Media proprietor and publisher Siemens Aktiengesellschaft Österreich Siemensstraße 90 1210 Vienna, Austria

For additional information, please contact our press office Telephone: +43 (0)51707 20222 Fax: +43 (0)51707 53000 (costs dependent upon provider) E-mail: kontakt.at@siemens.com

www.siemens.at/presse

Printed in Austria 01/17 Typesetting and printing errors excepted

siemens.at

Facts and Figures 2016Siemens Aktiengesellschaft Österreich

DIGITALIZATION

ELECTRIFICATIONAUTOMATION

016556T2_Siemens_GB_2016_Umschlag_en.indd 4-1 01.02.17 11:11

Siemens Aktiengesellschaft Österreich

(in € millions) 2012 2013 2014 2015 2016 YOY

New orders 2,100.8 3,054.7 2,769.1 2,692.4 2,939.2 9.2%

Revenue 2,872.5 2,735.4 2,661.7 2,526.5 2,681.8 6.1%

Exports (as a percentage of revenue) 42.0% 59.0% 49.9% 54.7% 51.8% –5.3%

Investments1 45.7 37.8 30.2 28.0 26.0 –7.1%

(as a percentage of revenue) 1.6% 1.4% 1.1% 1.1% 1.0%

Employees2 8,932 8,284 8,017 7,911 7,594 –4.0%

Personnel expenses 743.4 831.0 746.9 744.8 793.0 6.5%

(as a percentage of revenue) 25.9% 30.4% 28.1% 29.5% 29.6%

Research and development expenses 256.5 166.7 182.1 177.9 180.2  1.3%

Education and training expenses 14.8 16.6 14.9 14.8 13.3 –10.0% 

1 Property, plant, and equipment including equipment leased to customers

2 Number of employees as of September 30, 2016, not including employees completing compulsory military service, employees on parental leave, and apprentices

This report uses gender-free formulations whenever possible. Should a gender-specific formulation be used in the interests of readability, it refers equally to both genders unless a specific individual is being referred to.

Five-year overview

Concept, coordination, and implementationProject management Christian Holler-Berger Art direction Jutta Duschet Production Jutta Duschet and Christian Holler-Berger Typesetting and lithography R12 Spannbauer Ges.m.b.H. & Co KG Translation LanguageLink Sprachdienste GmbH Printing Offset 5020 Druckerei & Verlag Ges.m.b.H.

Photo creditsAll pictures are copyright Siemens Aktiengesellschaft Österreich.

We would like to thank: Andi Bruckner (photo on page 5) Siemens Aktiengesellschaft, Berlin and Munich (photo on page 9)

External orders for the annual reportwww.siemens.at/gborder

Internal orders for the annual reportE-mail: johann.schindler@siemens.com

Please always include your mailing address and complete Org-ID. with your orders.

This annual report is also published in German. Electronic versions will be available for download in English and German at www.siemens.at/presse starting in February 2017.

Legal noticeThe names and designations used in this report may be registered trademarks. Their use by other parties may violate the rights of their owners.

Additional information

Key figures 2012–2016

016556T2_Siemens_GB_2016_Umschlag_en.indd 2-3 01.02.17 11:11

A.1 Page 4

Statement from the Managing Board

A.2 Page 8

Supervisory Board report

A.3 Page 12

Supervisory Board, Managing Board

A.To our customers and partners

B.Management’s discussion and analysis for fiscal year 2016

C.Annual financial statements as of September 30, 2016

B.1 Page 16

Report on the development of business and economic conditions

B.2 Page 26

Report on the expected development and risks of the company

B.3 Page 28

Report on research and development (R&D)

C.1 Page 32

Balance sheet as of September 30, 2016

C.2 Page 34

Income statement

C.3 Page 35

Notes for fiscal year 2016

C.4 Page 44

Changes in fixed assets

C.5 Page 46

Summary of investments in affiliated and associated companies

C.6 Page 47

Summary of accounts receivable

C.7 Page 48

Changes in untaxed reserves

C.8 Page 49

Summary of liabilities

C.9 Page 50

Auditor ’s report

Contents

2

To our customers and partners

A.1 Page 4

Statement from the Managing Board

A.2 Page 8

Supervisory Board report

A.3 Page 12

Supervisory Board, Managing Board

A.

A.1 Statement from the Managing Board

Ladies and Gentlemen,

Digitalization is a determining factor in many areas of our lives. For industry, it serves as a source of leverage for greater efficiency and speed as well as a higher level of individuality. It makes it possible to merge all of the value creation steps and offers the opportunity to develop new services and innovative business models. Siemens has undergone a massive transformation in recent years due to its focus on digitalization. With some 17,500 software engineers, Siemens is now one of the largest software companies in the world in terms of pure numbers.

This transformation of the company also resulted in numerous successful projects for Siemens Austria in the reporting period, above all those in the Digital Factory Division, in which Siemens offers an integrated portfolio of hardware and software along with services for the electrifi cation, automation, and digitalization of industrial processes. The Digital Enterprise Suite, a solution platform aimed at implementing Industry 4.0, allows us to help our customers increase their competitive strength – through a shorter time to market and faster, more fl exible, and more effi cient production. The goal is to enable the seamless integration of data from development, production, and suppliers as well as to provide a complete digital representation covering the entire value creation chain. In the auto-motive segment, for example, large-scale projects were landed in the fi eld of automation and robotics for body-in-white facilities.

We also enjoyed success in the process industry during the reporting period. In the joint bioprocess lab operated in Vienna by Process Industries and Drives and Siemens Corporate Technology, researchers developed intelligent measurement and automation technol-ogies in order to optimize bioprocesses in the pharmaceuticals and food industries. The development of new drugs and active ingre-dients is cost-intensive and time-consuming. Tests to verify whether the fi nished drug matches the previously defi ned product char-acteristics are generally only performed at the end of the production process. If deviations are discovered, it is often diffi cult to ascertain the reasons for the production error. The solution to this problem lies in the digitalization of production plants – across the entire plant lifecycle, from engineering and operation to ongoing optimization. Here as well, digitalization is a pivotal productivity lever that improves the competitive strength of companies.

The ever-increasing level of digitalization is also apparent in the world of energy, especially in our Industrial Power Plant Solutions (IPPS) Business Unit, which operates in the power plant control system segment. This unit also bears worldwide responsibility for industrial power plant solutions from Siemens. IPPS made a signifi cant contribution to the increase in new orders in this segment at Siemens Austria in fi scal year 2016 thanks to the expansion of three thermal power plants operated by Bolivia’s state-owned power utility as well as two power plant projects in Israel. Along with the rise in new orders of over 9 percent, Siemens Austria experienced revenue growth of more than 6 percent in fi scal year 2016. As a result, the carve-out of the Healthcare Business Unit that was com-pleted during the fi scal year was more than offset in both new orders and revenue.

Siemens Austria has a number of competence centers for products, services, and solutions for the digitalization of power grids. With their support, the rollout of smart meters continued at Energie AG Oberösterreich Telekom. Energy Management will provide smart metering hardware and software for the grids in Tyrol, Carinthia, and Kapfenberg, as well.

Digitalization is also playing an increasingly important role in the mobility segment. Today, the bogies of a train are equipped with an average of 20 sensors that constantly monitor the systems and components. The researchers at the Virtual Vehicle Research Cen-ter in Graz, which develops concepts for road and rail vehicles, are interested in when repairs become necessary. Together with our development and production site for bogies, which is also located in Graz, the research center is working to optimize maintenance times on a long-term basis and ensure high availability for rail vehicles. The Siemens Mobility plant in Graz is one of the world’s larg-est development and manufacturing sites for modern rail bogies. In fi scal year 2016, 2,400 bogies and 4,000 wheelsets were delivered to customers around the world.

A. To our customers and partners

To our customers and partners 4

Wolfgang Hesoun Chief Executive Officer

To our customers and partners 5

The second Mobility plant, which is located in Vienna and is responsible for Siemens Group’s worldwide urban transportation business, once again made a substantial contribution to Siemens Austria’s success in the fi scal year. Highlights included the conclusion of the second framework agreement with the leasing company European Locomotive Leasing for the delivery of an additional 50 Vectron locomotives and an order for 21 fully automated metro trains for Nuremberg.

Our research and development unit Corporate Technology has come up with a successful innovation in the form of window panes that are optimized for high-frequency requirements. The solution is aimed at improving cellular reception in trains and will be used for the fi rst time in the trains on the Rhine-Ruhr Express starting in late 2018. Other highly innovative research projects deal with topics such as a systematic surveillance system for pipelines and expansive industrial facilities using autonomous drones and 3D image analysis, exploring new methods of artifi cial intelligence in order to organize production processes more effi ciently, and how solar storage technologies can optimize power grids.

The transformer plant in Weiz once again delivered innovative developments, including the world’s fi rst plug-and-play transformer. With this solution, utility companies can restore the power supply after one to three days in the event of a transformer failure – following a natural disaster, for example – instead of several weeks as is usually the case.

The energy research project Aspern Smart City Research (ASCR) at Aspern – Vienna’s Urban Lakeside reached the halfway point during the reporting period. The infrastructure that forms the basis for the research activities at the site was installed and successfully put into operation. The goal of the research is to optimize urban energy production and consumption and in this way reduce carbon dioxide emissions. All components of the energy system are incorporated using real data about residents of the Aspern development area. The fi ndings made by ASCR are intended to ultimately be applicable to entire cities and contribute to a more effi cient, more eco-friendly energy system. A demo center was opened in the Aspern development area in order to provide interested parties with insight into the research project. ASCR was named the best smart project in the world at the Smart City Expo World Congress 2016. The jury was impressed by the approach of incorporating all components of the energy system – i.e. buildings, the grid, users, and information and communication technology. The goal of the World Smart City Awards is to honor innovative solutions that have a positive impact on the lives of the residents in cities.

The energy research project in Aspern is also a good embodiment of Siemens AG’s new brand image, which now includes the new claim of “Ingenuity for life.” This new claim uses just three words to express the fact that technological expertise, resourcefulness, and innovation are in higher demand than ever before in the age of digitalization. “Ingenuity” stands for innovation and engineering prowess – in cooperation with our customers. “For life” refers to the role we want to take on in society, namely creating value on a long-term basis – for our customers, employees, and society as a whole. Just like we have been doing in Austria for 137 years now. Our involvement in the City of Vienna’s biggest environmental project is also very much in fi tting with the spirit of “Ingenuity for life.” Starting in 2020, the main wastewater treatment plant in Simmering will be able to generate the energy it needs itself using the renewable energy source of biogas. This will save roughly 40,000 metric tons of carbon dioxide per year.

As a complement to the group-wide Siemens Vision 2020 program, we continued the CEE 2020 project in our economic region during the reporting period and placed special emphasis on digitalization. This project is aimed at strengthening the market position of the countries in Central and Southeastern Europe for which Siemens Austria is responsible and developing new, innovative business models. Initial successes have already been achieved, including the market entry into the wind power segment in Croatia and large-scale projects for the automotive industry.

During the reporting period, we also commissioned the Institute for Industrial Research to develop a study regarding the importance of Siemens Austria for the business location and society. The creation and preservation of high-quality jobs and training opportunities are among the key tasks for the company in its role as one of the leading industrial and technology fi rms in the country. Siemens employed some 10,200 people in Austria during the reporting period. When one factors in the value creation chain of the input net-work (suppliers, customers, etc.), the company’s level of importance increases substantially again. From this perspective, a total of over 26,000 jobs are secured by Siemens in Austria. Siemens operates six plants in Austria. Large-scale orders that Siemens fulfi lls in Austria are linked with important value creation impetus for the country. When we complete orders here in the country, we employ around 10,000 other companies (with roughly 6,700 business partners based in Austria) and create jobs and prosperity.

To our customers and partners 6

The importance of Siemens Austria goes far beyond its role as a taxpayer and employer, however. For example, the company has been training youths with hearing disabilities – including many with migrant backgrounds – for many years now. A total of roughly 400 apprentices are receiving training in 20 occupations at the company’s own apprenticeship workshops in Vienna, Graz, Linz, and Innsbruck. Along with the training for youths with special needs described above, points of emphasis in the apprentice training pro-gram include apprenticeships with a secondary school diploma and the provision of support for women in technical occupations.

Digitalization is also impacting the working world. It is a determining factor in the development of our employees and will have a greater impact on the organization of work and individual learning in the future. Workfl ows are changing due to intelligent network-ing and the digital control of these processes. This requires more advanced IT expertise and production knowledge. The demand for workers who are capable of planning and implementing such work processes will increase, while that for workers who merely perform assigned tasks will decline.

Siemens Austria has always benefi ted from the knowledge, experience, and social competence of its employees. Their loyalty to the company allows us to think in longer cycles and to achieve the things that our customers need and that make the company stronger in line with our focus on electrifi cation, automation, and digitalization. On behalf of the Managing Board, I would like to sincerely thank all of our employees for their hard work as well as all of our customers and business partners for the trust they have placed in us and for the good collaboration.

For the Managing Board

Wolfgang HesounChief Executive Offi cer

To our customers and partners 7

A.2 Supervisory Board report

Ladies and Gentlemen,

The Supervisory Board of Siemens Aktiengesellschaft Österreich diligently fulfi lled its responsibilities as set forth in the law and in the articles of association of the company over the course of the 2016 fi scal year.

The Managing Board provided the Supervisory Board with regular and detailed reports on all relevant developments and events in the company, on its business policies, and on other fundamental aspects of business management and planning. The Managing Board also informed the Supervisory Board of important developments whenever the need arose between regular meetings.

The economic conditions during the 2016 fi scal year and especially the upswing in Central and Southeastern Europe (CEE) over the course of the reporting period led to continued moderate growth in the CEE countries for which Siemens Austria is responsible. A moderate upward trend led to revenue growth in Austria, as well. This can be attributed to a wide range of factors, although the persistent geopolitical tensions are still putting particular pressure on internationally oriented companies and the effects of spending cuts on the part of public agencies are making themselves felt. The strategic orientation in the Siemens economic region of CEE, with a focus on digitalization and the resulting opportunities for the company, was a key point of emphasis at all of the meetings. However, the company’s regional organizational structure in CEE was also assessed in the course of the CEE 2020 project, which is concentrated on the growth potential of the Divisions and the effi cient bundling of functions in CEE. The economic developments and the strategic responses by Siemens Aktiengesellschaft Österreich to the worldwide Siemens Vision 2020 program were a signifi cant focus of re-porting and occupied a large portion of the discussions. Other key topics of reporting and discussion included the carve-out of the Healthcare and Wind Power and Renewables Business Units, the purchase and sale of properties, and legal and compliance matters.

Changes in the Supervisory BoardThe term of offi ce of all shareholder representatives on the Supervisory Board expired as of the Annual Shareholders’ Meeting on December 11, 2015. Accordingly, the following shareholder representatives were re-elected at this Annual Shareholders’ Meeting.

Mr. Klaus Helmrich, Dipl.-Ing. (FH) Mr. Josef Pröll, Dipl.-Ing. Mr. Helmut Draxler, Dipl.-Ing. Dr. Ms. Monika Kircher, Mag. Dr. h. c. Mr. Karl Sevelda, Dr. Mr. Ralf P. Thomas, Dkfm. Dr. rer. pol. Mr. Norbert Zimmermann, Mag. Ms. Gabriele Zuna-Kratky, Dr.

