Siemens 2013 Annual Report Download - page 173

253 D. Consolidated Financial Statements
357 E. Additional Information
245 C. Compensation Report, Corporate Governance
statement pursuant to Section a of the
German Commercial Code, Takeover-relevant
information and explanatory report
246 C. Siemens AG ( Discussion on basis of
German Commercial Code)
250 C. Notes and forward-looking statements

C.. Overview
As part of One Siemens, we have developed a financial target
system for capital-efficient growth that we believe will in-
crease the value of our Company. Our goal is to achieve contin-
uous improvement relative to the market and our competitors.
The financial target system defines indicators for revenue
growth, profitability and capital efficiency, the optimization
of our capital structure, and our dividend policy. In addition,
we set hurdle rates that generally must be considered before
we make acquisitions.
In the following subchapters we describe financial perfor-
mance measures which have been defined in accordance with
One Siemens and are used to manage and control activities at
the Group level. These measures are or may be non-GAAP
financial measures. Other companies that report or describe
similarly titled financial measures may calculate them differ-
ently.
C.. Revenue growth
We believe that profitable revenue growth is an important
driver for increasing our Company ’s value over the long term.
Within the framework of One Siemens we have set ourselves
the goal to grow our revenue faster than the average revenue
growth of our most relevant competitors. For comparison with
our competitors, our revenue growth is calculated as the
growth rate of reported revenue as presented in the Consoli-
dated Financial Statements. For purposes of measuring, man-
aging and controlling the organic revenue growth this growth
rate is adjusted for currency translation and portfolio effects.
A detailed analysis regarding revenue growth is provided in
C... ORDERS AND REVENUE.
C.. Profitability and capital efficiency
Within the framework of One Siemens it is our goal to achieve
margins throughout the entire business cycle that are compa-
rable to those of the best competitors within our markets. We
seek to maintain or improve the profitability of our businesses
as appropriate. Therefore we have defined adjusted EBITDA
margin ranges for our four Sectors. These are defined as the
ratio of adjusted EBITDA (as presented in C.. RECONCILIA-
TION TO ADJUSTED EBITDA (CONTINUING OPERATIONS)) to revenue.
Adjusted EBITDA target margin ranges for the Sectors, and
their performance are shown in the chart below.
In fiscal , we used income from continuing operations at
the Group level to measure, manage and control profitability.
For a detailed analysis of this measure refer to C... CON-
SOLIDATED STATEMENTS OF INCOME. Effective with the beginning of
fiscal , we use net income. This measure is the primary
driver of basic earnings per share (EPS) from net income,
which we use for communicating with the capital markets.
Within the framework of One Siemens we seek to work profit-
ably and as efficiently as possible with the capital of our share-
holders and lenders. We manage and control our capital effi-
ciency using adjusted return on capital employed, or ROCE
(adjusted), for continuing operations. This financial measure
assesses our generated income from the point of view of our
shareholders and lenders. ROCE (adjusted) for continuing op-
erations is defined as income from continuing operations be-
fore interest after tax divided by average capital employed.
C. Financial performance system
Revenue growth
Actual
FY  (2)%
FY  7%
Adjusted

FY  (1)%
FY  3%
1 Adjusted for currency translation and portfolio effects.
Revenue current period
– 1 × 100%
Revenue prior-year period
Adjusted EBITDA margins

Margin Target range
Energy
FY  9.9% 10 – 15%
FY  8.9%
Healthcare
FY  19.8% 15 – 20%
FY  18.5%
Industry
FY  11.6% 11 – 17%
FY  15.5%
Infrastructure & Cities
FY  3.7% 8 – 12%
FY  7.5%
1 Adjusted EBITDA margins of respective markets throughout business cycle.
Target range