SAP 2015 Annual Report on Form 20-F

2015 ANNUAL REPORT ON FORM 20-F
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1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
‘
Í
‘
‘
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from
to
Commission file number: 1-14251
SAP SE
(Exact name of Registrant as specified in its charter)
SAP EUROPEAN COMPANY
(Translation of Registrant’s name into English)
Federal Republic of Germany
(Jurisdiction of incorporation or organization)
Dietmar-Hopp-Allee 16
69190 Walldorf
Federal Republic of Germany
(Address of principal executive offices)
Wendy Boufford
c/o SAP Labs
3410 Hillview Avenue, Palo Alto, CA, 94304, United States of America
650-849-4000 (Tel)
650-843-2041 (Fax)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange on which registered
American Depositary Shares, each Representing
one Ordinary Share, without nominal value
Ordinary Shares, without nominal value
New York Stock Exchange
New York Stock Exchange*
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report:
Ordinary Shares, without nominal value: 1,228,504,232 (as of December 31, 2015)**
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes Í
No ‘
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ‘
No Í
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes Í
No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such files.)
Yes ‘
No ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Í
Accelerated filer ‘
Non-accelerated filer ‘
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ‘
International Financial Reporting Standards as issued by the International Accounting Standards
Board Í
Other ‘
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17 ‘
Item 18 ‘
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes ‘
No Í
* Listed not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares representing such ordinary shares
pursuant to the requirements of the Securities and Exchange Commission.
** Including 30,551,035 treasury shares.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3. KEY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4. INFORMATION ABOUT SAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overview of the SAP Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strategy and Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Products, Research & Development, and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partner Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental Performance: Energy and Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intellectual Property, Proprietary Rights and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4A. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economy and the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Against Outlook for 2015 (Non-IFRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Results (IFRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Exchange Rate Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Off-Balance Sheet Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Critical Accounting Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Accounting Standards not yet Adopted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-Based Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .
Major Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 8. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements and Financial Statement Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9. THE OFFER AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading on the Frankfurt Stock Exchange and the NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 10. ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
2
9
9
9
9
9
11
11
12
24
25
26
29
29
34
34
35
37
39
39
41
41
41
41
43
45
58
58
62
62
63
63
63
63
69
69
70
71
87
88
88
88
88
89
89
89
89
89
89
90
91
91
91
95
95
i
Rights Accompanying our Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Documents on Display . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . . . . . . . . . .
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . .
American Depositary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 15. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Evaluation of Disclosure Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Annual Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . .
Changes in Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16B. CODE OF ETHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee’s Pre-Approval Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . . . . . . . . . . . . . . .
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS . . . . .
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Significant Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SAP SE is a European Company With a Two-Tier Board System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Independence Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rules on Non-Management Board Meetings are Different . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rules on Establishing Committees Differ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rules on Shareholders’ Compulsory Approval are Different . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Specific Principles of Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Specific Code of Business Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 17. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 18. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 19. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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F-1
F-2
F-3
ii
INTRODUCTION
SAP SE is a European Company (Societas Europaea, or
“SE”) and is referred to in this report, together with its
subsidiaries, as SAP, or as “Company,” “Group,” “we,”
“our,” or “us.”
SAP, TravelTrax, TripIt, TripLink, TwoGo, Web
Intelligence and other SAP products and services
mentioned herein as well as their respective logos are
trademarks or registered trademarks of SAP SE (or an
SAP affiliate company) in Germany and other countries.
In this report: (i) references to “US$,” “$,” or “dollars”
are to U.S. dollars; (ii) references to ‘‘€” or “euro” are to
the euro. Our financial statements are denominated in
euros, which is the currency of our home country,
Germany. Certain amounts that appear in this report
may not add up because of differences due to rounding.
Throughout this report, whenever a reference is made to
our website, such reference does not incorporate by
reference into this report the information contained on
our website.
Unless otherwise specified herein, euro financial data
have been converted into dollars at the noon buying rate
in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve
Bank of New York (the “Noon Buying Rate”) on
December 31, 2015, which was US$1.0859 per €1.00. No
representation is made that such euro amounts actually
represent such dollar amounts or that such euro
amounts could have been or can be converted into
dollars at that or any other exchange rate on such date or
on any other date. The rate used for the convenience
translations also differs from the currency exchange
rates used for the preparation of the Consolidated
Financial Statements. This convenience translation is not
a requirement under International Financial Reporting
Standards (IFRS) and, accordingly, our independent
registered public accounting firm has not audited these
US$ amounts. For information regarding recent rates of
exchange between euro and dollars, see “Item 3. Key
Information – Exchange Rates.” On March 11, 2016, the
Noon Buying Rate for converting euro to dollars was
US$1.1180 per €1.00.
Unless the context otherwise requires, references in this
report to ordinary shares are to SAP SE’s ordinary
shares, without nominal value. References in this report
to “ADRs” are to SAP SE’s American Depositary
Receipts, each representing one SAP ordinary share.
References in this report to “ADSs” are to SAP SE’s
American Depositary Shares, which are the deposited
securities evidenced by the ADRs.
SAP, ABAP, Adaptive Server, Advantage Database
Server,
Afaria,
Ariba,
Business
ByDesign,
BusinessObjects, ByDesign, Concur, Crystal Reports,
ExpenseIt,
Fieldglass,
hybris,
PartnerEdge,
PowerBuilder,
PowerDesigner,
Quadrem,
R/3,
Replication Server, SAP BusinessObjects Explorer, SAP
Business Workflow, SAP EarlyWatch, SAP Fiori, SAP
HANA, SAP Jam, SAP Lumira, SAP NetWeaver, SAP S/
4HANA, SAPPHIRE, SAPPHIRE NOW, SQL Anywhere,
Sybase, SuccessFactors, The Best-Run Businesses Run
We intend to make this report and other periodic reports
publicly available on our web site (www.sap.com) without
charge immediately following our filing with the U.S.
Securities and Exchange Commission (SEC). We assume
no obligation to update or revise any part of this report,
whether as a result of new information, future events or
otherwise, unless we are required to do so by law.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and
information based on the beliefs of, and assumptions
made by, our management using information currently
available to them. Any statements contained in this
report that are not historical facts are forward-looking
statements as defined in the U.S. Private Securities
Litigation Reform Act of 1995. We have based these
forward-looking statements on our current expectations,
assumptions, and projections about future conditions
and events. As a result, our forward-looking statements
and information are subject to uncertainties and risks. A
broad range of uncertainties and risks, many of which are
beyond our control, could cause our actual results and
performance to differ materially from any projections
expressed in or implied by our forward-looking
statements. The uncertainties and risks include, but are
not limited to:
– Uncertainty in the global economy, financial
markets or political conditions could have a
negative impact on our business, financial position,
profit, and cash flows and put pressure on our
operating profit.
– Third parties have claimed, and might claim in the
future, that we infringe their intellectual property
rights, which could lead to damages being awarded
against us and limit our ability to use certain
technologies in the future.
– Claims and lawsuits against us could have an
adverse effect on our business, financial position,
profit, cash flows and reputation.
– We may not be able to protect our critical
information and assets or to safeguard our
business operations against disruption.
We describe these and other risks and uncertainties in
the Risk Factors section.
1
If one or more of these uncertainties or risks
materializes,
or
if
management’s
underlying
assumptions prove incorrect, our actual results could
differ materially from those described in or inferred from
our forward-looking statements and information.
non-financial goals, which are customer loyalty and
employee engagement. We view growth and profitability
as indicators for our current performance, while
customer loyalty and employee engagement are
indicators for our future performance.
The words “aim,” “anticipate,” “assume,” “believe,”
“continue,” “could,” “counting on,” “is confident,”
“development,” “estimate,” “expect,” “forecast,” “future
trends,” “guidance,” “intend,” “may,” “might,” “outlook,”
“plan,” “project,” “predict,” “seek,” “should,” “strategy,”
“want,” “will,” “would,” and similar expressions as they
relate to us are intended to identify such forward-looking
statements. Such statements include, for example, those
made in the Operating Results section, our quantitative
and qualitative disclosures about market risk pursuant to
the International Financial Reporting Standards (IFRS),
namely IFRS 7 and related statements in our Notes to the
Consolidated Financial Statements section, Expected
Developments section; Risk Factors section; and other
forward-looking information appearing in other parts of
this report. To fully consider the factors that could affect
our future financial results, both this report and our
Annual Report should be considered, as well as all of our
other filings with the Securities and Exchange
Commission (SEC). Readers are cautioned not to place
undue reliance on these forward-looking statements,
which speak only as of the date specified or the date of
this report. We undertake no obligation to publicly
update or revise any forward-looking statements as a
result of new information that we receive about
conditions that existed upon issuance of this report,
future events, or otherwise unless we are required to do
so by law.
Measures We Use to Manage Our Financial
Performance
Changes to Income Statement Structure
Starting with the first quarter of 2015, we modified our
overall income statement structure. We reclassified
premium support revenue and related costs to the
respective services line items to align our financial
reporting with the changes in our services business. We
further simplified and clarified the labeling of several
income statement line items. For more information about
the changes to our income statement structure, see the
Notes to the Consolidated Financial Statements section,
Note (3).
This report includes statistical data about the IT industry
and global economic trends that comes from information
published by sources including International Data
Corporation (IDC), a provider of market information and
advisory services for the information technology,
telecommunications, and consumer technology markets;
the European Central Bank (ECB); and the International
Monetary Fund (IMF). This type of data represents only
the estimates of IDC, ECB, IMF, and other sources of
industry data. SAP does not adopt or endorse any of the
statistical information provided by sources such as IDC,
ECB, IMF, or other similar sources that is contained in
this report. In addition, although we believe that data
from these sources is generally reliable, this type of data
is imprecise. We caution readers not to place undue
reliance on this data.
PERFORMANCE MANAGEMENT SYSTEM
We use various performance measures to help manage
our performance with regard to our primary financial
goals, which are growth and profitability, and our primary
Measures We Use to Manage Our Operating Financial
Performance
In 2015, we used the following key measures to manage
our operating financial performance:
Cloud subscriptions and support revenue (nonIFRS): This revenue driver comprises the main revenues
of our fast-growing cloud business. We generate cloud
subscriptions and support revenue when we provide
software functionality in a cloud-based infrastructure
(SaaS) to our customers, when we provide our
customers with access to a cloud-based infrastructure to
develop, run, and manage applications (PaaS) and also
when we provide hosting services for software hosted by
SAP (IaaS). Cloud subscriptions and support revenue is
also generated when providing additional premium cloud
subscription support beyond the regular support, which
is embedded in the basic cloud subscription fees as well
as business network services to our customers. We use
the measure cloud subscriptions and support revenue
(non-IFRS) both at actual currency and at constant
currency.
Cloud and software revenue (non-IFRS): We use cloud
and software revenue (non-IFRS) and constant currency
cloud and software revenue (non-IFRS) to measure our
revenue growth. Our cloud and software revenue
includes cloud subscriptions and support revenue plus
software licenses and support revenue. Cloud
subscriptions and support revenue and software revenue
are our key revenue drivers because they tend to affect
our other revenue streams. Generally, customers that
buy software licenses also enter into related support
contracts, and these generate recurring revenue in the
form of support revenue after the software sale. Support
contracts cover standardized support services that
comprise unspecified future software updates and
2
enhancements. Software licenses revenue as well as
cloud subscriptions and support revenue also tend to
stimulate services revenue earned from providing
customers with professional services, premium support
services, training services, messaging services, and
payment services.
New cloud bookings: For our cloud activities, we also
look at new cloud bookings. This measure reflects the
committed order entry from new customers and from
incremental purchases by existing customers for
offerings that generate cloud subscriptions and support
revenue. In this way, it is an indicator for cloud-related
sales success in a given period and for secured future
cloud subscriptions and support revenue. We focus
primarily on the average contract value variant of the
new cloud bookings measure that takes into account
annualized
amounts
for
multiyear
contracts.
Additionally, we monitor the total contract value variant
of the new cloud bookings measure that takes into
account the total committed order entry amounts
regardless of contract durations. There are no
comparable IFRS measures for these bookings metrics.
Operating profit (non-IFRS): We use operating profit
(non-IFRS) and constant currency operating profit (nonIFRS) to measure our overall operational process
efficiency and overall business performance. See below
for more information on the IFRS and non-IFRS
measures we use.
Cloud subscriptions and support gross margin (nonIFRS): We use our cloud subscriptions and support gross
margin (non-IFRS) to measure our process efficiency
and our performance in our cloud business. Cloud
subscriptions and support gross margin (non-IFRS) is
the ratio of our cloud subscriptions and support gross
profit (non-IFRS) to cloud subscriptions and support
revenue (non-IFRS), expressed as a percentage.
Measures We Use to Manage Our Non-Operating
Financial Performance
We use the following measures to manage our nonoperating financial performance:
Financial income, net: This measure provides insight
into the return on liquid assets and capital investments
and the cost of borrowed funds. To manage our financial
income, net, we focus on cash flow, the composition of
our liquid assets and capital investment portfolio, and
the average rate of interest at which assets are invested.
We also monitor average outstanding borrowings and
associated finance costs.
Days Sales Outstanding (DSO): We manage working
capital by controlling the days sales outstanding (DSO)
for operating receivables (defined as the average
number of days from the raised invoice to cash receipt
from the customer).
Measures We Use to Manage Overall Financial
Performance
We use the following measures to manage our overall
financial performance:
Earnings per share (EPS): EPS measures our overall
performance because it captures all operating and nonoperating elements of profit as well as income tax
expense. It represents the portion of profit after tax
allocable to each SAP share outstanding. EPS is
influenced not only by our operating and non-operating
business as well as income taxes but also by the number
of shares outstanding.
Effective tax rate: We define our effective tax rate as
the ratio of income tax expense to profit before tax,
expressed as a percentage.
Operating, investing, and financing cash flows and
free cash flow: Our consolidated statement of cash
flows provides insight as to how we generated and used
cash and cash equivalents. When applied in conjunction
with the other primary financial statements, it provides
information that helps us evaluate the changes of our net
assets, our financial structure (including our liquidity and
solvency), and our ability to affect the amounts and
timing of cash flows to adapt to changing circumstances
and opportunities. We use our free cash flow measure to
determine the cash flow remaining after all expenditures
required to maintain or expand our organic business
have been paid off. This measure provides management
with supplemental information to assess our liquidity
needs. We calculate free cash flow as net cash from
operating activities minus purchases (other than
purchases made in connection with business
combinations) of intangible assets and property, plant,
and equipment.
Measures We Use to Manage Our Non-Financial
Performance
In 2015, we used the following key measures to manage
our non-financial performance in the areas of employee
engagement, customer loyalty and leadership trust:
Employee Engagement Index: We use this index to
measure the motivation and loyalty of our employees,
how proud they are of our company, and how strongly
they identify with SAP. The index is derived from surveys
conducted among our employees. Applying this measure
is recognition that our growth strategy depends on
engaged employees.
Customer Net Promoter Score (NPS): This score
measures the willingness of our customers to
3
recommend or promote SAP to others. It is derived from
our annual customer survey that identifies, on a scale of
0–10, whether a customer is loyal and likely to
recommend SAP to friends or colleagues, is neutral, or is
unhappy. We introduced this measure in 2012, as we are
convinced that we can achieve our financial goals only
when our customers are loyal to, and satisfied with, SAP
and our solutions. To derive the Customer NPS, we start
with the percentage of “promoters” of SAP – those who
give us a score of 9 or 10 on a scale of 0–10. We then
subtract the percentage of “detractors” – those who give
us a score of 0 to 6. The method ignores “passives,” who
give us a score of 7 or 8. Due to changes in sampling,
resulting from ongoing efforts to implement the survey
process holistically in recently acquired entities, the 2015
score is not fully comparable with the prior year’s score.
SAP’s long-term strategic plans are the point of
reference for our other planning and controlling
processes, including a multiyear plan through 2020. We
identify future growth and profitability drivers at a highly
aggregated level. This process is intended to identify the
best areas in which to target sustained investment. Next,
we evaluate our multiyear plans for our support and
development functions and break down the customerfacing plans by sales region. Based on our detailed
annual plans, we determine the budget for the respective
year. We also have processes in place to forecast
revenue and profit on a quarterly basis, to quantify
whether we expect to realize our financial goals, and to
identify any deviations from plan. We continuously
monitor the concerned units in the Group to analyze
these developments and define any appropriate actions.
Leadership Trust Score: We use this score to further
enhance accountability and to measure our collective
effort to foster a work environment based on trust. It is
derived from a question in our annual global employee
survey that gauges employees’ trust in our leaders. We
measure leadership trust by using the Net Promoter
Score (NPS) methodology.
Our entire network of planning, control, and reporting
processes is implemented in integrated planning and
information systems, based on SAP software, across all
organizational units so that we can conduct the
evaluations and analyses needed to make informed
decisions.
Value-Based Management
Our holistic view of the performance measures described
above, together with our associated analyses, comprises
the information we use for value-based management. We
use planning and control processes to manage the
compilation of these key measures and their availability
to our decision makers across various management
levels.
Non-IFRS Financial Measures Cited in This Report
As in previous years, we provided our 2015 financial
outlook on the basis of certain non-IFRS measures.
Therefore, this report contains a non-IFRS based
comparison of our actual performance in 2015 against
our outlook in the Performance Against Outlook for 2015
(Non-IFRS) section.
4
Reconciliations of IFRS to Non-IFRS Financial Measures for 2015 and 2014
The following table reconciles our IFRS financial measures to the respective and most comparable non-IFRS financial
measures of this report for each of 2015 and 2014. Due to rounding, the sum of the numbers presented in this table
might not precisely equal the totals we provide.
Reconciliation of IFRS to Non-IFRS Financial Measures for the Years Ended December 31
€ millions, unless
otherwise stated
2014
2015
Currency
Impact
Non-IFRS
Constant
Currency
IFRS
Adj.
Non-IFRS
IFRS
Adj.
Non-IFRS
Cloud subscriptions
and support
2,286
10
2,296
ⳮ297
1,999
1,087
14
1,101
Software licenses
4,835
1
4,836
ⳮ255
4,581
4,399
0
4,399
Software support
10,093
0
10,094
ⳮ678
9,416
8,829
5
8,834
Software licenses and
support
14,928
2
14,930
ⳮ933
13,997
13,228
5
13,233
Cloud and software
17,214
11
17,226
ⳮ1,230
15,996
14,315
19
14,334
3,579
0
3,579
ⳮ276
3,304
3,245
0
3,245
20,793
11
20,805
ⳮ1,505
19,299
17,560
19
17,580
Cost of cloud
subscriptions and
support
ⳮ1,022
232
ⳮ789
ⳮ481
88
ⳮ393
Cost of software
licenses and
support
ⳮ2,291
283
ⳮ2,008
ⳮ2,076
258
ⳮ1,818
Cost of cloud and
software
ⳮ3,313
516
ⳮ2,797
ⳮ2,557
346
ⳮ2,211
Cost of services
ⳮ3,313
180
ⳮ3,133
ⳮ2,716
125
ⳮ2,590
ⳮ6,626
696
ⳮ5,930
ⳮ5,272
471
ⳮ4,801
Gross profit
14,167
707
14,874
12,288
490
12,778
Research and
development
ⳮ2,845
202
ⳮ2,643
ⳮ2,331
127
ⳮ2,204
Sales and marketing
ⳮ5,401
449
ⳮ4,952
ⳮ4,304
170
ⳮ4,134
General and
administration
ⳮ1,048
116
ⳮ932
ⳮ892
86
ⳮ806
ⳮ621
621
0
ⳮ126
126
0
TomorrowNow and
Versata litigation
0
0
0
ⳮ309
309
0
Other operating
income/expense, net
1
0
1
4
0
4
ⳮ16,541
2,084
ⳮ14,457
1,062
ⳮ13,395
ⳮ13,230
1,288
ⳮ11,942
4,252
2,095
6,348
ⳮ443
5,904
4,331
1,307
5,638
Revenue measures
Services
Total revenue
Operating expense
measures
Total cost of
revenue
Restructuring
Total operating
expenses
Operating profit
5
Explanation of Non-IFRS Measures
We disclose certain financial measures, such as revenue
(non-IFRS), operating expenses (non-IFRS), operating
profit (non-IFRS), operating margin (non-IFRS), and
earnings per share (non-IFRS), as well as constant
currency revenue, expense, and profit that are not
prepared in accordance with IFRS and are therefore
considered non-IFRS financial measures. Our non-IFRS
financial measures may not correspond to non-IFRS
financial measures that other companies report. The
non-IFRS financial measures that we report should only
be considered in addition to, and not as substitutes for or
superior to, our IFRS financial measures.
We believe that the disclosed supplemental historical
and prospective non-IFRS financial information provides
useful information to investors because management
uses this information, in addition to financial data
prepared in accordance with IFRS, to attain a more
transparent understanding of our past performance and
our anticipated future results. We use the revenue (nonIFRS) and profit (non-IFRS) measures consistently in our
internal planning and forecasting, reporting, and
compensation,
as
well
as
in
our
external
communications, as follows:
– Our management primarily uses these non-IFRS
measures rather than IFRS measures as the basis for
making financial, strategic, and operating decisions.
– The variable components of our Executive Board
members’ and employees’ remuneration are based
on revenue (non-IFRS), operating profit (non-IFRS),
as well as new cloud bookings measures rather than
the respective IFRS measures.
– The annual budgeting process for all management
units is based on revenue (non-IFRS) and operating
profit (non-IFRS) numbers rather than the respective
IFRS financial measures.
– All forecast and performance reviews with all senior
managers globally are based on these non-IFRS
measures, rather than the respective IFRS financial
measures.
– Both our internal performance targets and the
guidance we provided to the capital markets are
based on revenue (non-IFRS) and profit (non-IFRS)
measures rather than the respective IFRS financial
measures.
Our non-IFRS financial measures reflect adjustments
based on the items below, as well as adjustments for the
related income tax effects.
Revenue (Non-IFRS)
Revenue items identified as revenue (non-IFRS) have
been adjusted from the respective IFRS financial
measures by including the full amount of software
support revenue, cloud subscriptions and support
revenue, and other similarly recurring revenue that we
are not permitted to record as revenue under IFRS due to
fair value accounting for the contracts in effect at the
time of the respective acquisitions.
Under IFRS, we record at fair value the contracts in effect
at the time entities were acquired. Consequently, our
IFRS software support revenue, IFRS cloud subscriptions
and support revenue, IFRS cloud and software revenue,
and IFRS total revenue for periods subsequent to
acquisitions do not reflect the full amount of revenue that
would have been recorded by entities acquired by SAP
had they remained stand-alone entities. Adjusting
revenue numbers for this revenue impact provides
additional insight into the comparability of our ongoing
performance across periods.
Operating Expense (Non-IFRS)
Operating expense numbers that are identified as
operating expenses (non-IFRS) have been adjusted by
excluding the following expenses:
– Acquisition-related charges
▪ Amortization expense/impairment charges of
intangibles acquired in business combinations and
certain stand-alone acquisitions of intellectual
property (including purchased in-process research
and development)
▪ Settlements of preexisting business relationships
in connection with a business combination
▪ Acquisition-related third-party expenses
– Expenses from the TomorrowNow litigation (formerly
labeled as “discontinued activities”) and the Versata
litigation cases
– Share-based payment expenses
– Restructuring expenses
We exclude certain acquisition-related expenses for the
purpose of calculating operating profit (non-IFRS),
operating margin (non-IFRS), and earnings per share
(non-IFRS)
when
evaluating
SAP’s
continuing
operational performance because these expenses
generally cannot be changed or influenced by
management after the relevant acquisition other than by
disposing of the acquired assets. Since management at
levels below the Executive Board does not influence
these expenses, we generally do not consider these
expenses for the purpose of evaluating the performance
of management units. Additionally, these non-IFRS
measures have been adjusted from the respective IFRS
measures for the results of the share-based payment
expenses and restructuring expenses, as well as the
TomorrowNow and Versata litigation expenses.
Operating Profit (Non-IFRS), Operating Margin (NonIFRS), and Earnings per Share (Non-IFRS)
Operating profit, operating margin, and earnings per
share identified as operating profit (non-IFRS), operating
margin (non-IFRS), and earnings per share (non-IFRS)
6
have been adjusted from the respective IFRS measures
by adjusting for the aforementioned revenue (non-IFRS)
and operating expenses (non-IFRS).
Constant Currency Information
We believe it is important for investors to have
information that provides insight into our sales. Revenue
measures determined under IFRS provide information
that is useful in this regard. However, both sales volume
and currency effects impact period-over-period changes
in sales revenue. We do not sell standardized units of
products and services, so we cannot provide relevant
information on sales volume by providing data on the
changes in product and service units sold. To provide
additional information that may be useful to investors in
breaking down and evaluating changes in sales volume,
we present information about our revenue and various
values and components relating to operating profit that
are adjusted for foreign currency effects.
We calculate constant currency revenue and operating
profit measures by translating foreign currencies using
the average exchange rates from the comparative period
instead of the current period.
Free Cash Flow
The following table shows our free cash flow measure.
We use this measure among others to manage our
overall financial performance.
Free Cash Flow
€ millions
2015
2014
in %
Net cash flows from operating
activities
3,638
3,499
4
Purchase of intangible assets and
property, plant, and equipment
(without acquisitions)
–636
–737
–14
Free cash flow
3,001
2,762
9
Usefulness of Non-IFRS Measures
We believe that our non-IFRS measures are useful to
investors for the following reasons:
– Our revenue (non-IFRS), expense (non-IFRS), and
profit (non-IFRS) measures provide investors with
insight into management’s decision making because
management uses these non-IFRS measures to run
our business and make financial, strategic, and
operating decisions. We include the revenue
adjustments outlined above and exclude the expense
adjustments outlined above when making decisions to
allocate resources. In addition, we use these non-IFRS
measures to gain a better understanding of SAP’s
operating performance from period to period.
– The non-IFRS measures provide investors with
additional information that enables a comparison of
year-over-year operating performance by eliminating
certain direct effects of acquisitions, share-based
compensation plans, restructuring plans, and the
TomorrowNow and Versata litigation cases.
– Non-IFRS and non-GAAP measures are widely used in
the software industry. In many cases, inclusion of our
non-IFRS measures may facilitate comparison with
our competitors’ corresponding non-IFRS and nonGAAP measures.
Limitations of Non-IFRS Measures
We believe that our non-IFRS financial measures
described above have limitations, including but not
limited to, the following:
– The eliminated amounts could be material to us.
– Without being analyzed in conjunction with the
corresponding IFRS measures, the non-IFRS
measures are not indicative of our present and future
performance, foremost for the following reasons:
▪ While our profit (non-IFRS) numbers reflect the
elimination of certain acquisition-related expenses,
no eliminations are made for the additional
revenue or other income that results from the
acquisitions.
▪ While we adjust for the fair value accounting of the
acquired entities’ recurring revenue contracts, we
do not adjust for the fair value accounting of
deferred compensation items that result from
commissions paid to the acquired company’s sales
force and third parties for closing the respective
customer contracts.
▪ The acquisition-related charges that we eliminate
in deriving our profit (non-IFRS) numbers are likely
to recur should SAP enter into material business
combinations in the future. Similarly, the
restructuring expenses that we eliminate in
deriving our profit (non-IFRS) numbers are likely to
recur should SAP perform restructurings in the
future.
▪ The acquisition-related amortization expense that
we eliminate in deriving our profit (non-IFRS)
numbers is a recurring expense that will impact
our financial performance in future years.
▪ The revenue adjustment for the fair value
accounting of the acquired entities’ contracts and
the expense adjustment for acquisition-related
charges do not arise from a common conceptual
basis. This is because the revenue adjustment
aims to improve the comparability of the initial
post-acquisition period with future postacquisition periods, while the expense adjustment
aims to improve the comparability between postacquisition periods and pre-acquisition periods.
This should particularly be considered when
7
▪
▪
▪
evaluating our operating profit (non-IFRS) and
operating margin (non-IFRS) numbers as these
combine our revenue (non-IFRS) and expenses
(non-IFRS) despite the absence of a common
conceptual basis.
Our restructuring charges could result in
significant cash outflows. The same applies to our
share-based payment expense because most of
our share-based payments are settled in cash
rather than shares.
The valuation of our cash-settled share-based
payments could vary significantly from period to
period due to the fluctuation of our share price and
other parameters used in the valuation of these
plans.
In the past, we have issued share-based payment
awards to our employees every year and we intend
to continue doing so in the future. Thus, our sharebased payment expenses are recurring although
the amounts usually change from period to period.
We believe that constant currency measures have
limitations, particularly as the currency effects that are
eliminated constitute a significant element of our
revenue and expenses and could materially impact our
performance. Therefore, we limit our use of constant
currency measures to the analysis of changes in volume
as one element of the full change in a financial measure.
We do not evaluate our results and performance without
considering both constant currency measures in revenue
(non-IFRS) and operating profit (non-IFRS) measures on
the one hand, and changes in revenue, operating
expenses, operating profit, or other measures of financial
performance prepared in accordance with IFRS on the
other. We caution the readers of our financial reports to
follow a similar approach by considering constant
currency measures only in addition to, and not as a
substitute for or superior to, changes in revenue,
operating expenses, operating profit, or other measures
of financial performance prepared in accordance with
IFRS.
Despite these limitations, we believe that the
presentation of the non-IFRS measures and the
corresponding IFRS measures, together with the relevant
reconciliations,
provide
useful
information
to
management and investors regarding present and future
business trends relating to our financial condition and
results of operations. We do not evaluate our growth and
performance without considering both non-IFRS
measures and the comparable IFRS measures. We
caution the readers of our financial reports to follow a
similar approach by considering our non-IFRS measures
only in addition to, and not as a substitute for or superior
to, revenue or other measures of our financial
performance prepared in accordance with IFRS.
8
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR
MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED
TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
SELECTED FINANCIAL DATA
The following table sets forth our selected consolidated
financial data as of and for each of the years in the fiveyear period ended December 31, 2015. The consolidated
financial data has been derived from, and should be read
in conjunction with, our Consolidated Financial
Statements prepared in accordance with International
Financial Reporting Standards as issued by the
International Accounting Standards Board (IFRS),
presented in “Item 18. Financial Statements” of this
report.
Our selected financial data and our Consolidated
Financial Statements are presented in euros. Financial
data as of and for the year ended December 31, 2015 has
been translated into U.S. dollars for the convenience of
the reader.
9
Selected Financial Data: IFRS
2015(1)
US$
2015
€
2014
€
2013
€
2012
€
2011
€
2,482
2,286
1,087
696
270
18
Software licenses and support
16,210
14,928
13,228
12,809
12,532
11,012
Cloud and software
18,693
17,214
14,315
13,505
12,801
11,030
Total revenue
22,579
20,793
17,560
16,815
16,223
14,233
Operating profit
4,618
4,252
4,331
4,479
4,041
4,884
Profit after tax
3,318
3,056
3,280
3,325
2,803
3,437
Profit attributable to owners of parent
3,327
3,064
3,280
3,326
2,803
3,435
Basic in €
2.78
2.56
2.75
2.79
2.35
2.89
Diluted in €
2.78
2.56
2.74
2.78
2.35
2.89
Basic
1,197
1,197
1,195
1,193
1,192
1,189
Diluted
1,198
1,198
1,197
1,195
1,193
1,190
3,704
3,411
3,328
2,748
2,477
4,965
44,945
41,390
38,565
27,091
26,306
23,227
913
841
2,561
748
802
1,331
Non-current financial liabilities(4)
9,427
8,681
8,980
3,758
4,446
2,925
Issued capital
1,334
1,229
1,229
1,229
1,229
1,228
25,296
23,295
19,534
16,048
14,133
12,689
millions, unless otherwise stated
Income Statement Data: Years ended December 31,
Cloud subscriptions and support
Earnings per share(2)
Other Data:
Weighted-average number of shares outstanding
Statement of Financial Position Data: At December 31,
Cash and cash equivalents
Total assets(3)
Current financial liabilities(4)
Total equity
(1) Amounts presented in US$ have been translated for the convenience of the reader at €1.00 to US$1.0859, the Noon Buying Rate for
converting €1.00 into dollars on December 31, 2015. See “Item 3. Key Information – Exchange Rates” for recent exchange rates
between the Euro and the dollar.
(2) Profit attributable to owners of parent is the numerator and weighted average number of shares outstanding is the denominator in
the calculation of earnings per share. See Note (11) to our Consolidated Financial Statements for more information on earnings per
share.
(3) The large increase in total assets from 2011 to 2012 was mainly due to the acquisitions of SuccessFactors and Ariba in 2012,
whereas the large increase in total assets from 2013 to 2014 was mainly due to the acquisition of Concur.
(4) The balances include primarily bonds, private placements and bank loans. Current is defined as having a remaining life of one year or
less; non-current is defined as having a remaining term exceeding one year. The significant increase in non-current financial liabilities in
2012 was due to the issuance of a U.S. private placement transaction and Eurobonds in the course of the acquisition of Ariba. The
significant increase from 2013 to 2014 was due to a long-term bank loan and the issuance of a three-tranche Eurobond, both in
connection with the Concur acquisition. See Note (17b) to our Consolidated Financial Statements for more information on our financial
liabilities.
10
EXCHANGE RATES
The sales prices for our ordinary shares traded on
German stock exchanges are denominated in euro.
Fluctuations in the exchange rate between the euro and
the U.S. dollar affect the dollar equivalent of the euro
price of the ordinary shares traded on the German stock
exchanges and, as a result, may affect the price of the
ADRs traded on the NYSE in the United States. See “Item
9. The Offer and Listing” for a description of the ADRs. In
addition, SAP SE pays cash dividends, if any, in euro. As
a result, any exchange rate fluctuations will also affect
the dollar amounts received by the holders of ADRs on
the conversion into dollars of cash dividends paid in euro
on the ordinary shares represented by the ADRs.
Deutsche Bank Trust Company Americas is the
depositary (the Depositary) for SAP SE’s ADR program.
The deposit agreement with respect to the ADRs
requires the Depositary to convert any dividend
payments from euro into dollars as promptly as
practicable upon receipt. For additional information on
the Depositary and the fees associated with SAP’s ADR
program see “Item 12. Description of Securities Other
Than Equity Securities – American Depositary Shares.”
For details on the impact of exchange rate fluctuations
see “Item 5. Operating and Financial Review and
Prospects – Foreign Currency Exchange Rate Exposure”.
The following table sets forth (i) the average, high and
low Noon Buying Rates for the euro expressed as U.S.
dollars per €1.00 for the past five years on an annual
basis and (ii) the high and low Noon Buying Rates on a
monthly basis from July 2015 through and including
March 11, 2016.
Year
Average(1)
High
Low
2011
1.4002
1.4875
1.2926
2012
1.2909
1.3463
1.2062
2013
1.3303
1.3816
1.2774
2014
1.3210
1.3927
1.2101
2015
1.1032
1.2015
1.0524
Month
High
Low
July
1.1150
1.0848
August
1.1580
1.0868
September
1.1358
1.1104
October
1.1437
1.0963
November
1.1026
1.0562
December
1.1025
1.0573
January
1.0964
1.0743
February
1.1362
1.0868
March (through March 11, 2016)
1.1180
1.0845
2015
2016
(1) The average of the applicable Noon Buying Rates on the last
day of each month during the relevant period.
The Noon Buying Rate on March 11, 2016 was US$1.1180
per €1.00.
DIVIDENDS
Dividend Distribution Policy
Dividends are jointly proposed by SAP SE’s Supervisory
Board (Aufsichtsrat) and Executive Board (Vorstand)
based on SAP SE’s year-end stand-alone statutory
financial statements, subject to approval by the Annual
General Meeting of Shareholders. Dividends are officially
declared for the prior year at SAP SE’s Annual General
Meeting of Shareholders. SAP SE’s Annual General
Meeting of Shareholders usually convenes during the
second quarter of each year. Dividends are usually
remitted to the custodian bank on behalf of the
shareholder within one business day following the Annual
General Meeting of Shareholders. Record holders of the
ADRs on the dividend record date will be entitled to
receive payment of the dividend declared in respect of
the year for which it is declared. Cash dividends payable
to such holders will be paid to the Depositary in euro and,
subject to certain exceptions, will be converted by the
Depositary into U.S. dollars.
Dividends paid to holders of the ADRs may be subject to
German withholding tax. See “Item 8. Financial
Information – Other Financial Information – Dividend
Policy” and “Item 10. Additional Information – Taxation,”
for further information.
Annual Dividends Paid and Proposed
The following table sets forth in euro the annual
dividends paid or proposed to be paid per ordinary share
in respect of each of the years indicated. One SAP ADR
currently represents one SAP SE ordinary share.
11
Accordingly, the final dividend per ADR is equal to the
dividend for one SAP SE ordinary share and is dependent
on the euro/U.S. dollar exchange rate. The table does
not reflect tax credits that may be available to German
taxpayers who receive dividend payments. If you own our
ordinary shares or ADRs and if you are a U.S. resident,
refer to “Item 10. Additional Information – Taxation,” for
further information.
Year Ended
December 31,
2011
Dividend Paid per Ordinary Share
€
1.10(2)
US$
1.38(1)
2012
0.85
1.11(1)
2013
1.00
1.37(1)
2014
1.10
1.22(1)
2015(proposed)
1.15(3)
1.29(3),(4)
(1) Translated for the convenience of the reader from euro into
U.S. dollars at the Noon Buying Rate for converting euro into U.S.
dollars on the dividend payment date. The Depositary is required
to convert any dividend payments received from SAP as promptly
as practicable upon receipt.
(2) Thereof a special dividend of €0.35 per share to celebrate our
40th anniversary.
(3) Subject to approval at the Annual General Meeting of
Shareholders of SAP SE currently scheduled to be held on May 12,
2016.
(4) Translated for the convenience of the reader from euro into
U.S. dollars at the Noon Buying Rate for converting euro into U.S.
dollars on March 11, 2016 of US$1.1180 per €1.00. The dividend
paid may differ due to changes in the exchange rate.
The amount of dividends paid on the ordinary shares
depends on the amount of profits to be distributed by
SAP SE, which depends in part upon our financial
performance. In addition, the amount of dividends
received by holders of ADRs may be affected by
fluctuations in exchange rates (see “Item 3. Key
Information – Exchange Rates”). The timing, declaration,
amount and payment of any future dividend will depend
upon our future earnings, capital needs and other
relevant factors, in each case as proposed by the
Executive Board and the Supervisory Board of SAP SE
and approved by the Annual General Meeting of
Shareholders.
RISK FACTORS
Economic, Political, Social, and Regulatory Risk
Uncertainty in the global economy, financial
markets, or political conditions could have a
negative impact on our business, financial position,
profit, as well as cash flows, and put pressure on our
operating profit.
Our business is influenced by multiple risk factors that
are both difficult to predict and beyond our influence and
control. These factors include global economic and
business conditions, and fluctuations in national
currencies. Other examples are political developments
and general regulations as well as budgetary constraints
or shifts in spending priorities of national governments.
Macroeconomic developments, such as financial market
volatility episodes, global economic crises, chronic fiscal
imbalances, slowing economic conditions, or disruptions
in emerging markets, could limit our customers’ ability
and willingness to invest in our solutions or delay
purchases. In addition, changes in the euro conversion
rates for particular currencies might have an adverse
effect on business activities with local customers and
partners. Furthermore, political instabilities in regions
such as the Middle East and Africa, political crises (such
as in Greece or Ukraine), natural disasters, pandemic
diseases (such as Ebola in West Africa) and terrorist
attacks (such as the attacks in Paris, France, in
November 2015) could contribute to economic and
political uncertainty.
These events could reduce the demand for SAP software
and services, and lead to:
– Delays in purchases, decreased deal size, or
cancellations of proposed investments
– Potential lawsuits from customers due to denied
provision of service as a result of sanctioned-party
lists or export control issues
– Higher credit barriers for customers, reducing their
ability to finance software purchases
– Increased number of bankruptcies among customers,
business partners, and key suppliers
– Increased default risk, which may lead to significant
impairment charges in the future
– Market disruption from aggressive competitive
behavior, acquisitions, or business practices
– Increased price competition and demand for cheaper
products and services
Any one or more of these developments could reduce
our ability to sell and deliver our software and services
which could have an adverse effect on our business,
financial position, profit, and cash flows.
Our international business activities and processes
expose us to numerous and often conflicting laws
and regulations, policies, standards or other
requirements and sometimes even conflicting
regulatory requirements, and to risks that could
harm our business, financial position, profit, and
cash flows.
We are a global company and currently market our
products and services in more than 180 countries and
territories in the Americas (Latin America and North
America); Asia Pacific Japan (APJ); China, Hong Kong,
Macau, and Taiwan (Greater China); Europe, Middle East,
and Africa (EMEA); and Middle and Eastern Europe
(MEE) regions. Our business in these countries is subject
12
to numerous risks inherent in international business
operations. Among others, these risks include:
– Data protection and privacy regulation regarding
access by government authorities to customer,
partner, or employee data
– Data residency requirements (the requirement to
store certain data only in and, in some cases, also to
access such data only from within a certain
jurisdiction)
– Conflict and overlap among tax regimes
– Possible tax constraints impeding business
operations in certain countries
– Expenses associated with the localization of our
products and compliance with local regulatory
requirements
– Discriminatory or conflicting fiscal policies
– Operational difficulties in countries with a high
corruption perceptions index
– Protectionist trade policies, import and export
regulations, and trade sanctions and embargoes
– Works councils, labor unions, and immigration laws in
different countries
– Difficulties enforcing intellectual property and
contractual rights in certain jurisdictions
– Country-specific software certification requirements
– Challenges with effectively managing a large
distribution network of third-party companies
– Compliance with various industry standards (such as
Payment Card Industry Data Security Standard)
As we expand into new countries and markets, these
risks could intensify. The application of these laws and
regulations to our business is sometimes unclear,
subject to change over time, and often conflict among
jurisdictions. Additionally, these laws and government
approaches to enforcement are continuing to change
and evolve, just as our products and services continually
evolve. Compliance with these varying laws and
regulations could involve significant costs or require
changes in products or business practices. Noncompliance could result in the imposition of penalties or
cessation of orders due to alleged non-compliant activity.
One or more of these factors could have an adverse
effect on our operations globally or in one or more
countries or regions, which could have an adverse effect
on our business, financial position, profit, and cash flows.
Social and political instability caused by state-based
conflicts, terrorist attacks, civil unrest, war, or
international hostilities, as well as pandemic disease
outbreaks or natural disasters, may disrupt SAP’s
business operations.
Terrorist attacks (such as the attacks in Paris in
November 2015) as well as other acts of violence or war,
civil, religious, and political unrest (such as in Ukraine,
Israel, Syria, and in other parts of the Middle East, Libya,
and in other parts of Africa); natural disasters (such as
hurricanes, flooding, or similar events); or pandemic
diseases (such as Ebola in West Africa) could have a
significant adverse effect on the local economy and
beyond. Such an event could lead, for example, to the
loss of a significant number of our employees, or to the
disruption or disablement of operations at our locations,
and could affect our ability to provide business services
and
maintain
effective
business
operations.
Furthermore, this could have a significant adverse effect
on our partners as well as our customers and their
investment decisions, which could have an adverse
effect on our reputation, business, financial position,
profit, and cash flows.
Market Risks
Our established customers might not buy additional
software solutions, subscribe to our cloud offerings,
renew maintenance agreements, purchase additional
professional services, or they might switch to other
products or service offerings (including competitive
products).
In 2015, we continued to depend materially on the
success of our support portfolio and on our ability to
deliver high-quality services. Traditionally, our large
installed customer base generates additional new
software, maintenance, consulting, and training revenue.
Despite the high quality and service level of our
transformed and expanded service offering in the area of
premium support services, we may be unable to meet
customer expectations with regards to delivery and value
proposition. This may lead to a potentially adverse
impact on customer experience. Existing customers
might cancel or not renew their maintenance contracts,
decide not to buy additional products and services, not
subscribe to our cloud offerings, or accept alternative
offerings from other vendors. In addition, the increasing
volume in our cloud business as well as the conversion of
traditional on-premise licenses to cloud subscriptions
licenses could have a potential negative impact on our
software and maintenance revenue streams. This could
have an adverse effect on our business, financial
position, profit, and cash flows.
The success of our cloud computing strategy
depends on market perception and an increasing
market adoption of our cloud solutions and managed
cloud services. Insufficient adoption of our solutions
and services could lead to a loss of SAP’s position as
a leading cloud company.
The market for cloud computing is increasing and shows
strong growth relative to the market for our on-premise
solutions. To offer a broad cloud service portfolio and
generate the associated business value for our
customers, we have acquired cloud computing
companies such as Ariba, Concur, Fieldglass, and
SuccessFactors. Due to ongoing contracts and previous
13
substantial investments to integrate traditional onpremise enterprise software into their businesses, as
well as concerns about data protection, security
capabilities, and reliability, customers and partners
might be reluctant or unwilling to migrate to the cloud.
Other factors that could affect the market acceptance of
cloud solutions and services include:
– Concerns with entrusting a third-party to store and
manage critical employee or company confidential
data
– Customer concerns about security capabilities and
reliability
– Customer concerns about the ability to scale
operations for large enterprise customers
– The level of configurability or customizability of the
software
– Missing integration scenarios between on-premise
products and cloud-to-cloud solutions
– Failure to securely and successfully deliver cloud
services by any cloud service provider could have a
negative impact on customer trust in cloud solutions
– Strategic alliances among our competitors in the
cloud area could lead to significantly increased
competition in the market with regards to pricing and
ability to integrate solutions
– Failure to get the full commitment of our partners
might reduce speed and impact in the market reach
If organizations do not perceive the benefits of cloud
computing, the market for cloud business might not
develop further, or it may develop more slowly than we
expect, either of which could have an adverse effect on
our business, financial position, profit, reputation and
cash flows.
Our market share and profit could decline due to
increased competition, market consolidation and
technological innovation as well as new business
models in the software industry.
The software industry continues to evolve rapidly and is
currently undergoing a significant shift due to
innovations in the areas of enterprise mobility,
cybersecurity, Big Data, hyperconnectivity, the Internet
of
Things,
digitization,
supercomputing,
cloud
computing, and social media. While smaller innovative
companies tend to create new markets continuously and
expand their reach through mergers, large traditional IT
vendors tend to enter such markets mostly through
acquisitions. SAP faces increased competition in our
business environment from traditional as well as new
competitors. This competition could cause price
pressure, cost increases, and loss of market share, which
could have an adverse effect on our business, financial
position, profit, and cash flows.
Additionally, related to our Applications, Technology, and
Services segment, customers could change their buying
behavior by accelerating their acceptance of cloud
solutions to reduce their investments, which might have
a temporary adverse effect on our operating results.
Furthermore, the trend in the market to invest more in
cloud solutions might lead to a risk of the potential loss of
existing on-premise customers. It may also have a
temporary adverse effect on our revenue due to the
number of conversions from on-premise licenses to
cloud subscriptions from existing SAP customers in our
installed base, as we recognize cloud subscriptions
revenue over the respective service provision, and that
typically ranges from one-to-three years with some up to
five years.
Business Strategy Risks
Demand for our new solutions may not develop as
planned and our strategy on new business models
and flexible consumption models may not be
successful.
Our business consists of new software licenses, software
license updates, and support and maintenance fees as
well as of cloud subscriptions. Our customers are
expecting to take advantage of technological
breakthroughs from SAP without compromising their
previous IT investments. However, the introduction of
new SAP solutions, technologies, and business models
as well as delivery and consumption models is subject to
uncertainties as to whether customers will be able to
perceive the additional value and realize the expected
benefits we deliver along our road maps. There is a risk
that such uncertainties may lead customers to wait for
proof of concept through reference customers or more
mature versions first, which might result in a lower level
of adoption of our new solutions, technologies, business
models, and flexible consumption models, or no adoption
at all. This could have an adverse effect on our business,
financial position, profit, and cash flows.
Though downturns or upturns in cloud sales may not
be immediately reflected in our operating results,
any decline in our customer renewals would harm
the future operating results of our cloud business.
We recognize cloud subscriptions revenue as we provide
the respective services, which typically range from oneto-three years with some up to five years. This revenue
recognition and our increasing subscription revenues
could have a temporary adverse effect on our financial
position, profit, and cash flows.
To maintain or improve our operating results in the cloud
business, it is important that our customers renew their
agreements with us when the initial contract term
expires and purchase additional modules or additional
14
capacities. Our customers have no obligation to renew
their subscriptions after the initial subscription period,
and we cannot assure that customers will renew
subscriptions at the same or at a higher level of service,
or at all. Our customers’ renewal rates may decline or
fluctuate as a result of various factors, including their
satisfaction or dissatisfaction with our cloud solution and
services portfolio; our ability to efficiently provide cloud
services according to customer expectations and
meeting the service level agreements, service availability
and provisioning, the integration capabilities of our cloud
solutions into their existing IT environment (including
hybrid solutions combining both cloud and on-premise
solutions); our customer support; concerns regarding
stable, efficient, and secure cloud operations and
compliance with legal and regulatory requirements; our
pricing; the pricing of competing products or services;
mergers and acquisitions affecting our customer base;
global economic conditions; and reductions in our
customers’ spending levels.
If our customers do not renew their subscriptions, renew
on terms less favorable to us, or fail to purchase
additional modules or users, our revenue and billings will
decline, and we may not realize significantly improved
operating results from our customer base. This could
have an adverse effect on our business, financial
position, profit, and cash flows.
If we are unable to scale and enhance an effective
partner ecosystem, revenue might not increase as
expected.
An open and vibrant partner ecosystem is a fundamental
pillar of our success and growth strategy. We have
entered into partnership agreements that drive coinnovation on our platforms, profitably expand all our
routes to market to optimize market coverage, optimize
cloud delivery, and provide high-quality services capacity
in all market segments. Partners play a key role in driving
market adoption of our entire solutions portfolio, by coinnovating on our platforms, embedding our technology,
and reselling and/or implementing our software.
If partners consider our products or services model less
strategic and/or financially less attractive compared to
our competition and/or less appropriate for their
respective channel and target market, if partners fear
direct competition by SAP or if SAP fails to establish and
enable a network of qualified partners meeting our
quality requirements and the requirements of our
customers, then, among other things, partners might
not:
– Develop a sufficient number of new solutions and
content on our platforms
– Provide high-quality products and services to meet
customer expectations
– Drive growth of references by creating customer use
cases and demo systems
– Embed our solutions sufficiently enough to profitably
drive product adoption, especially with innovations
such as SAP S/4HANA and SAP HANA Cloud
Platform
– Enable and train sufficient resources to promote, sell,
and support to scale to targeted markets
– Comply with applicable laws and regulations,
resulting in delayed, disrupted, or terminated sales
and services
– Transform their business model in accordance with
the transformation of SAP’s business model in a
timely manner
– Renew their existing agreements with us or enter into
new agreements on terms acceptable to us or at all
– Provide ability and capacity to meet customer
expectations regarding service provisioning.
If one or more of these risks materialize, this may have
an adverse effect on the demand for our products and
services as well as the partner’s loyalty and ability to
deliver. As a result, we may not be able to scale our
business to compete successfully with other software
vendors, which could have an adverse effect on our
reputation, business, financial position, profit, and cash
flows.
Human Capital Risks
If we do not effectively manage our geographically
dispersed workforce, we may not be able to run our
business efficiently and successfully.
Our success is dependent on appropriate alignment of
our internal and external workforce planning processes
and our location strategy with our general strategy. It is
critical that we manage our internationally dispersed
workforce effectively, taking short- and long-term
workforce and skill requirements into consideration. This
applies to the management of our internal as well as our
external workforce. Changes in headcount and
infrastructure needs as well as local legal or tax
regulations could result in a mismatch between our
expenses and revenue. Failure to manage our
geographically dispersed workforce effectively could
hinder our ability to run our business efficiently and
successfully and could have an adverse effect on our
business, financial position, profit, and cash flows.
If we are unable to attract, develop, and retain
leaders and employees with specialized knowledge
and technology skills, or are unable to achieve
internal diversity and inclusion objectives, we might
not be able to manage our operations effectively and
successfully, or develop successful new solutions
and services.
Our highly qualified workforce is the foundation for our
continued success. In certain regions and specific
technology and solution areas, we continue to set very
15
high growth targets, specifically in countries and regions
such as Africa, China, Latin America, and the Middle
East. In the execution of SAP’s strategic priorities, we
depend on highly skilled and specialized personnel and
leaders, both male and female. Successful maintenance
and expansion of our highly skilled and specialized
workforce in the area of cloud is a key success factor for
our transition to be the leading cloud company. The
availability of such personnel is limited and, as a result,
competition in our industry is intense and could expose
us to claims by other companies seeking to prevent their
employees from working for a competitor. If we are
unable to identify, attract, develop, motivate, adequately
compensate, and retain well-qualified and engaged
personnel, or if existing highly skilled and specialized
personnel leave SAP and ready successors or adequate
replacements are not available, we may not be able to
manage our operations effectively, which could have an
adverse effect on our reputation, business, financial
position, profit, and cash flows. Furthermore, we may not
be able to develop, sell, or implement successful new
solutions and services as planned. This is particularly
true as we continue to introduce new and innovative
technology offerings and expand our business in
emerging markets. The lack of appropriate or
inadequately executed benefit and compensation
programs could limit SAP’s ability to attract or retain
qualified employees and lead to financial losses. In
addition, we might not be able to achieve our internal
gender diversity objectives to increase the number of
women in management from 18% in 2010 to 25% by
2017.
Organizational and Governance-Related Risks
Laws and regulatory requirements in Germany, the
United States, and elsewhere have become much
more stringent.
As a European company domiciled in Germany with
securities listed in Germany and the United States, we
are subject to European, German, U.S., and other
governance-related regulatory requirements. Changes in
laws and regulations and related interpretations,
including changes in accounting standards and taxation
requirements, and increased enforcement actions and
penalties may alter the business environment in which
we operate. Regulatory requirements have become
significantly more stringent in recent years, and some
legislation, such as the anticorruption legislation in
Germany, the U.S. Foreign Corrupt Practices Act, the UK
Bribery Act, and other local laws prohibiting corrupt
payments by employees, vendors, distributors, or
agents, is being applied more rigorously. Emerging
markets are a significant focus of our international
growth strategy. The nature of these markets presents a
number of inherent risks. A failure by SAP to comply with
applicable laws and regulations, or any related
allegations of wrongdoing against us, whether merited or
not, could have an adverse effect on our business,
financial position, profit, cash flows and reputation.
Non-compliance with applicable data protection and
privacy laws or failure to adequately meet the
requirements of SAP’s customers with respect to
our products and services could lead to civil
liabilities and fines, as well as loss of customers and
damage to SAP’s reputation.