These representatives were elected for the maximum permissible term and will thus serve until the Annual Shareholders' Meeting voting on the discharge of the Managing and Supervisory Board for the 2019/2020 fi scal year.

In a letter dated September 4, 2016, Mr. Zimmerman announced that he would step down from the Supervisory Board upon the conclusion of the Annual Shareholders’ Meeting on November 25, 2016.

Changes in the Managing BoardDuring the reporting period, Reinhard Pinzer ’s resignation from the Managing Board effective September 30, 2016, was accepted by way of circular resolution on April 18, 2016, and Wolfgang Wrumnig was appointed to the Managing Board of Siemens Aktienge-sellschaft Österreich for a period of fi ve years effective October 1, 2016.

A. To our customers and partners

To our customers and partners 8

Klaus HelmrichChairman of the Supervisory Board

To our customers and partners 9

Supervisory Board meetingsThe Supervisory Board convened for a total of four meetings during the fi scal year. The following topics were discussed:

At the fi rst meeting on December 11, 2015, the annual fi nancial statements as of September 30, 2015, were approved after their review. In addition, the appropriation of the profi t for the period, the remuneration for the members of the Supervisory Board for the 2015 fi scal year, and the fi nancial and business planning for the 2016 fi scal year were discussed and the associated proposed resolutions for the Annual Shareholders’ Meeting were drafted. The Supervisory Board passed a resolution to propose that the Annual Share-holders’ Meeting appoint Ernst & Young Wirtschaftsprüfungs- und Steuerberatungsgesellschaft m.b.H., Vienna, as the auditor for the 2016 fi scal year. At this meeting, the fi rst results from the CEE 2020 growth project were presented and the key drivers being addressed in this project were discussed. Initial success was seen in additional potential for new orders through cross-border and cross-division topics that the Divisions will focus on over the course of this year and in future fi scal years. The Supervisory Board was informed on an ongoing basis about the implementation of the Healthcare carve-out that was approved on March 20, 2015.

At the second meeting of the Supervisory Board on March 1, 2016, reports were submitted on the current economic conditions and trends that have the potential to infl uence the business of Siemens Aktiengesellschaft Österreich over the long term, as well as on key orders in Austria and the economic region of CEE. A key focus during the discussions was the demand in CEE for products and solutions in the infrastructure segment, and particularly for energy distribution and railway traffi c. Discussions were also held on the use of Industry 4.0 and the opportunities this presents, particularly for the Digital Factory Division. The Mobility Division was covered in the regular strategy reviews, with reports on orders from key customers such as Austrian Railways. During the reports, the Super-visory Board was informed that operational logistics, which was previously part of the Supply Chain Management unit, will be trans-ferred to Siemens Gebäudemanagement & -Service GmbH. No motions were fi led at this Supervisory Board meeting. The overview of functional powers of proxy granted to employees of Siemens Aktiengesellschaft Österreich over the past fi scal year presented by the Managing Board was acknowledged by the Supervisory Board.

At the third Supervisory Board meeting on June 13, 2016, the chairman of the Supervisory Board informed the members of the board that on April 18, 2016, Wolfgang Wrumnig had been appointed to the Managing Board of Siemens Aktiengesellschaft Österreich effective October 1, 2016, and that Reinhard Pinzer ’s resignation from the Managing Board effective September 30, 2016, had been accepted by way of circular resolution. The Managing Board reported on the development of business in the second quarter of the fi scal year and on the material effects of the economic developments in CEE with a focus on the opportunities and risks for Siemens in these countries with regards to major projects and the associated fi nancing models. At this meeting, the progress of digitalization in Austria and its integration into the production processes were discussed with a focus on the business areas of Siemens that are working to optimize large parts of industrial value creation chains through digitalization in order to boost customers’ competitive strength. The sale of a property in St. Pölten was approved at this meeting.

During the last Supervisory Board meeting on September 16, 2016, the Managing Board reported on the current development of business and the outlook for the fi scal year until September 30, 2016, with regards to Siemens Aktiengesellschaft Österreich and the affi liated company Siemens s.r.o., Prague. As part of the discussion of the strategic orientation, pilot projects for the use of digitali-zation software were presented and debated, and the sales concept for key customers and the use of Siemens products were analyzed based on the example of the Digital Factory Division. As part of the current reporting, a fi nal overview was provided regarding the successful conclusion of the Healthcare carve-out in Austria and the CEE countries. In addition, the long-term structural shift on the market and the resulting excess capacities in the European plant network operated by the Large Drives Business Unit in the Process Industries and Drives Division (PD LD) were discussed, and the associated request for a change in the portfolio related to the PD LD activities of Siemens Aktiengesellschaft Österreich’s SIMEA plant was approved. A report was presented on the merger of Siemens and Gamesa and the associated carve-out of the wind power business. The transfer of the wind power business of Siemens Aktien-gesellschaft Österreich and its subsidiaries to member companies of the worldwide Siemens group was approved. In addition, the purchase of the Leonding property in order to expand the plant operated by Trench Austria GmbH was approved. The distribution of responsibilities among the Managing Board members effective October 1, 2016, was also approved at this meeting.

At all four meetings, the Chief Executive Offi cer reported on legal and compliance matters.

To our customers and partners 10

Audit CommitteeThe Audit Committee of the Supervisory Board held meetings on December 11, 2015, and on June 13, 2016. At the fi rst meeting, the fi nancial statements for fi scal year 2015 were approved, and the management’s discussion and analysis was reviewed in accordance with the legal and other requirements and found to contain no cause for objection. A proposal for the appropriation of the profi ts was also presented. At the second meeting, the Audit Committee was informed about the quarterly audits and all of the auditor ’s material fi ndings. The fi nancial auditors reported on the focuses of the audit activities for the current fi scal year, with particular em-phasis on the issue of project accounting in the Mobility Division’s Urban Transport Business Unit. The control requirements and the material current and future business risks and opportunities were also discussed. An overview of the tax positions, material legal disputes, and current compliance cases was also presented. No risks to the continued existence and development of the company were identifi ed.

Annual financial statementsThe annual fi nancial statements and the management’s discussion and analysis for fi scal year 2016 were audited by the balance sheet auditor appointed in accordance with § 270 (1) of the Austrian Uniform Commercial Code (UGB), Ernst & Young Wirtschaftsprüfungs- und Steuerberatungsgesellschaft m.b.H., Vienna, and were certifi ed without qualifi cation. After reviewing the auditor ’s report and completing its own review of the fi nancial statements, the Supervisory Board also approved the fi nancial statements at its meeting on November 25, 2016. On November 25, 2016, the Supervisory Board approved the annual fi nancial statements as of September 30, 2016, the management’s discussion and analysis, and the proposal for the appropriation of profi ts as prepared by the Managing Board. The annual fi nancial statements as of September 30, 2016, are hereby approved.

The Supervisory Board thanks the Managing Board, the line managers, and all employees of the company for their great personal effort and commitment to ensuring the continued success of the company.

Vienna, November 25, 2016

For the Supervisory Board

Klaus HelmrichChairman of the Supervisory Board

To our customers and partners 11

Supervisory Board

Klaus Helmrich, Dipl.-Ing. (FH)Chairman of the Supervisory BoardMember of the Managing Board of Siemens Aktiengesellschaft,Berlin and Munich, GermanyDate of birth: May 24, 1958External board appointments (abroad)*

EOS Holding AG, Krailling, Germanyinpro Innovationsgesellschaft für fortgeschrittene Produktions-systeme in der Fahrzeugindustrie mbH, Berlin, Germany

Josef Pröll, Dipl.-Ing.Deputy ChairmanCEO of LEIPNIK-LUNDENBURGER INVEST Beteiligungs Aktiengesellschaft, Vienna, AustriaDate of birth: September 14, 1968External board appointments (in Austria)*

AGRANA Beteiligungs-Aktiengesellschaft, ViennaAGRANA Zucker, Stärke und Frucht Holding AG, ViennaAgrarmarkt Austria Marketing GesmbH, ViennaCasinos Austria Aktiengesellschaft, ViennaFK Austria Wien AG, ViennaZ&S Zucker und Stärke Holding AG, Vienna (Second Deputy Chairman)

Helmut Draxler, Dipl.-Ing. Dr.Member of the Supervisory Board and Executive Committee of the Supervisory Board of RHI AG, Vienna, AustriaDate of birth: April 25, 1950External board appointments (in Austria)*

LINZ AG für Energie, Telekommunikation, Verkehr und Kommunale Dienste, LinzOMV Aktiengesellschaft, ViennaRHI AG, Vienna (Deputy Chairman)Wiener Städtische Wechselseitige Versicherungsanstalt –Vermögensverwaltung – Vienna Insurance Group, ViennaBurgenländische Landesholding GmbH, Eisenstadt

Monika Kircher, Mag. Dr. h. c.Former Chairwoman of the Managing Board of Infi neon Technologies Austria AG, Villach, AustriaDate of birth: July 8, 1957External board appointments (in Austria)*

Andritz AG, GrazAustrian Airlines AG, ViennaKÄRNTNER ENERGIEHOLDING BETEILIGUNGS GMBH, Klagenfurt (Chairwoman)KELAG-Kärntner Elektrizitäts-Aktiengesellschaft, KlagenfurtÖLH Österreichische Luftverkehrs-Holding-GmbH, Vienna

Karl Sevelda, Dr.Chairman of the Managing Board of Raiffeisen Bank International AG, Vienna, AustriaDate of birth: January 31, 1950External board appointments (in Austria)*

Oesterreichische Kontrollbank Aktiengesellschaft, Vienna

Ralf P. Thomas, Dkfm. Dr. rer. pol.Chief Financial Offi cer of Siemens Aktiengesellschaft,Berlin and Munich, GermanyDate of birth: March 7, 1961External board appointments (abroad)*

Deutsches Rechnungslegungs Standards Committee e.V. (DRSC),Berlin, Germany (Chairman)Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V., Munich, Germany (Treasurer)

Norbert Zimmermann, Mag.Chairman of the Supervisory Board of Berndorf Aktiengesellschaft, Berndorf, AustriaDate of birth: April 13, 1947External board appointments (in Austria)*

„DELTA“ Management AG, Berndorf (Chairman) Allianz Elementar Lebensversicherungs-Aktiengesellschaft, ViennaAllianz Elementar Versicherungs-Aktiengesellschaft, ViennaAllianz Investmentbank Aktiengesellschaft, ViennaBerndorf Aktiengesellschaft, Berndorf (Chairman)Berndorf Immobilien AG, Berndorf (Chairman) Berndorf Industrieholding AG, Vienna (Deputy Chairman)Gebrüder Weiss Holding AG, LauterachSCHOELLER-BLECKMANN OILFIELD EQUIPMENT Aktiengesellschaft, Ternitz (Chairman)

Gabriele Zuna-Kratky, Dr.Director and Managing Director of Technisches Museum Wien mit Österreichischer Mediathek, Vienna, AustriaDate of birth: September 8, 1957

As of October 1, 2016This list does not include appointments to group boards.

A. To our customers and partners

A.3 Supervisory Board, Managing Board

To our customers and partners 12

Wolfgang Hesoun, Ing. Chief Executive Offi cer of Siemens Aktiengesellschaft Österreich, Vienna, AustriaDate of birth: February 15, 1960External board appointments (in Austria)*

ARE Austrian Real Estate Development GmbH, ViennaATOS Information Technology GmbH, ViennaAtos IT Solutions and Services GmbH, ViennaBundesimmobiliengesellschaft m.b.H., ViennaWIENER STÄDTISCHE VERSICHERUNG AG Vienna Insurance Group, Vienna

Wolfgang Wrumnig, Mag. (since 10/1/2016)Chief Financial Offi cer of Siemens Aktiengesellschaft Österreich, Vienna, AustriaDate of birth: January 30, 1965

Reinhard Pinzer, Dkfm. (until 9/30/2016)Chief Financial Offi cer of Siemens Aktiengesellschaft Österreich, Vienna, AustriaDate of birth: August 31, 1952External board appointments (in Austria)*

Allianz Invest Kapitalanlagegesellschaft mbH, ViennaMacquarie Investment Management Austria Kapitalanlage AG, Vienna

Honorary Presidents

Heinrich v. Pierer, Prof. Dr. iur. Dr.-Ing. E.h. Date of birth: January 26, 1941

Walter Wolfsberger, Dkfm. Dr.Date of birth: June 19, 1930

Friedrich HaglChairman of the Central Works Council of Siemens Aktiengesellschaft Österreich, Vienna, AustriaDate of birth: October 26, 1955

Valida Industrie Pensionskasse AG, Vienna (Deputy Chairman)

Andreas Ecker, Ing.Date of birth: June 27, 1968

Valida Industrie Pensionskasse AG, Vienna

Christian SchallerDate of birth: September 17, 1957

Valida Industrie Pensionskasse AG, Vienna

Friedrich Scharrer, Ing.Date of birth: July 7, 1954

Managing Board Elected by the Works Council**

* Supervisory Board appointments and similar positions. ** Elected to the Supervisory Board by the Works Council pursuant to § 110 (1) of the Austrian

Labor Constitution Act.

To our customers and partners 13

14

B.1 Page 16

Report on the development of business and economic conditions

B.2 Page 26

Report on the expected development and risks of the company

B.3 Page 28

Report on research and development (R&D)

Management’s discussion and analysis for fiscal year 2016

B.

B.1 Report on the development of business and economic conditions

B.1.1 Development of business

B.1.1.1 ECONOMIC CONDITIONS The global economy expanded just as slowly in the fi rst quarter of 2016 as in the fourth quarter of the prior year, as economic growth remained subdued in several key industrialized countries including Japan and the U.S.A. in particular. At the same time, there are signs that economic activity has stabilized in many emerging countries following the downturn in 2015. Amidst these conditions, global economic growth is projected to come in at 3 percent for 2016.1

Real gross domestic product (GDP) growth remained robust in the Eurozone at plus 0.3 percent quarter-on-quarter in both the third and fourth quarter of 2015.2 This upswing was primarily driven by a rise in private consumption. The most substantial in-creases in public consumption in the fourth quarter of 2015 were seen in Germany, Austria, and Slovenia as well as beyond the Eurozone in Sweden.2 Economic activity is expected to expand at a higher rate in the Eurozone than at the global level in 2016. Particularly in the major Eurozone countries, growth will either accelerate (France, Italy) or remain at the same level as last year (Spain, Germany). This upward trend will be bolstered by domes-tic demand. GDP growth is expected to total 1.6 percent for the Eurozone as a whole in 2016.1

In 2015, Austria’s economy posted only moderate growth for the fourth year in a row, at 0.9 percent year-on-year. Economic activ-ity hardly accelerated at all over the course of the year, with eco-nomic growth coming in at just 0.3 percent quarter-on-quarter for the third period in a row in the fourth quarter of 2015. Under the current international and economic policy conditions, real GDP growth is projected to amount to 1.5 percent this year.1 Al-though this is a relatively high growth rate, it can largely be at-tributed to one-off factors such as the calendar effect, the tax reform, and the infl ux of refugees, as the weak underlying mo-mentum of economic activity is expected to persist this year.2 Without these one-off effects, the annual GDP growth rate would be only slightly higher than that seen in the prior year. However, economic activity is expected to pick up in Austria in 2017 due to the improvement of global economic conditions.1 Private con-sumption is receiving support from the tax reform this year. As-suming the reciprocal fi nancing measures are implemented in full, the tax reform is projected to boost private consumption by roughly 0.4 percent. WIFO forecasts a total increase in private consumption of 1.8 percent for 2016. Public consumption is also expected to grow substantially (plus 0.8 percent) in 2016.2

The development of capital investments started to gain momen-tum in the spring of 2015, and this largely persisted until the end of the year. Capital investments rose by 2.8 percent compared with the previous year. The fi rst quarter of 2016 brought a gain of 0.6 percent.3 Thanks to the sizable overhang from the previous year, a further increase of 3.2 percent is anticipated for 2016.1

Construction investments, on the other hand, declined against the prior year for the third year in a row in 2015. However, an increase of 1.0 percent is expected for 2016.1 Residential con-struction in particular will likely increase substantially due to the current population growth. Overall, gross capital formation is projected to rise by 1.7 percent year-on-year in 2016 and 1.8 per-cent in 2017.2

In 2015, Austria’s foreign trade was impacted by the weak growth in the Eurozone and the emerging countries. By contrast, de-mand from the U.S.A. and Central and Eastern Europe proved to be strong. Over the course of the year, however, the growth of exports to these regions decelerated slightly, and the deteriora-tion of global economic conditions dampened export activity considerably in the fourth quarter. Some of the sales markets for Austrian exporters are experiencing a slowdown in growth this year. Along with the U.S.A. and Great Britain, this primarily per-tains to emerging markets such as China as well as many Central and Eastern European countries.

