Siemens 2011 Annual Report Download - page 196

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C.2 Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

The following table provides further information on the capi-
tal structure of SFS as of September ,  and :
(in millions of €)
September ,
 
Allocated equity 1,593 1,458
Total debt 12,075 10,028
therein intragroup financing 12,066 10,004
therein debt from external sources 924
Debt to equity ratio 7.58 6.88
Cash and cash equivalents 178 90
Both Moody ’s and Standard & Poor’s view SFS as a captive fi-
nance company. These rating agencies generally recognize
and accept higher levels of debt attributable to captive fi-
nance subsidiaries in determining long-term and short-term
credit ratings.
The allocated equity for SFS is mainly determined and influ-
enced by the size and quality of its portfolio of commercial fi-
nance assets (primarily leases and loans) and equity invest-
ments. This allocation is designed to cover the risks of the un-
derlying business and is in line with common credit risk man-
agement standards. The actual risk of the SFS portfolio is
evaluated and controlled on a regular basis. The allocated eq-
uity is calculated quarterly.
C... RECONCILIATION TO
CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation to Consolidated Financial Statements includes
Centrally managed portfolio activities, Siemens Real Estate
(SRE) and various categories of items which are not allocated
to the Sectors and to SFS because management has deter-
mined that such items are not indicative of the Sectors’ and
SFS’ respective performance.
Centrally managed portfolio activities
For fiscal , the result of Centrally managed portfolio activi-
ties was a loss of € million compared to a loss of € mil-
lion a year earlier. The improvement is due primarily to the
electronics assembly systems business which recorded a profit
of € million in fiscal . For comparison, the result related
to this business in fiscal  was a loss of € million, in-
cluding € million provided for in connection with an ex-
pected loss from the sale to ASM Pacific Technology. The trans-
action was announced in the fourth quarter of fiscal  and
closed in the second quarter of fiscal . In addition, both
periods under review included losses related to the remaining
former business activities of Siemens IT Solutions and Services
that were not classified as discontinued operations and were
therefore retroactively reclassified as Centrally managed port-
folio activities. These losses were lower in the current year.
Siemens Real Estate (SRE)
In , we initiated a multi-year program to improve the effi-
ciency of our real estate management. Under the program,
Siemens bundled its real estate portfolio into SRE and is im-
plementing measures to increase the efficiency of these as-
sets. The program was expected to generate approximately
€ million in annual cost savings primarily for the Siemens
Sectors by the end of fiscal , mainly through the more ef-
ficient utilization of space and a reduction in vacant property.
At the end of the current fiscal year, we have completed the
bundling of our real estate assets into SRE and have achieved
the target of € million in annual cost savings compared to
the cost position prior to the start of the program.
Income before income taxes at SRE was € million in fiscal
, down from € million a year earlier, due in part to low-
er gains related to the disposal of real estate in the current pe-
riod. Costs associated with the real estate bundling program
came in lower year-over-year, at € million, compared to €
million in fiscal . Assets with a book value of € million
were transferred to SRE during fiscal  as part of the real
estate bundling program. SRE expects to continue with real
estate disposals depending on market conditions.
Corporate items and pensions
In fiscal , Corporate items and pensions posted a loss of
€ million, compared to a loss of € million a year earlier.
Within this change, Centrally carried pension expense im-
proved to a positive € million in the current year, from a
negative € million in the prior year, due primarily to lower
interest costs and a higher expected return on plan assets.
Corporate items recorded a loss of € million in fiscal ,
compared to a loss of € million in fiscal . The improve-
ment year-over-year benefited from management’s allocation