As a global software and service provider, SAP is
required to comply with local laws wherever SAP does
business. Consequently, we must ensure that any legal
requirements in connection with the provision of
products and services are properly implemented. With
regards to data protection requirements, significant
changes are expected subject to the upcoming European
Data Protection Regulation. Furthermore, SAP is
affected by the consequences of the decision of the
European Court of Justice (ECJ), which declared Safe
Harbor invalid, so that data transfers from within the
European Union (EU) to the United States are no longer
permitted based on Safe Harbor. This means that
acquired SAP affiliates that have not already
implemented the requirements for data transfers based
on the Standard Contractual Clauses will have to
implement these requirements immediately. However,
this will be ensured by the implementation of the new
Intra Group Agreement that provides a data protection
level at the Standard Contractual Clauses within the SAP
Group. These laws and regulations amend and
supplement existing requirements regarding the
processing of personal data that SAP and SAP
customers must fulfill and which we must consequently
address with our products and services, including cloud
delivery. Failure to comply with applicable laws or to
adequately address privacy concerns of customers, even
if unfounded, could lead to investigations by supervisory
authorities, civil liability, fines, (in the future, potentially
calculated based on the Company’s annual revenue),
loss of customers, damage to our reputation, and could
have an adverse effect on our business, financial
position, profit, and cash flows.
Further, recent landmark decisions by the ECJ on data
protection matters, as well as official statements made
by the European data protection supervisory authorities,
require SAP to carefully review our globalized business
practices. Most importantly, the ECJ on October 6, 2015,
ruled that data transfers by European companies to data
processors in the United States can no longer be based
on Safe Harbor. While SAP has not widely relied upon
Safe Harbor, the data protection supervisory authorities
have challenged the legality of other transfer
mechanisms, such as the Standard Contractual Clauses
used by SAP, on the same grounds by which the ECJ has
declared Safe Harbor invalid. The data protection
16
supervisory authorities have threatened to start
enforcement activities as early as end of January 2016
against European companies that still transfer data to
the United States (or grant U.S. companies remote
access to systems containing personal data in the EU)
based on a transfer mechanism that the authorities
consider invalid. Enforcement activities against SAP or
against SAP customers because of services and
products that SAP provides with the help of our U.S.based entities and/or U.S.-based suppliers could lead to
fines, civil liability, loss of customers, and damage to our
reputation, and could have an adverse effect on our
business, financial position, profit, and cash flows.
It is conceivable that data transfers to further countries
that do not provide a level of data protection and privacy
comparable to the European level may be challenged,
too.
Failure to meet customer, partner, or other
stakeholder expectations or generally accepted
standards on climate change, energy constraints,
and our social investment strategy could negatively
impact SAP’s business, results of operations, and
reputation.
Energy and emissions management are an integral
component of our holistic management of social,
environmental, and economic risks and opportunities.
We have identified risks in these major areas:
– Our solutions
– Our own operations – energy management and other
environmental issues such as carbon management,
water use, and waste
Because our customers, employees, and investors
expect a reliable energy and carbon strategy, we have
reemphasized our previously communicated targets,
especially our 2020 target for greenhouse gas
emissions. In case these targets cannot be achieved, our
customers might no longer recognize SAP for our
environmental leadership and might buy other vendors’
products and services. Consequently, we could fail to
achieve our revenue target. If we do not meet
stakeholder expectations in the areas identified, our
rating in sustainable investment indexes might decrease,
which could have an adverse effect on our reputation,
business, financial position, profit, and cash flows.
business integrity. The SAP Code of Business Conduct,
adopted by the Executive Board on January 29, 2003,
and updated as necessary since then, memorialized and
supplemented the already existing guidelines and
expectations for the business behavior practiced at SAP.
However, we may encounter unethical behavior and noncompliance with our integrity standards due to
intentional and fraudulent behavior of individual
employees, possibly in collusion with external third
parties. In addition to intentional behavior, problems
could also arise due to negligence in the adherence to
rules and regulations. Unethical behavior and
misconduct attributable to SAP could not only lead to
criminal charges, fines, and claims by injured parties, but
also to financial loss, and severe reputational damage.
This could have an adverse effect on our business,
financial position, profit, and cash flows.
Principal shareholders may be able to exert control
over our future direction and operations.
If SAP SE’s principal shareholders and the holdings of
entities controlled by them vote in the same manner, this
could delay, prevent or facilitate a change in control of
SAP or other significant changes to SAP SE or its capital
structure. See “Item 7. Major Shareholders and RelatedParty Transactions – Major Shareholders” for further
information.
U.S. judgments may be difficult or impossible to
enforce against us or our Board members.
Currently, except for Bill McDermott and Robert Enslin,
all members of SAP SE’s Executive Board and all
members of the Supervisory Board are non-residents of
the United States. A substantial portion of the assets of
SAP and our Board members are located outside the
United States. As a result, it may not be possible to effect
service of process within the United States upon nonU.S. resident persons or SAP or to enforce against nonU.S. resident persons judgments obtained in U.S. courts
predicated upon the civil liability provisions of the
securities laws of the United States. In addition, awards
of punitive damages in actions brought in the United
States or elsewhere might be unenforceable in Germany.
Communication and Information Risks
Unethical behavior and non-compliance with our
integrity standards due to intentional and fraudulent
employee behavior could seriously harm our
business, financial position, profit, and reputation.
Our controls and efforts to prevent the unauthorized
disclosure of confidential information might not be
effective.
SAP’s leadership position in the global market is founded
on the long-term and sustainable trust of our
stakeholders worldwide. Our heritage is one of corporate
transparency, open communication with financial
markets, and adherence to recognized standards of
Confidential information and internal information related
to topics such as our strategy, new technologies,
mergers and acquisitions, unpublished financial results,
or personal data, could be prematurely or inadvertently
disclosed
and
subsequently
lead
to
market
17
misperception and volatility. This could require us to
notify multiple regulatory agencies and comply with
applicable regulatory requirements and, where
appropriate, the data owner, which could result in a loss
of reputation for SAP. For example, leaked information
during a merger or acquisition deal could cause the loss
of our deal target, or our share price could react
significantly in case of prematurely published financial
results. This could have an adverse effect on our market
position and lead to fines and penalties. In addition, this
could have an adverse effect on our business, financial
position, profit, and cash flows.
Financial Risks
Our sales are subject to quarterly fluctuations and
our sales forecasts may not be accurate.
Our revenue and operating results can vary and have
varied in the past, sometimes substantially, from quarter
to quarter. Our revenue in general, and our software
revenue in particular, is difficult to forecast for a number
of reasons, including:
– The relatively long sales cycles for our products
– The large size, complexity, and extended timing of
individual customer transactions
– The introduction of licensing and deployment models
such as cloud subscription models
– The timing of the introduction of new products or
product enhancements by SAP or our competitors
– Changes in customer budgets
– Decreased software sales that could have an adverse
effect on related maintenance and services revenue
– The timing, size, and length of customers’ services
projects
– Deployment models that require the recognition of
revenue over an extended period of time
– Adoption of, and conversion to, new business models
leading to changed or delayed payment terms
– Seasonality of a customers’ technology purchases
– Limited visibility during the ongoing integration of
acquired companies into their ability to accurately
predict their sales pipelines and the likelihood that the
projected pipeline will convert favorably into sales
– Other general economic, social, environmental, and
market conditions, such as a global economic crisis
and difficulties for countries with large debt
Since many of our customers make their IT purchasing
decisions near the end of calendar quarters, and with a
significant percentage of those decisions being made
during our fourth quarter, even a small delay in
purchasing decisions for our on-premise software could
have an adverse effect on our revenue results for a given
year. Our dependence on large transactions has
decreased in recent years with a trend towards an
increased number of transactions coupled with a
decrease in deal size. However, the loss or delay of one
or a few large opportunities could have an adverse effect
on our business, financial position, profit, and cash flows.
External factors could impact our liquidity and
increase the default risk associated with, and the
valuation of, our financial assets.
Macroeconomic factors such as an economic downturn
could have an adverse effect on our future liquidity. We
use a globally centralized financial management to
control financial risk, such as liquidity, exchange rate,
interest rate, counterparty, and equity price risks. The
primary aim is to maintain liquidity in the SAP Group at a
level that is adequate to meet our obligations at any time.
Our total Group liquidity is supported by our strong
operating cash flows, of which a large part is recurring,
and by credit facilities from which we can draw if
necessary. However, adverse macroeconomic factors
could increase the default risk associated with the
investment of our total Group liquidity including possible
liquidity shortages limiting SAP’s ability to repay financial
debt. This could have an impact on the value of our
financial assets, which could have an adverse effect on
our business, financial position, profit, and cash flows.
Management use of estimates could negatively
affect our business, financial position, profit, and
cash flows.
To comply with IFRS, management is required to make
numerous judgments, estimates, and assumptions
(among others for our major patent disputes) that affect
the reported financial figures. The facts and
circumstances, as well as assumptions on which
management bases these estimates and judgments and
management’s judgment regarding the facts and
circumstances, may change from time to time and this
could result in significant changes in the estimates and
judgments and, consequently, in the reported financials.
Such changes could have an adverse effect on our
business, financial position, profit and cash flows.
Current and future accounting pronouncements and
other financial reporting standards, especially but
not only concerning revenue recognition, may
negatively impact our financial results.
We regularly monitor our compliance with applicable
financial reporting standards and review new
pronouncements and drafts thereof that are relevant to
us. As a result of new standards, changes to existing
standards (including the new IFRS 15 on revenue from
contracts with customers that we will need to adopt in
2018) and changes in their interpretation, we might be
required to change our accounting policies, particularly
concerning revenue recognition, to alter our operational
policies so that they reflect new or amended financial
reporting standards, or to restate our published financial
18
statements. Such changes may have an adverse effect
on our reputation, business, financial position, and profit,
or cause an adverse deviation from our revenue and
operating profit target.
Because we conduct operations throughout the
world, our business, financial position, profit, and
cash flows may be affected by currency and interest
rate fluctuations.
Our Group-wide management reporting and our external
financial reporting are both in euros. Nevertheless, a
significant portion of our business is conducted in
currencies other than the euro. Approximately 74% of
our revenue in 2015 was attributable to operations
outside the euro area and was translated into euros.
Consequently, period-over-period changes in the euro
rates for particular currencies can significantly affect our
reported revenues, profits and cash flows. In general,
appreciation of the euro relative to another currency has
an adverse effect while depreciation of the euro relative
to another currency has a positive effect. Variable
interest balance-sheet items are also subject to changes
in interest rates. Such changes may have an adverse
effect on our business, financial position, profit and cash
flows or cause an adverse deviation from our revenue
and operating profit target.
The cost of using derivative instruments to hedge
share-based payments may exceed the benefits of
hedging them.
– the announcement of new products or product
enhancements by us or our competitors;
– technological innovation by us or our competitors;
– quarterly variations in our results or our competitors’
results of operations or results that fail to meet
market expectations;
– changes in revenue and revenue growth rates on a
consolidated basis or for specific geographic areas,
business units, products or product categories;
– changes in our externally communicated outlook;
– changes in our capital structure, for example due to
the potential future issuance of additional debt
instruments;
– general market conditions specific to particular
industries;
– litigation to which we are a party;
– general and country specific economic or political
conditions (particularly wars, terrorist attacks, etc.);
– proposed and completed acquisitions or other
significant transactions by us or our competitors; and
– general market conditions.
Many of these factors are beyond our control. In the past,
companies that have experienced volatility in the market
price of their stock have been subject to shareholder
lawsuits, including securities class action litigation. Any
such lawsuits against us, with or without merit, could
result in substantial costs and the diversion of
management’s attention and resources, resulting in a
decline in our results of operations and our stock price.
Project Risks
We use derivative instruments to reduce the impact of
our share-based payments on our income statement and
to limit future expense associated with those plans.
Based on a defined hedging strategy, we align the
decision of individual hedging transactions with the
Group CFO in the Treasury Committee. The expense of
hedging the share-based payments could exceed the
benefit achieved by hedging them. On the other hand, a
decision to leave the plans materially unhedged could
prove disadvantageous. This could have an adverse
effect on our business, financial position, profit and cash
flows or cause an adverse deviation from our revenue
and operating profit target.
The market price for our ADRs and ordinary shares
may be volatile.
The market prices of our ADRs and ordinary shares have
experienced and may continue to experience significant
volatility in response to various factors including, but not
limited to:
– unauthorized or inadvertent premature disclosure of
confidential information, including information
concerning pending acquisition negotiations or
acquisition rumors;
Implementation of SAP software often involves a
significant commitment of resources by our
customers and is subject to a number of significant
risks over which we often have no control.
A core element of our business is the successful
implementation of software solutions to enable our
customers to master complexity and help our
customers’ business run at their best. The
implementation of SAP software is led by SAP, by
partners, by customers, or by a combination thereof.
Depending on various factors, such as the complexity of
solutions, the customer’s implementation, integration
and migration needs, or the resources required, SAP
faces a number of different risks. For example, functional
requirement changes, delays in timeline, or deviation
from recommended best practices may occur during the
course of a project. These scenarios have a direct impact
on the project resource model and on securing adequate
internal personnel or consultants in a timely manner and
could therefore prove challenging.
As a result of these and other risks, SAP and/or some of
our customers have incurred significant implementation
19
costs in connection with the purchase and installation of
SAP
software
products.
Some
customer
implementations have taken longer than planned. We
cannot guarantee that we can reduce or eliminate
protracted installation or significant third-party
consulting costs, for example, that trained consultants
will be readily available, that our costs will not exceed the
fees agreed in fixed-price contracts, or that customers
will be satisfied with the implementation of our software
and solutions. Unsuccessful, lengthy, or costly customer
implementation and integration projects could result in
claims from customers, harm SAP’s reputation, and
could have an adverse effect on our business, financial
position, profit, and cash flows.
Product and Technology Risks
Undetected security vulnerabilities shipped and
deployed within our products might cause damage
to SAP and our customers, and partners.
Customer systems or systems operated by SAP itself to
provide services could potentially be compromised by
vulnerabilities if they are exploited by hackers. This could
lead to theft, destruction, or abuse of data, or systems
could be rendered unusable (for example, due to
distributed denial of service attacks). The detection of
security vulnerabilities in our software, our customers’
systems, or SAP systems used in the provision of
services, especially in case of exploitation, could prevent
us from meeting our contractual obligations and
subsequently might lead to customer claims and
reputational damage, which might have an adverse effect
on our business, financial position, profit, and cash flows.
Undetected defects in the introduction of new
products and product enhancements could increase
our costs, and reduce customer demand.
Our development investment, including new product
launches and enhancements, is subject to risks. For
example, software products and services might not
completely meet our high-quality standards, including
security standards; might not fulfill market needs or
customer expectations; or might not comply with local
standards and requirements. Furthermore, this risk also
exists with respect to acquired companies’ technologies
and products where we might not be able to manage
these as quickly and successfully as expected.
Therefore, market launches, entering new markets, or
the introduction of new innovations could be delayed or
not be successful.
In addition, new products and cloud offerings, including
third-party technologies we have licensed and open
source software components we use in those products,
could contain undetected defects or they might not be
mature enough from the customer’s point of view for
business-critical solutions. The detection and correction
of any defects especially after delivery could be
expensive and time-consuming and we might not be able
to meet the expectations of customers regarding time
and quality in the defect resolution process. In some
circumstances, we might not be in a position to rectify
such defects or entirely meet the expectations of
customers, specifically as we are expanding our product
portfolio into additional markets. As a result, we might be
faced with customer claims for cash refunds, damages,
replacement software, or other concessions. The risk of
defects and their adverse consequences could increase
as we seek to introduce a variety of new software
products and product enhancements at a higher
innovation rate. This is especially relevant for cloud
products as delivery cycles are even shorter (up to daily
deliveries) and our complete cloud product customer
base could receive undetected defects simultaneously.
Furthermore, for products that use third-party (not SAP)
cloud services, we cannot detect defects in advance.
Significant undetected defects or delays in introducing
new products or product enhancements could affect
market acceptance of SAP software products and could
have an adverse effect on our reputation, business,
financial position, profit, and cash flows.
The use of existing SAP software products by customers
in business-critical solutions and processes and the
relative complexity and technical interdependency of our
software products and services create a risk that
customers or third parties may pursue warranty,
performance, or other claims against us for actual or
alleged defects in SAP software products, in our provision
of services, or in our application hosting services. We
have in the past been, and may in the future be, subject to
warranty, performance, or other similar claims.
Although our contracts generally contain provisions
designed to limit our exposure due to actual or alleged
defects in SAP software products or in our provision of
services, these provisions may not cover every
eventuality or be effective under the applicable law.
Regardless of its merits, any claim could entail
substantial expense and require the devotion of
significant time and attention by key management
personnel. Publicity surrounding such claims could affect
our reputation and the demand for our software.
20
Changes in our rights to use software, cloud
services, and technologies we license from third
parties that are an integral part of SAP’s products
could slow down time to market and influence our
license pricing and therefore the competitiveness
with other software vendors. Furthermore, it could
diminish our software’s or cloud functional
capabilities and therefore could jeopardize the
stability of our solution portfolio offering.
change, changing regulatory requirements, emerging
industry standards, and changing requirements of our
customers and partners. Finally, we might not succeed in
producing high-quality products, enhancements, and
releases in a timely and cost-effective manner to
compete with products, solutions, and other
technologies offered by our competitors, which could
have an adverse effect on our reputation, business,
financial position, profit, and cash flows.
The numerous third-party solutions we have licensed
and certain open source software components we use
have become an integral part of our product and service
portfolio. We depend on those solutions for the
functionality of our software and cloud services. Changes
to, or the loss of, third-party licenses as well as open
source licenses being construed could significantly
increase the cost of these licenses and significantly
reduce software or cloud functionality and/or usability of
SAP’s software or cloud offerings. As a result, we might
incur additional development or license costs to ensure
the continued functionality of our products, which could
have an adverse effect on our business, financial
position, profit, and cash flows. This risk increases with
each of our acquisitions of a company or a company’s
intellectual property assets that had been subject to
third-party solution licensing, open source software and
product standards less rigorous than our own.
Our technology and/or product strategy may not be
successful or our customers and partners might not
adopt our technology platforms and other
innovations accordingly.
If we are unable to keep up with rapid technological,
process and service innovations, and new business
models as well as changing market expectations, we
might not be able to compete effectively.
We might not be successful in integrating our platforms,
enabling the complete product and cloud service
portfolio, harmonizing our user interface design and
technology, integrating acquired technologies, or
bringing new solutions based on the SAP HANA platform
as well as SAP HANA Cloud Platform to the market as
fast as expected, in particular, innovative applications
such as SAP S/4HANA. In addition, we may not be able
to compete effectively in the area of cloud services and
our new applications and services might not meet
customer expectations. As a result, our partner
organizations and customers might not adopt our
technology platforms, applications, or cloud services
quickly enough or they might consider competitive
solutions. This could have an adverse effect on our
reputation, business, financial position, profit, and cash
flows.
Our future success depends upon our ability to keep
pace with technological and process innovations and
new business models, as well as our ability to develop
new products and services, enhance and expand our
existing products and services portfolio, and integrate
products and services we obtain through acquisitions. To
be successful, we are required to adapt our products and
our go-to-market approach to a cloud-based delivery
model to satisfy changing customer demand.
We might not be successful in bringing new business
models, solutions, solution enhancements, and/or
services to market before our competitors. We may also
face increasing competition from open source software
initiatives in which competitors may provide software
and intellectual property free and/or under terms and
conditions unfavorable for SAP. In addition, we might not
be able to generate enough revenue to offset the
significant research and development costs we incur to
deliver technological innovations or to offset the required
infrastructure costs to deliver our solutions and services
as part of our new business models. Moreover, we might
not anticipate and develop technological improvements
or succeed in adapting our products, services,
processes, and business models to technological
We offer customers a broad portfolio of products,
solutions, and services. Our technology strategy centers
on SAP HANA as a real-time in-memory computing
platform for analytics and applications, the SAP S/
4HANA suite as the digital core, the business network,
and SAP HANA Cloud Platform as our platform-as-aservice offering. The success of our technology strategy
depends on the delivery of the new digital framework, as
our technology continues to deliver business value to
meet changing customer expectations. Our technology
strategy also relies on our ability to maintain a dynamic
network of partner organizations developing their own
business applications using our technology platforms.
Our cloud offerings might be subject to a security
attack, become unavailable, or fail to perform
properly.
The software used in our cloud portfolio is inherently
complex and any defects in product functionality, data
center operations, or system stability that cause
interruptions in the availability of our application portfolio
could result in the following:
– Lost or delayed market acceptance and sales
– Breach of warranty or other contract breach or
misrepresentation claims
21
– Sales credits or refunds to our customers or partners
– Loss of customers and/or partners
– Diversion of development and customer service
resources
– Breach of data protection and privacy laws and
regulations
– Customers considering competitive cloud offerings
– Loss of customer satisfaction and brand reputation
The costs incurred in correcting any defects or errors
might be substantial and could have an adverse effect on
our reputation, business, financial position, profit, and
cash flows. The availability of our cloud applications
could be interrupted by a number of factors, resulting in
customers’ inability to access their cloud applications,
system outages, failure of our network due to human or
other errors, security breaches, or variability in user
traffic for our cloud applications. Because of the large
amount of data that we collect and manage, hardware
failures, defects in our software, or errors in our systems
could result in data loss or corruption, or cause the
information that we collect to be incomplete or contain
inaccuracies that our customers regard as significant.
Additionally, any loss of the right to use hardware
purchased or leased from third parties could result in
delays in our ability to provide our cloud applications
until equivalent technology is either developed by us or, if
available, identified. Furthermore, our cooperation with
partners in the area of cloud includes the co-location of
data centers that might expose SAP to additional risks in
the area of security and data protection, as well as the
potential for breached service-level agreements by
partners.
We have administrative, technical, and physical security
measures in place as well as contracts that require thirdparty data centers to have appropriate security and data
protection and privacy measures in place. In this context,
customers might demand to use only specific and/or
local data centers. However, if these security measures
are breached as a result of third-party action, employee
error or malfeasance, or otherwise, and if, as a result,
someone obtains unauthorized access to our customers’
data, which may include personally identifiable
information regarding users, our reputation could be
damaged, our business may suffer, local data protection
and privacy laws or regulations might be breached, and
we could incur significant liability.
In addition, our insurance coverage might not cover
claims against us for loss or security breach of data or
other indirect or consequential damages. Moreover,
defending a suit, regardless of its merit, could be costly
and time-consuming. In addition to potential liability, if
we experience interruptions in the availability of our
cloud applications, our reputation could be harmed and
we could lose customers.
Operational Risks
Third parties have claimed, and might claim in the
future, that we infringe their intellectual property
rights, which could lead to damages being awarded
against us and limit our ability to use certain
technologies in the future.
We believe that we will increasingly be subject to
intellectual property infringement claims as our solution
portfolio grows; as we acquire companies with increased
use of third-party code including open source code; as
we expand into new industries with our offerings,
resulting in greater overlap in the functional scope of
offerings; and as non-practicing entities that do not
design, manufacture, or distribute products increasingly
assert intellectual property infringement claims.
Any claims, with or without merit, and negotiations or
litigation relating to such claims, could preclude us from
utilizing certain technologies in our products, be timeconsuming, result in costly litigation, and require us to
pay damages to third parties, stop selling or reconfigure
our products and, under certain circumstances, pay fines
and indemnify our customers, which could have an
adverse effect on our business, financial profile, profit,
cash flows, and reputation. They could also require us to
enter into royalty and licensing arrangements on terms
that are not favorable to us, cause product shipment
delays, subject our products to injunctions, require a
complete or partial redesign of products, result in delays
to our customers’ investment decisions, and damage our
reputation.
Software includes many components or modules that
provide different features and perform different
functions. Some of these features or functions may be
subject to third-party intellectual property rights. The
rights of another party could encompass technical
aspects that are similar to one or more technologies in
one or more of our products. Intellectual property rights
of third parties could preclude us from using certain
technologies in our products or require us to enter into
royalty and licensing arrangements on unfavorable or
expensive terms.
The software industry is making increasing use of open
source software in its development work on solutions.
We also integrate certain open source software
components from third parties into our software. Open
source licenses may require that the software code in
those components or the software into which they are
integrated be freely accessible under open source terms.
Third-party claims may require us to make freely
accessible under open source terms one of our products
or third-party (not SAP) software upon which we depend.
22
Claims and lawsuits against us could have an
adverse effect on our business, financial position,
profit, cash flows, and reputation.
Claims and lawsuits are brought against us, including
claims and lawsuits involving businesses we have
acquired. Adverse outcomes to some or all of the claims
and lawsuits pending against us might result in the award
of significant damages or injunctive relief against us that
could hinder our ability to conduct our business and
could have an adverse effect on our reputation, business,
financial position, profit, and cash flows.
The outcome of litigation and other claims or lawsuits is
intrinsically uncertain. Management’s view of the
litigation may also change in the future. Actual outcomes
of litigation and other claims or lawsuits could differ from
the assessments made by management in prior periods,
which are the basis for our accounting for these
litigations and claims under IFRS.
We might not acquire and integrate companies
effectively or successfully and our strategic
alliances might not be successful.
To expand our business, we acquire businesses,
products, and technologies, and we expect to continue to
make acquisitions in the future. Over time certain of
these acquisitions have increased in size and in strategic
importance for SAP, Management negotiation of
potential acquisitions and alliances and integration of
acquired businesses, products, or technologies demands
time, focus, and resources of management and of the
workforce. Acquisitions of companies, businesses, and
technology expose us to unpredictable operational
difficulties, expenditures, and risks. These risks include,
among others:
– Selection of the wrong integration model for the
acquired company and/or technology
– Failure to properly evaluate the acquired business and
its different business and licensing models
– Failure
to
successfully
integrate
acquired
technologies or solutions into SAP’s solution portfolio
and strategy in a timely and profitable manner
– Failure to integrate the acquired company’s
operations
across
SAP’s
different
cultures,
languages, and local protocols, all within the
constraints of applicable local laws
– Failure to meet the needs of the acquired company’s
customers and partners in the combined company
– The diversion of management’s time and attention
from daily operations
– Loss of key personnel of the acquired business
– Material unknown liabilities and contingent liabilities
of acquired companies, including legal, tax,
accounting, intellectual property, or other significant
liabilities that may not be detected through the
acquisition due diligence process
– Legal and regulatory constraints (such as contract
obligations, privacy frameworks, and agreements)
– Difficulties in implementing, restoring, or maintaining
internal controls, procedures, and policies
– Practices or policies of the acquired company that
may be incompatible with our compliance
requirements
– An adverse effect on relationships with existing
customers, partners, or third-party providers of
technology or products
– Difficulties in integrating the acquired company’s
accounting, HR, and other administrative systems
and coordination of the acquired company’s research
and development (R&D), sales, and marketing
functions
– Debt incurrence or significant cash expenditures
– Constraints in enforcing acquired companies’
compliance with existing SAP security standards in a
timely manner
– Difficulties in customer implementation projects
combining technologies and solutions from both SAP
and the acquired company
In addition, acquired businesses might not perform as
anticipated, resulting in charges for the impairment of
goodwill and other intangible assets on our statements of
financial position. Such charges may have an adverse
effect on our business, financial position, profit, and cash
flows. We have entered into, and expect to continue to
enter into, alliance arrangements for a variety of
purposes, including the development of new products
and services. There can be no assurance that any such
products or services will be successfully developed or
that we will not incur significant unanticipated liabilities
in connection with such arrangements. We may not be
successful in overcoming these risks and we may
therefore not benefit as anticipated from acquisitions or
alliances.
We may not be able to obtain adequate title to, or
licenses in, or to enforce, intellectual property.
Protecting and defending our intellectual property is
crucial to our success. We use a variety of means to
identify and monitor potential risks and to protect our
intellectual property. These include applying for patents,
registering trademarks and other marks and copyrights,
implementing measures to stop copyright and
trademark infringement, entering into licensing,
confidentiality, and non-disclosure agreements, and
deploying protection technology. Despite our efforts, we
might not be able to prevent third parties from obtaining,
using, or selling without authorization what we regard as
our proprietary technology and information. All of these
measures afford only limited protection, and our
proprietary rights could be challenged, invalidated, held
unenforceable, or otherwise affected. Some intellectual
property might be vulnerable to disclosure or
23
misappropriation by employees, partners, or other third
parties. Third parties might independently develop
technologies that are substantially equivalent or superior
to our technology. Finally, third parties might reverseengineer or otherwise obtain and use technology and
information that we regard as proprietary. Accordingly,
we might not be able to protect our proprietary rights
against unauthorized third-party copying or utilization,
which could have an adverse effect on our competitive
and financial positions, and result in reduced sales. Any
legal action we bring to enforce our proprietary rights
could also involve enforcement against a partner or other
third party, which may have an adverse effect on our
ability, and our customers’ ability, to use that partner’s
or other third parties’ products. In addition, the laws and
courts of certain countries may not offer effective means
to enforce our intellectual property rights. This could
have an adverse effect on our reputation, business,
financial position, profit, and cash flows.
SAP’s business strategy focuses on certain business
models that are highly dependent on a working
cyberspace. A cybersecurity breach could have an
adverse effect on our customers, our reputation, and
our business.
The key cybersecurity risks currently applicable to us
include state-driven economic espionage as well as
competitor-driven industrial espionage, and criminal
activities including, but not limited to, cyberattacks and
“mega breaches” against cloud services and hosted onpremise software. This might result in, for example,
disclosure of confidential information and intellectual
property, defective products, production downtimes,
supply shortages, and compromised data (including
personal data). A failure of our cybersecurity measures
could impact our compliance with legal demands (for
example, Sarbanes-Oxley Act, Payment Card Industry
Data Security Standard, data privacy) and expose our
business operations as well as service delivery to the
described risks, for example, virtual attack, disruption,
damage, and/or unauthorized access. Additionally, we
could be subject to recovery costs, for example, as well
as significant contractual and legal claims by customers,
partners, authorities, and third-party service providers
for damages against us, which could have an adverse
effect on our reputation, business, financial position,
profit, and cash flows.
We may not be able to protect our critical
information and assets or to safeguard our business
operations against disruption.
SAP is highly dependent on the exchange of a wide range
of information across our global operations and on the
availability of our infrastructure. With regards to our
physical environment, we face several key security risks
such as industrial and/or economic espionage, serious
and organized crime, and other illegal activities, as well
as violent extremism and terrorism. We might be
endangered by threats including, but not limited to,
social engineering, misuse, or theft of information or
assets, or damage to assets by trespassers in our
facilities or by people who have gained unauthorized
physical access to our facilities, systems, or information.
These could have an adverse effect on our business,
financial profile, profit, and cash flows.
Our insurance coverage might not be sufficient and
we might be subject to uninsured losses.
We maintain insurance coverage to protect us against a
broad range of risks, at levels we believe are appropriate
and consistent with current industry practice. Our
objective is to exclude or minimize risk of financial loss at
reasonable cost. However, we may incur losses that may
be beyond the limits, or outside the scope, of coverage of
our insurance and that may limit or prevent
indemnification under our insurance policies. In addition,
we might not be able to maintain adequate insurance
coverage on commercially reasonable terms in the
future. Further, certain categories of risks are currently
not insurable at reasonable cost, which could have an
adverse effect on our business, financial position, profit,
and cash flows. Finally, there can be no assurance of the
financial ability of the insurance companies to meet their
claim payment obligations.
We could incur significant losses in connection with
venture capital investments.
Through Sapphire Ventures (formerly SAP Ventures),
our consolidated venture investment funds, we plan to
continue investing in new and promising technology
businesses. Many such investments initially generate net
losses and require additional expenditures from their
investors. Changes to planned business operations have,
in the past affected, and may in the future affect, the
performance of companies in which Sapphire Ventures
holds investments, and that could have an adverse effect
on the value of our investments in Sapphire Ventures,
which could have an adverse effect on our business,
financial position, profit, and cash flows. Furthermore,
tax deductibility of capital losses and impairment in
connection with equity securities are often restricted and
could therefore have an adverse effect on our effective
tax rate.
ITEM 4. INFORMATION ABOUT SAP
Our legal corporate name is SAP SE. SAP SE is translated
in English to SAP European Company (Societas
Europaea, or “SE”). SAP SE is organized in the Federal
Republic of Germany under German and European law,
see “Item 10. Additional Information.” Where the context
requires in the discussion below, SAP SE also refers to
our predecessor or previous legal forms and names, as
24
the
case may
be,
i.e.
Systemanalyse
und
Programmentwicklung GbR (1972-1976), SAP Systeme,
Anwendungen, Produkte in der Datenverarbeitung
GmbH (1976-1988), “SAP Aktiengesellschaft Systeme,
Anwendungen, Produkte in der Datenverarbeitung”
(1988-2005) and “SAP AG” (2005-2014). Our principal
executive offices, headquarters and registered office are
located at Dietmar-Hopp-Allee 16, 69190 Walldorf,
Germany. Our telephone number is +49-6227-7-47474.
As part of our activities to reduce the number of legal
entities in the SAP group, in 2015 we integrated certain
subsidiaries into the following significant SAP
subsidiaries: SAP (UK) Limited, SAP France S.A., SAP
America Inc., SuccessFactors, Inc., SAP Japan Co. Ltd.,
SAP Australia Pty Limited and SAP Nederland B.V.
For (i) a description of our principal capital expenditures
and divestitures and the amount invested (including
interests in other companies) since January 1, 2013 until
the date of this report and (ii) information concerning our
principal capital expenditures and divestitures currently
in progress, including the distribution of these
investments geographically and the method of financing,
see “Item 4. Information About SAP – Description of
Property – Capital Expenditures.”
OVERVIEW OF THE SAP GROUP
Founded in 1972, SAP today is the global leader in
business application and analytics software in terms of
market share and the market leader in digital commerce.
Further, SAP is the enterprise cloud company with the
greatest number of users and the fastest-growing major
database company. Our continued growth over more
than four decades is attributable to relentless innovation,
a diverse portfolio, our ability to anticipate everchanging
customer requirements, and a broad ecosystem of
partners. With approximately 300,000 customers in
over 180 countries, the SAP Group includes subsidiaries
in all major countries and employs approximately 77,000
people.
SAP is headquartered in Walldorf, Germany; our legal
corporate name is SAP SE. Our ordinary shares are listed
on the Frankfurt Stock Exchange, the Berlin Stock
Exchange and the Stuttgart Stock Exchange. The
principal trading market for the ordinary shares is Xetra,
the electronic dealing platform of Deutsche Börse AG.
American Depositary Receipts (ADRs) representing SAP
SE ordinary shares are listed on the New York Stock
Exchange (NYSE), and currently each ADR represents
one ordinary share. As at December 31, 2015, our market
capitalization was €90.1 billion on the DAX and US$97.2
billion on the NYSE. SAP is a member of Germany’s DAX,
the Dow Jones EURO STOXX 50, and the Dow Jones
Sustainability Index.
Our company culture puts our customers’ success at the
center of everything we do. With our vision to help the
world run better and improve people’s lives, and with
Run Simple as our operating principle, we focus on
helping our customers master complexity, and innovate
and transform to become a sustainable digital business.
We derive our revenue from fees charged to our
customers for the use of our cloud solutions, for
licensing of on-premise software products and solutions,
and transaction fees for activity on our business
networks. Additional sources of revenue are support,
professional services, development, training, and other
services.
As at December 31, 2015, SAP SE directly or indirectly
controlled a worldwide group of 255 subsidiaries in more
than 180 countries to distribute our products, solutions,
and services. Distributorship agreements are in place
with independent resellers in many countries.
Our subsidiaries perform tasks such as sales and
marketing, consulting, research and development, cloud
delivery, customer support, training, or administration.
For a list of subsidiaries, associates, and other equity
investments, see the Notes to the Consolidated Financial
Statements section, Note (33).
25
The following table illustrates our most significant subsidiaries based on total revenues as of December 31, 2015. All
subsidiaries are wholly owned by SAP SE.
Name of Subsidiary
Country of Incorporation
Germany
SAP Deutschland SE & Co. KG, Walldorf
Germany
Rest of EMEA
SAP (UK) Limited, Feltham
Great Britain
SAP (Schweiz) AG, Biel
Switzerland
SAP France, Levallois Perret
France
SAP Nederland B.V., ‘s-Hertogenbosch
The Netherlands
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Vimercate
Italy
United States
SAP America, Inc., Newtown Square
USA
SAP Industries, Inc., Newtown Square
USA
SuccessFactors, Inc., South San Francisco
USA
Ariba, Inc., Palo Alto
USA
Concur Technologies, Inc., Bellevue
USA
Rest of Americas
SAP Brasil Ltda, São Paulo
Brazil
Japan
SAP Japan Co., Ltd., Tokyo
Japan
Rest of APJ
SAP Australia Pty Ltd., Sydney
SAP (Beijing) Software System Co. Ltd., Beijing
STRATEGY AND BUSINESS MODEL
Helping our Customers Reimagine their Businesses
The world is experiencing unprecedented change that is
transforming both our use of technology and society
more broadly. People are connected in ways like never
before. Entire industries have been disrupted by
innovations that have brought the once unimaginable
within
reach.
Technology
trends
such
as
hyperconnectivity, cloud computing, and Big Data go
hand-in-hand with social and business trends that are
changing how we live and work. Rapid urbanization, the
sharing economy, enormous demographic change, and
resource scarcity are demanding that leaders of
tomorrow adapt to a world in which the pace of change
continues to accelerate.
To remain competitive – and create a sustainable
competitive advantage – businesses today must become
Australia
China
sustainable digital businesses. In fact, experts across
industries know that in the new digital economy, only the
most adaptive businesses will prevail. SAP provides what
is needed to become a digital business. Our enduring
vision is to help the world run better and improve
people’s lives. Our vision is not just relevant in this time
of change and disruption – it is essential.
Complexity has become a problem of staggering
proportions and stands in the way of digital
transformation and innovation. It is what keeps
companies from turning the trends of our time – from
the explosion of data to a rapidly growing middle class –
into business opportunities. Becoming a digital business
means that companies must first cut through this
complexity, as simplicity is a prerequisite for innovation.
Companies must make their digital strategy a core part
of their business strategy.
26
social performance, using resources more efficiently,
and interacting with local communities. Our global
business networks expand the world that our customers
operate in, connecting them with a vast ecosystem of
partners that creates more efficient, powerful, and
simpler ways of managing such key functions as
procurement, travel, and workforce management.
We enable organizations to tackle complexity by
unlocking their ability to Run Simple. This principle
guides everything we do and powers our customers’
transformation into digital businesses. We offer what is
required to support this transformation – our deep
experience as a leader in enterprise software for more
than 40 years; our solutions and services; and our global
reach, which includes a base of approximately
300,000 customers across 25 distinct industries; and an
ecosystem of thousands of partners.
Our digital approach is built on two critical elements –
our SAP Cloud portfolio and the SAP HANA platform.
And our strategy to become THE cloud company
powered by SAP HANA refers not just to our own
transformation but that of our customers – and their
customers.
SAP Cloud powered by SAP HANA simplifies
consumption and the user experience, while SAP HANA
simplifies the IT landscape. SAP HANA enables business
processes and analytics to run on the same platform,
something that was simply not conceivable even
five years ago.
With the release of SAP S/4HANA in 2015, our nextgeneration business suite, we have brought a new level of
performance and simplicity to core business processes.
And SAP HANA Cloud Platform is facilitating the
development of a much broader and richer landscape of
applications to support our customers’ needs.
With these capabilities, SAP partners with companies on
every aspect of their digital transformation, helping them
run better and improving people’s lives. As they become
digital businesses, our customers are becoming more
sustainable organizations by improving how they serve
their customers, engaging and developing their
workforce, increasing transparency of their suppliers’
Furthermore, we connect all of these realms to core
business processes, such as finance and logistics, for a
seamless and simplified customer experience. And we
provide deep industry expertise to help our customers
design an IT strategy that best supports their business
strategy. While each of these capabilities would bring
value on its own, together they set us apart – we are
unique in our ability to guide customers on all essential
elements of their digital transformation, enabling them to
reimagine their business and then realize their vision for
the future.
SAP has big ambitions. We measure our success across
both financial and non-financial indicators: revenue
growth, profitability, customer loyalty, and employee
engagement. And we are creating value for our
customers by helping them to navigate a changed world
so that they can find business opportunities across
social, environmental, and economic dimensions.
With our broad portfolio of solutions, we are convinced
that we can position our customers for greater success
in the digital world. SAP can help our customers better
serve their customers with the sophisticated experiences
they have come to expect; reach new markets as the
world’s cities expand; find new customers as millions of
people join the modern economy; and innovate in the
face of resource scarcity and ever changing
technologies. Most of all, we can help them understand
and capitalize on the ways that technology and societal
trends intersect, so that – along with SAP – they can not
only become better organizations, but also help create a
better world.
Creating Societal Impact by Enabling our Customers
to Innovate
As a software company that serves many of the world’s
leading organizations, we have enormous opportunity to
impact people and society by helping our customers
innovate, run more efficiently, improve their IT security,
and offer new products and services. For example, when
major manufacturers gain greater transparency into
their energy usage and create more efficient supply
chains, they create a more positive impact on society
while minimizing impact on environment. When banks
offer mobile banking services to people who lack
opportunities, they address inequality and promote
economic growth. When healthcare companies utilize
data in new and faster ways, they help patients gain
access to potentially life-saving treatments.
27
In addition, at SAP and within our ecosystem, we support
job creation and economic prosperity through demand
for highly qualified workers to develop, sell, implement,
and enhance our software for our customers. As our
customers grow their own businesses, they also create
opportunities for others through new products and
services as well as economic growth.
At the heart of realizing these possibilities is our ability to
help our customers cut through complexity and direct
their resources to the work that matters most: new
innovations that help the world run better and improve
people’s lives. We work to create long-term value by
addressing future needs as well as current ones, with the
goal of helping to transform how people use software,
conduct business, and live their lives.
To achieve our vision, SAP provides solutions and
services to customers throughout the world based on
our deep expertise in business processes across
industries. As leader of the enterprise software market,
we must continually adapt to new technology and
business trends. For this reason, we rely on the people of
SAP to drive our success – their intellectual and social
capital provide us with key knowledge, expertise, and
business relationships. Along with the financial capital of
our investors, an engaged, highly skilled, and agile
workforce is at the core of our business model.
Our organization must be as adaptable as our employees
– and in recent years, we have made important shifts to
our sales model to accommodate enormous changes in
how companies use technology. In the past, our
approach was focused on charging a one-time, upfront
fee for a perpetual license to our software that is typically
installed at the customer site. In addition, the customer
usually concludes a support contract covering support,
services, and software updates. As we have seen
customer preferences evolve, we are increasingly
delivering our solutions in the cloud through a softwareas-a-service (SaaS) model. Depending on the solution,
the customer pays either usage-based or periodic fees to
use our software, which is hosted in the cloud, and
accesses it over the Internet. Further, we receive
transaction fees from business conducted over our
business networks.
Despite these shifts, we still rely on the strengths of our
direct sales organizations to drive most business
development. As a global company, we set our sales goto-market strategies at the global level, with our regional
subsidiaries then adapting and executing them. Our
customer-facing employees, in close collaboration with
sales support and marketing, drive demand, build
pipeline, and enhance relationships with customers. Our
marketing efforts cover large enterprises as well as small
and midsize enterprises, with our broad portfolio of
solutions and services addressing the needs of
customers of all sizes across industries. Additional
e-commerce and digitally native offerings further enable
a low-touch or no-touch customer journey.
Our business model aligns with and supports our
business strategy and puts us in a strong position to
drive future growth. By helping organizations transform
into digital businesses, we see enormous potential to
increase our share of their overall IT spend while
providing them with greater value. As our technology
unlocks simplicity for our customers, they, in turn, bring
new advances to their customers in areas that directly
impact people’s lives.
Our Goals for Sustained Business Success
We have strong ambitions for sustainable business
success, both for our company and for our customers.
We believe the most important indicators to measure
this success comprise both financial and non-financial
indicators: growth, profitability, customer loyalty, and
employee engagement.
Growth: SAP uses various revenue metrics to measure
growth. We expect full-year 2016 non-IFRS cloud
subscriptions and support revenue to be in a range of
€2.95 billion to €3.05 billion at constant currencies
(2015: €2.30 billion). Further, we expect full-year 2016
non-IFRS cloud and software revenue to increase by 6%
to 8% at constant currencies (2015: €17.23 billion).
Looking beyond 2016, we have raised our 2017 ambition
to reflect the current currency exchange rate
environment and excellent business momentum.
Assuming a stable exchange rate environment going
forward, SAP now expects non-IFRS cloud subscriptions
and support revenue in a range of €3.8 billion to
€4.0 billion in 2017. By 2017, SAP continues to expect its
rapidly growing cloud subscriptions and support revenue
to be close to software license revenue and is expected
to exceed software license revenue in 2018. Non-IFRS
total revenue is expected to reach €23.0 billion to
€23.5 billion in 2017. Our high-level 2020 ambitions
remain unchanged, with 2020 non-IFRS cloud
subscriptions and support revenue expected to reach
€7.5 billion to €8.0 billion and total revenue is expected
to be in a range of €26 billion to €28 billion.
Profitability: SAP expects full-year 2016 non-IFRS
operating profit to be in a range of €6.4 billion to
€6.7 billion at constant currencies (2015: €6.35 billion).
We expect non-IFRS operating profit to be in a range of
€6.7 billion to €7.0 billion in 2017 and to be in a range of
€8.0 billion to €9.0 billion in 2020.
Customer
loyalty:
SAP
uses
the
Customer
Net Promoter Score (NPS) as a key performance
indicator (KPI) to measure customer loyalty. We aim to
28
achieve a Customer NPS score of 25% in 2016 (2015:
22.4%). Due to changes in sampling, resulting from
ongoing efforts to implement the survey process
holistically in recently acquired entities, the 2015 score is
not fully comparable with the prior year score.
Employee engagement: We use the employee
engagement index to measure motivation and loyalty of
our employees, how proud they are of our company, and
how strongly they identify with SAP. We remain
committed to achieving 82% employee engagement
score in 2016 (2015: 81%).
These four corporate objectives affirm our commitment
to innovation and sustainability, and help us deliver on
our vision.
In addition to primary KPIs, which directly measure our
performance on our four goals, we manage a number of
secondary performance indicators, which influence the
primary KPIs in a variety of ways.
Our main objectives are presented with more detail
throughout the report. For more information on our
strategic goals, see the Performance Management
System section; Expected Developments section;
Customers section; and Employees section.
SEASONALITY
Our business has historically experienced the highest
revenue in the fourth quarter of each year, due primarily
to year-end capital purchases by customers. Such
factors have resulted in 2015, 2014, and 2013 first
quarter revenue being lower than revenue in the prior
year’s fourth quarter. We believe that this trend will
continue in the future and that our total revenue will
continue to peak in the fourth quarter of each year and
decline from that level in the first quarter of the following
year. Unlike our on-premise software revenues, our onpremise support revenues and cloud subscriptions and
support revenues are less subject to seasonality.
PRODUCTS, RESEARCH & DEVELOPMENT, AND
SERVICES
Unlocking the Potential of Digital Transformation
For leading companies, the question is no longer whether
they need to become a digital business, but how. The role
of software has moved beyond enabling the realization of
business strategy to becoming an intrinsic part of that
strategy. In an increasingly complex landscape – with the
amount of stored data doubling every 18 months –
speed, innovation, and agility are the new differentiators.
It is not just about doing yesterday’s work faster.
Companies in every industry must take a unified
approach to managing every aspect of their business,
and they need solutions whose innovation matches their
own ambitions to grow and win in the market.
In 2015, we unveiled one of the most important products
in our history: SAP S/4HANA, our next-generation
business suite, designed to provide the digital core our
customers need to run their entire business in the new
digital world. We expect SAP S/4HANA to drive our
business for years to come, enabling companies to
integrate their core business processes with running
their key operations, from their supply chain to their
workforce. With SAP S/4HANA, we provide companies a
full business platform to reimagine their businesses and
achieve the creation of their own next-generation
products and services so critical in the digital economy.
SAP S/4HANA creates unique opportunities to simplify
the IT landscape, helps reduce total cost of ownership
with SAP HANA, and provides a simple and role-based
user experience. Enterprises can now reduce their data
footprint and work with larger data sets in one system to
save hardware costs, operational costs, and time as well
as reduce complexity.
After launching in February 2015, over 2,700 customers
have chosen SAP S/4HANA, with approximately
100 customers live at the end of 2015.
Driving Simplicity and Innovation through SAP
HANA and SAP HANA Cloud Platform
SAP HANA remains at the center of our strategy to help
our customers transform their businesses. The SAP
HANA platform combines database, data processing,
integration, and application platform capabilities inmemory. By providing advanced capabilities such as
predictive analytics on the same architecture, it further
simplifies application development and processing
across Big Data sources and structures.
The SAP HANA Vora engine adds a new dimension to
these capabilities, allowing our customers to combine
their business data with Big Data managed on Hadoop
compute clusters. It simplifies ownership of Big Data and
supports faster, interactive, and more precise decision
making.
In addition to expanding our own portfolio, we are
enabling others to develop a much broader landscape of
applications through SAP HANA Cloud Platform, our
strategic platform-as-a-service offering. Providing both
ease and flexibility, this cloud platform allows our
customers and partners to build, extend, run, and sell
applications and services in the cloud. It includes
infrastructure, data, and storage, as well as a toolbox of
platform and application extension services. SAP HANA
Cloud Platform also enables connectivity between SAP
solutions, including on-premise software such as SAP
Business Suite as well as software-as-a-service offerings
such as SAP SuccessFactors solutions.
29
Building on our experience, we are developing a suite of
SAP solutions for the Internet of Things (IoT). The
functionalities of our SAP HANA Cloud Platform IoT
services help accelerate development and deployment,
as well as improve the ability to manage real-time IoT
and machine-to-machine applications. To support the
development of these new innovations, we continue to
leverage our customer co-innovation framework, which
helps us address the evolving digitization needs of our
customers.
Industries
Industry Sector
Consumer
SAP for Consumer Products
SAP for Life Sciences
SAP for Retail
SAP for Wholesale
Distribution
Discrete manufacturing
The road to becoming a digital business is unique to
every organization. Our portfolio supports our customers
wherever they are on their journey. We want to offer the
broadest integration in the industry, with customers
seamlessly connecting SAP and third-party software
across a range of environments to reduce IT complexity.
At the same time, our user experience provides both
elegance and ease-of-use across multiple devices and
interfaces. Customers also have the benefits of efficiency
and flexibility through a variety of deployment models.
Industry Portfolio
SAP for Aerospace &
Defense
SAP for Automotive
SAP for High Tech
SAP for Industrial Machinery
& Components
Energy and natural resources
SAP for Chemicals
SAP for Mill Products
SAP for Mining
Launching SAP S/4HANA
SAP S/4HANA represents a huge step forward in
simplifying how applications are built, consumed, and
deployed. It provides real-time, mission-critical industryspecific business processes across organizations and
lines of business. As a basis, enterprises can now
support end-to-end operations across key business
functions through a fully digitized enterprise
management solution named SAP S/4HANA Enterprise
Management.
A prime example of our innovations is SAP S/4HANA
Finance, a comprehensive solution for the office of the
CFO. This solution brings enhanced functionality to a
range of key areas – from financial planning and analysis
to collaborative finance operations. It also provides our
customers with seamless flexibility, with deployment
either on premise or in the cloud.
SAP for Oil & Gas
SAP for Utilities
Financial services
SAP for Insurance
Public services
SAP for Defense & Security
SAP for Healthcare
SAP for Higher Education &
Research
SAP for Public Sector
Services
SAP for Engineering,
Construction & Operations
SAP for Media
SAP for Professional
Services
Beyond SAP S/4HANA Finance, the on-premise edition
of SAP S/4HANA drives business value in other areas
such as materials management as well as sales and
distribution, among others, taking full advantage of a
simplified data model and a responsive user experience.
Innovating for Industries and Lines of Business
As the market leader in enterprise application software,
we offer end-to-end solutions specific to 25 industries
and 12 lines of business, localized by country and for
companies of any size.
SAP for Banking
SAP for Sports &
Entertainment
SAP for Telecommunications
SAP for Travel &
Transportation
Lines of Business
–
–
–
–
–
–
–
Asset Management
Commerce
Finance
Human Resources
Manufacturing
Marketing
R&D/Engineering
30
–
–
–
–
–
Sales
Service
Sourcing and Procurement
Supply Chain
Sustainability
In addition, we are building other functional innovations
that serve each line of business. For example:
Human capital management (HCM): Our HCM
solutions, including SAP SuccessFactors solutions, help
organizations increase the value of their total workforce
by developing, managing, engaging, and empowering
their people. These solutions address the full range of HR
needs, from hiring the right people and managing
contingent workers to simplifying the way people
work. We focus on delivering a simple and intuitive user
experience through mobile device or desktop.
Customer engagement and commerce (CEC): Our CEC
solutions comprise SAP and SAP Hybris software that
serve the commerce, marketing, sales, and service lines
of business, enabling business-to-business and
business-to-consumer companies to provide real-time,
consistent, contextual, and relevant experiences to their
customers. Regardless of channel or device, these
solutions deliver personalized engagement based on
context and proven industry expertise and therefore go
beyond traditional customer relationship management,
which no longer meets the needs of today’s consumerdriven market.
Providing users with Freedom, Flexibility, and
Elegant Design
We believe digital transformation must include a focus on
the user experience, as expectations by our
customers – and their customers – have risen
enormously in recent years. For many, mobile has
become the technology of choice, providing simple,
always-on access to information, processes, and
services. To that end, key mobile services such as app
creation and management, security, and extensibility are
available as part of SAP HANA Cloud Platform, giving our
customers simple access to the technologies that
support new business models.
Providing an elegant, intuitive user experience, SAP Fiori
has evolved since its introduction in 2013 into the new
user experience (UX) for SAP software. It reflects a
broader shift in software design that puts as much focus
on how people actually use technology as on specific
features and functions. SAP Fiori offers innovative new
features such as improved contextual interaction and
action-oriented personal notifications. The updated
design delivers improvements while staying consistent
with our original UX principles of being role-based,
responsive, simple, coherent, and delightful.
We were awarded the prestigious Red Dot Award for the
SAP Fiori UX design concept in the Interaction Category
in September 2015.
Delivering Greater Value through the Power of
Business Networks
In today’s hyperconnected business landscape, how
companies interact with the outside world is undergoing
profound change. At SAP, we are helping to lead this
transformation through our business networks, which
are helping drive innovation in key areas that impact an
organization’s core operations. Our business network
strategy is to bring the world’s vast network of partners,
suppliers, and services to best-in-class solutions that
fulfill the needs of specific lines of business – all within a
few clicks. Moving far beyond basic automation, our
network solutions are enabling new processes and
outcomes for customers. They are also part of a new
wave of solutions that are more consumer-friendly and
business-ready than in the past.
We recognize that business applications today must
deliver an effortless user experience while ensuring that
information and data flow back into the business and
across networks in a secure way. These applications
serve to maintain compliance while enabling choice.
They are designed for a more digital, highly mobile, and
interconnected world, and help drive greater value for
employees, organizations, and the vast networks of
partners and individuals they rely on.
Today, our business network portfolio includes SAP
Ariba, Concur, and SAP Fieldglass solutions. Each is a
leading provider of cloud applications, services, and
cloud networks through open platforms that connect
internal business processes to a global ecosystem of
partners.
The Ariba Network is a leading marketplace used by
approximately two million companies to discover,
connect, and collaborate over US$740 billion in
commerce every year. The network connects companies
across the full commerce process – from sourcing
through payment settlement. It also provides insights
and technology to help companies improve their
operations – and to connect and collaborate in new ways
that are only possible in a networked environment.
