is adapted to Siemens requirements. The
frameworks connect the ERM process with our financial reporting
process and our internal control system. They consider a compa-
ny's strategy, the efficiency and effectiveness of its business oper-
ations, the reliability of its financial reporting and compliance with
relevant laws and regulations to be equally important.
such risks more closely as our business progresses. Our internal
auditors regularly review the adequacy and effectiveness of our
risk management. Accordingly, if deficits are detected, it is possi-
ble to adopt appropriate measures for their elimination. This
coordination of processes and procedures is intended to help
ensure that the Managing Board and the Supervisory Board are
fully informed about significant risks in a timely manner.
A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
We have implemented and coordinated a set of risk management
and control systems which support us in the early recognition of
developments that could jeopardize the continuity of our busi-
ness. The most important of these systems include our enter-
prise-wide processes for strategic planning and management
reporting. Strategic planning is intended to support us in consid-
ering potential risks well in advance of major business decisions,
while management reporting is intended to enable us to monitor
A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
Our risk management policy stems from a philosophy of pursu-
ing sustainable growth and creating economic value while man-
aging appropriate risks and opportunities and avoiding inappro-
priate risks. As risk management is an integral part of how we
plan and execute our business strategies, our risk management
policy is set by the Managing Board. Our organizational and ac-
countability structure requires each of the respective manage-
ments of our organizational units to implement risk manage-
ment programs that are tailored to their specific industries and
responsibilities, while being consistent with the overall policy.
This includes our listed Strategic Companies Siemens Healthineers
and SGRE, which are also subject to our group-wide principles for
risk management and individually responsible for adhering to
those principles.
A.8.2 Risk management
Overall, the actual development for Siemens and its segments
may vary, positively or negatively, from our outlook due to the
risks and opportunities described below or if our expectations
and assumptions do not materialize.
matters.
This outlook excludes charges related to legal and regulatory
For our EPS guidance we assume these positive effects will offset
carve-out costs and tax expenses related to the spin-off and
Group-wide severance charges for the fiscal year. Taken together
with our previously mentioned expectations for fiscal 2020, we
expect this to result in basic EPS from net income in the range
from €6.30 to €7.00 compared to €6.41 in fiscal 2019.
As previously announced, we plan to carve out Gas and Power
and to contribute our 59% stake in SGRE to create a new entity,
Siemens Energy. For this entity, we plan a spin-off and public
listing before the end of fiscal 2020, with Siemens Energy becom-
ing part of discontinued operations prior to the spin-off. We ex-
pect this to result in substantial positive effects within discontin-
ued operations, including a substantial gain at spin-off, which
cannot yet be reliably quantified.
27
Combined Management Report
We expect global macroeconomic development to remain sub-
dued in fiscal 2020, with risks particularly related to geopolitical
and geoeconomic uncertainties. We assume a moderate decline
in market volume for our short-cycle businesses. Given the fore-
going, we expect the Siemens Group to again achieve moderate
growth in comparable revenue, net of currency translation and
portfolio effects, and a book-to-bill ratio above 1.
A.8.1.3 OVERALL ASSESSMENT
We aim in general for a capital structure, defined as the ratio of
industrial net debt to EBITDA (continuing operations), of up to 1.0,
and expect to achieve this in fiscal 2020. Effects from adoption of
IFRS 16, Leases, beginning with fiscal 2020, result in an increase
in the ratio as described in more detail in NOTE 2 in B.6 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS. In addition, we expect effects
on capital structure related to the above-mentioned planned spin-
off and public listing of Siemens Energy, which cannot yet be re-
liably quantified.
Capital structure
Our long-term goal is to achieve a ROCE in the range of 15% to
20%. Due mainly to factors currently influencing net income and
average capital employed, particularly recent acquisitions, we
expect ROCE to continue to show a double-digit result in fiscal
2020 but to come in below our target range. In addition, we ex-
pect effects on ROCE related to the above-mentioned planned
spin-off and public listing of Siemens Energy, which cannot yet
be reliably quantified.
Capital efficiency
This outlook excludes charges related to legal and regulatory
businesses. Also, we assume that a public listing of Siemens
Energy will be finalized according to plan by the end of fiscal 2020.
We are basing our outlook for fiscal 2020 for the Siemens Group
and its reportable segments on the above-mentioned expecta-
tions and assumptions regarding the overall economic situation
as well as the specific market conditions we expect for our re-
spective industrial businesses, as described in → A.3 SEGMENT
INFORMATION. Overall, we expect global macroeconomic develop-
ment to remain subdued in fiscal 2020, with risks particularly
related to geopolitical and geoeconomic uncertainties. We as-
sume a moderate decline in market volume for our short-cycle
A.8.1.2 SIEMENS GROUP
high-speed trains, including services, in Russia, and recorded its
highest order intake ever. Order growth in Gas and Power was
driven by the new-unit business and included significantly higher
volume from large orders year-over-year. Siemens Healthineers
and Smart Infrastructure achieved broad-based order growth, the
former including particularly strong demand for its imaging solu-
tions, the latter including large contract wins in its solutions and
services business. Orders in Digital Industries came in slightly
lower year-over-year due mainly to increasingly adverse market
conditions in key manufacturing industries. Excluding currency
translation and portfolio effects, orders for Siemens rose 6%.
Orders rose 7% year-over-year to €98.0 billion, for a book-to-bill-
ratio of 1.13, thus fulfilling our expectation of a ratio above 1.
Five of our six industrial businesses increased orders year-over-
year. These increases were led by double-digit growth at Mobil-
ity, which again won significant contracts, such as for the new
generation of trains for the London Tube and for Velaro RUS
Despite increasing macroeconomic headwinds in the course of
the fiscal year, particularly for our short-cycle businesses, we
again achieved strong results - also in most of our industrial busi-
nesses and in Financial Services - and reached all the targets set
for our primary measures for fiscal 2019. We achieved revenue
growth of 3% net of currency translation and portfolio effects.
We delivered basic EPS from net income of €6.41, which included
impacts from severance charges amounting to (€0.52) per share.
At 11.1%, return on capital employed (ROCE) was in the double-
digit range; and our capital structure ratio came in at 0.6.
In fiscal 2019, as part of our new "Vision 2020+" company strat-
egy, we set Siemens' future course by introducing a new organi-
zational structure consisting of three Operating Companies
Digital Industries, Smart Infrastructure and Gas and Power - and
three Strategic Companies: Mobility, Siemens Healthineers and
SGRE. With this new setup, we are deepening our ownership cul-
ture and giving our businesses considerably more entrepreneur-
ial freedom and responsibility under the strong Siemens brand.
"Vision 2020+" is primarily a strategic growth concept aimed at
further improving the profitability of Siemens' Companies through
innovation and efficiency gains. As part of "Vision 2020+," we
have set ourselves even more ambitious targets for revenue
growth and the Adjusted EBITA margin ranges of our Companies.
With "Vision 2020+," we also intend to further strengthen our
portfolio through investments in new growth fields such as loT
integration services, distributed energy management and solu-
tions for electric mobility infrastructure. As part of this strategy,
we made several acquisitions during the fiscal year, the most im-
portant being Mendix, a pioneer and leader in cloud-native low-
code application development. The acquisition of Mendix and
our entry into the loT integration services business is enabling us
to further expand our market leadership in industrial digitaliza-
tion. As a next step of "Vision 2020+," we announced our plan to
carve out Gas and Power and to publicly list the business under
the name Siemens Energy by the end of fiscal 2020, to give it
even more independence and entrepreneurial freedom in a rap-
idly changing market environment. As part of this transaction,
Siemens plans to contribute its stake in SGRE to Siemens Energy.
As a result, the next generation of Siemens will be made up of
three Siemens companies: the industrial Siemens, comprising
Digital Industries, Smart Infrastructure and Mobility; Siemens
Healthineers, which we successfully listed publicly in fiscal 2018;
and Siemens Energy.
A.7 Overall assessment of the economic position
23
Combined Management Report
With regard to capital expenditures for continuing operations, we
expect a significant increase in fiscal 2020. In the coming years,
up to €0.6 billion are to be invested in "Siemensstadt 2.0". This
new project aims to transform Siemens' existing industrial area
in Berlin into a modern urban district supporting a diverse range
of purposes, including strengthening key technologies. Further
investments are planned in relation to the Siemens Campus Er-
langen. In addition, we plan to invest significant amounts in com-
ing years in attractive innovation fields through Siemens' global
venture capital unit Next47.
Company real estate worldwide and supports the Industrial Busi-
nesses and corporate activities with customer-specific real estate
solutions; excluded are Siemens Healthineers, SGRE and the
carved-out real estate of Mobility.
Additions to intangible assets and property, plant and equipment
from continuing operations totaled €2.6 billion in fiscal 2019.
Within the industrial Businesses, ongoing investments related
mainly to technological innovations; maintaining and extending
our capacities for designing, manufacturing and marketing new
solutions including strategic localization; improving productivity;
and replacements of fixed assets. These investments amounted
to €2.1 billion in fiscal 2019. The remaining portion related mainly
to Real Estate Services, including significant amounts for projects
such as new office buildings in Germany. Real Estate Services
is responsible for uniform and comprehensive management of
Investing activities
With our ability to generate positive operating cash flows, our
total liquidity (defined as cash and cash equivalents plus current
interest-bearing debt securities) of €13.7 billion, our unused lines
of credit, and our credit ratings at year-end, we believe that we
have sufficient flexibility to fund our capital requirements. Also
in our opinion, our operating net working capital is sufficient for
our present requirements.
Beginning with fiscal 2020, Siemens adopts IFRS 16, Leases,
applying the modified retrospective approach as described in
more detail in NOTE 2 in B.6 NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS. As a result, the shift of lease payments from cash
flows from operating activities to cash flows from financing ac-
tivities will have a positive effect on Free cash flow.
The Free cash flow for the Industrial Businesses amounted to
€8,000 millions, resulting in a cash conversation rate of 0.89.
5,845
(27)
(2,610)
8,456
(27)
Revenue also was higher in five of our industrial businesses and
rose to €86.8 billion, up 5% year-over-year. The strongest
increase came from SGRE, which posted double-digit growth,
driven by its offshore and service businesses. Siemens
Healthineers achieved clear revenue growth on increases in all
businesses, particularly in its imaging business. Following weak
order intake in prior years, revenue at Gas and Power came in
moderately lower. Excluding currency translation and portfolio
effects, revenue for Siemens grew 3%. For fiscal 2019, we had
forecast moderate growth in revenue, net of currency translation
and portfolio effects.
operations
Adjusted EBITA Industrial Businesses rose slightly to €9.0 bil-
lion, due mainly to double-digit growth in Siemens Healthineers
on the strength of its imaging and advanced therapies busi-
nesses and to a lesser extent to a moderate increase in Mobility.
These increases were partly offset by declines in Gas and Power,
due mainly to lower capacity utilization and price declines, and
in Smart Infrastructure, due mainly to negative effects related
to grid control projects at the beginning of fiscal 2019. Adjusted
EBITA in Digital Industries came in close to the strong prior-year-
level, despite increasing headwinds in the markets for its
short-cycle businesses in the course of the fiscal year. Overall,
Adjusted EBITA Industrial Businesses was burdened by severance
charges of €0.5 billion, substantially lower than a year earlier.
Approximately half of these severance charges were booked at
Gas and Power. As planned, we further increased R&D expenses
in our industrial businesses, in order to strengthen our capacity
for innovation.
24
GDP in advanced countries should increase by 1.4% in calendar
2020, after 1.6% in calendar 2019, and for emerging countries by
4.2% in calendar 2020, after 4.1% in calendar 2019, assuming
that risk factors (e.g. further escalation of the trade conflict or
Brexit, financial crisis in emerging markets or in Eurozone coun-
tries, geopolitical conflicts) do not materialize and the industrial
recession does not spill over to the rest of the economy.
Despite some moderation, the U.S. economy is expected to be
solid and a main pillar of global growth, with GDP expanding 2%
supported by strong domestic demand, low unemployment and
increasing disposable incomes. China's economy is expected to
decelerate markedly, with GDP growth going down from 6.2% in
calendar 2019 to 5.7% in calendar 2020. The room for monetary
easing is constrained by high debt levels in the economy. GDP
growth in Europe is expected to further slow also, to 1.0% in
calendar 2020, after 1.2% in calendar 2019. The industrial reces-
sion in Europe is expected to end during calendar 2020.
The main strains on the global economy are expected to be the
continued U.S.-China trade conflict and remaining uncerta-
inties from Brexit. Yet fears of a global recession, fueled in part
by yield curve inversions in the U.S. in calendar 2019, seem
overdone. In most countries domestic demand should remain
sound with unemployment on a low level, inflation modest and
wages increasing while monetary policy has again taken a more
supportive stance.
The outlook for the world economy in fiscal 2020 was subdued
at the outset of the fiscal year. Global GDP is projected to expand
by 2.5% in calendar 2020, the lowest growth rate since the global
financial crisis in 2008/09. Fixed investments should grow by
2.9%, level with 2019.
A.8.1.1 WORLDWIDE ECONOMY
expected developments
A.8.1 Report on
and associated material opportunities and risks
A.8 Report on expected developments
26
25
Combined Management Report
We intend to continue providing an attractive return to share-
holders. The Siemens Managing Board, in agreement with the
Supervisory Board, proposes a dividend of €3.90 per share, up
from €3.80 a year earlier.
Free cash flow from continuing and discontinued operations for
fiscal 2019 was €5.8 billion, level with the prior year.
We evaluate our capital structure using the ratio of industrial net
debt to EBITDA. For fiscal 2019, this ratio was 0.6, compared to
0.4 in fiscal 2018. We thus reached our forecast, which was to
achieve a ratio of up to 1.0.
ROCE for fiscal 2019 was 11.1%, down from 12.6% in fiscal 2018.
This decline was due to a combination of lower net income and
an increase in average capital employed, with the latter being im-
pacted by recent acquisitions, among them Mendix. We thus met
our forecast, which was to achieve a double-digit result but to
come in below the lower end of our long-term goal of 15% to 20%.
Net income was €5.6 billion, down 8% year-over-year, and basic
EPS from net income declined by €0.71 to €6.41. These declines
were due mainly to the aforementioned largely tax-free portfolio
gains, which contributed €1.87 per share to basic EPS from net
income in fiscal 2018. Basic EPS from net income in fiscal 2019 was
burdened by severance charges amounting to €0.52 per share.
With basic EPS from net income excluding severance charges of
€6.93, we thus met our forecast, which was to achieve basic EPS
from net income excluding severance charges in the range of
€6.30 to €7.00.
The loss outside the Industrial Businesses came in substantially
higher year-over-year despite a number of positive develop-
ments, including a positive effect related to the measurement of
a major asset retirement obligation, a lower loss at Portfolio Com-
panies, lower Centrally carried pension expenses and higher in-
come from Corporate Treasury activities. However, the positive
factors were substantially larger in fiscal 2018, most notably a
€0.9 billion gain related to the transfer of Siemens' shares in
Atos SE to Siemens Pension-Trust e. V. and a €0.7 billion gain from
the sale of shares in OSRAM Licht AG.
Combined Management Report
The Adjusted EBITA margin of our Industrial Businesses was 10.9%,
down from 11.1% in fiscal 2018. Four of our six industrial busi-
nesses were within their margin range or – as in the case of Smart
Infrastructure close to it. Excluding severance charges, Adjusted
EBITA margin Industrial Businesses was 11.5%, clearly in the range
of 11% to 12%, which we had expected it to reach. Financial Ser-
vices, which is reported outside our Industrial Businesses, con-
cluded another strong fiscal year with a return on equity after tax
of 19.1%, which was within its margin range.
Capital structure ratio
A.6.1 Capital structure
The main factors for the increase in total equity attributable
to shareholders of Siemens AG were €5.2 billion in net in-
come attributable to shareholders of Siemens AG; the re-issu-
ance of treasury shares of €1.6 billion; and positive other com-
prehensive income, net of income taxes of €0.4 billion, resulting
mainly from positive currency translation effects of €1.8 billion,
partly offset by negative effects from remeasurements of de-
fined benefit plans of €1.1 billion. This increase was partly offset
by dividend payments of €3.1 billion (for fiscal 2018) and the
repurchase of 13,532,557 treasury shares at an average cost per
share of €99.78, totaling €1.4 billion (including incidental trans-
action charges).
Other assets
Deferred tax assets
12%
17,774
19,843
Other financial assets
(13)%
2,579
Total non-current assets
2,244
7%
11,381
12,183
Property, plant and equipment
(3)%
10,131
9,800
Other intangible assets
Investments accounted for using the equity method
Total assets
3,174
2,341
20
19
Combined Management Report
The increase in other assets was driven mainly by higher net
defined benefit assets from actuarial gains.
Deferred tax assets increased mainly due to income tax effects
related to remeasurement of defined benefits plans.
The increase in goodwill included the acquisition of Mendix.
Assets classified as held for disposal increased mainly due to
reclassification of two investments from investments accounted
for using the equity method.
Inventories increased in several industrial businesses, with
the build-up most evident at SGRE, Mobility and Siemens
Healthineers.
The increase in other current financial assets was driven by
higher loans receivable at SFS, which were mainly due to new
business and reclassification of non-current loans receivable
from other financial assets. While higher loans receivable and
receivables from finance leases from new business at SFS contrib-
uted also to growth in other financial assets, a large extent of
the overall increase resulted from increased fair values of deriva-
tive financial instruments.
Our total assets at the end of fiscal 2019 were influenced by
positive currency translation effects of €4.0 billion (mainly good-
will), primarily involving the U.S. dollar.
8%
138,915
7%
74,359
79,878
150,248
37%
1,810
2,475
36%
6%
28,344
30,160
9%
12%
11,066
12,391
% Change
2018
2019
Goodwill
Total current assets
Assets classified as held for disposal
Other current assets
Current income tax assets
Inventories
Contract assets
Other current financial assets
Cash and cash equivalents
Trade and other receivables
(in millions of €)
Sep 30,
A.5 Net assets position
Our ERM process aims for early identification and evaluation of,
and response regarding, risks and opportunities that could mate-
rially affect the achievement of our strategic, operational, finan-
cial and compliance objectives. The time horizon is typically three
years, and we take a net risk approach, addressing risks and op-
portunities remaining after the execution of existing control mea-
sures. If risks have already been considered in plans, budgets,
forecasts or the consolidated financial statements (e.g. as a provi-
sion or risk contingency), they are supposed to be incorporated
with their financial impact in the entity's business objectives. As a
consequence, only additional risks arising from the same subject
(e.g. deviations from business objectives, different impact per-
spectives) should be considered. In order to provide a comprehen-
sive view of our business activities, risks and opportunities are
identified in a structured way combining elements of both top-
down and bottom-up approaches. Reporting generally follows a
quarterly cycle; we complement this periodic reporting with an
ad-hoc reporting process that aims to escalate critical issues in a
timely manner. Relevant risks and opportunities are prioritized in
terms of impact and likelihood, considering different perspectives,
including business objectives, reputation and regulatory require-
ments. The bottom-up identification and prioritization process is
supplemented by workshops with the respective managements of
our organizational units. This top-down element ensures that po-
tential new risks and opportunities are discussed at the manage-
ment level and are included in the subsequent reporting process,
if found to be relevant. Reported risks and opportunities are ana-
lyzed regarding potential cumulative effects and are aggregated
within and for each of the organizations mentioned above.
18,894
A.6 Financial position
18,455
10,669
64,556
70,370
154%
94
238
15%
1,707
1,960
9%
1,010
1,103
7%
13,885
14,806
16%
8,912
10,309
13%
9,427
2%
Combined Management Report
Sep 30,
2019
685
986
(12)%
4,216
3,714
Total liabilities and equity
Non-controlling interests
Total equity attributable to shareholders of Siemens AG
Equity ratio
44%
Debt ratio
Total non-current liabilities
Other liabilities
Other financial liabilities
Provisions
19%
1,092
1,305
Deferred tax liabilities
Total liabilities
2,226
2,198
1%
The increase in provisions for pensions and similar obligations
was due mainly to a lower discount rate. This effect was partly
offset by a positive return on plan assets, among other factors.
Long-term debt increased due primarily to the issuance of euro
instruments totaling €6.5 billion and currency translation ef-
fects for bonds issued in the U.S. dollar. This was partly offset
by the above-mentioned reclassifications of euro and U.S. dollar
instruments.
The decrease in current income tax liabilities was driven mainly
by the reversal of income tax provisions outside Germany and tax
payments in the context of the carve-out activities related to
Siemens Healthineers.
The increase in short-term debt and current maturities of
long-term debt was due mainly to reclassifications of long-term
euro and U.S. dollar instruments totaling €3.9 billion from long-
term debt. This was partly offset by €3.3 billion resulting from
the repayment of U.S. dollar instruments.
11%
8%
2,573
138,915
2,858
150,248
35%
6%
45,474
48,125
34%
65%
66%
9%
90,869
99,265
13%
42,995
48,541
29%
7,684
9,896
Provisions for pensions and similar obligations
Current provisions
14%
14,464
16,452
Contract liabilities
17%
1,485
1,743
Other current financial liabilities
6%
10,716
11,409
Trade payables
19%
5,057
6,034
Short-term debt and current maturities of long-term debt
% Change
2018
3,682
(in millions of €)
3,931
Current income tax liabilities
12%
27,120
30,414
Long-term debt
6%
47,874
50,723
Total current liabilities
54%
1
2
Liabilities associated with assets classified as held for disposal
(1)%
9,118
9,023
Other current liabilities
(23)%
3,102
2,378
(6)%
28 Combined Management Report
(27)
with standardized processes as well as dedicated roles and re-
sponsibilities in the areas of mergers, acquisitions, divestments
and carve-outs. This includes the systematic treatment of all con-
tractual obligations and post-closing claims.
Mergers, acquisitions, equity investments, partnerships,
divestments and streamlining our portfolio: We constantly
monitor our current and potential markets to identify opportuni-
ties for strategic mergers, acquisitions, equity investments and
partnerships, which may complement our organic growth. Such
activities may help us to strengthen our position in our existing
markets, provide access to new or underserved markets, or com-
plement our technological portfolio in strategic areas. Opportu-
nities might also arise when portfolio optimization measures
generate gains, which enable us to further pursue our other
strategies for growth and profitability.
result in an opportunity for us to participate in ways that increase
our revenue and profit.
(e.g. infrastructure or digitalization investments) and ultimately the accounting-related internal
A.8.5 Significant characteristics of
reforms among others) may lead to more government spending
35
Combined Management Report
Climate change: In line with the global agreement in Paris
(COP21) that entered into force in November 2016, Siemens
strives to support a trend towards reducing CO2 emissions both
in our own operations and for our customers, based on technol-
ogies from our environmental portfolio such as low-carbon
power generation from renewable energy sources. As such the
transition to a low-carbon economy represents an opportunity
for Siemens.
Leveraging market potential: Through sales initiatives and
masterplans in our operating units, we continuously strive to
grow and extend our businesses in established markets, open up
new markets for existing portfolio elements and strengthen our
installed base in order to gain a higher market share and in-
creased profits. Furthermore, we aim to increase our sales via
improved account management and new distribution channels.
an indication of the opportunities' current importance to us. The
described opportunities are not necessarily the only ones we en-
counter. In addition, our assessment of opportunities is subject
to change because the Company, our markets and technologies
are constantly advancing. It is also possible that opportunities we
see today will never materialize.
Within our ERM we regularly identify, evaluate and respond to
opportunities that present themselves in our various fields of ac-
tivity. Below we describe our most significant opportunities. Un-
less otherwise stated, the opportunities described relate to all
organizational units. The order in which the opportunities are
presented reflects the currently estimated relative exposure for
Siemens associated with these opportunities and thus provides
A.8.4 Opportunities
At present, no risks have been identified that either individually
or in combination could endanger our ability to continue as a
going concern.
While our assessments of individual risks have changed during
fiscal 2019 due to developments in the external environment,
effects of our own mitigation measures and the revision of our
plans for assessing risk, the overall risk situation for Siemens did
not change significantly as compared to the prior year.
The most significant challenges have been mentioned first in
each of the four risk categories - strategic, operational, financial
and compliance. Risks arising from Cyber/Information Security
are the most significant challenge for us.
THE OVERALL RISK SITUATION
Value creation by innovation (e.g. automation and digita-
lization): We drive innovation by investing significantly in R&D in
order to develop sustainable solutions for our customers while
also strengthening our own competitiveness. Being an innovative
company and constantly inventing new technologies that we ex-
pect will meet future demands arising from the megatrends of
demographic change, urbanization, climate change and global-
ization is one of our core purposes. We are granted thousands of
new patents every year and continuously develop new concepts
and convincing new digital and data-driven business models.
This helps us create the next generation of ground-breaking in-
novations in such fields as digitalization, artificial intelligence,
autonomous machines and edge computing. Across our operat-
ing units, we are profiting from our undisputed strength in the
"Digital Enterprise". Foremost, our cloud-based MindSphere plat-
form enhances the availability of our customers' digital products
and systems and improves their productivity and efficiency. We
see also significant opportunities to generate additional volume
and profit from innovative digital products, services and solu-
tions, including cyber security, applications for optimized energy
consumption and operation of highly efficient energy grids and
scalable solutions for distributed and renewable energy genera-
tion. We see growth opportunities in opening up access to new
markets and customers through new marketing and sales strate-
gies, which we implement in our operating units and share with
our Strategic Companies. Our position along the value chains of
automation and digitalization allows us to further increase mar-
ket penetration. Along these value chains, we have identified
several concrete growth fields in which we see our greatest long-
term potential. Hence, we are bundling and developing our re-
sources and capabilities for these growth fields.
A.8.3.5 ASSESSMENT OF
Localizing value chain activities: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service, in emerging markets could enable us to re-
duce costs and strengthen our global competitive position, in
particular compared to competitors based in countries where
they can operate with more favorable cost structures. Moreover,
our local footprint in many countries provides the opportunity to
take advantage of growth markets and market shifts around the
world, which could result in increased market penetration and
market share.
While our assessments of individual opportunities have changed
during fiscal 2019 due to developments in the external environ-
ment, our endeavors to profit from them and revision of our stra-
tegic plans, the overall opportunity situation for Siemens did not
change significantly as compared to the prior year.
A.9 Siemens AG
37
Combined Management Report
first have to be mandated by the listed Strategic Company's Man-
aging Board/Board of Directors and Audit Committee and subse-
quently be mandated by our Managing Board and Audit Commit-
tee. The audit procedures for these topics will be generally
executed in joint teams of our and the respective Strategic Com-
pany's internal audit function; thus reflecting the interest of both
Siemens AG and the respective listed Strategic Company. In addi-
tion, the Audit Committee is integrated into our control system.
In particular, it oversees the accounting and accounting process
and the effectiveness of the internal control system, the risk
management system and the internal audit system. Moreover,
we have rules for accounting-related complaints.
Our internal audit function systematically evaluates our financial
reporting integrity, the effectiveness of the control system and
the risk management system, and adherence to our compliance
policies. Our listed Strategic Companies have their own internal
audit departments and annual audit plans. Topics from the re-
spective annual audit plan of our listed Strategic Companies that
are also relevant for our Managing Board and Audit Committee
Our listed Strategic Companies Siemens Healthineers and SGRE
are also subject to our group-wide principles for the account-
ing-related internal control and risk management system and are
individually responsible for adhering to those principles. The
management of Siemens Healthineers and SGRE provide periodic
sign-offs to the Managing Board of Siemens AG, certifying the
effectiveness of their respective accounting-related internal con-
trol systems as well as the completeness, accuracy, and reliability
of the financial data reported to us.
On a quarterly basis, we execute an internal certification process.
Management at different levels of our organization, supported
by confirmations by managements of entities under their respon-
sibility, confirms the accuracy of the financial data that has been
reported to Siemens' corporate headquarters and reports on the
effectiveness of the related control systems.
Assessment of the overall opportunities situation: The most
significant opportunity for Siemens continues to be value cre-
ation through innovation (e.g. automation and digitalization) as
described above.
Qualification of employees involved in the accounting process is
ensured through appropriate selection processes and training. As
a fundamental principle, based on materiality considerations, the
"four eyes" principle applies and specific procedures must be ad-
hered to for data authorization. Additional control mechanisms
include target-performance comparisons and analyses of the com-
position of and changes in individual line items, both in the closing
data submitted by reporting units and in the Consolidated Finan-
cial Statements. In line with our information security requirements,
accounting-related IT systems contain defined access rules protect-
ing them from unauthorized access. The manual and system-based
control mechanisms referred to above generally also apply when
reconciling the International Financial Reporting Standards (IFRS)
closing data to the Annual Financial Statements of Siemens AG.
Combined Management Report
36
Our Consolidated Financial Statements are prepared on the basis
of a centrally issued conceptual framework which primarily con-
sists of uniform Financial Reporting Guidelines and a chart of
accounts. For Siemens AG and other companies within the
Siemens group required to prepare financial statements in accor-
dance with German Commercial Code, this conceptual frame-
work is complemented by mandatory regulations specific to the
German Commercial Code. The need for adjustments in the con-
ceptual framework due to regulatory changes is analyzed on an
ongoing basis. Accounting departments are informed quarterly
about current topics and deadlines from an accounting and clos-
ing process perspective.
At the end of each fiscal year, our management performs an eval-
uation of the effectiveness of the implemented control system,
both in design and operating effectiveness. We have a standard-
ized procedure under which necessary controls are defined, doc-
umented in accordance with uniform standards, and tested reg-
ularly for their effectiveness. Nevertheless, there are inherent
limitations on the effectiveness of any control system, and no
system, including one determined to be effective, may prevent
or detect all misstatements.
Our ERM approach is based on the globally accepted COSO
Standard (Committee of Sponsoring Organizations of the Tread-
way Commission) "Enterprise Risk Management - Integrating
with Strategy and Performance" (2017) and the ISO (Interna-
tional Organization for Standardization) Standard 31000 (2018)
and is adapted to Siemens requirements. The frameworks con-
nect the ERM process with our financial reporting process and
our internal control system. They consider a company's strat-
egy, the efficiency and effectiveness of its business operations,
the reliability of its financial reporting and compliance with
relevant laws and regulations to be equally important. Our ac-
counting-related internal control system is based on the inter-
nationally recognized "Internal Control - Integrated Frame-
work" (2013) also developed by COSO. The two systems are
complementary.
The overarching objective of our accounting-related internal con-
trol and risk management system is to ensure that financial re-
porting is conducted in a proper manner, such that the Consoli-
dated Financial Statements and the Combined Management
Report of Siemens group as well as the Annual Financial State-
ments of Siemens AG as the parent company are prepared in
accordance with all relevant regulations.
control and risk management system
The base data used in preparing our financial statements consists
of the closing data reported by the operations of Siemens AG and
its subsidiaries. The preparation of the closing data of most of our
entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance
and monitoring activities, are usually bundled on a regional level.
In particular cases, such as valuations relating to post-employ-
ment benefits, we use external experts. The reported closing
data is used to prepare the financial statements in the consolida-
tion system. The steps necessary to prepare the financial state-
ments are subject to both manual and automated controls.
The Annual Financial Statements of Siemens AG have been pre-
pared in accordance with the rules set out in the German Com-
mercial Code (Handelsgesetzbuch).
For additional information with respect to specific proceedings,
see → NOTE 22 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Some of these legal disputes and proceedings could result in
adverse decisions for Siemens or decisions, assessments or re-
quirements of regulatory authorities could deviate from our
expectations, which may have material effects on our business
activities as well as our financial position, results of operations
and cash flows.
Risks from pension obligations: The provisions for pensions
and similar obligations may be affected by changes in actuarial
assumptions, including the discount rate, as well as by move-
ments in financial markets or a change in the mix of assets in our
investment portfolio. Additionally, they are subject to legal risks
with regard to plan design among other factors. A significant in-
crease in the underfunding may have a negative effect on our cap-
ital structure and rating, and thus may tighten refinancing op-
tions and increase costs. In order to comply with local pension
regulations in selected foreign countries, we may face an economic
Credit risks: We provide our customers with various forms of
direct and indirect financing of orders and projects, including
guarantees. Financial Services in particular bears credit risks due
to such financing activities if, for example, customers are unable
to repay such financing.
Liquidity and financing risks: Our treasury and financing activ-
ities could face adverse deposit and/or financing conditions from
negative developments related to financial markets, such as lim-
ited availability of funds (particularly U.S. dollar) and hedging
instruments; an updated evaluation of our solvency, particularly
from rating agencies; negative interest rates; and impacts arising
from more restrictive regulation of the financial sector, central
bank policy, or financial instruments. Widening credit spreads
due to uncertainty and risk aversion in the financial markets
might lead to adverse changes in the market values of our finan-
cial assets, in particular our derivative financial instruments.
Market price risks: We are exposed to fluctuations in exchange
rates, especially between the U.S. dollar and the euro, because a
high percentage of our business volume is conducted as exports
from Europe to areas using the U.S. dollar. In addition, we are
exposed to effects involving the currencies of emerging markets,
in particular the Chinese yuan. Appreciable changes in euro
exchange rates could materially change our competitive position.
We are also exposed to fluctuations in interest rates. Even hedg-
ing activities to mitigate such risks may result in a reverse effect.
Fluctuations in exchange or interest rates, negative develop-
ments in the financial markets and changes in central bank poli-
cies could therefore negatively impact our financial results.
A.8.3.3 FINANCIAL RISKS
digital talent and other qualified personnel. We address this risk
for example by strengthening the capabilities and skills of our
talent-acquisition teams and have defined a strategy of proactive
search for people with the required skills in our respective indus-
tries and markets. Technology and digitalization help us to be
more effective in attracting and selecting diverse talent as well
as improving the efficiency of our processes. Furthermore, we
have a focus on structured succession planning, gender diversity,
retention and career management.
Combined Management Report
risk of increasing cash outflows due to change in funding level
according to local regulations of our pension plans in these coun-
tries and the change of the regulations themselves.
Shortage of skilled personnel: Competition for diverse and
highly qualified personnel (e.g. specialists, experts, digital tal-
ent) remains intense in the industries and regions in which our
businesses operate. We have ongoing demand for highly skilled
employees and a need to enhance the diversity of our work-
force. Our future success depends in part on our continued ability
to identify, assess, hire, integrate, develop and retain engineers,
product safety. If any of our units are not able to comply with
regulatory requirements, our business and reputation may be
adversely affected. We have established multiple measures for
quality improvement and claim prevention. The increased use of
quality management tools is improving visibility and enables us
to strengthen our root cause and prevention processes.
Operational failures and quality problems in our value
chain processes: Our value chains comprise all steps in the
product life-cycle, from research and development to supply
chain management, production, marketing, sales and services.
Operational failures in our value chain processes could result in
quality problems or potential product safety, labor safety, regula-
tory or environmental risks. Such risks are particularly present in
our operating units in relation to our production and manufac-
turing facilities, which are located all over the world and have a
high degree of organizational and technological complexity.
From time to time products we sell could have quality issues re-
sulting from the design or manufacture of these products or the
commissioning of these products or the software integrated into
them. In addition, we may not be able to fully meet regulatory
requirements. Siemens Healthineers, for example, is subject to
regulatory authorities including the U.S. Food and Drug Admin-
istration and the European Commission's Health and Consumer
Policy Department, which require specific efforts to safeguard
Interruption of the supply chain: The financial performance of
our operating units depends on reliable and effective supply
chain management for components, sub-assemblies and materi-
als. Capacity constraints and supply shortages resulting from
ineffective supply chain management may lead to production
bottlenecks, delivery delays and additional costs. We also rely on
third parties to supply us with parts, components and services.
Using third parties to manufacture, assemble and test our prod-
ucts may reduce our control over manufacturing yields, quality
assurance, product delivery schedules and costs. Although we
work closely with our suppliers to avoid supply-related problems,
there can be no assurance that we will not encounter supply
problems in the future, especially if we use single-source suppli-
ers for critical components. Shortages and delays could materi-
ally harm our businesses. Unanticipated increases in the price of
components or raw materials due to market shortages or other
reasons could also adversely affect performance. Furthermore,
we may be exposed to the risk of delays and interruptions in the
supply chain as a consequence of catastrophic events, cyber in-
cidents or suppliers' financial difficulties, particularly if we are
unable to identify alternative sources of supply or means of trans-
portation in a timely manner or at all. Besides other measures,
we mitigate price fluctuation in global raw material markets with
various hedging instruments.
of these measures to our profitability will be influenced by the
actual savings achieved and by our ability to sustain them. In case
of restructuring and outsourcing activities, there could be delays
in product deliveries or we might even experience delivery fail-
ures. Furthermore, delays in critical R&D projects could lead to
negative impacts in running projects. We constantly control and
monitor the progress of these projects and initiatives using stan-
dardized controlling and milestone tracking approaches.
32
31
Combined Management Report
Cost overruns or additional payment obligations related to
the management of our long-term, fixed-priced or turnkey
projects and service contracts: A number of our segments
conduct activities, especially large projects, under long-term
contracts that are awarded on a competitive bidding basis. Such
contracts typically arise at Gas and Power, SGRE, Mobility, and in
various activities of Smart Infrastructure. Some of these con-
tracts are inherently risky because we may assume substantially
all of the risks associated with completing a project and meeting
post-completion warranty obligations. For example, we may
face the risk that we must satisfy technical requirements of a
project even though we have not gained experience with those
requirements before winning the project. The profit margins re-
alized on fixed-priced contracts may vary from original estimates
as a result of changes in costs and productivity over the con-
tract's term. We sometimes bear the risk of unanticipated project
modifications, shortage of key personnel, quality problems, fi-
nancial difficulties of our customers and/or significant partners,
cost overruns or contractual penalties caused by unexpected
technological problems, unforeseen developments at the proj-
ect sites, unforeseen changes or difficulties in the regulatory or
political environment, performance problems with our suppli-
ers, subcontractors and consortium partners or other logistical
difficulties. Some of our multi-year contracts also contain de-
manding installation and maintenance requirements in addition
to other performance criteria relating to timing, unit cost and
compliance with government regulations, which, if not satisfied,
could subject us to substantial contractual penalties, damages,
non-payment and contract termination. There can be no assur-
ance that contracts and projects, in particular those with long-
term duration and fixed-priced calculation, can be completed
profitably. To tackle those risks, we established a global project
management organization to systematically improve the capa-
bilities of our project management personnel. For very complex
projects we conduct dedicated risk assessments in very early
stages of the sales phase before we decide to hand over a bind-
ing offer to our customer.
Siemens maintains liability insurance for certain legal risks at lev-
els our management believes are appropriate and consistent with
industry practice. The insurance policy, however, does not protect
Siemens against reputational damage. Moreover, Siemens may
incur losses relating to legal proceedings beyond the limits, or out-
side the coverage, of such insurance or exceeding any provisions
made for losses related to legal proceedings. Finally, there can be
no assurance that Siemens will be able to maintain adequate in-
surance coverage on commercially reasonable terms in the future.
For further information on post-employment benefits, derivative
financial instruments, hedging activities, financial risk manage-
ment and related measures, see → NOTES 17, 24 and 25 in B.6 NOTES
Audits by tax authorities and changes in tax regulations:
We operate in nearly all countries of the world and therefore are
subject to many different tax regulations. Changes in tax laws in
any of these jurisdictions could result in higher tax expenses and
increased tax payments. Furthermore, legislative changes could
impact our tax receivables and liabilities as well as deferred tax
assets and deferred tax liabilities. In addition, the uncertain legal
environment in some regions could limit our ability to enforce
our rights. As a globally operating organization, we conduct busi-
ness in countries subject to complex tax rules, which may be in-
terpreted in different ways. Future interpretations or develop-
ments of tax regimes may affect our business situation, financial
condition and results of operations. We are regularly audited by
tax authorities in various jurisdictions and we continuously iden-
tify and assess relevant risks.
equitable remedies or sanctions, fines or disgorgement of profit.
In individual cases this may also lead to formal or informal exclu-
sion from tenders or the revocation or loss of business licenses or
permits. Asserted claims are generally subject to interest rates.
Combined Management Report
34
Current or future litigation and legal and regulatory pro-
ceedings: Siemens is and potentially will be involved in numerous
legal disputes and proceedings in various jurisdictions. These legal
disputes and proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages,
In addition, while we have procedures in place to ensure compli-
ance with applicable governmental regulations in the conduct of
our business operations, it cannot be excluded that violations of
applicable governmental regulations may be caused either by us
or by third parties that we contract with, including suppliers or
service providers whose activities may be attributed to us. Any
such violations particularly expose us to the risk of liability, pen-
alties, fines, reputational damage or loss of licenses or permits
that are important to our business operations. In particular, we
could also face liability for damage or remediation for environ-
mental contamination at the facilities we design or operate. With
regard to certain environmental risks, we maintain liability insur-
ance at levels that our management believes are appropriate and
consistent with industry practice. We may incur environmental
losses beyond the limits, or outside the coverage, of such insur-
ance, and such losses may have an adverse effect on our business
situation, financial condition and results of operations.
restrictions (hereafter referred to as "sanctions") imposed by the
U.S., the EU or other countries or organizations. New or expanded
sanctions in countries in which we do business may result in a
curtailment of our existing business in such countries or indi-
rectly in other countries. We are also aware of policies of national
authorities and institutional investors, such as pension funds or
insurance companies, requiring divestment of interests in, pro-
hibiting investment in and transactions with entities doing busi-
ness with countries identified by the U.S. Department of State as
state sponsors of terrorism. Therefore, it is possible that such
policies may result in our being unable to gain or retain certain
investors or customers. In addition, the termination of our activ-
ities in sanctioned countries may expose us to customer claims
and other actions. Our reputation could also suffer due to our
activities with counterparties in or affiliated with these countries.
Environmental, health & safety and other governmental
regulations: Some of the industries in which we operate are
highly regulated. Current and future environmental, health and
safety and other governmental regulations or changes thereto
may require us to change the way we run our operations and
could result in significant increases in our operating or produc-
tion costs. Furthermore, we see the risk of potential environmen-
tal and health and safety incidents as well as potential non-com-
pliance with environmental and health and safety regulations
affecting Siemens and our contractors or sub-suppliers, resulting
for example in serious injuries, penalties, loss of reputation and
internal or external investigations.
Regulatory risks and potential sanctions: As a globally oper-
ating organization, we conduct business with customers in coun-
tries which are subject to export control regulations, embargoes,
economic sanctions, debarment policies or other forms of trade
TO CONSOLIDATED FINANCIAL STATEMENTS.
Protectionism (including localization): Protectionist trade
policies and changes in the political and regulatory environ-
ment in the markets in which we operate, such as import and
export controls, tariffs and other trade barriers including debar-
ment from certain markets and price or exchange controls,
could affect our business in national markets and could impact
our business situation, financial position and results of opera-
tions; and may expose us to penalties, other sanctions and rep-
utational damage. In addition, the uncertainty of the legal en-
vironment in some regions could limit our ability to enforce our
rights and subject us to increasing costs related to appropriate
compliance programs.
In addition, future developments in ongoing and potential future
investigations, such as responding to the requests of governmen-
tal authorities and cooperating with them, could divert manage-
ment's attention and resources from other issues facing our busi-
ness. Furthermore, we might be exposed to compliance risks in
connection with recently acquired operations that are in the
ongoing process of integration.
Siemens conducts a large share of its business with govern-
ments and government-owned enterprises. We also participate
in a number of projects funded by government agencies and
intergovernmental and supranational organizations, such as
multilateral development banks. Ongoing or potential future
investigations into allegations of corruption, antitrust violations
or other violations of law could as well impair relationships with
such parties or could result in our exclusion from public con-
tracts. Such investigations may also adversely affect existing
private business relationships and our ability to pursue poten-
tially important strategic projects and transactions, such as stra-
tegic alliances, joint ventures or other business alliances, or
could result in the cancellation of certain of our existing con-
tracts. Moreover, third parties, including our competitors, could
initiate significant litigation.
and German authorities, may endanger our business with gov-
ernment agencies and intergovernmental and supranational or-
ganizations. Monitors could again be appointed to review future
business practices and we may otherwise be required to further
modify our business practices and our compliance program.
33
Combined Management Report
Current and future investigations regarding allegations of
corruption, of antitrust violations and of other violations of
law: Proceedings against us or our business partners regarding
allegations of corruption, of antitrust violations and of other vio-
lations of law may lead to fines as well as penalties, sanctions,
injunctions against future conduct, profit disgorgements, dis-
qualifications from directly and indirectly engaging in certain
types of business, the loss of business licenses or permits, other
restrictions and legal consequences as well as negative public
media coverage. Accordingly, we may, among other things, be
required to comply with potential obligations and liabilities aris-
ing in connection with such investigations and proceedings, in-
cluding potential tax penalties. Moreover, any findings related to
public corruption that are not covered by the 2008 and 2009 cor-
ruption charge settlements, which we concluded with American
A.8.3.4 COMPLIANCE RISKS
Changes of regulations, laws and policies: As a diversified
company with global businesses we are exposed to various prod-
uct- and country-related regulations, laws and policies influenc-
ing our business activities and processes. We monitor the political
and regulatory landscape in all our key markets to anticipate po-
tential problem areas, with the aim of quickly adjusting our busi-
ness activities and processes to changed conditions. However,
any changes in regulations, laws and policies could adversely
affect our business activities and processes as well as our finan-
cial condition and results of operations.
Along with other measures, Siemens has established a global
compliance organization that conducts among others compli-
ance risk mitigation processes such as Compliance Risk Assess-
ments or internal audit activities.
Operational optimization and cost reduction initiatives:
We are in a continuous process of operational optimization and
constantly engage in cost-reduction initiatives, including ongoing
capacity adjustment measures and structural initiatives. Consoli-
dation of business activities and manufacturing facilities, out-
sourcings, joint ventures and the streamlining of product portfo-
lios are all part of these cost-reduction efforts. These measures
may not be implemented as planned, may turn out to be less ef-
fective than anticipated, may become effective later than esti-
mated or may not become effective at all. Any future contribution
Siemens AG is the parent company of the Siemens Group. At the
end of fiscal 2019, results for Siemens AG comprise the fields of
business activities mainly of Digital Industries, Smart Infrastruc-
ture, Gas and Power as well as the activities of Portfolio Compa-
nies and are significantly influenced by directly or indirectly
owned subsidiaries and investments. The business development
of Siemens AG is fundamentally subject to the same risks and
opportunities as the Siemens Group. Due to the interrelations
between Siemens AG and its subsidiaries and the relative size of
Siemens AG within the Group, the outlook of the Group also
largely reflects our expectations for Siemens AG. Therefore, the
foregoing explanations for the Siemens Group apply also for
Siemens AG. We expect that income from investments or profit
transfer agreements with affiliated companies will significantly
influence the profit of Siemens AG.
In January 2019, Siemens AG transferred the trademark "Siemens,"
consisting of a portfolio of trademarks with the component
"Siemens," by way of a contribution in kind, to the affiliated com-
pany Siemens Trademark GmbH & Co. KG, Germany. Additions to
shares in Siemens Trademark GmbH & Co. KG were measured at
the fair value of the transferred trademark rights in the amount
of €9.5 billion. The contribution resulted in other operating income
in the same amount. This was partially offset by a related deferred
tax expense of €1.5 billion. Siemens Trademark GmbH & Co. KG has
granted Siemens AG a royalty-bearing right to use the trade-
marks. Expenses of €0.6 billion related to the ongoing royalty for
the use of the right are recognized in selling expenses. The con-
tract has an indefinite duration.
38 Combined Management Report
The decrease in Financial income, net was primarily attributable
to lower income from investments, net. The main factor for this
decrease was a significant income from the profit transfer agree-
ment with Siemens Beteiligungen Inland GmbH, Germany, in
fiscal 2018.
The R&D intensity (R&D as a percentage of revenue) increased by
0.8 percentage points year-over-year. The research and development
activities of Siemens AG are fundamentally the same as for its fields
of business activities within the Siemens Group, respectively. On an
average basis, we employed 9,000 people in R&D in fiscal 2019.
On a geographical basis, 75% of revenue was generated in the
Europe, C.I.S., Africa, Middle East region, 18% in the Asia, Austra-
lia region and 7% in the Americas region. Exports from Germany
accounted for 62% of overall revenue. In fiscal 2019, orders for
Siemens AG amounted to €21.6 billion. Within Siemens AG, the
development of revenue depends strongly on the completion of
contracts, primarily in connection with large orders.
Beginning of August 2018, Siemens AG carved out its mobility
business to Siemens Mobility GmbH by way of singular succes-
sion. The decreases in revenue, cost of sales, gross profit and
research and development (R&D) expenses were mainly driven
by this carve-out.
> (200)%
67%
(1,451)
3,230
Portfolio measures, at-equity investments, other invest-
ments and strategic alliances: Our strategy includes divesting
our activities in some business areas and strengthening others
through portfolio measures, including mergers and acquisitions.
With respect to divestments, we may not be able to divest some
of our activities as planned, and the divestitures we do carry out
could have a negative impact on our business situation, financial
condition, results of operations and reputation. Mergers and ac-
quisitions are inherently risky because of difficulties that may
arise when integrating people, operations, technologies and
products. There can be no assurance that any of the businesses
we acquire can be integrated successfully and in a timely manner
as originally planned, or that they will perform as anticipated
once integrated. In addition, we may incur significant acquisi-
tion, administrative, tax and other expenditures in connection
with these transactions, including costs related to integration of
acquired businesses. Furthermore, portfolio measures may result
in additional financing needs and adversely affect our capital
structure. Acquisitions can lead to substantial additions to intan-
gible assets, including goodwill, in our statements of financial
position. If we were to encounter continuing adverse business
developments or if we were otherwise to perform worse than
expected at acquisition activities, then these intangible assets,
including goodwill, might have to be impaired, which could
adversely affect our business situation, financial condition and
results of operations. Our investment portfolio includes invest-
ments held for purposes other than trading and other invest-
ments. Any factors negatively influencing the financial condition
and results of operations of our at-equity investments and other
investments could have an adverse effect on our equity pick-up
related to these investments, or may result in a related write-off.
In addition, our business situation, financial condition and results
of operations could also be adversely affected in connection with
loans, guarantees or non-compliance with financial covenants
related to these investments. Furthermore, such investments are
inherently risky as we may not be able to sufficiently influence
corporate governance processes or business decisions taken by
our equity investments, other investments and strategic alli-
ances, which may have a negative effect on our business. In ad-
dition, joint ventures bear the risk of difficulties that may arise
when integrating people, operations, technologies and products.
Strategic alliances may also pose risks for us because we compete
in some business areas with companies with which we have stra-
tegic alliances. Besides other measures, we handle these risks
(6,005)
5,384
Net income
27%
134
170
147%
4,547
11,219
Profit carried forward
Allocation to other
retained earnings
Unappropriated net income
(111)%
with unions and workers councils might result in negative media
coverage and delivery problems. Additionally, public criticism
related to restructuring might negatively impact Siemens' repu-
tation. We mitigate these risks by closely monitoring the imple-
mentation of the planned measures, maintaining strict cost man-
agement, and conducting ongoing discussions with all concerned
interest groups.
Restructuring: We see risks that we may not be flexible enough
in adjusting our organizational and manufacturing footprint
in order to quickly respond to changing markets. The necessary
restructuring might not be executed to the extent or in the time-
frame planned (e.g. due to local co-determination regulations),
limiting our improvements of our cost position with negative
profit impacts and the loss of key personnel. Strikes and disputes
A.8.3.2 OPERATIONAL RISKS
Responsibilities are assigned for all relevant risks and opportuni-
ties, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step,
assuming responsibility for a specific risk or opportunity involves
choosing one of our general response strategies. Our general
response strategies with respect to risks are avoidance, transfer,
reduction or acceptance of the relevant risk. Our general re-
sponse strategy with respect to opportunities is to "seize" the
relevant opportunity. In a second step, responsibility for a risk or
opportunity also involves the development, initiation and moni-
toring of appropriate response measures corresponding to the
chosen response strategy. These response measures have to be
specifically tailored to allow for effective risk management. Ac-
cordingly, we have developed a variety of response measures
with different characteristics. For example, we mitigate the risk
of fluctuations in currency and interest rates by engaging in
hedging activities. Regarding our long-term projects, systematic
and comprehensive project management with standardized proj-
ect milestones, including provisional acceptances during project
execution and complemented by clearly defined approval pro-
cesses, assists us in identifying and responding to project risks at
an early stage, even before the bidding phase. Furthermore, we
maintain appropriate insurance levels for potential cases of dam-
age and liability risks in order to reduce our exposure to such risks
and to avoid or minimize potential losses. Among others, we ad-
dress the risk of fluctuation in economic activity and customer
demand by closely monitoring macroeconomic conditions and
developments in relevant industries, and by adjusting capacity
and implementing cost-reduction measures in a timely and con-
sistent manner if they are deemed necessary.
A.8.2.3 RISK MANAGEMENT ORGANIZATION
AND RESPONSIBILITIES
To oversee the ERM process and to further drive the integration
and harmonization of existing control activities to align with legal
and operational requirements, the Managing Board established
a Risk Management and Internal Control Organization, headed by
the Head of Assurance. In order to allow for a meaningful discus-
sion of risk at the Siemens group level, this organization aggre-
gates individual risks and opportunities of similar cause-and-
effect nature into broader risk and opportunity themes. This
aggregation naturally results in a mixture of risks, including
those with a primarily qualitative assessment and those with a
primarily quantitative risk assessment. Accordingly, we do not
adopt a purely quantitative assessment of risk themes. Thematic
risk and opportunity assessments then form the basis for the
evaluation of the company-wide risk and opportunity situation.
The Head of Assurance reports quarterly to the Managing Board
on matters relating to the implementation, operation and over-
sight of the risk and internal control system and assists the Man-
aging Board, for example in reporting to the Audit Committee of
the Supervisory Board.
A.8.3 Risks
Below we describe the risks that could have a material adverse
effect on our business situation, financial condition (including
effects on assets, liabilities and cash flows), results of operations
and reputation. The order in which the risks are presented in
each of the four categories reflects the currently estimated rela-
tive exposure for Siemens associated with these risks and thus
provides an indication of the risks' current importance to us.
Additional risks not known to us or that we currently consider
immaterial may also negatively impact our business objectives
and operations. Unless otherwise stated, the risks described be-
low relate to all our organizational units.
A.8.3.1 STRATEGIC RISKS
Combined Management Report
Competitive environment: The worldwide markets for our
products, solutions and services are highly competitive in terms
of pricing, product and service quality, product development and
introduction time, customer service, financing terms and shifts
in market demands. We face strong established competitors and
rising competitors from emerging markets and new industries,
which may have a better cost structure. Some industries in which
we operate are undergoing consolidation, which may result in
stronger competition, a change in our relative market position,
increase in inventory of finished or work-in-progress goods or
unexpected price erosion. We see a risk, especially in the energy
market, that long-term customer contracts are becoming subject
to renegotiation, which might result in less favorable conditions
for Siemens. Furthermore, there is a risk that critical suppliers are
taken over by competitors and a risk that competitors are increas-
ingly offering services to our installed base. We address these
risks with various measures, for example benchmarking, strate-
gic initiatives, sales push initiatives, executing productivity mea-
sures and target cost projects, rightsizing of our footprint, out-
sourcings, mergers and joint ventures, exporting from low-cost
countries to price-sensitive markets, and optimizing our product
and service portfolio. We continuously monitor and analyze com-
petitive, market and industry information in order to be able to
anticipate unfavorable changes in the competitive environment
rather than merely reacting to such changes.
Combined Management Report
29
30
recent agreement between the U.K. and the European Union on
a revised Withdrawal Agreement lowered risk of a "No-Deal"
Brexit. However, the renewed Article 50 extension of the Euro-
pean Union Treaty is spilling over damaging impact on economic
activity into fiscal 2020. If the risk of a "No-Deal" Brexit heightens
again, increasing business and consumer uncertainty, particu-
larly in the European Union and the U.K., this would reduce in-
vestment activity, and pose risks to financial markets. A further
and massive loss of economic confidence and a prolonged period
of reluctance in investment decisions and awarding of new or-
ders would negatively impact our businesses. We have estab-
lished a task force continuously monitoring the exit process and
coordinating our local and global mitigation measures. We are
depending on the economic momentum of specific industries,
especially on continued weakness in the automotive sector,
caused by both, cyclical and structural forces. Further business
risk results from an abrupt weakening of Chinese economic
growth. A terrorist mega-attack or a significant cybercrime inci-
dent, or a series of such attacks or incidents in major economies,
could depress economic activity globally and undermine con-
sumer and business confidence. Further significant risks stem
from geopolitical tensions (in particular in the Middle East, but
also Hong Kong), the economic vulnerability of several emerging
economies (among others Argentina, Turkey, Venezuela), politi-
cal upheavals, and from an increasing vulnerability of the con-
nected global economy to natural disasters.
In general, due to the significant proportion of long-cycle busi-
nesses in our operating units and the importance of long-term
contracts for Siemens, there is usually a time lag between
changes in macroeconomic conditions and their impact on our
financial results. In contrast, short-cycle business activities of
Digital Industries react quickly to volatility in market demand. If
the moderate growth of certain markets stalls again and if we are
not successful in adapting our production and cost structure to
subsequent changes in conditions in the markets in which we
operate, there can be no assurance that we will not experience
adverse effects. For example, our customers may modify, delay
or cancel plans to purchase our products, solutions and services,
or fail to follow through on purchases or contracts already exe-
cuted. Furthermore, the prices for our products, solutions and
services may decline to a greater extent than we currently antic-
ipate. In addition, it may become more difficult for our customers
to obtain financing. Contracted payment terms, especially re-
garding the level of advance payments by our customers relating
to long-term projects, may become less favorable, which could
negatively impact our financial condition. Siemens' global setup
with operations in almost all relevant economies, our wide range
of offerings with varied exposures to business cycles, and our
balanced mix of business models (e.g. equipment, components,
systems, software, services and solutions) help us to absorb im-
pacts from adverse developments in any single market.
Company transformation: There are risks in substantially
changing company structures, policies or management in the
interest of enhancing our speed, agility or company culture.
These risks include increased costs, missed financial or perfor-
mance targets, loss of key personnel, loss of (cost) synergies, and
reduced customer and investor confidence. This particularly
applies to Gas and Power, for which a spin-off is planned for fiscal
2020. We have set up a team within "Vision 2020+" which closely
monitors the transformation process. This includes, for example,
the active monitoring of employee attrition rates and execution
of adequate counter measures as well as increased management
involvement in maintaining an active dialogue with employees.
Furthermore, we implemented a continuous quality monitoring
process for critical IT solutions (infrastructure, applications and
platforms) and projects.
Disruptive technologies: The markets in which our businesses
operate experience rapid and significant changes due to the in-
troduction of innovative and disruptive technologies. In the fields
of digitalization (e.g. IoT, artificial intelligence, cloud computing,
Industry 4.0), there are risks associated with new competitors,
substitutions of existing products/solutions/services, new busi-
ness models (e.g. in terms of pricing, financing, extended scopes
for project business or subscription models in the software busi-
ness) and finally the risk that our competitors may have more
advanced time-to-market strategies and introduce their disrup-
tive products and solutions faster than Siemens. Our operating
results depend to a significant extent on our technological lead-
ership, our ability to anticipate and adapt to changes in our mar-
kets and to optimize our cost base accordingly. Introducing new
products and technologies requires a significant commitment to
research and development, which in return requires expenditure
of considerable financial resources that may not always result in
success. Our results of operations may suffer if we invest in tech-
nologies that do not operate or may not be integrated as ex-
pected, or that are not accepted in the marketplace as antici-
pated, or if our products, solutions or systems are not introduced
to the market in a timely manner, particularly compared to our
competitors, or even become obsolete. We constantly apply for
new patents and actively manage our intellectual property port-
folio to secure our technological position. However, our patents
and other intellectual property may not prevent competitors from
independently developing or selling products and services that
are similar to or duplicates of ours.
Economic, political and geopolitical conditions (macroeco-
nomic environment): We see increasing uncertainty regard-
ing the global economic outlook. Despite recent relaxation in the
U.S.-Chinese trade conflict, the key risk for the global economic
cycle is a further escalation to a full-fledged global trade war,
with a significant deterioration of global growth. In particular,
protectionist measures taken so far have already caused im-
mense economic damage on global growth. Adverse effects to
confidence and investment activity would severely hit Siemens
business. Increasing trade barriers would negatively impact pro-
duction costs and productivity along our many value chains. The
We intend to continue providing an attractive return to sharehold-
ers. Therefore, we intend to propose a dividend whose distribution
volume is within a dividend payout range of 40% to 60% of net
income of the Siemens Group attributable to shareholders of
Siemens AG, which we may adjust for this purpose to exclude se-
lected exceptional non-cash effects. For fiscal 2020, we expect that
net income of Siemens AG will be sufficient to fund the distribu-
tion of a corresponding dividend. In connection with the planned
listing of Siemens Energy, we expect a significant impact on the
annual financial statements of Siemens AG: The carve-out of Gas
and Power business activities is expected to result in an increase in
financial assets and decreases in other assets positions and liabili-
ties. Income and expenses, most notably revenue and cost of
sales, are expected to decrease as well. Subject to the approval of
the planned spin-off by an extraordinary Siemens shareholders'
meeting we expect also a significant withdrawal from retained
earnings of Siemens AG, offsetting the disposal of financial assets.
(653)
142%
(22)%
25%
(15,825) (21,074)
28,185
22,104
% Change
Fiscal year
2018
2019
6,279
Other operating income
(expenses), net
Financial income, net
thereof Income from
investments, net 3,754
(prior year 5,381)
development expenses
as percentage of revenue
Research and
Cost of Sales
Gross profit
(in millions of €)
Revenue
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
A.9.1 Results of operations
As of September 30, 2019, the number of employees was 74,700.
Selling and general
administrative expenses
(1,377)
7,111
28%
5,199
12,596
Income from business activity
Income taxes
(31)%
4,643
3,188
n/a
(12)%
1
(6)%
(3,767)
(3,979)
15%
(2,788)
(2,362)
25%
9,469
Cyber/Information security: Digital technologies are deeply
integrated into our business portfolio. We observe a global in-
crease of cyber security threats and higher levels of professional-
ism in computer crime, which pose a risk to the security of prod-
ucts, systems and networks and the confidentiality, availability
and integrity of data. There can be no assurance that the mea-
sures aimed at protecting our Intellectual Property (IP) and port-
folio will address these threats under all circumstances. There is
a risk that confidential information may be stolen or that the in-
tegrity of our portfolio may be compromised, e.g. by attacks on
our networks, social engineering, data manipulations in critical
applications and a loss of critical resources, resulting in financial
damages. Cyber security covers the IT of our entire enterprise
including office IT, systems and applications, special purpose net-
works, and our operating environments such as manufacturing
and research and development (R&D). Like other large multi-
national companies we are facing active cyber threats from so-
phisticated adversaries that are supported by organized crime
and nation-states engaged in economic espionage or even sabo-
tage. We attempt to mitigate these risks by employing a number
of measures, including employee training, comprehensive mon-
itoring of our networks and systems through Cyber Security
Defense Centers, and maintenance of backup and protective
systems such as firewalls and virus scanners. We initiated the
industrial "Charter of Trust", signed by a growing group of global
companies, which sets out principles for building trust in digital
technologies and creating a more secure digital world. Nonethe-
less our systems, products, solutions and services, as well as
those of our service providers, remain potentially vulnerable to
attacks. Such attacks could potentially lead to the publication,
manipulation or leakage of information such as through indus-
trial espionage. They could also result in deliberate improper use
of our systems, vulnerable products, production downtimes and
supply shortages, with potential adverse effects on our reputa-
tion, our competitiveness and results of operations.
Favorable political and regulatory environment: We see
opportunities for improvement in the geopolitical policy environ-
ment, which could quickly restore a more positive industrial
investment sentiment that supports the growth of our markets.
In addition, government initiatives and subsidies (including tax
Performance criterion
Settlement by
Value of
Stock Awards
in euros
(cap: 300%)
Xetra closing
price of
Siemens share
on transfer date
= final number of Stock Awards
target attainment
Stock Awards based on
≤300% of target amount:
number of
X
(for example, 150%)
based on target
attainment
Awards
Number of Stock
based on 200%
target attainment
of Stock Awards
Maximum number
actual target attainment
Adjustment to
Calculation of the number of Siemens shares
The remaining Stock Awards are settled by the transfer of Siemens
shares to the relevant Managing Board member.
transfer of Siemens
shares to Managing
Board member
>300% of target amount:
number of
Stock Awards based on target
attainment is reduced by amount
by which cap is exceeded
Further provisions for long-term stock-based compensation
If the relevant competitors undergo significant changes during
the period under consideration, the Supervisory Board may take
these changes into account when compiling the comparison val-
ues for those competitors and/or calculating their relevant share
prices. In the event of extraordinary, unforeseen developments
that impact the Siemens share price, the Supervisory Board may
decide to reduce the number of granted Stock Awards retro-
actively or to pay cash compensation for a defined, limited
amount in lieu of a transfer of Siemens shares or to postpone the
transfer of Siemens shares for payable Stock Awards until the
developments have ceased to impact the share price.
When a member leaves office, his or her short-term variable com-
pensation (Bonus) is calculated on a pro rata basis after the end
of the fiscal year and is granted on the regular payout date.
The compensation system also governs the amount of compen-
sation paid to a Managing Board member when membership on
the Managing Board is terminated early.
Commitments in connection with the
termination of Managing Board membership
Memberships on supervisory boards whose establishment is
required by law or on comparable domestic or foreign con-
trolling bodies of business enterprises are listed in Chapter
→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE in c.4 CORPORATE
GOVERNANCE.
If a Managing Board member holds a position in another Siemens
company, no separate compensation is paid since holding such
positions is considered to be covered by contractual Managing
Board compensation. As a rule, Managing Board members are
obligated to waive any compensation that may be due to them
in connection with such positions. Should a waiver not be possi-
ble, for example, owing to the legal or tax regulations applicable
to a Siemens company, the compensation paid to a Managing
Board member in connection with such a position will be de-
ducted from the compensation due to him or her in connection
with his or her Managing Board activities.
-
Secondary activities of Managing Board members
Members of the Managing Board may take on secondary activi-
ties – for example, supervisory board positions outside the Com-
pany only with the approval of the Chairman's Committee of
the Supervisory Board.
Adherence to these guidelines must be proven for the first time
after the four-year build-up phase and thereafter annually. If the
value of a Managing Board member's accrued holdings falls be-
low the required minimum due to fluctuations in Siemens' share
price, he or she must acquire additional shares.
-
44 Combined Management Report
The Siemens Share Ownership Guidelines are an integral part of
the compensation system for the Managing Board and senior ex-
ecutives. These guidelines oblige the Managing Board mem-
bers - after a four-year build-up phase - to continuously hold
Siemens shares worth a multiple of their base compensation
-300% for the President and CEO, 200% for the other members
of the Managing Board – throughout their terms of office. The
decisive figure in this context is the average base compensation
that a member of the Managing Board has received over the four
years before the applicable date of proof of adherence. Hence,
changes that have been made to base compensation in the
meantime are included.
If compensation exceeds this maximum, a number of Siemens Stock
Awards equivalent in value to the amount by which the maximum
was exceeded will be forfeited without refund or replacement.
In addition to the caps for the Bonus and the Siemens Stock Awards,
a maximum amount of total compensation has been agreed upon.
This maximum amount is 1.7 times target compensation - which
comprises base compensation, the target amount for the Bonus and
the target amount for long-term stock-based compensation – plus
the maximum expected value of fringe benefits and pension bene-
fit commitments. This latter value corresponds to the fringe benefits
and pension benefit commitments from the previous fiscal year
multiplied by a factor of 2.0.
Maximum amount of total compensation
45
Combined Management Report
B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
With regard to the further terms of the Stock Awards, the same
principles apply in general to the Managing Board and to senior
managers. These principles are explained in → NOTE 26 in
If a Managing Board member's employment contract begins
during a fiscal year, an equivalent number of Siemens Phantom
Stock Awards will be granted instead of Stock Awards, and only a
cash equivalent will be paid at the end of the vesting period.
Apart from this exception, the same provisions agreed upon for
Stock Awards will apply.
If a Managing Board member violates compliance regulations,
the Supervisory Board is entitled, at its duty-bound discretion, to
revoke without refund or replacement some or all of his or her
Siemens Stock Awards, depending on the gravity of the compli-
ance violation (clawback).
Share Ownership Guidelines
In addition, the total value (in euros) of the Siemens shares to be
transferred is capped at 300% of the relevant target amount.
If this cap is exceeded, a corresponding number of Stock Awards
are forfeited without refund or replacement.
Target attainment is used to determine whether, and to what
extent, the maximum number of Stock Awards is to be reduced.
For a target attainment of less than 200%, a number of Siemens
Stock Awards equivalent to the shortfall are forfeited without
refund or replacement.
+20%
Non-current assets
Intangible and tangible assets
1,884
1,894
Financial assets
73,158
55,747
75,043
57,641
Assets
(1)%
31%
30%
Current assets
Receivables and other assets
19,752
18,236
Cash and cash equivalents,
other securities
4,489
24,241
Prepaid expenses
8%
If an employment contract is terminated, Stock Awards are gov-
erned by the following rules:
(in millions of €)
Sep 30,
2018
Performance of
Siemens share
vs. competitors
0%
-20%
0%
100%
Target attainment
200%
Linear curve for determining Stock Award target attainment
If the Siemens share performs somewhere between the percent-
age points cited above, target attainment is determined by a lin-
ear interpolation.
If, during the vesting period, the Siemens share performs
≥20 percentage points worse than the share price of the
relevant competitors, target attainment is 0%.
% Change
> If, during the vesting period, the Siemens share performs the
same as the share price of the relevant competitors, target
attainment is 100%.
Target attainment may vary between 0% and 200% (cap).
At the end of the vesting period, the Supervisory Board deter-
mines the extent to which the performance of the Siemens share
price has surpassed or lagged behind that of the share prices of
relevant competitors. It then derives target attainment for the
relevant Stock Awards tranche on this basis. For this purpose, the
reference prices for Siemens and for each competitor are com-
pared to the respective performance prices, and a relative devia-
tion is calculated for each company. In a further step, these devi-
ations are averaged for all competitors. To determine target
attainment, the average relative change in the competitors' share
prices is then compared to the relative change in the Siemens
share price, and the difference is calculated.
Determination of target attainment
During the subsequent three-year performance period, an aver-
age price is again calculated from the 36 end-of-month prices for
Siemens and each competitor; this is the "performance" price.
More specifically, a starting price, the "reference" price, is first
determined for each competitor during the reference period,
which is the first 12 months of the vesting period. The 12 end-of-
month prices are averaged for Siemens and for each competitor.
A.9.2 Net assets and
financial position
Statement of Financial Position of Siemens AG in accordance
with German Commercial Code (condensed)
2019
> If, during the vesting period, the Siemens share performs
≥20 percentage points better than the share price of the
relevant competitors, target attainment is 200%.
147
> Stock Awards for which the vesting period has not yet ended
will be forfeited without refund or replacement if the employ-
ment contract is not renewed at the end of a term of office at
the Managing Board member's request or if there is serious
cause that entitles the Company to revoke the member's ap-
pointment or terminate his or her employment contract.
> Stock Awards granted at the beginning of the fiscal year in
which the Managing Board member leaves office will be cal-
culated and reduced on a pro rata basis.
Profit
33.33%
Share Ownership Guidelines
The number of shares that are actually transferred after the vest-
ing period ends depends on one performance criterion: the per-
formance of the Siemens share compared to the performance of
the shares of relevant competitors. Following an initial 12-month
"reference" period, stock performance is measured over a subse-
quent 36-month "performance" period.
100%
Fringe benefits
pensation/contract terms
Other components of com-
Fixed compensation
in %²
compensation components
Cap
Structure of
100%
compensation
(Siemens Stock Awards)
Long-term stock-based
34%
(ROCE)
Capital efficiency
(EPS)
33.33%
Individual
targets
240%
up to ±20% adjustment
48 Combined Management Report
Managing Board members were granted fringe benefits for fiscal
2019. Depending on the Managing Board member, these benefits
totaled between €16,732 and €751,054.
Fringe benefits
> €2,205,000 per year for President and CEO Joe Kaeser
€1,101,600 per year for the other Managing Board members.
Since October 1, 2018, base compensation has been as follows:
Base compensation
For fiscal 2019, each Managing Board member's base compensa-
tion and the target amount for his or her Bonus and Stock Awards
underwent a regular adjustment of +2.0%. This increase was
oriented in part on adjustments made to the compensation of
other employee groups within Siemens.
In accordance with the applicable accounting principles, Manag-
ing Board compensation for fiscal 2019 totaled €33.04 million.
This amount was 4.2% more than the year before (2018:
€31.72 million). Of the total for fiscal 2019, €21.97 million (2018:
€21.93 million) was attributable to cash compensation and
€11.07 million (2018: €9.79 million) to stock-based compensation.
Total compensation
33.34%
The following section provides detailed information and back-
ground regarding total Managing Board compensation and in-
dividualized disclosures regarding the compensation of each
Managing Board member for fiscal 2019.
2 Basis: target amount (based on 100% target attainment)
1 Excluding fringe benefits and pension benefit commitments
Severance cap
170%¹
up to +75% adjustment of target amount
300%
Performance of Siemens share price
compared to relevant competitors
Claw-
back
Extra-
ordinary
develop-
ments
A.10.1.2 MANAGING BOARD COMPENSATION
FOR FISCAL 2019
(Bonus)
compensation
33%
> Non-monetary benefits are compensated
for by a payment of 5% of the severance
amount.
> Reduction affects only the portion of the
severance payment calculated excluding
the first six months of the remaining term
of office.
> Severance payment will be reduced by
10% if the term of office still has more than
six months to run (a lump sum allowance
for discounting and for amounts earned
elsewhere).
> Limited to not more than the contributions
for two years (cap)
> Based on the BSAV contribution that the
Managing Board member received in the
prior year and on the remaining term of
his or her appointment
> In the month of departure
> Not more than two years' annual compen-
sation and not more than the member
would receive for the remaining term of his
or her employment contract
> Base compensation plus Bonus(es) actually
received in the last fiscal year prior to the
end of employment, and granted long-term
stock-based compensation (annual com-
pensation)
Increase/discount
3. Early termination by mutual agreement at the request
of the Managing Board member or if there is serious cause
that entitles the Company to terminate the appointment
No severance payments or special BSAV contributions are made.
Payment
Special BSAV
contribution;
one-time
Basis for
calculation
In the event of an early termination of membership on the
Managing Board by mutual agreement and without serious
cause, Managing Board members' employment contracts provide
for a severance payment:
2. Termination by mutual agreement
No severance payments or special BSAV contributions are made.
1. Termination due to regular expiration of
the term of office
The following rules also apply when a Managing Board member
leaves office and vary depending on the reason for contract ter-
mination:
Combined Management Report
46
> When a Managing Board member leaves the Company, any
existing Stock Awards will only be transferred at their due date.
Limit (severance cap)
> Stock Awards will not be forfeited, however, if the employment
contract is terminated by mutual agreement at the Company's
request or in the event of retirement, disability or death or in
connection with a spin-off, a transfer to a different company
or a change of activity within the Group. Likewise, Stock
Awards will not be forfeited if the Managing Board member
terminates his or her employment contract for good cause in
connection with a change of control at the Company.
4. Change of control
Basis for
calculation
Short-term variable
Base compensation
33%
Cash
Stock Awards
Variable
Fixed
Percentage of target
compensation¹
The compensation system for Managing Board members at a glance
In the event of a change of control that results in a substantial
change in a Managing Board member's position, the Managing
Board member has the right to terminate his or her employment
contract with the Company. A change of control exists if one
shareholder or multiple shareholders acting in concert acquire a
majority of the voting rights in Siemens AG and exercise a con-
trolling influence or if Siemens AG becomes a dependent enter-
prise as a result of entering into an intercompany agreement
within the meaning of Section 291 of the German Stock Corpora-
tion Act (Aktiengesetz) or if Siemens AG is to be merged into
another entity. There is no right of termination if the change of
control takes place within 12 months before the member retires.
If this right of termination is exercised, the Managing Board
member is entitled to a severance payment for the remainder of
his or her term of office:
The following chart provides an overview of the individual com-
ponents of the compensation system:
47
Combined Management Report
> 10% reduction and 5% increase, as in the
terms for termination of membership by
mutual agreement (see Item 2 "Termination
by mutual agreement")
> Benefits are forfeited if the Managing Board
member receives benefits from third parties
due to or in connection with a change of
control.
>In the month of departure
> Two years' annual compensation
> Base compensation plus the target amount
for the Bonus and the Stock Awards, each
based on the last fiscal year before the end
of employment (annual compensation)
Increase/discount
Limit (severance cap)
Payment
The compensation system at a glance
Deferred tax assets
Pension benefit commitments
3,177
21,413
163
2,064
Pension benefit
Short-term
variable
compensation
Long-term
stock-based
compensation
Share
Ownership
Guidelines
commitments
33%
33%
34%
Combined Management Report 41
Non-performance-based components
Non-performance-based compensation comprises base compen-
sation as well as fringe benefits and pension benefit commitments.
Base compensation
Each member of the Managing Board receives base compensa-
tion for performing his or her Managing Board duties. This com-
pensation is paid in 12 monthly installments.
Fringe benefits
Fringe benefits include the provision of non-monetary benefits
and other perquisites, such as the provision of a company car,
contributions toward the cost of insurance, reimbursement of
expenses for legal and tax advice and accommodation and mov-
ing expenses, including a gross-up provided by the Company for
any taxes due in this regard, as well as currency adjustment pay-
ments and costs relating to preventive medical examinations.
Pension benefit commitments
Like the employees of Siemens AG in Germany, the members of
the Managing Board are included in the Siemens Defined Contri-
bution Pension Plan (BSAV). Under the BSAV, Managing Board
members receive contributions that are credited to their individ-
ual pension accounts. The level of these annual contributions is
based on a predetermined percentage related to their base com-
pensation and the target amount of their Bonuses. The Super-
visory Board decides on this percentage annually (most recently
28%). In making its decision, the Supervisory Board takes ac-
count of the intended level of benefits for each individual and the
length of time he or she has been a Managing Board member as
well as the annual and long-term service cost to the Company
resulting from those benefits.
Special pension contributions may also be granted to Managing
Board members on the basis of individual decisions by the Super-
visory Board. Such contributions may be intended, for example,
to compensate for forfeited pension entitlements from a previous
employer. To the extent that a member of the Managing Board
earned a pension benefit entitlement from the Company before
the BSAV was introduced, a portion of his or her contributions
goes toward financing that prior commitment.
The following table summarizes further significant features of
Base
compensation
Fringe benefits
Performance-based components
Non-performance-based components
Compensation linked to performance
The Company's size and economic position is also to be re-
flected in Managing Board compensation. Exceptional achieve-
ments are to be adequately rewarded, while falling short of
targets results in an appreciable reduction in compensation.
> Ensuring competitiveness
In order to attract outstanding candidates for the Managing
Board of Siemens AG and to retain them for the long term,
compensation should be attractive compared to that offered
by competitors.
40
40
Combined Management Report
On the basis of these principles, the Supervisory Board deter-
mines the structure, amount and weighting of the individual
components of compensation. Regular review by the Supervisory
Board ensures that the amount of compensation is appropriate.
Several criteria are applied for this purpose:
Criteria for review of appropriateness of compensation
Economic
situation
the BSAV for Managing Board members.
Company
performance
Alignment with
market practice
Managing Board
compensation
compared to exec-
utive employees
and the rest of
workforce
Managing Board
member's
responsibilities
and achievements
The review of appropriateness is generally based on a compar-
ison with other German companies. The target compensation
and the maximum compensation for the Managing Board are
first compared to management compensation at the companies
listed in the German blue-chip stock index, the DAX. To account
for Siemens' international nature, size and complexity, the
compensation paid to Managing Board members is also com-
pared to management compensation at companies in the
STOXX Europe 50 index. In addition, the Supervisory Board
takes account of the evolution of Managing Board compensa-
tion in relation to the compensation paid to Siemens' workforce
in Germany. In this vertical comparison, the Supervisory Board
determines the ratio of Managing Board compensation to the
compensation paid to Siemens' executive employees and the
rest of the workforce and performs a market comparison with
other DAX companies. For this purpose, the Supervisory Board
has defined Siemens' executive employees as the employees in
the Senior Management and Top Management contract groups.
The rest of the workforce comprises both Siemens employees
who are and those who are not covered by collective bargain-
ing agreements.
Structure and components of
Managing Board compensation
Managing Board compensation comprises both non-perfor-
mance-based and performance-based elements and is divided
into three main, equally weighted components: base compen-
sation, short-term variable compensation and long-term stock-
based compensation. Fringe benefits and pension commitments
are also part of the compensation system.
The Share Ownership Guidelines, which are a further key com-
ponent of the compensation system, obligate Managing Board
members to continuously hold Siemens shares worth a defined
multiple of their base compensation and to acquire additional
shares if their holdings fall below the required figure.
Components of the Managing Board compensation system
Future
prospects
Entitlement
Non-forfeitability
Disbursement
33.34% ROCE¹
33.33% EPS²
X
Target
amount
X
33.33% individual targets
1 Return on capital employeed
2 Earnings per share
Bonus payout
amount
(cap: 240%)
Weighted average of target
attainment (0%-200%)
The Supervisory Board can review and, if appropriate, reduce
Bonus payout amounts in the event of a breach of duty or a vio-
lation of compliance regulations (clawback).
The Managing Board is expected to make a long-term commit-
ment to and on behalf of the Company. For this reason, a sub-
stantial portion of each member's total compensation is tied to
the long-term performance of the Siemens share.
At the start of each fiscal year, Siemens grants "Stock Awards" as
long-term stock-based compensation. Each Stock Award rep-
resents the right to one share of Siemens stock. Stock Awards are
settled by the transfer of shares at the end of a defined vesting
period of about four years. Subject to target attainment, Manag-
ing Board members receive one Siemens share per Stock Award.
Granting of Stock Awards
The annual target amount for a grant of Stock Awards, on the
basis of 100% target attainment, is contractually agreed upon
with each individual Managing Board member.
The number of Stock Awards actually granted to a Managing
Board member at the beginning of a fiscal year is determined by
extrapolating the target amount to 200% target attainment
("maximum grant value”). This maximum grant value is then
converted to a maximum number of Stock Awards by dividing it
by the grant price. These awards are then granted to the Man-
aging Board member. A roughly four-year vesting period begins
on the grant date. The grant price is defined as the closing price
of the Siemens share in Xetra trading on the grant date, less the
discounted estimated dividends during the roughly four-year
vesting period.
Combined Management Report
43
829
Since fiscal 2015, the Supervisory Board has had the option of
increasing the target amount for each Managing Board member,
on an individual basis, by as much as 75% for one fiscal year at a
time. This option is intended to take account of each Managing
Board member's individual accomplishments and experience as
well as the scope and demands of his or her function.
Long-term stock-based compensation
(Siemens Stock Awards)
Managing Board members are expected to make a long-term
commitment to and on behalf of the Company. As a result,
they can benefit from any sustained increase in the Compa-
ny's value. For this reason, a substantial portion of their total
compensation is linked to the long-term performance of the
Siemens share.
Determination of Bonus payout amount
Based on a proposal by the Compensation Committee, the
Supervisory Board also sets a minimum of two and a maximum
of five individual, qualitative targets for each member of the
Managing Board.
Guaranteed
interest
Disability/death
> On request, on or after reaching the age
of 62, for pension commitments made on
or after January 1, 2012
> On request, on or after reaching the age
of 60, for pension commitments made
before January 1, 2012
> As a rule, in accordance with the provisions
of the German Company Pensions Act
(Betriebsrentengesetz)
> As a rule, in 12 yearly installments; other
payment options, on request: a smaller
number of installments, a lump sum pay-
ment or an annuitization with or without
survivors' benefits as well as a combination
of these options
> Annual guaranteed interest credited to
pension accounts until benefits are first
drawn (currently 0.90%)
> The risk that benefits may have to be drawn
before the age of 60 due to disability or
death is mitigated by crediting contributions
from the age at the time benefits are first
drawn until the covered individual reaches
or would have reached the age of 60.
Due to Lisa Davis's tax status in the U.S., some of the details of
her pension benefit commitment - particularly, those regarding
funding differ from the standard provisions.
The range of target attainment for these target parameters is 0%
to 200% (cap). The Supervisory Board may also adjust the Bonus
payout amount upward or downward by as much as 20%, so that
the maximum payout for the Bonus is 240% of the target amount.
The decision on an adjustment may take account not only of the
Company's economic situation but also of such factors as the re-
sults of employee or customer satisfaction surveys as well as the
Managing Board members' individual achievements.
-
Performance-based components
In keeping with the abovementioned principles, Managing Board
compensation is to be coupled with business performance and
with sustainable management of the Company. To take due ac-
count of both factors, the performance-based component of
Managing Board compensation comprises both a short-term and
a long-term element: a short-term variable component (Bonus)
and a long-term stock-based component (Siemens Stock Awards).
The final amount of these two components depends on the
extent to which defined targets are attained. If these targets are
not attained, the performance-based components may be reduced
to zero. If, however, the targets are significantly exceeded, target
attainment is subject to a ceiling or "cap."
42
42
Combined Management Report
Short-term variable compensation (Bonus)
-
The target amount for the short-term variable component of com-
pensation (Bonus) – that is, the amount paid for 100% target at-
tainment – is currently equal to the amount of a Managing Board
member's base compensation. The payout amount of the Bonus
depends on the Company's business performance during the past
fiscal year, as measured in terms of the attainment of three
equally weighted target parameters.
Two of these target parameters are financial parameters that
reflect the Company's capital efficiency, measured in terms of
return on capital employed (ROCE), and profit, measured in terms
of earnings per share (EPS). These parameters constitute opera-
tional steering parameters based on the Company's strategic fo-
cus and are included in external financial reporting, see Chapter
→ A.2 FINANCIAL PERFORMANCE SYSTEM.
Like other eligible employees of Siemens AG, Managing Board
members who were employed by the Company before Septem-
ber 30, 1983, are entitled to receive transition payments for the
first six months after retirement. These payments are equal to the
difference between their final base compensation and the retire-
ment benefits payable under the corporate pension plan.
> Focus on successful, sustainable
management of the Company
Adjustment
(up to ±20%)
The current system of Managing Board compensation was en-
dorsed at the Annual Shareholders' Meeting on January 27, 2015,
by a majority of about 93%.
4%
Provisions for taxes
and other provisions
5,616
17,959
6,011
17,896
(7)%
0%
Liabilities
Liabilities to banks
Advance payments received
27
1,841
53
1,504
(49)%
22%
Trade payables, liabilities
to affiliated companies
and other liabilities
Cash and cash equivalents, other securities are significantly
affected by the liquidity management of the Corporate Treasury
of Siemens AG. The liquidity management is based on the financ-
ing policy of the Siemens Group, which is aimed towards a bal-
anced financing portfolio, a diversified maturity profile and a
comfortable liquidity cushion. Therefore, the change in liquidity
of Siemens AG was not driven only by business activities of
Siemens AG.
The increase in equity was attributable to net income for the year
of €11.2 billion, and the issuance of treasury stock related to the
fulfillment of exercised warrants in the amount of €1.1 billion and
our share-based payments and employee share programs in the
amount of €0.4 billion. These factors were partly offset by divi-
dends paid in fiscal 2019 (for fiscal 2018) of €3.1 billion. In addi-
tion, equity was reduced due to share buybacks during the year
amounting to €1.4 billion. The equity ratio as of September 30,
2019 and 2018 was 30% and 27%, respectively. For the disclosures
in accordance with Section 160 para. 1 no. 2 of the German Stock
Corporation Act (Aktiengesetz) about treasury shares we refer to
NOTE 15 of our Annual Financial Statements of Siemens AG for
the fiscal year ended September 30, 2019.
The increase in trade payables, liabilities to affiliated compa-
nies and other liabilities was due primarily to higher liabilities
to affiliated companies mainly as a result of a contribution to an
affiliated company in connection with the reorganization of in-
tra-group financing activities.
11,885
12,343
and similar commitments
Provisions for pensions
Active difference
Managing Board compensation is based on the following principles:
resulting from offsetting
68
62
9%
Total assets
100,328
23%
A.9.3 Corporate Governance
statement
Liabilities and equity
30,428
22,049
38%
Special reserve
with an equity portion
668
671
0%
Provisions
Equity
The Corporate Governance statement pursuant to Sections 289f
and 315d of the German Commercial Code is an integral part of
the Combined Management Report and is presented in → c.4.2
81,344
49,079
Responsibilities and principles for establishing
Managing Board compensation
The compensation system for Siemens' Managing Board is estab-
lished by the Supervisory Board, based on a proposal by the Com-
pensation Committee. After approval by the Supervisory Board,
the compensation system is submitted to the Annual Sharehold-
ers' Meeting for endorsement ("say on pay").
Process for establishing the compensation system
Compensation Committee
Supervisory Board
Develops recommendations on the
compensation system and submits
these to the Supervisory Board
Approves the compensation system
Annual Shareholders' Meeting
MMMM
A.10.1.1 COMPENSATION SYSTEM
MM
B• R• R• R• R⚫
B• R• R• R• •
MMMMM
. . .
MMMMM
MM
MM
CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS 289 F AND
315D OF THE GERMAN COMMERCIAL CODE.
MM
Endorses the compensation system
B• R• R• R• B⚫
10.1.1 describes the system for remunerating Manag-
ing Board members in general. Chapter 10.1.2 provides com-
prehensive information about the compensation granted and
paid to the Managing Board in fiscal 2019, together with an out-
look for fiscal 2020. Chapter 10.2 describes Supervisory Board
compensation.
41%
13%
(10)%
(60)%
individual components of compensation paid to the members of
these bodies.
38,863
Chapter
50,947
326
40,420
308
6%
Total liabilities and equity
100,328
81,344
23%
26%
26%
This report describes the compensation system for the Managing
Board members as well as the compensation of the Supervisory
Board of Siemens AG for fiscal 2019. It provides detailed and in-
dividualized explanations of the structure and amount of the
A.10.1. Compensation of
Managing Board members
The increase in financial assets was mainly due to additions to
shares in affiliated companies driven by the above-mentioned
trademark transfer and by contributions to affiliated companies in
connection with reorganization of intra-group financing activities.
This report is based on the recommendations of the German
Corporate Governance Code ("Code") and the requirements of
the German Commercial Code (Handelsgesetzbuch), German
Accounting Standards (Deutsche Rechnungslegungsstandards)
and International Financial Reporting Standards (IFRS). It also
incorporates elements of the requirements that can be foreseen
from the currently pending transposition of the European Share-
holder Rights Directive into German law, on the basis of the
regulations proposed in the German Act Implementing the Sec-
ond Shareholder Rights Directive (ARUG II).
A.10 Compensation Report
Deferred income
39
Combined Management Report
The increase in receivables and other assets was mainly due to
higher trade receivables from affiliated companies as a result of
intra-group financing activities.
62
Nov. 2022
Oct. 2022
2021
2020
Nov. 2019
Oct. 2019
Nov. 2018
Performance period
Mitsubishi Heavy Industries Ltd. (Tokyo Stock Exchange)
➤ Schneider Electric S.A. (Euronext, Paris).
>
Grant and beginning of the vesting period of about four years
Timetable for the 2019 Stock Awards tranche
This list of competitors is unchanged from fiscal 2018.
52
Reference period
50% EPS
Settlement
through
transfer
€25.64
Alstom
CHF 19.89
ABB
EPS target attainment was
calculated in November
2014 using the average
EPS values for fiscal 2012,
2013 and 2014.
Reference price vs.
performance price
price
Performance
Reference
price
50% share price performance
> General Electric Co. (New York Stock Exchange)
Target attainment for the 2014 Siemens Stock Awards tranche
Determination of target attainment for the 2014 tranche
Up to and including the 2014 tranche, the grant of one-half
of the Siemens Stock Awards was linked to basic (undiluted)
earnings per share (EPS). In November 2014, 50% of the Stock
Awards' target amount was adjusted in accordance with the at-
tainment of the EPS target and thereafter converted into a corre-
sponding number of Stock Awards. The remaining 50% of the
target amount depended on the performance of the Siemens
share compared to the share performance of relevant competi-
tors during the roughly four-year vesting period, which lasted
from November 2014 through October 2018.
In past years, Managing Board members received Siemens Stock
Awards for every fiscal year. Starting with the 2015 tranche, the
plan duration of Siemens Stock Awards was reduced to four years,
in alignment with prevailing market practices. This reduction re-
sulted in a one-time transfer of two tranches - the 2014 and the
2015 tranches in November 2018. The increase in paid compen-
sation in fiscal 2019 is primarily attributable to this transfer.
of the 2014 and 2015 tranches
Information about the transfer
of Siemens
shares
Combined Management Report
> Eaton Corporation plc. (New York Stock Exchange)
€2,280,000
For the 2019 tranche, the Supervisory Board decided to use the
stock listings of the following competitors for its comparison of
share performance:
€2,278,000
Maximum number of Stock Awards
(based on 200% target attainment)
Maximum grant value
(based on 200% target attainment)
Target amount
(based on 100% target attainment)
Prof. Dr. Ralf P. Thomas
Michael Sen
Cedrik Neike
€4,556,000
Janina Kugel
Lisa Davis
Dr. Roland Busch
Joe Kaeser
Information on grant of the 2019 Stock Awards tranche
GE
as much as 75%. The target amounts for Michael Sen and Prof. Dr.
Ralf P. Thomas for fiscal 2019 were increased by 25% on a one-time
basis in recognition of their individual accomplishments and experi-
ence as well as the scope and demands of their functions, including
appointments to positions at Siemens companies that are not entailed
by the Managing Board responsibilities directly assigned to them.
The grant price applicable for the 2019 tranche was €85.03. The
Supervisory Board set the grant date at November 9, 2018. The
target amounts, the maximum grant values and the maximum
number of Stock Awards granted to each Managing Board mem-
ber were, accordingly, as follows:
Klaus Helmrich
53,582
€1,140,000
26,815
33,518
€2,850,000
€1,425,000
33,518
€2,850,000
€1,425,000
26,815
€1,140,000
26,815
€2,280,000
€1,140,000
26,815
€2,280,000
€1,140,000
26,815
€2,280,000
€1,140,000
> ABB Ltd. (Swiss Exchange, Zürich)
€2,280,000
Novem-
ber 7, 2014
5.92%
€72.30 =
€1,000,000 ×
Dr. Roland Busch
€480,000
50% 96%
=
€72.30
50%
€912,000
€950,000
50%
50%
€1,900,000 x
Joe Kaeser
as of September 30,
2019
(in €)
Novem-
ber 12, 2018
price
96%
€500,000
50% 96%
€870,737
€664,962
In fiscal 2019, the Supervisory Board exercised its option to increase
the target amount for the Stock Awards on an individual basis by
=
€1,316,102
=
€100.16
x
€1,263,518
=
12,615
13,140
6,639
6,916
100%
12,615
13,140
6,639
6,916 100%
12,044
12,546 100%
€907,018
50%
€72.30 =
€1,814,035 x
Lisa Davis³
Cash
payment
CHF21.07
€29.60
$24.50
closing
Final
number
of SSA²
EPS target
attainment: 96%
10.08%
7.67%
2.87%
105.11
€95.49
Competitors (average)
Siemens AG
Share price target attainment:1 100%
€62.40
Schneider
20.41%
$141.48
$117.49
Rockwell
(6.29%)
15.43%
€60.66
Total target attainment: 98%
1 Up to and including the 2014 tranche of the Siemens Stock Awards, the following target attainment
curve applied: a deviation (A) of +/-7.5 percentage points yielded target attainment of 100%.
A = 2.41
percentage
points
ment:
SPP1
attain-
of SSA²
granted
Target
Number
Grant
price
Target
amount
per
compo-
nent
EPS Target
SPP1 attain-
ment:
EPS
(based on
100% target
attainment)
Target
amount
members in office
Managing Board
Overview of the 2014 Siemens Stock Awards tranche
The following table provides a summary of the key parameters of
the 2014 Siemens Stock Awards tranche, which was settled in cash:
53
53
Combined Management Report
Xetra
> €2,278,000 per year for President and CEO Joe Kaeser
> €1,140,000 per year for the other Managing Board members.
The target setting and target attainment for fiscal 2019 for the
target parameter "capital efficiency," which is measured in terms
of return on capital employed (ROCE), were as follows:
Long-term stock-based compensation
(Siemens Stock Awards)
39,518,836
45,617,700
5,235,121
6,184,498
604,800
5,444,040
616,896
5,553,072
Total
1 Deferred compensation totals €4,125,612 (2018: €4,115,237),
including €3,703,123 for Joe Kaeser (2018: €3,694,439),
€361,494 for Klaus Helmrich (2018: €362,606) and €60,995
for Prof. Dr. Ralf P. Thomas (2018: €58,192).
Prof. Dr. Ralf P. Thomas
1,862,660
604,800
616,896
Michael Sen
1,757,258
2,349,895
604,800
1,239,785
2 In accordance with the provisions of the BSAV, benefits to
be paid to Lisa Davis are not in any way secured or funded
through the trust associated with the Company's BSAV plan
or with any other trust. They represent only an unsecured,
unfunded legal obligation on the part of the Company to
pay such benefits in the future under certain conditions,
and the payout will only be made from the Company's
general assets.
In fiscal 2019, former members of the Managing Board and their
surviving dependents received emoluments within the meaning
of Section 314 para. 1 No. 6b of the German Commercial Code
totaling €21.09 million (2018: €39.9 million).
100%
TA: 107.67%
200%
Target attainment (TA)
Determining target attainment for ROCE
ROCE for fiscal 2019 amounted to 11.07%, resulting in target attain-
ment of 107.67%.
Determination of target attainment
For fiscal 2019, the ROCE value that would result in 100% target
attainment (ROCE target value) was set by the Supervisory Board
at 10.84%. The ROCE values that would result in 0% target attain-
ment and 200% target attainment were set for fiscal 2019 at
7.84% and 13.84%, respectively.
100% target, floor and cap
Target parameter "capital efficiency"
> €1,101,600 per year for the other Managing Board members.
> €2,205,000 per year for President and CEO Joe Kaeser
Since October 1, 2018, the Bonus target amounts have been as
follows:
Short-term variable compensation (Bonus)
49
Combined Management Report
The defined benefit obligation (DBO) of all pension commit-
ments to former members of the Managing Board and their sur-
viving dependents as of September 30, 2019, amounted to
€175.7 million (2018: €168.2 million). This figure is included in
→ NOTE 17 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
616,896
ROCE: 11.07%
2,157,427
604,800
1,234,800
Joe Kaeser
in office as of September 30, 2019
2018
2019
Defined benefit obligation for all pension
commitments excluding deferred compensation¹
Total contribu-
tions for
2018
1,210,440
2019
(in €)
The following table shows the individualized contributions (allo-
cations) under the BSAV for fiscal 2019 as well as the defined
benefit obligations for pension commitments:
Contributions under the BSAV are added to the individual pension
accounts in the January following each fiscal year. Until pension
payments begin, members' pension accounts are credited with
an annual interest payment (guaranteed interest) on January 1 of
each year. The interest rate is currently 0.90%.
The expense recognized in fiscal 2019 as a service cost under IFRS
for Managing Board members' entitlements under the BSAV in
fiscal 2019 totaled €5.4 million (2018: €5.3 million).
For fiscal 2019, Managing Board members were granted contribu-
tions under the BSAV totaling €5.6 million (2018: €5.4 million),
based on a Supervisory Board decision from November 7, 2019.
Of this amount, €0.02 million (2018: €0.03 million) relates to the
funding of pension commitments earned prior to the transfer to
the BSAV.
Pension benefit commitments
x
Managing Board members
14,299,267
12,970,960
Dr. Roland Busch
616,896
Cedrik Neike
Janina Kugel
5,714,522
6,473,904
604,800
616,896
Klaus Helmrich
5,322,537
5,701,811
604,800
616,896
Lisa Davis²
5,121,226
6,071,233
604,800
616,896
2,674,432
Information about the grant of the 2019 tranche
Since October 1, 2018, the target amounts for long-term stock-
based compensation have been as follows:
0%
100% target
10.84%
107%
113%
Lisa Davis
Dr. Roland Busch
Joe Kaeser
107.67%
110% -140%
103%
92.67%
11.07%
33.33% Individual targets
€7.10
10.84%
33.33% Earnings per share (EPS), 1,2 basic
33.34% Return on capital employed (ROCE)1
Total target attainment
€6.99
110%
103%
110%
51
Combined Management Report
In fiscal 2019, the Supervisory Board did not exercise its option to
adjust target attainment upward or downward by up to 20%.
2 The target value equals the average EPS value for fiscal
2016, 2017 and 2018. The actual value results from the
average EPS values for fiscal 2017, 2018 and 2019.
1 Continuing and discontinued operations
Michael Sen
Cedrik Neike
Janina Kugel
Klaus Helmrich
> Optimization/efficiency enhancement
› Business performance
> Market coverage
> Implementation of "Vision 2020+"
Focus topics 2019:
113%
Prof. Dr. Ralf P. Thomas
107%
Target attainment
Floor
7.84%
Actual value
Target parameter
200%
Target attainment (TA)
FY Average EPS
Determining target attainment for EPS
Combined Management Report
50
To determine EPS target attainment for fiscal 2019, the EPS target
of €7.10 - which is the average of the EPS values for 2016, 2017 and
2018 was compared to the average of the EPS values for fiscal
2017, 2018 and 2019, which amounted to €6.99. This comparison
yielded target attainment of 92.67% for the financial target EPS.
The two averages take account of the Company's long-term perfor-
mance and provide incentives for a sustainable increase in profit.
2016
2017
2018
2019
Determination of target attainment
The EPS value that would result in target attainment of 100%
(EPS target value) corresponds to the average of the EPS values
for the prior three fiscal years (2016, 2017 and 2018) and
amounted to €7.10. The EPS values for target attainment of 0%
and 200% were set for fiscal 2019 as follows: an EPS of €5.60
100% target, floor and cap
The target setting and target attainment for fiscal 2019 for the
target parameter "profit," measured in terms of earnings per share
(EPS), were as follows:
Target parameter "profit"
➤ ROCE
Cap
13.84%
Performance range
(+3 percentage points)
Performance range
(-3 percentage points)
would yield target attainment of 0%, and an EPS of €8.60 would
yield target attainment of 200%.
€6.74
€7.44
€7.12
€6.41
+
€8.60
Cap
EPS
age
Aver-
Performance range
(+ €1.50)
Target attainment for short-term variable compensation (Bonus)
The target setting and target attainment for the Bonus target
parameters for fiscal 2019 are summarized in the following table.
Performance range
(-€1.50)
100% target
€7.10
Floor
€5.60
0%
Actual value: €6.99
TA: 92.67%
100%
Average 2016-2018
€7.10 (100% target)
€6.99 (actual value)
Average 2017-2019
Target value
(based on 100% target attainment)
€100.16
$26.14
€692,707
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
2,505
2,502
2,162
5,292
0
2,205
Bonus
One-year variable compensation
Performance-based
compensation
115
115
2,320 2,277
2,277
2,320
2,320
2,320
115
115
115
2,330
0
6,834
4,647
9,597
14,249
7,820
1,207
1,271
1,207
8,391
12,978
6,613
115
11,370
6,854
1,271
8,125
Total compensation (Code)
Pension service cost
Total non-performance/performance-based compensation
Other
809
931
2,800
2,580
2,320
1,271 1,271
3,590 14,021
Fringe benefits
Total
2,162
2,205
The amounts of base compensation, the Bonus and fringe bene-
fits relate to fiscal 2019 and fiscal 2018.
The following tables show individually for each Managing
Board member the benefits granted in fiscal 2019 and fiscal
2018. The actual amounts paid out are reported under "Benefits
received."
made in fiscal 2019
Benefits granted and payments
No loans or advances from the Company are provided to mem-
bers of the Managing Board.
Other
2 Based on the average Xetra opening price of €101.42 for the 3 As of March 8, 2019 (date of verification)
fourth quarter of 2018 (October-December)
1 The amount of the obligation is based on the average base
compensation for the four years prior to the respective dates
of verification.
185,180
Target compensation for one-year variable compensation
(Bonus), including floors and caps, is reported under "Benefits
granted." The amounts for multi-year variable compensation
(Siemens Stock Awards) granted in fiscal 2019 reflect the fair
value on the grant date. The figures for individual maximums
for one-year variable compensation (Bonus) and multi-year vari-
able compensation (Siemens Stock Awards) reflect the possible
maximum value in accordance with the maximum amounts
agreed upon for fiscal 2019 - that is, 240% and 300% of the
applicable target amounts. Total maximum compensation for
fiscal 2019, which is reported as "Total compensation (Code),"
18,780,956
16,770,488
21,241
2,154,262
203%
20,884
2,118,100
200%
22,829
2,315,317
165,355
Compensation according to applicable reporting standards
represents the contractual maximum amount of total com-
pensation. The maximum amount of total compensation was
1.7 times target compensation for fiscal 2019 plus two times the
value of the fringe benefits and pension commitments in fiscal
2018. The figure of 1.7 times target compensation is reported
separately as maximum compensation under "Total non-perfor-
mance-based/performance-based compensation." Target com-
pensation equals the total of base compensation, the target
amount for the one-year variable compensation (Bonus) and
the target amount for multi-year variable compensation
(Siemens Stock Awards).
The payments made in 2019 and 2018 are reported under "Bene-
fits received." The payouts for stock-based compensation refer to
grants for fiscal 2015, 2014 and 2013. The benefits received for
2019 are significantly higher because in fiscal 2019 there was a
one-time transfer of two tranches of the Siemens Stock Awards
(for details, see "Information about the transfer of the 2014 and
2015 tranches").
2,162
2,205
2,205
2,205
Fixed compensation (base compensation)
2018
2019
2018
2019
(Max)
Total compensation in accordance with the applicable account-
ing standards is also reported under "Benefits granted." Instead
of the target amount for one-year variable compensation (Bonus)
specified by the Code, this figure includes the actual Bonus paid
out and excludes the pension service cost.
(Min)
(Amounts in thousands of €)
Non-performance-
based compensation
2019
Benefits received
Benefits granted
President and CEO since August 2013
Appointed: May 2006
Joe Kaeser
Combined Management Report
56
2019
Performance-based
compensation
One-year variable compensation
Bonus (payout amount)
559
628
Other
Total non-performance/performance-based compensation
3,426
1,159
5,683
3,303
6,730
1,577
4,556
Total compensation (Code)
566
3,992
566
566
593
566
593
1,725
7,004
Pension service cost
3,896
1,358
1,088
=
55
1,159
1,159
1,159
1,135
1,159
1,135
One-year variable compensation
2,478
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
1,102
0
2,644
1,080
1,176
1,216
1,166
0
3,420
Bonus
227%
7,296
Compensation according to applicable reporting standards
2018
2019
(Max)
(Min)
2019
2019
Benefits received
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
2019
Deputy CEO since October 2019
Dr. Roland Busch
57
40
Combined Management Report
6,956
7,151
Total compensation
2,505
2,502
Appointed: April 2011
5,149
2018
1,102
Performance-based
compensation
One-year variable compensation
Bonus (payout amount)
Total compensation
1,176
1,216
3,501
3,439
58
Combined Management Report
Fixed compensation (base compensation)
57
57
57
57
Fringe benefits
Total
1,080
1,102
1,080
1,102
1,102
55
20,147
2,175
200%
54
1 The reported relative deviation of (37.22%) also takes into account Toshiba's performance, which is factored into the reported deviation on a weighted basis for 19 months.
Toshiba's reference price was ¥4,382.08, and its performance price was ¥2,694.00, yielding a relative deviation of (38.52%). MHI's relative deviation was (35.76%), with a weighting of 17 months.
A = 14.45
percentage
points
31.42%
16.37%
17.87%
1.92%
5.42%
Target attainment: 172%
Combined Management Report
€108.95
12,044
2,043,275
=
x €100.16
12,546
=
€1,206,327
€1,256,607
50%
96%
€93.62
Klaus Helmrich
The following table provides a summary of the key parameters of
the 2015 Siemens Stock Awards tranche, which was settled in cash:
Target
amount
Lisa Davis
Dr. Roland Busch
Joe Kaeser
September 30, 2019
members in office as of
Managing Board
(in €)
Novem-
ber 12, 2018
price
Overview of the 2015 Siemens Stock Awards tranche
Cash
payment
Xetra
Final
number
of SSA¹
Target
attainment:
share price
performance
Novem-
ber 7, 2014
SSA¹
granted
Number of
Grant
price
(37.22%)
(based on
closing
Klaus Helmrich
€1,000,000 x
+
6,916
=
€664,962
€692,707
1 SPP: share price performance
2 SSA: Siemens Stock Awards
3 The target amount disclosed for Lisa Davis (at 100% target
attainment) comprises an amount that was granted to her
to compensate for the forfeiture of entitlements granted
by her previous employer (€1,647,368.73) as well as a
pro-rata grant of Siemens Stock Awards for fiscal 2014
(€166,666.67) in accordance with her employment contract.
Determination of target attainment for the 2015 tranche
Starting with the 2015 tranche, the Siemens Stock Awards were
subject to only one performance criterion - the performance of
the Siemens share compared to the share performance of rele-
vant competitors during the roughly four-year vesting period,
which lasted from November 2014 through October 2018.
Target attainment for the 2015 Siemens Stock Awards tranche
100%
100% share price performance
Reference
price
Performance
price
ABB
GE
MHI/Toshiba1
Rockwell
Schneider
Competitors (average)
Siemens AG
CHF18.58
$26.04
¥6,605.00
$114.49
€59.96
CHF21.90
$23.98
¥4,243.35
$150.47
€63.21
(7.88%)
Reference price vs.
performance price
50%
6,916
€72.30
€480,000
€500,000
6,639
6,639
=
€664,962
€72.30 =
x €100.16
6,916 100%
6,916
€100.16
=
50%
96%
Prof. Dr. Ralf P. Thomas
€1,000,000 x
50%
€480,000
€500,000
6,639
6,639
=
€692,707
€1,950,000 /
100% target
attainment)
€72.30
€72.30 =
Percentage
of base
compensation¹
Value¹
in €
Number of
shares²
Percentage
of base
compensation¹
Value²
in €
Number of
shares³
300%
6,254,813
61,672
340%
7,092,605
69,933
200%
2,118,100
20,884
217%
2,298,583
22,664
€1,040,000/
Verified
Required
Nov. 2015-Nov. 2019
Nov. 2016-Nov. 2020
Nov. 2017 - Nov. 2021
Nov. 2018-Nov. 2022
members in office as of September 30, 2019, the following table
shows the number of Siemens shares each held as of the March 2019
deadline for verifying compliance with the Share Ownership Guide-
lines. It also shows the number of shares to be held throughout
their terms of office with a view toward future deadlines.
The deadlines by which the individual Managing Board members
must first verify compliance with the Siemens Share Ownership
Guidelines vary from member to member, depending on when
they were appointed to the Managing Board. For Managing Board
Share Ownership Guidelines
55
55
Combined Management Report
83%
95%
131%
200%
Target attainment
Nov. 2015-Oct. 2016
Nov. 2016-Oct. 2017
Nov. 2017-Oct. 2018
Nov. 2018-Oct. 2019
as of September 30, 2019, and required
to verify compliance as of March 8, 2019
Joe Kaeser
Dr. Roland Busch
Lisa Davis
Klaus Helmrich
Janina Kugel
Prof. Dr. Ralf P. Thomas
Total
Performance period
Nov. 2016-Oct. 2019
Nov. 2017-Oct. 2020
Nov. 2018-Oct. 2021
Nov. 2019-Oct. 2022
2019
2,118,100
20,884
€100.16 =
€100.16 =
€100.16 =
X
€4,646,523
€2,478,259
€2,478,259
€100.16 =
€100.16 =
€100.16 =
X
X
46,391
24,743
24,743 x
24,743 x
16,495 x
24,743
172%
X
€2,478,259
€1,652,139
€2,478,259
172%
172% =
172%
172% =
172%
26,971 x
14,385 x
14,385 X
14,385 X
9,590
14,385
€72.30 =
€72.30
€72.30 =
€1,040,000 /
€693,333
€1,040,000
Prof. Dr. Ralf P. Thomas
Janina Kugel²
€72.30 =
€1,040,000 /
=
=
Obligations under Share Ownership Guidelines
22,301
2 Janina Kugel was appointed to the Managing Board effective
February 1, 2015. In addition to the Siemens Phantom Stock
Awards granted upon her appointment for a portion of
251%
2,658,421
26,212
200%
2,118,100
20,884
214%
2,261,767
2018
1 SSA: Siemens Stock Awards
2017
Reference period
Vesting period
Target attainment for the 2016 to 2019 Stock Awards tranches (as of October 2019)
Tranche
fiscal 2015 (see table), Siemens Stock Awards in the amount of
€51,300 were granted to her from the 2015 tranche for her
position as a member of Top Management.
of the Siemens Stock Awards was as follows:
As of October 2019, target attainment for the 2016 to 2019 tranches
for the 2016 to 2019 tranches
Information about current target attainment
2016
Managing Board members in office
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
0
2018
2019
1,102
1,080
1,102
1,102
1,102
Fixed compensation (base compensation)
Fringe benefits
Total
2018
2019
(Max)
2019
(Min)
2019
Benefits received
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
Klaus Helmrich
Appointed: April 2011
59
1,080
45
45
45
1,166
1,288
1,213
1,080
2,644
0
1,102
Bonus
3,420
One-year variable compensation
1,147
1,124
1,147
1,147
1,147
44
45
44
1,124
1,088
0
1,358
1,652
1,088
3,420
0
1,166
1,144
1,140
1,080
2,644
1,102
Bonus
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
One-year variable compensation
1,120
1,142
1,120
1,142
1,142
1,142
1,080
40
20181
Other 2,3
Total non-performance/performance-based compensation
3,410
Pension service cost
Combined Management Report
1 At the beginning of fiscal 2018, Janina Kugel was also
entitled to 2.501 matching shares from the Share Matching
Program (see → NOTE 26 in B.6 NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS). She had acquired this entitlement
when she was an employee of Siemens AG before she
became a member of the Managing Board. The entitlement
fell due and was settled in February 2018. At the time of
transfer, the shares had a value equivalent to €291.37.
1,144
3,352
1,140
3,448
Bonus (payout amount)
Total compensation
compensation
One-year variable compensation
Performance-based
Compensation according to applicable reporting standards
577
3,295
2019
1,102
41
584
4,777
577
584
6,974
2,718
453
258
4,192
3,288
5,683
1,142
584
1,727
584
3,994
Total compensation (Code)
3,865
40
41
41
Compensation according to applicable reporting standards
Payout cap: 200%
5,201
593
618
7,297
593
3,884
618
6,980
618
1,765
618
4,033
Total compensation (Code)
Performance-based
compensation
Pension service cost
6,679
3,291
5,683
1,147
3,415
Total non-performance/performance-based compensation
Other
619
483
1,577
4,608
2,478
One-year variable compensation
1,213
41
Fringe benefits
Total
1,080
1,102
1,102
1,102
Fixed compensation (base compensation)
2018
2019
(Max)
2019
(Min)
Bonus (payout amount)
Total compensation
2019
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
Appointed: February 2015
Janina Kugel
Combined Management Report
60
3,499
3,526
1,288
Benefits received
3 The amount reported under "Benefits received" includes
€2,236,573 from the settlement of Siemens Stock Awards
that were granted to Lisa Davis in fiscal 2014 as com-
pensation for the forfeiture of entitlements granted by her
previous employer.
Chair
€100,000
1 Lisa Davis's compensation is paid out in Germany in euros.
It has been agreed that any tax liability that arises due to tax
rates that are higher in Germany than in the U. S. will be
reimbursed. In addition, a currency adjustment payment was
granted for base compensation in calendar years 2017 and
2018 as well as for the Bonus for fiscal years 2017 and 2018.
> The Supervisory Board's option to adjust the Bonus payout
amount upwards or downwards by as much as 20% at its duty-
bound discretion has been eliminated. As a result, the maxi-
mum Bonus payout amount has been reduced from 240% to
200% of the target amount.
> A maximum amount of fringe benefits has been defined rela-
tive to base salary. This amount caps the benefits that can be
paid to a Managing Board member.
In the future, the pension benefit contribution will be set as a
fixed amount rather than in relation to base compensation
plus the Bonus target amount. Furthermore, in lieu of a de-
fined contribution to pension benefits, the Supervisory Board
may grant newly appointed Managing Board members an
amount to be used at the member's discretion.
> Newly appointed Managing Board members and members
whose employment contracts are renewed are not entitled to
a severance payment if they terminate their employment in
the event of a change of control.
The existing scope of the clawback and malus regulations will
be expanded for both the Bonus and the Stock Awards.
Transparency
> The current caps of 200% of the target amount for the Bonus
and 300% of the target amount for Stock Awards will be
retained. In addition, the Supervisory Board of Siemens AG
has defined maximum Managing Board compensation for
fiscal 2020.
With its revised compensation system for the Managing Board
and in line with regulatory requirements and feedback from
various stakeholders, Siemens has further enhanced its level of
transparency. Shareholders and other stakeholders should al-
ways be able to understand clearly how the system for compen-
sating Managing Board members helps implement the Compa-
ny's strategy and fosters its sustainable development.
The target values, target ranges and target attainment for the
Bonus-related key financial figures in a reporting year will be pub-
lished retroactively in the Compensation Report. The target values,
target ranges and target attainment measured in terms of capital
market performance and of the Siemens ESG/Sustainability Index
will be published for the relevant Stock Awards tranches after the
expiration of the vesting period.
Combined Management Report
67
Targets for fiscal 2020
A.10.2 Compensation of
On September 18, 2019, the Supervisory Board of Siemens AG Supervisory Board members
In the future, the Compensation Report will include the relevant
performance criteria for the following fiscal year's Bonus, to-
gether with the corresponding key figures. The key figures for the
Siemens ESG/Sustainability Index that have been selected for the
new tranche of Stock Awards will also be published.
The Managing Board compensation system is intended to comply
with regulatory requirements as well as to be appropriate and in
line with prevailing market practice. As a result, the following
adjustments to the design of the compensation system have
been or will be implemented as of fiscal 2020:
Compensation caps/contract provisions
> To anchor environmental, social & governance (ESG) factors
and sustainability in the Managing Board compensation sys-
tem, a second performance criterion will be introduced for the
Stock Awards in the form of a Siemens-internal ESG/Sustain-
ability Index, which is based on three equally weighted met-
rics. The ESG metrics will reflect relevant strategic and socio-
political topics.
80% based on TSR vs. MSCI World Industrials
20% based on a Siemens-internal ESG/Sustainability Index
comprising three key performance indicators, such as CO2 emissions
Bonus and Stock Awards, expanded scope
Expense reimbursement
BSAV contribution as percentage of target cash compensation
Fringe benefits
Pension benefit
commitments
Expense reimbursement up to an amount
defined by the Supervisory Board
Defined BSAV contribution in euros; option for new appointees
to receive amount for use at their discretion
"Vision 2020+"/sustainable company development
With "Vision 2020+,” Siemens has set the course for sustainable
value creation through accelerated growth and stronger profit-
ability. The aim of "Vision 2020+" is to give the Company's individ-
ual businesses considerably more entrepreneurial freedom and
more responsibility for their results. This realignment requires
a Managing Board compensation system that takes greater ac-
count of Managing Board members' individual achievements and
responsibilities and provides incentives for Siemens' sustainable,
profitable development as a whole. As an important step in the
move to tie compensation more closely to long-term Company
development, the proportion of Stock Awards in target total com-
pensation will be increased for all Managing Board members.
In addition, the Share Ownership Guidelines, which are already
ambitious, will be retained.
66
Combined Management Report
In addition, the following key changes will be made to the system:
> The short-term variable component (Bonus) will continue to
be based on two key financial figures, each of which will have
a one-third weighting. For Managing Board members with
responsibilities for an individual business one of these two key
figures will be measured at the level of that business in order
to take due account of the operational implementation of the
Company strategy. For Managing Board members with primar-
ily functional responsibilities (for example, finance), both key
financial figures will continue to be measured at the Group
level. Individual targets will still have a one-third weighting.
> For long-term stock-based compensation (Stock Awards), the
performance of Siemens AG on the capital market will be
compared to a broad sector index (MSCI World Industrials) on
the basis of total shareholder return (TSR). In view of the
planned and announced changes in the business portfolio of
Siemens AG, MSCI World Industrials offers a stable, strategi-
cally relevant metric over the term of a tranche. By taking ac-
count of share price performance and dividends paid, TSR
reflects the overall performance of the Siemens share.
approved the following performance criteria for the short-term
variable compensation component (Bonus) for fiscal 2020:
■33.33% individual targets
> for "Siemens Group," the performance criterion "profit," meas-
ured in terms of basic earnings per share (EPS)
The Supervisory Board also approved the following performance
criteria for the 2020 Siemens Stock Awards tranche (vesting pe-
riod: November 2019 to November 2023):
2 To compensate for the forfeiture of stock at her previous
employer, Janina Kugel was granted a special allocation of
3,999 Siemens Stock Awards in February 2014. This commit-
ment arose out of an entitlement that Janina Kugel had
acquired when she was an employee of Siemens AG before
she became a member of the Managing Board. In Febru-
ary 2018, after expiration of the four-year vesting period,
the Siemens Stock Awards were settled in cash. The value
of these Siemens Stock Awards is reported under "Other"
(see "Benefits received," fiscal 2018).
Chair
€80,000
Chair
€80,000
Member
Member
Member
Chair
€120,000
Member
€80,000
€80,000
€60,000
€40,000
€40,000
68 Combined Management Report
Member
Chair
€160,000
Finance Committee
Committee
> "long-term value creation," measured in terms of total share-
holder return (TSR) relative to the MSCI World Industrials index
> "sustainability," measured in terms of the Siemens ESG/Sus-
tainability Index and taking into account the following three
equally weighted key factors: CO2 emissions (environmental),
learning hours per employee (social) and Net Promoter Score
(governance).
The current compensation policies for the Supervisory Board
were authorized at the Annual Shareholders' Meeting on Janu-
ary 28, 2014, and have been in effect since fiscal 2014. Details
are set out in Section 17 of the Articles of Association of
Siemens AG. Supervisory Board compensation consists entirely
of fixed compensation; it reflects the responsibilities and scope
of the work of the Supervisory Board members. The Chairman
and Deputy Chairs of the Supervisory Board, as well as the chairs
and members of the Audit Committee, the Chairman's Commit-
tee, the Compensation Committee, the Compliance Committee
and the Innovation and Finance Committee receive additional
compensation.
Under the current rules, the members of the Supervisory Board
receive an annual base compensation, and the members of the
Supervisory Board committees receive additional compensation
for their committee work.
Compensation of members of the Supervisory Board and its committees
Chairman
€280,000
Base compensation of Supervisory Board
Deputy Chairs
€220,000
Additional compensation for committee work
Member
€140,000
Audit Committee
Chairman's Committee
Compensation
Innovation and
Compliance Committee
> for "Managing Board portfolio," the performance criterion
"profitability/capital efficiency," measured in terms of return
on capital employed (ROCE) for Managing Board members
with primarily functional responsibility, and in terms of the
profit margin of the relevant business for Managing Board
members with business responsibility.
2 The fringe benefits reported under "Benefits granted"
(fiscal 2019) also include fringe benefits of €22,288, which
will be paid out in October 2019 (fiscal 2020).
Business responsibilities
■33.34% Group (generally EPS)
■33.33% business (generally
profit margin)
Appointed: August 2014
Pension service cost
4,120
Total non-performance/performance-based compensation
Other
58
2,463
Total compensation (Code)
2,478
0 3,420
1,166
1,180
1,140
1,080
2,644
1,088
611
4,731
1,853
611
2,464
5,683
611
7,696
1,180
3,749
1,140
4,158
Bonus (payout amount)
Total compensation
compensation
One-year variable compensation
Performance-based
Compensation according to applicable reporting standards
581
3,242
8,580
4,230
611
581
2,661
7,969
3,649
0
Lisa Davis¹
1,102
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)³
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
1,102
1,102
Fixed compensation (base compensation)
2018
2019
2018
1,102
2019
(Max)
2019
2019
Benefits received
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
(Min)
1,080
1,102
1,080
One-year variable compensation
1,481
1,830
1,481
1,853
1,853
1,853
Total
401
729
401
751
751
751
Fringe benefits²
Bonus
3 Janina Kugel was appointed to the Managing Board, effec-
tive February 1, 2015. The value of Siemens Phantom Stock
Awards granted to Janina Kugel upon her appointment for
fiscal 2015 on a pro rata basis and settled in November 2018
following the expiration of the four-year vesting period is
reported under "Stock Awards 2015 (Vesting period 2014-18)."
Furthermore, Janina Kugel was entitled to Siemens Stock
Awards from the 2014 and 2015 tranches acquired when
she was an employee of Siemens AG, before she became
a member of the Managing Board. These Stock Awards were
also settled in November 2018, and their value is reported
under "Other" (see "Benefits received," fiscal 2019).
1,102
61
Functional responsibilities
■33.34% Group (generally EPS)
33.33% Group (generally
ROCE)
33.33% individual targets
No adjustment option
Balance at beginning of
Vested and
(Amounts in number of units)
> Supervisory Board can differentiate compensation structure
by function as long as long-term focus is guaranteed
The following table shows changes in the balance of the Stock
Awards held by Managing Board members in fiscal 2019. The table
also includes the expenses for each individual Managing Board
member arising from stock-based compensation recognized in
accordance with IFRS in fiscal 2019 and fiscal 2018.
STOCK-BASED COMPENSATION INSTRUMENTS
A.10.1.3 ADDITIONAL DISCLOSURES ON
Combined Management Report
64
3,455
3,878
1,216
1,250
IN FISCAL 2019
Bonus (payout amount)
Total compensation
> Reinforcement of long-term focus by increasing percentage
of Stock Awards
Malus/clawback
Aspect
Uniform allocation of target direct compensation:
Base compensation
33%
Bonus
33%
Compensation
structure
Stock Awards
Compensation system starting in fiscal 2020
34%
33.34% ROCE
33.33% individual targets
Adjustment option up to ±20%
Payout cap: 240%
Bonus
100% share price performance vs. comparison
group of five competitors
Stock Awards
Bonus and Stock Awards
33.33% EPS
Compensation system until fiscal 2019
One-year variable compensation
Compensation according to applicable reporting standards
751
1,358
2,478
1,088
4,275
0
1,457
1,216
483
1,250
2,644
0
1,102
Bonus
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
One-year variable compensation
1,152
1,171
1,080
Performance-based
compensation
24
Total non-performance/performance-based compensation
3,738
596
586
7,325
596
3,915
7,521
1,756
4,315
Total compensation (Code)
Other
586
586
Pension service cost
3,143
6,740
3,319
6,168
1,171
3,730
586
1,152
Overview of changes in Managing Board compensation
to the Supervisory Board and approved by that body on Septem-
ber 18, 2019. The revised compensation system applies to all
members of the Managing Board in office as of October 1, 2019,
and to all new appointments and reappointments thereafter.
Plans call for submitting the revised compensation system to the
Annual Shareholders' Meeting for endorsement in February 2020.
able Bonus
Awards
grants
Forfeitable
Stock
Awards
grants
2019
2018
Managing Board
members in office as
of September 30, 2019
Joe Kaeser
grants
9,296
53,582
62,022
Dr. Roland Busch
5,578
65,441
26,815
Granted
during
fiscal year¹
33,518
127,189
Lisa Davis
grants
grants
settled
during
fiscal year
Forfeited
during
fiscal year
Balance at end of
fiscal 20192
Expenses for stock-based
compensation (in €)
Bonus
Non-forfeit-
grants
Forfeitable
Awards
grants
Stock
Awards
Forfeitable
Stock
Awards
Awards and
Non-forfeit-
Stock
Awards
Stock
Awards
able Bonus
The key changes in the compensation system for Managing Board
members are explained below.
576
26,815
22,394
33,518
4,824
25,098
65,441
487,709
33,518
254,693
32,764
212,275
55,912 716,334
419,403
71,019 679,797 1,855,216
555,225 5,583,058 13,240,953
1 The resulting fair value per awarded share at grant date in
fiscal 2019 was €43.48.
2 The figures take into account the Stock Awards granted
in November 2018 for fiscal 2019.
In fiscal 2019, a gain from stock-based compensation for former
members of the Managing Board amounting to €928,067 was
recognized in accordance with IFRS. The gain was due to the re-
versal of accrued provisions, which were recognized as income.
These provisions exceeded the payout for the Stock Awards and
Bonus Awards that were transferred in fiscal 2019 or exceeded
the provisions required for the portions of the 2016 and 2017
tranches to be settled in cash. Settlement of Stock Awards for
former Managing Board members via the transfer of Siemens
shares typically takes place after the expiration of the relevant
vesting period.
3 The reported figures include the Stock Awards granted to
Cedrik Neike for his position as Executive Chairman of the
Board of Directors of Siemens Ltd. China.
Combined Management Report
65
A.10.1.4 OUTLOOK FOR FISCAL 2020
Due to the strategic realignment of the Siemens Group under
"Vision 2020+," the draft version of the German Corporate Gover-
nance Code of May 9, 2019, and the draft of the act transposing
the second European Shareholder Rights Directive into German
law (ARUG II), the compensation system for Managing Board
members was thoroughly reviewed and further developed in fis-
cal 2019. The Compensation Committee prepared a recommenda-
tion for a revision of the compensation system that was submitted
653,500
76,476
557,575
26,815
39,551
Klaus Helmrich
4,824
65,441
26,815
32,764
64,316
Janina Kugel
44,007
48,135
11,656
63,294
128,045 1,231,410 3,474,486
64,316 606,684 1,785,096
64,316 605,764 1,701,198
606,940 1,785,401
578,552 1,566,652
Cedrik Neike³
Michael Sen
Prof. Dr. Ralf P. Thomas
Total
17,192
26,815
Combined Management Report
1,171
1,171
Compensation according to applicable reporting standards
4,263
2,899
3,830
553
3,710
2,331
568
553
Performance-based
568
6,951
568
3,954
Total compensation (Code)
3,277
5,683
1,118
3,386
Total non-performance/performance-based compensation
Pension service cost
1,457
568
1,686
Other
compensation
1,213
3,497
2019
(Max)
(Min)
2019
2019
Benefits received
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
One-year variable compensation
Bonus (payout amount)
Total compensation
Appointed: April 2017
Combined Management Report
62
62
in September 2018. The value of these Siemens Phantom
Stock Awards depended solely on the performance of the
Siemens share.
2 To compensate for the forfeiture of stock at his previous
employer, the Supervisory Board granted Cedrik Neike a
one-time amount of €4,200,000 in fiscal 2017. Of this
amount, 75% was granted in the form of non-forfeitable
Siemens Phantom Stock Awards and the remaining 25% as
a special pension benefit contribution. One half of these
Siemens Phantom Stock Awards fell due and was settled in
September 2017. The other half fell due and was settled
(2018: €13,409), respectively, were granted and paid by
Siemens Ltd. China. In addition, it has been agreed that
Siemens AG will offset, as a net amount, any personal tax
burden that, due to Cedrik Neike's two employment relation-
ships, exceeds the burden that he would incur if he paid
tax solely on the benefits granted to him under his employ-
ment contract with Siemens AG in Germany. Siemens AG
will also offset, as a net amount, any burdens due to charges
and contributions to social insurance or comparable statutory
systems in China additional to those he incurs in Germany.
To date, no such offset payments have been made.
1 In addition to his role as a member of the Managing Board of
Siemens AG, Cedrik Neike served as Executive Chairman of
the Board of Directors of Siemens Ltd. China until March 31,
2019. Of the fixed compensation and payout amount for
one-year variable compensation reported here (see "Benefits
received"), an amount of €262,260 (2018: €514,725) was
granted and paid by Siemens Ltd. China and deducted from
the compensation for his Managing Board activities at
Siemens AG. Of the multi-year variable compensation
and fringe benefits reported here (see "Benefits granted"),
amounts of €131,359 (2018: €261,625) and €10,842
1,144
3,341
Michael Sen
2018
1,088
0
1,080
1,102
1,080
1,102
1,102
1,102
Fixed compensation (base compensation)
Fringe benefits
Total
2018
17
2019
2019
(Max)
2019
(Min)
2019
Benefits received²
Benefits granted
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
Cedrik Neike¹
Appointed: April 2017
2018
3,420
17
29
1,166
1,144
1,213
1,080
2,644
0
1,102
Bonus
17
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
1,109
1,118
1,109
1,118
1,118
1,118
29
17
One-year variable compensation
1,171
2019
Fixed compensation (base compensation)
Performance-based
compensation
(Amounts in thousands of €)
Non-performance-
based compensation
Appointed: September 2013
Prof. Dr. Ralf P. Thomas
63
Combined Management Report
3,929
3,906
Benefits granted
1,252
Bonus (payout amount)
Total compensation
One-year variable compensation
Performance-based
compensation
Compensation according to applicable reporting standards
3,400
559
562
3,010
2,841
1,176
2,448
Benefits received
2019
(Min)
Total
72
69
72
69
69
69
Fringe benefits
2019
1,080
1,080
1,102
1,102
Fixed compensation (base compensation)
2018
2019
2018
2019
(Max)
1,102
2018
3,757
559
4,316
1,834
1,590
1,272
510
170
510
170
1,272 1,590
1,272
1,272
One-year variable compensation
Total
170
Fringe benefits
1,080
1,102
1,080
1,102
1,102
1,102
170
8,397
Multi-year variable compensation
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2018 (Vesting period: 2017-21)
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2014 (Vesting period: 2014-18)
Stock Awards 2013 (Vesting period: 2013-17)
Bonus Awards 2014 (Waiting period: 2014-18)
Bonus Awards 2013 (Waiting period: 2013-17)
1,102
562
562
562
4,393
Total compensation (Code)
Pension service cost
6,168
1,272
3,831
Bonus
Total non-performance/performance-based compensation
1,088
0 4,275
1,457
1,252
1,176
1,080
2,644
0
Other
fiscal 2019
Dr. Norbert Reithofer
If a Supervisory Board member is absent from any Supervisory
Board meetings, one-third of the aggregate compensation due to
that member is reduced by the percentage of Supervisory Board
meetings he or she does not attend in relation to the total num-
ber of Supervisory Board meetings held during the fiscal year. In
the event of changes in the composition of the Supervisory Board
or its committees, compensation is paid on a pro rata basis,
rounding up to the next full month.
Other comprehensive income, net of income taxes
(2,170)
1,656
Items that may be reclassified subsequently to profit or loss
(2)
(8)
Income (loss) from investments accounted for using the equity method, net
24
69
therein: Income tax effects
(63)
(177)
Derivative financial instruments
24
(1,819)
(287)
1,841
624
(305)
Remeasurements of equity instruments
therein: Income tax effects
Income (loss) from investments accounted for using the equity method, net
Items that will not be reclassified to profit or loss
472
(15)
(6)
(1,184)
(360)
Currency translation differences
Available-for-sale financial assets
therein: Income tax effects
3
(360)
(2,530)
3,590
Sep 30,
Total assets
Total non-current assets
Other assets
Deferred tax assets
Other financial assets
Property, plant and equipment
Other intangible assets
Goodwill
Total current assets
Assets classified as held for disposal
Other current assets
Current income tax assets
Inventories
Contract assets
Other current financial assets
Trade and other receivables
Total comprehensive income
Attributable to:
Non-controlling interests
Shareholders of Siemens AG
540
259
6,120
5,581
Consolidated Financial Statements
77
B.3 Consolidated Statements of Financial Position
(in millions of €)
Assets
Cash and cash equivalents
3,330
Note
(1,163)
therein: Income tax effects
Non-controlling interests
Attributable to:
124
6,120
5,648
Net income
3
5,996
5,646
Income from discontinued operations, net of income taxes
Income from continuing operations
(2,054)
(1,872)
7
Income tax expenses
8,050
7,518
Income from continuing operations before income taxes
6
(466)
(678)
Income (loss) from investments accounted for using the equity method, net
4
199
Shareholders of Siemens AG
Interest income
(3)
1,481
Interest expenses
Other financial income (expenses), net
(1,129)
(74)
(1,089)
1,475
1,634
17
Basic earnings per share
Income from discontinued operations
Net income
Remeasurements of defined benefit plans
6,120
5,648
Net income
2018
2019
Note
(in millions of €)
Fiscal year
B.2 Consolidated Statements of Comprehensive Income
7.01
6.32
0.15
6.86
6.32
28
7.12
Diluted earnings per share
Income from continuing operations
Income from discontinued operations
Net income
76
Consolidated Financial Statements
474
Income from continuing operations
313
5,807
28
6.41
6.97
0.15
6.41
5,174
2019
2018
12,391
685
986
Issued capital
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
4,216
3,714
18
Provisions
1,092
1,305
7
Deferred tax liabilities
7,684
9,896
9,023
9,118
Liabilities associated with assets classified as held for disposal
2
1
Total current liabilities
2,226
50,723
Long-term debt
16
30,414
27,120
Provisions for pensions and similar obligations
17
47,874
15
2,198
42,995
Consolidated Financial Statements
78
138,915
150,248
48,046
50,984
2,573
2,858
45,474
48,125
(3,922)
(3,663)
(352)
1,134
41,014
41,818
6,184
99,265
90,869
19
2,550
2,550
Capital reserve
48,541
Retained earnings
Treasury shares, at cost
Total equity attributable to shareholders of Siemens AG
Non-controlling interests
Total equity
Total liabilities and equity
6,287
Other components of equity
Other current liabilities
3,102
2,378
11,381
12,183
13
10,131
9,800
13
28,344
30,160
12
64,556
70,370
94
238
1,707
1,960
1,010
1,103
11,066
8
18,894
18,455
9
10,669
Investments accounted for using the equity method
9,427
10,309
8,912
11
14,806
13,885
7
10
4
2,244
2,579
11,409
10,716
Other current financial liabilities
1,743
1,485
Contract liabilities
Trade payables
10
14,464
Current provisions
18
3,682
3,931
Current income tax liabilities
16,452
Other operating expenses
5,057
16
14,23
19,843
17,774
7
3,174
2,341
6,034
2,475
79,878
74,359
150,248
138,915
Liabilities and equity
Short-term debt and current maturities of long-term debt
1,810
Compensation for work on the Chairman's Committee counts
toward compensation for work on the Compensation Committee.
No additional compensation is paid for work on the Compliance
Committee if a member of that committee is already entitled to
compensation for work on the Audit Committee.
500
5
140,000
Jürgen Kerner¹
244,000
24,000
80,000
140,000
239,500
19,500
80,000
140,000
Harald Kern¹
351,500
31,500
180,000
140,000
348,500
28,500
7,500
112,500
Bettina Haller¹
140,000
80,000
24,000
200,000
244,000
80,000
24,000
244,000
Robert Kensbock¹
140,000
180,000
140,000
105,000
51,000
140,000
189,000
16,500
38,333
134,167
182,000
12,000
37,778
132,222
109,500
4,500
105,000
Hagen Reimer 1,2
112,500
7,500
105,000
141,222
9,000
200,000
54,000
394,000
Dr. Nicola Leibinger-Kammüller
140,000
80,000
391,000
25,500
140,000
80,000
28,500
248,500
Benoît Potier
132,222
245,500
Dame Nemat Shafik (DPhil)
149,000
140,000
220,000
Birgit Steinborn¹
536,000
51,000
240,000
245,000
612,500
52,500
280,000
280,000
Jim Hagemann Snabe
of September 30, 2019
members in office as
Supervisory Board
(Amounts in €)
Total
Meeting
attendance
fee
In addition, the members of the Supervisory Board are entitled
to receive a fee of €1,500 for each meeting of the Supervisory
Board and/or its committees they attend.
The members of the Supervisory Board are reimbursed for out-
of-pocket expenses incurred in connection with their duties and
for any value-added taxes to be paid on their compensation. For
the performance of his duties, the Chairman of the Supervisory
Board is also entitled to an office with secretarial support and
the use of a car service. No loans or advances from the Com-
pany are provided to members of the Supervisory Board. The
compensation shown in the following table was determined for
each Supervisory Board member for fiscal 2019 (individualized
disclosure).
2019
2018
Additional
Base
compen-
200,000
compen-
sation for
committee
sation
work
fee
Total
Base
compen-
sation
Additional
compen-
sation for
committee
work
Meeting
attendance
9,000
51,000
220,000
Dr. Andrea Fehrmann¹
216,500
16,500
60,000
140,000
215,000
15,000
60,000
140,000
Michael Diekmann
240,000
15,000
120,000
105,000
324,000
24,000
160,000
200,000
57,000
477,000
Werner Wenning
220,000
140,000
471,000
37,500
220,000
140,000
43,500
403,500
Dr. Werner Brandt
140,000
397,500
132,222
7,500
139,722
As of September 30, 2019, Siemens AG maintained a line of credit
in an amount of €7 billion, which provides its lenders with a right
of termination in the event that (1) Siemens AG becomes a sub-
sidiary of another company or (2) a person or a group of persons
acting in concert acquires effective control over Siemens AG by
being able to exercise decisive influence over its activities
(Art. 3(2) of Council Regulation (EC) 139/2004).
A.11.5 Significant agreements which
take effect, alter or terminate upon
a change of control of the Company
following a takeover bid
For details on the authorizations referred to above, especially
with the restrictions to exclude subscription rights and the
terms to include shares when calculating such restrictions,
please refer to the relevant resolution and to Section 4 of the
Articles of Association.
In November 2018, the Company announced that it would carry
out a share buyback of up to €3 billion in volume until Novem-
ber 15, 2021 at the latest. The buyback commenced on Decem-
ber 3, 2018 using the authorizations given by the Annual Share-
holders' Meeting on January 27, 2015. Under this share buyback
Siemens repurchased 10,189,078 shares by September 30, 2019.
The total consideration paid for these shares amounted to about
€982 million (excluding incidental transaction charges). The buy-
back has the exclusive purposes of retirement, of issuing shares
to employees, board members of affiliated companies and mem-
bers of the Managing Board of Siemens AG, and of servicing/se-
curing the obligations or rights to acquire Siemens shares arising
particularly from or in connection with convertible bonds and
warrant bonds. As of September 30, 2019, the Company held
37,232,048 shares of stock in treasury.
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this or any previously given authoriza-
tion to meet obligations or rights to acquire Siemens shares that
were or will be agreed with members of the Managing Board
within the framework of rules governing Managing Board com-
pensation.
> sold, with the approval of the Supervisory Board, to third parties
against payment in cash if the price at which such Siemens
shares are sold is not significantly lower than the market price
of Siemens stock (exclusion of subscription rights, limited to
10% of the capital stock, by mutatis mutandis application of Sec-
tion 186 para. 3 sentence 4 German Stock Corporation Act) or
> used to service or secure obligations or rights to acquire
Siemens shares arising particularly from or in connection with
convertible bonds or warrant bonds issued by the Company or
any of its consolidated subsidiaries (exclusion of subscription
rights, limited to 10% of the capital stock, by mutatis mutandis
application of Section 186 para. 3 sentence 4 German Stock
Corporation Act).
> offered and transferred, with the approval of the Supervisory
Board, to third parties against non-cash contributions
used in connection with share-based compensation programs
and/or employee share programs of the Company or any of its
affiliated companies and issued to individuals currently or for-
merly employed by the Company or any of its affiliated com-
panies as well as to board members of any of the Company's
affiliated companies
> retired
In addition to selling them over the stock exchange or through a
public sales offer to all shareholders, the Managing Board is autho-
rized by resolution of the Shareholders' Meeting on January 27, 2015
to also use Siemens shares repurchased on the basis of this or any
previously given authorization for every permissible purpose, in
particular as follows: Such Siemens shares may be
72 Combined Management Report
The Company may not repurchase its own shares unless so au-
thorized by a resolution duly adopted by the shareholders at a
general meeting or in other very limited circumstances set forth
in the German Stock Corporation Act. On January 27, 2015, the
Shareholders' Meeting authorized the Company to acquire until
January 26, 2020 up to 10% of its capital stock existing at the
date of adopting the resolution or - if this value is lower - as of
the date on which the authorization is exercised. The aggregate
of shares of stock of Siemens AG repurchased under this autho-
rization and any other Siemens shares previously acquired and
still held in treasury by the Company or attributable to the Com-
pany pursuant to Sections 71d and 71e of the German Stock Cor-
poration Act may at no time exceed 10% of the then existing
capital stock. Any repurchase of Siemens shares shall be accom-
plished at the discretion of the Managing Board either (1) by ac-
quisition over the stock exchange or (2) through a public share
repurchase offer. The Managing Board is additionally authorized
to complete the repurchase of Siemens shares in accordance
with the authorization described above by using certain deriva-
tives (put and call options, forward purchases and any combina-
tion of these derivatives). In exercising this authorization, all
stock repurchases based on the derivatives are limited to a max-
imum volume of 5% of Siemens' capital stock existing at the date
of adopting the resolution at the Shareholders' Meeting. A deriv-
ative's term of maturity may not, in any case, exceed 18 months
and must be chosen in such a way that the repurchase of Siemens
shares upon exercise of the derivative will take place no later
than January 26, 2020.
The new shares issued or to be issued in exchange for contribu-
tions in cash and in kind and with shareholders' subscription
rights excluded, may in certain cases be subject to further restric-
tions. The details of those restrictions are described in the rele-
vant authorization. In addition, the Managing Board has issued
the commitment not to increase the capital stock from the
Authorized Capital 2019 and the Conditional Capital 2019 by a
total of more than 10% of the capital stock existing at the time of
the Shareholders' Meeting on January 30, 2019, to the extent
that capital increases with shareholders' subscription rights ex-
cluded are made from the Authorized Capital 2019 against con-
tributions in cash or in kind or to service convertible bonds and/
or warrant bonds issued under the authorization approved on
January 30, 2019 with shareholders' subscription rights excluded.
This commitment ends no later than January 29, 2024.
a compensation for the effects of dilution.
> The exclusion is used to grant holders of conversion or option
rights or conversion or option obligations on Siemens shares
> The exclusion is necessary with regard to fractional amounts
resulting from the subscription ratio.
> The issue price of the new shares/bonds is not significantly
lower than the stock market price of the Siemens shares al-
ready listed or the theoretical market price of the bonds com-
puted in accordance with generally accepted actuarial meth-
ods (exclusion of subscription rights, limited to 10% of the
capital stock, in accordance with or by mutatis mutandis ap-
plication of Section 186 para. 3 sentence 4 German Stock Cor-
poration Act).
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
sustained basis, powers of attorney allowing it to exercise the
voting rights for 9,862,275 shares (as of September 30, 2019) on
behalf of members of the Siemens family. These shares are part
of the total number of shares held by the family's members. The
powers of attorney are based on an agreement between the VSV
and, among others, members of the Siemens family. The shares
are voted together by VSV, taking into account the proposals of a
family partnership established by the family's members or of one
of this partnership's governing bodies.
Articles of Association
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act and Section 31 of the German Co-
determination Act (Mitbestimmungsgesetz). According to Sec-
tion 8 para. 1 of the Articles of Association, the Managing Board
is comprised of several members, the number of which is deter-
mined by the Supervisory Board.
According to Section 179 of the German Stock Corporation Act,
any amendment to the Articles of Association requires a resolu-
tion of the Shareholders' Meeting. The authority to adopt purely
formal amendments to the Articles of Association was trans-
ferred to the Supervisory Board under Section 13 para. 2 of the
Articles of Association. In addition, by resolutions of the Share-
holders' Meetings, the Supervisory Board has been authorized to
amend Section 4 of the Articles of Association in accordance with
the utilization of the Authorized and Conditional Capitals, and
after expiration of the then-applicable authorization and utiliza-
tion period.
Resolutions of the Shareholders' Meeting require a simple major-
ity vote, unless a greater majority is required by law. Pursuant to
Section 179 para. 2 of the German Stock Corporation Act, amend-
ments to the Articles of Association require a majority of at least
three-quarters of the capital stock represented at the time of the
casting of the votes, unless another capital majority is prescribed
by the Articles of Association.
A.11.4 Powers of the Managing Board
to issue and repurchase shares
In addition, in March 2013 and in June 2019 respectively, a con-
solidated subsidiary as borrower and Siemens AG as guarantor
entered into a bilateral loan agreement, each of which has been
drawn in the full amount of US$500 million. Each agreement
provides its respective lender with a right of termination in the
event that (1) Siemens AG becomes a subsidiary of another com-
pany or (2) a person or a group of persons acting in concert ac-
quires effective control over Siemens AG by being able to exer-
cise decisive influence over its activities (Art. 3(2) of Council
Regulation (EC) 139/2004).
The Managing Board is authorized to increase, with the approval
of the Supervisory Board, the capital stock until January 25, 2021
by up to €90 million through the issuance of up to 30 million
registered shares of no par value against contributions in cash
(Authorized Capital 2016). Subscription rights of existing share-
holders are excluded. The new shares shall be issued under the
condition that they are offered exclusively to employees of
Siemens AG and any of its affiliated companies. To the extent
permitted by law, employee shares may also be issued in such a
manner that the contribution to be paid on such shares is covered
by that part of the annual net income which the Managing Board
71
and the Supervisory Board may allocate to other retained earnings
under Section 58 para. 2 of the German Stock Corporation Act.
Furthermore, the Managing Board is authorized to increase, with
the approval of the Supervisory Board, the capital stock until Jan-
uary 29, 2024 by up to €510 million through the issuance of up
to 170 million registered shares of no par value against cash con-
tributions and/or contributions in kind (Authorized Capital 2019).
As of September 30, 2019, the total unissued authorized capital
of Siemens AG therefore consisted of €600 million nominal that
may be used, in installments with varying terms, by issuance of
up to 200 million registered shares of no par value.
By resolutions of the Shareholders' Meetings on January 27, 2015
and January 30, 2019, the Managing Board is authorized to issue
bonds with conversion, exchange or option rights or with war-
rants attached, or a combination of these instruments, each en-
titling the holders to subscribe to up to 80 million registered
shares of Siemens AG of no par value. Based on these two autho-
rizations, the Company or consolidated subsidiaries of the Com-
pany may issue bonds until January 26, 2020 and January 29,
2024, respectively, each in an aggregate principal amount of up
to €15 billion. In order to grant shares of stock to holders/credi-
tors of such convertible bonds or warrant bonds, the capital stock
was conditionally increased by resolutions of the Shareholders'
Meetings 2015 and 2019, each by up to 80 million registered
shares of no par value (Conditional Capitals 2015 and 2019), i.e.
in total by up to €480 million through the issuance of up to
160 million registered shares of no par value.
The new shares under Authorized Capital 2019 and the aforemen-
tioned bonds are to be issued against cash or non-cash contribu-
tions. They are, as a matter of principle, to be offered to share-
holders for subscription. The Managing Board is authorized to
exclude, with the approval of the Supervisory Board, subscription
rights of shareholders in the event of capital increases against
contributions in kind. In the event of capital increases against
contributions in cash, the Managing Board is authorized to ex-
clude shareholders' subscription rights with the approval of the
Supervisory Board in the following cases:
Combined Management Report
Shares issued to employees worldwide under the employee share
programs implemented since the beginning of fiscal 2009, in par-
ticular the Share Matching Plan, are freely transferable unless
applicable local laws provide otherwise. Under the rules of the
program, however, in order to receive one matching share free
of charge for each three shares purchased, participants are re-
quired to hold the shares purchased by them for a vesting period
of several years, during which the participants have to be contin-
uously employed by Siemens AG or another Siemens company.
The right to receive matching shares is forfeited if the purchased
shares are sold, transferred, hedged on, pledged or hypothecated
in any way during the vesting period.
Framework agreements concluded by Siemens AG under Interna-
tional Swaps and Derivatives Association Inc. documentation
(ISDA Agreements) grant each counterparty a right of termina-
tion, including in certain cases of (i) a transformation (for exam-
ple mergers and changes of form), (ii) an asset transfer or (iii)
acquisition of ownership interests that enables the acquirer to
exercise control over Siemens AG or its controlling bodies. Par-
tially this right of termination exists only, if (1) the resulting entity
fails to simultaneously assume Siemens AG's obligations under
the ISDA Agreements or (2) the resulting entity's creditworthi-
ness is materially weaker than Siemens AG's immediately prior to
such event. Generally, ISDA Agreements are designed such that
upon termination all outstanding payment claims documented
under them are to be netted.
73
Other operating income
(12,941)
(13,345)
Selling and general administrative expenses
(5,558)
(5,670)
Research and development expenses
24,863
25,927
(58,181)
(60,922)
83,044
86,849
2,30
2018
2019
Note
A.11.6 Compensation agreements
with members of the Managing
Board or employees in the event
of a takeover bid
As of September 30, 2019, the contracts with the members of the
Managing Board contained the right of the member to terminate
his or her contract with the Company for good cause in the event
of a change of control that results in a substantial change in the
position of a Managing Board member (for example, due to a
change in corporate strategy or a change in the Managing Board
member's duties and responsibilities). A change of control exists
if one or several shareholders acting jointly or in concert acquire
a majority of the voting rights in Siemens AG and exercise a con-
trolling influence, or if Siemens AG becomes a dependent enter-
prise as a result of entering into an intercompany agreement
within the meaning of Section 291 of the German Stock Corpora-
tion Act, or if Siemens AG is to be merged into an existing corpo-
ration or other entity. If this right of termination is exercised, the
Managing Board member is entitled to a severance payment in
the amount of no more than two years' compensation. The cal-
culation of the annual compensation includes not only the base
compensation and the target amount for the bonus, but also the
target amount for the stock awards, in each case based on the
most recent completed fiscal year prior to termination of the con-
tract. The stock-based compensation components for which a
firm commitment already exists will remain unaffected. Addition-
ally, the severance payments cover non-monetary benefits by
including an amount of 5% of the total severance amount. Sev-
erance payments will be reduced by 10% as a lump-sum allow-
ance for discounted values and for income earned elsewhere.
However, this reduction will apply only to the portion of the sev-
erance payment that was calculated without taking account of
the first six months of the remaining term of the Managing Board
member's contract. There is no entitlement to a severance pay-
ment if the Managing Board member receives benefits from third
parties in connection with a change of control. A right to termi-
nate the contract does not exist if the change of control occurs
within a period of twelve months prior to a Managing Board
member's retirement. On September 18, 2019, the Supervisory
Board of Siemens AG resolved that the contracts with members
of the Managing Board shall not contain such right of termina-
tion in the future.
A.11.7 Other takeover-relevant
information
We are not aware of, nor have we during the last fiscal year been
notified of, any shareholder directly or indirectly holding 10%
or more of the voting rights. There are no shares with special
rights conferring powers of control. Shares of stock issued by
Siemens AG to employees under its employee share program
and/or as share-based compensation are transferred to the em-
ployees. The beneficiary employees who hold shares of employee
stock may exercise their control rights in the same way as any
other shareholder in accordance with applicable laws and the
Articles of Association.
74 Combined Management Report
Consolidated
Financial Statements
Combined Management Report
Pages 75-148
B.1 Consolidated Statements of Income
Fiscal year
(in millions of €, per share amounts in €)
Revenue
Cost of sales
Gross profit
R
At the Shareholders' Meeting, each share of stock has one vote
and accounts for the shareholders' proportionate share in the
Company's net income. An exception to this rule applies with
regard to treasury shares held by the Company, which do not
entitle the Company to any rights. Under Section 136 of the Ger-
man Stock Corporation Act the voting right of the affected shares
is excluded by law.
A.11.2 Restrictions on voting rights
or transfer of shares
and obligations are governed in detail by the provisions of the
German Stock Corporation Act, in particular by Sections 12, 53a et
seq., 118 et seq. and 186 of the German Stock Corporation Act.
244,000
24,000
80,000
140,000
Matthias Zachert
152,000
12,000
140,000
149,000
9,000
140,000
Dorothea Simon¹
152,000
12,000
140,000
149,000
9,000
105,000
7,500
112,500
Dr. Nathalie von Siemens
140,000
40,000
105,000
13,500
140,000
30,000
15,000
185,000
Michael Sigmund
140,000
193,500
60,000
12,000
177,000
152,000
4,812,000
1 These employee representatives on the Supervisory Board
and the representatives of the trade unions on the Super-
visory Board have declared their willingness to transfer
their compensation to the Hans Boeckler Foundation, in
accordance with the guidelines of the Confederation of
German Trade Unions.
2 Hagen Reimer was elected a member of the Supervisory
Board, effective at the end of the Annual Shareholders'
Meeting on January 30, 2019. He succeeded Reinhard Hahn,
who left the Supervisory Board, effective the same date.
3 Compared to the amounts reported in the 2018 Compen-
sation Report, this amount does not include compensation
totaling €543,667 for former Supervisory Board members
Olaf Bolduan, Dr. Gerhard Cromme, Dr. Hans Michael Gaul,
Gérard Mestrallet, Güler Sabançi and Sibylle Wankel.
Combined Management Report
69
12,000
454,500
A.10.3 Other
70 Combined Management Report
A.11 Takeover-relevant information
(pursuant to Sections 289a para. 1 and 315a para. 1 of the German Commercial Code)
and explanatory report
A.11.1 Composition of common stock
A.11.3 Legislation and provisions of
the Articles of Association applicable
to the appointment and removal
of members of the Managing Board
confer the same rights and obligations. The shareholders' rights and governing amendment to the
As of September 30, 2019, the Company's common stock totaled
€2.550 billion. The capital stock is divided into 850 million regis-
tered shares of no par value. The shares are fully paid in. All shares
The Company provides a group insurance policy for Supervisory
and Managing Board members and certain other employees of
the Siemens Group. The policy is taken out for one year at a time
or renewed annually. It covers the personal liability of the insured
individuals in cases of financial loss associated with their activi-
ties on behalf of the Company. The insurance policy for fiscal
2019 includes a deductible for the members of the Managing
Board and the Supervisory Board that complies with the require-
ments of the German Stock Corporation Act and the Code.
442
1,508,333
51,167
5,145,611
Gunnar Zukunft¹
140,000
9,000
149,000
105,000
7,500
140,000
2,849,167
112,500
of the Supervisory Board
Reinhard Hahn 1,2
Total³
46,667
3,088,333
1,617,778
4,500
439,500
Former members
Equity
(3,144)
2,550
Cash flows from investing activities – discontinued operations
(3,741)
(5,012)
Cash flows from investing activities - continuing operations
2,338
1,484
Disposal of investments and financial assets for investment purposes
362
(33)
261
238
1
(1,620)
Disposal of businesses, net of cash disposed
Disposal of intangibles and property, plant and equipment
Change in receivables from financing activities
(1,958)
(1,971)
(525)
(958)
(2,602)
(2,610)
Purchase of investments and financial assets for investment purposes
Acquisitions of businesses, net of cash acquired
(1,161)
Additions to intangible assets and property, plant and equipment
(33)
(5,011)
Dividends attributable to non-controlling interests
(3,011)
(3,060)
Dividends paid to shareholders of Siemens AG
(1,002)
(1,123)
Interest paid
333
(753)
Change in short-term debt and other financing activities
(3,530)
Cash flows from investing activities - continuing and discontinued operations
(3,205)
2,734
6,471
Issuance of long-term debt
4,064
1,044
Re-issuance of treasury shares and other transactions with owners
(1,409)
(1,407)
Purchase of treasury shares
Cash flows from financing activities
(3,774)
Repayment of long-term debt (including current maturities of long-term debt)
(246)
Cash flows from investing activities
8,456
(984)
943
605
(1,792)
(358)
(392)
(505)
2,054
1,872
Income tax expenses
3,419
(171)
3,494
(124)
(3)
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
Income from discontinued operations, net of income taxes
6,120
5,648
Net income
Cash flows from operating activities
Income taxes paid
Change in other assets and liabilities
Additions to assets leased to others in operating leases
Contract liabilities
Amortization, depreciation and impairments
8,425
(614)
85
Cash flows from operating activities - continuing and discontinued operations
10
(27)
Cash flows from operating activities - discontinued operations
8,415
8,482
Cash flows from operating activities - continuing operations
1,396
1,540
Interest received
270
(81)
299
(2,061)
(2,589)
(309)
(1,486)
(599)
(671)
140
1,684
1,033
465
(1,432)
Dividends received
(126)
Cash flows from financing activities - continuing operations
(2,277)
(3)
(10)
(30)
4
80 Consolidated Financial Statements
Balance as of September 30, 2019
Other changes in equity
Other transactions with non-controlling interests
Disposal of equity instruments
Re-issuance of treasury shares
Purchase of treasury shares
(9)
Share-based payment
(114)
99
(3,060)
(1,138)
Other comprehensive income, net of income taxes
5,174
Net income
41,007
6,184
2,550
Balance as of October 1, 2018
Dividends
(7)
2,550
41,818
(53)
(2,476)
6,120
313
5,807
44,619
1,438
43,181
Total equity
interests
Non controlling
6,287
Total equity
attributable to
shareholders
of Siemens AG
Treasury
shares at cost
Derivative financial
instruments
(27)
(1,821)
(262)
(181)
1,845
(prior year:
available-for-sale
financial assets)
Equity instruments
lation differences
Currency trans-
(3,196)
Effect of retrospectively adopting IFRS 9
41,014
6,184
(in millions of €)
B.5 Consolidated Statements of Changes in Equity
Consolidated Financial Statements 79
11,066
12,391
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
11,066
12,391
Cash and cash equivalents at end of period
8,389
Balance as of October 1, 2017
11,066
2,677
1,325
Change in cash and cash equivalents
(29)
157
Effect of changes in exchange rates on cash and cash equivalents
(1,946)
(2,277)
Cash flows from financing activities - continuing and discontinued operations
Cash flows from financing activities - discontinued operations
(1,946)
Cash and cash equivalents at beginning of period
Net income
Other comprehensive income, net of income taxes
Dividends
(133)
Balance as of September 30, 2018 (as previously reported)
41,014
6,184
2,550
Balance as of September 30, 2018
(5)
Other changes in equity
(11)
Other transactions with non-controlling interests
2,884
Changes in equity resulting from major portfolio transactions
38
Re-issuance of treasury shares
(79)
(222)
(3,011)
(366)
5,807
35,794
Retained earnings
Capital reserve
6,368
Issued capital
2,550
Purchase of treasury shares
Share-based payment
Trade payables
Trade and other receivables
Inventories
Contract assets
Provisions - A provision is recognized in the Statement of
Financial Position when it is probable that the Company has a
present legal or constructive obligation as a result of a past event,
it is probable that an outflow of economic benefits will be re-
quired to settle the obligation and a reliable estimate can be
made of the amount of the obligation. If the effect is material,
provisions are recognized at present value by discounting the
expected future cash flows at a pretax rate that reflects current
market assessments of the time value of money. When a contract
becomes onerous, the present obligation under the contract is
recognized as a provision.
Consolidated Financial Statements 85
86
Significant estimates are involved in the determination of provi-
sions related to onerous contracts, warranty costs, asset retire-
ment obligations, legal and regulatory proceedings as well as
governmental investigations (Legal Proceedings). Siemens re-
cords a provision for onerous contracts with customers when
current estimates of total estimated costs exceed estimated rev-
enue. Onerous contracts with customers are identified by moni-
toring the progress of the project and updating the estimates
which requires significant judgment relating to achieving certain
performance standards as well as estimates involving warranty
costs and estimates regarding project delays including the assess-
ment of responsibility splits between the contract partners for
these delays. Uncertainties regarding asset retirement obliga-
tions include the estimated costs of decommissioning and final
waste storage because of the long time frame over which future
cash outflows are expected to occur including the respective in-
terest accretion. The estimated cash outflows could be impacted
significantly by changes of the regulatory environment.
Legal Proceedings often involve complex legal issues and are sub-
ject to substantial uncertainties. Accordingly, considerable judg-
ment is part of determining whether it is probable that there is a
present obligation as a result of a past event at the end of the
reporting period, whether it is probable that such a Legal Pro-
ceeding will result in an outflow of resources and whether the
amount of the obligation can be reliably estimated. Internal and
external counsels are generally part of the determination pro-
cess. Due to new developments, it may be necessary, to record a
provision for an ongoing Legal Proceeding or to adjust the
amount of a previously recognized provision. Upon resolution of
a Legal Proceeding, Siemens may incur charges in excess of the
recorded provisions for such matters. The outcome of Legal Pro-
ceedings may have a material effect on Siemens' financial posi-
tion, its results of operations and/or its cash flows.
Termination benefits - Termination benefits are provided as a
result of an entity's offer made in order to encourage voluntary
redundancy before the regular retirement date or from an entity's
decision to terminate the employment. Termination benefits in
accordance with IAS 19, Employee Benefits, are recognized as a
liability and an expense when the entity can no longer withdraw
the offer of those benefits.
Financial instruments - A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Based on their
contractual cash flow characteristics and the business model they
are held in, financial instruments are classified as financial assets
and financial liabilities measured at cost or amortized cost, mea-
sured at fair value, loan commitments and credit guarantees,
contract assets and receivables from finance leases. Regular way
purchases or sales of financial assets are accounted for at the
trade date. Siemens does not use the option to designate finan-
cial assets or financial liabilities at fair value through profit or loss
at inception (Fair Value Option). Initially, financial instruments
are recognized at fair value and net of transaction costs, if not
categorized at FVTPL. Receivables from finance leases are recog-
nized at an amount equal to the net investment in the lease.
Subsequently, financial assets and liabilities are measured ac-
cording to the category to which they are assigned to:
Financial assets measured at fair value through profit and loss
(FVTPL) – Debt financial assets are measured at FVTPL if the busi-
ness model they are held in is not a hold-to-collect or a hold-and-
sell business model, or if their contractual cash flows do not
represent solely payments of principal and interest. Equity instru-
ments are measured at FVTPL unless the FVOCI-option is elected.
Financial assets measured at fair value through other compre-
hensive income (FVOCI) are equity instruments for which
Siemens irrevocably elects to present subsequent fair value
changes in OCI at initial recognition of the instrument. Unreal-
ized gains and losses, net of deferred income tax expenses, as
well as gains and losses on the subsequent sale of the instru-
ments are recognized in line item Other comprehensive income,
net of income taxes.
Financial assets measured at amortized cost – Loans, receivables
and other debt instruments held in a hold-to-collect business
model with contractual cash flows that represent solely pay-
ments of principal and interest are measured at amortized cost
using the effective interest method less valuation allowances for
expected credit losses.
Entitlements resulting from plans based on asset returns from
underlying assets are generally measured at the fair value of the
underlying assets at period-end. If the performance of the under-
lying assets is lower than a guaranteed return, the DBO is mea-
sured by projecting forward the contributions at the guaranteed
fixed return and discounting back to a present value.
Valuation allowances are set up for expected credit losses, repre-
senting a forward-looking estimate of future credit losses involv-
ing significant judgment. Expected credit loss is the gross carry-
ing amount less collateral, multiplied by the probability of default
and a factor reflecting the loss in the event of default. Valuation
allowances are not recognized when the gross carrying amount
is sufficiently collateralized. Probabilities of default are mainly
derived from internal rating grades. A simplified approach is used
to assess expected credit losses from trade receivables, lease re-
ceivables and contract assets by applying their lifetime expected
credit losses. The valuation allowance for loans and other long-
term debt instruments primarily held at Financial Services (SFS)
is measured according to a three-stage impairment approach:
Stage 2: If the credit risk of a financial asset increases significantly
without being credit-impaired, lifetime expected credit losses are
recognized based on a lifetime probability of default. A significant
Consolidated Financial Statements
increase in credit risk is determined for each individual financial
instrument using internal credit ratings. A rating deterioration
does not trigger a transfer into Stage 2, if the credit rating re-
mains within the investment grade range. More than 30 days
past due payments will not be transferred into Stage 2, if the
delay is not credit-risk-related.
Stage 3: If the financial asset is credit-impaired, valuation allow-
ances equal lifetime expected credit losses. A financial asset is
considered credit-impaired when there is observable information
about significant financial difficulties and a high vulnerability
to default, however, the definition of default is not yet met. Im-
pairment triggers include liquidity problems, a request for debt
restructuring or a breach of contract. A credit-risk driven con-
tractual modification always results in a credit-impaired finan-
cial asset.
Financial assets are written off as uncollectible if recovery ap-
pears unlikely. Generally, if the limitation period expired, when a
debtor's sworn statement of affairs is received, or when the re-
ceivable is not pursued due to its minor value. Receivables are
written off when bankruptcy proceedings close.
Cash and cash equivalents - The Company considers all highly
liquid investments with less than three months maturity from the
date of acquisition to be cash equivalents. Cash and cash equiv-
alents are measured at cost.
A financial asset is derecognized when the rights to cash flows
expire or the financial asset is transferred to another party. Sig-
nificant modifications of contractual terms of a financial asset
measured at amortized cost result in derecognition and recogni-
tion of a new financial asset; for insignificant modifications, the
carrying amount of the financial asset is adjusted without
derecognition.
Loan Commitments and credit guarantees - Expected credit
losses for irrevocable loan commitments are determined using
the three-stage impairment approach for financial assets mea-
sured at amortized cost and recognized as a liability. Credit guar-
antees are recognized at the higher of consideration received for
granting the guarantee and expected credit losses determined.
Financial liabilities
-
except for derivative financial instru-
ments, Siemens measures financial liabilities at amortized cost
using the effective interest method.
Stage 1: At inception, 12-month expected credit losses are recog-
nized based on a twelve months probability of default.
Derivative financial instruments - Derivative financial instru-
ments, such as foreign currency exchange contracts and interest
rate swap contracts are measured at fair value unless they are
designated as hedging instruments, for which hedge account-
ing is applied. Changes in the fair value of derivative financial
differ
Remeasurements comprise actuarial gains and losses as well
as the difference between the return on plan assets and the
amounts included in net interest on the net defined benefit lia-
bility (asset). They are recognized in Other comprehensive in-
come, net of income taxes.
Product-related expenses - Provisions for estimated costs re-
lated to product warranties are recorded in line item Cost of sales
at the time the related sale is recognized.
Research and development costs - Costs of research activities
are expensed as incurred. Costs of development activities are
capitalized when the recognition criteria in IAS 38 are met. Capi-
talized development costs are stated at cost less accumulated
Consolidated Financial Statements 83
amortization and impairment losses with an amortization period
of generally three to ten years.
Earnings per share - Basic earnings per share are computed by
dividing income from continuing operations, income from dis-
continued operations and net income, all attributable to ordinary
shareholders of Siemens AG by the weighted average number of
shares outstanding during the year. Diluted earnings per share
are calculated by assuming conversion or exercise of all poten-
tially dilutive securities and share-based payment plans.
Goodwill - Goodwill is not amortized, instead, goodwill is tested
for impairment annually, as well as whenever there are events
or changes in circumstances (triggering events) which suggest
that the carrying amount may not be recoverable. Goodwill is
carried at cost less accumulated impairment losses. The good-
will impairment test is performed at the level of a cash-generat-
ing unit or a group of cash-generating units, generally repre-
sented by a segment. Siemens Gamesa Renewable Energy and
Siemens Healthineers are tested one level below the segment.
This is the lowest level at which goodwill is monitored for internal
management purposes.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit or
the group of cash-generating units that is expected to benefit
from the synergies of the business combination. If the carrying
amount of the cash-generating unit or the group of cash-gener-
ating units, to which the goodwill is allocated, exceeds its recov-
erable amount, an impairment loss on goodwill allocated to this
cash-generating unit or this group of cash-generating units is
recognized. The recoverable amount is the higher of the cash-
generating unit's or the group of cash-generating units' fair value
less costs to sell and its value in use. If either of these values ex-
ceeds the carrying amount, it is not always necessary to deter-
mine both values. These values are generally determined based
on discounted cash flow calculations. Impairment losses on
goodwill are not reversed in future periods.
The determination of the recoverable amount of a cash-generat-
ing unit or a group of cash-generating units to which goodwill is
allocated involves the use of estimates by management. The out-
come predicted by these estimates is influenced e.g. by the
successful integration of acquired entities, volatility of capital
markets, interest rate developments, foreign exchange rate fluc-
tuations and the outlook on economic trends. In determining
recoverable amounts, discounted cash flow calculations use five-
year projections that are based on financial forecasts. Cash flow
projections take into account past experience and represent
management's best estimate about future developments. Cash
flows after the planning period are extrapolated using individual
growth rates. Key assumptions on which management has based
its determination of fair value less costs to sell and value in use
include estimated growth rates and weighted average cost of
capital. These estimates, including the methodology used, can
have a material impact on the respective values and ultimately
the amount of any goodwill impairment.
Other intangible assets - The Company amortizes intangible
assets with finite useful lives on a straight-line basis over their
respective estimated useful lives. Estimated useful lives for pat-
ents, licenses and other similar rights generally range from three
to five years, except for intangible assets with finite useful lives
acquired in business combinations. Intangible assets acquired in
business combinations primarily consist of customer relation-
ships and trademarks as well as technology. Useful lives in spe-
cific acquisitions ranged from four to 20 years for customer rela-
tionships and trademarks and from five to 25 years for technology.
Property, plant and equipment - Property, plant and equip-
ment, is valued at cost less accumulated depreciation and impair-
ment losses. Depreciation expense is recognized using the
straight-line method. The following useful lives are assumed:
Actuarial valuations rely on key assumptions including discount
rates, expected compensation increases, rate of pension progres-
sion and mortality rates. Discount rates used are determined by
reference to yields on high-quality corporate bonds of appropri-
ate duration and currency at the end of the reporting period. In
case such yields are not available, discount rates are based on
government bonds yields. Due to changing market, economic
and social conditions, the underlying key assumptions may
from actual developments.
Factory and office buildings
Other buildings
Technical machinery & equipment
Furniture & office equipment
Equipment leased to others
5 to 10 years
generally 10 years
generally 5 years
generally 3 to 7 years
Impairment of property, plant and equipment and other
intangible assets - The Company reviews property, plant and
equipment and other intangible assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In addition, intangi-
ble assets not yet available for use are subject to an annual impair-
ment test. Impairment testing of property, plant and equipment
and other intangible assets involves the use of estimates in deter-
mining the assets' recoverable amount which can have a material
impact on the respective values and ultimately the amount of any
impairment.
Discontinued operations and non-current assets held for
disposal - Discontinued operations are reported when a compo-
nent of an entity is classified as held for disposal or has been
disposed of, if the component represents a separate major line of
business or geographical area of operations and is part of a single
coordinated plan to disposal. A non-current asset or a disposal
group is held for disposal if its carrying amount will be recovered
principally through a sale transaction rather than through con-
tinuing use.
84 Consolidated Financial Statements
Income taxes - Tax positions under respective local tax laws and
tax authorities' views can be complex and subject to different
interpretations of tax payers and local tax authorities. Different
interpretations of existing or new tax laws as a result of tax re-
forms or other tax legislative procedures may result in additional
tax payments for prior years and are taken into account based
on management's considerations. Under the liability method,
deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets are recognized if
sufficient future taxable profit is available, including income from
forecasted operating earnings, the reversal of existing taxable
temporary differences and established tax planning opportuni-
ties. As of each period-end, Siemens evaluates the recoverability
of deferred tax assets, based on projected future taxable profits.
Based upon the level of historical taxable income and projections
for future taxable income over the periods in which the deferred
tax assets are deductible, Siemens believes it is probable the
Company will realize the benefits of these deductible differ-
ences. As future developments are uncertain and partly beyond
Siemens's control, assumptions are necessary to estimate future
taxable profits as well as the period in which deferred tax assets
will recover. Estimates are revised in the period in which there is
sufficient evidence to revise the assumption.
Contract assets, contract liabilities, receivables - When ei-
ther party to a contract with customers has performed, Siemens
presents a contract asset, a contract liability or a receivable de-
pending on the relationship between Siemens' performance and
the customer's payment. Contract assets and liabilities are pre-
sented as current since incurred in the normal operating cycle.
Receivables are recognized when the right to consideration
becomes unconditional. Valuation allowances for credit risks
are made for contract assets and receivables in accordance with
the accounting policy for financial assets measured at amor-
tized cost.
Inventories - Inventories are valued at the lower of acquisition
or production costs and net realizable value, costs being gener-
ally determined based on an average or first-in, first-out method.
Defined benefit plans - Siemens measures the entitlements by
applying the projected unit credit method. The approach reflects
an actuarially calculated net present value of the future benefit
entitlement for services already rendered. In determining the net
present value of the future benefit entitlement for service al-
ready rendered (Defined Benefit Obligation (DBO)), the expected
rates of future salary increases and expected rates of future pen-
sion progression are considered. The assumptions used for the
calculation of the DBO as of the period-end of the preceding fis-
cal year are used to determine the calculation of service cost and
interest income and expense of the following year. Significant
plans apply individual spot rates from full discount rate curves to
determine service cost and interest expense. The net interest in-
come or expense for the fiscal year will be based on the discount
rate for the respective year multiplied by the net defined benefit
liability (asset) at the preceding fiscal year's period-end date.
Service cost, past service cost and settlement gains (losses) for
pensions and similar obligations as well as administration costs
unrelated to the management of plan assets are allocated among
functional costs. Past service cost and settlement gains (losses)
are recognized immediately in profit or loss. For unfunded plans,
the amount of the line item Provisions for pensions and similar
obligations equals the DBO. For funded plans, Siemens offsets
the fair value of the plan assets with the DBO. Siemens recog-
nizes the net amount, after adjustments for effects relating to
any asset ceiling.
20 to 50 years
instruments are recognized either in net income or, in the case
of a cash flow hedge, in line item Other comprehensive income,
net of income taxes (applicable deferred income tax). Certain
derivative instruments embedded in host contracts are also ac-
counted for separately as derivatives.
Fair value hedges: The carrying amount of the hedged item is ad-
justed by the gain or loss attributable to the hedged risk. Where
an unrecognized firm commitment is designated as hedged item,
the subsequent cumulative change in its fair value is recognized
as a separate financial asset or liability with corresponding gain
or loss recognized in net income. For hedged items carried at
amortized cost, the adjustment is amortized until maturity of the
hedged item. For hedged firm commitments the initial carrying
amount of the assets or liabilities that result from meeting
the firm commitments are adjusted to include the cumulative
changes in the fair value that were previously recognized as sep-
arate financial assets or liabilities.
Cash flow hedges: The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net of
income taxes, and any ineffective portion is recognized immedi-
ately in net income. Amounts accumulated in equity are reclassi-
fied into net income in the same periods in which the hedged
item affects net income.
(53)
42,936
Financial assets at amortized cost
2,001
(1,567)
6
440
Financial assets at FVOCI
1,882
351
(13)
1,216
2,220
(27)
(61)
Financial assets at FVTPL
Loan Commitments and
Financial Guarantees
Available-for-sale assets (IAS 39) reclassified to amortized cost
(IFRS 9) that are still held have a fair value of €462 million as of
September 30, 2019.
RECENT ACCOUNTING PRONOUNCEMENTS,
NOT YET ADOPTED
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
nates the current classification model for lessee's lease contracts
as either operating or finance leases and, instead, introduces a
single lessee accounting model requiring lessees to recognize
right-of-use assets and lease liabilities for leases with a term of
more than twelve months. This brings the previous off-balance
leases on the balance sheet in a manner largely comparable to
current finance lease accounting. IFRS 16 is effective for annual
periods beginning on or after January 1, 2019. Siemens will adopt
the standard for the fiscal year beginning as of October 1, 2019,
by applying the modified retrospective approach, i.e. compara-
tive figures for the preceding year will not be adjusted. It is in-
tended to use most of the simplifications available under IFRS 16.
Currently, it is expected that the majority of the transition effect
relates to real estate leased by Siemens. Regarding the adoption
of IFRS 16, Leases, Siemens expects an increase of approximately
2% in Total assets as well as in Total liabilities and equity as of
October 1, 2019 (opening balance sheet). In addition, straight-
line operating lease expenses will be replaced by depreciation
expenses on right-of-use assets and interest expenses on lease
liabilities resulting in an increase of EBITDA. As the positive effect
on EBITDA will be more than offset by the increase in industrial
net debt the ratio of industrial net debt to EBITDA will increase.
Furthermore, applying IFRS 16 results in a deterioration in cash
flows from financing activities, an improvement in cash flows
from operating activities and accordingly an increase in Free
Cash Flow.
In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
Tax Treatments. The interpretation clarifies the recognition and
measurement requirements when there is uncertainty over in-
come tax treatments. In assessing the uncertainty, an entity shall
consider whether it is probable that a taxation authority will ac-
cept or revise the uncertain tax treatment. IFRIC 23 is effective for
annual reporting periods beginning on or after January 1, 2019,
while earlier application is permitted. Siemens expects an
increase in current income tax assets and Equity in the middle
three-digit million Euro range due to the adoption of IFRIC 23.
88
Consolidated Financial Statements
(34)
41,773
Oct 1, 2018
IFRS 9 measurement category
Share-based payment
-
Share-based payment awards at
Siemens are predominately designed as equity-settled. Fair value
is measured at grant date and is expensed over the vesting
period. Fair value is determined as the market price of the under-
lying shares, considering dividends during the vesting period the
grantees are not entitled to as well as market conditions and
non-vesting conditions, if applicable. Plans granting the rights to
receive subsidiary shares constitute own shares and, accordingly,
are accounted as equity-settled.
Prior-year information - The presentation of certain prior-year
information has been reclassified to conform to the current year
presentation.
RECENTLY ADOPTED ACCOUNTING
PRONOUNCEMENTS
IFRS 9, Financial Instruments, was adopted retrospectively as of
October 1, 2018. Fiscal 2018 information is measured under
IAS 39; amounts are not adjusted in accordance with IFRS 9 tran-
sitional provisions. The adoption had no material impact on the
Consolidated Financial Statements. IFRS 9 changed the classifica-
tion of financial instruments, mainly regarding the former avail-
able-for-sale category: most debt instruments previously held in
available-for-sale are notes and bonds meeting the solely pay-
ments of principal and interest criterion, accordingly, those were
Consolidated Financial Statements 87
reclassified to amortized cost. Equity instruments were assessed
on a case-by-case basis whether measurement at FVOCI or FVTPL
applies. Debt instruments not satisfying the solely payments of
principal and interest criterion were reclassified from loans and
receivables and available-for-sale to FVTPL.
In fiscal 2018, under IAS 39, loans and receivables were measured
at amortized cost using the effective interest method less any
impairment loss. Available-for-sale financial assets were mea-
sured at fair value, if reliably measurable, and changes in fair
value other than impairment losses were recognized in Other
comprehensive income, net of income taxes; upon derecogni-
tion, gains and losses accumulated in Equity were reclassified. If
fair value was not reliably measurable, available-for-sale assets
were measured at cost. Impairments were based on the incurred
loss model.
IAS 39 measurement category
(in millions of €)
Loans and receivables
Available-for-sale financial assets
(measured through OCI)
Financial assets at fair value
through profit and loss
Loan Commitments
and Financial Guarantees
IAS 39
Sep 30, 2018
Reclassi-
fications
Remeasure-
ments
IFRS 9
Functional costs - In general, operating expenses by types are
assigned to the functions following the functional area of the
corresponding profit and cost centers. Amortization, deprecia-
tion and impairment of intangible assets and property, plant and
equipment are included in functional costs depending on the use
of the assets.
(2,530)
Income from interest - Interest is recognized using the effec-
tive interest method.
Income from royalties: Royalties are recognized on an accrual
basis in accordance with the substance of the relevant agree-
ment.
(26)
(3,922)
45,474
2,573
48,046
(350)
24
(26)
(3,922)
45,474
2,573
24
48,046
(64)
(1)
(65)
(351)
(33)
(26)
(3,922)
45,410
2,571
47,981
5,174
(57)
474
(350)
(2)
Change in operating net working capital from
Other non-cash (income) expenses
(Income) loss related to investing activities
Interest (income) expenses, net
2018
2019
Fiscal year
(in millions of €)
B.4 Consolidated Statements of Cash Flows
(300)
(300)
(6)
(1,468)
743
(1,468)
781
781
92
2,977
1,005
3,981
(11)
5
(6)
(5)
(1,468)
5,648
1,760
(16)
50,984
Consolidated Financial Statements 81
B.6 Notes to Consolidated Financial Statements
NOTE 1 Basis of presentation
The accompanying Consolidated Financial Statements present
the operations of Siemens Aktiengesellschaft with registered of-
fices in Berlin (registry number HRB 12300) and Munich (registry
number HRB 6684), Germany, and its subsidiaries (the Company
or Siemens). They have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by the
European Union as well as with the additional requirements set
forth in Section 315e (1) of the German Commercial Code (HGB).
The financial statements are in accordance with IFRS as issued by
the International Accounting Standards Board (IASB). The Consol-
idated Financial Statements were authorized for issue by the
Managing Board on December 3, 2019.
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may not
add up precisely to totals provided.
Siemens is a German based multinational technology company
with core activities in the fields of electrification, automation and
digitalization.
NOTE 2 Material accounting policies
and critical accounting estimates
Certain of these accounting policies require critical accounting
estimates that involve complex and subjective judgments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Such critical
accounting estimates could change from period to period and
have a material impact on the Company's results of operations,
financial positions and cash flows. Critical accounting estimates
could also involve estimates where Siemens reasonably could
have used a different estimate in the current accounting period.
Siemens cautions that future events often vary from forecasts
and that estimates routinely require adjustment.
Basis of consolidation - The Consolidated Financial Statements
include the accounts of Siemens AG and its subsidiaries over
which the Company has control. Siemens controls an investee if
it has power over the investee. In addition, Siemens is exposed
to, or has rights to, variable returns from the involvement with
the investee and Siemens is able to use its power over the in-
vestee to affect the amount of Siemens' return.
Business combinations - Cost of an acquisition is measured at
the fair value of the assets given and liabilities incurred or as-
sumed at the date of exchange. Identifiable assets acquired and
liabilities assumed in a business combination (including contin-
gent liabilities) are measured initially at their fair values at the
2,858
acquisition date, irrespective of the extent of any non-controlling
interest. Non-controlling interests are measured at the propor-
tional fair value of assets acquired and liabilities assumed (partial
goodwill method). If there is no loss of control, transactions with
non-controlling interests are accounted for as equity transactions
not affecting profit and loss. At the date control is lost, any re-
tained equity interests are remeasured to fair value. In case of a
written put option on non-controlling interests the Company
assesses whether the prerequisites for the transfer of present
ownership interest are fulfilled at the balance sheet date. If the
Company is not the beneficial owner of the shares underlying the
put option, the exercise of the put option will be assumed at each
balance sheet date and treated as equity transaction between
shareholders with the recognition of a purchase liability at the
respective exercise price. The non-controlling interests partici-
pate in profits and losses during the reporting period.
Joint ventures - Joint ventures are entities over which Siemens
and one or more parties have joint control. Joint control requires
unanimous consent of the parties sharing control in decision
making on relevant activities.
Foreign currency translation - Assets and liabilities of foreign
subsidiaries, where the functional currency is other than the
euro, are translated using the spot exchange rate at the end of
the reporting period, while the Consolidated Statements of In-
come are translated using average exchange rates during the
period. Differences arising from such translations are recognized
within equity and reclassified to net income when the gain or
loss on disposal of the foreign subsidiary is recognized. The
Consolidated Statements of Cash Flow are translated at aver-
age exchange rates during the period, whereas cash and cash
82 Consolidated Financial Statements
equivalents are translated at the spot exchange rate at the end
of the reporting period.
Foreign currency transaction - Transactions that are denomi-
nated in a currency other than the functional currency of an en-
tity, are recorded at that functional currency applying the spot
exchange rate at the date when the underlying transactions are
initially recognized. At the end of the reporting period, foreign
currency-denominated monetary assets and liabilities are reval-
ued to functional currency applying the spot exchange rate pre-
vailing at that date. Gains and losses arising from these foreign
currency revaluations are recognized in net income. Those for-
eign currency-denominated transactions which are classified
as non-monetary are remeasured using the historical spot ex-
change rate.
Revenue recognition - Siemens recognizes revenue, when or
as control over distinct goods or services is transferred to the
customer; i.e. when the customer is able to direct the use of the
transferred goods or services and obtains substantially all of the
remaining benefits, provided a contract with enforceable rights
and obligations exists and amongst others collectability of con-
sideration is probable taking into account our customer's credit-
worthiness. Revenue is the transaction price Siemens expects
to be entitled to. Variable consideration is included in the trans-
action price if it is highly probable that a significant reversal of
revenue will not occur once associated uncertainties are re-
solved. The amount of variable consideration is calculated by
either using the expected value or the most likely amount
depending on which is expected to better predict the amount of
variable consideration. Consideration is adjusted for the time
value of money if the period between the transfer of goods or
services and the receipt of payment exceeds twelve months and
there is a significant financing benefit either to the customer or
Siemens. If a contract contains more than one distinct good or
service, the transaction price is allocated to each performance
obligation based on relative stand-alone selling prices. If stand-
alone selling prices are not observable, the Company reasonably
estimates those. Revenue is recognized for each performance
obligation either at a point in time or over time.
Sales from construction-type contracts: Revenues are recognized
over time under the percentage-of-completion method, based on
the percentage of costs incurred to date compared to total esti-
mated costs. An expected loss on the contract is recognized as an
expense immediately. Payment terms are usually 30 days from
the date of invoice issued according to the contractual terms.
The percentage-of-completion method places considerable im-
portance on accurate estimates of the extent of progress towards
completion and may involve estimates on the scope of deliver-
ies and services required to fulfill the contractually defined
obligations. These significant estimates include total estimated
costs, total estimated revenues, contract risks, including techni-
cal, political and regulatory risks, and other judgments. Under
the percentage-of-completion method, changes in estimates
may lead to an increase or decrease of revenue. In addition,
Siemens needs to assess whether the contract is expected to con-
tinue or whether it is terminated. In determining whether the
continuation or termination of a contract is expected to be the
most likely scenario, all relevant facts and circumstances relating
to the contract are considered on an individual basis.
Revenues from services: Revenues are recognized over time on a
straight-line basis or, if the performance pattern is other than
straight-line, as services are provided, i.e. under the percent-
age-of-completion method as described above. Payment terms
are usually 30 days from the date of invoice issued according to
the contractual terms.
Sale of goods: Revenues are recognized at a point in time when
control of the goods passes to the buyer, usually upon delivery of
the goods. Invoices are issued at that point in time and are usu-
ally payable within 30 days. For licensing transactions granting
the customer a right to use Siemens' intellectual property, pay-
ment terms are usually 30 days from the date of invoice issued
according to the contractual terms.
Associates - Associates are companies over which Siemens has
the ability to exercise significant influence over operating and
financial policies (generally through direct or indirect ownership
of 20% to 50% of the voting rights). These are recorded in the
Consolidated Financial Statements using the equity method and
are initially recognized at cost. Siemens' share of its associate's
post-acquisition profits or losses is recognized in the Consolidated
Statements of Income, and its share of post-acquisition changes
in equity that have not been recognized in the associate's profit
or loss is recognized directly in equity. The cumulative post-
acquisition changes are adjusted against the carrying amount
of the investment in the associate. When Siemens' share of
losses in an associate equals or exceeds its interest in the as-
sociate, Siemens does not recognize further losses, unless it in-
curs obligations or makes payments on behalf of the associate.
The interest in an associate is the carrying amount of the invest-
ment in the associate together with any longterm interests
that, in substance, form part of Siemens' net investment in the
associate.
48,125
(3,663)
(226)
(200)
406
66
472
(3,060)
(255)
(3,315)
(16)
6
(10)
(1,350)
1,609
(1,350)
(1,350)
1,583
1,583
(10)
(10)
(3)
(19)
(22)
(9)
15
7
1,409
(49)
Income from operating leases: Operating lease income for
equipment rentals is recognized on a straight-line basis over the
lease term.
(3,011)
The margin range for Siemens Healthineers reflects our
expectation as a majority shareholder.
Additional Information
29
A.9 Siemens AG
46
A.10 Compensation Report
50
A.11 Takeover-relevant information
82
B.
Consolidated Financial Statements
B.1 Consolidated Statements of Income
and risks
88
Consolidated Statements
of Comprehensive Income
89
B.3
Consolidated Statements
of Financial Position
90
B.4
Consolidated Statements of Cash Flows
92
B.2
A.8 Report on expected developments
18
2360232
Combined Management Report → A.2 Financial performance system
17-22%
11-15%
17-21%
9-12%
10-15%
17-23%
Margin range
Annual Report
2020
SIEMENS
Table of
contents
A.
Combined Management Report
A.1 Organization of the Siemens Group
and basis of presentation
A.2 Financial performance system
A.3 Segment information
A.4 Results of operations
A.5 Net assets position
A.6 Financial position
A.7 Overall assessment of the economic position
27
B.5 Consolidated Statements
of Changes in Equity
94
B.6
Our reportable segments and Portfolio Companies may
do business with each other, leading to corresponding
orders and revenue. Such orders and revenue are elimi-
nated on the Group level.
NON-FINANCIAL MATTERS
OF THE GROUP AND SIEMENS AG
Siemens has policies for environmental, employee and
social matters, for the respect of human rights, and anti-
corruption and bribery matters, among others. Our busi-
ness model is described in chapters > A.1 and 7 A.3 of this
Combined Management Report. Reportable information
that is necessary for an understanding of the develop-
ment, performance, position and the impact of our ac-
tivities on these matters is included in this Combined
Management Report, in particular in chapters > A.3
through > A.7. Forward-looking information, including risk
disclosures, is presented in chapter 7 A.8. Chapter 7 A.9
includes additional information that is required to be
reported in the Combined Management Report related to
the parent company Siemens AG. As supplementary infor-
mation, amounts reported in the Consolidated Financial
Statements and the Annual Financial Statements of
Siemens AG related to such non-financial matters, and ad-
ditional explanations thereto, are included in > B.6 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, NOTES 17, 18, 22, 26 and 27,
and in the 7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF
SIEMENS AG FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020, NOTES
16, 17, 20, 21 and 25. In order to inform the users of the finan-
cial reports in a focused manner, these disclosures are not
subject to a specific non-financial framework – in contrast to
the disclosures in our separate "Sustainability Information
2020" document, which are based on the standards devel-
oped by the Global Reporting Initiative (GRI).
ANNUAL REPORT 2020 2
Combined Management Report → A.2 Financial performance system
A.2
Financial performance system
A.2.1 Overview
The Siemens Financial Framework includes targets that
we aim to achieve over the cycle of the business activities.
A.2.2 Revenue growth
In the Siemens Financial Framework we aim to achieve a
revenue growth range of 4% to 5% per year on a compa-
rable basis. Our primary measure for managing and con-
trolling our revenue growth is comparable growth, be-
cause it shows the development in our business net of
currency translation effects, which arise from the exter-
nal environment outside of our control, and portfolio
effects, which involve business activities which are either
new to or no longer a part of the respective business.
Currency translation effects are the difference between
revenue for the current period calculated using the ex-
change rates of the current period and revenue for the
current period calculated using the exchange rates of
the comparison period. For calculating the percentage
change year-over-year, this absolute difference is divided
by revenue for the comparison period. A portfolio effect
arises in the case of an acquisition or a disposition and is
calculated as the change year-over-year in revenue result-
ing specifically from the transaction. For calculating the
percentage change, this absolute change is divided by
revenue for the comparison period. For orders, we apply
the same calculations for currency translation and port-
folio effects as described above.
A.2.3 Profitability
and capital efficiency
Within the Siemens Financial Framework, we aim to
achieve margins that are comparable to those of our rel-
evant competitors. Therefore, we have defined profit
margin ranges for our industrial businesses which are
based on the profit margins of their respective relevant
competitors. Profit margin is defined as profit of the re-
spective business divided by its revenue. For our industrial
businesses, profit represents EBITA adjusted for operating
financial income (expenses), net, and amortization of
intangible assets not acquired in business combinations
(Adjusted EBITA).
We have set the following margin ranges in our Siemens
Financial Framework:
Margin ranges
Digital Industries
Smart Infrastructure
Mobility
Siemens Healthineers
Industrial Businesses
Siemens Financial Services (ROE after tax)
Reconciliation to Consolidated Financial Statements is
Siemens Advanta, formerly Siemens IoT Services, a stra-
tegic advisor and implementation partner in digital trans-
formation and industrial internet of things (IoT).
In line with common practice in the financial services
business, our financial indicator for measuring capital
efficiency at Siemens Financial Services is return on
equity after tax, or ROE after tax. ROE is defined as
Siemens Financial Services' profit after tax, divided by its
average allocated equity.
As of September 30, 2020, Siemens has the following re-
portable segments: Digital Industries, Smart Infrastruc-
ture, Mobility and Siemens Healthineers, which together
form our "Industrial Businesses” and Siemens Financial
Services (SFS), which supports the activities of our indus-
trial businesses and also conducts its own business with
external customers. Furthermore, we report results for
Portfolio Companies, which comprises businesses that
are managed separately to improve their performance.
During fiscal 2020, the energy business, consisting of
the former reportable segment Gas and Power and the
approximately 67% stake held by Siemens in Siemens
Gamesa Renewable Energy, S.A. (SGRE) – also a former
reportable segment - was classified as held for disposal
and discontinued operations. Siemens transferred the
energy business into a new company, Siemens Energy AG,
and in September 2020 listed it on the stock market via a
spin-off. Siemens allocated 55.0% of its ownership inter-
est in Siemens Energy AG to its shareholders and a further
9.9% were transferred to Siemens Pension-Trust e. V. The
remaining 35.1% of shares in Siemens Energy AG are held
by Siemens and reported within Reconciliation to Consol-
idated Financial Statements as Siemens Energy Invest-
ment. For further information, see > NOTES 3 and 4 in 7 B.6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Also part of
Siemens comprises Siemens Aktiengesellschaft
(Siemens AG), a stock corporation under the Federal laws
of Germany, as the parent company and its subsidiaries.
Our Company is incorporated in Germany, with our cor-
porate headquarters situated in Munich. As of Septem-
ber 30, 2020, Siemens had around 293,000 employees.
Notes to Consolidated Financial Statements
96
C.
ANNUAL REPORT 2020 3
C.1 Responsibility Statement
166
C.2 Independent Auditor's Report
167
C.3 Report of the Supervisory Board
176
C.4 Corporate Governance
184
C.5
Notes and forward-looking statements
199
PAGES 1-86
A.
Combined
Management
Report
Combined Management Report → A.1 Organization of the Siemens Group and basis of presentation
A.1
Organization of the Siemens Group
and basis of presentation
Siemens is a technology company that is active in nearly all
countries of the world, focusing on the areas of automation
and digitalization in the process and manufacturing indus-
tries, intelligent infrastructure for buildings and distributed
energy systems, smart mobility solutions for rail and road
and medical technology and digital healthcare services.
-
For purposes of managing and controlling profitability at
the Group level, we use net income as our primary mea-
sure. This measure is the main driver of basic earnings
per share (EPS) from net income, which we used in com-
munication to the capital markets in fiscal 2020.
and associated material opportunities
A.2.4 Capital structure
ANNUAL REPORT 2020 7
Research & Development (R&D) activities at Digital
Industries are aimed at integrating technologies such as
artificial intelligence (AI), edge computing, cloud tech-
nologies, additive manufacturing and industrial 5G wire-
less technology into Digital Industries' extensive portfolio
for industrial automation and digitalization. Beyond its
own R&D activities, Digital Industries collaborates closely
with partners and customers. An example is PlantSight,
jointly developed by Digital Industries and Bentley Sys-
tems, Inc. (Bentley), which utilizes real-time analytics and
Al to generate new insights and enable real-time collab-
oration between engineering, operations and mainte-
nance functions. With its new NX Sketch software tool for
computer-aided design (CAD), Digital Industries has ad-
vanced CAD sketching by using Al to infer relationships
on the fly so that users can move away from a paper hand
sketch and truly create conceptual designs in the NX en-
vironment. In the field of Al-based services, Digital Indus-
tries launched "Predictive Services for Foundry," which
enables users to increase overall plant efficiency in the
automotive sector. In fiscal 2020, Digital Industries also
launched "Siemens Industrial Edge," which brings edge
computing and intelligent analytics to manufacturing
automation devices and introduced new software as
Digital Industries sees three trends influencing its busi-
ness and providing long-term growth opportunities. Pro-
ducers of investment goods in today's increasingly digital
environment must modernize their production capacity,
particularly to increase production flexibility and reduce
time to market. This environment also spurs producers to
complement their core products with vertical solutions
and service offerings, which their customers either need
or want in order to take full advantage of the investment
goods. Finally, there is a trend from globalization to re-
gionalization, to support local economic development or
to better adapt solutions to local needs.
Digital Industries' profitability. Volume from large con-
tracts in the software business, particularly for Mentor,
may also result in strong fluctuations in quarterly volume
and profitability. Competition for Digital Industries' busi-
ness activities comes primarily from multinational corpo-
rations that offer a relatively broad portfolio and from
smaller companies active only in certain geographic or
product markets.
Digital Industries offers a comprehensive product port-
folio and system solutions for automation used in dis-
crete and process industries; these offerings include
automation systems and software for factories, numeri-
cal control systems, motors, drives and inverters and
integrated automation systems for machine tools and
production machines. Digital Industries also provides
process control systems, machine-to-machine commu-
nication products, sensors (for measuring pressure, tem-
perature, level, flow rate, distance or shape) and radio
frequency identification systems. Furthermore, Digital
Industries offers production and product lifecycle man-
agement software, and software for simulation and
testing of mechatronic systems. These leading software
offerings are integrated with the electronic design auto-
mation (EDA) software portfolio of Mentor Graphics
(Mentor) and the open, cloud-based industrial internet of
things (IoT) operating system MindSphere, which con-
nects machines and physical infrastructure to the digital
world. These offerings are complemented by Mendix'
cloud-native low-code application development plat-
form, which allows customers to significantly reduce app
development times through visual representation of un-
derlying code. Digital Industries also provides customers
with lifecycle and data-driven services. Taken together,
Digital Industries' offerings enable customers to optimize
entire value chains from product design and develop-
ment through production and post-sale services. With its
advanced software solutions in particular, Digital Indus-
tries supports customers in the discrete manufacturing,
hybrid and process industries in their evolution towards
the "Digital Enterprise," resulting in increased flexibility
and efficiency of production processes and reduced time
to market for new products. The most important markets
include the automotive industry, the machine building
industry, the pharmaceutical and chemicals industry, the
food and beverage industry and the electronics and semi-
conductor industry. Digital Industries serves its custom-
ers through a common regional sales organization
spanning all its businesses, using various sales chan-
nels depending on the type of customer and industry.
Changes in customer demand, especially for standard
products, are driven strongly by macroeconomic cycles,
and can lead to significant short-term fluctuation in
A.3.2 Digital Industries
Combined Management Report →A.3 Segment information
ANNUAL REPORT 2020 6
These economic developments also influenced Siemens'
business performance in fiscal 2020, in particularly with
regard to effects related to COVID-19. These effects varied
between Siemens' businesses, customer markets and
geographic regions. While some of our key customer in-
dustries such as automotive and machine building were
heavily impacted by the steep drop in global GDP begin-
ning in the second calendar quarter of 2020, other cus-
tomer industries, such as semiconductors, electronics
and data centers, accelerated in order to serve rapid
global growth in online activity for work, leisure and
retail consumption. While the pandemic significantly
slowed our sales and service activities because of re-
stricted access to customer sites, this also resulted in cost
reductions such as lower travel and marketing expenses.
Furthermore, we were able to keep our production
largely stable due to the use of our own technology in
our factories and our diversified value chain. On a geo-
graphic basis, China was both the first country signifi-
cantly affected by COVID-19 and the first major national
economy to see a return to growth, which occurred to-
wards the end of our fiscal year. In contrast, large parts of
Europe and the Americas continue to be strongly im-
pacted by COVID-19, following temporary relief during
the summer months from the pandemic's first waves in
the spring. All these market dynamics noticeably affected
volume and income of Siemens' businesses in fiscal 2020
as described below.
The partly estimated figures presented here for GDP are
based on an IHS Markit report dated October 15, 2020.
and positive GDP growth (+1.9%) is expected for calendar
2020. All other major economies are expected to record
reductions in GDP in calendar 2020: European Union (EU)
(7.7)%, U.S. (3.5)%, Japan (5.6)%, India (10.8)%. For
advanced countries in aggregate, calendar 2020 GDP is
expected to decline by 5.5%. For emerging countries, the
decline in 2020 GDP is estimated at 3.1%.
Globally, governments and central banks responded with
unprecedented fiscal and monetary policy measures,
first, to ensure short-term liquidity of firms and house-
holds, later to stimulate their economies after the deep
slump. According to the International Monetary Fund
(IMF), these measures resulted in fiscal policy responses
totaling US$12 trillion and balance sheet expansion of
nearly US$7.5 trillion on the part of central banks in the
G10. As a result, and after initial lockdown measures
were lifted while the virus outbreak slowed, the global
economy experienced a strong rebound in the sum-
mer months of 2020. But a full recovery could not be
achieved, due to renewed virus outbreaks and restric-
tions on contact-intensive industries ("90% economy").
The only notable exception was the Chinese economy
where the recovery has been much faster than expected
Global economic activity was already decelerating in the
first quarter of fiscal 2020 as the trade conflict between
the U.S. and China increasingly took its toll. Shortly after
economic sentiment indicators improved in response to
calming of the conflict (due to the "phase one deal"), the
novel coronavirus (SARS-CoV-2) emerged and started to
spread globally. Voluntary and mandated social distanc-
ing measures to contain the outbreak massively restricted
economic activity, first in China, then in other Asian
countries, the Middle East and Europe, and finally in the
Americas and Africa. Sectors with high intensity of per-
sonal contact had to substantially curtail or stop their
operations. Many other industries were directly affected
by supply chain problems or indirectly by insufficient
demand and also stopped production.
The macroeconomic development in fiscal 2020 was
dominated by the coronavirus pandemic (COVID-19) and
subsequent recession, which was the deepest since the
Second World War. Global gross domestic product (GDP)
is expected to contract by 4.5% in calendar 2020, after it
grew by 2.6% in calendar 2019.
A.3.1 Overall economic conditions
Segment information
A.3
Combined Management Report → A.3 Segment information
Capital employed (continuing and discontinued operations)
5
ANNUAL REPORT 2020
1 Item Other interest expenses/income, net primarily consists of interest
relating to corporate debt, and related hedging activities, as well as
interest income on corporate assets.
11.1%
Combined Management Report → A.3 Segment information
7.8%
a service (SaaS) offerings such as Teamcenter X, Team-
center Share or Simcenter on the Cloud that do not re-
quire the IT investments typically needed for on-premise
deployments. In addition to this, Digital Industries
launched the SIMATIC IOT2050 gateway, which links
cloud computing with in-company IT and production.
Digital Industries further expanded its portfolio and part-
nerships for industrialized additive manufacturing. With
NX AM Path Optimizer, a new technology integrated in
NX software, Digital Industries demonstrated how to lo-
cally adapt and optimize the printing process during pro-
duction planning. Together with Qualcomm Technolo-
gies, Inc., Digital Industries implemented the first private
5G standalone network in a real-world industrial environ-
ment using the 3.7-3.8GHz band. By launching Xcelera-
tor, Digital Industries is now offering an integrated port-
folio of software, services and application development
capabilities that can be adapted to fit customer and in-
dustry-specific needs and thereby help companies of all
sizes become digital enterprises. Major investments of
Digital Industries in fiscal 2020 relate to its own factory
automation, motion control and process automation
businesses, to further automate and digitalize these
facilities particularly in Germany, China and the Czech
Republic.
We seek to work profitably and as efficiently as possible
with the capital provided by our shareholders and lend-
ers. For purposes of managing and controlling our capital
efficiency, we use return on capital employed, or ROCE,
as our primary measure in our Siemens Financial Frame-
work. Our long-term goal is to achieve ROCE within a
range of 15% to 20%.
ANNUAL REPORT 2020 8
Digital Industries achieved its results in a market environ-
ment which, beginning with the second quarter of fis-
cal 2020, was strongly impacted by effects related to
COVID-19, resulting in considerably lower demand for
investment goods. The magnitude and duration of pan-
demic impacts varied across regions and market seg-
ments. Market volume in fiscal 2020 declined clearly in
the region comprising Europe, C.I.S., Africa, Middle East
and to a lesser extent in the Americas. In contrast, market
volume in Asia, Australia slightly grew year-over-year.
Within that region, China, which was hit first by the
pandemic, was among the first countries that saw a re-
covery towards the end of the fiscal year. Within the most
important industries served by Digital Industries, the
automotive industry, which already was in a downturn
a year earlier, severely cut production in response to the
Global markets for Digital Industries' businesses showed
a mix of influences from customer industry shifts and
factors related to COVID-19. While the software business
achieved significant order growth, including a number
of large contract wins, most notably in its EDA software
business, orders in the automation businesses declined
due to lower demand from some of their most import-
ant customer segments, particularly the automotive and
the machine building industries. This latter development
was a significant factor in lower orders for the region
comprising Europe, Commonwealth of Independent
States (C.I.S.), Africa, Middle East, including a double-
digit decrease in Germany. In contrast, orders rose in the
Americas and Asia, Australia regions, including signifi-
cant growth in the U.S. and China. Revenue was similarly
affected by declines in the automation businesses, par-
ticularly in the short-cycle motion control and factory
automation businesses. The software business achieved
moderate revenue growth. On a geographic basis, the
region Europe, C.I.S., Africa, Middle East posted a sig-
nificant revenue decline while Asia, Australia and the
Americas delivered revenue close to the prior-year levels.
Adjusted EBITA rose due mainly to a €767 million posi-
tive effect related to Digital Industries' stake in Bentley
Systems, Inc. (Bentley), which was mostly from revalua-
tion following that company's public listing in Septem-
ber 2020 and included €48 million in dividend payments
for the full year. Adjusted EBITA rose substantially in the
software business. A year earlier, the software business
benefited from a €50 million gain from the sale of an
equity investment. Adjusted EBITA and profitability de-
creased in the automation businesses, due largely to
revenue declines associated with COVID-19; this develop-
ment was only partially offset by cost savings from pan-
demic restrictions such as lower travel and marketing
expenses. Severance charges, primarily related to cost
structure improvements, were €210 million in fiscal 2020,
up from severance charges of €92 million a year earlier.
Digital Industries' order backlog was €5 billion at the end
of the fiscal year, of which €4 billion are expected to be
converted into revenue in fiscal 2021.
17.9%
13%
2,880
3,252
21.7%
Adjusted EBITA margin
Adjusted EBITA
2%
3%
4,144 4,039
therein: software business
(7)%
0%
15,944
15,896
14,997 16,087
Revenue
Orders
Actual
Fiscal year
2019
2020
% Change
Comp.
0%
(6)%
(1)/(II) ROCE
(in millions of €)
53,459
Plus: Long-term debt
(562)
(691)
Less: Other interest expenses/income, net¹
Total equity
5,648
4,200
Net income
2019
2020
Calculation of capital employed
For purposes of calculating ROCE in interim periods, in-
come before interest after tax is annualized. Average
capital employed is determined using the average of the
respective balances as of the quarterly reporting dates for
the periods under review.
Fiscal year
Calculation of ROCE
A.2.6 Calculation of return
on capital employed
Combined Management Report → A.2 Financial performance system
ANNUAL REPORT 2020 4
The proposed dividend of €3.50 per share for fiscal
2020 represents a total payout of €2.8 billion based on
the estimated number of shares entitled to dividend at
the date of the Annual Shareholders' Meeting. Based on
Net income attributable to shareholders of Siemens AG
of €4.0 billion for fiscal 2020, the dividend payout
percentage is 70%.
At the Annual Shareholders' Meeting, the Managing
Board, in agreement with the Supervisory Board, will
submit the following proposal to allocate the unappro-
priated net income of Siemens AG for fiscal 2020: to
distribute a dividend of €3.50 on each share of no par
value entitled to the dividend for fiscal 2020 existing at
the date of the Annual Shareholders' Meeting; the re-
maining amount is to be carried forward. The dividend of
€3.50 consists of €3.00 at the upper end of our targeted
dividend payout ratio, supplemented by an additional
€0.50. Payment of the proposed dividend is contingent
upon approval by Siemens shareholders at the Annual
Shareholders' Meeting on February 3, 2021. The prior-
year dividend was €3.90 per share.
We intend to continue providing an attractive return to
our shareholders. Under the Siemens Financial Frame-
work, our intention is to propose a dividend whose distri-
bution volume is within a dividend payout range of 40%
to 60% of Net income attributable to shareholders of
Siemens AG, which we may adjust for this purpose to
exclude selected exceptional non-cash effects. As in the
past, we intend to fund the dividend payout from Free
cash flow. To provide an assessment of our ability to gen-
erate cash, and ultimately to pay dividends, we use the
cash conversion rate of Industrial Businesses, defined as
the ratio of Free cash flow from Industrial Businesses to
Adjusted EBITA Industrial Businesses. Because growth re-
quires investments, we aim to achieve a cash conversion
rate of 1 minus the annual comparable revenue growth
rate of Industrial Businesses.
A.2.5 Liquidity and dividend
Sustainable revenue and profit development is supported
by a healthy capital structure. Accordingly, a key consid-
eration within the Siemens Financial Framework is to
maintain ready access to the capital markets through
various debt products and preserve our ability to repay
and service our debt obligations over time. Our primary
measure for managing and controlling our capital struc-
ture is the ratio of Industrial net debt to EBITDA (continu-
ing operations). This financial measure indicates the ap-
proximate amount of time in years that would be needed
to cover Industrial net debt through income from con-
tinuing operations, without taking into account interest,
taxes, depreciation and amortization. We aim to achieve
a ratio of up to 1.0.
Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses
on provisions for pensions and similar obligations
Plus: SFS Other interest expenses/income
806
(in millions of €)
Plus: Net interest expenses related
56,190
763
(II) Average capital employed
Plus: Adjustments from assets classified as held for disposal and liabilities
associated with assets classified as held for disposal
5,916
4,397
(I) Income before interest after tax
Less: Fair value hedge accounting adjustment
(84)
(tax rate (flat) 30%)
Less: Taxes on interest adjustments
Less: SFS debt
(115)
66
Less: Current interest-bearing debt securities
73
100
(discontinued operations)
Less: Interest adjustments
108
obligations
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Plus: Provisions for pensions and similar obligations
to provisions for pensions and similar
Net income
Other comprehensive income, net of income taxes
ANNUAL REPORT 2020 93
Dividends
Balance as of October 1, 2018
(in millions of €)
Consolidated Financial Statements → B.5 Consolidated Statements of Changes in Equity
Consolidated Statements
12,391
B.5
Share-based payment
of Changes in Equity
Purchase of treasury shares
(33)
Capital reserve
Retained earnings
6,184
41,007
5,174
(1,138)
(3,060)
(3,922)
(26)
(351)
14,041
Total equity
Issued capital
2,550
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
(208)
12,391
interests
(3,174)
(3,060)
Dividends attributable to non-controlling interests
(205)
Cash flows from financing activities - continuing operations
4,263
(1,214)
Cash flows from financing activities – discontinued operations
(1,091)
(1,063)
Cash flows from financing activities - continuing and discontinued operations
3,172
(2,277)
Effect of deconsolidation of Siemens Energy on cash and cash equivalents
Effect of changes in exchange rates on cash and cash equivalents
(4,663)
(525)
157
Change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
operations at end of period
1,663
1,325
12,391
11,066
14,054
13
Non controlling
Dividends paid to shareholders of Siemens AG
Treasury
shares at cost
Net income
41,790
6,839
2,550
Balance as of October 1, 2019
41,818
(28)
553
Effects of retrospectively adopting IFRS
6,287
2,550
Balance as of September 30, 2019 (as previously reported)
41,818
4,030
6,287
(9)
(3)
(10)
(30)
4
Balance as of September 30, 2019
Other changes in equity
Transactions with non-controlling interests
Disposal of equity instruments
Re-issuance of treasury shares
(114)
99
2,550
Other comprehensive income, net of income taxes
(185)
Dividends
instruments
Derivative financial
Equity
instruments
differences
Currency
translation
→ B.5 Consolidated Statements of Changes in Equity
Consolidated Financial Statements
33,078
6,840
2,550
(15)
365
1
(2)
(9,589)
ANNUAL REPORT 2020 94
Balance as of September 30, 2020
Other changes in equity
Other transactions with non-controlling interests
Changes in equity resulting from major portfolio transactions
Disposal of equity instruments
5
Re-issuance of treasury shares
Purchase of treasury shares
(141)
(6)
Share-based payment
(3,174)
Total equity
attributable to
shareholders of
Siemens AG
(1,064)
(2,769)
Interest paid
2020
2019
4,200
5,648
17
(261)
33
624
5
(15)
(3)
3
Note
17
(240)
(1,184)
(2,805)
1,841
148
(177)
(38)
69
(89)
(8)
(2,746)
1,656
(6)
Fiscal year
ANNUAL REPORT 2020 89
Shareholders of Siemens AG
5,648
474
5,174
47,981
2,571
45,410
Consolidated Financial Statements → B.2 Consolidated Statements of Comprehensive Income
B.2
Consolidated Statements
of Comprehensive Income
(in millions of €)
Net income
Remeasurements of defined benefit plans
therein: Income tax effects
Remeasurements of equity instruments
therein: Income tax effects
Income (loss) from investments accounted for using the equity method, net
Items that will not be reclassified to profit or loss
Currency translation differences
Derivative financial instruments
therein: Income tax effects
Income (loss) from investments accounted for using the equity method, net
Items that may be reclassified subsequently to profit or loss
Other comprehensive income, net of income taxes
Total comprehensive income
Attributable to:
Non-controlling interests
(2,986)
1,760
472
6,120
Assets classified as held for disposal
Total current assets
Goodwill
11
7,795
14,806
2,7
1,523
1,103
1,271
1,960
3
Other current assets
338
52,968
70,370
3,12
20,449
30,160
Other intangible assets
3,13
4,838
9,800
Property, plant and equipment
2,13
10,250
238
Current income tax assets
Inventories
10,309
(47)
540
1,261
5,581
Consolidated Financial Statements → B.3 Consolidated Statements of Financial Position
B.3
Consolidated Statements
of Financial Position
(in millions of €)
Assets
Note
2020
Sep 30,
2019
Cash and cash equivalents
Trade and other receivables
14,041
12,391
8
14,074
18,894
Other current financial assets
9
8,382
10,669
Contract assets
10
5,545
1,214
12,183
(16)
406
The accompanying Consolidated Financial Statements
present the operations of Siemens Aktiengesellschaft
with registered offices in Berlin (registry number HRB
12300) and Munich (registry number HRB 6684), Ger-
many, and its subsidiaries (the Company or Siemens).
They have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS), as adopted
by the European Union as well as with the additional re-
quirements set forth in Section 315e (1) of the German
Commercial Code (HGB). The financial statements are in
accordance with IFRS as issued by the International Ac-
counting Standards Board (IASB). The Consolidated Fi-
nancial Statements were authorized for issue by the Man-
aging Board on November 27, 2020. Siemens prepares
and reports its Consolidated Financial Statements in eu-
ros (€). Due to rounding, numbers presented may not
add up precisely to totals provided. Siemens is a German
based multinational technology company.
NOTE 1 Basis of presentation
Notes to Consolidated Financial Statements
B.6
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 95
39,823
3,433
36,390
(4,629)
(115)
(42)
NOTE 2 Material accounting
policies and critical accounting
estimates
(1,292)
(663)
(15)
1,969
1,603
366
(9,589)
(9,589)
(2)
(2)
550
550
(1,511)
(677)
Certain of these accounting policies require critical ac-
counting estimates that involve complex and subjective
judgments and the use of assumptions, some of which
may be for matters that are inherently uncertain and sus-
ceptible to change. Such critical accounting estimates
could change from period to period and have a material
impact on the Company's results of operations, financial
positions and cash flows. Critical accounting estimates
could also involve estimates where Siemens reasonably
could have used a different estimate in the current ac-
counting period. Siemens cautions that future events
often vary from forecasts and that estimates routinely
require adjustment. In fiscal 2020, Siemens' business and
economic environment is adversely affected by the pan-
demic coronavirus spread, though certain mitigating
effects may arise due to the various measures taken either
by the Company, or by Governments and States globally,
including favorable financial support. Siemens' fiscal
2020 orders, revenues and net income are negatively af-
fected by COVID-19, particularly at our short-cyclic busi-
nesses. Impacts from the pandemic vary considerably
between regions and customer industries. As the out-
break continues to evolve, it is challenging to predict its
duration and its magnitude of impacts on assets, liabili-
ties, results of operations and cash flows. In the fiscal
2020 Consolidated Financial Statements, the Company
based financial statement related estimates and assump-
tions on existing knowledge and best information avail-
able and applied a scenario assuming the current corona-
virus situation is of no long-term duration. Consequently,
the Company believes its effects on Siemens' Consoli-
dated Financial Statements will not be of a severe, sub-
stantial degree. Corona related impacts on Siemens' Con-
solidated Financial Statements may result from declining
and more volatile share prices, interest rate adjustments
in various countries, increasing volatility in foreign cur-
rency exchange rates, deteriorating creditworthiness,
credit default or delayed payments, delays in order place-
ments as well as in executing orders and contracts, termi-
nation of contracts, adjusted or modified revenue and
cost patterns, limited usage of assets, volatility in financial
and commodity markets, limited or no access to customer
facilities and hardship in preparing predictions and fore-
casts due to uncertainties in amount and timing of cash
flows. Those factors may impact fair value and carrying
amounts of assets and liabilities, amount and timing of
results of operations and cash flows. It is reasonably pos-
sible, that adjustments to assumptions and carrying
amounts are necessary within the next fiscal year. The
Company believes assumptions applied appropriately re-
flect the current situation. See also > NOTES 4 and 23.
-
ANNUAL REPORT 2020 98
Functional costs - - In general, operating expenses by
types are assigned to the functions following the func-
tional area of the corresponding profit and cost centers.
Amortization, depreciation and impairment of intangible
Income from interest - Interest is recognized using the
effective interest method.
Income from royalties: Royalties are recognized on an
accrual basis in accordance with the substance of the rel-
evant agreement.
Sale of goods: Revenues are recognized at a point in time
when control of the goods passes to the buyer, usually
upon delivery of the goods. Invoices are issued at that
point in time and are usually payable within 30 days. For
licensing transactions granting the customer a right to
use Siemens' intellectual property, payment terms are
usually 30 days from the date of invoice issued according
to the contractual terms.
Revenues from services: Revenues are recognized over
time on a straight-line basis or, if the performance pat-
tern is other than straight-line, as services are provided,
i.e. under the percentage-of-completion method as
described above. Payment terms are usually 30 days
from the date of invoice issued according to the con-
tractual terms.
The percentage-of-completion method places consider-
able importance on accurate estimates of the extent of
progress towards completion and may involve estimates
on the scope of deliveries and services required to fulfill
the contractually defined obligations. These significant
estimates include total estimated costs, total estimated
revenues, contract risks, including technical, political and
regulatory risks, and other judgments. Under the per-
centage-of-completion method, changes in estimates
may lead to an increase or decrease of revenue. In addi-
tion, Siemens needs to assess whether the contract is
expected to continue or whether it is terminated. In de-
termining whether the continuation or termination of a
contract is expected to be the most likely scenario, all
relevant facts and circumstances relating to the contract
are considered on an individual basis.
Sales from construction-type contracts: Revenues are
recognized over time under the percentage-of-comple-
tion method, based on the percentage of costs incurred
to date compared to total estimated costs. An expected
loss on the contract is recognized as an expense immedi-
ately. Payment terms are usually 30 days from the date of
invoice issued according to the contractual terms.
when, or as control over distinct goods or services is
transferred to the customer; i.e. when the customer is
able to direct the use of the transferred goods or ser-
vices and obtains substantially all of the remaining ben-
efits, provided a contract with enforceable rights and
obligations exists and amongst others collectability of
consideration is probable taking our customer's credit-
worthiness into account. Revenue is the transaction
price Siemens expects to be entitled to. Variable consid-
eration is included in the transaction price if it is highly
probable that a significant reversal of revenue will not
occur once associated uncertainties are resolved. The
amount of variable consideration is calculated by either
using the expected value or the most likely amount de-
pending on which is expected to better predict the
amount of variable consideration. Consideration is ad-
justed for the time value of money if the period between
the transfer of goods or services and the receipt of pay-
ment exceeds twelve months and there is a significant
financing benefit either to the customer or Siemens. If a
contract contains more than one distinct good or ser-
vice, the transaction price is allocated to each perfor-
mance obligation based on relative stand-alone selling
prices. If stand-alone selling prices are not observable,
the Company reasonably estimates those. Revenue is
recognized for each performance obligation either at a
point in time or over time.
Siemens recognizes revenue
Revenue recognition
to functional currency applying the spot exchange rate
prevailing at that date. Gains and losses arising from
these foreign currency revaluations are recognized in net
income. Those foreign currency-denominated transac-
tions which are classified as non-monetary are remea-
sured using the historical spot exchange rate.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 97
Foreign currency transaction Transactions that are
denominated in a currency other than the functional
currency of an entity, are recorded at that functional cur-
rency applying the spot exchange rate at the date when
the underlying transactions are initially recognized.
At the end of the reporting period, foreign currency-
denominated monetary assets and liabilities are revalued
-
Foreign currency translation - Assets and liabilities of
foreign subsidiaries, where the functional currency is
other than the euro, are translated using the spot ex-
change rate at the end of the reporting period, while the
Consolidated Statements of Income are translated using
average exchange rates during the period. Differences
arising from such translations are recognized within eq-
uity and reclassified to net income when the gain or loss
on disposal of the foreign subsidiary is recognized. The
Consolidated Statements of Cash Flows are translated at
average exchange rates during the period, whereas cash
and cash equivalents are translated at the spot exchange
rate at the end of the reporting period.
Siemens reviews associates and joint ventures for impair-
ment whenever there is objective evidence that its in-
vestment is impaired, for example a significant or pro-
longed decline in the fair value of the investment below
its carrying amount. The determination of the recover-
able amount includes the use of estimates and assump-
tions that tend to be uncertain.
or joint venture's post-acquisition profits or losses is rec-
ognized in the Consolidated Statements of Income, and
its share of post-acquisition changes in equity that have
not been recognized in the associate's or joint venture's
profit or loss is recognized directly in equity. The cumula-
tive post-acquisition changes also include effects from
fair value adjustments and are adjusted against the car-
rying amount of the investment. When Siemens' share of
losses in an associate or joint venture equals or exceeds
its interest in the investment, Siemens does not recog-
nize further losses, unless it incurs obligations or makes
payments on behalf of the associate or joint venture. The
interest in an associate or joint venture is the carrying
amount of the investment together with any long term
interests that, in substance, form part of Siemens' net
investment in the associate or joint venture.
Associates and joint ventures are recorded in the Consol-
idated Financial Statements using the equity method and
are initially recognized at cost. If the investment was re-
tained in a transaction in which Siemens lost control of a
subsidiary, the fair value of the investment represents the
cost on initial recognition. Siemens' share of its associate's
Associates and joint ventures - Associates are compa-
nies over which Siemens has the ability to exercise sig-
nificant influence over operating and financial policies
(generally through direct or indirect ownership of 20%
to 50% of the voting rights). Joint ventures are entities
over which Siemens and one or more parties have joint
control. Joint control requires unanimous consent of the
parties sharing control in decision making on relevant
activities.
Business combinations - Cost of an acquisition is mea-
sured at the fair value of the assets given and liabilities
incurred or assumed at the date of exchange. Identifiable
assets acquired and liabilities assumed in a business com-
bination (including contingent liabilities) are initially
measured at their fair values at the acquisition date, irre-
spective of the extent of any non-controlling interest.
Non-controlling interests are measured at the propor-
tional fair value of assets acquired and liabilities assumed
(partial goodwill method). If there is no loss of control,
transactions with non-controlling interests are accounted
for as equity transactions not affecting net income. At
the date control is lost, any retained equity interests are
remeasured to fair value. In case of a written put option
on non-controlling interests the Company assesses
whether the prerequisites for the transfer of present
ownership interest are fulfilled at the balance sheet date.
If the Company is not the beneficial owner of the shares
underlying the put option, the exercise of the put option
will be assumed at each balance sheet date and treated
as equity transaction between shareholders with the rec-
ognition of a purchase liability at the respective exercise
price. The non-controlling interests participate in profits
and losses during the reporting period.
In addition, Siemens is exposed to, or has rights to, vari-
able returns from the involvement with the investee and
Siemens is able to use its power over the investee to af-
fect the amount of Siemens' return.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 96
The Consolidated Financial
Basis of consolidation
Statements include the accounts of Siemens AG and its
subsidiaries over which the Company has control. Siemens
controls an investee if it has power over the investee.
(1,511)
(200)
(1,511)
545
(147)
(3,663)
(226)
(49)
1,409
7
15
(9)
(22)
(19)
(3)
(10)
(10)
48,125
1,583
1,609
(1,350)
(1,350)
(1,350)
(10)
6
(16)
(3,315)
(255)
(3,060)
472
66
1,583
2,858
50,984
1,409
(3,492)
(318)
(3,174)
(2,986)
(218)
(833)
111
7
(2,701)
4,200
170
4,030
51,508
2,858
48,650
(3,663)
(226)
(49)
1,409
525
525
50,984
2,858
48,125
(3,663)
(226)
(49)
(147)
Investments accounted for using the equity method
(1,163)
7,862
(207)
Trade and other receivables
236
(330)
Trade payables
143
139
Contract liabilities
433
523
Additions to assets leased to others in operating leases
(500)
(425)
(660)
1,192
(250)
Income taxes paid
(1,650)
(2,409)
Dividends received
293
242
Interest received
1,347
1,510
Cash flows from operating activities - continuing operations
Change in other assets and liabilities
(455)
(723)
Inventories
2020
2019
Cash flows from operating activities
Net income
4,200
5,648
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
(Income) loss from discontinued operations, net of income taxes
Amortization, depreciation and impairments
Income tax expenses
Interest (income) expenses, net
(Income) loss related to investing activities
Other non-cash (income) expenses
90
(490)
3,157
2,280
1,382
1,775
(732)
(569)
(642)
(340)
379
540
Change in operating net working capital from
Contract assets
8,178
Fiscal year
6,947
684
(804)
Cash flows from investing activities - continuing and discontinued operations
(5,184)
(5,011)
ANNUAL REPORT 2020 92
Consolidated Financial Statements → B.4 Consolidated Statements of Cash Flows
(in millions of €)
Cash flows from financing activities
Fiscal year
2020
2019
Purchase of treasury shares
(1,080)
(1,517)
Re-issuance of treasury shares and other transactions with owners
2,624
1,044
Issuance of long-term debt
10,255
6,471
Repayment of long-term debt (including current maturities of long-term debt)
(4,472)
(3,205)
Change in short-term debt and other financing activities
1,588
211
(1,407)
Cash flows from investing activities - discontinued operations
(4,207)
(4,105)
1,508
Cash flows from operating activities - continuing and discontinued operations
8,862
8,456
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment
Acquisitions of businesses, net of cash acquired
Purchase of investments and financial assets for investment purposes
(1,554)
(1,780)
(1,727)
(958)
(1,269)
(1,940)
Change in receivables from financing activities
(994)
(1,160)
Disposal of intangibles and property, plant and equipment
47
4
Disposal of businesses, net of cash disposed
218
17
Disposal of investments and financial assets for investment purposes
1,174
1,402
Cash flows from investing activities - continuing operations
Cash flows from operating activities - discontinued operations
(in millions of €)
213
Consolidated Statements
7,873
11,409
Other current financial liabilities
1,958
1,743
Contract liabilities
10
7,524
16,452
Current provisions
18
1,674
Trade payables
3,682
2,281
2,378
Other current liabilities
15
6,209
9,023
Liabilities associated with assets classified as held for disposal
3
35
2
Total current liabilities
34,117
Current income tax liabilities
6,034
6,562
2,16
of Cash Flows
2,244
Other financial assets
14, 23
22,771
19,843
Deferred tax assets
7
2,988
3,174
Other assets
Total non-current assets
Total assets
1,769
2,475
70,928
79,878
123,897
150,248
ANNUAL REPORT 2020 90
(in millions of €)
Liabilities and equity
Note
2020
Sep 30,
2019
Short-term debt and current maturities of long-term debt
50,723
Long-term debt
Consolidated Financial Statements → B.3 Consolidated Statements of Financial Position
38,005
Capital reserve
6,840
6,287
Retained earnings
33,078
41,818
Other components of equity
(1,449)
1,134
Treasury shares, at cost
(4,629)
(3,663)
Total equity attributable to shareholders of Siemens AG
36,390
48,125
Non-controlling interests
3,433
2,858
Total equity
39,823
Total liabilities and equity
123,897
50,984
150,248
ANNUAL REPORT 2020 91
Consolidated Financial Statements → B.4 Consolidated Statements of Cash Flows
2,16
B.4
2,550
2,550
3
99,265
30,414
Provisions for pensions and similar obligations
2,3,19
17
6,360
9,896
Deferred tax liabilities
7
1,305
Provisions
18
2,352
3,714
Other financial liabilities
664
Total non-current liabilities
Other liabilities
48,541
2,226
1,808
49,957
84,074
986
769
Issued capital
Equity
Total liabilities
35.1%
23,136
Ownership interest
(in millions of €)
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Current assets
112
131
(5)
(590)
108
(14)
2020
2019
Non-current assets excluding goodwill
(114)
(596)
Current liabilities
Income (loss) from continuing operations
Other comprehensive income,
Net assets
Income (loss) from continuing
Revenue
Fiscal year
(25)
1
net of income taxes
154
128
Non-current liabilities
Fiscal year 2020
2020
(in millions of €)
11,731
Fiscal year
attributable to shareholders
of Siemens Energy AG
As of September 30, 2020 and 2019, the carrying amount
of all individually not material associates amounts to
€779 million and €1,577 million, respectively. Summa-
rized financial information for all individually not material
associates, adjusted for the percentage of ownership
held by Siemens, is presented below. Items included in
the Statements of Comprehensive Income are presented
for the twelve-month period applied under the equity
method.
Siemens Energy AG
registered in
Munich, Germany
Sep 30, 2020
18,792
21,669
8,080
12,179
2019
ANNUAL REPORT 2020 107
maturities of long-term debt
assets classified as held for disposal
4,701
670
1,335
1,756
1,098
Trade payables
Short-term debt and current
42,922
Assets classified as held for disposal
Miscellaneous non-current assets
Miscellaneous current assets
Deferred tax assets
9,338
4,678
4,988
Property, plant and equipment
Other intangible assets
Goodwill
6,647
operations, net of income taxes
Inventories
Income (loss) from investments accounted for using the
equity method included an impairment loss of €453 mil-
lion in connection with an investment that is part of Port-
folio Companies. The business situation of the invest-
ment, increased development costs of customer projects,
combined with a corona-related deterioration of the mar-
ket environment and contractual obligations triggered an
impairment test. The recoverable amount was deter-
mined as the investment's fair value less costs to sell us-
ing a discounted cash flow approach (level 3 of the fair
value hierarchy). In order to determine the recoverable
amount, cash flow forecasts were used, taking into ac-
count past experience and which represented the best
estimate of future developments. The calculation was
based on a discount rate (after taxes) of 8.0%.
27,443
As of September 30, 2020, Siemens' remaining invest-
ment in Siemens Energy AG, active in the transmission
and generation of electrical power, is a public listed asso-
ciate accounted for using the equity method. Below sum-
marized financial information of Siemens Energy AG is
disclosed on a 100 per cent basis. It is adjusted to align
with Siemens' accounting policies and to incorporate ef-
fects from preliminary fair value adjustments at initial
recognition.
Current provisions
Liabilities associated with
595
Miscellaneous non-current liabilities
2,089
Provisions
1,139
Deferred tax liabilities
1,128
Provisions for pensions and similar obligations
1,423
Long-term debt
1,289
Miscellaneous current liabilities
2,805
Other current liabilities
1,621
9,983
Contract liabilities
27,457
non-controlling interests
129
Dividends paid to
245
241
Net income attributable to
2019
2020
Fiscal year
Fiscal year
ANNUAL REPORT 2020 108
6,043
5,294
Non-current liabilities
5,605
7,289
Current liabilities
6,645
Siemens Energy AG at end of year
non-controlling interests
13,650
132
Revenue
4,576
367
(233)
Total cash flows
1,840
825
net of income taxes
Total comprehensive income,
254
(598)
net of income taxes
Other comprehensive income,
1,586
1,423
Income (loss) from continuing
operations, net of income taxes
14,518
14,460
118
14,827
Non-current assets
Carrying amount of
Summarized financial information, in accordance with
IFRS and before inter-company eliminations, is presented
below.
non-controlling interests
Subsidiaries with material
Total comprehensive income, net
of income taxes, attributable to
Siemens since initial recognition
Siemens Energy AG at initial recognition
Siemens interest in the net assets of
(2,630)
of Siemens Energy AG
attributable to shareholders
(2,993)
net of income taxes
Total comprehensive income (loss),
(1,120)
net of income taxes
Other comprehensive income,
(1,873)
130
4,142
(in millions of €)
(24)
Siemens Healthineers AG
registered in
7,779
10,268
Current assets
2,527
including goodwill (preliminary)
1,469
2,623
interests
Total comprehensive income
Consolidation adjustments
21%
Accumulated non-controlling
Ownership interests held by
non-controlling interests
4,118
Siemens interest in the net assets of
Siemens Energy AG at end of year
Sep 30, 2019
Sep 30, 2020
Munich, Germany
15%
Contract assets
ANNUAL REPORT 2020
Trade and other receivables
Valuation allowances are set up for expected credit
losses, representing a forward-looking estimate of
future credit losses involving significant judgment.
Expected credit loss is the gross carrying amount less
collateral, multiplied by the probability of default and
a factor reflecting the loss in the event of default. Valu-
ation allowances are not recognized when the gross
carrying amount is sufficiently collateralized. Probabili-
ties of default are mainly derived from internal rating
grades. A simplified approach is used to assess expected
credit losses from trade receivables, lease receivables
and contract assets by applying their lifetime expected
credit losses. The valuation allowance for loans and
Financial assets measured at amortized cost - Loans,
receivables and other debt instruments held in a hold-
to-collect business model with contractual cash flows
that represent solely payments of principal and interest
are measured at amortized cost using the effective in-
terest method less valuation allowances for expected
credit losses.
taxes.
Financial assets measured at fair value through other
comprehensive income (FVOCI) – are equity instruments
for which Siemens irrevocably elects to present subse-
quent fair value changes in OCI at initial recognition of
the instrument. Unrealized gains and losses, net of de-
ferred income tax expenses, as well as gains and losses
on the subsequent sale of the instruments are recognized
in line item Other comprehensive income, net of income
-
Financial assets measured at fair value through profit and
loss (FVTPL) - a) mandatorily measured at FVTPL: Debt
financial assets are measured at FVTPL if the business
model they are held in is not a hold-to-collect or a hold-
and-sell business model, or if their contractual cash flows
do not represent solely payments of principal and inter-
est. Equity instruments are measured at FVTPL unless the
FVOCI-option is elected. b) Financial assets designated as
measured at FVTPL: are irrevocably designated at initial
recognition if the designation significantly reduces ac-
counting mismatches that would otherwise arise if assets
and liabilities as well as recognizing gains (losses) were
measured on different bases.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
102
ANNUAL REPORT 2020
A financial instrument is any
Financial instruments
contract that gives rise to a financial asset of one entity
and a financial liability or equity instrument of another
entity. Based on their contractual cash flow characteris-
tics and the business model they are held in, financial
instruments are classified as financial assets and financial
liabilities measured at cost or amortized cost, measured
at fair value, loan commitments and credit guarantees,
contract assets and receivables from finance leases. Reg-
ular way purchases or sales of financial assets are ac-
counted for at the trade date. Initially, financial instru-
ments are recognized at fair value and net of transaction
costs, if not categorized at FVTPL. Subsequently, financial
assets and liabilities are measured according to the cate-
gory to which they are assigned to:
Termination benefits are pro-
Termination benefits
vided as a result of an entity's offer made in order to en-
courage voluntary redundancy before the regular retire-
ment date or from an entity's decision to terminate the
employment. Termination benefits in accordance with
IAS 19, Employee Benefits, are recognized as a liability
and an expense when the entity can no longer withdraw
the offer of those benefits.
-
Legal Proceedings often involve complex legal issues and
are subject to substantial uncertainties. Accordingly, con-
siderable judgment is part of determining whether it is
probable that there is a present obligation as a result of a
past event at the end of the reporting period, whether it
is probable that such a Legal Proceeding will result in an
outflow of resources and whether the amount of the ob-
ligation can be reliably estimated. Internal and external
counsels are generally part of the determination process.
Due to new developments, it may be necessary, to record
a provision for an ongoing Legal Proceeding or to adjust
the amount of a previously recognized provision. Upon
resolution of a Legal Proceeding, Siemens may incur
charges in excess of the recorded provisions for such mat-
ters. The outcome of Legal Proceedings may have a ma-
terial effect on Siemens' financial position, its results of
operations and/or its cash flows.
Significant estimates are involved in the determination of
provisions related to onerous contracts, warranty costs,
asset retirement obligations, legal and regulatory pro-
ceedings as well as governmental investigations (Legal
Proceedings). Siemens records a provision for onerous
contracts with customers when current estimates of total
estimated costs exceed estimated revenue. Onerous con-
tracts with customers are identified by monitoring the
progress of the project and updating the estimates which
requires significant judgment relating to achieving cer-
tain performance standards as well as estimates involv-
ing warranty costs and estimates regarding project de-
lays including the assessment of responsibility splits
between the contract partners for these delays. Uncer-
tainties regarding asset retirement obligations include
the estimated costs of decommissioning and final waste
storage because of the long time frame over which fu-
ture cash outflows are expected to occur including the
respective interest accretion. The estimated cash out-
flows could be impacted significantly by changes of the
regulatory environment.
Provisions - A provision is recognized in the Statement
of Financial Position when it is probable that the Com-
pany has a present legal or constructive obligation as a
result of a past event and it is probable that an outflow of
economic benefits will be required to settle the obliga-
tion and a reliable estimate can be made of the amount
of the obligation. If the effect is material, provisions are
recognized at present value by discounting the expected
future cash flows at a pretax rate that reflects current
market assessments of the time value of money. When a
contract becomes onerous, the present obligation under
the contract is recognized as a provision.
other long-term debt instruments primarily held at
Financial Services (SFS) is measured according to a three-
stage impairment approach:
Entitlements resulting from plans based on asset returns
from underlying assets are generally measured at the fair
value of the underlying assets at period-end. If the per-
formance of the underlying assets is lower than a guar-
anteed return, the DBO is measured by projecting for-
ward the contributions at the guaranteed fixed return
and discounting back to a present value.
Stage 1: At inception, twelve-month expected credit
losses are recognized based on a twelve months proba-
bility of default.
Financial assets are written off as uncollectible if recovery
appears unlikely. Generally, if the limitation period ex-
pired, when a debtor's sworn statement of affairs is re-
ceived, or when the receivable is not pursued due to its
minor value. Receivables are written off when bank-
ruptcy proceedings close.
ANNUAL REPORT 2020
IFRS 16, Leases, was adopted as of October 1, 2019, by
applying the modified retrospective approach (using
practical and transitional expedients), i.e. comparative
figures for the preceding year are not adjusted. IFRS 16
introduced a single lessee accounting model requiring
lessees to recognize right-of-use assets and lease liabili-
ties for leases with a term of more than twelve months,
unless the underlying asset is of low value. The initial ap-
plication of IFRS 16 reduced Retained earnings by €28 mil-
lion. Most of the transition effects relate to real estate
leased by Siemens. As of October 1, 2019, additional
right-of-use assets of €3,176 million were recognized in
Property, plant and equipment, generally measured at
the amount of the lease liability adjusted by any prepaid
or accrued lease payments. Future payment obligations
under operating leases as of September 30, 2019 recon-
cile to the lease liability as of October 1, 2019, as follows:
Accounting Pronouncements
Recently adopted
Prior-year information - The presentation of certain pri-
or-year information has been reclassified to conform to
the current year presentation.
Share-based payment - Share-based payment awards at
Siemens are predominately designed as equity-settled.
Fair value is measured at grant date and is expensed over
the vesting period. Fair value is determined as the market
price of the underlying shares, considering dividends
during the vesting period the grantees are not entitled to
as well as market conditions and non-vesting conditions,
if applicable. Plans granting the rights to receive subsidi-
ary shares constitute own shares and, accordingly, are
accounted as equity-settled.
Cash flow hedges: The effective portion of changes in the
fair value of derivative instruments designated as cash
flow hedges are recognized in line item Other compre-
hensive income, net of income taxes, and any ineffec-
tive portion is recognized immediately in net income.
Amounts accumulated in equity are reclassified into net
income in the same periods in which the hedged item
affects net income.
Fair value hedges: The carrying amount of the hedged
item is adjusted by the gain or loss attributable to the
hedged risk. Where an unrecognized firm commitment
is designated as hedged item, the subsequent cumula-
tive change in its fair value is recognized as a separate
financial asset or liability with corresponding gain or loss
recognized in net income. For hedged items carried at
amortized cost, the adjustment is amortized until matu-
rity of the hedged item. For hedged firm commitments
the initial carrying amount of the assets or liabilities that
result from meeting the firm commitments are adjusted
to include the cumulative changes in the fair value that
were previously recognized as separate financial assets
or liabilities.
Derivative financial instruments Derivative financial
instruments, such as foreign currency exchange con-
tracts and interest rate swap contracts are measured at
fair value unless they are designated as hedging instru-
ments, for which hedge accounting is applied. Changes
in the fair value of derivative financial instruments are
recognized either in net income or, in the case of a cash
flow hedge, in line item Other comprehensive income,
net of income taxes (applicable deferred income tax).
Certain derivative instruments embedded in host con-
tracts are also accounted for separately as derivatives.
-
Financial liabilities except for derivative financial
instruments, Siemens measures financial liabilities at
amortized cost using the effective interest method.
Loan Commitments and credit guarantees - Expected
credit losses for irrevocable loan commitments are deter-
mined using the three-stage impairment approach for
financial assets measured at amortized cost and recog-
nized as a liability. Credit guarantees are recognized at
the higher of consideration received for granting the
guarantee and expected credit losses determined.
Cash and cash equivalents - The Company considers all
highly liquid investments with less than three months
maturity from the date of acquisition to be cash equiva-
lents. Cash and cash equivalents are measured at cost.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
103
ANNUAL REPORT 2020
A financial asset is derecognized when the rights to cash
flows expire or the financial asset is transferred to an-
other party. Significant modifications of contractual
terms of a financial asset measured at amortized cost
result in derecognition and recognition of a new financial
asset; for insignificant modifications, the carrying
amount of the financial asset is adjusted without
derecognition.
Stage 3: If the financial asset is credit-impaired, valuation
allowances equal lifetime expected credit losses. A finan-
cial asset is considered credit-impaired when there is
observable information about significant financial diffi-
culties and a high vulnerability to default, however, the
definition of default is not yet met. Impairment triggers
include liquidity problems, a request for debt restructur-
ing or a breach of contract. A credit-risk driven contrac-
tual modification always results in a credit-impaired
financial asset.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
social conditions, the underlying key assumptions may
differ from actual developments.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Other buildings
Factory and office buildings
Property, plant and equipment - Property, plant and
equipment, is valued at cost less accumulated deprecia-
tion and impairment losses. Depreciation expense is rec-
ognized using the straight-line method. The following
useful lives are assumed:
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 99
Other intangible assets - The Company amortizes intan-
gible assets with finite useful lives on a straight-line basis
over their respective estimated useful lives. Estimated
useful lives for patents, licenses and other similar rights
generally range from three to five years, except for intan-
gible assets with finite useful lives acquired in business
combinations. Intangible assets acquired in business
combinations primarily consist of customer relationships
and trademarks as well as technology. Useful lives in spe-
cific acquisitions ranged from four to 20 years for cus-
tomer relationships and trademarks and for technology
from five to 18 years.
The determination of the recoverable amount of a cash-
generating unit or a group of cash-generating units to
which goodwill is allocated involves the use of estimates
by management. The outcome predicted by these esti-
mates is influenced e.g. by the successful integration of
acquired entities, volatility of capital markets, interest
rate developments, foreign exchange rate fluctuations
and the outlook on economic trends. In determining re-
coverable amounts, discounted cash flow calculations
use five-year projections that are based on financial
forecasts. Cash flow projections take into account past
experience and represent management's best estimate
about future developments. Cash flows after the plan-
ning period are extrapolated using individual growth
rates. Key assumptions on which management has
based its determination of fair value less costs to sell
and value in use include estimated growth rates and
weighted average cost of capital. These estimates, in-
cluding the methodology used, can have a material im-
pact on the respective values and ultimately the amount
of any goodwill impairment.
an impairment loss on goodwill allocated to this cash-
generating unit or this group of cash-generating units is
recognized. The recoverable amount is the higher of the
cash-generating unit's or the group of cash-generating
units' fair value less costs to sell and its value in use. If
either of these values exceeds the carrying amount, it is
not always necessary to determine both values. These
values are generally determined based on discounted
cash flow calculations. Impairment losses on goodwill
are not reversed in future periods.
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the cash-gener-
ating unit or the group of cash-generating units that is
expected to benefit from the synergies of the business
combination. If the carrying amount of the cash-gener-
ating unit or the group of cash-generating units, to which
the goodwill is allocated, exceeds its recoverable amount,
Goodwill - Goodwill is not amortized, instead, goodwill
is tested for impairment annually, as well as whenever
there are events or changes in circumstances (triggering
events) which suggest that the carrying amount may not
be recoverable. Goodwill is carried at cost less accumu-
lated impairment losses. The goodwill impairment test is
performed at the level of a cash-generating unit or a
group o of cash-generating units, generally represented by
a segment. Siemens Healthineers is tested one level be-
low the segment. This is the lowest level at which good-
will is monitored for internal management purposes.
Earnings per share Basic earnings per share are com-
puted by dividing income from continuing operations,
income from discontinued operations and net income, all
attributable to ordinary shareholders of Siemens AG by
the weighted average number of shares outstanding
during the year. Diluted earnings per share are calculated
by assuming conversion or exercise of all potentially dilu-
tive securities and share-based payment plans.
-
Research and development costs Costs of research
activities are expensed as incurred. Costs of development
activities are capitalized when the recognition criteria in
IAS 38 are met. Capitalized development costs are stated
at cost less accumulated amortization and impairment
losses with an amortization period of generally three to
ten years.
-
Product-related expenses - Provisions for estimated costs
related to product warranties are recorded in line item
Cost of sales at the time the related sale is recognized.
assets and property, plant and equipment are included in
functional costs depending on the use of the assets.
3,843
Technical machinery & equipment
Office & other equipment
Equipment leased to others
20 to 50 years
5 to 10 years
generally 10 years
generally 5 years
generally 3 to 7 years
ANNUAL REPORT 2020 101
Actuarial valuations rely on key assumptions including
discount rates, expected compensation increases, rate of
pension progression and mortality rates. Discount rates
used are determined by reference to yields on high-qual-
ity corporate bonds of appropriate duration and currency
at the end of the reporting period. In case such yields are
not available, discount rates are based on government
bonds yields. Due to changing market, economic and
Remeasurements comprise actuarial gains and losses as
well as the difference between the return on plan assets
and the amounts included in net interest on the net de-
fined benefit liability (asset). They are recognized in
Other comprehensive income, net of income taxes.
Service cost, past service cost and settlement gains
(losses) for pensions and similar obligations as well as
administration costs unrelated to the management of
plan assets are allocated among functional costs. Past
service cost and settlement gains (losses) are recognized
immediately in profit or loss. For unfunded plans, the
amount of the line item Provisions for pensions and sim-
ilar obligations equals the DBO. For funded plans,
Siemens offsets the fair value of the plan assets with the
DBO. Siemens recognizes the net amount, after adjust-
ments for effects relating to any asset ceiling.
Defined benefit plans - Siemens measures the entitle-
ments by applying the projected unit credit method. The
approach reflects an actuarially calculated net present
value of the future benefit entitlement for services al-
ready rendered. In determining the net present value of
the future benefit entitlement for service already ren-
dered (Defined Benefit Obligation (DBO)), the expected
rates of future salary increases and expected rates of fu-
ture pension progression are considered. The assump-
tions used for the calculation of the DBO as of the peri-
od-end of the preceding fiscal year are used to determine
the calculation of service cost and interest income and
expense of the following year. Significant plans apply in-
dividual spot rates from full discount rate curves to deter-
mine service cost and interest expense. The net interest
income or expense for the fiscal year will be based on the
discount rate for the respective year multiplied by the net
defined benefit liability (asset) at the preceding fiscal
year's period-end date.
Inventories Inventories are valued at the lower of ac-
quisition or production costs and net realizable value,
costs being generally determined based on an average or
first-in, first-out method. Determining net realizable
value of inventories involves accounting estimates for
quantity, technical and price risks.
-
Contract assets, contract liabilities, receivables - When
either party to a contract with customers has performed,
Siemens presents a contract asset, a contract liability or
a receivable depending on the relationship between
Siemens' performance and the customer's payment.
Contract assets and liabilities are presented as current
since incurred in the normal operating cycle. Receivables
are recognized when the right to consideration becomes
unconditional. Valuation allowances for credit risks are
made for contract assets and receivables in accordance
with the accounting policy for financial assets measured
at amortized cost.
104
Income taxes Tax positions under respective local tax
laws, relevant court decisions and applicable tax author-
ities' views can be complex and subject to different inter-
pretations of tax payers and local tax authorities. Differ-
ent interpretations of existing or new tax laws as a result
of tax reforms or other tax legislative procedures may
result in additional tax payments for prior years and are
taken into account based on management's consider-
ations. Under the liability method, deferred tax assets
and liabilities are recognized for future tax consequences
attributable to differences between the financial state-
ment carrying amounts of assets and liabilities and their
respective tax bases. Deferred tax assets are recognized
if sufficient future taxable profit is available, including
income from forecasted operating earnings, the reversal
of existing taxable temporary differences and available
tax planning opportunities that Siemens would execute.
As of each period-end, Siemens evaluates the recover-
ability of deferred tax assets, based on taxable income of
past periods and projected future taxable profits. As fu-
ture developments are uncertain and partly beyond Sie-
mens's control, assumptions are necessary to estimate
future taxable profits as well as the period in which de-
ferred tax assets will recover. Estimates are revised in the
period in which there is sufficient evidence to revise the
assumption.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 100
Discontinued operations and non-current assets held
for disposal Discontinued operations are reported
when a component of an entity is classified as held for
disposal or has been disposed of, if the component rep-
resents a separate major line of business or geographical
area of operations and is part of a single coordinated plan
to disposal. A non-current asset or a disposal group is
held for disposal if its carrying amount will be recovered
principally through a sale transaction or through a distri-
bution to owners rather than through continuing use. In
the Consolidated Statements of Income and of Cash
Flows, discontinued operations is reported separately
from continuing operations; prior periods are presented
on a comparable basis. The disclosures in the > NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS outside NOTE 3 relate
to continuing operations or assets and liabilities not held
for disposal. The determination of the fair value less costs
to sell includes the use of estimates and assumptions that
tend to be uncertain.
Prior-year lessee accounting: Until September 30, 2019,
IAS 17 and IFRIC 4 were applied. Lessee accounting distin-
guished between finance and operating leases. Finance
leases were accounted for largely comparable to the
right-of-use model currently applied for lease account-
ing. Operating leases were recognized off-balance and
expensed over the lease term.
Lessee - Under IFRS 16, Siemens recognizes right-of-use
assets and lease liabilities for leases with a term of more
than twelve months if the underlying asset is not of low
value. Payments for short-term and low-value leases are
expensed over the lease term. Extension options are
included in the lease term if their exercise is reasonably
certain. Right-of-use assets are measured at cost less
accumulated depreciation and impairment losses ad-
justed for any remeasurements. Right-of-use assets are
depreciated under the straight-line method over the
shorter of the lease term and the useful life of the under-
lying assets. Lease liabilities are measured at the present
value of the lease payments due over the lease term,
generally discounted using the incremental borrowing
rate. Lease liabilities are subsequently measured at
amortized cost using the effective interest method. They
are remeasured in case of modifications or reassess-
ments of the lease.
Lessor - Leases are classified as either finance or operat-
ing leases, determined based on whether substantially all
the risks and rewards incidental to ownership of an un-
derlying asset are transferred. If this is the case, the lease
is classified as a finance lease; if not, it is an operating
lease. Receivables from finance leases are recognized at
an amount equal to the net investment in the lease. The
assets underlying the operating leases are presented in
Property, plant and equipment and depreciated on a
straight-line basis over their useful lives or to their esti-
mated residual value. Operating lease income is recog-
nized on a straight-line basis over the lease term.
Leases - Under IFRS 16, a contract is or contains a lease if
the contract conveys the right to control the use of an
identified asset for a period of time in exchange for con-
sideration. Further information on leases can be found in
7 NOTES 8, 13 and 16.
Impairment of property, plant and equipment and
other intangible assets - The Company reviews prop-
erty, plant and equipment and other intangible assets for
impairment whenever events or changes in circum-
stances indicate that the carrying amount of an asset
may not be recoverable. In addition, intangible assets not
yet available for use are subject to an annual impairment
test. Impairment testing of property, plant and equip-
ment and other intangible assets involves the use of esti-
mates in determining the assets' recoverable amount,
which can have a material impact on the respective val-
ues and ultimately the amount of any impairment.
_
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Stage 2: If the credit risk of a financial asset increases
significantly without being credit-impaired, lifetime ex-
pected credit losses are recognized based on a lifetime
probability of default. A significant increase in credit risk
is determined for each individual financial instrument
using internal credit ratings. A rating deterioration does
not trigger a transfer into Stage 2, if the credit rating re-
mains within the investment grade range. More than
30 days past due payments will not be transferred into
Stage 2, if the delay is not credit-risk-related.
Future minimum lease payments from operating leases as of September 30, 2019 (gross)
Future minimum lease payments from finance leases as of September 30, 2019 (gross)
585
297
Income (loss) from discontinued
operations before income taxes
Gains (losses) on sales, net
(9)
946
less spin-off costs
Share of profit (loss), net
Impairment and reversals of impairment
(in millions of €)
(26,908)
28,366
26,259
Investments accounted for using the equity method
NOTE 4 Interests in other entities
2019
2020
Gain on the spin-off
(27,772)
Expenses
Income taxes on ordinary activities
Other income taxes¹
(100)
4,663
Cash and cash equivalents
(in millions of €)
2020
Sep 25,
The carrying amounts of the major classes of assets and
liabilities spun-off were as follows:
1 Mainly includes income taxes relating to the legal carve-out
of the distribution group.
375
(101)
39
thereof attributable to
487
(102)
operations, net of income taxes
Income (loss) from discontinued
3
(298)
Income (loss) from investments accounted
for using the equity method, net
Siemens AG shareholders
Revenue
(in millions of €)
(306)
In August 2020, Siemens Healthineers entered into an
agreement to acquire all shares of Varian Medical Sys-
tems, Inc., U.S., for a purchase price of US$16.4 billion
(€ 14.0 billion as of September 30, 2020). Upon closing
of the acquisition, Siemens Healthineers is obliged to re-
pay all amounts outstanding under an existing credit
agreement of Varian, which has a maximum volume of
US$1.2 billion (€1.0 billion). The acquisition was ap-
proved by Varian shareholders in October 2020. It is still
subject to regulatory approvals and other customary clos-
ing conditions and is expected to be completed in the
first half of calendar year 2021.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 105
In addition, Siemens acquired several businesses in fiscal
2020 and 2019 for a total purchase price of €551 million
and €429 million, respectively, mainly paid in cash. The
(preliminary) purchase price allocations resulted in Other
intangible assets of €263 million and €124 million and
Goodwill of €298 million and €311 million, respectively,
which comprises intangible assets that are not separable
such as employee know-how and expected synergy
effects. The purchase price allocation for some of the ac-
quired businesses is preliminary, as a detailed analysis of
the assets and liabilities has not been finalized. Other
intangible assets of €145 million and Goodwill of €35 mil-
lion were reclassified to Assets classified as held for dis-
posal subsequently.
