Siemens 2012 Annual Report Download - page 186

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

We achieved our target for capital efficiency measured in terms
of ROCE (adjusted) on a continuing basis, with a result of
.%, well within our target range of % to %. ROCE (ad-
justed) on a continuing basis a year earlier was .%, benefit-
ing from the above-mentioned divestment at Energy.
Our Free cash flow from continuing operations declined to
€. billion, down % year-over-year. Free cash flow devel-
opment was particularly influenced by lower income from con-
tinuing operations. Additional factors included cash outflows
in the current period related to project-related charges in
Healthcare.
In the fourth quarter of fiscal , we initiated a share buy-
back program of up to €. billion, to be financed partly by
long-term debt, and issued bonds totaling €. billion. These
measures are aimed at taking advantage of favorable capital
market conditions while reducing the gap to our capital struc-
ture target. We have set this target, defined as the ratio of ad-
justed industrial net debt to adjusted EBITDA, in the range of
. to .. In fiscal , our capital structure was a positive
. compared to a negative . in the prior fiscal year.
We believe that we achieved the goals we had announced in
our Interim report for the third quarter of fiscal . With re-
gard to One Siemens, our framework for sustainable value
creation, we believe that we did not fully succeed in our fun-
damental goal of continuous improvement relative to our
markets and competitors. We believe that Agenda , an
initiative started by our Healthcare Sector at the beginning of
fiscal  is making a contribution to achieve these goals.
We intend to expand these efforts on a company level. We
therefore initiated “Siemens ”, a company-wide program
aimed at improving our productivity. We defined action areas
for cutting our costs, strengthening our portfolio and becom-
ing faster and less bureaucratic. These goals apply company-
wide, with specific implementation measures to be devel-
oped by each Sector. While program-related productivity mea-
sures will burden Total Sectors profit, particularly in fiscal
, we expect that the productivity gains realized will en-
able us to achieve a Total Sectors profit margin of at least %
by fiscal .
In the fourth quarter of fiscal  in connection with the
“Siemens ” company program, we decided to divest our so-
lar business, consisting of our solar thermal and photovoltaic
activities, because they have not met our expectations with re-
gard to a number of factors, including changed market condi-
tions, lower growth and strong price pressure.
We intend to provide an attractive return to shareholders. We
previously set a target range for our dividend payout percentage
of % to % of Net income excluding selected exceptional
non-cash effects. The Siemens Managing Board, in agreement
with the Supervisory Board, proposes a dividend of €. per
share, unchanged from a year earlier. This proposal represents
a dividend payout percentage of %, based on shares outstand-
ing as of September , .
After the end of fiscal , Siemens announced the acquisi-
tion of LMS International NV, Belgium, a leading provider of
mechatronic simulation solutions. With the acquisition, which
will be integrated in the Industry Sector’s Industry Automation
Division, Siemens intends to expand and complement the
Industry Sector’s product lifecycle management portfolio with
mechatronic simulation and testing software. The purchase
price amounts to approximately € million. The transaction
is subject to approval by regulatory authorities. Closing is expect-
ed in the second quarter of fiscal .
.  
Also after the end of fiscal , Siemens announced that
it plans to divest the business activities included in the Indus-
try Sector’s Water Technologies Business Unit, which as of
September ,  was part of the Industry Automation
Division. The Business Unit’s offerings comprise solutions for
municipal and industrial water purification and wastewater
treatment.