Siemens Healthineers AG
0
12/01/2017
Contributions
Other addi-
Treasury shares
(in millions of €)
Subscribed capital
Equity
NOTE 11 -
The taxable temporary differences result, on the one hand,
from ownership interests in affiliated companies of Siemens
Healthineers AG and, on the other hand, from intangible as-
sets, ownership interests in affiliated companies, and deferrals
and receivables with a remaining term of less than one year
for Siemens Healthcare GmbH, the controlled company of
Siemens Healthineers AG. The deductible temporary differ-
ences, up to the amount of the taxable temporary differences,
result from the pension provisions of Siemens Healthineers AG
and the controlled company. Additionally, there were deducti-
ble temporary differences relating primarily to other provisions
of Siemens Healthineers AG and the controlled company, as
well as inventories and liabilities with a remaining term of
more than one year of the controlled company.
in kind
1.000
A tax rate of 29.63% was applied for the measurement of
deferred taxes. Deviating from this, for partnerships a tax rate
of 15.83% was applied for temporary differences of assets,
liabilities and prepaid/deferred items.
NOTE 10 - Deferred tax assets
Receivables from affiliated companies consist only of other
receivables. The receivables from affiliated companies of €50
thousand in the opening Balance Sheet represented receiva-
bles for outstanding contributions that had been called in.
All receivables and other assets at the reporting date had a
remaining term of less than one year.
NOTE 9 - Receivables and other assets
In the course of these transactions, additions of €14,399 mil-
lion were recorded in the financial assets (shares in affiliated
companies).
The Siemens Healthineers Group's business is conducted by
Siemens Healthcare GmbH and Siemens Healthineers Be-
teiligungen GmbH & Co. KG, Kemnath, together with their
directly and indirectly controlled subsidiaries. The shares of
Siemens Healthcare GmbH and the sole limited partner's share
and shares of the general partner of Siemens Healthineers
Beteiligungen GmbH & Co. KG were contributed by
Siemens AG or affiliated entities of Siemens AG in return for
the issue of new shares of Siemens Healthineers AG. In con-
nection with this contribution Siemens AG additionally trans-
ferred trust assets for pension obligations as voluntary addi-
tional contribution to Siemens Healthineers AG. Directly fol-
lowing this transfer Siemens Healthineers AG contributed
these trust assets to Siemens Healthcare GmbH. After these
contributions in kind Siemens Healthineers AG made a cash
contribution to Siemens Healthineers Beteiligungen GmbH &
Co. KG.
Siemens Healthineers AG was founded by a notarial deed of
incorporation in December 2017. In order to establish an in-
dependent Siemens Healthineers Group structure, all compa-
nies that conduct Siemens Healthineers business were bun-
dled under Siemens Healthineers AG and its subsidiaries.
Annual Financial Statements HGB | Siemens Healthineers AG
12/01/2017
The calculation of deferred taxes yielded a surplus of deferred
tax assets, which was not recognized, exercising the option
under Section 274 para. 1 sentence 2 of the German Commer-
cial Code.
40
tional contri-
butions
Share buy-
backs
-54
-390
766
10.403
Capital reserve
1.000
1
-1
1.000
Transfer from
capiral reserve
0
0
1
−1
1.000
09/30/2018
Net income
employee
share
programs
treasury
shares under
Issuance of
Issued capital
07
14.399
0
Non-current assets
-
NOTE 8
A.3.4 Notes to the Balance Sheet
90
06
Income taxes include only current income taxes resulting from
corporate income tax or trade tax, because the surplus of
deferred tax assets was not recognized owing to the exercise
NOTE 6 -Income taxes
Other financial income primarily included interest income of
€0.5 million from the measurement of pension provisions.
Both the interest component of the change in pension provi-
sions and the financial expenses relating to personnel-related
provisions constitute expenses from the discounting of provi-
sions.
(in millions of €)
-1
Financial expenses relating to the personnel-related provisions
Other financial income (expenses), net
Interest component of changes in the pension provisions
-1
2018
fiscal year
Short
(in millions of €)
Other taxes amounting to €31 thousand are included in the
relevant functional costs.
NOTE 7 - Other taxes
0
Financial assets
Shares in affiliated companies
Loans
14.399
09/30/2018
09/30/2018
Carrying amount
Annual Financial Statements HGB | Siemens Healthineers AG
14.399
0
14.399
0
0
0
14.399
14.399
12/01/2017
09/30/2018
Disposals
Accumulated Impairment
Additions
12/01/2017
Acquisition costs
Summary
45
10.770
Unappropriated net income
390
Liabilities to affiliated companies
5 years
up to 1 year
0
0
09/30/2018
Trade payables
(in millions of €)
1 year up to
Liabilities
2.414
-
For the method of determining the provision for share com-
mitments, please refer to the discussion in NOTE 17 - Share
based payments.
The main amounts in the miscellaneous provisions related to
provisions of €3 million for personnel expenses.
Other provisions included miscellaneous provisions of €3 mil-
lion and tax provisions of €35 million.
Other provisions
NOTE 13
For pension obligations, the 10-year average interest rate
(3.34%) pursuant to Section 253 para. 2 of the German Com-
mercial Code was applied. For other obligations, the 7-year
average interest rate (2.43%) was used. The valuation differ-
ence under Section 253 para. 6 of the German Commercial
Code from the discounting of pension provisions at the 10-
year average interest rate and the 7-year average interest rate
was €1.7 million at the reporting date. A rate of pension pro-
gression of 1.5% per year and an income progression of 2.25%
per year were applied for the pension obligations. The mortali-
ty rates are based on Siemens-specific mortality tables
(Richttafeln) with a mortality trend based on the Heubeck
mortality tables RT 2005 G.
The fulfillment amount of the provisions for pensions and
similar obligations came to €16 million at the reporting date.
The actuarial valuation of the fulfillment amount was based
substantially on the following parameters:
ees participate in the BSAV. The benefits from this plan are
predominantly based on contributions made by the Company
and returns earned on such contributions, subject to a mini-
mum return guaranteed by the Company. For benefits provid-
ed under the frozen legacy plans, the effects of compensation
increases were substantially eliminated, so that valuation
assumptions for salary and pension increases including career
trend are no longer of material significance for the pension
obligations of Siemens Healthineers AG.
As part of the transfer of employees of Siemens Healthcare
GmbH and Siemens AG, Siemens Healthineers AG assumed
pension obligations of €14 million resulting from the BSAV
pension plan and from frozen plans with legacy commitments.
In Germany, Siemens Healthineers AG generally provides pen-
sion benefits through the BSAV (Beitragsorientierte Siemens
Altersversorgung), frozen legacy plans and deferred compen-
sation plans; the latter were not claimed by any of the Compa-
ny's employees. The majority of the Company's active employ-
NOTE 14
2.414
Other liabilities
therein from taxes
10
within the Siemens Healthineers Group, and other liabilities of
€91 million resulting from the parent-subsidiary relationship
for value added tax purposes with several subsidiaries, and
from amounts collected for subsidiaries.
Tax liabilities as of September 30, 2018, came to €337 thou-
sand, and liabilities for social security came to €20 thousand.
The liabilities to affiliated companies pertained to liabilities of
€2,323 million to Siemens Healthcare GmbH for cash pooling
years
5 years
up to 1 year
12/01/2017
more than 5
1 year up to
thereof
maturities
thereof
maturities
more than 5
years
2.418
2.418
Liabilities
therein for social security
0
0
0
0
4
4
NOTE 12 - ·Provisions for pensions and similar com-
mitments
of the option under Section 274 para. 1 sentence 2 of the
German Commercial Code.
Siemens AG notified us on March 20, 2018, because of the
first admission of Siemens Healthineers AG stock for trading
on an organized market, that the percentage of voting rights
in Siemens Healthineers AG that it held either directly or indi-
rectly on March 15, 2018, amounted to 85.00% of the voting
rights (850,000,000 voting rights). At that time, moreover,
there was a claim for redelivery under a securities loan, as a
result of the Greenshoe option for Siemens Beteiligungsver-
waltung GmbH & Co. OHG with reference to 19,565,217 vot-
ing rights, or 1.96%.
Disclosures on holdings of the capital of Siemens
Healthineers AG
Additionally, as of September 30, 2018, Siemens Healthineers
AG had conditional capital of €100 million, or 100,000,000
shares. This capital may be used to service convertible bonds
or warrants from bonds with attached warrants issued on or
before February 18, 2023 (Conditional Capital 2018).
Conditional capital
As of September 30, 2018, Siemens Healthineers AG had au-
thorized capital of €500 million that may be issued in the form
of a total of up to 500,000,000 new registered shares of no
par value, on one or more occasions on or before February 18,
2023, in return for contributions in cash or in kind (Authorized
Capital 2018).
Authorized capital
Siemens Healthineers AG was first listed on an exchange on
March 16, 2018, when its shares began trading on the Frank-
furt Stock Exchange. A total of 150,000,000 registered shares
of no par value (including overallotments), equivalent to a free
float of 15%, were placed by the Siemens Group during the
initial public offering. The resulting proceeds were collected by
Siemens AG by way of Siemens Beteiligungsverwaltung GmbH
& Co. OHG. Since the IPO, the Siemens Group has held an
interest of 85% of Siemens Healthineers AG. The stock of Sie-
mens Healthineers AG is traded in the Regulated Market (Prime
Standard) of the Frankfurt Stock Exchange under the ticker
symbol SHL.
Annual Financial Statements HGB | Siemens Healthineers AG
08
As of September 30, 2018, the subscribed capital of Siemens
Healthineers AG was divided into 1,000,000,000 registered
shares of no par value with a notional value of €1.00 per
share. The shares are fully paid in. Each share confers one vote
in the Shareholders' Meeting and defines the shareholder's
interest in the Company's profit after taxes. All shares carry the
same rights and obligations.
kind in excess of the increase in the capital stock was appro-
priated to the capital reserve.
Capital reserve
Siemens Healthineers AG was founded on December 1, 2017,
in a notarial deed of incorporation, with a founding capital
stock of €50 thousand. In the course of the legal reorganiza-
tion of Siemens Healthineers, it was decided at the extraordi-
nary Shareholders' Meeting on February 2, 2018, to increase
the capital stock of Siemens Healthineers AG from €50 thou-
sand to €1.0 billion by issuing 999,950,000 new shares in
return for contributions in kind from Siemens AG and affiliated
companies of Siemens AG. The value of the contributions in
12.493
333
46
-55
766
11.403
0
Shareholders' equity
723
Subscribed capital
Additions to the capital reserve during the 2018 short fiscal
year came to €11,214 million. They primarily consisted of the
value of contributions in kind received in excess of the capital
stock in the course of the capital increase of February 2, 2018,
together with a voluntary additional contribution by
Siemens AG from the contribution of trust assets for pension
obligations. A further addition to the capital reserve resulted
from the release of treasury stock in connection with the "My
IPO Shares" employee stock plan.
In connection with setting up the Siemens Healthineers Group,
during the 2018 short fiscal year trust assets for the BSAV
Siemens contribution-based retirement plan and the frozen
plans with legacy commitments were transferred to Siemens
Healthineers AG from the trust structures of the Siemens
Group. This contribution represented an additional contribu-
tion into equity as defined in Section 272 para. 2 No. 4 of the
German Commercial Code. The fair value of the transferred
assets at the transfer date was €766 million. Siemens Healthi-
neers AG, in its turn, contributed these trust assets to Siemens
Healthcare GmbH.
Withdrawals from the capital reserve in the total amount of
€444 million only related to the capital reserve defined in
Section 272 para. 2 No. 4 of the German Commercial Code. An
amount of €54 million was withdrawn from this capital re-
serve for the repurchase of treasury shares. Additionally, the
management board decided to transfer €390 million from this
capital reserve in the course of the appropriation of income.
The capital reserve was distributable in an amount of €367
million as of September 30, 2018 before consideration of
amounts subject to dividend payout restrictions.
The amounts subject to payout restrictions are countered by a
capital reserve of €367 million that is not subject to such re-
strictions. Therefore there is no limitation on the payout of the
unappropriated net income of €723 million.
€131 million that is subject to dividend payout restrictions
under Section 253 para. 6 sentence 2 of the German Commer-
cial Code.
Annual Financial Statements HGB | Siemens Healthineers AG
09
The profit of €472 million transferred from the Siemens
Healthcare GmbH (the controlled company) to the parent
company for the short fiscal year also includes - as provided in
Section 301 of the Stock Corporation Act - the amount of
The difference as provided in Section 253 para. 6 sentence 2
of the German Commercial Code between the measurement
of provisions for post-retirement benefits according to the
corresponding average market interest rate over the preceding
ten years and the corresponding rate over the preceding seven
years, which is subject to dividend payout restrictions, was
€1.7 million.
Information on amounts subject to dividend payout
restrictions
In September 2018, 987,138 shares were sold as investment
shares to plan participants as part of the "My IPO Shares" em-
ployee share program, at a weighted average price of €38.54
per share; the purchase price was determined on the basis of
the closing price in Xetra trading on the transfer date of the
shares. The other 205,960 shares released during the report-
ing period were bonus shares awarded as part of the "My IPO
Shares" employee share program.
The 247,763 shares held by Siemens Healthineers AG corre-
spond to a nominal value of €247,763, or 0.02% of the capital
stock. During the 2018 short fiscal year, Siemens Healthineers
AG repurchased a total of 1,440,861 shares of its own stock
under this stock buyback program. This represents a nominal
amount of €1,440,861, or 0.14 % of the capital stock. During
this period, a total of €55 million (excluding incidental transac-
tion charges) was spent for this purpose; this represents a
weighted average stock price of €38.17 per share. The pur-
chase was made during the reporting period on 26 Xetra trad-
ing days during the months of August and September 2018,
by a bank engaged by Siemens Healthineers AG; the shares
were purchased solely on the electronic trading platform of
the Frankfurt Stock Exchange (Xetra). The average trading
volume on these trading days was about 526,532 shares. In
these transactions, the purchase price per repurchased share
(excluding incidental transaction charges) was not to exceed
by more than 10% the price of Siemens Healthineers stock as
determined in the opening auction in Xetra trading on the
trading date, or fall more than 20% below that price.
The extraordinary Shareholders' Meeting held on February 19,
2018, authorized the Managing Board to buy back treasury
shares until February 18, 2023 in an amount of up to 10% of
the capital stock at the time of the resolution, or at the date of
the exercise of the authorization if that value is lower, for any
permissible purpose.
247.763
-1.193.098
1.440.861
0
Short fiscal Year
2018
Treasury shares, end of fiscal year
Issuance under the employee share program "My IPO
Shares"
Share buyback
Treasury shares, beginning of fiscal year
(in numbers of shares)
Treasury Shares
As of September 30, 2018, the following information on
shareholdings subject to reporting requirements was available
to the Company pursuant to Section 160 para. 1 No. 8 of the
German Stock Corporation Act (AktG):
NOTE 5 - Other financial income (expenses), net
333
NOTE 4 - Interest income and interest expenses
-8
0
1
2
-9
0
-7
7
1
3
2018
Note
Annual Financial Statements HGB | Siemens Healthineers AG
Unappropriated net income
Transfer from capital reserves
Net income
Appropriation of net income
Income after taxes / Net income
Income taxes
Income from business activity
Short fiscal year
Other financial income (expenses), net
472
0
Current assets
Financial assets
Non-current assets
Assets
(in millions of €)
Balance Sheet
A.2
723
390
4
333
03
333
-126
6
459
-1
5
-5
4
63
Interest income
Income from investments, net
Income from operations
A.2
P. 20
P. 4
Responsibility Statement
B.1
Income Statement
A.1
P. 19
P. 3
Balance Sheet
Information
Financial
Statements
A. Annual
Table of contents
SIEMENS
Healthineers
siemens-healthineers.com
for the short fiscal year
from December 1, 2017 to September 30, 2018
Statements
Annual Financial
Interest income pertained only to third parties and did not
include negative interest. Interest expenses derived solely
from the cash pool liability to Siemens Healthcare GmbH and
included no positive interest from borrowings.
B. Additional
B.2 Independent Auditor's Report
P. 5
P. 24
Other operating expenses
Other operating income
General administrative expenses
Gross profit
Cost of Sales
Revenue
(in millions of €)
Income Statement
A.1
Annual Financial Statements
70
02
www.corporate.siemens-healthineers.com/investor-relations/presentations-financial-publications
The Annual Financial Statements of Siemens Healthineers AG as well as the Annual Report for the fiscal year 2018 are also availa-
ble for download on the Internet at:
The Annual Financial Statements for the fiscal year 2018 and the Combined Management Report of Siemens Healthineers AG are
filed with the operator of the electronic version of the German Federal Gazette and published in the electronic version of the
German Federal Gazette.
The Management Report of Siemens Healthineers AG has been combined with the Management Report of the Siemens Healthi-
neers Group in accordance with Section 315 para. 5 together with Section 298 para. 2 of the German Commercial Code (Han-
delsgesetzbuch) and is published in the 2018 Annual Report of the Siemens Healthineers Group.
Combined Management Report
Annual Financial Statements HGB | Siemens Healthineers AG
B.3 Further Information
Notes
A.3
Receivables and other assets
Receivables from affiliated companies
Interest expenses
Cash and cash equivalents
The Annual Financial Statements as of September 30, 2018,
were prepared in accordance with Section 264 para. 1 of the
German Commercial Code (Handelsgesetzbuch, HGB) in con-
junction with Section 267 para. 3 and Section 264d of that
Code, on the basis of the German Commercial Code's provi-
sions for the reporting of large capital corporations, as well as
under the terms of the German Stock Corporation Act (Ak-
tiengesetz, AktG). Amounts are presented in millions of euros
(€ million). Because of rounding, it is possible that some fig-
ures may not add up precisely to the presented totals.
The Company's shares were admitted for trading on the Frank-
furt Stock Exchange on March 16, 2018, and are traded in the
Prime Standard segment of the regulated market there. Since
the Company's initial public offering (IPO), the Siemens Ak-
tiengesellschaft, Berlin and Munich, as well as its directly and
indirectly controlled subsidiaries ("Siemens Group") have held
an interest of approximately 85% of Siemens Healthineers AG.
On June 18, 2018 the recently listed Company, which trades
under the ticker symbol SHL, was included in the TecDAX un-
der the Fast Entry rule, and on September 24, 2018 with the
inception of Deutsche Börse's new index structure, it was also
included in the MDAX.
The Company was founded in December 2017 and serves as
the holding company for the Siemens Healthineers Group.
Siemens Healthineers AG has its registered office in Munich,
Germany, where it is registered under entry number HRB
237558 with Munich Local Court.
General Disclosures
A.3.1
A.3 Notes
Annual Financial Statements HGB | Siemens Healthineers AG
04
0
14.965
4
2.414
0
2.418
14
38
13
16
12
54
The Income Statement was prepared using the cost of sales
method.
723
A.3.2 Accounting policies and methods
Financial assets: Financial assets acquired by contributions in
kind have been recognized with their fair value at the time of
the contribution in accordance with the principles for the
accounting for contributions in kind. The trust assets acquired
by a voluntary additional contribution have been recognized
and valued in the same way. The contribution of these trust
assets to Siemens Healthcare GmbH, Munich, has been valued
using the book value of the contributed assets in accordance
with the principle for the accounting for barter transactions.
Impairment losses are recognized if the decline in value is
presumed to be other than temporary. This applies when ob-
jective evidence, particularly events or changes in circum-
stances, indicate a significant or other than temporary decline
in value.
The former control and profit and loss transfer agreement
between Siemens AG and Siemens Healthcare GmbH was
terminated by mutual consent in a termination agreement
effective March 31, 2018.
Other receivables and other assets
The profit and loss transfer agreement between Siemens
Healthineers AG and Siemens Healthcare GmbH was entered
into in February 2018 with effect from April 1, 2018, and for
an indefinite duration. The agreement was entered in the
Commercial Register on April 16, 2018, and may be terminat-
ed for convenience on three months' notice, but not earlier
than the end of the day on September 30, 2023. It includes an
obligation to assume the losses of Siemens Healthcare GmbH
as provided in Section 302 of the German Stock Corporation
Act as amended from time to time.
Income from investments, totaling €472 million, derived en-
tirely from the profit and loss transfer agreement with Siemens
Healthcare GmbH, and therefore solely from affiliated compa-
nies. In connection with the profit transfer from Siemens
Healthcare GmbH, it should be noted that this represents the
profit for the short fiscal year from April 1 to September 30,
2018. The profit of Siemens Healthcare GmbH for its short
fiscal year
from October 1, 2017, to March 31, 2018 was trans-
ferred to Siemens AG.
NOTE 3 - Income from investments
from the profit transfer from Siemens Healthcare GmbH to
Siemens AG as of March 31, 2018.
Annual Financial Statements HGB | Siemens Healthineers AG
05
Other operating income substantially comprised reimburse-
ments by Siemens Aktiengesellschaft, Berlin and Munich,
("Siemens AG") of €0.7 million for the costs of share-based
payments awarded to Siemens Healthineers AG employees in
connection with the initial public offering (IPO). The associat-
ed expenses are recognized as either functional costs or as a
personnel expense. The cost reimbursement was provided on
the basis of an agreement entered into on March 1, 2018,
between Siemens Healthineers AG, Siemens Beteiligungsver-
waltung GmbH & Co. OHG, Grünwald, Germany, and Siemens
AG under which Siemens Healthineers AG was promised reim-
bursement of all costs reasonably necessary for the successful
completion of the IPO. The bulk of the costs of the IPO were
nevertheless incurred by Siemens Healthcare GmbH and were
assumed by Siemens AG by deducting the costs of the IPO
NOTE 2 - Other operating income and expenses
Revenue results entirely from providing management services
to affiliated companies, in the amount of €7 million.
Revenue is generated entirely from affiliated companies in
Germany.
Revenue
Notes to the Income Statement
NOTE 1 -
A.3.3
Classification of items in the Annual Financial Statements:
Siemens Healthineers AG aggregates individual line items in
the Income Statement and in the Balance Sheet if the individ-
ual line item is not material for providing a true and fair view
of the Company's financial position and if such an aggregation
improves clarity of presentation. Siemens Healthineers AG
discloses these items separately in the notes.
Deferred taxes are calculated for timing differences between
commercial and tax valuations of assets, liabilities and accruals
and deferrals. Any total representing a tax liability is recog-
nized as a deferred tax liability in the Balance Sheet. In the
event of a tax reduction, the associated capitalization option is
not exercised, and the amount is not capitalized.
Foreign currency translation: Receivables, other current assets,
cash and cash equivalents, provisions and liabilities as well as
commitments and contingencies denominated in foreign
currency are generally translated applying the mean spot ex-
change rate on the balance sheet date.
Other provisions are recognized in an appropriate and suffi-
cient amount to cover individual obligations for all identifiable
risks relating to liabilities of uncertain timing and amount,
taking account of price and cost increases expected to arise in
the future. Significant provi¬sions with a remaining term of
more than one year are discounted using a discount rate
which corresponds to the average market interest rate appro-
priate for the remaining term of the obligations, as calculated
and published by Deutsche Bundesbank.
the basis of biometric probabilities. The discount rate used for
discounting pension obligations corresponds to the average
market interest rate for instruments with an assumed remain-
ing maturity of 15 years as published by Deutsche Bundes-
bank.
Pensions and similar commitments: Siemens Healthineers AG
measures its pension obligations using the settlement amount
calculated with the actuarial projected unit credit method on
Proceeds from management services for affiliated companies
are recognized as revenue.
10.770
The year under report was a short fiscal year covering the
period from the founding of the Company on December 1,
2017, to September 30, 2018.
0
Notes
Dec 1,
Sept 30,
Annual Financial Statements HGB | Siemens Healthineers AG
Total shareholders' equity and liabilities
Other liabilities
Liabilities to affiliated companies
Trade payables
Other provisions
2018
Provision for pensions and similar commitments
Unappropriated net income
Capital reserve
Issued capital
Treasury shares
Subscribed capital
Shareholders' equity
Shareholders' equity and liabilities
Total assets
Prepaid expenses
Provisions
2017
Liabilities
14.399
1.000
8
0
0
1.000
0
12.493
11
14.965
0
0
0
14.399
0
479
0
566
9
0
566
86
51
5
2
P.E.T.NET Houston, LLC, Austin, TX / United States
-3
88
EPOCAL INC., Toronto / Canada
PETNET Indiana LLC, Indianapolis, IN / United States
100
0
100
50²
PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
1
3
63
PETNET Solutions, Inc., Knoxville, TN / United States
11
145
80
PhSiTh LLC, New Castle, DE / United States
3
8
−11
Dedicated 2Imaging LLC, Wilmington, DE / United States
N/A6
Siemens Medical Solutions Diagnostics Holding I B.V., The Hague / Netherlands
2.817
100
100
Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
0
0
100
Steiermärkische Medizinarchiv GesmbH, Graz / Austria
1
2
52
TRIXELL SAS, Moirans / France
225
385
25
Americas (26 companies)
Dade Behring Hong Kong Holdings Corporation, Tortola Virgin Islands, British
33
100
-5
N/A6
4
Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
Siemens Healthcare S.A.S., Tenjo / Colombia
Siemens Healthcare Servicios S. de R.L. de C.V., Mexico City / Mexico
Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
Siemens Molecular Imaging, Inc., Wilmington, DE / United States
Siemens S.A., Montevideo / Uruguay
Siemens-Healthcare Cia. Ltda., Quito / Ecuador
Annual Financial Statements HGB | Siemens Healthineers AG
Net income in
Equity in
millions of €1 millions of €¹
Equity
interest in %
0
0
99
125
6.714
100
8
248
100
1
1
100
71
2.502
100
Siemens Healthcare S.A.C., Surquillo / Peru
Siemens Healthcare S.A., Buenos Aires / Argentina
Siemens Healthcare Limited, Oakville / Canada
Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
19
136
100
1
The values correspond to the annual financial statements after
a possible profit transfer, for subsidiaries according to the
consolidated IFRS-closing.
2
Control due to a majority of voting rights.
3
Financial data for the short fiscal year November 10, 2017 -
September 30, 2018.
4
33
Financial data from local financial statements for the fiscal year
October 1, 2016 - September 30, 2017.
Financial data from local financial statements for the fiscal year
January 1, 2017 - December 31, 2017.
6
Usage of the exemption in accordance with Section 286 para. 3
sentence 2 German Commercial Code.
N/A = No data available.
16
September 30, 2018
SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A., Guatemala Guatemala
Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
Siemens Healthcare Diagnostics Manufacturing Limited, Grand Cayman / Cayman Islands
Siemens Healthcare Diagnostics S.A., San José / Costa Rica
Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City / Mexico
Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
5
83
15
100
34
51
Siemens Healthcare Logistics LLC, Cairo / Egypt
1
0
100
Siemens HealthCare Ltd., Rosh HaAyin / Israel
Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
Siemens Healthcare Nederland B.V., The Hague / Netherlands
1
3
100
2
8
100
1
117
100
Siemens Healthcare Oy, Espoo / Finland
Siemens Healthcare Proprietary Limited, Halfway House / South Africa
Siemens Healthcare S.A.E., Cairo / Egypt
Siemens Healthcare S.R.L., Bucharest Romania
22
7
100
30
1
6
Usage of the exemption in accordance with Section 286 para. 3
sentence 2 German Commercial Code.
N/A = No data available.
Annual Financial Statements HGB | Siemens Healthineers AG
September 30, 2018
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
Siemens Healthcare Limited, Frimley, Surrey / United Kingdom
Siemens Healthcare Limited, Riyadh / Saudi Arabia
Net income in
millions of €1 millions of €¹
Equity in
Equity
interest in %
1
2
100
6
6
100
-1
-3
100
-75
52
100
5
-2
100
Siemens Healthcare SAS, Saint-Denis / France
14
220
100
Siemens Healthcare Sp. z o.o., Warsaw / Poland
SIEMENS HEALTHCARE, S.L.U., Getafe / Spain
5
56
100
9
257
100
Siemens Healthcare, s.r.o., Prague / Czech Republic
5
38
100
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
2
90
-2
Siemens Healthcare SARL, Casablanca / Morocco
49
20
38
75
3
6
100
1
10
100
Siemens Healthcare S.r.l., Milan / Italy
10
Siemens Healthineers Holding III B.V., The Hague / Netherlands
239
Siemens Healthcare s.r.o., Bratislava / Slovakia
2
-2
100
Siemens Healthcare SA/NV, Beersel / Belgium
11
87
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Turkey
5
100
16
ters:
-1
Siemens Shanghai Medical Equipment Ltd., Shanghai / China
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
Annual Financial Statements HGB | Siemens Healthineers AG
Net income in
Equity in
millions of €1 millions of €¹
Equity
interest in %
41
92
100
48
100
100
4
7
90
2
20
100
1
The values correspond to the annual financial statements after
a possible profit transfer, for subsidiaries according to the
consolidated IFRS-closing.
2
September 30, 2018
Control due to a majority of voting rights.
17
Usage of the exemption in accordance with Section 286 para. 3
sentence 2 German Commercial Code.
100
15
90
100
3
6
100
48
74
100
1
The values correspond to the annual financial statements after
a possible profit transfer, for subsidiaries according to the
consolidated IFRS-closing.
2
Control due to a majority of voting rights.
3
Financial data for the short fiscal year November 10, 2017 -
September 30, 2018.
4
Financial data from local financial statements for the fiscal year
October 1, 2016 - September 30, 2017.
5
Financial data from local financial statements for the fiscal year
January 1, 2017 - December 31, 2017.
6
N/A = No data available.
3
Financial data for the short fiscal year November 10, 2017 -
September 30, 2018.
4
Report on the audit of the annual financial statements and of
the management report
Opinions
We have audited the annual financial statements of Siemens
Healthineers AG, Munich, which comprise the income state-
ment for the short fiscal year from December 1, 2017 to Sep-
tember 30, 2018, the balance sheet as of September 30, 2018
and the notes to the financial statements, including the
recognition and measurement policies presented therein. In
addition, we have audited the management report of Siemens
Healthineers AG, which is combined with the group manage-
ment report. In accordance with the German legal require-
ments we have not audited the content of chapter A.11.3
"Corporate Governance statement" of the Combined Manage-
ment Report, including chapter C.3.2 of the Annual Report
2018 referred to in chapter A.11.3.
In our opinion, on the basis of the knowledge obtained in the
audit,
•
•
the accompanying annual financial statements comply, in
all material respects, with the requirements of German
commercial law applicable to business corporations and
give a true and fair view of the assets, liabilities and finan-
cial position of the Company as of September 30, 2018 and
of its financial performance for the short fiscal year from
December 1, 2017 to September 30, 2018 in compliance
with German legally required accounting principles, and
the accompanying management report as a whole provides
an appropriate view of the Company's position. In all mate-
rial respects, this management report is consistent with the
annual financial statements, complies with German legal
requirements and appropriately presents the opportunities
and risks of future development. Our opinion on the man-
agement report does not cover the content of the Corporate
Governance statement referred to above.
Pursuant to Sec. 322 (3) Sentence 1 HGB ["Han-
delsgesetzbuch": German Commercial Code], we declare that
our audit has not led to any reservations relating to the legal
compliance of the annual financial statements and of the
management report.
Basis for the opinions
We conducted our audit of the annual financial statements
and of the management report in accordance with Sec. 317
HGB and the EU Audit Regulation (No 537/2014, referred to
subsequently as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
tute of Public Auditors in Germany] (IDW). In conducting the
audit of the annual financial statements we also complied with
International Standards on Auditing (ISA). Our responsibilities
under those requirements, principles and standards are further
described in the "Auditor's responsibilities for the audit of the
annual financial statements and of the management report"
section of our auditor's report. We are independent of the
Company in accordance with the requirements of European
law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in accord-
ance with Art. 10 (2) f) of the EU Audit Regulation, we declare
that we have not provided non-audit services prohibited under
Art. 5 (1) of the EU Audit Regulation. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions on the annual financial state-
ments and on the management report.
Key audit matters in the audit of the annual financial
statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the annual
financial statements for the short fiscal year from December 1,
2017 to September 30, 2018. These matters were addressed
in the context of our audit of the annual financial statements
as a whole, and in forming our opinion thereon; we do not
provide a separate opinion on these matters.
Below, we describe what we consider to be the key audit mat-
Financial data from local financial statements for the fiscal year
January 1, 2017 - December 31, 2017.
Impairment of non-current financial assets
Reasons why the matter was determined to be a key audit
matter: The impairment test of non-current financial assets,
especially of shares in affiliated companies, entails an elevated
risk of material misstatement due to the materiality of these
assets as well as the judgment involved in assessing whether
there is objective evidence to indicate a lower net realizable
value and permanent impairment. The valuations also depend
to a large extent on the estimate of future cash inflows and
the discount rate applied. Consequently, the impairment of
non-current financial assets was a key audit matter.
Auditor's response: With regard to the lower net realizable
value determined and the assessment of permanent impair-
ment by management, we examined the underlying processes
and controls used to determine net realizable values and ex-
amined the process for budgeting future cash flows. With the
help of internal valuation experts, we obtained an understand-
ing of the underlying valuation models used to determine net
realizable value both methodologically and arithmetically. We
also examined whether the budget planning reflects general
and industry-specific market expectations.
We performed a budget to actual comparison of the historical-
ly forecasted data and the actual results on a sample basis to
assess forecast accuracy. We examined the inputs used to
estimate net realizable value, such as the estimated growth
rates and the weighted average cost of capital, comparing
them with publicly available market data and assessing them
in light of changes in key assumptions, including future market
conditions.
Our audit procedures did not lead to any reservations relating
to the impairment of non-current financial assets.
Reference to related disclosures: With regard to the recogni-
tion and measurement policies applied in relation to the im-
pairment of non-current financial statements, refer to chapter
A.3.2 Accounting policies and methods in the notes to the
financial statements.
20
To Siemens Healthineers AG, Munich
B.2 Independent Auditor's Report
Annual Financial Statements HGB | Siemens Healthineers AG
19
Financial data from local financial statements for the fiscal year
October 1, 2016 - September 30, 2017.
5
Financial data from local financial statements for the fiscal year
January 1, 2017 - December 31, 2017.
6
Usage of the exemption in accordance with Section 286 para. 3
sentence 2 German Commercial Code.
N/A No data available.
18
Additional Information
B.1
Responsibility Statement
-20
Annual Financial Statements HGB | Siemens Healthineers AG
Munich, November 19, 2018
Siemens Healthineers AG
Der Vorstand
J. Montan
Dr. Bernhard Montag
1.
Schmit
Dr. Jochen Schmitz
Materia
Michael Reitermann
To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for
Siemens Healthineers AG, which has been combined with the Group Management Report, includes a fair review of the develop-
ment and performance of the business and the position of the Company, together with a description of the material opportuni-
ties and risks associated with the expected development of the Company.
100
4
Siemens Healthcare Pty. Ltd., Melbourne / Australia
100
0
3
100
0
3
100
Asia, Australia (24 companies)
Acrorad Co., Ltd., Okinawa / Japan
1
28
63
DPC (Tianjin) Co., Ltd., Tianjin / China
0
0
100
PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
0
3
100
Siemens Healthcare Diagnostics (Shanghai) Co. Ltd., Shanghai / China
-102
42
-4
4.924
4
100
12
71
100
-2
18
100
1
1
100
1
20
100
0
4
100
1
1
100
-47
100
317
100
Siemens Healthcare Diagnostics K.K., Tokyo / Japan
Siemens Healthcare Limited, Hong Kong / Hong Kong
Siemens Healthcare Limited, Taipei / Taiwan, Province of China
Siemens Healthcare Ltd., Dhaka / Bangladesh
4
7
100
6
22
100
1
3
100
Siemens Healthcare Ltd., Shanghai / China
Siemens Healthcare Private Limited, Mumbai / India
71
117
100
7
-54
100
Siemens Healthcare Pte. Ltd., Singapore / Singapore
100
2
0
Siemens Healthcare Limited, Ho Chi Minh City / Viet Nam
4
200
100
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
-1
14
100
Siemens Healthcare Inc., Manila / Philippines
0
4
Siemens Healthcare Sdn. Bhd., Petaling Jaya Malaysia
Siemens Healthineers Ltd., Seoul / Korea, Republic of
100
37
222
100
Siemens Healthcare Limited, Auckland / New Zealand
12
100
Siemens Healthcare Limited, Bangkok/Thailand
2
7
100
Siemens Healthcare K.K., Tokyo / Japan
5
2
4
Employee in the Finance Department of
Siemens AG
• evosoft GmbH
Positions outside Germany:
⚫evosoft kft, Hungary
Members of the Supervisory Board
The Supervisory Board of Siemens Healthineers AG has nine
members. All members are appointed by the Shareholders'
Meeting and represent the shareholders. Under the German
rules for employee co-determination in companies, Siemens
Healthineers AG is not required to appoint a Supervisory Board
that includes employee representatives, as Siemens
Healthineers AG has fewer than the required number of em-
ployees. Consistently with the German provisions for employee
co-determination in companies, employees at other entities of
the Group are not attributed to Siemens Healthineers AG.
In the 2018 short fiscal year, the Supervisory Board had the
following members:
13
Name
Michael Sen
Chairman
Occupation
Year of birth
Member of the
Managing Board
1968
of Siemens AG
Dr. Norbert Gaus
Deputy Chairman
Annual Financial Statements HGB | Siemens Healthineers AG
Member since
03/01/2018
Memberships in supervisory boards whose establishment is required
by law or in comparable domestic or foreign controlling bodies of
business enterprises
(as of September 30, 2018)
None
German positions:
German positions:
12/01/2017
United Kingdom (Chairman)
(until 08/31/2018)
• Siemens AB, Sweden
(until 08/31/2018)
Michael Reitermann
1962
03/01/2018
02/28/2021
Positions outside Germany:
None
Member of the Managing Board, President
of the Segment Diagnostics
• Siemens Foundation, USA
Carina Schätzl
1987
12/01/2017
02/28/2018
None
Employee in the Finance Department of
Siemens AG
None
Wolfgang Seltmann
1963
02/28/2018
•
Siemens Healthcare GmbH (Chairman)
Positions outside Germany:
CEO of
Karl-Heinz Streibich
DeepHealth, Inc.
President of
acatech-Deut-
sche Akademie
der Technikwis-
senschaften
Dr. Ralf P. Thomas
Member of the
Managing Board
of Siemens AG
(Chief Financial
Officer)
Peter Kastenmeier
Chairman
(until 02/28/2018)
ment of
Steffen Großberger
Deputy Chairman
(until 02/28/2018)
1952
03/01/2018
1961
03/01/2018
Teamlead in the
Finance Depart-
1960
12/01/2017
Siemens AG
German positions:
⚫ evosoft GmbH (Chairman)
Positions outside Germany:
• evosoft kft, Hungary (Chairman)
President and
03/01/2018
1962
Executive Chair-
man of IMRIS
(Deerfield Imag-
ing, Inc.) and
• Siemens Gamesa Renewable Energy, S.A., Spain
Executive Vice
President Corpo-
rate Technology
of Siemens AG
1961
03/01/2018
Dr. Marion Helmes
Business Con-
sultant
1965
03/01/2018
Dr. Andreas C. Hoffmann
General Counsel
•Siemens Holdings plc,
1964
of Siemens AG
Dr. Philipp Rösler
Chief Executive
Officer of Hainan
Cihang Charity
Foundation Inc.
1973
03/02/2018
Dr. Nathalie von Siemens
Dr. Gregory Sorensen
Managing Direc-
tor and Spokes-
person of Sie-
mens Stiftung
1971
03/01/2018
03/01/2018
German positions:
(Chairman) (until 08/31/2018)
Positions outside Germany:
•Siemens Sp. z o.o, Polen
225.702
0
0
225.702
NOTE 16 - Personnel expenses
Personnel expenses did not include the expense for com-
pounding the interest on the pension and personnel-related
expenses, which are included in other financial income (ex-
penses), net.
Short
fiscal year
(in millions of €)
2018
Wages and salaries
-10
Social security contributions and expenses for other employee
benefits
-0
Expenses for / Income from pensions
Personnel expenses
-1
-12
During the 2018 short fiscal year, the Company had an aver-
age of 27 employees, who were engaged solely in administra-
tive functions. The average percentage of women was 7%.
NOTE 17
-
Share-based payment
Siemens Healthineers AG allows employees and members of
the Managing Board to participate in share--based payment
programs. For the purpose of servicing share¬-based payment
programs Siemens Healthineers AG also delivers Siemens
Healthineers shares that have been granted by affiliated com-
panies.
0
Stock awards
2018
Short
Financial data from local financial statements for the fiscal year
October 1, 2016 - September 30, 2017.
A.3.5 Other disclosures
NOTE 15 - Material expenses
(in millions of €)
Expenses for raw materials, supplies and purchased
merchandise
Costs of purchased services
Material expenses
Annual Financial Statements HGB | Siemens Healthineers AG
The following table shows the changes in the stock awards
held by members of the senior management and other eligible
employees of Siemens Healthineers AG:
Short
fiscal year
(in number of shares)
2018
Non-vested, beginning of fiscal year
-67
Granted
-337
Forfeited
-404
Settled
Non-vested, end of fiscal year
fiscal year
Siemens Healthineers AG grants stock awards to members of
the Managing Board, members of the senior management and
other eligible employees.
Stock awards to beneficiaries of Siemens Healthineers AG are
expensed as incurred over the vesting period and are meas-
ured at the intrinsic value (= share price of Siemens Healthi-
neers stock) on a pro rata basis for the proportion of the vest-
ing period expired considering the estimated target attain-
ment at the balance sheet date. The number of shares for
some of the stock awards is not known because the grant and
number of these awards still depends on attaining certain
targets. The provision for these awards is formed on the basis
of the projected number of stock awards to be issued. The
estimate of the numbers took account of the estimated target
attainment and other performance terms.
Additionally, 15,184 stock awards with cash settlement were
granted during the 2018 short fiscal year.
NOTE 23 - Declaration of Compliance with the Ger-
man Corporate Governance Code
As of September 30, 2018, the mandatory statement pursuant
to Section 161 of the German Stock Corporation Act (AktG)
has been issued by the Managing Board and the Supervisory
Board and is accessible to the public on the Company's website
at https://www.corporate.siemens-healthineers.com/investor-
relations/corporate-governance.
12
NOTE 25- Members of the Supervisory Board and
Managing Board and their mandates
Members of the Managing Board
In the 2018 short fiscal year, the Managing Board had the
following members:
Name and occupation
Dr. Bernhard Montag
Chairman
Year of birth
1969
First appointed
03/01/2018
Term expires
02/28/2021
Annual Financial Statements HGB | Siemens Healthineers AG
Memberships in supervisory boards whose establishment is
required by law or in comparable domestic or foreign controlling
bodies of business enterprises
External positions
(as of September 30, 2018)
None
Group company positions
(as of September 30, 2018)
None
Dr. Jochen Schmitz
1966
03/01/2018
02/28/2021
Chief Financial Officer
Information regarding the remuneration of the members of
the Managing Board and Supervisory Board is disclosed on an
individual basis in the Compensation Report, which is part of
the Combined Management Report (Section A.12).
Remuneration of the members of the Supervisory Board
Compensation attributable to members of the Supervisory
Board comprises a base compensation and additional compen-
sation for committee work, and amounted to €0.6 million
(including meeting fees).
Therefore the compensation and benefits attributable to
members of the Managing Board amounted to €6.6 million in
total.
Remuneration of the members of the Managing Board
Members of the Managing Board received cash compensation
of €2.5 million. The fair value of stock-based compensation
amounted to €3.4 million for 120,097 Stock Awards. The Com-
pany granted contributions (including one-time special contri-
butions) under the BSAV to members of the Managing Board
totaling €0.7 million.
The pro rata intrinsic value of all stock awards issued to bene-
ficiaries of Siemens Healthineers AG amounted to €2 million at
the balance sheet date.
Bonus shares
Under the "My IPO Shares" employee share program, which
was offered on a one-time basis on the occasion of the initial
public offering (IPO), plan participants were entitled to bonus
shares depending on the amount of their investment, with a
maximum permitted investment of €2,500 per plan partici-
pant. Up to an investment of €1,000, plan participants re-
ceived bonus shares worth 30% of the investment amount. For
any further investment of up to €1,500, the plan participants
received bonus shares worth 10% of this additional investment
amount; in other words, bonus shares worth a maximum €450
per plan participant were granted.
The "My IPO Shares" employee share program was settled on
September 14, 2018, so that on that date 323 bonus shares
worth €12 thousand were issued to employees of Siemens
Healthineers AG.
NOTE 18-Guarantees and other commitments
For two subsidiaries Siemens Healthineers AG has undertaken
under unrestricted letters of comfort to be responsible for all
liabilities recognized in these subsidiaries' Annual Financial
Statements for fiscal year 2018, within the meaning of Section
264 para. 3 sentence 1 No. 2 of the German Commercial Code,
that were undertaken by these subsidiaries up to the reporting
date of September 30, 2018. These liabilities comprise the
liabilities and provisions recognized in the Balance Sheets of
these subsidiaries' Annual Financial Statements as of Septem-
ber 30, 2018, as well as the off-balance-sheet contingent
liabilities and liabilities from pending transactions. The letters
of comfort and the associated responsibility obligations will
end at the end of fiscal year 2019.
11
Annual Financial Statements HGB | Siemens Healthineers AG
subsidiaries will be able to fulfill their obligations themselves.
For this reason, the Company does not consider it probable
that it will be called upon to perform in conjunction with any
of the commitments described above.
NOTE 19
None
-
There were no payment obligations under leasing and rental
arrangements.
NOTE 20 - Other financial obligations
There were no other financial obligations at the balance sheet
date.
NOTE 21 Proposal for the appropriation of net in-
come
NOTE 24 - Group affiliation
Siemens Healthineers AG itself prepares the Consolidated
Financial Statements for the smallest group of consolidated
companies to which it belongs. Pursuant to Section 290 para.
1 of the German Commercial Code, it is also included in the
Consolidated Financial Statements of Siemens AG (registered
offices in Munich and Berlin, Berlin Charlottenburg Local Court
HRB 12300), as the largest consolidated group.
The Consolidated Financial Statements are published in the
electronic version of the German Federal Gazette.
The Supervisory Board and the Managing Board propose that
the unappropriated net income of Siemens Healthineers AG for
the past short fiscal year 2018, amounting to €723 million, be
appropriated as follows: Distribution of a dividend of €0.70 on
each share of no par value entitled to the dividend, and carry-
forward of the remaining amount.
NOTE 22 -Remuneration of the members of the
Managing Board and the Supervisory Board
Financial payment obligations under leas-
ing and rental arrangements
•
Siemens Healthineers AG enters into contingent liabilities only
after careful consideration of the risks concerned. Based on an
ongoing risk evaluation of the arrangements entered into and
taking into account all information available up to the date on
which the Annual Financial Statements were prepared, Sie-
mens Healthineers AG currently concludes that the relevant
Uniper SE
1
100
19
1.330
100
−1
-2
100
4
27
100
5
33
100
3
120
100
4
35
100
0
1
1
45
45
0
20
100
Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
Medical Systems S.p.A., Genoa / Italy
PETNET Solutions SAS, Lisses / France
Siemens Diagnostics Holding II B.V., The Hague / Netherlands
Siemens Healthcare (Private) Limited, Lahore / Pakistan
Siemens Healthcare A/S, Ballerup / Denmark
Siemens Healthcare AB, Solna / Sweden
Siemens Healthcare AG, Zurich / Switzerland
Siemens Healthcare AS, Oslo / Norway
Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
Siemens Healthcare d.o.o., Ljubljana / Slovenia
-144
564
31
0
ProSiebenSat. 1 Media SE (Vice Chairwoman)
69
1055
100
1
3
Siemens Healthcare Industrial and Commercial Société Anonyme, Athens / Greece
Siemens Healthcare Kft., Budapest / Hungary
Siemens Healthcare L.L.C., Dubai / United Arab Emirates
4
3
100
1
56
100
2
3
100
10
-46
49
1
The values correspond to the annual financial statements after
2
Control due to a majority of voting rights.
3
a possible profit transfer, for subsidiaries according to the
consolidated IFRS-closing.
Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
100
3
1
100
Siemens Healthcare d.o.o., Zagreb / Croatia
1
0
100
Siemens Healthcare Diagnostics GmbH, Vienna / Austria
0
105
100
Siemens Healthcare Diagnostics Ltd., Frimley, Surrey / United Kingdom
100
3
100
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey / United Kingdom
5
174
100
Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey / United Kingdom
4
165
100
Siemens Healthcare EOOD, Sofia / Bulgaria
53
76
3
100
German positions:
0
Employee in the
1972
12/01/2017
None
Finance Depart-
ment of
Siemens AG
Martin Rohbogner
(until 02/28/2018)
ment of
Employee in the
Finance Depart-
1978
12/01/2017
None
Siemens AG
14
Annual Financial Statements HGB | Siemens Healthineers AG
NOTE 26 - List of subsidiaries and associated companies pursuant to Section 285 para. 11 of the German
Commercial Code
September 30, 2018
Germany (11 companies)
• Siemens Gamesa Renewable Energy, S.A., Spain
Siemens Corp., USA (Deputy Chairman)
Siemens Aktiengesellschaft Österreich, Austria
Positions outside Germany:
Positions outside Germany:
⚫British American Tobacco p.l.c., United Kingdom
• Heineken N.V., The Netherlands
None
German positions:
• Bertelsmann Stiftung
• Jacobs University Bremen
German positions:
• Messer Group GmbH
Siemens AG
• Siemens Healthcare GmbH
Befund24 GmbH, Erlangen / Germany
Positions outside Germany:
• DFB Healthcare Acquisitions Corp., USA
German positions:
• Dürr AG (Chairman)
• Deutsche Telekom AG
• Deutsche Messe AG
•
Wittenstein SE
German positions:
•
Siemens Healthcare GmbH
• Fusion Healthcare Staffing, LLC, USA (Chairman)
• Invicro, LLC, USA
Dade Behring Grundstücks GmbH, Marburg / Germany
• Flender GmbH, Bocholt (since February 1, 2018)
NEO New Oncology GmbH, Cologne / Germany
34
786
100
-332
1.208
100
-3
12.898
100
6
34
100
16
121
94
Europe, Commonwealth of Independent States (C. I. S.), Africa, Middle East (EMEA) (without Germany)
(53 companies)
Fast Track Diagnostics Ltd, Sliema / Malta
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
MeVis BreastCare GmbH & Co. KG, Bremen / Germany
2
21
100
1.089
FTD Europe Ltd, Sliema / Malta
100
44
Siemens Healthcare Diagnostics GmbH, Eschborn / Germany
Siemens Healthineers Beteiligungen GmbH & Co. KG, Kemnath / Germany
Siemens Medical Solutions Health Services GmbH, Grünwald / Germany
Siemens Real Estate GmbH & Co. KG, Kemnath / Germany
Net income in
millions of €1
Equity in
millions of €1
Equity
interest in %
03
23
70
-1
Siemens Healthcare Diagnostics Holding GmbH, Eschborn / Germany
Siemens Healthcare Diagnostics Products GmbH, Marburg / Germany
Siemens Healthcare GmbH, Munich / Germany
94
14
44
49
Financial data for the short fiscal year November 10, 2017 -
September 30, 2018.
-7
29
100
206
7
36
German Public Auditor responsible for the engagement
The German Public Auditor responsible for the engagement is
Thomas Spannagl.
Munich, November 19, 2018
Annual Financial Statements HGB | Siemens Healthineers AG
Spannagl
Wirtschaftsprüfungsgesellschaft
bunch
Wirtschaftsprüfer
Ernst & Young GmbH
In addition to auditing the statutory financial statements of
Siemens Healthineers AG, we performed the statutory audit of
the Siemens Healthineers' consolidated financial statements,
audits of financial statements of subsidiaries of Siemens
Healthineers AG, reviews of interim financial statements being
integrated into the audit and project-accompanying IT audits.
Other attestation services include primarily a post-foundation
audit, an audit of a capital increase with contribution in kind
and other contractually agreed attestation services. Permissi-
ble tax services were performed to a minor extent.
We were elected as auditor by the Annual Shareholders' Meet-
ing on February 19, 2018. We were engaged by the Superviso-
ry Board on April 24, 2018. We have been the auditor of Sie-
mens Healthineers AG since the short fiscal year from Decem-
ber 1, 2017 to September 30, 2018.
22
In addition to the financial statement audit, we have provided
to the Company or entities controlled by it the following ser-
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the audit commit-
tee pursuant to Art. 11 of the EU Audit Regulation (long-form
audit report).
Further information pursuant to Art. 10 of the EU Audit
Regulation
Other legal and regulatory requirements
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships
and other matters that may reasonably be thought to bear on
our independence and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the annual financial statements of
the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of
the audit and significant audit findings, including any signifi-
cant deficiencies in internal control that we identify during our
audit.
[German Public Auditor]
• Perform audit procedures on the prospective information
presented by management in the management report. On
the basis of sufficient appropriate audit evidence we evalu-
ate, in particular, the significant assumptions used by man-
agement as a basis for the prospective information, and
evaluate the proper derivation of the prospective infor-
mation from these assumptions. We do not express a sepa-
rate opinion on the prospective information and on the as-
sumptions used as a basis. There is a substantial unavoida-
ble risk that future events will differ materially from the
prospective information.
vices that are not disclosed in the annual financial statements
or in the management report:
Tropschug
Internet: siemens-healthineers.com
[German Public Auditor]
SIEMENS
Healthineers
siemens-healthineers.com
Annual Financial Statements HGB | Siemens Healthineers AG
24
24
O Siemens Healthineers AG, 2018
Phone +49 9131 84-0
siemens-healthineers.com
Henkestraße 127
D-91052 Erlangen
Siemens Healthineers AG
Investor Relations: www.corporate.siemens-healthineers.com/investor-relations
Press: siemens-healthineers.com/press-room
For technical reasons, there may be differences between the accounting records appearing in this document and those published
pursuant to legal requirements.
This document is an English language translation of the German document. In case of discrepancies, the German language doc-
ument is the sole authoritative and universally valid version.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
Further Information
B.3
Annual Financial Statements HGB | Siemens Healthineers AG
223
23
Wirtschaftsprüferin
Evaluate the overall presentation, structure and content of
the annual financial statements, including the disclosures,
and whether the annual financial statements present the
underlying transactions and events in a manner that the
annual financial statements give a true and fair view of the
assets, liabilities, financial position and financial perfor-
mance of the Company in compliance with German legally
required accounting principles;
• Evaluate the consistency of the management report with
the annual financial statements, its conformity with Ger-
man law, and the view of the Company's position it pro-
vides;
•
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
Our opinions on the annual financial statements and on the
management report do not cover the other information, and
consequently we do not express an opinion or any other
form of assurance conclusion thereon.
The notes and forward-looking statements in chapter C.4 of
the Annual report 2018.
•
Corporate Governance in chapter C.3 of the Annual report
2018, and
•
• The Report of the Supervisory Board in the Annual Report
2018
• The Responsibility Statement in chapter C.1 of the Annual
Report 2018
The notes in chapter B.3 of the report "Annual Financial
Statements for the short fiscal year from December 1, 2017
to September 30, 2018"
• The Responsibility Statement according to Sec. 264 (2)
Sentence 3 and Sec. 289 (1) Sentence 5 HGB in chapter B.1
of the report "Annual Financial Statements for the short fis-
cal year from December 1, 2017 to September 30, 2018"
The other information, of which we received a version prior
to issuing the auditor's report, includes:
The Supervisory Board is responsible for the Report of the
Supervisory Board in the Annual Report 2018. In all other
respects, management is responsible for the other infor-
mation.
Other information
Reference to related disclosures: With regard to the recogni-
tion and measurement policies applied in accounting for in-
come taxes, refer to chapter A.3.2 Accounting policies and
methods and chapter A.3.3 Notes to the income statement
Note 6 Income taxes and with respect to disclosures for de-
ferred tax assets, refer to chapter A.3.4 Notes to the balance
sheet, Note 10 Deferred tax assets in the notes to the financial
statements.
Our audit procedures did not lead to any reservations relating
to the accounting for uncertain tax positions and the assess-
ment of deferred taxes.
Reasons why the matter was determined to be a key audit
matter: The accounting for uncertain tax positions as well as
deferred taxes requires management to exercise considerable
judgment and make estimates and assumptions, and was
therefore a key audit matter. In particular, this relates to the
measurement and completeness of uncertain tax position.
Auditor's response: With the assistance of internal tax special-
ists who have knowledge of relevant tax law, we examined the
processes installed by management to identify, recognize and
measure tax positions. In the course of our audit procedures
relating to uncertain tax positions, we evaluated whether
management's assessment of the tax implications of signifi-
cant business transactions or events in the short fiscal year
2018, which could result in uncertain tax positions or influ-
ence the measurement of existing uncertain tax positions, was
in compliance with tax law. This includes, in particular, tax
effects from the acquisition or disposal of businesses, corpo-
rate (intragroup) restructuring activities, and cross-border
transactions including the determination of transfer prices. We
also obtained confirmations from external tax advisors to
assess measurement and completeness. Further, we evaluated
management's assessments with respect to the prospects of
success of appeal and tax court proceedings by inquiring of
the Siemens Healthineers tax department and by considering
current tax case law.
Uncertain tax positions and deferred taxes
Annual Financial Statements HGB | Siemens Healthineers AG
may cause the Company to cease to be able to continue as
a going concern;
•
is materially inconsistent with the annual financial state-
ments, with the management report or our knowledge ob-
tained in the audit, or
•
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to re-
port in this regard.
Conclude on the appropriateness of management's use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty ex-
ists related to events or conditions that may cast significant
doubt on the Company's ability to continue as a going con-
cern. If we conclude that a material uncertainty exists, we
are required to draw attention in the auditor's report to the
related disclosures in the annual financial statements and in
the management report or, if such disclosures are inade-
quate, to modify our respective opinions. Our conclusions
are based on the audit evidence obtained up to the date of
our auditor's report. However, future events or conditions
otherwise appears to be materially misstated.
Evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
the management and related disclosures;
Obtain an understanding of internal control relevant to the
audit of the annual financial statements and of arrange-
ments and measures (systems) relevant to the audit of the
management report in order to design audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of
these systems of the Company;
Identify and assess the risks of material misstatement of the
annual financial statements and the management report,
whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evi-
dence that is sufficient and appropriate to provide a basis
for our opinions. The risk of not detecting a material mis-
statement resulting from fraud is higher than for one result-
ing from error, as fraud may involve collusion, forgery, in-
tentional omissions, misrepresentations, or the override of
internal control;
.•
•
•
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Our objectives are to obtain reasonable assurance about
whether the annual financial statements as a whole are free
from material misstatement, whether due to fraud or error,
and whether the management report as a whole provides an
appropriate view of the Company's position and, in all material
respects, is consistent with the annual financial statements
and the knowledge obtained in the audit, complies with the
German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to
issue an auditor's report that includes our opinions on the
annual financial statements and the management report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with
Sec. 317 HGB and the EU Audit Regulation as well as in com-
pliance with German Generally Accepted Standards for Finan-
cial Statement Audits promulgated by the IDW and in supple-
mentary compliance with ISA will always detect a material
misstatement. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these annual financial
statements and this management report.
•
annual financial statements and the management re-
port
Responsibilities of management and the Supervisory
Board for the annual financial statements and the man-
agement report
error.
In preparing the annual financial statements, management is
responsible for assessing the Company's ability to continue
as a going concern. It also has the responsibility for disclos-
ing, as applicable, matters related to going concern. In addi-
tion, it is responsible for financial reporting based on the
going concern basis of accounting, provided no actual or
legal circumstances conflict therewith.
Furthermore, management is responsible for the preparation
of the management report that, as a whole, provides an
appropriate view of the Company's position and is, in all
material respects, consistent with the annual financial
statements, complies with German legal requirements and
appropriately presents the opportunities and risks of future
development. In addition, management is responsible for
such arrangements and measures (systems) as it has consid-
ered necessary to enable the preparation of a management
report that is in accordance with the applicable German legal
requirements, and to be able to provide sufficient appropri-
ate evidence for the assertions in the management report.
The Supervisory Board is responsible for overseeing the
Company's financial reporting process for the preparation of
the annual financial statements and of the management
report.
Management is responsible for the preparation of the annual
financial statements that comply, in all material respects,
with the requirements of German commercial law applicable
to business corporations, and that the annual financial
statements give a true and fair view of the assets, liabilities,
financial position and financial performance of the Company
in compliance with the German legally required accounting
principles. In addition, management is responsible for such
internal control as it, in accordance with German legally
required accounting principles, has determined necessary to
enable the preparation of annual financial statements that
are free from material misstatement, whether due to fraud or
Annual Financial Statements HGB | Siemens Healthineers AG
Auditor's responsibilities for the audit of the
21
Financial assets
amortization
Carrying amount
10/1/2018
Additions Disposals 9/30/2019
10/1/2018
Depreciation/
Accumulated Impairment
Acquisition costs
Summary
Note 7
Property, plant and equipment
(in millions of €)
Note 8 Non-current assets
Notes to the Balance Sheet
A.3.4
Other taxes amounting to €252 thousand (previous year:
€31 thousand) are included in the relevant functional costs.
Other financial income primarily included interest income of
€1 million from the measurement of pension provisions (previous
year: €1 million). Both the interest component of the change in
pension provisions and the financial expenses relating to person-
Other taxes
-508
9/30/2019
Other equipment, plant and office
equipment
9/30/2019 9/30/2018
0
0
0
0
-1,353
0
0
Loans
14,399
16,185
16,185
-613
2,400
14,399
Shares in affiliated companies
0
0
0
0
0
0
0
0
0
Other financial income (expenses), net
10
Income taxes included only current income taxes resulting from
corporate income tax and trade tax, because the surplus of de-
ferred tax assets was not recognized owing to the exercise of the
option under Section 274 para. 1 sentence 2 of the German Com-
mercial Code.
Note 3 Income from investments
Other operating income substantially comprised a non-recurring
reimbursement by Siemens Aktiengesellschaft, Berlin and
Munich, ("Siemens AG") amounting to €5 million. This item also
included other reimbursements by Siemens AG for the cost of
share-based payments awarded to employees of Siemens
Healthineers AG as part of the IPO Incentive in the amount of
€1 million (previous year: €1 million). The associated expenses
are recognized within functional costs respectively personnel ex-
penses.
Note 2 Other operating income
Revenue is generated entirely from affiliated companies in
Germany.
Revenue results solely from providing management services to af-
filiated companies, in the amount of €14 million (previous year:
€7 million).
Note 1 Revenue
A.3.3 Notes to the Income Statement
In the previous year, the net income and equity figures in the list
of subsidiaries and associated companies were generally from the
consolidated IFRS-closing of the relevant company after profit
transfer, if any. To make this financial data more informative, the
net income and equity (after profit transfer, if any) figures that
are disclosed from this fiscal year onward are generally derived
from the annual financial statements of the relevant company
prepared according to local accounting principles. For this reason,
the figures for net income and equity in the list of subsidiaries
and associated companies are not comparable with those of the
prior year. This change did not affect the net assets, financial
position and results of operations of Siemens Healthineers AG.
Classification of items in the Annual Financial Statements: Siemens
Healthineers AG aggregates individual line items in the Income
Statement and in the Balance Sheet if the individual line item is
not material for providing a true and fair view of the Company's
financial position and if such an aggregation improves clarity of
presentation. Siemens Healthineers AG discloses these items
separately in the notes.
Deferred taxes are calculated for timing differences between valu-
ations in accordance with the German Commercial Code and tax
valuations of assets, liabilities and accruals and deferrals. Any
total representing a tax liability is recognized as a deferred tax
liability in the Balance Sheet. In case of a tax reduction, the
capitalization option is not exercised, and the amount is not
capitalized.
Income from investments, totaling €1,415 million (previous year:
€472 million), derived entirely from the profit and loss transfer
agreement with Siemens Healthcare GmbH, and therefore solely
from affiliated companies.
The option of applying hedge accounting is exercised on a case by
case basis. All derivative financial instruments in these Annual
Financial Statements were used for hedging purposes and com-
bined with the hedged items into hedges. Hedges are recognized
using the net hedge presentation method (Einfrierungsmethode).
Forward exchange contracts are generally designated as hedges
as a whole. In this case, when hedge accounting is applied, the
changes in the value of the hedged items and of the spot compo-
nents of the forward exchange contracts are offset. Only a net
negative amount from the ineffective portion of the change in
market value is recognized as a provision. The unrealized gains
and losses from the effective portion cancel each other out and
are not recognized either in the Balance Sheet or in the Income
Statement. The forward components at inception of forward
exchange contracts are recognized pro rata temporis over the
term of the forward as an adjustment of interest expenses, if they
are accounted for as a hedge of an interest-bearing liability. If the
forward component in this case results in a discount from the
spot rate, this is reported under other assets as long as the pre-
sentation as a receivable from affiliated companies does not take
precedent.
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
06
Distributions from other entities are presented as income from
investments if they do not demonstrably relate to reserves arising
prior to the acquisition of the investment or a repayment of pre-
vious capital increases or additional capital contributions.
Other provisions are recognized in an appropriate and sufficient
amount to cover individual obligations for all identifiable risks
relating to liabilities of uncertain timing and amount, taking ac-
count of price and cost increases expected to arise in the future.