158
In November 2019, Siemens Healthineers acquired 75%
of ownership interests in ECG Management Consultants
(ECG). ECG is a leading consulting company based in the
United States specialized in healthcare and providing a
comprehensive suite of advisory services. The purchase
price paid in cash including adjustments was US$219 mil-
lion (€196 million). In addition, Siemens Healthineers
redeemed financial liabilities of ECG amounting to
US$143 million (€129 million). The purchase price alloca-
tion as of the acquisition date mainly resulted in Other
Intangible assets of €112 million, Goodwill of €200 mil-
lion and current financial liabilities of €132 million. Good-
will comprises intangible assets that are not separable,
such as employee know-how and expected synergy ef-
fects. Goodwill of €99 million is expected to be deduct-
ible for tax purposes.
been €57,140 million and €4,196 million, respectively, in
fiscal year 2020.
In October 2019, Siemens Healthineers acquired Corin-
dus Vascular Robotics, Inc., USA, for US$1.1 billion
(€1.0 billion) in cash. Corindus develops and provides a
robotic-assisted platform for endo-vascular coronary and
peripheral vascular interventions. The purchase price al-
location as of the acquisition date resulted in Other Intan-
gible assets of €306 million, mainly relating to acquired
technology, and Goodwill of €751 million. Goodwill com-
prises intangible assets that are not separable, such as
employee know-how and expected synergy effects. Syn-
ergies are expected mainly from offering Corindus' prod-
ucts through the Siemens Healthineers' sales network,
and also from the combination of Corindus' robotic sys-
tems with Siemens Healthineers' therapy systems and
solutions in the fields of digitalization and artificial intel-
ligence. The acquired business contributed revenue of
€8 million and a net loss of €48 million for the period
from acquisition to September 30, 2020, including earn-
ings effects from purchase price allocation and integra-
tion costs. If Corindus had been included in the consoli-
dated financial statements as of October 1, 2019, revenue
and net income, including earnings effects from pur-
chase price allocation and integration costs, would have
Acquisitions
Acquisition of a further stake
NOTE 3 Acquisitions, dispositions
and discontinued operations
3,127
Lease liability recognized for the first time as of October 1, 2019 (thereof current: €751)
106
Lease liability from finance leases as of September 30, 2019
3,233
Change in future minimum lease payments relating to service components
Discounted using incremental borrowing rates (weighted average incremental borrowing rate as of October 1, 2019: 1.8%)
Lease liability as of October 1, 2019
3,538
(37)
On October 1, 2019, Siemens retrospectively adopted
IFRIC 23, Uncertainty over Income Tax Treatments. The
adoption increased Current income tax assets and Equity
by €553 million. Prior period amounts are not adjusted.
Other (therein leases terminating before September 30, 2020 €(34), leases concluded not yet commenced €(23))
Future minimum lease payments from leases under the right-of-use model as of October 1, 2019 (gross)
in Siemens Gamesa Renewable Energy
In February 2020, Siemens purchased Iberdrola S.A.'s
8.1% stake in Siemens Gamesa Renewable Energy for a
purchase price of €1.1 billion. The transaction was ac-
counted for as equity transaction, resulting in a decrease
of non-controlling interests of €112 million and a de-
crease of retained earnings attributable to shareholders
of Siemens AG of €967 million.
in Siemens Healthineers
3,518
(in millions of €)
Dilution of the stake
→ B.6 Notes to Consolidated Financial Statements
Consolidated Financial Statements
106
Fiscal year
To determine the fair value of the spin-off liability and the
remaining stake in Siemens Energy as of the spin-off
date, Siemens referred to an opinion by an independent
expert (level 3 of the fair value hierarchy). The fair value
of the spin-off liability, which represents 55% of the share
in Siemens Energy, amounted to €10.5 billion; the re-
maining 35.1% investment in Siemens Energy amounted
to €6.7 billion and the 9.9% interest contributed into the
Siemens Pension-Trust e. V. amounted to €1.9 billion; the
derecognised net assets, including the non-controlling
interests, amounted to €16.0 billion; the reclassification
of the amounts recognized in other comprehensive in-
come resulted in an expense of €0.7 billion and the spin-
off costs in fiscal year 2020 amounted to €0.2 billion. The
transfer of 24% of Siemens Ltd., India, is classified as an
equity transaction not impacting profit or loss at the
amount of €1.2 billion; this component is not part of the
spin-off gain. Subsequently, Siemens still holds 51% of
the shares in Siemens Ltd., India, and continues to con-
trol the investment. As a result of this equity transaction,
Non-controlling interests and Retained earnings in-
creased by €0.3 billion and €0.9 billion, respectively.
Overall, in fiscal 2020, Siemens recorded a spin-off gain
of €0.9 billion. The derecognition of the disposal group is
presented as a non-cash transaction. The results of
Siemens Energy are reported as discontinued operations
in the Consolidated Statements of Income and Cash Flows
for all periods presented:
On September 25, 2020, the spin-off transaction became
effective. Siemens transferred 55% of its ownership inter-
est in Siemens Energy to its shareholders and since that
point no longer controls Siemens Energy. Immediately
after the effectiveness of the spin-off, Siemens contrib-
uted a 9.9% interest in Siemens Energy to the Siemens
Pension-Trust e. V. Thereafter, Siemens owns 35.1% in
Siemens Energy and accounts for its investment using
the equity method.
the distribution group met the criteria for a held for dis-
posal and discontinued operation classification. Effective
with Siemens classifying the distribution group as held
for disposal, Siemens ceased depreciation and amortiza-
tion of assets within the distribution group. In July 2020,
the Siemens AG shareholders approved the spin-off plan
in an extraordinary shareholder meeting.
In May 2019, Siemens announced to transfer the energy
business into a new company, Siemens Energy AG
(Siemens Energy), and list it on the stock market by a
spin-off. The distribution group included the previous
segment Gas and Power and the 67% stake in Siemens
Gamesa Renewable Energy. In addition, Siemens trans-
ferred a 24% stake in Siemens Ltd., India, into Siemens
Energy. At the end of the second quarter in fiscal 2020,
Discontinued operations:
Siemens Energy spin-off
In September 2020, Siemens Healthineers AG placed
75 million new shares to institutional investors, receiving
gross proceeds of €2.7 billion and increasing its share cap-
ital to €1.075 billion. Siemens did not participate in the
placement, thus, Siemens' stake in Siemens Healthineers
decreased from 85% to 79%. The dilution is accounted for
as equity transaction, which increased Non-controlling
interests by €1.1 billion and Total equity attributable to
shareholders of Siemens AG by €1.6 billion (mainly due to
an increase in Retained earnings of €1.5 billion).
(101)
Finished goods and products held for resale
Advances to suppliers
2,355
4,258
600
921
7,795
14,806
5,902
Work in progress
In fiscal 2019, the gross investment in leases and the
present value of future minimum lease payments were
due as follows:
6,084
Present value of future minimum lease payments
3,726
1,796
Raw materials and supplies
(92)
Less: Present value of unguaranteed residual value
Sep 30,
2019
2020
3,043
(in millions of €)
(in millions of €)
One to five years
Fiscal year
NOTE 12 Goodwill
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 111
Cost of sales includes inventories recognized as expense
amounting to €36,406 million and €36,288 million,
respectively, in fiscal 2020 and 2019. Compared to prior
year, write-downs decreased (increased) by €17 million
and €(64) million as of September 30, 2020 and 2019.
Balance at begin of fiscal year
6,084
7,352
Translation differences and other
Within one year
(in millions of €)
657
920
4,064
2,368
in leases
1,930
3,497
Sep 30, 2019
Present value of
future minimum
lease payments
Gross
investment
Thereafter
Cost
(184)
2020
6,360
1,424
Other
6,375
775
798
Derivative financial instruments
(778)
1,331
1,256
669
Interest-bearing debt securities
4,904
Loans receivable
7,153
Sep 30,
2019
2020
(in millions of €)
Sep 30,
2020
NOTE 9 Other current
financial assets
Present value of future minimum lease payments
7,893
8,382
10,669
Plus: Present value of unguaranteed residual value
Net investment in the lease
Net investment in leases
(992)
Less: Unearned finance income
NOTE 11 Inventories
7,352
Gross investment in leases
239
Plus: Unguaranteed residual values
7,112
Future minimum lease payments
2019
(in millions of €)
As of September 30, 2020 and 2019, amounts expected
to be settled after twelve months are €960 million and
€2,106 million for contract assets and €1,112 million and
€3,626 million for contract liabilities, respectively. In fis-
cal 2020, a decrease in contract assets of €4,576 million
and in contract liabilities of €9,982 million resulted from
the Siemens Energy spin-off. In fiscal 2020 and 2019, rev-
enue includes €4,651 million and €4,799 million, respec-
tively, which was included in contract liabilities at the
beginning of the fiscal year.
NOTE 10 Contract assets
and liabilities
Sep 30,
Future minimum lease payments in fiscal 2019 reconcile to
the gross and net investment in leases and to the present
value of the future minimum lease payments as follows:
In fiscal 2020, finance income on the net investment in
the lease is €398 million.
machines.
Investments in finance leases primarily relate to indus-
trial machinery, medical equipment, transportation sys-
tems, equipment for information technology and office
6,475
100
Less: Allowance for doubtful accounts
2019
business
30,213
1.7%
6,807
8.0%
1.7%
7,167
Sep 30, 2019
After-tax
discount rate
Terminal value
growth rate
Goodwill
ANNUAL REPORT 2020 113
8.5%
The sensitivity analysis for the groups of cash-generating
units to which a significant amount of goodwill is allo-
cated was based on a reduction in after-tax future cash
flows by 10% or an increase in after-tax discount rates by
one percentage point or a reduction in the terminal value
growth rate by one percentage point. Siemens concluded
that no impairment loss would need to be recognized on
goodwill in any of these groups of cash-generating units.
Gas and Power
Digital Industries
(in millions of €)
revenue growth rates (excluding portfolio effects) of
between 3.1% and 6.1% (2.3% and 6.2% in fiscal 2019).
Revenue figures in the five-year planning period of the
groups of cash-generating units to which a significant
amount of goodwill is allocated are based on average
7.5%
1.5%
2,114
7.0%
1.7%
Imaging of Siemens Healthineers
5,951
1.7%
6.5%
amount
Retire-
ments²
fications
nations Additions
rences
10/01/20191
(in millions of €)
Reclassi-
combi-
diffe-
amount
carrying
to future minimum lease payments
lation
Gross
Accumu-
lated depre-
Additions
through
Trans-
Gross
carrying
NOTE 13 Other intangible assets and property, plant and equipment
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
5,827
32,098
(1,642)
8.5%
6,732
1
99
Impairment losses recognized during the period (including those relating to disposal groups)1
Dispositions and reclassifications to assets classified as held for disposal
72
(100)
Translation differences and other
1,868
1,938
Balance at begin of fiscal year
(314)
Accumulated impairment losses and other changes
22,072
Balance at fiscal year-end
(9)
(9,632)
Dispositions and reclassifications to assets classified as held for disposal
742
1,247
Acquisitions and purchase accounting adjustments
1,152
32,098
(3)
Balance at fiscal year-end
1,623
Sep 30, 2020
After-tax
discount rate
Terminal value
growth rate
Goodwill
Imaging of Siemens Healthineers
Smart Infrastructure
(in millions of €)
Digital Industries
The following table presents key assumptions used to de-
termine fair value less costs to sell for impairment test
purposes for the groups of cash-generating units to
which a significant amount of goodwill is allocated:
peer group information on beta factors, leverage and
cost of debt as well as country specific premiums. The
parameters for calculating the discount rates are based
on external sources of information. The peer group is
subject to an annual review and adjusted, if necessary.
Terminal value growth rates take into consideration ex-
ternal macroeconomic sources of data and industry spe-
cific trends.
The fair value less costs to sell is mainly driven by the
terminal value, which is particularly sensitive to changes
in the assumptions on the terminal value growth rate and
discount rate. Both assumptions are determined individ-
ually for each cash-generating unit or group of cash-gen-
erating units. Discount rates are based on the weighted
average cost of capital (WACC). Siemens Financial Ser-
vices' discount rate represents its specific cost of equity.
The discount rates are calculated based on a risk-free rate
of interest and a market risk premium. In addition, the
discount rates reflect the current market assessment of
the risks specific to each cash-generating unit or group of
cash-generating units by taking into account specific
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 112
To estimate the fair value less costs to sell of the cash-
generating units or groups of cash-generating units, cash
flows were projected for the next five years based on past
experience, actual operating results and management's
best estimate about future developments as well as
market assumptions. The determined fair value of the
cash-generating units or groups of cash-generating units
is assigned to level 3 of the fair value hierarchy.
value growth rates up to 1.7% in fiscal 2020 and fiscal
2019, respectively and after-tax discount rates of 5.5% to
12.5% in fiscal 2020 and 5.5% to 8.5% in fiscal 2019.
Siemens performs the mandatory annual impairment
test in the three months ended September 30. Key as-
sumptions on which Siemens based its determinations of
the fair value less costs to sell for the cash-generating
units or groups of cash-generating units include terminal
As of March 31, 2020, Siemens adjusted its organizational
and reporting structure regarding the local energy busi-
ness in certain countries remaining within Siemens after
the spin-off of Siemens Energy. Goodwill has been real-
located based on relative values from the former group
of cash-generating units Gas and Power to the newly es-
tablished group of cash-generating units Siemens Energy
Assets within Portfolio Companies.
28,344
30,160
30,160
20,449
1 Impairment losses in fiscal 2020 relate to Portfolio Companies.
Balance at fiscal year-end
Balance at begin of fiscal year
Carrying amount
1,938
1.7%
Less: Unearned finance income relating
403
(in millions of €)
(in millions of €)
403
(219)
1,372
1,601
are summarized as follows:
Fiscal year
2019
2020
Deferred income tax assets and (liabilities) on a net basis
1,382
1,775
(47)
(109)
Other, net (primarily German trade tax differentials)
Actual income tax expenses
16
33
for using the equity method
Tax effect of investments accounted
(400)
(457)
1,382
Foreign tax rate differential
1,775
Intangible assets
2,324
1,138
760
(144)
(417)
(169)
362
3,540
2,921
Deferred taxes due to temporary differences
(2,496)
Sep 30,
2019
2020
109
ANNUAL REPORT 2020
Tax loss carryforwards and tax credits
Total deferred taxes, net
Non-current assets and liabilities
Pensions and similar obligations
Current assets and liabilities
In Germany, the calculation of current taxes is based on
a combined tax rate of 31%, consisting of a corporate tax
rate of 15%, a solidarity surcharge thereon of 5.5% and an
average trade tax rate of 15%. For foreign subsidiaries,
current taxes are calculated based on the local tax law
and applicable tax rates in the individual foreign coun-
tries. Deferred tax assets and liabilities in Germany and
abroad are measured at the tax rates that are expected to
apply to the period when the asset is realized or the lia-
bility is settled.
The current income tax expenses in fiscal 2020 and 2019
include adjustments recognized for current taxes of prior
years in the amount of €(63) and €(413) million, respec-
tively. The deferred tax expenses (benefits) in fiscal 2020
and 2019 include tax effects of the origination and re-
versal of temporary differences of €(291) million and
€179 million, respectively.
(1,302)
14
7
Change in tax rates
Other operating expenses in fiscal 2020 and 2019 include
losses on sales of property, plant and equipment, impair-
ment expense as well as effects from insurance, person-
nel, legal and regulatory matters.
NOTE 6 Other operating expenses
Expected income tax expenses
(in millions of €)
Current and deferred income tax expenses differ from
the amounts computed by applying a combined statu-
tory German income tax rate of 31% as follows:
In fiscal 2020 and 2019, Other operating income includes
gains related to the sale of businesses of €177 million and
€49 million and gains on sales of property, plant and
equipment of €308 million and €138 million, respec-
tively, as well as gains from reversals of provisions.
NOTE 5 Other operating income
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
14,816
NOTE 7 Income taxes
18,511
1 Includes adjustments for fair value hedge accounting.
Debt Issuance Program - The Company has a program
for the issuance of debt instruments in place under
which, as of September 30, 2020, up to €25.0 billion of
instruments can be issued (€15.0 billion as of Septem-
ber 30, 2019). As of September 30, 2020, €23.2 billion in
notional amounts were issued and are outstanding
(€14.5 billion as of September 30, 2019). In March 2020,
the 1.5% €1.0 billion fixed-rate instruments were re-
deemed at face value. In June 2020, the US$400 million
floating rate instruments were redeemed at face value.
In December 2019, Siemens issued €1.25 billion float-
ing-rate instruments due December 2021. In Febru-
ary 2020, Siemens issued instruments totaling €4.0 bil-
lion in four € tranches as well as a £850 million tranche.
In June 2020, Siemens issued instruments totaling
€3.5 billion in three € tranches and, in addition, a
£450 million tranche.
38,265
33,205
US$ Bonds - In March 2020, Siemens redeemed the 3 m
LIBOR+0.34% US$800 million floating-rate instruments
and the 2.2% US$1.1 billion fixed-rate instruments at face
value. In May 2020, the 2.15% US$1.0 billion fixed-rate
instruments were redeemed at face value.
Assignable and term loans
As of September 30, 2020 and 2019, two bilateral
US$500 million term loan facilities (in aggregate
€854 million and €918 million respectively) are outstand-
ing. In fiscal 2020, one bilateral US$500 million term
loan facility was replaced cash neutral by a newly signed
US$500 million term loan facility with a maturity until
March 2023 with two one-year extension options. The
second has a maturity until June 2024.
ANNUAL REPORT 2020 118
09/30/2020
Total
Income tax expenses (benefits) consist of the following:
(in millions of €)
Current taxes
(93)
(75)
tax assets and tax credits
Change in realizability of deferred
(393)
(55)
Taxes for prior years
(268)
(378)
Tax-free income
797
658
Non-deductible expenses
Increase (decrease) in income taxes
resulting from:
2,149
1,758
2019
2020
Fiscal year
Income tax expenses
Deferred taxes
1,869
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
(in millions of €)
Deferred tax balances and expenses (benefits) developed
In fiscal 2020 and 2019, the long-term portion of receiv-
ables from finance leases is reported in Other financial
assets amounting to €4,245 million and €4,210 million,
respectively.
Siemens has not recognized deferred tax liabilities for
income taxes or foreign withholding taxes on the cumu-
lative earnings of subsidiaries of €25,003 million and
€34,075 million, respectively in fiscal 2020 and 2019 be-
cause the earnings are intended to be permanently rein-
vested in the subsidiaries.
The decrease of tax loss carryforwards was mainly caused
by the Siemens Energy spin-off. As of September 30,
2020 and 2019, €221 million and €2,186 million respec-
tively, expire over the periods to 2027.
5,586
5,062
2,172
2,364
14,074 18,894
524
192
Future minimum lease payments to be received are as
follows:
1,966
16,928
12,071
Trade receivables from the
sale of goods and services
Receivables from finance leases
2019
2020
Sep 30,
Sep 30,
2019
2020
(in millions of €)
2,003
(in millions of €)
Within one year
After one year but not more
In fiscal 2020, future minimum lease payments reconcile
to the net investment in the lease as follows:
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
7,112
7,153
751
717
More than five years
422
After four years but not
more than five years
732
1,156
ANNUAL REPORT 2020 110
After two years but not
more than three years
After three years but not
more than four years
Including items charged or credited directly to equity and
the expenses (benefits) from continuing and discontin-
ued operations, the income tax expenses (benefits) con-
sist of the following:
4,008
1,685
than two years (fiscal 2019 after one
year but not more than five years)
2,354
2,441
Sep 30,
2019
2020
Deductible temporary differences
Tax loss carryforwards
Future minimum lease payments
NOTE 8 Trade and
other receivables
An uncertain tax regulation arising from a foreign tax re-
form may result in potential future tax payments amount-
ing to a middle three-digit million euro range. Due to the
low probability and the character of a contingent liability,
no tax liability was recognized.
not impacting net income
Additions from acquisitions
(696)
8
Consolidated Statements of Comprehensive Income
Changes in items of the
(219)
Consolidated Statements of Income
Income taxes presented in the
61
(1,249)
of deferred tax (assets) liabilities
2019
2020
Discontinued operations
Fiscal year
Continuing operations
Balance at beginning of fiscal year
(in millions of €)
as follows in fiscal 2020 and 2019:
(1,869)
34
Changes due to
Siemens Energy
1,195
1,192
(698)
(588)
118
398
1,775
1,382
2019
2020
Fiscal year
Income and expenses
recognized directly in equity
(1,869)
(2,324)
12
(373)
(301)
(4)
(in millions of €)
of deferred tax (assets) liabilities
Balance at end of fiscal year
Other
Deferred tax assets have not been recognized with re-
spect of the following items (gross amounts):
ciation/
amortiza-
tion and
impairment
(195)
Deprecia-
tion/amor-
tization
and impair-
1 Opening balance as of October 1, 2019, including effect of adopting IFRS 16 (see > NOTE 2).
44,567
1,191
124
(1,865)
(2,123)
7,664
39,576
2,829
1,351
(108)
(735)
(911)
3,233
Total debt
(current and non-current)
Lease liabilities
2,076
24
(209)
(1)
1,388
875
In addition, other financing activities resulted in €(99)
(current and non-current)
Carrying
Non-cash changes
(current and non-current)
Loans from banks
4,029
3,850
228
(3,190)
3,142
Current notes and bonds
29,176
(3,954)
405
1,044
6,471
25,210
Non-current notes and bonds
09/30/2019
Reclassi-
fications
and other
changes
Fair value
changes
Foreign
currency
translation
Acquisitions/
Dispositions
Cash flows
10/01/2018
(in millions of €)
million cash flows in fiscal 2020.
2,934
Other financial indebtedness
(144)
10/01/20191
(in millions of €)
Reclassi-
fications
Non-cash changes
Changes in liabilities arising from financing activities
ing costs for buildings leased by Siemens, for which no
significant fluctuations are expected in the future.
extension options whose exercise is not yet reasonably
certain totaling €2.6 billion and, in addition, to variable
lease payments mainly relating to incidental and operat-
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 115
In fiscal 2020, Siemens recognized interest expenses on
lease liabilities of €39 million and expenses relating to
variable lease payments not included in the measure-
ment of lease liabilities of €100 million. In fiscal 2020,
cash flows to which Siemens is potentially exposed and
which are not reflected in the measurement of lease
liabilities relate primarily to lease contracts entered
into, however which are not yet commenced as well as to
In fiscal 2020, income from operating leases is €529 mil-
lion, thereof from variable lease payments €110 million.
164
1,204
1,586
186
More than five years
129
more than five years
After four years but not
188
more than four years
After three years but not
261
more than three years
Cash flows
1,397
Acquisitions/
Dispositions
Fair value
changes
(225)
(1,387)
891
2,262
(current and non-current)
Loans from banks
3,537
3,509
4
(46)
(3,959)
4,029
Current notes and bonds
34,728
(3,549)
120
(1,276)
10,256
29,176
Non-current notes and bonds
09/30/2020
changes
and other
Foreign
currency
translation
After two years but not
(752)
80
84
100
US$
997
1,000
€
998
1,000
€
1,263
1,250
€
1,254
1,250
€
650
£
700
650
£
394
350
£
US$
383
100
2013/June 2020/US$ floating-rate instruments
2014/September 2021/US$ floating-rate instruments
0.375%/2018/September 2023/EUR fixed-rate instruments
1.0%/2018/September 2027/EUR fixed-rate instruments
€
1.375%/2018/September 2030/EUR fixed-rate instruments
746
750
€
746
750
€
997
1,000
€
998
1,000
€
367
400
US$
342
400
US$
367
400
US$
90
30
350
1,000
36,449
106
16
(118)
405
1,524
24
2,436
32,177
Total debt
1
(21)
110
(current and non-current)
Lease liabilities
875
171
(6)
(72)
781
(current and non-current)
Other financial indebtedness
2,262
(30)
In addition, other financing activities resulted in €77 mil-
£
lion cash flows in fiscal 2019.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
1,000
€
-
of €1
(in millions)
of €¹
(in millions)
2.75%/2012/September 2025/GBP fixed-rate instruments
3.75%/2012/September 2042/GBP fixed-rate instruments
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
1.5%/2012/March 2020/EUR fixed-rate instruments
(interest/issued/maturity)
in millions
Sep 30, 2019
Carrying
amount
amount
Currency
Notional
in millions
Sep 30, 2020
Carrying
amount
amount
Notional
Currency
bridge facility to secure Siemens Healthineers AG's
financing of the acquisition of Varian Medical Systems,
Inc. was signed maturing in 2022 with two six-months
extension options. The unused syndicated bridge facility
was reduced to nearly €12.5 billion by net proceeds re-
ceived from Siemens Healthineers AG's issuance of new
shares in September 2020. In September 2020, the un-
used €450 million revolving bilateral credit facility was
extended to September 2021. The facilities are for gen-
eral corporate purposes.
Notes and bonds
As of September 30, 2020 and 2019, Siemens has
€22.95 billion and €9.95 billion lines of credit, thereof
unused €22.95 billion and €9.45 billion, respectively. In
February 2020 the unused €7.0 billion syndicated credit
facility maturing in 2024 was extended to mature in 2025
with one one-year extension option remaining. In
March 2020, a new €3.0 billion unused syndicated credit
facility was signed which matures in December 2020
with one three-months extension option remaining.
In August 2020, a new €15.2 billion unused syndicated
Credit facilities
ANNUAL REPORT 2020 116
30,414
90
16 2,146
6,034 38,005
663
19,938
Other intangible assets
(277)
4,515
9,434 (4,919)
(52)
183
405
8,898
and trademarks
Customer relationships
(428)
3,306
7,008 (3,702)
(923)
88
97
173
7,573
patents, licenses and similar rights
Acquired technology including
(211)
279
1,979
504
20,326 (10,526)
(309)
2,710
9,205 (6,495)
(355)
327
357
8
151
8,716
and equipment
Technical machinery
(203)
4,619
8,664 (4,046)
(185)
137
158
11
171
8,372
Land and buildings
(915)
9,800
(1,059)
Office and other equipment
(1,906)
(84)
lation
carrying
through
Trans-
Gross
Additions
2 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
1 Opening balance as of October 1, 2019 including effect of adopting IFRS 16 (see > NOTE 2).
(2,105)
10,250
(13,194)
735
(39)
512
(780) (418)
Property, plant and equipment
33,080
(951)
58
3,168
(11,911)
736
23,443
(1)
business
3,885
Gross
Accumu-
lated depre-
ciation/
416
85
3,467
Internally generated technology
fiscal 2019
ment in
and impair-
tization
Deprecia-
tion/amor-
Carrying
amount
09/30/2019
tion and
impairment
09/30/2019
amount
Retire-
ments'
Reclassi-
fications
nations Additions
rences
10/01/2018
(in millions of €)
combi-
diffe-
amount
amortiza-
carrying
6,651
121
UT
2020
Non-current debt
Current debt
Sep 30,
2019
2020
(in millions of €)
NOTE 16 Debt
9,023
6,209
1,824
1,280
1,204
518
Accruals for pending invoices
Other
156
108
5,839
4,304
Sep 30,
2019
2020
(in millions of €)
Liabilities to personnel
Deferred Income
NOTE 15 Other current liabilities
Item Loans receivable primarily relate to long-term loan
transactions of SFS.
19,843
Sep 30,
2019
22,771
Sep 30,
2020
6,562
Total debt
705
369
more than five years)
683
Lease liabilities
years (fiscal 2019 after one year but not
After one year but not more than two
72
55
29,176
1,076
4,029 34,728
1,187 1,076
803
2,021
Other financial indebtedness
336
454
321
Loans from banks
Within one year
3,537
Notes and bonds
2019
(in millions of €)
200
623
890
(638)
873
1
39
1,205
construction in progress
Advances to suppliers and
(327)
1,763
3,467 (1,704)
(387)
19
671
67
3,097
Equipment leased to others
(588)
1,635
7,150 (5,515)
(535)
154
754
5
Property, plant and equipment
28,040
549
26
1,670
2,239
2,044
4,210
4,245
12,304
14,189
Sep 30,
2019
2020
Receivables from finance leases
Derivative financial instruments
Equity instruments
Other
(in millions of €)
Loans receivable
1,000
NOTE 14 Other financial assets
In fiscal 2020, expenses recognized for short-term and
low-value leases not accounted for under the right-of-use
model are €72 million and €24 million, respectively. For
sale and leaseback transactions gains of €267 million are
recognized in fiscal 2020.
The gross carrying amount of Advances to suppliers and
construction in progress includes €639 million and
€1,335 million, respectively of property, plant and equip-
ment under construction in fiscal 2020 and 2019. As of
September 30, 2020 and 2019, contractual commitments
for purchases of property, plant and equipment are
€563 million and €676 million, respectively. Right-of-use
assets are presented in Property, plant and equipment in
accordance with their nature; right-of-use assets have a
carrying amount of €2,474 million as of September 30,
2020; additions are €1,273 million and depreciation ex-
pense is €710 million in fiscal 2020. Right-of-use assets
mainly relate to leases of land and buildings with a carry-
ing amount of €2,187 million as of September 30, 2020
and additions of €1,029 million and depreciation expense
of €512 million in fiscal 2020. Equipment leased to others
mainly relate to Technical machinery and equipment as
well as to Office and other equipment owned by Siemens
with a carrying amount of €1,223 million and €448 mil-
lion, respectively, as of September 30, 2020.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 114
1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
12,183 (1,427)
1,457
(4)
(17,765)
1,461
29,948
(18)
(1,480)
2,812
Future minimum lease payments to be received under
operating leases are:
994
721
1,000
1,000
US$
915
1,000
US$
3.125%/2017/March 2024/US$-fixed-rate-instruments
780
850
US$
€
850
US$
US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
940
1,000
946
3.4%/2017/March 2027/US$-fixed-rate-instruments
US$
1,250
(545)
3,682 (1,826)
1,856
(524)
Advances to suppliers and
construction in progress
1,461
US$
1,364
1,269 US$
1,500
US$
4.2%/2017/March 2047/US$-fixed-rate-instruments
Total US$ Bonds
1,144
1,250
1,064 US$
1,500
38
884
US$
US$
2.35%/2016/October 2026/US$-fixed-rate-instruments
685
750
638 US$
750
US$
1,009
1,100
939 US$
1,100
US$
1,587
1,750
1,476 US$
1,700
1,446
US$
1,700
2.7%/2017/March 2022/US$-fixed-rate-instruments
1,010
1,100
US$
2.2%/2017/March 2020/US$-fixed-rate-instruments
734
800
1,000
US$
910
1,000
846 US$
1,000
US$
3.3%/2016/September 2046/US$-fixed-rate-instruments
1,554
US$3 m LIBOR+ 0.34%/2017/March 2020/US$ floating-rate instruments
656
(168)
3,700
Customer relationships
and trademarks
9,434
(333)
331
6
(4,401)
5,037 (3,642)
1,395
(315)
Other intangible assets
20,326
(630)
704
495
(443)
1,729
4,631 (2,902)
(2,618)
amount
09/30/2020
ment in
fiscal 2020
Internally generated technology
3,885
(95)
419
(7,772)
(753)
1,714
Acquired technology including
patents, licenses and similar rights
7,008
(202)
373
70
3,456 (1,741)
13,124 (8,286)
4,838
(953)
5,120
(3,699)
1,421
(302)
Office and other equipment
7,239
(206)
(4,523)
10
124
(2,523)
5,249
(4,078)
1,171
(584)
Equipment leased to others
604
1,750
222
7
Land and buildings
11,319
(306)
40
40
1,108
396
288
(3,902)
(3,589)
5,067
(695)
Technical machinery
and equipment
9,360
(233)
8,656
US$
725
1,718
US$
2.15%/2015/May 2020/US$-fixed-rate-instruments
2.9%/2015/May 2022/US$-fixed-rate-instruments
1,892
1,750
US$
1,750
1,000
US$
14,695
23,449
491
450
£
998
6.125%/2006/August 2026/US$ fixed-rate instruments
1,000
918
1,750
0.0%/2020/February 2026/EUR fixed-rate instruments
€
1,000
4.4%/2015/May 2045/US$-fixed-rate-instruments
1.7%/2016/September 2021/US$-fixed-rate-instruments
2.0%/2016/September 2023/US$-fixed-rate-instruments
1,432
1,500
US$
US$
US$
3.25%/2015/May 2025/US$-fixed-rate-instruments
1,605
1,750
US$
1,493
1,500
1,253
€
of €1
ANNUAL REPORT 2020 117
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
(interest/issued/maturity)
0.375%/2020/June 2026/EUR fixed-rate instruments
0.875%/2020/June 2023/GBP fixed-rate instruments
Total Debt Issuance Program
Currency
Notional
Sep 30, 2020
Carrying
amount
997
in millions
Sep 30, 2019
Carrying
amount
in millions
of €1
amount
(in millions)
Currency
Notional
amount
(in millions)
1,000
1,496
997
0.25%/2020/February 2029/EUR fixed-rate instruments
0.5%/2020/February 2032/EUR fixed-rate instruments
1.0%/2020/February 2025/GBP fixed-rate instruments
0.125%/2020/June 2022/EUR fixed-rate instruments
0.25%/2020/June 2024/EUR fixed-rate instruments
1 Includes adjustments for fair value hedge accounting.
€
1,000
996
€
€
747
£
850
929
€
1,500
750
1,250
1,401
0.0%/2020/February 2023/EUR fixed-rate instruments
0.0%/2019/September 2021/EUR fixed-rate instruments
0.0%/2019/September 2024/EUR fixed-rate instruments
938
800
€
963
800
€
1.75%/2019/February 2039/EUR fixed-rate instruments
875
800
€
882
800
€
689
650
€
690
650
€
0.9%/2019/February 2028/EUR fixed-rate instruments
1.25%/2019/February 2031/EUR fixed-rate instruments
767
750
€
764
750
€
0.3%/2019/February 2024/EUR fixed-rate instruments
993
€
1,000
€
€
1,256
1,002
€
3m EURIBOR+0.7%/2019/December 2021/EUR floating-rate instrument
990
1,000
€
991
1,000
€
0.5%/2019/September 2034/EUR fixed-rate instruments
992
1,000
€
1,250
1,000
1,000
1,005
€
500
993
€
503
500
504
0.125%/2019/September 2029/EUR fixed-rate instruments
€
USD
GBP
Sep 30,
CHF
EUR
Pension progression
U.K.
Germany
2020
ial valuation of the DBO was as follows:
The weighted-average discount rate used for the actuar-
ACTUARIAL ASSUMPTIONS
Discount rate
2019
Sep 30,
2019
1.3%
0.8%
0.8%
2.6%
2020
ANNUAL REPORT 2020 121
The discount rate was derived from high-quality corpo-
rate bonds with an issuing volume of more than 100 mil-
lion units in the respective currency zones, which have
0.2%
0.2%
2.0%
3.1%
2.5%
CH
1.6%
1.1%
U.K.
(1,228)
Compensation increase
1,574
380
702
1,369
4,026
Thereof non-current
581
183
(3,639)
690
3.5%
Siemens specific tables
(Siemens Bio 2017/2020)
Pri-2012 with generational projection from
the US Social Security Administration's
Long Range Demographic Assumptions
SAPS S2 (Standard mortality tables for
Self Administered Pension Schemes with
allowance for future mortality improvements)
BVG 2015 G
1 Discloses figures including Siemens Energy. Accordingly, it comprises
the total of continuing and discontinuing operations.
The mortality tables used in Germany (Siemens Bio
2017/2020) are mainly derived from data of the German
Siemens population and to a lesser extent from data of
the Federal Statistical Office in Germany by applying for-
mulas in accordance with recognized actuarial standards.
the following table. Inflation effects, if applicable, are
included in the assumptions below.
2020
Changes in demographic assumptions
(3)
(173)
Changes in financial assumptions
402
4,569
Experience (gains) losses
(97)
52
Total
303
4,448
The rates of compensation increase and pension progres-
sion for countries with significant effects are shown in
1.4%
Effect on DBO due to a one-half percentage-point
1.5%
3,494
898
2,352
Except for asset retirement obligations, the majority of
the Company's provisions are generally expected to re-
sult in cash outflows during the next one to 15 years.
Warranties mainly relate to products sold. Order related
losses and risks are provided for anticipated losses and
risks on uncompleted construction, sales and leasing
contracts.
The Company is subject to asset retirement obligations
related to certain items of property, plant and equip
ment. Such asset retirement obligations are primarily
attributable to environmental clean-up costs (disclosed
in Corporate items of the Segment information) and to
costs primarily associated with the removal of leasehold
improvements at the end of the lease term.
Environmental clean-up costs relate to remediation and
environmental protection liabilities which have been ac-
crued based on the estimated costs of decommissioning
the site for the production of uranium and mixed-oxide
7,601
fuel elements in Hanau, Germany (Hanau facilities), as
well as a nuclear research and service center in Karlstein,
Germany (Karlstein facilities). Whilst in fiscal 2017, parts
of the regulation for nuclear waste disposal were
amended by way of law ("Gesetz zur Neuordnung der
Verantwortung in der kerntechnischen Entsorgung"),
Siemens is not covered by these regulations and conse-
quently continues to adhere to the German Atomic En-
ergy Act ("deutsches Atomgesetz") applicable as of Sep-
tember 30, 2020, which states that when a nuclear
facility is closed, the resulting radioactive waste from
decommissioning the nuclear facility must be repro-
cessed without causing damage and be delivered to a
government-approved final storage facility. In this re-
gard, the Company has developed a plan to decommis-
sion the Hanau and Karlstein facilities in the following
steps: asset retirement (including clean-out, decontami-
nation and disassembly of equipment and installations,
decontamination of the facilities and buildings), waste
conditioning and packaging of nuclear waste, as well as
intermediate storage, transport to and final storage of
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
the radioactive waste. This process will be supported by
continuing engineering studies and radioactive sampling
under the supervision of German federal and state au-
thorities. The decontamination and disassembly at the
Karlstein site were completed until the end of calendar
year 2018, whereas final waste conditioning and packag-
ing is planned to continue until 2025. Thereafter, the
Company is responsible for intermediate storage of the
radioactive materials until they are transported and
handed over to a final storage facility. With respect to the
Hanau facility, asset retirement is completed and inter-
mediate storage has been set up. On September 21,
2006, the Company received official notification from
authorities that the Hanau facility has been released from
the scope of application of the German Atomic Energy
Act and that its further use is unrestricted. The ultimate
costs of the remediation are contingent on the decision
of the federal government on the location of the final
storage facilities and the date of their availability. Several
parameters relating to the development of a final storage
facility for radioactive waste are based on the assump-
tions for the so called Schacht Konrad final storage. The
valuation uses assumptions to reflect the current and de-
tailed cost estimates, price inflation and discount rates as
well as a continuous outflow until the 2060's related to
the costs for dismantling as well as intermediate and final
storage. The estimated cash outflows related to the asset
retirement obligation could alter significantly if political
developments affect the government's timeline to final-
ize the so called Schacht Konrad. To discount cash out-
flows, the Company uses current interest rates as of the
balance sheet date.
As of September 30, 2020 and 2019, the provision totals
€638 million and €630 million, respectively, including
advance payments to the federal government for the
construction of the final storage facility in the amount
of €95 million, which are capitalized. The provision is
recorded net of a present value discount of €75 million
and €103 million, respectively, reflecting the assumed
continuous outflow of the total expected payments until
the 2060's.
Other includes transaction-related provisions and
post-closing provisions in connection with portfolio activ-
ities as well as provisions for Legal Proceedings, as far as
the risks that are subject to such Legal Proceedings are
not already covered by project accounting. Provisions for
Legal Proceedings amounted to €248 million and
€407 million as of September 30, 2020 and 2019, respec-
tively. Other also includes provisions for insurance con-
tracts in connection with the Siemens Energy business of
€499 million as of September 30, 2020. The provisions
are for incurred and reported insurance cases as well as
for incurred, hence, not yet reported cases as of fiscal
year-end. The provision is determined using actuarial
standard valuation methodologies, which are parameter-
ized based on historical data.
NOTE 19 Equity
Siemens' issued capital is divided into 850 million regis-
tered shares with no par value and a notional value of
€3.00 per share as of September 30, 2020 and 2019,
respectively. The shares are paid in full. At the Share-
holders' Meeting, each share has one vote and accounts
for the shareholders' proportionate share in the Compa-
ny's net income. All shares confer the same rights and
obligations.
In fiscal 2020 and 2019, Siemens repurchased 19,071,746
shares and 13,532,557 shares, respectively. In fiscal 2020
and 2019, Siemens transferred 5,613,506 and 16,251,968
treasury shares, respectively. As of September 30, 2020
and 2019, the Company has treasury shares of
50,690,288 and 37,232,048 respectively.
ANNUAL REPORT 2020 123
10,582
1.3
0.6
Long-term debt
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 125
9.06
9.46
25,959
25,267
Siemens Financial Services debt
Debt to equity ratio
2,864
2,672
2019
2020
(in millions of €)
Allocated equity
Sep 30,
The SFS business is capital intensive and operates with a
larger amount of debt to finance its operations compared
to the industrial business.
A key consideration of our capital structure management
is to maintain ready access to capital markets through
various debt instruments and to sustain our ability to re-
pay and service our debt obligations over time. In order
to achieve this, Siemens intended to maintain an Indus-
trial net debt divided by EBITDA (continuing operations)
ratio of up to 1.0 as of September 30, 2020 and 2019, re-
spectively. The ratio indicates the approximate number
of years that would be needed to cover the Industrial net
debt through Income from continuing operations, with-
out taking into account interest, other financial income
(expenses), taxes, depreciation, amortization and impair-
ments. The fiscal 2019 ratio is disclosed as computed in
the prior year, before fiscal 2020 retrospective discontin-
ued operation classifications.
NOTE 20 Additional
capital disclosures
Share based payment expenses increased Capital reserve
by €298 million and €294 million (including non-con-
trolling interests), respectively, in fiscal 2020 and 2019. In
connection with the settlement of share based payment
awards Siemens treasury shares (at cost) were trans-
ferred to employees of €310 million in fiscal 2020 and
€188 million in fiscal 2019 which decreased Capital
reserve and Retained earnings by €218 million and
€92 million, respectively in 2020 and by €132 million and
€56 million in fiscal 2019.
Short-term debt
ANNUAL REPORT 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Plus/Less: Interest income, interest expenses
and other financial income (expenses), net
Plus: Amortization, depreciation and impairments
EBITDA
Industrial net debt/EBITDA
(25,267) (25,959)
1 The adjustment considers that both Moody's and S&P view Siemens
Financial Services as a captive finance company. These rating agencies
generally recognize and accept higher levels of debt attributable to
captive finance subsidiaries in determining credit ratings. Following this
concept, Siemens excludes Siemens Financial Services debt in order to
derive an industrial net debt which is not affected by Siemens Financial
Services' financing activities.
6,360
9,896
604
Income from continuing operations
before income taxes
447
(706)
10,189
6,404
2 Debt is generally reported at a value representing approximately the
amount to be repaid. However, for debt designated in a hedging relation-
ship (fair value hedges), this amount is adjusted for changes in market
value mainly due to changes in interest rates. Accordingly, Siemens
deducts these changes in market values in order to derive an amount of
debt that, approximately, will be repaid.
5,672
3,157
7,518
(777)
Less: Fair value hedge accounting adjustment²
Industrial net debt
Plus: Provisions for pensions and similar obligations
Plus: Credit guarantees
Less: Siemens Financial Services debt¹
As of September 30, 2020 and 2019, total authorized cap-
ital of Siemens AG is €600 million nominal issuable in
installments based on various time-limited authoriza-
tions, by issuance of up to 200 million registered shares
of no par value. Siemens AG's conditional capital is
€420.6 million or 140.2 million shares as of Septem-
ber 30, 2020 and €1,080.6 million nominal or 360.2 mil-
lion shares as of September 30, 2019. Primarily, it can be
used to serve convertible bonds or warrants under war-
rant bonds that could or can be issued based on various
time-limited authorizations approved by the respective
Shareholders' Meeting.
Dividends paid per share were €3.90 and €3.80, respec-
tively, in fiscal 2020 and 2019. The Managing Board and
the Supervisory Board propose to distribute a dividend
of €3.50 per share to holders entitled to dividends, in to-
tal representing approximately €2.8 billion in expected
payments. Payment of the proposed dividend is contin-
gent upon approval at the Shareholders' Meeting on Feb-
ruary 3, 2021.
In November 2018, Siemens announced a share-buyback
program of up to €3 billion to be executed until Novem-
ber 15, 2021.
(in millions of €)
Plus: Long-term debt
2020
Sep 30,
2019
Short-term debt and current maturities
of long-term debt
6,562
38,005
6,034
30,414
(14,041) (12,391)
(1,256) (1,331)
29,270 22,726
Less: Cash and cash equivalents
Less: Current interest bearing debt securities
Net debt
124
Equity allocated to SFS differs from the carrying amount
of equity as it is mainly allocated based on the risks of the
underlying business.
Siemens' current corporate credit ratings are:
Sep 30, 2019
S&P
Global
Ratings
decrease
increase
Sep 30, 2019
decrease
Government bonds
3,727
5,239
Discount rate
increase
(2,134)
ANNUAL REPORT 2020
For Legal Proceedings information required under IAS 37,
Provisions, Contingent Liabilities and Contingent Assets
is not disclosed if the Company concludes that disclosure
can be expected to seriously prejudice the outcome of
the matter.
Some of these Legal Proceedings could result in adverse
decisions for Siemens, which may have material effects
on its business activities as well as its financial position,
results of operations and cash flows.
Siemens is involved in numerous Legal Proceedings in
various jurisdictions. These Legal Proceedings could re-
sult, in particular, in Siemens being subject to payment of
damages and punitive damages, equitable remedies or
sanctions, fines or disgorgement of profit. In individual
cases this may also lead to formal or informal exclusion
from tenders or the revocation or loss of business licenses
or permits. In addition, further Legal Proceedings may be
commenced or the scope of pending Legal Proceedings
may be extended. Asserted claims are generally subject
to interest rates.
As previously reported, in June 2015, Siemens Ltda. ap-
pealed to the Supreme Court against a decision of a pre-
vious court to suspend Siemens Ltda. from participating
in public tenders and signing contracts with public
administrations in Brazil for a five year term based on
alleged irregularities in calendar year 1999 and 2004
in public tenders with the Brazilian Postal authority.
In February 2018, the appeal was rejected. Siemens Ltda.
has introduced another remedy against the decision. In
June 2018, the court accepted Siemens' appeal and de-
clared the earlier instance decision as void. Siemens Ltda.
is currently not excluded from participating in public ten-
ders. In February 2018, the Ministério Público in Brasilia
filed a lawsuit based on the same set of facts, mainly
claiming the exclusion of Siemens Ltda. from public ten-
ders for a ten year term. Siemens Ltda. is defending itself
against the lawsuit.
a lawsuit of the Public Affairs Office (Ministério Público)
São Paulo against Siemens Ltda. and other companies
claiming, inter alia, damages in an amount of BRL487 mil-
lion (approximately €74 million as of September 2020)
plus adjustments for inflation and related interest in rela-
tion to train maintenance contracts entered into in 2000
and 2002. In September 2015, the district court of São
Paulo admitted another lawsuit of the Public Affairs Of-
fice (Ministério Público) São Paulo against Siemens Ltda.
and other companies claiming, inter alia, damages in an
amount of BRL918 million (approximately €139 million as
of September 2020) plus adjustments for inflation and
related interest in relation to train maintenance contracts
entered into in 2006 and 2007. Siemens is defending it-
self against these actions. It cannot be excluded that fur-
ther significant damage claims will be brought by cus-
tomers or the state against Siemens.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
128
(in millions of €)
Sep 30, 2020
16,292
1.4%
2.7%
2.8%
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
SENSITIVITY ANALYSIS
A one-half-percentage-point change of the above as-
sumptions would result in the following increase (de-
crease) of the DBO:
DISAGGREGATION OF PLAN ASSETS
Sep 30,
(in millions of €)
2020
2019
Equity securities
5,166
3,910
Fixed income securities
(430)
13,281
ANNUAL REPORT 2020 127
As previously reported, in May 2014, the Public Affairs
Office (Ministério Público) São Paulo initiated a lawsuit
against Siemens Ltda. as well as other companies and
several individuals claiming, inter alia, damages in an
amount of BRL2.5 billion (approximately €377 million as
of September 2020) plus adjustments for inflation and
related interest in relation to train refurbishment con-
tracts entered into between 2008 and 2011. In Janu-
ary 2015, the district court of São Paulo admitted a law-
suit of the State of São Paulo and two customers against
Siemens Ltda., Siemens AG and other companies and
individuals claiming damages in an unspecified amount.
In March 2015, the district court of São Paulo admitted
Based on the above mentioned conclusion of the Israeli
Antitrust Authority, two electricity consumer groups filed
motions to certify a class action for cartel damages
against a number of companies including Siemens AG
with an Israeli State Court in September 2013. One of the
class actions has been dismissed by the court in fiscal
year 2015. The remaining class action seeked compensa-
tion for alleged damages amounting to ILS2.8 billion.
In addition, the Israel Electric Corporation (IEC) filed at
the end of December 2013 with an Israeli State Court
a separate ILS3.8 billion claim for damages against
Siemens AG and other companies that allegedly formed
a cartel in the Israeli gas-insulated switchgear market.
A settlement agreement was concluded in those pro-
ceedings in December 2018 and has been approved by
the Israeli State Court in fiscal 2020. Following payment
of a mid double-digit million euro figure in July 2020, the
matter was finally settled.
As previously reported, in September 2011, the Israeli
Antitrust Authority requested that Siemens present its
legal position regarding an alleged anti-competitive ar-
rangement between April 1988 and April 2004 in the
field of gas-insulated switchgear. In September 2013, the
Israeli Antitrust Authority concluded that Siemens AG
was a party to an illegal restrictive arrangement regard-
ing the Israeli gas-insulated switchgear market between
1988 and 2004, with an interruption from October 1999
to February 2002. The Company appealed against this
decision in May 2014.
The following table presents the undiscounted amount
of maximum potential future payments for major groups
of guarantees:
NOTE 21 Commitments
and contingencies
A+
A-1+
P-1
A-1+
P-1
A1
A+
A1
Moody's
Investors
Service
Ratings
Service
Global
Investors
S&P
Moody's
Sep 30, 2020
(in millions of €)
1.4%
Credit guarantees
Performance guarantees
604
Proceedings out of or in connection
with alleged compliance violations
As previously reported, in July 2008, Hellenic Telecom-
munications Organization S.A. (OTE) filed a lawsuit
against Siemens AG with the district court of Munich,
Germany, seeking to compel Siemens AG to disclose the
outcome of its internal investigations with respect to
OTE. OTE seeks to obtain information with respect to
allegations of undue influence and/or acts of bribery
in connection with contracts concluded between
Siemens AG and OTE from calendar year 1992 to 2006. At
the end of July 2010, OTE expanded its claim and re-
quested payment of damages by Siemens AG of at least
€57 million to OTE for alleged bribery payments to OTE
employees. In October 2014, OTE increased its damage
claim to the amount of at least €68 million. Siemens AG
continues to defend itself against the expanded claim.
As previously reported, in June 2019, the City of Jackson,
Mississippi, filed a lawsuit against Siemens Industry, Inc.,
and Siemens Corporation, USA, among others, in con-
nection with a performance contract. In March 2020, the
City of Jackson and the defendants settled the matter for
approximately US$90 million. All claims in the case were
subsequently dismissed in April 2020.
As previously reported, in March 2019, a Brazilian com-
pany asserted claims to pay an amount in a higher three-
digit million euro amount in local currency against a
consortium of contractors and each member of the
consortium, including Siemens Ltda., Brazil (Siemens
Ltda.) in a lawsuit relating to the construction of a power
plant in Brazil that was completed in 2016. The members
of the consortium are jointly and severally liable. Siemens
Ltda.'s share in the consortium is below 3%. The consor-
tium and its members defend themselves against the
claim and for their part claim payment in a lower three-
digit million euro amount in local currency. Following the
Siemens Energy spin-off, the proceedings will no longer
be disclosed by Siemens.
Proceedings out of or in connection
with alleged breaches of contract
NOTE 22 Legal proceedings
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
126
ANNUAL REPORT 2020
Siemens is jointly and severally liable and has capital con-
tribution obligations as a partner in commercial partner-
ships and as a participant in various consortiums.
In addition to guarantees disclosed in the table above,
the Company issued other guarantees. To the extent fu-
ture claims are not considered remote, maximum future
payments from these obligations amount to €387 million
and €413 million as of September 30, 2020 and 2019, re-
spectively. These commitments include indemnifications
issued in connection with dispositions of businesses.
Such indemnifications may protect the buyer from poten-
tial tax, legal and other risks in conjunction with the pur-
chased business. As of September 30, 2020 and 2019, the
accrued amount for such other commitments is €73 mil-
lion and €146 million, respectively.
Furthermore, Siemens issues performance guarantees,
which mainly include performance bonds. In the event of
non-fulfillment of contractual obligations by the primary
obligor, Siemens will be required to pay up to an agreed-
upon maximum amount. These agreements typically
have terms of up to ten years. As of September 30, 2020,
Performance guarantees include €27,687 million for
Siemens Energy businesses which were not transferred;
however, Siemens has reimbursement rights towards
Siemens Energy. As of September 30, 2020 and 2019, the
Company accrued €1 million and €3 million, respectively,
relating to performance guarantees.
however, Siemens holds reimbursement rights towards
Siemens Energy. Siemens accrued €18 million and
€35 million relating to credit guarantees as of Septem-
ber 30, 2020 and 2019, respectively.
Item Credit guarantees covers the financial obligations of
third parties generally in cases where Siemens is the ven-
dor and (or) contractual partner or Siemens is liable for
obligations of associated companies accounted for using
the equity method. Additionally, credit guarantees are
issued in the course of the SFS business. Credit guaran-
tees generally provide that in the event of default or
non-payment by the primary debtor, Siemens will be re-
quired to settle such financial obligations. The maximum
amount of these guarantees is equal to the outstanding
balance of the credit or, in case a credit line is subject
to variable utilization, the nominal amount of the credit
line. These guarantees have residual terms of up to
6 years in fiscal 2020 and 2019. The Company held collat-
eral mainly through inventories and trade receivables.
As of September 30, 2020, Credit guarantees include
€271 million relating to the Siemens Energy business for
credit guarantees not transferred to Siemens Energy;
2,644
3,090
447
Sep 30,
2019
27,917
28,521
2020
(218)
425
(743)
692
658
3
2
568
313
1,257
970
Components of defined benefit costs recognized
in the Consolidated Statements of income³
24
(11)
(12)
(20)
12
(31)
Other²
(580)
(333)
580
333
Interest income
715
407
3
2
Return on plan assets excluding amounts included
in net interest income and net interest expenses
712
Actuarial (gains) losses
2,601
(2,898)
568
2,898
Employer contributions
1,787
358
(60)
(18)
2,601
(74)
4,448
303
Statements of Comprehensive Income
Remeasurements recognized in the Consolidated
(60)
(18)
(60)
(18)
Effects of asset ceiling
4,448
303
(2,601)
74
4,448
303
(74)
(568)
406
534
(I)
Net defined
benefit balance
Effects of
asset ceiling
Fair value of
plan assets
Defined benefit
obligation (DBO)
DEVELOPMENT OF THE DEFINED BENEFIT PLANS¹
sures.
funded plan the Company together with the employees
may be asked to pay supplementary contributions ac-
cording to a well-defined framework of recovery mea-
and the determination of contributions to finance the
benefits. The Company is required to make total contri-
butions at least as high as the sum of the employee con-
tributions set out in the plan rules. In case of an under-
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 119
Following the Swiss law of occupational benefits (BVG)
each employer has to grant post-employment benefits
for qualifying employees. Accordingly, Siemens in Swit-
zerland sponsors several cash balance plans. These plans
are administered by external foundations. The board of
the main foundation is composed of equally many em-
ployer and employee representatives. The board of the
foundation is responsible for investment policy and asset
management, as well as for any changes in the plan rules
SWITZERLAND
Pension benefits are mainly offered through the Siemens
Benefit Scheme for which, until the start of retirement,
an inflation increase of the majority of accrued benefits
is mandatory. The required funding is determined by a
funding valuation carried out every third year based on
legal requirements. Due to deviating guidelines for the
determination of the discount rates, the technical fund-
ing deficit is usually larger than the IFRS funding deficit.
To reduce the deficit Siemens entered into an agreement
with the trustees to provide annual payments of GB£31
(€34) million until fiscal 2033. The agreement also pro-
vides for a cumulative advance payment by Siemens AG
compensating the remaining annual payments at the
date of early termination of the agreement due to cancel-
lation or insolvency.
U.K.
In the US, the Siemens Pension Plans are sponsored,
which for the most part have been frozen to new en-
trants and to future benefit accruals, except for interest
credits on cash balance accounts. Siemens has appointed
the Investment Committee as the named fiduciary for the
management of the assets of the Plans. The Plans' assets
are held in Master Trusts and the trustees of the Master
Trusts are responsible for the administration of the assets
of the trust, taking directions from the Investment Com-
mittee. The Plans are subject to the funding requirements
under the Employee Retirement Income Security Act of
1974 as amended (ERISA). There is a regulatory require-
ment to maintain a minimum funding level of 80% in the
defined benefit plans in order to avoid benefit restric-
tions. At their discretion, sponsoring employers may con-
tribute in excess of this regulatory requirement. Annual
contributions are calculated by independent actuaries.
U.S.
In Germany, pension benefits are provided through the
following plans: BSAV (Beitragsorientierte Siemens Al-
tersversorgung), frozen legacy plans as well as deferred
compensation plans. The majority of active employees
participate in the BSAV. Those benefits are predominantly
based on notional contributions and their respective as-
set returns, subject to a minimum return guaranteed by
the employer. At inception of the BSAV, benefits provided
under the frozen legacy plans were modified to substan-
tially eliminate the effects of compensation increases.
However, the frozen plans still expose Siemens to invest-
ment risk, interest rate risk and longevity risk. The pen-
sion plans are funded via contractual trust arrangements
(CTA). In Germany no legal or regulatory minimum fund-
ing requirements apply.
GERMANY
The defined benefit plans open to new entrants are
based predominantly on contributions made by the Com-
pany. Only to a certain extent, those plans are affected by
longevity, inflation and compensation increases and take
into account country specific differences. The Company's
major plans are funded with assets in segregated entities.
In accordance with local laws these plans are managed in
the interest of the beneficiaries by way of contractual
trust agreements with each separate legal entity. The de-
fined benefit plans cover 444,000 participants, including
177,000 actives, 85,000 deferreds with vested benefits
and 182,000 retirees and surviving dependents.
Defined benefit plans
NOTE 17 Post-employment
benefits
Siemens has a US$9.0 billion (€7.7 billion as of Septem-
ber 30, 2020) commercial paper program in place includ-
ing US$ extendible notes capabilities. As of Septem-
ber 30, 2020 and 2019, US$2.3 billion (€2.0 billion) and
US$700 million (€643 million), respectively, were out-
standing. Siemens' commercial papers have a maturity of
generally less than 90 days. Interest rates ranged from
0.06% to 1.98% in fiscal 2020 and from 1.85% to 2.75% in
fiscal 2019.
Commercial paper program
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
(11)
Interest expenses
(III)
Fiscal year
595
534
595
Current service cost
7,215
9,042
86
33
28,764
31,307
35,893
40,317
Balance at begin of fiscal year
2019
2020
2019
2020
2019
2020
2019
2020
(in millions of €)
Fiscal year
Fiscal year
Fiscal year
(1 - 11 +111)
(5)
Plan participants' contributions
130
The DBO effect of a 10% reduction in mortality rates for
all beneficiaries would be an increase of €1,285 million
and €1,318 million, respectively, as of September 30,
2020 and 2019.
As in prior year, sensitivity determinations apply the
same methodology as applied for the determination of
the post-employment benefit obligation. Sensitivities re-
flect changes in the DBO solely for the assumption
changed.
ASSET LIABILITY MATCHING STRATEGIES
As a significant risk, the Company considers a decline in
the plans' funded status due to adverse developments of
plan assets and/or defined benefit obligations resulting
from changing parameters. Accordingly, Siemens imple-
mented a risk management concept aligned with the
defined benefit obligations (Asset Liability Matching).
Risk management is based on a worldwide defined risk
threshold (Value at Risk). The concept, the Value at Risk
and the asset development including the investment
strategy are monitored and adjusted on an ongoing basis
under consultation of senior external experts. Indepen-
dent asset managers are selected based on quantitative
and qualitative analyses, which include their perfor-
mance and risk evaluation. Derivatives are used to reduce
risks as part of risk management.
Virtually all equity securities have quoted prices in active
markets. The fair value of fixed income securities is based
on prices provided by price service agencies. The fixed
income securities are traded in active markets and almost
all fixed income securities are investment grade. Alterna-
tive investments include hedge funds, private equity and
real estate investments, thereof real estate used by the
Company with a fair value of €527 million. Multi strategy
funds mainly comprise absolute return funds and diversi-
fied growth funds that invest in various asset classes
within a single fund and aim to stabilize return and re-
duce volatility. Derivatives predominantly consist of fi-
nancial instruments for hedging interest rate risk and
inflation risk. Other assets include insured annuity con-
tracts valued at €1,766 million and €1,344 million, re-
spectively, as of September 30, 2020 and 2019.
FUTURE CASH FLOWS
Employer contributions expected to be paid to defined
benefit plans in fiscal 2021 are €1,790 million. Over the
next ten fiscal years, average annual benefit payments of
€1,730 million and €1,714 million, respectively, are ex-
pected as of September 30, 2020 and 2019. The weighted
average duration of the DBO for Siemens defined benefit
plans was 13 years as of September 30, 2020 and 2019.
ANNUAL REPORT 2020 122
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Defined contribution plans
and state plans
Amounts recognized as expense for defined contribution
plans is €710 million and €661 million in fiscal 2020 and
2019, respectively, thereof discontinued operations
€215 million and €201 million. Contributions to state
plans amount to €1,844 million and €1,850 million in fis-
cal 2020 and 2019, respectively, thereof discontinued
operations €450 million and €431 million.
NOTE 18 Provisions
(in millions of €)
Balance as of October 1, 2019
Thereof non-current
Additions
Usage
Reversals
Asset
Order related
retirement
Warranties
losses and risks
31,307
obligations
29,970
2,843
(2,673)
Other changes including Siemens Energy spin-off
Balance as of September 30, 2020
21
4
17
in discount rates
Accretion expense and effect of changes
CH
Rate of compensation increase
Rate of pension progression
95
1,689
2,412 (2,410)
(90)
(94)
(1,367) 1,826 (1,541)
2,740
104
Corporate bonds
Alternative investments
Multi strategy funds
9,555 11,053
4,078
4,181
3,154 3,259
Derivatives
635
577
Cash and cash equivalents
Other assets
Total
813
749
2,340
142
Other
4,300
436
(634)
(5,812) (1,281) (1,576)
Other reconciling items4
Foreign currency translation effects
(8)
(1,097)
(2)
56
(2,394)
(1)
(84)
(2)
(133)
(143)
(1,678)
(1,685)
(1,811)
(84)
48
(3,489)
Business combinations, disposals and other
(3)
Settlement payments
(1,828)
Benefits paid
130
142
Translation differences
Total
(74)
(3)
1,114
702
1,243
7,358
2,107
689
476
3,697
633
200
3
846
1,681
(395)
(112)
(5)
(311)
(823)
(258)
(65)
(5)
(171)
(499)
(33)
(14)
(24)
U.K.
(535)
(in millions of €)1
7,811
U.S.
U.K.
CH
2,958
4,073
2,617
3,341
16,588
341
5,637
6,064
6,000
6,764
8
19
(356)
(682)
732
24,398 17,161
22,223
Germany
383
Fiscal year
2019
(2)
4
(101)
56
(626)
(4)
4
(4,240)
(652)
Balance at fiscal year-end
35,777
40,317 29,970
31,307
11
33
5,819
9,042
3,328
3,574
5,062
3,424
6,360
9,896
(presented in Other assets)
1 Discloses figures including Siemens Energy. Accordingly, it comprises the total of continuing and discontinuing operations.
2 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
3 Thereof relating to discontinued operations: Defined benefit obligation €155 million and €179 million; Fair value of plan assets €34 million and €38 million;
Effects of asset ceiling €- million and €- million and Net defined benefit balance €121 million and €140 million, respectively, in fiscal 2020 and 2019.
4 Thereof relating to discontinued operations: Defined benefit obligation €(249) million and €(28) million; Fair value of plan assets €101 million and €69 million;
Effects of asset ceiling €- million and €- million and Net defined benefit balance €(350) million and €(97) million, respectively, in fiscal 2020 and 2019.
120
541
854
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Line item Business combinations, disposals and other in-
cludes the spin-off effects of Siemens Energy: DBO
€3,416 million, Fair value of plan assets €2,319 million
and Effects of asset ceiling €2 million.
Employer contributions in fiscal 2020 include fundings in
Germany of €2,730 million, thereof a contribution of a
9.9% interest in Siemens Energy AG amounting to €1,881
million. It also includes real estate contributions from
Siemens Real Estate.
been awarded an AA rating (or equivalent) by at least one
of the three rating agencies Moody's Investors Service,
S&P Global Ratings or Fitch Ratings.
Applied mortality tables are:
Germany
3,355
The remeasurements comprise actuarial (gains) and
losses resulting from:
Net interest expenses related to provisions for pensions
and similar obligations amounted to €66 million and
€108 million, respectively, in fiscal 2020 and 2019. The
DBO is attributable to actives 28% and 32%, to deferreds
with vested benefits 14% and 14% and to retirees and sur-
viving dependents 57% and 54%, respectively, in fiscal
2020 and 2019.
U.S.
9,042
5,819
ANNUAL REPORT 2020
11
Other countries
150
(27)
1,632
33
2,207
838
1,190
4
798
14
Total
thereof provisions for pensions
and similar obligations
thereof net defined benefit assets
35,777
40,317
29,970
31,307
1,031
Lease
Receivables
SFS' external financing portfolio disaggregates into credit
risk rating grades as of September 30, 2020 as follows
(pre valuation allowances):
Loans and other debt instruments
under the general approach
As of September 30, 2020 and 2019, collateral of €829
million and €835 million, respectively, relate to financial
assets measured at fair value. Those collaterals are pro-
vided in connection with netting agreements for deriva-
tives providing protection from the risk of a counterpar-
ty's insolvency. As of September 30, 2020 and 2019,
collateral held for credit-impaired receivables from fi-
nance leases amounted to €141 million and €55 million,
respectively. As of September 30, 2020 and 2019, collat-
eral held for financial assets measured at amortized cost
amounted to €4,109 million and €3,948 million, respec-
tively, including €141 million and €86 million, respec-
tively, for credit-impaired loans in SFS' asset finance
business. Those collaterals mainly comprised property,
plant and equipment. Credit risks arising from irrevoca-
ble loan commitments are equal to the expected future
pay-offs resulting from these commitments.
Financial guarantees
and loan commitments
(in millions of €)
6,101
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Investment Grade Ratings
Non-Investment Grade Ratings
31
The carrying amount is the maximum exposure to a finan-
cial asset's credit risk, without taking account of any collat-
eral. Collateral reduces the valuation allowance to the ex-
tent it mitigates credit risk. Collateral needs to be specific,
identifiable and legally enforceable to be taken into account.
Those collaterals are mostly held in the portfolio of SFS.
n/a
Stage 1
To analyze and monitor credit risks, the Company applies
various systems and processes. A main element is a central
IT application that processes data from operating units to-
gether with rating and default information and calculates
an estimate, which may be used as a basis for individual bad
debt provisions. Additionally, qualitative information is con-
sidered to particularly incorporate the latest developments.
604
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
607
195
Credit guarantees¹
Irrevocable loan
commitments²
2
172
3,177
335
An exposure is considered defaulted if the debtor is un-
willing or unable to pay its credit obligations. A range of
internally defined events trigger a default rating, includ-
ing the opening of bankruptcy proceedings, receivables
being more than 90 days past due, or a default rating by
an external rating agency.
229
1 Based on the maximum amounts Siemens could be required to settle
in the event of default by the primary debtor.
2 A considerable portion result from asset-based lending transactions
meaning that the respective loans can only be drawn after sufficient
collateral has been provided by the borrower.
Credit risk
Credit risk is defined as an unexpected loss in financial
instruments if the contractual partner is failing to dis-
charge its obligations in full and on time or if the value of
collateral declines.
Siemens provides its customers with various forms of
direct and indirect financing particularly in connection
with large projects. Hence, credit risks are determined by
the solvency of the debtors, the recoverability of the col-
laterals, the success of projects we invested in and the
global economic development.
The effective monitoring and controlling of credit risk
through credit evaluations and ratings is a core compe-
tency of our risk management system. In this context,
Siemens has implemented a binding credit policy.
Siemens maintains a Credit Risk Intelligence Unit to
which numerous operating units from the Siemens
Group regularly transfer business partner data as a basis
for a centralized internal rating and credit limit recom-
mendation process. Due to the identification, quantifica-
tion and active management of credit risks, this increases
credit risk transparency.
Ratings and individually defined credit limits are based
on generally accepted rating methodologies, with infor-
mation obtained from customers, external rating agen-
cies, data service providers and Siemens' credit default
experiences. Internal ratings consider appropriate for-
ward-looking information relevant to the specific finan-
cial instrument like expected changes in the debtor's
financial position, ownership, management or opera-
tional risks, as well as broader forward-looking informa-
tion, such as expected macroeconomic, industry-related
and competitive developments. The ratings also consider
a country-specific risk component derived from external
country credit ratings. Ratings and credit limits for finan-
cial institutions as well as Siemens' public and private
customers, which are determined by internal risk assess-
ment specialists, are continuously updated and consid-
ered for investments in cash and cash equivalents and in
determining the conditions under which direct or indirect
financing will be offered to customers.
ANNUAL REPORT 2020 137
14
n/a
513
1,966
45,467
Cash and cash equivalents
14,041
12,391
Derivatives designated in a hedge accounting relationship
790
798
Financial assets mandatorily measured at FVTPL²
2019
3,422
Financial assets designated as measured at FVTPL³
220
Equity instruments measured at FVOCI¹
Financial assets
491
113
59,268
61,797
2,626
Sep 30,
2020
40,304
12,189
776
541
2,574
130
100
4,172
Trade receivables of operating units are generally rated
internally; as of September 30, 2020 and 2019, approxi-
mately 43% and 42%, respectively, have an investment
grade rating and 57% and 58%, respectively, have a
non-investment grade rating. Contract assets generally
show similar risk characteristics as trade receivables in
operating units.
Amounts above do not represent economic credit risk,
since they consider neither collateral held nor valuation
allowances already recognized.
Equity Price Risk
Siemens' investment portfolio consists of direct and indi-
rect investments in publicly traded companies that are
classified as long term investments. These investments
are monitored based on their current market value, af-
fected primarily by fluctuations on the volatile technolo-
gy-related markets worldwide. As of September 30, 2020,
the market value of Siemens' portfolio, which mainly
consists of one investment in a publicly traded company,
was €1,055 million. The VaR relating to the equity price
was €182 million.
ANNUAL REPORT 2020
138
Lease
Receivables
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
NOTE 23 Additional disclosures
on financial instruments
The following table discloses the carrying amounts of
each category of financial assets and financial liabilities:
(in millions of €)
Loans, receivables and other debt instruments measured at amortized cost¹
n/a
513
Consolidated Financial Statements
Derivative financial
manage and control these risks primarily through its reg-
ular operating and financing activities and uses deriva-
tive financial instruments when deemed appropriate.
In order to quantify market risks Siemens has imple-
mented a system based on Value at Risk (VaR), which is
also used for internal management of Corporate Treasury
activities. The VaR figures are calculated based on histor-
ical volatilities and correlations of various risk factors, a
ten day holding period, and a 99.5% confidence level.
Actual results that are included in the Consolidated State-
ments of Income or Consolidated Statements of Compre-
hensive Income may differ substantially from VaR figures
due to fundamental conceptual differences. While the
Consolidated Statements of Income and Consolidated
Statements of Comprehensive Income are prepared in
accordance with IFRS, the VaR figures are the output of a
model with a purely financial perspective and represent
the potential financial loss, which will not be exceeded
within ten days with a probability of 99.5%. Although VaR
is an important tool for measuring market risk, the as-
sumptions on which the model is based give rise to some
limitations including the following. A ten day holding pe-
riod assumes that it is possible to dispose of the underlying
positions within this period. This may not be valid during
continuing periods of illiquid markets. A 99.5% confidence
level means that there is a 0.5% statistical probability that
losses could exceed the calculated VaR. The use of histori-
cal data as a basis for estimating the statistic behavior of
the relevant markets and finally determining the possible
range of the future outcomes on the basis of this statistic
behavior may not always cover all possible scenarios, es-
pecially those of an exceptional nature.
Any market sensitive instruments, including equity and
interest-bearing investments that our Company's pen-
sion plans hold are not included in the following quanti-
tative and qualitative disclosures.
Foreign currency exchange rate risk
TRANSACTION RISK
Each Siemens unit conducting businesses with interna-
tional counterparties leading to future cash flows denom-
inated in a currency other than its functional currency is
exposed to risks from changes in foreign currency ex-
change rates. In the ordinary course of business, Siemens
ANNUAL REPORT 2020 135
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
units are exposed to foreign currency exchange rate fluc-
tuations, particularly between the U.S. dollar and the
euro. Foreign currency exchange rate exposure is partly
balanced by purchasing of goods, commodities and ser-
vices in the respective currencies as well as production
activities and other contributions along the value chain in
the local markets.
Operating units are prohibited from borrowing or invest-
ing in foreign currencies on a speculative basis. Intercom-
pany financing or investments of operating units are
preferably carried out in their functional currency or on a
hedged basis.
According to the Company policy, Siemens units are re-
sponsible for recording, assessing and monitoring their
foreign currency transaction exposure. The net foreign
currency position of Siemens units serves as a central
performance measure and has to be hedged within a
band of at least 75% but no more than 100%.
Generally, the operating units conclude their hedging
activities internally with Corporate Treasury. By applying
a cost-optimizing portfolio approach, Corporate Treasury
itself hedges foreign currency exchange rate risks with
external counterparties and limits them.
As of September 30, 2020 and 2019, the VaR relating to
foreign currency exchange rates was €90 million and
€79 million. This VaR was calculated under consideration
of items of the Consolidated Statements of Financial
Position in addition to firm commitments, which are de-
nominated in foreign currencies, as well as foreign cur-
rency denominated cash flows from forecast transactions
for the following twelve months. The increase in the VaR
resulted mainly from a higher net foreign currency posi-
tion after hedging activities.
TRANSLATION RISK
Many Siemens units are located outside the Eurozone.
Because the financial reporting currency of Siemens is
the euro, the financial statements of these subsidiaries
are translated into euro for the preparation of the Consol-
idated Financial Statements. To consider the effects of
foreign currency translation in the risk management, the
general assumption is that investments in foreign-based
operations are permanent and that reinvestment is con-
tinuous. Effects from foreign currency exchange rate
fluctuations on the translation of net asset amounts into
euro are reflected in the Company's consolidated equity
position.
Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate be-
cause of changes in market interest rates. This risk arises
whenever interest terms of financial assets and liabilities
are different. In order to manage the Company's position
with regard to interest rate risk, interest income and in-
terest expenses, Corporate Treasury performs a compre-
hensive corporate interest rate risk management by us-
ing fixed or variable interest rates from bond issuances
and derivative financial instruments when appropriate.
The interest rate risk relating to the Group, excluding SFS'
business, is mitigated by managing interest rate risk
actively relatively to a benchmark. The interest rate risk
relating to SFS' business is managed separately, consider-
ing the term structure of financial assets and liabilities.
The Company's interest rate risk results primarily from
funding in the U.S. dollar, British pound and euro.
Increasing market fluctuations may result in significant
earnings and cash flow volatility risk for Siemens. The
Company's operating business as well as its investment
and financing activities are affected particularly by
changes in foreign exchange rates and interest rates. In
order to optimize the allocation of financial resources
across Siemens' segments and entities, as well as to
achieve its aims, Siemens identifies, analyzes and man-
ages the associated market risks. The Company seeks to
NOTE 25 Financial
risk management
The Company had interest rate swap contracts to pay
variable rates of interest of an average of (0.13)% and
0.825% as of September 30, 2020 and 2019, respectively
and received fixed rates of interest (average rate of 1.49%
and 1.523%, as of September 30, 2020 and 2019, respec-
tively). The notional amount of indebtedness hedged as
of September 30, 2020 and 2019 was €6,423 million and
€6,664 million, respectively. This changed 18% and 22%
of the Company's underlying notes and bonds from fixed
interest rates into variable interest rates as of Septem-
ber 30, 2020 and 2019, respectively. The notional
amounts of these contracts mature at varying dates
based on the maturity of the underlying hedged items.
The net fair value of interest rate swap contracts (exclud-
ing accrued interest) used to hedge indebtedness as of
September 30, 2020 and 2019 was €520 million and
€428 million, respectively.
respectively, of fixed-rate debt obligations are designated
in fair value hedges, including €540 million and €416 mil-
lion cumulative fair value hedge adjustments. Unamor-
tized fair value hedge adjustments of €220 million and
€281 million as of September 30, 2020 and 2019, respec-
tively, relate to no longer applied hedge accounting. The
amounts are amortized over the remaining term of the
underlying debt, maturing until 2042. Carrying amount
adjustments to debt of €(123) million and €405 million,
respectively, in fiscal 2020 and 2019 are included in Other
financial income (expenses), net; the related swap agree-
ments resulted in gains (losses) of €91 million and €(417)
million, respectively, in fiscal 2020 and 2019. Net cash
receipts and payments relating to such interest rate swap
agreements are recorded as interest expenses.
3
16
ANNUAL REPORT 2020 133
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Amounts reclassified to net income in connection with in-
terest rate risk hedges and non-operative foreign currency
hedges are presented in Other financial income (expenses),
net. Reclassifications of foreign currency risk hedges with
operative business purposes are presented as functional
costs. Costs of hedging reserve is the forward element of
forward contracts that are not designated as hedge ac-
counting and which are amortized to interest expense on a
straight-line basis as the hedged item is time-period related.
Foreign currency exchange rate
risk management
DERIVATIVE FINANCIAL INSTRUMENTS
NOT DESIGNATED IN A HEDGING RELATIONSHIP
The Company manages its risks associated with fluctua-
tions in foreign currency denominated receivables,
payables, debt, firm commitments and forecast transac-
tions primarily through a Company-wide portfolio ap-
proach. Under this approach the Company-wide risks are
aggregated centrally, and various derivative financial in-
struments, primarily foreign currency exchange con-
tracts, foreign currency swaps and options, are utilized to
minimize such risks. Such a strategy does not qualify
for hedge accounting treatment. The Company also ac-
counts for foreign currency derivatives, which are em-
bedded in sale and purchase contracts.
CASH FLOW HEDGES
If there are no conflicting country-specific regulations, all
Siemens operating units generally obtain any required
financing through Corporate Treasury in the form of
loans or intercompany clearing accounts. The same con-
cept is adopted for deposits of cash generated by the
units.
The Company's operating units apply hedge accounting
to certain significant forecast transactions and firm com-
mitments denominated in foreign currencies. Particu-
larly, the Company entered into foreign currency ex-
change contracts to reduce the risk of variability of
future cash flows resulting from forecast sales and pur-
chases as well as firm commitments. The risk mainly re-
sults from contracts denominated in US$ both from
Siemens' operating units entering into long-term con-
tracts e.g. from the project business, from the standard
product business and, additionally, Siemens AG entered
into a deal contingent forward with a nominal amount of
€7,500 million to hedge exchange risks arising from a
part of the purchase price obligation for the planned
Siemens Healthineers acquisition of Varian Medical Sys-
tems Inc. In fiscal 2020 and 2019, the risk is hedged
against the euro at an average rate of 1.2013 €/US$
and 1.1972 €/US$ (forward purchases of US$), respec-
tively and 1.1950 €/US$ and 1.2547 €/US$ (forward sales
891
Interest rate risk management
DERIVATIVE FINANCIAL INSTRUMENTS
NOT DESIGNATED IN A HEDGING RELATIONSHIP
Interest rate risk management relating to the Group,
excluding SFS' businesses, uses derivative financial in-
struments under a portfolio-based approach to manage
interest risk actively relative to a benchmark. Interest rate
management of the SFS and businesses remains to be
managed separately, considering the term structure of
SFS' financial assets and liabilities on a portfolio basis.
Neither approach qualifies for hedge accounting treat-
ment. Net cash receipts and payments in connection with
interest rate swap agreements are recorded as interest
expense in Other financial income (expenses), net.
CASH FLOW HEDGES OF
FLOATING-RATE COMMERCIAL PAPERS
Siemens applies cash flow hedge accounting to a revolv-
ing portfolio of floating-rate commercial papers of nom-
inal US$700 million. Siemens pays a fixed rate of interest
and receives a variable rate of interest, offsetting future
changes in interest payments of the underlying float-
ing-rate commercial papers. Net cash receipts and pay-
ments are recorded as interest expenses. The Company
had interest rate swap contracts to receive variable rates
of interest of an average of 0.23% and 2.11% as of Sep-
tember 30, 2020 and 2019, respectively, and paid fixed
rates of interest (average rate of 1.95% and 1.95%, as of
September 30, 2020 and 2019, respectively).
FAIR VALUE HEDGES OF
FIXED-RATE DEBT OBLIGATIONS
Under interest rate swap agreements outstanding in fis-
cal 2020 and 2019, the Company agreed to pay a variable
rate of interest multiplied by a notional principal amount,
and to receive in return an amount equal to a specified
fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements
offset future changes in interest rates designated as
hedged risk on the fair value of the underlying fixed-rate
debt obligations. As of September 30, 2020 and 2019, the
carrying amounts of €6,938 million and €7,050 million,
ANNUAL REPORT 2020 134
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
of US$). As of September 30, 2020 and 2019, the hedg-
ing transactions have an average remaining maturity
until 2022 and 2020 (forward purchases of US$) as well
as 2021 and 2024 (forward sales of US$).
liabilities
As of September 30, 2020 and 2019, the VaR relating to
the interest rate was €424 million and €722 million. The
decrease was driven mainly by lower interest rate volatil-
ities, in particular for the U.S. dollar and the euro.
Liquidity risk results from the Company's inability to meet
its financial liabilities. Siemens follows a deliberated fi-
nancing policy that is aimed towards a balanced financ-
ing portfolio, a diversified maturity profile and a comfort-
able liquidity cushion. Siemens mitigates liquidity risk by
the implementation of effective working capital and cash
management, arranged credit facilities with highly rated
financial institutions, via a debt issuance program and
indebtedness
2,023
2
8
Lease liabilities
695
563
921
867
Trade payables
7,786
53
32
Other financial
liabilities
1,480
112
109
21
Other financial
885
198
347
ANNUAL REPORT 2020
136
Financial liabilities measured at amortized cost4
→ B.6 Notes to Consolidated Financial Statements
via a global multi-currency commercial paper program.
Liquidity risk may also be mitigated by the Siemens Bank
GmbH, which increases the flexibility of depositing cash
or refinancing.
In addition, Siemens constantly monitors funding op-
tions available in the capital markets, as well as trends
in the availability and costs of such funding, with a view
to maintaining financial flexibility and limiting repay-
ment risks.
The following table reflects our contractually fixed pay-
offs for settlement, repayments and interest. The dis-
closed expected undiscounted net cash outflows from
derivative financial liabilities are determined based on
each particular settlement date of an instrument and
based on the earliest date on which Siemens could be
required to pay. Cash outflows for financial liabilities (in-
cluding interest) without fixed amount or timing are
based on the conditions existing at September 30, 2020.
Fiscal year
2026
and
there-
after
6
Liquidity risk
46
2021
2022
2023
to
2025
Non-derivative
financial liabilities
Notes and bonds
4,199
6,435
10,647 23,436
Loans from banks
(in millions of €)
Derivatives not designated in a hedge accounting relationships
Derivative financial instruments
1 Reported in the following line items of the Statements of Financial Position as of September 30, 2020 and 2019, respectively: Trade
and other receivables, Other current financial assets and Other financial assets, except for separately disclosed €1,843 million and
€890 million equity instruments in Other financial assets (thereof €491 million and €513 million at FVOCI), €220 million and €-
million financial assets designated as measured at FVTPL and €2,842 million and €3,014 million derivative financial instruments
(thereof in Other financial assets €2,044 million and €2,239 million) as well as €18 million and €34 million debt instruments
measured at FVTPL in Other financial assets. Includes €12,071 million and €16,928 million trade receivables from the sale of goods
and services, thereof €694 million and €889 million with a term of more than twelve months as of September 30, 2020 and 2019.
Reported in line items other current financial assets and other financial assets.
Financial liabilities measured at fair
value - Derivative financial instruments
1,273
1,273
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with cash flow hedges
889
889
384
384
ANNUAL REPORT 2020
130
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Fair value of equity instruments quoted in an active Net gains (losses) resulting from financial instruments
market is based on price quotations at period-end date.
Fair value of debt instruments, is either based on prices
provided by price service agencies or is estimated by
discounting future cash flows using current market in-
terest rates.
are:
(in millions of €)
342
342
457
457
7
206
164
377
1
1
511
513
Debt instruments measured at FVTPL
Fiscal year
34
Derivative financial instruments
3,014
3,014
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
2,215
2,215
34
Equity instruments measured at FVTPL
Equity instruments measured at FVOCI
2020
Cash and cash equivalents
(973)
ANNUAL REPORT 2020 131
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Valuation allowances
for expected credit losses
(in millions of €)
Valuation allowance
as of October 1, 2019
Loans, receivables and other debt instruments measured at amortized cost
Loans and other debt instruments
under the general approach
Trade receivables
Stage 1
Stage 2
Stage 3
and other debt
instruments under
the simplified
approach
68
12
54
(779)
1,583
1,494
Total interest income
on financial assets
Total interest expenses
on financial liabilities
(168)
33
Loans, receivables and other debt instruments measured at
amortized cost
(527)
(97)
Financial liabilities measured
at amortized cost
1,291
(1,383)
Fair values of derivative financial instruments are deter-
mined in accordance with the specific type of instru-
ment. Fair values of derivative interest rate contracts are
estimated by discounting expected future cash flows
using current market interest rates and yield curves over
the remaining term of the instrument. Interest rate fu-
tures are valued based on quoted market prices, if avail-
able. Fair values of foreign currency derivatives are based
on forward exchange rates. Options are generally valued
based on quoted market prices or based on option pricing
models. No compensating effects from underlying trans-
actions (e.g. firm commitments and forecast transac-
tions) are considered.
2019
The Company limits default risks resulting from deriva-
tive financial instruments by generally transacting with
financial institutions with a minimum credit rating of
investment grade. Based on Siemens' net risk exposure
towards the counterparty, the resulting credit risk is taken
into account via a credit valuation adjustment.
Financial assets and financial
liabilities at FVTPL
Amounts include foreign currency gains (losses) from rec-
ognizing and measuring financial assets and liabilities.
Net gains (losses) on financial assets and liabilities mea-
sured at FVTPL resulted from those mandatorily measured
at FVTPL and comprise fair value changes of derivative
financial instruments for which hedge accounting is not
applied including interest income (expense), as well as
dividends from and fair value changes of equity instru-
ments measured at FVTPL.
Interest income (expense) includes interest from finan-
cial assets and financial liabilities not at fair value through
profit or loss:
(in millions of €)
554
465
Fiscal year
2020
2019
As of September 30, 2020 and 2019, Level 3 financial as-
sets include venture capital investments of €386 million
and €291 million (Next47 investments). In fiscal 2020 and
2019, new level 3 investments and purchases amounted
to €249 million and €153 million, respectively. Sales
amounted to €327 million in fiscal 2020, thereof €248 mil-
lion related to a divestment of shareholding in an off-
shore wind farm, which was measured at FVOCI.
Derivatives designated in a hedge accounting relationships
Financial liabilities
3,938
3,221
38,264
34,758
33,205
3,483
3,473
3,138
3,137
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Fixed-rate and variable-rate receivables with a remain-
ing term of more than twelve months, including receiv-
ables from finance leases, are evaluated by the Com-
pany based on parameters such as interest rates, specific
country risk factors, individual creditworthiness of the
customer, and the risk characteristics of the financed
project. Based on this evaluation, allowances for these
receivables are recognized.
The fair value of notes and bonds is based on prices pro-
vided by price service agencies at the period-end date
(Level 2). The fair value of loans from banks and other
financial indebtedness as well as other non-current finan-
cial liabilities are estimated by discounting future cash
flows using rates currently available for debt of similar
terms and remaining maturities (Level 2).
The following table allocates financial assets and finan-
cial liabilities measured at fair value to the three levels of
the fair value hierarchy:
(in millions of €)
Financial assets measured at fair value
Equity instruments measured at FVTPL
Equity instruments measured at FVOCI
Debt instruments measured at FVTPL
(57)
Not designated in a hedge accounting relationship
(including embedded derivatives)
In connection with fair value hedges
40,868
amount
Sep 30, 2019
Carrying
Fair value
2
3 Reported in Other financial assets.
4 Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term
debt, Trade payables, Other current financial liabilities, Long-term debt and Other financial liabilities, except for separately
disclosed derivative financial instruments of €978 million and €1,273 million as of September 30, 2020 and 2019, respectively.
5 Reported in line items Other current financial liabilities and Other financial liabilities.
54,189
49,315
765
889
213
384
In connection with cash flow hedges
55,167
Cash and cash equivalents include €126 million and
€142 million as of September 30, 2020 and 2019, respec-
tively, which are not available for use by Siemens mainly
due to minimum reserve requirements with banks. As of
September 30, 2020 and 2019, the carrying amount of
financial assets Siemens pledged as collateral is €115 mil-
lion and €127 million, respectively.
The following table presents the fair values and carrying
amounts of financial assets and financial liabilities mea-
sured at cost or amortized cost for which the carrying
amounts do not approximate fair value:
(in millions of €)
Notes and bonds
Loans from banks and other financial indebtedness
ANNUAL REPORT 2020 129
Fair value
Sep 30, 2020
Carrying
amount
50,587
709
Financial liabilities measured at fair
Not designated in a hedge accounting relationship
(including embedded derivatives)
2,052
554
554
236
236
978
978
765
765
213
213
Sep 30, 2019
(in millions of €)
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
8
2,052
2,842
2,842
238
In connection with cash flow hedges
Sep 30, 2020
Level 1
Level 2
Level 3
Total
1,288
3,023
612
value - Derivative financial instruments
4,923
77
209
1,353
1
104
385
491
220
18
1,067
(10)
Contract
Assets
September 30, 2019
thereof discontinued
hedge accounting
Change in valuation allowances recorded
in the Consolidated Statements of Income
in the current period
67
11
43
175
9
97
Write-offs charged against the allowance
n/a
n/a
(35)
184
(60)
Recoveries of amounts previously written off
n/a
n/a
6
2
Foreign exchange translation differences
and other changes
Reclassifications to line item Assets held
for disposal and dispositions of those entities
Valuation allowance
as of September 30, 2020
(48)
4
35
(46)
198
68
891
(in millions of €)
340
341
106
231
therein: included in
cash flow hedges
Financial liabilities
Sep 30,
Financial assets
Sep 30,
792
942
617
933
Foreign currency exchange
contracts
Liability
Asset
Sep 30, 2019
Sep 30, 2020
Liability
Asset
(in millions of €)
Siemens enters into master netting and similar agree-
ments for derivative financial instruments. Potential off-
setting effects are as follows:
Offsetting
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 132
Should the current COVID-19 situation result in
pro-
longed recession with a delayed recovery process, valua-
tion allowances for expected credit losses on financial
assets at amortized cost could increase by a lower three-
digit million €-amount.
Impairment losses on financial instruments are presented
in line items Cost of sales, Selling and general administra-
tive expenses and Other financial income (expenses),
net. Net losses in fiscal 2020 and 2019 are €404 million
and €237 million, respectively. Impairment losses of
€33 million and €113 million in fiscal 2020 and 2019 are
mostly attributable to the SFS business and presented in
Other financial income (expenses), net.
184
198
(17)
(2)
Reclassifications to line item Assets held
(458)
136
32
36
Write-offs charged against the allowance
n/a
n/a
(39)
(105)
(72)
Recoveries of amounts previously written off
n/a
n/a
2
7
2
Foreign exchange translation differences
and other changes
54
as of September 30, 2019
Balance as of
for disposal and dispositions of those entities
Valuation allowance
(6)
(2)
14
(25)
6
7
26
2020
3
Consolidated Statements of Income in the current period
(169)
73
27
111
537
36
227
Loans and other debt instruments
under the general approach
Loans, receivables and other debt instruments measured at amortized cost
12
Trade receivables
Stage 1
Stage 2
Stage 3
and other debt
instruments under
the simplified
approach
Contract
Assets
Lease
Receivables
(in millions of €)
Valuation allowance
as of October 1, 2018
48
11
64
877
160
211
Change in valuation allowances recorded in the
13
2019
(11)
2019
10,739 4,435 7,803
450 7,110
Foreign currency
exchange contracts
Interest rate swaps
therein: included in
cash flow hedges
Interest
More than
12 months
Sep 30, 2019
More than
Up to
12 months 12 months
Up to
12 months
(in millions of €)
Sep 30, 2020
1
117
133
(59)
Balance as of
September 30, 2020
thereof discontinued
hedge accounting
income
(49)
8
(1)
Reclassification to net
163
162
(48)
3
(57)
21
(10)
reserve
Cost of
hedging
Cash flow
hedge
reserve
8,248
reserve
hedge
(in millions of €)
6,647
6,512
450
Reclassification to
2020
net income
(4)
94
94
(16)
19
(223)
(42)
Hedging gains (losses)
presented in OCI
therein: included in
fair value hedges
1,195
598
72
35
October 1, 2018
Balance as of
7,842
reserve
Cost of
hedging
Foreign
currency risk
reserve
reserve
Cash flow
hedge
hedge
rate risk
Cash flow
Interest
rate risk
Cash flow
Other (embedded
in the Statement of
Net amounts
457
554
fair value hedges
therein: included in
7
2
7
2
in the Statement of
42
107
cash flow hedges
Amounts offset
therein: included in
1,056
795
2,575
2,571
Gross amounts
Foreign
currency risk
Interest rate swaps and
combined interest and
currency swaps
248
1,639
328
Financial Position
2,569
Financial Position
2,568
Balance as of
October 1, 2019
Siemens Energy spin-off
Hedging gains (losses)
presented in OCI
(in millions of €)
To hedge foreign currency exchange and interest rate
risks, derivatives are contracted to achieve a 1:1 hedge
ratio so that the main characteristics match the underly-
ing hedged items (e.g. nominal amount, maturity) in a
critical term match, which ensures an economic relation-
ship between hedging instruments and hedged items
suitable for hedge accounting. The nominal amounts of
hedging instruments by maturity are:
NOTE 24 Derivative
financial instruments
and hedging activities
Fair values of each type of derivative financial instru-
ments reported as financial assets or financial liabilities
in line items Other current financial assets (liabilities) or
Other financial assets (liabilities) are:
391
658
571
221
1,733
1,739
Net amounts
835
829
of Financial Position
Other components of equity, net of income taxes, relat-
ing to cash flow hedges reconciles as follows:
978
793
3,014 1,273
1,049
derivatives, options,
commodity swaps)
74
1,835
33
434
233
Related amounts not
offset in the Statement
2,842
Continuing
operations
RESULTING MATCHING SHARES
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Under the Base Share Program employees of Siemens AG
and participating domestic Siemens companies may
invest a fixed amount of their compensation in Siemens
shares, sponsored by Siemens. The shares are bought at
market price at a predetermined date in the second quar-
ter and grant the right to receive matching shares under
the same conditions applying to the Share Matching Plan
described above. The fair value of the Base Share Pro-
gram amounted to €33 million and €33 million in fiscal
2020 and 2019, respectively.
BASE SHARE PROGRAM
Under the Monthly Investment Plan employees other
than senior managers may invest a specified part of their
compensation in Siemens shares on a monthly basis over
a period of twelve months. Shares are purchased at mar-
ket price at a predetermined date once a month. If the
Managing Board decides that shares acquired under the
Monthly Investment Plan are transferred to the Share
Matching Plan, plan participants will receive the right to
matching shares under the same conditions applying to
the Share Matching Plan described above with a vesting
period of about two years. The Managing Board decided
that shares acquired under the tranches issued in fiscal
2019 and 2018 are transferred to the Share Matching Plan
as of February 2020 and February 2019, respectively.
Continuing and
discontinued
MONTHLY INVESTMENT PLAN
Under the Share Matching Plan, senior managers may
invest a specified part of their variable compensation in
Siemens shares (investment shares). The shares are pur-
chased at the market price at a predetermined date in
the second quarter. Plan participants receive the right to
one Siemens share without payment of consideration
(matching share) for every three investment shares con-
tinuously held over a period of about three years (vest-
ing period) provided the plan participant has been con-
tinuously employed by Siemens until the end of the
vesting period.
SHARE MATCHING PLAN
In fiscal 2020, Siemens issued a new tranche under each
of the plans of the Share Matching Program.
ANNUAL REPORT 2020 140
Fiscal year
In fiscal 2020 and 2019, severance charges for continuing
operations amount to €591 million and €340 million, re-
spectively, thereof at Digital Industries €210 million and
€92 million and at Smart Infrastructure €195 million and
€46 million.
2019
2020
Outstanding, beginning of period
1,785,913
Vested and fulfilled
Forfeited
1,692,909
874,793
943,399
(569,405) (702,125)
(122,659) (105,092)
Settled (thereof 420,174 in
connection with the Siemens
Energy spin-off in fiscal 2020)
Outstanding, end of period
(459,596)
1,509,046
(43,178)
1,785,913
Employees were engaged in (averages; based on head-
count):
Share Matching Program
and its underlying plans
Granted
The Company grants stock awards to members of the
Managing Board, members of the senior management
and other eligible employees. Stock awards are subject to
a restriction period of about four years and entitle the
beneficiary to Siemens shares following the restriction
period without payment of consideration.
(2,303,850)
7,301,576
operations
Share-based payment awards may be settled in newly
issued shares of capital stock of Siemens AG, in treasury
shares or in cash. Share-based payment awards may
forfeit if the employment of the beneficiary terminates
prior to the expiration of the vesting period. In fiscal 2020
and 2019, expense from equity-settled awards on a con-
tinuing basis are €298 million and €250 million; cash-
settled awards on a continuing basis resulted in gains
(expenses) of €(26) million in fiscal 2020 and €24 million
in fiscal 2019.
In connection with the Siemens Energy spin-off, share-
based payment arrangements were altered in fiscal 2020.
To address an expected dilution from the spin off, bene-
ficiaries remaining with Siemens receive at the date of
transfer, in addition to Siemens shares, a compensating
cash payment based on the spin-off ratio 2:1 and based
on the Siemens Energy share price at vesting. Due to the
modifications of the underlying stock awards and match-
ing shares, €55 million were reclassified from equity to
liabilities as of July 9, 2020, and thereby recognized as
cash-settled share-based payment plan, taking into ac-
count the proportionate vesting period passed. In con-
nection with the spin-off, beneficiaries leaving Siemens
and joining Siemens Energy no longer participate in
the stock award and share matching programs. Related
Siemens obligations were settled, the beneficiaries
received a compensating cash payment from Siemens
Energy following the spin-off.
Stock Awards
Stock awards are tied to performance criteria. For stock
awards granted in fiscal 2020, 80% of the target amount
is linked to the relative total shareholder return of Siemens
compared to the total shareholder return of the MSCI
World Industrials sector index (TSR-Target) during a four-
year restriction period; the remaining 20% are linked to a
Siemens internal sustainability target considering envi-
ronmental, social and governance targets (ESG-Target).
The annual target amount for stock awards up to and in-
cluding tranche 2019 is linked to the share price perfor-
mance of Siemens relative to the share price perfor-
mance of five important competitors during the four-year
restriction period. The target attainment for each individ-
ual performance criteria ranges between 0% and 200%.
For awards granted since fiscal 2019 settlement is in
shares only corresponding to the actual target attain-
ment. Awards granted prior to fiscal 2019, target out-
performances in excess of 100% are settled in cash. The
vesting period is four years.
COMMITMENTS TO MEMBERS
OF THE MANAGING BOARD
Most of the Managing Board's stock awards are based on
criteria described above. Fair values are €12 million and
€11 million, respectively, in fiscal 2020 and 2019, calcu-
lated by applying a valuation model. In fiscal 2020 and
2019, inputs to that model include, for the majority of the
stock awards granted, an expected weighted volatility of
Siemens shares of 21.58% and 21.72%, respectively, and
a market price of €116.80 and €102.42 per Siemens share.
Expected volatility was determined by reference to his-
toric volatilities. The model applies a risk-free interest
rate of up to (0.24)% and 0.14% in fiscal 2020 and 2019,
respectively, and an expected dividend yield of 3.31% in
fiscal 2020 and 3.71% in fiscal 2019. Assumptions relating
to correlations between the Siemens share price and a)
the development of the MSCI index in fiscal 2020, respec-
tively b) the shares prices of the competitors basket in
fiscal 2019 were derived from historic observations of
share price and index changes.
COMMITMENTS TO MEMBERS OF THE SENIOR
MANAGEMENT AND OTHER ELIGIBLE EMPLOYEES
In fiscal 2020, 2,688,334 equity settled stock awards were
granted relating to the TSR-target with a fair value of
€132 million; 672,197 equity settled stock awards were
granted relating to the ESG-target with a fair value of
€66 million. In fiscal 2019, 3,751,556 stock awards were
granted with a fair value of equity-settled stock awards of
€168 million contingent upon attaining the prospective
performance-based target of Siemens stock relative to
five competitors.
ANNUAL REPORT 2020 139
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Fair value of stock awards granted in fiscal 2020 (TSR-
related) and 2019 were calculated applying a valuation
model. In fiscal 2020 and 2019, inputs to that model in-
clude an expected weighted volatility of Siemens shares
of 21.58% and 21.73%, respectively, and a market price of
€116.02 and €98.92 per Siemens share. Expected volatil-
ity was determined by reference to historic volatilities.
The model applies a risk-free interest rate of up to (0.26)%
in fiscal 2020 and up to 0.16 in fiscal 2019 and an ex-
pected dividend yield of 3.31% and 3.84% in fiscal 2020
and 2019, respectively. Assumptions relating to correla-
tions between the Siemens share price and a) the devel-
opment of the MSCI Index in fiscal 2020 respectively
b) the share prices of the competitor basket in fiscal 2019
were derived from historic observations of share price
and index changes. In fiscal 2020, fair value of the ESG
component of €98.02 per share was determined as the
market price of Siemens shares less the present value of
expected dividends during the vesting period.
Changes in the stock awards held by members of the
senior management and other eligible employees are:
Non-vested, beginning of period
Granted
Vested and fulfilled
Adjustments due to vesting conditions
other than market conditions
Forfeited
Modified
Settled (thereof 2,293,915 in
connection with the Siemens Energy spin-off
in fiscal 2020)
Non-vested, end of period
2020
Fiscal year
2019
8,742,219 6,641,400
3,360,531 3,751,556
(1,733,082) (603,572)
(351,339)
(412,903) (386,041)
(643,619)
(17,505)
8,742,219
Fiscal year
Fiscal year
2019
2020
2019
4,290
5,158
311
362
Income from continuing operations
attributable to shareholders of Siemens AG
3,979
4,796
NOTE 27 Personnel costs
Less: Dilutive effect from share based payment
resulting from Siemens Healthineers
3
Continuing and
2020
Continuing
operations
2020
2020
discontinued
operations
Fiscal year
2019
Income from continuing operations
attributable to shareholders of Siemens AG
to determine dilutive earnings per share
Weighted average shares outstanding - basic
3,976
806,335 807,273
Effect of dilutive share-based payment
11,029
Wages and salaries
20,132
20,585 26,660 25,975
Effect of dilutive warrants
10,657
380
Statutory social welfare
(in millions of €)
Fiscal year
Less: Portion attributable
to non-controlling interest
(shares in thousands; earnings per share in €)
Income from continuing operations
2019
2020
2019
The weighted average fair value of matching shares
granted in fiscal 2020 and 2019 of €89.71 and €76.76 per
share, respectively, was determined as the market price
of Siemens shares less the present value of expected div-
idends taking into account non-vesting conditions.
Jubilee Share Program
For their 25th and 40th service anniversary eligible em-
ployees receive jubilee shares. There were 3.29 million
and 4.23 million entitlements to jubilee shares outstand-
ing as of September 30, 2020 and 2019, respectively. In
fiscal 2020, the obligation to provide 0.88 million jubilee
shares was transferred to Siemens Energy in connection
with the spin-off.
(in thousands)
Manufacturing
and services
167
163
219
232
Sales and marketing
Research and development
Administration and general services
55
57
64
NOTE 28 Earnings per share
383
363
293
294
37
Fiscal year
35
31
45
44
40
41
69
33
NOTE 26 Share-based payment
9,169
263
14,517
Industrial Businesses
55,963
60,281
51,381
52,587
1,450
1,531
52,832
54,118
Siemens Financial Services
716
832
667
777
48
55
716
832
Portfolio Companies
5,258
5,562
4,633
4,749
760
706
5,393
5,455
Reconciliation to
14,460
Consolidated Financial Statements
105
14,412
15,944
14,279
15,319
718
769
14,997
16,087
Smart Infrastructure
14,734
15,590
13,742
13,986
581
612
14,323
14,597
Mobility
contributions and
12,894
9,012
8,870
40
45
9,052
8,916
Siemens Healthineers
16,163
15,853
14,349
111
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
(1,959)
458
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
3,252
2,880
10,756
10,626
2,854
2,635
194
316
700
668
1,302
1,465
4,340
4,907
1,498
1,540
182
239
337
Fiscal year
(1,993)
Amortization,
depreciation & impairments
Free cash flow
Fiscal year
369 (2,259)
(2,292)
Siemens (continuing operations)
59,977
64,682
57,139
58,483
(1,801)
57,139
(1,922)
58,483
Description of reportable segments
→ Digital Industries, offers a comprehensive product
portfolio and system solutions for automation used in
discrete and process industries, complemented by
product lifecycle and data-driven services,
→ Smart Infrastructure, supplies and intelligently con-
nects energy systems and building technologies, to
significantly improve efficiency and sustainability
while supporting its customers in addressing major
technology shifts,
→ Mobility, combines all Siemens businesses in the area
of passenger and freight transportation, including rail
vehicles, rail automation systems, rail electrification
systems, road traffic technology, digital solutions and
related services,
→ Siemens Healthineers is a global provider of technol-
ogy to the healthcare industry. It provides medical
technology and software solutions as well as clinical
consulting services, supported by an extensive set of
training and service offerings,
→ Siemens Financial Services (SFS) supports its custom-
ers' investments with leasing solutions and equip-
ment, project and structured financing in the form of
debt and equity investments
Portfolio Companies (POC)
comprise businesses which include a broad range of
customized and application-specific products, software,
solutions, systems and services in different industries
including oil and gas, marine, mining, cement, water,
fiber, wind, logistics and energy.
Reconciliation to
Consolidated Financial Statements
Siemens Energy Investment - includes our investment
in Siemens Energy after the spin-off accounted for using
the equity method as well as a smaller investment in con-
nection with Siemens Energy.
Siemens Real Estate (SRE) - manages the Group's real
estate business portfolio, operates the properties, and is
responsible for building projects and the purchase and
sale of real estate; excluded are the carved-out real estate
of Mobility and Siemens Healthineers.
Corporate items - includes corporate costs, such as
group managing costs, basic research of Corporate Tech-
nology, Siemens Advanta, as well as corporate services
and projects. Corporate items also include equity inter-
ests, activities generally intended for closure as well as
activities remaining from divestments and discontinued
operations.
ANNUAL REPORT 2020 142
Consolidated Financial Statements
→ B.6 Notes to Consolidated Financial Statements
Profit
Assets
Fiscal year
Sep 30,
Additions to intangible assets
and property, plant & equipment
Fiscal year
Weighted average shares outstanding - diluted
Furthermore, Siemens Energy will continue to receive ser-
vices from Siemens, particularly in the areas of informa-
tion technology, human resources, communications, se-
curity and procurement as well as from Siemens Advanta,
Global Business Services and Corporate Technology.
818,309
(in millions of €)
Siemens Energy Investment
2020
Fiscal year
2019
Assets Corporate items and pensions
(612)
230
Asset-based adjustments:
(24)
Intragroup financing receivables
51,509
45,493
Siemens Real Estate
325
135
Tax-related assets
4,383
3,146
3,898
Profit
Assets Siemens Real Estate
FREE CASH FLOW DEFINITION
Free cash flow of the segments constitutes cash flows
from operating activities less additions to intangible as-
sets and property, plant and equipment. Except for SFS,
it excludes financing interest, except for cases where in-
terest on qualifying assets is capitalized or classified as
contract costs; it also excludes income tax as well as
certain other payments and proceeds. Free cash flow of
SFS includes related financing interest payments and pro-
ceeds; income tax payments and proceeds of SFS are
excluded. In individual cases, free cash flow of Mobility
includes project-specific intercompany financing of long-
term projects.
AMORTIZATION, DEPRECIATION AND IMPAIRMENTS
Amortization, depreciation and impairments includes
depreciation and impairments of property, plant and
equipment as well as amortization and impairments of
intangible assets each net of reversals of impairment.
ANNUAL REPORT 2020 144
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Measurement
-
POC and Siemens Real Estate
3,052
POC follows the measurement principles of the segments
except for SFS. Siemens Real Estate applies the measure-
ment principles of SFS.
Consolidated Financial Statements
In fiscal 2020 and 2019, Profit of SFS includes interest
income of €1,238 million and €1,331 million, respec-
tively and interest expenses of €436 million and €564
million, respectively.
Assets
(in millions of €)
2020
Sep 30,
2019
Siemens Energy Investment
6,748
Reconciliation to
Corporate items
(892)
(472)
(1,491)
NOTE 30 Information
about geographies
Revenue by location
of customers
(in millions of €)
2020
Fiscal year
2019
2020
(1,730)
Revenue by location
of companies
Fiscal year
2019
Sep 30,
2020
2019
Europe, C.I.S., Africa, Middle East
28,062
28,821
29,566
30,735
Non-current
assets
As of September 30, 2020 and 2019, order backlog to-
taled €70 billion and €69 billion (continuing operations);
thereof Digital Industries €5 billion and €5 billion, Smart
Infrastructure €10 billion and €10 billion, Mobility €32
billion and €33 billion and Siemens Healthineers €18 bil-
lion and €18 billion. In fiscal 2021, Siemens expects to
convert approximately €28 billion of the September 30,
2020 order backlog into revenue; thereof at Digital Indus-
tries approximately €4 billion, Smart Infrastructure ap-
proximately €7 billion, Mobility approximately €8 billion
and Siemens Healthineers approximately €6 billion.
Consolidated Financial Statements
(236) (310)
Liability-based adjustments
28,228
26,284
Centrally carried pension expense
(211)
(210)
Eliminations, Corporate Treasury,
other items
(34,607)
Reconciliation to
7,294
acquired in business combinations
(691)
(634)
Reconciliation to
Consolidated Financial Statements
59,548
85,498
Eliminations, Corporate Treasury
and other reconciling items
Amortization of intangible assets
17,624
Orders are determined principally as estimated revenue
of accepted purchase orders for which enforceable rights
and obligations exist as well as subsequent order value
changes and adjustments, excluding letters of intent.
To determine orders, Siemens considers termination
rights and customer's creditworthiness.
Management determined Assets (Net capital employed)
as a measure to assess capital intensity of the segments
except for SFS. Its definition corresponds to the Profit
measure except for amortization expenses of intangible
assets acquired in business combinations which are not
part of Profit, however, the related intangible assets are
included in the segments' Assets. Segment Assets is
based on Total assets of the Consolidated Statements of
Financial Position, primarily excluding intragroup financ-
ing receivables, tax related assets and assets of discontin-
ued operations, since the corresponding positions are
excluded from Profit. The remaining assets are reduced
by non-interest-bearing liabilities other than tax related
liabilities, e.g. trade payables, to derive Assets. In con-
trast, Assets of SFS is Total assets. In individual cases
assets of Mobility include project-specific intercompany
financing of long-term projects. Assets of Siemens
Healthineers includes real estate, while real estate of all
other Siemens segments is carried at SRE, except for
carved-out real estate of Mobility.
33,859
32,467
7,142
6,696
1,104
1,306
2,144
1,735
345
632
28,946
29,901
611
621
23
27
253
7,789
7,560
620
815
822
983
3,424
3,045
862
903
183
175
220
292
2,184
2,461
15,338
13,889
1,928
1,618
544
575
184
(504)
2
2,383
2,280
Centrally carried pension expense - includes the Com-
pany's pension related income (expense) not allocated to
the segments, POC or Siemens Real Estate.
-
Eliminations, Corporate Treasury and other reconciling
items comprise consolidation of transactions within
the segments, certain reconciliation and reclassification
items as well as central financing activities. It also in-
cludes interest income and expense, such as, for example,
interest not allocated to segments or POC (referred to as
financing interest), interest related to central financing
activities or resulting consolidation and reconciliation
effects on interest.
REVENUE
Revenue includes revenue from contracts with customers
and revenue from leasing activities. In fiscal 2020 and
2019, lease revenue is €916 million and €795 million,
respectively. In fiscal 2020 and 2019, Digital industries
recognized €4,144 million and €4,039 million revenue,
respectively, from its software business, Smart Infrastruc-
ture recognized €5,224 million and €5,515 million in its
product business. Revenues of Mobility are mainly de-
rived from construction-type business.
Measurement - Segments
Accounting policies for Segment information are gener-
ally the same as those used for the Consolidated Finan-
cial Statements. Segment information is disclosed for
continuing operations; prior year Assets are reclassified
to conform to the current year presentation. For internal
and segment reporting purposes intercompany lease
transactions, however, are classified as operating leases
by the lessor and are accounted for off-balance sheet
by the lessee (except for intercompany leases with
Siemens Healthineers and Mobility as lessees). Interseg-
ment transactions are based on market prices.
3,157
PROFIT
Financing interest, excluded from Profit, is any interest
income or expense other than interest income related to
receivables from customers, from cash allocated to the
segments and interest expenses on payables to suppliers.
Financing interest is excluded from Profit because deci-
sion-making regarding financing is typically made at the
corporate level.
ANNUAL REPORT 2020 143
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Decisions on essential pension items are made centrally.
Accordingly, Profit primarily includes amounts related to
service cost of pension plans only, while all other regularly
recurring pension related costs are included in reconcilia-
tions in line item Centrally carried pension expense.
Amortization expenses of intangible assets acquired in
business combinations are not part of Profit. Further-
more, income taxes are excluded from Profit since in-
come tax is subject to legal structures, which typically do
not correspond to the structure of the segments. The
effect of certain litigation and compliance issues is ex-
cluded from Profit, if such items are not indicative of per-
formance. This may also be the case for items that refer
to more than one reportable segment, SRE and (or) POC
or have a corporate or central character. Costs for support
functions are primarily allocated to the segments.
PROFIT OF THE SEGMENT SFS
In contrast to performance measurement principles ap-
plied to other segments, interest income and expenses
are included, since interest is an important source of rev-
enue and expense of SFS.
ASSET MEASUREMENT PRINCIPLES
Siemens' Managing Board is responsible for assessing the
performance of the segments (chief operating decision
maker). The Company's profitability measure of the seg-
ments except for SFS is earnings before financing inter-
est, certain pension costs, income taxes and amortiza-
tion expenses of intangible assets acquired in business
combinations as determined by the chief operating deci-
sion maker (Profit). The major categories of items ex-
cluded from Profit are presented below.
ORDERS
1,780
5,167
556
189
80
77
217
100
(1,730)
5,672
(1,491)
1,554
6,933
85,498
150,248
(1,684)
(2,339)
347
371
543
225
6,625
59,548
123,897
25,065
Americas
15,464
Compensation attributable to members of the Super-
visory Board comprises in fiscal 2020 and 2019 of a base
compensation and additional compensation for commit-
tee work and amounted to €5.3 and €5.1 million (includ-
ing meeting fees), respectively.
Information regarding the remuneration of the members
of the Managing Board and Supervisory Board is disclosed
on an individual basis in the Compensation Report, which
is part of the Combined Management Report.
In fiscal 2020 and 2019, no other major transactions took
place between the Company and the members of the
Managing Board and the Supervisory Board.
Some of our board members hold, or in the last year have
held, positions of significant responsibility with other en-
tities. We have relationships with almost all of these en-
tities in the ordinary course of our business whereby we
buy and sell a wide variety of products and services on
arm's length terms.
NOTE 32 Principal
accountant fees and services
Fees related to professional services rendered by the
Company's principal accountant, EY, for fiscal 2020 and
2019 are:
Fiscal year
(in millions of €)
2020
2019
Audit services
58.1
51.1
Other attestation services
Tax services
10.4
6.1
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 147
The defined benefit obligation (DBO) of all pension com-
mitments to former members of the Managing Board and
their surviving dependents as of September 30, 2020
and 2019 amounted to €176.5 million and €175.7 million,
respectively.
Former members of the Managing Board and their
surviving dependents received emoluments within the
meaning of Section 314 para. 1 No. 6 b of the German
Commercial Code totaling €16.0 million and €21.1 million
in fiscal 2020 and 2019, respectively.
As of September 30, 2020 and 2019, guarantees to joint
ventures and associates amounted to €27,505 million
and €470 million, respectively, thereof €27,253 million
and €142 million, respectively, to associates. Guarantees
as of September 30, 2020 included mainly Siemens' obli-
gations from performance and credit guarantees in con-
nection with the Siemens Energy business. For these
guarantees, Siemens has reimbursement rights for the
full amount.
As of September 30, 2020 and 2019, loans given to joint
ventures and associates amounted to €900 million and
€679 million, therein €881 million and €662 million re-
lated to joint ventures, respectively. The related book
values amounted to €26 million and €481 million,
therein €20 million and €477 million related to joint ven-
tures, respectively. Valuation adjustments recognized in
fiscal 2020 and 2019 reduced book values of loans re-
lated to joint ventures by €744 million and €100 million,
respectively.
As of September 30, 2020 and 2019, the Company had
commitments to make capital contributions to joint ven-
tures and associates of €62 million and €145 million,
therein €51 million and €127 million related to joint ven-
tures, respectively.
As of September 30, 2020 and 2019, there were loan
commitments to joint ventures amounting to €299 mil-
lion and €361 million, respectively.
From the effective date of the spin-off, Siemens Energy
is reported as an associate of Siemens. There are various
relationships between Siemens and Siemens Energy
in the ordinary course of business, such as purchases
or sales of goods and services, leases, transfers under
license agreements and cooperation in research and
development.
ANNUAL REPORT 2020
146
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
0.1
Additionally, Siemens and Siemens Energy concluded
a non-exclusive Preferred Financing Agreement with
a term until September 30, 2030 governing the coopera-
tion in the areas of debt financing, commercial financing
and equity financing of customers of the Siemens Energy
business and their projects. Debt financing comprises the
provision of debt capital via standard market debt financ-
ing structures. An investment volume of up to €300 mil-
lion per fiscal year has been committed by Siemens for
the first five years. For a further five years, it was agreed
to reinvest any sales revenue from the equity portfolio,
but at least €500 million. Moreover, equity financing can
also be provided up to a total volume of €210 million
upon full recourse to Siemens Energy. Furthermore,
a Preferred Financing Agreement with Siemens Gamesa
Renewable Energy existed with a financing commitment
of up to €200 million per fiscal year for a period of five
years until September 30, 2025.
In fiscal 2020, funding of post-employment benefit
plans included the transfer of 9.9% interest in Siemens
Energy AG.
For information regarding the funding of our post-em-
ployment benefit plans see > NOTE 17.
Related individuals
In fiscal 2020 and 2019, members of the Managing
Board - including members who left during fiscal 2020-
received cash compensation of €15.3 million and €22.0
million. The fair value of stock-based compensation
amounted to €11.3 million and €11.1 million for 203,460
and 254,693 stock awards, respectively, in fiscal 2020 and
2019. In fiscal 2020 and 2019, the Company granted con-
tributions under the BSAV to members of the Managing
Board totaling €4.5 million and €5.6 million, respectively.
Therefore, in fiscal 2020 and 2019, compensation and
benefits, attributable to members of the Managing Board
amounted to €31.0 million and €38.6 million in total,
respectively.
In fiscal 2020 and 2019, expense related to share-based
payment amounted to €17.7 million and €4.7 million,
respectively, including expenses related to the addi-
tional cash payment compensation due to the spin-off of
Siemens Energy.
Associated with the earlier termination of her duties on
the Managing Board, Lisa Davis was granted a severance
payment of €2.4 million, fringe benefits of €0.7 million
and a special contribution to the BSAV of €0.4 million.
Associated with the earlier termination of his duties on
the Managing Board, Michael Sen was granted a cash
compensation of €2.2 million, a BSAV contribution of
€0.6 million and a share-based payment of €1.3 million
for the period until the earlier termination of his employ-
ment contract. For the remaining period until the regular
end of his Managing Board appointment he was granted
a severance payment of €3.5 million and a special contri-
bution to the BSAV of €0.6 million.
Pension entities
0.1
68.6
57.3
ANNUAL REPORT 2020 141
992 1,348 1,263
24,760 31,978 31,222
1,031
24,173
benefits
5.86
4.86
(from continuing operations)
to post-employment
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Diluted earnings per share
5.94
4.93
(from continuing operations)
3,984
3,183 3,970
3,010
Basic earnings per share
expenses for optional
support
Expenses relating
As of September 30, 2020, receivables to associates in-
cluded reimbursement rights against Siemens Energy
totaling €658 million. These rights were recognized cor-
respondingly with obligations from customer contracts in
connection with Siemens Energy activities legally re-
maining at Siemens. Liabilities to associates as of Sep-
tember 30, 2020 were mainly due to trade receivables
that also result from these activities and that have eco-
nomically to be allocated to Siemens Energy.
NOTE 29 Segment information
External revenue
In fiscal 2020 and 2019, 44% and 35%, respectively, of the
total fees related to Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft, Germany.
Audit Services relate primarily to services provided by EY
for auditing Siemens' Consolidated Financial Statements,
for auditing financial statements of Siemens AG and its
subsidiaries, for reviews of interim financial statements
being integrated into the audit, for project-accompany-
ing IT audits as well as for audit services in connection
with the implementation of new accounting standards.
Other Attestation Services include primarily audits of fi-
nancial statements as well as other attestation services in
connection with M&A activities, audits of employee ben-
efit plans, attestation services related to the sustainabil-
ity reporting, comfort letters and other attestation
services required under regulatory requirements, con-
tractually agreed or requested on a voluntary basis.
ANNUAL REPORT 2020 148
2019
2020
2019
2020
2019
Orders
2020
2020
(in millions of €)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Total revenue
Intersegment Revenue
2019
In fiscal 2020 and 2019, sales of goods and services and
other income resulting from transactions between dis-
continued operations and joint ventures and associates
amounted to €391 million and €641 million, respectively.
Purchases of goods and services and other expenses re-
sulting from transactions between discontinued opera-
tions and joint ventures and associates amounted to
€173 million and €245 million, respectively.
223
420
44 1,358
1,407
12,020
12,390
6,995
8,701
thereof countries outside of Germany
47,413
48,601
45,119
9,882
46,093
43,442
therein U.S.
12,981
12,937
12,992
12,817
13,656
20,296
28,543
Non-current assets consist of property, plant and equip-
ment, goodwill and other intangible assets.
9,726
52,143
15,597
15,154
15,243
14,410
21,795
Asia, Australia
13,613
14,065
thereof Germany
12,420
3,504
5,284
Siemens
57,139
58,483
57,139
58,483
35,537
12,505
817,364
ANNUAL REPORT 2020 145
NOTE 31 Related
party transactions
119
Liabilities
Sep 30,
2019
Receivables
Sep 30,
(in millions of €)
2020
2019
107
2020
76
228
49
197
Associates
1,105
1,181
271
Joint ventures
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
12
121
Joint ventures and associates
Siemens has relationships with many joint ventures and
associates in the ordinary course of business whereby
Siemens buys and sells a wide variety of products and
services generally on arm's length terms. The transac-
tions between continuing operations and joint ventures
and associates were as follows:
Purchases of goods
and services
and other expenses
Fiscal year
2019
Sales of goods
and services
and other income
Fiscal year
(in millions of €)
2020
2019
2020
89
Joint ventures
153
34
Associates
68
137
87
215
291
147
1,544
15,896
Digital Industries
492
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264 b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
100
Sala Al Jadida/Morocco
100
Swords, County Dublin/Ireland
Siemens Industry Software SARL,
Siemens Healthcare Medical Solutions Limited,
100
Siemens Healthcare SARL, Casablanca/Morocco
100
Limited, Swords, County Dublin/Ireland
100
FTD Europe Ltd, Sliema/Malta
ANNUAL REPORT 153
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Equity interest
Equity interest
100
Flender B.V., Rotterdam/Netherlands
100
Lahore/Pakistan
100
Amsterdam/Netherlands
Siemens Healthcare (Private) Limited,
Enlighted International B.V.,
100
Limited, Lahore/Pakistan
100
The Hague/Netherlands
Siemens Healthcare Diagnostics Manufacturing
Mentor Graphics Pakistan Development (Private)
51
Siemens Industrial LLC, Muscat/Oman
100
Castor III B.V., The Hague/Netherlands
100
Siemens Mobility AS, Oslo/Norway
100
Siemens S.A., Casablanca/Morocco
in %
September 30, 2020
in %
September 30, 2020
Dresser-Rand International B.V.,
100
Shannon, County Clare/Ireland
100
Mentor Graphics Magyarország Kft.,
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I.,
100
Budapest/Hungary
100
Crabtree (Pty) Ltd, Maseru/Lesotho
492
Electronic and Mechanical Contracting WLL, Kuwait
City/Kuwait
100
SIEMENS MOBILITY RAIL AND RAD TRANSPORTATION
SOLUTIONS SOCIETE ANONYME, Athens/Greece
Siemens Industrial Business Co. For Electrical,
100
Chalandri/Greece
100
Siemens TOO, Almaty/Kazakhstan
COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
100
Almaty/Kazakhstan
SIEMENS HEALTHCARE INDUSTRIAL AND
Siemens Healthcare Limited Liability Partnership,
100
100
Siemens S.p.A., Milan/Italy
Siemens A.E., Electrotechnical Projects and Products,
Athens/Greece
100
Esch-sur-Alzette/Luxembourg
100
Budapest/Hungary
100
Fast Track Diagnostics Ltd, Sliema/Malta
Mentor Graphics Development Services Limited,
100
Luxembourg/Luxembourg
100
TFM International S.A. i.L.,
Mentor Graphics (Ireland) Limited, Shannon, County
Clare/Ireland
100
Luxembourg/Luxembourg
10013
SPT Invest Management, SARL,
Shannon, County Clare/Ireland
Siemens Pakistan Engineering Co. Ltd.,
Mentor Graphics (Holdings) Unlimited Company,
SPT Holding SARL, Luxembourg/Luxembourg
100
Siemens Zrt., Budapest/Hungary
100
SPT Affiliates, LLC, SARL, Contern/Luxembourg
100
Siemens Mobility Kft., Budapest/Hungary
100
Luxembourg/Luxembourg
100
Siemens Mobility Holding SARL,
Siemens Healthcare Kft., Budapest/Hungary
100
Karachi/Pakistan
75
Flowmaster Group N.V., Eindhoven/Netherlands
100
Siemens S.R.L., Bucharest/Romania
100
Siemens Mobility B.V., Zoetermeer/Netherlands
100
Siemens Mobility S.R.L., Bucharest/Romania
100
The Hague/Netherlands
100
Siemens Industry Software S.R.L., Brasov/Romania
Siemens International Holding III B. V.,
100
Siemens Healthcare S.R.L., Bucharest/Romania
100
The Hague/Netherlands
Siemens International Holding II B.V.,
100
Bucharest/Romania
SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
100
The Hague/Netherlands
Siemens International Holding B.V.,
100
Bucharest/Romania
J2 Innovative Concepts Europe SRL,
Siemens Mobility Holding B.V.,
SIMEA SIBIU S.R.L., Sibiu/Romania
100
's-Gravenhage/Netherlands
5 No significant influence due to contractual arrangements
or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
Siemens Healthcare AS, Oslo/Norway
100
100
000 Siemens Industry Software,
Moscow/Russian Federation
100
100
100
100
000 Siemens, Moscow/Russian Federation
Helmond/Netherlands
TASS International Holding B.V.,
100
000 Legion II, Moscow/Russian Federation
100
TASS International B.V., Helmond/Netherlands
100
ELEKTROPRIVOD, St. Petersburg/Russian Federation
100
Siemens Nederland N.V., The Hague/Netherlands
LIMITED LIABILITY COMPANY SIEMENS
100
Siemens AS, Oslo/Norway
Siemens Mobility S.r.I., Milan/Italy
The Hague/Netherlands
55
100
Siemens Mobility Sp. z o.o., Warsaw/Poland
100
Siemens Finance B.V., The Hague/Netherlands
100
Warsaw/Poland
Siemens Industry Software Sp. z o.o.,
100
PSE (Europe) B.V., Rotterdam/Netherlands
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
100
Pollux III B.V., The Hague/Netherlands
100
Siemens Finance Sp. z o.o., Warsaw/Poland
100
Eindhoven/Netherlands
Mentor Graphics (Netherlands) B.V.,
100
Siemens Digital Logistics Sp. z o.o., Wroclaw/Poland
100
Mendix Technology B.V., Rotterdam/Netherlands
100
Mentor Graphics Polska Sp. z o.o., Poznan/Poland
100
Siemens Financieringsmaatschappij N.V.,
The Hague/Netherlands
100
Siemens Sp. z o.o., Warsaw/Poland
100
100
Siemens W.L.L., Doha/Qatar
100
Eindhoven/Netherlands
Siemens S.A., Amadora/Portugal
Siemens Industry Software B.V.,
Amadora/Portugal
100
Rijswijk/Netherlands
SIEMENS MOBILITY, UNIPESSOAL LDA,
Siemens Industry Software and Services B.V.,
Siemens Industry Software Holding II B.V.,
100
100
The Hague/Netherlands
100
Amadora/Portugal
Siemens Healthineers Nederland B.V.,
SIEMENS HEALTHCARE, UNIPESSOAL, LDA,
100
The Hague/Netherlands
100
UltraSoc Poland sp.zo.o, Warsaw/Poland
Siemens Healthineers Holding III B.V.,
100
Siemens Logistics, Unipessoal Lda, Lisbon/Portugal
100
Siemens SAS, Saint-Denis/France
100
ITH icoserve technology for healthcare GmbH,
Innsbruck/Austria
Siemens Electric Machines s.r.o.,
100
100
OEZ s.r.o., Letohrad/Czech Republic
Hochquellstrom-Vertriebs GmbH, Vienna/Austria
100
100
Siemens Healthcare d.o.o., Zagreb/Croatia
100
100
Siemens d.d., Zagreb/Croatia
ETM professional control GmbH, Eisenstadt/Austria
Flender GmbH, Vienna/Austria
100
100
Siemens Mobility EOOD, Sofia/Bulgaria
Mentor Graphics Development Services CJSC,
Yerevan/Armenia
100
Siemens Healthcare EOOD, Sofia/Bulgaria
100
Siemens Spa, Algiers/Algeria
100
Siemens EOOD, Sofia/Bulgaria
51
ESTEL Rail Automation SPA, Algiers/Algeria
Drasov/Czech Republic
100
69
KDAG Beteiligungen GmbH, Vienna/Austria
Siemens Industry Software A/S, Ballerup/Denmark
100
Vienna/Austria
100
Siemens Healthcare A/S, Ballerup/Denmark
Siemens Healthcare Diagnostics GmbH,
100
Siemens A/S, Ballerup/Denmark
100
G.m.b.H., Vienna/Austria
Siemens Gebäudemanagement & -Services
100
100
Siemens, s.r.o., Prague/Czech Republic
Vienna/Austria
100
Siemens Mobility, s.r.o., Prague/Czech Republic
Siemens Aktiengesellschaft Österreich,
100
Prague/Czech Republic
Siemens Industry Software, s.r.o.,
100
Omnetric GmbH, Vienna/Austria
100
100
Siemens Healthcare, s.r.o., Prague/Czech Republic
100
100
Sarajevo/Bosnia and Herzegovina
100
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
or legal circumstances.
5 No significant influence due to contractual arrangements
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
100
Siemens OfficeCenter Verwaltungs GmbH, Grünwald
100
VMZ Berlin Betreibergesellschaft mbH, Berlin
1009
10010
SYKATEC Systeme, Komponenten,
Anwendungstechnologie GmbH, Erlangen
Siemens OfficeCenter Frankfurt GmbH & Co. KG,
Grünwald
100
10010
100 10
SIMAR West Grundstücks-GmbH, Grünwald
SIMOS Real Estate GmbH, Munich
Siemens Nixdorf Informationssysteme GmbH,
Grünwald
1007
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
ANNUAL REPORT 151
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
September 30, 2020
Sarajevo/Bosnia and Herzegovina
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
(284 companies)
Siemens d.o.o. Sarajevo - U Likvidaciji,
100
Siemens S.A./N.V., Beersel/Belgium
100
Zeleni Real Estate GmbH & Co. KG, Kemnath
100
Siemens Mobility S.A./N.V, Beersel/Belgium
100
Zeleni Holding GmbH, Kemnath
100
Siemens Medicina d.o.o.,
Siemens Industry Software NV, Leuven/Belgium
Weiss Spindeltechnologie GmbH, Maroldsweisach
100
Siemens Healthcare NV, Beersel/Belgium
10010
Verkehrskontor GmbH, Munich
100
Samtech SA, Angleur/Belgium
VVK Versicherungsvermittlungs- und
in %
September 30, 2020
Equity interest
Equity interest
in %
100
6 Significant influence due to contractual arrangements
or legal circumstances.
Siemens Industry Software GmbH, Linz/Austria
Siemens Mobility A/S, Ballerup/Denmark
100
Monbonnot-Saint-Martin/France
Mentor Graphics Development Crolles SARL,
100
Siemens Concentrated Solar Power Ltd.,
Rosh HaAyin/Israel
100
Meudon La Forêt/France
Mentor Graphics (France) SARL,
100
Mentor Graphics Development Services (Israel) Ltd.,
Rehovot/Israel
100
KACO new energy SARL, Croissy-Beaubourg/France
100
Pituah/Israel
100
Illkirch-Graffenstaden/France
Mentor Graphics (Israel) Limited, Herzilya
Flender-Graffenstaden SAS,
100
in %
Equity interest
Siemens Limited, Dublin/Ireland
100
Aimsun SARL, Paris/France
September 30, 2020
Siemens HealthCare Ltd., Rosh HaAyin/Israel
100
PETNET Solutions SAS, Lisses/France
100
Siemens Logistics S.r.I., Milan/Italy
100
Siemens Mobility SAS, Châtillon/France
100
Siemens Industry Software S.r.I., Milan/Italy
100
100
Siemens Healthcare S.r.I., Milan/Italy
100
100
Flender Italia S.r.I., Milan/Italy
100
Equity interest
in %
Siemens Industry Software SAS, Châtillon/France
Siemens Lease Services SAS, Saint-Denis/France
Siemens Logistics SAS, Saint-Denis/France
UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
100
100
Siemens Mobility Ltd., Rosh HaAyin/Israel
100
Siemens France Holding SAS, Saint-Denis/France
Siemens Healthcare SAS, Saint-Denis/France
100
Siemens Ltd., Rosh Ha'ayin/Israel
100
Siemens Financial Services SAS, Saint-Denis/France
100
Siemens Industry Software Ltd., Airport City/Israel
100
100
September 30, 2020
Consolidated Financial Statements
Mentor Graphics (Finland) Oy, Espoo/Finland
Steiermärkische Medizinarchiv GesmbH,
Graz/Austria
100
Siemens Mobility Egypt LLC, Cairo/Egypt
100
Vienna/Austria
100
Siemens Industrial LLC, New Cairo/Egypt
Siemens Personaldienstleistungen GmbH,
100
Siemens Mobility Austria GmbH, Vienna/Austria
100
Siemens Healthcare S.A.E., Cairo/Egypt
100
Siemens Healthcare Logistics LLC, Cairo/Egypt
100
Vermögensverwaltungs GmbH, Vienna/Austria
Siemens Metals Technologies
100
Company - Private Free Zone), Cairo/Egypt
Mentor Graphics Egypt Company (A Limited Liability
100
Vienna/Austria
Siemens Konzernbeteiligungen GmbH,
100
100
52
Siemens Healthcare Oy, Espoo/Finland
100
ANNUAL REPORT 2020 152
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264 b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
or legal circumstances.
5 No significant influence due to contractual arrangements
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
→ B.6 Notes to Consolidated Financial Statements
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
100
VIBECO - Virtual Buildings Ecosystem Oy,
Espoo/Finland
100
Flender S.R.L., Beersel/Belgium
100
Siemens Osakeyhtiö, Espoo/Finland
51
Siemens W.L.L., Manama/Bahrain
100
Siemens Mobility Oy, Espoo/Finland
100
VVK Versicherungs-Vermittlungs- und
Verkehrs-Kontor GmbH, Vienna/Austria
1 Control due to a majority of voting rights.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
100
Surrey/United Kingdom
100
100 13
Siemens Industry Software ULC, Vancouver/Canada
Siemens Logistics Ltd., Oakville/Canada
Siemens Pension Funding Limited, Frimley,
100
Surrey/United Kingdom
Siemens Pension Funding (General) Limited, Frimley,
100
Siemens Healthcare Limited, Oakville/Canada
100
Siemens Mobility Limited, London/United Kingdom
100
Siemens Financial Ltd., Oakville/Canada
100
100
Siemens Canada Limited, Oakville/Canada
Siemens Industry Software Simulation and Test
Limited, Frimley, Surrey/United Kingdom
10013
Mentor Graphics (Canada) ULC, Vancouver/Canada
100
100
EPOCAL INC., Toronto/Canada
Siemens Industry Software Limited, Frimley,
Surrey/United Kingdom
SIEMENS MOBILITY LIMITED, Oakville/Canada
100
Siemens plc, Frimley, Surrey/United Kingdom
100
100
Siemens Mobility S.A.S., Tenjo/Colombia
100
London/United Kingdom
100
Siemens Healthcare S.A.S., Tenjo/Colombia
Siemens Rail Systems Project Limited,
100
Siemens S.A., Santiago de Chile/Chile
100
London/United Kingdom
100
in %
Siemens Mobility SpA, Santiago de Chile/Chile
100
Siemens Healthcare Equipos Médicos Sociedad por
Acciones, Santiago de Chile/Chile
100
London/United Kingdom
Siemens Rail Automation Limited,
100
Nimbic Chile SpA, Las Condes/Chile
100
Frimley, Surrey/United Kingdom
Siemens Postal, Parcel & Airport Logistics Limited,
100
Flender SpA, Santiago de Chile/Chile
Siemens Rail Systems Project Holdings Limited,
The Preactor Group Limited, Frimley,
September 30, 2020
September 30, 2020
Electrium Sales Limited, Frimley,
Siemens Healthcare Limited, Frimley,
100
ByteToken, Ltd, Edinburgh/United Kingdom
100
Frimley, Surrey/United Kingdom
100
AIMSUN LIMITED, London/United Kingdom
Siemens Healthcare Diagnostics Products Ltd,
492
SIEMENS MOBILITY LLC, Dubai/United Arab Emirates
100
Frimley, Surrey/United Kingdom
Siemens Healthcare Diagnostics Manufacturing Ltd,
100
Masdar City/United Arab Emirates
Siemens Middle East Limited,
100
Surrey/United Kingdom
Siemens Healthcare Diagnostics Ltd., Frimley,
492
Masdar City/United Arab Emirates
Siemens Industrial LLC,
100
Siemens Financial Services Ltd., Stoke Poges,
Buckinghamshire/United Kingdom
Surrey/United Kingdom
100
Surrey/United Kingdom
100
Equity interest
Equity interest
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 2020 156
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
or legal circumstances.
5 No significant influence due to contractual arrangements
in %
4 No control due to contractual arrangements or legal circumstances.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
100
Siemens Industry Software Computational Dynamics
Limited, Frimley, Surrey/United Kingdom
100
Flender Limited, Frimley, Surrey/United Kingdom
100
Dunblane/United Kingdom
100
Surrey/United Kingdom
FAST TRACK DIAGNOSTICS RESEARCH LIMITED,
Siemens Holdings plc, Frimley,
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
492
Surrey/United Kingdom
Siemens S.A., Tenjo/Colombia
September 30, 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 157
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264 b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
or legal circumstances.
5 No significant influence due to contractual arrangements
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
100
Mexico City/Mexico
100
Bytemark Canada Inc., Saint John/Canada
Siemens Inmobiliaria S.A. de C.V.,
100
Siemens Participações Ltda., São Paulo/Brazil
100
Mexico City/Mexico
Equity interest
in %
Equity interest
September 30, 2020
in %
DE/United States
100
Siemens Mobility S.A.C., Lima/Peru
Next47 Mid-Tier GP 2021, L.P., Wilmington,
100
Siemens Healthcare S.A.C., Surquillo/Peru
100
DE/United States
Next47 Mid-Tier GP 2020, L.P., Wilmington,
100
Siemens, S.A. de C.V., Mexico City/Mexico
100
Siemens Industry Software, S.A. de C.V.,
DE/United States
Siemens Servicios S.A. de C.V., Mexico City/Mexico
Next47 Mid-Tier GP 2019, L.P., Wilmington,
100
Mexico City/Mexico
100
Next47 Mid-Tier GP 2018, L.P., Wilmington,
DE/United States
Siemens Mobility S. de R.L. de C.V.,
100
Mexico City/Mexico
100
Next47 Inc., Wilmington, DE/United States
Siemens Logistics S. de R.L. de C.V.,
100
100
100
100
Siemens IT Services S.A., Buenos Aires/Argentina
Siemens Healthcare, Sociedad Anonima,
100
Siemens Industrial S.A., Buenos Aires/Argentina
100
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
100
Siemens Healthcare S.A., Buenos Aires/Argentina
100
Siemens S.A., Quito/Ecuador
Americas (105 companies)
100
Santo Domingo/Dominican Republic
Siemens Mobility, S.R.L.,
100
100
Siemens S.A., San José/Costa Rica
VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
100
Surrey/United Kingdom
100
San José/Costa Rica
Siemens Healthcare Diagnostics S.A.,
UltraSoc Technologies Limited, Frimley,
100
100
Antiguo Cuscatlán/El Salvador
100
Siemens Mobility S.A., Munro/Argentina
Mexico City/Mexico
Siemens Healthcare Servicios S. de R.L. de C.V.,
100
São Paulo/Brazil
Siemens Infraestrutura e Indústria Ltda.,
100
Mexico City/Mexico
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
100
São Caetano do Sul/Brazil
Siemens Industry Software Ltda.,
100
Siemens Mobility Soluções de Mobilidade Ltda.,
São Paulo/Brazil
Indústria de Trabajos Eléctricos S.A. de C.V.,
Ciudad Juárez/Mexico
São Paulo/Brazil
Siemens Healthcare Diagnósticos Ltda.,
100
Grupo Siemens S.A. de C.V., Mexico City/Mexico
100
Ltda., Canoas/Brazil
100
Siemens S.A., Guatemala/Guatemala
Iriel Indústria e Comercio de Sistemas Eléctricos
100
Siemens S.A., Antiguo Cuscatlán/El Salvador
100
100
10010
Dubai/United Arab Emirates
Stoke Poges, Buckinghamshire/United Kingdom
100
Mentor Graphics (Scandinavia) AB, Solna/Sweden
100
Siemens d.o.o., Ljubljana/Slovenia
100
Telecomunicación, Electrónica y Conmutación S.A.,
Madrid/Spain
100
SIPRIN s.r.o., Bratislava/Slovakia
100
Siemens s.r.o., Bratislava/Slovakia
100
Siemens S.A., Madrid/Spain
100
Siemens Mobility, s.r.o., Bratislava/Slovakia
100
Siemens Renting S.A., Madrid/Spain
100
Siemens Healthcare s.r.o., Bratislava/Slovakia
100
Siemens Rail Automation S.A.U., Tres Cantos/Spain
60
100
100
Siemens Logistics S. L. Unipersonal, Madrid/Spain
SIEMENS MOBILITY, S.L.U., Tres Cantos/Spain
SAT Systémy automatizacnej techniky spol. s.r.o.,
Bratislava/Slovakia
Siemens Healthcare d.o.o., Ljubljana/Slovenia
100
Siemens AB, Solna/Sweden
100
Mentor Graphics (Schweiz) AG, Zurich/Switzerland
03
Kenilworth/South Africa
100
BlueWatt engineering Sàrl, Lausanne/Switzerland
Linacre Investments (Pty) Ltd.,
100
Midrand/South Africa
100
Vizendo AB, Gothenburg/Sweden
KACO NEW ENERGY AFRICA (PTY) LTD,
100
100
Siemens Mobility AB, Solna/Sweden
Flender (Pty) Ltd, Johannesburg/South Africa
100
Siemens Industry Software AB, Solna/Sweden
100
Midrand/South Africa
100
Siemens Healthcare AB, Solna/Sweden
Crabtree South Africa Pty. Limited,
100
Siemens Financial Services AB, Solna/Sweden
100
Siemens Mobility d.o.o., Ljubljana/Slovenia
100
100
Bratislava/Slovakia
100
Arabia Electric Ltd. (Equipment),
100
Siemens Mobility LLC, Moscow/Russian Federation
70
Siemens Proprietary Limited, Midrand/South Africa
100
75
Siemens Mobility (Pty) Ltd, Randburg/South Africa
Siemens Healthcare Limited Liability Company,
Moscow/Russian Federation
100
SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD,
Centurion/South Africa
100
Vladivostok/Russian Federation
Siemens Finance and Leasing LLC,
in %
September 30, 2020
Equity interest
Equity interest
in %
September 30, 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
154
ANNUAL REPORT 2020
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
The Flender Employee Share Ownership Trust,
Johannesburg/South Africa
Jeddah/Saudi Arabia
51
Aimsun S.L., Barcelona/Spain
Siemens Industry Software S.L., Barcelona/Spain
100
Siemens Mobility d.o.o. Cerovac, Kragujevac/Serbia
100
100
100
Mentor Graphics (España) SL, Madrid/Spain
SIEMENS HEALTHCARE, S.L.U., Getafe/Spain
Siemens Holding S.L., Madrid/Spain
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Siemens d.o.o. Beograd, Belgrade/Serbia
1007
OEZ Slovakia, spol. s r.o.,
Flender d.o.o. Subotica, Subotica/Serbia
FLENDER IBERICA SL, Tres Cantos/Spain
51
Siemens Mobility Saudi Ltd, Al Khobar/Saudi Arabia
100
Tres Cantos/Spain
51
Siemens Ltd., Riyadh/Saudi Arabia
Fábrica Electrotécnica Josa, S.A.U.,
51
Siemens Healthcare Limited, Riyadh/Saudi Arabia
100
03
100
100
S'Mobility Employee Stock Ownership Trust,
100
100
Surrey/United Kingdom
100
MRX Technologies Limited, Frimley,
100% foreign owned subsidiary "Siemens Ukraine”,
Kiev/Ukraine
100
Surrey/United Kingdom
100
Istanbul/Turkey
Mentor Graphics (UK) Limited, Frimley,
Siemens Sanayi ve Ticaret Anonim Sirketi,
100
Surrey/United Kingdom
100
Istanbul/Turkey
Mendix Technology Limited, Frimley,
Siemens Mobility Ulasim Sistemleri Anonim Sirketi,
100
Surrey/United Kingdom
100
Materials Solutions Holdings Limited, Frimley,
100
Surrey/United Kingdom
100
LIGHTWORKS SOFTWARE LIMITED, Frimley,
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
Kiev/Ukraine
Preactor International Limited, Frimley,
100
Surrey/United Kingdom
Siemens Financial Services Holdings Ltd.,
100
Siemens Healthcare L.L.C.,
Siemens Healthcare FZ LLC,
Dubai/United Arab Emirates
573
SBS Pension Funding (Scotland) Limited Partnership,
Edinburgh/United Kingdom
100
Abu Dhabi/United Arab Emirates
Siemens Capital Middle East Ltd,
100
Surrey/United Kingdom
PSE Oil & Gas Limited, Frimley,
100
492
100
Surrey/United Kingdom
100
Abu Dhabi/United Arab Emirates
Project Ventures Rail Investments I Limited, Frimley,
Samateq FZ LLC, UAE,
100
Surrey/United Kingdom
Abu Dhabi/United Arab Emirates
Process Systems Enterprise Limited, Frimley,
PSE Software and Consulting L.L.C.,
100
SD (Middle East) LLC, Dubai/United Arab Emirates
Siemens Healthcare AG, Zurich/Switzerland
KACO New Enerji Limited Sirketi, Pendik/Turkey
Siemens Finansal Kiralama A.S., Istanbul/Turkey
Siemens Healthcare Saglik Anonim Sirketi,
Istanbul/Turkey
Surrey/United Kingdom
5 No significant influence due to contractual arrangements
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
100
Siemens Tanzania Ltd. i.L., Dar es Salaam/Tanzania,
United Republic of
75
100
Siemens Schweiz AG, Zurich/Switzerland
Siemens Healthcare Proprietary Limited, Halfway
House/South Africa
100
Siemens Mobility AG, Wallisellen/Switzerland
03
Siemens Healthcare Employee Share Ownership
Trust, Midrand/South Africa
100
Siemens Logistics AG, Zurich/Switzerland
03
Johannesburg/South Africa
100
Zurich/Switzerland
Siemens Employee Share Ownership Trust,
Siemens Industry Software GmbH,
03
Johannesburg/South Africa
or legal circumstances.
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
100
Lightwork Design Limited, Frimley,
Flender Mekanik Güc Aktarma Sistemleri Sanayi
ve Ticaret Anonim Sirketi, Istanbul/Turkey
100
Surrey/United Kingdom
100
Siemens S.A., Tunis/Tunisia
GYM Renewables Limited, Frimley,
100
Siemens Mobility S.A.R.L., Tunis/Tunisia
100
Surrey/United Kingdom
100
Flomerics Group Limited, Frimley,
in %
September 30, 2020
Equity interest
Equity interest
in %
Mentor Graphics Tunisia SARL, Tunis/Tunisia
September 30, 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 155
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264 b German Commercial Code.
100
10010
evosoft Hungary Szamitastechnikai Kft.,
100 10
NOTE 34 Subsequent events.
In October 2020, Siemens signed an agreement to sell
100% of its shares in Flender GmbH, including Siemens'
Wind Energy Generation business (Flender), both cur-
rently reported under Portfolio Companies. The purchase
price is €2 billion (enterprise value). The transaction is
subject to foreign-investment and antitrust approvals
and is expected to close in the first half of calendar year
2021. Flender will be presented as held for disposal and
discontinued operations starting in the first quarter of
fiscal 2021.
In November 2020, to fund its pension plan, Siemens
transferred its stake in Bentley Systems, Inc., measured at
FVTPL, to the Siemens Pension-Trust e. V. The contribu-
tion amounts to €1,146 million.
ANNUAL REPORT 2020 149
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
NOTE 35 List of subsidiaries and
associated companies pursuant
to Section 313 para. 2 of the
German Commercial Code
September 30, 2020
Kyros 65 GmbH, Munich
Kyros 66 GmbH, Munich
Equity interest
in %
1007
1007
September 30, 2020
Equity interest
in %
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
Mentor Graphics (Deutschland) GmbH, Munich
NEO New Oncology GmbH, Cologne
10010
100
respectively.
100
The Managing and Supervisory Boards of Siemens
Aktiengesellschaft and of Siemens Healthineers AG, a
publicly listed subsidiary of Siemens, provided as of
October 1, 2020, and September 30, 2020, respectively,
the declarations required under Section 161 of the Ger-
man Stock Corporation Act (AktG) and made them pub-
licly available on their company websites at ☐ www.
SIEMENS.COM/GCG-CODE and at ☐ www.CORPORATE.SIEMENS-
HEALTHINEERS.COM/INVESTOR-RELATIONS/CORPORATE-GOVERNANCE,
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Siemens Industry, Inc., Wilmington,
100
DE/United States
100
100
100
Siemens Logistics LLC, Wilmington, DE/United States
Siemens Medical Solutions USA, Inc., Wilmington,
DE/United States
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
NOTE 33 Corporate governance
Next47 GmbH, Munich
10010
Next47 Services GmbH, Munich
REMECH Systemtechnik GmbH, Unterwellenborn
RISICOM Rückversicherung AG, Grünwald
Siemens Bank GmbH, Munich
10010
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
ANNUAL REPORT 2020 158
100
100
100
Befund24 GmbH, Erlangen
Siemens Beteiligungen Europa GmbH, Munich
10010
85
Berliner Vermögensverwaltung GmbH, Berlin
Siemens Beteiligungen Inland GmbH, Munich
Atecs Mannesmann GmbH, Erlangen
10010
Alpha Verteilertechnik GmbH, Cham
100
10010
SUBSIDIARIES
Omnetric GmbH, Munich
100
Germany (112 companies)
Airport Munich Logistics and Services GmbH,
OPTIO Grundstücks-Vermietungsgesellschaft
mbH & Co. Objekt Tübingen KG, Grünwald
1009
100
Hallbergmoos
Projektbau-Arena-Berlin GmbH, Grünwald
10010
AIT Applied Information Technologies
GmbH & Co. KG, Stuttgart
R&S Restaurant Services GmbH, Munich
100
1009
AIT Verwaltungs-GmbH, Stuttgart
100 10
Next47 Fund 2018, L.P., Palo Alto, CA/United States
Next47 Fund 2019, L.P., Palo Alto, CA/United States
Next47 Fund 2020, L.P., Palo Alto, CA/United States
Next47 Fund 2021, L.P., Palo Alto, CA/United States
100
DE/United States
CD-adapco Battery Design LLC, Dover,
PETNET Solutions, Inc., Knoxville, TN/United States
100
DE/United States
502
Process Systems Enterprise Inc., Wilmington,
Corindus, Inc., Wilmington, DE/United States
100
DE/United States
100
Dedicated21maging LLC, Wilmington,
Siemens Capital Company LLC, Wilmington,
DE/United States
80
DE/United States
100
ECG Acquisition, Inc., Wilmington, DE/United States
63
501
PETNET Indiana, LLC, Indianapolis, IN/United States
PETNET Solutions Cleveland, LLC, Wilmington,
DE/United States
95
10010
100
Siemens S.A.C., Surquillo/Peru
100
Next47 TTGP, L.L.C., Wilmington, DE/United States
100
Aimsun Inc., New York, NY/United States
100
100
Omnetric Corp., Wilmington, DE/United States
Avatar Integrated Systems, Inc., Dover,
P.E.T.NET Houston, LLC, Austin, TX/United States
51
DE/United States
100
Building Robotics Inc., Wilmington, DE/United States
100
Bytemark Inc., Dover, DE/United States
100
10010
Siemens Corporation, Wilmington, DE/United States
ECG TopCo Holdings, LLC, Wilmington,
Siemens Government Technologies, Inc.,
J2 Innovations, Inc., Los Angeles, CA/United States
100
100
Mannesmann Corporation, New York,
NY/United States
100
Siemens Healthcare Diagnostics Inc., Los Angeles,
CA/United States
100
Mentor Graphics Corporation, Salem,
OR/United States
100
Siemens Healthcare Laboratory, LLC, Wilmington,
DE/United States
100
Mentor Graphics Global Holdings, LLC, Wilmington,
DE/United States
Siemens Industry Software Inc., Wilmington,
100
100
100
DE/United States
Siemens Financial, Inc., Wilmington,
Siemens Credit Warehouse, Inc., Wilmington,
DE/United States
75
DE/United States
100
eMeter Corporation, Wilmington, DE/United States
100
Siemens Electrical, LLC, Wilmington,
100
Enlighted, Inc., Wilmington, DE/United States
DE/United States
100
Executive Consulting Group, LLC, Wilmington,
DE/United States
100
Siemens Financial Services, Inc., Wilmington,
DE/United States
100
Falcon Sub Inc., Wilmington, DE/United States
Flender Corporation, Wilmington, DE/United States
1007
100
10010
Wilmington, DE/United States
Siemens Beteiligungen Management GmbH,
Kemnath
Siemens Healthineers AG, Munich
79
Siemens Spezial-Investmentaktiengesellschaft
mit TGV, Munich
100
Siemens Healthineers Beteiligungen GmbH & Co. KG,
Röttenbach
100
Siemens Technology Accelerator GmbH, Munich
10010
Siemens Healthineers Beteiligungen
Verwaltungs-GmbH, Röttenbach
Siemens Technopark Mülheim GmbH & Co. KG i.L.,
Grünwald
1007
1009
Siemens Healthineers Holding I GmbH, Röttenbach
100
Siemens Technopark Nürnberg GmbH & Co. KG,
Grünwald
1009
Siemens Healthineers Innovation GmbH & Co. KG,
Röttenbach
100
1007
Siemens Traction Gears GmbH, Penig
100
100
Siemens Private Finance
100 10
Versicherungsvermittlungsgesellschaft mbH, Munich
10010
Siemens Financial Services GmbH, Munich
10010
Siemens Project Ventures GmbH, Erlangen
10010
Siemens Fonds Invest GmbH, Munich
10010
Siemens Real Estate Consulting GmbH & Co. KG,
Munich
1009
Siemens Global Innovation Partners Management
GmbH, Munich
1007
Siemens Real Estate Consulting Management GmbH,
Grünwald
100
Siemens Healthcare Diagnostics Products GmbH,
Marburg
100
Siemens Healthcare GmbH, Munich
Siemens Real Estate GmbH & Co. KG, Kemnath
Siemens Real Estate Management GmbH, Kemnath
10010
10010
Siemens Trademark GmbH & Co. KG, Kemnath
Siemens Logistics GmbH, Constance
100 10
Siemensstadt Grundstücks-GmbH & Co. KG,
Grünwald
1009
Siemens Medical Solutions Health Services GmbH,
Grünwald
Siemensstadt Management GmbH, Grünwald
1007
100
Siemens Middle East Holding GmbH & Co. KG,
Grünwald
SILLIT Grundstücks-Verwaltungsgesellschaft mbH,
Munich
100
1007
Siemens Mobility GmbH, Munich
10010
Siemens Mobility Real Estate GmbH & Co. KG,
Grünwald
1009
Siemens Mobility Real Estate Management GmbH,
Grünwald
SIMAR Nordost Grundstücks-GmbH, Grünwald
SIMAR Nordwest Grundstücks-GmbH, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
SIMAR Süd Grundstücks-GmbH, Grünwald
Capta Grundstücks-Verwaltungsgesellschaft mbH,
Grünwald
100
Siemens Healthineers Innovation Verwaltungs-
GmbH, Röttenbach
Siemens Liquidity One, Munich
Siemens-Fonds S-8, Munich
1007
Siemens Trademark Management GmbH, Kemnath
1007
Siemens Immobilien GmbH & Co. KG, Grünwald
100⁹
Siemens Treasury GmbH, Munich
10010
Siemens Immobilien Management GmbH, Grünwald
1007
Siemens-Fonds C-1, Munich
100
Siemens Industriepark Karlsruhe GmbH & Co. KG,
Grünwald
Siemens-Fonds Pension Captive, Munich
100
1009
Siemens-Fonds S-7, Munich
100
Siemens Industry Software GmbH, Cologne
100
100
in %
1009
September 30, 2020
100⁹
Flender GmbH, Bocholt
100
Flender Industriegetriebe GmbH, Penig
100
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
Grünwald
100⁹
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
Grünwald
HaCon Ingenieurgesellschaft mbH, Hanover
ILLIT Grundstücksverwaltungs-Management GmbH,
Grünwald
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
Grünwald
100⁹
85
IPGD Grundstücksverwaltungs-Gesellschaft mbH,
Grünwald
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
Grünwald
1009
10010
100
1007
1009
1007
100
Equity interest
Dade Behring Grundstücks GmbH, Kemnath
Siemens Beteiligungen USA GmbH, Berlin
10010
100
Flender Beteiligungen Management GmbH, Munich
eos.uptrade GmbH, Hamburg
Siemens Beteiligungsverwaltung GmbH & Co. OHG,
Kemnath
1009,12
evosoft GmbH, Nuremberg
10010
Flender Beteiligungen GmbH & Co. KG, Munich
100
GmbH & Co. KG, Grünwald
10010
KACO new energy GmbH, Neckarsulm
Siemens Campus Erlangen Grundstücks-
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
Grünwald
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
100
ANNUAL REPORT 2020
150
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
September 30, 2020
Siemens Digital Logistics GmbH, Frankenthal
Siemens Finance & Leasing GmbH, Munich
Equity interest
in %
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
1 Control due to a majority of voting rights.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Siemens Campus Erlangen Verwaltungs-GmbH,
Grünwald
Kyros 54 GmbH, Munich
1007
KompTime GmbH, Munich
1009
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
Grünwald
10010
Kyros 51 Aktiengesellschaft, Munich
1009
1007
Siemens Campus Erlangen Objektmanagement
GmbH, Grünwald
100
Kyros 58 GmbH, Munich
1007
Kyros 62 GmbH, Munich
1007
1007
238
Orange Sironj Wind Power Private Limited,
New Delhi/India
46
Fluence Energy, LLC, Wilmington, DE/United States
50
Pune IT City Metro Rail Limited, Pune/India
27
CEF-L Holding, LLC, Wilmington, DE/United States
DeepHow Corp., Princeton, NJ/United States
Hickory Run Holdings, LLC, Wilmington,
DE/United States
206
Transparent Energy Systems Private Limited,
Pune/India
258
Panda Hummel Station Intermediate Holdings I LLC,
P.T. Jawa Power, Jakarta/Indonesia
50
Wilmington, DE/United States
32
BE C&I Solutions Holding Pte. Ltd.,
Panda Stonewall Intermediate Holdings I, LLC,
Singapore/Singapore
24
Wilmington, DE/United States
37
26
20
Zhenjiang Siemens Busbar Trunking Systems Co.
Ltd., Yangzhong/China
Zhi Dao Railway Equipment Ltd., Taiyuan/China
Bangalore International Airport Ltd., Bangalore/India
974
Power Automation Pte. Ltd., Singapore/Singapore
GNA 1 Geração de Energia S.A., São João da
Barra/Brazil
Zhuzhou/China
50
33
Micropower Comerc Energia S.A., São Paulo/Brazil
20
Smart Metering Solutions (Changsha) Co. Ltd.,
Changsha/China
49
MPC Serviços Energéticos 1A S.A, Navegantes/Brazil
48
Union Temporal Recaudo y Tecnologia,
Santiago de Cali/Colombia
Akuo Energy Dominicana, S.R.L,
Siemens Traction Equipment Ltd., Zhuzhou,
Santo Domingo/Dominican Republic
Tianjin ZongXi Traction Motor Ltd., Tianjin/China
Xi'An X-Ray Target Ltd., Xi'an/China
50
438
2013
50
33
DELARO, S.A.P.I. DE C.V., Mexico City/Mexico
298
50
49
ANNUAL REPORT 163
33
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
September 30, 2020
Equity interest
in %
Net income
in millions of €
Equity
in millions of €
Munipolis GmbH, Munich
565
71
1004,5
Kyros Beteiligungsverwaltung GmbH, Grünwald
N/A
N/A
1004,5
320
21
1004,5
BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
Erlapolis 20 GmbH, Munich
Germany (8 companies)
40
OTHER INVESTMENTS 11
7 Not consolidated due to immateriality.
PhSiTh LLC, New Castle, DE/United States
6 Significant influence due to contractual arrangements
or legal circumstances.
5 No significant influence due to contractual arrangements
Powerit Holdings, Inc., Seattle, WA/United States
218
PTG Holdings Company LLC, Dover, DE/United States
26
Rether networks, Inc., Berkeley, CA/United States
308
USARAD Holdings, Inc., Fort Lauderdale,
FL/United States
308
Wi-Tronix Group Inc., Dover, DE/United States
30
Asia, Australia (20 companies)
Exemplar Health (NBH) Partnership,
Melbourne/Australia
Forest Wind Holdings Pty Limited, Sydney/Australia
50
50
Forest Wind Investment Company (1) Pty Limited,
Sydney/Australia
50
PHM Technology Pty Ltd, Melbourne/Australia
378
DBEST (Beijing) Facility Technology Management
Co., Ltd., Beijing/China
25
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to contractual arrangements or legal circumstances.
or legal circumstances.
Shanghai Electric Power Generation Equipment Co.,
Ltd., Shanghai/China
Additional
Americas (19 companies)
C.1
Additional Information C.1 Responsibility Statement
Information
C.
PAGES 165-199
164
ANNUAL REPORT 2020
N/A No financial data available.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
12 Siemens AG is a shareholder with unlimited liability of this company.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
9 Exemption pursuant to Section 264 b German Commercial Code.
8 Not accounted for using the equity method due to immateriality.
7 Not consolidated due to immateriality.
53
(122)
4
298
92
Männedorf/Switzerland
5013
Padam Mobility S.A.S, Paris/France
388
TRIXELL SAS, Moirans/France
Responsibility Statement
25
To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit or loss of
the Group, and the Group Management Report, which
has been combined with the Management Report for
Munich, November 27, 2020
We have audited the consolidated financial statements of
Siemens Aktiengesellschaft, Berlin and Munich, and its
subsidiaries (the Group), which comprise the consoli-
dated statements of income and comprehensive income
for the fiscal year from October 1, 2019 to September 30,
2020, the consolidated statements of financial position
as of September 30, 2020, the consolidated statements
of cash flows and changes in equity for the fiscal year
from October 1, 2019 to September 30, 2020, and notes
to the consolidated financial statements, including a
summary of significant accounting policies. In addition,
we have audited the group management report of
Siemens Aktiengesellschaft, which is combined with the
management report of Siemens Aktiengesellschaft, for
the fiscal year from October 1, 2019 to September 30,
2020. In accordance with the German legal requirements
we have not audited the content of chapter 7 A.9.3 CORPO-
RATE GOVERNANCE STATEMENT of the Combined Management
Report, including chapter 7 c.4.2 of the Annual Report
2020 referred to in chapter 7 A.9.3.
Opinions
Group Management Report
the Consolidated Financial
Statements and of the
Report on the audit of
To Siemens Aktiengesellschaft, Berlin and Munich
Independent Auditor's Report
C.2
Additional Information → C.2 Independent Auditor's Report
ANNUAL REPORT 2020 166
Judith Wiese
Wiesz
Cedrik Neike
1004,5
Prof. Dr. Ralf P. Thomas
Jomal
Klaus Helmrich
Klous filmich
Matthias Rebellius
M. Rubelle's
Dr. Roland Busch
Rre
Joe Kaeser
The Managing Board
Siemens Aktiengesellschaft
Siemens Aktiengesellschaft, includes a fair review of the
development and performance of the business and
the position of the Group, together with a description
of the material opportunities and risks associated with
the expected development of the Group.
Awel Y Môr Offshore Wind Farm Limited, Swindon,
Wiltshire/United Kingdom
106
Eviop-Tempo A.E. Electrical Equipment
Manufacturers, Vassiliko/Greece
20
206,13
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
ANNUAL REPORT 2020
162
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
September 30, 2020
Equity interest
in %
Equity interest
September 30, 2020
in %
Guangzhou Suikai Smart Energy Co., Ltd.,
Guangzhou/China
35
Buitengaats C.V., Amsterdam/Netherlands
Tangier/Morocco
Energie Electrique de Tahaddart S.A.,
33
48
Cross London Trains Holdco 2 Limited,
London/United Kingdom
33
Parallel Graphics Ltd., Dublin/Ireland
574,8
Reindeer Energy Ltd., Bnei Berak/Israel
33
Five Estuaries Offshore Wind Farm Limited,
Swindon, Wiltshire/United Kingdom
25
Transfima GEIE, Milan/Italy
42 8,13
Transfima S.p.A., Milan/Italy
Brasol Participaçoes e Empreendimentos S.A., Brazil,
São Paulo/Brazil
Galloper Wind Farm Holding Company Limited,
Swindon, Wiltshire/United Kingdom
498
VAL 208 Torino GEIE, Milan/Italy
864,8,13
Lincs Renewable Energy Holdings Limited,
London/United Kingdom
50
KACO New Energy Co., Amman/Jordan
498
Temir Zhol Electrification LLP, Astana/Kazakhstan
49
Plessey Holdings Ltd., Frimley,
Surrey/United Kingdom
508
EGM Holding Limited, Marsaskala/Malta
25
0
Siemens Wiring Accessories Shandong Ltd.,
Zibo/China
OWP Butendiek GmbH & Co. KG, Bremen
100
Siemens Bangladesh Ltd., Dhaka/Bangladesh
100
Siemens Industry Software (Shanghai) Co., Ltd.,
Shanghai/China
100
Siemens Healthcare Ltd., Dhaka/Bangladesh
100
Siemens International Trading Ltd., Shanghai,
Shanghai/China
100
Siemens Industrial Limited, Dhaka/Bangladesh
Beijing Siemens Cerberus Electronics Ltd.,
Beijing/China
1007
Siemens Investment Consulting Co., Ltd.,
Beijing/China
100
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
Bayswater/Australia
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
100
SIEMENS RAIL AUTOMATION PTY. LTD.,
Siemens Healthineers Digital Technology
Siemens Healthcare Pty. Ltd., Melbourne/Australia
100
(Shanghai) Co., Ltd., Shanghai/China
100
Siemens Industry Software Pty Ltd,
Siemens Healthineers Ltd., Shanghai/China
100
Bayswater/Australia
100
Siemens Ltd., Bayswater/Australia
100
Siemens Industrial Automation Products Ltd.,
Chengdu, Chengdu/China
100
Siemens Mobility Pty Ltd, Bayswater/Australia
100
Siemens Industry Software (Beijing) Co., Ltd.,
Beijing/China
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
Siemens Manufacturing and Engineering Centre
Ltd., Shanghai/China
Bytemark Technology Solutions India Pvt Ltd,
51
Bangalore/India
100
Siemens Medium Voltage Switching Technologies
(Wuxi) Ltd., Wuxi/China
Enlighted Energy Systems Pvt Ltd, Chennai/India
100
85
Fast Track Diagnostics Asia Private Limited,
Siemens Mobility Electrification Equipment
(Shanghai) Co., Ltd., Shanghai/China
New Delhi/India
100
54
51
Siemens Mobility Equipment (China) Co., Ltd,
Flender Drives Private Limited, Kancheepuram,
Kancheepuram/India
100
Bytemark India LLP, Bangalore/India
100
Siemens Ltd., China, Beijing/China
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
ANNUAL REPORT 159
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
100
Equity interest
September 30, 2020
Siemens Logistics Automation Systems (Beijing) Co.,
Ltd, Beijing/China
in %
September 30, 2020
in %
100
AIS Design Automation Private Limited,
Bangalore/India
100
Equity interest
1007
J.R.B. Engineering Pty Ltd, Bayswater/Australia
Siemens Healthineers Diagnostics (Shanghai) Co.,
Ltd., Shanghai/China
SMI Holding LLC, Wilmington, DE/United States
100
UltraSoc Inc., Wilmington, DE/United States
100
Mentor Graphics (Shanghai) Electronic Technology
Co., Ltd., Shanghai/China
100
Siemens S.A., Montevideo/Uruguay
100
Dresser-Rand de Venezuela, S.A.,
Siemens Building Technologies (Tianjin) Ltd.,
Tianjin/China
70
Maracaibo/Venezuela, Bolivarian Republic of
100
Siemens Healthcare S.A., Caracas/Venezuela,
Siemens Business Information Consulting Co., Ltd,
Beijing/China
100
Bolivarian Republic of
100
1007
IBS Industrial Business Software (Shanghai), Ltd.,
Shanghai/China
DE/United States
6 Significant influence due to contractual arrangements
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Equity interest
Equity interest
September 30, 2020
in %
September 30, 2020
in %
Siemens Mobility, Inc, Wilmington, DE/United States
100
Camstar Systems Software (Shanghai) Company
Limited, Shanghai/China
100
Siemens Public, Inc., Iselin, NJ/United States
100
Siemens USA Holdings, Inc., Wilmington,
Flender Ltd., China, Tianjin/China
100
100
Siemens Rail Automation, C.A.,
Siemens Circuit Protection Systems Ltd., Shanghai,
Shanghai/China
75
100
Exemplar Health (NBH) 2 Pty Limited,
Bayswater/Australia
1007
Exemplar Health (NBH) Holdings 2 Pty Limited,
Siemens Finance and Leasing Ltd., Beijing/China
Siemens Financial Services Ltd., Beijing/China
100
100
Bayswater/Australia
100
Siemens Healthcare Diagnostics Manufacturing Ltd.,
Exemplar Health (NBH) Trust 2, Bayswater/Australia
100
Shanghai, Shanghai/China
100
Flender Pty. Ltd., Bayswater/Australia
100
Siemens Factory Automation Engineering Ltd.,
Beijing/China
100
Bayswater/Australia
Australia Hospital Holding Pty Limited,
Caracas/Venezuela, Bolivarian Republic of
100
Siemens Computational Science (Shanghai) Co., Ltd,
Dade Behring Hong Kong Holdings Corporation,
Tortola/Virgin Islands, British
Shanghai/China
100
100
Siemens Electrical Apparatus Ltd., Suzhou,
100
Suzhou/China
Asia, Australia (130 companies)
Siemens Electrical Drives (Shanghai) Ltd.,
Shanghai/China
100
Aimsun Pty Ltd, Sydney/Australia
100
Siemens Electrical Drives Ltd., Tianjin/China
85
100
Shanghai Pilot Free Trade Zone/China
100
Flomerics India Private Limited, Mumbai/India
September 30, 2020
in %
September 30, 2020
in %
Avatar Integrated Systems Kabushiki Kaisha,
Yokohama/Japan
100
Siemens Healthcare Limited, Taipei/Taiwan,
Province of China
100
Mentor Graphics Japan Co., Ltd., Tokyo/Japan
100
Siemens Industry Software (TW) Co., Ltd.,
Taipei/Taiwan, Province of China
100
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
Siemens Healthcare K.K., Tokyo/Japan
Siemens Limited, Taipei/Taiwan, Province of China
100
Equity interest
100
Equity interest
160
96
Siemens Mobility Limited, Hong Kong/Hong Kong
100
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
4 No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements
or legal circumstances.
6 Significant influence due to contractual arrangements
or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
ANNUAL REPORT 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
Siemens K.K., Tokyo/Japan
Dresser-Rand (Thailand) Limited, Rayong/Thailand
100
2
Europe, Commonwealth of Independent States (C.I.S.),
Africa, Middle East (without Germany) (1 company)
Siemens Gas and Power Holding B.V., Zoeterwoude/Netherlands
N/A
N/A
1004,5
SPT Beteiligungen GmbH & Co. KG, Grünwald
316
5
904,5
66
2
1004,5
466
102
235
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
Project Ventures Butendiek Holding GmbH, Munich
N/A
N/A
Americas (2 companies)
Bentley Systems, Incorporated, Wilmington, DE/United States
ChargePoint, Inc., Campbell, CA/United States
100
Siemens PLM Software Computational Dynamics
K.K., Yokohama/Japan
100
Siemens Healthcare Limited, Bangkok/Thailand
Siemens Limited, Bangkok/Thailand
100
100
Avatar Integrated Systems Korea LLC, Bundang-gu,
Seongnam-si, Gyeonggi-do/Korea, Republic of
Siemens Logistics Automation Systems Ltd.,
Acrorad Co., Ltd., Okinawa/Japan
100
100
Mentor Graphics (Korea) LLC, Bundang-gu,
Seongnam-si, Gyeonggi-do/Korea, Republic of
Siemens Mobility Limited, Bangkok/Thailand
5 No significant influence due to contractual arrangements
or legal circumstances.
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
1 Control due to a majority of voting rights.
Bangkok/Thailand
100
Siemens Logistics Limited, Hong Kong/Hong Kong
100
100
Siemens Factoring Private Limited,
Siemens Shanghai Medical Equipment Ltd.,
Navi Mumbai/India
100
Shanghai/China
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Shenzhen/China
Siemens Financial Services Private Limited,
Mumbai/India
100
100
Siemens Healthcare Private Limited, Mumbai/India
100
Siemens Signalling Co., Ltd., Xi'an/China
70
Siemens Healthineers India LLP, Bangalore/India
100
Dalian/China
100
Bangalore/India
Siemens Sensors & Communication Ltd.,
100
Siemens Mobility Rail Equipment (Tianjin) Ltd.,
Tianjin/China
100
Mentor Graphics (India) Private Limited,
New Delhi/India
100
Siemens Mobility Technologies (Beijing) Co., Ltd,
Beijing/China
100
Siemens Standard Motors Ltd., Yizheng/China
Mentor Graphics (Sales and Services) Private
Limited, New Delhi/India
Siemens Numerical Control Ltd., Nanjing,
Nanjing/China
80
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
Mumbai/India
100
Siemens Power Automation Ltd., Nanjing/China
100
Preactor Software India Private Limited,
100
251
100
55
TASS International Co. Ltd., Shanghai/China
100
Siemens Technology and Services Private Limited,
Navi Mumbai/India
100
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
P.T. Siemens Indonesia, Jakarta/Indonesia
100
Siemens Industry Software Limited,
Hong Kong/Hong Kong
100
PT Siemens Healthineers Indonesia,
Jakarta/Indonesia
100
Siemens Limited, Hong Kong/Hong Kong
100
PT Siemens Mobility Indonesia, Jakarta/Indonesia
100
Navi Mumbai/India
100
Siemens Rail Automation Pvt. Ltd.,
Siemens Industry Software (India) Private Limited,
New Delhi/India
100
Siemens Technology Development Co.,
Ltd. of Beijing, Beijing/China
90
Siemens Industry Software Computational Dynamics
India Pvt. Ltd., Bangalore/India
100
Siemens Venture Capital Co., Ltd., Beijing/China
Siemens Switchgear Ltd., Shanghai, Shanghai/China
100
65
51
13
Siemens Logistics India Private Limited,
100
Navi Mumbai/India
100
Siemens X-Ray Vacuum Technology Ltd., Wuxi,
Wuxi/China
Siemens Limited, Mumbai/India
In our opinion, on the basis of the knowledge obtained in
the audit,
or legal circumstances.
by the International Accounting Standards Board
(IASB), and, in compliance with these requirements,
give a true and fair view of the assets, liabilities and
financial position of the Group as of September 30,
2020 and of its financial performance for the fiscal
year from October 1, 2019 to September 30, 2020, and
→ the accompanying group management report as a
whole provides an appropriate view of the Group's
position. In all material respects, this group manage-
ment report is consistent with the consolidated
financial statements, complies with German legal
requirements and appropriately presents the oppor-
tunities and risks of future development. Our opinion
on the group management report does not cover the
content of the Corporate Governance Statement re-
ferred to above.
100
Aimsun Pte Ltd, Singapore/Singapore
50
GuD Herne GmbH, Essen
100
Siemens, Inc., Manila/Philippines
IFTEC GmbH & Co. KG, Leipzig
498
100
498
egrid applications & consulting GmbH, Kempten
100
Siemens Healthcare Limited, Auckland/New Zealand
Siemens Healthcare Inc., Manila/Philippines
498
FEAG Fertigungscenter für Elektrische Anlagen
GmbH, Erlangen
Cologne
50
100
258
Ludwig Bölkow Campus GmbH, Taufkirchen
100
Singapore/Singapore
508
LIB Verwaltungs-GmbH, Leipzig
Flender Pte. Ltd., Singapore/Singapore
Siemens Industry Software Pte. Ltd.,
Berlin
100
Siemens Healthcare Pte. Ltd., Singapore/Singapore
INPRO Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH,
100
Mentor Graphics Asia Pte Ltd, Singapore/Singapore
258
100
DKS Dienstleistungsgesellschaft f. Kommunikations-
anlagen des Stadt- und Regionalverkehrs mbH,
100
Kuala Lumpur/Malaysia
Dresser-Rand Asia Pacific Sdn. Bhd.,
Germany (24 companies)
100
Siemens Mobility Ltd., Seoul/Korea, Republic of
AND JOINT VENTURES
100
100
ASSOCIATED COMPANIES
100
Seoul/Korea, Republic of
Siemens Industry Software Ltd.,
100
Siemens Ltd., Ho Chi Minh City/Viet Nam
Siemens Ltd. Seoul, Seoul/Korea, Republic of
Alchemist Accelerator Europe Fund I GmbH & Co. KG,
Grünwald
418
Siemens Healthcare Sdn. Bhd., Petaling
Siemens Mobility Sdn. Bhd., Kuala Lumpur/Malaysia
Siemens (N.Z.) Limited, Auckland/New Zealand
100
30
Curagita Holding GmbH, Heidelberg
Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
100
50
Caterva GmbH, Pullach i. Isartal
Siemens Industry Software Sdn. Bhd., George Town,
Pulau Pinang/Malaysia
498
BELLIS GmbH, Braunschweig
100
Jaya/Malaysia
258
ATS Projekt Grevenbroich GmbH, Schüttorf
Siemens Logistics PTE. LTD., Singapore/Singapore
100
MetisMotion GmbH, Munich
238
21
Screenpoint Medical B.V., Nijmegen/Netherlands
50
Valeo Siemens eAutomotive GmbH, Erlangen
Zoetermeer/Netherlands
458
52
Sternico GmbH, Wendeburg
56
Siemens EuroCash, Munich
50
50
Dordrecht/Netherlands
35
Locomotive Workshop Rotterdam B.V.,
50
Veja Mate Offshore Project GmbH, Oststeinbek
WUN H2 GmbH, Wunsiedel
20
→ the accompanying consolidated financial statements
comply, in all material respects, with the International
Financial Reporting Standards (IFRSS) as adopted
by the European Union (EU), and the additional
requirements of German commercial law pursuant
to Sec. 315e (1) HGB ["Handelsgesetzbuch": German
Commercial Code] as well as with full IFRSS as issued
44
448
Aspern Smart City Research GmbH, Vienna/Austria
Aspern Smart City Research GmbH & Co KG,
Vienna/Austria
40
Armpower CJSC, Yerevan/Armenia
208
Eemshaven/Netherlands
Europe, Commonwealth of Independent States
(C.I.S.), Africa, Middle East (without Germany)
(42 companies)
ZeeEnergie Management B.V.,
206,13
ZeeEnergie C.V., Amsterdam/Netherlands
458
50
Ural Locomotives Holding Besloten Vennootschap,
's-Gravenhage/Netherlands
Siemens Energy AG, Munich
100
Infraspeed Maintainance B.V.,
508,13
7 Not consolidated due to immateriality.
6 Significant influence due to contractual arrangements
or legal circumstances.
or legal circumstances.
5 No significant influence due to contractual arrangements
4 No control due to contractual arrangements or legal circumstances.
3 Control due to contractual arrangements to determine the direction
of the relevant activities.
8 Not accounted for using the equity method due to immateriality.
9 Exemption pursuant to Section 264 b German Commercial Code.
2 Control due to rights to appoint, reassign or remove members
of the key management personnel.
100
Siemens Pte. Ltd., Singapore/Singapore
49
MeVis BreastCare GmbH & Co. KG, Bremen
100
Siemens Mobility Pte. Ltd., Singapore/Singapore
1 Control due to a majority of voting rights.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements;
the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder
with unlimited liability of this company.
Zoetermeer/Netherlands
Infraspeed EPC Consortium V.O.F.,
33
Nordlicht Holding GmbH & Co. KG, Frankfurt
Nordlicht Holding Verwaltung GmbH, Frankfurt
208
Eemshaven/Netherlands
Buitengaats Management B.V.,
MeVis BreastCare Verwaltungsgesellschaft mbH,
Bremen
in %
Equity interest
September 30, 2020
Equity interest
in %
September 30, 2020
Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
ANNUAL REPORT 161
338
100
498
358
40
49
WS Tech Energy Global S.L., Viladecans/Spain
Stavro Holding I AB, Stockholm/Sweden
20
SMATRICS GmbH & Co KG, Vienna/Austria
208
E-Mobility Provider Austria GmbH, Vienna/Austria
31
26
Rousch (Pakistan) Power Ltd., Islamabad/Pakistan
000 Transconverter, Moscow/Russian Federation
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
Nertus Mantenimiento Ferroviario y Servicios S.A.,
Madrid/Spain
100
Siemens Healthcare Limited,
PSE Korea Ltd, Daejeon/Korea, Republic of
100
Ho Chi Minh City/Viet Nam
100
Siemens Healthineers Ltd., Seoul/Korea, Republic of
Meomed s.r.o., Prerov/Czech Republic
478
514
50
Certas AG, Zurich/Switzerland
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that
our audit has not led to any reservations relating to the
legal compliance of the consolidated financial state-
ments and of the group management report.
Basis for the opinions
We conducted our audit of the consolidated financial
statements and of the group management report in ac-
cordance with Sec. 317 HGB and the EU Audit Regulation
(No 537/2014, referred to subsequently as "EU Audit
Regulation") and in compliance with German Generally
Accepted Standards for Financial Statement Audits pro-
mulgated by the Institut der Wirtschaftsprüfer [Institute
of Public Auditors in Germany] (IDW). In conducting the
audit of the consolidated financial statements we also
complied with International Standards on Auditing (ISA).
Our responsibilities under those requirements, principles
and standards are further described in the "Auditor's
responsibilities for the audit of the consolidated financial
statements and of the group management report" sec-
tion of our auditor's report. We are independent of the
group entities in accordance with the requirements of
European law and German commercial and professional
law, and we have fulfilled our other German professional
ANNUAL REPORT 2020 167
responsibilities in accordance with these require-
ments. In addition, in accordance with Art. 10 (2) f) of the
EU Audit Regulation, we declare that we have not pro-
vided non-audit services prohibited under Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide
a basis for our opinions on the consolidated financial
statements and on the group management report.
Key audit matters in the audit of the
consolidated financial statements
Key audit matters are those matters that, in our profes-
sional judgment, were of most significance in our audit
of the consolidated financial statements for the fiscal
year from October 1, 2019 to September 30, 2020. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in
forming our opinion thereon; we do not provide a sepa-
rate opinion on these matters.
Below, we describe what we consider to be the key audit
matters:
Additional Information → C.2 Independent Auditor's Report
SPIN-OFF OF THE SIEMENS ENERGY BUSINESS
Reasons why the matter was determined to be a key
audit matter: The spin-off and public listing of the
Siemens Gas and Power business, which was made a
legally independent entity under Siemens Energy AG
prior to the spin-off, including the shares previously held
by the Siemens Group comprising an interest of around
67% in the listed company Siemens Gamesa Renewable
Energy S.A., Spain, and its subsidiaries ("SGRE") (herein-
after "Siemens Energy Business"), was completed at the
end of September 2020. As consideration for the spin-
off, Siemens AG transferred 55% of the capital stock of
Siemens Energy AG existing after the spin-off capital in-
crease and in-kind capital increase to the shareholders of
Siemens AG. The remaining 45% of the capital stock of
Siemens Energy AG was initially held by Siemens AG and
a wholly owned subsidiary when the spin-off became
effective. A share of 9.9% of Siemens Energy AG's capital
stock was transferred by Siemens AG as a contribution to
Siemens Pension-Trust e. V., Germany, in connection with
the spin-off.
The accounting for the spin-off of the Siemens Energy
Business was a key audit matter due to the complexity
of the transaction and the associated significant risk of
material misstatement, the estimation uncertainties and
judgment involved in the measurements performed as
well as the overall significant impact on the assets, lia-
bilities, financial position and financial performance of
the Group. First of all, the classification of the Siemens
Energy Business as assets held for sale and as discontin-
ued operations since March 31, 2020 was of key signifi-
cance for our audit due to the complexity. In addition, the
recognition of the spin-off liability pursuant to IFRIC 17,
Distributions of Non-cash Assets to Owners, its measure-
ment as of September 25, 2020, and the disposal of this
spin-off liability and of the carrying amount of the assets
and liabilities held for sale as well as the addition of the
45% investment in Siemens Energy AG, including the rec-
ognition of the difference as a spin-off result in the in-
come statement, is subject to a significant risk due to the
complexity of the measurements.
Auditor's response: As part of our audit of the consoli-
dated financial statements, we first evaluated manage-
ment's assessment of fulfillment of the criteria pursuant
to IFRS 5, Non-current Assets Held for Sale and Discontin-
ued Operations, for classification as held for sale and dis-
continued operations as of March 31, 2020. For this pur-
pose, we obtained an understanding of the planned
contractual agreements and examined the probability of
the shareholders giving their approval at the extraordinary
shareholders' meeting, the progress of the carve-outs of
the Siemens Gas and Power Business and the decisions by
corporate bodies on the capitalization of the spin-off
group. In addition, we evaluated the planned legal execu-
tion of the spin-off including the Deconsolidation Agree-
ment as to whether the requirements of commercial and
stock corporation law are fulfilled with regard to the loss
of control and thus the deconsolidation of the Siemens
Energy Business when the spin-off becomes effective pur-
suant to IFRS 10, Consolidated Financial Statements.
We also evaluated the identification of the business activ-
ities falling within the scope of IFRS 5 using the underly-
ing contracts and assessed the implementation of the
classification as held for sale and as discontinued opera-
tions in the consolidation system, including adjustments
ANNUAL REPORT 2020 168
Interessengemeinschaft TUS,
238
BioMensio Oy, Tampere/Finland
Based on the aforementioned uncertainties, our audit
procedures with respect to asset retirement obligations
focused on the remediation and environmental protection
liabilities in connection with the decommissioning of the
facilities in Hanau, Germany (Hanau facilities), as well as
for the nuclear research and service center in Karlstein,
Germany (Karlstein facilities). Our audit procedures in-
cluded, among others, assessing the estimated costs for
the construction, operation and decommissioning of the
final storage facility, the appropriateness as audit evi-
dence of an independent expert's report commissioned
by management with regard to the estimated price infla-
tion, evaluating the valuation methods used by drawing
on the expertise of our valuation specialists, and assess-
ing the significant estimates resulting from the long-term
nature of the related obligations. Through inquiries of
persons entrusted with the matter and inspections of in-
ternal and external documents, we evaluated manage-
ment's assessment whether, as of September 30, 2020,
Siemens continues to be subject to the German Atomic
Energy Act ("Atomgesetz"), whereby radioactive waste
We further considered alleged or substantiated non-com-
pliance with legal provisions, official regulations and
internal company policies (compliance violations) by
inspecting internal and external statements on specific
matters, obtaining written statements from external
legal advisors, and by inquiring of the compliance orga-
nization. In this regard, among other procedures, we
evaluated the conduct and results of internal investiga-
tions by inspecting internal reports and the measures
taken to remediate identified weaknesses, and assessed
whether any risks have to be accounted for in the consol-
idated financial statements.
management's estimates of the expected cash outflows,
our audit procedures included inquiring of management
and other persons within the Group entrusted with these
matters, obtaining written statements from in-house legal
counsels with respect to the assessment of estimated cash
outflows and their probability, obtaining confirmations
from external legal advisors and evaluating internal state-
ments concerning the accounting treatment in the con-
solidated financial statements. Furthermore, we exam-
ined legal consulting expense accounts for any indications
of legal matters not yet considered.
Auditor's response: During our audit of the financial
reporting of proceedings out of or in connection with
alleged compliance violations, we examined the pro-
cesses implemented by Siemens for identifying, assess-
ing and accounting for legal and regulatory proceedings.
To determine what potentially significant pending legal
proceedings or claims asserted are known and to assess
PROVISIONS FOR PROCEEDINGS OUT OF
OR IN CONNECTION WITH ALLEGED COMPLIANCE
VIOLATIONS AS WELL AS PROVISIONS FOR ASSET
RETIREMENT OBLIGATIONS
Reference to related disclosures: With regard to the rec-
ognition and measurement policies applied in account-
ing for construction contracts, refer to > NOTE 2 MATERIAL
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the
notes to the consolidated financial statements. With re-
spect to contract assets and liabilities as well as provisions
for order related losses and risks, refer to 7 NOTE 10 CON-
TRACT ASSETS AND LIABILITIES and 7 NOTE 18 PROVISIONS in the
notes to the consolidated financial statements.
ANNUAL REPORT 2020 171
Reasons why the matter was determined to be a key
audit matter: We considered the accounting for provi-
sions for proceedings out of or in connection with alleged
compliance violations, including allegations of corrup-
tion and antitrust violations, and for asset retirement
obligations to be a key audit matter. These matters are
subject to inherent uncertainties and require estimates
that could have a significant impact on the recognition
and measurement of the respective provision and, ac-
cordingly, on assets, liabilities and financial performance.
Proceedings out of or in connection with alleged compli-
ance violations are subject to uncertainties because they
frequently involve complex legal issues and accordingly,
considerable management judgment, in particular when
determining whether and in what amount a provision is
required to account for the risks. The uncertainties and
estimates with respect to asset retirement obligations
pertain especially to the estimated costs of interim and
final nuclear waste storage, the estimated time frame
over which cash outflows are expected, and the relevant
discount rates.
Additional Information → C.2 Independent Auditor's Report
We also examined the accounting effects resulting from
the first-time application of IFRIC 23, Uncertainty over
Income Tax Treatments.
Furthermore, we evaluated the disclosures on proceed-
ings out of or in connection with alleged compliance vio-
lations as well as on asset retirement obligations in the
notes to the consolidated financial statements.
Our audit procedures did not lead to any reservations
relating to the accounting for proceedings out of or in
connection with alleged compliance violations as well as
for asset retirement obligations.
Reference to related disclosures: With regard to the rec-
ognition and measurement policies applied in account-
ing for provisions, refer to > NOTE 2 MATERIAL ACCOUNTING
POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the notes to
the consolidated financial statements. With respect to
proceedings out of or in connection with alleged compli-
ance violations, refer to > NOTE 22 LEGAL PROCEEDINGS. With
respect to the uncertainties and estimates relating to
asset retirement obligations, refer to > NOTE 18 PROVISIONS.
UNCERTAIN TAX POSITIONS AND DEFERRED TAXES
Reasons why the matter was determined to be a key
audit matter: Siemens operates in numerous countries
with different local tax legislation. The accounting for un-
certain tax positions as well as deferred taxes requires
management to exercise considerable judgment and
make estimates and assumptions, and was therefore a key
audit matter. In particular, this affects the measurement
and completeness of uncertain tax positions, the recover-
ability of deferred tax assets as well as the measurement
and completeness of deferred tax liabilities. In addition,
management's assessments regarding the tax implica-
tions of the COVID-19 pandemic, including the accounting
treatment of tax relief, were of particular significance.
Auditor's response: With the assistance of internal tax
specialists who have knowledge of relevant local tax law,
we examined the processes installed by management and
obtained an understanding of internal controls for the
identification, recognition and measurement of tax posi-
tions. In the course of our audit procedures relating to
uncertain tax positions, we evaluated whether manage-
ment's assessment of the tax implications of significant
business transactions or events in fiscal year 2020, which
could result in uncertain tax positions or influence the
measurement of existing uncertain tax positions, was in
compliance with tax law. In particular, this includes the
tax implications arising from the acquisition or disposal of
investments, corporate (intragroup) restructuring activi-
ties, carve-outs, especially in preparation of the spin-off
of the Siemens Energy Business, findings of tax audits and
cross-border matters, such as determining transfer prices.
In order to assess measurement and completeness, we
also obtained confirmations from external tax advisors
and inspected expert legal or tax opinions and assess-
ments commissioned by management. Further, we eval-
uated management's assessments with respect to the
prospects of success of appeal and tax court proceedings
by inquiring of the employees of the Siemens tax depart-
ment and by considering current tax case law.
In assessing the recoverability of deferred tax assets,
we above all analyzed management's assumptions with
respect to tax planning strategies and projected future
taxable income, particularly in view of the implications of
the COVID-19 pandemic, and compared them to internal
business plans. In the course of our audit procedures re-
garding deferred tax liabilities, we examined in particular
the assumptions regarding reinvestment of subsidiaries'
retained profits for an indefinite period and assessed
these taking into account dividend planning.
Our audit procedures did not lead to any reservations
relating to the accounting for uncertain tax positions and
deferred taxes.
Our audit procedures did not lead to any reservations re-
lating to revenue recognition on construction contracts.
resulting from decommissioning a nuclear facility must
be reprocessed without causing damage and be deliv-
ered to a government-approved final storage facility.
Additional Information → C.2 Independent Auditor's Report
As part of our assessment of the impairment test – to be
performed directly before the classification as held for
sale - for goodwill contained in the spin-off group and re-
lating to the previous groups of cash-generating units Gas
and Power, SGRE Operation and Maintenance and SGRE
Wind Turbines as well as the impairment test for the entire
spin-off group as of March 31, 2020 and June 30, 2020, we,
among other procedures, obtained an understanding of
the process for the preparation of the multi-year plan in
the Group and for the cash-generating units. In addition,
we evaluated the methodology and the valuation models
for performing the impairment tests with the assistance of
internal specialists who have expertise in business valua-
tion. We also assessed the stated future cash inflows by,
among other procedures, comparing this information
against the five-year plan prepared by management as
well as by comparing the internal growth and earnings
forecasts with general and industry-specific market expec-
tations and significant competitors. In addition, we exam-
ined the underlying assumptions and parameters, walked
through the sensitivity analyses prepared by management
and performed supplementary sensitivity analyses of our
own to account for the existing forecast uncertainties.
Due to the large contract volume and risk profile, in par-
ticular with respect to the developments of the power
generation markets, our audit procedures especially
focused on large contracts for the turnkey construction
of power plants, high-voltage-direct-current solutions,
the delivery of high-speed and commuter trains, and the
construction of onshore and offshore wind farms.
-
Additional Information → C.2 Independent Auditor's Report
to the consolidation entries and prior-year figures in the
consolidated statement of income and consolidated
statement of cash flows, drawing on the expertise of in-
ternal IT specialists.
Reference to related disclosures: With regard to the recog-
nition and measurement policies applied in accounting for
income taxes, refer to > NOTE 2 MATERIAL ACCOUNTING POLICIES
AND CRITICAL ACCOUNTING ESTIMATES in the notes to the consol-
idated financial statements. With respect to disclosures for
deferred tax assets and liabilities, refer to > NOTE 7 INCOME
TAXES in the notes to the consolidated financial statements.
In connection with the recognition of the spin-off liabil-
ity, we assessed the methodology of the independent
expert engaged by management, the valuation models
applied and the assumptions and estimates subject to
judgment used in determining the fair value of the spin-
off liability pursuant to IFRIC 17, Distributions of Non-cash
Assets to Owners, drawing on the expertise of our valua-
tion specialists and taking into account the audit evi-
dence obtained from the abovementioned impairment
tests. This also included assessing the appropriateness as
audit evidence of the expert opinion commissioned by
management from an independent expert.
Finally, we examined the accounting for the disposal of
the remeasured spin-off liability and the carrying amount
of the assets and liabilities held for sale as well as the
addition of the 45% investment in Siemens Energy AG
and the subsequent contribution of 9.9% to Siemens
Pension-Trust e. V. and their presentation in the consoli-
dated financial statements. Our audit procedures partic-
ularly included assessing the determination of the fair
value of the spin-off liability and of the investment held
in Siemens Energy AG as an associate as of September 25,
2020 on the basis of the opinion prepared by the inde-
pendent expert and the calculation of the disposal result.
Additional audit procedures were performed related to
management's assessment of the recoverability of the
35.1% investment in Siemens Energy accounted for as an
associate as of September 30, 2020.
In addition, drawing on the expertise of IT specialists, we
evaluated the IT related implementation of the deconsol-
idation in the consolidation systems as well as the meth-
odological, mathematical and accounting approach to
the derecognition calculation in accordance with IFRS 10.
Furthermore, we evaluated the disclosures on the spin-
off of the Siemens Energy Business provided in the notes
to the consolidated financial statements.
Our audit procedures did not lead to any reservations re-
lating to the spin-off of the Siemens Energy Business.
Reference to related disclosures: With regard to the rec-
ognition and measurement policies applied for the spin-off
of the Siemens Energy Business, refer to > NOTE 2 MATERIAL
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the
notes to the consolidated financial statements. An expla-
nation of the transaction and disclosures on the deconsol-
idation and spin-off result are presented in > NOTE 3 ACQUI-
SITIONS, DISPOSITION AND DISCONTINUED OPERATIONS in the notes
to the consolidated financial statements.
REVENUE RECOGNITION
ON CONSTRUCTION CONTRACTS
Reasons why the matter was determined to be a key au-
dit matter: The Group conducts a significant portion of its
business in continuing and discontinued operations under
construction contracts, particularly in the Gas and Power
business and at Siemens Gamesa Renewable Energy (until
the spin-off became effective) as well as in the Mobility
business. Revenue from long-term construction contracts
is recognized in accordance with IFRS 15, Revenue from
ANNUAL REPORT 2020
169
Additional Information → C.2 Independent Auditor's Report
Contracts with Customers, generally over time under
the percentage-of-completion method. We consider the
accounting for construction contracts to be an area posing
a significant risk of material misstatement (including the
potential risk of management override of internal con-
trols) and accordingly a key audit matter, because manage-
ment's assessments significantly impact the determination
of the extent of progress towards completion. These assess-
ments include, in particular, the scope of deliveries and
services required to fulfill contractually defined obligations,
total estimated contract costs, remaining costs to comple-
tion and total estimated contract revenues, as well as con-
tract risks including technical, political, regulatory and legal
risks. Revenues, total estimated contract costs and profit
recognition may deviate significantly from original esti-
mates based on new knowledge about cost overruns and
changes in project scope over the term of a construction
contract. Furthermore, in fiscal year 2020 the effects of the
coronavirus pandemic (COVID-19) on the project business,
such as delays in project execution due to access restric-
tions at customer sites or short-term interruptions to supply
chains as well as the invocation of force majeure or change
in law clauses with regard to compensation for damages or
contractual penalties for delays in delivery and their ac-
counting treatment were of key significance for our audit.
Auditor's response: As part of our audit, we obtained an
understanding of the Group's internally established
methods, processes and control mechanisms for project
management in the bid and execution phase of construc-
tion contracts. In this regard, we assessed the design and
operating effectiveness of the accounting-related inter-
nal controls in the project business by obtaining an un-
derstanding of business transactions specific to construc-
tion contracts, from the initiation of the transaction
through presentation in the consolidated financial state-
ments. We also tested internal controls on management
level including project reviews and controls addressing
the timely assessment of changes in cost estimates and
the timely and complete recognition of such changes in
the project calculation.
As part of our substantive audit procedures, we evaluated
management's estimates and assumptions based on a risk-
based selection of a sample of contracts. Our sample par-
ticularly included projects that are subject to significant
future uncertainties and risks, such as fixed-price or turn-
key projects, projects with complex technical require-
ments or with a large portion of materials and services to
be provided by suppliers, subcontractors or consortium
partners, cross-border projects, projects in regions partic-
ularly affected by the COVID-19 pandemic and projects
with changes in cost estimates, delays and/or low or neg-
ative margins. Our audit procedures included, among
others, review of the contracts and their terms and condi-
tions including contractually agreed partial deliveries and
services, termination rights, penalties for delay and
breach of contract as well as liquidated damages. In order
to evaluate whether revenues were recognized on an ac-
crual basis for the selected projects, we analyzed billable
revenues and corresponding cost of sales to be recog-
nized in the statement of income in the reporting period
considering the extent of progress towards completion,
and examined the accounting for the associated items
in the statement of financial position. Considering the
requirements of IFRS 15, we also assessed the accounting
for contract amendments or contractually agreed options.
We further performed inquiries of project management
(both commercial and technical project managers) with
respect to the development of the projects including the
effects of COVID-19 on project execution, the reasons for
deviations between planned and actual costs, the current
estimated costs to complete the projects, and manage-
ment's assessments on probabilities that contract risks
will materialize. To identify anomalies in the development
of margins throughout the projects' execution, we also
applied data analysis procedures. In designing our audit
procedures, we also considered results from project audits
conducted by the internal audit function. Furthermore,
we obtained evidence from third parties for selected proj-
ects (e.g., project acceptance documentation, contrac-
tual terms and conditions, and lawyers' confirmations
regarding alleged breaches of contract and asserted
claims) and inspected plant and project locations.
ANNUAL REPORT 2020 170
ANNUAL REPORT 2020 172
-
Other information
At our meeting on May 8, 2020, the Managing Board
reported to us on the Company's current business and
financial position following the conclusion of the sec-
ond quarter
in particular, on the impact of the
COVID-19 pandemic – and on the spin-off of Siemens'
energy business. The Managing Board also informed us
about the business situation, development and strategic
orientation of Mobility, one of Siemens' former Strategic
Companies. Finally, we concerned ourselves with corpo-
rate governance at Siemens. We approved the internal
control process for related-party transactions and trans-
ferred the responsibility for monitoring this process to
the Audit Committee.
At our extraordinary meeting on May 22, 2020, we ap-
proved the spin-off of Siemens' energy business via a
carve-out and subsequent public listing and made the
further decisions mentioned above. The meeting also
focused on Siemens AG's digitalization strategy.
At our extraordinary meeting on June 30, 2020, we de-
cided on the recommendation of the Chairman's Com-
mittee to appoint Judith Wiese a full member of the
Managing Board and the successor to Dr. Roland Busch as
Labor Director for the period from October 1, 2020,
through September 30, 2023. We also concerned our-
selves with succession planning for the Managing Board.
At our extraordinary meeting on July 30, 2020, the
Managing Board informed us about the planned
acquisition of Varian Medical Systems, Inc., USA, by
Siemens Healthineers AG. We approved the Managing
Board's decision regarding the financing measures
relating to this transaction.
ANNUAL REPORT 2020 178
In fiscal 2020, the Supervisory Board performed in full
the duties assigned to it by law, the Siemens Articles of
Association and the Bylaws for the Supervisory Board.
On the basis of detailed written and oral reports provided
by the Managing Board, we monitored the Managing
Board and advised it on the management of the Com-
pany. In addition, I regularly exchanged information with
the President and CEO and the other Managing Board
members. As a result, the Supervisory Board was always
kept up to date on projected business policies, Company
planning - including financial, investment and personnel
planning - and the Company's profitability and business
operations as well as on the state of Siemens AG and the
Siemens Group. We were directly involved at an early
stage in all decisions of fundamental importance to the
Company and discussed these decisions with the Manag-
ing Board intensively and in detail. To the extent that
Supervisory Board approval of the decisions and mea-
sures of Company management was required by law,
the Siemens Articles of Association or our Bylaws, the
members of the Supervisory Board - prepared in some
cases by the Supervisory Board's committees - issued
In fiscal 2020, the employees of Siemens AG delivered an
extraordinary performance. Despite the impact of the
COVID-19 pandemic, the Company not only demon-
strated impressive operating strength, it also successfully
completed a realignment of its structure and personnel.
Siemens Energy was listed on the stock exchange as orig-
inally scheduled. This spin-off marks the implementation
of a key element of the Vision 2020+ strategy concept.
In fiscal 2020, the Supervisory Board also successfully
completed the succession process for the Managing
Board of Siemens AG and established the new Managing
Board team headed by Dr. Roland Busch. These steps pro-
vided an excellent foundation for the successful further
development and growth of a focused Siemens AG.
Dear Shareholders,
-
Berlin and Munich, December 1, 2020
C.3
Additional Information C.3 Report of the Supervisory Board
ANNUAL REPORT 2020 175
[German Public Auditor]
Wirtschaftsprüferin
Breitsameter
Preisa
[German Public Auditor]
Report of the Supervisory Board
At our extraordinary meeting on May 7, 2020, we ap-
proved the Managing Board's decision regarding the
preparation of a spin-off of Flender following the inte-
gration of Siemens' wind power generator business into
Flender.
At an informational session on April 24, 2020, the em-
ployee representatives on the Supervisory Board dis-
cussed the planned spin-off of Siemens' energy business
in depth, as did the shareholder representatives at an-
other such session on April 27, 2020.
At our extraordinary meeting on March 19, 2020, which
was in the form of a conference call, we concerned our-
selves with personnel-related matters regarding the Man-
aging Board. In order to ensure an orderly succession
process, we decided on the recommendation of the
Chairman's Committee – to appoint Dr. Roland Busch to
another term of office as a full member of the Managing
Board for the period from April 1, 2020, through March 31,
2025, and to terminate by mutual agreement his current
appointment, effective the end of the day on March 31,
2020. In addition, we appointed Dr. Roland Busch Presi-
dent and CEO, effective no later than the conclusion of
the next ordinary Annual Shareholders' Meeting on Feb-
ruary 3, 2021. On the recommendation of the Chairman's
Committee, we also approved the termination by mutual
agreement of Michael Sen's appointment as a full mem-
ber of the Managing Board, effective the end of the day
on March 31, 2020, and we were informed about addi-
tional personnel-related decisions regarding Siemens
Energy. The Managing Board also informed us about the
impact of the COVID-19 pandemic.
such approval after intensive review and discussion. The
relevant Managing Board members informed us – within
the limits set by the applicable legal framework – about
measures and decisions of fundamental importance at
the former Strategic Companies.
Additional Information → C.2 Independent Auditor's Report
A special focus of our activities in fiscal 2020 was the
Company's further strategic development. At meetings
and additional informational sessions in the first three
quarters of the fiscal year, in particular, we concerned
ourselves intensively with the spin-off of Siemens' energy
business via a carve-out and subsequent public listing.
We support the spin-off of the energy business and ap-
proved it at an extraordinary meeting on May 22, 2020.
In the second half of fiscal 2020, our activities focused on
the further strategic development of Siemens AG after
the spin-off. Together with the Managing Board, we dis-
cussed markets and trends, the goals and priorities of
Siemens' businesses and the Company's technological
and personnel strategy. Succession planning for the
Managing Board was another focal point of our work in
fiscal 2020. To open a new chapter in Siemens' history,
we successfully completed the succession process and
established the management team that will lead the fo-
cused Siemens AG as of October 1, 2020.
Topics at the plenary meetings
of the Supervisory Board
We held a total of six regular plenary meetings and five
extraordinary meetings in fiscal 2020. Topics of discus-
sion at our regular plenary meetings were revenue, profit
and employment development at Siemens AG and the
Siemens Group as well as the Company's financial posi-
tion and the results of its operations. In addition, we con-
cerned ourselves, as occasion required, with acquisition
and divestment projects and with risks to the Company.
Portfolio measures were further topics of discussion.
We also met at regular intervals without the Managing
Board in attendance. On these occasions, we dealt with
agenda items that concerned either the Managing Board
itself or internal Supervisory Board matters.
ANNUAL REPORT 2020 176
Additional Information C.3 Report of the Supervisory Board
sup-
The spin-off of Siemens' energy business was a particular
focus of our activity. At our meetings on November 6,
2019, December 4, 2019, and February 4, 2020, the Man-
aging Board updated us on the current status of the carve-
out of the energy business and on the progress in spin-off
preparation. At an extraordinary meeting on January 15,
2020, the Audit Committee discussed financial, account-
ing and other key spin-off-related topics. An informational
session was held for the employee representatives on the
Supervisory Board on April 24, 2020. Another such session
was held for the shareholder representatives on April 27,
2020. At these informational sessions, at an extraordinary
Audit Committee meeting on April 27, 2020, and at our
meeting on May 8, 2020, the Managing Board and
Siemens Energy's designated leadership team
ported by external consultants and experts - provided us
with detailed information regarding the planned spin-off
in preparation for our decisions scheduled for May 22,
2020. At our meeting on May 8, 2020, we approved - on
the recommendation of the Audit Committee - the clos-
ing statements of financial position of Siemens AG as of
March 31, 2020, which also serve as the closing state-
ments of financial position pursuant to Section 125, sent. 1
and Section 17, para. 2 of the German Transformation Act
(Umwandlungsgesetz). At our extraordinary meeting on
May 22, 2020, we approved - on the basis of prior detailed
reporting by the Managing Board and intensive discus-
sions in the Supervisory Board and with the Managing
Board the spin-off of Siemens' energy business as ap-
proved by the Managing Board. On the recommendation
of the Compensation Committee, we approved, in addi-
tion, the adjustments to the stock-based compensation
programs for active and former Managing Board members
that had to be made in the course of the spin-off of
Siemens' energy business. At this meeting, we also con-
cerned ourselves with the agenda for the Extraordinary
Shareholders' Meeting on July 9, 2020, and approved the
Managing Board's decisions regarding the conduct of this
meeting as a virtual shareholders' meeting without the
physical presence of shareholders or their proxies in
accordance with Section 1, para. 2 of the German Act Con-
cerning Measures Under the Law of Companies, Cooper-
ative Societies, Associations, Foundations and Common-
hold Property to Combat the Effects of the COVID-19
Pandemic (Gesetz über Maßnahmen im Gesellschafts-,
Genossenschafts-, Vereins-, Stiftungs- und Wohnungs-
-
eigentumsrecht zur Bekämpfung der Auswirkungen der
COVID-19-Pandemie) of March 27, 2020 (Federal Law Ga-
zette | No. 14 2020, p. 570).
At our meeting on November 6, 2019, we discussed the
key financial figures for fiscal 2019 and approved the
budget for fiscal 2020. We dealt with the carve-out and
the preparations for the spin-off of Siemens' energy
business. On a recommendation by the Compensation
Committee, we also defined the Managing Board mem-
bers' compensation for fiscal 2019 on the basis of calcu-
lated target achievement. An internal review confirmed
the appropriateness of this compensation. Against the
backdrop of the changing regulatory framework and the
new Group structure due to the Vision 2020+ strategy
concept, we had already approved an adjustment to the
Managing Board compensation system as of fiscal 2020
at our meeting on September 18, 2019. At that meeting,
we had also defined the performance criteria for the
Managing Board's variable compensation for fiscal 2020.
On this basis and on the recommendation of the Com-
pensation Committee, we made a decision on target
setting for Managing Board compensation for fiscal
2020, at our meeting on November 6, 2019. At this
meeting, we also approved a Managing Board decision
on financing measures.
On December 4, 2019, we discussed the financial state-
ments and the Combined Management Report for
Siemens AG and the Siemens Group as of September 30,
2019, the Annual Report for 2019 – including the Report
of the Supervisory Board, the Corporate Governance
Report and the Compensation Report - and the agenda
for the ordinary Annual Shareholders' Meeting on Febru-
ary 5, 2020. In addition, we dealt with Managing Board
compensation for fiscal 2020. On the recommendation of
the Compensation Committee, we approved the Manag-
ing Board compensation system – including planned max-
imum compensation – effective October 1, 2019, as de-
scribed in the "Notice of Annual Shareholders' Meeting."
On the recommendation of the Compensation Commit-
tee, we also made a further decision regarding the target
setting and the maximum compensation for Managing
Board compensation in fiscal 2020. The Managing Board
updated us on the current status of acquisitions and
divestments and on the business situation and business
-
ANNUAL REPORT 2020 177
Additional Information C.3 Report of the Supervisory Board
development of Siemens Healthineers. In addition, we
concerned ourselves with the annual report of the Chief
Compliance Officer and the annual report of the Cyber-
security Officer. The carve-out and preparations for the
spin-off of Siemens' energy business were also topics at
this meeting. Finally, on the recommendation of the
Chairman's Committee, we approved the termination by
mutual agreement of Lisa Davis's appointment as a full
member of the Managing Board, effective the end of the
day on February 29, 2020.
-
-
Spannagl
Wirtschaftsprüfer
Отв
At our meeting on February 4, 2020, the Managing Board
reported to us on the Company's current business and
financial position following the conclusion of the first
quarter. We dealt with the carve-out and preparations for
the spin-off of Siemens' energy business. We also ap-
proved the Managing Board's decision to acquire the en-
tire stake in Siemens Gamesa Renewable Energy held by
Iberdrola S.A., Spain. Based on the endorsement of the
Managing Board compensation system by the Annual
Shareholders' Meeting on February 5, 2020, we confirmed
our decisions of December 4, 2019, defining Managing
Board compensation as of October 1, 2019.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other infor-
mation, we are required to report that fact. We have
nothing to report in this regard.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Sec. 317 HGB and the EU Audit Regulation as well as
in compliance with German Generally Accepted Stan-
dards for Financial Statement Audits promulgated by the
IDW and in supplementary compliance with ISA will
always detect a material misstatement. Misstatements
can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of these consolidated financial state-
ments and this group management report.
Auditor's responsibilities for the audit
of the consolidated financial statements
and of the group management report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and whether the group management
report as a whole provides an appropriate view of the
Group's position and, in all material respects, is consis-
tent with the consolidated financial statements and the
knowledge obtained in the audit, complies with the Ger-
man legal requirements and appropriately presents the
opportunities and risks of future development, as well as
to issue an auditor's report that includes our opinions on
the consolidated financial statements and on the group
management report.
→ the Responsibility Statement in chapter 7 c.1 of the
Annual Report 2020,
Additional Information → C.2 Independent Auditor's Report
ANNUAL REPORT 2020 173
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation of
the consolidated financial statements and of the group
management report.
Furthermore, management is responsible for the prepara-
tion of the group management report that, as a whole,
provides an appropriate view of the Group's position and is,
in all material respects, consistent with the consolidated
financial statements, complies with German legal require-
ments and appropriately presents the opportunities and
risks of future development. In addition, management is
responsible for such arrangements and measures (sys-
tems) as management has considered necessary to enable
the preparation of a group management report that is in
accordance with the applicable German legal require-
ments, and to be able to provide sufficient appropriate ev-
idence for the assertions in the group management report.
In preparing the consolidated financial statements, man-
agement is responsible for assessing the Group's ability
to continue as a going concern. It also has the responsi-
bility for disclosing, as applicable, matters related to go-
ing concern. In addition, management is responsible for
financial reporting based on the going concern basis of
accounting, unless there is an intention to liquidate the
Group or to cease operations, or there is no realistic alter-
native but to do so.
We exercise professional judgment and maintain profes-
sional skepticism throughout the audit. We also:
and the Supervisory Board for the
consolidated financial statements
and the group management report
Management is responsible for the preparation of the con-
solidated financial statements that comply, in all material
respects, with IFRSS as adopted by the EU and the addi-
tional requirements of German commercial law pursuant
to Sec. 315e (1) HGB as well as with full IFRSs as issued by
the IASB, and that the consolidated financial statements,
in compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group. In addition, manage-
ment is responsible for such internal control as manage-
ment has determined necessary to enable the preparation
of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for the Report of the
Supervisory Board in chapter c.3 of the Annual Report
2020. Management and the Supervisory Board are re-
sponsible for the declaration pursuant to Sec. 161 AktG
["Aktiengesetz": German Stock Corporation Act] on the
Corporate Governance Code, which is part of the Corpo-
rate Governance Statement in chapter > c.4.2. In all other
respects, management is responsible for the other infor-
mation. The other information comprises the Corporate
Governance Statement referred to above. In addition, the
other information comprises parts to be included in the
Annual Report, of which we received a version prior to
issuing this auditor's report, in particular:
→ otherwise appears to be materially misstated.
→ is materially inconsistent with the consolidated finan-
cial statements, with the group management report
or our knowledge obtained in the audit, or
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider
whether the other information
Our opinions on the consolidated financial statements
and on the group management report do not cover the
other information, and consequently we do not express
an opinion or any other form of assurance conclusion
thereon.
→ Notes and forward-looking statements in chapter 7 c.5
of the Annual Report 2020.
→ Corporate Governance in chapter > c.4 of the Annual
Report 2020, and
→ the Report of the Supervisory Board in chapter 7 c.3 of
the Annual Report 2020,
Responsibilities of management
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
→ Identify and assess the risks of material misstatement
of the consolidated financial statements and of the
group management report, whether due to fraud or
error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is suffi-
cient and appropriate to provide a basis for our opin-
ions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.
→ Evaluate the appropriateness of accounting policies
used by management and the reasonableness of esti-
mates made by management and related disclosures.
→ Conclude on the appropriateness of management's
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a ma-
terial uncertainty exists related to events or conditions
that may cast significant doubt on the Group's ability
to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in the auditor's report to the related disclo-
sures in the consolidated financial statements and in
the group management report or, if such disclosures
are inadequate, to modify our respective opinions.
Our conclusions are based on the audit evidence ob-
tained up to the date of our auditor's report. However,
future events or conditions may cause the Group to
cease to be able to continue as a going concern.
Munich, November 27, 2020
The German Public Auditor responsible for the engage-
ment is Thomas Spannagl.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated finan-
cial statements of the current period and are therefore
the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public
disclosure about the matter.
We also provide those charged with governance with a
statement that we have complied with the relevant inde-
pendence requirements, and communicate with them all
relationships and other matters that may reasonably be
thought to bear on our independence and where appli-
cable, the related safeguards.
ing any significant deficiencies in internal control that we
identify during our audit.
timing of the audit and significant audit findings, includ- responsible for the engagement
German Public Auditor
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the
Audit Committee pursuant to Art. 11 of the EU Audit Reg-
ulation (long-form audit report).
→ Obtain an understanding of internal control relevant
to the audit of the consolidated financial statements
and of arrangements and measures (systems) rele-
vant to the audit of the group management report
in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of
these systems.
to Art. 10 of the EU Audit Regulation
We were elected as group auditor by the Annual Share-
holders' Meeting on February 5, 2020. We were engaged
by the Supervisory Board on February 5, 2020. We have
been the group auditor of Siemens Aktiengesellschaft
without interruption since the fiscal year from October 1,
2008 to September 30, 2009.
Other legal and
regulatory requirements
We communicate with those charged with governance
regarding, among other matters, the planned scope and
→ Perform audit procedures on the prospective informa-
tion presented by management in the group manage-
ment report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the signifi-
cant assumptions used by management as a basis for
the prospective information, and evaluate the proper
derivation of the prospective information from these
assumptions. We do not express a separate opinion on
the prospective information and on the assumptions
used as a basis. There is a substantial unavoidable risk
that future events will differ materially from the pro-
spective information.
conformity with German law, and the view of the
Group's position it provides.
→ Evaluate the consistency of the group management
report with the consolidated financial statements, its
Additional Information → C.2 Independent Auditor's Report
ANNUAL REPORT 2020 174
→ Evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, includ-
ing the disclosures, and whether the consolidated
financial statements present the underlying transac-
tions and events in a manner that the consolidated
financial statements give a true and fair view of the
assets, liabilities, financial position and financial per-
formance of the Group in compliance with IFRSS as
adopted by the EU and the additional requirements of
German commercial law pursuant to Sec. 315e (1) HGB
as well as with full IFRSS as issued by the IASB.
→ Obtain sufficient appropriate audit evidence regard-
ing the financial information of the entities or busi-
ness activities within the Group to express opinions on
the consolidated financial statements and on the
group management report. We are responsible for the
direction, supervision and performance of the group
audit. We remain solely responsible for our opinions.
Further information pursuant
91
10/11
(Dr.-Ing. Dr.-Ing. E.h.)
Norbert Reithofer
100
11/11
Hagen Reimer
67
4/6
6/6
100
2/2 100
100
(DBE, DPhil)
11/11
100
Nathalie von Siemens
(Dr. phil.)
11/11 100
2/2 100
Michael Sigmund
Dorothea Simon
11/11
11/11 100
100
Matthias Zachert
Baroness Nemat Shafik
91
11/11 100 11/11
Benoît Potier
2/2 100
11/11
Harald Kern
11/11
100
4/4 100
2/2 100
Jürgen Kerner
100
4/4 100
8/8
100
4/4
100
212
100
Nicola Leibinger-Kammüller
(Dr. phil.)
9/11
82
5/8
63
63
3/4
75
10/11
100
CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE.
100
Corporate Governance
C.4.1 Management
and control structure
Siemens AG is subject to German corporate law. There-
fore, it has a two-tier board structure, consisting of a
Managing Board and a Supervisory Board.
C.4.1.1 Managing Board
As the top management body, the Managing Board is
committed to serving the interests of the Company and
achieving sustainable growth in company value. The
members of the Managing Board are jointly responsible
for the entire management of the Company and decide on
basic issues of business policy and corporate strategy as
well as on the Company's annual and multi-year plans.
The Managing Board prepares the Company's Quarterly
Statements and Half-year Financial Report, the Annual
Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the Com-
bined Management Report of Siemens AG and the
Siemens Group. In addition, the Managing Board ensures
that the Company adheres to statutory requirements, of-
ficial regulations and internal Company policies and
works to achieve compliance with these provisions and
policies within the Siemens Group. The Managing Board
has established a comprehensive compliance manage-
ment system. Protection is offered to employees and third
parties who provide information on unlawful behavior
within the Company. Details on the compliance manage-
ment system are available on the Siemens Global Website
at: www.SIEMENS.COM/SUSTAINABILITYINFORMATION
The Supervisory Board has issued Bylaws for the Manag-
ing Board that contain the assignment of different port-
folios and the rules for cooperation both within the Man-
aging Board and between the Managing Board and the
Supervisory Board. In accordance with these Bylaws, the
Managing Board is divided into the portfolio of the Presi-
dent and CEO and a variety of Managing Board portfolios.
The Managing Board members responsible for the indi-
vidual Managing Board portfolios are defined in a busi-
ness assignment plan that is approved by the Supervisory
Board. As the Managing Board member with responsibil-
ity for the Human Resources portfolio, the Labor Director
(Arbeitsdirektor) is appointed in accordance with the re-
quirements of Section 33 of the German Codetermina-
tion Act (Mitbestimmungsgesetz). While the first-time
appointment of Managing Board members shall not, as a
rule, exceed a period of three years, an assessment is to
be made in each individual case in order to determine
what period of appointment is deemed appropriate
within the legally permissible period. This matter is ex-
plained in greater detail in chapter 7 c.4.2.1 DECLARATION OF
As a rule, a portfolio assigned to an individual member is
that member's own responsibility. Activities and transac-
tions in a particular Managing Board portfolio that are
considered to be extraordinarily important for the Com-
pany or associated with an extraordinary economic risk
require the prior consent of the full Managing Board. The
same applies to activities and transactions for which the
President and CEO or another member of the Managing
Board demands a prior decision by the Managing Board.
The President and CEO is responsible for the coordination
of all Managing Board portfolios. Further details are avail-
able in the Bylaws for the Managing Board at: www.
SIEMENS.COM/BYLAWS-MANAGINGBOARD
The Managing Board and the Supervisory Board cooper-
ate closely for the benefit of the Company. The Manag-
ing Board informs the Supervisory Board regularly,
comprehensively and without delay on all issues of im-
portance to the entire Company with regard to strategy,
planning, business development, financial position,
results of operations, compliance and entrepreneurial
risks. At regular intervals, the Managing Board also dis-
cusses the status of strategy implementation with the
Supervisory Board.
ANNUAL REPORT 2020
184
Additional Information → C.4 Corporate Governance
-
The members of the Managing Board are subject to a
comprehensive prohibition on competitive activity for
the period of their employment at Siemens AG. They are
committed to serving the interest of the Company. When
making their decisions, they may not be guided by per-
sonal interests nor may they exploit for their own advan-
tage business opportunities offered to the Company.
Managing Board members may engage in secondary ac-
tivities – in particular, supervisory board positions out-
side the Siemens Group - only with the approval of the
Chairman's Committee of the Supervisory Board. The
Supervisory Board is responsible for decisions regarding
any adjustments to Managing Board compensation that
are necessary in order to take account of possible com-
pensation for secondary activities. Every Managing Board
member is under an obligation to disclose conflicts of
interest without delay to the Chairman or Chairwoman of
the Supervisory Board and to inform the other members
of the Managing Board thereof.
EQUITY AND COMPENSATION COMMITTEE
OF THE MANAGING BOARD
The Managing Board has one committee, the Equity and
Compensation Committee. This committee is responsible
for the duties assigned to it by a decision of the Managing
Board - including, in particular, duties in connection with
capital measures and equity-linked financial instruments
relating to the compensation of all employees and man-
agers of the Siemens Group except the members of the
Managing Board and of Top Management and relating to
share-based compensation components and employee
share plans. The Equity and Compensation Committee
comprises the President and CEO, the Managing Board
member with responsibility for the Human Resources
portfolio, the Managing Board member with responsibil-
ity for the Controlling and Finance portfolio and – as of
October 1, 2020 – the Deputy CEO. As of September 30,
2020, its members are Joe Kaeser (Chairman), Dr. Roland
Busch and Prof. Dr. Ralf P. Thomas. As of October 1, 2020,
it will also include Judith Wiese.
Information on the areas of responsibility and the curric-
ula vitae of the members of the Managing Board are
available on the Siemens Global Website at: ☐ www.
SIEMENS.COM/MANAGEMENT. Information on the compensa-
tion paid to the members of the Managing Board is pro-
vided in chapter 7 A.10 COMPENSATION REPORT.
8/8
MEMBERS OF THE MANAGING BOARD AND
POSITIONS HELD BY MANAGING BOARD MEMBERS
In fiscal 2020, the Managing Board had the following
members:
C.4
Additional Information C.4 Corporate Governance
ANNUAL REPORT 2020 183
Chairman
4/4 100
Gunnar Zukunft
11/11 100
98
100
96
95
97
100
92
Detailed discussion of the
audit of the financial statements
8/8
The independent auditors, Ernst & Young GmbH Wirt-
schaftsprüfungsgesellschaft (Stuttgart, Germany), au-
dited the Annual Financial Statements of Siemens AG, the
Consolidated Financial Statements of the Siemens Group
and the Combined Management Report for Siemens AG
and the Siemens Group for fiscal 2020 and issued unqual-
ANNUAL REPORT 2020
182
Additional Information C.3 Report of the Supervisory Board
and the Siemens Group were prepared in accordance
with the requirements of German law. The Consolidated
Financial Statements of the Siemens Group were prepared
in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the EU and with the addi-
tional requirements of German law set out in Section 315 e
(1) of the German Commercial Code (Handelsgesetzbuch).
The Consolidated Financial Statements of the Siemens
Group also comply with the IFRS as issued by the Interna-
tional Accounting Standards Board (IASB). The indepen-
dent auditors conducted their audit in accordance with
Section 317 of the German Commercial Code and the EU
Audit Regulation and German generally accepted stan-
dards for the audit of financial statements as promulgated
by the Institut der Wirtschaftsprüfer (IDW) as well as in sup-
plementary compliance with the International Standards
on Auditing (ISA). The abovementioned documents as well
as the Managing Board's proposal for the appropriation of
net income were submitted to us by the Managing Board
in advance. The Audit Committee discussed the dividend
proposal in detail at its meeting on November 10, 2020. It
discussed the Annual Financial Statements of Siemens AG,
the Consolidated Financial Statements of the Siemens
Group and the Combined Management Report in detail at
its meeting on November 30, 2020. In this context, the
Audit Committee concerned itself, in particular, with the
key audit matters described in the independent auditors'
respective opinions, including the audit procedures imple-
mented. The Audit Committee's review also covered the
non-financial information for Siemens AG and the Siemens
Group that is included in the Combined Management Re-
port. The audit reports prepared by the independent audi-
tors were distributed to all members of the Supervisory
Board and comprehensively reviewed at the Supervisory
Board meeting on December 1, 2020, in the presence of
the independent auditors, who reported on the scope, focal
points and main findings of their audit, addressing, in par-
ticular, key audit matters and the audit procedures imple-
mented. No major weaknesses in the Company's internal
control or risk management systems were reported. At this
meeting, the Managing Board explained the financial
statements of Siemens AG and the Siemens Group as well
as the Company's risk management system.
The Supervisory Board concurs with the results of the
audit. Following the definitive findings of the Audit
Committee's examination and our own examination, we
have no objections. The Managing Board prepared the
Annual Financial Statements of Siemens AG and the
Consolidated Financial Statements of the Siemens Group.
We approved the Annual Financial Statements and
the Consolidated Financial Statements. In view of our
approval, the financial statements are accepted as
submitted. We endorsed the Managing Board's proposal
that the net income available for distribution be used
to pay out a dividend of €3.50 per share entitled to a
dividend and that the amount of net income attributable
to shares of stock not entitled to receive a dividend for
fiscal 2020 be carried forward.
Changes in the composition of the
Supervisory and Managing Boards
The following members left the Managing Board in
fiscal 2020: Janina Kugel (effective January 31, 2020),
Lisa Davis (effective February 29, 2020) and Michael Sen
(effective March 31, 2020). The Supervisory Board ap-
pointed Judith Wiese and Matthias Rebellius full members
of the Managing Board, effective October 1, 2020.
Robert Kensbock left the Supervisory Board on Septem-
ber 25, 2020, the effective date of the spin-off of Siemens'
energy business. In a decision of October 16, 2020, the
Charlottenburg District Court appointed Tobias Bäumler
to succeed Robert Kensbock as an employee represen-
tative on the Supervisory Board for the remainder of
Robert Kensbock's term of office.
On behalf of the Supervisory Board, I would like to thank
the members of the Managing Board and all the employ-
ees and employee representatives of Siemens AG and all
Group companies for their outstanding commitment and
constructive cooperation in fiscal 2020.
For the Supervisory Board
#
Jim Hagemann Snabe
ified opinions for each. Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft (Stuttgart, Germany) has served as
independent auditors of Siemens AG and the Siemens
Group since fiscal 2009. Katharina Breitsameter has
signed as auditor since fiscal 2016, and Thomas Spannagl
has signed as auditor responsible for the audit since fiscal
2014. The Annual Financial Statements of Siemens AG
and the Combined Management Report for Siemens AG
100
pandemic, all meetings after March 2020 were held either in
100
(Number of meetings/
participation in %)
Supervisory
Board (plenary
meetings)
Chairman's Compensation
Committee
Committee
Audit
Committee
Compliance
Committee
Innovation
and Finance
Committee
Nominating
Committee
No.
in %
No.
in %
No.
in %
No.
in %
No.
in %
No.
in %
No.
in %
Jim Hagemann Snabe
Chairman
11/11
a virtual format or as in-person meetings in which virtual
participation was possible. The participation rate of individ-
ual members in the meetings of the Supervisory Board and
its committees is set out in the following chart:
Disclosure of participation by individual
Supervisory Board members in meetings
The average rate of participation by members in the meet-
ings of the Supervisory Board and its committees was 97.4%.
Due to the exceptional circumstances caused by the COVID-19
Additional Information C.3 Report of the Supervisory Board
ANNUAL REPORT 2020 181
Name
Additional Information C.3 Report of the Supervisory Board
At our meeting on August 5, 2020, the Managing Board
updated us on the Company's current business and
financial position, including the impact of the COVID-19
pandemic, following the conclusion of the third quarter.
This meeting focused on the Managing Board's reporting
on the status of the execution of the Vision 2020+ strategy
concept. In addition, we concerned ourselves again with
succession planning for the Managing Board. On the rec-
ommendation of the Chairman's Committee, we decided
in mutual agreement with Managing Board member Klaus
Helmrich not to extend his Managing Board appointment,
which will expire on March 31, 2021, due to his retirement
on that date. On the recommendation of the Chairman's
Committee, we also decided to appoint Matthias Rebellius
a full member of the Managing Board, for the period from
October 1, 2020, through September 30, 2025. In addition,
we reassigned the Managing Board members' areas of re-
sponsibility, effective October 1, 2020.
-
At our meeting on September 23, 2020, the Managing
Board reported to us on the state of the Company.
Siemens AG's strategy was also a focus of this meeting.
The Managing Board reported to us on current trends and
market developments. We discussed the goals and prior-
ities of Siemens' businesses as well as its technological
and personnel strategy. We concerned ourselves with the
annual review of Managing Board compensation and -
after preparation by, and on a recommendation of, the
Compensation Committee – defined for each Managing
Board member individual target total compensation and
maximum compensation as well as the performance cri-
teria for variable compensation for fiscal 2021. At this
meeting, we also discussed matters relating to corporate
governance and, in particular, the preparation of the Dec-
laration of Conformity with the German Corporate Gov-
ernance Code and the independence of the shareholder
representatives on the Supervisory Board. We approved
amendments to the Bylaws for the Managing Board, for
the Supervisory Board and for the Audit Committee of
the Supervisory Board. In particular, we decided to rein-
tegrate the Compliance Committee into the Audit Com-
mittee and to transfer the Compliance Committee's du-
ties to the Audit Committee, effective October 1, 2020. In
addition, we approved a new version of the objectives for
the composition of the Supervisory Board, including the
profile of skills and expertise and the diversity concept for
the Supervisory Board, which are explained in chapter
7 C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SEC-
TIONS 289 F AND 315 D OF THE GERMAN COMMERCIAL CODE. Finally,
we dealt with the efficiency review of our activities.
Corporate Governance Code
At our meeting on September 23, 2020, we approved a
Declaration of Conformity in accordance with Section 161
of the German Stock Corporation Act. Information on
corporate governance at Siemens is available in chapter
7 C.4 CORPORATE GOVERNANCE. The Company's Declaration
of Conformity has been made permanently available
to shareholders on the Siemens Global Website. The
current Declaration of Conformity is also available in
chapter 7 c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT
TO SECTIONS 289 F AND 315 D OF THE GERMAN COMMERCIAL CODE.
Work in the Supervisory Board
committees
100
In fiscal 2020, the Supervisory Board had seven standing
committees. These committees prepare proposals and
issues to be dealt with at the Supervisory Board's plenary
meetings. Some of the Supervisory Board's decision-mak-
ing powers have also been delegated to these commit-
tees within the permissible legal framework. The commit-
tee chairpersons report to the Supervisory Board on their
committees' work at subsequent Board meetings. A list of
the members and a detailed explanation of the tasks of
the individual Supervisory Board committees are included
in chapter 7 c.4.1 MANAGEMENT AND CONTROL STRUCTURE.
ANNUAL REPORT 2020 179
Additional Information C.3 Report of the Supervisory Board
The Nominating Committee met six times. With a view
to the regular Supervisory Board elections scheduled for
2021 and 2023, the Nominating Committee gave in-depth
consideration to succession planning for the Supervisory
Board and prepared the Supervisory Board's nominations
for the election by the 2021 Annual Shareholders' Meet-
ing of shareholder representatives on the Supervisory
Board. In this connection, the Nominating Committee
was supported by an external consulting firm. In select-
ing the potential candidates and in preparing a recom-
mendation for the Supervisory Board decision, the Nom-
inating Committee gave particular consideration to the
objectives that the Supervisory Board had previously ap-
proved for its composition, including the profile of re-
quired skills and expertise and the diversity concept for
the Supervisory Board.
The Compliance Committee met four times. It dealt pri-
marily with the Company's quarterly reports and the an-
nual report of the Chief Compliance Officer. Additional
topics were the further development and setup of the
compliance function within the Siemens Group in view of
the Company's strategic realignment.
The Mediation Committee had no need to meet.
The Compensation Committee met four times. It also
made two decisions by written circulation. The Compen-
sation Committee prepared, in particular, Supervisory
Board decisions regarding the definition of performance
criteria and the targets for variable compensation, the de-
termination and review of the appropriateness of Manag-
ing Board compensation and the approval of the Compen-
sation Report. In addition, the Compensation Committee
prepared the Supervisory Board's decision regarding the
adjustments to the stock-based compensation programs
for active and former Managing Board members that had
to be made in the course of the spin-off.
The Innovation and Finance Committee met twice.
The focuses of its meetings included its recommenda-
tion regarding the budget for fiscal 2020 and the discus-
sion of the pension system. Within the limits of the ap-
plicable regulatory framework, the relevant Managing
Board members informed the Innovation and Finance
Committee regarding measures and decisions of funda-
mental importance at the former Strategic Companies.
The Audit Committee held six regular and two extra-
ordinary meetings. In the presence of the independent
auditors as well as the President and CEO and the Chief
Financial Officer, the Committee dealt with the financial
statements and the Combined Management Report
for Siemens AG and the Siemens Group. The Audit Com-
mittee discussed the Half-year Financial Report and the
quarterly statements with the Managing Board and the
independent auditors. In the presence of the indepen-
dent auditors, it also discussed the report on the auditors'
review of the Company's Half-year Consolidated Financial
Statements and of its Interim Group Management Report.
The Audit Committee prepared the Supervisory Board
decision regarding approval of the interim statements of
financial position of Siemens AG as of March 31, 2020. In
connection with the spin-off of Siemens' energy business,
these statements also serve as the closing statements of
financial position pursuant to Section 125, sent. 1 and
Section 17, para. 2 of the German Transformation Act (Um-
wandlungsgesetz). The Audit Committee awarded the
audit contract for fiscal 2020 to the independent audi-
tors, who had been elected by the Annual Shareholders'
Meeting, defined the Audit Committee's focus areas
and determined the auditors' fee. The Audit Committee
monitored the selection, independence, qualification,
rotation and efficiency of the independent auditors
as well as the services they provided and concerned
itself with the review of the quality of the audit of the
financial statements. Against the backdrop of the
ANNUAL REPORT 2020 180
Additional Information C.3 Report of the Supervisory Board
Wirecard situation, the Audit Committee's review in fiscal
2020 included, in particular, discussion of the role of
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
Stuttgart, as the independent auditors of Wirecard AG.
The Siemens Audit Committee posed questions to the
independent auditors regarding this matter and evalu-
ated the impact on Siemens AG. No background details
became known that would preclude Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft, Stuttgart, from being
elected to serve as independent auditors for fiscal 2021.
The Audit Committee also dealt with the Company's
accounting and accounting process, the effectiveness of
its internal control system, its risk management system
and the effectiveness, resources and findings of its
internal audit as well as with reports concerning poten-
tial and pending legal disputes. The members of the
Audit Committee participated as guests in the Innovation
and Finance Committee's discussion of the budget for
fiscal 2020. At two extraordinary meetings, the Audit
Committee gave in-depth consideration to the spin-off of
Siemens' energy business and dealt, in particular, with
the related financial and accounting topics.
The Supervisory Board members take part, on their own
responsibility, in the educational and training measures
necessary for the performance of their duties - measures
relating, for example, to changes in the legal framework
and new, groundbreaking technologies. The Company
supports them in this regard. Internal informational
events are offered when necessary to support targeted
educational measures. New Supervisory Board members
can meet with Managing Board members and other man-
agers with specialist responsibility to exchange views on
current topics and topics of fundamental importance
and thus gain an overview of Company-relevant matters
(onboarding).
The Chairman's Committee met 11 times. In addition,
two decisions were made by written circulation. Between
meetings, some of which were in the form of conference
calls, I also discussed topics of major importance with the
members of the Chairman's Committee. The Committee
concerned itself, in particular, with personnel-related
matters, succession planning for the composition of the
Managing Board, related-party transactions, corporate
governance issues and the acceptance by Managing
Board members of positions at other companies and in-
stitutions. Within the limits of the applicable regulatory
framework, the Chairman's Committee was informed of
and/or approved personnel-related measures of funda-
mental importance at the former Operating Companies
and the former Strategic Companies.
4/4
11/11
4/4
2/2
100
6/6 100
Werner Brandt (Dr. rer. pol.)
11/11 100
8/8
100
4/4
100
Michael Diekmann
11/11 100
བ་
3/4
75
Andrea Fehrmann (Dr. phil.)
11/11
100
Bettina Haller
11/11
100
8/8 100
4/4 100
Robert Kensbock
(until September 25, 2020)
11/11
100
4/4
100
100 11/11
100
8/8
100
4/4
100
2/2
100
6/6
99
Birgit Steinborn
First Deputy Chairwoman
11/11
100
100 11/11
4/4
100
8/8
100
4/4
100
2/2
100
Werner Wenning
100
Second Deputy Chairman
11/11
100
Joe Kaeser
→ Pensions-Sicherungs-Verein
Versicherungsverein auf
Gegenseitigkeit, Cologne
Positions outside Germany:
→ Konecranes Plc., Finland1
Chief Executive Officer
Chief Executive Officer (CEO) - President
and Chairwoman of the Group Management
of TRUMPF GmbH + Co. KG
Leibinger-Kammüller
(Dr. phil.)
Nicola
of the Managing Board of IG Metall
Chief Treasurer and Executive Member
Siemens Europe Committee
March 13,
1971
Chairman of the
Harald Kern*
Deputy Chairman of the Central
Works Council of Siemens AG
Robert Kensbock*
(until September 25, 2020)
as of September 25, 2020
2023
April 1,
2007
March 14,
1959
Jürgen Kerner*
January 23,
2013
2023
March 16,
1960
2023
January 31,
2018
1957
September 3,
Chairman and Chief Executive Officer
of Air Liquide S.A.²
Benoît Potier
2021
January 24,
2008
December 15,
1959
2023
January 25,
2012
January 22,
1969
2008
2023
January 24,
Chairwoman of the Combine
Works Council of Siemens AG
Hagen Reimer*
Bettina Haller*
→ Siemens Gas and Power Management
GmbH (now: Siemens Energy
→ Fresenius SE & Co. KGaA,
→ Fresenius Management SE,
Bad Homburg
→ Allianz SE, Munich (Chairman)2
German positions:
→ RWE AG, Essen (Chairman)²
→ ProSiebenSat.1 Media SE, Munich
(Chairman)²
Bad Homburg (Deputy Chairman)²
German positions:
4 Shareholders' Committee.
3 Group company position.
2 Publicly listed.
1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
2023
January 24,
2008
ANNUAL REPORT 2020 187
Additional Information C.4 Corporate Governance
Name
Occupation
German positions:
→ Siemens Mobility GmbH, Munich
(Deputy Chairwoman)
German positions:
→ Siemens Gas and Power Management
GmbH (now: Siemens Energy
Management GmbH), Munich
German positions:
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2020)
Term
expires¹
2023
January 31,
2018
June 21,
1970
Member since
Date of birth
IG Metall Regional Office for Bavaria
Trade Union Secretary,
Andrea Fehrmann*
(Dr. phil.)
Management GmbH), Munich (Deputy
Chairman)
Trade Union Secretary of the
Managing Board of IG Metall
January 30,
2019
2023
→ TRUMPF Schweiz AG, Switzerland³
Positions outside Germany:
→ Traton SE, Munich²
(Deputy Chairman)2
→ Thyssenkrupp AG, Essen
Management GmbH), Munich
Positions outside Germany:
→ Siemens Gas and Power Management
GmbH (now: Siemens Energy
→ Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
→ MAN Truck & Bus SE, Munich
→ MAN SE, Munich (Deputy Chairman)²
German positions:
188
(Deputy Chairman)
→ Air Liquide International S.A., France
(Chairman and Chief Executive
Officer)³
→ Air Liquide International Corporation
(ALIC), USA (Chairman)³
→ American Air Liquide Holdings,
→ Siemens Healthcare GmbH, Munich
German positions:
→ Siemens Healthineers AG, Munich²
→ TÜV Süd AG, Munich
→ Siemens Healthcare GmbH, Munich
→ Messer Group GmbH, Sulzbach
German positions:
→ Henkel AG & Co. KGaA, Düsseldorf 2.4
→ Henkel Management AG, Düsseldorf
→ Bayerische Motoren Werke Aktien-
gesellschaft, Munich (Chairman)²
German positions:
→ Siemens Gas and Power Management
GmbH (now: Siemens Energy
Management GmbH), Munich
German positions:
→ The Hydrogen Company S.A., France³
Director of the London
→ Danone S.A., France²
Inc., USA³
ANNUAL REPORT 2020
Shareholders' Committee.
4
3 Group company position.
Member of Supervisory Boards
Nathalie
2023
January 31,
2018
August 13,
1962
School of Economics
President and
2023
January 27,
2015
May 29,
1956
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
(DBE, DPhil)
Nemat Shafik
Baroness
Norbert Reithofer
(Dr.-Ing. Dr.-Ing. E.h.)
von Siemens
December 23,
1954
July 14,
1971
2023
2 Publicly listed.
1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
2023
October 1,
2017
1969
August 3,
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
2023
March 1,
2014
September 13,
1957
Dorothea Simon*
of Spokespersons of the Siemens Group
and Chairman of the Central Committee
of Spokespersons of Siemens AG
Chairman of the Committee
Michael Sigmund*
(Dr. phil.)
January 27,
2015
Chairman of the Supervisory Board
of Allianz SE
April 26,
1967
2023
At the end
of the 2021
Annual
Shareholders'
Meeting
November 22,
1964
April 1,
2011
March 31,
2025
October 15,
1963
May 1,
2006
August 1,
2014
Memberships in supervisory boards whose establishment is required by law
or in comparable domestic or foreign controlling bodies of business enterprises
External positions
(as of September 30, 2020)
German positions:
→ Daimler AG, Stuttgart'
→ Mercedes-Benz AG, Stuttgart
→ Siemens Energy AG,
Term originally
to have expired
on October 31,
2020
Michael Diekmann
First appointed Term expires
June 23,
1957
March 7,
1961
April 1,
2017
November 17,
1968
Ralf P. Thomas
as of March 31, 2020
(until March 31, 2020)
Michael Sen
May 31,
2025
German positions:
April 1,
2017
Roland Busch
(Dr. rer. nat.)
Lisa Davis
(until February 29, 2020)
as of February 29, 2020
1 Publicly listed.
Date of birth
Munich (Chairman)1
→ Siemens Gas and Power Management
GmbH (now: Siemens Energy
Management GmbH), Munich
(Chairman as of October 12, 2020)
Positions outside Germany:
→ NXP Semiconductors N.V.,
Klaus Helmrich
Term expires
First appointed
Date of birth
Name
Additional Information C.4 Corporate Governance
185
ANNUAL REPORT 2020
→ Siemens Proprietary Ltd., South Africa
(Chairwoman)
Positions outside Germany:
→ Siemens W.L.L., Qatar
→ Siemens Ltd., Saudi Arabia
(Deputy Chairman)
→ Arabia Electric Ltd. (Equipment),
Saudi Arabia
Positions outside Germany:
→ Siemens Healthineers AG, Munich'
→ Siemens Mobility GmbH, Munich
(Chairman)
May 24,
1958
September 18,
2013
April 1,
2011
Janina Kugel
Netherlands'
German positions:
→ European School of Management
and Technology GmbH, Berlin
Positions outside Germany:
→ Kosmos Energy Ltd., USA
→ Penske Automotive Group,
Inc., USA¹
Group company positions
(as of September 30, 2020)
Positions outside Germany:
March 7,
1973
Cedrik Neike
January 31,
2020
February 1,
2015
January 12,
1970
as of January 31, 2020
(until January 31, 2020)
March 31,
2021
(Prof. Dr. rer. pol.)
→ Siemens Ltd., India'
1 Publicly listed.
The Supervisory Board oversees and advises the Manag-
ing Board in its management of the Company's business.
At regular intervals, the Supervisory Board discusses
business development, planning, strategy and strategy
implementation. It reviews the Annual Financial State-
ments of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group, the Combined Management
Report of Siemens AG and the Siemens Group, and the
proposal for the appropriation of net income. It approves
the Annual Financial Statements of Siemens AG as well as
the Consolidated Financial Statements of the Siemens
Group, based on the results of the preliminary review con-
ducted by the Audit Committee and taking into account
the reports of the independent auditors. The Supervisory
Board approves the Managing Board's proposal for the ap-
propriation of net income and the Report of the Super-
visory Board to the Annual Shareholders' Meeting. In addi-
tion, the Company's adherence to statutory provisions,
official regulations and internal Company policies (compli-
ance) are monitored by the Supervisory Board and/or its
relevant committee. The Supervisory Board also appoints
the members of the Managing Board and determines each
member's portfolios. The Supervisory Board approves - on
the basis of a proposal by the Compensation Committee -
the compensation system for Managing Board members
and defines their concrete compensation in accordance
with this system. It sets the individual targets for the vari-
able compensation and the total compensation of each
ANNUAL REPORT 2020 186
Additional Information → C.4 Corporate Governance
individual Managing Board member, reviews the appropri-
ateness of total compensation and regularly reviews the
Managing Board compensation system. Effective Octo-
ber 1, 2019, the Supervisory Board approved – on the basis
of a proposal by the Compensation Committee - an ad-
justed compensation system, which was approved by the
Annual Shareholders' Meeting on February 5, 2020. Im-
portant Managing Board decisions – such as those regard-
ing major acquisitions, divestments, fixed asset invest-
ments or financial measures – require Supervisory Board
approval unless the Bylaws for the Supervisory Board spec-
ify that such authority be delegated to the Innovation and
Finance Committee of the Supervisory Board.
-
C.4.1.2 Supervisory Board
-
The Supervisory Board of Siemens AG has 20 members.
As stipulated by the German Codetermination Act, half of
its members represent Company shareholders, and half
represent Company employees. The employee represen-
tatives' names are marked below with an asterisk (*).
The shareholder representatives on the Supervisory
Board are elected at the Annual Shareholders' Meeting by
a simple majority vote. Elections to the Supervisory
Board are conducted, as a rule, on an individual basis.
The Supervisory Board's employee representatives are
elected in accordance with the provisions of the German
Codetermination Act.
Details regarding the work of the Supervisory Board are
provided in chapter 7 C.3 REPORT OF THE SUPERVISORY BOARD.
The curricula vitae of the members of the Supervisory
Board are published on the Siemens Global Website at:
WWW.SIEMENS.COM/SUPERVISORY-BOARD and are updated
annually. Information on the compensation paid to the
members of the Supervisory Board is provided in chapter
7 A.10 COMPENSATION REPORT.
MEMBERS OF THE SUPERVISORY BOARD AND
POSITIONS HELD BY SUPERVISORY BOARD MEMBERS
In fiscal 2020, the Supervisory Board had the following
members:
Name
Occupation
Separate preparatory meetings of the shareholder repre-
sentatives and of the employee representatives are held
regularly in order to prepare the Supervisory Board meet-
ings. The Supervisory Board also meets regularly without
the Managing Board in attendance. Every Supervisory
Board member must disclose conflicts of interest to the
Supervisory Board. Information regarding conflicts of in-
terest that may have arisen and their handling is provided
in the Report of the Supervisory Board. Special informa-
tional (onboarding) events are held in order to familiarize
new Supervisory Board members with the Company's
business model and the structures of the Siemens Group.
Jim Hagemann Snabe Chairman of the Supervisory Board
Matthias Rebellius (born on January 2, 1965) and
Judith Wiese (born on January 30, 1971) were appointed
members of the Managing Board, effective October 1,
2020. Matthias Rebellius was appointed until Septem-
ber 30, 2025, and Judith Wiese until September 30, 2023.
Matthias Rebellius holds the following positions in super-
visory boards whose establishment is required by law or in
comparable domestic or foreign controlling bodies of busi-
ness enterprises: he is a member of the supervisory board
of Siemens Energy AG, Munich, and a member of the su-
pervisory board of Siemens Energy Management GmbH
(formerly Siemens Gas and Power Management GmbH),
Munich (external positions) as well as a member of the
supervisory board of Siemens Mobility GmbH, Munich,
and a member of the Board of Directors of Siemens Ltd.
Australia, Australia (group company positions).
→ Siemens Healthcare GmbH,
Munich (Chairman)
Positions outside Germany:
→ Siemens Aktiengesellschaft Österreich,
Austria (Chairman)
→ Siemens AB, Sweden (Chairman)
Positions outside Germany:
Switzerland (Chairman)
Positions outside Germany:
→ Siemens Healthineers AG,
Munich (Chairman)1
Positions outside Germany:
→ Siemens Proprietary Ltd.,
South Africa (Chairman)
→ Siemens Gamesa Renewable Energy,
S.A., Spain¹
Term originally
to have expired
on March 31,
2022
September 17,
2023
German positions:
→ Siemens Energy AG, Munich'
→Siemens Gas and Power Management
GmbH (now: Siemens Energy
Management GmbH), Munich
German positions:
(as of September 30, 2020)
→ Siemens France Holding S.A., France
→Siemens Ltd., India'
Chairman
Term
expires¹
Chairman of the Supervisory Board
of RWE AG and of ProSiebenSat.1 Media SE
October 21,
1946
January 23,
2013
2021
January 3,
1954
Second Deputy Chairman of the
Supervisory Board of Siemens AG
Positions outside Germany:
→ Atos SE, France'
→ inpro Innovationsgesellschaft für
fortgeschrittene Produktionssysteme
in der Fahrzeugindustrie mbH, Berlin
German positions:
→ EOS Holding AG, Krailling
German positions:
(as of September 30, 2020)
External positions
Memberships in supervisory boards whose establishment is required by law
or in comparable domestic or foreign controlling bodies of business enterprises
January 31,
2018
of Siemens AG and of the Board of
Directors of A.P. Møller-Mærsk A/S
2023
March 26,
1960
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2020)
German positions:
→ Allianz SE, Munich (Deputy Chairman)²
Positions outside Germany:
→ A.P. Møller-Mærsk A/S, Denmark
(Chairman)²
Date of birth
Member since
January 24,
2008
Group company positions
October 1,
2013
2021
Birgit Steinborn*
First Deputy Chairwoman
Werner Wenning
Second Deputy Chairman
Werner Brandt
(Dr. rer. pol.)
Chairwoman of the Central Works
Council of Siemens AG
October 27,
1965
→ Siemens Schweiz AG,
Actual
The addressable markets of Siemens Healthineers are
shaped by four major trends. The first is demographic, in
particular the growing and aging global population. This
trend poses major challenges for global healthcare sys-
tems and, at the same time, offers opportunities as the
demand for cost-efficient healthcare solutions continues
to intensify. The second trend is economic development
in emerging countries, which opens up improved access
to healthcare for many people. As the middle class con-
tinues to grow, significant investment in the expansion
of private and public healthcare systems will persist, driv-
ing overall demand for healthcare products and services
and hence market growth. The third trend is the increase
in chronic diseases as a consequence of an aging popula-
tion and environmental and lifestyle-related changes.
This development creates additional pressure on health
systems and leads to increased costs to address it. The
fourth global trend, the transformation of healthcare pro-
viders, results from a combination of societal and market
forces that are driving healthcare providers to operate
and organize their businesses differently. Increasing cost
pressure on the healthcare sector is prompting the intro-
duction of new remuneration models for healthcare ser-
vices, such as value-based rather than treatment-based
reimbursement. Digitalization and artificial intelligence
are likely to be key enablers for healthcare providers as
they increasingly focus on enhancing the overall patient
experience, with better outcomes and overall reduction
in cost of care. This development is driven partly by soci-
ety's increasing resistance to healthcare costs, payers'
increasing professionalization, burdens from chronic dis-
ease and rapid scientific progress. As a result, healthcare
providers are consolidating into networked structures,
resulting in larger clinic and laboratory chains, often op-
erating internationally, which act increasingly like large
corporations. Applying this industrial logic to the health-
care market can lead to systematic improvements in qual-
ity, while at the same time reducing costs. Driven by the
need of healthcare systems worldwide to deliver better
2019
2020
Fiscal year
Combined Management Report → A.3 Segment information
ANNUAL REPORT 2020 14
In fiscal 2020, the markets of Siemens Healthineers were
impacted by COVID-19. Overall, the long-term market
trends remained intact, however the pandemic rein-
forced some of them. For example, the already increasing
cost pressure for health systems and customers rose to
unprecedented levels. For the markets addressed by the
imaging business, Siemens Healthineers saw a slight
market decrease. Significant market declines in major
modalities such as magnetic resonance systems were
balanced out by an increased interest in equipment and
solutions used to diagnose and treat COVID-19, leading to
moderate to significant growth of these markets.
