Power Transmission and Distribution in China

Andreas Matthe, Siemens PTD China

Siemens Days in ChinaMarch 16th , 2005

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Safe Harbor Statement

This presentation contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified either orally or in writing by words as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products or technologies by other companies, lack of acceptance of new products or services by customers targeted by Siemens worldwide, changes in business strategy and various other factors. More detailed information about certain of these factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com and on the SEC’s website, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as anticipated, believed, estimated, expected,intended, planned or projected. 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.

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Country set up

Xinjiang

Tibet

Gansu

Qinghai

Yunnan

Guizhou

GuangxiGuangdong

Hunan Jiangxi

Fujian

Hubei Anhui

Jiangsu

ZhejiangSichuan

Chongqing

Shanxi

Inner Mongolia

Heilongjiang

Jilin

Liaoning

Shandong

Beijing

TianjinHebei

Henan

ShaanxiNingxia

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

Head office in Beijing

17 Sales offices ( +7 )

2 R&D Center M / EA

10 Manufacturing centers

Head counts

Service

R&D

Manufacturing

Sales

Others 430

410

1,222

173

65

2,300:

Shanghai

PTD HQ

PTD sales offices

New PTD sales offices

JV / WOFE

Hainan

New sales offices in: Shenyang, Kunming, Nanning, Nanjing, Hangzhou, Hefei, Urumuqi

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Operating Companies in China

Systems Products

Siemens Share in %

SHVC 51% Siemens High Voltage Circuit Breaker

MWBS 65%Trench China, Shanghai

TFBL 65%Trench Fushun Bushings, Lioning

SSAL 100%Siemens Surge Arresters

SSLS 55%Siemens Switchgear

SVIW 78%Siemens Vacuum Interrupter

STCL 90%Siemens Transformer

Our overall investment until 2005: > 100 million Euro

Siemens Share in %

SHVS 51%Siemens High Voltage Switchgear

SPTS 50%Siemens Power Transmission Solution

SPA 100%Siemens Power Automation

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

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Market in China

66 87 142223

319338 440

806

0

500

1000

198019851990199520002001 …2005 …2010

China’s total installed capacity

Source: China Electricity Council

GW

3033

4045

0

10

20

30

40

50

2003 2004 2006 2008

Source: Siemens PTD Estimation

Huge demand in

infrastructure

development

provides excellent

business potential

for PTD

PTD market volumeBillion RMB

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

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Market demand

Average growth rate in T&D market is expected at ~ 8 - 9% per year for the next years

Huge demand in infrastructure projects

500 kV grid needs further development to decrease regional unbalance

Grid extension into 1000 kV AC and ± 800 kV DC transmission in planning first projects expected in 2008 to stabilize network operation and increase transport capacities

Ongoing investment in industrial projects like automotive, chemical, oil & gas

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

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PTD in China at a glance

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

Fiscal Year 2004

Revenues* € 410 million

17 (+7)

2,300

Number of offices

Employees*

Number of Operating Companies 10

* PTD China incl. Operating companies

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Reference Projects in China

• HVDC long distance transmission project Tianshenqiao-Guangzhou 1997• Shanghai Urban-Rail Development Co.,

• HVDC long distance transmission project Three Gorges1999• Three Gorges

2001 • HVDC long distance transmission project Guizhou-Guangzhou I

2002

• BASF YPC’s Integrated Petrochemical Site, 110kV/35kV, 150 MVAtransformers, 35kV GIS switchgears, low voltage switches

• Tian-Guang Ping Guo, thrystor controlled series compensation,2x55 MVAr, 500 kV; fixed series compensation 2x350 MVAr, 500 kV

• Hechi, fixed series compensation, 2x762 MVAr, 500 kV

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

2003 • Tongbai Pump Storage Station, 500 kV/360 MVA transformers, 500 kV + 35 kV circuit-breakers and disconnecting switches

• Huaneng Taicang Power Plant Phase II, 550 kV/63 kA 8DQ1 GIS switchgear

• Tibet Railway, 246 panels of medium voltage GIS switchgear 8DA10,8 panels of medium voltage GIS switchgear NXPlusC

• HVDC long distance transmission project Guizhou-Guangzhou II,500 kV DC, 1500 MW per pole, Package II + III,28 units of 500 kV/285 MVA Transformers and 6 units of smoothing reactors

2004

2005 • Shanghai Metro, 8DA10 medium voltage GIS switchgear for Metro Line 8 and 9• Sichuan Power, Fixed Series Compensation, 3x 350 MVA, 500kV

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Prospects for Power Market Development

Trans-regional network projects 2006-2010 from State Grid Corporation

Northeast

Tibet

North China

Northwest

South China

Central ChinaEast China

500 kV DC• Three Gorges - Shanghai No.2 line

• Guizhou-Guangdong No. 2 line• Yimin (Inner Mongolia) –

• Suizhong(Liaoning)-Tianjin• Yinnan (Ningxia)-Shenyang

750 kV DC• Yunnan-Guangdong

750 kV AC• Qinghai- Gansu• Ningxia-Shaanxi

800 kV DC • Xiangjiaba, Xiluodu - East of

1000 kV AC• Shanxi - Hunan

China

Shenyang

Source: State Grid Corporation China

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Our actions to support profit and growth in China

Increase local presence by openingnew sales offices (+ 7 in 2005)

Increase production capacity (7 new/extended factories in 2005)

Further localization of products and systems (GIS switchgears, protection relays)

Use Siemens One potential with industry, power generation and railway projects

Strategic Acquisition to complete our portfolio or to increase market presence (Trench, Shaw Power Technologies Inc., Shenyang IT, VA Tech)

Expansion of R&D activities(Energy automation, medium-voltage, EHV development)

We are implementing all strategic levers of 12-point program for profit and growth in China

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

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SSLS Siemens Switchgear Ltd., Shanghai

SiemensPTD in China

MarketEnvironment

Facts & Figures

Business Opportunities

Portfolio:

• Vacuum circuit-breakers

• Air-insulated switchgears

• Contactors

Number of Employees: 503

Floor space: 35,000 m2

Production Capacity: 10,000 CB6,000 SG

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Reconciliations and definitions

”Group profit from Operations” is reconciled to ”Income before income taxes” of Operations under ”Reconciliation to financial statements” on the table ”Segment information.” See ”Financial Reports/Fiscal 2004, Quarter 4 / Financial Statements” at our Investor Relations website under www.siemens.com

”ROE” (Return on equity) margin for SFS was calculated as SFS’ income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS as of September 30, 2004 was €1.015 billion. See also Siemens’ Form 20-F at our Investor Relations website under www.siemens.com

The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.

Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business, (using Net capital employed for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA means that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA means that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.

A reconciliation of EVA may be found on our Investor Relations website under www.siemens.com

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Siemens Investor Relations Team

Marcus Desimoni +49-89-636-32445

Dr. Constantin Birnstiel +49-89-636-36165

Irina Pchelova +49-89-636-33693

Christina Schmöe +49-89-636-32677

Webpage: http://www.siemens.com Investor Relations

e-mail: investorrelations@siemens.com

Fax: +49-89-636-32830