Concur Travel & Expense is the world’s leading travel and
expense management system, with more than 32 million
users. The Concur system goes beyond the basic
automation of expense reports and provides visibility and
insights that support better decision making for
employee travel and spend, helping businesses to focus
on what matters most.
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SAP Fieldglass solutions simplify the process of
procuring and managing external workforce services.
They provide visibility into service providers and nonemployee workers and help improve compliance and
cost control. As a centralized, single point of access to
engage with more than 1.9 million external workers in
approximately 130 countries, SAP Fieldglass solutions
connect consultancies, staffing firms, independent
contractors, and other service providers, so business
users can procure services from anywhere in the world
with just a few clicks. As an open platform, SAP
Fieldglass also connects to financial, HR, payroll, and
procurement systems.
Each of these three cloud network companies has made
connecting to partners, suppliers, and services through
an open platform a core part of their architecture and
approach. Ultimately, we aim to go further, connecting all
the world’s networks. We are working to create platforms
for networks and services that will further transform the
business landscape – with the purpose of creating new
outcomes, services and experiences that make
businesses run more simply and with greater
opportunities for innovation.
Providing Real-Time, Advanced Analytics to Drive
Better Decision Making
The speed of the digital economy demands that
companies make informed decisions faster than ever
before, as data can become obsolete in a matter of
seconds. SAP HANA has vastly increased the efficiency
with which our customers can use analytics to drive
decision making. With transactions and analytics
combined into a single in-memory platform, our
customers can access a “single source of truth” for realtime planning, execution, reporting, analysis, and
predictive modeling on very large volumes of data.
In 2015, we further simplified our offering with the
introduction of the SAP Cloud for Analytics solution, a
software as a service that aims to bring all analytics
capabilities together for a richer user experience.
Based on SAP Cloud for Analytics, we also launched SAP
Digital Boardroom, a multifaceted solution that offers
executive decision makers new ease and elegance in
accessing company data in real time, and the ability to
engage in what-if queries and create visualizations.
Designed to provide far greater transparency to board
members, executives, and other decision makers, fully
automated business intelligence capabilities in the
solution not only improve the quality and speed of
reporting, but also facilitate greater trust through more
effective collaboration and decision making.
Whether in the cloud, on premise, or a combination of
the two, our analytics solutions enable our customers to
access immediate, actionable intelligence. Even as data
volumes grow exponentially, companies can simplify
their business processes and gain insights to better
manage every aspect of their organization – from
integrated planning to risk and compliance.
Among other features, key analytics solutions from SAP
support:
– Trusted data discovery and agile visualization to
bring reliable data to life in real time through intuitive
visualizations
– Advanced analytics to combine the power of
predictive processing with intuitive modeling and
advanced data visualization
– Corporate performance management to set and
track measurable performance objectives through
planning, budgeting, forecasting, and financial
consolidation tools
Research and Development
With businesses shifting at an ever-accelerating pace
towards digitalization and the cloud, leading our
customers through change is more important than ever
before. We do this every day by empowering our
employees and collaborating with our customers to
develop world-class software and next-generation
solutions. SAP further strengthened our global research
and development (R&D) efforts in 2015 by investing in
our SAP Labs network and the new SAP Innovation
Center Network.
Nearly all of our software products are developed at our
15 SAP Labs locations in 13 countries across the globe.
This global reach means that we have access to leading
talent worldwide; in addition, we can collaborate with top
universities throughout the world and have access to
major technology hubs as well as diverse and vibrant
startup communities. By understanding trends in
different regions, as well as the specific needs of our
customers that operate there, SAP has a major strategic
advantage in developing products and services for the
future.
In addition to our SAP Labs, we also expanded from two
SAP Innovation Center locations to an SAP Innovation
Center Network of 10 locations across four continents.
This network is a dedicated unit within our development
organization that is responsible for identifying new
markets for SAP and pioneering game-changing
solutions using transformational technologies. Through
the SAP Innovation Center Network, we can closely
collaborate with customers, partners, and academia to
explore trends such as machine learning and block chain,
among others.
We have identified several key markets and opportunities
that hold significant revenue potential and allow us to
apply our unique capabilities. Currently, areas include
future enterprise applications, personalized medicine,
32
and smart cities. We are tackling a range of challenges
facing these areas, from designing the future of business
software to developing new approaches to treating
cancer and helping decrease traffic congestion.
Research and Development (IFRS)
€ millions change since previous year
1.935
2.261
2.282
2.331
2.845
+12%
+17%
+1%
+2%
+5%
2011
2012
2013
2014
2015
Our revitalized research organization has become an
applied research entity with its main focus on machine
learning for enterprise applications, personalized
medicine, in-memory data management, and security.
Our new research approach focuses sharply on potential
business impact while collaborating with the best
research institutions worldwide for selected topics.
Our innovation stems from many places, and we draw on
the ideas of our customers, partners, startups,
academia, and, most importantly, our own employees.
Our overarching goal is to foster organic innovation and
support the transformation of great ideas into profitable
business. In support of this vision, we established a
Company-wide “intrapreneurship” program that enables
employees to develop their ideas in an internal incubator
at SAP.
In addition to our employees, our customers provide us
with unique insights about their business models and
digitization challenges. We also work with customers on
co-innovation and custom development projects. Our
partners and their solutions enhance these efforts in a
range of ways, such as at our SAP Co-Innovation Lab
locations, which support engagements ranging from
strategic alliances to key proofs of concept.
R&D Investment
SAP’s strong commitment to R&D is reflected in our
expenditures: In 2015, we increased our R&D expense
(IFRS) by €515 million, to €2,845 million (2014:
€2,331 million). We spent 13.7% of total revenue on R&D
in 2015 (2014: 13.3%). Our non-IFRS R&D expense as a
portion of total operating expenses declined slightly from
18.5% to 18.3% year-over-year.
At the end of 2015, our total full-time equivalent (FTE)
count in development work was 20,938 (2014: 18,908).
Measured in FTEs, our R&D headcount was 27% of total
headcount (2014: 25%). Total R&D expense not only
includes our own personnel costs but also the external
cost of works and services from the providers and
cooperation partners we work with to deliver and
enhance our products. We also incur external costs for
translating, localizing, and testing products, for obtaining
certification for them in different markets, patent
attorney services and fees, strategy consulting, and the
professional development of our R&D workforce.
Patents
As a market leader in enterprise applications, SAP
actively seeks intellectual property protection for
innovations and proprietary information. Our software
innovations continue to strengthen our market position
in business solutions and services. Our investment in
R&D has resulted in numerous patents. As at
December 31, 2015, SAP holds a total of more than
7,224 validated patents worldwide. Of these, 893 were
granted and validated in 2015.
While our intellectual property is important to our
success, we believe our business as a whole is not
dependent on any particular patent.
Guiding our Customers through Every Step of their
Digital Transformation
In addition to creating new solutions for the digital era,
we recognize that we must partner with our customers to
help them make the most of these innovations based on
their unique needs and goals. Through our worldwide
service and support, we guide companies at every stage
of their digital transformation. We focus on creating and
delivering strategies for our customers’ digital journey,
accelerating innovation, driving simplification of business
and IT, and ensuring that expected business value is
realized and continuously optimized.
In 2015, we radically simplified how we engage with our
customers and deliver services, greatly harmonizing our
portfolio. Under the new SAP ONE Service approach, we
also introduced a new commercial model providing one
service portfolio, out of one global organization, and
under one contract.
33
We see enormous potential for our customers to simplify
their own businesses and seize new opportunities
through SAP HANA, with SAP S/4HANA as their new
digital core. For this reason, adoption of these
innovations is a key pillar in our service and support
strategy. To ensure the expected customer outcomes,
we offer high-value services tailored to the various
customer scenarios supporting the adoption of SAP
S/4HANA:
– System conversion: Customers changing their
current SAP system to SAP S/4HANA
– Landscape
transformation:
Customers
consolidating their landscape or carving out selected
entities or processes into a system running SAP S/
4HANA
– New implementation: Customers migrating from a
third-party legacy system or installation of SAP
S/4HANA for a new customer
In mid-2015, we also introduced SAP Activate, an
innovation adoption framework to further support the
fast and effective implementation of SAP S/4HANA.
Offering a unique combination of SAP Best Practices and
guided configuration, the new methodology provides
ready-to-run digitized business processes optimized for
SAP S/4HANA. It allows customers to flexibly choose the
approach for their business needs, from a new
implementation to an integration to a migration scenario.
As they continue on their path to digitization, we work
with large enterprise customers to forge a coengineering and co-innovation relationship, so that they
can influence and shape existing SAP solutions while
gaining early access to product innovation. We help
define future software solution standards together with
our customers in comprehensive engagements and
serve as a trusted advisor during delivery of innovative
solutions for the future.
ACQUISITIONS
Focusing on Organic Growth and Targeting “Fill-in”
Technology through Acquisitions
As SAP prepares itself for the new digital economy, we
may make acquisitions that advance our strategic goals.
In 2015, SAP acquired Multiposting, a French cloudcomputing company with more than 80 employees that
provides software for the automatic posting of jobs and
internships on the Internet. Multiposting is based in Paris
and is a European leader in job posting solutions. With
this acquisition, SAP plans to offer customers the best
end-to-end cloud recruiting suite on the market,
including the ability to efficiently post jobs to a global
network of thousands of channels. The Multiposting
solution will be available as part of the existing recruiting
offering in our human capital management portfolio as
well as in all its current forms – as a stand-alone product,
as a Web service, and through import.
Organic growth is the primary driver of our growth
strategy. We will invest in our own product development
and technology innovation, improving the speed, number
of projects, and innovations brought to market. We may
also acquire targeted and “fill-in” technology and
software to add to our broad solution offerings and
improve coverage in key strategic markets. By doing so,
we strive to best support our customers’ needs for
simplified operations. We do not anticipate significant
acquisitions in 2016 or 2017.
For more information about our acquisitions, see the
Notes to the Consolidated Financial Statements section,
Note (4).
Investing in the Next Generation of Technology
Leaders through Venture Activities
Through investments in venture capital funds managed
by Sapphire Ventures (formerly called SAP Ventures),
which comprises our consolidated investments in
venture funds, SAP supports investments in
entrepreneurs worldwide that aspire to build industryleading businesses. Over the past 19 years, Sapphire
Ventures has invested in more than 130 companies on
five continents. Some of these companies have been
acquired by third parties or have become publicly listed
companies.
Sapphire Ventures aims to invest in the next generation
of global category technology leaders as well as earlystage venture capital funds in enterprise and consumer
technology. Specifically, Sapphire Ventures pursues
opportunities in which it can help fuel growth by adding
expertise, relationships, geographic reach, and capital. It
invests globally with a particular focus on emerging
companies and early stage funds in Europe, Israel, and
the United States, as well as in Brazil, China, and India.
SAP’s total commitment to Sapphire Ventures is
US$1.4 billion for use over the lifetime of its respective
funds. Investments through the funds are currently
ongoing.
For more information about our consolidated investment
funds, see the Notes to the Consolidated Financial
Statements section, Note (33).
PARTNER ECOSYSTEM
Working together to extend SAP’s Reach in the
Marketplace
SAP proudly works with a network of more than
13,000 partners worldwide that helps companies of all
sizes tackle complexity, grow their business, and Run
Simple. SAP partners extend our reach in the
marketplace and accelerate our Company’s growth,
reaching thousands of new companies and millions of
users each year. Our partner community plays an
34
important role in our success, delivering expertise
through pioneering solutions to provide our mutual
customers tools to succeed in the developing digital and
services-based economy.
Partners add tremendous value to both SAP and
customers. They sell our software and cloud services,
develop complementary software and solutions, and
provide a broad portfolio of implementation and
professional services that support customers across all
geographies and industries.
Last year we saw outstanding growth in SAP’s
partnerships. For example, partners were responsible for
nearly 90% of new SAP software customers. SAP
Business One, one of our core ERP solutions for small
and midsize enterprises (SMEs) and sold exclusively
through partners, reached its 50,000th customer.
Nearly 55% of all SAP S/4HANA software license deals
were won by partners and our cloud revenue through
partners reported triple-digit growth. Together with our
strategic technology and service partners, we created a
number of powerful and compelling joint solutions and
services that help customers transform and run their
businesses simpler.
In the past year, SAP made several transformational
moves designed to increase our joint success in the
market, including:
– SAP SME Solutions: More than 80% of SAP
customers are small and midsize enterprises (SMEs),
and we support the majority through our partner
networks and other channels. To boost our reach, we
introduced this SME-specific portfolio marketing
approach and a Run Simple advertising and demand
generation campaign around our core ERP solutions
for SMEs: SAP Business All-in-One, SAP Business
ByDesign, and SAP Business One. As growing
businesses transform in the digital economy, SAP has
equipped partners with these and other tools,
solutions, and programs they need to drive more
demand in this important market.
– SAP Anywhere debut: Late in 2015, we launched
SAP Anywhere, a revolutionary cloud solution that
allows small businesses to connect with customers
anytime, anywhere on any device. It is now available in
China and is expected to be introduced in the United
Kingdom and the United States in 2016. SAP
Anywhere represents a new opportunity for partners.
With our commitment to “SAP Anywhere,
Everywhere,” our partners can resell a complete
cloud-based solution that manages marketing, sales,
and e-commerce activities in one complete frontoffice system using real-time analytics.
– SAP PartnerEdge program enhancements: To build
stronger relationships and increased business
opportunities, SAP introduced the next generation of
its flagship partner program in 2015. Among the
improvements, we reduced the number of partner
engagement options from more than 30 to just four –
Run, Build, Service, and Sell – making it easier for
partners to engage with SAP. We streamlined
processes and relaunched the SAP PartnerEdge Web
site to give partners easier access to resources and
real-time visibility into their SAP business.
While reselling, implementation, and services are a large
part of our ecosystem’s effort, SAP partner innovation on
our technology platforms is also essential to market
penetration. Partners develop their own applications and
solutions called SAP Solution Extensions, which can then
be sold to customers and other partners. These partnerdeveloped solutions are tested, validated, approved, and
supported by SAP.
In addition, the SAP PartnerEdge program for
Application Development, which grew to more than
1,100 active members in 2015, encourages partners to
build complementary solutions on top of our technology
platforms – and quickly monetize those solutions
through SAP e-commerce channels.
Partners also embed SAP technology within their
offerings under an original equipment manufacturer
(OEM) licensing agreement, giving customers SAP
software functionality backed by partner industry
knowledge and expertise.
2015 was a seminal year for our partner managed cloud
business, where our partner recruitment and enablement
success has expanded the number of customers
benefiting from the flexibility, rapid time to value, and
pay-as-you-go economics of a managed cloud with
enterprise-class SAP solutions.
SAP will continue to drive business growth through
partners in 2016, continuing to identify and recruit key
partners and develop the innovative programs and
initiatives that fuel our mutual success.
CUSTOMERS
Helping Customers Run Simple
When SAP customers Run Simple, it improves their
ability ultimately to become best-run businesses that
create more sustainable business models – which, in
turn, help us ensure our own long-term viability. That is
why we strive to provide more than just software and
services; we continually engage with our customers at
every stage – not only during the sales and
implementation phases, but also through the sharing of
best practices and innovations.
35
One example of this strategy is our Customer
Engagement Initiative. This program offers customers
early insight into certain aspects of our planned
innovations, so they can influence new developments. In
addition, it offers customers the opportunity to network
on topics of mutual interest. These networking
opportunities take place at a variety of global events,
including the SAPPHIRE NOW, SAP Select, SAP Forum,
and SAP TechEd conferences, as well as virtual events.
Customer Focus Reflected in Customer Net
Promoter Score
Customer loyalty is one of our four Company-wide
strategic objectives, along with growth, profitability, and
employee engagement. In 2015, our combined onpremise and cloud Customer NPS is 22.4% (2014:
19.1%). Due to changes in sampling, resulting from
ongoing efforts to implement the survey process
holistically in recently acquired entities, the 2015 score is
not fully comparable with the prior year’s score.
Our goal continues to be to best support our customers’
success and the success of SAP. For example, we are
expanding on the insights provided by our surveys
through root cause analysis to gain a better
understanding of customer problems, why they
happened, and what needs to be done to prevent those
problems from happening again.
Our combined on-premise and cloud NPS target for 2016
is 25%, 2.6 percentage points above our 2015
achievement.
For more information about the Customer NPS, see the
Performance Management System section.
Strong Customer Demand
Our strategy focuses on offering solutions and services
to help customers Run Simple today and tomorrow. To
do so, we offer a spectrum, from complete suites to
applications that are lean, focused, quick to implement,
and highly mobile. In 2015, we saw customers embrace
this strategy by licensing or subscribing to the full range
of SAP software, from comprehensive solutions for large
enterprises to the latest mobile apps.
Some examples
customers:
by
region
include
the
following
North America and Latin America (Americas) Region
– Adobe, a multinational computer software company,
has chosen the SAP Hybris Billing solution as its
monetization and billing platform to support a new
SaaS business model. Adobe seeks to support fast
subscription-revenue growth on a flexible and
scalable platform, while significantly reducing time to
launch innovative and flexible offers and promotions.
– American Airlines, the world’s largest airline, has
selected several SAP SuccessFactors solutions, as
well as the SAP HANA Enterprise Cloud service and
SAP HANA Cloud Platform. The company’s goal is to
enhance service to its employees and reduce
operating costs while remaining focused on its core
business.
– Eastman Kodak, a technology company focused on
imaging, selected the SAP S/4HANA suite to help
reduce total cost of IT ownership. In addition, Kodak
plans to establish an IT infrastructure to position its
organization for future growth and innovation.
– Hewlett Packard Enterprise Company (HPE) has
committed to and invested in implementing one of the
largest installations of the SAP S/4HANA Finance
solution for their internal foundational platform to
support its digital transformation. With SAP
S/4HANA, HPE aims to be better able to take
advantage of real-time access to operational and
financial data with the goal of improving the speed of
decision making and operating more efficiently;
reducing the time for financial close; and delivering
actionable intelligence throughout its business. The
aim is to ensure HPE becomes more competitive in
the marketplace.
– Stara, a leader in agricultural machinery
headquartered in Brazil, selected SAP HANA Cloud
Portal, as well as SAP Cloud for Customer, SAP
SuccessFactors Employee Central, and SAP
SuccessFactors Talent Management solutions. Stara
expects to simplify its business processes while
improving sales efficiency through greater control of
critical company information.
Asia Pacific Japan (APJ) Region
– Boryung Pharmaceutical, one of the leading
pharmaceutical manufacturers in South Korea,
selected SAP S/4HANA Finance for its simple user
experience, simple business solution, simple data
model, and shorter go-live time.
– La Trobe University in Australia went live with SAP
S/4HANA Finance. As one of the first organizations
globally to adopt SAP S/4HANA Finance, La Trobe
University aims to benefit from instant insight across
financial and operational processes to drive value
through planning, analysis, prediction and simulation.
They have a term for it; they call it “Brilliant Basics.”
– Lenovo Group, a multinational computer technology
company, is expanding its HANA footprint by moving
data from all systems to the SAP HANA platform.
– PetroChina, China’s largest oil producer, has
implemented SAP Business Warehouse powered by
SAP HANA and SAP BusinessObjects Business
Intelligence solutions. Since the system went live in
late July, HR reporting performance is three to ten
times faster than before, which has empowered HR
director-level management to make strategic
decisions based on Big Data analysis.
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– St Barbara, an Australian-based, ASX-listed gold
producer and explorer, selected the SAP
SuccessFactors Performance & Goals solution. The
solution has enabled St Barbara to replace its paperbased performance management process with a
cloud-based solution that also supports its offshore
locations.
impact on energy consumption and greenhouse gas
emissions. We are applying these trends to our own
business and helping our customers apply them to their
businesses. For example, by enabling business model
transformation, using advances such as smart grids and
the Internet of Things, SAP is helping connected digital
business networks reduce overall carbon footprints.
Europe, Middle East, and Africa (EMEA) Region
– ArcelorMittal, the world’s leading steel and mining
company, selected SAP S/4HANA to streamline
business processes, improve productivity, and
decrease costs. The company seeks to enhance its
position by serving an increasingly strong innovation
agenda around the world.
– Bosch Group, a leading global supplier of technology
and services, has chosen SAP S/4HANA to rebuild its
IT infrastructure, seeking a simplified and harmonized
landscape that helps them offer connected services
to customers.
– City Football Group (CFG) is the owner of a number
of soccer-related businesses including Manchester
City Football Club and New York City Football Club.
CFG and its clubs will implement a wide variety of
cloud-based solutions powered by SAP HANA with
the aim of simplifying their worldwide operations,
scaling their business, increasing productivity, and
enhancing the fan experience.
– E.ON Group has chosen the limited runtime edition of
SAP HANA; SAP Mobile Platform; and SAP
SuccessFactors HCM Suite. The company, which is
splitting into two entities, seeks to streamline its
system landscape, replace homegrown software, and
reduce its on-premise footprint.
– Hydro, a global aluminium company based in
Norway, selected SAP S/4HANA to “replatform” and
renew its IT system landscape. With the suite, Hydro
expects to have access to real time information,
thereby running at optimal efficiency and safety,
which are key elements of its strategic vision.
Strengthening our “Green Cloud”
We see that energy consumption in data centers is
closely related to innovation and customer adoption of
our solutions. As we accelerate our shift to the cloud, we
have tied our business strategy to our environmental
strategy by creating a completely “green cloud” at SAP,
referring to carbon neutrality, by purchasing 100%
renewable electricity certificates and compensation by
CO2 offsets. In assessing our environmental impact, we
focus on energy usage throughout SAP, as well as
greenhouse gas emissions across our value chain.
Helping Customers Invest
To help companies invest in SAP solutions and
associated services and hardware, SAP Payment
services offers customers payment plans. SAP Payment
services can help preserve liquidity, provide an
alternative to credit from customers’ existing banking
relationships, and balance their budgetary priorities,
while giving them the flexibility to choose their preferred
solution.
ENVIRONMENTAL PERFORMANCE: ENERGY AND
EMISSIONS
In 2015, we made significant progress toward our goals
for the reduction of greenhouse gas emissions, taking
advantage of the digitalization and green technology
trends that are driving transformational changes across
the global economy. These trends can have a significant
Reducing Greenhouse Gas Emissions
Our goal is to reduce the net greenhouse gas (GHG)
emissions from our operations to levels of the year 2000
by 2020. This target includes all direct and indirect
emissions from running our business (GHG Protocol
Scopes 1 and 2), as well as a selected subset of other
indirect (Scope 3) emissions. We do not include all of our
Scope 3 emissions in our target because we choose to
focus on those emissions over which we have direct
control or ability to influence. However, we are
increasingly addressing both our upstream and
downstream emissions to support a comprehensive
carbon strategy for SAP.
Specifically, we are working to reduce our emissions
through three primary approaches: increasing our
operational efficiency combined with innovative
approaches to the way we do things; purchasing highquality renewable electricity certificates; and investing in
high-quality carbon credits.
In addition to our long-term commitment for 2020, we
have derived annual targets for our internal operational
steering. Despite integrating new acquisitions in 2015,
our total net emissions decreased to 455 kilotons CO2
(2014: 500 kilotons). This decrease stems primarily from
a reduction of business flights and compensation with
carbon
emission
offsets.
We
are
effectively
compensating the emissions from those customer
systems that have moved into our green cloud. Given the
large size of our customers’ CO2 footprints and our
growth strategy in the cloud, we see significant potential
to reduce both our own and our customers’
environmental impact.
Since the beginning of 2008, our focus on carbon
emissions has generated a cumulative cost avoidance of
37
€346 million, compared to a business-as-usual scenario.
This leads to an avoidance of €124 million in the past
three years, with €39.8 million avoided in 2015 alone.
Investing in Environmental Innovations
We are pursuing new strategies to contend with the
ongoing tension between growth in our business and our
goal to reduce our emissions. One such approach is the
introduction of carbon emission offsets for business
flights in 2015. In addition to avoiding and reducing
overall business flights, we began, in the second half of
2015, to offset selected business flights in the United
States, as this is the country with the greatest number of
business flights. This offset effort resulted in a
compensation of 35 kilotons of CO2.
SAP continues to invest in technology that enables
virtual collaboration, supporting our efforts to reduce the
need for employees to travel. In addition to our
TelePresence and video conferencing platforms, new
collaboration rooms based on the Skype for Business
communications platform bring new features that enable
teamwork across borders and time zones. More than
100 collaboration rooms have been installed throughout
SAP with more planned for 2016. Because more
employees adopt video chat as their preferred method of
communication, more than 1,200 meeting spaces have
been equipped with 360-degree cameras – giving
remote participants a more interactive experience.
Skype for Business also enables each employee to video
chat from their computer.
To further decrease car-related emissions, we plan to
increase the portion of electric vehicles (or alternatives)
in our company car fleet from the current 1% to 20% by
2020. At the end of 2015, we have 57 charging stations
and 55 pure electric vehicles in our company car fleet at
our headquarters in Walldorf, and approximately
300 e-cars globally. Our company car initiatives address
a dilemma that has grown in recent years. As a result of
our business expansion, the number of SAP employees
eligible for a company car has increased annually. We
want to ensure that we do not undo our efficiency gains
with our growing car fleet.
15 times larger than SAP’s own footprint, meaning these
products caused approximately 6,800 kilotons of CO2.
By using 100% renewable electricity, we dramatically
broaden our sustainability efforts and align them with our
cloud strategy, reducing the carbon emissions of our
cloud solutions to zero.
We continued to realize the benefits of our investment in
the Livelihoods Fund, a unique investment fund whose
returns consist of high-quality carbon credits. Several
years ago, we made a commitment to investing
€3 million covering a 20-year participation in the fund,
which supports the sustainability of agricultural and rural
communities worldwide. Projects of this fund focus on
ecosystem restoration, agriculture, agroforestry, and
rural energy. In eastern India, for example, the fund
helped communities plant fruit trees to diversify food
sources and address the overcultivation of soil. Instead
of a charitable donation, we have made a long-term
investment that brings benefits to society, the
environment, and SAP. In 2015, we received carbon
credits from the fund, which helped us to offset our
carbon footprint by 23 kilotons.
Another important program in 2015 was the further
implementation of ISO 14001 in SAP locations
throughout the world. This well-accepted environmental
management system is now in place at 32 of our
locations worldwide, including our North America
headquarters in Newtown Square, Pennsylvania, as well
as in Palo Alto, San Francisco, Sunnyvale, and Dublin,
California, both in the United States; and other countries
including Austria, Canada, Czech Republic, France,
Germany, Israel, Italy, and South Africa. New sites in
Singapore and Switzerland, as well as Rio de Janeiro and
São Paulo in Brazil, were certified in 2015. To act more
quickly and achieve consistency, we created a template
to roll out in other sites, enabling us to efficiently build a
large global network where different sites interact and
share best practices. Our goal is to continually increase
the number of certified locations; we aim for total fulltime equivalent (FTE) coverage of 70% by 2018. By end
of 2015, SAP had an environmental management system
(ISO 14001) in place in 15 countries and 32 single sites.
This represents a total FTE coverage of 22.2%.
In keeping with our existing policy for office buildings and
data centers, all our electric company cars charged at
SAP are powered with 100% renewable sources. In
Germany, for example, we provide employees with an
incentive to switch to electric alternatives by offering a
battery subsidy that offsets the costs of using an electric
vehicle. We believe that our electric car initiative will play
a critical role in helping achieve our 2020 carbon
reduction goal.
Measuring our Total Energy Consumed
Because our energy usage drives emissions, one of the
most important measures for us is total energy
consumed. This includes all energy that SAP generates
or purchases to run our facilities, data centers, company
cars, and corporate jets. Our total energy consumption
increased to 965 gigawatt hours (GWh) in 2015,
compared to 920 GWh in 2014.
In 2015, emissions caused by SAP products in use at the
sites of more than 300,000 customers were almost
This increase is due to growth in our workforce and
business. In addition, as software usage shifts to the
38
cloud, we are operating more of our customers’ systems
in our data centers, as well as other locations where we
supplement our servers. This additional cloud operation,
along with accompanying servers and facilities,
consumes more energy. At the same time, we believe
this shift has the opposite effect for our customers that
are now able to simplify their technology and save energy
through our shared infrastructure. This reduces overall
IT-related energy consumption through our highly
energy-efficient cloud provisioning.
Optimizing Efficiency in our Data Centers
Data centers are at the heart of how SAP provides
solutions to our customers and represents a significant
part of our total greenhouse gas emissions. At the same
time, with our energy consumption rising as more of our
business moves to the cloud, data centers have become
a primary focus of our carbon reduction efforts and the
adoption of our technology innovations and solutions
towards our customers. We continue to drive efficiency
and innovation around buildings, data center operations,
and infrastructure. For example, in one of our largest
data centers in St. Leon-Rot, Germany, we received an
energy efficiency certificate from TÜV Rheinland, a
leading provider of technical, safety, and certification
services, with an efficiency score of 98.7%. One hundred
percent of our energy usage that provides internal and
external computation power comes from renewable
sources. Our total data center electricity consumption at
both our internal and external sites increased from 179 in
2014 to 249 GWh in 2015. In recognition of the
exemplary actions SAP has taken to improve our data
centers, we were awarded the European Datacentre
Sustainability Award in 2015.
Reinforcing our Renewable Electricity Strategy
Our commitment to 100% renewable electricity in all of
our internal and external data centers and facilities is one
of the most significant steps toward making our
operations more sustainable. In 2015, we mainly focused
on wind and, to a lesser extent, on biomass. While we
produce a small amount of renewable electricity through
solar panels in some locations, we rely primarily on the
purchase of renewable electricity certificates (RECs) to
increase the renewable electricity in our energy mix. We
procure RECs regionally that add value and drive change
in the electricity market, adopting high-quality standards
in our procurement guidelines that are aligned with two
non-governmental organizations (NGOs). For example,
we consider renewable electricity from biomass only if it
is disconnected from coal or other fossil power plants
and if the biomass itself is not related to deforestation. In
addition, we require that power plants must be no more
than 10 years old, as we aim to foster new innovation in
the production of renewable electricity. Furthermore,
SAP is not considering RECs from power plants that are
currently supported by governments. As a vintage
requirement, we define that renewable electricity must
be produced in the same year or the year before the
reporting period will be applied.
In 2015, SAP joined the green initiative RE100 and is now
one of the global corporations that have signed on to the
RE100 initiative. RE100 is led by The Climate Group in
partnership with CDP (formerly Carbon Disclosure
Project) and the goal of the campaign is to have 100 of
the world’s most influential businesses committed to
100% renewable electricity.
INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS
AND LICENSES
We rely on a combination of the protections provided by
applicable statutory and common law rights, including
trade secret, copyright, patent, and trademark laws,
license and non-disclosure agreements, and technical
measures to establish and protect our proprietary rights
in our products. For further details on risks related to
SAP’s intellectual property rights, see “Item 3. Key
Information – Risk Factors – Operational Risks.”
We may be dependent in the aggregate on technology
that we license from third parties that is embedded into
our products or that we resell to our customers. We have
licensed and will continue to license numerous thirdparty software products that we incorporate into and/or
distribute with our existing products. We endeavor to
protect ourselves in the respective agreements by
obtaining certain rights in case such agreements are
terminated.
We are a party to patent cross-license agreements with
several third parties.
We are named as a defendant or plaintiff in various legal
proceedings
for
alleged
intellectual
property
infringements. See Note (23) to our Consolidated
Financial Statements for a more detailed discussion
relating to certain of these legal proceedings.
DESCRIPTION OF PROPERTY
Our principal office is located in Walldorf, Germany,
where
we
own
and
occupy
approximately
430,000 square meters of office and datacenter space
including our facilities in neighboring St. Leon-Rot. We
also own and lease office space in various other locations
in Germany, totaling approximately 120,000 square
meters. In approximately 70 countries worldwide, we
occupy roughly 1,615,000 square meters. The space in
most locations other than our principal office in Germany
is leased. We also own certain real properties in Newtown
Square and Palo Alto (United States); Bangalore (India);
Sao Leopoldo (Brazil); London (UK) and a few other
locations in and outside of Germany.
39
The office and datacenter space we occupy includes
approximately 305,000 square meters in the EMEA
region,
excluding
Germany,
approximately
410,000 square meters in the region North and Latin
America, and approximately 350,000 square meters in
the APJ Region.
–
With the acquisition of Concur in 2014, we added
approximately 50,000 square meters to our real estate
portfolio. This portfolio is included in the group portfolio
disclosed above.
The space is being utilized for various corporate
functions including research and development, our data
centers, customer support, sales and marketing,
consulting, training, administration and messaging.
Substantially all our facilities are being fully used or
sublet. For a discussion on our non-current assets by
geographic region see Note (28) to our Consolidated
Financial Statements. Also see, “Item 6. Directors,
Senior Management and Employees – Employees,”
which discusses the numbers of our employees, in FTE’s,
by business area and by geographic region, which may
be used to approximate the productive capacity of our
workspace in each region.
–
–
We believe that our facilities are in good operating
condition and adequate for our present usage. We do not
have any significant encumbrances on our properties.
We do not believe we are subject to any environmental
issues that may affect our utilization of any of our
material assets. We are currently undertaking
construction activities in various locations to increase
our capacity for future expansion of our business. Our
significant construction activities are described below,
under the heading “Principal Capital Expenditures and
Divestitures Currently in Progress.”
Capital Expenditures
Principal Capital Expenditures and Divestitures
Currently in Progress
In 2015, we continued with various construction projects
and started new construction activities in several
locations. The expansion of our data centers is again an
important aspect of our investments planned for 2016.
We aim to extend our office space to be able to cover
future growth. We plan to cover all of these projects in
full from operating cash flow. Our most important
projects are:
– In Bangalore, India, we want to add additional
capacity of roughly 2,500 employees. We estimate
the total cost to be approximately €50 million, of
which we had paid approximately €7 million as at
December 31, 2015. We expect to complete the
construction of this office building in 2017.
– In Ra’anana, Israel, we continued with the
construction of a new building. We estimate the total
–
–
–
–
cost of this project to be approximately €60 million,
of which we had paid approximately €25 million as at
December 31, 2015. We expect to complete the
construction of this office building in 2016.
In our research center in Potsdam, Germany, we
started a third construction phase to realize additional
capacity for approximately 150 employees. With the
extension of our research center, we aim to create the
general conditions for further teams contributing
innovations to SAP products in miscellaneous fields.
We estimate the total cost to be approximately
€16 million, of which we had paid approximately
€11 million as at December 31, 2015. We expect to
complete the construction of this office building in
2016.
In New York, New York, in the United States, we
continued executing the leasehold improvements for
our new office space. The project includes the
consolidation of our New York City offices for
approximately 450 employees. We estimate the total
capital expenditures for this project to be
approximately €34 million, of which we had paid
approximately €3.5 million as at December 31, 2015.
We expect to complete the leasehold improvements
in 2016.
In Dubai, United Arab Emirates, we continued with our
office consolidation project including an expansion of
office space adding additional capacity for
100 employees. We estimate the total cost to be
approximately €11 million, of which we had paid
approximately €0.9 million as at December 31, 2015.
We expect to complete the leasehold improvements
in 2016.
In Walldorf, Germany, we started construction on a
new office building for about 700 employees. We
estimate the total cost to be approximately
€71 million, of which we had paid approximately
€0.5 million as of December 31, 2015. We expect to
complete the construction in 2018.
In Walldorf, Germany, we also started construction on
a new data center as well as a new power station. We
estimate the total cost to be approximately
€58 million, of which we had paid approximately
€0.7 million as at December 31, 2015. We expect to
complete the construction for both projects in 2017.
In Prague, Czech Republic, we started the expansion
of an office building and began an office move. We
estimate the total capital expenditures for this project
to be approximately €19 million. We expect to
complete the project in 2016.
In Colorado Springs, Colorado, in the United States,
we started construction on a new data center in 2015.
We estimate the total cost of this project to be
approximately €75 million. We expect to complete the
construction of this data center in 2017.
40
– In San Ramon, California, in the United States, we
began an office move. We estimate the total cost of
this move to be approximately €22 million. We expect
to complete this project in 2017.
– In Shanghai, China, we started an expansion of our
office building. We estimate the total cost to be
approximately €15 million, of which we had paid
approximately €2 million as at December 31, 2015.
We expect to complete the construction in 2016.
For more information about planned capital
expenditures, see the Investment Goals section. There
were no material divestitures within the reporting period.
Principal Capital Expenditures and Divestitures for
the Last Three Years
Our principal capital expenditures for property, plant,
and equipment amounted to €580 million in 2015 (2014:
€666 million; 2013: €553 million). Principal capital
expenditures in 2015 for property, plant, and equipment
decreased compared to 2014 mainly due to lower
replacement investments in hardware. Furthermore,
compared to 2014, SAP did not have material
acquisitions in 2015, resulting in fewer additions. The
increase from 2013 to 2014 was due to the acquisition of
Concur, the replacement and purchase of computer
hardware and vehicles acquired in the normal course of
business and investments in data centers. Principal
capital expenditures for property, plant and equipment
for the period from January 1, 2016 to the date of this
report were €97 million.
Our capital expenditures for intangible assets such as
acquired technologies and customer relationships
amounted to €70 million in 2015 compared to
€1,954 million in 2014 (2013: €419 million). Capital
expenditures for intangible assets decreased from 2014
to 2015 because we only executed one small acquisition
in 2015, while the increase from 2013 to 2014 was due to
the acquisitions of Concur and Fieldglass in 2014. Our
investments allocated to goodwill decreased to
€27 million in 2015 from €6,072 million in 2014 (2013:
€842 million). The decrease from 2014 to 2015 in the
additions to goodwill was primarily attributable to
executing only one small acquisition in 2015 compared to
2014 when we acquired Concur and Fieldglass. These
2014 acquisitions also caused the significant increase
from 2013 to 2014 as we executed only a few small
acquisitions in 2013. For further details on acquisitions
and related capital expenditures, see Note (4) and
Note (15) to our Consolidated Financial Statements.
For further information regarding the principal markets
in which SAP conducts business, including a breakdown
of total revenues by category of activity and geographic
market for each of the last three years, see
“Item 5. Operating and Financial Review and Prospects –
Operating Results (IFRS)” of this report.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS
OVERVIEW
For information on our principal sources of revenue and
how the different types of revenue are classified in our
income statement refer to Note (3b) to our Consolidated
Financial Statements, section Revenue Recognition.
See “Item 4. Information about SAP – Products,
Research & Development, and Services” for a more
detailed description of the products and services we
offer.
The following discussion is provided to enable a better
understanding of our operating results for the periods
covered, including:
– the factors that we believe impacted our performance
in 2015;
– our outlook for 2015 compared to our actual
performance (non-IFRS);
– a discussion of our operating results for 2015
compared to 2014 and for 2014 compared to 2013;
– the factors that we believe will impact our
performance in 2016; and
– our operational targets for 2016 (non-IFRS).
The preceding overview should be read in conjunction
with the more detailed discussion and analysis of our
financial condition and results of operations in this
Item 5, “Item 3. Key Information – Risk Factors” and
“Item 18. Financial Statements.”
ECONOMY AND THE MARKET
Global Economic Trends
In its most recent report, the European Central Bank
(ECB) concludes that the global economy grew gradually
and unevenly in 2015. The ECB finds that low oil prices,
favorable financing conditions, and improving labor
markets helped advanced economies perform better
than in previous years. However, growth in emerging
markets and developing economies remained relatively
weak, according to the ECB. It cites tight global financing
conditions and declining commodity prices as the
causes.
For the Europe, Middle East, and Africa (EMEA) region,
the ECB reports contrasting developments. According to
its calculations, the gross domestic product of the euro
area grew 1.5% in 2015. It finds that this recovery was
mainly due to increasing domestic demand. The
economies of Central and Eastern European countries
were robust, according to the ECB, while Russia was in
significant recession.
41
The economic performance of the countries in the
Americas region was also uneven. According to the ECB,
the United States economy firmed in 2015, and
weakened slightly only in the third quarter. However, a
number of countries in Latin America slipped into
recession; notably Brazil, where the downturn was
mainly due to political uncertainty.
In the Asia Pacific Japan (APJ) region, Japan’s economy
struggled to gain momentum in 2015, the ECB notes.
However, the ECB also points to a slight recovery in the
third quarter and signs of growth at the end of the year.
China refocused its economy in 2015, easing its
monetary policy and introducing a new exchange rate
regime in the summer, the ECB reports. This increased
political uncertainty and economic growth slowed. The
ECB writes that business-friendly reforms in India
boosted investment and, after a temporary decline in the
second quarter, led to an increase in economic growth
from mid-year onwards.
The IT Market
Growth in the global IT market slowed from the second
quarter of 2015, U.S. market research firm International
Data Corporation (IDC) reports. It attributes this
development to the contracting PC market, the
encroachment on traditional IT business by cloud
services, and weak economic performance in countries
such as Brazil, China, and Russia. IDC lowered its
forecast for IT market growth in 2015, and at the end of
the year it expected the global IT market to have grown
4.9% year over year – still ahead of the economy as a
whole.
However, according to IDC, IT spending did not grow
evenly across the segments. It pointed to strong growth
in cloud, mobile, and Big Data, with service providers
increasing investment in server and data storage
hardware. IDC reports that smartphone market
expansion, which had been rapid in the previous year,
slowed significantly in 2015 due to saturation. In 2015,
the rate of smartphone market growth was closer to that
of the IT market as a whole. Even the tablet market was
unable to make up for this loss of momentum, IDC notes.
By contrast, worldwide spending on business software
increased significantly, at 6.8% in 2015, according to
IDC. The share of investment in cloud, mobile, and Big
Data solutions continued to increase. However,
according to IDC, this had an adverse effect on services,
which grew only 2.8%.
IDC reports that IT spending in the Europe, Middle East,
and Africa region (EMEA) increased 1.5% in 2015, and by
as much as 5% in Western Europe due to the economic
recovery there. In Germany, the IT market grew even
more strongly at over 6%. In Russia, though, low oil
prices, depreciation of the ruble, and economic sanctions
had a significant negative impact, IDC reports. It expects
the Russian IT market declined 15% in 2015.
In the Americas region, the IT market grew 4.6%
according to IDC. In its view, the U.S. market remained
largely stable. It grew 3% overall, somewhat less than in
the previous year, mainly due to the weakening market
for smartphones and tablets. Software, on the other
hand, grew strongly at 7% in the United States,
according to IDC. In Brazil, IT investment increased 11%
in 2015, though this increase has to be seen in the
context of high inflation. IDC put growth in the Mexican IT
market at almost 13%.
In the Asia Pacific Japan (APJ) region, IDC reports that
the IT market there grew almost 6% in 2015. The IT
markets in individual countries performed very
differently. In Japan, IT spending remained constant year
over year. In China, growth in the IT market slowed to 8%
(2014: 12%). In India, however, in 2015 IT spending grew
very strongly at 11%, according to IDC.
Impact on SAP
Once again, growth in the overall global economy and in
the IT industry was relatively slow in a volatile market
environment in 2015. This confronted SAP with
considerable challenges. But our tremendous 2015
results validate our strategy of innovating across the
core, the cloud, and business networks to help our
customers become true digital enterprises. We once
again succeeded in significantly expanding our business
and outperformed the overall global economy and IT
industry in all regions in 2015 with regards to revenue
growth.
Our non-IFRS cloud and software revenue increased 12%
at constant currencies in 2015. Both our core business
and our cloud business contributed substantially to the
increase. Our core business grew with non-IFRS software
and support revenue increasing 6% at constant
currencies. This was driven by a 4% year-over-year
increase in our non-IFRS software revenue at constant
currencies, while our resilient constant currency nonIFRS support revenue grew 7%. Support revenue is a
robust feature of our core business model because a
maintenance contract generally continues for as long as
the customer uses the software. Our cloud business
growth was strong as well. Non-IFRS cloud subscriptions
and support revenue grew 82% over the year at constant
currencies.
For more details about our regional performance, see the
Revenue by Region section below.
In 2015, we again demonstrated that we are consistently
pursuing our strategy for innovation and growth – and
that globally we are able to generate growth that few
other IT companies can match.
42
PERFORMANCE AGAINST OUTLOOK FOR 2015
(NON-IFRS)
Our 2015 operating profit-related internal management
goals and published outlook were based on our non-IFRS
financial measures. For this reason, in the next section
we discuss performance against our outlook only in
terms of non-IFRS numbers derived from IFRS
measures. The subsequent section about IFRS operating
results discusses numbers only in terms of the
International Financial Reporting Standards (IFRSs). So
the numbers in that section are not expressly identified
as IFRS numbers.
We acquired Concur Technologies in December 2014, so
Concur results are incorporated in our 2014 results only
for December. We acquired Fieldglass in May 2014, so
Fieldglass results are incorporated in our 2014 results
only from May to December. Similarly, because we
acquired hybris in August 2013, hybris results are
incorporated in our 2013 results only from August to
December.
Guidance for 2015 (Non-IFRS)
At the beginning of 2015, we projected, based on the
strong momentum in our cloud business, that our nonIFRS cloud subscriptions and support revenue would end
between €1.95 billion and €2.05 billion at constant
currencies (2014: €1.10 billion). The upper end of this
range represents a growth rate of 86% at constant
currencies. The acquired companies Concur and
Fieldglass were expected to contribute approximately
50 percentage points to this growth. SAP expected fullyear 2015 non-IFRS cloud and software revenue to
increase by 8% to 10% at constant currencies (2014:
€14.33 billion). We also expected our full-year operating
profit (non-IFRS) for 2015 to end between €5.6 billion
and €5.9 billion (2014: €5.64 billion) at constant
currencies. We anticipated an effective tax rate (IFRS) of
between 25.0% and 26.0% (2014: 24.7%) and an
effective tax rate (non-IFRS) of between 26.5% and
27.5% (2014: 26.1%).
To assist in understanding our 2015 performance as compared to our 2015 outlook a reconciliation from our IFRS
financial measures to our non-IFRS financial measures is provided below. These IFRS financial measures reconcile to
the nearest non-IFRS equivalents as follows:
€ millions, except operating
margin
Cloud subscriptions and
support
Recurring
Revenue
not
AcquiIFRS Recorded
sitionShareFinancial
Under Related
Based
Measure
IFRS Charges Payments
Currency
Effect on
the NonNon-IFRS
IFRS
Restruc- Financial Financial
turing Measure Measure
Non-IFRS
Financial
Measure
at
Constant
Currency
2,286
10
NA
NA
NA
2,296
ⳮ297
1,999
Software licenses and support
14,928
2
NA
NA
NA
14,930
ⳮ933
13,997
Cloud and software
17,214
11
NA
NA
NA
17,226
ⳮ1,230
15,996
20,793
11
NA
NA
NA
20,805
ⳮ1,505
19,299
4,252
11
738
724
621
6,348
ⳮ443
5,904
20.5
0
3.5
3.5
3.0
30.5
0.1
30.6
Total revenue(1)
Operating profit(1)
Operating margin (in %)
(1) Operating profit is the numerator and total revenue is the denominator in the calculation of our IFRS operating margin and the
comparable non-IFRS operating margin, and is included in this table for the convenience of the reader.
43
Actual Performance Compared to Guidance 2015
(Non-IFRS)
We achieved or exceeded the amended outlook guidance for revenue and operating profit we published at the
beginning of the year.
Comparison of Forecast and Results for 2015
Cloud subscriptions and support revenue
(non-IFRS, at constant currencies)
Cloud and software revenue
(non-IFRS, at constant currencies)
Operating profit
(non-IFRS, at constant currencies)
Effective tax rate (IFRS)
Forecast for 2015
Results for 2015
€1.95 billion
€2.00 billion
to €2.05 billion
+8%
+12%
to +10%
€5.6 billion
€5.90 billion
to €5.9 billion
25.0%
23.4%
to 26.0%
Effective tax rate (non-IFRS)
26.5%
26.1%
to 27.5%
Despite ongoing economic uncertainty throughout 2015,
our new and existing customers continued to show a
strong willingness to invest in our solutions.
At constant currencies, non-IFRS cloud subscriptions
and support revenue grew from €1.1 billion in 2014 to
€2.0 billion in 2015. That represents an increase of 82%
at constant currencies. The increase includes effects
relating to acquisitions not included, or not included in
full, in the 2014 amount. Besides these positive
acquisition effects our cloud line of business also
continued to benefit from strong organic growth (32% at
constant currencies), which surpassed our long-term
growth expectations for 2015.
Starting with the reporting for the first quarter of 2015,
SAP reports a new cloud related measure called “new
cloud bookings.” This measure is an order entry measure
that is determined by including all order entry of a given
period that meets all of the following conditions:
– The revenue from the orders is expected to be
classified as cloud subscriptions and support
revenue.
– It results from purchases by new customers and
incremental purchases by existing customers.
Consequently, orders to renew existing contracts are
not included.
– The order amount is contractually committed (that is,
variable amounts from pay-per-use and similar
arrangements are not included). Consequently, due to
their uncommitted pay-per-use nature, transaction-
based fees from SAP Ariba and SAP Fieldglass
solutions are not reflected in the new cloud bookings
metric.
– Amounts are annualized. That is, for contracts with
durations of more than one year, the average annual
order entry amount is included in the number.
Thus, the new cloud bookings measure is an indicator for
our cloud-related sales success in a given period and for
future cloud subscriptions revenue. New cloud bookings
increased 100% in 2015 to €874 million (2014:
€436 million). Concur contributed €169 million to new
cloud bookings. In addition to the strong growth of the
new cloud bookings the combination of our cloud
backlog (unbilled future revenue based on existing
customer contracts) and deferred cloud revenue that
together reflect the committed future cloud
subscriptions and support revenue climbed by 53% to
€4.6 billion (2014: €3.0 billion). This committed
business will drive cloud growth in 2016 and beyond.
Besides the cloud business also our core on-premise
business showed an exceptional growth in 2015. Cloud
and software revenue (non-IFRS) was €17.2 billion (2014:
€14.3 billion). On a constant currency basis, the increase
was 12% and based on that result significantly above the
forecast for 2015.
Our total revenue (non-IFRS) rose 18% in 2015 to
€20.8 billion (2014: €17.6 billion). On a constant
currency basis, the increase was 10%.
44
Operating expenses (non-IFRS) in 2015 were
€14.5 billion (2014: €11.9 billion), an increase of 21%. On
a constant currency basis the increase was 12%.
customer demand that can be seen in the significantly
higher cloud backlog as well as the increased cloud
bookings.
Our expense base in 2015 was impacted by the
transformation to a fast-growing cloud business
resulting in a significant higher share of more predictable
revenue. The gross margins of our cloud offerings made
good progress throughout 2015. Our gross margin (NonIFRS) in our business network segment resulted in ~75%
for 2015, already close to our long-term ambition of
~80%. This good result is based on an overall improved
profitability as well as related to positive effects of the
Concur acquisition. The revenue growth of our private
cloud offering was more positive than expected. At the
same time, the profitability of our private cloud offering
could also be improved further; it is still negative but
based on the good progress we saw throughout 2015, we
expect break even in the course of 2016. Profitability in
our public cloud offering was ~70% for 2015 compared to
our long-term ambition of ~80%. Our overall cloud gross
margin improved year over year from 64.3% in 2014 to
65.6% in 2015, despite incremental investments in the
cloud infrastructure. These investments were necessary
so as to be able in future periods to satisfy the increased
Efficiency improvements in both our core and our cloud
business drove absolute operating profit growth. NonIFRS operating profit in 2015 was €5.904 billion, an
increase of 5% at constant currencies. The growth in our
operating profit in 2015 reflects the continued success of
our business transformation in combination with the
strong top-line growth. In 2015, we had a positive impact
from our Company-wide transformation program in the
triple-digit million euro range. On the other hand, we had
a net increase of more than 2,500 employees in 2015 as
we continued to invest in innovation and growth markets.
Thus, constant currency non-IFRS operating profit
amounting to €5.904 billion slightly exceeded the range
(€5.6 billion to €5.9 billion) we had expected in our
outlook.
We achieved an effective tax rate (IFRS) of 23.4% and an
effective tax rate (non-IFRS) of 26.1%, which is below the
outlook of 25.0% to 26.0% (IFRS) and 26.5% to 27.5%
(non-IFRS). The reduction mainly results from taxes for
prior years.
OPERATING RESULTS (IFRS)
This section on operating results (IFRS) discusses results only in terms of IFRS measures, so the IFRS numbers are
not expressly identified as such.
Our 2015 Results Compared to Our 2014 Results (IFRS)
Revenue
€ millions
2015
2014
Change in % 2015
vs 2014
Cloud subscriptions and support
2,286
1,087
110%
Software licenses
4,835
4,399
10%
Software support
10,093
8,829
14%
Software licenses and support
14,928
13,228
13%
Cloud and software
17,214
14,315
20%
3,579
3,245
10%
20,793
17,560
18%
Services
Total revenue
Total Revenue
Total revenue increased from €17,560 million in 2014 to
€20,793 million in 2015, representing an increase of
€3,233 million, or 18%. This growth reflects a 10%
increase from new business and a 9% increase from
currency effects. The growth in revenue resulted
primarily from a €1,264 million rise in support revenue, a
€1,199 million increase in cloud subscriptions and
support revenue, software license revenue increased
€436 million and services revenue grew by €334 million.
Cloud and software revenue climbed to €17,214 million in
2015, an increase of 20%. Cloud and software revenue
represented 83% of total revenue in 2015 (2014: 82%).
Service revenue increased 10% from €3,245 million in
2014 to €3,579 million, which was 17% of total revenue,
in 2015.
45
For more information about the breakdown of total
revenue by region and industry, see the Revenue by
Region and Industry section below.
Enterprise Support. The acceptance rate for SAP
Enterprise Support among new customers slightly
increased to 99% in 2015 (2014: 98%).
Cloud and Software Revenue
Software licenses revenue results from the fees earned
from selling or licensing software to customers. Revenue
from cloud subscriptions and support refers to the
income earned from contracts that permit the customer
to access specific software solutions hosted by SAP
during the term of its contract with SAP. Support
revenue represents fees earned from providing technical
support services and unspecified software upgrades,
updates, and enhancements to customers.
Software licenses and software support revenue rose
€1,700 million, or 13%, from €13,228 million in 2014 to
€14,928 million in 2015. This growth breaks down into a
6% increase from new software licenses and software
support business and a 7% increase from currency
effects.
Cloud subscriptions and support revenue increased from
€1,087 million in 2014 to €2,286 million in 2015.
Despite a combination of a challenging macroeconomic
and political environment and the accelerating industry
shift to the cloud, we achieved a €436 million increase in
software license revenue. This increase, from
€4,399 million in 2014 to €4,835 million in 2015, reflects
a 4% increase from new license business and a 6%
increase from currency effects.
Our customer base continued to expand in 2015. Based
on the number of contracts concluded, 13% of the orders
we received for software in 2015 were from new
customers (2014: 12%). The total value of software
orders received increased 16% year-over-year. The total
number of software license contracts increased 6% to
57,439 (2014: 54,120 contracts), while the average order
value increased by 9%. Of all our software orders
received in 2015, 27% were attributable to deals worth
more than €5 million (2014: 22%), while 40% were
attributable to deals worth less than €1 million (2014:
44%).
