Combined Management Report 9. Siemens AG The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz). In fiscal 2023, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are influenced significantly by the results of subsidiaries and investments Siemens AG owns either directly or indirectly. The business development of Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing explanations for the Siemens Group apply also for Siemens AG. The Supervisory Board and the Managing Board propose to distribute a dividend of €4.70 per share of no par value entitled to the dividend, from the unappropriated net income of Siemens AG for the fiscal year ended September 30, 2023 amounting to €3.8 billion. The proposed dividend represents a total payout of €3.7 billion based on the estimated number of shares entitled to dividend at the date of the Annual Shareholders’ Meeting. We intend to continue providing an attractive return to our shareholders. This includes striving for a dividend per share that exceeds the amount for the preceding year, or at least matches it. For fiscal 2024, we expect that net income of Siemens AG will be sufficient to fund the distribution of a commensurate dividend. As of September 30, 2023, the number of employees was around 47.300. 9.1 Results of operations Statement of Income of Siemens AG in accordance with German Commercial Code (condensed) Fiscal year % Change (in millions of €) 2023 2022 Revenue 19,660 17,390 13% Cost of sales (13,671) (12,502) (9)% Gross profit 5,989 4,888 23% as percentage of revenue 30% 28% Research and development expenses (2,084) (1,785) (17)% Selling and general administrative expenses (3,701) (3,283) (13)% Other operating income (expenses), net (53) (306) 83% Income (loss) from investments, net 4,734 4,204 13% Interest and other financial income (expenses), net (128) (605) 79% Income from business activity 4,758 3,115 53% Income taxes (298) 498 n/a Net income 4,460 3,612 23% Profit carried forward 250 185 35% Allocation to other retained earnings (950) (185) >-200% Unappropriated net income 3,760 3,613 4% On a geographical basis, 75% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 17% in the Asia, Australia region and 8% in the Americas region. Exports from Germany accounted for 57% of overall revenue. In fiscal 2023, orders for Siemens AG amounted to €16.1 billion. The increases in revenue, cost of sales and research and development expenses were most evident at Digital Industries. The R&D intensity (R&D costs as a percentage of revenue) was 10.6%, slightly above the level in fiscal 2022. The R&D activities of Siemens AG are fundamentally the same as for its corresponding business activities within the Siemens Group. R&D expenses in both periods related mainly to Digital Industries. On an average basis, Siemens AG employed 7,100 people in R&D in fiscal 2023. The increase in selling and general administrative expenses was due mainly to higher selling expenses led by Digital Industries. Other operating income (expenses), net, included mainly a loss of €0.2 billion from a disposal in connection with the carve-out of business activities into the Innomotics GmbH, partly offset by €0.1 billion income from an intragroup service contract. Fiscal 2022 included mainly expenses of €0.2 billion from the intragroup service contract and expenses of €0.1 billion for the recognition of a provision related to guarantees and expected obligations from consortium contracts. Income (loss) from investments, net included mainly income from investments of €2.9 billion (fiscal 2022: €4.8 billion) and income from profit transfer agreements with affiliated companies of €1.6 billion (fiscal 2022: €3.5 billion). Additionally, in fiscal 2023 Siemens AG recorded a gain of €0.2 billion from the sale of a part of its stake in Siemens Energy AG and a gain of €0.2 billion from the reversal of an impairment on the remaining stake in Siemens Energy AG. The remaining stake held directly by Siemens AG amounted to 21.0% as of September 30, 2023. These gains were partly offset by a loss of €0.2 billion from an impairment on a stake in Thoughtworks Holding Inc. For comparison, in fiscal 2022 Siemens AG recorded losses of €4.0 billion from impairment of investments, which included an impairment of €2.9 billion on Siemens AG’s stake in Siemens Energy AG, Germany. Interest and other financial income (expenses), net included a negative interest result of €0.6 billion compared to a positive interest result of €0.4 billion a year earlier, which was driven by the effect of higher interest rates on intragroup-financing activities. Fiscal 2022 included impacts of €0.6 billion in connection with allowances on receivables from affiliated companies related to business activities in Russia, expenses from the recognition of provisions for risks relating to derivative financial instruments of €0.4 billion and a higher negative interest component of €0.3 billion from changes in pension and personnel-related provisions. 33