Siemens Healthineers expects that a recovery will not be
achieved before the end of fiscal 2021. For the diagnos-
tics business, markets increased for point-of-care tests to
monitor patients and lab tests to detect SARS-CoV-2 and
identify antibodies, while at the same time the demand
for certain diagnostic reagents, particularly tests for
routine care, was reduced as patient volume decreased.
The development of the diagnostics market depends on
a number of factors related to COVID-19, including de-
velopment of a vaccine, additional waves of infection,
and potential pent-up demand for routine testing. SARS-
COV-2 tests are expected to drive a market growth surge
in fiscal 2021. The market for the advanced therapies
In fiscal 2020, orders grew slightly on increases in the
diagnostics and imaging business, partly offset by a de-
cline in the advanced therapies business. On a regional
3%
0%
% Change
Comp.
2%
0%
16,163 15,853
14,460 14,517
2,184 2,461 (11)%
15.1% 17.0%
345
Actual
2020
Adjusted EBITA margin
Adjusted EBITA
Revenue
Orders
(in millions of €)
R&D activities at Siemens Healthineers are ultimately
geared towards delivering innovative, sustainable solu-
tions to its customers while safeguarding and improving
its competitiveness. Particularly in the field of artificial
intelligence, it has further expanded its activities and has
more than 65 products and applications on the market
that further improve its customers' productivity, while
enabling clinical decisions to be more precise and tai-
lored to the individual patient. Artificial intelligence-
based technology will, starting in fiscal 2021, also be
used in sample handling and classification in its Atellica
Solution laboratory system. Furthermore, Siemens
Healthineers is continuously expanding its portfolio of
digital services to support customers in their transition to
value-based care. The teamplay digital health platform
brings together data, applications and services to make
better decisions for patients in an efficient way. In addi-
tion to continually updating its portfolio, Siemens
Healthineers also improves existing products and solu-
tions. Siemens Healthineers focuses its investments
mainly on enhancing competitiveness and innovation.
The main capital expenditures were for spending for fac-
tories to expand manufacturing and technical capabili-
ties, in particular in China and the U.S., and for additions
to intangible assets, including capitalized development
expenses within the Atellica Solution and Blood Gas
product lines.
outcomes at lower costs, regulatory schemes around the
world increasingly seek to introduce new remuneration
models for healthcare services, leading to a shift of
healthcare reimbursement systems away from a pay-per-
procedure model towards an outcome-based model.
Most developed countries are currently considering reg-
ulatory changes within their healthcare systems.
Combined Management Report → A.3 Segment information
ANNUAL REPORT 2020 13
Healthineers are to a certain extent resilient to short-
term economic trends because large portions of its reve-
nue stem from recurring business. They are, however,
directly and indirectly dependent on trends in healthcare
markets and on developments in health policy, and geo-
political developments around the world.
Fiscal year
2019
632
11.7%
19.1%
Fiscal year
2019
2020
(in millions of €)
With certain notable exceptions, demand within the in-
dustries served by Portfolio Companies generally shows
a delayed response to changes in the overall economic
environment. The results of fully consolidated units are
strongly dependent, however, on customer investment
cycles in their key industries. In commodity-based indus-
tries such as oil and gas or mining, these cycles are driven
mainly by commodity price fluctuations rather than
changes in produced volumes. The broad range of fully
consolidated units and their aggregate, heterogonous
industrial customer base is reflected in its sales and mar-
keting channels. For example, the large drives applica-
tions business leverages the shared regional sales orga-
nization employed by Siemens industrial businesses,
while other businesses require a dedicated sales ap-
proach based on in-depth understanding of specific in-
dustries and customer requirements.
to Siemens Energy due to country-specific regulatory re-
strictions or economic considerations. Siemens Energy
Assets were classified to Portfolio Companies during the
second quarter of fiscal 2020. Portfolio Companies also
holds an at-equity investment in Valeo Siemens eAuto-
motive GmbH.
After these changes Portfolio Companies included at the
end of fiscal 2020 mainly the following fully consolidated
units, which are managed separately: gear units and
couplings (Mechanical Drives) and generators for wind
turbines (Wind Energy Generation), which were com-
bined at the end of fiscal 2020 within the company
Flender; electric motors, converters and generators
(Large Drives Applications); sorting technology and solu-
tions for mail, parcel, baggage and cargo handling
(Siemens Logistics); and certain regional remaining busi-
ness activities of the former Gas and Power segment
(Siemens Energy Assets), which were not carved out
Beginning with fiscal 2020, the equity investments
Ethos Energy Group Limited and Voith Hydro Holding
GmbH & Co. KG, the subsea business, and the majority of
the process solutions business were transferred to the
former Gas and Power segment and during the second
quarter of fiscal 2020 Siemens' stake in Primetals Tech-
nologies Limited was sold.
Portfolio Companies comprise businesses which include
a broad range of customized and application-specific
products, software, solutions, systems and services for
different industries including oil and gas, marine, min-
ing, cement, water, fiber, wind, logistics and energy.
Unrealized potential within these businesses requires
adjustment in their approach using defined measures
including internal re-organization, digitalization, cost im-
provements, and optimizing procurement, production
and service activities. After achieving certain threshold
performance targets, businesses may be transferred to
one of Siemens industrial businesses, combined with an
external business from the same industry, spun off via
public listing, or placed into an external private equity
partnership.
A.3.7 Portfolio Companies
Combined Management Report → A.3 Segment information
ANNUAL REPORT 2020 15
SFS is particularly geared to Siemens' industrial businesses
and its markets. As such, SFS is influenced by the busi-
ness development of the markets served by our industrial
businesses, among other factors. SFS will continue to
focus its business scope on areas of intense domain
know-how.
Net cash from operations (defined as the sum of cash
flows from operating and investing activities) amounted
to €(284) million compared to €(782) million in fiscal
2019. In fiscal 2020 and fiscal 2019, net cash from opera-
tions comprised a Free cash flow of €611 million and
€621 million, respectively, and remaining cash flows from
investing activities, including from change in receivables
from financing activities, of €(895) million and €(1,403)
million, respectively.
Earnings before taxes decreased sharply compared to
fiscal 2019. From the beginning of calendar 2020, SFS
addressed continuing high uncertainty in its markets, in-
cluding effects related to COVID-19, resulting in a sharp
increase of credit risk provisions in the debt business
compared to fiscal 2019. Results in the equity business
came in significantly lower compared to fiscal 2019, the
main factor being a loss of €98 million from an impair-
ment of an equity investment in the U.S. The decrease in
total assets since the end of fiscal 2019 is due mainly to
negative currency translation effects.
(in millions of €)
Total assets
(in millions of €)
Earnings before taxes (EBT)
ROE (after taxes)
Siemens Financial Services (SFS) supports its custom-
ers' investments with leasing solutions and equipment,
project and structured financing in the form of debt and
equity investments. Based on its comprehensive financ-
ing know-how and specialist technology expertise in the
areas of Siemens businesses, SFS provides financial solu-
tions for Siemens customers as well as other companies.
A.3.6 Siemens Financial Services
The planned acquisition of Varian Medical Systems, Inc.,
U.S. (Varian), announced in August 2020, will add an
additional business within Siemens Healthineers. It ad-
dresses the field of cancer care and provides innovative
solutions in radiation oncology and related software.
business was negatively affected, resulting in clear
market declines in fiscal 2020. Given that hospitals had
to free up capacities and resources for potential COVID-19
emergencies, the number of routine and elective proce-
dures severely decreased. It is expected to fully recover
only after the end of fiscal 2021. On a regional basis, pub-
lic investment programs in selected countries as well as
increased demand related to COVID-19 in several major
countries drove market growth for the imaging and
advanced therapies businesses in Europe, C.I.S., Africa,
Middle East. This counterbalanced negative effects due
to country lockdowns, resulting in clear to significant
overall market growth in fiscal 2020 in those markets.
Clear market growth for the diagnostics business in that
region was driven by test programs for SARS-CoV-2. For
the U.S. market, project postponements or cessation and
limited access to healthcare providers due to COVID-19
pandemic and related lockdowns resulted in significant
market declines across all imaging and advanced
therapies markets. The continued rise in COVID-19 cases
increased the U.S. diagnostics market growth on clear
levels, as demand for molecular and point-of-care
COVID-19 tests further increased. In China, the most
important market for Siemens Healthineers in the Asia,
Australia region, lockdowns and postponed or cancelled
elective procedures led to clear declines in the market for
the advanced therapies business. In contrast, public
investments in selected provinces with a high number of
COVID-19 cases drove significant market growth in the
imaging business. The growing private market segment
was more burdened by the COVID-19 crisis, leading to a
slower recovery and potential consolidation within that
segment. Although diagnostic tests were widely applied
to identify SARS-CoV-2, including large scale testing
of whole populations of certain regions, this additional
demand could not counterbalance the downturn of
routine testing, resulting in an overall significant
decrease in the diagnostics market.
29,901
28,946
2019
2020
Sep 30,
% Change
Comp.
basis, orders were up in the Americas and in Europe,
C.I.S., Africa, Middle East, while order intake in the Asia,
Australia region was near the prior-year level. For reve-
nue, slight increases in the imaging and advanced thera-
pies businesses were offset by a moderate decline in
the diagnostics business. On a regional basis, moderate
growth in Europe, C.I.S., Africa, Middle East was offset
by slight decreases in the Americas and Asia, Australia.
Adjusted EBITA was down year-over-year, mainly due
to the diagnostics business where COVID-19 led to lower
volume from testing for routine care and higher costs,
and where costs rose also related to Atellica Solution.
Adjusted EBITA was down slightly in the advanced thera-
pies business. In contrast, the imaging business again
posted strong results, which were higher than in the prior
year. Severance charges were €65 million in fiscal 2020
and €57 million in fiscal 2019. The order backlog for
Siemens Healthineers was €18 billion at the end of the
fiscal year, of which €6 billion are expected to be con-
verted into revenue in fiscal 2021.
therein: Germany
In the Europe, C.I.S., Africa, Middle East region, order
intake was down significantly year-over-year due mainly
to a lower volume from large orders in Mobility, which
won several large contracts in the prior year, and clear
declines in Smart Infrastructure and Digital Industries
that were only partly offset by a moderate increase in
Siemens Healthineers. In contrast to the region overall,
orders were up clearly in Germany, driven by sharp
growth in Mobility which won several large contracts in
the year under review, among them a €1.1 billion order
for high-speed trains and a €0.3 billion order for regional
trains. Siemens Healthineers posted clear growth in
Germany year-over-year, while order intake declined in
Smart Infrastructure and Digital Industries.
2020
2019
Siemens Energy Investment
Siemens Real Estate
Corporate items
(24)
325
135
(892)
(472)
Centrally carried pension expense
(211)
(210)
Amortization of intangible assets
acquired in business combinations
Eliminations, Corporate Treasury
and other reconciling items
Reconciliation to Consolidated
Financial Statements
(691)
(634)
(236)
(310)
(1,730)
(1,491)
Although the broad range of businesses are operating in
diverse markets, overall, the main markets served by
Portfolio Companies are generally impacted by rising un-
certainties regarding geopolitical and economic develop-
ments, including developments mentioned above, which
are expected to weaken investment sentiment also in the
coming year.
Fiscal year
During fiscal 2020 Flender's businesses recorded in-
creases in revenue from €2,021 million in fiscal 2019 to
€2,185 million and in Adjusted EBITA from €129 million
to €169 million. At the end of October 2020, Siemens
agreed to sell Flender GmbH, Germany, for a price of
€2.0 billion to Carlyle Group Inc., U.S. The transaction,
which is subject to foreign-investment and antitrust ap-
provals, is expected to close in the first half of calendar
2021. The criteria for the classification of Flender's busi-
nesses as held for disposal and discontinued operations
will be met in the first quarter of fiscal 2021.
(in millions of €)
progress and delivered an improved earnings per-
formance, Adjusted EBITA for fully consolidated units
decreased substantially compared to fiscal 2019 due to a
goodwill impairment of €99 million related to Siemens
Energy Assets, mainly to the activities in Asia. In addition,
sharply higher negative results from equity investments
due mainly to an impairment of €453 million on the
Valeo Siemens eAutomotive investment. Results from
investments accounted for using the equity method are
expected to remain volatile in coming quarters. Portfolio
Companies' order backlog was €4 billion at the end of
fiscal 2020, of which €3 billion was expected to be con-
verted into revenue in fiscal 2021.
Combined Management Report → A.3 Segment information
Siemens as majority shareholder holds about 79% of the
shares of the publicly listed Siemens Healthineers AG,
Germany (Siemens Healthineers). Siemens Healthineers
is a global provider of healthcare solutions and services.
It develops, manufactures, and sells a diverse range of
innovative imaging, diagnostic and advanced therapies
products and services to healthcare providers. In addi-
tion, it also provides clinical consulting services, comple-
mented by an extensive range of training and service
offerings. This comprehensive portfolio supports cus-
tomers all along the care continuum, from prevention
and early detection to diagnosis, treatment, and follow-
up care. The customer spectrum ranges from public and
private healthcare providers, including hospitals and hos-
pital systems, public and private clinics and laboratories,
universities, physicians/physician groups, public health
agencies, state-run and private health insurers, to phar-
maceutical companies and clinical research institutes. In
its imaging business, the most important products are
equipment for magnetic resonance, computed tomogra-
phy, X-ray systems, molecular imaging, and ultrasound.
Its diagnostics business offers in-vitro diagnostic prod-
ucts and services to healthcare providers in laboratory,
molecular and point-of-care diagnostics. The products in
its advanced therapies business facilitate image-guided
minimally invasive treatments, in areas such as cardiol-
ogy, interventional radiology, surgery and radiation on-
cology. In October 2019, Siemens Healthineers acquired
Corindus Vascular Robotics, Inc., USA, (Corindus) for
US$1.1 billion (€1.0 billion) in cash. Corindus develops and
provides a robotic-assisted platform for endo-vascular
coronary and peripheral vascular interventions and was
integrated in the advanced therapies business. In Sep-
tember 2020, Siemens Healthineers AG placed 75 million
new shares to institutional investors. Siemens did not
participate in the placement, thus, Siemens' stake in
Siemens Healthineers decreased from 85% to 79%. Com-
petition in the imaging and advanced therapies busi-
nesses consists mainly of a small number of large multi-
national companies, while the diagnostics market is
fragmented with a variety of global players that compete
with each other across market segments and also with
several regional players and specialized companies in
niche technologies. The business activities of Siemens
ANNUAL REPORT 2020 16
Volume development was held back by impacts related
to COVID-19 and the development of the oil-price. Lower
orders were due mainly to Siemens Logistics and Large
Drives Applications. Lower revenue was due mainly to
Siemens Energy Assets primarily related to mandated
0.0%
(9.3)%
n/a
2
(504)
Adjusted EBITA
Adjusted EBITA
margin
0%
(1)%
5,455
5,393
(4)%
(5)%
5,562
5,258
nesses. Although the fully consolidated units made good Statements
Profit
Siemens Energy Investment comprised the results re-
lated to our investment in Siemens Energy for the period
between September 25, 2020 (spin-off day) and the fiscal
year-end.
Higher profit at Siemens Real Estate was driven by gains
related to disposals mainly due to transfers to Siemens
Pension-Trust e.V. in Germany to fund pension plans, in-
cluding a gain of €219 million from the transfer of an in-
vestment in the first quarter of fiscal 2020.
The change in Corporate items involved a mix of factors.
The main factor of the change was a positive effect in
the prior year resulting from the measurement of a major
asset retirement obligation. Severance charges within
Corporate items were €68 million (€99 million in fiscal
2019).
(1)%
(5)%
14,361 14,049
2%
3%
therein: China
7,840 7,065
11%
Siemens (continuing operations)
59,977 64,682
therein: emerging markets'
16,120
18,111
(7)%
(11)%
(7)%
(8)%
1 As defined by the International Monetary Fund.
12%
In a challenging environment resulting from COVID-19,
orders related to external customers were clearly down
year-over-year, due mainly to a substantial decline in
Mobility which in the prior year recorded a higher volume
from large orders. While Siemens Healthineers posted
slight growth, order intake in Digital Industries was close
to the prior-year level and down clearly in Smart Infra-
structure. The decrease in emerging markets was due
mainly to lower order intake in Russia, which in the prior
year had included a €1.2 billion contract for high-speed
trains including maintenance at Mobility.
14,458 14,675
(9)%
(8)%
17,045 18,469
Eliminations, Corporate Treasury and other reconciling
items included lower interest expenses on debt.
ANNUAL REPORT 2020 17
Combined Management Report → A.4 Results of operations
A.4
Results of operations
A.4.1 Orders and revenue
by region
Currency translation effects took one percentage point
each from order and revenue development; portfolio
transactions added one percentage point to order devel-
opment but had only minimal effects on revenue devel-
opment year-over-year. The resulting ratio of orders to
revenue (book-to-bill) for Siemens in fiscal 2020 was
1.05. The order backlog was €70 billion as of Septem-
ber 30, 2020.
Orders (location of customer)
Americas
ANNUAL REPORT 2020 18
therein: U.S.
% Change
Comp.
(11)%
8%
(in millions of €)
2020
Fiscal year
2019
Actual
Europe, C.I.S., Africa, Middle East
28,571 32,164
10,927 10,088
(11)%
8%
Asia, Australia
A.3.5 Siemens Healthineers
A.3.8 Reconciliation
to Consolidated Financial
ANNUAL REPORT 2020 12
Actual
Comp.
14,734
15,590
(5)%
(5)%
14,323
2020
14,597
(2)%
therein: products
business
5,224
5,515
(5)%
(5)%
Adjusted EBITA
Adjusted EBITA
margin
(2)%
1,302
(in millions of €)
Fiscal year
Combined Management Report → A.3 Segment information
factory closures, which more than offset increases in
other fully consolidated units, primarily Flender's busi-
Orders
Revenue
Combined Management Report → A.3 Segment information
pandemic while continuing to address historic techno-
logical changes driven by CO₂ emission reduction. The
production cuts in the automotive industry were also a
main factor for a massive decline in demand in the ma-
chine building industry. The food and beverage markets
declined moderately due to weak demand for beverages.
The chemicals and pharmaceuticals industry was less
impacted by the pandemic, due mainly to stable produc-
tion levels in the pharmaceuticals industry. The global
electronics and semiconductor markets kept growing
during fiscal 2020. While the forecast for fiscal 2021 indi-
cates a slight recovery of the markets served by Digital
Industries, including moderate expansion in manufactur-
ing investments, pre-pandemic market volume is not
expected to be reached in the next fiscal year.
In October 2020, the stake in Bentley was transferred to
Corporate items, reported within the Reconciliation to
Consolidated Financial Statements. In November 2020,
to further strengthen Siemens' pension assets and safe-
guards the post-employment benefits of employees,
Siemens transferred the stake in Bentley from Corporate
items to Siemens Pension-Trust e. V.
A.3.3 Smart Infrastructure
% Change
Smart Infrastructure supplies and intelligently connects
energy systems and building technologies, to signifi-
cantly improve efficiency and sustainability of public and
private infrastructures, while supporting its customers in
addressing major technology shifts. Smart Infrastructure
delivers these benefits with a range of products and sys-
tems for intelligent grid control, low- and medium volt-
age electrification and control products, building auto-
mation, fire safety and security and energy efficiency in
buildings. At the grid edge – the interface between en-
ergy grids and buildings and energy consumers - Smart
Infrastructure serves high-growth markets in distributed
energy systems, electric vehicle infrastructure, microg-
rids and energy trading. Beginning with fiscal 2020, the
distribution transformer business was transferred to the
former segment Gas and Power. Smart Infrastructure
serves its customers through a broad range of channels,
including its global product and systems sales organi-
zation, distributors, panel builders, original equipment
The markets served are experiencing shifts that present
opportunities where building technologies and electri-
fication meet. Key trends include climate change, rising
population and urbanization which increase the need for
safe, secure and sustainable environments that provide
interactive, comfortable spaces and affordable costs for
energy, operation and maintenance. These trends lead to
cross-sector coupling of previously separate technolo-
gies, such as electrification of heat and transportation to
optimize energy efficiency. Decarbonization is changing
the energy generation mix towards renewable energy
sources, which fluctuate with time of day and weather
conditions. As a result, the energy system is becoming
ANNUAL REPORT 2020 9
Combined Management Report → A.3 Segment information
increasingly decentralized, more strongly influenced
by prosumers, and more dependent on integration of
intermittent/distributed energy sources including wind,
photovoltaic and biomass. Both smarter buildings and
the integration of more distributed energy sources into
conventional power networks result in increasing tech-
nological and management complexity, including rising
volumes of data, bi-directional energy and information
flows. These can be reliably managed only through
digitalization of buildings, transportation and energy
systems.
Smart Infrastructure's R&D activities focus on the one
hand on addressing the trends of decentralization, decar-
bonization and digitalization of energy markets. On the
other hand, R&D expenses strengthen Smart Infrastruc-
ture's capabilities to create comfortable, safe and energy-
efficient buildings and infrastructures that support in-
creased efficiency of occupants, equipment and the use
of building space. Smart Infrastructure is expanding its
digital offerings in its existing businesses while integrat-
ing recent acquisitions in such critical areas as power
control systems, power electronics and building loT. Fur-
thermore, it develops technologies for environmentally
friendly and increasingly renewable energy systems,
ranging from photovoltaic inverter technology to battery
storage and charging solutions for e-mobility. In this re-
gard, data from field devices is the basis to intelligently
deliver grid flexibility and continuously match energy
supply and demand while protecting grid assets. For elec-
trical distribution systems and industrial plants, Smart
Infrastructure continuously drives digitalization of its
switching and control products with built-in intelligence,
connectivity to the cloud, and increasingly remote diag-
nostics and edge computing capability. Its digital twins
of products, building systems or grids deliver customer
value with online configuration tools, maintenance and
service management. Smart Infrastructure also develops
data-driven applications and digital services. To a large
extent, its capital expenditures relate to the products
businesses. Main investment areas are replacement of
fixed assets and further digitalization of factories and
technical equipment, with a strong focus on innovation.
Orders
Revenue
manufacturers (OEM) and value added resellers and in-
stallers, all complemented by direct sales through the
branch offices of its regional solutions and services units
worldwide. Smart Infrastructure's customer base is di-
verse. It encompasses infrastructure developers, con-
struction companies and contractors; owners, operators
and tenants of both public and commercial buildings in-
cluding hospitals, campuses, airports and data centers;
utilities and power distribution network operators; com-
panies in heavy industries such as oil and gas, mining and
chemicals; and companies in discrete manufacturing in-
dustries such as automotive and machine building. Smart
Infrastructure's principal competitors consist mainly of
large multinational companies and smaller manufactur-
ers in emerging countries. Its solutions and services busi-
ness also competes with local players such as system
integrators and facility management firms. Smart Infra-
structure's businesses are impacted by changes in the
overall economic environment to varying degrees, de-
pending on customer segment. While customer demand
in discrete manufacturing industries changes quickly
and strongly with macroeconomic cycles, it reacts more
slowly in infrastructure, construction, heavy industries
and the utilities sector. Particularly in its solutions and
service business, Smart Infrastructure is affected by
changes in the non-residential building construction
markets with a time lag of two to four quarters. Overall,
Smart Infrastructure has developed a balanced and resil-
ient business mix with its diversified regional and vertical
markets; its range of products, systems, solutions and
services; and its participation in both long- and short-
cycle markets.
1,465
2019
9.1%
2020
Fiscal year
2019
Actual
9,169
12,894
8,916
822
9.1%
Adjusted EBITA margin
983
11.0%
% Change
Comp.
(29)%
2%
Although Mobility won a number of important orders in
fiscal 2020, orders overall still declined compared to the
prior year, which included a sharply higher volume from
large orders. Those important orders in fiscal 2020 in-
cluded a €1.1 billion contract for high-speed trains; orders
for the commuter rail platform Mireo, such as a first order
for battery-powered trains including a long-term service
agreement; a first order of 100 dual-power locomotives
out of a framework agreement comprising up to 400 ve-
hicles, all in Germany; and an order for signaling infra-
structure in Singapore. Revenue rose on clear growth in
the rolling stock business, which executed strongly on its
large order backlog, and in the customer services busi-
ness. These increases were partly offset by lower revenue
in the rail infrastructure business. Volume development
in the rail infrastructure and the customer services busi-
nesses was impacted by effects related to COVID-19, in-
cluding restricted access to customer sites and lower
operating mileage on public transport. On a geographic
basis, revenue rose in Europe, C.I.S., Africa, Middle East,
due particularly to a significant growth contribution from
Germany, and in the Americas. This growth was partly
offset by a double-digit decline in revenue in Asia, Aus-
tralia. Adjusted EBITA and profitability declined due to a
less favorable revenue mix year-over-year, including a
lower share from the higher-margin rail infrastructure
business and expenses related to COVID-19 for internal
(11)%
While the long-term demand for efficient and environ-
mentally friendly public transport continues to be a
growth driver for the markets served by Mobility, order
development in fiscal 2020 partly reflected the postpone-
ment of large rail and infrastructure projects due to
COVID-19, which led to a temporary decline in market
volume, particularly in Europe. Despite these postpone-
ments, market development in Europe continued to be
characterized by awards of mid-size to large orders, par-
ticularly in Germany, France and in the U.K. Demand in
the Middle East and Africa was held back by ongoing
uncertainties related to budget constraints and political
climates. In the Americas region, investment activities
were driven by demand for urban and mainline trans-
port, especially in the U.S. and Canada. Within the Asia,
Australia region, Chinese markets saw ongoing invest-
ments in high-speed trains, urban transport, freight
logistics and rail infrastructure, while India continues to
invest in modernizing the country's transportation infra-
structure. We expect these main regional investment
trends to continue in fiscal 2021. Furthermore, we expect
market volume in fiscal 2021 to exceed the pre-pandemic
level due in part to fiscal stimulus that benefits rail and
public transport operators across various countries. Over-
all, rail transport and intermodal mobility solutions are
expected to remain a focus as urbanization continues to
progress around the world. In emerging countries, rising
incomes are expected to result in greater demand for
public transport solutions.
measures to safeguard employee health in manufactur-
ing facilities. Severance charges were €20 million in both
fiscal years under review. Mobility's order backlog was
€32 billion at the end of the fiscal year, of which €8 billion
are expected to be converted into revenue in fiscal 2021.
(29)%
2%
(16)%
new system architecture for rail infrastructure and loT/
cloud-based concepts; solutions for more automated
and autonomous driving for rail and road; and digital
technologies and loT solutions including cyber security,
connectivity, simulation and digital twin, data analytics
and Al, additive manufacturing or intermodal apps and
platforms and connected e-mobility. Mobility's invest-
ments focus mainly on maintaining or enhancing its pro-
duction facilities for example in its Sacramento facility in
the U.S. or its new site in Goole in the U.K., on meeting
project demands and enhancing its depot services.
9,052
Revenue
10.0%
The decline in orders at Smart Infrastructure primarily
involves the solutions and services business, which took
in a sharply higher volume from large orders a year
earlier. Orders in the products business decreased only
moderately year-over-year, despite an adverse market
environment for the short-cycle activities at the be-
ginning of fiscal 2020 that rapidly became significantly
worse due to COVID-19. The systems and software busi-
ness was able to keep orders close to the prior-year level.
Weakness in short-cycle markets also strongly impacted
revenue development in the products business. Revenue
for the solutions and services business and for the sys-
tems and software business remained close to the prior-
year levels. On a geographic basis, the decline in orders
and revenue was due to the regions Europe, C.I.S., Africa,
Middle East and Asia, Australia, while volume in the
Americas remained largely stable. Adjusted EBITA de-
clined across the businesses and was impacted by sever-
ance charges of €195 million associated with the execu-
tion of Smart Infrastructure's competitiveness program,
up from severance charges of €46 million a year earlier.
Impacts on Adjusted EBITA and profitability related to
COVID-19 were partly offset by expense reductions result-
ing from pandemic restrictions. Adjusted EBITA in fiscal
2020 benefited from a €159 million gain from the sale of
a business while the prior fiscal year included negative
effects related to grid control projects. Smart Infrastruc-
ture's order backlog was €10 billion at the end of the fis-
cal year, of which €7 billion are expected to be converted
into revenue in fiscal 2021.
Adjusted EBITA
ANNUAL REPORT 2020 10
Combined Management Report → A.3 Segment information
-
and gas and machine-building industries. In the chemi-
cals industry, demand declined moderately. Grid markets
remained relatively stable, as utilities continued to prior-
itize investment in making legacy networks more auto-
mated, intelligent, flexible and reliable. Despite a moder-
ate decline in demand in the construction market overall,
the important segment of that market for Smart Infra-
structure energy performance services - continued to
grow, benefiting from persistent demand for energy effi-
ciency and digital services. The data center market grew
clearly, supported by higher demand for remote working
and cloud services. On a geographic basis, European
markets were most strongly impacted by effects related
to COVID-19, followed by the markets in the Asia, Austra-
lia region, while impacts on the U.S. markets were less
severe. In fiscal 2021, utilities markets are expected to
grow moderately and industry markets are forecast to
recover slightly. However, market development overall
is expected to be impacted by lower demand from the
building construction sector, leading to an overall slight
decline in volume of markets served by Smart Infrastruc-
ture year-over-year. On a geographic basis, markets in
Asia, Australia are expected to return to their growth path
with some of the region's countries already reaching
pre-pandemic market volume. Markets in Europe overall
are expected to remain on the reduced level and within
the Americas, market volume in the U.S. is forecast to
decline in fiscal 2021.
A.3.4 Mobility
Mobility combines all Siemens businesses in the area of
passenger and freight transportation, including rail vehi-
cles, rail automation systems, rail electrification systems,
road traffic technology, digital solutions and related ser-
vices. It also provides its customers with consulting, plan-
ning, financing, construction, service and operation of
turnkey mobility systems. Moreover, Mobility offers inte-
grated mobility solutions for networking of different
types of traffic systems. It sells its products, systems and
solutions through its worldwide network of sales units.
The principal customers of Mobility are public and state-
owned companies in the transportation and logistics sec-
tors, so its markets are driven primarily by public spend-
ing. Customers usually have multi-year planning and
Demand in the markets served by Smart Infrastructure
declined moderately in fiscal 2020 due primarily to ef-
fects related to COVID-19, which impacted most key cus-
tomer industries and all reporting regions. The strongest
declines in market volume came from the automotive, oil
The main trends driving Mobility's markets are urbaniza-
tion and the need to reduce emissions. Increasing popu-
lations in urban centers need daily mobility that is sim-
pler, faster, and more flexible, reliable and affordable. At
the same time, cities and national economies face the
challenge of cutting CO2 and noise emissions and reduc-
ing space requirements and costs of transportation. The
pressure on mobility providers to meet all these needs is
expected to rise continuously.
Mobility's R&D strategy is focused on making trains and
infrastructures more intelligent, thereby increasing its
customers' return on investment, improving passenger
experience, and guaranteeing availability. Decarboniza-
tion and seamlessly connected (e-)mobility are key fac-
tors for the future of transportation. Mobility's major
R&D areas include the development of efficient vehicle
platforms with optimized lifecycle cost and maximum
customization flexibility; eco-friendly, alternative power
supplies for trains (batteries, fuel cells, dual mode) and
trucks (eHighway); digital services for railways via its
Railigent application suite; "signaling in the cloud," a
ANNUAL REPORT 2020 11
Combined Management Report → A.3 Segment information
(in millions of €)
Orders
implementation horizons, and their contract tenders
therefore tend to be independent of short-term eco-
nomic trends. Mobility's principal competitors are multi-
national companies. Consolidation among Mobility's
competitors is continuing: In May 2020, CRRC Zhuzhou
Locomotives Co., Ltd., China (CRRC) finalized the acqui-
sition of Vossloh Locomotives GmbH, Germany to gain a
foothold in Europe, in line with CRRC's ambitious growth
and internationalization strategy. In September 2020,
Alstom SA of France (Alstom) signed the sale and pur-
chase agreement for the acquisition of Bombardier Trans-
portation. Already in July 2020, the European Commis-
sion decided to grant conditional clearance of the
proposed acquisition. The closing of the transaction is
expected for the first quarter of calendar 2021, subject to
regulatory approvals and customary closing conditions.
While CRRC retains its place as the largest rolling stock
manufacturer in the world in terms of revenue, the
planned acquisition of Bombardier Transportation by
Alstom will create the second-largest rolling stock manu-
facturer worldwide. Market consolidation may lead to in-
creased competitive pressure within the rail supply indus-
try and also to fewer sourcing options for rail customers.
As of September 30, 2020, the Audit Committee comprised
Dr. Werner Brandt (Chairman), Bettina Haller, Jürgen Kerner,
Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
Birgit Steinborn and Matthias Zachert. Robert Kensbock
was a member of the committee until September 25,
2020. The members of the Audit Committee are, as a
group, familiar with the sector in which the Company
operates. Pursuant to the German Stock Corporation Act,
the Audit Committee must include at least one Super-
visory Board member with knowledge and experience in
the areas of accounting or the auditing of financial state-
ments. Pursuant to the Code, the chairman or chair-
woman of the Audit Committee shall have specialist
knowledge and experience in the application of account-
ing principles and internal control processes, be familiar
with audits and be independent. The Chairman of the
Audit Committee, Dr. Werner Brandt, fulfills these re-
quirements.
The Audit Committee oversees, in particular, the account-
ing and the accounting process and conducts a prelimi-
nary review of the Annual Financial Statements of
Siemens AG, the Consolidated Financial Statements of
the Siemens Group and the Combined Management
Report of Siemens AG and the Siemens Group (including
non-financial measures). On the basis of the indepen-
dent auditors' report on their audit of the annual finan-
cial statements, the Audit Committee makes, after its
preliminary review, recommendations regarding Super-
visory Board approval of the Annual Financial Statements
of Siemens AG and the Consolidated Financial State-
ments of the Siemens Group. The Audit Committee dis-
cusses the Quarterly Statements and Half-year Financial
Report with the Managing Board and the independent
auditors and deals with the auditors' reports on the re-
view of the Half-year Consolidated Financial Statements
and Interim Group Management Report. It concerns itself
with the Company's risk monitoring system and oversees
the effectiveness of its internal control, risk management
and internal audit systems as well as the internal process
for related party transactions. The Audit Committee re-
ceives regular reports from the internal assurance depart-
ment. It prepares the Supervisory Board's recommenda-
tion to the Annual Shareholders' Meeting concerning the
election of the independent auditors and submits the
corresponding proposal to the Supervisory Board. Prior to
submitting this proposal, the Audit Committee obtains a
statement from the prospective independent auditors
affirming that their independence is not in question.
It awards the audit contract to the independent auditors
elected by the Annual Shareholders' Meeting and moni-
tors the independent audit of the financial statements as
well as the auditors' selection, independence, qualifica-
tion, rotation and efficiency and the services rendered by
the auditors. The Audit Committee assesses the quality of
the audit of the financial statements on a regular basis.
Outside its meetings, the Supervisory Board is also in reg-
ular communication with the independent auditors via
the Chairman of the Audit Committee.
German positions:
As of September 30, 2020, the Compensation Commit-
tee comprised Werner Wenning (Chairman), Michael
Diekmann, Harald Kern, Jürgen Kerner, Jim Hagemann
Snabe and Birgit Steinborn. Robert Kensbock was a
member of the committee until September 25, 2020.
Additional Information → C.4 Corporate Governance
ANNUAL REPORT 2020 189
The Compensation Committee prepares, in particular,
the proposals for decisions at the Supervisory Board's
plenary meetings regarding the system of Managing
Board compensation, including the implementation of
this system in Managing Board contracts, the definition
of the targets for variable Managing Board compensa-
tion, the determination and review of the appropriate-
ness of the total compensation of individual Managing
Board members and the approval of the annual Compen-
sation Report.
the targets for the proportion of women on the Manag-
ing Board that have been defined by the Supervisory
Board and the diversity concept for the Managing Board
that has been approved by the Supervisory Board. The
Chairman's Committee concerns itself with questions
regarding the Company's corporate governance and pre-
pares the resolutions to be approved by the Supervisory
Board regarding the Declaration of Conformity with the
Code - including the explanation of deviations from the
Code and regarding the approval of the corporate gov-
ernance reporting and of the Report of the Supervisory
Board to the Annual Shareholders' Meeting. It is respon-
sible for approving the Company's related party transac-
tions. Furthermore, the Chairman's Committee submits
recommendations to the Supervisory Board regarding
the composition of the Supervisory Board committees
and decides whether to approve contracts and business
transactions with Managing Board members and parties
related to them.
-
The Chairman's Committee makes proposals, in particu-
lar, regarding the appointment and dismissal of Manag-
ing Board members and is responsible for concluding,
amending, extending and terminating employment con-
tracts with members of the Managing Board. When mak-
ing recommendations for first-time appointments, it
takes into account that the terms of these appointments
shall not, as a rule, exceed three years, whereby it is to be
determined in each individual case what period of ap-
pointment is to be deemed appropriate within the legally
permissible period. In preparing recommendations re-
garding the appointment of Managing Board members,
the Chairman's Committee takes into account the candi-
dates' professional qualifications, international experi-
ence and leadership qualities, the age limit specified for
Managing Board members and the long-range plans for
succession as well as diversity. It also takes into account
In fiscal 2020, the Supervisory Board had seven commit-
tees,
, 
whose duties, responsibilities and procedures fulfill
the requirements of the German Stock Corporation Act
(Aktiengesetz) and the German Corporate Governance
Code (Code). The chairmen of these committees provide
the Supervisory Board with regular reports on their com-
mittees' activities.
SUPERVISORY BOARD COMMITTEES
Robert Kensbock left the Supervisory Board on Septem-
ber 25, 2020, the effective date of the spin-off of Siemens'
energy business. Tobias Bäumler (born on October 10,
1979), the Deputy Chairman of the Central Works Council
and the Combine Works Council of Siemens AG, was ap-
pointed by court order on October 16, 2020, to succeed
him and to complete his term of office as an employee
representative on the Supervisory Board.
→ Siemens Industry Software GmbH,
Cologne
The Compliance Committee concerned itself, in partic-
ular, with monitoring the Company's adherence to statu-
tory provisions, official regulations and internal Company
policies (compliance).
As of September 30, 2020, the Chairman's Committee com-
prised Jim Hagemann Snabe (Chairman), Jürgen Kerner,
Birgit Steinborn and Werner Wenning.
As of September 30, 2020, the Compliance Commit-
tee comprised Jim Hagemann Snabe (Chairman),
Dr. Werner Brandt, Bettina Haller, Harald Kern, Jürgen
Kerner, Dr. Nicola Leibinger-Kammüller, Birgit Steinborn
and Matthias Zachert. Effective October 1, 2020, the
duties that had been transferred to the Compliance Com-
mittee were assumed again by the Audit Committee, and
the Compliance Committee was thereby dissolved.
The composition of the Supervisory Board fulfilled the
legal requirements regarding the minimum gender quota
in the reporting period.
-
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2020)
ANNUAL REPORT 2020
When filling managerial positions at the Company, the
Managing Board takes diversity into account and, in par-
ticular, aims for an appropriate consideration of women
and internationality. In 2017, the Managing Board set the
target for the percentage of women at each of the two
management levels below the Managing Board at 20%,
applicable in each case until June 30, 2022.
At Siemens AG, the target for the proportion of women
on the Managing Board has been set at a minimum of
25% until June 30, 2022.
C.4.2.4 Targets for the quota of women
on the Managing Board and at the two
management levels below the Managing
Board; Information on Supervisory
Board compliance with minimum gender
quota requirements
A general description of the composition and operation
of the Managing Board, the Supervisory Board and their
committees, including the Supervisory Board's self-
assessment, can be found in chapter > C.4.1 MANAGEMENT
AND CONTROL STRUCTURE. Further details can be derived
from the bylaws for the governing bodies concerned.
C.4.2.3 Operation of the Managing
Board and the Supervisory Board,
and composition and operation of
their committees
The Nominating Committee is responsible for making
recommendations to the Supervisory Board on suitable
candidates for the election by the Annual Shareholders'
Meeting of shareholder representatives on the Super-
visory Board. In preparing these recommendations, the
objectives defined by the Supervisory Board for its com-
position and the approved diversity concept – in particu-
lar, independence and diversity – are to be appropriately
considered, as are the proposed candidates' required
knowledge, abilities and professional experience. Fulfill-
ment of the required profile of skills and expertise is also
to be aimed at. Attention shall be paid to an appropriate
participation of women and men in accordance with the
The Business Conduct Guidelines provide the ethical and
legal framework within which we want to conduct our ac-
tivities and remain on course for success. They contain the
basic principles and rules for our conduct within our Com-
pany and in relation to our external partners and the gen-
eral public. They set out how we meet our ethical and legal
responsibility as a Company and give expression to our
Company values: "Responsible" - "Excellent" - "Innovative."
In the 173 years of its existence, our Company has built an
excellent reputation around the world. Technical perfor-
mance, innovation, quality, reliability, and international
The Mediation Committee submits proposals to the
Supervisory Board in the event that the Supervisory
Board cannot reach the two-thirds majority required for
the appointment or dismissal of a Managing Board mem-
ber on the first ballot.
As of September 30, 2020, the Nominating Committee
comprised Jim Hagemann Snabe (Chairman), Dr. Nicola
Leibinger-Kammüller, Benoît Potier and Werner Wenning.
legal requirements relating to the gender quota as well
as to ensuring that the members of the Supervisory
Board are, as a group, familiar with the sector in which
the Company operates.
Additional Information → C.4 Corporate Governance
190
ANNUAL REPORT 2020
engagement have made Siemens a leading company in
its areas of activity. It is top performance with the highest
ethics that has made Siemens strong. This is what the
Company will continue to stand for in the future.
Shareholders' Committee.
ANNUAL REPORT 2020
3 Group company position.
In accordance with the German Stock Corporation
Act, the Supervisory Board is composed of at least
30% women and at least 30% men. The Nominat-
ing Committee shall continue to include at least one
female member.
INDEPENDENCE
The Supervisory Board shall include what the share-
holder representatives on the Supervisory Board con-
sider to be an appropriate number of independent
shareholder representatives. More than half of the
shareholder representatives shall be independent of
the Company and its Managing Board. Substantial
and not merely temporary - conflicts of interest are to
be avoided.
No more than two former members of the Managing
Board of Siemens AG shall belong to the Supervisory
Board.
The Supervisory Board members shall have sufficient
time to exercise their mandates with the necessary
regularity and diligence.
LIMITS ON AGE AND ON LENGTH OF MEMBERSHIP
In compliance with the age limit stipulated by the
Supervisory Board in its Bylaws, only individuals who
are no older than 70 years of age shall, as a rule, be
nominated for election to the Supervisory Board.
Nominations shall take into account the regular limit
established by the Supervisory Board, which restricts
membership on the Supervisory Board to a maximum
of three full terms of office. It is considered helpful if
different age groups are represented on the Super-
visory Board."
IMPLEMENTATION OF THE OBJECTIVES REGARDING
THE SUPERVISORY BOARD'S COMPOSITION AS
WELL AS THE PROFILE OF REQUIRED SKILLS AND
EXPERTISE AND THE DIVERSITY CONCEPT FOR THE
SUPERVISORY BOARD; INDEPENDENT SUPERVISORY
With regard to the composition of the Supervisory
Board, attention shall be paid to achieving sufficient
diversity. Not only is appropriate consideration to be
given to women. Diversity of cultural heritage and a
wide range of different educational and professional
backgrounds, experiences and ways of thinking are
also to be promoted. When considering possible can-
didates for new elections or for filling Supervisory
Board positions that have become vacant, the Super-
visory Board shall give appropriate consideration to
diversity at an early stage in the selection process.
BOARD MEMBERS
ANNUAL REPORT 2020 197
Additional Information → C.4 Corporate Governance
required skills and expertise and the diversity concept -
into consideration in the nominations of three shareholder
representatives to be elected by the Annual Shareholders'
Meeting in 2021.
The Supervisory Board is of the opinion that, with its cur-
rent composition, it meets the objectives for its composi-
tion and fulfills the profile of required skills and expertise
as well as the diversity concept. The Supervisory Board
members have the specialist and personal qualifications
considered necessary. As a group, they are familiar with
the sector in which the Company operates and have the
knowledge, skills and experience essential for Siemens.
A considerable number of Supervisory Board members
are engaged in international activities and/or have many
years of international experience. Appropriate consider-
ation has been given to diversity in the Supervisory
Board. In fiscal 2020, the Supervisory Board had seven
female members, of whom three are shareholder repre-
sentatives and four are employee representatives. As a
result, 35% of the Supervisory Board members are
women. Dr. Nicola Leibinger-Kammüller is a member of
the Nominating Committee.
In the estimation of the shareholder representatives, the
Supervisory Board now has at least eight independent
shareholder representatives – namely, Dr. Werner Brandt,
Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
Baroness Nemat Shafik, Dr. Nathalie von Siemens,
Jim Hagemann Snabe, Werner Wenning and Matthias
Zachert and thus an appropriate number of members
who are independent in the meaning of the Code. The
regulations establishing limits on age and restricting
membership in the Supervisory Board to three full terms
of office are complied with.
194
198
Within the framework of the selection process and the
nomination of candidates for the Supervisory Board, the
Supervisory Board as well as the Nominating Committee
of the Supervisory Board take into account the objec-
tives regarding the Supervisory Board's composition and
the requirements defined in its diversity concept. The
Supervisory Board and the Nominating Committee have
recently taken the objectives - including the profile of
4
DIVERSITY
Additional Information C.4 Corporate Governance
1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
2 Publicly listed.
2023
January 31,
2018
June 21,
1965
Deputy Chairman of the Central
Works Council of Siemens Industry
Software GmbH
Gunnar Zukunft*
2023
Taking the Company's international orientation into
account, care shall be taken to ensure that the Super-
visory Board has an adequate number of members
with extensive international experience. The goal is to
make sure that the present considerable share of Su-
pervisory Board members with extensive international
experience is maintained.
January 31,
2018
Member since
Date of birth
November 8,
1967
Chairman of the Board of
Management of LANXESS AG²
Occupation
Matthias Zachert
Name
Term
expires¹
Additional Information → C.4 Corporate Governance
C.4.2.6 Objectives regarding the
Supervisory Board's composition as well
as the profile of required skills and
expertise and the diversity concept for
the Supervisory Board
long-term succession planning
Additional Information → C.4 Corporate Governance
ANNUAL REPORT 2020 192
SIEMENS.COM/289F
The information and documents referred to in this chap-
ter - including the Bylaws for the Managing Board, the
Bylaws for the Supervisory Board, the bylaws for Super-
visory Board committees, the Code and the Business
Conduct Guidelines are publicly available at: www.
C.4.2.5 Diversity concept for
the Managing Board and
C.4.2 Corporate Governance
statement pursuant to
Sections 289f and 315d of the
German Commercial Code
The Articles of Association of Siemens AG, the Bylaws for
the Supervisory Board, the bylaws for the most important
Supervisory Board committees, the Bylaws for the Man-
aging Board, our Declarations of Conformity with the
Code and a variety of other corporate-governance-re-
lated documents are posted on the Siemens Global Web-
site at: wWW.SIEMENS.COM/CORPORATE-GOVERNANCE
C.4.2.1 Declaration of Conformity with
the German Corporate Governance Code
The Managing Board and the Supervisory Board of
Siemens AG approved the following Declaration of Con-
formity pursuant to Section 161 of the German Stock
Corporation Act as of October 1, 2020:
As part of our investor relations activities, we inform our
investors comprehensively about developments within
the Company. For communication purposes, Siemens
makes extensive use of the Internet. We publish Quar-
terly Statements, Half-year Financial and Annual Reports,
earnings releases, ad hoc announcements, analyst pres-
entations, letters to shareholders and press releases as
well as the financial calendar for the current year, which
contains the publication dates of significant financial
communications and the date of the Annual Sharehold-
ers' Meeting, at: www.SIEMENS.COM/INVESTORS. When
required, the Chairman of the Supervisory Board dis-
cusses Supervisory-Board-specific topics with investors.
Meeting and implemented by the Managing Board. The
Managing Board facilitates shareholder participation in
this meeting through electronic communications
particular, via the Internet - and enables shareholders
who are unable to attend the meeting to vote by proxy.
Proxies can also be reached during the Annual Sharehold-
ers' Meeting. Furthermore, shareholders may exercise
their right to vote in writing or by means of electronic
communications (absentee voting). The Managing Board
may enable shareholders to participate in the Annual
Shareholders' Meeting without the need to be present at
the venue and without a proxy and to exercise some or all
of their rights fully or partially by means of electronic
communications. The Company enables shareholders to
follow the entire Annual Shareholders' Meeting via the
Internet. Shareholders may submit motions regarding
the proposals of the Managing and Supervisory Boards
and may contest decisions of the Annual Shareholders'
Meeting. Shareholders owning Siemens stock with an
aggregate notional value of €100,000 or more may also
demand the judicial appointment of special auditors to
examine specific issues. The reports, documents and in-
formation required by law for the Annual Shareholders'
Meeting, including the Annual Report, can be down-
loaded from the Siemens Global Website. The same ap-
plies to the agenda for the Annual Shareholders' Meeting
and to any counterproposals or shareholders' nomina-
tions that may require disclosure. For the election of
shareholder representatives on the Supervisory Board, a
detailed curriculum vitae of every candidate is published.
in
-
Additional Information → C.4 Corporate Governance
ANNUAL REPORT 2020 191
C.4.1.4 Annual Shareholders'
Meeting and investor relations
Shareholders exercise their rights at the Annual Share-
holders' Meeting. An ordinary Annual Shareholders'
Meeting normally takes place within the first four months
of each fiscal year. The Annual Shareholders' Meeting de-
cides, among other things, on the appropriation of net
income, the ratification of the acts of the members of the
Managing and Supervisory Boards, and the appointment
of the independent auditors. Amendments to the Articles
of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders'
CIAL STATEMENTS.
In accordance with Section 1 para. 2 of the German Act
Concerning Measures Under the Law of Companies, Co-
operative Societies, Associations, Foundations and Com-
monhold Property to Combat the Effects of the COVID-19
Pandemic (Gesetz über Maßnahmen im Gesellschafts-,
Genossenschafts-, Vereins-, Stiftungs- und Wohnungsei-
gentumsrecht zur Bekämpfung der Auswirkungen der
COVID-19-Pandemie) of March 27, 2020 (Federal Law Ga-
zette | No. 14 2020, p. 570), the Extraordinary Sharehold-
ers' Meeting on July 9, 2020, was conducted as a virtual
shareholders' meeting without the physical presence of
shareholders or their proxies due to the special circum-
stances created by the COVID-19 pandemic.
Details regarding transactions with members of the Man-
aging and Supervisory Boards as related individuals are
available in NOTE 31 in 7 B. 6 NOTES TO CONSOLIDATED FINAN-
"Declaration of Conformity by the Managing Board and
the Supervisory Board of Siemens Aktiengesellschaft
with the German Corporate Governance Code pursu-
ant to Section 161 of the German Stock Corporation Act
→ Siemens AG has not complied with the recommen-
dation in Section 5.4.5 para. 1 sent. 2 of the 2017
Code. According to this recommendation, mem-
bers of the Managing Board of a listed corporation
shall not accept more than a total of three Super-
visory Board mandates in non-group listed corpo-
rations or on the supervisory bodies of non-group
entities that make similar requirements.
THE COMPANY'S VALUES AND
BUSINESS CONDUCT GUIDELINES
Further corporate governance practices applied beyond
legal requirements are contained in our Business Con-
duct Guidelines.
According to the suggestion in D.8 sent. 2, participation
by telephone or video conference in the meetings of the
Supervisory Board and its committees should not be the
rule. At Siemens AG, participation in meetings is, as a
rule, in person. Participation by telephone takes place
only in exceptional cases. Due to the special circum-
stances created by the COVID-19 pandemic, several meet-
ings of the Supervisory Board and its committees in
fiscal 2020 took place as virtual meetings or with the
possibility of participation in a virtual format.
According to the suggestion in A.5 of the Code, in the
case of a takeover offer, the Managing Board should con-
vene an Extraordinary General Meeting at which share-
holders discuss the takeover offer and may decide on
corporate actions. The convening of a shareholders'
meeting - even taking into account the shortened time
limits stipulated in the German Securities Acquisition and
Takeover Act (Wertpapiererwerbs- und Übernahme-
gesetz) - is an organizational challenge for large publicly
listed companies. It appears doubtful whether the asso-
ciated effort is justified in cases where no relevant deci-
sions by the shareholders' meeting are intended. There-
fore, extraordinary shareholders' meetings shall be
convened only in appropriate cases.
Siemens AG voluntarily complies with the Code's sugges-
tions, with only the following exceptions:
corporate governance practices
SUGGESTIONS OF THE CODE
C.4.2.2 Information on
Since making its last Declaration of Conformity dated
October 1, 2019, Siemens AG has complied with all the
recommendations of the Government Commission on
the German Corporate Governance Code in the ver-
sion of February 7, 2017 ('2017 Code') published by the
Federal Ministry of Justice and Consumer Protection in
the official section of the Federal Gazette (Bundesan-
zeiger), with the following exception:
This Declaration of Conformity is available on the Siemens
Global Website at: ☐ WWW.SIEMENS.COM/DECLARATIONOF
CONFORMITY. The website also provides access to the Dec-
larations of Conformity for the last five years.
ANNUAL REPORT 2020 193
The Managing Board The Supervisory Board"
Siemens Aktiengesellschaft
Berlin and Munich, October 1, 2020
Instead of regarding the recommended maximum pe-
riod of the first-time appointment of Managing Board
members and the recommended maximum number of
mandates for Managing Board and Supervisory Board
members as rigid upper limits, an assessment is to be
possible in each individual case. While the period of
the first-time appointment of a Managing Board mem-
ber shall not, as a rule, exceed three years, an assess-
ment is to be possible in each individual case in order
to determine what period of appointment is deemed
appropriate within the legally permissible period. This
assessment is to consider the individual qualifications
and experience of the Managing Board member to be
appointed and, in particular, the qualifications and ex-
perience that he or she has acquired over many years
in management positions within the Siemens Group.
With regard to the number of mandates accepted by
Managing Board and Supervisory Board members, an
assessment is to be possible in each individual case in
order to determine if the number of accepted man-
dates relevant within the meaning of the Code is
deemed appropriate. This assessment is to consider the
expected personal workload caused by the accepted
mandates, which can vary from mandate to mandate.
→ Siemens AG does not comply with the recommen-
dations in C.4 and C.5. According to the recom-
mendation in C.4, a Supervisory Board member
who is not a member of any Managing Board of a
listed company shall not accept more than five
Supervisory Board mandates at non-group listed
companies or comparable functions, with an ap-
pointment as chair of the Supervisory Board being
counted twice. According to the recommendation
in C.5, members of the Managing Board of a listed
company shall not have, in aggregate, more than
two Supervisory Board mandates in non-group
listed companies or comparable functions, and
shall not accept the chairmanship of a Supervisory
Board in a non-group listed company.
Siemens AG complies, and will continue to comply,
with all the recommendations of the Government Com-
mission on the German Corporate Governance Code in
the version of December 16, 2019 ('2019 Code') pub-
lished by the Federal Ministry of Justice and Consumer
Protection in the official section of the Federal Gazette
(Bundesanzeiger), with the following exceptions:
Additional Information → C.4 Corporate Governance
C.4.1.3 Share transactions by members
of the Managing and Supervisory Boards
Pursuant to Article 19 of EU Regulation No. 596/2014 of
the European Parliament and Council of April 16, 2014,
on market abuse (Market Abuse Regulation), members of
the Managing Board and the Supervisory Board are le-
gally required to disclose all transactions conducted on
their own account relating to the shares or debt instru-
ments of Siemens AG or to the derivatives or financial
instruments linked thereto if the total value of such trans-
actions entered into by a Board member or any closely
associated person in any calendar year reaches or ex-
ceeds €5,000 (in calendar year 2019) or €20,000 (as of
calendar year 2020). All transactions reported to
Siemens AG in accordance with this requirement have
been duly published and are available on the Siemens
Global Website at: www.SIEMENS.COM/DIRECTORS-DEALINGS
The Corporate Governance statement pursuant to Sec-
tions 289f and 315d of the German Commercial Code
(Handelsgesetzbuch) is an integral part of the Combined
Management Report. In accordance with Section 317
para. 2 sent. 6 of the German Commercial Code, the audit
of the disclosures made within the scope of Sections 289f
and 315d of the German Commercial Code is to be limited
to determining whether disclosures have been made.
The Supervisory Board and its committees regularly con-
duct reviews - either internally or with the involvement
of external consultants - in order to determine how effi-
ciently they perform their duties. In fiscal 2020, the Super-
visory Board conducted an internal efficiency review. At
its meeting on September 23, 2020, the Supervisory
The Managing Board members have a broad range of
knowledge, experience and educational and professional
backgrounds as well as international experience. The
Managing Board has all the knowledge and experience
that is considered essential in view of Siemens' activities.
DIVERSITY CONCEPT FOR THE MANAGING BOARD
The diversity concept for the Managing Board is imple-
mented as part of the process for making appointments
to the Managing Board. When selecting candidates and/or
making proposals for the appointment of Managing Board
members, the Supervisory Board and the Chairman's
Committee of the Supervisory Board take into account
the requirements defined in the diversity concept for the
Managing Board.
STATUS OF IMPLEMENTATION OF THE
When making an appointment to a specific Managing
Board position, the decisive factor is always the Com-
pany's best interest, taking into consideration all cir-
cumstances in the individual case."
→ It is considered helpful if different age groups are
represented on the Managing Board. In accordance
with the recommendation of the Code, the Super-
visory Board has defined an age limit for the mem-
bers of the Managing Board. In keeping with this
limit, the members of the Managing Board are, as
a rule, to be not older than 63 years of age.
-
→ When selecting individuals for Managing Board posi-
tions, the targets set by the Supervisory Board for the
proportion of women on the Managing Board shall
be taken into account. The Supervisory Board has
established as a target that - until June 30, 2022
25% of the Managing Board positions are to be held
by women.
ANNUAL REPORT 2020 195
→ As a group, the Managing Board shall have many
years of experience in technology (including infor-
mation technology and digitalization), research
and development, procurement, manufacturing
and sales, finance, law (including compliance) and
human resources.
-
→ As a group, the Managing Board shall have experi-
ence in the business areas that are important for
Siemens in particular, in the industry, energy,
Board concerned itself intensively with the results of this
review. These results confirm that cooperation within the
Supervisory Board and with the Managing Board is pro-
fessional, constructive and characterized by a high de-
gree of trust and openness. The results also confirm that
meetings are organized and conducted efficiently and
that the participants receive sufficient information.
The review did not reveal a need for any fundamental
changes. Individual suggestions for improvement are
also discussed and implemented during the year.
→ In addition to the expertise and the management
and leadership experience required for their spe-
cific tasks, the Managing Board members shall
have the broadest possible range of knowledge
and experience and the widest possible educa-
tional and professional backgrounds.
When selecting members of the Managing Board, the
Supervisory Board pays close attention to candidates'
personal suitability, integrity, convincing leadership
qualities, international experience, expertise in their
prospective areas of responsibility, achievements to
date and knowledge of the Company as well as their
ability to adjust business models and processes in a
changing world. Diversity with respect to such charac-
teristics as age and gender as well as professional and
educational background is an important selection cri-
terion for appointments to Managing Board positions.
When selecting members of the Managing Board, the
Supervisory Board also gives special consideration to
the following factors:
"The goal is to achieve a composition that is as diverse
as possible and comprises individuals who comple-
ment one another in a Managing Board that provides
strong leadership as well as to ensure that, as a group,
the members of the Managing Board have all the
knowhow and skills that are considered essential in
view of Siemens' activities.
In September 2018, the Supervisory Board approved the
following diversity concept for the composition of the
Managing Board:
healthcare and infrastructure sectors.
Additional Information → C.4 Corporate Governance
→ Taking the Company's international orientation
into account, the composition of the Managing
Board shall reflect internationality with respect to
different cultural backgrounds and international
experience (such as extensive professional experi-
ence in foreign countries and responsibility for
business activities in foreign countries in areas that
are relevant for Siemens).
During fiscal 2020, Lisa Davis, Janina Kugel and Michael
Sen left the Managing Board. In the summer of 2020, the
Supervisory Board appointed Judith Wiese and Matthias
Rebellius to the Managing Board as of October 1, 2020,
taking into account the diversity concept and the Compa-
ny's best interest. The target for June 30, 2022, has been
retained. The appropriate consideration of women is a
key component of long-term succession planning for the
Managing Board. Different age groups are represented
on the Managing Board. No Managing Board member is
currently older than 63 years of age.
SUPERVISORY BOARD SELF-ASSESSMENT
As of September 30, 2020, the Innovation and Finance
Committee comprised Jim Hagemann Snabe (Chairman),
Harald Kern, Jürgen Kerner, Dr.-Ing. Dr.-Ing. E.h. Norbert
Reithofer, Dr. Nathalie von Siemens, Birgit Steinborn and
Werner Wenning. Robert Kensbock was a member of the
committee until September 25, 2020.
As a group, the Managing Board has experience in the
business areas that are important for Siemens - in partic-
ular, in the industry, energy, healthcare and infrastructure
sectors - as well as many years of experience in technol-
ogy (including information technology and digitaliza-
tion), research and development, procurement, manu-
facturing and sales, finance, law (including compliance)
and human resources.
Based on the Company's overall strategy, the Innovation
and Finance Committee discusses, in particular, the
Company's innovation focuses and prepares the Super-
visory Board's discussions and resolutions regarding
questions relating to the Company's financial situation
and structure – including annual planning (budget) – as
well as the Company's fixed asset investments and its
financial measures. In addition, the Innovation and
Finance Committee has been authorized by the Super-
visory Board to decide on the approval of transactions
and measures that require Supervisory Board approval
and have a value of less than €600 million.
As of September 30, 2020, the Mediation Committee com-
prised Jim Hagemann Snabe (Chairman), Jürgen Kerner,
Birgit Steinborn and Werner Wenning.
INTERNATIONALITY
When a new member is to be appointed, a review shall
be performed to determine which of the areas of ex-
pertise deemed desirable for the Supervisory Board
are to be strengthened.
At least one independent member of the Supervisory
Board shall have knowledge and expertise in the areas
of accounting or the auditing of financial statements
and specific knowledge and experience in applying
accounting principles and internal control processes.
In particular, the Supervisory Board shall also include
members who have leadership experience as senior
executives or members of a supervisory board (or
comparable body) at a major company with interna-
tional operations.
→ Siemens AG does not comply with the recommen-
dation in B.3. According to this recommendation,
the first-time appointment of Managing Board
members shall be for a period of not more than
three years.
196
ANNUAL REPORT 2020
The goal is to ensure that, in the Supervisory Board, as
a group, all knowhow and experience is available that
is considered essential in view of Siemens' activities.
This includes, for instance, knowledge and experience
in the areas of technology (including information
technology and digitalization), procurement, manu-
facturing and sales, finance, law (including compli-
ance) and human resources. In addition, the members
of the Supervisory Board shall collectively have knowl-
edge and experience in the business areas that are im-
portant for Siemens, in particular, in the areas of indus-
try, energy, healthcare and infrastructure. As a group,
the members of the Supervisory Board are to be famil-
iar with the sector in which the Company operates.
PROFILE OF REQUIRED SKILLS AND EXPERTISE
The candidates proposed for election to the Super-
visory Board shall have the knowledge, skills and ex-
perience necessary to carry out the functions of a
Supervisory Board member in a multinational com-
pany oriented toward the capital markets and to safe-
guard the reputation of Siemens in public. In particu-
lar, care shall be taken in regard to the personality,
integrity, commitment and professionalism of the in-
dividuals proposed for election.
"The composition of the Supervisory Board of
Siemens AG shall be such that the Supervisory Board's
ability to effectively monitor and advise the Managing
Board is ensured. In this connection, mutually comple-
mentary collaboration among members with a wide
range of personal and professional backgrounds and
diversity with regard to internationality, age and gen-
der are considered helpful.
LONG-TERM SUCCESSION PLANNING
FOR THE MANAGING BOARD
Jointly with the Managing Board and with the support of
the Chairman's Committee, the Supervisory Board con-
ducts long-term succession planning for the Managing
Board. In its long-term succession planning, the Super-
visory Board considers the target it has defined for the
proportion of women on the Managing Board and the
criteria set out in the diversity concept it has approved for
the Managing Board's composition as well as the require-
ments of the German Stock Corporation Act (Aktien-
gesetz), the Code and the Bylaws for the Chairman's
Committee. Considering the concrete qualification re-
quirements and the above-mentioned criteria, the Chair-
man's Committee prepares an ideal profile, on the basis
of which it compiles a shortlist of the available candi-
dates. Structured interviews are then conducted with
these candidates. After the interviews, a proposal is sub-
mitted to the Supervisory Board for approval. When
developing the profile of requirements and selecting
candidates, the Supervisory Board and the Chairman's
Committee are supported, if necessary, by external
consultants.
Additional Information → C.4 Corporate Governance
In September 2020, the Supervisory Board approved
changes to the objectives for its composition including
the profile of required skills and expertise and the diver-
sity concept:
Siemens AG
Werner-von-Siemens-Str. 1
80333 Munich
Germany
+49 89 636-1332474 (Investor Relations)
press@siemens.com
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
E-mail
investorrelations@siemens.com
Order no. CMXX-B10005-00-7600
www.siemens.com
Fax
Address
Internet
© 2020 by Siemens AG, Berlin and Munich
ANNUAL REPORT 2020 199
WWW.SIEMENS.COM/INVESTOR/EN/
The "Sustainability Information 2020" which reports on
Sustainability and Citizenship at Siemens is available at:
This document is an English language translation of the
German document. In case of discrepancies, the German
language document is the sole authoritative and univer-
sally valid version.
Due to rounding, numbers presented throughout this
and other documents may not add up precisely to the
totals provided and percentages may not precisely reflect
the absolute figures.
This document includes in the applicable financial
reporting framework not clearly defined – supplemental
financial measures that are or may be alternative perfor-
mance measures (non-GAAP-measures). These supple-
mental financial measures should not be viewed in isola-
tion or as alternatives to measures of Siemens' net assets
and financial positions or results of operations as pre-
sented in accordance with the applicable financial
reporting framework in its Consolidated Financial State-
ments. Other companies that report or describe similarly
titled alternative performance measures may calculate
them differently.
This document contains statements related to our future
business and financial performance and future events or
developments involving Siemens that may constitute for-
ward-looking statements. These statements may be iden-
tified by words such as "expect," "look forward to," "antic-
ipate," "intend," "plan," "believe," "seek," "estimate," "will,"
"project" or words of similar meaning. We may also make
forward-looking statements in other reports, in prospec-
tuses, in presentations, in material delivered to share-
holders and in press releases. In addition, our represen-
tatives may from time to time make oral forward-looking
statements. Such statements are based on the current
expectations and certain assumptions of Siemens' man-
agement, of which many are beyond Siemens' control.
These are subject to a number of risks, uncertainties and
factors, including, but not limited to, those described in
disclosures, in particular in the chapter Report on ex-
pected developments and associated material opportu-
nities and risks in the Annual Report. Should one or more
of these risks or uncertainties materialize, events of
force majeure, such as pandemics, occur or should un-
derlying expectations including future events occur at a
later date or not at all or assumptions prove incorrect,
actual results, performance or achievements of Siemens
may (negatively or positively) vary materially from those
described explicitly or implicitly in the relevant for-
ward-looking statement. Siemens neither intends, nor
assumes any obligation, to update or revise these for-
ward-looking statements in light of developments which
differ from those anticipated.
Notes and forward-looking statements
C.5
Additional Information C.5 Notes and forward-looking statements
Phone
For technical reasons, there may be differences between
the accounting records appearing in this document and
those published pursuant to legal requirements.
4%
Order intake in the Americas was also influenced strongly
by a lower volume from large orders for Mobility which in
the prior year included large contract wins in the U.S. and
Canada. This decline was only partly offset by clear
growth in Digital Industries and a moderate increase in
Siemens Healthineers. Order intake for Smart Infrastruc-
ture was slightly below the prior-year level. The pattern
of order development in the U.S. was largely the same as
for the Americas region.
2,858
3,433
123,897
34%
32%
(24)%
48,125
36,390
Total liabilities and equity
Non-controlling interests
Total equity attributable to shareholders of Siemens AG
Equity ratio
66%
20%
68%
99,265
84,074
3%
48,541
49,957
(19)%
2,226
1,808
Debt ratio
Total liabilities
Total non-current liabilities
Combined Management Report → A.4 Results of operations
Other liabilities
150,248
The increase in short-term debt and current maturities
of long-term debt was due mainly to reclassifications of
long-term euro instruments totaling €3.5 billion from
long-term debt, the issuance of a commercial paper
program of €1.3 billion and increased lease liabilities due
to the adoption of IFRS 16. Set against these factors
were decreases resulting from €4.0 billion repayment of
euro and U.S. dollar instruments and from derecognition
of loans from banks in connection with the spin-off of
Siemens Energy.
A.6.2 Cash flows
Combined Management Report → A.6 Financial position
ANNUAL REPORT 2020 24
Out of the above-mentioned treasury shares repurchased
in fiscal 2020, 18,219,708 treasury shares were repur-
chased under the share buyback announced in Novem-
ber 2018 of up to €3.0 billion in volume until Novem-
ber 15, 2021 at the latest. Furthermore, the Company
repurchased the number of treasury shares that were
necessary to keep the stock of treasury shares stable on
a certain level until the spin-off of Siemens Energy be-
came legally effective. In pursuit of this goal, a total of
852,038 treasury shares were repurchased.
SHARE BUYBACK
TO CONSOLIDATED FINANCIAL STATEMENTS.
We have credit facilities totaling €23.0 billion, thereof
€23.0 billion unused as of September 30, 2020. This
includes a syndicated bridge facility in an amount of
nearly €12.5 billion to secure Siemens Healthineers AG's
financing of the acquisition of Varian. For further infor-
mation about this acquisition see 7 NOTE 3 in 7 B.6 NOTES
As of September 30, 2020, we recorded, in total, €38.3 bil-
lion in notes and bonds, €1.4 billion in loans from banks,
€2.1 billion in other financial indebtedness and €2.8 bil-
lion in lease liabilities. Notes and bonds were issued
mainly in the U.S. dollar and euro, and to a lower extent
in the British pound.
DEBT AND CREDIT FACILITIES
FINANCIAL STATEMENTS.
For further information about our commitments and
contingencies see > NOTE 21 in > B.6 NOTES TO CONSOLIDATED
The spin-off of Siemens Energy was the main factor for
the decreases in trade payables, contract liabilities,
current provisions, other current liabilities and pro-
visions. While the spin-off resulted also in decreased
provisions for pensions and similar obligations, the
major impact there resulted from extraordinary fundings
in Germany, including the transfer of a 9.9% interest
in Siemens Energy AG to Siemens Pension Trust e. V.
Irrevocable loan commitments amounted to €3.8 billion.
A considerable portion of these commitments resulted
from asset-based lending transactions, meaning that the
respective loans can be drawn only after the borrower
has provided sufficient collateral.
As of September 30, 2020, the undiscounted amount of
maximum potential future payments related primarily
to credit and performance guarantees amounted to
€28.5 billion. This includes Siemens' obligations from
performance and credit guarantees in connection with
the Siemens Energy business, for which Siemens has
reimbursement rights for the full amount.
OFF-BALANCE-SHEET COMMITMENTS
TO CONSOLIDATED FINANCIAL STATEMENTS.
7 B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For fur-
ther information about the functions and objectives of
our financial risk management see > NOTE 25 in 7 B.6 NOTES
For further information about our debt see > NOTE 16 in
Our capital structure ratio as of September 30, 2020 in-
creased to 1.3 from 0.6 a year earlier. The change was
due primarily to the above-mentioned increases in long-
term debt.
CAPITAL STRUCTURE RATIO
The main factors for the decrease in total equity attrib-
utable to shareholders of Siemens AG were changes
in equity resulting from major portfolio transactions to-
taling €9.6 billion, including the transfer of 55% of
Siemens' ownership interest in Siemens Energy to its
shareholders; dividend payments of €3.2 billion (for
fiscal 2019); negative other comprehensive income, net
of income taxes, of €2.8 billion, resulting mainly from
negative currency translation effects; and the repurchase
of 19,071,746 treasury shares at an average cost per
share of €79.24, totaling €1.5 billion (including incidental
transaction charges). This decrease was partly offset
by €4.0 billion in net income attributable to shareholders
of Siemens AG.
Long-term debt increased due primarily to the issuance
of euro and British pound instruments totaling €10.3 bil-
lion and increased lease liabilities due to the above-men-
tioned adoption of IFRS 16. Set against these factors were
decreases from the above-mentioned reclassifications of
euro instruments, currency translation effects for bonds
issued in the U.S. dollar and British pound, and the
Siemens Energy spin-off.
Combined Management Report → A.6 Financial position
ANNUAL REPORT 2020 23
In addition to these commitments, we issued other guar-
antees. To the extent future claims are not considered
remote, maximum future payments from these commit-
ments amounted to €0.4 billion.
(22)%
986
769
(4)%
2,378
2,281
Current income tax liabilities
(55)%
3,682
1,674
Current provisions
(54)%
16,452
7,524
Other current liabilities
Contract liabilities
1,743
1,958
Other current financial liabilities
(31)%
11,409
7,873
Trade payables
9%
6,034
6,562
Short-term debt and current maturities of long-term debt
12%
6,209
9,023
(31)%
(37)%
3,714
2,352
Other financial liabilities
Provisions
(49)%
1,305
664
Deferred tax liabilities
(36)%
9,896
6,360
Provisions for pensions and similar obligations
25%
30,414
38,005
Long-term debt
(33)%
50,723
34,117
Total current liabilities
> 200%
2
35
Liabilities associated with assets classified as held for disposal
(in millions of €)
Cash flows from operating activities
Fiscal year
2020
(2,458)
6,404
(220)
6,625
Free cash flow
(905)
(1,554)
Additions to intangible assets and property, plant
and equipment
8,862
684
8,178
Cash flows from operating activities
The Free cash flow for the Industrial Businesses amounted
to €7,142 million, resulting in a cash conversation rate
of 0.94.
discontinued operations
Discontinued
operations
Continuing
operations
(in millions of €)
Free cash flow
measure:
We report Free cash flow as a supplemental liquidity
Cash flows from discontinued operations related mainly
to the former energy business, which included cash
outflows from investing activities from additions to
intangible assets and property, plant and equipment of
€0.9 billion and cash outflows from financing activities
of €1.1 billion relating to the purchase of the 8.1% stake
in Siemens Gamesa Renewable Energy.
Cash inflows from the change in short-term debt and
other financing activities mainly included net cash in-
flows related to commercial paper.
Cash inflows from the re-issuance of treasury shares and
other transactions with owners mainly included pro-
ceeds of €2.7 billion related to Siemens Healthineers AG's
issuance of 75 million new shares to institutional investors.
Cash inflows from other disposals of assets mainly in-
cluded disposals of above-mentioned eligible collateral
and from equity investments.
Combined Management Report → A.6 Financial position
Fiscal year 2020
Continuing and
With our ability to generate positive operating cash
flows from continuing and discontinuing operations of
€8.9 billion in fiscal 2020, our total liquidity (defined as
cash and cash equivalents plus current interest-bearing
debt securities) of €15.3 billion, our unused lines of credit,
and our credit ratings at year-end, we believe that we
have sufficient flexibility to fund our capital require-
ments. Also in our opinion, our operating net working
capital is sufficient for our present requirements.
INVESTING ACTIVITIES
Additions to intangible assets and property, plant and
equipment from continuing operations totaled €1.6 bil-
lion in fiscal 2020. Within the industrial businesses, on-
going investments related mainly to technological inno-
vations; maintaining and extending our capacities for
designing, manufacturing and marketing new solutions;
improving productivity; and replacements of fixed assets.
These investments amounted to €1.1 billion in fiscal 2020.
ANNUAL REPORT 2020 28
We intend to continue providing an attractive return to
shareholders. After the successful spin-off of Siemens
Energy, the Siemens Managing Board, in agreement with
the Supervisory Board, proposes a dividend of €3.50 per
share, consisting of €3.00, which is at the upper end of
our targeted dividend payout ratio, supplemented by an
additional €0.50. A year earlier the dividend paid per
share was €3.90.
Free cash flow from continuing and discontinued opera-
tions for fiscal 2020 increased 10% year-over-year to
€6.4 billion, reaching its highest level since fiscal 2010.
We evaluate our capital structure using the ratio of indus-
trial net debt to EBITDA. Due primarily to an increase in
long-term debt year-over-year, this ratio rose to 1.3, com-
pared to 0.6 in fiscal 2019. Our forecast given in our
Annual Report 2019 was to achieve a ratio of up to 1.0.
ROCE for fiscal 2020 was 7.8%, down from 11.1% in fiscal
2019. This decline was due to a combination of lower net
income and an increase in average capital employed. Our
forecast for ROCE given in our Annual Report 2019 was to
achieve a double-digit result but to come in below the
lower end of our long-term goal of 15% to 20%.
Net income was €4.2 billion, down from €5.6 billion
over-year. This was due mainly to the aforementioned
lower results, particularly outside the Industrial Busi-
nesses. In addition, discontinued operations, largely re-
lated to our former energy business, reported a loss of
€0.1 billion in fiscal 2020 compared to income from
discontinued operations of €0.5 billion a year earlier. As
a result, basic EPS from net income declined to €5.00,
compared to €6.41 in fiscal 2019. In our Annual Report
2019, we forecast basic EPS from net income in the range
from €6.30 to €7.00.
year-
risk provisions and lower equity investment results year-
over-year, and a return on equity after tax of 11.7%, below
its margin range. Prior-year results outside the Industrial
Businesses benefited from a significant positive effect
related to the measurement of a major asset retirement
obligation.
The loss outside the Industrial Businesses came in sub-
stantially larger year-over-year. The change was due
mainly to an impairment of €0.5 billion on our equity
investment stake in Valeo Siemens eAutomotive in fiscal
2020. In addition, Siemens Financial Services reported a
sharp decline in earnings before taxes on higher credit
The Adjusted EBITA margin of our Industrial Businesses
was 14.3%, nearly on the prior-year level of 14.4%. With
Adjusted EBITA margins of 21.7% and 9.1%, respectively,
Digital Industries and Mobility were within their long-
term margin ranges; Digital Industries was within its
range even without the above-mentioned effect related
to Bentley, which added 5.1 percentage points to the
Adjusted EBITA margin. With Adjusted EBITA margins of
15.1% and 9.1%, respectively, Siemens Healthineers and
Smart Infrastructure were below their long-term margin
ranges.
Adjusted EBITA Industrial Businesses declined 3% to
€7.6 billion on lower Adjusted EBITA at Siemens
Healthineers, at Smart Infrastructure including declines
across its businesses, and at Mobility due in part to a less
favorable revenue mix. These decreases were only partly
offset by higher Adjusted EBITA at Digital Industries,
which included a strong contribution from the software
business and benefited from a €0.8 billion positive effect
related mainly to a revaluation of its stake in Bentley.
Overall, Adjusted EBITA Industrial Businesses was bur-
dened by severance charges of €0.5 billion, sharply
higher than a year earlier. The vast majority of these
severance charges were booked at Digital Industries and
Smart Infrastructure, which are executing cost structure
improvement and competitiveness programs.
Revenue declined 2% on both a nominal and a compa-
rable basis, to €57.1 billion. This was due mainly to a clear
decrease at Digital Industries' automation businesses,
and a more modest decline at Smart Infrastructure.
Siemens Healthineers kept revenue on the prior-year
level, while revenue at Mobility rose slightly driven
primarily by the rolling stock business. In our Annual
Report 2019, we had forecast moderate comparable
revenue growth for fiscal 2020. In our Half-year Financial
Report, we revised our expectation to a moderate decline
in comparable revenue in fiscal 2020.
Combined Management Report →A.7 Overall assessment of the economic position
ANNUAL REPORT 2020 27
Orders were €60.0 billion, down 7% year-over-year on
both a nominal and a comparable basis. The decline came
mainly from Mobility, due to sharply lower volume from
large orders year-over-year, partly caused by the post-
ponement of tenders for large rail and infrastructure
projects as a consequence of COVID-19. Lower volume
from large orders was also a main reason for a clear de-
cline in orders at Smart Infrastructure. Digital Industries
kept orders on the prior-year level with rapid growth in its
software business, while orders in its automation busi-
nesses declined due to lower demand from some of their
most important customer segments, particularly the
automotive and machine building industries. Orders at
Siemens Healthineers rose slightly on increases in its
diagnostics and imaging businesses. The book-to-bill-ratio
for Siemens was 1.05, thus fulfilling our expectation of
a ratio above 1.
At the beginning of fiscal 2020, we already faced macro-
economic headwinds, particularly at our short-cycle busi-
nesses. In addition, effects related to COVID-19 began to
burden volume, the Adjusted EBITA and the Adjusted
EBITA margin of our industrial businesses from the sec-
ond quarter of fiscal 2020 onwards. As a consequence,
we were no longer able to confirm the original outlook
for fiscal 2020 given in our Annual Report 2019. In our
Half-year Financial Report 2020 we revised our outlook
for revenue growth and refrained from giving guidance
for basic EPS from net income for fiscal 2020. While we
continued to deliver solid results in our industrial busi-
nesses and in Siemens Financial Services, particularly
given the adverse economic environment, we missed the
targets for our primary measures set in our Annual Report
2019, but achieved our revised target for revenue devel-
opment. On a comparable basis, revenue declined 2%,
we delivered basic EPS from net income of €5.00, return
on capital employed (ROCE) was 7.8%, and our capital
structure came in at 1.3.
During fiscal 2020, we created an independent player in
the energy market with the spin-off and public listing of
our energy business under the name Siemens Energy.
Following approval by our shareholders, we completed
this transaction in September 2020 as planned. We allo-
cated 55.0% of our ownership interest in Siemens Energy
to our shareholders, transferred a further 9.9% to Siemens
Pension-Trust e. V., and hold the remaining share of 35.1%.
This gives Siemens Energy more entrepreneurial freedom
in its rapidly changing market environment. The three
Siemens companies - Siemens, Siemens Healthineers
and Siemens Energy are now a family of companies
specialized in their respective fields and tied together
by the strong Siemens brand.
The worldwide spread of COVID-19 led to the biggest
health crisis and the deepest recession since the Second
World War and affected many of our key customer indus-
tries. Siemens managed this challenge well. The health
and security of our employees and business partners
was - and continues to be - our highest priority. Our
other key priorities during the crisis have been ensuring
business continuity wherever possible in a responsible
manner and safeguarding Siemens' strong financial
position. While the pandemic has affected our markets in
various ways and with different prospects for recovery,
Siemens has remained a reliable partner for customers
and suppliers. The pandemic has increased activity in the
digital economy and underscored the need for digitaliza-
tion and the development of the industrial internet of
things. These are core competencies of Siemens, and
common to each of our industrial businesses Digital
Industries, Smart Infrastructure, Mobility and Siemens
Healthineers.
For Siemens, fiscal 2020 was to a large extent determined
by two factors, one external - COVID-19 – and one inter-
nal - the spin-off and public listing of our energy business.
Overall assessment of the economic position
A.7
Combined Management Report → A.7 Overall assessment of the economic position
ANNUAL REPORT 2020 26
With regard to capital expenditures for continuing oper-
ations, we expect a significant increase in fiscal 2021. In
the coming years, up to €0.6 billion are to be invested in
"Siemensstadt 2.0″. This project initiated in fiscal 2019
aims to transform Siemens' existing industrial area in
Berlin into a modern urban district supporting a diverse
range of purposes, including strengthening key tech-
nologies. Further investments are planned in relation
to Siemens Campus Erlangen. In addition, we plan to in-
vest significant amounts in coming years in attractive
innovation fields through Siemens' global venture capital
unit Next47.
The remaining portion related mainly to Siemens Real
Estate, including significant amounts for projects such
as new office buildings in Germany. Siemens Real Estate
is responsible for uniform and comprehensive manage-
ment of Company real estate worldwide and supports
the industrial businesses and corporate activities with
customer-specific real estate solutions; excluded are
Siemens Healthineers and Mobility.
ANNUAL REPORT 2020 25
% Change
Cash outflows from change in receivables from financ-
ing activities of SFS related mainly to SFS' debt business.
Healthineers including €1.0 billion for Corindus and
€0.3 billion for ECG.
1,440
(994)
Cash flows from investing activities - continuing operations
Other disposals of assets
Change in receivables from financing activities of SFS
(1,269)
(1,727)
(1,554)
Purchase of investments and financial assets for investment purposes
Acquisitions of businesses, net of cash acquired
Additions to intangible assets and property, plant and equipment
(4,105)
Cash flows from investing activities
Cash flows from operating activities - continuing and discontinued operations
684
8,178
Cash flows from operating activities - discontinued operations
Cash flows from operating activities - continuing operations
4,314
Other reconciling items to cash flows from operating activities - continuing operations
(336)
Change in operating net working capital
4,200
Net income
8,862
Cash flows from investing activities - discontinued operations
(1,080)
Cash flows from investing activities - continuing and discontinued operations
Cash outflows from acquisitions of businesses, net of
cash acquired, mainly involved acquisitions by Siemens
All industrial businesses converted their Adjusted EBITA
in significant amounts to Cash flows from operating
activities, with the highest contribution from Digital
Industries. Cash outflows associated with changes in
operating net working included a build-up in inventories
at Siemens Healthineers. At Mobility, higher cash out-
flows from contract assets were nearly offset by higher
cash inflows from contract liabilities, both related to its
project business.
(1,091)
3,172
Cash flows from financing activities - continuing and discontinued operations
Cash flows from financing activities – discontinued operations
4,263
Cash flows from financing activities - continuing operations
(208)
Dividends attributable to non-controlling interests
(3,174)
Dividends paid to shareholders of Siemens AG
(833)
Interest paid
1,588
Change in short-term debt and other financing activities
(4,472)
Repayment of long-term debt (including current maturities of long-term debt)
10,255
Issuance of long-term debt
2,624
Re-issuance of treasury shares and other transactions with owners
(1,517)
Purchase of treasury shares
Cash flows from financing activities
(5,184)
Cash outflows for purchase of investments and finan-
cial assets for investment purposes primarily included
additions of assets eligible as central bank collateral and
payments related to investments such as debt or equity
investments related to certain projects.
Sep 30,
2019
(15)%
(in millions of €)
7,560
(11)%
2,461
2,184
(16)%
983
822
(11)%
1,465
1,302
Siemens Financial Services
7,789
Adjusted EBITA margin Industrial Businesses
Siemens Healthineers
Mobility
Smart Infrastructure
13%
2,880
3,252
Digital Industries
% Change
2019
2020
(in millions of €, earnings per share in €)
Industrial Businesses
(3)%
14.3%
14.4%
(90)
Income (loss) from discontinued operations, net of income taxes
Net income
(17)%
5,158
4,290
Income from continuing operations
22%
(1,775)
(1,382)
Income tax expenses
(18)%
6,933
5,672
Income from continuing operations before income taxes
(16)%
(1,491)
(1,730)
Reconciliation to Consolidated Financial Statements
n/a
2
(504)
Portfolio Companies
(45)%
632
345
Fiscal year
490
A.4.2 Income
ANNUAL REPORT 2020 19
therein: U.S.
(1)%
(1)%
15,597
15,464
Americas
(2)%
(2)%
9,882
9,726
therein: Germany
12,981 12,937
(2)%
28,821
28,062
Africa, Middle East
Europe, C.I.S.,
(in millions of €)
% Change
Comp.
Actual
Fiscal year
2019
2020
Revenue (location of customer)
In the Asia, Australia region, orders overall rose slightly
due to clear growth in Digital Industries, partly offset by
a decrease in Smart Infrastructure. Order growth for
Digital Industries was particularly strong in China.
Siemens Healthineers also posted an increase in that
country, while the other two industrial businesses posted
declines.
(3)%
0%
(1)%
Asia, Australia
1 As defined by the International Monetary Fund.
Revenue in Asia, Australia declined moderately year-
over-year on decreases in all four industrial businesses
due mainly to the above-mentioned pandemic effect in
India. In contrast, revenue in China was up moderately
on growth in all industrial businesses except for Mobility.
(1)%
In the Americas, revenue came in close to the prior-year
level, as Mobility recorded clear growth that was offset by
decreases in Siemens Healthineers and Digital Industries.
In the U.S., year-over-year changes in revenue were small
for all industrial businesses.
Revenue in Europe, C.I.S., Africa, Middle East decreased
moderately as a significant decline in Digital Industries
and a slight decrease in Smart Infrastructure were only
partly offset by moderate growth in Mobility and Siemens
Healthineers. In Germany, revenue was down only slightly
with a decline in Digital Industries to a large degree offset
by growth in Mobility.
Revenue related to external customers went down only
slightly year-over-year due mainly to a clear decrease in
Digital Industries driven by a decline in demand in its
short-cycle automation businesses. Smart Infrastructure
posted a slight decline, also involving short-cycle busi-
nesses, while revenue in Siemens Healthineers came in
close to the prior-year level. In contrast, Mobility posted
slight revenue growth due mainly to increases in its
rolling stock business. The revenue decline in emerging
markets was due mainly to lower revenue in countries
that were strongly affected by the pandemic, in particu-
lar India.
(4)%
16,773
16,168
markets1
therein: emerging
(2)%
2020
58,483
57,139
operations)
(continuing
Siemens
6%
6,947
7,254
therein: China
(2)%
(3)%
13,613 14,065
Combined Management Report → A.4 Results of operations
n/a
(2)%
5,648
Other financial assets
> 200%
2,244
7,862
Investments accounted for using the equity method
(16)%
12,183
10,250
Property, plant and equipment
(51)%
9,800
22,771
4,838
(32)%
30,160
20,449
Goodwill
(25)%
70,370
52,968
42%
238
338
Total current assets
Other intangible assets
19,843
15%
Deferred tax assets
A.6.1 Capital structure
4,200
Financial position
A.6
Combined Management Report → A.6 Financial position
ANNUAL REPORT 2020 22
The major factor for the decrease in other current finan-
cial assets was a reassessment of the expected repay-
ment dates of loans receivable at SFS. This decrease was
partly offset by receivables related to customer contracts
in connection with the Siemens Energy activities legally
remaining at Siemens. The reassessment of the expected
repayment dates of loans receivable mentioned above
was also the main factor for the increase in other
financial assets, along with revaluation of Siemens'
stake in Bentley.
The remaining minority stake that Siemens holds in
Siemens Energy AG after the spin-off increased invest-
ments accounted for using the equity method by
€6.6 billion.
In fiscal 2020, the spin-off of Siemens Energy was the
major factor related to the decrease of Siemens' assets,
mainly trade and other receivables, contract assets,
inventories, goodwill and other intangible assets. This
was partly offset by goodwill and other intangible assets
resulting from Siemens Healthineers' acquisitions of
Corindus and ECG Management Consultants, U.S. (ECG).
For further information see 7 NOTE 3 in 7 B.6 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS. While the spin-off also
reduced property, plant and equipment, this was partly
offset by assets recognized in connection with the
adoption of IFRS 16, Leases. For further information see
7 NOTE 2 in 7 B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Our total assets at the end of fiscal 2020 were influenced
by negative currency translation effects of €7.5 billion,
primarily involving the U.S. dollar.
(18)%
150,248
123,897
(11)%
79,878
70,928
(29)%
2,475
1,769
Total assets
Total non-current assets
Other assets
(6)%
3,174
2,988
Assets classified as held for disposal
(35)%
(18)%
1,271
Net assets position
A.5
Combined Management Report → A.5 Net assets position
ANNUAL REPORT 2020 21
Siemens' global venture capital unit, Next47, provides
capital to help start-ups expand and scale. It serves as the
creator of next-generation businesses for Siemens by
building, buying and partnering with innovative compa-
nies at any stage. Next47 is focused on anticipating how
emerging technologies will influence our end markets.
This foreknowledge enables Siemens and our customers
to grow and thrive in the age of digitalization.
We further develop technologies through our "open inno-
vation" concept. We are working closely with scholars
from leading universities and research institutions, not
only under bilateral cooperation agreements but also in
publicly funded collective projects. Our focus here is on
our strategic research partners, and especially the eight
Centers of Knowledge Interchange that we maintain at
leading universities worldwide.
Our research and development activities are ultimately
geared to developing innovative, sustainable solutions
for our customers - and the Siemens businesses - while
also strengthening our own competitiveness. Joint imple-
mentation by the operating units and Corporate Technol-
ogy, our central R&D department, ensures that research
activities and business strategies are closely aligned with
one another, and that all units benefit equally and quickly
from technological developments. As in fiscal 2019 the
following technologies were the focus in fiscal 2020:
additive manufacturing, autonomous robotics, block-
chain applications, connected (e-)mobility, connectivity
and edge devices, cyber security, data analytics and arti-
ficial intelligence, distributed energy systems, energy
storage, future of automation, materials, power electron-
ics, simulation and digital twins, and software systems
and processes.
In fiscal 2020, we reported research and development
(R&D) expenses of €4.6 billion, compared to €4.7 billion
in fiscal 2019. The resulting R&D intensity, defined as the
ratio of R&D expenses and revenue, was 8.1% (fiscal
2019: 8.0%). Additions to capitalized development ex-
penses amounted to €0.4 billion as in prior year. As of
September 30, 2020 and 2019, Siemens held approxi-
mately 42,900 and 42,400 respectively, granted patents
worldwide in its continuing operations. On average, we
had 40,800 R&D employees in fiscal 2020.
A.4.3 Research and development
As expected, ROCE at 7.8% was below the target range
set in our Siemens Financial Framework. The decline year-
over-year was due both to lower income before interest
after tax and to higher average capital employed, which
increased due mainly to effects from the adoption of
IFRS 16, Leases, and acquisitions during the fiscal year,
including Corindus at Siemens Healthineers.
The decline in basic earnings per share reflects the
decrease of Net income attributable to Shareholders of
Siemens AG, which was €4,030 million in fiscal 2020
compared to €5,174 million in fiscal 2019, partially off-
set by a lower number of weighted average shares out-
standing.
The negative swing year-over-year was due primarily to
losses at Gas and Power and SGRE, both of which had
recorded positive earnings in the prior year, and income
tax expenses of €298 million mainly related to the carve-
out of the distribution group, partly offset by a pretax
gain of €946 million, net of related expenses, from the
spin-off.
Combined Management Report → A.4 Results of operations
ANNUAL REPORT 2020 20
In May 2019, Siemens announced its intention to trans-
fer the energy business into a new company, Siemens
Energy AG, and list it on the stock market via a spin-off.
Siemens Energy, or the distribution group, includes the
former reportable segment Gas and Power and Siemens'
67% stake in SGRE., 8.1% of which was purchased in Feb-
ruary 2020 from Iberdrola S.A. for a purchase price of
€1.1 billion. The criteria for classification of the distribu-
tion group as held for disposal and discontinued opera-
tions were met at the end of the second quarter of fiscal
2020. In the Consolidated Statements of Income and in
the Consolidated Statements of Cash Flows, results and
cash flows of the distribution group are reported as
discontinued operations on a comparable basis for all
periods presented. Effective with Siemens classifying the
distribution group as held for disposal, depreciation and
amortization of assets within the distribution group
ceased. The spin-off was completed on September 25,
2020. After the spin-off, Siemens Energy was deconsoli-
dated; the remaining minority stake that Siemens holds in
Siemens Energy is accounted for using the equity method.
Income (loss) from discontinued operations, net of
income taxes in both years predominantly included
income related to Siemens Energy.
The tax rate of 24% for fiscal 2020 was below the tax rate
of 26% for the prior year, benefiting from largely tax-free
gains associated with the revaluation of the Bentley
investment and with the transfer of investments to
Siemens Pension-Trust e. V., and from a positive effect
related to a retroactive statutory tax rate reduction; these
factors were partly offset by impairment losses, which
were not tax-deductible. As a result, the decline in
Income from continuing operations was 17%.
As a result of the developments described above, Income
from continuing operations before income taxes de-
clined 18%. Severance charges for continuing operations
were €591 million, of which €490 million were in Indus-
trial Businesses. Adjusted EBITA margin Industrial Busi-
nesses excluding severance charges was 15.2% in fiscal
2020. In fiscal 2019, severance charges for continuing
operations were €340 million, of which €215 million
were in Industrial Businesses.
11.1%
7.8%
(22)%
6.41
(26)%
Basic earnings per share
ROCE
1,960
(in millions of €)
2020
5.00
% Change
38%
Sep 30,
2019
Other current assets
1,523
Current income tax assets
(47)%
14,806
7,795
Inventories
(46)%
10,309
5,545
1,103
(21)%
Contract assets
Cash and cash equivalents
12,391
13%
Trade and other receivables
14,041
18,894
(26)%
Other current financial assets
8,382
10,669
14,074
significant risks arise from geopolitical tensions (particu-
larly in the Near and Middle East, Hong Kong and
Taiwan), the European Union's relations with Russia, the
economic vulnerability of several emerging markets
(including Argentina, Turkey, Venezuela) and political
upheavals. We are dependent on the economic develop-
ment of certain industries, especially on continued weak-
ness in the automotive markets we serve, caused by
both, cyclical and structural forces. Further business risk
would result from an abrupt weakening of Chinese
economic growth. A terrorist mega-attack or a significant
cybercrime incident, or a series of such attacks or
incidents in major economies, could depress economic
activity globally and undermine consumer and business
confidence. Additionally, the highly interconnected
global economy remains vulnerable to natural disasters
or further pandemics.
ANNUAL REPORT 2020 33
ANNUAL REPORT 2020 34
Economic, political and geopolitical conditions (macro-
economic deterioration): We see significant uncertain-
ties regarding the global economic outlook. Especially
the renewed severe escalation of the COVID-19 pandemic
with a sustained long globally synchronized shutdown
would stall the recovery already underway and lead to a
new deep recession. Because the fiscal and monetary
policy scope for action appears already largely exhausted,
the economic impact could be much greater than in fiscal
2020. There is also great uncertainty about the long-term
consequences of the pandemic for important Siemens
customer industries, such as aerospace and non-residen-
tial construction. Moreover, during the COVID-19 pan-
demic essential trouble spots have not been defused and
in some cases they even have intensified. A further esca-
lation of the trade conflict between the U.S. and China
into a full-fledged global trade war or even geopolitical
conflict would significantly worsen global growth pros-
pects. Adverse effects to confidence and investment
activity would severely hit Siemens business. Increasing
trade barriers would negatively impact production costs
and productivity along our many value chains, as well as
our sales markets. In addition, the probability of the U.K.
exiting the European Single Market without a trade
agreement has increased significantly. A "No deal"-Brexit
could trigger a deep recession in the U.K, thereby signifi-
cantly reducing investment activity and posing a risk to
the financial markets. A further and massive loss of eco-
nomic confidence and a longer period of restraint in
investment decisions and the awarding of new orders
would have a negative impact on our business. We con-
tinuously monitor the exit process and coordinate our
local and global risk mitigation measures. Uncertainties
in the context of U.S. election results could potentially
burden the global economy, including a stand-still in
U.S. economic policy, with significant effects on invest-
ment decisions as well as on financial markets. Other
continuity. On Group level a senior management task
force prepares overarching decisions and coordinates the
flow of information through the various levels of the
organization while empowering the responsible manage-
ment in the businesses and countries to take actions
appropriate to their respective contexts.
COVID-19 pandemic (COVID-19): COVID-19 has come to
a head again in autumn 2020 with the number of new
infections rising rapidly in many countries. Current im-
pacts from the pandemic vary considerably between re-
gions and customer industries. Governments and other
local authorities are striving to contain the spread of
the disease by implementing various countermeasures
ranging from recommending social distancing and new
hygiene standards to imposing large-scale lockdowns
and restrictions on opening conditions in certain sectors
of the economy. Governments are expected to ease eco-
nomic restrictions to relieve associated suffering depend-
ing on epidemiological trends and political pressure. As a
result, the extent and duration of the individual effects
on our business are extremely difficult to predict. For ex-
ample, if containment measures are initiated on short
notice or last unforeseeably long, this might significantly
impact our business in a way that exceeds current expec-
tations and might go beyond already initiated mitigation
measures. We could be facing unexpected shutdowns of
locations, factories or office buildings of our suppliers,
customers or our own operations, thus impairing our
ability to produce or deliver our products, solutions and
services. Key uncertainties of the COVID-19 crisis are its
duration, including for example potential additional
waves of infections or mutations of the virus, and the
economic cost of the lockdowns. Since the second quar-
ter of fiscal 2020, we gradually started to see the effects
in our businesses, short-cycle as well as project busi-
nesses, as for example customers have been cancelling
orders or delaying investments, we have been exposed to
an increased risk of default and our supply chain has
been experiencing difficulties in certain areas. Potential
consequences include an unsustainable burden of public
and private debt that hampers the post-pandemic recov-
ery, severe disruptions in the financial system and bank-
ruptcies among Siemens customers and suppliers. In the
long term, a roll-back of globalization could reduce the
potential for future growth. Various task forces and crisis
teams have been set up across all functions of Siemens
to diligently monitor and mitigate the diverse effects
related to COVID-19 including an enduring on securing
the health and safety of our employees and business
A.8.3.1 Strategic risks
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
Below we describe the risks that could have a material
adverse effect on our business situation, financial condi-
tion (including effects on assets, liabilities and cash
flows), results of operations and reputation. The order in
which the risks are presented in each of the four catego-
ries reflects the currently estimated relative exposure for
Siemens associated with these risks and thus provides an
indication of the risks' current importance to us. Addi-
tional risks not known to us or that we currently consider
immaterial may also negatively impact our business ob-
jectives and operations. Unless otherwise stated, the risks
described below relate to all our organizational units.
organization and responsibilities
To oversee the ERM process and to further drive the inte-
gration and harmonization of existing control activities
to align with legal and operational requirements, the
Managing Board established a Risk Management and
Internal Control Organization, led by the Head of Assur-
ance. In order to allow for a meaningful discussion of risk
at the Siemens Group level, this organization aggregates
individual risks and opportunities of similar cause-and-
effect nature into broader risk and opportunity themes.
This aggregation naturally results in a mixture of risks,
including those with a primarily qualitative assessment
and those with a primarily quantitative risk assessment.
Accordingly, we do not adopt a purely quantitative as-
sessment of risk themes. Thematic risk and opportunity
assessments then form the basis for the evaluation of the
company-wide risk and opportunity situation. The Head
of Assurance reports quarterly to the Managing Board on
matters relating to the implementation, operation and
oversight of the risk and internal control system and
assists the Managing Board, for example in reporting to
the Audit Committee of the Supervisory Board.
A.8.2.3 Risk management
Responsibilities are assigned for all relevant risks and op-
portunities, with the hierarchical level of responsibility
depending on the significance of the respective risk or
opportunity. In a first step, assuming responsibility for a
specific risk or opportunity involves choosing one of our
general response strategies. Our general response strat-
egies with respect to risks are avoidance, transfer, reduc-
tion or acceptance of the relevant risk. Our general re-
sponse strategy with respect to opportunities is to "seize"
the relevant opportunity. In a second step, responsibility
for a risk or opportunity also involves the development,
initiation and monitoring of appropriate response mea-
sures corresponding to the chosen response strategy.
These response measures have to be specifically tailored
to allow for effective risk management. Accordingly, we
have developed a variety of response measures with dif-
ferent characteristics. For example, we mitigate the risk
of fluctuations in currency and interest rates by engaging
in hedging activities. Regarding our projects, systematic
and comprehensive project management with standard-
ized project milestones, including provisional accep-
tances during project execution and complemented by
clearly defined approval processes, assists us in identify-
ing and responding to project risks at an early stage, even
before the bidding phase. Furthermore, we maintain ap-
ANNUAL REPORT 2020 32
Our ERM process aims for early identification and evalu-
ation of, and response regarding, risks and opportunities
that could materially affect the achievement of our stra-
tegic, operational, financial and compliance objectives.
The time horizon is typically three years, and we take a
net risk approach, addressing risks and opportunities re-
maining after the execution of existing control measures.
If risks have already been considered in plans, budgets,
forecasts or the consolidated financial statements (e.g.
as a provision or risk contingency), they are supposed to
be incorporated with their financial impact in the entity's
business objectives. As a consequence, only additional
risks arising from the same subject (e.g. deviations from
business objectives, different impact perspectives) should
be considered. In order to provide a comprehensive view
of our business activities, risks and opportunities are
identified in a structured way combining elements of
both top-down and bottom-up approaches. Reporting
generally follows a quarterly cycle; we complement this
periodic reporting with an ad-hoc reporting process that
aims to escalate critical issues in a timely manner. Rele-
vant risks and opportunities are prioritized in terms of
impact and likelihood, considering different impact per-
spectives, including business objectives, reputation and
regulatory requirements. The bottom-up identification
and prioritization process is supplemented by workshops
with the respective managements of our organizational
units. The top-down element ensures that potential new
risks and opportunities are discussed at different man-
agement levels and are included in the subsequent re-
porting process, if found to be relevant. Reported risks
and opportunities are analyzed regarding potential cu-
mulative effects and are aggregated within and for each
of the organizations mentioned above.
mance" (2017) and the ISO (International Organization
for Standardization) Standard 31000 (2018) and is adapted
to Siemens requirements. The frameworks connect the
ERM process with our financial reporting process and our
internal control system. They consider a company's strat-
egy, the efficiency and effectiveness of its business oper-
ations, the reliability of its financial reporting and compli-
ance with relevant laws and regulations to be equally
important.
Risk management at Siemens builds on a comprehensive,
interactive and management-oriented Enterprise Risk
Management (ERM) approach that is integrated into the
organization and that addresses both risks and oppor-
tunities. Our ERM approach is based on the globally ac-
cepted COSO Standard (Committee of Sponsoring Orga-
nizations of the Treadway Commission) “Enterprise Risk
Management Integrating with Strategy and Perfor-
manner.
In general, due to long-cycle businesses in our organiza-
tional units and the importance of long-term contracts for
Siemens, there is usually a time lag between changes in
macroeconomic conditions and their impact on our finan-
cial results. In contrast, short-cycle business activities of
Digital Industries and Smart Infrastructure react quickly to
volatility in market demand. If the moderate growth of
certain markets stalls again and if we are not successful in
adapting our production and cost structure to subsequent
changes in conditions in the markets in which we operate,
there can be no assurance that we will not experience
adverse effects. For example, our customers may modify,
delay or cancel plans to purchase our products, solutions
and services, or fail to follow through on purchases or
contracts already executed. Furthermore, the prices for
our products, solutions and services may decline to a
greater extent than we currently anticipate. In addition,
it may become more difficult for our customers to obtain
financing. Contracted payment terms, especially regard-
ing the level of advance payments by our customers re-
lating to long-term projects, may become less favorable,
which could negatively impact our financial condition.
Siemens' global setup with operations in almost all rele-
vant economies, our wide range of offerings with varied
exposures to business cycles, and our balanced mix of
business models (e.g. equipment, components, systems,
We have implemented and coordinated a set of risk
management and control systems which support us in
the early recognition of developments that could jeopar-
dize the continuity of our business. The most important
of these systems include our enterprise-wide processes
for strategic planning and management reporting. Stra-
tegic planning is intended to support us in considering
potential risks well in advance of major business decisions,
while management reporting is intended to enable us
to monitor such risks more closely as our business pro-
gresses. Our internal auditors regularly review the ade-
quacy and effectiveness of our risk management. Ac-
cordingly, if deficits are detected, it is possible to adopt
appropriate measures for their elimination. This coordi-
nation of processes and procedures is intended to help
ensure that the Managing Board and the Supervisory
Board are fully informed about significant risks in a timely
propriate insurance levels for potential cases of damage A.8.3 Risks
and liability risks in order to reduce our exposure to such
risks and to avoid or minimize potential losses. Among
others, we address the risk of fluctuation in economic
activity and customer demand by closely monitoring
macroeconomic conditions and developments in relevant
industries, and by adjusting capacity and implementing
cost-reduction measures in a timely and consistent man-
ner if they are deemed necessary. Worldwide there are
risks from the transmission of infectious agents from
animals to humans, from humans to humans and in other
ways. Epidemic, pandemic or other spread patterns such
as bioterrorism threaten to cause high disease rates in
different countries, regions or continents. We constantly
check information from the World Health Organization
(WHO), the American and European Centers of Disease
Control and Prevention, the German Robert Koch Institute
and other institutions in order to be able to identify early
epidemic or pandemic risks and determine and initiate
related mitigation actions as early as possible.
software, services and solutions) help us to absorb im-
pacts from adverse developments in any single market.
Footprint and Restructuring: We see risks that we may
not be flexible enough in adjusting our organizational
and manufacturing footprint in order to quickly respond
to changing markets. The necessary restructuring might
not be executed to the extent or in the timeframe planned
(e.g. due to local co-determination regulations), limiting
our improvements of our cost position with negative
profit impacts and the loss of key personnel. Strikes and
disputes with unions and workers councils might result
in negative media coverage and delivery problems. Addi-
tionally, public criticism related to restructuring might
negatively impact Siemens' reputation. We mitigate these
risks by closely monitoring the implementation of the
planned measures, maintaining strict cost management,
and conducting ongoing discussions with all concerned
interest groups.
ANNUAL REPORT 2020 35
A.8.2.2 Enterprise risk
management process
ANNUAL REPORT 2020 38
Shortage of skilled personnel: Competition for diverse
and highly qualified personnel (e.g. specialists, experts,
digital talent) remains intense in the industries and re-
gions in which our businesses operate. We have ongoing
demand for highly skilled employees and a need to en-
hance diversity, inclusion and sense of belonging in our
workforce. Our future success depends in part on our
continued ability to identify, assess and hire engineers,
digital talent and other qualified personnel. We must also
integrate, develop and retain them after they join us,
Supply chain management: The financial performance
of our operating units depends on reliable and effective
supply chain management for components, sub-assem-
blies and materials. Capacity constraints and supply
shortages resulting from ineffective supply chain man-
agement may lead to production bottlenecks, delivery
delays, quality issues and additional costs. We also rely
on third parties to supply us with parts, components and
services. Using third parties to manufacture, assemble
and test our products may reduce our control over man-
ufacturing yields, quality assurance, product delivery
schedules and costs. Although we work closely with our
suppliers to avoid supply-related problems, there can be
no assurance that we will not encounter supply problems
in the future, especially if we use single-source suppliers
for critical components. Shortages and delays could ma-
terially harm our businesses. Unanticipated increases in
the price of components or raw materials due to market
shortages or other reasons could also adversely affect
performance. Furthermore, we may be exposed to the
risk of delays and interruptions in the supply chain as
a consequence of catastrophic events (including pan-
demics), cyber incidents or suppliers' financial difficul-
ties, particularly if we are unable to identify alternative
sources of supply or means of transportation in a timely
manner or at all. Besides other measures, we mitigate
price fluctuation in global raw material markets with
various hedging instruments.
project management personnel. For very complex proj-
ects we conduct dedicated risk assessments in very early
stages of the sales phase before we decide to hand over
a binding offer to our customers.
Project-related risks: A number of our segments conduct
activities, under long-term contracts that are awarded
on a competitive bidding basis. Such contracts typically
arise at Mobility and in various activities of Smart Infra-
structure. Some of these contracts are inherently risky
because we may assume substantially all of the risks
associated with completing a project and meeting post-
completion warranty obligations. For example, we may
face the risk that we must satisfy technical requirements
of a project even though we have not gained experience
with those requirements before winning the project. The
profit margins realized on fixed-priced contracts may
vary from original estimates as a result of changes in
costs and productivity over the contract's term. We some-
times bear the risk of unanticipated project modifica-
tions, shortage of key personnel, quality problems, fi-
nancial difficulties of our customers and/or significant
partners, cost overruns or contractual penalties caused
by unexpected technological problems, unforeseen de-
velopments at the project sites, unforeseen changes or
difficulties in the regulatory or political environment,
performance problems with our suppliers, subcontrac-
tors and consortium partners or other logistical difficul-
ties. Some of our multi-year contracts also contain de-
manding installation and maintenance requirements in
addition to other performance criteria relating to timing,
unit cost and compliance with government regulations,
which, if not satisfied, could subject us to substantial
contractual penalties, damages, non-payment and con-
tract termination. There can be no assurance that con-
tracts and projects, in particular those with long-term
duration and fixed-priced calculation, can be completed
profitably. To tackle those risks, we established a global
project management organization to systematically im-
prove the technical and commercial capabilities of our
sustain them. In case of restructuring and outsourcing
activities, there could be delays in product deliveries or
we might even experience delivery failures. Furthermore,
delays in critical R&D projects could lead to negative
impacts in running projects. We constantly control and
monitor the progress of these projects and initiatives
using standardized controlling and milestone tracking
approaches.
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ANNUAL REPORT 2020 37
Internal programs and initiatives: We are in a continu-
ous process of operational optimization and constantly
engage in cost-reduction initiatives, including ongoing
capacity adjustment measures and structural initiatives.
Consolidation of business activities and manufacturing
facilities, outsourcings, joint ventures and the stream-
lining of product portfolios are all part of these cost-
reduction efforts. These measures may not be imple-
mented as planned, may turn out to be less effective than
anticipated, may become effective later than estimated
or may not become effective at all. Any future contribu-
tion of these measures to our profitability will be influ-
enced by the actual savings achieved and by our ability to
Portfolio measures, at-equity investments, other invest-
ments and strategic alliances: Our strategy includes
divesting our activities in some business areas and
strengthening others through portfolio measures, includ-
ing mergers and acquisitions. With respect to divest-
ments, we may not be able to divest some of our activi-
ties as planned, and the divestitures we do carry out
could have a negative impact on our business situation,
financial condition, results of operations and reputation.
Mergers and acquisitions are inherently risky because of
difficulties that may arise when integrating people, oper-
ations, technologies and products. There can be no assur-
ance that any of the businesses we acquire can be inte-
grated successfully and in a timely manner as originally
planned, or that they will perform as anticipated once
integrated. In addition, we may incur significant acquisi-
tion, administrative, tax and other expenditures in con-
nection with these transactions, including costs related
to integration of acquired businesses. Furthermore, port-
folio measures may result in additional financing needs
and adversely affect our capital structure. Acquisitions
can lead to substantial additions to intangible assets, in-
cluding goodwill, in our statements of financial position.
If we were to encounter continuing adverse business
developments or if we were otherwise to perform worse
than expected at acquisition activities, then these in-
tangible assets, including goodwill, might have to be im-
paired, which could adversely affect our business situa-
tion, financial condition and results of operations. Our
investment portfolio includes investments held for pur-
poses other than trading and other investments. Any fac-
tors negatively influencing the financial condition and
results of operations of our at-equity investments and
other investments could have an adverse effect on our
equity pick-up related to these investments or may result
in a related write-off. In addition, our business situation,
financial condition and results of operations could also
be adversely affected in connection with loans, guaran-
tees or non-compliance with financial covenants related
to these investments. Furthermore, such investments are
inherently risky as we may not be able to sufficiently
we face active cyber threats from sophisticated adversar-
ies that are supported by organized crime and nation-
states engaged in economic espionage or even sabotage.
We attempt to mitigate these risks by employing a num-
ber of measures, including employee training, consider-
ing new models of flexible working environments, and
comprehensive monitoring of our networks and systems
through Cyber Defense with an artificial intelligence
solution to identify attacks faster and prevent damage to
society and especially to critical infrastructures, our cus-
tomers, our partners and Siemens overall. We initiated
the industrial "Charter of Trust”, signed by a growing
group of global companies, which sets out principles for
building trust in digital technologies and creating a more
secure digital world. Nonetheless, our systems, products,
solutions and services, as well as those of our service pro-
viders, remain potentially vulnerable to attacks. Such at-
tacks could potentially lead to the publication, manipula-
tion or leakage of information such as through industrial
espionage. They could also result in deliberate improper
use of our systems, vulnerable products, production
downtimes and supply shortages, with potential adverse
effects on our reputation, our competitiveness and re-
sults of operations. For increased protection of Siemens
and reduction of a potential financial impact caused by
cyber incidents, we have assessed in detail the possibility
of transferring risk. As a result of an international insur-
ance tender, out currently insurable cybersecurity risks
have been to a partial extent transferred to a consortium
of insurance companies.
A.8.3.2 Operational risks
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ANNUAL REPORT 2020 36
Increasing sustainability focus: The increasing environ-
mental, social and governance requirements from gov-
ernments and customers as well as financing restrictions
from governments, customer demands and financing
restrictions for greenhouse gas emitting technologies
could result in additional costs. Additionally, business
involvement in sensitive environmental, social or gover-
nance activities might be negatively perceived and
trigger adverse media attention. This could lead to repu-
tational damage and have an impact on achieving our
business goals. We are implementing an environmental,
social and governance due diligence tool during fiscal
2021, which is mandatory for all Siemens units.
Competitive environment: The worldwide markets for
our products, solutions and services are highly competi-
tive in terms of pricing, product and service quality, prod-
uct development and introduction time, customer ser-
vice, financing terms and shifts in market demands. We
face strong established competitors and rising competi-
tors from emerging markets and new industries, which
may have a better cost structure. Some industries in which
we operate are undergoing consolidation, which may
result in stronger competition, a change in our relative
market position, increase in inventory of finished or work-
in-progress goods or unexpected price erosion. Further-
more, there is a risk that critical suppliers are taken over
by competitors and a risk that competitors are increas-
ingly offering services to our installed base. We address
these risks with various measures, for example bench-
marking, strategic initiatives, sales push initiatives, exe-
cuting productivity measures and target cost projects,
rightsizing of our footprint, outsourcings, mergers and
joint ventures and optimizing our product and service
portfolio. We continuously monitor and analyze compet-
itive, market and industry information in order to be able
to anticipate unfavorable changes in the competitive en-
vironment rather than merely reacting to such changes.
lar to ours.
property may not prevent competitors from independently
developing or selling products and services that are simi-
Disruptive technologies: The markets in which our busi-
nesses operate experience rapid and significant changes
due to the introduction of innovative and disruptive tech-
nologies. In the fields of digitalization (e.g. IoT, artificial
intelligence, cloud computing, Industry 4.0), there are
risks associated with new competitors, substitutions of
existing products/solutions/services, new business mod-
els (e.g. in terms of pricing, financing, extended scopes
for project business or subscription models in the soft-
ware business) and finally the risk that our competitors
may have more advanced time-to-market strategies and
introduce their disruptive products and solutions faster
than Siemens. Our operating results depend to a signifi-
cant extent on our technological leadership, our ability
to anticipate and adapt to changes in our markets and
to optimize our cost base accordingly. Introducing new
products and technologies requires a significant commit-
ment to research and development, which in return re-
quires expenditure of considerable financial resources
that may not always result in success. Our results of
operations may suffer if we invest in technologies that do
not operate or may not be integrated as expected, or that
are not accepted in the marketplace as anticipated, or if
our products, solutions or systems are not introduced to
the market in a timely manner, particularly compared
to our competitors, or even become obsolete. We con-
stantly apply for new patents and actively manage our
intellectual property portfolio to secure our technological
position. However, our patents and other intellectual
influence corporate governance processes or business
decisions taken by our at-equity investments, other in-
vestments and strategic alliances, which may have a neg-
ative effect on our business and especially on our reputa-
tion. In addition, joint ventures bear the risk of difficulties
that may y arise when integrating people, operations, tech-
nologies and products. Strategic alliances may also pose
risks for us because we compete in some business areas
with companies with which we have strategic alliances.
Besides other measures, we handle these risks with stan-
dardized processes as well as dedicated roles and respon-
sibilities in the areas of mergers, acquisitions, divestments
and carve-outs. This includes the systematic treatment of
all contractual obligations and post-closing claims.
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
Cyber/Information security: Digital technologies are
deeply integrated into our business portfolio. We observe
a global increase of cyber security threats and higher
levels of professionalism in computer crime, which pose
a risk to the security of products, systems and networks
and the confidentiality, availability and integrity of data.
According to the various external data sources, this ten-
dency has accelerated during the COVID-19 pandemic.
Especially the number of phishing attacks as well as the
number of malicious websites have increased signifi-
cantly. Moreover, the information technology market is
concentrated around a small number of information
technology and software vendors, which could lead to
dependence on a single provider. There can be no assur-
ance that the measures aimed at protecting our Intellec-
tual Property and portfolio will address these threats
under all circumstances. There is a risk that confidential
information may be stolen or that the integrity of our
portfolio may be compromised, e.g. by attacks on our
networks, social engineering, data manipulations in crit-
ical applications and a loss of critical resources, resulting
in financial damages. Cyber security covers the IT of our
entire enterprise including office IT, systems and applica-
tions, special purpose networks, and our operating envi-
ronments such as manufacturing and research and devel-
opment (R&D). Like other large multinational companies
Our risk management policy stems from a philosophy
of pursuing sustainable growth and creating economic
value while managing appropriate risks and opportuni-
ties and avoiding inappropriate risks. As risk manage-
ment is an integral part of how we plan and execute our
business strategies, our risk management policy is set by
the Managing Board. Our organizational and account-
ability structure requires each of the respective manage-
ments of our organizational units to implement risk man-
agement programs that are tailored to their specific
industries and responsibilities, while being consistent
with the overall policy.
For our net income guidance, we assume that the gain
related to the announced divestment of Flender will be
largely offset by burdens related to Siemens Energy.
Within our equity investment in Siemens Energy, we ex-
pect an €0.3 billion impact from amortization of assets in
addition to our participation in its profit after tax. We also
expect expenses remaining from the spin-off transaction.
A.8.2.1 Basic principles
Siemens Financial Services is expected to achieve signif-
icant improvements year-over-year and to approach the
target range for return on equity (ROE) (after tax) of 17%
to 22% in fiscal 2021.
Siemens Healthineers expects to achieve comparable rev-
enue growth in the range of 5% to 8% in fiscal 2021. Ad-
justed EBITA margin is expected to improve considerably
and to come in slightly below our target margin range for
this segment of 17% to 21%.
Due mainly to executing its large order backlog, Mobility
anticipates mid-single-digit comparable revenue growth
in fiscal 2021. Adjusted EBITA margin is expected to be
9.5% to 10.5%.
Smart Infrastructure expects to achieve moderate com-
parable revenue growth in fiscal 2021. Adjusted EBITA
margin is expected at 10% to 11%.
Digital Industries expects fiscal 2021 comparable revenue
to grow modestly year-over-year. Adjusted EBITA margin
is expected at 17% to 18%.
Based on these assumptions and exclusions, our outlook
is as follows:
We are exposed to currency translation effects, mainly
involving the U.S. dollar, the British pound and currencies
of emerging markets, particularly the Chinese yuan.
While we expect volatility in global currency markets to
continue in fiscal 2021, we have improved our natural
hedge on a global basis through geographic distribution
of our production facilities in the past. Nevertheless,
Siemens is still a net exporter from the Eurozone to the
rest of the world, so a weak euro is principally favorable
for our business and a strong euro is principally unfavor-
able. In addition to the natural hedging strategy just
mentioned, we also hedge currency risk in our export
business using derivative financial instruments. We ex-
pect these steps to help us limit effects on income related
to currency in fiscal 2021. Nevertheless, based on cur-
rency exchange rates as of the beginning of Novem-
ber 2020, we anticipate that negative currency effects
will strongly burden both nominal growth rates in vol-
ume and Adjusted EBITA for our businesses in fiscal 2021.
expected to close in the first half of calendar 2021 and to
benefit nominal volume growth and burden net income
for fiscal 2021.
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ANNUAL REPORT 2020 29
REVENUE GROWTH
Excluded from this outlook are burdens from legal and
regulatory issues and effects in connection with Siemens
Healthineers' planned acquisition of Varian, which is
A.8.1.2 Siemens Group
The forecasts presented here for GDP and fixed invest-
ments are based on a report from IHS Markit dated Octo-
ber 15, 2020.
will weigh on overall investment activity. Accordingly,
global fixed investments are expected to expand by only
3.7% in calendar 2021, after a decline of 4.9% in calendar
2020. In addition, important customer industries for
Siemens are suffering from effects related to both
COVID-19 and structural problems, e.g. machine-building
(weak capacity utilization), oil and gas (decarbonization),
automotive (accelerated structural change). Therefore,
fiscal 2021 is expected to bring many headwinds for
Siemens' market environment. On the positive side, op-
portunities could arise from large government stimulus
programs, which may be set in place in the next years.
In our baseline forecast, we assume that vaccines will be
generally available during the first half of calendar 2021
and immunization of large parts of the population will
occur during 2021. Until then, contact-intensive industries
will still be subject to severe restraints. Based on these
assumptions, the EU economy is expected to expand by
4.1% in calendar 2021, U.S. 3.7%, China 7.3%, Japan 2.2%
and India 9.2%. Given the steep decline in economic
activity in calendar 2020, this is only a moderate rebound
with still a high level of under-utilized resources, which
In fiscal 2021, the world economy is expected to recover
from the recession caused by COVID-19 in fiscal 2020.
Global GDP is projected to expand by 4.4% in calendar
2021. The risks and uncertainties surrounding this base-
line forecast are unusually large. The further develop-
ment of the virus outbreak (e.g. waves of new infections,
lockdowns, and possible mutations), advances in medical
treatment, availability and acceptance of vaccines, possi-
ble spillover effects from weak demand (especially in
contact-intensive service sectors) or from financial mar-
ket tensions (increasing insolvencies) are very hard to
predict at the start of fiscal 2021. In Europe, it is expected
that the new wave of infection in October and Novem-
ber 2020, with varying degrees of lockdowns in different
countries, will interrupt the recovery and lead to a de-
cline in economic activity in the first quarter of fiscal
2021. However, the impact is expected to be much less
severe compared to spring 2020, as the recovery is so far
intact globally (especially in Asia and the U.S.) and no
significant disruptions in global supply chains have been
observed. High uncertainty also applies to significant
political developments, such as the U.S.-China trade re-
lationship and the U.K.'s exit from the EU, as well as to
the longer-term outcome of the 2020 U.S. election cycle.
of risk management
A.8.1 Report on expected
developments
Report on expected developments and
associated material opportunities and risks
A.8
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
We are basing our outlook for fiscal 2021 for the Siemens
Group and its reportable segments on the above-men-
tioned expectations and assumptions regarding the over-
all economic situation as well as the specific market con-
ditions we expect for our respective industrial businesses,
as described in A.3 SEGMENT INFORMATION. For our outlook
for fiscal 2021, we assume that the COVID-19 pandemic
will not have a long-lasting impact on the world econ-
omy. Given this condition, we expect a fairly robust
return to global GDP growth. While we anticipate that
important customer industries for Siemens will continue
to face challenges related to the pandemic and industry-
specific structural changes, and that this will cause
growth in global fixed investments to lag behind GDP
growth, we expect improved conditions particularly for
our high-margin short-cycle businesses in the second
half of fiscal 2021.
For comparable revenue, net of currency translation and
portfolio effects, we expect the Siemens Group to
achieve moderate growth. Furthermore, we anticipate
that orders in fiscal 2021 will exceed revenue for a book-
to-bill ratio above 1.
A.8.1.1 Worldwide economy
INFORMATION.
As of September 30, 2020, our order backlog totaled
€70 billion, and we expect conversion from the backlog
to strongly support revenue growth in fiscal 2021 with
approximately €28 billion of past orders converted to cur-
rent revenue. For expected conversion of order backlog
to revenue for our respective segments, see 7 A.3 SEGMENT
A.8.2 Risk management
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ANNUAL REPORT 2020 31
Overall, the actual development for Siemens and its
segments may vary, positively or negatively, from our
outlook due to the risks and opportunities described
below or if our expectations and assumptions do not
materialize.
Excluded from this outlook are burdens from legal and
regulatory issues and effects in connection with Siemens
Healthineers' planned acquisition of Varian, which is
expected to close in the first half of calendar 2021.
Assuming the expectations described above are fulfilled
during fiscal 2021, we anticipate net income to increase
moderately from €4.2 billion in fiscal 2020 despite the
strong currency headwinds.
For comparable revenue, net of currency translation and
portfolio effects, we expect the Siemens Group to achieve
moderate growth and a book-to-bill ratio above 1.
We further anticipate that negative currency effects will
strongly burden both nominal growth rates in volume and
Adjusted EBITA for our industrial businesses in fiscal 2021.
For our outlook for fiscal 2021 we assume that the
COVID-19 pandemic will not have a long-lasting impact on
the world economy. Given this condition, we expect a
fairly robust return to global GDP growth. While we an-
ticipate that important customer industries for Siemens
will continue to face challenges related to the pandemic
and industry-specific structural changes, and that this will
cause growth in global fixed investments to lag behind
GDP growth, we expect improved conditions particularly
for our high-margin short-cycle businesses in the second
half of fiscal 2021.
A.8.1.3 Overall assessment
mentioned above, which is excluded from this outlook,
will also significantly influence our capital structure.
SEGMENTS
CAPITAL STRUCTURE
We aim in general for a capital structure, defined as the
ratio of industrial net debt to EBITDA (continuing opera-
tions), of up to 1.0. Due mainly to an increase in long-
term debt year-over-year, this ratio came in at 1.3 in fiscal
2020 and is expected to remain above 1 fiscal 2021. The
planned acquisition of Varian by Siemens Healthineers
PROFITABILITY
ANNUAL REPORT 2020 30
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
We anticipate our tax rate for fiscal 2021 to be in the
range of 27% to 31%, up from 24% in fiscal 2020. We ex-
pect income from discontinued operations at a positive
mid-triple-digit level, due primarily to a gain from the
announced divestment of Flender, which is expected to
close in the first half of calendar 2021.
In addition to the above-mentioned expectations for our
segments, we expect our fully consolidated units within
Portfolio Companies to be profitable while equity invest-
ments therein are expected to be volatile and to continue
to generate losses. Results related to our investment in
Siemens Energy include our participation in its profit af-
ter tax and amortization of assets resulting from pur-
chase price allocation due to the initial recognition of the
investment at fair value. We anticipate this amortization,
which is expected to be approximately €0.3 billion after
tax in fiscal 2021, to result in a substantial loss related to
Siemens Energy Investment. We anticipate that Siemens
Real Estate will continue with real estate disposals de-
pending on market conditions, at a lower level compared
to fiscal 2020. Corporate items and Centrally carried pen-
sion expenses, which were a negative €1.1 billion are ex-
pected on a similar level in fiscal 2021, including impacts
of approximately €0.2 billion to €0.3 billion related to
Siemens Energy. Amortization of intangible assets ac-
quired in business combinations, which was €0.7 billion
in fiscal 2020, is expected at €0.6 billion, and Elimina-
tions, Corporate Treasury and other reconciling items,
which were a negative €0.2 billion in fiscal 2020, are ex-
pected to be slightly more negative in fiscal 2021.
Assuming the expectations described above are fulfilled
during fiscal 2021, we anticipate net income to increase
moderately from €4.2 billion in fiscal 2020 despite the
strong currency
headwinds.
Our forecast for net income takes into account a number
of additional factors. We expect solid project execution to
continue in fiscal 2021. We plan to keep the ratio of R&D
expenses to revenue above 8% with a strong focus on
software and digital technologies and to keep selling and
general administrative expenses as a percent of revenue
close to the fiscal 2020 level of 18.9%. Severance charges,
which were €0.6 billion in fiscal 2020, are expected to be
somewhat lower in fiscal 2021.
CAPITAL EFFICIENCY
Our long-term goal is to achieve a ROCE in the range of
15% to 20%. Due mainly to factors currently influencing
net income and average capital employed, particularly
recent acquisitions at Siemens Healthineers, we expect
ROCE to increase compared to 7.8% in fiscal 2020 but to
remain in the single-digit range in fiscal 2021. Addition-
ally we expect the planned acquisition of Varian by
Siemens Healthineers, which is excluded from this out-
look, to constitute a significant burden on ROCE.
For our net income guidance, we assume that the gain
related to the announced divestment of Flender will be
largely offset by burdens related to Siemens Energy and
expected additional expenses remaining from the spin-
off transaction.
40
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
trade restrictions (hereafter referred to as "sanctions")
imposed by the U.S., the EU or other countries or organi-
zations. New or expanded sanctions in countries in which
we do business may result in a curtailment of our existing
business in such countries or indirectly in other countries.
We are also aware of policies of national authorities and
institutional investors, such as pension funds or insur-
ance companies, requiring divestment of interests in and
prohibiting investment in and transactions with entities
doing business with countries identified by the U.S.
Department of State as state sponsors of terrorism. There-
fore, it is possible that such policies may result in our
being unable to gain or retain certain investors or cus-
tomers. In addition, the termination of our activities in
sanctioned countries may expose us to customer claims
and other actions. Our reputation could also suffer due
to our activities with counterparties in or affiliated with
these countries.
Environmental, health & safety and other governmen-
tal regulations: Some of the industries in which we
operate are highly regulated. Current and future en-
vironmental, health and safety and other governmental
regulations or changes thereto may require us to change
the way we run our operations and could result in signif-
icant increases in our operating or production costs. Fur-
thermore, we see the risk of potential environmental and
health and safety incidents as well as potential non-
compliance with environmental and health and safety
regulations affecting Siemens and our contractors or
sub-suppliers, resulting for example in serious injuries,
penalties, loss of reputation and internal or external
investigations.
In addition, while we have procedures in place to ensure
compliance with applicable governmental regulations in
the conduct of our business operations, it cannot be ex-
cluded that violations of applicable governmental regu-
lations may be caused either by us or by third parties that
we contract with, including suppliers or service providers
whose activities may be attributed to us. Any such viola-
tions particularly expose us to the risk of liability, penal-
ties, fines, reputational damage or loss of licenses or
permits that are important to our business operations. In
particular, we could also face liability for damage or re-
mediation for environmental contamination at the facil-
ities we design or operate. With regard to certain en-
vironmental risks, we maintain liability insurance at
levels that our management believes are appropriate and
consistent with industry practice. We may incur environ-
mental losses beyond the limits, or outside the coverage,
of such insurance, and such losses may have an adverse
effect on our business situation, financial condition and
results of operations.
Current or future litigation and legal and regulatory
proceedings: Siemens is and potentially will be involved
in numerous legal disputes and proceedings in various
jurisdictions. These legal disputes and proceedings could
result, in particular, in Siemens being subject to payment
of damages and punitive damages, equitable remedies
or sanctions, fines or disgorgement of profit. In individual
cases this may also lead to formal or informal exclusion
from tenders or the revocation or loss of business licenses
or permits. Asserted claims are generally subject to inter-
est rates. Some of these legal disputes and proceedings
could result in adverse decisions for Siemens or deci-
sions, assessments or requirements of regulatory author-
ities could deviate from our expectations, which may
have material effects on our business activities as well
as our financial position, results of operations and cash
flows. Siemens maintains liability insurance for certain
legal risks at levels our management believes are appro-
priate and consistent with industry practice. The insur-
ance policy, however, does not protect Siemens against
reputational damage. Moreover, Siemens may incur
losses relating to legal proceedings beyond the limits, or
outside the coverage, of such insurance or exceeding any
provisions made for losses related to legal proceedings.
Finally, there can be no assurance that Siemens will be
able to maintain adequate insurance coverage on com-
mercially reasonable terms in the future.
For additional information with respect to specific pro-
ceedings, see > NOTE 22 in 7 B.6 NOTES TO CONSOLIDATED
A.8.3.5 Assessment of the
overall risk situation
ANNUAL REPORT 2020 41
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ANNUAL REPORT 2020
The most significant challenges have been mentioned
first in each of the four risk categories - strategic, opera-
tional, financial and compliance.
While our assessments of individual risks have changed
during fiscal 2020 due to developments in the external
environment, changes in our business portfolio, effects
of our own mitigation measures and the revision of
our risk assessment, the overall risk situation for Siemens
did not change significantly as compared to the prior
year with the exception of the COVID-19 pandemic. We
currently see this strategic risk as the most significant
challenge for us followed by the operational risk arising
from cyber/information security.
At present, no risks have been identified that either indi-
vidually or in combination could endanger our ability to
continue as a going concern.
A.8.4 Opportunities
Within our ERM we regularly identify, evaluate and re-
spond to opportunities that present themselves in our
various fields of activity. Below we describe our most sig-
nificant opportunities. Unless otherwise stated, the op-
portunities described relate to all organizational units.
The order in which the opportunities are presented re-
flects the currently estimated relative exposure for
Siemens associated with these opportunities and thus
provides an indication of the opportunities' current im-
portance to us. The described opportunities are not nec-
essarily the only ones we encounter. In addition, our as-
sessment of opportunities is subject to change because
the Company, our markets and technologies are con-
stantly advancing. It is also possible that opportunities
we see today will never materialize.
FINANCIAL STATEMENTS.
Geopolitical uncertainties including sanctions and
export control: As a globally operating organization, we
conduct business with customers in countries which are
subject to export control regulations, embargoes, eco-
nomic sanctions, debarment policies or other forms of
Siemens conducts a large share of its business with gov-
ernments and government-owned enterprises. We also
participate in a number of projects funded by govern-
ment agencies and intergovernmental and supranational
organizations, such as multilateral development banks.
Ongoing or potential future investigations into allega-
tions of corruption, antitrust violations or other violations
of law could as well impair relationships with such parties
or could result in our exclusion from public contracts.
Such investigations may also adversely affect existing
private business relationships and our ability to pursue
potentially important strategic projects and transactions,
such as strategic alliances, joint ventures or other busi-
ness alliances, or could result in the cancellation of certain
of our existing contracts. Moreover, third parties, includ-
ing our competitors, could initiate significant litigation.
Changes of regulations, laws and policies: As a diversi-
fied company with global businesses we are exposed to
various product- and country-related regulations, laws
and policies influencing our business activities and pro-
cesses. We monitor the political and regulatory landscape
in all our key markets to anticipate potential problem
areas, with the aim of quickly adjusting our business ac-
tivities and processes to changed conditions. However,
any changes in regulations, laws and policies could ad-
versely affect our business activities and processes as
well as our financial condition and results of operations.
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
which appears especially relevant in times of a new, in-
creasingly virtual working environment. We address these
topics for example by strengthening the capabilities and
skills of our Talent Acquisition teams and a strategy of
proactive search for people with the required capabilities
in our respective industries and markets. Technology and
digitalization help us to be more effective in attracting
and selecting diverse talent. Furthermore, we have a
focus on diversity and structured succession planning.
A.8.3.3 Financial risks
Market price risks: We are exposed to fluctuations in
exchange rates, especially between the U.S. dollar and
the euro, because a high percentage of our business vol-
ume is conducted as exports from Europe to areas using
the U.S. dollar. In addition, we are exposed to effects in-
volving the currencies of emerging markets, in particular
the Chinese yuan. Appreciable changes in euro exchange
rates could materially change our competitive position.
We are also exposed to fluctuations in interest rates. Even
hedging activities to mitigate such risks may result in a
reverse effect. Fluctuations in exchange or interest rates,
negative developments in the financial markets and
changes in central bank policies could therefore nega-
tively impact our financial results.
Liquidity and financing risks: Our treasury and financing
activities could face adverse deposit and/or financing
conditions from negative developments related to finan-
cial markets, such as limited availability of funds and
hedging instruments, an updated evaluation of our sol-
vency, particularly from rating agencies, negative inter-
est rates, and impacts arising from more restrictive regu-
lation of the financial sector, central bank policy, or the
usage of financial instruments. Widening credit spreads
due to uncertainty and risk aversion in the financial mar-
kets might lead to adverse changes in the market values
of our financial assets, in particular our derivative finan-
cial instruments.
Credit risks: We provide our customers with various
forms of direct and indirect financing of orders and proj-
ects, including guarantees. Siemens Financial Services in
particular bears credit risks due to such financing activi-
ties if, for example, customers do not, only partially or
late meet obligations arising from these financing ar-
rangements.
Risks from pension obligations: The provisions for pen-
sions and similar obligations may be affected by changes
in actuarial assumptions, including the discount rate, as
well as by movements in financial markets or a change in
the mix of assets in our investment portfolio. Addition-
ally, they are subject to legal risks with regard to plan
design among other factors. A significant increase in the
underfunding may have a negative effect on our capital
structure and rating, and thus may tighten refinancing
options and increase costs. In order to comply with local
pension regulations in selected foreign countries, we
may face an economic risk of increasing cash outflows
due to change in funding level according to local regula-
tions of our pension plans in these countries and the
change of the regulations themselves.
STATEMENTS.
Audits by tax authorities and changes in tax regula-
tions: We operate in nearly all countries of the world and
therefore are subject to many different tax regulations.
Changes in tax laws in any of these jurisdictions could
result in higher tax expenses and increased tax payments.
Furthermore, legislative changes could impact our tax
receivables and liabilities as well as deferred tax assets
and deferred tax liabilities. In addition, the uncertain legal
environment in some regions could limit our ability to en-
force our rights. As a globally operating organization, we
conduct business in countries subject to complex tax
rules, which may be interpreted in different ways. Future
interpretations or developments of tax regimes may
affect our business situation, financial condition and
results of operations. We are regularly audited by tax
authorities in various jurisdictions and we continuously
identify and assess relevant risks.
ANNUAL REPORT 2020 39
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
A.8.3.4 Compliance risks
Current and future investigations regarding allega-
tions of corruption, of antitrust violations and of other
violations of law: Proceedings against us or our business
partners regarding allegations of corruption, of antitrust
violations and of other violations of law may lead to fines
as well as penalties, sanctions, injunctions against future
conduct, profit disgorgements, disqualifications from
directly and indirectly engaging in certain types of busi-
ness, the loss of business licenses or permits, other re-
strictions and legal consequences as well as negative
public media coverage. Accordingly, we may, among
other things, be required to comply with potential obliga-
tions and liabilities arising in connection with such inves-
tigations and proceedings, including potential tax penal-
ties. Moreover, any findings related to public corruption
that are not covered by the 2008 and 2009 corruption
charge settlements, which we concluded with U.S. and
German authorities, may endanger our business with
government agencies and intergovernmental and supra-
national organizations. Monitors could again be ap-
pointed to review future business practices and we may
otherwise be required to further modify our business
practices and our compliance program.
In addition, future developments in ongoing and poten-
tial future investigations, such as responding to the
requests of governmental authorities and cooperating
with them, could divert management's attention and
resources from other issues facing our business. Further-
more, we might be exposed to compliance risks in con-
nection with recently acquired operations that are in the
ongoing process of integration.
Along with other measures, Siemens has established a
global compliance organization that conducts among
others compliance risk mitigation processes such as Com-
pliance Risk Assessments or initiates internal audit activ-
ities performed by the internal assurance department.
Protectionism (including tariffs/trade war): Protection-
ist trade policies and changes in the political and regula-
tory environment in the markets in which we operate,
such as import and export controls, tariffs and other
trade barriers including debarment from certain markets
and price or exchange controls, could affect our business
in national markets and could impact our business situa-
tion, financial position and results of operations; and
may expose us to penalties, other sanctions and reputa-
tional damage. In addition, the uncertainty of the legal
environment in some regions could limit our ability to
enforce our rights and subject us to increasing costs re-
lated to appropriate compliance programs.
For further information on post-employment benefits,
derivative financial instruments, hedging activities, finan-
cial risk management and related measures, see > NOTES
17, 24 and 25 in 7 B.6 NOTES TO CONSOLIDATED FINANCIAL
Turning COVID-19 challenges into opportunities: The
participation in governmental COVID-19 recovery pro-
grams such as the European Union's "Next Generation
EU" recovery plan is an opportunity for Siemens. There is
also the chance to strengthen our customer relationship
through additional market offerings that specifically
address use cases related directly to the COVID-19 pan-
demic. Potential growth areas might arise through the
optimization program "new normal" with, for example,
more working flexibility for our employees.
ANNUAL REPORT 2020 42
(14)%
Cash and cash equivalents, other securities
8,786
4,489
96%
25,724
24,241
6%
Prepaid expenses
133
147
(10)%
Deferred tax assets
1,034
829
25%
Active difference resulting from offsetting
85
68
26%
Total assets
19,752
102,975
16,937
Current assets
A.9.2 Net assets and financial
position
Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
Sep 30,
2020
2019
% Change
(in millions of €)
ASSETS
Non-current assets
Intangible and tangible assets
Financial assets
1,122
1,884
(40)%
74,877
73,158
2%
75,999
75,043
1%
Inventories, receivables and other assets
Combined Management Report → A.9 Siemens AG
100,328
LIABILITIES AND EQUITY
> 200%
1,841
(100)%
Trade payables, liabilities to affiliated companies
and other liabilities
67,047
49,079
37%
67,145
50,947
32%
Deferred income
Total liabilities and equity
271
326
(17)%
102,975
100,328
3%
ANNUAL REPORT 2020 48
Value creation through innovation: We drive innova-
tion by investing significantly in R&D in order to develop
sustainable solutions for our customers while also
strengthening our own competitiveness. Being an inno-
vative company and constantly inventing new technolo-
gies that we expect will meet future demands arising
from the megatrends of demographic change, urbaniza-
tion, climate change and globalization is one of our core
purposes. We are granted thousands of new patents
every year and continuously develop new concepts and
convincing new digital and data-driven business models.
This helps us create the next generation of ground-break-
ing innovations in such fields as digitalization, artificial
intelligence, autonomous machines and edge comput-
ing. Across our operating units, we are profiting from
our strength in the "Digital Enterprise." Foremost, our
cloud-based MindSphere platform enhances the avail-
ability of our customers' digital products and systems and
improves their productivity and efficiency. We offer edge
computing apps along with Mindsphere in individual
facilities, so that customers can connect all their facilities
to create an integrated data network. We see also signif-
icant opportunities to generate additional volume and
profit from innovative digital products, services and solu-
tions, including cyber security and applications for opti-
mized energy consumption. We see growth opportuni-
ties in opening up access to new markets and customers
through new marketing and sales strategies, which we
implement in our operating units. Our position along the
value chains of automation and digitalization allows us
to further increase market penetration. Along these value
chains, we have identified several concrete growth fields
in which we see our greatest long-term potential. Hence,
we are combining and developing our resources and
capabilities for these growth fields.
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
27
3%
98
Liabilities to banks
Equity
Special reserve with an equity portion
18,917
30,428
(38)%
619
668
(7)%
Provisions
Provisions for pensions and similar commitments
11,700
12,343
(5)%
Provisions for taxes and other provisions
4,323
5,616
(23)%
16,023
17,959
(11)%
Liabilities
Advance payments received
ANNUAL REPORT 2020 47
Leveraging market potential: Through sales initiatives
and masterplans in our operating units, we continuously
strive to grow and extend our businesses in established
markets, open up new markets for existing portfolio
elements and strengthen our installed base in order to
gain a higher market share and increased profits. Further-
more, we aim to increase our sales via improved account
management and new distribution channels.
The increase in financial income, net was primarily at-
tributable to higher income from investments, net. In
fiscal 2020 we recorded a number of major changes com-
pared to fiscal 2019, including income of €1.3 billion from
the profit transfer agreement with Siemens Beteiligungen
Inland GmbH, Germany; income of €1.4 billion from the
investment in Siemens Holdings plc, Ltd., United Kingdom;
and a gain of €2.1 billion from the disposal of Siemens
Limited, India. These factors were partly offset by an
impairment of €1.3 billion on the shares in Siemens
Energy AG. Financial income, net, also included an
impairment of a loan receivable of €0.5 billion related to
an investment.
Siemens AG
The Annual Financial Statements of Siemens AG have
been prepared in accordance with the regulations set
forth in the German Commercial Code (Handelsgesetz-
buch) and the German Stock Corporation Act (Aktien-
gesetz).
Effective as of January 1, 2020, the business activities
"Gas and Power" were transferred to Siemens Energy
Global GmbH & Co. KG (formerly Siemens Gas and Power
GmbH & Co. KG) by means of singular succession. Fur-
thermore, domestic and foreign investments attributable
to the Siemens Energy business were transferred to
Siemens Energy Global GmbH & Co. KG, indirectly or di-
rectly. These transfers resulted in an increase in shares
in affiliated companies, and a decrease in transferred
assets and liabilities, particularly including property,
plant and equipment, securities, inventories, receiv-
ables and other assets, advance payments received,
provisions for pensions and other provisions. In addi-
tion, the transfers resulted in a corresponding year-over-
year
decline in income and expenses, particular including
revenue, cost of sales, gross profit, research and devel-
opment expenses as well as selling expenses.
With regard to the spin-off, on September 25, 2020 (spin-
off day), Siemens AG contributed, in a first step, indi-
rectly or directly, its interests in Siemens Energy Global
GmbH & Co. KG and also in its general partner to Siemens
Energy AG in return for the issuance of shares. In a
second step, Siemens AG transferred its remaining inter-
ests in Siemens Energy Global GmbH & Co. KG and in its
general partner to Siemens Energy AG in a spin-off in
accordance with the German Transformation Act
(Umwandlungsgesetz). This step followed the approval
by the extraordinary shareholder's meeting on July 9,
2020 in return for the issuance of shares in Siemens
Energy AG to the shareholders of Siemens AG. The inter-
ests transferred represented the equivalent of 55% of
the subscribed capital of Siemens Energy AG.
As of the end of fiscal 2020, results for Siemens AG arise
mainly from the business activities of Digital Industries,
Smart Infrastructure and Portfolio Companies and are
influenced significantly by the results of subsidiaries and
investments we own either directly or indirectly. The
business development of Siemens AG is fundamen-
tally subject to the same risks and opportunities as the
Siemens Group. Therefore, the foregoing explanations
for the Siemens Group apply also for Siemens AG. We
expect that income from investments or profit transfer
agreements with affiliated companies and a substantial
gain related to an agreement to sell Flender GmbH,
Germany, for a price of €2.0 billion will significantly
influence the profit of Siemens AG.
We intend to continue providing an attractive return to
shareholders. Therefore, we intend to propose a dividend
whose distribution volume is within a dividend payout
range of 40% to 60% of net income of the Siemens Group
attributable to shareholders of Siemens AG, which we
may adjust for this purpose to exclude selected excep-
tional non-cash effects. For fiscal 2021, we expect that
net income of Siemens AG will be sufficient to fund the
distribution of a corresponding dividend.
As of September 30, 2020, the number of employees
was 50,400.
ANNUAL REPORT 2020 46
Combined Management Report →A.9 Siemens AG
A.9.1 Results of operations
Statement of Income of Siemens AG in accordance
with German Commercial Code (condensed)
% Change
(26)%
24%
(31)%
29%
12%
n/a
(in millions of €)
2020
Fiscal year
2019
Revenue
16,389
Cost of sales
A.9
(12,032)
Combined Management Report → A.9 Siemens AG
Our internal audit function systematically evaluates our
financial reporting integrity, the effectiveness of the con-
trol system and the risk management system, and adher-
ence to our compliance policies. Siemens Healthineers
has its own internal audit department and annual audit
plan. Topics from the annual audit plan of Siemens
Healthineers that are also relevant for our Managing
Board and Audit Committee first have to be mandated by
Siemens Healthineers' Managing Board and Audit Com-
mittee and subsequently be mandated by our Managing
Board and Audit Committee. The audit procedures for
these topics will be generally executed in joint teams of
our and Siemens Healthineers' internal audit functions;
thus reflecting the interest of both Siemens AG and
Siemens Healthineers. In addition, the Audit Committee
is integrated into our control system. In particular, it over-
sees the accounting and accounting process and the
effectiveness of the internal control system, the risk man-
agement system and the internal audit system. More-
over, we have rules for accounting-related complaints.
Favorable political and regulatory environment (in-
cluding sustainability): We see opportunities from po-
tential improvement in the geopolitical policy environ-
ment, which could quickly restore a more positive
industrial investment sentiment that supports the growth
of our markets. In addition, government initiatives and
The change in income taxes was primarily due to the
recognition of deferred tax liabilities related to the
transfer of the trademark "Siemens" in fiscal 2019.
subsidies (including tax reforms among others) may lead
to more government spending (e.g. infrastructure or dig-
italization investments) and ultimately result in an oppor-
tunity for us to participate in ways that increase our rev-
enue and profit. By enabling our customers to lower their
GHG (Greenhouse Gas) emissions across our portfolio and
by reducing CO2 emission in our own operation, Siemens
strives to support the trend towards a low-carbon econ-
omy. Recent legislative and governmental accelerate to
mitigate climate change worldwide, especially in Europe
through e.g. the Green Deal or Sustainable Finance Initia-
tive represent an opportunity for Siemens.
Optimization of organization and processes: On the
one hand, we leverage ideas to drive further improve-
ments in our processes and cost structure, such as com-
mon computing architecture for image processing or
optimizing factory capacities for shorter lead times. On
the other hand, we see an opportunity of further pene-
trating markets by ramping up local business excellence
(e.g. engineering) and increasing local sourcing and local
manufacturing.
Assessment of the overall opportunities situation: The
most significant opportunity for Siemens continues to be
value creation through innovation as described above.
While our assessments of individual opportunities have
changed during fiscal 2020 due to developments in the
external environment, changes in our business portfolio,
our endeavors to profit from them and revision of our
strategic plans, the overall opportunity situation for
Siemens did not change significantly as compared to
the prior year.
ANNUAL REPORT 2020 43
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
A.8.5 Significant characteristics
of the accounting-related
internal control and risk manage-
ment system
The overarching objective of our accounting-related in-
ternal control and risk management system is to ensure
that financial reporting is conducted in a proper manner,
such that the Consolidated Financial Statements and the
Combined Management Report of Siemens Group as
well as the Annual Financial Statements of Siemens AG
as the parent company are prepared in accordance with
all relevant regulations.
-
Our ERM approach is based on the globally accepted
COSO Standard (Committee of Sponsoring Organizations
of the Treadway Commission) "Enterprise Risk Manage-
ment Integrating with Strategy and Performance"
(2017) and the ISO (International Organization for Stan-
dardization) Standard 31000 (2018) and is adapted to
Siemens requirements. The frameworks connect the ERM
process with our financial reporting process and our in-
ternal control system. They consider a company's strat-
egy, the efficiency and effectiveness of its business oper-
ations, the reliability of its financial reporting and
compliance with relevant laws and regulations to be
equally important. Our accounting-related internal con-
trol system is based on the internationally recognized
"Internal Control Integrated Framework" (2013) also
developed by COSO. The two systems are comple-
mentary.
At the end of each fiscal year, our management performs
an evaluation of the effectiveness of the implemented
control system, both in design and operating effective-
ness. We have a standardized procedure under which
necessary controls are defined, documented in accor-
dance with uniform standards, and tested regularly for
their effectiveness. Nevertheless, there are inherent lim-
itations on the effectiveness of any control system, and
no system, including one determined to be effective,
may prevent or detect all misstatements.
Our Consolidated Financial Statements are prepared on
the basis of a centrally issued conceptual framework
which primarily consists of uniform Financial Reporting
Guidelines and a chart of accounts. For Siemens AG and
other companies within the Siemens Group required to
prepare financial statements in accordance with German
Commercial Code, this conceptual framework is comple-
mented by mandatory regulations specific to the German
Commercial Code. The need for adjustments in the con-
ceptual framework due to regulatory changes is analyzed
on an ongoing basis. Accounting departments are in-
formed quarterly about current topics and deadlines
from an accounting and closing process perspective.
The base data used in preparing our financial statements
consists of the closing data reported by the operations of
Siemens AG and its subsidiaries. The preparation of the
closing data of most of our entities is supported by an
internal shared services organization. Furthermore, other
accounting activities, such as governance and monitor-
ing activities, are usually bundled on a regional level. In
particular cases, such as valuations relating to post-
employment benefits, we use external experts. The re-
ported closing data is used to prepare the financial state-
ments in the consolidation system. The steps necessary
to prepare the financial statements are subject to both
manual and automated controls.
Qualification of employees involved in the accounting pro-
cess is ensured through appropriate selection processes
and training. As a fundamental principle, based on mate-
riality considerations, the "four eyes” principle applies,
and specific procedures must be adhered to for data
authorization. Additional control mechanisms include
target-performance comparisons and analyses of the
composition of and changes in individual line items, both
in the closing data submitted by reporting units and in
the Consolidated Financial Statements. In line with our
information security requirements, accounting-related IT
systems contain defined access rules protecting them
from unauthorized access. The manual and system-based
control mechanisms referred to above generally also ap-
ply when reconciling the International Financial Report-
ANNUAL REPORT 2020 44
Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
ing Standards (IFRS) closing data to the Annual Financial
Statements of Siemens AG.
On a quarterly basis, we execute an internal certification
process. Management at different levels of our organiza-
tion, supported by confirmations by managements of
entities under their responsibility, confirms the accuracy
of the financial data that has been reported to Siemens'
corporate headquarters and reports on the effectiveness
of the related control systems.
Siemens Healthineers is subject to our Group-wide prin-
ciples for the accounting-related internal control and risk
management system and is responsible for adhering to
those principles. The management of Siemens Healthi-
neers provides periodic sign-offs to the Managing Board
of Siemens AG, certifying the effectiveness of its ac-
counting-related internal control system as well as the
completeness, accuracy, and reliability of the financial
data reported to us.
ANNUAL REPORT 2020 45
Gross profit
Mergers, acquisitions, equity investments, partner-
ships, divestments and streamlining our portfolio: We
constantly monitor our current and potential markets to
identify opportunities for strategic mergers, acquisitions,
equity investments and partnerships, which may comple-
ment our organic growth. Such activities may help us
to strengthen our position in our existing markets, pro-
vide access to new or underserved markets, or comple-
ment our technological portfolio in strategic areas. Op-
portunities might also arise when portfolio optimization
measures generate gains, which enable us to further
pursue our other strategies for growth and profitability.
as percentage of revenue
78
Net income
5,270
(1,377)
11,219
Profit carried forward
141
170
Allocation to other retained
earnings
(2,436)
(6,005)
income
2,975
5,384
(45)%
n/a
(53)%
(17)%
(59)%
On a geographical basis, 77% of revenue was generated
in the Europe, C.I.S., Africa, Middle East region, 16% in
the Asia, Australia region and 7% in the Americas region.
Exports from Germany accounted for 53% of overall rev-
enue. In fiscal 2020, orders for Siemens AG amounted to
€14.7 billion.
The R&D intensity (R&D as a percentage of revenue) was
10%, nearly on the same level as fiscal 2019. The research
and development activities of Siemens AG are funda-
mentally the same as for its corresponding business ac-
tivities within the Siemens Group. On an average basis,
we employed 7,300 people in R&D in fiscal 2020.
The change in other operating income (expenses), net,
was mainly due to a gain of €9.5 billion related to
Siemens AG's transfer of the trademark "Siemens" to the
affiliated company Siemens Trademark GmbH & Co. KG,
Germany, in fiscal 2019. In fiscal 2020 other operating
expenses included primarily expenses in connection with
the valuation of an investment as well as expenses re-
lated to the carve-out of the Siemens Energy business.
4,357
Income taxes
106%
(59)%
Unappropriated net
5,192
27%
22,104
(15,825)
6,279
28%
12,596
Research and development
expenses
(1,677)
Selling and general
administrative expenses
(3,490)
(3,979)
(2,362)
(expenses), net
(555)
9,469
Financial income, net
thereof Income from
investments, net 8,078
(prior year 3,754)
Other operating income
Income from business activity
6,557
3,188
internal ESG/Sustainability index consists of three equally
weighted, structured and verifiable ESG key performance
indicators. At the beginning of each tranche, the Super-
visory Board sets ambitious target values for each of the
ESG key performance indicators. Targets are measured
based on pre-defined interim targets for each fiscal year.
Target attainment for the Siemens internal ESG/Sustain-
ability index is finally determined at the end of the
approximately four-year vesting period based on
the weighted average of the target attainment values
calculated for each of the key performance indicators.
of Stock
Number
Calculation of the number of Siemens shares
The remaining Stock Awards are settled by the transfer
of Siemens shares to the relevant Managing Board
member.
Determination of total target attainment
At the end of the approximately four-year vesting period,
the Supervisory Board determines the degree of target
attainment. The target attainment range for TSR and the
Siemens internal ESG/Sustainability index is between 0%
and 200%. If target attainment is less than 200%, a num-
ber of Siemens Stock Awards equivalent to the shortfall
are forfeited without refund or replacement and an ac-
cordingly reduced number of shares will be transferred.
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 55
Awards
The value of the Siemens shares transferred after the ex-
piration of the vesting period is further limited to a max-
imum of 300% of the target amount. If this ceiling is
exceeded, a corresponding number of Stock Awards will
be forfeited without refund or replacement.
FYn+3
+
FYn+1
FYn
Target attainment:
0-200%
Payout cap:
300% of target value
X
Total Shareholder
Return (TSR)
Environmental,
80%
Social & Governance (ESG)
20%
Final number
of shares
Further provisions for Stock Awards
The Siemens
FYn+2
Environmental, Social & Governance
Target attainment for TSR is specifically determined by
first calculating a TSR reference value for Siemens AG and
a TSR reference value for the sector index. The TSR refer-
ence value is equal to the average of the end-of-month
→ If the change in the TSR of Siemens AG is at least
20 percentage points below that of the sector index,
target attainment is 0%.
dividing the maximum grant amount by the price of the
Siemens share on the grant date, less the estimated
discounted dividends ("grant price"). An approximately
four-year vesting period begins with the granting of
Stock Awards, after the expiration of which Siemens
shares are transferred. Beneficiaries are not entitled to
dividends during the vesting period.
Performance criteria
Since fiscal 2020, the number of Siemens shares that are
actually transferred depends 80% on the financial per-
formance criterion “long-term value creation,” measured
on the basis of total shareholder return (TSR), and 20% on
the non-financial performance criterion "sustainability."
For measuring the sustainability criterion, Siemens AG's
performance in the area of Environmental, Social & Gover-
nance (ESG) is assessed on the basis of a Siemens internal
ESG/Sustainability index, the composition of which is
determined annually by the Supervisory Board.
ANNUAL REPORT 2020
54
Combined Management Report → A.10 Compensation Report
Total shareholder return - TSR is indicative of the perfor-
mance of a share over a period of time - in the case of
Siemens, during the approximately four-year vesting
period. It includes the dividends paid and any changes
in the share price during this period. To reflect the
Company's international footprint, the TSR of Siemens AG
is compared at the end of the vesting period with the
TSR of an international sector index, the MSCI World
Industrials or a comparable successor index.
In the event of exceptional, unforeseen events that have
an influence on the performance criteria, the Supervisory
Board may decide that the number of granted Stock
Awards will be reduced after the fact, that only a cash
settlement of a limited amount to be determined will
take place instead of a transfer of Siemens shares or that
the transfer of Siemens shares for vested Stock Awards
will be suspended until the event ceases to influence the
performance criteria.
values over the first 12 months of the vesting period
(reference period).
In order to determine at the end of the vesting period
how well the TSR of Siemens AG has performed in com-
parison to the sector index, the TSR performance value is
calculated over the subsequent 36 months (performance
period). The TSR performance value is the average of the
end-of-month values during the performance period.
At the end of the vesting period, the change in Siemens'
TSR as well as that of the sector index is determined by
comparing the TSR values for the reference period with
those for the performance period.
Calculation of TSR reference values and TSR performance values for Stock Awards
FYn
If the change in the TSR of Siemens AG is between
20 percentage points above and 20 percentage points
below that of the sector index, target attainment is
calculated using linear interpolation.
•
NOV
OCT
12 months
TSR reference values for
→ MSCI World Industrials
→ Siemens AG
36 months
TSR performance values for
→ MSCI World Industrials
→ Siemens AG
FYn+3
ост
The following applies for the determination of target at-
tainment:
→ If the change in the TSR of Siemens AG is at least
20 percentage points above that of the sector index,
target attainment is 200%.
→ If the change in the TSR of Siemens AG is equal to that
of the sector index, target attainment is 100%.
FYn+1
If the employment contract of a Managing Board mem-
ber begins during a fiscal year, an equivalent number of
forfeitable virtual Stock Awards (Phantom Stock Awards)
will be granted instead of Stock Awards. Unlike Stock
Awards, Phantom Stock Awards will not be settled by a
transfer of shares, but by a cash payment after the expi-
ration of the vesting period. The remaining provisions
applicable to the Stock Awards apply analogously.
Termination due to regular expiration of term
of office
CIAL STATMENTS.
→ Not more than two years' annual compensation and
not more than the member would receive for the
remaining term of his or her employment contract
→ In the month of departure
→ Based on the contribution that the Managing Board
member received in the prior year and on the
remaining term of his or her appointment
→ Limited to not more than the contributions for two
years (cap)
→ Severance payment will be reduced by 5% as a lump
sum allowance for discounting and for earnings
obtained elsewhere if the remaining term of office
is more than six months.
→ Reduction refers only to that portion of the severance
payment that was determined without consideration
of the first six months of the remaining term of
office.
→In-kind benefits are compensated for by a payment
of 5% of the severance amount.
→ In the event of a post-contractual non-compete
agreement, the severance payment and special
pension contribution shall be taken into account
in the calculation of any compensation payments.
Early termination at the request of the Managing
Board member or termination for cause by the
Company
No severance payments or special pension contributions
are made.
Change of control
For newly concluded Managing Board employment con-
tracts (first-time appointments) or the extension of these
contracts, there are no special provisions for the event
that a change of control occurs, that is, neither special
rights to terminate the contract nor severance payments.
At the beginning of a fiscal year, the Supervisory Board
defines a target amount in euros based on 100% target
attainment for each Managing Board member. This
target amount is multiplied using target attainment of
200% ("maximum grant amount"). Stock Awards for
this maximum grant amount are then granted to the
beneficiary. The number of Stock Awards is calculated by
The following is applicable for existing Managing Board
employment contracts:
If a change of control occurs, as a consequence of which
the role of a Managing Board member significantly
changes, the Managing Board member is entitled to
terminate his or her employment contract. If this right
of termination is exercised, the Managing Board member
is entitled to a severance payment for the remainder of
his or her term of office.
Basis for calculation
Limit
(severance cap)
Increase/discount
Stock Awards
→ Base salary plus the target amount
for the Bonus and the target amount
for Stock Awards, each based on the
values for the last fiscal year before
contract termination
→ Two years' annual compensation
→ Severance payment will be reduced
by 10% as a lump-sum allowance
for discounting and for earnings
obtained elsewhere.
→ The reduction shall apply to the
portion of the severance payment
calculated for the period following
the first six months of the remaining
contract term.
→ In-kind benefits will be covered by
a payment of 5% of the severance
payment as a lump sum.
→ Stock-based compensation compo-
nents granted by the Company
in the past remain unaffected
ANNUAL REPORT 2020 58
There is no entitlement to severance payment if the Man-
aging Board member receives payments from third parties
on the occasion of, or in connection with, a change of
control. Furthermore, there is no right of termination if
the change of control takes place within 12 months before
the Managing Board member reaches retirement age.
→ Base salary plus actual short-term variable compen-
sation received in the last fiscal year before termi-
nation and granted long-term variable compensation
In the event of an early termination of membership on
the Managing Board by mutual agreement and without
serious cause, Managing Board members' employment
contracts provide for a severance payment:
Termination by mutual agreement
Deduction
MAXIMUM COMPENSATION LIMITS
Maximum compensation is determined annually by the
Supervisory Board for each Managing Board member in
accordance with Section 87a para. 1 sent. 2 No. 1 of the
German Stock Corporation Act (Aktiengesetz, AktG).
Maximum compensation is equal to the sum of the max-
imum amounts that can be paid out to each Managing
Board member for all compensation components for the
given fiscal year and is calculated by adding base salary,
maximum fringe benefits, BSAV contribution (or cash
amount at the member's free disposal) as well as two
times the Bonus target amount and three times the Stock
Awards target amount.
ANNUAL REPORT 2020 56
Combined Management Report → A.10 Compensation Report
SHARE OWNERSHIP GUIDELINES
-
Under the Siemens Share Ownership Guidelines, Manag-
ing Board members are obligated to permanently hold
Siemens shares of an amount equal to a multiple of their
base salary-300% for the President and CEO and 200%
for the other members of the Managing Board – during
their terms of office on the Managing Board, following an
initial four-year build-up phase. The average base salary
received by each member of the Managing Board in the
four years before the applicable verification date is rele-
vant for this
purpose.
Fulfillment of this obligation must be verified for the first
time after the four-year build-up phase and annually
thereafter. If share price fluctuations cause the value of
the accumulated shareholding to fall below the respec-
tive amounts to be verified, the Managing Board member
will be obligated to purchase additional shares.
DEDUCTION OF COMPENSATION FOR MANAGING
BOARD MEMBERS' SECONDARY ACTIVITIES
The acceptance of public offices, seats on supervisory
boards (including any committee memberships), boards
of directors, advisory boards and comparable bodies and
of appointments to scientific bodies are subject to prior
approval by the Chairman's Committee of the Super-
visory Board. As a rule, approval is not granted for more
than two supervisory board positions or comparable
functions at listed companies outside the Group. If a Man-
aging Board member holds a supervisory board position
within the Group, the compensation received for such a
position will be deducted from his or her Managing Board
compensation. If supervisory board positions outside the
Group are accepted, the Supervisory Board will decide at
its duty-bound discretion on a case-by-case basis whether
and to what extent the compensation for such positions
is to be deducted. In this context, particular consideration
will be given to the extent to which the activity is in the
interest of the Company or the Managing Board member.
Memberships on supervisory boards whose establish-
ment is required by law or on comparable domestic or
foreign controlling bodies of business enterprises are
listed in chapter 7 C.4.1 MANAGEMENT AND CONTROL STRUCTURE
in 7 C.4 CORPORATE GOVERNANCE.
COMMITMENTS GRANTED IN CONNECTION
WITH THE COMMENCEMENT OF MANAGING BOARD
APPOINTMENTS OR A CHANGE IN THE REGULAR
PLACE OF WORK
Upon the commencement of Managing Board member-
ship or if the regular place of work is changed at the re-
quest of the Company, the Supervisory Board will decide
on the basis of a proposal by the Compensation Commit-
tee whether and to what extent, in addition to the regu-
lar fringe benefits, the following compensation and/or
benefits will be granted under the Managing Board
member's individual employment contract:
With regard to the further terms of the Stock Awards,
the same principles apply in general to the Managing
Board and to executive employees. These principles are
explained in NOTE 26 in 7 B.6 NOTES TO CONSOLIDATED FINAN-
→ Compensation for the loss of benefits from the
previous employer
→ Moving expenses
If the appointment as a member of the Managing
Board or a change of the regular place of work at the
request of the Company requires the Managing Board
member to move to a new residence, moving ex-
penses will be reimbursed up to an appropriate maxi-
mum amount to be specified in the individual employ-
ment contract.
COMMITMENTS IN CONNECTION WITH
THE TERMINATION OF MANAGING BOARD
APPOINTMENTS
The compensation system also governs the amount of
compensation a Managing Board member receives if his
or her Managing Board appointment is terminated early.
Depending on the reason for the termination, the follow-
ing provisions apply to compensation guaranteed upon
departure from office:
No severance payments or special pension contributions
are made.
ANNUAL REPORT 2020 57
Combined Management Report → A.10 Compensation Report
Basis for
calculation
Limit
(severance cap)
Payment
Special pension
contribution;
one-time
Increase/
discount
Depending on whether the compensation and/or
benefits granted by a previous employer (for exam-
ple, long-term variable compensation grants or pen-
sion commitments) are lost by reason of moving to
Siemens AG, the Supervisory Board may grant com-
pensation in the form of (usually Phantom) Stock
Awards, special contributions within the scope of the
BSAV or cash payments.
Granting of Stock Awards
NOV
Bonus payout
amount
Combined Management Report → A.10 Compensation Report
COMPONENTS AND STRUCTURE OF MANAGING
BOARD COMPENSATION
The compensation of the members of the Managing
Board of Siemens AG comprises fixed and variable com-
ponents. Fixed, non-performance-based compensation
comprises base salary, fringe benefits and pension
commitment. Short-term variable compensation (Bonus)
and long-term variable compensation (Stock Awards) are
granted as performance-based compensation and are
thus variable.
Components comprising the Managing Board compensation system
In addition, the Share Ownership Guidelines are a further
key component of the compensation system. They obli-
gate Managing Board members to permanently hold
Siemens shares worth a defined multiple of their base
salary and to purchase additional shares in the event that
the value of their shares falls below the defined multiple.
The Managing Board compensation system is also sup-
plemented by appropriate and market-based commit-
ments granted in connection with the commencement
and termination of appointments to the Managing Board
as well as any change in the regular place of work.
Total target compensation
Fixed components
Base salary
Variable components
Fringe benefits
Short-term
variable compensation
(Bonus)
ANNUAL REPORT 2020 50
Pension commitment
variable compensation
(Stock Awards)
Share Ownership
Guidelines
The Supervisory Board determines, in accordance with
the compensation system, the amount of each Managing
Board member's total target compensation for the up-
coming fiscal year. This determination is based on an
appropriate consideration of the Managing Board
member's tasks and performance and the Company's
economic situation, performance and future prospects.
The Supervisory Board ensures that total target compen-
sation conforms to market conditions. For assessing the
market conformance of total compensation, compensa-
tion data for companies included in the DAX, the German
blue-chip stock index, and for comparable non-listed
companies (insofar as these are available) are consid-
ered. In view of Siemens' international footprint,
compensation data for companies included in the
STOXX Europe 50 index are also considered. In this
horizontal market comparison, the Supervisory Board
considers Siemens' market position, industry affiliation,
size and global presence. In addition, the Supervisory
Board considers the development of Managing Board
compensation in relation to the compensation of the
employees of Siemens in Germany. In this vertical com-
parison, it conducts a market comparison of the ratio of
Managing Board compensation to the compensation of
upper management and the wider workforce with the
corresponding ratios at companies included in the DAX.
For this purpose, the Supervisory Board has defined
upper management as the executive employees in the
Senior Management and Top Management contract
groups. The wider workforce is divided into employees
who are covered by collective bargaining agreements
and those who are not.
ANNUAL REPORT 2020 51
Combined Management Report → A.10 Compensation Report
The compensation system enables the Supervisory Board
to define total target compensation according to the
function of each Managing Board member and thus to
consider the different requirements for each function
when defining both the absolute amount and the struc-
ture of compensation. In doing so, the Supervisory Board
ensures that the proportions of total target compensa-
tion represented by each of the individual compensation
components are within the following percentage ranges:
→ fixed compensation: minimum 36% to maximum
43% of total target compensation
→ short-term variable compensation (Bonus): minimum
20% to maximum 28% of total target compensation
→ long-term variable compensation (Stock Awards):
minimum 30% to maximum 42% of total target com-
pensation.
FIXED COMPENSATION COMPONENTS
Fixed, non-performance-based compensation comprises
the base salary, fringe benefits and the pension commit-
ment.
Long-term
→ The compensation system for
Managing Board members also
extends to the other management
levels in the Group.
→ Compensation takes into account
the individual performance of
Managing Board members in their
respective areas of responsibility.
Overall responsibility for the
Company's long-term development
is represented by targets set at
the Group level. These targets
apply equally to all Managing
Board members.
→ Extraordinary performance should
be appropriately rewarded, and
failure to achieve targets should
lead to an appreciable reduction of
compensation.
Combined Management Report →A.9 Siemens AG
Long-term variable compensation (Stock Awards)
The Managing Board is required to commit itself to the
Company's long-term success, promote sustainable
growth and achieve long-lasting value creation. In accor-
dance with these principles, a significant part of total
compensation is tied to the long-term performance of
the Siemens share. Siemens grants long-term variable
compensation in the form of Stock Awards. A Stock
Award is the claim to one share - conditional on target
attainment - after the expiration of a defined vesting
period.
The changes in financial assets included in particular the
contributions of the line of business "Gas and Power,"
cash, interests in domestic and foreign investments of the
Siemens Energy business, including shares in Siemens
Gamesa Renewable Energy, S.A., Spain, to Siemens
Energy Global GmbH & Co. KG in return for the issuance
of shares. These shares issued amounted in total to
€20.3 billion. As the following steps, it also included the
contribution of interests in Siemens Energy Global
GmbH & Co. KG of €7.6 billion to Siemens Energy AG, in
return for the issuance of shares. Interests in Siemens
Energy Global GmbH & Co. KG of €12.7 billion were con-
tributed in the context of a spin-off in return for the issu-
ance of shares in Siemens Energy AG to the shareholder
of Siemens AG.
The decrease in equity was attributable to a decrease in
retained earnings of €12.7 billion due to the spin-off of
Siemens Energy, dividends paid in fiscal 2020 (for fiscal
2019) of €3.2 billion, and share buybacks during the year
amounting to €1.5 billion. These factors were partly off-
set by net income for the year of €5.3 billion, and the
transfer of treasury shares to employees in connection
with our share-based payments programs amounting
to €0.6 billion. The equity ratio as of September 30,
2020 and 2019 was 18% and 30%, respectively. For the
disclosures in accordance with Section 160 para. 1 no. 2
of the German Stock Corporation Act about treasury
shares, refer to 7 NOTE 15 of our 7 ANNUAL FINANCIAL STATE-
MENTS OF SIEMENS AG for the fiscal year ended Septem-
ber 30, 2020.
Cash and cash equivalents, other securities was signifi-
cantly affected by the spin-off of Siemens Energy and
the liquidity management of the Corporate Treasury of
Siemens AG, which was focused not solely on business
activities of Siemens AG. The liquidity management is
based on the financing policy of the Siemens Group,
which is aimed towards a balanced financing portfolio,
a diversified maturity profile and a comfortable liquid-
ity cushion.
The increase in trade payables, liabilities to affiliated
companies and other liabilities was due to higher liabil-
ities to affiliated companies mainly relating to intra-group
financing activities, including funding activities in con-
nection with the spin-off of Siemens Energy.
A.9.3 Corporate Governance
statement
The Corporate Governance statement pursuant to Sec-
tions 289f and 315d of the German Commercial Code is
an integral part of the Combined Management Report
and is presented in 7 c.4.2 CORPORATE GOVERNANCE STATEMENT
PURSUANT TO SECTIONS 289 F AND 315D OF THE GERMAN COMMER-
CIAL CODE.
ANNUAL REPORT 2020 49
Combined Management Report →A.10 Compensation Report
A.10
Compensation Report
This report describes the compensation system and the
compensation of the members of the Managing Board
and the Supervisory Board of Siemens AG for fiscal 2020.
It provides detailed and individualized explanations of
the structure and amount of the individual components
of Managing and Supervisory Board compensation.
The report is based on the requirements of the German
Commercial Code (Handelsgesetzbuch, HGB), the German
Accounting Standards (Deutsche Rechnungslegungs-
standards, DRS) and the International Financial Reporting
Standards (IFRS). It also includes previously selected volun-
tary disclosures in accordance with the substantive require-
ments of the German Act on the Implementation of the
Second Shareholder Rights Directive (Gesetz zur Umsetzung
der zweiten Aktionärsrechterichtlinie, ARUG II) of Decem-
ber 12, 2019, such as detailed information on the applica-
tion of performance criteria in variable compensation.
A.10.1 Compensation of
Managing Board members
A.10.1.1 Compensation system
RESPONSIBILITY FOR ESTABLISHING
MANAGING BOARD COMPENSATION
The compensation system for Siemens' Managing Board
members is established by the Supervisory Board. The
Compensation Committee of the Supervisory Board de-
velops corresponding recommendations and prepares, in
particular, the proposals for decisions by the Supervisory
Board's plenary meetings. The Supervisory Board may
consult external advisors when necessary. The system
approved by the Supervisory Board is then presented to
the Annual Shareholders' Meeting for endorsement.
The current compensation system for the members of
the Managing Board of Siemens AG has been in place
since fiscal 2020 and was endorsed at the Annual Share-
holders' Meeting on February 5, 2020 by a majority of
94.51%.
BASIC PRINCIPLES OF THE MANAGING BOARD
COMPENSATION SYSTEM
The Managing Board compensation system contributes
to the execution of the Company's strategy: The com-
pensation system is designed to motivate Managing
Board members to achieve the strategic goals defined in
"Vision 2020+." The system promotes innovation and
fosters incentives for the Company's value-creating and
long-term development while avoiding excessive risks.
The Supervisory Board makes decisions regarding the de-
sign of the compensation system and the structure and
amount of the Managing Board members' compensation
with due consideration of the following principles:
Compensation
linked to
performance
Consideration
of the collective
and individual
performance of
Managing Board
members
Compatibility
of compensation
systems
Appropriateness
of compensation
Base salary
Each Managing Board member receives a base salary,
which is paid in 12 monthly installments.
→ The compensation of Managing
Board members should conform
to market conditions and be appro-
priate for the Company's size,
complexity and economic situation.
A maximum value of fringe benefits for the upcoming fiscal
year is established for each Managing Board member. For
this purpose, the Supervisory Board determines an amount
relative to base salary. This amount covers expenses in-
curred to the benefit of the Managing Board member, for
example, in-kind compensation and fringe benefits granted
by the Company, including the provision of a company car,
insurance allowances and medical check-ups.
Sustainability
Long-term
value creation
Stock Awards
The Supervisory Board ensures that targets are demanding
and ambitious. If they are not met, variable compensation
can be reduced to as little as zero. If the targets are sub-
stantially exceeded, target attainment is limited to 200%.
In addition, there are malus and clawback regulations
that allow the Supervisory Board to withhold or reclaim
both short-term and long-term variable compensation in
certain cases.
Short-term variable compensation (Bonus)
Short-term variable compensation (Bonus) rewards the
contribution in a fiscal year to the operational execution
of the Company's strategy and therefore also to the
Company's long-term performance. The Bonus system is
based on three equally weighted target dimensions,
which take account of the overall responsibility of the
Managing Board as well as the Managing Board mem-
bers' respective business responsibilities and their indi-
vidual challenges:
→ "Siemens Group"
The dimension "Siemens Group" reflects the Managing
Board's overall responsibility and measures the per-
formance of the Siemens Group in its entirety, as the
sum of the contributions of each individual part of the
Company.
→ "Managing Board portfolio"
The dimension "Managing Board portfolio" focuses on
the business activities for which each Managing Board
member is responsible and measures his or her perfor-
mance based on the predefined portfolio strategy. In
the case of mainly functional responsibility (for exam-
ple, the President and CEO and the Chief Financial
Officer), the performance of the Siemens Group is
considered.
A minimum of two and a maximum of four individual
targets allow for further differentiation depending on
the specific strategic and operational challenges of
each Managing Board member.
Performance criteria are assigned to each of the three
target dimensions based on Company priorities and the
responsibilities of each Managing Board member. The fo-
cus is on short-term measures that execute the Company's
strategy, such as strengthening earnings and ensuring
profitability/capital efficiency and liquidity.
non-financial
One financial performance criterion is assigned to the
"Siemens Group" dimension and another to the "Manag-
ing Board portfolio" dimension. The fulfillment of these
criteria is measured on the basis of key performance indi-
cators. These key performance indicators are predomi-
nantly operational steering parameters derived from the
Company's strategic direction. They are based on the
Siemens Financial Framework and are also, as a rule, part
of the Company's external financial reporting. See chap-
ter 7 A.2 FINANCIAL PERFORMANCE SYSTEM.
Combined Management Report → A.10 Compensation Report
Growth and liquidity can both be employed as financial
performance criteria in the "Individual targets" dimen-
sion, as can additional non-financial performance cri-
teria. In the case of non-financial performance criteria,
the Supervisory Board considers the degree to which a
Managing Board member has fulfilled so-called focus
topics, which comprise both operational aspects of the
execution of the Company's strategy - such as business
performance, the execution of large-scale projects, opti-
mization and efficiency enhancement - as well as sus-
tainability aspects - such as diversity, ownership culture,
customer satisfaction, employee satisfaction and succes-
sion planning.
After the end of the fiscal year, target attainment for the
key performance indicators for the target dimensions
"Siemens Group" and "Managing Board portfolio" and the
attainment for the individual targets are determined and
aggregated to form a weighted average. The percentage
of weighted target attainment multiplied by the individ-
ual target amount yields the Bonus payout amount for
the past fiscal year. The payable Bonus is limited to two
times the target amount and is disbursed entirely in cash.
Bonus design and calculation of payout amount
Short-term
variable
compensation
(Bonus)
33.34% Siemens Group
33.33% Managing Board portfolio
Weighted
average target
attainment
(0-200%)
33.33% Individual targets
Fringe benefits
Target
amount
x =
ANNUAL REPORT 2020 53
financial
→ "Individual targets"
→ As a rule, in 12 yearly installments;
other payment options, on request,
are: ten or 11 installments, a lump sum
payment and an annuitization with
or without survivors' benefits as well
as a combination of these options
Other essential characteristics of the BSAV for Managing
Board members are summarized in the following table:
Entitlement
of Company
strategy
Vested status
Disbursement
Guaranteed
interest
Disability/death
→ Upon request, on or after reaching the
age of 62 for pension commitments
made on or after January 1, 2012
→ Upon request, on or after reaching
the age of 60 for pension commit-
ments made before January 1, 2012
→ In accordance with the provisions of
the German Company Pensions Act
(Betriebsrentengesetz)
If a member of the Managing Board earned a pension
entitlement from the Company before the BSAV was in-
troduced, a portion of his or her contributions will go
toward financing this legacy entitlement.
→ Annual guaranteed interest credited
to the pension account until benefits
are first drawn (currently: 0.9%)
→ The risk that benefits may have to
be drawn before the age of 60 due
to disability or death is mitigated by
crediting contributions from the age
at the time benefits are first drawn
until the covered individual reaches
or would have reached the age of 60.
Like other eligible employees of Siemens AG, Managing
Board members who were employed by the Company
before September 30, 1983 are entitled to transition pay-
ments equal to the difference between the last base
salary and the pension entitlement under the Company
pension plan in the first six months after retirement.
Like the employees of Siemens AG, the members of the
Managing Board are included for the most part in the
Siemens Defined Contribution Pension Plan (BSAV). Under
the BSAV, Managing Board members receive contribu-
tions that are credited to their pension accounts. Newly
appointed members of the Managing Board can be
granted, instead of a BSAV contribution, a fixed cash
amount that he or she can freely dispose of.
Pension commitment
Profit
capital efficiency
ANNUAL REPORT 2020 52
Combined Management Report → A.10 Compensation Report
The final payout amount from both components depends
on the fulfillment of financial and non-financial perfor-
mance criteria. Performance criteria are derived from the
Company's strategic goals and operational steering. In
Performance criteria for variable compensation
line with Siemens' social responsibility, sustainability is
also included in the performance criteria. Ultimately, the
performance criteria measure successful value creation
in all its different forms, as strategically envisioned.
Bonus
VARIABLE COMPENSATION COMPONENTS
The variable, performance-based compensation of Man-
aging Board members is tied to performance and aligned
with the Company's short- and long-term development.
It consists of a short-term component (Bonus) and a long-
term component (Stock Awards).
Profitability/
Growth
Execution
Liquidity
616,896
2,938,080
6,473,904
Cedrik Neike
616,896
2,349,895
Total contri-
butions for
2019
616,896
616,896
6,702,858
6,184,498
Total
Prof. Dr. Ralf P. Thomas
7,026,562
in office as of September 30, 2020
616,896
Klaus Helmrich
6,071,233
6,566,101
14,299,267
15,592,209
1,234,800
616,896
616,896
Dr. Roland Busch
1,234,800
Joe Kaeser
2019
3,702,384
Defined benefit obligation
for all pension commitments
excluding deferred compensation¹
2020
616,896
3,702,384
In fiscal 2020, former members of the Managing Board
and their surviving dependents received emoluments
within the meaning of Section 314 para. 1 No. 6b of the
German Commercial Code (HGB) totaling €15.96 million
(2019: €21.09 million).
35,378,797
2020
SHORT-TERM VARIABLE COMPENSATION (BONUS)
The Bonus target amounts for fiscal 2020 were as follows:
7 B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
The defined benefit obligation (DBO) of all pension com-
mitments to former members of the Managing Board and
their surviving dependents as of September 30, 2020 -
including to those members of the Managing Board who
left in fiscal 2020 - amounted to €176.5 million (2019:
€175.7 million). This figure is included in 7 NOTE 17 in
Combined Management Report → A.10 Compensation Report
60
ANNUAL REPORT 2020
2 In accordance with the provisions of the BSAV, benefits to be paid to Lisa Davis are not in any way secured or financed
through the trust associated with the Company's BSAV plan or with any other trust. They represent only an unsecured,
unfunded legal obligation on the part of the Company to pay such benefits in the future under certain conditions, and
the payout will only be made from the Company's general assets.
1 Deferred compensation totals €3,911,848 (2019: €4,125,612), including €3,512,020 for Joe Kaeser (2019: €3,703,123),
€342,276 for Klaus Helmrich (2019: €361,494) and €57,552 for Prof. Dr. Ralf P. Thomas (2019: €60,995).
10,238,903
11,707,147
1,850,688
771,120
Total
38,825,810
1,862,660
616,896
308,448
Michael Sen
2,674,432
2,829,621
616,896
205,632
Janina Kugel
5,701,811
6,444,855
616,896
257,040
Lisa Davis²
Former members of the Managing Board
2,432,671
Managing Board members
Variable
The following table shows the individualized contribu-
tions (allocations) under the BSAV for fiscal 2020 and the
defined benefit obligations for pension commitments:
Total shareholder return (TSR)
compared to
MSCI World Industrials
300%
20%
80%
Long-term
variable
compensation
(Stock Awards)
200%
33.33%
Individual
targets
Managing Board
portfolio
compensation
(Bonus)
33.33%
33.34%
Siemens Group
Short-term
variable
Pension commitment
compensation
Environmental,
100%¹
Base salary
Fixed
(in % of target amount)
Maximum payout
Design of compensation
components
Compensation
components
Cash
Stock Awards
Fixed
Overview of the compensation system for Managing Board members
The following chart provides an overview of all compo-
nents of the compensation system:
THE COMPENSATION SYSTEM AT A GLANCE
Combined Management Report → A.10 Compensation Report
→ for the President and CEO, Joe Kaeser: €2,205,000
→ for the Deputy CEO, Dr. Roland Busch: €1,277,300
→ for the other members of the Managing Board:
€1,101,600.
Fringe benefits
Social & Governance (ESG)
1 Fringe benefits are reimbursed up to a maximum amount set by the Supervisory Board.
Maximum
compensation
Contributions under the BSAV are added to the individual
pension accounts in the January following each fiscal
year. Until pension payments begin, members' pension
accounts are credited with an annual interest payment
(guaranteed interest) on January 1 of each year. The in-
terest rate is currently 0.90%.
The expense recognized in fiscal 2020 as a service cost
under IFRS for Managing Board members' entitlements
under the BSAV in fiscal 2020 totaled €5.5 million (2019:
€5.4 million).
For fiscal 2020, Managing Board members were granted
contributions under the Siemens Defined Contribution
Pension Plan (BSAV) totaling €4.5 million (2019: €5.6 mil-
lion) on the basis of a decision by the Supervisory Board
on September 18, 2019. Of this amount, €0.02 million
(2019: €0.02 million) related to the funding of pension
commitments earned prior to the transfer to the BSAV.
PENSION BENEFIT COMMITMENT
In fiscal 2020, Managing Board members were entitled
to fringe benefits equal to a maximum of 7.5% of their
base salary (maximum fringe benefits). As an exception,
Lisa Davis was entitled to fringe benefits equal to a
maximum of 100% of her base salary in fiscal 2020 on the
basis of existing contractual commitments (in particular,
a currency adjustment).
FRINGE BENEFITS
→ for the President and CEO, Joe Kaeser: €2,205,000
→ for the Deputy CEO, Dr. Roland Busch: €1,352,300
→ for the other members of the Managing Board:
€1,101,600.
Base salary in fiscal 2020 was as follows:
BASE SALARY
The internal review of the appropriateness of the com-
pensation of the Managing Board for fiscal 2020 estab-
lished that the Managing Board compensation resulting
from target attainment for fiscal 2020 is appropriate.
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 59
In addition, the Supervisory Board exercised its option to
differentiate the compensation of three members of the
Managing Board in fiscal 2020. As in previous years, all
components of Joe Kaeser's compensation were differ-
entiated due to his function as President and CEO. The
target amount of Prof. Dr. Ralf P. Thomas's Stock Awards
was differentiated due to his particular responsibility as
CFO. Dr. Roland Busch's base salary and the target amount
of his Stock Awards were differentiated due to his ap-
pointment as Deputy CEO. Compared to the previous
year, this differentiation resulted in an adjustment of
Dr. Roland Busch's total compensation, excluding fringe
benefits, by 15% upwards, effective October 1, 2019. Due
to his assumption, among other things, of the overarching
coordination of Digital Industries, Smart Infrastructure
and Mobility, Dr. Busch's total compensation, excluding
fringe benefits, was adjusted upwards by a further
12% to the benefit of his base salary and the target
amount of his Bonus, effective April 1, 2020.
compensation (Stock Awards). This increase was based,
among other things, on adjustments to the compensa-
tion of other employee groups within the Siemens Group.
In fiscal 2020, total compensation, excluding fringe ben-
efits, underwent a regular, upward adjustment of 3.0%
to the benefit of the target amount for long-term variable
In accordance with the applicable accounting princi-
ples, the total compensation of all Managing Board
members for fiscal 2020 totaled €26.53 million (2019:
€33.04 million). This amount corresponds to a decrease
of 19.7%. Of total compensation, €15.28 million (2019:
€21.97 million) was attributable to cash compensation
and €11.25 million (2019: €11.07 million) was attributable
to stock-based compensation (Stock Awards).
TOTAL COMPENSATION
Other design
characteristics
Sum of
maximum
payout
from each
compensation
component
for the
(Amounts in €)
relevant
fiscal year
Extra-
ordinary
develop-
ments
Malus
Claw-
back
Severance cap
A.10.1.2 Compensation of the members
of the Managing Board for fiscal 2020
This section describes the concrete application of the
compensation system for the members of the Managing
Board of Siemens AG in fiscal 2020. It provides detailed
information and background regarding total Managing
Board compensation, target setting and target attainment
for variable compensation as well as individualized dis-
closures regarding the compensation of each Managing
Board member for fiscal 2020.
Share Ownership
Guidelines
"Siemens Group" target dimension
6 In accordance with his severance agreement, Michael Sens' entitlement to a Bonus for the first six months of fiscal 2020
(October 1, 2019, to March 31, 2020), will be settled in accordance with the terms of his employment contract and the actual
degree of target attainment, subject to the provision that Michael Sen will receive 50% (pro rata temporis) of the actual bonus
achieved. For the second six months of fiscal 2020 (April 1, 2020, to September 30, 2020), his Bonus is set at 100% of the
pro-rated target amount - that is, at a gross amount of €550,800.
"Managing Board portfolio" target dimension
For the "Managing Board portfolio" target dimension in
fiscal 2020, the Supervisory Board of Siemens AG ap-
proved the performance criterion "profitability/capital
efficiency," measured in terms of
Klaus Helmrich
131% =
14,286 x
€75.60 =
€1,080,000 /
Dr. Roland Busch
131% =
28,043 x
€75.60 =
Prof. Dr. Ralf P. Thomas
€2,120,000 /
of September 30, 2020
November
11, 2019
of transfer²
Value at the day
calculated
Stock Awards1
Number of
attainment
share price
performance
Target
Joe Kaeser
Number of
Stock Awards
granted
€1,080,000 /
14,286 x
-
The respective target amounts for short-term variable
compensation (Bonus), including floors and caps, are re-
ported under "Benefits granted." The amounts for long-
term variable compensation (Stock Awards) granted in
fiscal 2020 and fiscal 2019 reflect the fair values on the
grant date. The figures for individual maximums for
short-term variable compensation (Bonus) and long-term
variable compensation (Stock Awards) reflect the possi-
ble maximum values in accordance with the maximum
amounts defined in the compensation system – that is,
200% and 300% of the applicable target amounts. Maxi-
mum compensation, which is reported in column "2020
(Max)" under "Total compensation (Code)," represents
the contractually agreed upon maximum amount of total
compensation for fiscal 2020 in accordance with Sec-
tion 87a para. 1 sent. 2 No. 1 of the German Stock Corpo-
ration Act (AktG). For each Managing Board member,
maximum compensation equals the sum of the maxi-
mum amount of all compensation components for fiscal
2020 and is calculated by adding the base salary, maxi-
mum fringe benefits, BSAV contribution, twice the Bonus
target amount and three times the Stock Awards target
amount.
Total compensation in accordance with the applicable
accounting standards is also reported under "Benefits
granted." According to these accounting standards, this
figure includes the amount of short-term variable com-
pensation (Bonus) actually paid, instead of the target
amount, and excludes the pension service cost.
The payments made in 2020 and 2019 are reported under
"Benefits received." The payouts for stock-based compen-
sation refer to the grants for the fiscal years 2016, 2015
and 2014, respectively.
ANNUAL REPORT 2020
68
131% =
131% =
14,286 x
13,757 x
€75.60
€75.60 =
€75.60 =
€1,080,000 /
€1,040,000/
Lisa Davis
the Managing Board
Former members of
36,737 > €4,105,778.12
18,715 > €2,091,614.38
18,715 > €2,091,614.38
18,715 > €2,091,614.38
131% =
14,286 x
€75.60 =
€1,080,000 /
131% =
Janina Kugel
The amounts of base salary, the Bonus and fringe bene-
fits relate to fiscal 2020 and fiscal 2019.
November
13, 2015
Target amount
(based on
100% target
attainment)
Schneider
$111.60 $168.61
Rockwell
CHF 19.17 CHF21.99
$16.44
$29.21
¥4,555.58 ¥4,308.66
MHI/Toshiba¹
GE
ABB
Performance
price
€53.86
Reference
price
Target attainment for the 2016 Stock Awards tranche
The 2016 Stock Awards tranche depended on the per-
formance of the Siemens share compared to the share
performance of relevant competitors during the roughly
four-year vesting period from November 2015 through
October 2019.
the 2016 tranche
Determination of target attainment for
Concrete target setting and the degree of target attain-
ment for total shareholder return and the Siemens inter-
nal ESG/Sustainability index for the 2020 Stock Awards
tranche will be published in the Compensation Report
after the expiration of the vesting period.
2,628
10,514
1,752
7,009
Performance of the Siemens share compared to the share performance of relevant competitors
Grant price
€69.38
Siemens AG
members in office as
Managing Board
Overview of the 2016 Stock Awards tranche
meters of the 2016 Stock Awards tranche:
The following table provides a summary of the key para-
Combined Management Report → A.10 Compensation Report
A = 6.10
percentage
points
65
ANNUAL REPORT 2020
Competitors (average)
1 The reported relative deviation of (4.50) % also takes into account Toshiba's performance, which is factored into the reported deviation
on a weighted basis for seven months. Toshiba's reference price was ¥2,682.26, and its performance price was ¥2,663.83, yielding a
relative deviation of (0.69) %. MHI's relative deviation was (5.42) %, with a weighting of 29 months.
9.27%
28.81%
51.08%
14.68%
Reference price vs.
performance price
(4.50)%
(43.73)%
Target attainment: 131%
€95.53 €110.21
15.37%
"Code") in its version of February 7, 2017, show individ-
ually for each Managing Board member the benefits
granted in fiscal 2020 and fiscal 2019. The actual amounts
paid out are reported under "Benefits received."
The following tables, which are based on the model
tables of the German Corporate Governance Code (the
IN FISCAL 2020
ESG3
Nov. 2020 Oct. 2023
Oct. 2019 Sep. 2023
92%
1 The 2017 to 2019 tranches of the Stock Awards depend on the performance of the Siemens share compared to the share performance
of relevant competitors during the roughly four-year vesting period.
2 The 2020 Stock Awards tranche depends 80% on the development of the total shareholder return (TSR) of Siemens AG compared
to the international sector index MSCI World Industrials and 20% on the Siemens internal ESG/Sustainability index.
3 In fiscal 2020, the three ESG key performance indicators were strongly impacted by the COVID-19 pandemic. Therefore, it was
decided not to measure the interim targets for fiscal 2020. The provisional target attainment shown is based on estimated target
attainments for the three ESG key performance indicators up to the end of the vesting period.
ANNUAL REPORT 2020
66
Combined Management Report → A.10 Compensation Report
Nov. 2019 Oct. 2020
Review of the maximum amount
In the course of transferring the 2016 Stock Awards
tranche, compliance with the maximum amounts of total
compensation for fiscal 2016 was also reviewed. The
applicable maximum amount was not exceeded in the
case of any active or former Managing Board member.
Share Ownership Guidelines
The deadlines by which the individual Managing Board
members must first verify compliance with the Share
Ownership Guidelines vary from member to member,
depending on when they were appointed to the Manag-
ing Board. For Managing Board members in office as of
September 30, 2020, the following table shows the num-
ber of Siemens shares each held as of the March 2020
deadline for verifying compliance with the Share Owner-
ship Guidelines. It also shows the number of shares to
be held throughout their terms of office with a view to
future deadlines.
Obligations under the Share Ownership Guidelines
Managing Board members
in office as of September 30,
2020, and required to verify
compliance as of March 13, 2020
of total compensation
Joe Kaeser
TSR compared to
MSCI World Industrials
89%
18,022 > €2,014,163.74
1 In accordance with plan requirements, the 2016 Stock Awards tranche was settled by the transfer of Siemens shares up to
a target attainment of 100%. For the portion of target attainment above 100%, Managing Board members received a cash
payment in accordance with plan requirements.
2 The Stock Awards settled by share transfer were valued at the German low price of the Siemens share on November 11, 2019,
of €111.52; Stock Awards settled by cash payment were valued at the Xetra closing price on November 11, 2019, of €112.54.
Provisional target attainment for the
2017 to 2020 tranches
As of October 2020, provisional target attainment for the
2017 to 2020 tranches of the Stock Awards was as fol-
lows:
Provisional target attainment for the 2017 to 2020 Stock Awards tranches (as of October 2020)
Tranche 1,2
89%
115%
2017
2019
2020
Vesting period
Nov. 2016 Nov. 2020
Nov. 2017 Nov. 2021
Nov. 2018 Nov. 2022
Nov. 2019 Nov. 2023
Performance criteria
Share price performance
compared to competitors
Reference period
Nov. 2016 Oct. 2017
Nov. 2017 Oct. 2018
Nov. 2018 - Oct. 2019
Performance period
Target
attainment
(provisional)
Nov. 2017 Oct. 2020
Nov. 2018 - Oct. 2021
Nov. 2019 Oct. 2022
2018
Dr. Roland Busch
Klaus Helmrich
Prof. Dr. Ralf P. Thomas
2,156,950
19,693
312%
3,367,500
30,745
12,953,413
118,264
15,748,004
143,778
200%
1 The amount of the obligation is based on the average base salary for the four years prior to the respective dates of verification.
2 Based on the average Xetra opening price of €109.53 for the fourth quarter of 2019 (October-December).
3 As of March 13, 2020 (date of verification).
As part of the termination by mutual agreement of the
Managing Board appointment of Lisa Davis, it was agreed
that her appointment and employment contract would
end as of February 29, 2020, prior to the end of her con-
tractual term of office. All contractually committed ben-
efits continued to be granted until the termination date
of February 29, 2020. To settle her claims for the period
from the termination date of February 29, 2020, to the
regular end of her appointment and employment con-
tract on October 31, 2020, a severance payment in the
gross amount of €2,369,353, which was due and payable
on the termination date of February 29, 2020, was
agreed with Lisa Davis. In addition, Lisa Davis will receive
a special contribution to the BSAV of €411,264, which will
be credited to her pension account in January 2021.
Lisa Davis will receive the contractually agreed tax adjust-
ment and the currency adjustment for both the regular
payments until the termination date of February 29,
2020, and the severance payment on the basis of the
base salary included in the severance payment and the
pro-rated Bonus. In addition, she will receive the unad-
justed lump-sum payment for tax advisory services for
the calendar year 2020 in the gross amount of €15,000,
which was due and payable at the termination date of
ANNUAL REPORT 2020 67
Combined Management Report → A.10 Compensation Report
February 29, 2020. In accordance with her employment
contract, the 2017 to 2020 tranches of the Stock Awards
that were granted in the past and are still within the vest-
ing period will not be forfeited and will remain unaf-
fected; they are still governed by the terms and condi-
tions of the applicable Siemens Stock Awards Guideline.
The Stock Awards will become due and will be settled
upon the expiration of the regular vesting period of each
tranche.
Michael Sen's appointment as a member of the Manag-
ing Board of Siemens AG was terminated by mutual
agreement as of March 31, 2020, prior to the end of his
contractual term of office. His employment relationship
will remain unaffected until the end of the day on
March 31, 2021. All contractually committed benefits
will continue to be granted until the termination date of
March 31, 2021. To settle his claims for the period from
the termination date of March 31, 2021, until the regular
end of his appointment and employment contract on
March 31, 2022, a severance payment in the gross
amount of €3,544,427, which will be due and payable on
the termination date of March 31, 2021, was agreed with
Michael Sen. In addition, Michael Sen will receive a spe-
cial contribution to the BSAV in the amount of €616,896,
which will be credited to his pension account in Janu-
ary 2022. In accordance with his employment contract,
the 2017 to 2020 tranches of the Stock Awards that were
granted in the past and are still within the vesting period
will not be forfeited and will remain unaffected; they are
still governed by the terms and conditions of the applica-
ble Siemens Stock Awards Guideline. The Stock Awards
will become due and will be settled upon the expiration
of the regular vesting period for each tranche.
OTHER
No loans or advances from the Company are provided to
members of the Managing Board.
BENEFITS GRANTED AND PAYMENTS MADE
BENEFITS IN CONNECTION WITH THE TERMINATION
OF MANAGING BOARD APPOINTMENTS
Janina Kugel's appointment as a member of the Manag-
ing Board of Siemens AG ended regularly on January 31,
2020. In accordance with the provisions of her employ-
ment contract, no severance payment or special pension
contribution was made.
25,497
23,884
63,652
Total
Required
Verified
Percentage of
base salary'
Value¹
in €
Number
of shares²
Percentage of
base salary¹
Value2
in €
Number
of shares³
300%
6,451,313
58,900
324%
200%
2,188,200
19,978
239%
200%
2,156,950
19,693
6,971,804
2,616,015
259% 2,792,686
€839,333
€1,259,000
2,190
8,761
€1,049,167
9.63%
employed (ROCE) 1
Return on capital
73.72%
135.50%
39.67%
7.82%
6.63% 12.63%
9.63%
6.63% 12.63%
employed (ROCE) 1
Total target
attainment
Target
attainment
Target
attainment
Actual
value
Performance range
(floor/cap)
Target
amount²
ΚΡΙ
Total target
attainment
"Individual targets"
(Weighting 33.33%)
Return on capital
"Managing Board portfolio"
(Weighting 33.33%)
7.82%
125.50%
9.63%
employed (ROCE) 1
Return on capital
79.83%
137.50%
56.00%
9.09%
7.97% 11.97%
9.97%
39.67%
Smart Infrastructure
86.00%
130.00%
82.00%
17.02%
15.38% 19.38%
17.38%
Digital Industries 4
Adjusted EBITA margin
70.39%
Adjusted EBITA margin
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 62
4 The adjusted EBITA margin of Digital Industries was adjusted for portfolio effects, which reduced the calculated target attainment.
5 Excluding Lisa Davis, who left the Company as of February 29, 2020, and to whom a pro-rated Bonus of €476,962 for fiscal 2020 was
granted in accordance with her severance agreement.
Former members of
the Managing Board5
Prof. Dr. Ralf P. Thomas
Cedrik Neike
Klaus Helmrich
Dr. Roland Busch
Joe Kaeser
September 30, 2020
in office as of
Managing Board members
Janina Kugel
Target dimension
The targets and target attainment for the Bonus for
fiscal 2020 are summarized in the following table:
Determination of target attainment
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 61
The individual targets "successful spin-off of Siemens
Energy" and "achievement of the "Vision 2020+" goals"
were established for all Managing Board members. The
performance criterion "liquidity" measured in terms of
the cash conversion rate was also established as an indi-
vidual target. For the Managing Board members with
functional responsibility, the cash conversion rate at the
Industrial Businesses is relevant. For the Managing Board
members with business responsibility, the cash conver-
sion rate at their respective businesses is relevant. For
Klaus Helmrich (Digital Industries) and Cedrik Neike
(Smart Infrastructure), a further individual target was
the performance criterion "growth" in the particular
business for which they are responsible. The other
individual targets for Managing Board members were
defined on the basis of the following focus topics:
succession planning, innovation performance, business
development, employee satisfaction, optimization/effi-
ciency enhancement and the implementation of other
strategic measures.
In addition to the aforementioned financial targets, the
Supervisory Board of Siemens AG established four equally
weighted "individual targets" for each Managing Board
member for fiscal 2020. These targets are related to the
Managing Board members' specific areas of responsibility.
"Individual targets" target dimension
→ the adjusted EBITA margin of the relevant business for
Managing Board members with business responsibility.
→ return on capital employed (ROCE) for Managing Board
members with primarily functional responsibility or
Target setting and target attainment for short-term variable compensation (Bonus)
Michael Sen 6
1
Continuing and discontinued operations.
3 The target value equals the average of EPS values in fiscal 2017, 2018 and 2019. The actual value results from the average EPS values
for fiscal 2018, 2019 and 2020.
2 Based on 100% target attainment.
46.00%
€6.18
€5.49 €8.49
€6.99
Earnings per share
(EPS), basic
46.00%
€6.18
€5.49 - €8.49
€6.99
Earnings per share
(EPS), basic
attainment
Target
Actual
value³
(floor/cap)
Performance range
Target
amount2,3
ΚΡΙ
(Weighting 33.34%)
"Siemens Group"
6.63% 12.63%
For the "Siemens Group" target dimension in fiscal 2020,
the Supervisory Board of Siemens AG approved the per-
formance criterion "profit," measured in terms of basic
earnings per share (EPS). For both target setting and
target attainment, the average EPS of three consecutive
fiscal years is used. The averaged values take account
of the Company's long-term performance and provide
incentives for a sustainable increase in profit.
7.82%
135.50%
26,622
€3,188,000
€1,594,000
10,505
42,021
€5,032,000
€2,516,000
(Weighting 20%)
(Weighting 80%)
6,656
index
Maximum number of Stock Awards
(based on 200% target attainment)
Total shareholder
return
Klaus Helmrich
Dr. Roland Busch
Joe Kaeser
September 30, 2020
in office as of
Managing Board members
Maximum grant value
(based on 200% target attainment)
ESG/Sustainability
Target amount
(based on 100% target attainment)
€1,259,000
21,027
1 Pro-rated target amount for the period from October 1, 2019, to February 29, 2020.
2 Pro-rated target amount for the period from October 1, 2019, to January 31, 2020.
3 Pro-rated target amount for the period from October 1, 2019, to March 31, 2020.
€629,500
€419,667
€524,583
Michael Sen³
Janina Kugel²
Lisa Davis¹
the Managing Board
Former members of
€2,518,000
6,447
€3,088,000
€1,544,000
Prof. Dr. Ralf P. Thomas
5,257
21,027
€2,518,000
€1,259,000
Cedrik Neike
5,257
25,787
Information on the grant of the 2020 Stock Awards tranche
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 64
LONG-TERM VARIABLE COMPENSATION
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 63
54.72%
102.50%
15.67%
0.97%
0.50% 6.50%
3.50%
(STOCK AWARDS)
Gas and Power
63.72%
105.50%
39.67%
7.82%
6.63% 12.63%
9.63%
employed (ROCE) 1
Return on capital
73.72%
Adjusted EBITA margin
Information on the granting of the 2020 tranche
The Supervisory Board approved the following perfor-
mance criteria for the 2020 Stock Awards tranche:
→ "Long-term value creation," measured in terms of the
development of the total shareholder return (TSR) of
Siemens AG relative to the international sector index
MSCI World Industrials and
→ "Sustainability," measured in terms of a Siemens inter-
nal ESG/Sustainability index,' which is based on the
following three equally weighted key performance
indicators: CO2 emissions (environmental), learning
hours per employee (social), and Net Promoter Score
(governance).
1 ESG stands for "Environmental, Social & Governance."
The grant price applicable for the 2020 tranche was
€95.80. The Supervisory Board set the grant date at
November 8, 2019. The target amounts, the maximum
grant values and the maximum number of Stock Awards
granted to each Managing Board member were as follows:
ESG performance measurement based on interim targets for each fiscal year
TSR performance period
TSR reference period
measurement
Performance
NOV '23
OCT '23
SEP '23
2022
2021
NOV '20
OCT '20
NOV '19
OCT '19
Process sequence
Transfer
Grant and four-year vesting period
Time sequence for the 2020 Stock Awards tranche
The time sequence for the 2020 Stock Awards tranche is
set out in the following chart:
€2,091,614.38
39.67%
18,715 >
Performance-based
compensation
of fiscal
2020²
Balance
at the end
Forfeited
during
fiscal year
Vested
and settled
during
fiscal year
Granted during
fiscal year¹
Balance at
beginning of
fiscal 2020
603
603
4,192
2,631
2,388 3,410
383
1,235
258
Compensation according to applicable accounting standards
Total compensation (Code)
Pension service cost²
Total non-performance/performance-based compensation
I
1,652
2,014
1,166
0 1,259
484
Stock Awards 2020 (Vesting period: 2019-23)
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2016 (Vesting period: 2015-19)
Stock Awards 2015 (Vesting period: 2014-18)1
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other¹
Long-term variable compensation
1,140
234
734 1,102
stock-based
compensation
Expenses for
(in €)
Forfeitable
5,257
64,316 21,027
Klaus Helmrich
83,308 1,180,201 606,684
0
14,286
6,656
64,316 26,622
Dr. Roland Busch
152,528 4,196,318 1,231,410
0
28,043
10,505
42,021
0
128,045
Fiscal 2019
Fiscal 2020
Forfeitable
Stock
Awards
grants
Stock
Awards
grants
Stock
Awards
grants
grants
(ESG)
(TSR)
grants
grants
Awards
Stock
Awards
Forfeitable
Forfeitable
Stock
Awards
Stock
Joe Kaeser
14,286
367
383
Janina Kugel
Combined Management Report → A.10 Compensation Report
3,526
3,548
1,213
947
4,797 7,297
4,033
7,781
618
611
618
617
4,186 6,679
3,415
1,147 7,164
611
4,313 1,758
611
3,702
ANNUAL REPORT 2020 72
1 Maximum compensation includes the contribution to the Siemens Defined Contribution
Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
Total compensation (HGB)
Short-term variable compensation
Bonus (payout amount)
compensation
Performance-based
Compensation according to applicable accounting standards
Total compensation (Code)
Pension service cost¹
Total non-performance/performance-based compensation
483
Appointed: February 2015; Left: January 2020
(Amounts in thousands of €)
Non-performance-
based compensation
395 1,142
383
383
41
16
41
28
16
16
16
1,102
367
367 1,102
367
1,142
367
2020
2019
(Max)
(Min)
2020
2020
2020
Benefits received
Benefits granted
Short-term variable compensation
Bonus
Performance-based
compensation
Total
Fringe benefits
Base salary
2019
0
Cedrik Neike3
44,007
2,478
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
1,358
I
483
Total non-performance/performance-based compensation
Pension service cost¹
Total compensation (Code)
Compensation according to applicable accounting standards
Performance-based
Short-term variable compensation
compensation
Bonus (payout amount)
Total compensation (HGB)
1 Maximum compensation includes the contribution to the Siemens Defined Contribution
Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
ANNUAL REPORT 2020 76
4,067
601
4,668
1,183
601
1,784 8,636 4,315
617
ANNUAL REPORT 2020 78
8,019 3,730
586
4,087
6,740
601
586
4,688 7,325
812
Stock Awards 2015 (Vesting period: 2014-18)
2,092
1,457
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2016 (Vesting period: 2015-19)
Benefits granted
Benefits received
2020
2020
(Min)
2020
(Max)
2019
2020
2019
1,102
81
81
1,102 1,102 1,102
83
1,102 1,102
1,250
69
69
1,183
1,183 1,184 1,171
1,183
1,171
1,102
0
2,203 1,102
812
1,250
Long-term variable compensation
Stock Awards 2020 (Vesting period: 2019-23)
1,782
0
4,632
81
3,777
3,878
Combined Management Report → A.10 Compensation Report
0
58,298 2,006,764 578,552
0
60,981 2,109,885 605,764
0
14,286
2,190
1,752 13,757
2,628
64,316 8,761
63,294 7,009
55,912 10,514
Michael Sen4
Janina Kugel
Lisa Davis
of the Managing Board
Former members
1,247,806 679,797
471,408 8,979,433 3,682,407
0
0
76,314 1,099,367 606,940
70,291
0 88,967
14,286
70,901
34,122
136,484
371,703
Total
6,447
25,787
71,019
Prof. Dr. Ralf P. Thomas
0
0
5,257
21,027
1,255,741 557,575
1,358
69,054 4,641,135 716,334
183,522
A.10.1.3 Additional disclosures on stock-
based compensation instruments in
fiscal 2020
The following table shows changes in the balance of
the Stock Awards held by Managing Board members in
fiscal 2020. The table also includes the expenses for each
individual Managing Board member arising from stock-
based compensation recognized in accordance with IFRS
in fiscal 2020 and fiscal 2019.
(Amounts in number of units)
Managing Board
members in office
as of September 30, 2020
→ "sustainability," measured in terms of the Siemens
ESG/Sustainability index and taking into account the
following three equally weighted key performance
indicators: CO2 emissions (environmental), digital
learning hours per employee (social) and Net Pro-
moter Score (governance).
→ "long-term value creation," measured in terms of total
shareholder return (TSR) relative to the MSCI World
Industrials index and
The Supervisory Board also approved the following per-
formance criteria for the 2021 Stock Awards tranche (vest-
ing period: November 2020 through November 2024):
In addition, the Supervisory Board has set from two
to four individual targets for each member of the
Managing Board.
→ for "Managing Board portfolio," the performance cri-
terion "profitability/capital efficiency," measured in
terms of return on capital employed (ROCE).
→ for "Siemens Group," the performance criterion "profit,"
measured in terms of basic earnings per share (EPS)
On September 23, 2020, the Supervisory Board of
Siemens AG approved the following performance cri-
teria for the short-term variable compensation (Bonus)
for fiscal 2021:
Total
in fiscal 2021
In fiscal 2020, a gain from stock-based compensation
for former Managing Board member Prof. Dr. Siegfried
Russwurm amounting to €54,084 was recognized in
accordance with IFRS. The gain was due to the reversal of
accrued provisions, which were recognized as income.
These provisions exceeded the payout for the 2016 Stock
Awards tranche received in fiscal 2020 and exceeded the
provisions required for the portion of the 2017 tranche to
be settled in cash. Beyond this, a gain of €1,630 was rec-
ognized for the additional cash payment for the 2017
tranche due to the spin-off of Siemens Energy. The settle-
ment of Stock Awards for former Managing Board mem-
bers via the transfer of Siemens shares takes place, as a
rule, after the expiration of the relevant vesting period.
The spin-off of Siemens Energy in fiscal 2020 led to
adjustments in the stock-based compensation grants
agreed upon until then (2017 to 2020 tranches of the
Stock Awards). To counteract an expected dilution from
the spin-off, Managing Board members - like all other
entitled employees will receive an additional cash
payment based on the spin-off ratio of 2:1 and the price
of the Siemens Energy share on the date when their
stock-based compensation grants become due. A total
expense of €775,882, which is already included in the
expense for stock-based compensation (see the pre-
ceding table), was recognized for these stock grants in
the past fiscal year.
-
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 77
4 The number of Stock Awards granted to Michael Sen during fiscal 2020 includes only the portion of Stock Awards attribut-
able to his membership on the Managing Board. The value reported under "Expenses for stock-based compensation (in €)
fiscal 2020" includes, however, the full expenses recognized for Michael Sen in the past fiscal year.
3 The reported figures include the Stock Awards granted to Cedrik Neike for his position as Executive Chairman of the Board
of Directors of Siemens Ltd. China.
2 The figures take into account the Stock Awards granted in November 2019 for fiscal 2020. The provisional target attainment
for the portion of the 2020 Stock Awards tranche that is dependent on the Siemens internal ESG/Sustainability index
(weighting 20%) is 92%. According to IFRS, this target attainment results in a reduction of the number of Stock Awards,
which has been accounted for in the recognition of expenses. As the provisional target attainment does not provide for any
information about the final target attainment or the number of Stock Awards to be transferred after the expiration of the
vesting period, the reduction is not reported in the table above. Rather, emphasis is placed on the transparent reporting of
the stock-based commitments for the individual members of the Managing Board. At the end of the vesting period,
a final number of shares to be transferred is determined based on actual target attainment, taking into account the maxi-
mum amount for the Stock Awards.
1 The resulting fair value at grant date in fiscal 2020 per granted Stock Award (TSR) was on the basis of 200% target attain-
ment - €44.42 and per granted Stock Award (ESG) €98.80.
188,333 8,757,785 1,900,651
0
28,043
6,570
26,284
A.10.1.4 Outlook for target-setting
Short-term variable compensation
Bonus
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
Stock Awards 2015 (Vesting period: 2014-18)
459
459
459 1,102
459
1,102
459
459
459
751
481
729
918
918
918 1,835
940
1,830
Total
Performance-based
compensation
Short-term variable compensation
Bonus4
477
477
477
1,102
477
1,140
Long-term variable compensation
Stock Awards 2020 (Vesting period: 2019-23)
606
0
2019
2020
2019
(Max)
1,450 8,790
608
617
5,175
2,058 8,948
3,426
566
3,992
4,441 6,730
608
566
5,049 7,296
899
4,189
1,176
3,501
1 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
service cost, see column "2020 (Max)."
1,574
2 The maximum compensation of Dr. Roland Busch was not adjusted in the course of his intra-year salary increase as of April 1, 2020.
Consequently, his maximum compensation does not correspond to the sum of the individual compensation components, see
column "2020 (Max)."
Combined Management Report → A.10 Compensation Report
Lisa Davis 1,2
Appointed: August 2014; Left: February 2020
(Amounts in thousands of €)
Non-performance-
based compensation
Base salary
Fringe benefits³
Benefits granted
Benefits received
2020
2020
2020
(Min)
ANNUAL REPORT 2020 70
608
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2016 (Vesting period: 2015-19)
2,092
ANNUAL REPORT 2020 71
Combined Management Report → A.10 Compensation Report
Klaus Helmrich
Appointed: April 2011
Benefits granted
Benefits received
2020
(Amounts in thousands of €)
Non-performance-
based compensation
Base salary
2020
(Min)
2020
(Max)
2019
2020
2019
1,102
Fringe benefits
Total
45
45
1,147
1,147
1,102 1,102 1,102
83
45
1,184 1,147
1,102 1,102
45
45
1,147
6 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead
of the pension service cost, see column "2020 (Max)."
5 The amount reported under "Benefits received" includes €2,236,573 from the settlement of Siemens Stock Awards that were
granted to Lisa Davis in fiscal 2014 as compensation for the forfeiture of entitlements granted by her previous employer.
4 In the termination agreement, Lisa Davis was granted an amount of €476,962 for the period from October 1, 2019, until the termination
date on February 29, 2020, as compensation for her entitlement to a pro-rata Bonus for fiscal 2020. Accordingly, the floor and cap applicable
to the Bonus did not apply. The amount of €476,962 is therefore reported in the section "Benefits granted" in column "2020" and also in
columns "2020 (Min)" and "2020 (Max)."
2 Lisa Davis's compensation was paid out in Germany in euros. It has been agreed that any tax liability that arises due to tax rates that are
higher in Germany than in the U. S. will be reimbursed. In addition, a currency adjustment payment was granted for base salary in calendar
years 2018 and 2019 as well as for the Bonus for fiscal years 2018 and 2019. Furthermore, Lisa Davis was granted a currency adjustment
payment for base salary in calendar year 2020 as well as for the Bonus for fiscal year 2020 up to the termination date of February 29, 2020.
3 The fringe benefits reported under "Benefits received" (fiscal 2020) include fringe benefits of €22,288 received in October 2019
that were, however, granted already in September 2019 (fiscal 2019).
Stock Awards 2015 (Vesting period: 2014-18)
2,478
Stock Awards 2014 (Vesting period: 2014-18)5
Bonus Awards 2014 (Waiting period: 2014-18)
Other
2,463
|
58
Total non-performance/performance-based compensation
Pension service cost6
Total compensation (Code)
Compensation according to applicable accounting standards
Performance-based
compensation
Short-term variable compensation
Bonus (payout amount)
Total compensation (HGB)
1,166
2,000
3,509
7,969
601
601
2,601
1,996
257
611
3,667 4,731
601
4,110
611
8,580
477
2,000
1,140
4,158
1 Pro-rated compensation for the period from October 1, 2019, to February 29, 2020, due to early termination of appointment and employment
contract. To settle her claims for the period from the termination date of February 29, 2020, to the regular end of her appointment and
employment contract on October 31, 2020, a severance payment in the gross amount of €2,369,353, which was due and payable on the
termination date of February 29, 2020, was agreed with Lisa Davis. In addition, Lisa Davis will receive a special contribution to the BSAV
of €411,264, which will be credited to her pension account in January 2021. Additional pension service costs of €395,141 were recognized
accordingly in fiscal 2020. Fringe benefits granted to Lisa Davis for the period from March 1, 2020, to October 31, 2020, for payments in
connection with the early termination of her appointment and employment contract amounted to €684,245, including contractually
agreed tax and currency adjustment.
1,395 2,969 4,120
4,567
Total compensation (HGB)
Bonus (payout amount)
2,205 2,205 2,205
115
165 115
2,320 2,370 2,320
2,205
2,205
115
115
2,320 2,320
2,205
0 4,410
2,205
1,626 2,502
Long-term variable compensation
Stock Awards 2020 (Vesting period: 2019-23)
Stock Awards 2019 (Vesting period: 2018-22)
2,904
0
7,548
2,330
Stock Awards 2016 (Vesting period: 2015-19)
4,106
Stock Awards 2015 (Vesting period: 2014-18)
4,647
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
2,580
931
Total non-performance/performance-based compensation
Pension service cost¹
Total compensation (Code)
Compensation according to applicable accounting standards
Performance-based
Short-term variable compensation
compensation
2,320
2,205
115
2019
2020
2,092
Stock Awards 2016 (Vesting period: 2015-19)
1,166
Stock Awards 2019 (Vesting period: 2018-22)
0 3,777
1,453
Stock Awards 2020 (Vesting period: 2019-23)
Long-term variable compensation
1,213
947
0 2,203 1,102
1,102
Short-term variable compensation
Bonus
Combined Management Report → A.10 Compensation Report
Bonus (Payout amount)
Joe Kaeser
(Amounts in thousands of €)
Non-performance-
based compensation
Performance-based
compensation
Base salary
Fringe benefits
Total
Short-term variable compensation
Bonus
Benefits granted
Benefits received
2020
2020
(Min)
2020
(Max)
2019
Appointed: May 2006; President and CEO since August 2013
Total compensation (HGB)
1 Maximum compensation includes the contribution to the Siemens Defined Contribution
Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
ANNUAL REPORT 2020 69
1,102
57
98
57
1,450 1,450 1,454 1,159
1,450 1,159
Performance-based
compensation
Short-term variable compensation
Bonus
1,277
0 2,555 1,102
899 1,176
Long-term variable compensation
Stock Awards 2020 (Vesting period: 2019-23)
Stock Awards 2019 (Vesting period: 2018-22)
Stock Awards 2016 (Vesting period: 2015-19)
1,840
0
1,352
4,782
2,092
Stock Awards 2015 (Vesting period: 2014-18)
2,478
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
1,358
I
559
Total non-performance/performance-based compensation
Pension service cost¹
Total compensation (Code)²
Compensation according to applicable accounting standards
Performance-based
Short-term variable compensation
compensation
1,166
2,478
1,102
98
7,429 2,320
1,220 1,220 1,235
8,649 3,540 15,563
14,328 6,854
1,271
8,125
8,051 12,978
1,220 1,271
9,271 14,249
1,626
2,502
6,850
7,151
Combined Management Report → A.10 Compensation Report
Dr. Roland Busch
Appointed: April 2011; Deputy CEO since October 2019
Benefits granted
Benefits received
1,352 1,352
101
2020
(Amounts in thousands of €)
Non-performance-
Base salary
based compensation
Fringe benefits
Total
2020
(Min)
(Max)
2019
2020
2019
1,352
98
2020
1,147
Performance-based
compensation
Fringe benefits
Pension service cost²
Total non-performance/performance-based compensation
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2016 (Vesting period: 2015-19)
0 3,777
1,453
Long-term variable compensation
Stock Awards 2020 (Vesting period: 2019-23)
Stock Awards 2019 (Vesting period: 2018-22)
1,213
879
0 2,203 1,102
1,102
Short-term variable compensation
Bonus
Performance-based
compensation
1,118
1,138
1,118
Total compensation (Code)
Compensation according to applicable accounting standards
Performance-based
compensation
ANNUAL REPORT 2020 74
2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
service cost, see column "2020 (Max)."
1 In addition to his role as a member of the Managing Board of Siemens AG, Cedrik Neike served as Executive Chairman of the Board
of Directors of Siemens Ltd. China until March 31, 2019. Of the fixed compensation and payout amount for short-term variable compen-
sation reported in section "Benefits received" (fiscal 2019), an amount of €262,260 was granted and paid by Siemens Ltd. China and
deducted from the compensation for his Managing Board activities at Siemens AG. Of the long-term variable compensation and fringe
benefits reported in section "Benefits granted" (fiscal 2019), amounts of €131,359 and €10,842, respectively, were granted and paid
by Siemens Ltd. China.
1,213
3,497
3,471
879
2,638 2,899
4,314 1,759 7,781 3,954
17
568
568
2,017 2,331
3,386
1,138 7,164
621
617
621
3,693
Total compensation (HGB)
Short-term variable compensation
Bonus (payout amount)
621
1,102 1,102
36
17
1,102 1,102 1,102
36
83
1,138 1,184
ANNUAL REPORT 2020 73
Combined Management Report → A.10 Compensation Report
Cedrik Neike1
Appointed: April 2017
(Amounts in thousands of €)
Non-performance-
Base salary
based compensation
2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
service cost, see column "2020 (Max)."
Fringe benefits
Benefits granted
Benefits received
2020
2020
(Min)
2020
(Max)
2019
2020
Total
Total
Combined Management Report → A.10 Compensation Report
1 Janina Kugel was appointed to the Managing Board, effective February 1, 2015. The value of Siemens Phantom Stock Awards granted
to Janina Kugel upon her appointment for fiscal 2015 on a pro-rata basis and settled in November 2018 following the expiration of
the four-year vesting period is reported under "Stock Awards 2015 (Vesting period 2014-18)." Furthermore, Janina Kugel was entitled
to Siemens Stock Awards from the 2014 and 2015 tranches acquired when she was an employee of Siemens AG, before she became
a member of the Managing Board. These Stock Awards were also settled in November 2018, and their value is reported under
"Other" (see "Benefits received," fiscal 2019).
1,140
1,138
1,102
36
2019
206
584
603
584
1,838
3,448
986 2,594
3,235 4,777
Performance-based
Short-term variable compensation
compensation
Bonus (payout amount)
Total compensation (HGB)
234
1,102
3,994
Michael Sen¹
1,166
(Amounts in thousands of €)
308
618
1,185
2,463
618
2,448
Appointed: April 2017; Left: March 2020
567 3,582 3,831
1,844
562
Compensation according to applicable accounting standards
Pension service cost²
Total non-performance/performance-based compensation
Stock Awards 2014 (Vesting period: 2014-18)
Bonus Awards 2014 (Waiting period: 2014-18)
Other
Stock Awards 2015 (Vesting period: 2014-18)
Stock Awards 2016 (Vesting period: 2015-19)
1,457
0 1,889
727
Total compensation (Code)
618
562
3,891
Base salary
Non-performance-
based compensation
(Amounts in thousands of €)
Appointed: September 2013
Prof. Dr. Ralf P. Thomas
Combined Management Report → A.10 Compensation Report
ANNUAL REPORT 2020 75
2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension service
cost, see column "2020 (Max)."
1 Pro-rated compensation for the period from October 1, 2019, to March 31, 2020, due to early termination of appointment. His employment
relationship will remain unaffected until the end of the day on March 31, 2021. In addition to the compensation as a Managing Board
member reported in the table above, Michael Sen received the following compensation for the period from April 1, 2020, until September 30,
2020 (fiscal 2020): base salary of €550,800, fringe benefits of €20,750, BSAV contribution of €308,448, Bonus of €550,800 and Stock
Awards of €629,500. Furthermore, Michael Sen has been granted the following compensation for the period from October 1, 2020, until the
early termination of his employment contract on March 31, 2021 (fiscal 2021): base salary of €550,800, fringe benefits in the maximum
amount of €24,357.50, BSAV contribution of €308,448, Bonus of €550,800 and Stock Awards of €629,500. In accordance with the terms of
his contract, the Bonus for fiscal 2020 and fiscal 2021 will be paid out entirely in cash. In accordance with the terms of his contract and the
guidelines for the 2020 and 2021 tranche, the Stock Awards will be settled and transferred after the expiration of the vesting period in
November 2023 and November 2024, respectively, on the basis of the actual degree of target attainment. To settle his claims for the period
from the termination date of March 31, 2021, until the regular end of his appointment and employment contract on March 31, 2022, a sever-
ance payment in the gross amount of €3,544,427, which will be due and payable on the termination date of March 31, 2021, was agreed
with Michael Sen. In addition, Michael Sen will receive a special contribution to the BSAV in the amount of €616,896, which will be credited
to his pension account in January 2022.
3,906
1,176
1,595
301
Total compensation (HGB)
Short-term variable compensation
Bonus (payout amount)
compensation
Performance-based
1,487 3,010
4,393
Stock Awards 2020 (Vesting period: 2019-23)
Stock Awards 2019 (Vesting period: 2018-22)
Long-term variable compensation
868
301
16
16
1,102
551
1,102
551
551
551
2019
2020
2019
(Max)
(Min)
2020
2020
2020
Benefits received
Benefits granted
Short-term variable compensation
Bonus
1,176
Total
Fringe benefits
Base salary
based compensation
Non-performance-
16
41
Performance-based
compensation
1,272
16
170
0 1,102
567
567
592
1,272
567
1,102
170
551
Non-controlling interests
Shareholders of Siemens AG
Basic earnings per share
Income from continuing operations
(39)
Net income
Diluted earnings per share
Income from continuing operations
Income from discontinued operations
Net income
88
170
474
Income from discontinued operations
ANNUAL REPORT 2020
Net income
5,648
4,200
490
(90)
Income (loss) from discontinued operations, net of income taxes
5,158
4,290
Income from continuing operations
(1,775)
(1,382)
Income tax expenses
6,933
5,672
Income from continuing operations before income taxes
Attributable to:
4,030
0.47
28
Combined Management Report →A.10 Compensation Report
Siemens shares issued to employees worldwide under
the employee share programs implemented since the be-
ginning of fiscal 2009, in particular the Share Matching
Plan, are freely transferable unless applicable local laws
provide otherwise. Under the rules of the Share Matching
Plan, however, in order to receive one matching share
free of charge for each three shares purchased, partici-
pants are required to hold the shares purchased by them
for a vesting period of several years, during which
the participants must be continuously employed by
Siemens AG or any of its affiliated companies. The right
the voting right of the affected shares is excluded by law.
Under Section 136 of the German Stock Corporation Act
vote and accounts for the shareholder's proportionate
share in the Company's net income. An exception to this
rule applies with regard to treasury shares held by the
Company, which do not entitle the Company to any rights.
At the Shareholders' Meeting, each share of stock has one
A.11.2 Restrictions on voting
rights or transfer of shares
As of September 30, 2020, the Company's common stock
totaled €2.550 billion. The capital stock is divided into
850 million registered shares of no par value (Siemens
shares). The shares are fully paid in. All shares confer the
same rights and obligations. The shareholders' rights and
obligations are governed in detail by the provisions of the
German Stock Corporation Act, in particular by Sections 12,
53a et seq., 118 et seq. and 186 of the German Stock Cor-
poration Act.
of common stock
A.11.1 Composition
Takeover-relevant information
(pursuant to Sections 289a and 315a
of the German Commercial Code)
and explanatory report
A.11
Combined Management Report → A.11 Takeover-relevant information
5,174
ANNUAL REPORT 2020 81
A.10.3 Other
6.32
4.93
0.46
0.06
5.86
4.86
28
6.41
5.00
0.06
5.94
4.93
The Company provides a group insurance policy for
Supervisory and Managing Board members and certain
other employees of the Siemens Group. The policy is
taken out for one year at a time or renewed annually. It
covers the personal liability of the insured individuals in
cases of financial loss associated with their activities
on behalf of the Company. The insurance policy for
fiscal 2019 includes a deductible for the members of
the Managing Board and the Supervisory Board that
complies with the requirements of the German Stock
Corporation Act and the Code in its version dated
February 7, 2017. Due to the amended recommendations
of the Code in its version dated December 16, 2019, the
policy for fiscal 2021 no longer includes a deductible
for the members of the Supervisory Board.
496
Furthermore, the Supervisory Board is authorized to use
(815)
→ offered and transferred, with the approval of the
Supervisory Board, to third parties against non-cash
contributions;
→ sold by the Managing Board, with the approval of the
Supervisory Board, against payment in cash if the
price at which such Siemens shares are sold is not sig-
nificantly lower than the market price of Siemens
stock (exclusion of subscription rights, limited to 10%
of the capital stock, by mutatis mutandis application
ANNUAL REPORT 2020 84
Combined Management Report → A.11 Takeover-relevant information
of Section 186 para. 3 sentence 4 German Stock Cor-
poration Act); or
→ used to service or secure obligations or rights to ac-
quire Siemens shares arising particularly from or in
connection with convertible bonds or warrant bonds
of the Company or its affiliated companies (exclusion
of subscription rights, limited to 10% of the capital
stock, by mutatis mutandis application of Section 186
para. 3 sentence 4 German Stock Corporation Act).
Moreover, the Managing Board is authorized to ex-
clude subscription rights in order to grant holders/
creditors of conversion or option rights or respective
conversion or option obligations on Siemens shares
subscription rights as compensation against effects of
dilution to the extent to which they would be entitled
after exercise of such rights or fulfillment of such ob-
ligations, and to use Siemens shares to service such
subscription rights.
ANNUAL REPORT 2020 80
shares acquired on the basis of this or any previously
given authorization to meet obligations or rights to ac-
quire Siemens shares that were or will be agreed with
members of the Managing Board within the framework
of rules governing Managing Board compensation.
In November 2018, the Company announced that it would
carry out a share buyback of up to €3 billion in volume
until November 15, 2021 at the latest. The buyback com-
menced on December 3, 2018. Using the authorizations
given by the Annual Shareholders' Meetings on Janu-
ary 27, 2015 and February 5, 2020, Siemens repurchased
28.4 million shares by September 30, 2020 under this
share buyback. The total consideration paid for these
Siemens shares amounted to about €2.404 billion (ex-
cluding incidental transaction charges). This buyback has
the exclusive purposes of retirement, of issuing shares to
employees, board members of affiliated companies and
members of the Managing Board of Siemens AG, and of
servicing/securing the obligations or rights to acquire
Siemens shares arising particularly from or in connection
with convertible bonds and warrant bonds. The current
buyback was suspended as of May 7, 2020 because of the
spin-off of Siemens Energy. From May 8, 2020, until the
completion of the spin-off, Siemens AG conducted a
technical share buyback to keep the number of Siemens
treasury shares constant and, in connection with share-
based compensation and employee stock programs of
the Company or any of its affiliated companies, to com-
pensate for current transfers of Siemens shares to per-
sons who are or were in an employment relationship
with the Company or any of its affiliates, as well as to
members of the boards of the Company or any of its
affiliated companies.
As of September 30, 2020, the Company held 50,690,288
shares of stock in treasury.
For details on the authorizations referred to above, espe-
cially with the restrictions to exclude subscription rights
and the terms to include shares when calculating such
restrictions, please refer to the relevant resolution and to
Section 4 of the Articles of Association.
A.11.5 Significant agreements
which take effect, alter or
terminate upon a change
of control of the Company
following a takeover bid
As of September 30, 2020, Siemens AG maintained lines
of credit in the total amount of €10 billion.
In connection with the planned acquisition of the shares
in Varian Medical Systems, Inc. by Siemens Healthi-
neers AG, a consolidated subsidiary of Siemens AG as
borrower maintains an undrawn bridge facility in an
amount of nearly €12.5 billion guaranteed by Siemens AG
as of September 30, 2020.
In addition, in March 2020 and in June 2019 respectively,
a consolidated subsidiary as borrower and Siemens AG
as guarantor entered into a bilateral loan agreement,
each of which has been drawn in the full amount of
US$500 million.
The lines of credit, the bridge facility and the loan
agreements mentioned above provide their respective
lenders with a right of termination in the event that
(1) Siemens AG becomes a subsidiary of another company
ANNUAL REPORT 2020 85
Combined Management Report → A.11 Takeover-relevant information
or (2) a person or a group of persons acting in concert
acquires effective control over Siemens AG by being able
to exercise decisive influence over its activities (Art. 3(2)
of Council Regulation (EC) 139/2004).
Framework agreements concluded by Siemens AG under
International Swaps and Derivatives Association Inc. doc-
umentation (ISDA Agreements) grant each counterparty
a right of termination, including in certain cases of (i)
a transformation (for example mergers and changes of
form), (ii) an asset transfer or (iii) acquisition of owner-
ship interests that enables the acquirer to exercise con-
trol over Siemens AG or its controlling bodies. Partially
this right of termination exists only, if (1) the resulting
entity fails to simultaneously assume Siemens AG's ob-
ligations under the ISDA Agreements or (2) the result-
ing entity's creditworthiness is materially weaker than
Siemens AG's immediately prior to such event. Generally,
ISDA Agreements are designed such that upon termina-
tion all outstanding payment claims documented under
them are to be netted.
→ used in connection with share-based compensation
programs and/or employee share programs of the
Company or any of its affiliated companies and issued
to individuals currently or formerly employed by the
Company or any of its affiliated companies as well as
to board members of any of the Company's affiliated
companies;
A.11.6 Compensation agreements
with members of the Managing
Board or employees in the event
of a takeover bid
→ retired;
stock. Any repurchase of Siemens shares shall be accom-
plished at the discretion of the Managing Board either
(1) by acquisition over the stock exchange, (2) through
a public share repurchase offer or (3) through a public
offer to swap Siemens shares for shares in a listed com-
pany within the meaning of Section 3 para. 2 German
Stock Corporation Act. The Managing Board is addition-
ally authorized to complete the repurchase of Siemens
shares in accordance with the authorization described
above by using certain derivatives (put and call options,
forward purchases and any combination of these deriva-
tives). In exercising this authorization, all stock repur-
chases based on the derivatives are limited to a maxi-
mum volume of 5% of Siemens' capital stock existing at
the date of adopting the resolution at the Shareholders'
Meeting. A derivative's term of maturity may not, in any
case, exceed 18 months and must be chosen in such
a way that the repurchase of Siemens shares upon
exercise of the derivative will take place no later than
February 4, 2025.
A.11.3 Legislation and provisions
of the Articles of Association
applicable to the appointment
and removal of members of the
Managing Board and governing
amendment to the Articles of
Association
The appointment and removal of members of the Man-
aging Board are subject to the provisions of Sections 84
and 85 of the German Stock Corporation Act and Sec-
tion 31 of the German Codetermination Act (Mitbestim-
mungsgesetz). According to Section 8 para. 1 of the Arti-
cles of Association, the Managing Board is comprised of
several members, the number of which is determined by
the Supervisory Board.
ANNUAL REPORT 2020 82
Combined Management Report → A.11 Takeover-relevant information
According to Section 179 of the German Stock Corpora-
tion Act, any amendment to the Articles of Association
requires a resolution of the Shareholders' Meeting. The
authority to adopt purely formal amendments to the
Articles of Association was transferred to the Supervisory
Board under Section 13 para. 2 of the Articles of Associ-
ation. In addition, by resolutions adopted during past
Shareholders' Meetings, the Supervisory Board has been
authorized to amend Section 4 of the Articles of Associ-
ation in accordance with the utilization of the Authorized
and Conditional Capitals, and after expiration of the
then-applicable authorization and utilization period.
Resolutions of the Shareholders' Meeting require a sim-
ple majority vote, unless a greater majority is required by
law (Section 23 para. 2 of the Articles of Association).
Pursuant to Section 179 para. 2 of the German Stock Cor-
poration Act, amendments to the Articles of Association
require a majority of at least three-quarters of the capital
stock represented at the time of the casting of the votes,
unless another capital majority is prescribed by the Arti-
cles of Association.
A.11.4 Powers of the Managing
Board to issue and repurchase
shares
The Managing Board is authorized to increase, with the
approval of the Supervisory Board, the capital stock until
January 25, 2021 by up to €90 million through the issu-
ance of up to 30 million Siemens shares against contribu-
tions in cash (Authorized Capital 2016). Subscription
rights of existing shareholders are excluded. The new
shares shall be issued under the condition that they are
offered exclusively to employees of the Company and
any of its affiliated companies. To the extent permitted
by law, such employee shares may also be issued in such
a manner that the contribution to be paid on such shares
is covered by that part of the annual net income which
the Managing Board and the Supervisory Board may allo-
cate to other retained earnings under Section 58 para. 2
of the German Stock Corporation Act.
Furthermore, the Managing Board is authorized to in-
crease, with the approval of the Supervisory Board, the
capital stock until January 29, 2024 by up to €510 million
through the issuance of up to 170 million Siemens shares
against cash contributions and/or contributions in kind
(Authorized Capital 2019).
As of September 30, 2020, the total unissued authorized
capital of Siemens AG therefore consisted of €600 mil-
lion nominal that may be used, in installments with
varying terms, by issuance of up to 200 million Siemens
shares.
By resolutions of the Shareholders' Meetings on Janu-
ary 30, 2019 and February 5, 2020, the Managing Board
is authorized to issue bonds with conversion, exchange
or option rights or with warrants attached, or a combina-
tion of these instruments, entitling the holders to sub-
scribe to up to 80 million and up to 60 million Siemens
shares, respectively. Based on these two authorizations,
the Company or its affiliated companies may issue bonds
until January 29, 2024 and February 4, 2025, respec-
tively, each in an aggregate principal amount of up to
€15 billion. In order to grant shares of stock to holders/
creditors of such convertible bonds or warrant bonds, the
capital stock was conditionally increased by resolutions
of the Shareholders' Meetings in 2019 and 2020, by up to
80 million and up to 60 million Siemens shares, respec-
tively (Conditional Capitals 2019 and 2020), i.e. in total
by up to €420 million through the issuance of up to
140 million Siemens shares.
The new shares under Authorized Capital 2019 and the
aforementioned bonds are to be issued against cash or
non-cash contributions. They are, as a matter of princi-
ple, to be offered to shareholders for subscription. The
Managing Board is authorized to exclude, with the ap-
proval of the Supervisory Board, subscription rights of
shareholders in the event of capital increases against
contributions in kind. In the event of capital increases
against contributions in cash, the Managing Board is
authorized to exclude shareholders' subscription rights
with the approval of the Supervisory Board in the follow-
ing cases:
→ The issue price of the new shares/bonds is not signifi-
cantly lower than the stock market price of the Siemens
shares already listed or the theoretical market price of
ANNUAL REPORT 2020 83
Combined Management Report → A.11 Takeover-relevant information
the bonds computed in accordance with generally ac-
cepted actuarial methods (exclusion of subscription
rights, limited to 10% of the capital stock, in accordance
with or by mutatis mutandis application of Section 186
para. 3 sentence 4 German Stock Corporation Act).
→ The exclusion is necessary with regard to fractional
amounts resulting from the subscription ratio.
→ The exclusion is used to grant holders of conversion
or option rights or conversion or option obligations
on Siemens shares a compensation for the effects of
dilution.
The new shares issued or to be issued in exchange for
contributions in cash and in kind and with shareholders'
subscription rights excluded, may in certain cases be sub-
ject to further restrictions. The details of those restric-
tions are described in the relevant authorization. In addi-
tion, the Managing Board has issued the commitment
not to increase the capital stock from the Authorized
Capital 2019 and the Conditional Capitals 2019 and 2020
by a total of more than 10% of the capital stock existing
at the time of the Shareholders' Meeting on February 5,
2020, to the extent that capital increases with share-
holders' subscription rights excluded are made from the
Authorized Capital 2019 against contributions in cash or
in kind or to service convertible bonds and/or warrant
bonds issued under the authorizations approved on Jan-
uary 30, 2019 or February 5, 2020 with shareholders' sub-
scription rights excluded. This commitment ends no later
than February 4, 2025.
The Company may not repurchase its own shares unless
so authorized by a resolution duly adopted by the share-
holders at a general meeting or in other very limited cir-
cumstances set forth in the German Stock Corporation
Act. On February 5, 2020, the Shareholders' Meeting
authorized the Company to acquire until February 4,
2025 up to 10% of its capital stock existing at the date of
adopting the resolution or if this value is lower - as of
the date on which the authorization is exercised. The
aggregate of shares of stock of Siemens AG repurchased
under this authorization and any other Siemens shares
previously acquired and still held in treasury by the Com-
pany or attributable to the Company pursuant to Sec-
tions 71d and 71e of the German Stock Corporation Act
may at no time exceed 10% of the then existing capital
-
In addition to selling them over the stock exchange
or through a public sales offer to all shareholders, the
Managing Board is authorized by resolution of the Share-
holders' Meeting on February 5, 2020 to also use Siemens
shares repurchased on the basis of this or any previously
given authorization for every permissible purpose, in par-
ticular as follows: Such Siemens shares may be
The contracts with the members of the Managing Board
previously contained the right of the member to termi-
nate his or her contract with the Company for good cause
in the event of a change of control that results in a
substantial change in the position of a Managing Board
member (for example, due to a change in corporate strat-
egy or a change in the Managing Board member's duties
and responsibilities). A change of control exists if one or
several shareholders acting jointly or in concert acquire a
majority of the voting rights in Siemens AG and exercise
a controlling influence, or if Siemens AG becomes a de-
pendent enterprise as a result of entering into an inter-
company agreement within the meaning of Section 291
of the German Stock Corporation Act, or if Siemens AG is
to be merged into an existing corporation or other entity.
If this right of termination is exercised, the Managing
Board member is entitled to a severance payment in the
amount of no more than two years' compensation. The
calculation of the annual compensation includes not only
the base compensation and the target amount for the
bonus, but also the target amount for the stock awards,
in each case based on the most recent completed fiscal
year prior to termination of the contract. The stock-based
compensation components for which a firm commitment
already exists will remain unaffected. Additionally, the
severance payments cover non-monetary benefits by in-
cluding an amount of 5% of the total severance amount.
Severance payments will be reduced by 10% as a lump-
sum allowance for discounted values and for income
earned elsewhere. However, this reduction will apply
only to the portion of the severance payment that was
calculated without taking account of the first six months
of the remaining term of the Managing Board member's
contract. There is no entitlement to a severance payment
if the Managing Board member receives benefits from
third parties in connection with a change of control.
A right to terminate the contract does not exist if
the change of control occurs within a period of twelve
months prior to a Managing Board member's retirement.
On September 18, 2019, the Supervisory Board of
Siemens AG resolved that the contracts with members
of the Managing Board should not contain such right of
termination in the future. This has already been taken
into account in the case of a contract extension and in
the case of new contracts with the newly appointed
members of the Managing Board as of October 1, 2020.
2019
2,30
57,139
58,483
(36,953)
(36,849)
20,187
21,634
(4,601)
(4,669)
(10,774)
(10,688)
ம
631
376
(403)
(362)
(596)
112
1,547
1,534
2020
Note
Other financial income (expenses), net
Interest expenses
A.11.7 Other takeover-relevant
information
We are not aware of, nor have we during the last fiscal
year been notified of, any shareholder directly or indi-
rectly holding 10% or more of the voting rights. There are
no Siemens shares with special rights conferring powers
of control. Shares of stock issued by Siemens AG to em-
ployees under its employee share program and/or as
share-based compensation are transferred to the employ-
ees. The beneficiary employees who hold shares of em-
ployee stock may exercise their control rights in the same
way as any other shareholder in accordance with applica-
ble laws and the Articles of Association.
ANNUAL REPORT 2020 86
PAGES 87-164
B.
Consolidated
Financial
Statements
Consolidated Financial Statements → B.1 Consolidated Statements of Income
B.1
(965)
Consolidated Statements
Fiscal year
(in millions of €, per share amounts in €)
Revenue
Cost of sales
Gross profit
Research and development expenses
Selling and general administrative expenses
Other operating income
Other operating expenses
Income (loss) from investments accounted for using the equity method, net
Interest income
of Income
3 Compared to the amounts reported in the 2019 Compensation Report, this amount does not include compensation totaling €51,167
for former Supervisory Board member Reinhard Hahn.
140,000
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared
their willingness to transfer their compensation to the Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of
German Trade Unions.
471,000
51,000
200,000
612,500
52,500
280,000
280,000
220,000
72,000 632,000
61,500 481,500
280,000 280,000
220,000 200,000
220,000 140,000
140,000 160,000
Dr. Werner Brandt
Werner Wenning
Birgit Steinborn¹
Jim Hagemann Snabe
as of September 30, 2020
members in office
Total
fee
Meeting
attendance
for committee
work
Total compensation
fee
51,000 411,000
Base
220,000
37,500
9,000
140,000
18,000 158,000
140,000
Dr. Andrea Fehrmann'
215,000
15,000
60,000
140,000
222,500
22,500
60,000
140,000
Michael Diekmann
324,000
24,000
160,000
140,000
336,000
36,000
397,500
140,000
Additional
compensation
Meeting
attendance
2019
Chair
€120,000
Chair
€160,000
Finance Committee
Compliance Committee
Innovation and
Member
€140,000
Committee
Compensation
Chairman's Committee
Audit Committee
Additional compensation for committee work
Deputy Chair
€220,000
Base compensation of Supervisory Board
Chairman
€280,000
Compensation of members of the Supervisory Board and its committees
Under the current rules, the members of the Supervisory
Board receive an annual base compensation, and the
members of the Supervisory Board committees receive
additional compensation for their committee work.
Chairs of the Supervisory Board as well as the chairs and
members of the Audit Committee, the Chairman's Com-
mittee, the Compensation Committee, the Compliance
Committee and the Innovation and Finance Committee
receive additional compensation.
The current compensation policies for the Supervisory
Board were authorized at the Annual Shareholders' Meet-
ing on January 28, 2014, and have been in effect since
fiscal 2014. Details are set out in Section 17 of the Articles
of Association of Siemens AG. Supervisory Board com-
pensation consists entirely of fixed compensation; it re-
flects the responsibilities and scope of the work of the
Supervisory Board members. The Chairman and Deputy
A.10.2 Compensation of
Supervisory Board members
Combined Management Report →A.10 Compensation Report
The von Siemens-Vermögensverwaltung GmbH (VSV)
has, on a sustained basis, powers of attorney allowing it
to exercise the voting rights for 10,599,284 shares (as of
September 30, 2020) on behalf of members of the
Siemens family. These shares are part of the total number
of shares held by the family's members. The powers of
attorney are based on an agreement between the VSV
and, among others, members of the Siemens family. The
shares are voted together by VSV, taking into account
the suggestions of a family partnership established by
the family's members or of one of this partnership's gov-
erning bodies.
Chair
€100,000
Chair
€80,000
Chair
€80,000
Member
€80,000
2020
compensation
Base for committee
work
Additional
compensation
Supervisory Board
The compensation shown in the following table was
determined for each Supervisory Board member for
fiscal 2020 (individualized disclosure).
In addition, at its meeting on September 23, 2020, the
Supervisory Board decided to reintegrate the Compliance
Committee into the Audit Committee. Effective Octo-
ber 1, 2020, the duties that had been transferred to the
Compliance Committee were assumed again by the Audit
Committee, and the Compliance Committee was thereby
dissolved.
amended effective October 1, 2021, and replaced by
simplified compensation arrangements.
Under Section 113 (3) of the German Stock Corporation
Act (AktG) in the version amended by the German Act
Implementing the Second Shareholders' Rights Directive
(ARUG II), the annual shareholders' meeting of a listed
company must resolve on compensation for the mem-
bers of the supervisory board at least every four years.
Such a resolution is planned for the Annual Shareholders'
Meeting on February 3, 2021. The current provisions
in Section 17 of Siemens' Articles of Association are to be
an office with secretarial support and the use of a car
service. No loans or advances from the Company are pro-
vided to members of the Supervisory Board.
149,000
(Amounts in €)
ANNUAL REPORT 2020 79
The members of the Supervisory Board are reimbursed
for out-of-pocket expenses incurred in connection with
their duties and for any value-added taxes to be paid on
their compensation. For the performance of his duties,
the Chairman of the Supervisory Board is also entitled to
In addition, the members of the Supervisory Board are
entitled to receive a fee of €1,500 for each meeting of the
Supervisory Board and/or its committees they attend.
of changes in the composition of the Supervisory Board
or its committees, compensation is paid on a pro-rata
basis, rounding up to the next full month.
If a Supervisory Board member is absent from any Super-
visory Board meetings, one-third of the aggregate com-
pensation due to that member is reduced by the percent-
age of Supervisory Board meetings he or she does not
attend in relation to the total number of Supervisory
Board meetings held during the fiscal year. In the event
Compensation for work on the Chairman's Committee
counts toward compensation for work on the Compensa-
tion Committee. No additional compensation is paid for
work on the Compliance Committee if a member of that
committee is already entitled to compensation for work
on the Audit Committee.
Member
€40,000
Member
€40,000
Member
€60,000
Member
€80,000
Combined Management Report → A.10 Compensation Report
2 Robert Kensbock left the Supervisory Board on September 25, 2020, the effective date of the spin-off of Siemens' energy business.
Bettina Haller¹
80,000
9,000
140,000
18,000 158,000
140,000
Dorothea Simon1
149,000
9,000
140,000
158,000
18,000
140,000
Michael Sigmund
193,500
13,500
40,000
140,000
201,000
21,000
40,000
140,000
Dr. Nathalie von Siemens
149,000
139,722
Matthias Zachert
Former members
348,500
5,094,444
28,500
435,000
140,000
39,000 359,000
180,000
646,500 5,343,470 3,041,666 1,617,778
180,000
1,613,940
140,000
3,083,031
149,000
9,000
140,000
18,000 158,000
140,000
244,000
24,000
80,000
140,000
36,000 256,000
80,000
140,000
Total³
Robert Kensbock 1,2
of the Supervisory Board
Gunnar Zukunft¹
7,500
132,222
158,000
34,500
21,000
391,000
51,000
200,000
140,000
61,500 401,500
239,500
19,500
80,000
140,000
27,000 247,000
140,000 80,000
140,000 200,000
131,515 75,152
135,758
Benoît Potier
Dr. Nicola Leibinger-Kammüller
Jürgen Kerner¹
Harald Kern¹
244,000
24,000
80,000
140,000
36,000 256,000
241,167
140,000
80,000
25,500
18,000
140,000
Baroness Nemat Shafik (DBE, DPhil)
182,000
12,000
37,778
132,222
194,045
19,500
38,788
140,000
135,758
109,500
4,500
105,000
18,000 158,000
Hagen Reimer'
141,222
9,000
132,222
156,758
245,500
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
to receive matching shares is forfeited if the purchased
shares are sold, transferred, hedged on, pledged or hy-
pothecated in any way during the relevant vesting period.