Our stable customer relations and continued investment
in new software licenses by customers throughout 2015
and the previous year resulted in an increase in software
support revenue from €8,829 million in 2014 to
€10,093 million in 2015. The SAP Enterprise Support
offering was the largest contributor to our software
support revenue. The €1,264 million, or 14%, growth in
software support revenue reflects a 7% increase from
new support business and an 8% increase from currency
effects. This growth is primarily attributable to SAP
Product Support for Large Enterprises and SAP
Cloud and software revenue grew from €14,315 million in
2014 to €17,214 million in 2015, an increase of 20%. This
reflects a 12% increase from new cloud and software
business and a 9% increase from currency effects.
Services Revenue
Services Revenue combines revenue from professional
services, premium support services, training services,
messaging services and payment services. Professional
services primarily relate to the installation and
configuration of our cloud subscriptions and on-premise
software products. Our premium support offering
consists of high-end support services tailored to
customer requirements. Messaging services are
primarily transmission of electronic text messages from
one mobile phone provider to another. Payment services
are primarily delivered in connection with our travel and
expense management offerings.
Services revenue increased €334 million, or 10%, from
€3,245 million in 2014 to €3,579 million in 2015. This
increase reflects a 2% increase from new services
business and an 8% increase from currency effects.
A solid market demand led to an 8% increase of
€222 million in consulting revenue and premium support
revenue from €2,634 million in 2014 to €2,856 million in
2015. This increase reflects a 0% increase from new
business and an 8% increase from currency effects.
Consulting and premium support revenue contributed
80% of the total service revenue (2014: 81%). Consulting
and premium support revenue contributed 14% of total
revenue in 2015 (2014: 15%).
Revenue from other services increased €112 million, or
18%, to €723 million in 2015 (2014: €611 million). This
reflects a 9% increase from new business and a 10%
increase from currency changes.
46
Revenue by Region and Industry
Revenue by Region
€ millions
2015
2014
Change in % 2015
vs 2014
Germany
2,771
2,570
8%
Rest of EMEA
6,409
5,813
10%
EMEA
9,181
8,383
10%
United States
6,750
4,898
38%
Rest of Americas
1,678
1,591
5%
8,428
6,489
30%
667
600
11%
Rest of APJ
2,517
2,088
21%
APJ
3,185
2,688
18%
20,793
17,560
18%
€ millions
2015
2014
Change in % 2015
vs 2014
Energy & Natural Resources
4,834
4,158
16%
Discrete Manufacturing
3,672
3,051
20%
Consumer
4,934
4,045
22%
Public Services
2,174
1,786
22%
Financial Services
1,881
1,697
11%
3,298
2,824
17%
20,793
17,560
18%
Americas
Japan
SAP Group
Revenue by Industry
Services
Total revenue
Revenue by Region
EMEA Region
In 2015, the EMEA region generated €9,181 million in
revenue, which was 44% of total revenue (2014: €8,383
million; 48%). This represents a year-over-year increase
of 10%. Revenue in Germany increased 8% to
€2,771 million in 2015 (2014: €2,570 million). Germany
contributed 30% (2014: 31%) of all EMEA region
revenue. The remaining revenue in the EMEA region was
primarily generated in France, Italy, the Netherlands,
Russia, Switzerland, and the United Kingdom. Cloud and
software revenue generated in the EMEA region in 2015
totaled €7,622 million (2014: €6,819 million). Cloud and
software revenue represented 83% of all revenue in the
region in 2015 (2014: 81%). Cloud subscriptions revenue
rose 83% to €507 million in 2015 (2014: €277 million).
This growth reflects a 69% increase from new cloud
business and a 14% increase from currency effects.
Software licenses and software support revenue rose 9%
to €7,115 million in 2015 (2014: €6,542 million). This
growth reflects an 8% increase from new software
license and software support business and a 1% increase
from currency effects.
Americas Region
In 2015, 41% of our total revenue was generated in the
Americas region (2014: 37%). Total revenue in the
Americas region increased 30% to €8,428 million;
revenue generated in the United States increased 38%
to €6,750 million. This growth reflects a 16% increase
from new business and a 22% increase from currency
effects. The United States contributed 80% (2014: 75%)
of all revenue generated in the Americas region. In the
remaining countries of the Americas region, revenue
increased 5% to €1,678 million. This reflects a 3%
increase from new business and a 2% increase from
currency effects. This revenue was primarily generated
in Brazil, Canada, and Mexico. Cloud and software
47
€2,663 million in 2015 (2014: €2,221 million). That was
84% of all revenue from the region (2014: 83%). Cloud
subscriptions revenue grew 98% to €200 million in 2015
(2014: €101 million). This growth reflects an 82%
increase from new cloud business and a 17% increase
from currency effects. Software licenses and software
support revenue increased 16% to €2,463 million in 2015
(2014: €2,120 million). This increase reflects an 8%
increase from new business and an 8% increase from
currency effects.
revenue generated in the Americas region in 2015 totaled
€6,929 million (2014: €5,276 million). Cloud and
software revenue represented 82% of all revenue in the
Americas region in 2015 (2014: 81%). Cloud
subscriptions revenue rose by 123% to €1,579 million in
2015 (2014: €709 million); currency effects were 34%,
growth in new cloud business was 89%. Software
licenses and software support revenue rose 17% to
€5,350 million in 2015 (2014: €4,566 million). This
growth reflects a 2% increase from new business;
currency effects were 15%.
Revenue by Industry
We allocate our customers to one of our industries at the
outset of an initial arrangement. All subsequent revenue
from a particular customer is recorded under that
industry sector.
APJ Region
In 2015, 15% (2014: 15%) of our total revenue was
generated in the APJ region, with the strongest revenue
growth being achieved in India. Total revenue in the APJ
region increased 18% to €3,185 million. In Japan,
revenue increased 11% to €667 million. Revenue from
Japan was 21% (2014: 22%) of all revenue generated in
the APJ region. The revenue growth in Japan was
attributable to a 6% increase from new business and a
5% increase from currency effects. In the remaining
countries of the APJ region, revenue increased 21%.
Revenue in the remaining countries of the APJ region
was generated primarily in Australia, China, and India.
Cloud and software revenue in the APJ region totaled
In 2015, we achieved above-average growth in the
following industry sectors, measured by changes in total
revenue: Public Services (€2,174 million, at a growth rate
of 22%); Consumer (€4,934 million, at a growth rate of
22%); and Discrete Manufacturing (€3,672 million, at a
growth rate of 20%). Revenue from the other industry
sectors was Services (€3,298 million, at a growth rate of
17%); Energy & Natural Resources (€4,834 million, at a
growth rate of 16%); and Financial Services
(€1,881 million, at a growth rate of 11%).
Operating Profit and Operating Margin
Total Operating Expenses
2015
% of
total
revenue(1)
2014
% of
total
revenue(2)
Change in
% 2015 vs
2014
Cost of cloud and software
ⳮ3,313
16%
ⳮ2,557
15%
30%
Cost of services
ⳮ3,313
16%
ⳮ2,716
15%
22%
Research and development
ⳮ2,845
14%
ⳮ2,331
13%
22%
Sales and marketing
ⳮ5,401
26%
ⳮ4,304
25%
25%
General and administration
ⳮ1,048
5%
ⳮ892
5%
17%
ⳮ621
3%
ⳮ126
1%
>100%
TomorrowNow and Versata litigation
0
0%
ⳮ309
2%
<ⳮ100%
Other operating income/expense, net
1
0%
4
0%
ⳮ86%
ⳮ16,541
80%
ⳮ13,230
75%
25%
€ millions
Restructuring
Total operating expenses
(1) Total revenue for 2015: € 20,793 million.
(2) Total revenue for 2014: € 17,560 million.
48
Operating Profit and Operating Margin
€ millions, except for operating margin
2015
2014
Change in % 2015
vs 2014
Operating profit
4,252
4,331
ⳮ2%
20.5%
24.7%
ⳮ4.2pp
Operating margin (in %)
SAP continued to invest in innovation and its cloud
business and generated record turnover in 2015. The
strong growth in revenue, however, also led to an
increase in compensation payments to our employees,
while the climbing stock price translated into higher
share-based payment expenses. As a result, our
operating profit declined slightly by 2% to €4,252 million
(2014: €4,331 million).
In 2015, our operating expenses increased €3,311 million
or 25% to €16,541 million (2014: €13,230 million). The
main contributors to that increase were our acquisition
of Concur in December 2014, our greater investmentand revenue-related cloud subscriptions and support
costs, our continued investment in sales activities, and
higher restructuring expenses.
The effect of acquisition-related expenses, which were
€738 million (2014: €562 million), of restructuring
expenses, which were €621 million (2014: €126 million),
and of a €724 million expense for share-based payments
(2014: €290 million) weighed more heavily on operating
profit than in the previous year. The record revenue
generated increased the cost of bonus payments, and
the improving performance of the share price in 2015
pushed share-based payment expenses higher.
Continuing investment in the cloud infrastructure, in
sales activities around the world, and in research and
development also affected operating profit. Our
employee headcount (measured in full-time equivalents,
or FTEs) increased by 2,579 year-over-year.
These short-term, negative effects on operating profit
largely represent investments in the future and were in
part offset by the increase in revenue.
and license fees and commissions paid to third parties
for databases and the other complementary third-party
products sublicensed by us to our customers.
In 2015, the cost of cloud and software increased 30% to
€3,313 million (2014: €2,557 million).
Significant costs included an additional €539 million
year-over-year to extend our cloud business in response
to the sustained strength of customer demand, with an
associated increase in the expense of delivering and
operating cloud applications, a €164 million revenuerelated increase in the license fees we pay to third
parties, and a €74 million rise in the cost of providing
custom development projects. These investments
contributed to revenue growth. Our margin on cloud
subscriptions and support narrowed 0.4 percentage
points to 55.3% (2014: 55.8%). This decrease was
primarily due to increasing expenses related to the
extension of our cloud infrastructure. These expenses
represent an investment in our fast-growing cloud
business of the future, and were in part already offset by
a significant increase in cloud subscriptions and support
revenue.
The gross margin on cloud and software, defined as
cloud and software profit as a percentage of cloud and
software revenue, narrowed to 80.8% in 2015 (2014:
82.1%). This change is driven by the revenue mix effect
with a rising cloud subscriptions and support revenue
share while both cloud subscriptions and support margin
as well as software license and support margin only
changed marginally.
Changes to the individual elements in our cost of revenue
were as follows:
Cost of Services
Cost of services consists primarily of the cost of
consulting, premium services and training personnel and
the cost of bought-in consulting and training resources.
This item also includes sales and marketing expenses for
our services resulting from sales and marketing efforts
where those efforts cannot be clearly distinguished from
providing the services.
Cost of Cloud and Software
Cost of cloud and software consists primarily of
customer support costs, cost of developing custom
solutions that address customers’ specific business
requirements, costs for deploying and operating cloud
solutions, amortization expenses relating to intangibles,
Although we were able to increase our service revenue
by 10% year-over-year to €3,579 million in 2015 (2014:
€3,245 million), our service business continues to be
greatly affected as we trend away from classic software
licensing and consulting revenue toward more
subscription revenue from cloud solutions. We are also
The overall result of these effects on operating profit was
a 4.2 percentage point narrowing of our operating margin
in 2015 to 20.5% (2014: 24.7 %).
49
investing in our SAP ONE Service organization. As a
result, cost of service rose 22% to €3,313 million (2014:
€2,716 million). Our gross margin on services, defined as
services profit as a percentage of services revenue,
narrowed to 7.4% (2014: 16.3%).
Research and Development Expense
Our research and development (R&D) expense consists
primarily of the personnel cost of our R&D employees,
costs incurred for independent contractors we retain to
assist in our R&D activities, and amortization of the
computer hardware and software we use for our R&D
activities.
Due to growing personnel costs because of the 11%
increase in our headcount by the end of the year, and the
revenue-related
year-over-year
increase
in
compensation payments, our R&D expense increased by
22% to €2,845 million in 2015 from €2,331 million in
2014. R&D expense as a percentage of total revenue
increased to 13.7% (2014: 13.3%). For more information,
see “Item 4. Information About SAP – Products,
Research & Development, and Services.”
Sales and Marketing Expense
Sales and marketing expense consists mainly of
personnel costs, direct sales costs, and the cost of
marketing our products and services.
Our sales and marketing expense rose 25% from
€4,304 million in 2014 to €5,401 million in 2015. The
increase was mainly the result of greater personnel costs
as we expanded our global sales force, and of increased
expenditure for bonus payments prompted by the strong
revenue growth. The ratio of sales and marketing
expense to total revenue, expressed as a percentage,
increased to 26.0% year-over-year (2014: 24.5%), an
increase of 1.5 percentage points.
General and Administration Expense
Our general and administration expense consists mainly
of personnel costs to support our finance and
administration functions.
General and administration expense increased 17% from
€892 million in 2014 to €1,048 million in 2015. That this
expense grew less rapidly than revenue is primarily the
result of careful cost management. Consequently, the
ratio of general and administration expense to total
revenue dropped slightly in 2015 to 5.0% (2014: 5.1%).
Segment Information (Non-IFRS)
In 2015, SAP had two reportable segments: the
Applications, Technology, and Services segment; and the
SAP Business Network segment. These are the
components of SAP that our Executive Board regularly
reviews to assess the performance of our Company and
to make resource allocation decisions.
Revenue and profit figures for each of our operating
segments are calculated in line with our internal
management reporting and therefore differ from the
corresponding revenue and profit in our Consolidated
Statements of Income prepared according to IFRS. For
more information about our segment reporting, the
activities that our two segments derive their revenues
from,
financial
performance
measures,
and
reconciliation from our internal management reporting to
our external IFRS reporting, see the Notes to the
Consolidated Financial Statements section, Note (28),
and the Performance Management System section.
The financial data presented for 2015 contain all
revenues and expenses from Concur and Fieldglass,
whereas the prior year’s comparison figures only include
their financial data as of their respective acquisition
dates. Fieldglass was acquired on May 2, 2014; Concur
on December 4, 2014.
Applications, Technology & Services Segment
€ millions, unless otherwise stated
Change in %
(Constant
Currency)
2015
2014
Change in
%
19,126
16,871
13%
6%
Gross margin (in %)
72%
73%
ⳮ1pp
ⳮ1pp
Cloud subscription and support margin (in %)
53%
55%
ⳮ2pp
ⳮ5pp
7,918
7,099
12%
4%
41%
42%
ⳮ1pp
ⳮ1pp
(Non-IFRS)
Segment revenue
Segment profit
Segment margin (in %)
In 2015, the Applications, Technology & Services
segment revenue increased 13% (6% at constant
currencies) to €19,126 million (2014: €16,871 million).
This increase was driven mainly by strong growth in
software support revenue, which increased 14% (7% at
constant currencies) to €10,061 million and a 10%
50
increase in software licenses (5% at constant
currencies) to €4,836 million. As a consequence of
continuous strong demand in the human capital
management, customer engagement and commerce,
and SAP HANA Enterprise Cloud business, cloud
subscriptions and support revenue in the Applications,
Technology & Services segment grew 64% (45% at
constant currencies) to €961 million.
The increase of cloud subscriptions and support revenue
and software support revenue results in an increasing
revenue share of more predictable revenue streams in
this segment of 2 percentage points from 56% in 2014 to
58% in 2015. Software license revenue attributable to
this segment increased 10% (5% at constant currencies)
to €4,835 million (2014: €4,381 million).
€5,343 million (2014: €4,564 million). This increase in
expenses was primarily the result of greater investment
in expanding our cloud infrastructure and in providing
and operating our cloud applications, as well as
additional personnel expenses to support the growth of
the SAP HANA Enterprise Cloud service. The cloud
subscriptions and support margin for the segment,
therefore, decreased by 2.2 percentage points to 52.9%
(50.4% at constant currencies). Segment gross profit
increased 12% in 2015 (5% at constant currencies) to
€13,784 million (2014: €12,307 million), which resulted
in a decrease of the segment gross margin from 72.9%
to 72.1% (72.1% at constant currencies). Segment profit
increased 12% (4% at constant currencies) to
€7,918 million (2014: €7,099 million), while the segment
margin decreased by 0.7 percentage points to 41.4%
(41.3% at constant currencies).
The segment’s cost of revenue during the same time
period increased 17% (9% at constant currencies) to
SAP Business Network Segment
€ millions, unless otherwise stated
Change in %
(Constant
Currency)
(Non-IFRS)
2015
2014
Change in
%
Segment revenue
1,614
644
150%
116%
Gross margin (in %)
67%
66%
1pp
0pp
Cloud subscription and support margin (in %)
75%
75%
ⳮ0pp
ⳮ1pp
312
105
199%
139%
19%
16%
3pp
2pp
Segment profit
Segment margin (in %)
In 2015, revenue from the SAP Business Network
segment, which combines all of our business network
solutions, increased 150% (116% at constant currencies)
to €1,614 million (2014: €644 million). Concur and
Fieldglass, which were acquired in 2014, together
contributed €909 million (2014: €107 million) to the
segment’s revenue. SAP internal analyses show that
more than US$740 billion in commerce is conducted on
the network annually.
The segment’s cost of revenue increased 144% in 2015
(114% at constant currencies) to €530 million
(2014: €217 million), of which €299 million in expenses
are attributable to Concur and SAP Fieldglass
(2014: €28 million). The cloud subscriptions and support
margin for the segment decreased by 0.4 percentage
points to 74.9% (74.5% at constant currencies). The
SAP Business Network segment achieved a segment
gross profit of €1,084 million in 2015 (2014: €427
million), an increase of 154% (117% at constant
currencies). This resulted in an increase of the segment
gross margin from 66.3% to 67.2% (66.5% at constant
currencies). Segment profit increased 199% year on year
(139% at constant currencies) to €312 million (2014:
€105 million), resulting in an increase in the segment
margin of +3.1 percentage points to 19.4% (18.0% at
constant currencies).
Financial Income, Net
Financial income, net, changed to ⳮ€5 million (2014:
ⳮ€25 million). Our finance income was €241 million
(2014: €127 million) and our finance costs were
€246 million (2014: €152 million).
Finance income mainly consists of gains from disposal of
equity securities and interest income from loans and
receivables, financial assets (cash, cash equivalents, and
current investments), and income of derivatives.
Finance costs mainly consist of interest expense on
financial liabilities (€135 million in 2015 compared to
€93 million in 2014) due to higher average indebtedness
and negative effects from derivatives (€72 million in 2015
compared to €28 million in 2014). For more information
about financing instruments, see the Notes to the
Consolidated Financial Statements section, Note (17b).
51
Income Tax
Our effective tax rate decreased to 23.4% in 2015 (2014:
24.7%). The year-over-year decrease in the effective tax
rate mainly resulted from changes in taxes for prior
years. For more information on income taxes, see the
Notes to the Consolidated Financial Statements section,
Note (10).
Our 2014 Results Compared to Our 2013 Results (IFRS)
Revenue
€ millions
2014
2013
Change in % 2014
vs 2013
Cloud subscriptions and support
1,087
696
56%
Software licenses
4,399
4,516
ⳮ3%
Software support
8,829
8,293
6%
Software licenses and support
13,228
12,809
3%
Cloud and software
14,315
13,505
6%
Services
3,245
3,310
ⳮ2%
17,560
16,815
4%
Total revenue
Total Revenue
Total revenue increased from €16,815 million in 2013 to
€17,560 million in 2014, representing an increase of
€746 million, or 4%. This growth reflects a 5% increase
from changes in volumes and prices and a 1% decrease
from currency effects. The growth in revenue resulted
primarily from a €391 million increase in cloud
subscriptions and support revenue and a €536 million
rise in software support revenue. Services revenue
declined €65 million and software licenses revenue
declined €117 million. Cloud and software revenue
climbed to €14,315 million in 2014, an increase of 6%.
Cloud and software revenue represented 82% of total
revenue in 2014 (2013: 80%). Services revenue declined
2% from €3,310 million in 2013 to €3,245 million, which
was 18% of total revenue in 2014.
For more information about the breakdown of total
revenue by region and industry, see the Revenue by
Region and Industry section below.
Cloud and Software Revenue
Software licenses revenue results from the fees earned
from selling or licensing software to customers. Revenue
from cloud subscriptions and support refers to the
income earned from contracts that permit the customer
to access specific software solutions hosted by SAP
during the term of its contract with SAP. Software
support revenue represents fees earned from providing
technical support services and unspecified software
upgrades, updates, and enhancements to customers.
Cloud subscriptions and support revenue increased from
€696 million in 2013 to €1,087 million in 2014.
A combination of a challenging macroeconomic and
political environment in Russia, Ukraine, and some Latin
American markets and the accelerating industry shift to
the cloud resulted in a €117 million decline in software
licenses revenue. That decline, from €4,516 million in
2013 to €4,399 million in 2014, reflects a 3% decrease in
new software business.
Our customer base continued to expand in 2014. Based
on the number of contracts concluded, 12% of the orders
we received for software in 2014 were from new
customers (2013: 16%). The total value of software
orders received declined 3% year-over-year. The total
number of software license contracts decreased 3% to
54,120 (2013: 55,909 contracts), while the average order
value increased by 1%. Of all our software orders
received in 2014, 22% were attributed to deals worth
more than €5 million (2013: 24%), while 44% were
attributed to deals worth less than €1 million (2013:
44%).
Our stable customer base, continued investment in
software by customers throughout 2014 and the
previous year, resulted in an increase in software support
revenue from €8,293 million in 2013 to €8,829 million in
2014. The SAP Enterprise Support services offering was
the largest contributor to our support revenue. The
€536 million, or 6%, growth in software support revenue
reflects an 8% increase from new support business and a
1% decrease from currency effects. This growth is
primarily attributable to SAP Product Support for Large
Enterprises and SAP Enterprise Support. The
acceptance rate for SAP Enterprise Support among new
customers remained high at 98% in 2014.
52
Software licenses and support revenue rose
€419 million, or 3%, from €12,809 million in 2013 to
€13,228 million in 2014. This growth breaks down into a
4% increase from new business and a 1% decrease from
currency effects.
Cloud and software revenue grew from €13,505 million in
2013 to €14,315 million in 2014, an increase of 6%. This
reflects a 7% increase from new cloud and software
business and a 1% decrease from currency effects.
Services Revenue
Services Revenue combines revenue from professional
services, premium support services, training services,
messaging services and payment services.
Professional services primarily relate to the installation
and configuration of our cloud subscriptions and onpremise software products. Our premium support
offering consists of high-end support services tailored to
customer requirements. Messaging services are
primarily transmission of electronic text messages from
one mobile phone provider to another. Payment services
are delivered in connection with our travel and expense
management offerings.
Services revenue decreased €65 million, or 2%, from
€3,310 million in 2013 to €3,245 million in 2014. This
decline reflects a 1% decrease in new services business
and a 1% decrease from currency effects.
Revenue by Region and Industry
Revenue by Region
€ millions
2014
2013
Change in % 2014
vs 2013
Germany
2,570
2,513
2%
Rest of EMEA
5,813
5,462
6%
EMEA
8,383
7,975
5%
United States
4,898
4,487
9%
1,591
1,746
ⳮ9%
6,489
6,233
4%
600
631
ⳮ5%
Rest of APJ
2,088
1,975
6%
APJ
2,688
2,606
3%
17,560
16,815
4%
€ millions
2014
2013
Change in % 2014
vs 2013
Energy & Natural Resources
4,158
4,077
2%
Discrete Manufacturing
3,051
2,987
2%
Consumer
4,045
3,778
7%
Public Services
1,786
1,691
6%
Financial Services
1,697
1,633
4%
Services
2,824
2,649
7%
17,560
16,815
4%
Rest of Americas
Americas
Japan
SAP Group
Revenue by Industry
Total revenue
Revenue by Region
We break our operations down into three regions: the
Europe, Middle East, and Africa (EMEA) region, the
Americas region, and the Asia Pacific Japan (APJ) region.
We allocate revenue amounts to each region based on
where the customer is located. For more information
about revenue by geographic region, see the Notes to the
Consolidated Financial Statements section, Note (28).
53
EMEA Region
In 2014, the EMEA region generated €8,383 million in
revenue, which was 48% of total revenue (2013: €7,975;
47%). This represents a year-over-year increase of 5%.
Revenue in Germany increased 2% to €2,570 million in
2014 (2013: €2,513 million). Germany contributed 31%
(2013: 32%) of all EMEA region revenue. The remaining
revenue in the EMEA region was primarily generated in
France, Italy, the Netherlands, Russia, Switzerland, and
the United Kingdom. Cloud and software revenue
generated in the EMEA region in 2014 totaled
€6,819 million (2013: €6,428 million). Cloud and
software revenue represented 81% of all revenue in the
region in 2014 (2013: 81%). Cloud subscriptions and
support revenue rose 58% to €277 million in 2014 (2013:
€176 million). This growth reflects a 57% increase from
new cloud business and a 1% increase from currency
effects. Software licenses and support revenue rose 5%
to €6,542 million in 2014 (2013: €6,252 million). This
growth reflects a 5% increase from new business and a
1% decrease from currency effects.
Americas Region
In 2014, 37% of our total revenue was generated in the
Americas region (2013: 37%). Total revenue in the
Americas region increased 4% to €6,489 million;
revenue generated in the United States increased 9% to
€4,898 million. This growth reflects an 8% increase from
new business and a 1% increase from currency effects.
The United States contributed 75% (2013: 72%) of all
revenue generated in the Americas region. In the
remaining countries of the Americas region, revenue
declined 9% to €1,591 million. This reflects a 5%
decrease in new business and a 4% decrease from
currency effects. This revenue was principally generated
in Brazil, Canada, and Mexico. Cloud and software
revenue generated in the Americas region in 2014 totaled
€5,276 million (2013: €4,922 million). Cloud and
software revenue represented 81% of all revenue in the
Americas region in 2014 (2013: 79%). Cloud
subscriptions and support revenue rose by 55% to
€709 million in 2014 (2013: €457 million); currency
effects were 0%. Software licenses and support revenue
rose 2% to €4,566 million in 2014 (2013: €4,465
million). This growth reflects a 3% increase from new
business; currency effects were almost 0%.
APJ Region
In 2014, 15% (2013: 15%) of our total revenue was
generated in the APJ region, with the strongest revenue
growth being achieved in Australia. Total revenue in the
APJ region increased 3% to €2,688 million. In Japan,
revenue decreased 5% to €600 million. Revenue from
Japan was 22% (2013: 24%) of all revenue generated in
the APJ region. The decline in revenue from Japan was
attributable to a 2% increase from new business and a
7% decrease from currency effects. In the remaining
countries of the APJ region, revenue increased 6%.
Revenue in the remaining countries of the APJ region
was generated primarily in Australia, China, and India.
Cloud and software revenue in the APJ region totaled
€2,221 million in 2014 (2013: €2,155 million). That was
83% of all revenue from the region (2013: 83%). Cloud
subscriptions and support revenue grew 59% to
€101 million in 2014 (2013: €64 million). This growth
reflects a 60% increase from new cloud business and a
1% decrease from currency effects. Software licenses
and support revenue increased 1% to €2,120 million in
2014 (2013: €2,092 million). This increase reflects a 4%
increase from new business and a 2% decrease from
currency effects.
Revenue by Industry
We allocate our customers to one of our industries at the
outset of an initial arrangement. All subsequent revenue
from a particular customer is recorded under that
industry sector.
In 2014 we achieved above-average growth in the
following industry sectors, measured by changes in total
revenue: Services (€2,824 million, at a growth rate of
7%); Consumer (€4,045 million, at a growth rate of 7%);
Public Services (€1,786 million, at a growth rate of 6%);
and Financial Services (€1,697 million, at a growth rate of
4%). Revenue from the other industry sectors: Energy
and Natural Resources (€4,158 million, at a growth rate
of 2%); and Discrete Manufacturing (€3,051 million, at a
growth rate of 2%).
54
Operating Profit and Operating Margin
Total Operating Expenses
2014
% of
total
revenue(1)
2013
% of
total
revenue(2)
Change
in % 2014
vs 2013
Cost of cloud and software
ⳮ2,557
15%
ⳮ2,370
14%
8%
Cost of services
ⳮ2,716
15%
ⳮ2,660
16%
2%
Research and development
ⳮ2,331
13%
ⳮ2,282
14%
2%
Sales and marketing
ⳮ4,304
25%
ⳮ4,131
25%
4%
General and administration
ⳮ892
5%
ⳮ866
5%
3%
Restructuring
ⳮ126
1%
ⳮ70
0%
80%
TomorrowNow and Versata litigation
ⳮ309
2%
31
0%
<ⳮ100%
4
0%
12
0%
ⳮ65%
ⳮ13,230
75%
ⳮ12,336
73%
7%
€ millions
Other operating income/expense, net
Total operating expenses
(1) Total revenue for 2014: €17,560 million.
(2) Total revenue for 2013: €16,815 million.
Operating Profit and Operating Margin
€ millions, except for operating margin
2014
2013
Change in
% 2014 vs
2013
Operating profit
4,331
4,479
ⳮ3%
24.7%
26.6%
ⳮ2.0pp
Operating margin (in %)
In 2014, SAP continued to invest in innovation and made
substantial advances in the cloud business. In addition
and among other influences, negative currency effects
and the difficult economic situation in Latin America and
Russia affected our profitability. As a result, our
operating profit in 2014 was €4,331 million, a little less
than in the previous year (2013: €4,479 million).
In 2014, our operating expenses increased €894 million
or 7% to €13,230 million (2013: €12,336 million). The
increase relates primarily to an expense in connection
with the TomorrowNow and Versata litigation,
restructuring costs, continuing investment in our sales
organization, and a rise in personnel and infrastructure
costs, especially for our cloud business.
The effect of acquisition-related expenses, which were
€562 million (2013: €555 million), of restructuring
expenses, which were €126 million (2013: €70 million),
and of a €309 million expense relating to the
TomorrowNow and Versata litigation weighed more
heavily on operating profit than in the previous year.
Continuing investment in sales activities around the
world and in the cloud also affected operating profit. Our
employee headcount (measured in full-time equivalents,
or FTEs) increased 7,834 year-over-year. Acquisitions
accounted for more than 5,500 of the added FTEs.
Those negative effects on operating profit were in part
offset by the reduced cost of share-based compensation
programs totaling €290 million (2013: €327 million)
resulting from the declining year-over-year performance
of the stock and by savings in general administration
costs.
The overall result of these effects on operating profit was
a 2.0 percentage point narrowing of our operating
margin in 2014 to 24.7% (2013: 26.6%).
Changes to the individual elements in our cost of revenue
were as follows:
Cost of Cloud and Software
Cost of cloud and software consists primarily of
customer support costs, cost of developing custom
solutions that address customers’ specific business
requirements, costs for deploying and operating cloud
solutions, amortization expenses relating to intangibles,
55
and license fees and commissions paid to third parties
for databases and the other complementary third-party
products sublicensed by us to our customers.
In 2014, the cost of cloud and software increased 8% to
€2,557 million (2013: €2,370 million).
2014 from €2,282 million in 2013. R&D expense as a
percentage of total revenue was slightly less year-overyear at 13.3% (2013: 13.6%). For more information, see
“Item 4. Information About SAP – Products, Research &
Development, and Services.”
Sales and Marketing Expense
Sales and marketing expense consists mainly of
personnel costs, direct sales costs, and the cost of
marketing our products and services.
Significant costs included an additional €180 million to
extend our cloud business, especially outside the United
States, with an associated increase in the expense of
delivering and operating cloud applications, and a
€34 million rise in the cost of providing customer
support. They both represent investments that
contributed to revenue growth. Our margin on cloud
subscriptions and support widened 0.9 percentage
points to 55.8% (2013: 54.8%). This improvement in
margin was achieved primarily through strong growth in
our cloud subscriptions and support revenue despite the
increased expense we incurred to extend our cloud
infrastructure. At the same time, the license fees we pay
to third parties decreased by €49 million.
Our sales and marketing expense rose 4% from
€4,131 million in 2013 to €4,304 million in 2014. The
increase was mainly the result of greater personnel costs
as we expanded our global sales force and of the
reallocation and re-tasking of employees to sales-related
work. By increasing our sales force we accelerated our
revenue growth. The ratio of sales and marketing
expense to total revenue, expressed as a percentage,
decreased slightly to 24.5% year-over-year (2013:
24.6%) because costs grew less rapidly than revenue.
The gross margin on our cloud and software, defined as
cloud and software profit as a percentage of cloud and
software revenue, remained constant year-over-year at
82% in 2014 (2013: 82%).
General and Administration Expense
Our general and administration expense consists mainly
of personnel costs to support our finance and
administration functions.
Cost of Services
Cost of services consists primarily of the cost of
consulting, premium services and training personnel and
the cost of bought-in consulting and training resources.
This item also includes sales and marketing expenses for
our services resulting from sales and marketing efforts
where those efforts cannot be clearly distinguished from
providing the services.
General and administration expense increased 3% from
€866 million in 2013 to €892 million in 2014. That this
increase was modest compared to the growth in our
revenue is primarily the result of careful cost
management. The ratio of general and administration
expense to total revenue was unchanged in 2014 at 5%
(2013: 5%).
Our consulting business is being greatly affected as we
trend away from classic software licensing and
consulting revenue toward more subscription revenue
from cloud solutions. As a result, our services revenue
decreased while our services expense increased by 2%
from €2,660 million in 2013 to €2,716 million in 2014.
Our gross margin on services, defined as services profit
as a percentage of services revenue, narrowed to 16%
(2013: 20%).
Research and Development Expense
Our research and development (R&D) expense consists
primarily of the personnel cost of our R&D employees,
costs incurred for independent contractors we retain to
assist in our R&D activities, and amortization of the
computer hardware and software we use for our R&D
activities.
Although our personnel costs grew because of the 6%
increase in our headcount by the end of the year, our
R&D expense increased only 2% to €2,331 million in
Segment Information (Non-IFRS)
The segment information below for 2014 and 2013 is
presented based on the reportable segments created in
2015 (Applications, Technology & Services segment and
the SAP Business Network Segment). These segments
are the components of SAP that our Executive Board
regularly reviews to assess the performance of our
company and to make resource allocation decisions.
Revenue and profit figures for each of our operating
segments are calculated in line with our internal
management reporting and therefore differ from the
corresponding revenue and profit in our Consolidated
Statements of Income prepared according to IFRS. For
more information about our segment reporting, the
activities that our two segments derive their revenues
from, the financial performance measures, and a
reconciliation from our internal management reporting to
our external IFRS reporting, see the Notes to the
Consolidated Financial Statements section, Note (28),
and the Performance Management System section.
56
The financial data presented for 2014 contains the revenue and expenses from Concur and SAP Fieldglass as of their
respective acquisition dates. Their financial data is not included in the prior-year amounts, as Concur and SAP
Fieldglass were acquired on December 4, 2014, and May 2, 2014, respectively.
Applications, Technology & Services Segment
€ millions, unless otherwise stated
Change in %
(Constant
Currency)
2014
2013
Change in
%
16,871
16,386
3%
4%
Gross margin (in %)
73%
74%
ⳮ1pp
ⳮ1pp
Cloud subscriptions and support margin (in %)
55%
70%
ⳮ15pp
ⳮ15pp
7,099
7,056
1%
1%
42%
43%
ⳮ1pp
ⳮ1pp
(Non-IFRS)
Segment revenue
Segment profit
Segment margin (in %)
In 2014, Applications, Technology & Services segment
revenue increased 3% (4% at constant currencies) to
€16,871 million (2013: €16,386 million). This increase
was mainly driven by strong growth in software support
revenue, which increased 6% (8% at constant
currencies) to €8,806 million, offset by a decrease in
software licenses of 3% (3% at constant currencies) to
€4,381 million. As a consequence of a continuous strong
demand in the human capital management, Customer
Engagement and Commerce, and SAP HANA Enterprise
Cloud lines of business, cloud subscriptions and support
revenue in the Applications, Technology & Services
segment grew 42% (42% at constant currencies) to
€585 million (2013: € 413 million).
The increase of cloud and software revenue did mainly
result from a strong increase in cloud subscriptions and
support revenue and software support revenue, whereas
software licenses revenue slightly decreased. This overall
results in an increase in the revenue share of more
predictable revenue streams in this segment of three
percentage points from 53% in 2013 to 56% in 2014.
Software licenses revenue attributable to this segment
decreased 3% (3% at constant currencies) to
€4,381 million (2013: €4,519 million). This decline was
due to a combination of challenging macroeconomic and
political environments in Russia, Ukraine, and some Latin
American markets and the accelerating industry shift to
the cloud.
The segment’s cost of revenue during the same time
period increased 6% (7% at constant currencies) to
€4,564 million (2013: €4,312 million). This increase in
expenses was the result of greater investment in
expanding our cloud infrastructure and in providing and
operating
our
cloud
applications.
The
cloud
subscriptions and support margin for the segment,
therefore, decreased by 15 percentage points to 55.1%
(55.1% at constant currencies). Segment gross profit
increased 2% in 2014 (3% at constant currencies) to
€12,307 million (2013: €12,074 million) which resulted in
a decrease of the segment gross margin of ⳮ0.7
percentage points to 72.9% (ⳮ0.8 percentage points to
72.9% in constant currencies). Segment profit increased
1% year on year to €7,099 million (2013: €7,056 million)
and was unchanged on a constant currency basis,
resulting in a narrowing of the segment margin by one
percentage point to 42.1% (41.9% at constant
currencies).
SAP Business Network Segment
€ millions, unless otherwise stated
Change in %
(Constant
Currency)
2014
2013
Change in
%
644
460
40%
39%
Gross margin (in %)
66%
65%
1pp
1pp
Cloud subscriptions and support margin (in %)
75%
76%
ⳮ0pp
ⳮ0pp
105
99
5%
2%
16%
22%
ⳮ5pp
ⳮ6pp
(Non-IFRS)
Segment revenue
Segment profit
Segment margin (in %)
57
In 2014, revenue from the SAP Business Network
segment, which combines all of our business network
solutions, increased 40% (39% at constant currencies)
to €644 million (2013: €460 million). This figure includes
€107 million in segment revenue attributable to SAP
Fieldglass and Concur, which were acquired in 2014 and
are reflected in these results for the first time.
The segment’s cost of revenue increased 36% in 2014
(37% at constant currencies) to €217 million, of which
€28 million in expenses are attributable to Concur and
SAP Fieldglass. The cloud subscriptions and support
margin for the segment decreased by 0.5 percentage
points to 75.2% (ⳮ0.4 percentage points to 75.3% in
constant currencies). The SAP Business Network
segment thus achieved a gross profit of €427 million in
2014, an increase of 42% (41% at constant currencies)
which resulted in an increase of the segment gross
margin of 1.0 percentage points to 66.3%
(0.7 percentage points to 66.0% in constant currencies).
Segment profit increased year-over-year by 5% (2% at
constant currencies) to €105 million (2013: € 99 million),
resulting in a narrowing of the segment margin by
5 percentage points to 16.2% (15.8% at constant
currencies).
Financial Income, Net
Financial income, net, changed to ⳮ€25 million (2013:
ⳮ€66 million). Our finance income was €127 million
(2013: €115 million) and our finance costs were
€152 million (2013: €181 million).
Finance income mainly consists of interest income from
loans, financial assets (cash, cash equivalents, and
current investments) and income of derivatives. This
increase is attributable to a higher average liquidity and
slightly higher interest rates than in 2013.
Finance costs mainly consist of interest expense on
financial liabilities (€93 million in 2014 compared to
€131 million in 2013). The decrease year-over-year is
mainly due to positive effects from interest rate
derivatives and due to lower average indebtedness. For
more information about financing instruments, see the
Notes to the Consolidated Financial Statements section,
Note (17b).
Income Tax
Our effective tax rate increased slightly to 24.7% in 2014
(2013: 24.4%). For more information, see the Notes to
the Consolidated Financial Statements section, Note
(10).
FOREIGN CURRENCY EXCHANGE RATE EXPOSURE
Although our reporting currency is the euro, a significant
portion of our business is conducted in currencies other
than the euro. Since the Group’s entities usually conduct
their business in their respective functional currencies,
our risk of exchange rate fluctuations from ongoing
ordinary operations is not considered significant.
However, occasionally we generate foreign-currencydenominated receivables, payables, and other monetary
items by transacting in a currency other than the
functional currency; to mitigate the extent of the
associated foreign currency exchange rate risk, the
majority of these transactions are hedged as described
in Note (25) to our Consolidated Financial Statements.
Also see Notes (3) and (24) for additional information on
foreign currencies.
Approximately 74% of our total revenue in 2015 (2014:
71%) was attributable to operations in non-euro
participating countries. That revenue had to be
translated into euros for financial reporting purposes.
Fluctuations in the exchange value of the euro had a
favorable impact of €1,504 million on our total revenue
for 2015, an unfavorable impact of €143 million on our
total revenue for 2014 and an unfavorable impact of
€734 million on our total revenue for 2013.
The impact of foreign currency exchange rate
fluctuations discussed in the preceding paragraph is
calculated by translating current period figures in local
currency to euros at the monthly average exchange rate
for the corresponding month in the prior year. Our
revenue analysis, included within the “Operating Results”
section of Item 5, discusses at times the effect of
currency movements which are calculated in the same
manner.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Global Financial Management
We use global centralized financial management to
control liquid assets and monitor exposure to interest
rates and currencies. The primary aim of our financial
management is to maintain liquidity in the Group at a
level that is adequate to meet our obligations. Most SAP
companies have their liquidity managed centrally by the
Group, so that liquid assets across the Group can be
consolidated, monitored, and invested in accordance
with Group policy. High levels of liquid assets help keep
SAP flexible, sound, and independent. In addition,
various credit facilities are currently available for
additional liquidity, if required. For more information
about these facilities, see the Credit Facilities section.
We manage credit, liquidity, interest rate, equity price,
and foreign exchange rate risks on a Group-wide basis.
We use selected derivatives exclusively for this purpose
and not for speculation, which is defined as entering into
a derivative instrument for which we do not have a
corresponding underlying transaction. The rules for the
use of derivatives and other rules and processes
58
concerning the management of financial risks are
collected in our treasury guideline document, which
applies globally to all companies in the Group. For more
information about the management of each financial risk
and about our risk exposure, see the Notes to the
Consolidated Financial Statements section, Notes (24)
to (26).
Liquidity Management
Our primary source of cash, cash equivalents, and
current investments is funds generated from our
business operations. Over the past several years, our
principal use of cash has been to support operations and
our capital expenditure requirements resulting from our
growth, to quickly repay financial debt, to acquire
businesses, to pay dividends on our shares, and to buy
back SAP shares on the open market. On December 31,
2015, our cash, cash equivalents, and current
investments were primarily held in euros and
U.S. dollars. We generally invest only in the financial
assets of issuers or funds with a minimum credit rating of
BBB, and pursue a policy of cautious investment
characterized by wide portfolio diversification with a
variety of counterparties, predominantly short-term
investments, and standard investment instruments. We
rarely invest in the financial assets of issuers with a credit
rating lower than BBB, and such investments were not
material in 2015.
We believe that our liquid assets combined with our
undrawn credit facilities are sufficient to meet our
present operating needs and, together with expected
cash flows from operations, will support debt
repayments and our currently planned capital
expenditure requirements over the near term and
medium term. It may also be necessary to enter into
financing transactions when additional funds are
required that cannot be wholly sourced from free cash
flow (for example, to finance large acquisitions).
To expand our business, we have made acquisitions of
businesses, products, and technologies. Depending on
our future cash position and future market conditions,
we might issue additional debt instruments to fund
acquisitions, maintain financial flexibility, and limit
repayment risk. Therefore, we continuously monitor
funding options available in the capital markets and
trends in the availability of funds, as well as the cost of
such funding. In recent years, we were able to repay
additional debt within a short period of time due to our
persistently strong free cash flow. For more information
about the financial debt, see the Cash Flows and
Liquidity section.
Capital Structure Management
The primary objective of our capital structure
management is to maintain a strong financial profile for
investor, creditor, and customer confidence, and to
support the growth of our business. We seek to maintain
a capital structure that will allow us to cover our funding
requirements through the capital markets at reasonable
conditions, and in so doing, ensure a high level of
independence, confidence, and financial flexibility.
The long-term credit rating for SAP SE is “A” by Standard
and Poor’s and “A2” by Moody’s, both with stable
outlook. Since their initial assignment in September
2014, the ratings and outlooks have not changed.
Our general intention is to remain in a position to return
liquidity to our shareholders by distributing annual
dividends totaling more than 35% of our profit after tax.
There are currently no plans for future share buybacks.
Capital Structure
2015
2014
€ millions
% of Total
equity and
liabilities
€ millions
% of Total
equity and
liabilities
Δ in %
23,295
56
19,534
51
19
7,867
19
8,574
22
ⳮ8
10,228
25
10,457
27
ⳮ2
Liabilities
18,095
44
19,031
49
ⳮ5
Total equity and liabilities
41,390
100
38,565
100
7
Equity
Current liabilities
Non-current liabilities
In 2015, we repaid €1,270 million in bank loans that we
had taken to finance the Concur acquisition and
refinanced another part of this loan through the issuance
of a three-tranche Eurobond of €1.75 billion in total with
maturities of two to ten years. We also repaid a
€550 million Eurobond and a US$300 million
U.S. private placement tranche at their maturity. Thus,
the ratio of total financial debt to total equity and
liabilities decreased by 7 percentage points to 22% at the
end of 2015 (29% as at December 31, 2014).
59
Total financial debt consists of current and non-current
bank loans, bonds, and private placements. For more
information about our financial debt, see the Notes to the
Consolidated Financial Statements section, Note (17).
As part of our financing activities in 2016, the Company
intends to repay a US$600 million U.S. private
placement tranche when it matures and a further
substantial portion of our outstanding bank loan.
December 31, 2015, consisted largely of financial debt,
which included amounts in euros (€6,994 million) and
U.S. dollars (€2,202 million). On December 31, 2015,
approximately 64% of financial debt was held at variable
interest rates, partially swapped from fixed into variable
using interest rate swaps. Total liabilities on
December 31, 2015, also comprised non-financial
liabilities. Most of these non-financial liabilities result
from employee-related obligations.
Total liabilities on December 31, 2015, mainly comprised
financial liabilities of €9,522 million (of which
€8,681 million are non-current). Financial liabilities on
For more information about financial and non-financial
liabilities, see the Notes to the Consolidated Financial
Statements section, Note (18).
Cash Flows and Liquidity
Group liquidity on December 31, 2015, primarily comprised amounts in euros and U.S. dollars. Current investments
are included in other financial assets in the statement of financial position. Financial debts are included within
financial liabilities in the statement of financial position.
Group Liquidity of SAP Group
€ millions
2015
2014
Δ
Cash and cash equivalents
3,411
3,328
83
148
95
53
Group liquidity
3,559
3,423
136
Current financial debt
ⳮ567
ⳮ2,157
1,590
Net liquidity 1
2,992
1,266
1,726
Non-current financial debt
ⳮ8,607
ⳮ8,936
329
Net liquidity 2
ⳮ5,615
ⳮ7,670
2,055
Current investments
Group liquidity consists of cash and cash equivalents (for
example, cash at banks, money market funds, and time
deposits with original maturity of three months or less)
and current investments (for example, investments with
original maturities of greater than three months and
remaining maturities of less than one year) as reported in
our Consolidated Financial Statements.
Group Liquidity Development
€ millions
1,748
226
-636
3,638
-1,316
3,423
329
3,559
Other
Group Liquidity
12/31/2015
-3,852
Group Liquidity
12/31/2014
Operating Cashflow
Proceeds from
Borrowings
Acquisitions
Capital Expenditure
Dividends
Paid
Repayments of
Borrowings
60
Net liquidity is Group liquidity less total financial debt as
defined above.
The increase in Group liquidity compared to 2014 was
mainly due to cash inflows from our operations and
financing activities in issuing bonds. They were offset by
cash outflows for dividend payments and repayments of
borrowings.
For information about the impact of cash, cash
equivalents, current investments, and our financial
liabilities on our income statements, see the analysis of
our financial income, net, in the Operating Results (IFRS)
section.
Analysis of Consolidated Statements of Cash Flows
€ millions
Years ended December 31,
2015
2014
2013
Change in % 2015
vs. 2014
Change in % 2014
vs. 2013
Net cash flows from operating activities
3,638
3,499
3,832
4%
ⳮ9%
Net cash flows from investing activities
ⳮ334
ⳮ7,240
ⳮ1,781
ⳮ95%
>100%
Net cash flows from financing activities
ⳮ3,356
4,298
ⳮ1,589
<ⳮ100%
<ⳮ100%
Analysis of Consolidated Statements of Cash Flows:
2015 compared to 2014
Net cash provided by operating activities increased 4%
year-over-year to €3,638 million in 2015 (2014:
€3,499 million). Payments in connection with the
restructuring of €204 million to employees and
€272 million to insurance policies have offset partly the
non-recurring effect from litigations in 2014. In 2015,
days’ sales outstanding (DSO) for receivables, defined as
the average number of days from the raised invoice to
cash receipt from the customer, increased six days to
71 days (2014: 65 days).
Cash outflows from investment activities decreased
significantly to €334 million in 2015 (2014:
€7,240 million). Cash outflows from purchase of
intangible assets and property, plant, and equipment
remained stable. Cash outflows in 2014 had resulted
mainly from business combinations of Concur and
Fieldglass. For more information about current and
planned capital expenditures, see the Investment Goals
section.
Net cash outflows from financing activities were
€3,356 million in 2015, compared to net cash inflows of
€4,298 million in 2014. The 2015 cash outflows had
resulted from repayments of €1,270 million bank loans,
€550 million Eurobonds and US$300 million private
placements. We refinanced another part of the bank loan
through the issuance of a three-tranche Eurobond of
€1,750 million in total. Cash inflows in 2014 were the
result of issuing a €2,750 million Eurobond and drawing
two tranches (of €1,270 million and €3,000 million) of a
bank loan. Cash outflows in 2014 arose chiefly from
repayments of €1,086 million borrowings and
US$1,160 million convertible bonds that we assumed in
connection with our acquisition of Concur.
The dividend payment of €1,316 million made in 2015
exceeded the amount of €1,194 million in the prior year
resulting from the increased dividend paid per share
from €1.00 to €1.10.
Analysis of Consolidated Statements of Cash Flows:
2014 Compared to 2013
Net cash provided by operating activities decreased 9%
year-over-year to €3,499 million in 2014 (2013:
€3,832 million). Payments in connection with the
TomorrowNow and Versata litigation had a €555 million
negative effect on net cash provided by operating activities.
A €61 million increase to €1,356 million in our income tax
payments also negatively affected net cash provided by
operating activities. In 2014, days’ sales outstanding (DSO)
for receivables, defined as the average number of days
from the raised invoice to cash receipt from the customer,
increased three days to 65 days (2013: 62 days).
Cash outflows from investment activities increased
significantly to €7,240 million in 2014 (2013:
€1,781 million). The increase resulted principally from
the Concur, Fieldglass, and SeeWhy acquisitions. For
more information about current and planned capital
expenditures, see the Investment Goals section.
Net cash inflows from financing activities were
€4,298 million in 2014, compared to net cash outflows of
€1,589 million in 2013. Cash inflows in 2014 were the
result of issuing a €2,750 bond and drawing two
tranches (of €1,270 million and €3,000 million) of a loan.
Cash outflows arose chiefly from repayments of
borrowings (€1,086 million) and the repayment of
convertible bonds that we assumed in connection with
our acquisition of Concur (US$1,160 million). The 2013
cash outflows had resulted chiefly from dividends paid
and the repayment of a €600 million bond.
61
The dividend payment of €1,194 million made in 2014
was greater than that of €1,013 million in the prior year
because the dividend paid per share increased from
€0.85 to €1.00.
Credit Facilities
Other sources of capital are available to us through
various credit facilities, if required.
We are party to a revolving €2.0 billion credit facility
contract with maturity in November 2020. The credit line
may be used for general corporate purposes. A possible
future withdrawal is not subject to any financial
covenants. Borrowings under the facility bear interest at
the Euro Interbank Offered Rate (EURIBOR) or London
Interbank Offered Rate (LIBOR) for the respective
optional currency plus a margin ranging from 0.3% to
0.525%. We pay a commitment fee of 0.079% per
annum on unused amounts of the available credit facility.
So far, we have not used and do not currently foresee
any need to use, this credit facility.
As at December 31, 2015, SAP SE had additional
available credit facilities totaling €471 million. Several of
our foreign subsidiaries have credit facilities available
that allow them to borrow funds at prevailing interest
rates. As at December 31, 2015, approximately
€49 million was available through such arrangements.
There were immaterial borrowings outstanding under
these credit facilities from our foreign subsidiaries as at
December 31, 2015.
OFF-BALANCE SHEET ARRANGEMENTS
Several SAP entities have entered into operating leases
for office space, hardware, cars and certain other
equipment. These arrangements are sometimes referred
to as a form of off-balance sheet financing. Rental
expenses under these operating leases are set forth
below under “Contractual Obligations.” We do not
believe we have forms of material off-balance sheet
arrangements that would require disclosure other than
those already disclosed.
CONTRACTUAL OBLIGATIONS
The table below presents our on- and off-balance sheet contractual obligations as of December 31, 2015:
Contractual obligations
Payments due by period
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
10,127
863
3,759
1,822
3,683
Derivative financial liabilities(1)
132
74
29
29
0
Operating lease obligations(3)
1,347
294
410
246
396
872
428
260
118
66
111
111
0
0
0
331
0
201
36
94
12,920
1,770
4,660
2,251
4,239
€ millions
Financial liabilities(1)
Purchase obligations(3)
Capital contribution commitments(3)
Other non-current non-financial liabilities(2)
Total
(1) For more information on financial liabilities and derivative financial liabilities see Note (24) to our Consolidated Financial Statements.
(2) For more information on other non-current non-financial liabilities see Note (17c) to our Consolidated Financial Statements.
(3) See Note (22) to our Consolidated Financial Statements for additional information about operating lease obligations, purchase
obligations, and capital contribution commitments. Our expected contributions to our pension and other post-employment benefit
plans are not included in the table above. For more information on these contributions see Note (18a) to our Consolidated Financial
Statements.
We expect to meet these contractual obligations with our
existing cash, our cash flows from operations and our
financing activities. The timing of payments for the above
contractual obligations is based on payment schedules
for those obligations where set payments exist. For other
obligations with no set payment schedules, estimates as
to the most likely timing of cash payments have been
made. The ultimate timing of these future cash flows
may differ from these estimates.
Obligations under Indemnifications and Guarantees
Our software license agreements and our cloud
subscription agreements generally include certain
provisions for indemnifying customers against liabilities
if our software products infringe a third party’s
intellectual property rights. In addition, we occasionally
provide function or performance guarantees in routine
consulting contracts and development arrangements.
We also generally provide a six to twelve month warranty
62
on our software. Our warranty liability is included in other
provisions. For more information on other provisions see
Note (18b) to our Consolidated Financial Statements. For
more information on obligations and contingent liabilities
refer to Note (3) and Note (22) in our Consolidated
Financial Statements.
RESEARCH AND DEVELOPMENT
For information on our R&D activities see “Item 4.
