Siemens 2012 Annual Report Download - page 248

1 A. To our Shareholders 49 C. Combined Management Report 21 B. Corporate Governance

As a result of a market assessment, which was completed in
the three months ended September , , the growth pros-
pects and the long-term market development for the concen-
trated solar power business have been reassessed and the un-
derlying business planning has been adjusted accordingly to
reflect expected lower growth prospects. Cash flows were dis-
counted at a rate of .%, whereas cash flows beyond the five-
year planning period were extrapolated using a constant
growth rate of .%. The main reason for the deteriorated mar-
ket perspective was a shift from STE technology to Photovolta-
ic technology, in particular in the U.S. market. The adjusted
business plan resulting from the market assessment was the
basis for the annual goodwill impairment test in the three
months ended September , .
In the fourth quarter of fiscal , the investment in Archimede
was impaired by € million. The main triggering events for
the impairment were the reassessment of the long-term mar-
ket developments and the continuing lack of a reference proj-
ect. As a consequence the underlying business planning of the
investment has been adjusted to reflect the expected lower
growth prospects. The Archimede impairment was based on
fair value less costs to sell applying a discounted cash flow
method, which assumed a discount rate of .% and a terminal
value growth rate of %.
The assets and liabilities of the solar business are presented as
held for disposal in the Consolidated Statements of Financial
Position as of September , . The carrying amounts of the
major classes of assets and liabilities of the solar business
were as follows:
September ,
(in millions of €) 
Trade and other receivables 29
Inventories 48
Property, plant and equipment 18
Financial assets 105
Other assets 24
Assets classified as held for disposal 224
Trade payables 30
Current provisions 24
Other current liabilities 66
Other liabilities 7
Liabilities associated with
assets classified as held for disposal 126
OSRAM – discontinued operations, assets
and liabilities held for disposal
In March , Siemens announced that it planned to publicly
list its subsidiary OSRAM. Siemens intended to retain a minority
stake in OSRAM. The conditions for OSRAM to be classified as
held for disposal and discontinued operations were fulfilled as
of the end of the second quarter of fiscal . Facing the mar-
ket conditions Siemens decided in June  to prepare, parallel
and alternatively to the aforementioned plan of an initial public
offering, an offering of OSRAM in the form of a spin-off by issu-
ing OSRAM shares to the shareholders of Siemens AG and a sub-
sequent listing of these shares. Also in this simultaneously pre-
pared form of a listing, that requires approval at the general
shareholders’ meeting, Siemens plans to retain a minority stake.
The decision in June  represented a significant change of
the previous disposal plan. Siemens no longer considered it
highly probable to complete the disposal of OSRAM via an ini-
tial public offering by the end of calendar year , resulting
in a reversal of the previous classification of the disposal group
OSRAM as asset held for disposal and discontinued operations.
By reversing the previous classification, Siemens recognized in
the third quarter of fiscal  a negative effect on earnings of
€ million before taxes that result from depreciation / amor-
tization and impairments of property, plant and equipment
and intangible assets and equity pick ups that were not recog-
nized while OSRAM was previously classified as discontinued
operations (€ million referring to fiscal ). This effect on
earnings is presented under expenses in the table below.
Siemens considers a listing via spin-off as highly probable un-
til June  including the high probability of the shareholders
approval based on past experience with other capital matters
suggested for approval at the general shareholders’ meeting,
feedback from the financial market and the economic rationale
of the decision from a shareholder perspective. Accordingly,
Siemens classifies OSRAM again as held for disposal and dis-
continued operations. Among other impacts on Income taxes
on costs to sell Siemens adjusted deferred tax assets according
to the plan of issuing OSRAM shares in the form of a spin-off.
The results of OSRAM are disclosed as discontinued operations
in the Company ’s Consolidated Statements of Income for all
periods presented.