2.4 Capital structure
In fiscal 2021 the market environment for Digital Industries improved strongly as global manufacturing production recovered throughout
the fiscal year from burdens related to COVID-19, which were most noticeable in the second and third quarter a year earlier. The rebound
was faster and stronger than assumed and led to constraints in global value chains over the course of the fiscal year. The main driver of
the upswing was China where the growth dynamic was extremely strong in the first half of the fiscal year. Other countries followed with
a delay of around three to six months, but their recovery was less pronounced than in China resulting in moderate growth in the regions
Americas and Europe, C.I.S., Africa, Middle East. Discrete industries recovered particularly quickly and strongly, benefiting in part from
restocking effects, while recovery in the more project-related process industries was delayed. The automotive industry started strongly
into fiscal 2021, but the recovery was held back by supply chain constraints which impacted production especially in the second half of
the fiscal year. This led to slowing or even limited contraction of production during the last months of the fiscal year. The machine building
industry also recovered faster than expected, with the recovery starting in China and benefiting from demand for general investment
goods. This development was evident in demand for automation equipment which in addition benefited from the trend towards
digitalization and from stock-building effects to mitigate risks from supply chain constraints. The pharmaceutical and the chemicals
industries expanded during the entire fiscal year. While the pharmaceuticals industry benefited from COVID-19 vaccine demand among
other factors, the chemicals industry steadily improved in line with the overall economic recovery. The development in the food and
beverage industry followed a similar pattern and grew steadily throughout the fiscal year. Global production of electronics and
semiconductors was not held back by effects related to COVID-19, and experienced strong growth during fiscal 2021. However, market
shifts within the semiconductor industry led to global shortages of semiconductors for certain customer segments that grew worse through
the fiscal year and increasingly affected the automotive and machine building industries. In addition, supply constraints for plastics, metals
and freight delivery impacted Digital Industries' market environment. Price increases affected all markets and were stronger than usually
experienced during periods of economic rebound. While prices started to surge in the first quarter of fiscal 2021 mainly in the raw material
sector (e. g. copper), they spread further to intermediate goods and to all markets, including electrical equipment, in the following
Siemens Healthineers
Mobility
Smart Infrastructure
Digital Industries
Margin ranges until fiscal 2021
For our industrial businesses, in fiscal 2021 profit represented EBITA adjusted for operating financial income (expenses), net, and
amortization of intangible assets not acquired in business combinations (Adjusted EBITA).
The margin ranges for our industrial businesses were as follows:
Within the Siemens Financial Framework, we aim to achieve margins that are comparable to those of our relevant competitors. Therefore,
we have defined profit margin ranges for our industrial businesses which also consider the profit margins of their respective relevant
competitors. Profit margin is defined as profit of the respective business divided by its revenue.
2.3 Profitability and capital efficiency
Under the modified framework, we aim to achieve comparable revenue growth in the range of 5% to 7% per year over a cycle of three to
five years.
Currency translation effects are the difference between revenue for the current period calculated using the exchange rates of the current
period and revenue for the current period calculated using the exchange rates of the comparison period. For calculating the percentage
change year-over-year, this absolute difference is divided by revenue for the comparison period. A portfolio effect arises in the case of an
acquisition or a disposition and is calculated as the change year-over-year in revenue related to the transaction. For calculating the
percentage change, this absolute change is divided by revenue for the comparison period. Any portfolio effect is excluded for the 12
months following the relevant transaction after which both current and past reporting periods fully reflect the portfolio change. For orders,
we apply the same calculations for currency translation and portfolio effects as described above.
Industrial Business
Our primary measure for managing and controlling our revenue growth is comparable growth, because it shows the development in our
business net of currency translation effects, which arise from the external environment outside of our control, and portfolio effects, which
involve business activities which are either new to or no longer a part of the respective business.
2.2 Revenue growth
The Siemens Financial Framework includes targets that we aim to achieve over a cycle of three to five years. During fiscal 2021, we
modified this framework. The resulting changes became effective starting with fiscal 2022.
2.1 Overview
2. Financial performance system
Combined Management Report
3
Siemens has policies for environmental, employee and social matters, for the respect of human rights, and anti-corruption and bribery
matters, among others. Our business model is described in chapters 1 and 3 of this Combined Management Report. Reportable information
that is necessary for an understanding of the development, performance, position and the impact of our activities on these matters is
included in this Combined Management Report, in particular in chapters 3 through 7. Forward-looking information, including risk
disclosures, is presented in chapter 8. Chapter 9 includes additional information that is required to be reported in the Combined
Management Report related to the parent company Siemens AG. As supplementary information, amounts reported in the Consolidated
Financial Statements and the Annual Financial Statements of Siemens AG related to such non-financial matters, and additional
explanations thereto, are included in Notes to Consolidated Financial Statements for fiscal 2021, Notes 17, 18, 22, 26 and 27, and in the
Notes to the Annual Financial Statements for fiscal 2021, Notes 16, 17, 20, 21 and 25. In order to inform the users of the financial reports
in a focused manner, these disclosures are not subject to a specific non-financial framework – in contrast to the disclosures in our separate
"Sustainability Report 2021" document, which are based on the standards developed by the Global Reporting Initiative (GRI). Said
document also includes detailed information on DEGREE, Siemens' new sustainability framework which was introduced during fiscal 2021.
With DEGREE, Siemens intends to manage and track its progress on selected ambitions in the environmental, social and governance areas.
Non-financial matters of the Group and Siemens AG
Our reportable segments and Portfolio Companies may do business with each other, leading to corresponding orders and revenue. Such
orders and revenue are eliminated on the Group level.
As of September 30, 2021, Siemens has the following reportable segments: Digital Industries, Smart Infrastructure, Mobility and
Siemens Healthineers, which together form our "Industrial Business" and Siemens Financial Services (SFS), which supports the activities
of our industrial businesses and also conducts its own business with external customers. Furthermore, we report results for Portfolio
Companies, which comprises businesses that are managed separately to improve their performance.
In the Siemens Financial Framework, up to and including fiscal 2021, we aimed to achieve a revenue growth range of 4% to 5% per year
on a comparable basis.
Siemens comprises Siemens Aktiengesellschaft (Siemens AG), a stock corporation under the Federal laws of Germany, as the parent
company, and its subsidiaries. Our Company is incorporated in Germany, with our corporate headquarters situated in Munich. As of
September 30, 2021, Siemens had around 303,000 employees.
Siemens Financial Services (ROE after tax)
17-23%
For purposes of managing and controlling profit and profitability at the Group level, we use net income as our primary measure. This
measure is the primary driver of basic earnings per share from net income (EPS).
In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at Siemens Financial
Services is return on equity after tax, or ROE after tax. ROE is defined as Siemens Financial Services' profit after tax, divided by its average
allocated equity.
For Siemens Healthineers, we present the margin range we expect as that company's majority shareholder.
15-20%
17-21%
10-13%
11-16%
17-23%
Margin range
Siemens Financial Services (ROE after tax)
Margin range
Siemens Healthineers
Smart Infrastructure
Digital Industries
Margin ranges from fiscal 2022
The margin ranges were set as follows:
Beginning with fiscal 2022, the profit definition no longer adjusts EBITA for operating financial income (expenses), net to present a more
transparent view on operating earnings. Operating financial income, net for Industrial Business was €23 million in fiscal 2021, without a
change to the reported margin.
17-22%
11-15%
17-21%
9-12%
10-15%
Mobility
Siemens is a technology group that is active in nearly all countries of the world, focusing on the areas of automation and digitalization in
the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions
for rail and road and medical technology and digital healthcare services.
1. Organization of the Siemens Group and basis of
presentation
Combined Management Report
3
Table of contents
SIEMENS
FOR FISCAL 2021
Report
Combined Management
Notes and forward-looking statements
Corporate Governance Statement
Report of the Supervisory Board
Compensation Report (including Auditor's Report)
1.
Five-Year Summary
Responsibility Statement (Siemens AG)
Annual Financial Statements
Independent Auditor's Report (Siemens Group)
Responsibility Statement (Siemens Group)
Consolidated Financial Statements
Combined Management Report
Table of contents
SIEMENS
FOR FISCAL 2021
Siemens Report
Independent Auditor's Report (Siemens AG)
4
2.
Combined Management Report
Takeover-relevant information
10.
37
9. Siemens AG
Report on expected developments and associated material opportunities and risks
8.
Overall assessment of the economic position
7.
Financial position
6.
20
2355 3
Net assets position
5.
19
Results of operations
4.
16
Segment information
3.
7
Financial performance system
8
4
Combined Management Report
Organization of the Siemens Group and basis of presentation
We seek to work profitably and as efficiently as possible with the capital provided by our shareholders and lenders. For purposes of
managing and controlling our capital efficiency, we use return on capital employed, or ROCE, as our primary measure in our Siemens
Financial Framework.
(in millions of €)
Research & Development (R&D) activities at Digital Industries are aimed at providing its customers with solutions that allow them to
exploit the potential of data in their businesses and to combine the real and the digital worlds. Digital Industries is developing and
integrating technologies such as artificial intelligence (AI), edge computing, cloud technologies, additive manufacturing and industrial 5G
wireless technology. For example, Digital Industries cooperated with Schaeffler Group by combining its lloT platform Sidrive IQ, which
augments drive systems with Al-based analytics and digital content, with Schaeffler's products and services in the area of designing,
manufacturing, and servicing bearings. Digital Industries introduced a new Industrial Edge Management system with which users can
remotely monitor the status of every connected device and remotely install edge apps and software functions on distributed edge devices.
Also in fiscal 2021, Digital Industries announced a cooperation with Google Cloud which aims at the integration of factory automation
systems from Digital Industries with Google's data cloud, Al and machine learning technologies. In the field of additive manufacturing,
Digital Industries worked with EOS and DyeMansion to present the first virtual additive manufacturing reference factory for selective laser
sintering and industrial post-processing. During the 2021 Hanover Fair, Digital Industries demonstrated its first industrial 5G router and
set up a private 5G campus network with a focus on industrial use cases such as automated guided vehicles, augmented reality, and
autonomous mobile robots. Major investments of Digital Industries in fiscal 2021 relate to its own factory automation, motion control
and process automation businesses, to further automate and digitalize facilities particularly in Germany, China and the Czech Republic.
Digital Industries sees three trends influencing its business and providing long-term growth opportunities. Producers of investment goods
in today's increasingly digital environment must modernize their production capacity, particularly to increase production flexibility and
reduce time to market. This environment also spurs producers to complement their core products with vertical solutions and service
offerings, which their customers either need or want in order to take full advantage of the investment goods. Finally, there is a trend from
globalization to regionalization, to support local economic development or to better adapt solutions to local needs. This is increasingly
accompanied by more differentiated regulatory requirements.
Combined Management Report
7
Taken together, Digital Industries' offerings enable customers to optimize entire value chains from product design and development
through production and post-sale services. With its advanced software solutions in particular, Digital Industries supports customers in their
evolution towards the "Digital Enterprise," resulting in increased flexibility and efficiency of production processes and reduced time to
market for new products. The most important markets include the automotive industry, the machine building industry, the pharmaceutical
and chemicals industry, the food and beverage industry and the electronics and semiconductor industry. Digital Industries serves its
customers through a common regional sales organization spanning all its businesses, using various sales channels depending on the type
of customer and industry and also enhancing customer choice across all channels. Changes in customer demand, especially for standard
products, are driven strongly by macroeconomic cycles, and can lead to significant short-term fluctuation in Digital Industries' profitability.
Volume from large contracts in the software business, particularly for EDA, may also result in strong fluctuations in quarterly volume and
profitability. Starting in fiscal 2022, Digital Industries intends to transition parts of its software business, particularly PLM, from largely
upfront revenue recognition towards Software as a Service (SaaS), which yields more predictable recurring revenue and offers growth
opportunities by opening access to new customers, especially small and medium-sized companies seeking to reduce costs associated with
owning complex IT infrastructure. During the transition, Digital Industries expects impacts on revenue growth rates and profit margin
development in the software business. Competition with Digital Industries' business activities comes primarily from multinational
corporations that offer a relatively broad portfolio and from smaller companies active only in certain geographic or product markets.
Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries;
these offerings include automation systems and software for factories, numerical control systems, motors, drives and inverters and
integrated automation systems for machine tools and production machines. Digital Industries also provides process control systems,
machine-to-machine communication products, sensors (for measuring pressure, temperature, level, flow rate, distance or shape) and
radio frequency identification systems. Furthermore, Digital Industries offers production and product lifecycle management (PLM)
software, and software for simulation and testing of mechatronic systems. These leading software offerings are integrated with an
electronic design automation (EDA) software portfolio, and the open, cloud-based industrial internet of things (IoT) operating system
MindSphere, which connects machines and physical infrastructure to the digital world. All these software offerings are complemented by
the Mendix cloud-native low-code application development platform, which allows customers to significantly reduce app development
times through visual representation of underlying code. Digital Industries also provides customers with lifecycle and data-driven services.
During the first quarter of fiscal 2021, Digital Industries' stake in Bentley Systems, Inc. (Bentley) was transferred to Siemens Pension-Trust
e.V. In August 2021, Digital Industries closed the acquisition of Supplyframe, Inc. (Supplyframe), a marketplace for the global electronics
value chain, to significantly strengthen and accelerate growth of its offerings in digital marketplaces. For further information on the
acquisition see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
3.2 Digital Industries
The partly estimated figures presented here for GDP are based on an IHS Markit report dated October 15, 2021.
Overall, the other major economies have experienced very strong economic rebounds and GDP is expected to grow strongly in calendar
2021: European Union (EU) 5.0%, U.S. 5.4%, Japan 2.3%, India 7.7%. For advanced countries in aggregate, calendar 2021 GDP is expected
to expand by 4.9%. For emerging markets, the increase in calendar 2021 GDP is estimated at 6.4%.
Orders
The Chinese economy - with the world's largest manufacturing sector - benefited particularly from the high global demand for goods and
is expected to grow by 8.2% in calendar 2021. However, tensions in the property sector and energy shortages weighed on economic
activity in the second half of calendar 2021.
Global economic activity expanded at very high rates in the third quarter of calendar 2020 after the first wave of COVID-19 ebbed.
Subsequent infection waves in winter months caused fears of a new global recession. But economic activity had already adapted to the
pandemic and was supported by massive stimulus programs, especially in Europe and the U.S. Globally, governments allocated nearly USD
11 trillion in stimulus programs and more than USD 6 trillion in liquidity support to businesses and households in response to the pandemic.
Central banks gave support with expansionary measures, in particular new quantitative easing programs, while short-term interest rates
were at or near zero. Accordingly, the global economy continued to expand also in the fourth quarter of calendar 2020 and the first quarter
of calendar 2021, despite renewed outbreaks and lockdowns. In December 2020, the first countries approved new COVID-19 vaccines,
which were developed in a very short time and which are of paramount importance in order to solve the health crisis and economic
challenges.
The global economic development in fiscal 2021 was still dominated by the coronavirus pandemic (COVID-19) and its many repercussions.
After the recession in calendar 2020, in which global gross domestic product (GDP) contracted by 3.4%, calendar 2021 is expected to show
a very strong rebound with global GDP increasing by 5.5%.
3.1 Overall economic conditions
3. Segment information
Combined Management Report
6
Beginning with fiscal 2022, ROCE will exclude defined Varian-related acquisition effects. For that purpose, in the numerator, Income before
interest after tax is adjusted for effects resulting from purchase price allocation which are comprised of amortization of tangible and
intangible assets, inventory step-ups, deferred revenue adjustments and related income taxes. The denominator Average capital employed
is adjusted for goodwill and other intangible assets resulting from purchase price allocation. ROCE adjusted for Varian-related acquisition
effects was 15.1% in fiscal 2021.
Plus: Adjustments from assets classified as held for disposal and liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses on provisions for pensions and similar obligations
Capital employed (continuing and discontinued operations)
Less: SFS debt
Plus: Provisions for pensions and similar obligations
However, momentum again weakened in the first half of calendar 2021, due to increasing infections in many countries. The new Delta
variant was more contagious than previous virus strains. Vaccine roll-out could not keep up with the spread of this new variant, especially
in emerging countries. In addition, supply disruptions, which were both caused and magnified by the pandemic, impaired the recovery.
Bottlenecks had impacts across the value chains from raw materials to high tech goods, especially semiconductors, and were exemplified
by extraordinary disruptions in global logistics systems. In addition, many companies were surprised by the strong recovery and high
demand for goods which often exceeded their production plans and short-term capacity. The extraordinarily high demand for goods was
caused by consumers with high excess savings and limited spending alternatives as many service offerings were still not available
("services-to-products shift"). Limited supply, logistics bottlenecks and record high consumer demand for goods caused substantial
increases of producer prices for many products, which partly translated to an increase of general inflation. In addition, energy prices
increased, and base effects from reduced 2020 price levels as well as temporary effects (e.g. provisional changes in taxation) contributed
to the elevated rate of inflation.
Revenue
therein: software business
Adjusted EBITA
Beginning with fiscal 2022, we will in addition report EPS before purchase price allocation accounting (EPS pre PPA) to increase
transparency regarding our operating performance. EPS pre PPA is defined as basic earnings per share from net income adjusted for
amortization of intangible assets acquired in business combinations and related income taxes. Like for EPS, EPS pre PPA includes the
amounts attributable to shareholders of Siemens AG. We aim to achieve high-single-digit annual growth in EPS pre PPA over a cycle of
three to five years. EPS pre PPA for fiscal 2021 was €8.32.
Significant order growth for Digital Industries was driven by the automation businesses, particularly factory automation and motion
control, on a recovery of their most important customer industries such as the automotive and machine building industries, which a year
earlier were strongly impacted by effects related to COVID-19. Orders in the software business came in lower compared to fiscal 2020,
which included a sharply higher volume from large orders, most notably in the EDA business. Revenue rose in all businesses, including
significant growth contributions from the factory automation and motion control businesses and successful mitigation of supply chain
risks primarily associated with electronics components. On a geographic basis, order and revenue were up in all regions with growth
mainly driven by the region Asia, Australia, due primarily to substantial increases in China, and the region comprising Europe,
Commonwealth of Independent States (C.I.S.), Africa, Middle East, including a strong growth contribution from Germany. Adjusted EBITA
rose moderately even though the prior fiscal year included a €767 million positive effect related to Digital Industries' former stake in
Bentley. The effect resulted mainly from revaluation of the stake following Bentley's public listing. Excluding this effect, Adjusted EBITA
rose on double-digit increases in all businesses and improved profitability compared to the prior fiscal year, with the strongest growth
contributions coming from the factory automation and motion control businesses. Adjusted EBITA improved also from successful execution
of the cost structure improvement program in prior periods, which strengthened current profitability. Furthermore, severance charges,
which resulted primarily from the ongoing program, fell substantially to €114 million from €210 million in the prior year. During the first
half of fiscal 2021, Adjusted EBITA development benefited from expense reductions year-over-year related to COVID-19 restrictions, such
as lower travel and marketing expenses. Digital Industries' order backlog was €7 billion at the end of the fiscal year, of which €6 billion are
expected to be converted into revenue in fiscal 2022.
21.7%
20.4%
3%
3,252
3,362
7%
4%
4,144
4,290
13%
10%
14,997
18%
16%
15,896
18,427
Comp.
% Change
Actual
2020
Fiscal year
2021
Adjusted EBITA margin
Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt
Less: Current interest-bearing debt securities
16,514
Plus: Short-term debt and current maturities of long-term debt
2020
2021
Fiscal year
(1)/(II) ROCE
(II) Average capital employed
(I) Income before interest after tax
Less: Taxes on interest adjustments (tax rate (flat) 30%)
Less: Interest adjustments (discontinued operations)
Plus: Net interest expenses related to provisions for pensions and similar obligations
Plus: SFS Other interest expenses/income
6,697
Less: Other interest expenses/income, net¹
(in millions of €)
Calculation of ROCE
2.6 Calculation of return on capital employed
Beginning with fiscal 2022, we use the cash conversion rate for the Siemens Group to reinforce our commitment to cash generation on a
Group level. It is defined as the ratio of Free cash flow (continuing and discontinued operations) to Net income. We aim to achieve a cash
conversion rate of 1 minus the annual comparable revenue growth rate for the Group over a cycle of three to five years.
As in the past, we intend to fund the dividend payout from Free cash flow. To provide an assessment of our ability to generate cash, and
ultimately to pay dividends, in fiscal 2021 we used the cash conversion rate of Industrial Business, defined as the ratio of Free cash flow
from Industrial Business to Adjusted EBITA Industrial Business. Because growth requires investments, we aimed to achieve a cash
conversion rate of 1 minus the annual comparable revenue growth rate of Industrial Business.
We intend to continue providing an attractive return to our shareholders under the Siemens Financial Framework. Beginning with fiscal
2022, this includes striving for a dividend per share that exceeds the amount of the preceding year, or that at least matches the prior-year-
level.
2.5 Liquidity and dividend
Sustainable revenue and profit development is supported by a healthy capital structure. Accordingly, a key consideration within the
Siemens Financial Framework is to maintain ready access to the capital markets through various debt products and preserve our ability to
repay and service our debt obligations over time. Our primary measure for managing and controlling our capital structure is the ratio of
Industrial net debt to EBITDA (continuing operations). This financial measure indicates the approximate amount of time in years that would
be needed to cover Industrial net debt through income from continuing operations, without taking into account interest, taxes,
depreciation and amortization. In fiscal 2021, we aimed to achieve a ratio of up to 1.0. Beginning with fiscal 2022, this ratio was raised to
up to 1.5.
Less: Cash and cash equivalents
Beginning with fiscal 2022, ROCE excludes defined acquisition-related effects for Varian Medical Systems, Inc. (Varian), which was acquired
by Siemens Healthineers in fiscal 2021, to further increase the transparency on our operating performance. Our goal is to achieve a ROCE
within a range of 15% to 20% over a cycle of three to five years.
Net income
4,200
At the Annual Shareholders' Meeting, the Managing Board, in agreement with the Supervisory Board, will submit the following proposal
to allocate the unappropriated net income of Siemens AG for fiscal 2021: to distribute a dividend of €4.00 on each share of no par value
entitled to the dividend for fiscal 2021 existing at the date of the Annual Shareholders' Meeting; the remaining amount is to be carried
forward. Payment of the proposed dividend is contingent upon approval by Siemens shareholders at the Annual Shareholders' Meeting on
February 10, 2022. The prior-year dividend was €3.50 per share.
(692)
Total equity
Plus: Long-term debt
(769)
Calculation of capital employed
purposes of calculating ROCE in interim periods, Income before interest after tax is annualized. Average capital employed is determined
using the average of the respective balances as of the quarterly reporting dates for the periods under review.
For
5
'Item Other interest expenses/income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.
7.8%
13.1%
56,190
Combined Management Report
4,397
51,723
66
806
842
100
(11)
(84)
6,778
(34)
53
100
100
100
100
100
100
Siemens Participações Ltda., São Paulo / Brazil
100
Varian Medical Systems Brasil Ltda., São Paulo / Brazil
Siemens Mobility Soluções de Mobilidade Ltda., São Paulo/ Brazil
Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
Siemens Industry Software Ltda., São Caetano do Sul / Brazil
Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
Iriel Indústria e Comercio de Sistemas Eléctricos Ltda., Canoas / Brazil
100
Siemens Mobility S.A., Munro / Argentina
Siemens IT Services S.A., Buenos Aires Argentina
100
100
Siemens Financial Ltd., Oakville / Canada
52
Talent Choice Investment Limited, George Town / Cayman Islands
Siemens Industrial S.A., Buenos Aires / Argentina
Monarch Capital, Limited, Grand Cayman Cayman Islands
Varian Medical Systems Canada, Inc., Ottawa / Canada
TimeSeries Canada Inc., Montreal / Canada
SIEMENS MOBILITY LIMITED, Oakville / Canada
Siemens Logistics Ltd., Oakville / Canada
100
Siemens Industry Software ULC, Vancouver / Canada
Siemens Canada Limited, Oakville / Canada
RailTerm Systems Inc., Dorval / Canada
RAIL-TERM INC., Mississauga / Canada
Mentor Graphics (Canada) ULC, Vancouver / Canada
EPOCAL INC., Toronto / Canada
10125032 CANADA INC, Mississauga / Canada
10262595 Canada Inc., Mississauga / Canada
12241510 CANADA INC., Mississauga / Canada
Bytemark Canada Inc., Saint John / Canada
62
Siemens Healthcare Limited, Oakville / Canada
Siemens Healthcare S.A., Buenos Aires / Argentina
100
100
Siemens Pension Funding (General) Limited, Frimley, Surrey / United Kingdom
Siemens Mobility Limited, London / United Kingdom
100
Siemens Logistics Limited, Frimley, Surrey / United Kingdom
100
Siemens Industry Software Limited, Frimley, Surrey / United Kingdom
100
Siemens Industry Software Computational Dynamics Limited, Frimley, Surrey / United Kingdom
100
Siemens Holdings plc, Frimley, Surrey / United Kingdom
100
Siemens Healthcare Limited, Frimley, Surrey / United Kingdom
100
100
Nimbic Chile SpA, Las Condes / Chile
100
Siemens plc, Frimley, Surrey / United Kingdom
Siemens Rail Automation Limited, London / United Kingdom
Siemens Pension Funding Limited, Frimley, Surrey / United Kingdom
100
100
Americas (124 companies)
Yunex Limited, Poole, Dorset / United Kingdom
Varian Medical Systems UK Limited, Crawley, West Sussex / United Kingdom
Varian Medical Systems UK Holdings Limited, Crawley, West Sussex / United Kingdom
UltraSoc Technologies Limited, Frimley, Surrey / United Kingdom
100
100
100
100
100
100
The Preactor Group Limited, Frimley, Surrey / United Kingdom
Siemens Rail Systems Project Holdings Limited, London / United Kingdom
Siemens Process Systems Engineering Limited, Frimley, Surrey / United Kingdom
100
Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
100
Siemens S.A., Santiago de Chile / Chile
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
Siemens Industry Software, S.A. de C.V., Mexico City / Mexico
Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City / Mexico
Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad Juárez / Mexico
Grupo Siemens S.A. de C.V., Mexico City / Mexico
Siemens S.A., Guatemala Guatemala
Siemens S.A., Antiguo Cuscatlán / El Salvador
Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
Siemens Inmobiliaria S.A. de C.V., Mexico City / Mexico
Siemens-Healthcare Cia. Ltda., Quito / Ecuador
Siemens Mobility, S.R.L., Santo Domingo / Dominican Republic
Siemens S.A., San José / Costa Rica
Siemens Healthcare Diagnostics S.A., San José / Costa Rica
YUNEX S.A.S., Bogotá / Colombia
Siemens S.A., Tenjo / Colombia
Siemens Healthcare S.A.S., Tenjo / Colombia
J. Restrepo Equiphos S.A.S, Bogotá / Colombia
Siemens S.A., Quito Ecuador
Siemens Mobility SpA, Santiago de Chile / Chile
Siemens Logistics S. de R.L. de C.V., Mexico City / Mexico
SIEMENS SERVICIOS COMERCIALES SA DE CV, SOFOM, ENR, Mexico City / Mexico
10013
100
100
100
100
100
10013
Siemens Mobility S. de R.L. de C.V., Mexico City / Mexico
100
100
100
100
Consolidated Financial Statements
Siemens Healthcare S.A.C., Surquillo / Peru
Siemens Large Drive Applications S.A., Panama City / Panama
Siemens, S.A. de C.V., Mexico City / Mexico
100
100
100
573
100
100
100
Siemens Healthcare Limited, Bangkok / Thailand
Varian Medical Systems Taiwan Co., Ltd., Taipei / Taiwan, Province of China
Siemens Industry Software (TW) Co., Ltd., Taipei / Taiwan, Province of China
Siemens Limited, Taipei / Taiwan, Province of China
Fang Chi Health Management Co., Ltd, Taipei / Taiwan, Province of China
Hong Tai Health Management Co. Ltd., Taipei / Taiwan, Province of China
New Century Technology Co. Ltd., Taipei / Taiwan, Province of China
Siemens Healthcare Limited, Taipei / Taiwan, Province of China
Asiri A O I Cancer Centre (Private) Limited, Colombo/Sri Lanka
YUNEX PTE. LTD., Singapore / Singapore
Siemens Pte. Ltd., Singapore / Singapore
Siemens Mobility Pte. Ltd., Singapore / Singapore
Siemens Logistics PTE. LTD., Singapore / Singapore
Siemens Industry Software Pte. Ltd., Singapore / Singapore
Siemens Healthcare Pte. Ltd., Singapore / Singapore
Mentor Graphics Asia Pte Ltd, Singapore / Singapore
Aimsun Pte Ltd, Singapore / Singapore
Acuson Singapore Pte. Ltd., Singapore / Singapore
Varian Medical Systems Philippines, Inc., City of Pasig / Philippines
Siemens, Inc., Manila / Philippines
Siemens Healthcare Inc., Manila / Philippines
Siemens Healthcare Limited, Auckland New Zealand
Siemens (N.Z.) Limited, Auckland / New Zealand
Varian Medical Systems Malaysia Sdn Bhd, Kuala Lumpur / Malaysia
Siemens Mobility Sdn. Bhd., Kuala Lumpur / Malaysia
Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
Siemens Industry Software Sdn. Bhd., George Town, Penang / Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya / Malaysia
Varian Medical Systems Korea, Inc., Seoul / Korea, Republic of
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur / Malaysia
Siemens Process Systems Engineering Limited, Daejeon / Korea, Republic of
100
Siemens Mobility Ltd., Seoul / Korea, Republic of
100
100
Siemens Limited, Bangkok Thailand
100
100
100
100
100
100
100
502
100
100
100
100
100
100
100
100
1007
100
100
100
100
100
100
100
100
100
100
100
100
Siemens Logistics Automation Systems Ltd., Bangkok / Thailand
Siemens Ltd. Seoul, Seoul / Korea, Republic of
Siemens Electronic Design Automation (Korea) LLC, Seoul / Korea, Republic of
Siemens Healthineers Ltd., Seoul / Korea, Republic of
99
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
_3
100
100
100
90
55
100
70
Consolidated Financial Statements
Acuson Korea Ltd., Seongnam-si / Korea, Republic of
Varian Medical Systems K.K., Tokyo / Japan
100
Siemens Industry Software Ltd., Seoul / Korea, Republic of
100
100
Consolidated Financial Statements
56
1007
100
100
100
100
100
100
100
100
96
100
100
100
100
100
100
100
51
100
1007
100
100
100
100
100
100
100
100
Siemens PLM Software Computational Dynamics K.K., Yokohama / Japan
Siemens Mobility Limited, Bangkok/Thailand
Siemens Ltd., Ho Chi Minh City / Viet Nam
20
33
49
498
498
428, 13
33
574,8
48
25
238
674, 8, 12, 13
478
44
448
40
458
20
50
498
46
35
338
33
498
49
238
258
508
206,13
Consolidated Financial Statements
208
50
40
49
514
31
358
26
Micropower Comerc Energia S.A., São Paulo / Brazil
GNA 1 Geração de Energia S.A., São João da Barra / Brazil
Brasol Participações e Empreendimentos S.A., Brazil, São Paulo / Brazil
Americas (21 companies)
Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
Plessey Holdings Ltd., Frimley, Surrey / United Kingdom
Five Estuaries Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
Cross London Trains Holdco 2 Limited, London / United Kingdom
Awel Y Môr Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
Interessengemeinschaft TUS, Volketswil / Switzerland
Certas AG, Zurich / Switzerland
Stavro Holding | AB, Stockholm / Sweden
WS Tech Energy Global S.L., Viladecans / Spain
Nertus Mantenimiento Ferroviario y Servicios S.A., Madrid / Spain
Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
OOO Transconverter, Moscow / Russian Federation
Rousch (Pakistan) Power Ltd., Islamabad / Pakistan
208
206, 13
50
50
ZeeEnergie Management B.V., Eemshaven / Netherlands
Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
ZeeEnergie C.V., Amsterdam / Netherlands
Locomotive Workshop Rotterdam B.V., Zoetermeer / Netherlands
508, 13
Siemens Healthcare Limited, Ho Chi Minh City I Viet Nam
Infraspeed Maintainance B.V., Dordrecht / Netherlands
Buitengaats Management B.V., Eemshaven / Netherlands
50
IFTEC GmbH & Co. KG, Leipzig
50
498
498
30
GuD Herne GmbH, Essen
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen des Stadt- und Regionalverkehrs mbH, Cologne
FEAG Fertigungscenter für Elektrische Anlagen GmbH, Erlangen
Curagita Holding GmbH, Heidelberg
50
50
Caterva GmbH, Pullach i. Isartal
BentoNet GmbH, Baden-Baden
49
258
418
BELLIS GmbH, Braunschweig
ATS Projekt Grevenbroich GmbH, Schüttorf
Alchemist Accelerator Europe Fund I GmbH & Co. KG, Grünwald
Germany (24 companies)
Associated companies and joint ventures
Varian Medical Systems Vietnam Co Ltd, Ho Chi Minh City / Viet Nam
100
100
100
100
100
100
100
INPRO Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
Infraspeed EPC Consortium V.O.F., Zoetermeer / Netherlands
338
57
Buitengaats C.V., Amsterdam / Netherlands
Energie Electrique de Tahaddart S.A., Tangier / Morocco
EGM Holding Limited, Marsaskala / Malta
Temir Zhol Electrification LLP, Astana / Kazakhstan
KACO New Energy Co., Amman / Jordan
Transfima S.p.A., Milan / Italy
Transfima GEIE, Milan / Italy
Reindeer Energy Ltd., Bnei Berak / Israel
Parallel Graphics Ltd., Dublin Ireland
EVIOP-TEMPO S.A. Electrical Equipment Manufacturers, Vassiliko / Greece
TRIXELL SAS, Moirans / France
BioMensio Oy, Tampere / Finland
Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
Meomed s.r.o., Prerov / Czech Republic
Aspern Smart City Research GmbH & Co KG, Vienna / Austria
Aspern Smart City Research GmbH, Vienna / Austria
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (37 companies)
Armpower CJSC, Yerevan / Armenia
WUN H2 GmbH, Wunsiedel
Veja Mate Offshore Project GmbH, Oststeinbek
Valeo Siemens eAutomotive GmbH, Erlangen
Sternico GmbH, Wendeburg
Siemens EuroCash, Munich
Siemens Energy AG, Munich
Nordlicht Holding Verwaltung GmbH, Frankfurt
Nordlicht Holding GmbH & Co. KG, Frankfurt
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
MeVis BreastCare GmbH & Co. KG, Bremen
Ludwig Bölkow Campus GmbH, Taufkirchen
MetisMotion GmbH, Munich
LIB Verwaltungs-GmbH, Leipzig
57
50
Siemens K.K., Tokyo / Japan
Siemens Healthcare Diagnostics K.K., Tokyo / Japan
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
Siemens Electrical Drives Ltd., Tianjin / China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
Siemens Commercial Factoring Ltd., Shanghai / China
Siemens Business Information Consulting Co., Ltd, Beijing / China
Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
Siemens Building Technologies (Tianjin) Ltd., Tianjin / China
Scion Medical Technologies (Shanghai) Ltd., Shanghai / China
Mentor Graphics (Shanghai) Electronic Technology Co., Ltd., Shanghai / China
Hangzhou Alicon Pharm Sci & Tec Co., Ltd., Hangzhou / China
Green Matrix (Suzhou) Network Technology Co., Ltd., Suzhou / China
Beijing Siemens Cerberus Electronics Ltd., Beijing / China
Acuson (Shanghai) Co., Ltd., Shanghai / China
Siemens Industrial Limited, Dhaka / Bangladesh
Siemens Healthcare Ltd., Dhaka / Bangladesh
Varian Medical Systems Australasia Pty Ltd., Belrose / Australia
YUNEX PTY. LTD., Sydney / Australia
SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater / Australia
Siemens Mobility Pty Ltd, Bayswater / Australia
Siemens Ltd., Bayswater / Australia
Siemens Industry Software Pty Ltd, Bayswater / Australia
J.R.B. Engineering Pty Ltd, Bayswater / Australia
Siemens Healthcare Pty. Ltd., Melbourne / Australia
Exemplar Health (NBH) Holdings 2 Pty Limited, Bayswater / Australia
Exemplar Health (NBH) Trust 2, Bayswater / Australia
Exemplar Health (NBH) 2 Pty Limited, Bayswater / Australia
ALDRIDGE TRAFFIC CONTROLLERS PTY. LTD, Sydney / Australia
Australia Hospital Holding Pty Limited, Bayswater / Australia
Aimsun Pty Ltd, Sydney / Australia
Asia, Australia (154 companies)
54
54
100
100
100
Siemens Factory Automation Engineering Ltd., Beijing / China
100
501
100
73
Siemens Corporation, Wilmington, DE / United States
Siemens Capital Company LLC, Wilmington, DE / United States
PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
PETNET Solutions, Inc., Knoxville, TN / United States
PolyDyne Software Inc., Austin, TX / United States
Rail-Term Corp., Plymouth, MI / United States
Next47 Mid-Tier GP 2022, L.P., Wilmington, DE / United States
Next47 TTGP, L.L.C., Wilmington, DE / United States
Omnetric Corp., Wilmington, DE / United States
P.E.T.NET Houston, LLC, Austin, TX / United States
Page Mill Corporation, Boston, MA / United States
PETNET Indiana, LLC, Indianapolis, IN / United States
Next47 Mid-Tier GP 2020, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2021, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2018, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2019, L.P., Wilmington, DE / United States
J2 Innovations, Inc., Los Angeles, CA / United States
Mannesmann Corporation, New York, NY / United States
Mansfield Insurance Company, Burlington, VT / United States
Next47 Inc., Wilmington, DE / United States
Executive Consulting Group, LLC, Wilmington, DE / United States
Enlighted, Inc., Wilmington, DE / United States
eMeter Corporation, Wilmington, DE / United States
ECG TopCo Holdings, LLC, Wilmington, DE / United States
Consolidated Financial Statements
53
100
80
100
Dedicated 21maging LLC, Wilmington, DE / United States
ECG Acquisition, Inc., Wilmington, DE / United States
D3 Oncology Inc., Wilmington, DE / United States
Corindus, Inc., Wilmington, DE / United States
CD-adapco Battery Design LLC, Dover, DE / United States
Bytemark Inc., Dover, DE / United States
Building Robotics Inc., Wilmington, DE / United States
Aimsun Inc., New York, NY / United States
Acuson, LLC, Wilmington, DE / United States
Varian Medical Systems Puerto Rico, LLC, Guaynabo / Puerto Rico
Siemens S.A.C., Surquillo / Peru
Siemens Mobility S.A.C., Lima / Peru
100
63
100
100
Dade Behring Hong Kong Holdings Corporation, Tortola Virgin Islands, British
Siemens Rail Automation, C.A., Caracas / Venezuela, Bolivarian Republic of
Siemens Healthcare S.A., Caracas / Venezuela, Bolivarian Republic of
Siemens S.A., Montevideo / Uruguay
Varian Medical Systems Africa Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems Canada Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems India Private Limited, Wilmington, DE / United States
Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems Latin America, Ltd., Wilmington, DE / United States
Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems Pacific, Inc., Wilmington, DE / United States
Varian Medical Systems, Inc., Wilmington, DE / United States
Yunex LLC, Wilmington, DE / United States
Varian BioSynergy, Inc., Wilmington, DE / United States
TimeSeries US, Inc., Centennial, CO / United States
Supplyframe, Inc., Pasadena, CA / United States
SMI Holding LLC, Wilmington, DE / United States
Siemens USA Holdings, Inc., Wilmington, DE / United States
Siemens Process Systems Engineering Inc., Wilmington, DE / United States
Siemens Public, Inc., Iselin, NJ / United States
Siemens Mobility, Inc, Wilmington, DE / United States
Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
Siemens Logistics LLC, Wilmington, DE / United States
Siemens Industry, Inc., Wilmington, DE / United States
Siemens Government Technologies, Inc., Wilmington, DE / United States
Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
Siemens Industry Software Inc., Wilmington, DE / United States
Siemens Financial Services, Inc., Wilmington, DE / United States
Siemens Financial, Inc., Wilmington, DE / United States
Siemens Electrical, LLC, Wilmington, DE / United States
100
51
100
100
100
100
100
100
100
100
100
100
Siemens Healthcare K.K., Tokyo / Japan
Siemens Finance and Leasing Ltd., Beijing / China
100
Supply Frame (Hong Kong) Limited, Hong Kong / Hong Kong
Siemens Mobility Limited, Hong Kong / Hong Kong
Siemens Logistics Limited, Hong Kong / Hong Kong
Siemens Limited, Hong Kong / Hong Kong
Siemens Industry Software Limited, Hong Kong / Hong Kong
Siemens Healthcare Limited, Hong Kong / Hong Kong
Scion Medical Limited, Hong Kong / Hong Kong
Yutraffic Technologies (Beijing) Co., Ltd., Beijing / China
Varian Medical Systems Trading (Beijing) Co., Ltd., Beijing / China
Varian Medical Systems China Co., Ltd., Beijing / China
Suzhou Ling Dong Zhen GE Network Technology Co., Ltd., Suzhou / China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
Siemens Wiring Accessories Shandong Ltd., Zibo / China
Siemens Venture Capital Co., Ltd., Beijing / China
Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
Siemens Switchgear Ltd., Shanghai, Shanghai / China
Siemens Standard Motors Ltd., Yizheng / China
Siemens Signalling Co., Ltd., Xi'an / China
55
100
100
100
100
80
100
100
100
51
85
Vertice Investment Limited, Hong Kong / Hong Kong
51
YUTRAFFIC LTD., Hong Kong / Hong Kong
American Institute of Pathology and Laboratory Sciences Private Limited, Hyderabad / India
Siemens Electronic Design Automation Japan K.K., Tokyo / Japan
OneSpin Solutions Japan K.K., Yokohama / Japan
Avatar Integrated Systems Kabushiki Kaisha, Yokohama / Japan
Acrorad Co., Ltd., Okinawa / Japan
PT Siemens Mobility Indonesia, Jakarta / Indonesia
PT Siemens Healthineers Indonesia, Jakarta / Indonesia
P.T. Siemens Indonesia, Jakarta / Indonesia
Varian Medical Systems International (India) Private Limited, Mumbai / India
Siemens Technology and Services Private Limited, Navi Mumbai / India
Siemens Rail Automation Pvt. Ltd., Navi Mumbai / India
Siemens Logistics India Private Limited, Navi Mumbai / India
Siemens Limited, Mumbai / India
Siemens Industry Software (India) Private Limited, New Delhi / India
SIEMENS HEALTHINEERS INDIA MANUFACTURING PRIVATE LIMITED, Mumbai / India
Siemens Healthineers India LLP, Bangalore / India
Siemens Healthcare Private Limited, Mumbai / India
Siemens Financial Services Private Limited, Mumbai / India
Siemens Factoring Private Limited, Navi Mumbai / India
Preactor Software India Private Limited, Bangalore / India
PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
Mentor Graphics (Sales and Services) Private Limited, New Delhi / India
Mentor Graphics (India) Private Limited, New Delhi / India
Flomerics India Private Limited, Mumbai / India
Enlighted Energy Systems Pvt Ltd, Chennai / India
Cancer Treatment Services Hyderabad Private Limited, Hyderabad / India
C&S Electric Limited, New Delhi / India
Bytemark Technology Solutions India Pvt Ltd, Bangalore / India
Bytemark India LLP, Bangalore / India
Artmed Healthcare Private Limited, Hyderabad / India
AIS Design Automation Private Limited, Bangalore / India
Consolidated Financial Statements
100
100
100
85
100
100
100
75
100
70
100
100
100
100
100
1007
100
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
100
100
Siemens Financial Services Ltd., Beijing / China
100
60
100
100
100
100
100
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
Siemens Shanghai Medical Equipment Ltd., Shanghai / China
Siemens Sensors & Communication Ltd., Dalian / China
Siemens Power Automation Ltd., Nanjing / China
Siemens Numerical Control Ltd., Nanjing, Nanjing / China
Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
Siemens Mobility Rail Equipment (Tianjin) Ltd., Tianjin / China
97
Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
Siemens Mobility Electrification Equipment (Shanghai) Co., Ltd., Shanghai / China
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
Siemens Manufacturing and Engineering Centre Ltd., Shanghai / China
Siemens Ltd., China, Beijing / China
Siemens Logistics Automation Systems (Beijing) Co., Ltd, Beijing / China
Siemens Investment Consulting Co., Ltd., Beijing / China
Siemens International Trading Ltd., Shanghai, Shanghai / China
Siemens Intelligent Signalling Technologies Co. Ltd., Foshan / China
Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
Siemens Industry Software (Beijing) Co., Ltd., Beijing / China
100
Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
Siemens Healthineers Ltd., Shanghai / China
100
100
5013
33
100
100
100
100
100
100
100
100
70
106
75
100
90
_3
_3
_3
_3
100
100
100
100
Siemens Logistics AG, Zurich / Switzerland
Siemens Industry Software GmbH, Zurich / Switzerland
Siemens Healthcare AG, Zurich / Switzerland
BlueWatt engineering Sàrl, Lausanne / Switzerland
100
Siemens Mobility AB, Solna / Sweden
100
100
100
100
Siemens Industry Software AB, Solna / Sweden
Siemens Healthcare AB, Solna / Sweden
Siemens Financial Services AB, Solna / Sweden
Siemens AB, Solna / Sweden
100
Mentor Graphics (Scandinavia) AB, Solna / Sweden
100
100
100
Varian Medical Systems Iberica SL, Alcobendas / Spain
Telecomunicación, Electrónica y Conmutación S.A., Madrid / Spain
100
100
100
100
100
100
60
Siemens Trgovsko in storitveno podjetje, d.o.o., Ljubljana / Slovenia
Siemens Mobility d.o.o., Ljubljana / Slovenia
Siemens Healthcare d.o.o., Ljubljana / Slovenia
Yunex, s.r.o., Bratislava / Slovakia
SIPRIN s.r.o., Bratislava Slovakia
Siemens s.r.o., Bratislava / Slovakia
Siemens Mobility, s.r.o., Bratislava / Slovakia
100
Siemens Healthcare s.r.o., Bratislava / Slovakia
SAT Systémy automatizacnej techniky spol. s.r.o., Bratislava / Slovakia
100
100
50
Consolidated Financial Statements
Siemens S.A., Madrid / Spain
Siemens Renting S.A., Madrid / Spain
Siemens Rail Automation S.A.U., Tres Cantos / Spain
SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
Siemens Logistics S.L. Unipersonal, Madrid / Spain
Siemens Industry Software S.L., Tres Cantos / Spain
Siemens Holding S.L., Madrid / Spain
SIEMENS HEALTHCARE, S.L.U., Getafe / Spain
Siemens Mobility AG, Wallisellen / Switzerland
Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
Varian Medical Systems Africa (Pty) Ltd., Midrand / South Africa
Siemens Proprietary Limited, Midrand / South Africa
Siemens Mobility (Pty) Ltd, Randburg / South Africa
SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD, Centurion / South Africa
Siemens Healthcare Employee Share Ownership Trust, Midrand / South Africa
Siemens Healthcare Proprietary Limited, Halfway House / South Africa
S'Mobility Employee Stock Ownership Trust, Johannesburg / South Africa
Siemens Employee Share Ownership Trust, Johannesburg / South Africa
KACO NEW ENERGY AFRICA (PTY) LTD, Midrand / South Africa
Linacre Investments (Pty) Ltd., Kenilworth/South Africa
Crabtree South Africa Pty. Limited, Midrand / South Africa
Aimsun S.L., Barcelona / Spain
Siemens Schweiz AG, Zurich / Switzerland
Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil / Switzerland
Varian Medical Systems International AG, Steinhausen / Switzerland
SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
Siemens Financial Services Holdings Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Healthcare Diagnostics Ltd, Frimley, Surrey / United Kingdom
100
Project Ventures Rail Investments | Limited, Frimley, Surrey / United Kingdom
Samacsys Limited, London / United Kingdom
Next47 Fund 2022, L.P., Palo Alto, CA / United Kingdom
Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
Data Sheet Archive Limited, London / United Kingdom
Electrium Sales Limited, Frimley, Surrey / United Kingdom
Flomerics Group Limited, Frimley, Surrey / United Kingdom
GYM Renewables Limited, Frimley, Surrey / United Kingdom
Mendix Technology Limited, Frimley, Surrey / United Kingdom
Mentor Graphics (UK) Limited, Frimley, Surrey / United Kingdom
MRX Technologies Limited, Frimley, Surrey / United Kingdom
Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
ByteToken, Ltd, Edinburgh / United Kingdom
AIMSUN LIMITED, London / United Kingdom
Acuson United Kingdom Ltd., Frimley, Surrey / United Kingdom
Siemens Middle East Limited, Masdar City / United Arab Emirates
SIEMENS MOBILITY LLC, Dubai United Arab Emirates
Siemens Industrial LLC, Masdar City / United Arab Emirates
Siemens Healthcare L.L.C., Dubai / United Arab Emirates
Consolidated Financial Statements
155
51
100
100
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey / United Kingdom
Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey / United Kingdom
492
492
100
100
100
100
100
100
100
100
100
492
100
1007
100
100
100
100
100
1007
492
100
Acuson Slovakia s. r. o., Bratislava / Slovakia
OEZ Slovakia, spol. s r.o., Bratislava / Slovakia
100
Siemens Capital Middle East Ltd, Abu Dhabi / United Arab Emirates
Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
KACO New Enerji Limited Sirketi, Pendik / Turkey
Siemens S.A., Tunis / Tunisia
Siemens Mobility S.A.R.L., Tunis / Tunisia
100
Mentor Graphics Tunisia SARL, Tunis / Tunisia
100
100
100
100
100
100
100
100
100
100
Siemens Tanzania Ltd. i.L., Dar es Salaam Tanzania, United Republic of
Yunex AG, Zurich / Switzerland
100
100
100
Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Turkey
SD (Middle East) LLC, Dubai / United Arab Emirates
PSE Software and Consulting L.L.C., Abu Dhabi / United Arab Emirates
Samateq FZ LLC, UAE, Abu Dhabi / United Arab Emirates
100
100
100% foreign owned subsidiary "Siemens Ukraine", Kiev / Ukraine
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
100
YUNEX ULAŞIM TEKNOLOJILERI ANONIM ŞIRKETI, Kartal/Istanbul / Turkey
100
492
V.O.S.S. Varinak Onkoloji Sistemleri Satis Ve Servis Anonim Sirketi, Istanbul / Turkey
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Turkey
100
Siemens Mobility Ulasim Sistemleri Anonim Sirketi, Istanbul / Turkey
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Turkey
100
Siemens Finansal Kiralama A.S., Istanbul / Turkey
100
100
Yunex Traffic d.o.o. Beograd, Belgrade / Serbia
100
1007
50
Tieke Intelligent Signalling Railway Equipment Co., Ltd., Tianjin / China
Xi'An X-Ray Target Ltd., Xi'an / China
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
Zhi Dao Railway Equipment Ltd., Taiyuan / China
Bangalore International Airport Ltd., Bangalore / India
HEALTH CONTINUUM PRIVATE LIMITED, Bangalore / India
Orange Sironj Wind Power Private Limited, New Delhi / India
Pune IT City Metro Rail Limited, Pune / India
P.T. Jawa Power, Jakarta / Indonesia
BE C&I Solutions Holding Pte. Ltd., Singapore / Singapore
Power Automation Pte. Ltd., Singapore / Singapore
SINGAPORE AQUACULTURE TECHNOLOGIES (SAT) PTE LTD, Singapore / Singapore
49
438
50
50
49
50
TianJin ZongXi Traction Motor Ltd., Tianjin / China
Smart Metering Solutions (Changsha) Co. Ltd., Changsha / China
238
43
206
20
37
100
33
26
20
308
308
30
50
50
378
25
35
40
24
27
308
26
Siemens Healthcare S.R.L., Bucharest / Romania
Siemens Industry Software S.R.L., Brasov / Romania
Siemens Mobility S.R.L., Bucharest / Romania
Siemens S.R.L., Bucharest / Romania
SIMEA SIBIU S.R.L., Sibiu / Romania
Varinak Europe SRL (Romania), Pantelimon / Romania
Acuson RUS Limited Liability Company, Moscow / Russian Federation
LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
000 Legion II, Moscow / Russian Federation
000 Siemens, Moscow / Russian Federation
000 Siemens Industry Software, Moscow / Russian Federation
Siemens Finance and Leasing LLC, Vladivostok / Russian Federation
Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
Siemens Mobility LLC, Moscow / Russian Federation
Varian Medical Systems (RUS) Limited Liability Company, Moscow / Russian Federation
Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia
Supplyframe d.o.o, Beograd-Vracar, Belgrade / Serbia
J2 Innovative Concepts Europe SRL, Bucharest / Romania
Siemens W.L.L., Doha Qatar
YUTRAFFIC, UNIPESSOAL LDA, Amadora / Portugal
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
Siemens Logistics, Unipessoal Lda, Lisbon Portugal
SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora / Portugal
Siemens S.A., Amadora / Portugal
50
24
49
24
59
59
Consolidated Financial Statements
Siemens Mobility AS, Oslo / Norway
46
Siemens Industrial LLC, Muscat / Oman
Siemens Healthcare (Private) Limited, Lahore / Pakistan
Siemens Pakistan Engineering Co. Ltd., Karachi / Pakistan
Mentor Graphics Polska Sp. z o.o., Katowice / Poland
Siemens Digital Logistics Sp. z o.o., Wroclaw / Poland
Siemens Finance Sp. z o.o., Warsaw / Poland
Siemens Healthcare Sp. z o.o., Warsaw / Poland
Siemens Industry Software Sp. z o.o., Warsaw / Poland
Siemens Mobility Sp. z o.o., Warsaw / Poland
Siemens Sp. z o.o., Warsaw / Poland
Varian Medical Systems Poland Sp. z o.o., Warsaw / Poland
YUNEX Sp. z o.o., Warsaw / Poland
Mentor Graphics Pakistan Development (Private) Limited, Lahore / Pakistan
29
50
2013
100
100
1007
33
100
100
100
100
100
100
55
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
75
51
51
100
51
Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
Siemens d.o.o. Beograd, Belgrade / Serbia
Varian Medical Systems Arabia Commercial Limited, Riyadh / Saudi Arabia
Siemens Mobility Saudi Ltd, Al Khobar / Saudi Arabia
Siemens Ltd., Riyadh / Saudi Arabia
Siemens Healthcare Limited, Riyadh / Saudi Arabia
_3
51
100
100
100
MSS Energy Holdings, LLC, New York, NY / United States
Panda Stonewall Intermediate Holdings I, LLC, Wilmington, DE / United States
PhSiTh LLC, New Castle, DE / United States
PTG Holdings Company LLC, Dover, DE / United States
Rether networks, Inc., Berkeley, CA / United States
Software.co Technologies, Inc., Wilmington, DE / United States
USARAD Holdings, Inc., Fort Lauderdale, FL / United States
Wi-Tronix Group Inc., Dover, DE / United States
Asia, Australia (22 companies)
Exemplar Health (NBH) Partnership, Melbourne / Australia
Forest Wind Holdings Pty Limited, Sydney / Australia
Forest Wind Investment Company (1) Pty Limited, Sydney / Australia
PHM Technology Pty Ltd, Melbourne / Australia
DBEST (Beijing) Facility Technology Management Co., Ltd., Beijing / China
Guangzhou Suikai Smart Energy Co., Ltd., Guangzhou / China
100
48
48
22
Hickory Run Holdings, LLC, Wilmington, DE / United States
Fluence Energy, LLC, Wilmington, DE / United States
Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China
Union Temporal Recaudo y Tecnologia, Santiago de Cali / Colombia
Akuo Energy Dominicana, S.R.L, Santo Domingo / Dominican Republic
DELARO, S.A.P.I. DE C.V., Mexico City / Mexico
100
CEF-L Holding, LLC, Wilmington, DE / United States
DeepHow Corp., Princeton, NJ / United States
100
100
75
100
100
51
25
100
508
974
22
20
58
Consolidated Financial Statements
25
MPC Serviços Energéticos 1B S.A., Cabo de Santo Agostinho / Brazil
UTE GNA II GERAÇÃO DE ENERGIA S.A., Rio de Janeiro / Brazil
MPC Serviços Energéticos 1A S.A, Navegantes / Brazil
1004,5
170
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (1
company)
Siemens Gas and Power Holding B.V., Zoeterwoude / Netherlands
2
1,307
Babson Diagnostics, Inc., Dover, DE / United States
Americas (2 companies)
Thoughtworks Holding Inc., Wilmington, DE / United States
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key management personnel.
3 Control due to contractual arrangements to determine the direction of the relevant activities.
SPT Beteiligungen GmbH & Co. KG, Grünwald
* No control due to contractual arrangements or legal circumstances.
5,592
257
in %
Munipolis GmbH, Munich
5 No significant influence due to contractual arrangements or legal circumstances.
Other investments11
Germany (3 companies)
Erlapolis 20 GmbH, Munich
Consolidated Financial Statements
Equity
interest
1004,5
Net income
in millions
of €
in millions
of €
1004,5
(1)
(1)
Equity
6 Significant influence due to contractual arrangements or legal circumstances.
Prof. Dr. Ralf P. Thomas
8 Not accounted for using the equity method due to immateriality.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of management and the Supervisory Board for the consolidated financial statements and the
group management report
Management is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSS
as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as with full IFRSS
as issued by the IASB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of
the assets, liabilities, financial position and financial performance of the Group. In addition, management is responsible for such internal
control as management has determined necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going
concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative but to do so.
Furthermore, management is responsible for the preparation of the group management report that, as a whole, provides an appropriate
view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German
legal requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible
for such arrangements and measures (systems) as management has considered necessary to enable the preparation of a group
management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate
evidence for the assertions in the group management report.
The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial
statements and of the group management report.
5
Independent Auditor's Report (Group)
Auditor's responsibilities for the audit of the consolidated financial statements and of the group
management report
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the
Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the
audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the group management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements and this group management report.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
•
•
Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems.
• Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
and related disclosures.
⚫ otherwise appears to be materially misstated.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report
to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are
inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in
the audit, or
•
In order to assess measurement and completeness, we also obtained confirmations from external tax advisors. Further, we evaluated
management's assessments with respect to the prospects of success of appeal and tax court proceedings by inquiring of the employees of
the Siemens tax department and by considering current tax case law.
In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
strategies and projected future taxable income, also in view of the implications of the COVID-19 pandemic, and compared them to internal
business plans. In the course of our audit procedures regarding deferred tax liabilities, we examined in particular the assumptions regarding
reinvestment of subsidiaries' retained profits for an indefinite period and assessed these taking into account dividend planning.
Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and deferred taxes.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
to disclosures for deferred tax assets and liabilities, refer to Note 7 Income taxes in the notes to the consolidated financial statements.
Other information
The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2021 within the meaning of ISA [DE]
720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
Corporate Governance Statement referred to above. In addition, the other information comprises parts to be included in the Annual Report,
of which we received a version prior to issuing this auditor's report, in particular:
•
•
•
the Responsibility Statement (to the Consolidated Financial Statements and the Group Management Report),
the Responsibility Statement (to the Annual Financial Statements and the Management Report),
the Five-Year Summary,
•
the Compensation Report,
the Report of the Supervisory Board,
• Notes and forward-looking statements,
but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
report whose content is audited and not our auditor's reports thereon.
Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and
consequently we do not express an opinion or any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
Independent Auditor's Report (Group)
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial
statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance
with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as
with full IFRSS as issued by the IASB.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our opinions.
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
throughout the assurance work. We also:
.
•
Identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
a basis for our assurance opinion.
Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
controls.
• Evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
specification for this file.
• Evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited consolidated financial
statements and to the audited group management report.
•
Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Arts.
4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an
appropriate and complete machine-readable XBRL copy of the XHTML rendering.
Further information pursuant to Art. 10 of the EU Audit Regulation
We were elected as group auditor by the Annual Shareholders' Meeting on February 3, 2021. We were engaged by the Supervisory Board
on February 3, 2021. We have been the group auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October
1, 2008 to September 30, 2009.
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
to Art. 11 of the EU Audit Regulation (long-form audit report).
Other matter - use of the auditor's report
Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management
report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the
ESEF format - including the versions to be published in the Bundesanzeiger [German Federal Gazette] ― are merely electronic renderings
of the audited consolidated financial statements and the audited group management report and do not take their place. In particular, the
ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available
in electronic form.
7
The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
Group auditor's responsibilities for the assurance work on the ESEF documents
•
In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
electronic reporting format.
Responsibilities of management and the Supervisory Board for the ESEF documents
• Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law,
and the view of the Group's position it provides.
•
Perform audit procedures on the prospective information presented by management in the group management report. On the basis of
sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
applicable, the related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public disclosure about the matter.
Other legal and regulatory requirements
Report on the assurance on the electronic rendering of the consolidated financial statements and the group
management report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
Opinion
We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the file
SIEMENS 2021.zip (SHA-256 checksum: c2fee878a23005add85c87b5f4a7cf3e7883b81d2626892870c12ff3d2a977f8) and prepared for
publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting format ("ESEF
6
Independent Auditor's Report (Group)
format"). In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained
in the consolidated financial statements and the group management report into the ESEF format and therefore relates neither to the
information contained within these renderings nor to any other information contained in the file identified above.
In our opinion, the rendering of the consolidated financial statements and the group management report contained in the file identified
above and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
reporting format. Beyond this assurance opinion and our audit opinions on the accompanying consolidated financial statements and the
accompanying group management report for the fiscal year from October 1, 2020 to September 30, 2021 contained in the "Report on the
audit of the consolidated financial statements and of the group management report" above, we do not express any assurance opinion on
the information contained within these renderings or on the other information contained in the file identified above.
Basis for the opinion
We conducted our assurance work on the rendering, of the consolidated financial statements and the group management report contained
in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering
of Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410)
and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described
in the "Group auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard
on Quality Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
Management is responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial
statements and the group management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the
consolidated financial statements in accordance with Sec. 328 (1) Sentence 4 No. 2 HGB.
7 Not consolidated due to immateriality.
4
Reasons why the matter was determined to be a key audit matter: Siemens operates in numerous countries with different local tax
legislation. The accounting for uncertain tax positions as well as deferred taxes requires management to exercise considerable judgment
and make estimates and assumptions, and was therefore a key audit matter. In particular, this affects the measurement and completeness
of uncertain tax positions, the recoverability of deferred tax assets, the measurement and completeness of deferred tax liabilities as well
as management's assessments regarding the tax implications of the COVID-19 pandemic.
Munich, November 30, 2021
Siemens Aktiengesellschaft
The Managing Board
Dr. Roland Busch
Cedrik Neike
Matthias Rebellius
Judith Wiese
2
Independent
Auditor's Report
TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
GROUP MANAGEMENT REPORT FOR FISCAL 2021
SIEMENS
Independent Auditor's Report (Group)
To Siemens Aktiengesellschaft, Berlin and Munich
Report on the audit of the consolidated financial statements and of the group management
report
Opinions
To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has
been combined with the Management Report for Siemens Aktiengesellschaft, includes a fair review of the development and performance
of the business and the position of the Group, together with a description of the material opportunities and risks associated with the
expected development of the Group.
We have audited the consolidated financial statements of Siemens Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the Group),
which comprise the consolidated statements of income and comprehensive income for the fiscal year from October 1, 2020 to September
30, 2021, the consolidated statements of financial position as of September 30, 2021, the consolidated statements of cash flows and
changes in equity for the fiscal year from October 1, 2020 to September 30, 2021, and notes to the consolidated financial statements,
including a summary of significant accounting policies. In addition, we have audited the group management report of Siemens
Aktiengesellschaft, which is combined with the management report of Siemens Aktiengesellschaft, for the fiscal year from October 1,
2020 to September 30, 2021. In accordance with the German legal requirements, we have not audited the content of the Corporate
Governance Statement which is published on the website stated in the combined management report.
Responsibility Statement (Group)
TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
GROUP MANAGEMENT REPORT FOR FISCAL 2021
⁹ Exemption pursuant to Section 264 b German Commercial Code.
10 Exemption pursuant to Section 264 (3) German Commercial Code.
11 Values according to the latest available local GAAP financial statements; the underlying fiscal year may differ from the Siemens fiscal year.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
n/a = No financial data available.
205
(4)
7
8
65
395
60
60
Responsibility Statement
SIEMENS
Auditor's response: With the assistance of internal tax specialists who have knowledge of relevant local tax law, we examined the
processes installed by management for the identification, recognition and measurement of tax positions. In the course of our audit
procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax implications of significant
business transactions or events in fiscal year 2021, which could result in uncertain tax positions or influence the measurement of existing
uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising from the results of tax field
audits, the acquisition or disposal of company shares, corporate (intragroup) restructuring activities and cross-border matters, such as the
determination of transfer prices.
.
the accompanying consolidated financial statements comply, in all material respects, with the International Financial Reporting
Standards (IFRSs) as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to
Sec. 315e (1) HGB ["Handelsgesetzbuch”: German Commercial Code] as well as with full IFRSS as issued by the International Accounting
Standards Board (IASB), and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial
position of the Group as of September 30, 2021 and of its financial performance for the fiscal year from October 1, 2020 to September
30, 2021, and
Auditor's response: As part of our audit, we obtained an understanding of the Group's internally established methods, processes and
control mechanisms for project management in the bid and execution phase of construction-type contracts. In this regard, we assessed
the design and operating effectiveness of the accounting-related internal controls in the project business by obtaining an understanding
of business transactions specific to construction-type contracts, from the initiation of the transaction through presentation in the
consolidated financial statements. We also tested controls addressing the timely assessment of changes in cost estimates and the timely
and complete recognition of such changes in the project calculation.
As part of our substantive audit procedures, which particularly involved project reviews, we evaluated management's estimates and
assumptions based on a risk-based selection of a sample of contracts. Our sample primarily included projects that are subject to significant
future uncertainties and risks, such as projects with complex safety/technical and regulatory requirements or projects with a large portion
of materials and services to be provided by suppliers or consortium partners, fixed-price or turnkey projects, cross-border projects, projects
in regions particularly affected by the COVID-19 pandemic and projects with changes in cost estimates, delays and/or low or negative
margins. Our audit procedures included, among others, review of the contracts and their terms and conditions including contractually
agreed partial deliveries and services, termination rights, penalties for delay and breach of contract, liquidated damages as well as joint
and several liability. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects, we analyzed
revenues attributable to the fiscal year and corresponding cost of sales to be recognized in the statement of income considering the extent
of progress towards completion and examined the accounting for the associated items in the statement of financial position. Considering
the requirements of IFRS 15, we also assessed the accounting for contract amendments or contractually agreed options. We further
performed inquiries of project management (both commercial and technical project managers) with respect to the development of the
projects including the effects of COVID-19 on project execution, the reasons for deviations between planned and actual costs, the current
estimated costs to complete the projects, and management's assessments on probabilities that contract risks and claims from joint and
several liability will materialize. To identify anomalies in the development of margins and other project KPIs, we also applied data analysis
procedures. In designing our audit procedures, we also considered results from project audits conducted by the internal audit function.
Furthermore, we obtained evidence from third parties for selected projects (e.g., project acceptance documentation, contractual terms
and conditions, and lawyers' confirmations regarding alleged breaches of contract and asserted claims).
3
Independent Auditor's Report (Group)
Due to the large contract volume and risk profile, our audit procedures focused on large contracts for delivery of high-speed and commuter
trains.
Our audit procedures did not lead to any reservations relating to revenue recognition on construction-type contracts.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for construction-type
contracts, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
statements. With respect to contract assets and liabilities as well as provisions for order related losses and risks, refer to Note 10 Contract
assets and liabilities, Note 18 Provisions and Note 21 Commitments and contingencies in the notes to the consolidated financial
statements.
Provisions for proceedings out of or in connection with alleged compliance violations as well as provisions for asset retirement
obligations
Reasons why the matter was determined to be a key audit matter: We considered the accounting for provisions for proceedings out
of or in connection with alleged compliance violations, including allegations of corruption and antitrust violations, and for asset retirement
obligations to be a key audit matter. These matters are subject to inherent uncertainties and require estimates that could have a significant
impact on the recognition and measurement of the respective provision and, accordingly, on assets, liabilities and financial performance.
The proceedings out of or in connection with alleged compliance violations are subject to uncertainties because they involve complex
legal issues and accordingly, considerable management judgment, in particular when determining whether and in what amount a
provision is required to account for the risks. The uncertainties and estimates with respect to asset retirement obligations pertain especially
to the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport to the final nuclear
waste storage facility.
Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
determine what potentially significant pending legal proceedings or claims asserted are known and to assess management's estimates of
the expected cash outflows, our audit procedures included inquiring of management and other persons within the Group entrusted with
these matters, obtaining written statements from in-house legal counsels with respect to the assessment of estimated cash outflows and
their probability, obtaining confirmations from external legal advisors and evaluating internal statements concerning the accounting
treatment in the consolidated financial statements. Furthermore, we examined legal consulting expense accounts for any indications of
legal matters not yet considered.
We further considered alleged or substantiated non-compliance with legal provisions, official regulations and internal company policies
(compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements from external
legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and
results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed
on this basis whether management's evaluation of any risks to be accounted for in the consolidated financial statements is plausible.
Based on the aforementioned uncertainties, our audit procedures with respect to asset retirement obligations focused on the remediation
and environmental protection liabilities in connection with the decommissioning of the facilities in Hanau, Germany (Hanau facilities), as
well as for the nuclear research and service center in Karlstein, Germany (Karlstein facilities). Our audit procedures included, among others,
assessing the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport to the final
nuclear waste storage facility, and the valuation methods used by drawing on the expertise of our valuation specialists. We evaluated
management's assessments, particularly regarding the accounting effects of the contractually agreed transfer of the nuclear waste disposal
obligation to the Federal Republic of Germany, which is still subject to the approval of the EU commission under state-aid-rules, and the
expected costs to fulfill the obligations remaining with Siemens through inquiries of persons entrusted with the matter and inspections of
internal and external documents.
Furthermore, we evaluated the disclosures on proceedings out of or in connection with alleged compliance violations as well as on asset
retirement obligations in the notes to the consolidated financial statements.
Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
compliance violations as well as for asset retirement obligations.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for provisions, refer to
Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
to proceedings out of or in connection with alleged compliance violations, refer to Note 22 Legal proceedings. With respect to the
uncertainties and estimates relating to asset retirement obligations, refer to Note 18 Provisions of the notes to the consolidated financial
statements.
Uncertain tax positions and deferred taxes
Reasons why the matter was determined to be a key audit matter: The Group conducts a significant portion of its business under
construction-type contracts, particularly in the Mobility business. Revenue from long-term construction-type contracts is recognized in
accordance with IFRS 15, Revenue from Contracts with Customers, generally over time under the percentage-of-completion method. We
consider the accounting for construction-type contracts to be an area posing a significant risk of material misstatement (including the
potential risk of management override of internal controls) and accordingly a key audit matter, because management's assessments
significantly impact the determination of the extent of progress towards completion. These assessments include, in particular, the scope
of deliveries and services required to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion
and total estimated contract revenues, as well as contract risks including technical, political, regulatory and legal risks. Revenues, total
estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge about cost
overruns and changes in project scope over the term of a construction-type contract. The effects of the coronavirus pandemic (COVID-19)
on the project business, such as delays in project execution or disruptions in supply chains as well as change in law clauses with regard to
compensation for damages or contractual penalties for delays in delivery and their accounting treatment remained of key significance for
our audit.
In our opinion, on the basis of the knowledge obtained in the audit,
Revenue recognition on construction-type contracts
Our audit procedures did not lead to any reservations relating to the accounting for the acquisition of Varian.
⚫ the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects,
this group management report is consistent with the consolidated financial statements, complies with German legal requirements and
appropriately presents the opportunities and risks of future development. Our opinion on the group management report does not cover
the content of the Corporate Governance Statement referred to above.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
consolidated financial statements and of the group management report.
Basis for the opinions
We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB
and the EU Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). In conducting the audit of the consolidated financial statements we also complied with International Standards on
Auditing (ISA). Our responsibilities under those requirements, principles and standards are further described in the "Auditor's
responsibilities for the audit of the consolidated financial statements and of the group management report" section of our auditor's report.
We are independent of the group entities in accordance with the requirements of European law and German commercial and professional
law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance
with Art. 10 (2) f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions
on the consolidated financial statements and on the group management report.
Key audit matters in the audit of the consolidated financial statements
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements for the fiscal year from October 1, 2020 to September 30, 2021. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these
matters.
Below, we describe what we consider to be the key audit matters:
Accounting for the acquisition of Varian
Reasons why the matter was determined to be a key audit matter: The acquisition of Varian Medical Systems, Inc., USA (Varian), was
completed on April 15, 2021. Since then, Siemens AG indirectly holds all the shares in Varian via its subsidiary Siemens Healthineers AG.
The acquisition was accounted for in accordance with IFRS 3, Business Combinations, on the basis of a preliminary purchase price
allocation. To finance the acquisition, a further capital increase was carried out at the level of Siemens Healthineers AG in fiscal year 2021
by issuing new shares, resulting in an increase of non-controlling interests in the Siemens consolidated financial statements. Furthermore,
the Group issued bonds denominated in US dollars to finance the transaction. To hedge foreign currency risks in connection with the
acquisition and its financing, the Group entered into hedging transactions which were designated as hedging instruments in hedging
relationships.
The accounting for the acquisition, including financing and hedging of foreign currency risks, was a key audit matter due to the estimation
uncertainties and judgments involved in the preliminary purchase price allocation (particularly regarding the measurement of acquired
intangible assets) and due to the overall significant impact on the assets, liabilities, financial position and financial performance of the
Group, the complexity of the transaction and the associated significant risk of material misstatement.
Auditor's response: Our audit procedures in relation to the preliminary purchase price allocation included the assessment of the
consideration transferred by Siemens and an evaluation of the methodology applied by the external appraiser engaged by management
with respect to the identification and valuation of the assets acquired and liabilities assumed in accordance with the requirements of IFRS
2
Independent Auditor's Report (Group)
3. We assessed the suitability of the preliminary external appraisal as audit evidence, among other things, through inquiries of
management as well as of the external appraiser. With the assistance of internal valuation specialists, we also analyzed whether the
assumptions and estimates (particularly growth rates, cost of capital, royalty rates and remaining useful lives) used in determining the fair
values of the identifiable assets acquired (particularly the acquired customer relationships and trade names as well as technologies) and
liabilities assumed correspond to general and industry-specific market expectations. In addition, we used the expertise of internal industry
specialists for the assessment of the recognition and valuation of identified intangible assets and liabilities assumed. Further, we
reperformed the calculations in the valuation models and reconciled the expected future cash flows underlying the valuations with, inter
alia, internal business plans. As part of our audit procedures, we also assessed the earnings effects in fiscal year 2021 resulting from the
subsequent accounting for assets acquired and liabilities assumed, particularly taking into account the remaining useful lives of the
acquired assets. As part of our audit of the accounting for the capital increase, we compared the change in equity with the underlying
resolutions of the Managing Board and the Supervisory Board of Siemens Healthineers, the register entries as well as other contractual
agreements with third parties. For the bonds issued, we compared the recognized amounts with the respective underlying contractual
agreements. With regard to the accounting for hedging relationships we assessed whether the requirements for hedge accounting in
accordance with IFRS 9, Financial Instruments, were satisfied based on the documentation prepared by management and the underlying
contractual agreements. We also assessed the accounting for hedging relationships and reconciled the amounts with the respective line
items in the consolidated statement of financial position, consolidated statement of income and consolidated statement of comprehensive
income. In this context, we further assessed the methodology applied to determine the fair values of hedging instruments and the clerical
accuracy of the respective calculations.
Furthermore, we assessed the application of uniform accounting policies, tax effects resulting from the acquisition and the accounting for
the first-time consolidation of the Varian entities in the consolidation system. In addition, we assessed the acquisition-related disclosures
(including financing and hedging) in the notes to the consolidated financial statements taking into account the respective IFRS
requirements.
Reference to related disclosures: With regard to the accounting and measurement policies applied in connection with the business
combination, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
statements. An explanation of the transaction including the related financing and hedging transactions as well as disclosures on the
preliminary purchase price allocation is included in Note 3 Acquisitions, dispositions and discontinued operations, Note 16 Debt and Note
24 Derivative financial instruments and hedging activities in the notes to the consolidated financial statements.
Identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
12,694
75,999
Issued capital
Capital reserve
Other retained earnings
Unappropriated net income
Special reserve with an equity portion
15
2,550
2,550
(143)
(152)
2,407
2,398
8,289
8,156
7,119
5,387
3,400
3,592
17
Other provisions
628
Provisions for taxes
12,372
Treasury shares
16
Provisions
619
541
18,917
21,216
2,975
Provisions for pensions and similar commitments
Subscribed capital¹
Shareholders' equity
Shareholders' equity and liabilities
1,583
17,564
1,442
1,696
12
863
1,937
949
(986)
1,869
1,934
11
75,999
75,920
(1,005)
16,592
20,844
215
2,082
102,975
101,487
85
51
14
1,034
16,074
1,243
133
184
25,724
24,089
8,351
435
13
74,877
11,700
636
3,687
16,023
18
3 to 8 years
mostly 3 to 5 years
Special reserve with an equity portion includes reserves pursuant to Section 6b of the German Income Tax Act
(Einkommensteuergesetz), recognized and transferred in fiscal years prior to the transition to regulations of the German Accounting Law
Modernisation Act (Bilanzrechtsmodernisierungsgesetz).
Financial assets: Impairment losses are recognized if the decline in value is presumed to be other than temporary. This applies, if objective
evidence, particularly events or changes in circumstances, indicate a significant or other than temporary decline in value. In case of an
impairment in prior periods, a lower recognized value may not be maintained if the reasons for the impairment do no longer exist.
Inventories are measured at the lower of average acquisition or production costs and daily values. Production costs comprise, in addition
to direct costs, an appropriate portion of production and material overheads and depreciation of property, plant and equipment. General
administration expenses, expenses for social facilities, voluntary social costs and company pension scheme costs are not capitalized. Write-
downs are recorded to cover inventory risks for reduced usability and technological obsolescence as well as in the context of loss-free
valuation of unbilled contracts in construction-type and service businesses.
Allowances on receivables are determined on the basis of the probability of default and country risks.
Deferred tax assets for differences between valuations of balance sheet line items in accordance to commercial and tax law and tax loss
carryforwards are recognized if a future tax benefit is expected. Deferred tax assets are netted with deferred tax liabilities. Recognized
deferred tax assets and liabilities comprise temporary differences of assets, liabilities, and deferred items of entities forming part of the
Siemens AG tax group and partnerships to the extent that the recovery or settlement of the carrying amount of assets, liabilities, or deferred
items result in a deductible or taxable amount in the taxable profit (loss) of Siemens AG.
Offsetting of assets and of income and expenses: Siemens AG measures assets at fair value that are designated as being held exclusively
to settle specified pension obligations and obligations for early retirement ("Altersteilzeit") arrangements and which cannot be accessed
by other creditors. Income and expenses relating to these designated assets are offset against the expenses arising from compounding
the corresponding obligations and are reported within the line item Other financial income (expenses), net.
Pensions and similar commitments: Siemens AG measures its pension obligations using the settlement amount calculated with the
actuarial projected unit credit method on the basis of biometric probabilities. The discount rate used corresponds to the average market
interest rate for instruments with an assumed remaining maturity of 15 years as published by German Federal Reserve Bank (Deutsche
Bundesbank).
5
Annual Financial Statements
Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
assets at the balance sheet date. If the performance of the underlying assets is lower than a guaranteed return, the pension provision is
measured by projecting forward the contributions at the guaranteed fixed return and discounting to a present value.
According to the Act on the Improvement of Company Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung), Siemens
AG is secondarily liable for pension benefits provided under an indirect pension funding vehicle (mittelbarer Durchführungsweg). Siemens
AG recognizes the underfunding in the item Provisions for pensions and similar commitments as far as the respective assets of the pension
fund or of the pension and support fund (Pensions- und Unterstützungskasse) do not cover the settlement amount of the respective
pension obligations.
Other provisions are recognized in an appropriate and sufficient amount to cover individual obligations for all identifiable risks relating
to liabilities of uncertain timing and amount and for anticipated losses on onerous contracts, taking account of price and cost increases
expected to arise in the future. Provisions for agreed personnel restructuring measures were recognized for legal and constructive
obligations. Significant provisions with a remaining term of more than one year are discounted using a discount rate which corresponds
to the average market interest rate appropriate for the remaining term of the obligations, as calculated and published by Deutsche
Bundesbank.
Foreign currency translation: Receivables, other current assets, securities, cash and cash equivalents, provisions and liabilities (excluding
advance payments received on orders) as well as commitments and contingencies denominated in foreign currency are generally
measured applying the mean spot exchange rate on the balance sheet date. Balance Sheet line items denominated in foreign currency
which are part of a valuation unit used to hedge foreign currency risk are measured using the mean spot exchange rate on the transaction
date. Non-current assets and inventories acquired in foreign currency are generally measured applying the mean spot exchange rate on
the transaction date.
Guarantees and other commitments: Siemens AG issues parent company guarantees, i.e. guarantees to ensure performance obligations
incurred from the delivery of goods or provision of services by affiliated and long-term investee companies or their parent companies. For
measurement purposes, the contract amount of the secured delivery or service agreement is reduced using the straight-line method over
the planned term of the delivery or service agreement, unless there are reasons for a different risk assessment and an increased liability
amount ("risk-adequate liability amount"). Credit lines included in the guarantee obligations in the context of financing affiliated
companies are recognized at their nominal amount.
Derivative financial instruments are used by Siemens AG almost exclusively for hedging purposes and - if the relevant conditions are
met- are aggregated with the underlying hedged item into valuation units. When a valuation unit is created, changes in values or cash
flows from the hedged item and hedging contract are compared. A provision is recognized only for a negative surplus from the ineffective
part of the market value changes. The unrealized gains and losses from the effective part offset each other completely and are not
recognized in the Balance Sheet or the Income Statement.
Classification of items in the annual financial statements: Siemens AG aggregates individual line items of the Income Statement and
Balance Sheet if the individual line item is not material for providing a true and fair view of the Company's financial position and if such
an aggregation improves the clarity of the presentation. Siemens AG discloses these items separately in the notes.
The business and economic environment continues to be affected by the coronavirus pandemic (COVID-19). Due to the spread of the
virus, it is difficult to predict the duration and extent of the resulting impact on Siemens AG's assets, provisions, liabilities and results.
However, the Company does not anticipate that COVID-19-related effects will have a material impact on the financial statements.
Revenue
Asia, Australia
Americas
Europe, C.I.S., Africa, Middle East
(in millions of €)
Revenue by region
20 to 50 years
5 to 10 years
mostly 10 years
Revenue
Smart Infrastructure
Digital Industry
(in millions of €)
Revenue by lines of business
NOTE 1 Revenue
3.3 Notes to the Income Statement
Other revenue
Other equipment, plant and office equipment
Equipment leased to others
Technical equipment and machines
Other buildings
1,632
1,293
62,890
249
1 Conditional Capital as of September 30, 2021 and 2020 amounted to €421 million and €421 million, respectively.
Total shareholders' equity and liabilities
Deferred income
63,638
67,145
58,985
2,111
501
Other liabilities
Liabilities to affiliated companies
Trade payables
Liabilities to banks
98
1,777
Liabilities
271
102,975
Factory and office buildings
Useful lives of property, plant and equipment
Property, plant and equipment: The components of production costs are described in the context of the explanations for inventories. In
general, property, plant and equipment is depreciated using the straight-line method. In certain cases, the declining balance method is
applied, whereby a switch is made from the declining balance to the straight-line method as soon as the latter results in higher depreciation
expense. Items are depreciated on a pro rata temporis basis in the year of acquisition. Low-value non-current assets that are subject to
wear and tear, movable, and capable of being used independently, are expensed immediately or capitalized and fully depreciated in the
year of acquisition.
Acquired goodwill is generally amortized systematically over the expected useful life of five to 15 years. The expected useful life is based
on the expected use of the acquired businesses and is determined in particular by economic factors such as future growth and profit
expectations, synergy effects and employee base.
Intangible assets acquired for consideration are capitalized at acquisition costs and amortized on a straight-line basis over a maximum of
five years or, if longer, the contractually agreed useful life. Items are amortized on a pro rata temporis basis in the year of acquisition. The
capitalization option for internally generated intangible assets is not used.
Negative interest from financial investments is presented as a deduction in interest income, and positive interest from borrowings as a
deduction in interest expenses.
101,487
Revenue are proceeds from selling and leasing products, providing services and granting licenses, including licensing contracts for the
use of the Siemens trademark.
The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). Amounts are presented in
millions of euros (€ million). Due to rounding, numbers presented may not add up precisely to totals provided.
Siemens AG has registered offices in Berlin and Munich, Germany. The Company is registered in the commercial register maintained by
the local courts in Berlin Charlottenburg, Germany, under the entry number HRB 12300, and in Munich, Germany, under the entry number
HRB 6684.
3.1 General Disclosures
|| 3. Notes to Annual Financial Statements
Annual Financial Statements
4
3.2 Accounting and Measurement Principles
74,852
897
876
Selling expenses
General administrative expenses
Other operating income
Note
2021
2020
1
15,094
16,389
(10,960)
(12,032)
4,135
4,357
(1,570)
(1,677)
(1,999)
(2,131)
3
Income (loss) from investments, net
(1,365)
(631)
Income (loss) from operations
(757)
Research and development expenses
(475)
Other operating expenses
202
279
2
(1,359)
(1,001)
2
Gross profit
Cost of sales
Revenue
Annual Financial
Statements*
8
00
Independent Auditor's Report (Group)
Dr. Gaenslen
Wirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
FOR FISCAL 2021
Wirtschaftsprüferin
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, November 30, 2021
The German Public Auditor responsible for the engagement is Katharina Breitsameter.
German Public Auditor responsible for the engagement
9
Breitsameter
5,303
* This document is an English language translation of the decisive German version and is not provided in
the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
language with the operator of the German Federal Gazette and published in the German Federal Gazette.
Table of contents
(in millions of €)
Fiscal year
Annual Financial Statements
1. Income Statement
Notes
3.
SIEMENS
5
2.
4
Income Statement
1.
3
Annual Financial Statements
Balance Sheet
8,078
Interest income
4
Advance payments received
Inventories
Current assets
Financial assets
Property, plant and equipment
Intangible assets
Receivables and other assets
Non-current assets
(in millions of €)
2. Balance Sheet
3
2,975
(2,436)
(1,918)
3,400
Assets
141
12,694
(12,694)
Trade receivables
Other receivables and other assets
225
192
10
2020
2021
Note
Receivables from affiliated companies
Sep. 30,
Total assets
Active difference resulting from offsetting
Deferred tax assets
Prepaid expenses
Cash and cash equivalents
Other Securities
Annual Financial Statements
Fiscal year
5,270
27
5
Other financial income (expenses), net
286
395
thereof positive interest from borrowing
(131)
39
137
Interest expenses
(18)
(26)
thereof negative interest from financial investment
411
319
4
5,147
171
(1,800)
5,166
Unappropriated net income
Allocation to other retained earnings
Asset reduction due to spin-off
Profit carried forward
Net income
Appropriation of net income
Income from business activity
5,270
78
(20)
6
Net income
Income taxes
5,192
5,147
2021
Withdrawals from other retained earnings
4,832
(927)
(127)
135
(919)
264
290
Equipment leased to others
164
7
(6)
165
(95)
(11)
4
(101)
64
69
73
64
(211)
(2,275)
3,165
(205)
1,183
199
64
(1)
(49)
40
73
Advanced payments made and construction in
progress
3,172
(137)
6
98
(7)
(246)
427
(2)
20
17
2
392
Land, land rights and buildings, including
225
192
(336)
88
(42)
buildings on third-party land
197
(252)
146
1,217
Other equipment, plant and office equipment
318
310
(1,016)
56
175
(65)
1,326
(59)
23
37
1,326
Technical equipment and machinery
(1,008)
(382)
(2,289)
897
5,450
1,202
(4,933)
1,718
(24)
24
1,718
5,426
78,133
12,450
(12,063)
78,520
(3,255)
(770)
36
321
(3,668)
75,920
8,176
(6,293)
606
37
(1,023)
Securities
(5,912)
(12,356)
12,659
81,911
Non-current assets
74,877
74,852
82,213
3,561
3,746
(701)
(441)
(1,154)
64,786
7,570
(1,324)
(285)
282
32
8,896
285
9,738
59,672
Shares in investments
Shares in affiliated companies
Financial assets
(4,910)
876
81
58,517
4
(151)
(554)
4,447
(897)
1,229
63,304
4,115
7,373
6,084
(1,485)
216
(178)
(1,523)
Loans
528
(1,482)
119
Fiscal year
NOTE 5 Other financial income (expenses), net
Interest income from loans of non-current financial assets amounted to €79 (2020: €81) million.
Interest income presented in the income statement included interest income from affiliated companies of €209 (2020: €326) million.
Interest expenses included interest income from borrowing from affiliated companies of €166 (2020: interest expenses from borrowing
of €88) million.
NOTE 4 Interest income and interest expenses
Gains from the disposal of investments included gains from the disposal of Flender GmbH, Germany, amounting to €875 million, of Kyros
Beteiligungsverwaltung GmbH, Germany, amounting to €411 million and of BSAV Kapitalbeteiligungen und Vermögensverwaltungs
Management GmbH, Germany, amounting to €301 million.
(in millions of €)
Income from investments included in particular profit distributions from Siemens Ltd., China, amounting to €1,331 million, from Siemens
Holdings plc., United Kingdom, amounting to €698 million and from Siemens Healthineers AG, Germany, amounting to €534 million.
Income from profit transfer agreements with affiliated companies included profit transfers from Siemens Beteiligungen Inland GmbH,
Germany, amounting to €307 million.
5,303
(21)
(39)
2,452
1,724
664
8,078
32
H2021
Interest component of changes in the pension provisions that are not offset against designated plan assets
39
(895)
(132)
(277)
(206)
218
2020
1,424
(31)
11
assets
Financial income (expenses), (net) relating to the pension and personnel-related provisions that are offset against designated plan
(815)
(1,058)
Other financial income
(1,800)
(1,646)
(6)
Other operating expenses included expenses of €191 million for an intragroup service contract and expenses of €109 million for the
recognition of a provision related to guarantees and expected obligations from consortium contracts.
Other operating income included income of €171 million from the release of a provision related to an investment and income from the
release of the special reserve with an equity portion of €78 (2020: €49) million.
NOTE 2 Other operating income and expenses
Annual Financial Statements
6
15,094
NOTE 3 Income (loss) from investments, net
2,529
11,507
2021
Fiscal year
(88)
15,094
2,086
1,058
(619)
(in millions of €)
thereof from affiliated companies
(4)
1,968
610
4,655
3,534
3,599
Income from investments
2020
Fiscal year
Gains from the disposal of investments
Losses from the disposal of investments
Income from investments, net
Reversals of impairments on investments
Impairments on investments
Expenses from loss transfers from affiliated companies
Income from profit transfer agreements with affiliated companies
2021
Other financial expenses
4,666
Financial income (expenses), net relating to the pension and personnel-related provisions that are offset against designated plan assets
represented a net amount from offset income totaling €57 (2020: €18) million and expenses totaling €46 (2020: €50) million.
Other financial income resulted from gains from non-current securities, in fiscal 2021 primarily from the transfer of investment funds to
SPT Beteiligungen GmbH & Co. KG, totaling €692 (2020: €186) million, the release of provisions for risks relating to derivative financial
instruments totaling €213 (2020: expenses of €48) million, from derivative instruments related to interest rate hedging totaling €312
(2020: expenses of €10) million, and from derivative financial instruments related to foreign currency hedging amounting to €197 (2020:
expenses of €176) million.
Sep 30, 2021
Sep 30, 2021
Disposals
Carrying amount
Accumulated depreciation/amortization
Annual Financial Statements
Sep 30, 2020
Property, plant and equipment
606
203
10
404
Concessions and industrial property rights
Goodwill
Disposals
10
Reclassifi-
cations
Sep 30, 2021
Depreciation/
amortization
(16)
Impairments and reversal of impairments of loans and securities of non-current and current assets
Other financial income (expenses), net
103
(84)
203
106
(100)
89
88
(26)
(298)
325
(88)
Write-ups
(236)
Additions
Oct 01, 2020
Acquisition or production costs
204
209
(126)
(229)
2020
2021
(20)
Annual Financial Statements
Income tax expenses
Deferred taxes
(in millions of €)
NOTE 6 Income taxes
7
Oct 01, 2020
Impairments and reversal of impairments of loans and securities of non-current and current assets included an impairment of €149 million
of a long-term loan related to an investment.
Income taxes
78
Fiscal year
Income tax expenses resulted primarily from foreign withholding taxes as well as from expenses for previous years from the completion
of a tax audit. Tax income from the remedy of appeals filed had an offsetting effect.
Intangible assets
(in millions of €)
NOTE 10 Non-current assets
3.4 Notes to the Balance Sheet
8
00
Other financial expenses included expenses from monetary balance sheet items denominated in foreign currencies totaling €186 (2020:
income of €32) million. In addition, the position included expenses from compounding of other provisions amounting to €18 (2020: €33)
million.
NOTE 9 Income and expenses relating to prior periods
The use of tax incentives had a positive effect on net income of €78 million.
NOTE 8 Impact of tax regulations on net income
Other taxes of €16 (2020: €16) million were included in functional costs.
NOTE 7 Other taxes
The income statement of Siemens AG included expenses and income relating to prior periods of €253 million and €512 million,
respectively. Expenses relating to prior periods included tax expenses related to the completion of a tax audit. Income relating to prior
periods resulted mainly from the release of provisions as well as tax income, particularly related to the remedy of appeals filed.
Deferred taxes included income from the increase of deferred tax assets related to pension provisions.
2021
Fiscal year
NOTE 20 Personnel expenses
Material expenses
Costs of purchased services
Expenses for raw materials, supplies and purchased merchandise
(in millions of €)
NOTE 19 Material expenses
3.5 Other disclosures
8,756
3,163
55,226
67,145
62,890
5,377
55,844
231
231
Liabilities to affiliated companies resulted primarily from intragroup-financing activities.
1,669
Expenses for pensions
(4,713)
(6,168)
(5,624)
Personnel expenses did not include the expenses resulting from the compounding of the pension and personnel-related provisions, which
are included in other financial income (expenses), net.
Personnel expenses
(437)
(738)
(657)
(383)
Social security contributions and expenses for other employee benefits
(4,993)
(4,584)
2020
Fiscal year
2021
Wages and salaries
(in millions of €)
(8,510)
(7,722)
(3,211)
(3,009)
(5,299)
2020
209
39
39
52,047
58,985
69
1,708
1,777
2,072
2,111
98
98
501
501
thereof
maturities
more than
5 years
1 year up
to 5 years
up to
1 year
Sep 30,
2020
thereof
maturities
more than
5 years
13
up to 1
year
1 year up
to 5 years
5,270
1,669
63,638
51,802
39
50
14
1,618
1,632
68
1,220
1,288
50
1
209
1
5
14
1,619
1,632
68
1,224
1,293
3,163
8,674
5
The breakdown of employees per function is as follows:
Money market funds
Sales
Share-based funds
Bond-based funds
Mixed funds
(in million of €)
The following shares in investment funds according to investment objects were held:
NOTE 22 Shares in investment funds
14
±
737,581
The pro rata intrinsic value of all matching shares issued to beneficiaries of Siemens AG amounted to €64 million.
Outstanding, end of fiscal year
4,975
(20,289)
(36,845)
(268,767)
314,473
744,034
2021
Fiscal year
Shares in investment assets according to investment objects
Organizational changes
Annual Financial Statements
Deviation
(in millions of €)
2021
NOTE 23 Guarantees and other commitments
Generally, shares in investment funds are accounted for securities held as non-current financial assets. Exceptions were those shares which
represented plan assets and therefor were not accessible by all other creditors. These shares are held exclusively for the purpose of settling
liabilities arising from post-employment obligations or comparable obligations with a long-term maturity, and are to be offset against such
liabilities.
226
2,809
2,583
59
59
37
37
331
331
226
2,383
from carrying
amount
Market value
amount
2,157
Carrying
Sep 30, 2021
Production
Settled
Vested and fulfilled
Granted
Non-vested, beginning of fiscal year
(in number of shares)
The following table shows the changes in the stock awards held by beneficiaries of Siemens AG:
Siemens AG grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
Stock awards to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic value
(= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired
considering the estimated target attainment at the balance sheet date.
Stock Awards
Siemens AG allows employees and members of the Managing Board to participate in share-based payment programs. For the purpose of
servicing share-based payment programs Siemens AG also delivers Siemens shares, which have been granted by affiliated companies.
NOTE 21 Share-based payment
49,500
7,200
7,000
8,300
27,100
2021
Fiscal year
Annual Financial Statements
Employees
Administration and general functions
Research and development
Vested and fulfilled
Forfeited
Forfeited
Change in connection with the adjustment of the ESG target
Granted
Outstanding, beginning of fiscal year
(in number of shares)
The following table shows the changes in the entitlements to matching shares of beneficiaries of Siemens AG:
Matching shares granted to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic
value (= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired at
the balance sheet date.
Plan participants receive the right to one Siemens share without payment (matching share) for every three investment shares continuously
held over a vesting period.
The pro rata intrinsic value of all stock awards issued to beneficiaries of Siemens AG amounted to €288 million at the balance sheet date.
Share Matching Program
4,678,418
114,516
(90,280)
(3,591)
(227,627)
(663,086)
1,402,547
4,145,939
2021
Fiscal year
Non-vested, end of fiscal year
Organizational changes
Settled
Sep 30,
69
2,845
therein for social security
(in millions of €)
NOTE 14 Active difference resulting from offsetting
10
10
For the measurement of deferred taxes, a tax rate of 31.33% was applied. Deviating from this, a tax rate of 15.83% was applied for
temporary differences related to assets, liabilities and prepaid/deferred items of partnerships.
Deferred tax assets resulted mainly from pension provisions and pension-related assets as well as deferred taxes of companies within the
consolidated tax group. Deferred taxes from partnerships had an offsetting effect.
NOTE 13 Deferred tax assets
Receivables from affiliated companies resulted primarily from intragroup-financing activities and included trade receivables totaling €6
(2020: €31) million.
3,084
16,074
4,632
20,844
170
1,936
186
1,582
2
2
170
Fair value of designated plan assets
1,937
Settlement amount for offset pension provisions
Active difference resulting from offsetting
Acquisition cost of designated plan assets
950
51
(287)
(751)
1,089
2021
Sep 30,
Annual Financial Statements
based payments
and employee
share programs
Oct 01, 2020 Share buybacks Issuance of treasury
shares under share-
Subscribed capital
Shareholders' equity
Unappropriated net income
Other retained earnings
Capital reserve
Issued capital
Subscribed capital
Treasury shares
(in millions of €)
NOTE 15 Shareholders' equity
Settlement amount for offset personnel-related provisions
Dividend
for 2020
186
1,442
12,694
thereof from long-term investees
Other receivables and other assets
Receivables from affiliated companies
Trade receivables
(in millions of €)
NOTE 12 Receivables and other assets
Advance payments made
Inventories
Cost of unbilled contracts
Finished products and goods
Work in progress
Raw materials and supplies
(in millions of €)
NOTE 11 Inventories
Total impairments of non-current assets were €772 (2020: €2,193) million.
For the investment in Siemens Energy AG, the market price as of September 30, 2021, was around 11% below the carrying amount of
€5.3 billion. However, the investment is not considered to be permanently impaired due to the unchanged expected value potential.
Loans included loans to affiliated companies amounting to €3,327 (2020: €3,249) million, loans to investments amounting to €43 (2020:
€0) million, and other loans amounting to €375 (2020: €312) million.
Disposals of investments resulted primarily from the sale of shares in Siemens Energy AG held by Siemens Pension-Trust e.V., totaling
€1.0 billion. Proceeds from the sales were also contributed to SPT Beteiligungen GmbH & Co. KG.
Additions and disposals in Shares in affiliated companies and Securities were mainly related to supplemental fundings of Siemens
Pension Trust e.V. as well as to corporate law measures to simplify the investment structure of the pension assets. The additions to Shares
in affiliated companies resulted primarily from the increase in the carrying amount of the shares in SPT Beteiligungen GmbH & Co. KG of
€7.8 billion. This increase was due, on the one hand, from the fair value transfer of investment funds by disclosing unrealized gains of
€4.8 billion, which led to a corresponding disposal in Securities with a carrying amount of €4.1 billion. On the other hand, the additions
included supplemental fundings, including shares in Bentley Systems, Inc. in the amount of €1.0 billion and in Charge Point Holdings, Inc.
in the amount of €0.3 billion as well as zero-coupon receiver swaps in the amount of €0.3 billion. In connection with the contribution of
the shares in Bentley Systems, Inc., there was a corresponding capital reduction at Siemens Beteiligungsverwaltung GmbH & Co. OHG in
the same amount, which resulted in a disposal in Shares in affiliated companies. Also, the intragroup sale of a stake in Atecs Mannesmann
GmbH of €1.1 billion and the sale of Flender GmbH of €1.0 billion to Carlyle Group Inc. were reflected in disposals in Shares in affiliated
companies.
Annual Financial Statements
Obligations from guarantees
thereof other assets
1,583
Receivables and other assets
2021
one year
thereof
maturities
more than
Sep 30, 2020
thereof
maturities
more than
one year
40
4,407
17,564
Sep 30, 2021
1,696
1,869
1,934
73
70
874
856
280
253
238
264
404
491
2020
Sep 30,
Net income
Sep 30, 2021
2,550
As of September 30, 2021, the following information on shareholdings subject to reporting requirements was available to the Company
pursuant to Section 160 para 1 No. 8 German Stock Corporation Act (Aktiengesetz):
Disclosures on shareholdings of Siemens AG
These amounts subject to dividend payout restrictions face other retained earnings in a sufficiently high amount. The unappropriated net
income of €3,400 million is available for distribution.
38
Amounts from the capitalization of assets at fair value
1,243
Amounts from the capitalization of deferred taxes
890
Amount representing the difference of the recognition of provisions and similar commitments based on average interest rates covering ten and
seven years, respectivly
2021
Fiscal Year
(in millions of €)
Information on amounts subject to dividend payout restrictions
In fiscal 2021, Siemens AG re-issued in total 4,022,053 treasury shares under the exclusion of subscription rights in connection with share-
based payments and employee share programs in the Group, equaling a nominal amount of €12 million and 0.5% of the capital stock. The
Company received in total €203 million for 1,729,089 shares, re-issued against payment of a purchase price. Siemens AG received this
amount for unrestricted use. All shares were sold as investment shares in connection with the share matching program to plan participants.
In each case, the purchase price was determined on the basis of the closing rate in Xetra trading, determined on a monthly effective date.
Therefore, in the reporting period, in total 1,199,097 shares related to the monthly investment plan at a weighted average share price of
€130.61 per share, 158,769 shares related to the share matching plan at a weighted average share price of €134.02 per share, and
371,223 shares related to the base share program at a weighted average share price of €67.01 per share (after consideration of a 50%
subsidy by the Company). The other shares re-issued during the reporting period can be primarily attributed to the servicing of stock
awards granted in fiscal 2017 totaling 1,555,044 shares, to 624,480 matching shares under the share matching program for fiscal 2018,
and to 113,440 jubilee shares.
The treasury shares purchased under the share buybacks may be used for purposes of retirement, distribution to employees, members of
the executive bodies of companies affiliated with Siemens and members of the Managing Board, as well as the servicing of convertible
bonds with attached warrants.
On June 24, 2021, Siemens again announced a share buyback with a volume of up to €3 billion in the period from the beginning of fiscal
2022 to 2026. The share buyback, which began on November 15, 2021, will be executed based on the authorizations granted by the
Annual Shareholders' Meeting on February 5, 2021. In addition to the dividend policy, the share buyback is intended to allow shareholders
to continuously participate in the success of the company.
In addition, a final payment of €410 million was made to the executing bank in fiscal 2021, which led to weighted average acquisition
costs of €100.42 per share in relation to the total share buyback from 2018 to 2021 of 29,385,132 shares with a buyback volume including
the final payment of €2,951 million. The final payment was recognized in the balance sheet as a purchase price adjustment against other
retained earnings.
On September 24, 2021, the share buyback announced on November 8, 2018 with a volume of up to €3 billion was completed. The share
buyback, which began on December 3, 2018, was executed in the reporting period based on the authorization granted by the Annual
Shareholders' Meeting on February 5, 2020. In addition to the dividend policy, the share buyback was intended to allow shareholders to
continuously participate in the success of the company. In fiscal 2021, Siemens AG repurchased a total of 976,346 treasury shares under
this share buyback program. This represented a nominal amount of €3 million or 0.1% of capital stock. In this reporting period, €137
million (excluding incidental transaction charges) were spent for this purpose; this represents a weighted average stock price of €140.22
per share. The purchases were made in the reporting period on 228 Xetra trading days and were carried out by a bank that had been
commissioned by Siemens AG; the shares were purchased exclusively on the electronic trading platform of the Frankfurt Stock Exchange
(Xetra). The average volume on these trading days was about 4,282 shares.
Annual Financial Statements
BlackRock, Inc., Wilmington, USA, notified us on April 14, 2021, that its percentage of voting rights (held either directly or indirectly) in
Siemens AG amounted to 6.17% (52,408,410 voting rights) on April 9, 2021.
11
The State of Qatar, Doha, acting by and through the DIC Company Limited, notified us on May 10, 2012, that its percentage of voting
rights (held either directly or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on May 7, 2012
and amounted to 3.04% (27,758,338 voting rights) as per this date.
NOTE 16 Provisions for pensions and similar commitments
therein from taxes
thereof miscellaneous liabilities
thereof to long-term investees
Other liabilities
Liabilities to affiliated companies
Trade payables
Advance payments received
Liabilities to banks
(in million of €)
NOTE 18 Liabilities
In May 2021, Siemens AG and the Federal Republic of Germany entered into a public-law contract based on which the obligation of final
disposal of nuclear waste is transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the
payment is subject to the approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made
to measure the obligations that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as
intermediate storage and transport to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032.
The main amounts in other provisions were contributed by provisions related to personnel costs of €1,271 million, provisions for
decontamination obligations of €496 million, and provisions for onerous contracts from derivative financial instruments amounting to
€422 million.
NOTE 17 Other provisions
The actuarial valuation of the settlement amount of €13,123 million as of September 30, 2021 was based, among others, on a discount
rate of 1.98% and on a rate of pension progression of 1.50% per year, except for the BSAV and deferred compensation plans with 1.00%
per year. The mortality tables used (Siemens Bio 2017/2021) are primarily based on data of the German Siemens population, using a set
of formulas that corresponds to generally accepted actuarial standards.
AG.
Therefore, the assets do not meet the criteria for offsetting against the pension obligation and are presented as financial assets of Siemens
Annual Financial Statements
12
In Germany, Siemens AG provides pension benefits through the BSAV (Beitragsorientierte Siemens Altersversorgung), frozen legacy plans
and deferred compensation plans. The majority of Siemens' active employees participate in the BSAV. The benefits are predominantly
based on nominal contributions by the Company and investment returns on assets designated to that plan, subject to a minimum return
guaranteed by the Company. In connection with the implementation of the BSAV, benefits provided under the frozen legacy plans were
modified to substantially eliminate the effects of compensation increases. Therefore, valuation assumptions for salary and pension
increases including career trend are no longer significant for the pension obligation of Siemens AG. The pension benefits are funded via
contractual trust arrangements (CTA). A portion of these trust assets also covers the pension obligations of other domestic subsidiaries.
The Werner Siemens-Stiftung, Zug, Switzerland, notified us on January 21, 2008, that its percentage of voting rights (held either directly
or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on January 2, 2008 and amounted to 3.03%
(27,739,285 voting rights) as per this date.
Siemens AG held 47,644,581 treasury shares, equaling a nominal amount of €143 million, representing 5.6% of the capital stock.
47,644,581
976,346
(4,022,053)
(2,804)
2,975
7,119
1,918
359
(544)
5,387
8,289
133
8,156
2,407
12
(3)
2,398
(143)
12
(3)
(152)
2,550
3,229
3,400
18,917
(547)
2021
50,690,288
Fiscal year
Treasury shares, end of fiscal year
Issuance under share-based payments and employee share programs
Share buyback
Treasury shares, beginning of fiscal year
(in number of shares)
The following table presents the development of treasury shares:
Treasury shares
Liabilities
Further, by resolution of the Annual Shareholders' Meeting of January 30, 2019, the Managing Board is authorized to increase, with the
approval of the Supervisory Board, the capital stock until January 29, 2024 by up to €510 million through the issuance of up to 170
million registered no-par value shares against cash contributions and/or contributions in kind (Authorized Capital 2019). Under certain
conditions, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights
in the event of issue against contributions in kind. In the case of issue against cash payment, the shares are generally to be offered to
shareholders for subscription. However, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude
subscription rights, firstly for any fractional amounts, secondly, to grant dilution compensation in connection with convertible bonds or
bonds with warrants already issued, and thirdly, under certain further conditions, if the issue price of the new shares does not fall
significantly below the stock exchange price of the company's already listed shares.
•
.
In detail, there are the following authorizations to increase the capital stock:
As of September 30, 2021, Siemens AG had authorized capital totaling a nominal amount of €600 million, which can be issued in
instalments and with different time limits by issuing up to 200 million registered no-par value shares.
The capital stock of Siemens AG is divided into 850,000,000 registered shares of no-par value with a notional value of €3.00 per share.
Authorized capital (not issued)
21,216
5,147
(2,804)
503
By resolution of the Annual Shareholders' Meeting of February 3, 2021, the Managing Board is authorized to increase the capital stock
until February 2, 2026 by up to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash
(Authorized Capital 2021). Subscription rights of existing shareholders are excluded. The new shares may exclusively be offered to
employees of Siemens AG and its affiliated companies (employee shares). To the extent permitted by law, employee shares may also be
issued in such a manner that the contribution to be paid on such shares is covered by that part of the annual net income which the
Managing Board and the Supervisory Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock
Corporation Act.
Warranty obligations
- TRUMPF Schweiz AG, Switzerland4
thereof relating to performance guarantees on behalf of affiliated companies
1969
Chief Treasurer and Executive Member of January 22,
the Managing Board of IG Metall
Jürgen Kerner²
2008
January 24, 2023
March 16,
1960
Chairman of the Siemens Europe
Committee
Harald Kern²
2023
April 1,
2007
March 14,
1959
Chairwoman of the Combine Works
Council of Siemens AG
Bettina Haller²
2018
1970
January 31, 2023
Trade Union Secretary, IG Metall Regional June 21,
Office for Bavaria
Andrea Fehrmann²
(Dr. phil.)
December 23, January 24, 2023
1954
2008
2012
2023
- ProSiebenSat.1 Media SE, Munich (Chairman)³
German positions:
2018
September 3,
1957
December 15, January 24, 2021
1959
2008
January 25, 2023
Chairman and Chief Executive Officer of
Air Liquide S.A.
Chief Executive Officer (CEO) - President
and Chairwoman of the Group
Management of TRUMPF GmbH + Co. KG
Benoît Potier
as of February 3, 2021
(until February 3, 2021)
(Dr. phil.)
Kammüller
Nicola Leibinger-
Siemens Mobility GmbH, Munich (Deputy
Chairwoman)
Siemens Energy Management GmbH, Munich
German positions:
- Siemens Energy AG, Munich³
German positions:
Fresenius SE & Co. KGaA, Bad Homburg (Deputy
Chairman)³
- Fresenius Management SE, Bad Homburg
- Allianz SE, Munich (Chairman)³
- RWE AG, Essen (Chairman)³
German positions:
October
16, 2020
2018
Term
Member
since
October 1,
2013
Date of birth
October 27,
1965
Chairman of the Supervisory Board of
Siemens AG and of the Board of Directors
of A.P. Møller-Mærsk A/S
Jim Hagemann Snabe
Chairman
Occupation
Name
Memberships in supervisory boards whose
establishment is required by law or in comparable
In fiscal 2021, the Supervisory Board had the following members:
Members of the Supervisory Board and positions held by Supervisory Board members
- European School of Management and
Technology GmbH, Berlin
German positions:
1 Publicly listed.
September 30,
2023
October 1,
2020
January 30,
1971
Judith Wiese
- Siemens Proprietary Ltd., South Africa
(Chairman)
Positions outside Germany:
domestic or foreign controlling bodies of business
October 10,
1979
expires
2025
German positions:
1954
Chairman of the Supervisory Board of
Allianz SE
Deputy Chairman of the Central Works
Council and of the Combine Works
Council of Siemens AG
RWE AG and of ProSiebenSat.1 Media SE
(Dr. rer. pol.)
Annual Financial Statements
18
German positions:
January 31, 2023
January 24, 2023
2008
1960
January 3,
Chairman of the Supervisory Board of
of Siemens AG
First Deputy Chairwoman
Werner Brandt
Chairwoman of the Central Works Council March 26,
Birgit Steinborn²
- C3.ai, Inc., USA³
-A.P. Møller-Mærsk A/S, Denmark (Chairman)³
- Allianz SE, Munich (Deputy Chairman)³
Positions outside Germany:
enterprises (as of September 30, 2021)
- Siemens Healthineers AG, Munich
(Chairman)1
- MAN Truck & Bus SE, Munich (Deputy Chairman)
Chairman)
2023
October 1,
2017
February 3, 2025
2021
23, 1969
1969
September
Airbus Special Advisor
(Second Deputy Chairman
and member of the
Supervisory Board
(since February 3, 2021)
Werner Wenning
Grazia Vittadini
of Siemens Healthcare GmbH
Dorothea Simon²
Chairwoman of the Central Works Council August 3,
Spokespersons of Siemens AG
2023
March 1,
2014
Spokespersons of the Siemens Group and 13, 1957
Chairman of the Central Committee of
September
Chairman of the Committee of
Michael Sigmund²
EssilorLuxottica SA, France³
German positions:
Positions outside Germany:
Siemens Healthcare GmbH, Munich
October 21,
1946
19
1
5 Shareholders' Committee.
4 Group company position.
3 Publicly listed.
2 Employee representative.
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
Council of Siemens Industry Software
GmbH
Deputy Chairman of the Central Works
Gunnar Zukunft²
Chairman of the Board of Management of November 8,
LANXESS AG³
as of February 3, 2021
Matthias Zachert
Siemens Industry Software GmbH, Cologne
German positions:
January 31, 2023
2018
January 31, 2023
2018
1967
June 21,
1965
until February 3, 2021)
January 23, 2021
2013
Member of the Supervisory Board
- Premium Aerotec GmbH, Augsburg (Deputy
- TÜV Süd AG, Munich
Siemens Healthcare GmbH, Munich
February 3, 2025
2021
February 24,
1962
Chief Executive Officer and Board
Member of adidas AG³
(since February 3, 2021)
Kasper Rørsted
May 29, 1956 January 27, 2023
2015
Chairman of the Supervisory Board of
Bayerische Motoren Werke
Aktiengesellschaft
(Dr.-Ing. Dr.-Ing. E.h.)
Norbert Reithofer
2019
January 30, 2023
April 26,
1967
Trade Union Secretary of the Managing
Board of IG Metall
Hagen Reimer²
January 31, 2023
Positions outside Germany:
- ThyssenKrupp AG, Essen (Deputy Chairman)³
Traton SE, Munich³
- Siemens Energy Management GmbH, Munich
- Siemens Energy AG, Munich³
Economics
Siemens Healthineers AG, Munich³
Nathalie von Siemens
(Dr. phil.)
Baroness Nemat Shafik Director of the London School of
(DBE, DPhil)
Messer Group GmbH, Sulzbach
German positions:
- Member of the Board of Directors, Nestlé S.A.,
Switzerland³
Positions outside Germany:
Henkel Management AG, Düsseldorf
Henkel AG & Co. KGaA, Düsseldorf³,5
Munich (Chairman)³
Bayerische Motoren Werke Aktiengesellschaft,
- Siemens Energy Management GmbH, Munich
German positions:
- Siemens Energy AG, Munich³
The Hydrogen Company S.A., France4
German positions:
American Air Liquide Holdings, Inc., USA4
- Air Liquide International Corporation (ALIC), USA
(Chairman)4
- Air Liquide International S.A., France (Chairman and
Chief Executive Officer) 3,4
Positions outside Germany:
2015
January 27, 2023
January 31, 2023
2018
August 13,
1962
July 14, 1971
Member of supervisory boards
- Siemens Healthcare GmbH, Munich
(Chairman)
German positions:
- Siemens W.L.L., Qatar
thereof assets
Foreign currency risk from balance sheet items
(in millions of €)
Annual Financial Statements
16
The remaining foreign currency risk after offsetting cash flows in the same currency is hedged by the Corporate Treasury of Siemens AG
with external contract partners. The net foreign currency position (before hedging) of Siemens AG is combined with the offsetting foreign
currency exchange contracts to a macro valuation unit. For this purpose, hedged items and hedging instruments are measured with the
respective underlying discounted cash flows. For foreign currency derivative financial instruments, the determination is based on the
changes in relevant forward exchange rates. The existing derivative currency hedging contracts are included in the valuation unit in their
entirety and had maturity terms until the year 2041. The cash in- and outflows from the foreign currency exchange contracts, firm
commitments and forecast transactions are disclosed on a net basis in the following table.
According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
exposure. The net foreign currency position of the Siemens units serves as a central performance measure and has to be hedged within a
band of at least 75% but no more than 100% with the Corporate Treasury of Siemens AG.
Valuation unit used to hedge the foreign currency risk
Provided the relevant conditions are met, derivative financial instruments are aggregated with the underlying hedged item into valuation
units. Using the freezing method, the hedging transactions are not recognized in the balance sheet. The effectiveness of the valuation
unit is either ensured through risk management, or is demonstrated both prospectively and retrospectively based on appropriate methods
used to demonstrate effectiveness (e.g. dollar offset method, regression method, sensitivity analysis). Valuation gains and losses from
derivative financial instruments and hedged items are netted for each valuation unit. A provision for anticipated losses on onerous
contracts is recognized for the respective valuation unit in the amount of an existing loss surplus. Profit surpluses are not recognized.
(10)
(10)
(283)
1
1
(283)
Derivative financial instruments requiring recognition
Interest rate options
Sep 30, 2021
Other
provisions Other liabilities
Other assets
thereof liabilities
Interest rate swaps
Foreign currency risk from firm commitments and forecast transactions
Net foreign currency position (before hedging)
The net fair value of derivative financial instruments from foreign currency hedge accounting was €320 million as of September 30, 2021;
positive fair values were €1,328 million and negative fair values were €1,008 million. Accordingly, no provision for anticipated losses was
recognized for the derivative financial instruments with negative fair values that were included in this macro valuation unit.
Firm commitments and forecast transactions concern business transactions for which a legally binding contract was concluded but not yet
performed on by either contracting party, as well as contingent payment claims for already partially completed performance obligations
in the project and product businesses.
(133)
(6,998)
7,289
292
(425)
(312)
779
466
(15,426)
14,534
(891)
2021
Sep 30,
Net foreign currency position (after hedging)
thereof with affiliated companies
thereof with external contract partners
Foreign currency exchange contracts (net face value)
thereof expected cash inflows from firm commitments and forecasted transactions
thereof expected cash outflows from firm commitments and forecasted transactions
Valuation unit used to hedge the interest rate risk
Interest rate hedging contracts
The following table presents the carrying amounts, if existing, of derivative financial instruments not included in valuation units and the
balance sheet line items in which these amounts were recognized.
Approximately €2.2 billion were outstanding as of September 30, 2021 from an outsourcing agreement with a maturity of several years.
Siemens AG has entered into a contract to pay its affiliated company Siemens Trademark GmbH & Co. KG, Germany, a running royalty for
the use of the Siemens trademark rights. The fee is calculated by applying business-specific royalty rates to brand-related revenue. The
contract has an indefinite duration. For fiscal 2021, the corresponding expenses amounted to €725 million. For fiscal 2022, the royalty is
expected to be in the same magnitude.
Obligations for equity and debt contributions amounted to €379 million, of which €165 million related to associates.
NOTE 25 Other financial obligations
Payment obligations under lease and rental arrangements amounted to €1,155 million, of which €74 million resulted from transactions
with affiliated companies. Payment obligations under lease and rental arrangements due within the next fiscal year amounted to €259
million.
Expenses for lease and rental arrangements with third parties in which the economic ownership of the leased/rented asset was not
attributable to Siemens AG and the relevant items were not recognized as assets by Siemens AG amounted to €195 million. Object of
these contracts were mainly real estate and other non-current assets.
NOTE 24 Financial payment obligations under lease and rental arrangements
Siemens AG only enters into guarantees and other commitments after careful consideration of the risks concerned and in general only in
relation to its own business activities or those of affiliated companies as well as to business activities of companies, if it holds an investment
in them or their parent companies. Based on an ongoing risk evaluation of the arrangements entered into and taking into account all
information available up to the date on which the Annual Financial Statements were issued for approval, Siemens AG concluded that the
relevant primary debtors are able to fulfill the underlying obligations. For this reason, Siemens AG considered it not probable that it will
be called upon in conjunction with any of the guarantees and commitments described above.
Effective January 1, 2020, the Gas and Power business line was transferred to Siemens Energy Global GmbH & Co. KG in preparation for
the spin-off of the Siemens Energy business, which occurred on September 25, 2020. The items Obligations from guarantees and Others
included guarantees and other commitments for the benefit of companies of the Siemens Energy Group totaling €0.8 billion and €12.3
billion, respectively, with corresponding full reimbursement rights towards Siemens Energy Global GmbH & Co. KG. In addition, the
position included indemnifications issued in connection with dispositions of businesses. Such indemnifications, if customary to the
relevant transactions, may protect the buyer from potential tax, legal and other risks in conjunction with the purchased business.
Warranty obligations included obligations of Siemens AG towards affiliated companies totaling €414 million.
Warranty obligations relating to financing of affiliated companies included guarantees towards banks for credit lines granted to affiliated
companies.
114,226
15,658
20,011
75,845
111,515
2,711
2021
Sep 30,
Guarantees and other commitments
thereof Others
In the course of its normal business operations, Siemens AG is involved in numerous legal and regulatory proceedings as well as
governmental investigations (legal proceedings) in various jurisdictions. These legal proceedings could result in particular in the Company
(in millions of €)
15
being subject to payment of damages and punitive damages, equitable remedies or criminal or civil sanctions, fines or disgorgements of
profit. In individual cases, this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or
permits. In addition, further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be expanded. Some
of these legal proceedings could result in adverse decisions for Siemens AG that may have material effects on its financial position, the
results of its operations and/or its cash flows in the respective reporting period. In addition, Siemens is jointly and severally liable within
consortia. As far as not recognized in the financial statements, Siemens AG did not expect any material negative effects on its financial
position, the results of its operations and/or its cash flows at balance sheet date.
Fair values of interest rate derivative financial instruments are determined by discounting expected future cash flows over the remaining
term of the instrument using current market interest rates and yield curves. If option components are included, fair values are determined
based on an option price model or quoted market prices.
-
The notional amounts equal the contractual amounts of the individual derivative financial instrument which – irrespective of the nature
of the concluded position (sale or purchase) – are presented on a gross basis (gross notional amounts).
30
5
24
6,275
5,325
950
Existing derivative financial instruments
Interest rate options
Interest rate swaps
Interest rate hedging contracts
(in millions of €)
Fair values
Notional
amount
Sep 30, 2021
The following table presents the notional amounts and fair values of those existing derivative financial instruments that were not included
in a valuation unit at the balance sheet date:
As a consequence of its global operating, investing and financing activities, Siemens AG is in particular exposed to risks resulting from
changes in exchange rates and interest rates, managed in line with a proven risk management system in consideration of defined risk
limits. As the parent company of the Siemens Group, Siemens AG has the central role within the group-wide management of financial
market risks. To manage the risks resulting from changes in exchange rates and interest rates, Siemens uses primarily foreign currency
forward contracts, interest rate swaps, combined interest and foreign currency swaps as well as interest rate options and interest rate
futures. Thereby the operating units of Siemens AG are not allowed to enter into derivative financial instruments for speculative purposes.
The contract partners of the Company for derivative financial instruments are banks, brokers and affiliated companies. The credit rating
for banks and brokers is constantly monitored.
NOTE 26 Derivative financial instruments and valuation units
Annual Financial Statements
The interest rate hedging contracts used by Siemens AG serve mainly to hedge against interest rate risks and to optimize the interest result
in accordance with internal interest rate benchmarks.
Siemens AG has entered into interest rate derivatives with external counterparties to hedge interest rate swaps transacted with its affiliated
companies against interest rate risk. As of September 30, 2021, the interest rate swaps transacted with affiliated companies included in
this macro valuation unit had a notional amount of €2,080 million and fair values of €(255) million and had maximum maturity terms
until the year 2028. At balance sheet date, these underlying transactions were matched by external interest rate derivatives with fair values
of €115 million, and maximum maturity terms until the year 2028. As of September 30, 2021, the negative surplus for the macro valuation
unit, recorded in provisions for onerous contracts, amounted to €139 million.
To hedge receivables from affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with
external counterparties and combined these instruments with the underlying transactions in a macro valuation unit. As of September 30,
2021, the notional amount of the receivables, which had a maximum maturity until the year 2045, amounted to €13,904 million. As of
September 30, 2021, the cumulative market value changes of these receivables of €131 million were matched by offsetting interest rate
derivatives with a positive net fair value of €37 million and maximum maturity terms until the year 2040, of which positive fair values
were €148 million and negative fair values were €111 million.
- NXP Semiconductors N.V., Netherlands'
German positions:
Positions outside Germany:
Munich (Chairman)
- Siemens Energy Management GmbH,
- Siemens Energy AG, Munich (Chairman)¹
- Mercedes-Benz AG, Stuttgart
Daimler AG, Stuttgart¹
German positions:
2023
September 18, September 17,
2013
March 7, 1961
Ralf P. Thomas
(Prof. Dr. rer. pol.)
September 30,
2025
October 1,
2020
January 2,
1965
Matthias Rebellius
May 31, 2025
March 7, 1973 April 1, 2017
Shareholders'
Meeting
- Evonik Industries AG, Essen¹
Positions outside Germany:
At the end of
the 2021
Annual
- Atos SE, France¹
Siemens Energy AG, Munich'
(Chairman)
- Siemens Schweiz AG, Switzerland
Chairman)
- Siemens Ltd., Saudi Arabia (Deputy
- Siemens Ltd., India¹
- Siemens Ltd., Australia
(Deputy Chairman)
- Arabia Electric Ltd., Saudi Arabia
Positions outside Germany:
- Siemens France Holding S.A., France
- Siemens Aktiengesellschaft Österreich,
Austria (Chairman)
Positions outside Germany:
- Siemens Ltd., India¹
Positions outside Germany:
Siemens Energy Management GmbH,
Munich
Siemens Energy AG, Munich¹
German positions:
Munich
Siemens Energy Management GmbH,
German positions:
Cedrik Neike
as of February 3, 2021
until February 3, 2021)
In fiscal 2021, the Managing Board had the following members:
Members of the Managing Board and positions held by Managing Board members
NOTE 30 Members of the Managing Board and Supervisory Board
As of October 1, 2021, the mandatory statement pursuant to Section 161 of the German Stock Corporation Act (AktG) has been issued by
the Managing Board and the Supervisory Board and is permanently accessible on www.SIEMENS.DE/CORPORATE-GOVERNANCE.
NOTE 29 Declaration of Compliance with the German Corporate Governance Code
Compensation attributable to members of the Supervisory Board comprises a base compensation and additional compensation for
committee work and amounted to €5.2 million (including meeting fees).
Remuneration of the members of the Supervisory Board
Annual Financial Statements
17
Siemens recognized pension provisions totaling €131.7 million for the pension entitlements to former members of the Managing Board
and their surviving dependents.
Former members of the Managing Board and their surviving dependents received a total of €30.1 million according to Section 285 para.
1 number 9b of the German Commercial Code.
Total remuneration of former members of the Managing Board
Therefore, the compensation and benefits attributable to members of the Managing Board amounted to €36.0 million in total.
Members of the Managing Board, including members who retired from the Managing Board during the fiscal year, received cash
compensation of €21.4 million. The fair value of share-based compensation amounted to €11.6 million for 202,139 stock awards. The
Company granted contributions under the BSAV to members of the Managing Board totaling €3.0 million.
Remuneration of the members of the Managing Board
note 28 Remuneration of the members of the Managing Board and the Supervisory Board
The Supervisory Board and the Managing Board propose the unappropriated net income of Siemens AG for the fiscal year ended September
30, 2021, amounting to €3,400 million to be appropriated as follows: Distribution of a dividend of €4.00 on each share of no par value
entitled to the dividend, and carry-forward of the unappropriated net income for shares of no par value not entitled to the dividend.
NOTE 27 Proposal for the appropriation of net income
To hedge payables to affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with external
counterparties. The payables hedged within this micro valuation unit had a nominal volume of €2,147 million as of September 30, 2021
and maximum maturity terms until the year 2025. As of September 30, 2021, negative cumulative changes in market value of these
liabilities of €101 million were matched by external interest rate derivatives with identical maturities whose market value was €109 million.
The amount of interest rate risks hedged with the valuation unit that did not lead to a provision for anticipated losses accordingly totaled
€227 million.
Name
Roland Busch
(Dr. rer. nat.)
President and Chief
Executive Officer
(President and Chief
Executive Officer,
member of the
Managing Board
May 1, 2006
June 23, 1957
(until March 31, 2021)
as of March 31, 2021
Joe Kaeser
German positions:
March 31, 2021
April 1, 2011
May 24, 1958
(since February 3, 2021)
Klaus Helmrich
thereof relating to financing of affiliated companies
EOS Holding AG, Krailling
- Siemens Healthineers AG, Munich¹
(as of September 30, 2021)
German positions:
Group company positions
(as of September 30, 2021)
External positions
Memberships in supervisory boards whose establishment is required by law or in
comparable domestic or foreign controlling bodies of business enterprises
Term expires
March 31, 2025
First appointed
April 1, 2011
Date of birth
November 22,
1964
- Siemens Mobility GmbH, Munich
(Chairman)
Second Deputy Chairman
(since February 3, 2021)
Tobias Bäumler²
(since October 16, 2020)
Michael Diekmann
100
000 Legion II, Moscow / Russian Federation
100
6,632
(14)
100
422
5
Siemens Government Technologies, Inc., Wilmington, DE / United States
Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
Siemens Industry Software Inc., Wilmington, DE / United States
Siemens Industry, Inc., Wilmington, DE / United States
100
1,607
124
Siemens Financial Services, Inc., Wilmington, DE / United States
100
5,327
13,895
58
100
1,497
(48)
Siemens Capital Company LLC, Wilmington, DE / United States
1005
6
1
PolyDyne Software Inc., Austin, TX / United States
100
158
28
375
-
Siemens Corporation, Wilmington, DE / United States
PETNET Solutions, Inc., Knoxville, TN / United States
100
4,675
100
60
(1)
Supplyframe, Inc., Pasadena, CA / United States
100
7
(6)
SMI Holding LLC, Wilmington, DE / United States
100
10,376
-
Siemens USA Holdings, Inc., Wilmington, DE / United States
100
160
1,476
Siemens Public, Inc., Iselin, NJ / United States
100
938
70
Siemens Mobility, Inc, Wilmington, DE / United States
100
16,362
165
Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
100
6,852
461
100
27
Thoughtworks Holding Inc., Wilmington, DE / United States
Panda Stonewall Intermediate Holdings I, LLC, Wilmington, DE / United States
100
275
247
7
CEF-L Holding, LLC, Wilmington, DE / United States
95,7
278
101
Bentley Systems, Incorporated, Wilmington, DE / United States
205
7
(4)
Babson Diagnostics, Inc., Dover, DE / United States
100
ChargePoint Holdings, Inc., Campbell, CA / United States
111
100
83
58
100
46
(2)
100
44
17
100
77
3
100
6
-
n/a
4
43
205
275
4
43
(18)
(44)
Mannesmann Corporation, New York, NY / United States
Hickory Run Holdings, LLC, Wilmington, DE / United States
Fluence Energy, LLC, Wilmington, DE / United States
100
3
(15)
n/a
100
(4)
73
129
(21)
100
176
100
530
(46)
eMeter Corporation, Wilmington, DE / United States
Enlighted, Inc., Wilmington, DE / United States
ECG TopCo Holdings, LLC, Wilmington, DE / United States
ECG Acquisition, Inc., Wilmington, DE / United States
Corindus, Inc., Wilmington, DE / United States
98
65
395
85
100
81
39
Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
100
192
162
Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
100
182
96
Siemens Healthineers Ltd., Shanghai / China
100
Siemens International Trading Ltd., Shanghai, Shanghai / China
333
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
100
77
(7)
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
100
433
25
Siemens Financial Services Ltd., Beijing / China
Annual Financial Statements
23
100
132
41
23
Siemens Ltd., China, Beijing / China
13
Siemens Standard Motors Ltd., Yizheng / China
100
99
60
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
100
128
102
Siemens Shanghai Medical Equipment Ltd., Shanghai / China
80
89
73
Siemens Numerical Control Ltd., Nanjing, Nanjing / China
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
100
19
100
93
17
Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
85
55
50
100
2,333
851
100
41
123
100
29
25
Siemens Mobility Pty Ltd, Bayswater / Australia
100
102
12
Siemens Ltd., Bayswater / Australia
100
-
100
22
1
J.R.B. Engineering Pty Ltd, Bayswater / Australia
Australia Hospital Holding Pty Limited, Bayswater / Australia
Asia, Australia (53 companies)
22
100
94
Dade Behring Hong Kong Holdings Corporation, Tortola / Virgin Islands, British
100
8,620
246
100
423
214
Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems, Inc., Wilmington, DE / United States
100
7,415
6,587
Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
33
159
100
Beijing Siemens Cerberus Electronics Ltd., Beijing / China
Siemens Finance and Leasing Ltd., Beijing / China
Siemens Factory Automation Engineering Ltd., Beijing / China
85
134
63
Siemens Electrical Drives Ltd., Tianjin / China
100
40
32
Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
100
122
74
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
75
30
21
Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
405
507
10
Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
100
62
2
Mentor Graphics (Shanghai) Electronic Technology Co., Ltd., Shanghai / China
100
30
22
463
13
100
284
43
(12)
100
29
5
100
34
(9)
Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
Siemens Proprietary Limited, Midrand / South Africa
Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
Siemens s.r.o., Bratislava / Slovakia
51
40
70
20
100
25
16
Siemens Mobility LLC, Moscow / Russian Federation
100
14
19
Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
100
115
50
Siemens Finance and Leasing LLC, Vladivostok / Russian Federation
100
Siemens Healthcare Limited, Riyadh / Saudi Arabia
51
2
100
100
157
4
Siemens Healthcare AG, Zurich / Switzerland
100
214
26
Siemens Financial Services AB, Solna / Sweden
100
188
20
Siemens S.A., Madrid / Spain
100
45
639
Siemens Rail Automation S.A.U., Tres Cantos / Spain
100
65
1
SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
100
76
9
Siemens Holding S.L., Madrid / Spain
100
277
12
SIEMENS HEALTHCARE, S.L.U., Getafe / Spain
27
20
000 Siemens, Moscow / Russian Federation
100
100
960
86
Siemens Mobility Holding B.V., The Hague / Netherlands
100
2
(1)
Siemens International Holding III B.V., The Hague / Netherlands
100
12,299
1,452
Siemens International Holding B.V., The Hague / Netherlands
100
Siemens Nederland N.V., The Hague / Netherlands
459
100
1,029
114
100
13,895
100
4,420
170
2
5,592
1,307
100
83
61
29
166
100
74
3
100
100
25
5
LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
55
25
11
Siemens W.L.L., Doha Qatar
100
108
11
Siemens S.A., Amadora / Portugal
100
91
4
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
Annual Financial Statements
21
100
6,273
27
Varian Medical Systems Nederland B.V., Houten / Netherlands
505
100
11
Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
Siemens Industry Software GmbH, Zurich / Switzerland
60
Siemens Mobility AG, Wallisellen / Switzerland
Varian Medical Systems International AG, Steinhausen / Switzerland
100
60
Yunex Limited, Poole, Dorset / United Kingdom
100
105
(15)
Siemens Process Systems Engineering Limited, Frimley, Surrey / United Kingdom
100
1,053
22
Siemens plc, Frimley, Surrey / United Kingdom
100
480
Americas (47 companies)
(2)
100
750
111
Siemens Mobility Limited, London / United Kingdom
100
101
18
Siemens Industry Software Limited, Frimley, Surrey / United Kingdom
100
378
2
Siemens Industry Software Computational Dynamics Limited, Frimley, Surrey / United Kingdom
100
Siemens Pension Funding Limited, Frimley, Surrey / United Kingdom
1,214
Siemens Industrial S.A., Buenos Aires / Argentina
(1)
26
Siemens, S.A. de C.V., Mexico City / Mexico
Grupo Siemens S.A. de C.V., Mexico City / Mexico
Siemens S.A., Tenjo / Colombia
Siemens S.A., Santiago de Chile / Chile
Siemens Healthcare Limited, Oakville / Canada
Siemens Financial Ltd., Oakville / Canada
Siemens Canada Limited, Oakville / Canada
Annual Financial Statements
22
22
100
116
GNA 1 Geração de Energia S.A., São João da Barra / Brazil
Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
Siemens Participações Ltda., São Paulo/ Brazil
EPOCAL INC., Toronto / Canada
3
74
(12)
100
78
16
100
138
20
225
277
(11)
100
19
100
577
Siemens Holdings plc, Frimley, Surrey / United Kingdom
100
255
99
38
Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
100
81
(6)
100
93
35
100
49
11
92
Electrium Sales Limited, Frimley, Surrey / United Kingdom
Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Turkey
100
5,968
74
100
1,103
35
100
110
29
100
142
7
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Turkey
100
Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
94
(26)
34
Siemens Healthcare Limited, Frimley, Surrey / United Kingdom
100
170
3
100
180
6
100
341
41
100
137
23
57
591
15
100
8
15
Project Ventures Rail Investments I Limited, Frimley, Surrey / United Kingdom
SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
Siemens Financial Services Holdings Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey / United Kingdom
Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey / United Kingdom
100
162
Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
100
124
Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
100
Siemens Schweiz AG, Zurich / Switzerland
87
100
Siemens Switchgear Ltd., Shanghai, Shanghai / China
1004
Valeo Siemens eAutomotive GmbH, Erlangen
(12)
153
505
Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
(18)
150
1003
Veja Mate Offshore Project GmbH, Oststeinbek
137
347
205
170
VMS Deutschland Holdings GmbH, Darmstadt
220
100
Yunex GmbH, Munich
2
69
100
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without
Germany) (104 companies)
Siemens Spa, Algiers / Algeria
19
40
100
20
20
3
Annual Financial Statements
SPT Beteiligungen GmbH & Co. KG, Grünwald
(30)
212
2,178
100
Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
7
121
100
Siemens Nixdorf Informationssysteme GmbH, Grünwald
28
100
Siemens Project Ventures GmbH, Erlangen
Siemens Real Estate GmbH & Co. KG, Kemnath
Siemens Trademark GmbH & Co. KG, Kemnath
Siemens Treasury GmbH, Munich
(26)
263
100
100
115
100
653
1,841
100
2
3
100
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
SIMAR Ost Grundstücks-GmbH, Grünwald
6
321
904
(1)
14
ETM professional control GmbH, Eisenstadt / Austria
14
21
14
84
100
17
52
100
Siemens Mobility, s.r.o., Prague / Czech Republic
12
27
100
Siemens, s.r.o., Prague / Czech Republic
44
103
100
100
6
40
100
Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
672,3
Siemens Osakeyhtiö, Espoo / Finland
9
40
100
ATOS SE, Bezons / France
(262)
6,871
105
Siemens A/S, Ballerup / Denmark
24
7
100
100
Siemens Aktiengesellschaft Österreich, Vienna / Austria
160
1,374
100
Siemens Healthcare Diagnostics GmbH, Vienna / Austria
14
112
100
Siemens Konzernbeteiligungen GmbH, Vienna / Austria
359
1,818
100
Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
Siemens Mobility Austria GmbH, Vienna / Austria
42
100
20
(153)
100
Siemens Healthcare NV, Beersel / Belgium
10
99
100
Siemens Industry Software NV, Leuven / Belgium
Siemens Mobility S.A. / N.V, Beersel / Belgium
Siemens S.A./N.V., Beersel / Belgium
OEZ s.r.o., Letohrad / Czech Republic
23
388
Siemens Mobility GmbH, Munich
Siemens France Holding SAS, Saint-Denis / France
100
28
1
100
Onespin Solutions Holding GmbH, Munich
(1)
53
100
OWP Butendiek GmbH & Co. KG, Bremen
119
648
235
Project Ventures Butendiek Holding GmbH, Munich
66
1006
(28)
RISICOM Rückversicherung AG, Grünwald
316
100
Siemens Bank GmbH, Munich
29
1,149
100
Siemens Beteiligungen Europa GmbH, Munich
47
5,159
100
Siemens Beteiligungen Inland GmbH, Munich
(97)
21,257
70
100
100
1004
Annual Financial Statements
NOTE 31 List of subsidiaries and associated companies pursuant to Section 285 para. 11, 11a and
11b of the German Commercial Code
September 30, 2021
Germany (46 companies)
Erlapolis 20 GmbH, Munich
evosoft GmbH, Nuremberg
HaCon Ingenieurgesellschaft mbH, Hanover
KACO new energy GmbH, Neckarsulm
Munipolis GmbH, Munich
NEO New Oncology GmbH, Cologne
Next47 Services GmbH, Munich
Net income in
millions of €1
Equity in
millions of €¹
1,142
Equity interest
(1)
(1)
1004
2
8
100
(7)
150
100
(16)
47
100
257
in %
Siemens Beteiligungen USA GmbH, Berlin
(17)
13,723
138
1,619
100
Siemens Healthineers AG, Munich
1,377
24,363
75
Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
95
23,648
100
Siemens Healthineers Holding I GmbH, Munich
(60)
Siemens Healthcare GmbH, Munich
(4,811)
Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
101
101
100
Siemens Immobilien GmbH & Co. KG, Grünwald
68
92
100
Siemens Industry Software GmbH, Cologne
13
308
100
Siemens Logistics GmbH, Constance
100
100
473
(13)
100
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
1,058
23,511
100²
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
14
31
Siemens Electronic Design Automation GmbH, Munich
(9)
69
100
Siemens Energy AG, Munich
200
13,021
40
Siemens Finance & Leasing GmbH, Munich
6
130
100
Siemens Financial Services GmbH, Munich
Siemens Fonds Invest GmbH, Munich
8
2,033
100
1
12
100
Siemens Healthcare Diagnostics Products GmbH, Marburg
80
8
74
100
100
10
11
Siemens Mobility Limited, Bangkok/Thailand
100
44
13
Siemens Limited, Taipei / Taiwan, Province of China
100
92
39
Siemens Pte. Ltd., Singapore / Singapore
Siemens, Inc., Manila / Philippines
Siemens Ltd., Ho Chi Minh City / Viet Nam
100
100
86
6
Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
100
6
Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur / Malaysia
100
126
13
Siemens Ltd. Seoul, Seoul / Korea, Republic of
100
100
3
27
1
100
SIEMENS
TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
FOR FISCAL 2021
Auditor's Report
Independent
2
Judith Wiese
Matthias Rebellius
Prof. Dr. Ralf P. Thomas
Cedrik Neike
Dr. Roland Busch
The Managing Board
Siemens Aktiengesellschaft
Munich, November 30, 2021
25
To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true and
fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for Siemens
Aktiengesellschaft, which has been combined with the Group Management Report, includes a fair review of the development and
performance of the business and the position of the Company, together with a description of the material opportunities and risks
associated with the expected development of the Company.
SIEMENS
TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
FOR FISCAL 2021
Responsibility Statement
224
24
n/a = No financial data available.
7 Therein are 2% held via an investment fund managed by Siemens Fonds Invest GmbH.
6 Values from fiscal year April 01, 2020 - March 31, 2021
5 Values from fiscal year January 01, 2020 - December 31, 2020
4 Values from fiscal year October 01, 2019 - September 30, 2020
3 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
2 Siemens AG is a shareholder with unlimited liability of this company.
1 The values correspond to the annual financial statements after a possible profit transfer, for subsidiaries according to the IFRS closing.
Responsibility Statement (Siemens AG)
Siemens Healthineers Ltd., Seoul / Korea, Republic of
100
77
Siemens Financial Services Private Limited, Mumbai / India
100
85
7
Mentor Graphics (India) Private Limited, New Delhi / India
99
248
(4)
C&S Electric Limited, New Delhi / India
206
318
(64)
Bangalore International Airport Ltd., Bangalore / India
8
100
9
Siemens Limited, Hong Kong / Hong Kong
505
33
21
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
100
14
7
Siemens Wiring Accessories Shandong Ltd., Zibo / China
55
49
29
24
69
100
Siemens Healthcare Private Limited, Mumbai / India
10
Varian Medical Systems K.K., Tokyo / Japan
100
180
5
Siemens K.K., Tokyo / Japan
100
251
25
Siemens Healthcare K.K., Tokyo / Japan
100
207
7
Siemens Healthcare Diagnostics K.K., Tokyo / Japan
505
909
195
P.T. Jawa Power, Jakarta / Indonesia
100
65
28
Siemens Technology and Services Private Limited, Navi Mumbai / India
51
1,523
120
Siemens Limited, Mumbai / India
100
171
31
Independent Auditor's Report (Siemens AG)
224
To Siemens Aktiengesellschaft, Berlin and Munich
Opinions
100
2
13
100
Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
Siemens Concentrated Solar Power Ltd., Rosh HaAyin / Israel
Siemens Industry Software Ltd., Airport City / Israel
116
100
(1)
81
100
14
1,836
51
UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
-
1
100
Siemens Healthcare S.r.l., Milan / Italy
17
254
100
Siemens S.p.A., Milan / Italy
35
198
100
Varian Medical Systems Italy SpA, Segrate / Italy
100
3
146
1,995
Siemens Healthcare SAS, Saint-Denis / France
22
222
100
Siemens Industry Software SAS, Châtillon / France
7
53
100
Siemens Mobility SAS, Châtillon / France
(31)
106
100
Siemens SAS, Saint-Denis / France
1003
44
100
Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
7
92
100
SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
Chalandri / Greece
Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
Mentor Graphics (Ireland) Limited, Shannon, County Clare / Ireland
Siemens Limited, Dublin Ireland
1
62
100
348
183
22
100
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
Uncertain tax positions and recoverability of deferred tax assets
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for other provisions,
refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements. With respect to the legal proceedings,
regulatory proceedings and governmental investigations, refer to chapter 3.5 Other Disclosures, Note 25 Other financial obligations and
with respect to the uncertainties and estimates relating to the provisions for decontamination, refer to chapter 3.4 Notes to the Balance
Sheet, Note 17 Other provisions in the notes to the financial statements.
Our audit procedures did not lead to any reservations relating to the accounting for other provisions.
Furthermore, we evaluated the disclosures on provisions for decontamination in the notes to the financial statements.
We further considered alleged or substantiated non-compliance with legal provisions, official regulations and internal company policies
(compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements from external
legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and
results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed
on this basis whether management's evaluation of any risks to be accounted for in the annual financial statements is plausible.
Based on the aforementioned uncertainties, our audit procedures with respect to the provisions for decontamination focused on the
remediation and environmental protection liabilities in connection with the decommissioning of the facilities in Hanau, Germany (Hanau
facilities), as well as for the nuclear research and service center in Karlstein, Germany (Karlstein facilities). Our audit procedures included,
among others, assessing the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport
to the final nuclear waste storage facility, and the valuation methods used by drawing on the expertise of our valuation specialists. We
evaluated management's assessments particularly regarding the accounting effects of the contractually agreed transfer of the nuclear
waste disposal obligation to the Federal Republic of Germany, which is still subject to the approval of the EU commission under state-aid
rules, and the expected costs to fulfill the obligations remaining with Siemens through inquiries of persons entrusted with the matter and
inspections of internal and external documents.
Auditor's response: During our audit of the financial reporting of legal proceedings resulting from or in connection with alleged
compliance violations, we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and
regulatory proceedings. To determine what potentially significant pending legal proceedings or claims asserted also in connection with
joint and several liability are known and to assess management's estimates of the expected cash outflows, our audit procedures included
inquiring of management and other persons within the Company entrusted with these matters, obtaining written statements from in-
house legal counsels with respect to the assessment of estimated cash outflows and their probability, obtaining confirmations from
external legal advisors and evaluating internal statements concerning the accounting treatment in the annual financial statements.
Furthermore, we examined legal consulting expense accounts for any indications of legal matters not yet considered.
Reasons why the matter was determined to be a key audit matter: We considered the accounting for other provisions, especially for
legal disputes, regulatory proceedings and governmental investigations (legal proceedings) resulting from or in connection with alleged
compliance violations as well as for decontamination to be a key audit matter. These matters are subject to inherent uncertainties and
require estimates that could have a significant impact on the recognition and measurement of the respective provision and, accordingly,
on assets, liabilities and financial performance. Legal proceedings resulting from or in connection with alleged compliance violations are
subject to uncertainties because they involve complex legal issues and accordingly, considerable management judgment, in particular
when determining whether and in what amount a provision is required to account for the risks. The uncertainties and estimates with
respect to provisions for decontamination pertain especially to the estimated costs for waste treatment and packaging for final storage,
for interim storage as well as transport to the final nuclear waste storage facility.
Other provisions
Reference to related disclosures: With regard to the recognition and measurement policies applied for the impairment of non-current
financial assets, refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements and with respect to
write-downs and write-ups of non-current financial assets, refer to chapter 3.3 Notes to the Income Statement, Note 3 Income (loss) from
investments, net as well as chapter 3.4 Notes to the Balance Sheet, Note 10 Non-current assets in the notes to the financial statements.
Independent Auditor's Report (Siemens AG)
2
Our audit procedures did not lead to any reservations relating to assessing the impairment of non-current financial assets.
Forecast accuracy was assessed on a sample basis using budget-to-actual comparisons of historically forecast data with the actual results,
also considering the effects attributable to the COVID-19 pandemic. The parameters used to estimate net realizable value such as the
estimated growth rates and the weighted average cost of capital rates were assessed by comparing them to publicly available market data.
We also performed our own sensitivity analyses to assess the impairment risk in the case of a reasonably possible change in one of the
significant assumptions.
Reasons why the matter was determined to be a key audit matter: The accounting for uncertain tax positions as well as deferred taxes
requires management to exercise considerable judgment and make estimates and assumptions, and was therefore a key audit matter. In
particular, this affects the measurement and completeness of uncertain tax positions, the recoverability of deferred tax assets as well as
management's assessments regarding the tax implications of the COVID-19 pandemic.
With regard to the net realizable values calculated by management and its assessment as to whether an impairment is expected to be
permanent, we examined the underlying processes related to the planning of future cash flows as well as to the calculation of net realizable
value. We assessed the underlying valuation models for the determination of net realizable value in terms of methodology and reperformed
the calculations with the assistance of internal valuation specialists. We further obtained explanations from management regarding
material value drivers of the planning, including the effects of the COVID-19 pandemic, and examined whether the budget planning
reflects general and industry-specific market expectations.
Reasons why the matter was determined to be a key audit matter: The impairment test of non-current financial assets was a key audit
matter, as in particular shares in affiliated companies and investments entail a significant risk of material misstatement due to the
materiality of these assets as well as the judgment involved in assessing whether there is objective evidence to indicate a lower net
realizable value and permanent impairment. The valuations of non-current financial assets also depend to a large extent on the assessment
of future cash inflows, particularly given the continuing effects of the COVID-19 pandemic, and the discount rate applied.
Impairment of non-current financial assets
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial
statements for the fiscal year from October 1, 2020 to September 30, 2021. These matters were addressed in the context of our audit of
the annual financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these matters.
Below, we describe what we consider to be the key audit matters:
Key audit matters in the audit of the annual financial statements
We conducted our audit of the annual financial statements and of the management report in accordance with Sec. 317 HGB and the EU
Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
In conducting the audit of the annual financial statements we also complied with International Standards on Auditing (ISA). Our
responsibilities under those requirements, principles and standards are further described in the "Auditor's responsibilities for the audit of
the annual financial statements and of the management report" section of our auditor's report. We are independent of the Company in
accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German
professional responsibilities in accordance with these requirements. In addition, in accordance with Art. 10 (2) f) of the EU Audit
Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the EU Audit Regulation. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements
and on the management report.
Basis for the opinions
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
annual financial statements and of the management report.
the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this
management report is consistent with the annual financial statements, complies with German legal requirements and appropriately
presents the opportunities and risks of future development. Our opinion on the management report does not cover the content of the
Corporate Governance Statement referred to above.
the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law
applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as of
September 30, 2021 and of its financial performance for the fiscal year from October 1, 2020 to September 30, 2021 in compliance
with German legally required accounting principles, and
•
.
In our opinion, on the basis of the knowledge obtained in the audit,
We have audited the annual financial statements of Siemens Aktiengesellschaft, Berlin and Munich, (the Company) which comprise the
income statement for the fiscal year from October 1, 2020 to September 30, 2021, the balance sheet as of September 30, 2021 and notes
to the financial statements, including the recognition and measurement policies presented therein. In addition, we have audited the
management report of Siemens Aktiengesellschaft, which is combined with the group management report, for the fiscal year from October
1, 2020 to September 30, 2021. In accordance with the German legal requirements, we have not audited the content of the Corporate
Governance Statement which is published on the website stated in the combined management report.
Auditor's response: In assessing whether there was objective evidence to indicate a lower net realizable value and permanent impairment,
we obtained an understanding of management's evaluation and also obtained external evidence of ratings, stock market prices, analyst
assessments and observable valuation inputs in this regard.
Auditor's response: With the assistance of internal tax specialists who have knowledge of tax law, we examined the processes installed
by management for the identification, recognition and measurement of tax positions. In the course of our audit procedures relating to
uncertain tax positions, we evaluated whether management's assessment of the tax implications of significant business transactions or
events in fiscal year 2021, which could result in uncertain tax positions or influence the measurement of existing uncertain tax positions,
was in compliance with tax law. In particular, this includes the tax implications arising from the results of tax field audits, the acquisition
or disposal of company shares, corporate (intragroup) restructuring activities and cross-border matters, such as the determination of
transfer prices. In order to assess measurement and completeness, we also obtained confirmations from external tax advisors. Further, we
evaluated management's assessments with respect to the prospects of success of appeal and tax court proceedings by inquiring of the
employees of the Siemens tax department and by considering current tax case law.
In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
strategies and projected future taxable income, also in view of the implications of the COVID-19 pandemic, and compared them to internal
business plans.
Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and the assessment of the
recoverability of deferred tax assets.
33
105
100
SPT Holding SARL, Luxembourg / Luxembourg
(146)
36
1004
SPT Invest Management, SARL, Luxembourg Luxembourg
(2)
1004
Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
77
100
Castor III B.V., The Hague / Netherlands.
3
100
Dresser-Rand International B.V., The Hague / Netherlands
3
100
Mendix Technology B.V., Rotterdam / Netherlands
(73)
122
100
Mentor Graphics (Netherlands) B.V., Eindhoven / Netherlands
Pollux III B.V., The Hague / Netherlands
57
100
-
3
3
Report on the audit of the annual financial statements and of the management report
Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
Siemens Gas and Power Holding B.V., Zoeterwoude / Netherlands
Siemens Healthineers Holding III B.V., The Hague / Netherlands
Siemens Healthineers Holding IV B.V., The Hague / Netherlands
Siemens Healthineers Nederland B.V., The Hague / Netherlands
Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
Following the scheduled departure of Werner Wenning,
the previous, long-serving Chairman of the Compensa-
tion Committee of the Supervisory Board of Siemens AG,
from the Supervisory Board and thereby also from the
Compensation Committee, the Compensation Commit-
tee elected Michael Diekmann to serve as its new Chair-
man effective February 4, 2021. The Compensation Com-
mittee also acquired two new members: Harald Kern,
who joined the Committee in October 2020, succeeding
Robert Kensbock, who left the Supervisory Board
on September 25, 2020, the effective date of the
Siemens Energy spin-off, and Matthias Zachert, who
joined the Committee in February 2021.
Independent Auditor's Report (Siemens AG)
2021
Sep 30,
Sep 30,
Sep 30,
Sep 30,
Sep 30,
4,819
5,719
2020
5,086
8,379
4,769
5,824
5,845
6,404
8,237
(2,228)
2,677
6,352
1,325
2019
2017
€7.34
€7.12
€6.41
€5.00
€7.68
FY 2017
FY 2018
FY 2019
2018
FY 2020
Basic earnings per share - continuing operations¹
Basic earnings per share - continuing and discontinued operations
Stock market information
377
288
287
285
303
FY 2021
€6.36
1,663
(1,560)
7,851
10,109
FY 2017
FY 2018
FY 2019
FY 2020
FY 2021
136,111
6,825
33%
34%
150,248
32%
123,897
44,619
48,046
50,984
39,823
49,274
35%
139,608
9,582
35%
138,915
(4,509)
7,539
3,075
(2,376)
(1,214)
4,267
785
(2,406)
(1,820)
(1,739)
(1,498)
7,225
(1,730)
(3,288)
(4,166)
(4,050)
(17,192)
3,211
2,131
2,222
3,098
(7,456)
7,684
€4.77
€5.94
31
B.7 Outlook for fiscal 2022
30
27
B.6.1 Active Managing Board members in fiscal 2021
B.6.2 Former members of the Managing Board
27
B.6 Compensation awarded and due
26
C. Compensation of Supervisory Board members
B.5 Pension benefit commitment
B.4 Share Ownership Guidelines
25
B.3.3 Malus and clawback regulations
18
B.3.2 Long-term variable compensation (Stock Awards)
B.3.1 Short-term variable compensation (Bonus)
12
B.3 Variable compensation in fiscal 2021
26
12
D. Comparative information on
E.
FISCAL 2021 4
Dr. Roland Busch was appointed President and CEO effec-
tive the end of the 2021 Annual Shareholders' Meeting.
He combines entrepreneurial farsightedness with a de-
sire to optimally support customers in their digital and
sustainable transformation. The Company is driving this
transformation with technologies that add real value for
customers - technologies that will continue to be crucial
for Siemens in the future and of which Dr. Roland Busch
has a deep and broad understanding.
In fiscal 2021, there were also changes in the Managing
Board. Matthias Rebellius and Judith Wiese were ap-
pointed full members of the Managing Board effective
October 1, 2020. Joe Kaeser left the Managing Board
effective the end of the Annual Shareholders' Meeting on
February 3, 2021. Klaus Helmrich left the Managing
Board effective March 31, 2021. The Supervisory Board is
very grateful to both Mr. Kaeser and Mr. Helmrich for
their many years of successful work on behalf of Siemens
and for their extraordinary services to the Company.
Managing Board and the
Compensation Committee
Changes in the
-
In the fall of 2020, the outlook for the fiscal year ahead
was anything but stable. Due to the ongoing COVID-19
pandemic, Siemens and its customers and partners
worldwide faced major challenges. In the U.S., the presi-
dential election was imminent, and it wasn't clear what
economic consequences the tense relations between the
U.S. and China would have. There were also structural
problems in Siemens' key customer sectors such as ma-
chine building due to low capacity utilization - and in
the automobile industry, which is undergoing a dramatic
structural transformation. All these factors are having an
impact on Siemens' business. In retrospect, we've experi-
enced an exciting and a very challenging, but also a very
successful fiscal year. The employees of Siemens have
delivered a stellar performance in difficult times.
What did the economic and
political environment look like
at the start of fiscal 2021?
profit development and annual
change in compensation
The Managing Board and the Supervisory Board of
Siemens AG have decided to voluntarily implement
ahead of time the new legal requirements regarding the
issuance of the Compensation Report that are set out in
Section 162 of the German Stock Corporation Act. The
emphasis of the Report continues to be on providing
clear, transparent and comprehensive reporting. The
Managing Board and the Supervisory Board have also
decided to commission the independent auditor to con-
duct a substantive audit of the Compensation Report,
over and above the requirement set out in Section 162
para. 3 sent. 1 and 2 of the German Stock Corporation Act.
Compensation Report → A. Fiscal 2021 in retrospect
39
38
35
KE
32
Independent auditor's report
Other
| A. Fiscal 2021 in retrospect
€5.82
11
B.2.2 Maximum compensation
€3.70
€3.80
€3.90
€3.50
€4.00
Dividend per share³
€7.13
€5.84
1 In FY 2020, Gas and Power and Siemens Gamesa Renewable Energy were classified as discontinued operations. Prior-period amounts beginning with FY 2018 are presented on a comparable basis.
In FY 2021, Flender GmbH was classified as discontinued operation. Prior-period amounts beginning with FY 2019 are presented on a comparable basis.
€5.74
€6.28
€7.19
€7.01
€6.32
€4.93
€7.59
Diluted earnings per share - continuing and discontinued operations
Diluted earnings per share - continuing operations¹
€7.27
€4.70
B.2.3 Appropriateness of compensation
2 Beginning with September 30, 2018 under consideration of IFRS 9.
2
9
B.2.1 Target compensation and compensation structure
9
6
B.2 Principles of the determination of compensation
B.1 The compensation system at a glance
6
B. Compensation of Managing Board members
3 For FY 2021 to be proposed to the Annual Shareholders' Meeting.
4
Table of
contents
Due to rounding, numbers presented throughout this document may not
add up precisely to the totals provided and percentages may not precisely
reflect the absolute figures.
This Compensation Report provides an explanation and a clear and com-
prehensible presentation of the compensation individually awarded
and due to the current and former members of the Managing Board and
the Supervisory Board of Siemens AG for fiscal 2021 (October 1, 2020 to
September 30, 2021). The Report complies with the requirements of the
German Stock Corporation Act (Aktiengesetz, AktG). Detailed information
regarding the compensation systems for members of the Managing Board
and the Supervisory Board of Siemens AG is available on the Siemens
Global Website www.SIEMENS.COM/CORPORATE-GOVERNANCE.
Compensation Report 2021
Siemens Aktiengesellschaft
Berlin and Munich
SIEMENS
2021
Compensation Report
A. Fiscal 2021 in retrospect
9,896
14
2,839
Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
controls.
•
•
• Identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
a basis for our assurance opinion.
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
throughout the assurance work. We also:
The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
Auditor's responsibilities for the assurance work on the ESEF documents
In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
electronic reporting format.
Management is responsible for the preparation of the ESEF documents including the electronic rendering of the annual financial
statements and the management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB.
Evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
specification for this file.
Responsibilities of management and the Supervisory Board for the ESEF documents
Independent Auditor's Report (Siemens AG)
5
We conducted our assurance work on the rendering of the annual financial statements and the management report contained in the file
identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering of Financial
Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) and the
International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described in the
Basis for the opinion
In our opinion, the rendering of the annual financial statements and the management report contained in the file identified above and
prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting
format. Beyond this assurance opinion and our audit opinions on the accompanying annual financial statements and the accompanying
management report for the fiscal year from October 1, 2020 to September 30, 2021 contained in the "Report on the audit of the annual
financial statements and of the management report" above, we do not express any assurance opinion on the information contained within
these renderings or on the other information contained in the file identified above.
We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
of the annual financial statements and the management report (hereinafter the "ESEF documents") contained in the file SIEMENS_2021.zip
(SHA-256-checksum: c2fee878a23005add85c87b5f4a7cf3e7883b81d2626892870c12ff3d2a977f8) and prepared for publication
purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting format ("ESEF format").
In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained in the
annual financial statements and the management report into the ESEF format and therefore relates neither to the information contained
within these renderings nor to any other information contained in the file identified above.
Opinion
Report on the assurance on the electronic rendering of the annual financial statements and the management
report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
"Auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard on Quality
Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
Other legal and regulatory requirements
Evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited annual financial statements
and to the audited management report.
We were elected as auditor by the Annual Shareholders' Meeting on February 3, 2021. We were engaged by the Supervisory Board on
February 3, 2021. We have been the auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October 1, 2008
to September 30, 2009.
Wirtschaftsprüfer
Dr. Gaenslen
[German Public Auditor]
Wirtschaftsprüferin
Breitsameter
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, November 30, 2021
Further information pursuant to Art. 10 of the EU Audit Regulation
The German Public Auditor responsible for the engagement is Katharina Breitsameter.
6
Our auditor's report must always be read together with the audited annual financial statements and the audited management report as
well as the assured ESEF documents. The annual financial statements and the management report converted to the ESEF format -
including the versions to be published in the Bundesanzeiger [German Federal Gazette] - are merely electronic renderings of the audited
annual financial statements and the audited management report and do not take their place. In particular, the ESEF report and our
assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic form.
-
Other matter use of the auditor's report
Audit-related services include primarily audits of financial statements as well as other attestation services in connection with M&A
activities, attestation services related to the sustainability reporting, comfort letters and other attestation services required under
regulatory requirements, contractually agreed or requested on a voluntary basis. Permitted tax services were rendered in connection with
audit-related support for the analysis of the design of the tax compliance management system performed by Siemens.
In addition to auditing the statutory financial statements of Siemens AG, we performed the statutory audit of Siemens' consolidated
financial statements, audits of financial statements of subsidiaries of Siemens AG, reviews of interim financial statements integrated in
the audit, project-based IT audits, audit services in connection with the implementation of new accounting standards as well as service
organization control engagements.
In addition to the financial statement audit, we have provided to the Company or entities controlled by it the following services that are
not disclosed in the annual financial statements or in the management report:
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
to Art. 11 of the EU Audit Regulation (long-form audit report).
German Public Auditor responsible for the engagement
[German Public Auditor]
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public disclosure about the matter.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
⚫ is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
• otherwise appears to be materially misstated.
In connection with our audit, our responsibility is to read the other information, and, in so doing, to consider whether the other information
Our opinions on the annual financial statements and on the management report do not cover the other information, and consequently
we do not express an opinion or any other form of assurance conclusion thereon.
but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
report whose content is audited and not our auditor's reports thereon.
• Notes and forward-looking statements,
⚫ the Report of the Supervisory Board,
the Compensation Report,
•
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
the Five-Year Summary,
⚫ the Responsibility Statement (to the consolidated financial statements and the group management report),
the Responsibility Statement (to the annual financial statements and the management report),
•
In addition, the other information comprises parts to be included in the Annual Report, of which we received a version prior to issuing this
auditor's report, in particular:
The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2021 within the meaning of ISA [DE]
720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
Corporate Governance Statement referred to above.
Other information
6,360
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
to chapter 3.2 Accounting and Measurement Principles and chapter 3.3 Notes to the Income Statement, Note 6 Income taxes and with
respect to disclosures for deferred tax assets, refer to chapter 3.4 Notes to the Balance Sheet, Note 13 Deferred tax assets in the notes to
the financial statements.
•
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
applicable, the related safeguards.
Responsibilities of management and the Supervisory Board for the annual financial statements and the
management report
Furthermore, management is responsible for the preparation of the management report that as a whole provides an appropriate view of
the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal
requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible for
such arrangements and measures (systems) as management has considered necessary to enable the preparation of a management report
that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
assertions in the management report.
• Perform audit procedures on the prospective information presented by management in the management report. On the basis of
sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
Evaluate the consistency of the management report with the annual financial statements, its conformity with German law and the view
of the Company's position it provides.
Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the
annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true
and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally
required accounting principles.
•
•
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's
report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate,
to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Company to cease to be able to continue as a going concern.
Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
and related disclosures.
Obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures
(systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company.
In preparing the annual financial statements, management is responsible for assessing the Company's ability to continue as a going
concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict
therewith.
Identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
•
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these annual financial statements and this management report.
Independent Auditor's Report (Siemens AG)
4
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
Auditor's responsibilities for the audit of the annual financial statements and of the management report
Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the
Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the
audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
as to issue an auditor's report that includes our opinions on the annual financial statements and on the management report.
The Supervisory Board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial
statements and of the management report.
•
Independent Auditor's Report (Siemens AG)
Management is responsible for the preparation of the annual financial statements that comply, in all material respects, with the
requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair
view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally required
accounting principles. In addition, management is responsible for such internal control as it, in accordance with German legally required
accounting principles, has determined necessary to enable the preparation of annual financial statements that are free from material
misstatement, whether due to fraud or error.
Five-Year Summary
52,968
52,340
2017
2018
2019
2020
2021
Sep 30,
70,370
Sep 30,
Sep 30,
Sep 30,
6,094
6,120
5,648
4,200
6,697
6,041
Sep 30,
64,556
60,750
39,952
19,840
22,607
7
22,726
29,270
38,022
26,777
27,120
30,414
38,005
40,879
32,224
32,177
44,567
48,700
46,077
47,874
50,723
34,117
5,084
5,063
36,449
5,636
Cash flows
Total assets
as a percentage of total assets
Provisions for pensions and similar obligations
Equity (including non-controlling interests)
Net debt
Long-term debt
Debt
Current liabilities
Cash flows from operating activities – continuing operations¹
Amortization, depreciation and impairments¹
Current assets
Net income
Income from continuing operations¹
Gross profit¹
Revenue¹
Revenue and profit
FOR THE FIVE YEARS UNTIL FISCAL 2021
4,156
(in millions of €, except where otherwise stated)
SIEMENS
Cash flows from investing activities - continuing operations¹
Additions to intangible assets and property, plant and equipment¹
Assets, liabilities and equity2
Free cash flow - continuing and discontinued operations
Free cash flow - continuing operations¹
21,381
Cash flows from financing activities - continuing operations¹
Change in cash and cash equivalents
25,043
19,888
22,737
20,535
55,538
56,797
55,254
62,265
82,863
FY 2018
FY 2019
FY 2020
FY 2021
Five-Year Summary
Continuing operations (in thousands)¹
FY 2017
Employees
133
26%
2021
1,102
26%
1,102
25%
1,352
1,770
€ thousand in % of TTC € thousand in % of TTC
Cedrik Neike
Managing Board member since April 1, 2017
2020
€ thousand in % of TTC € thousand in % of TTC
27%
2%
14%
2%
41%
2,894
15%
2,071
617
15%
101
617
617
991
2%
83
2%
83
12%
2020
The following table shows the individualized target com-
pensation of each Managing Board member and the rela-
tive proportions of total target compensation represented
by each of the individual compensation components.
Dr. Roland Busch'
President and CEO since Feb. 3, 2021
+
Pension benefit
commitment
+ Fringe benefits
42%
36% to 43%
of total target compensation
+
VARIABLE COMPENSATION
Short-term variable
compensation
(Bonus)
Long-term variable
compensation
(Stock Awards)
20% to 28%
of total target compensation
30% to 42%
of total target compensation
In line with the decision not to adjust, as a rule, employee
compensation worldwide in fiscal 2021 due to the ongo-
ing COVID-19 pandemic, the total target compensation of
the Managing Board members was not increased except
in the case of Dr. Roland Busch and is unchanged com-
pared to fiscal 2020. The total target compensation of
Dr. Roland Busch was increased as of October 1, 2020,
due to his appointment as President and CEO effec-
tive the end of the Annual Shareholders' Meeting on
February 3, 2021, and the related expansion of his duties
already at the beginning of fiscal 2021.
As in previous years, all components of the compen-
sation of the position of President and CEO¹ were differ-
entiated. As in fiscal 2020, the target amount of
Prof. Dr. Ralf P. Thomas's Stock Awards was differentiated
due to his particular responsibilities as CFO.
1 Joe Kaeser held this position until the end of the Annual Shareholders'
Meeting on February 3, 2021, when he was succeeded by Dr. Roland Busch,
who has held the position since that date.
Compensation Report → B. Compensation of Managing Board members
Bonus for fiscal 2020
Bonus for fiscal 2021
+ Short-term variable compensation
Variable
compensation
+ BSAV contribution/amount for free disposal³
= Total
2021
+ Fringe benefits²
Base salary
Fixed
in office on September 30, 2021
Managing Board members
Target compensation fiscal 2021
FISCAL 2021 9
compensation
1,801
25%
1,801
1,102
25%
1,102
83
2%
83
2%
83
2%
551
13%
617
14%
617
14%
1,735
42%
1,544
31%
FIXED COMPENSATION
1,259
+ Long-term variable compensation
2021 Stock Awards (vesting: 2020-2024)
2020 Stock Awards (vesting: 2019-2023)
Total target compensation (TTC)
25%
€ thousand in % of TTC € thousand in % of TTC
1,102
1,102
1,102 27%
41%
1,801
41%
1,801
25%
€ thousand in % of TTC € thousand in % of TTC
1,102
27%
2020
100%
7,054
30%
1,259
34%
2,390
1,594 32%
4,942 100%
+ Long-term variable compensation
2021 Stock Awards (vesting: 2020-2024)
2020 Stock Awards (vesting: 2019-2023)
= Total target compensation (TTC)
1,102
26%
1,277
1,102 26%
1,770 25%
43%
26%
43%
1,259
4,162
2021
Prof. Dr. Ralf P. Thomas
Managing Board member since Sept. 18, 2013
Matthias Rebellius
Managing Board member since Oct. 1, 2020
2020
2021
Bonus for fiscal 2020
+ Short-term variable compensation
Bonus for fiscal 2021
30%
Variable
compensation
+ Fringe benefits²
compensation
Base salary
Fixed
100%
100% 4,162
+ BSAV contribution/amount for free disposal³
= Total
TOTAL TARGET COMPENSATION
→ Performance range: 0% to 200%,
using linear interpolation
→Three equally weighted target
dimensions:
Base salary
max. €132,750
→ Other Managing Board members:
max. €82,620
Pension benefit commitment
→ Annual contributions to the
Siemens Defined Contribution
Pension Plan (BSAV)
→ Newly appointed Managing Board
members as of October 1, 2019:
fixed cash amount for free disposal
→ Commitment at beginning
of fiscal year
→ Credit to pension account (BSAV
contribution) or payout (amount
for free disposal) in January after
the end of the fiscal year
BSAV contribution
(credit in January 2022)
→ President and CEO:
€991,200
→ Other Managing Board members:
€616,896
Amount for free disposal
(payment in January 2022)
→ Other Managing Board members:
€550,800
FISCAL 2021 6
Compensation Report B. Compensation of Managing Board members
Link to strategy
Implementation
in compensation
system
Application
in 2021
Short-term variable
compensation (Bonus)
Provides incentives for strong
annual financial and non-financial
performance as the basis for
long-term Company strategy
and sustainable value creation.
- One to three additional individual
targets with focus topics from
the Bonus topic catalogue
Growth (for Managing Board
members with business responsi-
bility and the President and CEO)
the area of responsibility
-
- Cash conversion rate (CCR) in
→33.33% individual targets:
→ President and CEO:
employed (ROCE)
→ Performance period: October 1,
2020, to September 30, 2021
Bonus for fiscal 2021
→ Consideration of extraordinary
developments in justified, infre-
quent special cases possible
- Managing Board portfolio
- Individual targets: two to four
equally weighted financial
targets or focus topics
-Siemens Group
Performance-oriented annual
Bonus, paid in cash in the subsequent
fiscal year
→ Payout: February 2022 (at the latest)
→ 33.34% earnings per share (EPS)
→ 33.33% return on capital
Target amounts (based on 100% target
achievement)
In fiscal 2021, Managing Board members
were entitled to fringe benefits equal to
a maximum of 7.5% of their base salary.
→ Determination of a maximum
amount relative to base salary, cover-
ing expenses incurred to the benefit
of the Managing Board member
Includes in-kind compensation
and fringe benefits granted by the
Company, for example:
Taking into account all the changes and the existing chal-
lenges, the Compensation Committee of the Supervisory
Board intensively discussed the key performance indica-
tors for variable compensation as well as the individual
targets for Managing Board members. As a result of its
decision to place the focus on the Managing Board's over-
all responsibility and cross-business collaboration, two-
thirds of the short-term variable compensation (Bonus)
of all Managing Board members were determined on the
basis of the same criteria. Strategic and sustainability-
related aspects, which are measured on the basis of the
members' individual areas of responsibility, are anchored
in the remaining third of short-term variable compensa-
tion, the "individual targets."
35%
-
-
Sustainability strategic goal and an expression of
Siemens' social responsibility – is also firmly anchored in
the long-term variable compensation of both the Manag-
ing Board and the roughly 7,000 other Company manag-
ers worldwide. At Capital Market Day in 2021, DEGREE, a
framework that addresses sustainability from every angle
and defines ambitious targets, was introduced. As a re-
sult, the environment, society and good governance will
play a significantly stronger role. The key performance
indicators applied in long-term variable compensation are
part of this framework (CO2 emissions and digital learning
hours) and/or reflect the Company's priorities (Net Pro-
moter Score as an expression of customer satisfaction).
How did Siemens perform
in fiscal 2021?
Despite the challenges and the economic and pandem-
ic-related uncertainty, Siemens has achieved outstanding
results. For example, the Company succeeded in main-
taining its supply chains and its delivery capacity during
the fiscal year and continued to be a reliable partner to its
customers. These developments were reflected in the
strong financial performance in fiscal 2021. Siemens
raised its outlook several times during the fiscal year,
most recently after the third quarter, and reached or ex-
ceeded all the targets set for the primary measures for
fiscal 2021. Return on capital employed (ROCE) was in
double-digits, and the capital structure ratio came in at
1.5. Basic EPS from net income increased 54% to €7.68. In
addition, free cash flow from continuing and discontin-
ued operations for fiscal 2021 increased 29% year-over-
year to €8.2 billion, reaching a new high. Revenue also
was higher at all industrial businesses, rising to €62.3 bil-
lion. Siemens achieved revenue growth of 11.5% net of
currency translation and portfolio effects and delivered
net income of €6.7 billion. Discontinued operations,
largely related to the sale of Flender, contributed income
of €1.1 billion in fiscal 2021.
-
In line with the principle anchored in the compensation
system namely, that exceptional performance should
be appropriately rewarded and that failure to achieve tar-
gets should result in a perceptible reduction in compen-
sation (the pay for performance principle) – the excellent
results of fiscal 2021 are reflected in the Managing
Board's variable compensation, which takes into account
not only financial success but also environmental and
social aspects. As a result, the compensation of the Man-
aging Board members is also oriented toward the inter-
ests of the shareholders as well as the other stakeholders
of Siemens AG.
FISCAL 2021
5
Compensation Report B. Compensation of Managing Board members
B. Compensation of
Managing Board members
B.1 The compensation system
at a glance
The current compensation system for the members of
the Managing Board of Siemens AG has been in place
since fiscal 2020 and was endorsed by the Annual Share-
holders' Meeting on February 5, 2020, by a majority of
94.51%.
The compensation of the Managing Board members con-
sists of fixed and variable components. Fixed compensa-
tion, which is not performance-based, comprises base
salary, fringe benefits and a pension benefit commit-
ment. Short-term variable compensation (Bonus) and
long-term variable compensation (Stock Awards) are per-
formance-based compensation and thus variable.
The Share Ownership Guidelines are a further key com-
ponent of the compensation system. They obligate Man-
aging Board members to permanently hold Siemens
shares worth a defined multiple of their base salary and
to purchase additional shares in the event that the value
of their shares falls below the defined amount.
Fringe benefits
→ Other Managing Board members:
€1,101,600 p.a.
→ President and CEO:
€1,770,000 p.a.
→ Payment in 12 monthly installments
→ Contractually agreed fixed annual
compensation based on a
Managing Board member's duties
and related responsibilities and his
or her experience
Base salary
- Provision of a company car
- Insurance allowances
- Costs of medical checkups
Competitive compensation in order to obtain the best candidates worldwide to develop and execute the Company's
strategy and manage its operations and in order to retain these individuals at the Company over the long term
Application
in 2021
in compensation
system
Implementation
Link to strategy
The following table provides an overview of the compo-
nents of the compensation system for Managing Board
members, the underlying goals (including the link to the
Company's strategy) and the components' concrete im-
plementation in fiscal 2021.
The Managing Board compensation system is also sup-
plemented by commitments granted in connection with
the commencement and termination of appointments to
the Managing Board as well as any change in the regular
place of work.
FIXED COMPENSATION
Compensation Report B. Compensation of Managing Board members
→ President and CEO: €1,770,000
→ Other Managing Board members:
VARIABLE COMPENSATION
Termination by mutual agreement
and without serious cause
Change of control (only for
first-time appointments and/or
reappointments before Novem-
ber 2019)
→ Compensation alloted to Judith Wiese
for the loss of benefits granted by her
former employer: €1,469,124 (gross)
50% in the form of Stock Awards
additionally to the 2021 tranche
-
in November 2020
50% in cash in March 2021
MAXIMUM COMPENSATION
Caps Managing Board members'
compensation in order to avoid
uncontrollably high payments and
thus disproportionate costs and risks
for the Company.
→ Determined annually by the
Supervisory Board
→ Equals the sum of maximum
amounts that can possibly be
paid out to each Managing Board
member from all compensation
components for the relevant fiscal
year and is calculated as follows:
Base salary
+ maximum fringe benefits
+ BSAV contribution or amount
for free disposal
+ two times the Bonus
target amount
+ three times the Stock Awards
target amount
→ Maximum compensation for each
Managing Board member for fiscal
2021 determined in accordance
with the compensation system
→ Final assessment of compliance with
maximum compensation when the
2021 Stock Awards tranche is settled
in fiscal 2025
→ Reporting in Compensation Report
for fiscal 2025
Composition of total target compensation
The Supervisory Board has determined, in accordance
with the compensation system for the Managing Board
members, the amount of each Managing Board mem-
ber's total target compensation for fiscal 2021. In making
this determination, the Supervisory Board has ensured
that the proportion of long-term variable compensation
always exceeds that of short-term variable compensation
and that the proportions of the individual compensation
components are within the ranges defined in the com-
pensation system.
and compensation structure
B.2.1 Target compensation
B.2 Principles of the
determination of compensation
FISCAL 2021 8
→ Commitments in connection with
the termination of Managing Board
appointments:
→ Verification date: March 12, 2021
→ Relevant share price: €111.13
→ Fulfilled by all the Managing Board
members obligated to provide
verification
→ Relevant share price: average Xetra
opening price of the fourth quarter
of the previous calendar year
→ Verification date on second Friday
in March
→ Four-year build-up phase
→ Obligates Managing Board members
to permanently hold Siemens shares
of an amount equal to a multiple of
their base salary during their terms
of office on the Managing Board
President and CEO: 300%
- Other Managing Board
members: 200%
Foster an alignment of Managing
Board and shareholder interests and
provide additional incentives to
sustainably increase Company value.
SHARE OWNERSHIP GUIDELINES
→ Obligation to purchase additional
shares if the value of the accu-
mulated shareholding falls below
the respective amounts to be
verified due to fluctuations in
the Siemens share price
€1,101,600
-
Are part of competitive compensation
and help the Company obtain the
best candidates worldwide for the
Managing Board.
Long-term variable
compensation (Stock Awards)
Fosters long-term commitment and
provides incentives for sustainable
value creation in accordance with
the interests of shareholders and
for the achievement of strategic sus-
tainability targets.
Performance-oriented plan settled
by share transfer after the end of
an approximately four-year vesting
period
→ Performance range: 0% to 200%,
using linear interpolation
→ Two performance criteria:
80%: development of total
shareholder return (TSR) relative
to an international sector index
• 12-month reference and
•
36-month performance period
Outperformance relative to
sector index-/+20 percent-
age points
- 20%: Siemens-internal ESG/Sus-
tainability index with three equally
weighted key performance indica-
tors and annual interim targets
→ Payout cap: 300% of target amount
2021 Stock Awards tranche
→ Grant date: November 13, 2020
End of vesting period: in Novem-
ber 2024
→
→ Performance criteria:
80%: development of TSR relative
to MSCI World Industrials index
20%: ESG key performance
indicators: CO2 emissions,
digital learning hours and
Net Promoter Score
Target amounts (based on 100% target
achievement)
OTHER BENEFITS
Application
in 2021
in compensation
system
Implementation
Link to strategy
Compensation Report B. Compensation of Managing Board members
→ Commitments granted in connec-
tion with the commencement of
Managing Board appointments:
Compensation for the loss of
benefits from a former employer
Moving expenses due to a change
of the regular place of work at the
request of the Company
7
No application in fiscal 2021
In cases of severe breaches of duty or
compliance and/or unethical behavior
or in cases of grossly negligent or willful
breaches of duty of care or in cases in
which variable compensation compo-
nents linked to the achievement of
specific targets have been unduly paid
out on the basis of incorrect data, the
Supervisory Board can withhold
or reclaim variable compensation.
Aim to ensure sustainable Company
development and avoid inappropriate
risks.
Malus and clawback
regulations
→ Other Managing Board members:
€1,259,000
→ President and CEO: €2,390,000
→ CFO: €1,544,000
FISCAL 2021
1,544
2,203
4,096
7,170
3,777
3,777
4,632
3,777
2,583
1,889
13,604
7,781
7,715
8,636
7,715
5,327
3,891
1 The value of the Siemens shares transferred after the expiration of the vesting period is capped at 300% of the Stock Awards target amount.
If this cap is exceeded, a corresponding number of Stock Awards is forfeited without refund or replacement.
FISCAL 2021 11
Compensation Report B. Compensation of Managing Board members
12
FISCAL 2021
The performance criteria relevant for fiscal 2021, the key
performance indicators, the focus topics and the ex-
planations of how these foster the Company's long-term
development are shown in the following table.
The performance criteria and the key performance indi-
cators used to measure performance for variable com-
pensation in fiscal 2021 are derived from the Company's
strategic goals and operational steering and are in line
with the current compensation system. As a rule, all the
performance criteria measure successful value creation
in all its different forms, as strategically envisioned.
In line with Siemens' social responsibility, sustainability
is also included in the performance criteria.
Variable compensation is tied to performance and
accounts for a significant proportion of the total compen-
sation of Managing Board members. It consists of a short-
term variable component (Bonus) and a long-term variable
component (Stock Awards).
B.3 Variable compensation
in fiscal 2021
1,102
The appropriateness review of Managing Board com-
pensation for fiscal 2021 has shown that the Managing
Board compensation resulting from target achievement
in fiscal 2021 is appropriate.
B.2.3 Appropriateness of compensation
The Supervisory Board conducted the annual review of
Managing Board compensation in order to determine
the latter's appropriateness and conformity with market
conditions. For this purpose, the Supervisory Board
assessed with the assistance of an external and inde-
pendent compensation consultant and in accordance
with the compensation system the compensation's
level and structure relative to the companies included in
the DAX 40, the German blue-chip stock index, and rela-
tive to the companies included in the STOXX Europe 50
(horizontal comparison). In the course of its review, the
Supervisory Board also assessed the development of
Managing Board compensation relative to the compen-
sation of Senior Management and Siemens' total work-
force in Germany (vertical comparison). Senior Manage-
ment comprises executive employees. The total
workforce comprises Senior Management as well as the
Siemens employees who are covered by collective bar-
gaining agreements and those who are not. In addition
-
The final assessment of compliance with the maximum
compensation for fiscal 2021 will be included in the Com-
pensation Report for fiscal 2025.
be exceeded even if the value of the Siemens shares
transferred equals 300% of the Stock Awards target
amount (cap).
Since the 2021 Stock Awards tranche is not due until No-
vember 2024, compliance with the maximum limit of the
Stock Awards for fiscal 2021 can only be finally assessed
in November 2024, when the 2021 Stock Awards tranche
is settled. However, compliance with the maximum com-
pensation for fiscal 2021 in accordance with Section 87a
of the German Stock Corporation Act is already ensured
since the maximum compensation for fiscal 2021 will not
The base salary and the BSAV contribution (or the amount
for free disposal) are fixed amounts. In no case did the
fringe benefits awarded to a Managing Board member
exceed the maximum amount defined for fiscal 2021. The
Bonus cap was not reached in fiscal 2021.
to a status quo analysis, the vertical comparison took into
account the development of compensation ratios over
time. Since Siemens Healthineers is a separately man-
aged, publicly listed company, its workforce was not in-
cluded in the vertical comparison.
NON-FINANCIAL, QUALITATIVE TARGETS
1,509
2,203
755
551
compensation
+
Fringe benefits (maximum amount)
133
83
83
83
83
57
41
BSAV contribution/amount for
+ free disposal
991
617
551
2,203
3,540
= Maximum compensation
(three times target amount)'
+
vesting: 2020-2024
2,203
2021 Stock Awards
Bonus for fiscal 2021
Variable
308
423
551
617
compensation + (two times target amount)
1,102
FINANCIAL TARGETS
Compensation Report → B. Compensation of Managing Board members
→ CO2 emissions - Climate neutrality by 2030 in order to support the 1.5-degree target
and thus combat global warming.
→ Digital learning hours - Focus on learning in order to empower our people to
remain resilient and relevant in a constantly changing environment.
→ Net Promoter Score - Strong customer relationships are the basis for sustainable
development both for Siemens and for our customers.
The Supervisory Board aims to ensure that the targets
for variable compensation are demanding and ambitious.
If they are not reached, variable compensation can be
reduced to zero. If the targets are significantly exceeded,
target achievement is capped at 200%.
FISCAL 2021
13
Compensation Report → B. Compensation of Managing Board members
B.3.1 Short-term variable
compensation (Bonus)
B.3.1.1 BASIC PRINCIPLES AND FUNCTIONING
The Bonus system is based on three equally weighted
target dimensions, which take account of the overall re-
sponsibility of the Managing Board as well as each Man-
aging Board members' specific business responsibilities
and individual challenges:
→ "Siemens Group"
→ "Managing Board portfolio"
→ "Individual targets."
Performance criteria are assigned to each of the three
target dimensions based on Company priorities and the
responsibilities of each Managing Board member. One
financial performance criterion is assigned to the
"Siemens Group" dimension and another to the "Manag-
ing Board portfolio" dimension. The fulfillment of these
criteria is measured on the basis of key performance indi-
Bonus design and calculation of payout amount
cators. Within the "Individual targets" dimension, the
financial performance criteria growth and liquidity can be
employed as can additional non-financial performance
criteria. In the case of non-financial performance criteria,
the Supervisory Board considers the degree to which a
Managing Board member has fulfilled so-called focus
topics, which comprise operations-related aspects of the
execution of the Company's strategy as well as sustain-
ability-related aspects.
At the end of the fiscal year, target achievement for the
individual key performance indicators and the achieve-
ment of the Managing Board members' individual tar-
gets are determined and aggregated to form a weighted
average. The percentage of weighted target achieve-
ment multiplied by the individual target amount yields
the Bonus payout amount for the past fiscal year. The
payable Bonus is capped at two times the target amount
and is paid in cash, at the latest, together with the com-
pensation paid at the end of February of the following
fiscal year.
How is the new strategy
reflected in Managing Board
compensation?
14
FISCAL 2021
33.33%
Individual
targets
Board portfolio
33.33%
Managing
The Siemens-internal ESG/Sustainability index for the 2021 Stock Awards tranche
includes:
payout amount
Group
X
33.34%
Siemens
Weighted average target achievement (0%-200%)
target amount
Bonus
Bonus
Performance criteria of variable compensation and link to strategy
→ Sustainability/diversity - Siemens honors its social responsibility by achieving
ambitious sustainability targets and by fostering diversity, inclusion and equal
opportunity.
→ Innovation performance - Innovation is the basis of our success. The development
and introduction of future-oriented technologies, products and services create opportu-
nities for a sustainable and better future by, among other things, reducing emissions
and waste and enhancing resource efficiency.
Performance
criterion
Key performance
indicator/focus topic Bonus
Profit
Profitability/
capital efficiency
Liquidity
Growth
Long-term
value creation
Earnings per
share (EPS)
Return on capital
employed (ROCE)
Cash conversion
rate (CCR)
Comparable
revenue growth
Total shareholder
return (TSR)
Stock
Awards Link to strategy
EPS reflects the net income attributable to the shareholders of Siemens AG and incen-
tivizes the sustainable increase in profit - particularly by focusing on profitable growth.
This key performance indicator provides a comprehensive perspective that encompasses
all units of the Siemens Group.
→ Succession planning – Thorough succession planning ensures sustainable
Company development and fosters talents and young employees.
The focus topics in fiscal 2021 comprised business development, optimization/efficiency
enhancement, the implementation of portfolio measures and the implementation of
other strategic measures.
The individual targets for executing the Company strategy enable the Company to focus
on specific factors that are aligned with its short- and medium-term targets and measures
in order to ensure its long-term strategic development.
index
Siemens-internal
ESG/Sustainability
Diverse focus
topics
→ Employee satisfaction - Satisfied employees feel valued. They are motivated
and resilient, tackle challenges gladly and thus make a major contribution to the
Company's success.
Diverse focus
topics
of Company
strategy
Execution
TSR is a yardstick for measuring the achievement of Siemens' strategic goal of sustainably
increasing Company value. It indicates total value creation for shareholders in the form
of increases in the Siemens share price and dividends paid.
Further accelerating high-value qualitative growth is a key element of Siemens' strategy.
As a focused technology company, Siemens wants to expand its position on all targeted
markets and tap additional profitable markets.
CCR measures the ability to convert profit into cash flow in order to finance growth and
offer our shareholders an attractive, progressive dividend policy.
ROCE, which is the primary measure for managing capital efficiency at Group level,
reflects our focus on profitable growth, the implementation of measures to sustainably
increase competitiveness and stringent working capital management.
Sustainability
35%
1,102
1,102
2 For fiscal 2021, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary. The target amount reported
here is also equal to the maximum amount.
3 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive
a fixed cash amount for free disposal.
FISCAL 2021 10
Target compensation fiscal 2021 (cont.)
Compensation Report → B. Compensation of Managing Board members
Joe Kaeser¹
President and CEO until Feb. 3, 2021
Klaus Helmrich²
Managing Board member until March 31, 2021
Managing Board members
who left during the fiscal year
2021
2020
2021
2020
€ thousand in % of TTC € thousand in % of TTC
€ thousand in % of TTC € thousand in % of TTC
Fixed
Base salary
755
41
2%
165
2%
57
+ Fringe benefits³
1 Dr. Roland Busch was first appointed a full member of the Managing Board effective April 1, 2011. He served as Deputy CEO from October 1, 2019, until the
end of the Annual Shareholders' Meeting on February 3, 2021, when he succeeded Joe Kaeser as President and CEO.
compensation
1,102
26%
551
26%
2,205
26%
26%
2%
100%
= Total target compensation (TTC)
100%
4,447
100% 4,447 100%
Judith Wiese
Managing Board member since Oct. 1, 2020
2021
2020
€ thousand in % of TTC € thousand in % of TTC
27%
Fixed
Base salary
1,102
compensation
+Fringe benefits²
83
2%
+ BSAV contribution/amount for free disposal³
551
2020 Stock Awards (vesting: 2019-2023)
31%
1,259
2021 Stock Awards (vesting: 2020-2024)
+ Long-term variable compensation
Bonus for fiscal 2020
4,096
27%
+ Short-term variable compensation
Bonus for fiscal 2021
Variable
compensation
42%
1,735
= Total
13%
1,102
1,102
83
+ BSAV contribution/amount for free disposal
= Total
30%
1,259
30%
2,081 100%
4,162
100%
1 Pro-rated compensation for the period from October 1, 2020, up to and including February 3, 2021.
2 Pro-rated compensation for the period from October 1, 2020, up to and including March 31, 2021.
3 For fiscal 2021, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary.
The target amount reported here is also equal to the maximum amount for the fiscal year on a pro-rated basis.
B.2.2 Maximum compensation
The maximum compensation of each Managing Board
member is determined annually by the Supervisory Board
in accordance with Section 87a para. 1 sent. 2 No. 1 of the
German Stock Corporation Act. Maximum compensation
is equal to the total of the maximum amounts of all com-
pensation components that can possibly be paid out to
each Managing Board member for the relevant fiscal
year. It is calculated by adding base salary, maximum
fringe benefits, the BSAV contribution (or the amount
for free disposal) as well as two times the Bonus target
Maximum compensation fiscal 2021
amount and three times the Stock Awards target amount.
Twice the Bonus target amount and triple the Stock
Awards target amount also correspond to the respective
limits (individual caps) on the amount of variable com-
pensation.
The following table shows the maximum compensation
of each Managing Board member as approved by the
Supervisory Board for fiscal 2021 in accordance with Sec-
tion 87a para. 1 sent. 2 No. 1 of the German Stock Corpo-
ration Act.
Managing Board members
in office on September 30, 2021
Managing Board members
who left during the fiscal year
Joe
1,770
Base salary
Fixed
(€ thousand)
March 31, 2021)
Klaus
Helmrich
(until
2,516
8,326 100%
(until
Feb. 3, 2021)
Kaeser
Prof. Dr.
Ralf P.
Thomas
Matthias
Rebellius
Cedrik
Neike
Busch
Dr. Roland
Judith
Wiese
2%
2,850 100%
630
423
15%
1,235
15%
308
15%
617
15%
1,234
43%
3,605
43%
901
43%
1,801
43%
Variable
compensation
30%
861
26%
1,102
26%
2,205
30%
26%
26%
755
+ Long-term variable compensation
2021 Stock Awards (vesting: 2020-2024)
2020 Stock Awards (vesting: 2019-2023)
= Total target compensation (TTC)
Bonus for fiscal 2020
Bonus for fiscal 2021
+ Short-term variable compensation
551
The Managing Board presented the new Company strat-
egy for accelerated high value growth at Capital Market
Day on June 24, 2021: Siemens as a focused technology
company, active in highly attractive growth markets that
are the backbone of the global economy: industry, infra-
structure, transportation and healthcare. The Supervisory
Board is convinced that this strategy positions Siemens to
meet the challenges of the future. The Managing Board
compensation that has been determined by the Supervi-
sory Board fosters the implementation of the Company's
strategic targets by providing incentives for increasing
profit and capital efficiency and for cash generation.
Compensation Report → A. Fiscal 2021 in retrospect
110%
FISCAL 2021
In the course of transferring the 2017 Stock Awards
tranche, compliance with the maximum amounts of total
compensation for fiscal 2017 was also reviewed. The ap-
plicable maximum amount was not exceeded in the case
of any active or former Managing Board member.
3 The amount reported for Cedrik Neike under "Value at transfer date" comprises the 4,345 Phantom Stock Awards allocated by Siemens AG that were valued
at €113.72, the Xetra closing price of the Siemens share on November 12, 2020, in accordance with the plan requirements applicable to the Managing Board as well
as the 1,015 Stock Awards allocated by Siemens Ltd. China that were valued at €113.04, the Xetra closing price of the Siemens share on November 13, 2020, in
accordance with the plan requirements applicable to Senior Management. For the calculation of the additional cash payment resulting from the Siemens Energy
spin-off, the Xetra closing prices of the Siemens Energy share on November 12, 2020, of €22.20 and on November 13, 2020, of €22.87, respectively, were used in
accordance with the relevant plan requirements.
2 The Stock Awards settled by share transfer were valued at €112.78, the German low price of the Siemens share on November 13, 2020.
1 Cedrik Neike was appointed a full member of the Managing Board effective April 1, 2017. Due to his intra-year appointment, his Stock Awards target amount for fiscal
2017 was determined on a pro-rated basis and, instead of Stock Awards, a corresponding number of Phantom Stock Awards was allocated to him in accordance with
plan requirements. In contrast to Stock Awards, these Phantom Stock Awards were settled after the end of the vesting period by cash payment rather than by share.
transfer. In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China
from May 1, 2017, to March 31, 2019. Of the allocated number of Phantom Stock Awards reported here, 1,141 are attributable to the commitment by Siemens Ltd.
China. Of the calculated number of Phantom Stock Awards reported here, 1,015 were awarded and paid by Siemens Ltd. China.
€119,003
€238,006
23
€2,418,229 +
€1,209,114 +
89% =
89% =
24,092 x
12,046 x
€91.32 =
€91.32 =
€2,200,000/
€1,100,000/
Klaus Helmrich (until March 31, 2021)
Joe Kaeser (until Feb. 3, 2021)
members who left during
the fiscal year
21,442 >
10,721 >
Managing Board
B.3.2.4 CHANGES IN STOCK AWARDS
The following overview shows the changes in the balance
of the Stock Awards held by Managing Board members in
fiscal 2021.
FYn
FYn+1
OCT
NOV
NOV
12 months
TSR reference values for
IN FISCAL 2021
→ MSCI World Industrials index
→ Siemens AG
Matthias Rebellius
Cedrik Neike3
Dr. Roland Busch
in office on September 30, 2021
Managing Board members
(Amounts in number of units)1
Changes in Stock Awards in fiscal 2021
36 months
Calculation of TSR reference values and TSR performance values for Stock Awards
€59,836
€119,003
€1,209,114 +
€608,849 +
€1,209,114 +
Number
Allocation
price
Target amount
(based on
100% target
achievement)
Managing Board
members in office on
September 30, 2021
Information on the transfer of the 2017 Stock Awards tranche
ble employees were, accordingly, entitled to receive an
additional cash payment based on the spin-off ratio of 2:1
and on the Siemens Energy share price of €22.20 on the
date when their stock-based compensation commit-
ments became due.
-
Nov. 11, 2016
date. At the time when the 2017 Stock Awards became
due, the Managing Board members - like all other eligi-
Compensation Report → B. Compensation of Managing Board members
22
FISCAL 2021
A = (2.16)
percentage
points
Target achievement: 89%
(12.03)%
€95.29
The following table provides a summary of the key pa-
rameters of the 2017 Stock Awards tranche. In connection
with the due date and settlement of the Stock Awards for
fiscal 2017, the table also includes an additional cash pay-
ment to the Managing Board members as a result of the
Siemens Energy spin-off. The spin-off of Siemens Energy
in fiscal 2020 led to adjustments in the stock-based com-
pensation commitments agreed upon until the spin-off
€119,003
of Stock
Awards¹
allocated
Number
of Stock
Awards¹
calculated
10,721 >
5,360 >
10,721 >
89% =
89% =
89% =
6,023 x
12,046 x
€91.32 =
€91.32 =
€1,100,000 /
Prof. Dr. Ralf P. Thomas
€550,000 /
Target
achievement
of share price
performance
Cedrik Neike (since April 1, 2017)³
€91.32 =
€1,100,000 /
Dr. Roland Busch
spin-off
Nov. 13, 2020²
Cash payment
Siemens Energy
Value at
transfer date
12,046 x
€108.32
At the end of the vesting period, the change in Siemens'
TSR as well as that of the sector index is determined by
comparing the TSR reference values with the TSR perfor-
mance values.
In order to determine at the end of the vesting period
how well the TSR of Siemens AG has performed rela-
tive to the TSR of the sector index, the TSR perfor-
mance value is calculated over the subsequent 36 months
Compensation range
Floor
(based on 0%
target achievement)
Target amount
(based on 100%
target achievement)
Cap
(based on 200%
target achievement)
Total target
achievement
Compensation Report B. Compensation of Managing Board members
Bonus
payout amount
€1,770,000
€3,540,000
158.27%
€2,801,379
€0
€1,101,600
€2,203,200
€0
157.94%
Judith Wiese
Matthias Rebellius
118.00%
67%
avg. 110.00%
Succession planning
Successful transition of the Digital Industries business to Cedrik Neike
Target achievement: 118.00% to 133.50%
FISCAL 2021
Prof. Dr. Ralf P. Thomas
17
Bonus for fiscal 2021
Total target achievement and the resulting Bonus payout
amount for each Managing Board member are summa-
rized in the following table.
Total target achievement and Bonus payout amounts for fiscal 2021
Managing Board members
in office on September 30, 2021
Dr. Roland Busch
Cedrik Neike
Total target achievement for the
(performance period). The TSR performance value is the
average of the end-of-month values during the perfor-
mance period.
€1,739,867
€1,101,600
€550,800
€1,509,376
€1,101,600
154.44%
153.11%
€1,165,540
€843,330
B.3.2 Long-term variable
compensation (Stock Awards)
B.3.2.1 BASIC PRINCIPLES AND FUNCTIONING
Siemens grants long-term variable compensation in the
form of Stock Awards. A Stock Award is the claim to one
share-conditional on target achievement - after the ex-
piration of a defined vesting period. The vesting period
is, accordingly, the term of each tranche.
€0
At the beginning of a fiscal year, the Supervisory Board
defines a target amount in euros based on 100% target
achievement for each Managing Board member. This tar-
get amount is extrapolated to target achievement of 200%
("maximum allocation amount"). Stock Awards for this
maximum allocation amount are then allocated to the
Managing Board members. The number of Stock Awards is
calculated by dividing the maximum allocation amount by
the price of the Siemens share on the allocation date, less
the estimated discounted dividends ("allocation price").
Performance criteria
Since fiscal 2020, the number of Siemens shares that is
actually transferred depends 80% on the financial perfor-
mance criterion "long-term value creation," measured on
the basis of the key performance indicator "total share-
holder return" (TSR), and 20% on the non-financial per-
formance criterion "sustainability." For measuring the
"sustainability" performance criterion, Siemens AG's per-
formance in the environmental, social and governance
(ESG) area is assessed on the basis of a Siemens-internal
ESG/Sustainability index, the composition of which is de-
termined annually by the Supervisory Board.
Total shareholder return - TSR is indicative of the perfor-
mance of one share over a specified period of time - in
the case of Siemens, over the approximately four-year
vesting period. It takes into account changes in the
share price and the dividends paid during this period. To
reflect the Company's international footprint, the TSR of
Siemens AG is compared at the end of the vesting period
with the TSR of an international sector index, the MSCI
World Industrials or a comparable successor index.
Target achievement for TSR is concretely determined
by first calculating a TSR reference value for Siemens AG
and a TSR reference value for the sector index. The TSR
FISCAL 2021 18
Compensation Report → B. Compensation of Managing Board members
reference value is equal to the average of the end-of-
month values over the first 12 months of the vesting
period (reference period).
An approximately four-year vesting period begins with
the allocation of Stock Awards, after the expiration of
which Siemens shares are transferred. The beneficiary
Managing Board members are not entitled to dividends
during the vesting period.
€0
Klaus Helmrich (until March 31, 2021)
€0
€2,203,200
155.44%
€1,712,327
€0
€1,101,600
€2,203,200
157.44%
€754,688
€1,734,359
€1,101,600
€2,203,200
155.78%
€1,716,072
Managing Board members
who left during the fiscal year
Joe Kaeser (until Feb. 3, 2021)
€0
Optimization of the regional growth concept
(9.87)%
15.42%
Managing Board members
who left during the fiscal year
Joe Kaeser (until Feb. 3, 2021)
Klaus Helmrich (until March 31, 2021)
Target amount
(based on 100%
target achievement)
Maximum
allocation amount
Compensation Report → B. Compensation of Managing Board members
Judith Wiese³
Based on 200% target achievement
of Stock Awards
Fair value at
allocation date¹
Siemens-internal
Total shareholder return
(Weighting 80%)
ESG/Sustainability index
(Weighting 20%)
€2,390,000
€4,780,000
Maximum number
38,897
Prof. Dr. Ralf P. Thomas
Cedrik Neike
OCT '21
NOV '21
2022
2023
SEPT '24 OCT '24
NOV '24
Performance
measurement
Matthias Rebellius²
TSR reference period
ESG performance measurement based on interim targets for each fiscal year
The target amounts, the maximum allocation amounts,
the maximum number of Stock Awards allocated and
the fair value at allocation date in accordance with IFRS 2
Share-based Payment are shown in the following table.
The allocation price applicable for the 2021 tranche was
€98.31.
FISCAL 2021 21
Information on the allocation of 2021 Stock Awards tranche
Managing Board members
in office on September 30, 2021
Dr. Roland Busch
TSR performance period
NOV '20
9,724
€1,259,000
€1,722,262
€1,259,000
14,015
10,245
3,504
€1,007,142
2,561
€736,181
€861,131
€629,500
1 The fair value on the allocation date is calculated for the TSR component on the basis of a valuation model and amounts to €47.37. The fair value for the ESG component of
€97.96 is equal to the Xetra closing price of the Siemens share on the allocation date, less the discounted expected dividends. For the 2021 tranche, the allocation date in
accordance with IFRS 2 was December 14, 2020 (the date of communication to the Managing Board members).
3 As compensation for the loss of benefits granted by her former employer, the Supervisory Board allotted to Judith Wiese one-time compensation of €1,469,124 (gross)
in fiscal 2021 -50% in cash and the remaining 50% in the form of Stock Awards from the 2021 tranche. Accordingly, a further 14,944 Stock Awards from the 2021 tranche
with a fair value of €859,111 were allocated to Judith Wiese in November 2020, based on target achievement of 200%.
Concrete target setting and the degree of target achieve-
ment for the Siemens-internal ESG/Sustainability index
of the 2021 Stock Awards tranche will be published to-
gether with the degree of target achievement for the
TSR in the Compensation Report for fiscal 2025, after the
expiration of the vesting period.
B.3.2.3 TRANSFER OF STOCK AWARDS
IN FISCAL 2021 (2017 TRANCHE)
The 2017 Stock Awards tranche became due and was
settled in fiscal 2021. The 2017 Stock Awards tranche de-
pended on the performance of the Siemens share com-
pared to the share performance of five relevant compet-
itors during the approximately four-year vesting period
from November 11, 2016, to November 12, 2020.
Overview of target achievement for the 2017 Stock Awards tranche
Performance of the Siemens share compared to the share performance of five relevant competitors
2 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is Chairman of the Board of Directors and CEO of Siemens Schweiz AG.
The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under
the terms of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the target amount reported here (based on 100% target
achievement), €600,000 is attributable to Siemens Schweiz AG.
€2,795,114
€1,472,460
20,490
€2,518,000
20,490
5,123
€1,472,460
€1,259,000
€2,518,000
20,490
5,123
5,122
€1,544,000
€3,088,000
25,129
6,282
€1,805,745
€1,259,000
€2,518,000
€1,472,362
20.08%
OCT '20
Transfer
achievement.
Calculation of TSR target achievement
Target achievement
200%
100%
0%
(20) ppts.
The following applies for the determination of target
+20 ppts.
Siemens compared to MSCI World Industrials index
→ If the change in the TSR of Siemens AG is at least
20 percentage points above that of the sector index,
target achievement is 200%.
→ If the change in the TSR of Siemens AG is equal to
that of the sector index, target achievement is 100%.
If the change in the TSR of Siemens AG is at least
20 percentage points below that of the sector index,
target achievement is 0%.
If the change in the TSR of Siemens AG is between
20 percentage points above and 20 percentage points
below that of the sector index, target achievement is
calculated using linear interpolation.
FYn+4
OCT
Environmental, social and governance The Siemens-
internal ESG/Sustainability index is based on three
equally weighted, structured and verifiable ESG key per-
formance indicators. At the beginning of each tranche,
the Supervisory Board defines ambitious target values for
each of the ESG key performance indicators. Target mea-
surement is based on defined interim targets for each
fiscal year. Target achievement for the Siemens-internal
Relative
TSR
ESG/Sustainability index is finally determined at the end
of the approximately four-year vesting period on the
basis of the weighted average of the target achievement
values calculated for each of the key performance indi-
cators.
→ MSCI World Industrials index
→ Siemens AG
performance price
(16.05)%
(60.54)%
(8.27)%
€78.71
€65.55
$159.09 $183.62
¥4,607.00 ¥3,867.60
TSR performance values for
$26.40
Siemens AG
Competitors (average)
Schneider
Rockwell
MHI
GE
ABB
CHF 23.26 CHF 21.33
$10.42
Process sequence
FISCAL 2021 19
Determination of total target achievement
FISCAL 2021 20
Compensation Report B. Compensation of Managing Board members
B.3.2.2 ALLOCATION OF STOCK AWARDS
IN FISCAL 2021
The Supervisory Board approved the following perfor-
mance criteria for the 2021 Stock Awards tranche:
→ "Long-term value creation," measured in terms of the
development of the TSR of Siemens AG relative to the
international sector index MSCI World Industrials and
→ "Sustainability," measured in terms of the Siemens-
internal ESG/Sustainability index, which is based on
the following three equally weighted key performance
indicators:
ESG key performance indicators for 2021 Stock Awards tranche
Settlement by
transfer of Siemens
shares to Managing
Board member
CO2 emissions
Digital learning hours per employee
The total number of digital learning
hours completed in virtual trainer-led
training sessions, self-paced learning,
learning on the job, community-based
virtual learning and hybrid training
sessions, divided by the total number
of employees.
Net Promoter Score (NPS)
Customer intention to recommend us,
measured on a scale of 1 (extremely
unlikely) to 10 (extremely likely). NPS
is defined as the number of promoters
(%) minus the number of detractors (%).
The Supervisory Board set the allocation date for the
2021 Stock Awards tranche at November 13, 2020. The
time sequence of this tranche is as follows.
Time sequence for the 2021 Stock Awards tranche
Allocation and four-year vesting period
Amount of greenhouse gases emitted
by the Company's business operations
in tons of CO2 equivalent, excluding
carbon offsets (for example, certifi-
cates).
Compensation Report → B. Compensation of Managing Board members
Final number of
Stock Awards
>300% of target amount
Number of Stock Awards
based on target achievement
is reduced by amount by which
cap is exceeded
At the end of the approximately four-year vesting period,
the Supervisory Board determines the degree of target
achievement. The target achievement range for TSR and for
the Siemens-internal ESG/Sustainability index is between
0% and 200%. If target achievement is less than 200%, a
number of Siemens Stock Awards equivalent to the short-
fall are forfeited without refund or replacement and a
correspondingly smaller number of shares is transferred.
Calculation of Siemens shares to be transferred (illustrative)
The value of the Siemens shares transferred after the ex-
piration of the vesting period is also capped at 300% of
the target amount. If this cap is exceeded, a correspond-
ing number of Stock Awards is forfeited without refund
or replacement.
The remaining number of Stock Awards is settled by the
transfer of Siemens shares to the relevant Managing
Board member.
ESG
(Weighting: 20%)
ESG
≤300% of target amount
Number of Stock Awards
based on target achievement
= final number of Stock Awards
TSR
(Weighting: 80%)
Adjustment to actual
target achievement
120%
Reference price versus
Maximum number
of Stock Awards
(based on 200%
target achievement)
Number of
Stock Awards
based on target
achievement
Xetra closing price
of Siemens share
on transfer date
Value of
Stock Awards
in euros
(Cap: 300%)
TSR
122.00%
134.00%
110.00%
134.00%
Successful transition to new CEO Dr. Roland Busch
CCR IB
33.33% Managing Board portfolio
Return on capital employed (ROCE)
Return on capital employed (ROCE): Target setting and target achievement
for the "Managing Board portfolio" target dimension for
fiscal 2021 for all Managing Board members. ROCE is
defined as profit before interest and after tax divided by
average capital employed. The target amount for ROCE
is based on the budget plans. To focus on the operating
performance of Siemens AG, Varian and main effects
relating to the stake in Siemens Energy (profit "Siemens
Energy Investment" and asset "Siemens Energy Invest-
ment") were disregarded in target setting and in deter-
mining ROCE target achievement.
Because of the new structure of Siemens AG and the
changes in the assignment of Managing Board respon-
sibilities as of October 1, 2020, target setting for the
Bonus for fiscal 2021 focused on the Managing Board's
overall responsibility, cross-business collaboration and
Siemens' strategic realignment. For this reason, the
Supervisory Board of Siemens AG established "profit-
ability/capital efficiency" measured in terms of return on
capital employed (ROCE) as the performance criterion
"Managing Board portfolio" target dimension
Compensation Report → B. Compensation of Managing Board members
FISCAL 2021 15
Target achievement: 141.33%
Performance range
For fiscal 2018 through 2020: comparable EPS
of continuing operations
+€1.50
€(1.50)
target
(actual value)
Cap
100%
Floor
avg. 2019-2021 €6.09
€7.68
2021
€6.97
€5.47
€3.97
EPS
0%
€4.77
2020
avg.
€6.09
Target achievement
200%
200.00%
Calculation:
Average achievement of the equally weighted individual targets: CCR as reported, growth and/or further non-financial, qualitative individual targets
Calculation:
2 to 4 individual targets, target achievement between 0% and 200% each
33.33% Individual targets
Compensation Report → B. Compensation of Managing Board members
Individual targets: Target setting and target achievement
Target achievement
FISCAL 2021 16
The other individual targets were defined on the basis of
the Managing Board members' respective areas of re-
sponsibility.
For the Managing Board members with business respon-
sibility for Digital Industries (DI) and Smart Infrastructure
(SI), the CCR targets are business-specific and defined as
the ratio of free cash flow to Adjusted EBITA at each busi-
ness. The target amounts for CCR were based on the
budget plans.
When setting the targets for fiscal 2021, the Supervisory
Board took into account both the shared tasks and the
individual responsibilities of the Managing Board mem-
bers. For this reason, the cash conversion rate (CCR) was
defined as a target for all Managing Board members. The
CCR reflects a company's ability to convert profit into
available cash. For the President and CEO and the
Managing Board members with primarily functional
responsibility, the CCR target was defined on the basis of
Siemens' Industrial Businesses (IB). The CCR IB is defined
as the ratio of free cash flow from IB to Adjusted EBITA IB.
The "Individual targets" target dimension comprises two
to four equally weighted individual targets, achievement
of each of which may be between 0% and 200%.
"Individual targets" target dimension
Target achievement: 200.00%
(100% target)
(3.0) ppts. +3.0 ppts.
Performance range
Cap
points
18.56%
+5.46 percentage
13.10%
ROCE (as reported)
Varian and
Siemens Energy-related effects
Actual ROCE value
8.54% 11.54% 14.54%
Floor
100%
target
Reference
price
0%
18.56%
2021
value
100%
Actual
+
avg. 2018-2020 --> €5.47
€5.82
2019
119,883
70,291
25,613
5,360
663
89,881
25,612
25,612
88,967
31,411
10,721
1,325
108,332
40,557
1,325
40,557
who left during the fiscal year
Joe Kaeser (until Feb. 3, 2021)
Klaus Helmrich (until March 31, 2021)
152,528
76,314
17,519
12,806
21,442
10,721
2,650
1,325
145,955
77,074
1 The settlement of Stock Awards from the 2018 tranche will be by share transfer up to a target achievement of 100%, and above 100% in cash. For this reason, the number
of Stock Awards from the 2018 tranche, as set out in the table, is based on a target achievement of 100%. Starting with the 2019 tranche, settlement of Stock Awards will be
entirely by share transfer. For this reason, the number of Stock Awards, as set out in the table, is based on a target achievement of 200%. At the end of the vesting period,
a final number of Siemens shares to be transferred will be determined on the basis of actual target achievement and taking into account the Stock Awards cap.
2 The target achievement of the Stock Awards from the 2017 tranche, which were due and settled in fiscal 2021, was 89%. As the Stock Awards from the 2017 tranche were
allocated on the basis of 100% target achievement, a number equivalent to this shortfall was forfeited without refund or replacement, in accordance with plan requirements.
3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017,
to March 31, 2019. The reported figures include the Stock Awards allocated to Cedrik Neike by Siemens Ltd. China due to this position.
4 The reported figures also include the Stock Awards allocated to Judith Wiese in November 2020 as compensation for the loss of benefits granted by her former employer
in addition to the regular allocation of Stock Awards from the 2021 tranche.
FISCAL 2021 24
Managing Board members
-200%
10,721
83,308
2021
value
€5.83
2018
100%
Actual
EPS
FY
141.33%
Calculation of target and actual value:
200%
Target achievement
Basic earnings per share (EPS), three-year average
33.34% Siemens Group
48,621
Earnings per share (EPS): Target setting and target achievement
For the "Siemens Group" target dimension in fiscal 2021,
the Supervisory Board of Siemens AG approved the perfor-
mance criterion "profit," measured in terms of basic earn-
ings per share (EPS). EPS is calculated by dividing income
from continuing operations, income from discontinued
operations and net income - all attributable to ordinary
shareholders of Siemens AG - by the weighted average
number of shares outstanding during the fiscal year.
"Siemens Group" target dimension
B.3.1.2 BONUS FOR FISCAL 2021
Compensation Report → B. Compensation of Managing Board members
Prof. Dr. Ralf P. Thomas
Judith Wiese4
Compensation Report B. Compensation of Managing Board members
During fiscal year
Balance at beginning
of fiscal 2021
Allocated
Vested and settled
Other changes²
Balance at the end
of fiscal 2021
For both target setting and target achievement, the
average EPS of three consecutive fiscal years is used. The
averaged values take account of the Company's long-term
performance and provide incentives for a sustainable in-
crease in profit. Because of the significant change in the
portfolio of Siemens AG due to the spin-off of Siemens
Energy at the end of fiscal 2020, the EPS target for fiscal
2021 was defined on the basis of the comparable EPS of
continuing operations in the years 2018 through 2020. In
this process, the Flender sale in the first half of fiscal 2021
was also taken into account.
134.00%
ROCE
Industrial Businesses
Implementation of portfolio measures and drive performance
of Portfolio Companies
Expansion and use of innovative loT solution building blocks
CCR IB
Further development of the strategy for Smart Infrastructure
and Supply Chain Management
Expansion of the software and digital businesses
Expansion und use of innovative loT solution building blocks
CCR SI
100%
Expansion of the software and digital businesses
CCR DI
enhancement
Optimization/efficiency
Implementation of other
strategic measures
Innovation performance
Cash conversion rate
Implementation of
portfolio measures
25%
75%
Rebellius
Matthias
Cash conversion rate
Growth
25%
Implementation of other
strategic measures
Innovation performance
75%
Cedrik
Neike
Cash conversion rate
Growth
25%
Succession planning
Succession planning, taking into consideration Siemens'
diversity targets
avg. 133.33%
133.50%
Further development of the strategy for the Mobility business
Total target
achievement
achievement
134.00%
140.00%
132.50%
avg. 130.00%
160.00%
CCR IB
Cash conversion rate
Succession planning
Cash conversion rate
Growth
Klaus
Helmrich
33%
50%
Joe Kaeser
50%
who left during the fiscal year
Managing Board members
avg. 123.33%
126.00%
Strengthening employee responsibility and people development
Implementation and realization of CO2 climate targets; succession
planning, taking into consideration Siemens' diversity targets
Expansion of Global Business Services
Sustainability/diversity
Target
134.00%
Preserve rating and safeguard deleveraging
Implementation of other
strategic measures
Cash conversion rate
Business development
Employee satisfaction
75%
Judith
Wiese
25%
avg. 130.00%
131.00%
Performance of Siemens Financial Services and optimization
of finance organization
75%
P. Thomas
Prof. Dr. Ralf
134.00%
avg. 113.33%
125.00%
CCR IB
Performance range
Further development of the strategy for Digital Industries
and Advanta
(0.4)
Floor
1.36
0.96
0.56
CCR
0%
1.12
2021
Actual
value
100%
140.00%
200%
Digital Industries
Cash conversion rate
100%
Target achievement
+0.5
(0.5)
target
Cap
100%
Floor
1.45
+0.4
0.45
CCR
0%
1.12
2021
Actual
value
Performance range
Cap
0.95
(0.4)
target
target
Cap
100%
Floor
1.36
0.96
0.56
CCR
0%
1.20
2021
value
100%
Actual
Performance
price
160.00%
Smart Infrastructure
Performance range
+0.4
Key performance
Weighting indicator/focus topic
25%
Cash conversion rate
Growth
Implementation of other
strategic measures
Individual targets per Managing Board member
CCR IB
Expansion of the software and digital businesses
Dr. Roland
Busch
75%
Target achievement
Target setting
200%
22,500
33%
80,000
58%
2021
158,000
11%
18,000
140,000
9%
31%
(since April 2007)
2020
140,000
55%
80,000
89%
36,000
14%
256,000
Harald Kern¹
2021
242,500
140,000
222,500
153,500
2021
140,000
57%
86,667
35%
19,500
8%
246,167
(since Jan. 2008)
Dr. Andrea Fehrmann¹
Bettina Haller¹
2020
140,000
63%
60,000
27%
22,500
10%
2021
140,000
91%
13,500
9%
2020
(since Jan. 2018)
If a Supervisory Board member is absent from any Super-
visory Board meetings, one-third of the aggregate com-
pensation due to that member is reduced by the percent-
age of Supervisory Board meetings he or she does not
attend in relation to the total number of Supervisory
Board meetings held during the fiscal year. In the event
of changes in the composition of the Supervisory Board
or its committees, compensation is paid on a pro-rated
basis, rounding up to the next full month.
2020
The Siemens-internal ESG/Sustainability index for the 2022 Stock Awards tranche
is based on the following three equally weighted key performance indicators:
→ CO2 emissions
Siemens-
internal ESG/
Sustainability
index
Sustainability
Long-term
value creation
Sustainability
Company
strategy
Growth
Cash
conversion
rate (CCR)
Liquidity
Individual
targets
Development of the TSR of Siemens AG relative to the international sector index
MSCI World Industrials
Sucession planning; sustainability/diversity
Business development; implementation of portfolio measures; optimization/
efficiency enhancement; implementation of other strategic measures
→ the relevant business for Managing Board members with business responsibility
→ Siemens for Managing Board members with primarily functional responsibility
Comparable revenue growth, measured on the basis of:
→ all-in for Managing Board members with primarily functional responsibility
→ the relevant business for Managing Board members with business responsibility
CCR, measured on the basis of:
With return on capital employed (ROCE), we aim to focus on Siemens' operating
performance, analogously to fiscal 2021. Thus ROCE excludes defined Varian-
related acquisition effects and the main Siemens Energy-related effects in order to
further increase the transparency of Siemens' operating performance.
→ Digital learning hours per employee
This approach is aligned with external communications and the modified Financial
Framework for the financial steering of the Company, presented at Capital Market
Day 2021.
→ Net Promoter Score
31
Compensation
Committee
Member
€140,000
Member
€80,000
Chair
€120,000
Member
€80,000
Chair
€160,000
Chairman's Committee
Audit Committee
Additional compensation for committee work
Deputy Chair
€220,000
Base compensation of Supervisory Board
Chairman
€280,000
Compensation of members of the Supervisory Board and its committees
Under the rules for fiscal 2021, the members of the Super-
visory Board receive an annual base compensation, and
the members of the Supervisory Board committees re-
ceive additional compensation for their committee work.
the Innovation and Finance Committee receive additional
compensation. The compensation authorized by the Arti-
cles of Association for work in the Compliance Committee
was no longer paid in fiscal 2021 since the Compliance
Committee was reintegrated into the Audit Committee
and the duties of the Compliance Committee were trans-
ferred to the Audit Committee effective October 1, 2020.
The rules for Supervisory Board compensation for fiscal
2021 were approved by the Annual Shareholders' Meeting
on January 28, 2014, and have been in effect since fiscal
2014. They are set out in Section 17 of the Articles of
Association of Siemens AG in the version applicable for
fiscal 2021. Supervisory Board compensation consists
entirely of fixed compensation; it reflects the responsibil-
ities and scope of the work of the Supervisory Board
members. The Chairman and Deputy Chairs of the Super-
visory Board as well as the chairs and members of the
Audit Committee, the Chairman's Committee, the Com-
pensation Committee, the Compliance Committee and
Supervisory Board members
C. Compensation of
Compensation Report → C. Compensation of Supervisory Board members
FISCAL 2021
Beginning with fiscal 2022, EPS before purchase price allocation (EPS pre PPA)
will be used in order to increase transparency regarding the operating performance
of Siemens. EPS pre PPA is defined as basic earnings per share from net income
adjusted for amortization of intangible assets acquired in business combinations
and related income taxes. As for EPS, EPS pre PPA includes the amounts attributable
to shareholders of Siemens AG.
To strengthen the focus and connection between performance in the reporting year
and target achievement, the actual value of the reporting year is used. The target
value continues to be based on the average of the previous three fiscal years and
thus on the concept of continuous improvement.
Details
Matthias Rebellius
€7,715,220
Cedrik Neike
€7,781,316
Dr. Roland Busch
€15,295,950
MAXIMUM COMPENSATION
Compensation Report B. Compensation of Managing Board members
Outlook fiscal 2022
The following overview shows the maximum compen-
sation and the performance criteria for variable compensa-
tion for fiscal 2022, as approved by the Supervisory Board
of Siemens AG on September 23, 2021.
B.7 Outlook for fiscal 2022
FISCAL 2021 30
4 Like other eligible employees of Siemens AG who were employed by the Company before September 30, 1983, Joe Kaeser was entitled to transition payments
in the first six months of his retirement equal to the difference between his last base salary and his pension entitlement under the Company pension plan. The
transition payments that Joe Kaeser received in each month from March through August 2021 amounted to €178,080 and are included under "Pensions: Annuity."
5 Michael Sen's appointment as a member of the Managing Board of Siemens AG was terminated by mutual agreement as of March 31, 2020, prior to the end
of his contractual term of office. His employment relationship remained unaffected until the end of the day on March 31, 2021. The amount reported under
"Other" contains the base salary of €550,800 awarded to Michael Sen for the period from October 1, 2020, until the early termination of his employment
contract on March 31, 2021, his pro-rated Bonus for fiscal 2021 of €550,800 and a severance payment in the gross amount of €3,544,427, which was due
and payable on the termination date of March 31, 2021.
3 The amounts reported under "2017 Stock Awards (vesting: 2016-2020)" also include the additional cash payment relating to the settlement of the 2017 Stock Awards
tranche due to the Siemens Energy spin-off.
2 Fringe benefits include in-kind compensation and fringe benefits awarded by the Company such as the provision of a company car and insurance allowances.
In the case of Lisa Davis, they also include contractually agreed payments for tax adjustments.
1 The table includes only compensation that was awarded to former members after they left the Managing Board.
588
42
664
1,274
Capital payment (partial or full)
2017 Stock Awards (vesting: 2016-2020)³
Annuity
VARIABLE COMPENSATION
Key
Target
dimension
Performance
criterion
Total
shareholder
return (TSR)
Diverse
focus topics
Diverse
focus topics
growth
revenue
Comparable
Return on
capital
employed
(ROCE)
Judith Wiese
€7,715,220
Prof. Dr. Ralf P. Thomas
€8,636,316
Innovation and
efficiency
Managing
Board
portfolio
Stock Awards
tranche
2022
Basic earnings
per share (EPS)
Profit
Siemens
Group
Bonus
fiscal 2022
indicator
performance
Profitability/
capital
Michael Diekmann
Finance Committee
€60,000
213,333
44%
193,333
2021
Dr. Werner Brandt²
481,500
13%
61,500
42%
200,000
46%
220,000
2020
(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
466,500
10%
46,500
43%
200,000
49%
47%
31,500
438,167
(since Oct. 2020)
287,000
9%
27,000
42%
120,000
49%
140,000
2021
Tobias Bäumler¹
336,000
11%
36,000
48%
160,000
42%
140,000
2020
(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
7%
220,000
2021
Birgit Steinborn¹
compensation
Meeting
attendence fee
Comittee
compensation
compensation
in office on September 30, 2021
Basic
Supervisory Board members
Total
Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
Supervisory Board members
The following table shows the compensation awarded and due to the members of the Supervisory Board in
fiscal 2021 and fiscal 2020 in accordance with Section 162, para. 1, sent. 1 of the German Stock Corporation Act.
Compensation Report →C. Compensation of Supervisory Board members
32
FISCAL 2021
The members of the Supervisory Board are reimbursed
for out-of-pocket expenses incurred in connection with
their duties and for any value-added tax to be paid on
their compensation. For the performance of his duties,
the Chairman of the Supervisory Board is also entitled to
an office with secretarial support and the use of a car
service. No loans or advances from the Company are pro-
vided to members of the Supervisory Board.
In addition, the members of the Supervisory Board re-
ceive €1,500 for each meeting of the Supervisory Board
and its committees they attend.
140,000
Compensation for any work on the Chairman's Commit-
tee is deducted from compensation for work on the Com-
pensation Committee.
Member
€40,000
Chair
€80,000
(TC)
in €
in % of TC
Jim Hagemann Snabe
632,000
11%
72,000
44%
280,000
44%
280,000
2020
(since Oct. 2013, Chairman since Jan. 2018)
Chair
€100,000
608,000
in €
in % of TC
in €
48,000
46%
in % of TC
in €
280,000
46%
280,000
2021
8%
53%
2,418 52%
38%
2021
93,333
50%
80,000
42%
15,000
8%
188,333
2020
2021
140,000
49%
158,000
120,000
25,500
9%
285,500
2020
140,000
55%
80,000
31%
36,000
14%
256,000
2021
42%
140,000
11%
89%
Michael Sigmund
(since March 2014)
Dorothea Simon¹
(since Oct. 2017)
Grazia Vittadini
(since Feb. 2021)
Matthias Zachert
(since Jan. 2018)
2021
140,000
91%
13,500
9%
153,500
18,000
2020
89%
18,000
11%
158,000
2021
140,000
91%
13,500
9%
153,500
2020
140,000
140,000
201,000
91%
9%
34%
51,000
12%
411,000
33%
9,000
10%
93,028
75,152
1,650,741
1,433,939
31%
34,500
14%
166,500
241,167
465,000
607,500
9% 5,225,324
12%
4,984,470
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed
to transfer their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
2 Werner Brandt has been a member of the Supervisory Board since January 31, 2018, and was elected Second Deputy Chairman
of the Supervisory Board, effective the end of the Annual Shareholders' Meeting on February 3, 2021.
3 Compared to the amounts reported in the 2020 Compensation Report, the total does not include the compensation of €359,000
paid to former Supervisory Board member Robert Kensbock.
FISCAL 2021 33
Pursuant to Section 113 para. 3 of the German Stock Cor-
poration Act in the version amended by the German Act
Implementing the Second Shareholders' Rights Directive
(Gesetz zur Umsetzung der zweiten Aktionärsrechtericht-
linie, ARUG II), the annual shareholders' meeting of a
listed company must resolve on compensation for the
members of the supervisory board at least every four
years. In accordance with Section 113 para. 3 of the Ger-
man Stock Corporation Act, the Annual Shareholders'
Meeting on February 3, 2021, therefore adopted a resolu-
tion regarding the compensation of Supervisory Board
members and voted to amend Section 17 of the Articles
of Association. The compensation system for Supervisory
Board members submitted to the Annual Shareholders'
Meeting and the proposed new version of Section 17 of
the Articles of Association were approved by a majority of
97.49% of the valid votes cast. The provisions of the new
version of Section 17 of the Articles of Association, which
came into effect on October 1, 2021, replace the previous
provisions of the Articles of Association regarding Super-
visory Board compensation as of that date. The compen-
sation system approved by the Annual Shareholders'
Meeting as well as the Articles of Association are publicly
available on the Siemens Global Website at ☐ www.
SIEMENS.COM/CORPORATE-GOVERNANCE.
Compensation Report → C. Compensation of Supervisory Board members
FISCAL 2021 34
32%
29%
13,500
10%
35%
153,500
2020
140,000
89%
18,000
11%
158,000
Gunnar Zukunft¹
(since Jan. 2018)
Supervisory Board members
who left during the fiscal year
2021
16,500
Werner Wenning
(Second Deputy Chairman until Feb. 2021)
2020
Dr. Nicola Leibinger-Kammüller
2021
(until Feb. 2021)
2020
Total³
2021
2020
220,000
53,472
131,515
3,109,583
2,943,030
55%
54%
57%
55%
60%
59%
58,333
140,000
30,556
91,667
100,000
10%
20%
Benoît Potier
2021
140,000
90%
15,000
10%
155,000
(since Jan. 2018)
2020
135,758
87%
21,000
401,500
13%
Hagen Reimer¹
2021
140,000
91%
13,500
9%
153,500
(since Jan. 2019)
Pensions
2020
140,000
89%
156,758
18,000
15%
50%
24,000
9%
264,000
(since Jan. 2008)
2020
140,000
57%
80,000
32%
27,000
11%
247,000
61,500
Jürgen Kerner¹
140,000
37%
200,000
52%
43,500
11%
383,500
(since Jan. 2012)
2020
140,000
35%
200,000
2021
21,000
11%
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
129,630
93%
10,500
7%
140,130
(since Jan. 2018)
2020
140,000
89%
18,000
11%
158,000
2021
Dr. Nathalie von Siemens
140,000
81%
16,667
10%
16,500
10%
173,167
(since Jan. 2015)
2020
140,000
70%
40,000
2021
158,000
Baroness Nemat Shafik (DBE, DPhil)
(since Feb. 2021)
2021
134,815
71%
38,519
20%
16,500
9%
189,833
(since Jan. 2015)
2020
135,758
70%
2020
38,788
19,500
10%
194,045
Kasper Rørsted
2021
93,333
72%
26,667
20%
10,500
8%
130,500
20%
Peter Löscher
President and CEO
until July 31, 2013
Member
Prof. Dr.
Siegfried Russwurm
Managing Board member
until March 31, 2017
Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
Active Managing Board members in fiscal 2021
Managing Board members
in office on September 30, 2021
Fixed
Base salary
compensation
+ Fringe benefits
27
Variable
compensation
=
Total
+ Short-term variable compensation
Bonus for fiscal 2021
Bonus for fiscal 2020
+ Long-term variable compensation
2017 Stock Awards (vesting: 2016-2020)
2016 Stock Awards (vesting: 2015-2019)
Cash payment Siemens Energy spin-off
+ Other
Total compensation (TC)
(according to Section 162 AktG)
+ Amount for free disposal
FISCAL 2021
Although the service costs for Company pension plans
are not to be classified as awarded and due compensa-
tion, they are also reported in the following table for pur-
poses of transparency.
accordance with Section 162 para. 1 sent. 1 of the German
Stock Corporation Act.
March April
May
June
July
Aug
Sep
Amount for free disposal
Settlement in
Nov '20
2021
Payout in
Jan '22
Short-term variable compensation: Bonus for 2021
Payout latest
in Feb '22
plus cash payment relating to Siemens Energy spin-off
Compensation granted in connection with the
commencement/termination of appointments
2022
Fixed compensation
Variable compensation
Other
In addition to the amounts of compensation, Section 162
para. 1 sent. 2 No. 1 of the German Stock Corporation Act
requires disclosure of the relative proportion of total
compensation represented by all fixed and variable
compensation components. The relative proportions
reported here refer to the compensation components
"awarded" and "due" in the respective fiscal years in
+ Service costs
Feb
= Total compensation (incl. service costs)
Base salary
29%
2%
1,352
98
30%
2%
€ thousand in % of TC € thousand in % of TC
1,102 31% 1,102
14
0%
55%
1,770
109
36
1,879 31%
1,450
33%
1,116 32%
1,138
56%
2,801
2%
€ thousand in % of TC € thousand in % of TC
2020
2021
compensation
+ Fringe benefits
+ Amount for free disposal
= Total
Variable
compensation
+ Short-term variable compensation
Bonus for fiscal 2021
Bonus for fiscal 2020
+ Long-term variable compensation
2017 Stock Awards (vesting: 2016-2020)
2016 Stock Awards (vesting: 2015-2019)
Cash payment Siemens Energy spin-off
+ Other
Compensation Report → B. Compensation of Managing Board members
Dr. Roland Busch¹
President and CEO since Feb. 3, 2021
Cedrik Neike 2,3
Managing Board member since April 1, 2017
2021
2020
Fixed
Jan
Dec
Nov
(Amounts in €)
2021
2020
Managing Board members
in office on September 30, 2021
Dr. Roland Busch
991,200
Defined benefit obligation
for all pension commitments
excluding deferred compensation²
616,896
616,896
616,896
Prof. Dr. Ralf P. Thomas
616,896
Total
2,224,992
616,896
1,850,688
Cedrik Neike
2020
2021
2020
3,264,444
29,375
Total
4,628,050
41,645
6,544,446
58,890
1 The amount of the obligation is based on the average base salary during the four years prior to the respective verification dates.
2 Based on the average Xetra opening price of €111.13 for the fourth quarter of 2020 (October to December).
3 As of March 12, 2021 (verification date).
4 Dr. Roland Busch was appointed President and CEO only after the reference date relevant for the calculation of the SOG target.
As a result, the amount of his obligation on the verification date of March 12, 2021, was still 200% of his relevant average base salary.
B.5 Pension benefit commitment Contributions under the BSAV are credited to the individ-
Most of the members of the Managing Board are in-
cluded in the Siemens Defined Contribution Pension Plan
(BSAV). Newly appointed members of the Managing Board
can be awarded, instead of BSAV contributions, a fixed
cash amount for free disposal.
ual pension accounts in the January following each fiscal
year. Until pension payments begin, members' pension
accounts are credited with an annual interest payment
(guaranteed interest) in January of each year. The inter-
est rate is currently 0.90%.
Information on the BSAV
Contributions¹
Service costs
according to IAS 19R
2021
932,613
594,468
588,070
2,115,151
608,225
621,266
601,098
1,830,589
8,538,765
4,069,811
8,431,412
21,039,988
6,566,101
Compensation Report → B. Compensation of Managing Board members
Judith Wiese and Matthias Rebellius, who were newly
appointed to the Managing Board as of October 1, 2020,
are not included in the BSAV. Instead of BSAV contribu-
tions, the Supervisory Board awarded them for fiscal 2021
a fixed cash amount of €550,800 each for free disposal.
This amount will be paid in January 2022.
B.6 Compensation awarded
and due
B.6.1 Active Managing Board members
in fiscal 2021
The following tables show the compensation awarded
and due to the active members of the Managing Board in
fiscal 2021 and fiscal 2020 in accordance with Sec-
tion 162, para. 1, sent. 1 of the German Stock Corporation
Act. As a result, they include all the amounts actually paid
to individual Managing Board members in the reporting
period ("awarded compensation") and/or all the compen-
sation that is legally due but not yet received ("due com-
pensation").
The Bonus is reported under "Short-term variable com-
pensation" as "due compensation" since the underlying
services were fully rendered by the end of each period
(September 30). Therefore, the Bonus payout amounts
Compensation awarded and due in fiscal 2021
for the reporting year are reported, although payout only
occurs after the end of each reporting year, in order to
make reporting transparent and comprehensible and in
order to guarantee a connection between performance
and compensation in the reporting period.
Furthermore, in fiscal 2021 and 2020, the Stock Awards
from the 2017 and 2016 tranches allocated in fiscal 2017
and 2016, respectively, became due and were settled by
transfer of Siemens shares. The value of Siemens shares
at the time of transfer is reported under "Long-term vari-
able compensation."
In connection with the due date and settlement of the
Stock Awards for fiscal 2017, the table also includes the
additional cash payment to eligible Managing Board
members as a result of the Siemens Energy spin-off.
The spin-off of Siemens Energy in fiscal 2020 led to ad-
justments in the stock-based compensation allocations
agreed upon until the spin-off date. At the time when
the 2017 Stock Awards became due, the Managing
Board members like all other eligible employees -
were, accordingly, entitled to receive an additional
cash payment based on the spin-off ratio of 2:1 and on
the Siemens Energy share price of €22.20 on the date
when their stock-based compensation allocations be-
came due.
-
2017
Long-term variable compensation:
2017 Stock Awards tranche
Base salary and fringe benefits
Monthly payout
€ Oct
FISCAL 2021 26
Prof. Dr.
Hermann Requardt
Managing Board member
until Jan. 31, 2015
1 As in the previous year, a total of €22,950 is attributable to the funding of personal pension benefit commitments earned prior to the transfer to the BSAV.
2 Deferred compensation totals €4,164,429 (2020: €3,911,848), including €3,741,588 for Joe Kaeser (2020: €3,512,020), €359,363 for Klaus Helmrich (2020: €342,276)
and €63,478 for Prof. Dr. Ralf P. Thomas (2020: €57,552).
20,426,146
2,938,080
6,702,858
16,207,039
Managing Board members
who left during the fiscal year
Joe Kaeser (until Feb. 3, 2021)
422,625
Klaus Helmrich (until March 31, 2021)
Total
308,448
731,073
1,234,800
616,896
1,851,696
0
294,170
294,170
1,219,888
611,168
1,831,056
13,028,557
7,397,589
15,592,209
7,026,562
22,618,771
299%
1,740
899
735
18%
Total compensation (TC)
(according to Section 162 AktG)
4,185
100%
+ Service costs
= Total compensation (incl. service costs)
+ Long-term variable compensation
2017 Stock Awards (vesting: 2016-2020)
2016 Stock Awards (vesting: 2015-2019)
Cash payment Siemens Energy spin-off
+ Other
4,185
who left during the fiscal year
Fixed
compensation
Base salary
Variable
compensation
+ Fringe benefits
+ Amount for free disposal
Managing Board members
Bonus for fiscal 2020
41%
1,716
Base salary
compensation
+ Fringe benefits
1,102
26%
82
2%
+ Amount for free disposal
551
13%
=
Total
1,734
41%
Variable
compensation
+ Short-term variable compensation
Bonus for fiscal 2021
= Total
Fixed
+ Short-term variable compensation
Bonus for fiscal 2020
45
1%
794
17%
2,320
29%
585
1%
21%
27%
1,166 25%
843
31%
1,626 20%
947
23%
1,147
34
1%
115
Joe Kaeser²
President and CEO until Feb. 3, 2021
Klaus Helmrich 3
Managing Board member until March 31, 2021
2021
2020
2021
2020
€ thousand in % of TC € thousand in % of TC
€ thousand in % of TC € thousand in % of TC
755
40
16%
2,205
27%
551
20%
1,102
26%
1%
Bonus for fiscal 2021
€ thousand in % of TC € thousand in % of TC
2020
2021
4,119
621
2,638
Matthias Rebellius4
Managing Board member since Oct. 1, 2020
Prof. Dr. Ralf P. Thomas
Managing Board member since Sept. 18, 2013
2021
2020
2021
594
2020
1,102
70
32%
2%
1,102
71
€ thousand in % of TC € thousand in % of TC
26%
2%
1,102
81
€ thousand in % of TC € thousand in % of TC
5,049
608
6,941
20%
879
44%
1,209 20%
609
17%
2,092 47%
119
2%
60
2%
6,008 100% 4,441
100%
3,524 100%
2,017
100%
933
27%
2%
551
16%
+ Service costs
= Total compensation (incl. service costs)
3,435
588
4,823
601
4,688
1 Dr. Roland Busch was first appointed a full member of the Managing Board effective April 1, 2011. He served as Deputy CEO from October 1, 2019, until the end of the Annual
Shareholders' Meeting on February 3, 2021, when he succeeded Joe Kaeser as President and CEO.
2 Cedrik Neike was appointed a full member of the Managing Board effective April 1, 2017. Due to his intra-year appointment, his Stock Awards target amount for fiscal 2017 was
determined on a pro-rated basis and, instead of Stock Awards, a corresponding number of Phantom Stock Awards was allocated to him in accordance with plan requirements.
In contrast to Stock Awards, these Phantom Stock Awards were settled after the expiration of the vesting period by cash payment rather than by share transfer.
3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
March 31, 2019. The amount reported under "2017 Stock Awards (vesting: 2016-2020)" includes the value of the Stock Awards allocated by Siemens Ltd. China. Likewise, a portion
of the additional cash payment attributable to the Stock Awards allocated by Siemens Ltd. China is included under "Cash payment Siemens Energy spin-off." For details, see "Trans-
fer of Stock Awards in fiscal 2021 (2017 tranche)."
4 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is Chairman of the Board of Directors and CEO of Siemens Schweiz AG. The corre-
sponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms of his
contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the base salary and fringe benefits reported here, €615,367 and €29,579, respectively,
were awarded and paid by Siemens Schweiz AG. Of the Bonus for fiscal 2021 reported here, €859,802 (corresponding to CHF931,165 and converted into euros as of September 30,
2021) will be paid by Siemens Schweiz AG. Furthermore, employer contributions to pension plans paid by Siemens Schweiz AG are deducted from the amount for free disposal.
FISCAL 2021 28
Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
Active Managing Board members in fiscal 2021 (cont.)
Managing Board members
in office on September 30, 2021
Compensation Report → B. Compensation of Managing Board members
Judith Wiese¹
Managing Board member since Oct. 1, 2020
100% 4,087 100%
49%
4,235
Total compensation (TC)
(according to Section 162 AktG)
1,723
50%
1,172
28%
1,183
29%
1,712 50%
1,734
41%
812
20%
1,209 29%
2,092
51%
119
3%
=
3,435 100%
19,632
47%
2018
Nov 8, '19
Nov '23
Total shareholder return compared to
MSCI World Industrials index (80%)
Nov '19 Oct '20 Nov '20
Reference period
Oct '23
Performance period
Performance period
Siemens-internal
ESG/Sustainability index (20%)
Sept '23
Performance period
Nov 13, '20
Nov '24
Total shareholder return compared to
MSCI World Industrials index (80%)
Siemens-internal
ESG/Sustainability index (20%)
Nov '20 Oct '21
Reference period
Oct '19
Nov '21
Oct '22
Nov '18 Oct '19
Reference period
2020
2021
2022
2023
2024
Nov 10, '17
Nov '19
Nov '21
Nov '17 Oct '18 Nov '18
Reference period
Oct '21
Performance period
Share price performance
compared to competitors¹
Nov 9, '18
Nov '22
Share price performance
compared to competitors¹
Oct '24
Performance period
Oct '20
base salary'
Value
in €¹
Number of
shares²
Dr. Roland Busch4
200%
2,446,325
compliance on March 12, 2021
22,013
Value
in €²
Number of
shares³
3,280,002
29,515
Prof. Dr. Ralf P. Thomas
Percentage of
base salary'
268%
Percentage of
in office on September 30, 2021,
and required to verify
Sept '24
Performance period
1 The 2018 and 2019 Stock Awards tranches depend on the performance of the Siemens share relative to the share performance
of five relevant competitors during the approximately four-year vesting period.
B.3.3 Malus and clawback regulations
Under existing malus and clawback regulations, the Super-
visory Board is authorized to withhold or reclaim variable
compensation in cases of severe breaches of duty or
compliance and/or unethical behavior or in cases of
grossly negligent or willful breaches of the duty of care or
in cases in which variable compensation components
linked to the achievement of specific targets have been
unduly paid out on the basis of incorrect data.
The Supervisory Board exercises its authority to withhold
or reclaim variable compensation components at its duty-
bound discretion.
In fiscal 2021, the Supervisory Board did not exercise this
authority.
FISCAL 2021 25
Compensation Report → B. Compensation of Managing Board members
B.4 Share Ownership Guidelines
The deadlines by which the individual Managing Board
members must first verify compliance with the Share
Ownership Guidelines (SOG) vary from member to mem-
ber, depending on when they were appointed to the
Managing Board. For Managing Board members in office
Obligations under the Share Ownership Guidelines
on September 30, 2021, the following table shows the
number of Siemens shares that each held in order to
comply with the SOG on March 12, 2021, the verification
date. It also shows the number of shares to be held
throughout the Managing Board members' terms of of-
fice with a view to future verification dates.
Required
Verified
Managing Board members
2019
End of vesting period
and transfer
Vesting
period
Allocation
Capital payment (partial or full)
2017 Stock Awards (vesting: 2016-2020) 3
Annuity
Pensions
Other
Fringe benefits²
Fixed and
variable
compensation
Fixed and
variable
(€ thousand)
and due to former members of the Managing Board in
fiscal 2021 in accordance with Section 162 para. 1 sent. 1
of the German Stock Corporation Act. In accordance with
Section 162 para. 5 of the German Stock Corporation Act,
the personal information of former Managing Board
members is no longer included if they left the Managing
Board before September 30, 2011.
The following table shows the compensation awarded
of the Managing Board
B.6.2 Former members
FISCAL 2021 29
611
4,797
Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
Former members of the Managing Board'
Fringe benefits²
Other
compensation
Janina Kugel
Managing Board member
until Jan. 31, 2020
1,103
3,085
571
14
1,328
1,247
4,646
21
106
Managing Board member
until Feb. 29, 2020
Lisa Davis
Michael Sen
Managing Board member
until March 31, 2020
Joe Kaeser4
President and CEO
until Feb. 3, 2021
Klaus Helmrich
Managing Board member
until March 31, 2021
Compensation Report B. Compensation of Managing Board members
3,050
200%
294
2 Pro-rated compensation for the period from October 1, 2020, up to and including February 3, 2021.
4,106
1,209 44%
As of the end of fiscal 2021, the following Stock Awards
tranches were within the vesting period and are there-
fore included in the balance at the end of the fiscal year.
Outstanding Stock Awards tranches on September 30, 2021
2018
tranche
Performance
criterion
51%
2019
tranche
2020
tranche
Performance
criteria
2021
tranche
Performance
criteria
Compensation Report B. Compensation of Managing Board members
Performance
criterion
2,092
50%
238
1 As compensation for the loss of benefits granted by her former employer, the Supervisory Board allotted to Judith Wiese one-time
compensation of €1,469,124 (gross) in fiscal 2021. 50% of this compensation was allocated in November 2020 in the form of Stock
Awards, and the remaining 50% was awarded in cash in March 2021. The cash payment is included under "Other."
1,220
9,271
4,616
= Total compensation (incl. service costs)
+ Service costs
2,756 100% 4,186 100%
8,051 100%
100%
4,616
Total compensation (TC)
(according to Section 162 AktG)
=
+ Other
4%
119
5%
3 Pro-rated compensation for the period from October 1, 2020, up to and including March 31, 2021.
2,181,725
+ Long-term variable compensation
2017 Stock Awards (vesting: 2016-2020)
2016 Stock Awards (vesting: 2015-2019)
Cash payment Siemens Energy spin-off
32.4%
Compensation Report E. Other
The Company provides a group insurance policy for
Supervisory and Managing Board members and certain
other employees of the Siemens Group. The policy is taken
out for one year at a time or renewed annually. It covers
the personal liability of the insured individuals in cases of
financial loss associated with their activities on behalf
of the Company. The insurance policy for fiscal 2021 in-
cludes a deductible for the members of the Managing
Board that complies with the requirements of the Ger-
man Stock Corporation Act.
For the Managing Board
Dr. Roland Busch
President and Chief Executive Officer
of Siemens AG
For the Supervisory Board
Prof. Dr. Ralf P. Thomas
4
| E. Other
FISCAL 2021
In fiscal 2021, the Supervisory Board had six standing
committees. These committees prepare proposals and
issues to be dealt with at the Supervisory Board's plenary
meetings. Some of the Supervisory Board's decision-mak-
ing powers have been delegated to these committees
within the permissible legal framework. The committee
chairpersons report to the Supervisory Board on their
committees' work at the subsequent Board meeting.
A list of the members and a detailed explanation of the
tasks of the individual Supervisory Board committees are
set out in the Corporate Governance Statement.
Work in the Supervisory Board
committees
At our meeting on September 23, 2021, we approved a
Declaration of Conformity in accordance with Section 161
of the German Stock Corporation Act (Aktiengesetz,
AktG). Information on corporate governance is provided
in the Corporate Governance Statement, which is pub-
licly available on the Siemens Global Website at ☐ www.
SIEMENS.COM/CORPORATE-GOVERNANCE. The Company's Dec-
laration of Conformity has been made permanently avail-
able to shareholders on the Siemens Global Website at
WWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The cur-
rent Declaration of Conformity is also available in the
Corporate Governance Statement.
Corporate Governance Code
auditor for the Compensation Report for fiscal 2021. In
addition, we dealt with matters relating to corporate gov-
ernance, in particular with the Declaration of Conformity
with the German Corporate Governance Code and with
the independence of the shareholder representatives on
the Supervisory Board. We approved amendments to the
Bylaws for the Managing Board, the Bylaws for the Super-
visory Board and the bylaws for the Chairman's Commit-
tee, the Audit Committee and the Compensation Commit-
tee of the Supervisory Board. In addition, we amended
the objectives for the composition of the Supervisory
Board as well as the profile of skills and expertise and the
diversity concept for the Supervisory Board. Finally, we
conducted a self-assessment of our activities.
At our meeting on September 23, 2021, the Managing
Board reported on the state of the Company. One focus of
this meeting was the Company's human resources strat-
egy - including talent and leadership development, suc-
cession planning for the Managing Board and diversity.
The Managing Board reported on the current situation at
the Portfolio Companies. We concerned ourselves with
the annual review of Managing Board compensation and -
after preparation by and on a recommendation of the
Compensation Committee - defined each Managing Board
member's individual target total compensation and max-
imum compensation as well as the performance criteria
for variable compensation for fiscal 2022. At this meeting,
we also discussed the Compensation Report for fiscal 2021
and made a decision regarding the engagement of an
At our meeting on August 4, 2021, the Managing Board
reported on the Company's current business and finan-
cial position following the conclusion of the third quarter.
One focus of this meeting was the sustainability strategy
(DEGREE). We were informed about the current business
situation at Siemens Healthineers. We approved the Man-
aging Board's decision to acquire SQCAP B.V. (Sqills),
Netherlands, a leading supplier of SaaS solutions for the
rail industry.
On May 16, 2021, we approved – in a decision using other
customary means of communication and on the recom-
mendation of the Innovation and Finance Committee -
the Managing Board's decisions to acquire Supplyframe,
Inc., U.S., a marketplace for the global electronics value
chain. On May 21, 2021, we made another decision using
other customary means of communication to exercise
ownership rights in subsidiaries of Siemens AG in accor-
dance with Section 32 of the German Codetermination
Act (Mitbestimmungsgesetz, MitbestG). At an extraordi-
nary Supervisory Board meeting on June 22, 2021, the
Managing Board presented the reporting planned for
Capital Market Day on June 24, 2021. We approved the
Managing Board's decision on the share buyback. On
July 28, 2021, we were informed about matters concern-
ing Siemens Healthineers.
Board reported to us in detail in particular on the digital
marketplace strategy of the Digital Industries Business
and the SaaS business model. We also discussed Manag-
ing Board compensation. Finally, we concerned ourselves
with the Company's stake in Siemens Energy.
The Chairman's Committee met nine times. It also made
two decisions using other customary means of commu-
nication. In my capacity as Chairman of the Chairman's
Committee, I discussed topics of major importance with
the other Committee members also between meetings.
Report of the Supervisory Board
37
2 Werner Brandt has been a member of the Supervisory Board since January 31, 2018, and was elected Second Deputy Chairman of the Supervisory Board,
effective the end of the Annual Shareholders' Meeting on February 3, 2021.
Werner Wenning
(Second Deputy Chairman until Feb. 2021)
Dr. Nicola Leibinger-Kammüller (until Feb. 2021)
402
404
0.4%
398
(1.5)%
411
FISCAL 2021
3.4%
243
249
2.5%
246
(1.2)%
241
(1.8)%
93 (61.4)%
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer
their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
167 (59.5)%
3
FISCAL 2021
At our meeting on May 7, 2021, the Managing Board
reported to us on the Company's current business and
financial position following the conclusion of the second
quarter. As part of a strategic focus, we concerned our-
selves at this meeting - on the basis of the strategy dis-
cussions conducted in smaller groups with the Managing
Board in the previous weeks - comprehensively and
in detail with the strategic priorities of Siemens AG and
the strategic orientation of its businesses. The Managing
Report of the
Supervisory Board
40
FISCAL 2021
Independent auditor's report
Compensation Report →
[German Public Auditor]
Wirtschaftsprüfer
Dr. Gaenslen
[German Public Auditor]
SIEMENS
Wirtschaftsprüferin
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, December 2, 2021
The "General Engagement Terms for Wirtschaftsprüfer
and Wirtschaftsprüfungsgesellschaften [German Public
Auditors and Public Audit Firms]" as issued by the IDW
on January 1, 2017, are applicable to this engagement
and also govern our responsibility and liability to third
parties in the context of this engagement (☐ wWW.DE.EY.
COM/GENERAL-ENGAGEMENT-TERMS).
Limitation of liability
FISCAL 2021 39
The audit of the content of the Compensation Report de-
scribed in this auditor's report comprises the formal audit
of the Compensation Report required by Sec. 162 (3) AktG
and the issue of a report on this audit. As we are issuing
an unqualified opinion on the audit of the content of the
Compensation Report, this also includes the opinion that
the disclosures pursuant to Sec. 162 (1) and (2) AktG are
made in the Compensation Report in all material respects.