The poor global demand and the robust supply led to a decline in material prices that is dampening consumer price growth. As a result, infl ation fell to 0.9 percent in 2015.1 April 2016 brought the lowest infl ation rate seen since October 2009, at plus 0.5 per-cent.3

Conditions on the labor market are not improving. While the number of actively employed wage earners is expected to grow by 1.4 percent and 1.2 percent year-on-year in 2016 and 2017, respectively, the workforce is also expanding signifi cantly. As a result, unemployment will increase to 9.2 percent for 2016 ac-cording to the AMS defi nition.1

B.1.1.2 GENERALFrom a strategic point of view, the 2016 fi scal year was shaped by the continued implementation of the CEE 2020 growth project, which was initiated last year for the economic region of CEE. This project is part of the group-wide Siemens Vision 2020 project and is aimed at strengthening the market position in the CEE coun-tries and developing new, innovative business models. Initial successes have already been achieved under the project, such as the entry into the wind power market in Croatia and large-scale projects for the automotive industry. One of the key topics is dig-

B. Management’s discussion and analysis for Siemens Aktiengesellschaft Österreich for fiscal year 2016

1 WIFO Monthly Reports: 07/20162 WIFO Monthly Reports: 04/20163 WIFO Monthly Reports: 06/2016

Management’s discussion and analysis for fiscal year 201616

italization, with particular emphasis on Industry 4.0. The activi-ties related to the fi rst Austrian pilot plant for Industry 4.0 in Vienna’s Aspern subdivision that were started last year were continued, as were the efforts connected with the Industry 4.0 Austria platform.

The company’s brand positioning was further strengthened with the broadly based image campaign centered around the slogan “Together, we’re bringing Austria into the future” that was launched by Siemens Aktiengesellschaft Österreich.

B.1.1.3 DIVISIONS OF SIEMENS AKTIENGESELLSCHAFT ÖSTERREICH

Revenue by Division (in € millions) (prior-year fi gures in parentheses)

The campaign is aimed at positioning Siemens Austria as a com-pany that takes on responsibility for Austria and is a key factor in the country ’s value creation with pioneering ideas, research, and production facilities in Austria.

The healthcare activities were carved out as of the carve-out date of September 30, 2015, and this transaction was entered into the trade register on February 9, 2016. Please refer to the notes for fi scal year 2016 (section C.3.1 GENERAL) for more detailed infor-mation.

Siemens Industrial Manufacturing, Engineering and Applications (SIMEA) (135.5) 139.9 131.6 (36.6) Power and Gas

Energy701.1 (680.3) Management

Building 205.5 (189.0) Technologies

Digital Factory (231.3) 256.9

Process Industriesand Drives (184.7) 181.3

Wind Power 2.3 (7.2) and Renewables

Mobility (929.4) 1,003.7

Not included: Healthcare (carved out effective 9/30/2015) and others

Management’s discussion and analysis for fiscal year 2016 17

Power and Gas Division(including relevant share of service business)The focus on small- and medium-scale gas-fi red power plants and the new sales organization yielded initial results last year. One major achievement in this segment is the order for the expansion of three existing power plants for Bolivia’s state-owned power utility, Ende Andina SAM. These plants will serve to expand and secure Bolivia’s own power generation and will also form the ba-sis for the country ’s strategy of becoming an electricity exporter in Latin America. Industrial Power Plant Solutions also landed the contract for the turnkey delivery of two combined cycle power plants for RD Energy in Israel. These orders serve to secure the capacity utilization in the small- and medium-scale gas-fi red power plant segment amidst a highly competitive environment.

The Delimara combined cycle power plant in Malta, which was recognized on the company’s books last year, is scheduled to be handed over to the customer in a turnkey state in early 2017.

The power plants mentioned above will be equipped with Siemens power plant control systems from Austria. In addition, orders were received for the modernization of the turbine control

systems at EVN’s Theiß power plant and the construction of a supplemental reserve for Energie Steiermark at its Puchstraße site.

The state-of-the-art combined cycle plants in Austria increased their productive hours compared with the previous year. As a re-sult, various measures in the service segment – such as major overhauls and modernizations – were performed earlier than anticipated. Thanks to the high-quality implementation and op-timized planning of these projects, it was possible to ensure high availability. In another successful project, the partial load opera-tion of an existing combined cycle power plant was optimized in order to make the facility more competitive.

In the service segment for industrial turbines and compressors, Siemens realized several projects in collaboration with customers in the fi elds of waste incineration, air separation plants, and pa-per manufacturing. Our longstanding customers particularly ap-preciate our technical expertise and direct regional service.

Wind Power and Renewables Division(including relevant share of service business)The possibility of using Siemens wind turbines – particularly the new models that are suitable for the specifi c wind conditions in

Not included: Healthcare (carved out effective 9/30/2015) and others

* Excluding relevant employees of Siemens Industrial Manufacturing, Engineering and Applications (SIMEA)

Siemens Industrial Manufacturing, Engineering and Applications (SIMEA) (499) 472 313 (296) Power and Gas

Energy1,845 (1,828) Management

Building 700 (691) Technologies

Digital Factory (391) 400

Process Industries and Drives* (454) 468

Wind Power 11 (32) and Renewables

Mobility (2,498) 2,562

Number of employees by Division (prior-year fi gures in parentheses)

Management’s discussion and analysis for fiscal year 201618

Austria – was evaluated with several Austrian wind farm devel-opers. In general, however, these efforts were unsuccessful due to the customers’ reluctance to invest based on the current legal conditions pertaining to the construction and operation of wind farms.

The service activities for existing wind power plants were contin-ued as planned.

Energy Management DivisionThe development of new orders and revenue in the Energy Man-agement Division (EM) is still being shaped by the expansion of the grids in order to connect renewable generation capacities and offset the resulting volatility of production. Investments in connection with smart grids and the smart meter infrastructure were also a key factor during the reporting period.

For example, the rollout of smart meters at Energie AG Oberös-terreich Telekom was continued during the fi scal year, and EM will also equip the grids with hardware and software for smart metering in Tyrol (TINETZ), Carinthia (KNG), and Kapfenberg (Stadtwerke Kapfenberg) and will provide the infrastructure for the intelligent logging of the meter data.

Another highlight in the smart grids segment was an order for Wiener Netze. In order to prepare for the smart grids of the fu-ture, the Viennese distribution grid operator relies on gas-insu-lated medium-voltage systems from Siemens that can be con-trolled remotely. These plants make the operation of the power grids more effi cient and stable, allowing the increasingly strin-gent requirements to be fulfi lled on a lasting basis.

EM is also playing a key role in the City of Vienna’s biggest envi-ronmental project. The project E_OS (Energy_Optimization Sludge Treatment) 2020 focuses on the use of biogas to generate electricity. The order landed by EM includes the delivery of the switchgear control systems as well as the low- and medium-volt-age switchgears.

The successful completion of the Khorga switchgear in Georgia was a particular highlight in the export segment. Despite major challenges due to weather and soil conditions, the air-insulated turnkey system was built in a record time of 18 months.

Along with other facilities, the transformer plant in Weiz once again delivered innovative developments, including the world’s fi rst plug-and-play transformer. With this solution, utility compa-nies can restore the power supply after one to three days in the event of a transformer failure – following a natural disaster, for example – instead of several weeks as is the case for conven-

tional replacement systems. The fi rst six mobile plug-and-play transformers have already been delivered to Con Edison, the power utility for New York City.

The transformer plant in Linz enjoyed success in nearly every province in Austria. Export business to North America continues to develop positively, particularly with the longstanding cus-tomer Con Edison.

Building Technologies DivisionIn 2016, market conditions were primarily characterized by sub-dued investment activity in the area of commercially used build-ings and a signifi cantly lower number of large-scale projects. The tremendous interest in our energy effi ciency solutions related to building performance and sustainability was a positive contrast to these developments. Performance contracting, the special form of fi nancing that lays the basis for this business segment, is developing very well, which can primarily be attributed to the lively demand from the public sector. One particular highlight here is the energy effi ciency project “BIG Pool Schools Upper Austria 1,” which encompasses the technical modernization, op-timization, and operation of 20 schools. Siemens is guaranteeing the contracting agency, the Federal Ministry of Education, a re-duction of the energy costs of over 30 percent. The cloud-based platform Navigator, which stores data for over 8,000 buildings in Austria, is a noteworthy offering in this context. It allows the energy consumption of these buildings to be optimized using specifi c analysis technology.

Another positive development is the successful refi nement of our performance-based service portfolio. Our integrated solutions based on the Desigo CC building management platform are emerging as success stories in the systems business. For exam-ple, an integrated Siemens building technologies solution en-sures a safe, secure, comfortable, and energy-effi cient working environment for around 600 employees at Doppelmayr ’s head-quarters in Wolfurt.

The growth in the volume of new orders received by BT was roughly twice the market growth rate. Orders on hand are cur-rently at a record level. Revenue growth is also signifi cantly higher than the market average.

Mobility DivisionThe reporting period was marked by the postponement of key sourcing decisions in the rail vehicle segment.

Important orders were once again landed in 2016, including the second framework agreement with the Vienna-based leasing

Management’s discussion and analysis for fiscal year 2016 19

company European Locomotive Leasing (ELL) for the delivery of an additional 50 Vectron locomotives, which was concluded by the Mainline Transport Business Unit.

The Urban Transport Business Unit, which is located in Vienna and is responsible for Siemens Group’s worldwide urban trans-portation business, once again made a substantial contribution to Siemens Aktiengesellschaft Österreich’s success by securing new business. The unit landed an order for 21 fully automated metro trains (with a total of 84 cars) for Nuremberg with an op-tion for an additional 24 cars. Potsdam ordered 16 middle cars in order to expand its existing fl eet of trams. Another highlight was the receipt of an order for the expansion of Line A for VAL vehi-cles in Toulouse.

The Mobility Management Business Unit was the market leader in both the rail automation segment and the road traffi c technol-ogy segment. Along with other implementations, signal box equipment from Siemens will be used in the shunting yards in Linz and Wels and on the line between Dugo and Selo in Croatia.

The location in Graz, which is part of the Mainline Transport Busi-ness Unit, serves as a world competence center and is therefore responsible for the development and manufacture of innovative bogies and components for all rail vehicles produced by the Mo-bility Division. In 2016, 2,400 bogies and 4,000 wheelsets were delivered. A new logistics hall was opened at the site in January 2016. Creative developments, such as bogies for the new Mireo urban transportation vehicle platform of Siemens AG Deutsch-land, serve in the realization of innovative solutions for the ben-efi t of our customers. These efforts focused on saving weight and energy, improving track friendliness, and reducing the overall lifecycle costs.

Revenue increased in 2016 compared with the prior year, which can be attributed primarily to an increase in volume from orders on hand, largely due to the delivery of 29 cityjet trains for Aus-trian Railways.

Digital Factory DivisionFiscal year 2016 was another successful year for the Digital Fac-tory Division. New orders once again came in above the planned volume.

Activities in the Factory Automation Business Unit were focused on the successful market launch of the new generation of SIMATIC automation technology. Business with customers in the Austrian machine building and plant construction segment and with the portfolio element of industrial personal computers was expanded to a particularly satisfying degree.

Market conditions were diffi cult for the Motion Control Business Unit. Nevertheless, new orders were roughly equal to the prior- year level thanks to positive developments in the second half of the year. The benefi ts of the integration of drive technology into the TIA Portal have been well received by the market.

In the Industrial Controls Business Unit, the new SIRIUS Innova-tion product family was successfully launched, and many new customers were acquired thanks to the new commanding and signaling devices.

The Automotive Business Unit saw an increase in the volume of products and systems. Along with automotive customers, suppli-ers were provided with solution concepts for automation.

New orders increased substantially in Automotive’s solution busi-ness thanks to several large-scale orders. Major projects in the fi eld of automation and robotics for body-in-white facilities for Daimler AG for its new A- and B-Class models and for AUDI AG for its new A8 and A6 models as well as new orders from Magna Graz led to an all-time high in orders on hand.

With its integrated service offerings, Customer Services success-fully rounds out the product, system, and solution portfolio.

Process Industries and Drives DivisionThe 2016 fi scal year was characterized by stagnating markets. This was especially true in the mining and cement sectors as well as the oil and gas industry. Nevertheless, the Process Industries and Drives Division was able to live up the expectations placed on it.

During the reporting period, the Process Automation Business Unit landed an order for the City of Vienna’s biggest environmen-tal project – the conversion of the main wastewater treatment plant into an environmentally friendly power plant (Energy_Op-timization Sludge Treatment E_OS 2020). In addition, Process Automation was commissioned to complete numerous projects for globally active pharmaceutical companies. Together with Siemens Corporate Technology, the Business Unit operates a bi-oprocess pilot plant in Vienna which demonstrates how biopro-cesses in the pharmaceuticals and food industries can be opti-mized through the digitalization of production facilities.

The Mechanical Drives Business Unit was once again confronted with major challenges during the 2016 fi scal year. This was pri-marily due to a lack of investments in the mining and cement segments.

Management’s discussion and analysis for fiscal year 201620

The Large Drives Business Unit also faced poor market conditions during the reporting period, and the product business was hit especially hard. Nevertheless, the Business Unit met the expecta-tions that were placed on it. This was possible due to projects such as the one for Laakirchen Papier AG, in which Paper Machine 10 was put back into operation after only 80 days of downtime following a major fi re.

During the reporting period, the Oil & Gas and Marine Business Unit booked several release orders from framework agreements that were concluded in 2015. In addition, the unit’s capacity uti-lization was strong thanks to the implementation of mainte-nance and modernization projects for OMV.

Siemens Industrial Manufacturing, Engineering and Applications (SIMEA)SIMEA is Siemens Aktiengesellschaft Österreich’s unit for the de-velopment and manufacture of complex high-tech products for industrial automation applications and industrial drives. The unit operates a site in Vienna and also has a Romanian subsidiary, SIMEA SIBIU S.R.L., which operates sites in Sibiu and Buziaş.

