Siemens 2012 Annual Report Download - page 205

135 D. Consolidated Financial Statements
239 E. Additional Information
130 C. Siemens AG (Discussion on basis of
German Commercial Code)
134 C. Notes and forward-looking statements
129 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report

what lower prepayments will continue, as customers seek to
maintain their liquidity. Along with these effects, we expect
continued significant outflows for investing activities in the
next two years. SFS intends to continue with its growth strate-
gy focused on the business areas of our Sectors. Furthermore,
we expect significant outflows for strengthening our core ac-
tivities in connection with “Siemens .” This already in-
cludes our previously announced acquisition of LMS for ap-
proximately €. billion. For comparison, we spent €. billion
for acquisitions in fiscal . Among the planned divestments
mentioned above, the intended method of divesting OSRAM,
through a spin-off of the majority of shares to shareholders in
fiscal , will have no cash impact on our financial position.
We intend to maintain our focus on net working capital man-
agement as an important factor within operating activities,
and on investments in intangible and tangible assets within
cash used in investing activities. For both net working capital
and capital investments in intangible assets and property,
plant and equipment, we take into account both the macro-
economic environment and our own order growth. We will re-
tain our stringent approval process for capital investments,
which goes up to the Managing Board. For further informa-
tion, see ..    .
In the area of investment planning, we expect to continue in-
vesting in our established markets, such as to safeguard mar-
ket share and competitive advantages based on technological
innovation. We will also continue investing in emerging mar-
kets, such as for increasing our capacities for designing, manu-
facturing and marketing new solutions within these markets.
With regard to capital expenditures of our Sectors in property
plant and equipment and intangible assets, we expect fiscal
 spending on the level of fiscal .
Energy plans to invest mainly in innovation and in expanding
its global footprint to secure organic growth and competitive-
ness by achieving cost leadership. These investments include
further spending in the extension of capacities and facilities
such as for the technology-driven wind power market, particu-
larly in northern Europe. The Healthcare Sector continues to
invest in property, plant and equipment and intangible assets
including developing and implementing software and IT solu-
tions relating mainly to the medical imaging, therapy systems
and laboratory diagnostics businesses. The Industry Sector in-
tends with its investments mostly to strengthen its regional
footprint in emerging markets. This includes further invest-
ments in replacing products and ramping up capacities, partic-
ularly at Industry Automation in China, and implementing ad-
ditional productivity measures, particularly at Drive Technolo-
gies. The Infrastructure & Cities Sector plans to strengthen its
regional footprint in emerging markets and its position in fast-
growing market segments. This includes innovation projects
at low- and medium-voltage as well as investments related to
larger projects at Rail Systems.
With our ability to generate positive operating cash flows, our
total liquidity of €. billion as of September , , our
€. billion in undrawn lines of credit and our credit ratings at
year-end, we believe that we have sufficient flexibility to fund
our capital requirements including scheduled debt service,
regular capital spending, ongoing cash requirements from op-
erating and SFS financing activities, dividend payments, pen-
sion plan funding and portfolio activities. Also in our opinion,
our working capital is sufficient for the Company’s present re-
quirements.
For the medium-term we set ourselves a target for our capital
structure, defined as the ratio of adjusted industrial net debt
to adjusted EBITDA. We seek to achieve a ratio in the range of
. to .. In fiscal  we exercised the flexibility built into
our capital structure for achieving other goals, including share
buybacks, resulting in a ratio of .. We expect to increase
this ratio during the next two fiscal years.
... 
As for the Group, our outlook for our segments is based on the
above-mentioned expectations regarding the overall economic
situation and specific market conditions over the next two
fiscal years.
For fiscal , we expect orders to increase on an organic ba-
sis year-over-year. We expect Total Sectors organic revenue in
 to approach the level reached in fiscal . In particular,
we expect a revenue decline in Energy due in part to order de-
velopment in fiscal , when the Sector’s book-to-bill ratio
was below one. We anticipate that a challenging market en-
vironment will continue to hold back revenue development in
Industry. Revenue in fiscal  is expected to rise slightly
year-over-year in Healthcare and Infrastructure & Cities. While
we expect Total Sectors organic revenue to return to moderate
growth in fiscal , this expectation is dependent particular-
ly on businesses that are sensitive to short-term changes in
the economic environment.
Overall, volume development in our Sectors in the next two
fiscal years is expected to include pricing pressure, particularly
in Healthcare and Energy. We expect pricing pressure in fiscal
 to be at a level similar to fiscal .
We expect Total Sectors profit in fiscal  to be impacted
by the charges mentioned above related to the “Siemens ”
program, totaling approximately €. billion. Including their
respective portions of these charges, profit at Industry and