Combined Management Report Siemens Healthineers expects to achieve comparable revenue growth of 4.5% to 6.5% in fiscal 2024, and to contribute solidly to the profit and profit margin of our Industrial Business. SFS anticipates further gradually improved earnings before taxes in fiscal 2024 compared to fiscal 2023. Return on equity (ROE) (after tax) is expected to be in the target range of 15% to 20%. Revenue growth For comparable revenue, we expect the Siemens Group to achieve comparable revenue growth in the range of 4% to 8%. Furthermore, we anticipate that orders in fiscal 2024 will exceed revenue for a book-to-bill ratio above 1. As of September 30, 2023, our order backlog totaled €111 billion, and we expect conversion from the backlog to strongly support revenue growth in fiscal 2024 with approximately €43 billion of past orders converted to current revenue. For expected conversion of order backlog to revenue for our respective segments, see chapter 3 Segment information. Profitability Outside our reportable segments, we expect Portfolio Companies to achieve an operational margin of more than 5%. Results of Siemens Energy Investment depend on the performance of Siemens Energy and are excluded from our forecast for EPS pre PPA. We anticipate that Siemens Real Estate will continue with real estate disposals depending on market conditions. Results for Innovation are expected on the prior-year level, which was a negative €0.2 billion. The negative results related to Governance declined to €0.5 billion in fiscal 2023; we expect a further improvement in fiscal 2024. Centrally carried pension expense are expected to be on the prior-year level, which was a negative €0.1 billion. Amortization of intangible assets acquired in business combinations is expected in a range of €0.7 billion to €0.8 billion in fiscal 2024 based on our current business portfolio. Financing, eliminations and other items, which were a negative €0.3 billion in fiscal 2023, are expected to be on the prior-year level depending on market developments. We anticipate our tax rate for fiscal 2024 to be in the range of 24% to 29%. This assumption does not take into consideration possible impacts from potential major tax reforms. Our forecast for net income takes into account a number of additional factors. We assume solid project execution continues in fiscal 2024. We plan to keep the ratio of R&D expenses to revenue, which was 8% in fiscal 2023 at approximately the level in fiscal 2024. We expect the ratio of selling and general administrative expenses to revenue, which was 18% in fiscal 2023 to remain approximately on this level in fiscal 2024. Severance charges, which were €0.4 billion in fiscal 2023, are expected at a lower level in fiscal 2024. Given the above-mentioned assumptions, we expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA excluding Siemens Energy Investment to a range of €10.40 to €11.00 in fiscal 2024, along with a corresponding increase in net income. For comparison, fiscal 2023 EPS pre PPA was €9.93 excluding €0.84 in EPS pre PPA from Siemens Energy Investment. Capital efficiency For fiscal 2024, we expect ROCE to be in our target range of 15% to 20%. Capital structure We aim in general for a capital structure of up to 1.5; we expect to achieve this in fiscal 2024. Cash conversion rate For fiscal 2024, we expect a cash conversion rate that contributes to reaching our target of 1 minus the annual comparable revenue growth rate of Siemens over a cycle of three to five years. 8.1.3 Overall assessment Our outlook for the Siemens Group for fiscal 2024 is based on the assumption that geopolitical tensions do not further increase. Under this condition, we expect our Industrial Business to continue its profitable growth. For the Siemens Group we expect comparable revenue growth in the range of 4% to 8% and a book-to-bill ratio above 1. We expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA excluding Siemens Energy Investment to a range of €10.40 to €11.00 in fiscal 2024, up from EPS pre PPA excluding Siemens Energy Investment of €9.93 in fiscal 2023. This outlook excludes burdens from legal and regulatory matters. Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and opportunities described below or if our expectations and assumptions do not materialize. 8.2 Risk management 8.2.1 Basic principles of risk management Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific industries and responsibilities, while being consistent with the overall policy. 23