The production output for SITOP products in the process automa-tion segment (power products) during the 2016 fi scal year was roughly equal to that seen in the prior year. In the large drives segment, the weak economic conditions are having a dampening effect on key industries. The power plant exciter segment en-joyed positive development thanks to large-scale orders.

The new developments in the SITOP range focused on system products such as PSU8600 Ultracap and PSU8600 20A Multi and Single Power. The line-up of uninterruptable power supplies was expanded to include lithium batteries.

In the large drives segment, the voltage range for the THYRIPOL exciter technology was increased to over 1,000 volts. Confi gu-rable cabinet modules were also added to the THYRIPOL portfolio to better tap the potential in the retrofi tting segment. In the load-ing technology segment, SINAMICS DCP 120 kW has emerged as a key component for rapid charging stations for electric cars, but is also used for industrial and smart grid applications.

The Romanian subsidiary is developing very well. Highlights in-cluded the construction of a location for Process Industries and Drives – Large Drives in Sibiu, the expansion of a hall at the plant in Buziaş, and the introduction of new products for Process Indus-tries and Drives – Process Automation at the Sibiu site.

A restructuring obligation for the group-wide PD2020 program was adopted in the 2016 fi scal year. Please refer to section B.2.1

EXPECTED DEVELOPMENT OF THE COMPANY for details about the program.

B.1.2 Report on the branches

On September 30, 2016, Siemens Aktiengesellschaft Österreich had branches in the following countries in relation to individual projects: Georgia, Montenegro (established on December 5, 2015), Romania, Serbia (in the process of being closed), Sri Lanka (in the process of being closed), and Syria.

B.1.3 Financial and non-financial performance indicators

B.1.3.1 FINANCIAL POSITIONNew orders for the 2016 fi scal year totaled €2.939 billion and were thus 9.2 percent higher than the prior-year fi gure (€2.692 billion) despite the carve-out of the Healthcare Business Unit. This was primarily due to the strong level of orders on hand in the Power and Gas Division, which landed key large-scale or-ders with a power plant expansion project in Bolivia (€519.9 mil-lion) and the delivery of two combined cycle power plants in Israel (€64.4 million). The most important new orders for the Mobility Division included the Nuremberg metro project (€131.4 million), the second framework agreement for Vectron locomotives with the leasing company European Locomotive Leasing (€93.2 mil-lion), the Berlin commuter railway project (€62.2 million), the Bangkok metro project (€48.5 million), and the X4 electric loco-motive order (€37.3 million). Other noteworthy new orders were received by the Energy Management Division, with the AMIS smart metering project (€25.6 million), and the Process Indus-tries and Drives Division, with the conversion of the City of Vien-na’s main wastewater treatment plant (€23.3 million).

Revenue amounted to €2.682 billion in the 2016 fi scal year, which represents an increase of 6.1 percent over the prior year (€2.527 billion). The largest nominal revenue contributions came from the Mobility and Energy Management Divisions. The most signifi cant settlements in Mobility were the Austrian Railways cityjet train project (€171.8 million), RMS Riyadh (€80.7 million), Thameslink (€64.1 million), Vectron locomotives for European Locomotive Leasing (€52.3 million), and Avenio trams for The Hague (€46.4 million). The biggest contributions to revenue in the Energy Management Division came from an order for gas-in-sulated switchgears for Egyptian Electricity Transmission Com-pany (€26.5 million) and the Imperial Valley Substitution project (€16.3 million). The highest revenue growth as a percentage was achieved by the Power and Gas Division through the settlement of the Bandirma 2 combined cycle turbine project (€80.8 mil-lion). The Digital Factory Division saw an increase in revenue, largely due to projects in the automotive industry. Revenue was also up over the prior year for the Building Technologies, Mobil-ity, and Energy Management Divisions as well as for SIMEA. As a

Management’s discussion and analysis for fiscal year 2016 21

result, the carve-out of the Healthcare Business Unit was more than offset in terms of revenue.

Foreign revenue for the reporting period came to €1.389 billion (2015 fi scal year: €1.382 billion), roughly equal to the prior-year fi gure. Along with Germany and the United States of America, the most important foreign markets included Turkey, Denmark, and Switzerland.

Earnings for the fi scal year were negatively impacted by an in-crease in production costs (€247.4 million), which can largely be attributed to the formation of provisions for expected losses from pending transactions (€160.4 million) primarily in the Power and Gas and Mobility Divisions as well as the adoption of a restructur-ing obligation for the PD2020 program in the amount of €27.2 million. Income from dividends (€211.8 million) and in-come from the sale of fi nancial investments (€46.3 million) had a positive effect on earnings in the reporting period.

The operating result for the 2016 fi scal year totaled minus €35.4 million. The interest expenses for personnel provisions were reclassifi ed from the operating result to the fi nancial result (€46.4 million) for the fi rst time.

In order to calculate the return on sales, the operating assets are adjusted to refl ect the write-downs on goodwill and orders on hand in connection with the integration of business entities in previous fi scal years (primarily Siemens Transportation Systems GmbH & Co KG, Vienna, and Siemens Transformers Austria GmbH & Co KG, Vienna). The combination of the adjusted operating assets of minus €3.2 million and the increase in revenue resulted in a much lower return on sales than in the previous year, at minus 0.1 percent.

Return on sales

Operating result*

Revenue

2016€000

2015€000

Operating result –35,448 90,675

Adjusted for write-downs on goodwill and orders on hand 32,230 41,984

–3,218–3,218 132,659132,659

Revenue 2,681,786 2,526,506

Return on sales –0.1% 5.3%

* Adjusted for write-downs on goodwill and orders on hand

Consequently, the result on ordinary operations in the amount of €185.9 million fell short of the prior-year fi gure by €13.6 million despite a signifi cant increase in income from dividends and addi-tional income from the sale of fi nancial investments. In combina-tion with an increase in the shareholders’ equity at the beginning of the fi scal year, this ultimately reduced the return on equity to 19.0 percent.

Return on equity

Result on ordinary operationsShareholders’ equity (after dividend)*

2016€000

2015€000

Result on ordinary operations 185,892 199,511

Shareholders’ equity at the startof the fi scal year 1,170,997 969,873

Less dividend –195,000 –80,000

975,997975,997 889,873889,873

Return on equity 19.0% 22.4%

* At the start of the fiscal year

The company’s total assets at the end of the reporting period were up €369.1 million compared with the end of the previous fi scal year.

On the assets side of the balance sheet, this was due to an in-crease in accounts receivable from affi liated companies in the amount of €349.1 million resulting from a rise in intragroup as-sessments.

The shareholders’ equity of Siemens Aktiengesellschaft Österreich totaled €1.162 billion for the reporting period, which represents

Management’s discussion and analysis for fiscal year 201622

a slight decline of €9.0 million compared with the prior fi scal year.

Material changes on the liabilities side of the balance sheet oc-curred in the item Provisions for termination benefi ts and post-employment benefi ts due to the change in the calculation methodology to IAS 19 (increase of €55.7 million) and in the item Other provisions (increase of €91.1 million). The increase in other provisions can be attributed primarily to the formation of a re-structuring provision for the PD2020 program and the increase in provisions for expected losses from pending transactions. The positive change in advance payments received recognized under liabilities in the amount of €207.4 million resulted from new or-ders for the expansion of Bolivian power plants in the Power and Gas Division.

Following the adjustment of the total assets to refl ect the ad-vance payments received recognized under liabilities, the equity ratio for the 2016 fi scal year comes to 44.1 percent.

Equity ratio

Shareholders’ equityAdjusted total capital*

2016€000

2015€000

Shareholders’ equity 1,161,991 1,170,997

Total assets 3,512,906 3,143,814

Less advance payments received –878,389 –596,561

2,634,5172,634,517 2,547,2532,547,253

Equity ratio 44.1% 46.0%

* Total assets less advance payments received recognized under liabilities

Net short-term current assets increased by €120.9 million during the reporting period. This can be attributed to the rise in services not yet chargeable, particularly in the Power and Gas (construc-tion of the combined cycle power plants Delimara in Malta and Pengerang in Malaysia) and Mobility (Austrian Railways railjet reproduction project) Divisions. The net increase in short-term debt amounting to €369.0 million (largely due to advances from customers and other provisions) resulted in a further reduction of working capital to minus €619.1 million.

Financing needs are covered by the available liquidity, the ex-pected net cash from operations in fi scal year 2017, and, if needed, by the use of refi nancing measures offered by the world-wide group.

Working capital (without income taxes or financial investments)

9/30/2016 €000

9/30/2015 €000

Current assets including deferred items 2,195,274 1,677,862

Less long-term current assets –22,464 –36,533

= Short-term current assets 2,172,8102,172,810 1,641,3291,641,329

Less short-term fi nancial assets –964,249 –555,693

Less short-term deferred tax assets –15,003 –12,116

Less short-term income tax receivables –110 –980

= Net short-term current assets 1,193,448 1,072,540

Debt including deferred items 2,338,843 1,960,577

Less long-term debt –471,374 –427,634

= Short-term debt 1,867,4691,867,469 1,532,9431,532,943

Less short-term fi nancial obligations 0 –1

Less short-term income tax provisions and liabilities –54,899 –89,381

= Net short-term debt 1,812,570 1,443,561

Working capital –619,122 –371,021

The long-term assets cover ratio improved to 122.8 percent in fi scal year 2016, primarily due to the reduction of fi xed assets by €148.3 million. The main causes for this were the sale of securi-ties and the scheduled write-down of goodwill and orders on hand in connection with the integration of business entities (pri-marily Siemens Transportation Systems GmbH & Co KG, Vienna, and Siemens Transformers Austria GmbH & Co KG, Vienna).

Long-term assets cover ratio

Equity* and long-term debtNon-current assets

2016€000

2015€000

Shareholders’ equity 1,161,991 1,170,997

Plus untaxed reserves 12,071 12,240

1,174,0621,174,062 1,183,2371,183,237

Long-term debt 471,374 427,634

1,645,436 1,610,871

Fixed assets 1,317,632 1,465,952

Non-current assets 22,464 36,533

1,340,096 1,502,485

Long-term assets cover ratio 122.8% 107.2%

* Shareholders’ equity plus untaxed reserves

Management’s discussion and analysis for fiscal year 2016 23

A cash fl ow of €415.3 million was generated during the reporting period.

The signifi cant increase in the operating cash fl ow compared with the previous year can mainly be attributed to the advance payments received by the Power and Gas Division in connection with the power plant projects in Bolivia.

The cash fl ow from investments primarily resulted from the sale of fi nancial investments (€157.5 million). Sales and purchases of securities during the reporting period are presented in aggre-gated form in the cash fl ow statement. No sales transactions (such as the sale of Siemens VAI Metals Technologies GmbH, Linz, in the previous year) involving shareholdings in affi liated or associated companies were completed during the reporting pe-riod. The investments in intangible assets include the acquisition of goodwill and an order backlog as part of an asset deal with Siemens Convergence Creators GmbH, Vienna, which is assigned to the Energy Management Division (€1.3 million). Investments in property, plant, and equipment totaled €26.0 million. The largest individual investments included the expansion of the as-sembly hall on Paschinger Straße in Linz (€2.1 million) as well as renovation measures at the Siemensstraße site in Vienna in con-nection with the relocation of parts of the Energy Management Division (€1.0 million). The purchase of Priamos Grundstücks-gesellschaft m.b.H, Vienna, for an amount of €13.5 million rep-resents the largest item under fi nancial assets. The item Purchase price from the purchase/sale of business units includes the pre-viously mentioned asset deal with Siemens Convergence Creators GmbH, Vienna, and the carve-out of the logistics activities into Siemens Gebäudemanagement & -Services G.m.b.H., Vienna.

The cash fl ow from fi nancing stemmed almost entirely from the dividend payment to Siemens Konzernbeteiligung GmbH, Vienna.

Cash flow statement

2016 €000

2015€000

Cash infl ow from operating activities

Profi t for the period 181,889 193,648

Depreciation on fi xed assets 66,873 90,847

Changes in social capital 70,983 –1,935

Changes in the other non-current provisions –14,629 –3,251

Other –56,844 –11,723

Other cash fl ow from the results 248,272 267,586

Changes in inventories –124,006 –65,957

Changes in receivables 18,438 –44,756

Changes in advance payments received 268,738 87,843

Changes in accounts payable –33,952 38,714

Changes in the other current provisions 110,160 –2,648

Operating cash fl ow 487,650 280,782

Cash fl ow from investments

Investments in intangible assets and property, plant, and equipment –27,361 –27,992

Proceeds from the sale of intangible assets and property, plant, and equipment 7,767 3,550

Investments in fi nancial assets* –16,289 –5,320

Proceeds from the sale of fi nancial assets* 157,462 240,780

Purchase price from the purchase/sale of business units 815 28,890

122,394 239,908

Cash fl ow from fi nancing

Dividend disbursement –195,000 –80,000

Changes in fi nancial liabilities/other 222 769

–194,778 –79,231

Disposal of cash funds from the carve-out of Siemens Healthcare Diagnostic GmbH –9

Infl ow of cash from the integration of Landis & Staefa (Österreich) GmbH 8,872

Changes in cash and cash equivalents including securities 415,257 450,331

Cash as of the balance sheet date

Cash on hand, cash in banks 9,509 2,843

Credit from investments in the group 964,249 555,693

Deposits at outside entities 583 548

974,341 559,084

* Sales and purchases of securities during the reporting period are presented in aggregated form in the cash flow statement

Management’s discussion and analysis for fiscal year 201624

B.1.3.2 INVESTMENTSSiemens Aktiengesellschaft Österreich invested €26.0 million in property, plant, and equipment during the fi scal year, 7.1 percent less than in the prior fi scal year.

B.1.3.3 EMPLOYEESDigitalization is also a determining factor in the development of all our employees and will have a greater impact on the organi-zation of work and individual learning in the future. Workfl ows are changing due to intelligent networking and the digital control of these processes using modern software technologies, which requires increased IT knowledge and production expertise. The demand for workers who are capable of planning and imple-menting such work processes at Siemens will increase, while that for workers who merely perform assigned tasks will decline. This transition also encompasses the use of social media and the in-terpretation of large volumes of data from digital environments (big data).

Along with the changes listed above, Siemens is actively working to strengthen its “ownership culture.” These efforts are aimed at continuing to increase the number of employees who own shares in Siemens (for example, under the share matching plan). The focus is on securing the company’s success for the long term, because employees will only give their all if they trust Siemens as a company. In addition, the employees once again participated in Siemens’ result in the 2016 fi scal year. The success bonus to-taled €11.3 million.

A detailed look at the development of the workforce reveals that 129 employees were hired by Siemens during the reporting pe-riod and 104 resigned from the company voluntarily. This re-sulted in a fl uctuation rate of 1.4 percent (2015: 1.3 percent). As of September 30, 2016, Siemens Aktiengesellschaft Österreich had a total of 7,594 employees (2015: 7,911) in Austria (the head-count corresponds to the number of employees regardless of their working hours), plus 368 apprentices in training (2015: 391).

