Siemens Energy : Annual Report 2022 including Consolidated Financial Statements for the Siemens Energy Group, together with the Combined Management Report of Siemens Energy AG and the Siemens Energy Group, as of September 30, 2022 (IFRS)

Siemens Energy

Annual Report 2022

siemens-energy.com

Siemens Energy Group at a glance

Revenue distribution (location of customer) (in billions of €)

EMEA

14.7

therein Germany 2.7

Americas

8.5

therein U.S. 4.4

Adjusted EBITA margin before Special items

1.3%

Order Backlog (in billions of €)

97

Free cash flow pre tax (in millions of €)

1,503

29.0

Asia, Australia

5.8

therein China 1.5

Adjusted EBITA	Net income (loss)
(in millions of €)	(in millions of €)
(75)	(647)

Orders	Book-to-bill ratio
(in billions of €)
38.3	1.3

Basic EPS	Employees ∅
(in €)	(in thousands)
(0.56)	91

Content	1	Introduction to the Annual Report
		2	Siemens Energy Group at a glance
		5	Letter from the Executive Board
		7	Our leadership team
		8	About this Report
	2	Combined Management Report

10 Business description

14 Financial performance system

1. Business performance in fiscal year 2022

1. Results of operation

1. Net assets, liabilities and equity

1. Financial position

1. Report on expected developments

1. Report on the internal control and risk management system and material risks and opportunities

1. Explanations to the Financial Statements of Siemens Energy AG (Holding)

1. Group non-financial statement

1. Takeover-relevantinformation

1. Further information

3 Consolidated Financial Statements

1. Consolidated Statements of Income
2. Consolidated Statements of Comprehensive Income
3. Consolidated Statements of Financial Position
4. Consolidated Statements of Cash Flows
5. Consolidated Statements of Changes in Equity
6. Notes to Consolidated Financial Statements

4 Additional information

1. Responsibility Statement
2. Independent Auditor's Report

127 Independent auditor's report on a limited assurance engagement

129 Report of the Supervisory Board

135 Corporate Governance pursuant to Sections 289f and 315d of the German Commercial Code

149 Compensation Report pursuant to Section 162 of the Stock Corporation Act of Siemens Energy AG

for fiscal year 2022

1. Independent auditor's report on the audit of the compensation report prepared to comply with Sec. 162
   AktG ["Aktiengesetz": German Stock Corporation Act]
2. TCFD Index

Introduction to the Annual Report

Siemens Energy Group at a glance	2
Letter from the Executive Board	5
Our leadership team	7
About this Report	8

5

Letter from the Executive Board

On the morning of our 2022 Annual General Meeting, February 24, 2022, the war in Ukraine began. Not only does this day represent a deep cut in the European security architecture, it is also the day that the issue of energy security became the center of public interest - in Germany, in Europe and in many regions of the world.

The affordable and reliable supply of energy is at the heart of the debate. Nevertheless, we can only achieve energy security in the long term if electricity is not only affordable and reliably available, but also generated sustainably. The latest report by the Intergovernmental Panel on Climate Change (IPCC) has made this very clear once again: Without major changes, global warming will rise to 3.2° C on average. To limit it to 1.5° C, greenhouse gas emissions must be reduced by 45% by 2030 compared to 2019 levels - mainly through a significant reduction in fossil fuels.

Siemens Energy has the technologies and capabilities needed to shape the energy transition today. As an energy technology company with a team of about 91,000 employees worldwide, we support our customers along the entire value chain. Represented in more than 90 countries, around one sixth of the world's electricity generation is based on our technologies.

In the past fiscal year, we laid the foundations for a new corporate structure. Officially launched on October 1, 2022, this will ensure clearer structures, a holistic market access, operational excellence and improved transparency regarding the capital market. With our Gas Services, Grid Technologies and Transformation of Industry business areas, we have consistently positioned our business along three pillars: low- or zero-emission power generation, transport and storage of energy, and reduction of greenhouse gas emissions and energy consumption in industrial processes.

With our majority stake in Siemens Gamesa Renewable Energy S.A. (SGRE), we also have a leading supplier of onshore and offshore wind energy in-house. On May 21, 2022, we announced a voluntary tender offer for all outstanding shares in SGRE which has been authorized by Spain's National Securities Market Commission ("CNMV") on Novem- ber 7, 2022. Following the successful completion of the transaction, we intend to delist SGRE from the Spanish stock exchanges and fully integrate it into Siemens Energy. The planned integration will allow us to actively address the current challenges at SGRE. In addition, a successful delisting of SGRE will enable us to simplify structures and to establish a holistic market approach. As a result, we expect to realize estimated cost synergies of up to €300 million annually within three years of full integration. For Siemens Energy, this integration is an important strategic step. Our goal is to play a decisive role in shaping the energy transition as a leading energy technology company.

The course has therefore been set for a successful, profitable future for our company. Only as a strong and profitable company can we make a decisive contribution to the energy transition and thus to energy security worldwide. But how did Siemens Energy develop in the past fiscal year?

Fiscal year 2022 was a challenging year for our company. At the beginning of the year, we pointed out the expected impairments of global supply chains in our forecast. The war in Ukraine further intensified this negative dynamic. The result was additional supply bottlenecks, further increases in raw material prices and energy costs, and rising inflation. At the same time, we saw continued strong demand for our products and solutions.

Following the outbreak of war in Ukraine, we reacted quickly and discontinued almost all business activities in Russia. The restructuring of our business activities in Russia continued and resulted in a charge of €200 million, which was reported under special items. The restructuring of Siemens Energy's business activities in Russia continues to progress and the measures are expected to be completed without further significant financial impacts in the first quarter of fiscal year 2023.

At €38 billion, Siemens Energy's order intake increased significantly compared with the previous year (2021: €33 billion). The order backlog again exceeded the record level of the previous year and was €97 billion at the end of the fiscal year (2021: €84 billion). Siemens Energy's revenue was €29 billion (2021: €28 billion), a moderate decline on a comparable basis (adjusted for currency translation and portfolio effects). Our Adjusted EBITA was sharply lower at minus €75 million (2021: minus €12 million). Adjusted EBITA before Special items deteriorated to €379 million (2021: €661 million). This resulted in an after-tax loss at Siemens Energy of minus €647 million (2021: minus €560 million) and corresponding negative basic earnings per share of minus €0.56 (2021: minus €0.63).

Our SGRE reporting segment contributed to the deterioration in earnings. Various factors, such as the launch of the onshore 5.X platform or higher costs due to price increases for raw materials and pressure on logistics chains, have negatively impacted profitability at SGRE. These factors were mainly responsible for the need to adjust our revenue and earnings guidance for Siemens Energy as a whole. We have responded to the situation at SGRE. Jochen Eickholt, previously a member of the Executive Board of Siemens Energy, a proven expert in turning around companies in difficult situations, took over as CEO on March 1, 2022.

In contrast, the Gas and Power (GP) segment demonstrated resilience in fiscal year 2022. The basis for this was the consistent execution of our Accelerating Impact program since our company became indepen- dent. Through efficiency enhancements, process optimization and portfolio streamlining, we strengthened our operating performance and cut costs. The stronger order intake of GP also demonstrates the central importance of our portfolio for the energy transition.

However, it is also clear that we cannot be satisfied with the development of our share price. In the coming fiscal year, we will therefore offer our investors greater transparency. The levers for this are our new corporate structure, the planned delisting of SGRE and its integration, and the consistent improvement of our operating performance.

Siemens Energy - Annual Report 2022