Siemens 2014 Annual Report Download - page 179

247 D. Consolidated Financial Statements
337 E. Additional Information
213 C. Overall assessment of the economic position
214 C. Subsequent events
215 C. Sustainability and citizenship
225 C. Report on expected developments and
associated material opportunities and risks
242 C. Compensation Report and legal disclosures
242 C. Siemens AG (Discussion on basis
of German Commercial Code)

cities and rail operators. Changes in the overall economic envi-
ronment generally have a delayed effect on our business activ-
ities. Furthermore, parts of our businesses are driven by public
spending. Customers in the public sector usually have multi-
year planning and implementation horizons, and their contract
tenders therefore tend to be independent of short-term eco-
nomic trends.
Beginning with fiscal , all businesses of the former Smart
Grid Division except for the rail electrification business are in-
cluded in the new Energy Management Division. As described
above, the rail electrification business is included in the new
Mobility Division as of fiscal .
The Building Technologies Division is a leading provider of
automation technologies and services for safe, secure and effi-
cient buildings and infrastructures throughout the lifecycle of
buildings. The Division offers products, solutions and services
for fire safety, security, building automation, heating, venti-
lation, air conditioning and energy management. The large
customer base is widely-dispersed. It includes public and com-
mercial building owners, operators and tenants, building con-
struction general contractors and system houses. Changes in
the overall economic environment generally have a delayed
effect on our business activities.
At the beginning of fiscal , the Building Technologies Divi-
sion includes the same business activities as it did at the end of
fiscal .
Equity Investments
In fiscal , Equity Investments in general comprised equity
stakes held by Siemens that are accounted for by the equity
method or as available-for-sale financial assets and that for
strategic reasons are not allocated to a Sector or a Division, re-
spectively, SFS, Centrally managed portfolio activities, Siemens
Real Estate (SRE), Corporate items or Corporate Treasury. Our
main investments within Equity Investments were our  %
stake in BSH Bosch und Siemens Hausgeräte GmbH (BSH), our
 % stake in OSRAM Licht AG (OSRAM), our  % stake in Atos SE
(AtoS) and our  % stake in Enterprise Networks Holdings
B.V. (EN), which in the fourth quarter of fiscal , was re-
named Unify Holdings B.V. (Unify). In the fourth quarter of fiscal
, Siemens signed an agreement to sell its stake in BSH to
Robert Bosch GmbH. The transaction is expected to be com-
pleted in the first half of calendar . Equity Investments
ceased to be a reportable segment beginning with fiscal .
As of October , , equity stakes formerly included in Equity
Investments are reported within Centrally managed portfolio
activities, which are part of the Reconciliation to Consolidated
Financial Statements.
Financial Services
Financial Services (SFS) provides business-to-business finan-
cial solutions. With its specialist financing and technology
expertise in the areas of Siemens businesses, SFS supports cus-
tomer investments with leasing solutions and equipment,
project and structured financing. SFS provides capital for
Siemens customers as well as other companies and manages
financial risks of Siemens.
SFS operates the Corporate Treasury of the Siemens Group,
which includes managing liquidity, cash and interest risks as
well as certain foreign exchange, credit and commodities risks.
Business activities and tasks of Corporate Treasury are reported
in the segment information within Reconciliation to Consoli-
dated Financial Statements. For further information on Corpo-
rate Treasury activities see C.. PRINCIPLES AND OBJECTIVES OF
FINANCIAL MANAGEMENT.
C.. Economic environment
C... WORLDWIDE ECONOMIC ENVIRONMENT
Fiscal year  started with a divergent global economic
development. While emerging countries showed a mixed pic-
ture with growth slowing down in the BRIC countries (Brasil,
Russia, India, China), early economic indicators in many indus-
trial economies (U.S., U.K., Japan, countries of the Euro zone)
signaled improvements. In the Euro zone, years of economic
stagnation and recession seemed set to come to an end. Given
the importance of these “heavy weights” for the world econ-
omy, expectations for fiscal  were quite positive. Indeed,
with growth of . % year-over-year, global gross domestic
product (GDP) growth had accelerated in the second half of cal-
endar  compared to the first half, when GDP grew by . %
year-over-year. However, these promising prospects did not
materialize in  for several unforeseeable reasons. The un-
usually strong winter of  /  disrupted large parts of the
U.S. economy and led to negative GDP growth in the U.S. in the
first quarter of calendar . With the start of calendar ,
the first of a series of geopolitical conflicts escalated: the con-
flict in Ukraine brought about substantial uncertainty for the
whole year. In the Middle East, several military conflicts got
worse: Israel and Palestinians again went to war; Libya fell back
into political chaos; the militant group “Islamic State” made sig-
nificant military advances in Syria and Iraq and triggered an
American-led intervention. All these shocks to the global eco n-
omy led to increased uncertainty and weighed on global econ-
omic activity. Accordingly, global GDP grew only by . % and
not by . % as expected in October . The slowdown of fixed
investment growth and value added manufacturing growth –
both impor tant indicators for Siemens as a producer of capital
goods – was even stronger: Fixed investments grew by only