Siemens 2010 Annual Report Download - page 123

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

nual growth rate for organic revenue of %, which is two times
the level of real global GDP growth reported by IHS Global
Insight, Inc. for this period.
Under Fit, our primary measure for the conversion of
revenue to income was profit margin, applied and reported at
the Sector, Division and Cross-Sector Business levels. For our
Sectors, Divisions and for Siemens IT Solutions and Services,
profit margin was calculated as the ratio of profit to revenue;
except as indicated below, profit for these businesses was de-
fined consistently with the segment measure for profitability
in the “Notes to Consolidated Financial Statements,” i.e., earn-
ings before financing interest, certain pension costs, and in-
come taxes, and also may exclude various categories of items,
which are not allocated to these businesses since management
does not regard such items as indicative of their performance.
For purposes of comparison with the target margin ranges,
profit for the Diagnostics Division and the Healthcare Sector
was adjusted for purchase price allocation (PPA) effects and
integration costs.
In contrast, and in line with common practice in the financial
services industry, the Fit capital efficiency measure for
SFS was return on equity (ROE), defined as Income before in-
come taxes (i.e., the segment measure for profitability) divided
by the average allocated equity for SFS.
Our Fit target ranges and the fiscal  performance
results of our Sectors, Divisions and Cross-Sector Businesses
are shown below. The impairment charges mentioned above
in relation to Diagnostics reduced profit margin for the Heath-
care Sector by . percentage points and profit margin for the
Diagnostics Division by . percentage points in the current
fiscal year.
Our Fit capital efficiency measure was return on capital
employed (ROCE). This measure assesses our income genera-
tion from the point of view of our shareholders and creditors,
who provide us with capital. Siemens’ weighted average cost
of capital (WACC) is currently estimated at approximately .%.
ROCE under Fit was defined as Income from continuing
operations (before interest) divided by average capital em-
ployed. For further information, see “Additional information for
supplemental financial measures.” Our Fit target was to
achieve ROCE in the range of  – %. ROCE in fiscal  was
.%. The total of the above-mentioned impairment charges
Revenue growth 
FY 2010 (3)%
FY 2009 0%
1 Adjusted for currency translation and portfolio effects.
Revenue current period
– 1 × 100%
Revenue prior-year period
Profit margin FY 
Margin Target
range
Industry 10.0 % 9 – 13%
Industry Automation 16.8 % 12 – 17%
Drive Technologies 12.3 % 11 – 16%
Building Technologies 6.6 % 7 – 10%
OSRAM 12.2 % 10 – 12%
Industry Solutions 0.7 % 5 – 7%
Mobility 7.9 % 5 – 7%
Energy 14.0 % 11 – 15%
Fossil Power Generation 15.9 % 11 – 15%
Renewable Energy 11.3 % 12 – 16%
Oil & Gas 11.7 % 10 – 14%
Power Transmission 12.4 % 10 – 14%
Power Distribution 13.9 % 11 – 15%
Healthcare ,  7.5 % 14 – 17%
Imaging & IT 19.6 % 14 – 17%
Workflow & Solutions 1.8 % 11 – 14%
Diagnostics ,  (16.3)% 16 – 19%
Siemens IT Solutions
and Services (12.9)% 5 – 7%
Siemens Financial
Services  30.4 % 20 – 23%
Target range
1 Profit margin including PPA effects is 6.1% for Healthcare
and (21.2)% for Diagnostics.
2 The impairment charges related to Diagnostics reduced profit margin for the
Healthcare Sector by 9.7pp and profit margin for the Diagnostics Division by 32.8pp.
3 Return on equity
Profit
× 100%
Revenue