Information about SAP – Products, Research &
Development, and Services.” For information on our R&D
costs see “Item 5. Operating and Financial Review and
Prospects – Operating Results (IFRS)” and for
information related to our R&D employees see “Item 6.
Directors, Senior Management and Employees –
Employees.”
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements are prepared
based on the accounting policies described in Note (3) to
our Consolidated Financial Statements in this report. The
application of such policies requires management to
make judgments, estimates and assumptions that affect
the application of policies and the reported amounts of
assets, liabilities, revenues and expenses in our
Consolidated Financial Statements. We base our
judgments, estimates and assumptions on historical and
forecast information, as well as regional and industry
economic conditions in which we or our customers
operate, changes to which could adversely affect our
estimates. Although we believe we have made
reasonable estimates about the ultimate resolution of
the underlying uncertainties, no assurance can be given
that the final outcome of these matters will be consistent
with what is reflected in our assets, liabilities, revenues
and expenses. Actual results could differ from original
estimates.
The accounting policies that most frequently require us
to make judgments, estimates, and assumptions, and
therefore are critical to understanding our results of
operations, include the following:
– revenue recognition;
– valuation of trade receivables;
– accounting for share-based payments;
– accounting for income tax;
– accounting for business combinations;
– subsequent accounting for goodwill and other
intangible assets;
– accounting for legal contingencies; and
– recognition of internally generated intangible assets
from development.
Our management periodically discusses these critical
accounting policies with the Audit Committee of the
Supervisory Board. See Note (3c) to our Consolidated
Financial Statements for further discussion on our
critical accounting estimates and critical accounting
policies.
NEW ACCOUNTING STANDARDS NOT YET
ADOPTED
See Note (3e) to our Consolidated Financial Statements
for our discussion on new accounting standards not yet
adopted.
EXPECTED DEVELOPMENTS
Future Trends in the Global Economy
In its most recent report, the European Central Bank
(ECB) forecasts moderate growth in the world economy
and it expects that this growth will vary across regions
and countries in 2016. It foresees more favorable
prospects for advanced economies than for emerging
markets and developing economies. Geopolitical risks,
especially of heightened tensions in the Middle East,
could undermine global economic performance, the ECB
warns.
In the Europe, Middle East, and Africa (EMEA) region, the
ECB expects the euro-area economy to recover slightly
more rapidly in 2016 than in the previous year. It
suggests that low oil prices, increased publicsector
spending on assistance for refugees, and its own
monetary measures may encourage that acceleration. In
Central and Eastern Europe, the ECB expects economic
activity to remain stable but for performance to vary
from country to country. The European Union’s
structural funds and strong consumer spending may be
principal factors behind such growth. In Russia, on the
other hand, the economic situation is expected to remain
difficult. The ECB expects further cuts in public spending
as a consequence of declining oil revenue.
The ECB’s forecasts for 2016 for a number of major
countries in the Americas region are cautious. For the
United States, the ECB expects that economic growth
may slow following the Federal Reserve’s move on
interest rates in December 2015. The ECB expects
political uncertainty, a tightening of monetary policy, and
more restrictive financing conditions to continue to
weigh on Brazil’s economy.
For the Asia Pacific Japan (APJ) region, the ECB expects
that wage increases and low oil prices will improve
consumer spending in Japan. Japan’s exports should
also pick up. For China, though, the ECB expects that
economic growth will continue to slow following the
refocusing of its economy. It believes that the prospects
for India’s economy are positive in 2016.
63
Economic Trends – Year-Over-Year GDP Growth
In %
2014e
2015p
2016p
World
3.4
3.1
3.4
Advanced economies
1.8
1.9
2.1
Developing and emerging economies
4.6
4.0
4.3
Euro area
0.9
1.5
1.7
Germany
1.6
1.5
1.7
Central and Eastern Europe
2.8
3.4
3.1
Middle East and
North Africa
2.8
2.5
3.6
Sub- Saharan Africa
5.0
3.5
4.0
United States
2.4
2.5
2.6
Canada
2.5
1.2
1.7
Central and South America, Caribbean
1.3
ⳮ0.3
ⳮ0.3
Japan
0.0
0.6
1.0
Asian developing economies
6.8
6.6
6.3
China
7.3
6.9
6.3
Europe, Middle East, and Africa (EMEA)
Americas
Asia Pacific Japan (APJ)
e = estimate; p = projection
Source: International Monetary Fund (IMF), World Economic Outlook Update January 2016, Subdued Demand, Diminished Prospects,
as of January 19, 2016, p. 6.
IT Market: The Outlook for 2016
The worldwide IT market is at the dawn of a new era,
according to U.S. market research firm IDC. It expects IT
market growth to decline in a number of emerging
economies, notably Brazil, China, and Russia. For a
decade, these countries were the driving force in all
segments of the global IT market while the advanced
economies were already focusing on the transition from
traditional technologies to innovations such as cloud and
mobile computing. IDC expects that the growth in
traditional IT will also slow in the emerging markets and
developing economies in the years ahead. It believes that
cloud, mobile, and Big Data will offer the main
opportunities for growth. In view of that prediction, IDC
expects the worldwide IT market to grow just 2.8% in
2016. Hardware spending is expected to increase by
about 1%, and software spending by almost 7% (mainly
due to software-as-a-service and platform-as-a-service
solutions).
In the Europe, Middle East, and Africa (EMEA) region,
IDC expects overall IT market growth to decelerate to 2%
in 2016. Notably, the IT market in Western Europe is
expected to grow just 1% to 2% in the coming years. The
IT market in Germany is not expected to grow much
above these rates either, according to IDC. The institute
believes that IT spending in Russia might recover as early
as 2016 and grow 6% as a result of short-term
government stimulus measures.
IDC expects the Americas region IT spending to increase
3.7% in 2016. It believes the IT market in the United
States will grow at a similar rate and that, with 7%
growth, the software segment will again be the fastest to
expand there. For Brazil, IDC expects that the
government will pursue a strict program of economic
reform in the next few years, which could slow growth in
the IT market to a rate of 3% or 4%. IDC forecasts that
the IT market in Mexico will also grow by about 3%
annually in the next few years.
In the Asia Pacific Japan (APJ) region, IDC believes
growth in the IT market might reach 2.5%. However,
growth rates again are expected to vary from country to
country. IDC expects the IT market in Japan will grow by
about 3% in 2016. It anticipates that China’s IT market
64
will expand only in the low to middle single-digit
percentage range in the years ahead. The IT market in
India, on the other hand, might continue to grow by rates
at or above 10% a year, according to IDC.
Trends in the IT Market –
Increased IT Spending Year-Over-Year
In %
2014e
2015p
2016p
4.5
4.9
2.8
Hardware
5.2
5.5
1.1
Packaged software
5.6
6.8
6.8
Applications
6.9
7.3
7.1
IT services
3.0
2.8
3.0
3.9
4.6
2.0
Packaged software
4.0
4.8
5.2
Applications
4.5
5.4
5.6
IT services
2.2
1.9
2.6
4.2
4.6
3.7
Packaged software
6.8
8.4
7.3
Applications
8.5
8.9
7.8
IT services
2.8
2.8
2.6
5.9
5.9
2.5
Packaged software
4.5
4.9
8.0
Applications
5.6
5.1
7.7
IT services
5.3
4.6
4.6
World
Total IT
Europe, Middle East, and Africa (EMEA)
Total IT
Americas
Total IT
Asia Pacific Japan (APJ)
Total IT
e = estimate, p = projection
Source: IDC Worldwide Black Book Pivot V3.1, 2015
Impact on SAP
SAP expects to outperform the global economy and the
IT industry again in 2016 in terms of revenue growth.
Our 2015 results validate our strategy of innovating
across the core, the cloud, and business networks to help
our customers become true digital enterprises.
Our innovation cycle for SAP S/4HANA is well underway
and the completeness of our vision in the cloud has
distinguished SAP from both legacy players and point
solution providers. We have beaten our guidance for
2015 on cloud and software as well as on operating
income.
In 2015, we have transformed our Company and made it
leaner by shifting investments from non-core activities to
strategic growth areas enabling us to capture the growth
opportunities in the market.
We are well-positioned for the future as reflected in the
increase of our ambition for 2017.
We plan to continue to invest in countries in which we
expect significant growth, helping us reach our ambitious
2016 outlook targets and medium-term aspirations for
2017 and 2020.
We are confident we can achieve our medium-term
targets for 2017 and 2020, assuming that the economic
65
environment and IT industry develop as currently
forecasted. Balanced in terms of regions as well as
industries, we are well-positioned with our product
offering to offset smaller individual fluctuations in the
global economy and IT market.
A comparison of our business outlook with forecasts for
the global economy and IT industry shows that we can be
successful even in a tough economic environment and
will further strengthen our position as the market leader
of enterprise application software.
Operational Targets for 2016 (Non-IFRS)
Revenue and Operating Profit Outlook
We are providing the following outlook for the full-year
2016:
– Based on the continued strong momentum in SAP’s
cloud business the Company expects full year 2016
non-IFRS cloud subscriptions and support revenue to
be in a range of €2.95 billion to €3.05 billion at
constant currencies (2015: €2.30 billion). The upper
end of this range represents a growth rate of 33% at
constant currencies.
– SAP expects full year 2016 non-IFRS cloud and
software revenue to increase by 6% to 8% at
constant currencies (2015: €17.23 billion).
– SAP expects full-year 2016 non-IFRS operating profit
to be in a range of €6.4 billion to €6.7 billion at
constant currencies (2015: €6.35 billion).
We expect our headcount to experience an increase
similar to the increase in 2015.
While our full-year 2016 business outlook is at constant
currencies, actual currency reported figures are
expected to continue to be impacted by currency
exchange rate fluctuations.
However, the revenue growth we expect from this is
below the outlook provided for non-IFRS cloud
subscriptions and support revenue. We expect the
software license revenue in 2016 to be at the same level
as in 2015 with SAP gaining market share against our
main on-premise license competitors.
We expect that most of the total revenue growth (nonIFRS) will come from the Applications, Technology, and
Services segment, equally distributed into software
licenses and support revenue growth and cloud
subscriptions
and
support
revenue
growth.
Nevertheless, we anticipate our SAP Business Network
segment will outpace the Applications, Technology, and
Services segment with a significantly higher total
revenue growth rate at lower absolute levels. As such, we
expect we will seize a huge market opportunity with
continued strong mid- and long-term growth potential.
We continuously strive for profit expansion in all our
segments, therefore, we expect an increase in both
segments’ profits. The vast majority of the profit
expansion comes from our Applications, Technology,
and Services segment. Overall, in the SAP Business
Network segment, operating profit growth is higher than
in the Applications, Technology, and Services segment,
but at significantly lower volume.
Across all segments we expect our 2016 non-IFRS cloud
subscriptions and support gross margin to be at least
stable or to slightly increase compared to 2015. For
SAP’s managed-cloud offerings, we still expect negative
margins in 2016 which by 2017 are expected to break
even.
The following table shows the estimates of the items that
represent the differences between our non-IFRS financial
measures and our IFRS financial measures.
We expect that non-IFRS total revenue will continue to
depend largely on the revenue from cloud and software.
Non-IFRS Measures
€ millions
Estimated
Amounts
for 2016
Actual
Amounts
for 2015
< 20
11
Share-based payment expenses
590 to 630
724
Acquisition-related charges
690 to 740
738
40 to 60
621
Revenue adjustments
Restructuring
We do not expect any Company-wide restructuring
programs in 2016.
The Company expects a full-year 2016 effective tax rate
(IFRS) of 22.5% to 23.5% (2015: 23.4%) and an effective
tax rate (non-IFRS) of 24.5% to 25.5% (2015: 26.1%).
66
Goals for Liquidity and Finance
On December 31, 2015, we had a negative net liquidity.
We believe that our liquid assets combined with our
undrawn credit facilities are sufficient to meet our
present operating financing needs also in 2016 and,
together with expected cash flows from operations, will
support debt repayments and our currently planned
capital expenditure requirements over the near term and
medium term.
In 2016, we expect a positive development of our
operating cash flow mainly due to lower restructuring
related payments.
We intend to repay a US$600 million U.S. private
placement when it matures in June. Additionally, we are
planning to further repay our outstanding €1.25 billion
bank loan.
By the time of this report, we have no concrete plans for
future share buybacks.
Based on this planning, at this point in time we expect we
will noticeably reduce our net debt in 2016 and gradually
return to a positive net liquidity in subsequent years.
Investment Goals
Our planned capital expenditures for 2016 and 2017,
other than from business combinations, mainly comprise
the construction activities described in “Item 4.
Information About SAP – Description of Property –
Capital Expenditures”. We expect investments from
these activities of approximately €450 million during the
next two years. These investments can be covered in full
by operating cash flow.
SAP does not plan any significant acquisitions in 2016
and 2017 but will rather focus on organic growth.
Proposed Dividend
We intend to continue our dividend policy in 2017 as well,
which is to pay a dividend totaling more than 35% of the
prior year’s profit after tax.
Premises on Which Our Outlook Is Based
In preparing our outlook guidance, we have taken into
account all events known to us at the time we prepared
this report that could influence SAP’s business going
forward.
Among the premises on which this outlook is based are
those presented concerning economic development and
the assumption that there will be no effects from major
acquisitions in 2016 and 2017.
Medium-Term Prospects
In this section, all discussion of the medium-term
prospects is based exclusively on non-IFRS measures.
We expect to grow our more predictable revenue
business while steadily increasing operating profit. Our
strategic objectives are focused primarily on the
following financial and non-financial objectives: growth,
profitability,
customer
loyalty,
and
employee
engagement.
We are raising our 2017 ambition compared to our
outlook previously communicated in 2015 to reflect both
the current exchange rate environment and our excellent
business momentum.
Assuming a stable exchange rate environment going
forward, SAP now expects non-IFRS cloud subscriptions
and support revenue in a range of €3.8 billion to
€4.0 billion in 2017. The upper end of this range
represents a 2015 to 2017 compound annual growth rate
(CAGR) of 32%. Non-IFRS total revenue is expected to
be in a range of €23.0 billion to €23.5 billion in 2017. We
now expect our 2017 non-IFRS operating profit to be in a
range of €6.7 billion to €7.0 billion.
We continue to anticipate that the fast-growing cloud
business along with growth in support revenue will drive
a higher share of more predictable revenue. Given the
current software license revenue momentum, we now
expect the total of cloud subscriptions and support
revenue and software support revenue to be in a range of
63% to 65% of total revenue in 2017.
By 2017, we continue to expect the rapidly growing cloud
subscriptions and support revenue to be close to
software license revenue and they are expected to
exceed software license revenue in 2018. At that time,
SAP expects to reach a scale in its cloud business that
will clear the way for accelerated operating profit
expansion.
In 2015, we communicated our long term, high-level
ambitions for the year 2020. We are not adjusting this
long-term ambition at this time. Thus, we continue to
strive for reaching the following by 2020:
– €7.5 billion to €8.0 billion non-IFRS cloud
subscriptions and support revenue
– €26 billion to €28 billion non-IFRS total revenue
– €8.0 billion to €9.0 billion non-IFRS operating profit
– 70% to 75% share of more predictable revenue
(defined as the total of cloud subscriptions and
support revenue and software support revenue)
By 2020, we expect our business network offering to
generate the largest portion of the cloud subscriptions
and support revenue. The share of this portion of
revenue is expected to be followed by our public cloud
offerings. Both of these offerings are expected to each
generate, in 2020, cloud subscriptions and support
revenues that are significantly higher than the cloud
subscriptions and support revenue generated from our
private cloud offerings.
67
We also strive for significantly improving, over the next
few years, the profitability of our cloud business. We
expect that the flat or slightly increasing cloud
subscriptions and support margin development in 2016
will be followed by further margin increases in the
following years until we reach our envisioned long-term
cloud subscriptions and support margin targets in 2020.
These will continue to increase at different rates: We
expect the gross margin from our public cloud to reach
approximately 80% (2015: approximately 70%) in 2020.
Likewise, we expect our business network gross margin
to reach approximately 80% (2015: approximately 75%)
in 2020. The gross margin for our private cloud is
expected to break even in 2016 and reach about 40% in
2020.
In a mature state of our cloud business, we expect that
approximately 80% of the cloud subscription business
will be generated from existing contracts and their
renewals and approximately 20% from new business.
This is compared to approximately 60% from existing
contracts and renewals and 40% from new business in
the fast-growth phase of our cloud business.
business. It is our target, from that point in time, to grow,
until 2020, our gross profit from software licenses and
support by a compound annual growth rate of
approximately 3%, leading to an improvement in the
software licenses and support gross margin of
approximately 2 percentage points.
Non-Financial Goals 2016
In addition to our financial goals, we also focus on two
non-financial targets: customer loyalty and employee
engagement.
We believe it is essential that our employees are
engaged, drive our success, and support our strategy.
We remain committed to achieving an 82% employee
engagement score in 2016 (2015: 81%).
Further, our customers’ satisfaction with the solutions
we offer is very important to us. We want our customers
not only to be satisfied, but also to see us as a trusted
partner for innovation. We measure this customer loyalty
metric using the Customer Net Promoter Score (NPS).
For 2016, we aim to achieve a Customer NPS of 25%
(2015: 22.4%).
We also communicated in 2015 that we aim at further
improving the profitability of our on-premise software
68
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
SUPERVISORY BOARD
The current members of the Supervisory Board of SAP SE, each member’s principal occupation, the year in which
each was first elected and the year in which the term of each expires, respectively, are as follows:
Name
Age
Principal Occupation
Year
First
Elected
Year
Term
Expires
2003
2019
Prof. Dr. h.c. mult. Hasso Plattner,
Chairman(1)(2)(5)(6)(9)(10)
72
Pekka Ala-Pietilä(1)(4)(5)(6)(9)
59
Chairman of the Board of Directors,
Solidium Oy
2002
2019
Prof. Anja Feldmann(1)(5)(10)
50
Professor at the Electrical Engineering and
Computer Science Faculty at the
Technische Universität Berlin
2012
2019
Prof. Dr. Wilhelm Haarmann(1)(2)(4)(9)(10)
65
Attorney at Law, Certified Public Auditor
and Certified Tax Advisor; Linklaters LLP,
Rechtsanwälte, Notare, Steuerberater
1988
2019
Prof. Dr. Gesche Joost(1)(5)(10)
41
Professor for Design Research and Head of
the Design Research Lab, University of Arts
Berlin
2015
2016
Bernard Liautaud(1)(2)(5)(6)
53
General Partner, Balderton Capital
2008
2019
Dr. Erhard Schipporeit(1)(3)(8)(9)
67
Independent Management Consultant
2005
2019
Jim Hagemann Snabe(1)(2)(4)
49
Supervisory Board Member
2014
2019
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer(1)(3)
71
Managing Director of Dr. Klaus Wucherer
Innovations- und Technologieberatung
GmbH
2007
2019
Margret Klein-Magar, Vice Chairperson(2)(4)(5)(7)
51
Employee, Vice President Head of People
Principles
2012
2019
Panagiotis Bissiritsas(3)(4)(5)(7)
47
Employee, Support Expert
2007
2019
Martin Duffek(3)(7)(10)
40
Employee, Product Manager
2015
2019
Andreas Hahn(2)(5)(7)
45
Employee, Product Expert, Industry
Standards & Open Source
2015
2019
Lars Lamadé(2)(7)(9)(10)
44
Employee, Head of Customer & Events GSS
COO
2002
2019
Christine Regitz(5)(7)(10)
50
Employee, Vice President User Experience,
Chief Product Expert
2015
2019
Robert Schuschnig-Fowler(7)(10)
56
Employee, Account Manager, Senior
Support Engineer
2015
2019
Dr. Sebastian Sick(2)(4)(7)(9)
43
Head of Company Law Unit, Hans Boeckler
Foundation
2015
2019
Pierre Thiollet(5)(7)
54
Employee, Webmaster
2015
2019
Chairman of the Supervisory Board
Elected by SAP SE’s shareholders on May 20, 2015.
Member of the General and Compensation Committee.
(3) Member of the Audit Committee.
(4) Member of the Finance and Investment Committee.
(5) Member of the Technology and Strategy Committee.
(6) Member of the Nomination Committee.
(7) Appointed by the SAP SE Works Council Europe on May 6, 2015.
(8) Audit Committee financial expert.
(9) Member of the Special Committee.
(10) Member of the People and Organization Committee
(1)
(2)
69
For detailed information on the Supervisory Board
committees and their tasks, including the Audit
Committee and the General and Compensation
Committee, please refer to “Item 10 Additional
Information – Corporate Governance.”
Pursuant to the Articles of Incorporation of SAP SE and
the Agreement on the Involvement of Employees in SAP
SE, members of the Supervisory Board of SAP SE consist
of nine representatives of the shareholders and nine
representatives of the European employees. The current
nine employees’ representatives were appointed by the
SAP SE Works Council Europe on May 6, 2015.
Certain current members of the Supervisory Board of
SAP SE were members of supervisory boards and
comparable governing bodies of enterprises other than
SAP SE in Germany and other countries as of
December 31, 2015. See Note (29) to our Consolidated
Financial Statements for more detail. Apart from pension
obligations for employees, SAP SE has not entered into
contracts with any member of the Supervisory Board
that provide for benefits upon a termination of the
employment or service of the member.
EXECUTIVE BOARD
The current members of the Executive Board, the year in
which each member was first appointed and the year in
which the term of each expires, respectively, are as
follows:
Year First
Appointed
Year Current
Term
Expires
Bill McDermott, CEO
2008
2021
Robert Enslin
2014
2021
Michael Kleinemeier
2015
2018
Bernd Leukert
2014
2021
Luka Mucic
2014
2021
Gerhard Oswald
1996
2016
Name
The following changes occurred in the Executive Board in
2015:
• On October 8, 2015, the SAP Supervisory Board
appointed Michael Kleinemeier to the SAP Executive
Board, effective November 1, 2015.
A description of the management responsibilities and
backgrounds of the current members of the Executive
Board are as follows:
Bill McDermott, CEO (Vorstandssprecher), 54 years
old, holds a master’s degree in business administration.
He joined SAP in 2002 and became a member of its
Executive Board on July 1, 2008. On February 7, 2010 he
became Co-CEO alongside Jim Hagemann Snabe and
when Jim Hagemann Snabe concluded his current role
as Co-CEO in May 2014, Bill McDermott became sole
CEO. As CEO he is leading SAP with organizational
responsibility for strategy, business development,
corporate development, communications, marketing and
internal audit. In addition he assumed responsibility for
human resources and is the Labor Relations Director.
With the acquisition of Concur, he is also responsible for
SAP’s Business Network. He represents SAP as a
member of the European Roundtable of Chief Executive
Officers, the U.S. Business Council and the World
Economic Forum. Prior to joining SAP, he served as a
global executive in several technology companies.
Robert Enslin, 53 years old, holds diplomas in data
science as well as computer science and data
management. He joined SAP in 1992 and became a
member of the Executive Board in May 2014. He is
president of Global Customer Operations and is
responsible for global sales, industry & line of business
(LoB) solutions sales, services sales, sales operations as
well as the Global Customer Office. Before joining SAP,
Robert Enslin spent 11 years in various roles in the IT
industry.
Michael Kleinemeier, 59 years old, holds a degree in
commercial management from the University of
Paderborn. He first joined SAP in 1989 and became a
member of the Executive Board in November 2015. He
leads the Global Service & Support organization
including global consulting delivery, all global and
regional support and premium engagement functions,
maintenance go-to-market, global user groups, and
mobile services.
Bernd Leukert, 48 years old, holds a master’s degree in
business administration with an emphasis on
engineering and information technology. He joined SAP
in 1994 and became a member of the Executive Board in
May 2014. As SAP’s Chief Technology Officer he is
responsible for the board area Products & Innovation
including the global development organization,
innovation & cloud delivery, product strategy,
development services, and SAP Global Security. In
addition, Bernd Leukert heads strategic innovation
initiatives at SAP and is responsible for leading design
and user experience for SAP.
Luka Mucic, 44 years old, holds master’s degrees in law
and business administration. He joined SAP in 1996 and
became Chief Financial Officer (CFO), Chief Operating
Officer (COO) and a member of the Executive Board in
July 2014. He is responsible for finance and
administration including investor relations and data
protection and privacy. In addition, as the company’s
COO, Luka Mucic is responsible for the Process Office of
the company and for Business Innovation & IT.
70
Gerhard Oswald, 62 years old, economics graduate.
Gerhard Oswald joined SAP in 1981 and became a
member of the Executive Board in 1996. He is
responsible for the board area Product Quality &
Enablement covering quality governance & validation,
scale, enablement & transformation, logistics services,
and special tasks.
The members of the Executive Board of SAP SE as of
December 31, 2015 that are members on other
supervisory boards and comparable governing bodies of
enterprises, other than SAP, in Germany and other
countries, are set forth in Note (29) to our Consolidated
Financial Statements. SAP SE has not entered into
contracts with any member of the Executive Board that
provide for benefits upon a termination of the
employment of service of the member, apart from
pensions, benefits payable in the event of an early
termination of service, and abstention compensation for
the postcontractual noncompete period.
To our knowledge, there are no family relationships
among the Supervisory Board and Executive Board
members.
COMPENSATION REPORT
Compensation for Executive and Supervisory Board
Members
This compensation report outlines the criteria that we
applied for the year 2015 to determine compensation for
Executive Board and Supervisory Board members,
discloses the amount of compensation paid, and
describes the compensation systems. It also contains
information about share-based payment plans for
Executive Board members, shares held by Executive
Board and Supervisory Board members, and the
directors’ dealings required to be disclosed in
accordance with the German Securities Trading Act.
Compensation for Executive Board Members
Compensation System for 2015
The compensation for 2015 for Executive Board
members is intended to reflect SAP’s company size and
global presence as well as our economic and financial
standing. The compensation level is internationally
competitive to reward committed, successful work in a
dynamic business environment.
The Executive Board compensation package is
performance-based. It has three elements:
– A fixed annual salary element
– A variable short-term incentive (STI) element to
reward performance in the plan year
– A variable long-term incentive (LTI) element tied to
the price of SAP shares to reward performance over
multiple years
The Supervisory Board sets a compensation target for
the sum of the fixed and the variable elements. It
reviews, and if appropriate, revises, this compensation
target every year. The review takes into account SAP’s
business performance and the compensation paid to
board members at comparable companies on the
international
stage.
The
amount
of
variable
compensation depends on SAP’s performance against
performance targets that the Supervisory Board sets for
each plan year. The performance targets are key
performance indicator (KPI) values aligned to the SAP
budget for the plan year.
The following criteria apply to the elements of Executive
Board compensation for 2015:
– The fixed annual salary element is paid as a monthly
salary.
– The variable STI element was determined under the
STI 2015 plan. Under this plan, the STI compensation
depends on the SAP Group’s performance against the
predefined target values for three KPIs: non-IFRS
constant currency cloud and software growth; nonIFRS constant currency operating margin increase;
and non-IFRS constant currency new and upsell
bookings. In addition, the STI 2015 plan provides for a
discretionary element that allows the Supervisory
Board, after the end of the fiscal year 2015, to address
not only an Executive Board member’s individual
performance, but also SAP’s performance in terms of
market position, innovative power, customer
satisfaction, employee satisfaction, attractiveness as
an employer and the performance in our Business
Network Group.
Moreover, if there has been any extraordinary and
unforeseeable event, the Supervisory Board can, at its
reasonable discretion, retroactively adjust payouts up
or down in the interest of SAP. For 2014, this
discretion was applied.
On February 18, 2016, the Supervisory Board
assessed SAP’s performance against the agreed
targets and determined the amount of compensation
payable under the STI 2015 plan. The STI 2015 plan
pays out after the Annual General Meeting of
Shareholders in May 2016.
– The variable LTI element was determined under the
RSU Milestone Plan 2015. “RSU” stands for
“restricted share unit.” This originally four-year plan
was established in 2012 and focuses on the SAP share
price and on certain objectives derived from our
Company strategy for the years through 2015. For
each of the four years, the members of the Executive
Board are allocated a certain number of RSUs for the
respective year based on a budget amount that was
granted to each Executive Board member in 2012
already for each of the years 2012 through 2015. The
number of RSUs allocated to each member for a given
year is their target amount (an amount in euros) for
71
that year divided by the SAP share price over a
reference period (defined in the RSU Milestone Plan
2015 terms) at the beginning of the respective year.
The number of RSUs an Executive Board member
actually earns in respect of a given year depends on
the Company performance against the objectives for
that year (a year is a “performance period” in the
plan). The objectives derive from SAP’s strategy for
the period to 2015. The plan objectives relate to two
KPIs: non-IFRS total revenue and non-IFRS operating
profit.
After the end of each fiscal year, the Supervisory
Board assesses the Company’s performance against
the objectives set for that year and determines the
number of RSUs to be finally allocated and vested in
each Executive Board member. No RSUs vest if
minimum performance levels of 60%, predefined for
each of the two KPIs, are not achieved. There is also a
cap. Normally, the quantity of vested RSUs a member
can attain in respect of a plan year is capped at 150%
of their initial RSU allocation for that year.
The Company strategy underlying the RSU Milestone
Plan 2015 focuses on where SAP aimed to be by the
end of 2015, so the plan gave greater weight to
performance against the KPI targets for 2015 (the
final year of the plan) than against the targets for
2012 through 2014. Due to the adjustment factor, the
number of vested RSUs a member of the Executive
Board actually received for 2015 has been revised
according to plan terms.
All vested RSUs are subject to a three-year holding
period. The holding period commences at the end of
the year for which the RSUs were allocated. The
amount an RSU eventually pays out depends on the
SAP share price at the end of the holding period. A
member who leaves the Executive Board before the
end of the plan retains their vested RSUs for
completed plan years but does not retain any
allocated but unvested RSUs for the year during
which they leave. If a member leaves the Executive
Board before the beginning of the subsequent year,
no RSUs are finally allocated.
Each vested RSU entitles its holder to a (gross)
payout corresponding to the price of one SAP share
after the end of the three-year holding period. The
applicable share price is measured over a reference
period defined in the RSU Milestone Plan 2015 terms.
For the terms and details of the RSU Milestone Plan
2015, see the Notes to Consolidated Financial
Statements section, Note (27). The number of RSUs
issued initially to each member of the Executive Board
under the RSU Milestone Plan 2015 for 2015 was
decided by the Supervisory Board on February 12,
2015. The number of RSUs allocated finally to each
member of the Executive Board under the RSU
Milestone Plan 2015 for 2015 was determined by the
Supervisory Board on February 18, 2016.
The contracts of Executive Board members Bill
McDermott and Robert Enslin require that compensation
payments are made in U.S. dollars. The contracts include
clauses that determine the exchange rates for the
translation of euro-denominated compensation into U.S.
dollars.
Changes to Compensation System in 2016
As the RSU Milestone Plan 2015 expired at the end of
2015, the Supervisory Board developed a new LTI 2016
plan for the Executive Board effective January 1, 2016
with the first grant occurring in March 2016. The purpose
of the LTI 2016 is to reflect the operating profit target
achievement, to ensure long-term retention of our
Executive Board members and to reward a share price
outperformance by SAP as compared to a group of its
peers (Peer Group).
The LTI 2016 is an annual revolving remuneration
element that is linked to the price of the SAP share. A
grant amount determined by the Supervisory Board is
converted into virtual shares, referred to as Share Units,
by dividing the grant amount by the price of the SAP
share (calculated on the basis of a defined average
value). The grant amount is determined by the
Supervisory Board in its discretion for each financial year
at a level of between 80% and 120% of the contractual
target amount; taking into account the achievement of
the operating profit targets set for the preceding
financial year.
The Share Units granted comprise 40% Retention Share
Units (RSUs) and 60% Performance Share Units (PSUs).
Both types of Share Units have a vesting period of four
years. Each share unit that finally vests entitles its holder
to a (gross) payout corresponding to the price of one
SAP share after the end of the four-year holding period,
but capped at three times the SAP share price applied for
the conversion of the grant amount into Share Units.
The number of PSUs, that finally vests depends on the
performance of the SAP share. If the increase of price of
the SAP share over the four-year vesting period of the
PSUs exceeds the increase of a defined Peer Group Index
over the same period, the number of PSUs will be
increased by a percentage equal to the outperformance
expressed as percentage points. This percentage will be
doubled if, in addition to the outperformance over the
Peer Group Index, the price of the SAP share at the end
of the vesting period of the PSUs is higher than the price
at the start of this period. The number of vested PSUs a
member can attain in respect of a plan year is capped at
150% of their initial PSU allocation for that year.
Conversely, if the increase of price of the SAP share over
the four-year vesting period of the PSUs underperforms
the Peer Group Index, the number of PSUs will be
reduced by a percentage equal to the underperformance
expressed as percentage points. No PSUs vest if the
underperformance exceeds 50%.
72
Amount of Compensation for 2015
We present separately Executive Board compensation
disclosures under three different compensation
disclosure approaches:
– Compensation disclosures under a management view
that follows the requirements of sections 314 and 315
of the German Commercial Code (Handelsgesetzbuch,
or “HGB”) as specified in the German Accounting
Standards (“GAS 17”) except that it allocates sharebased compensation to the periods to which this
compensation economically belongs
– Compensation disclosures fully in accordance the
requirements of sections 314 and 315 of the HGB as
specified in GAS 17
– Compensation disclosures in accordance with the
recommendations of the German Corporate
Governance Code (“Code”)
I. Executive Board Members’ Compensation – Management View
Executive Board Members’ Compensation for 2015 – Management View
€ thousands
Fixed Elements
Salary
Bill McDermott (CEO)
Other1)
Performance- Compensation
Related Element
for 2015
Short-Term
Incentive
Element
Long-Term
Incentive
Element
STI
Share-Based
Payment (RSU
Milestone Plan
2015)2)
1,150.0
1,258.0
2,743.5
4,127.5
9,279.0
700.0
103.3
1,660.5
1,480.6
3,944.4
116.7
0
277.5
315.0
709.2
Bernd Leukert
700.0
11.7
1,660.5
1,480.6
3,852.8
Luka Mucic
700.0
12.1
1,660.5
1,480.6
3,853.2
Gerhard Oswald
700.0
22.4
1,660.5
1,480.6
3,863.5
4,066.7
1,407.5
9,663.0
10,364.9
25,502.1
Robert Enslin
Michael Kleinemeier (from November 1,
2015)
Total
73
Executive Board Members’ Compensation for 2014 – Management View
€ thousands
Fixed Elements
PerformanceRelated Element
Short-Term
Incentive
Elements
Salary
Bill McDermott (CEO)
Other1)
Compensation
for 20141)
Long-Term
Incentive Element
STI
Share-Based
Payment (RSU
Milestone Plan
2015)2)
1,150.0
861.4
2,036.7
4,040.5
8,088.6
Jim Hagemann Snabe (co-CEO and
member until May 21, 2014)
448.8
2,647.1
—
—
3,095.9
Dr. Werner Brandt (until June 30,
2014)
350.0
1,418.8
—
—
1,768.8
Robert Enslin (from May 4, 2014)
462.9
121.0
817.3
939.4
2,340.6
Bernd Leukert (from May 4, 2014)
462.9
12.2
817.3
939.4
2,231.8
Luka Mucic (from July 1, 2014)
350.0
4.3
621.4
729.0
1,704.7
Gerhard Oswald
700.0
22.0
1,232.7
1,449.4
3,404.1
291.7
1,367.5
—
—
1,659.2
4,216.3
6,454.3
5,525.4
8,097.7
24,293.7
Dr. Vishal Sikka (until May 4, 2014)
Total
1) Insurance contributions, benefits in kind, expenses for maintenance of two households, non-recurring payments, use of aircraft, tax,
cash disbursement of short-term and long-term incentive elements, and discrete payments arising through application of the fixed
exchange-rate clause.
2) Compensation attributable to Executive Board members for the respective year, including the respective year’s plan tranche of LTI
2015 based on the grant value at time of grant.
The share-based payment amounts included in the 2015 and 2014 compensation result from the following RSUs
under the RSU Milestone Plan 2015.
Share-Based Payment Under RSU Milestone Plan 2015 (Grants for 2015)
Grants for 2015
Quantity
Grant Value
per Unit at
Time of Grant
Total Grant
Value at Time
of Grant
€
€thousands
Bill McDermott (CEO)
77,099
53.53
4,128
Robert Enslin
27,656
53.53
1,481
4,622
68.16
315
Bernd Leukert
27,656
53.53
1,481
Luka Mucic
27,656
53.53
1,481
Gerhard Oswald
27,656
53.53
1,481
Michael Kleinemeier (from November 1, 2015)
Total
192,345
10,365
74
Share-Based Payment Under RSU Milestone Plan 2015 (Grants for 2014)
Grants for 2014
Quantity
Bill McDermott (CEO)
Grant Value
per Unit at
Time of Grant
Total Grant
Value at Time
of Grant
€
€ thousands
76,374
52.90
4,040.50
—
—
—
Robert Enslin (from May 4, 2014)
18,164
51.72
939.40
Bernd Leukert (from May 4, 2014)
18,164
51.72
939.40
Luka Mucic (from July 1, 2014)
13,811
52.78
729.00
27,396
52.90
1,449.40
—
—
—
Dr. Werner Brandt (until June 30, 2014)1)
Gerhard Oswald
Dr. Vishal Sikka (until May 4, 2014)1)
Total
153,909
8,097.70
The allocations for Werner Brandt (27,396 RSUs), and Vishal Sikka (27,396 RSUs) were forfeited at the end of their contracts.
Consequently, they are not disclosed in the table above.
1)
II. Executive Board Members’ Compensation According to
HGB and GAS 17
Under the compensation disclosure rules of the German
HGB and GAS 17, share-based compensation awards are
to be included in the compensation of the year of grant,
even if the awards are tied to future years. Accordingly,
and in contrast to, the compensation amounts disclosed
under the management view above, the Executive Board
compensation amounts determined under HGB and GAS
17 for 2014 and 2015:
– Exclude the share-based compensation awards
granted to Executive Board members in 2012 for the
years 2014 and 2015 as these were already included
in the 2012 compensation
– Include in full the grants for 2014 and 2015 made to
Executive Board members appointed in 2014, that is,
also including the grant for 2015
– Include the grant for 2015 made to Michael
Kleinemeier who was appointed to the Executive
Board in 2015
Including RSU Milestone Plan 2015 awards for 2015
granted in 2015 to Michael Kleinemeier (€263,200) upon
his appointment to the Executive Board, the total
Executive Board compensation for 2015 calculated as
required under section 314 of the German Commercial
Code amounts to €15,400,400, thereof: Bill McDermott
€5,151,500; Robert Enslin €2,463,800; Michael
Kleinemeier €657,400; Bernd Leukert €2,372,200; Luka
Mucic €2,372,600; and Gerhard Oswald €2,382,900.
Including RSU Milestone Plan 2015 awards for 2014 and
2015 granted in 2014 to Robert Enslin (€1,574,800 for
each of the two years); Bernd Leukert (2014:
€1,280,000; 2015: €1,574,800); and Luka Mucic (2014:
€1,141,000; 2015: €1,574,800) upon their appointment
to the Executive Board, the total Executive Board
compensation for 2014 calculated as required under
section 314 of the German Commercial Code amounts to
€23,216,200, thereof: Bill McDermott €4,048,100; Jim
Hagemann Snabe €1,395,900; Werner Brandt
€1,768,800; Robert Enslin €4,550,800; Bernd Leukert
€4,147,200; Luka Mucic €3,691,500; Gerhard Oswald
€1,954,700; and Vishal Sikka €1,659,200.
All amounts as determined under HGB and GAS 17, other
than share-based compensation, are identical to the
amounts disclosed under the management view above.
III. Executive Board Members’ Compensation According to
the Code
Pursuant to the recommendations of the Code, the value
of benefits granted for the year under review as well as
the allocation, that is the amounts disbursed for the year
under review, are disclosed below based on the
reference tables recommended in the Code.
In contrast to the disclosure rules stipulated in the
German HGB and GAS 17, the Code includes the service
cost according to IAS 19 in the Executive Board
compensation and requires the additional disclosure of
the target value for the one-year variable compensation
and the maximum and minimum compensation amounts
achievable for the variable compensation elements.
However, due to the payouts under the RSU Milestone
Plan 2015 not being capped, there is no disclosure to be
made for the maximum variable compensation amount
achievable (marked as “NA” in the table below).
75
German Corporate Governance Code (Benefits Granted in 2014 and 2015)
Benefits Granted
Michael Kleinemeier
Robert Enslin
Member of the
Member of the
Executive Board
Executive Board (from November 1, 2015)
Bill McDermott
CEO
2015
(Min)
2015
(Max)
20141)
2015 2015 2015 2014
(Min) (Max)
700.0 700.0
700.0
462.9
116.7 116.7
103.3 103.3
103.3
121.0
2,408.0 2,408.0 2,408.0 2,011.4 803.3 803.3
803.3
20151)
2015
(Min)
Fixed compensation
1,150.0
1,150.0
Fringe benefits2)
1,258.0 1,258.0 1,258.0
Total
One-year variable
compensation
1,860.0
0
—
0
2015
(Max)
20141) 20151)
1,150.0 1,150.0
861.4
3,371.3 1,860.0 1,125.8
116.7
—
0
0
—
583.9
116.7 116.7
116.7
—
0 2,040.5
746.4
188.1
0 340.9
—
0
939.4 315.0
0
NA
—
NA 2,269.7 619.8 116.7
NA
—
0
0
—
NA 2,417.8 619.8 116.7
NA
—
0
Multiyear variable
compensation
RSU Milestone Plan 2015
Total
Service cost
Total
NA
4,268.0 2,408.0
682.4
682.4
—
—
NA
NA 3,871.4 1,929.1 803.3
682.4
4,950.4 3,090.4
646.8
308.0 308.0
308.0
NA 4,518.2 2,237.1 1,111.3
148.1
0
German Corporate Governance Code (Benefits Granted in 2014 and 2015)
Benefits Granted
Fixed compensation
Fringe benefits2)
Total
One-year variable
compensation
Bernd Leukert
Member of the Executive
Board
Luka Mucic
Member of the Executive
Board
Gerhard Oswald
Member of the Executive
Board
2015
2015 (Min)
2015
(Max)
2014
2015
2015 (Min)
2015
(Max)
2014
2015
2015 (Min)
2015
(Max)
2014
700.0 700.0
700.0
462.9
700.0 700.0
700.0
350.0
700.0 700.0
700.0
700.0
12.1
12.1
4.3
22.4
22.4
22.0
712.1 712.1
712.1
354.3
722.4 722.4
722.4
722.0
11.7
11.7
11.7
12.2
711.7
711.7
711.7
475.1
1,125.8
12.1
22.4
0 2,040.5
746.4 1,125.8
0 2,040.5
567.5 1,125.8
0 2,040.5 1,125.8
—
0
939.4
0
729.0
0
NA 1,449.4
1,837.5
711.7
NA 1,650.8 1,848.2 722.4
NA 3,297.2
0
0
1,837.5
711.7
Multiyear variable
compensation
RSU Milestone Plan
2015
Total
Service cost
Total
NA
—
NA 2,160.9 1,837.9 712.1
0
0
0
0
NA 2,160.9 1,837.9 712.1
NA
0
0
—
0
0
NA 1,650.8 1,848.2 722.4
0
0
NA 3,297.2
The value of the fixed and one-year variable elements is subject to a contractual exchange-rate clause applied at the end of the year,
so the amounts actually paid may be greater.
2) Insurance contributions, benefits in kind, expenses for maintenance of two households, use of aircraft, tax and discrete payments
arising through application of the fixed exchange-rate clause.
1)
The total Executive Board compensation granted according to the Code amounted to €13,330,900
(2014: €23,302,200).
76
German Corporate Governance Code (Allocation)
Allocation
Michael Kleinemeier
Member of the
Executive Board
(from November 1, 2015)
Bill McDermott
CEO
Robert Enslin
Member of the
Executive Board
2015
2014
2015
Fixed compensation
1,150.0
1,150.0
700.0
462.9
116.7
—
Fringe benefits1)
1,258.0
861.4
103.3
121.0
0
—
2,408.0
2,011.4
803.3
583.9
116.7
—
2,036.7
1,737.2
817.3
—
—
—
RSU Milestone Plan 2015
—
—
—
—
—
—
MTI
—
1,011.1
—
—
—
—
SAP SOP 2011
—
—
—
—
—
—
SAP SOP 2010
—
—
—
—
—
—
SAP SOP 2009
—
378.7
—
—
—
—
Other
—
—
—
—
—
—
Total
4,444.7
5,138.4
1,620.6
583.9
116.7
—
682.4
646.9
308.0
148.1
0
—
5,127.1
5,785.3
1,928.6
732.0
116.7
—
Total
One-year variable compensation
2014
2015
2014
Multi-year variable compensation
Service cost
Total
German Corporate Governance Code (Allocation)
Allocation
Bernd Leukert
Member of the Executive
Board
2015
Fixed compensation
2014
Luka Mucic
Member of the
Executive Board
2015
2014
Gerhard Oswald
Member of the
Executive Board
2015
2014
700.0
462.9
700.0
350.0
700.0
700.0
11.7
12.2
12.1
4.3
22.4
22.0
Total
711.7
475.1
712.1
354.3
722.4
722.0
One-year variable compensation
817.3
—
621.4
—
1,232.7
1,051.5
RSU Milestone Plan 2015
—
—
—
—
—
—
MTI
—
—
—
—
—
611.0
SAP SOP 2011
—
—
—
—
1,126.7
—
SAP SOP 2010
—
—
—
—
—
1,590.9
SAP SOP 2009
—
—
—
—
—
—
Other
—
—
—
—
—
—
Total
1,529.0
475.1
1,333.5
354.3
3,081.8
3,975.4
0
0
0
0
0
0
1,529.0
475.1
1,333.5
354.3
3,081.8
3,975.4
Fringe benefits1)
Multi-year variable compensation
Service cost
Total
1) Insurance contributions, benefits in kind, expenses for maintenance of two households, use of aircraft, tax and discrete payments
arising through application of the fixed exchange-rate clause.
77
The total Executive Board compensation allocated
according to the Code amounted to €13,116,700 (2014:
€32,687,400).
End-of-Service Benefits
Regular End-of-Service Undertakings
Retirement Pension Plan
The following retirement pension agreements apply to
the individual members of the Executive Board:
– Michael Kleinemeier, Bernd Leukert, Luka Mucic, and
Gerhard Oswald receive a retirement pension when
they reach the retirement age of 60 (62 for Board
Members appointed after January 1, 2012) and retire
from their Executive Board seat, or a disability
pension if, before reaching the regular retirement age,
they become subject to occupational disability or
permanent incapacity. A surviving dependent’s
pension is paid on the death of a former member of
the Executive Board. The disability pension is 100% of
the vested retirement pension entitlement and is
payable until the beneficiary’s 60th birthday, after
which it is replaced by a retirement pension. The
surviving dependent’s pension is 60% of the
retirement pension or vested disability pension
entitlement at death. Entitlements are enforceable
against SAP SE. Current pension payments are
reviewed annually for adjustments and, if applicable,
increased according to the surplus in the pension
liability insurance. If service is ended before the
retirement age of 60 (62 for Board Members
appointed after January 1, 2012), pension entitlement
is reduced in proportion as the actual length of service
stands in relation to the maximum possible length of
service. The applied retirement pension plan is
contributory. The contribution is 4% of applicable
compensation up to the applicable income threshold
plus 14% of applicable compensation above the
applicable income threshold. For this purpose,
applicable compensation is 180% of annual base
salary. The applicable income threshold is the
statutory annual income threshold for the state
pension plan in Germany (West), as amended from
time to time. Originally, Gerhard Oswald was under a
performance-based retirement plan. This plan was
discontinued when SAP introduced a contributory
retirement pension plan in 2000. His pension benefits
are derived from any accrued entitlements on
December 31, 1999, under performance-based
pension agreements and a salary-linked contribution
for the period commencing January 1, 2000. Gerhard
Oswald’s rights to retirement pension benefits will
increase by further annual contributions because he
remains a member of the Executive Board after his
60th birthday until his scheduled retirement on
December 31, 2016.
– Bill McDermott has rights to future benefits under the
portion of the pension plan for SAP America classified
as “Non-Qualified Retirement Plan” according to the
U.S. Employee Retirement Income Security Act
(ERISA). The “Non-Qualified” pension plan of SAP
America is a cash balance plan that on retirement
provides either monthly pension payments or a lump
sum. The pension becomes available from the
beneficiary’s 65th birthday. Subject to certain
conditions, the plan also provides earlier payment or
invalidity benefits. The “Non-Qualified” pension plan
closed with effect from January 1, 2009. Interest
continues to be paid on the earned rights to benefits
within this plan.
SAP made contributions to a third-party pension plan
for Bill McDermott (2015: €682,400; 2014:
€646,800) and Robert Enslin (2015: €308,000; 2014:
€148,100). SAP’s contributions are based on
payments by Bill McDermott and Robert Enslin into
this pension plan.
78
Total Defined Benefit Obligations (DBO) and the Total Accruals for Pension Obligations to Executive Board
Members
€ thousands
Bill McDermott
(CEO)
DBO January 1, 2014
Michael Bernd Leukert1) Luka Mucic1) Gerhard Oswald
Kleinemeier
(from November 1,
2015)1)
Total
1,042.7
—
—
—
5,816.5
6,859.2
Less plan assets market
value January 1, 2014
—
—
—
—
4,651.3
4,651.3
Accrued January 1, 2014
1,042.7
—
—
—
1,165.2
2,207.9
169.8
—
123.2
102.8
1,404.9
1,800.7
—
—
94.6
67.8
341.1
503.5
DBO December 31, 2014
1,212.5
—
123.2
102.8
7,221.4
8,659.9
Less plan assets market
value December 31, 2014
—
—
94.6
67.8
4,992.4
5,154.8
1,212.5
—
28.6
35.0
2,229.0
3,505.1
170.0
29.7
129.2
129.9
ⳮ171.2
287.6
—
25.4
145.6
138.0
356.9
665.9
DBO December 31, 2015
1,382.5
29.7
252.4
232.7
7,050.2
8,947.5
Less plan assets market
value December 31, 2015
—
25.4
240.2
205.8
5,349.3
5,820.7
1,382.5
4.3
12.2
26.9
1,700.9
3,126.8
DBO change in 2014
Plan assets change in
2014
Accrued December 31,
2014
DBO change in 2015
Plan assets change in
2015
Accrued December 31,
2015
The values shown here only reflect the pension entitlements that Michael Kleinemeier, Bernd Leukert and Luka Mucic will receive from
the retirement pension plan for Executive Board members.
1)
The table below shows the annual pension entitlement of each member of the Executive Board on reaching the
scheduled retirement age (60 for Executive Board members initially appointed before 2012 and 62 for Executive
Board members initially appointed after January 1, 2012) based on entitlements from SAP under performance-based
and salary-linked plans vested on December 31, 2015.
Annual Pension Entitlement
€ thousands
Vested on
December 31,
2015
Vested on
December 31,
2014
106.9
94.0
Michael Kleinemeier (from November 1, 2015)
0.7
—
Bernd Leukert
8.8
3.5
Luka Mucic
7.8
2.6
302.5
279.4
Bill McDermott (CEO)1)
Gerhard Oswald2)
The rights shown here for Bill McDermott refer solely to rights under the pension plan for SAP America.
Due to the extension of Gerhard Oswald’s contract beyond June 30, 2014, these values represent the retirement pension entitlement
that he would receive after his current Executive Board contract expires on December 31, 2016, based on the entitlements vested on
December 31, 2015 (December 31, 2014).
1)
2)
79
These are vested entitlements. To the extent that
members continue to serve on the Executive Board and
that therefore more contributions are made for them in
the future, pensions actually payable at the scheduled
retirement age will be higher than the amounts shown in
the table.
Postcontractual Non-Compete Provisions
During the agreed 12-month postcontractual noncompete period, each Executive Board member receives
abstention payments corresponding to 50% of the final
average contractual compensation as agreed in the
respective contract on an individual basis. Any other
occupational income generated by the Executive Board
member will be deducted from their compensation in
accordance with section 74c of the German Commercial
Code.
The following table presents the net present values of the
postcontractual non-compete abstention payments. The
net present values in the table reflect the discounted
present value of the amounts that would be paid in the
fictitious scenario in which the Executive Board members
leave SAP at the end of their respective current contract
terms and their final average contractual compensation
prior to their departure equals the compensation in 2015.
Actual postcontractual non-compete payments will likely
differ from these amounts depending on the time of
departure and the compensation levels and target
achievements at the time of departure.
Net Present Values of the Postcontractual Non-Compete Abstention Payments
€ thousands
Contract Term
Expires
Net Present Value
of Postcontractual
Non-Compete
Abstention
Payment1)
Bill McDermott (CEO)
June 30, 2017
4,627.7
Robert Enslin
June 30, 2017
1,967.2
October 31, 2018
349.6
Bernd Leukert
June 30, 2017
1,921.5
Luka Mucic
June 30, 2017
1,921.7
December 31, 2016
1,928.9
Michael Kleinemeier
(from November 1, 2015)
Gerhard Oswald
Total
12,716.6
1) For the purpose of this calculation, the following discount rates have been applied: Bill McDermott 0.18% (2014: 0.46%); Robert Enslin
0.18% (2014: 0.46%); Michael Kleinemeier 0.50%; Bernd Leukert 0.18% (2014: 0.46%); Luka Mucic 0.18% (2014: 0.46%); Gerhard
Oswald 0.15% (2014: 0.38%).
Early End-of-Service Undertakings
Severance Payments
The standard contract for all Executive Board members
provides that on termination before full term (for
example, where the member’s appointment is revoked,
where the member becomes occupationally disabled, or
in connection with a change of control), SAP SE will pay
to the member the outstanding part of the compensation
target for the entire remainder of the term, appropriately
discounted for early payment. A member has no claim to
that payment if they have not served SAP as a member
of the Executive Board for at least one year or if they
leave SAP SE for reasons for which they are responsible.
Upon the appointment of Robert Enslin, Bernd Leukert,
Luka Mucic, and Michael Kleinemeier to the Executive
Board, the Supervisory Board abstained from the waiting
period of one year due to their previous membership to
the Global Managing Board.
If an Executive Board member’s appointment to the
Executive Board expires or ceases to exist because of, or
as a consequence of, change or restructuring, or due to a
change of control, SAP SE and each Executive Board
member has the right to terminate the employment
contract within eight weeks of the occurrence by giving
six months’ notice. A change of control is deemed to
occur when a third party is required to make a
mandatory takeover offer to the shareholders of SAP SE
under the German Securities Acquisition and Takeover
Act, when SAP SE merges with another company and
becomes the subsumed entity, or when a control or
profit transfer agreement is concluded with SAP SE as
the dependent company. An Executive Board member’s
contract can also be terminated before full term if their
appointment as an Executive Board member of SAP SE is
revoked in connection with a change of control.
80
Postcontractual Non-Compete Provisions
Abstention compensation for the postcontractual noncompete period as described above is also payable on
early contract termination.
Permanent Disability
In case of permanent disability, the contract will end at
the end of the quarter in which the permanent inability to
work was determined. The Executive Board member
receives the monthly basic salary for a further 12 months
starting from the date the permanent disability is
determined.