Significant provisions with a remaining term of more than one
year are discounted using a discount rate which corresponds to
the average market interest rate appropriate for the remaining
term of the obligations, as calculated and published by Deutsche
Bundesbank.
Pensions and similar commitments: Siemens Healthineers AG mea-
sures its pension obligations using the settlement amount calcu-
lated with the actuarial projected unit credit method on the basis
of biometric probabilities. Entitlements resulting from plans based
on asset returns are generally measured at the fair value of the
underlying assets at the reporting date. If the performance of the
underlying assets is lower than a guaranteed return, the pension
obligation is measured by projecting forward the contributions at
the guaranteed fixed return and discounting back to a present
value. The discount rate used for discounting pension obligations
corresponds to the average market interest rate for instruments
with an assumed remaining maturity of 15 years as published by
Deutsche Bundesbank. In the 2019 fiscal year, the mortality rates
are based on Siemens' own mortality tables (Siemens Bio 2017)
for the first time, instead of the Siemens-specific tables (Richt-
tafeln) with a mortality trend based on the Heubeck mortality
tables RT 2005 G. This change did not have any material effect in
fiscal year 2019.
The Company exercises the option to recognize debt discounts as
prepaid expenses.
investment. Distributions from other entities are recognized as
repayment of capital or a reduction in acquisition costs to the
extent to which distributions demonstrably relate to reserves aris-
ing prior to the acquisition of the investment and therefore
included in the acquisition costs, or the distributions involve
previously executed capital increases or additional capital contri-
butions. Distributions of liquidity by partnerships are generally
treated as repayment of capital. Impairment losses are recognized
if the decline in value is presumed to be other than temporary.
This applies when objective evidence, particularly events or
changes in circumstances, indicate a significant or other than
temporary decline in value.
Financial assets acquired by way of contributions in kind from
shareholders are generally recognized in the amount issued ac-
cording to the resolution to increase the share capital, up to a
maximum of their fair value at the time of the contribution. Con-
tributions in kind to other entities are carried as acquisition costs
either at their carrying amount or at the fair value of the asset
contributed, up to a maximum of the fair value, on a case by case
basis, exercising the option provided under the principles govern-
ing exchanges of assets. Grants made to affiliated companies
without consideration are capitalized as acquisition costs only
when the grant increases the intrinsic value of the equity
Proceeds from management services for affiliated companies are
recognized as revenue.
A.3.2 Accounting policies and methods
Foreign currency translation: Receivables, other assets, cash and
cash equivalents, provisions and liabilities as well as commit-
ments and contingencies denominated in foreign currency are
generally translated applying the mean spot exchange rate on the
balance sheet date.
13
The profit and loss transfer agreement between Siemens
Healthineers AG and Siemens Healthcare GmbH was entered into
in February 2018 with effect from April 1, 2018, and for an indef-
inite duration. The agreement was entered in the Commercial
Register on April 16, 2018, and may be terminated for conve-
nience on three months' notice, but not earlier than the end of
the day on September 30, 2023. It includes an obligation to
assume the losses of Siemens Healthcare GmbH as provided in
Section 302 of the German Stock Corporation Act as amended
from time to time.
expenses
-1
-1
-507
-1,364
2018
2019
Fiscal year fiscal year
Income taxes
Note 6
Short
Note 4 Interest income and interest
Other financial income
Interest component of changes in the pension
provisions
(in thousands of €)
nel-related provisions constitute expenses from the discounting
of provisions. Other financial income exclusively relates to gains
from currency translation.
net
Note 5 Other financial income (expenses),
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
07
Summary
Interest income pertained only to third parties and did not inclu-
de negative interest. Interest expenses related exclusively to affi-
liated companies and included no positive interest from borro-
wings. The interest expenses item decreased by €12 million due
to the recognition pro rata temporis of the forward components
of forward exchange contracts included in hedges.
10
Financial expenses relating to the personnel-related
provisions
14,399
Note 11 Deferred tax assets
-613
A further addition to the capital reserve resulted from the release
of treasury shares in connection with the employee share pro-
grams totaling €36 million.
As of September 30, 2019, the capital reserve amounted to
€10,754 million (previous year: €10,770 million). They primarily
included the value of contributions in kind received in excess of
the capital stock in the course of the capital increase of February
2, 2018, together with a voluntary additional contribution by
Siemens AG in the 2018 short fiscal year from the contribution of
trust assets for pension obligations.
Capital reserve
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
09
Additionally, as of September 30, 2019, Siemens Healthineers AG
had conditional capital of €100 million, or 100,000,000 shares.
This capital may be used to service convertible bonds or warrants
from bonds with attached warrants issued on or before February
18, 2023 (Conditional Capital 2018).
Conditional capital
As of September 30, 2019, Siemens Healthineers AG had autho-
rized capital of €500 million that may be issued in the form of a
total of up to 500,000,000 new registered shares with no par
value, on one or more occasions on or before February 18, 2023,
in return for contributions in cash and/or in kind (Authorized
Capital 2018).
Authorized capital
Siemens Healthineers AG shares are traded on the Regulated
Market (Prime Standard) of the Frankfurt Stock Exchange under
the ticker symbol SHL.
As of September 30, 2019, the subscribed capital of Siemens
Healthineers AG was divided into 1,000,000,000 registered
shares with no par value with a notional value of €1.00 per share.
The shares are fully paid in. Each share confers one vote in the
Shareholders' Meeting and defines the shareholder's interest in
the Company's profit after taxes. All shares carry the same rights
and obligations.
Subscribed capital
12,811
1,034
1,057
1,034
-699
-699
-
10,754
999
-1
An amount of €52 million was withdrawn from the freely avail-
able capital reserve for the repurchase of treasury shares.
The capital reserve was distributable in an amount of
€350 million as of September 30, 2019 (previous year:
€367 million) before consideration of amounts subject to divi-
dend payout restrictions.
Treasury Shares
Fiscal year
2019
The Income Statement was prepared using the cost of sales
method.
In Germany, Siemens Healthineers AG generally provides pension
benefits through the Siemens Healthineers BSAV (Beitragsorien-
tierte Siemens Altersvorsorge), frozen legacy plans and deferred
Note 13 Provisions for pensions and similar
obligations
Siemens AG notified us on March 20, 2018, because of the first
admission of Siemens Healthineers AG stock for trading on an
organized market, that the percentage of voting rights in Siemens
Healthineers AG that it held either directly or indirectly on March
15, 2018, amounted to 85.00% of the voting rights (850,000,000
voting rights). At that time, moreover, there was a claim for rede-
livery under a securities loan, as a result of the Greenshoe option
for Siemens Beteiligungsverwaltung GmbH & Co. OHG with refer-
ence to 19,565,217 voting rights, or 1.96%.
As of September 30, 2019, the following information on share-
holdings subject to reporting requirements was available to the
Company pursuant to Section 160 para. 1 No. 8 of the German
Stock Corporation Act (AktG):
Disclosures on holdings of the capital of Siemens
Healthineers AG
The amounts subject to payout restrictions are countered by a
capital reserve of €350 million (previous year: €367 million) that
is not subject to such restrictions. Therefore, there was no limita-
tion on the payout of the unappropriated net income of
€1.057 million (previous year: €723 million).
The 651,158 treasury shares held by Siemens Healthineers AG as
of September 30, 2019, correspond to a nominal value of
€651,158, or 0.07% of the capital stock. During the 2019 fiscal
year, Siemens Healthineers AG repurchased a total of 1,446,454
shares of its own stock under this share buyback program. This
represents a nominal amount of €1,446,454, or 0.14% of the
capital stock. During this period, a total of €55 million (excluding
incidental transaction charges) was spent for this purpose; this
represents a weighted average stock price of €36.75 per share.
The purchase was made during the reporting period on 28 Xetra
trading days during the months of November and December 2018
and January and September 2019, by a bank engaged by Siemens
Healthineers AG; the shares were purchased solely on the elec-
tronic trading platform of the Frankfurt Stock Exchange (Xetra).
The average trading volume on these trading days was about
580,333 shares. In these transactions, the purchase price per re-
purchased share (excluding incidental transaction charges) was
not to exceed by more than 10% the price of Siemens
Healthineers stock as determined in the opening auction in Xetra
trading on the trading date, or fall more than 20% below that
price.
The extraordinary Shareholders' Meeting held on February 19,
2018, authorized the Managing Board to buy back treasury shares
until February 18, 2023 in an amount of up to 10% of the capital
stock at the time of the resolution, or at the date of the exercise
of the authorization if that value is lower, for any permissible pur-
pose.
sentence 2 of the German Commercial Code.
1,000
The profit of €1,415 million (previous year: €472 million) trans-
ferred from Siemens Healthcare GmbH (the controlled company)
to the parent company for the past fiscal year also includes - as
provided in Section 301 of the Stock Corporation Act - the
amount of €124 million (previous year: €131 million) that is sub-
ject to dividend payout restrictions under Section 253 para. 6
Information on amounts subject to dividend payout
restrictions
In the months from February to September 2019, 918,389 shares
were sold as investment shares to plan participants in the employ-
ee share programs at a weighted average price of €37.49 per
share; the purchase price was determined on the basis of the clos-
ing price in Xetra trading on the transfer date of the shares. A
total of €33 million accrued to Siemens Healthineers AG from
these sales. This amount was generally freely available to the
Company and reduced the amount of liabilities to affiliated com-
panies. The other 124,671 shares released during the reporting
period were bonus shares awarded as part of the base share pro-
gram, which were issued in February 2019.
-1,043,059
651,158
Treasury shares, end of fiscal year
Issuance under share-based payments
1,446,454
Share buyback
Treasury shares, beginning of fiscal year
(in numbers of shares)
247,763
The difference as provided in Section 253 para. 6 sentence 2 of
the German Commercial Code between the measurement of pro-
visions for post-retirement benefits according to the correspond-
ing average market interest rate over the preceding ten years and
the corresponding rate over the preceding seven years, which is
subject to dividend payout restrictions, was €2 million (previous
year: €2 million).
2,400
9/30/2019
Dividend 2018
A tax rate of 29.54% was applied for the measurement of de-
ferred taxes. Deviating from this, for partnerships a tax rate of
15.83% was applied for temporary differences of assets, liabilities
and prepaid/deferred items.
The calculation of deferred taxes yielded a surplus of deferred tax
assets, which was not recognized, exercising the option under
Section 274 para. 1 sentence 2 of the German Commercial Code.
was below their settlement amount, at which these were carried
as a liability. The debt discounts are reversed over the term of the
loans, i.e., by September 2021 or 2023.
Prepaid expenses included debt discounts of €33 million for the
first time. These discounts arose in the course of the assumption
of two loans from Siemens Healthineers Beteiligungen GmbH &
Co. KG, because the fair value of the loans assumed, which was
recognized as acquisition costs of the shares in the subsidiary,
Note 10 Accruals and deferrals
As in the previous year, all other receivables and other assets had
a remaining term of less than one year at the reporting date.
As in the previous year, receivables from affiliated companies did
not comprise trade receivables. Instead, this item exclusively com-
prised other receivables and other assets and included receivables
with a remaining term of more than one year of €12 million
(previous year: €0 million). Receivables from affiliated companies
included receivables from shareholders amounting to €13 million
(previous year: €0 million).
Note 9 Receivables and other assets
Disposals of €613 million and additions of €2,400 million were
reported in financial assets (shares in affiliated companies) as a
result of the transactions described above.
cash payment of €1,000 million, which the subsidiary had called
in, into its Capital Account II.
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
08
capital and therefore was presented as a disposal in shares in
affiliated companies. On May 29, 2019, Siemens Healthineers AG
also assumed two loans from Siemens Healthineers Beteiligungen
GmbH & Co. KG under a debt assumption with full discharge of
the debtor, waiving ex ante any recourse. This relates to loan lia-
bilities to Siemens Finance B.V., The Hague / Netherlands, in the
amount of US$ 1,602 million. The loans were assumed in the
course of restructuring financial liabilities within the Group, which
resulted in the transfer of three Siemens Finance B.V. loans total-
ing US$ 3,291 million. One of the loans remained with Siemens
Healthineers Beteiligungen GmbH & Co. KG. The loans were
originally made to Siemens Medical Solutions USA, Inc.,
Wilmington, DE/USA. This transaction was recognized as a grant
without an obligation to provide consideration, applying the
principles for the accounting for contributions in kind as acquisi-
tion costs for the investment in the amount of the fair value of
the loans assumed. By way of a shareholder resolution dated
August 16, 2019, Siemens Healthineers AG pledged to Siemens
Healthineers Beteiligungen GmbH & Co. KG to make an additional
€613 million, which was required to be treated as a repayment of
During the fiscal year 2019, Siemens Healthineers Beteiligungen
GmbH & Co. KG distributed liquidity in the amount of
In order to establish an independent Siemens Healthineers Group
structure, all companies that conduct Siemens Healthineers busi-
ness were bundled under Siemens Healthineers AG and its sub-
sidiaries in the previous year. The Siemens Healthineers Group's
business is conducted by Siemens Healthcare GmbH and Siemens
Healthineers Beteiligungen GmbH & Co. KG, Kemnath, together
with their directly and indirectly controlled subsidiaries. Shares in
affiliated companies acquired in the previous year from contribu-
tions in kind by shareholders were recognized with their fair value
at the time of the contribution in accordance with the principles
for the accounting for contributions in kind. The trust assets for
pension obligations acquired in the previous year as an additional
contribution to equity and contributed in the same year to
Siemens Healthcare GmbH, Munich, were recognized and valued
in the same way.
14,399
16,185
0
0
16,185
The taxable temporary differences result from intangible assets,
receivables with a remaining term of less than one year, goodwill,
shares in affiliated companies, and investments of Siemens
Healthcare GmbH, the controlled company of Siemens
Healthineers AG. The deductible temporary differences, up to the
amount of the taxable temporary differences, result from the pen-
sion provisions of Siemens Healthineers AG and the controlled
company. Additionally, there were deductible temporary differ-
ences relating primarily to shares in affiliated companies of
Siemens Healthineers AG and to other provisions, inventories,
and current liabilities of the controlled company.
Note 12 Equity
Issuance of treasury
(in millions of €)
Subscribed capital
37
-54
12,493
Shareholders' equity
723
Unappropriated net income
36
-52
10,770
Capital reserve
Net income
1
1,000
Issued capital
1
-1
0
1,000
shares under share-
based payments
Share
buybacks
10/1/2018
Treasury shares
-1
The Annual Financial Statements as of September 30, 2019, were
prepared in accordance with Section 264 para. 1 of the German
Commercial Code (Handelsgesetzbuch, HGB) in conjunction with
Section 267 para. 3 and Section 264d of that Code, on the basis
of the German Commercial Code's provisions for the financial re-
porting of large capital corporations, as well as under the terms of
the German Stock Corporation Act (Aktiengesetz, AktG). Amounts
are generally presented in millions of euros (€ million). Because
of rounding, it is possible that some figures may not add up
precisely to the presented totals.
16
The Company was founded in December 2017 and serves as the
management holding company for the Siemens Healthineers
Group providing central administrative services. The Company's
shares were admitted for trading on the Frankfurt Stock Exchange
on March 16, 2018. As of September 30, 2019, the Siemens
Group held an interest of approximately 85% of Siemens
Healthineers AG.
-8
-16
Other operating expenses
0
0
1
6
2
Other operating income
General administrative expenses
_9
-23
Gross profit
0
1
-7
-13
7
14
1
Cost of Sales
Income from operations
Revenue
1,415
Income from investments
333
1,034
Income taxes
-126
-356
6
Income from business activity
459
1,389
-1
-1
5
Other financial income (expenses), net
Interest expenses
-5
-9
4
Interest income
0
0
4
472
(in millions of €)
Short fiscal year
2018
2019
B.1 Responsibility Statement
B.2
Balance Sheet
A.2
S. 22
S. 5
Income Statement
S. 21
S. 4
A.1
Information
statements
A. Annual financial B. Additional
Table of content
SIEMENS
Healthineers
siemens-healthineers.com
2019
September 30,
statements as of
Annual financial
Siemens Healthineers AG
The previous year was a short fiscal year covering the period from
the founding of the Company on December 1, 2017, to
September 30, 2018. This limits the comparability of the previous
year's figures in the Income Statement.
Independent Auditor's
Report
S. 6
A.3
Notes
Fiscal year
A.1 Income Statement
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Income Statement
13
03
Notes
Balance Sheet
A.3
S. 6
S. 5
A.2
Income after taxes / Net income
Income Statement
S. 4
Annual financial
statements
A.
www.corporate.siemens-healthineers.com/investor-relations/presentations-financial-publications
The Annual Financial Statements of Siemens Healthineers AG as well as the Annual Report for the fiscal year 2019 are also available for
download on the Internet at:
The Annual Financial Statements and the Combined Management Report of Siemens Healthineers AG for the fiscal year 2019 are filed
with the operator of the German Federal Gazette and published in the German Federal Gazette.
The Management Report of Siemens Healthineers AG has been combined with the Management Report of the Siemens Healthineers
Group in accordance with Section 315 para. 5 together with Section 298 para. 2 of the German Commercial Code (Handelsgesetzbuch)
and is published in the 2019 Annual Report of the Siemens Healthineers Group.
Combined Management Report
Further Information
S. 26
B.3
A.1
Appropriation of net income
Notes
Profit carried forward
19
13
Provision for pensions and similar commitments
54
162
Provisions
723
1,057
10,770
10,754
1,000
999
0
-1
1,000
1,000
12,493
12,811
12
14,965
17,747
Other provisions
143
38
Liabilities
Siemens Healthineers AG has its registered office in Munich,
Germany, where it is registered under entry number HRB 237558
with Munich Local Court.
Net income
A.3.1 General Disclosures
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
A.3 Notes
14,965
17,747
4
15
2,414
0
4,759
0
2,418
4,774
15
50
05
Total shareholders' equity and liabilities
Other liabilities
Liabilities to affiliated companies
Trade payables
0
33
14
0
Prepaid expenses
Total assets
Cash and cash equivalents
Receivables from affiliated companies
Other receivables and other assets
Receivables and other assets
Current assets
Financial assets
Property, plant and equipment
Non-current assets
(in millions of €)
A.2 Balance Sheet
Shareholders' equity and liabilities
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Balance Sheet
1,057
390
24
333
1,034
=
04
10
Unappropriated net income
Transfer from capital reserves
723
Shareholders' equity
Assets
86
4
Subscribed capital
96
479
1,428
566
1,524
1,529
14,399
16,185
0
566
Issued capital
16,185
8
Sept 30, 2018
Sept 30, 2019
Notes
Unappropriated net income
Capital reserve
14,399
Treasury shares
62
Siemens Medical Solutions Diagnostics Holding I B.V., The Hague/Netherlands
100
3,575
2
Siemens Healthineers Holding III B.V., The Hague/Netherlands
100
26
2,810
62
100
9
0
0
100
TRIXELL SAS, Moirans/France
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
1
2
52
9
SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora/Portugal
Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
100
Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
5
4
23
100
6
15
100
Siemens Healthcare SARL, Casablanca/Morocco
Siemens Healthcare SAS, Saint-Denis/France
-2
-3
100
16
66
100
Siemens Healthcare Sp. z o.o., Warsaw/Poland
6
24
100
SIEMENS HEALTHCARE, S.L.U., Getafe/Spain
-1
147
100
Siemens Healthcare, s.r.o., Prague/Czech Republic
8
40
Siemens Healthcare Diagnostics Inc., Los Angeles, CA/United States
Americas (26 companies)
1
3
50
3,13
3,13
PETNET Solutions Cleveland, LLC, Wilmington, DE/United States
1
3
63
3,13
3,13
PETNET Solutions, Inc., Knoxville, TN/United States
20
174
100
15.16
15,16
PhSiTh LLC, New Castle, DE/United States
Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
N/A
N/A
33
1
3,13
3,13
51
6
Dade Behring Hong Kong Holdings Corporation, Tortola/Virgin Islands, British
Dedicated 21maging LLC, Wilmington, DE/United States
EPOCAL INC., Toronto/Canada
Imricor Medical Systems, Inc., Dover, DE/United States
P.E.T.NET Houston, LLC, Austin, TX/United States
PETNET Indiana, LLC, Indianapolis, IN/United States
3,13
3,13
44
100
3,13
25
3,13
3
80
6
92
100
-5'
-5'
9
3,13
3,13
3
-6
Siemens Healthcare s.r.o., Bratislava/Slovakia
2
70
100
Siemens Healthcare Industrial and Commercial Société Anonyme, Chalandri/Greece
3
15
100
Siemens Healthcare Kft., Budapest/Hungary
1
2
100
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
7
59
49
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev/Ukraine
2
0
100
Siemens Healthcare Limited Liability Company, Moscow/Russian Federation
2
0
100
9
Siemens Healthcare Limited Liability Partnership, Almaty/Kazakhstan
22
2
Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
100
0
3
100
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
7
44
100
Siemens Healthcare Diagnostics Ltd., Frimley, Surrey/United Kingdom
13
36
100
-1°
Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin/Ireland
Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey/United Kingdom
100
5
26
100
Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey/United Kingdom
Siemens Healthcare EOOD, Sofia/Bulgaria
4
47
100
9
1
4'
0
100
1
Siemens Healthcare Limited, Frimley, Surrey/United Kingdom
100
Siemens Healthcare NV, Beersel/Belgium
6
19
100
Siemens Healthcare Oy, Espoo/Finland
6
27
100
Siemens Healthcare Proprietary Limited, Halfway House/South Africa
4
23
75
Siemens Healthcare S.A.E., Cairo/Egypt
3
5
100
Siemens Healthcare S.R.L., Bucharest/Romania
0
7
100
Siemens Healthcare S.r.l., Milan/Italy
8
50
13
Siemens Healthcare Nederland B.V., The Hague/Netherlands
100
28
182
100
17
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
September 30, 2019
Siemens Healthcare Limited, Riyadh/Saudi Arabia
Net income in
millions of €¹
Equity in
millions of €¹
Equity
interest in %
21
100
37
Siemens Healthcare Logistics LLC, Cairo/Egypt
0
0
100
Siemens HealthCare Ltd., Rosh HaAyin/Israel
0
3
100
Siemens Healthcare Medical Solutions Limited, Swords, County Dublin/Ireland
2
8
51
13
-1
68
-57'
100
Siemens Healthcare Pte. Ltd., Singapore/Singapore
2
20
100
Siemens Healthcare Pty. Ltd., Melbourne/Australia
Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai/China
Siemens Healthineers Ltd., Seoul/Korea, Republic of
Siemens Healthineers Ltd., Shanghai/China
Siemens Shanghai Medical Equipment Ltd., Shanghai/China
Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen/China
Siemens Technology Development Co., Ltd. of Beijing, Beijing/China
Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
1 The financial data essentially corresponds to the figures in the annual
financial statements after profit transfer, if any, prepared according to
locally applicable accounting rules for the fiscal year from October 1,
2017, to September 30, 2018.
3 The values correspond to the annual financial statements according to
the consolidated IFRS-closing.
4 No annual financial statements available due to founding in fiscal year
2019.
5 Financial data for the fiscal year January 1, 2017 - December 31,
2017.
6 Financial data for the short fiscal year October 25, 2017 -
September 30, 2018.
7 Financial data for the short fiscal year November 1, 2017 -
September 30, 2018.
8 Financial data for the short fiscal year January 1, 2018 September
30, 2018.
9 Financial data for the fiscal year January 1, 2018 - December 31,
2018.
10 Financial data for the short fiscal year April 1, 2018 - September 30,
2018.
19
11 Financial data for the short fiscal year April 6, 2018 - December 31,
12
100
100
-1
9
100
1
8
100
0
3
100
Siemens Healthcare Limited, Hong Kong/Hong Kong
Siemens Healthcare Limited, Taipei/Taiwan, Province of China
Siemens Healthcare Ltd., Dhaka/Bangladesh
Siemens Healthcare Private Limited, Mumbai/India
5
7
100
6
23
100
13
13
0
3
12
2018.
12 Financial data for the fiscal year April 1, 2018 - March 31, 2019
13 Financial data for the fiscal year October 1, 2018 - September 30,
96
100
3
7
90
9
3'
21
100
11
19
B.
Additional information
S. 21
B.1 Responsibility Statement
S. 22
B.2
S. 26
B.3
Independent Auditor's
Report
Further Information
20
Siemens Healthcare d.o.o., Zagreb/Croatia
66
9
100
109
2019.
14 A profit transfer agreement was in place in the fiscal year listed.
15 Usage of the exemption in accordance with Section 286 para. 3
sentence 2 German Commercial Code.
16 N/A No data available.
4
79
100
3
8
100
9
229
9
300
100
14°
55
100
9
90
1379
100
9
67
36
51
100
24
11
175
100
Siemens Healthcare S.A., Buenos Aires/Argentina
0
9
100
9
Siemens Healthcare S.A.C., Surquillo/Peru
1
29
100
Siemens Healthcare S.A.S., Tenjo/Colombia
1
10°
100
Siemens Healthcare Servicios S. de R.L. de C.V., Mexico City/Mexico
1⁹
3
100
Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán/El Salvador
0
2°
Siemens Healthcare Limited, Oakville/Canada
100
5
1
100
3,13
3,13
57
7,713
100
Siemens Healthcare Diagnostics Manufacturing Limited, Grand Cayman/Cayman Islands
Siemens Healthcare Diagnostics S.A., San José/Costa Rica
8
36
100
0
100
2
Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City/Mexico
5
34
100
Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile/Chile
1
14
100
3,13
3,13
Siemens Healthcare Laboratory, LLC, Wilmington, DE/United States
100
17
18
September 30, 2019
PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai/India
0
3
100
4,16
4,16
Shanghai Meiling Medical Imaging Diagnosis Center Co., Ltd., Shanghai/China
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
N/A
N/A
49
5
71
100
9
Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai/China
28
100
Siemens Healthcare Inc., Manila/Philippines
Siemens Healthcare K.K., Tokyo/Japan
Siemens Healthcare Limited, Auckland/New Zealand
Siemens Healthcare Limited, Bangkok/Thailand
Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
2
96
25
2
Acrorad Co., Ltd., Okinawa/Japan
Siemens Medical Solutions USA, Inc., Wilmington, DE/United States
Siemens Molecular Imaging, Inc., Wilmington, DE/United States
Siemens S.A., Montevideo/Uruguay
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
Asia, Australia (24 companies)
Net income in
millions of €¹
Equity in
millions of €¹
Equity
interest in %
3,13
3,13
87
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
9,721
3,13
3,13
-6
-108
100
0
1
100
0
3
100
100
100
2 Control due to a majority of voting rights.
1
ments.
If the requisite conditions are met and a decision has been made
to exercise this option, derivative financial instruments are com-
bined with the hedged items into hedges. Hedge effectiveness
was assessed both prospectively as well as retrospectively based
on the critical terms match method, because the Company only
had micro hedges in the 2019 fiscal year, i.e., the risk resulting
from a single hedged item is hedged with a single derivative fi-
nancial instrument. For this assessment, the change in the spot
component of the forward exchange contracts was offset against
the change in the value or payment flows of the hedged items
from exchange rate movements. The forward component is rec-
ognized pro rata temporis over the term of the forward exchange
contracts and reported as an adjustment to interest expenses.
Hedge accounting for currency risks
In accordance with business policy, each Siemens Healthineers
unit is responsible for documenting, measuring and monitoring
its foreign currency risks. The net foreign currency position of
each unit serves as the key performance indicator and must be
hedged in a bandwidth of no less than 75% but no more than
100%, generally with Siemens AG Group Treasury.
A separate hedge was designated for each payment due for the
loan liabilities. The hedges for the loan liabilities have terms up to
September 15, 2021, or up to September 15, 2023. As of the bal-
ance sheet date, based on the interest period of six months the
hedges for the interest payments had a term from five-and-a-half
months up to a maximum of 23.5 months or 47.5 months.
Note 20 Financial payment obligations
under leasing and rental
arrangements
There were no payment obligations under leasing and rental ar-
rangements at the balance sheet date.
Note 21 Other financial obligations
There were no other financial obligations at the balance sheet
date.
(in millions of US$)
Foreign currency risk from liabilities
Foreign currency risk from firm commitments and forecast
transactions
Net foreign currency position (before hedging)
Foreign currency exchange contracts with affiliated
companies
Net foreign currency position (after hedging)
Sep 30, 2019
1,602
98
1,700
1,700
0
Note 22 Derivative financial instruments
and hedge accounting
Siemens Healthineers AG is exposed for the first time to signifi-
cant foreign currency risk from the loan liabilities to Siemens
Finance B.V. assumed from Siemens Healthineers Beteiligungen
GmbH & Co. KG, because these loans are denominated in U.S.
dollars. Since the loans carry fixed interest, there is no interest
rate risk. Siemens Healthineers AG has entered into forward ex-
change contracts with Siemens AG to hedge this foreign currency
risk.
As of September 30, 2019, the Company held forward exchange
contracts with a nominal volume of €1,411 million and a positive
13
market value of €53 million. The nominal volume equals the total
contract value. The market value of the forward exchange con-
tracts is calculated and measured based on exchange rate move-
No provisions for pending losses were recognized because no
hedge ineffectiveness was determined for the hedged foreign
currency risks.
Siemens Healthineers AG enters into contingent liabilities only
after careful consideration of the risks concerned. Based on an
ongoing risk evaluation of the arrangements entered into and
taking into account all information available up to the date on
which the Annual Financial Statements were prepared, Siemens
Healthineers AG currently concludes that the relevant subsidiaries
will be able to fulfill their obligations themselves. For this reason,
the Company does not consider it probable that it will be called
upon to perform in conjunction with any of the commitments de-
scribed above.
Further, as of September 30, 2019, there were two guarantee
agreements with unlimited amounts and indefinite term with
affiliated companies to take advantage of disclosure simpli-
fication options abroad, and sureties in favor of an affiliated
company in the amount of €2 million.
During the 2019 fiscal year, the Company had an average of 53
employees, who were engaged solely in administrative functions.
The average percentage of women was 17%.
Note 18 Share-based payments
Siemens Healthineers AG allows employees and members of the
Managing Board to participate in share-based payment programs.
For the purpose of servicing share-based payment programs
Siemens Healthineers AG also delivers Siemens Healthineers
shares that have been granted by affiliated companies.
The following table shows the changes in claims by beneficiaries
of Siemens Healthineers AG to matching shares:
(in number of shares)
Outstanding, beginning of fiscal year
Granted
Forfeited
Outstanding, end of fiscal year
Fiscal year
2019
0
8,665
-198
8,467
Stock awards
Siemens Healthineers AG grants stock awards to members of the
Managing Board, members of the senior management and other
eligible employees.
The pro rata intrinsic value of all matching shares issued to bene-
ficiaries of Siemens Healthineers AG amounted to €0 million at
the balance sheet date.
Stock awards to beneficiaries of Siemens Healthineers AG are ex-
pensed as incurred over the vesting period and are measured at
the intrinsic value (= share price of Siemens Healthineers AG
stock) on a pro rata basis for the proportion of the vesting period
expired considering the estimated target attainment at the bal-
ance sheet date.
Note 19 Guarantees and other
commitments
For one subsidiary, Siemens Healthineers AG has undertaken un-
der an unrestricted letter of comfort to be responsible for all liabil-
ities recognized in this subsidiary's Annual Financial Statements
for fiscal year 2019, within the meaning of Section 264 para. 3
sentence 1 No. 2 of the German Commercial Code, that were un-
dertaken by this subsidiary up to the reporting date of
12
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
September 30, 2019. These liabilities comprise the liabilities and
provisions recognized in the Balance Sheet of this subsidiary's An-
nual Financial Statements as of September 30, 2019, as well as
the off-balance-sheet contingent liabilities and liabilities from
pending transactions. The letter of comfort and the associated re-
sponsibility obligation will end at the end of fiscal year 2020.
Furthermore, Siemens Healhtineers AG guaranteed the payment
of up to €914 million with regard to the acquisition of Corindus
Vascular Robotics, Inc., Wilmington, DE/USA in case the affiliated
company obliged to pay defaults in the due and punctual pay-
ment. This guarantee was valid until the earlier of the satisfaction
of the payment obligation and September 7, 2020.
Carrying amounts of derivative financial instruments
requiring recognition
Because no provisions for pending losses were required to be rec-
ognized, only the forward component of the forward exchange
contracts not yet due recognized on a pro rata basis was reflected
in the balance sheet. Its carrying amount totaled €12 million as of
September 30, 2019, and was reported in receivables from affili-
ated companies.
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
In the 2019 fiscal year and the period up to the preparation of these Annual Financial Statements, the Managing Board had the
following members:
Memberships in supervisory boards whose establishment is
required by law or in comparable domestic or foreign controlling
bodies of business enterprises
External positions
None
Group company positions
None
Name and occupation
Dr. Bernhard Montag
Chairman
Year of birth
1969
First appointed Term expires
03/01/2018
02/28/2021
Dr. Jochen Schmitz
Chief Financial Officer
1966
03/01/2018
02/28/2021
German Positions:
None
• Universitätsklinikum Augsburg
(since 02/01/2019)
Michael Reitermann
1962
03/01/2018
Members of the Managing Board
Note 28 Members of the Supervisory Board and Managing Board and their mandates
Annual financial statements - Notes
Siemens Healthineers AG Annual financial statements 2019
Note 23 Proposal for the appropriation of
net income
The Supervisory Board and the Managing Board propose that the
unappropriated net income of Siemens Healthineers AG for the
past
fiscal year 2019, amounting to €1,057 million, be appropri-
ated as follows: Distribution of a dividend of €0.80 on each no-
par value share entitled to the dividend, and carry-forward of the
remaining amount.
Note 24 Remuneration of the members of
the Managing Board and the
Supervisory Board
Remuneration of the members of the Managing Board
Members of the Managing Board received cash compensation of
€4.1 million. The fair value of share-based compensation amount-
ed to €3.9 million for 194,823 stock awards in fiscal year 2019.
The Company granted contributions (including one-time special
contributions) under the Siemens Healthineers BSAV pension plan
to members of the Managing Board totaling €0.9 million.
Therefore, the compensation and benefits attributable to mem-
bers of the Managing Board amounted to €8.8 million in total.
Total remuneration of the Managing Board member
stepping down at fiscal year-end
The Managing Board member stepping down at 2019 fiscal year-
end was awarded severance of €2.4 million in fiscal year 2019.
Siemens Healthineers AG has not recognized provisions for
pen-
sions commitments for the Managing Board member stepping
down at the end of the 2019 fiscal year. A subsidiary holds the
existing vested awards.
Remuneration of the members of the Supervisory
The employees of Siemens Healthineers AG have several options
for participating in the Share Matching program: the base share
program and the share matching plan. Plan participants have the
right to receive one Siemens Healthineers share without payment
of consideration (matching share) for every three investment
shares held over the vesting period. Matching shares awarded to
beneficiaries of Siemens Healthineers AG are expensed as in-
curred over the vesting period and are measured on a pro rata
basis for the proportion of the vesting period expired at the intrin-
sic value (= share price of Siemens Healthineers AG stock) at the
balance sheet date.
Board
Information regarding the remuneration of the members of the
Managing Board and Supervisory Board is disclosed on an individ-
ual basis in the Compensation Report, which is part of the Com-
bined Management Report (Section A.8).
Note 25 Declaration of Compliance with the
German Corporate Governance
Code
As of September 30, 2019, the mandatory statement pursuant to
Section 161 of the German Stock Corporation Act (AktG) has been
issued by the Managing Board and the Supervisory Board of
Siemens Healthineers AG and is accessible to the public on the
Company's website at www.corporate.siemens-healthineers.com/
investor-relations/corporate-governance.
Note 26 Group affiliation
Siemens Healthineers AG itself prepares the Consolidated Finan-
cial Statements for the smallest group of consolidated companies
to which it belongs. Pursuant to Section 290 para. 1 of the
German Commercial Code, it is also included in the Consolidated
Financial Statements of Siemens AG (registered offices in Munich
and Berlin, Munich Local Court HRB 6684 and Berlin
Charlottenburg Local Court HRB 12300), as the largest consoli-
dated group.
The Consolidated Financial Statements are published in the
German Federal Gazette.
Note 27 Events after the balance sheet date
The following event of particular significance occurred after the
balance sheet date:
End of October 2019 the acquisition of Corindus Vascular
Robotics, Inc. was completed, and the consideration was paid.
Therefore, the guarantee existing as of the balance sheet date be-
came invalid.
±
14
Compensation attributable to members of the Supervisory Board
comprises a base compensation and additional compensation for
committee work, and totaled €1.1 million (including meeting
fees) in fiscal year 2019.
Share Matching program
The pro rata intrinsic value of all stock awards issued to beneficia-
ries of Siemens Healthineers AG amounted to €4 million at the
balance sheet date.
-12
0
0
4,759
3,282
1,437
2,414
2,414
15
15
4
4
0
0
0
0
therein for social security
0
0
0
0
Liabilities
3
3,296
0
0
therein from taxes
Other liabilities
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
compensation plans; the latter were not claimed by any of the
Company's employees. The majority of the Company's active em-
ployees participate in the Siemens Healthineers BSAV. The bene-
fits from this plan are predominantly based on notional contribu-
tions and their respective asset returns whereby a minimum re-
turn is guaranteed. For benefits provided under the frozen legacy
plans, the effects of compensation increases were substantially
eliminated, so that valuation assumptions for salary and pension
increases including career trend are no longer of material signif-
icance for the pension obligations of Siemens Healthineers AG.
The fulfillment amount of the provisions for pensions and similar
obligations came to €19 million at the reporting date (previous
year: €16 million). The actuarial valuation of the fulfillment
amount was based substantially on the following parameters:
For pension obligations, the 10-year average interest rate (2.82%)
pursuant to Section 253 para. 2 of the German Commercial Code
was applied. For other obligations, the 7-year average interest
rate (2.05%) was used. The valuation difference under Section
253 para. 6 of the German Commercial Code from the discount-
ing of pension provisions at the 10-year average interest rate and
the 7-year average interest rate was €2 million at the reporting
date (previous year: €2 million). A rate of pension progression of
1.50% per year and an income progression of 2.25% per year
were applied for the pension obligations. As of September 30,
2019, the mortality rates were based on Siemens' own mortality
tables (Siemens Bio 2017) for the first time, instead of the
Siemens-specific tables (Richttafeln) with a mortality trend based
on the Heubeck mortality tables RT 2005 G. This change did not
have any material effect in fiscal year 2019.
Note 14 Other provisions
Other provisions included miscellaneous provisions of €7 million
(previous year: €3 million) and tax provisions of €136 million
(previous year: €35 million).
The main amounts in the miscellaneous provisions related to pro-
visions of €5 million for personnel expenses (previous year:
€3 million).
For the method of determining the provision for stock awards,
please refer to the discussion in → Note 18 Share-based payment.
Note 15 Liabilities
(in millions of €)
1,437
Sept. 30,
2019
up to 1 year
5 years
thereof
maturities
more than 5
Sept. 30,
1 year up to
thereof
maturities
more than 5
2018
up to 1 year
5 years
Trade payables
Liabilities to affiliated companies
1 year up to
Member of the Managing Board
2,418
Tax liabilities as of September 30, 2019, came to €340 thousand
(previous year: €337 thousand), and liabilities for social security
came to €22 thousand (previous year: €20 thousand). The liabili-
ties to affiliated companies pertained to liabilities of
€2,222 million (previous year: €2,323 million) to Siemens
Healthcare GmbH for cash pooling within the Siemens
Healthineers Group, loans from Siemens Finance B.V. amounting
to €1,437 million, the liability from the additional contribution to
225,702
413,376
-19,193
-23,661
596,224
Note 17 Personnel expenses
Personnel expenses did not include the expense for compounding
the interest on the pension and personnel-related expenses,
which are included in other financial income (expenses), net.
Short
Fiscal Year fiscal year
(in millions of €)
2019
2018
Wages and salaries
-22
-10
Social security contributions and expenses for other
employee benefits
-1
0
Expenses for / Income from pensions
-1
-1
Personnel expenses
-23
2019
Fiscal year
Non-vested, end of fiscal year
-404
Capital Account II of Siemens Healthineers Beteiligungen GmbH &
Co. KG pledged and called in amounting to €1,000 million, and
other liabilities of €96 million (previous year: €91 million) resul-
ting from the tax group for value added tax purposes with several
subsidiaries, and from amounts collected for subsidiaries. The
loan liabilities to Siemens Finance B.V. comprise the loans as-
sumed from Siemens Healthineers Beteiligungen GmbH & Co. KG
on May 29, 2019, discharging the obligation.
11
A.3.5
Other disclosures
Note 16 Material expenses
(in thousands of €)
Expenses for raw materials, supplies and purchased
merchandise
Costs of purchased services
Material expenses
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
The following table shows the changes in the stock awards held
by members of the Managing Board, senior management and
other eligible employees of Siemens Healthineers AG:
2,418
Short
Fiscal year fiscal year
2019
Non-vested, beginning of fiscal year
2018
Granted
-165
-67
Forfeited
-2,519
-337
Organizational changes
-2,684
(in number of shares)
Dr. Christoph Zindel
4,774
10/01/2019
11,651
100
1
100
15
91
94
4,16
4,16
N/A
ΝΙΑ
100
4,16
4,16
N/A
ΝΙΑ
100
Fast Track Diagnostics Ltd, Sliema/Malta
8
100
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I., Esch-sur-Alzette/Luxembourg
FTD Europe Ltd, Sliema/Malta
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
-37
ITH icoserve technology for healthcare GmbH, Innsbruck/Austria
100
10,14
Equity in
millions of €¹
Equity
interest in %
0
2
85
14
14
21
94
1
4
49
13
13
131
667
100
14
14
89
100
10,14
2,710
Medical Systems S.p.A., Genoa/Italy
Minicare B.V., Amsterdam/Netherlands
PETNET Solutions SAS, Lisses/France
100
-2
-2
100
2
7
100
1
5
100
13
13
11
80
100
5
17
100
34
98
100
Siemens Healthcare d.o.o., Ljubljana/Slovenia
1961
1
1
100
2'
Siemens Healthcare (Private) Limited, Lahore/Pakistan
Siemens Healthcare A/S, Ballerup/Denmark
Siemens Healthcare AB, Solna/Sweden
Siemens Healthcare AG, Zurich/Switzerland
Siemens Healthcare AS, Oslo/Norway
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
1
1
100
8
3
Net income in
millions of €1
9'
-13
58
31
0
1
69
4
109
45
11
-1
100
Europe, Commonwealth of Independent States (C. I. S.), Africa, Middle East (EMEA)
(without Germany) (54 companies)
31
Zeleni Holding GmbH, Kemnath/Germany
Dr. Philipp Rösler
1964
03/01/2018
General Counsel of
Siemens Aktiengesellschaft
Supervisory board member
1973
03/02/2018
Dr. Nathalie von Siemens
Managing Director and
Spokesperson of Siemens
Stiftung
1971
03/01/2018
Dr. Andreas C. Hoffmann
Dr. Gregory Sorensen
CEO, DeepHealth, Inc.
and Executive Chairman,
IMRIS (Deerfield
Imaging, Inc.)
President of acatech -
Deutsche Akademie der
Technikwissenschaften
1962
03/01/2018
1952
03/01/2018
Prof. Dr. Ralf P. Thomas
Member of the
Managing Board of
Siemens Aktiengesellschaft
(Chief Financial Officer)
1961
03/01/2018
Memberships in supervisory boards whose establishment
Karl-Heinz Streibich
is required by law or in comparable domestic or foreign
controlling bodies of business enterprises
03/01/2018
Supervisory board member
original
appointment
ended 2021
09/30/2022
Positions outside Germany:
None
• Siemens Foundation, USA
(until 09/30/2019)
None
None
Member of the Managing Board
Michael Reitermann stepped down from the Managing Board effective at the end of the day on September 30, 2019.
15
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
Members of the Supervisory Board
The Supervisory Board of Siemens Healthineers AG has nine mem-
bers. All members were appointed by the Shareholders' Meeting
and represent the shareholders. Under the German rules for em-
ployee co-determination in companies, Siemens Healthineers AG
is not required to appoint a Supervisory Board that includes em-
ployee representatives, as Siemens Healthineers AG has fewer
than the required number of employees. Consistently with the
1965
German provisions for employee co-determination in companies,
employees at other entities of the Group are not attributed to
Siemens Healthineers AG.
Name
Michael Sen
Chairman
Dr. Norbert Gaus
Deputy Chairman
Occupation
Member of the
Managing Board of
Siemens Aktiengesellschaft
Year of birth
1968
Member since
03/01/2018
Executive Vice President
Corporate Technology of
Siemens Aktiengesellschaft
1961
Zeleni Real Estate GmbH & Co. KG, Kemnath/Germany
Dr. Marion Helmes
In the 2019 fiscal year, the Supervisory Board had the following
members:
German positions:
03/01/2018
Positions outside Germany:
• Dürr AG (Chairman)
• Deutsche Telekom AG
• Münchener Rückversicherungs-Gesellschaft AG
(since 04/30/2019)
• Wittenstein SE (until 03/31/2019)
German positions:
• Siemens Healthcare GmbH
Positions outside Germany:
• Siemens Aktiengesellschaft Österreich, Austria
• Siemens Corp., USA (until 06/30/2019)
• Siemens Gamesa Renewable Energy, S.A., Spain
German positions:
16
September 30, 2019
Germany (11 companies)
Befund24 GmbH, Erlangen/Germany
Dade Behring Grundstücks GmbH, Kemnath/Germany
MeVis BreastCare GmbH & Co. KG, Bremen/Germany
NEO New Oncology GmbH, Cologne/Germany
Siemens Healthcare Diagnostics Products GmbH, Marburg/Germany
Siemens Healthcare GmbH, Munich/Germany
Siemens Healthineers Beteiligungen GmbH & Co. KG, Kemnath/Germany
Siemens Medical Solutions Health Services GmbH, Grünwald/Germany
Siemens Real Estate GmbH & Co. KG, Kemnath/Germany
• Siemens Healthcare GmbH (Chairman)
Note 29 List of subsidiaries and associated companies of Siemens Healthineers AG
pursuant to Section 285 para. 11 of the German Commercial Code
⚫DFB Healthcare Acquisitions Corp., USA
Siemens Healthineers AG Annual financial statements 2019
Annual financial statements - Notes
Positions outside Germany:
Siemens Gamesa Renewable Energy, S.A., Spain
German positions:
• Fusion Healthcare Staffing, LLC, USA (Chairman)
•Invicro, LLC, USA
⚫evosoft GmbH (Chairman)
Positions outside Germany:
• evosoft kft, Hungary (Chairman)
German positions:
• ProSiebenSat.1 Media SE (Vice Chairwoman)
.
Positions outside Germany:
• British American Tobacco p.l.c., United Kingdom
• Heineken N.V., The Netherlands
Uniper SE
• Messer Group GmbH
•Siemens Ltd., China (since 04/01/2019)
German positions:
• Arabesque S-Ray GmbH (since 07/01/2019)
• Bertelsmann Stiftung
• Jacobs University Bremen
Positions outside Germany:
• Fortum Corporation, Finland (since 03/26/2019)
German positions:
Positions outside Germany:
• Siemens Aktiengesellschaft
• Siemens Healthcare GmbH
•
•
•
Identify and assess the risks of material misstatement of the
annual financial statements and of the management report,
whether due to fraud or error, design and perform audit pro-
cedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our
opinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the
audit of the annual financial statements and of arrangements
and measures (systems) relevant to the audit of the manage-
ment report in order to design audit procedures that are appro-
priate in the circumstances, but not for the purpose of express-
ing an opinion on the effectiveness of these systems of the
Company.
Evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures;
We also provide those charged with governance with a statement
that we have complied with the relevant independence require-
ments, and communicate with them all relationships and other
Evaluate the overall presentation, structure and content of the
annual financial statements, including the disclosures, and
whether the annual financial statements present the under-
lying transactions and events in a manner that the annual fi-
nancial statements give a true and fair view of the assets, li-
abilities, financial position and financial performance of the
Company in compliance with German legally required
accounting principles.
Evaluate the consistency of the management report with the
annual financial statements, its conformity with German law,
and the view of the Company's position it provides.
Perform audit procedures on the prospective information pre-
sented by management in the management report. On the
basis of sufficient appropriate audit evidence we evaluate, in
particular, the significant assumptions used by management as
a basis for the prospective information, and evaluate the prop-
er derivation of the prospective information from these as-
sumptions. We do not express a separate opinion on the
prospective information and on the assumptions used as a
basis. There is a substantial unavoidable risk that future events
will differ materially from the prospective information.
Siemens Healthineers AG Annual financial statements 2019
Additional information - Independent Auditor's Report
•
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficien-
cies in internal control that we identify during our audit.
Conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit evi-
dence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the
Company's ability to continue as a going concern. If we con-
clude that a material uncertainty exists, we are required to
draw attention in the auditor's report to the related disclosures
in the annual financial statements and in the management re-
port or, if such disclosures are inadequate, to modify our re-
spective opinions. Our conclusions are based on the audit evi-
dence obtained up to the date of our auditor's report. How-
ever, future events or conditions may cause the Company to
cease to be able to continue as a going concern.
•
responsible for such internal control as it, in accordance with
German legally required accounting principles, has determined
necessary to enable the preparation of annual financial state-
ments that are free from material misstatement, whether due to
fraud or error.
•
24
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec. 317
HGB and the EU Audit Regulation as well as in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the IDW and in supplementary compliance
with ISA will always detect a material misstatement. Misstate-
ments can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expect-
ed to influence the economic decisions of users taken on the basis
of these annual financial statements and this management re-
port.
Our objectives are to obtain reasonable assurance about whether
the annual financial statements as a whole are free from material
misstatement, whether due to fraud or error, and whether the
management report as a whole provides an appropriate view of
the Company's position and, in all material respects, is consistent
with the annual financial statements and the knowledge obtained
in the audit, complies with the German legal requirements and
appropriately presents the opportunities and risks of future devel-
opment, as well as to issue an auditor's report that includes our
opinions on the annual financial statements and on the manage-
ment report.
Auditor's responsibilities for the audit of the
annual financial statements and the management
report
The Supervisory Board is responsible for overseeing the Compa-
ny's financial reporting process for the preparation of the annual
financial statements and of the management report.
Furthermore, management is responsible for the preparation of
the management report that, as a whole, provides an appropriate
view of the Company's position and is, in all material respects,
consistent with the annual financial statements, complies with
German legal requirements and appropriately presents the oppor-
tunities and risks of future development. In addition, manage-
ment is responsible for such arrangements and measures (sys-
tems) as management has considered necessary to enable the
preparation of a management report that is in accordance with
the applicable German legal requirements, and to be able to pro-
vide sufficient appropriate evidence for the assertions in the man-
agement report.
In preparing the annual financial statements, management is re-
sponsible for assessing the Company's ability to continue as a
going concern. It also has the responsibility for disclosing, as
applicable, matters related to going concern. In addition, it is
responsible for financial reporting based on the going concern
basis of accounting, provided no actual or legal circumstances
conflict therewith.
Siemens Healthineers AG Annual financial statements 2019
Additional information - Independent Auditor's Report
23
Responsibilities of management and the Supervisory
Board for the annual financial statements and the
management report
matters that may reasonably be thought to bear on our indepen-
dence and where applicable, the related safeguards.
Management is responsible for the preparation of the annual fi-
nancial statements that comply, in all material respects, with the
requirements of German commercial law applicable to business
corporations, and that the annual financial statements give a true
and fair view of the assets, liabilities, financial position and finan-
cial performance of the Company in compliance with German
legally required accounting principles. In addition, management is
•
From the matters communicated with those charged with gover-
nance, we determine those matters that were of most signifi-
cance in the audit of the annual financial statements of the cur-
rent period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation pre-
cludes public disclosure about the matter.
26
Further information pursuant to Art. 10 of the EU Audit Regula-
tion
Siemens Healthineers AG, 2019
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are re-
quired to report that fact. We have nothing to report in this re-
gard.
siemens-healthineers.com
Phone +49 9131 84-0
Germany
91052 Erlangen
Henkestraße 127
Siemens Healthineers AG
Investor Relations: www.corporate.siemens-healthineers.com/investor-relations
Press: www.siemens-healthineers.com/press-room
Internet: www.siemens-healthineers.com
To facilitate readability mainly the masculine form is used in this report. However, this always relates to male and female persons alike.
For technical reasons, there may be differences in formatting between the accounting records appearing in this document and those
published pursuant to legal requirements.
This document is an English language translation of the German document. In case of discrepancies, the German language document is
the sole authoritative version and supersedes the English translation.
Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and per-
centages may not precisely reflect the absolute figures.
B.3 Further Information
Additional information - Further Information
In addition to auditing the statutory financial statements of
Siemens Healthineers AG, we performed the statutory audit of
the Siemens Healthineers' consolidated financial statements, au-
dits of financial statements of subsidiaries of Siemens
Healthineers AG, reviews of interim financial statements being in-
tegrated into the audit, project-accompanying IT audits and audit
services in connection with the implementation of new account-
ing standards.
Other attestation services include primarily attestation services re-
quired by law, contractually agreed or requested on a voluntary
basis.
We were elected as auditor by the Annual Shareholders' Meeting
on February 5, 2019. We were engaged by the Supervisory Board
on February 25, 2019. We have been the auditor of Siemens
Healthineers AG without interruption since the short fiscal year
from December 1, 2017 to September 30, 2018.
We declare that the opinions expressed in this auditor's report are
consistent with the additional report to the Audit Committee pur-
suant to Art. 11 of the EU Audit Regulation (long-form audit re-
port).
In addition to the financial statement audit, we have provided to
the Company or entities controlled by it the following services
that are not disclosed in the annual financial statements or in the
management report:
German Public Auditor responsible for the engagement
The German Public Auditor responsible for the engagement is
Thomas Spannagl.
Other legal and regulatory requirements
Munich, November 25, 2019
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
Tropschug
Wirtschaftsprüferin
[German Public Auditor]
25
Siemens Healthineers AG Annual financial statements 2019
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
otherwise appears to be materially misstated.
Corporate Governance in chapter C.3 "Corporate Governance"
of the Annual Report 2019, and
•
Key audit matters in the audit of the annual financial
statements
We conducted our audit of the annual financial statements and of
the management report in accordance with Sec. 317 HGB and the
EU Audit Regulation (No 537/2014, referred to subsequently as
"EU Audit Regulation") and in compliance with German Generally
Accepted Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). In conducting the audit of the annual financial
statements we also complied with International Standards on
Auditing (ISA). Our responsibilities under those requirements,
principles and standards are further described in the "Auditor's
responsibilities for the audit of the annual financial statements
and of the management report" section of our auditor's report.
We are independent of the Company in accordance with the re-
quirements of European law and German commercial and pro-
fessional law, and we have fulfilled our other German profession-
al responsibilities in accordance with these requirements. In
addition, in accordance with Art. 10 (2) f) of the EU Audit
Regulation, we declare that we have not provided non-audit
services prohibited under Art. 5 (1) of the EU Audit Regulation.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions on the annual
financial statements and on the management report.
Basis for the opinions
22
22
Pursuant to Sec. 322 (3) Sentence 1 HGB ["Handelsgesetzbuch":
German Commercial Code], we declare that our audit has not led
to any reservations relating to the legal compliance of the annual
financial statements and of the management report.
the accompanying management report as a whole provides an
appropriate view of the Company's position. In all material re-
spects, this management report is consistent with the annual
financial statements, complies with German legal require-
ments and appropriately presents the opportunities and risks
of future development. Our opinion on the management re-
port does not cover the content of the Corporate Governance
statement referred to above.
the accompanying annual financial statements comply, in all
material respects, with the requirements of German commer-
cial law applicable to business corporations and give a true and
fair view of the assets, liabilities and financial position of the
Company as of September 30, 2019 and of its financial perfor-
mance for the fiscal year from October 1, 2018 to September
30, 2019 in compliance with German legally required account-
ing principles, and
•
•
In our opinion, on the basis of the knowledge obtained in the
audit,
We have audited the annual financial statements of Siemens
Healthineers AG, Munich, which comprise the income statement
for the fiscal year from October 1, 2018 to September 30, 2019,
the balance sheet as of September 30, 2019 and the notes to the
financial statements, including the recognition and measurement
policies presented therein. In addition, we have audited the man-
agement report of Siemens Healthineers AG, which is combined
with the group management report for the fiscal year from
October 1, 2018 to September 30, 2019. In accordance with the
German legal requirements we have not audited the content of
chapter A.7.4 "Corporate Governance statement" of the Com-
bined Management Report, including chapter C.3.2 "Corporate
Governance statement pursuant to Sections 289f and 315d of the
German Commercial Code" of the Annual Report 2019 referred to
in chapter A.7.4 "Corporate Governance statement”.
Opinions
Report on the audit of the annual financial statements and of the
management report
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the annual
financial statements for the fiscal year from October 1, 2018 to
September 30, 2019. These matters were addressed in the con-
text of our audit of the annual financial statements as a whole,
and in forming our opinion thereon; we do not provide a separate
opinion on these matters.
To Siemens Healthineers AG, Munich
Siemens Healthineers AG Annual financial statements 2019
Additional information - Independent Auditor's Report
21
Dr. Christoph Zindel
Dr. Jochen Schmitz
Schmit
The Managing Board
B. Monta
Siemens Healthineers AG
Munich, November 25, 2019
To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true
and fair view of the net assets, financial position and results of operations of the Company, and the Management Report for Siemens
Healthineers AG, which has been combined with the Group Management Report, includes a fair review of the development and perfor-
mance of the business and the position of the Company, together with a description of the material opportunities and risks associated
with the expected development of the Company.
Responsibility Statement
Siemens Healthineers AG Annual financial statements 2019
Additional information - Responsibility Statement
B.1
is materially inconsistent with the annual financial statements,
with the management report or our knowledge obtained in the
audit, or
B.2 Independent Auditor's Report
Below, we describe what we consider to be the key audit matters:
Dr. Bernhard Montag
Reasons why the matter was determined to be a key audit matter: The
impairment test of non-current financial assets was a key audit
matter, as in particular shares in affiliated companies entail a
significant risk of material misstatement due to the materiality of
these assets as well as the judgment involved in assessing
whether there is objective evidence to indicate a lower net real-
izable value and permanent impairment. The valuations of non-
current financial assets also depend to a large extent on the as-
sessment of future cash inflows and the discount rate applied.
•
Impairment of non-current financial assets
In connection with our audit, our responsibility is to read the oth-
er information and, in so doing, to consider whether the other in-
formation
Our opinions on the annual financial statements and on the man-
agement report do not cover the other information, and conse-
quently we do not express an opinion or any other form of assur-
ance conclusion thereon.
•Notes and forward-looking statements in chapter C.4 "Notes
and forward-looking statements" of the Annual Report 2019.
the section "To our shareholders" in the Annual Report 2019,
the "Report of the Supervisory Board" in the Annual Report
2019,
the notes in chapter B.3 "Further Information" of the report
"Annual financial statements as of September 30, 2019",
the Responsibility Statement according to Sec. 264 (2) Sen-
tence 3 and Sec. 289 (1) Sentence 5 HGB in chapter B.1 "Re-
sponsibility Statement" of the report "Annual financial state-
ments as of September 30, 2019",
•
•
•
•
•
•
the Responsibility Statement in chapter C.1 "Responsibility
statement" of the Annual Report 2019,
The Supervisory Board is responsible for the Report of the Super-
visory Board in the Annual Report 2019. In all other respects,
management is responsible for the other information.
The other information, of which we received a version prior to is-
suing this auditor's report, includes:
Auditor's response: With regard to the lower net realizable values
calculated by management and its assessment as to whether an
impairment is expected to be permanent, we examined the un-
derlying processes related to the planning of future cash flows as
well as to the calculation of net realizable value. We assessed the
underlying valuation models for the determination of net real-
izable value in terms of methodology and reperformed the calcu-
lations with the assistance of internal valuation specialists. We
further obtained explanations from management regarding ma-
terial value drivers of the planning and examined whether the
budget reflects general and industry-specific market expectations.
Siemens Healthineers AG Annual financial statements 2019
Additional information - Independent Auditor's Report
Our audit procedures did not lead to any reservations relating to
the impairment of non-current financial assets.
Reference to related disclosures: With regard to the recognition and
measurement policies applied for the impairment of non-current
financial assets, refer to chapter A.3.2 "Accounting policies and
methods" in the notes to the financial statements.
Uncertain tax positions and deferred taxes
Forecast accuracy was assessed on a sample basis using budget-
to-actual comparisons of historically forecast data with the actual
results. The parameters used to estimate net realizable value such
as the estimated growth rates and the weighted average cost of
capital rates were assessed by comparing them to publicly avail-
able market data and considering changes in significant assump-
tions, including future market conditions. We also performed sen-
sitivity analyses to assess the impairment risk in the case of a rea-
sonably possible change in one of the significant assumptions.
Auditor's response: With the assistance of internal tax specialists
who have knowledge of tax law, we examined the processes in-
stalled by management for the identification, recognition and
measurement of tax positions. In the course of our audit proce-
dures relating to uncertain tax positions, we evaluated whether
management's assessment of the tax implications of significant
business transactions or events in fiscal year 2019, which could
result in uncertain tax positions or influence the measurement of
existing uncertain tax positions, was in compliance with tax law.
In particular, this includes the tax implications arising from the
acquisition or disposal of company shares, corporate (intragroup)
restructuring activities, and cross-border matters, such as deter-
mining transfer prices. In order to assess measurement and com-
pleteness, we also obtained confirmations from external tax ad-
visors. Further, we evaluated management's assessments with
respect to the prospects of success of appeal and tax court pro-
ceedings by inquiring of the Siemens Healthineers tax depart-
ment and by considering current tax case law.
Our audit procedures did not lead to any reservations relating to
the accounting for uncertain tax positions and the assessment of
deferred taxes.
Reference to related disclosures: With regard to the recognition and
measurement policies applied in accounting for income taxes,
refer to chapter A.3.2 "Accounting policies and methods" and
chapter A.3.3 "Notes to the income statement", Note 6 "Income
taxes" and with respect to disclosures for deferred tax assets, refer
to chapter A.3.4 "Notes to the balance sheet", Note 10 "Deferred
tax assets" in the notes to the financial statements.
Other information
Reasons why the matter was determined to be a key audit matter: The
accounting for uncertain tax positions as well as deferred taxes
requires management to exercise considerable judgment and
make estimates and assumptions, and was therefore a key audit
matter. In particular, this relates to the measurement and
completeness of uncertain tax positions.
Page 08
Business principles
A.1
Page 04
60
03
management report
Combined
A.
02
Page 59
B.6
information and
A.9 Takeover-relevant
Page 48
Notes to consolidated
financial statements
A.8 Compensation report
Page 33
forward-looking
statements
C.5 Notes and
A.2 Financial performance
Page 122
explanatory report
system
Page 48
A.3
C.4 Corporate Governance
Siemens Healthineers has a strong presence and scale in an
attractively growing market and is directly represented in more
than 70 countries worldwide. Our main production sites are in
the United States, China and Germany. With holistic system com-
petence, we develop, manufacture and sell a diverse range of
innovative imaging, diagnostic and advanced therapies products
and services to healthcare providers in more than 180 countries.
We also provide clinical consulting services, complemented by
an extensive range of training and service offerings. This com-
prehensive portfolio supports customers all along the care con-
tinuum, from prevention and early detection to diagnosis, treat-
ment and follow-up care.
Siemens Healthineers is a global provider of healthcare solutions
and services, with activities in numerous countries around the
world. Siemens Healthineers Group (hereinafter referred to as
"Siemens Healthineers", the "Company", "we" or the "Group")
comprises the parent company Siemens Healthineers AG, a
stock corporation under the laws of the Federal Republic of
Germany, and its subsidiaries. Siemens Healthineers AG is
incorporated in the commercial register in Munich, Germany.
The Company's business operations are conducted by the direct
and indirect subsidiaries of Siemens Healthineers AG. As of
September 30, 2020, the Siemens Group owned around 79%
in Siemens Healthineers AG. Siemens Healthineers had about
54,300 employees as of September 30, 2020 (Septem-
ber 30, 2019: about 52,000).
Organization
A.1.1 Business description
A.1 Business principles
-
Siemens Healthineers Annual Report 2020
Combined management report
Business principles
information and
explanatory report
A.9 Takeover-relevant
Page 10
A.8 Compensation report
A.7 Siemens Healthineers AG
Page 30
risks and opportunities
A.6 Report on material
Page 21
A.5 Report on expected
developments
Page 19
A.4 Nonfinancial matters
Page 18
Business development
Page 33
Page 111
A.3 Business development
Page 106
B.2
Page 55
statements of income
Delivering high-quality and affordable healthcare requires scal-
able solutions to meet the needs of a spectrum of healthcare
providers. This spectrum ranges from public and private health-
care providers, including hospitals and hospital systems, public
and private clinics and laboratories, universities, physicians/
physician groups, public health agencies, state-run and private
health insurers, to pharmaceutical companies and clinical
research institutes. We offer different solutions tailored to the
customers' needs for all market segments.
Page 10
A.2 Financial performance
system
Page 08
B.1 Consolidated
Business principles
A.1
Consolidated statements
Page 54
Additional
information
C.
financial
statements
Consolidated
B.
Combined
management
report
A.