Employees by function as of the balance sheet date

9/30/2016 9/30/2015

Research and development 1,037 1,009

Manufacturing, installation, maintenance, and service 4,428 4,405

Sales 1,449 1,695

Headquarters, service, and administration 680 802

TOTAL Siemens Aktiengesellschaft Österreich (without apprentices) 7,594 7,911

B.1.3.4 ENVIRONMENTAL PROTECTIONOperational environmental protection is important at every Siemens facility. All Siemens manufacturing plants in Austria are ISO 14001 certifi ed and all sites are ISO 50001 certifi ed. One focus is the prevention and reduction of hazardous waste. The quantity of such waste was cut by 132 metric tons from 781 tons in 2015 to 649 tons in the reporting period.

Siemens Aktiengesellschaft Österreich itself used energy with a carbon dioxide load of 18,776 metric tons in 2015. The further consolidation of company sites, a mild winter, a reduction in the need for natural gas and fuel, and the increased use of car-bon-free electricity resulted in a further reduction of the carbon dioxide load by 2,186 tons to 16,590 tons in 2016.

Siemens Aktiengesellschaft Österreich invested around €2.9 mil-lion in environmental protection measures during the fi scal year. This included regular expenses for exhaust gas purifi cation, water protection, waste management, nature conservation and land-scaping, and measures aimed at boosting energy effi ciency.

The carbon dioxide emissions of Siemens Aktiengesellschaft Österreich’s vehicle fl eet, which consists of passenger cars, trucks, and other utility vehicles, were reduced from an average of 176 grams per vehicle and kilometer driven in 2010 to 122.78 grams in the reporting period through the increased use of envi-ronmentally friendly and fuel-effi cient vehicles.

B.1.3.5 QUALITY MANAGEMENTThe sixth edition of the internationally recognized PM@Siemens project management standard has now been published. It incor-porates the requirements of ISO 21500 and refl ects the experi-ence gained through years of successfully executing complex projects. In the 2016 fi scal year, 106 employees successfully com-pleted the global Siemens certifi cation program for commercial or technical project managers.

The integrated management system of Siemens Aktienge-sellschaft Österreich is driven by customer and market needs, meets the legal requirements, and is oriented towards the recog-nized international system standards ISO 9001 (quality manage-ment system), ISO 14001 (environmental management system), BS OHSAS 18001 (occupational safety management system), and ISO 50001 (energy management system). Depending on the spe-cifi c needs, individual organizational units also apply further in-dustry-specifi c system standards (such as Safety Certifi cate Con-tractors or SCC). Compliance with the applicable quality standards is periodically and independently assessed in the course of sys-tem audits.

Management’s discussion and analysis for fiscal year 2016 25

B.1.4 Material events after the balance sheet date

Wolfgang Wrumnig took over as Chief Financial Offi cer of Siemens Aktiengesellschaft Österreich in place of Reinhard Pinzer effective October 1, 2016.

Shortly before the balance sheet date, a bank guarantee in the amount of €15.2 million was utilized by the regional company Siemens Sp. z o.o. for a project in the Mobility Division. The bank guarantee applies to the scope of delivery and services of Siemens Aktiengesellschaft Österreich and was paid out shortly after the balance sheet date. At the beginning of October, the customer sent a letter to the Polish regional company lodging additional warranty claims. Based on the Division management’s estimate, there was no need to increase the provision for various warranty matters that had already been formed as of September 30, 2016.

In June 2016, Siemens Aktiengesellschaft, Berlin and Munich, and Gamesa Corporación Tecnológica SA (Gamesa) signed bind-ing agreements to merge Siemens’ wind power business (includ-ing the relevant share of the service business) with Gamesa. Siemens Aktiengesellschaft, Berlin and Munich, will hold 59 per-cent of the shares in the joint venture. Therefore, Siemens Aktien gesellschaft Österreich’s wind power business will be carved out into the newly founded company Siemens Wind Power GmbH effective December 1, 2016 (pending the fulfi llment of all necessary conditions).

No other events occurred after the balance sheet date that have an impact on the fi nancial position of the company as of Septem-ber 30, 2016.

B.2 Report on the expected develop-ment and risks of the company

B.2.1 Expected development of the company

Once again in the coming fi scal year, Siemens Aktiengesellschaft Österreich sees the fi elds of digitalization, automation, and elec-trifi cation as the key source of leverage for future growth oppor-tunities.

In the Power and Gas Division, we see global growth potential for the Industrial Power Plant Solutions Business Unit in the coming fi scal year. This will also result in new business opportunities in the power plant control system segment, where we anticipate a greater future focus on digitalization.

The Energy Management Division has identifi ed growth potential for the coming years in the delivery of high voltage products and transformers in connection with the announced expansion of the power transmission grid. The continuing rollout of smart meters and the necessary meter data management infrastructure will open up additional business opportunities in combination with increased activity in the fi eld of cybersecurity.

In the coming fi scal year, the Building Technologies Division plans to expand its digital service platform in order to further increase the availability of customer systems. In addition, it plans to broaden its service portfolio. Integrated solutions based on application models and building information modeling are also on the agenda.

The postponed invitations to tender and placements of orders in the rail vehicle segment are expected to be completed in 2017. We believe market conditions will remain the same in all of the Mobility Division’s other Business Units. The Graz site plans to deliver 2,700 bogies and more than 4,500 wheelsets according to schedule.

The Digital Factory Division anticipates moderate growth in the coming year in line with the general economic development. Activities will focus on the Division’s positioning as a provider of end-to-end Industry 4.0 solutions and providing support to cus-tomers in the implementation of their digitalization strategies.

In the 2017 fi scal year, the Process Industries and Drives Division will continue to focus on the implementation of the digitalization strategy for the process industry, supported by the establishment of a global automation competence center for the food industry in Linz as well as other measures.

The top-priority development areas for SIMEA (Siemens Industrial Manufacturing, Engineering and Applications) in the 2017 fi scal year are the adaptation of the SITOP software tools for the auto-mation and digitalization of production processes to the latest technology, the migration to the new generation of THYRIPOL excitation systems, and the improvement of loading technology components to provide higher performance. The group-wide PD2020 program calls for the reduction of excess capacities in Europe and the consolidation of activities for large drives. This program is scheduled to be implemented by 2020 and will also affect portions of SIMEA’s large drives business. At the sites op-erated by the Romanian subsidiary SIMEA SIBIU S.R.L. in Buziaş and Sibiu, plans are in place to gradually expand the content produced to include the production of complete electric motors and to broaden the portfolio for printed circuit boards and cable manufacturing.

Management’s discussion and analysis for fiscal year 201626

B.2.2 Basic principles and material risks and uncertainties

B.2.2.1 BASIC PRINCIPLESSiemens Aktiengesellschaft Österreich is active in many countries around the world. The company completes major projects, offers fi nancing concepts and operator models, and constantly brings new technical innovations to the market. All of these activities involve a considerable number of business risks.

The foundation for the risk management system of Siemens is formed by a comprehensive and interactive enterprise risk man-agement (ERM) approach that is integrated into the company organization and addresses both opportunities and risks. The ERM approach is based on an internationally recognized concept: the Enterprise Risk Management – Integrated Framework (2004) developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Siemens Aktiengesellschaft Österreich evaluates and documents opportunities and risks on a quarterly basis in order to ensure early identifi cation, rapid assessment, and proper steering.

The ability of Siemens Aktiengesellschaft Österreich to constantly develop new products and services in order to keep pace with technological change in its fi elds of business plays a signifi cant role in the company’s competitive strength. The introduction and implementation of the Siemens Vision 2020 program represents a key aspect and milestone for the positive development of the company. Under this program, the company’s business opera-tions were structured into Divisions with a focus on technical in-novations and growth. At the same time, regional market pene-tration will be improved by strengthening the role of the regions.

An increased level of collaboration between universities and the research and development departments of the operating units and Corporate Technology will foster innovations and, in turn, further growth.

B.2.2.2 GENERAL RISKSSiemens Aktiengesellschaft Österreich operates in markets that are extremely competitive for our products and solutions in terms of pricing, product and service quality, product development times and time to market, customer service and fi nancing condi-tions, disruptive technologies, and shifts in market demand.

Our value creation chain encompasses all stages from sourcing, supply chain management, and production to marketing, distri-bution, and the provision of services. Operational disruptions in our value creation chain could lead to quality problems as well as potential product, occupational safety, and environmental risks.

Cost overruns or additional payment obligations represent a la-tent risk in the execution of our long-term and fi xed-price pro-jec ts, particularly in the Power and Gas, Wind Power and Renew-ables, Mobility, and Energy Management Divisions.

Our business activity is dependent upon digital technologies. The increase in threats to information security due to a higher level of professionalism in computer-related crime is giving rise to risks pertaining to the security of our products, systems, and networks and risks with regards to the confi dentiality, availability, and reli-ability of data.

Our future success also depends on our continuing ability to hire and develop highly qualifi ed employees (engineers and other specialized personnel) and foster their loyalty to the company on a lasting basis.

At this time, we do not anticipate any risks that could jeopardize the independence or the continued existence of the company in Austria.

B.2.2.3 FINANCIAL AND HEDGING INSTRUMENTSThe company employs derivative fi nancial instruments to protect against risks, primarily those arising from exchange rate fl uctu-ations. Derivative transactions hedged 100.0 percent of the cur-rency risk to which the company was exposed as of September 30, 2016 (2015: 99.5 percent).

To mitigate customer default risk, we rate the creditworthiness of all of our customers, actively manage our receivables, and agree advance payments for the construction of major systems. In addition to our hedging instruments, we also make use of facilities offered by Oesterreichische Kontrollbank, bank guaran-tees, and letters of credit for export transactions.

We encounter the risk of price changes primarily in our business in building large-scale systems. This applies especially to the prices of materials and components that we must purchase and that are determined by the prices of the necessary raw materials (such as copper) on the global market. This risk is predominantly managed by attempting to pass the conditions in our contracts with our customers on to our suppliers, and by concluding supply agreements with fi xed prices for the required period (in part in-cluding advance payments). We also employ commodity hedges to a limited extent as needed.

Siemens Aktiengesellschaft Österreich’s liquidity risk is currently assessed as being extremely low because of the company’s exist-ing liquidity and its involvement in the worldwide Siemens Group’s cash-pooling system.

Management’s discussion and analysis for fiscal year 2016 27

B.2.2.4 RISKS AND UNCERTAINTIES OF THE DIVISIONSAustria’s energy strategy and the implementation of the climate and energy targets have a material infl uence on the business of the Power and Gas, Wind Power and Renewables, and Energy Management Divisions. In the fi eld of conventional energy gen-eration, the persistently low electricity prices are having a nega-tive impact on investment activity in the Austrian energy sector. Under these challenging conditions, increasing effi ciency in the generation of power and/or heat is a key factor when it comes to staying competitive. The expansion of wind power is currently being noticeably hindered due to increasingly stringent require-ments and specifi cations on the part of countries as well as grow-ing resistance to the construction of new wind farms from mu-nicipalities and environmental protection organizations. As a result, there is an increasing level of uncertainty at Siemens regarding the realization of wind farm projects that are planned or under consideration. However, the expansion of the grids is absolutely crucial in order to connect renewable generation capacities and offset the resulting volatility of production. The introduction of smart meter infrastructure and additional func-tionalities in connection with smart grids are opening up busi-ness opportunities in the short term. At the same time, grid operators are increasingly focusing on security requirements related to cybersecurity.

The continuous further development of the energy effi ciency portfolio for the entire lifecycle of a building provides signifi cant growth potential for the Building Technologies Division. Specially developed key performance indicators tailored to the specifi c customer enable buildings to be used in an intelligent, energy -optimized manner. The center of competence in Austria, which is active across the CEE region, has years of experience and know-how in this area.

In the Mobility Division, safeguarding against system and techni-cal risks as well as safety- and security-related risks is of key im-portance. These risks are addressed through appropriate quality management in both the implementation phase and during the ongoing provision of support for the facilities and systems. The high level of investments currently being planned in the rail transport segment offers promising opportunities for Siemens’ broad portfolio in this area. One challenge here is the fi erce in-ternational competition, which could become more intense due to the potential entry of competitors. We are meeting these chal-lenges with consistent investments in innovations and the fur-ther development of our portfolio.

The Digital Factory Division entered into new growth fi elds during the reporting period by increasing its activities in the tire production and aerospace sectors. The VW emissions scandal had less of a negative impact on growth in the automotive industry

than was initially feared. The course has been set for additional growth in the future with activities related to Industry 4.0.

The Process Industries and Drives Division was able to mitigate the impact of the decline in oil production business caused by the drop in oil prices by focusing on production companies. In addi-tion, new business opportunities in the drive technology fi eld were identifi ed and developed in the CEE economic region.

B.3 Report on research and development (R&D)

B.3.1 Intellectual property rights

In 2016, Siemens Aktiengesellschaft Österreich fi led 46 new pat-ents up until September 30. The majority pertained to inventions for rail vehicles and topics related to the energy supply.

Only a portion of the patents are fi led in Austria: This year, the number was 24. Six other fi lings were submitted to the European Patent Offi ce, and 10 patents were fi led in Germany. Siemens Austria’s entire portfolio of intellectual property rights that were granted in or are valid for Austria encompasses 308 patents.

B.3.2 Research and development

Within the central research and development unit Corporate Technology (CT), roughly one hundred researchers distributed among eight research groups work on pioneering technological solutions in close cooperation with customers.

These research activities focus on topics such as the individual-ized confi guration of products, drone-based image analysis, soft-ware and system architecture for industrial applications, wireless communication, design solutions for embedded electronics, and communication networks for mobility, energy systems, and buildings.

One successful innovation that was developed together with the Mobility Division is window panes that are specially optimized for high-frequency requirements and improve cellular reception in passenger trains. Other highly innovative research projects include a systematic surveillance system for pipelines and expan-sive industrial facilities using autonomous drones and 3D image analysis as well as the development of intelligent measurement and automation technologies in order to make the production of medications more cost-effective and to digitalize the process in-dustry. Research into new methods of artifi cial intelligence as part of the HINT project is helping to make production processes

Management’s discussion and analysis for fiscal year 201628

more effi cient. Under the LEAFS project in the energy segment, Siemens specialists are working with research partners and three Austrian municipalities to test how solar storage technologies can be used to balance and optimize power grids.

Numerous research partnerships with institutions of higher learning, non-university research institutions, and partner com-panies make an important contribution to CT’s successful inno-vations. One particular highlight in this context is the collabora-tion with Graz University of Technology in connection with the Center of Knowledge Interchange (CKI).

Aspern Smart City Research GmbH & Co KG (ASCR)ASCR is made up of Siemens, Wien Energie, Wiener Netze, the Vienna Business Agency, and Wien3420 and focuses on four re-search areas: smart buildings, smart grids, smart ICT, and smart users. The overarching goal is to optimally link buildings and power distribution grids in order to meet the future requirements of the energy market. This, in turn, is intended to ensure a fail-safe energy supply and fulfi ll the basic objectives of the energy transition. The infrastructure that forms the basis for the research activities in the listed areas was installed and successfully put into operation. The fi rst prototype of an intelligent energy man-agement system for buildings and initial plug-and-automate applications aimed at supporting the future grid operations have been integrated into the test environment and are now being evaluated. Another key focus was the integration of data from various sources. The various forms of information were pro-cessed and can be used for domain-specifi c data analysis appli-cations such as the benchmark service for buildings.