Other matter – formal audit
of the Compensation Report
-
Breitsameter
| Report of the Supervisory Board
Berlin and Munich, December 2, 2021
Report of the Supervisory Board
In April 2021, the members of the Managing and Super-
visory Boards met several times in smaller groups of a few
participants each for strategy discussions (so-called multi-
lateral strategy sessions) in order to conduct detailed con-
sultations and discussions regarding topics of strategic
importance for Siemens AG.
The regular terms of office of three shareholder represen-
tatives on the Supervisory Board, who had been reelected
early to five-year terms of office by the Annual Sharehold-
ers' Meeting on January 26, 2016, ended at the Annual
Shareholders' Meeting on February 3, 2021. Three share-
holder representatives on the Supervisory Board were
elected for new, four-year terms of office - that is, for the
electoral period 2021 to 2025 - by the Annual Sharehold-
ers' Meeting on February 3, 2021. The constituent meet-
ing of the Supervisory Board took place immediately after
the Annual Shareholders' Meeting on February 3, 2021.
At this Supervisory Board meeting, Jim Hagemann Snabe
was reelected Chairman of the Supervisory Board.
The Supervisory Board confirmed Birgit Steinborn in
her position as First Deputy Chairwoman and elected
Dr. Werner Brandt Second Deputy Chairman of the Super-
visory Board. The Supervisory Board also elected the
members of its committees.
At our meeting on February 2, 2021, the Managing Board
reported on the Company's current business and finan-
cial position following the conclusion of the first quarter.
and the Compensation Report - and the agenda for the
ordinary Annual Shareholders' Meeting on February 3,
2021. On the recommendation of the Compensation
Committee, we also made a further decision regarding
the target setting for Managing Board compensation for
fiscal 2021. In addition, we concerned ourselves with the
annual reporting of the Chief Compliance Officer and the
Cybersecurity Officer.
On December 1, 2020, we discussed the financial state-
ments and the Combined Management Report for
Siemens AG and the Siemens Group as of September 30,
2020, the Annual Report for 2020 - including the Report
of the Supervisory Board, corporate governance reporting
At our meeting on November 11, 2020, we discussed the
key financial figures for fiscal 2020 and approved the bud-
get for fiscal 2021. On a recommendation by the Compen-
sation Committee, we also defined the Managing Board
members' compensation for fiscal 2020 on the basis of
calculated target achievement. An internal review con-
firmed the appropriateness of this compensation. We had
already defined the performance criteria for the Manag-
ing Board's variable compensation for fiscal 2021 at our
meeting on September 22, 2020. On this basis and on the
recommendation of the Compensation Committee, we
made a decision on target setting for Managing Board
compensation for fiscal 2021 at our meeting on Novem-
ber 11, 2020. At this meeting, we also approved a Manag-
ing Board decision on financing measures.
At an extraordinary meeting on October 29, 2020,
we approved the Managing Board's decision to sell
Flender GmbH, a producer of mechanical and electrical
drive systems, to The Carlyle Group, U.S.
We held a total of six regular plenary meetings and two
extraordinary meetings in fiscal 2021. Another extraordi-
nary meeting the Supervisory Board's constituent meet-
ing was held immediately after the Annual Sharehold-
ers' Meeting on February 3, 2021. We also made two
decisions using other customary means of communica-
tion. Topics of discussion at our regular plenary meetings
were revenue, profit and employment development at
Siemens AG and the Siemens Group as well as the Com-
pany's financial position and the results of its operations.
In addition, we concerned ourselves, as occasion required,
with acquisition and divestment projects and with risks
to the Company. We received regular reports from the
Managing Board regarding the impact on Siemens of the
COVID-19 pandemic. In addition, we met regularly in
closed sessions without the Managing Board in atten-
dance. In these sessions, we dealt with agenda items that
concerned either the Managing Board itself or internal
Supervisory Board matters.
-
Topics at the plenary meetings
of the Supervisory Board
Report of the Supervisory Board
FISCAL 2021 2
A special focus of our activities in fiscal 2021 was the
Company's further strategic development after the suc-
cessful spin-off and subsequent public listing of Siemens
Energy. At our meetings and in additional informational
sessions, we concerned ourselves intensively with the
goals and priorities of Siemens' businesses and with the
Managing Board's technology and personnel strategy.
In this connection, we focused our attention on innova-
tion, digitalization and the related opportunities for
growth. Together with the Managing Board, we dis-
cussed the markets, trends and growth fields. The sus-
tainability strategy of Siemens AG was another focus of
our work in fiscal 2021.
-
basis of detailed written and oral reports provided by the
Managing Board, we monitored the Managing Board and
advised it on the management of the Company. In my
capacity as Chairman of the Supervisory Board, I regu-
larly exchanged information with the President and CEO
and the other Managing Board members. As a result, the
Supervisory Board was always kept up to date on pro-
jected business policies, Company planning - including
financial, investment and personnel planning – and the
Company's profitability and business operations as well
as on the state of Siemens AG and the Siemens Group.
We were directly involved at an early stage in all deci-
sions of fundamental importance to the Company and
discussed these decisions with the Managing Board
intensively and in detail. To the extent that Supervisory
Board approval of the decisions and measures of Com-
pany management was required by law, the Siemens
Articles of Association or our Bylaws, the members of
the Supervisory Board - prepared in some cases by the
Supervisory Board's committees – issued such approval
after intensive review and discussion. The relevant Man-
aging Board members informed us - within the limits of
the applicable legal framework - about critically impor-
tant measures and decisions at the Company's equity
investments.
In fiscal 2021, the Supervisory Board performed in full the
duties assigned to it by law, the Siemens Articles of Asso-
ciation and the Bylaws for the Supervisory Board. On the
-
In close dialogue with the Supervisory Board, the new
management team also succeeded in further accelerating
business and technological innovation. The extensive in-
troduction of Software-as-a-Service (SaaS) offerings by
Siemens' industry software business is an excellent exam-
ple of this success. In addition, the Companywide DEGREE
program intensified the focus of all Siemens businesses
on ambitious sustainability targets – targets for environ-
mental and social sustainability and good governance -
even further.
This move-intensively promoted by the Supervisory
Board - successfully concluded Siemens' strategic, struc-
tural and personnel realignment, which provided a
strong foundation for the outstanding achievements of
the Company's roughly 300,000 employees in fiscal 2021.
Despite the uncertainties due to the ongoing COVID-19
pandemic, Siemens AG seized the opportunities provided
by the economic recovery and the accelerated drive to-
ward digitalization and sustainability that is transforming
its key markets. The broad-based growth and high profit-
ability achieved by the Company's businesses are impres-
sive and speak for themselves. Siemens proved that sus-
tainable technologies designed to benefit society are
already a model for success.
Fiscal 2021 was Siemens AG's first year as a newly posi-
tioned, focused technology company. It was also the
first year for the Company's new Managing Board
team. Together with his Managing Board colleagues,
Dr. Roland Busch pursued clear strategic objectives and
positioned Siemens' operations for faster growth. As
planned, Dr. Busch succeeded Joe Kaeser as President
and CEO at the conclusion of the ordinary Annual Share-
holders' Meeting on February 3, 2021.
Dear Shareholders,
154 (2.8)%
6.0%
158
32.4%
155
(1.1)%
Hagen Reimer' (since Jan. 2019)
110
158
44.3%
154
(2.8)%
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
11.0%
(since Jan. 2015)
189
0.6%
182
(3.7)%
194
6.6%
190
(2.2)%
Kasper Rørsted (since Feb. 2021)
188
157
25.5%
141
158
244
6.5%
240
(1.8)%
247
3.1%
264
6.9%
Jürgen Kerner¹ (since Jan. 2012)
381
394
3.5%
391
(0.8)%
402
2.7%
384
(4.5)%
Benoît Potier (since Jan. 2018)
113
131
In our opinion, on the basis of the knowledge obtained in
the audit, the Compensation Report for the fiscal year
from October 1, 2020 to September 30, 2021 and the re-
lated disclosures comply, in all material respects, with the
financial reporting provisions of Sec. 162 AktG. Our opin-
ion on the Compensation Report does not cover the con-
tent of the abovementioned disclosures in the Compen-
sation Report that is beyond the scope of Sec. 162 AktG.
Baroness Nemat Shafik (DBE, DPhil) (since Jan. 2018)
140
Harald Kern (since Jan. 2008)
(2.0)%
158
6.0%
154
(2.8)%
Grazia Vittadini (since Feb. 2021)
188
Matthias Zachert (since Jan. 2018)
Gunnar Zukunft' (since Jan. 2018)
149
Supervisory Board members
177
244
37.9%
256
4.9%
286
11.5%
113
149
who left during the fiscal year
152
Dorothea Simon' (since Oct. 2017)
154 (2.8)%
24.2%
158
13.1%
140 (11.3)%
Dr. Nathalie von Siemens (since Jan. 2015)
151
185
22.9%
194
4.6%
201
3.9%
173 (13.8)%
Michael Sigmund (since March 2014)
151
152
1.0%
149
(2.0)%
158
6.0%
113
Opinion
229
An audit involves performing audit procedures to obtain
audit evidence about the amounts in the Compensation
Report and the related disclosures. The audit procedures
selected depend on the auditor's judgment, including
the assessment of the risks of material misstatement of
the Compensation Report and the related disclosures,
whether due to fraud or error. In making those risk as-
sessments, the auditor considers internal control relevant
to the preparation of the Compensation Report and the
related disclosures in order to plan and perform audit
procedures that are appropriate under the given circum-
stances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. An
audit also includes evaluating the accounting policies
used and the reasonableness of accounting estimates
made by management and the Supervisory Board, as
well as evaluating the overall presentation of the Com-
pensation Report and the related disclosures.
2,202
Prof. Dr. Siegfried Russwurm 4 (until March 2017)
4,363
Michael Sen (from April 2017 until March 2020)
1,272
2,661 (5.8)% 7,969 199.5% 6,562 (17.6)% 1,434 (78.2)%
2,718 23.4% 4,192 54.3% 2,631 (37.2)% 1,274 (51.6)%
3,244 (25.7)% 4,330
33.5% 2,905 (32.9)% 664 (77.1)%
2,841 123.4% 2,448 (13.8)% 1,991 (18.7)% 5,914 197.1%
1 Revenue as reported. In fiscal 2020, the segments "Gas and Power" and "Siemens Gamesa Renewable Energy" were classified as discontinued operations and are therefore not
included in the amount reported for fiscal 2020.
2 The primary measure for managing and controlling revenue growth is comparable growth, because it shows the development of Siemens' business net of currency translation
effects, which arise from the external environment outside the Company's control, and portfolio effects, which involve business activities that are either new to or no longer a
part of the relevant business.
3 Basic earnings per share from continuing and discontinued operations as reported.
Janina Kugel (until Jan. 2020)
4 The increase in compensation in fiscal 2019 is primarily attributable to the one-time benefit from two Stock Awards tranches - the 2014 and 2015 tranches in November 2018,
due to a reduction in the duration of the Stock Awards to the customary four-year period starting with the 2015 tranche.
Compensation Report → D. Comparative information on profit development and annual change in compensation
Comparative information on profit development and change in compensation
of employees, Managing Board and Supervisory Board members (cont.)
Fiscal
2017
2018
Change
in %
2019
Change
in %
2020
FISCAL 2021 36
2,825
Lisa Davis (until Feb. 2020)
Former Managing Board members
4,556 (16.9)%
3,710 45.1%
Matthias Rebellius (since Oct. 2020)
Prof. Dr. Ralf P. Thomas 4 (since Sept. 2013)
3,347
3,143
(6.1)%
6,740 114.5% 4,087
Judith Wiese (since Oct. 2020)
6,730 47.7% 4,441 (34.0)% 6,008 35.3%
2,331 (37.2)% 2,017 (13.5)% 3,524 74.7%
3,435
(39.4)% 4,235
4,185
3.6%
Managing Board members
who left during the fiscal year
Joe Kaeser (President and CEO until Feb. 2021)
9,643
8,391
Klaus Helmrich 4 (until March 2021)
5,586
(13.0)% 12,978
4,608 (17.5)% 6,679
54.7%
45.0%
8,051 (38.0)%
4,186 (37.3)%
4,616 (42.7)%
2,756 (34.2)%
Change
in %
2,556
2021
IV. SUPERVISORY BOARD MEMBERS' COMPENSATION (in € thousand)
35.0%
336
3.7%
438
30.4%
Tobias Bäumler' (since Oct. 2020)
287
Michael Diekmann (since Jan. 2008)
204
324
217
215
(0.7)%
223
3.5%
246
10.6%
Dr. Andrea Fehrmann1 (since Jan. 2018)
113
We believe that the evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinion.
6.1%
240
(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
Dr. Werner Brandt²
Jim Hagemann Snabe
(since Oct. 2013, Chairman since Jan. 2018)
279
536 92.0%
613
14.3%
632
3.2%
608
(3.8)%
Birgit Steinborn¹
(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
468
477
1.9%
471
(1.3)%
482
2.2%
467
(3.1)%
Change
in %
Cedrik Neike (since April 2017)
149
(since April 2011, President and CEO since Feb. 2021)
154
Compensation Report → D. Comparative information on profit development and annual change in compensation
D. Comparative information on
profit development and annual
change in compensation
The following table shows, in accordance with Sec-
tion 162 para. 1 sent. 2 No. 2 of the German Stock Corpo-
ration Act, Siemens' profit development, the annual
change in the Managing Board and Supervisory Board
members' compensation and the annual change in aver-
age employee compensation on a full-time equivalent
basis over the last five fiscal years.
Profit development is presented on the basis of the
Siemens Group's key performance indicators revenue,
comparable revenue growth and earnings per share. The
latter is also one of the financial targets for the short-
term variable compensation (Bonus) of the Managing
Board and thus has a significant influence on the amount
of the compensation of the Managing Board members. In
accordance with Section 275 para. 3 No. 16 of the German
Commercial Code (Handelsgesetzbuch, HGB), the devel-
opment of the net income of Siemens AG is also shown.
The compensation awarded and due to the Managing
Board and Supervisory Board members in each fiscal year
is presented in accordance with Section 162 para. 1 sent. 1
of the German Stock Corporation Act.
The presentation of average employee compensation is
based on the size of the workforce, including trainees,
employed by Siemens in Germany. In fiscal 2021, this
workforce comprised on average 71,838 employees
(full-time equivalent). By way of comparison, the
Siemens Group had about 241,000 employees and train-
ees worldwide as of September 30, 2021. The figures
exclude the workforce of Siemens Healthineers, which
is not included in the presentation since it is a separately
managed, publicly listed company.
Average employee compensation comprises the person-
nel costs for wages and salaries, fringe benefits, employer
contributions to social insurance and any short-term
variable compensation components attributable to the
fiscal year. For compensation in connection with share
plans, the amounts received in the fiscal year are taken
into account. Therefore, employee compensation is also
equivalent, in principle, to awarded and due compensa-
tion within the meaning of Section 162 para. 1 sent. 1 of
the German Stock Corporation Act and thus in line with
Managing Board and Supervisory Board compensation.
FISCAL 2021 35
(2.8)%
Compensation Report → D. Comparative information on profit development and annual change in compensation
Fiscal
2017
2018
Change
in %
2019
Change
in %
2020
Change
in %
2021
Comparative information on profit development and change in compensation
of employees, Managing Board and Supervisory Board members
Bettina Haller¹ (since April 2007)
231
244
5,482
Our responsibility is to express an opinion on this Com-
pensation Report and the related disclosures based on
our audit. We conducted our audit in compliance with
German Generally Accepted Standards for Financial State-
ment Audits promulgated by the Institut der Wirtschafts-
prüfer [Institute of Public Auditors in Germany] (IDW).
Those standards require that we comply with ethical re-
quirements and plan and perform the audit to obtain
reasonable assurance about whether the Compensation
Report and the related disclosures are free from material
misstatement.
Auditor's responsibility
Management and the Supervisory Board of Siemens AG
are responsible for the preparation of the Compensation
Report and the related disclosures in compliance with the
requirements of Sec. 162 AktG. In addition, management
and the Supervisory Board are responsible for such inter-
nal control as they determine is necessary to enable the
preparation of a Compensation Report and the related
disclosures that are free from material misstatement,
whether due to fraud or error.
Responsibilities of management
and the Supervisory Board
We have audited the attached Compensation Report of
Siemens Aktiengesellschaft, Berlin and Munich, prepared
to comply with Sec. 162 AktG ["Aktiengesetz": German
Stock Corporation Act] for the fiscal year from October 1,
2020 to September 30, 2021 and the related disclosures.
We have not audited the content of disclosures regarding
appropriateness and marketability of the compensation
in chapter 7 B.2.3 APPROPRIATENESS OF THE COMPENSATION that
is beyond the scope of Sec. 162 AktG.
To Siemens Aktiengesellschaft, Berlin and Munich
Compensation Report → Independent auditor's report
I Independent auditor's report
FISCAL 2021 38
Jim Hagemann Snabe
Chief Financial Officer
of Siemens AG
Chairman of the Supervisory Board
of Siemens AG
(5.3)%
243
4.9%
256
0.0%
244
5.8%
Change
in %
I. PROFIT DEVELOPMENT
6.0%
83,049
4,076
4,547
11.6% 11,219
(10.0)%
146.7%
5.00
(22.0)%
5,270 (53.0)% 5,147
7.68
II. AVERAGE EMPLOYEE COMPENSATION (in € thousand)
Workforce in Germany
Net income according to HGB (in € billion)
91
3.3%
95
1.1%
96
1.1%
99
3.1%
III. MANAGING BOARD MEMBERS' COMPENSATION (in € thousand)
Revenue (in € billion)
94
6.41
53.6%
(2.3)%
7.12
83,044
(4.3)%
86,849
4.6%
57,139
(34.2)%
62,265
9.0%
Comparable revenue growth² (in %)
3
2
(0.0)%
3
n.a.
7.44
Earnings per share³ (in €)
n.a.
Dr. Roland Busch 4
n.a.
(2)
n.a.
11.5
therein: Germany
therein: emerging markets'
Siemens (continuing operations)
therein: China
Asia, Australia
therein: U.S.
As defined by the International Monetary Fund.
Americas
Europe, C.I.S., Africa, Middle East
In the Europe, C.I.S., Africa, Middle East region, order intake was up substantially year-over-year with increases in all four industrial
businesses. Sharp order growth in Siemens Healthineers included high volume from rapid coronavirus antigen tests. Digital Industries and
Smart Infrastructure also recorded double-digit growth, while orders in Mobility were up clearly year-over year. In Germany, order intake
in Siemens Healthineers almost doubled due mainly to the high volume from rapid coronavirus antigens tests. Digital Industries and Smart
Infrastructure posted double-digit growth, while Mobility posted a substantial decline due to a lower volume from large orders which in
fiscal 2020 had included a €1.1 billion order for high-speed trains.
Revenue (location of customer)
In the Asia, Australia region, orders overall rose substantially due to double-digit increases in all four industrial businesses, with the
highest contributions from Siemens Healthineers and Digital Industries. The pattern of order development in China was largely the same
as for the region.
Order growth in the Americas and in the U.S. was due mainly to a higher volume from large orders in Mobility, particularly including the
large order in the U.S. mentioned above. Overall, order intake both in the region and in the U.S. was subject to significantly negative
currency translation effects, partly offset by portfolio effects which related primarily to the acquisition of Varian.
Orders related to external customers were up substantially year-over-year on double-digit growth in all four industrial businesses, reflecting
a very strong rebound in economic activity even though the economic environment was still strongly impacted by COVID-19. Orders in
Mobility increased sharply on a higher volume from large orders which included a €2.8. billion order for trainsets including dual powered
and hybrid battery vehicles and associated services in the U.S., its largest-ever order in the Americas. Siemens Healthineers, Digital
Industries and Smart Infrastructure also posted double-digit order growth year-over-year. The broad-based increase in emerging markets
was driven by China and, to a lesser degree, India.
25%
26%
15,234
19,208
Fiscal year
(in millions of €)
% Change
16%
2020
21%
12,784
14,815
9%
6%
12,761
13,521
10%
7%
15,218
16,312
16%
20%
9,373
11,249
12%
14%
27,252
31,138
Comp.
Actual
2021
23%
15
71,374
% Change
Actual
2020
Fiscal year
2021
1 As defined by the International Monetary Fund.
therein: emerging markets¹
Siemens (continuing operations)
therein: China
Asia, Australia
therein: U.S.
Comp.
Americas
Europe, C.I.S., Africa, Middle East
(in millions of €)
Orders (location of customer)
Currency translation effects took three percentage points each from order and revenue growth, respectively. Portfolio transactions, in
particular the acquisition of Varian by Siemens Healthineers, added five percentage points to order and four percentage points to revenue
growth year-over-year. The resulting ratio of orders to revenue (book-to-bill) for Siemens in fiscal 2021 was 1.15. The order backlog was
€85 billion as of September 30, 2021.
4.1 Orders and revenue by region
4. Results of operations
Combined Management Report
15
Beginning with fiscal 2022, governance costs and Siemens brand fees, previously included in Corporate items, will be included within the
new item Governance; results related to Technology and Next47, also previously included in Corporate items, will be disclosed under the
new item Innovation. Other components of corporate items, including the businesses Advanta and Global Business Solution, will be
transferred to the item Financing, eliminations and other items (formerly Eliminations, Corporate Treasury and other reconciling items).
In line with the change to a new profit definition, this item will also include operating financial income (expenses), net. As a result of the
changes described above, Corporate items will be retired as a disclosure line item. If this new reporting structure had already existed in
fiscal 2021, the items Innovation; Governance; and Financing, eliminations and other items would have recorded €(207) million, €(751)
million and €452 million in profit, respectively.
therein: Germany
34,311
27,778
24%
23%
27%
7,094
9,029
20%
23%
13,473
16,589
26%
24%
14,212
17,555
24%
22%
16,780
20,474
9%
14%
10,646
12,118
20%
58,030
13%
4%
6,594
4,156
5,636
(38)%
(1,346)
(1,861)
36%
5,502
7,496
0%
36%
(1,731)
87%
(673)
(85)
48%
345
512
14.3%
15.0%
17%
(1,739)
1,062
>200%
6,697
age of digitalization.
Combined Management Report
Siemens' global venture capital unit, Next47, provides capital to help start-ups expand and scale. It serves as the creator of next-generation
businesses for Siemens by building, buying and partnering with innovative companies at any stage. Next47 is focused on anticipating how
emerging technologies will influence our end markets. This foreknowledge enables Siemens and our customers to grow and thrive in the
Combined Management Report
17
We advance certain of these technologies also through our open innovation concept. We are working closely with scholars from leading
universities and research institutions, not only under bilateral cooperation agreements but also in publicly funded collective projects. Our
focus here is on our strategic research partners, and especially the eight Centers of Knowledge Interchange that we maintain at leading
universities worldwide.
Our research and development activities are ultimately geared to developing innovative, sustainable solutions for our customers - and the
Siemens businesses while also strengthening our own competitiveness. Joint implementation by the operating units and Technology,
our central R&D department, ensures that research activities and business strategies are closely aligned with one another, and that all
units benefit equally and quickly from technological developments. As in previous years, we focused on the following technologies:
additive manufacturing, autonomous robotics, blockchain applications, connected (e-)mobility, connectivity and edge devices, cyber
security, data analytics and artificial intelligence, distributed energy systems, energy storage, future of automation, materials, power
electronics, simulation and digital twin, and software systems and processes.
-
In fiscal 2021, we reported research and development expenses of €4.9 billion, compared to €4.6 billion in fiscal 2020. The resulting R&D
intensity, defined as the ratio of R&D expenses and revenue, was 7.8% (fiscal 2020: 8.3%). Additions to capitalized development expenses
amounted to €0.3 billion in fiscal 2021, compared to €0.4 billion in fiscal 2020. As of September 30, 2021 and 2020, Siemens held
approximately 43,400 and 40,900 respectively, granted patents worldwide in its continuing operations. On average, we had 42,500 R&D
employees in fiscal 2021.
4.3 Research and development
As expected, ROCE improved year-over-year, but was below the target range set in our Siemens Financial Framework. The increase year-
over-year was due both to sharply higher income before interest after tax and to clearly lower average capital employed following the
spin-off of Siemens Energy at the end of fiscal 2020.
The increase in basic earnings per share reflects an increase of Net income attributable to Shareholders of Siemens AG, which was €6,161
million in fiscal 2021 compared to €4,030 million in fiscal 2020, combined with a lower number of weighted average shares outstanding.
The tax rate in fiscal 2021 was 25%, close to the 24% rate in fiscal 2020, benefiting from reversal of income tax provisions and largely tax-
free gains resulting from the transfers of assets to Siemens Pension-Trust e.V. mentioned above. These benefits were partly offset by losses
related to equity investments which were not tax-deductible. As a result, the increase in Income from continuing operations was 36%.
Income from discontinued operations, net of income taxes in fiscal 2021 included a gain of €0.9 billion from the sale of Flender and
also benefited from reversal of income tax provisions. The prior year included a pretax gain of €0.9 billion, net of related expenses, from
the spin-off of Siemens Energy AG (Siemens Energy), as well as a positive contribution from Flender. These positive factors were largely
offset, however, by losses at the former operating businesses Gas and Power and Siemens Gamesa Renewable Energy (now part of Siemens
Energy) and €0.3 billion in income tax expenses mainly related to the carve-out of Siemens Energy.
As a result of the developments described above, Income from continuing operations before income taxes increased 36%. Severance
charges for continuing operations were €410 million, of which €251 million were in Industrial Business. In fiscal 2020, severance charges
for continuing operations were €589 million, of which €490 million were in Industrial Business.
7.8%
13.1%
54%
5.00
7.68
59%
4,200
7,560
8,232
8,808
2,184
Mobility
Smart Infrastructure
Digital Industries
(in millions of €, earnings per share in €)
4.2 Income
In Asia, Australia, Digital Industries, Siemens Healthineers and Smart Infrastructure all posted double-digit growth, while Mobility reported
a decline. Growth in the region was primarily due to increases in China and India.
In the Americas, revenue was up in all four industrial businesses, led by Siemens Healthineers. As with orders, revenue was subject to
significantly negative currency translation effects, partly offset by portfolio effects related primarily to the acquisition of Varian. The pattern
of revenue growth in the U.S. was largely the same as for the region.
Combined Management Report
16
Siemens Healthineers
Revenue in Europe, C.I.S., Africa, Middle East increased significantly on growth in all four industrial businesses. Within the region,
Germany showed sharp growth particularly due to Siemens Healthineers which doubled its revenue in the country through sales of rapid
coronavirus antigen tests. The other industrial businesses posted sizeable increases in Germany.
15%
15%
15,323
11%
13%
55,254
62,265
17,651
21%
25%
Revenue related to external customers went up significantly year-over-year, led by double-digit growth in Siemens Healthineers and Digital
Industries. Smart Infrastructure recorded a clear increase, while Mobility posted slightly higher revenue year-over-year. The revenue
increase in emerging markets was driven by substantially higher demand in China and, to a lesser degree, India.
Industrial Business
Adjusted EBITA margin Industrial Business
Siemens Financial Services
2,847
822
857
34%
1,302
1,743
3%
3,252
3,362
% Change
2020
2021
Fiscal year
ROCE
Basic earnings per share
Income from discontinued operations, net of income taxes
Net income
Income from continuing operations
Income tax expenses
Income from continuing operations before income taxes
Reconciliation to Consolidated Financial Statements
Portfolio Companies
30%
14
14,460
The positive change in Corporate items was mainly due to the following factors in fiscal 2021: Firstly, a positive result, primarily resulting
from revaluation gains, totaling €358 million related to the transfers of assets to Siemens Pension-Trust e.V. in Germany, which included
the stakes in Bentley and ChargePoint Holdings, Inc. (ChargePoint). Secondly, a gain of €314 million related to the revaluation of, and
dividends received for the stake in, Thoughtworks Holdings Inc. (Thoughtworks), which completed its initial public offering in the U.S. in
September 2021. These factors were partly offset by expenses of €94 million from revised estimates related to provisions for a legacy
project. Severance charges within Corporate items were €73 million (€68 million in fiscal 2020).
4%
822
857
3%
2%
1,392
1,416
3%
2%
9.3%
9,052
41%
38%
9,169
12,696
Comp.
% Change
Actual
2020
2021
Fiscal year
9,232
Adjusted EBITA
9.1%
Orders grew on sharply higher volume from large orders, which Mobility won across the three reporting regions, highlighted by a €2.8
billion order for trainsets including dual powered and hybrid battery vehicles and associated services in the U.S., Mobility's largest-ever
order in the Americas. Large contract wins in the region Europe, C.I.S., Africa, Middle East included an order for passenger coaches in the
Czech Republic, an order for regional trains in Austria and an order for light rail vehicles in Germany, each worth €0.4 billion, and in the
region Asia, Australia a €0.2 billion order for a signaling system in Taiwan. Revenue growth was driven by the rail infrastructure business,
including significant growth in its mainline activities. On a geographic basis, revenue rose in the Americas due particularly to a significant
growth contribution from the U.S., and in the region Europa, C.I.S., Africa, Middle East, including clear growth in Germany. These increases
were only partly offset by lower revenue in the region Asia, Australia. Adjusted EBITA rose in the majority of the businesses, most strongly
in the rail infrastructure business. For Mobility overall, impacts related to COVID-19, such as measures in the rolling stock business to
safeguard employee health in manufacturing facilities, held back revenue and Adjusted EBITA growth, albeit to a lesser extent than a year
earlier. Severance charges were €22 million, compared to €20 million a year earlier. Mobility's order backlog reached €36 billion at the
end of the fiscal year, of which €9 billion are expected to be converted into revenue in fiscal 2022.
20,320
Comp.
Actual
2020
% Change
Fiscal year
2021
Adjusted EBITA margin
Adjusted EBITA
Revenue
Adjusted EBITA margin
Orders
R&D activities at Siemens Healthineers are aimed at delivering innovative, sustainable solutions to its customers while safeguarding and
improving its competitiveness. Particularly in the field of digitalization and artificial intelligence, it has further expanded its activities and
has 67 products and applications on the market that are designed to further improve its customers' productivity, while enabling clinical
decisions to be more precise and tailored to the individual patient. Furthermore, Siemens Healthineers is continuously expanding its
portfolio of digital services to support customers in their transition to value-based care. The teamplay digital health platform brings
together data, applications and services to make better decisions for patients in an efficient way. In addition, in fiscal 2021 Siemens
Healthineers extended its portfolio in the field of cancer care with the Varian acquisition. The combined company pursues an intelligent
cancer care strategy, harnessing advanced technologies such as Al and data analytics to improve cancer treatment and expand global
access to cancer care. In addition to continually updating its portfolio, Siemens Healthineers also improves existing products and solutions.
Siemens Healthineers focuses its investments mainly on enhancing competitiveness and innovation. The main capital expenditures were
for spending for factories to expand manufacturing and technical capabilities, in particular in China and the U.S., and for additions to
intangible assets, including capitalized development expenses within the Atellica Solution and Central Lab product lines.
The addressable markets of Siemens Healthineers are shaped by four major trends. The first is demographic, in particular the growing and
aging global population. This trend poses major challenges for global healthcare systems and, at the same time, offers opportunities for
players in the healthcare industry as the demand for cost-efficient healthcare solutions continues to intensify. The second trend is
economic development in emerging countries, which opens up improved access to healthcare for many people. Significant investment in
the expansion of private and public healthcare systems will persist, driving overall demand for healthcare products and services and hence
market growth. The third trend is the increase in chronic diseases as a consequence of an aging population and environmental and lifestyle-
related changes. This trend results in far more patients with multiple morbidities, putting further pressure on healthcare systems and
leading to higher costs; it also increases the need for new, more timely ways to detect and treat diseases. The fourth global trend, the
transformation of healthcare providers, results from a combination of societal and market forces that are driving healthcare providers to
operate and organize their businesses differently. Increasing cost pressure on the healthcare sector is prompting the introduction of new
remuneration models for healthcare services, such as value-based rather than treatment-based reimbursement. Digitalization and artificial
intelligence are thereby likely to be key enablers for healthcare providers as they increasingly focus on enhancing the overall patient
experience, with better outcomes and overall reduction in cost of care. This development is driven partly by society's increasing resistance
to healthcare costs, payers' increasing professionalization, burdens from chronic disease, rapid scientific progress and staff shortages. As
a result of these factors, healthcare providers are consolidating into networked structures, resulting in larger clinic and laboratory chains,
often operating internationally, which act increasingly like large corporations. Applying this industrial logic to the healthcare market can
lead to systematic improvements in quality, while at the same time reducing costs.
reducing Siemens' stake in Siemens Healthineers from about 79% to slightly over 75%. Competition in the imaging, Varian and advanced
therapies businesses consists mainly of a small number of large multinational companies, while the diagnostics market is fragmented with
a variety of global players that compete with each other across market segments and also with several regional players and specialized
companies in niche technologies. The business activities of Siemens Healthineers are to a certain extent resilient to short-term economic
trends because large portions of its revenue stem from recurring business. They are, however, directly and indirectly dependent on trends
in healthcare markets and on developments in health policy, and geopolitical developments around the world.
Combined Management Report
11
Siemens is majority shareholder in the publicly listed Siemens Healthineers AG, Germany (Siemens Healthineers). Siemens Healthineers
is a global provider of healthcare solutions and services. It develops, manufactures, and sells a diverse range of innovative diagnostic and
therapeutic products and services to healthcare providers. In addition, it also provides clinical consulting services, complemented by
extensive training and service offerings. This comprehensive portfolio supports customers all along the care continuum, from prevention
and early detection to diagnosis, treatment, and follow-up care. The customer spectrum ranges from public and private healthcare
providers, including hospitals and hospital systems, public and private clinics and laboratories, universities, physicians/physician groups,
public health agencies, state-run and private health insurers, to pharmaceutical companies and clinical research institutes. The imaging
business provides imaging products, services and solutions. Its most important products are equipment for magnetic resonance, computed
tomography, X-ray systems, molecular imaging, and ultrasound. The diagnostics business offers in-vitro diagnostic products and services
to healthcare providers in laboratory, molecular and point-of-care diagnostics. The portfolio of the advanced therapies business consists
of highly integrated products, solutions and services across multiple clinical fields that are designed to support image-guided minimally
invasive treatments, in areas such as cardiology, interventional radiology and surgery. On April 15, 2021, Siemens acquired Varian, which
is active in the field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications. Varian
thus offers a good complement to Siemens Healthineers' businesses in medical imaging, laboratory diagnostics and interventional
procedures. The purchase price paid in cash amounted to USD 16.4 billion (€13.9 billion as of the acquisition date). To partially finance
this acquisition, Siemens Healthineers carried out a capital increase during fiscal 2021 without the participation of Siemens, consequently
3.5 Siemens Healthineers
In October 2021, Mobility closed the acquisition of SQCAP B.V. (Sqills), Netherlands, a provider of cloud-based inventory management,
reservation, and ticketing software for public transport operators to enhance its offerings that increase the availability, capacity and
utilization of public transportation. The purchase price is €537 million paid in cash plus a contingent consideration recognized at the
acquisition date at its maximum amount of €79 million. For further information see Note 34 in Notes to Consolidated Financial Statements
for fiscal 2021.
Markets served by Mobility grew moderately in fiscal 2021 as they partly recovered from impacts related to COVID-19. The market for
rolling stock saw large orders across all segments, especially for high-speed trains, commuter trains and locomotives. The rail infrastructure
market has seen growth both in urban and mainline segments due to the renewal and extension of mainline tracks and the ongoing trend
towards automatic train protection (ATP), including communications-based train control (CBTC) and European train control system (ETCS)
technologies. Service demand partly recovered from prior-year impacts related to COVID-19, due to growing installed bases which drove
a corresponding increase in the spare parts and maintenance market. On a geographic basis, market development in Europe continued to
be characterized by awards of mid-size to large orders, particularly in Germany, Denmark and in Switzerland. While demand in the Middle
East rose, demand in Africa was held back by ongoing uncertainties related to budget constraints and political climates. In the Americas
region, investment activities were driven by demand for urban and mainline transport, especially in the U.S. and Canada. Within the Asia,
Australia region, markets saw ongoing rail investments, particularly in China. For fiscal 2022, markets served by Mobility are expected to
further recover from impacts related to COVID-19 and to grow clearly, partly benefiting from fiscal stimulus and investment programs.
Mobility anticipates that rail operators in Europe, particularly in Germany and in the U.K., will continue making significant investments and
that customers in the Middle East and Africa will tender large turnkey systems, especially for additional rail lines in Egypt and Saudi Arabia.
Markets in the Americas region are expected to remain strong, especially due to ongoing investments in urban and mainline transport and
large investment programs dedicated to transportation and enhancements of existing infrastructure in the U.S. In China, investments in
high-speed trains, urban transport, freight logistics and rail infrastructure are expected to continue to drive growth. In India, privatization
is expected to drive infrastructure enhancements and upgrades and to lead to strong market growth through investments in mainline
(high-speed, freight infrastructure, additional rolling stock), urban metro and rail electrification with ambitious electrification targets for
the broad-gauge network. Despite an adverse short-term impact from COVID-19, rail transport and intermodal mobility solutions are
expected to remain a high priority as urbanization continues to progress around the world. In emerging countries, rising incomes are
expected to result in greater demand for public transport solutions.
(in millions of €)
therein: service business
Revenue
Orders
12%
9%
14,734
16,071
Comp.
% Change
Actual
2020
Fiscal year
2021
Adjusted EBITA margin
15,015
Adjusted EBITA
Revenue
Orders
(in millions of €)
Smart Infrastructure's R&D activities focus on sustainable and decarbonized infrastructures in electrification, distribution grids and
buildings. It develops digital offerings for the energy market such as for integrating renewable energy into conventional grids.
Furthermore, R&D efforts strengthen Smart Infrastructure's capabilities to create comfortable, safe and energy-efficient buildings and
infrastructures that support increased efficiency for occupants, equipment and the use of building space. Smart Infrastructure is expanding
its digital offerings such as cloud solutions using field data from controllers and loT devices. Furthermore, it develops technologies for
environmentally friendly and increasingly renewable-based energy systems, ranging from photovoltaic and battery storage inverters to
charging solutions for e-mobility. In this regard, data from field devices is the basis for intelligent grid control and protection, providing
grid stability and flexibility and continuously matching energy supply and demand while protecting grid assets. For electrical distribution
systems and industrial plants, Smart Infrastructure continuously drives digitalization of its switching and control products with built-in
intelligence, connectivity to the cloud, and increasingly remote diagnostics and edge computing capability. Its digital twins of products,
building systems or grids deliver customer value from online configuration and parametrization, to operation, to maintenance planning.
Smart Infrastructure also develops data-driven applications and digital services. To a large extent, its capital expenditures relate to the
products businesses. Main investment areas are replacement of fixed assets and further digitalization of factories and technical
equipment, with a strong focus on innovation.
Smart Infrastructure's customer base is diverse. It encompasses infrastructure developers, construction companies and contractors;
owners, operators and tenants of both public and commercial buildings including hospitals, campuses, airports and data centers;
companies in heavy industries such as oil and gas, mining and chemicals; companies in discrete manufacturing industries such as
automotive and machine building; and utilities and power grid network operators (transmission and distribution). Smart Infrastructure
serves its customers through a broad range of channels, including its global sales organization, distributors and partners such as panel
builders, original equipment manufacturers (OEM) and value-added resellers and installers, all complemented by direct sales such as
through the branch offices of its regional solutions and services units worldwide and e-commerce channels. Smart Infrastructure's principal
competitors consist mainly of large multinational companies and smaller manufacturers in emerging countries. Its solutions and services
business also competes with local players such as system integrators and facility management firms. Smart Infrastructure's businesses are
impacted by changes in the overall economic environment to varying degrees, depending on customer segment. While customer demand
in discrete manufacturing industries changes quickly and strongly with macroeconomic cycles, it reacts more slowly in infrastructure,
construction, heavy industries and the utilities sector. The building solutions business in particular is affected by economic cycles in the
non-residential building construction markets with a time lag of two to four quarters. Overall, Smart Infrastructure has developed a
balanced and resilient business mix with its diversified regional and vertical markets; its range of products, systems, solutions and services;
and its participation in both long- and short-cycle markets. To further strengthen the resilience of its portfolio, Smart Infrastructure aims
at increasing the share of service revenue and beginning with fiscal 2022 will report revenue generated from service activities.
Smart Infrastructure benefits from a number of favorable trends. These include urbanization, demographic change, climate change, and
digitalization. Urbanization and demographic change drive a need for smarter and more human-centric buildings. Climate change drives
the need for decarbonization. This results in an increasing demand for flexible and resilient energy infrastructures and rapid growth in
electric mobility. Digitalization is an enabler for such changes in both buildings and grids, making it possible to develop smarter buildings
and manage electricity distribution with a higher share of renewables. The markets served are experiencing shifts that present
opportunities where building technologies and electrification meet.
Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition in energy generation
sources, from fossil to renewable and a transition to smarter, more sustainable buildings and communities. This versatile portfolio is
structured into three businesses: buildings, electrification and electrical products. The buildings business addresses the needs of operators,
owners, occupants and users of buildings. It spans integrated building management systems and software; heating, ventilation and air
conditioning (HVAC) controls; fire safety and security products and systems; and solutions and services such as energy and performance
services. The electrification business makes grids more resilient, flexible and efficient. Its offerings cover grid simulation, operation and
control software; substation automation and protection; medium-voltage primary and secondary switchgear (including SF6-free medium-
voltage switchgear); and low-voltage switchboards and eMobility charging infrastructure. The electrical products business supplies
electrification and buildings. Its offerings include low-voltage switching, measuring and control equipment; low-voltage distribution
systems and switchgear; and circuit breakers, contactors and switching for medium-voltage. In fiscal 2021, Smart Infrastructure acquired
C&S Electric Limited (C&S Electric), India, a provider of electrical and electronic equipment for infrastructure, power generation,
transmission and distribution to strengthen its position in India as a supplier of low-voltage power distribution and electrical installation
technology.
3.3 Smart Infrastructure
quarters. Digital Industries expects its primary markets, as described above, to show clear growth in fiscal 2022, with somewhat diminished
momentum compared to fiscal 2021 and more geographic balance among the three reporting regions.
18
therein: products business
14,323
5%
8%
(in millions of €)
connectivity, simulation and digital twin, data analytics and Al, additive manufacturing and software systems and processes. Mobility's
investments focus mainly on maintaining or enhancing its production facilities, on meeting project demands and enhancing its depot
services.
Combined Management Report
10
Mobility's R&D strategy is focused on making trains and infrastructures more intelligent, thereby increasing its customers' return on
investment, improving the passenger experience, and guaranteeing availability. Decarbonization and seamlessly connected (e-)mobility
are also key factors for the future of transportation. Mobility's major R&D areas include the development of efficient vehicle platforms with
optimized lifecycle cost and maximum customization flexibility; eco-friendly, alternative power supplies for trains (batteries, hydrogen,
dual mode) and trucks (eHighway); digital services for railways via its Railigent application suite; "signaling in the cloud," a new system
architecture for rail infrastructure and loT/cloud-based technologies; solutions for more automated and autonomous driving for rail and
road; innovative brake monitoring systems for freight trains; and digital technologies and loT solutions including cyber security,
The main trends driving Mobility's markets are urbanization and the need to reduce emissions, particularly from transportation. Increasing
populations in urban centers need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same time, cities
and national economies face the challenge of cutting CO₂ and noise emissions and reducing space requirements and costs of
transportation. The pressure on mobility providers to meet all these needs is expected to rise continuously. Furthermore, improving
availability, connectivity, and sustainability of rail infrastructures increasingly requires digital solutions, which provide growth
opportunities. While a significant drop in ridership driven by COVID-19 has strongly impacted mobility operators, overall trends towards
urbanization and decarbonization persist unchanged and recovery programs in many countries have been allocating significant funds to
rail and public transport operators to address these trends.
Mobility sells its products, systems and solutions through its worldwide network of sales units. The principal customers of Mobility are
public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public spending.
Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be independent
of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded together with
service contracts, which start to generate revenue only after the respective products and solutions have been put in operation, which can
be a number of years after the contract award. Mobility's principal competitors are multinational companies. Consolidation among
Mobility's competitors is continuing: In January 2021, Alstom SA of France announced the closing of the acquisition of Bombardier
Transportation. In August 2021, Hitachi Ltd., Japan, announced an agreement of Hitachi Rail to acquire the Ground Transportation Systems
business of Thales. Market consolidation may lead to increased competitive pressure within the rail supply industry and also to fewer
sourcing options for rail customers.
Mobility combines all Siemens businesses in the area of passenger and freight transportation. Within its rolling stock business, its offerings
encompass trains for urban and regional transport such as vehicles for metro systems, trams and light rail, and commuter trains as well as
trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock offerings furthermore include
locomotives for freight or passenger transport and solutions for automated transportation such as automated people movers. Offerings in
its rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking,
operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and crossing
products and yard and depot solutions; for electrification such as AC and DC traction power supply, contact lines and network control; and
intermodal solutions, such as platforms for fleet management, route planning, ticketing and payments solutions and data analytics. With
its service business, Mobility provides customer services for rolling stock and rail infrastructure throughout the entire lifecycle, such as
maintenance and digital services. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation
of completed mobility systems. Its intelligent traffic systems business provides solutions for traffic management such as autonomous
driving, eHighway systems and tolling solutions. During fiscal 2021, Mobility carved out the intelligent traffic systems business to form a
separately managed entity, which operates under the brand name Yunex Traffic.
3.4 Mobility
Overall, markets served by Smart Infrastructure grew moderately in fiscal 2021, experiencing a recovery from COVID-19-related effects
that had a strong impact on most customer industries a year earlier. Industrial markets developed well, with strong growth in the machine
building and pharmaceutical industries, followed by the automotive, food and beverage, oil and gas and chemicals industries. Grid markets
grew clearly as utilities continued to prioritize investments in making legacy networks more automated, intelligent, flexible and reliable.
Ongoing strong demand for remote working and cloud services resulted in strong growth in the data center market. Conditions in non-
residential construction markets were challenging, while residential construction markets, in which Smart Infrastructure has a significantly
lower exposure, grew strongly. On a geographic basis, market growth in fiscal 2021 was mainly driven by the region Asia, Australia, which
recovered earlier from impacts related to COVID-19, while market volume in the Americas declined. Smart Infrastructure also experienced
a number of supply chain constraints, especially in the areas of base metals (copper, aluminum, steel), plastics, semiconductors and
transportation services. Whereas the management of these constraints required additional effort, Smart Infrastructure's supply chains have
proven to be resilient, so that major interruptions could be avoided and delivery ability was maintained. In fiscal 2022, markets served by
Smart Infrastructure are expected to grow slightly faster than in fiscal 2021. Demand from the pharmaceutical industry, data centers and
utilities are expected to be main growth drivers, while growth rates of the non-residential construction markets are expected to come in
below the average growth of markets served by Smart Infrastructure. On a geographic basis, Asia, Australia is expected to continue to be
the fastest-growing region. Growth in the region Europe, C.I.S., Africa, Middle East is expected to accelerate and markets in the region
Americas are expected to return to growth.
and services business was due to negative currency translation effects. Despite more challenging supply conditions, Smart Infrastructure
maintained its delivery capacity by successfully avoiding major supply chain disruptions. On a geographic basis, orders and revenue were
up in all regions, with double-digit volume growth in the region Asia, Australia including a particularly strong contribution from China.
Volume growth in the Americas included strong demand from residential markets in the U.S. Overall, growth in this region was sharply
impacted by negative currency translation effects, which eased towards the end of the fiscal year. Adjusted EBITA and profitability rose
in all businesses, with the strongest growth contributions coming from the products business and the systems business on higher revenue
and increased capacity utilization. Adjusted EBITA overall rose also due to cost savings related to prior execution of Smart Infrastructure's
competitiveness program, while severance associated with the program fell sharply, to €47 million from €195 million a year earlier.
Particularly during the first half of fiscal 2021, Adjusted EBITA development benefited from expense reductions year-over-year related to
COVID-19 restrictions. These effects were only partly offset by negative currency effects. For comparison, Adjusted EBITA in fiscal 2020
benefited from a €159 million gain from the sale of a business. Smart Infrastructure's order backlog was €11 billion at the end of the fiscal
year, of which €7 billion are expected to be converted into revenue in fiscal 2022.
Combined Management Report
9
Orders at Smart Infrastructure rose in all businesses on broad-based improvements in its main customer markets. The strongest growth
contributions came from the products business, which saw a clear recovery in demand from industrial customers, and from the systems
business, which won a number of significant contracts including orders from semiconductor manufacturers in the U.S. Orders in the
solutions and services business grew slightly as the business saw first signs of recovery in relevant markets towards the end of the fiscal
year. Revenue growth also was driven mainly by the products business and the systems business, while a slight decline in the solutions
34%
1,302
9.1%
1,743
11.6%
15%
11%
5,182
5,769
16,163
26%
18%
17,997
(in millions of €)
Profit
3.8 Reconciliation to Consolidated Financial Statements
Although the broad range of businesses are operating in diverse markets, overall the main markets served by Portfolio Companies are
generally impacted by uncertainties regarding geopolitical and economic developments and by cautiousness of investment sentiment.
However, ongoing recovery is expected to continue in most end-customer vertical markets in fiscal 2022.
Even though volume development was held back by adverse currency translation effects and impacts related to COVID-19, orders still
increased significantly, driven by Siemens Logistics and Large Drives Applications. However, Portfolio Companies recorded lower revenue
compared to fiscal 2020, as Large Drives Applications in particular could not offset these headwinds. Fully consolidated units made good
progress with profitability and delivered overall a sharply improved earnings performance, even though Portfolio Companies recorded
higher severance charges of €74 million, up from €21 million in fiscal 2020, related to cost structure improvement measures mainly at
Large Drives Applications. A positive Adjusted EBITA for fully consolidated units was more than offset by continued negative results from
the at-equity investment in Valeo Siemens eAutomotive GmbH. For comparison, fiscal 2020 included an impairment of €453 million on
the at-equity investment and a goodwill impairment of €99 million related to Siemens Energy Assets. Portfolio Companies' order backlog
was €4 billion at the end of fiscal 2021, of which €2 billion was expected to be converted into revenue in fiscal 2022.
(2.8)%
(21.0)%
87%
(673)
Siemens Energy Investment
(85)
(5)%
3,209
3,058
20%
16%
3,024
3,516
Comp.
% Change
Actual
(2)%
Siemens Real Estate
Corporate items
Centrally carried pension expense
Lower profit at Siemens Real Estate was due mainly to reduced gains related to disposals. The prior year included a gain of €219 million
from the transfer of an investment.
The result for Siemens Energy Investment included Siemens' share of Siemens Energy AG's result after tax and, in addition, expenses
from amortization of assets resulting from purchase price allocation due to the initial recognition of the investment at fair value in
September 2020. In fiscal 2021, Siemens' share of Siemens Energy AG's net loss amounted to €159 million, which was due mainly to
planned restructuring measures by Siemens Energy to improve its competitiveness, while the expenses from amortization amounted to a
€237 million.
(1,731)
(1,739)
(243)
(94)
(691)
(738)
(211)
(170)
(887)
(435)
325
94
(24)
(396)
2020
2021
Fiscal year
Eliminations, Corporate Treasury and other reconciling items
Reconciliation to Consolidated Financial Statements
Amortization of intangible assets acquired in business combinations
2020
Improved results in Eliminations, Corporate Treasury and other reconciling items were due mainly to lower interest expenses on debt
and positive effects related to reinsurance contracts.
2021
Adjusted EBITA margin
2020
2021
Fiscal year
ROE (after taxes)
therein: equity business
Earnings before taxes (EBT)
(in millions of €)
Siemens Financial Services provides financing solutions for Siemens' customers as well as other companies in the form of debt and equity
investments. Based on its comprehensive financing know-how and specialist technology expertise in the areas of Siemens businesses, SFS
supports its customers' investments with leasing, lending and working capital financing solutions as well as equipment, project and
structured financing. In addition, SFS supports Siemens' industrial businesses via a joint go-to-market that includes SFS's risk management
expertise, such as to assess the risk profiles of projects or business models. Furthermore, SFS collaborates with the industrial businesses
to co-develop new digital business models. Recent examples include energy as a service or pay-per-use and pay-for-outcome options that
give customers more financial flexibility.
3.6 Siemens Financial Services
512
Markets addressed by the imaging business grew significantly, mainly due to large COVID 19-driven demand for computer tomography
systems and initial signs of normalization in all other modalities. For the Imaging market, it is expected that a normalization of growth to
pre-COVID-19 levels will occur in fiscal year 2022. In the diagnostics business, the markets for point-of-care tests for patient monitoring
and for lab tests increased in fiscal 2021. On the one hand, the backlog of purchasing decisions and capital expenditure by laboratories
and hospitals from the previous year dissipated while, on the other, demand for certain diagnostic reagents, particularly tests for routine
care, increased. The markets for combating the COVID-19 pandemic posted sharp growth. Vaccination rates in the population and further
COVID-19 implications such as future waves and testing guidelines are key factors for determining expected growth in the market for the
diagnostics business. Siemens Healthineers expects demand for tests for acute infection with SARS-CoV-2 to decrease sharply. In the Varian
business, growth was driven primarily by new and replacement business. In markets such as the U.S. and Western Europe, product
innovations led to higher customer investment. The market for Varian is expected to continue to grow throughout fiscal 2022. The recovery
in the advanced therapies markets was made possible through a combination of a resumption in elective surgical procedures and the
gradual return of patients. The expectation is that the slight market recovery already seen in fiscal 2021 will continue on a broad basis in
fiscal 2022.
12
In general, the markets addressed by Siemens Healthineers showed significant growth in fiscal 2021. Nearly two years after the first case
of COVID-19 was identified, the virus continues to impact health systems worldwide. Competition among the leading healthcare
companies remained at elevated high levels. While the long-term market trends generally remained intact, the COVID-19 pandemic did
reinforce some of these trends and has, for example, raised the already increasing cost pressure on health systems and customers to
unprecedented levels. Especially in countries with severe COVID-19 outbreaks such as the U.S., India, and Brazil, a significant impact on
healthcare economics was apparent in the form of additional cost increases combined with simultaneous revenue losses for hospitals.
Staff shortages became more acute, leading to significant care disruptions at many hospitals and overburdening healthcare systems. The
pandemic served to drive efforts toward innovation and digital transformation in healthcare. From a regional perspective, China is one of
the biggest markets for medical technology and a major incremental growth driver. In the course of the last fiscal year, China's healthcare
market recovered almost fully from effects related to the coronavirus pandemic during the fiscal year. In the region Europe, C.I.S., Africa,
Middle East, public investment programs as well as a rise in COVID-19-related demand helped drive a market rise in several countries. The
private market also began to recover. In the U.S., business began to return to normal as progress was made in the vaccination campaign.
In fiscal 2021, Siemens Healthineers recorded double-digit growth both in orders and revenue, with both metrics developing similarly.
While all businesses contributed to growth, the increases were highest in the diagnostics and imaging businesses. On a geographic basis,
growth was particularly strong in the region Europe, C.I.S. Africa, Middle East. The reporting regions Asia, Australia and Americas also saw
double-digit increases, the latter one despite significant currency translation effects. Portfolio effects primarily following the acquisition
of Varian added twelve percentage points to order growth and nine percentage points to revenue growth. Adjusted EBITA was
substantially higher year-over-year, due primarily to strong earnings development in the diagnostics business that was driven by high
demand for rapid coronavirus antigen tests. The imaging business again posted strong earnings, which were higher than in the prior year.
Varian delivered a positive contribution to earnings on an operating basis. In contrast, Adjusted EBITA in the advanced therapies business
was lower year-over-year. Adjusted EBITA included subsequent measurement effects from purchase price allocation related to the Varian
acquisition totaling €0.1 billion and expenses totaling €0.1 billion related to the closing of the Varian transaction and its ongoing
integration. Profitability was also burdened by negative currency effects. Severance charges were €68 million in fiscal 2021 and €65 million
in fiscal 2020. The order backlog for Siemens Healthineers was €27 billion at the end of the fiscal year, of which €9 billion are expected to
be converted into revenue in fiscal 2022.
15.1%
30%
2,184
2,847
15.8%
19%
24%
Combined Management Report
345
49
82
Adjusted EBITA
Revenue
Orders
(in millions of €)
Demand within the industries served by Portfolio Companies mainly shows a delayed response to changes in the overall economic
environment. The results of fully consolidated units are strongly dependent, however, on customer investment cycles in their key
industries. In commodity-based industries such as oil and gas or mining, these cycles are driven mainly by commodity price fluctuations
rather than changes in produced volumes. The broad range of fully consolidated units and their heterogonous industrial customer base
are reflected in the use of various sales and marketing channels, requiring a dedicated sales approach based on in-depth understanding
of specific industries and customer requests.
After this disposal, Portfolio Companies consists mainly of three fully consolidated, separately managed units at the end of fiscal 2021.
Large Drives Applications, which offers electric motors, converters and solutions for mining, will be carved out beginning with fiscal 2022
to increase its entrepreneurial freedom and thereby unlock its full potential. Similarly, Siemens Logistics, which offers sorting technology
and solutions, will be reorganized to separate its mail and parcel activities from its airport logistics activities, which focuses on baggage
and cargo handling. The third fully consolidated unit, Siemens Energy Assets, comprises certain regional remaining business activities of
the former Gas and Power segment; as part of the Siemens Energy carve-out these activities remained with Siemens due to country-specific
regulatory restrictions or economic considerations. Portfolio Companies also holds an at-equity investment in Valeo Siemens eAutomotive
GmbH.
Combined Management Report
13
In March 2021 Siemens sold Flender GmbH, Germany, (Flender) to Carlyle Group Inc., U.S. During the first quarter of fiscal 2021 the
businesses of Flender (previously reported in Portfolio Companies) were classified as held for disposal and discontinued operations. Prior-
period amounts are presented on a comparable basis. For further information see Note 3 in Notes to Consolidated Financial Statements
for fiscal 2021.
Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
and fiber. Unrealized potential within these businesses requires adjustment in their approach using defined measures including internal
re-organization, digitalization, cost improvements, and optimizing procurement, production and service activities. After achieving certain
threshold performance targets, businesses may be transferred to one of Siemens industrial businesses, combined with an external business
from the same industry, sold or placed into an external private equity partnership.
3.7 Portfolio Companies
SFS is de-risking its business profile by reducing exposure in connection with energy-related equity investments as a consequence of the
spin-off of Siemens Energy. This has the additional benefit of more tightly focusing SFS's business scope and capital allocation on areas of
intense domain know-how closely aligned with Siemens' customers and markets, particularly for Digital Industries, Smart Infrastructure
and Mobility. Accordingly, SFS is influenced by the business development of the markets served by our industrial businesses, among other
factors, including effects related to COVID-19. In addition to its high level of diversification across industries, SFS has a strong regional
footprint in investment-grade countries, with the highest share in the U.S. SFS intends to maintain a highly diversified portfolio across
regions, while participating in the strong economic development of selected Asian markets.
The increase in total assets since the end of fiscal 2020 was due to growth in the debt business and positive currency translation effects.
Net cash from operations (defined as the sum of cash flows from operating and investing activities) amounted to €105 million compared
to €(284) million in fiscal 2020. In fiscal 2021 and fiscal 2020, net cash from operations comprised Free cash flow of €820 million and
€611 million, respectively, and remaining cash flows from investing activities, including from change in receivables from financing
activities, of €(715) million and €(895) million, respectively.
A high earnings contribution from the debt business resulted in a sharp increase in Earnings before taxes and was also the main factor
for the increase of the ROE. The improvement was due mainly to sharply lower expenses for credit risk provisions compared to fiscal 2020,
when results were significantly influenced by effects related to COVID-19. However, results from the equity business were affected by high
ongoing uncertainty in the macroeconomic environment. Additionally, sales of investments in the previous fiscal year lifted profit for that
period. This led also, along with seasonal effects on offshore wind-farm projects, to a lower share of profit from investments accounted
for using the equity method in fiscal 2021. For comparison, results in the equity business in fiscal 2020 included a loss of €98 million from
an impairment of an equity investment in the U.S.
28,946
2020
Sep 30,
Sep 30,
2021
30,384
(in millions of €)
Total assets
11.7%
15.4%
Fiscal year
Combined Management Report
44
Matthias Rebellius and Judith Wiese have been full mem-
bers of the Managing Board since October 1, 2020.
Joe Kaeser left the Managing Board effective the end of
the Annual Shareholders' Meeting on February 3, 2021.
Klaus Helmrich left the Managing Board effective
March 31, 2021. Joe Kaeser worked for Siemens for more
than 40 years. For seven years, he headed the Company
as President and CEO. Klaus Helmrich retired at the expi-
ration of his term of office after nine years on the Man-
aging Board and 35 years at the Company. The Super-
visory Board would like to thank both Mr. Kaeser and
Mr. Helmrich for their many years of successful work on
behalf of Siemens and their extraordinary services to the
Company. We would especially like to thank Joe Kaeser,
who shaped the Company as few others have done and
left behind a strong foundation for future generations.
Grazia Vittadini (since February 3, 2021)
100
1/1
100
1/1
78
100
2/2
100
5/5
3/3
100
9/9
Dorothea Simon
100
9/9
Michael Sigmund
100
9/9
Nathalie von Siemens (Dr. phil.)
88828 % 8
100
3/3
100
100
9/9
Gunnar Zukunft
100
6/6
100
2/2
100
9/9
Matthias Zachert
100
1/1
100
2/2
100
4/4
100
4/4
Werner Wenning (until February 3, 2021)
100
2/2
7/9
Baroness Nemat Shafik (DBE, DPhil)
100
5/5
8/9
100
9/9
Jürgen Kerner
100
33
3/3
100
4/4
100
9/9
Harald Kern
100
6/6
100
100
100
3/3
33
100
1/1
89
98
3/4
6/6
Kasper Rørsted (since February 3, 2021)
8/9
Norbert Reithofer (Dr. Ing. Dr. Ing. E.h.)
100
9/9
Hagen Reimer
100
1/1
100
3/3
75
28
100
9/9
Benoît Potier
3/4
(until February 3, 2021)
Nicola Leibinger-Kammüller (Dr. phil.)
100
3/3
100
75
13
97
100
In the 174 years of its existence, our Company has built an
excellent reputation around the world. Technical perfor-
mance, innovation, quality, reliability and international
engagement have made Siemens a leading company in
its areas of activity. It is top performance with the highest
ethics that has made Siemens strong. This is what the
Company will continue to stand for in the future.
The Company's values and Business
Conduct Guidelines
COMPLIANCE.
Further corporate governance practices applied beyond
the applicable legal requirements are contained in our
Business Conduct Guidelines, which are publicly available
on the Siemens Global Website at WWW.SIEMENS.COM/
created by the COVID-19 pandemic, several meetings of
the Supervisory Board and its committees in fiscal 2021
took place as virtual meetings or with the possibility of
participation in a virtual format.
Corporate Governance Statement
3
According to the suggestion in D.8 sent. 2, participation
by telephone or video conference in the meetings of the
Supervisory Board and its committees should not be the
rule. At Siemens AG, participation in meetings is, as a rule,
in person. Participation by telephone takes place only
in exceptional cases. Due to the special circumstances
-
The Business Conduct Guidelines provide the ethical and
legal framework within which we want to conduct our
activities and remain on course for success. They contain
the basic principles and rules for our conduct within our
Company and in relation to our external partners and the
general public. They set out how we meet our ethical and
legal responsibility as a Company and give expression to
our Company values: "Responsible" - "Excellent" - "Inno-
vative." Our Business Conduct Guidelines are publicly
available on the Siemens Global Website at www.
According to the suggestion in A.5 of the Code, in the
case of a takeover event, the Managing Board should
convene an Extraordinary General Meeting at which
shareholders will discuss the takeover offer and may
decide on corporate actions. The convening of a share-
holders' meeting - even taking into account the short-
ened time limits stipulated in the German Securities
Acquisition and Takeover Act (Wertpapiererwerbs- und
Übernahmegesetz, WpÜG) – is an organizational chal-
lenge for large publicly listed companies. It appears
doubtful whether the associated effort is justified also
in cases where no relevant decisions by the sharehold-
ers' meeting are intended. Therefore, extraordinary
shareholders' meetings shall be convened only in appro-
priate cases.
Suggestions of the Code
COM/DECLARATION OF CONFORMITY.
The current Declaration of Conformity and the Declara-
tions of Conformity of the previous five years are avail-
able on the Siemens Global Website at www.SIEMENS.
The Managing Board The Supervisory Board"
-
Siemens Aktiengesellschaft
Berlin and Munich, October 1, 2021
Mr. Diekmann has been a member of the Supervisory
Board of Siemens AG since January 24, 2008, and is
therefore not regarded as independent in terms of the
Code's independence indicators. In the view of the
Compensation Committee, however, Mr. Diekmann is
currently the most suitable candidate for the position
of Chairman because of his professional experience -
due, among other things, to his many years of work
on the Compensation Committee and because his
election will help ensure continuity in the Commit-
tee's work.
as its new Chairman, effective February 4, 2021. governance practices
Siemens AG voluntarily complies with the Code's sugges-
tions, with only the following exceptions:
SIEMENS.COM/COMPLIANCE.
4. Description of the operation
of the Managing Board and the
Supervisory Board and of the
composition and operation of
their committees
Siemens AG is subject to German corporate law. There-
fore, it has a two-tier board structure, consisting of a
Managing Board and a Supervisory Board. The duties and
powers of the Managing Board and the Supervisory
Board as well as the regulations regarding their operation
and composition are defined primarily by the German
Stock Corporation Act, the Articles of Association of
Siemens AG and the bylaws for the Company's governing
EQUITY AND COMPENSATION COMMITTEE
OF THE MANAGING BOARD
The members of the Managing Board are subject to a com-
prehensive prohibition on competitive activity for the pe-
riod of their employment at Siemens AG. They are commit-
ted to serving the interest of the Company. When making
their decisions, they may not be guided by personal inter-
ests, nor may they exploit for their own advantage busi-
ness opportunities offered to the Company. Managing
Board members may engage in secondary activities - in
particular, supervisory board positions outside the Siemens
Group-only with the approval of the Chairman's Commit-
tee of the Supervisory Board. The Supervisory Board is re-
sponsible for decisions regarding any adjustments to Man-
aging Board compensation that are necessary in order to
take account of compensation for secondary activities.
Every Managing Board member is under an obligation to
disclose conflicts of interest without delay to the Chairman
or Chairwoman of the Supervisory Board and to inform the
other members of the Managing Board thereof.
The Managing Board and the Supervisory Board cooper-
ate closely for the benefit of the Company. The Managing
Board informs the Supervisory Board regularly, compre-
hensively and without delay on all issues of importance
to the entire Company with regard to strategy, planning,
business development, financial position, results of oper-
ations, compliance and entrepreneurial risks. At regular
intervals, the Managing Board also discusses the status
of strategy implementation with the Supervisory Board.
BYLAWS-MANAGINGBOARD.
Board demands a prior decision by the Managing Board.
The President and CEO is responsible for the coordina-
tion of all Managing Board portfolios. Further details
are available in the Bylaws for the Managing Board
on the Siemens Global Website at ☐ wWW.SIEMENS.COM/
As a rule, the portfolio assigned to an individual member
is that member's own responsibility. Activities and trans-
actions in a particular Managing Board portfolio that are
considered to be extraordinarily important for the Com-
pany or associated with an extraordinary economic risk
require the prior consent of the full Managing Board. The
same applies to activities and transactions for which the
President and CEO or another member of the Managing
The Supervisory Board has issued Bylaws for the Manag-
ing Board that contain the assignment of different port-
folios and the rules for cooperation both within the Man-
aging Board and between the Managing Board and the
Supervisory Board as well as rules for the so-called Equity
Investments. In accordance with these Bylaws, the Man-
aging Board is divided into the portfolio of the President
and CEO and a variety of Managing Board portfolios. The
Managing Board members responsible for the individual
Managing Board portfolios are defined in a business as-
signment plan that is determined by the Supervisory Board.
As the Managing Board member with responsibility for
the People & Organization portfolio, the Labor Director
(Arbeitsdirektor) is appointed in accordance with the re-
quirements of Section 33 of the German Codetermina-
tion Act (Mitbestimmungsgesetz, MitbestG). While the
first-time appointment of Managing Board members is
not, as a rule, to exceed a period of three years, an assess-
ment is to be made in each individual case in order to
determine what period of appointment is deemed appro-
priate within the legally permissible period. This matter is
explained in greater detail in Section 1 of this Corporate
Governance Statement.
www.SIEMENS.COM/
SUSTAINABILITYINFORMATION.
Combined Management Report of Siemens AG and the
Siemens Group. Together with the Supervisory Board,
the Managing Board prepares the Compensation Report.
The Managing Board has established an appropriate and
effective internal control system and risk management
system. It also ensures that the Company adheres to stat-
utory requirements, official regulations and internal
Company policies and works to achieve compliance with
these provisions and policies within the Siemens Group.
The Managing Board has established a comprehensive
compliance management system. Protection is offered
to employees and third parties who provide informa-
tion on unlawful behavior within the Company. Details
on the compliance management system are available
on the Siemens Global Website at
Corporate Governance Statement
4
The Managing Board prepares the Company's Quarterly
Statements and Half-year Financial Report, the Annual
Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the
-
SUSTAINABILITYINFORMATION.
As the top management body, the Managing Board is
committed to serving the interests of the Company and
achieving sustainable growth in company value. The
members of the Managing Board are jointly responsible
for the entire management of the Company and decide
on basic issues of business policy and corporate strategy,
including Siemens' sustainability strategy, as well as on
the Company's annual and multi-year plans, unless spe-
cific circumstances are taken into account for companies
that are separately managed and publicly listed them-
selves (Siemens Healthineers). The Companywide DEGREE
program, which was approved by the Managing Board in
fiscal 2021, intensified the focus of all Siemens businesses
on ambitious sustainability targets – targets for environ-
mental and social sustainability and good governance -
even further. More details on sustainability are available
on the Siemens Global Website at www.SIEMENS.COM/
COM/MANAGEMENT.
In fiscal 2021, the Managing Board of Siemens AG
comprised Dr. Roland Busch (President and CEO since
the conclusion of the ordinary Annual Shareholders'
Meeting on February 3, 2021, previously Deputy CEO),
Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas
and Judith Wiese as well as Klaus Helmrich (until
March 31, 2021) and Joe Kaeser (President and CEO until
the conclusion of the ordinary Annual Shareholders'
Meeting on February 3, 2021). Further information
regarding the Managing Board members and their mem-
berships, which are to be disclosed pursuant to Sec-
tion 285 No. 10 of the German Commercial Code, are set
out in Section 10 of this Corporate Governance State-
ment. Information about the Managing Board members'
areas of responsibility and their curricula vitae are avail-
able on the Siemens Global Website at www.SIEMENS.
Managing Board
CORPORATE-GOVERNANCE.
bodies. The Articles of Association of Siemens AG,
the Bylaws for the Managing Board, the Bylaws for
the Supervisory Board and the bylaws for the Super-
visory Board's most important committees are available
on the Siemens Global Website at WWW.SIEMENS.COM/
3. Information on corporate
The current compensation system for the Managing
Board members pursuant to Section 87a para. 1 and 2
sent. 1 of the German Stock Corporation Act, which was
endorsed by the Annual Shareholders' Meeting on Febru-
ary 2, 2020, and the decision of the Annual Shareholders'
Meeting on February 3, 2021, pursuant to Section 113
para. 3 of the German Stock Corporation Act regarding
the compensation of the Supervisory Board members are
publicly available on the Siemens Global Website at
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE. The Compen-
sation Report and the Independent Auditor's Report in
accordance with Section 162 of the German Stock Cor-
poration Act are publicly available at the same Internet
address.
Following the regular departure of Werner Wenning,
the previous, long-serving Chairman of the Compen-
sation Committee of the Supervisory Board of
Siemens AG, from the Supervisory Board and thereby
also from the Compensation Committee, the Compen-
sation Committee elected Michael Diekmann to serve
fications and experience that he or she has acquired
over many years in management positions within the
Siemens Group. With regard to the number of man-
dates accepted by Managing Board and Supervisory
Board members, an assessment is also to be possible
in each individual case in order to determine if the
number of accepted mandates relevant within the
meaning of the Code is deemed appropriate. This as-
sessment is to consider the expected personal work-
load caused by the accepted mandates, which can
vary from mandate to mandate.
Chairman
Jim Hagemann Snabe
For the Supervisory Board
On behalf of the Supervisory Board, I would like to thank
the members of the Managing Board and all the employ-
ees and employee representatives of Siemens AG and of
all Group Companies for their outstanding commitment
and constructive cooperation in fiscal 2021.
and the Supervisory Board reelected Mr. Snabe its Chair-
man. The Annual Shareholders' Meeting on February 3,
2021, newly elected Kasper Rørsted and Grazia Vittadini
to four-year terms of office as shareholder representa-
tives on the Supervisory Board.
FISCAL 2021 8
The Annual Shareholders' Meeting reelected
Jim Hagemann Snabe, whose regular term of office also
expired at the end of the Annual Shareholders' Meeting
on February 3, 2021, to a four-year term of office as
shareholder representative on the Supervisory Board,
Dr. Nicola Leibinger-Kammüller and Werner Wenning left
the Supervisory Board at the end of the Annual Share-
holders' Meeting on February 3, 2021, when their terms
of office as shareholder representatives on the Super-
visory Board expired. We thanked Dr. Nicola Leibinger-
Kammüller and Werner Wenning for their many years of
trust-based cooperation and for their professional com-
mitment and contribution to the Company's success. We
are especially grateful to Mr. Wenning, who, as Second
Deputy Chairman of the Supervisory Board and Chairman
of the Compensation Committee, decisively shaped the
Supervisory Board's work over a period of many years.
Robert Kensbock left the Supervisory Board on Septem-
ber 25, 2020, the effective date of the spin-off of Siemens
Energy. In a decision of October 16, 2020, the Charlotten-
burg District Court appointed Tobias Bäumler to succeed
Mr. Kensbock as an employee representative on the
Supervisory Board for the remainder of Mr. Kensbock's
term of office.
Changes in the composition of the
Supervisory and Managing Boards
The Supervisory Board concurs with the results of the
audit. Following the definitive findings of the Audit Com-
mittee's examination and our own examination, we have
no objections. The Managing Board prepared the Annual
Financial Statements of Siemens AG and the Consoli-
dated Financial Statements of the Siemens Group.
We approved the Annual Financial Statements and the
Consolidated Financial Statements. In view of our ap-
proval, the financial statements are accepted as submit-
ted. We endorsed the Managing Board's proposal that
the net income available for distribution be used to pay
out a dividend of €4.00 per share entitled to a dividend
and that the amount of net income attributable to shares
of stock not entitled to receive a dividend for fiscal 2021
be carried forward.
the Managing Board's proposal for the appropriation of
net income were submitted to us by the Managing Board
in advance. The Audit Committee discussed the dividend
proposal in detail at its meeting on November 9, 2021. It
discussed the Annual Financial Statements of Siemens AG,
the Consolidated Financial Statements of the Siemens
Group and the Combined Management Report in detail
at its meeting on December 1, 2021. In this context, the
Audit Committee concerned itself, in particular, with the
key audit matters described in the independent auditors'
respective opinions, including the audit procedures im-
plemented. The Audit Committee's review also covered
the non-financial information for Siemens AG and the
Siemens Group that is included in the Combined Man-
agement Report. The audit reports prepared by the inde-
pendent auditors were distributed to all members of the
Supervisory Board and comprehensively reviewed at the
Supervisory Board meeting on December 2, 2021, in the
presence of the independent auditors, who reported on
the scope,
focal points and main findings of their audit,
addressing, in particular, key audit matters and the audit
procedures implemented. No major weaknesses in the
Company's internal control or risk management systems
were reported. At this meeting, the Managing Board ex-
plained the financial statements of Siemens AG and the
Siemens Group as well as the Company's risk manage-
ment system.
Report of the Supervisory Board
7
FISCAL 2021
were prepared in accordance with the requirements of
German law. The Consolidated Financial Statements of
the Siemens Group were prepared in accordance with
the International Financial Reporting Standards (IFRS) as
adopted by the EU and with the additional requirements
of German law set out in Section 315 e (1) of the German
Commercial Code (Handelsgesetzbuch, HGB). The Con-
solidated Financial Statements of the Siemens Group also
comply with the IFRS as issued by the International Ac-
counting Standards Board (IASB). The independent audi-
tors conducted their audit in accordance with Section 317
of the German Commercial Code and the EU Audit Regu-
lation and German generally accepted standards for the
audit of financial statements as promulgated by the Insti-
tut der Wirtschaftsprüfer (IDW) as well as in supplemen-
tary compliance with the International Standards on Au-
diting (ISA). The abovementioned documents as well as
The independent auditors, Ernst & Young GmbH Wirt-
schaftsprüfungsgesellschaft, Stuttgart, audited the An-
nual Financial Statements of Siemens AG, the Consoli-
dated Financial Statements of the Siemens Group and the
Combined Management Report for Siemens AG and the
Siemens Group for fiscal 2021 and issued an unqualified
opinion for each. Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft, Stuttgart, has served as the indepen-
dent auditors of Siemens AG and the Siemens Group
since fiscal 2009. Katharina Breitsameter has signed as
auditor since fiscal 2016 and as auditor responsible for
the audit since fiscal 2021. Dr. Philipp Gaenslen has
signed as auditor since fiscal 2021. The Annual Financial
Statements of Siemens AG and the Combined Manage-
ment Report for Siemens AG and the Siemens Group
of the financial statements
Detailed discussion of the audit
100
100
Report of the Supervisory Board
96
FISCAL 2021 9
Statement
member to be appointed and, in particular, the quali- Compensation system
2. Compensation Report/
qualifications and experience of the Managing Board
Corporate Governance Statement
2
Instead of regarding the recommended maximum pe-
riod of the first-time appointment of Managing Board
members and the recommended maximum number
of mandates for Managing Board and Supervisory
Board members as rigid upper limits, an assessment is
to be possible in each individual case. While the period
of the first-time appointment of a Managing Board
member shall not, as a rule, exceed three years, an
assessment is to be possible in each individual case in
order to determine what period of appointment is
deemed appropriate within the legally permissible pe-
riod. This assessment is to consider the individual
→ Siemens AG does not comply with the recommen-
dation in C.10 sent. 1 variant 3. According to this
recommendation, the chair of the committee that
addresses Managing Board compensation shall
be independent from the company and the Man-
aging Board.
→ Siemens AG does not comply with the recommen-
dations in C.4 and C.5. According to the recom-
mendation in C.4, a Supervisory Board member
who is not a member of any Managing Board of a
listed company shall not accept more than five
Supervisory Board mandates at non-group listed
companies or comparable functions, with an ap-
pointment as chair of the Supervisory Board being
counted twice. According to the recommendation
in C.5, members of the Managing Board of a listed
company shall not have, in aggregate, more than
two Supervisory Board mandates in non-group
listed companies or comparable functions and shall
not accept the chairmanship of a Supervisory Board
in a non-group listed company.
→ Siemens AG does not comply with the recommen-
dation in B.3. According to this recommendation,
the first-time appointment of Managing Board
members shall be for a period of not more than
three years.
Since making its last Declaration of Conformity dated
February 4, 2021, Siemens AG has complied, and will
continue to comply, with all the recommendations of
the Government Commission on the German Corpo-
rate Governance Code in the version of December 16,
2019 ('Code') published by the Federal Ministry of
Justice and Consumer Protection in the official section
of the Federal Gazette (Bundesanzeiger), with the fol-
lowing exceptions:
"Declaration of Conformity by the Managing Board and
the Supervisory Board of Siemens Aktiengesellschaft
with the German Corporate Governance Code pursu-
ant to Section 161 of the German Stock Corporation Act
The Managing Board and the Supervisory Board of
Siemens AG approved the following Declaration of Con-
formity pursuant to Section 161 of the German Stock Cor-
poration Act (Aktiengesetz, AktG) as of October 1, 2021:
1. Declaration of Conformity
with the German Corporate
Governance Code
-
CORPORATE-GOVERNANCE.
In this Statement, the Managing Board and the Super-
visory Board report as of November 8, 2021, on corporate
governance at the Company in fiscal 2021 (October 1,
2020, to September 30, 2021) pursuant to Sections 289f
and 315d of the German Commercial Code (Handels-
gesetzbuch, HGB) and as prescribed in Principle 22 of the
German Corporate Governance Code ("Code"). Further
information regarding corporate governance – for exam-
ple, the Bylaws for the Supervisory Board, the Bylaws
for the Managing Board, the bylaws for the Supervisory
Board committees and the Corporate Governance State-
ments of the previous fiscal years is also available
on the Siemens Global Website at www.SIEMENS.COM/
Corporate Governance Statement
pursuant to Sections 289f and 315d
of the German Commercial Code
Corporate Governance Statement
SIEMENS
pursuant to Sections 289f and 315d
of the German Commercial Code
Corporate Governance
In fiscal 2021, the Managing Board had one committee,
the Equity and Compensation Committee. The Equity
and Compensation Committee was dissolved effective
October 1, 2021. The duties assigned to it were trans-
ferred back to the Managing Board at that time. The
Equity and Compensation Committee was responsible for
the duties assigned to it by a decision of the Managing
Board - including, in particular, duties in connection with
capital measures and equity-linked financial instruments
relating to the compensation of all employees and man-
agers of the Siemens Group except the members of the
5
100
100
4/4
100
9/9
9/9
100
=1
1/1
6/6
100
100
6/6
100
4/4
100
9/9
100
9/9
3/3
100
3/3
33
100
4/4
100
6/6
100
6/6
100
55
100
100
5/5
22222
Bettina Haller
Andrea Fehrmann (Dr. phil.)
Michael Diekmann
Tobias Bäumler
Second Deputy Chairman
Werner Brandt (Dr. rer. pol.)
100
99
in %
100
in %
Birgit Steinborn
Chairman
Jim Hagemann Snabe
(Number of meetings/
participation in %)
FISCAL 2021 6
Disclosure of participation by individual
Supervisory Board members in meetings
The average rate of participation by members in the
meetings of the Supervisory Board and its committees
was 98%. Due to the exceptional circumstances caused
by the COVID-19 pandemic, all meetings in fiscal 2021
were held either in a virtual format or as in-person meet-
ings in which virtual participation was possible. The par-
ticipation rate of individual members in the meetings of
the Supervisory Board and its committees is set out in the
following chart:
New Supervisory Board members can meet with Manag-
ing Board members and other managers with specialist
responsibility to exchange views on current topics and
topics of fundamental importance and thus gain an
overview of Company-relevant matters (onboarding). In
fiscal 2021, a separate informational event was held for
the new Supervisory Board members on March 12, 2021,
in order to acquaint them, in particular, with the Compa-
ny's business model and strategy and with the structures
of the Siemens Group. The new members of the Audit
Committee participated in discussions with the indepen-
dent auditors on April 14, 2021. On April 15, 2021, they
also took part in an introductory event regarding the
Audit Committee's tasks and processes and the areas of
the Group relevant for the Audit Committee.
The Supervisory Board members take part, on their own
responsibility, in the educational and training measures
necessary for the performance of their duties - measures
relating, for example, to changes in the legal framework
and new, groundbreaking technologies. The Company
supports them in this regard. Internal informational
events are offered when necessary to support targeted
training measures. Two internal training events for all
Supervisory Board members were held in fiscal 2021: one
event on April 14, 2021, concerning strategically relevant
technology-related topics, and another on July 19, 2021,
concerning Group finance.
contract for fiscal 2021 to the independent auditors, who
had been elected by the Annual Shareholders' Meeting,
defined the Audit Committee's focus areas and deter-
mined the auditors' fee. The Audit Committee monitored
the selection, independence, qualification, rotation and
efficiency of the independent auditors as well as the ser-
vices they provided and concerned itself with the review
of the quality of the audit of the financial statements.
In fiscal 2021, against the backdrop of the Wirecard situ-
ation, the Audit Committee regularly discussed the role
of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
Stuttgart, as the independent auditors of Wirecard AG.
The Audit Committee questioned the independent audi-
tors regarding this matter and assessed the impact on
Siemens AG. No impediments were identified that would
preclude Ernst & Young GmbH Wirtschaftsprüfungs-
gesellschaft, Stuttgart, from being elected to serve as
independent auditors for fiscal 2022. The Audit Commit-
tee also dealt with the Company's accounting and ac-
counting process, the effectiveness of its internal control
system, its risk management system and the effective-
ness, resources and findings of its internal audit as well
as with reports concerning potential and pending legal
disputes. In addition, the Audit Committee concerned
itself with compliance-related matters and, in particular,
with the Chief Compliance Officer's quarterly reports and
annual report. Due to the regular external rotation of
independent auditors at the conclusion of fiscal 2023
required in accordance with the current legal situation,
the Audit Committee's work in fiscal 2021 also focused on
the preparation and implementation of a transparent and
non-discriminatory process for the selection of the inde-
pendent auditors for fiscal 2024. At its meeting on
August 3, 2021, the Audit Committee approved for this
purpose the introduction of a tendering process in accor-
dance with Article 16 of the EU audit regulation (Regula-
tion (EU) No. 537/2014 of the European Parliament and of
the Council of April 16, 2014, on specific requirements
regarding the statutory audit of public-interest entities
and repealing Commission Decision 2005/909/EG,
"EU audit regulation"). The members of the Audit Commit-
tee participated as guests in the Innovation and Finance
Committee's discussion of the budget for fiscal 2021.
Report of the Supervisory Board
5
FISCAL 2021
No.
The Innovation and Finance Committee met three
times. It also made one decision using other customary
means of communication. The Innovation and Finance
Committee's work focused on its recommendation re-
garding the budget for fiscal 2021, the discussion of the
pension system and the preparation and approval of in-
vestment and divestment projects and/or financial mea-
sures. For example, the Innovation and Finance Commit-
tee prepared the Supervisory Board's decision regarding
the acquisition of Supplyframe, Inc., U.S. It also con-
cerned itself with M&A action fields and with Next47, the
independent unit established by Siemens in 2016 to bun-
dle the Company's venture capital activities in order to
foster disruptive ideas more intensively and expedite the
development of new technologies. Innovation and tech-
nology-related topics were a further focus. The Managing
Board reported to the Innovation and Finance Committee
regarding user-centered product design and experience
(UX). A guest speaker explained this topic from an exter-
nal perspective (outside-in). Within the limits of the ap-
plicable legal framework, the relevant Managing Board
members informed the Innovation and Finance Commit-
tee about critically important measures and decisions at
the Company's equity investments.
The Compensation Committee met four times. It also
made one decision using other customary means of com-
munication. The Compensation Committee prepared, in
particular, Supervisory Board decisions regarding the
definition of performance criteria and the targets for vari-
able compensation, the determination and review of the
appropriateness of Managing Board compensation and
the approval of the Compensation Report. In addition,
the Compensation Committee prepared the Supervisory
Board's decision regarding the engagement of an auditor
for the Compensation Report for fiscal 2021.
The Mediation Committee had no need to meet.
The Nominating Committee met once. It also made one
decision using other customary means of communica-
tion. The Nominating Committee gave in-depth consid-
eration to succession planning for the Supervisory Board
and prepared the Supervisory Board's nominations of
shareholder representatives on the Supervisory Board for
election by the 2021 Annual Shareholders' Meeting. The
Nominating Committee was supported in this connection
by an external consulting firm. In selecting the potential
candidates and in preparing a recommendation for the
Supervisory Board decision, the Nominating Committee
gave particular consideration to the objectives that the
Supervisory Board had previously approved for its com-
position, including the profile of required skills and
expertise and the diversity concept for the Supervisory
Board. With a view to the regular Supervisory Board elec-
tions scheduled for 2023, the Nominating Committee
defined the topics for its work over the next few years
and examined the regulatory framework conditions for
the Supervisory Board's composition.
The Committee concerned itself, in particular, with per-
sonnel-related matters, succession planning for the com-
position of the Managing Board, corporate governance
issues and the acceptance by Managing Board members
of positions at other companies and institutions. Within
the limits of the applicable legal framework, the Chair-
man's Committee was informed of and/or approved crit-
ically important, personnel-related measures at Siemens'
businesses and equity investments.
Report of the Supervisory Board
First Deputy Chairwoman
Supervisory
The Audit Committee held six regular meetings. In the
presence of the independent auditors, of the President
and CEO, of the Deputy Chairman and of the Chief Finan-
cial Officer, the Audit Committee dealt with the financial
statements and the Combined Management Report for
Siemens AG and the Siemens Group. The Audit Commit-
tee discussed the Half-year Financial Report and the quar-
terly statements with the Managing Board and the inde-
pendent auditors. In the presence of the independent
auditors, it also discussed the report on the auditors'
review of the Company's Half-year Consolidated Financial
Statements and of its Interim Group Management Re-
port. As part of the preparation and implementation of
the audit, the Audit Committee regularly exchanged
views with the independent auditors without the Manag-
ing Board in attendance. In addition, it met regularly in
closed sessions without the Managing Board and inde-
pendent auditors in attendance. The Audit Committee
recommended that the Supervisory Board propose to the
Annual Shareholders' Meeting that Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft, Stuttgart, be elected
independent auditors for fiscal 2021. It awarded the audit
meetings)
Board (plenary
No.
in %
No.
No.
in %
No.
in %
No.
Nominating
Committee
in %
Committee
Audit
Report of the Supervisory Board
Committee
Committee
Compensation
Innovation
and Finance
Committee
Chairman's
Positions outside Germany:
→ Siemens Healthineers AG,
Munich (Chairman)'
Positions outside Germany:
→ Siemens Proprietary Ltd.,
South Africa (Chairman)
→ Siemens Healthcare GmbH,
Munich (Chairman)
German positions:
→ Siemens W.L.L., Qatar
(Chairman)
→ Siemens Schweiz AG, Switzerland
→Siemens Ltd., India'
→ Siemens Ltd., Saudi Arabia
→ Siemens Ltd., Australia
→ Arabia Electric Ltd., Saudi Arabia
(Deputy Chairman)
Judith Wiese
→ Siemens France Holding S.A., France
(Deputy Chairman)
January 30,
1971
Occupation
1 Publicly listed.
→ Siemens Aktiengesellschaft Österreich,
Austria (Chairman)
October 1,
2013
October 27,
1965
of Siemens AG and of the Board of
Directors of A. P. Møller-Mærsk A/S
Chairman
Term
expires¹
October 1,
2020
Date of birth
Name
In fiscal 2021, the Supervisory Board had the following members:
11. Members of the Supervisory Board and
positions held by Supervisory Board members
14
→ European School of Management
and Technology GmbH, Berlin
September 30, German positions:
2023
Jim Hagemann Snabe Chairman of the Supervisory Board
Positions outside Germany:
Member since
Positions outside Germany:
2025
March 7,
1973
April 1,
2017
May 31,
2025
Matthias Rebellius
January 2,
1965
October 1,
2020
Ralf P. Thomas
(Prof. Dr. rer. pol.)
September 30,
2025
March 7,
1961
September 18,
2013
September 17,
2023
German positions:
→EOS Holding AG, Krailling
German positions:
→Daimler AG, Stuttgart'
→Mercedes-Benz AG, Stuttgart
→ Siemens Energy AG,
→ Siemens Energy Management GmbH,
Munich
→ Siemens Energy AG, Munich'
German positions:
→ Siemens Energy Management GmbH,
Munich
→ Siemens Energy AG, Munich'
German positions:
→ Siemens Ltd., India¹
→ Evonik Industries AG, Essen¹
Positions outside Germany:
→ Atos SE, France¹
Netherlands'
→ NXP Semiconductors N.V.,
Positions outside Germany:
Munich (Chairman)
→ Siemens Energy Management GmbH,
Munich (Chairman)1
German positions:
Birgit Steinborn²
(Dr. phil.)
Chairwoman of the Central Works
Council of Siemens AG
Harald Kern²
Jürgen Kerner²
Chairman of the
Siemens Europe Committee
Chief Treasurer and Executive Member
of the Managing Board of IG Metall
Nicola
Leibinger-Kammüller
Cedrik Neike
(until February 3, 2021)
as of February 3, 2021
Benoît Potier
Chief Executive Officer (CEO) - President
and Chairwoman of the Group Management
of TRUMPF GmbH + Co. KG
March 16,
1960
January 24,
2008
2023
January 22,
1969
January 25,
→ RWE AG, Essen (Chairman)³
→ ProSiebenSat.1 Media SE, Munich
(Chairman)³
German positions:
C3.ai, Inc., USA³
→ A.P. Møller-Mærsk A/S, Denmark
(Chairman)³
→ Allianz SE, Munich (Deputy Chairman)³
Positions outside Germany:
2023
German positions:
Corporate Governance Statement
2021
January 24,
2008
December 15,
1959
2012
2023
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2021)
First Deputy Chairwoman
April 1,
2007
Chairwoman of the Combine
Works Council of Siemens AG
Werner Brandt
(Dr. rer. pol.)
Second Deputy Chairman
(since February 3, 2021)
Tobias Bäumler²
(since October 16, 2020)
Michael Diekmann
Chairman of the Supervisory Board
of RWE AG and of ProSiebenSat.1 Media SE
Deputy Chairman of the
Central Works Council and of the
Combine Works Council of Siemens AG
Chairman of the Supervisory Board
of Allianz SE
March 26,
1960
January 24,
2008
2023
January 3,
1954
January 31,
2018
Bettina Haller²
2023
January 31,
2018
June 21,
1970
IG Metall Regional Office for Bavaria
Trade Union Secretary,
March 14,
1959
Andrea Fehrmann²
(Dr. phil.)
January 24,
2008
December 23,
1954
2023
October 16,
2020
October 10,
1979
2023
2023
of the 2021
Annual
Shareholders'
Meeting
Corporate Governance Statement
until February 3, 2021)
CORPORATE-GOVERNANCE.
SUPERVISORY BOARD SELF-ASSESSMENT
The Supervisory Board and its committees regularly con-
duct reviews - either internally or with the involvement
of external consultants - in order to determine how effi-
ciently they perform their duties. In fiscal 2021, the Super-
visory Board conducted an internal self-assessment at its
meeting on September 23, 2021. The results of this as-
sessment confirm that cooperation within the Super-
visory Board and with the Managing Board is professional,
constructive and characterized by a high degree of trust
and openness. The results also confirm that meetings are
organized and conducted efficiently and that the partici-
pants receive sufficient information. The review did not
reveal a need for any fundamental changes. Individual
suggestions for improvement are also discussed and im-
plemented during the year.
5. Targets for the quota of
women on the Managing Board
and at the two management
levels below the Managing
Board; Information on Managing
Board and Supervisory Board
compliance with minimum gen-
der quota requirements
At Siemens AG, the Supervisory Board has set a target for
the proportion of women on the Managing Board at a
minimum of 25% until June 30, 2022. Pursuant to the Ger-
man Stock Corporation Act in the version of the Second
Management Positions Act (Zweites Führungspositionen-
Gesetz, FÜPOG II), the Managing Board must include at
least one woman and at least one man (minimum partic-
ipation requirement). In fiscal 2021, Siemens AG already
complied with this requirement.
When filling managerial positions at the Company, the
Managing Board takes diversity into account and, in par-
ticular, aims for an appropriate consideration of women
and internationality. In 2017, the Managing Board set the
target for the percentage of women at each of the two
management levels below the Managing Board at 20%,
applicable in each case until June 30, 2022.
The composition of the Supervisory Board fulfilled the
legal requirements regarding the minimum gender quota
in the reporting period.
Statutory provisions on the equal participation of men
and women in management positions that may be appli-
cable to Group Companies other than Siemens AG re-
main unaffected.
6. Diversity concept for the
Managing Board and long-term
succession planning
In September 2018, the Supervisory Board approved the
following diversity concept for the composition of the
Managing Board:
"The goal is to achieve a composition that is as diverse
as possible and comprises individuals who comple-
ment one another in a Managing Board that provides
strong leadership as well as to ensure that, as a group,
the members of the Managing Board have all the
knowhow and skills that are considered essential in
view of Siemens' activities.
Further details regarding the operation and composition
of the Supervisory Board and its committees are pro-
vided in the Bylaws for the Supervisory Board and the
bylaws for its committees, which are publicly available
on the Siemens Global Website at ☐ www.SIEMENS.COM/
When selecting members of the Managing Board, the
Supervisory Board pays close attention to candidates'
personal suitability, integrity, convincing leadership
qualities, international experience, expertise in their
prospective areas of responsibility, achievements to
date and knowledge of the Company as well as their
ability to adjust business models and processes in a
changing world. Diversity with respect to such charac-
teristics as age and gender as well as professional and
educational background is an important selection cri-
terion for appointments to Managing Board positions.
When selecting members of the Managing Board, the
Supervisory Board also gives special consideration to
the following factors:
9
Corporate Governance Statement
→ Taking the Company's international orientation
into account, the composition of the Managing
Board shall reflect internationality with respect to
different cultural backgrounds and international
experience (such as extensive professional experi-
ence in foreign countries and responsibility for
business activities in foreign countries in areas that
are relevant for Siemens).
→ As a group, the Managing Board shall have experi-
ence in the business areas that are important for
Siemens in particular, in the industry, energy,
healthcare and infrastructure sectors.
→ As a group, the Managing Board shall have many
years of experience in technology (including infor-
mation technology and digitalization), research
and development, procurement, manufacturing
and sales, finance, law (including compliance) and
human resources.
→ When selecting individuals for Managing Board po-
sitions, the targets set by the Supervisory Board for
the proportion of women on the Managing Board
shall be taken into account. The Supervisory Board
has established as a target that - until June 30,
2022-25% of the Managing Board positions are to
be held by women.
→It is considered helpful if different age groups are
represented on the Managing Board. In accordance
with the recommendation of the Code, the Super-
visory Board has defined an age limit for the mem-
bers of the Managing Board. In keeping with this
limit, the members of the Managing Board are, as
a rule, to be not older than 63 years of age.
When making an appointment to a specific Manag-
ing Board position, the decisive factor is always the
Company's best interest, taking into consideration all
circumstances in the individual case."
Implementation of the diversity concept
for the Managing Board in fiscal 2021
The diversity concept for the Managing Board is imple-
mented as part of the process for making appointments
to the Managing Board. When selecting candidates and/
or making proposals for the appointment of Managing
Board members, the Supervisory Board and/or the Chair-
man's Committee of the Supervisory Board take into ac-
count the requirements defined in the diversity concept
for the Managing Board.
In its current composition, the Managing Board fulfills all
the requirements of the diversity concept. The Managing
Board members have a broad range of knowledge, expe-
rience and educational and professional backgrounds as
well as international experience. The Managing Board has
all the knowledge and experience that is considered es-
sential in view of Siemens' activities. As a group, the Man-
aging Board has experience in the business areas that are
important for Siemens - in particular, in the industry, en-
ergy, healthcare and infrastructure sectors - as well as
many years of experience in technology (including infor-
mation technology and digitalization), research and devel-
opment, procurement, manufacturing and sales, finance,
law (including compliance) and human resources.
In the summer of 2020, the Supervisory Board appointed
Judith Wiese and Matthias Rebellius to the Managing
Board as of October 1, 2020, taking into account the diver-
sity concept and the Company's best interest. In the
course of fiscal 2021, Joe Kaeser and Klaus Helmrich left
the Managing Board at the completion of their regular
terms of office. The target for June 30, 2022, continues
to apply. The appropriate consideration of women is a
key component of long-term succession planning for the
Managing Board. Different age groups are represented
on the Managing Board. No Managing Board member is
currently older than 63 years of age.
Long-term succession planning
for the Managing Board
Jointly with the Managing Board and with the support of
the Chairman's Committee, the Supervisory Board conducts
long-term succession planning for the Managing Board. In
its long-term succession planning, the Supervisory Board
takes into account the target it has defined for the propor-
tion of women on the Managing Board and the criteria set
out in the diversity concept it has approved for the Manag-
ing Board's composition as well as the requirements of the
German Stock Corporation Act, the Code and the Bylaws for
the Chairman's Committee. Considering the concrete qual-
ification requirements and the above-mentioned criteria,
the Chairman's Committee prepares an ideal profile, on the
basis of which it compiles a shortlist of the available candi-
dates. Structured interviews are then conducted with these
candidates. After the interviews, a proposal is submitted to
the Supervisory Board for approval. When developing the
profile of requirements and selecting candidates, the Super-
visory Board and the Chairman's Committee are supported,
if necessary, by external consultants.
10
→ In addition to the expertise and management and
leadership experience required for their specific
tasks, the Managing Board members shall have the
broadest possible range of knowledge and experi-
ence and the widest possible educational and pro-
fessional backgrounds.
Corporate Governance Statement
8
As of September 30, 2021, the Innovation and Finance
Committee comprised Jim Hagemann Snabe (Chair-
man), Tobias Bäumler, Harald Kern, Jürgen Kerner,
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer, Kasper Rørsted,
Birgit Steinborn and Grazia Vittadini.
Corporate Governance Statement
Managing Board and of Top Management and relating to
share-based compensation components and employee
share plans. The Equity and Compensation Committee
comprised the President and CEO, the Managing Board
member with responsibility for the People & Organization
portfolio, the Managing Board member with responsibil-
ity for the Controlling and Finance portfolio and - as of
October 1, 2020 - the Deputy CEO. As of September 30,
2021, its members were Dr. Roland Busch (Chairman),
Prof. Dr. Ralf P. Thomas and Judith Wiese.
Further details regarding the operation and composition
of the Managing Board and its committees are provided
in the Bylaws for the Managing Board, which are publicly
available on the Siemens Global Website at www.
SIEMENS.COM/BYLAWS-MANAGINGBOARD.
Supervisory Board
The Supervisory Board of Siemens AG has 20 members.
As stipulated by the German Codetermination Act, half of
its members represent Company shareholders, and half
represent Company employees. The shareholder repre-
sentatives on the Supervisory Board are elected at the
Annual Shareholders' Meeting by a simple majority vote.
Elections to the Supervisory Board are conducted, as a
rule, on an individual basis. The employee representatives
on the Supervisory Board are elected in accordance with
the provisions of the German Codetermination Act. Fur-
ther information regarding the Supervisory Board mem-
bers and their memberships, which are to be disclosed
pursuant to Section 285 No. 10 of the German Commer-
cial Code, are set out in Section 11 of this Corporate Gov-
ernance Statement. The curricula vitae of the Supervisory
Board members are publicly available on the Siemens
Global Website at www.SIEMENS.COM/SUPERVISORY-BOARD
and updated annually.
The Supervisory Board oversees and advises the Manag-
ing Board in its management of the Company's business.
At regular intervals, the Supervisory Board discusses
business development, planning, strategy and strategy
implementation. It reviews the Annual Financial State-
ments of Siemens AG, the Consolidated Financial State-
ments of the Siemens Group, the Combined Manage-
ment Report of Siemens AG and the Siemens Group, and
the proposal for the appropriation of net income. It ap-
proves the Annual Financial Statements of Siemens AG as
well as the Consolidated Financial Statements of the
Siemens Group, based on the results of the preliminary
-
review conducted by the Audit Committee and taking
into account the reports of the independent auditors.
The Supervisory Board approves the Managing Board's
proposal for the appropriation of net income and the Re-
port of the Supervisory Board to the Annual Sharehold-
ers' Meeting. The Supervisory Board is jointly responsible
with the Managing Board for the preparation of the Com-
pensation Report. In addition, the Company's adherence
to statutory provisions, official regulations and internal
Company policies (compliance) are monitored by the
Supervisory Board and/or the Audit Committee. The Super-
visory Board also appoints the members of the Managing
Board and determines each member's portfolios. The
Supervisory Board approves - on the basis of a proposal
by the Compensation Committee the compensation
system for Managing Board members and defines their
concrete compensation in accordance with this system.
It sets the individual targets for the variable compensa-
tion and the total compensation of each individual Man-
aging Board member, reviews the appropriateness of to-
tal compensation and regularly reviews the Managing
Board compensation system. Effective October 1, 2019,
the Supervisory Board adopted - on the basis of a pro-
posal by the Compensation Committee - an adjusted
compensation system, which was approved by the An-
nual Shareholders' Meeting on February 5, 2020. Import-
ant Managing Board decisions - such as those regarding
major acquisitions, divestments, fixed asset investments
or financial measures - require Supervisory Board ap-
proval unless the Bylaws for the Supervisory Board spec-
ify that such authority be delegated to the Innovation
and Finance Committee of the Supervisory Board.
Separate preparatory meetings of the shareholder repre-
sentatives and of the employee representatives are held
regularly in order to prepare the Supervisory Board meet-
ings. The Supervisory Board also meets regularly without
the Managing Board in attendance. Every Supervisory
Board member must disclose conflicts of interest to the
Supervisory Board. Information regarding conflicts of in-
terest that may have arisen and their handling is provided
in the Report of the Supervisory Board. Special informa-
tional (onboarding) events are held in order to familiarize
new Supervisory Board members with the Company's
business model and the structures of the Siemens Group.
The Supervisory Board members take part, on their own
responsibility, in the educational and training measures
necessary for the performance of their duties – measures
relating, for example, to changes in the legal framework
6
Corporate Governance Statement
and new, groundbreaking technologies. The Company
supports them in this regard. Internal informational
events are offered when necessary to support targeted
training measures.
Details regarding the work of the Supervisory Board are
provided in the Report of the Supervisory Board, which
will be made publicly available for each previous fiscal
year on the Siemens Global Website.
SUPERVISORY BOARD COMMITTEES
In fiscal 2021, the Supervisory Board had six committees,
whose duties, responsibilities and procedures fulfill the
requirements of the German Stock Corporation Act and
the Code. The chairmen of these committees provide the
Supervisory Board with regular reports on their commit-
tees' activities.
The Chairman's Committee makes proposals, in particu-
lar, regarding the appointment and dismissal of Manag-
ing Board members and is responsible for concluding,
amending, extending and terminating employment con-
tracts with members of the Managing Board. When mak-
ing recommendations for first-time appointments, it
takes into account that the terms of these appointments
shall not, as a rule, exceed three years, whereby it is to be
determined in each individual case what period of ap-
pointment is to be deemed appropriate within the legally
permissible period. In preparing recommendations re-
garding the appointment of Managing Board members,
the Chairman's Committee takes into account the candi-
dates' professional qualifications, international experi-
ence and leadership qualities, the age limit specified for
Managing Board members and the long-range plans for
succession as well as diversity. It also takes into account
the targets for the proportion of women on the Manag-
ing Board that have been defined by the Supervisory
Board and the diversity concept for the Managing Board
that has been approved by the Supervisory Board. The
Chairman's Committee concerns itself with questions re-
garding the Company's corporate governance and pre-
pares the resolutions to be approved by the Supervisory
Board regarding the Declaration of Conformity with the
Code - including the explanation of deviations from the
Code and regarding corporate governance reporting
and the Report of the Supervisory Board to the Annual
Shareholders' Meeting. It is responsible for approving the
Company's related party transactions. Furthermore, the
Chairman's Committee submits recommendations to the
Based on the Company's overall strategy, the Innovation
and Finance Committee discusses, in particular, the
Company's innovation focuses and prepares the Super-
visory Board's discussions and resolutions regarding ques-
tions relating to the Company's financial situation and
structure - including annual planning (budget) – as well
as the Company's fixed asset investments and its finan-
cial measures. In addition, the Innovation and Finance
Committee has been authorized by the Supervisory
Board to decide on the approval of transactions and mea-
sures that require Supervisory Board approval and have a
value of between €300 million and €600 million.
As of September 30, 2021, the Mediation Committee
comprised Jim Hagemann Snabe (Chairman), Dr. Werner
Brandt, Jürgen Kerner and Birgit Steinborn.
The Mediation Committee submits proposals to the
Supervisory Board in the event that the Supervisory
Board cannot reach the two-thirds majority required for
the appointment or dismissal of a Managing Board mem-
ber on the first ballot.
As of September 30, 2021, the Nominating Committee
comprised Jim Hagemann Snabe (Chairman), Dr. Werner
Brandt, Benoît Potier and Dr. Nathalie von Siemens.
The Nominating Committee is responsible for making rec-
ommendations to the Supervisory Board on suitable can-
didates for the election by the Annual Shareholders' Meet-
ing of shareholder representatives on the Supervisory
Board. In preparing these recommendations, the objec-
tives defined by the Supervisory Board for its composition
and the approved diversity concept - in particular, inde-
pendence and diversity - are to be appropriately consid-
ered, as are the proposed candidates' required knowledge,
abilities and professional experience. Fulfillment of the
required profile of skills and expertise is also to be aimed
at. Attention shall be paid to an appropriate participation
of women and men in accordance with the legal require-
ments relating to the gender quota as well as to ensuring
that the members of the Supervisory Board are, as a group,
familiar with the sector in which the Company operates.
As of September 30, 2021, the Audit Committee com-
prised Dr. Werner Brandt (Chairman), Tobias Bäumler,
Bettina Haller, Jürgen Kerner, Jim Hagemann Snabe,
Birgit Steinborn, Grazia Vittadini and Matthias Zachert.
The members of the Audit Committee are, as a group,
familiar with the sector in which the Company operates.
Pursuant to the German Stock Corporation Act, the Audit
Committee has had to include to date at least one Super-
visory Board member with knowledge and experience in
the areas of accounting or the auditing of financial state-
ments. Pursuant to the German Stock Corporation Act in
the version of the Financial Market Integrity Strengthen-
ing Act (Finanzmarktintegritätsstärkungsgesetz, FISG),
the Supervisory Board must - after the conclusion of a
defined transition period - have at least one member
with knowledge and expertise in the area of accounting,
and at least one additional member with knowledge and
expertise in the auditing of financial statements. In the
person of Mr. Zachert, the Supervisory Board and the Au-
dit Committee have at least one member with knowledge
and expertise in the area of accounting and in the person
of Dr. Brandt at least one additional member with knowl-
edge and expertise in the auditing of financial statements.
Pursuant to the Code, the chair of the Audit Committee
shall have specialist knowledge and experience in the ap-
plication of accounting principles and internal control
processes, be familiar with the auditing of financial state-
ments and be independent. The Chairman of the Audit
Committee, Dr. Werner Brandt, fulfills these requirements.
Corporate Governance Statement
internal process for related party transactions. The Audit
Committee receives regular reports from the internal au-
dit department. It prepares the Supervisory Board's rec-
ommendation to the Annual Shareholders' Meeting con-
cerning the election of the independent auditors and
submits the corresponding proposal to the Supervisory
Board. Prior to submitting this proposal, the Audit Com-
mittee obtains a statement from the prospective indepen-
dent auditors affirming that their independence is not in
question. It awards the audit contract to the independent
auditors elected by the Annual Shareholders' Meeting and
monitors the independent audit of the financial state-
ments as well as the auditors' selection, independence,
qualification, rotation and efficiency and the services ren-
dered by the auditors. The Audit Committee assesses the
quality of the audit of the financial statements on a regu-
lar basis. Outside its meetings, the Supervisory Board is
also in regular communication with the independent au-
ditors via the Chairman of the Audit Committee.
7
The Audit Committee oversees, in particular, the ac-
counting and the accounting process and conducts a
preliminary review of the Annual Financial Statements
of Siemens AG, the Consolidated Financial Statements of
the Siemens Group and the Combined Management
Report of Siemens AG and the Siemens Group (including
non-financial measures). On the basis of the indepen-
dent auditors' report on their audit of the annual finan-
cial statements, the Audit Committee makes, after its
preliminary review, recommendations regarding Super-
visory Board approval of the Annual Financial Statements
of Siemens AG and the Consolidated Financial Statements
of the Siemens Group. The Audit Committee discusses
the Quarterly Statements and Half-year Financial Report
with the Managing Board and the independent auditors
and deals with the auditors' reports on the review of the
Half-year Consolidated Financial Statements and Interim
Group Management Report. It also monitors the Compa-
ny's adherence to statutory provisions, official regula-
tions and internal Company policies (compliance). The
Chief Compliance Officer reports regularly to the Audit
Committee. The Audit Committee concerns itself with the
Company's risk monitoring system and oversees the ap-
propriateness and effectiveness of its internal control, risk
management and internal audit systems as well as the
As of September 30, 2021, the Compensation Committee
comprised Michael Diekmann (Chairman), Harald Kern,
Jürgen Kerner, Jim Hagemann Snabe, Birgit Steinborn
and Matthias Zachert.
The Compensation Committee prepares, in particular,
the proposals for decisions by the Supervisory Board's
plenary meetings regarding the system of Managing
Board compensation, including the implementation of
this system in Managing Board contracts, the definition
of the targets for variable Managing Board compensa-
tion, the determination and review of the appropriate-
ness of the total compensation of individual Managing
Board members and the annual Compensation Report.
As of September 30, 2021, the Chairman's Committee
comprised Jim Hagemann Snabe (Chairman), Dr. Werner
Brandt, Jürgen Kerner and Birgit Steinborn.
Supervisory Board regarding the composition of the Super-
visory Board committees and decides whether to approve
contracts and business transactions with Managing
Board members and parties related to them.
Corporate Governance Statement
7. Objectives regarding the
Supervisory Board's composition
as well as the profile of required
skills and expertise and the
diversity concept for the Super-
visory Board
In September 2021, the Supervisory Board approved
changes to the objectives for its composition including
the profile of required skills and expertise and the diver-
sity concept:
"The composition of the Supervisory Board of
Siemens AG shall be such that the Supervisory Board's
ability to effectively monitor and advise the Managing
Board is ensured. In this connection, mutually comple-
mentary collaboration among members with a wide
range of personal and professional backgrounds and
diversity with regard to internationality, age and gen-
der are considered helpful.
10. Members of the Managing Board and
positions held by Managing Board members
In fiscal 2021, the Managing Board had the following members:
Name
Roland Busch
(Dr. rer. nat.)
President and
Chief Executive Officer
(since February 3, 2021)
Date of birth
November 22,
1964
First appointed Term expires
April 1,
2011
March 31,
2025
Corporate Governance Statement
Memberships in supervisory boards whose establishment is required by law
or in comparable domestic or foreign controlling bodies of business enterprises
External positions
(as of September 30, 2021)
Group company positions
(as of September 30, 2021)
German positions:
→ Siemens Healthineers AG, Munich'
→ Siemens Mobility GmbH, Munich
(Chairman)
of the Managing Board
Executive Officer, member
(President and Chief
At the end
May 1,
2006
June 23,
1957
13
Joe Kaeser
(until March 31, 2021)
March 31,
2021
April 1,
2011
1958
May 24,
Klaus Helmrich
as of March 31, 2021
as of February 3, 2021
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
As part of our investor relations activities, we inform our
investors comprehensively about developments within
the Company. For communication purposes, Siemens
makes extensive use of the Internet. We publish Quar-
terly Statements, Half-year Financial and Annual Reports,
earnings releases, ad hoc announcements, analyst pre-
sentations, letters to shareholders and press releases as
well as the financial calendar for the current year, which
contains the publication dates of significant financial
communications and the date of the Annual Sharehold-
ers' Meeting, at ☐ WWW.SIEMENS.COM/INVESTORS. The Chair-
man of the Supervisory Board regularly discusses Super-
visory-Board-specific topics with investors.
Profile of required skills and expertise
The candidates proposed for election to the Super-
visory Board shall have the knowledge, skills and ex-
perience necessary to carry out the functions of a
Supervisory Board member in a multinational com-
pany oriented toward the capital markets and to safe-
guard the reputation of Siemens in public. In particu-
lar, care shall be taken with regard to the personality,
integrity, commitment and professionalism of the in-
dividuals proposed for election.
The goal is to ensure that, in the Supervisory Board, as
a group, all the knowhow and experience is available
that is considered essential in view of Siemens' activi-
ties. This includes, for instance, knowledge and expe-
rience in the areas of technology (including informa-
tion technology and digitalization), procurement,
manufacturing and sales, finance, law (including
compliance) and human resources. In addition, the
members of the Supervisory Board shall collectively
have knowledge and experience in the business areas
that are important for Siemens, in particular, in the
areas of industry, energy, healthcare and infrastruc-
ture. As a group, the members of the Supervisory
Board are to be familiar with the sector in which the
Company operates. In accordance with the German
Stock Corporation Act, at least one member of the
Supervisory Board must have knowledge and exper-
tise in the area of accounting, and at least one addi-
tional member of the Supervisory Board must have
knowledge and expertise in the area of financial state-
ments. These two Supervisory Board members shall
be independent. At least one member of the Super-
visory Board shall have specific knowledge and expe-
rience in applying accounting principles and internal
control processes. This member shall, in addition, be
familiar with the auditing of financial statements and
independent. In particular, the Supervisory Board
shall also include members who have leadership expe-
rience as senior executives or members of a super-
visory board (or comparable body) at a major com-
pany with international operations.
When a new member is to be appointed, a review shall
be performed to determine which of the areas of ex-
pertise deemed desirable for the Supervisory Board
are to be strengthened.
Internationality
Taking the Company's international orientation into
account, care shall be taken to ensure that the Super-
visory Board has an adequate number of members
with extensive international experience. The goal is to
make sure that the present considerable share of Su-
pervisory Board members with extensive international
experience is maintained.
Diversity
With regard to the composition of the Supervisory
Board, attention shall be paid to achieving sufficient
diversity. Not only is appropriate consideration to be
given to women. Diversity of cultural heritage and a
wide range of educational and professional back-
grounds, experiences and ways of thinking are also to
be promoted. When considering possible candidates
for new elections or for filling Supervisory Board posi-
tions that have become vacant, the Supervisory Board
shall give appropriate consideration to diversity at an
early stage in the selection process.
In accordance with the German Stock Corporation
Act, the Supervisory Board is composed of at least
30% women and at least 30% men. The Nominating
Committee shall continue to include at least one fe-
male member.
11
Corporate Governance Statement
Independence
The Supervisory Board shall include what the share-
holder representatives on the Supervisory Board con-
sider to be an appropriate number of independent
shareholder representatives. More than half of the
shareholder representatives shall be independent of
the Company and its Managing Board. Substantial -
and not merely temporary - conflicts of interest are to
be avoided.
No more than two former members of the Managing
Board of Siemens AG shall belong to the Supervisory
Board.
The Supervisory Board members shall have sufficient
time to exercise their mandates with the necessary
regularity and diligence.
Limits on age and on length of
membership
In compliance with the age limit stipulated by the
Supervisory Board in its Bylaws, only individuals who
are no older than 70 years of age shall, as a rule, be
nominated for election to the Supervisory Board.
Nominations shall take into account the regular limit
established by the Supervisory Board, which restricts
membership on the Supervisory Board to a maximum
of three full terms of office. It is considered helpful if
different age groups are represented on the Super-
visory Board."
wirkungen der COVID-19-Pandemie, GesRua COVBekG)
of March 27, 2020 (Federal Law Gazette | No. 14 2020,
p. 570) whose application was extended until Decem-
ber 31, 2021 by the Ordinance on the Extension of the
Measures Under the Law of Companies, Cooperative
Societies, Associations and Foundations to Combat the
Effects of the COVID-19 Pandemic (Verordnung zur Ver-
längerung von Maßnahmen im Gesellschafts-, Genossen-
schafts-, Vereins- und Stiftungsrecht zur Bekämpfung
der Auswirkungen der COVID-19-Pandemie, GesRGen-
RCOVMVV) of October 20, 2020 (Federal Law Gazette |
No. 48 2020, p. 2258), the ordinary Shareholders' Meet-
ing on February 3, 2021, was conducted as a virtual
shareholders' meeting without the physical presence of
shareholders or their proxies due to the special circum-
stances created by the COVID-19 pandemic.
Shareholders exercise their rights at the Annual Share-
holders' Meeting. An ordinary Annual Shareholders'
Meeting normally takes place within the first five months
of each fiscal year. The Annual Shareholders' Meeting de-
cides, among other things, on the appropriation of net
income, the ratification of the acts of the members of the
Managing and Supervisory Boards, and the appointment
of the independent auditors. Amendments to the Articles
of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders'
Meeting and implemented by the Managing Board. The
Managing Board facilitates shareholder participation in
this meeting through electronic communications - in
particular, via the Internet - and enables shareholders
who are unable to attend the meeting to vote by proxy.
Proxies can also be reached during the Annual Sharehold-
ers' Meeting. Furthermore, shareholders may exercise
their right to vote in writing or by means of electronic
communications (absentee voting). The Managing Board
may enable shareholders to participate in the Annual
Shareholders' Meeting without the need to be present at
the venue and without a proxy and to exercise some or all
of their rights fully or partially by means of electronic
communications. The Company enables shareholders to
follow the entire Annual Shareholders' Meeting via the
Internet. Shareholders may submit motions regarding
the proposals of the Managing and Supervisory Boards
and may contest decisions of the Annual Shareholders'
Meeting. Shareholders owning Siemens stock with an
aggregate notional value of €100,000 or more may also
demand the judicial appointment of special auditors to
examine specific issues. The reports, documents and in-
formation required by law for the Annual Shareholders'
Meeting, including the Annual Report, can be down-
loaded from the Siemens Global Website. The same ap-
plies to the agenda for the Annual Shareholders' Meeting
and to any counterproposals or shareholders' nomina-
tions that may require disclosure. For the election of
shareholder representatives on the Supervisory Board, a
detailed curriculum vitae of every candidate is published.
9. Annual Shareholders' Meeting Wohnungseigentumsrecht zur Bekämpfung der Aus-
and investor relations
In accordance with Section 1 para. 2 of the German Act
Concerning Measures Under the Law of Companies,
Cooperative Societies, Associations, Foundations and
Commonhold Property to Combat the Effects of the
COVID-19 Pandemic (Gesetz über Maßnahmen im Gesell-
schafts-, Genossenschafts-, Vereins-, Stiftungs- und
DIRECTORS-DEALINGS.
exceeds €20,000. All transactions reported to Siemens AG
in fiscal 2021 have been duly published and are available
on the Siemens Global Website at WWW.SIEMENS.COM/
The Articles of Association of Siemens AG, the Bylaws for
the Supervisory Board, the bylaws for the most important
Supervisory Board committees, the Bylaws for the Man-
aging Board, our Declarations of Conformity with the
Code and a variety of other corporate-governance-related
documents are posted on the Siemens Global Website at
German positions:
Pursuant to Article 19 of EU Regulation No. 596/2014 of
the European Parliament and Council of April 16, 2014,
on market abuse (Market Abuse Regulation), members
of the Managing Board and the Supervisory Board are
legally required to disclose all transactions conducted on
their own account relating to the shares or debt instru-
ments of Siemens AG or to the derivatives or financial
instruments linked thereto if the total value of such
transactions entered into by a board member or any
closely associated person in any calendar year reaches or
8. Share transactions by
members of the Managing and
Supervisory Boards
In the estimation of the shareholder representatives, the
Supervisory Board now has at least nine independent
shareholder representatives – namely, Dr. Werner Brandt,
Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
Kasper Rørsted, Baroness Nemat Shafik, Dr. Nathalie von
Siemens, Jim Hagemann Snabe, Grazia Vittadini and
Matthias Zachert - and thus an appropriate number of
members who are independent in the meaning of the
Code. The regulations establishing limits on age and re-
stricting membership in the Supervisory Board to three
full terms of office are complied with.
The Supervisory Board is of the opinion that, with its cur-
rent composition, it meets the objectives for its composi-
tion and fulfills the profile of required skills and expertise
as well as the diversity concept. The Supervisory Board
members have the specialist and personal qualifications
considered necessary. As a group, they are familiar with
the sector in which the Company operates and have the
knowledge, skills and experience essential for Siemens.
A considerable number of Supervisory Board members
are engaged in international activities and/or have many
years of international experience. Appropriate consider-
ation has been given to diversity in the Supervisory Board.
In fiscal 2021, the Supervisory Board had seven female
members, of whom three are shareholder representatives
and four are employee representatives. As a result, 35% of
the Supervisory Board members are women. Dr. Nathalie
von Siemens is a member of the Nominating Committee.
Meeting in 2021. As an additional criterion, the Super-
visory Board takes into account expertise in the area of
sustainability.
Implementation of the objectives
regarding the Supervisory Board's
composition as well as the profile of
required skills and expertise and the
diversity concept for the Supervisory
Board in fiscal 2021; independent
members of the Supervisory Board
Within the framework of the selection process and the
nomination of candidates for the Supervisory Board, the
Supervisory Board as well as the Nominating Committee
of the Supervisory Board take into account the objectives
regarding the Supervisory Board's composition and the
requirements defined in its diversity concept. The Super-
visory Board and the Nominating Committee have re-
cently taken the objectives - including the profile of re-
quired skills and expertise and the diversity concept - into
consideration in the nominations of three shareholder
representatives to be elected by the Annual Shareholders'
12
→ Allianz SE, Munich (Chairman)³
of Air Liquide S.A
Bad Homburg
September 3,
1957
January 31,
2023
2018
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
2 Employee representative.
Positions outside Germany:
→ Air Liquide International S.A., France
(Chairman and Chief Executive
Officer) 3,4
→ Air Liquide International Corporation
(ALIC), USA (Chairman)4
→ American Air Liquide Holdings,
Inc., USA4
3 Publicly listed.
4 Group company position.
5 Shareholders' Committee.
15
→ Fresenius Management SE,
Chairman and Chief Executive Officer
→ The Hydrogen Company S.A., France4
Positions outside Germany:
→ TRUMPF Schweiz AG, Switzerland
→Fresenius SE & Co. KGaA,
Bad Homburg (Deputy Chairman)³
→ Siemens Energy AG, Munich³
→ Siemens Energy Management GmbH,
Munich
German positions:
→ Siemens Mobility GmbH, Munich
(Deputy Chairwoman)
German positions:
German positions:
(Deputy Chairman)
Premium Aerotec GmbH, Augsburg
(Deputy Chairman)
→ Siemens Energy AG, Munich³
→ Siemens Energy Management GmbH,
Munich
→ Thyssenkrupp AG, Essen
(Deputy Chairman)³
→ MAN Truck & Bus SE, Munich
→ Traton SE, Munich³
January 31,
2023
2018
Gunnar Zukunft²
Deputy Chairman of the Central
Works Council of Siemens Industry
Software GmbH
2023
January 31,
2018
→ Siemens Industry Software GmbH,
Cologne
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
November 8,
1967
2 Employee representative.
June 21,
1965
Matthias Zachert
→ Siemens Healthcare GmbH, Munich
2021
January 23,
2013
October 21,
1946
Member of the Supervisory Board
2025
February 3,
2021
September 23,
1969
German positions:
2023
October 1,
2017
August 3,
1969
3 Publicly listed.
Chairman of the Board of
Management of LANXESS AG³
4 Group company position.
E-mail
Shareholders' Committee.
© 2021 by Siemens AG, Berlin and Munich
investorrelations@siemens.com
press@siemens.com
+49 89 636-1332474 (Investor Relations)
+49 89 636-33443 (Media Relations)
+49 89 636-32474 (Investor Relations)
+49 89 636-30085 (Media Relations)
www.siemens.com
Germany
80333 Munich
Werner-von-Siemens-Str. 1
Siemens AG
2023
Fax
Phone
Internet
Address
2
The Sustainability Report 2021 which reports on Sustainability and Citizenship at Siemens is available at: siemens.com/investor/en/
For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant
to legal requirements.
This document is an English language translation of the German document. In case of discrepancies, the German language document is
the sole authoritative and universally valid version.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are
or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance
with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe
similarly titled alternative performance measures may calculate them differently.
-
This document contains statements related to our future business and financial performance and future events or developments involving
Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward
to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-
looking statements in other reports, in prospectuses, in presentations, in material delivered to shareholders and in press releases. In
addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current
expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a
number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report
on expected developments and associated material opportunities and risks in the Annual Report. Should one or more of these risks or
uncertainties materialize, events of force majeure, such as pandemics, occur or should underlying expectations including future events
occur at a later date or not at all or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively
or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens neither
intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from
those anticipated.
Notes and forward-looking statements
SIEMENS
Notes and forward-
looking statements
16
5
March 1,
2014
German positions:
Airbus Special Advisor
(DBE, DPhil)
2023
January 31,
2018
August 13,
1962
Director of the London
School of Economics
2025
February 3,
2021
February 24,
1962
Chief Executive Officer and
Board Member of adidas AG3
2023
January 27,
2015
May 29,
1956
Baroness
Nemat Shafik
(since February 3, 2021)
Kasper Rørsted
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
Norbert Reithofer
(Dr.-Ing. Dr.-Ing. E.h.)
January 30,
2019
April 26,
1967
Trade Union Secretary of the
Managing Board of IG Metall
Hagen Reimer2
Term
expires¹
Member since
Date of birth
Occupation
Name
September 13,
1957
Nathalie
Member of supervisory boards
2023
July 14,
1971
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
von Siemens
of Spokespersons of the Siemens Group
and Chairman of the Central Committee
of Spokespersons of Siemens AG
Chairman of the Committee
until February 3, 2021)
as of February 3, 2021
(Second Deputy Chairman
and member of the
Supervisory Board
Grazia Vittadini
(since February 3, 2021)
Werner Wenning
Michael Sigmund²
→ EssilorLuxottica SA, France³
Positions outside Germany:
→ Siemens Healthcare GmbH, Munich
→Siemens Healthineers AG, Munich³
→ TÜV Süd AG, Munich
→ Messer Group GmbH, Sulzbach
German positions:
Member of the Board of Directors,
Nestlé S.A., Switzerland³
Dorothea Simon²
→ Henkel AG & Co. KGaA, Düsseldorf 3,5
→ Henkel Management AG, Düsseldorf
Positions outside Germany:
(Dr. phil.)
January 27,
2015
Corporate Governance Statement
German positions:
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2021)
→ Siemens Energy Management GmbH,
Munich
German positions:
→ Bayerische Motoren Werke Aktien-
gesellschaft, Munich (Chairman)³
→ Siemens Energy AG, Munich³
2023
14,074
6,688
15,518
(32)%
10%
7,985
8,382
(5)%
13%
21%
8,836
7,795
1,795
1,523
1,271
14,041
18%
1,751
5,545
9,545
Property, plant and equipment
2020
Inventories
Contract assets
38%
Current income tax assets
Other current assets
Assets classified as held for disposal
Total current assets
Goodwill
Other intangible assets
Investments accounted for using the equity method
Other financial assets
Deferred tax assets
Short-term debt and current maturities of long-term debt
Other assets
Total non-current assets
Total assets
Combined Management Report
Sep 30,
2021
% Change
223
139,608
(34)%
23%
87,267
70,928
23%
123,897
13%
Our total assets at the end of fiscal 2021 were influenced by positive currency translation effects of €2.3 billion (mainly goodwill), primarily
involving the U.S. dollar.
In fiscal 2021, the acquisition of Varian was the major factor related to the increase of Siemens' assets, mainly goodwill, other intangible
assets, inventories, property, plant and equipment, and trade and other receivables. The increase of the latter was driven also by
higher business volume, primarily at Siemens Healthineers. Goodwill increased also due to the acquisition of Supplyframe. These increases
were partly offset by the sale of Flender, among other factors. This applies mainly to inventories, trade and other receivables, and property,
plant and equipment. For further information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
The increase in other financial assets was driven mainly by increased equity investments as well as higher receivables from finance leases
and higher loans receivable at SFS. The increase of the latter two was mainly due to new business and – in case of loans receivable - also
to a reassessment of the expected repayment dates. Set against these factors was a decrease resulting mainly from contributions of assets
to Siemens Pension-Trust e.V., including the stake in Bentley.
19
| 6. Financial position
6.1 Capital structure
Combined Management Report
Sep 30,
(in millions of €)
2021
2020
Other current financial assets
% Change
1,769
338
2,183
2,988
52,340
52,968
(1)%
29,729
20,449
45%
10,964
4,838
127%
11,023
10,250
8%
7,539
7,862
(4)%
22,964
22,771
1%
2,865
(4)%
Trade and other receivables
Total current liabilities
(in millions of €)
6,360
(55)%
Deferred tax liabilities
2,337
664
>200%
Provisions
Other financial liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Debt ratio
1,723
2,352
(27)%
679
769
(12)%
1,925
2,839
1,808
Provisions for pensions and similar obligations
38,005
35%
Current income tax liabilities
1,809
2,281
(21)%
Other current liabilities
7,628
6,209
23%
Liabilities associated with assets classified as held for disposal
10
35
(71)%
7,821
39,952
34,117
17%
Long-term debt
40,879
8%
6%
50,381
49,957
The share capital increase of Siemens Healthineers mentioned above contributed also to higher non-controlling interests totaling €1.0
billion. For further information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
Capital structure ratio
Our capital structure ratio as of September 30, 2021 increased to 1.5 from 1.3 a year earlier. The change was due primarily to the above-
mentioned increase in long-term debt and decreased cash and cash equivalents related to the acquisition of Varian.
Debt and credit facilities
As of September 30, 2021, we recorded, in total, €43.4 billion in notes and bonds, €2.3 billion in loans from banks, €0.1 billion in other
financial indebtedness and €2.9 billion in lease liabilities. Notes and bonds were issued mainly in the U.S. dollar and euro, and to a lesser
extent in the British pound.
We have credit facilities totaling €7.5 billion which were unused as of September 30, 2021.
For further information about our debt see Note 16 in Notes to Consolidated Financial Statements for fiscal 2021. For further information
about the functions and objectives of our financial risk management see Note 25 in Notes to Consolidated Financial Statements for fiscal
2021.
20
Combined Management Report
Off-balance-sheet commitments
As of September 30, 2021, the undiscounted amount of maximum potential future payments related primarily to credit and performance
guarantees amounted to €15.6 billion. This included primarily Siemens' obligations from performance and credit guarantees in connection
with the Siemens Energy business, for which Siemens has reimbursement rights towards Siemens Energy.
In addition to these commitments, there are contingent liabilities of €0.5 billion which mainly result from other guarantees, legal
proceedings and from joint and several liabilities of consortia. Other guarantees include €0.2 billion in connection with the Siemens Energy
business, for which Siemens has reimbursement rights towards Siemens Energy.
Irrevocable loan commitments amounted to €3.9 billion. A considerable portion of these commitments resulted from asset-based lending
transactions, meaning that the respective loans can be drawn only after the borrower has provided sufficient collateral.
For further information about our commitments and contingencies see Note 21 in Notes to Consolidated Financial Statements for fiscal
2021.
Share buyback
The share buyback announced in November 2018 was completed on September 24, 2021 with a total volume of €3 billion. On June 24,
2021, Siemens announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal 2022.
6.2 Cash flows
(in millions of €)
Cash flows from operating activities
5. Net assets position
The decrease of provisions is due mainly to reclassification of a large part of a major asset retirement obligation to current provisions.
The main factors for the increase in total equity attributable to shareholders of Siemens AG were €6.2 billion in net income attributable
to shareholders of Siemens AG; positive other comprehensive income, net of income taxes, of €3.5 billion resulting mainly from positive
effects from remeasurements of defined benefit plans and from currency translation; and higher retained earnings of €1.2 billion due to
Siemens Healthineers' increase in share capital. The increase was partly offset by dividend payments of €2.8 billion (for fiscal 2020) and
the repurchase of 976,346 treasury shares totaling €0.5 billion (including final payment to a commissional bank).
Long-term debt increased due primarily to the issuance of U.S. dollar instruments of €8.4 billion. Set against this were mainly decreases
from the above-mentioned reclassifications and currency translation effects for bonds issued in the U.S. dollar and British pound.
Provisions for pensions and similar obligations substantially decreased mainly due to a positive return on plan assets and extraordinary
fundings in Germany, including the transfer of Siemens' stake in Bentley to Siemens Pension-Trust e.V.
Increases in deferred tax liabilities and contract liabilities year-over-year were due mainly to the acquisition of Varian. For further
information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
The increase in short-term debt and current maturities of long-term debt was due mainly to reclassifications of long-term U.S. dollar
and euro instruments totaling €5.7 billion, and to higher loans from banks totaling €0.9 billion. This was offset by repayment of euro and
U.S. dollar instruments totaling €3.5 billion, and by a €1.9 billion decrease in commercial papers.
1%
90,333
84,074
7%
65%
68%
Total equity attributable to shareholders of Siemens AG
Equity ratio
Non-controlling interests
Total liabilities and equity
Cash and cash equivalents
44,373
22%
35%
32%
4,901
3,433
43%
139,608
123,897
13%
36,390
6,562
9,996
Trade payables
Cash inflows from other disposals of assets mainly included disposals of assets eligible as central bank collateral.
Cash outflows for purchase of treasury shares included a final payment of €0.4 billion to the commissioned bank, which was due with
completion of the share buyback program 2018-2021.
Cash inflows from the re-issuance of treasury shares and other transactions with owners mainly included proceeds of €2.3 billion
related to Siemens Healthineers AG's issuance of 53 million new shares to institutional investors.
21
Combined Management Report
Cash outflows from the change in short-term debt and other financing activities mainly included net cash outflows related to
commercial paper, partly offset by cash inflows from new bank loans.
Cash inflows from investing activities from discontinued operations were driven by the sale of Flender, which resulted in cash inflows
(net of cash disposed) of €1.8 billion.
We report Free cash flow as a supplemental liquidity measure:
Free cash flow
(in millions of €)
Cash flows from operating activities
Additions to intangible assets and property, plant and equipment
Free cash flow
Fiscal year 2021
Continuing
operations
Discontinued
operations
Continuing and
discontinued
operations
10,109
(113)
Cash outflows from change in receivables from financing activities of SFS related mainly to SFS' debt business.
9,996
Cash outflows for purchase of investments and financial assets for investment purposes primarily included additions of assets eligible
as central bank collateral and payments for debt or equity investments related to certain businesses or projects, including the acquisition
of an equity stake in Thoughtworks for €0.3 billion.
Led by Digital Industries, all industrial businesses delivered strong conversion of their Adjusted EBITA to Cash flows from operating
activities, including only minor cash flows from changes in operating net working capital in all industrial businesses.
Issuance of long-term debt
Repayment of long-term debt (including current maturities of long-term debt)
Change in short-term debt and other financing activities
(547)
2,055
8,316
(4,294)
(952)
(704)
(2,804)
(285)
785
Interest paid
Dividends paid to shareholders of Siemens AG
Dividends attributable to non-controlling interests
Cash flows from financing activities continuing operations
Cash flows from financing activities - discontinued operations
Cash flows from financing activities - continuing and discontinued operations
785
Cash outflows from acquisitions of businesses, net of cash acquired, were due mainly to the acquisitions of Varian by Siemens
Healthineers for €13.4 billion and Supplyframe by Digital Industries for €0.6 billion.
Re-issuance of treasury shares and other transactions with owners
(1,730)
(1,759)
We intend to continue providing an attractive shareholder return. The Siemens Managing Board, in agreement with the Supervisory Board,
proposes a dividend of €4.00 per share, up from €3.50 per share a year earlier.
24
224
Combined Management Report
8. Report on expected developments and associated material
opportunities and risks
8.1 Report on expected developments
8.1.1 Worldwide economy
After the deepest recession and the fastest rebound in decades, in calendar 2020 and calendar 2021, respectively, the global economic
recovery is expected to continue with slowing momentum in fiscal 2022. Global gross domestic product (GDP) is expected to expand by
4.3% in calendar 2022. The outlook is still subject to a high level of uncertainty. The biggest source of concern remains COVID-19. New
variants could emerge before widespread vaccination is reached globally, or they could escape existing immunity, while vaccine
effectiveness might fade more quickly than expected.
However, in our baseline forecast we assume the impact of the Delta variant will recede further, vaccination rates will continue to rise,
especially in developing countries, and the global economy gradually will return to normal. The service sector will reopen further, and
consumer spending for services will recover, which will contribute significantly to the global recovery. This is supported by consumers still
having substantial pent-up savings which will continue to fuel consumer demand. In addition, companies in general have low levels of
inventory and will seek to re-stock, adding to demand, even if consumer spending should slow. Also, many companies might want to have
structurally higher inventory levels to improve supply chain resilience, as supply chains were often stressed during the pandemic. However,
we expect supply shortages to continue in the first half of calendar 2022.
Besides a potential re-emergence of the pandemic, further risks exist for fiscal 2022. Supply bottlenecks might last longer and restrain the
recovery. While we expect price pressures to subside for the most part in fiscal 2022 in our baseline outlook, persistent supply bottlenecks
or further energy price increases could fuel inflation and inflation expectations, and thus prompt a faster-than-anticipated monetary
tightening. This could reverberate in financial markets and weigh on investment spending. Risks for financial markets could also emerge
from other sources, e.g. an escalation of the U.S.-China trade and technology conflict, high corporate or government debt levels or China's
property sector which could undergo a substantial correction after a period of over-investment.
The necessary adjustments in the Chinese property sector, a high ratio of debt to GDP and worsening business conditions will limit China's
GDP growth in calendar 2022 to 5.7%. The European Union economy is expected to expand by 4.0% in calendar 2022, still supported by
catch-up effects and announced stimulus programs becoming effective. In the U.S., GDP is expected to expand by 4.3%, where government
spending has a negative effect on GDP growth, as it is reduced from calendar 2021 on, implying a negative fiscal impulse. An important
pre-requisite is preventing federal limits on borrowing (the debt ceiling) from disrupting government operations and spending programs.
Global fixed investments are expected to expand by 4.4% in calendar 2022, after already growing by 6.4% in calendar 2021. Important
customer industries for Siemens are participating in the global recovery (e.g. electronics, pharma, materials, chemicals). Yet persistent
supply bottlenecks have the potential to significantly derail this recovery, such as in the automotive sector due to semiconductor shortages.
The infrastructure sector (particularly public transport and electricity grids) will benefit from various green stimulus programs.
Overall, the market environment for Siemens is expected to remain favorable in fiscal 2022, but with some deceleration compared to fiscal
2021. Risks for the outlook are still substantial.
The forecasts presented here for GDP and fixed investments are based on a report from IHS Markit dated October 15, 2021.
8.1.2 Siemens Group
We are basing our outlook for fiscal 2022 on the above-mentioned expectations and assumptions regarding the overall economic situation,
including continuing healthy growth in global GDP albeit with slowing momentum, and also on the specific market conditions we expect
for our respective industrial businesses, as described in chapter 3 Segment information. Furthermore, we assume that the challenges to
our businesses from COVID-19 will ease during fiscal 2022. Although we also expect supply chain constraints to recede somewhat during
fiscal 2022, we expect continued impacts from higher prices for raw materials and components and from wage increases, which we intend
to mitigate by adjusting prices for our own products, solutions and services.
We are exposed to currency translation effects, mainly involving the U.S. dollar, the British pound and currencies of emerging markets,
particularly the Chinese yuan. While we expect volatility in global currency markets to continue in fiscal 2022, we have improved our
natural hedge on a global basis through geographic distribution of our production facilities in the past. Nevertheless, Siemens is still a net
exporter from the Eurozone to the rest of the world, so a weak euro is principally favorable for our business and a strong euro is principally
unfavorable. In addition to the natural hedging strategy just mentioned, we also hedge currency risk in our export business using derivative
financial instruments. We expect these steps to help us limit effects on income related to currency in fiscal 2022. Based on currency
exchange rates as of the beginning of November 2021, we do not expect significant currency effects on nominal growth rates in volume
and profit for our businesses in fiscal 2022.
This outlook excludes burdens from legal and regulatory matters.
Segments
2,263
Current provisions
Free cash flow from continuing and discontinued operations for fiscal 2021 increased 29% year-over-year to €8.2 billion, reaching a new
high.
(29)
We evaluate our capital structure using the ratio of Industrial net debt to EBITDA. Due primarily to an increase in net debt year-over-year,
this ratio rose to 1.5, compared to 1.3 in fiscal 2020. We thus achieved our forecast given in our Annual Report 2020, which was for a ratio
above 1.0 in fiscal 2021.
Combined Management Report
8,379
(142)
8,237
The Free cash flow for the Industrial Business amounted to €9,847 million, resulting in a cash conversion rate of 1.12. The cash conversion
rate for the Siemens Group was 1.23.
With our ability to generate positive operating cash flows from continuing and discontinued operations of €10.0 billion in fiscal 2021, our
total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €10.7 billion, our unused lines of
credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion,
our operating net working capital is sufficient for our present requirements.
Investing activities
Additions to intangible assets and property, plant and equipment from continuing operations totaled €1.7 billion in fiscal 2021. Within
the industrial businesses, ongoing investments related mainly to technological innovations; maintaining and extending our capacities for
designing, manufacturing and marketing new solutions; improving productivity; and replacements of fixed assets. These investments
amounted to €1.3 billion in fiscal 2021. The remaining portion related mainly to Siemens Real Estate, including significant amounts for
projects such as new office buildings in Germany. Siemens Real Estate is responsible for uniform and comprehensive management of
Company real estate worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate activities with
customer-specific real estate solutions.
With regard to capital expenditures for continuing operations, we expect a significant increase in fiscal 2022. In the coming years, up to
€0.6 billion are to be invested in Siemensstadt Square. This project initiated in fiscal 2019 aims to transform Siemens' existing industrial
area in Berlin into a modern urban district supporting a diverse range of purposes, including strengthening key technologies. Further
investments are planned in relation to Siemens Campus Erlangen. In addition, we continue to invest in attractive innovation fields through
Next47, our global venture capital unit.
22
7. Overall assessment of the economic position
Combined Management Report
Siemens successfully executed on its strategy as a focused technology company in fiscal 2021, following the spin-off and public listing of
Siemens Energy in September 2020. All our industrial businesses are addressing highly attractive markets in industrial automation,
infrastructure, transportation and healthcare. With our offerings we are taking advantage of growth trends such as digitalization and
decarbonization, for example by helping our customers to combine the real and the digital worlds. With the financial framework that we
presented in June 2021, we have set ambitious new targets: we aim to further accelerate our profitable growth while placing an even
greater emphasis on free cash flow.
In fiscal 2021, Siemens made further progress in sharpening its business focus by divesting activities such as the Flender business on one
side, while on the other side strengthening our industrial businesses with a number of significant acquisitions. Important examples are: in
the second quarter of fiscal 2021, the acquisition of C&S Electric, a provider of electrical and electronic equipment for infrastructure, power
generation, transmission and distribution in India, to strengthen Smart Infrastructure's position in that country as a supplier of low-voltage
power distribution and electrical installation technology; in the third quarter of fiscal 2021, the acquisition of Varian, a global leader in the
field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications, which provides a good
complement to Siemens Healthineers' activities in medical imaging, laboratory diagnostics and interventional procedures; in the fourth
quarter of fiscal 2021, the acquisition of Supplyframe, a marketplace for the global electronics value chain, with which Digital Industries
intends to significantly strengthen digital marketing and accelerate sales of its offerings to small and medium-sized companies. At the
beginning of the first quarter of fiscal 2022, Mobility closed the acquisition of Sqills, a provider of cloud-based inventory management,
reservation, and ticketing software for public transport operators, which enhances Mobility's existing offerings for increasing the
availability, capacity and utilization of public transportation.
Following the deep recession during fiscal 2020, many of Siemens' key customer industries including automotive, machine building,
pharmaceuticals, chemicals, electronics, and cloud services recovered or continued to grow during fiscal 2021. Although COVID-19 led to
a significant drop in public transit ridership, recovery programs in many countries have been allocating significant funds to transport
providers, resulting in strong order development. During the fiscal year, Siemens succeeded in maintaining its supply chains and delivery
capacity and continued to be a reliable partner for its customers, despite more challenging supply condition. These developments were
reflected in our strong financial performance for fiscal 2021. We raised our outlook during the fiscal year, most recently after the third
quarter, and reached or exceeded all the targets set for our primary measures for fiscal 2021. We achieved revenue growth of 11.5% net
of currency translation and portfolio effects and delivered net income of €6.7 billion. Return on capital employed (ROCE) was double-digit
at 13.1% and our capital structure ratio came in at 1.5.
Orders rose 23% year-over-year to €71.4 billion, for a book-to-bill ratio of 1.15, thus fulfilling our expectation of a ratio above 1. All our
four industrial businesses increased orders year-over-year. Mobility achieved the highest growth rate due to a sharply higher volume from
large orders, including its largest ever order in the Americas, worth €2.8 billion, for trainsets and associated services. Substantial order
growth at Siemens Healthineers included new volume from the acquisition of Varian. Significant order growth at Digital Industries was
driven mainly by its factory automation and motion control businesses, while orders at Smart Infrastructure increased clearly on growth
in all its businesses, with the strongest contributions coming from the products business and the systems business.
Revenue was also higher in all our industrial businesses, rising to €62.3 billion, a 13% increase year-over-year. The strongest increases
came from Siemens Healthineers and Digital Industries, which both posted double-digit growth. Revenue growth at Siemens Healthineers
included all businesses with the highest increases coming from the diagnostics and imaging businesses. Revenue development at Digital
Industries also included increases in all its businesses led by factory automation and motion control. Revenue growth at Smart
Infrastructure was driven by its products business and its systems business. Revenue at Mobility rose slightly, as parts of its businesses
continued to be impacted by restrictions related to COVID-19. Excluding currency translation and portfolio effects, revenue for Siemens
grew 11.5%. We thus exceeded our forecast given in our Annual Report 2020, which was to achieve moderate comparable revenue growth
and we met our raised guidance given after the third quarter of fiscal 2021, which was to achieve comparable revenue growth of 11% to
12%.
Adjusted EBITA Industrial Business rose 17% to €8.8 billion on growth in all industrial businesses, led by Siemens Healthineers on strong
earnings development in its diagnostics business driven by strong demand for rapid coronavirus antigen tests and by Smart Infrastructure
on increases in all its businesses. Adjusted EBITA at Digital Industries rose moderately even though prior-year results benefited from a €0.8
billion positive effect related mainly to a revaluation of the stake in Bentley. Adjusted EBITA at Mobility also rose moderately, driven by its
rail infrastructure business.
Adjusted EBITA margin Industrial Business rose to 15.0%, up from 14.3% a year earlier. With Adjusted EBITA margins of 11.6%, 15.8% and
9.3%, respectively, Smart Infrastructure, Siemens Healthineers and Mobility improved their Adjusted EBITA margins year-over-year. The
Adjusted EBITA margin of 20.4% at Digital Industries came in below the prior-year level of 21.7%, which included the above-mentioned
substantial positive effect related to Bentley, which added 5.1 percentage points to Digital Industries' Adjusted EBITA margin.
Siemens Financial Services sharply increased earnings before taxes due to lower expenses for credit risk provisions year-over-year, resulting
in a return on equity after tax of 15.4%. In addition, results outside Industrial Business in fiscal 2021 benefited from a €0.3 billion
revaluation gain and gains related to transfers of assets to Siemens Pension Trust e.V. in Germany were higher in the current period. A
€0.4 billion loss related to Siemens Energy Investment was due mainly to Siemens Energy's execution of planned restructuring measures
to improve its competitiveness and expenses from amortization of assets resulting from purchase price allocation. For comparison, results
outside Industrial Business a year earlier included an impairment of €0.5 billion on our equity investment stake in Valeo Siemens
eAutomotive GmbH.
Net income in fiscal 2021 rose 59% to €6.7 billion, and basic EPS from net income increased 54% to €7.68. We thus exceeded the forecast
given in our Annual Report 2020, which was for a moderate increase in net income, and also exceeded our raised forecast after the third
quarter, which was for net income in the range of €6.1 billion to €6.4 billion. This improvement was due mainly to the aforementioned
significantly higher Adjusted EBITA Industrial Business and the lower loss outside Industrial Business. In addition, discontinued operations,
largely related to the sale of Flender, contributed income of €1.1 billion in fiscal 2021.
23
ROCE for fiscal 2021 rose to 13.1%, up from 7.8% in fiscal 2020. This increase was due to a combination of sharply higher net income and
clearly lower average capital employed year-over-year. We thus exceeded our forecast for ROCE given in our Annual Report 2020, which
was for ROCE to remain in the single-digit range in fiscal 2021.
19%
Purchase of treasury shares
(15,494)
Responsibilities are assigned for all relevant risks and opportunities, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step, assuming responsibility for a specific risk or opportunity involves choosing
one of our general response strategies. Our general response strategies with respect to risks are avoidance, transfer, reduction or
acceptance of the relevant risk. Our general response strategy with respect to opportunities is to "seize" the relevant opportunity. In a
second step, responsibility for a risk or opportunity also involves the development, initiation and monitoring of appropriate response
measures corresponding to the chosen response strategy. These response measures have to be specifically tailored to allow for effective
risk management. Accordingly, we have developed a variety of response measures with different characteristics. For example, we mitigate
the risk of fluctuations in currency and interest rates by engaging in hedging activities. Regarding our projects, systematic and
comprehensive project management with standardized project milestones, including provisional acceptances during project execution
and complemented by clearly defined approval processes, assists us in identifying and responding to project risks at an early stage, even
before the bidding phase. Furthermore, we maintain appropriate insurance levels for potential cases of damage and liability risks in order
to reduce our exposure to such risks and to avoid or minimize potential losses. Among others, we address the risk of fluctuation in
economic activity and customer demand by closely monitoring macroeconomic conditions and developments in relevant industries, and
by adjusting capacity and implementing cost-reduction measures in a timely and consistent manner if they are deemed necessary.
Worldwide there are risks from the transmission of infectious agents from animals to humans, from humans to humans and in other ways.
Epidemic, pandemic or other infectious developments such as bioterrorism to cause high disease rates in countries, regions or continents.
We constantly check information from the World Health Organization (WHO), the - Centers for Disease Control and Prevention in the U.S.
and Europe, the Robert Koch Institute in Germany and other institutions in order to be able to identify early epidemic or pandemic risks
and determine and initiate related mitigation actions as early as possible.
Our ERM process aims for early identification and evaluation of, and response regarding, risks and opportunities that could materially
affect the achievement of our strategic, operational, financial and compliance objectives. The time horizon is typically three years, and we
take a net risk approach, addressing risks and opportunities remaining after the execution of existing and effective measures and controls.
If risks have already been considered in plans, budgets, forecasts or the consolidated financial statements (e.g. as a provision or risk
contingency), they are supposed to be incorporated with their financial impact in the entity's business objectives. As a consequence, only
additional risks arising from the same subject (e.g. deviations from business objectives, different impact perspectives) should be
considered. In order to provide a comprehensive view of our business activities, risks and opportunities are identified in a structured way
combining elements of both top-down and bottom-up approaches. Reporting generally follows a quarterly cycle; we complement this
periodic reporting with an ad-hoc reporting process that aims to escalate critical issues in a timely manner. Relevant risks and opportunities
are evaluated in terms of impact and likelihood, considering different impact perspectives, including business objectives, reputation and
regulatory requirements. The bottom-up identification and prioritization process is supplemented by workshops with the respective
managements of our organizational units. The top-down element ensures that potential new risks and opportunities are discussed at
different management levels and are included in the subsequent reporting process, if found to be relevant. Reported risks and
opportunities are analyzed regarding potential cumulative effects and are aggregated within and for each of the organizational units
mentioned above.
Risk management at Siemens builds on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM)
approach that is integrated into the organization and that addresses both risks and opportunities. Our ERM approach is based on the
globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management –
Integrating with Strategy and Performance (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018)
and is adapted to Siemens requirements. The frameworks connect the ERM process with our financial reporting process and our internal
control system. They consider a company's strategy, the efficiency and effectiveness of its business operations, the reliability of its financial
reporting and compliance with relevant laws and regulations to be equally important.
We have implemented and coordinated a set of risk management and control systems which support us in the early recognition of
developments that could jeopardize the continuity of our business. The most important of these systems include our enterprise-wide
processes for strategic planning and management reporting. Strategic planning is intended to support us in considering potential risks and
opportunities well in advance of major business decisions, while management reporting is intended to enable us to monitor such risks
more closely as our business progresses. Our internal auditors regularly review the adequacy and effectiveness of our risk management.
Accordingly, if deficits are detected, it is possible to adopt appropriate measures for their elimination. This coordination of processes and
procedures is intended to help ensure that the Managing Board and the Supervisory Board are fully informed about significant risks in a
timely manner.
8.2.2 Enterprise risk management process
Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing
appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute
our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires
each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific
industries and responsibilities, while being consistent with the overall policy.
8.2.1 Basic principles of risk management
Combined Management Report
8.2 Risk management
26
Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and
opportunities described below or if our expectations and assumptions do not materialize.
This outlook excludes burdens from legal and regulatory matters.
We expect profitable growth of our industrial businesses to drive an increase in EPS pre PPA to a range of €8.70 to €9.10, up from €8.32
in fiscal 2021. We assume that rigorous execution of our portfolio optimization strategy will contribute similarly as in fiscal 2021, when
we generated €1.5 billion in net income from the sale of our Flender business, divestment of our stakes in Bentley and ChargePoint, and
revaluation of our stake in Thoughtworks.
For the Siemens Group we expect mid-single-digit comparable revenue growth, net of currency translation and portfolio effects, and a
book-to-bill ratio above 1.
Our outlook for fiscal 2022 is based on continuing healthy growth in global GDP, albeit with slowing momentum, and our expectation that
the challenges to our businesses from COVID-19 and supply chain constraints will ease during fiscal 2022. With these conditions and given
our very strong fiscal year 2021, we expect our industrial businesses to continue their profitable growth.
8.1.3 Overall assessment
For our capital structure, defined as the ratio of industrial net debt to EBITDA (continuing operations), we expect in fiscal 2022 to achieve
a ratio below the prior-year figure of 1.5. We assume that our targeted cash conversion rate of 1 minus the annual comparable revenue
growth rate of the Group over a cycle of three to five years will support the achievement of the capital structure target in fiscal 2022.
Capital structure
For fiscal 2022, we expect ROCE adjusted for defined Varian-related acquisition effects, which was 15.1% in fiscal 2021, to improve in our
target range of 15% to 20%.
8.2.3 Risk management organization and responsibilities
Capital efficiency
To oversee the ERM process and to further drive the integration and harmonization of existing control activities to align with legal and
operational requirements, the Managing Board established a Risk Management and Internal Control Organization, led by the Head of
Assurance. In order to allow for a meaningful discussion of risk at the Siemens Group level, this organization aggregates individual risks
and opportunities of similar cause-and-effect nature into broader risk and opportunity themes. This aggregation naturally results in a
mixture of risks, including those with a primarily qualitative assessment and those with a primarily quantitative risk assessment.
Accordingly, we do not adopt a purely quantitative assessment of risk and opportunity themes. Thematic risk and opportunity assessments
Combined Management Report
8,832
7,873
12%
Other current financial liabilities
1,731
1,958
(12)%
Contract liabilities
9,858
7,524
31%
28
Competitive environment: The worldwide markets for our products, solutions and services are highly competitive in terms of pricing,
product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.
We face strong, established competitors as well as rising competitors from emerging markets and new industries, which may have a better
cost structure. Some industries in which we operate are undergoing consolidation, which may result in stronger competition, a change in
our relative market position, an increase in inventory of finished or work-in-progress goods, or unexpected price erosion. Furthermore,
Disruptive technologies: The markets in which our businesses operate experience rapid and significant changes due to the introduction
of innovative and disruptive technologies. In the fields of digitalization (e.g. IoT, artificial intelligence, cloud computing, Industry 4.0),
there are risks associated with new competitors, substitutions of existing products/solutions/services, new business models (e.g. in terms
of pricing, financing, extended scopes for project business or subscription models in the software business) and finally the risk that our
competitors may have more advanced time-to-market strategies and introduce their disruptive products and solutions faster than Siemens.
Our operating results depend to a significant extent on our technological leadership, our ability to anticipate and adapt to changes in our
markets and to optimize our cost base accordingly. Introducing new products and technologies requires a significant commitment to
research and development, which in return requires expenditure of considerable financial resources that may not always result in success.
Our results of operations may suffer if we invest in technologies that do not operate or may not be integrated as expected, or that are not
accepted in the marketplace as anticipated, or if our products, solutions or systems are not introduced to the market in a timely manner,
particularly compared to our competitors, or even become obsolete. We constantly apply for new patents and actively manage our
intellectual property portfolio to secure our technological position. However, our patents and other intellectual property may not prevent
competitors from independently developing or selling products and services that are similar to ours.
Economic, political and geopolitical conditions: We see significant uncertainties regarding the global economic outlook. In particular, a
renewed intensity of the COVID-19 pandemic could stall the recovery achieved to date, and even lead to a new recession, for example if
current vaccines are less effective with new variants, leading to the return of contact restrictions or lockdowns. There is also great
uncertainty about the long-term consequences of the pandemic for important Siemens customer industries, such as aerospace and non-
residential construction. Moreover, during the COVID-19 pandemic significant macroeconomic challenges have not been defused and in
some cases, they have intensified. A renewed escalation of the trade conflict between the U.S. and China and an intensified de-coupling
would significantly worsen global growth prospects. Adverse effects on confidence and investment activity would severely hit Siemens'
business. Increasing trade barriers, protectionism, sanctions and in particular technical regulations would negatively impact production
costs and productivity along our many value chains, as well as significantly impede or even hinder access to sales markets. A significant
risk to our sales potential and cost structure is coming from mounting supply chain bottlenecks, due to growing lack of availability of
intermediate goods, in particular electronic components. Bottlenecks in energy supply on the one hand and in access to raw materials on
the other would substantially reduce industrial production potential. The escalating possibility of major defaults in the Chinese property
sector, with potential spillover effects into the entire real estate market and financial markets, would significantly impact growth prospects
of one of our core geographic markets and might have reverberations even on the global financial system and the world economy. A
substantial increase in inflation rates could lead to serious distortions in global currency, capital, and foreign exchange markets, if central
banks initiate the tightening cycle too fast and too aggressively. Highly indebted (emerging and industrialized) countries could suffer from
increasing financing costs and a loss of investor confidence. Additional threats to the outlook could arise as well, ranging from market
pressure to intensify austerity measures to declining confidence in individual currency markets. Additionally, a strong increase of raw
material and intermediate goods prices would negatively impact Siemens's cost structure. Other significant risks could arise from
geopolitical tensions (particularly in the Near and Middle East, Hong Kong and Taiwan), the European Union's relations with Russia, the
economic vulnerability of several emerging markets (including Argentina, Turkey, Venezuela) and political upheavals. We are dependent
on the economic development of certain industries; a continuation or even an intensification of the cyclical and structural headwinds in
core customer industries, e.g., automotive or construction, would have adverse impact on our business prospects. Further business risk
would result from an abrupt weakening of Chinese economic growth. A terrorist mega-attack or a significant cybercrime incident, or a
series of such attacks or incidents in major economies, could depress economic activity globally and undermine consumer and business
confidence. Additionally, the highly interconnected global economy remains vulnerable to natural disasters or further pandemics.
In general, due to long-cycle businesses in our organizational units and the importance of long-term contracts for Siemens, there is usually
a time lag between changes in macroeconomic conditions and their impact on our financial results. In contrast, short-cycle business
activities react quickly to volatility in market demand. If the moderate growth of certain markets stalls again and if we are not successful
in adapting our production and cost structure to subsequent changes in conditions in the markets in which we operate, there can be no
assurance that we will not experience adverse effects. For example, our customers may modify, delay or cancel plans to purchase our
products, solutions and services, or fail to follow through on purchases or contracts already executed. Furthermore, the prices for our
products, solutions and services may decline to a greater extent than we currently anticipate. In addition, it may become more difficult for
our customers to obtain financing. Contracted payment terms, especially regarding the level of advance payments by our customers
relating to long-term projects, may become less favorable, which could negatively impact our financial condition. Siemens' global setup
with operations in almost all relevant economies, our wide range of offerings with varied exposures to business cycles, and our balanced
mix of business models (e.g. equipment, components, systems, software, services and solutions) help us to absorb impacts from adverse
developments in any single market.
8.3.1 Strategic risks
Below we describe the risks that could have a material adverse effect on our business situation, financial condition (including effects on
assets, liabilities and cash flows), results of operations and reputation. The order in which the risks are presented in each of the four
categories reflects the currently estimated relative exposure for Siemens associated with these risks and thus provides an indication of the
risks' current importance to us. Additional risks not known to us or that we currently consider immaterial may also negatively impact our
business objectives and operations. Unless otherwise stated, the risks described below relate to all our organizational units.
8.3 Risks
as well as our risk-bearing capacity then form the basis for the evaluation of the company-wide risk and opportunity situation during the
quarterly board meetings. The Head of Assurance assists the Managing Board with the operation and oversight of the risk and internal
control system and reporting to the Audit Committee of the Supervisory Board.
27
Cash flows from financing activities
Our forecast for net income takes into account a number of additional factors. We assume solid project execution to continue in fiscal
2022. We plan to increase the ratio of R&D expenses to revenue, which was 7.8% in fiscal 2021, to approximately 8% with a strong focus
on software and digital technologies. Severance charges, which were €0.4 billion in fiscal 2021, are expected at €0.2 billion in fiscal 2022.
Given the above-mentioned assumptions, we expect profitable growth of our industrial businesses to drive an increase in net income and
EPS pre PPA to a range of €8.70 to €9.10, up from €8.32 in fiscal 2021.
In addition, results for Siemens Energy Investment, which includes Siemens' share of Siemens Energy AG's profit after tax, amounting to
a negative €0.2 billion in fiscal 2021, is expected to improve; amortization of assets resulting from purchase price allocation due to the
initial recognition of the investment at fair value in September 2020, which are also included in Siemens Energy Investment, are expected
to decline to €0.1 billion in fiscal 2022, from €0.2 billion in fiscal 2021. We anticipate that Siemens Real Estate will continue with real
estate disposals depending on market conditions, at a similar level as in fiscal 2021. Results for Innovation also are expected on the prior-
year level, which was a negative €0.2 billion. Results related to Governance, were a negative €0.8 billion in fiscal 2021; we expect a
substantial improvement in fiscal 2022, to a negative €0.5 billion. Centrally carried pension expense are expected to be on prior-year level,
which was a negative €0.2 billion. Amortization of intangible assets acquired in business combinations, which was €0.7 billion in fiscal
2021, is expected at €0.9 billion due mainly to the acquisition of Varian in April 2021. Financing, eliminations and other items, which were
a positive €0.5 billion in fiscal 2021, are expected to include substantial parts of gains from revaluation and from divestments in fiscal
2022, resulting from our portfolio optimization strategy, among them the above-mentioned gain related to Fluence.
2021
6,697
(187)
3,599
10,109
(113)
(1,730)
(14,391)
Purchase of investments and financial assets for investment purposes
(1,523)
Change in receivables from financing activities of SFS
(631)
Other disposals of assets
1,084
Cash flows from investing activities - continuing operations
(17,192)
Cash flows from investing activities - discontinued operations
1,698
Cash flows from investing activities - continuing and discontinued operations
Fiscal year
We anticipate our tax rate for fiscal 2022 to be in the range of 25% to 29%, depending strongly on portfolio-related gains, compared to
25% in fiscal 2021. This assumption does not take into consideration possible impacts from potential major tax reforms. We do not expect
material influence on financial results from discontinued operations in fiscal 2022.
Acquisitions of businesses, net of cash acquired
Cash flows from investing activities
We expect our fully consolidated units within Portfolio Companies to reach profit margins above 5%, while results from the equity
investment are expected to be volatile and negative.
We assume that rigorous execution of our portfolio optimization strategy in fiscal 2022 will contribute similarly as in fiscal 2021, when we
generated €1.5 billion in net income from the sale of our Flender business, divestment of our stakes in Bentley and ChargePoint, Inc., and
revaluation of our stake in Thoughtworks. In October 2021, Siemens already recognized a €0.3 billion pretax gain (€0.2 billion after tax)
related to its investment in Fluence Energy, LLC (Fluence).
Profitability
As of September 30, 2021, our order backlog totaled €85 billion, and we expect conversion from the backlog to strongly support revenue
growth in fiscal 2022 with approximately €34 billion of past orders converted to current revenue. For expected conversion of order backlog
to revenue for our respective segments, see chapter 3 Segment information.
For comparable revenue, net of currency translation and portfolio effects, we expect the Siemens Group to achieve mid-single-digit
growth. Furthermore, we anticipate that orders in fiscal 2022 will exceed revenue for a book-to-bill ratio above 1.
Revenue growth
Siemens Financial Services expects to further improve Earnings before taxes year-over-year. Return on equity (ROE) (after tax) is expected
to reach the lower half of the new target range of 15% to 20%.
Siemens Healthineers expects to achieve comparable revenue growth in the range of 0% to 2% in fiscal 2022. The profit margin, which
was 15.8% in fiscal 2021, is expected to continue to improve.
Combined Management Report
25
Smart Infrastructure expects for fiscal 2022 comparable revenue growth of 5% to 8%. The profit margin is expected to be 12% to 13%.
Mobility expects for fiscal 2022 comparable revenue growth of 5% to 8%. The profit margin is expected to be 10.0% to 10.5%.
Digital Industries expects for fiscal 2022 to achieve comparable revenue growth of 5% to 8%. The profit margin is expected to be 19% to
21%, including known headwinds of up to two percentage points associated with the strategic transition to software as a service (SaaS)
in parts of its large software business.
We expect our industrial businesses to continue their profitable growth.
Net income
Change in operating net working capital
Other reconciling items to cash flows from operating activities - continuing operations
Cash flows from operating activities - continuing operations
Cash flows from operating activities - discontinued operations
Cash flows from operating activities - continuing and discontinued operations
Additions to intangible assets and property, plant and equipment
1,674
(2,436)
Liabilities
of cybersecurity threats and higher levels of professionalism in computer crime, which pose a risk to the security of products, systems and
networks and the confidentiality, availability and integrity of data. According to various external data sources, this trend has accelerated
during the COVID-19 pandemic. Especially the number of phishing attacks as well as the number of malicious websites have increased
significantly. Moreover, the information technology market is concentrated among a small number of information technology and
software vendors, which could lead to dependence on a single provider. There can be no assurance that the measures aimed at protecting
our intellectual property and portfolio will address these threats under all circumstances. There is a risk that confidential information (data
privacy) may be stolen or that the integrity of our portfolio may be compromised, e.g. by attacks on our networks, social engineering, data
manipulations in critical applications and a loss of critical resources, resulting in financial damages. Cybersecurity covers the IT of our entire
enterprise including office IT, systems and applications, special purpose networks, and our operating environments such as manufacturing
and research and development (R&D). Like other large multinational companies, we face active cyber threats from sophisticated
adversaries that are supported by organized crime and nation-states engaged in economic espionage or even sabotage. We strive to
mitigate these risks by employing a number of measures, including employee training, considering new models of flexible working
environments, and comprehensive monitoring of our networks and systems through cyber defense with an artificial intelligence solution
to identify attacks faster and prevent damage to society and especially to critical infrastructures, our customers, our partners and Siemens
overall. We initiated the industrial "Charter of Trust," signed by a growing group of global companies, which sets out principles for building
trust in digital technologies and creating a more secure digital world. Nonetheless, our systems, products, solutions and services, as well
as those of our service providers, remain potentially vulnerable to attacks. Such attacks could potentially lead to the publication,
manipulation or leakage of information such as through industrial espionage. They could also result in deliberate improper use of our
systems, vulnerable products, production downtimes and supply shortages, with potential adverse effects on our reputation, our
competitiveness and results of operations. For increased protection of Siemens and reduction of a potential financial impact caused by
cyber incidents, the risk transfer possibilities have been evaluated. As a result of an international insurance tender, the currently insurable
cybersecurity risks have been to a partial extent transferred to a consortium of insurance companies.
Supply chain management: The financial performance of our operating units depends on reliable and effective supply chain management
for components, sub-assemblies and materials. Capacity constraints and supply shortages resulting from ineffective supply chain
management may lead to production bottlenecks, delivery delays, quality issues and additional costs. We also rely on third parties to supply
us with parts, components and services. Using third parties to manufacture, assemble and test our products may reduce our control over
manufacturing yields, quality assurance, product delivery schedules and costs. Although we work closely with our suppliers to avoid supply-
related problems, there can be no assurance that we will not encounter supply problems in the future, especially if we use single-source
suppliers for critical components. Shortages and delays could materially harm our businesses. Unanticipated increases in the price of
components or raw materials due to market shortages or other reasons could also adversely affect performance. Furthermore, we may be
exposed to the risk of delays and interruptions in the supply chain as a consequence of catastrophic events (including pandemics), cyber
incidents or suppliers' financial difficulties, particularly if we are unable to identify alternative sources of supply or means of transportation
in a timely manner or at all. Besides other measures, we mitigate price fluctuation in global raw material markets with various hedging
instruments.
Internal programs and initiatives: We are in a continuous process of operational optimization and constantly engage in cost-reduction
initiatives, including ongoing capacity adjustment measures and structural initiatives. Consolidation of business activities and
manufacturing facilities, outsourcings, joint ventures and the streamlining of product portfolios are all part of these cost-reduction efforts.
These measures may not be implemented as planned, may turn out to be less effective than anticipated, may become effective later than
estimated or may not become effective at all. Any future contribution of these measures to our profitability will be influenced by the actual
savings achieved and by our ability to sustain them. In case of restructuring and outsourcing activities, there could be delays in product
deliveries or we might even experience delivery failures. Furthermore, delays in critical R&D projects could lead to negative impacts in
running projects. We constantly control and monitor the progress of these projects and initiatives using standardized controlling and
milestone tracking approaches.
Project-related risks: A number of our segments conduct activities under long-term contracts that are awarded on a competitive bidding
basis. Such contracts typically arise at Mobility and in various activities of Smart Infrastructure or Portfolio Companies. Some of these
contracts are inherently risky because we may assume substantially all of the risks associated with completing a project and meeting post-
completion warranty obligations. For example, we may face the risk that we must satisfy technical requirements of a project even though
we have not gained experience with those requirements before winning the project. The profit margins realized on fixed-priced contracts
may vary from original estimates as a result of changes in costs and productivity over a contract's term. We sometimes bear the risk of
unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties of our customers and/or significant
partners, cost overruns or contractual penalties caused by unexpected technological problems, unexpected developments at the project
sites, unforeseen changes or difficulties in the regulatory or political environment, performance problems with our suppliers,
subcontractors and consortium partners or other logistical difficulties. Some of our multi-year contracts also contain demanding
installation and maintenance requirements in addition to other performance criteria relating to timing, unit cost and compliance with
government regulations, which, if not satisfied, could subject us to substantial contractual penalties, damages, non-payment and contract
termination. There can be no assurance that contracts and projects, in particular those with long-term duration and fixed-priced
calculation, can be completed profitably. To tackle those risks, we established a global project management organization to systematically
improve the technical and commercial capabilities of our project management personnel. For very complex projects we conduct dedicated
risk assessments in very early stages of the sales phase before we decide to hand over a binding offer to our customers.
Shortage of skilled personnel: Competition for diverse and highly qualified personnel (e.g. specialists, experts, digital talent) remains
intense in the industries and regions in which our businesses operate. We have ongoing demand for highly skilled employees and a need
to enhance diversity, inclusion and sense of belonging in our workforce. Our future success depends in part on our continued ability to
identify, assess and hire engineers, digital talent and other qualified personnel. We must also integrate, develop and retain them after they
join us, which appears especially relevant in times of a new, increasingly virtual working environment. We address these topics for example
by strengthening the capabilities and skills of our talent acquisition teams and a strategy of proactive search for people with the required
capabilities in our respective industries and markets. Technology and digitalization help us to be more effective in attracting and selecting
diverse talent. Furthermore, we have a focus on diversity and structured succession planning.
30
Combined Management Report
8.3.3 Financial risks
Risks from pension obligations: The provisions for pensions and similar obligations may be affected by changes in actuarial assumptions,
including the discount rate, as well as by movements in financial markets or a change in the mix of assets in our investment portfolio.
Additionally, they are subject to legal risks with regard to plan design among other factors. A significant increase in the underfunding may
have a negative effect on our capital structure and rating, and thus may tighten refinancing options and increase costs. In order to comply
with local pension regulations in selected foreign countries, we may face an economic risk of increasing cash outflows due to change in
funding level according to local regulations of our pension plans in these countries or to changes in the regulations themselves.
Audits by tax authorities and changes in tax regulations: We operate in nearly all countries of the world and therefore are subject to
many different tax regulations. Changes in tax laws in any of these jurisdictions could result in higher tax expenses and increased tax
payments. Furthermore, legislative changes could impact our tax receivables and liabilities as well as deferred tax assets and deferred tax
liabilities. In addition, the uncertain legal environment in some regions could limit our ability to enforce our rights. As a globally operating
organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
interpretations or developments of tax regimes may affect our business situation, financial condition and results of operations. We are
regularly audited by tax authorities in various jurisdictions and we continuously identify and assess relevant risks.
Combined Management Report
Market price risks: We are exposed to fluctuations in exchange rates, especially between the U.S. dollar and the euro, because a high
percentage of our business volume is conducted as exports from Europe to areas using the U.S. dollar. In addition, we are exposed to
effects involving the currencies of emerging markets, in particular the Chinese yuan. Appreciable changes in euro exchange rates could
materially change our competitive position. We are also exposed to fluctuations in interest rates. Even hedging activities to mitigate such
risks may result in a reverse effect. Fluctuations in exchange or interest rates, negative developments in the financial markets and changes
in central bank policies could therefore negatively impact our financial results.
Credit risks: We provide our customers with various forms of direct and indirect financing of orders and projects, including guarantees.
Siemens Financial Services in particular bears credit risks due to such financing activities if, for example, customers do not meet obligations
arising from these financing arrangements, meet them only partially, or meet them late.
For further information on post-employment benefits, derivative financial instruments, hedging activities, financial risk management and
related measures, see Notes 17, 24 and 25 in Notes to Consolidated Financial Statements for fiscal 2021.
8.3.4 Compliance risks
Current and future investigations regarding allegations of corruption, of antitrust violations and of other violations of law:
Proceedings against us or our business partners regarding allegations of corruption, of antitrust violations and of other violations of law
may lead to fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgements, disqualifications from directly
and indirectly engaging in certain types of business, the loss of business licenses or permits, other restrictions and legal consequences as
well as negative public media coverage. Accordingly, we may, among other things, be required to comply with potential obligations and
liabilities arising in connection with such investigations and proceedings, including potential tax penalties. Moreover, any findings related
to public corruption that are not covered by the 2008 and 2009 corruption charge settlements, which we concluded with U.S. and German
authorities, may endanger our business with government agencies and intergovernmental and supranational organizations. Monitors
could again be appointed to review future business practices and we may otherwise be required to further modify our business practices
and our compliance program.
In its global business, Siemens does part of its business with state-owned enterprises and governments. We also participate in a number
of projects funded by government agencies and intergovernmental and supranational organizations, such as multilateral development
banks. Ongoing or potential future investigations into allegations of corruption, antitrust violations or other violations of law could as well
impair relationships with such parties or could result in our exclusion from public contracts. Such investigations may also adversely affect
existing private business relationships and our ability to pursue potentially important strategic projects and transactions, such as strategic
alliances, joint ventures or other business alliances, or could result in the cancellation of certain of our existing contracts. Moreover, third
parties, including our competitors, could initiate significant litigation.
In addition, future developments in ongoing and potential future investigations, such as responding to the requests of governmental
authorities and cooperating with them, could divert management's attention and resources from other issues facing our business.
Furthermore, we might be exposed to compliance risks in connection with recently acquired operations that are in the ongoing process of
integration.
Along with other measures, Siemens has established a global compliance organization that conducts among others compliance risk
mitigation processes such as Compliance Risk Assessments or initiates internal audit activities performed by the internal assurance
department.
Changes of regulations, laws and policies: As a diversified company with global businesses we are exposed to various product- and
country-related regulations, laws and policies influencing our business activities and processes. According to observations and analysis,
there is an increasing risk that existing technical regulations in target markets will suddenly change, or new ones will be set in force, which
determine market access criteria that our products do not meet. The affected products would lose marketability in this market. The way
of resolving the risk of a sales-stop depends on the case of how to correct the non-conformity. In case the product can technically stay as
is, while it has to undergo new and additional conformity assessment and certification, there will be considerable effort and cost to carry
out the needed testing and certification procedures. In a worse case, the affected product will need re-engineering or re-design to meet
the requirements of the changed or new technical regulation even before it can become re-assessed and certified for market approval.
Liquidity and financing risks: Our treasury and financing activities could face adverse deposit and/or financing conditions from negative
developments related to financial markets, such as limited availability of funds and hedging instruments, an updated evaluation of our
solvency, particularly from rating agencies, negative interest rates, and impacts arising from more restrictive regulation of the financial
sector, central bank policy, or the usage of financial instruments. Widening credit spreads due to uncertainty and risk aversion in the
financial markets might lead to adverse changes in the market values of our financial assets, in particular our derivative financial
instruments.
29
Cyber/Information security: Digital technologies are deeply integrated into our business portfolio. Further integration of information
technology into products and services in conjunction with changing business strategies (such as outsourcing, globally distributed
development, a lesser degree of sole production) are leading to an increasingly distributed supply chain, making efficient controls difficult.
The fact of a large number of suppliers requires a significant effort for the initial and regular verification of the effective implementation
of cybersecurity requirements by suppliers. Siemens business entities might lose market access if their products, solutions and services do
not comply with increased regulations and legal requirements for cybersecurity in their respective countries. We observe a global increase
8.3.2 Operational risks
The Company may not repurchase its own shares unless so authorized by a resolution duly adopted by the shareholders at a general
meeting or in other very limited circumstances set forth in the German Stock Corporation Act. On February 5, 2020, the Shareholders'
Meeting authorized the Company to acquire until February 4, 2025 up to 10% of its capital stock existing at the date of adopting the
resolution or - if this value is lower - as of the date on which the authorization is exercised. The aggregate of shares of stock of Siemens
AG repurchased under this authorization and any other Siemens shares previously acquired and still held in treasury by the Company or
attributable to the Company pursuant to Sections 71d and 71e of the German Stock Corporation Act may at no time exceed 10% of the
then existing capital stock. Any repurchase of Siemens shares shall be accomplished at the discretion of the Managing Board either (1) by
acquisition over the stock exchange, (2) through a public share repurchase offer or (3) through a public offer to swap Siemens shares for
shares in a listed company within the meaning of Section 3 para. 2 German Stock Corporation Act. The Managing Board is additionally
authorized to complete the repurchase of Siemens shares in accordance with the authorization described above by using certain derivatives
(put and call options, forward purchases and any combination of these derivatives). In exercising this authorization, all stock repurchases
based on the derivatives are limited to a maximum volume of 5% of Siemens' capital stock existing at the date of adopting the resolution
at the Shareholders' Meeting. A derivative's term of maturity may not, in any case, exceed 18 months and must be chosen in such a way
that the repurchase of Siemens shares upon exercise of the derivative will take place no later than February 4, 2025.
In addition to selling them over the stock exchange or through a public sales offer to all shareholders, the Managing Board is authorized
by resolution of the Shareholders' Meeting on February 5, 2020 to also use Siemens shares repurchased on the basis of this or any
previously given authorization for every permissible purpose, in particular as follows: Such Siemens shares may be
•
•
•
•
•
retired;
used in connection with share-based compensation programs and/or employee share programs of the Company or any of its affiliated
companies and issued to individuals currently or formerly employed by the Company or any of its affiliated companies as well as to
board members of any of the Company's affiliated companies;
offered and transferred, with the approval of the Supervisory Board, to third parties against non-cash contributions;
sold by the Managing Board, with the approval of the Supervisory Board, against payment in cash if the price at which such Siemens
shares are sold is not significantly lower than the market price of Siemens stock (exclusion of subscription rights, limited to 10% of the
capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act); or
used to service or secure obligations or rights to acquire Siemens shares arising particularly from or in connection with convertible bonds
or warrant bonds of the Company or its affiliated companies. Moreover, the Managing Board is authorized to exclude subscription rights
in order to grant holders/creditors of conversion or option rights or respective conversion or option obligations on Siemens shares
subscription rights as compensation against effects of dilution to the extent to which they would be entitled after exercise of such rights
or fulfillment of such obligations, and to use Siemens shares to service such subscription rights.
Furthermore, the Supervisory Board is authorized to use shares acquired on the basis of this or any previously given authorization to meet
obligations or rights to acquire Siemens shares that were or will be agreed with members of the Managing Board within the framework of
rules governing Managing Board compensation.
In November 2018, the Company announced that it would carry out a share buyback of up to €3 billion in volume until November 15,
2021 at the latest. The buyback commenced on December 3, 2018 and terminated on September 24, 2021. Using the authorizations given
by the Annual Shareholders' Meetings on January 27, 2015 and February 5, 2020, Siemens repurchased 29.4 million shares by September
30, 2021 under this share buyback. This buyback had the exclusive purposes of retirement, of issuing shares to employees, board members
of affiliated companies and members of the Managing Board of Siemens AG, and of servicing/securing the obligations or rights to acquire
Siemens shares arising particularly from or in connection with convertible bonds and warrant bonds. On June 24, 2021, Siemens
announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal 2022.
As of September 30, 2021, the Company held 47,644,581 shares of stock in treasury.
38
Combined Management Report
there is a risk that critical suppliers are taken over by competitors and a risk that competitors are increasingly offering services to our
installed base. We address these risks with various measures, for example benchmarking, strategic initiatives, sales push initiatives,
executing productivity measures and target cost projects, rightsizing of our footprint, outsourcings, mergers and joint ventures and
optimizing our product and service portfolio. We continuously monitor and analyze competitive, market and industry information in order
to be able to anticipate unfavorable changes in the competitive environment rather than merely reacting to such changes.
COVID-19 pandemic (COVID-19): The COVID-19 situation may worsen, as the number of new infections is rising again in many countries.
At the same time, the number of cases and the severe course of the disease will develop very differently depending on the respective
vaccination rate in the countries. The impact of the pandemic therefore varies considerably between regions and customer sectors.
Governments and other local authorities are working to contain the spread of infection by implementing various countermeasures such
as contact restrictions, adherence to minimum hygienic standards, wearing of respiratory masks, vaccine mandates, and vaccination and
testing services to avoid widespread curfews and restrictions on the opening of certain sectors of the economy. Depending on
epidemiological trends and political pressure, governments are expected to relax existing restrictions and avoid new ones to reduce the
associated economic harm. The extent and duration of the individual impacts on our business are difficult to predict. For example, if
containment measures are initiated at short notice or last an unpredictably long time, our business may be significantly impacted in ways
that exceed current expectations and go beyond mitigation measures already in place. We could face unexpected closures of sites, factories
or office buildings of our suppliers, customers or our own operations, which would affect our ability to produce or deliver our products,
solutions and services. The most material uncertainties of the COVID-19 crisis are its continued duration, including for example potential
further waves of infection, mutations of the virus and the evolution of global vaccination progress, and the economic costs of restrictions.
Since the second quarter of fiscal 2020, we have felt the impact in our businesses, both our short-cycle businesses and project businesses,
as, for example, customers cancelled orders or postponed investments, we were exposed to increased default risk, and our supply chain
experienced difficulties in certain areas. Now we are seeing a recovery in many business sectors, and travel is also becoming easier. The
longer the restrictive measures such as curfews last, the deeper the resulting recession will be. Possible consequences include an
unchecked increase of public and private debt which hampers the post-crisis recovery, serious disruptions in the financial system and
insolvencies among Siemens customers and suppliers. In the long term, a reversal of globalization could reduce potential future growth.
Various task forces and crisis teams have been set up in all areas of Siemens to carefully monitor and mitigate the various impacts of
COVID-19, with a focus on the health and safety of our employees through operational vaccination offers, testing concepts and making
treatment offers available, and on business continuity. At the Group level, an executive-level crisis team at Group headquarters has worked
out overarching decisions and coordinated the flow of information through the different levels of the organization, while empowering
responsible management in each business and country to take appropriate action according to national and regional guidelines.
Increasing sustainability focus: The increasing environmental, social and governance (ESG) requirements from governments and
customers as well as financing restrictions from governments, customer demands and financing restrictions for greenhouse gas emitting
technologies could result in additional costs. Additionally, business involvement in sensitive environmental, social or governance activities
might be negatively perceived and trigger adverse media attention. This could lead to reputational damage and have an impact on
achieving our business goals. In fiscal 2021 we introduced a binding ESG risk framework and with it an optimized due diligence process.
This supports Siemens businesses with due diligence in the customer-oriented environment with a view to possible environmental and
social risks as well as related human rights and reputational risks.
Portfolio measures, at-equity investments, other investments and strategic alliances: Our strategy includes divesting our activities in
some business areas and strengthening others through portfolio measures, including mergers and acquisitions. With respect to
divestments, we may not be able to divest some of our activities as planned, and the divestitures we do carry out could have a negative
impact on our business situation, financial condition, results of operations and reputation. Mergers and acquisitions are inherently risky
because of difficulties that may arise when integrating people, operations, technologies and products. There can be no assurance that any
of the businesses we acquire can be integrated successfully and in a timely manner as originally planned, or that they will perform as
anticipated once integrated. In addition, we may incur significant acquisition, administrative, tax and other expenditures in connection
with these transactions, including costs related to integration of acquired businesses. Furthermore, portfolio measures may result in
additional financing needs and adversely affect our capital structure. Acquisitions can lead to substantial additions to intangible assets,
including goodwill, in our statements of financial position. If we were to encounter continuing adverse business developments or if we
were otherwise to perform worse than expected at acquisition activities, then these intangible assets, including goodwill, might have to
be impaired, which could adversely affect our business situation, financial condition and results of operations. Our investment portfolio
includes investments held for purposes other than trading and other investments. Any factors negatively influencing the financial
condition and results of operations of our at-equity investments and other investments could have an adverse effect on our equity pick-
up related to these investments or may result in a related write-off. In addition, our business situation, financial condition and results of
operations could also be adversely affected in connection with loans, guarantees or non-compliance with financial covenants related to
these investments. Furthermore, such investments are inherently risky as we may not be able to sufficiently influence corporate
governance processes or business decisions taken by our at-equity investments, other investments and strategic alliances, which may have
a negative effect on our business and especially on our reputation. In addition, joint ventures bear the risk of difficulties that may arise
when integrating people, operations, technologies and products. Strategic alliances may also pose risks for us because we compete in
some business areas with companies with which we have strategic alliances. Besides other measures, we handle these risks with
standardized processes as well as dedicated roles and responsibilities in the areas of mergers, acquisitions, divestments and carve-outs.
This includes the systematic treatment of all contractual obligations and post-closing claims.
31
Combined Management Report
The latter case will cause significant extra effort and cost to do the needed product changes and to maintain the country-specific product
variant as an additional derivate item in the portfolio. In the worst case, if the two aforementioned ways of maintaining the product's
marketability prove to be not feasible, sale of the affected product in the market has to be stopped. We monitor the political and regulatory
landscape in all our key markets to anticipate potential problem areas, with the aim of quickly adjusting our business activities and
processes to changed conditions. However, any changes in regulations, laws and policies could adversely affect our business activities and
processes as well as our financial condition and results of operations.
Protectionism (including tariffs/trade war): Protectionist trade policies, de-coupling and changes in the political and regulatory
environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers including debarment
from certain markets and price or exchange controls, could affect our business in national markets and could impact our business situation,
financial position and results of operations; and may expose us to penalties, other sanctions and reputational damage. In addition, the
uncertainty of the legal environment in some regions could limit our ability to enforce our rights and subject us to increasing costs related
to appropriate compliance programs.
Combined Management Report
is analyzed on an ongoing basis. Accounting departments are informed quarterly about current topics and deadlines from an accounting
and closing process perspective.
The base data used in preparing our financial statements consists of the closing data reported by the operations of Siemens AG and its
subsidiaries. The preparation of the closing data of most of our entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance and monitoring activities, are usually bundled on a regional level. In
particular cases, such as valuations relating to post-employment benefits, we use external experts. The reported closing data is used to
prepare the financial statements in the consolidation system. The steps necessary to prepare the financial statements are subject to both
manual and automated controls.
Qualification of employees involved in the accounting process is ensured through appropriate selection processes and training. As a
fundamental principle, based on materiality considerations, the "four eyes" principle applies, and specific procedures must be adhered to
for data authorization. Additional control mechanisms include target-performance comparisons and analyses of the composition of and
changes in individual line items, both in the closing data submitted by reporting units and in the Consolidated Financial Statements. In
line with our information security requirements, accounting-related IT systems contain defined access rules protecting them from
unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the
International Financial Reporting Standards (IFRS) closing data to the Annual Financial Statements of Siemens AG.
On a quarterly basis, we execute an internal certification process. Management at different levels of our organization, supported by
confirmations by managements of entities under their responsibility, confirms the accuracy of the financial data that has been reported to
Siemens' corporate headquarters and reports on the effectiveness of the related control systems.
Siemens Healthineers is subject to our Group-wide principles for the accounting-related internal control and risk management system and
is responsible for adhering to those principles. The management of Siemens Healthineers provides periodic signoffs to the Managing Board
of Siemens AG, certifying the effectiveness of its accounting-related internal control system as well as the completeness, accuracy, and
reliability of the financial data reported to us.
After the acquisition of Varian, Siemens Healthineers has commenced to integrate the former Varian entities into our accounting-related
internal control and risk management system. The integration efforts for the accounting-related internal control system will continue in
fiscal 2022.
Our internal audit function systematically evaluates our financial reporting integrity, the effectiveness of the control system and the risk
management system, and adherence to our compliance policies. Siemens Healthineers has its own internal audit department and annual
audit plan. Topics from the annual audit plan of Siemens Healthineers that are also relevant for our Managing Board and Audit Committee
must be mandated first by Siemens Healthineers' Managing Board and Audit Committee and subsequently by our Managing Board and
Audit Committee. The audit procedures for these topics will be generally executed by joint teams including members of our and Siemens
Healthineers' internal audit functions, thus respecting the interests of both Siemens AG and Siemens Healthineers. In addition, the Audit
Committee is integrated into our control system. In particular, it oversees the accounting and accounting process and the effectiveness of
the internal control system, the risk management system and the internal audit system. Moreover, we have rules for accounting-related
complaints.
34
Combined Management Report
9. Siemens AG
The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz).
In fiscal 2021, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are
influenced significantly by the results of subsidiaries and investments we own either directly or indirectly. The business development of
Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing explanations for
the Siemens Group apply also for Siemens AG.
The Supervisory Board and the Managing Board propose from the unappropriated net income of Siemens AG for the fiscal year ended
September 30, 2021, amounting to €3,400 million to distribute a dividend of €4.00 per share of no par value entitled to the dividend. The
proposed dividend represents a total payout of €3.2 billion based on the estimated number of shares entitled to dividend at the date of
the Annual Shareholders' Meeting. Based on Net income of Siemens group attributable to shareholders of Siemens AG of €6.2 billion for
fiscal 2021, the dividend payout percentage is 52%. We intend to continue providing an attractive return to our shareholders. This includes
striving for a dividend per share that exceeds the amount of the preceding year, or that at least matches the prior-year-level. For fiscal
2022, we expect that net income of Siemens AG will be sufficient to fund the distribution of a corresponding dividend.
As of September 30, 2021, the number of employees was 49.100.
9.1 Results of operations
Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
(in millions of €)
Revenue
33
The new shares issued or to be issued in exchange for contributions in cash and in kind and with shareholders' subscription rights excluded,
may in certain cases be subject to further restrictions. The details of those restrictions are described in the relevant authorization. In
addition, the Managing Board has issued the commitment not to increase the capital stock from the Authorized Capital 2019 and the
Conditional Capitals 2019 and 2020 by a total of more than 10% of the capital stock existing at the time of the Shareholders' Meeting on
February 5, 2020, to the extent that capital increases with shareholders' subscription rights excluded are made from the Authorized Capital
2019 against contributions in cash or in kind or to service convertible bonds and/or warrant bonds issued under the authorizations
approved on January 30, 2019 or February 5, 2020 with shareholders' subscription rights excluded. This commitment ends no later than
February 4, 2025.
At the end of each fiscal year, our management performs an evaluation of the effectiveness of the implemented control system, both in
design and operating effectiveness. We have a standardized procedure under which necessary controls are defined, documented in
accordance with uniform standards, and tested regularly for their effectiveness. Nevertheless, there are inherent limitations on the
effectiveness of any control system, and no system, including one determined to be effective, may prevent or detect all misstatements.
Our Consolidated Financial Statements are prepared on the basis of a centrally issued conceptual framework which primarily consists of
uniform Financial Reporting Guidelines and a chart of accounts. For Siemens AG and other companies within the Siemens Group required
to prepare financial statements in accordance with German Commercial Code, this conceptual framework is complemented by mandatory
regulations specific to the German Commercial Code. The need for adjustments in the conceptual framework due to regulatory changes
8.5 Significant characteristics of the accounting-related internal control and risk management
system
Geopolitical uncertainties including sanctions and export control: As a globally operating organization, we conduct business with
customers in countries which are subject to export control regulations, embargoes, economic sanctions, debarment policies or other forms
of trade restrictions (hereafter referred to as "sanctions") imposed by the U.S., the EU, China or other countries or organizations. New or
expanded sanctions in countries in which we do business may result in a curtailment of our existing business in such countries or indirectly
in other countries. We are also aware of policies of national authorities and institutional investors, such as pension funds or insurance
companies, requiring divestment of interests in and prohibiting investment in and transactions with entities doing business with countries
identified by the U.S. Department of State as state sponsors of terrorism. As a result, it is possible that such policies may result in our being
unable to gain or retain certain investors or customers. In addition, the termination of our activities in sanctioned countries may expose
us to customer claims and other actions. Our reputation could also suffer due to our activities with counterparties in or affiliated with these
countries.
Environmental, health & safety and other governmental regulations: Some of the industries in which we operate are highly regulated.
Current and future environmental, health and safety and other governmental regulations or changes thereto may require us to change
the way we run our operations and could result in significant increases in our operating or production costs. Furthermore, we see the risk
of potential environmental and health and safety incidents as well as potential non-compliance with environmental and health and safety
regulations affecting Siemens and our contractors or sub-suppliers, resulting for example in serious injuries, business interruptions,
penalties, loss of reputation and internal or external investigations.
In addition, while we have procedures in place to ensure compliance with applicable governmental regulations in the conduct of our
business operations, it cannot be excluded that violations of applicable governmental regulations may be caused either by us or by third
parties that we contract with, including suppliers or service providers whose activities may be attributed to us. Any such violations
particularly expose us to the risk of liability, penalties, fines, reputational damage or loss of licenses or permits that are important to our
business operations. In particular, we could also face liability for damage or remediation for environmental contamination at the facilities
we design or operate. With regard to certain environmental risks, we maintain liability insurance at levels that our management believes
are appropriate and consistent with industry practice. We may incur environmental losses beyond the limits, or outside the coverage, of
such insurance, and such losses may have an adverse effect on our business situation, financial condition and results of operations.
Current or future litigation and legal and regulatory proceedings: Siemens is and potentially will be involved in numerous legal disputes
and proceedings in various jurisdictions. These legal disputes and proceedings could result, in particular, in Siemens being subject to
payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual cases this may
also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Asserted claims are generally
subject to interest rates. Some of these legal disputes and proceedings could result in adverse decisions for Siemens or decisions,
assessments or requirements of regulatory authorities could deviate from our expectations, which may have material effects on our
business activities as well as our financial position, results of operations and cash flows. Siemens maintains liability insurance for certain
legal risks at levels our management believes are appropriate and consistent with industry practice. The insurance policy, however, does
not protect Siemens against reputational damage. Moreover, Siemens may incur losses relating to legal proceedings beyond the limits, or
outside the coverage, of such insurance or exceeding any provisions made for losses related to legal proceedings. Finally, there can be no
assurance that Siemens will be able to maintain adequate insurance coverage on commercially reasonable terms in the future.
For additional information with respect to specific proceedings, see Note 22 in Notes to Consolidated Financial Statements for fiscal 2021.
8.3.5 Assessment of the overall risk situation
The most significant challenges have been mentioned first in each of the four risk categories: strategic, operational, financial and
compliance.
While our assessments of individual risks have changed during fiscal 2021 due to developments in the external environment, changes in
our business portfolio, effects of our own mitigation measures and the revision of our risk assessment, the overall risk situation for Siemens
did not change significantly as compared to the prior year. We currently see the operational risk cyber/information security as the most
significant challenge for us followed by the strategic risk arising from economic, political and geopolitical conditions.
concern.
8.4 Opportunities
Within our ERM we regularly identify, evaluate and respond to opportunities that present themselves in our various fields of activity. Below
we describe our most significant opportunities. Unless otherwise stated, the opportunities described relate to all organizational units. The
order in which the opportunities are presented reflects the currently estimated relative exposure for Siemens associated with these
opportunities and thus provides an indication of the opportunities' current importance to us. The described opportunities are not
32
Combined Management Report
necessarily the only ones we encounter. In addition, our assessment of opportunities is subject to change because the Company, our
markets and technologies are constantly advancing. It is also possible that opportunities we see today will never materialize.
Favorable political and regulatory environment (including sustainability): We see opportunities from potential improvement in the
geopolitical policy environment, which could quickly restore a more positive industrial investment sentiment that supports the growth of
our markets. In addition, government initiatives and subsidies (including tax reforms, recovery plans among others) may lead to more
government spending (e.g. infrastructure, healthcare or digitalization investments) and ultimately result in an opportunity for us to
participate in ways that increase our revenue and profit. By enabling our customers to lower their GHG (Greenhouse Gas) emissions across
our portfolio and by reducing CO2 emission in our own operation, Siemens strives to support the trend towards a low-carbon economy.
Siemens also welcomes and supports from an opportunity perspective, recent legislative and governmental accelerate to mitigate climate
change worldwide, especially in Europe through e.g. the Green Deal or Sustainable Finance Initiative.
Mergers, acquisitions, equity investments, partnerships, divestments and streamlining our portfolio: We constantly monitor our
current and potential markets to identify opportunities for strategic mergers, acquisitions, equity investments and partnerships, which
may complement our organic growth. Such activities may help us to strengthen our position in our existing markets, provide access to
new or underserved markets, or complement our technological portfolio in strategic areas. Opportunities might also arise when portfolio
optimization measures generate gains, which enable us to further pursue our other strategies for growth and profitability.
Value creation through innovation: We drive innovation by investing significantly in R&D in order to develop sustainable solutions for
our customers while also strengthening our own competitiveness. Being an innovative company and constantly inventing new
technologies that we expect will meet future demands arising from the megatrends of demographic change, urbanization, climate change
and globalization is one of our core purposes. We are granted thousands of new patents every year and continuously develop new concepts
and convincing new digital and data-driven business models. This helps us create the next generation of ground-breaking innovations in
such fields as digitalization, artificial intelligence, autonomous machines and edge computing. Across our operating units, we are profiting
from our strength in the "Digital Enterprise." Foremost, our cloud-based MindSphere platform enhances the availability of our customers'
digital products and systems and improves their productivity and efficiency. We offer edge computing apps along with MindSphere in
individual facilities, so that customers can connect all their facilities to create an integrated data network. We see also significant
opportunities to generate additional volume and profit from innovative digital products, services and solutions, including cyber security
and applications for optimized energy consumption. We see growth opportunities in opening up access to new markets and customers
through new marketing and sales strategies, which we implement in our operating units. Our position along the value chains of
automation and digitalization allows us to further increase market penetration. Along these value chains, we have identified several
concrete growth fields in which we see our greatest long-term potential. Hence, we are combining and developing our resources and
capabilities for these growth fields.
Turning COVID-19 challenges into opportunities: The participation in governmental COVID-19 recovery programs such as the European
Union's "Next Generation EU" recovery plan is an opportunity for Siemens. There is also the chance to strengthen our customer relationship
through additional market offerings that specifically address use cases related directly to the COVID-19 pandemic. Potential growth areas
might arise through the optimization program "new normal" with, for example, more working flexibility for our employees.
Optimization of organization and processes: On the one hand, we leverage ideas to drive further improvements in our processes and
cost structure, such as common computing architecture for image processing or optimizing factory capacities for shorter lead times. On
the other hand, we see an opportunity of further penetrating markets by ramping up local business excellence (e.g. engineering) and
increasing local sourcing and local manufacturing.
Assessment of the overall opportunities situation: The most significant opportunity for Siemens is favorable political and regulatory
environment (including sustainability) as described above.
While our assessments of individual opportunities have changed during fiscal 2021 due to developments in the external environment,
changes in our business portfolio, our endeavors to profit from them and revision of our strategic plans, the overall opportunity situation
for Siemens did not change significantly as compared to the prior year.
The overarching objective of our accounting-related internal control and risk management system is to ensure that financial reporting is
conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of Siemens Group
as well as the Annual Financial Statements of Siemens AG as the parent company are prepared in accordance with all relevant regulations.
Our ERM approach is based on the globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway
Commission) Enterprise Risk Management - Integrating with Strategy and Performance (2017) and the ISO (International Organization
for Standardization) Standard 31000 (2018) and is adapted to Siemens requirements. The frameworks connect the ERM process with our
financial reporting process and our internal control system. They consider a company's strategy, the efficiency and effectiveness of its
business operations, the reliability of its financial reporting and compliance with relevant laws and regulations to be equally important.
Our accounting-related internal control system is based on the internationally recognized Internal Control - Integrated Framework (2013)
also developed by COSO. The two systems are complementary.
Cost of Sales
• The exclusion is used to grant holders of conversion or option rights or conversion or option obligations on Siemens shares a
compensation for the effects of dilution.
The issue price of the new shares/bonds is not significantly lower than the stock market price of the Siemens shares already listed or the
theoretical market price of the bonds computed in accordance with generally accepted actuarial methods (exclusion of subscription
rights, limited to 10% of the capital stock, in accordance with or by mutatis mutandis application of Section 186 para. 3 sentence 4
German Stock Corporation Act).
Liabilities and equity
Equity
Special reserve with an equity portion
Provisions
Provisions for pensions and similar commitments
Provisions for taxes and other provisions
Liabilities to banks
Trade payables, liabilities to affiliated companies and other liabilities
(1)%
Deferred income
21,216
18,917
12%
541
619
(13)%
12,372
4,220
16,592
11,700
Total liabilities and equity
102,975
101,487
Total assets
16,937
29%
2,297
8,786
(74)%
24,089
25,724
(6)%
184
133
39%
Deferred tax assets
1,243
1,034
20%
Active difference resulting from offsetting
51
85
(41)%
6%
4,323
(2)%
16,023
As of September 30, 2021, the Company's common stock totaled €2.550 billion. The capital stock is divided into 850 million registered
shares of no par value (Siemens shares). The shares are fully paid in. All shares confer the same rights and obligations. The shareholders'
rights and obligations are governed in detail by the provisions of the German Stock Corporation Act, in particular by Sections 12, 53a et
seq., 118 et seq. and 186 of the German Stock Corporation Act.
10.2 Restrictions on voting rights or transfer of shares
At the Shareholders' Meeting, each share of stock has one vote and accounts for the shareholder's proportionate share in the Company's
net income. An exception to this rule applies with regard to treasury shares held by the Company, which do not entitle the Company to
any rights. Under Section 136 of the German Stock Corporation Act the voting right of the affected shares is excluded by law.
Siemens shares issued to employees worldwide under the employee share programs implemented since the beginning of fiscal 2009, in
particular the Share Matching Plan, are freely transferable unless applicable local laws provide otherwise. Under the rules of the Share
Matching Plan, however, in order to receive one matching share free of charge for each three shares purchased, participants are required
to hold the shares purchased by them for a vesting period of several years, during which the participants must be continuously employed
by Siemens AG or any of its affiliated companies. The right to receive matching shares is forfeited if the purchased shares are sold,
transferred, hedged on, pledged or hypothecated in any way during the relevant vesting period.
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a sustained basis, powers of attorney allowing it to exercise the voting rights
for 10,716,740 shares (as of September 30, 2021) on behalf of members of the Siemens family. These shares are part of the total number
of shares held by the family's members. The powers of attorney are based on an agreement between the VSV and, among others, members
of the Siemens family. The shares are voted together by VSV, taking into account the suggestions of a family partnership established by
the family's members or of one of this partnership's governing bodies.
10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
removal of members of the Managing Board and governing amendment to the Articles of
Association
The appointment and removal of members of the Managing Board are subject to the provisions of Sections 84 and 85 of the German Stock
Corporation Act and Section 31 of the German Codetermination Act (Mitbestimmungsgesetz). According to Section 8 para. 1 of the Articles
of Association, the Managing Board is comprised of several members, the number of which is determined by the Supervisory Board.
According to Section 179 of the German Stock Corporation Act, any amendment to the Articles of Association requires a resolution of the
Shareholders' Meeting. The authority to adopt purely formal amendments to the Articles of Association was transferred to the Supervisory
Board under Section 13 para. 2 of the Articles of Association. In addition, by resolutions adopted during past Shareholders' Meetings, the
Supervisory Board has been authorized to amend Section 4 of the Articles of Association in accordance with the utilization of the
Authorized and Conditional Capitals, and after expiration of the then-applicable authorization and utilization period.
Resolutions of the Shareholders' Meeting require a simple majority vote, unless a greater majority is required by law (Section 23 para. 2 of
the Articles of Association). Pursuant to Section 179 para. 2 of the German Stock Corporation Act, amendments to the Articles of
Association require a majority of at least three-quarters of the capital stock represented at the time of the casting of the votes, unless
another capital majority is prescribed by the Articles of Association.
10.4 Powers of the Managing Board to issue and repurchase shares
The Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until February 2, 2026 by up
to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash (Authorized Capital 2021).
Subscription rights of existing shareholders are excluded. The new shares shall be offered exclusively to employees of the Company and
any of its affiliated companies. To the extent permitted by law, such employee shares may also be issued in such a manner that the
contribution to be paid on such shares is covered by that part of the annual net income which the Managing Board and the Supervisory
Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock Corporation Act.
Furthermore, the Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until January 29,
2024 by up to €510 million through the issuance of up to 170 million Siemens shares against cash contributions and/or contributions in
kind (Authorized Capital 2019).
As of September 30, 2021, the total unissued authorized capital of Siemens AG therefore consisted of €600 million nominal that may be
used, in installments with varying terms, by issuance of up to 200 million Siemens shares.
By resolutions of the Shareholders' Meetings on January 30, 2019 and February 5, 2020, the Managing Board is authorized to issue bonds
with conversion, exchange or option rights or with warrants attached, or a combination of these instruments, entitling the holders to
subscribe to up to 80 million and up to 60 million Siemens shares, respectively. Based on these two authorizations, the Company or its
affiliated companies may issue bonds until January 29, 2024 and February 4, 2025, respectively, each in an aggregate principal amount
of up to €15 billion. In order to grant shares of stock to holders/creditors of such convertible bonds or warrant bonds, the capital stock was
conditionally increased by resolutions of the Shareholders' Meetings in 2019 and 2020, by up to 80 million and up to 60 million Siemens
37
Combined Management Report
shares, respectively (Conditional Capitals 2019 and 2020), i.e. in total by up to €420 million through the issuance of up to 140 million
Siemens shares.
The new shares under Authorized Capital 2019 and the aforementioned bonds are to be issued against cash or non-cash contributions.
They are, as a matter of principle, to be offered to shareholders for subscription. The Managing Board is authorized to exclude, with the
approval of the Supervisory Board, subscription rights of shareholders in the event of capital increases against contributions in kind. In the
event of capital increases against contributions in cash, the Managing Board is authorized to exclude shareholders' subscription rights with
the approval of the Supervisory Board in the following cases:
.
•
10.1 Composition of common stock
The exclusion is necessary with regard to fractional amounts resulting from the subscription ratio.
explanatory report
Combined Management Report
4%
501
62,389
62,890
249
98
>200%
67,047
67,145
(7)%
(6)%
271
(8)%
101,487
102,975
(1)%
During fiscal 2021 Siemens contributed supplemental fundings to Siemens Pension-Trust e.V. and took measures under company law to
simplify the investment structure of pension assets, which for the most part had overall no impact on the carrying amount of the financial
assets as of September 2021 compared to the prior year. The supplemental fundings included stakes in Bentley Systems, Inc. in the amount
of €1.0 billion and in ChargePoint Holdings, Inc. in the amount of €0.3 billion, as well as zero-coupon receiver swaps in the amount of
€0.3 billion. The measures to simplify the investment structure included a transfer of investment funds at fair value of €4.8 billion
(including realization of hidden reserves) to shares in affiliated companies, which led to a disposal of securities with a carrying amount of
€4.1 billion in the fixed assets register. In addition to these transactions Siemens recorded the disposal of Flender GmbH in the fixed assets
register, at a carrying amount of €1.0 billion.
The change in cash and cash equivalents, other securities related to the liquidity management of the Corporate Treasury of Siemens
AG, which was focused not solely on the business activities of Siemens AG. The liquidity management is based on the financing policy of
the Siemens Group, which is aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity
cushion. Intra-group financing activities drove both an increase in receivables from affiliated companies, which resulted in higher
inventories, receivables and other assets, and lower liabilities to affiliated companies, which was the main reason for the reduction of
trade payables, liabilities to affiliated companies and other liabilities.
The increase in provisions for pensions and similar commitments was mainly due to recording of current service and interest costs and
to lower discount rates partly offset by payments for pensions and similar commitments.
The increase in equity was attributable to net income for the year of €5.1 billion and the transfer of €0.5 billion in treasury shares to
employees in connection with our share-based payments programs. These factors were partly offset by dividends paid in fiscal 2021 (for
fiscal 2020) of €2.8 billion and share buybacks during the year amounting to €0.5 billion (including a €0.4 billion final payment to the
commissioned bank). The equity ratio as of September 30, 2021 increased to 21%, from 18% a fiscal year earlier. For the disclosures in
accordance with Section 160 para. 1 no. 2 of the German Stock Corporation Act about treasury shares, refer to Note 15 of our Notes to
Annual Financial Statements for fiscal 2021.
9.3 Corporate Governance statement
The Corporate Governance statement pursuant to Sections 289f and 315d of the German Commercial Code is publicly available on the
company's website at siemens.de/corporate-governance.
36
10. Takeover-relevant information (pursuant to Sections 289a
and 315a of the German Commercial Code) and
Gross profit
At present, no risks have been identified that either individually or in combination could endanger our ability to continue as a going
Research and development expenses
Assets
(in millions of €)
Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
9.2 Net assets and financial position
35
The decrease in financial income, net was due primarily to lower income from investments, net, partly offset by a positive change in
other financial income (expenses), net. The primary factors in lower income from investments, net were the following: a profit transfer
agreement with Siemens Beteiligungen Inland GmbH, Germany, which reduced income by €0.9 billion; a decline in income from the
investment in Siemens Holdings plc, Ltd., United Kingdom, of €0.7 billion; and a decrease of €0.5 billion in income from Siemens Ltd,
China. Furthermore, fiscal 2020 included a gain of €2.1 billion from the disposal of Siemens Limited, India, which was partly offset by an
impairment of €1.3 billion on the stake in Siemens Energy AG. In contrast, a gain of €0.9 billion from the sale of Flender GmbH, Germany
in fiscal 2021 was recorded in income from investments, net. The positive change in other financial income (expenses), net included an
increase in gains from non-current securities by €0.5 billion and a reduction of expenses by €0.4 billion from impairments of loan
receivables related to an investment. Higher gains from non-current securities were driven by a transfer of investment funds and
corresponding realization of hidden reserves as mentioned below.
The change in other operating income (expenses), net, was mainly due to higher expenses in fiscal 2020, which included expenses
related to the valuation of an investment as well as expenses related to the spin-off of Siemens Energy.
The R&D intensity (R&D as a percentage of revenue) was 10%, on the same level as fiscal 2020. The research and development activities
of Siemens AG are fundamentally the same as for its corresponding business activities within the Siemens Group. Research and
development expenses in both periods related mainly to Digital Industries. On an average basis, we employed 7,000 people in R&D in
fiscal 2021.
Non-current assets
Research and development expenses and selling and general administrative expenses decreased due mainly to the above-mentioned
transfer of the business activities of Gas and Power.
The decrease of revenue and cost of sales was due mainly to the business activities of Gas and Power which, effective with the beginning
of calendar year 2020, were transferred to Siemens Energy Global GmbH & Co. KG in preparation of the Siemens Energy spin-off completed
in September 2020.
2,975
Unappropriated net income
14%
3,400
21%
(1,918)
22%
On a geographical basis, 76% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 17% in the Asia, Australia region
and 7% in the Americas region. Exports from Germany accounted for 54% of overall revenue. In fiscal 2021, orders for Siemens AG
amounted to €15.7 billion.
141
Intangible and tangible assets
Combined Management Report
21,792
Prepaid expenses
Cash and cash equivalents, other securities
Inventories, receivables and other assets
Current assets
0%
75,999
75,920
Financial assets
0%
74,852
(5)%
as percentage of revenue
1,068
2020
2021
% Change
Sep. 30,
74,877
171
1,122
5,270
(5)%
4,135
9%
(8)%
16,389
(12,032)
2020
2021
15,094
(10,960)
% Change
Fiscal year
Allocation to other retained earnings
Profit carried forward
Net income
Income taxes
Income from business activity
thereof Income from investments, net 5,303 (prior year 8,078)
Financial income, net
Other operating income (expenses), net
(2)%
Selling and general administrative expenses
27%
27%
4,357
(1,677)
5,147
n/a
78
(20)
0%
5,192
5,166
(12)%
(1,570)
5,797
6,557
(555)
(196)
14%
(3,490)
(2,999)
6%
65%
therein: Income tax effects
Remeasurements of defined benefit plans
Net income
(in millions of €)
|| 2. Consolidated Statements of Comprehensive Income
6,697
Fiscal year
2021
2020
4,200
57
2,123
148
(237)
Derivative financial instruments
(2,805)
1,587
Currency translation differences
(240)
2,210
Items that will not be reclassified to profit or loss
17
7
Income (loss) from investments accounted for using the equity method, net
(3)
(1)
therein: Income tax effects
5
30
Remeasurements of equity instruments
33
(45)
(261)
17
4.93
28
0.23
2,865
2,988
2,183
1,769
87,267
70,928
139,608
123,897
Liabilities and equity
Short-term debt and current maturities of long-term debt
16
7,821
6,562
Trade payables
8,832
7,873
Other current financial liabilities
1,731
1,958
Contract liabilities
10
6,697
4,200
Attributable to:
Non-controlling interests
1.31
4.70
6.28
28
5.00
7.68
0.23
1.32
4.77
6.36
7.59
therein: Income tax effects
6,161
537
Income from discontinued operations
Net income
Income from continuing operations
Diluted earnings per share
Net income
Income from discontinued operations
Income from continuing operations
Basic earnings per share
Shareholders of Siemens AG
170
4,030
31
3
Income (loss) from investments accounted for using the equity method, net
7,985
8,382
10
6,688
5,545
11
8,836
7,795
7
1,795
1,523
3,492
1,271
3
223
338
52,340
9
14,074
15,518
8
Other current assets
9,858
Assets classified as held for disposal
Total current assets
Goodwill
Other intangible assets
Property, plant and equipment
Other financial assets
52,968
Deferred tax assets
Total non-current assets
Total assets
Note
Sep 30,
2021
Sep 30,
2020
9,545
14,041
Other assets
3, 12
29,729
20,449
1,261
9,652
(47)
693
Shareholders of Siemens AG
Non-controlling interests
Attributable to:
Total comprehensive income
Consolidated Financial Statements
1,214
(2,986)
3,647
Other comprehensive income, net of income taxes
(2,746)
1,438
Items that may be reclassified subsequently to profit or loss
(89)
88
10,345
(38)
3. Consolidated Statements of Financial Position
Cash and cash equivalents
3,12
10,964
4,838
13
11,023
10,250
Investments accounted for using the equity method
4
(in millions of €)
Assets
7,539
14, 23
22,964
22,771
Current income tax assets
Inventories
Contract assets
Other current financial assets
Trade and other receivables
7,862
7,524
1,751
18
9,545
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations
at end of period
14,054
9,545
Cash and cash equivalents at end of period
12,391
13
14,041
14,054
1,663
(4,509)
Change in cash and cash equivalents
(525)
204
Effect of changes in exchange rates on cash and cash equivalents
(4,663)
Cash and cash equivalents at beginning of period
5
5. Consolidated Statements of Changes in Equity
Issued
capital
Dividends
Other comprehensive income, net of income taxes
Net income
Balance as of October 1, 2019
(in millions of €)
Total
equity
controlling
interests
Non
to share-
holders of
Siemens AG
Total equity
attributable
Treasury
shares
at cost
Consolidated Financial Statements
Derivative
financial
instruments
Equity
instruments
Currency
translation
differences
Retained
earnings
Capital
reserve
Effect of deconsolidation of Siemens Energy on cash and cash equivalents
3,172
785
Cash flows from financing activities - continuing and discontinued operations
8,316
Issuance of long-term debt
2,624
2,055
Re-issuance of treasury shares and other transactions with owners
(1,517)
(547)
Purchase of treasury shares
Cash flows from financing activities
(5,184)
(15,494)
Cash flows from investing activities - continuing and discontinued operations
(1,134)
1,698
Cash flows from investing activities - discontinued operations
(4,050)
(17,192)
10,255
Share-based payment
Repayment of long-term debt (including current maturities of long-term debt)
(4,472)
(1,095)
Cash flows from financing activities - discontinued operations
4,267
785
Cash flows from financing activities continuing operations
(208)
(285)
Dividends attributable to non-controlling interests
(3,174)
(2,804)
Dividends paid to shareholders of Siemens AG
(833)
(704)
Interest paid
1,592
(952)
Change in short-term debt and other financing activities
(4,294)
2,550
6,839
41,790
4,030
(4,629)
(115)
(42)
(1,292)
33,078
6,840
2,550
Balance as of September 30, 2020
(677)
(663)
(15)
(15)
Other changes in equity
1,969
1,603
366
365
36,390
1
3,433
Balance as of October 1, 2020
1,465
2,175
Other comprehensive income, net of income taxes
6,697
537
6,161
39,823
3,433
36,390
(4,629)
(115)
(42)
(1,292)
33,078
6,161
Net income
6,840
2,550
39,823
Cash flows from investing activities - continuing operations
Other transactions with non-controlling interests
(9,589)
(3,174)
(2,986)
(218)
(2,769)
111
(2,701)
(185)
4,200
170
4,030
51,508
2,858
48,650
(3,663)
(226)
(49)
1,409
(3,174)
(9,589)
(318)
(6)
(9,589)
Changes in equity resulting from major portfolio transactions
(2)
(2)
(2)
550
550
(1,511)
(1,511)
(1,511)
545
5
Disposal of equity instruments
Re-issuance of treasury shares
Purchase of treasury shares
(147)
(147)
(141)
(3,492)
1,174
985
Disposal of investments and financial assets for investment purposes
6,840
7,040
Total liabilities and equity
Total equity
Non-controlling interests
Treasury shares, at cost
Other components of equity
Retained earnings
Capital reserve
2,550
2,550
3, 19
84,074
90,333
49,957
50,381
1,808
39,607
1,925
33,078
(1,449)
Fiscal year
Consolidated Financial Statements
(in millions of €)
4. Consolidated Statements of Cash Flows
4
123,897
139,608
39,823
49,274
3,433
4,901
3
36,390
44,373
Total equity attributable to shareholders of Siemens AG
(4,629)
(4,804)
(19)
2021
769
Issued capital
Long-term debt
34,117
39,952
Total current liabilities
35
10
3
Liabilities associated with assets classified as held for disposal
6,209
7,628
15
Other current liabilities
2,281
1,809
Current income tax liabilities
1,674
2,263
16
679
40,879
Provisions for pensions and similar obligations
Equity
Total liabilities
Total non-current liabilities
Other liabilities
Other financial liabilities
2,352
1,723
18
Provisions
664
2,337
7
Deferred tax liabilities
6,360
2,839
Net income
17
38,005
Current provisions
2020
Interest (income) expenses, net
Cash flows from operating activities - continuing and discontinued operations
1,012
(113)
Cash flows from operating activities - discontinued operations
7,851
10,109
Cash flows from operating activities - continuing operations
1,347
1,369
Interest received
293
238
(1,632)
(2,324)
1,183
1,403
(500)
9,996
(463)
8,862
Additions to intangible assets and property, plant and equipment
218
2
Disposal of businesses, net of cash disposed
47
98
Disposal of intangibles and property, plant and equipment
(994)
(631)
Change in receivables from financing activities
(1,269)
(1,523)
Purchase of investments and financial assets for investment purposes
(1,727)
(14,391)
Acquisitions of businesses, net of cash acquired
(1,498)
(1,730)
Cash flows from investing activities
Income tax expenses
418
67
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
4,200
6,697
Net income
Cash flows from operating activities
Dividends received
Income taxes paid
Change in other assets and liabilities
Additions to assets leased to others in operating leases
Contract liabilities
Trade payables
Trade and other receivables
Inventories
Contract assets
Change in operating net working capital from
Other non-cash (income) expenses
(Income) loss related to investing activities
Income from discontinued operations, net of income taxes
1,132
(1,062)
Amortization, depreciation and impairments
1,286
214
(1,227)
(414)
(444)
(723)
(934)
373
586
(644)
(243)
(731)
(839)
1,346
1,861
3,098
3,075
(44)
44
156
3
(219)
Other changes in equity
Balance as of September 30, 2021
1
2,550
7,040
39,607
173
(13)
114
(179)
115
9
124
(4,804)
44,373
4,901
49,274
60
Consolidated Financial Statements
| 6. Notes to Consolidated Financial Statements
NOTE 1 Basis of presentation
2,325
The accompanying Consolidated Financial Statements present the operations of Siemens Aktiengesellschaft with registered offices in
Berlin (registry number HRB 12300) and Munich (registry number HRB 6684), Germany, and its subsidiaries (the Company or Siemens).
They have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as well
as with the additional requirements set forth in Section 315e (1) of the German Commercial Code (HGB). The financial statements are in
accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements were
authorized for issue by the Managing Board on November 30, 2021. Siemens prepares and reports its Consolidated Financial Statements
in euros (€). Due to rounding, numbers presented may not add up precisely to totals provided. Siemens is a German based multinational
focused technology company.
1,095
(45)
(178)
137
(63)
74
74
Purchase of treasury shares
Re-issuance of treasury shares
58
(547)
372
(547)
(547)
430
430
Disposal of equity instruments
Changes in equity resulting from major portfolio transactions
Other transactions with non-controlling interests
8
8
8
1,229
1,229
5
(174)
Share-based payment
note 2 Material accounting policies and critical accounting estimates
Business combinations - Cost of an acquisition is measured at the fair value of the assets given and liabilities incurred or assumed at the
date of exchange. Identifiable assets acquired and liabilities assumed in a business combination (including contingent liabilities) are
initially measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling
interests are measured at the proportional fair value of assets acquired and liabilities assumed (partial goodwill method). If there is no loss
of control, transactions with non-controlling interests are accounted for as equity transactions not affecting net income. At the date control
is lost, any retained equity interests are remeasured to fair value. In case of a written put option on non-controlling interests the Company
assesses whether the prerequisites for the transfer of present ownership interest are fulfilled at the balance sheet date. If the Company is
not the beneficial owner of the shares underlying the put option, the exercise of the put option will be assumed at each balance sheet
date and treated as equity transaction between shareholders with the recognition of a purchase liability at the respective exercise price.
The non-controlling interests participate in profits and losses during the reporting period.
Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses.
Depreciation expense is recognized using the straight-line method. The following useful lives are assumed:
Factory and office buildings
Other buildings
Technical machinery & equipment
Office & other equipment
Equipment leased to others
20 to 50 years
5 to 10 years
generally 10 years
generally 5 years
generally 3 to 7 years
Impairment of property, plant and equipment and other intangible assets - The Company reviews property, plant and equipment and
other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. In addition, intangible assets not yet available for use are subject to an annual impairment test. Impairment testing of
property, plant and equipment and other intangible assets involves the use of estimates in determining the assets' recoverable amount,
which can have a material impact on the respective values and ultimately the amount of any impairment.
Leases - A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. Further information on leases can be found in Notes 8, 13 and 16.
Lessor - Leases are classified as either finance or operating leases, determined based on whether substantially all the risks and rewards
incidental to ownership of an underlying asset are transferred. If this is the case, the lease is classified as a finance lease; if not, it is an
operating lease. Receivables from finance leases are recognized at an amount equal to the net investment in the lease. The assets
underlying the operating leases are presented in Property, plant and equipment and depreciated on a straight-line basis over their useful
lives or to their estimated residual value. Operating lease income is recognized on a straight-line basis over the lease term.
Lessee - Siemens recognizes right-of-use assets and lease liabilities for leases with a term of more than twelve months if the underlying
asset is not of low value. Payments for short-term and low-value leases are expensed over the lease term. Extension options are included
in the lease term if their exercise is reasonably certain. Right-of-use assets are measured at cost less accumulated depreciation and
impairment losses adjusted for any remeasurements. Right-of-use assets are depreciated under the straight-line method over the shorter
of the lease term and the useful life of the underlying assets. Lease liabilities are measured at the present value of the lease payments due
over the lease term, generally discounted using the incremental borrowing rate. Lease liabilities are subsequently measured at amortized
cost using the effective interest method. They are remeasured in case of modifications or reassessments of the lease.
Discontinued operations and non-current assets held for disposal - Discontinued operations are reported when a component of an
entity is classified as held for disposal or has been disposed of, if the component represents a separate major line of business or
geographical area of operations and is part of a single coordinated plan to disposal. A non-current asset or a disposal group is held for
disposal if its carrying amount will be recovered principally through a sale transaction or through a distribution to owners rather than
through continuing use. In the Consolidated Statements of Income and of Cash Flows, discontinued operations is reported separately from
continuing operations; prior periods are presented on a comparable basis. The disclosures in the Notes to the Consolidated Financial
Statements outside Note 3 relate to continuing operations or assets and liabilities not held for disposal. The determination of the fair value
less costs to sell includes the use of estimates and assumptions that tend to be uncertain.
Income taxes - Tax positions are calculated taking into consideration the respective local tax laws, relevant court decisions and applicable
tax authorities' views. Tax regulations can be complex and possibly subject to different interpretations of tax payers and local tax
authorities. Different interpretations of existing or new tax laws as a result of tax reforms or other tax legislative procedures may result in
additional tax payments for prior years and are taken into account based on management's considerations. Under the liability method,
deferred tax assets and liabilities are recognized for expected tax consequences of future periods attributable to differences between the
financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are recognized if sufficient
future taxable profit is available, including income from forecasted operating earnings, the reversal of existing taxable temporary
differences and available tax planning opportunities that Siemens would execute. As of each period-end, Siemens evaluates the
recoverability of deferred tax assets, based on taxable income of past periods and projected future taxable profits. As future developments
are uncertain and partly beyond Siemens's control, assumptions are necessary to estimate future taxable profits as well as the period in
which deferred tax assets will recover. Estimates are revised in the period in which there is sufficient evidence to revise the assumption.
Contract assets, contract liabilities, receivables - When either party to a contract with customers has performed, Siemens presents a
contract asset, a contract liability or a receivable depending on the relationship between Siemens' performance and the customer's
payment. Contract assets and liabilities are presented as current since incurred in the normal operating cycle. Receivables are recognized
when the right to consideration becomes unconditional. Valuation allowances for credit risks are made for contract assets and receivables
in accordance with the accounting policy for financial assets measured at amortized cost.
Inventories - Inventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally
determined based on an average or first-in, first-out method. Determining net realizable value of inventories involves accounting estimates
for quantity, technical and price risks.
-
Defined benefit plans Siemens measures the entitlements by applying the projected unit credit method. The approach reflects an
actuarially calculated net present value of the future benefit entitlement for services already rendered. In determining the net present
value of the future benefit entitlement for service already rendered (Defined Benefit Obligation (DBO)), the expected rates of future salary
9
1,062
Other intangible assets - The Company amortizes intangible assets with finite useful lives on a straight-line basis over their respective
estimated useful lives. Estimated useful lives for patents, licenses and other similar rights generally range from three to five years, except
for intangible assets with finite useful lives acquired in business combinations. Intangible assets acquired in business combinations
primarily consist of customer relationships and trademarks as well as technology. Useful lives in specific acquisitions ranged from four to
30 years for customer relationships and trademarks (in fiscal 2020 four to 20 years) and for technology from five to 22 years (in fiscal
2020 five to 18 years).
Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgments and the use of
assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting estimates
could change from period to period and have a material impact on the Company's results of operations, financial positions and cash flows.
Critical accounting estimates could also involve estimates where Siemens reasonably could have used a different estimate in the current
accounting period. Siemens cautions that future events often vary from forecasts and that estimates routinely require adjustment.
COVID-19 - Impacts of the pandemic coronavirus spread on Siemens' Consolidated Financial Statements are contingent on the further
evolution of virus variants, the progress of worldwide vaccinations and the vaccines' effectiveness. Potential impacts may also result from
increasingly phased out financial and non-financial measures originally taken by governments and organizations globally. Related impacts
could influence fair value and carrying amounts of assets and liabilities, amount and timing of results of operations and cash flows. Effects
vary considerably by region and customer industries. Siemens based its estimates and assumptions on existing knowledge and best
information available. We expect that related effects on Siemens' Consolidated Financial Statements will not reach a substantial degree.
Basis of consolidation - The Consolidated Financial Statements include the accounts of Siemens AG and its subsidiaries over which the
Company has control. Siemens controls an investee if it has power over the investee. In addition, Siemens is exposed to, or has rights to,
variable returns from the involvement with the investee and Siemens is able to use its power over the investee to affect the amount of
Siemens' return.
estimated growth rates and weighted average cost of capital. These estimates, including the methodology used, can have a material
impact on the respective values and ultimately the amount of any goodwill impairment.
8
Associates and joint ventures - Associates are companies over which Siemens has the ability to exercise significant influence over
operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights). Joint ventures are
entities over which Siemens and one or more parties have joint control. Joint control requires unanimous consent of the parties sharing
control in decision making on relevant activities.
Associates and joint ventures are recorded in the Consolidated Financial Statements using the equity method and are initially recognized
at cost. If the investment was retained in a transaction in which Siemens lost control of a subsidiary, the fair value of the investment
represents the cost on initial recognition. Siemens' share of its associate's or joint venture's post-acquisition profits or losses is recognized
in the Consolidated Statements of Income, and its share of post-acquisition changes in equity that have not been recognized in the
associate's or joint venture's profit or loss is recognized directly in equity. The cumulative post-acquisition changes also include effects
from fair value adjustments and are adjusted against the carrying amount of the investment. When Siemens' share of losses in an associate
or joint venture equals or exceeds its interest in the investment, Siemens does not recognize further losses, unless it incurs obligations or
makes payments on behalf of the associate or joint venture. The interest in an associate or joint venture is the carrying amount of the
investment together with any long term interests that, in substance, form part of Siemens' net investment in the associate or joint venture.
Siemens reviews associates and joint ventures for impairment whenever there is objective evidence that its investment is impaired, for
example a significant or prolonged decline in the fair value of the investment below its cost. This includes the use of estimates and
assumptions also related to observable valuation inputs that tend to be uncertain.
Foreign currency translation - Assets and liabilities of foreign subsidiaries, where the functional currency is other than the euro, are
translated using the spot exchange rate at the end of the reporting period, while the Consolidated Statements of Income are translated
using average exchange rates during the period. Differences arising from such translations are recognized within equity and reclassified
to net income when the gain or loss on disposal of the foreign subsidiary is recognized. The Consolidated Statements of Cash Flows are
translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the
end of the reporting period.
Foreign currency transaction - Transactions that are denominated in a currency other than the functional currency of an entity, are
recorded at that functional currency applying the spot exchange rate at the date when the underlying transactions are initially recognized.
At the end of the reporting period, foreign currency-denominated monetary assets and liabilities are revalued to functional currency
applying the spot exchange rate prevailing at that date. Gains and losses arising from these foreign currency revaluations are recognized
7
Consolidated Financial Statements
in net income. Those foreign currency-denominated transactions which are classified as non-monetary are remeasured using the historical
spot exchange rate.
Revenue recognition - Siemens recognizes revenue when, or as control over distinct goods or services is transferred to the customer; i.e.
when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits,
provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking our
customer's creditworthiness into account. Revenue is the transaction price Siemens expects to be entitled to. Variable consideration is
included in the transaction price if it is highly probable that a significant reversal of revenue will not occur once associated uncertainties
are resolved. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending
on which is expected to better predict the amount of variable consideration. Consideration is adjusted for the time value of money if the
period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing
benefit either to the customer or Siemens. If a contract contains more than one distinct good or service, the transaction price is allocated
to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company
reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over time.
Sales from construction-type contracts: Revenues are recognized over time under the percentage-of-completion method, based on the
percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense
immediately. Payment terms are usually 30 days from the date of invoice issued according to the contractual terms.
The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards
completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. These
significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory
risks, risks from supply chain constraints and other judgments. Under the percentage-of-completion method, changes in estimates may
lead to an increase or decrease of revenue. In addition, Siemens needs to assess whether the contract is expected to continue or whether
it is terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant
facts and circumstances relating to the contract are considered on an individual basis.
Revenues from services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-
line, as services are provided, i.e. under the percentage-of-completion method as described above. Payment terms are usually 30 days
from the date of invoice issued according to the contractual terms.
Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon delivery of the
goods. Invoices are issued at that point in time and are usually payable within 30 days. For licensing transactions granting the customer a
right to use Siemens' intellectual property, payment terms are usually 30 days from the date of invoice issued according to the contractual
terms.
Income from royalties: Royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement.
Income from interest - Interest is recognized using the effective interest method.
Functional costs - In general, operating expenses by types are assigned to the functions following the functional area of the
corresponding profit and cost centers. Amortization, depreciation and impairment of intangible assets and property, plant and equipment
are included in functional costs depending on the use of the assets.
Product-related expenses - Provisions for estimated costs related to product warranties are recorded in line item Cost of sales at the time
the related sale is recognized.
Research and development costs - Costs of research activities are expensed as incurred. Costs of development activities are capitalized
when the recognition criteria in IAS 38 are met. Capitalized development costs are stated at cost less accumulated amortization and
impairment losses with an amortization period of generally three to ten years.
Earnings per share - Basic earnings per share are computed by dividing income from continuing operations, income from discontinued
operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding
during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-
based payment plans.
Goodwill - Goodwill is not amortized, instead, goodwill is tested for impairment annually, as well as whenever there are events or changes
in circumstances (triggering events) which suggest that the carrying amount may not be recoverable. Goodwill is carried at cost less
accumulated impairment losses. The goodwill impairment test is performed at the level of a cash-generating unit or a group of cash-
generating units, generally represented by a segment. Siemens Healthineers is tested one level below the segment. This is the lowest level
at which goodwill is monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the cash-generating unit or the group
of cash-generating units that is expected to benefit from the synergies of the business combination. If the carrying amount of the cash-
generating unit or the group of cash-generating units, to which the goodwill is allocated, exceeds its recoverable amount, an impairment
loss on goodwill allocated to that (group of) cash-generating unit(s) is recognized. The recoverable amount is the higher of the cash-
generating unit's or the group of cash-generating units' fair value less costs to sell and its value in use. If either of these values exceeds the
carrying amount, it is not always necessary to determine both values. These values are generally determined based on discounted cash
flow calculations. Impairment losses on goodwill are not reversed in future periods.
The determination of the recoverable amount of a cash-generating unit or a group of cash-generating units to which goodwill is allocated
involves the use of estimates by management. The outcome predicted by these estimates is influenced e.g. by the successful integration
of acquired entities, volatility of capital markets, interest rate developments, foreign exchange rate fluctuations and the outlook on
economic trends. In determining recoverable amounts, discounted cash flow calculations generally use five-year projections (in
exceptional cases up to ten years) that are based on financial forecasts. Cash flow projections take into account past experience and
represent management's best estimate about future developments. Cash flows after the planning period are extrapolated using individual
growth rates. Key assumptions on which management has based its determination of fair value less costs to sell and value in use include
Consolidated Financial Statements
(3,088)
(178)
(2,804)
(431)
6
Other operating expenses
630
236
5
Other operating income
(10,682)
(11,189)
Selling and general administrative expenses
(4,569)
(4,859)
Research and development expenses
19,888
22,737
(39,527) (35,366)
55,254
62,265
2020
2021
Note
2,30
(396)
Gross profit
Income (loss) from investments accounted for using the equity method, net
(478)
Income from discontinued operations, net of income taxes
(284)
4,156
5,636
Income from continuing operations
(1,346)
(1,861)
7
Income tax expenses
5,502
7,496
Income from continuing operations before income taxes
641
Other financial income (expenses), net
(814)
(644)
Interest expenses
1,545
1,483
Interest income
(596)
4
Cost of sales
496
(in millions of €, per share amounts in €)
FOR FISCAL 2021
Statements*
Consolidated Financial
39
We are not aware of, nor have we during the last fiscal year been notified of, any shareholder directly or indirectly holding 10% or more
of the voting rights. There are no Siemens shares with special rights conferring powers of control. Shares of stock issued by Siemens AG
to employees under its employee share program and/or as share-based compensation are transferred to the employees. The beneficiary
employees who hold shares of employee stock may exercise their control rights in the same way as any other shareholder in accordance
with applicable laws and the Articles of Association.
10.7 Other takeover-relevant information
On September 18, 2019, the Supervisory Board of Siemens AG resolved that the contracts with members of the Managing Board should
not contain such right of termination in the future. This has already been taken into account in the case of contract extensions and in the
case of new contracts with the newly appointed members of the Managing Board as of October 1, 2020.
The contracts with the members of the Managing Board previously contained the right of the member to terminate his or her contract
with the Company for good cause in the event of a change of control that results in a substantial change in the position of a Managing
Board member (for example, due to a change in corporate strategy or a change in the Managing Board member's duties and
responsibilities). A change of control exists if one or several shareholders acting jointly or in concert acquire a majority of the voting rights
in Siemens AG and exercise a controlling influence, or if Siemens AG becomes a dependent enterprise as a result of entering into an
intercompany agreement within the meaning of Section 291 of the German Stock Corporation Act, or if Siemens AG is to be merged into
an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance
payment in the amount of no more than two years' compensation. The calculation of the annual compensation includes not only the base
compensation and the target amount for the bonus, but also the target amount for the stock awards, in each case based on the most
recent completed fiscal year prior to termination of the contract. The stock-based compensation components for which a firm commitment
already exists will remain unaffected. Additionally, the severance payments cover non-monetary benefits by including an amount of 5%
of the total severance amount. Severance payments will be reduced by 10% as a lump-sum allowance for discounted values and for income
earned elsewhere. However, this reduction will apply only to the portion of the severance payment that was calculated without taking
account of the first six months of the remaining term of the Managing Board member's contract. There is no entitlement to a severance
payment if the Managing Board member receives benefits from third parties in connection with a change of control. A right to terminate
the contract does not exist if the change of control occurs within a period of twelve months prior to a Managing Board member's
retirement.
10.6 Compensation agreements with members of the Managing Board or employees in the
event of a takeover bid
Framework agreements concluded by Siemens AG under International Swaps and Derivatives Association Inc. documentation (ISDA
Agreements) grant each counterparty a right of termination, including in certain cases of (i) a transformation (for example mergers and
changes of form), (ii) an asset transfer or (iii) acquisition of ownership interests that enables the acquirer to exercise control over Siemens
AG or its controlling bodies. Partially this right of termination exists only, if (1) the resulting entity fails to simultaneously assume Siemens
AG's obligations under the ISDA Agreements or (2) the resulting entity's creditworthiness is materially weaker than Siemens AG's
immediately prior to such event. Generally, ISDA Agreements are designed such that upon termination all outstanding payment claims
documented under them are to be netted.
The lines of credit, and the relevant loan agreements mentioned above provide their respective lenders with a right of termination in the
event that (1) Siemens AG becomes a subsidiary of another company or (2) a person or a group of persons acting in concert acquires
effective control over Siemens AG by being able to exercise decisive influence over its activities (Art. 3(2) of Council Regulation (EC) 139/
2004).
In addition, in March 2020 and in June 2019 respectively, a consolidated subsidiary as borrower and Siemens AG as guarantor entered
into a bilateral loan agreement, each of which has been drawn in the full amount of US$ 500 million. In February 2021, a consolidated
subsidiary as borrower entered into two bilateral loan agreements in the total amount of US$ 500 million; both loan agreements have
been guaranteed by Siemens AG and have been fully drawn.
In March 2021, Siemens AG entered into a bilateral loan agreement, which has been drawn in the full amount of € 500 million.
10.5 Significant agreements which take effect, alter or terminate upon a change of control of
the Company following a takeover bid
For details on the authorizations referred to above, especially with the restrictions to exclude subscription rights and the terms to include
shares when calculating such restrictions, please refer to the relevant resolution and to Section 4 of the Articles of Association.
Combined Management Report
29
3,647
Revenue
(2,804)
Dividends
* This document is an English language translation of the decisive German version and is not provided in
the European Single Electronic Format (ESEF). The legally required rendering in ESEF-format is filed in
German language with the operator of the German Federal Gazette and published in the German Federal
Gazette.
SIEMENS
As of September 30, 2021, Siemens AG maintained lines of credit in the amount of € 7.45 billion.
Consolidated Financial Statements
1. Consolidated Statements of Income
Table of contents
Fiscal year
Notes to Consolidated Financial Statements
Consolidated Statements of Changes in Equity
7
5.
Consolidated Statements of Cash Flows
4.
45
6
6.
5
3
1.
Consolidated Statements of Income
3
2.
Consolidated Financial Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
3.
4
Non-current liabilities
Net Assets
Current assets
Non-current assets excluding goodwill
Siemens interest in the net assets of Siemens Energy AG at fiscal year-end
Consolidation adjustments (including goodwill)
Carrying amount of Siemens Energy AG at end of fiscal year
22,602
Sep 30, 2021
35.1%
23,397
Siemens Energy AG
registered in Munich, Germany
Sep 30, 2020
35.1%
23,136
16,874
18,792
Current liabilities
attributable to shareholders of Siemens Energy AG
10
(4,523)
Equipment leased to others
Ownership interest
(571)
1,171
(4,078)
5,249
(2,523)
21,669
124
(206)
7,239
Office and other equipment
(273)
1,421
(3,699)
5,120
604
(in millions of €)
244
In fiscal 2021, share of profit (loss) from investments accounted for using the equity method includes a loss of €396 million (loss of €24
million in fiscal 2020) from Siemens Energy AG. In fiscal 2021, the loss includes Siemens' share of Siemens Energy AG's net losses of €(159)
million as well as effects from fair value adjustments at initial recognition of €(237) million.
116
193
355
1,862
92
359
123
907
540
510
95
Mar 10, 2021
Spin-off Siemens Energy AG in fiscal 2020
Liabilities associated with assets classified as held for disposal
Miscellaneous non-current liabilities
3,700
143
Below summarized financial information of Siemens Energy AG are disclosed at a 100 per cent basis. They are adjusted to align with
Siemens' accounting policies and to incorporate effects from fair value adjustments at initial recognition. These adjustments were
preliminary in fiscal 2020 and have been finalized in fiscal 2021.
Income from discontinued operations, net of income taxes includes €119 million from Siemens Energy AG in fiscal 2021, which are mainly
attributable to the reversal of income tax provisions.
Investments accounted for using the equity method
(596)
(478)
(590)
(21)
108
57
(114)
NOTE 4 Interests in other entities
(514)
2021
Fiscal year
Income (loss) from investments accounted for using the equity method, net
Impairment and reversals of impairment
Gains (losses) on sales, net
Share of profit (loss), net
(in millions of €)
2020
(168)
124
38
Sep 30,
NOTE 14 Other financial assets
In fiscal 2021 and 2020, income from operating leases is €668 million and €571 million, respectively, thereof from variable lease payments
€127 and €110 million, respectively.
1,586
1,505
186
166
129
Miscellaneous current liabilities
188
182
261
247
369
336
(in millions of €)
Loans receivable
Receivables from finance leases
Derivative financial instruments
22,771
22,964
623
710
1,670
1,556
2,044
454
1,552
4,700
14,189
14,446
2020
2021
Other
Equity instruments
4,245
656
449
2021
735
(1)
736
(418)
(780)
512
(39)
1,461
construction in progress
Advances to suppliers and
(524)
1,856
(1,826)
3,682
(545)
Property, plant and equipment
33,080
(951)
58
Sep 30,
After four years but not more than five years
More than five years
After one year but not more than two years
After two years but not more than three years
After three years but not more than four years
Within one year
(in millions of €)
Future minimum lease payments to be received under operating leases are:
In fiscal 2021 and 2020, expenses recognized for short-term leases are €50 million and €71 million, respectively; expenses for low-value
leases not accounted for under the right-of-use model are €21 million and €23 million, respectively.
2020
The gross carrying amount of Advances to suppliers and construction in progress includes €959 million and €639 million, respectively, of
property, plant and equipment under construction in fiscal 2021 and 2020. As of September 30, 2021 and 2020, contractual commitments
for purchases of property, plant and equipment are €625 million and €563 million, respectively. Right-of-use assets are presented in
Property, plant and equipment in accordance with their nature; right-of-use assets have a carrying amount of €2,641 million and €2,474
as of September 30, 2021 and 2020, respectively; additions are €901 million and €1,273 million and depreciation expense is €726 million
and €706 million in fiscal 2021 and 2020. Right-of-use assets mainly relate to leases of land and buildings with a carrying amount of
€2,320 million and €2,187 million as of September 30, 2021 and 2020, additions of €659 million and €1,029 million and depreciation
expense of €534 million and €509 million in fiscal 2021 and 2020. Equipment leased to others mainly relate to Technical machinery and
equipment as well as to Office and other equipment owned by Siemens with a carrying amount of €1,279 million and €404 million,
respectively, as of September 30, 2021 and €1,223 million and €448 million, respectively, as of September 30, 2020.
1 Opening balance as of October 1, 2019 including effect of adopting IFRS 16
(2,054)
10,250
(13,194)
23,443
(11,911)
3,168
2 Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
Other current financial liabilities
(8,286)
Assets classified as held for disposal
through
differences
carrying
amount
10/01/20191
Reclassi-
Additions Additions
FY 2021
928
(818)
Income (loss) from discontinued operations before income taxes
Disposal gain net of disposal costs
Expenses
Revenue
(in millions of €)
In October 2020, Siemens signed an agreement to sell 100% of its shares in Flender GmbH including Siemens' Wind Energy Generation
business (Flender) to The Carlyle Group, U.S. Both businesses were previously reported under Portfolio Companies. In the first quarter of
fiscal 2021, the businesses of Flender (the disposal group) met the criteria for classification as held for disposal as well as for discontinued
operation, and, accordingly, Siemens ceased depreciation and amortization of assets within the disposal group. Upon closing of the
transaction in March 2021, Siemens no longer controls Flender. The consideration was €1.875 billion. Derecognized net assets amounted
to €954 million. The results of Flender are reported as discontinued operations in the Consolidated Statements of Income and Cash Flows
for all periods presented:
Sale of Flender GmbH
In March 2021, Siemens Healthineers placed 53 million new shares to institutional investors, receiving gross proceeds of €2.3 billion and
increasing its share capital to €1.128 billion. Siemens did not participate in the placement, thus, Siemens' stake in Siemens Healthineers
decreased from 79% to 75%. The dilution is accounted for as equity transaction, which increased Non-controlling interests by €1.0 billion
and Total equity attributable to shareholders of Siemens AG by €1.3 billion (mainly due to an increase in Retained earnings of €1.2 billion).
Dilution of the stake in Siemens Healthineers
fications
In addition, Siemens closed several smaller acquisitions in fiscal 2021 and 2020 for a total purchase price of €429 million and €551 million,
respectively, mainly paid in cash. The (preliminary) purchase price allocations resulted in Other intangible assets of €147 million and
€263 million and Goodwill of €254 million and €298 million, respectively, which comprises intangible assets that are not separable such
as employee know-how and expected synergy effects. The purchase price allocation for some of the acquired businesses is preliminary, as
a detailed analysis of the assets and liabilities has not been finalized.
Retire-
ments²
Gross
carrying
amount
09/30/2020
419
(95)
3,885
Internally generated technology
(in millions of €)
2020
in fiscal
zation and
impairment
Deprecia-
tion/amorti-
amount
09/30/2020
Carrying
ment
ortization
and impair-
Accumu-
lated depre-
ciation/am-
nations
combi-
In August 2021, Siemens acquired all shares in Supplyframe Inc., USA (Supplyframe). Supplyframe is a design-to-source platform for the
global electronics value chain. The transaction provides value to both Supplyframe's and Siemens' customers through access to both
Siemens' offerings and Supplyframe's marketplace intelligence. The acquired business is integrated into Digital Industries. The
preliminary purchase price paid in cash is €556 million as of the acquisition date. The preliminary purchase price allocation as of the
acquisition date resulted in Other intangible assets of €111 million, thereof customer-related intangible assets and trademark rights
€83 million and technology €28 million as well as in liabilities of €87 million. Goodwill of €491 million comprises intangible assets that
are not separable such as employee know-how and expected synergy effects. The acquired business contributed Revenue of €11 million
and Net income of €(7) million for the period from its acquisition date to September 30, 2021, including earnings effects from the
purchase price allocation and integration costs. If Supplyframe had been included in the Consolidated Financial Statements since
October 1, 2020, Revenue and Net income, including earnings effects from the purchase price allocation and integration costs, would
have been €62,314 million and €6,694 million, respectively, in fiscal 2021.
activities. The gross contractual amounts of Trade and other receivables is €603 million, of which €24 million were expected to be
uncollectable at the date of acquisition. The gross contractual amount of loans and bonds receivables is €227 million, of which
€207 million are probably uncollectible at the acquisition date. The acquired business contributed Revenue of €1,241 million and a net loss
of €50 million for the period from the acquisition date to September 30, 2021, including earnings effects from the purchase price allocation
and integration costs. If Varian had been included in the Consolidated Financial Statements since October 1, 2020, Revenue and
Net income, including earnings effects from the purchase price allocation and integration costs, would have been €63.6 billion and
€6.6 billion, respectively, in fiscal 2021. The purchase price allocation of Varian is preliminary as, in particular, the allocation of intangible
assets including goodwill to currency areas is not finalized. Adjustments may lead to changes, such as, in intangible assets including
goodwill and in deferred tax liabilities.
Consolidated Financial Statements
allowance for loans and other long-term debt instruments primarily held at Financial Services (SFS) is measured according to a three-stage
impairment approach:
Consolidated Financial Statements
10
Valuation allowances are set up for expected credit losses, representing a forward-looking estimate of future credit losses involving
significant judgment. Expected credit loss is the gross carrying amount less collateral, multiplied by the probability of default and a factor
reflecting the loss in the event of default. Valuation allowances are not recognized when the gross carrying amount is sufficiently
collateralized. Probabilities of default are mainly derived from internal rating grades. A simplified approach is used to assess expected
credit losses from trade receivables, lease receivables and contract assets by applying their lifetime expected credit losses. The valuation
Financial assets measured at amortized cost: Loans, receivables and other debt instruments held in a hold-to-collect business model
with contractual cash flows that represent solely payments of principal and interest are measured at amortized cost using the effective
interest method less valuation allowances for expected credit losses.
Financial assets measured at fair value through other comprehensive income (FVOCI): are equity instruments for which Siemens
irrevocably elects to present subsequent fair value changes in OCI at initial recognition of the instrument. Unrealized gains and losses, net
of deferred income tax expenses, as well as gains and losses on the subsequent sale of the instruments are recognized in line item Other
comprehensive income, net of income taxes.
Financial assets measured at fair value through profit and loss (FVTPL): a) mandatorily measured at FVTPL: Debt financial assets are
measured at FVTPL if the business model they are held in is not a hold-to-collect or a hold-and-sell business model, or if their contractual
cash flows do not represent solely payments of principal and interest. Equity instruments are measured at FVTPL unless the FVOCI-option
is elected. b) Financial assets designated as measured at FVTPL are irrevocably designated at initial recognition if the designation
significantly reduces accounting mismatches that would otherwise arise if assets and liabilities as well as recognizing gains (losses) were
measured on different bases.
Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy
before the regular retirement date or from an entity's decision to terminate the employment. Termination benefits in accordance with IAS
19, Employee Benefits, are recognized as a liability and an expense when the entity can no longer withdraw the offer of those benefits.
Financial instruments - A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Based on their contractual cash flow characteristics and the business model they are held in, financial
instruments are classified as financial assets and financial liabilities measured at cost or amortized cost, measured at fair value, loan
commitments, contract assets and receivables from finance leases. Regular way purchases or sales of financial assets are accounted for at
the trade date. Initially, financial instruments are recognized at fair value and net of transaction costs, if not categorized at FVTPL.
Subsequently, financial assets and liabilities are measured according to the category to which they are assigned to:
Legal Proceedings often involve complex legal issues and are subject to substantial uncertainties. Accordingly, considerable judgment is
part of determining whether it is probable that there is a present obligation as a result of a past event at the end of the reporting period,
whether it is probable that such a Legal Proceeding will result in an outflow of resources and whether the amount of the obligation can
be reliably estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be
necessary, to record a provision for an ongoing Legal Proceeding or to adjust the amount of a previously recognized provision. Upon
resolution of a Legal Proceeding, Siemens may incur charges in excess of the recorded provisions for such matters. The outcome of Legal
Proceedings may have a material effect on Siemens' financial position, its results of operations and/or its cash flows.
Significant estimates are involved in the determination of provisions related to onerous contracts, warranty costs, asset retirement
obligations, legal and regulatory proceedings as well as governmental investigations (Legal Proceedings). Siemens records a provision for
onerous contracts with customers when current estimates of total estimated costs exceed estimated revenue. Onerous contracts with
customers are identified by monitoring the progress of the project and updating the estimates which requires significant judgment relating
to achieving certain performance standards as well as estimates involving warranty costs and estimates regarding project delays including
the assessment of responsibility splits between the contract partners for these delays.
Provisions - A provision is recognized in the Statement of Financial Position when it is probable that the Company has a present legal or
constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized at
present value by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of
money. When a contract becomes onerous, the present obligation under the contract is recognized as a provision.
Remeasurements comprise actuarial gains and losses as well as the difference between the return on plan assets and the amounts included
in net interest on the net defined benefit liability (asset). They are recognized in Other comprehensive income, net of income taxes.
Actuarial valuations rely on key assumptions including discount rates, expected compensation increases, rate of pension progression and
mortality rates. Discount rates used are determined by reference to yields on high-quality corporate bonds of appropriate duration and
currency at the end of the reporting period. In case such yields are not available, discount rates are based on government bonds yields.
Due to changing market, economic and social conditions, the underlying key assumptions may differ from actual developments.
Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
assets at period-end. If the performance of the underlying assets is lower than a guaranteed return, the DBO is measured by projecting
forward the contributions at the guaranteed fixed return and discounting back to a present value.
Service cost, past service cost and settlement gains (losses) for pensions and similar obligations as well as administration costs unrelated
to the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized
immediately in profit or loss. For unfunded plans, the amount in line item Provisions for pensions and similar obligations equals the DBO.
For funded plans, Siemens offsets the fair value of the plan assets with the DBO. Siemens recognizes the net amount, after adjustments
for effects relating to any asset ceiling.
increases and expected rates of future pension progression are considered. The assumptions used for the calculation of the DBO as of the
period-end of the preceding fiscal year are used to determine the calculation of service cost and interest income and expense of the
following year. Significant plans apply individual spot rates from full discount rate curves to determine service cost and interest expense.
The net interest income or expense for the fiscal year will be based on the discount rate for the respective year multiplied by the net
defined benefit liability (asset) at the preceding fiscal year's period-end date.
Consolidated Financial Statements
Stage 1: At inception, twelve-month expected credit losses are recognized based on a twelve months probability of default.
Stage 2: If the credit risk of a financial asset increases significantly without being credit-impaired, lifetime expected credit losses are
recognized based on a lifetime probability of default. A significant increase in credit risk is determined for each individual financial
instrument using internal credit ratings. A rating deterioration does not trigger a transfer into Stage 2, if the credit rating remains within
the investment grade range. More than 30 days past due payments will not be transferred into Stage 2, if the delay is not credit-risk-
related.