Table of contents
SIEMENS
Healthineers
siemens-healthineers.com
Page 04
C.3 Report of the
Supervisory Board
of comprehensive
income
Page 18
report
C.2 Independent auditor's
Page 101
statement
C.1 Responsibility
Page 100
changes in equity
statements of
Consolidated
statements of
A.7 Siemens Healthineers AG
statements of
financial position
Page 30
Page 58
B.5
A.6 Report on material
risks and opportunities
cash flows
Page 21
Page 57
B.4
A.5 Report on expected
developments
Page 19
A.4 Nonfinancial matters
Consolidated
Page 56
B.3
Consolidated
Our business operations are divided into three segments:
Imaging, Diagnostics and Advanced Therapies. In all these seg-
ments, we are a leading global provider.
We act in a long-term stable growth market, which is supported
by below described Healthcare trends. Moreover, large portions
of the revenue of Siemens Healthineers stem from recurring
business, providing a stable foundation for profits. Fluctuations
of the healthcare market are also impacted by overall economic
changes and political developments, including changes in
health policy and reimbursement, as well as regulatory topics.
software platforms. We offer a broad and scalable range of
software solutions to support multi-modality reading and
structured reporting. We generate a significant amount of pe-
riodic revenues from our customer services business (services
and spare parts) due to our strong and growing installed base
and long-term service relationships. These provide a stable
foundation for profits.
• severance charges and
> transaction, integration, retention and carve-out costs,
> gains and losses from divestments,
> amortization, depreciation and other effects from
IFRS 3 purchase price allocation adjustments,
• expenses for mergers, acquisitions, disposals and other port-
folio-related measures, in particular
As of fiscal year 2021, EBIT will be adjusted for the following
items:
centrally carried pension service and administration
expenses.
• acquisition-related transaction costs and
•
•
• severance charges,
•
• amortization of intangible assets acquired in business
combinations,
We use adjusted EBIT (earnings before interest and taxes)
margin as KPI for managing the operating performance of our
segments. Adjusted EBIT is defined as income before income
taxes, interest income and expenses, and other financial in-
come, net, adjusted for non-operating items.
Adjusted EBIT margin
There were no effects in line with revaluation of contract liabilities
from IFRS 3 purchase price allocations in fiscal year 2020.
At the segment level, revenue is defined as total revenue and
corresponds to the sum of external and intersegment revenue.
Total adjusted revenue of the segments is additionally adjusted
for effects in line with revaluation of contract liabilities from
IFRS 3 purchase price allocations.
For Siemens Healthineers revenue is defined as consolidated
revenue reported in the company's consolidated statements of
income. Adjusted revenue is additionally adjusted for effects in
line with revaluation of contract liabilities from IFRS 3 purchase
price allocations.
Comparable revenue growth is our key performance indicator
(hereinafter “KPI”) for managing and monitoring the revenue
growth (through fiscal year 2020) or adjusted revenue growth
(as of fiscal year 2021), respectively, of our segments and of
Siemens Healthineers. It shows the development of the re-
venue or adjusted revenue, respectively, net of currency trans-
lation effects, which are beyond our control, and portfolio
effects, which involve business activities that are either new to
our business or no longer a part of it.
Comparable revenue growth
Key performance indicators
A.2 Financial performance system
Combined management report - Financial performance system
Until the end of fiscal year 2020, the adjustments comprised
the following items:
Siemens Healthineers Annual Report 2020
centrally carried pension service and administration
expenses.
From fiscal year 2021 onwards the adjustment items include
expenses and income related to portfolio adjustments on a
larger scale to continuously ensure transparency, comparability,
and reconcilability of adjusted EBIT margin.
18.9%
1.9%
21.1%
0.1%-points
0.0%-points
0.4%-points
0.2%-points
18.3%
0.0%-points
0.0%-points
21.0%
1.8%
(as defined
starting FY 2021)
Adjusted EBIT margin
The adjustments (including revenue) relate to income and ex-
penses that do not reflect operating performance and therefore
adversely affect the comparability of financial results between
periods.
08
Retention cost
Integration cost
(as defined
until FY 2020)
Adjusted EBIT margin
Advanced Therapies
Diagnostics
Imaging
Reconciliation adjustments of adjusted EBIT margin for
fiscal year 2020
Reconciliation of adjustments of adjusted EBIT margin (for fiscal year 2020)
Adjusted EBIT margin is defined as the adjusted EBIT of the
particular segment divided by its total revenue (until the end
of fiscal year 2020) or adjusted total revenue (as of fiscal
year 2021), respectively. The adjusted EBIT margin is calculated
by applying the total adjusted revenue definitions described
above.
80
Our Imaging segment provides imaging products, services and
solutions. Our most important products within this segment
are equipment including magnetic resonance, computed
tomography, X-ray systems, molecular imaging and ultrasound.
All our imaging and therapy systems are driven by shared
07
Developments in clinical procedures are one of the major factors
which keep defining growth in the Advanced Therapies market.
Minimally invasive procedures as well as the growing complexity
of procedures that require complex technological devices are
key drivers of the market. In particular, due to technological
innovations in imaging, robotics, medical devices and IT, mini-
mally invasive procedures result in, among other things, lower
risks of complications, faster recovery time, less post-operative
pain, shorter hospital stays and lower costs. The global Advanced
Therapies market can be described as consolidated with three
top players (Siemens Healthineers, GE Healthcare and Philips).
05
Innovative Al-based technology is starting fiscal year 2021 used
also in sample handling and classification in our Atellica Solution
laboratory system, enabling data-based efficient management
of laboratory workflow. One Al-based option for the Atellica
Solution enables the evaluation of up to 7,500 features of a sam-
ple or a sample carrier. Another Al-solution ensures robustness
of the sample characterization and was trained and evaluated on
more than 60,000 data points. The new Atellica Hematology-
Suite reflects the next generation high-volume system of hema-
tology analysis devices. In addition, the Atellica DCA Analyzer
(CE) diabetes test was advanced.
In 2021, CorPath GRX is planned to be expanded for neuro-
vascular procedures, particularly with regard to access to care
through remote-controlled robotic capabilities (or telerobotics).
In the area of robotics, we increased our efforts for the CorPath
GRX System of Corindus, which is the only robotic system on
the market for percutaneous coronary and vascular procedures.
The system is designed to improve precision of interventions,
standardize treatment and enable a safe procedure for patients
as well as medical staff. This solution presents another milestone
for realizing our Strategy 2025.
We are continuously expanding our portfolio of digital services to
support customers in their transition to value-based care. The team-
play digital health platform brings together data, applications
and services to make better decisions for patients in an efficient
way. In addition, we have launched a number of new products.
For example, we introduced the high-end single-source CT system
SOMATOM X.cite with myExam Companion - a wizard for easy
operation and the mobile head CT scanner SOMATOM On.site.
We also launched the YSIO X.pree radiography system, also with
myExam Companion, to support users with different levels of ex-
perience. In Magnetic Resonance Imaging (hereinafter "MRI"), we
are planning new innovations which improve global access signifi-
cantly, among others greatly simplified infrastructure require-
ments, highly automated handling with myExam Companion, as
well as the worldwide first 80 cm bore. In addition, Syngo Virtual
Cockpit, our software solution for remote operation of equip-
ment, enables our customers to optimize the utilization of their
scanner fleet and achieve a higher quality standard.
field of digitalization and Al. This development is reflected in
additions to our product and solutions portfolio in this area: We
now have more than 65 Al-supported products and applications
on the market that further boost our customers' productivity,
while enabling clinical decisions to be more precise and tailored
to the individual patient. The major additions to the Al-based pro-
duct portfolio are driven by extensions of our Al-Rad Companion
and new Al Pathway Companion and syngo.via products and
solutions. For fiscal year 2021, we plan Al-Rad Companion ex-
tensions for brain, prostate-MR and thorax X-ray data as well as
organ contouring for radiotherapy planning. In addition, the
Al-Pathway Companion Prostate Cancer, a digital companion
for clinical decision support, has received CE label in Europe for
use in the clinical pathway for prostate cancer, the second most
common cancer (after lung cancer) in men worldwide.
Our research and development (hereinafter "R&D") activities
are ultimately geared towards delivering innovative and sus-
tainable solutions to our customers while safeguarding and
improving our competitiveness. Consequently, we focus our
R&D activities on selected technologies and innovations. We
have further expanded our R&D activities particularly in the
Research and development
Growing in existing markets, entering adjacent fields and creating
new markets are additional core elements of the Upgrading
strategy. The acquisitions completed in FY20 (ECG and Corindus)
as well as the announced acquisition of Varian show the progress
of the Upgrading strategy in this regard.
At the same time, Siemens Healthineers has defined three cross-
segment priorities for the Upgrading phase: Market share gains
in geographic growth markets, market share gains with leading
healthcare providers and driving forward the Company's digital
transformation.
50
In the Imaging segment, the focus is on continuously innovating
the core business, the expansion of diagnostic offerings and
taking a leading role in clinical decision-making based on artifi-
cial intelligence (hereinafter "AI"). In the Diagnostics segment,
the main task is to exploit the opportunities offered by the market
trend towards automated workflows in laboratory diagnostics
and to bring the segment up to market-growth level in the mid-
term. On top of this, it is planned to continue to expand the
point-of-care business. The Advanced Therapies segment is set
to further develop innovative technologies and services that
advance and improve image-guided clinical procedures. The
increasing number of procedures forms the basis for profitable
growth in adjacent markets.
measures.
Against the background of the healthcare trends described in
→A.1.2 Business environment, Siemens Healthineers has defined
strategic priorities to capture short-term potential and ensure
market leadership beyond 2025. The first, so-called "Reinforcing
Phase" of the Siemens Healthineers Strategy 2025 was com-
pleted by the end of fiscal year 2019. The focus in this phase
was on market introductions of new products and platforms and
a cost savings program including productivity improvement
Siemens Healthineers Strategy 2025
The planned acquisition of Varian Medical Systems, Inc. (here-
inafter "Varian"), announced in the fourth quarter of fiscal
year 2020, will add an additional business segment within the
Company. It provides innovative solutions in cancer care, in
particular within radiation oncology and related software.
-
Siemens Healthineers Annual Report 2020
Combined management report
Business principles
04
Within these three segments we provide comprehensive ser-
vices all along the customer value chain, among them design,
maintenance, operational management, training and education
services. Our service offerings include equipment performance
management, clinical education and e-learning, asset manage-
ment, managed departmental services, consulting and Digital
Health products and services. By finalizing the acquisition of a
majority stake of ECG Management Consultants (hereinafter
"ECG") in early FY20, the Company enhanced its portfolio in
this field.
Our Advanced Therapies segment's portfolio consists of highly
integrated products, solutions and services across multiple clinical
fields. We provide these to therapy departments of healthcare
providers. Our Advanced Therapies products facilitate image
guided minimally invasive treatments, in areas such as cardiology,
interventional radiology, surgery and radiation oncology. Our
most important products in this segment are angiography sys-
tems and mobile C-arms. Following completion of the Corindus
Vascular Robotics, Inc. (hereinafter "Corindus") acquisition in
early FY20, its business around the robotic-assisted platform
for endo-vascular coronary and peripheral vascular interventions
is now part of the Advanced Therapies segment. Our integrated
business model provides a solid foundation for our business
activities in this field, with recurring revenues on a regular
basis generated through our growing installed base and our
customer service offerings.
The portfolio of our Diagnostics segment comprises in-vitro
diagnostic products and services that we offer to healthcare
providers in laboratory, molecular and point-of-care diagnostics.
Spanning a breadth of test settings, from centralized reference
and hospital laboratories to clinical and physician office labo-
ratories, our comprehensive portfolio covers a range of testing
disciplines, including immunochemistry, hematology, coagu-
lation, urinalysis, blood gas and PCR testing (molecular). In
addition, we provide workflow solutions and informatics products
that integrate our offerings and improve provider efficiency
and productivity. The bulk of Diagnostic's business model is
based on long-term contracts that include an initial instrument
placement followed by ongoing reagent sales, which results in
a predictive and resilient revenue stream.
Fiscal year 2020 marked the beginning of the second phase of
the Siemens Healthineers Strategy 2025, for which the Company
has defined clear priorities for its segments. The so-called Up-
grading phase will run until the end of fiscal year 2022. During
the Upgrading phase Siemens Healthineers aims at comparable
revenue growth of more than 5% p.a. (per annum) and growth
of adjusted basic earnings per share of around 10% p.a.
40
Siemens Healthineers Annual Report 2020
Combined management report
Business principles
Within Point of Care (hereinafter "POC") solutions we were able
to launch the CLINITEST Rapid COVID-19 Antigen test at the be-
ginning of fiscal year 2021 timely. This is a test cassette to de-
tect SARS-CoV-2 and to enable test results within 15 minutes
without laboratory equipment or specialized medical staff. In
the area of molecular diagnostics we will bring the FTD
CoV-2/Flu/HRSV Test to the market in fiscal year 2021. This test
can detect SARS-CoV-2 and HRSV A&B and differentiate be-
tween Influenza A/B.
The Diagnostics market is a market with an attractive underlying
growth driven by an increasing demand for diagnostics tests,
through both the development of new tests as well as increased
access to existing tests, particularly in emerging markets. To
offset increasing test demand and rising healthcare costs, pro-
viders are continuing to consolidate their operations to realize
laboratory cost improvements and industrialize their testing
processes to improve efficiency through automation and digita-
lization. Increased digitalization will further enhance laboratory
productivity and enable better integration of diagnostics test
results into clinical decision making. Immunochemistry continues
to be the largest and one of the fastest growing segments of
the Diagnostics market. The Diagnostics market is fragmented
with a variety of global players that compete internationally
across market segments, but that also face competition from
several regional players and specialized companies in niche
technologies.
There are two fundamental trends in the Imaging market,
the shift towards precision medicine and increased utilization
of imaging devices in therapy, screening and intervention.
Both drive the demand for a broader application of imaging
procedures and digitalization and therefore increase the
demand for imaging technology. Furthermore, develop-
ments in Al, big data and deep machine learning continue to
frame the future of population health management. Highly
intelligent imaging systems will remain critical to care man-
agement and delivery. A moderate level of consolidation is
one of the key characteristics of the global Imaging market,
in which Siemens Healthineers, GE Healthcare and Philips
are the top three players.
Segments' markets
In Europe, negotiations over the United Kingdom leaving the
European Union (EU) were complicated. This had however only
limited impact on investment sentiment and limited to no effect
on the development of the EMEA market. The departure of the
United Kingdom from the EU's internal market could lead to
disruptions of free trade in goods and services, implying poten-
tial impacts on customs duties, transportation and associated
administrative burdens, and ultimately on pricing.
The business environment is subject not only to the influence of
regulatory schemes, which healthcare companies and providers
must comply with in order to sell their products and deliver
health services. Non-tariff barriers such as forced localization,
licensing requirements and, in particular, protectionism have
been topics of increased importance in recent years. Barriers to
trade are becoming more common, affecting all our segments'
markets and creating additional financial burdens on vendors.
The ongoing trade dispute between the United States and China
resulted in cost increases as new tariffs came into effect in both
countries, impacting the flow of products between these coun-
tries. While the 2020 election cycle in the U.S. and China's next
five year-plan could also have an impact on this situation, trade
challenges will independently remain a topic.
Political developments
With the presidential elections in the U.S. in November 2020
and the finalization of China's next five-year plan in spring 2021,
two of our major markets face additional uncertainties in the
area of health policy and budgeting topics in the coming years.
The programs of the two presidential candidates in the U.S. vary
widely on economic and healthcare policy and could substan-
tively impact tax policy, the number of uninsured citizens, and
penetration of value-based care initiatives. As the COVID-19 pan-
demic has plunged the world economy into recession, China re-
mains committed to expanding the opening of their markets to
bolster growth and to promoting globalization and inclusive de-
velopment. China's next five-year plan for 2021-2025 is essen-
tial for the "Made in China 2025" strategic national initiative. The
goal of next five-year plan is to take a decisive lead in key in-
dustries including healthcare. The government's continuous
support of the domestic Chinese medical industry and imple-
mentation of "local preferred" procurement policies result in a
higher level of competition for multinational companies with
local vendors. The priorities of the "Healthy China 2030" strat-
egy is primary care and the establishment of a tiered healthcare
system. It is expected that demand for equipment and upgrad-
ing will increase, as well as the request for solutions in the area
of healthcare digitalization. Moreover, reimbursement reforms
such as diagnosis-based case groups - so called Diagnostic-Re-
lated Groups - will be introduced to more regions.
In the U.S., the focus on the pandemic has created a temporary
reduction in efforts to modify the healthcare system around
value based care. The introduction of such models has been
temporarily suspended. Over the medium term, the impact of
COVID-19 on government and private sector finances is likely
to increase pressure on utilization and reimbursement.
-
Siemens Healthineers Annual Report 2020
Combined management report
Business principles
-
06
COVID-19 also has impacted regulatory environment and prac-
tices, as governments and healthcare providers face unprece-
dented challenges. Regulatory authorities utilized methods to
speed diagnostic products to market. Governments have also
provided reimbursement for testing. This includes changes in
existing reimbursement structures as well as accelerated regu-
latory and emergency approval pathways. This has positively
influenced the availability of diagnostic tests and access to
reimbursement for, among others, digital health solutions such
as telehealth in various countries including China, the U.S. and
Germany. The importance and value of such technologies have
been highlighted and increased during the pandemic. However,
these changes in health policy and reimbursement may be only
temporary and potentially could be reversed or modified in the
Driven by the need of healthcare systems worldwide to deliver
better outcomes at lower costs, regulatory schemes around the
world increasingly seek to introduce new remuneration models
for healthcare services, leading to a shift of healthcare reim-
bursement systems away from a pay-per-procedure model
towards an outcome-based model. Most developed countries
are currently considering or undergoing regulatory changes
within their healthcare systems.
solutions continues to intensify. The second trend is economic
development in emerging countries that opens up improved
access to healthcare for many people. As the middle class contin-
ues to grow, significant investments in the expansion of private
and public healthcare systems will persist, driving overall demand
for healthcare products and services and hence market growth.
The third trend is the increase in chronic diseases as a conse-
quence of an aging population and environmental and life-
style-related changes. This development creates additional pres-
sure on health systems and leads to increased costs to address
this challenge. The fourth global trend with significant effect on
our business development, the transformation of healthcare pro-
viders, results from a combination of societal and market forces
that are driving healthcare providers to operate and organize
their businesses differently. Increasing cost pressure on the
healthcare sector is prompting the introduction of new remuner-
ation models for healthcare services, such as value-based rather
than treatment-based reimbursement. Digitalization and Al are
likely to be key enablers for healthcare providers as they increas-
ingly focus on enhancing the overall patient experience, with
better outcomes and an overall reduction in cost of care. This
development is driven partly by society's increasing resistance to
healthcare costs, payers' increasing professionalization, burdens
from chronic disease and rapid scientific progress. As a result,
healthcare providers are consolidating into networked struc-
tures, resulting in larger clinic and laboratory chains, often oper-
ating internationally, which act increasingly like large corpora-
tions. Applying this industrial logic to the healthcare market can
lead to systematic improvements in quality, while at the same
time reducing costs.
The first trend are demographic developments, especially the
world's growing and aging population. This trend poses major
challenges for global healthcare systems. At the same time,
however, it offers opportunities for players in the healthcare
industry, because demand for cost-efficient healthcare
Healthcare markets worldwide are affected by four major, sus-
tainable trends, which are hardly impacted by the COVID-19
pandemic.
Healthcare market trends and health policy
developments
A.1.2 Business environment
As of September 30, 2020, we had more than 18,500 patents,
patent applications, and utility models. This figure includes
more than 13,500 granted patents and registered utility models,
on the level of fiscal year 2019.
In fiscal year 2020, we reported R&D expenses of €1,342 mil-
lion (2019: €1,328 million). The resulting R&D intensity, defined
as the ratio of R&D expenses to revenue, was 9% (2019: 9%).
Additions to capitalized development expenses amounted to
€245 million (2019: € 155 million). Therefore, the ratio of capi-
talized development expenses to total R&D expenses was 18%
(2019: 12%). Amortization of capitalized development expenses
totaled €99 million (2019: €111 million).
In addition to continually updating our portfolio, the focus of
our R&D activities is also on permanent improvement of exist-
ing products and solutions. Our R&D workforce, counting al-
ready around 10,000 employees, operates at a number of R&D
sites around the world, mainly in Germany, the U.S., China and
India. The distribution of our R&D workforce across an interna-
tionally balanced network of sites enables us to better meet the
needs of local markets and gives us access to local job markets,
allowing us to hire the best employee for the respective job. We
supplement our internal capabilities through our relationships
with strategic partners.
mid-term.
Annual Report
2020
Total segments' adjusted EBIT
Siemens Healthcare S.A., Caracas/Venezuela
1005
Ltd. of Beijing, Beijing/China
Siemens Healthcare S.A.C., Surquillo/Peru
100
Siemens Healthcare S.A.S., Tenjo/Colombia
100
Siemens X-Ray Vacuum Technology Ltd., Wuxi,
Wuxi/China
100
Siemens Healthcare Servicios S. de R.L. de C.V.,
Mexico City/Mexico
100
Joint ventures and associates
Siemens Healthcare, Sociedad Anonima,
100
Germany (2 companies)
Antiguo Cuscatlán/El Salvador
MeVis BreastCare GmbH & Co. KG, Bremen
49
Siemens Medical Solutions USA, Inc.,
100
Wilmington, DE/United States
MeVis BreastCare Verwaltungsgesellschaft mbH,
Bremen
496
90
1 Control due to a majority of voting rights.
Siemens Technology Development Co.,
Siemens Healthcare S.A., Buenos Aires/Argentina
Siemens Healthineers Digital Technology
100
San José/Costa Rica
(Shanghai) Co., Ltd., Shanghai/China
Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
Mexico City/Mexico
100
Siemens Healthineers India LLP, Bangalore/India
100
Siemens Healthineers Ltd., Seoul/Korea
100
Siemens Healthcare Equipos Médicos Sociedad por
100
100
Acciones, Santiago de Chile/Chile
Siemens Shanghai Medical Equipment Ltd.,
100
Siemens Healthcare Laboratory, LLC, Wilmington,
DE/United States
Shanghai/China
100
Siemens Healthcare Limited, Oakville/Canada
100
Siemens Shenzhen Magnetic Resonance Ltd.,
Shenzhen/China
100
100
100
6 Not accounted for using the equity method due to immateriality.
2 Control due to rights to appoint, reassign or remove members of the key management personnel.
Sept 30, 2020
Other Investments
Europe, C.I.S., Africa, Middle East (EMEA) (without Germany)
(1 company)
Medical Systems S.p.A., Genoa/Italy'
Americas (1 company)
Imricor Medical Systems, Inc., Dover, DE/United States'
1 Control due to a majority of voting rights.
2 Control due to rights to appoint, reassign or remove members of the key management personnel.
3 Control due to contractual arrangements to determine the direction of the relevant activities.
4 No significant influence due to contractual arrangements or legal circumstances.
5 Not consolidated due to immateriality.
98
Equity interest
in %
33
306
436
Equity interest
Net income
Equity
in %
in millions of €
in millions of €
Xi'An X-Ray Target Ltd., Xi'an/China
' Exemption pursuant to Section 264b of the German Commercial Code.
25
Asia, Australia (1 company)
3 Control due to contractual arrangements to determine the direction of the relevant activities.
4 No significant influence due to contractual arrangements or legal circumstances.
5 Not consolidated due to immateriality.
97
³ Exemption pursuant to Section 264 (3) of the German Commercial Code.
⁹Values according to the latest available local GAAP financial statements; the underlying
fiscal year differs from the Siemens Healthineers fiscal year.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Sept 30, 2020
Europe, C.I.S., Africa,
Equity interest
in %
Sept 30, 2020
Americas (2 companies)
Middle East (EMEA) (without Germany)
PhSiTh LLC, New Castle, DE/United States
(4 companies)
USARAD Holdings, Inc.,
Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
31
Fort Lauderdale, FL/United States
Meomed s.r.o., Prerov/Czech Republic
476
Screenpoint Medical B.V., Nijmegen/Netherlands
21
TRIXELL SAS, Moirans/France
454
Siemens Healthcare Diagnostics S.A.,
Los Angeles, CA/United States
100
Siemens Healthineers Holding III B.V.,
100
Asia, Australia (27 companies)
The Hague/Netherlands
Acrorad Co., Ltd., Okinawa/Japan
Siemens Healthineers Nederland B.V.,
100
The Hague/Netherlands
Fast Track Diagnostics Asia Private Limited,
New Delhi/India
96
100
Siemens Medicina d.o.o.,
100
Sarajevo/Bosnia and Herzegovina
PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
Mumbai/India
100
Steiermärkische Medizinarchiv GesmbH, Graz/Austria
52
PT Siemens Healthineers Indonesia,
Jakarta/Indonesia
100
Americas (28 companies)
Siemens Healthcare Diagnostics K.K., Tokyo/Japan
100
100
in %
Siemens-Healthcare Cia. Ltda., Quito/Ecuador
100
100
1 Control due to a majority of voting rights.
² Control due to rights to appoint, reassign or remove members of the key management personnel.
3 Control due to contractual arrangements to determine the direction of the relevant activities.
4 No significant influence due to contractual arrangements or legal circumstances.
5 Not consolidated due to immateriality.
6 Not accounted for using the equity method due to immateriality.
7 Exemption pursuant to Section 264b of the German Commercial Code.
8 Exemption pursuant to Section 264 (3) of the German Commercial Code.
⁹Values according to the latest available local GAAP financial statements; the underlying
fiscal year differs from the Siemens Healthineers fiscal year.
96
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Equity interest
SIEMENS HEALTHCARE, UNIPESSOAL, LDA,
Sept 30, 2020
Siemens Healthcare, s.r.o., Prague/Czech Republic
Amadora/Portugal
in %
Sept 30, 2020
100
Siemens S.A., Montevideo/Uruguay
100
Equity interest
Shanghai/China
Corindus, Inc., Wilmington, DE/United States
Dade Behring Hong Kong Holdings Corporation,
Tortola/British Virgin Islands
Siemens Healthcare Diagnostics Manufacturing Ltd.,
100
501
Siemens Healthcare Ltd., Dhaka/Bangladesh
100
PETNET Solutions Cleveland, LLC, Wilmington,
DE/United States
63
Siemens Healthcare Private Limited, Mumbai/India
Siemens Healthcare Pte. Ltd., Singapore/Singapore
100
100
PETNET Solutions, Inc., Knoxville, TN/United States
100
Siemens Healthcare Pty. Ltd., Melbourne/Australia
100
Siemens Healthcare Diagnósticos Ltda.,
100
Siemens Healthcare Sdn. Bhd.,
100
São Paulo/Brazil
Petaling Jaya/Malaysia
Siemens Healthcare Diagnostics Inc.,
100
Siemens Healthineers Diagnostics (Shanghai) Co., Ltd.,
100
Siemens Healthcare Limited, Taipei/Taiwan,
Province of China
100
51
Falcon Sub Inc., Wilmington, DE/United States
P.E.T.NET Houston, LLC, Austin, TX/United States
PETNET Indiana, LLC, Indianapolis, IN/United States
100
Shanghai, Shanghai/China
100
Siemens Healthcare Inc., Manila/Philippines
100
Dedicated2Imaging LLC, Wilmington, DE/United States
ECG Acquisition, Inc., Wilmington, DE/United States
ECG TopCo Holdings, LLC, Wilmington, DE/United States
EPOCAL INC., Toronto/Canada
80
Siemens Healthcare K.K., Tokyo/Japan
100
100
Siemens Healthcare Limited, Auckland/New Zealand
100
75
Siemens Healthcare Limited, Bangkok/Thailand
100
100
Siemens Healthcare Limited,
100
Executive Consulting Group, LLC, Wilmington,
DE/United States
100
Ho Chi Minh City/Vietnam
Siemens Healthcare Limited, Hong Kong/Hong Kong
100
1005
100
1
7
1,625
4,133
3,924
4,133
3,924
8,938
9,090
292
277
8,647
8,813
2019
2020
2019
2020
2019
2020
Fiscal year
Fiscal year
Fiscal year
Total revenue
Intersegment revenue
External revenue
1,602
Total segments
3
1,628
• Imaging offers imaging products, services and solutions. The
most important products within this segment are equipment
for magnetic resonance, computed tomography, X-ray systems,
molecular imaging and ultrasound.
Siemens Healthineers has the following three reportable seg-
ments, which are differentiated according to the nature of goods
and services:
Reportable segments
2 Fiscal year 2019: On segment level adjusted according to the definition of the adjusted EBIT.
3 Including additions through business combinations, excluding goodwill.
1 Siemens Healthineers: Income before income taxes.
Siemens Healthineers
Reconciliation to consolidated financial statements
14,518
-160
-182
14,460
14,518
14,460
-296
-280
136
98
14,678
14,642
296
280
14,381
14,362
1,606
4
•
Advanced Therapies
Imaging
203
238
Expenses relating to post-employment benefits
Total personnel expenses
617
613
Statutory social welfare contributions and
expenses for optional support
3,956
4,221
2019
Fiscal year
2020
Wages and salaries
(in millions of €)
Note 28 Personnel expenses and
employees
For their 25th and 40th service anniversary, eligible employees
in Germany receive jubilee shares in form of Siemens AG shares.
The Jubilee Share program is classified as cash-settled share-
based payment. As of September 30, 2020, 426,240 entitlements
to jubilee shares were outstanding for Siemens Healthineers'
employees (September 30, 2019: 485,360).
Jubilee Share program
Under the base share program, employees of participating en-
tities can invest a fixed amount of their compensation in
shares, which is then matched by Siemens Healthineers. The
shares are purchased at market price at a predetermined date
in the second quarter of each fiscal year and grant the right to
receive matching shares under the same conditions applying
to the share matching plan described above.
Base share program
Under the monthly investment plan, employees other than
members of senior management can monthly invest a part of
their compensation in shares over a period of twelve months.
Shares are purchased at market price at a predetermined date
once a month. If the Managing Board decides that shares ac-
quired under the monthly investment plan are transferred to
the share matching plan, plan participants have the right to
receive matching shares under the same conditions applying
to the share matching plan described above but with a vesting
period of about two years. In fiscal year 2020, the Managing
Board of Siemens Healthineers AG decided that shares acquired
under the 2019 tranche are transferred to the share matching
plan in February 2020.
Monthly investment plan
Under the share matching plan, members of senior manage-
ment can invest a part of their variable compensation in shares
(investment shares). The shares are purchased at the market
price at a predetermined date in the second quarter of each fiscal
year. For every three investment shares held over the vesting
period of about three years, plan participants have the right to
receive one share without payment of consideration (matching
share), provided the plan participant is continually employed by
the Siemens Group, including Siemens Healthineers, until the
end of the vesting period.
Share matching plan
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
2019
5,072
Diagnostics
4,775
Employees were engaged in the following functions (averages):
(in millions of €)
Note 29 Segment information
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
89
Sales
52
54
Total employees
3
3
Administration and general services
9
10
Research and development
11
12
29
30
Manufacturing and services
2019
2020
Fiscal year
(in thousands)
Wages and salaries in fiscal year 2020 included severance
charges of €65 million (2019: €57 million).
110
Diagnostics offers in-vitro diagnostic products and services
that are offered to healthcare providers in laboratory, molecu-
lar and point-of-care diagnostics.
Measurement and reconciliations
300
-615
-487
8,093
10,936
-330
-325
427
464
810
1,179
1,653
1,858
13,336
14,158
2,523
2,280
14
18
22
328
261
265
151
997
351
1,954
−11
6 Not accounted for using the equity method due to immateriality.
7 Exemption pursuant to Section 264b of the German Commercial Code.
8 Exemption pursuant to Section 264 (3) of the German Commercial Code.
⁹Values according to the latest available local GAAP financial statements; the underlying
fiscal year differs from the Siemens Healthineers fiscal year.
6
2020
Fiscal year
in business combinations
(in millions of €)
The reconciliation of total segments' adjusted EBIT to
Siemens Healthineers' income before income taxes is given in
the table below:
Income tax expenses are excluded from the segments' adjusted
EBIT because income taxes are subject to legal structures, which
typically do not correspond to the segment's structure. Deci-
sions on essential pension items are made centrally. Accordingly,
the segments' adjusted EBIT includes amounts related primarily
to service cost of pension plans, while other regularly recurring
pension related expenses ("centrally carried pension service and
administration expenses") are excluded. Acquisition-related
transaction costs and severance charges are not part of ad-
justed EBIT because they do not affect the operating perfor-
mance of the segments. Financial income, net, comprises other
financing income, net, and any interest income or expenses.
Financing income, net, is excluded from the segments' adjusted
EBIT because decision-making regarding financing is typically
made at group level. Certain items that are not indicative of the
segments' performance are also excluded from the adjusted
EBIT, such as items that have a corporate or central character or
refer to more than one reportable segment, to corporate trea-
sury or to Siemens Healthineers Real Estate. Costs for support
functions are mainly allocated to the segments.
Starting in fiscal year 2020, adjusted EBIT margin is used to
manage the operating performance of our segments. Adjusted
EBIT margin is defined as the adjusted EBIT of the particular
segment concerned, divided by its total revenue. Adjusted EBIT
is defined as income before income taxes, interest income and
expenses and other financial income, net, adjusted for amorti-
zation of intangible assets acquired in business combinations,
severance charges, acquisition-related transaction costs and
centrally carried pension service and administration expenses.
Adjusted EBIT
620
815
961
1,479
1,037
1,371
21,429
25,094
2,193
193
• Advanced Therapies is a supplier of highly integrated products,
solutions and services across multiple clinical fields, which are
provided to therapy departments of healthcare providers.
1,934
298
2020
2019
2020
Fiscal year
Fiscal year
Fiscal year
Sept 30,
Fiscal year
Amortization, depreciation
and impairments
Additions to other intangible
assets and property, plant and
equipment³
Free cash flow²
Assets
Adjusted EBIT¹
Consolidated financial statements - Notes to consolidated financial statements
Siemens Healthineers Annual Report 2020
90
06
Intersegment revenue is based on market prices.
As of the reporting date, the aggregate amount of transaction
prices allocated to performance obligations that were unsatis-
fied or partially unsatisfied (order backlog) amounted to €19 bil-
lion (September 30, 2019: €18 billion). Thereof, €6 billion (Sep-
tember 30, 2019: €6 billion) are expected to be recognized as
revenue in the next twelve months.
For each of the segments, revenue results mainly from perfor-
mance obligations satisfied at a point in time, especially in the
case of the sale of goods, including reagents and consumables
in the Diagnostics segment. However, the performance obli-
gations related to maintenance contracts for equipment sold
are generally satisfied over time with revenue recognized on
a straight-line basis.
Siemens Healthineers' revenue included revenue from contracts
with customers and income from leases. In fiscal year 2020, in-
come from leases amounted to €323 million (2019: €233 million).
Revenue
Accounting policies for segment information are generally the
same as those summarized in Note 2 Accounting policies. Any
exceptions or supplements are outlined below or become appar-
ent in the reconciliations.
2019
317
2020
2020
263
279
634
541
-120
-216
5,499
5,179
375
72
151
166
154
309
1,512
1,810
6,840
7,045
1,831
1,909
2019
2020
2019
2019
Siemens Healthcare SAS, Saint-Denis/France
Siemens Healthcare Sp. z o.o., Warsaw/Poland
SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
Siemens Healthineers Ltd., Shanghai/China
Siemens Healthcare d.o.o., Zagreb/Croatia
Europe, C.I.S., Africa, Middle East (EMEA)
4,193
3,979
Americas
8,270
7,627
Asia, Australia
1,260
879
Total
13,724
12,484
(in millions of €)
Fiscal year
2020
Thereof:
20191
Germany
1,880
1,691
Total segments' free cash flow
1,858
1,653
Foreign countries
2019
11,844
2020
assets
873
13,645
1,418
1,725
13,042
12,793
Siemens Healthineers' total assets
25,094
21,429
Therein:
United States
4,909
4,916
4,937
4,935
Free cash flow
China
1,893
1,838
1,716
1,352
Free cash flow comprises the cash flows from operating activi-
ties and additions to intangible assets and property, plant and
equipment included in cash flows from investing activities. As
with the segments' adjusted EBIT, the segments' free cash flow
excludes payments related to income taxes, corporate items and
certain other payments. With the application of the adjusted
EBIT margin as the new performance measure, the calculation
of free cash flow changed accordingly, which means that oper-
ating interest is no longer part of the segments' free cash flow.
(in millions of €)
Location of non-current
Sept 30,
13,586
10,793
-512
Sept 30,
Sept 30,
(in millions of €)
2020
2019
2020
2019
Siemens AG
2,720
596
1,346
425
Other Siemens Group
entities
672
91
3,683
3,969
Total
3,392
686
5,028
4,394
(in millions of €)
Siemens Group
Tax-related cash flows
Payables and other
payables to
Siemens Group
Receivables from and payables
to the Siemens Group
-493
Therein:
Corporate items and other
25
-122
United States
7,920
7,247
Total reconciliation to
consolidated financial statements
-487
-615
Siemens Healthineers' free cash flow
1,371
1,037
1 Fiscal year 2019: On segment level adjusted according to the definition of the adjusted EBIT.
92
42
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Note 31 Related party transactions
Siemens Healthineers maintained business relations with the
Siemens Group and with joint ventures and associates of both
the Siemens Group and Siemens Healthineers. The Siemens Group
is a related party, as Siemens AG controls Siemens Healthineers AG.
Transactions with the Siemens Group
Sales of goods
Receivables from
Siemens AG
Foreign countries
10,936
Siemens Healthineers' income
before income taxes
1,954
2,193
Siemens Healthineers Real Estate manages Siemens Healthineers' entire real estate
business portfolio, operates the properties and is responsible for building projects and for
the purchase and sale of real estate.
The line item corporate items includes corporate costs, such as
costs of group management and corporate projects as well as
business activities and special topics that were not allocated
directly to the segments.
91
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Assets
Siemens Healthineers determined to use segments' assets, de-
fined as net capital employed, as a measure to assess the seg-
ments' capital intensity. Segments' assets are based on total
assets presented in the consolidated statements of financial po-
sition (i.e. including intangible assets acquired in business com-
binations), which are allocated to the segments, primarily ex-
cluding receivables from Siemens Group from financing activities
and tax-related assets, because the corresponding income and
expenses are also excluded from the segments' adjusted EBIT.
Moreover, the remaining assets are reduced by non-interest-
bearing liabilities (e.g. trade payables, contract liabilities and
other current liabilities) other than tax-related liabilities.
Amortization, depreciation and impairments
Amortization, depreciation and impairments include depreci-
ation and impairments of property, plant and equipment as
well as amortization and impairments of intangible assets (sim-
ilarly to segments' adjusted EBIT excluding intangible assets
acquired in business combinations), each net of reversals of
impairment losses.
Note 30 Information about geographies
The following tables disclose revenue by location of the cus-
tomer and entity, and the location of non-current assets. Non-
current assets consisted of property, plant and equipment,
goodwill and other intangible assets.
(in millions of €)
Total segments' assets
Sept 30,
2020
2019
14,158
13,336
5,770
2,768
-330
Revenue by customer
location
-325
Total reconciliation to
2,280
2,523
Centrally carried pension service and
administration expenses
-17
-13
Amortization of intangible assets acquired
-168
-131
Acquisition-related transaction costs
-16
Severance charges
-65
-57
Financial income, net
-27
-107
Corporate items
-22
-42
Corporate treasury, Siemens Healthineers
Real Estate¹, eliminations and other items
-10
19
consolidated financial statements
8,093
Revenue by entity
location
Therein:
5,765
Current income tax assets and
Asia, Australia
4,022
4,098
3,701
3,454
deferred tax assets
468
554
Total
100
14,518
14,460
14,518
Liability-based adjustments
5,167
5,325
Thereof:
Total reconciliation to
Germany
874
consolidated financial statements
5,665
Asset-based adjustments
5,803
Americas
Fiscal year
Fiscal year
(in millions of €)
2020
2019
2020
2019
Assets corporate treasury
739
994
Assets Siemens Healthineers Real Estate
945
627
Europe, C.I.S., Africa,
Middle East (EMEA)
4,747
4,617
5,094
5,299
Receivables from Siemens Group from
non-operating activities
3,387
683
5,691
and services
and other income
14,460
and services
SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
100
Siemens Real Estate GmbH & Co. KG, Kemnath
947
Kiev/Ukraine
Siemens Real Estate Management GmbH, Kemnath
1005
Siemens Healthcare Limited Liability Company,
100
Zeleni Holding GmbH, Kemnath
100
Moscow/Russian Federation
Zeleni Real Estate GmbH & Co. KG, Kemnath
1007
Siemens Healthcare Limited Liability Partnership,
Almaty/Kazakhstan
100
Europe, C.I.S., Africa,
Middle East (EMEA) (without Germany)
Siemens Healthcare Limited, Frimley,
Surrey/United Kingdom
100
(51 companies)
Fast Track Diagnostics Ltd, Sliema/Malta
100
492
FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I.,
Siemens Healthcare L.L.C., Dubai/United Arab Emirates
Siemens Medical Solutions Health Services GmbH,
Grünwald
100
Siemens Healthineers Beteiligungen
1005
Siemens Healthcare Employee Share Ownership
Trust, Midrand/South Africa
03
Verwaltungs-GmbH, Röttenbach
Siemens Healthcare EOOD, Sofia/Bulgaria
100
Siemens Healthineers Holding I GmbH, Röttenbach
100
Siemens Healthcare FZ LLC,
100
Dubai/United Arab Emirates
Siemens Healthineers Innovation GmbH & Co. KG,
1007
Röttenbach
Siemens Healthineers Innovation
1005
SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL
SINGLE MEMBER SOCIETE ANONYME, Chalandri/Greece
100
Verwaltungs-GmbH, Röttenbach
Siemens Healthcare Kft., Budapest/Hungary
100
100
Siemens Healthcare Diagnostics Products Ltd,
Frimley, Surrey/United Kingdom
100
51
100
Lahore/Pakistan
Siemens Healthcare S.r.I., Milan/Italy
100
Siemens Healthcare A/S, Ballerup/Denmark
100
Siemens Healthcare s.r.o., Bratislava/Slovakia
100
Siemens Healthcare AB, Solna/Sweden
100
Siemens Healthcare AG, Zurich/Switzerland
100
Siemens Healthcare Saglik Anonim Sirketi,
Istanbul/Turkey
100
Siemens Healthcare AS, Oslo/Norway
100
Siemens Healthcare SARL, Casablanca/Morocco
100
Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
100
Siemens Healthcare d.o.o., Ljubljana/Slovenia
Purchases of goods
100
Siemens Healthcare S.R.L., Bucharest/Romania
Siemens Healthcare Limited, Riyadh/Saudi Arabia
Siemens Healthcare Logistics LLC, Cairo/Egypt
Siemens Health Care Ltd., Rosh HaAyin/Israel
100
100
100
100
Esch-sur-Alzette/Luxembourg
100
FAST TRACK DIAGNOSTICS RESEARCH LIMITED,
Swords, County Dublin/Ireland
100
Dunblane/United Kingdom
Siemens Healthcare NV, Beersel/Belgium
100
FTD Europe Ltd, Sliema/Malta
100
Siemens Healthcare Oy, Espoo/Finland
100
ITH icoserve technology for healthcare GmbH,
69
Siemens Healthcare Proprietary Limited,
75
Innsbruck/Austria
Halfway House/South Africa
PETNET Solutions SAS, Lisses/France
100
Siemens Healthcare S.A.E., Cairo/Egypt
Siemens Healthcare (Private) Limited,
1007
Siemens Healthcare Medical Solutions Limited,
1008
For further information regarding the capital increase, please
refer to Note 23 Equity. For details on the financing arrange-
ments with the Siemens Group, the bridge facility related to the
planned acquisition of Varian and resulting interest expenses
and income, please refer to Note 16 Financial debt.
93
33
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Other material relationships
with the Siemens Group
Hedging
The majority of Siemens Healthineers' hedging activities was
carried out with the corporate treasury of the Siemens Group
as counterparty. As of September 30, 2020, related other cur-
rent and other non-current financial assets amounted to
€ 154 million (September 30, 2019: €116 million). This included
other current financial assets amounting to €25 million related
to a deal contingent forward with the Siemens Group, which
hedges the payment of the purchase price of the planned ac-
quisition of Varian. In addition, other current and other non-
current financial liabilities from hedging activities with the
Siemens Group amounted to €10 million (September 30,
2019: €45 million).
For further details, please refer to Note 16 Financial debt and
to Note 25 Financial instruments and hedging activities.
Guarantees and letters of support
The Siemens Group issued guarantees for or on behalf of
Siemens Healthineers in connection with the operating activ-
ities of the Group. As of September 30, 2020, the guarantees
issued by Siemens AG and other Siemens Group entities
amounted to €19 million (September 30, 2019: €82 million)
and €236 million (September 30, 2019: € 305 million), respec-
tively.
In addition, Siemens AG provided letters of support to banks
and insurance companies, for example in connection with
securing guarantee credit lines and overdraft facilities of
the Group. As of September 30, 2020, the obligations secured
by letters of support amounted to €452 million (September 30,
2019: €463 million).
Share-based payment plans
Siemens Healthineers' employees continued to participate in
existing share-based payment plans of the Siemens Group
based on Siemens AG shares. For further details, please refer to
→ Note 27 Share-based payment. Siemens AG delivered the
respective shares on behalf of Siemens Healthineers and was
reimbursed by Siemens Healthineers.
Joint ventures and associates
In fiscal year 2020, Siemens Healthineers purchased goods and
services from its joint ventures and associates in an amount of
€70 million (2019: €72 million).
Related individuals
Managing Board and Supervisory Board
of the Group
In fiscal year 2020, the members of the Managing Board received
cash compensation of €3.3 million (2019: €4.1 million). The fair
value of share-based payment granted in fiscal year 2020
amounted to €3.0 million (2019: €3.9 million) for 139,006 stock
awards. Contributions to the Siemens Healthineers BSAV pension
plan amounted to €1.1 million (2019: €0.9 million). Thus, com-
pensation and benefits granted in fiscal year 2020 amounted
to €7.4 million (2019: €8.8 million). In fiscal year 2020, expenses
related to share-based payment amounted to €2.4 million
(2019: €2.0 million).
As of September 30, 2020, the defined benefit obligation for
pension commitments to former members of the Managing
Board and its surviving dependents amounted to €0.7 million.
Compensation attributable to members of the Supervisory
Board comprised a base compensation and additional compen-
sation for committee work, and amounted (including meeting
fees) to €1.2 million in fiscal year 2020 (2019: €1.1 million).
Information regarding the individual compensation of the
members of the Managing Board and Supervisory Board of
Siemens Healthineers AG is disclosed in chapter A.8 Compen-
sation report in the combined management report.
In fiscal years 2020 and 2019, no other major transactions took
place between Siemens Healthineers and the members of the
Managing Board and Supervisory Board. Some Managing Board
and Supervisory Board members hold, or in the past year have
held, positions of significant responsibility with other entities.
Siemens Healthineers has relationships with many of these en-
tities in the ordinary course of business.
Additionally, the Siemens Group provided a bridge facility to
finance the planned acquisition of Varian. As of the reporting
date, this financing commitment amounted to €12.5 billion
and was not utilized by Siemens Healthineers.
Managing Board and Supervisory Board
of Siemens AG
• The Siemens Group provided revolving backup facilities and
loans of various maturities to Siemens Healthineers. The in-
crease of other liabilities to Siemens AG is primarily due to an
additional financing of €1.0 billion for the acquisition of
Corindus.
Receivables from and payables to the Siemens Group resulted
mainly from financing activities:
Fiscal year
Siemens Healthineers Beteiligungen GmbH & Co. KG,
Röttenbach
Fiscal year
2020
2019
2020
2019
5
35
266
250
Other Siemens Group
entities
375
337
231
Total
380
372
497
235
485
Between Siemens Healthineers and the Siemens Group existed
supply and service agreements:
• In fiscal year 2020, Siemens Healthineers received support
services from the Siemens Group for central corporate ser-
vices such as tax, legal, IT, corporate communications, human
resources, accounting, financial services and treasury with a
total value of €334 million (2019: €349 million). For certain
services, there were fixed payment obligations over a non-
cancelable contract term and, in the prior year, also a mini-
mum volume commitment. As of September 30, 2020, the re-
sulting commitment amounted to €46 million (September 30,
2019: €225 million).
• Siemens Healthineers has entered into leasing transactions
with the Siemens Group, mainly for real estate. As of Septem-
ber 30, 2020, total lease liabilities amounted to €86 million.
As of September 30, 2019, the undiscounted future minimum
lease payments to be made under non-cancelable leases for
real estate amounted to € 98 million.
• Receivables from the Siemens AG increased mainly due to the
short-term investment of liquid funds from the capital in-
crease in September 2020. The increase in receivables from
other Siemens Group entities resulted, in particular, from the
investment of liquid funds of Siemens Healthineers entities
in China.
As of September 30, 2020 and 2019, Siemens Healthineers has
been controlled by its ultimate parent company Siemens AG.
Therefore, the members of the Managing Board and the Super-
visory Board of Siemens AG were regarded as key management.
Information about Siemens AG's Managing Board and Supervi-
sory Board is included in the Siemens Group's publicly available
annual report.
• Siemens Healthineers was included in the cash pooling
and cash management of the Siemens Group. Thereby,
Siemens Healthineers invested excess liquidity in the short
term and was granted overdraft facilities for financing its
operating activities.
94
Equity interest
Sept 30, 2020
in %
Subsidiaries
Germany (15 companies)
Befund24 GmbH, Erlangen
85
Siemens Healthcare Diagnostics GmbH, Vienna/Austria
Siemens Healthcare Diagnostics Ltd., Frimley,
Surrey/United Kingdom
100
100
Dade Behring Grundstücks GmbH, Kemnath
94
Siemens Healthcare Diagnostics Manufacturing
100
NEO New Oncology GmbH, Cologne
1008
Limited, Swords, County Dublin/Ireland
Siemens Healthcare Diagnostics Products GmbH,
Marburg
1008
Siemens Healthcare Diagnostics Manufacturing Ltd,
Frimley, Surrey/United Kingdom
94
100
Siemens Healthcare GmbH, Munich
Equity interest
in %
Sept 30, 2020
and other expenses
Note 34 List of subsidiaries, joint ventures
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Note 32 Principal accountant fees
and associates pursuant to
Section 313 (2) of the German
Commercial Code
and services
Fees related to professional services rendered by the principal
accountant EY were:
(in millions of €)
Audit services
Other attestation services
Fiscal year
2020
2019
6.6
Total principal accountant fees
6.6
0.3
0.3
6.8
6.9
Note 33 Corporate Governance
The Managing Board and the Supervisory Board of
Siemens Healthineers AG provided the declaration required
by Section 161 of the German Stock Corporation Act ("Ak-
tiengesetz") as of September 30, 2020. The declaration is
available on the Group's website at www.corporate.siemens-
healthineers.com/investor-relations/corporate-governance.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
95
In fiscal year 2020, 42% (2019: 40%) of the total fees related to
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Germany.
Audit services related primarily to services provided by EY for au-
diting Siemens Healthineers' consolidated financial statements,
for auditing financial statements of Siemens Healthineers AG and
its subsidiaries, for reviews of interim financial statements be-
ing integrated into the audit and for project-accompanying IT
audits. Other attestation services included mainly other attes-
tation services required by law, contractually agreed or re-
quested on a voluntary basis.
in %
(Number of
No.
in %
No.
in %
meetings/participation in %)
in %
No.
No.
No.
in %
100
88
100
11/11
100
5/5
100
1/1
Committee
Dr. Norbert Gaus
Deputy Chairman
8/8
100
14/14
Prof. Dr. Ralf P. Thomas
Chairman
Related-Party Transactions
The Innovation and Finance Committee met twice during the
reporting period. Its work focused mainly on the preparation
of the budget approval by the Supervisory Board and the dis-
cussion of the Company's innovation strategy with particular
emphasis on molecular diagnostics. The Committee discussed
thoroughly the investment in an innovation hub that will be
housed in a new campus at Bengaluru, India. It will combine
the existing operations of the Research and Development Cen-
ter and the state-of-the-art manufacturing of medical imaging
systems. The Committee approved this promising digital proj-
ect in the growth market of India following intense discussion.
Audit Committee
100
The Supervisory Board held regular meetings, also in the ab-
sence of members of the Managing Board, especially to discuss
Supervisory Board matters and personnel issues affecting the
Managing Board.
Topics at the plenary meetings of the
Supervisory Board
The Supervisory Board held seven regular meetings and one
extraordinary meeting in fiscal year 2020 and adopted two res-
olutions by written circulation. Topics of discussion at our reg-
ular plenary meetings were the net assets, financial position
and results of operations of Siemens Healthineers, together
with its workforce development.
After in-depth consultations at our meeting of October 10, 2019,
we approved the Managing Board's medium-term plan and
budget for 2020, and examined in this context the second
phase (upgrading) of Strategy 2025.
At the meeting on October 31, 2019, we discussed the key finan-
cial data for the fourth quarter and for fiscal year 2019. The
Supervisory Board also determined the compensation for the
members of the Managing Board for fiscal year 2019 on the
basis of the calculated target achievement. We also adopted
the targets for the Managing Board's compensation for fiscal
year 2020 on the basis of the proposal made by the Chairman's
Committee.
On November 26, 2019, we dealt with the financial statements
and combined management report for Siemens Healthineers AG
and the Group for the year ended September 30, 2019; the
report on relationships with affiliated companies as of Septem-
ber 30, 2019, pursuant to Section 312 of the German Stock
Corporation Act ("Aktiengesetz"); the 2019 Annual Report,
including the report of the Supervisory Board, the corporate
governance report and the compensation report; and the
agenda for the Shareholders' Meeting on February 12, 2020. In
addition, we discussed the results of our own self-assessment.
Siemens Healthineers Annual Report 2020
Additional information Report of the Supervisory Board
-
At the meeting on January 31, 2020, the Managing Board re-
ported on the net assets, financial position and results of oper-
ations as of the end of the first quarter. We also discussed the
Annual Shareholders' Meeting 2020.
Directly after the Annual Shareholders' Meeting on Febru-
ary 12, 2020, a meeting of the Supervisory Board took place at
which we adopted amendments to both the Supervisory Board's
own bylaws and those of the Managing Board. We also passed
resolutions regarding the composition of the Innovation and
Finance Committee and the creation of a committee to handle
transactions with related parties (Related-Party Transactions
Committee).
At the meeting on May 4, 2020 we unanimously approved the
reappointments of the Managing Board members Dr. Bernhard
Montag (CEO) and Dr. Jochen Schmitz (CFO), both with effect
from March 1, 2021, until February 28, 2026. Furthermore, the
Managing Board reported to us on the net assets, financial po-
sition and results of operations as of the end of the second quar-
ter, including the effects of the COVID-19 pandemic. In view of
the new requirements of the Act Implementing the Second
Shareholders' Rights Directive (Gesetz zur Umsetzung der
zweiten Aktionärsrechterichtlinie - ARUG II) and of the thor-
oughly revised GCGC, we also dealt with questions regarding
the compensation paid to members of the Managing Board and
with the concept for a new compensation system for the Man-
aging Board. In this context, we also examined the appropriate-
ness review performed by an external compensation expert.
That review came to the conclusion that the Managing Board's
existing and planned compensation is appropriate when com-
pared both with the market (horizontally) and with the com-
pensation paid elsewhere within the company (vertically).
Our meeting of July 31, 2020 focused on the planned acquisi-
tion of Varian Medical Systems, Inc., which we approved unan-
imously following detailed discussions. Particular factors of
relevance in granting our approval were the transaction's con-
siderable potential to add value and create a highly integrated
portfolio for the global battle against cancer. During the same
meeting, we also dealt with the new sustainability strategy and
the associated materiality analysis to determine sustainability
issues of relevance. In addition to reviewing the Managing
Board's report on the Company's net assets, financial position
and results of operations on conclusion of the third quarter, we
also examined the new provisions of the thoroughly revised
German Corporate Governance Code which came into force on
March 20, 2020. The new Code also included key changes as
regards the composition of the Supervisory Board, with partic-
ular emphasis on the independence of the individual members.
Against this backdrop, and after in-depth discussions, we ad-
opted our revised profile of required skills and expertise, and
adapted our goals in relation to the composition of the Super-
visory Board.
One focus of debate at our extraordinary meeting of Septem-
ber 14, 2020, was improvements to our compensation system
for Managing Board members. On the recommendation of the
Chairman's Committee of the Supervisory Board, we adopted
amendments to that system, which will be submitted to the An-
nual Shareholders' Meeting for approval. We also dealt with the
latest Declaration of Conformity with the GCGC, prepared in ac-
cordance with Section 161 of the German Stock Corporation Act.
Work in the Supervisory Board committees
In order to perform our duties efficiently, we have established
a total of four committees, which prepare proposals for resolu-
tions and issues to be dealt with at the Supervisory Board's ple-
nary meetings. Some of the Supervisory Board's decision-mak-
ing powers have also been delegated to these committees
within the permissible legal framework. The committee chairs
report to the Supervisory Board on their committees' work at
the subsequent Board meeting. Details of the members and the
tasks of the individual Supervisory Board committees are pro-
vided in C.4.1.2 Supervisory Board.
The Chairman's Committee met 14 times in the reporting period
(seven of these were extraordinary). It also adopted two reso-
lutions by written circulation. Between meetings, the Chairman
of the Supervisory Board discussed topics of major importance
with the members of the Chairman's Committee. The Chair-
man's Committee dealt, in particular, with personnel matters
such as the regular reappointment of two members of the Man-
aging Board, long-term succession planning for the Managing
Board, compensation for the Managing Board, the Managing
Board members' acceptance of offices at other institutions, and
corporate governance issues. Special emphasis was placed on
the compensation system of the Managing Board with regard
to the requirements of ARUG II and the GCGC. Furthermore, the
Chairman's Committee was involved in the implementation of
a capital increase to finance the planned acquisition of Varian
Medical Systems, Inc. In the process, the Chairman's Commit-
tee either adopted resolutions itself or prepared resolutions
for the Supervisory Board. The Committee also prepared the
Supervisory Board's proposal to the Annual Shareholders'
Meeting for the election of one shareholder representative to
the Supervisory Board.
107
Siemens Healthineers Annual Report 2020
Additional information Report of the Supervisory Board
-
The Audit Committee held five meetings during the reporting
period. Together with the Managing Board and the indepen-
dent auditors, the committee discussed the annual financial
statements, consolidated financial statements and combined
management report for Siemens Healthineers AG and the Group
for fiscal year 2019, and the half-year financial report and quar-
terly statements for fiscal year 2020. In the presence of the
independent auditors, the Audit Committee also discussed the
audit reports on the annual financial statements, the consoli-
dated financial statements and the combined management re-
port, and the report on the auditors' review of the Group's half-
year consolidated financial statements and of the interim Group
management report. The committee engaged the independent
auditors to audit the annual and consolidated financial state-
ments for fiscal year 2020 and to review the interim financial
statements and financial information; it defined the focal
points for the audits and determined the auditors' fee. The
committee monitored the selection, independence, qualifica-
tion, rotation and efficiency of the independent auditors. The
Audit Committee also dealt with the Company's accounting and
accounting process, the effectiveness of the risk management
and internal control systems, the effectiveness, resources, find-
ings and audit plan for the internal audit, and also the reports
concerning compliance, regulatory compliance, and potential
and pending legal disputes.
The Related-Party Transactions Committee was newly estab-
lished on February 12, 2020 and convened once during the
reporting period to discuss the planned financing for the acqui-
sition of Varian Medical Systems, Inc. Specifically, we spoke of
a bridge facility that a Siemens AG subsidiary was to provide
transitionally to Siemens Healthineers and of a hedging trans-
action with Siemens AG and a related guarantee for the benefit
of Siemens AG. The Related-Party Transactions Committee
granted its approval to the financing arrangements having as-
sured itself that the conditions are in line with market condi-
tions.
For the fiscal year overall, the participation rate of members in
meetings of the Supervisory Board and its committees was
approximately 97%.
Personalized disclosure of the individual Supervisory Board members' attendance rates
Supervisory Board
(plenary meetings)
Chairman's Committee
Innovation and Finance
Committee
106
100
100
Dr. Philipp Rösler
8/8
100
Dr. Nathalie von Siemens
8/8
100
Dr. Gregory Sorensen
8/8
100
Karl-Heinz Streibich
8/8
100
97
98
2/2
100
2/2
1/1
100
89
100
100
Corporate Governance
The Declaration of Conformity with the German Corporate Gov-
ernance Code adopted on September 30, 2020, was made per-
manently available to shareholders on the Company's website.
It can also be found in C.4 Corporate Governance.
We regularly monitor the application and ongoing develop-
ment of our system of corporate governance. Detailed informa-
tion on corporate governance at the Company, including the
composition of the Supervisory Board, can be found in →C.4.2
Corporate Governance statement pursuant to Sections 289f and
315d of the German Commercial Code.
As Supervisory Board chairman, I maintained regular contact
between meetings with the Managing Board, in particular with
the Chief Executive Officer, and conferred with him on issues
of strategy, business development, the risk situation, risk man-
agement and compliance.
Audit of the annual and consolidated financial
statements discussed in detail
(until 12.02.2020)
2/2
100
33
Dr. Roland Busch
4/4
100
(since 12.02.2020)
Dr. Marion Helmes
8/8
100
5/5
100
1/1
100
Dr. Andreas C. Hoffmann
8/8
100
14/14
100
Michael Sen
2/4
50
2/3
༠」
5/5
100
1/1
100
67
1/3
1/1
The Supervisory Board and the relevant committees examined
and deliberated in detail on the proposals made by the Manag-
ing Board. Deviations from business plans were explained to us
in detail and discussed in depth.
In our opinion, on the basis of the knowledge obtained in the
audit,
In the year under review, all of us on the Supervisory Board ex-
ecuted, with due diligence, the duties assigned to us by law, by
the Siemens Healthineers articles of association and our own
bylaws, taking also into account the German Corporate Gover-
nance Code ("GCGC"). In this respect, we assisted and moni-
tored the Managing Board in its management of the Company.
Munich, November 19, 2020
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the net assets, financial
position and results of operations of the Group, and the Group's
management report, which has been combined with the man-
agement report for Siemens Healthineers AG, includes a fair
review of the development and performance of the business
and the position of the Group, together with a description of
the material opportunities and risks associated with the ex-
pected development of the Group.
C.1 Responsibility statement
Siemens Healthineers Annual Report 2020
Additional information - Responsibility statement
statements
forward-looking
Notes and
C.5
Page 122
C.4 Corporate Governance
Page 111
Supervisory Board
Report of the
C.3
Page 106
report
C.2 Independent auditor's
Page 101
statement
C.1 Responsibility
Page 100
99
Additional
information
C.
We also performed sensitivity analyses to assess the impair-
ment risk in case of changes in significant assumptions. In ad-
dition, we analyzed the disclosures in the notes to the consoli-
dated financial statements on the measurement of goodwill in
relation to the requirements of IAS 36. We consulted internal
valuation specialists to assess the recoverable amounts.
Our audit procedures did not lead to any reservations relating
to the testing of impairment of goodwill allocated to the "Diag-
nostics" cash-generating unit and capitalized development costs.
102
Siemens Healthineers AG
Siemens Healthineers Annual Report 2020
Additional information - Independent auditor's report
The Managing Board
Dr. Bernhard Montag
The independent auditors, Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft (Stuttgart, Germany), audited the annual
financial statements of Siemens Healthineers AG, the consoli-
dated financial statements of Siemens Healthineers and the
combined management report for Siemens Healthineers AG and
the Group for fiscal year 2020 and issued an unqualified opinion.
The annual financial statements of Siemens Healthineers AG and
the combined management report for Siemens Healthineers AG
and the Group were prepared in accordance with the require-
ments of German law. The consolidated financial statements
were prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union
and with the additional requirements of German law set out in
Testing impairment of goodwill ("Diagnostics") and
capitalized development costs
Reference to related disclosures: With regard to the recognition
and measurement policies applied for the recognition of reve-
nue, refer to → Note 2 Accounting policies in the notes to the
consolidated financial statements.
Our audit procedures did not lead to any reservations relating
to the recognition of revenue from the sale of products and the
provision of services.
Auditor's response: As part of our audit, we identified all signif-
icant revenue streams subject to different processes, risks and
controls. For these revenue streams we assessed the different
revenue recognition processes and the effectiveness of the ac-
counting-related internal control system in relation to revenue
recognition. We planned the nature, timing and scope of sub-
stantive audit procedures according to our individual assess-
ment of the risk inherent in the different revenue streams. Our
substantive procedures primarily involved analyses of disaggre-
gated data to determine whether there are any unexpected
discrepancies between revenue, cost of sales and trade receiv-
ables or contract assets, or any significant or extraordinary
changes in key performance indicators (e.g., revenue or gross
profit). We also performed correlation analyses and cut-off
analyses of revenue transactions around the reporting date. We
supplemented data analytics with sample testing specifically
focusing on revenues for imaging and therapy products and
assessed the amount and timing of revenue recognized on the
basis of contracts, invoices and delivery notes. As part of these
procedures, we also obtained external customer confirmations
and reviewed credit notes issued after the reporting date.