Vienna, November 18, 2016

The Managing Board

Wolfgang Hesoun Wolfgang WrumnigChief Executive Offi cer Chief Financial Offi cer

Management’s discussion and analysis for fiscal year 2016 29

30

C.1 Page 32

Balance sheet as of September 30, 2016

C.2 Page 34

Income statement

C.3 Page 35

Notes for fiscal year 2016

C.4 Page 44

Changes in fixed assets

C.5 Page 46

Summary of investments in affiliated and associated companies

C.6 Page 47

Summary of accounts receivable

C.7 Page 48

Changes in untaxed reserves

C.8 Page 49

Summary of liabilities

C.9 Page 50

Auditor ’s report

Annual financial statements as of September 30, 2016

C.

Assets

9/30/2016€

9/30/2015€000

A. Fixed assets

I. Intangible assets 178,400,185 209,383

II. Property, plant, and equipment 224,625,201 245,274

III. Financial assets 914,606,260 1,011,295

1,317,631,646 1,465,952

B. Current assets

I. Inventories

1. Raw materials and supplies 81,269,984 93,611

2. Work in process 42,075,109 42,904

3. Finished goods and merchandise 12,359,368 11,222

4. Services not yet chargeable 903,482,872 757,575

5. Advance payments made 58,139,187 37,104

6. Advances received from customers –450,974,468 –471,699

646,352,052 470,717

II. Accounts receivable and other assets

1. Accounts receivable – trade 196,429,279 187,824

2. Accounts receivable – affi liated companies 1,242,670,644 893,613

3. Accounts receivable – associated companies 335,187 1,510

4. Other receivables and assets 81,030,331 104,552

1,520,465,441 1,187,499

III. Cash on hand, cash in banks 9,508,754 2,843

2,176,326,247 1,661,059

C. Deferred items

1. Deferred tax assets 15,003,000 12,116

2. Other deferred items 3,945,210 4,687

18,948,210 16,803

3,512,906,103 3,143,814

C. Annual financial statements as of September 30, 2016

C.1 Balance sheet as of September 30, 2016

Annual financial statements as of September 30, 201632

Equity and liabilities

9/30/2016€

9/30/2015€000

A. Shareholders’ equity

I. Capital stock 125,925,000 125,925

II. Capital reserves

1. Restricted 265,603,867 265,604

2. Non-restricted 344,225,406 343,136

609,829,273 608,740

III. Net profi t 426,236,743 436,332

thereof profi t carried forward: €241,332,257; 2015: €242,266 thousand

1,161,991,016 1,170,997

B. Untaxed reserves 12,071,082 12,240

C. Provisions

1. Provisions for termination benefi ts 164,665,673 115,292

2. Provisions for post-employment benefi ts 39,628,409 33,291

3. Accrued income tax 29,344,946 29,995

4. Other provisions 811,654,051 720,600

1,045,293,079 899,178

D. Liabilities

1. Bank loans – 1

2. Advances received from customers 455,939,890 248,586

3. Trade accounts payable 164,266,358 147,184

4. Accounts payable to affi liated companies 511,437,389 451,340

5. Accounts payable to associated companies 4,788,774 2,026

6. Other liabilities 143,342,193 186,450

thereof due to taxes: €26,862,921; 2015: €38,856 thousand

thereof due to social security: €14,914,257; 2015: €23,875 thousand

1,279,774,604 1,035,587

E. Deferred items 13,776,322 25,812

3,512,906,103 3,143,814

Contingent liabilities 115,636,508 74,853

Annual financial statements as of September 30, 2016 33

Fiscal years ended September 30, 2016, and September 30, 2015

2016€

2015€000

1. Revenue 2,681,786,337 2,526,506

2. Cost of sales –2,540,355,529 –2,292,925

3. Gross profi t on sales 141,430,808 233,581

4. Other operating income 63,563,383 98,783

5. Marketing and selling expenses –231,722,240 –227,787

6. Administrative expenses –4,520,037 –6,627

7. Other operating expenses –4,199,537 –7,274

8. Subtotal of lines 3 to 7 (operating result) –35,447,623 90,676

9. Income from investments in affi liated and associated companies 211,788,080 136,325

thereof from affi liated companies: €211,788,080; 2015: €136,325 thousand

10. Income from other securities and loans classifi ed as fi nancial assets 1,788,445 1,764

thereof from affi liated companies: €0; 2015: €0 thousand

11. Other interest income and similar income 611,476 487

thereof from affi liated companies: €29,537; 2015: €46 thousand

12. Income from the disposal and write-up of fi nancial assets 56,834,558 10,942

13. Expenses arising from fi nancial assets –973,672 –40,243

thereof a) write-downs: €973,672; 2015: €12,138 thousand

b) expenses arising from affi liated companies: €0; 2015: €39,146 thousand

14. Interest and similar expenses –48,708,978 –440

thereof for affi liated companies: €2,213,474; 2015: €31 thousand

15. Subtotal of lines 9 to 14 (fi nancial result) 221,339,909 108,835

16. Result on ordinary operations 185,892,286 199,511

17. Merger profi t – 4,282

18. Income tax –4,003,527 –10,145

19. Net profi t for the year 181,888,759 193,648

20. Increase in net assets due to carve-out 2,847,107 –

21. Reversal of untaxed reserves 168,620 418

22. Profi t carried forward 241,332,257 242,266

23. Net profi t 426,236,743 436,332

C.2 Income statement

Annual financial statements as of September 30, 201634

C.3 Notes for fiscal year 2016

C.3.1 General

The annual fi nancial statements of Siemens Aktiengesellschaft Österreich as of September 30, 2016, were prepared in accor-dance with the Austrian Uniform Commercial Code (UGB) as amended.

The income statement was prepared on the basis of the cost-of-sales accounting format.

Certain reportable items were aggregated in the balance sheet and the income statement. These items are disclosed in the fol-lowing notes.

The following notable transactions occurred in fi scal year 2016:

Carve-out of the healthcare activitiesEffective September 30, 2015, the Healthcare (HSC) unit of Siemens Aktiengesellschaft Österreich was carved out into Siemens Healthcare Diagnostics GmbH, Vienna. This carve-out was entered into the trade register on February 9, 2016.

The earnings and expenses incurred up to the legal effectiveness of the carve-out are contained in the corresponding items of the income statement of Siemens Aktiengesellschaft Österreich.

In total, the carve-out led to an increase in the net assets of €2,847 thousand.

Sale of financial investmentsSiemens Aktiengesellschaft Österreich sold the majority of its security holdings in fi scal year 2016. This resulted in a reduction of the book value of €111,082 thousand compared with the pre-vious year. The resulting positive sales proceeds in the amount of €46,334 thousand are reported in the fi nancial result for the reporting period.

C.3.2 Accounting and valuation principles

The fi nancial statements were prepared in accordance with gen-erally accepted accounting principles and seek to present a true and fair view of the company’s assets, liabilities, and fi nan-cial and earnings position.

The accounting and valuation principles applied in the reporting period were changed compared with the previous year with re-gards to the defi nition of production costs for the purposes of recognition; the defi ned discount rates for the volume risk per-taining to the balance sheet items Raw materials and supplies, Work in process, and Finished goods and merchandise; and the calculation methodology for personnel provisions. For more de-tailed information, please refer to the explanations regarding the specifi c balance sheet items below.

The principles of completeness and individual valuation were ad-hered to, and the going concern principle was applied.

The principle of prudence was adhered to by applying the impar-ity principle. Only those profi ts are reported that were realized and earned as of the balance sheet date, and adequate provisions have been made for all risks and potential losses foreseeable at the time that the fi nancial statements were prepared.

Intangible assets are valued at their acquisition cost less straight-line amortization. Impairment charges are recorded when the fair value on the balance sheet date is below book value and the decrease in value is other than temporary.

Property, plant, and equipment are valued at their acquisition cost or production cost, less straight-line depreciation where de-preciable, and less impairment charges where required. The de-preciation is calculated on a straight-line basis over the service life of the respective asset, with the half-year method applying in the year of acquisition. The defi nition of production costs for the valuation of self-produced fi xed assets corresponds to that ap-plied for inventories.

Annual financial statements as of September 30, 2016 35

Amortization and depreciation are based on the following rates:

%

Intangible assets 20–33.34

thereof capitalized orders on hand from integration measures

according to their progress

Goodwill 6.67

Buildings 3–20

Technical equipment and machinery 10–20

Other equipment, plant, and offi ce equipment 20–50

Special tools, low-value assets, standard tools 100

Leased equipment 12.5–25or in accordance

with the duration of the contract

Impairment charges are recorded when the fair value on the bal-ance sheet date is below book value and the decrease in value is other than temporary.

Financial assets are valued as follows: Investments in affi liated companies and other shareholdings

at historical cost, reduced where appropriate to recognize a decline other than temporary in the value of the investments and increased by impairment charge reversals when the rea-son for the impairment no longer applies. The valuation ap-proaches applied are the discounted cash fl ow method and the income approach.

Financial investments at their historical cost or at lower ex-change or market prices prevailing on the balance sheet date. Impairment charges are recorded when the fair value on the balance sheet date is below book value and the decreases in value are other than temporary.

Other loans at the lower of historical cost or discounted cash value.

Raw materials and supplies are valued at their average histori-cal cost or at the lower values prevailing on the balance sheet date.

Work in process and fi nished goods are valued at their produc-tion cost. The production costs include direct materials and direct labor as well as an appropriate portion of material and produc-tion overhead. The 2016 fi scal year marks the fi rst time that ex-penses for social benefi ts as defi ned in § 203 (3) of the Uniform Commercial Code are included. However, directly attributable interest on borrowings is not included. The calculation method-ology for the overhead rates was also adapted in the course of this change. A simulated valuation of the stocks reported in the prior year using the overhead rates calculated with the adapted methodology showed that work in process and fi nished goods would have been €7 million higher last year.

Merchandise is valued at average historical cost or at the lower value prevailing on the balance sheet date.

Services not yet chargeable are valued in the same manner as merchandise. Neither the proportional administrative and selling expenses nor interest on borrowings are capitalized. Advance payments received from customers are deducted from the fi n-ished work.

A simulated valuation of the stocks reported in the prior year using the overhead rates calculated with the adapted methodol-ogy showed that services not yet chargeable would have been €31.7 million higher last year.

Inventory risks arising from extended storage and reduced us-ability have been accounted for by reasonable allowances. The discount rates for volume risk were redefi ned in the 2016 fi scal year, which led to a slight increase in the reported inventories.

Appropriate provisions are made to cover expected losses from pending transactions.

Accounts receivable and other assets are reported at their nominal value, or in the event of foreseeable risks, at their lower fair value. Accounts receivable denominated in foreign curren-cies are covered against exchange rate risk for the most part and valued at the lower of cost or market using the average closing exchange rate on the balance sheet date. General provisions are determined on the basis of customer credit rating to cover gen-eral risks. Non-interest bearing or low-interest bearing receiv-ables are reduced to their discounted value using a standard market interest rate.

Annual financial statements as of September 30, 201636

Deferred tax assets were recognized in the amount of the ex-pected tax relief (tax rate: 25 percent) and reported under De-ferred items.

The provisions for termination benefi ts and anniversary bonuses were computed using the projected unit credit method according to IAS 19 for the fi rst time in the 2016 fi scal year. The calculation was performed using an interest rate of 1.03 percent (interest rate as of the balance sheet date) and a growth rate of 3.00 percent of the relevant assessment basis, based on the AVÖ 2008-P mortality tables for salaried employees.

The retirement age was computed based on a calculated retire-ment age of 62 years for women and 62 years for men, taking into account the transitional provisions according to the 2011 Finance Act (Budgetbegleitgesetz 2011) and the Federal Consti-tutional Law on Age Limits (BVG Altersgrenzen) for women. The end of fi nancing applied is the earlier of the calculated retirement age or the 25th year of service. Age-dependent fl uctuation rates of 1.03 percent to 6.85 percent were also applied.

The difference of €39.5 million resulting from the change in the calculation methodology was recognized in full in profi t or loss in the 2016 annual fi nancial statements.

In the previous fi scal year, the calculation was performed accord-ing to generally accepted actuarial principles, using an interest rate of 1.12 percent, based on the AVÖ 2008-P mortality tables for salaried employees. The retirement age was computed based on a calculated retirement age of 62 years for women and 62 years for men, taking into account the transitional provisions according to the 2011 Finance Act (Budgetbegleitgesetz 2011) and the Fed-eral Constitutional Law on Age Limits (BVG Altersgrenzen) for women. This calculated retirement age was also applied for the distribution of service costs when calculating the provision for termination benefi ts. Age-dependent fl uctuation rates of 1.23 percent to 6.85 percent were also applied.

The provisions for post-employment benefi ts were also com-puted using the projected unit credit method according to IAS 19 for the fi rst time in the 2016 fi scal year. The calculation was per-formed using an interest rate of 1.03 percent (interest rate as of the balance sheet date) and a growth rate of 0.00 percent or 2.00 percent of the current benefi ts, based on the AVÖ 2008-P mor-tality tables for salaried employees. The provisions for post-em-ployment benefi ts do not pertain to any active employees.

The change in the calculation methodology did not result in any difference in the 2016 fi scal year.

In the previous fi scal year, the calculation was performed accord-ing to generally accepted actuarial principles, using an interest rate of 2.69 percent (interest rate as of the balance sheet date), based on the AVÖ 2008-P mortality tables for salaried employees. Valorizations of between 0.00 and 2.00 percent of the current benefi ts were taken into account in the computation. The provi-sions for post-employment benefi ts did not pertain to any active employees.

In keeping with the concept of prudence, the item other provi-sions is composed of provisions for all other foreseeable risks on the balance sheet date in an amount deemed necessary and rea-sonable to cover them; they consist of provisions for warranties, other project-related provisions and deferred items, personnel expenses, and other risks.

The provisions for other long-term employee benefi ts were computed using the projected unit credit method according to IAS 19. The calculation was performed using an interest rate (interest rate as of the balance sheet date) of 1.03 percent (2015: 2.69 percent) and a growth rate of 3.00 percent (2015: 3.00 per-cent) of the relevant assessment basis, based on the AVÖ 2008-P mortality tables for salaried employees.

Liabilities are reported at their repayment amounts. Liabilities denominated in foreign currencies are covered against exchange rate risk for the most part and valued at the higher of cost or market using the average closing exchange rate on the balance sheet date.

The derivative fi nancial instruments used in the current fi scal year consisted of forward exchange transactions and commodity hedges. The values were calculated as of the balance sheet date based on changes in forward exchange rates and commodity fu-tures prices. No valuation units were formed with the hedged underlying transactions. Thus, the derivatives were valued ac-cording to the imparity principle. Forward exchange transactions and commodity hedges were only conducted with Siemens Aktiengesellschaft, Berlin and Munich.

Annual financial statements as of September 30, 2016 37

C.3.3 Notes to the balance sheet

Fixed assetsThe breakdown of and changes in the aggregate fi xed assets re-ported in the balance sheet for fi scal year 2016 can be found in

ANNEX 1, “CHANGES IN FIXED ASSETS”.

The item Licenses, industrial property rights, and similar rights and licenses to such rights includes the goodwill recognized pur-suant to § 203 (5) of the Uniform Commercial Code in fi scal year 2012 in connection with the merger of Siemens Transformers Austria GmbH & Co KG, Vienna, with Siemens Aktiengesellschaft Österreich. A useful life of 15 years has been applied on the basis of the expected duration of the acquired company, the stability of the industry, and the product cycles. Because of the higher loss of value for the capitalized goodwill at the beginning of the term, degressive amortization will be applied over the 15-year useful life. The book value as of September 30, 2016, was €131,682 thou-sand (2015: €156,713 thousand).