Payments to Former Executive Board Members
In 2015, we paid pension benefits of €1,580,000 to
Executive Board members who had retired before
January 1, 2015 (2014: €1,425,000). At the end of the
year, the DBO for former Executive Board members was
€32,758,000 (2014: €33,764,000). Plan assets of
€26,716,000 are available to meet these obligations
(2014: €25,584,000).
Executive Board Members’ Holdings of Long-Term
Incentives
Members of the Executive Board hold or held sharebased payment rights throughout the year under the
RSU Milestone Plan 2015 and the SAP SOP 2010 (which
were granted in previous years). For information about
the terms and details of these programs, see the Notes
to the Consolidated Financial Statements section,
Note (27).
RSU Milestone Plan 2015
The table below shows Executive Board members’
holdings, on December 31, 2015, of RSUs issued to them
under the RSU Milestone Plan 2015. The plan is a cashsettled long-term incentive scheme with a payout
subsequent to a performance period of one year and an
additional holding period of three years. The RSU
Milestone Plan 2015 consists of four plan tranches to be
issued with respect to the calendar years 2012 through
2015.
RSU Milestone Plan 2015 (2015 Tranche)
Quantity of RSUs
Bill McDermott (CEO)
Holding on Grants in 2015 Performance- Exercised Forfeited Units
Holding on
January 1,
Related
Units
December 31,
2015
Adjustment
2015
255,050
77,099
36,568
—
—
368,717
14,148
27,656
12,329
—
—
54,133
0
4,622
599
—
—
5,221
Bernd Leukert
14,148
27,656
13,922
—
—
55,726
Luka Mucic
10,757
27,656
13,474
—
—
51,887
Gerhard Oswald
91,490
27,656
13,117
—
—
132,263
385,593
192,345
90,009
0
0
667,947
Robert Enslin
Michael Kleinemeier (from
November 1, 2015)
Total
The holding of RSUs on December 31, 2015, which were
issued and not forfeited in 2015, reflects the number of
RSUs multiplied by the total target achievement. The
total target achievement consists of the addition of the
target achievement of the financial KPIs of 112.96% and
the adjustment factor based on individual plan
participation. The RSUs allocated in 2012 have a
remaining term of 0.08 years; the RSUs allocated in 2013
have a remaining term of 1.08 years; the RSUs allocated
in 2014 have a remaining term of 2.08 years; and the
RSUs allocated in 2015 have a remaining term of 3.08
years.
81
RSU Milestone Plan 2015 (2014 Tranche)
Quantity of RSUs
Holding on Grants in 2014 Performance- Exercised Forfeited Units
Holding on
January 1,
Related
Units
December 31,
2014
Adjustment
2014
195,562
76,374
ⳮ16,886
—
—
255,050
Dr. Werner Brandt (until June 30,
2014)
70,151
27,396
—
—
27,396
70,151
Gerhard Oswald
70,151
27,396
ⳮ6,057
—
—
91,490
Dr. Vishal Sikka (until May 4,
2014)1)
70,151
27,396
—
70,151
27,396
—
Robert Enslin (from May 4, 2014)
0
18,164
ⳮ4,016
—
—
14,148
Bernd Leukert (from May 4,
2014)
0
18,164
ⳮ4,016
—
—
14,148
Luka Mucic (from July 1, 2014)
0
13,811
ⳮ3,054
—
—
10,757
406,014
208,701
ⳮ34,029
70,151
54,792
455,743
Bill McDermott (CEO)
Total
According to the termination agreement with Vishal Sikka, the 2012 grants will be paid out after the close of the Annual General
Meeting of Shareholders in 2016, based on a fixed share price of €52.96. The 2013 grants will be paid out after the close of the Annual
General Meeting of Shareholders in 2017 based on a fixed share price of €58.69.
1)
The holding of RSUs on December 31, 2014, which were issued and not forfeited in 2014, reflects the number of RSUs
multiplied by the 77.89% target achievement.
RSU Milestone Plan 2015 (2013 Tranche)
Quantity of RSUs
Bill McDermott
(co-CEO)
Holding on
January 1,
2013
Grants in 2013
PerformanceRelated
Adjustment
Exercised
Units
Forfeited Units
Holding on
December 31,
2013
127,425
73,289
ⳮ5,152
—
—
195,562
Jim Hagemann
Snabe (co-CEO)1)
127,425
73,289
ⳮ5,152
195,562
—
—
Dr. Werner Brandt
45,709
26,290
ⳮ1,848
—
—
70,151
Gerhard Oswald
45,709
26,290
ⳮ1,848
—
—
70,151
Dr. Vishal Sikka
45,709
26,290
ⳮ1,848
—
—
70,151
391,977
225,448
ⳮ15,849
195,562
0
406,014
Total
1) According to the termination agreement with Jim Hagemann Snabe, the 2012 and 2013 grants were paid out after the close of the
Annual General Meeting of Shareholders on May 21, 2014, based on a fixed share price of €52.96 for the 2012 grants and €58.69 for the
2013 grants.
The holding of RSUs on December 31, 2013, which were issued and not forfeited in 2013, reflects the number of RSUs
multiplied by the 92.97% target achievement.
82
RSU Milestone Plan 2015 (2012 Tranche)
Quantity of RSUs
Holding on
January 1,
2012
Bill McDermott
(co-CEO)
Grants in 2012
PerformanceRelated
Adjustment
Exercised
Units
Forfeited Units
Holding on
December 31,
2012
—
95,414
32,011
—
—
127,425
Jim Hagemann
Snabe (co-CEO)
—
95,414
32,011
—
—
127,425
Dr. Werner Brandt
—
34,226
11,483
—
—
45,709
Gerhard Oswald
—
34,226
11,483
—
—
45,709
Dr. Vishal Sikka
—
34,226
11,483
—
—
45,709
Total
—
293,506
98,471
—
—
391,977
The holding on December 31, 2012, reflects the number of RSUs issued in 2012 multiplied by the 133.55% target
achievement.
SAP SOP 2010
The table below shows Executive Board members’ holdings, on December 31, 2015, of virtual share options issued to
them under the SAP SOP 2010 since its inception. The strike price for an option is 115% of the base price. The issued
options have a term of seven years and can only be exercised on specified dates after the vesting period. The options
issued in 2010 were exercisable beginning in September 2014 and the options issued in 2011 were exercisable
beginning in June 2015.
SAP SOP 2010 Virtual Share Options
Year
Granted
Holding on Strike Price
Rights Price on Forfeited
January 1, per Option Exercised Exercise
Rights
2015
in 2015
Date
€ Quantity of
Options
Quantity of Remaining
Options
Term in
Years
Bill McDermott
(CEO)
Gerhard Oswald
Total
Holding on
December 31,
2015
€ Quantity of Quantity of Remaining
Options
Options
Term in
Years
2010
135,714
2.69
40.80
—
—
—
135,714
1.69
2011
112,426
3.44
48.33
—
—
—
112,426
2.44
2010
0
—
—
0
—
—
—
—
2011
68,284
–
48.33
68,284
64.83
—
—
—
316,424
68,284
— 248,140
83
Total Expense for Share-Based Payment
Total expense for the share-based payment plans of Executive Board members was recognized as follows.
Total Expense for Share-Based Payment
€ thousands
2015
2014
12,291.1
5,063.8
1,851.2
1,833.5
364.7
—
Bernd Leukert
2,208.6
1,759.7
Luka Mucic
2,148.5
1,577.2
Gerhard Oswald
3,445.6
1,891.1
22,309.7
12,125.3
Bill McDermott (CEO)
Robert Enslin
Michael Kleinemeier (from November 1, 2015)
Total
The expense is recognized in accordance with IFRS 2
(Share-Based Payments) and consists exclusively of
obligations arising from Executive Board activities.
Shareholdings and Transactions of Executive Board
Members
No member of the Executive Board holds more than 1%
of the ordinary shares of SAP SE. Members of the
Executive Board held a total of 45,309 SAP shares on
December 31, 2015 (2014: 36,426 shares).
The table below shows transactions by Executive Board
members and persons closely associated with them
notified to SAP pursuant to the German Securities
Trading Act, section 15a, in 2015.
Transactions in SAP Shares
Transaction Date
Bill McDermott (CEO)
Transaction
Quantity
Unit Price
August 11, 2015
Purchase of ADRs
2,000
US$71.5845
August 26, 2015
Purchase of ADRs
1,145
US$66.3099
May 7, 2015
Share sale
1,595
€66.2364
August 13, 2015
Share purchase
830
€63.7290
Luka Mucic
May 20, 2015
Share purchase
700
€68.9990
Gerhard Oswald
July 22, 2015
Share purchase
930
€66.7100
Robert Enslin
Bernd Leukert
Executive Board: Other Information
We did not grant any compensation advance or credit to, or
enter into any commitment for the benefit of, any member
of our Executive Board in 2015 or the previous year.
As far as the law permits, SAP SE and its affiliated
companies in Germany and elsewhere indemnify and
hold harmless their respective directors and officers
against and from the claims of third parties. To this end,
we maintain directors’ and officers’ (D&O) group liability
insurance. The policy is annual and is renewed from year
to year. The insurance covers the personal liability of the
insured group for financial loss caused by its managerial
acts and omissions. The current D&O policy includes an
individual deductible for Executive Board members of
SAP SE as required by section 93 (2) of the German
Stock Corporation Act.
Compensation for Supervisory Board Members
Compensation System
Supervisory Board members’ compensation is governed
by our Articles of Incorporation, section 16. By resolution
of our May 20, 2015, Annual General Meeting of
Shareholders the section was changed from the
compensation with fixed and performance-related
components to a fixed compensation plus fixed amounts
for membership in and chairing of committees.
Each member of the Supervisory Board receives, in
addition to the reimbursement of their expenses, an
annual basic compensation of €165,000. The
chairperson receives €275,000 and the deputy
chairperson €220,000.
For membership of the Audit Committee, Supervisory
Board members receive additional fixed annual
84
compensation of €16,500, and for membership of any
other Supervisory Board committee €11,000, provided
that the committee concerned has met in the year. The
chairperson of the Audit Committee receives €27,500,
and the chairpersons of the other committees receive
€22,000. The fixed remuneration is payable after the
end of the year.
Any members of the Supervisory Board having served
for less than the entire year receive one-twelfth of the
annual remuneration for each month of service
commenced. This also applies to the increased
compensation of the chairperson and the deputy
chairperson(s) and to the remuneration for the
chairperson and the members of a committee.
Supervisory Board Members’ Compensation in 2015
€ thousands
2014
2015
Fixed CompenCompen- sation for
sation Committee Work
Total
Fixed CompenCompen- sation for
sation Committee Work
Variable
Compensation
Total
Prof. Dr. h.c. mult. Hasso Plattner (chairperson)
275.0
66.0
341.0
100.0
100.0
150.0
350.0
Margret Klein-Magar (deputy chairperson from
May 20, 2015)
215.4
29.3
244.8
50.0
30.0
100.0
180.0
Pekka Ala-Pietilä
165.0
27.5
192.5
50.0
30.0
100.0
180.0
Panagiotis Bissiritsas
165.0
32.1
197.1
50.0
20.0
100.0
170.0
68.8
0
68.8
25.0
5.0
50.0
80.0
Martin Duffek (from May 20, 2015)
110.0
18.3
128.3
NA
NA
NA
NA
Prof. Anja Feldmann
165.0
22.0
187.0
50.0
20.0
100.0
170.0
Prof. Dr. Wilhelm Haarmann
165.0
44.0
209.0
50.0
50.0
100.0
200.0
Andreas Hahn (from May 20, 2015)
110.0
14.7
124.7
NA
NA
NA
NA
91.7
9.2
100.8
70.0
20.8
130.0
220.8
Prof. Dr. Gesche Joost (from May 28, 2015)
110.0
11.0
121.0
NA
NA
NA
NA
Lars Lamadé
165.0
22.0
187.0
50.0
30.0
100.0
180.0
68.8
11.5
80.2
25.0
12.5
50.0
87.5
165.0
22.0
187.0
50.0
30.0
100.0
180.0
68.8
9.2
77.9
50.0
20.0
100.0
170.0
110.0
14.7
124.7
NA
NA
NA
NA
Dr. Kurt Reiner (until May 20, 2015)
68.8
9.2
77.9
50.0
20.0
100.0
170.0
Mario Rosa-Bian (until May 20, 2015)
68.8
9.2
77.9
50.0
15.0
100.0
165.0
165.0
27.5
192.5
50.0
35.0
100.0
185.0
68.8
11.5
80.2
50.0
30.8
100.0
180.8
Robert Schuschnig-Fowler (from May 20, 2015)
110.0
7.3
117.3
NA
NA
NA
NA
Dr. Sebastian Sick (from May 20, 2015)
110.0
14.7
124.7
NA
NA
NA
NA
Jim Hagemann Snabe
165.0
22.0
187.0
25.0
10.0
50.0
85.0
Pierre Thiollet (from May 20, 2015)
110.0
7.3
117.3
NA
NA
NA
NA
NA
NA
NA
29.2
14.6
58.3
102.1
165.0
16.5
181.5
50.0
20.8
100.0
170.8
3,249.6
478.5
3,728.1
924.2
514.5
1,788.3
3,227.0
Catherine Bordelon (until May 20, 2015)
Christiane Kuntz-Mayr (deputy chairperson and
member until May 20, 2015)
Steffen Leskovar (until May 20, 2015)
Bernard Liautaud
Dr. h. c. Hartmut Mehdorn (until May 15, 2015)
Christine Regitz (from May 20, 2015)
Dr. Erhard Schipporeit
Stefan Schulz (until May 20, 2015)
Inga Wiele (until July 6 , 2014)
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer
Total
85
In addition, we reimburse members of the Supervisory
Board for their expenses and the value-added tax
payable on their compensation.
In total, we received services from members of the
Supervisory Board (including services from employee
representatives on the Supervisory Board in their
capacity as employees of SAP) in the amount of
€1,282,800 (2014: €2,295,000). This amount includes
fees paid to Linklaters LLP in Frankfurt am Main,
Germany (which Supervisory Board member Wilhelm
Haarmann is a partner of) of €224,500 (2014:
€1,001,700).
Long-Term Incentives for the Supervisory Board
We do not offer members share options or other sharebased payment for their Supervisory Board work. Any share
options or other share-based payment received by
employee-elected members relate to their position as SAP
employees and not to their work on the Supervisory Board.
Shareholdings and Transactions of Supervisory
Board Members
Supervisory Board chairperson Hasso Plattner and the
companies he controlled held 90,248,789 SAP shares on
December 31, 2015 (December 31, 2014: 107,442,743
SAP shares), representing 7.346% (2014: 8.746%) of
SAP’s share capital. No other member of the Supervisory
Board held more than 1% of the SAP SE share capital at
the end of 2015 or of the previous year. Members of the
Supervisory Board held a total of 90,262,686 SAP shares
on December 31, 2015 (December 31, 2014: 107,467,372
SAP shares).
The table below shows transactions by Supervisory
Board members and persons closely associated with
them notified to SAP pursuant to the German Securities
Trading Act, section 15a, in 2015:
Transactions in SAP Shares
Transaction Date
Transaction
Quantity
Unit Price
May 28, 2015
Share purchase
12
€57.3600
June 2, 2015
Share sale
100
€ 67.4170
August 5, 2015
Share sale
115
€66.2200
October 28, 2015
Share sale
38
€ 70.0100
May 7, 2015
Share sale
120
€ 66.2364
December 18, 2015
Share purchase
2,444,816
€72.9300
December 23, 2015
Compensation
in kind
(granting party)
87,803,973
1)
December 23, 2015
Compensation
in kind
(receiving party)
87,803,973
1)
November 25,
2015
Share sale
480,000
2)
Riitta Schuschnig-Fowler
December 8, 2015
Share sale
50
€72.4500
Robert Schuschnig-Fowler
December 8, 2015
Share sale
35
€72.6500
May 28, 2015
Share purchase
11
€57.3600
June 2, 2015
Share sale
75
€ 67.4170
August 4, 2015
Share sale
122
€65.6800
November 18, 2015
Share sale
90
€ 73.7700
Andreas Hahn
Margret Klein-Magar
Hasso Plattner
Hasso Plattner GmbH & Co. Beteiligungs-KG
HP Vermögensverwaltungs GmbH & Co. KG
Sabine Plattner GmbH & Co. Beteiligungs-KG
Ingrid van Skyhawk
Compensation in kind of 87,803,973 shares, hypothetical volume of the transaction €6,299,935,062.75.
The notifying party concluded a contract with a bank acting as commission agent for the sale of 10,000 SAP shares per week. The sale
will be carried out at the bank’s own discretion in the stock market or over the counter in the months December 2015 through
November 2016.
1)
2)
86
Supervisory Board: Other Information
We did not grant any compensation advance or credit to,
or enter into any commitment for the benefit of, any
member of our Supervisory Board in 2015 or the
previous year.
Hasso Plattner, the chairperson of the Supervisory
Board, entered into a consulting contract with SAP after
he joined the Supervisory Board in May 2003. The
contract does not provide for any compensation. The
only cost we incurred under the contract was the
reimbursement of expenses.
As far as the law permits, we indemnify Supervisory
Board members against, and hold them harmless from,
claims brought by third parties. To this end, we maintain
directors’ and officers’ (D&O) group liability insurance.
The current D&O policy does not include an individual
deductible for Supervisory Board members as envisaged
in the German Corporate Governance Code.
EMPLOYEES
Headcount
Note (7) to our Consolidated Financial Statements
presents the number of employees, measured in fulltime equivalents by functional area and by geographic
region.
On December 31, 2015, we had 76,986 full-time
equivalent (FTE) employees worldwide (December 31,
2014: 74,406). This represents an increase in headcount
of 2,579 FTEs in comparison to 2014. The average
number of employees in 2015 was 75,180 (2014:
68,343).
We define FTE headcount as the number of people we
would employ if we only employed people on full-time
employment contracts. Students employed part-time
and certain individuals employed by SAP but who, for
various reasons, are not currently working, are excluded
from our figures. Also, temporary employees are not
included in the above figures. The number of temporary
employees is not material.
On December 31, 2015, the largest number of SAP
employees (44%) were employed in the Europe, Middle
East, and Africa (EMEA) region (including 23% in
Germany and 21% in other countries of the region), while
29% were employed in the North America and Latin
America (Americas) region (including 21% in the United
States and 8% in other countries of the region) and 27%
in the Asia Pacific Japan (APJ) region.
Our worldwide headcount in the field of cloud and
software decreased less than 1% to 14,991 FTEs (2014:
15,074). Services counted 15,085 FTEs at the end of
2015 – an increase of 3% (2014: 14,639). Our R&D
headcount saw a year-over-year increase of 11% to
20,938 FTEs (2014: 18,908). Sales and marketing
headcount grew by 1% to 18,206 FTEs at the end of the
year (2014: 17,969). General and administration
headcount stayed constant at 5,024 FTEs at the end of
the year (2014: 5,023). Our infrastructure employees
numbered 2,743 FTEs – a decrease of 2% (2014: 2,794).
In the Americas region, headcount (FTEs) increased by
95, or less than 1%; in the EMEA region, the increase was
566, or 2%; and in the APJ region, it was 1,919, or 10%.
Our personnel expense per employee increased to
approximately €135,000 in 2015 (2014: approximately
€115,000). This rise in expense is primarily attributable
to an increase in salaries, employee-related restructuring
expenses, share-based payments, and a significant rise
in the share price in 2015. The personnel expense per
employee is defined as the personnel expense divided by
the average number of employees. For more information
about employee compensation and a detailed overview
of the number of people we employ, see the Notes to the
Consolidated Financial Statements section, Note (7).
Employee and Labor Relations
On a worldwide basis, we believe that our employee and
labor relations are excellent.
On a corporate level employees of SAP in Europe are
represented by the SAP SE Works Council (WoC)
(Europe). By law and agreement with SAP the SAP SE
WoC (Europe) is entitled to receive information on
transnational matters and to consult with the Executive
Board or a representative thereof. The SAP SE WoC
(Europe) was established in November 2014 as a result
of the legal transformation of SAP AG into SAP SE. The
SAP SE WoC (Europe) replaced the European Works
Council which was dissolved following the conversion.
On the legal entity level, the SAP SE works council
(Germany) represents the employees of SAP SE. The
employees of SAP Deutschland SE & Co. KG (SAP
Germany) are represented by a separate works council.
Other employee representatives include the group works
council (members of the works councils of SAP SE and
SAP Germany), the representatives of severely disabled
persons in all entities and on group level (Germany) and
the spokespersons committee as the representation of
the executives.
Employees of SAP France, SAP France Holding and SAP
Labs France SAS are subject to a collective bargaining
agreement. Each of SAP France, SAP France Holding,
SAP Labs France SAS, Multiposting SAS France and bprocess France are represented by a French works
council. The represented unions negotiate agreements
with SAP France and SAP Labs France SAS.
87
In addition, the employees of various other SAP entities,
including SAP España – Sistemas, Aplicaciones y
Productos en la Informática, S.A., SAP Belgium NV/SA.,
SAP Nederland B.V., SAP Italia Sistemi Applicazioni
Prodotti in Data Processing S.p.A., Concur (France) SAS,
SAP Brasil Ltda, SAP sistemi, aplikacije in produkti za
obdelavo podatkov d.o.o.(Slovenia), SAP Romania SRL,
SAP Argentina S.A. and SAP Svenska Aktiebolag
(Sweden), are represented by works councils, worker
representatives, employee consultation forums and/or
unions. In addition, some of these employees are subject
to a collective bargaining agreement.
SHARE OWNERSHIP
Beneficial Ownership of Shares
The ordinary shares beneficially owned by the persons
listed in Item 6. Directors, Senior Management and
Employees – Compensation Report” are disclosed in
“Item 7. Major Shareholders and Related-Party
Transactions – Major Shareholders.”
SHARE-BASED COMPENSATION PLANS
Share-Based Compensation
We maintain certain share-based compensation plans.
The share-based compensation from these plans result
from cash-settled and equity-settled awards issued to
employees. For more information on our share-based
compensation plans refer to “Item 6. Directors, Senior
Management and Employees – Compensation Report”
and Note (27) to our Consolidated Financial Statements.
ITEM 7. MAJOR SHAREHOLDERS AND RELATEDPARTY TRANSACTIONS
MAJOR SHAREHOLDERS
The share capital of SAP SE consists of ordinary shares,
which are issued only in bearer form. Accordingly, SAP
SE generally cannot determine the identity of its
shareholders or how many shares a particular
shareholder owns. SAP’s ordinary shares are traded in
the United States by means of ADRs. Each ADR currently
represents one SAP SE ordinary share. On March 11,
2016, based on information provided by the Depositary
there were 41,751,316 ADRs held of record by 917
registered holders. The ordinary shares underlying such
ADRs represented 3.40% of the then-outstanding
ordinary shares (including treasury stock). Because
SAP’s ordinary shares are issued in bearer form only, we
are unable to determine the number of ordinary shares
directly held by persons with U.S. addresses.
The following table sets forth certain information
regarding the beneficial ownership of the ordinary shares
to the extent known to SAP as of March 11, 2016 of:
(i) each person or group known by SAP SE to own
beneficially 5% or more of the outstanding ordinary
shares; and (ii) the beneficial ownership of all members of
the Supervisory Board and all members of the Executive
Board, individually and as a group, in each case as
reported to SAP SE by such persons. There was, as far as
we are able to tell given the nature of our shares, no
significant change in the percentage ownership held by
any major shareholder during the past three years. None
of the major shareholders have special voting rights.
Ordinary Shares
Beneficially Owned
Major Shareholders
Number
% of
Outstanding
Dietmar Hopp, collectively(1)
65,273,200
5.313%
Hasso Plattner, Chairperson Supervisory Board, collectively(2)
90,248,789
7.346%
Joint heirs of Klaus Tschira, collectively (3)
88,149,595
7.175%
45,309
0.004%
Supervisory Board Members as a group (18 persons)
90,262,818
7.347%
Executive Board Members and Supervisory Board Members as a group (24 persons)(4)
90,308,127
7.351%
Executive Board Members as a group (6 persons)
Options and convertible bonds that are vested and exercisable within 60 days of March 11,
2016, held by Executive Board Members and Supervisory Board Members, collectively
BlackRock, Inc.(5)
0
NA
NA
>5%
(1) Represents 65,273,200 ordinary shares beneficially owned by Dietmar Hopp, including 3,404,000 ordinary shares owned by DH
Besitzgesellschaft mbH & Co. KG (formerly known as Golf Club St. Leon-Rot GmbH & Co. Betriebs-oHG) of which DH VerwaltungsGmbH is the general partner and 61,869,200 ordinary shares owned by Dietmar Hopp Stiftung, GmbH. Mr. Hopp exercises voting and
dispositive powers of the ordinary shares held by such entities. The foregoing information is based solely on a Schedule 13G filed by
Dietmar Hopp and Dietmar Hopp Stiftung, GmbH on February 15, 2016.
88
Includes HP Vermögensverwaltungs GmbH & Co. KG in which Hasso Plattner exercises sole voting and dispositive power.
Includes Klaus Tschira Stiftung gGmbH and Dr. h. c. Tschira Beteiligungs GmbH & Co. KG in which the joint heirs of Klaus Tschira
exercise sole voting and dispositive power.
(4) We believe each of the other members of the Supervisory Board and the Executive Board beneficially owns less than 1% of SAP SE’s
ordinary shares as of March 11, 2016.
(5) As required under German law, BlackRock, Inc. informed SAP that they own more than 5% of SAP’s outstanding ordinary shares.
BlackRock, Inc. is not required to provide SAP with the number of shares owned and has not provided such information.
(2)
(3)
We at present have no knowledge about any arrangements, the operation of which may at a subsequent date result in
a change in control of the company.
RELATED-PARTY TRANSACTIONS
For further information on related-party transactions see
Note (30) to our Consolidated Financial Statements.
The Supervisory Board of SAP SE appointed Stefan Ries
and Steve Singh to the SAP Executive Board, with effect
from April 1, 2016.
ITEM 8. FINANCIAL INFORMATION
Stefan Ries will continue his role as Chief Human
Resources Officer and also take on the role of SAP Labor
Relations Director. Steve Singh will continue to lead the
SAP Business Network Group.
CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
See “Item 18. Financial Statements” and pages F-1
through F-73.
OTHER FINANCIAL INFORMATION
Legal Proceedings
We are subject to a variety of legal proceedings and
claims, either asserted or unasserted, which arise in the
ordinary course of business, including claims and
lawsuits involving businesses we have acquired.
Refer to Note (23) to our Consolidated Financial
Statements for a detailed discussion of our material legal
proceedings.
Dividend Policy
For more information on dividend policy see the
disclosure in “Item 3. Key Information — Dividends”.
The Global Managing Board will be dissolved on
March 31, 2016.
ITEM 9. THE OFFER AND LISTING
GENERAL
Our ordinary shares are officially listed on the Frankfurt
Stock Exchange, the Berlin Stock Exchange and the
Stuttgart Stock Exchange. The principal trading market
for the ordinary shares is Xetra, the electronic dealing
platform of Deutsche Boerse AG.
ADRs representing SAP SE ordinary shares are listed on
the New York Stock Exchange (NYSE) under the symbol
“SAP,” and currently each ADR represents one ordinary
share.
Significant Changes
We are in the process of preparing the consolidation of
intellectual property rights from hybris AG to SAP SE. For
more information about this transfer, see Note (32).
89
TRADING ON THE FRANKFURT STOCK EXCHANGE AND THE NYSE
The table below sets forth, for the periods indicated, the high and low closing sales prices for the ordinary shares on
the Xetra trading System of the Frankfurt Stock Exchange together with the closing highs and lows of the DAX, and
the high and low closing sales prices for the ADRs on the NYSE (information is provided by Reuters):
Price per
Ordinary
Share in €
DAX(1)
in points
Price per ADR
in US$
High
Low
High
Low
High
Low
2011
45.90
34.26
7,527.64
5,072.33
68.31
48.39
2012
61.43
41.45
7,672.10
5,969.40
81.21
53.25
2013
64.80
52.20
9,589.39
7,459.96
87.14
70.27
2014
62.55
50.90
10,087.12
8,571.95
85.45
64.14
2015
74.85
54.53
12,374.73
9,427.64
80.91
63.37
First Quarter
62.55
54.31
9,742.96
9,017.79
85.45
74.87
Second Quarter
59.15
54.41
10,028.80
9,173.71
81.77
74.21
Third Quarter
61.12
56.53
10,029.43
9,009.32
82.30
72.16
Fourth Quarter
58.73
50.90
10,087.12
8,571.95
71.70
64.14
First Quarter
67.60
54.53
12,167.72
9,469.66
73.53
63.56
Second Quarter
70.72
62.60
12,374.73
10,944.97
77.27
70.23
Third Quarter
68.77
55.89
11,735.72
9,427.64
74.60
63.37
Fourth Quarter
74.85
57.12
11,382.23
9,509.25
80.91
64.16
July
68.77
61.29
11,735.72
10,676.78
74.60
68.26
August
66.79
56.90
11,636.30
9,648.43
73.08
65.47
September
59.83
55.89
10,317.84
9,427.64
67.07
63.37
October
71.88
57.12
10,850.14
9,509.25
78.71
64.16
November
74.85
72.33
11,382.23
10,708.40
80.22
77.96
December
74.75
69.40
11,261.24
10,139.34
80.91
77.21
January
74.25
70.58
10,310.10
9,391.64
80.36
76.90
February
73.19
64.90
9,757.88
8,752.87
79.70
73.68
March (through March 11, 2016)
71.17
68.62
9,831.13
9,498.15
78.65
76.34
Annual Highs and Lows
Quarterly Highs and Lows
2014
2015
Monthly Highs and Lows
2015
2016
The DAX is a continuously updated, capital-weighted performance index of 30 German blue chip companies. In principle, the shares
included in the DAX are selected on the basis of their stock exchange turnover and the issuer’s free-float market capitalization.
Adjustments to the DAX are made for capital changes, subscription rights and dividends.
(1)
90
On March 11, 2016, the closing sales price per ordinary
share on the Frankfurt Stock Exchange (Xetra Trading
System) was €69.97 and the closing sales price per ADR
on the NYSE was US $78.65, as reported by Reuters.
ITEM 10. ADDITIONAL INFORMATION
ARTICLES OF INCORPORATION
Organization and Register
SAP SE is a European Company (Societas Europaea, or
“SE”) organized in the Federal Republic of Germany
under German and European law, including Council
Regulation (EC) No. 2157/2001 on the Statute for a
European Company (the “SE Regulation”), the German
Act on the Implementation of Council Regulation
No. 2157/2001 of October 8, 2001 on the Statute for a
European Company (Gesetz zur Ausführung der
Verordnung (EG) Nr. 2157/2001 des Rates vom
8. Oktober 2001 über das Statut der Europäischen
Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”) of
December 22, 2004, and the German Stock Corporation
Act (Aktiengesetz). SAP SE is registered in the
Commercial Register (Handelsregister) at the Lower
Court of Mannheim, Germany, under the entry number
“HRB 719915.” SAP SE publishes its official notices in the
Federal Gazette (www.bundesanzeiger.de).
Objects and Purposes
SAP’s Articles of Incorporation state that our objects
involve, directly or indirectly, the development,
production and marketing of products and the provision
of services in the field of information technology,
including:
– developing and marketing integrated product and
service solutions for e-commerce;
– developing software for information technology and
the licensing of its use to others;
– organization and deployment consulting, as well as
user training, for e-commerce and other software
solutions;
– selling, leasing, renting and arranging the
procurement and provision of all other forms of use of
information technology systems and related
equipment; and
– making capital investments in enterprises active in
the field of information technology to promote the
opening and advancement of international markets in
the field of information technology.
SAP is authorized to act in all the business areas listed
above and to delegate such activities to affiliated entities
within the meaning of the German Stock Corporation
Act; in particular SAP is authorized to delegate its
business in whole or in part to such entities. SAP SE is
authorized to establish branch offices in Germany and
other countries, as well as to form, acquire or invest in
other companies of the same or related kind and to enter
into collaboration and joint venture agreements. SAP is
further authorized to invest in enterprises of all kinds
principally for investment purposes. SAP is authorized to
dispose of investments, to consolidate the management
of enterprises in which it participates, to enter into
affiliation agreements with such entities, or to limit its
activities to manage its shareholdings.
CORPORATE GOVERNANCE
Introduction
SAP SE, as a European Company with a two-tier board
system, is governed by three separate bodies: the
Supervisory Board, the Executive Board and the Annual
General Meeting of Shareholders. Their rules are defined
by European and German law, by the Agreement on the
Involvement of Employees in SAP SE (“Employee
Involvement Agreement”, or “EIA”), by the German
Corporate Governance Code and by SAP’s Articles of
Incorporation (Satzung) and are summarized below. See
“Item 16G. Differences in Corporate Governance
Practices” for additional information on our corporate
governance practices.
The Supervisory Board
The Supervisory Board appoints and removes the
members of the Executive Board and oversees and
advises the management of the corporation. At regular
intervals it meets to discuss current business as well as
business development and planning. The SAP Executive
Board must consult with the Supervisory Board
concerning the corporate strategy, which is developed by
the Executive Board. Types of transactions for which the
Executive Board requires the Supervisory Board’s
consent are listed in the Articles of Incorporation; in
addition, the Supervisory Board has specified further
types of transactions that require its consent.
Accordingly, the Supervisory Board must also approve
the annual budget of SAP upon submission by the
Executive Board and certain subsequent deviations from
the approved budget. The Supervisory Board is also
responsible for representing SAP SE in transactions
between SAP SE and Executive Board members.
The Supervisory Board, based on a recommendation by
its Audit Committee, provides its proposal for the
election of the external independent auditor to the
Annual General Meeting of Shareholders. The
Supervisory Board is also responsible for monitoring the
auditor’s independence, a task it has delegated to its
audit committee.
Pursuant to Article 40 (3) sentence 1 of the SE
Regulation, the number of members of the supervisory
board and the rules for determining this number are to
be laid down in the articles of incorporation.
Furthermore, pursuant to Section 17 (1) SE-AG, the size
of supervisory boards of companies which, like SAP SE,
have a capital stock exceeding € 10,000,000, is limited
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to 21 members. Moreover, the number of members must
be divisible by three. In line with these provisions as well
as the EIA, the Articles of Incorporation of SAP SE
provide that the Supervisory Board shall be composed of
18 members. Furthermore, it is provided in the EIA that
the shareholders of SAP SE have the possibility to reduce
the size of the Supervisory Board in the future (i.e. at the
earliest in the Annual General Meeting of Shareholders in
2018, with effect from the Annual General Meeting of
Shareholders in 2019) to 12 members.
The current Supervisory Board of SAP SE consists of
eighteen members, of which nine members were elected
by SAP SE’s shareholders at the Annual General Meeting
of Shareholders in 2014, and nine members were
appointed by the SAP SE Works Council Europe in 2015.
The term of office of all eighteen members will end upon
the conclusion of the Annual General Meeting of
Shareholders in 2015.
The procedure for the appointment of the employees’
representatives on the Supervisory Board of SAP SE is
governed by the EIA. In accordance with the EIA, the nine
seats on the first Supervisory Board reserved for
employees’ representatives were allocated as follows:
the first six seats were allocated to Germany, the seventh
seat was allocated to France, the eighth seat was also
allocated to Germany, and the ninth seat was allocated to
a European country not represented by the first eight
seats, as determined by the SAP SE Works Council
Europe. The employees’ representatives for the first six
seats allocated to Germany were determined by direct
vote by all SAP employees with their principal place of
employment in Germany. The employees’ representative
for the seventh seat allocated to France was determined
according to the applicable provisions of French law on
the
election
or
appointment
of
employees’
representatives on a supervisory board. With regard to
the eighth and ninth seat, members of the SAP SE Works
Council Europe from Germany and Slovakia were
appointed by the SE Works Council as employees’
representatives.
Any Supervisory Board member elected by the
shareholders at the Annual General Meeting of
Shareholders may be removed by three-quarters of the
votes cast at the Annual General Meeting of
Shareholders. Any Supervisory Board member
appointed in accordance with the EIA may be removed
by the SAP SE Works Council Europe upon application by
the body that nominated the respective employees’
representative for appointment by the SE Works Council
or, in case the employees’ representative was directly
elected, the majority of the employees entitled to vote.
The Supervisory Board elects a chairperson and one or
two deputy chairperson(s) among its members by a
majority of the votes cast. Only a shareholders’
representative may be elected as chairperson of the
Supervisory Board. When electing the chairperson of the
Supervisory Board, the oldest member in terms of age of
the shareholders’ representatives on the Supervisory
Board will chair the meeting and, in the event of a tied
vote, will have the casting vote.
Unless otherwise mandatorily prescribed by law or the
Articles of Incorporation, resolutions of the Supervisory
Board are adopted by simple majority of the votes cast.
In the event of a tie, the vote of the chairperson and, in
the event that the chairperson does not participate in
passing the resolution, the vote of the deputy
chairperson, provided that he or she is a shareholders’
representative, will be decisive (casting vote).
The members of the Supervisory Board cannot be
elected or appointed, as the case may be, for a term
longer than six years. Other than for the employees’
representatives on the first Supervisory Board of SAP
SE, the term expires at the close of the Annual General
Meeting of Shareholders giving its formal approval of the
acts of the Supervisory Board for the fourth fiscal year
following the year in which the term of office of the
Supervisory Board members commenced. Re-election is
possible. Our Supervisory Board normally meets four
times a year. The compensation of the members of the
Supervisory Board is set in the Articles of Incorporation.
As stipulated in the German Corporate Governance Code
(GCGC), an adequate number of our Supervisory Board
members are independent. To be considered for
appointment to the Supervisory Board and for as long as
they serve, members must comply with certain criteria
concerning independence, conflicts of interest and
multiple memberships of management, supervisory and
other governing bodies. They must be loyal to SAP in
their conduct and must not accept any position in
companies that are in competition with SAP. Members
are subject to insider trading prohibitions and the
respective directors’ dealing rules of the German
Securities Trading Act. A member of the Supervisory
Board may not vote on matters relating to certain
contractual agreements between such member and SAP
SE. Further, as the compensation of the Supervisory
Board members is set in the Articles of Incorporation,
Supervisory Board members are unable to vote on their
own compensation, with the exception that they are able
to exercise voting rights in a General Meeting of
Shareholders in connection with a resolution amending
the Articles of Incorporation.
The Supervisory Board may appoint committees from
among its members and may, to the extent permitted by
law, entrust such committees with the authority to make
decisions on behalf of the Supervisory Board. Currently
the Supervisory Board maintains the following
committees:
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The Audit Committee
The focus of the Audit Committee (Prüfungsausschuss)
is the oversight of SAP’s external financial reporting as
well as SAP’s risk management, internal controls
(including internal controls over the effectiveness of the
financial reporting process), corporate audit and
compliance matters. According to German Law SAP’s
Audit Committee includes at least one independent
member with specialist expertise in the fields of financial
reporting or auditing. Among the tasks of the Audit
Committee are the discussion of SAP’s quarterly and
year end financial reporting prepared under German and
U.S. regulations, including this report. The Audit
Committee proposes the appointment of the external
independent auditor to the Supervisory Board,
determines focus audit areas, discusses critical
accounting policies and estimates with and reviews the
audit reports issued and audit issues identified by the
auditor. The audit committee also negotiates the audit
fees with the auditor and monitors the auditor’s
independence and quality. SAP’s Corporate Audit, SAP’s
Office of Legal Compliance and Integrity and SAP’s Risk
Management Office report upon request or at the
occurrence of certain findings, but in any case at least
once a year (Office of Legal Compliance and Integrity and
Risk Management Office) or twice a year (Corporate
Audit), directly to the Audit Committee.
The Audit Committee has established procedures
regarding the prior approval of all audit and non-audit
services provided by our external independent auditor.
See “Item 16C. Principal Accountant Fees and Services”
for details.
The Supervisory Board has determined Erhard
Schipporeit to be an audit committee financial expert as
defined by the regulations of the SEC issued under
Section 407 of the Sarbanes-Oxley Act as well as an
independent financial expert as defined by the German
Stock Corporation Act. See “Item 16A. Audit Committee
Financial Expert” for details. He is also the chairperson of
the Audit Committee.
The General and Compensation Committee
The General and Compensation Committee (Präsidialund Personalausschuss) coordinates the work of the
Supervisory Board, prepares its meetings and deals with
corporate governance issues. In addition, it carries out
the preparatory work necessary for the personnel
decisions made by the Supervisory Board, notably those
concerning compensation for the Executive Board
members and the conclusion, amendment and
termination of the Executive Board members’ contracts
of appointment.
The German Stock Corporation Act prohibits the
Compensation Committee from deciding on the
compensation of the Executive Board members on
behalf of the Supervisory Board and requires that such
decision is made by the entire Supervisory Board. This
Act also provides the General Meeting of Shareholders
with the right to vote on the system for the
compensation of Executive Board members, such vote,
however, not being legally binding for the Supervisory
Board.
The Finance and Investment Committee
The Finance and Investment Committee (Finanz- und
Investitionsausschuss) addresses general financing
issues. Furthermore, it regularly discusses acquisitions
of intellectual property and companies, venture capital
investments and other investments with the Executive
Board and reports to the Supervisory Board on such
investments. It is also responsible for the approval of
such investments if the individual investment amount
exceeds certain specified limits.
The Technology and Strategy Committee
The Technology and Strategy Committee (Technologieund
Strategieausschuss)
monitors
technology
transactions and provides the Supervisory Board with indepth technical advice.
The Nomination Committee
The Nomination Committee (Nominierungsausschuss) is
exclusively composed of shareholder representatives
and is responsible for identifying suitable candidates for
membership
of
the
Supervisory
Board
for
recommendation to the Annual General Meeting of
Shareholders.
The Special Committee
The Special Committee (Sonderausschuss) deliberates
on matters arising out of substantial exceptional risks,
such as major litigations.
The People and Organization Committee
The People and Organization Committee (Ausschuss für
Mitarbeiterund
Organisationsangelegenheiten)
deliberates and advises the Executive and Supervisory
Board on key personnel matters and major
organizational changes below the Executive Board and
Global Managing Board level as well as equal
opportunities for women at SAP.
The duties and procedures of the Supervisory Board and
its committees are specified in their respective rules of
procedure, if any, which reflect the requirements of
European and German law, including the SE Regulation
and the German Stock Corporation Act, the Articles of
Incorporation and the recommendations of the GCGC.
According to the provisions of the Sarbanes-Oxley Act,
SAP does not grant loans to the members of the
Executive Board or the Supervisory Board.
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The Executive Board
The Executive Board manages the Company’s business,
is responsible for preparing its strategy and represents it
in dealings with third parties. The Executive Board
reports regularly to the Supervisory Board about SAP
operations and business strategies and prepares special
reports upon request. A person may not serve on the
Executive Board and on the Supervisory Board at the
same time.
The Executive Board and the Supervisory Board
cooperate closely for the benefit of the Company. The
Executive Board is required to provide the Supervisory
Board regular, prompt and comprehensive information
about all of the essential issues affecting the SAP
Group’s business progress and its potential business
risks. Furthermore, the Executive Board must maintain
regular contact with the chairperson of the Supervisory
Board and vice versa. The Executive Board must inform
the chairperson of the Supervisory Board promptly
about exceptional events that are of significance to
SAP’s business. The Supervisory Board chairperson
must inform the Supervisory Board accordingly and
shall, if required, convene an extraordinary meeting of
the Supervisory Board.
Pursuant to the Articles of Incorporation, the Executive
Board must consist of at least two members. SAP SE’s
Executive Board is currently comprised of six members.
Any two members of the Executive Board jointly or one
member of the Executive Board and the holder of a
special power of attorney (Prokurist) jointly may legally
represent SAP SE. The Supervisory Board appoints each
member of the Executive Board for a maximum term of
five years, with the possibility of re-appointment. Under
certain circumstances, a member of the Executive Board
may be removed by the Supervisory Board prior to the
expiration of that member’s term. A member of the
Executive Board may not vote on matters relating to
certain contractual agreements between such member
and SAP SE, and may be liable to SAP SE if such member
has a material interest in any contractual agreement
between SAP and a third party which was not previously
disclosed to and approved by the Supervisory Board.
Further, as the compensation of the Executive Board
members is set by the Supervisory Board, Executive
Board members are unable to vote on their own
compensation, with the exception that they are able to
exercise voting rights in a General Meeting of
Shareholders resolving a non-binding vote on the system
for the compensation of Executive Board members.
Under German law SAP SE’s Supervisory Board
members and Executive Board members have a duty of
loyalty and care towards SAP SE. They must exercise the
standard of care of a prudent and diligent businessman
and bear the burden of proving they did so if their actions
are contested. Both bodies must consider the interest of
SAP SE shareholders and our employees and, to some
extent, the common good. Those who violate their duties
may be held jointly and severally liable for any resulting
damages, unless they acted pursuant to a lawful
resolution of the Annual General Meeting of
Shareholders.
SAP has implemented a Code of Business Conduct for
employees (see “Item 16B. Code of Ethics” for details).
The employee code is equally applicable to managers
and members of the Executive Board. Its rules are
observed as well by members of the Supervisory board
as applicable.
Under German law the Executive Board of SAP SE has to
assess all major risks for the SAP Group. In addition, all
measures taken by management to reduce and handle
the risks have to be documented. Therefore, SAP’s
management has adopted suitable measures such as
implementing an enterprise-wide risk monitoring system
to ensure that adverse developments endangering the
corporate standing are recognized at a reasonably early
point in time.
The Office of Legal Compliance and Integrity was created
by the SAP Executive Board in 2006 to oversee and
coordinate legal and regulatory policy compliance at
SAP. The Chief Global Compliance Officer heading the
Office of Legal Compliance and Integrity directly reports
to the CFO of SAP SE and also has direct communication
channels and reporting obligations to the Audit
Committee of the Supervisory Board. The Office of Legal
Compliance and Integrity manages a network of more
than 100 local subsidiary Compliance Officers who act as
the point of contact for local questions or issues under
the SAP Code of Business Conduct for employees. The
Office of Legal Compliance and Integrity provides
training and communication to SAP employees to raise
awareness and understanding of legal and regulatory
compliance policies. Employee help lines are also
supported in each region where questions can be raised
or questionable conduct can be reported without fear of
retaliation.
The Global Managing Board
In May 2012, SAP created a Global Managing Board in
addition to the SAP Executive Board, which retains
ultimate responsibility for overseeing and deciding on the
activities of the company. The Global Managing Board
allows SAP to appoint a broader range of global leaders
to help steer the organization. The Global Managing
Board has advisory and decision-supporting functions
for the Executive Board and comprises all Executive
Board members as well as Helen Arnold, Quentin Clark,
Stefan Ries and Steve Singh.
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The Annual General Meeting of Shareholders
Shareholders of the Company exercise their voting rights
at shareholders’ meetings. The Executive Board calls the
Annual General Meeting of Shareholders, which must
take place within the first six months of each fiscal year.
The Supervisory Board or the Executive Board may call
an extraordinary meeting of the shareholders if the
interests of the stock corporation so require.
Additionally, shareholders of SAP SE holding in the
aggregate a minimum of 5% of SAP SE’s issued share
capital may call an extraordinary meeting of the
shareholders. Shareholders as of the record date are
entitled to attend and participate in shareholders’
meetings if they have provided timely notice of their
intention to attend the meeting.
At the Annual General Meeting of Shareholders, the
shareholders are asked, among other things, to formally
approve the actions taken by the Executive Board and
the Supervisory Board in the preceding fiscal year, to
approve the appropriation of the corporation’s
distributable profits and to appoint an external
independent auditor. Shareholder representatives of the
Supervisory Board are generally elected at the Annual
General Meeting of Shareholders for a term of
approximately five years. Shareholders may also be
asked to grant authorization to repurchase treasury
shares, to resolve on measures to raise or reduce the
capital of the Company or to ratify amendments of our
Articles of Incorporation. The Annual General Meeting of
Shareholders can make management decisions only if
requested to do so by the Executive Board.
CHANGE IN CONTROL
There are no provisions in the Articles of Incorporation of
SAP SE that would have an effect of delaying, deferring
or preventing a change in control of SAP SE and that
would only operate with respect to a merger, acquisition
or corporate restructuring involving it or any of its
subsidiaries.
According to the German Securities Acquisition and
Takeover
Act
(Wertpapiererwerbsund
Übernahmegesetz) a bidder seeking control of a
company with its corporate seat in Germany or another
state of the European Economic Area (EEA) and its
shares being traded on an EEA stock exchange must
publish an advance notice of its decision to make a
tender offer, submit an offer statement to the Federal
Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht) for review, and obtain
certification from a qualified financial institution that
adequate financing is in place to complete the offer. The
offer statement must be published upon approval by the
Federal Financial Supervisory Authority or expiry of a
certain time period without such publication being
prohibited by the Federal Financial Supervisory
Authority. Once a shareholder has acquired shares
representing at least 30% of the voting rights in an EEAlisted company, it must make an offer for all remaining
shares. The Securities Acquisition and Takeover Act
requires the executive board of the target company to
refrain from taking any measures that may frustrate the
success of the takeover offer. However, the target
executive board is permitted to take any action that a
prudent and diligent management of a company that is
not the target of a takeover bid would also take.
Moreover, the target executive board may search for
other bidders and, with the prior approval of the
supervisory board, may take other defensive measures,
provided that both boards act within the parameters of
their general authority under the German Stock
Corporation Act. An executive board may also adopt
specific defensive measures if such measures have been
approved by the supervisory board and were specifically
authorized by the general shareholders’ meeting no
earlier than 18 months in advance of such measures by a
resolution of at least 75% of the shares represented.
Under the European Takeover Directive of 2004 member
states had to choose whether EU restrictions on
defensive measures apply to companies that are
registered in their territory. Germany decided to opt out
and to retain its current restrictions on a board
implementing defensive measures (as described above).
As required by the Directive if a country decides to opt
out the German Securities Acquisition and Takeover Act
grants companies the option of voluntarily applying the
European standard by a change of the Articles of
Incorporation (opt-in). SAP SE has not made use of this
option.
CHANGE IN SHARE CAPITAL
Under German law, the capital stock may be increased in
consideration of contributions in cash or in kind, or by
establishing authorized capital or contingent capital or
by an increase of the company’s capital reserves.
Authorized capital provides the Executive Board with the
flexibility to issue new shares for a period of up to five
years. The Executive Board must obtain the approval of
the Supervisory Board before issuing new shares with
regard to the authorized capital. Contingent capital
allows the issuance of new shares for specified purposes,
including stock option plans for Executive Board
members or employees and the issuance of shares upon
conversion of convertible bonds and exercise of stock
options. By law, the Executive Board may only issue new
shares with regard to the contingent capital for the
specified purposes. Capital increases require an approval
by at least 75% of the valid votes cast at the General
Meeting of Shareholders in which the increase is
proposed, and requires an amendment to the Articles of
Incorporation.
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The share capital may be reduced by an amendment to
the Articles of Incorporation approved by at least 75% of
the valid votes cast at the General Meeting of
Shareholders. In addition, the Executive Board of SAP SE
is allowed to authorize a reduction of the company’s
capital stock by canceling a defined number of
repurchased treasury shares if this repurchasing and the
subsequent reduction have already been approved by
the General Meeting of Shareholders.
The Articles of Incorporation do not contain conditions
regarding changes in the share capital that are more
stringent than those provided by applicable European
and German law.
RIGHTS ACCOMPANYING OUR SHARES
There are no limitations imposed by German law or the
Articles of Incorporation of SAP SE on the rights to own
securities, including the rights of non-residents or foreign
holders to hold the ADRs or ordinary shares, to exercise
voting rights or to receive dividends or other payments
on such shares.
According to the German stock corporation law, the
rights of shareholders cannot be amended without
shareholders’ consent. The Articles of Incorporation do
not provide more stringent conditions regarding changes
of the rights of shareholders than those provided by
applicable European and German law.
Voting Rights
Each ordinary SAP SE share represents one vote.
Cumulative voting is not permitted under applicable
European and German law. A corporation’s articles of
incorporation may stipulate a majority necessary to pass
a shareholders’ resolution differing from the majority
provided by law, unless the law mandatorily requires a
certain majority. Section 21 (1) of SAP SE’s Articles of
Incorporation provides that resolutions may be passed at
the General Meeting of Shareholders with a majority of
valid votes cast, unless a larger majority is prescribed by
law or the Articles of Incorporation. SAP SE’s Articles of
Incorporation as well as applicable European and
German law require that the following matters, among
others, be approved by at least 75% of the valid votes
cast at the General Meeting of Shareholders in which the
matter is proposed:
– changing the corporate purpose of the company set
out in the Articles of Incorporation;
– capital increases and capital decreases;
– excluding preemptive rights of shareholders to
subscribe for new shares or for treasury shares;
– dissolution;
– a merger into, or a consolidation with, another
company;
– a transfer of all or virtually all of the assets;
– a change of corporate form, including re-conversion
into a German stock corporation;
– a transfer of the registered seat to another EU
member state; and
– any other amendment to the Articles of Incorporation
(pursuant to section 21 (2) sentence 1 of the Articles
of Incorporation). For any amendments of the Articles
of Incorporation which require a simple majority for
stock corporations established under German law,
however, section 21 (2) sentence 2 of SAP SE’s
Articles of Incorporation provides that the simple
majority of the valid votes cast is sufficient if at least
half of the subscribed capital is represented or, in the
absence of such quorum, the majority prescribed by
law (i.e. two thirds of the votes cast, pursuant to sec.
59 of the SE Regulation) is sufficient.
Dividend Rights
See “Item 3. Key Information – Dividends.”
Preemptive Rights
Shareholders have preemptive rights to subscribe
(Bezugsrecht) for any issue of additional shares in
proportion to their shareholdings in the issued capital.
The preemptive rights may be excluded under certain
circumstances by a shareholders’ resolution (approved
by at least 75% of the valid votes cast at the General
Meeting of Shareholders) or by the Executive Board
authorized by such shareholders’ resolutions and subject
to the consent of the Supervisory Board.
Liquidation
If SAP SE were to be liquidated, any liquidation proceeds
remaining after all of our liabilities were paid would be
distributed to our shareholders in proportion to their
shareholdings.
Disclosure of Shareholdings
SAP SE’s Articles of Incorporation do not require
shareholders to disclose their share holdings. The
German
Securities
Trading
Act
(Wertpapierhandelsgesetz), however, requires holders of
voting securities of SAP SE to notify SAP SE and the
Federal Financial Supervisory Authority of the number of
shares they hold if that number reaches, exceeds or falls
below specified thresholds. These thresholds are 3%,
5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of the
corporation’s outstanding voting rights. In respect of
certificates representing shares, the notification
requirement shall apply exclusively to the holder of the
certificates. In addition, the German Securities Trading
Act also obliges anyone who holds, directly or indirectly,
financial instruments that convey an unconditional
entitlement to acquire under a legally binding agreement,
shares in SAP SE, to notify SAP SE and the Federal
Financial Supervisory Authority if the thresholds
mentioned above have been reached, exceeded or fallen
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below, with the exception of the 3% threshold. This
notification obligation also exists for the holder of a
financial instrument which merely de facto enables its
holder or a third party to acquire shares in SAP SE,
subject to the thresholds mentioned in the preceding
sentence. In connection with this notification obligation
positions in voting rights and other financial instruments
have to be aggregated.