Stage 3: If the financial asset is credit-impaired, valuation allowances equal lifetime expected credit losses. A financial asset is considered
credit-impaired when there is observable information about significant financial difficulties and a high vulnerability to default, however,
the definition of default is not yet met. Impairment triggers include liquidity problems, a request for debt restructuring or a breach of
contract. A credit-risk driven contractual modification always results in a credit-impaired financial asset.
Financial assets are written off as uncollectible if recovery appears unlikely. Generally, if the limitation period expired, when a debtor's
sworn statement of affairs is received, or when the receivable is not pursued due to its minor value. Receivables are written off when
bankruptcy proceedings close.
11
On April 15, 2021, Siemens completed the acquisition of all shares in Varian Medical Systems, Inc., USA (Varian). Varian is active in the
field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications. The acquired business is
integrated into Siemens Healthineers. Varian thus offers a good complement to Siemens Healthineers' businesses in medical imaging,
laboratory diagnostics and interventional procedures. The purchase price paid in cash amounted to US$16.4 billion (€13.9 billion as of the
acquisition date). The preliminary purchase price allocation as of the acquisition date resulted in the following assets and liabilities:
Cash and cash equivalents €0.6 billion, Trade and other receivables €0.6 billion, Inventories €0.8 billion, various other
current assets €0.4 billion, Goodwill €8.0 billion, Other intangible assets €6.3 billion, Property, plant and equipment €0.5 billion,
miscellaneous assets €0.2 billion, Trade payables €0.2 billion, Contract liabilities €0.7 billion, Current income tax liabilities €0.2 billion,
Other current liabilities €0.3 billion, Deferred tax liabilities €1.6 billion and miscellaneous liabilities €0.5 billion. Resulting intangible assets
mainly relate to technologies for oncology solutions, customer relationships, and the acquired order backlog. As of the acquisition date,
goodwill was allocated to the groups of cash-generating units Varian €7.5 billion and Imaging €0.5 billion in accordance with the expected
synergies. Goodwill relates to inseparable intangible assets such as synergy effects and employee know-how. Synergies from the
acquisition are mainly expected from broader regional coverage of the sales network, cross-selling opportunities into our existing customer
base and from expanded integrated service offerings (e.g. "Oncology-as-a-Service" program) and value partnerships, and joint product
innovation. In addition, the business combination is expected to generate cost synergies in the administrative field and in procurement
Acquisitions
NOTE 3 Acquisitions, dispositions and discontinued operations
The presentation of certain prior-year information has been reclassified to conform to the current year
Cash flow hedges: The effective portion of changes in the fair value of derivative instruments designated as cash flow hedges are
recognized in line item Other comprehensive income, net of income taxes, and any ineffective portion is recognized immediately in net
income. Amounts accumulated in equity are reclassified into net income in the same periods in which the hedged item affects net income.
Share-based payment - Share-based payment awards at Siemens are predominately designed as equity-settled. Fair value is measured
at grant date and is expensed over the vesting period. Fair value is determined as the market price of the underlying shares, considering
dividends during the vesting period the grantees are not entitled to as well as market conditions and non-vesting conditions, if applicable.
Plans granting the rights to receive subsidiary shares constitute own shares and, accordingly, are accounted as equity-settled.
Prior-year information
presentation.
Fair value hedges: The carrying amount of the hedged item is adjusted by the gain or loss attributable to the hedged risk. Where an
unrecognized firm commitment is designated as hedged item, the subsequent cumulative change in its fair value is recognized as a
separate financial asset or liability with corresponding gain or loss recognized in net income. For hedged items carried at amortized cost,
the adjustment is amortized until maturity of the hedged item. For hedged firm commitments the initial carrying amount of the assets or
liabilities that result from meeting the firm commitments are adjusted to include the cumulative changes in the fair value that were
previously recognized as separate financial assets or liabilities.
(753)
Derivative financial instruments - Derivative financial instruments, such as foreign currency exchange contracts and interest rate swap
contracts are measured at fair value unless they are designated as hedging instruments, for which hedge accounting is applied. Changes
in the fair value of derivative financial instruments are recognized either in net income or, in the case of a cash flow hedge, in line item
Other comprehensive income, net of income taxes (applicable deferred income tax). Certain derivative instruments embedded in host
contracts are also accounted for separately as derivatives.
except for derivative financial instruments, Siemens measures financial liabilities at amortized cost using the
-
Financial liabilities
Loan Commitments Expected credit losses for irrevocable loan commitments are determined using the three-stage impairment
approach for financial assets measured at amortized cost and recognized as a liability.
-
Cash and cash equivalents - The Company considers all highly liquid investments with less than three months maturity from the date of
acquisition to be cash equivalents. Cash and cash equivalents are measured at cost.
A financial asset is derecognized when the rights to cash flows expire or the financial asset is transferred to another party. Significant
modifications of contractual terms of a financial asset measured at amortized cost result in derecognition and recognition of a new
financial asset; for insignificant modifications, the carrying amount of the financial asset is adjusted without derecognition.
effective interest method.
3,456
(1,741)
1,714
Other income taxes
Income taxes on ordinary activities
170
995
(5)
885
1,885
(1,710)
FY 2020
222
288
7
(233)
9,360
Technical machinery and equipment
(685)
(8)
(36)
(40)
Income (loss) from discontinued operations, net of income taxes
Miscellaneous current and non-current assets
Property, plant and equipment
Goodwill
Inventories
Other current financial assets
Trade and other receivables
Cash and cash equivalents
5,067
(in millions of €)
12
The carrying amounts of the major classes of assets and liabilities derecognized were as follows:
134
946
thereof attributable to Siemens AG shareholders
134
946
Consolidated Financial Statements
Trade payables
8,656 (3,589)
396
(333)
9,434
Customer relationships and trademarks
(443)
1,729
(2,902)
4,631
(2,618)
70
373
(202)
7,008
licenses and similar rights
Acquired technology including patents,
(194)
331
9
(4,401)
5,037 (3,642)
1,108
40
(306)
11,319
Land and buildings
(952)
4,838
(3,902)
13,124
495
704
(630)
20,326
Other intangible assets
(315)
1,395
(7,772)
business
748
10,155
(in millions of €)
Internally generated technology
3,456
22
277
(51)
3,704
(1,910)
1,794
(208)
Acquired technology including patents,
licenses and similar rights
4,631
in fiscal
2021
138
43
(243)
7,144
(3,158)
3,987
(458)
Customer relationships
and trademarks
5,037
176
3,978
(1,051)
8,139
2,576
zation and
impairment
tion/amorti-
Deprecia-
Imaging of Siemens Healthineers
Smart Infrastructure
Sep 30, 2020
Terminal
value growth
After-tax
Goodwill
rate
6,732
1.7%
5,827
1.7%
discount rate
8.5%
7.0%
2,114
1.5%
7.5%
The sensitivity analysis for the groups of cash-generating units to which a significant amount of goodwill is allocated was based on a
reduction in after-tax future cash flows by 10% or an increase in after-tax discount rates by one percentage point or a reduction in the
terminal value growth rate by one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill
in any of these groups of cash-generating units.
NOTE 13 Other intangible assets and property, plant and equipment
Gross Translation
carrying differences
amount
10/01/2020
Additions Additions
through
Reclassi-
fications
Retire-
ments¹
Gross
business
combi-
carrying
amount
09/30/2021
Accumu-
lated depre-
nations
ciation/am-
ortization
and impair-
Carrying
amount
09/30/2021
ment
(2,956)
Digital Industries
5,184
Other intangible assets
75
85
511
81
(595)
5,406
(4,164)
1,242
(582)
Equipment leased to others
3,682
76
14
5,249
626
(538)
3,860
(1,979)
1,882
(511)
Advances to suppliers and
construction in progress
736
16
47
711
(420)
Property, plant and equipment
1
Office and other equipment
(270)
1,421
13,124
335
6,553
319
(1,345)
18,987
(8,023)
10,964
(1,004)
Land and buildings
8,656
126
349
756
195
(629)
9,454
(4,029)
5,425
(707)
Technical machinery and equipment
5,120
86
73
136
142
(732)
4,826
(3,405)
(338)
(in millions of €)
Revenue figures in the detailed forecast planning period of the groups of cash-generating units to which a significant amount of goodwill
is allocated are based on average revenue growth rates (excluding portfolio effects) of between 7.3% and 9.3% (3.1% and 6.1% in fiscal
2020).
7.5%
2020
5,085
4,904
1,132
1,256
398
798
1,370
1,424
7,985
8,382
16
Consolidated Financial Statements
2021
NOTE 10 Contract assets and liabilities
NOTE 11 Inventories
(in millions of €)
Raw materials and supplies
Work in progress
Finished goods and products held for resale
Advances to suppliers
Sep 30,
2021
2020
1,974
1,796
3,421
3,043
2,825
As of September 30, 2021 and 2020, amounts expected to be settled after twelve months are €1,319 million and €960 million for contract
assets and €1,824 million and €1,112 million for contract liabilities, respectively. In fiscal 2021, contract assets and liabilities increased by
€141 million and €724 million, respectively, due to business combinations (mainly Varian). In fiscal 2021 and 2020, revenue includes
€4,966 million and €4,616 million, respectively, which was included in contract liabilities at the beginning of the fiscal year.
Sep 30,
Other
Derivative financial instruments
717
7,914
7,153
Future minimum lease payments reconcile to the net investment in the lease as follows:
Sep 30,
(in millions of €)
2021
2020
Future minimum lease payments
7,914
7,153
Less: Unearned finance income relating to future minimum lease payments
(867)
(778)
Present value of future minimum lease payments
7,047
6,375
Plus present value of unguaranteed residual value
115
100
Net investment in the lease
7,162
6,475
Investments in finance leases primarily relate to industrial machinery, medical equipment, transportation systems, equipment for
information technology and office machines.
In fiscal 2021 and 2020, finance income on the net investment in the lease is €412 million and €398 million.
NOTE 9 Other current financial assets
(in millions of €)
Loans receivable
Interest-bearing debt securities
2,355
616
600
8,836
22
(100)
99
(271)
1,688
1,666
20,449
29,729
30,160
20,449
Siemens performs the mandatory annual impairment test in the three months ended September 30. Key assumptions on which Siemens
based its determinations of the fair value less costs to sell for the cash-generating units or groups of cash-generating units include terminal
value growth rates up to 1.7% in fiscal 2021 and fiscal 2020, respectively and after-tax discount rates of 5.5% to 12.0% in fiscal 2021 and
5.5% to 12.5% in fiscal 2020.
To estimate the fair value less costs to sell of the cash-generating units or groups of cash-generating units, cash flows were projected for
the next five years (in exceptional cases up to ten years) based on past experience, actual operating results and management's best
estimate about future developments as well as market assumptions. The determined fair value of the cash-generating units or groups of
cash-generating units is assigned to level 3 of the fair value hierarchy.
The fair value less costs to sell is mainly driven by the terminal value, which is particularly sensitive to changes in the assumptions on the
terminal value growth rate and discount rate. Both assumptions are determined individually for each cash-generating unit or group of
cash-generating units. Discount rates are based on the weighted average cost of capital (WACC). Siemens Financial Services' discount rate
represents its specific cost of equity. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In
addition, the discount rates reflect the current market assessment of the risks specific to each cash-generating unit or group of cash-
generating units by taking into account specific peer group information on beta factors, leverage and cost of debt as well as country
specific premiums. The parameters for calculating the discount rates are based on external sources of information. The peer group is
subject to an annual review and adjusted, if necessary. Terminal value growth rates take into consideration external macroeconomic
sources of data and industry specific trends.
17
Consolidated Financial Statements
The following table presents key assumptions used to determine fair value less costs to sell for impairment test purposes for the groups of
cash-generating units to which a significant amount of goodwill is allocated:
(in millions of €)
Varian of Siemens Healthineers
Digital Industries
Imaging of Siemens Healthineers
Sep 30, 2021
Terminal
value growth
Goodwill
rate
7,692
1.7%
7,417
1.7%
After-tax
discount rate
7.8%
8.5%
6,525
1.7%
1,938
23,443
1,666
Balance at begin of fiscal year
7,795
Cost of sales includes inventories recognized as expense amounting to €39,227 million and €35,017 million, respectively, in fiscal 2021
and 2020. Compared to prior year, write-downs increased by €61 million as of September 30, 2021. As of September 30, 2020, write-
downs decreased by €18 million compared to FY 2019.
NOTE 12 Goodwill
(in millions of €)
Cost
Balance at begin of fiscal year
Translation differences and other
Fiscal year
2021
2020
22,115
32,098
657
(1,642)
Acquisitions and purchase accounting adjustments
8,768
1,247
Dispositions and reclassifications to assets classified as held for disposal
(123)
(9,588)
Balance at fiscal year-end
31,417
22,115
Accumulated impairment losses and other changes
Balance at begin of fiscal year
Translation differences and other
Impairment losses recognized during the period
Dispositions and reclassifications to assets classified as held for disposal
Balance at fiscal year-end
Carrying amount
Balance at fiscal year-end
422
379
2,739
(217)
211
1,563
1,650
2020
2021
Fiscal year
Income tax expenses
Deferred taxes
Current taxes
(in millions of €)
Income tax expenses (benefits) consist of the following:
NOTE 7 Income taxes
1,861
Other operating expenses in fiscal 2021 and 2020 include losses on the sale of businesses as well as effects from insurance, personnel,
legal and regulatory matters.
In fiscal 2021 and 2020, Other operating income mainly includes gains on sales of property, plant and equipment of €73 million and €308
million, respectively, as well as insurance related income. Fiscal 2020 included gains on the sales of businesses of €177 million.
NOTE 5 Other operating income
(233)
632
(598)
825
2.446
700
1,423
1.746
14,460
17.997
132
192
NOTE 6 Other operating expenses
1,346
Current income tax expenses in fiscal 2021 and 2020 include adjustments recognized for current taxes of prior years in the amount of
€(359) million and €(64) million, respectively. The deferred tax expenses (benefits) in fiscal 2021 and 2020 include tax effects of the
origination and reversal of temporary differences of €94 million and €(289) million, respectively.
In Germany, the calculation of current taxes is based on a combined tax rate of 31%, consisting of a corporate tax rate of 15%, a solidarity
surcharge thereon of 5.5% and an average trade tax rate of 15%. For foreign subsidiaries, current taxes are calculated based on the local
tax law and applicable tax rates in the individual foreign countries. Deferred tax assets and liabilities in Germany and abroad are measured
at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
2020
2021
Fiscal year
Deferred tax balances and expenses (benefits) developed as follows in fiscal 2021 and 2020:
Total deferred taxes, net
Tax loss carryforwards and tax credits
Non-current assets and liabilities
Current assets and liabilities
Pensions and similar obligations
Intangible assets
Deferred taxes due to temporary differences
(in millions of €)
Deferred income tax assets and (liabilities) on a net basis are summarized as follows:
Actual income tax expenses
Other, net (primarily German trade tax differentials)
Tax effect of investments accounted for using the equity method
Foreign tax rate differential
Change in tax rates
Change in realizability of deferred tax assets and tax credits
Taxes for prior years
Tax-free income
Non-deductible expenses
Increase (decrease) in income taxes resulting from:
Expected income tax expenses
(in millions of €)
Current and deferred income tax expenses differ from the amounts computed by applying a combined statutory German income tax rate
of 31% as follows:
Consolidated Financial Statements
14
±
241
2,324
409
Fiscal year 2021
(278)
Total comprehensive income, net of income taxes, attributable to Siemens (2020: since initial recognition on Sep. 25)
(2,630)
(793)
Item Loans receivable primarily relate to long-term loan transactions of SFS.
attributable to shareholders of Siemens Energy AG
(2,993)
(867)
Total comprehensive income (loss), net of income taxes
(1,120)
369
(1,873)
(1,236)
(24)
Income (loss) from continuing operations, net of income taxes
Other comprehensive income, net of income taxes
28,482
Revenue
Fiscal year 2020
Fiscal year 2021
6,645
6,352
2,527
3,009
4,118
3,343
11,731
9,525
12,179
27,457
13
Consolidated Financial Statements
Siemens Energy AG is globally active in the transmission and generation of electrical power and is publicly listed. The market capitalization
of Siemens Energy is €16.6 billion and €16.5 billion, respectively, as of September 30, 2021 and 2020.
5,294
15,758
7,289
10,065
14,827
31,338
10,268
10,824
2,623
4,031
21%
Sep 30, 2020
Sep 30, 2021
25%
Siemens Healthineers AG
registered in Munich, Germany
Total comprehensive income, net of income taxes
Total cash flows
Other comprehensive income, net of income taxes
Income (loss) from continuing operations, net of income taxes
Revenue
Dividends paid to non-controlling interests
Net income attributable to non-controlling interests
Non-current liabilities
Current liabilities
Non-current assets
Current assets
Accumulated non-controlling interests
Ownership interests held by non-controlling interests
(in millions of €)
Summarized financial information, in accordance with IFRS and before inter-company eliminations, is presented below.
Subsidiary with material non-controlling interests
Fiscal year 2020
1,705
607
655
12,071
13,267
2020
2021
Sep 30,
Trade receivables from the sale of goods and services
Receivables from finance leases
(in millions of €)
NOTE 8 Trade and other receivables
An uncertain tax regulation arising from a foreign tax reform may result in potential future tax payments amounting to a middle three-
digit million euro range. Due to the low probability and the character of a contingent liability, no tax liability was recognized.
1,192
1,690
(588)
(55)
2,250
435
1,346
1,861
2020
2021
Fiscal year
Income and expenses recognized directly in equity
Discontinued operations
Continuing operations
(in millions of €)
Including items charged or credited directly to equity and the expenses (benefits) from continuing and discontinued operations, the
income tax expenses (benefits) consist of the following:
Consolidated Financial Statements
15
Siemens has not recognized deferred tax liabilities for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
of €31,628 million and €25,003 million, respectively in fiscal 2021 and 2020, because the earnings are intended to be permanently
reinvested in the subsidiaries.
(116)
2,003
15,518
14,074
(35)
(2,529)
1,055
24,601
(1)
(13,578)
1,053
11,023
(2,071)
'Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
18
Consolidated Financial Statements
Gross
Translation
452
732
807
1,156
1,284
1,685
1,911
2,441
2,711
2020
2021
After four years but not more than five years
More than five years
After one year but not more than two years
After two years but not more than three years
After three years but not more than four years
Within one year
(in millions of €)
Sep 30,
Future minimum lease payments to be received are as follows:
In fiscal 2021 and 2020, the long-term portion of receivables from finance leases is reported in Other financial assets amounting to €4,700
million and €4,245 million, respectively.
As of September 30, 2021 and 2020, €82 million and €221 million respectively, expire over the periods to 2029.
The amount of €2,280 million for tax loss carryforwards for which no deferred tax asset has been recognized does include material loss
carryforwards for local taxes only.
2,364
2,474
2,324
527
760
898
(417)
(600)
362
2,921
(1,302)
(2,931)
2,724
437
2020
2021
Sep 30,
1,346
1,861
(109)
(91)
33
147
(437)
(496)
7
54
(75)
100
(56)
(398)
(377)
(386)
Fiscal year
568
8,080
Balance at beginning of fiscal year of deferred tax (assets) liabilities
2,172
2,280
2020
192
194
2021
Sep 30,
Tax loss carryforwards
Deductible temporary differences
(in millions of €)
Deferred tax assets have not been recognized with respect of the following items (gross amounts):
(2,324)
(527)
Balance at end of fiscal year of deferred tax (assets) liabilities
(6)
(49)
(301)
61
1,620
8
(217)
211
15
Other
Changes due to Siemens Energy
Additions from acquisitions not impacting net income
Changes in items of the Consolidated Statements of Comprehensive Income
Income taxes presented in the Consolidated Statements of Income
(1,869)
2020
2021
(2,324)
(in millions of €)
7,514
19
(2,243)
1,697
1,750
US$
6.125%/2006/August 2026/US$ fixed-rate instruments
23,449
20,867
491
450
£
522
450
£
0.875%/2020/June 2023/GBP fixed-rate instruments
Total Debt Issuance Program
998
1,000
€
998
1,000
€
997
1,000
€
998
1,000
€
1,496
1,500
US$
1,750
1,718
2.9%/2015/May 2022/US$-fixed-rate-instruments
3.25%/2015/May 2025/US$ fixed-rate-instruments
4.4%/2015/May 2045/US$ fixed-rate-instruments
1.7% /2016/September 2021/US$-fixed-rate-instruments
2.0%/2016/September 2023/US$-fixed-rate-instruments
2.35%/2016/October 2026/US$-fixed-rate-instruments
3.3%/2016/September 2046/US$-fixed-rate-instruments
US$
638
750
US$
646
750
US$
939
1,100
US$
1,476
1,750
US$
€
1,493
US$
1,401
1,500
US$
1,369
1,500
US$
1,493
1,750
US$
1,511
1,750
US$
1,750
1,498
1,500
€
0.0%/2020/February 2023/EUR fixed-rate instruments
1,256
1,250
€
1,251
1,250
€
3m EURIBOR+0.7%/2019/December 2021/EUR floating-rate instrument
991
1,000
€
991
1,000
€
€
993
1,000
€
994
1,000
€
503
500
€
503
500
€
1,002
0.5%/2019/September 2034/EUR fixed-rate instruments
1,700
1,250
€
929
850
₤
985
850
£
747
750
€
748
750
€
996
1,252
1,000
997
1,000
€
0.25%/2020/February 2029/EUR fixed-rate instruments
0.5%/2020/February 2032/EUR fixed-rate instruments
1.0%/2020/February 2025/GBP fixed-rate instruments
0.125%/2020/June 2022/EUR fixed-rate instruments
0.25%/2020/June 2024/EUR fixed-rate instruments
0.375%/2020/June 2026/EUR fixed-rate instruments
997
1,000
€
998
1,000
€
0.0%/2020/February 2026/EUR fixed-rate instruments
1,253
1,250
€
1,000
1,463
1,700
U.K.
In the US, the Siemens Pension Plans are sponsored, which for the most part have been frozen to new entrants and to future benefit
accruals, except for interest credits on cash balance accounts. Siemens has appointed the Investment Committee as the named fiduciary
for the management of the assets of the Plans. The Plans' assets are held in Master Trusts and the trustees of the Master Trusts are
responsible for the administration of the assets of the trust, taking directions from the Investment Committee. The Plans are subject to the
funding requirements under the Employee Retirement Income Security Act of 1974 as amended (ERISA). There is a regulatory requirement
to maintain a minimum funding level of 80% in the defined benefit plans in order to avoid benefit restrictions. At their discretion,
sponsoring employers may contribute in excess of this regulatory requirement. Annual contributions are calculated by independent
actuaries.
U.S.
In Germany, pension benefits are provided through the following plans: BSAV (Beitragsorientierte Siemens Altersversorgung), frozen
legacy plans as well as deferred compensation plans. The majority of active employees participate in the BSAV. Those benefits are
predominantly based on notional contributions and the return on the corresponding assets of this plan, subject to a minimum return
guaranteed by the employer. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially
eliminate the effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk and
longevity risk. The pension plans are funded via contractual trust arrangements (CTA). In Germany no legal or regulatory minimum funding
requirements apply.
The defined benefit plans open to new entrants are based predominantly on contributions made by the Company. Only to a certain extent,
those plans are affected by longevity, inflation and compensation increases and take into account country specific differences. The
Company's major plans are funded with assets in segregated entities. In accordance with local laws these plans are managed in the interest
of the beneficiaries by way of contractual trust agreements with each separate legal entity. The defined benefit plans cover 442,000
participants, including 178,000 actives, 84,000 deferreds with vested benefits and 180,000 retirees and surviving dependents.
Germany
Defined benefit plans
NOTE 17 Post-employment benefits
Siemens has a US$9.0 billion (€7.8 billion and €7.7 billion as of September 30, 2021 and 2020) commercial paper program in place
including US$ extendible notes capabilities as of September 30, 2021 and 2020. As of September 30, 2021 and 2020, US$15 million (€13
million) and US$2.3 billion (€2.0 billion), respectively, were outstanding. Siemens' commercial papers have a maturity of generally less
than 90 days. Interest rates ranged from 0.05% to 0.21% in fiscal 2021 and from 0.06% to 1.98% in fiscal 2020.
Commercial paper program
As of September 30, 2021 and 2020, five respectively two bilateral term loan facilities are outstanding (in aggregate € 1.8 billion and
€0.85 billion). In fiscal 2021 three bilateral term loan facilities were newly signed: one bilateral €500 million term loan facility maturing
in March 2022 with a one-year extension option; one bilateral US$150 million term loan facility (€130 million) maturing in February 2022
with a one-year extension option and one bilateral US$350 million term loan facility (€302 million) maturing in February 2022 with a one-
year extension option. One existing bilateral US$500 million term loan facility (€432 million) has a maturity until March 2024 with a one-
year extension option remaining and the second existing bilateral US$500 million term loan facility (€432 million) has a maturity until
June 2024.
Assignable and term loans
US$ Bonds - In September 2021, the 1.7% US$1.1 billion fixed-rate instruments were redeemed at face value. In March 2021, Siemens
issued instruments totaling US$10.0 billion (€8.6 billion at September 30, 2021) in seven tranches.
Debt Issuance Program - The Company has a program for the issuance of debt instruments in place under which, as of September 30,
2021, up to €30.0 billion of instruments can be issued (€25.0 billion as of September 30, 2020). As of September 30, 2021, €20.8 billion
in notional amounts were issued and are outstanding (€23.2 billion as of September 30, 2020). In March 2021 the 1.75% €1.25 billion
fixed-rate instrument was redeemed at face value. In September 2021, the US$ 400 million floating rate instruments were redeemed at
face value. In September 2021 the 0.0% €1.0 billion fixed-rate instrument was redeemed at face value.
Consolidated Financial Statements
22
38,265
43,372
1 Includes adjustments for fair value hedge accounting.
Total
14,816
22,505
1,284
1,500
US$
2.875%/2021/March 2041/US$ fixed-rate-instruments
Total US$ Bonds
1,503
1,750
Pension benefits are mainly offered through the Siemens Benefit Scheme for which, until the start of retirement, an inflation increase of
the majority of accrued benefits is mandatory. The required funding is determined by a funding valuation carried out every third year
based on legal requirements. Due to deviating guidelines for the determination of the discount rates, the technical funding deficit is usually
larger than the IFRS funding deficit. To reduce the deficit Siemens entered into an agreement with the trustees to provide annual payments
of £31 (€35) million until fiscal 2033. The agreement also provides for a cumulative advance payment by Siemens AG compensating the
remaining annual payments at the date of early termination of the agreement due to cancellation or insolvency.
Switzerland
Following the Swiss law of occupational benefits (BVG) each employer has to grant post-employment benefits for qualifying employees.
Accordingly, Siemens in Switzerland sponsors several cash balance plans. These plans are administered by external foundations. The board
of the main foundation is composed of equally many employer and employee representatives. The board of the foundation is responsible
for investment policy and asset management, as well as for any changes in the plan rules and the determination of contributions to finance
the benefits. The Company is required to make total contributions at least as high as the sum of the employee contributions set out in the
23
2020
2021
2020
2021
2020
2021
Other³
Interest income
Interest expenses
Current service cost
Balance at begin of fiscal year
(in millions of €)
Fiscal year
US$
Fiscal year
Fiscal year
(1 - 11 + 111)
(III)
(II)
(DBO)²
(I)
Net defined benefit
balance
ceiling
Effects of asset
Fair value of
plan assets
Defined benefit
obligation
Development of the defined benefit plans¹
plan rules. In case of an underfunded plan the Company together with the employees may be asked to pay supplementary contributions
according to a well-defined framework of recovery measures.
Consolidated Financial Statements
Fiscal year
2.15%/2021/March 2031/US$ fixed-rate-instruments
1,074
1,250
915
1,000
US$
902
1,000
US$
3.125%/2017/March 2024/US$ fixed-rate-instruments
725
850
US$
734
850
US$
3.4%/2017/March 2027/US$ fixed-rate-instruments
US$ 3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
1,000
US$
873
1,000
US$
2.7%/2017/March 2022/US$ fixed-rate-instruments
846
1,000
US$
856
1,000
US$
1,446
884
US$
US$
1,077
US$
1.7%/2021/March 2028/US$ fixed-rate-instruments
1,505
1,750
US$
1.2%/2021/March 2026/US$ fixed-rate-instruments
1,293
1,500
US$
0.65%/2021/March 2024/US$ fixed-rate-instruments
862
1,000
US$
1,250
Compounded SOFR+0.43%/2021/March 2024/US$ floating-rate instruments
1,250
US$
0.4%/2021/March 2023/US$ fixed-rate-instruments
1,269
1,500
US$
1,283
1,500
US$
4.2%/2017/March 2047/US fixed-rate-instruments
1,064
1,250
US$
1,078
€
963
800
6
(9)
(1,957)
2,076
2,282
(42)
22
67
839
1,397
5,867
5,726
5
110
37,505
(5,758)
(242)
461
34,728 8,316
3,537 (3,511)
changes 09/30/2021
other
Fair value
changes
Reclassifi-
cations and
Foreign
currency
translation
(Acquisi-
tions)/Dis-
positions
10/01/2020
Non-cash changes
116
2,829
(745)
92
changes 09/30/2020
other
Reclassifi-
cations and
Fair value
changes
Foreign
currency
translation
(1,276)
29,176 10,256
4,029 (3,959)
(Acquisi-
tions)/Dis-
positions
10/01/2019
Non-cash changes
Cash flows
Total debt
Lease liabilities (current and non-current)
Other financial indebtness (current and non-current)
Cash flows
Loans from banks (current and non-current)
Non-current notes and bonds
(in millions of €)
In addition, other financing activities resulted in €130 million cash flows in fiscal 2021.
48,700
659
(236)
610
159
2,941
44,567
2,929
726
26
Current notes and bonds
Total debt
Lease liabilities (current and non-current)
Other financial indebtness (current and non-current)
2021
2020
2021
2020
5,867
3,537
37,505
34,728
1,183
321
1,100
1,076
70
Sep 30,
701
46
55
2,228
2,146
7,821
6,562
40,879
38,005
Lease liabilities
Total debt
In fiscal 2021 and 2020, Siemens recognized interest expenses on lease liabilities of €43 million and €39 million and expenses relating to
variable lease payments not included in the measurement of lease liabilities of €64 million and €100 million, respectively. In fiscal 2021
and 2020, cash flows to which Siemens is potentially exposed and which are not reflected in the measurement of lease liabilities relate
primarily to lease contracts entered into, however which have not yet commenced as well as to extension options whose exercise is not
yet reasonably certain totaling €2.9 billion and €2.6 billion, respectively, and, in addition, to variable lease payments mainly relating to
incidental and operating costs for buildings leased by Siemens, for which no significant fluctuations are expected in the future.
Changes in liabilities arising from financing activities
(in millions of €)
Non-current notes and bonds
2,021
683
120
Sep 30,
Sep 30,
NOTE 15 Other current liabilities
Consolidated Financial Statements
Sep 30,
(in millions of €)
Liabilities to personnel
2021
2020
5,375
4,304
Deferred Income
Accruals for pending invoices
Other
96
Sep 30,
108
518
1,616
1,280
7,628
6,209
Other includes miscellaneous tax liabilities of €742 million and €576 million, respectively, in fiscal 2021 and 2020.
NOTE 16 Debt
(in millions of €)
Notes and bonds
Loans from banks
Other financial indebtedness
Current debt
Non-current debt
541
(3,549)
34,728
(46)
750
€
998
1,000
€
999
1,000
€
342
400
US$
84
100
747
US$
100
US$
998
1,000
€
998
1,000
€
1,254
1,250
-
€
700
85
650
€
746
€
884
800
€
882
800
€
846
800
€
690
650
€
750
673
€
764
750
€
759
750
€
994
1,000
€
994
1,000
€
650
Current notes and bonds
£
650
1,191
124
(1,865)
(2,123)
7,664
39,576
2,829
1,351
(108)
2,076
24
-
(209)
44,567
(1)
(735)
3,233
1,388
875
1,397
(144)
-
(225)
(1,387)
891
2,262
3,537
3,509
4
(911)
743
In addition, other financing activities resulted in €(99) million cash flows in fiscal 2020.
As of September 30, 2021 and 2020, Siemens has €7.45 billion and €22.95 billion lines of credit, thereof unused €7.45 billion and €22.95
billion, respectively. In fiscal 2021, the unused €7.0 billion syndicated credit facility maturing in 2025 was extended to mature in 2026
£
383
350
£
350
£
406
millions of €1
(in millions)
millions of €1
(in millions)
2.75%/2012/September 2025/GBP fixed-rate instruments
3.75%/2012/September 2042/GBP fixed-rate instruments
1.75%/2013/March 2021/EUR fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
2014/September 2021/US$ floating-rate instruments
0.375%/2018/September 2023/EUR fixed-rate instruments
1.0%/2018/September 2027/EUR fixed-rate instruments
1.375%/2018/September 2030/EUR fixed-rate instruments
0.3%/2019/February 2024/EUR fixed-rate instruments
0.9%/2019/February 2028/EUR fixed-rate instruments
1.25%/2019/February 2031/EUR fixed-rate instruments
1.75%/2019/February 2039/EUR fixed-rate instruments
0.0%/2019/September 2021/EUR fixed-rate instruments
0.0%/2019/September 2024/EUR fixed-rate instruments
0.125%/2019/September 2029/EUR fixed-rate instruments
(interest/issued/maturity)
Credit facilities
amount in
amount in
Notional amount
Carrying
Sep 30, 2020
Currency
Carrying
Currency
Sep 30, 2021
Consolidated Financial Statements
Notes and bonds
21
with no extension option remaining. The €3.0 billion unused syndicated credit facility matured in December 2020. The €12.5 billion
unused syndicated bridge facility to secure Siemens Healthineers AG's financing of the acquisition of Varian Medical Systems, Inc. was
cancelled by Siemens in March 2021. In September 2021, the unused €450 million revolving bilateral credit facility was extended to
September 2022. The facilities are for general corporate purposes.
Consolidated Financial Statements
20
Notional amount
2020
2021
40,317
(100)
(98)
(375)
Usage
1,195
424
3
134
633
2,352
898
690
183
(199)
581
1,369
702
380
1,574
Total
Other
Asset
retirement
obligations
risks
Warranties
Additions
thereof: non-current
Balance as of October 1, 2020
(in millions of €)
4,026
losses and
(773)
(246)
199
138
539
thereof: non-current
3,985
1,552
577
351
1,505
23
115
3
(2)
Reversals
(93)
(24)
(24)
Accretion expense and effect of changes in discount rates
24
7
1
4
12
Translation differences
(486)
(164)
(8)
(68)
Other changes including reclassifications to held for disposal and disposition of those entities
Balance as of September 30, 2021
847
Order
related
Amounts recognized as expenses for defined contribution plans are €484 million and €710 million in fiscal 2021 and 2020, respectively.
Contributions to state plans amount to €1,449 million and €1,844 million in fiscal 2021 and 2020. Amounts are based on continuing and
discontinued operations.
Derivatives
Multi strategy funds
Alternative investments
Corporate bonds
Government bonds
Fixed income securities
(in millions of €)
Equity securities
Consolidated Financial Statements
Disaggregation of plan assets
55
25
As a significant risk, the Company considers a decline in the plans' funded status due to adverse developments of plan assets and/or defined
benefit obligations resulting from changing parameters. Accordingly, Siemens implemented a risk management concept aligned with the
defined benefit obligations (Asset Liability Matching). Risk management is based on a worldwide defined risk threshold (Value at Risk).
The concept, the Value at Risk and the asset development including the investment strategy are monitored and adjusted on an ongoing
basis under consultation of senior external experts. Independent asset managers are selected based on quantitative and qualitative
analyses, which include their performance and risk evaluation. Derivatives are used to reduce risks as part of risk management.
Asset Liability Matching Strategies
Cash and cash equivalents
As in prior years, sensitivity determinations apply the same methodology as applied for the determination of the post-employment benefit
obligation. Sensitivities reflect changes in the DBO solely for the assumption changed.
(1,367)
1,689
2,412
(90)
(2,134)
95
2,259
(89)
(1,386)
1,559
95
(2,045)
2020
2021
Rate of pension progression
Rate of compensation increase
Discount rate
The DBO effect of a 10% reduction in mortality rates for all beneficiaries would be an increase of €1,196 million and €1,285 million,
respectively, as of September 30, 2021 and 2020.
NOTE 18 Provisions
Insurance contracts
Sep 30,
Defined contribution plans and state plans
Employer contributions expected to be paid to defined benefit plans in fiscal 2022 are €212 million. Over the next ten fiscal years, average
annual benefit payments of €1,754 million and €1,730 million, respectively, are expected as of September 30, 2021 and 2020. The
weighted average duration of the DBO for Siemens defined benefit plans was 12 and 13 years, respectively, as of September 30, 2021 and
2020.
Future cash flows
Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by
price service agencies. The fixed income securities are traded in active markets and almost all fixed income securities are investment grade.
Alternative investments include hedge funds, private equity and real estate investments, thereof real estate used by the Company with a
fair value of €530 million and €527 million, respectively, as of September 30, 2021 and 2020. Multi strategy funds mainly comprise
absolute return funds and diversified growth funds that invest in various asset classes within a single fund and aim to stabilize return and
reduce volatility. Derivatives predominantly consist of financial instruments for hedging interest rate risk and inflation risk.
29,970
33,543
277
297
2,565
2,690
813
547
750
Other assets
Total
1,510
4,288
4,078
4,627
9,583
10,030
3,583
3,782
13,166
13,811
5,166
5,773
2020
2021
3,154
(in millions of €)
1,723
The Company is subject to asset retirement obligations related to certain items of property, plant and equipment. Such asset retirement
obligations are primarily attributable to environmental clean-up costs (disclosed in Corporate items of the Segment information) and to
costs primarily associated with the removal of leasehold improvements at the end of the lease term.
A+
A1
A+
A1
Ratings
S&P
Global
Sep 30, 2020
Moody's
Investors
Service
S&P
Global
Ratings
Service
Investors
Sep 30, 2021
Moody's
NOTE 21 Commitments and contingencies
Short-term debt
P-1
Long-term debt
9.46
9.56
25,267
26,519
2,672
2,774
2020
2021
Sep 30,
Sep 30,
Debt to equity ratio
Siemens Financial Services debt
Allocated equity
Equity allocated to SFS differs from the carrying amount of equity as it is mainly allocated based on the risks of the underlying business.
Siemens' current corporate credit ratings are:
(in millions of €)
A-1+
A-1+
29
For Legal Proceedings information required under IAS 37, Provisions, Contingent Liabilities and Contingent Assets is not disclosed if the
Company concludes that disclosure can be expected to seriously prejudice the outcome of the matter.
Some of these Legal Proceedings could result in adverse decisions for Siemens, which may have material effects on its business activities
as well as its financial position, results of operations and cash flows.
Siemens is involved in numerous Legal Proceedings in various jurisdictions. These Legal Proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual
cases this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. In addition,
further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be extended. Asserted claims are generally
subject to interest rates.
As previously reported, in June 2015, Siemens Ltda. appealed to the Supreme Court against a decision of a previous court to suspend
Siemens Ltda. from participating in public tenders and signing contracts with public administrations in Brazil for a five year term based on
alleged irregularities in calendar year 1999 and 2004 in public tenders with the Brazilian Postal authority. In June 2018, the court accepted
Siemens' appeal and declared the earlier instance decision as void. In June 2021, the court referred the case back to the court of first
instance. In February 2018, the Ministério Público in Brasilia filed a lawsuit based on the same set of facts, mainly claiming the exclusion
of Siemens Ltda. from public tenders for a ten year term. Siemens Ltda. is defending itself against the lawsuit. Siemens Ltda. is currently
not excluded from participating in public tenders.
As previously reported, in May 2014, the Public Affairs Office (Ministério Público) São Paulo initiated a lawsuit against Siemens Ltda. as
well as other companies and several individuals claiming, inter alia, damages in an amount of BRL2.5 billion (approximately €399 million
as of September 2021) plus adjustments for inflation and related interest in relation to train refurbishment contracts entered into between
2008 and 2011. In January 2015, the district court of São Paulo admitted a lawsuit of the State of São Paulo and two customers against
Siemens Ltda., Siemens AG and other companies and individuals claiming damages in an unspecified amount. In March 2015, the district
court of São Paulo admitted a lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other companies
claiming, inter alia, damages in an amount of BRL487 million (approximately €78 million as of September 2021) plus adjustments for
inflation and related interest in relation to train maintenance contracts entered into in 2000 and 2002. In September 2015, the district
court of São Paulo admitted another lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other
companies claiming, inter alia, damages in an amount of BRL918 million (approximately €147 million as of September 2021) plus
adjustments for inflation and related interest in relation to train maintenance contracts entered into in 2006 and 2007. Siemens is
defending itself against these actions. It cannot be excluded that further significant damage claims will be brought by customers or the
state against Siemens.
As previously reported, in July 2008, Hellenic Telecommunications Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
district court of Munich, Germany, seeking to compel Siemens AG to disclose the outcome of its internal investigations with respect to
OTE. OTE seeks to obtain information with respect to allegations of undue influence and/or acts of bribery in connection with contracts
concluded between Siemens AG and OTE from calendar year 1992 to 2006. At the end of July 2010, OTE expanded its claim and requested
payment of damages by Siemens AG of at least €57 million to OTE for alleged bribery payments to OTE employees. In October 2014, OTE
increased its damage claim to the amount of at least €68 million. Siemens AG continues to defend itself against the expanded claim.
Proceedings out of or in connection with alleged compliance violations
NOTE 22 Legal proceedings
million for which Siemens holds reimbursement rights towards Siemens Energy; the related contract liability amount for parent company
guarantees is generally reduced using the straight-line method over the planned term of the underlying delivery or service agreement. As
of September 30, 2021 and 2020, the Company accrued €51 million and €1 million, respectively, relating to performance guarantees.
As of September 30, 2021 and 2020, in addition to guarantees disclosed in the table above, there are contingent liabilities of €475 million
and €405 million which mainly result from other guarantees, legal proceedings and from joint and several liabilities of consortia, in
particular from the construction of a power plant in Finland. Other guarantees include €189 million and €261 million for which Siemens
holds reimbursement rights towards Siemens Energy.
Consolidated Financial Statements
28
Furthermore, Siemens issues performance guarantees, which mainly include performance bonds. In the event of non-fulfillment of
contractual obligations by the primary obligor, Siemens will be required to pay up to an agreed-upon maximum amount. These agreements
typically have terms of up to ten years. As of September 30, 2021 and 2020, Performance guarantees include €14,508 million and €27,425
P-1
Item Credit guarantees covers the financial obligations of third parties generally in cases where Siemens is the vendor and (or) contractual
partner or Siemens is liable for obligations of associated companies accounted for using the equity method. Additionally, credit guarantees
are issued in the course of the SFS business. Credit guarantees generally provide that in the event of default or non-payment by the primary
debtor, Siemens will be required to settle such financial obligations. The maximum amount of these guarantees is equal to the outstanding
balance of the credit or, in case a credit line is subject to variable utilization, the nominal amount of the credit line. These guarantees have
typically residual terms of up to four years. The Company held collateral mainly through inventories and trade receivables. As of September
30, 2021 and 2020, Credit guarantees include €124 million and €271 million for which Siemens holds reimbursement rights towards
Siemens Energy. Siemens accrued €3 million and €18 million relating to credit guarantees as of September 30, 2021 and 2020,
respectively.
15,646
27,917
15,116
604
530
2020
2021
Sep 30,
Sep 30,
Performance guarantees
Credit guarantees
(in millions of €)
The following table presents the undiscounted amount of maximum potential future payments for major groups of guarantees:
28,521
The majority of the Company's provisions are generally expected to result in cash outflows during the next five years.
Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted
construction, sales and leasing contracts.
The SFS business is capital intensive and operates with a larger amount of debt to finance its operations compared to the industrial
business.
1 Debt is generally reported with a value representing approximately the amount to be repaid. Accordingly, debt in a hedging relationship is adjusted for fair values of interest hedges as well as for foreign currency hedge effects;
the latter commencing with financing the acquisition of Varian Medical Systems, Inc. in fiscal 2021. Siemens deducts resulting changes in fair value, to derive an amount of debt that approximates the amount that will be repaid.
Less: Current interest bearing debt securities
(9,545) (14,041)
38,005
40,879
6,562
7,821
2020
2021
Less: Cash and cash equivalents
Plus: Long-term debt
Short-term debt and current maturities of long-term debt
(in millions of €)
Sep 30,
(1,132)
Consolidated Financial Statements
A key consideration of our capital structure management is to maintain ready access to capital markets through various debt instruments
and to sustain our ability to repay and service our debt obligations over time. In order to achieve this, Siemens intended to maintain an
Industrial net debt divided by EBITDA (continued operations) ratio of up to 1.0 as of September 30, 2021 and 2020, respectively. In line
with our updated Financial Framework we target an Industrial net debt divided by EBITDA (continuing operations) ratio of up to 1.5 for
fiscal 2022 and beyond. The ratio indicates the approximate number of years that would be needed to cover the Industrial net debt through
Income from continuing operations, excluding interest, other financial income (expenses), taxes, depreciation, amortization and
impairments. The fiscal 2020 ratio is disclosed as computed in the prior year, it is disclosed before retrospective classification of
discontinued operation.
NOTE 20 Additional capital disclosures
Dividends paid per share were €3.50 and €3.90, respectively, in fiscal 2021 and 2020. The Managing Board and the Supervisory Board
propose to distribute a dividend of €4.00 per share to holders entitled to dividends, in total representing approximately €3.2 billion in
expected payments. Payment of the proposed dividend is contingent upon approval at the Shareholders' Meeting on February 10, 2022.
In November 2018, Siemens announced a share-buyback program of up to €3 billion. The program ceased in September 2021. On June
24, 2021, Siemens announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal
2022.
As of September 30, 2021 and 2020, total authorized capital of Siemens AG is €600 million nominal issuable in installments based on
various time-limited authorizations, by issuance of up to 200 million registered shares of no par value. Siemens AG's conditional capital is
€420.6 million or 140.2 million shares as of September 30, 2021 and 2020. Primarily, it can be used to serve convertible bonds or warrants
under warrant bonds that could or can be issued based on various time-limited authorizations approved by the respective Shareholders'
Meeting.
Share based payment expenses increased Capital reserve by €294 million and €295 million (including non-controlling interests),
respectively, in fiscal 2021 and 2020. In connection with the settlement of share based payment awards Siemens treasury shares (at cost)
were transferred to employees of €226 million in fiscal 2021 and €310 million in fiscal 2020 which decreased Capital reserve and Retained
earnings by €165 million and €61 million, respectively in 2021 and by €218 million and €92 million in fiscal 2020.
In fiscal 2021 and 2020, Siemens repurchased 976,346 shares and 19,071,746 shares, respectively. In fiscal 2021 and 2020, Siemens
transferred 4,022,053 and 5,613,506 treasury shares, respectively. As of September 30, 2021 and 2020, the Company has treasury shares
of 47,644,581 and 50,690,288 respectively.
Siemens' issued capital is divided into 850 million registered shares with no par value and a notional value of €3.00 per share as of
September 30, 2021 and 2020, respectively. The shares are paid in full. At the Shareholders' Meeting, each share has one vote and
accounts for the shareholders' proportionate share in the Company's net income. All shares confer the same rights and obligations.
NOTE 19 Equity
Other includes provisions for life and industrial business reinsurance contracts (liability, property, construction) in connection with the
Siemens Energy business of €487 million and €499 million as of September 30, 2021 and 2020; thereof life €248 million and €262 million
and industrial business €239 million and €237 million, respectively, as of September 30, 2021 and 2020. The provisions are for incurred
and reported insurance losses as well as for incurred, hence, not yet reported insurance losses as of fiscal year-end. The provision is
determined using actuarial standard valuation methodologies, which are parameterized based on historical loss data. Life reinsurance
contracts have an average term of 20 years, whereas the cash outflows for the industrial business reinsurance contracts are expected
within the next five years. Other also includes provisions for Legal Proceedings, as far as the risks that are subject to such Legal Proceedings
are not already covered by project accounting. Provisions for Legal Proceedings amounted to €251 million and €248 million as of
September 30, 2021 and 2020, respectively. Furthermore, Other includes provision for indemnifications in connection with dispositions
of businesses of €96 million and €87 million as of September 30, 2021 and 2020. Such indemnifications may protect the buyer from
potential tax, legal and other risks in conjunction with the purchased business.
government in the amount of €95 million which were capitalized and included in the carrying amount of the provision as well as from
interest rate adjustments.
Consolidated Financial Statements
26
Environmental clean-up costs relate to remediation and environmental protection liabilities which have been accrued based on the
estimated costs of decommissioning the site for the production of uranium and mixed-oxide fuel elements in Hanau, Germany (Hanau
facilities), as well as for a nuclear research and service center in Karlstein, Germany (Karlstein facilities). In May 2021, Siemens AG and the
Federal Republic of Germany entered into a public-law contract based on which the obligation of final disposal of nuclear waste is
transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the payment is subject to the
approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made to measure the obligations
that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as intermediate storage and transport
to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032. As of September 30, 2021 and 2020, the provisions
total €507 million and €638 million, respectively. The decrease results primarily from the reversal of advance payments to the federal
27
2 The adjustment considers that both Moody's and S&P view Siemens Financial Services as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive
finance subsidiaries in determining credit ratings. Following this concept, Siemens excludes Siemens Financial Services debt.
(1,256)
(1,012)
37,010
1.3
1.5
Industrial net debt/EBITDA
7,601
9,091
3,157
3,075
(1,228)
(1,480)
5,672
7,496
EBITDA
Plus/Less: Interest income, interest expenses and other financial income (expenses), net
Plus: Amortization, depreciation and impairments
Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt¹
Net debt
Income from continuing operations before income taxes
13,861
604
530
Industrial net debt
Plus: Credit guarantees
6,360
2,839
Plus: Provisions for pensions and similar obligations
(25,267)
(26,519)
Less: Siemens Financial Services debt²
28,492
(777)
10,189
35,777
Sep 30,
increase
(143)
(1)
-
(2)
(3)
Settlement payments
(121)
(1,685)
(1,638)
(1,828)
(1,759)
Benefits paid
-
142
102
142
102
Plan participants' contributions
(2,898)
(2,041)
-
-
2,898
2,041
Employer contributions
358
(2,165)
(18)
Business combinations, disposals and other
Foreign currency translation effects
195
371
(3,489)
1,768
-
-
5,819
2,015
11
16
(4,240)
(2,179)
(4)
1
(1,576)
(101)
4
(17)
1
(535)
(634)
388
(5,812) 1,089
35,542 35,777 33,543 29,970
21,697 22,223 19,929 17,161
Germany
Balance at fiscal year-end
(1,091)
Other reconciling items
(1,097)
1
(2)
-
(2,394)
195
(2)
decrease
(74)
303
(20)
(13)
(31)
(4)
(333)
(254)
-
-
333
254
407
299
2
-
406
299
595
485
-
595
485
9,042
5,819
33
11
31,307
29,970
-
-
9
(11)
75
Comprehensive Income
Remeasurements recognized in the Consolidated Statements of
(18)
4
(18)
4
Effects of asset ceiling
303
75
-
303
75
2,243
Actuarial (gains) losses
(74)
2,243
income and net interest expenses
Return on plan assets excluding amounts included in net interest
658
540
2
313
241
970
780
Consolidated Statements of income
Components of defined benefit costs recognized in the
74
U.S.
5,062
CH
0.3%
1.6%
1.9%
2.5%
2.8%
0.8%
0.9%
1.1%
1.3%
2020
2021
Sep 30,
Consolidated Financial Statements
0.2%
USD
Discount rate
The weighted-average discount rate used for the actuarial valuation of the DBO was as follows:
Actuarial assumptions
14
24
303
75
(97)
455
402
(156)
(3)
(224)
EUR
GBP
CHF
The discount rate was derived from high-quality corporate bonds with an issuing volume of more than 100 million units in the respective
currency zones, which have been awarded an AA rating (or equivalent) by at least one of the three rating agencies Moody's Investors
Service, S&P Global Ratings or Fitch Ratings.
Effect on DBO due to a one-half percentage-point
decrease
increase
A one-half-percentage-point change of the above assumptions would result in the following increase (decrease) of the DBO:
2.7%
3.1%
1.5%
1.5%
1.4%
1.4%
2.6%
3.0%
2020
2021
Sep 30,
Sensitivity analysis
U.K.
Germany
Pension progression
CH
U.K.
Compensation increase
The mortality tables used in Germany (Siemens Bio 2017/2021) are mainly derived from data of the German Siemens population and to a
lesser extent from data of the Federal Statistical Office in Germany by applying formulas in accordance with recognized actuarial standards.
The rates of compensation increase and pension progression for countries with significant effects are shown in the following table.
Inflation effects, if applicable, are included in the assumptions below.
BVG 2020 G (in fiscal 2020 BVG 2015 G)
Pri-2012 with generational projection from the US Social Security Administration's Long Range Demographic Assumptions
SAPS S3 (Standard mortality tables for Self Administered Pension Schemes with allowance for future mortality improvements), (in fiscal 2020
SAPS S2)
Siemens specific tables (Siemens Bio 2017/2021), (in fiscal 2020 Siemens Bio 2017/2020)
U.K.
CH
U.S.
Germany
Applied mortality tables are:
2020
U.K.
2021
Total
925
1,632
1,643
Other countries
(27)
(300)
-
-
3,355
3,702
3,328
3,402
(356)
838
(325)
8
6,000
6,339
5,637
6,005
341
147
-
-
2,617
2,648
2,958
2,795
8
8
4
726
Experience (gains) losses
Changes in financial assumptions
Changes in demographic assumptions
(in millions of €)
The DBO remeasurements comprise actuarial (gains) and losses resulting from:
Net interest expenses relating to provisions for pensions and similar obligations amount to €53 million and €66 million, respectively, in
fiscal 2021 and 2020. The DBO is attributable to actives 29% and 28%, to deferreds with vested benefits 15% and 14% and to retirees and
surviving dependents 57% and 57%, respectively, in fiscal 2021 and 2020.
Employer contributions in fiscal 2021 include fundings in Germany of €1,887 million, thereof a contribution of a stake in Bentley Systems,
Inc. amounting to €1,146 million, the contribution of various zero-coupon receiver swaps at total value of €368 million and the
contribution of a stake in an equity instrument in the amount of €270 million. In fiscal 2020, Employer contributions include fundings in
Germany of €2,730 million, including the contribution of a 9.9% interest in Siemens Energy AG of €1,881 million and real estate
contributions from Siemens Real Estate.
Line item Business combinations, disposals and other includes the acquisition of Varian in fiscal 2021: DBO €303 million, Fair value of plan
assets €271 million.
3 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
1 Discloses figures including Flender and Siemens Energy AG. Accordingly, it comprises the total of continuing and discontinuing operations.
2 Total Defined benefit obligation (DBO) includes other post-employment benefits of €345 million and €393 million in fiscal 2021 and 2020 respectively, which primarily consist of transition payments to German employees after
retirement as well as post-employment health care and life insurance benefits to employees in the U.S. and India.
541
825
6,360
2,839
5,819
2,015
11
16
29,970
33,543
35,777
35,542
thereof net defined benefit assets (presented in Other assets)
thereof provisions for pensions and similar obligations
Total
798
Fiscal year
Loans from banks (current and non-current)
Foreign currency exchange contracts
(in millions of €)
Sep 30, 2020
505
Fair values of each type of derivative financial instruments reported as financial assets or financial liabilities in line items Other current
financial assets (liabilities) or Other financial assets (liabilities) are:
Total
1,288
3,023
612
4,923
1,067
77
209
Level 3
1,353
104
385
491
220
18
238
2,842
2,842
1
Level 2
Level 1
Sep 30, 2020
545
545
Financial liabilities measured at fair value - Derivative financial instruments
769
769
Not designated in a hedge accounting relationship (including embedded derivatives)
In connection with cash flow hedges
therein: included in cash flow hedges
505
263
263
30
(in millions of €)
Financial assets measured at fair value
Equity instruments measured at FVTPL
Equity instruments measured at FVOCI
Debt instruments measured at FVTPL
Derivative financial instruments
Not designated in a hedge accounting relationship (including embedded derivatives)
In connection with fair value hedges
In connection with cash flow hedges
Consolidated Financial Statements
2,052
2,052
554
554
(168)
74
(526)
22
1,291
1,020
552
Financial assets and financial liabilities at FVTPL
Amounts include foreign currency gains (losses) from recognizing and measuring financial assets and liabilities. Net gains (losses) on
financial assets and liabilities measured at FVTPL resulted from those mandatorily measured at FVTPL and comprise fair value changes of
derivative financial instruments for which hedge accounting is not applied including interest income (expense), as well as dividends from
and fair value changes of equity instruments measured at FVTPL.
Interest income (expense) includes interest from financial assets and financial liabilities not at fair value through profit or loss:
(in millions of €)
Total interest income on financial assets
Total interest expenses on financial liabilities
Fiscal year
2021
2020
1,434
1,503
(672)
(17)
307
2020
Fiscal year
236
236
Financial liabilities measured at fair value – Derivative financial instruments
Not designated in a hedge accounting relationship (including embedded derivatives)
In connection with cash flow hedges
978
978
765
765
213
213
Fair value of equity instruments quoted in an active market is based on price quotations at period-end date. Fair value of debt instruments,
is either based on prices provided by price service agencies or is estimated by discounting future cash flows using current market interest
rates.
Fair values of derivative financial instruments are determined in accordance with the specific type of instrument. Fair values of derivative
interest rate contracts are estimated by discounting expected future cash flows using current market interest rates and yield curves over
the remaining term of the instrument. Interest rate futures are valued based on quoted market prices, if available. Fair values of foreign
currency derivatives are based on forward exchange rates. Options are generally valued based on quoted market prices or based on option
pricing models. No compensating effects from underlying transactions (e.g. firm commitments and forecast transactions) are considered.
The Company limits default risks resulting from derivative financial instruments by generally transacting with financial institutions with a
minimum credit rating of investment grade. Based on Siemens' net risk exposure towards the counterparty, the resulting credit risk is taken
into account via a credit valuation adjustment.
In fiscal 2021, Siemens Advanta acquired equity stakes for €279 million in cash (Thoughtworks). The financial asset is mandatorily
measured at fair value through profit and loss (FVTPL). The company went public in September 2021 resulting in a gain from fair value
measurement including foreign currency effects of €289 million at Siemens disclosed in Corporate items of segment information and
presented in Other financial income (expenses), net.
As of September 30, 2021 and 2020, Level 3 financial assets include venture capital investments of €515 million and €386 million (Next47
investments). In fiscal 2021 and 2020, new level 3 investments and purchases amounted to €522 million and €249 million, respectively.
Sales of Level 3 financial assets amounted to €305 million and €327 million, respectively, in fiscal 2021 and 2020.
In fiscal 2021, a Level 3 equity investment mandatorily measured at FVTPL was merged with a public holding company in exchange for
shares in the new entity, ChargePoint. The transaction resulted in a gain of €220 million derived from now available Level 1 quoted prices.
The gain is disclosed in Other financial income (expenses), net and in Next47 of Corporate items. Subsequently, the investment was
contributed to the Siemens Pension-Trust e.V. at fair value of €270 million.
Net gains (losses) resulting from financial instruments are:
(in millions of €)
Cash and cash equivalents
Loans, receivables and other debt instruments measured at amortized cost
Financial liabilities measured at amortized cost
2021
(702)
307
1,098
56,012
59,268
Financial liabilities measured at amortized cost4
Derivatives not designated in a hedge accounting relationship5
Derivatives designated in a hedge accounting relationship 5
Financial liabilities
59,172
54,189
505
491
765
213
59,941
55,167
1 Reported in the following line items of the Statements of Financial Position as of September 30, 2021 and 2020, respectively: Trade and other receivables, Other current financial assets and Other financial
assets, except for separately disclosed €1,824 million and €1,843 million equity instruments in Other financial assets (thereof €675 million and €491 million at FVOCI), €198 million and €220 million financial
assets designated as measured at FVTPL and €1,950 million and €2,842 million derivative financial instruments (thereof in Other financial assets €1,552 million and €2,044 million) as well as €58 million and
€18 million debt instruments measured at FVTPL in Other financial assets. Includes €13,267 million and €12,071 million trade receivables from the sale of goods and services, thereof €663 million and
2 Reported in line items Other current financial assets and Other financial assets.
3 Reported in Other financial assets.
* Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade payables, Other current financial liabilities, Long-term debt and
Other financial liabilities, except for separately disclosed derivative financial instruments of €769 million and €978 million as of September 30, 2021 and 2020, respectively.
5 Reported in line items Other current financial liabilities and Other financial liabilities.
Cash and cash equivalents include €190 million and €126 million as of September 30, 2021 and 2020, respectively, which are not available
for use by Siemens mainly due to minimum reserve requirements with banks. As of September 30, 2021 and 2020, the carrying amount
of financial assets Siemens pledged as collateral is €156 million and €115 million, respectively.
The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized
cost for which the carrying amounts do not approximate fair value:
263
675
220
198
The following table discloses the carrying amounts of each category of financial assets and financial liabilities:
(in millions of €)
Loans, receivables and other debt instruments measured at amortized cost¹
Cash and cash equivalents
Derivatives designated in a hedge accounting relationship
Financial assets mandatorily measured at FVTPL²
Financial assets designated as measured at FVTPL³
Equity instruments measured at FVOCI¹
Financial assets
Sep 30,
2021
42,436
2020
40,304
9,545
14,041
852
790
2,305
3,422
(in millions of €)
Notes and bonds
Loans from banks and other financial indebtedness
Sep 30, 2021
Level 3
Total
917
2,030
1,085
4,031
718
77
354
1,149
1
674
675
198
1
57
256
1,950
1,950
Level 2
1,098
Level 1
In connection with cash flow hedges
Sep 30, 2020
Fair value
45,594
2,400
Carrying
amount
43,373
Fair value
40,868
Carrying
amount
38,264
3,483
2,398
3,473
Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are
evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the
customer, and the risk characteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized.
The fair value of notes and bonds is based on prices provided by price service agencies at the period-end date (Level 2). The fair value of
loans from banks and other financial indebtedness as well as other non-current financial liabilities are estimated by discounting future
cash flows using rates currently available for debt of similar terms and remaining maturities (Level 2).
The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy:
(in millions of €)
Financial assets measured at fair value
Equity instruments measured at FVTPL
Equity instruments measured at FVOCI
Debt instruments measured at FVTPL
Derivative financial instruments
Not designated in a hedge accounting relationship (including embedded derivatives)
In connection with fair value hedges
Sep 30, 2021
31
Valuation allowances for expected credit losses
Consolidated Financial Statements
227
Impairment losses on financial instruments are presented in line items Cost of sales, Selling and general administrative expenses and Other
financial income (expenses), net. Net losses in fiscal 2021 and 2020 are €50 million and €404 million, respectively. Impairment losses net
of (gains) from reversal of impairments are €(19) million and €33 million in fiscal 2021 and 2020 are mostly attributable to the SFS
business and presented in Other financial income (expenses), net.
Offsetting
Siemens enters into master netting and similar agreements for derivative financial instruments. Potential offsetting effects are as follows:
Financial assets
Financial liabilities
(in millions of €)
Sep 30,
2021
36
Gross amounts
2020
2,571
Sep 30,
2021
753
2020
795
Amounts offset in the Statement of Financial Position
5
2
5
1,910
537
111
27
(60)
(46)
Recoveries of amounts previously written off
n/a
n/a
6
2
Foreign exchange translation differences and other changes
(48)
4
35
(17)
(2)
(11)
Reclassifications to line item Assets held for disposal and dispositions of
those entities
(458)
(169)
Valuation allowance as of September 30, 2020
73
2
Net amounts in the Statement of Financial Position
1,905
2,569
Sep 30, 2020
Up to 12
months
More than
12 months
3,605
873
14,676
5,752
Up to 12
months
10,739
More than
12 months
4,435
450
7,110
13
605
598
859
5,147
450
6,512
Sep 30, 2021
(35)
therein: included in fair value hedges
Interest rate swaps
748
793
Related amounts not offset in the Statement of Financial Position
748
829
586
571
Net amounts
1,157
1,739
163
221
22
32
Consolidated Financial Statements
NOTE 24 Derivative financial instruments and hedging activities
To hedge foreign currency exchange and interest rate risks, derivatives are contracted to achieve a 1:1 hedge ratio so that the main
characteristics match the underlying hedged items (e.g. nominal amount, maturity) in a critical term match, which ensures an economic
relationship between hedging instruments and hedged items suitable for hedge accounting. The nominal amounts of hedging instruments
by maturity are:
(in millions of €)
Foreign currency exchange contracts
therein: included in cash flow hedges
n/a
n/a
Write-offs charged against the allowance
(10)
2
48
(22)
15
Write-offs charged against the allowance
n/a
n/a
(25)
(89)
(38)
Recoveries of amounts previously written off
n/a
n/a
2
7
2
Foreign exchange translation differences and other changes
(5)
18
(3)
Change in valuation allowances recorded in the Consolidated Statements of
Income in the current period
36
Loans, receivables and other debt instruments measured at
amortized cost
Loans and other debt instruments
under the general approach
Trade
receivables
and other
debt instru-
ments under
the simplified
approach
Contract
Assets
Lease
Receivables
(in millions of €)
Stage 1
Stage 2
Stage 3
Valuation allowance as of October 1, 2020
73
27
111
537
227
Sep 30, 2021
8
1
(in millions of €)
Stage 1
Stage 2
Stage 3
Valuation allowance as of October 1, 2019
54
54
12
68
891
198
184
Change in valuation allowances recorded in the Consolidated Statements of
Income in the current period
67
11
43
175
9
97
Lease
Receivables
5
Assets
the simplified
approach
5
Reclassifications to line item Assets held for disposal and dispositions of
those entities
Valuation allowance as of September 30, 2021
-
-
22
27
37
86
15
98
535
53
212
Loans, receivables and other debt instruments measured at
amortized cost
Loans and other debt instruments
under the general approach
Trade
receivables
and other
debt instru-
ments under
Contract
Interest rate swaps and combined interest and currency swaps
Consolidated Financial Statements
Asset
874,793
1,785,913
1,509,046
654,483
Settled
Forfeited
Vested and fulfilled
Granted
Outstanding, beginning of period
2020
2021
Fiscal year
Resulting Matching Shares
Under the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of
their compensation in Siemens shares, sponsored by Siemens. The shares are bought at market price at a predetermined date in the second
quarter and grant the right to receive matching shares under the same conditions applying to the Share Matching Plan described above.
The fair value of the Base Share Program amounted to €25 million and €33 million in fiscal 2021 and 2020, respectively.
Base Share Program
Under the Monthly Investment Plan employees other than senior managers may invest a specified part of their compensation in Siemens
shares on a monthly basis over a period of twelve months. Shares are purchased at market price at a predetermined date once a month.
If the Managing Board decides that shares acquired under the Monthly Investment Plan are transferred to the Share Matching Plan, plan
participants will receive the right to matching shares under the same conditions applying to the Share Matching Plan described above with
a vesting period of about two years. The Managing Board decided that shares acquired under the tranches issued in fiscal 2020 and 2019
are transferred to the Share Matching Plan as of February 2021 and February 2020, respectively.
Monthly Investment Plan
Under the Share Matching Plan, senior managers may invest a specified part of their variable compensation in Siemens shares (investment
shares). The shares are purchased at the market price at a predetermined date in the second quarter. Plan participants receive the right to
one Siemens share without payment of consideration (matching share) for every three investment shares continuously held over a period
of about three years (vesting period) provided the plan participant has been continuously employed by Siemens until the end of the vesting
period.
7,939,840
8,670,111
(624,480)
(2,303,850)
(569,405)
(122,659)
discontinued operations
Continuing and
Continuing
operations
Consolidated Financial Statements
Expenses relating to post-employment benefits
Statutory social welfare contributions and expenses for optional support
Wages and salaries
(in millions of €)
NOTE 27 Personnel costs
38
For their 25th and 40th service anniversary eligible employees receive jubilee shares. There were 3.15 million and 3.29 million entitlements
to jubilee shares outstanding as of September 30, 2021 and 2020, respectively.
Jubilee Share Program
account.
The weighted average fair value of matching shares granted in fiscal 2021 and 2020 of €96.92 and €89.71 per share, respectively, was
determined as the market price of Siemens shares less the present value of expected dividends; non-vesting conditions were taken into
1,509,046
1,389,016
Outstanding, end of period
(459,596)
(69,648)
(80,385)
Fiscal year
(42,116)
(444,962)
In fiscal 2021 and 2020, 1,975,492 and 2,688,334 equity-settled stock awards were granted relating to the TSR-Target with a fair value
of €104 million and €132 million, respectively. In fiscal 2021 and 2020, 493,472 and 672,197 equity-settled stock awards were granted
relating to the ESG-Target with a fair value of €48 million and €66 million, respectively.
Commitments to members of the senior management and other eligible employees
The Managing Board's stock awards are based on criteria described above. Fair values are €12 million and €12 million, respectively, in
fiscal 2021 and 2020, calculated by applying a valuation model. In fiscal 2021 and 2020, inputs to that model include an expected
weighted volatility of Siemens shares of 24.30% and 21.58%, respectively, and a market price of €112.70 and €116.80 per Siemens share.
Expected volatility was determined by reference to historic volatilities. The model applies a risk-free interest rate of up to (0.49)% and
(0.24)% in fiscal 2021 and 2020, respectively, and an expected dividend yield of 3.10% in fiscal 2021 and 3.31% in fiscal 2020.
Assumptions relating to correlations between the Siemens share price and the development of the MSCI index were derived from historic
observations of share price and index changes.
Commitments to members of the Managing Board
Stock awards are tied to performance criteria. For stock awards granted in fiscal 2021 and 2020, 80% of the target amount is linked to the
relative total shareholder return of Siemens compared to the total shareholder return of the MSCI World Industrials sector index (TSR-
Target) during a four-year restriction period; the remaining 20% are linked to a Siemens internal sustainability target considering
environmental, social and governance targets (ESG-Target). The annual target amount for stock awards up to and including tranche 2019
is linked to the share price performance of Siemens relative to the share price performance of five important competitors during the four-
year restriction period. The target attainment for each individual performance criteria ranges between 0% and 200%. For awards granted
since fiscal 2019 settlement is in shares only corresponding to the actual target attainment. Awards granted prior to fiscal 2019, target
outperformances in excess of 100% are settled in cash. The vesting period is four years.
The Company grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
Stock awards are subject to a restriction period of about four years and entitle the beneficiary to Siemens shares following the restriction
period without payment of consideration.
Stock Awards
Share-based payment awards may be settled in newly issued shares of capital stock of Siemens AG, in treasury shares or in cash. Share-
based payment awards may forfeit if the employment of the beneficiary terminates prior to the expiration of the vesting period. In fiscal
2021 and 2020, expense from equity-settled awards on a continuing basis are €294 million and €295 million; cash-settled awards on a
continuing basis resulted in gains (expenses) of €(8) million and €(26) million in fiscal 2021 and 2020. Included is expense of €127 million
and €100 million in fiscal 2021 and 2020, respectively, resulting from various individually immaterial plans, of which €66 million and €45
million, respectively, stem from Siemens Healthineers plans. Siemens Healthineers plans are largely similar to Siemens' plans, except for
granting Siemens Healthineers AG shares.
NOTE 26 Share-based payment
Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies that are classified as long term
investments. These investments are monitored based on their current market value, affected primarily by fluctuations on the volatile
technology-related markets worldwide. As of September 30, 2021 and 2020, the market value of Siemens' portfolio, which mainly consists
of one investment in a publicly traded company, was €678 million and €1,055 million, respectively. As of September 30, 2021 and 2020,
the VaR relating to the equity price was €105 million and €182 million.
Equity Price Risk
Amounts above do not represent economic credit risk, since they consider neither collateral held nor valuation allowances already
recognized.
Trade receivables of operating units are generally rated internally; as of September 30, 2021 and 2020, approximately 47% and 43%,
respectively, have an investment grade rating and 53% and 57%, respectively, have a non-investment grade rating. Contract assets
generally show similar risk characteristics as trade receivables in operating units.
4,704
91
39
2,684
360
2,068
The fair value of stock awards granted in fiscal 2021 and 2020 (TSR-related) was calculated applying a valuation model. In fiscal 2021 and
2020, inputs to that model include an expected weighted volatility of Siemens shares of 24.34% and 21.58%, respectively, and a market
price of €112.36 and €116.02 per Siemens share. Expected volatility was determined by reference to historic volatilities. The model applies
a risk-free interest rate of up to (0.49)% in fiscal 2021 and up to (0.26)% in fiscal 2020 and an expected dividend yield of 3.11% and 3.31%
in fiscal 2021 and 2020, respectively. Assumptions relating to correlations between the Siemens share price and the development of the
MSCI Index were derived from historic observations of share price and index changes. The fair value of the ESG component of €97.63 and
(412,903)
37
€98.02 per share in fiscal 2021 and 2020, respectively, was determined as the market price of Siemens shares less the present value of
expected dividends during the vesting period.
(374,733)
(173,648)
(1,292,912) (1,846,312)
9,300,505
3,577,133
2,683,909
7,939,840
2020
2021
Fiscal year
In fiscal 2021, Siemens issued a new tranche under each of the plans of the Share Matching Program.
Share Matching Plan
Share Matching Program and its underlying plans
Non-vested, end of period
Settled
Forfeited
Adjustments due to vesting conditions other than market conditions
Vested and fulfilled
Granted
Non-vested, beginning of period
Changes in stock awards:
Consolidated Financial Statements
Fiscal year
2021
2020
Income from continuing operations attributable to shareholders of Siemens AG
311
537
Less: Portion attributable to non-controlling interest
4,156
5,636
Income from continuing operations
2020
2021
(shares in thousands; earnings per share in €)
Fiscal year
363
295
285
293
29
26
25
26
5,099
45
3,845
(5)
39
4.70
6.28
Diluted earnings per share (from continuing operations)
4.77
6.36
Basic earnings per share (from continuing operations)
817,364
811,490
Weighted average shares outstanding - diluted
806,335
11,029
9,661
Effect of dilutive share-based payment
801,829
Weighted average shares outstanding - basic
3,842
5,094
Income from continuing operations attributable to shareholders of Siemens AG to determine dilutive earnings per share
(3)
Less: Dilutive effect from share based payment resulting from Siemens Healthineers
43
41
42
In fiscal 2021 and 2020, severance charges for continuing operations amount to €410 million and €589 million, respectively, thereof at
Digital Industries €114 million and €210 million.
31,978
25,008
23,761
24,789
1,348
1,013
1,024
1,010
3,970
3,113
2,948
3,082
26,660
20,882
19,789
20,697
2020
2021
Employees were engaged in (averages; based on headcount):
(in thousands)
Manufacturing and services
Sales and marketing
64
54
54
54
225
172
165
171
2020
n/a
2021
2021
Fiscal year
Fiscal year
discontinued operations
Continuing and
Continuing
operations
NOTE 28 Earnings per share
Administration and general services
Research and development
2020
Stage 3
Stage 2
n/a
671
The Company's operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated
in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future
cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated
in US$ both from Siemens' operating units entering into long-term contracts e.g. from the project business and from the standard product
business. In fiscal 2021 and 2020, the risk is hedged against the euro at an average rate of 1.2808 €/US$ and 1.2013 €/US$ (forward
purchases of US$), respectively and 1.2070 €/US$ and 1.1950 €/US$ (forward sales of US$). As of September 30, 2021 and 2020, the
Cash flow hedges
The Company manages its risks associated with fluctuations in foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a Company-wide portfolio approach. Under this approach the Company-wide
risks are aggregated centrally, and various derivative financial instruments, primarily foreign currency exchange contracts, foreign currency
swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company
also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts.
Derivative financial instruments not designated in a hedging relationship
Foreign currency exchange rate risk management
Amounts reclassified to net income in connection with interest rate risk hedges and non-operative foreign currency hedges are presented
in Other financial income (expenses), net. Reclassifications of foreign currency risk hedges with operative business purposes are presented
as functional costs. Costs of hedging reserve is the forward element of forward contracts that are not designated as hedge accounting and
which are amortized to interest expense on a straight-line basis as the hedged item is time-period related. In fiscal 2021, €114 million in
Other relate to designated foreign currency swaps to hedge risks of the highly probable purchase price payment made for the Varian
acquisition. The amount was removed from the cash flow hedge reserve and included in the initial cost of Varian.
(3)
(11)
93
(28)
(17)
114
(121)
6
97
(263)
36
117
133
33
(59)
Consolidated Financial Statements
Included are Siemens' foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10
billion (€8.5 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually,
also turns interest into € with volume weighted average interest rates of currently about 0.3%.
Operating units are prohibited from borrowing or investing in foreign currencies on a speculative basis. Intercompany financing or
investments of operating units are preferably carried out in their functional currency or on a hedged basis.
Each Siemens unit conducting businesses with international counterparties leading to future cash flows denominated in a currency other
than its functional currency is exposed to risks from changes in foreign currency exchange rates. In the ordinary course of business,
Siemens units are exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro. Foreign
currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well
as production activities and other contributions along the value chain in the local markets.
Transaction risk
Foreign currency exchange rate risk
NOTE 23 Additional disclosures on financial instruments
34
Any market sensitive instruments, including equity and interest-bearing investments that our Company's pension plans hold are not
included in the following quantitative and qualitative disclosures.
Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may
differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with
a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of
99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some
limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this
period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical
probability that losses could exceed the calculated VaR. The use of historical data as a basis for estimating the statistic behavior of the
relevant markets and finally determining the possible range of the future outcomes on the basis of this statistic behavior may not always
cover all possible scenarios, especially those of an exceptional nature.
In order to quantify market risks Siemens has implemented a system based on Value at Risk (VaR), which is also used for internal
management of Corporate Treasury activities. The VaR figures are calculated based on historical volatilities and correlations of various risk
factors, a ten day holding period, and a 99.5% confidence level.
Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company's operating
business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates.
In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens
identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its
regular operating and financing activities and uses derivative financial instruments when deemed appropriate.
NOTE 25 Financial risk management
The Company had interest rate swap contracts to pay variable rates of interest of an average of (0.14)% and (0.13)% as of September 30,
2021 and 2020, respectively and received fixed rates of interest (average rate of 1.50% and 1.49%, as of September 30, 2021 and 2020,
respectively). The notional amount of indebtedness hedged as of September 30, 2021 and 2020 was €6,007 million and €6,423 million,
respectively. This changed 15% and 18% of the Company's underlying notes and bonds from fixed interest rates into variable interest rates
as of September 30, 2021 and 2020, respectively. The notional amounts of these contracts mature at varying dates based on the maturity
of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness
as of September 30, 2021 and 2020 was €277 million and €520 million, respectively.
Under interest rate swap agreements outstanding in fiscal 2021 and 2020, the Company agreed to pay a variable rate of interest multiplied
by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value
of the underlying fixed-rate debt obligations. As of September 30, 2021 and 2020, the carrying amounts of €6,305 million and €6,938
million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €304 million and €540 million cumulative
fair value hedge adjustments. Unamortized fair value hedge adjustments of €181 million and €220 million as of September 30, 2021 and
2020, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of the underlying
debt, maturing until 2042. Carrying amount adjustments to debt of €236 million and €(123) million, respectively, in fiscal 2021 and 2020
are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €(243) million and €91
million, respectively, in fiscal 2021 and 2020. Net cash receipts and payments relating to such interest rate swap agreements are recorded
as interest expenses.
Fair value hedges of fixed-rate debt obligations
Siemens applies cash flow hedge accounting to a revolving portfolio of floating-rate commercial papers of nominal US$700 million.
Siemens pays a fixed rate of interest and receives a variable rate of interest, offsetting future changes in interest payments of the
underlying floating-rate commercial papers. Net cash receipts and payments are recorded as interest expenses. The Company had interest
rate swap contracts to receive variable rates of interest of an average of 0.13% and 0.23% as of September 30, 2021 and 2020, respectively,
and paid fixed rates of interest (average rate of 1.95% and 1.95%, as of September 30, 2021 and 2020, respectively).
Cash flow hedges of floating-rate commercial papers
Interest rate risk management relating to the Group, excluding SFS' businesses, uses derivative financial instruments under a portfolio-
based approach to manage interest risk actively relative to a benchmark. Interest rate management of the SFS and businesses remains to
be managed separately, considering the term structure of SFS' financial assets and liabilities on a portfolio basis. Neither approach qualifies
for hedge accounting treatment. Net cash receipts and payments in connection with interest rate swap agreements are recorded as interest
expense in Other financial income (expenses), net.
Derivative financial instruments not designated in a hedging relationship
Interest rate risk management
hedging transactions have an average remaining maturity until 2026 and 2022 (forward purchases of US$) as well as 2022 and 2021
(forward sales of US$).
reserve
reserve
reserve
307
therein: included in fair value hedges
107
31
328
1,835
155
987
106
231
231
544
617
933
569
893
Liability
Asset
Liability
554
Other (embedded derivatives, options, commodity swaps)
70
45
Cost of
hedging
Cash flow
hedge
hedge
Cash flow
thereof: discontinued hedge accounting
Balance as of September 30, 2021
Other
Reclassification to net income
Hedging gains (losses) presented in OCI
According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
exposure. The net foreign currency position of Siemens units serves as a central performance measure and has to be hedged within a band
of at least 75% but no more than 100%.
Balance as of October 1, 2020
Foreign currency risk
Interest
rate risk
Other components of equity, net of income taxes, relating to cash flow hedges reconciles as follows:
978
2,842
769
1,950
33
74
(in millions of €)
therein: included in cash flow hedges
Generally, the operating units conclude their hedging activities internally with Corporate Treasury. By applying a cost-optimizing portfolio
approach, Corporate Treasury itself hedges foreign currency exchange rate risks with external counterparties and limits them.
Translation risk
The effective monitoring and controlling of credit risk through credit evaluations and ratings is a core competency of our risk management
system. In this context, Siemens has implemented a binding credit policy.
Siemens provides its customers with various forms of direct and indirect financing particularly in connection with large projects. Hence,
credit risks are determined by the solvency of the debtors, the recoverability of the collaterals, the success of projects we invested in and
the global economic development.
Credit risk is defined as an unexpected loss in financial instruments if the contractual partner is failing to discharge its obligations in full
and on time or if the value of collateral declines.
Credit risk
2 A considerable portion result from asset-based lending transactions meaning that the respective loans can only be drawn after sufficient collateral has been provided by the borrower.
1 Based on the maximum amounts Siemens could be required to settle in the event of default by the primary debtor.
2
165
312
3,408
Irrevocable loan commitments²
530
Credit guarantees¹
72
213
143
429
14
111
Siemens maintains a Credit Risk Intelligence Unit to which numerous operating units from the Siemens Group regularly transfer business
partner data as a basis for a centralized internal rating and credit limit recommendation process. Due to the identification, quantification
and active management of credit risks, this increases credit risk transparency.
147
Ratings and individually defined credit limits are based on generally accepted rating methodologies, with information obtained from
customers, external rating agencies, data service providers and Siemens' credit default experiences. Internal ratings consider appropriate
forward-looking information relevant to the specific financial instrument like expected changes in the debtor's financial position,
ownership, management or operational risks, as well as broader forward-looking information, such as expected macroeconomic, industry-
related and competitive developments. The ratings also consider a country-specific risk component derived from external country credit
ratings. Ratings and credit limits for financial institutions as well as Siemens' public and private customers, which are determined by
internal risk assessment specialists, are continuously updated and considered for investments in cash and cash equivalents and in
determining the conditions under which direct or indirect financing will be offered to customers.
To analyze and monitor credit risks, the Company applies various systems and processes. A main element is a central IT application that
processes data from operating units together with rating and default information and calculates an estimate, which may be used as a basis
for individual bad debt provisions. Additionally, qualitative information is considered to particularly incorporate the latest developments.
The carrying amount is the maximum exposure to a financial asset's credit risk, without taking account of any collateral. Collateral reduces
the valuation allowance to the extent it mitigates credit risk. Collateral needs to be specific, identifiable and legally enforceable to be taken
into account. Those collaterals are mostly held in the portfolio of SFS.
n/a
8
657
Stage 1
Stage 3
Stage 2
Stage 1
5,627
13,456
approach
ceivables
loan commitments
Lease Re-
Financial guarantees and
Loans and other debt
instruments under the general
Non-Investment Grade Ratings
Investment Grade Ratings
(in millions of €)
SFS' external financing portfolio disaggregates into credit risk rating grades as of September 30, 2021 as follows (pre valuation
allowances):
Consolidated Financial Statements
36
As of September 30, 2021 and 2020, collateral of €748 million and €829 million, respectively, relate to financial assets measured at fair
value. Those collaterals are provided in connection with netting agreements for derivatives providing protection from the risk of a
counterparty's insolvency. As of September 30, 2021 and 2020, collateral held for credit-impaired receivables from finance leases
amounted to €90 million and €141 million, respectively. As of September 30, 2021 and 2020, collateral held for financial assets measured
at amortized cost amounted to €3,328 million and €4,109 million, respectively, including €90 million and €141 million, respectively, for
credit-impaired loans in SFS' asset finance business. Those collaterals mainly comprised property, plant and equipment. Credit risks arising
from irrevocable loan commitments are equal to the expected future pay-offs resulting from these commitments.
An exposure is considered defaulted if the debtor is unwilling or unable to pay its credit obligations. A range of internally defined events
trigger a default rating, including the opening of bankruptcy proceedings, receivables being more than 90 days past due, or a default
rating by an external rating agency.
1,430
1
30
Notes and bonds
Non-derivative financial liabilities
(in millions of €)
2027 and
thereafter
2024 to
2026
2023
2022
Fiscal year
Consolidated Financial Statements
35
The following table reflects our contractually fixed pay-offs for settlement, repayments and interest. The disclosed expected undiscounted
net cash outflows from derivative financial liabilities are determined based on each particular settlement date of an instrument and based
on the earliest date on which Siemens could be required to pay. Cash outflows for financial liabilities (including interest) without fixed
amount or timing are based on the conditions existing at September 30, 2021.
In addition, Siemens constantly monitors funding options available in the capital markets, as well as trends in the availability and costs of
such funding, with a view to maintaining financial flexibility and limiting repayment risks.
Liquidity risk results from the Company's inability to meet its financial liabilities. Siemens follows a deliberated financing policy that is
aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Siemens mitigates liquidity
risk by the implementation of effective working capital and cash management, arranged credit facilities with highly rated financial
institutions, via a debt issuance program and via a global multi-currency commercial paper program. Liquidity risk may also be mitigated
by the Siemens Bank GmbH, which increases the flexibility of depositing cash or refinancing.
Liquidity risk
As of September 30, 2021 and 2020, the VaR relating to the interest rate was €529 million and €424 million. The increase was driven
mainly by higher interest rate volatilities for the U.S. dollar and an increase in interest rate sensitivity for the U.S. dollar related to the
US$10 billion instrument issued in March 2021.
If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through
Corporate Treasury in the form of loans or intercompany clearing accounts. The same concept is adopted for deposits of cash generated
by the units.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. This risk arises whenever interest terms of financial assets and liabilities are different. In order to manage the Company's
position with regard to interest rate risk, interest income and interest expenses, Corporate Treasury performs a comprehensive corporate
interest rate risk management by using fixed or variable interest rates from bond issuances and derivative financial instruments when
appropriate. The interest rate risk relating to the Group, excluding SFS' business, is mitigated by managing interest rate risk within an
integrated Asset Liability Management approach. The interest rate risk relating to SFS' business is managed separately, considering the
term structure of financial assets and liabilities. The Company's interest rate risk results primarily from funding in the U.S. dollar, British
pound and euro.
Interest rate risk
Many Siemens units are located outside the Eurozone. Because the financial reporting currency of Siemens is the euro, the financial
statements of these subsidiaries are translated into euro for the preparation of the Consolidated Financial Statements. To consider the
effects of foreign currency translation in the risk management, the general assumption is that investments in foreign-based operations
are permanent and that reinvestment is continuous. Effects from foreign currency exchange rate fluctuations on the translation of net
asset amounts into euro are reflected in the Company's consolidated equity position.
Loans from banks
Other financial indebtedness
Lease liabilities
Trade payables
25
8,776
921
971
556
731
4
36
6
As of September 30, 2021 and 2020, the VaR relating to foreign currency exchange rates was €39 million and €90 million. This VaR was
calculated under consideration of items of the Consolidated Statements of Financial Position in addition to firm commitments, which are
denominated in foreign currencies, as well as foreign currency denominated cash flows from forecast transactions for the following twelve
months. The decrease in the VaR resulted mainly from a lower net foreign currency position after hedging activities and a lower volatility
between the U.S. dollar and the euro.
70
914
176
1,217
24,290
14,768
5,178
6,600
Derivative financial liabilities
Other financial liabilities
16
Consolidated Financial Statements
(12)
2020
17,624
Varian Medical Systems Scandinavia AS, Herlev / Denmark
Siemens Mobility A/S, Ballerup / Denmark
Siemens Industry Software A/S, Ballerup / Denmark
Siemens Healthcare A/S, Ballerup / Denmark
Siemens A/S, Ballerup / Denmark
Acuson Denmark S/A, Ballerup / Denmark
Yunex, s.r.o., Prague / Czech Republic
Siemens, s.r.o., Prague / Czech Republic
Siemens Electric Machines s.r.o., Drasov / Czech Republic
Siemens Healthcare, s.r.o., Prague / Czech Republic
Siemens Industry Software, s.r.o., Prague / Czech Republic
Siemens Mobility, s.r.o., Prague / Czech Republic
OEZ s.r.o., Letohrad / Czech Republic
Siemens Healthcare d.o.o., Zagreb / Croatia
Consolidated Financial Statements
+2
47
100
100
100
100
100
100
100
100
100
100
100
Mentor Graphics Egypt Company (A Limited Liability Company - Private Free Zone), New Cairo / Egypt
100
Siemens Healthcare Logistics LLC, Cairo / Egypt
100
PETNET Solutions SAS, Lisses / France
Padam Mobility SAS, Paris / France
Nextflow Software SAS, Nantes / France
Mentor Graphics (France) SARL, Meudon La Forêt / France
Aimsun SARL, Paris / France
Varian Medical Systems Finland OY, Helsinki / Finland
Siemens Osakeyhtiö, Espoo / Finland
Siemens Mobility Oy, Espoo / Finland
Siemens Industry Software Oy, Espoo / Finland
Siemens Healthcare Oy, Espoo / Finland
Siemens Mobility Egypt LLC, Cairo / Egypt
Siemens Industrial LLC, New Cairo / Egypt
Siemens Healthcare S.A.E., Cairo / Egypt
100
100
100
100
100
1007
100
100
100
100
100
100
100
Siemens Financial Services SAS, Saint-Denis / France
100
51
4,535
6,748
6,458
2020
2021
Sep 30,
Sep 30,
Consolidated Financial Statements
NOTE 30 Information about geographies
Reconciliation to Consolidated Financial Statements
Eliminations, Corporate Treasury, other items
Liability-based adjustments
Tax-related assets
Intragroup financing receivables
Asset-based adjustments:
Assets Corporate items and pensions
Assets Siemens Real Estate
Siemens Energy Investment
(in millions of €)
Assets
42
In fiscal 2021 and 2020, Profit of SFS includes interest income of €1,154 million and €1,242 million, respectively and interest expenses of
€313 million and €436 million, respectively.
In fiscal 2021, Corporate items includes income of €192 million from Bentley Systems, Inc. stemming from the investment's fair value
measurement before its transfer to the Siemens Pension-Trust e.V.
(1,731)
(1,739)
3,898
100
228
56,091
100
100
100
52
100
100
100
100
100
100
100
100
100
69
100
100
491
100
51
Siemens d.d., Zagreb / Croatia
Varinak Bulgaria EOOD, Sofia / Bulgaria
Americas
4,335
4,511
51,431
(608)
Reconciliation to Consolidated Financial Statements
Siemens France Holding SAS, Saint-Denis / France
Siemens Healthcare SAS, Saint-Denis / France
Siemens Industry Software SAS, Châtillon / France
Siemens Lease Services SAS, Saint-Denis / France
Siemens Mobility SAS, Châtillon / France
100
Consolidated Financial Statements
Siemens TOO, Almaty / Kazakhstan
Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
Varian Medical Systems Italy SpA, Segrate / Italy
VAL 208 Torino GEIE, Milan / Italy
Siemens S.p.A., Milan / Italy
Siemens Mobility S.r.I., Milan / Italy
Siemens Logistics S.r.I., Milan / Italy
Siemens Industry Software S.r.l., Milan / Italy
Siemens Healthcare S.r.l., Milan / Italy
Acuson Italy S.r.I., Milan / Italy
UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
Siemens Mobility Ltd., Rosh HaAyin / Israel
Siemens Ltd., Rosh Ha'ayin / Israel
Siemens Industry Software Ltd., Airport City / Israel
Siemens HealthCare Ltd., Rosh HaAyin / Israel
Siemens Concentrated Solar Power Ltd., Rosh HaAyin / Israel
Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
Mentor Graphics (Israel) Limited, Herzilya Pituah / Israel
Siemens Limited, Dublin Ireland
48
100
100
Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
100
Mentor Graphics Development Services Limited, Shannon, County Clare / Ireland
Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin / Ireland
100
100
Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
CTSI (Mauritius) Ltd., Ebene / Mauritius
FTD Europe Ltd, Sliema / Malta
TFM International S.A. i.L., Luxembourg / Luxembourg
100
492
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
Atruvi Invest Management S.à.r.l, Munsbach / Luxembourg
Siemens Industrial Business Co. For Electrical, Electronic and Mechanical Contracting WLL, Kuwait City / Kuwait
Crabtree (Pty) Ltd, Maseru / Lesotho
VMS Kenya, Ltd, Nairobi Kenya
100
100
100
100
10013
100
100
100
100
100
1007
100
100
100
100
100
Siemens Logistics SAS, Saint-Denis / France
100
10013
100
100
100
100
100
100
100
100
100
Mentor Graphics (Ireland) Limited, Shannon, County Clare / Ireland
Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
Yunex Traffic Kft., Budapest / Hungary
Varian Medical Systems Hungary Kft., Budapest / Hungary
Siemens Zrt., Budapest / Hungary
Siemens Mobility Kft., Budapest / Hungary
Siemens Industry Software Kft., Budapest / Hungary
Siemens Healthcare Kft., Budapest / Hungary
evosoft Hungary Szamitastechnikai Kft., Budapest / Hungary
YUNEX SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
SIEMENS MOBILITY RAIL AND ROAD TRANSPORTATION SOLUTIONS SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME, Chalandri / Greece
Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
Varian Medical Systems France SARL, Le Plessis-Robinson / France
Supplyframe Europe SAS, Grenoble / France
Siemens SAS, Saint-Denis / France
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
Siemens Healthcare SARL, Casablanca / Morocco
(243)
Eliminations, Corporate Treasury and other reconciling items
4,385
1,302
1,743
15,015 14,323
581
344
700
640
194
288
2,854
3,750
10,123 10,756
3,252
3,362
14,997
16,514
718
358
14,279
2020
2021
2020
2021
2020
4,340
2021
2,098
181
663
2,879
805
51,381
57,954
14,460
17,997
111
76
292
191
183
181
862
898
3,424
2,661
822
857
9,052
9,232
40
27
337
334
182
1,498
667
2020
Fiscal year
Assets
Profit
Total
revenue
Intersegment
Revenue
External revenue
Orders
Consolidated Financial Statements
NOTE 29 Segment information
Steiermärkische Medizinarchiv GesmbH, Graz / Austria
Varian Medical Systems Gesellschaft mbH, Brunn am Gebirge / Austria
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH, Vienna / Austria
Yunex Traffic Austria GmbH, Vienna / Austria
Siemens W.L.L., Manama / Bahrain
Samtech SA, Angleur / Belgium
Siemens Healthcare NV, Beersel / Belgium
Siemens Industry Software NV, Leuven / Belgium
Siemens Mobility S.A. / N.V, Beersel / Belgium
Siemens S.A./N.V., Beersel / Belgium
Varian Medical Systems Belgium NV, Machelen / Belgium
Yunex S.A./N.V., Beersel / Belgium
Siemens d.o.o. Sarajevo - U Likvidaciji, Sarajevo / Bosnia and Herzegovina
Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
Siemens EOOD, Sofia / Bulgaria
Siemens Healthcare EOOD, Sofia / Bulgaria
Siemens Mobility EOOD, Sofia / Bulgaria
Free cash flow
Fiscal year
Additions to
intangible
assets and
property, plant
& equipment
(in millions of €)
Fiscal year
Sep 30,
Sep 30,
2021
2020
Fiscal year
2021
2020
2021
2020
2021
2020
Fiscal year
Fiscal year
Fiscal year
2021
16,156
2020
15,896
16,071 14,734 14,671 13,742
12,696 9,169 9,205 9,012
20,320 16,163 17,921 14,349
67,514 55,963
697
716
3,024
3,516
Portfolio Companies
Siemens Financial Services
Industrial Business
Siemens Healthineers
Mobility
Smart Infrastructure
18,427
Digital Industries
Fiscal year
2021
Amortization,
depreciation &
impairments
(94)
2,747
1,450
48
461
Management determined Assets (Net capital employed) as a measure to assess capital intensity of the segments except for SFS. Its
definition corresponds to the Profit measure except for amortization expenses of intangible assets acquired in business combinations
which are not part of Profit, however, the related intangible assets are included in the segments' Assets. Segment Assets is based on Total
assets of the Consolidated Statements of Financial Position, primarily excluding intragroup financing receivables, tax related assets and
assets of discontinued operations, since the corresponding positions are excluded from Profit. The remaining assets are reduced by non-
interest-bearing liabilities other than tax related liabilities, e.g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. In
individual cases assets of Mobility include project-specific intercompany financing of long-term projects. Assets of Siemens Healthineers
and in fiscal 2020 of Mobility include real estate, while real estate of all other segments is carried at SRE.
Asset measurement principles
In contrast to performance measurement principles applied to other segments, interest income and expenses are included, since interest
is an important source of revenue and expense of SFS.
Profit of the segment SFS
be the case for items that refer to more than one reportable segment, SRE and (or) POC or have a corporate or central character. Costs for
support functions are primarily allocated to the segments.
Consolidated Financial Statements
41
Amortization expenses of intangible assets acquired in business combinations are not part of Profit. Furthermore, income taxes are
excluded from Profit since income tax is subject to legal structures, which typically do not correspond to the structure of the segments.
The effect of certain litigation and compliance issues is excluded from Profit, if such items are not indicative of performance. This may also
Decisions on essential pension items are made centrally. Accordingly, Profit primarily includes amounts related to service cost of pension
plans only, while all other regularly recurring pension related costs are included in reconciliations in line item Centrally carried pension
expense.
Financing interest, excluded from Profit, is any interest income or expense other than interest income related to receivables from
customers, from cash allocated to the segments and interest expenses on payables to suppliers. Financing interest is excluded from Profit
because decision-making regarding financing is typically made at the corporate level.
Siemens' Managing Board is responsible for assessing the performance of the segments (chief operating decision maker). The Company's
profitability measure of the segments except for SFS is earnings before financing interest, certain pension costs, income taxes and
amortization expenses of intangible assets acquired in business combinations as determined by the chief operating decision maker (Profit).
The major categories of items excluded from Profit are described below.
Profit
Revenue includes revenue from contracts with customers and revenue from leasing activities. In fiscal 2021 and 2020, lease revenue is
€1,050 million and €958 million, respectively. In fiscal 2021 and 2020, Digital industries recognized €4,290 million and €4,144 million
revenue, respectively, from its software business, Smart Infrastructure recognized €5,769 million and €5,182 million in its products
business. Revenues of Mobility are mainly derived from construction-type business.
Revenue
Accounting policies for Segment information are generally the same as those used for the Consolidated Financial Statements. Segment
information is disclosed for continuing operations; prior year Assets are reclassified to conform to the current year presentation. For
internal and segment reporting purposes intercompany lease transactions, however, are classified as operating leases by the lessor and
are accounted for off-balance sheet by the lessee (except for intercompany leases with Siemens Healthineers as lessees). Intersegment
transactions are based on market prices.
Measurement - Segments
Eliminations, Corporate Treasury and other reconciling items - comprise consolidation of transactions within the segments, certain
reconciliation and reclassification items as well as central financing activities. It also includes interest income and expense, such as, for
example, interest not allocated to segments or POC (referred to as financing interest), interest related to central financing activities or
resulting consolidation and reconciliation effects on interest.
Centrally carried pension expense - includes the Company's pension related income (expense) not allocated to the segments, POC or
Siemens Real Estate.
Corporate items - includes corporate costs, such as group managing costs, basic research of Corporate Technology, Siemens Advanta, as
well as corporate services and projects. Corporate items also include equity interests, activities generally intended for closure as well as
activities remaining from divestments and discontinued operations.
Siemens Real Estate (SRE) - manages the Group's real estate business portfolio, operates the properties, and is responsible for building
projects and the purchase and sale of real estate; excluded is the carved-out real estate of Siemens Healthineers; in fiscal 2020 Mobility
was excluded as well.
Siemens Energy Investment - includes our investment in Siemens Energy accounted for using the equity method as well as a smaller
investment in connection with Siemens Energy.
Reconciliation to Consolidated Financial Statements
Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
solutions, systems and services for various industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water and
fiber.
Portfolio Companies (POC)
Siemens Financial Services provides financing solutions to Siemens' customers and other companies via debt and equity investments,
offering leasing, lending and working capital financing solutions and equipment, project and structured financing.
Orders
Siemens Healthineers develops, manufactures, and sells a diverse range of innovative diagnostic and therapeutic products and services
to healthcare providers,
Orders are determined principally as estimated revenue of accepted purchase orders for which enforceable rights and obligations exist as
well as subsequent order value changes and adjustments, excluding letters of intent. To determine orders, Siemens considers termination
rights and customer's creditworthiness.
Free cash flow definition
(691)
(738)
(211)
(170)
(887)
(435)
325
94
(24)
(396)
2020
2021
Amortization of intangible assets acquired in business combinations
Centrally carried pension expense
Corporate items
Siemens Real Estate
Siemens Energy Investment
(in millions of €)
Fiscal year
Profit
POC follows the measurement principles of the segments except for SFS. Siemens Real Estate applies the measurement principles of SFS.
Reconciliation to Consolidated Financial Statements
Measurement - POC and Siemens Real Estate
Amortization, depreciation and impairments includes depreciation and impairments of property, plant and equipment as well as
amortization and impairments of intangible assets each net of reversals of impairment.
Amortization, depreciation and impairments
Free cash flow of the segments constitutes cash flows from operating activities less additions to intangible assets and property, plant and
equipment. Except for SFS, it excludes financing interest, except for cases where interest on qualifying assets is capitalized or classified as
contract costs; it also excludes income tax as well as certain other payments and proceeds. Free cash flow of SFS includes related financing
interest payments and proceeds; income tax payments and proceeds of SFS are excluded. In individual cases, free cash flow of Mobility
includes project-specific intercompany financing of long-term projects.
As of September 30, 2021 and 2020, order backlog totaled €85 billion and €70 billion (continuing operations); thereof Digital Industries
€7 billion and €5 billion, Smart Infrastructure €11 billion and €10 billion, Mobility €36 billion and €32 billion and Siemens Healthineers
€27 billion and €18 billion. In fiscal 2022, Siemens expects to convert approximately €34 billion of the September 30, 2021 order backlog
into revenue; thereof at Digital Industries approximately €6 billion, Smart Infrastructure approximately €7 billion, Mobility approximately
€9 billion and Siemens Healthineers approximately €9 billion.
34
179
Mobility, combines all Siemens businesses in the area of passenger and freight transportation, including rail vehicles, rail automation
systems, rail electrification systems, road traffic technology, digital solutions and related services,
Digital Industries, offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries,
complemented by product lifecycle and data-driven services,
767
253
204
23
22
611
820
28,946
2,144
2,202
1,104
1,314
7,142
9,847
7,560 48,658 33,859
815
1,037
544
665
1,928
3,101
2,184 31,489 15,338
2,847
8,808
512
345 30,384
(85) (673)
576
52,832
716
3,209
58,759
697
3,058
354
Smart Infrastructure, offers products, systems, solutions, services and software to support a sustainable transition in energy generation
sources, from fossil to renewable and a transition to smarter, more sustainable buildings and communities,
270
25
Description of reportable segments
Consolidated Financial Statements
40
40
3,098
3,075
1,730 1,498
6,352
543
616
347
376
(1,670)
(249) (1,502) (1,739) (1,731) 59,990 60,325 (2,642)
62,265 55,254 7,496 5,502 139,608 123,897 8,379
(1,960)
(1,018)
458
55,254
769
62,265
71,374 58,030
Siemens (continuing operations)
(353) (1,672)
Consolidated Financial Statements
Reconciliation to
159
53
18
Siemens Industry Software SARL, Sala Al Jadida / Morocco
VIBECO - Virtual Buildings Ecosystem Oy, Espoo / Finland
Acuson France SAS, Saint-Denis / France
Castor III B.V., The Hague / Netherlands
1007
10010
1009
100
10010
85
10010
100
100
10010
10010
1007
1009
10010
85
100
Kyros 54 GmbH, Munich
Kyros 58 GmbH, Munich
Kyros 66 GmbH, Munich
Kyros 67 GmbH, Munich
Kyros B AG, Munich
Kyros C AG, Munich
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
Moorenbrunn Entwicklungs Management GmbH, Grünwald
Moorenbrunn Entwicklungs-GmbH & Co. KG, Grünwald
NEO New Oncology GmbH, Cologne
Next47 GmbH, Munich
Next47 Services GmbH, Munich
Omnetric GmbH, Munich
in %
Onespin Solutions GmbH, Munich
Equity interest
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
KACO new energy GmbH, Neckarsulm
0.1
41.6
68.6
In fiscal 2021 and 2020, 43% and 44%, respectively, of the total fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
Germany.
Audit Services relate primarily to services provided by EY for auditing Siemens' Consolidated Financial Statements, for auditing financial
statements of Siemens AG and its subsidiaries, for reviews of interim financial statements being integrated into the audit, for project-
accompanying IT audits, for audit services in connection with the implementation of new accounting standards as well as for audits of the
internal control system at service companies. Other Attestation Services include primarily audits of financial statements as well as other
attestation services in connection with M&A activities, audits of employee benefit plans, attestation services related to the sustainability
reporting, comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested on a
voluntary basis.
NOTE 33 Corporate governance
The Managing and Supervisory Boards of Siemens Aktiengesellschaft and of Siemens Healthineers AG, a publicly listed subsidiary of
Siemens, provided the declarations required under Section 161 of the German Stock Corporation Act (AktG) on October 1, 2021 and
September 30, 2021. The declarations are available on the company's websites at siemens.com/gcg-code and at corporate.siemens-
healthineers.com/investor-relations/corporate-governance.
NOTE 34 Subsequent events
In October 2021, Siemens recognized a pre-tax gain of €291 million related to Siemens' investment in Fluence Energy, LLC, Delaware, U.S.
(Fluence), an investment accounted for using the equity method, which is active in energy storage products and services and digital
applications for renewables and storage. Fluence issued new equity to a newly formed parent holding company, Fluence Energy, Inc., a
Delaware corporation, which in turn issued shares of stock through an initial public offering. The transaction diluted Siemens' share
in Fluence to 34%.
In October 2021, Siemens acquired the Netherlands based company SQCAP B.V. (Sqills), a provider in the provision of cloud-based
inventory management, reservation, and ticketing software to public transport operators around the world. The acquired business will be
integrated into Mobility. The purchase price is €537 million paid in cash plus contingent consideration recognized at the acquisition date
44
Consolidated Financial Statements
at its maximum amount of €79 million. The purchase price allocation is preliminary as a detailed analysis of the assets and liabilities has
not been finalized. Resulting Other Intangible assets include mainly customer-related intangible assets of €193 million and technology-
related intangible assets of €138 million, while Goodwill of €368 million comprises intangible assets that are not separable such as
employee know-how and synergy effects.
NOTE 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the
German Commercial Code
September 30, 2021
Subsidiaries
Germany (121 companies)
Acuson GmbH, Erlangen
Airport Munich Logistics and Services GmbH, Hallbergmoos
AIT Applied Information Technologies GmbH & Co. KG, Stuttgart
AIT Verwaltungs-GmbH, Stuttgart
Alpha Verteilertechnik GmbH, Cham
BEFUND24 GmbH, Erlangen
Berliner Vermögensverwaltung GmbH, Berlin
Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
Dade Behring Grundstücks GmbH, Kemnath
eos.uptrade GmbH, Hamburg
evosoft GmbH, Nuremberg
Geisenhausener Entwicklungs Management GmbH, Grünwald
Geisenhausener Entwicklungs-GmbH & Co. KG, Grünwald
HaCon Ingenieurgesellschaft mbH, Hanover
ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
KompTime GmbH, Munich
100
10010
1007
1009, 12
45
Consolidated Financial Statements
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 2 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objektmanagement GmbH, Grünwald
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Digital Logistics GmbH, Frankenthal
Siemens Electronic Design Automation GmbH, Munich
Siemens Finance & Leasing GmbH, Munich
Siemens Financial Services GmbH, Munich
Siemens Fonds Invest GmbH, Munich
Siemens Global Innovation Partners Management GmbH, Munich
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Healthcare GmbH, Munich
Siemens Healthineers AG, Munich
Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
Siemens Healthineers Beteiligungen Verwaltungs-GmbH, Röttenbach
Siemens Healthineers Holding I GmbH, Munich
Siemens Healthineers Holding II GmbH, Munich
Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
Siemens Healthineers Innovation Verwaltungs-GmbH, Röttenbach
Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
Siemens Immobilien GmbH & Co. KG, Grünwald
Siemens Immobilien Management GmbH, Grünwald
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
Siemens Industry Software GmbH, Cologne
Siemens Liquidity One, Munich
Siemens Logistics GmbH, Constance
Siemens Medical Solutions Health Services GmbH, Grünwald
Siemens Middle East Services LP GmbH, Munich
Siemens Mobility GmbH, Munich
10010
1007
10010
100
1007
1007
1007
1007
1007
10010
1007
1009
100
Siemens S.A., Casablanca / Morocco
10010
100
100
Onespin Solutions Holding GmbH, Munich
10.4
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Tübingen KG, Grünwald
REMECH Systemtechnik GmbH, Unterwellenborn
100
1009
100
10010
RISICOM Rückversicherung AG, Grünwald
Siemens Bank GmbH, Munich
Siemens Beteiligungen Europa GmbH, Munich
Siemens Beteiligungen Inland GmbH, Munich
Siemens Beteiligungen Management GmbH, Kemnath
Siemens Beteiligungen USA GmbH, Berlin
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
100
100
R & S Restaurant Services GmbH, Munich
3.9
58.1
37.6
5,582
3,504
Siemens
62,265
55,254
62,265
55,254
51,716
35,537
thereof Germany
11,249
9,373
13,226
11,227
7,061
6,995
thereof countries outside of Germany
51,016
45,881
49,039
44,027
44,655
28,543
therein U.S.
13,521
12,761
13,901
12,907
21,550
11,630
13,773
12,784
14,815
23,724
28,563
32,066
27,252
31,138
Europe, C.I.S., Africa, Middle East
2021
2020
2021
2020
Sep 30,
Fiscal year
Fiscal year
2021
(in millions of €)
13,656
Non-current assets
Revenue by location
of customers
60,325
59,990
(33,049)
(45,289)
27,568
33,456
16,312
15,218
16,426
15,061
22,409
14,410
Asia, Australia
Revenue by location
of companies
Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
Non-current assets consist of property, plant and equipment, goodwill and other intangible assets.
Joint ventures and associates
870
1,407
In fiscal 2021 and 2020, sales of goods and services and other income resulting from transactions between discontinued operations and
joint ventures and associates amounted to €97 million and €391 million, respectively. Purchases of goods and services and other expenses
resulting from transactions between discontinued operations and joint ventures and associates amounted to €1 million and €174 million,
respectively.
As of September 30, 2021 and 2020, receivables to associates included reimbursement rights against Siemens Energy which were
recognized correspondingly with obligations from customer contracts in connection with Siemens Energy activities legally remaining at
Siemens. Liabilities to associates as of September 30, 2021 and 2020 were mainly due to trade receivables that also result from these
activities and that have economically to be allocated to Siemens Energy.
As of September 30, 2021 and 2020, guarantees to joint ventures and associates amounted to €14,533 million and €27,505 million,
respectively, thereof €14,159 million and €27,253 million, respectively, to associates. These guarantees included mainly obligations from
performance and credit guarantees in connection with the Siemens Energy business. For these guarantees, Siemens has reimbursement
rights towards Siemens Energy.
As of September 30, 2021 and 2020, loans given to joint ventures and associates amounted to €1,138 million and €900 million, therein
€1,122 million and €881 million related to joint ventures, respectively. The related book values amounted to €28 million and €26 million,
therein €25 million and €20 million related to joint ventures, respectively. Valuation adjustments recognized in fiscal 2021 and 2020
reduced book values of loans related to joint ventures by €242 million and €744 million, respectively.
As of September 30, 2021 and 2020, the Company had commitments to make capital contributions to joint ventures and associates of
€72 million and €62 million, therein €65 million and €51 million related to joint ventures, respectively.
43
Consolidated Financial Statements
As of September 30, 2021 and 2020, there were loan commitments to joint ventures amounting to €222 million and €299 million,
respectively.
Pension entities
For information regarding the funding of our post-employment benefit plans see Note 17.
Related individuals
In fiscal 2021 and 2020, members of the Managing Board – including members who left during fiscal 2021 - received cash compensation
of €21.4 million and €15.3 million. The fair value of share-based compensation amounted to €11.6 million and €11.3 million for 202,139
and 203,460 stock awards, respectively, granted in fiscal 2021 and 2020. In fiscal 2021 and 2020, the Company granted contributions
under the BSAV to members of the Managing Board totaling €3.0 million and €4.5 million, respectively.
Therefore, in fiscal 2021 and 2020, compensation and benefits, attributable to members of the Managing Board amounted to €36.0
million and €31.0 million in total, respectively.
In fiscal 2021 and 2020, expense related to share-based compensation amounted to €7.6 million and €17.7 million, respectively, including
expenses related to the additional cash payment compensation due to the spin-off of Siemens Energy.
Former members of the Managing Board and their surviving dependents received emoluments within the meaning of
Section 314 para. 1 No. 6 b of the German Commercial Code totaling €30.1 million and €16.0 million in fiscal 2021 and 2020, respectively.
The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving
dependents as of September 30, 2021 and 2020 amounted to €192.0 million and €176.5 million, respectively.
Compensation attributable to members of the Supervisory Board comprised in fiscal 2021 and 2020 base compensation and additional
compensation for committee work and amounted to €5.2 and €5.3 million (including meeting fees), respectively.
In fiscal 2021 and 2020, no other major transactions took place between the Company and the members of the Managing Board and the
Supervisory Board.
Some of our board members hold, or in the last year have held, positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary course of our business whereby we buy and sell a wide variety of products
and services on arm's length terms.
NOTE 32 Principal accountant fees and services
Fees related to professional services rendered by the Company's principal accountant, EY, for fiscal 2021 and 2020 are:
(in millions of €)
Audit services
Other attestation services
Tax services
Fiscal year
2021
2020
1,181
1,358
861
49
Siemens has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a
wide variety of products and services generally on arm's length terms. The transactions between continuing operations and joint ventures
and associates were as follows:
(in millions of €)
Joint ventures
Associates
Sales of goods and services
and other income
Fiscal year
2021
Purchases of goods and
services and other expenses
Receivables
Liabilities
Fiscal year
Sep 30,
2020
2021
2020
2021
NOTE 31 Related party transactions
169
10
34
113
1,329
1,498
68
215
584
594
87
121
1,129
1,242
Sep 30,
2020
76
1,105
Sep 30,
2021
Sep 30,
2020
8
147
Siemens Mobility Real Estate Management GmbH, Grünwald
10010
100
100
100
100
1007
46
46
Consolidated Financial Statements
Siemensstadt CX Verwaltungs GmbH, Grünwald
Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
Siemensstadt Management GmbH, Grünwald
Siemensstadt SPE Verwaltungs GmbH, Grünwald
Siemensstadt SWHH Verwaltungs GmbH, Grünwald
Siemensstadt VG Verwaltungs GmbH, Grünwald
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
SIMAR Ost Grundstücks-GmbH, Grünwald
100
SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
timeseries germany GmbH, Munich
Varian Medical Systems Haan GmbH, Haan
Varian Medical Systems München GmbH, Munich
Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
VMS Deutschland Holdings GmbH, Darmstadt
VMZ Berlin Betreibergesellschaft mbH, Berlin
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH, Munich
Weiss Spindeltechnologie GmbH, Maroldsweisach
Yunex GmbH, Munich
Zeleni Holding GmbH, Kemnath
Zeleni Real Estate GmbH & Co. KG, Kemnath
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (306 companies)
ESTEL Rail Automation SPA, Algiers / Algeria
Siemens Spa, Algiers / Algeria
Varian Medical Systems Algeria Spa., Hydra / Algeria
Siemens Industry Software Closed Joint-Stock Company, Yerevan / Armenia
Varian Medical Systems Deutschland GmbH & Co. KG, Darmstadt
ETM professional control GmbH, Eisenstadt / Austria
10010
1009
1009
Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
Siemens OfficeCenter Verwaltungs GmbH, Grünwald
Siemens Private Finance Versicherungsvermittlungsgesellschaft mbH, Munich
Siemens Project Ventures GmbH, Erlangen
100
Siemens Real Estate Consulting GmbH & Co. KG, Munich
Siemens Real Estate Consulting Management GmbH, Grünwald
Siemens Real Estate GmbH & Co. KG, Kemnath
Siemens Real Estate Management GmbH, Kemnath
Siemens Technology Accelerator GmbH, Munich
Siemens Technopark Mülheim GmbH & Co. KG i.L., Grünwald
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
Siemens Traction Gears GmbH, Penig
Siemens Trademark Management GmbH, Kemnath
1007
Siemens Treasury GmbH, Munich
Siemens-Fonds Pension Captive, Munich
Siemens-Fonds S-7, Munich
Siemens-Fonds S-8, Munich
Siemensstadt C1 Verwaltungs GmbH, Grünwald
10010
10010
1009
100
100
1007
10010
1009
1009
10010
Siemens-Fonds C-1, Munich
ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
1007
1009
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
Siemens Healthcare AS, Oslo / Norway
Siemens AS, Oslo / Norway
100
100
100
100
1007
1007
1007
1007
100
10010
10010
100
10013
100
100
10013
100
10010
100
100
100
100
100
100
100
49
49
Siemens Personaldienstleistungen GmbH, Vienna / Austria
100
Siemens Mobility Austria GmbH, Vienna / Austria
Siemens Konzernbeteiligungen GmbH, Vienna / Austria
Siemens Industry Software GmbH, Linz / Austria
Siemens Healthcare Diagnostics GmbH, Vienna / Austria
Siemens Gebäudemanagement & -Services G.m.b.H., Vienna / Austria
Siemens Aktiengesellschaft Österreich, Vienna / Austria
Omnetric GmbH, Vienna / Austria
Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
1007
Siemens Trademark GmbH & Co. KG, Kemnath
10010
1009
1009
1009
1009
1009
1009
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Yunex Traffic B.V., Zoetermeer / Netherlands
Varian Medical Systems Nederland Finance B.V., Houten / Netherlands
1009
TS International B.V., Rotterdam / Netherlands
1009
TASS International B.V., Helmond / Netherlands
Timeseries Group B.V., Rotterdam / Netherlands
Siemens Mobility Holding B.V., The Hague / Netherlands
Siemens Mobility B.V., Zoetermeer / Netherlands
Siemens International Holding III B.V., The Hague / Netherlands
Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
Siemens Healthineers Holding III B.V., The Hague / Netherlands
Siemens Healthineers Holding IV B.V., The Hague / Netherlands
Siemens Healthineers Nederland B.V., The Hague / Netherlands
Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
Siemens International Holding B.V., The Hague / Netherlands
Siemens Finance B.V., The Hague / Netherlands
Pollux III B.V., The Hague / Netherlands
Mentor Graphics (Netherlands) B.V., Eindhoven / Netherlands
Mendix Technology B.V., Rotterdam / Netherlands
Fractal Technologies B.V., Ospel / Netherlands
Flowmaster Group N.V., Eindhoven / Netherlands
Dresser-Rand International B.V., The Hague / Netherlands
Siemens Nederland N.V., The Hague / Netherlands
100
Varian Medical Systems Nederland B.V., Houten / Netherlands
100
1007
100
1007
100
1007
1009
100
1009
1009
100
100
10010
100
1007
1007
75
1007
100
1007
10010
10010
10010
100
100
Profit
Profit margin
Fiscal year
2022
% Change
Actual
Comp.
20,620
25,283
(18)%
2023
therein: software business
2023
(17)%
(in millions of €)
Orders
Research & Development (R&D) activities at Digital Industries are aimed at innovative ways to merge the real and digital worlds with a
continuous flow of data, so that customers can improve their products, production and resource efficiency. Digital Industries' innovations
incorporate artificial intelligence (AI), edge computing, SaaS and software-defined control, among other advanced technologies. As part
of Siemens' open digital marketplace Siemens Xcelerator - a business platform that includes a curated portfolio of internet-of-things-
enabled hardware, software and digital services from across Siemens and certified third parties and facilitates interactions and transactions
between customers, partners and developers Digital Industries in fiscal 2023 introduced Industrial Operations X, an open and
interoperable portfolio for automating and operating industrial production. Industrial Operations X focuses on integrating IT capabilities
such as Al, low-code programming, edge computing, and cloud computing with automation technology and digital services. Through
various collaborations, Digital Industries is developing industrial-grade Al solutions. With Intrinsic, an Alphabet company, Digital Industries
collaborates to accelerate the integration of Al-based robotics and automation technology. Digital Industries and Microsoft are harnessing
generative Al to help industrial companies drive innovation and efficiency across the entire product lifecycle. Also in fiscal 2023, Digital
Industries introduced several innovations based on cloud and edge technologies such as Simcenter Cloud HPC, which provides instant-on,
rapidly scalable cloud-based high performance computing for complex simulation studies, hosted on Amazon Web Services; and Industrial
Edge Management System for Kubernetes clusters, which addresses IT users in production and aims to save IT resources, energy, and
costs. Major investments of Digital Industries in fiscal 2023 relate to its own factory automation, motion control and process automation
businesses, to further automate and digitalize facilities particularly in Germany, China and Singapore.
-
offerings, which their customers either need or want in order to take full advantage of the investment goods. Finally, there is a trend from
globalization to regionalization, to support local economic development, to increase supply chain resilience or to better adapt solutions to
local needs. This is increasingly accompanied by more differentiated regulatory requirements.
Combined Management Report
6
Digital Industries sees three trends influencing its business and providing long-term growth opportunities. Producers of investment goods
in today's increasingly digital environment must modernize their production capacity, particularly to increase production flexibility and
reduce time to market. This environment also spurs producers to complement their core products with vertical solutions and service
Taken together, Digital Industries' offerings enable customers to optimize entire value chains from product design and development
through production and post-sale services. With its advanced software solutions in particular, Digital Industries supports customers in their
evolution towards the "Digital Enterprise," resulting in increased flexibility and efficiency of production processes and reduced time to
market for new products. The most important customer markets include the automotive industry, the machine-building industry, the
pharmaceutical and chemicals industry, the food and beverage industry and the electronics and semiconductor industry. Digital Industries
serves its customers through a common regional sales organization spanning all its businesses, using various sales channels depending
on the type of customer and industry and also enhancing customer choice across all channels. Changes in customer demand, especially
for standard products, are driven strongly by macroeconomic cycles, and can lead to significant short-term fluctuation in Digital Industries'
profitability. Volume from large contracts in the software business, particularly for EDA, may also result in strong fluctuations in quarterly
volume and profitability. In fiscal 2023, Digital Industries continued to transition parts of its software business, particularly PLM, from
largely upfront revenue recognition towards Software as a Service (SaaS), which yields more predictable recurring revenue and offers
growth opportunities by opening access to new customers, especially small and medium-sized companies seeking to reduce costs
associated with owning complex IT infrastructure. The transition held back revenue growth rates and profit margin development in the
software business in fiscal 2023 and Digital Industries expects continued impacts until completion of the transition. Competition with
Digital Industries' business activities comes primarily from multinational corporations that offer a relatively broad portfolio and from
smaller companies active only in certain geographic or product markets.
Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries;
these offerings include automation systems and software for factories, numerical control systems, servo motors, drives and inverters and
integrated automation systems for machine tools and production machines. Digital Industries also provides process control systems,
machine-to-machine communication products, sensors (for measuring pressure, temperature, level, flow rate, distance or shape) and
radio frequency identification systems. Furthermore, Digital Industries offers production and product lifecycle management (PLM)
software, and software for simulation and testing of mechatronic systems. These leading software offerings are supplemented by an
electronic design automation (EDA) software portfolio; the Mendix cloud-native low-code application development platform, which allows
customers to significantly reduce app development times through visual representation of underlying code; and digital marketplaces for
the global electronics value chain, such as Supplyframe and Pixeom. Digital Industries also provides customers with lifecycle and data-
driven services.
Revenue
21,919
19,517
12%
As in the past, we intend to fund the dividend payout from Free cash flow. Our primary measure to assess our ability to generate cash,
and ultimately to pay dividends, is the cash conversion rate for the Siemens Group, defined as the ratio of Free cash flow (continuing and
discontinued operations) to net income. Over a cycle of three to five years, we aim to achieve a cash conversion rate of 1 minus the annual
comparable revenue growth rate.
At the Annual Shareholders' Meeting, the Managing Board, in agreement with the Supervisory Board, will submit the following proposal
to allocate the unappropriated net income of Siemens AG for fiscal 2023: to distribute a dividend of €4.70 on each share of no par value
entitled to the dividend for fiscal 2023 existing at the date of the Annual Shareholders' Meeting; the remaining amount is to be carried
4
Combined Management Report
forward. Payment of the proposed dividend is contingent upon approval by Siemens shareholders at the Annual Shareholders' Meeting on
February 8, 2024. The prior-year dividend was €4.25 per share.
2.5 Calculations of EPS pre PPA and ROCE
Calculation of EPS pre PPA
Fiscal year
(in millions of €, shares in thousands, earnings per share in €)
2023
2022
Net income attributable to shareholders of Siemens AG
7,949
3,723
Plus: Amortization of intangible assets acquired in business combinations - attributable to shareholders of Siemens AG
Less: Taxes on adjustment
773
882
(193)
(220)
(I) Adjusted Net income attributable to shareholders of Siemens AG
8,529
4,384
(II) Weighted average shares outstanding
792
10.77
10%
8%
4,691
5,067
15%
3.2 Digital Industries
The partly estimated figures presented here for GDP are based on an S&P Global report dated October 15, 2023.
In the post-pandemic world, consumption patterns of households continued to normalize. In particular, the shift to goods from services
triggered by COVID-19 ended and then reversed, with a strong rebound of the service sector including tourism, and a normalization of
goods demand. In addition, in light of much higher interest rates many firms started to reduce their inventory levels, which they had
previously elevated as a precautionary measure to ensure production and delivery during periods of supply chain bottlenecks. Accordingly,
both global goods demand and trade were significantly weaker in calendar 2023.
The U.S. economy was a positive surprise. Although monetary policy was substantially tightened and the main policy interest rate was
increased to 5.5%, consumption and investment were strong and GDP is expected to expand by 2.5% in calendar 2023. In particular the
labor market was robust and unemployment remained at historic lows. Despite the strong economy, inflation and core inflation rates
declined substantially. By end of calendar 2023, consumer price inflation is expected to be approximately 3%, after it reached nearly 6.5%
at the end of calendar 2022. Receding global commodity and energy prices and the dissolvement of supply chain bottlenecks both helped
ease inflation while tighter monetary policy had the desired effect of anchoring inflation expectations. This helped the U.S. avoid a price-
wage-price spiral which could have led to structurally higher inflation rates.
Less: Goodwill and other intangible assets resulting from purchase price allocation related to the Varian acquisition
Plus: Long-term debt
Total equity
Calculation of capital employed
For purposes of calculating ROCE in interim periods, Income before interest after tax is annualized. Average capital employed is determined
using the average of the respective balances as of the quarterly reporting dates for the periods under review.
1 Item Other interest expenses/income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.
2 Effects resulting from purchase price allocation for Varian Medical Systems, Inc. (Varian) which are comprised of amortization of tangible and intangible assets, inventory step-ups, deferred revenue adjustments and
related income taxes.
10.0%
18.6%
47,996
47,002
4,819
8,765
365
251
(27)
6
5
51
97
971
957
(939)
(1,075)
4,392
8,529
2022
Plus: Short-term debt and current maturities of long-term debt
Less: Cash and cash equivalents
Less: Current interest-bearing debt securities
Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt
These trends were primary contributors for the significant slowdown of the Chinese economy during calendar 2023, after it started very
dynamically in the first quarter of calendar 2023 following lifting of severe COVID-19 lockdowns. Another main contributor for the
slowdown was the intensification of the country's real estate crisis. Hence, China's GDP is expected to grow by only 5% in calendar 2023,
which is regarded as low because under multiple lockdowns in calendar 2022, China delivered GDP growth of only 3% and some catching-
up in 2023 was expected.
(1) / (II) ROCE
Overall, calendar 2023 was characterized by many headwinds for the global economy. Global economic development continued to slowly
recover from the negative shocks of the previous years: the coronavirus pandemic (COVID-19) with its disruptions on global demand and
supply chains; war in Ukraine and the following commodity price explosions, especially for European energy; spiraling inflation and severe
financial tightening which caused some turbulence in the banking sector and financial markets. After calendar 2022, in which global gross
domestic product (GDP) increased by 3.1%, calendar 2023 is expected to show global GDP increasing by 2.6%, which shows a remarkable
resilience of the global economy, given the number of big negative shocks of the previous year.
3.1 Overall economic conditions
3. Segment information
801
5.47
(I) (II) EPS pre PPA
Calculation of ROCE
Fiscal year
Less: Other interest expenses/income, net¹
Plus: SFS Other interest expenses/income
While the U.S. showed stronger economic growth than expected, the European Union (E.U.) experienced the difficulties that were widely
expected. The drastic increase of energy prices in calendar 2022, a result of the war in Ukraine, had a severe negative impact, especially
on energy-intensive industries. Strong increases in inflation rates led the European Central bank to increase the main policy interest rate
to 4.5% which weighed on fixed investment, especially in the real estate sector. Moreover, the global manufacturing and trade slowdown
mentioned above weighed on the E.U., due in particular to the high concentration of manufacturing and export industries in Germany,
the region's largest economy. GDP growth in calendar 2023 is expected to be 0.4% in the E.U. and -0.4% in Germany. Only the service
sector, in particular tourism, supported the overall E.U. economy.
Net income
Less: Interest adjustments (discontinued operations)
Less: Taxes on interest adjustments (tax rate (flat) 30%)
Plus: Defined Varian-related acquisition effects (after tax)²
We intend to continue providing an attractive return to our shareholders. In the Siemens Financial Framework, we strive for a dividend per
share that exceeds the amount for the preceding year, or at least matches it.
(in millions of €)
(I) Income before interest after tax
(II) Average capital employed
Combined Management Report
5
Plus: Adjustments from assets classified as held for disposal and liabilities associated with assets classified as held for disposal
Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses on provisions for pensions and similar obligations
Capital employed (continuing and discontinued operations)
Less: SFS debt
Plus: Provisions for pensions and similar obligations
Plus: Net interest expenses related to provisions for pensions and similar obligations
2.4 Liquidity and dividend
33
2.3 Capital structure
7. Overall assessment of the economic position
30
8.3 Risks
222228
29
25
23
20
6.2 Cash flows
18
6.1 Capital structure
17
6. Financial position
17
8. Report on expected developments and associated material opportunities and risks
8.1 Report on expected developments
5. Net assets position
4.3 Research and development
4.2 Income
4455
15
15
14
14
11
666890123
45
4.1 Orders and revenue by region
4. Results of operations
3.8 Reconciliation to Consolidated Financial Statements
3.7 Portfolio Companies
16
3.6 Siemens Financial Services
8.2 Risk management
As of September 30, 2023, Siemens has the following reportable segments: Digital Industries, Smart Infrastructure, Mobility and
Siemens Healthineers, which together form our “Industrial Business" and Siemens Financial Services (SFS), which supports the activities
of our industrial businesses and also conducts its own business with external customers. Furthermore, we report results for Portfolio
Companies, which comprises businesses that are managed separately to improve their performance.
33
33
9. Siemens AG
9.1 Results of operations
34
9.2 Net assets and financial position
34
9.3 Corporate Governance statement
35
10. Takeover-relevant information (pursuant to Sections 289a and 315a of the German Commercial Code) and
explanatory report
35
10.1 Composition of common stock
35
10.2 Restrictions on voting rights or transfer of shares
Our reportable segments and Portfolio Companies may do business with each other, leading to corresponding orders and revenue. Such
orders and revenue are eliminated on Group level.
35
37
37
10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
removal of members of the Managing Board and governing amendment to the Articles of Association
10.4 Powers of the Managing Board to issue and repurchase shares
10.5 Significant agreements which take effect, alter or terminate upon a change of control of
the Company following a takeover bid
10.6 Compensation agreements with members of the Managing Board or employees in the
event of a takeover bid
8.4 Opportunities
10.7 Other takeover-relevant information
38
11. EU Taxonomy disclosure
Combined Management Report
1. Organization of the Siemens Group and basis of presentation
Siemens is a technology group that is active in nearly all countries of the world, focusing on the areas of automation and digitalization in
the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions
for rail transport, and medical technology and digital healthcare services.
Siemens comprises Siemens Aktiengesellschaft (Siemens AG), a stock corporation under the Federal laws of Germany, as the parent
company, and its subsidiaries. Our Company is incorporated in Germany, with our corporate headquarters situated in Munich. As of
September 30, 2023, Siemens had around 320,000 employees.
35
Sustainable revenue and profit development is supported by a healthy capital structure. Accordingly, a key consideration within the
Siemens Financial Framework is to maintain ready access to the capital markets through various debt products and preserve our ability to
repay and service our debt obligations over time. Our primary measure for managing and controlling our capital structure is the ratio of
Industrial net debt to EBITDA (continuing operations). This financial measure indicates the approximate amount of time in years that would
be needed to cover Industrial net debt through income from continuing operations, without taking into account interest, taxes,
depreciation and amortization. We aim to achieve a ratio of up to 1.5.
3.5 Siemens Healthineers
3.3 Smart Infrastructure
Siemens Report
for fiscal 2023
SIEMENS
Table of reports
Combined Management Report
Non-financial matters of the Group and Siemens AG
Siemens has policies for environmental, employee and social matters, for the respect of human rights, and anti-corruption and bribery
matters, among others. Our business model is described in chapters 1 and 3 of this Combined Management Report. Reportable information
that is necessary for an understanding of the development, performance, position and the impact of our activities on these matters is
included in this Combined Management Report, in particular in chapters 3 through 7. Forward-looking information, including risk
disclosures, is presented in chapter 8. Chapter 9 includes additional information that is required to be reported in the Combined
Management Report related to the parent company Siemens AG. EU Taxonomy disclosures are outlined in chapter 11.
As supplementary information, amounts reported in the Consolidated Financial Statements and the Annual Financial Statements of
Siemens AG related to such non-financial matters, and additional explanations thereto, are included in Notes to Consolidated Financial
Statements for fiscal 2023, Notes 17, 18, 22, 26 and 27, and in the Notes to the Annual Financial Statements for fiscal 2023, Notes 16,
17, 20, 21 and 25. In order to inform the users of the financial reports in a focused manner, these disclosures are not subject to a specific
non-financial framework - in contrast to the disclosures in our separate "Sustainability report 2023" document, which are based on the
standards developed by the Global Reporting Initiative (GRI). Said document also includes detailed information on DEGREE, Siemens'
sustainability framework. With DEGREE, Siemens intends to manage and track its progress on selected ambitions in the environmental,
social and governance areas.
3
Combined Management Report
2. Financial performance system
2.1 Revenue growth
In the Siemens Financial Framework we aim to achieve a revenue growth range of 5% to 7% per year on a comparable basis over a cycle
of three to five years. Our primary measure for managing and controlling our revenue growth is comparable growth, because it shows the
development in our business net of currency translation effects, which arise from the external environment outside of our control, and
portfolio effects, which involve business activities which are either new to or no longer a part of the respective business.
Currency translation effects are the difference between revenue for the current period calculated using the exchange rates of the current
period and revenue for the current period calculated using the exchange rates of the comparison period. For calculating the percentage
change year-over-year, this absolute difference is divided by revenue for the comparison period. A portfolio effect arises in the case of an
acquisition or a disposition and is calculated as the change year-over-year in revenue related to the transaction. For calculating the
percentage change, this absolute change is divided by revenue for the comparison period. Any portfolio effect is excluded for the twelve
months following the relevant transaction after which both current and past reporting periods fully reflect the portfolio change. For orders,
we apply the same calculations for currency translation and portfolio effects as described above.
8.5 Significant characteristics of the internal control and risk management system
2.2 Profitability and capital efficiency
Digital Industries
Smart Infrastructure
Mobility
Siemens Healthineers
Margin range
17-23%
11-16%
10-13%
17-21%
Siemens Financial Services (ROE after tax)
15-20%
For Siemens Healthineers, we present the margin range we expect as that company's majority shareholder.
In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at SFS is return on
equity after tax, or ROE after tax. ROE is defined as SFS' profit after tax, divided by its average allocated equity.
Primary measure for managing and controlling profit and profitability at Group level: Net income is the primary driver of basic earnings
per share from net income (EPS) as well as of EPS before purchase price allocation accounting (EPS pre PPA) which is used for our capital
market communication. EPS pre PPA is defined as basic earnings per share from net income adjusted for amortization of intangible assets
acquired in business combinations and related income taxes. As with EPS, EPS pre PPA includes the amounts attributable to shareholders
of Siemens AG. We aim to achieve high-single-digit annual growth in EPS pre PPA over a cycle of three to five years.
We seek to work profitably and as efficiently as possible with the capital provided by our shareholders and lenders. For purposes of
managing and controlling our capital efficiency, we use return on capital employed, or ROCE, as our primary measure in our Siemens
Financial Framework. Our goal is to achieve a ROCE within a range of 15% to 20% over a cycle of three to five years.
Within the Siemens Financial Framework, we aim to achieve over a cycle of three to five years margins that are comparable to those of
our relevant competitors. Therefore, we have defined profit margin ranges for our industrial businesses which also consider the profit
margins of their respective relevant competitors. Profit margin is defined as profit of the respective business divided by its revenue.
For our industrial businesses, profit represents EBITA adjusted for amortization of intangible assets not acquired in business combinations.
We have set the following margin ranges:
3.4 Mobility
4,947
Responsibility Statement (Siemens Group)
3.2 Digital Industries
3.1 Overall economic conditions
3. Segment information
2.5 Calculations of EPS pre PPA and ROCE
2.4 Liquidity and dividend
2.3 Capital structure
2.2 Profitability and capital efficiency
2.1 Revenue growth
2. Financial performance system
1. Organization of the Siemens Group and basis of presentation
Combined Management Report
4
4
4
Consolidated Financial Statements
4
Table of contents
SIEMENS
for fiscal 2023
Report
Combined Management
Notes and forward-looking statements
Corporate Governance Statement
Report of the Supervisory Board
Compensation Report (including Auditor's Report)
Five-Year Summary
Independent Auditor's Report (Siemens AG)
Responsibility Statement (Siemens AG)
Annual Financial Statements
Independent Auditor's Reports (Siemens Group)
3
3,892
37
22.6%
20,798
Actual
7%
Comp.
7%
19,946
17,353
15%
4,243
22,333
3,856
11%
3,074
2,222
38%
15.4%
12.8%
8
27%
10%
2022
15%
Fiscal year
2023
19.9%
% Change
Following extraordinary demand in fiscal 2022, which included proactive customer purchasing, orders at Digital Industries came in lower
in its automation businesses. The short-cycle factory automation and the motion control businesses were affected most strongly due
particularly to destocking at customers. These declines were partly offset by significant growth in the software business, due to large
contract wins in both the PLM and the EDA businesses. Revenue rose on increases in all businesses due in part to conversion from the
order backlog which had expanded significantly in the previous fiscal year. The strongest revenue growth contributions came from the
factory automation and the process automation businesses. Overall, growth in the automation businesses was supported by improved
availability of components year-over-year. Revenue growth in the software business was led by the EDA business while year-over-year
growth in PLM was held back by the transition to SaaS. On a geographic basis, orders remained stable in the Americas region, but came in
lower in the region Europe, C.I.S., Africa, Middle East and in the region Asia, Australia due mainly to weaker demand in China. Revenue
grew in all regions with the strongest contribution coming from the region Europe, C.I.S., Africa, Middle East. Profit and profitability at
Digital Industries rose on strong improvements in all automation businesses, supported by higher capacity utilization and a more favorable
business mix including improved availability of components for high-margin products. Profit in the software business declined due to
increased expenses related to cloud-based activities including severance charges, which for Digital Industries overall rose to €109 million,
up from €64 million in the prior year.
At the beginning of fiscal 2024, business activities in the areas of low-voltage and geared motors and motor spindles, previously part of
Digital Industries' motion control business, were transferred to Portfolio Companies. If the transfer to Portfolio Companies had already
existed at the beginning of fiscal 2023, Digital Industries would have posted orders of €19.387 billion, revenue of €20.636 billion, profit
of €4.833 billion and a profit margin of 23.4%. At the beginning of fiscal 2024, Digital Industries' order backlog amounted to €11 billion,
of which €8 billion are expected to be converted into revenue in fiscal 2024.
In fiscal 2023, markets served by Digital Industries overall grew significantly. However, after a strong start, growth momentum
increasingly slowed over the course of the fiscal year. This was particularly evident in China. On a geographic basis, all regions contributed
to growth, led by the regions Americas and Europe, C.I.S., Africa, Middle East. While global supply chain constraints eased, high price
inflation led central banks to increase interest rates, which together with high energy costs impacted manufacturing industries. This
impacted predominantly consumer- and building-related industries whereas production of investments goods still benefited from
converting high order backlogs into current revenue. The entire manufacturing industry experienced a destocking of inventories as a
countereffect of proactive ordering in the previous fiscal year. This was most evident in distributor channels and resulted in a significant
decline in orders for automation equipment. Discrete industries, which are closer to consumer spending than process industries, were
impacted earlier and more strongly than process industries, which are more project-based. The global automotive industry recovered
throughout the year following a weak prior year, and benefited from improved supply chain conditions. Production of electric vehicles
continued to increase. On a geographic basis, China, Japan, the U.S. and countries of the European Union saw a strong catchup of
production mainly in the first half of the fiscal year. The machine-building industry grew strongly in the first half of fiscal 2023 but growth
in major countries such as China, Germany, Japan and countries of the European Union came to a halt or market volume even declined in
the second half of the fiscal year due to less favorable investment conditions caused by rising interest rates and a more cautious investment
sentiment in consumer industries. Within the pharmaceutical and the chemicals industries, the pharmaceutical industry grew throughout
the fiscal year, but with slower momentum towards the end of the fiscal year. In contrast, production in the chemicals industries declined
in fiscal 2023. This was particularly evident within the countries of the European Union due mainly to high energy costs. The food and
beverage industry grew strongly at the beginning of the fiscal year, driven by strong price increases. In the second half of the fiscal year,
growth slowed considerably, reflecting weaker consumer spending. The market for electronics and semiconductors declined markedly at
the beginning of fiscal 2023 but began to stabilize during the second half of the fiscal year. The decline, which was particularly evident in
countries such as Taiwan and Korea with a focus on semiconductor production, was due among other factors to shrinking consumer
7
Combined Management Report
3.3 Smart Infrastructure
Smart Infrastructure offers products, systems, solutions, services and software to support the global transition from fossil to renewable
energy sources, and the associated transition to smarter, more sustainable buildings and communities. Smart Infrastructure's versatile
portfolio consists of buildings, electrification, and electrical products. Its buildings portfolio addresses the needs of operators, owners,
occupants and users of buildings. It spans integrated building management systems and software; heating, ventilation and air conditioning
controls; fire safety and security products and systems; and solutions and services such as energy performance services. With its
electrification portfolio, Smart Infrastructure makes grids more resilient, flexible and efficient. Its offerings cover grid simulation, operation
and control software; substation automation and protection; medium-voltage primary and secondary switchgear including fluorinated
gas-free (F-gas-free) medium-voltage switchgear; and low-voltage switchboards and eMobility charging infrastructure. The electrical
products portfolio addresses industrial and building applications. Its offerings include low-voltage switching, measuring and control
equipment; low-voltage distribution systems and switchgear; and circuit breakers, contactors and switching for medium voltage.
Smart Infrastructure's customer and end user base is diverse. It encompasses infrastructure developers, construction companies and
contractors; owners, operators and tenants of both public and commercial buildings including hospitals, campuses, airports and data
centers; companies in process industries such as oil and gas, pharmaceuticals and chemicals; companies in discrete manufacturing
industries such as automotive and machine building; and utilities and power grid network operators (transmission and distribution). Smart
Infrastructure serves its customers through a broad range of channels, including direct sales organizations, distributors and partners such
as panel builders, original equipment manufacturers and value-added resellers and installers. To address more complex customer
requirements, Smart Infrastructure uses its dedicated sales forces within its country organization. Furthermore, Smart Infrastructure
provides e-commerce platforms or marketplaces where customers can directly place orders on-line, either via a web shop or via electronic
interfaces, and sells its broad range of digital offerings and connected devices via Siemens Xcelerator. These digital sales channels and e-
commerce platforms are becoming increasingly important and Smart Infrastructure therefore is continuously strengthening its digital
omni-channel marketing and e-commerce platforms.
demand following unusually high demand during the COVID-19 pandemic. For fiscal 2024, markets served by Digital Industries are
expected to grow markedly slower than in fiscal 2023. While industrial software markets are expected to grow clearly, short-cycle markets
served by Digital Industries are expected to contract slightly. Among other factors, rebalancing of supply chains, trade conflicts, effects
from geopolitical tensions, cautious consumer spending and downsizing of inventories, mainly in distribution channels, are expected to
weigh on market growth.
Smart Infrastructure benefits from a number of major trends. These include urbanization, demographic change, decarbonization, and
digitalization. Urbanization and demographic change drive a need for smarter and more human-centric buildings. Climate change drives
the need for decarbonization and digitalization. This results in an increasing demand for flexible and resilient energy infrastructures
including rapid growth in electric mobility and more sustainable buildings. Digitalization is an enabler for such changes in both buildings
and grids, making it possible to develop smarter buildings and manage electricity distribution with a higher share of renewables. The
markets served are experiencing shifts that present opportunities where building technologies and electrification meet.
Profit margin
Smart Infrastructure's principal competitors consist mainly of large multinational companies and smaller manufacturers in emerging
countries. Its solutions and services business also competes with local players such as system integrators and facility management firms.
Smart Infrastructure's businesses are impacted by changes in the overall economic environment to varying degrees, depending on the
customer segment and offering. Demand for Smart Infrastructure's electrical and building products offerings is driven strongly by
macroeconomic cycles, while demand for its systems and solutions offerings changes more slowly, with a time lag of several quarters. In
contrast, demand for service offerings shows only limited influence from macroeconomic cycles. Overall, Smart Infrastructure has
developed a balanced and resilient business mix with its diversified regional and vertical markets; its range of products, systems, solutions
and services; and its participation in both long- and short-cycle markets. To further strengthen the resilience of its portfolio, Smart
Infrastructure aims to increase the share of overall revenue that comes from services.
therein: service business
Revenue
Profit
(in millions of €)
Smart Infrastructure's R&D activities focus on sustainable and decarbonizing offerings for buildings, utilities and industrial customers.
Smart Infrastructure develops digital offerings for stable operation of electrical grids with a high share of renewable energy. In this regard,
data from field devices is the basis for intelligent grid control and protection, providing grid flexibility and continuously matching energy
supply and demand while protecting grid assets. Furthermore, it develops technologies for environmentally friendly and increasingly
renewable-based energy systems, ranging from climate-friendly F-gas-free switchgear for medium voltage to charging solutions for e-
mobility and grid integration of green hydrogen production. R&D efforts also strengthen Smart Infrastructure's capabilities to improve the
sustainability, performance and attractiveness of buildings. Smart Infrastructure is expanding its digital offerings such as cloud solutions
using field data from controllers and loT devices and the business platform Building X on the principles of openness and modularity of
Siemens Xcelerator. These and other offerings are enhanced using Al and large language models. For electrical distribution systems and
industrial plants, Smart Infrastructure continuously drives digitalization of its switching and control products with connectivity to the cloud,
remote diagnostics and edge computing capability. Smart Infrastructure puts an increasing focus of R&D on the sustainability of its
products along the lifecycle, incorporating environmentally friendly designs, materials and processes. To a large extent, its capital
expenditures relate to the products businesses. Main investment areas are replacement of fixed assets and further digitalization of
factories and technical equipment, with a strong focus on innovation.
Orders
100
100
573
100
100
100
100
100
492
100
100
100
1007
492
100
492
492
Siemens Electronic Design Automation Ltd, Farnborough, Hampshire / United Kingdom
Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Healthcare Diagnostics Ltd, Camberley, Surrey / United Kingdom
100
100
100
100
Siemens plc, Farnborough, Hampshire / United Kingdom
100
Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
100
Siemens Pension Funding (General) Limited, Farnborough, Hampshire / United Kingdom
100
Siemens Mobility Limited, London / United Kingdom
100
Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
100
Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United Kingdom
100
Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
100
Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
100
Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
100
Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
100
Innomotics Motors and Large Drives Limited, Farnborough, Hampshire / United Kingdom
Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
Senseye Limited, Farnborough, Hampshire / United Kingdom
100
Henley Bidco Limited, Swindon, Wiltshire / United Kingdom
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
Acuson Middle East FZ LLC, Dubai United Arab Emirates
100% foreign owned subsidiary "Siemens Ukraine", Kiev / Ukraine
V.O.S.S. Varinak Onkoloji Sistemleri Satis Ve Servis Anonim Sirketi, Istanbul / Türkiye
Sqills Turkey Bilgi Teknolojileri Ticaret Limited Sirketi, Istanbul / Türkiye
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
Siemens Mobility Ulasim Sistemleri Anonim Sirketi, Istanbul / Türkiye
Siemens Industry Software Yazilim Hizmetleri Anonim Sirketi, Istanbul / Türkiye
100
PSE Software and Consulting L.L.C., Abu Dhabi / United Arab Emirates
Samateq FZ LLC, UAE, Abu Dhabi / United Arab Emirates
Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
Innomotics Motorlar Ve Yüksek Güclü Sürücüler Anonim Sirketi, Istanbul / Türkiye
Siemens S.A., Tunis / Tunisia
100
100
100
100
100
Siemens Finansal Kiralama A.S., Istanbul / Türkiye
SD (Middle East) LLC, Dubai / United Arab Emirates
Siemens Capital Middle East Ltd, Abu Dhabi / United Arab Emirates
10012
Data Sheet Archive Limited, Farnborough, Hampshire / United Kingdom
Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
Flomerics Group Limited, Farnborough, Hampshire / United Kingdom
Acuson United Kingdom Ltd., Camberley, Surrey / United Kingdom
Assetic UK Limited, Farnborough, Hampshire / United Kingdom
Brightly Software Limited, Farnborough, Hampshire / United Kingdom
ByteToken, Ltd, Edinburgh / United Kingdom
Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
Siemens Healthcare L.L.C., Dubai / United Arab Emirates
Siemens Industrial LLC, Masdar City / United Arab Emirates
Siemens Large Drives LLC, Abu Dhabi / United Arab Emirates
Siemens Middle East Limited, Masdar City / United Arab Emirates
SIEMENS MOBILITY LLC, Dubai / United Arab Emirates
Consolidated Financial Statements
49
100
492
100
492
1007
100
100
100
100
100
100
100
100
Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
Henley Topco Limited, Swindon, Wiltshire / United Kingdom
Siemens Rail Automation Limited, London / United Kingdom
Siemens Participações Ltda., São Paulo/ Brazil
Varian Medical Systems UK Limited, Crawley, West Sussex / United Kingdom
Acuson México, S. de R.L. de C.V., Mexico City / Mexico
Siemens S.A., Guatemala / Guatemala
Siemens S.A., Antiguo Cuscatlán / El Salvador
Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
Siemens-Healthcare Cia. Ltda., Quito / Ecuador
Siemens S.A., Quito Ecuador
Siemens Mobility, S.R.L., Santo Domingo / Dominican Republic
Siemens Healthcare Diagnostics S.A., San José / Costa Rica
Grupo Siemens S.A. de C.V., Mexico City / Mexico
Siemens S.A.S., Tenjo / Colombia
J. Restrepo Equiphos S.A.S, Bogotá / Colombia
Siemens S.A., Santiago de Chile / Chile
Innomotics S.A.S., Tenjo / Colombia
Siemens Large Drives S.A., Santiago de Chile / Chile
Siemens Mobility SpA, Santiago de Chile / Chile
Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
Varian Medical Systems Canada, Inc., Ottawa / Canada
SIEMENS MOBILITY LIMITED, Oakville / Canada
Siemens Industry Software ULC, Vancouver / Canada
Siemens Healthcare Limited, Oakville / Canada
Siemens Healthcare S.A.S., Tenjo / Colombia
Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad Juárez / Mexico
Innomotics Motors, S. de R.L. de C.V., Mexico City / Mexico
Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City/Mexico
100
100
100
100
10013
100
100
10013
100
100
Consolidated Financial Statements
Innomotics S.A.C., Surquillo / Peru
Innomotics S.A., Panama City / Panama
Siemens, S.A. de C.V., Mexico City / Mexico
SIEMENS SERVICIOS COMERCIALES SA DE CV, SOFOM, ENR, Mexico City / Mexico
Siemens Mobility S. de R.L. de C.V., Mexico City / Mexico
Siemens Logistics S. de R.L. de C.V., Mexico City / Mexico
Siemens Inmobiliaria S.A. de C.V., Mexico City / Mexico
Siemens Industry Software, S.A. de C.V., Mexico City / Mexico
Siemens Financial Ltd., Oakville / Canada
Varian Medical Systems UK Holdings Limited, Crawley, West Sussex / United Kingdom
Siemens Electronic Design Automation ULC, Vancouver / Canada
Innomotics Inc., Oakville / Canada
Siemens Mobility Soluções de Mobilidade Ltda., São Paulo / Brazil
Siemens Large Drives Máquinas e Soluções Ltda, Jundiaí / Brazil
100
100
100
100
100
100
100
100
Acuson Brasil Ltda., Joinville / Brazil
Siemens S.A., Buenos Aires Argentina
Siemens Mobility S.A., Olivos / Argentina
Siemens IT Services S.A., Buenos Aires / Argentina
Siemens Healthcare S.A., Buenos Aires / Argentina
Americas (130 companies)
Vendigital Limited, London / United Kingdom
Vendigital Holdings Ltd, Swindon, Wiltshire / United Kingdom
Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
Siemens Industry Software Ltda., São Caetano do Sul / Brazil
Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
Varian Medical Systems Brasil Ltda., Jundiaí / Brazil
Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
Brightly Software Canada, Inc., Oakville / Canada
50
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
100
EPOCAL INC., Toronto / Canada
Bytemark Canada Inc., Oakville / Canada
Siemens Canada Limited, Oakville / Canada
100
100
100
100
100
100
1007
75
100
100
51
100
100
Siemens Trgovsko in storitveno podjetje, d.o.o., Ljubljana / Slovenia
Siemens Mobility d.o.o., Ljubljana / Slovenia
Siemens Healthcare d.o.o., Ljubljana / Slovenia
SIPRIN s.r.o., Bratislava Slovakia
Siemens s.r.o., Bratislava / Slovakia
Siemens Mobility, s.r.o., Bratislava / Slovakia
Siemens Healthcare s.r.o., Bratislava / Slovakia
SAT Systémy automatizacnej techniky spol. s.r.o., Bratislava / Slovakia
Consolidated Financial Statements
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
55
55
100
100
100
100
Rolling Stock Services Bratislava s.r.o., Bratislava / Slovakia
51
OEZ Slovakia, spol. s r.o., Bratislava / Slovakia
Supplyframe doo Beograd-Stari grad, Belgrade / Serbia
Acuson Slovakia s. r. o., Bratislava / Slovakia
INNOMOTICS S.R.L., Sibiu / Romania
Siemens W.L.L., Doha Qatar
Siemens Large Drives W.L.L., Doha / Qatar
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
Siemens Logistics, Unipessoal Lda, Lisbon / Portugal
SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora / Portugal
Siemens S.A., Amadora / Portugal
Varian Medical Systems Poland Sp. z o.o., Warsaw / Poland
Siemens Sp. z o.o., Warsaw / Poland
Siemens Mobility Sp. z o.o., Warsaw / Poland
Siemens Industry Software Sp. z o.o., Warsaw / Poland
Siemens Healthcare S.R.L., Bucharest / Romania
Siemens Healthcare Sp. z o.o., Warsaw / Poland
Siemens Digital Logistics Sp. z o.o., Wroclaw / Poland
Innomotics Sp. z o.o., Katowice / Poland
Siemens Pakistan Engineering Co. Ltd., Karachi / Pakistan
SIEMENS INDUSTRY SOFTWARE (PRIVATE) LIMITED, Lahore / Pakistan
Siemens Healthcare (Private) Limited, Lahore / Pakistan
Siemens Industrial LLC, Muscat / Oman
Siemens Mobility AS, Oslo / Norway
47
Siemens Finance Sp. z o.o., Warsaw / Poland
Siemens Industry Software S.R.L., Brasov / Romania
Siemens Mobility S.R.L., Bucharest / Romania
Siemens S.R.L., Bucharest Romania
Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
Siemens d.o.o. Beograd, Belgrade / Serbia
Innomotics d.o.o. Beograd, Belgrade / Serbia
Varian Medical Systems Arabia Commercial Limited, Riyadh / Saudi Arabia
Siemens Regional Headquarters Ltd., Jeddah / Saudi Arabia
Siemens Mobility Saudi Ltd, Khobar / Saudi Arabia
Siemens Ltd., Riyadh / Saudi Arabia
Siemens Large Drives Ltd., Khobar / Saudi Arabia
Siemens Healthcare Limited, Riyadh / Saudi Arabia
Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia
Varian Medical Systems (RUS) Limited Liability Company, Moscow / Russian Federation
Upsilon 1 LLC, St. Petersburg / Russian Federation
Smart Industry Software, 000, Moscow / Russian Federation
Siemens Mobility LLC, Moscow / Russian Federation
Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
000 Siemens, Moscow / Russian Federation
Varinak Europe SRL (Romania), Pantelimon / Romania
SIMEA SIBIU S.R.L., Sibiu / Romania
Innomotics, s.r.o., Bratislava / Slovakia
100
51
51
Siemens Mobility S.A.R.L., Tunis / Tunisia
Mentor Graphics Tunisia SARL, Tunis / Tunisia
Siemens Tanzania Ltd. i.L., Dar es Salaam / Tanzania
Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil / Switzerland
Siemens Schweiz AG, Zurich / Switzerland
Siemens Mobility AG, Wallisellen / Switzerland
Siemens Industry Software GmbH, Zurich / Switzerland
Siemens Healthineers International AG, Steinhausen / Switzerland
75
Siemens Mobility AB, Solna / Sweden
Siemens Healthcare AB, Solna / Sweden
Siemens Financial Services AB, Solna / Sweden
Siemens Electronic Design Automation AB, Solna / Sweden
Siemens AB, Solna / Sweden
Innomotics AB, Solna / Sweden
Varian Medical Systems Iberica SL, Madrid / Spain
Telecomunicación, Electrónica y Conmutación S.A., Madrid / Spain
Siemens S.A., Madrid / Spain
Siemens Industry Software AB, Solna / Sweden
85
_3
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Siemens Rail Automation S.A.U., Tres Cantos / Spain
51
Siemens Campus Madrid, S.L., Madrid / Spain
Siemens Financial Services S.A.U, Madrid / Spain
SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
Siemens Industry Software S.L., Tres Cantos / Spain
Siemens Logistics S.L. Unipersonal, Madrid / Spain
SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
Innomotics, S.L., Madrid / Spain
100
100
100
100
100
60
60
100
100
100
100
100
100
100
100
75
100
51
1007
100
48
Consolidated Financial Statements
Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
S'Mobility Employee Stock Ownership Trust, Johannesburg / South Africa
Siemens Proprietary Limited, Midrand / South Africa
_3
100
90
_3
_3
100
100
100
Siemens Mobility (Pty) Ltd, Randburg / South Africa
Siemens Large Drives Employee Ownership Trust, Johannesburg / South Africa
SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD, Pretoria / South Africa
Siemens Healthcare Employee Share Ownership Trust, Midrand / South Africa
Siemens Healthcare Proprietary Limited, Halfway House / South Africa
Siemens Employee Share Ownership Trust, Johannesburg / South Africa
KACO NEW ENERGY AFRICA (PTY) LTD, Midrand / South Africa
Innomotics (Pty) Ltd., Midrand / South Africa
Crabtree South Africa Pty. Limited, Midrand / South Africa
Innovation Strategies, S.L., Palma / Spain
100
100
100
100
100
100
100
100
100
100
100
51
96
100
100
Nihon Block Imaging KK, Tokyo / Japan
Siemens Electronic Design Automation Japan K.K., Tokyo / Japan
100
54
100
Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
1007
100
Innomotics G.K., Tokyo / Japan
Acuson Japan K.K., Tokyo / Japan
100
1007
Siemens Financial Services Private Limited, Mumbai / India
Siemens Healthcare Private Limited, Mumbai / India
Siemens Healthineers India LLP, Bangalore / India
Siemens Industry Software (India) Private Limited, New Delhi / India
SIEMENS HEALTHINEERS INDIA MANUFACTURING PRIVATE LIMITED, Mumbai / India
100
SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
Siemens Limited, Mumbai / India
Siemens Logistics India Private Limited, Navi Mumbai / India
Siemens Rail Automation Pvt. Ltd., Navi Mumbai / India
Siemens Technology and Services Private Limited, Navi Mumbai / India
Varian Medical Systems International (India) Private Limited, Pune / India
P.T. Siemens Indonesia, Jakarta / Indonesia
PT Innomotics Motors and Solutions, Jakarta / Indonesia
PT Siemens Healthineers Indonesia, Jakarta / Indonesia
PT Siemens Mobility Indonesia, Jakarta / Indonesia
Acrorad Co., Ltd., Okinawa / Japan
100
100
Siemens Industry Software (Beijing) Co., Ltd., Beijing / China
Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
Siemens Digital Technology (Shenzhen) Co., Ltd., Shenzhen / China
Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
Siemens Commercial Factoring Ltd., Shanghai / China
Siemens Building Technologies (Tianjin) Ltd., Tianjin / China
100
1007
100
Siemens Electrical Drives Ltd., Tianjin / China
100
100
1007
100
100
100
100
100
100
100
70
75
100
100
Siemens Healthineers Ltd., Shanghai / China
100
100
Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
100
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
100
100
Siemens Financial Services Ltd., Beijing / China
Siemens Finance and Leasing Ltd., Beijing / China
100
100
Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
Siemens Factory Automation Engineering Ltd., Beijing / China
85
100
100
100
100
100
100
100
Siemens Standard Motors Ltd., Yizheng / China
Siemens Switchgear Ltd., Shanghai, Shanghai / China
Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
Siemens Wiring Accessories Shandong Ltd., Zibo / China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
Suzhou Ling Dong Zhen GE Network Technology Co., Ltd., Suzhou / China
Varian Medical Systems China Co., Ltd., Beijing / China
Varian Medical Systems Trading (Beijing) Co., Ltd., Beijing / China
Siemens Signalling Co., Ltd., Xi'an / China
Scion Medical Limited, Hong Kong / Hong Kong
Siemens Industry Software Limited, Hong Kong / Hong Kong
Siemens Limited, Hong Kong / Hong Kong
Siemens Logistics Limited, Hong Kong / Hong Kong
Siemens Mobility Limited, Hong Kong / Hong Kong
Supply Frame (Hong Kong) Limited, Hong Kong / Hong Kong
Vertice Investment Limited, Hong Kong / Hong Kong
AIS Design Automation Private Limited, Bangalore / India
American Institute of Pathology and Laboratory Sciences Private Limited, Hyderabad / India
Siemens Healthcare Limited, Hong Kong / Hong Kong
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
Siemens Shanghai Medical Equipment Ltd., Shanghai / China
Siemens Sensors & Communication Ltd., Dalian / China
Siemens International Trading Ltd., Shanghai, Shanghai / China
100
Siemens Large Drives Equipment (Tianjin) Ltd., Tianjin / China
85
Siemens Logistics Automation Systems (Beijing) Co., Ltd, Beijing / China
100
Siemens Ltd., China, Beijing / China
100
Siemens Manufacturing and Engineering Centre Ltd., Shanghai / China
Siemens Mechatronics Technology JiangSu Ltd., Yizheng / China
51
100
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
Siemens Mobility Electrification Equipment (Shanghai) Co., Ltd., Shanghai / China
Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
Siemens Mobility Rail Equipment (Tianjin) Ltd., Tianjin / China
85
51
100
100
53
Consolidated Financial Statements
Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
Siemens Numerical Control Ltd., Nanjing, Nanjing / China
Siemens Power Automation Ltd., Nanjing / China
Artmed Healthcare Private Limited, Hyderabad / India
100
Brightly Software India Private Limited, Bangalore / India
Bytemark Technology Solutions India Pvt Ltd, Bangalore / India
100
100
100
100
100
100
100
100
100
100
100
100
100
99
100
100
100
100
100
100
100
_3
C&S Electric Limited, New Delhi / India
Cancer Treatment Services Hyderabad Private Limited, Hyderabad / India
Enlighted Energy Systems Pvt Ltd, Chennai / India
PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
SIEMENS EDA (SALES & SERVICES) PRIVATE LIMITED, New Delhi / India
Siemens Factoring Private Limited, Navi Mumbai / India
100
80
100
100
100
100
70
100
55
90
100
100
Bytemark India LLP, Bangalore / India
100
100
100
Next47 Mid-Tier GP 2018, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2019, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2020, L.P., Wilmington, DE / United States
J2 Innovations, Inc., Los Angeles, CA / United States
Keystone Physics Limited, Millersville, PA / United States
Mannesmann Corporation, New York, NY / United States
Mansfield Insurance Company, Jeffersonville, VT / United States
Medical Physics Holdings, LLC, Dover, DE / United States
Next47 Fund 2018, L.P., Palo Alto, CA / United States
Next47 Fund 2019, L.P., Palo Alto, CA / United States
Next47 Fund 2020, L.P., Palo Alto, CA / United States
Next47 Fund 2021, L.P., Palo Alto, CA / United States
Next47 Fund 2022, L.P., Palo Alto, CA / United States
Next47 Fund 2023, L.P., Palo Alto, CA / United States
Next47 Fund 2024, L.P., Palo Alto, CA / United States
Next47 Inc., Wilmington, DE / United States
Innomotics LLC, Wilmington, DE / United States
Consolidated Financial Statements
51
78
1007
100
Next47 Mid-Tier GP 2021, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2022, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2023, L.P., Wilmington, DE / United States
Next47 Mid-Tier GP 2024, L.P., Wilmington, DE / United States
Next47 TTGP, L.L.C., Wilmington, DE / United States
P.E.T.NET Houston, LLC, Austin, TX / United States
Healthcare Technology Management, LLC, Wilmington, DE / United States
100
75
100
100
100
100
100
100
Gas Chromatography Systems MAXUM LLC, Wilmington, DE / United States
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Page Mill Corporation, Boston, MA / United States
100
Executive Consulting Group, LLC, Wilmington, DE / United States
100
100
100
100
100
100
100
100
100
1007
100
100
100
100
100
100
100
100
100
100
100
100
eMeter Corporation, Wilmington, DE / United States
ECG TopCo Holdings, LLC, Wilmington, DE / United States
ECG Acquisition, Inc., Wilmington, DE / United States
D3 Oncology Inc., Wilmington, DE / United States
Block Imaging Technical Excellence, LLC, Holt, MI / United States
Brightly Software, Inc., Wilmington, DE / United States
Building Robotics Inc., Wilmington, DE / United States
Corindus, Inc., Wilmington, DE / United States
Block Imaging Parts & Service, LLC, Holt, MI / United States
Associates in Medical Physics, LLC, Greenbelt, MD / United States
Block Imaging International, LLC, Wilmington, DE / United States
Acuson, LLC, Wilmington, DE / United States
Acuson Holding LLC, Wilmington, DE / United States
Varian Medical Systems Puerto Rico, LLC, Guaynabo / Puerto Rico
Siemens S.A.C., Surquillo / Peru
Siemens Mobility S.A.C., Lima / Peru
Siemens Healthcare S.A.C., Surquillo / Peru
1007
1007
100
100
100
100
100
PETNET Indiana, LLC, Indianapolis, IN / United States
PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
PETNET Solutions, Inc., Knoxville, TN / United States
PolyDyne Software Inc., Dallas, TX / United States
Radiation Management Associates, LLC, Greenbelt, MD / United States
Rail-Term LLC, Plymouth, MI / United States
Varian Medical Systems Australasia Pty Ltd., Belrose / Australia
SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater / Australia
Siemens Mobility Pty Ltd, Melbourne / Australia
Siemens Ltd., Bayswater / Australia
Siemens Healthcare Pty. Ltd., Hawthorn East / Australia
Siemens Industry Software Pty Ltd, Bayswater / Australia
Project Ventures Rail Investments (SMWSA) Pty Ltd, Bayswater / Australia
Innomotics Pty Ltd, Bayswater / Australia
Exemplar Health (NBH) Holdings 2 Pty Limited, Bayswater / Australia
Exemplar Health (NBH) Trust 2, Bayswater / Australia
1007
Exemplar Health (NBH) 2 Pty Limited, Bayswater / Australia
Brightly Software Australia Pty Ltd, Sydney / Australia
Australia Hospital Holding Pty Limited, Bayswater / Australia
Asia, Australia (157 companies)
Siemens Rail Automation, C.A., Caracas / Venezuela
Siemens S.A., Montevideo / Uruguay
52
100
100
Brightly Software Holdings Pty. Ltd., Sydney / Australia
100
1007
100
100
100
1007
100
100
100
100
100
Consolidated Financial Statements
Scion Medical Technologies (Shanghai) Ltd., Shanghai / China
Innomotics Mechanical Drives (Tianjin) Co., Ltd., Tianjin / China
Innomotics Large Drives (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
Hangzhou Alicon Pharm Sci & Tec Co., Ltd., Hangzhou / China
Green Matrix (Suzhou) Network Technology Co., Ltd., Suzhou / China
Beijing Siemens Cerberus Electronics Ltd., Beijing / China
Acuson (Shanghai) Co., Ltd., Shanghai / China
Siemens Industrial Limited, Dhaka / Bangladesh
Siemens Healthcare Ltd., Dhaka / Bangladesh
100
100
100
100
100
100
63
501
100
51
Vendigital, Inc., Wilmington, DE / United States
Varian Medical Systems, Inc., Wilmington, DE / United States
Varian Medical Systems Pacific, Inc., Wilmington, DE / United States
Varian Medical Systems Africa Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems India Private Limited, Wilmington, DE / United States
Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
Varian Medical Systems Latin America, Ltd., Wilmington, DE / United States
Varian BioSynergy, Inc., Wilmington, DE / United States
Supplyframe, Inc., Glendale, CA / United States
SMI Holding LLC, Wilmington, DE / United States
Siemens USA Holdings, Inc., Wilmington, DE / United States
Siemens Public, Inc., Iselin, NJ / United States
Siemens Mobility, Inc, Wilmington, DE / United States
Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
Siemens Logistics LLC, Wilmington, DE / United States
Siemens Government Technologies, Inc., Wilmington, DE / United States
Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
Siemens Industry Software Inc., Wilmington, DE / United States
Siemens Industry, Inc., Wilmington, DE / United States
Siemens Advanta Solutions Corp., Wilmington, DE / United States
Siemens Capital Company LLC, Wilmington, DE / United States
Siemens Corporation, Wilmington, DE / United States
Siemens Financial Services, Inc., Wilmington, DE / United States
Siemens Financial, Inc., Wilmington, DE / United States
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Padam Mobility SAS, Paris / France
PETNET Solutions SAS, Lisses / France
Siemens Electronic Design Automation SARL, Meudon La Forêt / France
Siemens Financial Services SAS, Courbevoie / France
Siemens France Holding SAS, Courbevoie / France
Siemens Healthcare SAS, Courbevoie / France
Siemens Industry Software SAS, Châtillon / France
Siemens Lease Services SAS, Courbevoie / France
Siemens Logistics SAS, Saint-Denis / France
Siemens Mobility SAS, Châtillon / France
Siemens SAS, Courbevoie / France
Sqills IT Services SAS, Paris / France
Supplyframe Europe SAS, Grenoble / France
Varian Medical Systems France SARL, Le Plessis-Robinson / France
Wattsense SAS, Dardilly / France
Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME, Marousi / Greece
SIEMENS MOBILITY RAIL AND ROAD TRANSPORTATION SOLUTIONS SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
evosoft Hungary Szamitastechnikai Kft., Budapest / Hungary
Siemens Healthcare Kft., Budapest / Hungary
Siemens Industry Software Kft., Budapest / Hungary
Siemens Mobility Kft., Budapest / Hungary
Siemens Zrt., Budapest Hungary
Varian Medical Systems Hungary Kft., Budapest / Hungary
Consolidated Financial Statements
100
100
100
100
100
100
1007
100
100
Innomotics SAS, Saint-Priest / France
100
100
Innomotics Limited Liability Partnership, Almaty / Kazakhstan
Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
Siemens TOO, Almaty / Kazakhstan
VMS Kenya, Ltd, Nairobi / Kenya
Siemens Industrial Business Co. For Electrical, Electronic and Mechanical Contracting WLL, Kuwait City / Kuwait
Siemens Large Drives Company for Repairing & Maintenance of Light & Heavy Equipment, W.L.L, Ahmadi / Kuwait
Crabtree (Pty) Ltd, Maseru / Lesotho
Atruvi Invest Management S.à.r.l, Munsbach / Luxembourg
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
TFM International S.A. i.L., Luxembourg Luxembourg
FTD Europe Ltd, Sliema / Malta
CTSI (Mauritius) Ltd., Ebene / Mauritius
Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
Siemens Healthcare SARL, Casablanca / Morocco
Siemens Industry Software SARL, Sala Al Jadida / Morocco
Siemens S.A., Casablanca / Morocco
Castor III B.V., The Hague / Netherlands
Chronos B.V., Enschede / Netherlands
Mendix Technology B.V., Rotterdam / Netherlands
Pollux III B.V., The Hague / Netherlands
Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
Siemens Finance B.V., The Hague / Netherlands
Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
Siemens Healthineers Holding III B.V., The Hague / Netherlands
Siemens Healthineers Holding IV B.V., The Hague / Netherlands
Siemens Healthineers Holding V B.V., The Hague / Netherlands
Siemens Healthineers Nederland B.V., The Hague / Netherlands
Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
Siemens International Holding B.V., The Hague / Netherlands
Siemens Mobility B.V., Zoetermeer / Netherlands
Siemens Mobility Holding B.V., The Hague / Netherlands
Siemens Nederland N.V., The Hague / Netherlands
Sqills Products B.V., Enschede / Netherlands
TASS International B.V., Helmond / Netherlands
Varian Medical Systems Nederland B.V., Houten / Netherlands
Innomotics AS, Oslo / Norway
Varian Medical Systems Italia S.p.A., Segrate / Italy
100
Siemens S.p.A., Milan / Italy
Siemens Logistics S.r.I., Milan / Italy
100
100
100
100
10013
Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
Mentor Graphics Development Services Limited, Shannon, County Clare / Ireland
Siemens Electronic Design Automation Limited, Shannon, County Clare / Ireland
Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin / Ireland
Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
Siemens Industry Software Limited, Shannon, County Clare / Ireland
Siemens Limited, Dublin Ireland
100
1007
100
100
100
100
46
Mckit Systems Ltd., Giv'at Shmuel / Israel
Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
Siemens Electronic Design Automation Ltd, Herzilya Pituah / Israel
Siemens HealthCare Ltd., Rosh Ha'ayin / Israel
Siemens Industry Operations Ltd., Rosh Ha'ayin / Israel
Siemens Industry Software Ltd., Airport City / Israel
Siemens Ltd., Rosh Ha'ayin / Israel
Siemens Mobility Ltd., Rosh Ha'ayin / Israel
Siemens Mobility Operations Ltd., Rosh Ha'ayin / Israel
UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
Acuson Italy S.r.l., Milan/Italy
Innomotics S.r.I., Milan Italy
Siemens Healthcare S.r.I., Milan / Italy
Siemens Industry Software S.r.l., Milan / Italy
60
Siemens Mobility S.r.I., Milan / Italy
Siemens AS, Oslo / Norway
BLOCK IMAGING SAS, Paris / France
VIBECO - Virtual Buildings Ecosystem Oy, Espoo / Finland
1007
1009
1007
1009
1007
100
10010
10010
10013
100
100
10013
100
10010
100
100
100
51
100
100
100
100
1007
100
100
69
100
100
100
1009
100
1007
Siemens Konzernbeteiligungen GmbH, Vienna / Austria
Siemensstadt Management GmbH, Grünwald
Siemensstadt SPE GmbH & Co. KG, Grünwald
Siemensstadt SPE Verwaltungs GmbH, Grünwald
Siemensstadt SWHH GmbH & Co. KG, Grünwald
Siemensstadt SWHH Verwaltungs GmbH, Grünwald
Siemensstadt VG GmbH & Co. KG, Grünwald
Siemensstadt VG Verwaltungs GmbH, Grünwald
SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
SIMAR Ost Grundstücks-GmbH, Grünwald
SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
Varian Medical Systems Deutschland GmbH & Co. KG, Darmstadt
Varian Medical Systems Haan GmbH, Haan
Varian Medical Systems München GmbH, Munich
Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
VMS Deutschland Holdings GmbH, Darmstadt
VVK Versicherungsvermittlungs- und Verkehrskontor GmbH, Munich
Weiss Spindeltechnologie GmbH, Maroldsweisach
Zeleni Holding GmbH, Kemnath
Zeleni Real Estate GmbH & Co. KG, Kemnath
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (297 companies)
ESTEL Rail Automation SPA, Algiers / Algeria
Siemens Healthineers Algeria E.U.R.L., Hydra / Algeria
Siemens Healthineers Oncology Services Algeria E.U.R.L., Hydra / Algeria
Siemens Spa, Algiers / Algeria
Siemens Industry Software Closed Joint-Stock Company, Yerevan / Armenia
Acuson Österreich GmbH, Vienna / Austria
ETM professional control GmbH, Eisenstadt / Austria
Innomotics GmbH, Vienna / Austria
ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
Siemens Advanta Solutions GmbH, Vienna / Austria
Siemens Aktiengesellschaft Österreich, Vienna / Austria
100
Siemens Healthcare Diagnostics GmbH, Vienna / Austria
Siemens Industry Software GmbH, Linz / Austria
Consolidated Financial Statements
Acuson France SAS, Courbevoie / France
Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
Siemens Mobility Austria GmbH, Vienna / Austria
100
100
100
100
100
100
100
45
OEZ s.r.o., Letohrad / Czech Republic
Siemens Healthcare, s.r.o., Prague / Czech Republic
Siemens Industry Software, s.r.o., Prague / Czech Republic
Siemens Large Drives, s.r.o., Drasov / Czech Republic
Siemens Mobility, s.r.o., Prague / Czech Republic
Siemens, s.r.o., Prague / Czech Republic
Innomotics A/S, Ballerup / Denmark
Siemens A/S, Ballerup / Denmark
Siemens Healthcare A/S, Ballerup / Denmark
Siemens Industry Software A/S, Ballerup / Denmark
Siemens Mobility A/S, Ballerup / Denmark
Siemens Healthcare Logistics LLC, Cairo / Egypt
Siemens Healthcare S.A.E., Cairo / Egypt
Siemens Industrial LLC, New Cairo / Egypt
Siemens Industry Software (A Limited Liability Company - Private Free Zone), New Cairo / Egypt
Siemens Mobility Egypt LLC, Cairo / Egypt
Siemens Healthcare Oy, Espoo / Finland
Siemens Industry Software Oy, Espoo / Finland
Siemens Mobility Oy, Espoo / Finland
Siemens Osakeyhtiö, Espoo / Finland
Varian Medical Systems Finland OY, Helsinki / Finland
100
100
100
100
Siemens Personaldienstleistungen GmbH, Vienna / Austria
Steiermärkische Medizinarchiv GesmbH, Graz / Austria
Varian Medical Systems Gesellschaft mbH, Brunn am Gebirge / Austria
VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH, Vienna / Austria
Siemens W.L.L., Manama Bahrain
Innomotics N.V., Beersel / Belgium
Siemens Healthcare NV, Groot-Bijgaarden / Belgium
Siemens Industry Software NV, Leuven / Belgium
Siemens Mobility S.A. / N.V, Beersel / Belgium
Siemens S.A./N.V., Beersel / Belgium
Varian Medical Systems Belgium NV, Groot-Bijgaarden / Belgium
Siemens d.o.o. Sarajevo - U Likvidaciji, Sarajevo / Bosnia and Herzegovina
Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
Siemens EOOD, Sofia / Bulgaria
Siemens Healthcare EOOD, Sofia / Bulgaria
Siemens Mobility EOOD, Sofia / Bulgaria
Varinak Bulgaria EOOD, Sofia / Bulgaria
Siemens d.d., Zagreb / Croatia
Siemens Healthcare d.o.o., Zagreb / Croatia
100
100
100
52
100
100
51
100
100
100
100
Siemens Healthcare AS, Oslo / Norway
100
100
100
100
100
100
100
1007
100
492
492
100
100
100
100
Consolidated Financial Statements
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Siemens Intelligent Signalling Technologies Co. Ltd., Foshan, Foshan / China
100
100
100
1007
100
100
100
Dr. Roland Busch
Judith Wiese
The Managing Board
Siemens Aktiengesellschaft
Munich, December 4, 2023
To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has
been combined with the Management Report for Siemens Aktiengesellschaft, includes a fair review of the development and performance
of the business and the position of the Group, together with a description of the material opportunities and risks associated with the
expected development of the Group.
Cedrik Neike
Prof. Dr. Ralf P. Thomas
Matthias Rebellius
2
SIEMENS
Auditor's Reports
to the Consolidated Financial Statements and the
Group Management Report for fiscal 2023
Responsibility Statement (Group)
Independent Auditor's Reports (Group)
Independent auditor's report
To Siemens Aktiengesellschaft, Berlin and Munich
Report on the audit of the consolidated financial statements and of the group management
report
Opinions
We have audited the consolidated financial statements of Siemens Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the Group),
which comprise the consolidated statements of income and comprehensive income for the fiscal year from October 1, 2022 to September
30, 2023, the consolidated statements of financial position as of September 30, 2023, the consolidated statements of cash flows and
changes in equity for the fiscal year from October 1, 2022 to September 30, 2023, and notes to the consolidated financial statements,
including a summary of significant accounting policies. In addition, we have audited the group management report of Siemens
Aktiengesellschaft, which is combined with the management report of Siemens Aktiengesellschaft, for the fiscal year from October 1,
2022 to September 30, 2023. In accordance with the German legal requirements, we have not audited chapter 11 "EU Taxonomy
disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2 Compliance
Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate Governance
Statement which is published on the website stated in the combined management report. In our opinion, on the basis of the knowledge
obtained in the audit,
Independent
SIEMENS
730
Responsibility Statement
67
1004,5
1
273
1004,5
(1,795)
5,693
455
2
to the Consolidated Financial Statements and the
Group Management Report for fiscal 2023
132
113
314
9
(64)
782
8
(99)
⚫ the accompanying consolidated financial statements comply, in all material respects, with the International Financial Reporting
Standards (IFRSS) as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to Sec.
315e (1) HGB ["Handelsgesetzbuch": German Commercial Code] as well as with full IFRSS as issued by the International Accounting
Standards Board (IASB), and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial
position of the Group as of September 30, 2023 and of its financial performance for the fiscal year from October 1, 2022 to September
30, 2023, and
58
6
•
We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB
and the EU Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). We performed the audit of the consolidated financial statements in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under those requirements, principles and standards are further described in the "Auditor's
responsibilities for the audit of the consolidated financial statements and of the group management report" section of our auditor's report.
We are independent of the group entities in accordance with the requirements of European law and German commercial and professional
law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance
with Art. 10 (2) f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions
on the consolidated financial statements and on the group management report.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
consolidated financial statements and of the group management report.
Furthermore, we evaluated the disclosures in the notes to the consolidated financial statements regarding the investment in Siemens
Energy AG, and the reversal of the impairment, the effects of the other transactions described above as well as the events affecting
Siemens Energy AG after the balance sheet date.
Our audit procedures did not lead to any reservations regarding the valuation of the investment in Siemens Energy AG as of September
30, 2023.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for investments in
associates, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
statements. Details on the reversal of the impairment of the investment in Siemens Energy AG and the other described transactions are
presented in Note 4 Interests in other entities. Regarding the subsequent events relating to the investment in Siemens Energy AG refer to
Note 34 Subsequent events.
Provisions for proceedings out of or in connection with alleged compliance violations
Reasons why the matter was determined to be a key audit matter: We consider the accounting for provisions for proceedings out of
or in connection with alleged compliance violations, including allegations of corruption and antitrust violations to be a key audit matter.
These matters are subject to inherent uncertainties and require estimates that could have a significant impact on the recognition and
measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The proceedings out of or in
connection with alleged compliance violations are subject to uncertainties because they involve complex legal issues and accordingly,
considerable management judgment, in particular when determining whether and in what amount a provision is required to account for
the risks.
Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
determine what potentially significant pending legal proceedings or claims asserted are known and to assess management's estimates of
the expected cash outflows, our audit procedures included inquiring of management and other persons within the Group entrusted with
these matters, obtaining written statements from in-house legal counsels with respect to the assessment of estimated cash outflows and
their probability, obtaining confirmations from external legal advisors and evaluating internal statements concerning the accounting
treatment in the consolidated financial statements. Furthermore, we examined legal consulting expense accounts for any indications of
legal matters not yet considered.
We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
company policies by inspecting internal and external statements on specific matters, obtaining written statements from external legal
advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and results
of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed on this
basis whether management's evaluation of any risks to be accounted for in the consolidated financial statements is plausible.
Furthermore, we evaluated the disclosures on proceedings out of or in connection with alleged compliance violations in the notes to the
consolidated financial statements.
Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
compliance violations.
In order to assess the valuation of the investment in fiscal year 2023, we also considered the effects for Siemens AG from the acquisition
of the shares in Siemens Gamesa Renewable Energy S.A. by Siemens Energy AG, the capital increase of Siemens Energy AG and the
contribution of shares in Siemens Energy AG to the Siemens Pension-Trust e.V. by Siemens AG.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for provisions, refer to
Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
to proceedings out of or in connection with alleged compliance violations, refer to Note 22 Legal proceedings.
Reasons why the matter was determined to be a key audit matter: Siemens operates in numerous countries with different local tax
legislation. The accounting for uncertain tax positions as well as deferred taxes requires management to exercise considerable judgment
and make estimates and assumptions and was therefore a key audit matter. In particular, this affects the measurement and completeness
of uncertain tax positions, the recoverability of deferred tax assets and the measurement and completeness of deferred tax liabilities.
Auditor's response: With the assistance of internal tax specialists who have knowledge of relevant local tax law, we examined the
processes installed by management for the identification, recognition and measurement of tax positions.
In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
implications of significant business transactions or events in fiscal year 2023, which could result in uncertain tax positions or influence the
measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
shares and corporate (intragroup) restructuring activities. In order to assess measurement and completeness, we also obtained
confirmations from external tax advisors. Further, we evaluated management's assessments with respect to the prospects of success of
appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by considering current tax case law.
In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
strategies and projected future taxable income and compared them to internal business plans. In the course of our audit procedures
regarding deferred tax liabilities, we examined in particular the assumptions regarding reinvestment of subsidiaries' retained profits for an
indefinite period and assessed these taking into account dividend planning.
Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and deferred taxes.
4
Fluence Energy, Inc., Wilmington, DE / United States
DeepHow Corp., Princeton, NJ / United States
CEF-L Holding, LLC, Wilmington, DE / United States
Tenedora de Activos Medicos S.A.P.I. de C.V, Mexico City Mexico
Akuo Energy Dominicana, S.R.L, Santo Domingo / Dominican Republic
DELARO, S.A.P.I. DE C.V., Mexico City / Mexico
Uncertain tax positions and deferred taxes
Independent Auditor's Reports (Group)
3
With regards to the assessment of whether there are indications for a reversal of an impairment, in particular regarding the interpretation
of a possible significant increase of the fair value, we evaluated management's assessment made on a quarterly and year-end basis as well
as management's judgements and estimates contained therein and also considered external evidence on credit ratings, stock market
prices, analysts' assessments and observable valuation indicatorsin this regard. In addition, we evaluated the calculation of the reversal of
the impairment as of March 31, 2023.
Basis for the opinions
-
Key audit matters in the audit of the consolidated financial statements
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
statements for the fiscal year from October 1, 2022 to September 30, 2023. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these
matters.
Below, we describe what we consider to be the key audit matters:
Revenue recognition on construction-type contracts
Reasons why the matter was determined to be a key audit matter: The Group conducts a significant portion of its business under
construction-type contracts, particularly in the Mobility business. Revenue from long-term construction-type contracts is recognized in
accordance with IFRS 15, Revenue from Contracts with Customers, generally over time under the percentage-of-completion method. We
consider the accounting for construction-type contracts to be an area posing a significant risk of material misstatement (including the
potential risk of management override of internal controls) and accordingly a key audit matter, because management's assessments
significantly impact the determination of the extent of progress towards completion. These assessments include, in particular, the scope
of deliveries and services required to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion
and total estimated contract revenues, as well as contract risks including technical, political, regulatory, legal and supply chain risks.
2
Independent Auditor's Reports (Group)
Revenues, total estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge
about cost overruns and changes in project scope over the term of a construction-type contract.
The effects of current geopolitical and macroeconomic developments on the project business, such as delays in project execution, price
increases or disruptions in supply chains and their accounting treatment were taken into account during our audit.
Auditor's response: As part of our audit, we obtained an understanding of the Group's internally established methods, processes and
control mechanisms for project management in the bid and execution phase of construction-type contracts. In this regard, we assessed
the design and operating effectiveness of the accounting-related internal controls in the project business by obtaining an understanding
of business transactions specific to construction-type contracts, from the initiation of the transaction through presentation in the
consolidated financial statements. We also tested controls addressing the timely assessment of changes in cost estimates, the timely and
complete recognition of such changes in the project calculation as well as their accounting treatment.
As part of our substantive audit procedures, which particularly involved project reviews, we evaluated management's estimates and
assumptions based on a risk-based selection of a sample of contracts. Our sample primarily included projects that are subject to significant
future uncertainties and risks, such as projects with complex safety/technical and regulatory requirements or projects with a large portion
of materials and services to be provided by suppliers or consortium partners, fixed-price or turnkey projects, cross-border projects and
projects with changes in cost estimates, delays and/or low or negative margins.
Our audit procedures included, among others, review of the contracts and their terms and conditions including contractually agreed partial
deliveries and services, termination rights, penalties for delay and breach of contract, liquidated damages as well as joint and several
liability. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects, we analyzed revenues
attributable to the fiscal year and corresponding cost of sales to be recognized in the statement of income considering the extent of
progress towards completion and examined the accounting for the associated items in the statement of financial position.
For this we also assessed the accounting for contractually agreed options, contract amendments or contract terminations (including
related pending legal proceedings) also in relation to previous construction-type contracts with Russian customers. We also assessed the
recognition requirements of reimbursement claims.
We further performed inquiries of project management (both commercial and technical project managers) with respect to the
development of the projects, the reasons for deviations between planned and actual costs, the current estimated costs to complete the
projects, and management's assessments on probabilities that contract risks and claims from joint and several liability will materialize.
To identify anomalies in the development of margins and other project KPIs, we also applied data analysis procedures. In designing our
audit procedures, we also considered results from project audits conducted by the internal audit function. Furthermore, we obtained
evidence from third parties for selected projects (e.g., project acceptance documentation, contractual terms and conditions, and lawyers'
confirmations regarding alleged breaches of contract and asserted claims) and inspected the status of projects at plant sites. Due to the
large contract volume and risk profile, our audit procedures focused on large contracts for delivery of high-speed and commuter trains.
Our audit procedures did not lead to any reservations relating to revenue recognition on construction-type contracts.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for construction-type
contracts, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
statements. With respect to contract assets and liabilities as well as provisions for order related losses and risks, refer to Note 10 Contract
assets and liabilities, Note 18 Provisions and Note 21 Commitments and contingencies in the notes to the consolidated financial
statements.
Valuation of the investment in Siemens Energy AG
Reasons why the matter was determined to be a key audit matter: Since the spin-off of Siemens Energy AG in September 2020,
Siemens AG has held a 35.1% stake in the listed Siemens Energy AG which was reduced to 25.1% due to capital measures at Siemens
Energy AG and the contribution of shares in Siemens Energy AG to the Siemens Pension-Trust e.V. in fiscal year 2023. The investment is
accounted for as an associate, applying the equity method in accordance with IAS 28, Investments in Associates and Joint Ventures. As of
June 30, 2022, an impairment was recognized on the investment. During the first six months of the financial year 2023, the market
capitalization of the investment was mostly higher than the value at the time of the impairment. As of March 31, 2023, the latter was
significantly exceeded. As a result, an impairment reversal was made in accordance with IAS 36, Impairment of Assets, in the amount of
the increase in the stock market price since the date of the impairment until March 31, 2023. In addition, Siemens Energy AG acquired
additional shares in Siemens Gamesa Renewable Energy, S.A. in fiscal year 2023. This led to a reduction in equity in the consolidated
financial statements of Siemens Energy AG. The recognition of Siemens' share in this equity transaction resulted in a reduction of the
carrying amount of the investment in Siemens Energy AG, which was recognized directly in Siemens' equity. As of September 30, 2023,
the pro rata market value of the investment was above the book value.
Due to the judgments and estimates by management in the analyses and assessments with regards to possible impairments or reversals
of impairments as well as the overall material implications for the assets, liabilities and financial position of the Group and the related
significant risk of material misstatement, the assessment of the investment in Siemens Energy AG is one of the key audit matters.
Auditor's response: As part of our audit procedures in relation to management's assessment regarding the valuation of the investment in
Siemens Energy AG, we examined the methods and processes defined internally for the identification of indicators for a reversal of an
impairment and thus the timing of a possible reversal of an impairment as well as the measurement of a reversal of an impairment of the
investment in Siemens Energy AG.
the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects,
this group management report is consistent with the consolidated financial statements, complies with German legal requirements and
appropriately presents the opportunities and risks of future development. Our opinion on the group management report does not cover
chapter 11 "EU Taxonomy disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and
"8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the group management report and the content of the Corporate
Governance Statement.
1004,5
15
3
308
23
30
50
20
20
378
498
25
35
33
50
50
Smart Metering Solutions (Changsha) Co. Ltd., Changsha / China
TianJin ZongXi Traction Motor Ltd., Tianjin / China
Tieke Intelligent Signalling Railway Equipment Co., Ltd., Tianjin / China
Xi'An X-Ray Target Ltd., Xi'an / China
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
Zhi Dao Railway Equipment Ltd., Taiyuan / China
Bangalore International Airport Ltd., Bangalore / India
Greenko Sironj Wind Power Private Limited, New Delhi / India
Happzee Technologies Private Limited, Hyderabad / India
Pune IT City Metro Rail Limited, Pune / India
49
SUNSOLE RENEWABLES PRIVATE LIMITED, Mumbai / India
20
22
Hickory Run Holdings, LLC, Wilmington, DE / United States
MSS Energy Holdings, LLC, New York, NY / United States
PhSiTh LLC, New Castle, DE / United States
Rether networks, Inc., Berkeley, CA / United States
Software.co Technologies, Inc., Wilmington, DE / United States
Wi-Tronix Group Inc., Dover, DE / United States
Asia, Australia (24 companies)
Exemplar Health (NBH) Partnership, Melbourne / Australia
Parklife Metro Holdings Pty Ltd, Melbourne / Australia
Parklife Metro Holdings Unit Trust, Melbourne / Australia
PHM Technology Pty Ltd, Melbourne / Australia
Chengdu Wayin Zhiyun Medical Technology Co., Ltd., Chengdu / China
DBEST (Beijing) Facility Technology Management Co., Ltd., Beijing / China
206
Guangzhou Suikai Smart Energy Co., Ltd., Guangzhou / China
22
20
48
48
22
33
29
49
27
238
Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China
P.T. Jawa Power, Jakarta / Indonesia
BE C&I Solutions Holding Pte. Ltd., Singapore / Singapore
Power Automation Pte. Ltd., Singapore / Singapore
Thoughtworks Holding Inc., Wilmington, DE / United States
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key management personnel.
3 Control due to contractual arrangements to determine the direction of the relevant activities.
* No control due to contractual arrangements or legal circumstances.
5 No significant influence due to contractual arrangements or legal circumstances.
6 Significant influence due to contractual arrangements or legal circumstances.
7 Not consolidated due to immateriality.
8 Not accounted for using the equity method due to immateriality.
⁹ Exemption pursuant to Section 264 b German Commercial Code.
Electrify America, LLC, Wilmington, DE / United States
10 Exemption pursuant to Section 264 (3) German Commercial Code.
12 Siemens AG is a shareholder with unlimited liability of this company.
13 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
Consolidated Financial Statements
Equity
interest
Net income
Equity
in %
in millions
of €
in millions
of €
1004,5
11 Values according to the latest available local GAAP financial statements; the underlying fiscal year may differ from the Siemens fiscal year.
Americas (2 companies)
KIC InnoEnergy S.E., Eindhoven / Netherlands
Medical Systems S.p.A., Genoa / Italy
SINGAPORE AQUACULTURE TECHNOLOGIES (SAT) PTE LTD, Singapore / Singapore
49
438
50
50
176
46
76
26
268
50
25
49
24
Asiri A O I Cancer Centre (Private) Limited, Colombo / Sri Lanka
508
57
Other investments11
Germany (4 companies)
Erlapolis 20 GmbH, Munich
Erlapolis 22 GmbH, Munich
Munipolis GmbH, Munich
SPT Beteiligungen GmbH & Co. KG, Grünwald
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (2
companies)
MPC Serviços Energéticos 1B S.A., Cabo de Santo Agostinho / Brazil
Tractian Limited, Grand Cayman / Cayman Islands
MPC Serviços Energéticos 1A S.A, Navegantes / Brazil
WS Tech Energy Global S.L., Viladecans / Spain
Consolidated Financial Statements
MeVis BreastCare GmbH & Co. KG, Bremen
MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
Nordlicht Holding GmbH & Co. KG, Frankfurt
Nordlicht Holding Verwaltung GmbH, Frankfurt
Siemens Energy AG, Munich
Siemens EuroCash, Munich
Sternico GmbH, Wendeburg
WUN H2 GmbH, Wunsiedel
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (37 companies)
VARIAN MEDICAL SYSTEMS ALGERIA SPA, Hydra / Algeria
Armpower CJSC, Yerevan / Armenia
MetisMotion GmbH, Munich
Aspern Smart City Research GmbH, Vienna / Austria
Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
Siemens Mobility Aarsleff Konsortium I/S, Ballerup / Denmark
TRIXELL SAS, Moirans / France
EVIOP-TEMPO S.A. Electrical Equipment Manufacturers, Vassiliko / Greece
Parallel Graphics Ltd., Dublin Ireland
Reindeer Energy Ltd., Bnei Berak / Israel
Transfima GEIE, Milan / Italy
Transfima S.p.A., Milan / Italy
KACO New Energy Co., Amman / Jordan
Consolidated Financial Statements
Aspern Smart City Research GmbH & Co KG, Vienna / Austria
49
Ludwig Bölkow Campus GmbH, Taufkirchen
IFTEC GmbH & Co. KG, Leipzig
100
100
100
100
100
100
100
100
Siemens Ltd., Ho Chi Minh City / Viet Nam
Varian Medical Systems Vietnam Co Ltd, Ho Chi Minh City / Viet Nam
inpro Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
LIB Verwaltungs-GmbH, Leipzig
Associated companies and joint ventures
Alchemist Accelerator Europe Fund I GmbH & Co. KG, Grünwald
ATS Projekt Grevenbroich GmbH, Schüttorf
BentoNet GmbH, Baden-Baden
Caterva GmbH, Pullach i. Isartal
418
258
50
50
55
DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen des Stadt- und Regionalverkehrs mbH, Cologne
GuD Herne GmbH, Essen
Germany (19 companies)
50
50
508
Buitengaats C.V., Amsterdam / Netherlands
Buitengaats Management B.V., Eemshaven / Netherlands
Infraspeed EPC Consortium V.O.F., Zoetermeer / Netherlands
Infraspeed Maintainance B.V., Dordrecht / Netherlands
49
248
33
20
206, 13
208
Energie Electrique de Tahaddart S.A., Tangier / Morocco
508,13
Locomotive Workshop Rotterdam B.V., Zoetermeer / Netherlands
Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
ZeeEnergie C.V., Amsterdam / Netherlands
ZeeEnergie Management B.V., Eemshaven / Netherlands
50
50
206,13
Rousch (Pakistan) Power Ltd., Islamabad / Pakistan
Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
Nertus Mantenimiento Ferroviario y Servicios S.A., Madrid / Spain
50
Prime Green Energy Infrastructure Fund II, S.A. SICAV-RAIF, Luxembourg / Luxembourg
EGM Holding Limited, Birkirkara / Malta
Temir Zhol Electrification LLP, Nur-Sultan-City / Kazakhstan
498
508
258
238
49
498
33
338
25
36
498
458
498
40
448
44
674, 8, 12, 13
508,13
25
48
574,8
23
428,13
498
100
Certas AG, Zurich / Switzerland
100
100
Siemens Electronic Design Automation (Korea) LLC, Seoul / Korea
Siemens Healthineers Ltd., Seoul / Korea
Siemens Industry Software Ltd., Seoul / Korea
Siemens Large Drives Limited, Seoul / Korea
Siemens Ltd. Seoul, Seoul / Korea
Siemens Mobility Ltd., Seoul / Korea
Varian Medical Systems Korea, Inc., Seoul / Korea
Innomotics Sdn. Bhd., Shah Alam / Malaysia
Radica Software Sdn. Bhd., George Town / Malaysia
Siemens Healthcare Sdn. Bhd., Petaling Jaya / Malaysia
Acuson Korea Ltd., Seongnam-si / Korea
Siemens Industry Software Sdn. Bhd., George Town, Penang / Malaysia
Siemens Mobility Sdn. Bhd., Kuala Lumpur / Malaysia
Varian Medical Systems Malaysia Sdn Bhd, Kuala Lumpur / Malaysia
Siemens (N.Z.) Limited, Auckland / New Zealand
Siemens Healthcare Limited, Auckland / New Zealand
Siemens Healthcare Inc., Manila / Philippines
Siemens, Inc., Manila / Philippines
Varian Medical Systems Philippines, Inc., City of Pasig / Philippines
Acuson Singapore Pte. Ltd., Singapore / Singapore
Consolidated Financial Statements
100
Siemens Malaysia Sdn. Bhd., Petaling Jaya / Malaysia
100
Varian Medical Systems K.K., Tokyo / Japan
Siemens Healthcare K.K., Tokyo / Japan
56
984
25
508
25
33
106
49
5013
50
49
Siemens K.K., Tokyo / Japan
514
26
208
Brasol Participaçoes e Empreendimentos S.A., Brazil, São Paulo / Brazil
Americas (18 companies)
Five Estuaries Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
Plessey Holdings Ltd., Farnborough, Hampshire / United Kingdom
Cross London Trains Holdco 2 Limited, London / United Kingdom
Awel Y Môr Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
CAPTON ENERGY DMCC, Dubai / United Arab Emirates
Interessengemeinschaft TUS, Volketswil / Switzerland
Siemens Healthcare Diagnostics K.K., Tokyo / Japan
31
100
100
1007
Fang Zhi Health Management Co., Ltd., Taipei / Taiwan
Hong Tai Health Management Co. Ltd., Taipei / Taiwan
New Century Technology Co. Ltd., Taipei / Taiwan
Siemens Healthcare Limited, Taipei / Taiwan
Siemens Industry Software (TW) Co., Ltd., Taipei / Taiwan
Siemens Limited, Taipei / Taiwan
Varian Medical Systems Taiwan Co., Ltd., Taipei / Taiwan
YaRa Information Inc., Taipei / Taiwan
Innomotics Limited, Bangkok Thailand
Siemens Healthcare Limited, Bangkok / Thailand
Siemens Limited, Bangkok Thailand
Siemens Logistics Automation Systems Ltd., Bangkok/Thailand
Siemens Mobility Limited, Bangkok/Thailand
INNOMOTICS LIMITED COMPANY, Ho Chi Minh City / Viet Nam
Siemens Mobility Pte. Ltd., Singapore / Singapore
Siemens Pte. Ltd., Singapore / Singapore
Siemens Healthcare Limited, Ho Chi Minh City / Viet Nam
100
100
100
100
100
100
100
100
100
100
100
Siemens Logistics Pte. Ltd., Singapore / Singapore
100
Siemens Industry Software Pte. Ltd., Singapore / Singapore
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1007
Innomotics Pte. Ltd., Singapore / Singapore
Siemens Electronic Design Automation Pte. Ltd., Singapore / Singapore
Siemens Healthcare Pte. Ltd., Singapore / Singapore
100
GNA 1 Geração de Energia S.A., São João da Barra / Brazil
Micropower Comerc Energia S.A., São Paulo / Brazil
107,005
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
to disclosures for deferred tax assets and liabilities, refer to Note 7 Income taxes in the notes to the consolidated financial statements.
18
Note 31 Members of the Managing Board and Supervisory Board
Note 32 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b of the
German Commercial Code
1. Income Statement
Annual Financial Statements
Fiscal year
(in millions of €)
Revenue
Cost of sales
Gross profit
Research and development expenses
Selling expenses
General administrative expenses
Other operating income
Note
2023
2022
1
19,660
17,390
(13,671)
Note 30 Subsequent events
17
Note 29 Declaration of Compliance with the German Corporate Governance Code
17
8
Independent Auditor's Reports (Group)
Dr. Gaenslen
Wirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
Wirtschaftsprüfer
Keller
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, December 4, 2023
The German Public Auditor responsible for the engagement is Siegfried Keller.
(12,502)
German Public Auditor responsible for the engagement
Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management
report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the
ESEF format - including the versions to be published in the Unternehmensregister [German Company Register] – are merely electronic
renderings of the audited consolidated financial statements and the audited group management report and do not take their place. In
particular, the ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents
made available in electronic form.
-
Other matter - use of the auditor's report
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
to Art. 11 of the EU Audit Regulation (long-form audit report).
We were elected as group auditor by the Annual Shareholders' Meeting on February 9, 2023. We were engaged by the Supervisory Board
on February 9, 2023. We have been the group auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October
1, 2008 to September 30, 2009.
Further information pursuant to Art. 10 of the EU Audit Regulation
Independent Auditor's Reports (Group)
Note 27 Proposal for the appropriation of net income
17
Note 28 Remuneration of the members of the Managing Board and the Supervisory Board
7
Independent Auditor's Reports (Group)
5,989
(2,084)
Interest expenses
4
(1,586)
51
thereof positive interest from borrowing
3
341
Other financial income (expenses), net
5
445
(1,044)
Income from business activity
4,758
3,115
Income taxes
Net income
6
(298)
498
4,460
3,612
(18)
(1)
thereof negative interest from financial investment
387
(1,785)
(2,492)
(2,228)
(1,209)
(1,055)
2
338
159
Other operating expenses
2
4,888
(391)
Income (loss) from operations
151
(485)
Income (loss) from investments, net
3
4,734
4,204
Interest income
4
1,014
(464)
Independent auditor's report on a limited assurance
engagement on the EU Taxonomy disclosure
To Siemens Aktiengesellschaft, Berlin and Munich
We have performed a limited assurance engagement on the "EU Taxonomy disclosure" in chapter 11 of the group management report of
Siemens Aktiengesellschaft, Berlin and Munich (hereinafter the "Company"), which is combined with the management report of Siemens
Aktiengesellschaft, for the period from October 1, 2022 to September 30, 2023 (hereinafter the "EU Taxonomy disclosure").
Note 13 Deferred tax assets
Note 12 Receivables and other assets
Note 11 Inventories
Note 10 Non-current assets
Note 9 Expenses relating to prior periods
Note 8 Income relating to prior periods
Note 7 Other taxes
8
8
Note 6 Income taxes
8
Note 2 Other operating income and expenses
Note 3 Income (loss) from investments, net
Note 4 Interest income and interest expenses
Note 5 Other financial income (expenses), net
3. Notes to Annual Financial Statements
Note 1 Revenue
2. Balance Sheet
1. Income Statement
Annual Financial Statements
12
9
56699 co co co co ooooo -
11
10
Note 14 Active difference resulting from offsetting
Note 15 Shareholders' equity
4
Note 16 Provisions for pensions and similar commitments
17
Note 26 Derivative financial instruments and valuation units
15
Note 25 Other financial obligations
15
Note 24 Financial payment obligations under lease and rental arrangements
15
Note 23 Guarantees and other commitments
14
45557EE702
10
Note 22 Shares in investment funds
Note 21 Share-based payment
13
Note 20 Personnel expenses
13
Note 19 Material expenses
13
Note 18 Liabilities
13
Note 17 Other provisions
12
14
10
10
st
In determining the disclosures in accordance with Art. 8 of the EU Taxonomy Regulation, management is required to interpret undefined
legal terms. Due to the immanent risk that undefined legal terms may be interpreted differently, the legal conformity of their interpretation
and, accordingly, our assurance engagement thereon are subject to uncertainties.
Evaluation of the presentation of the EU Taxonomy disclosure.
•
Reconciliation of selected disclosures with the corresponding data in the consolidated financial statements and group management
report,
Inquiries and inspection of documents relating to the collection and reporting of data,
•
• Analytical evaluation of data at the level of the Group and businesses as well as service and governance units,
•
•
• Identification of likely risks of material misstatement in the EU Taxonomy disclosure,
9
Inquiries of the employees responsible for data capture and consolidation as well as the preparation of the EU Taxonomy disclosure
about the reporting processes, the data capture and compilation methods as well as internal controls to the extent relevant for the
limited assurance of the EU Taxonomy disclosure,
•
•
In the course of our assurance engagement we have, among other things, performed the following assurance procedures and other
activities:
Our responsibility is to express a conclusion with limited assurance on the EU Taxonomy disclosure based on our assurance engagement.
We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000
(Revised): "Assurance Engagements other than Audits or Reviews of Historical Financial Information" issued by the International Auditing
and Assurance Standards Board (IAASB). This standard requires that we plan and perform the assurance engagement to obtain limited
assurance about whether any matters have come to our attention that cause us to believe that the Company's EU Taxonomy disclosure is
not prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts adopted thereunder as well
as the interpretation by management disclosed in the EU Taxonomy disclosure. In a limited assurance engagement, the procedures
performed are less extensive than in a reasonable assurance engagement, and accordingly, a substantially lower level of assurance is
obtained. The selection of the assurance procedures is subject to the professional judgment of the auditor.
Responsibilities of the auditor
We have complied with the German professional requirements on independence as well as other professional conduct requirements.
Our audit firm applies the national legal requirements and professional pronouncements, in particular the BS WP/vBP ["Berufssatzung für
Wirtschaftsprüfer/vereidigte Buchprüfer": Professional Charter for German Public Accountants/German Sworn Auditors]) in the exercise of
their Profession and the IDW Standard on Quality Management issued by the Institute of Public Auditors in Germany (IDW): Requirements
for Quality Management in the Audit Firm (IDW QS 1), and accordingly maintains a comprehensive quality management system that
includes documented policies and procedures with regard to compliance with professional ethical requirements, professional standards
as well as relevant statutory and other legal requirements.
Independence and quality assurance of the audit firm
These responsibilities of the Company's management include the selection and application of appropriate EU Taxonomy reporting
methods and making assumptions and estimates about individual disclosures that are reasonable in the circumstances. Furthermore,
management is responsible for such internal control as management considers necessary to enable the preparation of the EU Taxonomy
disclosure that is free from material misstatement, whether due to fraud (manipulation of the EU Taxonomy disclosure) or error.
The EU Taxonomy Regulation and the Delegated Acts adopted thereunder contain wording and terms that are still subject to considerable
interpretation uncertainties and for which clarifications have not yet been published in every case. Therefore, management has disclosed
their interpretation of the EU Taxonomy Regulation and the Delegated Acts adopted thereunder in the EU Taxonomy disclosure. They are
responsible for the defensibility of this interpretation. Due to the immanent risk that undefined legal terms may be interpreted differently,
the legal conformity of the interpretation is subject to uncertainties.
Management of the Company is responsible for the preparation of the EU Taxonomy disclosure in accordance with Art. 8 of Regulation
(EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework to facilitate
sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the "EU Taxonomy Regulation") and the Delegated Acts
adopted thereunder as well as in accordance with their own interpretation of the wording and terms contained in the EU Taxonomy
Regulation and the Delegated Acts adopted thereunder that is presented in the EU Taxonomy disclosure.
Responsibilities of management
Inquiries of relevant employees for the assessment of the process to identify the Taxonomy-eligible and Taxonomy-aligned economic
activities,
Appropriation of net income
Independent Auditor's Reports (Group)
Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe
that the EU Taxonomy disclosure of Siemens Aktiengesellschaft for the period from October 1, 2022 to September 30, 2023 is not
prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts adopted thereunder as well as
the interpretation by management as disclosed in the EU Taxonomy disclosure.
3
Table of contents
SIEMENS
This document is an English language translation of the authoritative German version and is not provided
in the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
language with the operator of the German Company Register and published in the German Company
Register.
for fiscal 2023
Annual Financial
Statements*
10
10
[German Public Auditor]
Wirtschaftsprüferin
Assurance conclusion
Johne
Wirtschaftsprüfer
Keller
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, December 4, 2023
We make express reference to the fact that we will not update the report to reflect events or circumstances arising after it was issued,
unless required to do so by law. It is the sole responsibility of anyone taking note of the summarized result of our work contained in this
report to decide whether and in what way this result is useful or suitable for their purposes and to supplement, verify or update it by means
of their own review procedures.
The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and Public Audit
Firms]" dated January 1, 2017 are applicable to this engagement and also govern our relations with third parties in the context of this
engagement (www.de.ey.com/general-engagement-terms). In addition, please refer to the liability provisions contained there in no. 9
and to the exclusion of liability towards third parties. We accept no responsibility, liability or other obligations towards third parties unless
we have concluded a written agreement to the contrary with the respective third party or liability cannot effectively be precluded.
General engagement terms and liability
We draw attention to the fact that the assurance engagement was conducted for the Company's purposes and that the report is intended
solely to inform the Company about the result of the assurance engagement. As a result, it may not be suitable for another purpose than
the aforementioned. Accordingly, the report is not intended to be used by third parties for making (financial) decisions based on it. Our
responsibility is to the Company alone. We do not accept any responsibility to third parties. Our assurance conclusion is not modified in
this respect.
Restriction of use
[German Public Auditor]
Net income
4
Allocation to other retained earnings
1,080
67,914
235
235
103,884
evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Arts.
4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an
appropriate and complete machine-readable XBRL copy of the XHTML rendering.
•
• evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited consolidated financial
statements and to the audited group management report;
evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
specification for this file;
•
•⚫ obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
controls;
identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
a basis for our assurance opinion;
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
throughout the assurance work. We also:
The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
Group auditor's responsibilities for the assurance work on the ESEF documents
In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
electronic reporting format.
Management is responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial
statements and the group management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the
consolidated financial statements in accordance with Sec. 328 (1) Sentence 4 No. 2 HGB.
Responsibilities of management and the Supervisory Board for the ESEF documents
We conducted our assurance work on the rendering, of the consolidated financial statements and the group management report contained
in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering
of Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410)
(06.2022) and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further
described in the "Group auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW
Standard on Quality Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
Basis for the opinion
Independent Auditor's Reports (Group)
6
1,222
63,417
639
2,249
63,946
59,483
2,374
2,378
8,737
8,445
6,555
6,188
3,760
3,613
21,422
20,623
540
In our opinion, the rendering of the consolidated financial statements and the group management report contained in the file identified
above and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
reporting format. Beyond this assurance opinion and our audit opinions on the accompanying consolidated financial statements and the
accompanying group management report for the fiscal year from October 1, 2022 to September 30, 2023 contained in the "Report on the
audit of the consolidated financial statements and of the group management report" above, we do not express any assurance opinion on
the information contained within these renderings or on the other information contained in the file identified above.
540
13,604
13,380
680
17
3,987
602
3,711
18,270
17,693
18
339
16
2,370
We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the file
SIEMENS 2023.zip and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for
the electronic reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the
conversion of the information contained in the consolidated financial statements and the group management report into the ESEF format
and therefore relates neither to the information contained within these renderings nor to any other information contained in the file
identified above.
Report on the assurance on the electronic rendering of the consolidated financial statements and the group
management report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
Management is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSS
as adopted the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as with full IFRSS
as issued by the IASB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of
the assets, liabilities, financial position and financial performance of the Group. In addition, management is responsible for such internal
control as management has determined necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
Responsibilities of management and the Supervisory Board for the consolidated financial statements and the
group management report
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
otherwise appears to be materially misstated.
•
⚫ is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in
the audit, or
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and
consequently we do not express an opinion or any other form of assurance conclusion thereon.
but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
EU Taxonomy disclosure.
• Notes and forward-looking statements,
⚫ the Report of the Supervisory Board,
⚫ the Compensation Report,
the Five-Year Summary,
the Responsibility Statement (to the Annual Financial Statements and the Management Report),
the Responsibility Statement (to the Consolidated Financial Statements and the Group Management Report),
•
•
.
The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2022 within the meaning of ISA [DE]
720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
Compensation Report. In all other respects, management is responsible for the other information. The other information comprises chapter
11 "EU Taxonomy disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate
Governance Statement. In addition, the other information comprises parts to be included in the Annual Report, of which we received a
version prior to issuing this auditor's report, in particular:
Other information
Profit carried forward
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going
concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative but to do so.
Furthermore, management is responsible for the preparation of the group management report that, as a whole, provides an appropriate
view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German
legal requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible
for such arrangements and measures (systems) as management has considered necessary to enable the preparation of a group
management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate
evidence for the assertions in the group management report.
The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial
statements and of the group management report.
Auditor's responsibilities for the audit of the consolidated financial statements and of the group
management report
Other legal and regulatory requirements
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public disclosure about the matter.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
applicable, the related safeguards.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
perform audit procedures on the prospective information presented by management in the group management report. On the basis of
sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law,
and the view of the Group's position it provides.
obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our opinions;
evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial
statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance
with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as
with full IFRSS as issued by the IASB;
conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report
to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are
inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern;
evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
and related disclosures;
Opinion
obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems;
.
•
•
•
•
•
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements and this group management report.
Independent Auditor's Reports (Group)
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the
Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the
audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the group management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
the risk of not detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
(172)
5
2,550
1,022
928
71,303
71,576
72,610
72,657
Current assets
Inventories
Advance payments received
11
153
2,487
(916)
(1,043)
1,571
1,334
Receivables and other assets
Trade receivables
Receivables from affiliated companies
Other receivables and other assets
12
1,762
2,377
1,657
285
2022
Unappropriated net income
(30)
27
4,460
3,612
250
185
(950)
(185)
3,760
10
3,613
2. Balance Sheet
(in millions of €)
Assets
Intangible assets
Property, plant and equipment
Financial assets
Annual Financial Statements
Sep. 30,
Note
2023
3
21,630
Non-current assets
Liabilities to banks
Shareholders' equity and liabilities
Shareholders' equity
Subscribed capital¹
Treasury shares
Issued capital
Other retained earnings
Unappropriated net income
Special reserve with an equity portion
Provisions
Provisions for pensions and similar commitments
107,005
Provisions for taxes
Liabilities
Trade payables
Liabilities to affiliated companies
Other liabilities
Deferred income
Total shareholders' equity and liabilities
1 Conditional Capital as of September 30, 2023 and 2022 amounted to €421 million and €421 million, respectively.
15
2,400
26,093
Other provisions
103,884
Capital reserve
Prepaid expenses
1,340
29,090
Other Securities
Cash and cash equivalents
Total assets
164
170
2,370
28,724
223
1,454
Deferred tax assets
16
33
14
32,047
220
2,065
Active difference resulting from offsetting
2,294
13
1,227
24,619
(53)
9
87
192
(128)
630
39
(116)
319
(12)
66
93
(217)
(353)
(20)
(40)
823
(345)
183
(259)
(20)
7
(8)
(258)
442
48
(9)
5
445
buildings on third-party land
Land, land rights and buildings, including
Property, plant and equipment
153
285
1
(237)
Intangible assets
(41)
Annual Financial Statements
(in millions of €)
NOTE 10 Non-current assets
3.4 Notes to the Balance Sheet
8
The income statement of Siemens AG included expenses relating to prior periods of €34 million.
NOTE 9 Expenses relating to prior periods
The income statement of Siemens AG included income relating to prior periods of €520 million, resulting mainly from the release of
provisions.
NOTE 8 Income relating to prior periods
Other taxes of €21 million (2022: €11 million) were included in functional costs.
NOTE 7 Other taxes
Deferred taxes included income from an increase in deferred taxes related to partnerships, pension provisions, and from entities forming
part of the Siemens AG tax group.
498
187
(298)
Accumulated depreciation/amortization
Disposals
Sep 30, 2023
Sep 30, 2023
178
505
129
203
49
303
Concessions and industrial property rights
Goodwill
310
Write-ups
Oct 01, 2022
Sep 30, 2023
Disposals
Additions Reclassifications
Oct 01, 2022
Acquisition or production costs
Carrying amount
Sep 30, 2022
Depreciation/
amortization
Technical equipment and machinery
(2,298)
78
Shares in investments
Shares in affiliated companies
Financial assets
928
1,022
(2,078)
445
(225)
3,100
(493)
366
3,227
108
144
(1)
64,580
(1)
269
64,065
166
229
(166)
(4,531)
6,222
(1,412)
2
7,632
62,427
62,180
(1,886)
222
58
(12)
(2,153)
(783)
145
(12)
(59)
1,170
(196)
16
171
1,180
Other equipment, plant and office equipment
309
343
(830)
247
(65)
(1,013)
1,173
(269)
42
(917)
(141)
186
(872)
107
110
Advanced payments made and construction in
progress
61
55
(115)
5
1,322
(11)
170
(6)
6
170
Equipment leased to others
263
298
(109)
(325)
2,313
2022
Fiscal year
19,660
6,127
11,220
2023
Fiscal year
Revenue
Asia, Australia
Europe, C.I.S., Africa, Middle East
Americas
(in millions of €)
Revenue by region
Revenue
Other revenue
Smart Infrastructure
Digital Industries
2023
(in millions of €)
14,708
3,346
Gains from the disposal of investments
Reversals of impairments on investments
Impairments on investments
Expenses from loss transfers from affiliated companies
Income from profit transfer agreements with affiliated companies
thereof from affiliated companies
Income from investments
(in millions of €)
Annual Financial Statements
NOTE 3 Income (loss) from investments, net
6
Other operating expenses included a loss of €196 million on the disposal relating to the carve-out of business activities into Innomotics
GmbH, Germany (a supplier of engines and large drives).
Other operating income included income from an intragroup service contract in the amount of €148 million. Income from the release of
the special reserve with an equity portion was €1 million (2022: €1 million).
NOTE 2 Other operating income and expenses
19,660
1,606
Revenue by lines of business
NOTE 1 Revenue
3.3 Notes to the Income Statement
Other buildings
Factory and office buildings
Useful lives of property, plant and equipment
Property, plant and equipment: The components of production costs are described in the context of the explanations for inventories. In
general, property, plant and equipment is depreciated using the straight-line method. In certain cases, the declining balance method is
applied, whereby a switch is made from the declining balance to the straight-line method as soon as the latter results in higher depreciation
expense. Items are depreciated on a pro rata temporis basis in the year of acquisition. Low-value non-current assets that are subject to
wear and tear, movable, and capable of being used independently, are expensed immediately or capitalized and fully depreciated in the
year of acquisition.
Acquired goodwill is generally amortized systematically over the expected useful life of five to 15 years. The expected useful life is based
on the expected use of the acquired businesses and is determined in particular by economic factors such as future growth and profit
expectations, synergy effects and employee base.
Intangible assets acquired for consideration are capitalized at acquisition costs and amortized on a straight-line basis over a maximum of
five years or, if longer, the contractually agreed useful life. Items are amortized on a pro rata temporis basis in the year of acquisition. The
capitalization option for internally generated intangible assets is not used.
Negative interest from financial investments is presented as a deduction in interest income, and positive interest from borrowings as a
deduction in interest expenses.
Revenue are proceeds from selling and leasing products, providing services and granting licenses, including licensing contracts for the
use of the Siemens trademark.
3.2 Accounting and Measurement Principles
The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). Amounts are presented in
millions of euros (€ million). Due to rounding, numbers presented may not add up precisely to totals provided.
Siemens AG has registered offices in Berlin and Munich, Germany. The Company is registered in the commercial register maintained by
the local courts in Berlin Charlottenburg, Germany, under the entry number HRB 12300, and in Munich, Germany, under the entry number
HRB 6684.
3.1 General Disclosures
3. Notes to Annual Financial Statements
Annual Financial Statements
1,040
Technical equipment and machines
Other equipment, plant and office equipment
Equipment leased to others
20 to 50 years
5 to 10 years
mostly 10 years
3 to 8 years
Classification of items in the annual financial statements: Siemens AG aggregates individual line items of the Income Statement and
Balance Sheet if the individual line item is not material for providing a true and fair view of the Company's financial position and if such
an aggregation improves the clarity of the presentation. Siemens AG discloses these items separately in the notes.
Derivative financial instruments are used by Siemens AG almost exclusively for hedging purposes and – if the relevant conditions are
met- are aggregated with the underlying hedged item into valuation units. When a valuation unit is created, changes in values or cash
flows from the hedged item and hedging contract are compared. A provision is recognized only for a negative surplus from the ineffective
part of the market value changes. The unrealized gains and losses from the effective part offset each other completely and are not
recognized in the Balance Sheet or the Income Statement.
Guarantees and other commitments: Siemens AG issues parent company guarantees, i.e. guarantees to ensure performance obligations
incurred from the delivery of goods or provision of services by affiliated and long-term investee companies or their parent companies. For
measurement purposes, the contract amount of the secured delivery or service agreement is reduced using the straight-line method over
the planned term of the delivery or service agreement, unless there are reasons for a different risk assessment and an increased liability
amount ("risk-adequate liability amount"). Credit lines included in the guarantee obligations in the context of financing affiliated
companies are recognized at their nominal amount.
Foreign currency translation: Receivables, other current assets, securities, cash and cash equivalents, provisions and liabilities (excluding
advance payments received on orders) as well as commitments and contingencies denominated in foreign currency are generally
measured applying the mean spot exchange rate on the balance sheet date. Balance Sheet line items denominated in foreign currency
which are part of a valuation unit used to hedge foreign currency risk are measured using the mean spot exchange rate on the transaction
date. Non-current assets and inventories acquired in foreign currency are generally measured applying the mean spot exchange rate on
the transaction date.
Other provisions are recognized in an appropriate and sufficient amount to cover individual obligations for all identifiable risks relating
to liabilities of uncertain timing and amount and for anticipated losses on onerous contracts, taking account of price and cost increases
expected to arise in the future. Provisions for agreed personnel restructuring measures were recognized for legal and constructive
obligations. Significant provisions with a remaining term of more than one year are discounted using a discount rate which corresponds
to the average market interest rate appropriate for the remaining term of the obligations, as calculated and published by Deutsche
Bundesbank.
According to the Act on the Improvement of Company Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung), Siemens
AG is secondarily liable for pension benefits provided under an indirect pension funding vehicle (mittelbarer Durchführungsweg). Siemens
AG recognizes the underfunding in the item Provisions for pensions and similar commitments as far as the respective assets of the pension
fund or of the pension and support fund (Pensions- und Unterstützungskasse) do not cover the settlement amount of the respective
pension obligations.
Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
assets at the balance sheet date. If the performance of the underlying assets is lower than a guaranteed return, the pension provision is
measured by projecting forward the contributions at the guaranteed fixed return and discounting to a present value.
Losses from the disposal of investments
Annual Financial Statements
Pensions and similar commitments: Siemens AG measures its pension obligations using the settlement amount calculated with the
actuarial projected unit credit method on the basis of biometric probabilities. The discount rate used corresponds to the average market
interest rate for instruments with an assumed remaining maturity of 15 years as published by German Federal Reserve Bank (Deutsche
Bundesbank).
Offsetting of assets and of income and expenses: Siemens AG measures assets at fair value that are designated as being held exclusively
to settle specified pension obligations and obligations for early retirement ("Altersteilzeit") arrangements and which cannot be accessed
by other creditors.
Deferred tax assets for differences between valuations of balance sheet line items in accordance to commercial and tax law and tax loss
carryforwards are recognized if a future tax benefit is expected. Deferred tax assets are netted with deferred tax liabilities. Recognized
deferred tax assets and liabilities comprise temporary differences of assets, liabilities, and deferred items of entities forming part of the
Siemens AG tax group and partnerships to the extent that the recovery or settlement of the carrying amount of assets, liabilities, or deferred
items result in a deductible or taxable amount in the taxable profit (loss) of Siemens AG.
Allowances on receivables are determined on the basis of the probability of default and country risks.
Financial assets: Impairment losses are recognized if the decline in value is presumed to be other than temporary. This applies, if objective
evidence, particularly events or changes in circumstances, indicate a significant or other than temporary decline in value. In case of an
impairment in prior periods, a lower recognized value may not be maintained if the reasons for the impairment do no longer exist.
Inventories are measured at the lower of average acquisition or production costs and daily values. Production costs comprise, in addition
to direct costs, an appropriate portion of production and material overheads and depreciation of property, plant and equipment. General
administration expenses, expenses for social facilities, voluntary social costs and company pension scheme costs are not capitalized. Write-
downs are recorded to cover inventory risks for reduced usability and technological obsolescence as well as in the context of loss-free
valuation of unbilled contracts in construction-type and service businesses.
Special reserve with an equity portion includes reserves pursuant to Section 6b of the German Income Tax Act
(Einkommensteuergesetz), recognized and transferred in fiscal years prior to the transition to regulations of the German Accounting Law
Modernisation Act (Bilanzrechtsmodernisierungsgesetz).
mostly 3 to 5 years
5
(527)
Income (loss) from investments, net
2023
Impairments of loans and securities
76
71
(361)
59
510
479
138
(28)
(487)
(181)
Result from changes in provisions for risks relating to derivative financial instruments
Reversal of impairments of loans and securities
Result from foreign currency, interest rate and other derivative financial instruments
Result from realization of monetary balance sheet items denominated in foreign currencies
Interest component of changes in the pension and personnel-related provisions that are not offset
against designated plan assets
Other financial income
(52)
(904)
40
2023
Fiscal year
Income taxes
Deferred taxes
Income tax expenses
(in millions of €)
Annual Financial Statements
NOTE 6 Income taxes
7
Result from foreign currency, interest rate and other derivative financial instruments included income of €536 million from the termination
of interest rate hedging contracts and combined interest and currency hedging contracts in connection with intragroup financing.
(1,044)
445
Other financial income (expenses), net
(3)
Other financial expenses
23
22
Financial income (expenses), (net) from pension and personnel-related provisions that are offset
against designated plan assets
(89)
(19)
61
240
61
224
(3,997)
(179)
(61)
3,474
1,562
4,768
2,905
4,789
2,907
2022
(124)
4,734
4,204
Income from investments included in particular profit distributions from Siemens Ltd., China, amounting to €1,987 million, and from
Siemens Healthineers AG, Germany, amounting to €634 million.
(1)
19
44
18
(21)
Expenses from designated plan assets
Income from designated plan assets
Fiscal year
Interest component of changes in the pension and personnel-related provisions that are offset
against designated plan assets
Fiscal year
2023
(in millions of €)
NOTE 5 Other financial income (expenses), net
Both the increase in interest income from €387 million in the prior year to €1,014 million in the current fiscal year and the swing in interest
expense from income of €51 million in the prior year to expenses of €1,586 million in the current fiscal year resulted primarily from the
effects of higher interest rates in connection with intragroup financing. Interest income included interest income from affiliated companies
of €890 million (2022: €347 million). Interest expenses included interest expenses from affiliated companies of €1,548 million (2022:
€67 million interest income). Interest income from loans of non-current financial assets amounted to €113 million (2022: €80 million).
NOTE 4 Interest income and interest expenses
In fiscal year 2023, Siemens AG sold 3.5% of the shares in Siemens Energy AG that were held as pension assets at that time. This resulted
in a gain of €213 million from the disposal of investments. As of the balance sheet date, Siemens AG directly held a 21.0% stake in Siemens
Energy AG. A reversal of impairment in the amount of €166 million was made on these shares based on Xetra closing price on the balance
sheet date. As of the reporting date, the carrying amount of the investment in Siemens Energy AG amounted to €2.1 billion.
Income from profit transfer agreements with affiliated companies included profit transfers from Siemens Beteiligungen Inland GmbH,
Germany, amounting to €1,323 million, and from Siemens Financial Services GmbH, Germany, amounting to €188 million.
Impairments on investments included an impairment of €164 million on a stake in Thoughtworks Holding, Inc., U.S.
2022
(3,492)
1,222
3,102
1,585
4,095
57,737
63,417
Liabilities
137
137
91
91
therein for social security
93
93
111
111
therein from taxes
61
1,013
1,074
19
1,198
1,217
thereof miscellaneous liabilities
2,730
67,914
6
60,010
1,684
Fiscal year
2023
Personnel expenses
Expenses for pensions
Social security contributions and expenses for other employee benefits
Wages and salaries
(in millions of €)
(9,117)
(10,257)
(3,576)
(4,210)
(5,541)
(6,047)
2022
2023
Fiscal year
NOTE 20 Personnel expenses
Material expenses
Costs of purchased services
Expenses for raw materials, supplies and purchased merchandise
(in millions of €)
NOTE 19 Material expenses
3.5 Other disclosures
Liabilities to affiliated companies resulted primarily from intragroup-financing activities.
6,220
2022
5
thereof to long-term investees
more than
thereof
maturities
to 5 years
1 year
2022
5 years
to 5 years
1 year up
up to
Sep 30,
more than
1 year up
up to 1
year
Sep 30,
2023
Liabilities to affiliated companies
Trade payables
Liabilities to banks
(in million of €)
thereof
maturities
Annual Financial Statements
NOTE 18 Liabilities
12
In May 2021, Siemens AG and the Federal Republic of Germany entered into a public-law contract based on which the obligation of final
disposal of nuclear waste is transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the
payment is subject to the approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made
to measure the obligations that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as
intermediate storage and transport to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032.
5 years
5
339
337
61
1,019
1,080
19
1,203
1,222
Other liabilities
1,684
6,119
56,143
63,946
1,585
3,732
54,165
59,483
40
2,209
2,249
7
2,367
2,374
639
639
2
The major amounts in other provisions were contributed by provisions related to personnel costs amounting to €1,136 million, provisions
for contingent losses from derivative financial instruments amounting to €723 million, provisions for warranties, delay compensations,
penalties for delay and breach of contract amounting to €639 million, provisions for decontamination obligations amounting to €489
million, and provisions related to guarantees and expected obligations from consortium agreements amounting to €267 million.
(4,767)
(689)
Sep 30, 2023
Deviation
from carrying
amount
Market value
2,284
amount
1,941
Carrying
602,270
(29,029)
(15,853)
(31,134)
(296,040)
307,201
667,125
2023
Fiscal year
Shares in investment assets according to investment objects
Money market funds
Share-based funds
Bond-based funds
Mixed funds
(in million of €)
The following shares in investment funds according to investment objects were held:
NOTE 22 Shares in investment funds
The pro rata intrinsic value of all matching shares issued to beneficiaries of Siemens AG amounted to €47 million.
Outstanding, end of fiscal year
343
Organizational changes
321
24
14
104,511
8,036
23,040
70,041
101,116
2023
3,395
Sep 30,
Guarantees and other commitments
thereof Others
thereof relating to performance guarantees on behalf of affiliated companies
thereof relating to financing of affiliated companies
Warranty obligations
Obligations from guarantees
(in millions of €)
NOTE 23 Guarantees and other commitments
Generally, shares in investment funds are accounted for securities held as non-current financial assets. Exceptions were those shares which
represented plan assets and therefore were not accessible by all other creditors. These shares are held exclusively for the purpose of
settling liabilities arising from post-employment obligations or comparable obligations with a long-term maturity, and are to be offset
against such liabilities.
343
2,679
2,336
50
50
24
321
(4,186)
Settled
Vested and fulfilled
13
Siemens AG grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
Stock awards to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic value
(= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired, if
applicable, considering the estimated target attainment at the balance sheet date.
Stock Awards
Siemens AG allows employees and members of the Managing Board to participate in share-based payment programs. For the purpose of
servicing share-based payment programs, Siemens AG also delivers Siemens shares, which have been granted by affiliated companies.
49,000
6,300
7,100
8,300
27,200
2023
Fiscal year
NOTE 21 Share-based payment
Employees
Administration and general functions
Research and development
Sales
Production
Personnel expenses did not include the expenses resulting from the compounding of the pension and personnel-related provisions, which
are included in other financial income (expenses), net. Expenses for pensions mainly included effects from pension increases due to the
continued high consumer price index as part of the actuarial valuation of the settlement amount of pension obligations.
The breakdown of employees per function is as follows:
(6,073)
(6,603)
(1,213)
(1,148)
(674)
Annual Financial Statements
Forfeited
The following table shows the changes of stock awards subject to performance conditions held by beneficiaries of Siemens AG and, for
the first time since fiscal 2023 due to the overall increase in volume, also stock awards not subject to performance conditions:
Non-vested, beginning of fiscal year
Granted
Outstanding, beginning of fiscal year
(in number of shares)
The following table shows the changes in the entitlements to matching shares of beneficiaries of Siemens AG:
Matching shares granted to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic
value (= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired at
the balance sheet date.
Plan participants receive the right to one Siemens share without payment (matching share) for every three investment shares continuously
held over a vesting period.
Share Matching Program
The pro rata intrinsic value of all stock awards issued to beneficiaries of Siemens AG amounted to €343 million at the balance sheet date.
4,740,136
(75,860)
(5,005)
(924,465)
(730,891)
1,364,429
5,111,928
2023
Fiscal year
Non-vested, end of fiscal year
Organizational changes
Settled
Forfeited
Vested and fulfilled
Granted
(in number of shares)
NOTE 17 Other provisions
6
In Germany, Siemens AG provides pension benefits through the BSAV (Beitragsorientierte Siemens Altersversorgung), frozen legacy plans
and deferred compensation plans. The majority of Siemens' active employees participate in the BSAV. The benefits are predominantly
based on nominal contributions by the Company and investment returns on assets designated to that plan, subject to a minimum return
guaranteed by the Company. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially
eliminate the effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk,
inflation risk and longevity risk. The pension benefits are funded via contractual trust arrangements (CTA). A portion of these trust assets
also covers the pension obligations of other domestic subsidiaries. Therefore, the assets do not meet the criteria for offsetting against the
pension obligation and are presented as financial assets of Siemens AG.
Sep 30, 2023
Receivables and other assets
thereof other assets
thereof from long-term investees
Other receivables and other assets
Receivables from affiliated companies
Trade receivables
(in millions of €)
2,377
2,487
thereof
maturities
more than
one year
57
910
937
350
399
298
278
762
812
2022
2023
60
15
Sep 30, 2022
1,657
For the measurement of deferred taxes, a tax rate of 31.33% was applied. Deviating from this, a tax rate of 15.83% was applied for
temporary differences related to assets, liabilities and prepaid/deferred items of partnerships.
Deferred tax assets resulted mainly from pension provisions and pension-related assets, from deferred taxes of companies forming part of
the Siemens AG tax group, as well as from other provisions and tax loss carryforwards. Deferred taxes from partnerships had an offsetting
effect.
NOTE 13 Deferred tax assets
Receivables from affiliated companies resulted primarily from intragroup-financing activities and included trade receivables totaling €15
million (2022: €12 million).
29,090
4,588
5,295
193
1,330
161
193
1,340
4,345
26,093
51
one year
thereof
maturities
more than
161
5,119
24,619
5
1,762
21,630
1,227
ph
Sep 30,
NOTE 12 Receivables and other assets
Inventories
Advance payments made
(179)
(6,900)
76,835
(3,778)
2,136
78,476
1,374
1,572
(154)
63
(217)
1,727
(133)
268
1,591
Securities
4,673
4,821
4,821
(1,450)
1,598
4,673
Loans
286
NOTE 14 Active difference resulting from offsetting
1,261
71,303
The actuarial assumptions for valuation of the settlement amount as of September 30, 2023 were based, among others, on a discount
rate of 1.81% and an average weighted pension increase of 2.40% p.a. The mortality tables used (Siemens Bio 2017/2023) are primarily
based on data of the German Siemens population, using a set of formulas that corresponds to generally accepted actuarial standards.
Finished products and goods
Work in progress
Raw materials and supplies
(in millions of €)
NOTE 11 Inventories
Total impairments of non-current assets were €179 million (2022: €4,268 million).
Loans included loans to affiliated companies in the amount of to €4,383 million (2022: €4,244 million), and other loans in the amount of
€438 million (2022: €430 million).
Annual Financial Statements
9
72,657
72,610
(7,955)
1,754
286
(444)
(9,551)
80,565
(4,324)
2,680
82,208
Non-current assets
71,576
(5,532)
(in millions of €)
Cost of unbilled contracts
Settlement amount for offset pension provisions
57,454,171
2023
Treasury shares, end of fiscal year
Issuance under share-based payments and employee share programs
Share buyback
Retirement of treasury shares
Treasury shares, beginning of fiscal year
(in number of shares)
Fiscal year
The following table presents the development of treasury shares:
Treasury shares
Further, by resolution of the Annual Shareholders' Meeting of January 30, 2019, the Managing Board is authorized to increase, with the
approval of the Supervisory Board, the capital stock until January 29, 2024 by up to €510 million through the issuance of up to 170
million registered no-par value shares against cash contributions and/or contributions in kind (Authorized Capital 2019). Under certain
conditions, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights
in the event of issue against contributions in kind. In the case of issue against cash payment, the shares are generally to be offered to
shareholders for subscription. However, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude
subscription rights, firstly for any fractional amounts, secondly, to grant dilution compensation in connection with convertible bonds or
bonds with warrants already issued, and thirdly, under certain further conditions, if the issue price of the new shares does not fall
significantly below the stock exchange price of the Company's already listed shares.
By resolution of the Annual Shareholders' Meeting of February 3, 2021, the Managing Board is authorized to increase the capital stock
until February 2, 2026 by up to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash
(Authorized Capital 2021). Subscription rights of existing shareholders are excluded. The new shares may exclusively be offered to
employees of Siemens AG and its affiliated companies (employee shares). To the extent permitted by law, employee shares may also be
issued in such a manner that the contribution to be paid on such shares is covered by that part of the annual net income which the
Managing Board and the Supervisory Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock
Corporation Act.
.
In detail, there are the following authorizations to increase the capital stock:
As of September 30, 2023, Siemens AG had authorized capital totaling a nominal amount of €600 million, which can be issued in
instalments and with different time limits by issuing up to 200 million registered no-par value shares.
Authorized capital
The capital stock of Siemens AG is divided into 800,000,000 registered shares (2022: 850,000,000 registered shares) of no-par value with
a notional value of €3.00 per share.
21,422
4,460
(3,362)
586
(884)
(50,000,000)
3,760
(4,227,344)
Siemens AG held 10,079,918 treasury shares, equaling a nominal amount of €30 million, representing 1.3% of the capital stock.
On June 24, 2021, Siemens announced a share buyback with a volume of up to €3 billion in the period from the beginning of fiscal 2022
to 2026. The share buyback, which began on November 15, 2021 and will run no longer than until September 15, 2026, is executed based
on the authorizations granted by the Annual Shareholders' Meeting on February 5, 2020. In addition to the dividend policy, the share
buyback is intended to allow shareholders to continuously participate in the success of the Company. In fiscal 2023, Siemens AG
repurchased a total of 6,853,091 treasury shares under this buyback program. This represented a nominal amount of €21 million or 0.9%
of capital stock. In the current reporting period, €884 million (excluding incidental transaction charges) were spent for this purpose; this
represents a weighted average stock price of €129.04 per share. The purchases were made in the reporting period on 248 Xetra trading
days and were carried out by a bank that had been commissioned by Siemens AG; the shares were purchased exclusively on the electronic
trading platform of the Frankfurt Stock Exchange (Xetra). The average volume on these trading days was about 27,633 shares.
NOTE 16 Provisions for pensions and similar commitments
Fair value of designated plan assets
The Werner Siemens-Stiftung, Zug, Switzerland, notified us on January 21, 2008, that its percentage of voting rights (held either directly
or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on January 2, 2008 and amounted to 3.03%
(27,739,285 voting rights) as per this date.
Goldman Sachs Group, Inc., Wilmington, USA, informed us on December 22, 2022, that as of December 16, 2022, its percentage of voting
rights (held either directly or indirectly) in Siemens AG amounted to 4.15% of which 0.28% were voting rights from 2,377,304 shares due
to their participation and 3.87% were attributable to instruments.
BlackRock, Inc., Wilmington, USA, informed us on August 7, 2023, that as of August 2, 2023, its percentage of voting rights (held either
directly or indirectly) in Siemens AG amounted to 6.68% of which 6.56% were voting rights from 52,480,190 shares due to their
participation and 0.12% were attributable to instruments.
As of September 30, 2023, the following information on shareholdings subject to reporting requirements was available to the Company
pursuant to Section 160 para 1 No. 8 German Stock Corporation Act (Aktiengesetz):
Disclosures on shareholdings of Siemens AG
These amounts subject to dividend payout restrictions face other retained earnings in a sufficiently high amount. The unappropriated net
income of €3,760 million is available for distribution.
18
Amounts from the capitalization of assets at fair value
2,294
Amounts from the capitalization of deferred taxes
257
Amount representing the difference of the recognition of provisions and similar commitments based on average interest rates covering ten and
seven years, respectively
2023
Fiscal Year
(in millions of €)
Information on amounts subject to dividend payout restrictions
In fiscal 2023, Siemens AG re-issued in total 4,227,344 treasury shares under the exclusion of subscription rights in connection with share-
based payments and employee share programs in the Group, equaling a nominal amount of €13 million and 0.5% of capital stock. The
Company received in total €236 million for 1,843,831 shares, re-issued against payment of a purchase price. Siemens AG received this
amount for unrestricted use. All shares were sold as investment shares in connection with the share matching program to plan participants.
In each case, the purchase price was determined on the basis of the closing rate in Xetra trading, determined on a monthly effective date.
Therefore, in the reporting period, in total 1,297,391 shares related to the monthly investment plan at a weighted average share price of
€138.69 per share, 227,427 shares related to the share matching plan at a weighted average share price of €145.02 per share, and
319,013 shares related to the base share program at a weighted average share price of €72.51 per share (after consideration of a 50%
subsidy by the Company). The other shares re-issued during the reporting period can be primarily attributed to the servicing of stock
awards granted in fiscal 2019 totaling 1,693,126 shares, to 573,467 matching shares under the share matching program for fiscal 2020,
and to 116,920 jubilee shares.
Following the 2023 Annual Shareholders' Meeting, the Management Board resolved to redeem 50,000,000 treasury shares.
The treasury shares purchased under the share buybacks may be used for purposes of retirement, distribution to employees, members of
the executive bodies of companies affiliated with Siemens and members of the Managing Board, as well as the servicing of convertible
bonds with attached warrants.
Annual Financial Statements
11
10,079,918
3,510
6,853,091
3,613
20,623
Share buybacks
Retirement of
treasury shares
Oct 01, 2022
Subscribed capital
Shareholders' equity
Unappropriated net income
Other retained earnings
Capital reserve
(in millions of €)
Subscribed capital
Treasury shares
NOTE 15 Shareholders' equity
10
10
939
33
(285)
(694)
1,011
2023
Sep 30,
Acquisition cost of designated plan assets
(3,362)
Active difference resulting from offsetting
Settlement amount for offset personnel-related provisions
Issuance of treasury
shares under share-
based payments
and employee
share programs
Annual Financial Statements
Issued capital
Dividend
for 2022
950
431
(864)
(150)
6,188
8,737
142
150
6,555
2,370
13
(21)
8,445
(30)
13
(21)
150
(172)
2,400
(150)
2,550
2,378
Sep 30, 2023
Net income
53
39
Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
55
100
33
Siemens Switchgear Ltd., Shanghai, Shanghai / China
63
84
48
Siemens Limited, Hong Kong / Hong Kong
103
37
100
C&S Electric Limited, New Delhi / India
9
249
99
SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
18
17
100
Siemens Standard Motors Ltd., Yizheng / China
Siemens Financial Services Private Limited, Mumbai / India
21
100
64
116
102
100
Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
57
85
Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
8
87
100
Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
21
153
205
100
81
107
80
Siemens Sensors & Communication Ltd., Dalian / China
9
26
100
Siemens Shanghai Medical Equipment Ltd., Shanghai / China
86
196
100
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
Siemens Numerical Control Ltd., Nanjing, Nanjing / China
100
4 Values from fiscal year October 01, 2021 - September 30, 2022
34
Varian Medical Systems K.K., Tokyo / Japan
(1)
955
100
Siemens Healthineers Ltd., Seoul / Korea
20
114
100
Siemens Ltd. Seoul, Seoul / Korea
30
167
100
22
53
100
Siemens Limited, Taipei / Taiwan
1 The values correspond to the annual financial statements after a possible profit transfer, for subsidiaries according to the IFRS closing.
2 Siemens AG is a shareholder with unlimited liability of this company.
3 Values from fiscal year January 01, 2020 - December 31, 2020
5 Values from fiscal year January 01, 2022 - December 31, 2022
6 Values from fiscal year July 22, 2022 - September 30, 2022
7 Values from fiscal year July 21, 2023 - September 30, 2023
8 Values from fiscal year August 01, 2023 - September 30, 2023
24
104
100
143
15
Siemens K.K., Tokyo / Japan
282
100
SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
10
25
100
Siemens Limited, Mumbai / India
225
1,763
51
Siemens Technology and Services Private Limited, Navi Mumbai / India
45
Siemens Healthcare Private Limited, Mumbai / India
73
P.T. Jawa Power, Jakarta / Indonesia
204
960
505
Siemens Healthcare Diagnostics K.K., Tokyo / Japan
20
205
100
Siemens Healthcare K.K., Tokyo / Japan
34
221
100
100
Siemens Mechatronics Technology JiangSu Ltd., Yizheng / China
505
2,219
100
Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
40
542
100
Siemens International Holding B.V., The Hague / Netherlands
1,221
1,395
11,351
Siemens Mobility Holding B.V., The Hague / Netherlands
112
1,453
100
Siemens Nederland N.V., The Hague / Netherlands
54
171
100
279
Siemens Healthineers Nederland B.V., The Hague / Netherlands
100
Mendix Technology B.V., Rotterdam / Netherlands
(79)
(19)
100
Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
2
16
100
Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
Siemens Healthineers Holding III B.V., The Hague / Netherlands
8
84
100
665
3,944
100
Siemens Healthineers Holding IV B.V., The Hague / Netherlands
13,895
100
65
Sqills Products B.V., Enschede / Netherlands
577
21
Annual Financial Statements
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
5
94
100
Siemens S.A., Amadora / Portugal
100
16
2015
May 29, 1956 January 27, 2023
2019
2018
January 30, 2028
1957
April 26,
1967
September 3, January 31, 2027
- Siemens Mobility GmbH, Munich
93
65
20
100
100
Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
11
100
503
Varian Medical Systems Nederland B.V., Houten / Netherlands
14
3,034
100
ZeeEnergie C.V., Amsterdam / Netherlands
165
219
205
Siemens AS, Oslo / Norway
Siemens Sp. z o.o., Warsaw / Poland
11
22
(3)
AB Volvo, Gothenburg, Sweden³
German positions:
314
KIC InnoEnergy S.E., Eindhoven / Netherlands
1
63
100
131
1,996
100
252
Siemens Industry Software Limited, Shannon, County Clare / Ireland
1,789
Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
Siemens Industry Software Ltd., Airport City / Israel
57
3,810
100
9
118
100
Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
Marousi Greece
100
219
100
Siemens Industry Software SAS, Châtillon / France
14
58
100
Siemens Mobility SAS, Châtillon / France
(32)
89
100
Siemens SAS, Courbevoie / France
84
238
100
Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
7
86
100
113
UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
1
SPT Invest Management, SARL, Luxembourg Luxembourg
(103)
627
1005
EGM Holding Limited, Birkirkara / Malta
66
(47)
1005
335
7
78
100
Buitengaats C.V., Amsterdam / Netherlands
165
219
205
Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
193
6
SPT Holding SARL, Luxembourg / Luxembourg
100
Medical Systems S.p.A., Genoa / Italy
2
132
455
Siemens Healthcare S.r.l., Milan / Italy
17
253
100
Siemens S.p.A., Milan / Italy
123
290
100
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I., Esch-sur-Alzette / Luxembourg
(3)
65
100
-
17
Positions outside Germany:
- Siemens Energy AG, Munich³
domestic or foreign controlling bodies of business
enterprises (as of September 30, 2023)
expires
2025
Term
Member
since
October 1,
2013
Date of birth
October 27,
1965
Chairman of the Supervisory Board of
Siemens AG
Jim Hagemann Snabe
Chairman
Positions outside Germany:
Occupation
Memberships in supervisory boards whose
establishment is required by law or in comparable
Members of the Supervisory Board and positions held by Supervisory Board members
In fiscal 2023, the Supervisory Board had the following members:
- Siemens Proprietary Ltd., South Africa
(Chairman)
Positions outside Germany:
- Siemens Healthineers AG, Munich
(Chairman)'
(Chairman)
- Siemens Healthcare GmbH, Munich
Name
- C3.ai, Inc., USA³
- Northvolt AB, Sweden (Chairman)
- Urban Partners A/S, Denmark (Deputy Chairman)
German positions:
January 31, 2027
January 3,
1954
2028
January 24,
2008
1960
Chairman of the Supervisory Board of
Allianz SE
Deputy Chairman of the Central Works
Council and of the Combine Works
Council of Siemens AG
Chairman of the Supervisory Board of
RWE AG
Chairwoman of the Central Works Council March 26,
of Siemens AG
(until February 9, 2023)
(as of February 9, 2023)
Michael Diekmann
Second Deputy Chairman
Tobias Bäumler²
(Dr. rer. pol.)
Werner Brandt
First Deputy Chairwoman
Birgit Steinborn²
German positions:
2018
Siemens W.L.L., Qatar
- Siemens Schweiz AG, Switzerland
1 Publicly listed.
September 30,
2028
October 1,
2020
1971
January 30,
Judith Wiese
December 14,
2026
German positions:
September 18,
2013
Ralf P. Thomas
(Prof. Dr. rer. pol.)
September 30,
2025
October 1,
2020
January 2,
1965
Matthias Rebellius
May 31, 2025
March 7, 1973 April 1, 2017
March 7, 1961
- Evonik Industries AG, Essen¹
German positions:
- Siemens Energy AG, Munich'
Siemens Ltd., Saudi Arabia (Deputy
Chairman)
- Siemens Ltd., India¹
Arabia (Deputy Chairman)
Arabia Electric Ltd. (Equipment), Saudi
- Siemens France Holding SAS, France
Positions outside Germany:
- Siemens Aktiengesellschaft Österreich,
Austria (Chairman)
Positions outside Germany:
- Siemens Mobility GmbH, Munich
(Chairman)
- Siemens Healthineers AG, Munich¹
(as of September 30, 2023)
German positions:
Group company positions
- European School of Management and
Technology GmbH, Berlin
German positions:
- Siemens Energy Management GmbH,
Munich
- Siemens Energy AG, Munich'
German positions:
- Siemens Energy Management GmbH,
Munich
(Chairman)
Siemens Energy Management GmbH, Munich
Thyssenkrupp AG, Essen (Deputy Chairman)³
- Traton SE, Munich³
RWE AG, Essen (Chairman)³
October
16, 2020
Benoît Potier
(since February 9, 2023)
(since February 9, 2023)
Christian Pfeiffer
(Dr.-Ing.)²
Martina Merz
OPUS Talent Solutions, UK (Chair)
Positions outside Germany:
Annual Financial Statements
Hagen Reimer²
Chairman of the Siemens Europe
Committee
1969
January 25, 2028
Chief Treasurer and Executive Member of January 22,
the Managing Board of IG Metall
2008
January 24, 2028
March 16,
1960
2027
2012
Norbert Reithofer
(Dr.-Ing. Dr.-Ing. E.h.)
(until February 9, 2023)
(as of February 9, 2023)
Kasper Rørsted
-MAN Truck & Bus SE, Munich (Deputy Chairman)
- Airbus GmbH, Hamburg
German positions:
February 9, 2028
2023
February 9, 2027
2023
Member of supervisory boards
Director of the London School of
Economics
Member of supervisory boards
Chairman of the Supervisory Board of
Bayerische Motoren Werke
Aktiengesellschaft
Trade Union Secretary of the Managing
Board of IG Metall
member of the Combine Works Council
of Siemens AG and of the Central Works
Council of Siemens Mobility GmbH
Chairman of the Board of Directors of
L'Air Liquide S.A.
Siemens Mobility GmbH,
Innovation manager at
March 1,
1963
June 2,
1969
Member of supervisory boards
(until February 9, 2023)
(as of February 9, 2023)
Nathalie von Siemens
(Dr. phil.)
Baroness Nemat Shafik
(DBE, DPhil)
December 12, February 9,
1968
2023
October 10,
1979
14, 2023
September
Regina E. Dugan
(PhD)
- Siemens Mobility GmbH, Munich (Deputy
Chairwoman)
- Siemens Energy Management GmbH, Munich
German positions:
- Siemens Energy AG, Munich³
- Airbus Defence and Space GmbH, Taufkirchen
German positions:
- HPE, Houston, Texas, USA³
President and Chief Executive Officer of
Wellcome Leap Inc.
Positions outside Germany:
- Fresenius Management SE, Bad Homburg
- Allianz SE, Munich (Chairman)³
German positions:
2018
January 31, 2028
December 23, January 24, 2023
1954
2008
2028
- Fresenius SE & Co. KGaA, Bad Homburg (Deputy
Chairman)³
March 19,
1963
February 9, 2027
2023
(since February 9, 2023)
April 25,
1968
Chair of the Board of Directors of
OPUS Talent Solutions
Head of the Regional Office Erlangen /
Nuremberg, Germany, Chairman of the
Committee of Spokespersons of the
Siemens Group and Chairman of the
Central Committee of Spokespersons of
Siemens AG
Jürgen Kerner²
(since February 9, 2023)
Harald Kern²
Keryn Lee James
(since September 14,
2023)
Oliver Hartmann²
18
2028
April 1,
2007
March 14,
1959
Chairwoman of the Combine Works
Council of Siemens AG
Bettina Haller²
Trade Union Secretary, IG Metall Regional June 21,
Office for Bavaria
1970
(Dr. phil.)