Reasons why the matter was determined to be a key audit matter:
The Group's revenue stems from the sale of imaging, diagnostics
and therapy products and related maintenance and other ser-
vices. Financial management and measurement of the operating
results of the segments is based on comparable revenue growth
and adjusted EBIT-margin. The development of these key perfor-
mance indicators is primarily determined by the amount of rev-
enue recognized. In view of the materiality of revenue and its
significance for the financial management of the Group, we
consider revenue recognition to be an area posing a significant
risk of material misstatement (including the potential risk of
managers circumventing controls) and a key audit matter.
Revenue recognition
Below, we describe what we consider to be the key audit matters:
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consol-
idated financial statements for the fiscal year from October 1,
2019 to September 30, 2020. These matters were addressed in
the context of our audit of the consolidated financial state-
ments as a whole, and in forming our opinion thereon; we do
not provide a separate opinion on these matters.
Key audit matters in the audit of the consolidated
financial statements
Siemens Healthineers Annual Report 2020
Additional information - Independent auditor's report
101
We conducted our audit of the consolidated financial state-
ments and of the group management report in accordance
with Sec. 317 HGB and the EU Audit Regulation (No 537/2014,
referred to subsequently as "EU Audit Regulation") and in
compliance with German Generally Accepted Standards for
Financial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). In conducting the audit of the consolidated financial
statements we also complied with International Standards on
Auditing (ISA). Our responsibilities under those requirements,
principles and standards are further described in the "Audi-
tor's responsibilities for the audit of the consolidated financial
statements and of the group management report" section of
our auditor's report. We are independent of the group entities
in accordance with the requirements of European law and Ger-
man commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Art. 10
(2) f) of the EU Audit Regulation, we declare that we have not
provided non-audit services prohibited under Art. 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis
for our opinions on the consolidated financial statements and
on the group management report.
Basis for the opinions
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our
audit has not led to any reservations relating to the legal com-
pliance of the consolidated financial statements and of
the group management report.
⚫ the accompanying group management report, as a whole,
provides an appropriate view of the Group's position. In all
material respects, this group management report is consistent
with the consolidated financial statements, complies with
German legal requirements and appropriately presents the
opportunities and risks of future development. Our opinion
on the group management report does not cover the content
of the Corporate Governance statement referred to above.
⚫ the accompanying consolidated financial statements comply,
in all material respects, with the International Financial Re-
porting Standards (IFRSS) as adopted by the European Union
(EU), and the additional requirements of German commercial
law pursuant to Sec. 315e (1) HGB ["Handelsgesetzbuch": Ger-
man Commercial Code] as well as with full IFRSS as issued by
the International Accounting Standards Board (IASB), and, in
compliance with these requirements, give a true and fair
view of the assets, liabilities and financial position of
the Group as of September 30, 2020 and of its financial per-
formance for the fiscal year from October 1, 2019 to Septem-
ber 30, 2020, and
We have audited the consolidated financial statements of
Siemens Healthineers AG, Munich, and its subsidiaries (the Group),
which comprise the consolidated statements of income and com-
prehensive income for the fiscal year from October 1, 2019 to
September 30, 2020, the consolidated statements of financial
position as of September 30, 2020, the consolidated statements
of cash flows and changes in equity for the fiscal year from Oc-
tober 1, 2019 to September 30, 2020, and notes to the consoli-
dated financial statements, including a summary of significant
accounting policies. In addition, we have audited the group
management report of Siemens Healthineers AG, which is com-
bined with the management report of Siemens Healthineers AG,
for the fiscal year from October 1, 2019 to September 30, 2020.
In accordance with the German legal requirements we have not
audited the content of chapter A.7.4 Corporate Governance
statement of the Combined Management Report, including chapter
→C.4.2 Corporate Governance statement pursuant to Sections 289f
and 315d of the German Commercial Code of the Annual Report 2020
referred to in chapter A.7.4 Corporate Governance statement.
Opinions
Report on the audit of the consolidated
financial statements and of the group
management report
To Siemens Healthineers AG, Munich
C.2 Independent auditor's report
Siemens Healthineers Annual Report 2020
Additional information - Independent auditor's report
100
Dr. Christoph Zindel
Dr. Jochen Schmitz
Schmit
B. lllowtan
The Managing Board involved us in a direct, timely and com-
prehensive manner in all decisions of a fundamental nature. By
means of written and verbal reports, both during and outside
of planned meetings, the Managing Board provided us with
regular, prompt and thorough information. We were informed
of all relevant aspects of the Company's business planning in-
cluding financial, investment and personnel planning, financial
position and profitability.
Reference to related disclosures: With regard to the testing of
impairment of goodwill and other intangible assets, including
capitalized development costs, refer to → Note 2 Account-
ing policies in the notes to the consolidated financial state-
ments. For explanatory notes on goodwill and other intangi-
ble assets, refer to the disclosures in → Note 12 Goodwill and
→ Note 13 Other intangible assets and property, plant and equip-
ment in the notes to the consolidated financial statements.
Reasons why the matter was determined to be a key audit matter:
On October 29, 2019, the merger of Siemens Healthineers with
Corindus Vascular Robotics, Inc., USA ("Corindus"), was completed.
Siemens Healthineers holds 100% of the shares and accounts for
the business combination in accordance with IFRS 3, Business
Combinations. Considering the assumptions and estimates re-
quired to be made by management as part of the purchase price
allocation, specifically with regard to the measurement of ac-
quired technology, the accounting for this business combination
was a key audit matter.
Siemens Healthineers Annual Report 2020
Additional information - Independent auditor's report
• Conclude on the appropriateness of management's use of the
going concern basis of accounting and, based on the audit ev-
idence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on
the Group's ability to continue as a going concern. If we con-
clude that a material uncertainty exists, we are required to
draw attention in the auditor's report to the related disclosures
in the consolidated financial statements and in the group man-
agement report or, if such disclosures are inadequate, to mod-
ify our respective opinions. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to
cease to be able to continue as a going concern.
• Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSS as ad-
opted by the EU and the additional requirements of German
commercial law pursuant to Sec. 315e (1) HGB as well as with
full IFRSS as issued by the IASB.
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the group management report.
We are responsible for the direction, supervision and perfor-
mance of the group audit. We remain solely responsible for
our opinions.
• Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity with
German law, and the view of the Group's position it provides.
• Perform audit procedures on the prospective information pre-
sented by management in the group management report. On
the basis of sufficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used by manage-
ment as a basis for the prospective information, and evaluate
the proper derivation of the prospective information from
these assumptions. We do not express a separate opinion on
the prospective information and on the assumptions used as
a basis. There is a substantial unavoidable risk that future
events will differ materially from the prospective information.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence and where applicable, the related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report un-
less law or regulation precludes public disclosure about the
matter.
Other legal and regulatory requirements
Further information pursuant to Art. 10 of the EU
Audit Regulation
We were elected as group auditor by the Annual Shareholders'
Meeting on February 12, 2020. We were engaged by the Super-
visory Board on March 3, 2020. We have been the group audi-
tor of Siemens Healthineers AG without interruption since the
fiscal year from October 1, 2017 to September 30, 2018.
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the Audit Commit-
tee pursuant to Art. 11 of the EU Audit Regulation (long-form
audit report).
German Public Auditor responsible for the
engagement
The German public auditor responsible for the engagement is
Thomas Spannagl.
Munich, November 19, 2020
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
ания
Spannagl
Wirtschaftsprüfer
[German Public Auditor]
к
Tropschug
Wirtschaftsprüferin
[German Public Auditor]
105
Siemens Healthineers Annual Report 2020
Additional information - Report of the Supervisory Board
C.3 Report of the Supervisory Board
Dear Shareholders,
In 2020, the relevance of Siemens Healthineers for society
became more apparent than ever before. Since the COVID-19
pandemic began, the Company's employees have stood on the
front line together with their customers' medical personnel to
jointly implement measures to fight COVID-19 and at the same
time to maintain regular operations in the clinics. Their com-
mon goal was, and remains, to provide patients with the very
best care while simultaneously protecting themselves against
infection. From diagnosis to follow-up care, the portfolio of
Siemens Healthineers is linked to the entire sequence of treat-
ment for COVID-19 patients. This is just one aspect underscor-
ing the critical role that Siemens Healthineers plays in health-
care worldwide. What is more, in the third year after the IPO,
the Company has made increasing use of its entrepreneurial
independence to operationally and strategically develop fur-
ther alongside the goals it set for itself: the planned acquisition
of Varian Medical Systems, Inc. will make Siemens Healthineers
a leading provider of cancer therapies and will contribute to
improve success rates for the millions of patients battling this
disease. I am convinced that the societal relevance of
Siemens Healthineers will continue to increase. In my capacity
as Chairman of the Supervisory Board, I view it as my obligation
to provide this great Company with advice and support as it
grows. This is a task that I perform with conviction, pleasure
and dedication.
104
Business combinations ("Corindus")
management and the reasonableness of estimates made by
management and related disclosures.
• Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of ar-
rangements and measures (systems) relevant to the audit of
the group management report in order to design audit pro-
cedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of
these systems.
Auditor's response: Our audit procedures in relation to the pur-
chase price allocation included, in addition to assessing the
consideration transferred by Siemens Healthineers, the evalua-
tion of the methodology applied by the external valuation expert
engaged by management to identify and measure the assets
acquired under IFRS 3. Based on inquiries of management and
the external expert, we evaluated whether the external valua-
tion report qualifies as audit evidence. With the assistance of
internal valuation specialists, we analyzed whether assump-
tions and estimates (specifically growth rates, cost of capital,
royalty rates and remaining useful lives) used in determining the
fair values of identifiable assets acquired (specifically acquired
technology) correspond to general and industry-specific market
expectations. For the assessment of recognition and measurement
of acquired technology, we additionally utilized the expertise of
internal industry specialists. Furthermore, we reperformed the
calculations in the valuation models and reconciled the ex-
pected future cash flows underlying the impairment tests,
amongst others, to internal business plans. In addition, we eval-
uated the disclosures in the notes to the consolidated financial
statements regarding the acquisition of Corindus in terms of
their compliance with the requirements defined in IFRS 3.
Our audit procedures did not lead to any reservations relating
to the accounting for the Corindus business combination.
Reference to related disclosures: With regard to the recognition
and measurement policies applied in connection with the busi-
ness combination refer to Note 2 Accounting policies in the
notes to the consolidated financial statements. A description
of the transaction and disclosures on the purchase price allo-
cation are included in → Note 3 Acquisitions in the notes to the
consolidated financial statements.
Other information
The Supervisory Board is responsible for the Report of the
Supervisory Board in the Annual Report 2020. In all other
respects, management is responsible for the other information.
The other information, of which we received a version prior to
issuing this auditor's report, includes:
⚫ the Responsibility Statement in chapter →C.1 Responsibility
statement of the Annual Report 2020,
⚫ the Report of the Supervisory Board in chapter → C.3 Report
of the Supervisory Board of the Annual Report 2020,
• Corporate Governance in chapter →C.4 Corporate Governance
of the Annual Report 2020, and
• Notes and forward-looking statements in chapter →C.5 Notes
and forward-looking statements of the Annual Report 2020.
Our opinions on the consolidated financial statements and on
the group management report do not cover the other informa-
tion, and consequently we do not express an opinion or any
other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
is materially inconsistent with the consolidated financial
statements, with the group management report or our
knowledge obtained in the audit, or
• otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
103
Siemens Healthineers Annual Report 2020
Additional information - Independent auditor's report
Responsibilities of management and the
Supervisory Board for the consolidated
financial statements and the group
management report
Management is responsible for the preparation of the consoli-
dated financial statements that comply, in all material respects,
with IFRSS as adopted by the EU and the additional requirements
of German commercial law pursuant to Sec. 315e (1) HGB, as
well as with full IFRSS as issued by the IASB and that the consol-
idated financial statements, in compliance with these require-
ments, give a true and fair view of the assets, liabilities, financial
position and financial performance of the Group. In addition,
management is responsible for such internal control as manage-
ment has determined necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, manage-
ment is responsible for assessing the Group's ability to continue
as a going concern. It also has the responsibility for disclosing,
as applicable, matters related to going concern. In addition,
management is responsible for financial reporting based on the
going concern basis of accounting unless there is an intention
to liquidate the Group or to cease operations, or there is no re-
alistic alternative but to do so.
Furthermore, management is responsible for the preparation of
the group management report that, as a whole, provides an
appropriate view of the Group's position and is, in all material
respects, consistent with the consolidated financial statements,
complies with German legal requirements, and appropriately
presents the opportunities and risks of future development. In
addition, management is responsible for such arrangements
and measures (systems) as management has considered neces-
sary to enable the preparation of a group management report
that is in accordance with the applicable German legal require-
ments, and to be able to provide sufficient appropriate evidence
for the assertions in the group management report.
The Supervisory Board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and of the group management report.
Auditor's responsibilities for the audit of the
consolidated financial statements and of the
group management report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or er-
ror, and whether the group management report as a whole pro-
vides an appropriate view of the Group's position and, in all
material respects, is consistent with the consolidated financial
statements and the knowledge obtained in the audit, complies
with the German legal requirements and appropriately pres-
ents the opportunities and risks of future development, as well
as to issue an auditor's report that includes our opinions on the
consolidated financial statements and on the group manage-
ment report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec.
317 HGB and the EU Audit Regulation as well as in compliance
with German Generally Accepted Standards for Financial State-
ment Audits promulgated by the IDW and in supplementary
compliance with ISA will always detect a material misstate-
ment. Misstatements can arise from fraud or error and are con-
sidered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial state-
ments and this group management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
consolidated financial statements and of the group manage-
ment report, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for
our opinions. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Evaluate the appropriateness of accounting policies used by
108
Auditor's response: To assess the recoverable amounts of good-
will and capitalized development costs determined by manage-
ment, we examined the underlying processes and controls.
With regard to the recoverable amounts for goodwill, we addi-
tionally tested the effectiveness of controls related to budget-
ing future cash flows. We obtained an understanding of the
underlying valuation models used to determine the recover-
able amounts by verifying the applied methodology and arith-
metical correctness. To assess estimates of future net cash
flows, we reconciled approved budgets with the valuations
provided to us. We also examined whether the budget reflects
general, industry and product-specific market expectations, in-
cluding potential COVID-19 impacts. We performed a budget-
to-actual comparison of historically forecasted data and actual
results, where available, on a sample basis to assess forecast
accuracy. We examined the inputs used to estimate recoverable
amounts, such as the estimated growth rates and the discount
rates, by comparing them with publicly available market data
and assessing them in light of changes in key assumptions,
including future market conditions.
Reasons why the matter was determined to be a key audit matter:
Testing impairment for goodwill allocated to the "Diagnostics"
cash-generating unit and capitalized development costs in-
volves considerable judgment in estimating future cash flows
and discount rates. Estimation uncertainty in relation to future
net cash flows particularly exists due to the impact of COVID-19
pandemic. Consequently, the testing of goodwill ("Diagnos-
tics") and capitalized development costs for impairment was a
key audit matter.
President of acatech -
Deutsche Akademie der
German positions:
• Brainloop AG
Positions outside Germany:
• Fortum Corporation, Finland
• Loc Troi Group, Vietnam
Positions outside Germany:
• Siemens Gamesa Renewable Energy, S.A., Spain
German positions:
•
Messer Group GmbH
Siemens Aktiengesellschaft
Siemens Healthcare GmbH
•
•
TÜV SÜD AG
Positions outside Germany:
• Fusion Healthcare Staffing, LLC, USA
• Invicro, LLC, USA
⚫DFP Healthcare Acquisitions Corp., USA
German positions:
Deutsche Telekom AG
• Münchener Rückversicherungs-Gesellschaft AG
• Software AG (Chairman)
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
Targets for the Supervisory Board's composition
and profile of required skills and expertise
Taking into account the recommendations of the German Cor-
porate Governance Code ("GCGC"), the Supervisory Board has
adopted targets for its composition, including a profile of the
skills and expertise that the Supervisory Board should possess;
these are described in C.4.2.6 Targets for the composition,
profile of required skills and expertise, and diversity concept for the
Supervisory Board.
Supervisory Board committees
The Supervisory Board has four committees, whose duties,
responsibilities, and procedures fulfill the requirements of the
German Stock Corporation Act and the GCGC. The chairpersons
of these committees provide the Supervisory Board with regular
reports on the committees' activities.
The Chairman's Committee coordinates the work of the Super-
visory Board and prepares the meetings of the Supervisory
Board. It prepares the self-assessment of the Supervisory Board's
work and monitors the implementation of the resolutions ad-
opted by the Supervisory Board or its committees. It makes
proposals regarding the appointment and dismissal of Manag-
ing Board members and handles contracts with members of the
Managing Board. When making recommendations for first-time
appointments, it takes into account that the term of these ap-
pointments should not, as a rule, exceed three years. In prepar-
ing recommendations on the appointment of Managing Board
members, the Chairman's Committee takes into account the
candidates' professional qualifications, international experience
and leadership qualities, the age limit specified for Managing
Board members, the long-range plans for succession, and
diversity. It also takes into account the targets that the Supervi-
sory Board has specified for the share of women on the Manag-
ing Board. It decides on approving contracts and transactions
with members of the Managing Board and their related parties,
whether individuals or entities. The Chairman's Committee sub-
mits proposals to the Supervisory Board for setting the compen-
sation of the individual Managing Board members. The Chair-
man's Committee prepares resolutions of the Supervisory Board
regarding the systems of Managing Board and Supervisory Board
compensation, including the regular review of those systems.
The Chairman's Committee furthermore has the task of provid-
ing the Supervisory Board with recommendations of suitable
candidates for the board to nominate for election by the Annual
Shareholders' Meeting as new members of the Supervisory
Board. It therefore has the tasks of a nomination committee. In
preparing these recommendations, the targets defined by the
Supervisory Board for its composition are to be given due con-
sideration, along with the proposed candidates' required knowl-
edge, abilities, and professional experience. Fulfillment of the
profile of required skills and expertise is also to be aimed for.
The Chairman's Committee has furthermore been authorized
by the Supervisory Board to decide on the approval of Managing
Siemens Ltd., China
•
Positions outside Germany:
• Siemens Healthcare GmbH
2018
113
Memberships in supervisory boards whose establishment
is required by law or in comparable domestic or foreign
controlling bodies of business enterprises
(as of September 30, 2020)
German positions:
.
Siemens Energy AG
• Siemens Gas and Power Management GmbH
•
Siemens Healthcare GmbH (Chairman)
Positions outside Germany:
• Siemens Proprietary Ltd., South Africa
German positions:
Siemens Healthcare GmbH
German positions:
• ESMT European School of Management and
Technology GmbH
• Siemens Mobility GmbH (Chairman)
Positions outside Germany:
• Arabia Electric Ltd. (Equipment), Saudi Arabia
Siemens Ltd., Saudi Arabia
• Siemens W.L.L., Qatar
German positions:
• ProSiebenSat.1 Media SE (Vice Chairwoman)
Positions outside Germany:
⚫British American Tobacco p.l.c., United Kingdom
• Heineken N.V., The Netherlands
German positions:
Board proposals regarding appointment or dismissal of persons
in certain management positions at the first level below the
Managing Board, and the main principles of the compensation
and incentivization system for employees.
In fiscal year 2020, the Chairman's Committee had the following
members: Prof. Ralf P. Thomas, Dr. Nobert Gaus, Dr. Andreas C.
Hoffmann, and Michael Sen (until February 12, 2020). On Decem-
ber 1, 2019, Prof. Thomas replaced Michael Sen as Chairman.
The Audit Committee oversees, in particular, accounting and the
accounting process and conducts a preliminary review of the
annual financial statements of Siemens Healthineers AG, the
consolidated financial statements, and the combined manage-
ment report, as well as the report on relationships with
affiliated companies. On the basis of the independent auditors'
report on their audit of the financial statements, the Audit Com-
mittee makes, after its own preliminary review, recommenda-
tions regarding the Supervisory Board's approval of the annual
financial statements of Siemens Healthineers AG and the con-
solidated financial statements. The Audit Committee discusses
the quarterly statements and half-year financial report with the
Managing Board and the independent auditors and deals with
the auditors' reports on the review of the Group's half-year con-
solidated financial statements and interim management report.
It concerns itself with questions of risk management and over-
sees the effectiveness of the systems for internal control, risk
management, and internal auditing. The Audit Committee
receives regular reports from the internal audit department.
It prepares the Supervisory Board's recommendation to the
Annual Shareholders' Meeting concerning the election of the
independent auditors and submits the corresponding proposal
to the Supervisory Board. Once the Annual Shareholders' Meet-
ing has made a resolution, the Audit Committee awards the
audit contract to the independent auditors and monitors the
independent audit of the financial statements, particularly
the selection, independence, and qualification of the auditors.
It evaluates the quality of the audit and the work of the inde-
pendent auditors, including the additional services they pro-
vide. In this regard, the committee complies with the applicable
legal requirements, including in particular the requirements
under the EU Audit Regulation (Regulation (EU) No. 537/2014
of the European Parliament and of the Council of 16 April 2014
on specific requirements of statutory audits of public-interest
entities and repealing Commission Decision 2005/909/EC). The
Audit Committee furthermore concerns itself with monitoring
compliance, and with nonfinancial reporting and exemptions
from such reporting.
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
2. The Company fully complies with the recommendations of
the GCGC 2020 with just one exception:
Pursuant to C.10 sentence 2 and D.4 sentence 1 of the GCGC
2020 the Chairman of the Audit Committee shall be inde-
pendent.
As to the deviation declared in sections 1 and 2 on the inde-
pendence of the Chairman of the Audit Committee, the Com-
pany explains that is included in the consolidated financial
statements of the Siemens Group due to its affiliation with
Siemens AG. Against this background the assumption of the
functions of the Audit Committee of Siemens Healthineers AG
is strengthened by a representative of the majority shareholder
chairing the Audit Committee.
Munich, September 30, 2020
Siemens Healthineers AG
The Managing Board
The Supervisory Board
117
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
C.4.2.2 Information on corporate governance
practices
Suggestions of the German Corporate
Governance Code
In addition to the recommendations, the GCGC also contains
suggestions, compliance with which does not have to be dis-
closed. Since September 30, 2019, Siemens Healthineers AG
has complied with the suggestions with the exception of the
deviations from numbers 2.3.2 and 3.7 subsection 3 of GCGC
2017 explained below. In addition, the Company complies with
all the suggestions of GCGC 2020, with the exception of A.5.
Pursuant to number 2.3.2 of GCGC 2017, the proxy appointed
by the Managing Board to exercise shareholders' voting rights
as instructed should also be reachable during the Shareholders'
Meeting. The proxies appointed by Siemens Healthineers AG
were personally available to the attending shareholders during
the 2020 Annual Shareholders' Meeting. However, due to tech-
nical constraints, instructions on voting could not be given to
the proxies electronically until the end of the general debate.
The suggestion previously contained in number 2.3.2 of GCGC
2017 was removed from the new version of the GCGC of De-
cember 16, 2019.
Pursuant to number 3.7 subsection 3 of GCGC 2017 and A.5 of
GCGC 2020, in the case of a takeover offer, the Managing Board
should convene an extraordinary shareholders' meeting at
which shareholders discuss the takeover offer and may decide
on corporate actions. The convening of a shareholders' meet-
ing, even taking into account the shortened time limits stipu-
lated in the German Securities Acquisition and Takeover Act, is
an organizational challenge for large publicly listed companies.
It appears doubtful whether the associated effort is also justi-
fied in cases where no relevant decisions by the shareholders'
meeting are intended. Therefore, extraordinary shareholders'
meetings are convened only in appropriate cases.
Further corporate governance practices applied beyond legal
requirements are contained in the business conduct guidelines.
Business conduct guidelines
The Siemens Healthineers business conduct guidelines provide
the ethical and legal framework within which the Company in-
tends to operate and to remain on course for success. They
contain the basic principles and rules for the conduct of all
Siemens Healthineers employees within the Company and in
relation to our external partners and the general public. They
set out how Siemens Healthineers meets its ethical and legal
responsibilities as a company.
C.4.2.3 Managing Board and Supervisory
Board procedures, and composition
and procedures of their committees
The composition and procedures of the Managing Board and
Supervisory Board, and of the committees of the Supervisory
Board, are described in C.4.1 Management and control structure.
Further details can be found in the bylaws for the corporate
bodies concerned. The names of the respective committee
members and of the committee chairman are mentioned in
→C.4.1.2 Supervisory Board. Information on the self-evaluation
regarding the work of the Supervisory Board can be found here
→C.4.1.2 Supervisory Board.
The information and documents named, including the GCGC
and the business conduct guidelines, are publicly available at:
→ www.corporate.siemens-healthineers.com/investor-relations/
corporate-governance.
C.4.2.4 Targets for the share of women
on the Managing Board and at the
management level immediately
below the Managing Board; target
for the share of women on the
Supervisory Board
Pursuant to the German Stock Corporation Act, the Supervisory
Board is to set targets for the share of women on the Managing
Board and Supervisory Board. The Managing Board is to set tar-
gets for the share of women at the two levels of management
below the Managing Board. If the share of women is less than
30% when the targets are set, the targets cannot be below the
level that has already been achieved.
At Siemens Healthineers AG, targets have been set for the Man-
aging Board to include at least one woman by June 30, 2023,
and for the first management level below the Managing Board
to include at least 25% women by June 30, 2022. There is only
one level of management below the Managing Board. A target
has been set for the Supervisory Board to be composed of at
least 2/9 of women by June 30, 2023.
118
By taking over the position as Chairman of the Supervisory
Board on December 1, 2019, Prof. Dr. Ralf P. Thomas had been
in the temporary situation to chair both the Supervisory
Board and the Audit Committee contemporaneously. This de-
viation as to section 5.3.2 subsection 3 sentence 3 of the
GCGC 2017 has ceased to apply when Dr. Andreas C. Hoff-
mann assumed the function as Chairman of the Audit Com-
mittee on February 1, 2020.
1952
Pursuant to section 5.3.2 subsection 3 sentences 2 and 3 of
the GCGC 2017 the Chairman of the Audit Committee shall
be independent and the Chairman of the Supervisory Board
shall not chair the Audit Committee.
Since the last issuance of the Declaration of Conformity dated
September 30, 2019, Siemens Healthineers AG ("Company"),
except for the deviations set out below in section 1, has fully
complied with the recommendations of the German Corporate
Governance Code ("GCGC") as amended on February 7, 2017
("GCGC 2017"). Furthermore, the Company meets all recom-
mendations of the GCGC as amended on December 16, 2019
(valid from March 20, 2020, "GCGC 2020") except for the devi-
ation stated in section 2 and will continue to meet all recom-
mendations except for the said deviation.
In fiscal year 2020, the Audit Committee had the following
members: Dr. Andreas C. Hoffmann, Dr. Marion Helmes, Michael
Sen (until February 12, 2020), and Prof. Ralf P. Thomas. On Feb-
ruary 1, 2020, Dr. Hoffmann replaced Prof. Thomas as Chair-
man. The members of the Audit Committee are collectively
familiar with the sector in which the Company operates. Pur-
suant to the German Stock Corporation Act, the Audit Commit-
tee must include at least one Supervisory Board member with
knowledge and experience in the areas of accounting or the
auditing of financial statements. Pursuant to the GCGC, the
Chair of the Audit Committee should have specific knowledge
and experience in applying accounting principles and internal
control procedures and be familiar with audits of financial
statements. This person should also be independent. Both
the current Chairman of the Audit Committee, Dr. Andreas C.
Hoffmann, and the previous Chairman of the Audit Commit-
tee, Prof. Ralf P. Thomas, fulfill these requirements, with the
exception of the requirement of independence, as the GCGC
does not view representatives of a controlling shareholder as
independent.
The Innovation and Finance Committee particularly has the
task, based on the Company's overall strategy, of discussing
the innovation strategy and preparing the Supervisory Board's
discussions and resolutions relating to the Company's financial
situation and resources, as well as the Company's investments
in property, plant, and equipment and its financial measures.
In addition, the Innovation and Finance Committee has been
authorized by the Supervisory Board to decide on the approval
of transactions and measures that require Supervisory Board
approval and have a value of less than € 300 million. The Inno-
vation and Finance Committee furthermore deals with
Siemens Healthineers AG's corporate, brand and design image
and that of its dependent companies, particularly its image
as a Siemens company (the Siemens Brand), and is authorized
by the Supervisory Board to decide on changes or other mea-
sures in this regard.
In fiscal year 2020, the Innovation and Finance Committee had
the following members: Prof. Ralf P. Thomas (since December 1,
2019), Dr. Roland Busch (since February 12, 2020), Dr. Norbert
Gaus, Michael Sen (until November 30, 2019), Dr. Gregory
Sorensen, and Karl-Heinz Streibich. Prof. Thomas replaced
Michael Sen as Chairman.
The Related-Party Transactions Committee decides on the
approval of related party transactions within the meaning of
Sections 107 and 111a to 111c of the German Stock Corpora-
tion Act. The establishment of this new committee creates the
conditions that allow the Supervisory Board to deal with related
party transactions independently of the related parties involved
in the transaction concerned. Within the scope specified above,
the committee's responsibility for making decisions pertaining
to related party transactions takes priority over the responsibility
of other committees to make decisions.
The Related-Party Transactions Committee was established as
a new committee on February 12, 2020; it has three members,
who are elected by the Supervisory Board. The majority of
members of the committee, including the committee chair-
woman, are individuals for whom there are no concerns about
conflicts of interest due to their relations with related parties.
In fiscal year 2020, the committee had the following members:
Dr. Marion Helmes (Chairwoman), Dr. Andreas C. Hoffmann,
and Karl-Heinz Streibich.
Self-evaluation of the work of
the Supervisory Board
The Supervisory Board regularly evaluates how effectively the
Supervisory Board as a whole and its committees discharge
their duties. In fiscal year 2020, the Supervisory Board con-
ducted a questionnaire-based self-evaluation. The self-evalua-
tion focused on the Supervisory Board's supply of information,
the conduct of meetings of the Supervisory Board and its com-
mittees, and the composition of the Supervisory Board and its
committees.
C.4.1.3 Share transactions by members of the
Managing and Supervisory Boards
Pursuant to Article 19 of Regulation (EU) No 596/2014 of the
European Parliament and of the Council of 16 April 2014 on
market abuse (Market Abuse Regulation) and repealing Direc-
tive 2003/6/EC of the European Parliament and of the Council
and Commission Directives 2003/124/EC, 2003/125/EC, and
2004/72/EC, members of the Managing Board and the Super-
visory Board are required by law to disclose all transactions
conducted on their own account relating to the shares or debt
instruments of Siemens Healthineers AG or to derivatives or
other financial instruments linked thereto, if the total value of
such transactions entered into by a board member or any re-
lated party of that member reaches or exceeds €20,000 in any
calendar year. All transactions reported during the past fiscal
year to Siemens Healthineers AG in accordance with this re-
quirement have been duly published and are available on the
Company's website at www.corporate.siemens-healthineers.
com/investor-relations/corporate-governance/directors-dealings.
115
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
C.4.1.4 Annual Shareholders' Meeting
Shareholders exercise their rights at the Annual Shareholders'
Meeting. The ordinary Annual Shareholders' Meeting takes
place within the first eight months of each fiscal year. The
Annual Shareholders' Meeting decides, among other things, on
the appropriation of unappropriated net income, the ratifi-
cation of the acts of the Managing and Supervisory Boards, and
the appointment of the independent auditors. Amendments
to the Articles of Association and measures that change
Siemens Healthineers AG's capital stock are approved by the
Annual Shareholders' Meeting and are implemented by the
Managing Board. The Managing Board facilitates shareholder
participation in this meeting through electronic communica-
tions - in particular, via the Internet - and enables sharehold-
ers who are unable to attend the meeting to vote by proxy.
Furthermore, shareholders may exercise their right to vote in
writing or by means of electronic communications (absentee
voting). The Managing Board may enable shareholders to
participate in the Annual Shareholders' Meeting without the
need to be present at the venue and without a proxy and to
exercise some or all of their rights fully or partially by means of
electronic communications. Shareholders may submit motions
regarding the resolutions proposed by the Managing and
Supervisory Boards and may contest decisions of the Annual
Shareholders' Meeting. Shareholders owning an aggregate
value of €100,000 or more of the issued capital may also de-
mand a court appointment of special auditors to examine specific
issues. The reports, documents, and information required by
law for the Annual Shareholders' Meeting, including the Annual
Report, may be downloaded from our website. The same ap-
plies to the agenda for the Annual Shareholders' Meeting and
to any opposing motions or shareholders' nominations that are
required to be disclosed.
Pursuant to the German Act on Measures in Corporate, Cooper-
ative, Association, Foundation, and Residential Property Law to
Combat the Effects of the COVID-19 Pandemic (Gesetz über
Maßnahmen im Gesellschafts-, Genossenschafts-, Vereins-,
Stiftungs- und Wohnungseigentumsrecht zur Bekämpfung der
Auswirkungen der COVID-19-Pandemie), the Managing Board,
subject to the approval of the Supervisory Board, may resolve
that the Annual Shareholders' Meeting be held as a virtual an-
nual shareholders' meeting without the physical presence of
shareholders or their authorized representatives, if there is a
video and audio broadcast of the entire meeting, shareholders
can exercise their voting rights using electronic communication
(absentee voting or electronic participation) and voting instruc-
tions can be issued to proxies, shareholders are given the option
to ask questions using electronic communication, and share-
holders who have exercised their voting rights are given the
option to contest decisions of the Annual Shareholders' Meeting
without having to appear at the Annual Shareholders' Meeting.
The Managing Board decides at its due discretion to which
questions it will respond and how; it may also specify that ques-
tions must be submitted by way of electronic communication
by no later than two days before the meeting. The Managing
Board may resolve, subject to the approval of the Supervisory
Board, that, contrary to Section 175 (1) sentence 2 of the
German Stock Corporation Act, the Annual Shareholders' Meet-
ing take place in the course of the fiscal year. The provisions of
the German Act on Measures in Corporate, Cooperative, Asso-
ciation, Foundation, and Residential Property Law to Combat
the Effects of the COVID-19 Pandemic relating to the conduc-
tion of annual shareholders' meetings initially only applied to
annual shareholders' meetings held in 2020. However, the Fed-
eral Ministry of Justice and Consumer Protection was autho-
rized to extend the validity to no later than December 31, 2021,
if this seemed expedient due to the ongoing effects of the
COVID-19 pandemic in the Federal Republic of Germany. The
Federal Ministry of Justice and Consumer Protection exercised
this option by a regulation, which became effective on October
29, 2020, that provides a prolongation of the rules about vir-
tual annual shareholders' meetings until the end of 2021.
C.4.1.5 Investor relations
As part of investor relations activities, investors are comprehen-
sively informed about developments within the Company. For
reporting purposes, Siemens Healthineers also makes extensive
use of the Internet. At www.corporate.siemens-healthineers.com/
investor-relations, we publish quarterly statements, half-year
financial and annual reports, ad hoc announcements, analyst
presentations, and press releases, as well as the financial
calendar for the current year, which contains the publication
dates of significant financial communications and the date of
the Annual Shareholders' Meeting.
Our articles of association, the bylaws for the Supervisory
Board and its committees, the bylaws for the Managing Board,
the declaration of conformity, and a variety of other corporate
governance related documents are posted on our website at
→ www.corporate.siemens-healthineers.com/investor-relations/
corporate-governance.
116
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
C.4.2 Corporate Governance
statement pursuant to Sections
289f and 315d of the German
Commercial Code
The corporate governance statement pursuant to Sections 289f
and 315d of the German Commercial Code is an integral part
of the combined management report. Pursuant to Section 317
(2) sentence 6 of the German Commercial Code, the indepen-
dent auditor's review of the disclosures made within the scope
of Sections 289f and 315d of the German Commercial Code is to
be limited to ascertaining whether the disclosures were made.
C.4.2.1 Declaration of conformity with the
German Corporate Governance Code
The Managing Board and the Supervisory Board of Siemens
Healthineers AG approved the following declaration of confor-
mity pursuant to Section 161 of the German Stock Corporation
Act as of September 30, 2020:
1. Since the issuance of the last Declaration of Conformity
dated September 30, 2019 all recommendations of the GCGC
2017 have been met with the following exceptions:
Technikwissenschaften
114
109
As the Company's top management body, the Managing Board
is committed to serving the Company's interests and achieving
sustainable growth in the Company's value. The members of
the Managing Board are jointly responsible for the entire man-
agement of the Company and decide on the basic issues of
business policy and corporate strategy, as well as on the Com-
pany's annual and multiyear plans.
The Managing Board prepares the quarterly statements and
the half-year financial report, the annual financial statements
of Siemens Healthineers AG, the consolidated financial state-
ments of the Group, and the combined management report of
Siemens Healthineers AG and the Group. In addition, the Man-
aging Board ensures that the Company adheres to the require-
ments of legislation, government regulations, and internal
Company guidelines, and works to ensure that Group com-
panies comply with these provisions and guidelines. The
Managing Board has established a comprehensive compliance
management system. Details are available on the website at
→www.corporate.siemens-healthineers.com/compliance.
The Supervisory Board has defined a target for the share of
women on the Managing Board of Siemens Healthineers AG,
and has set a deadline for its attainment. The Managing Board
has defined a target for the share of women at the manage-
ment level immediately below the Managing Board, and has
set a deadline for its attainment. The details are presented in
→C.4.2.4 Targets for the share of women on the Managing Board and
at the management level immediately below the Managing Board;
target for the share of women on the Supervisory Board.
Information on the areas of responsibility and the curricula vi-
tae of the members of the Managing Board are available on the
Company's website at www.corporate.siemens-healthineers.com/
about/management. Information on the compensation paid to mem-
bers of the Managing Board is provided in section →A.8 Compen-
sation report.
111
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
Members of the Managing Board and positions
held by Managing Board members
In fiscal year 2020 the Managing Board comprised the follow-
ing members:
Name
Year of birth
First appointed
C.4.1.1 Managing Board
Dr. Bernhard Montag
2018
Term expires
2026
External positions
(as of September 30, 2020)
None
Memberships in supervisory boards whose establishment
is required by law or in comparable domestic or foreign
controlling bodies of business enterprises
Group company positions
(as of September 30, 2020)
None
Chief Executive Officer
Dr. Jochen Schmitz
1966
2018
2026
German positions:
1969
Siemens Healthineers AG is subject to German stock corpora-
tion law. It therefore has a two-tier board structure, consisting
of a Managing Board and a Supervisory Board.
C.4.1 Management and control structure
C.4 Corporate Governance
Siemens Healthineers Annual Report 2020
Additional information Report of the Supervisory Board
-
Section 315e (1) of the German Commercial Code ("Handels-
gesetzbuch"). The consolidated financial statements also com-
ply with IFRS as issued by the International Accounting Stan-
dards Board (IASB). The independent auditors conducted their
audit in accordance with Section 317 of the German Commer-
cial Code, the EU Audit Regulation and German generally ac-
cepted standards for the audit of financial statements promul-
gated by the Institut der Wirtschaftsprüfer (IDW), as well as in
supplementary compliance with the International Standards
on Auditing (ISA). The aforementioned documents, as well as
the Managing Board's proposal for the appropriation of net in-
come, were submitted to us in advance by the Managing Board.
The Audit Committee discussed the dividend proposal in detail
at its meeting on October 30, 2020. It discussed the annual
financial statements, the consolidated financial statements and
the combined management report in detail at its meeting on
November 20, 2020. In this context, the Audit Committee con-
cerned itself, in particular, with key audit matters as described
in the independent auditors' report, including the audit proce-
dures implemented. The auditors' reports were presented to all
members of the Supervisory Board. We reviewed these reports
comprehensively at our meeting on November 20, 2020, in the
presence of the independent auditors The independent audi-
tors reported on the scope, focal points and main findings of
their audit, addressing, in particular, key audit matters and the
audit procedures implemented. No major weaknesses in the
risk management or internal control systems were reported. At
the same meeting, the Managing Board explained the financial
statements of Siemens Healthineers AG and the Group as well
as the risk management system. Another topic addressed at this
meeting was the quality evaluation of the audit of the financial
statements. The Audit Committee performed an evaluation
based on previously determined audit quality indicators. On the
basis of this evaluation, the Supervisory Board approved the
proposal to be submitted to the Annual Shareholders' Meeting
regarding the election of the independent auditors, taking into
account the Audit Committee's recommendation.
The Supervisory Board concurs with the results of the audit.
Based on the definitive results of the Audit Committee's prelim-
inary examination and our own examination, we have no ob-
jections. The Managing Board prepared the annual financial
statements and the consolidated financial statements. We ap-
proved the annual financial statements and the consolidated
financial statements. In view of our approval, the annual finan-
cial statements of Siemens Healthineers AG are adopted as sub-
mitted. The Managing Board has proposed that the net income
available for distribution be used to pay out a dividend of €0.80
per share entitled to a dividend and that the amount of net in-
come attributable to shares of stock not entitled to receive a
dividend for the past fiscal year be carried forward. We have
endorsed this proposal.
Review of the Managing Board's report on
relationships with affiliated companies
As of the end of the fiscal year, Siemens AG (directly and indi-
rectly) held 79% of the issued capital of Siemens Healthineers AG.
Siemens Healthineers AG is included as a fully consolidated sub-
sidiary in Siemens AG's consolidated financial statements.
For that reason, the Managing Board of Siemens Healthineers AG
prepared a report on relationships with affiliated companies
(dependent company report) for the fiscal year 2020 in accor-
dance with Section 312 of the German Stock Corporation Act,
and submitted it in good time to the Supervisory Board. The
dependent company report was audited by the independent
auditors. Since, on the basis the final results of the audit, no
objections were raised, the independent auditors issued the fol-
lowing audit opinion in accordance with Section 313 (3) of the
German Stock Corporation Act: "Based on our audit and assess-
ment, which were carried out in accordance with professional
standards, we confirm that (1.) the factual statements made in
the report are correct, (2.) the payments made by the Company
in connection with legal transactions detailed in the report
were not unreasonably high, (3.) there are no circumstances
that would require a materially different assessment of the
measures listed in the report than that of the Managing Board."
The dependent company report and the independent auditors'
audit report were submitted to the Audit Committee and the
Supervisory Board and were reviewed by them. The review led
to no objections. In accordance with the definitive results of
the preliminary review by the Audit Committee and our own
review, the Supervisory Board has no objections to the Manag-
ing Board's declaration on relationships with affiliated compa-
nies. The Supervisory Board concurs with the results of the in-
dependent auditors' audit of the dependent company report.
Siemens Healthineers Annual Report 2020
Additional information Report of the Supervisory Board
Changes in the composition of the Supervisory
and Managing Boards
-
The following changes occurred in the composition of the
Supervisory and Managing Boards in the reporting period:
Supervisory Board
Mr. Michael Sen resigned from the Supervisory Board with effect
from the end of the Annual Shareholders' Meeting on Febru-
ary 12, 2020.
The Annual Shareholders' Meeting elected Dr. Roland Busch as
a new member of the Supervisory Board with effect from the
end of the Annual Shareholders' Meeting on February 12, 2020,
until the end of the Annual Shareholders' Meeting to resolve
on the ratification of actions for the fourth fiscal year after the
beginning of the term of office. In the Supervisory Board meeting
directly following the Annual Shareholders' Meeting on Febru-
ary 12, 2020, he was elected as a member of the Innovation
and Finance Committee. Having held positions of responsibility
for many years at Siemens AG, Dr. Busch can contribute both
valuable experience and company-specific expertise. During
his inauguration process, he talked in person to the Chairman
of the Supervisory Board, the Chief Executive Officer and other
key persons within the Company.
Further Supervisory Board changes occurred in the reporting
period. I took over from Mr. Michael Sen as Chairman of the
Supervisory Board on December 1, 2019. I also took over the chair
of the Innovation and Finance Committee from Mr. Michael Sen.
My position as chair of the Audit Committee was filled by
Dr. Andreas C. Hoffmann on February 1, 2020. Dr. Marion
Helmes was appointed chair of the newly established Related-
Party Transactions Committee as of February, 12, 2020.
Managing Board
Mr. Michael Reitermann resigned from the Managing Board,
effective September 30, 2019. Dr. Christoph Zindel was
appointed member of the Managing Board with effect from
October 1, 2019 until September 30, 2022.
During the reporting period, we also unanimously approved
the reappointments of Dr. Bernhard Montag as member of the
Managing Board and Chief Executive Officer and Dr. Jochen
Schmitz as member of the Managing Board and Chief Financial
Officer, both with effect from March 1, 2021, until Febru-
ary 28, 2026.
On behalf of the Supervisory Board, I wish to thank all employees
of Siemens Healthineers for their extraordinary dedication in
the past year which was marked by the pandemic. I also want
to express my gratitude to the members of the Managing
Board, who successfully led the Company through another
demanding year. And I would especially like to thank you our
shareholders for the trust you have placed in our Company and
its management, employees and technologies over the past
fiscal year.
Munich, November 20, 2020
For the Supervisory Board
Ray Thomas
Prof. Dr. Ralf P. Thomas
Chairman
110
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
None
• Universitätsklinikum
The Managing Board and the Supervisory Board cooperate
closely for the Company's benefit. The Managing Board informs
the Supervisory Board regularly, comprehensively, and without
delay on all issues of importance to the Company with regard
to strategy, planning, business development, the risk situation,
risk management, and compliance. When filling managerial po-
sitions at the Company, the Managing Board takes diversity into
consideration and, in particular, aims for an appropriate con-
sideration of women and internationality.
Dr. Christoph Zindel
Supervisory board member
1965
2018
Dr. Andreas C. Hoffmann
General Counsel of
Siemens Aktiengesellschaft
1964
2018
Dr. Philipp Rösler
Supervisory board member
1973
2018
Michael Sen
(until 12.02.2020)
as of 12.02.2020
Member of the Managing
1968
2018
Board of Siemens Aktien-
gesellschaft
Dr. Nathalie von Siemens
Supervisory board member
1971
Augsburg
Dr. Gregory Sorensen
Founder and CEO of
DeepHealth, Inc. (artificial in-
telligence division of RadNet,
Inc.) and Executive Chairman
of IMRIS (Deerfield Imaging,
Inc.)
1962
2018
Karl-Heinz Streibich
Dr. Marion Helmes
2020
2018
2018
1964
1961
2019
2022
None
C.4.1.2 Supervisory Board
The Supervisory Board oversees and advises the Managing Board
in its management of the Company's business. At regular inter-
vals, the Supervisory Board discusses business development,
planning, strategy, and strategy implementation. It reviews the
annual financial statements of Siemens Healthineers AG, the
consolidated financial statements, and the combined manage-
ment report, as well as the proposal for the appropriation of
net income. It approves the annual financial statements of
Siemens Healthineers AG as well as the consolidated financial
statements, based on the results of the preliminary review con-
ducted by the Audit Committee and taking into account the
reports of the independent auditors. The Supervisory Board
decides on the Managing Board's proposal for the appropria-
tion of net income and the Report of the Supervisory Board to
the Annual Shareholders' Meeting. In addition, the Supervisory
Board or the Audit Committee, as appropriate, concerns itself
with monitoring the Company's compliance with the require-
ments of legislation, government regulations, and internal
Company guidelines. The Supervisory Board also appoints the
members of the Managing Board and determines each mem-
ber's business responsibilities. Important Managing Board de-
cisions such as those regarding major acquisitions, divest-
ments, investments in property, plant, and equipment, or
financial measures – are subject to Supervisory Board approval,
unless the bylaws for the Supervisory Board specify that such
authority is delegated to one of the Supervisory Board commit-
tees. In the bylaws for the Managing Board, the Supervisory
Board has established the rules that govern the Managing
Board's work.
-
Detailed information on the work of the Supervisory Board is
provided in →C.3 Report of the Supervisory Board. The curricula
vitae of the members of the Supervisory Board are available on
the Company's website at www.corporate.siemens-healthineers.
com/about/supervisory-board. Information on the compensation
paid to the members of the Supervisory Board is provided in
→A.8 Compensation report.
The Supervisory Board of Siemens Healthineers AG has nine
members. It is composed entirely of shareholder representatives.
The terms of office of the members of the Supervisory Board
who were appointed in 2018 will expire at the conclusion of the
Annual Shareholders' Meeting in 2023. The term of office of
the member of the Supervisory Board who was appointed in
2020 will expire at the conclusion of the Annual Shareholders'
Meeting in 2025.
Citing Section 98 of the German Stock Corporation Act, a share-
holder petitioned Munich Regional Court I for a declaratory
judgment that the German Co-Determination Act must be
applied in appointing the Supervisory Board. The court issued
a decision confirming that the Supervisory Board was properly
formed in its current composition, with representatives of
shareholders only.
112
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
Members of the Supervisory Board and positions
held by Supervisory Board members
None
Name
In fiscal year 2020 the Supervisory Board comprised the follow-
ing members:
Executive Vice President
Corporate Technology of
Siemens Aktiengesellschaft
Member of the Managing
Board of Siemens Aktien-
gesellschaft (Deputy Chief
Executive Officer)
2018
Member since
Year of birth
1961
Dr. Roland Busch
(since 12.02.2020)
1961
Siemens Aktiengesellschaft
(Chief Financial Officer)
Member of the
Managing Board of
Occupation
Prof. Dr. Ralf P. Thomas
Chairman
Dr. Norbert Gaus
Deputy Chairman
Diversity
It should be ensured that the Supervisory Board is sufficiently
diverse in its composition. In addition to an appropriate ratio of
women, this also includes diversity with regard to cultural ori-
gin, religion, and ethnic background, as well as diversity of pro-
fessional background, experience, and mindset. When examin-
ing potential candidates for appointments to Supervisory Board
positions, diversity should be given appropriate consideration
early on in the selection process.
120
In accordance with the GCGC, the Supervisory Board should in-
clude what it considers to be an appropriate number of indepen-
dent members from the group of shareholder representatives,
thereby taking into account the shareholder structure. Within
the meaning of this recommendation of the GCGC, a Super-
visory Board member is considered independent if he/she is
independent of the company and its Managing Board, and inde-
pendent of any controlling shareholder. The composition of the
Supervisory Board should be such that at least three indepen-
dent shareholder representatives who meet the above criteria
of independence are members of the Supervisory Board. In the
opinion of the Supervisory Board, there are currently at least
four Supervisory Board members who are independent of the
Company, its Managing Board, and the majority shareholder -
namely, Dr. Marion Helmes, Dr. Philipp Rösler, Dr. Gregory
Sorensen, and Karl-Heinz Streibich.
Under the GCGC, more than half of the shareholder represen-
tatives should be independent of the company and the Manag-
ing Board. Supervisory Board members are to be considered
independent of the company and its Managing Board if they
have no personal or business relationship with the company or
its Managing Board that may cause a substantial - and not
merely temporary - conflict of interest.
When assessing the independence of its members of the com-
pany and its Managing Board, shareholder representatives
should particularly take into consideration whether the respec-
tive Supervisory Board member or a close family member:
• was a member of the company's Managing Board in the two
years prior to appointment,
•
currently maintains (or maintained in the year up to his/her
appointment) a material business relationship with the com-
pany or one of the entities dependent upon the company
(e.g., as customer, supplier, lender, or advisor) directly or as
a shareholder, or in a leading position of a non-group entity,
• is a close family member of a Managing Board member, or
⚫ has been a member of the Supervisory Board for more than
twelve years.
Independence
Implementation of targets for composition,
including profile of required skills and expertise
and diversity concept; independent members
of the Supervisory Board
In the opinion of the Supervisory Board, all its members are
currently independent of the Company and its Managing
Board. Some members of the Supervisory Board hold positions
of significant responsibility in other companies with which
Siemens Healthineers maintains relationships in the ordinary
course of business. The Supervisory Board believes that none
of these relationships should be considered material.
If the company has a controlling shareholder, and the Super-
visory Board comprises more than six members, the GCGC rec-
ommends that at least two shareholder representatives should
be independent of the controlling shareholder. A Supervisory
Board member is considered independent of the controlling
shareholder if he/she, or a close family member, is neither a
controlling shareholder nor a member of the executive govern-
ing body of the controlling shareholder, and does not have
a personal or business relationship with the controlling share-
holder that may cause a substantial - and not merely tempo-
rary conflict of interest. In the opinion of the Supervisory
Board, there are currently at least four Supervisory Board
members who are independent of the controlling shareholder,
namely, Dr. Marion Helmes, Dr. Philipp Rösler, Dr. Gregory
Sorensen, and Karl-Heinz Streibich.
Availability
Every Supervisory Board member must ensure that they have
enough time to perform their tasks. The legal limits on the
number of positions, and the upper limit recommended by the
GCGC of two supervisory board positions for Managing Board
members of publicly listed companies and five supervisory
board positions for other members, must be taken into consid-
eration.
In the process of selecting and nominating candidates for the
Supervisory Board, the Supervisory Board takes account of the
targets for its composition and the requirements laid down in
the diversity concept.
With its current membership, the Supervisory Board meets all
the targets for its composition and fulfills the profile of required
skills and expertise and the diversity concept. The Supervisory
Board members have the professional and personal qualifica-
tions considered necessary. As a group, they are familiar with
the sector in which the Company operates and have the knowl-
edge, skills, and experience essential for Siemens Healthineers.
A considerable number of Supervisory Board members are en-
gaged in international activities and/or have many years of in-
ternational experience. Appropriate consideration has been
given to diversity in the Supervisory Board. In fiscal year 2020,
the Supervisory Board had two female members.
The Supervisory Board also has an adequate number of inde-
pendent members. In the opinion of the Supervisory Board,
there are currently at least four Supervisory Board members
who are independent from the Company, its Managing Board,
and the controlling shareholder, namely, Dr. Marion Helmes,
Dr. Philipp Rösler, Dr. Gregory Sorensen, and Karl-Heinz
Streibich.
With regard to performing the tasks associated with such a po-
sition at Siemens Healthineers, it must be taken into account
that
⚫ sufficient time must be planned for reviewing the documents
relating to the annual and consolidated financial statements
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
• at least four, but usually six, ordinary Supervisory Board meet-
ings are held per year, which require adequate preparation
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
C.4.2.5 Succession planning and diversity
concept for the Managing Board
The decisive factor for the decision on the filling of a specific
Managing Board position is always the Company's interest, taking
into account all circumstances of the individual case.
With the support of the Chairman's Committee, and in consul-
tation with the Managing Board, the Supervisory Board performs
long-term succession planning for members of the Managing
Board. To this end, the Supervisory Board and the Chairman's
Committee regularly discuss potential candidates for the Man-
aging Board. The chair of the Managing Board is involved, unless
the discussion is about his or her own succession. The Super-
visory Board designs an applicant profile for Managing Board
vacancies, with due consideration to ensuring that the knowl-
edge, abilities, and experience of all members of the Managing
Board are diverse and balanced; it pursues the approved
diversity concept in this process. In addition, the Supervisory
Board regularly receives information on the succession plan-
ning for the level immediately below the Managing Board and
advises the Managing Board on this matter. The appointment
of incumbents of certain management functions at the first
level below the Managing Board requires the approval of the
Chairman's Committee.
•
At least one member of the Supervisory Board must have ac-
counting or auditing expertise. The chair of the Audit Commit-
tee should have specific knowledge and experience in applying
accounting principles and internal control procedures and be
familiar with audits of financial statements.
The aim is for the Supervisory Board as a whole to have all the
knowledge and experience considered essential in view of the
activities of Siemens Healthineers. This includes among others
competencies and experience of medical and healthcare tech-
nology (including information technology and digitalization),
transformation processes, entrepreneurship, procurement,
production and sales, finance, legal (including compliance),
and human resources. The Supervisory Board should also have
knowledge and experience of the lines of business important
to Siemens Healthineers, in particular (diagnostic) imaging,
laboratory diagnostics and clinical therapy. In particular, the
Supervisory Board members should also include persons who
have management experience at a large international enter-
prise as a result of performing an executive function or as a
member of a supervisory board or similar body.
The candidates proposed for election to the Supervisory Board
should have the knowledge, skills, and experience that enable
them to perform the duties of a supervisory board member at
an international enterprise and strengthen the public image of
Siemens Healthineers. The character, integrity, motivation, and
professionalism of the persons proposed for election should be
given particular consideration.
Profile of required skills and expertise
The diversity concept for the Supervisory Board was adopted
by the Supervisory Board together with the targets for the
Board's own composition, including the profile of the skills and
expertise that the Supervisory Board should possess. This
framework requires the composition of the Supervisory Board
of Siemens Healthineers AG to be such as to ensure that its
members collectively are qualified to supervise and advise the
Managing Board. The Supervisory Board should collectively be
familiar with the sector in which Siemens Healthineers operates.
C.4.2.6 Targets for the composition,
profile of required skills and
expertise, and diversity concept
for the Supervisory Board
Siemens Healthineers Annual Report 2020
Additional information - Corporate Governance
119
In the decisions made in the reporting period on the reappoint-
ment of the Chief Executive Officer and the Chief Financial
Officer effective March 1, 2021, the Supervisory Board took
appropriate account of the diversity concept during the struc-
tured appointment process. The Supervisory Board believes
that, following the very successful first appointment period, it
is in the Company's best interest to reappoint each of the two
Managing Board members for another term of office of five
years. It lies in the nature of a reappointment that the decision
process focuses on the incumbent's previous record in office.
The diversity concept is implemented as part of the procedure
for the Supervisory Board's appointment of the Managing
Board. In selecting candidates, the Supervisory Board is to take
account of the requirements set out in the diversity concept for
the Managing Board.
Implementation of the diversity concept for the
Managing Board
Appointments to Managing Board positions should also take
into account the targets that the Supervisory Board has spec-
ified for the share of women on the Managing Board.
It is regarded as useful to have different age groups repre-
sented on the Managing Board. In accordance with the rec-
ommendation of the GCGC, the Supervisory Board has set an
age limit for members of the Managing Board. In general, an
appointment or a renewal of an appointment to the Manag-
ing Board is permitted only for persons below the age of 63.
Collectively, the Managing Board should have many years of
experience in the areas of technology (including information
technology and digitalization), transformation processes, en-
trepreneurship, research and development, procurement,
production and sales, finance, legal (including compliance),
and human resources.
Collectively, the Managing Board should have experience of
the lines of business important to Siemens Healthineers, in
particular (diagnostic) imaging, laboratory diagnostics, and
clinical therapy.
•
•
•
• In view of the Company's international reach, it should be en-
sured that the composition of the Managing Board reflects
internationality by including different cultural backgrounds or
international experience (for example, extended professional
experience abroad that is relevant to Siemens Healthineers or
the management of foreign business activities).
In addition to the required specific technical skills and man-
agement and leadership experience for the task at hand,
Managing Board members should cover a range of knowl-
edge and experience as well as of educational and profes-
sional backgrounds that is as broad as possible.
In light of the Company's international reach, it should be en-
sured that the Supervisory Board has a sufficient number of
members with many years' international experience.
When assessing the proposals for appointing Managing Board
members, the Chairman's Committee's is guided by the objec-
tive to ensure, as far as possible, that the Managing Board has
strong leadership skills and a diversified complementary com-
position. The aim is for the Managing Board as a whole to have
all the knowledge and experience that are considered essential
in light of the activities of Siemens Healthineers.
Diversity concept for the Managing Board
Long-term succession planning for
the Managing Board
• attendance at the Annual Shareholders' Meeting is mandatory
depending on membership in one or more of the currently
four Supervisory Board committees, additional time is re-
quired for attending and adequately preparing for committee
meetings; this applies especially to the Audit Committee
• additional extraordinary meetings of the Supervisory Board
or a committee may become necessary to deal with special
issues.
When selecting Managing Board members, the Supervisory
Board ensures that they are personally suited and have integ-
rity, convincing leadership qualities, international experience,
the professional qualifications for the specific business respon-
sibilities to be assumed, a proven track record, knowledge of
the Company, and the ability to adapt business models and
processes in a constantly changing world. The aspect of diver-
sity is an important selection criterion in filling Managing Board
positions, including aspects such as age, gender, and educa-
tional and professional background. For this reason, the Super-
visory Board takes particular account of the following criteria
when selecting members of the Managing Board:
Observing the age limit laid down by the Supervisory Board in
the bylaws, only persons no more than 70 years of age should
usually be proposed for election as a member of the Supervi-
sory Board. The aim is for the Supervisory Board to have an
appropriate structure of experience and age.
When a new member is about to be appointed, a review should
be undertaken to determine which of the desirable skills on the
Supervisory Board ought to be enhanced.
Published by Siemens Healthineers AG Order No. CC-00124-1|1-7600 Printed in Germany 12/2020 Siemens Healthineers AG, 2020
Email: press.team@siemens-healthineers.com
Age limit and length of membership
Email: ir.team@siemens-healthineers.com
Telefon: +49 (9131) 84-3385
Investor Relations
siemens-healthineers.com
91052 Erlangen, Deutschland
Henkestr. 127
Siemens Healthineers AG
122
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Investor Relations:
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Siemens Healthineers Annual Report 2020
Additional information - Notes and forward-looking statements
C.5 Notes and forward-looking statements
This document contains statements related to our future busi-
ness and financial performance and future events or develop-
ments involving Siemens Healthineers that may constitute for-
ward-looking statements. These statements may be identified
by words such as "expect", "forecast", "anticipate", "intend",
"plan", "believe", "seek", "estimate", "will", "target" or words of
similar meaning. We may also make forward-looking state-
ments in other reports, in presentations, in material delivered
to shareholders and in press releases. In addition, our represen-
tatives may from time to time make oral forward-looking state-
ments. Such statements are based on the current expectations
and certain assumptions of Siemens Healthineers' manage-
ment, of which many are beyond Siemens Healthineers' con-
trol. As they relate to future events or developments, these
statements are subject to various risks, uncertainties and fac-
tors, including but not limited to those described in the respec-
tive disclosures. Should one or more of these risks, uncertain-
ties or factors materialize, or should underlying expectations
not occur or assumptions prove incorrect, actual results, per-
formance or achievements of Siemens Healthineers may (neg-
atively or positively) vary materially from those described ex-
plicitly or implicitly in the relevant forward-looking statement.
All forward-looking statements only speak as of the date when
they were made and Siemens Healthineers neither intends nor
assumes any obligation, unless required by law, to update or
revise these forward-looking statements in light of develop-
ments which differ from those anticipated.
-
International profile
Due to rounding, numbers presented throughout this and other
documents may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures to
which they refer.
This document is an English language translation of the German
document. In case of discrepancies, the German language doc-
ument is the sole authoritative and universally valid version.
For technical reasons, there may be differences in formatting
between the accounting records appearing in this document
and those published pursuant to legal requirements.
For reasons of better readability, the male form is predomi-
nantly chosen in this Annual Report. The information refers
nevertheless to persons of any gender.
→www.siemens-healthineers.com
Internet:
This document includes - in the applicable financial reporting
framework not clearly defined – supplemental financial mea-
sures (financial key performance indicators) that are or may be
alternative performance measures (non-GAAP-measures). These
supplemental financial measures may have limitations as ana-
lytical tools and should not be viewed in isolation or as alterna-
tives to measures of Siemens Healthineers' net assets, financial
position and results of operations as presented in accordance
with the applicable financial reporting framework in its half-
year consolidated financial statement and consolidated financial
statement. Other companies that report or describe similarly
titled alternative performance measures may calculate them dif-
ferently, which may therefore not be comparable.
-2%
-3%
Therein:
United States
4,909
4,916
0%
-3%
4,022
-1%
-2%
1,893
1,838
3%
14,460
14,518
0%
0%
Asia, Australia
4,098
4%
2020
Siemens Healthineers
20.5%
21.0%
1.8%
18.3%
Advanced Therapies
Diagnostics
Imaging
2,488
2,230
Adjusted EBIT
Therein:
2019
5,803
(in millions of €)
17.1%
15.4%
Adjusted EBIT margin
9.1%
Amortization of intangible assets acquired in
business combinations
A.4 Nonfinancial matters
-131
-607
-532
-107
-27
Net income
Income tax expenses
Financial income, net
Fiscal Year
2,300
EBIT
-57
-65
Severance charges
-16
Acquisition-related transaction costs
19.7%
1,982
317
298
Advanced Therapies
A.3.2.2 Adjusted EBIT
In Asia, Australia comparable revenue declined by 1%. The Diag-
nostics segment showed a strong decline which was partially
offset by a slight revenue growth in Imaging. Advanced Therapies
was almost on the prior year level. China reported a comparable
revenue growth of 4%.
In the Americas comparable revenue decreased by 3% with a
slight decline in the Imaging and Advanced Therapies segments.
Diagnostics showed a moderate comparable revenue decline.
The United States reported a comparable revenue decline of 3%.
The comparable revenue growth of 4% in EMEA was mainly
driven by very strong growth in Imaging and strong growth in
Advanced Therapies. The Diagnostics segment showed a moder-
ate decline. Germany was on the prior-year level.
Regions
Siemens Healthineers Annual Report 2020
Combined management report - Business development
11
Segments
Total revenue of Advanced Therapies increased by 1% to
€1,628 million on a nominal and comparable basis supported
by a strong increase in EMEA while Americas showed a slight
decline.