Exchange Controls and Other Limitations Affecting
Security Holders
The euro is a fully convertible currency. At the present
time, Germany does not restrict the export or import of
capital, except for investments in certain areas in
accordance with applicable resolutions adopted by the
United Nations and the European Union. However, for
statistical purposes only, every individual or corporation
residing in Germany (“Resident”) must report to the
German Central Bank (Deutsche Bundesbank), subject
only to certain immaterial exceptions, any payment
received from or made to an individual or a corporation
residing outside of Germany (“Non-Resident”) if such
payment exceeds €12,500 (or the equivalent in a foreign
currency). In addition, German Residents (except for
individuals and certain financial institutions) must report
any accounts payable to or receivable from NonResidents if such payables or receivables, in the
aggregate, exceed €5 million (or the equivalent in a
foreign currency) at the end of any calendar month.
Furthermore, companies resident in Germany with
accounts payable to or receivable from Non-Residents in
excess of €500 million have to report any payables or
receivables to/from Non-Residents arising from
derivative instruments at the end of each calendar
quarter. Residents are also required to report annually to
the German Central Bank any shares or voting rights of
10% or more which they hold directly or indirectly in nonresident corporations with total assets of more than €3
million. Corporations residing in Germany with assets in
excess of €3 million must report annually to the German
Central Bank any shares or voting rights of 10% or more
held directly or indirectly by a Non-Resident.
TAXATION
General
The following discussion is a summary of certain material
German tax and U.S. federal income tax consequences of
the acquisition, ownership and disposition of our ADRs or
ordinary shares to a U.S. Holder. In general, a U.S. Holder
(as hereinafter defined) is any beneficial owner of our
ADRs or ordinary shares that (i) is a citizen or resident of
the U.S. or a corporation organized under the laws of the
U.S. or any political subdivision thereof, an estate whose
income is subject to U.S. federal income tax regardless of
its source or a trust, if a U.S. court can exercise primary
supervision over its administration and one or more U.S.
persons are authorized to control all substantial
decisions of the trust; (ii) is not a resident of Germany for
purposes of the income tax treaty between the U.S. and
Germany (Convention between the Federal Republic of
Germany and the United States of America for the
Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with respect to Taxes on Income and
Capital and to certain other Taxes, as amended by the
Protocol of June 1, 2006 and as published in the German
Federal Law Gazette 2008 vol. II pp. 611/851; the
“Treaty”); (iii) owns the ADRs or ordinary shares as
capital assets; (iv) does not hold the ADRs or ordinary
shares as part of the business property of a permanent
establishment or a fixed base in Germany; and (v) is fully
entitled to the benefits under the Treaty with respect to
income and gain derived in connection with the ADRs or
ordinary shares.
THE FOLLOWING IS NOT A COMPREHENSIVE
DISCUSSION OF ALL GERMAN TAX AND U.S. FEDERAL
INCOME TAX CONSEQUENCES THAT MAY BE
RELEVANT FOR U.S. HOLDERS OF OUR ADRs OR
ORDINARY SHARES. THEREFORE, U.S. HOLDERS ARE
STRONGLY URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE OVERALL GERMAN TAX
AND U.S. FEDERAL INCOME TAX CONSEQUENCES OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
OUR ADRs OR ORDINARY SHARES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, INCLUDING THE
EFFECT OF ANY STATE, LOCAL OR OTHER FOREIGN OR
DOMESTIC LAWS.
German Taxation
The summary set out below is based on German tax
laws, interpretations thereof and applicable tax treaties
to which Germany is a party and that are in force at the
date of this report; it is subject to any changes in such
authority occurring after that date, potentially with
retroactive effect, that could result in German tax
consequences different from those discussed below.
This discussion is also based, in part, on representations
of the Depositary and assumes that each obligation of
the Deposit Agreement and any related agreements will
be performed in accordance with its terms. For
additional information on the Depository and the fees
associated with SAP’s ADR program see “Item 12.
Description of Securities Other Than Equity Securities –
American Depository Shares.”
For purposes of applying German tax law and the
applicable tax treaties to which Germany is a party, a
holder of ADRs will generally be treated as owning the
ordinary shares represented thereby.
German Taxation of Dividends
Under German income tax law, the full amount of
dividends distributed by an incorporated company is
generally subject to German withholding tax at a
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domestic rate of 25% plus a solidarity surtax of 5.5%
thereon (effectively 1.375% of dividends before
withholding tax), resulting in an aggregate withholding
tax rate from dividends of 26.375%. Non-resident
corporate shareholders will generally be entitled to a
refund in the amount of two-fifths of the withholding tax
(including solidarity surtax). This does not preclude a
further reduction or refund of withholding tax, if any,
available under a relevant tax treaty.
Generally, for many non-resident shareholders the
withholding tax rate is currently reduced under
applicable income tax treaties. Rates and refund
procedures may vary according to the applicable treaty.
To reduce the withholding tax to the applicable treaty tax
rate a non-resident shareholder must apply for a refund
of withholding taxes paid. Claims for refund, if any, are
made on a special German claim for refund form, which
must be filed with the German Federal Tax Office
(Bundeszentralamt für Steuern, D-53221 Bonn,
Germany; http://www.bzst.de). The relevant forms can
be obtained from the German Federal Tax Office or from
German embassies and consulates. For details, such
non-resident shareholders are urged to consult their own
tax advisors. Special rules apply for the refund to U.S.
Holders (we refer to the below section “Refund
Procedures for U.S. Holders”).
Refund Procedures for U.S. Holders
Under the Treaty, a partial refund of the 25% withholding
tax equal to 10% of the gross amount of the dividend and
a full refund of the solidarity surtax can be obtained by a
U.S. Holder. Thus, for each US$100 of gross dividends
paid by SAP SE to a U.S. Holder, the dividends (which are
dependent on the euro/dollar exchange rate at the time
of payment) will be initially subject to a German
withholding tax of US$26.375, of which US$11.375 may
be refunded under the Treaty. As a result, a U.S. Holder
effectively would receive a total dividend of US$85
(provided the euro/dollar exchange rate at the time of
payment of the dividend is the same as at the time of
refund, otherwise the effective dividend may be higher or
lower). Further relief of German withholding tax under
the Treaty may be available for corporate U.S. Holders
owning at least 10% of the voting stock of SAP or U.S.
Holders qualifying as pension fund within the meaning of
the Treaty, subject to further requirements being met.
To claim the refund of amounts withheld in excess of the
Treaty rate, a U.S. Holder must submit (either directly or,
as described below, through the Data Medium Procedure
participant) a claim for refund to the German tax
authorities, with, in the case of a direct claim, the original
bank voucher (or certified copy thereof) issued by the
paying entity documenting the tax withheld, within four
years from the end of the calendar year in which the
dividend is received. Claims for refund are made on a
special German claim for refund form, which must be
filed
with
the
German
Federal
Tax
Office
(Bundeszentralamt für Steuern, D-53221 Bonn,
Germany). The German claim for refund form may be
obtained from the German tax authorities at the same
address where applications are filed, from the Embassy
of the Federal Republic of Germany, 4645 Reservoir
Road NW, Washington, DC 20007, or can be downloaded
from the homepage of the German Federal Tax Office
(http://www.bzst.de).
U.S. Holders must also submit to the German tax
authorities a certification of their U.S. residency status
(IRS Form 6166). This certification can be obtained from
the Internal Revenue Service by filing a request for
certification (generally on an IRS Form 8802, which will
not be processed unless a user fee is paid) with the
Internal Revenue Service, P.O. Box 71052, Philadelphia,
PA 19176-6052. U.S. Holders should consult their own
tax advisors regarding how to obtain an IRS Form 6166.
An IT-supported quick-refund procedure is available for
dividends received (the “Data Medium Procedure –
DMP”). If the U.S. Holder’s bank or broker elects to
participate in the DMP, it will perform administrative
functions necessary to claim the Treaty refund for the
beneficiaries. The refund beneficiaries must confirm to
the DMP participant that they meet the conditions of the
Treaty provisions and that they authorize the DMP
participant to file applications and receive notices and
payments on their behalf. Further each refund
beneficiary must confirm that (i) it is the beneficial owner
of the dividends received; (ii) it is resident in the U.S. in
the meaning of the Treaty; (iii) it does not have its
domicile, residence or place of management in Germany;
(iv) the dividends received do not form part of a
permanent establishment or fixed base in Germany; and
(v) it commits, due to its participation in the DMP, not to
claim separately for refund.
The beneficiaries also must provide an IRS Form 6166
certification with the DMP participant. The DMP
participant is required to keep these documents in its
files and prepare and file a combined claim for refund
with the German tax authorities by electronic media. The
combined claim provides evidence of a U.S. Holder’s
personal data including its U.S. Tax Identification
Number.
The German tax authorities reserve the right to audit the
entitlement to tax refunds for several years following
their payment pursuant to the Treaty in individual cases.
The DMP participant must assist with the audit by
providing the necessary details or by forwarding the
queries to the respective refund beneficiaries.
98
The German tax authorities will issue refunds
denominated in euros. In the case of shares held through
banks or brokers participating in the Depository, the
refunds will be issued to the Depository, which will
convert the refunds to dollars. The resulting amounts will
be paid to banks or brokers for the account of the U.S.
Holders.
German Taxation of Capital Gains
Under German income tax law, a capital gain derived
from the sale or other disposition of ADRs or ordinary
shares by a non-resident shareholder is subject to
income tax in Germany only if such non-resident
shareholder has held, directly or indirectly, ADRs or
ordinary shares representing 1% or more of the
registered share capital of a company at any time during
the five-year period immediately preceding the sale or
other disposition.
However, a U.S. Holder of ADRs or ordinary shares that
qualifies for benefits under the Treaty is not subject to
German income or corporate income tax on the capital
gain derived from the sale or other disposition of ADRs or
ordinary shares.
German Gift and Inheritance Tax
Generally, a transfer of ADRs or ordinary shares by a
shareholder at death or by way of gift will be subject to
German gift or inheritance tax, respectively, if (i) the
decedent or donor, or the heir, donee or other transferee
is resident in Germany at the time of the transfer, or with
respect to German citizens who are not resident in
Germany, if the decedent or donor, or the heir, donee or
other transferee has not been continuously outside of
Germany for a period of more than five years; (ii) the
ADRs or ordinary shares are part of the business
property of a permanent establishment or a fixed base in
Germany; or (iii) the ADRs or ordinary shares subject to
such transfer form part of a portfolio that represents
10% or more of the registered share capital of the
Company and has been held, directly or indirectly, by the
decedent or donor, respectively, at the time of the
transfer, actually or constructively together with related
parties.
However, the right of the German government to impose
gift or inheritance tax on a non-resident shareholder may
be limited by an applicable estate tax treaty. In the case
of a U.S. Holder, a transfer of ADRs or ordinary shares by
a U.S. Holder at death or by way of gift generally will not
be subject to German gift or inheritance tax by reason of
the estate tax treaty between the U.S. and Germany
(Convention between the Federal Republic of Germany
and the United States of America for the Avoidance of
Double Taxation with respect to Estate, Gift and
Inheritance Taxes, German Federal Law Gazette 1982
vol. II page 846, as amended by the Protocol of
December 14, 1998 and as published on December 21,
2000, German Federal Law Gazette 2001 vol. II, page 65;
the “Estate Tax Treaty”) so long as the decedent or
donor, or the heir, donee or other transferee was not
domiciled in Germany for purposes of the Estate Tax
Treaty at the time the gift was made, or at the time of the
decedent’s death, and the ADRs or ordinary shares were
not held in connection with a permanent establishment
or a fixed base in Germany. In general, the Estate Tax
Treaty provides a credit against the U.S. federal gift or
estate tax liability for the amount of gift or inheritance tax
paid in Germany, subject to certain limitations, in a case
where the ADRs or ordinary shares are subject to
German gift or inheritance tax and U.S. federal gift or
estate tax.
Other German Taxes
There are currently no German net worth, transfer,
stamp or other similar taxes that would apply to a U.S.
Holder on the acquisition, ownership, sale or other
disposition of our ADRs or ordinary shares.
U.S. Taxation
The following discussion applies to U.S. Holders only if
the ADRs and ordinary shares are held as capital assets
for tax purposes. It does not address tax considerations
applicable to U.S. Holders that may be subject to special
tax rules, such as dealers or traders in securities,
financial institutions, insurance companies, tax-exempt
entities, regulated investment companies, U.S. Holders
that hold ordinary shares or ADRs as a part of a straddle,
conversion transaction or other arrangement involving
more than one position, U.S. Holders that own (or are
deemed for U.S. tax purposes to own) 10% or more of
the total combined voting power of all classes of voting
stock of SAP SE, U.S. Holders that have a principal place
of business or “tax home” outside the United States or
U.S. Holders whose “functional currency” is not the
dollar and U.S. Holders that hold ADRs or ordinary
shares through partnerships or other pass-through
entities.
The summary set out below is based upon the U.S.
Internal Revenue Code of 1986, as amended (the
“Code”), the Treaty and regulations, rulings and judicial
decisions thereunder at the date of this report. Any such
authority may be repealed, revoked or modified,
potentially with retroactive effect, so as to result in U.S.
federal income tax consequences different from those
discussed below. No assurance can be given that the
conclusions set out below would be sustained by a court
if challenged by the IRS. The discussion below is based,
in part, on representations of the Depositary, and
assumes that each obligation in the Deposit Agreement
and any related agreements will be performed in
accordance with its terms.
99
For U.S. federal income tax purposes, a U.S. Holder of
ADRs will be considered to own the ordinary shares
represented thereby. Accordingly, unless the context
otherwise requires, all references in this section to
ordinary shares are deemed to refer likewise to ADRs
representing an ownership interest in ordinary shares.
U.S. Taxation of Dividends
Subject to the discussion below under “Passive Foreign
Investment Company Considerations”, distributions
made by SAP SE with respect to ordinary shares (other
than distributions in liquidation and certain distributions
in redemption of stock), including the amount of German
tax deemed to have been withheld in respect of such
distributions, will generally be taxed to U.S. Holders as
ordinary dividend income.
As discussed above, a U.S. Holder may obtain a refund of
German withholding tax under the Treaty to the extent
that the German withholding tax exceeds 15% of the
dividend distributed. Thus, for each US$100 of gross
dividends paid by SAP SE to a U.S. Holder, the dividends
(which are dependent on the euro/dollar exchange rate
at the time of payment) will be initially subject to German
withholding tax of US$25 plus US$1.375 solidarity
surtax, and the U.S. Holder will receive US$73.625. A
U.S. Holder who obtains the Treaty refund will receive
from the German tax authorities an additional amount in
euro that would be equal to US$11.375. For U.S. tax
purposes, such U.S. Holder will be considered to have
received a total distribution of US$100, which will be
deemed to have been subject to German withholding tax
of US$15 (15% of US$100) resulting in the net receipt of
US$85 (provided the euro/dollar exchange rate at the
time of payment of the dividend is the same as at the
time of refund, otherwise the effective dividend may be
higher or lower).
In the case of a distribution in euro, the amount of the
distribution generally will equal the dollar value of the
euro distributed (determined by reference to the spot
currency exchange rate on the date of receipt of the
distribution, or receipt by the Depositary in the case of a
distribution on ADRs), regardless of whether the holder
in fact converts the euro into dollars, and the U.S. Holder
will not realize any separate foreign currency gain or loss
(except to the extent that such gain or loss arises on the
actual disposition of foreign currency received).
However, a U.S. Holder may be required to recognize
foreign currency gain or loss on the receipt of a refund in
respect of German withholding tax to the extent the U.S.
dollar value of the refund differs from the U.S. dollar
equivalent of that amount on the date of receipt of the
underlying dividend.
Dividends paid by SAP SE generally will constitute
“portfolio income” for purposes of the limitations on the
use of passive activity losses (and, therefore, generally
may not be offset by passive activity losses) and as
“investment income” for purposes of the limitation on
the deduction of investment interest expense. Dividends
paid by SAP SE will not be eligible for the dividends
received deduction generally allowed to U.S.
corporations under Section 243 of the Code. Dividends
paid by SAP SE to an individual are treated as “qualified
dividends” subject to capital gains rates, i.e. at a
maximum rate of 20%, if SAP SE was not in the prior
year and, is not in the year in which the dividend is paid, a
passive foreign investment company (“PFIC”). Based on
our audited financial statements and relevant market
and shareholder data, we believe that we were not
treated as a PFIC for U.S. federal income taxes with
respect to our 2015 tax year. In addition, based on our
audited financial statements and our current
expectations regarding the value and nature of our
assets, the sources and nature of our income, and
relevant market and shareholder data, we do not
anticipate becoming a PFIC for the 2016 tax year. With
the enactment of The Health Care and Education
Reconciliation Act of 2010, certain US holders who are
individuals, trusts, or estates, must pay a Medicare tax at
a rate of 3.8% on the lesser of (i) net investment income
such as dividends and (ii) the excess of modified
adjusted gross income over the statutory thresholds.
U.S. Taxation of Capital Gains
In general, assuming that SAP SE at no time is a PFIC,
upon a sale or exchange of ordinary shares to a person
other than SAP SE, a U.S. Holder will recognize gain or
loss in an amount equal to the difference between the
amount realized on the sale or exchange and the U.S.
Holder’s adjusted tax basis in the ordinary shares. Such
gain or loss will be a capital gain or loss and will be
considered a long-term capital gain (taxable at a reduced
rate for individuals) if the ordinary shares were held for
more than one year. Capital gains may also be subject to
the Medicare tax at a rate of 3.8%. The deductibility of
capital losses is subject to significant limitations. Upon a
sale of ordinary shares to SAP SE, a U.S. Holder may
recognize a capital gain or loss or, alternatively, may be
considered to have received a distribution with respect
to the ordinary shares, in each case depending upon the
application to such sale of the rules of Section 302 of the
Code.
Deposit and withdrawal of ordinary shares in exchange
for ADRs by a U.S. Holder will not result in its realization
of gain or loss for U.S. federal income tax purposes.
U.S. Information Reporting and Backup Withholding
Dividend payments made to holders and proceeds paid
from the sale of shares or ADRs are subject to
information reporting to the Internal Revenue Service
and will be subject to backup withholding taxes
100
(currently imposed at a 28% rate) unless the holder (i) is
a corporation or other exempt recipient or (ii) provides a
taxpayer identification number on a properly completed
IRS Form W-9 and certifies that no loss of exemption
from backup withholding has occurred. Holders that are
not U.S. persons are not subject to information reporting
or backup withholding. However, such a holder may be
required to provide a certification of its non-U.S. status in
connection with payments received within the United
States or through a U.S.-related financial intermediary.
Backup withholding is not an additional tax and any
amounts withheld as backup withholding may be
credited against a holder’s U.S. federal income tax
liability. A holder may obtain a refund of any excess
amounts withheld under the backup withholding rules by
timely filing the appropriate claim for refund with the
Internal Revenue Service and furnishing any required
information.
Shareholders may be subject to other U.S. information
reporting requirements and should consult their own tax
advisors for application of these reporting requirements
to their own facts and circumstances.
U.S. Foreign Tax Credit
In general, in computing its U.S. federal income tax
liability, a U.S. Holder may elect for each taxable year to
claim a deduction or, subject to the limitations on foreign
tax credits generally, a credit for foreign income taxes
paid or accrued by it. For U.S. foreign tax credit
purposes, subject to the applicable limitations under the
foreign tax credit rules, German tax withheld from
dividends paid to a U.S. Holder, up to the 15% provided
under the Treaty, will be eligible for credit against the
U.S. Holder’s federal income tax liability or, if the U.S.
Holder has elected to deduct such taxes, may be
deducted in computing taxable income.
For U.S. foreign tax credit purposes, dividends paid by
SAP SE generally will be treated as foreign-source
income and as “passive category income” (or in the case
of certain holders, as “general category income”). Gains
or losses realized by a U.S. Holder on the sale or
exchange of ordinary shares generally will be treated as
U.S.-source gain or loss.
Passive Foreign Investment Company
Considerations
Special and adverse U.S. tax rules apply to a U.S. Holder
that holds an interest in a passive foreign investment
company (PFIC). Based on current projections
concerning the composition of SAP SE’s income and
assets, SAP SE does not believe that it will be treated as
a PFIC for its current or future taxable years. However,
because this conclusion is based on our current
projections and expectations as to its future business
activity, SAP SE can provide no assurance that it will not
be treated as a PFIC in respect of its current or any future
taxable years.
MATERIAL CONTRACTS
Concur Technologies, Inc.
Pursuant to the Agreement and Plan of Merger dated as
of September 18, 2014 by and among Concur
Technologies, Inc., SAP America, Inc. and Congress
Acquisition Corp., on December 4, 2014 SAP America
acquired Concur, the leader in the multi-billion travel and
expense management software industry, for US$129.00
per share which represents an enterprise value of
approximately US$8.3 billion. The transaction was
funded primarily from a EUR 7.0 billion credit facility.
See “Item 5. Operating and Financial Review and
Prospects – Liquidity and Capital Disclosures”, for
information on our credit facilities.
DOCUMENTS ON DISPLAY
We are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended. In
accordance with these requirements, we file reports and
furnish other information as a foreign private issuer with
the SEC. These materials, including this report and the
exhibits thereto, may be inspected and copied at the
SEC’s Public Reference Room at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. The SEC also
maintains a Web site at www.sec.gov that contains
reports and other information regarding registrants that
file electronically with the SEC. This report as well as
some of the other information submitted by us to the
SEC may be accessed through this Web site. In addition,
information about us is available at our Web site:
www.sap.com.
ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
We are exposed to various financial risks, such as market
risks, including changes in foreign currency exchange
rates, interest rates and equity prices, as well as credit
risk and liquidity risk. We manage these risks on a Groupwide basis. Selected derivatives are exclusively used for
this purpose and not for speculation, which is defined as
entering into derivative instruments without a
corresponding underlying transaction. Financial risk
management is done centrally. See Notes (24), (25) and
(26) to our Consolidated Financial Statements for our
quantitative and qualitative disclosures about market
risk.
101
ITEM 12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES
AMERICAN DEPOSITARY SHARES
Fees and Charges Payable by ADR Holders
Deutsche Bank Trust Company Americas is the
Depositary for SAP SE’s ADR program. ADR holders may
be required to pay the following charges:
– taxes and other governmental charges;
– registration fees as may be in effect from time to time
for the registration of transfers of SAP ordinary
shares on any applicable register to the Depositary or
its nominee or the custodian or its nominee in
connection with deposits or withdrawals under the
Deposit Agreement;
– applicable air courier, cable, telex and facsimile
expenses of the Depositary;
– expenses incurred by the Depositary in the
conversion of foreign currency;
– US $5.00 or less per 100 ADSs (or portion thereof) to
the Depositary for the execution and delivery of ADRs
(including in connection with the depositing of SAP
ordinary shares or the exercising of rights) and the
surrender of ADRs as well as for the distribution of
other securities;
– a maximum aggregate service fee of US $3.00 per
100 ADSs (or portion thereof) per calendar year to the
Depositary for the services performed by the
Depositary in administering the ADR program,
including for processing any cash dividends and other
cash distributions; and
– US $5.00 or less per 100 ADSs (or portion thereof) to
the Depositary for distribution of securities other than
SAP ordinary shares or rights.
These fees may at any time and from time to time be
changed by agreement between SAP SE and the
Depositary. These charges are described more fully in
Section 5.9 of the Amended and Restated Deposit
Agreement dated as of November 25, 2009, as amended
by Amendment No. 1 dated as of March 18, 2016 and as
may be further amended from time to time, incorporated
by reference as Exhibits 4.1.1 and 4.1.2 to this report.
Applicable service fees are either deducted from any
cash dividends or other cash distributions or charged
separately to holders in a manner determined by the
Depositary, depending on whether ADSs are registered
in the name of investors (whether certificated or in bookentry form) or held in brokerage and custodian accounts
(via DTC). In the case of distributions of securities other
than SAP ordinary shares or rights, the Depositary
charges the applicable ADS record date holder
concurrent with the distribution. In the case of ADSs
registered in the name of the investor, whether
certificated or in book entry form, the Depositary sends
invoices to the applicable record date ADS holders. For
ADSs held in brokerage and custodian accounts via DTC,
the Depositary may, if permitted by the settlement
systems provided by DTC, collect the fees through those
settlement systems from the brokers and custodians
holding ADSs in their DTC accounts. The brokers and
custodians who hold their clients’ ADSs in DTC accounts
in such case may in turn charge their clients’ accounts
the amount of the service fees paid to the Depositary.
In the event of a refusal to pay applicable fees, the
Depositary may refuse the requested services until
payment is received or may set off the amount of the
service from any distribution to be made to the ADR
holder, all in accordance with the Deposit Agreement.
If any taxes or other governmental charges are payable
by the holders and/or beneficial owners of ADSs to the
Depositary, the Depositary, the custodian or SAP may
withhold or deduct from any distributions made in
respect of the deposited SAP ordinary share and may sell
for the account of the holder and/or beneficial owner any
or all of the deposited ordinary shares and apply such
distributions and sale proceeds in payment of such taxes
(including applicable interest and penalties) or charges,
with the holder and the beneficial owner thereof
remaining fully liable for any deficiency.
Fees and Other Payments Payable by the Depositary
to SAP
In connection with the ADR program, the Depositary has
agreed to make certain payments to SAP and waive
certain costs of providing ADR administrative and
reporting services, including reporting of ADR program
activity, distribution of information to investors,
managing the ADR program, including ADR processing
activities and corporate actions, ADR broker desk
services and ADR investor relations services, including
production of investor targeting, peer analysis,
shareholder identification reports and market perception
studies. For the period beginning November 25, 2014
and ending November 24, 2015, the Depositary has
made direct and indirect payments to SAP in an
aggregate amount of US $1,287,940.78 related to the
ADR program. In 2015, the Depositary agreed to
reimburse up to US $25,000 in legal fees associated with
the cost of renewal of the ADR program.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND
PROCEDURES
Disclosure controls and procedures are controls and
other procedures of SAP that are designed to ensure that
information required to be disclosed by SAP in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and
forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to
ensure that information required to be disclosed by SAP
in the reports that it files or submits under the Exchange
Act is accumulated and communicated to SAP
management, including SAP’s principal executive and
financial officers (i.e. SAP’s chief executive officer (CEO)
and chief financial officer (CFO)), or persons performing
similar functions, as appropriate to allow timely decisions
regarding required disclosure. SAP’s management
evaluated, with the participation of SAP’s CEO and CFO
the effectiveness of SAP’s disclosure controls and
procedures as of December 31, 2015. The evaluation was
led by SAP’s Global Governance Risk & Compliance
function, including dedicated “SOX Champions” in all of
SAP’s major entities and business units with the
participation of process owners, SAP’s key corporate
senior management, senior management of each
business group, and as indicated above under the
supervision of SAP’s CEO and CFO. Based on the
foregoing, SAP’s management, including SAP’s CEO and
CFO, concluded that as of December 31, 2015, SAP’s
disclosure controls and procedures were effective.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING
The management of SAP is responsible for establishing
and maintaining adequate internal control over financial
reporting as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934.
SAP’s internal control over financial reporting is a
process designed under the supervision of SAP’s CEO
and CFO to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external reporting purposes in
accordance with International Financial Reporting
Standards as issued by the International Accounting
Standards Board.
SAP’s management assessed the effectiveness of the
Company’s internal control over financial reporting as of
December 31, 2015. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in
“Internal Control – Integrated Framework (2013)”.
Based on the assessment under these criteria, SAP
management has concluded that, as of December 31,
2015, the Company’s internal control over financial
reporting was effective.
KPMG, our independent registered public accounting
firm, has issued its attestation report on the effectiveness
of SAP’s internal control over financial reporting, which is
included in Item 18. Financial Statements, “Report of
Independent Registered Public Accounting Firm.”
CHANGES IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
There has been no change in our internal control over
financial reporting during the period covered by this
report that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Supervisory Board has determined that Erhard
Schipporeit is an “audit committee financial expert”, as
defined by the regulations of the Commission issued
pursuant to Section 407 of the Sarbanes-Oxley Act of
2002 and meeting the requirements of Item 16A. He is
“independent”, as such term is defined in Rule 10A-3
under the Exchange Act.
ITEM 16B. CODE OF ETHICS
In 2003, SAP adopted a Code of Business Conduct that
applies to all employees (including all personnel in the
accounting and controlling departments), managers and
the members of SAP’s Executive Board (including our
CEO and CFO). Our Code of Business Conduct
constitutes a “code of ethics” as defined in Item 16.B of
Form 20-F. Our Code of Business Conduct sets
standards for all dealings with customers, partners,
competitors and suppliers and includes, among others,
regulations with regard to confidentiality, loyalty,
preventing conflicts of interest, preventing bribery, and
avoiding anti-competitive practices. International
differences in culture, language, and legal and social
systems make the adoption of uniform Codes of
103
Business Conduct across an entire global company
challenging. As a result, SAP has set forth a master code
containing minimum standards. In turn, each company
within the SAP Group has been required to adopt a
similar code that meets at least these minimum
standards, but may also include additional or more
stringent rules of conduct. Newly acquired companies
also are required to meet the minimum standards set
forth in the Code of Business Conduct. Effective
February 2012, SAP amended its Code of Business
Conduct to address certain changes in bribery laws, and
to update the intellectual property and non-retaliation
provisions. We have made our amended Code of
Business Conduct publicly available by posting the full
text on our Web site under http://www.sap.com/
corporate-en/investors/governance/policiesstatutes.epx.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND
SERVICES
AUDIT FEES, AUDIT RELATED FEES, TAX FEES AND
ALL OTHER FEES
Refer to Note (31) to our Consolidated Financial
Statements for information on fees charged by our
independent registered public accounting firm, KPMG,
for audit services and other professional services.
AUDIT COMMITTEE’S PRE-APPROVAL POLICIES
AND PROCEDURES
As required under German law, our shareholders appoint
our external independent auditors to audit our financial
statements, based on a proposal that is legally required
to be submitted by the Supervisory Board. The
Supervisory Board’s proposal is based on a proposal by
the Audit Committee. See also the description in “Item
10. Additional Information – Corporate Governance.”
In 2002 our Audit Committee adopted a policy with
regard to the pre-approval of audit and non-audit
services to be provided by our external independent
auditors. This policy, which is designed to assure that
such engagements do not impair the independence of
our auditors, was amended and expanded in 2003, 2007
and 2009 (changes in 2009 only related to information
requirements). The policy requires prior approval of the
Audit Committee for all services to be provided by our
external independent auditors for any entity of the SAP
Group. With regard to non-audit services the policy
distinguishes among three categories of services:
– (i) “Prohibited services:” This category includes
services that our external independent auditors must
not be engaged to perform. These are services that
are not permitted by applicable law or that would be
inconsistent
with
maintaining
the
auditors’
independence.
– (ii) “Services requiring universal approval:” Services
of this category may be provided by our external
independent auditors up to a certain aggregate
amount in fees per year that is determined by the
Audit Committee.
– (iii) “Services requiring individual approval:” Services
of this category may only be provided by our external
independent auditors if they have been individually
(specifically) pre-approved by the Audit Committee or
an Audit Committee member who is authorized by the
Audit Committee to make such approvals.
Our Chief Accounting Officer or individuals empowered
by him review all individual requests to engage our
external independent auditors as a service provider in
accordance with this policy and determines the category
to which the requested service belongs. All requests for
engagements with expected fees over a specified limit
are additionally reviewed by our CFO. Based on the
determination of the category the request is (i) declined
if it is a “prohibited service,” (ii) approved if it is a
“service requiring universal approval” and the maximum
aggregate amount fixed by the Audit Committee has not
been reached or (iii) forwarded to the Audit Committee
for individual approval if the “service requires individual
approval” or is a “service requiring universal approval”
and the maximum aggregate amount fixed by the Audit
Committee has been exceeded.
Our Audit Committee’s pre-approval policies also include
information requirements to ensure the Audit Committee
is kept aware of the volume of engagements involving
our external independent auditors that were not
individually pre-approved by the Audit Committee itself.
Substantially all of the work performed to audit our
Consolidated Financial Statements was performed by
our principal accountant’s full-time, permanent
employees.
ITEM 16D. EXEMPTIONS FROM THE LISTING
STANDARDS FOR AUDIT COMMITTEES
Rule 10A-3 of the Exchange Act requires that all
members of our audit committee be independent,
subject to certain exceptions. In accordance with
German law, the Audit Committee consists of both
employee and shareholder elected members. Rule 10A-3
provides an exception for an employee of a foreign
private issuer such as SAP who is not an executive officer
of that issuer and who is elected to the supervisory board
or audit committee of that issuer pursuant to the issuer’s
governing law. In this case, the employee is exempt from
the independence requirements of Rule 10A-3 and is
permitted to sit on the audit committee.
104
We rely on this exemption. Our Audit Committee
includes two employees representatives, Panagiotis
Bissiritsas and Martin Duffek , who were appointed to our
Supervisory Board pursuant to the Agreement on the
Involvement of Employees in SAP SE (see “Item 6.
Directors, Senior Management and Employees.” for
details). We believe that the reliance on this exemption
does not materially adversely affect the ability of our
Audit Committee to act independently and to satisfy the
other requirements of Rule 10A-3.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY
THE ISSUER AND AFFILIATED PURCHASERS
At the Annual General Meeting of Shareholders on
June 4, 2013, the Executive Board was authorized to
acquire, on or before June 3, 2018, up to 120 million
shares of SAP. The authorization from June 4, 2013
replaced the authorization from June 8, 2010.
The authorization is subject to the provision that the
shares to be purchased, together with any other shares
already acquired and held by SAP, do not account for
more than 10% of SAP’s capital stock.
In 2015 there were no purchases made by us or on our
behalf or on behalf of affiliates of SAP of SAP shares or
SAP ADRs. The total number of SAP shares that SAP
could purchase under existing repurchase programs was
92,299,388 as of December 31, 2015.
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING
ACCOUNTANT
Not applicable.
ITEM 16G. DIFFERENCES IN CORPORATE
GOVERNANCE PRACTICES
The following summarizes the principal ways in which
our corporate governance practices differ from the New
York Stock Exchange (NYSE) corporate governance
rules applicable to U.S. domestic issuers (the NYSE
Rules).
INTRODUCTION
SAP is incorporated under the laws of the European
Union and Germany, with securities publicly traded on
markets in Germany, including the Frankfurt Exchange
and in the United States on the NYSE.
The NYSE Rules permit foreign private issuers to follow
applicable home country corporate governance
practices in lieu of the NYSE corporate governance
standards, subject to certain exceptions. Foreign private
issuers electing to follow home country corporate
governance rules are required to disclose the principal
differences in their corporate governance practices from
those required under the NYSE Rules. This Item 16G
summarizes the principal ways in which SAP’s corporate
governance practices differ from the NYSE Rules
applicable to domestic issuers.
LEGAL FRAMEWORK
The primary sources of law relating to the corporate
governance of a European Company are the Council
Regulation (EC) No. 2157/2001 on the Statute for a
European Company (the “SE Regulation”), the German
Act on the Implementation of Council Regulation
No. 2157/2001 of October 8, 2001 on the Statute for a
European Company (Gesetz zur Ausführung der
Verordnung (EG) Nr. 2157/2001 des Rates vom 8.
Oktober 2001 über das Statut der Europäischen
Gesellschaft (SE) – SE-Ausführungsgesetz; “SE-AG”) of
December 22, 2004, and the German Stock Corporation
Act (Aktiengesetz). Additionally, the Securities Trading
Act (Wertpapierhandelsgesetz), the German Securities
Purchase and Take Over Act (Wertpapiererwerbs- und
Übernahmegesetz), the Stock Exchange Admission
Regulations,
the
German
Commercial
Code
(Handelsgesetzbuch) and certain other German statutes
contain corporate governance rules applicable to SAP. In
addition to these mandatory rules, the German
Corporate Governance Code (“GCGC”) summarizes the
mandatory statutory corporate governance principles
found in the German Stock Corporation Act and other
provisions of German law. Further, the GCGC contains
supplemental recommendations and suggestions for
standards on responsible corporate governance
intended to reflect generally accepted best practices.
The German Stock Corporation Act requires the
executive and the supervisory board of publicly listed
companies like SAP to declare annually that the
recommendations set forth in the GCGC have been and
are being complied with or which of the
recommendations have not been or are not being
complied with and why not. SAP has disclosed and
reasoned deviations from a few of the GCGC
recommendations in its Declaration of Implementation
on a yearly basis since 2003. Declarations from 2007
forward are available on the SAP website (http://
www.sap.com/corporate-en/investors/governance/
policies-statutes.epx).
SIGNIFICANT DIFFERENCES
We believe the following to be the significant differences
between applicable European and German corporate
governance practices, as SAP has implemented them,
and those applicable to domestic companies under the
NYSE Rules.
SAP SE IS A EUROPEAN COMPANY WITH A TWOTIER BOARD SYSTEM
SAP is governed by three separate bodies: (i) the
Supervisory Board, which counsels, supervises and
105
controls the Executive Board; (ii) the Executive Board,
which is responsible for the management of SAP; and
(iii) the General Meeting of Shareholders. The rules
applicable to these governing bodies are defined by
European and German law and by SAP’s Articles of
Incorporation. This corporate structure differs from the
unitary board of directors established by the relevant
laws of all U.S. states and the NYSE Rules. Under the SE
Regulation and the German Stock Corporation Act, the
Supervisory Board and Executive Board are separate and
no individual may be a member of both boards. See
“Item 10. Additional Information — Corporate
Governance” for additional information on the corporate
structure.
DIRECTOR INDEPENDENCE RULES
The NYSE Rules require that a majority of the members
of the board of directors of a listed issuer and each
member of its nominating, corporate governance,
compensation and audit committee be “independent.”
As a foreign private issuer, SAP is not subject to the
NYSE board, compensation committee and corporate
governance committee independence requirements but
instead can elect to follow its home country rules. With
respect to the audit committee, SAP is required to satisfy
Rule 10A-3 of the Exchange Act, which provides certain
exemptions from the audit committee independence
requirements in the case of employee board
representatives. The NYSE Rules stipulate that no
director qualifies as “independent” unless the board of
directors has made an affirmative determination that the
director has no material direct or indirect relationship
with the listed company. However, under the NYSE Rules
a director may still be deemed independent even if the
director or a member of a director’s immediate family
has received during a 12 month period within the prior
three years up to $120,000 in direct compensation. In
addition, a director may also be deemed independent
even if a member of the director’s immediate family
works for the company’s auditor in a non-partner
capacity and not on the company’s audit. By contrast,
the GCGC requires that the Supervisory Board ensure
that proposed candidates are persons with the
necessary knowledge, competencies and applicable
experience. Additionally, the Supervisory Board is
required to implement and adhere to concrete director
independence criteria, including a consideration of the
total number of independent Supervisory Board
members as defined in Section 5.4.2 of the Code.
According to this definition, a Supervisory Board
member will not be considered independent in particular
if s/he has personal or business relations with the
company, its executive bodies, a controlling shareholder
or an enterprise associated with any of the preceding
persons and entities which could cause a substantial and
sustained conflict of interest. The members of the
Supervisory Board must have enough time to perform
their board duties and must carry out their duties
carefully and in good faith. For as long as they serve, they
must comply with the criteria that are enumerated in
relation to the selection of candidates for the
Supervisory Board concerning independence, conflict of
interest and multiple memberships of management,
supervisory and other governing bodies. They must be
loyal to SAP in their conduct and they must not accept
appointment in companies that are in competition with
SAP. Supervisory Board members must disclose any
planned non-ordinary course business transactions with
SAP to the Supervisory Board promptly. The Supervisory
Board members cannot carry out such transactions
before the Supervisory Board has given its permission.
The Supervisory Board may grant its permission for any
such transaction only if the transaction is based on terms
and conditions that are standard for the type of
transaction in question and if the transaction is not
contrary to SAP’s interest. SAP complies with these
GCGC director independence requirements.
Applicable European and German corporate law requires
that for publicly listed stock corporations at least one
member of the Supervisory Board who has expert
knowledge in the areas of financial accounting and audit
of financial statements must be independent. Mr. Erhard
Schipporeit who is the Chairman of SAP’s Audit
Committee meets these requirements. However,
applicable European and German corporate law and the
GCGC do not require the Supervisory Board to make an
affirmative determination for each individual member
that is independent or that a majority of Supervisory
Board members or the members of a specific committee
are independent.
The NYSE independence requirements are closely linked
with risks specific to unitary boards of directors that are
customary for U.S. companies. In contrast, the two-tier
board structure requires a strict separation of the
executive board and supervisory board. In addition, the
supervisory board of a European Company formed by
conversion from a large German stock corporation which
was
subject
to
the
principle
of
employee
codetermination as outlined in the German CoDetermination Act of 1976 (Mitbestimmungsgesetz) is
subject to at least the same level of employee
participation which formerly existed in the German stock
corporation that was converted to an SE. The terms of
employee participation with regard to the Supervisory
Board of SAP SE are, among others, set out in the
Agreement on the Involvement of Employees in SAP SE.
As a result, the Supervisory Board of SAP SE consists of
18 members, of which nine are representatives of SAP
SE’s shareholders elected at the Annual General Meeting
and nine members are representatives of the European
employees. Only a shareholders’ representative may be
elected as chairperson of the Supervisory Board. In case
106
of a tied vote, the vote of the chairperson and, in the
event that the chairperson does not participate in
passing the resolution, the vote of the deputy
chairperson, provided that he or she is a shareholders’
representative, will be decisive (casting vote). This board
structure creates a different system of checks and
balances, including employee participation, and cannot
be directly compared with a unitary board system.
AUDIT COMMITTEE INDEPENDENCE
As a foreign private issuer, the NYSE Rules require SAP
to establish an Audit Committee that satisfies the
requirements of Rule 10A-3 of the Exchange Act with
respect to audit committee independence. SAP is in
compliance with these requirements. The Chairman of
SAP’s Audit Committee and Prof. Dr. Klaus Wucherer
meet the independence requirements of Rule 10A-3 of
the Exchange Act. The other two Audit Committee
members, Panagiotis Bissiritsas and Martin Duffek, are
employee representatives who are eligible for the
exemption provided by Rule 10 A-3 (b) (1) (iv) (C) (see
“Item 16D Exemptions from the listing standards for
audit committees” for details).
The Audit Committee independence requirements are
similar to the Board independence requirements under
applicable European and German corporate law and the
GCGC. See the section above under “Director
Independence Rules.” Nonetheless, SAP meets the NYSE
Rules on audit committee independence applicable to
foreign private issuers.
RULES ON NON-MANAGEMENT BOARD MEETINGS
ARE DIFFERENT
Section 303 A.03 of the NYSE Rules stipulates that the
non-management board of each listed issuer must meet
at regularly scheduled executive sessions without the
management. Under applicable European and German
corporate law and the GCGC the Supervisory Board is
entitled but not required to exclude Executive Board
members from its meetings. The Supervisory Board
exercises this right generally during its meetings.
RULES ON ESTABLISHING COMMITTEES DIFFER
Pursuant to Section 303 A.04 and 303 A.05 of the NYSE
Rules listed companies are required to set up a
Nominating/Corporate Governance Committee and a
Compensation Committee, each composed entirely of
independent directors and having a written charter
specifying the committee’s purpose and responsibilities.
In addition, each committee’s performance must be
reviewed annually. Applicable European and German
corporate law does not mandate the creation of specific
supervisory board committees. The GCGC recommends
that the Supervisory Board establish an Audit Committee
and a Nomination Committee. SAP has the following
committees, which are in compliance with the GCGC:
General
and
Compensation
Committee,
Audit
Committee, Strategy and Technology Committee,
Finance and Investment Committee, Nomination
Committee, Special Committee and People and
Organization Committee (See “Item 10. Additional
Information — Corporate Governance” for more
information).
RULES ON SHAREHOLDERS’ COMPULSORY
APPROVAL ARE DIFFERENT
Section 312 of the NYSE Rules requires U.S. companies
to seek shareholder approval of all equity-compensation
plans, including certain material revisions thereto
(subject to certain exemptions as described in the rules),
issuances of common stock, including convertible stock,
if the common stock has, or will have upon issuance,
voting power of or in excess of 20% of the then
outstanding common stock, and issuances of common
stock if they trigger a change of control.
According to applicable European law, the German Stock
Corporation Act and other applicable German laws,
shareholder approval is required for a broad range of
matters, such as amendments to the articles of
association, certain significant corporate transactions
(including inter-company agreements and material
restructurings), the offering of stock options and similar
equity compensation to its Executive Board members or
its employees by a way of a conditional capital increase
or by using treasury shares (including significant aspects
of such an equity compensation plan as well as the
exercise thresholds), the issuance of new shares, the
authorization to purchase the corporation’s own shares,
and other essential issues, such as transfers of all, or
substantially all, of the assets of the stock corporation,
including shareholdings in subsidiaries.
SPECIFIC PRINCIPLES OF CORPORATE
GOVERNANCE
Under the NYSE Rules Section 303A.09 listed companies
must adopt and disclose corporate guidelines. Since
October 2007, SAP has applied, with few exceptions, the
recommended corporate governance standards of the
GCGC rather than company-specific principles of
corporate governance. The GCGC recommendations
differ from the NYSE Standards primarily as outlined in
this Item 16G.
SPECIFIC CODE OF BUSINESS CONDUCT
NYSE Rules Section 303 A.10 requires listed companies
to adopt and disclose a code of business conduct and
ethics for directors, officers and employees, and to
disclose promptly any waivers of the code for directors
or executive officers. Although not required under
applicable European and German law, SAP has adopted a
Code of Business Conduct, which is equally applicable to
employees, managers and members of the Executive
Board. SAP complies with the requirement to disclose
the Code of Business Conduct and any waivers of the
code with respect to directors and executive officers. See
“Item 16B. Code of Ethics” for details.
107
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
The Consolidated Financial Statements are included herein on pages F-1 through F-73.
The following are filed as part of this report:
–
–
Report of Independent Registered Public Accounting Firm.
Consolidated Financial Statements
– Consolidated Income Statements for the years ended December 31, 2015, 2014, and 2013.
– Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014
and 2013.
– Consolidated Statements of Financial Position as of December 31, 2015 and 2014.
– Consolidated Statements of Changes in Equity for the years ended December 31, 2015, 2014 and
2013.
– Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013.
– Notes to the Consolidated Financial Statements.
ITEM 19. EXHIBITS
The following documents are filed as exhibits to this report:
1
2.1
4.1.1
4.1.2
4.9
8
12.1
12.2
13.1
13.2
15
Articles of Incorporation (Satzung) of SAP SE, effective as of May 20, 2015 (English translation).
Form of global share certificate for ordinary shares (English translation).(1)
Certain instruments which define rights of holders of long-term debt of SAP SE and its subsidiaries are not
being filed because the total amount of securities authorized under each such instrument does not exceed
10% of the total consolidated assets of SAP SE and its subsidiaries. SAP SE and its subsidiaries hereby agree
to furnish a copy of each such instrument to the Securities and Exchange Commission upon request.
Amended and Restated Deposit Agreement dated as of November 25, 2009, by and among SAP SE, Deutsche
Bank Trust Company Americas as Depositary, and all owners and holders from time to time of American
Depositary Receipts issued thereunder.(2)
Amendment No. 1 dated March 18, 2016 to the Amended and Restated Deposit Agreement, by and among
SAP SE, Deutsche Bank Trust Company Americas as Depositary, and all owners and holders from time to time
of American Depositary Receipts issued thereunder, including the form of American Depositary Receipt.(3)
Agreement and Plan of Merger dated as of September 18, 2014 by and among Concur Technologies, Inc., SAP
America, Inc. and Congress Acquisition Corp.(4)
For a list of our subsidiaries see Note (33) to our Consolidated Financial Statements in “Item 18. Financial
Statements”.
Certification of Bill McDermott, Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
Certification of Luka Mucic, Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
Certification of Bill McDermott, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Luka Mucic, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
Consent of Independent Registered Public Accounting Firm.
(1) Incorporated by reference to Exhibit 2.1 to SAP SE’s 2014 Annual Report on Form 20-F filed with the SEC on March 20, 2015.
(2) Incorporated by reference to Exhibit 99.(a)(2) of Post Effective Amendment #1 to SAP SE’s Registration Statement on Form F-6
filed on November 25, 2009.
(3) Incorporated by reference to Exhibit 99.(a)(2) of Post Effective Amendment #2 to SAP SE’s Registration Statement on Form F-6
filed on March 18, 2016.
(4) Incorporated by reference to Exhibit 2.1 to Concur Technologies, Inc.’s Current Report on Form 8-K filed on September 19, 2014.
108
SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused
and authorized the undersigned to sign this report on its behalf.
SAP SE
(Registrant)
By: /s/ BILL MCDERMOTT
Name: Bill McDermott
Title: Chief Executive Officer
Dated: March 29, 2016
By: /s/ LUKA MUCIC
Name: Luka Mucic
Title: Chief Financial Officer
Dated: March 29, 2016
109
[THIS PAGE INTENTIONALLY LEFT BLANK]
SAP SE AND SUBSIDIARIES
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements:
Consolidated Income Statements for the years ended 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014
and 2013
Consolidated Statements of Financial Position as of December 31, 2015 and 2014
Consolidated Statements of Changes in Equity for the years ended December 31, 2015, 2014 and
2013
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
Notes to the Consolidated Financial Statements
F-2
F-3
F-4
F-5
F-6
F-7
F-8 to F-73
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Supervisory Board of SAP SE:
We have audited the accompanying consolidated statements of financial position of SAP SE and subsidiaries (“SAP”
or “the Company”) as of December 31, 2015 and 2014, and the related consolidated statements of income,
comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended
December 31, 2015. We also have audited SAP’s internal control over financial reporting as of December 31, 2015,
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). SAP’s management is responsible for these
consolidated financial statements, for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the consolidated financial statements
included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of SAP SE and subsidiaries as of December 31, 2015 and 2014, and the results of their operations
and their cash flows for each of the years in the three-year period ended December 31, 2015, in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). Also
in our opinion, SAP SE maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
COSO.
