Siemens 2007 Annual Report Download - page 140

140 Management’s discussion and analysis
The underlying assumptions of our EVA calculations are continuously
reviewed. For fi scal 2007, we adjusted the key assumptions for our EVA calcula-
tion, particularly with respect to the market risk. This resulted in the following
fi gures for Weighted Average Cost of Capital (WACC):
To determine the capital charge for each Operations Group, the respective
percentage is applied against the average net operating assets of the Operating
Group. Average net operating assets were determined on a monthly basis, princi-
pally based on net capital employed. With the transition to IFRS in fi scal 2007,
Siemens modifi ed the defi nition of net capital employed. In particular liabilities
deducted within net capital employed became defi ned more comprehensively.
Prior year data are adjusted for incentive and reporting purposes to maintain a
meaningful comparison.
The cost of risk-oriented equity of the Financing and Real Estate Groups was
also adjusted to the changes in our business environment. The following table
illustrates the current and the former percentages of our cost of equity for these
Groups:
WACC
Operations Groups 2007
Automation and Drives (A&D) 7.5%
Industrial Solutions and Services (I&S) 8%
Siemens Building Technologies (SBT) 8%
Osram 7.5%
Transportation Systems (TS) 8%
Power Generation (PG) 8%
Power Transmission and Distribution (PTD) 8%
Medical Solutions (Med) 8%
Siemens IT Solutions and Services (SIS) 8.5%
Cost of equity
Financing and Real Estate Groups 2007
Siemens Financial Services (SFS) 8.5%
Siemens Real Estate (SRE) 7.5%