Imaging saw nominal and comparable growth in total revenue
of 2% to €9,090 million. Computed Tomography in particular
reported very strong growth because computed tomography
scans became increasingly important for treating COVID-19
positive patients. From a geographic perspective, comparable
revenue increased very strongly in EMEA and slightly in Asia,
Australia. Americas on the other hand showed a slight decline
in comparable revenue mainly due to the COVID-19 pandemic.
Segments
same amount.
Currency translation effects had a negative effect of about one
percentage point on nominal revenue growth. This development
was offset by positive portfolio effects in approximately the
Revenue of €14,460 million was at approximately the prior year
level. Also on a comparable basis, meaning excluding currency
translation and portfolio effects, revenue was at the same level
as fiscal year 2019 despite the COVID-19 pandemic. Slight
growth on a comparable basis in the Imaging and Advanced
Therapies segments was offset by a moderate decline in
Diagnostics.
Siemens Healthineers
1 Year-over-year on a comparable basis, excluding currency translation and portfolio effects.
Total revenue in Diagnostics showed a nominal decline of 5% to
€3,924 million. On a comparable basis, total revenue declined
by 4%. The decline is mainly because of lower testing volumes
for routine care during the COVID-19 pandemic. All regions
showed a moderate to strong comparable revenue decline.
Therein: China
The adjusted EBIT margin of Imaging was 21.0%, above the
prior year level, mainly due to a more favorable business mix,
stringent cost management and positive currency effects
which more than offset negative impacts on the regional mix
of revenue due to the COVID-19 pandemic. Adjusted EBIT grew
by 4% to €1,909 million.
The adjusted EBIT margin of Advanced Therapies was 18.3%,
below prior year, despite positive currency effects. Excluding
the effect of the Corindus acquisition, the adjusted EBIT margin
came in above the prior year level. Adjusted EBIT declined by
6% to €298 million.
375
72
Diagnostics
1,831
1,909
Imaging
Therein:
The adjusted EBIT margin of Diagnostics was 1.8%, below the
prior year, mainly because of lower testing volumes for routine
care and higher costs due to the COVID-19 pandemic as well as
future-oriented expenses for Atellica Solution and negative
currency effects. Adjusted EBIT declined to €72 million.
2,488
Adjusted EBIT
2019
2020
(Adjusted EBIT in millions of €, margin in %)
Fiscal Year
The reconciliation from adjusted EBIT to net income is shown
in the following table:
Reconciliation to consolidated financial
statements
2,230
5,691
Siemens Healthineers Annual Report 2020
Combined management report - Nonfinancial matters
0%
Retention cost
Dividend
We aim to provide an attractive return to our shareholders.
Therefore, we intend to pay an annual dividend in the amount
of 50% to 60% of the net income of the respective prior fiscal
year. To this end, net income - the calculation basis for the
dividend - may be adjusted for selected exceptional non-cash
items.
60
09
€1.59
€0.00
€0.01
Adjusted basic EPS
(as defined
starting FY 2021)
€1.61
Siemens Healthineers Annual Report 2020
Combined management report - Business development
A.3 Business development
A.3.1 Market development
The addressable global Imaging equipment market in fiscal
year 2020 amounted to around €19 billion. The addressable
equipment market for the Advanced Therapies segment (based
on angiography systems and mobile C-arms, excluding radiation
oncology) was estimated at €3 billion. Within the equipment
business of the segments Imaging and Advanced Therapies and
based on order intake, Siemens Healthineers grew more strongly
than the addressable market. Including molecular diagnostics,
the global market for Diagnostics was approximately €34 billion.
Supported by the growth of our installed base in the previous
year, the product-related service business saw healthy growth
in this fiscal year.
After the first confirmed appearance of SARS-CoV-2 at the end
of 2019, the virus spread rapidly, resulting in the COVID-19
pandemic in the second quarter of fiscal year 2020. This
development significantly impacted economies worldwide,
including our addressed markets. Compared to our assump-
tions in the 2019 annual report and the average growth levels
from previous years, market developments in fiscal year 2020
were therefore different. Competition among the leading
healthcare companies remained at high levels.
COVID-19 reinforced some of the long-term market trends and
has for example raised the already increasing cost pressure for
health systems and customers to unprecedented levels and re-
inforced consolidation among healthcare providers. Especially
in countries with severe COVID-19 outbreaks such as the U.S.
and Brazil, a significant effect on healthcare economics was vis-
ible in additional increase of costs combined with simultaneous,
temporarily substantial revenue losses for hospitals. Invest-
ments in capital goods and other medical imaging equipment
were postponed to a later date or cancelled. The initially ex-
pected pent-up market demand and corresponding resolution
did not materialize in fiscal year 2020, even though individual
countries were on the way to recovery after the first wave of the
pandemic. In general, markets for medical devices used to fight
COVID-19 saw a slight positive effect on fiscal year 2020 growth.
For our addressed Imaging markets, we saw a slight decrease.
Substantial market declines in major modalities, such as mag-
netic resonance systems, were balanced out by moderately to
significantly increased interest in equipment and solutions
used to diagnose and monitor COVID-19, including computed
tomography systems and (mobile) x-ray systems. The ultrasound
market declined moderately in fiscal year 2020, as increased
demand for portable ultrasound point-of-care systems used to
diagnose and monitor COVID-19, for example, could not out-
weigh shifts of projects and strong declines in other ultrasound
market segments. Given that hospitals had to free up capacity
and resources for potential COVID-19 emergencies, the number
of routine and elective procedures severely decreased. The
markets for Advanced Therapies were therefore negatively af-
fected, resulting in very strong market declines in fiscal
year 2020.
Within Diagnostics, markets increased for point-of-care tests
to monitor patients and lab tests to detect SARS-CoV-2 and
identify antibodies, while at the same time the demand for
certain diagnostic reagents, particularly tests for routine care,
was reduced as patient volume decreased. The extraordinary
growth of the molecular diagnostics market counterbalanced
severe declines of laboratory diagnostics, which led to a modest
growth for the Diagnostics market overall.
China, one of our biggest markets and major incremental
growth driver, was the first country with a severe SARS-CoV-2
outbreak, leading to a complete shutdown of the country for
more than two months. After ending its lockdown phase, the
country returned to regular business activity in a relatively short
time. The growing private market segment was more burdened
by the COVID crisis, leading to a slower recovery and potential
consolidation. While postponed or cancelled elective procedures
led to strong declines in the Advanced Therapies market, public
investments in selected provinces with high numbers of
COVID-19 cases resulted in substantial market growth in the
Imaging Segment, especially for modalities used to fight
COVID-19. Local vendors in particular benefitted from this addi-
tional market demand. Although diagnostic tests were widely
applied to identify SARS-CoV-2, including large scale testing of
whole populations of certain regions, this additional demand
could not counterbalance the downturn of testing for routine
care, resulting in a significant market decrease of the overall
Diagnostics market.
Integration cost
Adjusted basic EPS
(as defined
until FY 2020)
Fiscal year 2020
for fiscal year 2020
18
Siemens Healthineers Annual Report 2020
Combined management report - Financial performance system
Adjusted basic earnings per share growth
(until the end of fiscal year 2020)
Company level performance was measured by using growth in
adjusted basic earnings per share (EPS). Adjusted basic EPS was
defined as basic EPS adjusted for the items shown below, net
of tax:
• amortization of intangible assets acquired
in business combinations,
• severance charges and
•
acquisition-related transaction costs.
In Japan, the second largest market of the Asia, Australia region,
a sales tax increase in early fiscal year 2020 brought investment
forward to fiscal year 2019. With COVID-19 impacts as an addi-
tional factor, this led to significant market declines for Imaging
and Advanced Therapies and a slightly decreasing market for
Diagnostics.
Adjusted basic earnings per share (as of fiscal year 2021)
As of fiscal year 2021, we will no longer use adjusted basic EPS
growth to measure company level performance. Instead, we
will introduce adjusted basic EPS as the new KPI.
Reconciliation of adjustments of adjusted basic EPS (for fiscal year 2020)
•
expenses for mergers, acquisitions, disposals and other
portfolio related measures, in particular
> amortization, depreciation and other effects from
IFRS 3 purchase price allocation adjustments,
> transaction, integration, retention and carve-out costs,
> gains and losses from divestments and
⚫ severance charges.
Therefore, also in this KPI, we extend the adjustment items for
expenses and income related to portfolio related measures to
continuously ensure transparency, comparability, and reconcil-
ability of the adjusted basic EPS. The analog adjustment of ba-
sic EPS and EBIT ensures the consistency between the KPIs ad-
justed EBIT margin and adjusted basic EPS. The adjustments are
made after tax.
Tax effects on the adjustments are determined based on the
income tax rate of the respective reporting period, like in fiscal
year 2020. Similarly, adjusted basic EPS is determined based on
the average weighted number of outstanding shares of the
respective reporting period.
Siemens Healthineers
Reconciliation adjustments of adjusted basic EPS
As of fiscal year 2021, the following adjustments will be
made in line with the altered definition of the adjusted EBIT
margin:
10
Siemens Healthineers Annual Report 2020
Combined management report Business development
-
2%
-4%
Advanced Therapies
1,628
1,606
1%
1%
1 Year-over-year on a comparable basis, excluding currency translation and portfolio effects.
Revenue by region (location of customer)
(in millions of €)
Europe, Common-
wealth of Independent
States, Africa, Middle
East (EMEA)
Fiscal Year
2020
1,423
%-Change
Act.
Comp.¹
4,747
4,617
3%
4%
Therein: Germany
874
873
0%
2019
Americas
-5%
3,924
In the region EMEA, public investment programs as well as
strong purchases related to COVID-19 in several EMEA countries
counterbalanced negative effects resulting from lockdowns.
Overall, this led to strong to substantial market growth for
Imaging and Advanced Therapies in fiscal year 2020. Significant
market growth for Diagnostics in EMEA was driven by test
strategy programs for SARS-CoV-2, which were put in place by
several EMEA governments and outweighed the severe decline
in testing for routine care.
In the U.S., project postponements or cessation and limited
access to healthcare providers due to the COVID-19 pandemic
and related lockdowns resulted in substantial market declines
across all Imaging and Advanced Therapies markets. The con-
tinued rise in COVID-19 cases increased U.S. diagnostics market
growth on strong levels, as demand for molecular and point-of-
care COVID-19 tests further increased.
Market estimates are based on Healthineers' market model that
builds on external sources (amongst others from IQVIA Ltd.,
OMDIA and Signify Research), market information from Med-
Tech industry associations (amongst others COCIR, NEMA, JIRA
and MedTech Europe) and Siemens Healthineers' management
estimates. All statements on market developments refer to the
first three quarters of fiscal year 2020, because market data
for the full fiscal year were not available as of the publication
of the annual report. Given the unpredictability of further
COVID-19 pandemic developments and related impacts on
Healthcare markets, the usual and historic development patterns
of Healthineers' markets cannot be applied in this year.
A.3.2 Results of operations
A.3.2.1 Revenue by segment and region
Fiscal Year
%-Change
(in millions of €)
2020
2019
4,133
Act.
14,460
14,518
0%
Comp.¹
0%
Therein:
Imaging
9,090
8,938
2%
Diagnostics
Siemens Healthineers
1,586
-168
Adjusted EBIT declined by 10%, resulting in an adjusted EBIT
margin of 15.4% for fiscal year 2020. The decline year-over-
year was mainly due to the weak development of the adjusted
EBIT margin in Diagnostics.
Current provisions
152
93
Other current financial liabilities
2019
2020
(in millions of €)
270
Sept 30,
Please refer to Note 23 Equity in the notes to the consolidated
financial statements for further information regarding equity.
Other components of equity decreased by €604 million, mainly
due to currency translation differences.
Retained earnings increased by €582 million, mainly due to net
income for fiscal year 2020 of €1,423 million, which was partly
offset by dividend payments of €798 million.
Equity rose by €2,729 million to € 12,511 million, mainly as a
result of a capital increase through issuing new shares of
Siemens Healthineers AG for financing the planned acquisition
of Varian. Thus, issued capital increased by €75 million and
capital reserve by €2,629 million, net of effects from trans-
action costs.
9,782
12,511
9,769
13
A.3.3.2 Cash flows
13
282
374
Remaining non-current liabilities
Other liabilities
Other financial liabilities
Provisions
Deferred tax liabilities
(in millions of €)
Remaining non-current liabilities
Siemens Healthineers
Remaining current liabilities decreased by €82 million to
€1,936 million. Therein, other current financial liabilities de-
creased by €59 million mainly due to changes in value of deriv-
atives and a decrease in liabilities for contingent consider-
ations from business combinations.
1,936
1
Remaining payables to Siemens Group
Remaining current liabilities
1,236
1,198
Other current liabilities
346
2,018
12,498
-174
-777
In addition, local bank facilities are in place to cover funding
needs of some Siemens Healthineers entities which have no
access to direct funding within Siemens Healthineers.
As of September 30, 2020, Siemens Healthineers continued to
participate in the cash pooling of the Siemens Group, which
included the short-term investment of excess liquidity and the
borrowing of short-term funds within the Siemens Group.
Siemens Healthineers intends to set up its own cash pooling in
the medium term in order to (partially) replace the participation
in the cash pooling of the Siemens Group.
In fiscal year 2019, the US$ loans maturing in fiscal years 2021,
2023 and 2027 were transferred from a U.S. entity to German
entities. The resulting foreign currency risks were hedged by
forward exchange contracts. As a result, the loans were effec-
tively converted into synthetic euro-denominated loans and
actual interest expenses decreased due to positive forward el-
ements of the forward exchange contracts. In total, the actual
current volume-weighted average interest rate of the trans-
ferred loans decreased to approximately -0.1%. The loan matur-
ing in fiscal year 2046 carried a contractual interest rate of 3.4%.
• US$1.7 billion loan maturing in fiscal year 2027, and
US$ 1.0 billion loan maturing in fiscal year 2046.
• A loan to the Siemens Group maturing in fiscal year 2021,
amounting to US$ 0.9 billion, was reclassified to the short-term
balance sheet item. Other liabilities to Siemens Group from fi-
nancing activities were reduced by the corresponding amount.
• In fiscal year 2020, Siemens Healthineers took out a variable in-
terest-loan from the Siemens Group amounting to €1.0 billion,
in connection with the acquisition of Corindus.
Net receivables from and payables to Siemens Group from
financing activities increased by €907 million, mainly due to the
short-term investment of funds from the capital increase of
€2.7 billion, which was completed in September 2020 to finance
the planned acquisition of Varian. In addition, the above-
mentioned investment of cash from Siemens Healthineers en-
tities in China with the Siemens Group increased this item.
Counterbalancing effects resulted from the following factors:
As in the previous year, the Siemens Group granted two credit
facilities to Siemens Healthineers. As of September 30, 2020,
a multicurrency revolving credit facility existed in an amount
up to €1.1 billion (September 30, 2019: € 1.0 billion). It serves
as financing of net working capital and as short-term loan
The decrease of €264 million in cash and cash equivalents
resulted mainly from the investment of cash from Siemens
Healthineers entities in China with the Siemens Group.
Net debt
3,974
2,605
Net debt (including pensions)
• US$ 0.7 billion loan maturing in fiscal year 2023,
1,045
1,029
The line items cash and cash equivalents, and receivables from
and payables to Siemens Group from financing activities collec-
tively make up the Company's funds available at short notice.
Changes in these items were attributable to income and expen-
ditures from operations and to short-term investment of excess
liquidity or short-term borrowing.
14
Siemens Healthineers Annual Report 2020
Combined management report - Business development
facility. The duration of this credit facility was extended in
fiscal year 2020 until January 31, 2023. Additionally, a multi-
currency revolving credit facility in an amount up to €1.0 bil-
lion (September 30, 2019: € 1.0 billion) was granted, serving as
a financing reserve, available until January 31, 2023. As of Sep-
tember 30, 2020, these credit facilities had been utilized in the
amount of €166 million (September 30, 2019: €0 million).
-1,859
-1,276
10,801
13,476
1,000
1,075
2019
2020
Sept 30,
Other components of equity
Total equity attributable to shareholders of
Siemens Healthineers AG
Non-controlling interests
Total equity
Retained earnings
Capital reserve
(in millions of €)
Issued capital
Total equity
Remaining current liabilities
Please refer to Note 16 Financial debt in the notes to the con-
solidated financial statements for further information on finan-
cial debt. For more information on financial risk management
responsibilities and objectives, please refer to → Note 26 Finan-
cial risk management in the notes to the consolidated financial
statements.
As of September 30, 2020, the expected purchase price
obligation from the planned acquisition of Varian amounted
to US$ 16.4 billion. Upon closing of the acquisition, Siemens
Healthineers is obliged to repay amounts outstanding under
a credit agreement of Varian of up to US$ 1.2 billion. To fi-
nance this acquisition, the Siemens Group provided a bridge
facility. As of September 30, 2020, the financing commit-
ment amounted to €12.5 billion and was not used by
Siemens Healthineers. Siemens Healthineers plans to replace
the bridge facility with debt capital provided by the Siemens Group
and, if appropriate, through issuance of equity instruments.
Sept 30,
• € 1.0 billion loan maturing in fiscal year 2021,
• US$ 0.9 billion loan maturing in fiscal year 2021,
2020
470
Free cash flow
-579
-557
plant and equipment
Additions to intangible assets and property,
1,617
1,928
1,371
Cash flows from operating activities
2020
(in millions of €)
Fiscal year
Siemens Healthineers had contractual obligations as of Sep-
tember 30, 2020, to purchase property, plant and equipment
totaling € 107 million (September 30, 2019: €84 million). These
are mainly future payments related to new factories and will be
financed through the cash pooling of the Siemens Group.
Advanced Therapies: In fiscal year 2020, investments were
mostly associated with new machinery and tools for the new
ARTIS icono product family.
Diagnostics: In fiscal year 2020, additions to intangible assets
were primarily attributable to product developments within the
Atellica Solution and Blood Gas product lines. Additions to
property, plant and equipment mainly related to investments
in production facilities in China and the United States.
Imaging: In fiscal year 2020, additions to intangible assets were
mainly for capitalization of development expenses for soft-
ware. Additions to property, plant and equipment mainly in-
cluded the acquisition of specialized tooling for new products,
machinery, replacements, and site modernizations.
2019
The segments' additions to intangible assets and property,
plant and equipment focused especially on the following:
1,037
Siemens Healthineers Annual Report 2020
Combined management report - Business development
17
We reached significant milestones for the strategic development
of Siemens Healthineers and initiated important measures to
further strengthen our portfolio in the fiscal year. With the
announcement of the planned acquisition of Varian, headquar-
tered in the U.S. and addressing the field of cancer care
with solutions in radiation oncology and related software,
Siemens Healthineers aims to add value for healthcare providers
beyond the current range of products and solutions.
The Managing Board and the Supervisory Board propose to the
Shareholders' Meeting to distribute a dividend of €0.80 per
share entitled to the dividend. This corresponds to the level in
the previous fiscal year and in total represents approximately
€859 million in expected payments. Based on net income of
€1,423 million for fiscal year 2020, the dividend payout per-
centage is 60%.
Net income decreased by 10% to €1,423 million, mainly due to
a lower EBIT. An increase in financial income, mainly resulting
from a debt restructuring in fiscal year 2019, had an offsetting
counter effect. The lower net income resulted in a decrease in
adjusted basic earnings per share of 7% to €1.59. We therefore
fulfilled our outlook of adjusted basic earnings per share be-
tween €1.54 and € 1.62. Consequently, this KPI was within our
expected target corridor as stated in the quarterly statement for
the third quarter of fiscal year 2020. Our adjusted basic earnings
per share for fiscal year 2020 would be at € 1.60 without the cap-
ital increase.
Adjusted EBIT margin for the Imaging segment was at 21.0%
and above the previous fiscal year and within the mid-term
target corridor of 20% to 22%. For Advanced Therapies, ad-
justed EBIT margin was at 18.3%, below the previous fiscal year
level and also below the mid-term target of 20% to 22%, due
to Corindus. Excluding Corindus adjusted EBIT margin was
within the target corridor. With an adjusted EBIT margin of
1.8% Diagnostics was below the previous fiscal year level,
mainly due to lower volumes of testing for routine care im-
pacted by the COVID-19 pandemic.
In our quarterly statement for the third quarter we did not
provide a fiscal year 2020 outlook for our segments. On a com-
parable basis our Imaging segment revenue grew by 2% and
our Advanced Therapies segment by 1%. Diagnostics revenue
declined by 4% on a comparable basis.
For fiscal year 2020 Siemens Healthineers' comparable revenue
growth was 0%, and therefore corresponded to our expected
broadly flat revenue growth as stated in our quarterly state-
ment for the third quarter of fiscal year 2020.
16
In our quarterly statement for the third quarter of fiscal
year 2020 we introduced a new outlook for Siemens Healthineers.
For fiscal year 2020 we projected flat comparable revenue
growth and adjusted basic earnings per share (adjusted for
amortization of intangible assets acquired in business combi-
nations, severance charges and acquisition-related transaction
costs, after tax) between €1.54 and €1.62 (previous fiscal year:
€1.70). The outlook was based on the assumption that the current
business environment, including the upward trend in testing
for routine care that has been observed, will not deteriorate
again, as well as on current exchange rate assumptions and on
the current portfolio. In addition, it was assumed that there will
be no material change in the valuation of share-based compen-
sation programs that are tied to shares of Siemens AG.
For the Advanced Therapies segment: comparable revenue
growth within our target corridor for Siemens Healthineers
for fiscal year 2020, and a significant decrease in adjusted
EBIT margin compared to the prior year due to the acquisition
of Corindus.
• For the Diagnostics segment: an increase in comparable rev-
enue growth, though below the target corridor for Siemens
Healthineers for fiscal year 2020, and a slight decrease in ad-
justed EBIT margin compared to prior year.
• For the Imaging segment: comparable revenue growth below
the very strong level of fiscal year 2019, but within the target
corridor for Siemens Healthineers for fiscal year 2020 and an
increase in adjusted EBIT margin comparable to the increase
in the prior year.
• For Siemens Healthineers: comparable revenue growth be-
tween 5% and 6% and adjusted basic earnings per share to
increase by 6% to 12%.
With respect to our outlook provided in the Annual Report 2019,
we expected for fiscal year 2020:
economic position
A.3.4 Overall assessment of the
The outlook provided in the fiscal year 2019 annual report was
withdrawn at the end of the first half of the fiscal year. Due to
the COVID-19 pandemic, the underlying assumptions for fiscal
year 2020 were in significant parts no longer valid. This held
true for the segments, as well as for Siemens Healthineers.
Accordingly, initially communicated segment targets for com-
parable revenue growth and adjusted EBIT margin, and
Siemens Healthineers targets for comparable revenue growth
and adjusted basic earnings per share, were no longer valid.
Siemens Healthineers' investments were aimed mainly at
enhancing competitiveness and innovation capability. The
main capital expenditures were for additions to intangible
assets, including capitalized development expenses, as well as
for replacements and enhancements of property, plant and
equipment in the ordinary course of business.
A.3.3.3 Additions to intangible assets and
property, plant and equipment
Siemens Healthineers reports free cash flow as a supplemental
liquidity measure:
Fiscal year
Operating activities
Investing activities
Financing activities
Operating activities
Cash flows from:
(in millions of €)
Remaining non-current liabilities grew by €63 million to
€969 million. Therein, deferred tax liabilities increased by
€95 million. Here deferred tax liabilities recognized in the first-
time consolidations of Corindus and ECG had an impact.
2020
906
368
345
16
10
147
144
375
969
2019
1,928
1,617
Free cash flow
Higher cash outflows of €99 million resulted from dividends
paid to shareholders of Siemens Healthineers AG amounting to
€798 million (2019: €699 million).
Cash inflows from change in short-term financial debt and
other financing activities changed by € 153 million to cash out-
flows of € 101 million, mainly due to the above-mentioned shift
due to the first-time adoption of IFRS 16.
Cash inflows from other transactions/financing with Siemens
Group changed by €2,098 million to cash outflows of €1,853 mil-
lion. The funds received from the capital increase were invested
with the Siemens Group, resulting in cash outflows in this line
item in the corresponding amount. Investment of cash from
Siemens Healthineers entities in China with the Siemens Group
resulted in additional cash outflows of €406 million in fiscal
year 2020. The cash outflows were partly offset by cash inflows
resulting from borrowing the loan of €1.0 billion from the
Siemens Group in connection with the acquisition of Corindus.
In fiscal year 2020, cash inflows of €2.7 billion resulted from
issuance of new shares to finance the planned acquisition of
Varian.
Cash outflows from financing activities decreased by €354 mil-
lion to € 249 million.
Financing activities
Cash outflows from investing activities increased by €1,264 mil-
lion to €1,912 million. This was primarily the result of cash out-
flows for acquisitions of businesses, net of cash acquired, of
€1,354 million, chiefly related to the acquisitions of Corindus
and ECG.
Investing activities
Siemens Healthineers Annual Report 2020
Combined management report - Business development
15
The first-time adoption of IFRS 16, Leases, resulted in an in-
crease in reported cash flows from operating activities of
€130 million with a corresponding decrease in reported cash
flows from financing activities. For additional information
regarding the first-time adoption of IFRS 16, please refer to
→ Note 2 Accounting policies in the notes to the consolidated
financial statements.
Cash inflows from operating activities increased by €311 million
to €1,928 million. In particular, cash outflows from operating
net working capital decreased by € 192 million, mainly because
cash flows from trade and other receivables improved by
€331 million due to improved receivables management. In con-
trast, cash outflows from the buildup of inventories increased
by €208 million.
-603
-249
-647
-1,912
2019
Provisions for pensions and similar
obligations
Current income tax liabilities
1,576
Remaining current assets
2,538
2,550
Operating net working capital
2019
2020
(in millions of €)
645
Sept 30,
The growth in remaining current assets by €154 million to
€645 million was due primarily to an increase of € 116 million
in remaining receivables from Siemens Group. This related to
receivables in the context of pre-initial public offering group
taxation with the Siemens Group in the United States. The
amounts resulted from expanded options for tax loss carry-
backs due to the CARES Act aimed at mitigating the financial
impact of the COVID-19 pandemic.
Net assets and capital structure are described by the following
line items, which can be reconciled to the consolidated state-
ments of financial position, as shown in the table:
A.3.3.1 Net assets and capital structure
A.3.3 Net assets and financial position
-0.04
1.57
-0.02
-0.05
1.41
Siemens Healthineers is exempted from submitting the non-
financial group declaration pursuant to Section 315b (2) of
the German Commercial Code (hereinafter "HGB") and refers
to the combined nonfinancial group declaration, which is in-
tegrated in the combined management report in the annual
report of Siemens Group for fiscal year 2020. Siemens Group's
annual report will be published on the Internet at → https://
www.siemens.com/investor/en/publications_calendar.php.
The increase of €65 million in other current financial assets
was mainly due to changes in the value of derivatives to hedge
foreign currency risks in connection with operations and the
planned acquisition of Varian. For further information regarding
derivatives, please refer to → Note 25 Financial instruments and
hedging activities in the notes to the consolidated financial
statements.
Severance charges
491
Total non-current assets
Goodwill
-906
-969
Remaining non-current liabilities
2019
2020
(in millions of €)
Total non-current assets
-2,018
Remaining current liabilities
Sept 30,
-3,974
-2,605
Net debt (including pensions)
13,650
14,827
-1,936
Acquisition-related transaction costs
-0.09
-0.12
Other current financial assets
2019
2020
(in millions of €)
Sept 30,
Remaining current assets
As a result of the factors described above, net income decreased
to €1,423 million. Consequently, adjusted basic earnings per
share declined by 7% to €1.59.
142
-
12
Income tax expenses decreased by €75 million to €532 million.
The effective income tax rate stayed broadly flat at 27.2% in
fiscal year 2020 compared to 27.7% in prior year. For further
information, please refer to → Note 5 Income taxes in the notes
to the consolidated financial statements.
Financial income, net, improved by €79 million. The increase
resulted mainly from lower interest expenses following a restruc-
turing of debt in fiscal year 2019, and interest income related to
international tax procedures. The figure in fiscal year 2019 in-
cluded negative currency effects associated with financing of
business in Turkey.
Amortization of intangible assets acquired in business combina-
tions increased by € 37 million to € 168 million due to the acqui-
sitions of Corindus and ECG in the first quarter of the fiscal year.
Additionally, acquisition-related transaction costs of € 16 million
were incurred, mainly due to the takeover of Corindus.
Selling and general administrative expenses grew by €64 million,
or 3%. Excluding currency translation effects the expenses also
increased moderately, due mainly to the acquisitions of Corindus
and ECG.
Research and development expenses increased by € 14 million,
or 1%. Also adjusted for currency translation these expenses
increased slightly compared to prior-year-level.
The adjusted EBIT margin was adversely affected by the
COVID-19 pandemic, counterbalanced by lower expenses for
performance-related remuneration components and income of
€34 million in the United States related to the CARES Act. Prior
year results included positive effects of €24 million due to a
settlement gain.
Siemens Healthineers Annual Report 2020
Combined management report
Business development
2,929
Fiscal Year
Current income tax assets
491
645
Remaining current assets
Amortization of intangible assets acquired
in business combinations
116
Remaining receivables from Siemens Group
1.70
1.59
Adjusted basic earnings per share
321
338
Other current assets
2019
2020
(in €)
92
49
9,038
8,590
78
12,511
-683
-3,271
financing activities
Receivables from Siemens Group from
-920
-656
2019
Payables to Siemens Group from
Sept 30,
2020
(in millions of €)
Short-term financial debt and current maturities of long-term
financial debt increased by €87 million and long-term financial
debt rose by €252 million, mainly as a consequence of the first-
time adoption of IFRS 16, Leases. For additional information
regarding the first-time adoption of IFRS 16, please refer to
→ Note 2 Accounting policies in the notes to the consolidated
financial statements.
Payments for the acquisition of ECG were financed by short-
term debt to the Siemens Group. For further information to
the payments for the acquisition of ECG, please refer to
→ Note 3 Acquisitions in the notes to the consolidated financial
statements.
•
In fiscal year 2020, Siemens Healthineers included net debt
in the description of its net assets and capital structure, as
Siemens Healthineers' capital management is based on this
key figure.
Net debt (including pensions)
In addition, property, plant and equipment was up by €456 mil-
lion, despite negative currency translation effects, mainly be-
cause of the first-time adoption of IFRS 16. For additional infor-
mation regarding the first-time adoption of IFRS 16, please
refer to Note 2 Accounting policies in the notes to the consol-
idated financial statements.
Cash and cash equivalents
financing activities
2,040
359
Net debt
Total equity
62
314
Long-term financial debt
Loans with various maturities denominated in various currencies
have been granted by the Siemens Group, in particular:
Financing management
Provisions for pensions and similar obligations remained nearly
level with a slight decrease of €16 million. For additional informa-
tion, please refer to Note 21 Provisions for pensions and similar
obligations in the notes to the consolidated financial statements.
Pensions
80
167
maturities of long-term financial debt
Short-term financial debt and current
4,030
2,982
financing activities
Other liabilities to Siemens Group from
Siemens Healthineers Annual Report 2020
Combined management report - Business development
13
Basic earnings per share
Within operating net working capital, inventories increased by
€240 million, despite negative currency translation effects. This
increase was attributable to steps taken to ensure the delivery
capability of all segments, mainly resulting from recent eco-
nomic developments due to the COVID-19 pandemic. This devel-
opment was offset by a decrease in trade and other receivables
of €211 million, mainly due to currency translation effects and
improved receivables management.
(in millions of €)
339
352
Other financial assets
Sept 30,
45
37
the equity method
Investments accounted for using
Operating net working capital
2,318
Property, plant and equipment
1,576
1,912
9,782
The increase in non-current assets by €1,176 million to
€ 14,827 million resulted largely from a rise of €447 million in
goodwill and €337 million in other intangible assets. These devel-
opments were caused most notably by the acquisitions of
Corindus and ECG. Negative currency translation effects of
€599 million had an offsetting impact. For additional information
regarding the acquisitions, please refer to Note 3 Acquisitions
in the notes to the consolidated financial statements.
Other intangible assets
Trade and other receivables
2020
2,774
Deferred tax assets
13,650
2019
Operating net working capital remained at nearly the same
level, with a slight increase of €12 million to €2,550 million.
14,827
Total non-current assets
320
295
Other assets
839
2,064
-1,403
-1,741
2,538
2,568
818
2,304
-1,356
-1,784
2,550
Operating net working capital
419
Contract liabilities
Trade payables
Inventories
2,779
Contract assets
462
Siemens Healthineers Annual Report 2020
Report on material risks and opportunities
Combined management report
-
Cybersecurity
Product development and introduction
We develop, produce and sell a comprehensive portfolio of
products, solutions and services (including accessories and
software products) to a wide range of healthcare providers. We
are an industry-wide technology leader with many of our prod-
ucts, solutions and services. Our operating results depend to a
significant extent on our technological leadership, as well as
our ability to anticipate changes in our markets and to adapt us
as well as the costs of producing our products to those changes.
Our products, solutions, services and their enhancements often
have long development and government approval cycles. As a
result, this requires us to maintain early and accurate anticipation
of relevant changes in the marketplace, in technology and in
customer demands. Introducing new products and technologies
requires a significant commitment to R&D, which in turn re-
quires expenditure of considerable financial resources that may
not always result in success. Our results of operations could be
negatively impacted if we invest in technologies that do not
operate as expected or cannot be integrated as planned, or that
do not find the expected market acceptance. The same applies
if our products, solutions or services are not introduced to the
market at the targeted margins, in a timely manner particularly
compared to our competitors, or even become obsolete. Fur-
thermore, errors in the design of our products or operational
disruptions in our value chain could result in quality problems
or potential product, labor safety, regulatory or environmental
risks. The correction of errors could lead to unforeseen costs,
at the same time result in guarantee or warranty claims, and,
moreover, adversely impact our reputation. Our patents and
other intellectual property rights may not prevent competitors
from independently developing or selling products and ser-
vices that resemble or replicate our own. If we are unable to
protect or effectively enforce our intellectual property rights
against the competition, we might lose our technical leader-
ship position and market share which could result in negative
financial impact, loss of reputation or customers. To counter
these risks, we continuously initiate and implement measures
for quality improvement, project risk management and claim
prevention that contribute to the mitigation of existing risks.
In addition, we closely monitor market developments in order
to identify and react on new demands early on. We continu-
ously apply for new patents and actively manage our intellec-
tual property portfolio to safeguard our leading technological
position.
15
25
24
Siemens Healthineers Annual Report 2020
Combined management report —
We observe a global increase of cybersecurity threats and
higher levels of sophistication in cybercrime. These pose a risk
to the security of products, systems and networks and the
confidentiality, availability and integrity of data. In this context
the healthcare industry, which is subject to specific privacy,
security and safety regulations with regards to a wide range of
health information, has become a prime target for attackers.
The number of cybersecurity threats and cybercrime was
amplified particularly in the healthcare industry throughout
the COVID-19 pandemic. These threats have materialized for
example with ransomware attacks against healthcare providers,
leading to major negative impacts on the provision of health-
care services affecting the health and safety of patients. The
attacks experienced against Siemens Healthineers, however,
have not changed significantly in number and criticality. The
political and regulatory focus on cybersecurity has increased,
leading to a variety of regulations being implemented and
integrated in various areas and processes. The fines and penalties
are elevated and represent both financial and reputational risks
that can be avoided only with a strong internal control system
and high awareness for the relevant requirements and risks.
Preparedness to act against threats and attacks remains a key
priority. We establish clear responsibilities across the entire or-
ganization through organizational changes. In addition, we
made changes in infrastructure, access management, remote
working capabilities and cloud-based services that enable secure
and uninterrupted operations even during the work situation
changed by the pandemic. In addition to our established tech-
nical and organizational controls, we strengthen the awareness
of our employees so they can detect attacks at an early stage
and react to them in an improved manner. Because cybersecurity
is a shared responsibility across all involved parties and various
stakeholders, we are also constantly developing our ability to
preventively protect our customers from cyber-attacks as well
as reactively support them after those. In order to respond to
market needs, strengthen the internal control system, increase
maturity and assurance and meet customer requirements, we
are expanding our ISO 27001 certification activities. Moreover,
we leverage our cyber resilience to enable business continuity.
Therefore, we continue to focus on expanding, adapting and
improving established security controls across the organization
and the supply chain. We are committed to our security and
privacy by design and default approach for both products and
internal processes. The exchanges and collaborations with
healthcare providers, industry, partners, regulators and security
researchers in line with the Charter of Trust principles for a se-
cure digital world have been expanded with regular customer
advisory boards, development of internal standards and ex-
changes of threat intelligence.
24
Combined management report
COVID-19 Pandemic
A.6.2.2 Operational risks
Global or regional economic and geopolitical instability as well
as continuing uncertainties and challenging conditions in
regional markets may have a negative impact on our business.
Future developments globally depend on a number of political
and economic factors that we cannot fully anticipate. There is a
risk that an unstable political, regulatory and economic environ-
ment in certain countries might potentially result in significant
adverse business impacts including non-sustainable business
development, diverted management attention or less compet-
itive strength. Slower economic growth in a country might reduce
tax revenues, which in a second step could reduce the budget
for public healthcare spending. Further risks stem from geopolit-
ical tensions (such as in Iran, Syria, Russia, North Korea, Turkey
and Ukraine) and the conflicts which may potentially result. A
terrorist attack, significant cybercrime incident, or a series of
such attacks or incidents in major economies could depress
economic activity globally and undermine consumer and busi-
ness confidence. We see a high degree of uncertainty regarding
the current political environment and a risk to the continued
existence of the EU in its current form. This affects stability of
fiscal policy, discussions about a crisis of the euro, the develop-
ment of negative interest rates and further debates regarding
national independence. In addition, the outcome of the Brexit
negotiations is still unclear. If agreements cannot be reached
between the United Kingdom and the European Union, we
might face the imposition of new tariffs as well as a re-intro-
duction of customs controls, which might lead to additional
costs and disruptions in our supply chain. The outcome of the
presidential election in the United States may have an impact
on climate, tax, trade, health, immigration and foreign policy
which could both negatively and positively affect our business
activities. In particular, future developments regarding the
Affordable Care Act, such as its impact on our customers and
their financial situation, may have significant consequences for
our business in the United States. Moreover, if global macro-
economic growth stalls and we cannot successfully adapt our
production and cost structure to subsequent changes in the
markets we operate in, it cannot be ruled out that we will expe-
rience adverse effects. Furthermore, the prices for our products,
solutions and services may decline as a result of unfavorable
market conditions to a greater extent than we currently antic-
ipate. It may become more difficult for our customers to obtain
financing. As a consequence, they may modify, delay or cancel
plans to purchase our products, solutions and services, or fail
to follow through on purchases or contracts that they have
already made. To address risks in this field, we constantly monitor
changes in economic, political and geopolitical situations. For ex-
ample, regarding the Brexit developments we coordinate local
and global mitigation measures. We also use opportunities to en-
gage in discussions with local authorities. Siemens Healthineers'
global setup, with operations in almost all relevant economies,
together with the variety of our products and services, can con-
tribute to the compensation of the impact of an unfavorable
development in a single market.
Economic, political and geopolitical conditions
(macroeconomic environment)
Report on material risks and opportunities
-
Siemens Healthineers Annual Report 2020
223
23
we operate, consolidation on the customer side is increasing.
If our customers combine through mergers and acquisitions,
join group purchasing organizations or otherwise collectively
enter our markets, it could result in a lower sales volume and
higher price pressure. We address these risks with various mea-
sures. This includes among other examples, benchmarking,
strategic initiatives, sales push initiatives, and the implemen-
tation of productivity measures and projects to achieve target
costs for instance by adjustment of operational structures, out-
sourcing, mergers and establishment of joint ventures, as well as
by exporting from low-cost countries to price-sensitive markets
and optimizing our product portfolio. We are an industry-wide
technology leader with many of our products, solutions and
services. However, demand for standardized and basic products
is increasing, especially in emerging markets. Such products
generally yield lower margins. If we cannot adapt our product
mix, cost structure and production capacities quickly enough
to changes in the market, technology or the customer require-
ments for high-end, standard and basic products, this could
result in negative effects on our profit. As a countermeasure,
we closely monitor how markets develop in order to better an-
ticipate future developments, adapt our product portfolio to
future demands, implement tools to strengthen value selling
and determine how to lower operating expenses to increase
competitiveness for basic and standard products. Furthermore,
the launch of new products by others may lead to additional
price pressure (for example the competitive response to our
laboratory diagnostics platform). We continually monitor and
analyze market and competitive information in order to be able to
anticipate unfavorable changes in the competitive environment
rather than merely reacting to them.
The worldwide markets for our products, solutions and services
are highly competitive in terms of pricing, product and service
quality, product development and introduction time, customer
service and financing terms. Market demand is also subject to
change, partly due to rapid and significant changes resulting
from the introduction of innovative and disruptive technologies.
New competition in the form of healthcare providers in the
low-price segment or niche markets, as well as independent
service organizations, or global players that want to expand
their business with new portfolio elements or introduce new
business models, might lead to increased pressure on prices or
a loss of market share. There is also the risk that, against the
backdrop of rapid technological progress, new providers previ-
ously from outside the industry will penetrate our markets,
such as IT companies. We counter this risk by constantly moni-
toring existing competitors, known potential competitors, as
well as barriers to market entry, and by exchanging information
with industrial associations. If healthcare markets, especially in
emerging countries, are unable to achieve the anticipated market
growth, then demand for our products, systems and services
could decline. This may result in a change in our relative market
position, or unexpected price erosion. In some sectors in which
Competitive environment
Report on material risks and opportunities
Since the beginning of calendar year 2020 we have been
affected by impact from the COVID-19 pandemic. Some of the
potential key impacts going forward include harm to our
employees' health and safety, and the closure of offices and
production facilities due to COVID-19 cases. We could experience
negative business impacts in the form of disruptions of our
supply chain, delays in our time to market for certain products
or product lifecycles, or changes in installation and service
capacities. Other potential key impacts include revenue short-
falls for example due to investment shifts, reduced reagent
demand in the Diagnostics business, shifts in public funding or
financial difficulties of customers. Investment shifts could par-
ticularly affect medical imaging equipment as far as they are
not used in the treatment of COVID-19 patients. Furthermore,
unforeseen expenses could adversely impact our financial
position. In order to ensure business operations and reduce
impacts of the pandemic on our business, we initiated a broad
spectrum of measures. These include among others protecting
our workforce (such as by provision of personal protective
equipment, including prevention principles, COVID-19 testing
for employees, particularly including installation and service
technicians, working from home, staggered work times to
enable social distancing and travel restrictions), regular crisis
management team meetings led by the managing board and
dedicated task forces, coordinating local response plans, and
ensuring close coordination with suppliers. We continue to
observe the situation, including changes in pandemic-related
restrictions, on an ongoing basis in order to quickly identify
new developments, evaluate potential impacts, assess risks
and make adjustments where necessary.
A.6.2.3 Financial risks
In connection with our worldwide business operations, we
must comply with a broad range of legal and regulatory
requirements in numerous jurisdictions. Further, as a globally
operating company in the healthcare industry we process
personal data of our employees, our customers, the patients of
our customers and our business partners. Thereby, we are
bound by various legislations such as the European Regulation
on Data Protection. Since its implementation, European author-
ities have tightened their enforcement in case of data protec-
tion violations and issued higher fines. We are also bound by
similar legislation in other countries. We have established com-
pliance and risk management systems to ensure adherence to
compliance requirements. Nevertheless, there is no guarantee
that we can avoid all risks in every jurisdiction with these
systems. Proceedings against us regarding antitrust violations,
allegations of corruption or other violations of law, could lead
to penalties such as criminal and administrative fines. Further
consequences could include sanctions, injunctions against
future conduct, profit disgorgements, exclusion from direct or
indirect participation in certain types of transactions and public
tenders, loss of business licenses or permits or could result in
other restrictions and legal consequences. These consequences
could under certain circumstances also affect us if they relate
to violations by our indirect sales channels or business part-
ners. Accordingly, we may, among other things, be required to
comply with potential obligations and liabilities arising in
connection with such investigations and proceedings, including
potential tax penalties. A considerable part of our business
activities involves governments and companies with public
shareholders. We also participate in a number of projects
funded by government agencies and intergovernmental and
supranational organizations, such as multilateral development
banks. Potential future investigations into antitrust violations,
allegations of corruption or other violations of law could impair
relationships with such agencies or organizations or could re-
sult in the exclusion of public contracts. They may also ad-
versely affect existing private business relationships and our
ability to pursue potentially important strategic projects and
transactions, such as strategic alliances, joint ventures or other
business cooperations, or could result in the cancellation of
certain of our existing contracts. Moreover, third parties, in-
cluding customers or our competitors, could initiate litigation
against us. Furthermore, we might be exposed to compliance
risks in connection with recently acquired companies that are
still in the process of integration. In addition, future develop-
ments in current or potential future investigations, such as
responding to the requests of governmental authorities and
cooperating with them, could require increased management
Siemens Healthineers provides post-employment benefits for
the majority of its employees, partly resulting in provisions for
pensions. An increase of provisions for pensions due to an
adverse development of plan assets or the defined benefit
obligation is considered a significant risk. The funded status
can be affected by changes in actuarial assumptions, primarily
the discount rate, as well as by movements in financial markets.
In order to comply with local pension regulations in selected
foreign countries, we may face a risk of increasing cash out-
flows to reduce an underfunding of our pension plans in these
countries. Regular asset liability studies are performed for major
pension plans to implement an investment strategy to mitigate
liability risks and reduce funded status volatility.
Our comprehensive and structured approach to our internal
digital transformation and related investments could poten-
tially support our growth, improve our cost position and
increase our attractiveness as employer. The leverage of our
digital skills, infrastructure, tools and data could enable us to
drive significant value creation across the entire value chain of
the company. Further investments into efficiency measures,
and the use of new technologies such as machine learning and
Artificial Intelligence, could potentially drive additional im-
provements in our processes and cost structures. Increased
harmonization, collaboration and transparency throughout the
entire organization could create synergies, lead to a faster
decision-making process and reduce redundant efforts. Local-
izing certain value-chain activities, such as procurement, pro-
duction, logistics, maintenance and service, for example in
emerging markets, could enable us to reduce costs and
strengthen our global competitive position, in particular com-
pared to competitors based in countries with more favorable
cost structures. In supply chain management and product life-
cycle management, opportunities for improvement could arise
from further implementing an integrated digital tool land-
scape. The improvements could also include further efficiency
gains from using standardized platform elements across
multiple applications. Utilizing these synergies could further
increase our flexibility and speed in adjusting our innovative
solution portfolio to the needs of the market while optimizing
product lifecycle costs and reducing internal complexity.
Efficiency gains
Innovation, digital offerings and new business models are core
for our company in shaping the future of the healthcare industry.
We invest significantly in R&D in order to develop innovative
products, solutions and services for our customers, including
in the area of digitalization. In doing so, we aim to safeguard
our competitiveness at the same time. Our goal is to enable
healthcare providers to create added value by expanding
precision medicine, transforming care delivery and improving
patient experience by leveraging digital technologies. We
expect to be able to meet future demands arising from funda-
mental trends. These trends include demographic change and
global population growth as well as the increasing burden of
chronic diseases. We continuously strive to grow and expand
our business in established markets, open up new markets for
existing portfolio elements and strengthen our installed base in
order to gain a higher market share and improved profitability.
In addition, we aim to further develop our product portfolio
and also grow into adjacent fields, especially in high-growth
customer segments. This is achieved through various measures,
such as targeted product development (for example entry level
systems), the expansion of our consulting competencies to
strengthen our position as a trusted partner as well as the
assessment of new market entry strategies. The measures also
include M&A activities, such as the planned acquisition of
Varian Medical Systems, Inc., which was announced in
August 2020. Varian is a global leader in cancer care, providing
innovative solutions, especially in radiation therapy and related
software. Moreover, we see the opportunity to generate addi-
tional sales volume and profit from new and innovative digital
products, services and solutions, including cybersecurity for
our customers, preventive maintenance and data analytics,
among others. Furthermore, additional business opportunities
could also arise from long-term value partnerships with health-
care providers, supporting our customers in setting up centers
of excellence and jointly co-creating on solutions. Further busi-
ness opportunities could also arise from our SARS COV-2 test
offering (for example the Rapid COVID-19 Antigen test), which
helps healthcare providers diagnose COVID-19. In addition, the
provision of funds by aid organizations such as the World
Health Organization (WHO) or the EU and as well as the provision
of national funds or subsidies could further increase. This
would expand investment and spending in private hospitals,
for example in the Middle East and Africa, Asia and Europe. This
in turn could generate additional growth in these markets,
especially for standard and basic products and services. In our
Diagnostics segment, further collaboration with third parties
could create opportunities for increased revenue and margins
on existing system platforms through creation of an even
broader range of assays in addition to our own development
assays and a faster availability for our customers.
Growth fields
Below we describe our significant opportunities. Unless indi-
cated otherwise, the opportunities described below relate to
all of our segments.
A.6.3 Opportunities
Siemens Healthineers Annual Report 2020
Combined management report - Report on material risks and opportunities
27
The order in which the risks are presented in each of the four
categories above - strategic, operational, financial and com-
pliance risks - reflects the currently estimated exposure. The
most significant risks we are currently exposed to are those
that arise from the COVID-19 pandemic, legal and regulatory
environment and cybersecurity. Compared to prior year and as
already described in the half-year financial report COVID-19
pandemic is the most significant risk. We consider all other risks
mentioned above not as high as the three most significant
risks. At present, no risks have been identified that either
individually or in combination could endanger our ability to
continue as a going concern.
A.6.2.5 Assessment of the overall risk situation
attention. A violation of data protection laws could result in
significant damage to the Company such as fines, damage and
in a loss of reputation. The realization of any of these risks
could have a material adverse effect on our business, assets,
financial condition and results of operations, reputation and
future prospects. Besides other measures such as general training
on compliance with law, our antitrust compliance program and
the requirements of our Business Conduct Guidelines,
Siemens Healthineers has established a global compliance
organization. This organization conducts, among others, com-
pliance risk mitigation processes, such as compliance risk
assessments, which have been reviewed by external compliance
experts. In regard to its business partners, Siemens Healthineers
has established a global business partner management process.
This includes, among other measures, a careful selection pro-
cess, a structured onboarding process as well as trainings,
monitoring and dialogue during on-site visits as well as regular
audits with consistent implementation and monitoring of any
measures taken. When handling personal data, we are conscious
of our responsibility and take it very seriously. Consequently,
we are countering data protection risks now and in the future
through organizational measures, for example by strengthening
our data protection organization at the central and regional
level. Moreover, we have strengthened our corporate gover-
nance, for example by issuing a globally applicable directive.
At the same time, awareness of data protection among our
employees is enhanced through continuous training. To en-
sure adherence to the set standard, we have implemented
data protection controls and also perform independent audits
through our internal audit function. By introducing a dedicated
tool and setting up contact points we enable timely reporting
of potential deficiencies or violations to us, authorities or other
stakeholders.
We operate production, development and service facilities in a
number of different countries and market our products, services
and solutions worldwide. Due to the international scope of our
business operations, we are subject to a multitude of risks and
challenges some of which fall beyond our sphere of influence.
This includes increasing governmental protectionism in recent
years, for example in the form of import and export controls,
tariffs and other trade barriers, including exclusion from certain
markets and price or exchange controls. Protectionist trade pol-
icies and changes in the political and regulatory environment
in the markets, could affect our business in national markets
and could negatively impact our business, financial position
and results of operations. Furthermore, they may expose us to
penalties, other sanctions and reputational damage. Further-
more, the imposition of import customs duties, increased regu-
latory burdens, and non-refundable taxes on foreign value
added may result in a need to reduce our transfer prices, if
passing these costs along to customers is not feasible. The
United States and China are important markets for
Siemens Healthineers, and the trade conflict between the two
countries burdens our business there. Beside the addition of
punitive tariffs, it also brings the risk of threatening free market
access. Other protectionist measures such as the imposition of
localization requirements or local ownership and shareholder
regulations may lead to a significant impact on our business
volume and market share as well as a less competitive position
for bids and consequently a reduction in our profits. To counter
these risks, we continuously observe the global geopolitical
developments and its indicators worldwide in order to identify
critical cases. Based on that we want to adapt our processes
and business model to possible changes due to protectionism,
ensure compliance with all legal requirements and educate the
organization about these changes.
Violations of anti-corruption, antitrust, data
privacy legislation or other violations of law
Risks from pension obligations
markets to anticipate potential problem areas with the objective
of quickly adjusting our business activities and processes to
changed conditions. Furthermore, we issue internal regulations
and guidance, conduct continuous training and communication
as well as synchronized implementation actions. In addition,
internal and external audits of compliance with laws and regu-
lations are performed.
Combined management report
Siemens Healthineers Annual Report 2020
Report on material risks and opportunities
26
As a globally operating and diversified medical technology
company, we are exposed to various increasingly complex
product and country-related regulations, laws and policies that
influence our business activities and processes. A failure to
comply with current regulations or changed and new regulatory
requirements could result in governmental fines and other
sanctions, the temporary or permanent shutdown of production
facilities, third-party claims, import restrictions and negative
publicity. This could lead to unforeseen expenses and adversely
impact our financial position as well as our time to market for
certain products or product life cycles. Further, our business
may be affected by new laws and regulations, in particular by
those that may govern innovative products and business activi-
ties, including services and solutions, such as the use of Artificial
Intelligence. For these new subject areas the regulatory
requirements are often not yet defined or they may undergo
future changes whose effects cannot yet be estimated. Regu-
latory authorities including the Food and Drug Administration
(FDA) in the United States and the National Medical Product
Administration (NMPA) in China and regulations including the
Medical Device Regulation (MDR) and In-Vitro Diagnostics
Regulation (IVDR) in Europe are especially relevant for the
commercialization of our products and services. However,
there are numerous other regulatory schemes in practically all
jurisdictions worldwide to which we are subject. Risks could
also arise from effects of regulations in the area of Environ-
ment, Health, and Safety (EHS) especially from Restriction of
Hazardous Substances (RoHS) and Registration, Evaluation,
Authorization and Restriction of Chemicals (REACH). We need
to comply with and safeguard requirements that will ensure
product safety. To counter the risks mentioned above, we
monitor the political and regulatory landscape in all our key
Legal and Regulatory Environment
A.6.2.4 Compliance risks
For further information related to the financial risks described
above, especially derivative financial instruments and hedging
activities, financial risk management, provisions for pensions
and similar obligations and income taxes, please see
→ Note 25 Financial instruments and hedging activities, Note 26
Financial risk management, →Note 21 Provisions for pensions and
similar obligations and Note 5 Income taxes in the notes to the
consolidated financial statements.
Our treasury and financing activities could face negative devel-
opments related to financial markets, such as limited availability
of funds and hedging instruments, a change in assessment of
our solvency, particularly from rating agencies, impacts arising
from more restrictive regulation of the financial sector, central
bank policy or financial instruments, termination of financing
from Siemens AG or other Siemens Group entities or a deterio-
ration in the financial situation of our main financial partner,
Siemens AG. Widening credit spreads due to uncertainty and
risk aversion in the financial markets might lead to adverse
changes in the fair values of our financial assets and liabilities,
particularly our derivative financial instruments.
Liquidity and financing risk
Siemens Healthineers has global operations in a number of
countries and is thus subject to multiple national tax regimes.
At most Siemens Healthineers entities, the tax authorities in
the respective jurisdictions carry out regular tax audits. Tax
risks can arise from legal interpretations by tax authorities that
diverge from ours, and from changes in legal provisions as well
as case law and their implementation, especially in cross-border
transactions involving various jurisdictions. This can result in
additional tax expenses and additional tax payments, double
taxation and the imposition of penalties and interest payments,
which could have a negative impact on the company's profit and
cash flow. Tax-related risks are identified, regularly monitored
and assessed by the tax department, and necessary measures
are taken.
Tax risks
We are exposed to fluctuations in exchange rates, especially
between the U.S. dollar (and other currencies whose move-
ments are positively correlated with the U.S. dollar) and the
euro. Depending on our hedging activities, devaluation of the
U.S. dollar against the euro may result in material adverse
effects on our profit. Other currencies of significance from the
viewpoint of foreign currency effects include the Chinese yuan,
Japanese yen, Korean won and British pound. A strengthening
of the euro could change our competitive position. We are also
exposed to risks resulting from fluctuations in interest rates.
Our worldwide business operations and our investment and
financing activities are affected particularly by changes in
foreign exchange rates and interest rates. Increasing financial
market fluctuations may result in a significant earnings and
cash flow volatility risk for us. In order to optimize the allocation
of financial resources across our segments and entities, as well
as to achieve our objectives, we identify, analyze and manage
the associated financial market risks. We seek to manage and
control these risks primarily through our regular operating and
financing activities and use derivative financial instruments
when deemed appropriate.
Market price risks
-
Increasing governmental protectionism
21
-
The actual development for Siemens Healthineers and the seg-
ments may vary, positively or negatively, from our outlook due
to the opportunities and risks described in the following chapter
or if our expectations and assumptions do not materialize.
The expected adjusted basic earnings per share was based on
the expected income tax-rate for fiscal year 2021 and on the
number of outstanding shares at the end of fiscal year 2020.
The outlook is based on several assumptions including the ex-
pectation that current and potential future measures to bring
the COVID-19 pandemic under control will not negatively impact
the demand for our products and services. Furthermore, we
expect that the environment for routine-care testing continues
to improve and that investment activity in the U.S. will begin to
pick up from January 2021. The outlook is also based on current
exchange rate assumptions and excluding portfolio activities.
It therefore also does not take into account the planned acquisi-
tion of Varian. In addition, it is assumed that there will be no
material change in the valuation of share-based compensation
programs that are tied to shares of Siemens AG. The outlook also
excludes charges related to legal and regulatory matters.
We are exposed to exchange rate effects, particularly involving
the U.S. dollar and the currencies of emerging markets such as
the Chinese yuan. We expect volatility in global currency markets
to continue in fiscal year 2021. Siemens Healthineers is still a
net exporter from the euro zone into the rest of the world,
which means that in terms of absolute values a weak euro is
generally favorable for our business and a strong euro is in prin-
ciple unfavorable. We use derivative financial instruments to
hedge currency risks in our business. We expect this measure
to help us limit effects on income related to exchange rate fluc-
tuations in fiscal year 2021.
A.5.3 Overall assessment of the
expected development
The Advanced Therapies segment is significantly positively in-
fluenced by sustainable development of the business environ-
ment in all addressed clinical areas. These market drivers will
increase demands for the segment's products and solutions,
supporting our growth expectations. In fiscal year 2021, we
expect comparable revenue growth of at least 5% in the
Advanced Therapies segment strongly above the prior-year
level. We expect adjusted EBIT margin to come in at approxi-
mately the prior-year level, and thus continue to develop well
compared to the industry overall.
The outlook for the Diagnostics segment is based on the
assumptions that the environment for routine-care testing
continues to improve, that we generate at least €100 million
revenue with our new CLINITEST Rapid COVID-19 Antigen test
and that new products will have a positive contribution to busi-
ness development. In fiscal year 2021, we expect a mid- to
high-single digit comparable revenue growth in the Diagnostics
segment. It is expected that the adjusted EBIT margin will
recover to more than 5%, clearly above the prior-year level.
-
Siemens Healthineers Annual Report 2020
Combined management report Report on expected developments
19
199
Development in the Imaging segment will primarily be based
on recent and planned launches of new products and platforms
along with sales of imaging products and services from our
existing portfolio. In fiscal year 2021, we expect comparable
revenue growth of at least 5% in the Imaging segment, clearly
above the previous year, as well as an increase in adjusted
EBIT margin of around 100 basis points compared to the prior
year.
As of fiscal year 2021, along with the comparable revenue
growth we will apply adjusted EBIT margin (for the segments)
and adjusted basic earnings per share (for Siemens Healthineers),
for management purposes, according to their new definitions as
described in A.2 Financial performance system.
A.5.2 Business development
The development of a COVID-19 vaccine and further COVID-19
implications such as future waves and potential pent-up demand
for testing for routine care are determining factors for the ex-
pected future of the Diagnostics market. SARS-CoV-2 tests are
expected to drive a market growth surge in fiscal year 2021.
For the Imaging equipment markets, it is expected that a recovery
will be achieved in fiscal year 2021. For some countries, a soft
recovery is expected during fiscal year 2021, without yet
returning to previous growth levels. In EMEA, the government
initiatives that bolstered market growth in fiscal year 2020 will
run out at the end of calendar year 2020, leading to expected
market declines. The Advanced Therapies market, being se-
verely impacted by COVID-19 in fiscal year 2020, is expected to
fully recover only after the end of fiscal year 2021, with first
steps in this direction visible after the second quarter of fiscal
year 2021.
These market development expectations are based on
Siemens Healthineers' market model that builds on external
sources (amongst others from IQVIA Ltd., OMDIA and Signify
Research), market information from MedTech industry associa-
tions (amongst others COCIR, NEMA, JIRA and MedTech Europe)
and Siemens Healthineers' management estimates.
Beyond that and in line with our Siemens Healthineers Strat-
egy 2025 described in A.1.1 Business description, we aim to
address attractive adjacent markets and grow innovative new
market segments. The announced acquisition of Varian would
add another, strongly growing market segment for Siemens
Healthineers, valued with a future market potential of around
$20 billion (including equipment, service and software solu-
tions for cancer care).
In addition to our addressable product markets described
above, the product-related service market offers sustainable
growth potential. Given the stable growth of the installed base,
this area develops increasingly positive.
Due to Healthcare resource constraints, the growth recovery of
emerging markets as a global growth driver is expected to lag
slightly across all segments.
ness area.
We evaluate the impact of the COVID-19 pandemic on our ad-
dressed markets on an ongoing basis. The positive effect on
certain market segments within the MedTech landscape (e.g.
equipment and supplies needed to fight COVID-19) and tech-
nologies (e.g. telehealth) might continue in the next fiscal
years. Estimations on when the overall market size and growth
might return to pre-COVID-19 levels, however, vary across market
segments and geographies. Healthcare capital restraints, poten-
tial shifts in budget allocations and increased price sensitivity
may have different effects on individual markets in each busi-
The COVID-19 pandemic is currently still volatile and dynamic,
especially as long as further waves, the duration of the crisis and
respective government reactions and measures remain unclear.
Given this unpredictability, the usual and historic development
patterns of Siemens Healthineers' markets might not be appli-
cable for forecasting purposes this year. Therefore, at this point
in time it is challenging to reliably estimate the impact of
COVID-19 on our addressed markets and therefore the expected
developments of these markets. Nevertheless, we expect that
the underlying trends described in →A.1.2 Business environment
are and will remain intact.
A.5.1 Expected market development
A.5 Report on expected developments
Report on expected developments
Siemens Healthineers Annual Report 2020
Combined management report -
We expect a significant increase in revenue for fiscal year 2021,
due to the planned acquisition of Varian. The closing is subject
to regulatory approvals and other customary closing conditions
and is expected to be completed in the first half of calendar
year 2021. Starting with fiscal year 2021 we expect a positive
impact on our adjusted basic earnings per share due to the
planned acquisition of Varian, based on a constant number of
shares outstanding.
The statements about the development including Varian are
based on external available information, because the acquisition
is currently not yet closed.
20
20
Combined management report
Siemens Healthineers Annual Report 2020
22
22
financial structures. Non-compliance with such closing condi-
tions by either company could also result in litigation and addi-
tional termination fees. Our assessments and assumptions
regarding acquisition targets may not prove to be correct and
actual developments may differ significantly from our expec-
tations. This could mean that the expected synergies and cost
savings may not be fully realized. Acquired companies may also
have unexpected or previously unidentified liabilities or pending
regulatory litigation. This could result in additional costs and
negative effects on our business. There is no guarantee that
any of the acquired companies can be integrated successfully
and within the planned time frame. It is possible that the in-
tended combination of companies, processes and employees
will be more complex than expected. If we cannot successfully
integrate newly acquired companies into our existing operations,
for example in terms of regulatory compliance, information
technology and finance, additional expenses, delays and diffi-
culties could arise. The same applies for the integration of cor-
porate cultures. If we do not succeed in integrating these, we
risk losing employees in key roles. This could have a negative
impact on our know-how and our ability to innovate as well as
on our cooperation with customers. The acquisition could also
lead to the loss of customers, suppliers, partners, licensors or
contacts to other stakeholders. In addition, unforeseen acqui-
sition, administrative, tax and other expenditures may incur in
connection with these transactions, including costs related to
integration of acquired businesses. Acquisitions can lead to
substantial additions to intangible assets, including goodwill,
on our balance sheet. Should an acquired company's business
perform below our expectations on a lasting basis, these intan-
gible assets, including goodwill, may have to be impaired
which could adversely affect our net assets, financial position
and results of operations. We counter these risks by carefully
selecting the companies to be acquired and by conducting a
thorough due diligence. We also create detailed integration
plans, set up integration projects and strive to implement them
in a way that countermeasures can be initiated in a timely manner.
