Supply Chain Finance Program for capital efficiency optimization at Siemens Siemens AG All rights reserved. siemens.com

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Supply Chain Finance Program for capital

efficiency optimization at Siemens

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Siemens` Global presence

Close to customers all over the world

10.9 115,000

69

Revenue (in billions of €)2

15% of total worldwide Employees3

33 % of total worldwide Key production facilities4

24 % of total worldwide

18.8 70,000

76

14.4 62,000

74

38.7 211,000

139 Americas

Germany

Europe, C.I.S.,

1

_{Africa, Middle East}

(including Germany)

Asia,

Australia

All figures refer to continuing operations.

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Building Technologies

World leader in building technologies headquartered in Zug

The division Building Technologies is the world’s

leading provider of safe, secure, energy-efficient

and eco-friendly buildings and infrastructures. As a

technology partner, consultant, service provider,

systems integrator and product vendor, we have

offerings for fire safety, security, building

automation, heating, ventilation, air

conditioning and energy management.

WWW.SIEMENS.COM/AR/BUILDING-TECHNOLOGIES

FY 2014 FY 2013

Orders in millions of € 5,587 5,769

Revenue in millions of € 5,569 5,754

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Collaborative Financial Supply Chain Management

Supplier

Siemens

Customer

Liabilities

Supply Chain

Finance

Receivables

Siemens Credit

Warehouse

Investments

Sales

Financing

Investments

Supplier

Investment

Financing

Exemplary collboration in the supply chain

Liabilities

Supply Chain

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Siemens DPO in a competitors’ Benchmark

70 43 43 70 Honeywell 61 32 34 63 Emerson 70 50 51 71 Schneider 59 46 45 58 Philips 94 52 59 101 ABB 33 44 69 58 General Electric 99 67 36 68 Siemens 70 46 45 68 Median 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th Benchmark Comparison Cash Conversion Cycle DIO Comparison DPO Comparison DSO Comparison

Working Capital Benchmark : Study Results

70 43 43 70 Honeywell 61 32 34 63 Emerson 70 50 51 71 Schneider 59 46 45 58 Philips 94 52 59 101 ABB 33 44 69 58 General Electric 99 67 36 68 Siemens 70 46 45 68 Median 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th Benchmark Comparison Cash Conversion Cycle DIO Comparison DPO Comparison DSO Comparison 70 43 43 70 Honeywell 61 32 34 63 Emerson 70 50 51 71 Schneider 59 46 45 58 Philips 94 52 59 101 ABB 33 44 69 58 General Electric 99 67 36 68 Siemens 70 46 45 68 Median 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th Benchmark Comparison Cash Conversion Cycle DIO Comparison DPO Comparison DSO Comparison

:

Source: The Hackett Group 2010 REL working capital _{DSO = days sales outstanding} DPO = days payables outstanding DIO = days inventory outstanding

Cash Conversion Cycle = DSO + DIO - DPO

-4th 3rd 2nd 1st Leading Source: The Hackett Group 2010 REL working capital

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Motivation to establish a SCF-Programme

Lieferanten

Customer

Supplier

„Longer pay terms

without change in

prices“

„That‘s not

possible“

„ok! We accept the

longer terms“

„That‘s not

possible“

„ok! We get the

Cash flow from our

Suppliers“

„Only if we discuss

prices“

Profitability

Supplier

Profitability

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Supply Chain Finance Programm

Durch Siemens’ Finanzstärke profitieren -Powered by

Orbian-Supply Chain Finance Programm

Durch Siemens’ Finanzstärke profitieren -Powered by

Orbian-Siemens SCF Program makes use of a technology platform that links Orbian-Siemens and its

Suppliers of goods or services with a 3

rd

_{party financier. This solution allows the suppliers}

to benefit from early payments at very low cost.

supplier

Bank

_supplier

Siemens Supply Chain Finance Program (SCF) is designed to give selected Siemens’

suppliers access to cash at Siemens’ financing rates to

§

Increase suppliers’ cash

§

Reduce suppliers’ cost of capital

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5. SCF Program purchases receivables

by paying after 2 business days

6. Payment of Invoices at

maturity date to Program

1. Supplier delivers goods/services

and invoices Siemens

€

Supply Chain Finance Program

Leveraging Siemens Financial Strength -Powered by Orbian-Supply Chain Finance Program

Leveraging Siemens Financial Strength -Powered by Orbian-

€

Supply Chain Finance@Siemens at work

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Bank #1

Bank #2

Bank #3

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Standard Payment Term with Supply Chain Finance

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Challenges of the Supply Chain Finance program

Procurement

§ Payment terms not equally in focus

§ Abstract promise to pay = loss of rights

§ General reluctance to discuss finance topics

§ Multidivisional - suppliers

Accounting

§ Due Diligence to ensure that trade

payables will not be reclassified to

financial debt

IT

§ Modification of complex IT-environment

§ Number of systems to be implemented

§ Profit Center Accounting

Legal

§ Payment to new owner of

receivables rather than to supplier

Treasury

§ Negative impact on buyer‘s credit line for the benefit of the

supplier

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Supply Chain Finance fosters a win win situation in

the supply chain

Improve Cash Flow

Get paid fast, 2 business days following Siemens’

approval of the invoice

Optimize Working Capital

Non-recourse cash drastically reduces Days Sales

Outstanding (DSO)

Enhance Debt Capacity

Reduced reliance on debt can improve overall cost of

debt

Increased Transparency & Reduced Costs

Reduce processing and collection costs by viewing

all the approved invoices

Supplier

Improve Cash Flow

Extend supplier pay terms (ex. New standard: 60 days

net)

Reduce Supply Chain Risk

Inject cash into supply chain via low cost early payment

Strengthen Supplier Relationship

Differentiate from competitors and build supplier loyalty

Streamline Processes

Reduce number of payment terms and methods

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Where are we at Siemens with the

Supply Chain Program today?

Over 1500 supplier

participating in the

program

Continuously growing

amount of transactions

and volume

Roll out status

Eligible supplier countries and currencies

ü

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Thank you for your attention