Another major portion of this can be attributed to the orders on hand capitalized in fi scal year 2010 during the integration of Siemens Transportation Systems GmbH & Co KG (STS KG), Vienna. The book value as of September 30, 2016, was €443 thou-sand (2015: €1,254 thousand). These assets are written off ac-cording to their progress.

The book value of the goodwill capitalized in connection with the integration of STS KG amounted to €45,503 thousand as of Sep-tember 30, 2016 (2015: €51,190 thousand). This is being amor-tized linearly over a period of 15 years because of the long devel-opment and product cycles in the rail industry.

Information about the most important equity holdings in affi li-ated companies and other shareholdings can be found in the

“SUMMARY OF INVESTMENTS IN AFFILIATED AND ASSOCIATED COMPANIES”

(ANNEX 2).

The other financial investments break down as follows:

9/30/2016Book value

€000

9/30/2016Fair value

€000

9/30/2015Book value

€000

9/30/2015Fair value

€000

Financial investments 23,886 24,162 134,968 180,290

Other loans 5 5 49 49

A write-up in the amount of €2,762 thousand was waived pursu-ant to § 208 (3) of the Uniform Commercial Code in the previous year. Portions of the security holdings were sold in fi scal year 2016, which eliminated the write-up potential in full.

Of the total other loans, an amount of €5 thousand (2015: €24 thousand) is due during the next fi scal year.

Accounts receivable and other assetsInformation on the structure of receivables can be seen in the

“SUMMARY OF ACCOUNTS RECEIVABLE” (ANNEX 3).

The increase in accounts receivable from affi liated companies is primarily due to the rise in intragroup assessments in the amount of €408,556 thousand.

The major items in the other receivables and assets after allow-ances are receivables from tax authorities amounting to €54,823 thousand (2015: €62,186 thousand) and a receivable from a contingent purchase price adjustment from the sale of Metals Technologies amounting to €10,000 thousand (2015: €10,000 thousand). A receivable from a subscribed performance bond amounting to €15,496 thousand was also reported in the prior year.

Other receivables and assets include income in the amount of €58,929 thousand (2015: €60,716 thousand) for which cash will be received after the balance sheet date.

Capital stockThe company’s capital stock totals €125,925 thousand (2015: €125,925 thousand) and is divided into 1,725,000 bearer shares at zero par value.

Capital reservesIn fi scal year 2016, a contribution was made by Siemens Konzern-beteiligungen GmbH, Vienna, the direct parent company of Siemens Aktiengesellschaft Österreich, to the second-tier subsid-iary Aspern Smart City Research GmbH & Co KG, Vienna, which led to an increase in the non-restricted capital reserves in the amount of €1,089 thousand.

Untaxed reservesInformation on the composition of the untaxed reserves and their development in fi scal year 2016 can be seen in ANNEX 4,

“CHANGES IN UNTAXED RESERVES”.

Annual financial statements as of September 30, 201638

ProvisionsThe total benefi t obligation for pension benefi ts that have been outsourced or are covered by planned assets amounts to €39,064 thousand. In connection with planned assets in the amount of €23,202 thousand, this results in an accumulated ben-efi t obligation of €15,862 thousand.

Other provisions consist of the following items:

2016 €000

2015€000

Personnel expenses 200,666 180,220

Project-related provisions and deferred items 314,026 231,728

Warranties 182,181 184,123

Other 114,781 124,529

811,654 720,600

The increase in the project-related provisions and deferred items can be attributed primarily to expected losses from pending trans-actions.

Provisions for personnel expenses formed in connection with re-structuring measures total €25,478 thousand (2015: €0 thou-sand).

LiabilitiesInformation on the maturity and structure of the liabilities can be found in the “SUMMARY OF LIABILITIES” (ANNEX 5).

The major items in other liabilities include liabilities to employ-ees in the amount of €82,633 thousand (2015: €88,323 thou-sand), liabilities to tax authorities totaling €26,863 thousand (2015: €38,856 thousand), and liabilities to regional healthcare authorities in the amount of €14,914 thousand (2015: €23,875 thousand).

Other liabilities include expenses amounting to €111,983 thou-sand (2015: €129,888 thousand) that will be paid after the bal-ance sheet date.

Deferred itemsThis item primarily shows deferred income from rental and main-tenance activities.

Hedging transactionsDerivative instruments were held for the purpose of hedging foreign currency risk and commodity futures for the purpose of hedging the development of raw materials prices as follows on the balance sheet date and in the previous year:

Currency hedging transactions

Forward currency

sales€000

Forward currency

purchases €000

Positive fair values

€000

Negative fair values

€000

9/30/2016 841,901 396,726 6,112 –27,320

9/30/2015 352,419 105,579 4,569 –22,137

Commodity hedges

Hedging volume Sale in

€000

Hedging volume

Purchase in €000

Positive fair values

€000

Negative fair values

€000

9/30/2016 194 7,219 119 –186

9/30/2015 0 13,140 8 –947

The positive market values were not recognized in accordance with the imparity principle. Other provisions were formed in the amount of €27,506 thousand (2015: €23,084 thousand) for the negative fair values.

Annual financial statements as of September 30, 2016 39

Contingent liabilities and obligations arising from the use of property, plant, and equipmentThe contingent liabilities break down as follows:

2016 €000

2015€000

Bills of exchange 412 0

Guarantees 16,700 16,700

Warranty obligations 98,525 58,153

115,637 74,853

Guarantees were provided for affi liated companies in the amount of €57,283 thousand (2015: €51,480 thousand). They break down as follows:

2016 €000

2015€000

Guarantees 16,700 16,700

Warranty obligations 40,583 34,780

57,283 51,480

No collateral for third-party obligations had been provided as of the balance sheet date or in the previous year.

Obligations arising from the use of property, plant, and equipment not recognized on the balance sheetPayment obligations from the utilization of property, plant, and equipment not recognized on the balance sheet from rental, ten-ancy, and lease agreements will total €13,859 thousand (2015: €25,074 thousand) for the coming fi scal year and €59,184 thou-sand (2015: €76,557 thousand) for the next fi ve fi scal years. The liabilities to affi liated companies in this item will amount to €4,671 thousand (2015: €4,682) for the coming fi scal year and €23,355 thousand (2015: €23,162 thousand) for the coming fi ve fi scal years.

C.3.4 Notes to the income statement

RevenueRevenue can be broken down as follows by sales market:

2016€000

2015€000

Domestic revenue 1,292,857 1,144,431

Foreign revenue 1,388,929 1,382,075

thereof EU €949,699 thousand (2015: €1,003,884 thousand)

thereof non-EU €439,230 thousand(2015: €378,191)

2,681,786 2,526,506

Revenue can be broken down according to operations as follows:

2016€ millions

2015€ millions

Power and Gas 131.6 36.6

Wind Power and Renewables 2.3 7.2

Energy Management 701.1 680.3

Building Technologies 205.5 189.0

Mobility 1,003.7 929.4

Digital Factory 256.9 231.3

Process Industries and Drives 181.3 184.7

Siemens Industrial Manufacturing, Engineering and Applications 139.9 135.5

Healthcare 44.4 110.1

Other 15.1 22.4

2,681.8 2,526.5

Annual financial statements as of September 30, 201640

Manufacturing, selling, and administrative expensesThe functional costs (manufacturing, selling, and administrative expenses) were computed from the operational accounts accord-ing to cost center allocation. They can be broken down into the following cost categories:

2016€000

2015€000

Cost of raw materials, supplies, and merchandise 1,599,946 1,358,119

Cost of purchased services 310,094 318,773

Personnel expenses 793,027 744,843

Amortization and depreciation on intangible and tangible assets 74,613 87,450

Changes in valuation allowances and other provisions 120,842 58,979

Other operational expenses/expense adjustments 33,259 26,709

Other internally produced and capitalized assets –1,022 –1,046

Inventory changes –154,161 –66,488

2,776,598 2,527,339

The manufacturing, selling, and administrative expenses can be broken down as follows:

2016€000

2015€000

Manufacturing expenses 2,540,355 2,292,925

Marketing and selling expenses 231,723 227,787

Administrative expenses 4,520 6,627

2,776,598 2,527,339

The manufacturing expenses are presented less funding received for research.

PersonnelAverage number of employees (full-time equivalents; not includ-ing employees completing compulsory military service, employ-ees on parental leave, and apprentices):

2016 2015

Wage earners 2,334 2,396

Salary earners 5,145 5,342

Total 7,479 7,738

Total personnel expenses can be broken down as follows:

2016€000

2015€000

Wages 134,765 121,375

Salaries 452,225 437,753

Expenses for termination benefi ts and contributions to employee welfare funds 46,045 17,774

Expenses for pension plans 6,453 13,223

Expenses for mandatory social security contributions, payroll-related benefi ts, and other mandatory contributions 138,799 141,381

Other personnel-related expenses 14,740 13,337

793,027 744,843

The wages and salaries include expenses for the changes in the provision for anniversary bonuses in the amount of €740 thou-sand (2015: income in the amount of €1,626 thousand) recog-nized through profi t or loss.

The expenses for termination benefi ts and contributions to em-ployee welfare funds include expenses for termination benefi ts in the amount of €40,403 thousand (2015: €12,273 thousand).

The expenses for pension plans include pension fund contribu-tions and income from the changes in the provision for other long-term employee benefi ts in the amount of €6,704 thousand (2015: €14,106 thousand) as well as pension payments and in-come from the changes in the provision for post-employment benefi ts in the amount of €251 thousand (2015: €883 thousand).

The expenses for termination benefi ts and post-employment benefi ts can be broken down as follows:

2016€000

2015€000

Members of the Managing Board and managerial employees as per § 80 (1) AktG 2,506 1,796

Other employees 44,350 23,700

46,856 25,496

Annual financial statements as of September 30, 2016 41

Other operating incomeOther operating income can be broken down as follows:

2016€000

2015€000

Income from the sale of fi xed assets excluding fi nancial assets 6,914 3,095

Income from the release of provisions 55,987 66,751

Other income 662 28,937

63,563 98,783

The decline in income from the release of provisions resulted primarily from changes in provisions for warranties.

Other income declined compared with the previous year in the amount of the proceeds from the sale of the Metals Technologies activities.

Income from financial assetsThis item contains the income from the disposal of securities as previously described in the section “GENERAL” as well as im-pairment charge reversals on investments in affi liated companies.

Expenses arising from financial assetsThe fi gure for the previous year consists primarily of the loss re-sulting from the disposal of Primetals Technologies Austria GmbH, Linz, in the amount of €28,105 thousand as well as im-pairment charges on investments in affi liated companies.

Interest and similar expensesThe provision for termination benefi ts, post-employment bene-fi ts, anniversary bonuses, and other long-term employee benefi ts as of September 30, 2016, was recognized in accordance with IAS 19. The option to recognize the actuarial interest (€46,406 thou-sand) in the fi nancial result was employed.

In the previous year, the full amount of the changes in the per-sonnel provisions was recognized in the operating result.

In fi scal year 2016, the interest expenses include negative interest from investments in the global group in the amount of €2,173 thousand.

Income tax The company has been a member of the tax group parented by Siemens Konzernbeteiligungen GmbH, Vienna, pursuant to § 9 KStG since fi scal year 2005.

The fi scal results of the group members are allocated to the group parent. Assessments as defi ned in the tax consolidation agreement were applied for fi scal earnings adjustments between the group parent and each individual group member. Under this agreement, group members transferring a tax loss to the group parent (Siemens Konzernbeteiligungen GmbH, Vienna) receive compensation in the amount of 16 percent of the loss. Group members transferring a positive tax result benefi t from the group’s aggregate advantage on a pro rata basis.

Taxes on income include the tax expense from group allocations in the amount of €2,567 thousand (2015: €12,731 thousand). Of the total income taxes, €920 thousand (2015: €5,370 thousand) pertain to earnings from previous periods. The income from the change in deferred tax assets totals €2,887 thousand (2015: €2,616 thousand).

Increase in net assets due to carve-outThe carve-out of Healthcare (HSC) into Siemens Healthcare Diag-nostics GmbH, Vienna, resulted in a demerger gain of €5,061 thousand. The result in the amount of €2,214 thousand contained in the various income and expense items of Siemens Aktiengesellschaft Österreich’s income statement until the rec-ognition of the carve-out was neutralized with the item Increase in net assets due to carve-out, such that a positive result from the carve-out in the amount of €2,847 thousand is reported under this item.

2016€000

2015€000

Increase in net assets due to carve-out

HSC demerger profi t 5,061 0

HSC result transfer –2,214 0

2,847 0

Changes in reservesAs in the previous year, the full changes in the untaxed reserves in the amount of €169 thousand (2015: €418 thousand) are sub-ject to tax assessment.

Expenses for the financial auditor Due to the inclusion of Siemens Aktiengesellschaft Österreich in the consolidated fi nancial statements of Siemens Aktienge-sellschaft, Berlin and Munich, and the disclosure of the expenses for the fi nancial auditor in these consolidated fi nancial state-ments, this information is not being provided in these annual fi -nancial statements.

Annual financial statements as of September 30, 201642

* Elected to the Supervisory Board by the Works Council pursuant to § 110 (1) of the Austrian Labor Constitution Act.

Annual financial statements as of September 30, 2016 43

MANAGING BOARD

Wolfgang Hesoun, Ing.Chief Executive Offi cer

Wolfgang Wrumnig, Mag.Chief Financial Offi cer (since 10/1/2016)

Reinhard Pinzer, Dkfm.Chief Financial Offi cer (until 9/30/2016)

Remuneration of board members

2016€000

2015€000

Members of the Managing Board 2,508 2,254

Members of the Supervisory Board 145 139

The company is a consolidated affi liate of Siemens Aktienge-sellschaft, Berlin and Munich. The company is included in the consolidated accounts of Siemens Aktiengesellschaft, Berlin and Munich, which prepares consolidated fi nancial statements for the largest and smallest group of companies. Due to the inclusion of Siemens Aktiengesellschaft Österreich in the consolidated fi -nancial statements of Siemens Aktiengesellschaft, Berlin and Munich, Siemens Aktiengesellschaft Österreich is not required to prepare separate consolidated fi nancial statements. The group’s fi nancial statements are fi led with the commercial register of the Vienna Commercial Court under the number 60562 m.

Vienna, November 18, 2016

Siemens Aktiengesellschaft ÖsterreichThe Managing Board

Wolfgang Hesoun Wolfgang WrumnigChief Executive Offi cer Chief Financial Offi cer

C.3.5 Other information

Supervisory Board, Managing Board

SUPERVISORY BOARD

Klaus Helmrich, Dipl.-Ing. (FH)Chairman of the Supervisory Board

Josef Pröll, Dipl.-Ing.Deputy Chairman of the Supervisory Board

Helmut Draxler, Dipl.-Ing. Dr.

Monika Kircher, Mag. Dr. h. c.

Karl Sevelda, Dr.

Ralf P. Thomas, Dkfm. Dr. rer. pol.

Norbert Zimmermann, Mag.

Gabriele Zuna-Kratky, Dr.

ELECTED BY THE WORKS COUNCIL*

Friedrich HaglChairman of the Central Works Council

Andreas Ecker, Ing.

Christian Schaller

Friedrich Scharrer, Ing.