Moreover, we support the integration of corporate culture and
change management by providing clarity about organizational
structures to employees and developing and executing clear
communication plans. In addition, we strive to achieve and
maintain employee loyalty through adequate incentive and
compensation programs as well as access to additional local
benefits and the company infrastructure.
ning and require significant adjustments to our operating and
Our business strategy includes amongst others the acquisition
of companies and business activities that expand or comple-
ment our existing business. One example is the planned acqui-
sition of Varian Medical Systems, Inc., which was announced in
August 2020. Successful growth through acquisitions is depen-
dent upon our ability to identify suitable acquisition targets,
conduct appropriate due diligence, negotiate transactions at
favorable terms and ultimately complete such transactions as
well as integrate the acquired company successfully. Mergers
and acquisitions (M&A) are generally associated with risks due
to the difficulties that may arise when integrating people,
operations, technologies and products. Planned acquisitions
are subject to closing conditions, including applicable antitrust
and other regulatory approvals as well as approvals within the
scope of foreign investment control. The required approvals
may be denied, which could adversely affect our strategic plan-
Transactional Risks (M&A)
A.6.2.1 Strategic risks
Hereafter we describe risks that could have a material adverse
effect on our business situation, net assets, financial position
(including effects on assets, liabilities and cash flows), results
of operations and reputation. The order in which the risks are
presented in each of the four categories reflects the currently
estimated exposure for Siemens Healthineers associated with
these risks and thus provides an indication of the risks' current
importance to us. Additional risks not known to us or that we
currently consider immaterial may also negatively impact our
business objectives and operations. Unless otherwise stated,
the risks described below relate to all of our segments.
A.6.2 Risks
In order to allow for a meaningful discussion at the Company
level, individual risks and opportunities of similar cause-and-
effect nature are aggregated into risk and opportunity themes.
This aggregation naturally results in a mixture of risks, including
those with a primarily qualitative assessment and those with a
primarily quantitative risk assessment. Accordingly, we do not
adopt a purely quantitative assessment of risk themes.
Responsibilities are assigned for all relevant risks and opportu-
nities. The hierarchical level of responsibility depends on the
significance of the risk or opportunity. In a first step, assuming
responsibility involves choosing one of our general response
strategies. The general response strategies with respect to risks
are to avoid, transfer, reduce, retain or watch the relevant risk.
The general response strategy for opportunities is to pursue
the opportunity concerned. In a second step, responsibilities
involve developing, initiating and monitoring appropriate
response measures according to the chosen response strategy,
within an appropriate time frame. To allow for effective risk
management, these response measures must be specifically tai-
lored to relevant circumstances. Accordingly, we have developed
a variety of response measures with different characteristics.
Report on material risks and opportunities
-
Siemens Healthineers Annual Report 2020
Report on material risks and opportunities
21
Our ERM process aims for early identification and evaluation of,
and response to, risks and opportunities that could materially
affect the achievement of our strategic, operational, financial
and compliance objectives. The time horizon covered by ERM is
typically three years. Our ERM is based on a net approach,
addressing risks and opportunities that remain after the existing
control measures have been taken. If risks have already been
considered in plans, budgets, forecasts or the financial state-
ments (for example as a provision or risk contingency), they are
supposed to be incorporated, along with their financial impact,
in the entity's business objectives. As a consequence, only
additional risks arising from the same subject (for example
deviations from business objectives, different impact perspec-
tives) should be considered for the ERM. In order to provide a
comprehensive view of our business activities, risks and oppor-
tunities are identified in a structured procedure. This combines
elements of both top-down and bottom-up approaches. While
reporting generally follows a quarterly cycle, this regular
reporting process is complemented by an ad hoc reporting
process that aims to escalate critical issues in a timely manner.
Relevant risks and opportunities are prioritized in terms of
impact and likelihood, considering different perspectives, in-
cluding business objectives, reputation and regulatory matters.
The bottom-up identification and prioritization process is
supplemented by workshops with the respective managements
of the Siemens Healthineers businesses and regional levels.
This top-down element ensures that potential new risks and
opportunities are discussed at the management level and are
included in the subsequent reporting process, if found to be
relevant. Reported risks and opportunities are analyzed for
their potential cumulative effects and are aggregated within
and for each of the organizational levels mentioned above.
Risk management at Siemens Healthineers builds on a compre-
hensive, interactive and management-oriented Enterprise Risk
Management (ERM) approach. This approach is integrated into
the organization and addresses both risks and opportunities. It is
based on the globally accepted COSO (Committee of Sponsoring
Organizations of the Treadway Commission) framework "Enter-
prise Risk Management – Integrating with Strategy and Perfor-
mance" (2017) as well as the ISO (International Organization
for Standardization) Standard 31000 (2018), and is adapted to
Siemens Healthineers requirements.
We make use of a coordinated set of risk management and con-
trol systems. These support us in the early recognition of devel-
opments that could jeopardize the continuity of our business.
The most important of these systems include our company-
wide procedures for strategic planning and management
reporting. Strategic planning is intended to support us in assessing
potential risks well in advance of major business decisions.
Management reporting is intended to enable us to monitor such
risks more closely as our business progresses. Our internal audit
function reviews the adequacy and effectiveness of our risk
management system at the request of the Audit Committee.
Accordingly, if deficits are detected, it is possible to adopt
appropriate measures to eliminate them. We intend to ensure
that the Managing Board and the Supervisory Board are fully
informed about significant risks in a timely manner.
(Enterprise Risk Management Process)
Company-wide risk management
process and organization
Our risk management supports our pursuit of sustainable
growth and thereby increased company value. Hence it is
essential to manage risks and opportunities appropriately. Our
risk management is therefore an integral part of the planning
and implementation of our business strategies. The risk man-
agement policy is set by the Managing Board. In accordance
with our organizational and accountability structure each of the
respective managements of businesses, regions and functions is
obliged to implement a comprehensive risk management system.
This is tailored to their specific area and its responsibilities, while
at the same time being consistent with the overall policy.
Basic principles of risk management
A.6.1 Risk management
A.6 Report on material risks and opportunities
Combined management report - Report on material risks and opportunities
Siemens Healthineers Annual Report 2020
Combined management report
For fiscal year 2021, we expect comparable revenue growth to
be in the range of 5% to 8% compared to fiscal year 2020. We
expect adjusted basic earnings per share to be between € 1.58
and € 1.72.
28
Assessment of the overall opportunities situation
The order in which they are presented reflects the currently
estimated exposure for Siemens Healthineers associated with
these opportunities. The described opportunities are not neces-
sarily the only ones we encounter. In addition, our assessment
of opportunities is subject to change, as Siemens Healthineers,
our markets and technologies are constantly developing. It is
also possible that opportunities we foresee today will never
materialize.
Other provisions
4,774
Total liabilities and equity
Non-current assets
20,837
17,747
The increase in financial assets of €3,024 million pertained
essentially to the shares of Siemens Healthineers Beteiligun-
gen GmbH & Co. KG.
Siemens Healthineers AG promised an allocation to equity in
the amount of €3,000 million to Siemens Healthineers Beteili-
gungen GmbH & Co. KG, which the subsidiary requested. The
promise may be met in the form of a cash payment, a contribu-
tion in kind or a combined cash and non-cash contribution.
In addition, Siemens Healthineers AG acquired Siemens
Healthineers Holding I GmbH and promised an additional capital
payment in the amount of €24 million to fulfill its obligations un-
der the existing letter of support, which the subsidiary requested.
Due to the letter of support Siemens Healthineers AG has to pro-
vide equity to Siemens Healthineers Holding I GmbH with high
probability for carrying out the acquisition of Varian, i.e. for fi-
nancing the purchase price in the amount of US$ 16.4 billion
(€ 14.0 billion as of September 30, 2020) and for the repayment
of all amounts outstanding under an existing credit agreement
of Varian, which has a maximum volume of US$ 1.2 billion
(€ 1.0 billion as of September 30, 2020). In the unlikely case that
the acquisition fails Siemens Healthineers AG will have to pro-
vide equity to Siemens Healthineers Holding I GmbH for the pay-
ment of termination fees up to US$ 925 million (€790 million as
of September 30, 2020) if applicable. Moreover, an additional
-
Current assets
The increase of €59 million in receivables and other assets
resulted primarily from the profit transfer receivable from
Siemens Healthcare GmbH, which rose by €44 million to
€1,459 million compared with the prior year. Moreover, receiv-
ables from the tax authorities from a value-added tax group
decreased by €21 million to €75 million.
Prepaid expenses
The € 12 million increase in prepaid expenses relates primarily
to the deferral of one-time fees of €24 million paid for the
bridge facility. The scheduled reversal of discounts from the
loan liabilities assumed in the prior year had the opposite effect.
Shareholders' equity
The €3,057 million increase in equity is the result of contrary
developments. As a result of the capital increase in Septem-
ber 2020, issued capital rose by €75 million and the capital
reserve by €2,655 million. The dividend distributed for fiscal
year 2019 decreased the unappropriated net income by
€798 million. This negative effect was more than made up for
by net income, resulting in an increase in unappropriated net
income of €337 million overall. The capital reserve under Sec-
tion 272 (2) number 4 of the German Commercial Code that
remained from the prior year was used again in fiscal year 2020
to acquire treasury shares, of which 898,249 were held as of
September 30, 2020 (September 30, 2019: 651,158). For infor-
mation about the acquisition of treasury shares pursuant to
Section 160 (1) number 2 of the German Stock Corporation Act
("Aktiengesetz"), please see Note 11 Equity in the notes to
the annual financial statements of Siemens Healthineers AG for
the year ended September 30, 2020. As of September 30, 2020,
before allowing for amounts subject to dividend payout restric-
tions, €338 million of the capital reserve (September 30, 2019:
€350 million) could be distributed. The equity ratio rose from
72% to 76%, which was essentially a result of the capital in-
crease. The simultaneous slight increase in liabilities and pro-
visions had the opposite effect on the equity ratio.
4,752
Liabilities to affiliated companies
and other liabilities
Liabilities
19
143
1,524
Prepaid expenses
45
33
Active difference resulting from offsetting
0
Total assets
-
20,837
Shareholders' Equity
15,868
12,811
Provisions
Pensions and similar commitments
22
195
17,747
31
Liabilities
Siemens Healthineers Annual Report 2020
Combined management report Siemens Healthineers AG
A.7.5 Report on relationships with
affiliated companies
The Managing Board of Siemens Healthineers AG has submit-
ted to the Supervisory Board the report required by Section 312
of the German Stock Corporation Act for fiscal year 2020 and
issued the following concluding declaration:
"We declare that, in the legal transactions and other measures
in fiscal year 2020 outlined in the report on relationships with
affiliated companies, based on the circumstances which we
were aware of at the point in time when the legal transactions
were entered into, or the measures were taken or refrained
from, the company received adequate consideration in each
legal transaction and did not suffer any disadvantage by taking
or refraining from taking the measures."
32
Siemens Healthineers Annual Report 2020
Combined management report
Compensation report
-
A.8 Compensation report
The corporate governance statement pursuant to Sections 289f
and 315d of the German Commercial Code ("Handelsgesetz-
buch") is an integral part of the combined management report
and is presented in C.4.2 Corporate Governance statement pur-
suant to Sections 289f and 315d of the German Commercial Code.
This report is based on the recommendations of the German
Corporate Governance Code (GCGC) in the version dated Febru-
ary 7, 2017 and on the requirements of the German Commercial
Code ("Handelsgesetzbuch"), the German Accounting Stan-
dards ("Deutsche Rechnungslegungsstandards") and Interna-
tional Financial Reporting Standards (IFRS).
A.8.1 Compensation of Managing
Board members
A.8.1.1 Compensation system
Principles and objectives
The Supervisory Board decides on the compensation system on
the basis of proposals made by the Chairman's Committee. The
Supervisory Board regularly evaluates the appropriateness of
the compensation system and determines the total compen-
sation paid to members of the Managing Board, taking into
account the statutory requirements and the recommenda-
tions of the GCGC. If necessary, it revises the compensation
system. The current compensation system for members of the
Siemens Healthineers AG's Managing Board has been in place
since March 2018.
The following principles in particular guide the Supervisory
Board in designing the compensation system and determining
the amount and structure of compensation:
The Company's economic situation, performance and outlook: In
deciding on the design and implementation of the compensa-
tion system, the Supervisory Board takes account of the Com-
pany's size and its current and future economic position.
Sustainable growth of the Company: The compensation system
is intended to provide an incentive for successful corporate
management and sustainable growth of the Company. The per-
formance-based components allow for both positive and negative
future developments. Managing Board members are expected to
make a long-term commitment to the Company and are dis-
couraged from taking unreasonable risks. A substantial portion
of their total compensation is linked to the long-term perfor-
mance of Siemens Healthineers AG's share price.
The report details the compensation of the members of the Man-
aging Board and Supervisory Board of Siemens Healthineers AG
for fiscal year 2020 in the period from October 1, 2019, to Sep-
tember 30, 2020. It also provides information on the revised
compensation system for Managing Board members that will
apply as of October 1, 2020.
1,583
0
A.7.4 Corporate Governance
statement
The availability of cash to Siemens Healthineers AG is essen-
tially ensured by cash pooling. The proceeds from the capital
increase were invested by the cash pool leader separately from
the multicurrency revolving credit facility held with Siemens AG
in order to ensure the availability of the proceeds for the Varian
acquisition.
Liabilities to affiliated companies and other liabilities almost
exclusively included liabilities to affiliated companies. Liabilities
from cash pooling decreased by €2,027 million to € 195 million,
because the cash generated by financing activities and operat-
ing activities more than compensated for the cash used for in-
vesting activities. Cash pooling liabilities carried an average
interest rate of 0.31 % in fiscal year 2020. Liabilities to affiliated
companies from promised and requested allocations to equity
rose by €2,024 million. The other liabilities to affiliated compa-
nies, which largely result from a value-added tax group with
several subsidiaries, fell by €19 million to €80 million. The
loans resulting from the US$ 1.6 billion debt assumption in the
prior year remained unchanged. The nominal amounts of the
loans denominated in U.S. dollars and all associated interest
payments continue to be hedged with forward exchange con-
tracts. Concerning the currency hedging of the loans, please
also see Note 21 - Derivative financial instruments and hedg-
ing activities in the notes to the annual financial statements
of Siemens Healthineers AG for the year ended Septem-
ber 30, 2020. The contractual interest rates for the fixed-
rate loans were 1.9% for the US$ 0.9 billion loan due in 2021
and 2.2% for the US$ 0.7 billion loan due in 2023 respec-
tively. Other than the loan maturing in fiscal year 2023, the
liabilities had a remaining term of less than one year.
For further information about the bridge facility and the loans
denominated in U.S. dollars, see A.3.3.1 Net assets and capital
structure.
A.7.3 Cash flows and liquidity
(in millions of €)
Cash flows from:
Operating activities
Investing activities
Concerning special credit terms that may result in early maturity
of the assumed loans, please see A.9 Takeover-relevant infor-
mation and explanatory report.
Financing activities
2019
1,188
-1,000
1,834
223
613
-731
The income from investments, including the profit transfer
received from Siemens Healthcare GmbH, is presented under
operating activities in the table above, because that categori-
zation better reflects the activity of Siemens Healthineers AG
as a management holding company than would a presentation
under investing activities.
Cash generated from operating activities largely resulted from
the payment of the profit transfer from Siemens Healthcare
GmbH for the prior year. The payments of income taxes had
a contrary effect. The significant cash outflow from investing
activities in fiscal year 2020 resulted from the settlement
of the capital payment to Siemens Healthineers Beteiligun-
gen GmbH & Co. KG which was decided and requested in the
prior year. A capital return was made by this subsidiary in the
prior year. The cash generated by financing activities consisted
of net inflows from the capital increase in the amount of
-
€2,709 million less the dividend payment, which was higher
than in the prior year by €99 million, a significant increase in
interest paid and the repurchase of treasury shares. The inter-
est paid included the one-time fees for the bridge facility in the
amount of €28 million.
Fiscal year
2020
Cash and cash equivalents
Receivables and other assets
Current assets
A dividend payout in the amount of around €859 million is in-
tended for fiscal year 2020. This equals a dividend per share of
€0.80. The shares from the capital increase implemented in
September are entitled to a dividend as of October 1, 2019.
As of September 30, 2020, Siemens Healthineers AG had
52 employees.
A.7.1 Results of operations
(in millions of €)
Revenue
Cost of sales
Gross profit
Fiscal year
Fiscal year 2020 was particularly notable for the announce-
ment of the takeover of Varian and for the COVID-19 pandemic.
For details on the announced Varian takeover, see A.3.4 Overall
assessment of the economic position and A.5.3 Overall assess-
ment of the expected development. In this connection, Siemens
Healthineers AG concluded a bridge facility with the Siemens
Group and implemented a capital increase. For details please
see A.3.3.1 Net assets and capital structure. These transactions
led to expenses for fees and services from banks and affiliated
companies and for advisory services. Siemens Healthineers
Holding I GmbH was acquired in order to carry out the acquisi-
tion of Varian. Siemens Healthineers AG guarantees the finan-
cial resources of Siemens Healthineers Holding I GmbH through
an unrestricted letter of support. The COVID-19 pandemic essen-
tially had an indirect impact on Siemens Healthineers AG by af-
fecting the business activities of its direct and indirect subsid-
iaries. Please refer to A.3.2 Results of operations.
2020
16
14
-15
-13
1
1
General administrative expenses
Other operating income/expenses, net
2019
-27
Siemens Healthineers AG is the parent company of Siemens
Healthineers, acts as a management holding company and pro-
vides central administration services. Its results are significantly
influenced by directly or indirectly owned subsidiaries. As a re-
sult, the business development of Siemens Healthineers AG is
generally subject to the same risks and opportunities as the
Group. Due to the interrelations between Siemens Healthineers AG
and its subsidiaries, the outlook of the Company also reflects
our expectations for Siemens Healthineers AG. The foregoing
explanations for Siemens Healthineers therefore also apply to
Siemens Healthineers AG, with an additional risk of the impair-
ment of investments in subsidiaries. The impairment test for
investments in subsidiaries is based on a discounted cash flow
model. The results of the test are influenced by the develop-
ment and success of the subsidiaries and their investments.
Consequently, adverse effects on subsidiaries or indirect invest-
ments may lead to an impairment of the investment in subsid-
iaries in Siemens Healthineers AG's annual financial statements.
Impairments would reduce the net income that can be distrib-
uted to owners. As investments in subsidiaries represent nearly
100% of total assets, this risk is of great importance for
Siemens Healthineers AG. Income from investments signifi-
cantly influences the net income of Siemens Healthineers AG.
A.7 Siemens Healthineers AG
Siemens Healthineers Annual Report 2020
Combined management report - Report on material risks and opportunities
A.6.4 Significant characteristics
of the accounting-related
internal control and risk
management system
The overarching objective of our accounting-related internal
control and risk management system is to ensure that financial
reporting is conducted in a proper manner, such that the con-
solidated financial statements and the combined management
report of Siemens Healthineers are prepared in accordance
with all relevant regulations.
-
Our ERM approach is based on the COSO framework "Enterprise
Risk Management Integrating with Strategy and Perfor-
mance" (2017) and ISO Standard 31000 (2018), and is adapted
to Siemens Healthineers' requirements. These frameworks
connect the ERM process with the financial reporting process
and the internal control system. They consider a company's
strategy, the efficiency and effectiveness of its business oper-
ations, the reliability of its financial reporting and compliance
with relevant laws and regulations to be equally important. Our
accounting-related internal control system (control system) is
based on the internationally recognized "Internal Control -
Integrated Framework" (2013) also developed by COSO. The
two systems are complementary.
The annual financial statements of Siemens Healthineers AG
were prepared in accordance with the rules set out in the Ger-
man Commercial Code.
At the end of each fiscal year, our management performs an
evaluation of the effectiveness of the design and operating
effectiveness of the implemented control system. We have a
standardized procedure under which necessary controls are
defined, documented in accordance with uniform standards,
and tested regularly for their effectiveness. Nevertheless, there
are inherent limitations on the effectiveness of any control
system, and no system, including one determined to be effec-
tive, can prevent or detect all misstatements.
The base data used in preparing our financial statements con-
sists of the closing data reported by Siemens Healthineers AG
and its subsidiaries. Accounting activities, such as activities
related to governance and monitoring, are usually bundled on
a regional level. In particular cases, such as valuations relating
to post-employment benefits, we engage external experts, for
example actuaries. The reported closing data is used to prepare
the financial statements in the consolidation system. The steps
necessary to prepare the financial statements are subject to
both manual and automated controls.
Qualification of employees involved in the accounting process
is ensured through appropriate selection processes and regular
training. As a fundamental principle, based on materiality con-
siderations, the four eyes principle applies and specific proce-
dures must be adhered to for data authorization. Additional
control mechanisms include target-performance comparisons
and analyses of the composition of and changes in individual
line items, both in the closing data submitted by reporting
units and in the consolidated financial statements. In line with
our information security requirements, accounting-related IT
systems include defined access rules protecting them from un-
authorized access. An internal certification process is executed
on a quarterly basis. Management at different levels of our
organization confirms the accuracy of the financial data that
has been reported to Siemens Healthineers headquarters and
reports on the effectiveness of the related control systems.
Our internal audit function addresses our financial reporting
integrity, the effectiveness of the control system and the risk
management system, and adherence to our compliance policies.
In addition, the Audit Committee is integrated into our control
system. In particular, it oversees the accounting, the accounting
process and the effectiveness of the internal control system,
the risk management system and the internal audit system.
Furthermore, we have set up a disclosure committee which is
responsible for reviewing certain financial and nonfinancial
information prior to publication.
29
29
Siemens Healthineers Annual Report 2020
Combined management report Siemens Healthineers AG
-
Our consolidated financial statements are prepared on the basis
of a centrally provided conceptual framework which primarily
consists of uniform financial reporting guidelines and a chart of
accounts. They are issued centrally by the Siemens Group and
complemented by additional Siemens Healthineers guide-
lines for business-specific financial reporting topics. Siemens
Healthineers AG and other entities within Siemens Healthineers
are required to prepare financial statements in accordance with
the German Commercial Code; the conceptual framework is
complemented by mandatory regulations specific to the German
Commercial Code. The need for adjustments in the conceptual
framework due to regulatory changes is analyzed on an ongoing
basis. Accounting departments are informed regularly about
current topics and deadlines from an accounting and closing
process perspective.
Strategic company targets: The compensation system mirrors
the long-term strategic objectives of Siemens Healthineers.
-23
6
Net financial income/expenses in the amount of € 1,516 mil-
lion stemmed mainly from income from investments, which
resulted both from the profit transfer agreement with
Siemens Healthcare GmbH and, for the first time, from a profit
transfer from Siemens Healthineers Beteiligungen GmbH &
Co. KG amounting to €76 million. The profit transfer from
Siemens Healthcare GmbH increased by €44 million, to
€1,459 million.
Income taxes included only current income taxes from corpora-
tion tax and trade tax because the excess of deferred tax assets
was not recognized due to the exercise of the option under Sec-
tion 274 (1) sentence 2 of the German Commercial Code. In ad-
dition to the income tax group formed with Siemens Healthcare
GmbH, in fiscal year 2020 Siemens Healthineers AG for the first
time also formed an income tax group with two further subsid-
iaries. The decline in income tax compared with the prior year
was essentially due to the fact that Siemens Healthineers AG and
Siemens Healthcare GmbH recorded substantially higher tax-free
income from investments and that Siemens Healthcare GmbH
recorded a €28 million increase in creditable withholding tax.
30
Siemens Healthineers Annual Report 2020
Combined management report Siemens Healthineers AG
A.7.2 Net assets and financial position
(in millions of €)
Non-current assets
The decline in other operating income/expenses was primarily
a result of fees from banks in connection with the implemen-
tation of the capital increase.
Property, plant and equipment
Sept 30,
2020
2019
0
0
19,209
16,185
4
Financial assets
-27
Revenue and cost of sales resulted only from providing manage-
ment services for affiliates.
Profit carried forward
Financial income/expenses, net
Therein: income from investments
Income from business activity
Income taxes
1,516
1,405
1,535
1,415
1,463
1,389
Unappropriated net income
-327
1,135
1,034
259
24
1,394
1,057
Net income
-356
Compensation linked to duties and performance: Compensation
depends on the duties, responsibilities and performance of
each Managing Board member. The amount of performance-
based compensation is dependent on the achievement of de-
manding targets agreed upon in advance. Performance-based
compensation accounts for a significant portion of the total
compensation.
capital payment for the compensation of a deficit not covered by
equity may have to be provided.
33
restriction period, this yields a target achievement bandwidth
from a minimum of 0% to a maximum of 200% (cap). The actual
amount, defined as the final number of Siemens Healthineers AG
shares to be transferred multiplied by the Siemens Healthineers AG
share price at the end of the restriction period, may not exceed
300% of the originally granted target amount (absolute payout
limit). If the actual amount is higher, the corresponding number
of stock awards will be forfeited without replacement.
At the beginning of each fiscal year, the Supervisory Board
decides on the target system and the relevant competitors.
Adjustments can be made in the event of significant changes
in the relevant competitors and/or extraordinary unforeseen
developments impacting the share price. The following twelve
competitors were determined to calculate target achievement
for the awards granted in fiscal year 2020:
36
Competitors
25% Europe-based
• Kon. Philips Electronics N. V.
• Qiagen N. V.
The target achievement for the stock awards depends on the total
shareholder return (TSR) for the Siemens Healthineers AG share
relative to competitors during the restriction period. In order to
calculate target achievement, in the first twelve months of the
restriction period a reference price (average price) is determined
for the total shareholder return of the Siemens Healthineers AG
share and relevant competitors, which is then compared with the
so-called performance price for each share over the three-year
performance period. After the end of the approximately four-year
Smith & Nephew
-
75% U.S.-based
• Abbott Laboratories
• Becton, Dickinson and Company
• Boston Scientific Corp.
• Danaher Corp.
• Hologic Inc.
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
• Medtronic plc
After an approximately four-year restriction period, beneficiaries
receive one free Siemens Healthineers AG share per stock award,
subject to target achievement. The number of stock awards
granted is calculated by dividing the target amount by the closing
price of the Siemens Healthineers AG share in Xetra trading on
the grant date (less the discounted estimated dividends during
the restriction period). Stock awards are granted based on a tar-
get achievement of 200%. If actual target achievement at the
end of the restriction period is below 200%, the corresponding
number of stock awards is forfeited without replacement.
3 Total shareholder return (TSR) =
40% long-term share-based compensation
(Siemens Healthineers Stock Awards) 1
Closing price of the
Target
amount
in €
Siemens Healthineers AG
share in Xetra trading at
grant date² in €
X
Target achievement depends on TSR³ (0-200%)
Siemens Healthineers AG's TSR compared
to competitors' TSR in quartiles (100% target
achievement median performance)
(Performance price - Reference price) + dividends
Reference price
Final number of
Share price
at end of
restriction
period
=
Actual
amount
in €
(cap:
300%)
Grant (number)
Assessment of target achievement
1 For Dr. Christoph Zindel, the weighting of the long-term share-based compensation (Siemens Healthineers Stock Awards) in fiscal year 2020 was 36%.
² Less discounted estimated dividends during the restriction period.
Consideration of cap
Siemens Healthineers' stock
awards to be converted into
Siemens Healthineers AG
shares
Calculation of long-term share-based compensation (Siemens Healthineers Stock Awards)
• Stryker Corp.
•Varian Medical Systems Inc.
-
Pension benefit commitments
The Managing Board members participate in the Siemens
Healthineers Beitragsorientierte Siemens Altersversorgung
(Siemens Healthineers BSAV). Under this plan, Managing Board
members receive contributions that are credited to their pen-
sion accounts. Each year, the Supervisory Board determines
whether a contribution will be paid and decides the amount as
a percentage of the sum of the base compensation plus the
target amount for the bonus (currently 28%). It may also decide
on special contributions and special provisions for individual
members. In making its decisions, the Supervisory Board takes
into account the intended level of benefits for each Managing
Board member, the length of time he/she has been a member
and the annual and long-term expense resulting from provid-
ing for those benefits. Managing Board members are eligible
to receive benefits at the age of 62, but not before they have
retired. As a rule, the accrued pension benefit balance is paid
out in twelve annual installments. The Managing Board mem-
ber or his/her surviving dependents may choose a different
payment option, subject to Siemens Healthineers AG's consent.
Pension benefit commitments or entitlements expire if a recipient
jeopardizes or harms important interests of the Siemens Group
or acts in a way that would entitle Siemens Healthineers AG to
terminate his/her contract for cause.
Other rules of the compensation system
Commitments in connection with the termination of
Managing Board membership
The following provisions apply if a Managing Board member-
ship is terminated prematurely:
• Termination by mutual agreement without serious cause: The
Managing Board contracts provide for a severance payment
in this case. The severance payment is limited to the remain-
ing term of the board member's contract, and cannot exceed
two years' compensation in any case. It is payable in the
month the member leaves the Managing Board. The amount
of the severance payment is calculated based on the fixed
base compensation together with the bonus and stock
awards actually granted in the last fiscal year before termina-
tion. If the remaining term of the member's appointment is
more than six months, the severance payment is reduced by
10% as a lump sum allowance for discounted values and for
income earned elsewhere. This reduction applies only to the
portion of the severance payment calculated excluding the
first six months of the remaining contract term. An additional
flat rate of 5% of the severance payment is paid to cover non-
cash benefits. A one-time special contribution is also made
to the Siemens Healthineers BSAV. The amount is based on
the contribution made in the previous year and on the re-
maining term of the Managing Board member's appoint-
ment, with a cap of two years' of contributions.
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
• Premature termination at the Managing Board member's
request, or termination by Siemens Healthineers AG for serious
cause: None of the above payments are made.
The following further provisions apply to stock awards:
• Stock awards for which the restriction period is still in effect
expire without replacement if the employment contract is
not extended after the appointment period at the Managing
Board member's request, or if a serious cause is present that
would have entitled Siemens Healthineers AG to revoke the
appointment or terminate the contract.
• However, stock awards are not forfeited if the contract is ter-
minated by mutual agreement at Siemens Healthineers AG's
request, or because of retirement, disability or a change of
role within Siemens Healthineers.
• On termination of the employment agreement because of a
structural measure (e.g., merger, carve-out), the Managing
Board member is entitled to a cash settlement.
• If a beneficiary dies, his/her heir is entitled to a cash settlement.
Secondary activities of Managing Board members
Managing Board members may take on secondary activities,
especially supervisory board memberships outside Siemens
Healthineers, only with the approval of the Chairman's Com-
mittee of the Supervisory Board. It is up to the Supervisory
Board to decide on any adjustments of compensation to take
account of possible compensation from secondary activities.
38
• Serious breach of fundamental contractual duties by a Manag-
ing Board member: None of the above payments are made.
Siemens Healthineers AG reserves the right to claim damages.
• Change of control: If a change of control (controlling influ-
ence of a shareholder outside the Siemens Group as a result
of a majority voting interest, intercompany agreement or
merger) takes place and leads to a material change in a Man-
aging Board member's position, that member has a right of
termination. This right is excluded if the change of control
occurs during the twelve months before the member's retire-
ment. If the Managing Board member exercises this right, he
or she is entitled to a severance payment for the remaining
term of his or her appointment, capped at two years' com-
pensation. The calculation is based on the fixed base com-
pensation, the target amount for the variable compensation
(bonus) and for the stock awards (each for the last fiscal year
completed prior to the termination). The entitlement does
not apply if the Managing Board member receives benefits
from third parties on the occasion of or in connection with
the change of control. The reduction of 10% and the increase
of 5% of the severance payment apply accordingly to the
above outlined section "Termination by mutual agreement
without serious cause".
• Thermo Fisher Scientific
Ordinary
Managing Board member
0
The Supervisory Board may revoke all or some of a Managing
Board member's stock awards without replacement in the
event of compliance violations by that member, depending on
the seriousness of the violation.
With regard to the further terms of the Stock Awards, the same
general principles apply for the Managing Board and senior
executives; these principles are discussed in more detail in
→ Note 27 Share-based payment of the Notes to Consolidated
Financial Statements.
Maximum amount of total compensation
In addition to the caps on performance-based compensation,
the maximum amount of total compensation is 1.7 times the
target compensation (i.e. the fixed base compensation, the
target amounts for variable compensation (bonus) and long-
term share-based compensation (Siemens Healthineers Stock
Awards) but excluding fringe benefits and pension benefit
commitments). If the fringe benefits and pension benefit com-
mitments are included, the maximum amount of total compen-
sation increases accordingly.
Share ownership guidelines
The Share Ownership Guidelines form an integral part of the
compensation system for the Managing Board. The Managing
Board members' contracts require that during their term of of-
fice, they must continuously hold Siemens Healthineers AG
shares worth a percentage of their average annual base com-
pensation paid over the last four years. The figures set are 250%
for the Chief Executive Officer and 200% for the other Manag-
ing Board members. Each Managing Board member must pro-
vide evidence of having met this requirement after a buildup
period of up to four years (but not before March 2022) and then
annually. The Managing Board member must acquire additional
shares if the value of his/her shares falls below the required
minimum level due to a decline in the Siemens Healthineers AG
share price.
Customary level of compensation: The Supervisory Board is
particularly concerned with ensuring that the compensation
system is in line with market practice and at the same time
responds to the contending needs of international competition
in the healthcare market, German market practice and the
Siemens Group as a strong anchor shareholder. The Super-
visory Board considers the customary level of Managing Board
compensation at peer companies. For this purpose, the Super-
visory Board also obtains recommendations from an indepen-
dent external compensation expert. Compensation is intended
to be attractive in comparison to competitors and thus offer
qualified executives an incentive to join and remain with the
Company for the long term. The Supervisory Board also consid-
ers the compensation structure prevailing in other areas of the
Company. It takes due account of the relationship between the
Managing Board's compensation and that of senior manage-
ment and of the rest of the workforce, including the way it de-
velops over time, and also determines how senior management
and the relevant staff are to be differentiated.
Chief
Executive Officer
referred to annual base compensation
3
annual base compensation
2 x
annual base compensation
2
37
1
2.5 x
On an individual basis, the Supervisory Board may increase this
amount by up to 75% per fiscal year. This allows the Supervi-
sory Board to account for each Managing Board member's in-
dividual performance and experience, the scope and demands
of his or her position, and the Company's goal of a long-term
and sustainable development of the Company while also assur-
ing the international competitiveness of the compensation sys-
tem. In fiscal year 2020, the Supervisory Board did not exercise
this option.
Share ownership target
• €1,235,000 for the Chief Executive Officer Dr. Bernhard Montag
and
Long-term share-based compensation
(Siemens Healthineers Stock Awards)
Target Parameters: Total shareholder return
Performance against 12 competitors and
overall share price performance
Restriction period: Four years
Variability of target achievement: 0-200%
Maximum amount: 300%
Share ownership guidelines
Requirement to hold Siemens Healthineers AG
shares worth a multiple of base compensation
throughout the term of office.
Pension benefit commitments
40%
The amount of the annual contributions is based
on a percentage based on the sum of each
Managing Board member's base compensation
and the target amount for the variable compen-
sation (bonus).
For example, provision of a company car,
contribution to insurance costs, housing costs
and moving expenses.
The maximum amount for total compensation is 1.7 times the target compensation (plus fringe benefits and pension benefit commitments).
For Dr. Christoph Zindel, the weighting for fiscal year 2020 was slightly different: 39% fixed base compensation, 25% variable compensation (bonus) and 36% long-term share-based compensation
(Siemens Healthineers Stock Awards). The ratio of non-performance-based to performance-based compensation was 39% to 61%.
Non-performance-based components
Fixed base compensation
The fixed base compensation is paid as a monthly salary in cash.
In fiscal year 2020, the annual base compensation amounted to:
• €1,050,000 for the Chief Executive Officer Dr. Bernhard
Montag and
• € 735,000 and € 600,000 for the Managing Board members
Dr. Jochen Schmitz and Dr. Christoph Zindel, respectively.
Fringe benefits
Fringe benefits
0-200%, ±20% adjustment (if applicable)
Maximum amount: 240%
⚫1/3 Comparable revenue growth
1/3 Individual targets
• €870,000 and €550,000 for Managing Board members
Dr. Jochen Schmitz and Dr. Christoph Zindel, respectively.
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
-
In fiscal year 2020, the compensation system comprised the
following components:
Compensation
35%
Variability of target achievement:
Fixed base compensation
Non-performance-
based components
65%
Performance-based
components
25%
Variable compensation (bonus)
Target Parameters:
35%
Fringe benefits include the costs, or the cash equivalent, of
non-cash benefits and other perquisites, such as the provision
of a company car, contributions to insurance costs, housing
costs and moving expenses, including taxes incurred on these,
and costs related to preventive medical examinations.
• 1/3 adjusted basic earnings per share
(excluding currency effects and
major portfolio effects)
Performance-based components consist of the variable compen-
sation (bonus) and the long-term share-based compensation
(Siemens Healthineers Stock Awards).
X
Weighted target
achievement (in %)
=
(0-200% of target
amount)
Target achievement
X
Adjustment
(0.8-1.2)
Target amount
Total target
achievement
amount)
35
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
-
Long-term share-based compensation
(Siemens Healthineers Stock Awards)
Performance-based components
At the beginning of each fiscal year, forfeitable stock awards
(Siemens Healthineers Stock Awards) are granted as long-term
share-based compensation. For fiscal year 2020, based on a
target achievement of 100%, the annual target amount for the
cash value of the stock awards was
(0-240% of target
Target achievement
In case of an adjustment the following additional calculation takes place:
(excluding currency effects and major portfolio effects)
1/3 Comparable revenue growth
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
1/3 Individual targets
-
Variable compensation (bonus)
The bonus depends on the Company's business performance in
the past fiscal year and on the achievement of individual targets.
The bonus is paid entirely in cash and consists of the following
components, each accounting for a third of the bonus:
• achievement of the target parameter adjusted basic earnings
per share (excluding currency effects and major portfolio
effects) in the past fiscal year,
• achievement of the target parameter comparable revenue
growth in percent compared with the previous fiscal year,
• achievement of individual targets.
For fiscal year 2020, the Supervisory Board defined the follow-
ing annual target amounts for the bonus based on target
achievement of 100%:
34
• €548,000 and €380,000 for the Managing Board members
Dr. Jochen Schmitz and Dr. Christoph Zindel, respectively.
Calculation of variable compensation (bonus)
The bonus is not paid if target achievement is 0%, and is capped
at 200% of the respective target amount.
For some or all of the Managing Board members, the Supervi-
sory Board may increase or decrease the amount of the bonus
paid by up to 20%. The related calculations take account of
growth and the market in the previous year, the results of a
customer satisfaction survey and the results of an employee
survey
if one is conducted, as well as the Board member's indi-
vidual contribution. The maximum adjusted bonus amount is
240% of the target amount. In fiscal year 2020, the Supervisory
Board did not exercise this adjustment option.
Under a malus clause, the Supervisory Board can reduce the pay-
out amount (to as much as zero) in the event of a severe breach
of duty, a severe compliance violation or seriously unethical
behavior on the part of a Managing Board member.
25% variable compensation (bonus)
• €775,000 for the Chief Executive Officer Dr. Bernhard Montag
and
1/3 adjusted basic earnings per share
2019
2020
2020
(Min)
2020
(Max)
2020
2020
2020
Dr. Christoph Zindel
Managing Board Member
2020
2020
"If the plan conditions are met, Managing Board members are, based on a 100% target achievement, entitled to 4,558 Siemens AG shares (prior year: 2,264) from participation in Siemens share
programs, which are transferred after expiry of the respective holding or vesting period. For Siemens share programs expenses of €247,195 (prior year: €44,580) were recognized according to IFRS
in fiscal year 2020. Due to the spin-off of Siemens Energy from Siemens Group, the Managing Board members will receive an additional cash payment as compensation for the expected dilution
when their Siemens share programs vest. Herefore, an expense in accordance with IFRS of €47,653 was recognized in fiscal year 2020.
Siemens Healthineers Annual Report 2020
Combined management report - Compensation report
Chief Executive Officer
Dr. Bernhard Montag
40
40
3 In fiscal year 2020, the expenses recognized for share-based compensation for Managing Board members in accordance with IFRS amounted to €1,912,770 (prior year: €1,986,309).
The following amounts pertained to the Managing Board members in fiscal year 2020: Dr. Bernhard Montag €1,027,711 (prior year: €591,285), Dr. Jochen Schmitz €733,356 (prior year: €437,071)
and Dr. Christoph Zindel €151,703 (prior year: €0).
2 The figures for individual maximums for multi-year variable compensation reflect the possible maximum value in accordance with the maximum amount agreed on for fiscal year 2020 and 2019,
i.e. 300% of the applicable target amount.
Total compensation
(Min)
1 Fringe benefits include the cost, or the cash equivalent, of non-cash benefits and perquisites, such as provision of a company car, contributions to insurance costs, housing costs and moving
expenses, including taxes incurred on these, and costs related to preventive medical examinations.
Dr. Jochen Schmitz
Chief Financial Officer
(Max)
58
2020
31
One year variable compensation (bonus) -
payout amount
31
31
65
58
58
600
600
600
735
735
735
735
1,050
1,050
1,050
1,050
2019
(Max)
(Min)
2019
without long-term incentive effect,
non-share-based
The Supervisory Board set the target parameters adjusted basic
earnings per share (excluding currency effects and major port-
folio effects) and comparable revenue growth for all Managing
Board members. In order to take comprehensive account of
each Managing Board member's individual performance, it also
set individual targets, each consisting of three focus topics. The
figures set for 100% target achievement are shown below, to-
gether with the figures actually achieved:
Total compensation of all Managing Board members for fiscal year 2020, in accordance with the applicable reporting standards, amounted to
€6.23 million (prior year: €7.97 million). The payout amount presented below is to be used instead of the target value according to the DCGK for
one-year variable compensation. Service costs for pension benefits are not included.
€1.80
4.98%
Actual figure for
fiscal year 2020
Target value for 100%
1 The adjustment due to currency effects amounted to €-0.01 in fiscal year 2020.
Individual targets
Comparable revenue growth
(excluding currency effects and major portfolio effects) 1
Adjusted basic earnings per share
(each weighting 1/3)
Target parameter
Variable compensation (bonus)
fiscal year 2020. After assessing achievement of the targets it
set in October 2019, the Supervisory Board established the
amounts of the variable compensation, long-term share-based
compensation and pension benefit commitments for the Man-
aging Board members in office as of September 30, 2020, as
follows:
The following describes the compensation the Managing
Board members of Siemens Healthineers AG received during
A.8.1.2 Compensation of Managing Board
members for the fiscal year
Further information regarding memberships in supervisory
boards or in comparable domestic or foreign controlling bodies
of business enterprises can be found in the additional informa-
tion in C.4.1.1 Managing Board.
Mandates held in other Siemens Healthineers companies are
considered to be covered by the Managing Board's compensa-
tion. As a general rule, Managing Board members are obliged
to waive any compensation that may be due to them for these
positions. If this is not possible, the compensation paid by the
Siemens Healthineers company will be offset against the
Managing Board's compensation.
Compensation report
-
Siemens Healthineers Annual Report 2020
Combined management report
44
33
2020 focus topics: Strategy 2025,
Operational Performance, People
€1.58
-0.24%
In fiscal year 2020, target achievement was between 39.0%
and 47.3%. In its overall assessment, the Supervisory Board
decided not to make any adjustments to the bonus payout
amounts.
Long-term share-based compensation
(Siemens Healthineers Stock Awards)
Total compensation (GCGC)
Service Cost
Total 8
IPO incentive (restriction period: three years)
(restriction period: four years)
Multi-year variable compensation 2, 3, 4
stock awards 5,6
(bonus) target amount
One-year variable compensation
with long-term incentive effect,
share-based
without long-term incentive effect,
non-share-based
Performance-based components
Total
Performance-based components
Non-perfomance-based components
(Amounts in thousands of €)
Managing Board members in office in fiscal year 2020
-
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
39
Based on the Supervisory Board's decisions as described above,
the Managing Board's compensation for fiscal year 2020 totaled
€6,230,641. Of this total, cash compensation accounted for
€3,275,054 and share-based compensation for €2,955,587.
The compensation granted to the Managing Board members in
fiscal year 2020 and 2019 is presented below.
Total compensation
The number of stock awards granted is based on 200% target
achievement. The number of stock awards granted was deter-
mined based on the price of the Siemens Healthineers AG share
in Deutsche Börse AG's Xetra trading on the grant date, less the
discounted estimated dividends during the restriction period. The
value used to determine the number of stock awards was €38.20.
Fixed base compensation
Fringe benefits1
35
48
35
Balance at the end
of fiscal year 2020
year 20204
64,660
45,550
28,796
139,006
Granted during fiscal
197,340
28,796
363,440
1 Some of Dr. Bernhard Montag's stock awards were originally granted as Siemens stock awards (based on Siemens AG stocks) in November 2017, but were replaced with Siemens Healthineers stock
awards and are thus reported as such. The number includes 9,391 phantom stock awards. In lieu of a transfer of shares, a cash equivalent will be paid for the phantom stock awards at the end of
the restriction period. Otherwise, the same provisions apply as for the stock awards.
² In addition, Dr. Christoph Zindel is, based on a 100% target achievement, entitled to 21,338 Siemens Healthineers AG shares for participation in Siemens Healthineers share programs, which are
transferred after expiry of the respective holding or vesting period.
3 The balance at the beginning of the fiscal year includes 115,614 share awards based on 200% target achievement.
4 The number of stock awards is based on 200% target achievement. The weighted average fair value was €21.26 per granted share.
The balance of stock awards includes also one-time IPO stock
awards granted in two tranches, in the 2018 term of office
(March 1, 2018 to September 30, 2018) and in fiscal year 2019,
to those members who were in office during this period,
Dr. Bernhard Montag and Dr. Jochen Schmitz (IPO incentives):
137,304
• 50% after completion of the IPO (granted: 2018 term of of-
fice) and
224,434
132,680
42
Loans and advances
No loans or advances from the Company were provided to
members of the Managing Board.
Siemens Healthineers Annual Report 2020
Combined management report
Compensation report
-
A.8.1.3 Additional information on share-based
compensation instruments
91,754
Overview of stock awards
Managing Board members in office in fiscal year 2020
(Number of units of forfeitable Siemens Healthineers' stock awards)
Dr. Bernhard Montag'
Dr. Jochen Schmitz
Dr. Christoph Zindel²
Total
Balance³ at beginning
of fiscal year 2020
The following table shows the changes in stock awards held by
Managing Board members in fiscal year 2020:
22
• 50% one year later (granted: fiscal year 2019).
The total target amount of both tranches (for 100% goal achieve-
ment) corresponded to the agreed annual base compensation
in fiscal year 2018. The actual target amounts and number of
stock awards per tranche were calculated taking into account
the target achievement levels determined by the Supervisory
Board. In this context, the number of stock awards equaled the
actual target amount divided by the fair market value of the
Siemens Healthineers AG shares at the time each tranche was
granted.
Strengthening sustainability
Linking financial targets to sustainability goals in both the
short- and long-term variable compensation components un-
derscores in particular the significance of sustainable busi-
ness practices.
• Changeover to fixed Siemens Healthineers BSAV contributions
Going forward, the Supervisory Board will set the pension
plan contribution as a fixed amount, rather than in relation
to the target cash compensation (base compensation plus
target amount for bonus).
• Abolishment of change-of-control rule
In accordance with the recommendation of the new GCGC,
the change-of-control rule – under which a Managing Board
member has a right of termination if control of the company
changes in such a way that materially affects that member's
position - will be rescinded. As a result, the entitlement to a
severance payment has also been abolished.
• Malus and claw-back rule
A claw-back rule has been introduced in addition to the existing
malus rule. This rule allows the Supervisory Board, in particular
in cases of serious breaches of duty, to demand full or partial
repayment of performance-based compensation and to declare
Siemens Healthineers Stock Awards invalid.
To enhance the comprehensibility of relative performance in
the context of the Siemens Healthineers Stock Awards, capital
market performance will be measured in the future on the ba-
sis of total shareholder returns (TSR) relative to two equally
weighted indices: MSCI World Health Care and MSCI Europe
Health Care Equipment & Services. These two indices are
closely aligned with Siemens Healthineers' most important
markets, competitors and areas of activity, and are also de-
fined by an external provider.
44
Siemens Healthineers Annual Report 2020
Combined management report - Compensation report
Aspect
Performance criteria:
> 1/3 adjusted basic earnings per share (excluding
currency effects and major portfolio effects)
1/3 comparable revenue growth
1/3 individual performance
Discretionary adjustment option of up to +/-20%
Previous compensation system
No further stock awards were granted in connection with the
IPO incentive in fiscal
year 2020.
Adjustment of the comparative group for Siemens Healthineers
Stock Awards
•
Target achievement per tranche might vary between 50%
(floor) and 150% (cap). The stock awards granted are subject
with a restriction period of three years. The beneficiaries re-
ceive one Siemens Healthineers AG share or an equivalent cash
payment for each stock award. The forfeiture rules, including
the malus clause outlined above for the stock awards, apply
accordingly.
A.8.1.4 Revised compensation system
effective as of October 1, 2020
At the start of calendar year 2020, the Act Implementing the
Second Shareholders' Rights Directive (Gesetz zur Umsetzung
der zweiten Aktionärsrechterichtlinie - ARUG II) entered into
force, introducing material changes to managing board compen-
sation requirements. The revised GCGC, which has been in force
since March 20, 2020, also contains new recommendations for
managing board compensation. These changes prompted the
Supervisory Board to perform a thorough review and update of
the Company's Managing Board compensation system.
At its meeting in September 2020, the Supervisory Board re-
solved to implement the revised Managing Board compensation
system with effect from October 1, 2020. In reaching its deci-
sion, the Supervisory Board took account of the provisions of
Section 87a (1) of the German Stock Corporation Act (AktG), the
recommendations of the GCGC, the Siemens Healthineers Strat-
egy 2025 and the expectations of our shareholders. The new
compensation system will be submitted to the next Sharehold-
ers' Meeting for approval. All Managing Board members have
agreed to the necessary changes in their service contracts.
43
33
The Supervisory Board's discretionary option of revising the
bonus payable upward or downward by up to 20% or in-
creasing the target amount of Siemens Healthineers Stock
Awards by up to 75% per fiscal year was abolished. As a re-
sult, the maximum bonus payout amount was reduced from
240% to 200% of the target amount.
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
Supporting a sustainable, future-proof corporate
growth - Siemens Healthineers' Strategy 2025
One of the goals of the revised compensation system is to make
compensation contribute even more to the pursuit of our busi-
ness strategy and to Siemens Healthineers' long-term growth.
The Siemens Healthineers Strategy 2025 is geared to faster prof-
itable growth. The intention is for the Company to grow both by
strengthening its current core business and sharpening its stra-
tegic focus on adjacent growth areas. With its strong weighting
of variable compensation components coupled with ambitious
targets, the compensation system is designed to motivate the
Managing Board to implement the Siemens Healthineers Strat-
egy 2025 in an effective manner. The long-term variable com-
pensation component (Siemens Healthineers Stock Awards) is
clearly geared to the Company's share price, aligning Managing
Board compensation more closely with the shareholders' inter-
ests. At the same time, the Managing Board compensation is
intended to encourage the sustainable, long-term growth of
Siemens Healthineers, namely by lending greater weight to
long-term variable compensation elements and by introducing
a sustainability target that is measured with reference to two or
three ESG (environmental, social and governance) goals. The sys-
tem is designed to promote innovation and provide incentives
for the Company's value-creating long-term growth while simul-
taneously avoiding unreasonable risks.
Fundamentals of and key changes to the
compensation system
The total compensation of the Managing Board members of
Siemens Healthineers AG continues to comprise non-perfor-
mance-based and performance-based components. The non-
performance-based fixed compensation comprises the base
compensation as well as fringe benefits and pension benefit
commitments (Siemens Healthineers BSAV). The performance-
based - and thus variable - compensation comprises short-term
variable compensation (bonus) and long-term variable share-
based compensation (Siemens Healthineers Stock Awards).
The revision of the compensation system left the base compen-
sation and fringe benefits largely unchanged. The variable
compensation components, bonus and Siemens Healthineers
Stock Awards, and pension benefit commitments were evolved
and adapted to meet the new regulatory requirements. Each
Managing Board member's possible total compensation is
capped (maximum compensation).
The following are the main changes to the compensation system:
• Abolishment of the discretionary adjustment option for perfor-
mance-based compensation
•
-
Cap: 240% of target amount
Benefits for former members of the Managing Board
In fiscal year 2020, former Managing Board members and their
surviving dependents received total benefits within the mean-
ing of Section 314 (1) no. 6 lit. b of the German Commercial
Code in the amount of €37,384.
1 The expenses (service cost) recognized in accordance with IFRS in fiscal year 2020 for Managing Board members' entitlements under the Siemens Healthineers BSAV amounted to €1,119,686
(2019: €1,262,061).
148
with long-term
incentive effect,
Multi-year variable
compensation
share-based
Total
Service Cost
Total compensation
(GCGC)
566
1,475
1,016
1,334
784
505
519
348
358
1,907
267
250
367
58
65
31
33
35
based
components
Performance-
791
Total
1,115
766
768
635
based
components
without long-term
incentive effect,
non-share-based
One-year variable
compensation
(bonus) payout
amount²
1,108
2 There was no contribution to deferred compensation in fiscal year 2020 or 2019.
1,980
1,364
2020
2019
511
504
3,768
3,328
359
2019
353
2,585
274
875
1,145
857
7,507
5,913
2,864
2,425
2020
Contributions' in fiscal year
1,693
1,051
1 Fringe benefits include the costs, or the cash equivalent of, non-cash benefits and perquisites, such as the provision of a company car, contributions to insurance costs, housing costs and moving
expenses, including taxes incurred on these, and costs related to preventive medical examinations.
2 The payout amount for one-year variable compensation (bonus) shown above represents the amount awarded for fiscal year 2020 and 2019, which will be paid out in January 2021 or was paid out
in January 2020, respectively.
3 In fiscal year 2020, the members of the Managing Board received the following additional amounts from participation in Siemens share programs granted prior to their appointment
to the Managing Board of Siemens Healthineers AG: Dr. Bernhard Montag €120,006, Dr. Jochen Schmitz €82,463 and Dr. Christoph Zindel €329,481.
Pension benefit commitments
For fiscal year 2020, the Managing Board members were
granted contributions under the Siemens Healthineers BSAV
totaling €1,144,640 (2019: €856,800) based on the resolution
by the Supervisory Board in October 2020.
Defined benefit obligations for all pension
commitments excluding deferred
compensation² on Sept 30,
Of the above amount, €12,410 related to the funding of pension
commitments earned prior to transfer to the Siemens Healthineers
BSAV. The contributions are added to the respective pension
The following table shows details of the individual contributions
(additions) during the fiscal years, as well as the defined benefit
obligations for pension commitments.
Managing Board members in office in fiscal year 2020
(Amounts in thousands of €)
Dr. Bernhard Montag
Dr. Jochen Schmitz
Dr. Christoph Zindel
Total
accounts each January, following the end of the fiscal year. Until
the beneficiary's date of retirement, his/her pension account is
credited with an annual interest payment (guaranteed interest)
on January 1 of each year. The interest rate is currently 0.9%.
600
Bonus
> 100% of TSR relative to twelve competitors
Discretionary option of increasing the target amount by
up to 75% per fiscal year
42,000
245,333
110,000
60,000
31,500 201,500
Michael Sen 1,2
Dr. Philipp Rösler
93,333
110,000
110,000
13,500 123,500
Dr. Nathalie von
Siemens
110,000
12,000 122,000
105,926
12,000 122,000
12,000 117,926
110,000
Dr. Andreas
P. Thomas1
Dr. Norbert Gaus
110,000
50,000
36,000 196,000
110,000
50,000
C. Hoffmann
33,000 193,000
Dr. Marion Helmes
110,000
53,333
21,000 184,333
110,000
40,000
21,000 171,000
Dr. Roland Busch 1,2
Prof. Dr. Ralf
Dr. Gregory Sorensen
30,000
47
47
35
Combined management report - Takeover-relevant information and explanatory report
A.9 Takeover-relevant information and
explanatory report (pursuant to Sections 289a and
315a German Commercial Code)
A.9.1 Composition of issued capital
Siemens AG provides a group insurance policy for Supervisory
and Managing Board members of Siemens AG and certain other
board members and employees of the Siemens Group, includ-
ing Siemens Healthineers AG and its subsidiaries. The policy is
taken out for one year at a time or renewed annually. The re-
lated costs are charged by Siemens to Siemens Healthineers.
The insurance covers the personal liability of the insured per-
sons in cases of financial loss associated with their activities on
behalf of the Siemens Group. The insurance policy for fiscal
year 2020 includes a deductible for the members of the Man-
aging Board and the Supervisory Board that complies with the
terms of the German Stock Corporation Act and the 2017 ver-
sion of the GCGC. In line with the new version of the GCGC, as
of fiscal year 2021 the insurance policy no longer includes a
deductible for Supervisory Board members.
As of September 30, 2020, Siemens Healthineers AG's issued
capital totaled €1,075,000,000. The issued capital is divided
into 1,075,000,000 ordinary registered shares with no par
value ("auf den Namen lautende Stückaktien"), each of which
is notionally equal to €1 in value. The shares are fully paid in.
All shares confer the same rights and obligations. Details of the
shareholders' rights and obligations are governed by the provi-
sions of the German Stock Corporation Act, in particular by Sec-
tions 12, 53a et seq., 118 et seq. and 186 of the German Stock
Corporation Act.
At the Shareholders' Meeting, each share reflects the share-
holders' stake in Siemens Healthineers AG's net income. An
exception to this rule applies to treasury shares held by
Siemens Healthineers AG, which do not entitle it to any rights
pursuant to Section 71b of the German Stock Corporation Act.
In accordance with Section 136 of the German Stock Corpora-
tion Act, voting rights of these shares are excluded by law.
Stock programs are in place under which certain employees are
or will be granted Siemens Healthineers AG shares. These stock
programs were continued in fiscal year 2020. Such shares are not
subject to any block on sale, except as provided under local law.
Furthermore, in connection with Article 19 (11) of Regulation
(EU) No. 596/2014 (Market Abuse Regulation) and on the basis
of internal requirements, members of the Managing Board and
Supervisory Board of Siemens Healthineers AG are subject to
certain trading prohibitions with regard to the purchase and
sale of Siemens Healthineers AG shares in temporal connection
with the publication of quarterly financial results.
A.9.3 Legislation and provisions
of the articles of association
applicable to the appointment
and removal of members of the
Managing Board and governing
the amendment to the articles
of association
The appointment and removal of members of the Managing
Board is subject to the provisions of Sections 84 and 85 of the
German Stock Corporation Act. In accordance with Article 5 (1)
of the articles of association, the Managing Board comprises
several persons. Their exact number is determined by the Su-
pervisory Board.
Pursuant to Section 179 of the German Stock Corporation Act,
any amendment to the articles of association is subject to a
resolution of the Shareholders' Meeting. The authority to adopt
nonsubstantive editorial amendments to the articles of associ-
ation was transferred to the Supervisory Board under Article 9 (4)
of those articles. In addition, by resolutions of the Sharehold-
ers' Meeting, the Supervisory Board has been authorized to
amend Article 4 of the articles of association accordingly as the
authorized and contingent capital is utilized, and also after the
expiration of the applicable authorization or utilization period
in each case.
Resolutions of the Shareholders' Meeting are adopted by a sim-
ple majority vote, unless a larger majority is required by law or
by the articles of association. In accordance with Section 179
(2) of the German Stock Corporation Act, amendments to the
articles of association require a majority of at least three-quar-
ters of the issued capital represented at the Shareholders'
Meeting at the time of the vote, unless another capital majority
is prescribed by the articles of association.
A.9.2 Restrictions on voting rights or
transfer of shares
110,000
Other
1 In their capacity as Managing Board members of Siemens AG, Dr. Roland Busch, Michael Sen and Prof. Dr. Ralf P. Thomas have waived compensation for their Supervisory Board membership at
Siemens Healthineers AG.
15,000 155,000
110,000
30,000
22,500 162,500
Karl-Heinz Streibich
Total
110,000
770,000
2 With effect from the end of the Annual Shareholders' Meeting of February 12, 2020, Dr. Roland Busch was appointed to the Supervisory Board to succeed Mr. Michael Sen, who stepped down from
the Board on the same date.
36,667
263,333
101,852
27,778
18,000 147,630
154,500 1,187,833
757,778
207,778
151,500 1,117,056
16,500 163,167
Performance criterion:
Total
Base compensation for
compensation committee work
No discretionary increase possible
Pension benefit
commitment
Fixed Siemens Healthineers BSAV contribution in euro
Malus/claw back
Malus and claw back rules for bonus and Siemens
Healthineers Stock Awards
Change of control
3. Improvement of gender balance
Rule abolished
By introducing a maximum compensation amount for the CEO and
ordinary Managing Board members, Siemens Healthineers AG is
meeting the requirements of Section 87a (1) sentence 2 no. 1 of
the German Stock Corporation Act. The maximum compensation
comprises all performance-based and non-performance-based
compensation components. It represents the maximum compen-
sation limit and thus the actual maximum amount payable for the
corresponding fiscal year, taking into account fixed compensation
(including base compensation, fringe benefits and pension bene-
fit commitments), short-term variable compensation (bonus) and
long-term variable compensation (Siemens Healthineers Stock
Awards). Furthermore, the maximum compensation also in-
cludes additional benefits agreed in the individual service con-
tract, for example a severance payment for forfeited benefits
from the previous employer. The maximum compensation thus
reflects Siemens Healthineers AG's maximum expense for the
relevant Managing Board member.
45
Transparency
Siemens Healthineers Annual Report 2020
Combined management report Compensation report
In revising its Managing Board compensation system,
Siemens Healthineers AG's goal is to further enhance transpar-
ency in compliance with the regulatory requirements and the
needs of our shareholders. In addition, the new compensation
system is intended to be simple, clear and comprehensible, so
that it is always apparent how the compensation system con-
tributes toward implementing the corporate strategy and/or
ensuring Siemens Healthineers AG's sustainable growth.
In future compensation reports, the decisive performance crite-
ria and financial KPIs for the bonus of the following fiscal year will
be announced in advance, as will the selected ESG KPIs for the
sustainability goal in the new tranche of the Siemens Healthineers
Stock Awards.
Introduction of maximum compensation
What is more, the target values, target corridors and goal
achievement levels for the financial KPIs used to calculate the
bonus will be published in arrears for the corresponding fiscal
year. Similarly, the target values, target corridors and goal
achievement levels for the KPIs for the Siemens Healthineers
Stock Awards (i.e. the two relative capital market performance
figures and the KPIs for the sustainability goal) will be an-
nounced after expiry of the restriction period of each tranche.
2. Reduction of CO2 emissions
Three ESG KPIs were set for fiscal year 2021:
Siemens Healthineers BSAV contribution as a percentage of
target cash compensation
Malus rule for variable compensation (bonus)
Right of termination for Managing Board member
Severance payment of a maximum of two years'
compensation (base compensation, target amount for
variable compensation (Bonus) and stock awards)
Compensation system as of fiscal year 2021
Performance criteria:
> 2/3 corporate financial performance (2-3 equally
weighted KPIs)
Two KPIs were set for fiscal year 2021:
1. Access to healthcare
1. adjusted basic earnings per share
2. comparable revenue growth
> 1/3 individual performance (2-4 KPIs)
No discretionary adjustment possible
Cap: 200% of target amount
Siemens
Healthineers
Stock Awards
Performance criteria:
> 80% of TSR relative to two equally weighted indices:
MSCI World Health Care and MSCI Europe Health Care
Equipment & Services
> 20% sustainability (2-3 ESG KPIs)
(excluding major currency and portfolio effects)
Meeting
attendance fee
Targets for fiscal year 2021
• As regards corporate financial performance, the performance
criteria profit/earnings (measured with reference to adjusted
basic earnings per share (excluding major currency and port-
folio effects)) and growth (measured with reference to com-
parable revenue growth) were adopted. Adjusted basic earn-
ings per share and the comparable revenue growth refer to
the definition changed as of fiscal year 2021. For details, see
→A.2 Financial performance system.
46
Siemens Healthineers Annual Report 2020
Combined management report
Compensation report
-
No loans or advances from the Company were provided to
Supervisory Board members.
Based on these provisions, the compensation was as follows:
Supervisory Board members in office in fiscal year 2020
Fiscal year 2020
46
Fiscal year 2019
(Amounts in €)
compensation
Additional
compensation for
committee work
Additional
Meeting
attendance fee
Total
Base
At its meeting in September 2020, the Supervisory Board ad-
opted the following performance criteria (and KPIs) for the
bonus for fiscal year 2021:
As the Supervisory Board receives fixed compensation only,
this encourages both the Company's long-term growth and the
Supervisory Board's own independence.
If a Supervisory Board member fails to attend a Supervisory
Board meeting, one-third of the total compensation entitle-
ment described above is reduced by a percentage equal to the
percentage of the meetings that the Supervisory Board mem-
ber did not attend relative to the total number of Supervisory
Board meetings held in the fiscal year. Compensation is payable
to members of the Related-Party Transactions Committee only
in fiscal years in which the committee convenes at least once
or adopts at least one resolution.
• Four equally weighted targets were set to measure the indi-
vidual performance of each Managing Board member.
