Siemens 2010 Annual Report Download - page 178

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis
50 Business and operating environment
78 Fiscal  – Financial summary
81 Results of operations
98 Financial position
110 Net assets position
113 Overall assessment of the economic position

Shareholders’ equity and total assets were as follows:
(in millions of €)
September ,
 
Total equity attributable
to shareholders of Siemens AG 28,346 26,646
Equity ratio 28% 28%
Non-controlling interests 750 641
Total assets 102,827 94,926
Total equity attributable to shareholders of Siemens AG in-
creased €. billion year-over-year, to €. billion at the
end of fiscal . The increase in Total equity was due mainly
to the Net income attributable to shareholders of Siemens AG
of €. billion and positive currency translation effects of
€. billion. These factors were partly offset by dividend pay-
ments of €. billion and actuarial losses on pension plans
and similar commitments of €. billion.
While both Total assets and Total equity attributable to share-
holders of Siemens AG increased year-over-year, our equity
ratio excluding non-controlling interests remained at %.
For additional information on our net assets position, see
“Notes to Consolidated Financial Statements.”
GOODWILL IMPAIRMENT
AT HEALTHCARE SECTOR’S DIAGNOSTIC DIVISION
The annual test for impairment of goodwill of the Diagnostics
Division within the Sector Healthcare was performed as of
September , . As a result, the goodwill was reduced due
to an impairment amounting to €. billion, below the previ-
ously announced estimate primarily due to currency transla-
tion effects. The Diagnostics Division is based on the acquisi-
tions of Diagnostic Products Corporation (DPC), the diagnostics
division of Bayer AG, and the acquisition of Dade Behring, Inc.
The Division operates in the global healthcare market for diag-
nostic testing systems and consumables which faces increas-
ing cost restraints but is estimated to still represent a growing
market mainly due to the megatrend demographic change.
While the cost targets associated with the integration of the
acquired three companies were met, the growth targets have
not been achieved.
As a result of a strategic review, which was completed in the
three months ended September , , the Division’s medi-
um-term growth prospects and the long-term market develop-
ment in laboratory diagnostics have been reassessed and the
Division’s business planning has been adjusted accordingly to
reflect expected lower growth prospects. Cash flows beyond
the -year planning period were extrapolated using a constant
growth rate of .%. The main reasons for these lower growth
prospects and therefore adjusted business targets are delays in
technology and product related development activities along
with increasing competition. The adjusted business plan re-
sulting from the strategic review was the basis for the annual
goodwill impairment test in the three months ended Septem-
ber , .
The estimated fair value of Diagnostics is assumed to be
mainly driven by its terminal value. Cash flows beyond the
-year planning period were extrapolated using a constant
growth rate of .%. A post-tax discount rate of % was ap-
plied. The recoverable amount of the Diagnostics Division is
calculated as fair value less costs to sell and amounts to €.
billion. A decrease of the terminal value growth rate by .
percentage points would reduce the Division’s recoverable
amount by more than .%. The Division’s recoverable amount
would decline by .% upon a . percentage point increase in
the discount rate.
Except for the Diagnostics Division within the Healthcare Sec-
tor described above, the recoverable amounts for the annual
impairment test  for Divisions and Cross-Sector Businesses
were estimated to be significantly higher than the carrying
amounts. For further information, refer to ”Notes to Consoli-
dated Financial Statements.”