Siemens 2014 Annual Report Download - page 188

108 A. To our Shareholders 131 B. Corporate Governance 171 C. Combined Management Report
172 C. Business and economic environment
187 C. Financial performance system
193 C. Results of operations
205 C. Financial position
210 C. Net assets position

Beginning with fiscal , we defined profit margin ranges for
our Industrial Business (for the new organizational set up of
Siemens, see C... ORGANIZATION AND BASIS OF PRESENTATION),
which are based on the profit margins of the respective rele-
vant competitors. Their determination is based on our en-
hanced profit definition for our Industrial Business, which is
also effective beginning with fiscal . In contrast to the
profit definition we used for fiscal , the enhanced defini-
tion eliminates income statement effects resulting from amor-
tization of intangible assets acquired in business combinations.
This type of amortization is basically a technical consequence
of the purchase price allocation resulting from an acquisition,
and therefore has nearly no operational business relevance.
Moreover, by eliminating these income statement effects, we
improve the comparability of our Industrial Businesses’s profits
with that of their relevant competitors. Beginning with fiscal
, profit for SFS is also presented excluding amortization
of intangible assets acquired in business combinations. Except
for this adjustment, the profit definition remains unchanged.
Profit margin ranges
Margin range
Power and Gas 11 – 15%
Wind Power and Renewables 5 – 8%
Energy Management 7 – 10%
Building Technologies 8 – 11%
Mobility 6 – 9%
Digital Factory 14 – 20%
Process Industries and Drives 8 – 12%
Healthcare 15 – 19%
SFS (ROE (after taxes)) 15 – 20%
Beginning with fiscal , we incorporated a measure called
total cost productivity into our One Siemens framework, to em-
phasize and evaluate our continuous efforts to improve produc-
tivity. We define this measure as the ratio of cost savings from
defined productivity improvement measures to the aggregate
of functional costs for the Siemens Group. We aim to achieve
an annual value of  % to  % for Total cost productivity.
Within the framework of One Siemens we seek to work profit-
ably and as efficiently as possible with the capital provided by
our shareholders and lenders. For purposes of managing and
controlling our capital efficiency in fiscal , we used return
on capital employed, or ROCE, for continuing operations as
our primary measure. We aimed to achieve a range of  % to
 %. An analysis of this financial measure is provided in
C.. INCOME. For information on the calculation of ROCE and
its components, see C... RETURN ON CAPITAL EMPLOYED (ROCE).
Return on capital employed (ROCE)
(continuing operations)
Income from continuing operations before interest after tax
× 100%
Average capital employed
FY  17.2%
FY  13.7%
Target range:  – %
Beginning with fiscal  and within the scope of further
develop ment of One Siemens, we intend to use ROCE for con-
tinuing and discontinued operations as the primary measure for
managing and controlling our capital efficiency. Going forward
all activities of the Group are included in this financial measure.
We continue to aim for a ROCE in the range of  % to  %. ROCE
for continuing and discontinued operations amounted to . %
in fiscal , compared to . % a year earlier.