The Supervisory Board also determined the following perfor-
mance criteria for the Siemens Healthineers Stock Awards
tranche 2021 (restriction period: approximately four years):
• 80% of relative TSR, measured against two equally weighted
indices: MSCI World Health Care and MSCI Europe Health Care
Equipment & Services, and
• 20% sustainability, measured against three equally weighted
ESG KPIs: 1. Access to healthcare 2. Reduction of CO2 emissions
and 3. Improvement of gender balance.
-
A.8.2 Compensation of Supervisory
Board members
Section 12 of the articles of association of Siemens Healthineers AG
governs the compensation of the Supervisory Board members and
specifies the following base compensation for each fiscal year:
In addition to the above, members receive €1,500 for each at-
tendance at meetings of the Supervisory Board or its commit-
tees. Siemens Healthineers AG reimburses all Supervisory Board
members for their expenses and for value-added tax levied on
their salaries.
• €220,000 for the Supervisory Board Chair,
• €110,000 for Supervisory Board members.
• € 80,000 for the Chair of the Audit Committee,
• €40,000 for each of the other members of the Audit Committee,
• € 60,000 for the Chair of the Innovation and Finance Committee,
• €30,000 for each of the other members of the Innovation and
Finance Committee.
• €40,000 for the Chair of the Chairman's Committee,
• €20,000 for each of the other members of the Chairman's
Committee,
• €20,000 for the Chair of the Related-Party Transactions
Committee,
• €10,000 for each of the other members of the Related-Party
Transactions Committee.
Supervisory Board members who did not serve as a member or
chair of the Supervisory Board or of a committee for the full
(12-month) fiscal year receive prorated compensation, rounded
up to full months.
Additionally, for serving on the Supervisory Board committees:
735
Siemens Healthineers Annual Report 2020
250
1,985
5 If the plan conditions are met, Dr. Christoph Zindel is, based on a 100% target achievement, additionally entitled to 21,338 Siemens Healthineers AG shares for participation in
Siemens Healthineers share programs prior to his appointment to the Managing Board, which are transferred after expiry of the respective holding or vesting period. Herefore, an expense
of €161,477 was recognized in fiscal year 2020.
6 The cash value of stock awards for 100% target achievement was €2,655,015 (prior year: €2,880,017). The amounts for individual Managing Board members were as follows:
Dr. Bernhard Montag €1,235,006 (prior year: €1,200,001), Dr. Jochen Schmitz €870,005 (prior year: €840,008) and Dr. Christoph Zindel €550,004 (prior year: €0).
'The cash value of the IPO incentive stock awards (second tranche) for 100% target achievement, which were granted in fiscal year 2019, was €795,027. The amounts for individual
Managing Board members were as follows: Dr. Bernhard Montag €472,516 and Dr. Jochen Schmitz €322,511. For further information on the IPO incentive, see → A.8.1.3 Additional information
on share-based compensation instruments.
8 The total maximum compensation for fiscal year 2020 represents the contractual maximum amount for total compensation, excluding fringe benefits and pension benefit commitments.
At 1.7 times target compensation (base compensation, target amount for the bonus and target amount for long-term share-based compensation), the maximum amount is less than
the total of the individual contractual caps for performance-based components.
⁹The total compensation includes the respective fair value of the share-based compensation components as of the grant date. Based on the respective cash values of share-based compensation
components, the total compensation amounted to €5,930,069 (prior year: €8,091,184).
41
Siemens Healthineers Annual Report 2020
Combined management report
Compensation report
-
Allocations
The following table shows allocations for fiscal year 2020 and
2019 for fixed base compensation, fringe benefits, and one-year
and multi-year variable compensation, as well as the service cost
for pension benefits:
Managing Board members in office in fiscal year 2020
Dr. Bernhard Montag³
Chief Executive Officer
Dr. Jochen Schmitz 3
Chief Financial Officer
Dr. Christoph Zindel³
Managing Board Member
(Amounts in thousands of €)
2020
2019
2020
2019
2020
2019
Non-
perfomance-
Fixed base compensation
Fringe benefits¹
1,050
1,050
766
1,396
2,283
148
3,660
635
2,601
505
505
505
519
348
348
348
358
267
267
267
3,763
1,613
5,707
3,996
2,630
1,114
4,008
2,771
1,895
902
2,868
367
2,850
791
3,518
566
2,454
3,477
5,202
1,108
750
1,860
775
635
635
635
548
768
766
766
1,115
1,628
1,108
735
766
1,315
1,108
380
3,258
525
-
317
465
1,650
612
2,413
1,108
2,610
968
1,147
3,705
803
912
1,375
10,801
1,000
October 1, 20191
Balance as of
13
-1,859
9,769
-24
3
-24
9,782
-95
3
-24
-24
9,769
13
9,782
1,411
1,411
12
1,423
Other comprehensive
income, net of taxes
Dividends
-33
Net income
Cash flows from financing activities
-7
23
-1,859
-1,276
10,801
13,476
1,000
1,075
56
Total liabilities and equity
Total equity
Non-controlling interests
Total equity attributable to shareholders of Siemens Healthineers AG
Other components of equity
Retained earnings
Capital reserve
Issued capital
11,648
12,584
Total liabilities
6,043
5,294
Total non-current liabilities
4,030
2,982
16, 25, 31
Other liabilities to Siemens Group
368
345
22
-777
12,498
-33
-174
9,769
12,511
25,094
-10
85
23
607
532
620
815
Contract liabilities
Trade payables
Trade and other receivables
Inventories
Contract assets
Change in operating net working capital
Other non-cash income/expenses, net
Income related to investing activities
Interest income/expenses, net
Income tax expenses
Amortization, depreciation and impairments
Adjustments to reconcile net income to cash flows from operating activities:
Net income
1,586
1,423
2019
2020
Fiscal year
(in millions of €)
B.4 Consolidated statements
of cash flows
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Consolidated statements of cash flows
13
9,782
21,429
13
-95
10,801 -1,859
1,000
Other transactions/financing with Siemens Group
-113
-105
Interest paid to Siemens Group
-15
Equity transactions with non-controlling interests
-15
-16
Dividends paid to non-controlling interests
-699
-798
Dividends paid to shareholders of Siemens Healthineers AG
-6
-18
Interest paid
52
-101
Change in short-term financial debt and other financing activities
2,709
-1,853
245
117
-249
Other components of equity
of changes in equity
B.5 Consolidated statements
Consolidated financial statements - Consolidated statements of changes in equity
Siemens Healthineers Annual Report 2020
557
57
920
656
Issuance of new shares
Cash and cash equivalents at end of period
920
Cash and cash equivalents at beginning of period
401
-264
Change in cash and cash equivalents
35
-31
Effect of changes in exchange rates on cash and cash equivalents
-603
519
-51
-67
Purchase of treasury shares
5
Dividends received
-493
-512
Income taxes paid
-345
-301
Additions to equipment leased to others in operating leases
-140
7
-40
178
130
90
1
-265
66
-124
-332
-220
Change in other assets and liabilities
Reserve of
Interest received
27
-647
-1,912
Cash flows from investing activities
7
Disposal of businesses, net of cash disposed
6
5
Disposal of investments, intangible assets and property, plant and equipment
-76
26
-1,354
-6
-6
Purchase of investments and financial assets for investment purposes
-579
-557
Additions to intangible assets and property, plant and equipment
1,617
1,928
Cash flows from operating activities
Acquisitions of businesses, net of cash acquired
Other liabilities
equity in-
struments
measured
-15
-699
-699
Dividends
254
-2
256
3
-26
1
398
-120
income, net of taxes
Other comprehensive
1,586
18
1,567
8,679
20
-714
Share-based payment
17
-1
September 30, 2019
Balance as of
-22
-8
-14
37
37
39
-2
376
8,659
-390
shares
Reissuance of treasury
-54
-54
-54
shares
Purchase of treasury
16
16
Other changes in equity
-10
4
4
Balance as of
equity
interests
neers AG
at cost
Total
Healthi- controlling
Non-
Siemens
September 30, 2018
Treasury
shares
reserve
Cash flow
hedges
Issued Capital Retained translation prehensive
capital reserve earnings differences income
(in millions of €)
holders of
to share-
at fair value
through
other com-
Currency
equity at-
tributable
Cost of
hedging
reserve
Total
1,000
-3,019
8,675
20
8,656
-10
2
-34
-493
-2,980
1,567
Net income
11,174
11,174
October 1, 2018
Balance as of
-35
39
Financial Instruments
Effect of retrospectively
adopting IFRS 9,
2
1
-493
1,000
16
25
-13
5
53
38
16, 21, 25
-76
-123
16, 25
-5
-22
1,954
2,193
5
-532
-607
1,423
1,586
12
1,411
18
1,567
2,300
1,982
3
3
554
Fiscal year
Note
2020
2019
29, 30
14,460
14,518
-8,880
5,580
6
-8,722
-1,342
-1,328
-2,279
-2,214
4
47
65
-28
-23
5,796
1.41
1.57
6
Other comprehensive income that will not be reclassified to profit or loss
-5
-121
Currency translation differences
Cash flow hedges
Therein: Income tax effects
Cost/Income from hedging
Therein: Income tax effects
58
1
1 The balance as of September 30, 2019 corresponds to the balance as of October 1, 2019. The first-time adoption of IFRS 16, Leases, does not lead to a change in the reported amounts, please refer
to Note 2 Accounting policies in the notes to the consolidated financial statements.
13
12,498
-36
117
37
-33
-862
-1,276
13,476
12,511
54
25
55
1.40
1.57
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Consolidated statements of comprehensive income
B.2 Consolidated statements
of comprehensive income
(in millions of €)
Net income
Fiscal year
Equity instruments measured at fair value through other comprehensive income
Therein: Income tax effects
Note
2019
1,423
1,586
Remeasurements of defined benefit plans
21
-5
-122
Therein: Income tax effects
3
2020
1,075
Diluted earnings per share
Shareholders of Siemens Healthineers AG
Siemens Healthineers Annual Report 2020
Combined management report - Takeover-relevant information and explanatory report
A.9.5 Significant agreements which
take effect, alter or terminate
upon a change of control of
Siemens Healthineers AG
following a takeover bid
Various agreements between the Siemens Group and Siemens
Healthineer are in place. The majority of these agreements con-
tain change-of-control provisions.
Treasury and financing agreements
With regard to treasury and financing, these agreements par-
ticularly include the following:
In 2016, a U.S. subsidiary of Siemens Healthineers AG, as
borrower, entered into a bilateral framework loan agreement
with a subsidiary of Siemens AG, as lender, in the amount of
US$6.0 billion. Four individual loan agreements totaling
US$4.3 billion have been drawn upon under this framework.
Each agreement provides the lender with a right of termination
in the event that the borrower ceases to be an affiliate of
Siemens AG. An affiliate is defined as a company in which
Siemens AG (directly or indirectly) holds a majority of shares or
voting rights. In fiscal year 2019, Siemens Healthineers AG as-
sumed two tranches for a total of US$1.6 billion under the
above individual loan agreements. A German subsidiary of
Siemens Healthineers AG assumed a tranche of US$1.7 billion.
Furthermore, Siemens Healthcare GmbH, as borrower, main-
tains a multicurrency revolving credit facility with Siemens AG,
as lender, in the amount of €1.1 billion to serve as working
capital and as a short-term loan facility, as well as a multicur-
rency revolving loan facility in the amount of € 1.0 billion which
provides funding for backup purposes. The agreement cover-
ing the aforementioned two facilities provides Siemens AG
with a right of termination in the event that the borrower
ceases to be an affiliate of Siemens AG. An affiliate is defined
as a company in which Siemens AG (directly or indirectly) holds
a majority of shares or voting rights. For the acquisition of
Corindus Vascular Robotics, Inc. in fiscal year 2020, a loan
agreement was concluded between Siemens AG, as lender,
and Siemens Healthcare GmbH, as borrower, in the amount of
€ 1.0 billion and with a term until September 30, 2021. The
loan agreement provides that the lender may call in the loan
in the event that the borrower ceases to be an affiliate of
Siemens AG. An affiliate is defined as a company in which
Siemens AG (directly or indirectly) holds a majority of shares
or voting rights. In connection with the planned acquisition of
Varian Medical Systems, Inc., Siemens Finance B.V., as lender,
provided Siemens Healthineers AG, as borrower, with a bridge
facility in fiscal year 2020 with a term of 24 months to finance
the purchase price and cover other costs and outlays. On the
reporting date the bridge facility had a volume of €12.5 billion.
Outside what is termed the 'certain funds period,' the bridging
facility provides that the lender may call in the loan in the event
that the borrower ceases to be an affiliate of Siemens AG. An
affiliate is defined as a company in which Siemens AG (directly
or indirectly) holds a majority of shares or voting rights.
Framework agreements based on the International Swaps and
Derivatives Association Inc. documentation (ISDA agreements)
entered into between Siemens Healthineers AG or numerous
subsidiaries of Siemens Healthineers AG on the one hand and
Siemens AG or one of its U.S. subsidiaries on the other hand
grant Siemens AG and its subsidiary a right of termination if
Siemens AG either ceases to (directly or indirectly) hold the ma-
jority of the shares or voting rights in the relevant counterparty
and/or if the relevant counterparty ceases to be a fully consol-
idated subsidiary of Siemens AG. Such agreements also grant
a right of termination if Siemens Healthineers AG or its relevant
subsidiary, as the counterparty, is consolidated by, merges into
or transfers substantially all of its assets to a third party. How-
ever, the latter right of termination applies only if the resulting
company's creditworthiness is materially weaker than the rel-
evant counterparty's creditworthiness immediately prior to
such an event or the resulting company does not simultane-
ously assume the relevant counterparty's obligations under the
ISDA agreements.
Siemens Healthcare GmbH and Siemens AG have an agreement
under which Siemens AG provides certain cash management
services to Siemens Healthcare GmbH, and via Siemens Healthcare
GmbH, also to Siemens Healthineers. Among such services are
the provision of payment infrastructure including the use of
the Siemens Group's bank accounts for external incoming and
outgoing payment transactions, provision of internal accounts
with credit lines (the latter only under separate agreements),
participation in the Siemens Group's cash pools, and settle-
ment of intra-group transactions between the Siemens Group
on the one hand and Siemens Healthineers on the other hand.
The agreement may be terminated by Siemens AG in the event
that Siemens AG ceases to control Siemens Healthineers AG,
where control is defined as the majority ownership of shares
and/or voting rights. Furthermore, Siemens Healthcare GmbH
has an agreement with a subsidiary of Siemens AG under which
Siemens Healthineers may use a central treasury IT application
for its finance management. The agreement may be terminated
by the subsidiary of Siemens AG in the event of an actual or im-
minent loss of control by Siemens AG over Siemens Healthcare
GmbH, where control is defined as the direct or indirect major-
ity ownership of shares and/or voting rights.
51
Siemens Healthineers Annual Report 2020
Combined management report - Takeover-relevant information and explanatory report
Further agreements
Siemens Healthineers AG or some of its subsidiaries also have
various service agreements, some of which are long-term, with
companies of the Siemens Group. Services covered by such
agreements include, but are not limited to, IT, human resources,
procurement, accounting, legal and compliance, as well as
tax-related services. In the event of any change of control in
Siemens Healthineers AG or a subsidiary that is a service recipient
(i.e., in the event that Siemens AG no longer (directly or indirectly)
holds a majority of the voting rights in Siemens Healthineers AG
or the subsidiary, or loses the right to appoint the majority of
the members of the Managing Board or to exercise comparable
control rights), the service provider may terminate the relevant
agreement so far as the provided services are affected, for ex-
ample if rendering such services has become impossible for
legal, technical or organizational reasons.
Several lease and rental agreements and real estate-related
service agreements exist between Siemens Healthineers as the
lessee and the Siemens Group as the lessor. In the event that
Siemens AG no longer (directly or indirectly) holds a majority
of the voting rights in Siemens Healthineers AG, or loses the
right to appoint the majority of the members of the Managing
Board or to exercise comparable control rights, several legal
consequences may ensue, including the obligation to vacate
premises, termination of lease, or a physical separation in cases
where premises are shared between entities of the Siemens Group
and entities of Siemens Healthineers.
Siemens AG has entered into trademark and name-use licensing
agreements with Siemens Healthineers AG and some of its subsid-
iaries. Under such agreements, Siemens AG grants the licensee the
right to use the designations "Siemens" and "Siemens Healthineers"
as a product brand, corporate brand and part of the company
name, business designation and domain name, among other
purposes. The agreements will automatically expire after a tran-
sitional period if Siemens Healthineers AG ceases to be a com-
pany over which Siemens AG has direct or indirect management
power by contract or otherwise, or through ownership of voting
rights entitling Siemens AG to (directly or indirectly) appoint the
majority of the members of the managing body.
A.9.6 Other takeover-relevant
information
We are not aware, nor were we notified during the last fiscal
year, of any shareholder (directly or indirectly) holding interests
in Siemens Healthineers AG's issued capital that entitle it to
10% or more of the voting rights except for Siemens AG, with
its registered seat in Berlin and Munich, Germany, which directly
and indirectly held 850,000,000 shares (equaling 79% of all
shares), carrying 850,000,000 voting rights. There are no shares
with special rights conferring powers of control. Shares granted
by Siemens Healthineers AG or its subsidiaries to employees un-
der their employee stock programs and/or as share-based com-
pensation are transferred directly to the employees. The bene-
ficiary employees may directly exercise their shareholder rights
resulting from the employee shares in the same way as any
other shareholder, in accordance with applicable laws and the
articles of association.
52
62
50
The primary purpose of the buybacks is the issuance of shares
to Siemens Healthineers employees and certain board mem-
bers of the Siemens Healthineers Group, particularly under
stock programs. To the extent that the repurchased shares are
not required for that purpose, they may be used for other
purposes permitted by law. As of September 30, 2020,
Siemens Healthineers AG held 898,249 ordinary shares in
treasury.
Four share buybacks have been carried out on the basis of the
authorization given by the extraordinary Shareholders' Meet-
ing on February 19, 2018. In September 2020, the Managing
Board of Siemens Healthineers AG approved a share buyback
lasting until February 5, 2021, with a volume of up to € 160 mil-
lion and a maximum of 6,400,000 ordinary shares. The buy-
back commenced on October 7, 2020. In September 2019,
Siemens Healthineers AG had announced that it would carry
out a share buyback with a volume of up to €70 million in the
time period until January 31, 2020. The buyback commenced
on September 24, 2019. Under this share buyback, which ended
on January 31, 2020, Siemens Healthineers AG repurchased
1,791,916 shares. The total consideration paid for these shares
amounted to €70 million (excluding incidental transaction
charges). In addition, Siemens Healthineers AG repurchased
1,205,012 shares in fiscal year 2019 for a total consideration of
€45 million (excluding incidental transaction charges).
Furthermore, the Supervisory Board is authorized to use shares
acquired on the basis of this authorization to meet obligations
or rights to acquire Siemens Healthineers AG shares that were
or will be agreed upon with members of the Managing Board
under the rules governing Managing Board compensation.
Siemens Healthineers Annual Report 2020
Combined management report - Takeover-relevant information and explanatory report
A.9.4 Powers of the Managing Board
to issue and repurchase shares
Based on a resolution of Siemens Healthineers AG's extraordi-
nary Shareholders' Meeting held on February 19, 2018, the Man-
aging Board was authorized, subject to the Supervisory Board's
consent, to increase Siemens Healthineers AG's issued capital
on one or more occasions until February 18, 2023, by up to
€500 million by issuing up to 500,000,000 new ordinary regis-
tered shares with no par value in return for cash and/or contribu-
tions in kind. As of September 30, 2020, Siemens Healthineers AG
has made use of the aforementioned authorized capital in the
amount of €75 million. Consequently, as of 30 September 2020,
subject to the Supervisory Board's consent, the Managing Board
was authorized to increase Siemens Healthineers AG's issued
capital by up to €425 million on one or more occasions until Feb-
ruary 18, 2023, by issuing up to 425,000,000 new ordinary reg-
istered shares with no par value in return for cash and/or contri-
butions in kind (Authorized Capital 2018).
On February 19, 2018, Siemens Healthineers AG's extraordinary
Shareholders' Meeting resolved to create contingent capital.
Siemens Healthineers AG's issued capital was conditionally in-
creased by up to € 100 million by issuance of up to 100,000,000
new ordinary registered shares with no par value (Contingent
Capital 2018). A capital increase utilizing Contingent Capital
2018 may be implemented only to grant shares in cases where,
by February 18, 2023, holders and/or creditors of convertible
bonds or of option warrants from option bonds issued by
Siemens Healthineers AG or a controlled entity exercise their
conversion/option rights, or perform their conversion/option
obligations, or if shares are delivered, and only if other forms
of performance are not used.
The Managing Board is authorized to issue bearer or registered
bonds in an aggregate principal amount of up to € 6.0 billion
with conversion or option rights attached, or a combination of
these instruments, entitling the holders/creditors to subscribe
for up to 100,000,000 new ordinary registered shares with no
par value of Siemens Healthineers AG. As of September 30,
2020, Siemens Healthineers AG had not made use of the ability
to issue bonds under this authorization.
• The issue price of the new shares/bonds is not significantly
lower than the stock market price of Siemens Healthineers AG
shares already listed or the theoretical market price of the
bonds computed in accordance with generally accepted actu-
arial methods (exclusion of preemptive rights limited to 10%
of the issued capital in accordance with or under correspond-
ing application of Section 186 (3) sentence 4 of the German
Stock Corporation Act).
• The exclusion is necessary for fractional amounts resulting
from the subscription ratio
• The exclusion is required in order to compensate holders of
conversion or option bonds for the effects of dilution.
In the event of a capital increase from the Authorized Capital
2018 in return for a contribution in cash, preemptive rights may
be excluded with the approval of the Supervisory Board if the
new shares are offered exclusively to employees of
Siemens Healthineers AG and any of its subsidiaries (employee
shares). To the extent permitted by law, such employee shares
may also be issued by effecting the contribution with those
parts of net income which the Managing Board and the Super-
visory Board may transfer to retained earnings in accordance
with Section 58 (2) of the German Stock Corporation Act.
B.
With the approval of the Supervisory Board, the Managing
Board of Siemens Healthineers AG resolved on September 2,
2020, to increase the issued capital of Siemens Healthineers AG
by €75,000,000 (from €1,000,000,000 to €1,075,000,000)
through partial utilization of Siemens Healthineers AG's autho-
rized capital and to exclude shareholders' preemptive rights.
The 75,000,000 new ordinary registered shares with no par
value were placed with institutional investors in an accelerated
bookbuilding offering entitled to applicable dividends retroac-
tive to October 1, 2019. This capital increase took effect upon
entry in the Commercial Register on September 3, 2020.
49
49
Siemens Healthineers Annual Report 2020
Combined management report - Takeover-relevant information and explanatory report
Siemens Healthineers AG cannot repurchase its own shares un-
less authorized to do so by a resolution of the Shareholders'
Meeting or under the limited circumstances explicitly set forth in
the German Stock Corporation Act. On February 19, 2018, an
extraordinary Shareholders' Meeting authorized the Managing
Board to repurchase Siemens Healthineers AG shares until Feb-
ruary 18, 2023, for any permissible purpose, up to a limit of
10% of its issued capital as of the date of the resolution or
as of the date on which the authorization is exercised, if the
latter value is lower. The aggregate of Siemens Healthineers AG
shares repurchased under this authorization and any other of
Siemens Healthineers AG shares previously acquired and still held
in treasury by it or attributable to it pursuant to Sections 71d and
71e of the German Stock Corporation Act may at no time exceed
10% of the issued capital then in existence. Any repurchase of
Siemens Healthineers AG shares is to be accomplished at the dis-
cretion of the Managing Board, either by acquisition in the stock
market or through a public share repurchase offer.
In addition to selling them on the stock exchange or through a
public sales offer to all shareholders, the Managing Board was
also authorized by resolution of the extraordinary Shareholders'
Meeting on February 19, 2018, to use the Siemens Healthineers AG
shares repurchased on the basis of this authorization for any per-
missible purpose. Such shares may in particular be
canceled,
• used in connection with share-based payment programs and/or
employee share programs of Siemens Healthineers AG or any
of its affiliated companies and issued to individuals currently
or formerly employed by Siemens Healthineers AG or any of
its affiliated companies, as well as to board members of any
of Siemens Healthineers AG's affiliated companies,
⚫ offered and transferred, subject to the approval of the Super-
visory Board, to third parties in return for contributions in kind,
• sold, subject to the approval of the Supervisory Board, in
return for payment in cash if the price at which such
Siemens Healthineers AG shares are sold is not significantly
lower than the market price of Siemens Healthineers AG shares
(exclusion of preemptive rights limited to 10% of the issued
capital under a mutatis mutandis application of Section 186 (3)
sentence 4 of the German Stock Corporation Act) or
• used to service or secure obligations or rights to acquire
Siemens Healthineers AG shares arising particularly from or in
connection with convertible bonds or warrant bonds issued
by Siemens Healthineers AG or any of its affiliated companies
(exclusion of preemptive rights limited to 10% of the issued
capital under corresponding application of Section 186 (3)
sentence 4 of the German Stock Corporation Act).
The new shares under the Authorized Capital 2018 and the
bonds under the aforementioned authorization are to be issued
in return for contributions in cash or in kind. They are normally
to be offered to shareholders for subscription. Subject to the
approval of the Supervisory Board, the Managing Board is au-
thorized to exclude shareholders' preemptive rights in the event
of contributions in kind. In the event of capital increases in re-
turn for contributions in cash, the Managing Board is authorized,
subject to the approval of the Supervisory Board, to exclude the
shareholders' preemptive rights in the following cases:
Consolidated
financial statements
53
financial statements
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Consolidated statements of income
B.1 Consolidated statements
of income
(in millions of €, earnings per share in €)
Revenue
Cost of sales
Gross profit
Research and development expenses
Selling and general administrative expenses
B.6 Notes to consolidated
Other operating income
Income from investments accounted for using the equity method, net
Earnings before interest and taxes
Interest income
Interest expenses
Other financial income, net
Income before income taxes
Income tax expenses
Net income
Thereof attributable to:
Non-controlling interests
Other operating expenses
Basic earnings per share
Page 59
statements of
53
Page 54
B.1
Consolidated
statements of income
Page 55
B.2
Consolidated statements
of comprehensive
income
Page 56
changes in equity
B.3
statements of
financial position
Page 57
B.4
Consolidated
statements of
cash flows
Page 58
B.5
Consolidated
Consolidated
10
September 30, 2020
52
2,704
-19
12
13
13
233
9,038
8,590
1,912
1,576
2,774
2,318
37
45
14, 25
352
339
5
419
462
15
7,779
10,268
321
338
920
7,25
2,568
2,779
8,25
142
78
16, 25, 31
3,392
295
686
818
839
10
2,304
2,064
5
49
92
11
9
320
14,827
13,650
1,198
1,236
7,289
5,605
Long-term financial debt
16, 25
314
Provisions for pensions and similar obligations
21
20
1,029
Deferred tax liabilities
5
470
375
Provisions
19
144
147
Other financial liabilities
62
1,045
656
346
5
25,094
21,429
16,25
167
80
25
1,356
1,403
25
374
93
16, 25, 31
2,046
364
18
1,784
1,741
19
270
282
152
Balance as of
25
Sept 30, 2020
-598
-1
-597
114
61
-767
-5
-798
Other comprehensive income that may be reclassified subsequently to profit or loss
Other comprehensive income, net of taxes
Comprehensive income
Thereof attributable to:
Non-controlling interests
Shareholders of Siemens Healthineers AG
55
-768
398
25
61
-26
-798
-16
-814
Share-based payment
2,704
-24
52
52
-24
Other changes in equity
2,629
75
Issuance of new shares
-1
-22
2
Reissuance of treasury
-64
-64
-64
shares
Purchase of treasury
45
45
45
shares
11
25
114
Total current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments accounted for using the equity method
Other financial assets
Deferred tax assets
Other assets
Total non-current assets
Other current assets
Total assets
Trade payables
Other current financial liabilities
Payables to Siemens Group
Contract liabilities
Current provisions
Current income tax liabilities
Other current liabilities
Total current liabilities
Note
Short-term financial debt and current maturities of long-term financial debt
Sept 30, 2019
Current income tax assets
Contract assets
3
-40
-1
-593
375
-598
254
825
1,840
Inventories
11
814
1,824
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Consolidated statements of financial position
B.3 Consolidated statements
of financial position
(in millions of €)
Cash and cash equivalents
Trade and other receivables
Other current financial assets
Receivables from Siemens Group
16
10
The goodwill of €751 million comprised intangible assets that
were not separable, such as employee know-how and expected
synergy effects. Synergies are expected mainly from offering
Corindus' products through the Siemens Healthineers' sales
network, and also from the combination of Corindus' robotic
systems with Siemens Healthineers' therapy systems and solu-
tions in the fields of digitalization and artificial intelligence.
The intangible assets of €306 million particularly include ac-
quired technologies.
68
reflect the current market assessment of the risks specific to
each segment by taking into account specific peer group infor-
mation on beta factors, leverage and cost of debt. The param-
eters for calculating the discount rates are based on external
sources of information. The peer groups undergo an annual
review and are adjusted, if necessary. Terminal value growth
rates consider external macroeconomic data and industry-
specific trends. The accounting estimates, including the meth-
odology applied, can have a material impact on the respective
values and ultimately the amount of any goodwill impairment.
Additionally, the outcome of goodwill impairment tests may
depend on the allocation of goodwill to the segments.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
61
The segment's recoverable amount is based on discounted cash
flow calculations and involves the use of accounting estimates.
The amount is influenced by, for example, the market launch of
new goods and services, the successful integration of acquisi-
tions, volatility of capital markets, interest rate developments,
exchange rate fluctuations and the outlook on economic
trends. At Siemens Healthineers, the recoverable amount is
generally determined based on the fair value less costs of dis-
posal. For the purpose of estimating a segment's fair value less
costs of disposal, cash flows are projected for the next five
years based on past experience, actual operating results and
management's best estimate about future developments as
well as on market assumptions. Cash flows after the detailed
planning period are extrapolated using individual growth rates.
The determined fair value of a segment is assigned to level 3 of
the fair value hierarchy. Key assumptions on which the deter-
minations of fair values less costs of disposal are based include
estimated terminal value growth rates and discount rates. Both
assumptions are determined individually for each segment. The
discount rates correspond to the segment's weighted average
cost of capital and are calculated based on a risk-free interest
rate and a market risk premium. In addition, the discount rates
Goodwill is tested for impairment annually as well as whenever
an indication (triggering event) arises that the carrying amount
may not be recoverable. Siemens Healthineers performs the
annual impairment test in the quarter ending September 30.
For the purpose of impairment testing, the segment's recover-
able amount is to be determined as the higher of the segment's
fair value less costs of disposal and its value in use. If either of
these values exceeds the carrying amount, it is not necessary
to determine both values. If the carrying amount of the seg-
ment to which the goodwill is allocated exceeds its recoverable
amount, an impairment loss on goodwill allocated to this seg-
ment is recognized. Impairment losses on goodwill are not re-
versed in future periods.
Goodwill is carried at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to the cash-generating unit
or the group of cash-generating units that is expected to ben-
efit from the synergies of the business combination and re-
presents the lowest level at which goodwill is monitored for
internal management purposes. At Siemens Healthineers, the
goodwill impairment test is performed at the level of the seg-
ments (please also see → Note 29 Segment information). The
allocation of goodwill requires judgment.
Goodwill
Inventories are valued at the lower of acquisition or production
costs and net realizable value. Acquisition or production costs
are generally determined on the basis of an average value or the
first-in, first-out method. The determination of the net realizable
value includes assumptions with respect to quantity risks, risks
of technical obsolescence and price risks.
Inventories
Basic earnings per share are computed by dividing net income at-
tributable to the shareholders of Siemens Healthineers AG by the
weighted average number of shares of Siemens Healthineers AG
outstanding during fiscal year. Diluted earnings per share are
calculated by assuming conversion or exercise of all potentially
dilutive share-based payment plans.
Earnings per share
Deferred tax assets and liabilities for temporary differences
between the accounting book value and the tax base for assets
and liabilities, as well as deferred tax assets for loss carryfor-
wards, are measured at the tax rates that are expected to ap-
ply in the period when the asset is realized or the liability is
settled using the liability method. Deferred tax assets are rec-
ognized if sufficient taxable profit is projected for the periods
in which the underlying temporary difference is reversed. The
projection includes, in particular, future results from operating
activities, reversals of taxable temporary differences and sub-
stantiated tax planning opportunities. At each reporting date,
Siemens Healthineers reassesses the recoverability of deferred
tax assets based on the projected taxable profit. As future busi-
ness developments are uncertain and partly beyond Siemens
Healthineers' control, assumptions are necessary to estimate
future taxable profit as well as the period in which deferred tax
assets will be recovered. Estimates are updated on a regular
basis and resulting adjustments are made in the respective pe-
riod. Deferred tax assets and liabilities are offset if they relate
to income taxes levied by the same tax authority and there is a
legal right to set off current tax assets against liabilities.
Recognition and measurement of tax positions are determined
by respective local tax laws and applicable tax authorities' reg-
ulations. These can be complex and may be interpreted differ-
ently by taxpayers and local tax authorities. Thus, subsequent
current tax payments or refunds for prior years are possible.
These uncertainties are taken into account based on manage-
ment's considerations.
Income taxes
Expenditures on research activities and collaborations are recog-
nized as expenses as incurred. Expenditures on development ac-
tivities are expensed and only capitalized when the recognition
criteria in IAS 38, Intangible Assets, are met. To assess the fulfill-
ment of these criteria, it is necessary to make assumptions about
technical development risks and market developments, among
other matters. Capitalized development expenses are measured
at cost less accumulated amortization and impairment losses
with an amortization period of generally five to 25 years.
Research and development expenses
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
60
In general, operating expenses by types are assigned to func-
tional areas according to their profit and cost centers. Amorti-
zation, depreciation and impairment of intangible assets and
property, plant and equipment are included in functional costs
depending on the use of the assets.
Functional costs
Contract assets, contract liabilities, receivables: When either
party to a contract with a customer has performed its contrac-
tual obligations, Siemens Healthineers presents a contract asset
or a contract liability depending on the relationship between
Siemens Healthineers' performance and the customer's pay-
ment. Contract assets primarily relate to the sale of goods for
which transfer of control occurs before Siemens Healthineers
has an unconditional right to consideration. Contract liabilities
result mainly from customer advances on services and from
prepayments for goods not yet shipped. Contract assets and
contract liabilities are presented net at the contract level and
as current because they arise in the course of the regular op-
erating cycle. Receivables are recognized when the right to
consideration becomes unconditional. Valuation allowances
for credit risks are set up for contract assets and receivables
according to the accounting policy for financial assets mea-
sured at amortized cost.
Other intangible assets
Revenue from services: Revenue is recognized over time on a
straight-line basis or, if the performance pattern is other than
straight-line, as services are provided. Service contracts can also
include extended warranties, which cover periods beyond the
statutory or customary warranty period and for which revenue
is recognized straight-line over the extended warranty period.
Customer payments are typically received on a monthly or quar-
terly basis over the contract term.
Siemens Healthineers amortizes purchased intangible assets
with finite useful life on a straight-line basis over their respec-
tive estimated useful life. The estimated useful life of patents,
licenses and other similar rights generally ranges from three
to five years. In addition, there are intangible assets acquired
in business combinations, especially customer relationships,
trademarks and technologies. For customer relationships and
trademarks, the useful life ranges from five to 20 years; for
technologies, from two to 15 years.
Property, plant and equipment are valued at acquisition or pro-
duction costs less accumulated depreciation and impairment
losses. Depreciation is recognized on a straight-line basis. The
following useful lives are assumed:
Significant accounting estimates are required to determine
provisions related to onerous contracts with customers, war-
ranty costs and asset retirement obligations, as well as those
related to legal and regulatory proceedings and governmental
investigations (hereinafter, collectively, “legal proceedings").
Siemens Healthineers recognizes a provision for onerous con-
tracts with customers when the estimated unavoidable costs
of outstanding goods and services exceed the expected out-
standing revenue. Legal proceedings often involve complex
legal issues and are subject to substantial uncertainties. Accord-
ingly, considerable judgment is required to determine whether
it is probable that there is a present obligation as a result of a
past event at the end of the reporting period, whether an out-
flow of resources is probable and whether the amount of the
obligation can be estimated reliably. Internal and external coun-
sels are generally part of the determination process for legal
proceedings. Due to new developments, it may
be necessary
to recognize a provision for an ongoing legal proceeding or to
adjust the amount of a previously recognized provision. Upon
resolution of a legal proceeding, Siemens Healthineers may in-
cur charges in excess of the provision recognized for the matter
concerned. Legal proceedings may have a material effect on
net assets, financial position and results of operations.
A provision is recognized if all of the following conditions are
met: (1) it is probable that Siemens Healthineers has a present
legal or constructive obligation as a result of a past event,
(2) it is probable that an outflow of resources with economic
benefits will be required to settle the obligation, and (3) a reli-
able estimate of the amount of the obligation can be made. If
the effect is material, provisions are recognized at present value
by discounting the expected future cash flows at a pretax inter-
est rate that corresponds to the risk-free market interest rate.
Provisions
Until September 30, 2019, IAS 17 and IFRIC 4 were applied.
Lessee accounting distinguished between finance leases and
operating leases. Finance leases were accounted for largely
comparable to the right-of-use model currently applied for lessee
accounting. Operating leases were reported off balance sheet
and the lease payments were expensed over the lease term.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
62
Siemens Healthineers as lessee applies the right-of-use model,
means right-of-use assets and lease liabilities are recognized,
which normally correspond to the discounted lease payments
at initial measurement. The right-of-use model is not applied
for leases with a term of twelve months or less or for low-value
assets. In these cases, the lease payments are instead expensed
over the lease term. Extension options are included in the lease
term if their exercise is reasonably certain. The accounting pol-
icy choice for the non-separation of lease components and
non-lease components is used, with the exemption for vehicle
leases, and all components are accounted for as lease compo-
nents. Right-of-use assets are measured at acquisition costs
less accumulated depreciation and impairment losses, and are
depreciated under the straight-line method over the shorter of
the lease term or the useful life of the underlying assets. Lease
liabilities are measured at the present value of the lease pay-
ments payable over the lease term, generally discounted using
the incremental borrowing rate. Subsequently, they are mea-
sured using the effective interest method. Lease liabilities are
remeasured in case of lease modifications (due to renegotia-
tions) or index-changes triggering price-adjustments, and as a
result of required reassessments of existing contract conditions.
The remeasurement of the lease liabilities leads to a respective
adjustment of the right-of-use assets.
Siemens Healthineers as lessor rents equipment to its customers.
If substantially all risks and rewards incidental to the ownership
of the rented equipment are transferred to the customer, the
lease is classified as a finance lease, otherwise as an operating
lease. Under finance leases, revenue is recognized at the time
the equipment is made available for use by the customer. At
the same time, a receivable from finance leases is recognized
at an amount equal to the net investment in the lease. In the
following periods, interest income is realized using the effec-
tive interest method, reflecting a constant periodic rate of return
of the net investment. Under operating leases, the rented equip-
ment is recognized as property, plant and equipment and is de-
preciated over its ordinary useful life. Income from operating
leases is recognized on a straight-line basis over the lease term.
A contract is or contains a lease if the contract conveys the
right to control the use of an identified asset for a period of
time in exchange for consideration. For further information on
leases, please refer to Note 7 Trade and other receivables,
→ Note 13 Other intangible assets and property, plant and equip-
ment, Note 16 Financial debt, Note 24 Other financial obliga-
tions and Note 26 Financial risk management.
Leases
about continuing or disposing of assets and operations. There-
fore, the identification of the relevant cash-generating unit
involves judgment. In addition, impairment testing of other
intangible assets and property, plant and equipment involves
the use of accounting estimates in determining the assets' or
cash-generating units' recoverable amount, which can have a
material impact on the respective values and ultimately the
amount of any impairment.
Siemens Healthineers reviews other intangible assets and
property, plant and equipment for impairment whenever an
indication (triggering event) arises that the carrying amount of
an asset may not be recoverable. In addition, intangible assets
not yet available for use are subject to an annual impairment
test. If the recoverable amount of an individual asset cannot be
determined, the impairment test is performed at the level of
the cash-generating unit. A cash-generating unit is the smallest
identifiable group of assets that includes the asset to be tested
for impairment and that generates cash inflows, which are
largely independent of the cash inflows from other assets
or groups of assets. When determining the relevant cash-gen-
erating unit, various factors need to be considered, including
how management monitors operations or makes decisions
Impairment of other intangible assets and
property, plant and equipment
generally 5 years
generally 7 to 8 years
5 to 10 years
generally 10 years
20 to 50 years
Office and other equipment
Equipment leased to others
and equipment
Technical machinery
Other buildings
Factory and office buildings
Property, plant and equipment
Defined benefit plans
Revenue from the sale of goods: Revenue is recognized at a point
in time when control of the goods (esp. equipment, reagents
and consumables) passes to the customer, usually upon delivery
of the goods. Payment terms typically do not exceed 90 days
after customer acceptance.
Siemens Healthineers recognizes revenue when, or as, control
over distinct goods or services is transferred to the customer.
This requires, among others, that a contract with enforceable
rights and obligations exists, the customer is committed to its
obligations, and collectability of consideration is probable, taking
the customer's creditworthiness into account. Revenue is the
transaction price Siemens Healthineers expects to be enti-
tled to. Variable consideration is included in the transaction
price if it is highly probable that no significant reversal of reve-
nue will occur once associated uncertainties are resolved. Sig-
nificant accounting estimates are involved in determining the
amount of variable consideration, which is calculated by using
either the expected value or the most likely amount depend-
ing on which is expected to better predict the amount of vari-
able consideration. Consideration is adjusted for the time value
of money if the period between the transfer of goods or services
and the receipt of payment exceeds twelve months and there
is a significant financing benefit to either the customer or
The acquired business contributed revenue of €8 million and a net
loss of €48 million to Siemens Healthineers for the period from
the acquisition date to September 30, 2020, including earnings
effects from purchase price allocation and integration costs. If
Corindus had been included in the consolidated financial state-
ments as of October 1, 2019, revenue and net income, including
earnings effects from purchase price allocation and integration
costs, would have been € 14,461 million and €1,419 million, re-
spectively, in fiscal year 2020.
Miscellaneous liabilities
Total liabilities
Non-controlling interests
The goodwill of €200 million comprised intangible assets that
were not separable, such as employee know-how and expected
synergy effects. Thereof, €99 million are expected to be deduct-
ible for tax purposes. Some employees are covered by a non-
compete agreement, which was classified as a separate trans-
action and recognized as an intangible asset measured at
€19 million. The non-controlling interests of 25% were mea-
sured with the corresponding proportion of the amount of the
acquired net assets.
In August 2020, Siemens Healthineers entered into an agree-
ment to acquire all shares of Varian Medical Systems, Inc.
(hereinafter "Varian") for an expected purchase price of
US$ 16.4 billion (€14.0 billion as of September 30, 2020).
The acquisition was approved by the Varian shareholders on
October 15, 2020. The closing of the acquisition of Varian is
subject to regulatory approvals and other customary closing
conditions and is expected to be completed in the first half of
calendar year 2021.
66
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Note 4 Other operating income
In fiscal year 2020, an amount of €34 million is reported in
other operating income in the United States in connection with
the CARES Act to mitigate the financial impact of the COVID-19
pandemic. In fiscal year 2019, Siemens Healthineers realized
other operating income of €24 million due to settlement gains.
In fiscal year 2020, income tax expenses differed from the ex-
pected income tax expenses based on the combined German
tax rate of 29.2% (2019: 29.5%) as follows:
(in millions of €)
Expected income tax expenses
Fiscal year
2020
2019
571
648
Nondeductible expenses
69
98
Tax-free income
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Siemens Healthineers. If a contract contains more than one dis-
tinct good or service, the transaction price is allocated to
each performance obligation based on relative stand-alone
selling prices. If stand-alone selling prices are not observable,
Siemens Healthineers reasonably estimates them, primarily by
using historical reference values. Revenue is recognized for each
performance obligation either at a point in time or over time.
B.6 Notes to consolidated
Note 1 Basis of presentation
Revenue recognition
Transactions in a currency other than the functional currency
of an entity are recorded, on initial recognition, in that func-
tional currency, by applying the spot exchange rate at the date
of the transaction. At the end of each reporting period, foreign
currency-denominated monetary items are translated applying
the spot exchange rate prevailing at that date. Gains and losses
arising from these foreign currency revaluations are recog-
nized in profit or loss. Foreign currency-denominated non-mon-
etary items are subsequently translated using the historical
spot exchange rate.
Foreign currency transactions
Assets and liabilities of foreign subsidiaries, where the functional
currency is other than the euro, are translated using the spot
exchange rate at the end of the reporting period, while income
and expenses are translated using monthly average exchange
rates. Differences arising from such translations are recognized
within equity and reclassified to profit or loss when the gain or
loss on disposal of the foreign operation is recognized. The items
within the consolidated statements of cash flows are trans-
lated at monthly average exchange rates, whereas cash and
cash equivalents are translated at the spot exchange rate at the
end of the reporting period.
Foreign currency translation
As a writer of a put option on non-controlling interests, Siemens
Healthineers assesses whether the prerequisites for the trans-
fer of present ownership interests are fulfilled at the balance
sheet date. If Siemens Healthineers is not the beneficial owner
of the shares underlying the put option, the exercise of the put
option will be assumed at each balance sheet date and treated
as a transaction between shareholders with the corresponding
recognition of a purchase liability at the respective exercise
price. The non-controlling interests participate in profits and
losses during the reporting period.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
59
The non-controlling interests participate in comprehensive in-
come. Transactions resulting in changes in the proportion of
equity held by non-controlling interests that do not result in the
loss of control by the Group are accounted for as equity trans-
actions not affecting profit or loss. At the date control is lost, the
entity concerned is deconsolidated and any remaining equity
interests of the Group are remeasured to fair value through
profit or loss.
The costs of an acquisition are measured at the fair value of the as-
sets given and the liabilities incurred or assumed at the acquisition
date. Identifiable assets acquired and liabilities assumed in a busi-
ness combination (including contingent liabilities) are measured
initially at their fair values at the acquisition date, irrespective of
the extent of any non-controlling interests. Non-controlling inter-
ests are measured at the proportional fair value of assets acquired
and liabilities assumed (partial goodwill method). The accounting
for business combinations requires accounting estimates and
judgments, for example when estimating the fair values of
identifiable assets acquired and liabilities assumed or when
determining whether an intangible asset is identifiable and should
therefore be recognized separately from goodwill.
Business combinations
The consolidated financial statements include the accounts of
Siemens Healthineers AG and the subsidiaries, which are con-
trolled. The Group controls an investee if it has power over it.
In addition, Siemens Healthineers must be exposed, or must
have rights, to variable returns from the involvement with the
investee and must have the ability to use its power over the
investee to affect the amount of Siemens Healthineers' returns.
Basis of consolidation
The COVID-19 pandemic and associated significant uncertainties
have been considered, where relevant, in accounting estimates
and judgments. In fiscal year 2020, the COVID-19 pandemic did
not lead to material adjustments to the carrying amounts
of recognized assets and liabilities. For further information on
impacts from the COVID-19 pandemic, see disclosures in the
respective notes to the consolidated financial statements and
in the group management report.
routinely require adjustments. Estimates and assumptions are
reviewed on an ongoing basis. Changes in estimates and as-
sumptions are recognized in the period in which the changes
occur and in future periods impacted by the changes.
In certain cases, accounting estimates and judgments are nec-
essary. These involve complex and subjective assessments and
the use of assumptions, some of which may be for matters that
are inherently uncertain and susceptible to change. Accounting
estimates and judgments could change from period to period
and could have a material impact on net assets, financial posi-
tion and results of operations. In addition, Siemens Healthineers
could reasonably have made accounting estimates differently
in the current accounting period. Siemens Healthineers cautions
that future events often vary from forecasts and that estimates
The below-mentioned accounting policies, unless stated other-
wise, have been applied consistently for all presented periods.
Accounting estimates and judgments
Note 2 Accounting policies
Siemens Healthineers prepared and published the consolidated
financial statements in euros (€). Due to rounding, numbers
may not add up precisely to the totals provided.
Siemens Healthineers AG itself prepares consolidated financial
statements for the smallest group of consolidated companies
to which it belongs. Pursuant to Section 290 (1) of the German
Commercial Code, it is also included in the consolidated financial
statements of its parent company, Siemens AG (registered offices
in Munich and Berlin, Munich Local Court HRB 6684 and Berlin
Charlottenburg Local Court HRB 12300), as the largest group of
consolidated companies.
The consolidated financial statements as of September 30, 2020,
present the operations of Siemens Healthineers AG, registered
in Munich (Munich Local Court, commercial register number
HRB 237558), Germany, and its subsidiaries (hereinafter, col-
lectively, "Group" or "Siemens Healthineers"). They have been
prepared in accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union (EU), as
well as with the additional requirements set forth in Section
315e (1) of the German Commercial Code ("Handelsgesetz-
buch"). The consolidated financial statements are in accor-
dance with IFRS as issued by the International Accounting
Standards Board (IASB). On November 19, 2020, the Managing
Board of Siemens Healthineers AG authorized the consolidated
financial statements for issue.
financial statements
-46
Siemens Healthineers measures entitlements from defined ben-
efit plans by applying the projected unit credit method. Thereby,
the obligation from defined benefit plans reflects an actuarially
calculated present value of the future benefit entitlement for
services already rendered (defined benefit obligation, DBO). Ac-
tuarial valuations rely on key assumptions including discount
rates, expected compensation increases and pension progression
and mortality rates. Discount rates are determined by reference
to yields on high-quality corporate bonds of appropriate dura-
tion and currency at the end of the reporting period. High-
quality corporate bonds have an issuing volume of more than
100 million units (in the respective currency) and an AA rating
(or equivalent) by at least one of the three rating agencies
For funded plans, Siemens Healthineers offsets the fair value
of the plan assets with the defined benefit obligation. The net
amount is presented, after adjustments for any effects relating
to asset ceiling.
112
Other intangible assets
7
Miscellaneous assets
200
Goodwill
306
Other intangible assets
33
25
Cash and cash equivalents
Trade and other receivables
(in millions of €)
751
13
Goodwill
Cash and cash equivalents
(in millions of €)
The purchase price paid in cash amounted to US$ 219 million
(€ 196 million as of the acquisition date), including subsequent
adjustments. In addition, Siemens Healthineers redeemed finan-
cial liabilities of ECG amounting to US$ 143 million (€ 129 mil-
lion as of the acquisition date). The purchase price allocation
as of the acquisition date resulted in the following assets and
liabilities:
On November 1, 2019, Siemens Healthineers completed the
acquisition of 75% of the ownership interest of ECG Manage-
ment Consultants (hereinafter “ECG"). ECG is a leading con-
sulting company based in the United States specialized in
healthcare and providing a comprehensive suite of advisory
services for meeting the strategic, financial, operational and
technology-related challenges facing healthcare providers to-
day. The business is part of the Imaging segment and allows
Siemens Healthineers to tap into adjacent growth markets.
Acquisition of ECG
The purchase price amounted to US$ 1.1 billion (€ 1.0 billion as
of the acquisition date) and was paid in cash. The purchase price
allocation as of the acquisition date resulted in the following
assets and liabilities:
Total assets
On October 29, 2019, Siemens Healthineers completed the ac-
quisition of all shares in Corindus Vascular Robotics, Inc. (here-
inafter "Corindus"). Corindus develops and provides a robotic-
assisted platform for endovascular coronary and peripheral
vascular interventions. By combining Siemens Healthineers'
cardiovascular and neurointerventional therapy systems with
Corindus' innovative technology, Siemens Healthineers is able
to drive optimization of procedures for image-based minimally
invasive therapies. The business has been integrated into the
Advanced Therapies segment.
1,077
18
3
189
11
80
Total liabilities
13
Deferred tax liabilities
11
Miscellaneous liabilities
33
Other current liabilities
35
Deferred tax liabilities
132
Short-term financial debt
8
Long-term financial debt
388
Total assets
25
Other current financial liabilities
Miscellaneous assets
Moody's Investor Service, Standard & Poor's Rating Services or
Fitch Ratings. In such case that yields are not available, discount
rates are based on government bond yields. For significant
plans, individual spot rates from a full yield curve approach are
applied. Due to changing market, economic and social condi-
tions, the underlying actuarial assumptions may differ from
actual developments.
Acquisition of Corindus
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
The fair value of equity instruments for equity-settled plans
and of liabilities for cash-settled plans is measured at the grant
date and recognized as an expense over the vesting period. For
cash-settled plans, the fair value is reassessed each quarter. The
fair value is based on the market price of Siemens Healthineers AG
shares or Siemens AG shares considering the present value of
dividends to which the beneficiaries are not entitled during the
vesting period as well as market and non-vesting conditions,
if applicable. Therefore, the fair value is based on market
parameters, assumptions and estimates. Changes in any of
these could necessitate material adjustments to the carrying
amount of the liabilities.
Share-based payment awards may be settled in shares of
Siemens Healthineers AG or Siemens AG, depending on which
shares are the basis, or in cash. Share-based payment awards
based on Siemens Healthineers AG shares are classified pre-
dominately as equity-settled. Share-based payment awards
based on Siemens AG shares are classified as cash-settled to
fulfill the specific requirements for share-based payment trans-
actions among group entities, as Siemens Healthineers is con-
trolled by Siemens AG.
Share-based payment
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
64
Cash flow hedges: The effective portion of changes in the fair
value of derivatives designated as hedging instruments in cash
flow hedges is recognized in other comprehensive income.
Amounts accumulated in the cash flow hedge reserve are re-
classified into net income in the same periods in which the
hedged item affects net income. If the hedged item is an ex-
pected business combination, the effective portion of changes
in the fair value of the hedging instrument is considered when
determining the transaction price upon closing of the acquisi-
tion. Any ineffective portion is recognized immediately in profit
or loss. The application of hedge accounting for expected busi-
ness combinations assumes that the closing of the acquisition
is estimated to be highly probable. This assessment may require
significant judgment. Should the closing no longer be consid-
ered highly probable, hedge accounting must be discontinued
prospectively. If the closing is no longer expected to occur, the
amount accumulated in the cash flow hedge reserve must be
recognized immediately in profit or loss. For certain time-peri-
od-related cash flow hedges, Siemens Healthineers designates
only the change in the fair value of the spot element of forward
exchange contracts as a hedging instrument. Changes in the fair
value of the forward element are recognized in other compre-
hensive income and accumulated separately in a cost of hedg-
ing reserve. The value of the forward element at the time of
designation is amortized into profit or loss on a straight-line
basis over the hedging period.
Cash and cash equivalents: Cash and cash equivalents are mea-
sured at cost. Siemens Healthineers considers all highly liquid
investments with a maturity of three months or less from the
date of acquisition to be cash equivalents. Short-term deposits
and overdraft facilities granted in connection with the cash
pooling arrangements with the Siemens Group are not in-
cluded in cash and cash equivalents. Changes in these items
are presented as financing activities in the consolidated state-
ments of cash flows.
Financial liabilities measured at amortized cost: Siemens
Healthineers measures financial liabilities, except for deriva-
tives, contingent consideration recognized in a business com-
bination and written put options on non-controlling interests,
at amortized cost using the effective interest method.
Financial assets are considered defaulted if the obligor is unwill-
ing or unable to pay its credit obligations. A range of internally
defined events can trigger a default rating, including the open-
ing of bankruptcy proceedings or a default rating by an external
rating agency. Financial assets are written off as uncollectible
when it appears unlikely that they will be recovered. Generally,
this applies after the statutory limitation period has expired,
when bankruptcy proceedings have been closed, or when the
receivable is no longer pursued due to its insignificance.
Valuation allowances are set up for expected credit losses, repre-
senting a forward-looking estimate of future credit losses and
involving significant judgment. Expected credit losses are cal-
culated based on the gross carrying amount of the financial
asset less collateral, multiplied by a factor reflecting the proba-
bility of default and the loss in the event of default. Probabilities
of default and losses in the event of default are derived mainly
from rating grades determined by Siemens Financial Services.
Valuation allowances for receivables from Siemens Group are
measured according to the general three-stage impairment ap-
proach. For trade receivables, lease receivables and contract
assets, Siemens Healthineers uses the simplified impairment
model to measure valuation allowances at an amount equal to
the lifetime expected credit losses.
Financial assets measured at amortized cost: Loans, receivables
and other debt instruments held in a hold-to-collect business
model with contractual cash flows that represent solely pay-
ments of principal and interest are measured at amortized cost.
Interest income is calculated using the effective interest method.
Financial assets measured at fair value through other compre-
hensive income: Siemens Healthineers irrevocably elected to
present changes in the fair value of its investment in Medical
Systems S.p.A. in other comprehensive income to avoid earnings
volatility. Accordingly, unrealized gains and losses as well as
gains and losses on the subsequent sale of the investment are
recognized in other comprehensive income.
Financial assets and liabilities measured at fair value through
profit or loss: Debt instruments are measured at fair value
through profit or loss if the business model they are held in is
neither a hold-to-collect nor a hold-and-sell business model or
if their contractual cash flows do not represent solely payments
of principal and interest. Equity instruments are measured at
fair value through profit or loss unless the option to measure
them at fair value through other comprehensive income was
elected. Derivatives are measured at fair value through profit or
loss unless they are designated as hedging instruments. Financial
liabilities measured at fair value through profit or loss include
contingent consideration recognized in a business combination
and liabilities from written put options on non-controlling in-
terests. Siemens Healthineers does not use the option to desig-
nate financial assets or financial liabilities at fair value through
profit or loss at initial recognition (fair value option).
Initially, financial instruments are generally recognized at their
fair value. Receivables from finance leases are measured at an
amount equal to the net investment in the lease. Regular way
purchases or sales of financial assets are recognized on the
trade date. Subsequently, financial instruments are measured
according to the category to which they are assigned: financial
assets and liabilities measured at fair value through profit or
loss, financial assets measured at fair value through other com-
prehensive income and financial assets and liabilities measured
at amortized cost.
With the closing of the acquisition of Corindus, Siemens pro-
vided Siemens Healthineers with additional financing of € 1.0 bil-
lion in the first quarter of fiscal year 2020.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
63
Termination benefits are provided when Siemens Healthineers
makes an offer to enable an employee to resign from its employ-
ment voluntarily before his or her normal retirement date or
decides to terminate the employment. Termination benefits in
accordance with IAS 19, Employee Benefits, are recognized as
liabilities and expenses when the offer of those benefits can no
longer be withdrawn.
Termination benefits
Entitlements resulting from plans based on investment returns
of underlying assets are generally measured at the fair value of
the underlying assets as of the reporting date. If the perfor-
mance of the underlying assets is lower than a guaranteed re-
turn, the DBO is measured by projecting forward the contribu-
tions at the guaranteed fixed return and discounting back to a
present value.
Current and past service cost, settlement gains and losses for
pensions and similar obligations and administration costs unre-
lated to the management of plan assets are allocated to func-
tional costs. Thereby, past service cost and settlement gains
and losses are recognized immediately in net income. Current
service cost and interest income and expenses are determined
based on the assumptions used for the calculation of the de-
fined benefit obligation as of the reporting date of the previous
fiscal year, and recognized in profit or loss. Net interest is thus
calculated by multiplying the discount rate for the respective
fiscal year by the net defined benefit asset or liability as of the
reporting date of the previous fiscal year. As of the reporting
date, remeasurements are recognized in other comprehensive
income. These comprise actuarial gains and losses as well as
the difference between the return on plan assets and the inter-
est income on plan assets, which is included in net interest.
Prior-year information
Note 3 Acquisitions
Certain prior-year information has been reclassified to conform
to the current presentation.
IFRS 16, Leases, was adopted for the first time as of Octo-
ber 1, 2019, by applying the modified retrospective approach
(using practical and transitional expedients), that is, compara-
tive figures for the preceding year were not adjusted. At date
of initial application, it was not reassessed, whether an exist-
ing contract was or included a lease. IFRS 16 introduced a sin-
gle lessee accounting model (so-called right-of-use model),
requiring lessees to recognize right-of-use assets and lease
liabilities. The recognition exemptions for not applying the
right-of-use model for leases with a term of twelve months or
less or for low-value assets have been exercised. The majority
of the transition effect was related to real estate leased by
Siemens Healthineers. As of October 1, 2019, additional right-
of-use assets of €435 million were recognized in property,
65
The IASB has issued standards and amendments to standards
whose application is not yet mandatory and which in part are
not endorsed by the EU. Siemens Healthineers currently as-
sumes that the application of these standards and amend-
ments will not have a material impact on the presentation of
the consolidated financial statements.
Recent accounting pronouncements,
not yet adopted
The lease liabilities as of October 1, 2019, amounting to
€470 million, exceeded by €438 million the lease liabilities
from finance leases as of September 30, 2019, which amounted
to €32 million.
470
Lease liabilities as of October 1, 2019
(therein current: €132 million)
-24
Discounted using incremental borrowing rates
(weighted average incremental borrowing rate as of
October 1, 2019: 1.9%)
494
Future minimum lease payments from leases under the
right-of-use model as of October 1, 2019 (gross)
-3
-19
7
34
475
Recognition exemption for low value assets: Former
finance leases which lead to off balance sheet reporting
Others
Practical relief for non-separation of lease components
and non-lease components
Future minimum lease payments from finance leases as
of September 30, 2019 (gross)
Future minimum lease payments from operating leases
as of September 30, 2019 (gross)
(in millions of €)
plant and equipment, generally measured at the amount of the
lease liability adjusted by any prepaid or accrued lease pay-
ments. In addition, the right-of-use asset was derecognized
if the leased asset was subleased under a finance lease to
customers. The transition to IFRS 16 had nearly no effect on
retained earnings. In fiscal year 2020, the initial application
resulted in an improvement in cash flows from operating activ-
ities of €130 million with a corresponding decrease in cash
flows from financing activities and a corresponding increase in
free cash flow. Future payment obligations under operating
leases as of September 30, 2019 reconcile to the lease liability
as of October 1, 2019, as follows:
Recently adopted accounting pronouncements
-56
Financial instruments
Income taxes broke down as follows:
461
€138 million of the tax loss carryforwards not recognized as
of September 30, 2020 will expire in the periods up to 2028
(September 30, 2019: €89 million expiring by 2037). As of Sep-
tember 30, 2020, no deferred tax liabilities were recognized for
temporary differences in connection with shares in subsidiaries
amounting to €3,412 million (September 30, 2019: €3,228 mil-
lion), as Siemens Healthineers can control their reversal and it
is probable that these differences will not dissolve in the fore-
seeable future. As of September 30, 2020, deferred tax liabil-
ities of €21 million (September 30, 2019: €18 million) were
recognized for planned dividend payments.
Uncertainties in the interpretation of a tax regulation in the
context of an enacted foreign tax reform in former years may
result in future tax payments of a mid double-digit million
amount. Due to the low probability of such an occurrence, no
current income tax liability was still recognized.
Note 6 Earnings per share
Receivables from finance leases particularly related to the leas-
ing of imaging equipment in the Imaging segment. The corre-
sponding long-term portion is reported in the line item other
financial assets and amounted to € 162 million as of the report-
ing date (September 30, 2019: € 144 million).
In the following table, the undiscounted future minimum lease
payments are reconciled to the net investment in finance leases:
(in millions of €)
Future minimum lease payments
Unearned finance income
Net investment in finance leases
Sept 30,
2020
2019
258
225
-42
-40
215
185
The future minimum lease payments to be received were due
as follows:
Sept 30,
436
(in millions of €)
Total items (gross amounts) for which no
deferred tax assets have been recognized
2,388
Oct 1,
Sept 30,
(in millions of €)
2020
2019
2018
(in millions of €)
2020
2019
Deductible temporary differences
131
Receivables from the sale of goods
and services
2,520
187
Tax loss carryforwards
305
274
Receivables from finance leases
Total trade and other receivables
48
2,568
2,744
35
2,779
31
2,419
Sept 30,
2020
Within 1 year
53
Total
258
225
Net income attributable to shareholders of
Siemens Healthineers AG
1,411
1,567
Weighted average shares outstanding during
fiscal year (basic)
1,001,859
Effect of dilutive share-based payment
Weighted average shares outstanding during
fiscal year (diluted)
2,211
999,245
893
1,004,070 1,000,138
Basic earnings per share
Diluted earnings per share
1.41
1.57
1.40
1.57
Note 5 Income taxes
60
2019
More than 5 years
-12
58
Fiscal year
Between 1 and 2 years
42
38
(in millions of €, number of shares in thousands,
earnings per share in €)
Between 2 and 3 years
37
37
2020
2019
Between 3 and 4 years
32
29
Net income
1,423
1,586
Between 4 and 5 years
28
25
Portion attributable to non-controlling
interests
-18
Note 7 Trade and other receivables
45
Deferred tax assets (gross amounts) have not been recognized
Deferred tax
39
7
Income tax expenses recognized in the
consolidated statements of income
532
607
Deferred tax assets and liabilities (-) related to the following
items:
Effective tax rate
27.2%
27.7%
Income tax effects recognized in other
comprehensive income or directly in equity
59
-64
Sept 30,
Total income taxes included in the
consolidated statements of comprehensive
income or directly recognized in equity
(in millions of €)
2020
2019
591
543
Deferred taxes on temporary differences
600
-243
Current tax
532
Taxes for prior years
with respect to the following items:
24
-5
Change in realizability of deferred tax assets
and tax credits
-5
-12
Change in tax rates
-19
3
Foreign tax rate differential
-62
-71
Fiscal year
Other
2
(in millions of €)
2020
2019
Total income tax expenses
607
-76
493
Current assets and liabilities
-12
-51
87
Other
Balance at fiscal year-end
Intangible assets
-757
-680
300
312
9
8
156
132
36
31
-51
87
52
Thereof:
67
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
60
-4
Provisions for pensions and similar obligations
Other non-current assets and liabilities
Deferred taxes on tax loss carryforwards
Deferred taxes on tax credits
-49
232
In fiscal year 2020, the current taxes included expenses of €9 mil-
lion (2019: €7 million) for adjustments of taxes from prior fiscal
years. The deferred taxes included expenses of €45 million
(2019: €50 million) from the origination and reversal of tem-
porary differences. Various one-time circumstances, such as
the assessment of the deferred tax assets on loss carry-for-
wards and the adjustment of the outside basis differences to a
reduced withholding tax rate on distributions of a company,
had a small overall positive effect on the effective tax rate for
fiscal year 2020. In fiscal year 2019, the effective tax rate was
positively influenced by different effects, for example the
settlement of international proceedings on the avoidance of
double taxation as well as tax-free income following interna-
tional changes in jurisdiction. In fiscal year 2020, interest on
tax receivables in the amount of € 19 million, relating to these
proceedings, was recognized as interest income.
