Siemens 2014 Annual Report Download - page 205

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)

C.. Principles and objectives
of financial management
Siemens is committed to a strong financial profile, which pro-
vides the financial flexibility to achieve growth and portfolio
optimization goals largely independent of capital market con-
ditions.
Financial management at Siemens is executed according
to applicable laws and internal guidelines and regulations. It
includes the following activities:
LIQUIDITY MANAGEMENT
Siemens’ principal source of financing is cash inflows from
operating activities. Corporate Treasury generally manages
cash and cash equivalents for Siemens and has primary respon-
sibility for raising funds in the capital markets for Siemens
through various debt products, with the exception of countries
with conflicting capital market controls. The relevant consoli-
dated subsidiaries in these countries obtain financing primarily
from local banks. Siemens follows a prudent borrowing policy
that is aimed towards a balanced financing portfolio, a diversi-
fied maturity profile and a comfortable liquidity cushion. Espe-
cially since the beginning of the global financial markets crisis,
Siemens monitors very closely the funding options available in
the capital markets, trends in the availability of funds and the
cost of such funding in order to evaluate possible strategies
regarding its financial and risk profile.
CASH MANAGEMENT
Cash management comprises the management of bank partner
relationships and bank accounts as well as the execution of
payments, including the administration of cash pools, on a
global level. Siemens strives to raise efficiency and transpar-
ency through a high level of standardization and continuous
advancement of payment processes. Where permissible, the
execution of intercompany and third party payments is effected
centrally through group-wide tools with central controls to en-
sure compliance with internal and external guidelines and
requirements. To ensure efficient management of Siemens’
funds, Corporate Treasury has established a central cash man-
agement approach: to the extent legally and economically fea-
sible, funds are pooled and managed centrally by Corporate
Treasury. Conversely, funding needs within Siemens are cov-
ered centrally by Corporate Treasury via intercompany current
accounts and / or loans where legally and economically feasible.
FINANCIAL RISK MANAGEMENT
Investments of cash and cash equivalents are subject to credit
requirements and counterparty limits. Corporate Treasury
pools and centrally manages Siemens’ interest rate exposure as
well as certain commodity, currency and credit risk exposures
and uses financial derivative instruments in transactions with
external financial institutions to offset such concentrated expo-
sures. Especially since the beginning of the global financial
market crisis, Siemens monitors very closely the counterparty
risk in its financial assets and financial derivative instruments.
For more detailed information about financial risk manage-
ment at Siemens, see NOTE  in D. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
MANAGEMENT OF POST-EMPLOYMENT BENEFITS
Siemens’ funding policy for post-employment-benefits is part
of its overall commitment to sound financial management,
which includes a continuous analysis of the structure of its pen-
sion liabilities. For more detailed information about Siemens’
pension plan funding, see NOTE  in D. NOTES TO CON-
SOLIDATED FINANCIAL STATEMENTS.
CAPITAL STRUCTURE MANAGEMENT
To effectively manage Siemens’ capital structure, Siemens
seeks to maintain ready access to the capital markets through
various debt products and to preserve its ability to repay and
service its debt obligations over time.
C.. Capital structure
As of September ,  and  our capital structure was
as follows:
(in millions of €)
September , % Change
 
Total equity attributable to
shareholders of Siemens AG 30,954 28,111 10%
As percentage of total capital 60% 58%
Short-term debt and current
maturities of long-term debt 1,620 1,944
Long-term debt 19,326 18,509
Total debt 20,947 20,453 2%
As percentage of total capital 40% 42%
Total capital
(total equity and total debt) 51,900 48,564 7%
For information on changes in equity and debt, see C. NET
ASSETS POSITION.
We believe that sustainable revenue and profit development is
supported by a healthy capital structure. A key consideration of
our capital structure management is to maintain ready access
to the capital markets through various debt products and to
preserve our ability to repay and service our debt obligations
C. Financial position