Siemens 2012 Annual Report Download - page 158

1 A. To our Shareholders
21 B. Corporate Governance 49 C. Combined Management Report
50 C. Business and economic environment
64 C. Financial performance measures
69 C. Results of operations
82 C. Financial position
93 C. Net assets position
95 C. Overall assessment of the economic position
96 C. Subsequent events
97 C. Sustainability
111 C. Report on expected developments and
associated material opportunities and risks

...   
  
We also use other financial performance measures in addition
to the measures described above, such as new orders and order
backlog for the assessment of our future revenue potential. We
define and calculate new orders and order backlog as follows:
Under its policy for the recognition of new orders, Siemens
generally recognizes the total contract amount for a new order
when we enter into a contract that we consider legally effec-
tive and compulsory based on a number of different criteria.
The contract amount is the agreed price or fee for that portion
of the contract for which the delivery of goods and / or the pro-
vision of services has been irrevocably agreed. Future reve-
nues from service, maintenance and outsourcing contracts are
recognized as new orders in the amount of the total contract
value only if there is adequate assurance that the contract will
remain in effect for its entire duration (e.g., due to high exit
barriers for the customer). New orders are generally recog-
nized immediately when the relevant contract is considered
legally effective and compulsory. The only exceptions are or-
ders with short overall contract terms. In this case, a separate
reporting of new orders would provide no significant addition-
al information regarding our performance. For orders of this
type the recognition of new orders thus occurs when the cor-
responding revenue is recognized.
Order backlog represents an indicator for the future revenues
of our Company resulting from already recognized new orders.
Order backlog is calculated by adding the new orders of the
current fiscal year to the balance of the order backlog as of the
end of the prior fiscal year and by subtracting the revenue rec-
ognized in the current fiscal year. If the amount of an order al-
ready recognized in the current or the previous fiscal years is
modified or if an order from the current fiscal year is cancelled,
Siemens adjusts its new orders for the current quarter and also
its order backlog accordingly, but does not retroactively adjust
previously published new orders. However, if an order from a
previous fiscal year is cancelled, new orders of the current
quarter and, accordingly, the current fiscal year are generally
not adjusted, instead, the existing order backlog is revised di-
rectly. Aside from cancellations, the order backlog is also sub-
ject to portfolio effects and to currency translation effects.
There is no standard system for compiling and calculating new
orders and order backlog information that applies across com-
panies. Accordingly, Siemens’ new orders and order backlog
measures may not be comparable with new orders and order
backlog reported by other companies. Siemens subjects its
new orders and its order backlog to internal documentation
and review requirements. Siemens may change its policies for
recognizing new orders and order backlog in the future with-
out previous notice.
Year ended September ,
(in millions of €)  
Calculation of income taxes of Financial
Services (SFS)
Profit of SFS
(Income before Income Taxes, IBIT) 479 428
Less/Plus: Income/loss from investments
accounted for using the equity method,
net of SFS (168) (92)
Less: Tax-free income components
and others 57 (16)
Tax basis 368 319
Tax rate (flat) 30% 30%
Calculated income taxes of SFS 110 96
Profit after tax of SFS
Profit of SFS (IBIT) 479 428
Less: Calculated income taxes of SFS (110) (96)
Profit after tax of SFS 368 332
ROE (after tax) of SFS
(I) Profit after tax of SFS 368 332
(II) Average allocated equity of SFS 1,681 1,468
(I) / (II) ROE (after tax) of SFS 21.9% 22.6%
1 For information on Income (loss) from investments accounted for using the equity
method, net of SFS, see ..     (
).
2 Tax-free income components include forms of financing which are generally
exempted from income taxes. Others comprise result components related to the
(partial) sale/divestment of equity investments, which are reclassified from at
equity to available- for-sale financial assets and are therefore not included in the
(Income) loss from investments accounted for using the equity method, net.
Such results are already taxed or generally tax free. Others may also comprise
an adjustment for material taxable Income (loss) from investments accounted for
using the equity method, net.
3 Average allocated equity of SFS for a fiscal year is determined as a five-point average
in allocated equity of SFS of the respective quarters starting with the allocated equity
of SFS as of September  of the previous fiscal year.
...    () ( )
The following table reports the calculation of ROE (after tax) of
SFS as defined under One Siemens.