In fiscal year 2020, the calculation of taxes in Germany was
based on a combined tax rate of 29.2% (2019: 29.5%), consist-
ing of the corporate tax rate of 15.0% (2019: 15.0%), the soli-
darity surcharge thereon of 5.5% (2019: 5.5%) and an average
trade tax rate of 13.4% (2019: 13.7%). For foreign subsidiaries,
taxes were calculated based on local tax law and applicable tax
rates in the individual countries.
Total deferred tax assets and liabilities, net
Deferred tax assets and liabilities, net, developed as follows:
(in millions of €)
2020
2019
Balance at beginning of fiscal year
87
Fiscal year
206
Changes recognized in the consolidated
statements of income
-39
-7
Changes recognized in other
comprehensive income
-59
64
Additions from acquisitions directly
recognized in equity
46
114
1 Included past service costs, settlement gains and losses as well as liability management costs for funded plans.
2 Presented in the line item other assets.
1,029
36
Changes in demographic assumptions
Changes in financial assumptions
Experience gains and losses
Total actuarial gains (-) and losses
Net interest expenses related to provisions for pensions and
similar obligations amounted to €10 million in fiscal year 2020
(2019: €17 million). The defined benefit obligation was attribut-
able to active employees 45% (2019: 46%), to active and for-
mer employees with vested benefits for whom no more current
service cost is recognized 14% (2019: 15%), and to retirees and
surviving dependents 41 % (2019: 39%).
Fiscal year
The actuarial gains (-) and losses included in the remeasure-
ments resulted from:
114
1,045
43
(in millions of €)
104
147
263
261
10
-32
7
95
112
105
2020
-39
149
2019
Mortality tables applied were:
-19
Sept 30,
2020
13
A change of half a percentage-point in the above-mentioned
assumptions would affect the defined benefit obligation as fol-
lows:
Sensitivity analysis
Swiss franc
British pound
U.S. dollar
Euro
Discount rate
(in %)
-3
The weighted-average discount rate was as follows:
Consolidated financial statements - Notes to consolidated financial statements
Siemens Healthineers Annual Report 2020
16
76
In fiscal year 2019, an actuarial gain of €83 million was recog-
nized due to a change in financial assumptions in connection
with payment options at the start of retirement in Germany.
397
67
-11
-2
426
72
Actuarial assumptions
8
-95
408
2,813
3,847
3,798
Balance at fiscal year-end
-70
-99
-1
-137
-71
-235
Other reconciliation items
8
-11
62
-85
70
Currency translation differences
3
4
3
4
2019
Business combinations, disposals and other
2,858
8
13
993
371
369
120
113
987
937
1,107
1,050
798
791
1,204
423
1,216
2,007
Net defined benefit assets²
Provisions for pensions and similar obligations
Thereof:
Other countries
Switzerland
United Kingdom
United States
Germany
Thereof:
1,002
2,001
1.5
83
Effect on defined benefit obligation due to a change of
half a percentage-point
327
Government bonds
Thereof:
Fixed income securities
Equity securities
(in millions of €)
1,522
1,474
560
554
2019
2020
Sept 30,
Disaggregation of plan assets
A decline in the pension plans' funded status due to an adverse
development of plan assets or the defined benefit obligation is
considered as a significant risk. The funded status can be af-
fected by changes in actuarial assumptions, primarily the dis-
count rate, as well as movements in financial markets. Accord-
ingly, Siemens Healthineers implemented an investment strategy
aligned with the defined benefit obligation (liability-driven
investment approach). The management of the risks is based
on a worldwide defined risk measure (Value at Risk, VaR),
which considers both plan assets and the defined benefit ob-
ligation. The risk assessment is combined with a stress test
simulating the impact of a deterioration of the funded status in
the amount of the VaR on net debt (including pensions). The
above-mentioned risks and the asset development are moni-
tored on an ongoing basis and, if necessary, the investment
strategy is adjusted accordingly. Independent asset managers
are selected based on quantitative and qualitative analyses,
which include their performance and risk preference. Deriva-
tives are used to reduce risks as part of risk management.
Asset liability management strategies
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
77
2.7
2.6
United Kingdom
1.4
1.5
337
Corporate bonds
1,147
1,185
Settlement payments
78
The amount recognized as an expense for defined contribution
plans amounted to €449 million in fiscal year 2020 (2019:
€418 million). Therein, contributions to state plans of €287 mil-
lion (2019: €284 million) were included.
Defined contribution plans
As of the reporting date, employer contributions expected to
be paid to defined benefit plans in fiscal year 2021 amounted
to €73 million (2020: €76 million). Over the next ten fiscal
years, average annual benefit payments of €181 million were
expected (September 30, 2019: €181 million). The weighted
average duration of the defined benefit obligation for
Siemens Healthineers' defined benefit plans was 13 years (Sep-
tember 30, 2019: 13 years).
Future cash flows
Almost all equity securities had quoted prices in an active mar-
ket. The fair value of fixed income securities was based on
prices provided by price service agencies. The fixed income se-
curities were traded on an active market and almost all were
rated as investment grade. Alternative investments mostly in-
cluded investments in hedge funds. Real estate investments
were included as well. Multi-strategy funds comprised mainly
absolute return funds and diversified growth funds that invest
in various asset classes within a single fund, with the aim to
stabilize investment returns and reduce volatility. Derivatives
predominantly consisted of financial instruments for hedging
interest rate risk.
2,858
2,813
Total plan assets
65
Germany
Other
91
Cash and cash equivalents
46
65
Derivatives
343
345
Multi-strategy funds
200
200
Alternative investments
122
Pension progression
1.4
1.4
-10
10
-10
11
Compensation increase
0.2
0.2
271
-231
266
-227
Pension progression
Discount rate
1.7
Decrease
Sept 30, 2019
Increase
Decrease
Increase
(in millions of €)
3.0
2.4
Sept 30, 2020
0.9
0.9
2.0
1.8
158
154
Switzerland
3.5
2.6
United Kingdom
Compensation increase
(in %)
2019
2020
Sept 30,
Compensation increase and pension progression for countries,
in which these assumptions have a significant effect, are shown
in the following table. If applicable, inflation effects were con-
sidered.
Sensitivity determinations applied the same methodology as
applied for the determination of the post-employment benefit
obligation. Sensitivities reflected changes in the defined bene-
fit obligation solely for the assumption changed.
-135
The effect on the defined benefit obligation of a 10% reduction
in mortality rates for all beneficiaries would be an increase of
€ 109 million as of September 30, 2020 (September 30, 2019:
€ 104 million).
Pri-2012 generational
projection from the U.S.
Social Security Administra-
tion's Long Range Demo-
graphic Assumptions
Siemens-specific tables
(Siemens Bio 2017) mainly
derived from data of the
German Siemens pop-
ulation and to a lesser
extent from data of the
Federal Statistical Office
in Germany by applying
formulas in accordance
with recognized actuarial
standards
2019
Switzerland BVG 2015 G
SAPS S2 Standard mortality
tables for Self-Adminis-
tered Pension Schemes
with allowance for future
mortality improvements
United King-
dom
United States Pri-2012 generational
projection from the U.S.
Social Security Administra-
tion's Long Range Demo-
graphic Assumptions
Siemens-specific tables
(Siemens Bio 2017/2020)
mainly derived from data
of the German Siemens
population and to a lesser
extent from data of the
Federal Statistical Office
in Germany by applying
formulas in accordance
with recognized actuarial
standards
Sept 30,
2020
Germany
-136
SAPS S2 Standard mortal-
ity tables for Self-Adminis-
tered Pension Schemes
with allowance for future
mortality improvements
BVG 2015 G
-16
Sept 30,
-136
361
-98
459
-12
110
14
-21
264
264
-219
-105
127
-185
832
-1,033
1,866
-149
25
302
-96
-93
287
-16
-816
-5
-18
impairments
Accumulated
amortization,
depreciation and
2019
Retirements
Additions Reclassifications
Gross carrying
amount at end
of fiscal year
business
combinations
through
Currency
translation
differences
Additions
57
-525
-3,259
6,033
-241
742
17
-273
-53
82
-45
128
2,774
Carrying
amount at end
of fiscal year
2019
1,103
22
37
299
-41
245
-72
Additions Reclassifications
combinations
differences
business
translation
-135
through
Additions
-290
1,912
-3,093
5,005
-16
-138
297
-2,034
2,331
Currency
-49
139
-248
86
2
-46
-50
254
-620
874
-10
35
25
-
-38
694
-645
1,340
-3
137
35
1
-51
281
438
-40
Amortization,
depreciation and
impairments in
fiscal year 2019
50
Siemens Healthineers as lessor
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
71
-357
2,318
-3,039
5,357
-336
750
145
The line item equipment leased to others comprised predom-
inately diagnostic instruments that were leased out under
operating leases in the Diagnostics segment.
374
-1
-144
216
16
-149
782
-1,002
1,784
-177
21
374
346
Future minimum lease payments to be received under operating
leases were due as follows:
Sept 30,
28
56
Within 1 year
2019
2020
(in millions of €)
Sept 30,
Total other assets
Other
320
Note 15 Other assets
295
13
55
46
Prepaid expenses
250
235
Deferred compensation assets
2019
2020
(in millions of €)
15
28
-125
317
197
14
174
-117
313
-2,014
2,327
-
103
-35
-11
198
567
-9
41
14
21
-111
1,065
-590
1,655
155
-369
4,549
-2,973
1,576
-800
1,117
-100
31
132
33
-49
256
-605
861
-42
35
30
30
-34
589
-632
1,221
-16
57
25
38
-263
-53
461
-401
862
accounting adjustments
Acquisitions and purchase
416
-573
9,433
9,906
Balance at beginning of fiscal year
Currency translation differences and other
2019
2020
Fiscal year
Balance at fiscal year-end
69
In fiscal year 2020, cost of sales included inventories recog-
nized as expenses in the amount of €8,698 million (2019:
€8,503 million). Write-offs of inventories increased by €11 mil-
lion (2019: €35 million) compared to the prior year.
2,064
2,304
Total inventories
19
31
Advances to suppliers
981
1,099
Finished goods and products held for resale
69
565
951
57
9,906
Terminal value growth rate
Goodwill
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Total goodwill
Advanced Therapies
Diagnostics
Imaging
(in millions of €)
Impairment testing of goodwill at the level of the segments
resulted in no impairment. The allocation of goodwill to the
segments as well as the key assumptions for the calculation of
the segments' fair value less costs of disposal were as follows:
8,590
10,285
9,038
8,590
Balance at beginning of fiscal year
Balance at fiscal year-end
Carrying amount
-1,316
-1,247
-59
69
-1,257
-1,316
Accumulated impairment losses
Balance at beginning of fiscal year
Currency translation differences
Balance at fiscal year-end
8,176
609
Work in progress
500
22
84
253
226
Miscellaneous tax receivables
27
27
2019
2020
(in millions of €)
Prepaid expenses
2019
Sept 30,
Sept 30,
Note 11 Other current assets
Total other current financial assets
Other
Derivatives
Receivables from employees
(in millions of €)
Note 8 Other current financial assets
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
2020
85
56
31
566
Raw materials and supplies
2019
2020
(in millions of €)
Sept 30,
Cost
(in millions of €)
Note 10 Inventories
As of the reporting date, contract assets amounted to €818 mil-
lion (September 30, 2019: €839 million; October 1, 2018:
€600 million). Thereof, contract assets amounting to € 132 mil-
lion (September 30, 2019: € 128 million) had a remaining term
of more than twelve months. The change in contract assets in
fiscal year 2019 primarily related to the Imaging segment, with
an increase by €153 million, and resulted mainly from an in-
crease in deliveries of imaging equipment for which control
had already been transferred to the customer but for which the
unconditional right to consideration was still dependent on the
rendering of services outstanding as of the reporting date.
Note 9 Contract assets
Note 12 Goodwill
As of September 30, 2020, miscellaneous tax receivables mainly
consisted of sales tax receivables amounting to €217 million
(September 30, 2019: €246 million).
The increase of the line item derivatives resulted from
currency hedging transactions mainly in connection with op-
erating activities and the planned acquisition of Varian. For
further details, please refer to Note 16 Financial debt and to
→ Note 25 Financial instruments and hedging activities.
321
338
Total other current assets
78
142
12
27
Other
28
After-tax discount rate
Deferred compensation assets related to a deferred compensation
plan in the United States. Please refer to Note 22 Other liabilities
for the corresponding deferred compensation liabilities.
Sept 30,
Sept 30,
499
1,452
amount at
beginning of
fiscal year 2019
Gross carrying
0
70
Total property, plant and equipment
Advances to suppliers and construction in progress
Equipment leased to others
Office and other equipment
2,224
Technical machinery and equipment
Total other intangible assets
Customer relationships and trademarks
Acquired technology including patents, licenses and similar rights
Internally generated technology
(in millions of €)
1 The opening balance sheet values include the adjustments due to the modified retrospective transition to right-of-use model in accordance with IFRS 16, Leases, please refer
to Note 2 Accounting policies.
Total property, plant and equipment
5,788
94
368
Land and buildings
374
4,175
808
-1
1
-99
1,154
-657
1,812
-15
-1
Amortization,
depreciation and
impairments in
fiscal year 2020
2020
1,117
impairments
amortization,
depreciation and
Accumulated
Gross carrying
amount at end
of fiscal year
2020
Retirements
Consolidated financial statements - Notes to consolidated financial statements
Siemens Healthineers Annual Report 2020
4,799
287
1,566
1,021
Carrying
amount at end
of fiscal year
1,784
1,088
861
1.7%
1.7%
924
1,587
7.0%
6.5%
1.7%
1.7%
1,714
1,624
6.5%
6.5%
1.7%
1.7%
5,951
5,827
2019
2020
2019
2020
2019
2020
7.0%
6.5%
9,038
8,590
1,220
4,549
2,327
567
fiscal year 20201
1,655
amount at
beginning of
Gross carrying
Right-of-use assets for other property, plant and equipment
Right-of-use assets for land and buildings
Advances to suppliers and construction in progress
Equipment leased to others
Office and other equipment
Technical machinery and equipment
Land and buildings
Total other intangible assets
Customer relationships and trademarks
Acquired technology including patents, licenses and similar rights
Internally generated technology
(in millions of €)
Note 13 Other intangible assets and
property, plant and equipment
percentage-point increase in after-tax discount rates, or a one
percentage-point decrease in the terminal value growth rate.
These indicated that no goodwill impairment loss would need
to be recognized.
-15
Revenue figures in the five-year detailed planning period
included average revenue growth rates (excluding portfolio ef-
fects) of 6% to 9% (2019: 5% to 8%).
Sept 30,
Between 1 and 2 years
Siemens Healthineers performed sensitivity analyses based
on a 10% reduction in after-tax future cash flows, a one
35
Net debt (including pensions)/EBITDA
2,920
2,796
EBITDA
Note 20 Other current liabilities
620
815
Amortization, depreciation and impairments
107
27
Note 18 Contract liabilities
Interest income, interest expenses and other
financial income, net
1,954
Income before income taxes
In the ordinary course of business, Siemens Healthineers is in-
volved in legal proceedings in various jurisdictions. At present,
the Group does not expect any matters from these legal pro-
ceedings to have material effects on net assets, financial posi-
tion and results of operations.
The majority of provisions is expected to result in cash outflows
during the next one to 15 years. Warranties related to goods
sold. Provisions for order-related losses and risks were primarily
recognized for contracts in which the unavoidable costs of
meeting the obligations under the contracts exceeded ex-
pected outstanding revenue. Other provisions included various
types of provisions, such as provisions for asset retirement ob-
ligations related to certain items of property, plant and equip-
ment as well as provisions for legal proceedings.
144
64
56
24
414
123
2,193
80
Sept 30,
1.4
Note 21 Provisions for pensions and
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
74
The decrease in the line item wage and salary obligations and
other liabilities to employees was due mainly to lower obliga-
tions for performance-based compensation. Employee-related
accruals primarily included accruals for vacation entitlements
and share-based payment. As of the reporting date, miscella-
neous tax liabilities mainly comprised sales tax liabilities of
€157 million (September 30, 2019: € 143 million).
Total other current liabilities
Other
Employee-related accruals
Miscellaneous tax liabilities
As of September 30, 2020, contract liabilities amounted to
€1,784 million (September 30, 2019: €1,741 million; October 1,
2018: €1,524 million). Included therein were contract liabilities
of €451 million (September 30, 2019: €440 million) with a re-
maining term of more than twelve months. In fiscal year 2020,
an amount of €1,059 million (2019: €1,070 million) included
in contract liabilities at the beginning of the period was recog-
nized as revenue.
1,236
1,198
0.9
147
192
200
268
302
629
561
Wage and salary obligations and
other liabilities to employees
2019
2020
(in millions of €)
135
similar obligations
211
3
1,045
1,029
Provisions for pensions and similar obligations
2,929
1,576
Net debt
-920
-656
Cash and cash equivalents
-683
Net debt (including pensions)
-3,271
Receivables from Siemens Group from
4,030
2,982
financing activities
Other liabilities to Siemens Group from
359
2,040
financing activities
Payables to Siemens Group from
80
62
financing activities
3
2,605
225
-23
-7
-8
-56
-15
-7
-34
-160
-15
-6
3,974
-138
35
19
165
147
61
63
23
430
122
83
219
Siemens Healthineers provides post-employment benefit plans
for almost all of its German employees and the majority of its
foreign employees. These plans are accounted for either as de-
fined benefit plans or defined contribution plans.
Defined benefit plans
The defined benefit plans cover around 48,000 participants.
These are divided into 29,000 active employees for whom current
service cost is recognized, 8,000 active and former employees
with vested benefits for whom no more current service cost is
recognized, and 10,000 retirees and surviving dependents who
receive benefits. The defined benefit plans are to a certain extent
affected by longevity, inflation and compensation increases
and take into account country-specific differences. Major plans
are funded with assets in external segregated benefit trusts. In
accordance with local laws, these plans are managed in the in-
terest of the beneficiaries through trust agreements with the
respective benefit trusts. The defined benefit plans open to
new entrants are predominantly based on contributions made
by Siemens Healthineers. The majority of the provisions for
pensions derives from defined benefit plans in the following
four countries:
-6
-6
397
67
-220
-53
397
67
220
53
Effects of asset ceiling
Actuarial gains (-) and losses
81
81
65
39
145
119
statements of income
Defined benefit cost recognized in the consolidated
3
-2
Return on plan assets (excluding amounts included in
net interest income and net interest expenses)
-2
Remeasurements recognized in the consolidated
Employer contributions
56
-138
-152
-153
8
9
8
9
-66
-77
statements of comprehensive income
66
177
9
-6
220
53
397
40
67
Benefits paid
Plan participants' contributions
77
-4
-6
Other¹
2019
2020
2019
2020
(in millions of €)
Fiscal year
Net defined benefit
balance (I-II+III)
Effects
of asset ceiling (III)
Fiscal year
Fair value
of plan assets (II)
Fiscal year
Fiscal year
2020
Defined benefit
obligation (I)
Siemens Healthineers Annual Report 2020
75
Following the Swiss Law of Occupational Benefits ("Berufliches
Vorsorgegesetz", BVG), each employer must grant post-employ-
ment benefits to qualifying employees. Accordingly, Siemens
Healthineers sponsors cash balance plans in Switzerland. These
plans are administered by external foundations. The board of
the main foundation is composed of an equal number of em-
ployer and employee representatives of the plan sponsors. The
board of the foundation is responsible for the investment policy
and the management of plan assets as well as for any changes
in the plan rules and the determination of contributions to
finance the benefits. Siemens Healthineers is required to make
total contributions at least as high as the sum of the employee
contributions set out in the plan rules. In case of an underfunded
plan, Siemens Healthineers together with the employees may
be required to pay supplementary contributions according to a
defined framework of recovery measures.
Switzerland
In the United Kingdom, Siemens Healthineers provides pension
benefits through the Siemens Healthineers Benefit Scheme for
which an inflation adjustment of the majority of accrued de-
fined benefits is mandatory until the start of retirement. The
required funding is determined by a so-called funding valuation
carried out every third year according to legal requirements.
United Kingdom
In the United States, defined benefit plans are sponsored by
Siemens Healthineers, which have been frozen to new entrants
and future benefit accruals, except for interest credits on cash
balance accounts. The plans' assets are held in trusts. The trust-
ees of the trusts are responsible for the administration of the
assets. They take directions from an investment committee to
which Siemens Healthineers has delegated supervision of the
investment of plan assets. The plans are subject to funding re-
quirements under the Employee Retirement Income Security
Act of 1974 (ERISA) as amended. There is a regulatory require-
ment to maintain a minimum funding level of 80% in the de-
fined benefit plans in order to avoid benefit restrictions. An-
nual contributions are calculated by independent actuaries.
Siemens Healthineers may, at its discretion, contribute in ex-
cess of this regulatory requirement.
United States
In Germany, Siemens Healthineers provides pension benefits
through the Siemens Healthineers BSAV ("Beitragsorientierte
Siemens Altersversorgung"), frozen legacy plans and deferred
compensation plans. The majority of active employees parti-
cipates in the Siemens Healthineers BSAV. The benefits pro-
vided under this plan are predominantly based on notional
contributions and their respective investment returns, whereby
a minimum return is guaranteed. The frozen plans expose
Siemens Healthineers to investment risk, interest rate risk and
longevity risk. The effect of compensation increases is sub-
stantially eliminated. The pension plans are funded via a con-
tractual trust arrangement (CTA). No legal or regulatory mini-
mum funding requirements apply in Germany.
Germany
Consolidated financial statements - Notes to consolidated financial statements
2019
2020
2019
-67
-43
67
43
Interest income
83
52
83
52
Interest expenses
62
73
62
73
Current service cost
1,002
13
13
2,574
2,858
3,376
3,847
Balance at beginning of fiscal year
314
Long-term financial debt
815
maturities of long-term financial debt
Total other financial assets
Other
66
75
Equity instruments and fund shares
107
92
Derivatives
144
162
352
Receivables from finance leases
2020
(in millions of €)
Note 14 Other financial assets
4,531
5,503
Total financial debt
4,092
3,297
Total non-current financial debt
59
2019
Therein: Lease liabilities
25
21
Other
differences
Acquisitions
Currency
translation
Cash flows from
financing
activities²
fiscal year 20201
Balance at
beginning of
Non-cash changes
Loans from banks
(in millions of €)
23
The following tables show the sources of changes in total
financial debt and total liabilities from financing activities:
In fiscal year 2020, Siemens AG provided an additional variable
interest loan in connection with the acquisition of Corindus
(please also see → Note 3 Acquisitions), amounting to € 1.0 bil-
lion and maturing in fiscal year 2021.
loans and actual interest expenses decreased due to positive
forward elements of the forward exchange contracts. In total,
the actual current volume-weighted average interest rate of
the transferred loans decreased to approximately -0.1%. For
further information about the hedging activities, please refer
to Note 25 Financial instruments and hedging activities.
In addition, there were loans with the Siemens Group with various
maturities and in various currencies. As of September 30, 2020
and 2019, the loans were mainly denominated in U.S. dollars
with approximately US$ 0.9 billion maturing in fiscal year 2021
(contractual interest rate: 1.9%), US$ 0.7 billion maturing in fiscal
year 2023 (contractual interest rate: 2.2%), US$ 1.7 billion ma-
turing in fiscal year 2027 (contractual interest rate: 2.5%) and
US$ 1.0 billion maturing in fiscal year 2046 (contractual inter-
est rate: 3.4%). In fiscal year 2019, the loans maturing in fiscal
years 2021, 2023 and 2027 were transferred from a U.S. entity
to German entities. The resulting foreign currency risks were
hedged by forward exchange contracts. As a result, the loans
were effectively converted into synthetic euro-denominated
Furthermore, the Siemens Group provided a bridge facility to
finance the purchase price and additional costs in connection
with the planned acquisition of Varian. As of the reporting date,
the financing commitment amounted to €12.5 billion and was not
utilized by Siemens Healthineers. Unused available commitment
from the bridge facility is subject to a commitment fee. This fee
and other fees are recognized in other financial income and
amounted to €5 million in fiscal year 2020.
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
22
72
As of September 30, 2020, financing arrangements of
Siemens Healthineers with Siemens AG consisted of a multi-
currency revolving credit facility of up to €1.1 billion (Septem-
ber 30, 2019: € 1.0 billion), which serves to finance net working
capital and as a short-term loan facility, as well as a multi-
currency revolving credit facility of up to € 1.0 billion (Septem-
ber 30, 2019: €1.0 billion) as a financing reserve. As of the
reporting date, an amount of €166 million (September 30, 2019:
€0 million) was drawn from these facilities.
1 Obligations under finance leases as of September 30, 2019.
339
In fiscal year 2020, interest expenses from financing arrange-
ments with Siemens AG amounted to €21 million (2019: €31 mil-
lion) and from financing arrangements with other Siemens Group
entities to €22 million (2019: €73 million). The decrease in inter-
est expenses resulted mainly from positive effects of the above-
mentioned loan transfers.
4,030
2,982
from financing activities
167
Short-term financial debt and current
maturities of long-term financial debt
Thereof:
2019
2020
Sept 30,
(in millions of €)
130
250
13
27
80
More than 5 years
Total
27
Between 4 and 5 years
Note 16 Financial debt
18
37
Between 3 and 4 years
26
47
167
Between 2 and 3 years
10
Loans from banks
Lease liabilities1
60
Other liabilities to Siemens Group
22
265
39
49
Lease liabilities1
Loans from banks
62
314
Long-term financial debt
Thereof:
Therein: Lease liabilities
Total current financial debt
In fiscal year 2019, total expenses under operating leases
amounted to €201 million.
The total cash outflows from leases amounted to € 190 million
in fiscal year 2020.
Siemens Healthineers as lessee
439
2,207
27
359
2,040
Payables to Siemens Group
from financing activities
10
107
70
Balance at end of
fiscal year 2020
109
In fiscal year 2020, revenue from operating leases in the amount
of €216 million (2019: €162 million) was realized. Included
therein were variable lease payments in the amount of € 109 mil-
lion (2019: €85 million). Before Siemens Healthineers concludes
contracts with the customer for the sale of reagents and consum-
ables by providing a diagnostic instrument, the order volumes
forecasted by the customer are analyzed and verified. Based on
realistic sales volumes, customer-specific prices for reagents are
calculated, including a price offset for the diagnostic instrument.
The average term of customer contracts covers the ordinary
useful life of the diagnostic instruments.
142
-683
-8
716
-1,391
Receivables from Siemens Group from financing activities
4,531
1
242
-419
4,707
Total liabilities from financing activities
Total financial debt
-14
243
-473
4,634
Payables and other liabilities to Siemens Group from financing
activities
Balance at end of
fiscal year 2019
109
33
16
-9
26
-1
4,390
3,317
297
234
Short-term financial debt and current
2019
19
2020
Sept 30,
(in millions of €)
Other
Balance at end
of fiscal year 2020
Therein:
Non-current
Usage
Reversals
Currency translation
differences
Additions
(in millions of €)
Balance at beginning
of fiscal year 2020
Therein:
Non-current
Note 19 Provisions
Siemens Healthineers generates consistent liquid funds from
recurring revenue, supporting a strong cash position. Capital
management aims to maintain ready access to international
capital markets, and thereby to financing through various debt
instruments, as well as to sustain the ability to repay and service
financial debt over time. For this purpose, Siemens Healthineers
actively manages net debt (including pensions) and the ratio
of net debt (including pensions) to EBITDA. This ratio indicates
the approximate number of years needed to cover net debt (in-
cluding pensions) with continuing income, without taking into
account interest, taxes, depreciation and amortization. Net
debt (including pensions) and the ratio of net debt (including
pensions) to EBITDA are managed with a long-term outlook and
with the intention that Siemens Healthineers would qualify for
a solid investment grade rating at the minimum.
management disclosures
Note 17 Additional capital
Total
Other
Order-
related
losses and
risks
Warranties
Consolidated financial statements - Notes to consolidated financial statements
73
1 Reported in the following line items of the consolidated statements of cash flows: Change in short-term financial debt and other financing activities and other transactions/financing with
Siemens Group.
3,849
1
63
48
Siemens Healthineers Annual Report 2020
Currency
translation
differences
60
-328
157
645
4,969
Total financial debt
4,936
54
-285
777
4,390
Payables and other liabilities to
Lease liabilities
458
148
-23
15
-152
470
-20
Other
109
-142
5,503
Receivables from Siemens Group from
Siemens Group from financing activities ³
-683
fiscal year 2019
financing
financing activities
Cash flows from
Balance at
beginning of
Non-cash changes
Obligations under finance leases
(in millions of €)
3 Excluding separately disclosed lease liabilities.
1 Including effects from the modified retrospective adoption of IFRS 16, Leases (please also see Note 2 Accounting policies).
2 Reported in the following line items of the consolidated statements of cash flows: Change in short-term financial debt and other financing activities and other transactions/financing with
Siemens Group.
2,232
activities'
Loans from banks
-317
157
Total liabilities from financing activities
-3,271
11
4,286
-1,954
60
-2,599
About 4 years
Members of the Managing Board, eligible
members of senior management and other
eligible employees
About 1 to about 4
years
Members of senior
management and
other eligible
employees
Equity-settled share-based payment
€8 million
Valuation model
Members of the
Managing Board
21.28%
€32 million
Expected weighted volatility of
Siemens Healthineers AG
shares²
784,924
Members of senior
management
and other eligible
employees
21.36%
354,9551
Inputs to the valuation model for
the following beneficiaries
Plan design II
Classification
87
40
In fiscal year 2020, Siemens Healthineers granted Siemens
Healthineers' stock awards to members of the Managing Board,
members of senior management and other eligible employees.
Beginning with the 2020 tranche, the major portion of the
Siemens Healthineers' stock awards (plan design II) granted to
members of senior management and other eligible employees
depends solely on fulfillment of the employee's respective ser-
vice condition. In addition, Siemens Healthineers' stock awards
(plan design 1) granted to members of the Managing Board and
eligible members of senior management and other eligible em-
ployees remain linked to the development of the total share-
holder return in comparison to that of established competitors
during the vesting period. The following table summarizes the
information for the Siemens Healthineers' stock awards of the
2020 and 2019 tranches.
Share price less the
present value of ex-
pected dividend
Members of senior
management
and other eligible
employees
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Siemens Healthineers' stock awards
Number of granted stock awards
Fair Value at the grant date
Determination of the fair value
Tranche 2020
Performance condition
development of the total shareholder return
in comparison to competitors
0-200%
n. a.
n. a.
Target attainment
Beneficiaries
Plan design I
n. a.
n. a.
development of the total shareholder
return in comparison to competitors
0-200%
1.88%
-0.27%
1.84%
-0.27%
n. a.
1 Based on a target attainment of 200%.
€36.25
1.91 %
Risk-free interest rate
1.93%
0.16%
2 Expected volatility and assumptions concerning share price correlations were determined by reference to historical volatilities and historical correlations, respectively.
Share Matching program and its
underlying plans
Siemens Healthineers' stock awards
The development of outstanding matching shares from plans
of the Share Matching program described below was as follows:
Under the Share Matching program, Siemens Healthineers
offers plans which entitle beneficiaries to receive Siemens
Healthineers AG shares. Up to fiscal year 2018, beneficiaries
were entitled to receive Siemens AG shares. The plans under
the Share Matching program based on Siemens Healthineers AG
shares are classified as equity-settled share-based payment,
while plans under the Share Matching program based on
Siemens AG shares as cash-settled share-based payment. The
weighted average fair value of the Siemens Healthineers'
matching shares granted in fiscal year 2020 was €33.81 per
share (2019: €28.17 per share). It was determined as the share
price less the present value of expected dividends and taking
into account non-vesting conditions.
0.16%
Tranche 2019
Expected dividend yield
€36.73
About 4 years
Members of the Managing Board,
members of senior management and other
eligible employees
Equity-settled share-based payment
1,836,5861
€33 million
Valuation model
Siemens Healthineers AG share
Members of the
Managing Board
Members of senior
management
and other eligible
employees
20.54%
Share price per
€42.59
€43.50
€43.50
20.54%
With regard to the total target amount of share-based payment,
the target attainment of the Siemens' stock awards is bound to
the share price performance of Siemens AG relative to the share
price performance of competitors during the restriction period
of about four years. The target attainment for the performance
criteria ranges from 0% to 200%. If the target attainment ex-
ceeds 100%, an additional cash payment is made correspond-
ing to the outperformance. Siemens' stock awards are classified
as cash-settled share-based payment.
2
3,390,682 2,400,158 325,330 534,148
71
Trade payables
1,350
3
1
Other financial
157
liabilities
other liabilities to
Siemens Group¹
2,101
79
845
2,954
Payables and
Derivative financial
111
Lease liabilities
2021
Outstanding at
beginning of
fiscal year
Granted
2022
2023
to
2025
2026
and
thereafter
Non-derivative
financial liabilities
143
3,725
1,005
3,026
Thereof:
Loans from banks
60
51
251
Siemens' stock awards
liabilities
8
Non-vested at begin-
ning of fiscal year
Granted
Siemens Healthineers AG
shares
Siemens AG shares
Fiscal year
Fiscal year
2020
Changes in stock awards held by members of the Managing
Board, members of senior management and other eligible em-
ployees were as follows:
2019
2019
2,400,158 620,826
1,139,879 1,836,586
534,148 690,022
-193,877 -133,967
-130,553 –53,289 -12,793 -20,429
-18,802 -3,965 -2,148 -1,478
Non-vested at fiscal
year-end
Vested and fulfilled
Forfeited
Settled
2020
71
Siemens Healthineers grants stock awards to members of the
Managing Board, members of senior management and other
eligible employees. These entitle beneficiaries after expiry of the
restriction period to receive Siemens Healthineers AG shares
without payment of consideration (Siemens Healthineers' stock
awards). In fiscal year 2018, Siemens Healthineers granted stock
awards based on Siemens AG shares (Siemens' stock awards) for
the last time.
After the Siemens Energy spin-off from the Siemens Group,
participants in Siemens' stock awards and the Share Matching
program based on Siemens AG shares, accounted for as cash-
settled share-based payment transactions, will receive, upon
their granted but not yet vested Siemens' stock awards and
Siemens' matching shares, as compensation for the dilution ex-
pected from the spin-off, an additional cash-payment. This cash
payment applies to the notional number of Siemens Energy AG
shares in the ratio of two to one based on the respective num-
ber of Siemens AG shares of the participants and depends on
the Siemens Energy share price at the end of the vesting pe-
riod. This represents a modification of the underlying Siemens'
stock awards and Siemens' matching shares and has to be ac-
counted for as cash-settled share-based payment. At the date
of the modification, which was the acceptance of the spin-off
at the extraordinary shareholder's meeting of Siemens AG on
July 9, 2020, the fair value amounted to €5 million.
22
1 Excluding separately disclosed lease liabilities.
The risk implied from the values shown in the table above
reflects the one-sided scenario of cash outflows only. Trade
payables and other financial liabilities, including lease liabi-
lities, originate mainly from the financing of assets used in
Siemens Healthineers' ongoing operations, such as property,
plant, equipment and investments in working capital. These
assets are considered in Siemens Healthineers' overall liquidity
risk management. Thus, Siemens Healthineers mitigates liquid-
ity risk through the implementation of effective working capi-
tal management and cash management. To monitor existing
financial assets and liabilities and to enable effective control of
emerging risks, Siemens Healthineers uses a comprehensive risk
reporting system, which covers its worldwide business entities.
Credit risk
Credit risk is defined as an unexpected loss from financial in-
struments if a counterparty is unable to pay its obligations in
due time or if the value of collateral declines. The effective mon-
itoring and controlling of credit risk through credit evaluations
and ratings is a core competence of Siemens Healthineers' risk
management system. Accordingly, binding credit policy guide-
lines were implemented. In principle, each entity is responsible
for managing credit risk in its own operating activities.
Ratings and individually defined credit limits are based mainly
on generally accepted rating methodologies, with input con-
sisting of information obtained from customers, external rating
agencies, data service providers and credit default experiences.
Ratings consider appropriate forward-looking information sig-
nificant to the specific financial instrument, such as expected
changes in the obligor's financial position, as well as broader
forward-looking information, such as expected macroeconomic,
industry-related and competitive developments. In addition, rat-
ings also consider a country-specific risk component derived
from external country ratings. Ratings and credit limits are
carefully considered in determining the conditions under which
direct or indirect financing will be offered to customers by
Siemens Healthineers.
Stock awards
Siemens Healthineers applies various systems and processes to
analyze and monitor credit risk. A central IT application is avail-
able that provides rating and default information. Together with
data from operating entities, this information is used as a basis
for individual bad debt allowances. In addition to this auto-
mated process, qualitative information is considered to parti-
cularly incorporate latest developments.
As of September 30, 2020, the gross carrying amount of re-
ceivables from the sale of goods and services amounted to
€2,612 million (September 30, 2019: €2,831 million). Based on
rating information from Siemens Financial Services, 38% (Sep-
tember 30, 2019: 38%) were rated with an investment grade
rating and 62% (September 30, 2019: 62%) with a non-invest-
ment grade rating. Receivables from finance leases with a gross
carrying amount of €216 million (September 30, 2019: €185 mil-
lion) and contract assets with a gross carrying amount of
€825 million (September 30, 2019: €844 million) generally share
similar risk characteristics. As of the reporting date, there were
no material loan commitments and financial guarantee contracts.
86
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Note 27 Share-based payment
As of September 30, 2020, the carrying amount of liabilities
from share-based payment amounted to €72 million (Septem-
ber 30, 2019: €80 million). In fiscal year 2020, total expenses
for share-based payment amounted to €88 million (2019:
€36 million). These included €50 million related to equity-set-
tled share-based payment awards (2019: €22 million).
Share-based payment awards granted in fiscal year 2020
were based on Siemens Healthineers AG shares, including the
Siemens Healthineers' stock awards and the Share Matching
program based on Siemens Healthineers AG shares. In addition,
employees continued to participate in existing share-based
payment plans of the Siemens Group based on Siemens AG
shares. These plans included Siemens' stock awards, the Share
Matching program based on Siemens AG shares and the Jubilee
Share program.
There were no significant concentrations of customer credit
risk as of September 30, 2020 and 2019. The maximum expo-
sure to credit risk for financial assets, without taking account
of any collateral, is represented by their carrying amount. As of
September 30, 2020, collateral and other credit enhancements
held for financial assets measured at amortized cost amounted
to € 59 million (September 30, 2019: €78 million), mainly in the
form of letters of credit and guarantees.
Siemens Healthineers AG
shares
Cash and cash equivalents
Fiscal year
The following tables show the carrying amounts and measure-
ment details of each category of financial assets and liabilities:
Carrying amounts as of September 30, 2020
(in millions of €)
Trade receivables2
Receivables from finance leases³
Receivables from Siemens Group
Other current and non-current financial assets²
Derivatives included in hedge accounting
Derivatives not included in hedge accounting
Equity instruments and fund shares measured
In scope of IFRS 9
Measured at fair value
Category of
financial assets
and liabilities
(IFRS 9)¹
Measured at
amortized cost
Not in scope of
Level 1
Level 2
Level 3
IFRS 9
154
FVtPL
n. a.
2,520
210
3,392
3,392
AC
Financial instruments
210
2,520
AC
656
656
AC
Total
n. a.
Note 25 Financial instruments and
hedging activities
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
64
13
13
127
121
227
211
345
Deferred compensation liabilities
2020
(in millions of €)
Sept 30,
Note 22 Other liabilities
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
(in millions of €)
2019
21
368
Other
79
As of the reporting date, contractual commitments for pur-
chases of property, plant and equipment amounted to € 107 mil-
lion (September 30, 2019: €84 million).
As of September 30, 2020, extension options existed for leases
with undiscounted lease payments in the amount of €393 mil-
lion, whose exercise was assessed not reasonably certain.
As of the reporting date, the expected purchase price obliga-
tion from the planned acquisition of Varian amounted to
US$ 16.4 billion (€ 14.0 billion). Upon closing of the acquisition,
Siemens Healthineers is obliged to repay all amounts outstand-
ing under an existing credit agreement of Varian, which has a
maximum volume of US$ 1.2 billion (€1.0 billion). For further
information, please refer to Note 3 Acquisitions.
Note 24 Other financial obligations
Dividends: Dividends paid per share were €0.80 in fiscal
year 2020. The amount was calculated based on the Group's
net income generated during the period from October 1, 2018,
until September 30, 2019. For fiscal year 2020, the Managing
Board and the Supervisory Board propose to distribute a divi-
dend of €0.80 per share entitled to the dividend, in total re-
presenting approximately €859 million in expected payments.
Payment of the proposed dividend is contingent upon approval
at the Shareholders' Meeting on February 12, 2021.
Employee-related accruals
Other components of equity: In fiscal year 2020, Siemens
Healthineers repurchased 1,550,474 (2019: 1,446,454) shares
and transferred 1,303,383 (2019: 1,043,059) treasury shares.
As of the reporting date, the Group held 898,249 (Septem-
ber 30, 2019: 651,158) treasury shares.
Authorized capital: As of September 30, 2020, authorized capital
of Siemens Healthineers AG was €425 million (September 30,
2019: €500 million), issuable on one or more occasions until
February 18, 2023, by issuing up to a total of 425,000,000
(September 30, 2019: 500,000,000) new ordinary registered
shares with no par value in return for cash or contributions in
kind. In addition, as of September 30, 2020 and 2019, the con-
ditional capital of Siemens Healthineers AG was €100 million
or 100,000,000 shares. It can be used for servicing convertible
bonds or warrants under warrant bonds.
Issued capital: As of September 30, 2020, the issued capital of
Siemens Healthineers AG was divided into 1,075,000,000 (Sep-
tember 30, 2019: 1,000,000,000) ordinary registered shares
with no par value and a notional value of €1.00 per share. The
shares are fully paid in. Each share has one vote and accounts
for the shareholder's proportionate share in the net income. All
shares confer the same rights and obligations.
In September 2020, the Managing Board of Siemens
Healthineers AG, with the approval of the Supervisory Board,
authorized a capital increase against cash contributions through
partial utilization of the authorized capital. The 75,000,000
new shares were issued under exclusion of subscription rights
of already existing shareholders at a placement price of €36.40
per share and carry dividend rights as from October 1, 2019.
Within equity, effects from transaction costs of €26 million
were recognized.
Note 23 Equity
Deferred compensation liabilities related to a deferred
compensation plan in the United States. Please refer to
→ Note 15 Other assets for the corresponding deferred compen-
sation assets. Employee-related accruals primarily included ac-
cruals for anniversary expenses and expenses for partial retire-
ment in Germany.
Total other liabilities
Capital reserve and retained earnings: In fiscal year 2020,
changes in the capital reserve resulted mainly from the capital
increase against cash contributions described above. In fiscal
year 2019, for the purpose of dividend distribution, an amount
of €390 million was withdrawn from the free capital reserve
and transferred to retained earnings.
154
21
at fair value through profit or loss
7
21
45
45
6,452
AC
31
489
31
Liabilities from written put options on
non-controlling interests
7
17
5
FVtPL
Contingent consideration
n. a.
5
17
6,969
88
2020
2019
Fiscal year
2020
2019
134,462
410,693 142,942
213,232
80
229,703
93,144
-19,941
-7,059
-79,790
-7,510 -7,167 -10,884
-970 -4,657 -4,808
-93,923
518,155
134,462
121,618 213,232
Vested and fulfilled
Forfeited
Settled
Outstanding at
fiscal year-end
Siemens AG shares
FVtPL
458
4,942
6,650
Total financial assets
81
81
AC
42
13
42
Equity instruments measured at fair value
through other comprehensive income
Other
33
11
9
13
FVtPL
FVTOCI
n. a.
185
210
458
109
1,356
4,942
AC
Payables and other liabilities to Siemens Group 4
Other current and non-current financial liabilities
Derivatives included in hedge accounting
Derivatives not included in hedge accounting
n. a.
53
Lease liabilities 5
AC
Trade payables
109
AC
Short-term and current maturities of long-term
financial debt as well as long-term financial debt4
7,111
1,356
Fiscal year
AC
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Total financial liabilities
Other
6,105
49
27
62
61
61
5,967
AC
17
17
n. a.
Liabilities from written put options on
non-controlling interests
27
13
49
27
1,403
Obligations under finance leases 5
n. a.
Payables and other liabilities to Siemens Group
Other current and non-current financial liabilities
Derivatives included in hedge accounting
Derivatives not included in hedge accounting
Contingent consideration
4,394
109
1 AC = Financial Assets/Liabilities at Amortized Cost;
1,403
32
4,394
n. a.
FVtPL
FVtPL
49
13
32
FVtPL = Financial Assets/Liabilities at Fair Value through Profit or Loss;
FVTOCI = Financial Assets at Fair Value through Other Comprehensive Income;
n. a. not applicable.
2 Excluding separately disclosed receivables from finance leases..
2019
Financial assets measured at amortized cost
Financial liabilities measured at amortized cost
Financial assets and financial liabilities
measured at fair value through profit or loss
Equity instruments measured at fair value
through other comprehensive income
-15
-26
172
-78
2020
34
1
Net gains or losses on financial assets measured at amortized
cost consisted of foreign currency revaluation gains and losses,
changes in valuation allowances and gains and losses on derecog-
nition. Net gains or losses on financial liabilities measured at
amortized cost included foreign currency revaluation gains and
losses. Net gains or losses on financial assets and liabilities mea-
sured at fair value through profit or loss resulted from the
remeasurement of equity instruments as well as from changes
in the fair value of derivatives, which were not designated as
hedging instruments. Net gains or losses on equity instruments
measured at fair value through other comprehensive income
included remeasurement gains and losses.
In fiscal year 2020, interest expenses on financial liabilities not
measured at fair value through profit or loss amounted to
€128 million (2019: €126 million). Foreign currency revalua-
tion differences recognized in profit or loss on financial assets
and liabilities not measured at fair value amounted to € 161 mil-
lion (2019: €-84 million).
82
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Valuation allowances for expected credit losses
-108
AC
Fiscal year
The following table shows the net gains or losses on financial
instruments:
3 Reported in the line items trade and other receivables as well as other financial assets.
4 Excluding separately disclosed obligations under finance leases.
5 Reported in the line items short-term financial debt and current maturities of long-term financial debt as well as long-term financial debt.
81
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
• The carrying amounts of the items cash and cash equivalents,
short-term and current maturities of long-term financial debt,
trade payables, payables to Siemens Group and other current
financial assets and other current financial liabilities measured
at amortized cost approximated their fair value due to the short-
term maturities of these instruments.
(in millions of €)
• Trade receivables, receivables from finance leases, receiv-
ables from Siemens Group and other non-current financial
assets measured at amortized cost were evaluated taking
into account various parameters, such as interest rates, coun-
try-specific risks and individual creditworthiness of the debt-
ors. Based on this evaluation, valuation allowances for these
items were recognized. The carrying amounts of the items
net of valuation allowances approximated their fair values.
• The carrying amount of other liabilities to Siemens Group from
U.S. dollar denominated long-term loans was €2,923 million
as of September 30, 2020 (September 30, 2019: €3,932 mil-
lion). The fair value of these liabilities, which is based on prices
provided by price service agencies (level 2), amounted to
€3,173 million as of September 30, 2020 (September 30, 2019:
€3,928 million). The carrying amounts of the remaining other
liabilities to Siemens Group approximated their fair value
because the relevant interest rates approximated market
interest rates.
• The determination of the fair values of derivatives depended
on the specific type of instrument. The fair values of for-
ward exchange contracts were based on forward exchange
rates (level 2). Options were generally valued based on
quoted market prices or based on option pricing models
(level 2). In connection with the planned acquisition of
Varian, Siemens Healthineers entered into a deal contingent
forward, which is linked to the actual closing of the acquisi-
tion. The fair value of this deal contingent forward is gener-
ally based on observable market data such as forward ex-
change rates, interest curves and volatilities. In addition, the
value of the contingency element was taken into account,
which depends on expectations about the occurrence and
the timing of the closing (level 3). The changes in value of the
deal contingent forward amounted to €25 million and were
recognized in the line item cash flow hedges within other
comprehensive income. In determining the fair values of
derivatives, no compensating effects from underlying trans-
actions were taken into consideration.
•
Except for a publicly listed investment for which a quoted price
in an active market exists (level 1), the fair values of equity in-
struments were generally derived from a discounted cash flow
valuation (level 3). Expected cash flows are subject to future
market and business developments as well as price volatility.
The discount rates applied take into account respective risk-
adjusted capital costs. The fair value measurement of fund
shares was based on their net asset values (level 2).
• The fair values of contingent consideration were derived
from probability-weighted future payments, which mainly
depend on the achievement of technical and commercial
milestones as well as on the achievement of sales targets
(level 3).
• Liabilities from written put options on non-controlling inter-
ests were measured at fair value, which is based on the pres-
ent value of the exercise price of the options (level 3). The ex-
ercise price is generally derived from the proportionate
enterprise value. The increase in liabilities resulted mainly
from the addition of written put options amounting to €58 mil-
lion in connection with the acquisition of ECG (please also see
→ Note 3 Acquisitions). The enterprise value of ECG is calcu-
lated by an independent appraiser in accordance with a con-
tractually agreed methodology and serves as a basis for the
exercise price per share, which is determined at least once a
year. The most significant unobservable input used to deter-
mine the fair value is financial information from the five-year
business plan, which is mainly subject to expected business
and market developments. In addition, weighted revenue
and earnings multiples are considered. Changes resulting
from the revaluation of liabilities from written put options
during fiscal year 2020 amounted to €-44 million and were
recognized in retained earnings.
The carrying amounts of other non-current financial liabilities
measured at amortized cost approximated their fair value,
which is determined by discounting the expected future cash
flows using market interest rates.
109
AC
Short-term and current maturities of long-term
financial debt as well as long-term financial debt4
Trade payables
Other current and non-current financial assets²
Derivatives included in hedge accounting
Derivatives not included in hedge accounting
Equity instruments and fund shares measured
Category of
financial assets
and liabilities
In scope of IFRS 9
Measured at fair value
(IFRS 9)¹
Receivables from Siemens Group
Measured at
amortized cost
Level 1
Level 2
Level 3
IFRS 9
Total
AC
Not in scope of
920
Receivables from finance leases³
Cash and cash equivalents
Other
Total financial liabilities
1 AC - Financial Assets/Liabilities at Amortized Cost;
FVtPL = Financial Assets/Liabilities at Fair Value through Profit or Loss;
FVTOCI = Financial Assets at Fair Value through Other Comprehensive Income;
n. a. not applicable.
2 Excluding separately disclosed receivables from finance leases..
Trade receivables 2
3 Reported in the line items trade and other receivables as well as other financial assets.
5 Reported in the line items short-term financial debt and current maturities of long-term financial debt, long-term financial debt, payables to Siemens Group and other liabilities to Siemens Group.
80
60
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
Carrying amounts as of September 30, 2019
(in millions of €)
4 Excluding separately disclosed lease liabilities.
Impairments for expected credit losses were generally recorded
in the line item selling and general administrative expenses in
the consolidated statements of income. Valuation allowances
on current and non-current receivables, included in the line
items trade and other receivables, other current financial assets
and other financial assets, represent lifetime expected credit
losses and changed as follows:
920
2,744
Equity instruments measured at fair value
through other comprehensive income
Other
FVTOCI
44
44
AC
77
22
77
4,427
7
137
51
179
4,801
Total financial assets
AC
7
FVtPL
2,744
179
179
n. a.
AC
686
8
686
FVtPL
113
16
113
16
at fair value through profit or loss
n. a.
The following table reflects the contractually fixed payoffs for
repayments and interest. The disclosed expected undiscounted
net cash outflows from derivative financial liabilities were de-
termined based on each particular settlement date of an instru-
ment and on the earliest date on which Siemens Healthineers
could be required to pay. In addition, the majority of the financing
agreements with the Siemens Group include change of control
clauses that may result in early maturity (please also see
→A.9.5 Significant agreements which take effect, alter or terminate
upon a change of control of Siemens Healthineers AG following a
takeover bid). Cash outflows for financial liabilities without fixed
amount are based on the conditions existing as of Septem-
ber 30, 2020.
(in millions of €)
Cash flow hedges
-22
-22
-67
1
-72
211
1
-1
-7
-1
26
221
41
-127
3
2
-24
Amounts reclassified into revenue (hedging of forecast sales)
Amounts reclassified into cost of sales (hedging of forecast purchases)
Amounts reclassified into other financial income
(hedging of financial debt denominated in foreign currency)
Amounts reclassified into interest expenses
Income tax effects
Balance at end of fiscal year
11
Cash flow hedges reserve
Fiscal year
Fiscal year
2020
2019
2020
2019
Cost of hedging reserve
-40
-1
37
Siemens Healthineers defines exchange rate risk as the sum of
the net amount of foreign-currency-denominated monetary
items, firm commitments and planned sales and purchases in
a foreign currency. The exchange rate risk is determined based
on the respective functional currencies of the exposed entities.
The exchange rate risk from cash inflows in foreign currency
is partly balanced by purchasing goods, commodities and
services in the respective currencies as well as by production
activities and other contributions along the value chain in the
local markets.
Entities are bound by an exchange rate risk management sys-
tem established within the Group. Each entity is responsible for
recording, assessing and monitoring its transaction-related ex-
change rate risk. The mandatory guideline for the treatment of
exchange rate risks within Siemens Healthineers describes the
procedure for identifying and determining the single net foreign
currency positions. It commits the entities to hedge at least 75%
but no more than 100% of their foreign-currency-denominated
monetary items, firm commitments and cash flows from planned
sales and purchases for the following three months. The ma-
jority of Siemens Healthineers' hedging transactions is carried
out with the corporate treasury of the Siemens Group as the
counterparty.
Entities are prohibited from borrowing or investing in foreign
currencies on a speculative basis. New financing from the
Siemens Group or investments by operating entities are carried
out preferably in their functional currency. In case an entity is
financed in a non-functional currency, the respective foreign
currency risk must be hedged 100%. Exchange rate risks in
connection with the acquisition or sale of businesses are
hedged on an individual basis.
As of September 30, 2020, the VaR relating to exchange rate
risks was €50 million (September 30, 2019: €51 million). This
VaR was calculated taking into consideration items of the con-
solidated statement of financial position, foreign-currency-
denominated firm commitments, foreign-currency-denomi-
nated cash flows from forecast transactions for the following
twelve months and effects from hedging transactions.
Translation risk
Each entity whose business leads to future cash flows denom-
inated in a currency other than its functional currency is ex-
posed to risks from changes in exchange rates. In the ordinary
course of business, entities are particularly exposed to exchange
rate fluctuations between the U.S. dollar and the euro.
Many entities are located outside the euro zone. Because the
financial reporting currency of Siemens Healthineers is the
euro, the financial statements of these entities are translated
into euros for preparation of the consolidated financial state-
ments. To take account of effects of foreign currency transla-
tion in risk management, the general assumption is that invest-
ments in foreign entities are permanent and that reinvestment
is continuous. Effects from exchange rate fluctuations on the
translation of net asset amounts into euros are reflected in the
line item other components of equity.
Interest rate risk is the risk that the fair value of a financial instru-
ment or its future cash flows will fluctuate because of changes
in interest rates. This risk arises whenever interest terms of
financial assets and liabilities are different. Siemens Healthineers'
exposure to the risk of fluctuations in future cash flows resulting
from changes in interest rates relates mainly to short-term bank
loans as well as money market borrowings and investments at
Siemens Group. Long-term liabilities to Siemens Group primarily
have fixed interest rates. Therefore, Siemens Healthineers was
not exposed to a substantial risk of fluctuations in future cash
flows resulting from changes in interest rates. Moreover, the
interest rate risks of fluctuations in the fair values of long-term
liabilities are currently not actively managed as no material
effects on net income are expected to occur. Accordingly,
Siemens Healthineers did not use any interest rate derivatives
in fiscal years 2020 and 2019.
As of September 30, 2020, the VaR relating to interest rates was
€47 million (September 30, 2019: €184 million). The decrease
was mainly driven by lower interest rate volatilities in the
United States and in the euro zone.
Liquidity risk
Liquidity risks relate to Siemens Healthineers' ability to meet
its financial obligations. As of September 30, 2020, Siemens
Healthineers' reserve of cash and cash equivalents amounted to
€656 million (September 30, 2019: €920 million).
In the periods presented, Siemens Healthineers was financed
largely by the Siemens Group and invested excess liquidity using
its cash pooling and cash management systems. For details about
financing arrangements with the Siemens Group, please refer to
→ Note 16 Financial debt.
85
Interest rate risk
Changes in the fair value of hedging instruments
Transaction risk
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
-24
117
3
Note 26 Financial risk management
Siemens Healthineers is managed centrally by the Managing
Board. The Managing Board is responsible for the operating
business and manages and controls financial risks in accor-
dance with its risk management policy. The Siemens Group
acts as a service provider with respect to certain financial risk
management activities.
Market risks
Exchange rate risk
Increasing market fluctuations may result in significant earn-
ings and cash flow volatility risks. The worldwide operating
business as well as the investing and financing activities are
affected particularly by changes in exchange rates and interest
rates. In order to optimize the allocation of financial resources
across its segments and entities as well as to achieve its aims,
Siemens Healthineers identifies, analyzes and manages the rel-
evant market risks. Siemens Healthineers seeks to manage and
control market risks primarily through its regular operating and
financing activities and uses derivatives when it is appropriate.
To quantify market risks, Siemens Healthineers uses the Value
at Risk (VaR) approach. The VaR figures are calculated based on
historical volatilities and correlations of various risk factors, a
ten-day holding period and a 99.5% confidence level. Actual
impacts on the consolidated statements of income or consoli-
dated statements of comprehensive income according to IFRS
may differ substantially from calculated VaR figures, which are
the output of a model with a purely financial perspective. Al-
though VaR is an important tool for measuring market risks, the
assumptions on which the model is based give rise to some
limitations including the following:
• A ten-day holding period assumes that it is possible to dis-
pose of the underlying positions within this period. This may
not apply during continuing periods of illiquid markets.
• A 99.5% confidence level means that there is a 0.5% statisti-
cal probability that losses exceed the calculated VaR.
• The use of historical data as a basis for estimating the statis-
tical behavior of the relevant markets and finally determining
the possible range of the future outcomes based on this sta-
tistical behavior may not always cover all possible scenarios,
especially those of an exceptional nature.
Any market-sensitive instruments, including equity and inter-
est-bearing investments, that Siemens Healthineers' pension
plans hold are not included in the following quantitative and
qualitative disclosures.
84
Management of market risks is a priority for the Managing
Board. The chief financial officer has specific responsibility for
this part of the overall risk management system. This respon-
sibility is delegated to corporate treasury. For practical busi-
ness purposes, Siemens Healthineers has entered into service
agreements with the Siemens Group to receive support in the
management of market risks.
Balance at beginning of fiscal year
(in millions of €)
2 Reported in the line items other current financial liabilities and other financial liabilities.
More than
1 year
Within 1 More than
1 year
year
Valuation allowances at fiscal year-end
101
96
Forward exchange
contracts
1 year
1,889
1,437
3,355
Deal contingent
forward
7,500
9,389
2,333
2,333
1,437
(in millions of €)
Sept 30, 2020
Within
Siemens Healthineers applied hedge accounting for certain sig-
nificant forecast transactions, firm commitments and loans de-
nominated in foreign currencies. The main characteristics of the
forward exchange contracts designated as hedging instruments
generally matched the underlying hedged items (e.g. nominal
amount, maturity).
The nominal amounts of the hedging instruments by maturity
were as follows:
Fiscal year
2020
2019
Valuation allowances at beginning of fiscal year
Change in valuation allowances recorded in
the consolidated statements of income
Write-offs charged against allowances
Currency translation differences
Sept 30, 2019
96
27
20
-16
-11
-7
3
85
In fiscal years 2020 and 2019, Siemens Healthineers did not
hold any material derivatives relating to interest rate risk or
commodity price risk.
3,355
Receivables from Siemens Group were classified in stage 1 of
the general impairment approach, which means the valuation
allowances were measured at an amount equal to the twelve-
month expected credit loss. As of September 30, 2020, receiv-
ables from Siemens Group with gross carrying amounts of
€3,392 million (September 30, 2019: €686 million) carried an
investment grade rating. In fiscal years 2020 and 2019, no ma-
terial valuation allowances were recognized.
forward
Total
Sept 30, 2019
Assets¹ Liabilities²
129
5
113
Deal contingent
49
113
49
25 - --
154
1 Reported in the line items other current financial assets and other financial assets.
In fiscal year 2020, the changes in fair value of the hedging in-
struments used for measuring hedge ineffectiveness amounted
to €-127 million (2019: €41 million). The changes in value of
the hedged items amounted to € 127 million (2019: €-41 mil-
lion). There was no material impact on profit or loss resulting
from ineffectiveness.
The cash flow hedge reserve and the cost of hedging reserve
related to the hedging of exchange rate risks and reconcile as
follows:
5
The change in valuation allowances recorded in the consoli-
dated statements of income related to an increase in the valu-
ation allowances on receivables from the sale of goods and
services in fiscal year 2020 by €27 million (2019: increase by
€16 million).
contracts
Liabilities²
Offsetting
Siemens Healthineers entered into master netting agreements
and similar agreements for derivatives. As of September 30,
2020, the gross amounts of such derivatives amounted to
€ 154 million (September 30, 2019: €116 million) for deriva-
tives with positive fair values and €10 million (September 30,
2019: €45 million) for derivatives with negative fair values.
Thereof, €5 million (September 30, 2019: €2 million) were sub-
ject to a master netting agreement but were not offset in the
consolidated statements of financial position because the off-
setting requirements were not met.
Hedging activities
As part of Siemens Healthineers' risk management approach
(please also see Note 26 Financial risk management), deriva-
tives were used to reduce the risks resulting primarily from fluc-
tuations in exchange rates. In particular, Siemens Healthineers
entered into forward exchange contracts in order to reduce the
risk of variability of future cash flows resulting from forecast
sales and purchases, acquisitions, firm commitments and loans
denominated in foreign currencies.
Total
As of the reporting date, forward exchange contracts with a nom-
inal amount of €3,102 million (September 30, 2019: €3,399 mil-
lion) were used to hedge exchange risks arising from U.S. dollar-
denominated loans maturing in fiscal years 2021, 2023 and
2027. The weighted average hedging rate was 1.2548 US$/€
(September 30, 2019: 1.2525 US$/€). For these hedges, only
the changes in the value of the spot element of the forward
exchange contracts were designated as hedging instruments.
Forward exchange
In addition, Siemens Healthineers entered into a deal contin-
gent forward with a nominal amount of €7,500 million to
hedge exchange risks arising from a part of the purchase price
obligation for the planned acquisition of Varian. The expected
hedging rate of the deal contingent forward, which is linked to
the closing date of the transaction, was 1.1677 US$/€. Since
the acquisition of Varian is considered to be highly probable,
the deal contingent forward was designated as a hedging in-
strument in a cash flow hedge. The existence of an economic
relationship between the hedging instrument and the hedged
item is reassessed regularly on a qualitative and quantitative
basis. The effectiveness of the hedging relationship is deter-
mined by using the dollar offset method. In applying this
method, the changes in the value of the deal contingent for-
ward are compared to the changes in the value of a hypothetical
derivative representing the hedged item. Hedge ineffectiveness
can result mainly from the contingency element included in the
hedging instrument, which depends on expectations about the
occurrence and the timing of the closing.
83
Siemens Healthineers Annual Report 2020
Consolidated financial statements - Notes to consolidated financial statements
The fair values of derivatives designated as hedging instruments
were as follows:
Sept 30, 2020
(in millions of €)
Assets¹
83
Restriction period