Andrea Fehrmann²
2028
(as of September 30, 2023)
Siemens Healthcare SAS, Courbevoie / France
173
273
1004
Next47 GmbH, Munich
5
(7)
100
Nordlicht Holding GmbH & Co. KG, Frankfurt
1
148
OWP Butendiek GmbH & Co. KG, Bremen
145
789
235
Project Ventures Butendiek Holding GmbH, Munich
66
1004
335
Munipolis GmbH, Munich
100
71
1
10
100
GuD Herne GmbH, Essen
19
37
505
HaCon Ingenieurgesellschaft mbH, Hanover
12
148
100
Innomotics GmbH, Munich
KACO new energy GmbH, Neckarsulm
(179)
(192)
100
16
RISICOM Rückversicherung AG, Grünwald
evosoft GmbH, Nuremberg
13
100
18
100
Siemens Electronic Design Automation GmbH, Munich
(6)
73
100
Siemens Energy AG, Munich
14
(6)
324
Siemens Finance & Leasing GmbH, Munich
(6)
138
100
Siemens Financial Services GmbH, Munich
9
13,164
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
100²
24,217
Siemens Bank GmbH, Munich
65
1,242
100
Siemens Beteiligungen Europa GmbH, Munich
192
5,895
100
Siemens Beteiligungen Inland GmbH, Munich
(283)
26,716
100
Siemens Beteiligungen USA GmbH, Berlin
13,776
100
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
2,755
327
2,038
1006
1004
Michael Sigmund²
(until August 31, 2023)
(as of August 31, 2023)
Chairman of the Committee of
Dorothea Simon²
Grazia Vittadini
September
Spokespersons of the Siemens Group and 13, 1957
Chairman of the Central Committee of
Spokespersons of Siemens AG
- EssilorLuxottica SA, France³
Chairwoman of the Central Works Council August 3,
March 1,
2014
2028
1969
Chief Technology Officer and Member of
the Executive Team of Rolls-Royce
Holdings plc³ (until October 17, 2023),
September
23, 1969
October 1,
2017
February 3, 2025
2021
2028
of Siemens Healthcare GmbH
Positions outside Germany:
TÜV Süd AG, Munich
- Siemens Healthineers AG, Munich³
February 3, 2025
2021
February 24,
1962
August 13,
1962
2018
January 31, 2023
July 14, 1971
January 27, 2027
2015
Positions outside Germany:
- L'Air Liquide S.A., France (Chairman)³
German positions:
- Bayerische Motoren Werke Aktiengesellschaft,
Munich (Chairman)³
- Henkel AG & Co. KGaA, Düsseldorf³,4
- Henkel Management AG, Düsseldorf
Positions outside Germany:
A. P. Møller-Mærsk A/S, Denmark³
German positions:
Messer SE & Co. KGaA, Bad Soden am Taunus
Siemens Healthcare GmbH, Munich
German positions:
67
- Siemens Healthcare GmbH, Munich
German positions:
Matthias Zachert
Equity interest
in %
September 30, 2023
Germany (49 companies)
Berliner Vermögensverwaltung GmbH, Berlin
Erlangen KHK 5 GmbH & Co. KG, Grünwald
Erlapolis 20 GmbH, Munich
Equity in
millions of €¹
Erlapolis 22 GmbH, Munich
18
100
8
39
1004
3
15
(63)
Net income in
millions of €¹
NOTE 32 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b
of the German Commercial Code
Annual Financial Statements
Gunnar Zukunft²
(until February 9, 2023)
(as of February 9, 2023)
Special Advisor of Rolls-Royce Holdings
plc³ (since October 17, 2023)
Chairman of the Board of Management of November 8,
LANXESS AG³
January 31, 2027
1967
2018
Member of the Central Works Council of
Siemens Industry Software GmbH
June 21,
1965
January 31, 2023
German positions:
2018
Siemens Industry Software GmbH, Cologne
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
² Employee representative.
3 Publicly listed.
4 Shareholders' Committee.
19
The Exploration Company GmbH, Gilching
100
100
14
100
Siemens Healthcare Diagnostics GmbH, Vienna / Austria
10
110
100
Siemens Konzernbeteiligungen GmbH, Vienna / Austria
179
1,350
1,824
Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
(1)
(22)
100
Siemens Mobility Austria GmbH, Vienna / Austria
(68)
(87)
100
113
Siemens Aktiengesellschaft Österreich, Vienna / Austria
100
96
100
VMS Deutschland Holdings GmbH, Darmstadt
4
428
100
Weiss Spindeltechnologie GmbH, Maroldsweisach
(1)
42
100
20
20
Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without
Germany) (95 companies)
Annual Financial Statements
ETM professional control GmbH, Eisenstadt / Austria
15
22
100
(75)
Siemens Healthcare NV, Groot-Bijgaarden / Belgium
108
46
113
100
Siemens A/S, Ballerup / Denmark
9
43
100
100
Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
674,2
Siemens Osakeyhtiö, Espoo / Finland
15
46
100
Siemens France Holding SAS, Courbevoie / France
71
-
32
17
Siemens Mobility, s.r.o., Prague / Czech Republic
Siemens, s.r.o., Prague / Czech Republic
100
Siemens Industry Software NV, Leuven / Belgium
(64)
285
100
Siemens S.A./N.V., Beersel / Belgium
OEZ s.r.o., Letohrad / Czech Republic
Siemens Large Drives, s.r.o., Drasov / Czech Republic
23
94
100
30
65
100
(6)
(2)
100
8
Siemens Fonds Invest GmbH, Munich
Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
5,693
Siemens Healthineers Holding III GmbH, Munich
6,408
100
Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
556
48
100
100
Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
141
100
Siemens Industry Software GmbH, Cologne
2
292
100
Siemens Logistics GmbH, Nuremberg
(2)
(4,731)
(48)
Siemens Healthineers Holding I GmbH, Munich
100
Siemens Healthcare Diagnostics Products GmbH, Marburg
(37)
552
100
Siemens Healthcare GmbH, Munich
205
1,125
100
Siemens Healthineers AG, Munich
1,177
24,254
75
Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
72
24,855
100
(18)
1004
67
Siemens Mobility GmbH, Munich
3,502
100
Siemens Treasury GmbH, Munich
1
8
100
SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
941
6
104
SIMAR Ost Grundstücks-GmbH, Grünwald
1
(30)
100
SPT Beteiligungen GmbH & Co. KG, Grünwald
(1,795)
312
Siemens Trademark GmbH & Co. KG, Kemnath
100
144
226
2,723
100
Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
8
119
100
Siemens Nixdorf Informationssysteme GmbH, Grünwald
1
29
100
Siemens Project Ventures GmbH, Erlangen
44
330
100
Siemens Real Estate GmbH & Co. KG, Kemnath
14
100
100
136
(7)
100
205
4
100
181
7
100
333
29
57
621
17
100
(6)
9
255
79
187
Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
100
53
100
Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
100
174
(1)
Brightly Software Limited, Farnborough, Hampshire / United Kingdom
49
(69)
65
87
100
Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
Siemens S.A., Buenos Aires / Argentina
Americas (57 companies)
100
1
100
102
(32)
Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
Vendigital Holdings Ltd, Swindon, Wiltshire / United Kingdom
100
577
49
Siemens plc, Farnborough, Hampshire / United Kingdom
100
474
12
(3)
100
932
156
Siemens Mobility Limited, London / United Kingdom
100
98
26
Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
100
(2)
Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United
Kingdom
100
1,169
3
Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
1
100
58
40
100
671
28
100
69
5
100
10
3
100
300
23
100
44
(1)
85
37
2
100
36
(6)
100
15
(4)
100
15
(4)
Siemens Mobility AG, Wallisellen / Switzerland
227
100
13
95
Siemens Industrial LLC, Masdar City / United Arab Emirates
Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
100
41
(6)
Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
100²
(1)
Siemens AG - Siemens Sanayi Ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
100
31
20
Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil /Switzerland
100
137
891
Siemens Schweiz AG, Zurich / Switzerland
100
82
19
100
191
11
100
600
54
100
231
18
100
14
Siemens Industry Software GmbH, Zurich / Switzerland
25
GNA 1 Geração de Energia S.A., São João da Barra / Brazil
141
95
782
(64)
75
60
(43)
100
175
(1)
100
176
(342)
275
(6)
(35)
100
(67)
(34)
100
(115)
(70)
ECG Acquisition, Inc., Wilmington, DE / United States
ECG TopCo Holdings, LLC, Wilmington, DE / United States
Electrify America, LLC, Wilmington, DE / United States
eMeter Corporation, Wilmington, DE / United States
Brightly Software, Inc., Wilmington, DE / United States
Building Robotics Inc., Wilmington, DE / United States
CEF-L Holding, LLC, Wilmington, DE / United States
Corindus, Inc., Wilmington, DE / United States
1007
(3)
Block Imaging International, LLC, Wilmington, DE / United States
1008
93
100
Fluence Energy, Inc., Wilmington, DE / United States
(297)
645
100
183
53
100
145
(2)
100
142
(1)
100
115
100
78
100
Associates in Medical Physics, LLC, Greenbelt, MD / United States
53
96
100
49
2
Mannesmann Corporation, New York, NY / United States
Medical Physics Holdings, LLC, Dover, DE / United States
Next47 Fund 2018, L.P., Palo Alto, CA / United States
Next47 Fund 2019, L.P., Palo Alto, CA / United States
Next47 Fund 2020, L.P., Palo Alto, CA / United States
Next47 Fund 2021, L.P., Palo Alto, CA / United States
Next47 Fund 2022, L.P., Palo Alto, CA / United States
PETNET Solutions, Inc., Knoxville, TN / United States
PolyDyne Software Inc., Dallas, TX / United States
Siemens Capital Company LLC, Wilmington, DE / United States
Siemens Corporation, Wilmington, DE / United States
Siemens Financial Services, Inc., Wilmington, DE / United States
Siemens Government Technologies, Inc., Wilmington, DE / United States
Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
Siemens Industry Software Inc., Wilmington, DE / United States
Siemens Industry, Inc., Wilmington, DE / United States
205
441
59
Hickory Run Holdings, LLC, Wilmington, DE / United States
78
138
(2)
Healthcare Technology Management, LLC, Wilmington, DE / United States
334
1008
100
100
2
2
Innomotics Inc., Oakville / Canada
100
127
EPOCAL INC., Toronto / Canada
4
100
74
(7)
Brightly Software Canada, Inc., Oakville / Canada
100
311
15
Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
100
37
(17)
Siemens Participações Ltda., São Paulo / Brazil
100
62
44
Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
100
209
30
Siemens Healthcare Diagnósticos Ltda., São Paulo/ Brazil
225
175
(71)
8
100
Siemens Canada Limited, Oakville / Canada
53
Siemens S.A.C., Surquillo / Peru
100
130
58
Siemens, S.A. de C.V., Mexico City / Mexico
100
88
71
Grupo Siemens S.A. de C.V., Mexico City / Mexico
100
47
2
Siemens S.A.S., Tenjo / Colombia
Annual Financial Statements
27
22
100
28
7
Siemens S.A., Santiago de Chile / Chile
100
80
14
Siemens Healthcare Limited, Oakville / Canada
100
527
30
Siemens Financial Ltd., Oakville / Canada
100
272
22
1
Siemens Healthineers International AG, Steinhausen / Switzerland
Siemens AB, Solna / Sweden
85
Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
6,411
100
Varian Medical Systems, Inc., Wilmington, DE / United States
(85)
7,883
100
Asia, Australia (49 companies)
Brightly Software Australia Pty Ltd, Sydney / Australia
(4)
81
100
Brightly Software Holdings Pty. Ltd., Sydney / Australia
-
94
100
Innomotics Pty Ltd, Bayswater / Australia
5
7
100
Siemens Ltd., Bayswater / Australia
16
94
100
Siemens Mobility Pty Ltd, Melbourne / Australia
15
161
100
730
(99)
Thoughtworks Holding Inc., Wilmington, DE / United States
100
1,318
5,964
100
Siemens Logistics LLC, Wilmington, DE / United States
18
25
100
Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
793
17,743
100
Siemens Mobility, Inc, Wilmington, DE / United States
47
980
Beijing Siemens Cerberus Electronics Ltd., Beijing / China
100
43
1,674
100
Siemens USA Holdings, Inc., Wilmington, DE / United States
1,212
10,415
100
SMI Holding LLC, Wilmington, DE / United States
2
9
100
Supplyframe, Inc., Glendale, CA / United States
(41)
(77)
Siemens Public, Inc., Iselin, NJ / United States
100
25
100
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
(28)
25
100
23
146
100
Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
92
37
100
Siemens Healthineers Ltd., Shanghai / China
219
231
100
Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
177
170
100
Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
23
78
100
Siemens International Trading Ltd., Shanghai, Shanghai / China
14
42
100
Siemens Ltd., China, Beijing / China
1,247
100
229
25
Siemens Financial Services Ltd., Beijing / China
Innomotics Large Drives (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
1
9
100
Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
22
30
75
Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
82
121
100
Siemens Electrical Drives Ltd., Tianjin / China
87
28
103
23
Annual Financial Statements
Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone /
China
7
71
100
Siemens Factory Automation Engineering Ltd., Beijing / China
22
29
100
Siemens Finance and Leasing Ltd., Beijing / China
9
124
100
85
Siemens Financial Services AB, Solna / Sweden
5,229
100
The notional amounts equal the contractual amounts of the individual derivative financial instrument which – irrespective of the nature
of the concluded position (sale or purchase) – are presented on a gross basis (gross notional amounts).
Fair values of these derivative financial instruments are calculated by discounting expected future cash flows over the remaining term of
the instrument using current market interest rates and yield curves.
15
Annual Financial Statements
The following table shows the carrying amounts, if any, of derivative financial instruments that are not included in valuation units and the
balance sheet items in which the carrying amounts are recognized:
(in millions of €)
Interest rate hedging contracts
Combined interest and currency hedging contracts
Derivative financial instruments requiring recognition
Sep 30, 2023
Other assets
Other
provisions
(722)
(1)
Other liabilities
(723)
Provided the relevant conditions are met, derivative financial instruments are aggregated with the underlying hedged item into valuation
units. Using the freezing method, the hedging transactions are not recognized in the balance sheet. The effectiveness of the valuation
unit is either ensured through risk management, or is demonstrated both prospectively and retrospectively based on appropriate methods
used to demonstrate effectiveness (e.g. dollar offset method, regression method, sensitivity analysis). Valuation gains and losses from
derivative financial instruments and hedged items are netted for each valuation unit. A provision for anticipated losses on onerous
contracts is recognized for the respective valuation unit in the amount of an existing loss surplus. Profit surpluses are not recognized.
Valuation unit used to hedge the foreign currency risk
According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
exposure. Foreign currency transaction exposure of the Siemens units from contracted business and cash balances in foreign currency is
generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of the Siemens units from
planned business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period
of at least three months.
The remaining foreign currency risk after offsetting cash flows in the same currency is hedged by the Corporate Treasury with external
contract partners. The net foreign currency position (before hedging) is combined with the offsetting foreign currency exchange contracts
to a macro valuation unit. For this purpose, hedged items and hedging instruments are measured with the respective underlying
discounted cash flows. For foreign currency derivative financial instruments, the determination is based on the changes in relevant forward
exchange rates. The existing derivative currency hedging contracts are included in the valuation unit in their entirety and had maturity
terms until the year 2041. The cash in- and outflows from the foreign currency exchange contracts, firm commitments and forecast
transactions are disclosed on a net basis in the following table.
Sep 30,
(in millions of €)
Foreign currency risk from balance sheet items
thereof assets
thereof liabilities
Foreign currency risk from firm commitments and forecast transactions
thereof expected cash inflows from firm commitments and forecast transactions
thereof expected cash outflows from firm commitments and forecast transactions
Net foreign currency position (before hedging)
Foreign currency exchange contracts (net notional value)
thereof with external contract partners
thereof with affiliated companies
Net foreign currency position (after hedging)
-
Fair values
(722)
26
(696)
8,407
Existing derivative financial instruments
Siemens S.A., Madrid / Spain
Siemens Rail Automation S.A.U., Tres Cantos / Spain
SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
000 Siemens, Moscow / Russian Federation
Upsilon 1 LLC, St. Petersburg / Russian Federation
Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
Siemens Proprietary Limited, Midrand / South Africa
Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
Siemens Logistics S.L. Unipersonal, Madrid / Spain
55
54
12
Siemens W.L.L., Doha Qatar
100
Annual Financial Statements
Warranty obligations relating to financing of affiliated companies included guarantees towards banks for credit lines granted to affiliated
companies.
The items Obligations from guarantees and Warranty Obligations - Others included guarantees and other commitments for the benefit of
companies of the Siemens Energy Group totaling €0.1 billion and €4.7 billion, respectively, with corresponding full reimbursement rights
towards Siemens Energy Global GmbH & Co. KG. In addition, the items included indemnifications issued in connection with dispositions
of businesses. Such indemnifications, if customary to the relevant transactions, may protect the buyer from potential tax, legal and other
risks in conjunction with the purchased business.
Warranty obligations included obligations of Siemens AG towards affiliated companies totaling €1.0 billion.
Siemens AG only enters into guarantees and other commitments after careful consideration of the risks concerned and in general only in
relation to its own business activities or those of affiliated companies as well as to business activities of companies, if it holds an investment
in them or their parent companies. Based on an ongoing risk evaluation of the arrangements entered into and taking into account all
information available up to the date on which the Annual Financial Statements were issued for approval, Siemens AG concluded that the
relevant primary debtors are able to fulfill the underlying obligations. For this reason, Siemens AG considered it not probable that it will
be called upon in conjunction with any of the guarantees and commitments described above.
2023
3,115
NOTE 24 Financial payment obligations under lease and rental arrangements
Payment obligations under lease and rental arrangements amounted to €1,334 million, of which €201 million resulted from transactions
with affiliated companies. Payment obligations under lease and rental arrangements due within the next fiscal year amounted to €247
million.
NOTE 25 Other financial obligations
Approximately €1.5 billion were outstanding as of September 30, 2023, from an outsourcing agreement with a maturity of several years.
Obligations for equity contributions to affiliated companies amounted to €491 million.
Siemens AG has entered into a contract to pay its affiliated company Siemens Trademark GmbH & Co. KG, Germany, a running royalty for
the use of the Siemens trademark rights. The fee is calculated by applying business-specific royalty rates to brand-related revenue. The
contract has an indefinite duration. For fiscal 2023, the corresponding expenses amounted to €988 million. For fiscal 2024, the royalty is
expected to be in the same magnitude.
In the course of its normal business operations, Siemens AG is involved in numerous legal and regulatory proceedings as well as
governmental investigations (legal proceedings) in various jurisdictions. These legal proceedings could result in particular in the Company
being subject to payment of damages and punitive damages, equitable remedies or criminal or civil sanctions, fines or disgorgements of
profit. In individual cases, this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or
permits. In addition, further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be expanded. Some
of these legal proceedings could result in adverse decisions for Siemens AG that may have material effects on its financial position, the
results of its operations and/or its cash flows in the respective reporting period. In addition, Siemens is jointly and severally liable within
consortia. As far as not recognized in the financial statements, Siemens AG did not expect any material negative effects on its financial
position, the results of its operations and/or its cash flows at balance sheet date.
NOTE 26 Derivative financial instruments and valuation units
As a consequence of its global operating, investing and financing activities, Siemens AG is in particular exposed to risks resulting from
changes in exchange rates and interest rates, managed in line with a proven risk management system in consideration of defined risk
limits. As the parent company of the Siemens Group, Siemens AG has the central role within the group-wide management of financial
market risks. To manage the risks resulting from changes in exchange rates and interest rates, Siemens AG uses primarily foreign currency
forward contracts, interest rate swaps as well as combined interest and foreign currency swaps. Thereby the operating units of Siemens
AG are not allowed to enter into derivative financial instruments for speculative purposes. The contract partners of the Company for
derivative financial instruments are banks, brokers and affiliated companies. The credit rating for banks and brokers is constantly
monitored.
The following table shows the notional volume and net fair values of existing derivative financial instruments that were not included in a
valuation unit as of the balance sheet date:
Sep 30, 2023
(in millions of €)
Interest rate hedging contracts
Notional
amount
8,038
Combined interest and currency hedging contracts
369
Expenses for lease and rental arrangements in which the economic ownership of the leased/rented asset was not attributable to Siemens
AG and the relevant items were not recognized as assets by Siemens AG amounted to €293 million. Object of these contracts were mainly
real estate and other non-current assets.
3
14,073
687
Members of the Managing Board and positions held by Managing Board members
In fiscal 2023, the Managing Board had the following members:
Name
Roland Busch
(Dr. rer. nat.)
President and Chief
Executive Officer
Cedrik Neike
Memberships in supervisory boards whose establishment is required by law or in
comparable domestic or foreign controlling bodies of business enterprises
External positions
Date of birth
November 22,
1964
First appointed
April 1, 2011
Term expires
March 31, 2025
94
1,747
100
1,090
6,259
100
170
2,111
100
22
515
100
(121)
7,358
100
13,895
NOTE 31 Members of the Managing Board and Supervisory Board
Annual Financial Statements
17
In November 2023, agreements were entered into with the intent to acquire 18% of the shares in Siemens Limited, India from the Siemens
Energy Group for a purchase price of €2.1 billion in cash. Closing of the transaction is expected in December 2023.
1,245
(558)
3,802
(3,968)
2,671
(6,639)
(166)
Firm commitments and forecast transactions relate to transactions for which a legally binding contract was concluded but not yet
performed on by either contracting party, as well as contingent payment claims for already partially completed performance obligations
in the project and product businesses.
As of September 30, 2023, the fair value of derivative financial instruments from foreign currency hedging transactions was €(4) million,
net. Positive fair values of €1,897 million were offset by negative fair values of €1,901 million. For derivative financial instruments with
negative fair values, no provision for anticipated losses was recognized as part of the valuation unit.
Valuation unit used to hedge the interest rate risk
The interest rate hedging contracts used by Siemens AG serve to reduce interest rate risks within the framework of an integrated asset-
liability management approach and to optimize the interest results.
Siemens AG has entered into interest rate derivatives with external counterparties to hedge interest rate swaps with its affiliated companies
against interest rate risk. As of September 30, 2023, the interest rate swaps with affiliated companies with a maximum maturity term until
the year 2028 included in this macro-valuation unit had a notional amount of €2,121 million and fair values of €122 million. At balance
sheet date, these underlying transactions were matched by external interest rate derivatives with negative fair values of €59 million, net,
and a maximum maturity term until the year 2030.
To hedge interest rate risks arising from payables to affiliated companies, Siemens AG has entered into interest rate derivatives with
external counterparties. As of September 30, 2023, the liabilities hedged in this micro-valuation unit had a nominal volume of €2,347
million and a maximum maturity term until the year 2025. As of September 30, 2023, the positive cumulative changes in the market value
of these payables of €86 million were offset by external interest rate derivatives with identical maturities whose negative market value
was €78 million.
16
(10,958)
Annual Financial Statements
NOTE 27 Proposal for the appropriation of net income
The Supervisory Board and the Managing Board propose the unappropriated net income of Siemens AG for the fiscal year ended September
30, 2023, amounting to €3,760 million to be appropriated as follows: Distribution of a dividend of €4.70 on each share of no par value
entitled to the dividend, and carry-forward of the unappropriated net income for shares of no par value not entitled to the dividend.
NOTE 28 Remuneration of the members of the Managing Board and the Supervisory Board
Remuneration of the members of the Managing Board
Members of the Managing Board received cash compensation of €18.8 million. The fair value of share-based compensation amounted to
€10.5 million for 170,111 stock awards. The Company granted contributions under the BSAV to members of the Managing Board totaling
€2.2 million.
Therefore, the compensation and benefits attributable to members of the Managing Board amounted to €31.6 million in total.
Total remuneration of former members of the Managing Board
Former members of the Managing Board and their surviving dependents received a total of €24.6 million according to Section 285 no. 9b
of the German Commercial Code.
Siemens recognized pension provisions totaling €129.3 million for the pension entitlements to former members of the Managing Board
and their surviving dependents.
Remuneration of the members of the Supervisory Board
Compensation attributable to members of the Supervisory Board comprises a base compensation and additional compensation for
committee work and amounted to €5.3 million (including meeting fees).
NOTE 29 Declaration of Compliance with the German Corporate Governance Code
As of October 1, 2023, the mandatory statement pursuant to Section 161 of the German Stock Corporation Act (AktG) has been issued by
the Managing Board and the Supervisory Board and is permanently accessible on siemens.com/gcg-code.
NOTE 30 Subsequent events
The amount of interest rate risks hedged with the valuation unit, which did not lead to a provision for anticipated losses, totaled €165
million.
123
Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
throughout the assurance work. We also:
Responsibility Statement
• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's
report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate,
to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Company to cease to be able to continue as a going concern;
•
•
.
evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the
annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true
and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally
required accounting principles;
evaluate the consistency of the management report with the annual financial statements, its conformity with German law and the view
of the Company's position it provides;
perform audit procedures on the prospective information presented by management in the management report. On the basis of
sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
applicable, the related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public disclosure about the matter.
Other legal and regulatory requirements
Report on the assurance on the electronic rendering of the annual financial statements and the management
report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
Opinion
We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
of the annual financial statements and the management report (hereinafter the "ESEF documents") contained in the file SIEMENS_2023.zip
and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the conversion of
the information contained in the annual financial statements and the management report into the ESEF format and therefore relates
neither to the information contained within these renderings nor to any other information contained in the file identified above.
In our opinion, the rendering of the annual financial statements and the management report contained in the file identified above and
prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting
format. Beyond this assurance opinion and our audit opinions on the accompanying annual financial statements and the accompanying
management report for the fiscal year from October 1, 2022 to September 30, 2023 contained in the "Report on the audit of the annual
financial statements and of the management report" above, we do not express any assurance opinion on the information contained within
these renderings or on the other information contained in the file identified above.
evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
and related disclosures;
5
obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures
(systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company;
•
•
is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of management and the Supervisory Board for the annual financial statements and the
management report
Management is responsible for the preparation of the annual financial statements that comply, in all material respects, with the
requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair
view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally required
accounting principles. In addition, management is responsible for such internal control as it, in accordance with German legally required
accounting principles, has determined necessary to enable the preparation of annual financial statements that are free from material
misstatement, whether due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
In preparing the annual financial statements, management is responsible for assessing the Company's ability to continue as a going
concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict
therewith.
Furthermore, management is responsible for the preparation of the management report that, as a whole, provides an appropriate view of
the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal
requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible for
such arrangements and measures (systems) as management has considered necessary to enable the preparation of a management report
that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
assertions in the management report.
The Supervisory Board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial
statements and of the management report.
Auditor's responsibilities for the audit of the annual financial statements and of the management report
Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the
Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the
4
Independent Auditor's Report (Siemens AG)
audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
as to issue an auditor's report that includes our opinions on the annual financial statements and on the management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these annual financial statements and this management report.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
•
identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for
the risk of detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
•
Independent Auditor's Report (Siemens AG)
We conducted our assurance work on the rendering of the annual financial statements and the management report contained in the file
identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering of Financial
Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) (06.2022)
and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described
in the "Auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard on Quality
Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
electronic reporting format.
-
Other matter
Audit-related services include primarily audits of financial statements as well as other attestation services in connection with M&A
activities, attestation services related to the sustainability reporting, the compensation reporting and the disclosures in accordance with
EU Taxonomy, comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested
on a voluntary basis.
In addition to auditing the statutory financial statements of Siemens AG, we performed the statutory audit of Siemens' consolidated
financial statements, audits of financial statements of subsidiaries of Siemens AG, reviews of interim financial statements integrated in
the audit, project-based IT audits as well as service organization control engagements.
In addition to the financial statement audit, we have provided to the Company or entities controlled by it the following services that are
not disclosed in the annual financial statements or in the management report:
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
to Art. 11 of the EU Audit Regulation (long-form audit report).
We were elected as auditor by the Annual Shareholders' Meeting on February 9, 2023. We were engaged by the Supervisory Board on
February 9, 2023. We have been the auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October 1, 2008
to September 30, 2009.
Further information pursuant to Art. 10 of the EU Audit Regulation
• evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited annual financial statements
and to the audited management report.
• evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
specification for this file;
obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
controls;
identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
a basis for our assurance opinion;
•
.
Our auditor's report must always be read together with the audited annual financial statements and the audited management report as
well as the assured ESEF documents. The annual financial statements and the management report converted to the ESEF format -
including the versions to be published in the Unternehmensregister [German Company Register] – are merely electronic renderings of the
audited annual financial statements and the audited management report and do not take their place. In particular, the ESEF report and
our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic
form.
Basis for the opinion
6
The German Public Auditor responsible for the engagement is Siegfried Keller.
Responsibilities of management and the Supervisory Board for the ESEF documents
Management is responsible for the preparation of the ESEF documents including the electronic rendering of the annual financial
statements and the management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB.
SIEMENS
for the five years until fiscal 2023
Five-Year Summary
7
Independent Auditor's Report (Siemens AG)
[German Public Auditor]
Dr. Gaenslen
Wirtschaftsprüfer
[German Public Auditor]
Wirtschaftsprüfer
Keller
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, December 4, 2023
German Public Auditor responsible for the engagement
In connection with our audit, our responsibility is to read the other information, and, in so doing, to consider whether the other information
Our opinions on the annual financial statements and on the management report do not cover the other information, and consequently
we do not express an opinion or any other form of assurance conclusion thereon.
but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
EU Taxonomy disclosure.
Independent auditor´s report
To Siemens Aktiengesellschaft, Berlin and Munich
Report on the audit of the annual financial statements and of the management report
Opinions
We have audited the annual financial statements of Siemens Aktiengesellschaft, Berlin and Munich, (the Company) which comprise the
income statement for the fiscal year from October 1, 2022 to September 30, 2023, the balance sheet as of September 30, 2023 and notes
to the financial statements, including the recognition and measurement policies presented therein. In addition, we have audited the
management report of Siemens Aktiengesellschaft, which is combined with the group management report, for the fiscal year from
October 1, 2022 to September 30, 2023. In accordance with the German legal requirements, we have not audited chapter 11 “EU
Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate
Governance Statement which is published on the website stated in the combined management report.
.
•
In our opinion, on the basis of the knowledge obtained in the audit,
the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law
applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as of
September 30, 2023 and of its financial performance for the fiscal year from October 1, 2022 to September 30, 2023 in compliance
with German legally required accounting principles, and
the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this
management report is consistent with the annual financial statements, complies with German legal requirements and appropriately
presents the opportunities and risks of future development. Our opinion on the management report does not cover chapter 11 “EU
Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
Compliance Management System (CMS)" in chapter 8.5 of the combined management report and the content of the Corporate
Governance Statement.
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
annual financial statements and of the management report.
Basis for the opinions
We conducted our audit of the annual financial statements and of the management report in accordance with Sec. 317 HGB and the EU
Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
In conducting the audit of the annual financial statements we also complied with International Standards on Auditing (ISA). Our
responsibilities under those requirements, principles and standards are further described in the "Auditor's responsibilities for the audit of
the annual financial statements and of the management report" section of our auditor's report. We are independent of the Company in
accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German
professional responsibilities in accordance with these requirements. In addition, in accordance with Art. 10 (2) f) of the EU Audit
Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the EU Audit Regulation. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements
and on the management report.
Key audit matters in the audit of the annual financial statements
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial
statements for the fiscal year from October 1, 2022 to September 30, 2023. These matters were addressed in the context of our audit of
the annual financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these matters.
Below, we describe what we consider to be the key audit matters:
Independent Auditor's Report (Siemens AG)
Valuation of non-current financial assets
SIEMENS
Auditor's Report
to the Annual Financial Statements and the Management Report
for fiscal 2023
SIEMENS
Responsibility Statement (Siemens AG)
To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true and
fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for Siemens
Aktiengesellschaft, which has been combined with the Group Management Report, includes a fair review of the development and
performance of the business and the position of the Company, together with a description of the material opportunities and risks
associated with the expected development of the Company.
Munich, December 4, 2023
Siemens Aktiengesellschaft
The Managing Board
Dr. Roland Busch
Cedrik Neike
Prof. Dr. Ralf P. Thomas
Matthias Rebellius
Judith Wiese
2
Independent
to the Annual Financial Statements and the Management Report for fiscal 2023
Reasons why the matter was determined to be a key audit matter: The impairment test and the assessment regarding the need for a
reversal of impairment of non-current financial assets was a key audit matter, as in particular shares in affiliated companies and
investments entail a higher risk of material misstatement due to the materiality of these assets as well as the estimation uncertainties and
judgments involved in assessing whether there is objective evidence to indicate a lower net realizable value and permanent impairment
or a reversal of impairment, and the determination of the fair values.
The determination of the fair values of non-current financial assets also depends to a large extent on the assessment of future cash inflows
and the discount rate applied.
In case of the investment in Siemens Energy AG, in which 21,0% are held directly, the market capitalization during fiscal 2023 was on
average above the book value sometimes significantly. As of September 30, 2023, a reversal of impairment to the stock market price has
been recorded, following an impairment as of September 30, 2022.
Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and the assessment of the
recoverability of deferred tax assets.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
to chapter 3.2 Accounting and Measurement Principles and chapter 3.3 Notes to the Income Statement, Note 6 Income taxes and with
respect to disclosures for deferred tax assets, refer to chapter 3.4 Notes to the Balance Sheet, Note 13 Deferred tax assets in the notes to
the financial statements.
Other information
The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2023 within the meaning of ISA [DE]
720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
Compensation Report. In all other respects, management is responsible for the other information. The other information comprises
chapter 11 "EU Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM"
and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the
Corporate Governance Statement. In addition, the other information comprises parts to be included in the Annual Report, of which we
received a version prior to issuing this auditor's report, in particular:
•
•
•
•
the Responsibility Statement (to the annual financial statements and the management report),
the Responsibility Statement (to the consolidated financial statements and the group management report),
the Five-Year Summary,
•
the Compensation Report,
the Report of the Supervisory Board,
• Notes and forward-looking statements,
In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
strategies and projected future taxable income and compared them to internal business plans.
Independent Auditor's Report (Siemens AG)
3
In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
implications of significant business transactions or events in fiscal year 2023, which could result in uncertain tax positions or influence the
measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
shares and corporate (intragroup) restructuring activities. In order to assess measurement and completeness of uncertain tax positions,
we also obtained confirmations from external tax advisors. Further, we evaluated management's assessments with respect to the prospects
of success of appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by considering current
tax case law.
Auditor's response: With regards to the net realizable values calculated by management and its assessment as to whether an impairment
or reversal of impairment is expected to be permanent, we examined the underlying processes related to the planning of future cash flows
2
Independent Auditor's Report (Siemens AG)
as well as to the calculation of net realizable value, obtained an understanding of management's evaluation and also considered external
evidence in this regard, amongst others, on the development of stock market prices.
We assessed the underlying valuation models for the determination of the net realizable value in terms of methodology and reperformed
the calculations with the assistance of internal valuation specialists. We further obtained explanations from management regarding
material value drivers of the planning and examined whether the budget planning reflects general and industry-specific market
expectations. Forecast accuracy was assessed on a sample basis using budget-to-actual comparisons of historically forecast data with the
actual results. The parameters used to estimate net realizable value such as the estimated growth rates and the weighted average cost of
capital rates were assessed by comparing them to publicly available market data. We also performed our own sensitivity analyses to assess
the impairment risk in the case of a reasonably possible change in one of the significant assumptions.
With regard to the reversal of impairment of the investment in Siemens Energy AG, we have traced the development of the stock market
price and assessed the calculation of the reversal of impairment as of September 30, 2023, considering the acquisition costs of the
investment.
Furthermore, we evaluated the disclosures in the notes to the annual financial statements regarding the subsequent events relating to the
investment in Siemens Energy AG.
The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
Auditor's responsibilities for the assurance work on the ESEF documents
Our audit procedures did not lead to any reservations relating to the valuation of non-current financial assets as of September 30, 2023.
Reference to related disclosures: With regard to the recognition and measurement policies applied for the impairment of non-current
financial assets, refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements and with respect to
write-downs and write-ups of non-current financial assets, refer to chapter 3.3 Notes to the Income Statement, Note 3 Income (loss) from
investments, net as well as chapter 3.4 Notes to the Balance Sheet, Note 10 Non-current assets and with respect to the subsequent events
relating to the investment in Siemens Energy AG, refer to chapter 3.5 Other disclosures, Note 30 Subsequent events in the notes to the
financial statements.
Reasons why the matter was determined to be a key audit matter: We considered the accounting for other provisions for legal disputes,
regulatory proceedings and governmental investigations (legal proceedings) out of or in connection with alleged compliance violations to
be a key audit matter. These matters are subject to inherent uncertainties and require estimates that could have a significant impact on
the recognition and measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The
proceedings out of or in connection with alleged compliance violations are subject to uncertainties because they involve complex legal
issues and accordingly, considerable management judgment, in particular when determining whether and in what amount a provision is
required to account for the risks.
Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
determine what potentially significant pending legal proceedings or claims asserted also in connection with joint and several liability are
known and to assess management's estimates of the expected cash outflows, our audit procedures included inquiring of management
and other persons within the Company entrusted with these matters, obtaining written statements from in-house legal counsels with
respect to the assessment of estimated cash outflows and their probability, obtaining confirmations from external legal advisors and
evaluating internal statements concerning the accounting treatment in the annual financial statements. Furthermore, we examined legal
consulting expense accounts for any indications of legal matters not yet considered.
We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
company policies by inspecting internal and external statements on specific matters, obtaining written statements from external legal
advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and results
of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed on this
basis whether management's evaluation of any risks to be accounted for in the annual financial statements is plausible.
Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
compliance violations.
Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for other provisions,
refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements. With respect to the legal proceedings,
regulatory proceedings and governmental investigations, refer to chapter 3.5 Other Disclosures, Note 25 Other financial obligations.
Uncertain tax positions and recoverability of deferred tax assets
Reasons why the matter was determined to be a key audit matter: The accounting for uncertain tax positions as well as deferred taxes
requires management to exercise considerable judgment and make estimates and assumptions, and was therefore a key audit matter. In
particular, this affects the measurement and completeness of uncertain tax positions as well as the recoverability of deferred tax assets.
Auditor's response: With the assistance of internal tax specialists who have knowledge of tax law, we examined the processes installed
by management for the identification, recognition and measurement of tax positions.
Other Provisions for legal disputes, regulatory proceedings and governmental investigations
use of the auditor's report
(in millions of €, except where otherwise stated)
7,851
Shares
Fixed
Variable
Overview of the compensation system for Managing Board members
work.
The Managing Board compensation system is also supplemented by commitments granted in connection with the
commencement and termination of appointments to the Managing Board as well as any change in the regular place of
The Share Ownership Guidelines are a further key component of the compensation system. They obligate Managing Board
members to permanently hold Siemens shares worth a defined multiple of their base salary and to purchase additional
shares in the event that the value of their shares falls below the defined amount.
The compensation of the Managing Board members consists of fixed and variable components. Fixed compensation, which
is not performance-based, comprises base salary, fringe benefits and a pension benefit commitment. Short-term variable
compensation (Bonus) and long-term variable compensation (Stock Awards) are performance-based compensation and
thus variable.
The compensation system for the members of the Managing Board of Siemens AG that is applicable for fiscal 2023 has been
in place since fiscal 2020 and was approved by the Annual Shareholders' Meeting on February 5, 2020, by a majority of
94.51% of the valid votes cast.
B.1 The compensation system at a glance
B. Compensation of Managing Board members
B. Compensation of Managing Board members
→
Compensation Report
FISCAL 2023 5
In view of the high level of approval, the Compensation Report for 2023 is basically unchanged in structure and scope. In
addition, no changes to the compensation system were deemed necessary for fiscal 2023. Pursuant to Section 120a para.1
sent. 1 of the German Stock Corporation Act (AktG), the compensation system for Managing Board members must be
submitted for regular approval by the Annual Shareholders' Meeting in February 2024. In this connection, the compensation
system has been subjected to a comprehensive review and adjusted. The compensation system as of fiscal 2024 is available
on the Company website as part of the Notice of Annual Shareholders' Meeting.
The Compensation Report for fiscal 2022 was prepared in accordance with Section 162 of the German Stock Corporation
Act (AktG), and its content was also audited by the independent auditors, beyond the requirement of Section 162 para. 3
sent. 1 and 2 of the German Stock Corporation Act (AktG). The Compensation Report on the compensation individually
awarded and due to the members of the Managing Board and the Supervisory Board of Siemens AG in fiscal 2022 was
approved by a majority of 92.09% of the valid votes cast at the Annual Shareholders' Meeting on February 9, 2023.
Vote on the Compensation Report for fiscal 2022 at the 2023 Annual Shareholders' Meeting
Following the scheduled departure of Michael Diekmann, the previous Chairman of the Compensation Committee of the
Supervisory Board of Siemens AG, from the Supervisory Board and thus also from the Compensation Committee, the
Compensation Committee elected Matthias Zachert to serve as its new Chairman, effective February 10, 2023. Grazia
Vittadini has been a new member of the Compensation Committee since February 2023. As of September 30, 2023, the
Compensation Committee comprised Matthias Zachert (Chairman), Harald Kern, Jürgen Kerner, Jim Hagemann Snabe,
Birgit Steinborn and Grazia Vittadini.
There were no changes in the composition of the Managing Board of Siemens AG in fiscal 2023. In fiscal 2023, the Managing
Board comprised Dr. Roland Busch (President and CEO), Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas and
Judith Wiese.
Composition of the Managing Board and the Compensation Committee
Cash
Compensation
components
Design of compensation
components
Maximum payout
1 Fringe benefits are reimbursed up to a maximum amount set by the Supervisory Board.
300%
Environment, Social
and Governance (ESG/
Sustainability index)
20%
Total shareholder
return (TSR) com-
pared to MSCI World
İndustrials Index
80%
Long-term
variable
compensation
(Stock Awards)
200%
33.33%
Individual
targets
33.33%
Managing
Board
portfolio
Siemens' strong operating performance in fiscal 2023 is reflected in the Managing Board's variable compensation, which
takes into account not only financial success but also environmental and social aspects. As a result, the compensation of
the Managing Board members is also oriented toward the interests of the shareholders as well as the other stakeholders of
Siemens AG.
Group
Pension benefit
commitment
(Bonus)
Short-term
variable
compensation
compensation
100%1
Fringe benefits
Base salary
Fixed
(in % of target amount) regulations
Malus and clawback
33.34%
Siemens
income, was 1.17. We thus achieved a cash conversion rate that contributed strongly to the average required to reach our
target of 1 minus annual comparable revenue growth rate over a cycle of three to five years.
A. Fiscal 2023 in retrospect
→
19
WWNNNNUE
31
30
27
27
B.6.2 Former members of the Managing Board
B.6.1 Active Managing Board members in fiscal 2023
Revenue and profit
Revenue
26
Gross profit
Net income
Assets, liabilities and equity
Current assets
Current liabilities
Debt
Long-term debt
Net debt
Provisions for pensions and similar obligations
Equity (including non-controlling interests)
as a percentage of total assets
Total assets
Income from continuing operations
Not applicable
26
C. Compensation of Supervisory Board members
Compensation Report
FISCAL 2023 4
Free cash flow from continuing and discontinued operations for fiscal 2023 was €10.0 billion, reaching a record high. The
cash conversion rate for Siemens, defined as the ratio of free cash flow from continuing and discontinued operations to net
Return on capital employed (ROCE) for fiscal 2023 rose to 18.6%, up from 10.0% in fiscal 2022. This increase was due to
sharply higher income before interest after tax year-over-year. We thus exceeded the forecast for ROCE, which was to come
close to or reach the lower end of our target range of 15% to 20%.
Net income nearly doubled year-over year to a historic high of €8.5 billion and corresponding basic earnings per share (EPS)
more than doubled to €10.04. Earnings per share before purchase price allocation (EPS pre PPA) increased to €10.77.
Revenue was higher in nearly all our industrial businesses and rose to €77.8 billion, up 8% year-over-year. Smart
Infrastructure and Digital Industries contributed double-digit growth with all businesses posting increases. Excluding
currency translation and portfolio effects, revenue for Siemens rose 11%. Profit Industrial Business exceeded the record
high of a year earlier and rose 11% to €11.4 billion. The profit margin of our Industrial Business rose to 15.4%, up from
15.1% a year earlier, reaching its highest level ever.
Fiscal 2023 was another very successful year for Siemens. We achieved excellent financial results in a volatile market
environment, which on the one hand included destocking by customers and distributors following previously proactive
purchasing, particularly in our short-cycle businesses, and on the other hand included improved supply chain conditions,
which accelerated revenue conversion from our high order backlog. We raised our outlook during the fiscal year after the
first and the second quarters. We then reached or exceeded all the targets set for our primary measures for fiscal 2023.
How did Siemens perform in fiscal 2023?
In addition, sustainability as a strategic goal and an expression of Siemens' social responsibility – is a high priority at
Siemens. Sustainability is managed using the DEGREE framework. Introduced in fiscal 2021, this framework addresses
sustainability from every angle and determines Siemens' ambitions in the sustainability area with systematized, measurable
and specific long-term targets for environment, social and governance (ESG) dimensions. DEGREE is an acronym that stands
for decarbonization, ethics, governance, resource efficiency, equity and employability. The DEGREE framework is
continuously developed and adapted to the commitments that Siemens has made, such as the Science Based Targets
initiative. The key performance indicators applied in long-term variable compensation are part of this DEGREE framework
(CO2 emissions and digital learning hours per employee) and/or reflect the Company's priorities (Net Promoter Score as an
expression of customer satisfaction).
As a leading technology company, Siemens partners closely with other companies, industries and innovators in order to
combine the real and the digital worlds. In this context, the Company focuses on accelerated, high-value growth. The
Managing Board compensation determined by the Supervisory Board fosters the implementation of the Company's strategic
targets by providing incentives for increasing profit, capital efficiency and cash generation. Incentives are also provided for
driving the Company's digital transformation and developing its sustainability-related business.
B.7 Outlook for fiscal 2024
How is the strategy reflected in Managing Board compensation?
A. Fiscal 2023 in retrospect
Compensation Report → A. Fiscal 2023 in retrospect
38
Independent auditor's report
37
E. Other
34
32
33
D. Comparative information on profit development and annual change in compensation
What did the economic and political environment look like at the start of fiscal 2023?
Siemens AG began fiscal 2023 spurred by a strong performance in fiscal 2022. However, the economic and political
environment still contained a large number of uncertainties. Although new variants of the coronavirus did not produce the
negative impacts feared and a crisis in gas and electricity supplies failed to materialize, the economic situation began to
weaken - particularly in Germany, the Company's home market. The war in Ukraine continued as did tensions between the
western democracies and China. On the other hand, supply chain pressures eased. Due to a sharp increase in inflation, all
major central banks raised their interest rates to levels not seen since the beginning of the financial crisis in 2008. In Europe,
high energy prices burdened economic development, while, in the U.S., consumption and the labor market in particular
proved to be very resilient despite the interest rate increases. Growth in China - which had been strong following the
relaxation of COVID-19 restrictions in Q1 of fiscal 2023 - slowed due to the normalization of inventories, which had built
up during the pandemic, and as a result of the burdens imposed by the crisis in China's real estate market. Siemens AG's
markets benefited from high order backlogs, positive price developments and customers' efforts to become more resilient,
more competitive and more sustainable.
Cash flows
Maximum
compensation
Equals the sum
of maximum
amounts that
can possibly be
paid out to each
Managing Board
member from all
compensation
components for
the relevant
Application in fiscal 2023
• Consideration of extraordinary developments in justified, infrequent special cases
possible
Individual targets: two to four equally weighted financial targets or focus topics
•
Managing Board portfolio
•
Siemens Group
•
Three equally weighted target dimensions:
Performance-oriented annual Bonus, paid in cash in the subsequent fiscal year
Performance range: 0% to 200%, using linear interpolation
Implementation in compensation system
compensation
(Stock Awards)
Long-term variable
compensation
(Bonus)
Short-term variable
VARIABLE COMPENSATION
B. Compensation of Managing Board members
→
Compensation Report
7
FISCAL 2023
Bonus for fiscal 2023
•
Performance period: October 1, 2022, to September 30, 2023
Payout: February 2024 (at the latest)
2023 Stock Awards tranche
Application in fiscal 2023
Payout cap: 300% of target amount
Outperformance relative to sector index -/+ 20 percentage points
Siemens-internal ESG/Sustainability index with three equally weighted key
performance indicators and annual interim targets (weighting: 20%)
12-month reference and 36-month performance period
Development of total shareholder return (TSR) relative to an international sector
index (weighting: 80%)
•
Two performance criteria:
• Performance range: 0% to 200%, using linear interpolation
Performance-oriented plan settled by share transfer after the end of an approximately
four-year vesting period
Amount for free disposal (payment in January 2024)
Other Managing Board members: €550,800
Implementation in compensation system
President and CEO: €1,770,000
Target amounts (based on 100% target achievement)
Two additional individual targets with focus topics from the Bonus topic
catalogue
Comparable revenue growth in the area of responsibility
•
• Cash conversion rate (CCR) in the area of responsibility
• 33.33% individual targets:
• 33.33% return on capital employed adjusted (ROCE adjusted)
• 33.34% earnings per share before purchase price allocation (EPS pre PPA)
Performance criteria:
Other Managing Board members: €1,101,600
Other Managing Board members: €616,896
President and CEO: €991,200
•
• Includes in-kind compensation and fringe benefits granted by the Company, for
example:
incurred to the benefit of the Managing Board member
Determination of a maximum amount relative to base salary, covering expenses
•
Implementation in compensation system
• Other Managing Board members: €1,101,600 a year
President and CEO: €1,770,000 a year
Application in fiscal 2023
Contractually agreed-upon fixed annual compensation based on a Managing Board
member's duties and related responsibilities and his or her experience
Payment in 12 monthly installments
Implementation in compensation system
• Provision of a company car
Fringe benefits
FIXED COMPENSATION
The following tables describe the components of the compensation system for the Managing Board members, the
components' link to the Company's strategy and their concrete application in fiscal 2023.
Compensation Report → B. Compensation of Managing Board members
6
Commitments in
the event of
termination of
appointments
Severance cap
FISCAL 2023
in connection with
the commence-
ment of appoint-
ments
Commitments
Share Ownership
Guidelines
fiscal year
Base salary
Other design
characteristics
Insurance allowances
•
BSAV contribution (credit in January 2024)
Application in fiscal 2023
Credit to pension account (BSAV contribution) or payout (amount for free disposal) in
January after the end of the fiscal year
Commitment at beginning of fiscal year
Newly appointed Managing Board members as of October 1, 2019: fixed cash amount
for free disposal
•
•
.
• Annual contributions to the Siemens Defined Contribution Pension Plan (BSAV)
Implementation in compensation system
•
• Other Managing Board members: max. €82,620
In fiscal 2023, Managing Board members were entitled to fringe benefits equal to a
maximum of 7.5% of their base salary
Application in fiscal 2023
Pension benefit
commitment
term.
to retain these
individuals at the
Company over the long
operations and in order
to obtain the best
candidates worldwide
to develop and execute
the Company's strategy
and manage its
compensation in order
Link to strategy
Competitive
Costs of medical checkups
President and CEO: max. €132,750
•
Cash flows from operating activities - continuing operations
Amortization, depreciation and impairments
Cash flows from investing activities - continuing operations
Cash flows from financing activities - continuing operations
Change in cash and cash equivalents
5,086
Sep 30,
Sep 30,
Sep 30,
Sep 30,
Sep 30,
2023
2022
2021
2020
2019
320
311
303
285
287
FY 2023
FY 2022
FY 2021
FY 2020
FY 2019
6,352
8,379
8,238
10,062
(4,050)
(4,166)
(2,218)
(2,084)
(1,730)
(1,498)
(1,739)
(8,730)
(7,502)
785
€10.04
4,267
(388)
927
(4,509)
1,663
1,325
10,021
8,157
8,237
6,404
5,845
(1,214)
€4.65
€7.68
€5.00
Compensation Report 2023
This Compensation Report provides an explanation and a clear and comprehensible presentation of the compensation
individually awarded and due to the current and former members of the Managing Board and the Supervisory Board of
Siemens AG for fiscal 2023 (October 1, 2022, to September 30, 2023). The Report complies with the requirements of the
German Stock Corporation Act (Aktiengesetz, AktG). Detailed information regarding the compensation systems for
members of the Managing Board and the Supervisory Board of Siemens AG is available on the Siemens Global Website at
WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
Due to rounding, numbers presented throughout this Report may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Table of contents
A. Fiscal 2023 in retrospect
B. Compensation of Managing Board members
B.1 The compensation system at a glance
B.2 Principles of the determination of compensation
B.2.1 Target compensation and compensation structure
B.2.2 Maximum compensation
B.2.3 Appropriateness of compensation
B.3 Variable compensation in fiscal 2023
Siemens Aktiengesellschaft
Berlin and Munich
6
10
10
12
12
13
B.3.1 Short-term variable compensation (Bonus)
14
B.3.2 Long-term variable compensation (Stock Awards)
B.3.3 Malus and clawback regulations
25
6
(17,192)
SIEMENS
Compensation Report
€6.41
€10.02
€4.67
€6.36
€4.77
€5.82
€9.91
€4.59
€7.59
€4.93
2023
€6.32
€4.62
€6.28
€4.70
€5.74
€4.70
€4.25
€4.00
€3.50
€3.90
2
€9.90
Additions to intangible assets and property, plant and equipment
(2,467)
2,222
4,413
5,636
4,156
5,063
8,529
4,392
6,697
4,200
5,648
Sep 30,
Sep 30,
Sep 30,
Sep 30,
Sep 30,
2023
2022
2021
2020
2019
60,639
58,829
8,514
21,381
19,888
22,737
Free cash flow - continuing and discontinued operations
Free cash flow - continuing operations
Employees
Continuing operations (in thousands)
Stock market information
Basic earnings per share - continuing and discontinued operations
Basic earnings per share - continuing operations
Diluted earnings per share - continuing and discontinued operations
Diluted earnings per share - continuing operations
Dividend per share¹
1 For FY 2023 to be proposed to the Annual Shareholders' Meeting.
Five-Year Summary
52,298
FY 2023
FY 2021
FY 2020
FY 2019
77,769
71,977
62,265
55,254
56,797
29,653
25,847
FY 2022
52,968
70,370
44,901
48,991
39,823
50,984
37%
145,067
36%
151,502
35%
139,372
32%
123,897
34%
150,248
FY 2023
54,805
12,281
FY 2021
FY 2020
FY 2019
10,109
B.6 Compensation awarded and due
6,825
3,608
3,561
3,075
3,098
FY 2022
10,322
(3,458)
53,060
6,360
42,686
40,000
34,117
50,723
46,596
50,636
48,700
44,567
36,449
39,113
9,896
43,978
38,005
30,414
34,843
37,212
37,010
28,492
22,726
1,426
2,275
2,839
40,879
B.4 Share Ownership Guidelines
Allocation date: November 18, 2022
• Performance criteria:
Relevant share price: average Xetra opening price of the fourth quarter of the
previous calendar year
Verification date on second Friday in March
Four-year build-up phase
Other Managing Board members: 200%
President and CEO: 300%
.
Obligates Managing Board members to permanently hold Siemens shares of an
amount equal to a multiple of their base salary during their terms of office on the
Managing Board
event of termination
of Managing Board
appointments
Obligation to purchase additional shares if the value of the accumulated shareholding
falls below the respective amounts to be verified due to fluctuations in the Siemens
share price
Commitments in the
commencement of
Managing Board
appointments
connection with the
Commitments in
.
•
Implementation in compensation system
Share Ownership
Guidelines
OTHER DESIGN CHARACTERISTICS
•
compensation in order
to avoid uncontrollably
high payments and
thus disproportionate
costs and risks for the
Company.
Application in fiscal 2023
Relevant share price: €120.12
End of vesting period: in November 2026
FISCAL 2023 9
Are part of competitive
compensation and help
the Company obtain
the best candidates
worldwide for the
Managing Board.
Link to strategy
Foster an alignment of
Managing Board and
shareholder interests
and provide additional
incentives to
sustainably increase
Company value.
Link to strategy
No application in fiscal 2023
Application in fiscal 2023
• Verification date: March 10, 2023
Change of control (only for first-time appointments and/or reappointments before
November 2019)
•
Implementation in compensation system
No application in fiscal 2023
Application in fiscal 2023
Moving expenses due to a change of the regular place of work at the request of the
Company
Compensation for the loss of benefits from a former employer
Implementation in compensation system
Fulfilled by all the Managing Board members obligated to provide verification
Termination by mutual agreement and without serious cause
Caps Managing Board
members'
B.5 Pension benefit commitment
Reporting in Compensation Report for fiscal 2027
Link to strategy
Application in fiscal 2023
In cases of severe breaches of duty or compliance and/or unethical behavior or in cases
of grossly negligent or willful breaches of duty of care or in cases in which variable
compensation components linked to the achievement of specific targets have been
unduly paid out on the basis of incorrect data, the Supervisory Board can withhold or
reclaim variable compensation.
Implementation in compensation system
Other Managing Board members: €1,380,000
• Cedrik Neike: €1,470,000
Malus and clawback
regulations
Chief Financial Officer: €2,145,000
•
Fosters long-term
commitment and
provides incentives for
sustainable value
creation in accordance
with the interests of
shareholders and for
the achievement of
strategic sustainability
targets.
Link to strategy
creation.
Provides incentives for
strong annual financial
and non-financial
performance as the
basis for long-term
Company strategy and
sustainable value
Link to strategy
President and CEO: €3,340,000
Development of TSR relative to MSCI World Industrials index (weighting: 80%)
ESG key performance indicators: CO2 emissions, digital learning hours per
employee and Net Promoter Score (weighting: 20%)
Link to strategy
Aim to ensure
sustainable Company
development and avoid
inappropriate risks.
Target amounts (based on 100% target achievement)
FISCAL 2023
Final assessment of compliance with maximum compensation when the 2023 Stock
Awards tranche is settled in fiscal 2027
No application in fiscal 2023
determined in accordance with the compensation system
Maximum compensation for each Managing Board member for fiscal 2023
•
Application in fiscal 2023
+ three times the Stock Awards target amount
+ two times the Bonus target amount
+ BSAV contribution or amount for free disposal
+ maximum fringe benefits
•
Determined annually by the Supervisory Board based on total target compensation
Equals the sum of maximum amounts that can possibly be paid out to each Managing
Board member from all compensation components for the relevant fiscal year and is
calculated as follows:
Implementation in compensation system
•
8
Maximum
compensation
MAXIMUM COMPENSATION
Base salary
B. Compensation of Managing Board members
Compensation Report →
Managing Board members
Maximum compensation fiscal 2023
The following table shows the maximum compensation of each Managing Board member as approved by the Supervisory
Board for fiscal 2023 in accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG).
The maximum compensation of each Managing Board member is determined annually by the Supervisory Board in
accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG). Maximum compensation is
equal to the total of the maximum amounts of all compensation components that can possibly be paid out to each
Managing Board member for the relevant fiscal year. It is calculated by adding base salary, maximum fringe benefits and
the BSAV contribution (or the amount for free disposal) as well as two times the Bonus target amount and three times the
Stock Awards target amount. Twice the Bonus target amount and triple the Stock Awards target amount also correspond
to the respective limits (individual caps) on the amount of variable compensation.
B.2.2 Maximum compensation
Compensation Report → B. Compensation of Managing Board members
2 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV).
Instead of BSAV contributions, they receive a fixed cash amount for free disposal.
FISCAL 2023
in office on September 30, 2023
Prof. Dr. Ralf P.
For fiscal 2023, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary.
The target amount reported here is also equal to the maximum amount.
1
100% 4,096 100%
4,217
Total target compensation (TTC)
31%
1,259
11
(€ thousand)
compensation
Base salary
83
33%
133
1,102
1,102
1,102
1,102
Fixed
1,770
Thomas
Matthias
Rebellius
Busch
Cedrik
Dr. Roland
Fringe benefits (maximum amount)
+
Judith
Wiese
Neike
27%
+ Long-term variable compensation
2023 Stock Awards (vesting: 2022 - 2026)
2022 Stock Awards (vesting: 2021 - 2025)
26%
1,102
83
€ thousand in % of TTC € thousand in % of TTC
2022
2023
Managing Board member since Oct. 1, 2020.
Judith Wiese
2%
+ BSAV contribution/
Base salary
compensation
Fixed
4,217
Total target compensation (TTC)
2022 Stock Awards (vesting: 2021-2025)
2023 Stock Awards (vesting: 2022 - 2026) 1,380
+ Fringe benefits¹
1,380
1,102
83
2%
27%
1,102
Bonus for fiscal 2022
26%
1,102
+ Short-term variable compensation
Bonus for fiscal 2023
Variable
compensation
83
42%
1,735
= Total
13%
551
13%
551
amount for free disposal²
41% 1,735
83
+
BSAV contribution/
Growth
Cash conversion
rate (CCR)
Liquidity
Return on capital
employed
adjusted
(ROCE adjusted)
purchase price
allocation
(EPS pre PPA)
share before
Earnings per
Long-term
Profitability/
capital efficiency
Link to strategy
Awards
Stock
Key performance
indicator/ focus topic Bonus
FINANCIAL TARGETS
Performance
criterion
Performance criteria of variable compensation and link to strategy
Profit
value creation
Comparable
revenue growth
Total
shareholder
return (TSR)
Sustainability/diversity - Siemens honors its social responsibility by fostering
diversity, inclusion and equal opportunity.
The focus topics in fiscal 2023 comprised business development, the implementation of
other strategic target setting, optimization / efficiency enhancement and the
implementation of portfolio measures.
The individual targets for executing the Company strategy enable the Company to focus
on specific factors that are aligned with its short- and medium-term targets and
measures in order to ensure its long-term strategic development.
TSR is a yardstick for measuring the achievement of Siemens' strategic goal of
sustainably increasing Company value. It indicates total value creation for shareholders
in the form of increases in the Siemens share price and dividends paid.
Further accelerating high-value growth is a key element of Siemens' strategy. As a
leading technology company, Siemens wants to expand its position on all targeted
markets and tap additional profitable markets.
CCR measures the ability to convert profit into cash flow in order to finance growth and
offer our shareholders an attractive, progressive dividend policy.
ROCE, which is the primary measure for managing capital efficiency at Group level,
reflects our focus on profitable growth, the implementation of measures to sustainably
increase competitiveness and stringent working capital management. The adjustment
of ROCE places the focus on Siemens' operating performance.
EPS reflects the net income attributable to the shareholders of Siemens AG and
incentivizes the sustainable increase in profit - particularly by focusing on profitable
growth. This key performance indicator provides a comprehensive perspective that
encompasses all units of the Siemens Group. The consideration of EPS pre PPA
strengthens the focus on Siemens' operating performance.
ability index
Siemens-internal
ESG/Sustain-
Various focus
topics
Various focus
topics
Sustainability
strategy
Company
Execution of
NON-FINANCIAL, QUALITATIVE TARGETS
The performance criteria relevant for fiscal 2023, the key performance indicators, the focus topics and the explanations of
how these foster the Company's long-term development are shown in the following table.
The performance criteria and the key performance indicators used to measure performance for variable compensation in
fiscal 2023 are derived from the Company's strategic goals and operational steering and are in line with the compensation
system applicable for fiscal 2023. As a rule, all the performance criteria measure successful value creation in all its different
forms, as strategically envisioned. In line with Siemens' social responsibility, sustainability is also included in the
performance criteria.
Variable compensation is tied to performance and accounts for a significant proportion of the total compensation of
Managing Board members. It consists of a short-term variable component (Bonus) and a long-term variable component
(Stock Awards).
B.3 Variable compensation in fiscal 2023
vesting: 2022- 2026
Stock Awards 2023
2,203
2,203
2,203
2,203
3,540
(two times target amount)
+
Bonus for fiscal 2023
Variable
compensation
551
617
551
617
991
+ amount for free disposal
1,102
83
(three times target amount)
10,020
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 12
The appropriateness review of Managing Board compensation for fiscal 2023 has shown that Managing Board
compensation is appropriate.
The Supervisory Board conducted the annual review of Managing Board compensation in order to determine the latter's
appropriateness and conformity with market conditions. For this purpose, the Supervisory Board assessed the
compensation's level and structure relative to the companies included in the DAX 40, the German blue-chip stock index,
and relative to the companies included in the STOXX Europe 50 (horizontal comparison). In the course of its review, the
Supervisory Board also assessed the development of Managing Board compensation relative to the compensation of Senior
Management and Siemens' total workforce in Germany (vertical comparison). Senior Management comprises executive
employees. The total workforce comprises Senior Management as well as the Siemens employees who are covered by
collective bargaining agreements and those who are not. In addition to a status quo analysis, the vertical comparison took
into account the development of compensation ratios over time. Since Siemens Healthineers is a separately managed,
publicly listed company, its workforce was not included in the vertical comparison.
B.2.3 Appropriateness of compensation
The final assessment of compliance with the maximum compensation for fiscal 2023 will be included in the Compensation
Report for fiscal 2027.
Since the 2023 Stock Awards tranche is not due until November 2026, compliance with the maximum limit of the Stock
Awards for fiscal 2023 can be finally assessed only in November 2026, when the 2023 Stock Awards tranche is settled.
The base salary and the BSAV contribution (or the amount for free disposal) are fixed amounts. In no case did the fringe
benefits awarded to a Managing Board member exceed the maximum amount defined for fiscal 2023. The Bonus cap was
not reached in fiscal 2023.
8,078
10,439
8,078
8,414
16,454
4,140
6,435
4,140
4,410
Maximum compensation
1,735
༅། །
+ Long-term variable compensation
1,102
23%
1,770
22%
1,770
amount for free disposal²
+BSAV contribution/
133
+ Fringe benefits¹
Base salary
Fixed
€ thousand in % of TTC € thousand in % of TTC € thousand in % of TTC € thousand in % of TTC
Managing Board member since April 1, 2017
2022
2023
Cedrik Neike
Dr. Roland Busch
President and CEO since Feb. 3, 2021
2022
compensation
2%
133
2%
38%
36% 2,894
2,894
Total
617
14%
617
13%
991
12%
991
83
2%
།
1,102
25%
83
2023
1,801
B. Compensation of Managing Board members
in office on September 30, 2023
TOTAL TARGET COMPENSATION
Base salary
Composition of total target compensation
The Supervisory Board has determined, in accordance with the compensation system for the Managing Board members,
the amount of each Managing Board member's total target compensation for fiscal 2023. In making this determination, the
Supervisory Board has ensured that the proportion of long-term variable compensation always exceeds that of short-term
variable compensation and that the proportions of total target compensation represented by each of the individual
compensation components are within the ranges defined in the compensation system.
B.2.1 Target compensation and compensation structure
B.2 Principles of the determination of compensation
B. Compensation of Managing Board members
FIXED COMPENSATION
→
•
Digital learning hours - Focus on learning in order to empower our people to
remain resilient and relevant in a constantly changing environment.
• Net Promoter Score - Strong customer relationships are the basis for sustainable
development both for Siemens and for our customers.
FISCAL 2023
13
Compensation Report → B. Compensation of Managing Board members
The Supervisory Board aims to ensure that the targets for variable compensation are demanding and sustainable. If they
are not reached, variable compensation can be reduced to zero. If the targets are significantly exceeded, target achievement
is capped at 200%.
Compensation Report
+
36% to 43%
Fringe benefits
Managing Board members
Target compensation fiscal 2023
10
FISCAL 2023
The following table shows the individualized target compensation of each Managing Board member and the relative
proportions of total target compensation represented by each of the individual compensation components.
Regarding compensation, all components of the compensation of the position of President and CEO are differentiated. The
target amount of Prof. Dr. Ralf P. Thomas's Stock Awards is differentiated due to his particular responsibilities as CFO. The
target amount of Cedrik Neike's Stock Awards is also differentiated due to the outstanding business results of Digital
Industries, the strategic importance of this Business for the further development of Siemens AG and Cedrik Neike's five-
years of membership on the Managing Board.
Due to the increase in the Stock Awards target amounts, variable compensation is structured on a more long-term basis,
while compensation as a whole is oriented even more toward sustainable Company development.
The regular review of Managing Board compensation at the beginning of fiscal 2023 in order to determine the
compensation's appropriateness and conformity with customary market practices indicated that - when compared to the
companies in the DAX 40, the German blue-chip stock index, that have been defined in the compensation system as the
relevant market - the total target compensation of the members of the Managing Board of Siemens AG was positioned
toward the lower end of the customary market ranges. Compared to the companies in the STOXX Europe 50, which is also
used for a market comparison due to Siemens' international footprint, direct target compensation was actually below the
customary market range. Against this backdrop, the Supervisory Board approved an increase in the total target
compensation of all Managing Board members as of October 1, 2022. This increase was implemented by raising the
individual members' Stock Awards target amounts. The Stock Awards target amount for Dr. Roland Busch was raised to
€3,340,000 from €2,954,000, the target amount for Prof. Dr. Ralf P. Thomas was raised to €2,145,000 from €2,000,000,
the target amount for Cedrik Neike was raised to €1,470,000 from €1,259,000, and the target amounts for the remaining
Managing Board members were raised to €1,380,000 from €1,259,000.
of total target compensation
30% to 42%
Long-term variable
compensation
(Stock Awards)
of total target compensation
20% to 28%
VARIABLE COMPENSATION
Short-term variable
compensation
(Bonus)
of total target compensation
Pension benefit
commitment
Compensation Report →
551
41%
Variable
617
22%
83
1,102
1,102
1,102
€ thousand in % of TTC € thousand in % of TTC € thousand in % of TTC € thousand in % of TTC
1,102
1,801
།།། ༅།། ཚ།་། ༅།་།༅།
2,000
།།
1,102
་།
1,801
617
37%
4,903
1,102
2,145
*། ༅།། ་།
Bonus for fiscal 2022
+ Short-term variable compensation
Bonus for fiscal 2023
= Total
amount for free disposal²
+BSAV contribution/
Variable
compensation
༄།། ༅།། རྨ།།
4,096
1,259
།།།
5,048
1,102
1,735
551
83
།*།
83
ས །
1,801
2022
2023
2023 Stock Awards (vesting: 2022 - 2026)
2022 Stock Awards (vesting: 2021 - 2025)
Total target compensation (TTC)
+ Long-term variable compensation
26%
1,102
23%
1,770
Bonus for fiscal 2022
3,340
25%
22%
1,770
Bonus for fiscal 2023
compensation
༅༅།ཇ། ༅། །
2%
+ Short-term variable compensation
1,102
42%
1,470
34%
Managing Board member since Sept. 18, 2013
Managing Board member since Oct. 1, 2020
Prof. Dr. Ralf P. Thomas
Matthias Rebellius
+ Fringe benefits¹
Base salary
compensation
Fixed
100%
100% 4,162
4,373
30%
1,259
39%
100%
2,954
7,618
100%
8,004
2022
2023
Performance criteria are assigned to each of the three target dimensions based on Company priorities and the
responsibilities of each Managing Board member. One financial performance criterion is assigned to the "Siemens Group"
dimension and another to the "Managing Board portfolio" dimension. The fulfillment of these criteria is measured on the
basis of key performance indicators. Within the "Individual targets" dimension, the financial performance criteria "growth"
and "liquidity" can be employed as can additional, non-financial performance criteria. In the case of non-financial
performance criteria, the Supervisory Board considers the degree to which a Managing Board member has fulfilled so-called
focus topics, which comprise operations-related aspects of the execution of the Company's strategy as well as sustainability-
related aspects.
B.3.1 Short-term variable compensation (Bonus)
Optimization / efficiency enhancement
• Continuous further development of sustainability through innovation in financing offerings
Development and implementation of methods for identifying SFS financing solutions with a positive
value contribution in the sustainability area
Scaling of established financing solutions in new business models of the industrial business
Successful support for Siemens Xcelerator through specific SFS solutions and integration of a digital
payment and financing gateway
Strong operating performance, including revenue growth and increase in operating profitability
year-over-year
Financial Services (SFS)
business of Siemens
Development of the
sustainability-related
Sustainability / diversity
Further development of
Siemens Financial Services
(SFS)
Driving performance of
Portfolio Companies
Successful sale of Commercial Vehicles business to Meritor
Implementation of portfolio measures
Wiese
Judith
Prof. Dr.
Ralf P.
Thomas
Individual targets: Focus topics from the areas of Company strategy / sustainability (cont.)
B. Compensation of Managing Board members
The Siemens-internal ESG/Sustainability index for the 2023 Stock Awards tranche
includes:
FISCAL 2023 17
related business
Successful, cross-sector scaling of energy-saving contracting in commercial buildings, hospitals,
universities
regard to sustainability-
•
Further development and
performance of Global
Business Services (GBS)
Implementation of Next
Work program
specific solutions with
Sustainability / diversity
Further development of
DEGREE framework
business strategy and
anchoring in Company
steering
Comparable revenue growth Siemens c/o
25%
162.50%
CCR Siemens Group
25%
Dr. Roland
Busch
Total target achievement
Target achievement
Key performance indicator/ focus topics
Weighting
Individual targets: Total target achievement by each Managing Board member
Target achievement for the target dimension "Individual targets" is summarized for each Managing Board member in the
following table.
Implementation and anchoring in key processes such as project design and data / IT infrastructure
as well as the development of business models
Strengthening of the sustainability organization in the business units and establishment of a
committee for sustainability-related business decisions
of the target regarding the share of women in top management positions
Acceleration of two DEGREE targets with adjusted, ambitious target setting and early achievement
.
• Launch of a project to further develop the DEGREE framework
Development and provision of a Next Work training program for managers and businesses
•
Targeted scaling of Next Work to now roughly 80,000 employees
•
Revenue increase above annual planning as well as achievement of planned productivity targets
•
• Further expansion of business activities, including a first major external contract
Further development of the
sustainability-related
Identification of business opportunities and market-specific use cases
•
Strengthening of sector-
business
sustainability-related
Development of
Implementation of other strategic target setting
Transition to software-as-a-service considerably above plan and above the target communicated at
the 2021 Capital Market Day
Improved sector-specific expertise in the battery and semiconductor segment - in particular,
through the dedicated allocation of resources and the addressing of key customers
Driving Regional sales transformation, among other things, through the introduction of overarching
sales processes and steering
Further expansion of customer and partner landscape with, among others, NVIDIA, Microsoft and
Daimler Truck
Positive revenue development as well as the expansion of Siemens Xcelerator scope to include
product design, engineering and verification
Definition of basic structure and preparation of new key performance indicators for impact
Completion of materiality assessment pursuant to the Corporate Sustainability Reporting Directive
(CSRD) as well as sustainability scenario modeling
Implementation and anchoring in key processes such as product design and data / IT infrastructure
as well as the development of business models
Strengthening of the sustainability organization in the business units and establishment of a
committee for sustainability-related business decisions
Market share gains in nearly all businesses with accompanying revenue growth
Strengthening of value chain resilience
as well as the extension of marketplace content and functionalities
Accelerated expansion of Siemens Xcelerator business through modernization and modularization
Siemens Xcelerator revenue growth above fiscal-year targets
.
.
Achievement of software-as-
a-service targets
expertise
including sector-specific
•
•
•
.
Strengthening of sector-
specific solutions with
.
.
business
Definition and introduction of customer value in the sustainability strategy of Siemens AG
Determination of clear sustainability-related focus businesses and investment priorities
.
sustainability-related
•
Development of
Implementation of other strategic target setting
Strong development in the battery and semiconductor segment, among other things, through the
strengthening of sales structures and the conclusion of framework agreements
.
Planning for seven sectors in key countries for fiscal 2024 already concluded
•
Siemens Xcelerator revenue growth above fiscal-year targets for Siemens Xcelerator software,
internet of things (IoT) and digital services and for Siemens Xcelerator loT hardware
200.00%
expertise
Regions in go-to-market,
Strengthening of the
Siemens Xcelerator business
•
Expansion of
Rebellius
Business development
Matthias
related business
regard to sustainability-
Establishment and expansion of partnerships as well as analysis of new business opportunities
External communications and training of sales personnel in sector-specific aspects of sustainability
Definition of basic structure and preparation of new key performance indicators for impact
Implementation of sustainability and energy efficiency campaigns
including sector-specific
•
165.63%
50%
€3,276,270
€1,915,572
173.89%
€2,203,200
€1,101,600
€0
185.10%
€3,540,000
€1,770,000
€0
payout amount
Bonus
Total target
achievement
(based on 200%
target achievement)
(based on 100%
target achievement)
target achievement)
in office on September 30, 2023
Cap
Target amount
Floor
(based on 0%
Cedrik Neike
Dr. Roland Busch
Managing Board members
Compensation range
Total target achievement and Bonus payout amounts for fiscal 2023
Total target achievement and the resulting Bonus payout amount for each Managing Board member are summarized in the
following table.
Matthias Rebellius
Total target achievement for the Bonus for fiscal 2023
Prof. Dr. Ralf P. Thomas
€0
FISCAL 2023 19
In order to determine at the end of the vesting period how well the TSR of Siemens AG has performed relative to the TSR of
the sector index, the TSR performance value is calculated over the subsequent 36 months (performance period). The TSR
performance value is the average of the end-of-month values during the performance period.
Target achievement for TSR is concretely determined by first calculating a TSR reference value for Siemens AG and a TSR
reference value for the sector index. The TSR reference value is equal to the average of the end-of-month values over the
first 12 months of the vesting period (reference period).
Total shareholder return - TSR is indicative of the performance of one share over a specified period of time – in the case of
Siemens, over the approximately four-year vesting period. It takes into account changes in the share price and the dividends
paid during this period. To reflect the Company's international footprint, the TSR of Siemens AG is compared at the end of
the vesting period with the TSR of an international sector index, the MSCI World Industrials or a comparable successor index.
Since fiscal 2020, the number of Siemens shares that is actually transferred depends 80% on the financial performance
criterion "long-term value creation," measured on the basis of the key performance indicator "total shareholder return"
(TSR), and 20% on the non-financial performance criterion "sustainability." For measuring the "sustainability" performance
criterion, Siemens AG's performance in the environment, social and governance (ESG) area is assessed on the basis of a
Siemens-internal ESG/Sustainability index, the composition of which is determined annually by the Supervisory Board.
Performance criteria
An approximately four-year vesting period begins with the allocation of Stock Awards, after the expiration of which Siemens
shares are transferred. The beneficiary Managing Board members are not entitled to dividends during the vesting period.
At the beginning of a fiscal year, the Supervisory Board defines a target amount in euros based on 100% target achievement
for each Managing Board member. This target amount is extrapolated to target achievement of 200% ("maximum allocation
amount"). Stock Awards for this maximum allocation amount are then allocated to the Managing Board members. The
number of Stock Awards is calculated by dividing the maximum allocation amount by the price of the Siemens share on the
allocation date, less the estimated discounted dividends ("allocation price").
Siemens grants long-term variable compensation in the form of Stock Awards. A Stock Award is the claim to one share -
conditional on target achievement - after the expiration of a defined vesting period. The vesting period is, accordingly, the
term of each Stock Awards tranche.
B.3.2.1. BASIC PRINCIPLES AND FUNCTIONING
B.3.2 Long-term variable compensation (Stock Awards)
€2,002,378
181.77%
€2,203,200
€1,101,600
€0
€2,020,665
183.43%
€2,203,200
€1,101,600
€0
€1,995,438
181.14%
€2,203,200
€1,101,600
Judith Wiese
Compensation Report → B. Compensation of Managing Board members
18
FISCAL 2023
Business development
153.75%
200.00%
Comparable revenue growth Smart Infrastructure
25%
Rebellius
115.00%
CCR Smart Infrastructure
25%
Matthias
Implementation of other strategic target setting
130.00%
50%
Business development
132.00%
168.00%
Comparable revenue growth Digital Industries
25%
Neike
100.00%
CCR Digital Industries
25%
Cedrik
Sustainability / diversity
150.00%
50%
150.00%
Implementation of other strategic target setting
Prof. Dr.
Target achievement: 132.00% to 165.63%
Sustainability / diversity
130.00%
50%
Optimization efficiency enhancement
155.63%
200.00%
Comparable revenue growth Siemens c/o
25%
Wiese
162.50%
CCR Siemens Group
Business development
25%
Sustainability/ diversity
140.00%
50%
Implementation of portfolio measures
160.63%
200.00%
Comparable revenue growth Siemens c/o
25%
Ralf P. Thomas
162.50%
CCR Siemens Group
25%
Judith
Regions in go-to-market,
Compensation Report →
Siemens Xcelerator business
Performance range
(3) ppts. +3 ppts.
target
18.25%
Actual ROCE adjusted value
18.56%
Cap
100%
adjusted
15.56%
12.56%
Floor
0%
ROCE
(0.40) ppts.
Main Siemens-Energy-related effects
2023
18.25%
value
Actual
100%
18.65%
Varian-related acquisition effects)
ROCE as reported
(excluding defined
Calculation of actual value according to target setting:
189.67%
200%
Percentage
points=ppts.
Target achievement: 189.67%
Target achievement
FISCAL 2023
Target achievement
2023
2023
2023
Actual
value
value
value
Actual
Actual
100%
100%
100.00%
115.00%
100%
162.50%
-200%
200%
Smart Infrastructure
Digital Industries
Siemens Group
200%
Individual targets: Cash conversion rate (CCR) - Target setting and target achievement
The cash conversion rate (CCR) was defined as the first individual target for all Managing Board members. The CCR reflects
a company's ability to convert profit into available cash. For the President and CEO and the Managing Board members with
primarily functional responsibility, the CCR target was defined on the basis of the Siemens Group in order to support
Siemens' voluntary commitment to generate cash at Group level. CCR Siemens Group is defined as the ratio of free cash
flow from continuing and discontinued operations to net income. For the Managing Board members with business
responsibility for Digital Industries and Smart Infrastructure, the CCR targets are business-specific and defined as the ratio
of free cash flow to profit at each business. The target amounts for CCR were based on the budget plans.
The "Individual targets" target dimension comprises four equally weighted individual targets, achievement of each of which
may be between 0% and 200%.
"Individual targets" target dimension
Compensation Report → B. Compensation of Managing Board members
15
33.33% Managing Board portfolio
ROCE adjusted
Return on capital employed adjusted (ROCE adjusted): Target setting and target achievement
The Supervisory Board of Siemens AG established "profitability / capital efficiency" measured in terms of return on capital
employed (ROCE) as the performance criterion for the "Managing Board portfolio" target dimension for fiscal 2023 for all
Managing Board members. ROCE is defined as profit before interest and after tax divided by average capital employed. For
the purposes of target setting and determining target achievement, ROCE – as defined in the Siemens Financial Framework,
which excludes certain Varian-related acquisition effects is adjusted for main effects relating to the stake in
Siemens Energy (profit "Siemens Energy Investment" in the numerator and asset "Siemens Energy Investment” in the
denominator). The target value for ROCE adjusted is derived from budget planning.
100%
Target achievement
200%
33.34% Siemens Group
EPS pre PPA, basic
Earnings per share before purchase price allocation (EPS pre PPA): Target setting and target achievement
As part of target achievement, the actual EPS pre PPA value of the reporting year is used in order to place the focus on
performance in the reporting year.
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 14
To take account of the Company's long-term performance and provide incentives for a sustainable increase in profit, the
average EPS pre PPA of three consecutive fiscal years was used for target setting. The portfolio of Siemens AG changed
significantly due to the spin-off of Siemens Energy at the end of fiscal 2020. Against this backdrop, target setting for fiscal
2023 was defined on the basis of comparable EPS pre PPA values. The following EPS pre PPA values were used for this
purpose: the EPS pre PPA value of continuing operations was used for fiscal 2020, and the EPS pre PPA values of continuing
and discontinued operations were used for fiscal 2021 and fiscal 2022.
For the "Siemens Group" target dimension in fiscal 2023, the Supervisory Board of Siemens AG defined the performance
criterion "profit." In accordance with external communications and the Siemens Financial Framework for the financial
steering of the Company, the focus is on the transparent presentation of Siemens' operating performance. For this reason,
"profit" is measured in terms of basic earnings per share before purchase price allocation (EPS pre PPA). EPS pre PPA is
defined as basic earnings per share from net income adjusted for amortization of intangible assets acquired in business
combinations and related income taxes. It includes the amounts attributable to shareholders of Siemens AG.
"Siemens Group" target dimension
B.3.1.2. BONUS FOR FISCAL 2023
payout amount
Bonus
☐ × Post + 2 + 2 =
Weighted average target achievement (0%-200%)
target amount
Bonus
Bonus design and calculation of payout amount
At the end of the fiscal year, target achievement for the individual key performance indicators and the achievement of the
Managing Board members' individual targets are determined and aggregated to form a weighted average. The percentage
of weighted target achievement multiplied by the individual target amount yields the Bonus payout amount for the past
fiscal year. The payable Bonus is capped at two times the target amount and is paid in cash, at the latest, together with the
compensation paid at the end of February of the following fiscal year.
→> "Individual targets."
→ "Managing Board portfolio"
→ "Siemens Group"
The Bonus system is based on three equally weighted target dimensions, which take account of the overall responsibility of
the Managing Board as well as each Managing Board members' specific business responsibilities and individual challenges:
B.3.1.1 BASIC PRINCIPLES AND FUNCTIONING
200.00%
Actual
value
2023
€10.77
"Managing Board portfolio" target dimension
comparable EPS pre PPA of continuing operations
For fiscal 2020:
Actual value
2023 €10.77
€5.47
Strengthening of the
= €6.39
avg. 2020-2022 100% target
EPS pre PPA
€5.39
€8.32
2021
2020
1.17
Fiscal
Target achievement: 200.00%
Performance range
+ €2.50
€(2.50)
€8.89
Cap
100%
target
Floor
€6.39
€3.89
EPS pre PPA
0%
90
Calculation of target and actual value:
0.85
2022
0% H
0% 41-
15.42%
Actual
value
2023
100%
Smart Infrastructure
200.00%
- 200%
Target achievement
Target achievement: 168.00%
Target achievement: 200.00%
Performance range
+5 ppts.
(5) ppts.
100%
target
11.50%
6.50%
Floor
0% 4
16.50% Growth
Cap
14.90%
2023
value
Actual
Digital Industries
100%
168.00%
5.50%
Floor
9.50%
100%
13.50%
Growth
0.95
Expansion of
Business development
business
sustainability-related
Development of
business strategy and
anchoring in Company
steering
Further development of the
sustainability-related
Sustainability/diversity
of the businesses, including
resilience
Sustainable strengthening
Neike
200%
Cedrik
Business development
Expansion of
Dr. Roland
Busch
Individual targets: Focus topics from the areas of Company strategy / sustainability
The other two individual targets include focus topics from the areas of Company strategy / sustainability and were defined
on the basis of the Managing Board members' respective areas of responsibility.
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 16
Target achievement: 200.00%
Performance range
+4 ppts.
(4) ppts.
target
Cap
Siemens Xcelerator business
Target achievement
• CO2 emissions - Climate neutrality by 2030 in order to support the 1.5-degree target
and thus combat global warming.
+2 ppts.
target
target
target
Cap
100%
Floor
Cap
100%
Floor
Cap
100%
Floor
(0.4)
1.29
1.25
0.85
0.45
1.32
0.92
0.52
CCR
0% 41
CCR
0%
CCR
Performance range
0.49
+0.4
0.89
+0.4
Growth
(0.4)
(2) ppts.
9.50%
Cap
100%
target
7.50%
5.50%
Floor
0% 41
2023
value
Actual
100%
200.00%
10.74%
200%
(0.4)
+0.4
Performance range
Performance range
Performance range
Target achievement: 162.50%
+
Target achievement: 115.00%
In addition to CCR, "comparable revenue growth" was defined as the second individual target for fiscal 2023 for all members
of the Managing Board. It indicates the development in Siemens' business net of currency translation effects arising from
the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either
new to or no longer a part of the relevant business. For the President and CEO and the members of the Managing Board
with primarily functional responsibility, the growth target was determined on the basis of continuing operations (c/o)
related to the Siemens Group (Siemens c/o). For the Managing Board members with business responsibility for Digital
Industries and Smart Infrastructure, growth targets are based on their respective businesses. The respective target values
were derived from the external outlook for fiscal 2023.
Individual targets: Comparable revenue growth - Target setting and target achievement
Siemens c/o
Target achievement: 100.00%
Sustainability
strategy
(DEGREE
framework)
and Company
priorities
(Growth mindset)
Company
priorities
(Customer
impact)
Ambition
Siemens' success is inseparably linked with highly qualified
employees. The right employees with the right expertise are
decisive for our further growth. That is why we place a strong
emphasis on learning in order to sustainably anchor it in
our day-to-day working environment while continuously
increasing learning hours.
Customer satisfaction is Siemens' top priority. For us, this
means identifying customer requirements as early as
possible, strengthening partnerships and maintaining and
building trust. As a result, we systematically measure
customer satisfaction and take steps to improve it.
1
Use of renewable energy (RE): 100% green electricity by 2030; use of electric vehicles (EV): 100% electric vehicles;
improving energy productivity (EP): 100% CO2-neutral buildings.
2
Science Based Target Initiative (SBTI): Reduction targets for 2030 based on the scientific requirements for limiting global warming to 1.5 degrees Celsius.
Net zero emissions in business operations by 2030 with 55%
emission reduction by 2025 and 90% by 2030. This ambition,
which was raised in fiscal 2022, also contributes to
compliance with the SBTI pathway¹ and the fulfilment of the
obligations arising from membership in the RE100, EV100
and EP100 initiatives.²
Sustainability
strategy
(DEGREE
framework)
ESG key performance indicators for 2023 Stock Awards tranche
Customer intention to recommend us,
measured on a scale of 1 (extremely unlikely)
to 10 (extremely likely) and based on
comprehensive annual customer satisfaction
surveys.3
The total number of digital learning hours
completed in virtual trainer-led training ses-
sions, self-paced learning, learning on
the job, community-based virtual learning
and hybrid training sessions, divided by the
total number of employees.
Amount of greenhouse gases emitted
by the Company's business operations
in tons of CO2 equivalent, excluding
carbon offsets (for example, certificates).
Definition
Score (NPS)
Net Promoter
Digital learning
hours per
employee
CO2 emissions
Key performance
indicator
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 21
→ "Sustainability," measured in terms of the Siemens-internal ESG/Sustainability index, which is based on the following
three equally weighted key performance indicators. Target setting for the three key performance indicators is oriented
on the Company's strategic sustainability planning, which is described in detail in Siemens' sustainability reporting.
→ "Long-term value creation," measured in terms of the development of the TSR of Siemens AG relative to the
international sector index MSCI World Industrials and
3 The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. Customers that rate Siemens high on the scale are promoters.
Customers that find it unlikely to recommend Siemens to others are named detractors. Example: promoters (55%) minus detractors (10%) = NPS (45%).
Derived from
The Supervisory Board set the allocation date for the 2023 Stock Awards tranche at November 18, 2022. The timeline of
this tranche is as follows.
Judith Wiese
Allocation and four-year vesting period
B. Compensation of Managing Board members
→
Compensation Report
2
1
The Supervisory Board approved the following performance criteria for the 2023 Stock Awards tranche:
Prof. Dr. Ralf P. Thomas
Matthias Rebellius²
Cedrik Neike
Dr. Roland Busch
in office on September 30, 2023
Managing Board members
Information on the allocation of the 2023 Stock Awards tranche
22
22
FISCAL 2023
The target amounts, the maximum allocation amounts, the maximum number of Stock Awards allocated and the fair value
at allocation date in accordance with IFRS 2 Share-based Payment are shown in the following table. The allocation price
applicable for the 2023 tranche was €114.22.
Transfer
Process sequence
OCT '22
NOV '22
OCT '23
NOV '23
Timeline for the 2023 Stock Awards tranche
2024
SEPT '26 OCT '26
NOV '26
Performance
measurement
TSR reference period
TSR performance period
ESG performance measurement based on interim targets for each fiscal year
2025
B.3.2.2 ALLOCATION OF STOCK AWARDS IN FISCAL 2023
1-year
= Final number of Stock Awards
Basic principles and functioning of Stock Awards
The remaining number of Stock Awards is settled by the transfer of Siemens shares to the relevant Managing Board member.
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 20
The value of the Siemens shares transferred after the expiration of the vesting period is also capped at 300% of the target
amount. If this cap is exceeded, a corresponding number of Stock Awards is forfeited without refund or replacement.
At the end of the approximately four-year vesting period, the Supervisory Board determines the degree of target
achievement. The target achievement range for TSR and for the Siemens-internal ESG/Sustainability index is between 0%
and 200%. If target achievement is less than 200%, a number of Siemens Stock Awards equivalent to the shortfall are
forfeited without refund or replacement and a correspondingly smaller number of shares is transferred.
Determination of total target achievement
Environment, social and governance - The Siemens-internal ESG/Sustainability index is based on three equally weighted,
structured and verifiable ESG key performance indicators. At the beginning of each tranche, the Supervisory Board defines
the target values for each of the ESG key performance indicators. Target measurement is based on defined interim targets
for each fiscal year. Target achievement for the Siemens-internal ESG/Sustainability index is finally determined at the end
of the approximately four-year vesting period on the basis of the weighted average of the target achievement values
calculated for each of the key performance indicators.
OCT
FYn+4
If the change in the TSR of Siemens AG is between
20 percentage points above and 20 percentage points
below that of the sector index, target achievement is
calculated using linear interpolation.
• If the change in the TSR of Siemens AG is equal to
that of the sector index, target achievement is 100%.
•If the change in the TSR of Siemens AG is at least
20 percentage points below that of the sector index,
target achievement is 0%.
• If the change in the TSR of Siemens AG is at least
20 percentage points above that of the sector index,
target achievement is 200%.
Siemens compared to MSCI World Industrials index
Allocation
Relative
TSR
(20) ppts.
0%
100%
200%
Calculation of TSR target achievement
The following applies for the determination of target achievement.
→ MSCI World Industrials index
→ Siemens AG
TSR performance values for
36 months
→ MSCI World Industrials index
→ Siemens AG
TSR reference values for
12 months
NOV
OCT
+20 ppts.
Settlement by transfer of Siemens
shares to Managing Board member
Target amount
x 2 (Extrapolation to
Actual target achievement
= final number of
Stock Awards
300% of target amount
Number of Stock Awards
based on target
achievement
> 300% of target amount
Number of Stock Awards
based on target
achievement is reduced
by amount by which
cap is exceeded
performance
period
4-year
ESG/Sustainability index
(weighting: 20%)
Siemens-internal
(based on 200% target
achievement)
of Stock Awards
= Maximum number
estimated discounted dividends)
allocation date, less the
(Xetra closing price on the
(based on 100% target
achievement)
+ Allocation price
= Maximum allocation
amount
= Value of Stock Awards in €
(Cap: 300% of target amount)
× Siemens share price
(Xetra closing price on
transfer date)
on target achievement
Number of Stock Awards based
Settlement after expiration of vesting period
performance
period
period
reference
3-year
Total shareholder return (TSR)
compared to sector index
(weighting: 80%)
Performance range 0%-200%
Four-year vesting period
maximum possible target
achievement of 200%)
(based on 200% target
achievement)
Target achievement
Target amount
(based on 100%
target achievement)
FYn
Siemens-internal
Total shareholder return compared to
MSCI World Industrials index (80%)
Oct '19
Performance period
Oct '23
Nov '19 Oct '20 Nov '20
Reference period
Nov '23
8 Nov '19
2023
2022
2021
2020
End of vesting period
and transfer
Vesting
period
Allocation
ESG/Sustainability index (20%)
Siemens-internal
ESG/Sustainability index (20%)
Performance period
Sept '23
Oct '25
Nov '21 Oct '22 Nov '22
Reference period
Total shareholder return compared to
MSCI World Industrials index (80%)
Nov '25
12 Nov '21
Performance period
Sept '24
Oct '20
Performance period
Oct '24
Nov '20 Oct '21 Nov '21
Reference period
Nov '24
2026
2025
2024
13 Nov '20
Performance period
Total shareholder return
compared to MSCI World
Industrials index (80%)
2023
tranche
1 Starting with the 2019 tranche, the settlement of Stock Awards will be entirely by share transfer. For this reason, the number of Stock Awards, as set out in the table, is based on a
target achievement of 200%. At the end of the vesting period, a final number of Siemens shares to be transferred will be determined on the basis of actual target achievement and
taking into account the Stock Awards cap.
84,045
24,164
59,881
131,900
(18,267)
(15,251)
37,559
127,859
69,100
24,164
44,936
96,961
(14,613)
(12,202)
2 The target achievement of the Stock Awards from the 2019 tranche, which were due and settled in fiscal 2023, was 91%. Since the Stock Awards were initially allocated on the
basis of 200% target achievement, a number equivalent to this shortfall was forfeited without refund or replacement, in accordance with plan requirements.
Performance
criteria
3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
March 31, 2019. The reported figures include the Stock Awards allocated to Cedrik Neike by Siemens Ltd. China due to this position.
In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
Performance
criteria
2022
tranche
Performance
criteria
2021
tranche
Performance
criteria
2020
tranche
Fiscal
Outstanding Stock Awards tranches on September 30, 2023
As of the end of fiscal 2023, the following Stock Awards tranches were within the vesting period and are therefore included
in the balance at the end of the fiscal year.
Compensation Report → B. Compensation of Managing Board members
24
FISCAL 2023
5 The reported figures also include the Stock Awards allocated to Judith Wiese in November 2020 as compensation for the loss of benefits granted by her former employer in
addition to the regular allocation of Stock Awards from the 2021 tranche.
of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. The Stock Awards reported here also include the Stock Awards allocated by
Siemens Schweiz AG since the appointment of Matthias Rebellius to the Managing Board of Siemens AG.
The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
4
25,740
Siemens-internal
ESG/Sustainability index (20%)
Sept '25
9,110,700
42,723
22,633
41,261
4,956,271
2,718,676
5,131,887
466%
18,342
2,203,200
200%
shares³
Number of
Amount
in €²
Percentage of
base salary1
316%
247%
18,342
2,203,200
75,847
200%
12,806,834
1
2022
for all pension commitments
excluding deferred compensation²
Service costs according to IAS 19R
2023
2022
2023
Contributions¹
Defined benefit obligation
Information regarding the Siemens Defined Contribution Pension Plan (BSAV)
Contributions under the BSAV are credited to the individual members' pension accounts in the January following each fiscal
year. Until pension payments begin, members' pension accounts are credited with an annual interest payment (guaranteed
interest) on January 1 of each year. The interest rate is currently 0.25%.
Most of the members of the Managing Board are included in the Siemens Defined Contribution Pension Plan (BSAV). Since
fiscal 2020, newly appointed members of the Managing Board can be awarded, instead of BSAV contributions, a fixed cash
amount for free disposal.
B.5 Pension benefit commitment
As of March 10, 2023 (verification date).
3
The amount of the obligation is based on the average base salary during the four years prior to the respective verification dates.
Based on the average Xetra opening price of €120.12 for the fourth quarter of 2022 (October to December).
2
106,617
Oct '21
39,163
300%
FISCAL 2023 25
In fiscal 2023, the Supervisory Board did not exercise this authority.
The Supervisory Board exercises its authority to withhold or reclaim variable compensation components at its duty-bound
discretion.
Under existing malus and clawback regulations, the Supervisory Board is authorized to withhold or reclaim variable
compensation in cases of severe breaches of duty or compliance and/or unethical behavior or in cases of grossly negligent
or willful breaches of the duty of care or in cases in which variable compensation components linked to the achievement
of specific targets have been unduly paid out on the basis of incorrect data.
B.3.3 Malus and clawback regulations
Performance period
Sept '26
Oct '22
Performance period
Oct '26
Nov '22 Oct '23 Nov '23
Reference period
Total shareholder return compared to
MSCI World Industrials index (80%)
Siemens-internal
ESG/Sustainability index (20%)
Nov '26
18 Nov '22
Performance period
Compensation Report → B. Compensation of Managing Board members
4,704,300
B.4 Share Ownership Guidelines
Obligations under the Share Ownership Guidelines
shares²
Number of
Value
in €1
base salary
Percentage of
Verified
Required
Total
Prof. Dr. Ralf P. Thomas
Cedrik Neike
Dr. Roland Busch
compliance on March 10, 2023
and required to verify
in office on September 30, 2023,
Managing Board members
The deadlines by which the individual Managing Board members must first verify compliance with the Share Ownership
Guidelines (SOG) vary from member to member, depending on when they were appointed to the Managing Board. For
Managing Board members in office on September 30, 2023, the following table shows the number of Siemens shares that
each held in order to comply with the SOG on March 10, 2023, the verification date. It also shows the number of shares to
be held throughout the Managing Board members' terms of office with a view to future verification dates.
98,036
185,721
(14,613)
(22.23)%
Heavy Industries
Mitsubishi
10.32%
$79.66 $127.46
$74.91 $82.64
General Electric
Eaton
CHF 18.74 CHF25.73
price
price
Performance
Reference
ABB
Performance of the Siemens share compared to the share performance of five relevant competitors
Overview of target achievement for the 2019 Stock Awards tranche
Schneider
The 2019 Stock Awards tranche became due and was settled in fiscal 2023. The 2019 Stock Awards tranche depended on
the performance of the Siemens share compared to the share performance of five relevant competitors during the
approximately four-year vesting period from November 9, 2018, to November 17, 2022.
€72.37
Competitors (average)
0%
(1.75)ppts.
91%
100%
200%
Target achievement
28.81%
30.55%
67.35%
60.01%
37.32%
Reference price versus
performance price
Target achievement: 91%
€89.91 €115.81
Siemens AG
¥4,401.17 ¥3,422.67
€121.12
(20.00)%
Floor
B.3.2.3 TRANSFER OF STOCK AWARDS IN FISCAL 2023 (2019 TRANCHE)
In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the target amount reported here (based on 100% target achievement),
€600,000 is attributable to Siemens Schweiz AG.
€2,940,000
€1,470,000
€3,626,839
11,697
46,787
€6,680,000
€3,340,000
(weighting: 20%)
(weighting: 80%)
Total shareholder return ESG/ Sustainability index
Siemens-internal
Fair value at allocation
date¹
Maximum number of
Stock Awards
Maximum
allocation amount
NOV
20,592
Concrete target setting and the degree of target achievement for the Siemens-internal ESG/Sustainability index of the 2023
Stock Awards tranche will be published together with the degree of target achievement for the TSR in the Compensation
Report for fiscal 2027, after the expiration of the vesting period.
5,148
€1,380,000
The fair value on the allocation date is calculated for the TSR component on the basis of a valuation model and amounts to €49.42. The fair value for the ESG component of
€112.39 is equal to the Xetra closing price of the Siemens share on the allocation date, less the discounted expected dividends. For the 2023 tranche, the allocation date in
accordance with IFRS 2 was November 23, 2022 (the date of communication to the Managing Board members).
€1,498,519
4,833
19,331
€2,760,000
€1,380,000
€2,329,196
7,512
30,047
€4,290,000
€2,145,000
€1,498,519
4,833
19,331
€2,760,000
€1,596,240
0.00%
20.00%
100%
target
Changes in Stock Awards in fiscal 2023
The following overview shows the changes in the balance of the Stock Awards held by Managing Board members in fiscal
2023.
B.3.2.4 CHANGES IN STOCK AWARDS IN FISCAL 2023
In the course of transferring the 2019 Stock Awards tranche, compliance with the maximum amounts of total compensation
for fiscal 2019 was also reviewed. The applicable maximum amount was not exceeded in the case of any Managing Board
member.
The Stock Awards settled by share transfer were valued at €129.56, the German low price of the Siemens share on November 18, 2022.
In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
March 31, 2019. Of the allocated number of Stock Awards reported here, 2,940 are attributable to the commitment by Siemens Ltd. China. Of the calculated number of Stock
Awards reported here, 1,338 were awarded and paid by Siemens Ltd. China.
€111,904
€1,975,920 +
€89,532
€1,580,891 +
€89,532
12,202 > €1,580,891 +
12,202 >
15,251 >
91%
91%
91% =
26,815 x
26,815 x
33,518 x
€85.03 =
€2,850,000 /
(Amount in number of units)1
€85.03 =
Managing Board members
Dr. Roland Busch
(12,202)
58,484
154,052
of fiscal 2023
Other changes²
Vested and settled
Allocated
of fiscal 2023
Balance at the end
Balance at beginning
During fiscal year
Judith Wiese5
Prof. Dr. Ralf P. Thomas
Matthias Rebellius4
Cedrik Neike3³
in office on September 30, 2023
€2,280,000 /
€85.03 =
€2,280,000 /
Managing Board members in
office on September 30, 2023
Nov. 9, 2018
Allocation
price
amount
(based on
Maximum
allocation
Information on the transfer of the 2019 Stock Awards tranche
FISCAL 2023 23
-
The following table provides a summary of the key parameters of the 2019 Stock Awards tranche. In connection with the
due date and settlement of the Stock Awards for fiscal 2019, the table also includes an additional cash payment to the
Managing Board members as a result of the Siemens Energy spin-off. The spin-off of Siemens Energy in fiscal 2020 led to
adjustments in the stock-based compensation commitments agreed upon until the spin-off date. At the time when the
2019 Stock Awards became due, the Managing Board members like all other eligible employees - were, accordingly,
entitled to receive an additional cash payment based on the spin-off ratio of 2:1 and on the Siemens Energy share price of
€14.68 on the date when their stock-based compensation commitments became due.
A= (1.75) percentage points
Performance range
+
+20 ppts.
(20) ppts.
Cap
200% target
achievement)
with a commitment of the Stock Awards
from the 2019 tranche
Cedrik Neike2
Prof. Dr. Ralf P. Thomas
spin-off
Nov. 18, 20221
achievement
Cash payment
Siemens Energy
target
Value at
transfer day
based on
2023
Number of
Stock Awards
B. Compensation of Managing Board members
→
Compensation Report
number of
Stock Awards
(based on
200% target
achievement)
Maximum
2
1
Target
achievement
of share
price
performance
2022
Dr. Roland Busch
Managing Board members
1,496
37%
1,976
Cash payment Siemens Energy spin-off
2018 Stock Awards (vesting: 2017-2021)
2019 Stock Awards (vesting: 2018 - 2022)
+ Long-term variable compensation
35%
1,524
45%
1,428
38%
2,021
རྨ། ་ །
Bonus for fiscal 2022
35%
1,995
112
124
3,723
Total compensation (incl. service costs)
578
518
+ Service costs
100%
4,304
100%
5,270
3,160 100%
100%
3,723
(according to Section 162 AktG)
Total compensation (TC)
3%
2%
3,160
Bonus for fiscal 2023
Variable
compensation
3%
80
2%
75
2022
in % of TC
26%
in % of TC € thousand
1,102
21%
1,102
35%
1,102
30%
1,102
+ Fringe benefits
Base salary
compensation
+ Amount for free disposal¹
+ Short-term variable compensation
551
551
27%
1,160
22%
1,161
55%
1,733
46%
1,727
Total
=
1%
58
1%
། ། ་ །
17%
15%
Fixed
5,788
1
=
Cash payment Siemens Energy spin-off
2018 Stock Awards (vesting: 2017-2021)
2019 Stock Awards (vesting: 2018-2022)
+ Long-term variable compensation
1
46%
1,487
Bonus for fiscal 2022
54%
2,002
Bonus for fiscal 2023
compensation
Short-term variable compensation
+
Total compensation (TC)
Variable
(according to Section 162 AktG)
Total compensation (incl. service costs)
FYn+1
(Amounts in €)
Calculation of TSR reference values and TSR performance values for Stock Awards
At the end of the vesting period, the change in Siemens' TSR as well as that of the sector index is determined by comparing
the TSR reference values with the TSR performance values.
Compensation Report → B. Compensation of Managing Board members
Based on 200% target achievement
29
FISCAL 2023
Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive a fixed cash amount for
free disposal.
3,223
100%
3,223
100%
3,696
3,696
+ Service costs
4,882
54%
46%
Fixed
€ thousand in % of TC € thousand in % of TC
2023
Managing Board member since Oct. 1, 2020
2022
Judith Wiese
in office on September 30, 2023
Managing Board members
Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
Active Managing Board members in fiscal 2023 (cont.)
Compensation Report → B. Compensation of Managing Board members
28
FISCAL 2023
In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the base salary and fringe benefits reported here, €710,428 and €34,312,
respectively, were awarded and paid by Siemens Schweiz AG. Of the Bonus for fiscal 2023 reported here, €1,192,486 (corresponding to CHF 1,153,015 and converted into euros
as of September 30, 2023) will be paid by Siemens Schweiz AG. Furthermore, employer contributions to pension plans paid by Siemens Schweiz AG are deducted from the
amount for free disposal. Matthias Rebellius is subject to Swiss legislation on social insurance. Unlike in Germany, this subjection to social insurance also applies to compensation
as a member of the Managing Board of Siemens AG. Since the clarification of this matter in May 2023, employer contributions of CHF5,785 (€6,048) have accrued. For the reverse
transaction relating to the period from October 2020, when Matthias Rebellius joined the Managing Board, until May 2023, Siemens AG has incurred, in addition, one-time social
insurance costs of CHF133,548 (€139,855). Neither the employer contributions nor the one-time social insurance costs are included in the compensation awarded and due to
Matthias Rebellius in fiscal 2023.
3
2 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
March 31, 2019. The amounts reported under "2019 Stock Awards (vesting: 2018-2022)" and "2018 Stock Awards (vesting: 2017-2021)" include the value of the Stock Awards
allocated by Siemens Ltd. China. Likewise, a portion of the additional cash payment attributable to the Stock Awards allocated by Siemens Ltd. China is included under "Cash
payment Siemens Energy spin-off." For details, see chapter "B.3.2.3 Transfer of Stock Awards in fiscal 2023 (2019 tranche)."
Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive a fixed cash amount for
free disposal.
Base salary
1,735
1,102
1,102
1,693
Total
17%
551
15%
551
Amount for free disposal¹
+
3%
1%
41
Fringe benefits
+
compensation
34%
30%
€ thousand in % of TC € thousand in % of TC € thousand
83
2022
Fixed compensation
Variable compensation
in Feb '24
Payout latest
2024
Payout in
Jan '24
plus cash payment relating to Siemens Energy spin-off
Settlement in
Nov '22
Short-term variable compensation: Bonus for 2023
2023
Amount for free disposal
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept
Monthly payout
Base salary and fringe benefits
Long-term variable compensation:
2019 Stock Awards tranche
2019
In addition to the amounts of compensation, Section 162 para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG)
requires disclosure of the relative proportion of total compensation represented by all fixed and variable compensation
components. The relative proportions reported here refer to the compensation components "awarded" and "due" in the
respective fiscal years in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG).
Compensation awarded and due in fiscal 2023
Although the service costs for Company pension plans are not to be classified as awarded and due compensation, they are
also reported in the following table for purposes of transparency.
Compensation Report → B. Compensation of Managing Board members
1,102
1,770
26%
1%
99
1,770
in % of TC
in % of TC € thousand
in % of TC € thousand in % of TC € thousand
€ thousand
Cedrik Neike²
Managing Board member since April 1, 2017
2023
2022
Dr. Roland Busch
President and CEO since Feb. 3, 2021
2022
2023
in office on September 30, 2023
Managing Board members
Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
Active Managing Board members in fiscal 2023
FISCAL 2023 27
23%
In connection with the due date and settlement of the Stock Awards for fiscal 2019 and fiscal 2018, the tables also include
the additional cash payments to eligible Managing Board members as a result of the Siemens Energy spin-off. The spin-off
of Siemens Energy in fiscal 2020 led to adjustments in the stock-based compensation allocations agreed upon until the
spin-off date. At the time when the 2019 and 2018 Stock Awards became due, the Managing Board members - like all
other eligible employees - were, accordingly, entitled to receive an additional cash payment based on the spin-off ratio of
2:1 and on the Siemens Energy share price of €14.68 and €24.32, respectively, on the date when their respective stock-
based compensation allocations became due.
The Bonus is reported under "Short-term variable compensation" as "due compensation" since the underlying services were
fully rendered by the end of each period (September 30). Therefore, the Bonus payout amounts for the reporting year are
reported, although payout only occurs after the end of each reporting year, in order to make reporting transparent and
comprehensible and in order to guarantee a connection between performance and compensation in the reporting period.
518,342
616,896
616,896
2,224,992
Total
Prof. Dr. Ralf P. Thomas
502,591
616,896
616,896
Cedrik Neike
792,442
991,200
991,200
2023
Dr. Roland Busch
in office on September 30, 2023
913,079
581,069
578,296
Furthermore, in fiscal 2023 and fiscal 2022, the Stock Awards from the 2019 and 2018 tranches allocated in fiscal 2019
and fiscal 2018, respectively, became due and were settled by transfer of Siemens shares. The value of Siemens shares at
the time of transfer is reported under "Long-term variable compensation."
8,569,123
4,350,198
4,026,008
The following tables show the compensation awarded and due to the active members of the Managing Board in fiscal 2023
and fiscal 2022 in accordance with Section 162 para. 1, sent. 1 of the German Stock Corporation Act (AktG). As a result,
they include all the amounts actually paid to individual Managing Board members in the reporting period ("awarded
compensation") and all the compensation that is legally due but not yet received ("due compensation").
B.6.1 Active Managing Board members in fiscal 2023
B.6 Compensation awarded and due
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 26
Judith Wiese and Matthias Rebellius, who were appointed to the Managing Board as of October 1, 2020, are not included
in the BSAV. Instead of BSAV contributions, the Supervisory Board awarded these members for fiscal 2023 a fixed cash
amount of €550,800 each for free disposal. This amount will be paid in January 2024.
A total of €12,325 is attributable to the funding of personal pension benefit commitments earned prior to the transfer to the BSAV.
Deferred compensation for Prof. Dr. Ralf P. Thomas totals €59,980 (2022: €57,419).
2
1
21,626,822
2,072,444
1,813,375
2,224,992
7,572,833
8,707,501
7,814,364
1,102
19,413,205
111
=
+ Amount for free disposal¹
+ Fringe benefits
Base salary
compensation
Variable
compensation
Fixed
༅ག་།༄།
་།ཎ། ༅༅།ཎྜ
༅།
5,226
6,892
503
913
5,979 100% 4,723
+| " | +
Total
+ Short-term variable compensation
Bonus for fiscal 2023
Managing Board member since Sept. 18, 2013
Managing Board member since Oct. 1, 2020.
26%
2023
Prof. Dr. Ralf P. Thomas
Matthias Rebellius³
Total compensation (incl. service costs)
90
=
3,276
1,869
+ Service costs
(according to Section 162 AktG)
Cash payment Siemens Energy spin-off
Total compensation (TC)
2019 Stock Awards (vesting: 2018-2022)
2018 Stock Awards (vesting: 2017 - 2021)
Bonus for fiscal 2022
1,581
2%
+ Long-term variable compensation
1%
2,479
41%
1,916
།*།༅། །༴།
1,132
24%
1,137
31%
1,881
༅། ༈ ། *།
36
124
1%
31
1%
41%
1,462
27%
༅།་།
25%
1,496
1,581
ཚ། ་།ཇ། ༅།
35%
581
100%
4,215
124
4,796
1,496
།
3%
༄༄།།།།
35%
9%
28,000
48%
43% 157,500
37%
140,000
80,000
240,000
8%
20,000
33%
80,000
57%
58%
2022 140,000
2023 140,000
2022
2023
Martina Merz
(since Jan. 2008)
Jürgen Kerner¹
(since Jan. 2012)
24,000
244,000
10%
2023 140,000
33%
325,500
Dr.-Ing. Christian Pfeiffer¹
56%
Benoît Potier
2022
2023 140,000
Harald Kern¹
(since Feb. 2023)
103,333
10%
10,000
90%
93,333
2023
2022
(since Feb. 2023)
167,333
8%
14,000
36%
60,000
56%
93,333
376,000
7%
26,000
210,000
2022
8%
103,333
35%
90,000
55%
2023 140,000
152,000
12,000
92%
140,000
2022
Bettina Haller¹
(since Jan. 2018)
156,000
10%
16,000
90%
140,000
2023
Dr. Andrea Fehrmann¹
134,000
10%
88%
14,000
20%
26,000
(since Feb. 2023)
10%
(since April 2007)
10%
10,000
90%
93,333
2023
Keryn Lee James
2022
(since Sept. 2023)
13,667
15%
2,000
85%
11,667
2023
Oliver Hartmann
250,000
8%
20,000
36%
90,000
56%
140,000
2022
256,000
20,000
290,000
(since Jan. 2018)
Hagen Reimer¹
(since Jan. 2019)
45%
326,000
8%
26,000
49%
7%
20,000
45%
48% 130,000
43% 160,000
48% 130,000
264,167
22,000
8%
39%
53% 104,167
2023 140,000
2022 140,000
2023 140,000
2022 140,000
(since Jan. 2018)
Matthias Zachert
(since Feb. 2021)
Grazia Vittadini
152,000
8%
12,000
20,000
8%
292,000
Supervisory Board members
140,000
26,667
2022
(until Feb. 2023)
in €
99,667
8%
in % of TC
in €
8,000
33%
in % of TC
in €
33,333
59%
58,333
2023
Michael Diekmann
in % of TC
in €
Total com-
pensation (TC)
Meeting
attendance fee
Committee
compensation
compensation
who left during the fiscal year
Basic
92%
2022 140,000
(since Oct. 2017)
154,000
(since Feb. 2021)
198,000
9%
18,000
20%
71% 40,000
152,000
8%
12,000
92%
2022 140,000
2023 140,000
Kasper Rørsted
222,000
10%
22,000
27%
60,000
63%
2023 140,000
14% 162,000
22,000
86%
2022 140,000
2022
13% 160,000
140,000
40,000
9%
14,000
91%
2023 140,000
Dorothea Simon¹
162,000
14%
22,000
86%
140,000
2022
(since Jan. 2015)
160,000
13%
20,000
88%
140,000
2023
Dr. Nathalie von Siemens
196,000
8%
16,000
20%
71%
70%
Liquidity
8%
•
Cash conversion rate (CCR), measured on the basis of:
With adjusted return on capital employed (ROCE adjusted), we aim to focus on
Siemens' operating performance, analogously to fiscal 2023. Therefore, ROCE - as
defined in the Siemens Financial Framework, which excludes certain Varian-related
acquisition effects - is adjusted for the main effects relating to the stake in
Siemens Energy.
Analogously to fiscal 2023, basic earnings per share before purchase price
allocation (EPS pre PPA) is used to place the focus on Siemens' operating
performance and present it transparently.
Details
•
revenue growth
Comparable
EPS pre PPA,
basic
•
.
Execution of the
Company's strategy
STOCK AWARDS
CCR
Individual
targets
ROCE
adjusted
capital efficiency
Profitability/
Profit
Key performance
indicator
targets
Financial
Growth
Siemens Group for Managing Board members with primarily functional
responsibility
the relevant business for Managing Board members with business responsibility
Comparable revenue growth, measured on the basis of:
Sustainability
ESG/
Siemens
The Siemens ESG/Sustainability index for the 2024 Stock Awards tranche is based
on the following two equally weighted key performance indicators:
Development of the TSR of Siemens AG relative to the international sector index
MSCI World Industrials
Details
Total shareholder
return (TSR)
Key performance
indicator
Sustainability
Long-term value creation
Performance criterion
Further anchoring of sustainability in business processes and product development
•
Further development of the DEGREE framework
•
Sustainability
Next Work
•
Strengthening the Regions
Expansion of Siemens Xcelerator business
Business development
the relevant business for Managing Board members with business responsibility
Siemens (c/o) for Managing Board members with primarily functional
responsibility
Performance criterion
• CO2 emissions
BONUS
The following overview shows the performance criteria for variable compensation for fiscal 2024, as approved by the
Supervisory Board of Siemens AG. These criteria are based on the regularly audited and adjusted compensation system,
which will be submitted to the Annual Shareholders' Meeting for approval in February 2024.
Klaus Helmrich
Managing Board member
Capital payment
(partial or full)
Annuity
(vesting: 2018-2022)
Pensions
2019 Stock Awards
Fringe benefits
Fixed and
variable
compensation
Capital payment
(partial or full)
Annuity
until March 31, 2021
(vesting: 2018-2022)
compensation
2019 Stock Awards
variable
Fringe benefits
Fixed and
(in Tsd. €)
-
Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG)
Former members of the Managing Board¹
The following table shows the compensation awarded and due to former members of the Managing Board in fiscal 2023 in
accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG). In accordance with Section 162
para. 5 of the German Stock Corporation Act (AktG), the personal information of former Managing Board members is no
longer included if they left the Managing Board before September 30, 2013. The amounts reported under Stock Awards
also include the additional cash payment due to the Siemens Energy spin-off.
59%
Pensions
Joe Kaeser
President and CEO
until Feb. 3, 2021
Michael Sen
Managing Board member
until March 31, 2020
Lisa Davis²
B.7 Outlook for fiscal 2024
Compensation Report → B. Compensation of Managing Board members
FISCAL 2023 30
1,670
47
29
until Jan. 31, 2015
Managing Board member
Prof. Dr.
Hermann Requardt
2 Lisa Davis's fringe benefits include contractually agreed-upon payments for tax adjustments.
The table includes only compensation that was awarded to former members after they left the Managing Board.
1
1,670
Prof. Dr.
Siegfried Russwurm
Managing Board member
until March 31, 2017
Janina Kugel
Managing Board member
until Jan. 31, 2020
1,107
58
2,088
3,338
583
1,670
28
1
Managing Board member
until Feb. 29, 2020
Outlook for fiscal 2024 - Variable compensation
292,000
index
Digital learning hours per employee
2023 210,000
Dr. Werner Brandt
446,000
6%
26,000
47%
47% 210,000
2022 210,000
(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
450,000
45% 220,000
7%
47%
47% 210,000
602,000
5%
32,000
48%
290,000
in €
602,000
5%
32,000
30,000
47%
34,000
7%
22,000
45%
48% 130,000
296,000
9%
26,000
44%
130,000
462,000
7%
32,000
48%
220,000
45%
47%
140,000
140,000
93,333
2023
2022
2023
2022
(since Feb. 2023)
Dr. Regina E. Dugan
(since Oct. 2020)
Tobias Bäumler1
2022 210,000
(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
464,000
48%
•
290,000
in €
Member
€40,000
Chair
€80,000
Finance Committee
Innovation and
Compensation
Committee
Member
€140,000
Member
€40,000
Chair
€80,000
Member
€90,000
Chair
€180,000
Chair
€80,000
Chairman's Committee
Additional compensation for committee work
Deputy Chair
€210,000
Basic compensation of Supervisory Board
Chairman
€280,000
Compensation of members of the Supervisory Board and its committees
Supervisory Board compensation consists entirely of fixed compensation; it reflects the responsibilities and scope of the
work of the Supervisory Board members. Under the applicable rules, the members of the Supervisory Board receive base
compensation for each full fiscal year, and the members of the Audit Committee, the Chairman's Committee, the
Compensation Committee and the Innovation and Finance Committee receive additional compensation for their committee
work. The Chairman and Deputy Chairs of the Supervisory Board as well as the chairs of the Audit Committee, the Chairman's
Committee, the Compensation Committee and the Innovation and Finance Committee receive additional compensation.
The currently applicable rules for Supervisory Board compensation are set out in Section 17 of the Articles of Association of
Siemens AG. They have been in effect since October 1, 2021, and stem from a decision of the Annual Shareholders' Meeting
on February 3, 2021, in accordance with Section 113 para. 3 of the German Stock Corporation Act (AktG). The compensation
system for Supervisory Board members submitted to the Annual Shareholders' Meeting and the proposed new version of
Section 17 of the Articles of Association were approved by a majority of 97.49% of the valid votes cast. The compensation
system approved by the Annual Shareholders' Meeting as well as the Articles of Association are publicly available on the
Siemens Global Website at WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
C. Compensation of Supervisory Board members
Compensation Report → C. Compensation of Supervisory Board members
FISCAL 2023 31
Audit Committee
Member
€40,000
In the event of changes in the composition of the Supervisory Board and/or its committees within a fiscal year,
compensation is paid on a pro-rated basis, rounding up to the next full month.
In addition, the members of the Supervisory Board receive a fee of €2,000 for each of the meetings of the Supervisory Board
and its committees that they attend. Attendance at a meeting also includes participation via telephone, video conference
or other similar customary means of communication. For attendance at several meetings on the same day, only a single fee
is paid.
in % of TC
in €
in % of TC
47%
47%
280,000
210,000
2023
Birgit Steinborn¹
2022
(since Oct. 2013, Chairman since Jan. 2018)
280,000
2023
Jim Hagemann Snabe
in €
Meeting Total com-
attendance fee pensation (TC)
Committee
compensation
compensation
in office on September 30, 2023
Basic
Supervisory Board members
Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
Supervisory Board members
The following table shows the compensation awarded and due to the members of the Supervisory Board in fiscal 2023 and
fiscal 2022 in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG).
Compensation Report → C. Compensation of Supervisory Board members
FISCAL 2023 32
The members of the Supervisory Board are reimbursed for out-of-pocket expenses incurred in connection with their duties
and for any value-added tax to be paid on their compensation. For the performance of his duties, the Chairman of the
Supervisory Board is also entitled to an office with secretarial support and the use of a car service. No loans or advances
from the Company are provided to members of the Supervisory Board.
in % of TC
80,000
103
18,000
5%
1%
450
(4)%
0%
602
(1)%
་། ། ༄།༅། ་། ་།༅།༅། ་།༅། ༅། ་། ༄།
རྩ། རྩ། རྞ།།
༅༅།༅།། ༅༅།། །།
464
༅། ། ། །༅།༅།
286
5%
188
154 (3)%
6%
173
4%
131
་ ། ། ༅ ། ་ ། ྃ །
244
12%
0%
2%
296
(1)%
160
5%
༅།ཎྜ།།༅།
162
196
152
162
103
167
(13)%
(2)% 326
2%
(9)% 244
14
2%
256
3%
3%
156
(1)%
134
1%
Matthias Zachert (since Jan. 2018)
(1)%
Grazia Vittadini (since Feb. 2021)
Dorothea Simon1 (since Oct. 2017)
243
5%
256
244
(3)%
154
6%
158
149
Dr. Andrea Fehrmann1 (since Jan. 2018)
(5)%
Dr. Regina E. Dugan (since Feb. 2023)
Tobias Bäumler1 (since Oct. 2020)
438
4%
336
324
(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
Dr. Werner Brandt
467
2%
482
287
30%
Jürgen Kerner¹ (since Jan. 2012)
Martina Merz (since Feb. 2023)
194
Dr. Nathalie von Siemens (since Jan. 2015)
Kasper Rørsted (since Feb. 2021)
154 (3)%
44%
158
110
155
11%
157
141
Hagen Reimer¹ (since Jan. 2019)
Benoît Potier (since Jan. 2018)
Dr.-Ing. Christian Pfeiffer¹ (since Feb. 2023)
(4)%
7%
384
3%
264
3%
།* །༅།
391
240
149
471
222
50%
FISCAL 2023 37
Jim Hagemann Snabe
Chairman of the Supervisory Board
of Siemens AG
Prof. Dr. Ralf P. Thomas
Chief Financial Officer
of Siemens AG
President and Chief Executive Officer
of Siemens AG
Dr. Roland Busch
For the Supervisory Board
For the Managing Board
The Company provides a group insurance policy for Supervisory and Managing Board members and certain other employees
of the Siemens Group. The policy is taken out for one year at a time or renewed annually. It covers the personal liability of
the insured individuals in cases of financial loss associated with their activities on behalf of the Company. The insurance
policy for fiscal 2023 includes a deductible for the members of the Managing Board that complies with the requirements of
the German Stock Corporation Act (AktG).
E. Other
E. Other
Compensation Report → Independent auditor's report
Compensation Report →
FISCAL 2023
1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer their compensation to the
Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
(58)%
64
(1)%
152
(3)%
154
6%
158
36
Independent auditor's report
To Siemens Aktiengesellschaft, Berlin and Munich
We have audited the attached Compensation Report of Siemens Aktiengesellschaft, Berlin and Munich, prepared to comply
with Sec. 162 AktG ["Aktiengesetz": German Stock Corporation Act] for the fiscal year from October 1, 2022 to September
30, 2023 and the related disclosures. We have not audited the content of disclosures regarding appropriateness and
marketability of the compensation in chapter B.2.3 APPROPRIATENESS OF THE COMPENSATION that is beyond the scope of
Sec. 162 AktG.
B.6.2 Former members of the Managing Board
FISCAL 2023 39
Dr. Gaenslen
Wirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
Wirtschaftsprüfer
Keller
Wirtschaftsprüfungsgesellschaft
Ernst & Young GmbH
Munich, December 6, 2023
The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and
Public Audit Firms]" as issued by the IDW on January 1, 2017, are applicable to this engagement and also govern our
responsibility and liability to third parties in the context of this engagement (WWW.DE.EY.COM/GENERAL-ENGAGEMENT-
TERMS).
Limitation of liability
Compensation Report → Independent auditor's report
FISCAL 2023 38
The audit of the content of the Compensation Report described in this auditor's report comprises the formal audit of the
Compensation Report required by Sec. 162 (3) AktG and the issue of a report on this audit. As we are issuing an unqualified
opinion on the audit of the content of the Compensation Report, this also includes the opinion that the disclosures pursuant
to Sec. 162 (1) and (2) AktG are made in the Compensation Report in all material respects.
Other matter - formal audit of the Compensation Report
In our opinion, on the basis of the knowledge obtained in the audit, the Compensation Report for the fiscal year from
October 1, 2022 to September 30, 2023 and the related disclosures comply, in all material respects, with the financial
reporting provisions of Sec. 162 AktG. Our opinion on the Compensation Report does not cover the content of the
abovementioned disclosures of the Compensation Report that go beyond the scope of Sec. 162 AktG.
Opinion
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
An audit involves performing procedures to obtain audit evidence about the amounts in the Compensation Report and the
related disclosures. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the Compensation Report and the related disclosures, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the preparation of the Compensation Report and
the related disclosures in order to plan and perform audit procedures that are appropriate in the circumstances, but not for
the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating
the accounting policies used and the reasonableness of accounting estimates made by management and the Supervisory
Board, as well as evaluating the overall presentation of the Compensation Report and the related disclosures.
Our responsibility is to express an opinion on this Compensation Report and the related disclosures based on our audit. We
conducted our audit in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Compensation
Report and the related disclosures are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Management and the Supervisory Board of Siemens Aktiengesellschaft are responsible for the preparation of the
Compensation Report and the related disclosures in compliance with the requirements of Sec. 162 AktG. In addition,
management and the Supervisory Board are responsible for such internal control as they determine is necessary to enable
the preparation of a Compensation Report and the related disclosures that are free from material misstatement, whether
due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
Responsibilities of management and the Supervisory Board
149
46%
Gunnar Zukunft¹ (until Feb. 2023)
142
238
11%
3%
223
215
Michael Diekmann (until Feb. 2023)
who left during the fiscal year
Supervisory Board members
12%
326
(3)%
2%
(9)%
264
290
1%
154
152
(1)%
160
1%
198
292
100
(58)%
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (until Feb. 2023)
(58)%
64
8%
152
(11)%
(3)% 152 (1)%
154
6%
158
149
Michael Sigmund (until Aug. 2023)
140
13%
158
140
Baroness Nemat Shafik (DBE, DPhil) (until Feb. 2023)
(58)%
81
2%
194
190 (2)%
7%
194
182
(6)%
34%
(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
608
The compensation awarded and due to the Managing Board and Supervisory Board members in each fiscal year is presented
in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG). Pension payments to former
members of the Managing Board are not listed here since they do not depend on Siemens' profit development.
Profit development is presented on the basis of the Siemens Group's key performance indicators revenue, comparable
revenue growth and basic earnings per share from continuing and discontinued operations. Through fiscal 2021, the latter
was also one of the financial targets for the short-term variable compensation (Bonus) of the Managing Board and thus had
a significant influence on the amount of the compensation of the Managing Board members. Since fiscal 2022, the
comparative information has also included basic earnings per share before purchase price allocation. This key performance
indicator supersedes basic earnings per share from continuing and discontinued operations in the Bonus in accordance with
the Siemens Financial Framework, which has been in effect since fiscal 2022. In accordance with Section 275 para. 3 No. 16
of the German Commercial Code (Handelsgesetzbuch, HGB), the development of the net income of Siemens AG is also
shown.
The following table shows, in accordance with Section 162 para. 1 sent. 2 No. 2 of the German Stock Corporation Act (AktG),
Siemens' profit development, the annual change in the Managing Board and Supervisory Board members' compensation
and the annual change in average employee compensation on a full-time equivalent basis over the last five fiscal years.
D. Comparative information on profit development
and annual change in compensation
Compensation Report → D. Comparative information on profit development and annual change in compensation
FISCAL 2023 33
These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer their compensation to the
Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
1
5,114,000
8%
The presentation of average employee compensation is based on the size of the workforce, including trainees, employed
by Siemens in Germany. In fiscal 2023, this workforce comprised on average 70,984 employees (full-time equivalent). By
way of comparison, the Siemens Group had about 254,000 employees and trainees worldwide as of September 30, 2023.
The figures exclude the workforce of Siemens Healthineers, which is not included in the presentation since it is a separately
managed, publicly listed company.
384,000
8%
446,000
32%
32%
60% 1,678,333
60% 1,650,000
152,000
8%
12,000
92%
64,333
9%
5,251,000
Average employee compensation comprises the personnel costs for wages and salaries, fringe benefits, employer
contributions to social insurance and any short-term variable compensation components attributable to the fiscal year. For
compensation in connection with share plans, the amounts received in the fiscal year are taken into account. Therefore,
employee compensation is also equivalent, in principle, to awarded and due compensation within the meaning of
Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG) and is thus in line with Managing Board and
Supervisory Board compensation.
FISCAL 2023
34
n.a.
(2)
11.5
5.00 (22)% 7.68
6.41
Earnings per share³ (in €)
3
Comparable revenue growth² (in %)
(34)% 62,265
86,849 57,139
Revenue (in € million)
Change
in %
2023
Change
in %
2022
Change
in %
2021
Change
in %
2020
2019
I. PROFIT DEVELOPMENT
Fiscal
Comparative information on profit development and change in compensation
of employees, Managing Board and Supervisory Board members
D. Comparative information on profit development and annual change in compensation
Compensation Report →
6,000
n.a.
91%
2023
2022 140,000
2023 3,126,667
2022 3,080,000
2023
Baroness Nemat Shafik (DBE, DPhil)
194,000
7%
14,000
21%
40,000
72%
140,000
2022
58,333
(until Feb. 2023)
7%
6,000
21%
16,667
72%
58,333
2023
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer
238,000
8%
81,000
91%
6,000
9%
Total
(until Feb. 2023)
Gunnar Zukunft¹
152,000
8%
12,000
92%
2022 140,000
(until Aug. 2023)
142,333
10%
14,000
90%
2023 128,333
Michael Sigmund
152,000
8%
12,000
92%
140,000
2022
(until Feb. 2023)
64,333
58,333
Birgit Steinborn¹
9% 71,977
8.2
8%
1 Revenue as reported. In fiscal 2020, the segments "Gas and Power" and "Siemens Gamesa Renewable Energy" were classified as discontinued operations and are therefore not
included in the amount reported for fiscal 2020.
29%
3%
3%
3%
(41)% 1,670
(30)% 3,338
27% 1,670
(73)% 2,088
(3)%
20% 1,671
7,969 6,562 (18)% 1,434 (78)% 1,721
6,679 4,186 (37)% 2,756 (34)% 1,620
12,978 8,051 (38)% 4,616 (43)% 3,238
4,192 2,631 (37)% 1,274 (52)% 1,620
2,448 1,991 (19)% 5,914 197% 1,620
Michael Sen (until March 2020)
Janina Kugel (until Jan. 2020)
2 The primary measure for managing and controlling revenue growth is comparable growth, because it shows the development in Siemens' business net of currency translation
effects arising from the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either new to or no longer a part of the
relevant business.
Joe Kaeser (President and CEO until Feb. 2021)
Lisa Davis (until Feb. 2020)
Former Managing Board members
3,696
2% 5,270
3,723
4,723
14%
6,815
ཚ། ༴ ། ་ ། ༄ ། ་ །
ཚ།*།རྒྱ།
Klaus Helmrich (until March 2021)
3 Basic earnings per share from continuing and discontinued operations as reported.
FISCAL 2023
35
3%
632
613
(since Oct. 2013, Chairman since Jan. 2018)
Jim Hagemann Snabe
IV. SUPERVISORY BOARD MEMBERS' COMPENSATION (in € thousand)
Harald Kern (since Jan. 2008)
Oliver Hartmann (since Sept. 2023)
Keryn Lee James (since Feb. 2023)
Bettina Haller1 (since April 2007)
Change
in %
2023
Change
in %
2022
in %
Change
2021
in %
2020
2019
Change
Fiscal
Comparative information on profit development and change in compensation
of employees, Managing Board and Supervisory Board members (cont.)
Compensation Report → D. Comparative information on profit development and annual change in compensation
༅།༈།
16% 77,769
།༅།༅།ཚ།༅།
4,185
96
95
Workforce in Germany
II. AVERAGE EMPLOYEE COMPENSATION (in € thousand)
23%
(30)% 4,460
3,612
(2)%
5,147
(53)%
1%
5,270
97%
5.47 (34)% 10.77
8.32
Earnings per share before purchase price allocation (in €)
Net income according to HGB (in € million)
116%
4.65 (40)% 10.04
54%
n.a.
11
n.a.
11,219
99
3%
102
Judith Wiese (since Oct. 2020)
4,304
3,160
4,215
(39)% 4,235
4,087
6,740
Prof. Dr. Ralf P. Thomas (since Sept. 2013)
3,435
Matthias Rebellius (since Oct. 2020)
3,524
5,979
6,008
4,441 (34)%
2,017 (13)%
2,331
Cedrik Neike (since April 2017)
6,730
(since April 2011, President and CEO since Feb. 2021)
Dr. Roland Busch
III. MANAGING BOARD MEMBERS' COMPENSATION (in € thousand)
5%
107
3%
3,223
Compensation Report → B. Compensation of Managing Board members
246
(8,730)
(4)%
The increase in short-term debt and current maturities of long-term debt was due mainly to reclassifications of long-term instruments
totaling €5.3 billion. This was partly offset by the repayment of euro, U.S. dollar and British pound instruments totaling €4.6 billion.
Long-term debt decreased due primarily to the above-mentioned reclassifications and currency translation effects of €1.9 billion on bonds
issued in the U.S. dollar and British pound. Set against this were mainly increases of €2.5 billion from the issuance of euro bonds.
The contribution of a stake in Siemens Energy AG to Siemens Pension-Trust e.V. led to a decrease of provisions for pensions and similar
obligations. Additional major effects resulted from returns on plan assets and actuarial gains and losses. For further information see Note
17 in Notes to Consolidated Financial Statement for fiscal 2023.
The main factors for the decrease in total equity attributable to shareholders of Siemens AG were a negative other comprehensive
income, net of income taxes, of €4.0 billion resulting mainly from currency translation; dividend payments of €3.4 billion (for fiscal 2022);
and changes in equity totaling €1.6 billion resulting from an equity transaction at Siemens Energy AG. These factors were largely offset by
€7.9 billion in net income attributable to shareholders of Siemens AG. In fiscal 2023, Siemens cancelled 50 million treasury shares, thereby
reducing issued capital by €150 million and retained earnings by €5.1 billion.
Capital structure ratio
Our capital structure ratio as of September 30, 2023 decreased to 0.6 from 1.0 a year earlier. The change was due to a decrease in Industrial
net debt and a higher EBITDA.
Debt and credit facilities
151,502
As of September 30, 2023, we recorded, in total, €40.9 billion in notes and bonds, €2.2 billion in loans from banks, €0.5 billion in other
financial indebtedness and €2.9 billion in lease liabilities. Notes and bonds were issued mainly in the U.S. dollar and the euro, and to a
lesser extent in the British pound.
For further information about our debt see Note 16 in Notes to Consolidated Financial Statements for fiscal 2023. For further information
about the functions and objectives of our financial risk management see Note 25 in Notes to Consolidated Financial Statements for fiscal
2023.
17
Combined Management Report
Off-balance-sheet commitments
As of September 30, 2023, the undiscounted amount of maximum potential future payments related primarily to credit and performance
guarantees amounted to €6.2 billion. This included primarily Siemens' obligations from performance and credit guarantees in connection
with the Siemens Energy business, for which Siemens has reimbursement rights towards Siemens Energy.
In addition to these commitments, there are contingent liabilities of €0.4 billion which result mainly from other guarantees and legal
proceedings. Other guarantees include €0.1 billion, for which Siemens has reimbursement rights towards Siemens Energy.
We have credit facilities totaling €7.5 billion which were unused as of September 30, 2023.
(11)%
5,910
5,270
145,067
1%
47,106
54,011
92,007
96,697
(5)%
63%
64%
Total equity attributable to shareholders of Siemens AG
Equity ratio
Non-controlling interests
Total liabilities and equity
47,791
37%
48,895
(2)%
36%
Irrevocable loan commitments amounted to €3.9 billion. A considerable portion of these commitments resulted from asset-based lending
transactions, meaning that the respective loans can be drawn only after the borrower has provided sufficient collateral.
1,654
For further information about our commitments and contingencies see Notes 21 and 25 in Notes to Consolidated Financial Statements for
fiscal 2023.
The share buyback program announced on June 24, 2021 with a volume of up to €3 billion ending September 15, 2026, at the latest,
began on November 15, 2021. This buyback is executed based on the authorization provided by the Annual Shareholders' Meeting on
February 5, 2020. In fiscal 2023, Siemens repurchased 6,853,091 shares under this share buyback program. On November 16, 2023 we
announced a share buyback of up to €6 billion for up to five years.
Acquisitions of businesses, net of cash acquired
(407)
Purchase of investments and financial assets for investment purposes
(723)
Change in receivables from financing activities of SFS
(1,461)
(2,218)
Other disposals of assets
Cash flows from investing activities - continuing operations
(3,458)
Cash flows from investing activities – discontinued operations
281
Cash flows from investing activities - continuing and discontinued operations
(3,176)
1,351
Additions to intangible assets and property, plant and equipment
(41)
12,239
12,281
6.2 Cash flows
(in millions of €)
Cash flows from operating activities
Net income
Change in operating net working capital
Other reconciling items to cash flows from operating activities - continuing operations
Cash flows from operating activities - continuing operations
Cash flows from operating activities – discontinued operations
Cash flows from operating activities - continuing and discontinued operations
Cash flows from investing activities
Fiscal year
2023
8,529
(2,165)
5,918
Share buyback
Cash flows from financing activities
1,666
1,867
12
In fiscal 2023, orders and revenue increased in all businesses. While order growth was driven by higher volume from larger orders, most
evidently at the Airport Logistics business of Siemens Logistics, revenue increased mainly at Large Drives Applications in part due to strong
conversion of the order backlog. Primarily due to the sale of the mail and parcel-handling business of Siemens Logistics in the fourth
quarter of fiscal 2022, portfolio effects took eleven and 13 percentage points from orders and revenue, respectively. The strong profit was
driven by Siemens Energy Assets and Large Drives Applications. Additionally, Portfolio Companies recorded a gain of €0.1 billion from the
sale of the Commercial Vehicles business. For comparison, profit in fiscal 2022 included a gain of €1.1 billion from the sale of the mail and
parcel-handling business of Siemens Logistics and a revaluation gain of €0.3 billion in connection with the sale of the equity investment
in Valeo Siemens eAutomotive GmbH. Portfolio Companies recorded lower severance charges of €12 million, down from €20 million in
fiscal 2022.
Profit margin
1,616
(1)%
Contract liabilities
Combined Management Report
12,571
4%
Current provisions
2,320
2,156
8%
Current income tax liabilities
12,049
Although the broad range of businesses is operating in diverse markets, overall the main markets served by Portfolio Companies are
generally impacted by uncertainties regarding geopolitical and economic developments which tend to trigger customer caution regarding
purchasing decisions. After the post-pandemic recovery, a normalizing growth momentum is expected in most end-customer vertical
markets in fiscal 2024.
At the beginning of fiscal 2024, Large Drives Applications and certain business activities which were transferred from Digital Industries are
combined in the areas of low- to high-voltage motors, geared motors, medium-voltage converters and motor spindles under a new
separately managed unit, Innomotics. If the transfer from Digital Industries had already existed at the beginning of fiscal 2023, Portfolio
Companies would have posted orders of €5,317 million, revenue of €4,699 million, profit of €457 million and a profit margin of 9.7%.
Portfolio Companies' order backlog amounted to €5 billion at the beginning of fiscal 2024, of which €3 billion are expected to be converted
into revenue in fiscal 2024.
3.8 Reconciliation to Consolidated Financial Statements
(2,911)
668
2022
2023
Fiscal year
Reconciliation to Consolidated Financial Statements
Financing, eliminations and other items
Amortization of intangible assets acquired in business combinations
Centrally carried pension expense
Governance
Innovation
Siemens Real Estate
Siemens Energy Investment
(in millions of €)
Profit
2,566
(22)%
2,381
Other current liabilities
Deferred tax liabilities
1,655
2,381
(30)%
Provisions
Other financial liabilities
(37)%
Other liabilities
Total liabilities
Debt ratio
1,794
1,857
(3)%
1,453
Total non-current liabilities
2,275
1,426
Provisions for pensions and similar obligations
8,182
7,448
10%
Liabilities associated with assets classified as held for disposal
50
61
(19)%
Total current liabilities
44,901
42,686
5%
Long-term debt
39,113
43,978
(11)%
8%
Purchase of treasury shares
Re-issuance of treasury shares and other transactions with owners
Issuance of long-term debt
2022
33,263
32,915
Siemens Financial Services in fiscal 2023 recorded higher earnings before taxes in the debt business despite a volatile credit environment.
In the prior period, earnings before taxes were burdened by €0.2 billion in connection with the sale of the financing and leasing business
in Russia at the end of the fiscal year. The equity business recorded strong results. While both periods under review included gains from
the sales of equity investments, fiscal 2022 additionally included higher gains from fair value measurements of investments and gains
from energy-related investments in connection with rising prices in global energy markets.
Net cash from operations (defined as the sum of cash flows from operating and investing activities) amounted to €(733) million compared
to €(616) million in fiscal 2022. In fiscal 2023 and fiscal 2022, net cash from operations comprised Free cash flow of €852 million and
€985 million, respectively, while remaining cash flows from investing activities, including from changes in receivables from financing
activities, comprised €(1,585) million and €(1,601) million, respectively.
Despite the increase in receivables from financing activities, total assets decreased since the end of fiscal 2022 due primarily to negative
currency translation effects.
2023
SFS's business scope and capital allocation is focused on areas of intense domain know-how closely aligned with Siemens' customers and
markets, particularly for Digital Industries, Smart Infrastructure and Mobility. Accordingly, SFS is influenced by the business development
of the markets served by the industrial businesses, among other factors, including macroeconomic effects such as inflation or recession
which could impact the credit risk of customers. In addition to its high level of diversification across industries, SFS has a strong regional
footprint in investment-grade countries, with the highest share in the U.S. SFS intends to maintain a highly diversified portfolio across
regions, while participating in the strong economic development of selected Asian markets.
Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
and fiber. Unrealized potential within these businesses requires adjustment in their approach using defined measures including internal
re-organization, digitalization, cost improvements, and optimizing procurement, production and service activities. After achieving certain
threshold performance targets, businesses may be combined with another business in the same industry, sold, placed into an external
private equity partnership, or exited via a public listing.
At the end of fiscal 2023, Portfolio Companies consisted mainly of three separately managed units: Large Drives Applications offers electric
motors, converters and mining solutions. Siemens Logistics offers sorting technology and solutions focused on handling baggage and
cargo in airports. Siemens Energy Assets comprises certain regional business activities of the former Gas and Power segment; as part of
the Siemens Energy carve-out these activities remained so far with Siemens due to country-specific regulatory restrictions or economic
considerations.
Demand within the industries served by Portfolio Companies mainly shows a delayed response to changes in the overall economic
environment. Financial results are strongly dependent, however, on customer investment cycles in their key industries. In commodity-
based industries such as oil and gas or mining, these cycles are driven mainly by commodity price fluctuations rather than changes in
produced volumes. The heterogonous industrial customer base of the separately managed units requires a dedicated sales approach based
on in-depth understanding of specific industries and customer requests, resulting in the use of various sales and marketing channels for
Portfolio Companies.
(in millions of €)
Orders
Revenue
3.7 Portfolio Companies
Sep 30,
Sep 30,
(in millions of €)
Total assets
11
(in millions of €)
Earnings before taxes (EBT)
therein: equity business
ROE (after taxes)
Combined Management Report
Fiscal year
2023
2022
563
498
201
269
16.3%
15.6%
Profit
Siemens Financial Services provides financing solutions for Siemens' customers as well as other companies in the form of debt and equity
investments. Based on its comprehensive financing know-how and specialist technology expertise in the areas of Siemens businesses, SFS
supports its customers' investments with leasing, lending, working capital and structured financing solutions and offers a broad range of
equipment and project financing. In addition, SFS supports Siemens' industrial businesses with financial advisory services and via a joint
go-to-market that includes SFS's risk management expertise, such as to assess the risk profiles of projects or business models. Furthermore,
SFS collaborates with Siemens' industrial businesses to co-develop new digital business models, and also supports its customers through
targeted financings in sustainable technologies and projects.
Fiscal year
2023
2022
Cash outflows for purchase of investments and financial assets for investment purposes included additions of assets eligible as central
bank collateral and payments for debt or equity investments.
Industrial Business recorded cash inflows from operating activities that exceeded its profit, with the highest contribution from Digital
Industries. Cash outflows from changes in operating net working capital were due mainly to Siemens Healthineers which recorded a
significant build-up of trade and other receivables as well as inventories due in part to the expected growth of business activities in coming
quarters.
(8,731)
Cash flows from financing activities - continuing and discontinued operations
Cash flows from financing activities – discontinued operations
Cash flows from financing activities - continuing operations
Cash outflows from change in receivables from financing activities of SFS related primarily to SFS's debt business.
Dividends attributable to non-controlling interests
Interest paid
(1)
(389)
(3,362)
300
(1,208)
(5,252)
Dividends paid to shareholders of Siemens AG
Cash inflows from other disposals of assets included mainly proceeds from disposals of assets eligible as central bank collateral, from the
sale of the Commercial Vehicles business by Portfolio Companies, and from the sale or disposal of debt or equity investments.
Cash outflows from the re-issuance of treasury shares and other transactions with owners were driven by the purchase of Siemens
Healthineers AG treasury shares.
18
Actual
Comp.
4,016
3,995
1%
15%
3,313
3,234
2%
19%
343
1,520
(77)%
10.3%
47.0%
% Change
3.6 Siemens Financial Services
In general, the addressable global markets of Siemens Healthineers excluding rapid coronavirus antigen tests grew moderately in fiscal
2023. From a regional perspective, the Asia, Australia region saw market growth in most businesses; in China, government subsidy
programs, among others, including the program of lending incentives associated with the economic stimulus package, had a positive
effect on investment by healthcare providers. In the region Europe, C.I.S., Africa, Middle East, government subsidy programs, among
others, were able to support growth in most businesses. In the U.S., market growth was recorded in all businesses. Globally, higher volume
in the market for the imaging business was generated thanks to the high level of order backlogs resulting from demand catch-up effects,
on the one hand, and investments in diagnostic imaging equipment in reaction to announced price hikes, on the other hand. The imaging
market is expected to grow moderately overall in fiscal 2024, driven mainly by pent-up demand for the major imaging modalities. Within
the diagnostics business, demand for rapid coronavirus antigen tests declined sharply after the COVID-19 pandemic ceased to be a global
health emergency and the incidence of COVID-19 infections subsided. The market for the diagnostics business is expected to achieve slight
growth in fiscal 2024, excluding COVID-19 testing. In the market for Varian, overall market growth, especially in the U.S. and Western
Europe, was boosted mainly by increasing demand for product innovations and services as well as by an intact replacement market. For
this reason, the market for Varian is expected to grow clearly in fiscal 2024. For advanced therapies business, government subsidy
programs, including lending incentives enacted as part of the economic stimulus package in China along with EU investment programs,
positively influenced market development. The expectation for the advanced therapies business is that the market will continue to grow
moderately in fiscal 2024.
In fiscal 2023, Siemens Healthineers recorded a decrease of orders, while revenue was on the prior-year level. While the imaging and
Varian businesses in particular delivered growth in both orders and revenue, this was offset by a substantial decline in the diagnostics
business. On a geographic basis, revenue was on the prior-year level in all regions; in the Asia, Australia region reported revenue was held
back by negative currency translation effects. Profit declined primarily due to substantially lower revenue from rapid coronavirus antigen
tests in the diagnostics business, which also recorded charges of €0.2 billion related to its transformation program. In addition, profitability
was burdened by impairments and other charges totaling €0.3 billion due to a management decision to refocus certain activities in the
advanced therapies business. The imaging and Varian businesses increased their profit contributions on higher revenue. Severance charges
were €167 million in fiscal 2023, compared to €71 million a year earlier. The order backlog for Siemens Healthineers was €34 billion at
the end of the fiscal year, of which €11 billion are expected to be converted into revenue in fiscal 2024.
Fiscal year
% Change
2023
2022
Actual
Comp.
Combined Management Report
20,629
56%
65%
10,549
9,692
9%
15%
13,200
Profit margin
Profit
therein: service business
Repayment of long-term debt (including current maturities of long-term debt)
Change in short-term debt and other financing activities
(884)
(404)
2,470
Combined Management Report
Smart Infrastructure showed very strong performance in fiscal 2023. Orders increased clearly compared to the high prior-year level, which
included proactive purchasing by customers. Growth was mainly driven by the electrification business and included a number of larger
contract wins from data center, semiconductor, power distribution and battery manufacturing customers. Revenue rose in all businesses,
with the strongest growth contributions coming from the electrification and the electrical products businesses. On a geographic basis,
orders and revenue rose in all three reporting regions. The strongest growth contribution came from the Americas region, driven by the
U.S., while growth in the Asia, Australia region was held back by declines in China, which were due mainly to negative currency translation
effects. Profit also rose in all businesses. Growth in profit and profitability was driven by the electrical products and the electrification
businesses due to higher revenue, by increased capacity utilization and by cost reductions achieved through the execution of Smart
Infrastructure's competitiveness program. Severance charges were €50 million, up from €28 million a year earlier. At the end of fiscal
2023, Smart Infrastructure's order backlog was €16 billion, of which €10 billion are expected to be converted into revenue in fiscal 2024.
Overall, markets served by Smart Infrastructure grew clearly in fiscal 2023. Market dynamics were influenced by a further recovery from
COVID-19-related effects; easing of supply chain and logistics constraints, which resulted in shorter lead times for order fulfillment; strong
price inflation; and effects from the war in Ukraine. Furthermore, rising interest rates burdened building construction markets. On a
geographic basis, all reporting regions contributed to growth. Price inflation affected all regions and was particularly high in the U.S. While
on the one hand rising interest rates impacted growth in the U.S., economic activity was boosted by stimulus programs on the other hand.
In China, the recovery from lockdown measures was significantly weaker than expected, which also impacted growth dynamics in other
countries, while Europe was most strongly affected by the war in Ukraine and high energy prices. Grid markets grew clearly, driven by
demand for integration of energy from renewable resources. Industrial markets also grew clearly on strong demand in the battery,
semiconductor, and automotive industries. The buildings market overall also grew but activity in the commercial building market rose only
moderately. In fiscal 2024, markets served by Smart Infrastructure are expected to grow clearly but at a slower pace than in fiscal 2023
due to a substantially lower effect from price inflation and a cooling of the general economic environment. While growth is expected to
be weak in residential and commercial building markets and in some industrial markets, continued robust demand is expected for data
centers and power distribution. Overall, market development in fiscal 2024 is expected to continue to be influenced by rebalancing of
supply chains, trade conflicts and effects from geopolitical tensions.
3.4 Mobility
Mobility combines all Siemens businesses in the area of rail passenger and rail freight transportation. Within its rolling stock business, its
offerings encompass vehicles and selected components for urban and regional transport such as metro systems, trams and light rail, and
commuter trains as well as trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock
offerings furthermore include locomotives and solutions for automated transportation such as automated people movers. Offerings in its
rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking,
operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and signaling
crossing products and yard and depot solutions; and for electrification such as AC and DC traction power supply, contact lines and network
control. With its service business, Mobility provides maintenance and digital services, among others, for rolling stock and rail infrastructure
throughout the entire lifecycle. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation of
complete mobility systems. Mobility's software business comprises train planning systems, trip planning, mobile ticketing, Mobility as a
Service (MaaS) platforms, on-demand transportation and fleet management, data analytics, and inventory and reservation management.
Mobility sells its products, systems and solutions through its worldwide network of sales and execution units. The principal customers of
Mobility are public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public
spending. Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be
independent of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded
together with service contracts, which start to generate revenue only after the respective products and solutions have been put in
operation, which can be a number of years after the contract award. Mobility's principal competitors are multinational companies.
Consolidation among Mobility's competitors is continuing and may lead to increased competitive pressure within the rail transport industry
and also to fewer sourcing options for rail customers.
The main trends driving Mobility's markets are urbanization, decarbonization and digitalization. Increasing populations in urban centers
need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same time, cities and national economies face
the challenge of cutting CO₂ and noise emissions and reducing space requirements and costs of transportation. The pressure on mobility
providers to meet all these needs is expected to rise continuously. Furthermore, improving availability, connectivity, and sustainability of
rail infrastructures increasingly requires digital solutions, which generates growth opportunities for providers of such solutions. IoT systems
and new software-based solutions such as MaaS are expected to become major growth enablers for the rail industry. Overall trends towards
urbanization, decarbonization and digitalization persist and many countries have been allocating significant funds to rail and public
transport operators to address these trends.
Mobility's R&D strategy is focused on reducing life-cycle costs of rail infrastructure and rolling stock, securing system availability,
increasing network capacity of rail infrastructure, optimizing the processes of rail operators and improving passenger experience. With
Siemens Xcelerator, Mobility intends to make software more modular and increasingly move it to the cloud. At the same time, Mobility
intends to enhance connectivity of hardware and software and provide open application programming interfaces. Thereby Mobility
accelerates the pace and impact of digital innovation, which in turn benefits owners, operators, and customers of rail transport. Mobility's
major R&D areas include the development of efficient vehicle platforms with optimized lifecycle cost; eco-friendly, alternative power
supplies for trains; the Railigent X open application suite for maintenance of rail assets; smart connected products; the Distributed Smart
Safe System (DS3), which allows for hardware-independent and cloud-enabled signaling; automatic train operation for European Train
Control System (ETCS); safe artificial intelligence for driverless trains; air-free brake systems, 5G for wireless-based activities; the Mobility
Software Suite X for operators and passengers; and cyber security. Mobility's investments focus mainly on maintaining or enhancing its
production facilities, on meeting project demands, and on enhancing its depot services.
9
(in millions of €)
Orders
Revenue
1,710
1,592
7%
9%
2023
2022
% Change
Actual
Comp.
24,499
21,681
25,556
21,715
(4)%
(2)%
0%
1%
2,527
11.7%
3,369
(25)%
15.5%
Fiscal year
67
Profit margin
Revenue
882
794
11%
8.4%
8.2%
Order intake at Mobility exceeded the record level a year earlier on sharply higher volume from large orders. Contract wins in fiscal 2023
were highlighted by an order worth €2.9 billion for locomotives and associated maintenance in India, a €2.5 billion order for the first line
of a turnkey rail system in Egypt and a €2.1 billion order for suburban trains in Germany. Order intake a year earlier included among others
an order worth €1.5 billion for high-speed trains in Germany. Revenue rose on growth in nearly all businesses with the strongest
contribution coming from the rolling stock business, and was supported by improved availability of components. On a geographic basis,
revenue grew in all three reporting regions. Nominal volume development was held back by the fiscal 2022 divestment of Yunex Traffic,
resulting in a portfolio effect which took four percentage points from order growth and five percentage points from revenue growth in
the current period. As with revenue, profit and profitability rose in nearly all businesses. Profit in fiscal 2023 included a positive €0.2 billion
in trailing effects related to the winding down of business activities in Russia a year earlier, which burdened prior-year profit by €0.6 billion
in impairments and other charges. In addition, profit in fiscal 2022 included impacts from supplier delays and COVID-19 effects. These
burdens were largely offset by a gain of €0.7 billion from the sale of Yunex Traffic. Severance charges were €25 million, compared to €27
million a year earlier. Mobility's order backlog rose to €45 billion at the end of the fiscal year, of which €11 billion are expected to be
converted into revenue in fiscal 2024.
Markets served by Mobility grew significantly in fiscal 2023, supported by long-term trends such as urbanization, decarbonization and
increasing demand for digital solutions. Market dynamics in fiscal 2023 also benefited from receding material shortages and easing of
supply chain constraints. On a geographic basis, all regions contributed to market growth, highlighted by large and very large orders in
Germany, the U.S., Egypt and India, among others. The market for rolling stock included large orders for high-speed trains, commuter
trains and locomotives in Europe, India and Egypt. Growth in North America included major investments in new and existing fleets,
especially for urban transport. Growth in the rail infrastructure market was driven mainly by digitalization, deployment of ETCS technology
and track electrification, for example with projects in Europe and Asia. For fiscal 2024, markets served by Mobility are expected to grow
clearly, benefiting from the above-mentioned trends and with all reporting regions contributing to growth. Market expansion is expected
to be supported by a large number of public investment programs. Mobility anticipates that rail operators in Europe, particularly in
Germany and in the U.K., will continue making significant investments in rolling stock and advanced rail infrastructure solutions and that
customers in the Middle East and Africa will tender large turnkey projects, especially in North Africa and the Middle East such as in in Egypt,
Saudi Arabia and the United Arab Emirates. Markets in the U.S. are expected to remain strong, especially due to ongoing investments in
rolling stock, particularly for mainline and light rail transport; within the infrastructure market demand is expected to continue for mass
transit including communications-based train control technology and from a developing market for rail freight solutions. In Asia, markets
in India are expected to grow strongly with investments in mainline transport (high-speed trains, freight infrastructure, rolling stock fleet
renewals and expansions of large commuter rail and locomotive tenders), urban metros and rail electrification driving growth.
3.5 Siemens Healthineers
Siemens as majority shareholder holds just over 75% of the shares of the publicly listed Siemens Healthineers AG, Germany. Siemens
Healthineers is a global provider of healthcare products, solutions and services. It develops, manufactures, and sells a diverse range of
diagnostic and therapeutic products and services to healthcare providers. In addition, Siemens Healthineers also provides clinical
consulting services, as well as an extensive range of training and service offerings. This comprehensive portfolio supports customers along
the entire care continuum, from prevention and early detection through to diagnosis, treatment, and follow-up care. The customer
spectrum ranges from public and private healthcare providers, including hospitals and hospital systems, public and private clinics and
laboratories, universities, physicians/joint medical practices, public health agencies, public and private health insurers, through to
pharmaceutical companies and clinical research institutes. The imaging business provides imaging products, services, and solutions as
well as digital offerings. Its most important products are devices for magnetic resonance imaging, computed tomography, X-ray, molecular
imaging, and ultrasound. The diagnostics business comprises in-vitro diagnostic products and services that are offered to healthcare
providers in the fields of laboratory and point-of-care diagnostics. The Varian business provides multi-modality cancer care technologies
along with solutions and services to oncology departments in hospitals and clinics. The portfolio of the advanced therapies business
consists of highly integrated products, services, and solutions across multiple clinical fields that are designed to support image-guided
minimally invasive treatments, in areas such as cardiology, interventional radiology, and surgery. Competition in the imaging, Varian and
advanced therapies businesses consists mainly of a small number of large multinational companies, while the diagnostics market is
fragmented with a variety of global players that compete with each other across market segments and also with several regional players
and specialized companies in niche technologies. Markets of Siemens Healthineers are characterized by long-term stability, though, over
the long term, these markets may also experience shorter-term fluctuations arising from macroeconomic and health political
developments, such as changes in health policy, regulation or reimbursement systems. Because a substantial portion of Siemens
Healthineers' revenue stems from recurring business, growth opportunities can be pursued from a stable foundation of profit.
The addressable markets of Siemens Healthineers are shaped by four major trends. The first is demographic developments, in particular
the growing and aging global population. This trend poses major challenges for global healthcare systems and, at the same time, offers
an opportunity for healthcare providers as the demand for cost-efficient healthcare solutions increases. The second trend is economic
development in emerging countries, which opens up improved access to healthcare for many people. Significant investment in the
expansion of private and public healthcare systems will persist, driving overall demand for healthcare products and services and hence
market growth. The third trend is the increase in non-communicable diseases as a consequence of an aging population and environmental
and lifestyle-related changes. This trend results in far more patients with multiple morbidities, increasing the need for new ways to detect
and treat diseases in a timely manner. The fourth global trend, the transformation of healthcare providers such as hospitals and
10
Combined Management Report
laboratories, results from a combination of societal and market forces that are driving healthcare providers to operate and organize their
businesses differently. This development is driven partly by staff shortages, society's increasing resistance to healthcare costs, the growing
professionalization of health insurance and governmental healthcare systems, burdens from chronic diseases and the rapid scientific
progress. The growing cost pressure will continue to drive new remuneration models for healthcare services such as value-based
reimbursement instead of treatment-based reimbursement. As a result of these factors, there's a trend of consolidation of healthcare
providers into networks. The aim of the resulting larger clinic and laboratory chains, often operating internationally and acting increasingly
like large corporations are systematic improvements in quality, while at the same time reducing costs. This development leads to an
increased demand for standardized and scalable systems and solutions as well as new business models.
R&D activities at Siemens Healthineers are aimed at offering innovative and sustainable solutions for diagnostics and therapy to its
customers. Artificial intelligence, sensors, and robotics are focal points of the R&D activities at Siemens Healthineers. A growing share of
the R&D activities is devoted to improving the sustainability of the products. Furthermore, the systems of Siemens Healthineers regularly
receive extensive software releases to improve user friendliness and add innovative applications. Investments at Siemens Healthineers
were mainly for spending for factories to expand manufacturing and technical capabilities, in particular in the U.S. and China, for measures
related to improving operational efficiency and for additions to intangible assets, including capitalized development expenses for products
within the Atellica product line.
(in millions of €)
Orders
Profit
118
(13)%
(190)
0%
7,559
7,581
9%
9,696
10,605
11,548
4%
145,067
17,405
% Change
(4)%
10,465
10,084
(9)%
16,701
10,626
9%
1,363
2023
(in millions of €)
Sep 30,
Combined Management Report
6.1 Capital structure
6. Financial position
16
Our investment in Siemens Energy AG was the main factor for the decrease of investments accounted for using the equity method. For
further information see Note 4 in Notes to Consolidated Financial Statements for fiscal 2023.
The decrease of other intangible assets resulted mainly from negative currency translation effects and from impairments recorded at
Siemens Healthineers.
The increase in other current financial assets was driven mainly by higher loans receivable at SFS, which were mainly due to new business
and reclassification of loans receivable from other financial assets due to a reassessment of the expected repayment dates. The latter was
a major factor also for the decrease of other financial assets, along with decreased positive fair values of derivative financial instruments.
Inventories increased in all industrial businesses, with the build-up most evident at Mobility and Siemens Healthineers.
Our total assets at the end of fiscal 2023 were influenced by negative currency translation effects of €7.6 billion (particularly affecting
goodwill and other financial assets), primarily involving the U.S. dollar.
(4)%
151,502
(5)%
1,432
92,673
2022
84,428
1,565
3%
58,829
60,639
(76)%
413
99
32,224
1%
1,955
13%
498
563
15.1%
15.4%
1,935
33,861
(5)%
10,641
1,523
(9)%
2,459
2,231
(12)%
25,903
22,855
(39)%
4,955
3,014
2%
11,733
11,938
(13)%
12,196
(3)%
2023
% Change
(195)
(in millions of €)
5. Net assets position
15
Siemens' global venture capital unit, Next47, provides capital to help start-ups expand and scale. It serves as the creator of next-generation
businesses for Siemens by building, buying and partnering with innovative companies at any stage. Next47 is focused on anticipating how
emerging technologies will influence our end markets. This foreknowledge enables our Company and our customers to grow and thrive
in the age of digitalization.
We advance technologies also through our open innovation concept. We work closely with scholars from leading universities, research
institutions and academic start-ups, not only under bilateral cooperation agreements but also in publicly funded collective projects. Our
focus here is on our strategic research partners and in particular the Siemens Research and Innovation Ecosystems, which we maintain at
16 locations worldwide.
Siemens' core technologies have been determined to be critical for our Company's long-term success and that of our customers. They are
bundled in eleven technology areas: additive manufacturing and materials (from fiscal 2024 on: advanced manufacturing and circularity),
cybersecurity and trust, data analytics and artificial intelligence, power electronics, simulation and digital twin, sustainable energy and
infrastructure, future of automation, integrated circuits and electronics, connectivity and edge, software systems and processes, and user
experience.
Cash and cash equivalents
Trade and other receivables
Our research and development activities are ultimately geared to developing innovative, sustainable solutions for our customers - and our
businesses - while also strengthening our own competitiveness. Joint implementation by the operating units and Technology, our central
R&D department, ensures that research activities and business strategies are closely aligned with one another, and that all units benefit
equally and quickly from technological developments.
4.3 Research and development
At 18.6%, ROCE was back in the target range established in our Siemens Financial Framework. The increase year-over-year was due
primarily to sharply higher income before interest after tax.
The increase in Basic EPS and in EPS pre PPA reflects the increase of Net income attributable to Shareholders of Siemens AG, which was
€7,949 million in fiscal 2023 compared to €3,723 million in fiscal 2022, combined with a lower number of weighted average shares
outstanding. Our investment in Siemens Energy AG contributed €0.84 to the increase of EPS pre PPA.
The tax rate in fiscal 2023 was 24% (fiscal 2022: 38%), benefiting from tax-free gains in relation to the partial reversal of an impairment
on Siemens' stake in Siemens Energy AG and the contribution of a stake in Siemens Energy AG to Siemens Pension-Trust e.V. Moreover,
the gain recorded in connection with the capital increase by Siemens Energy AG was also tax-free. These positive influences on the tax
rate were partly offset by our participation in the after-tax loss at Siemens Energy, which was not tax-deductible. As a result, the increase
in Income from continuing operations was 93%.
As a result of the developments described in chapter 3, Income from continuing operations before income taxes increased by 57%.
Severance charges for continuing operations were €430 million, of which €351 million were in Industrial Business. In fiscal 2022,
severance charges for continuing operations were €272 million, of which €190 million were in Industrial Business.
10.0%
In fiscal 2023, we reported research and development expenses of €6.2 billion, compared to €5.6 billion in fiscal 2022. The resulting R&D
intensity, defined as the ratio of R&D expenses to revenue, was 8.0% (fiscal 2022: 7.8%). Additions to capitalized development expenses
amounted to €0.3 billion as in the prior year. As of September 30, 2023, Siemens worldwide held approximately 45,000 granted patents
in its continuing operations. On average, we had 50,029 R&D employees in fiscal 2023.
Other current financial assets
Contract assets
Inventories
Sep 30,
Combined Management Report
Total assets
Total non-current assets
Other assets
Deferred tax assets
Other financial assets
Investments accounted for using the equity method
Property, plant and equipment
Other intangible assets
Goodwill
Total current assets
Assets classified as held for disposal
Other current assets
Current income tax assets
18.6%
Short-term debt and current maturities of long-term debt
97%
10.77
(5,141)
(1,135)
(77)%
1,520
343
1,601
78%
Other current financial liabilities
10,317
10,130
Trade payables
12%
6,658
7,483
(2)%
11,201
7,154
57%
116%
4.65
10.04
94%
4,392
8,529
n/a
(21)
15
93%
4,413
8,514
2%
(2,741)
(2,687)
5.47
10,277
11%
(25)%
(19)%
10,831
8,798
15%
10%
20,990
23,085
2%
2%
21,563
22,093
3%
3%
25,646
26,540
(15)%
3%
92,305
4%
Fiscal year
2023
Siemens (continuing operations)
therein: China
Asia, Australia
therein: U.S.
Americas
therein: Germany
Europe, C.I.S., Africa, Middle East
(in millions of €)
Revenue (location of customer)
In the Asia, Australia region, order intake was up on a sharp increase at Mobility, including a €2.9 billion order for locomotives and
associated maintenance in India, combined with slight order growth at Smart Infrastructure. Orders declined at Digital Industries and
Siemens Healthineers. Within the region in China, order declines were reported in most of the industrial businesses, except at Mobility
with significant growth. Overall, order intake both in the region and in China was strongly burdened by negative currency translation
effects.
Order intake rose in both the Americas region and in the U.S. on double-digit increases at Mobility and Smart Infrastructure, whereas
Siemens Healthineers recorded a moderate order decline.
In the Europe, C.I.S., Africa, Middle East region, order intake increased by double digits at Mobility, including a €2.5 billion order for the
first line of a turnkey rail system in Egypt and a €2.1 billion order for suburban trains in Germany. Smart Infrastructure recorded clear order
growth, whereas Digital Industries showed a double-digit decline year-over-year from a high base of comparison, due to its automation
businesses. Orders at Siemens Healthineers declined year-over-year primarily due to lower demand for rapid coronavirus antigen tests in
the diagnostics business. Within the region, Germany showed a pattern similar to the region overall.
On a worldwide basis, growth in orders related to external customers came on a sharp increase at Mobility and clear order growth at
Smart Infrastructure; both businesses reported higher order intake across all regions year-over-year. Digital Industries and, to a lesser
extent, Siemens Healthineers recorded order declines from high bases of comparison. Siemens Healthineers again had the highest order
contribution.
7%
89,010
% Change
1%
15,164
4. Results of operations
Combined Management Report
13
Financing, eliminations and other items included a revaluation loss of €0.2 billion on the stake in Thoughtworks Holding Inc. (fiscal
2022: a loss of €0.3 billion). For comparison, fiscal 2022 included also impacts totaling €0.5 billion at Corporate Treasury, resulting from
the sale of Siemens' financing and leasing business in Russia, as well as a loss of €0.1 billion resulting from applying hyperinflation
accounting. These effects were partly offset in fiscal 2022 by a gain of €0.5 billion in connection with an investment accounted for using
the equity method mainly due to fair value measurement.
The result for Siemens Energy Investment was driven by a gain of €1.6 billion from a partial reversal of an impairment on Siemens' stake
in Siemens Energy AG (fiscal 2022 included an impairment of €2.7 billion), a gain of €0.3 billion resulting from the transfer of a stake in
Siemens Energy AG to Siemens Pension-Trust e.V., and a gain of €0.2 billion which was recorded in connection with a capital increase by
Siemens Energy AG in which Siemens did not participate. These gains were partly offset by Siemens' share of Siemens Energy's after-tax
loss and expenses from amortization of assets resulting from purchase price allocation totaling €1.5 billion (fiscal 2022: totaling €0.2
billion).
(5,141)
(1,135)
(474)
(256)
(990)
(865)
(113)
(104)
(582)
(451)
4.1 Orders and revenue by region
15,046
Currency translation effects took two percentage points each from order and revenue growth year-over-year, respectively. Portfolio
measures, including the sale of Yunex Traffic in the third quarter of fiscal 2022 and the mail and parcel-handling business of Siemens
Logistics in the fourth quarter of fiscal 2022, took one percentage point each from order and revenue growth year-over-year. The ratio of
orders to revenue (book-to-bill) for Siemens in fiscal 2023 was 1.19. The order backlog as of September 30, 2023 was €111 billion.
(in millions of €)
4%
1%
42,373
42,679
Comp.
% Change
Actual
2022
Fiscal year
2023
Siemens (continuing operations)
therein: China
Asia, Australia
therein: U.S.
Americas
therein: Germany
Europe, C.I.S., Africa, Middle East
Orders (location of customer)
11,430
2022
Comp.
Income (loss) from discontinued operations, net of income taxes
Income from continuing operations
Income tax expenses
Income from continuing operations before income taxes
Reconciliation to Consolidated Financial Statements
Portfolio Companies
Net income
Siemens Financial Services
Industrial Business
Siemens Healthineers
Mobility
Smart Infrastructure
Digital Industries
(in millions of €, earnings per share in €)
Profit margin Industrial Business
Actual
Basic EPS
EPS pre PPA
Fiscal year
3,369
2,527
11%
794
882
38%
ROCE
2,222
27%
3,892
4,947
% Change
2022
2023
3,074
translation effects, which turned revenue development negative in China for Smart Infrastructure and Digital Industries. Mobility also
recorded a revenue decline in China.
4.2 Income
14
Combined Management Report
18,561
9%
9%
20,680
22,615
8%
9%
11,961
12,718
12%
10%
33,481
36,664
6%
7%
17,241
17,816
In the Asia, Australia region, revenue was up by on double-digit increase at Mobility, followed by revenue growth at Digital Industries and
Smart Infrastructure. As with orders, revenue development both in the region and in China was held back by strong negative currency
In the Americas region, revenue was up in all four industrial businesses led by Smart Infrastructure with double-digit growth. Within the
region in the U.S., Mobility and Siemens Healthineers reported slight revenue decreases.
Revenue in Europe, C.I.S., Africa, Middle East increased with double-digit growth contributions from Digital Industries and Smart
Infrastructure. Mobility reported clear revenue growth, which was held back by portfolio effects stemming from the sale of Yunex traffic
in fiscal 2022. Revenues at Siemens Healthineers decreased slightly. Within the region in Germany, the same pattern applied for Digital
Industries and Smart Infrastructure, while revenues at Mobility came in flat. A decline in Germany at Siemens Healthineers was primarily
due to lower demand for rapid coronavirus antigen tests in the diagnostics business.
Worldwide, revenue related to external customers rose significantly at Smart Infrastructure and Digital Industries, while Mobility posted
clearly higher revenue growth year-over-year. Revenue at Siemens Healthineers came in level with fiscal 2022 and was again the highest
among industrial businesses.
11%
18,489
8%
2022
77,769
4%
(2)%
9,557
9,367
10%
4%
71,977
6/6
75
3/4
100
3/3
100
100
100
1/1
100
Regina E. Dugan (PhD)
(since February 9, 2023)
4/4
100
2/2
100
Andrea Fehrmann (Dr. phil.)
717
100
(until February 9, 2023)
Bettina Haller
100
Oliver Hartmann
(since September 14, 2023)
1/1
100
88
6/6
100
Keryn Lee James
(since February 9, 2023)
4/4
100
Harald Kern
717
Michael Diekmann
100
2/2
3/3
100
Birgit Steinborn
First Deputy Chairwoman
717
100
8/8
100
4/4
100
6/6
100
2/2
100
Werner Brandt (Dr. rer. pol.)
Second Deputy Chairman
717
100
8/8
100
Tobias Bäumler
717
100
6/6
100
3/3
100
6/6
100
2/2
8/8
participation in %)
717
At our meeting on February 8, 2023, the Managing
Board reported on the Company's current business and
financial position, including personnel-related matters
FISCAL 2023
3
Report of the Supervisory Board
and sustainability, as of the first quarter. We were in-
formed about the current business position of Siemens
Healthineers and that of its Diagnostics Business Area, in
particular.
Due to the regular election of ten employee representa-
tives and seven shareholder representatives on the
Supervisory Board, a constituent meeting of the Super-
visory Board was held immediately after the Annual
Shareholders' Meeting on February 9, 2023. At this meet-
ing, the Supervisory Board confirmed Birgit Steinborn
as the Supervisory Board's First Deputy Chairwoman and
Dr. Werner Brandt as the Supervisory Board's Second
Deputy Chairman, effective the beginning of their re-
spective new electoral periods. The Supervisory Board
also elected the members of its committees.
At the beginning of May 2023, the members of the
Managing and Supervisory Boards met several times in
smaller groups (so-called multilateral strategy sessions)
to consider and discuss in detail topics of strategic
importance to the Company.
At our meeting on May 16, 2023, the Managing Board
reported on the Company's current business and finan-
cial position, including personnel-related matters and
sustainability, as of the second quarter. As part of a stra-
tegic focus, we concerned ourselves at this meeting - on
the basis of the strategy discussions held in the previous
weeks in smaller groups with the Managing Board - ex-
tensively and in detail with the growth targets and the
further implementation of Siemens' strategy as a focused
technology company. For Siemens Xcelerator, our open
digital business platform, growth targets for the portfolio
at the Siemens and business level were presented in de-
tail and the status of the two pillars "ecosystem" and
"marketplace" were discussed. We were also informed
about the current business position of Siemens Healthi-
neers and about progress in the integration of Varian. We
approved amendments to the Bylaws for the Managing
Board, for the Supervisory Board and for the Chairman's
Committee, the Audit Committee, the Innovation and
Finance Committee, and the Compensation Committee
of the Supervisory Board.
On January 31, 2023, we approved – in a decision using other
customary means of communication - a decision regarding
the exercise of shareholding rights in associated companies
of Siemens AG pursuant to Section 32 of the German Code-
termination Act (Mitbestimmungsgesetz, MitbestG).
At our meeting on August 9, 2023, the Managing Board
reported on the Company's current business and finan-
cial position and on personnel-related matters as of the
third quarter. One focus of the meeting was the
The Supervisory Board meeting on September 22, 2023,
was held in Berlin, where we gained an insight into the
future-oriented project Siemensstadt Square and, on a tour
of the Röhrenwerk tube plant, familiarized ourselves with
the advanced production and manufacturing methods at
the long-standing location. At the meeting, the Managing
Board reported on the state of the Company. The person-
nel strategy of Siemens AG was again a focus of the meet-
ing. Following up on its reporting on December 7, 2022,
the Managing Board informed us about the strategic
approach to systematic workforce training, which aimed
to drive the organization's transformation and empower
its employees to continuously learn and grow. We dis-
cussed the Managing Board's considerations regarding the
2024 budget. A further focus of the meeting was Manag-
ing Board compensation, whose appropriateness had
been confirmed by an internal review. After preparation by
and on a recommendation of the Compensation Commit-
tee, we approved an adjustment of the compensation
system for the Managing Board as of fiscal 2024. As part of
the annual review of Managing Board compensation and
after preparation by and on a recommendation of the
Compensation Committee, we determined each Manag-
ing Board member's individual total target compensation
and maximum compensation and defined the perfor-
mance criteria for variable compensation for fiscal 2024. In
addition, we dealt with matters relating to corporate gov-
ernance – in particular, the Declaration of Conformity with
the German Corporate Governance Code. We approved
amendments to the Bylaws for the Managing Board and
changes to the diversity concept for the Managing Board.
We also concerned ourselves with the independence of
FISCAL 2023 4
Report of the Supervisory Board
the shareholder representatives on the Supervisory Board
within the meaning of the German Corporate Governance
Code and with the Supervisory Board's qualification
matrix. Finally, we discussed the results of the Supervisory
Board's self-assessment in August and the recommen-
dations and measures to be derived from it.
Corporate Governance Code
At our meeting on September 23, 2022, we approved a
Declaration of Conformity in accordance with Section 161
of the German Stock Corporation Act (Aktiengesetz,
AktG). Information on corporate governance is provided
in the Corporate Governance Statement, which is pub-
licly available on the Siemens Global Website at www.
SIEMENS.COM/CORPORATE-GOVERNANCE. The Company's Dec-
laration of Conformity has been made permanently avail-
able to shareholders on the Siemens Global Website at
WWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The cur-
rent Declaration of Conformity is also available in the
Corporate Governance Statement.
Work in the Supervisory Board
committees
In fiscal 2023, the Supervisory Board had six standing
committees. These committees prepare decisions and
topics to be dealt with at the Supervisory Board's plenary
meetings. Some of the Supervisory Board's decision-mak-
ing powers have been delegated to these committees
within the permissible legal framework. The committee
chairpersons report to the Supervisory Board on their
committees' work at the subsequent Board meeting. A
list of the members and a detailed explanation of the
tasks of the individual Supervisory Board committees are
set out in the Corporate Governance Statement.
Company's sustainability strategy. We concerned our-
selves with the Company's strategic orientation and with
progress in its sustainability-related transformation. We
discussed the Company's business opportunities con-
nected with sustainability-related factors and concerned
ourselves with business potential particularly in the ar-
eas of decarbonization, energy efficiency and resource
efficiency. Regulatory requirements - in particular, the
EU taxonomy and the Corporate Sustainability Reporting
Directive (CSRD) - and their impact on Siemens were
also topics of our discussions. In addition, we discussed
the Siemens Energy investment and the format of the
2024 Annual Shareholders' Meeting. Finally, we dealt
with Managing Board compensation and approved a pro-
posal regarding the engagement of the auditors of the
Compensation Report for fiscal 2023.
On December 7, 2022, we discussed the 2022 Annual
Financial Report - comprising the financial statements
and the Combined Management Report for Siemens AG
and the Siemens Group as of September 30, 2022 - as
well as the Report of the Supervisory Board to the Annual
Shareholders' Meeting, the Sustainability Report, the
Compensation Report for fiscal 2022, the Report on Gen-
der Equality and Equal Pay in accordance with the German
Transparency in Wage Structures Act (Entgelttransparenz-
gesetz, EntgTranspG) and the agenda for the ordinary
Annual Shareholders' Meeting on February 9, 2023. On
the basis of recommendations by the Nominating Com-
mittee, we concerned ourselves with proposals regarding
the election of seven shareholder representatives on the
Supervisory Board at the 2023 Annual Shareholders'
Meeting. We also concerned ourselves with the annual
reporting by the Chief Compliance Officer and the Global
Chief Cypersecurity Officer. One focus of the meeting was
the Company's personnel strategy. The Managing Board
reported on measures regarding employee training and
development under the heading #NextWork, with the aim
of systematically addressing the megatrends digitaliza-
tion, automation and demographic change.
firmed the appropriateness of this compensation. We
had already defined the performance criteria for the Man-
aging Board's variable compensation for fiscal 2023 at our
meeting on September 23, 2022. On this basis and on a
recommendation by the Compensation Committee, we
made a decision regarding target setting for Managing
Board compensation for fiscal 2023 at our meeting on
November 16, 2022. At this meeting, we also approved
the Corporate Governance Statement for fiscal 2022 and
endorsed a decision by the Managing Board regarding
financing measures. In addition, we concerned ourselves
with personnel-related matters regarding the Managing
Board and, on a recommendation by the Chairman's Com-
mittee, approved the extension of Judith Wiese's appoint-
ment as a full member of the Managing Board from
October 1, 2023, until the end of September 30, 2028.
At our meeting on November 16, 2022, the Managing
Board reported to us on the Company's current business
position, including personnel-related matters and
sustainability, as of the fourth quarter. We discussed the
key financial figures for fiscal 2022 and approved the
budget for fiscal 2023. We also discussed the Managing
Board's considerations regarding business activities at
Large Drive Applications. On a recommendation by the
Compensation Committee, we also determined the
Managing Board members' compensation for fiscal 2022
on the basis of calculated target achievement. A review
conducted by an independent compensation expert con-
717
Report of the
Supervisory Board
December 2023
SIEMENS
Report of the Supervisory Board
Berlin and Munich, December 6, 2023
Report of the Supervisory Board
Dear Shareholders,
In fiscal 2023, Siemens AG once again demonstrated its
operational excellence as a leading technology company
by delivering an impressively high level of profitable
growth. The Company's long-range strategy of combining
the real and the digital worlds and its rigorous orien-
tation toward long-term growth fields paid off: Siemens
benefited from strong, stable developments in the global
markets - above all, from worldwide efforts to make
value chains across the board more efficient, resilient
and sustainable. The Company also made major invest-
ments to drive its innovative power and enhance its
manufacturing capacities – while further strengthening
its regional diversification.
Against this backdrop, the Supervisory Board focused
intensively in fiscal 2023 on the execution of Siemens'
growth strategy. Siemens Xcelerator, our open digital
business platform, gained more and more momentum
and is the key element of Siemens' strategy to combine
the real and the digital worlds. The business opportunities
created by digitalization and sustainability as well as the
DEGREE sustainability framework were likewise priorities.
In addition, the elections at the 2023 Annual Shareholders'
Meeting enabled the Supervisory Board to successfully
further develop its own profile of skills and expertise,
particularly in the areas of technology and sustainability.
Today, our Supervisory Board is more global and more
diverse than ever before - and, as a result, excellently
positioned to optimally support the Company also in the
next phases of its development.
In fiscal 2023, the Supervisory Board performed in full
the duties assigned to it by law, the Siemens Articles
of Association and the Bylaws for the Supervisory Board.
On the basis of detailed written and oral reports provided
by the Managing Board, we monitored the Managing
Board and advised it on the management of the Company.
In my capacity as Chairman of the Supervisory Board,
I regularly exchanged information with the President and
Chief Executive Officer and other Managing Board mem-
bers. As a result, the Supervisory Board was always
kept up to date on projected business policies, Company
planning - including financial, investment and personnel
planning - and the Company's profitability and business
operations as well as on the state of Siemens AG and the
Siemens Group. We were directly involved at an early
stage in all decisions of fundamental importance to the
Company and discussed these decisions with the Man-
aging Board intensively and in detail. To the extent that
Supervisory Board approval of the decisions and mea-
sures of Company management was required by law, the
Siemens Articles of Association or our Bylaws, the mem-
bers of the Supervisory Board - prepared in some cases
by the Supervisory Board's committees issued such
approval after intensive review and discussion.
-
A special focus of our activities in fiscal 2023 was the fur-
ther implementation of the Company's growth strategy.
At our meetings and in additional informational sessions,
we concerned ourselves intensively with the goals and
priorities of Siemens' businesses and with the Managing
Board's technology and personnel strategy. In this connec-
tion, we focused our attention on the accelerated trans-
formation toward digitalization and sustainability and on
business and technological innovation and the related
opportunities for growth. Together with the Managing
Board, we discussed markets, trends and growth fields. A
further focus of our activities in fiscal 2023 - in addition to
Siemens Xcelerator, our platform for driving the digital
transformation - was Siemens AG's sustainability strategy.
We focused on sustainability-related topics in the environ-
ment, social and governance (ESG) area. At the center was
not only DEGREE, our Companywide sustainability frame-
work - with the aspects of decarbonization, ethics, gover-
nance, resource efficiency, equity and employability – but
also the positive impact the Company creates for customers
with its portfolio. The Supervisory Board discussed the risks
and opportunities for the Company connected with social
and environmental factors as well as the environmental
and social impact of the Company's activities. The discus-
sion made clear that sustainability is a strategic business
opportunity for Siemens due to our strong portfolio focused
FISCAL 2023 2
Report of the Supervisory Board
on decarbonization and energy efficiency, resource effi-
ciency and circularity as well as people centricity and social
impact. The Supervisory Board discussed the risks and op-
portunities for the Company connected with social and en-
vironmental factors as well as the environmental and social
impact of the Company's activities. The Supervisory Board
also concerned itself with the 2022 Sustainability Report.
Topics at the plenary meetings of the
Supervisory Board
We held a total of six regular plenary meetings in fiscal
2023. We also held an extraordinary constituent meeting
of the Supervisory Board immediately after the Annual
Shareholders' Meeting on February 9, 2023. Six meetings
were held in person and one in a so-called hybrid format -
that is, as an in-person meeting with the possibility of
virtual participation. No meetings were held via telephone
conference or in an exclusively virtual format. We also
made one decision using other customary forms of com-
munication. Topics of discussion at our regular plenary
meetings were strategic progress, revenue, profit and em-
ployment development at Siemens AG and the Siemens
Group, the Company's financial position and the results of
its operations, personnel-related matters, the status of the
implementation of Siemens Xcelerator, and sustainability.
In addition, we concerned ourselves, as occasion required,
with acquisition and divestment projects and with risks to
the Company. The Supervisory Board and/or the Innovation
and Finance Committee were regularly informed – within
the stipulated legal framework – by the relevant Managing
Board member about measures and decisions of funda-
mental importance at the Equity Investments, companies
in which Siemens holds a majority stake. In addition, we
regularly met in sessions without the Managing Board in
attendance. In these closed sessions, we dealt with agenda
items that concerned either the Managing Board itself or
internal Supervisory Board matters.
The Chairman's Committee met eight times. Three
meetings were held in person, two in a virtual format via
video conference and three in a so-called hybrid format.
The Chairman's Committee also made one decision using
other customary means of communication. In my capac-
ity as Chairman of the Chairman's Committee, I discussed
topics of major importance with other Committee mem-
bers also between meetings. The Committee concerned
itself, in particular, with personnel-related matters, long-
term succession planning for the composition of the
Managing Board, corporate governance issues and the
acceptance by Managing Board members of positions at
other companies and institutions.
100
The Nominating Committee met three times. Two meet-
ings were held in a virtual format via video conference
and one in a so-called hybrid format. The Nominating
Committee gave in-depth consideration to succession
planning for the composition of the Supervisory Board.
One focus of the Nominating Committee's activities in
fiscal 2023 was the preparation of the Supervisory
Board's nominations of shareholder representatives on
the Supervisory Board for election by the 2023 Annual
Shareholders' Meeting. The Nominating Committee was
supported in this connection by an external consulting
firm. In selecting the potential candidates and in prepar-
ing a recommendation for the Supervisory Board's deci-
sion, the Nominating Committee gave particular consid-
eration to the objectives that the Supervisory Board had
previously approved for its composition - including the
profile of required skills and expertise and the diversity
concept for the Supervisory Board - and to the Supervi-
sory Board's qualification matrix. With a view to the reg-
ular elections of three shareholder representatives on the
Supervisory Board scheduled for 2025, the Nominating
Committee also defined the topics for its work over the
next few years and concerned itself with the regulatory
framework, with the objectives that the Supervisory
Board had approved for its composition, including the
profile of required skills and expertise and the diversity
concept for the Supervisory Board, and with the qualifi-
cation matrix.
The Compensation Committee met four times. All four
meetings were held in person. The Compensation Com-
mittee also made one decision using other customary
means of communication. The Committee prepared, in
particular, Supervisory Board decisions regarding the
definition of performance criteria and the targets for vari-
able compensation, regarding the determination and
regarding the review of the appropriateness of Managing
Board compensation and regarding the Compensation
Report. In addition, the Compensation Committee pre-
pared the Supervisory Board's decision regarding the en-
gagement of an auditor for the Compensation Report for
fiscal 2023. One focus of the Compensation Committee's
work was the preparation of the Supervisory Board's de-
cision regarding the adjustment of the compensation
system for the members of the Managing Board as of
fiscal 2024. Independent external consultants were also
involved in the preparation of this decision.
Committee
Innovation
and Finance
Committee
Nominating
Committee
(Number of meetings/
No.
in %
No.
in %
Audit
No.
No.
in %
No.
in %
No.
in %
Jim Hagemann Snabe
Chairman
in %
Committee
Committee
Compensation
FISCAL 2023
5
Report of the Supervisory Board
The Innovation and Finance Committee met two times.
Both meetings were held in person. A decision was also
made using other customary means of communication.
The focus of the Committee's work was on innovation-
and technology-related topics. The Committee discussed
the Company's progress, strategic priorities, technolo-
gies and growth opportunities relating to the industrial
metaverse. In the strategic context, it concerned itself with
progress regarding Siemens Xcelerator, the Company's
open digital business platform. Detailed growth plans for
the portfolio and new Siemens Xcelerator portfolio
elements were presented. Expanding the ecosystem and
increasing the relevance of the marketplace were also
focus topics. Under the heading "UX Transformation," the
Managing Board reported on progress in user-centered
product design. The Committee's meetings and/or
decisions also focused on the discussion of the pension
system and the preparation and approval of investment
and divestment projects and/or financial measures. For
example, the Innovation and Finance Committee en-
dorsed the Managing Board's decision regarding the
Siemens Industrial Campus Erlangen Project.
The Audit Committee held six regular meetings. All the
meetings were held in person. In the presence of the in-
dependent auditors, the President and Chief Executive
Officer, the Chief Financial Officer, the General Counsel,
the head of accounting, the head of corporate audit and
the head of the sustainability function, the Audit Com-
mittee dealt with the financial statements and the Com-
bined Management Report for Siemens AG and the
Siemens Group, including the non-financial information
integrated into the Combined Management Report. In
this connection, the Audit Committee also concerned it-
self with the Sustainability Report, with the statements
regarding the EU taxonomy in the Combined Manage-
ment Report for Siemens AG and the Siemens Group and
with the related reports of the independent auditors. The
Committee discussed the Half-year Financial Report and
the quarterly statements with the Managing Board and
the independent auditors. In the presence of the inde-
pendent auditors, it also discussed the report on the au-
ditors' review of the Company's Half-year Consolidated
Financial Statements and of its Interim Group Manage-
ment Report. As part of the preparation and implemen-
tation of the audit, the Audit Committee regularly ex-
changed views with the independent auditors without
the Managing Board in attendance. In addition, it met
regularly without the Managing Board and/or the inde-
pendent auditors in attendance. Outside its meetings,
the Chairman of the Audit Committee regularly ex-
changed views with the independent auditors regarding
the progress of the audit and reported to the Audit Com-
mittee thereon. The Audit Committee recommended that
the Supervisory Board propose to the Annual Sharehold-
ers' Meeting that Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft, Stuttgart, be elected independent
auditors for fiscal 2023. It awarded the audit contract for
fiscal 2023 to the independent auditors, who had been
elected by the Annual Shareholders' Meeting, defined
the audit's focus areas and determined the auditors' fee.
The Audit Committee approved the audit plan and defined
the Audit Committee's focus areas. It monitored the selec-
tion, independence, qualification, rotation and efficiency
of the independent auditors as well as the services they
provided and concerned itself with the review of the qual-
ity of the audit of the financial statements. In fiscal 2023,
against the backdrop of the Wirecard situation, the Audit
Committee regularly discussed the role of Ernst & Young
GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, as the
independent auditors of Wirecard AG. The Audit Commit-
tee questioned the independent auditors regarding this
matter and assessed the impact on Siemens AG. The Audit
Committee also dealt with the Company's accounting and
accounting process, the appropriateness and effective-
ness of its internal control system and its risk manage-
ment system (including sustainability-related aspects),
and the effectiveness, resources and findings of its inter-
nal audit as well as with reports concerning potential and
pending legal disputes. In addition, the Audit Committee
concerned itself with the Company's compliance with
legal requirements, official regulations and the Company's
internal guidelines (compliance) and dealt, in particular,
with the quarterly reports, the Chief Compliance Officer's
annual report and the compliance management system.
For this topic, the Managing Board member responsible
for People & Organization also attended the Audit Com-
mittee meetings at the invitation of the Audit Committee
Chairman. In this connection, the Audit Committee
concerned itself with the implementation of the new
German Supply Chain Act (Lieferkettensorgfaltspflichten-
gesetz, LKSG). It also focused on the current and future
regulatory requirements regarding sustainability report-
ing and its implementation, including, in particular, the
requirements of the EU taxonomy and the Corporate
Sustainability Reporting Directive (CSRD). Finally, the
FISCAL 2023
6
Report of the Supervisory Board
Audit Committee concerned itself in fiscal 2023 - due to
the regular, legally required external rotation of the
independent auditors at the end of fiscal 2023 - with the
selection and transition procedure for the audit of the
financial statements for fiscal 2024.
The Supervisory Board members take part, on their own
responsibility, in the educational and training measures
necessary for the performance of their duties - measures
relating, for example, to changes in the legal framework
and to new, groundbreaking technologies. The Company
supports them in this regard. Internal informational
events are regularly offered to support targeted training
measures. In March and July of fiscal 2023, three internal
training events concerning strategically relevant tech-
nology and sustainability-related topics were held for
all Supervisory Board members. The Supervisory Board
informed itself, in particular, about industrial and
generative artificial intelligence and discussed the tech-
nological background, application and impact on
Siemens' markets as well as the technology-related and
regulatory challenges.
New Supervisory Board members can meet with Manag-
ing Board members and other managers with specialist
responsibility to exchange views on current topics and
topics of fundamental importance and thus gain an
overview of Company-relevant matters (onboarding). In
fiscal 2023, a separate informational event for the new
members of the Supervisory Board was held on March 13,
2023, to familiarize those members, in particular, with
the Company's business model and strategy and with the
structures of the Siemens Group. As part of this onboard-
ing program, Supervisory Board members also have the
opportunity to visit the various locations of different
Siemens business areas and gain an insight into the port-
folio as well as production and manufacturing methods.
Longer-serving Supervisory Board members may also
attend onboarding events and regularly do so.
Disclosure of participation by individual
Supervisory Board members in meetings
The average rate of participation by members in the
meetings of the Supervisory Board and its committees
was 97%. In fiscal 2023, meetings were held not only in
person but, in some cases, also in a virtual format via
video conference or in a so-called hybrid format. No
meetings were held via telephone conference. The par-
ticipation rate of individual members in the meetings of
the Supervisory Board and its committees is set out in the
following chart:
FISCAL 2023 7
Report of the Supervisory Board
Supervisory
Board (plenary
meetings)
Chairman's
The Mediation Committee had no need to meet.
100
100
100
100
3/3
(until February 9, 2023)
Gunnar Zukunft
Matthias Zachert
100
6/6
100
4/4
100
717
100
2/2
67
2/3
100
3/3
71
5/7
100
717
100
6/6
98
Grazia Vittadini
100
94
10
FISCAL 2023
Jim Hagemann Snabe
Chairman
For the Supervisory Board
On behalf of the Supervisory Board, I would like to thank
the members of the Managing Board and all the employ-
ees and employee representatives of Siemens AG and of
all Group companies for their outstanding commitment
and constructive cooperation in fiscal 2023.
We thanked the Supervisory Board members who de-
parted in fiscal 2023 for their many years of trust-based
cooperation and for their professional commitment and
contribution to the Company's success. Our special
thanks go to Michael Diekmann, who - as Chairman of
the Compensation Committee - decisively shaped the
Supervisory Board's activities over many years.
Upon his retirement from the Company on August 31,
2023, Michael Sigmund left the Supervisory Board, on
which he had represented the Senior Management of
Siemens AG. In a decision of September 14, 2023, the
Charlottenburg District Court appointed Oliver Hartmann
to succeed Michael Sigmund as an employee represen-
tative on the Supervisory Board for the remainder of
Michael Sigmund's term of office.
Pursuant to the provisions of the German Codetermination
Act, Dr. Christian Pfeiffer was elected on November 22,
2022, to serve as a new employee representative on
the Supervisory Board for a five-year term of office, effec-
tive at the end of the Annual Shareholders' Meeting on
February 9, 2023. Tobias Bäumler, Dr. Andrea Fehrmann,
Bettina Haller, Harald Kern, Jürgen Kerner, Hagen Reimer,
Michael Sigmund, Dorothea Simon and Birgit Steinborn,
who were already employee representatives on the
Supervisory Board, were reelected to the Supervisory
Board for five-year terms of office - that is, for the elec-
toral period 2023 to 2028 - effective at the end of the
Annual Shareholders' Meeting on February 9, 2023.
On February 9, 2023, the Annual Shareholders' Meeting
elected Dr. Regina E. Dugan, Keryn Lee James and
Martina Merz to serve as new shareholder representa-
tives on the Supervisory Board for four-year terms of
office that is, for the electoral period 2023 to 2027.
Dr. Werner Brandt, Benoît Potier, Dr. Nathalie von Siemens
and Matthias Zachert, who were already shareholder rep-
resentatives on the Supervisory Board and whose regular
terms of office expired at the end of the Annual Share-
holders' Meeting on February 9, 2023, were reelected to
serve as shareholder representatives on the Supervisory
Board for four-year terms of office - for the electoral pe-
riod 2023 to 2027. Kasper Rørsted, Jim Hagemann Snabe
and Grazia Vittadini had already been elected by a
decision of the Annual Shareholders' Meeting on
February 3, 2021, to serve as shareholder represen-
tatives on the Supervisory Board for four-year terms of
office - for the electoral period 2021 to 2025.
-
Changes in the composition of the
Supervisory and Managing Boards
There were no changes in the composition of the Manag-
ing Board in fiscal 2023.
Report of the Supervisory Board
9
FISCAL 2023
The Sustainability Report for fiscal 2023 and the informa-
tion regarding the EU taxonomy in the Combined Man-
agement Report for Siemens AG and the Siemens Group
for fiscal 2023 and the independent auditors' related re-
ports were dealt with at the Audit Committee meeting on
December 5, 2023, and at the Supervisory Board meeting
on December 6, 2023.
The Supervisory Board concurs with the results of the au-
dit. Following the definitive findings of the Audit Com-
mittee's examination and our own examination, we have
no objections. The Managing Board prepared the Annual
Financial Statements of Siemens AG and the Consoli-
dated Financial Statements of the Siemens Group. We
approved the Annual Financial Statements of Siemens AG
and the Consolidated Financial Statements of the
Siemens Group. In view of our approval, these financial
statements are accepted as submitted. We endorsed the
Managing Board's proposal that the net income available
for distribution be used to pay out a dividend of €4.70
per share entitled to a dividend and that the amount of
net income attributable to shares of stock not entitled to
receive a dividend for fiscal 2023 be carried forward.
Audit Committee's review also covered the non-financial
information for Siemens AG and the Siemens Group that
is included in the Combined Management Report. The
audit reports prepared by the independent auditors were
distributed to all members of the Supervisory Board and
comprehensively reviewed at the Supervisory Board
meeting on December 6, 2023, in the presence of the in-
dependent auditors, who reported on the scope, focal
points and main findings of their audit, addressing, in
particular, key audit matters, the Audit Committee's focus
areas and the audit procedures implemented. No major
weaknesses in the Company's internal control or risk
management systems were reported. At this meeting,
the Managing Board explained the financial statements
of Siemens AG and the Siemens Group as well as the
Company's risk management system.
The independent auditors, Ernst & Young GmbH Wirt-
schaftsprüfungsgesellschaft, Stuttgart, audited the
Annual Financial Statements of Siemens AG, the Consol-
idated Financial Statements of the Siemens Group and
the Combined Management Report for Siemens AG and
the Siemens Group for fiscal 2023 and issued an unqual-
ified opinion for each. Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft, Stuttgart, has served as the inde-
pendent auditors of Siemens AG and the Siemens Group
since fiscal 2009. Siegfried Keller has signed as auditor
since fiscal 2023 and as auditor responsible for the audit
also since fiscal 2023. Dr. Philipp Gaenslen has signed as
auditor since fiscal 2021. The Annual Financial State-
ments of Siemens AG and the Combined Management
Report for Siemens AG and the Siemens Group were pre-
pared in accordance with the requirements of German
law. The Consolidated Financial Statements of the
Siemens Group were prepared in accordance with the
International Financial Reporting Standards (IFRS) as
adopted for use in the European Union (EU) and with
the additional requirements of German law set out in
Section 315 e (1) of the German Commercial Code
(Handelsgesetzbuch, HGB). The Consolidated Financial
Statements of the Siemens Group also comply with all
IFRS requirements as issued by the International Account-
ing Standards Board (IASB). The independent auditors
conducted their audit in accordance with Section 317 of
the German Commercial Code and the EU Audit Regula-
tion and German generally accepted standards for the
audit of financial statements as promulgated by the Insti-
tut der Wirtschaftsprüfer (IDW) as well as in supplemen-
tary compliance with the International Standards on
Auditing (ISA). The abovementioned documents as well
as the Managing Board's proposal for the appropriation
of net income were submitted to the Supervisory Board
by the Managing Board in advance. The Audit Committee
discussed the dividend proposal in detail at its meeting
on November 14, 2023. It discussed the Annual Financial
Statements of Siemens AG, the Consolidated Financial
Statements of the Siemens Group and the Combined
Management Report in detail at its meeting on Decem-
ber 5, 2023. In this context, the Audit Committee con-
cerned itself, in particular, with the key audit matters
described in the independent auditors' respective opin-
ions, including the audit procedures implemented. The
Detailed discussion of the audit of the
financial statements
Report of the Supervisory Board
FISCAL 2023 8
100
94
96
Dorothea Simon
The shareholder representatives Michael Diekmann,
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer and Baroness
Nemat Shafik and the employee representative
Gunnar Zukunft left the Supervisory Board upon the
expiry of their regular terms of office at the end of the
Annual Shareholders' Meeting on February 9, 2023.
Michael Sigmund
100
4/4
(since February 9, 2023)
Christian Pfeiffer (Dr. Ing.)
100
3/3
75
3/4
(since February 9, 2023)
Martina Merz
50
1/2
33
1/3
100
4/4
100
100
717
Jürgen Kerner
100
2/2
(until August 31, 2023)
Benoît Potier
717
8/8
3/3
100
100
313
100
717
100
3/3
(until February 9, 2023)
Baroness Nemat Shafik (DBE, DPhil)
2/2
100
717
Nathalie von Siemens (Dr. phil.)
4/4
Kasper Rørsted
717
100
100
100
3/3
(until February 9, 2023)
3/3
100
Norbert Reithofer (Dr. Ing. Dr. Ing. E.h.)
Hagen Reimer
The Supervisory Board oversees and advises the Manag-
ing Board in its management of the Company's business.
At regular intervals, the Supervisory Board discusses
business development, planning, strategy (including
sustainability strategy) and strategy implementation.
It reviews the Annual Financial Statements of
Siemens AG, the Consolidated Financial Statements of
the Siemens Group, the Combined Management Report
of Siemens AG and the Siemens Group (including non-
financial matters), and the proposal for the appropriation
of net income. It approves the Annual Financial State-
ments of Siemens AG as well as the Consolidated Finan-
cial Statements of the Siemens Group, based on the
results of the preliminary review conducted by the Audit
Committee and taking into account the reports of the
independent auditors. The Supervisory Board approves
the Managing Board's proposal for the appropriation of
net income and the Report of the Supervisory Board to
the Annual Shareholders' Meeting. The Supervisory
Board is jointly responsible with the Managing Board for
the preparation of the Compensation Report. In addition,
the Company's adherence to statutory provisions, official
regulations and internal Company policies (compliance)
are monitored by the Supervisory Board and/or the Audit
Committee. The Supervisory Board's oversight and
advisory activities also encompass, in particular, sustain-
ability-related topics in the environment, social and
governance (ESG) area. The Managing Board reports
regularly to the Supervisory Board on Siemens' Company-
Details regarding the work of the Supervisory Board are
provided in the Report of the Supervisory Board, which is
made publicly available for each previous fiscal year on
the Siemens Global Website.
wide sustainability strategy and on the status of this
strategy's implementation. The Supervisory Board deals
with both the risks and the opportunities for Siemens
relating to social and environmental factors and the
environmental and social impact of the Company's activ-
ities. The Supervisory Board and the Audit Committee
also concern themselves with sustainability reporting,
which includes the Sustainability Report in addition to re-
porting on non-financial matters in the Combined Man-
agement Report, and are kept up to date on new
developments and the status of their implementation at
Siemens. In addition, the Supervisory Board appoints and
dismisses the members of the Managing Board and
determines each member's portfolios. The Supervisory
Board approves - on the basis of a proposal by the
Compensation Committee – the compensation system for
Managing Board members and defines their concrete com-
pensation in accordance with this system. It sets the indi-
vidual targets for the variable compensation and the total
compensation of each individual Managing Board mem-
ber, reviews the appropriateness of total compensation
and regularly reviews the Managing Board compensation
system. Important Managing Board decisions
such as
those regarding major acquisitions, divestments, fixed as-
set investments or financial measures - require Supervi-
sory Board approval unless the Bylaws for the Supervisory
Board specify that such authority be delegated to the Inno-
vation and Finance Committee of the Supervisory Board.
-
Separate preparatory meetings of the shareholder repre-
sentatives and of the employee representatives are held
regularly in order to prepare the Supervisory Board meet-
ings. The Supervisory Board also meets regularly without
the Managing Board in attendance. Every Supervisory
Board member must disclose conflicts of interest to the
Supervisory Board. Information regarding conflicts of
interest that may have arisen and their handling is
provided in the Report of the Supervisory Board. Special
informational (onboarding) events are held in order to
familiarize new Supervisory Board members with the
Company's business model and the structures of the
Siemens Group. The Supervisory Board members take
part, on their own responsibility, in the educational and
training measures necessary for the performance of their
duties - measures relating, for example, to changes in
the legal framework and new, groundbreaking tech-
nologies. The Company supports them in this regard.
Internal informational events are offered when necessary
to support targeted training measures.
The Supervisory Board of Siemens AG has 20 members.
As stipulated by the German Codetermination Act, half of
its members represent Company shareholders, and half
represent Company employees. The shareholder repre-
sentatives on the Supervisory Board are elected at the
Annual Shareholders' Meeting by a simple majority vote.
Elections to the Supervisory Board are conducted, as a
rule, on an individual basis. The employee representa-
tives on the Supervisory Board are elected in accordance
with the provisions of the German Codetermination Act.
Further information regarding the Supervisory Board
members and their memberships, which are to be
disclosed pursuant to Section 285 No. 10 of the German
Commercial Code, are set out in Section 11 of this
Corporate Governance Statement. The curricula vitae of
the Supervisory Board members are publicly available
on the Siemens Global Website at ☐ www.SIEMENS.COM/
SUPERVISORY-BOARD and updated annually.
5
Corporate Governance Statement
The Compensation Committee prepares, in particular,
the proposals for decisions by the Supervisory Board's
plenary meetings regarding the system of Managing
Board compensation, including the implementation of
this system in Managing Board contracts, the definition
of the targets for variable Managing Board compensa-
tion, the determination and review of the appropriate-
ness of the total compensation of the individual Manag-
ing Board members and the annual Compensation
Report. Insofar as the non-financial aspects of Managing
Board compensation are concerned, the Compensation
Committee also considers sustainability in the environ-
ment, social and governance (ESG) area.
In fiscal 2023, the Supervisory Board had six standing
committees, whose duties, responsibilities and pro-
cedures fulfill the requirements of the German Stock
Corporation Act and the Code. The chairmen of these
committees provide the Supervisory Board with regular
reports on their committees' activities.
The Chairman's Committee makes proposals, in particu-
lar, regarding the appointment and dismissal of Manag-
ing Board members and is responsible for concluding,
amending, extending and terminating employment con-
tracts with members of the Managing Board. When mak-
ing recommendations for first-time appointments, it
takes into account that the terms of these appointments
shall not, as a rule, exceed three years. In preparing rec-
ommendations regarding the appointment of Managing
Board members, the Chairman's Committee takes into
account the candidates' professional qualifications,
international experience and leadership qualities, the
age limit specified for Managing Board members
and long-term succession planning as well as diversity.
It also takes into account the diversity concept for the
Managing Board that has been approved by the Super-
visory Board. The Chairman's Committee concerns itself
with questions regarding the Company's corporate
governance and prepares the proposals to be approved
by the Supervisory Board regarding the Declaration of
Conformity with the Code - including the explanation of
deviations from the Code - and regarding the Corporate
Governance Statement and the Report of the Super-
visory Board to the Annual Shareholders' Meeting. It is
responsible for approving the Company's related party
transactions. Furthermore, the Chairman's Committee
submits recommendations to the Supervisory Board re-
garding the composition of the Supervisory Board com-
mittees and decides whether to approve contracts and
business transactions with Managing Board members
and parties related to them.
As of September 30, 2023, the Chairman's Commit-
tee comprised Jim Hagemann Snabe (Chairman),
Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
As of September 30, 2023, the Compensation Com-
mittee comprised Matthias Zachert (Chairman),
Harald Kern, Jürgen Kerner, Jim Hagemann Snabe,
Birgit Steinborn and Grazia Vittadini.
The Audit Committee oversees, in particular, the
accounting and the accounting process and conducts a
preliminary review of the Annual Financial Statements
of Siemens AG, the Consolidated Financial Statements of
the Siemens Group and the Combined Management Re-
port of Siemens AG and the Siemens Group, including
non-financial matters. On the basis of the independent
auditors' report on their audit of the annual financial
statements, the Audit Committee makes, after its prelim-
inary review, recommendations regarding Supervisory
Board approval of the Annual Financial Statements of
Siemens AG and the Consolidated Financial Statements
of the Siemens Group. The Audit Committee discusses
the quarterly statements and Half-year Financial Report
with the Managing Board and the independent auditors
and deals with the auditors' reports on the review of the
Half-year Consolidated Financial Statements and Interim
Group Management Report. The Audit Committee con-
cerns itself with sustainability reporting, which includes
the Sustainability Report in addition to reporting on
non-financial matters in the Combined Management
Report. It also monitors the Company's adherence to
statutory provisions, official regulations and internal
Company policies (compliance). The Chief Compliance
Officer reports regularly to the Audit Committee. The
Audit Committee concerns itself with the Company's risk
monitoring system. It oversees the appropriateness and
effectiveness of the risk management system and of the
internal control system with particular regard to financial
6
Supervisory Board
Corporate Governance Statement
reporting and sustainability reporting. The Audit Com-
mittee also monitors the internal audit system and the
internal process for related party transactions. The Audit
Committee receives regular reports from the internal au-
dit department. It prepares the Supervisory Board's rec-
ommendation to the Annual Shareholders' Meeting con-
cerning the election of the independent auditors and
submits the corresponding proposal to the Supervisory
Board. Prior to submitting this proposal, the Audit Com-
mittee obtains a statement from the prospective indepen-
dent auditors affirming that their independence is not in
question. Based on the decision of the Annual Share-
holders' Meeting, it awards the audit contract to the inde-
pendent auditors and monitors the independent audit of
the financial statements as well as the auditors' selection,
independence, qualification, rotation and efficiency and
the services rendered by the auditors. The Audit Commit-
tee assesses the quality of the audit of the financial state-
ments on a regular basis. Outside its meetings, the Super-
visory Board is also in regular communication with the
independent auditors via the Chairman of the Audit Com-
mittee. The Audit Committee regularly consults with the
independent auditors also without the Managing Board
in attendance. Outside its meetings, the Chairman of the
Audit Committee is in regular communication with the
independent auditors regarding the progress of the audit
and reports thereon to the Audit Committee.
SUPERVISORY BOARD COMMITTEES
Corporate Governance Statement
on the Siemens Global Website at WWW.SIEMENS.COM/
BYLAWS-MANAGINGBOARD.
Siemens AG is subject to German corporate law. There-
fore, it has a two-tier board structure, consisting of a
Managing Board and a Supervisory Board. The duties and
As of September 30, 2023, the Audit Committee com-
prised Dr. Werner Brandt (Chairman), Tobias Bäumler,
Bettina Haller, Martina Merz, Hagen Reimer, Jim
Hagemann Snabe, Birgit Steinborn and Matthias Zachert.
The members of the Audit Committee are, as a group,
familiar with the sector in which the Company operates.
Pursuant to the German Stock Corporation Act, the
Supervisory Board must have at least one member with
expertise in the area of accounting and at least one
additional member with expertise in the auditing of
financial statements. According to the Code, expertise in
the area of accounting consists of specialist knowledge
and experience in the application of accounting prin-
ciples and internal control and risk management
systems, while expertise in the area of auditing consists
of specialist knowledge and experience in the auditing
of financial statements. Accounting and auditing also
include sustainability reporting and its audit and assur-
ance. In the person of Matthias Zachert, the Supervisory
Board and the Audit Committee have at least one mem-
ber with expertise in the area of accounting and in the
person of Dr. Werner Brandt, the Chairman of the Audit
powers of the Managing Board and the Supervisory
Board as well as the regulations regarding their operation
and composition are defined primarily by the German
Stock Corporation Act, the Articles of Association of
Siemens AG and the bylaws for the Company's governing
bodies. The Articles of Association of Siemens AG, the
Bylaws for the Managing Board, the Bylaws for the
Supervisory Board and the bylaws for the Supervisory
Board's most important committees are available on
the Siemens Global Website at ☐ WWW.SIEMENS.COM/
CORPORATE-GOVERNANCE.
Managing Board
In fiscal 2023, the Managing Board of Siemens AG
comprised Dr. Roland Busch (President and CEO),
Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas
and Judith Wiese. Further information regarding the
Managing Board members and their memberships, which
are to be disclosed pursuant to Section 285 No. 10 of the
German Commercial Code, are set out in Section 10 of this
Corporate Governance Statement. Information about the
Managing Board members' areas of responsibility and
their curricula vitae are available on the Siemens Global
Website at WWW.SIEMENS.COM/MANAGEMENT.
As Siemens' top management body, the Managing Board
is committed to serving the interests of the Company and
achieving sustainable growth in company value. The
members of the Managing Board are jointly responsible
for the entire management of the Company and decide on
basic issues of business policy and Company strategy,
including Siemens' sustainability strategy as well as on
the Company's annual and multi-year plans, unless
specific circumstances are taken into account for compa-
nies that are separately managed and publicly listed
themselves (Siemens Healthineers). The Companywide
DEGREE program,
which was approved by the Managing
Board in fiscal 2021, intensified the focus of all Siemens
businesses on ambitious sustainability targets - targets
for environmental and social sustainability and good
governance - even further. The Managing Board ensures
that the risks and opportunities for the Company
connected with social and environmental factors and
the environmental and social impact of the Company's
activities are systematically identified and assessed. The
Company strategy gives due consideration to long-term
targets as well as to environmental and social objectives.
Company planning encompasses both the appropriate
financial targets and the appropriate sustainability-related
objectives. More details on sustainability are available
3
4
Corporate Governance Statement
The Managing Board prepares the Company's Quarterly
Statements and Half-year Financial Report, the Annual
Financial Statements of Siemens AG, the Consolidated
Financial Statements of the Siemens Group and the
Combined Management Report of Siemens AG and the
Siemens Group. Together with the Supervisory Board, the
Managing Board prepares the Compensation Report. The
Managing Board has established an appropriate and
effective internal control system and risk management
system that also covers sustainability-related aspects.
In addition, it ensures that the Company adheres to
statutory requirements, official regulations and internal
Company policies and works to achieve compliance with
these provisions and policies within the Siemens Group.
The Managing Board has established a comprehensive
compliance management system oriented toward
the Company's risk situation. Protection is offered to
employees and third parties who provide information
on unlawful behavior within the Company. Details on
the compliance management system are available on
the Siemens Global Website at ☐ wWW.SIEMENS.COM/
SUSTAINABILITYINFORMATION.
The Supervisory Board has issued Bylaws for the
Managing Board that contain the assignment of different
portfolios and the rules for cooperation both within the
Managing Board and between the Managing Board and
the Supervisory Board as well as rules for the so-called
Equity Investments. In accordance with these Bylaws, the
Managing Board is divided into the portfolio of the
President and CEO and a variety of Managing Board port-
folios. The Managing Board members responsible for the
individual Managing Board portfolios are defined in a
business assignment plan that is determined by the
Supervisory Board. As the Managing Board member
with responsibility for the People & Organization port-
folio, the Labor Director (Arbeitsdirektor) is appointed in
accordance with the requirements of Section 33 of the
German Codetermination Act (Mitbestimmungsgesetz,
MitbestG). When making recommendations for the first-
time appointments of Managing Board members, it is to
be taken into account that the terms of these appoint-
ments shall not, as a rule, exceed three years.
As a rule, the portfolio assigned to an individual member
is that member's own responsibility. Activities and
transactions in a particular Managing Board portfolio
that are considered to be extraordinarily important
for the Company or associated with an extraordinary
economic risk require the prior consent of the full
Managing Board. The same applies to activities and
transactions for which the President and CEO or another
member of the Managing Board demands a prior decision
by the Managing Board. The President and CEO is respon-
sible for the coordination of all Managing Board port-
folios. The Managing Board had no standing committee
in fiscal 2023. Further details are available in the Bylaws
for the Managing Board on the Siemens Global Website
at www.SIEMENS.COM/BYLAWS-MANAGINGBOARD.
The Managing Board and the Supervisory Board cooper-
ate closely for the benefit of the Company. The Managing
Board informs the Supervisory Board regularly, compre-
hensively and without delay on all issues of importance
to the entire Company with regard to strategy (including
the Company's sustainability strategy), planning, business
development, financial position, results of operations,
compliance and entrepreneurial risks. At regular inter-
vals, the Managing Board also discusses the status of
strategy implementation with the Supervisory Board.
The members of the Managing Board are subject to a
comprehensive prohibition on competitive activity for the
period of their employment at Siemens AG. They are com-
mitted to serving the interest of the Company. When mak-
ing their decisions, they may not be guided by personal
interests, nor may they exploit for their own advantage
business opportunities offered to the Company. Manag-
ing Board members may engage in secondary activities -
in particular, hold supervisory board positions outside the
Siemens Group - only with the approval of the Chairman's
Committee of the Supervisory Board. The Supervisory
Board is responsible for decisions regarding any adjust-
ments to Managing Board compensation that are neces-
sary in order to take account of compensation for second-
ary activities. Every Managing Board member is under an
obligation to disclose conflicts of interest without delay to
the Chairman of the Supervisory Board and to inform the
other members of the Managing Board thereof.
Further details regarding the operation and composition
of the Managing Board are provided in the Bylaws for
the Managing Board, which are publicly available on
the Siemens Global Website at ☐ WWW.SIEMENS.COM/
SUSTAINABILITYINFORMATION.
Committee, at least one additional member with exper-
tise in the area of auditing. Pursuant to the Code, the
chair of the Audit Committee shall be an expert in at
least one of these two areas and independent. The
Chairman of the Audit Committee, Dr. Werner Brandt,
fulfills these requirements.
"The goal of this diversity concept is to achieve a com-
position that is as diverse as possible and comprises
individuals who complement one another in a Manag-
ing Board that provides strong leadership and brings
different perspectives to the management of the
Company as well as to ensure that, as a group, the
members of the Managing Board have all the know-
how and skills that are considered essential in view of
Siemens' activities.
-
For the composition of the Managing Board, the follow-
ing diversity concept applies:
When selecting members of the Managing Board, the
Supervisory Board pays close attention to candidates'
personal suitability, integrity, convincing leadership
qualities, international experience, expertise in their
prospective areas of responsibility, achievements to
date and knowledge of the Company as well as their
ability to adjust business models and processes in a
changing world. Diversity with respect to such charac-
teristics as age and gender as well as professional and
educational background is an important selection cri-
terion for appointments to Managing Board positions.
When selecting members of the Managing Board, the
Supervisory Board also gives special consideration to
the following factors:
→In addition to the expertise and management and
leadership experience required for their specific
tasks, the Managing Board members shall have the
broadest possible range of knowledge and experi-
ence and the widest possible educational and pro-
fessional backgrounds.
→ Taking the Company's international orientation
into account, the composition of the Managing
Board shall reflect internationality with respect to
different cultural backgrounds and international
experience (such as extensive professional experi-
ence in foreign countries and responsibility for
business activities in foreign countries in areas that
are relevant for Siemens).
→ As a group, the Managing Board shall have experi-
ence in the business areas that are important for
Siemens - in particular, in the industry, infrastruc-
ture, energy, mobility and healthcare sectors.
9
Corporate Governance Statement
→ As a group, the Managing Board shall have many
years of experience in technology (including infor-
mation technology, digitalization and cybersecu-
rity), sustainability, transformation, procurement,
manufacturing, research and development, sales,
finance, risk management, law (including compli-
ance) and human resources.
6. Diversity concept for the
Managing Board and long-term
succession planning
→ Diversity also means gender diversity. According to
the legal requirement applicable to Siemens AG
(Section 76 para. 3a of the German Stock Corpora-
tion Act), the Managing Board must include at least
one woman and at least one man (minimum partic-
ipation requirement). Beyond the minimum partici-
pation requirement, the consideration of women is
an essential aspect of the Supervisory Board's long-
term succession planning for the Managing Board.
→It is considered helpful if different age groups are
represented on the Managing Board. In accordance
with the recommendation of the Code, the Super-
visory Board has defined an age limit for the mem-
bers of the Managing Board. In keeping with this
limit, the members of the Managing Board are, as
a rule, to be not older than 67 years of age.
Implementation of the diversity concept
for the Managing Board in fiscal 2023
The diversity concept for the Managing Board is imple-
mented as part of the process for making appointments
to the Managing Board. When selecting candidates
and/or making proposals for the appointment of Manag-
ing Board members, the Supervisory Board and/or the
Chairman's Committee of the Supervisory Board take into
account the requirements defined in the diversity con-
cept for the Managing Board.
In its current composition, the Managing Board fulfills all
the requirements of the diversity concept. The Managing
Board members have a broad range of knowledge, expe-
rience and educational and professional backgrounds as
well as international experience. The Managing Board
has all the knowledge and experience that is considered
essential in view of Siemens' activities. As a group, the
Managing Board has experience in the business areas
that are important for Siemens - in particular, in the
industry, infrastructure, energy, mobility and healthcare
sectors - as well as many years of experience in tech-
nology (including information technology, digitalization
and cybersecurity), sustainability, transformation, pro-
curement, manufacturing, research and development,
sales, finance, risk management, law (including compli-
ance) and human resources.
Siemens AG complies with the minimum participation
requirement set out in Section 76 para. 3a of the German
Stock Corporation Act. The Managing Board has one
female member, Judith Wiese. Beyond the minimum
participation requirement, the consideration of women
is a key component of the Supervisory Board's long-term
succession planning for the Managing Board. Different
age groups are represented on the Managing Board. No
Managing Board member has reached the stipulated
regular age limit.
Long-term succession planning
for the Managing Board
Jointly with the Managing Board and with the support of
the Chairman's Committee, the Supervisory Board con-
ducts long-term succession planning for the Managing
Board. Long-term succession planning is systematic and
based on the strategic target setting of the Company.
Taking into account the concrete qualification require-
ments and the diversity concept that the Supervisory
Board has approved for the Managing Board's compo-
sition, the Chairman's Committee prepares ideal profiles.
When a concrete decision regarding succession is to be
made, the Chairman's Committee compiles a shortlist of
the available candidates on the basis of these profiles.
Structured interviews are then conducted with these
candidates. After the interviews, a recommendation is
submitted to the Supervisory Board for approval. When
developing the profile of requirements and selecting
candidates, the Supervisory Board and/or the Chairman's
Committee are supported, if necessary, by external
consultants.
10
4. Description of the operation
of the Managing Board and the
Supervisory Board and of the
composition and operation of
their committees
When making an appointment to a specific Managing
Board position, the decisive factor is always the Com-
pany's best interest, taking into consideration all cir-
cumstances in the individual case."
Statutory provisions on the equal participation of men and
women in management positions that may be applicable to
Group companies other than Siemens AG remain unaffected.
The composition of the Supervisory Board fulfilled the
legal requirements regarding the minimum gender quota
in the reporting period.
When filling managerial positions at the Company, the
Managing Board takes diversity into account and, in partic-
ular, aims for an appropriate consideration of women and
internationality. In May 2022, in compliance with the
German legal requirements set out in Section 76 para. 4 of
the German Stock Corporation Act, the Managing Board set
the targets for the percentage of women in management
positions at Siemens AG that will apply until September 30,
2025, as follows: 30% for the first management level below
the Managing Board and 25% for the second management
level below the Managing Board. On the basis of projected
employee figures, women will, accordingly, hold a total
of four of the 13 positions at Siemens AG at the first
management level below the Managing Board and a
total of 32 of the 126 positions at Siemens AG at the
second management level below the Managing Board.
For the Siemens Group worldwide, the targets set out in
the Companywide DEGREE sustainability framework
continue to apply without change.
Due to his many years of work at a major auditing firm -
the former Price Waterhouse GmbH - and his many years
of service as the chief financial officer of publicly listed
international companies - Fresenius Medical Care AG
and, subsequently, SAP AG Dr. Werner Brandt has
specialist knowledge and experience in the auditing of
financial statements. Due to his above-mentioned activ-
ities and his many years of experience as the chairman
of the supervisory board and audit committee of various
publicly listed international companies, he also has
specialist knowledge and experience in the application
of accounting principles and internal control and risk
management systems and thus has expertise in the
area of accounting. In addition, Dr. Werner Brandt is
independent. As former chief financial officer of various
companies and as the current chairman of the super-
visory board of RWE AG and Chairman of the Audit
Committee of Siemens AG, Dr. Werner Brandt also has
extensive knowledge regarding sustainability reporting.
Dr. Werner Brandt follows current developments in
sustainability reporting and its audit and assurance and
is an active participant in discussions of this topic in
expert committees. He actively applies this expertise for
the benefit of the Supervisory Board and the Audit
Committee of Siemens AG.
7
Corporate Governance Statement
The Nominating Committee is responsible for making
recommendations to the Supervisory Board on suitable
candidates for the election by the Annual Shareholders'
Meeting of shareholder representatives on the Supervisory
Board. In preparing these recommendations, the objec-
tives defined by the Supervisory Board for its composition
and the approved diversity concept - in particular, inde-
pendence and diversity - are to be appropriately consid-
ered, as are the proposed candidates' required knowledge,
abilities and professional experience. Fulfillment of the
required profile of skills and expertise is also to be aimed
at. Attention shall be paid to an appropriate participation
of women and men in accordance with the legal require-
ments relating to the gender quota as well as to ensuring
that the members of the Supervisory Board are, as a group,
familiar with the sector in which the Company operates.
As of September 30, 2023, the Nominating Commit-
tee comprised Jim Hagemann Snabe (Chairman),
Dr. Werner Brandt, Benoît Potier and Dr. Nathalie von
Siemens.
The Mediation Committee submits proposals to the
Supervisory Board in the event that the Supervisory
Board cannot reach the two-thirds majority required for
the appointment or dismissal of a Managing Board
member on the first ballot.
As of September 30, 2023, the Mediation Commit-
tee comprised Jim Hagemann Snabe (Chairman),
Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
Based on the Company's overall strategy, the Innovation
and Finance Committee discusses, in particular, the
Company's innovation focuses and prepares the Supervi-
sory Board's discussions and decisions regarding ques-
tions relating to the Company's financial situation and
structure - including annual planning (budget) – as well
as the Company's fixed asset investments and its finan-
cial measures. In addition, the Innovation and Finance
Committee has been authorized by the Supervisory Board
to decide on the approval of transactions and measures
that require Supervisory Board approval and have a value
of between €300 million and €600 million.
As of September 30, 2023, the Innovation and Finance
Committee comprised Jim Hagemann Snabe (Chairman),
Tobias Bäumler, Dr. Regina E. Dugan, Harald Kern,
Jürgen Kerner, Kasper Rørsted, Birgit Steinborn and
Grazia Vittadini.
The Supervisory Board has not established a dedicated
sustainability committee. Sustainability is one of the
focus topics of the Supervisory Board's work. Sustain-
ability is of such central importance for Siemens that it
is discussed regularly and in detail at the Supervisory
Board's plenary meetings. As a cross-cutting issue,
sustainability touches on the areas of responsibility of
several committees. To the extent that sustainability
affects reporting, the Audit Committee considers
sustainability-related questions in detail and reports on
these matters at the Supervisory Board's plenary meet-
ings. To prepare for discussions and decisions at these
meetings, the sustainability-related aspects of Managing
Board compensation are dealt with in the Compensation
Committee.
Further details regarding the operation and composition
of the Supervisory Board and its committees are pro-
vided in the Bylaws for the Supervisory Board and the
bylaws for its committees, which are publicly available
on the Siemens Global Website at ☐ www.SIEMENS.COM/
CORPORATE-GOVERNANCE.
SUPERVISORY BOARD SELF-ASSESSMENT
-
The Supervisory Board and its committees regularly con-
duct reviews - either internally or with the involvement
of external consultants in order to determine how
efficiently they perform their duties. In fiscal 2023, the
Supervisory Board conducted an internal self-assess-
ment. At its meeting on September 22, 2023, the Super-
visory Board concerned itself intensively with the results
of the assessment and the measures to be derived from
it. The results of the assessment confirm that coopera-
tion within the Supervisory Board and with the Manag-
ing Board is professional, constructive and characterized
by a high degree of trust and openness. The results also
confirm that meetings are organized and conducted
efficiently and that the participants receive sufficient
information. The composition and structure of the
Supervisory Board, including the structure and mecha-
nisms of its committees, were assessed as effective and
efficient. The review did not reveal a need for any funda-
mental changes. Individual suggestions for improvement
are also discussed and implemented during the year.
8
Corporate Governance Statement
5. Targets, within the meaning
of Section 76 para. 4 of the
German Stock Corporation Act,
for the quota of women at the
two management levels below
the Managing Board; Information
on Managing Board compliance
with the participation require-
ment and Supervisory Board
compliance with minimum
gender quota requirements
Pursuant to the German Stock Corporation Act, the Man-
aging Board of Siemens AG must include at least one
woman and at least one man (minimum participation
requirement). In fiscal 2023, Siemens AG complied with
this requirement. Beyond the minimum participation re-
quirement, the consideration of women is an essential
aspect of the Supervisory Board's long-term succession
planning for the Managing Board.
In the course of his professional career, Matthias Zachert
has served as the chief financial officer of a variety of
publicly listed companies and thus has specialist knowl-
edge and experience in the application of accounting
principles and internal control and risk management
systems, including sustainability reporting. His activities
as the chief financial officer of a publicly listed interna-
tional company include engagement with non-financial
aspects and the reporting thereon. As the current chief
executive officer and former chief financial officer of
Lanxess AG, Matthias Zachert has extensive knowledge
of the requirements for sustainability reporting and of
current developments in this area. Matthias Zachert
follows and monitors current developments in sustain-
ability reporting and actively applies this expertise for
the benefit of the Supervisory Board and the Audit
Committee of Siemens AG.
SIEMENS.COM/COMPLIANCE.
The Company's values and Business
Conduct Guidelines
In its more than 175 years of existence, our Company has
built an excellent reputation around the world. Technical
performance, innovation, quality, reliability and inter-
national engagement have made Siemens a leading
company in its areas of activity. It is top performance with
the highest ethics that has made Siemens strong. This is
what the Company will continue to stand for in the future.
The current Declaration of Conformity and the Declara-
tions of Conformity of the previous five years are avail-
able on the Siemens Global Website at www.SIEMENS.
The Managing Board The Supervisory Board"
Siemens Aktiengesellschaft
Berlin and Munich, October 1, 2023
As of February 10, 2023, the date of its last Declaration
of Conformity, Siemens AG complied with all the
recommendations of the Code.
In this Statement, the Managing Board and the Super-
visory Board report as of November 9, 2023, on corporate
governance at the Company in fiscal 2023 (October 1,
2022, to September 30, 2023) pursuant to Sections 289f
and 315d of the German Commercial Code (Handels-
gesetzbuch, HGB) and as prescribed in Principle 23 of the
German Corporate Governance Code ("Code"). Further
information regarding corporate governance - for exam-
ple, the Bylaws for the Managing Board, the Bylaws for
the Supervisory Board, the bylaws for the Supervisory
Board committees and the Corporate Governance State-
ments of the previous fiscal years is also available
on the Siemens Global Website at www.SIEMENS.COM/
Corporate Governance Statement
pursuant to Sections 289f and 315d
of the German Commercial Code
Corporate Governance Statement
SIEMENS
October 2023
pursuant to Sections 289f and 315d
of the German Commercial Code
Statement
Corporate Governance
The Business Conduct Guidelines provide the ethical and
legal framework within which we want to conduct our
activities and remain on course for success. They contain
the basic principles and rules for our conduct within our
Company and in relation to our external partners and the
general public. They set out how we meet our ethical and
legal responsibility as a Company and give expression to
our Company values: "Responsible" - "Excellent" - "Inno-
vative." Our Business Conduct Guidelines are publicly
available on the Siemens Global Website at www.
COM/DECLARATIONOFCONFORMITY.
1. Declaration of Conformity
with the German Corporate
Governance Code
CORPORATE-GOVERNANCE.
"Declaration of Conformity by the Managing Board and
the Supervisory Board of Siemens Aktiengesellschaft
with the German Corporate Governance Code pursu-
ant to Section 161 of the German Stock Corporation
Act
The Managing Board and the Supervisory Board of
Siemens AG approved the following Declaration of
Conformity pursuant to Section 161 of the German Stock
Corporation Act (Aktiengesetz, AktG) as of October 1,
2023:
COMPLIANCE.
Further corporate governance practices applied beyond
the applicable legal requirements are described in our
Business Conduct Guidelines, which are publicly available
on the Siemens Global Website at WWW.SIEMENS.COM/
decide on corporate actions. The convening of a share-
holders' meeting - even taking into account the short-
ened time limits stipulated in the German Securities
Acquisition and Takeover Act (Wertpapiererwerbs- und
Übernahmegesetz, WpÜG) – is an organizational chal-
lenge for large publicly listed companies. It appears doubt-
ful whether the associated effort is justified also in cases
where no relevant decisions by the shareholders' meeting
are intended. Therefore, extraordinary shareholders'
meetings shall be convened only in appropriate cases.
-
2
According to the suggestion in A.8 of the Code, in the
case of a takeover event, the Managing Board should
convene an Extraordinary General Meeting at which
shareholders will discuss the takeover offer and may
Corporate Governance Statement
Suggestions of the Code
3. Information on corporate
governance practices
CORPORATE-GOVERNANCE.
The Compensation Report and the Independent Auditor's
Report in accordance with Section 162 of the German
Stock Corporation Act, the compensation system for the
Managing Board members pursuant to Section 87a
para. 1 and para. 2 sent. 1 of the German Stock Corpora-
tion Act and the decision of the Annual Shareholders'
Meeting pursuant to Section 113 para. 3 of the German
Stock Corporation Act regarding the compensation of
the Supervisory Board members are published on
the Siemens Global Website at ☐ wWW.SIEMENS.COM/
2. Compensation Report/
Compensation system
Siemens AG complies, and will continue to comply,
with all the recommendations of the Government
Commission on the German Corporate Governance
Code in the version of April 28, 2022 ("Code"), pub-
lished by the Federal Ministry of Justice in the official
section of the Federal Gazette (Bundesanzeiger).
Siemens AG voluntarily complies with the Code's sugges-
tions, with only the following exception:
February 9,
2023
2028
Date of birth
February 9,
2023
February 9,
2023
January 31,
2018
February 3,
2021
Diversity
October 1,
2013
February 3,
2021
January 31,
2018
Personal qualification
Independence¹
No overboarding'
January 31,
2018
January 27,
2015
Matthias
Zachert
12
Jim
Hagemann
Snabe
The implementation status of the profile of required skills
and expertise is disclosed below in the form of a qualifi-
cation matrix.
January 3,
Qualification matrix
Shareholder representatives
Length of membership Member since
Corporate Governance Statement
Werner
Brandt
(Dr. rer. pol.)
Regina E.
Dugan
(PhD)
Keryn Lee
James
Martina
Merz
Benoît
Potier
Kasper
Rørsted
Nathalie
von
Siemens
(Dr. phil.)
Grazia
Vittadini
1954
Female
December 12,
1968
German
French
Danish
German
Danish
Italian/
German
German
German US-American Australian
International
experience
Americas
China
Asia/Pacific
Professional
qualification
Leadership experience
Technology
Sustainability
Europe
March 19,
1963
Nationality
Female
March 1,
1963
September 3, February 24,
1957
1962
July 14,
1971
1965
October 27, September 23, November 8,
1969
Male
1967
Male
Female
Female
Female
Male
In the estimation of the shareholder representatives, the
Supervisory Board now includes ten independent share-
holder representatives namely, Dr. Werner Brandt,
Dr. Regina E. Dugan, Keryn Lee James, Martina Merz,
Benoît Potier, Kasper Rørsted, Dr. Nathalie von Siemens,
Jim Hagemann Snabe, Grazia Vittadini and
Matthias Zachert and thus an appropriate number of
members who are independent within the meaning of
the Code. The regulations establishing limits on age and
restricting membership in the Supervisory Board to three
full terms of office are complied with.
Male
Gender
The Supervisory Board is of the opinion that, with its
current composition, it meets the objectives for its compo-
sition and fulfills the profile of required skills and expertise
as well as the diversity concept. The Supervisory Board
members have the specialist and personal qualifications
considered necessary. As a group, they are familiar with the
sector in which the Company operates and have the knowl-
edge, skills and experience essential for Siemens in the
areas of technology (including information technology,
digitalization and cybersecurity), transformation, procure-
ment, manufacturing, research and development, sales,
finance, risk management, law (including compliance) and
human resources. Due to the presence in the Supervisory
Board of expertise in the sustainability-related matters
important for Siemens, the Supervisory Board is in a
position to monitor the way in which environmental and
social sustainability is taken into consideration in the
Company's strategic orientation and in Company planning.
Knowledge and experience in the business areas important
for Siemens - in particular, in the industry, infrastructure,
energy, mobility and healthcare sectors - are also present
in the Supervisory Board. A considerable number of Super-
visory Board members are engaged in international activi-
ties and/or have many years of international experience.
Appropriate consideration has been given to diversity in
the Supervisory Board. The Supervisory Board currently has
nine female members, of whom five are shareholder repre-
sentatives and four are employee representatives. As a
result, 45% of the Supervisory Board members are women.
Dr. Nathalie von Siemens is a member of the Nominating
Committee.
Internationality
of required skills and expertise and the diversity con-
cept into consideration.
Positions outside Germany:
→ OPUS Talent Solutions, UK
(Chair)
German positions:
→ Airbus GmbH, Hamburg
→ MAN Truck & Bus SE, Munich
(Deputy Chairman)
→ Siemens Energy AG, Munich³
→Siemens Energy Management GmbH,
Munich
→ Thyssenkrupp AG, Essen
(Deputy Chairman)³
→ Traton SE, Munich³
Positions outside Germany:
→ AB Volvo, Gothenburg, Sweden³
German positions:
→ Siemens Mobility GmbH, Munich
(Deputy Chairwoman)
German positions:
→ Siemens Energy AG, Munich³
→Siemens Energy Management GmbH,
Munich
→ Airbus Defence and Space GmbH,
Taufkirchen
Transformation
Positions outside Germany:
C3.ai, Inc., USA³
→ Northvolt AB, Sweden (Chairman)
→ Urban Partners A/S, Denmark
(Deputy Chairman)
German positions:
→ RWE AG, Essen (Chairman)³
→ Siemens Mobility GmbH, Munich
(Chairman)
German positions:
→ Fresenius Management SE,
Bad Homburg
→ Fresenius SE & Co. KGaA,
Bad Homburg (Deputy Chairman)³
Positions outside Germany:
→ HPE, Houston, Texas, USA³
German positions:
→ Allianz SE, Munich (Chairman)³
-
Positions outside Germany:
17
When a new member is to be appointed, a review
shall be performed to determine which of the areas
of expertise deemed desirable for the Supervisory
Board are to be strengthened.
Taking the Company's international orientation into
account, care shall be taken to ensure that the Super-
visory Board has an adequate number of members
with extensive international experience. The goal is to
make sure that the present considerable share of
Supervisory Board members with extensive inter-
national experience is maintained.
Diversity
With regard to the composition of the Supervisory
Board, attention shall be paid to achieving sufficient
diversity. Not only is appropriate consideration to be
given to women. Diversity of cultural heritage and a
wide range of educational and professional back-
grounds, experiences and ways of thinking are also to
be promoted. When considering possible candidates
for new elections or for filling Supervisory Board
positions that have become vacant, the Supervisory
Board shall give appropriate consideration to diversity
at an early stage in the selection process.
In accordance with the German Stock Corporation
Act, the Supervisory Board is composed of at least
30% women and at least 30% men. The Nominating
11
Corporate Governance Statement
Committee shall continue to include at least one
female member.
Independence
The Supervisory Board shall include what the share-
holder representatives on the Supervisory Board con-
sider to be an appropriate number of independent
shareholder representatives. More than half of the
shareholder representatives shall be independent of
the Company and its Managing Board. Substantial -
and not merely temporary - conflicts of interest are to
be avoided.
No more than two former members of the Managing
Board of Siemens AG shall belong to the Supervisory
Board.
The Supervisory Board members shall have sufficient
time to exercise their mandates with the necessary
regularity and diligence.
Limits on age and on length of
membership
In compliance with the age limit stipulated by the Super-
visory Board in its Bylaws, only individuals who are no
older than 70 years of age shall, as a rule, be nominated
for election to the Supervisory Board. Nominations shall
take into account the regular limit established by the
Supervisory Board, which restricts membership on the
Supervisory Board to a maximum of three full terms of
office. It is considered helpful if different age groups are
represented on the Supervisory Board."
Implementation of the objectives
regarding the Supervisory Board's
composition as well as the profile of
required skills and expertise and the
diversity concept for the Supervisory
Board in fiscal 2023; Independent
members of the Supervisory Board
Within the framework of the selection process and
the nomination of candidates for the Supervisory Board,
the Supervisory Board as well as the Nominating Com-
mittee of the Supervisory Board take into account the
objectives regarding the Supervisory Board's composition
and the requirements defined in its diversity concept.
In preparing the nominations of the seven shareholder
representatives elected by the 2023 Annual Shareholders'
Meeting, the Supervisory Board and the Nominating
Committee took these objectives - including the profile
Board must have knowledge and expertise in the area
of accounting, and at least one additional member of
the Supervisory Board must have knowledge and
expertise in the auditing of financial statements. The
expertise in the field of accounting shall consist of
special knowledge and experience in the application
of accounting principles and internal control and risk
management systems and the expertise in the field of
auditing shall consist of special knowledge and
experience in the auditing of financial statements.
Accounting and auditing also include sustainability
reporting and its audit and assurance. The chairman
of the audit committee shall have appropriate exper-
tise in at least one of the two areas and shall be inde-
pendent. In particular, the Supervisory Board shall
also include members who have leadership experi-
ence as senior executives or members of a supervisory
board (or comparable body) at a major company with
international operations.
The goal is to ensure that, in the Supervisory Board, as
a group, all the knowhow and experience is available
that is considered essential in view of Siemens' acti-
vities. This includes, for instance, knowledge and
experience in the areas of technology (including infor-
mation technology, digitalization and cybersecurity),
sustainability, transformation, procurement, manu-
facturing, research and development, sales, finance,
risk management, law (including compliance) and
human resources. In addition, the members of the
Supervisory Board shall collectively have knowledge
and experience in the business areas that are impor-
tant for Siemens, in particular, in the areas of industry,
infrastructure, energy, mobility and healthcare. As a
group, the members of the Supervisory Board are to
be familiar with the sector in which the Company
operates. In accordance with the German Stock Cor-
poration Act, at least one member of the Supervisory
Profile of required skills and expertise
The candidates proposed for election to the Super-
visory Board shall have the knowledge, skills and
experience necessary to carry out the functions of a
Supervisory Board member in a multinational com-
pany oriented toward the capital markets and to safe-
guard the reputation of Siemens in public. In particu-
lar, care shall be taken with regard to the personality,
integrity, commitment and professionalism of the
individuals proposed for election.
"The composition of the Supervisory Board of
Siemens AG shall be such that the Supervisory Board's
ability to effectively monitor and advise the Managing
Board is ensured. In this connection, mutually comple-
mentary collaboration among members with a wide
range of personal and professional backgrounds
and diversity with regard to internationality, age and
gender are considered helpful.
Name
Hagen Reimer²
Norbert Reithofer
(Dr.-Ing. Dr.-Ing. E.h.)
(until February 9, 2023)
(as of February 9, 2023)
Kasper Rørsted
Baroness
Nemat Shafik
(DBE, DPhil)
→ L'Air Liquide S.A., France (Chairman)³
Occupation
Member since
Term
expires¹
Trade Union Secretary of the
Managing Board of IG Metall
January 30,
2019
Corporate Governance Statement
7. Objectives regarding the
Supervisory Board's composition
as well as the profile of required
skills and expertise and the
diversity concept for the Super-
visory Board
In September 2022, the Supervisory Board approved the
objectives for its composition including the profile of
required skills and expertise and the diversity concept:
Date of birth
Procurement/manu-
March 26,
Finance
In fiscal 2023, the Supervisory Board had the following members:
Name
Occupation
Jim Hagemann Snabe Chairman of the Supervisory Board
of Siemens AG
Chairman
Birgit Steinborn²
First Deputy Chairwoman
Werner Brandt
(Dr. rer. pol.)
Second Deputy Chairman
Tobias Bäumler²
Michael Diekmann
(until February 9, 2023)
(as of February 9, 2023)
Date of birth
Member since
Term
expires¹
11. Members of the Supervisory Board and
positions held by Supervisory Board members
October 27,
1965
2025
Chairwoman of the Central Works
Council of Siemens AG
March 26,
1960
January 24,
2008
2028
Chairman of the Supervisory Board
of RWE AG
January 3,
1954
January 31,
2018
2027
Deputy Chairman of the
Central Works Council and of the
Combine Works Council of Siemens AG
Chairman of the Supervisory Board
of Allianz SE
October 10,
1979
October 16,
2020
October 1,
2013
16
→ European School of Management
and Technology GmbH, Berlin
September 30, German positions:
2028
Memberships in supervisory boards whose establishment is required by law
or in comparable domestic or foreign controlling bodies of business enterprises
External positions
(as of September 30, 2023)
German positions:
→ Evonik Industries AG, Essen¹
German positions:
→ Siemens Energy AG, Munich'
→ Siemens Energy Management GmbH,
Munich
German positions:
→ Siemens Energy AG, Munich'
→ Siemens Energy Management GmbH,
Munich
Group company positions
(as of September 30, 2023)
German positions:
→ Siemens Healthineers AG, Munich'
→ Siemens Mobility GmbH, Munich
(Chairman)
Positions outside Germany:
→ Siemens Aktiengesellschaft Österreich,
Austria (Chairman)
Positions outside Germany:
→Siemens Proprietary Ltd.,
South Africa (Chairman)
→ Siemens Healthineers AG,
Munich (Chairman)'
Munich (Chairman)
→Siemens Healthcare GmbH,
German positions:
→Siemens W.L.L., Qatar
2028
(Chairman)
(Deputy Chairman)
→ Siemens Ltd., Saudi Arabia
→ Siemens Ltd., India¹
→ Arabia Electric Ltd. (Equipment),
Saudi Arabia (Deputy Chairman)
Positions outside Germany:
→ Siemens France Holding SAS, France
→ Siemens Schweiz AG, Switzerland
December 23,
1954
January 24,
2008
2023
April 1,
2007
2028
April 25,
1968
September 14,
2023
2028
December 12,
1968
February 9,
2023
2027
March 16,
1960
January 24,
2008
2028
January 22,
1969
January 25,
2012
2028
March 1,
1963
February 9,
2023
2027
January 27,
2015
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2023)
Corporate Governance Statement
4 Shareholders' Committee.
3 Publicly listed.
2
March 14,
1959
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
Employee representative.
2027
January 31,
September 3,
1957
2028
February 9,
2023
June 2,
1969
2018
Corporate Governance Statement
Chairman of the Board of Directors
of L'Air Liquide S.A.
Innovation manager at Siemens Mobility
GmbH, member of the Combine Works
Council of Siemens AG and of the Central
Works Council of Siemens Mobility GmbH
Regina E. Dugan
President and Chief Executive Officer
(PhD)
of Wellcome Leap Inc.
March 19,
1963
February 9,
2023
2027
(since February 9, 2023)
Andrea Fehrmann²
(Dr. phil.)
Trade Union Secretary,
IG Metall Regional Office for Bavaria
June 21,
1970
January 31,
2018
2028
Bettina Haller²
Chairwoman of the Combine
Works Council of Siemens AG
Oliver Hartmann²
(since September 14,
2023)
(since February 9, 2023)
Christian Pfeiffer²
(Dr.-Ing.)
Member of supervisory boards
Martina Merz
(since February 9, 2023)
of the Managing Board of IG Metall
Chief Treasurer and Executive Member
Benoît Potier
Siemens Europe Committee
of OPUS Talent Solutions
Jürgen Kerner²
Harald Kern²
Keryn Lee James
(since February 9, 2023)
Chair of the Board of Directors
Head of the Regional Office Erlangen/Nurem-
berg, Germany, Chairman of the Committee
of Spokespersons of the Siemens Group
and Chairman of the Central Committee
of Spokespersons of Siemens AG
Chairman of the
1 Publicly listed.
October 1,
2020
1971
2019
October 1,
2017
January 24,
2008
Diversity
Date of birth
October 10,
1979
June 21,
1970
March 14,
1959
April 25,
1968
March 16,
1960
January 22,
1969
June 2,
1969
April 26,
August 3,
1967
1969
German
German
German
Female
Female
Male
January 30,
Male
Male
Male
Female
Female
Male
1960
Male
German
February 9,
2023
January 24,
2008
Financial expert²
Risk management
Legal/compliance
Human resources
Familiarity with
business area/sector
1 According to the German Corporate Governance Code (GCGC).
2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the GCGC.
● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
13
Employee representatives
Corporate Governance Statement
Andrea
Tobias
Fehrmann
Bettina
Bäumler
September
14, 2023
April 1,
2007
January 31,
2018
October 16,
2020
Length of membership Member since
Birgit
Steinborn
January 25,
2012
Dorothea
Simon
Christian
Pfeiffer
(Dr.-Ing.)
Jürgen
Kerner
Harald
Kern
Oliver
Hartmann
Haller
(Dr. phil.)
Hagen
Reimer
facturing/sales/R&D
German
German
Meeting (virtual shareholders' meeting). This authoriza-
tion applies to holding virtual shareholders' meetings in a
period of two years after the registration of this amend-
ment in the Company's commercial registers. This regis-
tration took place in May 2023.
As part of our investor relations activities, we inform our
investors comprehensively about developments within
the Company. For communication purposes, Siemens
makes extensive use of the Internet. We publish quarterly
statements, Half-year and Annual Financial Reports,
earnings releases, ad hoc announcements, analyst
presentations, letters to shareholders and press releases
as well as the financial calendar for the current year,
which contains the publication dates of significant
financial communications and the date of the Annual
Shareholders' Meeting, at ☐ wWW.SIEMENS.COM/INVESTORS.
The Chairman of the Supervisory Board regularly dis-
cusses Supervisory-Board-specific topics with investors.
The Articles of Association of Siemens AG, the Bylaws
for the Supervisory Board, the bylaws for the most
important Supervisory Board committees, the Bylaws
for the Managing Board, our Declarations of Conformity
with the Code and a variety of other corporate-
governance-related documents are posted on the
Siemens Global Website at www.SIEMENS.COM/
CORPORATE-GOVERNANCE.
15
10. Members of the Managing Board and
positions held by Managing Board members
In fiscal 2023, the Managing Board had the following members:
Name
Roland Busch
(Dr. rer. nat.)
President and
Chief Executive Officer
Cedrik Neike
Date of birth
November 22,
1964
April 1,
2011
First appointed Term expires
March 31,
2025
January 30,
Judith Wiese
December 14,
2026
September 18,
2013
March 7,
1961
Ralf P. Thomas
(Prof. Dr. rer. pol.)
-
September 30,
2025
January 2,
1965
Matthias Rebellius
May 31,
2025
2017
April 1,
March 7,
1973
October 1,
2020
German
Shareholders exercise their rights at the Annual Share-
holders' Meeting. An ordinary Annual Shareholders' Meet-
ing normally takes place within the first five months of
each fiscal year. The Annual Shareholders' Meeting de-
cides, among other things, on the appropriation of net
income, the ratification of the acts of the members of the
Managing and Supervisory Boards, and the appointment
of the independent auditors. Amendments to the Articles
of Association and measures that change the Company's
capital stock are approved at the Annual Shareholders'
Meeting and implemented by the Managing Board. The
Managing Board facilitates shareholder participation in
this meeting through electronic communications – in par-
ticular, via the Internet and enables shareholders who
are unable to attend the meeting to vote by proxy. Proxies
can also be reached during the Annual Shareholders'
Meeting. Furthermore, shareholders may exercise their
right to vote in writing or by means of electronic commu-
nications (absentee voting). The Managing Board may
enable shareholders to participate in the Annual Share-
holders' Meeting without the need to be present at the
venue and without a proxy and to exercise some or all of
their rights fully or partially by means of electronic com-
munications. The Company enables shareholders to follow
the entire Annual Shareholders' Meeting via the Internet.