Figures in €000 Acquisition/production costs

Fixed asset itemsAs of

10/1/2015 Transfers Additions

I. Intangible assets

1. Licenses, industrial property rights, and similar rights and licenses to such rights 157,587 – 356

2. Goodwill 353,170 – 993

510,757 0 1,349

II. Property, plant, and equipment

1. Land, equivalent rights to property, and buildings including buildings on land not owned

a) Property value 16,484 – –

b) Building value 248,968 712 1,526

2. Technical equipment and machinery 234,764 6,882 6,164

3. Other equipment, plant, and offi ce equipment 182,648 1,859 11,880

4. Leased equipment 15,186 – 334

5. Construction in process 10,079 –8,825 4,505

6. Advance payments 628 –628 1,603

708,757 0 26,012

III. Financial assets

1. Investments in affi liated companies 2,179,741 – 34,458

2. Investments in associated companies 14,269 – 3,087

3. Financial investments 137,730 – 39,466

4. Other loans 49 – –

2,331,789 0 77,011

3,551,303 0 104,372

1 Including €1,786 thousand for the shares in Aspern Smart City Research GmbH & Co KG, Vienna, held in trust

C.4 Changes in fixed assets

Annual financial statements as of September 30, 201644

Net book value

DisposalsAs of

9/30/2016

Cumulated amortization/depreciation

As of9/30/2016

As of9/30/2015

Amortization/depreciation

in periodWrite-upsin period

46,344 111,599 111,079 520 1,433 1,268 –

– 354,163 176,283 177,880 207,950 31,063 –

46,344 465,762 287,362 178,400 209,383 32,331 0

80 16,404 1,306 15,098 15,178 – –

568 250,638 125,587 125,051 129,919 6,890 –

2,125 245,685 189,077 56,608 61,431 17,709 –

19,576 176,811 156,513 20,298 24,563 17,272 –

8,103 7,417 7,208 209 3,476 411 –

– 5,759 – 5,759 10,079 – –

– 1,603 – 1,603 628 – –

30,452 704,317 479,691 224,626 245,274 42,282 0

30,846 2,183,353 1,300,439 882,914 868,801 – 10,501

2 17,354 9,553 7,801 7,477 2,7601 –

153,310 23,886 – 23,886 134,968 – –

44 5 – 5 49 – –

184,202 2,224,598 1,309,992 914,606 1,011,295 2,760 10,501

260,998 3,394,677 2,077,045 1,317,632 1,465,952 77,373 10,501

(Annex 1)

Annual financial statements as of September 30, 2016 45

Company, registered headquarters

(Negative)equity capital

€000Shareholding

%

Profit/loss for the period

€000

Lastreporting

date

Aspern Smart City Research GmbH & Co KG, Vienna 13,452 44.10 –5,772 12/31/2015

Aspern Smart City Research GmbH, Vienna 34 44.10 1 12/31/2015

KDAG Beteiligungen GmbH, Vienna 5,520 99.00 2,266 9/30/2015

Oil and Gas ProServ LLC, Baku 5,430 25.00 402 12/31/2015

Priamos Grundstücksgesellschaft m.b.H., Vienna 60 94.00 679 12/31/2015

Siemens (Austria) Proiect Spital Coltea S.R.L., Bucharest –82 100.00 0 12/31/2015

Siemens d.d., Zagreb 17,495 98.24 3,993 9/30/2015

Siemens d.o.o. Beograd, Belgrade 23,699 100.00 3,038 9/30/2015

Siemens d.o.o. Podgorica, Podgorica 300 100.00 11 12/31/2015

Siemens d.o.o. Sarajevo, Sarajevo 2,549 100.00 –842 9/30/2015

Siemens d.o.o., Ljubljana 4,719 100.00 4,183 9/30/2015

Siemens EOOD, Sofi a 9,506 100.00 5,213 12/31/2015

Siemens Gebäudemanagement & -Services G.m.b.H., Vienna 2,837 100.00 2,756 9/30/2015

Siemens Healthcare d.o.o. Beograd, Belgrade 1 – 100.00 – –

Siemens Healthcare d.o.o., Zagreb 1 – 100.00 – –

Siemens Healthcare S.R.L., Bucharest 1 – 98.36 – –

Siemens Healthcare, s.r.o., Prague 6 100.00 0 9/30/2015

Siemens Liegenschaftsverwaltung GmbH, Vienna 39,741 99.89 840 9/30/2015

Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna 153,281 100.00 4,645 9/30/2015

Siemens Personaldienstleistungen GmbH, Vienna 8,573 100.00 295 9/30/2015

Siemens S.R.L., Bucharest 25,525 98.37 18,019 9/30/2015

Siemens s.r.o., Bratislava 51,394 100.00 29,022 9/30/2015

Siemens Transformer (Guangzhou) Co. Ltd., Guangzhou 60,186 63.00 5,682 12/31/2015

Siemens Ukraine, Kiev 2,437 100.00 156 12/31/2015

Siemens Zrt., Budapest 20,916 100.00 11,402 9/30/2015

Siemens, s.r.o., Prague 107,966 100.00 50,249 9/30/2015

SIMEA SIBIU S.R.L., Sibiu 5,163 99.93 654 9/30/2015

SMATRICS GmbH & Co KG, Vienna 4,408 50.00 –3,259 12/31/2015

VA TECH T & D Co. Ltd., Riyadh 1,497 51.00 –114 9/30/2015

VVK Versicherungs-Vermittlungs- undVerkehrs-Kontor GmbH, Vienna 2,757 100.00 57 9/30/2015

1 Established in fiscal year 2016 – no annual financial statements were available at the time Siemens Aktiengesellschaft Österreich’s financial statements were being prepared

(Annex 2)

C.5 Summary of investments in affiliated and associated companies

Annual financial statements as of September 30, 201646

Figures in €000Net book value

9/30/2016

Time tomaturity morethan one year

Generalprovisions

Net book value 9/30/2015

Time tomaturity morethan one year

Generalprovisions

1. Accounts receivable – trade 196,429 9,550 564 187,824 22,938 611

2. Accounts receivable – affi liated companies

– Advances paid 144,819 – – 185,504 – –

– Trade 129,051 – – 146,163 – –

– Financial deposits 964,249 – – 555,693 – –

– Other receivables and assets 4,552 – – 6,253 – –

1,242,671 0 0 893,613 0 0

3. Accounts receivable – associated companies

– Advances paid – – – – – –

– Trade 335 – 2 1,510 – 13

– Financial deposits – – – – – –

– Other receivables and assets – – – – – –

335 0 2 1,510 0 13

4. Other receivables and assets 81,030 12,261 0 104,552 12,647 0

Total receivables 1,520,465 21,811 566 1,187,499 35,585 624

No receivables were collateralized by bill of exchange as of September 30, 2016, or September 30, 2015. (Annex 3)

C.6 Summary of accounts receivable

Annual financial statements as of September 30, 2016 47

As of10/1/2015 Transfers Additions Retirements Releases

As of9/30/2016Figures in €000

Valuation reserve based on special depreciation

a) Special write-downs pursuant to §§ 8 and 122 EStG 1972

Buildings 2 – – – 1 1

2 0 0 0 1 1

b) Transferred undisclosed reserves pursuant to § 12 (1) EStG

Developed land 11,806 – – 80 88 11,638

Undeveloped land 427 – – – – 427

Technical equipment and machinery 0 – – – – –

Other equipment, plant, and offi ce equipment 5 – – – – 5

12,238 0 0 80 88 12,070

Untaxed reserves 12,240 0 0 80 89 12,071

(Annex 4)

C.7 Changes in untaxed reserves

Annual financial statements as of September 30, 201648

Time to maturity Time to maturity

Net book value 9/30/2016

up toone year

one tofive years

Net book value 9/30/2015

up toone year

one tofive yearsFigures in €000

1. Bank loans 0 0 0 1 1 0

2. Advances received from customers 455,940 455,940 0 248,586 248,586 0

3. Trade accounts payable 164,266 164,266 0 147,184 147,184 0

4. Accounts payable to affi liated companies

– Advances from customers 419,256 419,256 – 347,330 347,330 –

– Trade 42,757 42,639 118 31,596 31,479 117

– Other liabilities 49,425 43,795 5,630 72,414 67,117 5,297

(thereof due to taxes) 25,554 25,554 – 59,386 59,386 –

511,438 505,690 5,748 451,340 445,926 5,414

5. Accounts payable to associated companies

– Advances from customers 3,193 3,193 – 645 645 –

– Trade 1,596 1,218 378 1,361 1,361 –

– Other liabilities – – – 20 20 –

4,789 4,411 378 2,026 2,026 0

6. Other liabilities 143,342 103,918 39,424 186,450 143,107 43,343

Liabilities 1,279,775 1,234,225 45,550 1,035,587 986,830 48,757

No liabilities were collateralized by bill of exchange as of September 30, 2016, or September 30, 2015, and no liabilities had a remaining time to maturity of greater than fi ve years.

(Annex 5)

C.8 Summary of liabilities

Annual financial statements as of September 30, 2016 49

C.9 Auditor’s report*

Report on the financial statementsWe have audited the accompanying fi nancial statements of Siemens Aktiengesellschaft Österreich, Vienna, for the fi scal year from October 1, 2015, to September 30, 2016. These fi nancial statements comprise the statement of fi nancial position as of September 30, 2016, the income statement for the fi scal year ended September 30, 2016, and the notes.

Management’s responsibility for the financial statements The Company’s management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with Austrian Generally Accepted Accounting Principles and for such internal control as management determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error.

Auditor ’s responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accor-dance with Austrian Standards on Auditing. Those standards require that we comply with International Standards on Auditing – ISA. In accordance with International Standards on Auditing, we are required to comply with professional requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity ’s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity ’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a reasonable basis for our audit opinion.

OpinionOur audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the fi nancial state-ments comply with legal requirements and present fairly, in all material respects, the fi nancial position of the Company as of September 30, 2016, and its fi nancial performance for the year then ended in accordance with Austrian Generally Accepted Accounting Principles.

Comments on the management reportPursuant to statutory provisions, the management report is to be audited as to whether it is consistent with the fi nancial state-ments and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor ’s report also has to contain a statement as to whether the management report is consistent with the fi nancial statements.

In our opinion, the management report is consistent with the fi nancial statements.

Vienna, November 18, 2016

Ernst & YoungWirtschaftsprüfungsgesellschaft m.b.H.Wirtschaftsprüfungsgesellschaft m.b.H.

Mag. Johanna Hobelsberger-Gruber Mag. Marainer JeschkeCertifi ed Public Accountant Certifi ed Public Accountant

* In the event that these financial statements are published or distributed in any form other than that audited (the unabridged German version), such as abridged versions or translations into other lan-guages, our audit opinion may not be cited or reference made to our audit without our prior ap-proval.

Annual financial statements as of September 30, 201650

Annual financial statements as of September 30, 2016 51

This report contains forward-looking statements about the course of our business and fi nancial performance and about develop-ments that will affect Siemens. These statements may be identi-fi ed by words such as “expects,” “looks forward to,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “project,” or words of similar meaning. We may also make forward-looking statements in other reports, presentations, and documents that are sent to customers as well as in press releases. Our represen-tatives may also occasionally make forward-looking statements on an oral basis. Such statements are based on the current expec-tations and certain assumptions of the management of Siemens, all of which are subject to numerous effects beyond the infl uence of Siemens. They are subject to a variety of risks, uncertainty, and factors that are described in publications such as section B.2

REPORT ON THE EXPECTED DEVELOPMENT AND RISKS OF THE COMPANY of this annual report prepared in accordance with the Austrian Uniform Commercial Code, as well as other risks not specifi ed here. Should one or more of these risks or uncertainties materialize, or should underlying expectations and assumptions prove incorrect, the

actual results, performance, and achievements of Siemens may diverge materially (in a negative or positive sense) from those described or expressly or implicitly stated in the forward-looking statement. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Because of rounding, individual fi gures in this report and other documents may not exactly add up to the indicated total, and the indicated percentages may not exactly refl ect the values to which they refer.

The English version of this report is a translation from the origi-nal German report. In the event of discrepancies, the German version shall take precedence over the English translation.

For technical reasons, there may be differences between the accounting documents contained in this report and those pub-lished in compliance with legal requirements.

Disclaimer and forward-looking statements

Annual financial statements as of September 30, 201652

Siemens Aktiengesellschaft Österreich

(in € millions) 2012 2013 2014 2015 2016 YOY

New orders 2,100.8 3,054.7 2,769.1 2,692.4 2,939.2 9.2%

Revenue 2,872.5 2,735.4 2,661.7 2,526.5 2,681.8 6.1%

Exports (as a percentage of revenue) 42.0% 59.0% 49.9% 54.7% 51.8% –5.3%

Investments1 45.7 37.8 30.2 28.0 26.0 –7.1%

(as a percentage of revenue) 1.6% 1.4% 1.1% 1.1% 1.0%

Employees2 8,932 8,284 8,017 7,911 7,594 –4.0%

Personnel expenses 743.4 831.0 746.9 744.8 793.0 6.5%

(as a percentage of revenue) 25.9% 30.4% 28.1% 29.5% 29.6%

Research and development expenses 256.5 166.7 182.1 177.9 180.2  1.3%

Education and training expenses 14.8 16.6 14.9 14.8 13.3 –10.0% 

1 Property, plant, and equipment including equipment leased to customers

2 Number of employees as of September 30, 2016, not including employees completing compulsory military service, employees on parental leave, and apprentices

This report uses gender-free formulations whenever possible. Should a gender-specific formulation be used in the interests of readability, it refers equally to both genders unless a specific individual is being referred to.

Five-year overview

Concept, coordination, and implementationProject management Christian Holler-Berger Art direction Jutta Duschet Production Jutta Duschet and Christian Holler-Berger Typesetting and lithography R12 Spannbauer Ges.m.b.H. & Co KG Translation LanguageLink Sprachdienste GmbH Printing Offset 5020 Druckerei & Verlag Ges.m.b.H.

Photo creditsAll pictures are copyright Siemens Aktiengesellschaft Österreich.

We would like to thank: Andi Bruckner (photo on page 5) Siemens Aktiengesellschaft, Berlin and Munich (photo on page 9)

External orders for the annual reportwww.siemens.at/gborder

Internal orders for the annual reportE-mail: johann.schindler@siemens.com

Please always include your mailing address and complete Org-ID. with your orders.

This annual report is also published in German. Electronic versions will be available for download in English and German at www.siemens.at/presse starting in February 2017.

Legal noticeThe names and designations used in this report may be registered trademarks. Their use by other parties may violate the rights of their owners.

Additional information

Key figures 2012–2016

016556T2_Siemens_GB_2016_Umschlag_en.indd 2-3 01.02.17 11:11

Media proprietor and publisher Siemens Aktiengesellschaft Österreich Siemensstraße 90 1210 Vienna, Austria

For additional information, please contact our press office Telephone: +43 (0)51707 20222 Fax: +43 (0)51707 53000 (costs dependent upon provider) E-mail: kontakt.at@siemens.com

www.siemens.at/presse

Printed in Austria 01/17 Typesetting and printing errors excepted

siemens.at

Facts and Figures 2016Siemens Aktiengesellschaft Österreich

DIGITALIZATION

ELECTRIFICATIONAUTOMATION

016556T2_Siemens_GB_2016_Umschlag_en.indd 4-1 01.02.17 11:11