Shareholders may submit motions regarding the proposals
9. Annual Shareholders' Meeting physically present at the place of the Annual Shareholders'
and investor relations
German
German
German
Gender
Nationality
International experience
Professional
Leadership experience
qualification
Technology
Sustainability
Transformation
Procurement/manu-
facturing/sales/R&D
Finance
Financial expert²
Risk management
Legal/compliance
Pursuant to a decision by the Annual Shareholders' Meet-
ing on February 9, 2023, the Articles of Association have
been amended and the Managing Board has been autho-
rized to allow for the Annual Shareholders' Meeting to be
held without shareholders or their representatives being
of the Managing and Supervisory Boards and may contest
decisions of the Annual Shareholders' Meeting. Sharehold-
ers owning Siemens stock with an aggregate notional
value of €100,000 or more may also demand the judicial
appointment of special auditors to examine specific is-
sues. The reports, documents and information required by
law for the Annual Shareholders' Meeting, including the
Annual Financial Report, can be downloaded from the
Siemens Global Website. The same applies to the agenda
for the Annual Shareholders' Meeting and to any counter-
proposals or shareholders' nominations that may require
disclosure. For the election of shareholder representatives
on the Supervisory Board, a detailed curriculum vitae of
every candidate is published.
DIRECTORS-DEALINGS.
Pursuant to Article 19 of EU Regulation No. 596/2014 of
the European Parliament and Council of April 16, 2014,
on market abuse (Market Abuse Regulation), members of
the Managing Board and the Supervisory Board are
legally required to disclose all transactions conducted on
their own account relating to the shares or debt instru-
ments of Siemens AG or to the derivatives or financial
instruments linked thereto if the total value of such trans-
actions entered into by a board member or any closely
associated person in any calendar year reaches or ex-
ceeds €20,000. All transactions reported to Siemens AG
in fiscal 2023 have been duly published and are available
on the Siemens Global Website at ☐ WWW.SIEMENS.COM/
members of the Managing and
Supervisory Boards
8. Share transactions by
=
Corporate Governance Statement
● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the GCGC.
1 According to the German Corporate Governance Code (GCGC).
business area/sector
Familiarity with
Human resources
14
2023
Male
Member of supervisory boards
German positions:
→ A.P. Møller-Mærsk A/S, Denmark³
→ Henkel AG & Co. KGaA, Düsseldorf 3,4
→ Henkel Management AG, Düsseldorf
Positions outside Germany:
→ Bayerische Motoren Werke Aktien-
gesellschaft, Munich (Chairman)³
German positions:
Memberships in supervisory boards
whose establishment is required by law
or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2023)
Corporate Governance Statement
4 Shareholders' Committee.
→ Messer SE & Co. KGaA,
3 Publicly listed.
1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
2018
2023
January 31,
June 21,
1965
Works Council of Siemens Industry
Software GmbH
Member of the Central
Gunnar Zukunft²
(until February 9, 2023)
(as of February 9, 2023)
2 Employee representative.
Bad Soden am Taunus
→Siemens Healthcare GmbH, Munich
→ Siemens Healthineers AG, Munich³
→ TÜV Süd AG, Munich
Positions outside Germany:
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft
2
For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant
to legal requirements.
This document is an English language translation of the German document. In case of discrepancies, the German language document is
the sole authoritative and universally valid version.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are
or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance
with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe
similarly titled alternative performance measures may calculate them differently.
-
This document contains statements related to our future business and financial performance and future events or developments involving
Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward
to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-
looking statements in other reports, in prospectuses, in presentations, in material delivered to shareholders and in press releases. In
addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current
expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a
number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report
on expected developments and associated material opportunities and risks in the Combined Management Report of the Siemens Report
(siemens.com/siemensreport). Should one or more of these risks or uncertainties materialize, should decisions, assessments or
requirements of regulatory authorities deviate from our expectations, should events of force majeure, such as pandemics, unrest or acts
of war, occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect,
actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or
implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these
forward-looking statements in light of developments which differ from those anticipated.
Notes and forward-looking statements
SIEMENS
Notes and forward-
looking statements
18
→ Siemens Industry Software GmbH,
Cologne
German positions:
→ The Exploration Company GmbH,
Gilching
German positions:
→ Siemens Healthcare GmbH, Munich
German positions:
→ EssilorLuxottica SA, France³
January 31,
2018
November 8,
1967
2027
February 3,
2021
2025
January 27,
2015
July 14,
1971
von Siemens
Member of supervisory boards
Nathalie
(as of February 9, 2023)
(until February 9, 2023)
2018
2023
January 31,
August 13,
1962
2025
February 3,
2021
February 24,
1962
May 29,
1956
April 26,
1967
School of Economics
Director of the London
(Dr. phil.)
Michael Sigmund²
(until August 31, 2023)
(as of August 31, 2023)
2027
Grazia Vittadini
September 23,
1969
2028
October 1,
2017
August 3,
1969
2028
March 1,
2014
Dorothea Simon²
Management of LANXESS AG³
Chairman of the Board of
September 13,
1957
Special Advisor of Rolls-Royce Holdings plc³
(until October 17, 2023),
of Rolls-Royce Holdings plc³
and member of the Executive Team
Chief Technology Officer
Chairwoman of the Central Works
Council of Siemens Healthcare GmbH
of Spokespersons of the Siemens Group
and Chairman of the Central Committee
of Spokespersons of Siemens AG
Chairman of the Committee
(since October 17, 2023)
Matthias Zachert
Siemens AG
Fax
E-mail
Werner-von-Siemens-Str. 1
Internet
Address
Phone
80333 Munich
+49 (0)89 7805-33443 (Media Relations)
+49 (0)89 7805-32474 (Investor Relations)
+49 (0)89 7805-32475 (Investor Relations)
www.siemens.com
Germany
press@siemens.com
investorrelations@siemens.com
© 2023 by Siemens AG, Berlin and Munich
C
-
-
In the E.U., GDP is expected to increase by 0.8% in calendar 2024, after an anticipated growth of 0.4% in calendar 2023. The effects of the
energy crisis still show negative impacts, especially in energy-intensive industries. Tighter monetary policy - the European Central Bank
lifted the main policy interest rate to 4.5% in just over one year also held back growth, particularly in the construction industry. The
German economy is most impacted due to its proportionally large manufacturing sector and is expected to grow by only 0.5% in calendar
2024.
The global economy showed remarkable resilience in calendar 2023, given the number of headwinds and negative economic shocks from
the previous year. Nevertheless, these shocks still have adverse implications for economic growth in calendar 2024, especially the
dampening effects of tighter financial conditions. Accordingly, in calendar 2024 the global economy is expected to further slow down to
2.3% GDP growth, after 2.6% in calendar 2023. Given the high number of active and potential geopolitical conflicts, the outlook is subject
to a high level of uncertainty.
8.1.1 Worldwide economy
8.1 Report on expected developments
8. Report on expected developments and associated material
opportunities and risks
Combined Management Report
Free cash flow from continuing and discontinued operations for fiscal 2023 was €10.0 billion, reaching a record high. The cash conversion
rate for Siemens, defined as the ratio of Free cash flow from continuing and discontinued operations to Net income, was 1.17. We thus
achieved a cash conversion rate that contributed strongly to the average required to reach our target of 1 minus annual comparable
revenue growth rate over a cycle of three to five years.
We intend to continue providing an attractive shareholder return. The Siemens Managing Board, in agreement with the Supervisory Board,
proposes a dividend of €4.70 per share, up from €4.25 per share a year earlier.
The U.S. economy is expected to decelerate to a soft landing. After unexpectedly strong GDP growth (expected to be +2.5%) in calendar
2023, caused mainly by a very strong services sector while industry was weak, growth in calendar 2024 is expected to slow down to 1.6%.
Tighter financial conditions
the Federal Reserve increased the main policy interest rate to 5.5% and longer-term interest rates also
increased substantially – will unfold their full effect next year. Hence, a short and shallow recession during calendar 2024, while not our
baseline assumption, is also possible and expected by some economists. Consumer spending is expected to continue as a primary growth
driver, while government investment programs (CHIPS Act, Inflation Reduction Act) play a supporting role for the economy as they spur
business investment.
Combined Management Report
20
We evaluate our capital structure using the ratio of Industrial net debt to EBITDA. Due to a combination of a decrease in Industrial net debt
and higher EBITDA year-over-year, this ratio declined to 0.6. We thus achieved the forecast provided in our Combined Management Report
2022, which was to achieve a ratio of up to 1.5.
ROCE for fiscal 2023 rose to 18.6%, up from 10.0% in fiscal 2022. This increase was due to sharply higher income before interest after tax
year-over-year. We thus exceeded the forecast for ROCE provided in our Combined Management Report 2022, which was to come close
to or reach the lower end of our target range of 15% to 20%.
Net income nearly doubled year-over-year to a historic high of €8.5 billion and corresponding basic EPS more than doubled to €10.04. EPS
pre PPA increased to €10.77. Excluding a positive €0.84 per share related to Siemens Energy Investment, EPS pre PPA was €9.93. We thus
exceeded the forecast provided in our Combined Management Report for fiscal 2022, which was to achieve EPS pre PPA in a range of
€8.70 to €9.20, and exceeded our forecast made after the third quarter of fiscal 2023, which was for EPS pre PPA excluding Siemens
Energy Investment in the range of €9.60 to €9.90.
Earnings before taxes at SFS increased significantly due mainly to higher earnings before taxes in the debt business, which in the prior
fiscal year included a €0.2 billion impact in connection with the sale of the financing and leasing business in Russia. Return on equity after
tax for SFS increased to 16.3%. Profit at Portfolio Companies included a €0.1 billion gain from the sale of the Commercial Vehicles business
but came in sharply lower compared to the prior fiscal year which had included a €1.1 billion gain from the sale of the mail and parcel-
handling business of Siemens Logistics and a €0.3 billion revaluation gain in connection with the sale of our stake in Valeo Siemens
eAutomotive GmbH. Results within Reconciliation to Consolidated Financial Statements benefited from positive effects related to Siemens
Energy Investment, including €1.6 billion from a partial reversal of the prior-year €2.7 billion impairment on Siemens' stake in Siemens
Energy AG. These positive effects were partly offset by Siemens' share of Siemens Energy's after-tax loss.
The profit margin of our Industrial Business rose to 15.4%, up from 15.1% a year earlier, reaching its highest level ever. Digital Industries
and Smart Infrastructure achieved the strongest increases and also contributed the highest margins: 22.6% and 15.4%, respectively. The
profit margin for Mobility rose slightly to 8.4%, while the profit margin at Siemens Healthineers declined to 11.7%.
21
-
Given the forecasted further slowdown of the global economy, growth of markets served by Siemens is also expected to slow in fiscal
2024 in light of significant headwinds, few tailwinds, and reduced stabilizing effects from high industry's order backlogs and price
adjustments in a number of our businesses.
Global fixed investments should benefit from government programs and from factory investments to improve supply chain resilience and
other diversification measures. Global gross fixed investments are expected to grow by 3.2% in calendar 2024, unchanged from 3.2% in
the year before.
Our forecast for net income takes into account a number of additional factors. We assume solid project execution continues in fiscal 2024.
We plan to keep the ratio of R&D expenses to revenue, which was 8% in fiscal 2023 at approximately the level in fiscal 2024. We expect
the ratio of selling and general administrative expenses to revenue, which was 18% in fiscal 2023 to remain approximately on this level in
fiscal 2024. Severance charges, which were €0.4 billion in fiscal 2023, are expected at a lower level in fiscal 2024.
We anticipate our tax rate for fiscal 2024 to be in the range of 24% to 29%. This assumption does not take into consideration possible
impacts from potential major tax reforms.
Outside our reportable segments, we expect Portfolio Companies to achieve an operational margin of more than 5%.
Results of Siemens Energy Investment depend on the performance of Siemens Energy and are excluded from our forecast for EPS pre PPA.
We anticipate that Siemens Real Estate will continue with real estate disposals depending on market conditions. Results for Innovation are
expected on the prior-year level, which was a negative €0.2 billion. The negative results related to Governance declined to €0.5 billion in
fiscal 2023; we expect a further improvement in fiscal 2024. Centrally carried pension expense are expected to be on the prior-year level,
which was a negative €0.1 billion. Amortization of intangible assets acquired in business combinations is expected in a range of €0.7
billion to €0.8 billion in fiscal 2024 based on our current business portfolio. Financing, eliminations and other items, which were a negative
€0.3 billion in fiscal 2023, are expected to be on the prior-year level depending on market developments.
Profitability
As of September 30, 2023, our order backlog totaled €111 billion, and we expect conversion from the backlog to strongly support revenue
growth in fiscal 2024 with approximately €43 billion of past orders converted to current revenue. For expected conversion of order backlog
to revenue for our respective segments, see chapter 3 Segment information.
For comparable revenue, we expect the Siemens Group to achieve comparable revenue growth in the range of 4% to 8%. Furthermore,
we anticipate that orders in fiscal 2024 will exceed revenue for a book-to-bill ratio above 1.
Revenue growth
SFS anticipates further gradually improved earnings before taxes in fiscal 2024 compared to fiscal 2023. Return on equity (ROE) (after tax)
is expected to be in the target range of 15% to 20%.
Globally, the decline of inflation rates is expected to continue, although at a slower pace. Past interest rate hikes are having the desired
effect, and headline inflation is expected to steadily approach the central bank targets. Hence, monetary policy is expected to become less
restrictive in calendar 2024.
Siemens Healthineers expects to achieve comparable revenue growth of 4.5% to 6.5% in fiscal 2024, and to contribute solidly to the profit
and profit margin of our Industrial Business.
22
Smart Infrastructure expects for fiscal 2024 comparable revenue growth of 7% to 10%. The profit margin is expected to be 15% to 17%.
Mobility expects for fiscal 2024 comparable revenue growth of 8% to 11%. The profit margin is expected to be 8% to 10%.
Digital Industries expects for fiscal 2024 comparable revenue development of 0% to 3%. This is based on the assumption that following
destocking by customers, global demand in the automation businesses, especially in China, will pick up again in the second half of the
fiscal year. The profit margin is expected to be 20% to 23%.
Segments
We are exposed to currency translation effects, mainly involving the U.S. dollar, the British pound and currencies of emerging markets,
particularly the Chinese yuan. Siemens is still a net exporter from the Eurozone to the rest of the world, so a weak euro is principally
favorable for our business and a strong euro is principally unfavorable. While we expect volatility in global currency markets to continue
in fiscal 2024, we have improved our natural hedge on a global basis through geographic distribution of our production facilities in the
past. In addition to the natural hedging strategy, we also hedge currency risk in our export business using derivative financial instruments.
We expect these steps to help us limit effects on income related to currency in fiscal 2024. In this outlook, we assume that currency
translation effects in fiscal 2024 slightly reduce nominal volume growth rates for Siemens and profitability of our businesses.
This outlook excludes burdens from legal and regulatory matters.
We are basing our outlook for fiscal 2024 on the above-mentioned expectations and assumptions regarding the overall economic situation
and also on the specific market conditions we expect for our respective industrial businesses, as described in chapter 3 Segment
information. Furthermore, we assume that geopolitical tensions do not further increase. We expect improvements in productivity and
adjusting prices for our own products, solutions and services to more than offset effects from wage increases and higher prices for raw
materials and components.
8.1.2 Siemens Group
The forecasts for calendars 2024 and 2023 presented here for GDP and fixed investments are based on a report from S&P Global dated
October 15, 2023.
Combined Management Report
Profit Industrial Business exceeded the record high of a year earlier and rose 11% to €11.4 billion. All industrial businesses except Siemens
Healthineers increased their profit year-over-year. The strongest increase came from Smart Infrastructure on improvements in all its
businesses, led by the electrical products and the electrification businesses. Growth at Digital Industries was driven by the automation
businesses, only partly offset by a decline in profit in the software business due mainly to higher expenses related to cloud-based activities.
Profit at Mobility increased in nearly all businesses and included positive trailing effects related to the winding down of business activities
in Russia a year earlier. Profit at Siemens Healthineers came in lower on declines in the diagnostics business, due primarily to sharply lower
revenue from rapid coronavirus antigen tests as well as charges related to its transformation program and charges related to refocusing
certain activities in the advanced therapies business.
Fiscal 2023 was another very successful year for Siemens. We achieved excellent financial results in a volatile market environment, which
on the one hand included destocking by customers and distributors following previously proactive purchasing, particularly in our short-
cycle businesses, and on the other hand included improved supply chain conditions, which accelerated revenue conversion from our high
order backlog. We raised our outlook during the fiscal year after the first and the second quarters. We then reached or exceeded all the
targets set for our primary measures for fiscal 2023. We achieved revenue growth of 11% net of currency translation and portfolio effects
and delivered EPS pre PPA of €10.77. Excluding Siemens Energy Investment, EPS pre PPA was €9.93. ROCE increased to 18.6%, our capital
structure ratio came in at 0.6, and the cash conversion rate was 1.17.
Orders rose 7% year-over-year to €92.3 billion, for a book-to-bill ratio of 1.19, thus fulfilling our expectation of a ratio above 1. Order
growth was driven by sharply higher volume from large orders at Mobility, including an order worth €2.9 billion for locomotives and
associated maintenance in India and a €2.5 billion order for the first line of a turnkey rail system in Egypt, and by clear growth in Smart
Infrastructure led by the electrification business. Orders in Digital Industries came in lower as the destocking trend mentioned above had
a significant effect on its automation businesses.
10,322
(2,084)
(2,218)
With our ability to generate positive operating cash flows from continuing and discontinued operations of €12.2 billion in fiscal 2023, our
total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €11.1 billion, our unused lines of
credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion,
our operating net working capital is sufficient for our present requirements.
(2,218)
Additions to intangible assets and property, plant and equipment
12,239
(41)
12,281
(81)
Cash flows from operating activities
and
Continuing Discontinued Continuing
operations operations
discontinued
operations
discontinued
operations
Fiscal year 2022
Fiscal year 2023
Continuing
and
Continuing Discontinued
operations operations
Cash conversion rate
Given the above-mentioned assumptions, we expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA
excluding Siemens Energy Investment to a range of €10.40 to €11.00 in fiscal 2024, along with a corresponding increase in net income.
For comparison, fiscal 2023 EPS pre PPA was €9.93 excluding €0.84 in EPS pre PPA from Siemens Energy Investment.
(in millions of €)
10,241
(2,083)
(I) Free cash flow
During fiscal 2023, we made further progress in focusing our business portfolio by selling our Commercial Vehicles business. Furthermore,
we began forming a new motors and large drives company under the name Innomotics by combining our existing business activities in
the areas of low- to high-voltage motors, geared motors, medium-voltage converters and motor spindles. Also, we further reduced our
stake in Siemens Energy AG to 25.1% and transferred shares to Siemens Pension-Trust e.V. To boost future growth and drive innovation,
we announced a €2 billion investment strategy mainly for new manufacturing capacity as well as innovation labs and education centers.
We also expanded our open digital business platform, Siemens Xcelerator, by introducing Industrial Operations X, which includes a broad
range of interoperable offerings for more adaptive production, and by adding new cloud-based applications for Building X, our suite for
smart and sustainable buildings.
Overall, global economic development in fiscal 2023 was mixed and characterized by a number of headwinds. In this environment,
Siemens delivered a very strong performance in all its businesses due to its strategic positioning relative to long-term trends such as
automation, electrification and digitalization. With our offerings, we help increase resource efficiency and the decarbonization of industry,
transport and building infrastructures and make manufacturing more resilient and flexible. We expect these trends to continue to drive
our growth in the coming years.
7. Overall assessment of the economic position
Combined Management Report
19
With regard to capital expenditures, we expect a significant increase in fiscal 2024. In the context of the €2 billion investment strategy
presented in fiscal 2023 to strengthen growth, innovation and resilience, significant amounts will be invested in the coming years for the
construction and expansion of high-tech production facilities in the U.S., China and Singapore. As part of this investment strategy, Siemens
also announced the establishment of its new Technology Campus in Erlangen, Germany, to expand development and manufacturing
capacities. In addition, up to €0.6 billion are to be invested in Siemensstadt Square. This project, initiated in fiscal 2019, aims to transform
Siemens' existing industrial area in Berlin into a modern urban district supporting a diverse range of purposes, including strengthening key
technologies. Further investments are planned in relation to new office buildings, including Siemens Campus Erlangen. Furthermore, we
continue to invest in attractive innovation fields through Next47, our global venture capital unit.
Additions to intangible assets and property, plant and equipment from continuing operations totaled €2.2 billion in fiscal 2023. Within
the industrial businesses, ongoing investments related mainly to technological innovations; maintaining, extending and digitalizing our
capacities for designing, manufacturing and marketing new solutions; improving productivity; and replacements of fixed assets. These
investments amounted to €1.7 billion in fiscal 2023. The remaining portion related mainly to Siemens Real Estate, including significant
amounts for projects such as new office buildings in Germany and Spain. Siemens Real Estate is responsible for uniform and comprehensive
management of Company real estate worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate
activities with customer-specific real estate solutions.
Investing activities
The cash conversion rate was influenced by a non-cash profit of €0.7 billion in fiscal 2023 (in fiscal 2022 by a non-cash loss of €2.9 billion)
related to Siemens Energy Investment.
1.86
4,392
8,157
(81)
8,238
10,021
8,529
1.17
(1)/(II) Cash conversion rate
(II) Net income
(41)
10,062
Revenue was higher in nearly all our industrial businesses and rose to €77.8 billion, up 8% year-over-year. Smart Infrastructure and Digital
Industries contributed double-digit growth with all businesses posting increases. Revenue growth at Smart Infrastructure was led by the
electrification and the electrical products businesses, while at Digital Industries the factory automation and the process automation
businesses contributed the strongest growth. Revenue growth at Mobility was led by a significant increase in the rolling stock business.
Revenue at Siemens Healthineers remained on the prior-year level as growth particularly in the imaging and Varian businesses was offset
by a decline in the diagnostics business. Excluding currency translation and portfolio effects, revenue for Siemens rose 11%. We thus
exceeded the forecast provided in our Combined Management Report for fiscal 2022, which was to achieve comparable revenue growth
in the range of 6% to 9%, and reached the upper end of our subsequently raised outlook, which was to achieve 9% to 11% in comparable
revenue growth.
Capital efficiency
GDP in China is expected to grow at only 4.6% in calendar 2024, after an anticipated growth of 5.0% in calendar 2023. The correction in
the real estate sector will continue to weigh on GDP growth. During calendar 2024 global goods demand, world trade and industrial
production are expected to modestly increase again. The main assumption behind this expectation is further normalization for two critical
factors: consumer spending and the inventory policies of companies. Both weighed on industrial output in calendar 2023 but are expected
to modestly support growth of the Chinese economy in calendar 2024. In addition, Chinese private consumption is expected to drive
domestic demand and some tailwinds will come from announced stimulus measures.
Capital structure
Competitive environment: The worldwide markets for our products, solutions and services are highly competitive in terms of pricing,
product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.
We face strong, established competitors as well as rising competitors from emerging markets and new industries, which may have a better
cost structure or offer a better customer solution. Some industries in which we operate are undergoing consolidation, which may result in
stronger competition, a change in our relative market position, an increase in inventory of finished or work-in-progress goods, or
unexpected price erosion. Furthermore, there is a risk that critical suppliers could be taken over by competitors and a risk that competitors
are increasingly offering services to our installed base. We address these risks with various measures, for example benchmarking, strategic
initiatives, sales push initiatives, executing productivity measures and target cost projects, rightsizing of our footprint, outsourcings,
mergers and joint ventures and optimizing our product and service portfolio. We continuously monitor and analyze competitive, market
and industry information in order to be able to anticipate unfavorable changes in the competitive environment rather than merely reacting
to such changes.
8.3.2 Operational risks
Cyber/Information security: Digital technologies are deeply integrated into our business portfolio. Further integration of information
technology into products and services in conjunction with changing business strategies (such as outsourcing, globally distributed
development, a lesser degree of sole production) are leading to an increasingly distributed supply chain, making efficient controls difficult.
The fact of a large number of suppliers requires a significant effort for the initial and regular verification of the effective implementation
of cybersecurity requirements by suppliers. Siemens business entities might lose market access if their products, solutions and services do
not comply with increased regulations and legal requirements for cybersecurity in their respective countries. We observe a global increase
of cybersecurity threats and higher levels of professionalism in computer crime, which pose a risk to the security of Siemens products,
solutions and services; to Siemens IT systems and networks; and to the confidentiality, availability and integrity of data. Like other large
multinational companies, we face active cyber threats from sophisticated adversaries that are supported by organized crime and nation-
states engaged in economic espionage or even sabotage. According to external sources of relevant data, this trend has been accelerated
by geopolitical developments and tensions worldwide. Especially the numbers of phishing attacks and malicious websites have increased
significantly. There is a risk that confidential information or data-privacy-relevant information may be stolen or that the integrity of our
portfolio may be compromised, such as by attacks on our networks, social engineering, data manipulations in critical applications, or a
loss of critical resources, resulting in financial damages and violation of data privacy laws. Moreover, the information technology market
is concentrated among a small number of information technology and software vendors, which could lead to dependence on a single
provider. There can be no assurance that the measures aimed at protecting our intellectual property and portfolio will address these threats
under all circumstances. Cybersecurity covers the IT of our entire enterprise including office IT, systems and applications, special-purpose
networks, and our operating environments such as manufacturing and R&D. We strive to mitigate these risks by employing a number of
cyber defense measures, including employee training, considering new models of flexible working environments, and comprehensive
monitoring of our networks and systems with an artificial intelligence solution to identify attacks faster, and thereby prevent damage to
society, critical infrastructures, our customers, our partners and Siemens overall. We initiated the industrial "Charter of Trust," signed by a
growing group of global companies, which sets out principles for building trust in digital technologies and creating a more secure digital
world. Nonetheless, our systems, products, solutions and services, as well as those of our service providers, remain potentially vulnerable
to attacks. Such attacks could potentially lead to the publication, manipulation or leakage of information such as through industrial
espionage. They could also result in deliberate improper use of our systems, vulnerable products, production downtimes and supply
shortages, with potential adverse effects on our reputation, our competitiveness and results of operations. For increased protection of
Siemens and reduction of a potential financial impact caused by cyber incidents, the currently insurable cybersecurity risks have been to a
partial extent transferred to a consortium of insurance companies.
26
Combined Management Report
Supply chain management: The financial performance of our operating units depends on reliable and effective supply chain management
for components, sub-assemblies, energy, critical parts (e.g. semiconductors) and materials. Capacity constraints and supply shortages
resulting from ineffective supply chain management may lead to production bottlenecks, delivery delays, quality issues and additional
costs. We also rely on third parties to supply us with parts, components and services. Using third parties to manufacture, assemble and
test our products may reduce our control over manufacturing yields, quality assurance, product delivery schedules and costs. Although we
work closely with our suppliers to avoid supply-related problems, there can be no assurance that we will not encounter supply problems
in the future, especially if we use single-source suppliers for critical components. Shortages and delays could materially harm our
businesses. Unanticipated increases in the price of components or raw materials due to market shortages or other reasons could also
adversely affect performance. Furthermore, we may be exposed to the risk of delays and interruptions in the supply chain as a consequence
of catastrophic events (including pandemics), geopolitical uncertainties, energy shortages, sabotage, cyber incidents, suppliers' financial
difficulties or suppliers not meeting our standards, particularly if we are unable to identify alternative sources of supply or means of
transportation in a timely manner or at all. Besides other measures, we mitigate price fluctuation in global raw material markets with
various hedging instruments.
Internal programs and initiatives: We are in a continuous process of operational optimization and constantly engage in cost-reduction
initiatives, including ongoing capacity adjustment measures and structural initiatives. Consolidation of business activities and
manufacturing facilities, outsourcings, joint ventures and the streamlining of product portfolios are all part of these cost-reduction efforts.
These measures may not be implemented as planned, may turn out to be less effective than anticipated, may become effective later than
estimated or may not become effective at all. Any future contribution of these measures to our profitability will be influenced by the actual
savings achieved and by our ability to sustain them. In case of restructuring and outsourcing activities, there could be delays in product
deliveries or we might even experience delivery failures. Furthermore, delays in critical R&D projects could lead to negative impacts in
running projects. We constantly control and monitor the progress of these projects and initiatives using standardized controlling and
milestone tracking approaches.
Shortage of skilled personnel: Competition for diverse and highly qualified personnel, such as specialists and experts in technical fields,
remains intense in the industries and regions in which our businesses operate. We have ongoing demand for highly skilled people and a
need to enhance diversity, inclusion and sense of belonging in our workforce. Our future success depends in part on our continued ability
to attract engineers, tech talent and other qualified personnel. We address these topics for example by strengthening the capabilities and
skills of our talent acquisition teams and a strategy of proactive search for people with the required capabilities in our respective industries
and markets. In fiscal 2023 we rolled out our new Employer Branding in all our recruiting marketing activities and started a media campaign
with focus on tech talent in our key markets. Technology and digitalization help us to be more effective in attracting and selecting diverse
talent. In addition, we have a focus on diversity and structured succession planning. As with our existing people, we must also provide
new talent with opportunities to grow and bond, especially soon after they join us. This appears especially relevant at a time of new,
increasingly virtual working environments.
Project-related risks: A number of our segments conduct activities under long-term contracts that are awarded on a competitive bidding
basis. Such contracts typically arise at Mobility and in various activities of Smart Infrastructure or Portfolio Companies. Some of these
contracts are inherently risky because we may assume substantially all of the risks associated with completing a project and meeting post-
completion warranty obligations. For example, we may face the risk that we must satisfy technical requirements of a project even though
we have not gained experience with those requirements before winning the project. The profit margins realized on fixed-priced contracts
may vary from original estimates as a result of changes in costs and productivity over a contract's term. We sometimes bear the risk of
unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties of our customers and/or significant
partners, cost overruns or contractual penalties caused by unexpected technological problems, unexpected developments at the project
sites, unforeseen changes or difficulties in the regulatory or political environment, performance problems with our suppliers,
subcontractors and consortium partners or other logistical difficulties. Some of our multi-year contracts also contain demanding
installation and maintenance requirements in addition to other performance criteria relating to timing, unit cost and compliance with
government regulations, which, if not satisfied, could subject us to substantial contractual penalties, damages, non-payment and contract
termination. There can be no assurance that contracts and projects, in particular those with long-term duration and fixed-price calculation,
can be completed profitably. To tackle those risks, we established a global project management organization to systematically improve
the technical and commercial capabilities of our project management personnel. For complex projects we conduct dedicated risk
assessments in very early stages of the sales phase before we decide to hand over a binding offer to our customers.
8.3.3 Financial risks
Risks from pension obligations: The provisions for pensions and similar obligations may be affected by changes in actuarial assumptions,
including the discount rate, as well as by movements in financial markets or a change in the mix of assets in our investment portfolio.
Additionally, they are subject to legal risks with regard to plan design, among other factors. A significant increase in underfunding may
have a negative effect on our capital structure and rating, and thus may tighten refinancing options and increase costs. In order to comply
with local pension regulations in selected foreign countries, we may face an economic risk of increasing cash outflows due to changes in
funding level according to local regulations of our pension plans in these countries or to changes in the regulations themselves.
Audits by tax authorities and changes in tax regulations: We operate in nearly all countries of the world and therefore are subject to
many different tax regulations. Changes in tax laws in any of these jurisdictions could result in higher tax expenses and increased tax
payments. Furthermore, legislative changes could impact our tax receivables and liabilities as well as deferred tax assets and deferred tax
liabilities. In addition, the uncertain legal environment in some regions could limit our ability to enforce our rights. As a globally operating
organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
interpretations or developments of tax regimes may affect our business situation, financial condition and results of operations. We are
regularly audited by tax authorities in various jurisdictions and we continuously identify and assess relevant risks.
Market price risks: We are exposed to fluctuations in exchange rates, especially between the U.S. dollar and the euro, because a high
percentage of our business volume is conducted as exports from Europe to regions using the U.S. dollar. In addition, we are exposed to
effects involving the currencies of emerging markets, in particular the Chinese yuan. Appreciable changes in euro exchange rates could
materially change our competitive position. We are also exposed to fluctuations in interest rates. Even hedging activities to mitigate such
risks may result in a reverse effect. Fluctuations in exchange or interest rates, negative developments in the financial markets and changes
27
Disruptive technologies: The markets in which our businesses operate experience rapid and significant changes due to the introduction
of innovative and disruptive technologies. In the field of digitalization (e.g. Digital Twin, artificial intelligence, cloud computing), there are
risks associated with new competitors, substitutions for existing products/solutions/services, new business models (e.g. in terms of pricing,
financing, extended scopes for project business or subscription models in the software business), and finally the risk that our competitors
may have more advanced time-to-market strategies and introduce their disruptive products and solutions faster than Siemens. Siemens
generally differentiates its software offerings from those of other software companies through deep domain know-how. There are risks
associated with technologies such as artificial intelligence, including generative artificial intelligence, that domain expertise will not be a
significant distinguishing feature in the future, and that additional competitors may therefore emerge more easily or rapidly. Our operating
results depend to a significant extent on our technological leadership, our ability to anticipate and adapt to changes in our markets, and
our ability to optimize our cost base accordingly. Introducing new products and technologies requires a significant commitment to research
and development, which in return requires expenditure of considerable financial resources that may not always result in success. Our
results of operations may suffer if we invest in technologies that do not operate or may not be integrated as expected, or that are not
accepted in the marketplace as anticipated, or if our products, solutions or systems are not introduced to the market in a timely manner,
particularly compared to our competitors, or even become obsolete. We constantly apply for new patents and actively manage our
intellectual property portfolio to secure our technological position. However, our patents and other intellectual property may not prevent
competitors from independently developing or selling products and services that are similar to ours.
Combined Management Report
Liquidity and financing risks: Our treasury and financing activities could face adverse deposit and/or financing conditions from negative
developments related to financial markets, such as limited availability of funds and hedging instruments; an updated evaluation of our
solvency, particularly from rating agencies; negative interest rates; and impacts arising from more restrictive regulation of the financial
sector, central bank policy, or the usage of financial instruments. Widening credit spreads due to uncertainty and risk aversion in the
financial markets might lead to adverse changes in the market values of our financial assets, in particular our derivative financial
instruments.
Credit risks: We provide our customers with various forms of direct and indirect financing of orders and projects, including guarantees.
Siemens Financial Services in particular bears credit risks due to such financing activities if, for example, customers do not meet obligations
arising from these financing arrangements, meet them only partially, or meet them late. The credit environment has become more
dynamic due to a more uncertain macroeconomic outlook (e.g. inflation) and geopolitical tensions.
8.3.4 Compliance risks
Changes of regulations, laws and policies: Regulatory requirements are being introduced or modified at an unprecedented rate, often
with little or no advance implementation lead time. This creates a risk that new requirements become effective more quickly than they
can be implemented in the associated systems and processes, potentially resulting in business disruptions and the need for manual
mitigation interventions. As a diversified company with global businesses we are exposed to various product- and country-related
regulations, laws and policies influencing our business activities and processes. According to observations and analysis, there is an
increasing risk that existing technical regulations in target markets will suddenly change, or new ones will be set in force, which result in
market access criteria that our products do not meet. The affected products would lose marketability in this market. Reducing the risk of a
sales-stop depends on the required correction for the non-conformity. In case the product can technically stay as is, while it has to undergo
new and additional conformity assessment and certification, there will be considerable effort and cost to carry out the needed testing and
certification procedures. In a worse case, the affected product will need re-engineering or re-design to meet the requirements of the
changed or new technical regulation even before it can become re-assessed and certified for market approval. The latter case will cause
significant extra effort and cost to make the needed product changes and to maintain the country-specific product variant as an additional
derivative item in the portfolio. In the worst case, if the two aforementioned ways of maintaining the product's marketability prove to be
not feasible, we must stop selling the affected product in the market. The uncertain geopolitical situation has triggered unpredictable -
and often conflicting – extraterritorial regulations, restrictions and sanctions, thus creating a potential risk that it will be difficult to
simultaneously comply with all relevant regulatory requirements of certain transactions. Complex cross-jurisdictional regulations can vary
between countries, even within the same region, each with slightly different rules and requirements, creating a risk that a global standard
cannot be effectively implemented and maintained, potentially leading to a need for more custom or regional standards. We monitor the
political and regulatory landscape in all our key markets to anticipate potential problem areas, with the aim of quickly adjusting our
business activities and processes to changed conditions. However, any changes in regulations, laws and policies could adversely affect our
business activities and processes as well as our financial condition and results of operations.
-
Current and future investigations regarding allegations of corruption, of antitrust violations and of other violations of law:
Proceedings against us or our business partners regarding allegations of corruption, of antitrust violations and of other violations of law
may lead to fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgements, disqualifications from directly
and indirectly engaging in certain types of business, the loss of business licenses or permits, other restrictions and legal consequences as
well as negative public media coverage. Accordingly, we may, among other things, be required to comply with potential obligations and
liabilities arising in connection with such investigations and proceedings, including potential tax penalties. Moreover, any findings related
to public corruption that are not covered by the 2008 and 2009 corruption charge settlements, which we concluded with U.S. and German
authorities, may endanger our business with government agencies and intergovernmental and supranational organizations. Monitors
could again be appointed to review future business practices and we may otherwise be required to further modify our business practices
and our compliance program.
In its global business, Siemens does part of its business with state-owned enterprises and governments. We also participate in projects
funded by government agencies and intergovernmental and supranational organizations, such as multilateral development banks.
Ongoing or potential future investigations into allegations of corruption, antitrust violations or other violations of law could as well impair
relationships with such parties or could result in our exclusion from public contracts. Such investigations may also adversely affect existing
private business relationships and our ability to pursue potentially important strategic projects and transactions, such as strategic alliances,
joint ventures or other business alliances, or could result in the cancellation of certain of our existing contracts. Moreover, third parties,
including our competitors, could initiate significant litigation.
In addition, future developments in ongoing and potential future investigations, such as responding to the requests of governmental
authorities and cooperating with them, could divert management's attention and resources from other issues facing our business.
Furthermore, we might be exposed to compliance risks in connection with recently acquired operations that are in the ongoing process of
integration.
Along with other measures, Siemens has established a global compliance organization that conducts compliance risk mitigation processes
such as Compliance Risk Assessments, among others, or initiates audit activities performed by the internal assurance department.
Sanctions and export control: As a globally operating organization, we conduct business with customers in countries which are subject
to export control regulations, embargoes, economic sanctions, debarment policies or other forms of trade restrictions (hereafter referred
to as "sanctions") imposed by the U.S., the EU, China or other countries or organizations. New or expanded sanctions in countries in which
we do business may result in a curtailment of our existing business in such countries or indirectly in other countries. We are also aware of
policies of national authorities and institutional investors, such as pension funds or insurance companies, requiring divestment of interests
in and prohibiting investment in and transactions with entities doing business with countries identified by the U.S. Department of State as
28
Combined Management Report
Cash outflows for dividends attributable to non-controlling interests mainly included dividends paid to the shareholders of Siemens
Healthineers AG.
For fiscal 2024, we expect ROCE to be in our target range of 15% to 20%.
in central bank policies could therefore negatively impact our financial results. Market prices show higher volatility than in the past due to
increased macroeconomic uncertainties resulting from inflation, geopolitical tensions and other factors noted above.
Increasing sustainability focus: Governments around the world continue to increase their focus on sustainability topics, resulting in the
risk of increased costs to comply with new laws and related reporting requirements. In addition, increasing stakeholder and investor focus
on sustainability topics brings reputational risk should our sustainability commitments, targets and activities be perceived as a deceptive
use of green marketing or otherwise not credible. Climate change litigation has become a worldwide phenomenon with a corresponding
risk to Siemens as a large corporation. We address these risks in a variety of ways including through our sustainability framework DEGREE,
in which we have set ambitious sustainability targets. DEGREE includes measures to reduce our carbon footprint along with other initiatives
addressing ESG topics more generally. We have implemented an ESG due diligence process that supports Siemens businesses with due
diligence in the customer-oriented environment with a view to possible environmental and social risks as well as related human rights and
reputational risks. Finally, we believe our overall portfolio is very well positioned to meet the current and future sustainability needs of our
customers and the societies in which we operate.
For further information on post-employment benefits, derivative financial instruments, hedging activities, financial risk management and
related measures, see Notes 17, 24 and 25 in Notes to Consolidated Financial Statements for fiscal 2023.
25
For fiscal 2024, we expect a cash conversion rate that contributes to reaching our target of 1 minus the annual comparable revenue growth
rate of Siemens over a cycle of three to five years.
Cash conversion rate
We aim in general for a capital structure of up to 1.5; we expect to achieve this in fiscal 2024.
Combined Management Report
8.1.3 Overall assessment
Our outlook for the Siemens Group for fiscal 2024 is based on the assumption that geopolitical tensions do not further increase. Under
this condition, we expect our Industrial Business to continue its profitable growth.
For the Siemens Group we expect comparable revenue growth in the range of 4% to 8% and a book-to-bill ratio above 1.
We expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA excluding Siemens Energy Investment to a range
of €10.40 to €11.00 in fiscal 2024, up from EPS pre PPA excluding Siemens Energy Investment of €9.93 in fiscal 2023.
This outlook excludes burdens from legal and regulatory matters.
8.2 Risk management
8.2.1 Basic principles of risk management
Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing
appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute
our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires
each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific
industries and responsibilities, while being consistent with the overall policy.
23
Combined Management Report
8.2.2 Enterprise risk management process
Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and
opportunities described below or if our expectations and assumptions do not materialize.
Risk management at Siemens builds on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM)
approach that is integrated into the organization and that addresses both risks and opportunities. Our ERM approach is based on the
globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management –
Integrating with Strategy and Performance (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018)
and is adapted to Siemens requirements. The frameworks connect the ERM process with our financial reporting process, our internal
control and our compliance management system. They consider a company's strategy, the efficiency and effectiveness of its business
operations, the reliability of its financial reporting and compliance with relevant laws and regulations to be equally important.
Our ERM process aims for early identification and evaluation of, and response regarding, risks and opportunities that could materially
affect the achievement of our strategic, operational, financial and compliance objectives. The time horizon is typically three years, and we
take a net risk approach, addressing risks and opportunities remaining after the execution of existing and effective measures and controls.
If risks have already been considered in plans, budgets, forecasts or the consolidated financial statements (e.g. as a provision or risk
contingency), they are supposed to be incorporated with their financial impact in the entity's business objectives. As a consequence, only
additional risks arising from the same cause (e.g. deviations from business objectives, different impact perspectives) should be considered.
In order to provide a comprehensive view of our business activities, risks and opportunities are identified in a structured way combining
elements of both top-down and bottom-up approaches. Reporting generally follows a quarterly cycle; we complement this periodic
reporting with an ad-hoc reporting process that aims to escalate critical issues in a timely manner. Relevant risks and opportunities are
evaluated in terms of impact and likelihood, considering different impact perspectives, including business objectives, reputation and
regulatory requirements. The bottom-up identification and prioritization process is supplemented by workshops with the respective
managements of our organizational units. The top-down element ensures that potential new risks and opportunities are discussed at
different management levels and are included in the subsequent reporting process, if found to be relevant. Reported risks and
opportunities are analyzed regarding potential cumulative effects and are aggregated within and for each of the organizational units
mentioned above.
We have implemented and coordinated a set of risk management and control systems which support us in the early recognition of
developments that could jeopardize the continuity of our business. The most important of these systems include our enterprise-wide
processes for strategic planning and management reporting. Strategic planning is intended to support us in considering potential risks and
opportunities well in advance of major business decisions, while management reporting is intended to enable us to monitor such risks
more closely as our business progresses. Our risk management and its contributing elements are regularly subject of audit activities by our
internal audit function. Accordingly, if deficits are detected, it is possible to adopt appropriate measures for their elimination. This
coordination of processes and procedures is intended to help ensure that the Managing Board and the Supervisory Board are fully informed
about significant risks in a timely manner.
Economic, political and geopolitical conditions: We see high uncertainties regarding the global economic and geopolitical outlook,
which deteriorated significantly in the past year due to multiple headwinds, all of which may continue to intensify. First, the Israel-Gaza
conflict continues to escalate and might cause a larger regional conflict involving further parties. Ongoing risks emanate from the war in
Ukraine. Both the Israel-Gaza conflict and the war in Ukraine may have negative impacts on sales development, production processes and
purchasing and logistics processes, for example through interruptions in supply chains and energy supplies or bottlenecks affecting
components, raw materials and intermediate products. Each of the conflicts could also intensify further to the point of expanding to
include other warring parties, including NATO countries, and the use of unconventional weapons. An expansion of the conflicts would
have a significant impact on the Siemens market environment. Even the current states of conflicts could have a further negative impact
on development of potential crude oil and natural gas supplies. This would fuel inflation, with further risk of a sustained wage-price-spiral.
In any case one of the core risks for the Siemens outlook is that central banks may fail to get inflation below their targets and then react
more restrictively or even overreact. More restrictive financial conditions would likely push advanced economies into recession and pose
a significant risk to vulnerable emerging economies. Highly indebted (emerging and industrialized) countries could suffer from increasing
financing costs, further U.S. dollar appreciation, and loss of investor confidence. Other risks could arise for the stability of public finances
and the banking sector. Further risks are coming from other geopolitical tensions (particularly associated with the Baltics, Eastern Europe,
the Western Balkans, China, Taiwan, and Iran). We continue to face economic risks from a further significant slow-down of the Chinese
economy. Key risks are coming from potential financial imbalances, particularly due to the struggling real-estate sector, but also from the
growing debt-level of local governments, with growing negative implications for Siemens business in China and the country's trading
partners. Obstruction and redefinitions of international cooperation agreements could severely impact our business. First and foremost a
more extensive U.S.-China decoupling would have adverse effects on confidence and investment activity and would severely hit Siemens'
business. Increasing trade barriers, protectionism, sanctions and in particular technical regulations would negatively impact production
costs and productivity along our global value chains, as well as significantly impede or even hinder access to sales markets. A significant
risk to our sales potential and cost structures is coming from the possibility of renewed supply chain bottlenecks, due to growing lack of
availability of intermediate goods, in particular electronic components. Furthermore, grid-lock in U.S. politics could weigh on U.S. growth
with the risk of a global spillover. We are dependent on the economic development of certain industries; a continuation or even an
intensification of the cyclical and structural headwinds in core customer industries, e.g. automotive or construction, would have adverse
impact on our business prospects. A resurgence of COVID-19 or even the outbreak of a new pandemic, a terrorist attack, a significant
cybercrime incident, or a series of such attacks or incidents in major economies, could depress economic activity globally and undermine
consumer and business confidence. Additionally, the highly interconnected global economy remains vulnerable to natural disasters or
hybrid warfare.
Below we describe the risks that could have a material adverse effect on our business situation, financial condition (including effects on
assets, liabilities and cash flows), results of operations and reputation. The order in which the risks are presented in each of the four
categories reflects the currently estimated relative exposure for Siemens associated with these risks and thus provides an indication of the
risks' current importance to us. Additional risks not known to us or that we currently consider immaterial may also negatively impact our
business objectives and operations. Unless otherwise stated, the risks described below relate to all our organizational units.
If we are not successful in adapting our production and cost structure to subsequent changes in conditions in the markets in which we
operate, there can be no assurance that we will not experience adverse effects. For example, our customers may modify, delay or cancel
plans to purchase our products, solutions and services, or fail to follow through on purchases or contracts already executed. In addition, it
may become more difficult for our customers to obtain financing. Contracted payment terms, especially regarding the level of advance
payments by our customers relating to long-term projects, may become less favorable, which could negatively impact our financial
condition. Siemens' global setup with operations in almost all relevant economies, our wide range of offerings with varied exposures to
business cycles, and our balanced mix of business models (e.g. equipment, components, systems, software, services and solutions) help
us to absorb impacts from adverse developments in any single market.
Combined Management Report
8.3 Risks
24
To oversee the ERM process and to further drive the integration and harmonization of existing control activities to align with legal and
operational requirements, the Managing Board established a Risk Management and Internal Control Organization, led by the Head of
Assurance. In order to allow for a meaningful discussion at the Siemens Group level, this organization aggregates individual risks and
opportunities of similar cause-and-effect nature into broader risk and opportunity themes. This aggregation naturally results in a mixture
of risks, including those with a primarily qualitative assessment and those with a primarily quantitative assessment; the same applies to
opportunities. Accordingly, we do not adopt a purely quantitative assessment of risk and opportunity themes. Thematic risk and
opportunity assessments as well as our risk-bearing capacity then form the basis for the evaluation of the company-wide risk and
opportunity situation during the quarterly Managing Board meetings. The Head of Assurance assists the Managing Board with the
operation and oversight of the risk and internal control system and reporting to the Audit Committee of the Supervisory Board.
8.2.3 Risk management organization and responsibilities
Responsibilities are assigned for all relevant risks and opportunities, with the hierarchical level of responsibility depending on the
significance of the respective risk or opportunity. In a first step, assuming responsibility for a specific risk or opportunity involves choosing
one of our general response strategies. Our general response strategies with respect to risks are avoidance, transfer, reduction or
acceptance of the relevant risk. Our general response strategy with respect to opportunities is to "pursue" the relevant opportunity. In a
second step, responsibility for a risk or opportunity also involves the development, initiation and monitoring of appropriate response
measures corresponding to the chosen response strategy. These response measures have to be specifically tailored to allow for effective
risk management. Accordingly, we have developed a variety of response measures with different characteristics. For example, we mitigate
the risk of fluctuations in currency and interest rates by engaging in hedging activities. Regarding our projects, systematic and
comprehensive project management with standardized project milestones, including provisional acceptances during project execution
and complemented by clearly defined approval processes, assists us in identifying and responding to project risks at an early stage, even
before the bidding phase. Furthermore, we maintain appropriate insurance levels for potential cases of damage and liability risks in order
to reduce our exposure to such risks and to avoid or minimize potential losses. Among others, we address the risk of fluctuation in
economic activity and customer demand by closely monitoring macroeconomic conditions and developments in relevant industries, and
by adjusting capacity and implementing cost-reduction measures in a timely and consistent manner if they are deemed necessary. Due to
regular screening of climate risks and environmental, social and governance (ESG) developments we can initiate related mitigation actions
in a timely manner – also as part of our DEGREE implementation. Worldwide there are risks from the transmission of infectious agents
from animals to humans, from humans to humans and in other ways. Epidemic, pandemic or other infectious developments such as
bioterrorism to cause high disease rates in countries, regions or continents. We constantly check information from the World Health
Organization (WHO), the Centers for Disease Control and Prevention in the U.S. and Europe, the Robert Koch Institute in Germany and
other institutions in order to be able to identify early epidemic or pandemic risks and determine and initiate related mitigation actions as
early as possible.
Portfolio measures, at-equity investments, other investments and strategic alliances: Our strategy includes divesting our activities in
some business areas and strengthening others through portfolio measures, including mergers and acquisitions. With respect to
divestments, we may not be able to divest some of our activities as planned, and the divestitures we do carry out could have a negative
impact on our business situation, financial condition, results of operations and reputation. Mergers and acquisitions are inherently risky
because of difficulties that may arise when integrating people, operations, technologies and products. There can be no assurance that any
of the businesses we acquire can be integrated successfully and in a timely manner as originally planned, or that they will perform as
anticipated once integrated. In addition, we may incur significant acquisition, administrative, tax and other expenditures in connection
with these transactions, including costs related to integration of acquired businesses. Furthermore, portfolio measures may result in
additional financing needs and adversely affect our capital structure. Acquisitions can lead to substantial additions to intangible assets,
including goodwill, in our statements of financial position. If we were to encounter continuing adverse business developments or if we
were otherwise to perform worse than expected at acquisition activities, then these intangible assets, including goodwill, might have to
be impaired, which could adversely affect our business situation, financial condition and results of operations. Our investment portfolio
includes investments held for purposes other than trading and other investments. Any factors negatively influencing the financial
condition and results of operations of our at-equity investments, such as Siemens Energy, and other investments could have an adverse
effect on our equity pick-up related to these investments or may result in a related write-off. In addition, our business situation, financial
condition and results of operations could also be adversely affected in connection with loans, guarantees or non-compliance with financial
covenants related to these investments. Furthermore, such investments are inherently risky as we may not be able to sufficiently influence
corporate governance processes or business decisions taken by our at-equity investments, by other investments and by strategic alliances,
which may have a negative effect on our business and especially on our reputation. In addition, joint ventures bear the risk of difficulties
that may arise when integrating people, operations, technologies and products. Strategic alliances may also pose risks for us because we
compete in some business areas with companies with which we have strategic alliances. Besides other measures, we handle these risks
with standardized processes as well as dedicated roles and responsibilities in the areas of mergers, acquisitions, divestments and carve-
outs. This includes the systematic treatment of all contractual obligations and post-closing claims.
8.3.1 Strategic risks
0%
38
2,534
(14)%
30,424
26,190
71,576
72,610
0%
71,303
21%
1,081
2022
Corresponding to revenue, the difference between Taxonomy-eligible OpEx and Taxonomy-aligned OpEx relates mainly to the
documentation of DNSH criteria for pollution prevention (Appendix C).
1,307
72,657
This aligned OpEx includes €3 million related to a CapEx plan, associated with building projects to be finalized by fiscal 2028, summing up
to a planned total volume of €1.4 billion (capitalizable and non-capitalizable costs). The buildings are designed to minimize energy use
and carbon emissions (CCM 7.7).
28,724
The OpEx KPI shows the ratio of OpEx from Taxonomy-eligible and/or aligned economic activities to total OpEx. The total OpEx comprises
direct non-capitalized costs related to research and development, building renovation measures, short-term leases, maintenance and
repairs, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant, and equipment per Annex I of
the Commission Delegated Regulation (EU) 2021/2178. Accordingly, 12.4% (€0.9 billion) of Siemens' OpEx were eligible and 8.2% (€0.6
billion) were aligned.
11%
% Change
2,065
2,294
33
1%
220
223
(10)%
32,047
56%
1,623
The revenue KPI shows the ratio of revenue from Taxonomy-eligible and/or aligned economic activities to the total revenue in the
Consolidated Statements of Income for the reporting year. Based on an assessment of the Siemens business portfolio, Taxonomy-eligible
revenue accounted for 20.3% and Taxonomy-aligned revenue for 16.5% of total revenue. This translates into €15.7 billion in Taxonomy-
eligible revenue and €12.8 billion in aligned revenue.
Taxonomy-eligible and aligned economic activities were primarily driven by the (i) Manufacture of low-carbon technologies for transport
(Climate Change Mitigation, CCM 3.3), (ii) rail transportation infrastructure (CCM 6.14), (iii) Infrastructure enabling low-carbon road
transport and public transport (CCM 6.15), all associated with Mobility businesses, as well as (iv) energy-efficient building technologies
(CCM 3.5) and (v) services for energy-efficient building technologies (CCM 7.5), both related to Smart Infrastructure businesses.
The difference between Taxonomy-eligible revenue and Taxonomy-aligned revenue is mainly due to DNSH criteria related to pollution
prevention as part of Appendix C, which go beyond existing national regulation. This is mainly because additionally required
documentation is not completely available yet.
Capital expenditures KPI
The CapEx KPI shows the ratio of CapEx from Taxonomy-eligible and/or aligned economic activities to the total CapEx, reflecting additions
(including additions from business combinations) to other intangible assets and property, plant and equipment in accordance with Note
13 to the Consolidated Financial Statements. In the reporting year, 34.5% (€1.3 billion) of Siemens' CapEx were eligible, and 12.2% (€0.5
billion) were aligned. The aligned CapEx is composed as follows: a majority of €0.4 billion is related to additions to property, plant and
equipment, the remainder pertains to internally generated intangible assets and capitalized right-of-use assets.
This aligned CapEx includes €116 million related to a CapEx plan, associated with building projects to be finalized by fiscal 2028, summing
up to a planned total volume of €1.4 billion (capitalizable and non-capitalizable costs). The buildings are designed to minimize energy use
and carbon emissions (CCM 7.7).
Acquisition and ownership of buildings (CCM 7.7) related to Siemens' real estate portfolio represents the largest portion in overall CapEx
eligibility. The difference between Taxonomy-eligible CapEx and Taxonomy-aligned CapEx is impacted by (i) only partial availability of
information on energy performance certificates for our global portfolio and (ii) energy certificates below the required threshold defined
in the Substantial Contribution criteria for the energy efficiency of buildings.
Operating expenditures KPI
The majority of eligible and/or aligned expenditures relate to processes and assets associated with the economic activities described for
the revenue KPI: (i) Manufacture of low carbon technologies for transport (CCM 3.3) and (ii) rail transportation infrastructure (CCM 6.14).
These two activities account for half of eligible OpEx and the majority of aligned OpEx.
Sep. 30,
2023
The increase in selling and general administrative expenses was due mainly to higher selling expenses led by Digital Industries.
Other operating income (expenses), net, included mainly a loss of €0.2 billion from a disposal in connection with the carve-out of
business activities into the Innomotics GmbH, partly offset by €0.1 billion income from an intragroup service contract. Fiscal 2022 included
mainly expenses of €0.2 billion from the intragroup service contract and expenses of €0.1 billion for the recognition of a provision related
to guarantees and expected obligations from consortium contracts.
Total liabilities and equity
33
Interest and other financial income (expenses), net included a negative interest result of €0.6 billion compared to a positive interest
result of €0.4 billion a year earlier, which was driven by the effect of higher interest rates on intragroup-financing activities. Fiscal 2022
included impacts of €0.6 billion in connection with allowances on receivables from affiliated companies related to business activities in
Russia, expenses from the recognition of provisions for risks relating to derivative financial instruments of €0.4 billion and a higher negative
interest component of €0.3 billion from changes in pension and personnel-related provisions.
Income (loss) from investments, net included mainly income from investments of €2.9 billion (fiscal 2022: €4.8 billion) and income
from profit transfer agreements with affiliated companies of €1.6 billion (fiscal 2022: €3.5 billion). Additionally, in fiscal 2023 Siemens
AG recorded a gain of €0.2 billion from the sale of a part of its stake in Siemens Energy AG and a gain of €0.2 billion from the reversal of
an impairment on the remaining stake in Siemens Energy AG. The remaining stake held directly by Siemens AG amounted to 21.0% as of
September 30, 2023. These gains were partly offset by a loss of €0.2 billion from an impairment on a stake in Thoughtworks Holding Inc.
For comparison, in fiscal 2022 Siemens AG recorded losses of €4.0 billion from impairment of investments, which included an impairment
of €2.9 billion on Siemens AG's stake in Siemens Energy AG, Germany.
16
The R&D intensity (R&D costs as a percentage of revenue) was 10.6%, slightly above the level in fiscal 2022. The R&D activities of Siemens
AG are fundamentally the same as for its corresponding business activities within the Siemens Group. R&D expenses in both periods related
mainly to Digital Industries. On an average basis, Siemens AG employed 7,100 people in R&D in fiscal 2023.
The increases in revenue, cost of sales and research and development expenses were most evident at Digital Industries.
On a geographical basis, 75% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 17% in the Asia, Australia region
and 8% in the Americas region. Exports from Germany accounted for 57% of overall revenue. In fiscal 2023, orders for Siemens AG
amounted to €16.1 billion.
4%
3,613
3,760
>-200%
(185)
(950)
Unappropriated net income
Allocation to other retained earnings
35%
185
250
23%
9.2 Net assets and financial position
Combined Management Report
Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
Assets
Deferred income
Trade payables, liabilities to affiliated companies and other liabilities
Liabilities to banks
Liabilities
Provisions for taxes and other provisions
Provisions for pensions and similar commitments
Provisions
Special reserve with an equity portion
Equity
Liabilities and equity
Total assets
Active difference resulting from offsetting
Deferred tax assets
Prepaid expenses
Cash and cash equivalents, other securities
Inventories, receivables and other assets
Current assets
Financial assets
Intangible and tangible assets
(in millions of €)
107%
The change in cash and cash equivalents, other securities relates to the liquidity management conducted by Corporate Treasury, which
was focused not solely on the business activities of Siemens AG. The liquidity management is based on the financing policy of the Siemens
Group, which is aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Intra-
group financing activities drove both a decrease of €4.5 billion in receivables from affiliated companies, which resulted in lower
inventories, receivables and other assets, and a decrease of €4.5 billion in liabilities to affiliated companies, which was the main reason
for the decrease of trade payables, liabilities to affiliated companies and other liabilities.
107,005
⚫ used to service or secure obligations or rights to acquire Siemens shares arising particularly from or in connection with convertible bonds
or warrant bonds of the Company or its affiliated companies. Moreover, the Managing Board is authorized to exclude subscription rights
in order to provide subscription rights as dilution compensation for holders/creditors of conversion or option rights/obligations on
Siemens shares, and to use Siemens shares to service such subscription rights.
• sold by the Managing Board, with the approval of the Supervisory Board, against payment in cash if the price at which such Siemens
shares are sold is not significantly lower than the market price of Siemens stock (exclusion of subscription rights, limited to 10% of the
capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act); or
⚫ offered and transferred, with the approval of the Supervisory Board, to third parties against non-cash contributions;
• used in connection with share-based compensation programs and/or employee share programs of the Company or any of its affiliated
companies and issued to individuals currently or formerly employed by the Company or any of its affiliated companies as well as to
board members of any of the Company's affiliated companies;
retired;
In addition to selling over the stock exchange or through a public sales offer to all shareholders, the Managing Board is authorized by
resolution of the Shareholders' Meeting on February 5, 2020 to also use Siemens shares repurchased on the basis of this or any previously
given authorization for every permissible purpose. In particular such shares may be:
•
The Company may not repurchase Siemens shares unless so authorized by a resolution duly adopted by the shareholders at a general
meeting or in other very limited circumstances set forth in the German Stock Corporation Act. On February 5, 2020, the Shareholders'
Meeting authorized the Company to acquire until February 4, 2025 up to 10% of its capital stock existing at the date of adopting the
resolution or if the value is lower - as of the date on which the authorization is exercised. The aggregate of shares of stock of Siemens
AG repurchased under this authorization and any other Siemens shares previously acquired and still held in treasury by the Company or
attributable to the Company pursuant to Sections 71d and 71e of the German Stock Corporation Act may at no time exceed 10% of the
then existing capital stock. Any repurchase of Siemens shares shall be accomplished at the discretion of the Managing Board either (1) by
acquisition over the stock exchange, (2) through a public share repurchase offer or (3) through a public offer to swap Siemens shares for
shares in a listed company within the meaning of Section 3 para. 2 German Stock Corporation Act. The Managing Board is additionally
authorized to complete the repurchase of Siemens shares in accordance with the authorization described above by using certain derivatives
(put and call options, forward purchases and any combination of these derivatives). In exercising this authorization, all stock repurchases
based on the derivatives are limited to a maximum volume of 5% of Siemens' capital stock existing at the date of adopting the resolution
at the Shareholders' Meeting. A derivative's term of maturity may not, in any case, exceed 18 months and must be chosen in such a way
that the repurchase of Siemens shares upon exercise of the derivative will take place no later than February 4, 2025.
Furthermore, the Supervisory Board is authorized to use shares acquired on the basis of this or any previously given authorization to meet
obligations or rights to acquire Siemens shares that were or will be agreed with members of the Managing Board within the framework of
rules governing Managing Board compensation.
The new shares issued or to be issued against contributions in cash or in kind, and with shareholders' subscription rights excluded, may in
certain cases be subject to further restrictions. The details of those restrictions are described in the respective authorizations. In addition,
the Managing Board has declared, by way of a voluntary commitment, not to increase the capital stock from the Authorized Capital 2019
and the Conditional Capitals 2019 and 2020 by a total of more than 10% of the capital stock existing at the time of the Shareholders'
Meeting on February 5, 2020, to the extent that capital increases with shareholders' subscription rights excluded are made from the
Authorized Capital 2019 against contributions in cash or in kind or to service convertible bonds and/or warrant bonds issued under the
authorizations approved on January 30, 2019 or February 5, 2020 with shareholders' subscription rights excluded. This voluntary
commitment ends no later than February 4, 2025.
The exclusion is necessary with regard to fractional amounts resulting from the subscription ratio.
•
•
• The issue price of the new shares/bonds is not significantly lower than the stock market price of Siemens shares already listed or the
theoretical market price of the bonds computed in accordance with generally accepted actuarial methods (exclusion of subscription
rights, limited to 10% of the capital stock, in accordance with or by mutatis mutandis application of Section 186 para. 3 sentence 4
German Stock Corporation Act).
The new shares under Authorized Capital 2019 and the aforementioned bonds are to be issued against contributions in cash or in kind.
They are, as a matter of principle, to be offered to shareholders for subscription. The Managing Board is authorized to exclude, with the
approval of the Supervisory Board, subscription rights of shareholders in the event of capital increases against contributions in kind. In the
event of capital increases against contributions in cash, the Managing Board is authorized to exclude shareholders' subscription rights with
the approval of the Supervisory Board in the following cases:
and/or warrant bonds, the capital stock was conditionally increased by resolutions of the Shareholders' Meetings in 2019 and 2020, by up
to 80 million and up to 60 million Siemens shares, respectively (Conditional Capitals 2019 and 2020), i.e. in total by up to €420 million
nominal through the issuance of up to 140 million Siemens shares.
Combined Management Report
35
The exclusion is used to provide subscription rights as dilution compensation for holders/creditors of conversion or option rights/
obligations on Siemens shares.
On June 24, 2021, the Company announced that it would launch a new five-year share buyback program, beginning in fiscal 2022. This
buyback, which began on November 15, 2021 and extends at the latest until September 15, 2026, is limited to a maximum value of €3
billion (excluding incidental transaction charges) on purchases of no more than 50 million Siemens shares. Using the authorization given
by the Annual Shareholders' Meeting on February 5, 2020, Siemens repurchased 21.0 million shares by September 30, 2023 under this
share buyback. This buyback has the exclusive purposes of retirement, of issuing shares to employees, board members of affiliated
companies and members of the Managing Board of Siemens AG, and of servicing/securing the obligations or rights to acquire Siemens
shares arising particularly from or in connection with convertible bonds and warrant bonds.
Revenue KPI
As of September 30, 2023, the Company held 10,079,918 shares of stock in treasury.
3,612
In January 2023, Siemens AG entered into a bilateral loan agreement in the amount of US$250 million and in December 2022, Siemens
AG entered into a bilateral loan agreement in the amount of PLN500 million; both loan agreements have been fully drawn.
In December 2021, a consolidated subsidiary as borrower and Siemens AG as guarantor entered into a bilateral loan agreement in the
amount of €500 million, which has been fully drawn. In addition, in March 2020 and in June 2019 respectively, a consolidated subsidiary
as borrower and Siemens AG as guarantor entered into a bilateral loan agreement, each of which has been drawn in the full amount of
US$500 million.
The lines of credit, and the relevant loan agreements mentioned above provide their respective lenders with a right of termination in the
event that (1) Siemens AG becomes a subsidiary of another company or (2) a person or a group of persons acting in concert acquires
effective control over Siemens AG by being able to exercise decisive influence over its activities (Art. 3(2) of Council Regulation (EC)
139/2004).
Framework agreements concluded by Siemens AG under International Swaps and Derivatives Association Inc. documentation (ISDA
Agreements) grant each counterparty a right of termination, including in certain cases of (i) a transformation (for example mergers and
changes of form), (ii) an asset transfer or (iii) acquisition of ownership interests that enables the acquirer to exercise control over Siemens
AG or its controlling bodies. Partially this right of termination exists only, if (1) the resulting entity fails to simultaneously assume Siemens
AG's obligations under the ISDA Agreements or (2) the resulting entity's creditworthiness is materially weaker than Siemens AG's
immediately prior to such event. Generally, ISDA Agreements are designed such that upon termination all outstanding payment claims
documented under them are to be netted.
10.6 Compensation agreements with members of the Managing Board or employees in the
event of a takeover bid
The contracts with the members of the Managing Board previously contained the right of the member to terminate his or her contract
with the Company for good cause in the event of a change of control that results in a substantial change in the position of a Managing
Board member (for example, due to a change in corporate strategy or a change in the Managing Board member's duties and
responsibilities). A change of control exists if one or several shareholders acting jointly or in concert acquire a majority of the voting rights
in Siemens AG and exercise a controlling influence, or if Siemens AG becomes a dependent enterprise as a result of entering into an
intercompany agreement within the meaning of Section 291 of the German Stock Corporation Act, or if Siemens AG is to be merged into
an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance
payment in the amount of no more than two years' compensation. The calculation of the annual compensation includes not only the base
compensation and the target amount for the bonus, but also the target amount for the stock awards, in each case based on the most
recent completed fiscal year prior to termination of the contract. The stock-based compensation components for which a firm commitment
already exists will remain unaffected. Additionally, the severance payments cover non-monetary benefits by including an amount of 5%
of the total severance amount. Severance payments will be reduced by 10% as a lump-sum allowance for discounted values and for income
earned elsewhere. However, this reduction will apply only to the portion of the severance payment that was calculated without taking
account of the first six months of the remaining term of the Managing Board member's contract. There is no entitlement to a severance
payment if the Managing Board member receives benefits from third parties in connection with a change of control. A right to terminate
the contract does not exist if the change of control occurs within a period of twelve months prior to a Managing Board member's
retirement.
On September 18, 2019, the Supervisory Board of Siemens AG resolved that the contracts with members of the Managing Board should
not contain such right of termination in the future. This has already been taken into account in the case of contract extensions and in the
case of new contracts with the newly appointed members of the Managing Board as of October 1, 2020.
10.7 Other takeover-relevant information
We are not aware of, nor have we during the last fiscal year been notified of, any shareholder directly or indirectly holding 10% or more
of the voting rights. There are no Siemens shares with special rights conferring powers of control. Shares of stock issued by Siemens AG
to employees under its share programs and/or as share-based compensation are transferred to the employees. The beneficiary employees
who hold shares of employee stock may exercise their control rights in the same way as any other shareholder in accordance with
applicable laws and the Articles of Association.
37
Combined Management Report
11. EU Taxonomy disclosure
The key performance indicators (KPI) in this section were determined based on Commission Delegated Regulation (EU) 2021/2178 in
conjunction with the International Financial Reporting Standards applicable for the Consolidated Financial Statements. For calculating the
eligibility and alignment KPIs, Siemens' business activities and associated revenue, capital expenditures (CapEx), and operating
expenditures (OpEx) were predominantly directly mapped to an applicable economic activity listed in the Commission Delegated Acts in
connection with EU regulation 2020/852. For the calculation of CapEx and OpEx, allocations were also made based on the revenue of the
Taxonomy-eligible and aligned activities. To avoid double counting, a mapping was always made to one economic activity only. Following
the eligibility assessment, the alignment with Substantial Contribution criteria for all eligible business activities was assessed and
documented based on appropriate reporting hierarchy levels, such as business-segment, product-family or project level. Once a business
activity demonstrated Substantial Contribution, the Do No Significant Harm (DNSH) criteria were assessed together with technical experts
on the product, site, project and/or supplier level. For fiscal 2023, EU Taxonomy reporting is limited to the first two environmental
objectives (climate change mitigation and climate change adaption). Based on its implemented group-wide structures on risk analysis,
corporate guidelines and due diligence processes and mechanisms, Siemens fulfills the Minimum Safeguards requirements, which
comprise the areas of human rights, anti-corruption and bribery, taxation, and fair competition.
As of September 30, 2023, Siemens AG maintained lines of credit in the amount of €7.45 billion.
10.5 Significant agreements which take effect, alter or terminate upon a change of control of
the Company following a takeover bid
For details on the authorizations referred to above, especially the terms to exclude subscription rights, please refer to the relevant
resolution and to Section 4 of the Articles of Association.
Combined Management Report
36
By resolutions of the Shareholders' Meetings on January 30, 2019 and February 5, 2020, the Managing Board is authorized to issue bonds
with conversion, exchange or option rights or conversion obligations, or a combination of these instruments, entitling the holders/creditors
to subscribe to up to 80 million and up to 60 million Siemens shares, respectively. Based on these two authorizations, the Company or its
affiliated companies may issue such convertible bonds and/or warrant bonds until January 29, 2024 and February 4, 2025, respectively,
each in an aggregate principal amount of up to €15 billion. In order to grant shares of stock to holders/creditors of such convertible bonds
103,884
As of September 30, 2023, the total unissued authorized capital of Siemens AG therefore consisted of €600 million nominal that may be
used, in installments with varying terms, by issuing up to 200 million Siemens shares.
The Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until February 2, 2026 by up
to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash (Authorized Capital 2021).
Subscription rights of existing shareholders are excluded. The new shares shall be offered exclusively to employees of the Company and
any of its affiliated companies. To the extent permitted by law, such employee shares may also be issued in such a manner that the
contribution to be paid on such shares is covered by that part of the annual net income which the Managing Board and the Supervisory
Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock Corporation Act.
(47)%
639
339
63,079
63,417
235
3%
17,693
8%
4,313
4,666
18,270
67,275
2%
13,604
0%
540
540
4%
20,623
21,422
(3)%
13,380
(6)%
67,914
235
(7)%
10.4 Powers of the Managing Board to issue and repurchase shares
Resolutions of the Shareholders' Meeting require a simple majority vote, unless a greater majority is required by law (Section 23 para. 2 of
the Articles of Association). Pursuant to Section 179 para. 2 of the German Stock Corporation Act, amendments to the Articles of
Association require a majority of at least three-quarters of the capital stock represented at the time of the casting of the votes, unless
another capital majority is prescribed by the Articles of Association.
The appointment and removal of members of the Managing Board are subject to the provisions of Sections 84 and 85 of the German Stock
Corporation Act and Section 31 of the German Codetermination Act (Mitbestimmungsgesetz). According to Section 8 para. 1 of the Articles
of Association, the Managing Board is comprised of several members, the number of which is determined by the Supervisory Board.
According to Section 179 of the German Stock Corporation Act, any amendment to the Articles of Association requires a resolution of the
Shareholders' Meeting. The authority to adopt purely formal amendments to the Articles of Association was transferred to the Supervisory
Board under Section 13 para. 2 of the Articles of Association. In addition, by resolutions adopted during past Shareholders' Meetings, the
Supervisory Board has been authorized to amend Section 4 of the Articles of Association in accordance with the utilization of the
Authorized and Conditional Capitals, and after expiration of the then-applicable authorization and utilization period.
10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
removal of members of the Managing Board and governing amendment to the Articles of
Association
The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a sustained basis, powers of attorney allowing it to exercise the voting rights
for 10,059,581 Siemens shares (as of September 30, 2023) on behalf of members of the Siemens family. These shares are part of the total
number of shares held by the family's members. The powers of attorney are based on an agreement between the VSV and, among others,
members of the Siemens family. The shares are voted together by vSV, taking into account the suggestions of a family partnership
established by the family's members or of one of this partnership's governing bodies.
At the Shareholders' Meeting, each share of stock has one vote and accounts for the shareholder's proportionate share in the Company's
net income. An exception to this rule applies with regard to treasury shares held by the Company, which do not entitle the Company to
any rights. Under Section 136 of the German Stock Corporation Act the voting right of the affected shares is excluded by law.
Siemens shares issued to employees worldwide under the Siemens share programs implemented since the beginning of fiscal 2009, in
particular the Share Matching Plan, are freely transferable unless applicable local laws indicate otherwise. Under the rules of the Share
Matching Plan, however, in order to receive one matching share free of charge for each three shares purchased, participants are required
to hold the shares purchased by them for a vesting period of several years, during which the participants must be continuously employed
by Siemens AG or any of its affiliated companies. The right to receive matching shares is forfeited if the purchased shares are sold,
transferred, hedged on, pledged or hypothecated in any way during the relevant vesting period.
10.2 Restrictions on voting rights or transfer of shares
Following the cancellation of 50 million registered shares of no par value of the Company (Siemens shares) in February 2023, the
Company's capital stock amounts to €2.400 billion (as of September 30, 2023), divided into 800 million Siemens shares. The shares are
fully paid in. All shares confer the same rights and obligations. The shareholders' rights and obligations are governed in detail by the
provisions of the German Stock Corporation Act, in particular by Sections 12, 53a et seq., 118 et seq. and 186 of the German Stock
Corporation Act.
10.1 Composition of common stock
10. Takeover-relevant information (pursuant to Sections 289a
and 315a of the German Commercial Code) and explanatory
report
Combined Management Report
34
The Corporate Governance statement pursuant to Sections 289f and 315d of the German Commercial Code is publicly available on the
company's website at siemens.com/corporate-governance.
9.3 Corporate Governance statement
The increase in equity was due to net income for the year of €4.5 billion and the transfer of €0.6 billion in treasury shares to employees
in connection with our share-based payment programs. These factors were partly offset by dividends paid in fiscal 2023 (for fiscal 2022)
of €3.4 billion and share buybacks during the year amounting to €0.9 billion. The equity ratio as of September 30, 2023 increased to 21%,
from 19% a fiscal year earlier. For the disclosures in accordance with Section 160 para. 1 no. 2 of the German Stock Corporation Act about
treasury shares, refer to Note 15 of our Notes to Annual Financial Statements for fiscal 2023.
(3)%
107,005
103,884
0%
Furthermore, the Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until January 29,
2024 by up to €510 million through the issuance of up to 170 million Siemens shares against contributions in cash and/or in kind
(Authorized Capital 2019).
4,460
Non-current assets
498
We have an overarching, integrated ICS and ERM methodology (RIC methodology) with a standardized procedure under which necessary
controls are defined, documented in accordance with uniform standards, and tested regularly for their adequacy and effectiveness. For
more information on ERM, see chapter 8.2 Risk management.
Overall responsibility for our ICS and ERM lies with the Managing Board. The Siemens Risk and Internal Control (RIC) organization bundles
and integrates the internal control and ERM processes and supports the Managing Board in designing and maintaining adequate and
effective processes for implementing, monitoring and reporting on internal control and ERM activities. It consists of the central RIC
departments of Siemens AG and the RIC departments at our organizational units. The central RIC departments are responsible for
monitoring and coordinating the entire processes in order to ensure an adequate and effective ICS and ERM within the Group.
Our ICS and ERM are based on the globally accepted COSO framework (Committee of Sponsoring Organizations of the Treadway
Commission). Our ERM approach is based on the COSO Standard "Enterprise Risk Management - Integrating with Strategy and
Performance" (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018) and is adapted to Siemens
requirements. Our ICS is based on the internationally recognized "Internal Control - Integrated Framework" (2013) also developed by
COSO. The framework defines the elements of a control system and sets the standard for assessing the adequacy and effectiveness of the
ICS. The frameworks connect the ERM process with our financial reporting process and our ICS, both systems are complementary.
All Siemens entities are part of our ICS and ERM. The scope of activities to be performed by each entity is different, depending, among
others, on the entity's impact on the Consolidated Financial Statements of Siemens and the specific risks associated with the entity. The
management of each entity is obliged to implement an adequate and effective ICS and ERM within their area of responsibility, based on
the group-wide mandatory methodology.
Our ICS and ERM are based on the principles, guidelines and measures introduced by the Managing Board, which are aimed at the
organizational implementation of the Managing Board's decisions. Our ICS and ERM include the management of risks and opportunities
relating to the achievement of business goals, the correctness and reliability of internal and external accounting, and compliance with the
laws and regulations relevant to Siemens. Sustainability aspects are covered as well and are continuously developed based on the
regulatory requirements.
8.5.1 Internal Control System (ICS) and ERM
8.5 Significant characteristics of the internal control and risk management system
While our assessments of individual opportunities have changed during fiscal 2023 due to developments in the external environment,
changes in our business portfolio, our endeavors to profit from them and revision of our strategic plans, the overall opportunity situation
for Siemens did not change significantly as compared to the prior year.
Assessment of the overall opportunities situation: The most significant opportunity for Siemens is favorable political and regulatory
environment (including sustainability) as described above.
Optimization of organization and processes: On the one hand, we leverage ideas to drive further improvements in our processes and
cost structure, such as common computing architecture for image processing. Furthermore, we leverage ideas to drive further
improvements in our processes and cost structure optimizing factory capacities for shorter lead times. On the other hand, we see an
opportunity of further penetrating markets by quality initiative program and avoiding or reducing non conformance cost.
Mergers, acquisitions, equity investments, partnerships, divestments and streamlining our portfolio: We constantly monitor our
current and potential markets to identify opportunities for strategic mergers, acquisitions, equity investments and partnerships, which
may complement our organic growth. Such activities may help us to strengthen our position in our existing markets, provide access to
new or underserved markets, or complement our technological portfolio in strategic areas. Opportunities might also arise when portfolio
optimization measures generate gains, which enable us to further pursue our other strategies for growth and profitability.
Leveraging Market Potential: Through sales and services initiatives we continuously strive to grow and extend our businesses in
established markets, open up new markets for existing portfolio elements and strengthen our installed base in order to gain a higher
market share and increased profits. Furthermore, we aim to increase our sales via improved account management and new distribution
channels.
Within our ERM we regularly identify, evaluate and respond to opportunities that present themselves in our various fields of activity. Below
we describe our most significant opportunities. Unless otherwise stated, the opportunities described relate to all organizational units. The
order in which the opportunities are presented reflects the currently estimated relative exposure for Siemens associated with these
opportunities and thus provides an indication of the opportunities' current importance to us. The described opportunities are not
necessarily the only ones we encounter. In addition, our assessment of opportunities is subject to change because the Company, our
markets and technologies are constantly advancing. It is also possible that opportunities we see today will never materialize.
Favorable political and regulatory environment including sustainability: A favorable political and regulatory environment including
the transition towards a low-carbon economy could restore a more positive industrial investment sentiment that supports the growth of
our markets. In addition, government initiatives and subsidies (including tax reforms, green and digital recovery plans, R&D among others)
lead to more government spending (e.g. infrastructure, healthcare, mobility or digitalization investments) and may ultimately result in an
opportunity for us to participate in ways that increase our revenue and profit. Investments to strengthen countries' resilience, energy and
food security, as well as to diversify value chains close to major markets (reshoring, nearshoring) can present opportunities to businesses.
By enabling our customers to reduce their greenhouse gas (GHG) emissions using our portfolio and by reducing CO2 emission in our own
operations, Siemens strives to support the transition towards a low-carbon economy. Siemens also welcomes and supports recent
29
Combined Management Report
legislative and governmental measures to accelerate the mitigation of climate change, especially in Europe such as through the Green
Deal or sustainable finance initiatives.
Value creation through innovation: We drive innovation by investing significantly in R&D in order to develop sustainable solutions for
our customers while also strengthening our own competitiveness. Being an innovative company and constantly inventing new
technologies that we expect will meet future demands arising from the megatrends of demographic change, urbanization, digitalization,
environmental change, resource scarcity and glocalization is one of our core purposes. We are granted thousands of new patents every
year and continuously develop new concepts and convincing new digital and data-driven business models. This helps us create the next
generation of ground-breaking innovations in such fields as digital twin, artificial intelligence, automation and edge computing. Across
our operating units, we are profiting from our strength in connecting the real and digital worlds. Our Xcelerator platform is an open, digital
business platform featuring a curated portfolio of loT-enabled hardware and software, an ecosystem and a marketplace to enhance the
digital transformation of our customers. We see growth opportunities in opening up access to new markets and customers through new
marketing and sales strategies, which we implement in our operating units. Our position along the value chains of automation and
digitalization allows us to further increase market penetration. Along these value chains, we have identified several clear growth fields in
which we see our greatest long-term potential. Hence, we are combining and developing our resources and capabilities for these growth
fields.
The base data used in preparing our financial statements consists of the closing data reported by the operations of Siemens AG and its
subsidiaries. The preparation of the closing data of most of our entities is supported by an internal shared services organization.
Furthermore, other accounting activities, such as governance and monitoring activities, are usually bundled on a regional level. In
particular cases, such as valuations relating to post-employment benefits, we use external experts. The reported closing data is used to
prepare the financial statements in the consolidation system. The steps necessary to prepare the financial statements are subject to both
manual and automated controls.
31
Combined Management Report
Qualification of employees involved in the accounting process is ensured through appropriate selection processes and training. As a
fundamental principle, based on materiality considerations, the "four eyes" principle applies, and specific procedures must be adhered to
for data authorization. Additional control mechanisms include target-performance comparisons and analyses of the composition of and
changes in individual line items, both in the closing data submitted by reporting units and in the Consolidated Financial Statements. In
line with our information security requirements, accounting-related IT systems contain defined access rules protecting them from
unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the
International Financial Reporting Standards (IFRS) closing data to the Annual Financial Statements of Siemens AG.
On a quarterly basis, we execute an internal certification process. Management at different levels of our organization, supported by
confirmations by managements of entities under their responsibility, confirms the accuracy of the financial data that has been reported to
Siemens' corporate headquarters and reports on the effectiveness of the related control systems.
Siemens Healthineers is subject to our Group-wide principles for the accounting-related internal control and risk management system and
is responsible for adhering to those principles.
Environmental, health & safety and other governmental regulations: Some of the industries in which we operate are highly regulated.
Current and future environmental, health, safety and other governmental regulations or changes thereto may require us to change the
way we run our operations and could result in significant increases in our operating or production costs. Furthermore, we see the risk of
potential environmental, health or safety incidents as well as potential non-compliance with environmental, health or safety regulations
affecting Siemens and our contractors or sub-suppliers, resulting for example in serious injuries, business interruptions, penalties, loss of
reputation and internal or external investigations.
Our internal audit function systematically reviews our financial reporting integrity, our accounting-related ICS and ERM. Siemens
Healthineers has its own internal audit department and annual audit plan (see also 8.5.1). The Audit Committee is integrated into our
accounting-related ICS. In particular, it oversees the accounting and accounting process and the adequacy and effectiveness of the
associated ICS, the ERM and the internal audit system. Moreover, we have rules for accounting-related complaints.
Our ICS and ERM and their contributing elements are regularly subject of audit activities by our internal audit function. These are carried
out either as part of the risk-based annual audit plan or as part of audits scheduled during the year upon request. Siemens Healthineers
has its own internal audit function and annual audit plan. Topics from the annual audit plan of Siemens Healthineers that are also relevant
for our Managing Board and Audit Committee must be mandated first by Siemens Healthineers' Managing Board and Audit Committee
32
30
and subsequently by our Managing Board and Audit Committee. The audit procedures for these topics will be - where reasonable -
executed by joint teams including members of our and Siemens Healthineers' internal audit functions, thus respecting the interests of
both Siemens AG and Siemens Healthineers.
Protectionism (including tariffs/trade war): Protectionist trade policies, de-coupling and changes in the political and regulatory
environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers including debarment
from certain markets, inbound and outbound investment screenings, and price or exchange controls, could affect our business in national
markets and could impact our business situation, financial position and results of operations; we may also be exposed to penalties, other
sanctions and reputational damage. In addition, the uncertainty of the legal environment in some regions could limit our ability to enforce
our rights and subject us to increasing costs related to adjusting our compliance programs.
For additional information with respect to specific proceedings, see Note 22 in Notes to Consolidated Financial Statements for fiscal 2023.
8.3.5 Assessment of the overall risk situation
state sponsors of terrorism. As a result, it is possible that such policies may result in our inability to gain or retain certain investors or
customers. In addition, the termination of our activities in sanctioned countries may expose us to customer claims and other actions. Our
reputation could also suffer due to our activities with counterparties in or affiliated with these countries or due to unauthorized diversion
of our products to restricted parties or destinations. Siemens addresses these risks by maintaining a comprehensive and robust control
program.
Combined Management Report
The most significant challenges have been mentioned first in each of the four risk categories: strategic, operational, financial and
compliance.
While our assessments of individual risks have changed during fiscal 2023 due to developments in the external environment, changes in
our business portfolio, effects of our own mitigation measures and the revision of our risk assessment, the overall risk situation for Siemens
did not change significantly as compared to the prior year. We currently see the strategic risk economic, political and geopolitical conditions
as the most significant challenge for us followed by the operational risk cyber/information security.
At present, no risks have been identified that either individually or in combination could endanger our ability to continue as a going
concern.
n/a
8.4 Opportunities
Our Consolidated Financial Statements according to IFRS are prepared on the basis of a centrally issued conceptual framework which
primarily consists of uniform Financial Reporting Guidelines and a chart of accounts. For Siemens AG and other companies within the
Siemens Group required to prepare financial statements in accordance with German Commercial Code, this conceptual framework is
complemented by mandatory regulations specific to the German Commercial Code. The need for adjustments in the conceptual framework
due to regulatory changes is analyzed on an ongoing basis. Accounting departments are informed quarterly about current topics and
deadlines from an accounting and closing process perspective.
At the end of each fiscal year, our management performs an evaluation of the effectiveness of the accounting-related ICS. We have a
standardized procedure under which necessary controls are defined, documented in accordance with uniform standards, and tested
regularly for their effectiveness. Nevertheless, there are inherent limitations on the effectiveness of any control system, and no system,
including one determined to be effective, may prevent or detect all misstatements.
Our ICS and ERM are based on the globally recognized COSO framework, for further information see 8.5.1.
The overarching objective of our accounting-related ICS and ERM - as part of the overarching ICS and ERM – is to ensure that financial
reporting is conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of
the Siemens Group and the Annual Financial Statements of Siemens AG as the parent company are prepared in accordance with all relevant
regulations.
8.5.3 Significant characteristics of the accounting-related ICS and ERM
The entire CMS is continuously adapted to business-specific risks and various local legal requirements. The findings from compliance risk
management as well as compliance controls and audits are used to derive measures for its further development.
The Compliance Control Program aims to ensure compliance with and implementation of the CMS and processes used worldwide. It is part
of the ICS and is continuously further developed and adapted to the current Siemens guidelines. In addition, current compliance issues are
discussed at the management level on a regular basis.
Our ICS and ERM also comprise a CMS aligned to the Company's risk situation which is based on the three pillars - prevent, detect and
react. It includes the legal risk areas of corruption, antitrust law, data protection, money laundering, export controls as well as human
rights and is based on an extensive internal set of rules: The Siemens Business Conduct Guidelines (BCG) define the basic principles and
standards of behavior that must be observed by all employees in the company units and in relation to customers, external partners and
the public. In addition, there are extensive internal compliance regulations, including associated controls, which oblige all Siemens
employees to ensure the implementation of the CMS. They contain topic-specific implementation regulations for the individual risk areas
with regard to compliance processes and tools as well as additional guidelines and information. The compliance operating model contains
binding specifications for the employees of the compliance organization and describes responsibilities and how the CMS works.
Compliance risk management and compliance reviews as part of the CMS aim to identify compliance risks at an early stage and thus enable
to take appropriate and effective measures to avoid or minimize risks. The risk assessment is also integrated into individual business
processes and tools. The results of CMS that are relevant to the Group are taken into account as part of the Company-wide ERM.
8.5.2 Compliance Management System (CMS)
Siemens Healthineers is largely subject to the Group-wide principles for our ICS and ERM and is responsible for adhering to those principles.
The integration of Varian into our ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers, continued in fiscal 2023
and was completed to a very large extent with regard to all Varian entities. The integration measures are planned to be completely finalized
in fiscal 2024.
The Audit Committee is systematically integrated into our ICS and ERM. In particular, it oversees the accounting and the accounting process
as well as the adequacy and effectiveness of the ICS, ERM and the internal audit system.
Nevertheless, there are inherent limitations on the effectiveness of any risk management and control system. For example, no system -
even if deemed to be adequate and effective – can guarantee that all risks that will actually occur will be identified in advance or that any
process violations will be ruled out under all circumstances.
At the end of each fiscal year, our Managing Board performs an evaluation of the adequacy and effectiveness of the ICS and ERM. This
evaluation is based primarily on the Siemens "In Control"-Statement and quarterly Managing Board meetings. The purpose of the "In
Control"-Statement is to provide an overview of the key elements of the ICS and ERM of Siemens AG and its affiliated companies at the
end of the fiscal year, to summarize the activities undertaken to review its adequacy and effectiveness and highlight any critical control
weaknesses identified as part of these activities. The information contained in this statement is provided to the Audit Committee of the
Supervisory Board of Siemens AG to report on the effectiveness of the ICS and ERM. The Siemens "In Control"-Statement is supported by
certifications at various corporate levels and by all affiliated companies. In the quarterly Managing Board meetings, the company-wide risk
and opportunity situation is evaluated, the results of the internal control process are explained and once a year an overall conclusion is
made about the adequacy and effectiveness of our ICS or ERM. Based on this, the Managing Board has no indication that our ICS or ERM
in their respective wholes have not been adequate or effective as of September 30, 2023.
Combined Management Report
32
The integration of Varian into our accounting-related ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers,
continued in fiscal 2023 and was completed to a very large extent with regard to all Varian entities. The integration measures are planned
to be completely finalized in fiscal 2024.
9. Siemens AG
23%
28%
(2,084)
(1,785)
(17)%
(3,701)
(3,283)
(13)%
(53)
(306)
83%
4,734
4,888
4,204
Interest and other financial income (expenses), net
(128)
(605)
79%
Income from business activity
Income taxes
Net income
Profit carried forward
4,758
3,115
53%
(298)
13%
Combined Management Report
(9)%
17,390
(12,502)
The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz).
In fiscal 2023, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are
influenced significantly by the results of subsidiaries and investments Siemens AG owns either directly or indirectly. The business
development of Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing
explanations for the Siemens Group apply also for Siemens AG.
The Supervisory Board and the Managing Board propose to distribute a dividend of €4.70 per share of no par value entitled to the dividend,
from the unappropriated net income of Siemens AG for the fiscal year ended September 30, 2023 amounting to €3.8 billion. The proposed
dividend represents a total payout of €3.7 billion based on the estimated number of shares entitled to dividend at the date of the Annual
Shareholders' Meeting. We intend to continue providing an attractive return to our shareholders. This includes striving for a dividend per
share that exceeds the amount for the preceding year, or at least matches it. For fiscal 2024, we expect that net income of Siemens AG
will be sufficient to fund the distribution of a commensurate dividend.
As of September 30, 2023, the number of employees was around 47.300.
9.1 Results of operations
Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
Fiscal year
% Change
13%
(in millions of €)
In addition, while we have procedures in place to ensure compliance with applicable governmental regulations in the conduct of our
business operations, it cannot be excluded that violations of applicable governmental regulations may be caused either by us or by third
parties that we contract with, including suppliers or service providers whose activities may be attributed to us. Any such violations
particularly expose us to the risk of liability, penalties, fines, reputational damage or loss of licenses or permits that are important to our
business operations. In particular, we could also face liability for damage or remediation for environmental contamination at the facilities
we design or operate. With regard to certain environmental risks, we maintain liability insurance at levels that our management believes
are appropriate and consistent with industry practice. We may incur environmental losses beyond the limits, or outside the coverage, of
such insurance, and such losses may have an adverse effect on our business situation, financial condition and results of operations.
Current or future litigation and legal and regulatory proceedings: Siemens is and potentially will be involved in numerous legal disputes
and proceedings in various jurisdictions. These legal disputes and proceedings could result, in particular, in Siemens being subject to
payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual cases this may
also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Asserted claims are generally
subject to interest rates. Some of these legal disputes and proceedings could result in adverse decisions for Siemens; or decisions,
assessments or requirements of regulatory authorities could deviate from our expectations, which may have material effects on our
business activities as well as our financial position, results of operations and cash flows. Siemens maintains liability insurance for certain
legal risks at levels our management believes are appropriate and consistent with industry practice. However, the insurance policy does
not protect Siemens against, in particular, reputational damage. Moreover, Siemens may incur losses relating to legal disputes and
proceedings beyond the limits, or outside the coverage, of such insurance or exceeding any provisions made for losses related to legal
disputes and proceedings. Finally, there can be no assurance that Siemens will be able to maintain adequate insurance coverage on
commercially reasonable terms in the future.
Cost of sales
2022
2023
19,660
(13,671)
5,989
30%
Income (loss) from investments, net
Other operating income (expenses), net
Selling and general administrative expenses
Research and development expenses
Revenue
as percentage of revenue
Gross profit
652
7.7
Acquisition and ownership of buildings
0.1%
Data-driven solutions for GHG emissions reductions¹
7.6
17.1%
2
1.4%
0.1%
0
0.0%
Renovation of existing buildings
7.2
51
8.2
Installation, maintenance and repair of energy efficiency
equipment
7.3
4
0.1%
Installation, maintenance and repair of charging stations for
electric vehicles in buildings (and parking spaces attached to
buildings)
7.4
1
0.0%
Installation, maintenance and repair of instruments and devices
for measuring, regulation and controlling energy performance
of buildings
7.5
3
Installation, maintenance and repair of renewable energy
technologies
0
A. Taxonomy-eligible activities
CapEx of Taxonomy-eligible but not environmentally
Circular
economy
Combined Management Report
(in millions of €)
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
E/T
Pollution
Biodiversity
and
ecosystems
Minimum Taxonomy-
safe-
guards
aligned
proportion
Category
(E = enabling;
of OpEx
DNSH criteria
0.0%
Substantial contribution criteria
Proportion of
848
22.3%
sustainable activities (not Taxonomy-aligned activities) (A.2.)
Total (A.1+A.2)
1,312
34.5%
12.2%
B. Taxonomy-non-eligible activities
CapEx of Taxonomy-non-eligible activities (B)
Total (A+B)
1 Value below €0.5 million, therefore rounded to zero.
2,496
65.5%
3,808
100.0%
Confidential
42
Draft
EU Taxonomy - OpEx
Economic activities
6.15
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
Codes
OpEx
Absolute
OpEx
OpEx
Infrastructure enabling low-carbon road transport and public
transport¹
%
0
CapEx
Substantial contribution criteria
Absolute
CapEx
Proportion of
CapEx
Climate
change
mitigation
Climate
Codes
change
(in millions of €)
%
DNSH criteria
Climate
change
mitigation
Climate
change
adaptation
adaptation
A.2. Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Economic activities
EU Taxonomy - CapEx
100%
0%
Y
Y
Y
Y
Y
Y
0.0%
E
buildings¹
CapEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
464
12.2%
12.2%
'Value below €0.5 million, therefore rounded to zero.
Confidential
41
Draft
Water and
marine
resources
Circular
0.7%
Manufacture of energy efficiency equipment for buildings
3.5
30
0.8%
Manufacture of other low carbon technologies
3.6
6
0.1%
Transmission and distribution of electricity
4.9
4
0.1%
Transport by motorbikes, passenger cars and light commercial
vehicles
6.5
67
1.8%
Infrastructure for rail transport¹
6.14
27
0.0%
3.3
E/T
economy
Pollution
Biodiversity
and
ecosystems
Combined Management Report
Minimum Taxonomy-
safe-
guards
aligned
proportion
of CapEx
Category
(E = enabling;
T =
transitional)
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
T =
transitional)
Manufacture of low carbon technologies for transport
Manufacture of renewable energy technologies
2.7%
8
Y
Y
Y
Y
0%
100%
0.0%
0
9.3
Y
Professional services related to energy performance of
buildings¹
0.7%
Y
Y
Y
Y
Y
Y
0%
100%
E
Y
0.0%
E
0%
Y
Y
Y
Y
OpEx
Absolute
OpEx
Codes
A.2. Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Economic activities
EU Taxonomy - OpEx
Y
Draft
43
Confidential
1 Value below €0.5 million, therefore rounded to zero.
8.2%
8.2%
597
OpEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
0.7%
100%
54
Data-driven solutions for GHG emissions reductions
7.6
Installation, maintenance and repair of renewable energy
technologies
E
0.4%
Y
Y
Y
Y
Y
1
Y
100%
0.4%
29
7.5
Installation, maintenance and repair of instruments and devices
for measuring, regulation and controlling energy performance
of buildings
E
0.0%
Y
0.0%
0%
0.0%
100%
0%
0.1%
Y
Y
Y
Y
Y
Y
0%
100%
0.1%
7
7.7
Acquisition and ownership of buildings
E
0.0%
Y
Y
Y
Y
Y
Y
8.2
0.0%
0
7.4
Transmission and distribution of electricity
4.9
1
0.0%
100%
0%
Y
Y
Y
E
Y
Y
0.0%
E
Infrastructure for rail transport
6.14
196
100%
0%
Y
Y
3.1%
Y
Y
0.1%
100%
0%
Y
Y
Y
Y
Y
Y
0.1%
E
Manufacture of low carbon technologies for transport
3.3
226
3.1%
100%
0%
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
0.0%
E
Installation, maintenance and repair of energy efficiency
equipment
7.3
5
0.1%
100%
0%
Y
Y
Y
Y
Y
Y
0.1%
E
Installation, maintenance and repair of charging stations for
electric vehicles in buildings (and parking spaces attached to
buildings)
Y
3.1
Y
100%
Y
2.7%
E
Infrastructure enabling low-carbon road transport and public
transport
6.15
69
0.9%
100%
0%
Y
Y
Y
Y
Y
Y
0.9%
E
Infrastructure enabling low carbon water transport
6.16
3
0.0%
0%
0
Infrastructure for rail transport
Professional services related to energy performance of
3.6
130
0.2%
Transmission and distribution of electricity
4.9
241
0.3%
Proportion of
OpEx
6.14
15
0.0%
Infrastructure enabling low-carbon road transport and public
transport
6.15
10
0.0%
Installation, maintenance and repair of energy efficiency
equipment
7.3
92
0.1%
Manufacture of other low carbon technologies
1.3%
976
3.5
Category
(E = enabling;
T =
transitional)
(in millions of €)
%
%
%
Y/N
Y/N
Y/N
Installation, maintenance and repair of charging stations for
electric vehicles in buildings (and parking spaces attached to
buildings)
Y/N
Y/N
Y/N
%
E/T
Manufacture of low carbon technologies for transport
3.3
1,317
1.7%
Manufacture of energy efficiency equipment for buildings
Y/N
aligned
proportion
of revenue
7.4
0.0%
40
Draft
EU Taxonomy - CapEx
Economic activities
A. Taxonomy-eligible activities
A.1. Environmentally sustainable activities
(Taxonomy-aligned)
Codes
CapEx
Substantial contribution criteria
DNSH criteria
Absolute
Proportion of
CapEx
CapEx
Pollution
Combined Management Report
(in millions of €)
%
Confidential
100.0%
77,769
79.7%
Acquisition and ownership of buildings
Data-driven solutions for GHG emissions reductions
Revenue of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2.)
Total (A.1+A.2)
B. Taxonomy-non-eligible activities
Revenue of Taxonomy-non-eligible activities (B)
Total (A+B)
7.7
25
105
8.2
14
0.0%
2,927
3.8%
15,748
20.3%
16.5%
62,020
0.1%
Revenue
Revenue
safe-
guards
0%
Y
Y
Y
Y
Y
Y
0.2%
E
Acquisition and ownership of buildings
7.7
4
0.0%
100%
0%
Y
Y
Y
Y
100%
0.2%
119
7.6
Y
0.6%
E
equipment
Installation, maintenance and repair of instruments and devices
for measuring, regulation and controlling energy performance
of buildings
7.5
2,574
3.3%
100%
Y
90
Y
Y
Y
Y
Y
Y
3.3%
E
Installation, maintenance and repair of renewable energy
technologies
0%
Y
0.0%
Data-driven solutions for GHG emissions reductions
0.0%
E
Revenue of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
12,822
16.5%
16.5%
Confidential
39
Draft
Y
EU Taxonomy - Revenue
A.2. Taxonomy-Eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities)
Codes
Combined Management Report
Revenue
Substantial contribution criteria
DNSH criteria
Minimum Taxonomy-
Absolute
Proportion of
Economic activities
%
Y
Y
8.2
234
0.3%
100%
0%
Y
Y
Y
Y
Y
Y
0.3%
E
Professional services related to energy performance of buildings 9.3
4
0.0%
100%
0%
Y
Y
Y
%
Y/N
Y/N
100%
0%
Y
Y
Y
Y
Y
Y
0.0%
E
Installation, maintenance and repair of instruments and devices
for measuring, regulation and controlling energy performance
of buildings
7.5
14
24
0.6%
100%
0%
Y
Y
0.0%
2
7.4
Installation, maintenance and repair of charging stations for
electric vehicles in buildings (and parking spaces attached to
buildings)
Y
Y
Y
Y
0.5%
E
Installation, maintenance and repair of energy efficiency
equipment
7.3
2
Y
0.1%
0%
Y
Y
Y
Y
Y
Y
0.1%
E
100%
Y
Y
Y
Y
Y
Y
Y
Y
5.4%
Data-driven solutions for GHG emissions reductions
8.2
10
Y
0.3%
0%
Y
Y
Y
Y
Y
Y
0.3%
E
100%
Y
0%
5.4%
Y
0.6%
E
Installation, maintenance and repair of renewable energy
technologies
7.6
7
0.2%
100%
0%
100%
Y
Y
Y
Y
Y
0.2%
E
Acquisition and ownership of buildings
7.7
206
Y
9.3
Y
100%
Y
Y
Y
Y
Y
0.1%
E
Manufacture of low carbon technologies for transport
3.3
115
3.0%
100%
0%
Y
Y
Y
Y
Y
Y
Y
0%
100%
0.1%
Y/N
Y/N
Y/N
Y/N
Y/N
%
E/T
Biodiversity
and
3.0%
ecosystems
safe-
guards
aligned
proportion
Category
(E = enabling;
of CapEx
T =
transitional)
Manufacture of renewable energy technologies
3.1
2
Minimum Taxonomy-
E
Transmission and distribution of electricity
4.9
0.3%
T
Infrastructure for rail transport
6.14
65
1.7%
100%
0%
Y
Y
Y
Y
Y
Y
1.7%
E
Infrastructure enabling low-carbon road transport and public
transport
6.15
18
0.5%
Y
0%
Y
Y
1
0.0%
100%
0%
Y
Y
Y
Y
Y
Y
Y
E
Transport by motorbikes, passenger cars and light commercial
vehicles
6.5
12
0.3%
100%
0%
Y
Y
0.0%
(in millions of €)
Water and
Substantial contribution criteria
Long-term debt
16
39,113
43,978
Provisions for pensions and similar obligations
17
1,426
42,686
2,275
7
1,655
2,381
Provisions
18
1,794
1,857
Deferred tax liabilities
44,901
Total current liabilities
%
10
12,571
12,049
Current provisions
18
2,320
2,156
Current income tax liabilities
2,566
2,381
Other current liabilities
15
8,182
7,448
Liabilities associated with assets classified as held for disposal
50
61
Other financial liabilities
Contract liabilities
Other liabilities
Total liabilities
7,174
36,874
38,959
2,282
6,159
(1,177)
(5,948)
7,411
Total equity attributable to shareholders of Siemens AG
48,895
5,270
5,910
53,060
54,805
145,067
151,502
47,791
Total liabilities and equity
Total equity
Non-controlling interests
Equity
Issued capital
1,453
1,867
1,666
1,654
47,106
54,011
92,007
96,697
4,19
2,400
2,550
Capital reserve
Retained earnings
Other components of equity
Treasury shares, at cost
Total non-current liabilities
4
1,616
Other current financial liabilities
Sep 30,
2023
Sep 30,
2022
10,084
10,465
8
17,405
16,701
Note
9
9,696
10
7,581
7,559
11
11,548
10,626
10,605
Consolidated Financial Statements
Total assets
Total non-current assets
Assets
Cash and cash equivalents
Trade and other receivables
Other current financial assets
Contract assets
Inventories
Current income tax assets
Other current assets
Assets classified as held for disposal
Total current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments accounted for using the equity method
Other financial assets
Deferred tax assets
Other assets
1,363
1,601
1,432
1,955
2,231
2,459
1,523
1,565
84,428
92,673
145,067
7
151,502
Short-term debt and current maturities of long-term debt
16
7,483
6,658
Trade payables
10,130
10,317
Liabilities and equity
25,903
22,855
14, 23
1,935
99
413
60,639
58,829
3,12
32,224
33,861
3,13
10,641
12,196
13
11,938
11,733
4
3,014
4,955
11
(in millions of €)
Y
0%
Manufacture of low carbon technologies for transport
E
0.1%
Y
Y
Y
Y
3.3
Y
0%
100%
0.1%
58
3.1
Manufacture of renewable energy technologies
T =
transitional)
Y
4,947
6.4%
100%
Y
Y
0%
100%
0.0%
39
3.5
Manufacture of energy efficiency equipment for buildings
E
6.4%
Y
Y
Y
Y
Y
Y
0%
Category
(E = enabling;
Y
of revenue
guards
Circular
DNSH criteria
Substantial contribution criteria
Proportion of
Revenue
Revenue
Absolute
economy
Revenue
(Taxonomy-aligned)
A.1. Environmentally sustainable activities
A. Taxonomy-eligible activities
Economic activities
EU Taxonomy - Revenue
Draft
Y
Codes
Combined Management Report
(in millions of €)
%
safe-
Minimum Taxonomy-
ecosystems
and
Biodiversity
Pollution
E/T
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
%
aligned
proportion
Y
Y
Y
1.5%
Y
Y
Y
Y
Y
Y
E
0%
1.5%
1,159
6.15
Infrastructure enabling low-carbon road transport and public
E
3.9%
Y
100%
transport
Infrastructure enabling low carbon water transport
6.16
100%
0.6%
433
7.3
Installation, maintenance and repair of energy efficiency
E
0.0%
Y
Y
Y
Y
Y
Y
0%
100%
0.0%
16
Y
Y
Y
Y
E
0.2%
Y
Y
Y
Y
Y
Transmission and distribution of electricity
Y
100%
0.2%
122
3.6
Manufacture of other low carbon technologies
E
0.0%
0%
4.9
100
0.1%
Y
0%
100%
3.9%
3,013
6.14
Infrastructure for rail transport
E
0.1%
Y
Y
Y
Y
Y
Y
0%
100%
Y
3. Consolidated Statements of Financial Position
Y
9,553
0.1%
9
8.2
Data-driven solutions for GHG emissions reductions
0.3%
21
7.7
Acquisition and ownership of buildings
0.0%
1
7.6
Installation, maintenance and repair of renewable energy
technologies
0.0%
3
7.5
Installation, maintenance and repair of instruments and devices
for measuring, regulation and controlling energy performance
of buildings
0.0%
7.4
Installation, maintenance and repair of charging stations for
electric vehicles in buildings (and parking spaces attached to
buildings)
0.2%
16
7.3
Installation, maintenance and repair of energy efficiency
equipment
OpEx of Taxonomy-eligible but not environmentally sustainable
307
4.2%
29,653
1. Consolidated Statements of Income
3
Consolidated Financial Statements
Table of contents
SIEMENS
This document is an English language translation of the authoritative German version and is not provided
in the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
language with the operator of the German Company Register and published in the German Company
Register.
for fiscal 2023
Statements*
Consolidated Financial
44
Confidential
0.2%
100.0%
87.6%
6,369
1 Value below €0.5 million, therefore rounded to zero.
Total (A+B)
OpEx of Taxonomy-non-eligible activities (B)
B. Taxonomy-non-eligible activities
12.4%
905
Total (A.1+ A.2)
8.2%
activities (not Taxonomy-aligned activities) (A.2.)
7,274
15
7.2
Renovation of existing buildings
Manufacture of low carbon technologies for transport
E/T
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
T =
transitional)
3.3
of OpEx
aligned
proportion
guards
safe-
Minimum Taxonomy-
Combined Management Report
ecosystems
Biodiversity
and
Pollution
economy
Circular
resources
Category
(E = enabling;
3
26
Manufacture of energy efficiency equipment for buildings
25,847
(6,183)
0.0%
0
7.1
Construction of new buildings¹
0.0%
0
6.15
Infrastructure enabling low-carbon road transport and public
transport¹
0.0%
0.4%
0
0.0%
2
4.9
Transmission and distribution of electricity
0.3%
24
3.6
Manufacture of other low carbon technologies
2.6%
189
3.5
Infrastructure for rail transport¹
2. Consolidated Statements of Comprehensive Income
4
3. Consolidated Statements of Financial Position
Selling and general administrative expenses
Research and development expenses
Gross profit
Cost of sales
Revenue
(in millions of €, per share amounts in €)
1. Consolidated Statements of Income
Commercial Code
Note 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the German
43
Note 34 Subsequent events
Other operating income
42
42
Note 32 Principal accountant fees and services
77,769 71,977
(48,116) (46,130)
42
Note 31 Related party transactions
41
Note 30 Information about geographies
41
Note 29 Segment information
38
Note 28 Earnings per share
Note 33 Corporate governance
37
Other operating expenses
Interest income
Shareholders of Siemens AG
Basic earnings per share
Income from continuing operations
Income (loss) from discontinued operations
Net income
Diluted earnings per share
Income from continuing operations
Income (loss) from discontinued operations
Net income
Consolidated Financial Statements
Fiscal year
Income (loss) from investments accounted for using the equity method, net
Note
2,30
2022
3
Non-controlling interests
Attributable to:
Net income
Income (loss) from discontinued operations, net of income taxes
Income from continuing operations
Income tax expenses
Income from continuing operations before income taxes
Other financial income (expenses), net
Interest expenses
2023
marine
Note 27 Personnel costs
Note 26 Share-based payment
18
17
16
Note 10 Contract assets and liabilities
16
Note 9 Other current financial assets
16
Note 8 Trade and other receivables
Note 7 Income taxes
14
Note 6 Other operating expenses
19
Note 5 Other operating income
Note 2 Material accounting policies and critical accounting estimates
Note 3 Acquisitions and dispositions
Note 1 Basis of presentation
6. Notes to Consolidated Financial Statements
5. Consolidated Statements of Changes in Equity
13
12
12
7772233456
6
4. Consolidated Statements of Cash Flows
5
Note 4 Interests in other entities
37
19
Note 11 Inventories and Other current assets
Note 12 Goodwill
35
Note 25 Financial risk management
32
Note 24 Derivative financial instruments and hedging activities
31
Note 23 Additional disclosures on financial instruments
28
Note 22 Legal proceedings
27
Note 21 Commitments and contingencies
27
67899
Note 20 Additional capital disclosures
Note 19 Equity
26
Note 18 Provisions
25
Note 17 Post-employment benefits
22
Note 16 Debt
19
Note 15 Other current liabilities
Note 14 Other financial assets
Note 13 Other intangible assets and property, plant and equipment
26
change
adaptation
6.14
mitigation
8,529
Climate
579
7,949
669
3,723
28
10.02
4.67
0.02
10.04
(21)
(0.03)
4.65
9.90
4.62
0.02
(0.03)
9.91
4.59
2. Consolidated Statements of Comprehensive Income
Fiscal year
2023
28
15
4,413
8,514
(12,857)
5
574
2,171
6
(454)
(285)
4
906
(2,085)
2,406
1,632
(1,373)
(689)
(387)
(987)
11,201
7,154
7
(2,687)
(2,741)
2022
(in millions of €)
Net income
Remeasurements of defined benefit plans
(15)
45
therein: Income tax effects
Income (loss) from investments accounted for using the equity method, net
(161)
398
Items that may be reclassified subsequently to profit or loss
(4,431)
7,127
Other comprehensive income, net of income taxes
(4,566)
6,611
3,962
11,003
Total comprehensive income
Attributable to:
Non-controlling interests
Shareholders of Siemens AG
(10)
1,450
3,972
Derivative financial instruments
(13,941)
(74)
6,803
therein: Income tax effects
8,529
4,392
17
(104)
(589)
(84)
(560)
(41)
1
Remeasurements of equity instruments
(1)
therein: Income tax effects
Income (loss) from investments accounted for using the equity method, net
10
72
Items that will not be reclassified to profit or loss
(135)
(516)
Currency translation differences
(4,262)
(8)
(5,591)
4,392
Climate
change
DNSH criteria
800
35.1%
25.1%
Sep 30, 2022
Sep 30, 2023
Siemens Energy AG
registered in Munich, Germany
attributable to shareholders of Siemens Energy AG
Net Assets
Non-current liabilities
2022
Current liabilities
Non-current assets excluding goodwill
Current assets
Ownership interest
(in millions of €)
Siemens Energy AG, an associate accounted for using the equity method, is globally active in the transmission and generation of electrical
power and is publicly listed. The fair value of our investment in Siemens Energy AG is €2.5 billion and €2.9 billion, respectively, as of
September 30, 2023 and 2022, determined based on Siemens Energy's market capitalization (level 1 of the fair value hierarchy). In fiscal
2023 and 2022, Siemens Energy AG added a loss to Share of profit (loss), net of €(1,478) million and €(207) million, respectively. The loss
includes Siemens' share of Siemens Energy AG's net losses of €(1,405) million and €(142) million as well as effects from fair value
adjustments at initial recognition of €(73) million and €(65) million, respectively. In fiscal 2023, Siemens Energy AG acquired and
redeemed shares of Siemens Gamesa Renewable Energy, S.A. from the minority shareholders. The acquisition and redemption of shares
of Siemens Gamesa Renewable Energy, S.A. reduced equity within Siemens Energy AG's consolidated financial statements. Recognizing
Siemens' share in this equity transaction decreased the carrying amount of our investment in Siemens Energy AG by €1,553 million, which
is recognized in Equity directly. In March 2023, Siemens Energy AG completed a capital increase, in which Siemens did not participate.
The transaction decreased Siemens' stake in Siemens Energy AG from 35.1% to 31.9%, which resulted in a gain of €235 million, disclosed
in Income (loss) from investments accounted for using the equity method and in Reconciling items of Segment information. As of March
31, 2023, the recoverable amount of our investment in Siemens Energy AG of €5.2 billion, determined based on its market capitalization
(level 1 of the fair value hierarchy), increased significantly compared to the level when the impairment was recorded in fiscal 2022. This
triggered a partial reversal of the previous impairment of €1,594 million, which is included in Income (loss) from investments accounted
for using the equity method and in Reconciling items of Segment information. In June 2023, Siemens contributed a 6.8% stake in Siemens
Energy AG (54 million shares) to the Siemens Pension-Trust e.V. at fair value (share price of €15.67; Level 1 of the fair value hierarchy).
Siemens' stake in Siemens Energy AG declined from 31.9% to 25.1%. The contribution resulted in a gain of €318 million disclosed at
Income (loss) from investments accounted for using the equity method and at Reconciling items of Segment information.
Below summarized consolidated financial information of Siemens Energy AG are disclosed at a 100 per cent basis. They are adjusted to
align with Siemens' accounting policies and to incorporate effects from fair value adjustments at initial recognition.
(2,085)
(2,597)
609
Sep 30, 2022
618
1,586
906
26,567
28,665
16,321
17,279
24%
Revenue
Consolidated Financial Statements
12
3,662
1,779
(2,703)
(873)
Accumulated (impairment) and reversal of impairment (balance at fiscal year-end)
Carrying amount of Siemens Energy AG at fiscal year-end
2,670
(97)
2,098
554
Siemens interest in the net assets of Siemens Energy AG at fiscal year-end
Consolidation adjustments including goodwill
10,528
2,207
10,870
2,802
7,134
8,487
27,941
31,599
3,695
(1,298)
Sep 30,
2023
25%
Insurance contracts - In June 2020, the IASB issued IFRS 17 Insurance contracts (IFRS 17), effective for reporting periods beginning on
or after January 1, 2023. Siemens will adopt the standard commencing with fiscal 2024. IFRS 17 introduces and applies uniform accounting
policies for insurance contracts and supersedes IFRS 4 Insurance contracts. The adoption of IFRS 17 is not expected to have a significant
impact on Siemens' Consolidated Financial Statements.
Cash flow hedges: The effective portion of changes in the fair value of derivative instruments designated as cash flow hedges are
recognized in line item Other comprehensive income, net of income taxes, and any ineffective portion is recognized immediately in net
income. Amounts accumulated in equity are reclassified into net income in the same periods in which the hedged item affects net income.
Share-based payment - Share-based payment awards at Siemens are predominately designed as equity-settled. Fair value is measured
at grant date and is expensed over the vesting period. Fair value is determined as the price of the underlying shares, considering dividends
during the vesting period the grantees are not entitled to as well as market conditions and non-vesting conditions, if applicable. Plans
granting the rights to receive subsidiary shares constitute own shares and, accordingly, are accounted as equity-settled.
Fair value hedges: The carrying amount of the hedged item is adjusted by the gain or loss attributable to the hedged risk. Where an
unrecognized firm commitment is designated as hedged item, the subsequent cumulative change in its fair value is recognized as a
separate financial asset or liability with corresponding gain or loss recognized in net income. For hedged items carried at amortized cost,
the adjustment is amortized until maturity of the hedged item. For hedged firm commitments the initial carrying amount of the assets or
liabilities that result from meeting the firm commitments are adjusted to include the cumulative changes in the fair value that were
previously recognized as separate financial assets or liabilities.
Derivative financial instruments - Derivative financial instruments, such as foreign currency exchange contracts and interest rate swap
contracts are measured at fair value unless they are designated as hedging instruments, for which hedge accounting is applied. Changes
in the fair value of derivative financial instruments are recognized either in net income or, in the case of a cash flow hedge, in line item
Other comprehensive income, net of income taxes (applicable deferred income tax). Certain derivative instruments embedded in host
contracts are also accounted for separately as derivatives.
effective interest method.
except for derivative financial instruments, Siemens measures financial liabilities at amortized cost using the
-
Financial liabilities
Expected credit losses for irrevocable loan commitments are determined using the three-stage impairment
approach for financial assets measured at amortized cost and recognized as a liability.
Loan Commitments
Cash and cash equivalents - The Company considers all highly liquid investments with less than three months maturity from the date of
acquisition to be cash equivalents. Cash and cash equivalents are measured at cost.
A financial asset is derecognized when the rights to cash flows expire or the financial asset is transferred to another party. Significant
modifications of contractual terms of a financial asset measured at amortized cost result in derecognition and recognition of a new
financial asset; for insignificant modifications, the carrying amount of the financial asset is adjusted without derecognition.
Financial assets are written off as uncollectible if recovery appears unlikely. Generally, if the limitation period expired, when a debtor's
sworn statement of affairs is received, or when the receivable is not pursued due to its minor value. Receivables are written off when
bankruptcy proceedings close.
Stage 3: If the financial asset is credit-impaired, valuation allowances equal lifetime expected credit losses. A financial asset is considered
credit-impaired when there is observable information about significant financial difficulties and a high vulnerability to default, however,
the definition of default is not yet met. Impairment triggers include liquidity problems, a request for debt restructuring or a breach of
contract. A credit-risk driven contractual modification always results in a credit-impaired financial asset.
Stage 1: At inception, twelve-month expected credit losses are recognized based on a twelve months probability of default.
Stage 2: If the credit risk of a financial asset increases significantly without being credit-impaired, lifetime expected credit losses are
recognized based on a lifetime probability of default. A significant increase in credit risk is determined for each individual financial
instrument using internal credit ratings. A rating deterioration does not trigger a transfer into Stage 2, if the credit rating remains within
the investment grade range. More than 30 days past due payments will not be transferred into Stage 2, if the delay is not credit-risk-
related.
Valuation allowances are set up for expected credit losses, representing a forward-looking estimate of future credit losses involving
significant judgment. Expected credit loss is the gross carrying amount less collateral, multiplied by the probability of default and a factor
reflecting the loss in the event of default. Valuation allowances are not recognized as far as the gross carrying amount is sufficiently
collateralized. Probabilities of default are mainly derived from internal rating grades. A simplified approach is used to assess expected
credit losses from trade receivables, lease receivables and contract assets by applying their lifetime expected credit losses. The valuation
allowance for loans and other long-term debt instruments primarily held at Financial Services (SFS) is measured according to a three-stage
impairment approach:
Financial assets measured at amortized cost: Loans, receivables and other debt instruments held in a hold-to-collect business model
with contractual cash flows that represent solely payments of principal and interest are measured at amortized cost using the effective
interest method less valuation allowances for expected credit losses.
Financial assets measured at fair value through other comprehensive income (FVOCI): are equity instruments for which Siemens
irrevocably elects to present subsequent fair value changes in OCI at initial recognition of the instrument. Unrealized gains and losses, net
of deferred income tax expenses, as well as gains and losses on the subsequent sale of the instruments are recognized in line item Other
comprehensive income, net of income taxes.
Consolidated Financial Statements
10
Financial assets measured at fair value through profit and loss (FVTPL): a) mandatorily measured at FVTPL: Debt financial assets are
measured at FVTPL if the business model they are held in is not a hold-to-collect or a hold-and-sell business model, or if their contractual
cash flows do not represent solely payments of principal and interest. Equity instruments are measured at FVTPL unless the FVOCI-option
is elected. b) Financial assets designated as measured at FVTPL are irrevocably designated at initial recognition if the designation
significantly reduces accounting mismatches that would otherwise arise if assets and liabilities as well as recognizing gains (losses) were
measured on different bases.
Prior-year information - · The presentation of certain prior-year information has been reclassified to conform to the current year
presentation.
11
Consolidated Financial Statements
NOTE 3 Acquisitions and dispositions
Income (loss) from investments accounted for using the equity method, net
Sep 30, 2023
Siemens Healthineers AG
registered in Munich, Germany
NOTE 5 Other operating income
Total comprehensive income, net of income taxes
Total cash flows
Other comprehensive income, net of income taxes
Income (loss) from continuing operations, net of income taxes
Revenue
Dividends paid to non-controlling interests
Net income attributable to non-controlling interests
2022
Non-current liabilities
Impairments and reversals of impairment
Gains (losses) on disposals, net
Share of profit (loss), net
(in millions of €)
Investments accounted for using the equity method
NOTE 4 Interests in other entities
In November 2022, Siemens sold its Commercial Vehicles business for a consideration of €184 million in cash and recognized a pre-tax gain
on the disposal of €148 million, which is presented in Other operating income. The business was previously reported at Portfolio
Companies.
Disposals
In fiscal 2023, Siemens completed several individually minor acquisitions for a total purchase price of €373 million, mainly paid in cash. In
fiscal 2022 acquisitions totaled €2.0 billion. In fiscal 2023 and 2022, the (preliminary) purchase price allocations resulted in Other
intangible assets of €180 million and €1.1 billion, respectively, and in Goodwill of €203 million and €1.5 billion, respectively. Goodwill
comprises intangible assets that are not separable such as employee know-how and expected synergy effects. The purchase price
allocation for some of the acquired businesses is preliminary, as a detailed analysis of the assets and liabilities has not been finalized.
Acquisitions
Current liabilities
4,341
4,887
14,136
(422)
2,687
2,741
Current income tax expenses in fiscal 2023 and 2022 include adjustments recognized for current taxes of prior years in the amount of €73
million and €220 million, respectively. In fiscal 2023 and 2022, deferred taxes include tax effects from the origination and reversal of
temporary differences of €(670) million and €(430) million, respectively. Deferred taxes include tax expenses of €125 million from the
write-down of previously recognized deferred tax assets on tax loss carryforwards and temporary differences (in fiscal 2022, €(202) million
tax from the recognition of previously unrecognized deferred taxes on tax loss carryforwards and temporary differences).
In Germany, the calculation of current taxes is based on a combined tax rate of 31%, consisting of a corporate tax rate of 15%, a solidarity
surcharge thereon of 5.5% and an average trade tax rate of 15%. For foreign subsidiaries, current taxes are calculated based on the local
tax law and applicable tax rates in the individual foreign countries. Deferred tax assets and liabilities in Germany and abroad are measured
at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
Global minimum taxation rules (Pillar Two) were enacted in some jurisdictions, in which Siemens currently operates. We expect to apply
Pillar Two worldwide commencing with fiscal 2025 and anticipate an increase in current taxes in a low double-digit million euro range.
Current and deferred income tax expenses differ from the amounts computed by applying a combined statutory German income tax rate
of 31% as follows:
(in millions of €)
Expected income tax expenses
Increase (decrease) in income taxes resulting from:
Non-deductible expenses
(563)
Tax-free income
Change in realizability of deferred tax assets and tax credits
Change in tax rates
Foreign tax rate differential
Tax effect of investments accounted for using the equity method
Other, net (primarily German trade tax differentials)
Actual income tax expenses
Deferred income tax assets and (liabilities) on a net basis are summarized as follows:
(in millions of €)
Deferred taxes due to temporary differences
Intangible assets
Taxes for prior years
Pensions and similar obligations
3,163
21,680
2023
Fiscal year
Income tax expenses
Deferred taxes
Current taxes
(in millions of €)
Consolidated Financial Statements
Income tax expenses (benefits) consist of the following:
NOTE 7 Income taxes
13
251
Other operating expenses in fiscal 2023, and 2022, include losses on the sale of property, plant and equipment as well as effects from
insurance, personnel, legal and regulatory matters.
Other operating income in fiscal 2023 and 2022, mainly includes gains from disposals of businesses of €232 million and €1,884 million,
respectively, (thereof in fiscal 2022: mail and parcel-handling business of Siemens Logistics GmbH €1,084 million and Yunex Traffic €738
million) gains from sales of property, plant and equipment of €174 million and €125 million, respectively, as well as insurance related
income in both years.
(8)
361
4,935
(464)
2,881
1,989
2,054
1,525
21,714
NOTE 6 Other operating expenses
3,250
Current assets and liabilities
Tax loss carryforwards and tax credits
2023
2022
Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy
before the regular retirement date or from an entity's decision to terminate the employment. Termination benefits in accordance with IAS
19, Employee Benefits, are recognized as a liability and an expense when the entity can no longer withdraw the offer of those benefits.
Financial instruments - A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity. Based on their contractual cash flow characteristics and the business model they are held in, financial
instruments are classified as financial assets and financial liabilities measured at cost or amortized cost, measured at fair value, loan
commitments, contract assets and receivables from finance leases. Regular way purchases or sales of financial assets are accounted for at
the trade date. Initially, financial instruments are recognized at fair value and net of transaction costs, if not categorized at FVTPL.
Subsequently, financial assets and liabilities are measured according to the category to which they are assigned to:
(2,208)
1,709
(2,957)
1,943
640
459
(318)
273
Sep 30,
514
2022
2023
Fiscal year
17,180
15,110
12,024
13,440
35,677
32,548
13,379
372
Non-current assets and liabilities
2,741
(106)
Total deferred taxes, net
Minus amounts represent deferred tax liabilities.
Fiscal year
2023
2022
3,472
2,218
831
1,947
(1,142)
2,687
(769)
215
36
(198)
(6)
12
(752)
(591)
410
14
(154)
(8)
Legal Proceedings often involve complex legal issues and are subject to substantial uncertainties. Accordingly, considerable judgment is
part of determining whether it is probable that there is a present obligation as a result of a past event at the end of the reporting period,
whether it is probable that such a Legal Proceeding will result in an outflow of resources and whether the amount of the obligation can
be reliably estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be
necessary, to record a provision for an ongoing Legal Proceeding or to adjust the amount of a previously recognized provision. Upon
resolution of a Legal Proceeding, Siemens may incur charges in excess of the recorded provisions for such matters. The outcome of Legal
Proceedings may have a material effect on Siemens' financial position, its results of operations and/or its cash flows.
Consolidated Financial Statements
Provisions - A provision is recognized in the Statement of Financial Position when (1) it is probable that the Company has a present legal
or constructive obligation as a result of a past event and (2) it is probable that an outflow of economic benefits will be required to settle
the obligation and (3) a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized
at present value by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value
of money. When a contract becomes onerous, the present obligation under the contract is recognized as a provision.
237
276
Disposal of businesses, net of cash disposed
368
2,078
Disposal of investments and financial assets for investment purposes
746
1,973
Cash flows from investing activities – continuing operations
(3,458)
(2,467)
Cash flows from investing activities - discontinued operations
281
(23)
Cash flows from investing activities - continuing and discontinued operations
(3,176)
(2,490)
Cash flows from financing activities
Purchase of treasury shares
(884)
(1,565)
Disposal of intangibles and property, plant and equipment
(1,100)
(1,461)
Change in receivables from financing activities
Interest received
2,205
1,481
Cash flows from operating activities - continuing operations
12,281
10,322
Cash flows from operating activities - discontinued operations
(41)
(81)
Cash flows from operating activities - continuing and discontinued operations
Re-issuance of treasury shares and other transactions with owners
12,239
Cash flows from investing activities
Additions to intangible assets and property, plant and equipment
(2,218)
(2,084)
Acquisitions of businesses, net of cash acquired
(407)
(2,207)
Purchase of investments and financial assets for investment purposes
(723)
(1,404)
10,241
(404)
(305)
Issuance of long-term debt
679
Change in cash and cash equivalents
(388)
927
Cash and cash equivalents at beginning of period
10,472
9,545
Cash and cash equivalents at end of period
10,084
10,472
(721)
Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations
at end of period
10,084
7
10,465
5
5. Consolidated Statements of Changes in Equity
Issued
capital
Capital
reserve
Retained
earnings
Currency
translation
differences
Equity
instruments
Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
348
Effect of changes in exchange rates on cash and cash equivalents
(1)
(8,731)
2,470
4,969
Repayment of long-term debt (including current maturities of long-term debt)
(5,252)
(6,663)
Change in short-term debt and other financing activities
300
455
Interest paid
(1,208)
(1)
(7,502)
(824)
Dividends attributable to non-controlling interests
Cash flows from financing activities - continuing operations
Cash flows from financing activities - discontinued operations
(3,362)
(3,215)
(389)
(354)
(8,730)
(7,502)
Cash flows from financing activities - continuing and discontinued operations
Dividends paid to shareholders of Siemens AG
258
(2,173)
(2,902)
Joint ventures
Associates
Total comprehensive income
Other comprehensive income
Income (loss) from continuing operations
(in millions of €)
As of September 30, 2023, and 2022, the carrying amount of all individually not material associates amounts to €901 million and €943
million, respectively. As of September 30, 2023, and 2022, the carrying amount of all individually not material joint ventures amounts to
€334 million and €350 million, respectively. The aggregate amount of the Siemens' share in the following line items of these associates
and joint ventures is presented below:
(1)
(1,605)
(2)
Sep 30,
(5,075)
(5,057)
622
(244)
28,997
(833)
(4,813)
31,119
2022
2023
Fiscal year
attributable to shareholders of Siemens Energy AG
attributable to Siemens
(211)
4. Consolidated Statements of Cash Flows
2023
Sep 30,
Non-current assets
Current assets
Accumulated non-controlling interests
Ownership interests held by non-controlling interests
(in millions of €)
Summarized consolidated financial information, in accordance with IFRS and before intercompany eliminations, is presented below.
Subsidiary with material non-controlling interests
292
72
152
Sep 30,
2022
73
(14)
132
(21)
99
86
20
95
2022
2023
Sep 30,
193
Derivative
(in millions of €)
Fiscal year
Income taxes paid
Dividends received
(1,033)
(942)
(979)
432
(652)
2,903
(425)
(432)
Change in other assets and liabilities
(1,345)
(1,655)
(972)
190
1,352
1,069
2,046
(444)
(394)
3,184
(2,584)
(1,456)
Consolidated Financial Statements
Additions to assets leased to others in operating leases
Trade payables
2023
2022
Cash flows from operating activities
Net income
8,529
4,392
Adjustments to reconcile net income to cash flows from operating activities - continuing operations
(Income) loss from discontinued operations, net of income taxes
Amortization, depreciation and impairments
Income tax expenses
(15)
Contract liabilities
21
3,561
2,687
2,741
Interest (income) expenses, net
(Income) loss related to investing activities
Other non-cash (income) expenses
Change in operating net working capital from
Contract assets
Inventories
Trade and other receivables
3,608
financial
instruments
Treasury
shares
at cost
Total equity
attributable
(267)
(193)
3
37
41
2,400
7,411
36,874
2,425
(53)
75
(89)
47,791
5,270
53,060
445
5,211
502
502
6
Consolidated Financial Statements
6. Notes to Consolidated Financial Statements
NOTE 1 Basis of presentation
(1,177)
The accompanying Consolidated Financial Statements present the operations of Siemens Aktiengesellschaft with registered offices in
Berlin (registry number HRB 12300) and Munich (registry number HRB 6684), Germany, and its subsidiaries (the Company or Siemens).
They have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as well
as with the additional requirements set forth in Section 315e (1) of the German Commercial Code (HGB). The Consolidated Financial
Statements are in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Consolidated Financial
Statements were authorized for issue by the Managing Board on December 4, 2023. Siemens prepares and reports its Consolidated
Financial Statements in euros (€). Due to rounding, numbers presented may not add up precisely to totals provided. Siemens is a German
based multinational focused technology company.
71
3
(1,553)
(46)
130
130
Purchase of treasury shares
(884)
(884)
(884)
Re-issuance of treasury shares
Cancellation of treasury shares
Disposal of equity instruments
3
Changes in equity resulting from major portfolio transactions
Other changes in equity
Balance as of September 30, 2023
57
(150)
(5,061)
14
14
14
(1,553)
(1,553)
Other transactions with non-controlling interests
176
NOTE 2 Material accounting policies and critical accounting estimates
Siemens operates in an increasingly complex and uncertain macroeconomic and geopolitical environment, particularly due to the war in
Ukraine and the conflict in Israel-Gaza/Middle East. Notably, we face continuing inflation, increased interest rates, volatile foreign
currencies and share prices along with a rising apprehension of a slow-down of economic growth in significant markets compared to prior
years. Uncertainties increase in prognosis and forecasts, in applying critical accounting estimates and in using management judgements.
Those trends could impact fair values and carrying amounts of assets and liabilities, amount and timing of results of operations and cash
flows of Siemens. Severity and duration of those trends are decisive on the magnitude of its impact on Siemens' Consolidated Financial
Statements. Siemens based its estimates and assumptions on existing knowledge and best information available.
Factory and office buildings
Other buildings
Technical machinery & equipment
Office & other equipment
Equipment leased to others
20 to 50 years
5 to 10 years
generally 10 years
generally 5 years
generally 3 to 7 years
Impairment of property, plant and equipment and other intangible assets - The Company reviews property, plant and equipment and
other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. In addition, intangible assets not yet available for use are subject to an annual impairment test. Impairment testing of
property, plant and equipment and other intangible assets involves the use of estimates in determining the assets' recoverable amount,
which can have a material impact on the respective values and ultimately the amount of any impairment.
Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses.
Depreciation expense is recognized using the straight-line method. The following useful lives are assumed:
Leases - A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. Further information on leases can be found in Notes 8, 13 and 16.
Lessee: Siemens recognizes right-of-use assets and lease liabilities for leases with a term of more than twelve months if the underlying
asset is not of low value. Payments for short-term and low-value leases are expensed over the lease term. Extension options are included
in the lease term if their exercise is reasonably certain. Right-of-use assets are measured at cost less accumulated depreciation expense
and impairment losses adjusted for any remeasurements. Right-of-use assets are depreciated under the straight-line method over the
shorter of the lease term and the useful life of the underlying assets. Lease liabilities are measured at the present value of the lease
payments due over the lease term, generally discounted using the incremental borrowing rate. Lease liabilities are subsequently measured
at amortized cost using the effective interest method. They are remeasured in case of modifications or reassessments of the lease.
Discontinued operations and non-current assets held for disposal - Discontinued operations are reported when a component of an
entity is classified as held for disposal or has been disposed of, if the component represents a separate major line of business or
geographical area of operations and is part of a single coordinated plan to disposal. A non-current asset or a disposal group is held for
disposal, if its carrying amount will be recovered principally through a sale transaction or through a distribution to owners rather than
through continuing use. Depreciation and amortization cease for assets classified as held for disposal. In the Consolidated Statements of
Income and of Cash Flows, discontinued operations are reported separately from continuing operations; prior periods are presented on a
comparable basis. The disclosures in the Notes to the Consolidated Financial Statements outside of Note 3 relate to continuing operations
or assets and liabilities not held for disposal. The non-current asset held for disposal or the disposal group is measured at the lower of its
carrying amount and fair value less costs to sell. The determination of the fair value less costs to sell includes the use of estimates and
assumptions that tend to be uncertain.
Income taxes - Tax positions are calculated taking into consideration the respective local tax laws, relevant court decisions and applicable
tax authorities' views. Tax regulations can be complex and possibly subject to different interpretations of tax payers and local tax
authorities. Different interpretations of existing or new tax laws as a result of tax reforms or other tax legislative procedures may result in
additional tax payments for prior years and are taken into account based on management's considerations. Under the liability method,
deferred tax assets and liabilities are recognized for expected tax consequences of future periods attributable to differences between the
financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are recognized if sufficient
future taxable profit is available, including income from forecasted operating earnings, the reversal of existing taxable temporary
differences and available tax planning opportunities that Siemens would execute. As of each period-end, Siemens evaluates the
recoverability of deferred tax assets, based on taxable income of past periods and projected future taxable profits. As future developments
are uncertain and partly beyond Siemens's control, assumptions are necessary to estimate future taxable profits as well as the period in
which deferred tax assets will recover. Estimates are revised in the period in which there is sufficient evidence to revise the assumption.
9
Consolidated Financial Statements
Expected tax effects, arising from prospectively applying the global minimum taxation rules (Pillar Two), are not considered in calculating
deferred tax assets and liabilities. Currently, it is expected to apply Pillar Two to the entire Siemens Group commencing with fiscal 2025.
Contract assets, contract liabilities, receivables – When either party to a contract with customers has performed, Siemens presents a
contract asset, a contract liability or a receivable depending on the relationship between Siemens' performance and the customer's
payment. Contract assets and liabilities are presented as current since incurred in the normal operating cycle. Receivables are recognized
when the right to consideration becomes unconditional. Valuation allowances for credit risks are made for contract assets and receivables
in accordance with the accounting policy for financial assets measured at amortized cost.
Inventories - Inventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally
determined based on an average or first-in, first-out method. Determining net realizable value of inventories involves accounting estimates
for quantity, technical and price risks.
Defined benefit plans - Siemens measures the entitlements by applying the projected unit credit method. The approach reflects an
actuarially calculated net present value of the future benefit entitlement for services already rendered. In determining the net present
value of the future benefit entitlement for service already rendered (Defined Benefit Obligation (DBO)), the expected rates of salary and
pension increases are considered. The assumptions used for the calculation of the DBO as of the period-end of the preceding fiscal year
are used to determine the calculation of service cost and interest income and expense of the following year. Significant plans apply
individual spot rates from full discount rate curves to determine service cost and interest expense. The net interest income or expense for
the fiscal year will be based on the discount rate for the respective year multiplied by the net defined benefit liability (asset) at the
preceding fiscal year's period-end date.
Service cost, past service cost and settlement gains (losses) for pensions and similar obligations as well as administration costs unrelated
to the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized
immediately in profit or loss. For unfunded plans, the amount in line item Provisions for pensions and similar obligations equals the DBO.
For funded plans, Siemens offsets the fair value of the plan assets from the DBO. Siemens recognizes the net amount, after adjustments
for effects relating to any asset ceiling.
Remeasurements comprise actuarial gains and losses as well as the difference between the return on plan assets and the amounts included
in net interest on the net defined benefit liability (asset). They are recognized in Other comprehensive income, net of income taxes.
Actuarial valuations rely on key assumptions including discount rates, expected compensation increases, rate of pension progression and
mortality rates. Discount rates used are determined by reference to yields on high-quality corporate bonds of appropriate duration and
currency at the end of the reporting period. In case such yields are not available, discount rates are based on government bonds yields.
Due to changing market, economic and social conditions, the underlying key assumptions may differ from actual developments.
Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
assets at period-end. If the performance of the underlying assets is lower than a guaranteed return, the DBO is measured by projecting
forward the contributions at the guaranteed fixed return and discounting back to a present value.
Lessor: Leases are classified as either finance or operating leases, determined based on whether substantially all the risks and rewards
incidental to ownership of an underlying asset are transferred. If this is the case, the lease is classified as a finance lease; if not, it is an
operating lease. Receivables from finance leases are recognized at an amount equal to the net investment in the lease. The assets
underlying the operating leases are presented in Property, plant and equipment and depreciated on a straight-line basis over their useful
lives or to their estimated residual value. Operating lease income is recognized on a straight-line basis over the lease term.
Certain of the following accounting policies require critical accounting estimates that involve complex and subjective judgments and the
use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting
estimates could change from period to period and have a material impact on the Company's results of operations, financial positions and
cash flows. Critical accounting estimates could also involve estimates where Siemens reasonably could have used a different estimate in
the current accounting period. Siemens cautions that future events often vary from forecasts and that estimates routinely require
adjustment.
Other intangible assets - The Company amortizes intangible assets with finite useful lives on a straight-line basis over their respective
estimated useful lives. Estimated useful lives for patents, licenses and other similar rights generally range from three to five years, except
for intangible assets with finite useful lives acquired in business combinations. Intangible assets acquired in business combinations
primarily consist of customer relationships and trademarks as well as technology. Useful lives in specific acquisitions ranged from two to
30 years for customer relationships and trademarks and for technology from five to 22 years.
values are generally determined based on discounted cash flow calculations. Impairment losses on goodwill are not reversed in future
periods.
Basis of consolidation - The Consolidated Financial Statements include the accounts of Siemens AG and its subsidiaries over which the
Company has control. Siemens controls an investee if it has power over the investee. In addition, Siemens is exposed to, or has rights to,
variable returns from the involvement with the investee and Siemens is able to use its power over the investee to affect the amount of
Siemens' return.
Business combinations - Cost of an acquisition is measured at the fair value of the assets given and liabilities incurred or assumed at the
date of exchange. Identifiable assets acquired and liabilities assumed in a business combination (including contingent liabilities) are
initially measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling
interests are measured at the proportional fair value of assets acquired and liabilities assumed (partial goodwill method). If there is no loss
of control, transactions with non-controlling interests are accounted for as equity transactions not affecting net income. At the date control
is lost, any retained equity interests are remeasured to fair value. In case of a written put option on non-controlling interests the Company
assesses whether the prerequisites for the transfer of present ownership interest are fulfilled at the balance sheet date. If the Company is
not the beneficial owner of the shares underlying the put option, the exercise of the put option will be assumed at each balance sheet
date and treated as equity transaction between shareholders with the recognition of a purchase liability at the respective exercise price.
The non-controlling interests participate in profits and losses during the reporting period.
Associates and joint ventures - Associates are companies over which Siemens has the ability to exercise significant influence over
operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights). Joint ventures are
entities over which Siemens and one or more parties have joint control. Joint control requires unanimous consent of the parties sharing
control in decision making on relevant activities.
Associates and joint ventures are recorded in the Consolidated Financial Statements using the equity method and are initially recognized
at cost. If the investment was retained in a transaction in which Siemens lost control of a subsidiary, the fair value of the investment
represents the cost on initial recognition. Siemens' share of its associate's or joint venture's post-acquisition profits or losses is recognized
in the Consolidated Statements of Income, and its share of post-acquisition changes in equity that have not been recognized in the
associate's or joint venture's profit or loss is recognized directly in equity. The cumulative post-acquisition changes also include effects
from fair value adjustments and are adjusted against the carrying amount of the investment. When Siemens' share of losses in an associate
or joint venture equals or exceeds its interest in the investment, Siemens does not recognize further losses, unless it incurs obligations or
makes payments on behalf of the associate or joint venture. The interest in an associate or joint venture is the carrying amount of the
investment together with any long-term interests that, in substance, form part of Siemens' net investment in the associate or joint venture.
Siemens reviews associates and joint ventures for impairment whenever there is objective evidence that its investment is impaired, for
example a significant or prolonged decline in the fair value of the investment below its cost. In addition, Siemens similarly assesses
whether there are indications that an impairment loss recorded in prior periods may no longer exist or may have decreased. If this is the
case, any reversal of an impairment loss is recognized to the extent that the recoverable amount subsequently increases, not exceeding
the carrying amount, had no impairment loss been recognized in previous periods. Impairments and reversal of impairments include the
use of judgements.
Foreign currency translation - Assets and liabilities of foreign subsidiaries, where the functional currency is other than the euro, are
translated using the spot exchange rate at the end of the reporting period, while the Consolidated Statements of Income are translated
using average exchange rates during the period. Differences arising from such translations are recognized within equity and reclassified
to net income when the gain or loss on disposal of the foreign subsidiary is recognized. The Consolidated Statements of Cash Flows are
translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the
end of the reporting period.
7
Foreign currency transaction - Transactions that are denominated in a currency other than the functional currency of an entity, are
recorded at that functional currency applying the spot exchange rate at the date when the underlying transactions are initially recognized.
At the end of the reporting period, foreign currency-denominated monetary assets and liabilities are revalued to functional currency
applying the spot exchange rate prevailing at that date. Gains and losses arising from these foreign currency revaluations are recognized
in net income. Those foreign currency-denominated transactions which are classified as non-monetary are remeasured using the historical
spot exchange rate.
Revenue recognition - Siemens recognizes revenue when, or as control over distinct goods or services is transferred to the customer; i.e.
when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits,
provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking our
customer's creditworthiness into account. Revenue is the transaction price Siemens expects to be entitled to. Variable consideration is
included in the transaction price if it is highly probable that a significant reversal of revenue will not occur once associated uncertainties
are resolved. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending
on which is expected to better predict the amount of variable consideration. Consideration is adjusted for the time value of money if the
period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing
benefit either to the customer or Siemens. If a contract contains more than one distinct good or service, the transaction price is allocated
to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company
reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over time.
Revenues from construction-type contracts: Revenues are recognized over time under the percentage-of-completion method, based on
the percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense
immediately. Payment terms are usually 30 days from the date of invoice issued according to the contractual terms.
The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards
completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. These
significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory
risks, risks from supply chain constraints and other judgments. Under the percentage-of-completion method, changes in estimates may
lead to an increase or decrease of revenue. In addition, Siemens needs to assess whether the contract is expected to continue or whether
it is terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant
facts and circumstances relating to the contract are considered on an individual basis.
The determination of the recoverable amount of a (group of) cash-generating unit(s) to which goodwill is allocated involves the use of
estimates by management. The outcome predicted by these estimates is influenced e.g. by the successful integration of acquired entities,
volatility of capital markets, interest rate developments, foreign exchange rate fluctuations and the outlook on economic trends. In
determining recoverable amounts, discounted cash flow calculations generally use five-year projections (in exceptional cases up to ten
years) that are based on financial forecasts. Cash flow projections consider past experience and represent management's best estimate
about future developments. Cash flows after the planning period are extrapolated using individual growth rates. Key assumptions on
which management has based its determination of fair value less costs to sell and value in use include estimated growth rates and weighted
average cost of capital. These estimates, including the methodology used, can have a material impact on the respective values and
ultimately the amount of any goodwill impairment.
Revenues from maintenance and service contracts: Revenues are recognized over time on a straight-line basis or, if the performance
pattern is other than straight-line, as services are provided, i.e. under the percentage-of-completion method as described above. Payment
terms are usually 30 days from the date of invoice issued according to the contractual terms.
Revenues from software contracts: Software contracts usually comprise the sale of subscription licenses and perpetual licenses, which
are both on-premise, as well as technical support services including updates and unspecified upgrades and the sale of software-as-a-
service. Subscription contracts generally contain two separate performance obligations: time-based software license and technical support
service. Revenues for perpetual and time-based licenses granting the customer a right to use Siemens' intellectual property are recognized
at a point in time, i.e. when control of the license passes to the customer. Revenues for technical support services including updates and
unspecified upgrades are recognized over time on a straight-line basis as the customer simultaneously receives and consumes the benefits
provided by Siemens' services. Software-as-a-service contracts including related cloud services represent one performance obligation for
which revenues are recognized over time on a straight-line basis. Payment terms for all transactions are usually 30 days from the date of
invoice issued according to the contractual terms.
Income from interest - Interest is recognized using the effective interest method.
Functional costs - In general, operating expenses by types are assigned to the functions following the functional area of the
corresponding profit and cost centers. Amortization, depreciation and impairment of intangible assets and property, plant and equipment
are included in functional costs depending on the use of the assets.
Product-related expenses - Provisions for estimated costs related to product warranties are recorded in line item Cost of sales at the time
the related sale is recognized.
Research and development costs - Costs of research activities are expensed as incurred. Costs of development activities are capitalized
when the recognition criteria in IAS 38 are met. Capitalized development costs are stated at cost less accumulated amortization and
impairment losses with an amortization period of generally three to 25 years.
Earnings per share - Basic earnings per share are computed by dividing income from continuing operations, income from discontinued
operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding
during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-
based payment plans.
Goodwill - Goodwill is not amortized, instead, goodwill is tested for impairment annually, as well as whenever there are events or changes
in circumstances (triggering events) which suggest that the carrying amount may not be recoverable. Goodwill is carried at cost less
accumulated impairment losses. The goodwill impairment test is performed at the level of a cash-generating unit or a group of cash-
generating units, generally represented by a segment. Siemens Healthineers is tested one level below the segment. This is the lowest level
at which goodwill is monitored for internal management purposes.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the (group of) cash-generating unit(s)
that is expected to benefit from the synergies of the business combination. If the carrying amount of the (group of) cash-generating
unit(s), to which the goodwill is allocated, exceeds its recoverable amount, an impairment loss on goodwill allocated to that (group of)
cash-generating unit(s) is recognized. The recoverable amount is the higher of the (group of) cash-generating unit(s)' fair value less costs
to sell and its value in use. If either of these values exceeds the carrying amount, it is not always necessary to determine both values. These
8
Consolidated Financial Statements
Revenues from product sales: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon
delivery of the goods. Invoices are issued at that point in time and are usually payable within 30 days.
Significant estimates are involved in the determination of provisions related to onerous contracts, warranty costs, asset retirement
obligations, legal and regulatory proceedings as well as governmental investigations (Legal Proceedings). Siemens records a provision for
onerous contracts with customers when current estimates of total estimated costs exceed estimated revenue. Onerous contracts with
customers are identified by monitoring the progress of the project and updating the estimates which requires significant judgment relating
to achieving certain performance standards as well as estimates involving warranty costs and estimates regarding project delays including
the assessment of responsibility splits between the contract partners for these delays.
Share-based payment
(400)
48,991
4,392
(562)
6,346
1
45
5,830
781
6,611
(3,215)
4,831
669
-
(354)
(3,569)
83
(69)
14
14
45
(1,588)
444
(1,588)
(1,588)
(3,215)
490
3,723
(4,804)
Consolidated Financial Statements
Non
controlling
interests
Total
equity
(in millions of €)
Balance as of October 1, 2021
Net income
Other comprehensive income, net of income taxes
Dividends
Share-based payment
44,160
Purchase of treasury shares
Disposal of equity instruments
Transactions with non-controlling interests
Other changes in equity
Balance as of September 30, 2022
2,550
7,040
39,607
3,723
(40)
(13)
(179)
Re-issuance of treasury shares
(3,762)
490
(41)
(134)
(5,948)
48,895
5,910
54,805
Net income
7,949
7,949
579
8,529
(12)
Other comprehensive income, net of income taxes
(3,881)
(41)
45
(3,977)
(589)
(4,566)
Dividends
(3,362)
-
(3,362)
(100)
(41)
6,306
7,174
(41)
6
(153)
(146)
(19)
(166)
(331)
(331)
3
(328)
38,959
2,550
38,959
6,306
(12)
(134)
(5,948)
48,895
5,910
54,805
Balance as of October 1, 2022
2,550
7,174
to share-
holders of
Siemens AG
Income (loss) from continuing operations, net of income taxes
Other comprehensive income, net of income taxes
(355)
753
989
576
78
14
Total comprehensive income (loss), net of income taxes
153
(5,291)
35,383
4,797
(4,574)
5,267
(59)
(1,911)
5,545
Loans from banks (current and non-current)
2,745
114
2,470
Reclassifi-
cations and
other
09/30/2023
changes
(404)
Fair value
hedge
adjustments
translation
positions
10/01/2022
Current notes and bonds
Non-current notes and bonds
(in millions of €)
currency
tions)/Dis-
Foreign
39,964
39
2,194
(41)
Foreign
currency
translation
(Acquisi-
tions)/Dis-
positions
10/01/2021
(in millions of €)
Non-cash changes
Cash flows
In addition, other financing activities resulted in €251 million cash flows in fiscal 2023.
46,596
725
94
(2,162)
35
(2,733)
50,636
Total debt
2,924
793
(97)
(3)
(771)
3,002
Lease liabilities (current and non-current)
549
(3)
(123)
546
128
Other financial indebtedness (current and non-current)
(Acquisi-
(144)
Non-cash changes
19
Cash flows
Loans from banks
Notes and bonds
(in millions of €)
NOTE 16 Debt
In fiscal 2023 and 2022, Other includes miscellaneous tax liabilities of €899 million and €743 million, respectively, as well as various
accruals of €368 million and €419 million, respectively.
7,448
8,182
1,692
1,985
550
569
79
105
Other financial indebtedness
Other
Deferred Income
5,126
5,522
2022
2023
Liabilities to personnel
(in millions of €)
Sep 30,
NOTE 15 Other current liabilities
Item Loans receivable primarily relate to long-term loan transactions of SFS.
25,903
22,855
737
Accruals for pending invoices
Lease liabilities
Total debt
Current debt
Changes in liabilities arising from financing activities
Fair value
hedge
adjustments
In fiscal 2023 and 2022, Siemens recognized interest expenses on lease liabilities of €71 million and €48 million and expenses relating to
variable lease payments not included in the measurement of lease liabilities of €100 million and €93 million, respectively. In fiscal 2023
and 2022, cash flows to which Siemens is potentially exposed and which are not reflected in the measurement of lease liabilities, relate
primarily to lease contracts entered into, however which have not yet commenced as well as to extension options whose exercise is not
yet reasonably certain totaling €2.9 billion and €3.1 billion, respectively, and, in addition, to variable lease payments mainly relating to
incidental and operating costs for buildings leased by Siemens.
43,978
39,113
6,658
7,483
2,299
2,230
703
693
42
1,673
1,461
38
87
511
1,071
733
2022
39,964
35,383
4,797
5,545
2023
Sep 30,
Sep 30,
Sep 30,
2022
2023
Sep 30,
Non-current debt
Consolidated Financial Statements
Reclassifi-
cations and
Current notes and bonds
changes 09/30/2022
676
750
€
677
750
€
999
1,000
€
101
100
US$
93
€
100
998
1,000
€
1,001
1,000
€
725
650
£
741
650
£
355
US$
1,000
996
€
484
500
€
601
800
€
576
800
€
665
800
€
664
800
€
569
650
€
572
650
€
724
750
€
737
750
€
995
1,000
350
other
£
350
(72)
(604)
2,929
Lease liabilities (current and non-current)
128
3
463
(453)
116
Other financial indebtedness (current and non-current)
2,745
(377)
159
127
361
2,282
1,250
4,797
4,456
(19)
553
39,964
(4,480)
(1,255)
3,224
37,505 4,969
5,867 (6,060)
760
Non-current notes and bonds
320
622
3,002
Total debt
£
millions of €1
(in millions)
millions of €1
(in millions)
2.75%/2012/September 2025/GBP fixed-rate instruments
3.75%/2012/September 2042/GBP fixed-rate instruments
2.875%/2013/March 2028/EUR fixed-rate instruments
3.5%/2013/March 2028/US$ fixed-rate instruments
0.375%/2018/September 2023/EUR fixed-rate instruments
1.0%/2018/September 2027/EUR fixed-rate instruments
1.375%/2018/September 2030/EUR fixed-rate instruments
0.3%/2019/February 2024/EUR fixed-rate instruments
0.9%/2019/February 2028/EUR fixed-rate instruments
1.25%/2019/February 2031/EUR fixed-rate instruments
1.75%/2019/February 2039/EUR fixed-rate instruments
0.0%/2019/September 2024/EUR fixed-rate instruments
0.125%/2019/September 2029/EUR fixed-rate instruments
(interest/issued/maturity)
Carrying
amount in
Notional amount
Currency
Carrying
amount in
Notional amount
Currency
Sep 30, 2022
Consolidated Financial Statements
Sep 30, 2023
Notes and bonds
20
20
As of September 30, 2023, and 2022, Siemens has €7.45 billion lines of credit, which are unused. The €7.0 billion syndicated loan facility
matures in February 2026. In September 2023, the unused €450 million revolving bilateral credit facility was extended to September
2024. The facilities are for general corporate purposes.
Credit facilities
In addition, other financing activities resulted in €590 million cash flows in fiscal 2022.
50,636
224
(1,274)
4,526
289
(1,829)
48,700
377
1,470
1,213
2,868
'Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
(2,279)
11,938
(15,342)
27,280
(1,901)
3,252
17
(1,015)
26,926
Property, plant and equipment
(2)
1,288
Gross Translation
(8)
(8)
(755)
742
(41)
1,359
construction in progress
Advances to suppliers and
(543)
1,769
(2,088)
3,857
(675)
12
1,296
643
Additions
carrying
(2,164)
4,215
(119)
295
335
3,704
Internally generated technology
(in millions of €)
in fiscal
2022
zation and
impairment
Deprecia-
tion/amorti-
09/30/2022
amount
Additions
Carrying
ortization
and impair-
ciation/am-
Accumu-
lated depre-
nations
Gross
carrying
amount
09/30/2022
combi-
10/01/2021
business
amount
Retire-
ments¹
Reclassi-
fications
through
differences
ment
(149)
4,025
Equipment leased to others
(451)
5,229
8,200 (2,971)
20,247 (9,605)
(1,310)
349
203
(1,077)
22,082
Other intangible assets
(1,007)
160
(438)
9,484
10,641
Customer relationships and trademarks
3,417
7,882 (4,465)
(102)
48
43
(490)
8,383
licenses and similar rights
Acquired technology including patents,
(168)
1,995
(2,170)
4,165
(702)
(1,321)
Land and buildings
10,610
(674)
1,418
(4,482)
5,900
(485)
103
748
15
(223)
5,742
Office and other equipment
(307)
1,642
(3,691)
5,333
(185)
215
289
(177)
5,190
Technical machinery and equipment
(753)
5,821
10,894 (5,073)
(548)
424
831
1
(425)
2,051
(199)
Acquired technology including patents,
licenses and similar rights
After one year but not more than two years
After two years but not more than three years
After three years but not more than four years
After four years but not more than five years
More than five years
Within one year
(in millions of €)
Future minimum lease payments to be received under operating leases are:
18
In fiscal 2023 and 2022, expenses recognized for short-term leases are €64 million and €56 million, respectively; expenses for low-value
leases not accounted for under the right-of-use model are €27 million and €22 million, respectively. Sale and Leaseback transactions
resulted in gains of €2 million and €94 million, respectively, in fiscal 2023 and 2022.
Right-of-use assets are presented in Property, plant and equipment in accordance with their nature; right-of-use assets have a carrying
amount of €2,546 million and €2,608 million as of September 30, 2023, and 2022, respectively; additions are €924 million and €918
million and depreciation expense is €770 million and €760 million in fiscal 2023 and 2022. Right-of-use assets mainly relate to leases of
land and buildings with a carrying amount of €2,176 million and €2,309 million as of September 30, 2023, and 2022, additions of €604
million and €650 million and depreciation expense of €554 million and €558 million in fiscal 2023, and 2022. Equipment leased to others
mainly relate to Technical machinery and equipment as well as to Office and other equipment owned by Siemens with a carrying amount
of €1,248 million and €298 million, respectively, as of September 30, 2023 and €1,323 million and €337 million, respectively, as of
September 30, 2022.
In fiscal 2023, Siemens Healthineers incurred impairment losses in the endovascular robotics solution business of €262 million, mainly on
other intangible assets, due to a decision to refocus certain activities within this business. The impairment loss is primarily reported at Cost
of sales. The recoverable amount of the cash generating unit of €(69) million is fair value less costs to sell, determined by applying a
discounted cash flow model (Level 3 of the fair value hierarchy) using a 10% after tax discount rate and a term corresponding to the
expected useful life of the respective asset.
The carrying amount of Advances to suppliers and construction in progress includes €1,125 million and €1,218 million, respectively, of
property, plant and equipment under construction in fiscal 2023 and 2022. As of September 30, 2023, and 2022, contractual
commitments for purchases of property, plant and equipment are €694 million and €627 million, respectively.
1 Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
(7)
1,347
(12)
(15,193) 11,733 (2,292)
Consolidated Financial Statements
1,359
26,926
3,104
26
1,503
24,601
Property, plant and equipment
(568)
834
58
1,055
construction in progress
Advances to suppliers and
(543)
1,838
(19)
(2,307)
Sep 30,
2023
2022
€
4,277
4,606
16,551
14,917
2022
Sep 30,
2023
Other
Equity instruments
Derivative financial instruments
Receivables from finance leases
Loans receivable
(in millions of €)
NOTE 14 Other financial assets
In fiscal 2023 and 2022, income from operating leases is €610 million and €687 million, respectively, thereof from variable lease payments
€137 million and €144 million, respectively.
1,323
1,272
130
139
111
101
163
161
228
215
298
284
392
372
4,025 (2,188)
1,360
(608)
553
9,454
Land and buildings
(1,256)
12,196
(478)
5,815
9,484 (3,669)
(9,886)
22,082
(298)
345
1,169
2,017
18,849
656
Other intangible assets
911
698
7,966
Customer relationships and trademarks
(579)
4,331
(4,052)
8,383
(89)
50
259
983
7,179
(91)
22
888
337
4
213
3,860
Equipment leased to others
(631)
1,321
(4,420)
5,742
(692)
80
627
-
320
5,406
Office and other equipment
(309)
1,519
(3,671)
5,190
(242)
149
201
256
4,826
Technical machinery and equipment
(802)
5,708
10,610 (4,902)
(746)
2
500
1,000
€
-
(5)
Business combinations, disposals and other
(5)
Foreign currency translation effects
(281)
(155)
874
12
(204)
(154)
(7)
(17)
(8)
854
(11)
(6)
(83)
28
Other reconciling items
(1,987)
(941)
(660)
(319)
(6)
1
(1,333)
(620)
Balance at fiscal year-end
26,610
8
(15)
Settlement payments
(128)
(50)
602
Remeasurements recognized in the Consolidated Statements of
Comprehensive Income
(696)
(7,581)
(788)
(7,018)
(50)
602
42
39
Employer contributions
1,104
513
(1,104)
(513)
Plan participants' contributions
126
128
126
128
Benefits paid
(1,811)
(1,788)
(1,687)
(1,660)
-
(124)
27,853
602
Germany
U.K.
604
(47)
(52)
1,518
26,610 27,853
1,599
864
899
4
3
658
704
26,055
26,523
561
578
1,132
1,949
1,426
2,278
293
328
1 Total Defined benefit obligation (DBO) includes other post-employment benefits of €284 million and €299 million in fiscal 2023 and 2022 respectively, which primarily consist of transition payments to German employees after
retirement as well as post-employment health care and life insurance benefits to employees in the U.S.
2 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
Net interest expenses relating to provisions for pensions and similar obligations amount to €97 million and €51 million, respectively, in
fiscal 2023 and 2022. The DBO is attributable to actives 29% and 29%, to deferreds with vested benefits 12% and 13% and to retirees and
surviving dependents 60% and 58%, respectively, in fiscal 2023 and 2022.
The DBO remeasurements comprise actuarial (gains) and losses resulting from:
Fiscal year
(in millions of €)
Changes in demographic assumptions
Changes in financial assumptions
620
3,731
3,783
3,075
CH
Other countries
Total
thereof provisions for pensions and similar obligations
thereof net defined benefit assets (presented in Other assets)
16,023
2,240
26,055 26,523
16,676 15,760 15,475
578
620
1,132
1,949
-
262
1,201
2,568
2,057
2,314
-
183
254
3,654
3,933
3,591
4,105
12
13
76
(159)
3,175
U.S.
Experience (gains) losses
(50)
(7,581)
Of the two persisting bilateral term loan facilities of US$500 million (€472 million) each, one matures in fiscal 2024, and the second in
fiscal 2025. The existing bilateral €500 million term loan facility matures in fiscal 2025.
Commercial paper program
As of September 30, 2023, and 2022, Siemens has a US$9.0 billion (€8.5 billion and €9.2 billion, respectively, as of September 30, 2023
and 2022) commercial paper program in place including US$ extendible notes capabilities. As of September 30, 2023, US$49 million (€46
million) were outstanding; as of September 30, 2022, none were outstanding. Siemens' commercial papers have a maturity of generally
less than 90 days. Interest rates ranged from 3.06% to 5.29% in fiscal 2023 and from 0.08% to 3.06% in fiscal 2022.
NOTE 17 Post-employment benefits
Defined benefit plans
The defined benefit plans open to new entrants are based predominantly on contributions made by the Company. Only to a certain extent,
those plans are affected by longevity, inflation and compensation increases and take country specific differences into account. The
Company's major plans are funded with assets in segregated entities. In accordance with local laws these plans are managed in the interest
of the beneficiaries by way of contractual trust agreements with each separate legal entity. The defined benefit plans cover 442,000
participants, including 183,000 actives, 82,000 deferreds with vested benefits and 177,000 retirees and surviving dependents.
Germany
In Germany, pension benefits are provided through the following plans: BSAV (Beitragsorientierte Siemens Altersversorgung), frozen
legacy plans as well as deferred compensation plans. The majority of active employees participate in the BSAV. Those benefits are based
predominantly on notional contributions and the return on the corresponding assets of this plan, subject to a minimum return guaranteed
by the employer. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially eliminate the
effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk, inflation risk and
longevity risk. The pension plans are funded via contractual trust arrangements (CTA). In Germany no legal or regulatory minimum funding
requirements apply.
U.S.
In the U.S., the Pension Plans are sponsored by Siemens, which for the most part have been frozen to new entrants and to future benefit
accruals, except for interest credits on cash balance accounts. Siemens has appointed the Investment Committee as the named fiduciary
for the management of the assets of the Plans. The Plans' assets are held in Trusts and the trustees of the Trusts are responsible for the
administration of the assets of the Trusts, taking directions from the Investment Committee. The Plans are subject to the funding
requirements under the Employee Retirement Income Security Act of 1974 as amended (ERISA). There is a regulatory requirement to
maintain a minimum funding level of 80% in the defined benefit plans in order to avoid benefit restrictions. At their discretion, sponsoring
employers may contribute in excess of this regulatory requirement. Annual contributions are calculated by independent actuaries.
U.K.
Pension benefits are mainly offered through the Siemens Benefit Scheme for which, until the start of retirement, an inflation increase of
the majority of accrued benefits is mandatory. The required funding is determined by a funding valuation carried out every third year
based on legal requirements. Due to deviating guidelines for the determination of the discount rates, the technical funding deficit is usually
larger than the IFRS funding deficit. To reduce the deficit Siemens entered into an agreement with the trustees to provide annual payments
of £31 (€35) million until fiscal 2033. The agreement also provides for a cumulative advance payment by Siemens AG compensating the
remaining annual payments at the date of early termination of the agreement due to cancellation or insolvency.
22
Consolidated Financial Statements
The previous bilateral €250 million term loan facility and the bilateral €350 million term loan facility, both maturing in fiscal 2023, were
redeemed as due.
Switzerland
Development of the defined benefit plans
Defined benefit
obligation
Fair value of
plan assets
Effects of asset
ceiling
Net defined benefit
balance
(DBO)¹
(I)
(11)
(III)
(1 - 11 +111)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Following the Swiss law of occupational benefits (BVG) each employer has to grant post-employment benefits for qualifying employees.
Accordingly, Siemens in Switzerland sponsors several cash balance plans. These plans are administered by external foundations. The board
of the main foundation is composed of equally many employer and employee representatives. The board of the foundation is responsible
for investment policy and asset management, as well as for any changes in the plan rules and the determination of contributions to finance
the benefits. The Company is required to make total contributions at least as high as the sum of the employee contributions set out in the
plan rules. In case of an underfunded plan the Company together with the employees may be asked to pay supplementary contributions
according to a well-defined framework of recovery measures.
In fiscal 2023, two bilateral term loan facilities were newly signed: one bilateral PLN 500 million (€108 million) term loan facility maturing
in fiscal 2026 with one one-year extension option and one bilateral US$250 million (€236 million) term loan facility maturing in fiscal
2025 with one one-year extension option, which was extended in October 2023 to mature in fiscal 2026 with no remaining extension
option.
As of September 30, 2023, and 2022, five bilateral term loan facilities are outstanding (in aggregate €1.8 billion and €2.1 billion,
respectively).
Assignable and term loans
2.15%/2021/March 2031/US$ fixed-rate-instruments
US$
1,750
1,645
US$
1,750
1,788
2.875%/2021/March 2041/US$ fixed-rate-instruments
US$
1,500
1,405
US$
1,500
1,527
2023/February 2024/EUR fixed-rate instruments
Total Stand Alone Bonds
€
60
60
19,087
22,755
Total
1 Includes adjustments for fair value hedge accounting.
40,929
44,761
21
Consolidated Financial Statements
Debt Issuance Program - The Company has a program in place to issue debt instruments under which, as of September 30, 2023 and
2022, up to €30.0 billion of instruments can be issued. As of September 30, 2023, €22.7 billion in notional amounts were issued and are
outstanding (€23.0 billion as of September 30, 2022).
In February 2023, the 0.0% €1.25 billion fixed-rate instruments, in June 2023, the 0.875% £450 million fixed-rate instruments and in
September 2023, the 0.375% €1.0 billion fixed-rate instruments were redeemed at face value. In February 2023, Siemens issued fixed-
rate instruments totaling €2.5 billion in three tranches: 3.375% €1.25 billion due August 2031; 3.5% €500 million due February 2036 and
3.625% €750 million due February 2043.
Stand Alone Bonds - In March 2023, the 0.4% US$1.25 billion fixed-rate instruments and in September 2023, the 2.0% US$750 million
fixed-rate instruments were redeemed at face value.
(in millions of €)
Effects of asset ceiling
Balance at begin of fiscal year
Interest expenses
(15)
(10)
(10)
8
(6)
Components of defined benefit costs recognized in the
Consolidated Statements of income
1,440
832
980
317
14
1
(2)
474
Return on plan assets excluding amounts included in net interest
income and net interest expenses
(788)
(7,018)
-
-
788
7,018
Actuarial (gains) losses
(696)
(7,581)
-
(696)
516
Other²
(327)
(990)
2023
2022
2023
27,853
35,542
26,523
2022
33,543
2023
620
2022
2023
2022
16
1,949
2,015
386
482
-
-
386
482
1,056
366
14
1
1,070
367
Interest income
990
327
Current service cost
479
2023
(82)
(1,246)
631
(696)
(49)
(7,986)
454
€
3.0%/2022/September 2033/EUR fixed-rate instruments
3.375%/2023/August 2031/EUR fixed-rate instruments
3.5%/2023/February 2036/EUR fixed-rate instruments
3.625%/2023/February 2043/EUR fixed-rate instruments
Total Debt Issuance Program
497
500
€
497
500
€
499
500
€
499
500
1,000
€
1,000
€
998
1,000
€
738
750
€
739
750
€
746
750
997
997
€
1,000
US$
1,635
1,750
US$
1,458
1,500
US$
1,350
1,500
US$
1,968
1,750
US$
1,758
1,750
US$
6.125%/2006/August 2026/US$ fixed-rate instruments
3.25%/2015/May 2025/US$ fixed-rate-instruments
4.4%/2015/May 2045/US$ fixed-rate-instruments
2.0%/2016/September 2023/US$-fixed-rate-instruments
2.35%/2016/October 2026/US$-fixed-rate-instruments
3.3%/2016/September 2046/US$-fixed-rate-instruments
3.125%/2017/March 2024/US$ fixed-rate-instruments
22,006
21,842
735
750
€
492
500
€
1,244
1,250
€
997
€
1,750
746
€
997
1,000
€
998
1,000
€
950
1,000
€
953
1,000
€
1,251
€
1,250
-
992
1,000
€
993
1,000
€
0.5%/2019/September 2034/EUR fixed-rate instruments
0.0%/2020/February 2023/EUR fixed-rate instruments
0.0%/2020/February 2026/EUR fixed-rate instruments
0.25%/2020/February 2029/EUR fixed-rate instruments
0.5%/2020/February 2032/EUR fixed-rate instruments
1.0%/2020/February 2025/GBP fixed-rate instruments
0.25%/2020/June 2024/EUR fixed-rate instruments
0.375%/2020/June 2026/EUR fixed-rate instruments
0.875%/2020/June 2023/GBP fixed-rate instruments
0.625%/2022/February 2027/EUR fixed-rate instruments
1.0%/2022/February 2030/EUR fixed-rate instruments
1.25%/2022/February 2035/EUR fixed-rate instruments
2.25%/2022/March 2025/EUR fixed-rate instruments
2.5%/2022/September 2027/EUR fixed-rate instruments
2.75%/2022/September 2030/EUR fixed-rate instruments
995
1,000
€
995
(202)
€
750
748
€
454
500
€
455
500
€
497
450
£
-
921
1,000
€
924
1,000
€
962
1,000
€
976
1,000
€
878
850
£
932
850
748
750
750
2022
1,776
750
Pension increase
Germany
U.K.
Sensitivity analysis
Sep 30,
2023
2022
2.3%
3.0%
2.0%
3.2%
A one-half-percentage-point change of the above assumptions would result in the following increase (decrease) of the DBO:
increase
Effect on DBO due to a one-half percentage-point
decrease
increase
The mortality tables used in Germany (Siemens Bio 2017/2023) are mainly derived from data of the German Siemens population and to a
lesser extent from data of the Federal Statistical Office in Germany by applying formulas in accordance with recognized actuarial standards.
The weighted-average assumptions for pension increase for countries with significant effects are shown in the following table. Inflation
effects, if applicable, are included in the assumptions below.
decrease
(in millions of €)
Discount rate
Rate of pension increase
2023
(1,123)
788
1,208
(642)
2022
(1,328)
973
1,450
(813)
The DBO effect of a 10% reduction in mortality rates for all beneficiaries would be an increase of €714 million and €800 million,
respectively, as of September 30, 2023 and 2022.
As in prior years, sensitivity determinations apply the same methodology as those applied in determining post-employment benefit
obligations. Sensitivities reflect changes in the DBO solely for the assumption changed.
Asset Liability Matching Strategies
Sep 30,
Pri-2012 with generational projection from the US Social Security Administration's Long Range Demographic Assumptions
SAPS S3 (Standard mortality tables for Self Administered Pension Schemes with allowance for future mortality improvements)
BVG 2020 G with generational projection according to CMI model with a long-term trend rate of 1.25%
CH
U.K.
(7,581)
Total
DBO remeasurements in fiscal 2023 include losses of €813 million arising from inflation-related adjustments of pension benefits in
Germany.
23
Actuarial assumptions
The weighted-average discount rate used for the actuarial valuation of the DBO was as follows:
Discount rate
EUR
USD
Consolidated Financial Statements
Sep 30,
2023
2022
4.6%
3.9%
4.5%
3.7%
5.9%
5.5%
5.5%
4.8%
2.1%
2.2%
GBP
CHF
Discount rates are derived from high-quality corporate bonds in the respective currency zones. As of September 30, 2023, discount rates
are provided by external actuaries, which increased our weighted average discount rate by 0.21 percentage points.
Applied mortality tables are:
Germany
Siemens specific tables (Siemens Bio 2017/2023)
U.S.
As a significant risk, the Company considers a decline in the plans' funded status due to adverse developments of plan assets and/or defined
benefit obligations resulting from changing parameters. Accordingly, Siemens implemented a risk management concept aligned with the
defined benefit obligations (Asset Liability Matching). Risk management is based on a worldwide defined risk threshold (Value at Risk).
The concept, the Value at Risk and the asset development including the investment strategy are monitored and adjusted on an ongoing
basis under consultation of senior external experts. Independent asset managers are selected based on quantitative and qualitative
analyses, which include their performance and risk evaluation. Derivatives are used to reduce risks as part of risk management.
US$
24
1,176
US$
4.2%/2017/March 2047/US fixed-rate-instruments
1,280
1,250
US$
1,178
1,250
US$
3.4%/2017/March 2027/US$ fixed-rate-instruments
992
1,000
US$
929
1,500
1,000
1,018
1,000
US$
937
1,000
US$
1,740
1,700
US$
1,602
1,700
US$
768
US$
1,404
US$
1,500
1,250
US$
1.7%/2021/March 2028/US$ fixed-rate-instruments
1,790
1,750
US$
1,649
1,750
US$
1.2%/2021/March 2026/US$ fixed-rate-instruments
1,538
1,500
US$
1,416
1,500
US$
0.65%/2021/March 2024/US$ fixed-rate-instruments
1,025
1,000
US$
944
1,000
US$
Compounded SOFR+0.43%/2021/March 2024/US$ floating-rate instruments
1,282
1,250
US$
0.4%/2021/March 2023/US$ fixed-rate-instruments
1,526
US$
301
Loans from banks (current and non-current)
4,215
Sep 30,
2023
2022
7,475
7,106
(922)
(756)
6,552
6,350
144
136
6,696
6,486
Investments in finance leases primarily relate to industrial machinery, medical equipment, transportation systems, equipment for
information technology and office machines.
In fiscal 2023 and 2022, finance income on the net investment in the lease is €372 million and €453 million.
Consolidated Financial Statements
Net investment in the lease
Plus present value of unguaranteed residual value
Present value of future minimum lease payments
1,653
1,243
1,171
829
758
489
456
NOTE 9 Other current financial assets
808
7,475
7,106
15
Future minimum lease payments reconcile to the net investment in the lease as follows:
(in millions of €)
Future minimum lease payments
Less: Unearned finance income relating to future minimum lease payments
769
(in millions of €)
Loans receivable
Interest-bearing debt securities
Raw materials and supplies
Work in progress
Finished goods and products held for resale
Advances to suppliers
Sep 30,
2023
2022
3,516
(in millions of €)
3,197
3,631
3,715
3,419
287
379
11,548
10,626
4,029
1,721
Inventories
As of September 30, 2023, and 2022, amounts expected to be settled after twelve months are €1,487 million and €1,321 million for
contract assets and €1,812 million and €1,628 million for contract liabilities, respectively. In fiscal 2023, and 2022, revenue includes
€7,799 million and €6,158 million, respectively, which was included in contract liabilities at the beginning of the fiscal year.
Derivative financial instruments
Other
NOTE 10 Contract assets and liabilities
Sep 30,
2023
2022
7,588
NOTE 11 Inventories and Other current assets
6,216
1,239
573
957
1,397
1,285
10,605
9,696
1,047
2,299
2,384
2022
(422)
99
515
18
172
(52)
184
(563)
(576)
Sep 30,
2023
2022
550
443
1,314
1,164
(78)
1,864
(527)
2022
Deferred tax balances developed as follows:
(in millions of €)
Balance at beginning of fiscal year of deferred tax (assets) liabilities
Income taxes presented in the Consolidated Statements of Income
Changes in items of the Consolidated Statements of Comprehensive Income
Additions from acquisitions not impacting net income
Other (includes mainly currency translation differences)
(78)
Balance at end of fiscal year of deferred tax (assets) liabilities
Deferred tax assets have not been recognized with respect of the following items (gross amounts):
(in millions of €)
Deductible temporary differences
Tax loss carryforwards
Consolidated Financial Statements
Fiscal year
2023
Minus amounts represent deferred tax assets.
Cost of sales includes inventories recognized as expense amounting to €47,350 million and €45,159 million, respectively, in fiscal 2023
and 2022. Compared to prior year, write-downs increased by €131 million in fiscal 2023. In fiscal 2022, write-downs increased by €94
million compared to fiscal 2021.
1,607
Siemens has not recognized deferred tax liabilities for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
of €29,720 million and €29,687 million, respectively in fiscal 2023 and 2022, because the earnings are intended to be permanently
reinvested in the subsidiaries.
Sep 30,
2023
2022
15,454
14,666
1,952
2,036
17,405
Trade receivables from the sale of goods and services
Receivables from finance leases
16,701
Future minimum lease payments to be received are as follows:
(in millions of €)
Within one year
After one year but not more than two years
After two years but not more than three years
After three years but not more than four years
After four years but not more than five years
More than five years
Sep 30,
2023
In fiscal 2023 and 2022, the long-term portion of receivables from finance leases is reported in Other financial assets amounting to €4,606
million and €4,277 million, respectively.
Of the tax loss carryforward, an amount of €189 million and €245 million for fiscal 2023 and 2022, respectively can be carried forward for
a limited period. A material portion thereof will expire until 2031 and 2030, respectively.
(in millions of €)
An uncertain tax regulation arising from a foreign tax reform may result in potential future tax payments amounting to a middle three-
digit million euro range. Due to the low probability and the character of a contingent liability, no tax liability was recognized.
Including items charged or credited directly to equity and the expenses (benefits) from continuing and discontinued operations, the
income tax expenses (benefits) consist of the following:
Fiscal year
2023
2022
(in millions of €)
Continuing operations
Discontinued operations
NOTE 8 Trade and other receivables
2,687
9
3
Income and expenses recognized directly in equity
(4)
538
2,692
3,282
2,741
(150)
1,277
2023
1,859
1,688
(118)
217
8
13
(63)
(59)
1,859
Balance at fiscal year-end
Carrying amount
Balance at begin of fiscal year
Balance at fiscal year-end
33,861
29,672
32,224
33,861
Siemens performs the mandatory annual impairment test in the three months ended September 30. Key assumptions on which Siemens
based its determinations of the fair value less costs to sell for the (group of) cash-generating unit(s) being part of the segments include
terminal value growth rates up to 1.9% in fiscal 2023 and 2022, and after-tax discount rates of 7.5% to 9.5% in fiscal 2023 and 6.5% to
9.0% in fiscal 2022.
To estimate the fair value less costs to sell of the cash-generating units or groups of cash-generating units, cash flows were projected for
the next five years (in exceptional cases up to ten years) based on past experience, actual operating results and management's best
estimate about future developments as well as market assumptions. The determined fair value of the cash-generating units or groups of
cash-generating units is assigned to level 3 of the fair value hierarchy.
The fair value less costs to sell is mainly driven by the terminal value, which is particularly sensitive to changes in the assumptions on the
terminal value growth rate and discount rate. Both assumptions are determined individually for each cash-generating unit or group of
cash-generating units. Discount rates are based on the weighted average cost of capital (WACC). Siemens Financial Services' discount rate
represents its specific cost of equity. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In
addition, the discount rates reflect the current market assessment of the risks specific to each cash-generating unit or group of cash-
generating units by taking into account specific peer group information on beta factors, leverage and cost of debt as well as country
specific premiums. The parameters for calculating the discount rates are based on external sources of information. The peer group is
subject to an annual review and adjusted, if necessary. Terminal value growth rates take into consideration external macroeconomic
sources of data and industry specific trends.
The following table presents key assumptions used to determine fair value less costs to sell for impairment test purposes for the groups of
cash-generating units to which a significant amount of goodwill is allocated:
Sep 30, 2023
Terminal
35,721
33,910
(159)
(110)
Other current assets
In fiscal 2023, and 2022, Other current assets include other tax receivables of €784 million and €810 million, prepaid expenses of €543
million and €509 million, respectively, and €283 million and €261 million, respectively, in reimbursement claims relating to activities in
Russia.
16
NOTE 12 Goodwill
(in millions of €)
Cost
Balance at begin of fiscal year
Translation differences and other
Acquisitions and purchase accounting adjustments
Dispositions and reclassifications to assets classified as held for disposal
Balance at fiscal year-end
Accumulated impairment losses and other changes
(in millions of €)
Balance at begin of fiscal year
Impairment losses recognized during the period
Dispositions and reclassifications to assets classified as held for disposal
Consolidated Financial Statements
Fiscal year
2022
35,721
31,360
(1,899)
3,014
198
1,505
Translation differences and other
Varian of Siemens Healthineers
1,686
Imaging of Siemens Healthineers
7.5%
The sensitivity analysis for the groups of cash-generating units to which a significant amount of goodwill is allocated was based on a
reduction in after-tax future cash flows by 10% or an increase in after-tax discount rates by one percentage point or a reduction in the
terminal value growth rate by one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill
in any of these groups of cash-generating units.
17
NOTE 13 Other intangible assets and property, plant and equipment
(in millions of €)
Gross Translation
carrying
amount
10/01/2022
differences
through
Additions Additions Reclassi-
fications
Retire-
ments'
Gross
Imaging of Siemens Healthineers
business
carrying
amount
09/30/2023
Digital Industries
Consolidated Financial Statements
Accumu-
lated depre-
ciation/am-
ortization
and impair-
ment
Carrying
amount
09/30/2023
Deprecia-
tion/amorti-
zation and
impairment
in fiscal
2023
Internally generated technology
combi-
1.9%
nations
After-tax
discount rate
9.0%
8.0%
7,260
Goodwill
value growth
rate
After-tax
discount rate
7,874
1,9%
7,828
1,9%
9,5%
6,782
1,9%
8,0%
Revenue figures in the detailed forecast planning period of the groups of cash-generating units to which a significant amount of goodwill
is allocated are based on average revenue growth rates (excluding portfolio effects) of between 7.3% and 8.4% (8.3% and 10.3% in fiscal
2022).
8,5%
Digital Industries
(in millions of €)
8,134
1.9%
rate
1.9%
value growth
Goodwill
8,226
Terminal
Sep 30, 2022
Varian of Siemens Healthineers
131
52
(113)
Foreign exchange translation differences and other changes
6
3
16
(28)
n/a
n/a
Recoveries of amounts previously written off
(133)
6
n/a
(15)
1
93
Consolidated Financial Statements
Valuation allowance as of September 30, 2022
Amounts offset in the Statement of Financial Position
n/a
Gross amounts
(in millions of €)
Siemens enters into master netting and similar agreements for derivative financial instruments. Potential offsetting effects are as follows:
Offsetting
30
Reclassifications to line item Assets held for disposal and dispositions of
entities
Impairment losses on financial instruments are presented in line items Cost of sales, Selling and general administrative expenses and Other
financial income (expenses), net. Net losses (gains) in fiscal 2023 are €247 million and in fiscal 2022 €966 million (thereof €566 million
due to credit impaired lease receivables in connection with the sale of our leasing business in Russia). In fiscal 2023 and 2022, impairment
losses net of (gains) from reversal of impairments at SFS total €181 million and €259 million, respectively. Impairment losses and (gains)
from reversal of impairments at SFS are presented in Other financial income (expenses), net.
140
567
227
(732)
(19)
22
106
172
Write-offs charged against the allowance
2022
82
Trade
receivables
Loans and other debt instruments
under the general approach
Lease
Receivables
Assets
amortized cost
Contract
Loans, receivables and other debt instruments measured at
and other
137
498
274
18
100
Valuation allowance as of September 30, 2023
(2)
Net amounts in the Statement of Financial Position
134
620
debt instru-
the simplified
approach
116
13
4
132
Change in valuation allowances recorded in the Consolidated Statements of
Income in the current period
212
53
ments under
535
15
86
Valuation allowance as of October 1, 2021
Stage 3
Stage 2
Stage 1
(in millions of €)
98
Related amounts not offset in the Statement of Financial Position
Net amounts
Sep 30, 2022
Financial liabilities
(in millions of €)
Reclassifications to line item Assets held for disposal and dispositions of
entities
Sep 30, 2023
Fair values of each type of derivative financial instruments reported as financial assets or financial liabilities in line items Other current
financial assets (liabilities) or Other financial assets (liabilities) are:
11,210
558
10,597
3,090
205
11,210
763
10,597
3,090
16,751
5,872
Foreign currency exchange contracts
therein: included in cash flow hedges
Interest rate swaps and combined interest and currency swaps
therein: included in cash flow hedges
1,088
644
955
73
319
2,648
328
11,538
1,431
3,086
603
1,637
Liability
Asset
Liability
Asset
722
Financial assets
8,325
months
863
1,863
1,558
3,711
1,705
1,864
1,559
3,711
1,705
2022
2023
2022
2023
Sep 30,
Sep 30,
1,444
865
1,449
842
12 months
months
More than
Sep 30, 2022
Up to 12
More than
Up to 12
Sep 30, 2023
12 months
therein: included in fair value hedges
Interest rate swaps
Foreign currency exchange contracts
(in millions of €)
NOTE 24 Derivative financial instruments and hedging activities
To hedge foreign currency exchange and interest rate risks, derivatives are contracted to achieve a 1:1 hedge ratio so that the main
characteristics match the underlying hedged items (e.g. nominal amount, maturity) in a critical term match, which ensures an economic
relationship between hedging instruments and hedged items suitable for hedge accounting. The nominal amounts of hedging instruments
by maturity are:
414
694
2,266
therein: included in cash flow hedges
(8)
Total interest income on financial assets
(48)
168
1
154
692
691
2
1,075
372
336
367
5,916
1,230
4,164
521
Total
323
3,825
3,825
1,124
325
925
925
651
651
1,900
1,900
Level 3
In connection with cash flow hedges
Not designated in a hedge accounting relationship (including embedded derivatives)
Financial liabilities measured at fair value - Derivative financial instruments
2,699
2,699
3
3
1,124
In connection with fair value hedges
325
Level 2
Sep 30, 2022
Aa3
Ratings
Global
S&P
Sep 30, 2022
Moody's
Investors
Service
Ratings
Service
Global
Investors
S&P
Moody's
Sep 30, 2023
Short-term debt
Long-term debt
Equity allocated to SFS differs from the carrying amount of equity as it is mainly allocated based on the risks of the underlying business.
Siemens' current corporate credit ratings are:
A+
1,432
Financial liabilities measured at fair value - Derivative financial instruments
1,578
In connection with cash flow hedges
In connection with fair value hedges
Not designated in a hedge accounting relationship (including embedded derivatives)
Derivative financial instruments
Debt instruments measured at FVTPL
Equity instruments measured at FVOCI
Financial assets measured at fair value
Equity instruments measured at FVTPL
Level 1
(in millions of €)
In connection with cash flow hedges
954
954
296
296
Not designated in a hedge accounting relationship (including embedded derivatives)
In connection with fair value hedges
1,578
328
Fair value of equity instruments quoted in an active market is based on price quotations at period-end date. Fair value of debt instruments,
is either based on prices provided by price service agencies or is estimated by discounting future cash flows using current market interest
rates.
Fair values of derivative financial instruments are determined in accordance with the specific type of instrument. Fair values of derivative
interest rate contracts are estimated by discounting expected future cash flows using current market interest rates and yield curves over
the remaining term of the instrument. Interest rate futures are valued based on quoted market prices, if available. Fair values of foreign
currency derivatives are based on forward exchange rates. Options are generally valued based on quoted market prices or based on option
pricing models. No compensating effects from underlying transactions (e.g. firm commitments and forecast transactions) are considered.
The Company limits default risks resulting from derivative financial instruments by generally transacting with financial institutions with a
minimum credit rating of investment grade. Based on Siemens' net risk exposure towards the counterparty, the resulting credit risk is
considered via a credit valuation adjustment.
As of September 30, 2023, and 2022, Level 3 financial assets include venture capital investments of €578 million and €607 million (Next47
investments). In fiscal 2023 and 2022, new level 3 investments and purchases amounted to €156 million and €221 million, respectively.
Sales of Level 3 financial assets amounted to €40 million and €100 million, respectively, in fiscal 2023 and 2022.
3
106
Change in valuation allowances recorded in the Consolidated Statements of
Income in the current period
172
140
567
227
22
106
Stage 3
Stage 2
Stage 1
Valuation allowance as of October 1, 2022
(in millions of €)
the simplified
approach
74
41
(1)
5
104
(6)
(112)
Foreign exchange translation differences and other changes
4
9
4
ments under
n/a
Recoveries of amounts previously written off
(36)
(69)
(135)
n/a
n/a
Write-offs charged against the allowance
n/a
debt instru-
and other
Trade
receivables
(1,283)
(56)
(25)
(568)
(306)
87
(38)
2,126
2022
Fiscal year
Financial assets and financial liabilities at FVTPL
Financial liabilities measured at amortized cost
Loans, receivables and other debt instruments measured at amortized cost
Cash and cash equivalents
(in millions of €)
Net gains (losses) resulting from financial instruments are:
2023
(4)
29
Amounts include foreign currency gains (losses) from recognizing and measuring financial assets and liabilities. Net gains (losses) on
financial assets and liabilities measured at FVTPL resulted from those mandatorily measured at FVTPL and comprise fair value changes of
derivative financial instruments for which hedge accounting is not applied including interest income (expense), as well as dividends from
and fair value changes of equity instruments measured at FVTPL.
Loans and other debt instruments
under the general approach
Lease
Receivables
Assets
Contract
Loans, receivables and other debt instruments measured at
amortized cost
(841)
(1,476)
Consolidated Financial Statements
1,626
2023
Fiscal year
Valuation allowances for expected credit losses
Total interest expenses on financial liabilities
49
(in millions of €)
Interest income (expense) includes interest from financial assets and financial liabilities not at fair value through profit or loss:
2,380
therein: included in fair value hedges
Cash flow hedges of floating-rate commercial papers
954
27
As previously reported, in July 2008, Hellenic Telecommunications Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
district court of Munich, Germany, seeking to compel Siemens AG to disclose the outcome of its internal investigations with respect to
OTE. OTE seeks to obtain information with respect to allegations of undue influence and/or acts of bribery in connection with contracts
concluded between Siemens AG and OTE from calendar 1992 to 2006. At the end of July 2010, OTE expanded its claim and requested
Proceedings out of or in connection with alleged compliance violations
For Legal Proceedings information required under IAS 37, Provisions, Contingent Liabilities and Contingent Assets is not disclosed if the
Company concludes that disclosure can be expected to seriously prejudice the outcome of the matter.
Some of these Legal Proceedings could result in adverse decisions for Siemens, which may have material effects on its business activities
as well as its financial position, results of operations and cash flows.
Siemens is involved in numerous Legal Proceedings in various jurisdictions. These Legal Proceedings could result, in particular, in Siemens
being subject to payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual
cases this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. In addition,
further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be extended. Asserted claims are generally
subject to interest rates.
NOTE 22 Legal proceedings
Furthermore, Siemens issues performance guarantees, which mainly include performance bonds. In the event of non-fulfillment of
contractual obligations by the primary obligor, Siemens will be required to pay up to an agreed-upon maximum amount. These agreements
typically have terms of up to ten years. As of September 30, 2023, and 2022, Performance guarantees include €5,341 million and €8,562
million for which Siemens holds reimbursement rights towards Siemens Energy; the related contract liability amount for parent company
guarantees is generally reduced using the straight-line method over the planned term of the underlying delivery or service agreement. As
of September 30, 2023, and 2022, the Company accrued €58 million and €54 million, respectively, relating to performance guarantees.
As of September 30, 2023, and 2022, in addition to guarantees disclosed in the table above, there are contingent liabilities of €402 million
and €421 million which mainly result from other guarantees and legal proceedings. Other guarantees include €71 million and €99 million
for which Siemens holds reimbursement rights towards Siemens Energy.
Credit guarantees cover the financial obligations of third parties generally in cases where Siemens is the vendor and (or) contractual
partner or Siemens is liable for obligations of associated companies accounted for using the equity method. Additionally, credit guarantees
are issued in the course of the SFS business. Credit guarantees generally provide that in the event of default or non-payment by the primary
debtor, Siemens will be required to settle such financial obligations. The maximum amount of these guarantees is equal to the outstanding
balance of the credit or, in case a credit line is subject to variable utilization, the nominal amount of the credit line. These guarantees have
typically residual terms of up to three years (in fiscal 2022 four years). The Company held collateral mainly through inventories and trade
receivables. As of September 30, 2023, and 2022, Credit guarantees include €95 million and €123 million for which Siemens holds
reimbursement rights towards Siemens Energy. Siemens accrued €18 million and €2 million relating to credit guarantees as of September
30, 2023 and 2022, respectively.
9,824
6,156
9,309
5,746
Performance guarantees
515
Consolidated Financial Statements
payment of damages by Siemens AG of at least €57 million to OTE for alleged bribery payments to OTE employees. In October 2014, OTE
increased its damage claim to the amount of at least €68 million. Siemens AG continues to defend itself against the expanded claim.
As previously reported, in May 2014, the Public Affairs Office (Ministério Público) São Paulo initiated a lawsuit against Siemens Ltda. as
well as other companies and several individuals claiming, inter alia, damages in an amount of BRL2.5 billion (approximately €471 million
as of September 2023) plus adjustments for inflation and related interest in relation to train refurbishment contracts entered into between
2008 and 2011. In January 2015, the district court of São Paulo admitted a lawsuit of the State of São Paulo and two customers against
Siemens Ltda., Siemens AG and other companies and individuals claiming damages in an unspecified amount. In March 2015, the district
court of São Paulo admitted a lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other companies
claiming, inter alia, damages in an amount of BRL487 million (approximately €92 million as of September 2023) plus adjustments for
inflation and related interest in relation to train maintenance contracts entered into in 2000 and 2002. In September 2015, the district
court of São Paulo admitted another lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other
companies claiming, inter alia, damages in an amount of BRL918 million (approximately €173 million as of September 2023) plus
adjustments for inflation and related interest in relation to train maintenance contracts entered into in 2006 and 2007. Siemens is
defending itself against these actions. It cannot be excluded that further significant damage claims will be brought by customers or the
state against Siemens.
As previously reported, in June 2015, Siemens Ltda. appealed to the Supreme Court against a decision of a previous court to suspend
Siemens Ltda. from participating in public tenders and signing contracts with public administrations in Brazil for a five year term based on
alleged irregularities in calendar 1999 and 2004 in public tenders with the Brazilian Postal authority. In June 2018, the court accepted
Siemens' appeal and declared the earlier instance decision as void. In June 2021, the court referred the case back to the court of first
instance. In February 2018, the Ministério Público in Brasilia filed a lawsuit based on the same set of facts, mainly claiming the exclusion
of Siemens Ltda. from public tenders for a ten year term. Siemens Ltda. is defending itself against the lawsuit. Siemens Ltda. is currently
not excluded from participating in public tenders.
10,084
46,386
47,021
2022
2023
Sep 30,
Financial assets
411
Equity instruments measured at FVOCI¹
Financial assets mandatorily measured at FVTPL²
Derivatives designated in a hedge accounting relationship
Cash and cash equivalents
Loans, receivables and other debt instruments measured at amortized cost¹
(in millions of €)
The following table discloses the carrying amounts of each category of financial assets and financial liabilities:
NOTE 23 Additional disclosures on financial instruments
Financial assets designated as measured at FVTPL³
10,465
Sep 30,
2022
Credit guarantees
Credit risk
2 A considerable portion result from asset-based lending transactions meaning that the respective loans can only be drawn after sufficient collateral has been provided by the borrower.
1 Based on the maximum amounts Siemens could be required to settle in the event of default by the primary debtor.
6
156
325
3,370
411
262
355
307
760
8
170
186
Credit risk is defined as an unexpected loss in financial instruments if the contractual partner is failing to discharge its obligations in full
and on time or if the value of collateral declines.
Siemens provides its customers with various forms of direct and indirect financing particularly in connection with large projects. Hence,
credit risks are determined by the solvency of the debtors, the recoverability of the collaterals, the success of projects we invested in and
the global economic development.
The effective monitoring and controlling of credit risk through credit evaluations and ratings is a core competency of our risk management
system. In this context, Siemens has implemented a binding credit policy.
Siemens maintains a Credit Risk Intelligence Unit to which numerous operating units from the Siemens Group regularly transfer business
partner data as a basis for a centralized internal rating and credit limit recommendation process. Due to the identification, quantification
and active management of credit risks, this increases credit risk transparency.
(in millions of €)
Sep 30,
guarantees:
The following table presents the undiscounted amount of maximum potential future payments for major groups of
NOTE 21 Commitments and contingencies
A-1+
P-1
2023
A-1+
A+
A1
34
As of September 30, 2023 and 2022, collateral of €863 million and €1,444 million, respectively, relate to financial assets measured at fair
value. Those collaterals are provided in connection with netting agreements for derivatives providing protection from the risk of a
counterparty's insolvency. As of September 30, 2023 and 2022, collateral held for credit-impaired receivables from finance leases
amounted to €66 million and €53 million, respectively. As of September 30, 2023 and 2022, collateral held for financial assets measured
at amortized cost amounted to €3,918 million and €3,817 million, respectively, including €135 million and €108 million, respectively, for
To analyze and monitor credit risks, the Company applies various systems and processes. A main element is a central IT application that
processes data from operating units together with rating and default information and calculates an estimate, which may be used as a basis
for individual bad debt provisions. Additionally, qualitative information is considered to particularly incorporate the latest developments.
The carrying amount is the maximum exposure to a financial asset's credit risk, without taking account of any collateral. Collateral reduces
the valuation allowance to the extent it mitigates credit risk. Collateral needs to be specific, identifiable and legally enforceable to be taken
into account. Those collaterals are mostly held in the portfolio of SFS.
An exposure is considered defaulted if the debtor is unwilling or unable to pay its credit obligations. A range of internally defined events
trigger a default rating, including the opening of bankruptcy proceedings, receivables being more than 90 days past due, or a default
rating by an external rating agency.
Ratings and individually defined credit limits are based on generally accepted rating methodologies, with information obtained from
customers, external rating agencies, data service providers and Siemens' credit default experiences. Internal ratings consider appropriate
forward-looking information relevant to the specific financial instrument like expected changes in the debtor's financial position,
ownership, management or operational risks, as well as broader forward-looking information, such as expected macroeconomic, industry-
related and competitive developments. The ratings also consider a country-specific risk component derived from external country credit
ratings. Ratings and credit limits for financial institutions as well as Siemens' public and private customers, which are determined by
internal risk assessment specialists, are continuously updated and considered for investments in cash and cash equivalents and in
determining the conditions under which direct or indirect financing will be offered to customers.
P-1
1,466
2,701
1,578
2,193
349
Total
Level 3
Level 2
Level 1
Sep 30, 2023
In connection with cash flow hedges
In connection with fair value hedges
Not designated in a hedge accounting relationship (including embedded derivatives)
Derivative financial instruments
Debt instruments measured at FVTPL
Equity instruments measured at FVOCI
Equity instruments measured at FVTPL
Financial assets measured at fair value
1,302
3,844
213
334
1,432
34
34
320
320
1,786
1,786
(in millions of €)
367
71
136
665
663
2
1,026
479
161
The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy:
The fair value of notes and bonds is based on prices provided by price service agencies at the period-end date (Level 2). The fair value of
loans from banks and other financial indebtedness as well as other non-current financial liabilities are estimated by discounting future
cash flows using rates currently available for debt of similar terms and remaining maturities (Level 2).
Consolidated Financial Statements
1,249
1,282
651
296
62,536
58,202
Derivatives designated in a hedge accounting relationship 5
Financial liabilities
59,779
Derivatives not designated in a hedge accounting relationship5
62,766
60,950
692
665
154
136
2,368
Financial liabilities measured at amortized cost4
1,134
64,436
2 Reported in line items Other current financial assets and Other financial assets.
28
Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are
evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the
customer, and the risk characteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized.
2,870
Carrying
amount
44,764
Fair value
40,622
2,821
Carrying
amount
40,929
2,744
Fair value
37,059
2,681
1 Reported in the following line items of the Statements of Financial Position as of September 30, 2023 and 2022, respectively: Trade and other receivables, Other current financial assets and Other financial assets, except for
separately disclosed €1,691 million and €1,767 million equity instruments in Other financial assets (thereof €665 million and €692 million at FVOCI), €136 million and €154 million financial assets designated as measured at
FVTPL and €1,786 million and €3,825 million derivative financial instruments (thereof in Other financial assets €1,213 million and €2,868 million) as well as €232 million and €169 million debt instruments measured at FVTPL
in Other financial assets. Includes €15,454 million and €14,666 million trade receivables from the sale of goods and services, thereof €640 million and €766 million with a term of more than twelve months as of September 30,
2023 and 2022.
Sep 30, 2022
Loans from banks and other financial indebtedness
Notes and bonds
(in millions of €)
The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized
cost for which the carrying amounts do not approximate fair value:
Cash and cash equivalents include €89 million and €164 million as of September 30, 2023 and 2022, respectively, which are not available
for use by Siemens mainly due to minimum reserve requirements with banks. As of September 30, 2023, and 2022, the carrying amount
of financial assets Siemens pledged as collateral is €164 million and €166 million, respectively.
* Includes fair value hedge adjustments. Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade payables, Other current financial liabilities, Long-
term debt and Other financial liabilities, except for separately disclosed derivative financial instruments of €1,578 million and €1,900 million as of September 30, 2023 and 2022, respectively.
5 Reported in line items Other current financial liabilities and Other financial liabilities.
3 Reported in Other financial assets.
Sep 30, 2023
34
3
10,107
In September 2023, Siemens ended cash flow hedge accounting. Previously, Siemens applied cash flow hedge accounting to a revolving
portfolio of floating-rate commercial papers of nominal US$200 million.
9.43
Interest rate risk management uses derivative financial instruments under a portfolio-based approach to manage interest risk actively. The
approach does not qualify for hedge accounting. Gains and losses in connection with interest rate swap agreements are recorded in Other
financial income (expenses), net. The interest rate risk management includes SFS business, for which the interest rate risk was formerly
managed separately.
Derivative financial instruments not designated in a hedging relationship
Interest rate risk management
Included are Siemens' foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10
billion (€10 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually,
also turns interest into € with volume weighted average interest rates of currently about 0.7% and 0.3%, respectively, in fiscal 2023 and
2022.
The Company's operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated
in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future
cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated
in US$ both from Siemens' operating units entering into long-term contracts e.g. from the project business and from the standard product
business. In fiscal 2023 and 2022, the risk is hedged against the euro at an average rate of 1.2780 €/US$ and 1.2293 €/US$ (forward
purchases of US$), respectively, and 1.1027 €/US$ and 1.0258 €/US$ (forward sales of US$), respectively. As of September 30, 2023, and
2022, the hedging transactions have an average remaining maturity until 2028 and 2027 (forward purchases of US$) as well as 2024 and
2023 (forward sales of US$), respectively.
Cash flow hedges
swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company
also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts.
Consolidated Financial Statements
31
The Company manages its risks associated with fluctuations in foreign currency denominated receivables, payables, debt, firm
commitments and forecast transactions primarily through a Company-wide portfolio approach. Under this approach the Company-wide
risks are aggregated centrally, and various derivative financial instruments, primarily foreign currency exchange contracts, foreign currency
Derivative financial instruments not designated in a hedging relationship
Foreign currency exchange rate risk management
Amounts reclassified to net income in connection with interest rate risk hedges and non-operative foreign currency hedges are presented
in Other financial income (expenses), net. Reclassifications of foreign currency risk hedges with operative business purposes are presented
as functional costs. Costs of hedging reserve is the forward element of forward contracts that are not designated as hedge accounting and
which are amortized to interest expense on a straight-line basis as the hedged item is time-period related.
Fair value hedges of fixed-rate debt obligations
Under interest rate swap agreements outstanding in fiscal 2023 and 2022, the Company agreed to pay a variable rate of interest multiplied
by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional
principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value
of the underlying fixed-rate debt obligations. As of September 30, 2023, and 2022, the carrying amounts of €13,164 million and €10,718
million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €(876) million and €(973) million
cumulative fair value hedge adjustments. Unamortized fair value hedge adjustments of €112 million and €169 million as of September
30, 2023 and 2022, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of
the underlying debt, maturing until 2042. Carrying amount adjustments to debt of €(95) million and €1,273 million, respectively, in fiscal
2023 and 2022 are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €74
million and €(1,236) million, respectively, in fiscal 2023 and 2022. Net cash receipts and payments relating to such interest rate swap
agreements are recorded as interest expenses.
The Company had interest rate swap contracts to pay variable rates of interest of an average of 3.00% and (0.86% as of September 30,
2023 and 2022, respectively and received fixed rates of interest (average rate of 1.81% and 1.07%, as of September 30, 2023 and 2022,
respectively). The notional amount of indebtedness hedged as of September 30, 2023 and 2022 was €13,687 million and €11,719 million,
respectively. This changed 33% and 26% of the Company's underlying notes and bonds from fixed interest rates into variable interest rates
as of September 30, 2023 and 2022, respectively. The notional amounts of these contracts mature at varying dates based on the maturity
of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness
as of September 30, 2023 and 2022 was €(844) million and €(959) million, respectively.
NOTE 25 Financial risk management
Equity
Net income
(in Mio. €)
Generally, the operating units conclude their hedging activities internally with Corporate Treasury. By applying a cost-optimizing portfolio
approach, Corporate Treasury itself hedges foreign currency exchange rate risks with external counterparties and limits them.
The following table demonstrates the sensitivity of net income and equity to a reasonably possible change in the euro versus the most
important currency exchange rates compared to the respective year-end exchange rates. The analysis does not include effects of foreign
currency translation. The effect on net income is due to changes in the fair values of monetary assets and liabilities including non-
designated foreign currency derivatives and embedded derivatives. The effect on equity is due to changes in the fair values of forward
exchange contracts designated as cash flow hedges. In fiscal 2023, the sensitivity of net income with regard to the U.S. dollar decreased
compared to the prior year mainly due to a decrease of monetary assets and liabilities and a higher hedge ratio. The sensitivity of equity
with regard to the U.S. dollar decreased due to a decline in the nominal amount of U.S. dollar forward exchange contracts designated as
cash flow hedges.
According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
exposure. Foreign currency transaction exposure of Siemens units from contracted business and cash balances in foreign currency is
generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of Siemens units from planned
business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period of at
least three months.
Operating units are prohibited from borrowing or investing in foreign currencies on a speculative basis. Intercompany financing or
investments of operating units are preferably carried out in their functional currency or on a hedged basis.
Each Siemens unit conducting businesses with international counterparties leading to future cash flows denominated in a currency other
than its functional currency is exposed to risks from changes in foreign currency exchange rates. In the ordinary course of business,
Siemens units are exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro. Foreign
currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well
as production activities and other contributions along the value chain in the local markets.
thereof: discontinued hedge accounting
Transaction risk
Any market sensitive instruments, including equity and interest-bearing investments that our Company's pension plans hold are not
included in the following quantitative and qualitative disclosures.
probability that losses could exceed the calculated VaR. The use of historical data as a basis for estimating the statistic behavior of the
relevant markets and finally determining the possible range of the future outcomes on the basis of this statistic behavior may not always
cover all possible scenarios, especially those of an exceptional nature.
Consolidated Financial Statements
32
Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may
differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with
a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of
99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some
limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this
period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical
Foreign currency exchange rate risk is quantified based on a sensitivity analysis. In order to quantify remaining market risks Siemens has
implemented a system based on Value at Risk (VaR), which is also used for internal management of Corporate Treasury activities. The VaR
figures are calculated based on historical volatilities and correlations of various risk factors, a ten day holding period, and a 99.5%
confidence level.
Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company's operating
business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates.
In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens
identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its
regular operating and financing activities and uses derivative financial instruments when deemed appropriate.
Foreign currency exchange rate risk
Sep 30, 2023
(26)
(153)
Reclassification to net income
Hedging gains (losses) presented in OCI
Balance as of October 1, 2022
(in millions of €)
Other components of equity, net of income taxes, relating to cash flow hedges reconciles as follows:
89
1,900
3,825
1,578
1,786
95
20
76
Other (embedded derivatives, options, commodity swaps)
925
3
Balance as of September 30, 2023
Interest
rate risk
Foreign currency risk
Cash flow
24
(135)
(59)
(28)
241
75
(1)
(107)
(213)
53
reserve
hedging
Cost of
Cash flow
hedge
reserve
reserve
hedge
(170)
Sep 30, 2022
Change in €
versus
USD
Other financial indebtedness
Loans from banks
Notes and bonds
Non-derivative financial liabilities
(in millions of €)
2029 and
thereafter
2026 to
2028
2025
2024
Fiscal year
The following table reflects our contractually fixed pay-offs for settlement, repayments and interest. The disclosed expected undiscounted
net cash outflows from derivative financial liabilities are determined based on each particular settlement date of an instrument and based
on the earliest date on which Siemens could be required to pay. Cash outflows for financial liabilities (including interest) without fixed
amount or timing are based on the conditions existing at September 30, 2023.
In addition, Siemens constantly monitors funding options available in the capital markets, as well as trends in the availability and costs of
such funding, with a view to maintaining financial flexibility and limiting repayment risks.
Liquidity risk results from the Company's inability to meet its financial liabilities. Siemens follows a deliberated financing policy that is
aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Siemens mitigates liquidity
risk by the implementation of effective working capital and cash management, arranged credit facilities with highly rated financial
institutions, via a debt issuance program and via a global multi-currency commercial paper program. Liquidity risk may also be mitigated
by the Siemens Bank GmbH, which increases the flexibility of depositing cash or refinancing.
Liquidity risk
Consolidated Financial Statements
Lease liabilities
Trade payables
Other financial liabilities
Derivative financial liabilities
918
982
609
753
36
2
519
33
21
14,599
159
1,308
820
4,642
6,598
Irrevocable loan commitments²
Credit guarantees¹
24,763
As of September 30, 2023 and 2022, the VaR relating to the interest rate was €683 million and €864 million. The decrease was driven
mainly by a decrease in interest rate sensitivity for the U.S. dollar and a lower interest rate volatility for the euro.
If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through
Corporate Treasury in the form of loans or intercompany clearing accounts. The same concept is adopted for deposits of cash generated
by the units.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. This risk arises whenever interest terms of financial assets and liabilities are different. In order to manage the Company's
position with regard to interest rate risk, interest income and interest expenses, Corporate Treasury performs a comprehensive corporate
interest rate risk management by using fixed or variable interest rates from bond issuances and derivative financial instruments when
appropriate. The interest rate risk is mitigated by managing interest rate risk within an integrated Asset Liability Management approach
and results primarily from funding in the U.S. dollar, British pound and euro. This includes SFS business, for which the interest rate risk
was formerly managed separately.
3
(15)
(27)
(5)%
(3)
22
122
(122)
(3)
27
+5%
CNY
GBP
USD
CNY
GBP
15
21
(22)
+5%
Interest rate risk
Many Siemens units are located outside the Eurozone. Because the financial reporting currency of Siemens is the euro, the financial
statements of these subsidiaries are translated into euro for the preparation of the Consolidated Financial Statements. To consider the
effects of foreign currency translation in the risk management, the general assumption is that investments in foreign-based operations
are permanent and that reinvestment is continuous. Effects from foreign currency exchange rate fluctuations on the translation of net
asset amounts into euro are reflected in the Company's consolidated equity position.
Translation risk
(12)
(72)
(71)
(19)
3
(62)
(5)%
12
72
71
19
62
(3)
3
9.18
328
28,756
284
769
1,857
886
185
235
551
4,013
1,471
564
481
1,497
Total
Other
Asset
retirement
obligations
risks
Warranties
Additions
thereof: non-current
5
(in millions of €)
371
Usage
3
Accretion expense and effect of changes in discount rates
(118)
(30)
(5)
(37)
(46)
(504)
(189)
(2)
(101)
(212)
Translation differences
Reversals
(753)
(198)
(11)
(156)
(388)
1,428
(3)
losses and
NOTE 18 Provisions
10,635
10,504
3,185
3,360
2022
2023
Insurance contracts
Other assets
Total
Cash and cash equivalents
Derivatives
Multi strategy funds
Alternative investments
Corporate bonds
Government bonds
Fixed income securities
(in millions of €)
Equity securities
Sep 30,
Consolidated Financial Statements
Disaggregation of plan assets
29,107
2,639
Order
related
2,517
8,118
Amounts recognized as expenses for defined contribution plans are €611 million and €611 million in fiscal 2023 and 2022, respectively.
Contributions to state plans amount to €1,723 million and €1,630 million, respectively, in fiscal 2023 and 2022.
Defined contribution plans and state plans
Employer contributions expected to be paid to defined benefit plans in fiscal 2024 are €230 million. Over the next ten fiscal years, average
annual benefit payments of €1,945 million and €1,869 million, respectively, are expected as of September 30, 2023 and 2022. The
weighted average duration of the DBO for Siemens defined benefit plans was 9 and 10 years, respectively, as of September 30, 2023 and
2022.
Future cash flows
Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by
price service agencies. The fixed income securities are traded in active markets and almost all fixed income securities are investment grade.
Alternative investments include hedge funds, private equity and real estate investments, thereof real estate used by the Company with a
fair value of €608 million and €734 million, respectively, as of September 30, 2023 and 2022. Multi strategy funds mainly comprise
absolute return funds and diversified growth funds that invest in various asset classes within a single fund and aim to stabilize return and
reduce volatility. Derivatives predominantly consist of financial instruments for hedging interest rate risk and inflation risk.
26,055
26,523
321
299
2,090
2,039
699
818
602
499
3,501
3,329
5,491
5,207
7,865
4
Balance as of October 1, 2022
Other changes including reclassifications to held for disposal and disposition of those entities
11,201
411
7,924
2,275
1,426
(29,107)
(28,756)
37,212
34,843
(1,720)
(621)
(1,239)
(1,047)
(10,465)
(10,084)
43,978
39,113
6,658
7,483
2022
7,154
(646)
45
3,608
3,087
5
3,133
2022
Sep 30,
Sep 30,
2023
Siemens Financial Services debt
Debt to equity ratio
(in millions of €)
Allocated equity
The SFS business is capital intensive and operates with a larger amount of debt to finance its operations compared to the industrial
business.
2023
Consolidated Financial Statements
26
2 The adjustment considers that both Moody's and S&P view Siemens Financial Services as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive
finance subsidiaries in determining credit ratings. Following this concept, Siemens excludes Siemens Financial Services debt.
1 Debt is generally reported at a value approximately representing the amount to be repaid. Accordingly, debt in a hedging relationship is adjusted for fair values of interest hedges as well as for foreign currency hedge effects.
Siemens deducts resulting changes in fair value, to derive an amount of debt that approximates the amount that will be repaid.
Industrial net debt/EBITDA
1.0
0.6
10,759
14,163
3,561
26
Sep 30,
515
10,896
EBITDA
The Company is subject to asset retirement obligations related to certain items of property, plant and equipment. Such asset retirement
obligations are primarily attributable to environmental clean-up costs and to costs primarily associated with the removal of leasehold
improvements at the end of the lease term.
Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted
construction, sales and leasing contracts.
The majority of the Company's provisions are generally expected to result in cash outflows during the next five years.
1,794
823
179
207
585
thereof: non-current
4,113
1,521
556
470
1,566
Balance as of September 30, 2023
42
92
(1)
(57)
Environmental clean-up costs relate to remediation and environmental protection liabilities which have been accrued based on the
estimated costs of decommissioning the site for the production of uranium and mixed-oxide fuel elements in Hanau, Germany (Hanau
facilities), as well as for a nuclear research and service center in Karlstein, Germany (Karlstein facilities). In May 2021, Siemens AG and the
Federal Republic of Germany entered into a contract under public-law, based on which the obligation of final disposal of nuclear waste is
transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the payment is subject to the
approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made to measure the obligations
that remain with Siemens AG, regarding conditioning and packaging of nuclear waste, as well as intermediate storage and transport to
the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032. As of September 30, 2023, and 2022, the provisions
total €480 million and €487 million, respectively.
25
7
Other includes provisions for life and industrial business reinsurance contracts (liability, property, construction) in connection with the
Siemens Energy business of €267 million and €339 million as of September 30, 2023 and 2022; thereof life €145 million and €159 million
and industrial business €122 million and €180 million, respectively, as of September 30, 2023 and 2022. The provisions are for incurred
and reported insurance losses as well as for incurred, hence, not yet reported insurance losses as of fiscal year-end. The provision is
determined using actuarial standard valuation methodologies, which are parameterized based on historical loss data. Life reinsurance
contracts have an average term of 19 years, whereas the cash outflows for the industrial business reinsurance contracts are expected
within the next five years. Other also includes provisions for Legal Proceedings, as far as the risks that are subject to such Legal Proceedings
are not already covered by project accounting. Provisions for Legal Proceedings amounted to €227 million and €236 million as of
September 30, 2023 and 2022, respectively. As of September 30, 2023, and 2022, €260 million and €181 million are included for claims
and charges resulting from the construction business. Furthermore, Other includes provision for indemnifications in connection with
dispositions of businesses of €82 million and €92 million as of September 30, 2023 and 2022. Such indemnifications may protect the
buyer from potential tax, legal and other risks in conjunction with the purchased business.
Consolidated Financial Statements
Plus/Less: Interest income, interest expenses and other financial income (expenses), net
Plus: Amortization, depreciation and impairments
Income from continuing operations before income taxes
Industrial net debt
Plus: Credit guarantees
Plus: Provisions for pensions and similar obligations
Less: Siemens Financial Services debt²
Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt¹
Net debt
Less: Cash and cash equivalents
Plus: Long-term debt
Less: Current interest-bearing debt securities
(in millions of €)
A key consideration of our capital structure management is to maintain ready access to capital markets through various debt instruments
and to sustain our ability to repay and service our debt obligations over time. In order to achieve our target, Siemens intends to maintain
an Industrial net debt divided by EBITDA (continuing operations) ratio of up to 1.5 in accordance with our Financial Framework. The ratio
indicates the approximate number of years that would be needed to cover the Industrial net debt through Income from continuing
operations, excluding interest, other financial income (expenses), taxes, depreciation, amortization and impairments.
NOTE 20 Additional capital disclosures
Dividends paid per share were €4.25 and €4.00, respectively, in fiscal 2023 and 2022. The Managing Board and the Supervisory Board
propose to distribute a dividend of €4.70 per share to holders entitled to dividends, in total representing approximately €3.7 billion in
expected payments. Payment of the proposed dividend is contingent upon approval at the Shareholders' Meeting on February 8, 2024.
Share based payment expenses increased Capital reserve by €444 million and €376 million (including non-controlling interests),
respectively, in fiscal 2023 and 2022. In connection with the settlement of share based payment awards, Siemens treasury shares (at cost)
were transferred to employees amounting to €265 million and €257 million, respectively, in fiscal 2023 and 2022, which decreased Capital
reserve and Retained earnings by €221 million and €44 million, respectively in 2023 and by €191 million and €66 million in fiscal 2022.
As of September 30, 2023, and 2022, total authorized capital of Siemens AG is €600 million nominal issuable in installments based on
various time-limited authorizations, by issuance of up to 200 million registered shares of no par value. Siemens AG's conditional capital is
€420.6 million or 140.2 million shares as of September 30, 2023 and 2022; which, primarily, can be used to serve convertible bonds or
warrants under warrant bonds that could or can be issued based on various time-limited authorizations approved by the respective
Shareholders' Meeting.
As of September 30, 2023, and 2022, Siemens' issued capital is divided into 800 million and 850 million registered shares, respectively,
with no par value and a notional value of €3.00 per share. The shares are paid in full. At the Shareholders' Meeting, each share has one
vote and accounts for the shareholders' proportionate share in the Company's net income. All shares confer the same rights and
obligations. In fiscal 2023, Siemens cancelled 50 million treasury shares, thereby reducing issued capital by €150 million to €2.4 billion.
In fiscal 2023 and 2022, Siemens repurchased 6,853,091 shares and 14,185,791 shares, respectively. In fiscal 2023 and 2022, Siemens
transferred 4,227,344 and 4,376,201 treasury shares, respectively. As of September 30, 2023, and 2022, the Company has treasury shares
of 10,079,918 and 57,454,171 respectively.
Short-term debt and current maturities of long-term debt
NOTE 19 Equity
Siemens Healthcare Diagnostics Products GmbH, Marburg
Siemens Digital Logistics GmbH, Frankenthal
Siemens Global Innovation Partners Management GmbH, Munich
Siemens Financial Services GmbH, Munich
Siemens Electronic Design Automation GmbH, Munich
Siemens Finance & Leasing GmbH, Munich
Siemens Healthcare GmbH, Munich
Siemens Fonds Invest GmbH, Munich
Siemens Healthineers AG, Munich
Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
Siemens Healthineers Beteiligungen Verwaltungs-GmbH, Röttenbach
Siemens Healthineers Holding I GmbH, Munich
Siemens Healthineers Holding III GmbH, Munich
Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
Siemens Healthineers Innovation Verwaltungs-GmbH, Röttenbach
Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objektmanagement GmbH, Grünwald
Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
Siemens Digital Business Builder GmbH, Munich
Siemens Immobilien Management GmbH, Grünwald
Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
Siemens Industry Software GmbH, Cologne
Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
Consolidated Financial Statements
10010
1009
1009
Siemens Liquidity One, Munich
100
1009
10010
Siemens Bank GmbH, Munich
Siemens Beteiligungen Europa GmbH, Munich
Siemens Beteiligungen Inland GmbH, Munich
Siemens Beteiligungen Management GmbH, Kemnath
Siemens Beteiligungen USA GmbH, Berlin
43
Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
100
10010
1007
10010
1009,12
Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
1009
100
Siemens Logistics GmbH, Nuremberg
Siemens Real Estate Consulting GmbH & Co. KG, Munich
Siemens Middle East Services LP GmbH, Munich
1007
100⁹
10010
100
10010
1009,13
100
10010
1009
1009
1007
1009
Siemens Nixdorf Informationssysteme GmbH, Grünwald
Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
Siemens OfficeCenter Verwaltungs GmbH, Grünwald
Siemens Private Finance Versicherungsvermittlungsgesellschaft mbH, Munich
Siemens Project Ventures GmbH, Erlangen
100
Siemens Real Estate GmbH & Co. KG, Kemnath
10010
Siemens Real Estate Consulting Management GmbH, Grünwald
100
1007
100
100
Siemens Mobility GmbH, Munich
Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
Siemens Mobility Real Estate Management GmbH, Grünwald
1009
1009
100⁹
100
1007
100
100
100
100
10010
10010
1007
100
100
75
100
1007
100
Siemens Middle East Services GmbH & Co. KG, Munich
10010
Fiscal year
1007
801,338
8,342
809,680
9,803
801,342
10.02
9.90
Diluted earnings per share (from continuing operations)
Basic earnings per share (from continuing operations)
Weighted average shares outstanding - diluted
Effect of dilutive share-based payment
791,538
Weighted average shares outstanding - basic
3,737
4.67
7,930
(7)
(4)
Less: Dilutive effect from share based payment resulting from Siemens Healthineers
3,744
7,935
Income from continuing operations attributable to shareholders of Siemens AG
669
579
Less: Portion attributable to non-controlling interest
Income from continuing operations attributable to shareholders of Siemens AG to determine dilutive earnings per share
4,413
4.62
NOTE 29 Segment information
Fiscal year
2023
2022
2023
2022
Siemens Real Estate Management GmbH, Kemnath
Fiscal year
2023
2022
Fiscal year
2023
Digital Industries
37
(in millions of €)
Additions to
intangible
assets and
property, plant
& equipment
Consolidated Financial Statements
Free cash flow
Assets
Profit
Total
revenue
Intersegment
Revenue
External revenue
Orders
Amortization,
depreciation &
impairments
1009
8,514
2022
Kyros B AG, Munich
Kyros C AG, Munich
Lincas Electro Vertriebsgesellschaft mbH, Grünwald
Moorenbrunn Entwicklungs Management GmbH, Grünwald
Moorenbrunn Entwicklungs-GmbH & Co. KG, Grünwald
Next47 GmbH, Munich
Next47 Services GmbH, Munich
OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Tübingen KG, Grünwald
REMECH Systemtechnik GmbH, Unterwellenborn
Kyros 71 GmbH, Munich
RISICOM Rückversicherung AG, Grünwald
10010
1007
1007
1007
1007
1007
1007
1007
10010
Siemens Advanta Solutions GmbH, Munich
Income from continuing operations
Kyros 70 GmbH, Munich
Kyros 58 GmbH, Munich
2023
(shares in thousands; earnings per share in €)
Fiscal year
308
316
308
316
26
27
Kyros 68 GmbH, Munich
26
1009
10010
85
1007
100
1009
100
100
Kyros 54 GmbH, Munich
1007
Siemens Technology Accelerator GmbH, Munich
56
Siemens Traction Gears GmbH, Penig
22,669
24,689
22,659
24,683
2022
2023
2022
Fiscal year
Fiscal year
2023
3,774
Continuing and
discontinued operations
Statutory social welfare contributions and expenses for optional support
Expenses relating to post-employment benefits
Wages and salaries
(in millions of €)
NOTE 27 Personnel costs
For their 25th and 40th service anniversary eligible employees receive jubilee shares. There were 3.14 million and 3.11 million entitlements
to jubilee shares outstanding as of September 30, 2023 and 2022, respectively.
Jubilee Share Program
Consolidated Financial Statements
36
The weighted average fair value of matching shares granted in fiscal 2023 and 2022 of €107.60 and €121.35 per share, respectively, was
determined as Siemens' share price, less the present value of expected dividends; non-vesting conditions were taken into account.
Continuing
operations
1,255,825
3,442
3,442
Fiscal year
Fiscal year
Continuing and
discontinued operations
Continuing
operations
NOTE 28 Earnings per share
Administration and general services
Research and development
Sales and marketing
Manufacturing and services
3,774
(in thousands)
In fiscal 2023 and 2022, severance charges for continuing operations amount to €430 million and €272 million, thereof at Siemens
Healthineers €167 million and €71 million, respectively, and at Digital Industries €109 million and €64 million, respectively.
27,211
29,494
27,201
29,488
1,099
1,031
1,099
1,031
Employees were engaged in (averages; based on headcount):
2023
1,245,467
(53,561)
(365,913)
(1,099,508)
(91,905) (125,993)
(1,667,914) (362,176)
(16,447) (77,370)
8,388,910 8,956,287
(1,192,351)
778,012
897,484
2,401,240 1,951,223
624,775
2022
2023
1,131,311
(198,524)
8,670,111
2022
2023
Not subject to
performance conditions
Fiscal year
performance conditions
Fiscal year
Subject to
Share Matching Program and its underlying plans
Non-vested at period-end
Settled
Forfeited
8,956,287
Outstanding, end of period
n/a
(66,128) (71,512)
(3,484) (1,440)
1,593,270 1,131,311
(23,663)
(64,030)
(68,404)
2022
1,389,016
557,839
(573,440)
1,255,825
655,177
(573,468)
Settled
Forfeited
Vested and fulfilled
Granted
n/a
Outstanding, beginning of period
Fiscal year
Resulting Matching Shares:
Under the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of
their compensation in Siemens shares, sponsored by Siemens. The shares are bought at market price at a predetermined date in the second
quarter and grant the right to receive matching shares under the same conditions applying to the Share Matching Plan described above.
Siemens' contributions to the Base Share Program recognized as expense were €23 and €24 in fiscal 2023 and 2022, respectively
Base Share Program
Under the Monthly Investment Plan employees other than senior managers may invest a specified part of their compensation in Siemens
shares on a monthly basis over a period of twelve months. Shares are purchased at market price at a predetermined date once a month.
If the Managing Board decides that shares acquired under the Monthly Investment Plan are transferred to the Share Matching Plan, plan
participants will receive the right to matching shares under the same conditions applying to the Share Matching Plan described above with
a vesting period of about two years. The Managing Board decided that shares acquired under the tranches issued in fiscal 2022 and 2021
are transferred to the Share Matching Plan as of February 2023 and February 2022, respectively.
Monthly Investment Plan
Under the Share Matching Plan, senior managers may invest a specified part of their variable compensation in Siemens shares (investment
shares). The shares are purchased at market price at a predetermined date in the second quarter. Plan participants receive the right to one
Siemens share without payment of consideration (matching share) for every three investment shares continuously held over a period of
about three years (vesting period) provided the plan participant has been continuously employed by Siemens until the end of the vesting
period.
Share Matching Plan
In fiscal 2023, Siemens issued a new tranche under each of the plans of the Share Matching Program.
2023
2022
2023
2022
100
100
100
100⁹
1007
1007
1007
1009
44
100
Non-vested, beginning of period
The weighted average fair value of stock awards granted in fiscal 2023 and 2022 of €125.42 and €125.29 per share, respectively, was
determined as Siemens' share price, less the present value of expected dividends during the respective vesting period.
Each quarter, the Company grants stock awards not subject to performance conditions to selected employees. The awards are subject to
a ratable vesting period of one to four years, i.e. 25% of the number of awards granted are transferred each year.
Stock awards not subject to performance conditions
Siemens' share price of €133.66 and €153.58. Expected volatility was determined by reference to historic volatilities. The model applies a
risk-free interest rate of up to 2.68% and (0.23)% in fiscal 2023 and 2022, respectively, and an expected dividend yield of 3.18% in fiscal
2023 and 2.61% in fiscal 2022. Assumptions relating to correlations between the Siemens share price and the development of the MSCI
Index were derived from historic observations of share price and index changes. The fair value of the ESG component of €120.28 and
€140.52 per share in fiscal 2023 and 2022, respectively, was determined as Siemens' share price, less the present value of expected
dividends during the vesting period.
Consolidated Financial Statements
35
The fair value of stock awards granted in fiscal 2023 and 2022 (TSR-related) was calculated by applying a valuation model. In fiscal 2023
and 2022, inputs to that model include an expected weighted volatility of Siemens shares of 26.70% and 24.41%, respectively, and a
In fiscal 2023 and 2022, 1,784,892 and 1,459,182 equity-settled stock awards were granted relating to the TSR-Target with a fair value
of €114 million and €106 million, respectively. In fiscal 2023 and 2022, 446,237 and 365,610 equity-settled stock awards were granted
relating to the ESG-Target with a fair value of €54 million and €51 million, respectively.
Commitments to members of the senior management and other eligible employees
Changes in stock awards:
Fair values of TSR-related stock awards granted are €7 million and €6 million, respectively, in fiscal 2023 and 2022, calculated by applying
a valuation model. In fiscal 2023 and 2022, inputs to that model include an expected weighted volatility of Siemens shares of 26.71% and
24.41%, respectively, and a Siemens share price of €130.68 and €153.34. Expected volatility was determined by reference to historic
volatilities. The model applies a risk-free interest rate of up to 2.76% and (0.15)% in fiscal 2023 and 2022, respectively, and an expected
dividend yield of 3.25% in fiscal 2023 and 2.61% in fiscal 2022. Assumptions relating to correlations between the Siemens share price and
the development of the MSCI index were derived from historic observations of share price and index changes. The fair value of the ESG
component of €112.39 and €135.25 per share in fiscal 2023 and 2022, respectively, was determined as Siemens' share price, less the
present value of expected dividends during the vesting period.
10010
100⁹
Siemens Trademark GmbH & Co. KG, Kemnath
Siemens Trademark Management GmbH, Kemnath
Siemens Treasury GmbH, Munich
Siemens-Fonds C-1, Munich
Siemens-Fonds Pension Captive, Munich
Siemens-Fonds S-7, Munich
Siemens-Fonds S-8, Munich
Siemensstadt C1 GmbH & Co. KG, Grünwald
Siemensstadt C1 Verwaltungs GmbH, Grünwald
1007
Siemensstadt CX GmbH & Co. KG, Grünwald
10010
10010
100⁹
100
100
1007
10010
1009
10010
Siemensstadt CX Verwaltungs GmbH, Grünwald
Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
Commitments to members of the Managing Board
For stock awards subject to performance conditions, 80% of the target amount is linked to the relative total shareholder return of Siemens
compared to the total shareholder return of the MSCI World Industrials sector index (TSR-Target); the remaining 20% are linked to a
Siemens internal sustainability target considering environmental, social and governance targets (ESG-Target). The annual target amount
for stock awards up to and including tranche 2019 is linked to the share price performance of Siemens relative to the share price
performance of five important competitors. The target attainment for each individual performance criteria ranges between 0% and 200%.
Settlement of the awards is in shares corresponding to the actual target attainment.
The Company grants stock awards subject to performance conditions to members of the Managing Board, members of the senior
management and other eligible employees. The vesting period for awards granted to members of the senior management and other
eligible employees is three years respectively four years for awards granted prior to fiscal 2022. Awards granted to members of the
Managing Board are subject to a four year vesting period.
Loans and other debt
instruments under the general
Non-Investment Grade Ratings
Investment Grade Ratings
(in millions of €)
SFS' external financing portfolio disaggregates into credit risk rating grades as of September 30, 2023 as follows (pre valuation
allowances):
credit-impaired loans in SFS' asset finance business. Those collaterals mainly comprised property, plant and equipment. Credit risks arising
from irrevocable loan commitments are equal to the expected future pay-offs resulting from these commitments.
Consolidated Financial Statements
26
47
Financial guarantees and
loan commitments
50
50
56
57
Fiscal year
57
179
183
179
183
47
Lease Re-
ceivables
approach
Stock awards granted by Siemens are distinguished between a) subject to performance conditions and b) no performance conditions.
Stock awards entitle the beneficiaries to Siemens shares without payment of consideration at the end of the respective vesting period.
Stock awards subject to performance conditions
Stock awards
Share-based payment awards may be settled in newly issued shares of capital stock of Siemens AG, in treasury shares or in cash. Share-
based payment awards may forfeit if the employment of the beneficiary terminates prior to the expiration of the vesting period. In fiscal
2023 and 2022, expense from equity-settled awards on a continuing basis are €444 million and €377 million; cash-settled awards on a
continuing basis resulted in expenses of €18 million and gains of €12 million in fiscal 2023 and 2022. Included is expense of €113 million
and €110 million in fiscal 2023 and 2022, respectively, relating to Siemens Healthineers plans. Siemens Healthineers plans are largely
similar to Siemens' plans, except for granting Siemens Healthineers AG shares.
NOTE 26 Share-based payment
Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies that are classified as long term
investments. These investments are monitored based on their current market value, affected primarily by fluctuations on the volatile
technology-related markets worldwide. As of September 30, 2023 and 2022, the market value of Siemens' portfolio was €182 million and
€339 million, respectively. As of September 30, 2023 and 2022, the VaR relating to the equity price was €26 million and €74 million.
Equity Price Risk
Amounts above do not represent economic credit risk, since they consider neither collateral held nor valuation allowances already
recognized.
Trade receivables of operating units are generally rated internally; as of September 30, 2023 and 2022, approximately 45% and 45%,
respectively, have an investment grade rating and 55% and 55%, respectively, have a non-investment grade rating. Contract assets
generally show similar risk characteristics as trade receivables in operating units.
3,593
118
67
2,857
918
2,512
n/a
Stage 3
Stage 2
n/a
Stage 1
840
Stage 3
n/a
Stage 2
4
548
Stage 1
6,074
16,017
Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
20,620
39
19,098
thereof countries outside of Germany
6,999
7,535
13,537
14,778
11,961
12,718
thereof Germany
57,791
65,051
54,804
77,769
71,977
77,769
Siemens
7,105
6,468
16,749
17,214
17,816
71,977
18,489
60,016
58,440
Liabilities
Receivables
Purchases of goods and
services and other expenses
and other income
Fiscal Year
Sales of goods and services
Associates
(in millions of €)
Joint ventures
Siemens has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a
wide variety of products and services generally on arm's length terms. The transactions between continuing operations and joint ventures
and associates were as follows:
Joint ventures and associates
62,991
NOTE 31 Related party transactions
26,543
23,644
17,727
19,072
17,241
18,561
therein U.S
50,792
47,269
Non-current assets consist of property, plant and equipment, goodwill and other intangible assets.
Fiscal Year
Asia, Australia
24,844
of customers
Revenue by location.
60,724
(53,342)
(49,602)
57,680
37,518
38,509
3,769
3,499
Revenue by location
of companies
62,765
1,129
1,211
5,215
5,126
3,669
1,801
2022
2023
Sep 30,
57,137
27,653
Non-current assets
Fiscal year
20,757
22,669
20,680
22,615
Americas
23,033
23,492
34,470
37,886
Fiscal year
33,481
Europe, C.I.S., Africa, Middle East
2022
2023
2022
2023
2022
2023
(in millions of €)
Sep 30,
36,664
Sep 30,
2023
116
1,527
1,643
2022
Alpha Verteilertechnik GmbH, Cham
AIT Verwaltungs-GmbH, Stuttgart
AIT Applied Information Technologies GmbH & Co. KG, Stuttgart
Airport Munich Logistics and Services GmbH, Hallbergmoos
Acuson GmbH, Erlangen
Germany (121 companies)
Subsidiaries
September 30, 2023
in %
BEFUND24 GmbH, Erlangen
Equity interest
Consolidated Financial Statements
42
In November 2023, agreements were entered into with the intent to acquire 18% of the shares in Siemens Limited, India from the Siemens
Energy Group for a purchase price of €2.1 billion in cash. Closing of the transaction is expected in December 2023. Upon closing, the
acquisition will be accounted for as equity transaction not impacting net income and Siemens' share in Siemens Limited, India will increase
to 69%. Additionally, the Siemens Energy Group will receive a put option for up to an additional 5% of the shares in Siemens Limited, India.
If specific guarantee events occur, Siemens Energy can exercise the option for a fixed price totaling €750 million for the entire 5% stake
to be paid by Siemens. The transaction will be recognized in equity not impacting net income and a purchase liability measured at the
respective present value of the option price will be recorded.
NOTE 34 Subsequent events
The Managing and Supervisory Boards of Siemens Aktiengesellschaft and of Siemens Healthineers AG, a publicly listed subsidiary of
Siemens, provided the declaration required under Section 161 of the German Stock Corporation Act (AktG) on October 1, 2023 and
September 30, 2023, respectively. The declarations are available on the company's websites at siemens.com/gcg-code and at
corporate.siemens-healthineers.com/investor-relations/corporate-governance.
NOTE 33 Corporate governance
Audit Services relate primarily to services provided by EY for auditing Siemens' Consolidated Financial Statements, for auditing financial
statements of Siemens AG and its subsidiaries, for reviews of interim financial statements being integrated into the audit, for project-
accompanying IT audits, as well as for audits of the internal control system at service companies. Other Attestation Services include
primarily audits of financial statements as well as other attestation services in connection with M&A activities, audits of employee benefit
plans, attestation services relating to sustainability reporting, compensation reporting and disclosures in accordance with EU taxonomy,
comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested on a voluntary
basis.
In fiscal 2023 and 2022, 39% and 40%, respectively, of the total fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
Germany.
43.3
NOTE 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the
German Commercial Code
44.5
Berliner Vermögensverwaltung GmbH, Berlin
Dade Behring Grundstücks GmbH, Kemnath
eos.uptrade GmbH, Hamburg
Granted
Vested and fulfilled
10010
10010
100
100
10010
85
10010
Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
100
10010
1007
KompTime GmbH, Munich
IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
KACO new energy GmbH, Neckarsulm
Innomotics Real Estate GmbH & Co. KG, Nuremberg
Innomotics GmbH, Munich
ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
Innomotics Beteiligungs-GmbH, Munich
Geisenhausener Entwicklungs Management GmbH, Grünwald
Geisenhausener Entwicklungs-GmbH & Co. KG, Grünwald
HaCon Ingenieurgesellschaft mbH, Hanover
evosoft GmbH, Nuremberg
1009
5.0
3.3
38.2
As of September 30, 2023 and 2022, guarantees to joint ventures and associates amounted to €5,098 million and €8,165 million,
respectively, thereof €5,081 million and €8,147 million, respectively, to associates. These guarantees included mainly obligations from
performance and credit guarantees in connection with the Siemens Energy business. For these guarantees, Siemens has reimbursement
rights towards Siemens Energy.
As of September 30, 2023 and 2022, receivables to associates included reimbursement rights against Siemens Energy which were
recognized correspondingly with obligations from customer contracts in connection with Siemens Energy activities legally remaining at
Siemens. Liabilities to associates as of September 30, 2023 and 2022 were mainly due to trade receivables that also result from these
activities and that have economically to be allocated to Siemens Energy.
686
832
1,284
608
Sep 30,
2022
78
55
777
1,204
As of September 30, 2023 and 2022, loans given to joint ventures and associates amounted to €160 million and €166 million, therein
€126 million and €149 million related to joint ventures, respectively. The related book values amounted to €133 million and €143 million,
therein €112 million and €139 million related to joint ventures, respectively. Valuation adjustments recognized in fiscal 2023 and 2022
reduced book values of loans related to joint ventures by €5 million and €2 million, respectively.
Sep 30,
2023
2023
42
1,436
1,478
563
580
517
487
1,384
1,491
2022
17
30
107
2023
Sep 30,
2022
80
As of September 30, 2023 and 2022, the Company had commitments to make capital contributions to joint ventures and associates of
€108 million and €106 million, therein €86 million and €95 million related to joint ventures, respectively.
As of September 30, 2023 and 2022, there were loan commitments to joint ventures amounting to €2 million and €4 million, respectively.
41
41.2
2022
2023
Fiscal year
Other attestation services
Tax services
Audit services
(in millions of €)
Fees related to professional services rendered by the Company's principal accountant, EY, for fiscal 2023 and 2022 are:
NOTE 32 Principal accountant fees and services
Some of our board members hold, or in the last year have held, positions of significant responsibility with other entities. We have
relationships with almost all of these entities in the ordinary course of our business whereby we buy and sell a wide variety of products
and services on arm's length terms.
In fiscal 2023 and 2022, no other major transactions took place between the Company and the members of the Managing Board and the
Supervisory Board.
Compensation attributable to members of the Supervisory Board comprised in fiscal 2023 and 2022 base compensation and additional
compensation for committee work and amounted to €5.3 million and €5.1 million (including meeting fees), respectively.
Former members of the Managing Board and their surviving dependents received emoluments within the meaning of
Section 314 para. 1 No. 6 b of the German Commercial Code totaling €24.6 million and €23.6 million in fiscal 2023 and 2022, respectively.
The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving
dependents as of September 30, 2023 and 2022 amounted to €140.3 million and €175.3 million, respectively.
In fiscal 2023 and 2022, expense related to share-based compensation amounted to €8.3 million and €4.7 million, respectively, including
expenses related to the additional cash payment compensation due to the spin-off of Siemens Energy.
Therefore, in fiscal 2023 and 2022, compensation and benefits, attributable to members of the Managing Board amounted to €31.6
million and €28.5 million in total, respectively.
In fiscal 2023 and 2022, members of the Managing Board received cash compensation of €18.8 million and €16.0 million. The fair value
of share-based compensation amounted to €10.5 million and €10.3 million for 170,111 and 134,006 stock awards, respectively, granted
in fiscal 2023 and 2022. In fiscal 2023 and 2022, the Company granted contributions under the BSAV to members of the Managing Board
totaling €2.2 million and €2.2 million, respectively.
Related individuals
For information regarding the funding of our post-employment benefit plans see Notes 4 and 17.
As of September 30, 2023 and 2022, lease liabilities resulting from sale and leaseback transactions with pension entities amounted to
€264 million and €280 million, respectively.
Pension entities
Consolidated Financial Statements
Sep 30,
25,283 21,478
Consolidated Financial Statements
Reconciliation to Consolidated Financial Statements
838
817
2,625
248
238
188
190
771
1,046
1,555 1,343
343
205
284
6,501 2,908 2,203
693
612
316
440
2022
2023
393
2022
9,689
1,548
(261) (483) 1,062
92,305 89,010 77,769
Siemens (continuing operations)
Consolidated Financial Statements
Reconciliation to
51
209
25
36
38
1,730
97
659
175
31
32
985
852
33,263
2,626
2,798
197
892
71,977
2023
2023
4,201 4,090
Portfolio Companies
Siemens Financial Services
21,681
85
108
24,499 25,556 21,574 21,630
10,549
10
12
88,082
468
4,016
9,683
419
366
381
16,987
22,333 20,798 19,564
20,629 13,200 10,537
Industrial Business
Siemens Healthineers
Mobility
Smart Infrastructure
442
19,946
2022
84,837
67,397
Fiscal year
Fiscal year
Fiscal year
Sep 30, Sep 30,
2023 2022
10,946 10,861
6,386
2,244 2,547
34,415 36,948 2,221
53,991 56,857 10,376
32,915
482
11,430
563
343
2022
2022
2023
21,919 19,517 4,947 3,892
17,353 3,074 2,222
9,692
882
794
21,715 2,527 3,369
10,277
498
1,520
661
3,234
468
3,313
73,152
662
442
3,995 3,112
178
|
3,056
29
25
632
68,277
74,095
880
943
201
(1,170) (1,087) (108)
77,769
(195) (1,135)
71,977 11,201
(5,141) 57,680 60,724 (1,363) (2,533)
7,154 145,067 151,502 10,062 8,238
(582)
(451)
(190)
(195)
118
67
(2,911)
668
2022
(104)
2023
Governance
Innovation
Siemens Real Estate
Siemens Energy Investment
(in millions of €)
Fiscal year
Profit
Reconciliation to Consolidated Financial Statements
The orderly wind down of business activities in Russia resulted in losses in Profit of Mobility of €0.6 billion in fiscal 2022. In fiscal 2023,
subsequent to the wind down, Profit of Mobility carried related gains of €153 million, which mainly stem from the reversal of provisions
and obligations as well as from the reversal of write downs and the sale of inventories.
Centrally carried pension expense
POC follows the measurement principles of the segments except for SFS. Siemens Real Estate applies the measurement principles of SFS.
Additional segment information
(113)
(865)
Financing, eliminations and other items
Liability-based adjustments
Tax-related assets
Intragroup financing receivables
Asset-based adjustments:
Assets Innovation, Governance and Pensions
Assets Siemens Real Estate
Siemens Energy Investment
(in millions of €)
Amortization of intangible assets acquired in business combinations
Assets
In fiscal 2023, and 2022, Profit of SFS includes interest income of €1,942 million and €1,399 million, respectively and interest expenses
of €985 million and €428 million, respectively.
In fiscal 2023 and 2022, Financing, eliminations and other items includes a loss of €167 million and €308 million, respectively, mainly due
to measuring our investment in Thoughtworks Holding, Inc. at fair value through profit and loss at fiscal year-end.
(5,141)
(1,135)
Reconciliation to Consolidated Financial Statements
(474)
(256)
Financing, eliminations and other items
(990)
40
Measurement - POC and Siemens Real Estate
Amortization, depreciation and impairments includes depreciation and impairments of property, plant and equipment as well as
amortization and impairments of intangible assets each net of reversals of impairment.
Amortization, depreciation and impairments
Siemens Energy Investment - includes our investment in Siemens Energy accounted for using the equity method, and previously, a
smaller investment in connection with Siemens Energy sold in fiscal 2022.
Reconciliation to Consolidated Financial Statements
Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
and fiber.
Portfolio Companies (POC)
Siemens Financial Services provides financing solutions to Siemens' customers and other companies via debt and equity investments,
offering leasing, lending, working capital and structured financing solutions, equipment and project financing and financial advisory
services.
Siemens Healthineers provides healthcare solutions and services. It develops, manufactures, and sells a diverse range of innovative
diagnostic and therapeutic products and services to healthcare providers.
Mobility combines all Siemens businesses in the area of rail passenger and rail freight transportation, including rail vehicles, rail
automation systems, rail electrification systems, digital and cloud-based solutions and related services,
Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition from fossil to renewable
energy sources, as well as a transition to smarter, more sustainable buildings and communities,
Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries,
complemented by product lifecycle and data-driven services,
Siemens Real Estate (SRE) - Siemens Real Estate is responsible for uniform and comprehensive management of Company real estate
worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate activities with customer-specific real
estate solutions.
Description of reportable segments
38
3,561
3,608
2,084
2,218
687
584
469
418
Consolidated Financial Statements
Innovation - mainly includes results from our units Technology and Next47.
Governance - primarily includes Siemens brand fees and governance costs, group managing costs, IT and corporate services.
Centrally carried pension expense - includes the Company's pension related income (expense) not allocated to the segments, POC or
Siemens Real Estate.
Free cash flow of the segments constitutes cash flows from operating activities less additions to intangible assets and property, plant and
equipment. Except for SFS, it excludes financing interest, except for cases where interest on qualifying assets is capitalized or classified as
contract costs; it also excludes income tax as well as certain other payments and proceeds. Free cash flow of SFS includes related financing
interest payments and proceeds; income tax payments and proceeds of SFS are excluded. In individual cases, free cash flow of Mobility
includes project-specific intercompany financing of long-term projects.
Free cash flow definition
As of September 30, 2023, and 2022, order backlog totaled €111 billion and €102 billion (continuing operations); thereof Digital Industries
€11 billion and €14 billion, Smart Infrastructure €16 billion and €15 billion, Mobility €45 billion and €36 billion and Siemens Healthineers
€34 billion and €34 billion. In fiscal 2024, Siemens expects to convert approximately €43 billion of the September 30, 2023 order backlog
into revenue; thereof at Digital Industries approximately €8 billion, Smart Infrastructure approximately €10 billion, Mobility approximately
€11 billion and Siemens Healthineers approximately €11 billion.
Orders are determined principally as estimated revenue of accepted purchase orders for which enforceable rights and obligations exist as
well as subsequent order value changes and adjustments, excluding letters of intent. To determine orders, Siemens considers termination
rights and customer's creditworthiness.
Orders
Management determined Assets (Net capital employed) as a measure to assess capital intensity of the segments except for SFS. Its
definition corresponds to the Profit measure except for amortization expenses of intangible assets acquired in business combinations
which are not part of Profit, however, the related intangible assets are included in the segments' Assets. Segment Assets is based on Total
assets of the Consolidated Statements of Financial Position, primarily excluding intragroup financing receivables, tax related assets and
assets of discontinued operations, since the corresponding positions are excluded from Profit. The remaining assets are reduced by non-
interest-bearing liabilities other than tax related liabilities, e.g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. In
individual cases assets of Mobility include project-specific intercompany financing of long-term projects. Assets of Siemens Healthineers
include real estate, while real estate of all other segments is carried at SRE.
Asset measurement principles
In contrast to performance measurement principles applied to other segments, interest income and expenses are included, since interest
is an important source of revenue and expense of SFS.
Profit of the segment SFS
Consolidated Financial Statements
39
Amortization expenses of intangible assets acquired in business combinations are not part of Profit. Furthermore, income taxes are
excluded from Profit since income tax is subject to legal structures, which typically do not correspond to the structure of the segments.
The effect of certain litigation and compliance issues is excluded from Profit, if such items are not indicative of performance. This may also
be the case for items that refer to more than one reportable segment, SRE and (or) POC or have a corporate or central character. Costs for
support functions are primarily allocated to the segments.
Decisions on essential pension items are made centrally. Accordingly, Profit primarily includes amounts related to service cost of pension
plans only, while all other regularly recurring pension related costs are included in reconciliations in line item Centrally carried pension
expense.
Interest income (expenses) are excluded from Profit. Decision-making regarding financing is typically made at the corporate level.
Siemens' Managing Board is responsible for assessing the performance of the segments (chief operating decision maker). The Company's
profitability measure of the segments except for SFS is earnings before interest, certain pension costs, income taxes and amortization
expenses of intangible assets acquired in business combinations as determined by the chief operating decision maker (Profit). The major
categories of items excluded from Profit are described below.
Profit
Revenue includes revenue from contracts with customers and revenue from leasing activities. In fiscal 2023 and 2022, lease revenue is
€1,004 million and €1,104 million, respectively. In fiscal 2023 and 2022, Digital industries recognized €5,067 million and €4,691 million
revenue, respectively, from its software business, Smart Infrastructure recognized €4,243 million and €3,856 million in its service business.
Revenues of Mobility are mainly derived from construction-type business.
Revenue
Accounting policies for Segment information are generally the same as those used for the Consolidated Financial Statements. Segment
information is disclosed for continuing operations. For internal and segment reporting purposes, intercompany lease transactions,
however, are classified as operating leases by the lessor and are accounted for off-balance sheet by the lessee (except for intercompany
leases with Siemens Healthineers as lessees). Intersegment transactions are based on market prices.
Measurement - Segments
Financing, eliminations and other items - comprise activities of Advanta and Global Business Services, results from corporate projects,
equity interests and activities generally intended for closure as well as activities remaining from divestments, consolidation of transactions
within the segments, certain reconciliation and reclassification items as well as central financing activities. It also includes interest income
and expense, such as, for example, interest not allocated to segments or POC (referred to as financing interest), interest related to central
financing activities or resulting consolidation and reconciliation effects on interest.
NOTE 30 Information about geographies
Adjustments due to vesting conditions other than market conditions