/s/KPMG AG
Wirtschaftsprüfungsgesellschaft
Mannheim, Germany
February 25, 2016
F-2
SAP SE AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENTS OF SAP GROUP
for the years ended December 31,
millions, unless otherwise stated
Notes
(Unaudited)
2015(1)
US$
Cloud subscriptions and support
2015
€
2014
€
2013
€
2,482
2,286
1,087
696
Software licenses
5,250
4,835
4,399
4,516
Software support
10,960
10,093
8,829
8,293
Software licenses and support
16,210
14,928
13,228
12,809
18,693
17,214
14,315
13,505
3,887
3,579
3,245
3,310
22,579
20,793
17,560
16,815
Cost of cloud subscriptions and support
ⳮ1,109
ⳮ1,022
ⳮ481
ⳮ314
Cost of software licenses and support
ⳮ2,488
ⳮ2,291
ⳮ2,076
ⳮ2,056
Cost of cloud and software
ⳮ3,597
ⳮ3,313
ⳮ2,557
ⳮ2,370
Cost of services
ⳮ3,598
ⳮ3,313
ⳮ2,716
ⳮ2,660
Total cost of revenue
ⳮ7,195
ⳮ6,626
ⳮ5,272
ⳮ5,031
Gross profit
15,384
14,167
12,288
11,784
Research and development
ⳮ3,090
ⳮ2,845
ⳮ2,331
ⳮ2,282
Sales and marketing
ⳮ5,865
ⳮ5,401
ⳮ4,304
ⳮ4,131
Cloud and software
Services
Total revenue
(5)
ⳮ1,138
ⳮ1,048
ⳮ892
ⳮ866
Restructuring
(6)
ⳮ675
ⳮ621
ⳮ126
ⳮ70
TomorrowNow and Versata litigation
(23)
0
0
ⳮ309
31
1
1
4
12
ⳮ17,962
ⳮ16,541
ⳮ13,230
ⳮ12,336
4,618
4,252
4,331
4,479
ⳮ278
ⳮ256
49
ⳮ17
262
241
127
115
ⳮ267
ⳮ246
ⳮ152
ⳮ181
ⳮ5
ⳮ5
ⳮ25
ⳮ66
4,334
3,991
4,355
4,396
0
0
86
ⳮ8
General and administration
Other operating income/expense, net
Total operating expenses
Operating profit
Other non-operating income/expense, net
(8)
Finance income
Finance costs
Financial income, net
(9)
Profit before tax
Income tax TomorrowNow and Versata litigation
Other income tax expense
Income tax expense
(10)
Profit after tax
Attributable to owners of parent
Attributable to non-controlling interests
ⳮ1,016
ⳮ935
ⳮ1,161
ⳮ1,063
ⳮ1,016
ⳮ935
ⳮ1,075
ⳮ1,071
3,318
3,056
3,280
3,325
3,327
3,064
3,280
3,326
ⳮ9
ⳮ8
0
ⳮ1
Earnings per share, basic (in €)
(11)
2.78
2.56
2.75
2.79
Earnings per share, diluted (in €)
(11)
2.78
2.56
2.74
2.78
(1) The 2015 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.0859 to €1.00, the Noon Buying
Rate certified by the Federal Reserve Bank of New York on December 31, 2015.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-3
SAP SE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP
for the years ended December 31,
€ millions
Notes
Profit after tax
2015
2014
2013
3,056
3,280
3,325
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans
(18)
ⳮ19
ⳮ30
16
Income tax relating to items that will not be reclassified
(10)
2
7
ⳮ3
ⳮ17
ⳮ23
13
1,845
1,161
ⳮ576
Other comprehensive income after tax for items that will not be
reclassified to profit or loss
Items that will be reclassified subsequently to profit or loss
(20)
Exchange differences
Available-for-sale financial assets
(26)
128
128
60
Cash flow hedges
(25)
15
ⳮ38
0
Income tax relating to items that will be reclassified
(10)
10
31
ⳮ8
Other comprehensive income after tax for items that will be reclassified to
profit or loss
1,997
1,282
ⳮ524
Other comprehensive income net of tax
1,980
1,259
ⳮ511
Total comprehensive income
5,036
4,539
2,814
5,044
4,539
2,815
ⳮ8
0
ⳮ1
Attributable to owners of parent
Attributable to non-controlling interests
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-4
SAP SE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP
as at December 31,
millions
Notes
Cash and cash equivalents
(Unaudited)
2015(1)
US$
2015
€
2014
€
3,704
3,411
3,328
(12)
381
351
678
Trade and other receivables
(13)
5,728
5,275
4,342
Other non-financial assets
(14)
508
468
435
Other financial assets
Tax assets
Total current assets
255
235
215
10,576
9,739
8,999
Goodwill
(15)
24,638
22,689
21,000
Intangible assets
(15)
4,647
4,280
4,604
Property, plant, and equipment
(16)
2,380
2,192
2,102
Other financial assets
(12)
1,450
1,336
1,021
Trade and other receivables
(13)
95
87
100
Other non-financial assets
(14)
361
332
164
306
282
231
492
453
343
Tax assets
Deferred tax assets
(10)
Total non-current assets
Total assets
Trade and other payables
(17)
Tax liabilities
34,370
31,651
29,566
44,945
41,390
38,565
1,181
1,088
1,032
250
230
339
Financial liabilities
(17)
913
841
2,561
Other non-financial liabilities
(17)
3,700
3,407
2,811
Provisions
(18)
325
299
150
Deferred income
(19)
2,173
2,001
1,680
Total current liabilities
8,543
7,867
8,574
(17)
88
81
55
437
402
371
(17)
9,427
8,681
8,980
Other non-financial liabilities
(17)
359
331
219
Provisions
(18)
195
180
151
Deferred tax liabilities
(10)
486
448
603
Deferred income
(19)
115
106
78
Trade and other payables
Tax liabilities
Financial liabilities
Total non-current liabilities
Total liabilities
Issued capital
Share premium
Retained earnings
Other components of equity
Treasury shares
Equity attributable to owners of parent
Non-controlling interests
Total equity
Total equity and liabilities
(20)
11,107
10,228
10,457
19,650
18,095
19,031
1,334
1,229
1,229
606
558
614
21,766
20,044
18,317
2,781
2,561
564
–1,221
–1,124
–1,224
25,266
23,267
19,499
30
28
34
25,296
23,295
19,534
44,945
41,390
38,565
(1) The 2015 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.0859 to €1.00, the Noon Buying
Rate certified by the Federal Reserve Bank of New York on December 31, 2015.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-5
SAP SE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP
as at December 31,
€ millions
Equity Attributable to Owners of Parent
Issued
Share Retained
Capital Premium Earnings
Other Components of Equity Treasury
Shares
Exchange Available- Cash Flow
Differences
Notes
January 1, 2013
(20)
(20)
(20)
1,229
492
13,934
Profit after tax
Statement of Comprehensive
Income
ⳮ236
22
Comprehensive income
Share-based payments
20
(20)
ⳮ1,337 14,125
3,326
13
ⳮ584
60
ⳮ511
3,339
ⳮ584
60
2,815
30
ⳮ1,013
Dividends
Reissuance of treasury
shares under sharebased payments
29
57
ⳮ2
Other changes
1,229
551
16,258
82
20
8 14,133
ⳮ1
3,325
ⳮ511
ⳮ1
2,814
30
30
ⳮ1,013
ⳮ1,013
86
86
ⳮ2
ⳮ820
Total
Equity
Hedges
3,326
Other
comprehensive
income
December 31, 2013
for-Sale
Financial
Assets
NonControlling
Total
Interests
1
ⳮ1
ⳮ1,280 16,040
8 16,048
3,280
3,280
Profit after tax
3,280
Other
comprehensive
income
ⳮ23
1,182
128
ⳮ28
1,259
1,259
Comprehensive income
3,257
1,182
128
ⳮ28
4,539
4,539
34
34
ⳮ1,194
ⳮ1,194
85
85
Share-based payments
34
ⳮ1,194
Dividends
Reissuance of treasury
shares under sharebased payments
29
56
Additions from business
combinations
26
ⳮ4
Other changes
December 31, 2014
1,229
614
Profit after tax
362
211
ⳮ8
ⳮ4
ⳮ4
ⳮ1,224 19,499
34 19,534
3,064
Other
comprehensive
income
Comprehensive income
3,064
ⳮ17
1,861
125
11
1,980
3,047
1,861
125
11
5,044
ⳮ136
Share-based payments
ⳮ1,316
Dividends
Reissuance of treasury
shares under sharebased payments
80
100
ⳮ4
Other changes
December 31, 2015
18,317
1,229
558 20,044
336
3
ⳮ8
3,056
1,980
ⳮ8
5,036
ⳮ136
ⳮ136
ⳮ1,316
ⳮ1,316
180
180
ⳮ4
2,223
26
ⳮ1,124 23,267
2
ⳮ2
28 23,295
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-6
SAP SE AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP
for the years ended December 31,
(Unaudited)
2015(1)
US$
2015
€
2014
€
2013
€
3,318
3,056
3,280
3,325
(15),(16)
1,400
1,289
1,010
951
Income tax expense
(10)
1,016
935
1,075
1,071
Financial income, net
(9)
5
5
25
66
49
45
47
42
ⳮ2
ⳮ2
70
62
Decrease/increase in trade and other receivables
ⳮ917
ⳮ844
ⳮ286
ⳮ110
Decrease/increase in other assets
ⳮ340
ⳮ313
ⳮ329
ⳮ136
Decrease/increase in trade payables, provisions, and
other liabilities
823
757
573
ⳮ176
Decrease/increase in deferred income
236
218
16
125
0
0
ⳮ555
ⳮ1
ⳮ187
ⳮ172
ⳮ130
ⳮ159
millions
Notes
Profit after tax
Adjustments to reconcile profit after taxes to net cash
provided by operating activities:
Depreciation and amortization
Decrease/increase in sales and bad debt allowances on
trade receivables
Other adjustments for non-cash items
Cash outflows due to TomorrowNow and Versata litigation
(23)
Interest paid
Interest received
Income taxes paid, net of refunds
Net cash flows from operating activities
Business combinations, net of cash and cash equivalents
acquired
Cash receipts from derivative financial instruments
related to business combinations
Total cash flows for business combinations, net of cash and
cash equivalents acquired
(4)
Purchase of intangible assets and property, plant, and
equipment
Proceeds from sales of intangible assets or property, plant,
and equipment
Purchase of equity or debt instruments of other entities
Proceeds from sales of equity or debt instruments of other
entities
Net cash flows from investing activities
Dividends paid
(20)
Proceeds from reissuance of treasury shares
Proceeds from borrowings
Repayments of borrowings
Net cash flows from financing activities
Effect of foreign currency rates on cash and cash
equivalents
Net decrease/increase in cash and cash equivalents
89
82
59
67
ⳮ1,541
ⳮ1,420
ⳮ1,356
ⳮ1,295
3,950
3,638
3,499
3,832
ⳮ43
ⳮ39
ⳮ6,360
ⳮ1,160
289
266
ⳮ111
0
246
226
ⳮ6,472
ⳮ1,160
ⳮ691
ⳮ636
ⳮ737
ⳮ566
73
68
46
55
ⳮ2,032
ⳮ1,871
ⳮ910
ⳮ1,531
2,041
1,880
833
1,421
ⳮ362
ⳮ334
ⳮ7,240
ⳮ1,781
ⳮ1,430
ⳮ1,316
ⳮ1,194
ⳮ1,013
70
64
51
49
1,899
1,748
7,503
1,000
ⳮ4,183
ⳮ3,852
ⳮ2,062
ⳮ1,625
ⳮ3,644
ⳮ3,356
4,298
ⳮ1,589
146
135
23
ⳮ191
90
83
580
271
Cash and cash equivalents at the beginning of the
period
(20)
3,614
3,328
2,748
2,477
Cash and cash equivalents at the end of the period
(20)
3,704
3,411
3,328
2,748
(1) The 2015 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.0859 to €1.00, the Noon Buying
Rate certified by the Federal Reserve Bank of New York on December 31, 2015.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-7
SAP SE AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL INFORMATION ABOUT
CONSOLIDATED FINANCIAL STATEMENTS
(3) SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The accompanying Consolidated Financial Statements of
SAP SE and its subsidiaries (collectively, “we,” “us,”
“our,” “SAP,” “Group,” and “Company”) have been
prepared in accordance with International Financial
Reporting Standards (IFRS).
(3a) Bases of Measurement
The Consolidated Financial Statements have been
prepared on the historical cost basis except for the
following:
– Derivative financial instruments, available-for-sale
financial assets, and liabilities for cash-settled sharebased payments are measured at fair value.
– Monetary assets and liabilities denominated in foreign
currencies are translated at period-end exchange
rates.
– Post-employment benefits are measured according to
IAS 19 (Employee Benefits) as described in
Note (18a).
We have applied all standards and interpretations that
were effective on and endorsed by the European Union
(EU) as at December 31, 2015. There were no standards
or interpretations impacting our Consolidated Financial
Statements for the years ended December 31, 2015,
2014, and 2013, that were effective but not yet endorsed.
Therefore, our Consolidated Financial Statements
comply with both IFRS as issued by the International
Accounting Standards Board (IASB) and with IFRS as
endorsed by the EU.
Our Executive Board approved the Consolidated
Financial Statements on February 25, 2016, for
submission to our Supervisory Board.
All amounts included in the Consolidated Financial
Statements are reported in millions of euros (€ millions)
except where otherwise stated. Due to rounding,
numbers presented throughout this document may not
add up precisely to the totals we provide and
percentages may not precisely reflect the absolute
figures.
(2) SCOPE OF CONSOLIDATION
Entities Consolidated in the Financial Statements
Total
December 31, 2013
272
Additions
58
Disposals
ⳮ43
December 31, 2014
287
Additions
8
Disposals
ⳮ40
December 31, 2015
255
The additions relate to legal entities added in connection
with acquisitions and foundations. The disposals are
mainly due to mergers and liquidations of legal entities.
Where applicable, information about the methods and
assumptions used in determining the respective
measurement bases is disclosed in the Notes specific to
that asset or liability.
(3b) Relevant Accounting Policies
Reclassifications
We modified and simplified the presentation of our
services revenue in our income statement starting with
the first quarter of 2015 to align our financial reporting
with the change in our services business under the ONE
Service approach. Under this approach, we combine
premium support services and professional services in a
way that no longer allows us to separate premium
support revenues from professional services revenues or
to separate their related cost of services.
Consequently, we have combined the revenue from
premium support services with the revenue from
professional services and other services in a new
services revenue line item. Previously, revenues from
premium support services were classified as support
revenues (2014: €539 million, 2013: €445 million) and
related costs were classified as cost of software and
software-related services (2014: €337 million, 2013:
€259 million). Simultaneously with this change, we
simplified and clarified the labeling of several income
statement line items. This includes renaming the
previous revenue subtotal labeled software and support
(which included premium support revenues) to software
licenses and support (which no longer includes premium
support revenues). The previous revenue subtotal
labeled software and software-related service revenue is
renamed cloud and software and accordingly no longer
includes premium support revenue. All of these changes
have been applied retrospectively.
F-8
The two other revenue line items cloud subscriptions and
support and total revenue are not affected by any of
these changes and remain unaltered.
Business Combinations and Goodwill
We decide on a transaction-by-transaction basis whether
to measure the non-controlling interest in the acquiree at
fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition-related costs are
accounted as expense in the periods in which the costs
are incurred and the services are received, with the
expense being classified as general and administration
expense.
Foreign Currencies
Income and expenses and operating cash flows of our
foreign subsidiaries that use a functional currency other
than the euro are translated at average rates of foreign
exchange (FX) computed on a monthly basis. Exchange
differences resulting from foreign currency transactions
are recognized in other non-operating income/expense,
net.
The exchange rates of key currencies affecting the
Company were as follows:
Exchange Rates
Equivalent to €1
Middle Rate
as at December 31
Annual Average Exchange Rate
2015
2014
2015
2014
2013
U.S. dollar
USD
1.0887
1.2141
1.1071
1.3198
1.3301
Pound sterling
GBP
0.7340
0.7789
0.7255
0.8037
0.8482
Japanese yen
JPY
131.07
145.23
134.12
140.61
130.21
Swiss franc
CHF
1.0835
1.2024
1.0688
1.2132
1.2302
Canadian dollar
CAD
1.5116
1.4063
1.4227
1.4645
1.3710
Australian dollar
AUD
1.4897
1.4829
1.4753
1.4650
1.3944
Revenue Recognition
Classes of Revenue
We derive our revenue from fees charged to our
customers for (a) the use of our hosted cloud offerings,
(b) licenses to our on-premise software products, and
(c) standardized and premium support services,
consulting, customer-specific on-premise software
development agreements, training, and other services.
Cloud and software revenue, as presented in our
Consolidated Income Statements, is the sum of our
cloud subscriptions and support revenue, our software
licenses revenue, and our software support revenue.
– Revenue from cloud subscriptions and support
represents fees earned from providing customers
with:
▪ Software-as-a-Service (SaaS), that is, a right to
use software functionality in a cloud-basedinfrastructure (hosting) provided by SAP, where
the customer does not have the right to terminate
the hosting contract and take possession of the
software to run it on the customer’s own IT
infrastructure or by a third-party hosting provider
without significant penalty, or
▪ Platform-as-a-Service (PaaS), that is, access to a
cloud-based infrastructure to develop, run, and
manage applications, or
▪
Infrastructure-as-a-Service (IaaS), that is, hosting
services for software hosted by SAP, where the
customer has the right to terminate the hosting
contract and take possession of the software at
any time without significant penalty and related
application management services, or
▪ Additional premium cloud subscription support
beyond the regular support that is embedded in
the basic cloud subscription fees, or
▪ Business Network Services, that is, connecting
companies in a cloud-based-environment to
perform business processes between the
connected companies.
– Software licenses revenue represents fees earned
from the sale or license of software to customers for
use on the customer’s premises, in other words,
where the customer has the right to take possession
of the software for installation on the customer’s
premises (on-premise software). Software licenses
revenue includes revenue from both the sale of our
standard software products and customer-specific
on-premise software development agreements.
– Software support revenue represents fees earned
from providing customers with standardized support
services which comprise unspecified future software
updates, upgrades, enhancements, and technical
product support services for on-premise software
F-9
products. We do not sell separately technical product
support or unspecified software upgrades, updates,
and enhancements. Accordingly, we do not
distinguish within software support revenue or within
cost of software support the amounts attributable to
technical support services and unspecified software
upgrades, updates, and enhancements.
Services revenue as presented in our Consolidated
Income Statements represents fees earned from
providing customers with:
– Professional services, that is, consulting services that
primarily relate to the installation and configuration of
our cloud subscriptions and on-premise software
products,
– Premium support services, that is, high-end support
services tailored to customer requirements,
– Training services,
– Messaging services (primarly transmission of
electronic text messages from one mobile phone
provider to another), and
– Payment services in connection with our travel and
expense management offerings.
We account for out-of-pocket expenses invoiced by SAP
and reimbursed by customers as cloud subscriptions
and support, software support, or services revenue,
depending on the nature of the service for which the outof-pocket expenses were incurred.
Timing of Revenue Recognition
We do not start recognizing revenue from customer
arrangements before evidence of an arrangement exists
and the amount of revenue and associated costs can be
measured reliably and collection of the related receivable
is probable. If, for any of our product or service offerings,
we determine at the outset of an arrangement that the
amount of revenue cannot be measured reliably, we
conclude that the inflow of economic benefits associated
with the transaction is not probable, and we defer
revenue recognition until the arrangement fee becomes
due and payable by the customer. If, at the outset of an
arrangement, we determine that collectability is not
probable, we conclude that the inflow of economic
benefits associated with the transaction is not probable,
and we defer revenue recognition until the earlier of
when collectability becomes probable or payment is
received. If a customer is specifically identified as a bad
debtor, we stop recognizing revenue from the customer
except to the extent of the fees that have already been
collected.
In general, we invoice fees for standard software upon
contract closure and delivery. Periodical fixed fees for
cloud subscription services and software support
services are mostly invoiced yearly or quarterly in
advance. Fees based on actual transaction volumes for
cloud subscriptions and fees charged for non-periodical
services are invoiced as the services are delivered.
Cloud subscriptions and support revenue is recognized
as the services are performed. Where a periodical fixed
fee is agreed for the right to continuously access and use
a cloud offering for a certain term, the fee is recognized
ratably over the term covered by the fixed fee. Fees that
are based on actual transaction volumes are recognized
as the transactions occur.
In general, our cloud subscriptions and support
contracts include certain set-up activities. If these set-up
activities have stand-alone value, they are accounted for
as distinct deliverables with the respective revenue being
classified as service revenue and recognized as the setup activity is performed. If we conclude that such set-up
activities are not distinct deliverables, we do not account
for them separately.
Revenue from the sale of perpetual licenses of our
standard on-premise software products is recognized
upon delivery of the software, that is, when the customer
has access to the software. Occasionally, we license onpremise software for a specified period of time. Revenue
from short-term time-based licenses, which usually
include support services during the license period, is
recognized ratably over the license term. Revenue from
multi-year time-based licenses that include support
services, whether separately priced or not, is recognized
ratably over the license term unless a substantive
support service renewal rate exists; if this is the case, the
amount allocated to the delivered software is recognized
as software licenses revenue based on the residual
method once the basic criteria described above have
been met.
In general, our on-premise software license agreements
include neither acceptance-testing provisions nor rights
to return the software. If an arrangement allows for
customer acceptance-testing of the software, we defer
revenue until the earlier of customer acceptance or when
the acceptance right lapses. If an arrangement allows for
returning the software, we defer recognition of software
revenue until the right to return expires.
We usually recognize revenue from on-premise software
arrangements involving resellers on evidence of sellthrough by the reseller to the end-customer, because the
inflow of the economic benefits associated with the
arrangements to us is not probable before sell-through
has occurred.
Software licenses revenue from customer-specific onpremise software development agreements that qualify
for revenue recognition by reference to the stage of
completion of the contract activity is recognized using
F-10
the percentage-of-completion method based on contract
costs incurred to date as a percentage of total estimated
contract costs required to complete the development
work.
On-premise software subscription contracts combine
software and support service elements, as under these
contracts the customer is provided with current software
products, rights to receive unspecified future software
products, and rights to product support during the onpremise software subscription term. Typically,
customers pay a periodic fee for a defined subscription
term, and we recognize such fees ratably over the term
of the arrangement beginning with the delivery of the
first product. Revenue from on-premise software
subscription contracts is allocated to the software
licenses revenue and software support revenue line
items in our Consolidated Income Statements.
Under our standardized support services, our
performance obligation is to stand ready to provide
technical product support and unspecified updates,
upgrades, and enhancements on a when-and-if-available
basis. Consequently, we recognize support revenue
ratably over the term of the support arrangement.
We recognize services revenue as the services are
rendered. Usually, our professional services contracts
and premium support services contracts do not involve
significant production, modification, or customization of
software and the related revenue is recognized as the
services are provided using the percentage-ofcompletion method of accounting. For messaging
services, we measure the progress of service rendering
based on the number of messages successfully
processed and delivered except for fixed-price
messaging arrangements, for which revenue is
recognized ratably over the contractual term of the
arrangement. Revenue from our training services is
recognized when the customer consumes the respective
classroom training. For on-demand training services,
whereby our performance obligation is to stand ready
and provide the customer with access to the training
courses and learning content services, revenue is
recognized ratably over the contractual term of the
arrangement.
Measurement of Revenue
Revenue is recognized net of returns and allowances,
trade discounts, and volume rebates.
Our contributions to resellers that allow our resellers to
execute qualified and approved marketing activities are
recognized as an offset to revenue, unless we obtain a
separate identifiable benefit for the contribution and the
fair value of that benefit is reasonably estimable.
Multiple-Element Arrangements
We combine two or more customer contracts with the
same customer and account for the contracts as a single
contract if the contracts are negotiated as a package or
otherwise linked. Thus, the majority of our contracts that
contain cloud offerings or on-premise software also
include other goods or services (multiple-element
arrangements).
We account for the different goods and services
promised under our customer contracts as separate
units of account (distinct deliverables) unless:
– The contract involves significant production,
modification, or customization of the cloud
subscription or on-premise software; and
– The services are not available from third-party
vendors and are therefore deemed essential to the
cloud subscription or on-premise software.
Goods and services that do not qualify as distinct
deliverables are combined into one unit of account
(combined deliverables).
The portion of the transaction fee allocated to one
distinct deliverable is recognized in revenue separately
under the policies applicable to the respective
deliverable. For combined deliverables consisting of
cloud offerings or on-premise software and other
services, the allocated portion of the transaction fee is
recognized using the percentage-of-completion method,
as outlined above, or over the cloud subscription term, if
applicable, depending on which service term is longer.
We allocate the total transaction fee of a customer
contract to the distinct deliverables under the contract
based on their fair values. The allocation is done relative
to the distinct deliverables’ individual fair values unless
the residual method is applied as outlined below. Fair
value is determined by company-specific objective
evidence of fair value which is the price charged
consistently when that element is sold separately or, for
elements not yet sold separately, the price established
by our management if it is probable that the price will not
change before the element is sold separately. Where
company-specific objective evidence of fair value and
third-party evidence of selling price cannot be
established due to lacking stand-alone sales or lacking
pricing consistency, we determine the fair value of a
distinct deliverable by estimating its stand-alone selling
price. Company-specific objective evidence of fair value
and estimated stand-alone selling prices (ESP) for our
major products and services are determined as follows:
– We derive the company-specific objective evidence of
fair value for our renewable support services from the
rates charged to renew the support services annually
after an initial period. Such renewal rates generally
represent a fixed percentage of the discounted
F-11
software license fee charged to the customer. The
majority of our customers renew their annual support
service contracts at these rates.
– Company-specific objective evidence of fair value for
our professional services is derived from our
consistently priced historic sales.
– Company-specific objective evidence of fair value can
generally not be established for our cloud
subscriptions. ESP for these offerings is determined
based on the rates agreed with the individual
customers to apply if and when the subscription
arrangement renews. We determine ESP by
considering multiple factors which include, but are
not limited to, the following:
– Substantive renewal rates stipulated in the cloud
arrangement; and
– Gross margin expectations and expected internal
costs of the respective cloud business model.
– For our on-premise software offerings, companyspecific objective evidence of fair value can generally
not be established and representative stand-alone
selling prices are not discernible from past
transactions. We therefore apply the residual method
to multiple-element arrangements that include onpremise software. Under this method, the transaction
fee is allocated to all undelivered elements in the
amount of their respective fair values and the
remaining amount of the arrangement fee is allocated
to the delivered element. With this policy, we have
considered the guidance provided by FASB ASC
Subtopic 985-605 (Software Revenue Recognition),
where applicable, as authorized by IAS 8 (Accounting
Policies, Changes in Accounting Estimates and
Errors).
Cost of Services
Cost of services includes the costs incurred in providing
the services that generate service revenue including
messaging revenues. The item also includes sales and
marketing expenses related to our services that result
from sales and marketing efforts that cannot be clearly
separated from providing the services.
We also consider FASB ASC 985-605 in our accounting
for options that entitle the customer to purchase, in the
future, additional on-premise software or services. We
allocate revenue to future incremental discounts
whenever customers are granted a material right, that is,
the right to license additional on-premise software at a
higher discount than the one given within the initial
software license arrangement, or to purchase or renew
services at rates below the fair values established for
these services. We also consider whether future
purchase options included in arrangements for cloud
subscription deliverables constitute a material right.
Accounting for Uncertainties in Income Taxes
We measure current and deferred tax liabilities and
assets for uncertainties in income taxes based on our
best estimate of the most likely amount payable to or
recoverable from the tax authorities, assuming that the
tax authorities will examine the amounts reported to
them and have full knowledge of all relevant information.
Cost of Cloud and Software
Cost of cloud and software includes the costs incurred in
producing the goods and providing the services that
generate cloud and software revenue. Consequently, this
line item primarily includes employee expenses relating
to these services, amortization of acquired intangibles,
fees for third-party licenses, shipping, ramp-up cost, and
depreciation of our property, plant, and equipment.
Research and Development
Research and development includes the costs incurred
by activities related to the development of software
solutions (new products, updates, and enhancements)
including resource and hardware costs for the
development systems.
We have determined that the conditions for recognizing
internally generated intangible assets from our software
development activities are not met until shortly before
the products are available for sale. Development costs
incurred after the recognition criteria are met have not
been material. Consequently, research and development
costs are expensed as incurred.
Sales and Marketing
Sales and marketing includes costs incurred for the
selling and marketing activities related to our software
and cloud solutions.
General and Administration
General and administration includes costs related to
finance and administrative functions, human resources,
and general management as long as they are not directly
attributable to one of the other operating expense line
items.
Share-Based Payments
Share-based payments cover cash-settled and equitysettled awards issued to our employees. The respective
expenses are recognized as employee benefits expenses
and classified in our Consolidated Income Statements
according to the activities that the employees owning the
awards perform.
We grant our employees discounts on certain sharebased payment awards. Since those discounts are not
dependent on future services to be provided by our
employees, the discount is recognized as an expense
when the rights are granted.
F-12
Where we hedge our exposure to cash-settled awards,
changes in the fair value of the respective hedging
instruments are also recognized as employee benefits
expenses in profit or loss. The fair values of hedging
instruments are based on market data reflecting current
market expectations.
For more information about our share-based payments,
see Note (27).
Financial Assets
Our financial assets comprise cash and cash equivalents
(highly liquid investments with original maturities of
three months or less), loans and receivables, acquired
equity and debt investments, and derivative financial
instruments (derivatives) with positive fair values.
Financial assets are only classified as financial assets at
fair value through profit or loss if they are held for
trading, as we do not designate financial assets at fair
value through profit or loss. All other financial assets are
classified as loans and receivables if we do not designate
them as available-for-sale financial assets.
Regular way purchases and sales of financial assets are
recorded as at the trade date.
Among the other impairment indicators in IAS 39
(Financial Instruments: Recognition and Measurement),
for an investment in an equity security, objective
evidence of impairment includes a significant (more than
20%) or prolonged (a period of more than nine months)
decline in its fair value. Impairment losses on financial
assets are recognized in financial income, net. For
available-for-sale financial assets, which are nonderivative financial assets that are not assigned to loans
and receivables or financial assets at fair value through
profit or loss, impairment losses directly reduce an
asset’s carrying amount, while impairments on loans and
receivables are recorded using allowance accounts. Such
allowance accounts are always presented together with
the accounts containing the asset’s cost in other
financial assets. Account balances are charged off
against the respective allowance after all collection
efforts have been exhausted and the likelihood of
recovery is considered remote.
Derivatives
Derivatives Not Designated as Hedging Instruments
Many transactions constitute economic hedges, and
therefore contribute effectively to the securing of
financial risks but do not qualify for hedge accounting
under IAS 39. To hedge currency risks inherent in
foreign-currency denominated and recognized monetary
assets and liabilities, we do not designate our held-fortrading derivative financial instruments as accounting
hedges, because the profits and losses from the
underlying transactions are recognized in profit or loss in
the same periods as the profits or losses from the
derivatives.
In addition, we occasionally have contracts that contain
foreign currency embedded derivatives to be accounted
for separately.
Derivatives Designated as Hedging Instruments
We use derivatives to hedge foreign currency risk or
interest-rate risk and designate them as cash flow or fair
value hedges if they qualify for hedge accounting under
IAS 39. For more information about our hedges, see
Note (24).
a) Cash Flow Hedge
In general, we apply cash flow hedge accounting to the
foreign currency risk of highly probable forecasted
transactions and interest-rate risk on variable rate
financial liabilities.
With regard to foreign currency risk, hedge accounting
relates to the spot price and the intrinsic values of the
derivatives designated and qualifying as cash flow
hedges, while gains and losses on the interest element
and on those time values excluded from the hedging
relationship as well as the ineffective portion of gains or
losses are recognized in profit or loss as they occur.
b) Fair Value Hedge
We apply fair value hedge accounting for certain of our
fixed rate financial liabilities.
Valuation and Testing of Effectiveness
The effectiveness of the hedging relationship is tested
prospectively and retrospectively. Prospectively, we
apply the critical terms match for our foreign currency
hedges as currencies, maturities, and the amounts are
identical for the forecasted transactions and the spot
element of the forward exchange rate contract or
intrinsic value of the currency options, respectively. For
interest-rate swaps, we also apply the critical terms
match as the notional amounts, currencies, maturities,
basis of the variable legs or fixed legs, respectively, reset
dates, and the dates of the interest and principal
payments are identical for the debt instrument and the
corresponding interest-rate swaps. Therefore, over the
life of the hedging instrument, the changes in the
designated components of the hedging instrument will
offset the impact of fluctuations of the underlying
hedged items.
The method of retrospectively testing effectiveness
depends on the type of the hedge as described further
below:
a) Cash Flow Hedge
Retrospectively, effectiveness is tested on a cumulative
basis applying the dollar offset method by using the
hypothetical derivative method. Under this approach, the
change in fair value of a constructed hypothetical
derivative with terms reflecting the relevant terms of the
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hedged item is compared to the change in the fair value
of the hedging instrument employing its relevant terms.
The hedge is deemed highly effective if the results are
within the range 80% to 125%.
b) Fair Value Hedge
Retrospectively, effectiveness is tested using statistical
methods in the form of a regression analysis by which
the validity and extent of the relationship between the
change in value of the hedged items as the independent
variable and the fair value change of the derivatives as
the dependent variable is determined. The hedge is
deemed highly effective if the determination coefficient
between the hedged items and the hedging instruments
exceeds 0.8 and the slope coefficient lies within a range
of –0.8 to –1.25.
Trade and Other Receivables
Trade receivables are recorded at invoiced amounts less
sales allowances and allowances for doubtful accounts.
We record these allowances based on a specific review of
all significant outstanding invoices. When analyzing the
recoverability of our trade receivables, we consider the
following factors:
– First, we consider the financial solvency of specific
customers and record an allowance for specific
customer balances when we believe it is probable that
we will not collect the amount due according to the
contractual terms of the arrangement.
– Second, we evaluate homogenous portfolios of trade
receivables according to their default risk primarily
based on the age of the receivable and historical loss
experience, but also taking into consideration general
market factors that might impact our trade receivable
portfolio. We record a general bad debt allowance to
record impairment losses for a portfolio of trade
receivables when we believe that the age of the
receivables indicates that it is probable that a loss has
occurred and we will not collect some or all of the
amounts due.
Account balances are written off, that is, charged off
against the allowance after all collection efforts have
been exhausted and the likelihood of recovery is
considered remote.
In our Consolidated Income Statements, expenses from
recording bad debt allowances for a portfolio of trade
receivables are classified as other operating income, net,
whereas expenses from recording bad debt allowances
for specific customer balances are classified as cost of
cloud and software or cost of services, depending on the
transaction from which the respective trade receivable
results. Sales allowances are recorded as an offset to the
respective revenue item.
Included in trade receivables are unbilled receivables
related to fixed-fee and time-and-material consulting
arrangements for contract work performed to date.
Other Non-Financial Assets
Other non-financial assets are recorded at amortized
cost. We recognize as an asset the direct and
incremental cost incurred when obtaining a customer
cloud subscription contract. We amortize these assets
on a straight line basis over the period of providing the
cloud subscriptions to which the assets relate.
Intangible Assets
We classify intangible assets according to their nature
and use in our operation. Software and database licenses
consist primarily of technology for internal use, whereas
acquired technology consists primarily of purchased
software to be incorporated into our product offerings
and in-process research and development. Customer
relationship and other intangibles consist primarily of
customer contracts and acquired trademark licenses.
All our purchased intangible assets other than goodwill
have finite useful lives. They are initially measured at
acquisition cost and subsequently amortized either
based on expected consumption of economic benefits or
on a straight-line basis over their estimated useful lives
ranging from two to 20 years.
Amortization for acquired in-process research and
development project assets starts when the projects are
complete and the developed software is taken to the
market. We typically amortize these intangibles over five
to seven years.
Amortization expenses of intangible assets are classified
as cost of cloud and software, cost of services, research
and development, sales and marketing, and general and
administration, depending on the use of the respective
intangible assets.
Property, Plant, and Equipment
Property, plant, and equipment are carried at acquisition
cost plus the fair value of related asset retirement costs
if any and if reasonably estimable, less accumulated
depreciation.
Property, plant, and equipment are depreciated over
their expected useful lives, generally using the straightline method.
Useful Lives of Property, Plant, and Equipment
Buildings
Leasehold improvements
Information technology
equipment
Office furniture
Automobiles
25 to 50 years
Based on the term of the lease
contract
3 to 5 years
4 to 20 years
4 to 5 years
F-14
Impairment of Goodwill and Non-Current Assets
The annual goodwill impairment test is performed at the
level of our operating segments since there are no lower
levels in SAP at which goodwill is monitored for internal
management purposes. The test is performed at the
same time for all operating segments.
Impairment losses are presented in other operating
income/expense, net in profit or loss.
Liabilities
Financial Liabilities
Financial liabilities include trade and other payables,
bank loans, issued bonds, private placements, and other
financial liabilities that comprise derivative and nonderivative financial liabilities. They are classified as
financial liabilities at amortized cost and at fair value
through profit or loss. The latter include only those
financial liabilities that are held for trading, as we do not
designate financial liabilities at fair value through profit or
loss.
Customer funding liabilities are funds we draw from and
make payments on on behalf of our customers for
customers’ employee expense reimbursements, related
credit card payments, and vendor payments. We present
these funds in cash and cash equivalents and record our
obligation to make these expense reimbursements and
payments on behalf of our customers as customer
funding liabilities.
Expenses and gains/losses on financial liabilities mainly
consist of interest expense, which is recognized based on
the effective interest method.
Provisions
The employee-related provisions include, amongst
others, long-term employee benefits. They are secured
by pledged reinsurance coverage and are offset against
the settlement amount of the secured commitment.
Post-Employment Benefits
The discount rates used in measuring our postemployment benefit assets and liabilities are derived
from rates available on high-quality corporate bonds and
government bonds for which the timing and amounts of
payments match the timing and the amounts of our
projected pension payments. The assumptions used to
calculate pension liabilities and costs are disclosed in
Note (18a). Net interest expense and other expenses
related to defined benefit plans are recognized in
employee expenses.
Since our domestic defined benefit pension plans
primarily consist of an employee-financed postretirement plan that is fully financed with qualifying
insurance policies, current service cost may become a
credit as a result of adjusting the defined benefit
liability’s carrying amount to the fair value of the
qualifying plan assets. Such adjustments are recorded in
service cost.
Deferred Income
Deferred income is recognized as cloud subscriptions
and support revenue, software licenses revenue,
software support revenue, or services revenue,
depending on the reason for the deferral, once the basic
applicable revenue recognition criteria have been met.
These criteria are met, for example, when the services
are performed or when the discounts that relate to a
material right granted in a purchase option are applied.
(3c) Management Judgments and Sources of
Estimation Uncertainty
The preparation of the Consolidated Financial
Statements in conformity with IFRS requires
management to make judgments, estimates, and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
revenues, and expenses, as well as disclosure of
contingent assets and liabilities.
We base our judgments, estimates, and assumptions on
historical and forecast information, as well as on regional
and industry economic conditions in which we or our
customers operate, changes to which could adversely
affect our estimates. Although we believe we have made
reasonable estimates about the ultimate resolution of
the underlying uncertainties, no assurance can be given
that the final outcome of these matters will be consistent
with what is reflected in our assets, liabilities, revenues,
and expenses. Actual results could differ from original
estimates.
The accounting policies that most frequently require us
to make judgments, estimates, and assumptions, and
therefore are critical to understanding our results of
operations, include the following:
– Revenue recognition
– Valuation of trade receivables
– Accounting for share-based payments
– Accounting for income tax
– Accounting for business combinations
– Subsequent accounting for goodwill and other
intangible assets
– Accounting for legal contingencies
– Recognition of internally generated intangible assets
from development
Our management periodically discusses these critical
accounting policies with the Audit Committee of the
Supervisory Board.
Revenue Recognition
As described in the Revenue Recognition section of
Note (3b), we do not recognize revenue before the
F-15
amount of revenue can be measured reliably and
collection of the related receivable is probable. The
determination of whether the amount of revenue can be
measured reliably or whether the fees are collectible is
inherently judgmental, as it requires estimates as to
whether and to what extent subsequent concessions
may be granted to customers and whether the customer
is expected to pay the contractual fees. The timing and
amount of revenue recognition can vary depending on
what assessments have been made.
The application of the percentage-of-completion method
requires us to make estimates about total revenue, total
cost to complete the project, and the stage of
completion.
The
assumptions,
estimates,
and
uncertainties inherent in determining the stage of
completion affect the timing and amounts of revenue
recognized.
In the area of allocating the transaction fee to the
different deliverables under the respective customer
contract, judgment is required in the determination of an
appropriate fair value measurement which may impact
the timing and amount of revenue recognized depending
on the following:
– Whether an appropriate measurement of fair value
can be demonstrated for undelivered elements
– The approaches used to establish fair value
Additionally, our revenue for on-premise software
contracts would be significantly different if we applied a
revenue allocation policy other than the residual method.
The determination of whether different contracts with
the same customer are to be accounted for as one
contract is highly judgmental, as it requires us to
evaluate whether the contracts are negotiated together
or linked in any other way. The timing and amount of
revenue recognition can vary depending on whether two
contracts are accounted for separately or as one single
contract.
Valuation of Trade Receivables
As described in the Trade and Other Receivables section
in Note (3b), we account for impairments of trade
receivables by recording sales allowances and
allowances for doubtful accounts on an individual
receivable basis and on a portfolio basis. The
assessment of whether a receivable is collectible is
inherently judgmental and requires the use of
assumptions about customer defaults that could change
significantly. Judgment is required when we evaluate
available information about a particular customer’s
financial situation to determine whether it is probable
that a credit loss will occur and the amount of such loss
is reasonably estimable and thus an allowance for that
specific account is necessary. Basing the general
allowance for the remaining receivables on our historical
loss experience, too, is highly judgmental, as history may
not be indicative of future development. Changes in our
estimates about the allowance for doubtful accounts
could materially impact reported assets and expenses,
and our profit could be adversely affected if actual credit
losses exceed our estimates.
Under a multiple-element arrangement including a cloud
subscription, or on-premise software, and other
deliverables, we do not account for the cloud
subscription, or on-premise software, and the other
deliverables separately if one of the other deliverables
(such as consulting services) is deemed to be essential
to the functionality of the cloud subscription or onpremise software. The determination whether an
undelivered element is essential to the functionality of
the delivered element requires the use of judgment. The
timing and amount of revenue recognition can vary
depending on how that judgment is exercised, because
revenue may be recognized over a longer service term.
Accounting for Share-Based Payments
We use certain assumptions in estimating the fair values
for our share-based payments, including expected future
share price volatility and expected option life (which
represents our estimate of the average amount of time
remaining until the options are exercised or expire
unexercised). In addition, the final payout for these plans
also depends on our share price at the respective
exercise dates. Changes to these assumptions and
outcomes that differ from these assumptions could
require material adjustments to the carrying amount of
the liabilities we have recognized for these share-based
payments.
In
the
accounting
for
our
multiple-element
arrangements, we have to determine the following:
– Which contracts with the same customer are to be
accounted for as one single contract
– Which deliverables under one contract are distinct
and thus to be accounted for separately
– How to allocate the total arrangement fee to the
deliverables of one contract
F-16
For the purpose of determining the estimated fair value
of our stock options, we believe expected volatility is the
most sensitive assumption. Regarding future payout
under our cash-settled plans, the price of SAP stock will
be the most relevant factor. Changes in these factors
could significantly affect the estimated fair values as
calculated by the option-pricing model, and the future
payout. For more information about these plans, see
Note (27).
Accounting for Income Tax
We are subject to changing tax laws in multiple
jurisdictions within the countries in which we operate.
Our ordinary business activities also include transactions
where the ultimate tax outcome is uncertain, such as
those involving revenue sharing and cost reimbursement
arrangements between SAP Group entities. In addition,
the amount of income tax we pay is generally subject to
ongoing audits by domestic and foreign tax authorities.
As a result, judgment is necessary in determining our
worldwide income tax provisions. We make our
estimates about the ultimate resolution of our tax
uncertainties based on current tax laws and our
interpretation thereof. Changes to the assumptions
underlying these estimates and outcomes that differ
from these assumptions could require material
adjustments to the carrying amount of our income tax
provisions.
The assessment whether a deferred tax asset is impaired
requires management judgment, as we need to estimate
future taxable profits to determine whether the
utilization of the deferred tax asset is probable. In
evaluating our ability to utilize our deferred tax assets,
we consider all available positive and negative evidence,
including the level of historical taxable income and
projections for future taxable income over the periods in
which the deferred tax assets are recoverable. Our
judgment regarding future taxable income is based on
assumptions about future market conditions and future
profits of SAP. Changes to these assumptions and
outcomes that differ from these assumptions could
require material adjustments to the carrying amount of
our deferred tax assets.
For more information about our income tax, see
Note (10).
Accounting for Business Combinations
In our accounting for business combinations, judgment is
required in determining whether an intangible asset is
identifiable, and should be recorded separately from
goodwill. Additionally, estimating the acquisition date fair
values of the identifiable assets acquired and liabilities
assumed involves considerable management judgment.
The necessary measurements are based on information
available on the acquisition date and are based on
expectations and assumptions that have been deemed
reasonable by management. These judgments,
estimates, and assumptions can materially affect our
financial position and profit for several reasons, including
the following:
– Fair values assigned to assets subject to depreciation
and amortization affect the amounts of depreciation
and amortization to be recorded in operating profit in
the periods following the acquisition.
– Subsequent negative changes in the estimated fair
values of assets may result in additional expense from
impairment charges.
– Subsequent changes in the estimated fair values of
liabilities and provisions may result in additional
expense (if increasing the estimated fair value) or
additional income (if decreasing the estimated fair
value).
Subsequent Accounting for Goodwill and Other
Intangible Assets
As described in the Intangible Assets section in
Note (3b), all of our intangible assets other than goodwill
have finite useful lives. Consequently, the depreciable
amount of the intangible assets is amortized on a
systematic basis over their useful lives. Judgment is
required in determining the following:
– The useful life of an intangible asset, as this
determination is based on our estimates regarding
the period over which the intangible asset is expected
to produce economic benefits to us
– The amortization method, as IFRS requires the
straight-line method to be used unless we can reliably
determine the pattern in which the asset’s future
economic benefits are expected to be consumed by
us
Both the amortization period and the amortization
method have an impact on the amortization expense that
is recorded in each period.
In making impairment assessments for our intangible
assets and goodwill, the outcome of these tests is highly
dependent on management’s latest estimates and
assumptions regarding future cash flow projections and
economic risks, which are complex and require
significant judgment and assumptions about future
developments. They can be affected by a variety of
factors, including changes in our business strategy, our
internal forecasts, and an estimate of our weightedaverage cost of capital. These judgments impact the
carrying amounts of our intangible assets and goodwill
as well as the amounts of impairment charges
recognized in profit or loss.
The outcome of goodwill impairment tests and thus the
carrying amounts of our recognized goodwill may
depend on the allocation of goodwill to our operating
F-17
segments. This allocation involves judgment as it is
based on our estimates regarding which operating
segments are expected to benefit from the synergies of
the business combination. Additionally, judgment is
required in the determination of our operating segments.
Changes to the assumptions underlying our goodwill
impairment tests could require material adjustments to
the carrying amount of our recognized goodwill. For
more information about the goodwill allocation and
impairment testing, see Note (15).
Accounting for Legal Contingencies
As described in Note (23), we are currently involved in
various claims and legal proceedings. We review the
status of each significant matter not less frequently than
each quarter and assess our potential financial and
business exposures related to such matters. Significant
judgment is required in the determination of whether a
provision is to be recorded and what the appropriate
amount for such provision should be. Notably, judgment
is required in the following:
– Determining whether an obligation exists
– Determining the probability of outflow of economic
benefits
– Determining whether the amount of an obligation is
reliably estimable
– Estimating the amount of the expenditure required to
settle the present obligation
Due to uncertainties relating to these matters, provisions
are based on the best information available at the time.
At the end of each reporting period, we reassess the
potential obligations related to our pending claims and
litigation and adjust our respective provisions to reflect
the current best estimate. In addition, we monitor and
evaluate new information that we receive after the end of
the respective reporting period but before the
Consolidated Financial Statements are authorized for
issue to determine whether this provides additional
information regarding conditions that existed at the end
of the reporting period. Changes to the estimates and
assumptions underlying our accounting for legal
contingencies and outcomes that differ from these
estimates and assumptions could require material
adjustments to the carrying amounts of the respective
provisions recorded as well as additional provisions. For
more information about legal contingencies, see
Notes (18b) and (23).
Recognition of Internally Generated Intangible
Assets from Development
We believe that determining whether internally
generated intangible assets from development are to be
recognized as intangible assets requires significant
judgment, particularly in the following areas:
– Determining whether activities should be considered
research activities or development activities.
– Determining whether the conditions for recognizing
an intangible asset are met requires assumptions
about future market conditions, customer demand,
and other developments.
– The term “technical feasibility” is not defined in IFRS,
and therefore determining whether the completion of
an asset is technically feasible requires judgment and
a company-specific approach.
– Determining the future ability to use or sell the
intangible asset arising from the development and the
determination of the probability of future benefits
from sale or use.
– Determining whether a cost is directly or indirectly
attributable to an intangible asset and whether a cost
is necessary for completing a development.
These judgments impact the total amount of intangible
assets that we present in our balance sheet as well as the
timing of recognizing development expenses in profit or
loss.
(3d) New Accounting Standards Adopted in the
Current Period
No new accounting standards adopted in 2015 had a
material impact on our Consolidated Financial
Statements.
(3e) New Accounting Standards Not Yet Adopted
The standards and interpretations (relevant to the
Group) that are issued, but not yet effective, up to the
date of issuance of the Group’s financial statements are
disclosed below. The Group intends to adopt these
standards, if applicable, when they become effective:
– On May 28, 2014, the IASB issued IFRS 15 (Revenue
from Contracts with Customers). The standard
becomes effective in fiscal year 2018 with earlier
application permitted. We have not yet completed the
determination of the impact on our Consolidated
Financial Statements, and whether the overall impact
will be material, but we expect the standard - for some
of our contracts and business models - to impact the
timing of recognizing revenue and the revenue
classification. IFRS 15 includes a cohesive set of
disclosure requirements which we expect to lead to
additional and amended disclosures. The standard
foresees two possible transition methods for the
adoption of the new guidance. We have not finally
decided yet which of these two methods we intend to
apply.
– On July 24, 2014, the IASB issued the fourth and final
version of IFRS 9 (Financial Instruments), which will
be applicable in fiscal year 2018 with earlier
application permitted. The new guidance is expected
to mainly impact the classification and measurement
of financial assets and will result in additional
disclosures. We have not yet completed the
determination of the impact on our Consolidated
Financial Statements.
F-18
– On January 13, 2016, the IASB issued IFRS 16
(Leases). The standard becomes effective in fiscal
year 2019 with earlier application permitted for those
companies that also apply IFRS 15. The new standard
is a major revision of lease accounting; whereas the
accounting by lessors remains substantially
unchanged, the lease accounting by lessees will
change significantly as all leases (the majority of
which were “off balance” in the past as they were
operating leases) need to be recognized on a
company’s balance sheet as assets and liabilities. We
have not yet completed the determination of the
impact on our Consolidated Financial Statements.
– On January 29, 2016, the IASB published
amendments to IAS 7 (Statement of Cash Flows). The
standard becomes effective in fiscal year 2017 with
earlier application permitted. The aim of the
amendments is to improve the information provided
to users of financial statements about an entity’s
financing activities and will most likely result in
additional disclosures. We have not yet completed the
determination of the impact on our Consolidated
Financial Statements.
Revenue from construction contracts (contract revenue)
is mainly included in software revenue and services
revenue depending on the type of contract. In 2015,
contract revenue of €292 million was recognized for all
our construction contracts (2014: €285 million, 2013:
€261 million). The status of our construction contracts in
progress at the end of the reporting period accounted for
under IAS 11 (Construction Contracts) was as follows:
Construction Contracts in Progress
€ millions
2015
2014
2013
294
201
221
20
92
87
2015
2014
2013
610
119
57
Onerous contract-related
restructuring expenses
11
7
13
Restructuring expenses
621
126
70
Aggregate cost recognized
(multi-year)
Recognized result
(+ profit/– loss;
multi-year)
(6) RESTRUCTURING
€ millions
Employee-related restructuring
expenses
(4) BUSINESS COMBINATIONS
In 2015, we did not conclude any significant business
combinations.
Prior-year acquisitions are described in our 2014
Consolidated Financial Statements.
We have retrospectively adjusted the provisional
amounts recognized as at the dates of these acquisitions
to reflect new information obtained about facts and
circumstances that existed on the respective acquisition
dates. For more information about significant
adjustments, see Notes (10) and (15).
(5) REVENUE
For detailed information about our revenue recognition
policies, see Note (3).
For revenue information by geographic region, see
Note (28).
To further drive our transition from an on-premise
software vendor to a cloud company, we have carried out
additional organizational changes as part of a new
restructuring plan, which is intended to minimize costintensive and low-growth business activities worldwide.
In addition, more redundancies resulted from the
integration of our acquired companies.
Restructuring provisions primarily include personnel
costs that result from severance payments for employee
terminations and onerous contract costs. Prior-year
restructuring provisions relate to restructuring activities
incurred in connection with the organizational changes
triggered by our new cloud and simplification strategy
and the integration of employees of our acquisitions. For
more information, see Note (18b).
F-19
If not presented separately in our income statement,
restructuring expenses would break down by functional
area as follows:
Restructuring Expenses by Functional Area
€ millions
2015
2014
2013
80
9
12
Cost of services
218
24
14
Research and development
156
24
0
Sales and marketing
147
41
29
General and administration
20
28
15
Restructuring expenses
621
126
70
Cost of cloud and software
(7) EMPLOYEE BENEFITS EXPENSE AND HEADCOUNT
Employee Benefits Expense
€ millions
2015
2014
2013
Salaries
7,483
6,319
5,997
Social security expense
1,067
916
857
Share-based payment expense
724
290
327
Pension expense
258
211
212
Employee-related restructuring
expense
610
119
57
Termination benefits outside of
restructuring plans
28
22
39
10,170
7,877
7,489
Employee benefits expense
Pension expense includes the amounts recorded for our
defined benefit and defined contribution plans as
described in Note (18a). Expenses for local state pension
plans are included in social security expense.
The number of employees in the following table is broken
down by function and by the regions EMEA (Europe,
Middle East, and Africa), Americas (North America and
Latin America), and APJ (Asia Pacific Japan).
Number of Employees
December 31, 2014
December 31, 2015
Full-time
equivalents
EMEA Americas
APJ
Total
EMEA Americas
APJ
Total
December 31, 2013
EMEA Americas
APJ
Total
3,541
11,261
Cloud and
software
6,095
3,920
4,976 14,991
5,953
3,983
5,138 15,074
4,859
2,861
Services
6,980
4,264
3,841 15,085
7,291
4,304 3,044 14,639
7,177
4,406 3,047 14,629
Research and
development
9,676
4,233
7,029 20,938
9,049
3,974
5,885 18,908
8,806
3,630 5,367 17,804
Sales and
marketing
7,186
7,314
3,706 18,206
7,069
7,288
3,611 17,969
6,346
6,437 3,041 15,824
General and
administration
2,434
1,653
937
5,024
2,436
1,643
944
5,023
2,424
1,445
697
4,566
Infrastructure
1,535
783
425
2,743
1,542
879
373
2,794
1,380
790
318
2,488
SAP Group
33,906
(December 31)
Thereof
acquisitions
73
SAP Group
(months’ end
average)
33,561
22,166 20,914 76,986 33,340
0
0
73
814
21,832 19,788 75,180
31,821
22,071 18,995 74,406 30,993
2,890
1,831
5,535
511
19,797 16,725 68,343 30,238
19,568 16,011 66,572
571
29
1,111
19,418 15,752 65,409
F-20
Allocation of Share-Based Payment Expense
The allocation of expense for share-based payments, net
of the effects from hedging these instruments, to the
various operating expense items is as follows:
Share-Based Payments
€ millions
2014
2013
74
28
35
Cost of services
126
53
66
Research and development
166
71
90
Sales and marketing
247
76
96
General and administration
113
62
40
724
290
327
637
193
240
87
96
87
Share-based payments
Thereof cash-settled sharebased payments
€ millions
2015
2014
2013
241
127
115
176
30
46
ⳮ246
ⳮ152
ⳮ181
Thereof interest expense from
financial liabilities at amortized
cost
ⳮ135
ⳮ93
ⳮ131
Thereof interest expense from
derivatives
ⳮ72
ⳮ28
ⳮ23
ⳮ5
ⳮ25
ⳮ66
2015
2014
2013
Germany
859
770
836
Foreign
408
422
326
1,267
1,192
1,162
ⳮ74
84
51
Foreign
ⳮ258
ⳮ201
ⳮ142
Total deferred tax income
ⳮ332
ⳮ117
ⳮ91
Total income tax expense
935
1,075
1,071
2015
2014
2013
1,278
1,168
1,249
ⳮ11
24
ⳮ87
1,267
1,192
1,162
ⳮ428
ⳮ126
ⳮ168
96
9
77
Total deferred tax income
ⳮ332
ⳮ117
ⳮ91
Total income tax expense
935
1,075
1,071
Finance income
Thereof available-for-sale
financial assets (equity)
2015
Cost of cloud and software
(9) FINANCIAL INCOME, NET
Finance costs
Financial income, net
(10) INCOME TAX
Tax Expense According to Region
Thereof equity-settled sharebased payments
€ millions
Current tax expense
For more information about our share-based payments,
see Note (27).
(8) OTHER NON-OPERATING INCOME/EXPENSE,
NET
€ millions
Foreign currency exchange
gain/loss, net
Thereof from financial
assets/liabilities at fair value
through profit or loss
Thereof from available for
sale financial assets
Total current tax expense
Deferred tax expense/income
2015
2014
2013
ⳮ230
71
4
ⳮ12
ⳮ1
Germany
83
0
ⳮ75
0
Major Components of Tax Expense
ⳮ213
ⳮ219
184
Thereof from financial
liabilities at amortized cost
ⳮ2
226
ⳮ105
Thereof from non-financial
assets/liabilities
ⳮ3
ⳮ13
0
1
3
1
Miscellaneous expense
ⳮ27
ⳮ25
ⳮ22
Other non-operating
income/expense, net
ⳮ256
49
ⳮ17
Thereof from loans and
receivables
Miscellaneous income
€ millions
Current tax expense/income
Tax expense for current year
Taxes for prior years
Total current tax expense
Deferred tax expense/income
Origination and reversal of
temporary differences
Unused tax losses, research and
development tax credits, and
foreign tax credits
F-21
Profit Before Tax
Recognized Deferred Tax Assets and Liabilities
€ millions
2015
2014
2013
€ millions
Germany
3,161
3,338
3,126
Deferred tax assets
830
1,017
1,270
3,991
4,355
4,396
Foreign
Total
The following table reconciles the expected income tax
expense computed by applying our combined German
tax rate of 26.4% (2014: 26.4%; 2013: 26.4%) to the
actual income tax expense. Our 2015 combined German
tax rate includes a corporate income tax rate of 15.0%
(2014: 15.0%; 2013: 15.0%), plus a solidarity surcharge
of 5.5% (2014: 5.5%; 2013: 5.5%) thereon, and trade
taxes of 10.6% (2014: 10.6%; 2013: 10.6%).
Relationship Between Tax Expense and Profit Before
Tax
€ millions, unless otherwise
stated
2015
2014
2013
Profit before tax
3,991
4,355
4,396
Tax expense at applicable
tax rate of 26.4% (2014:
26.4%; 2013: 26.4%)
1,055
1,151
1,161
2015
2014
Intangible assets
99
104
Property, plant, and equipment
24
18
Other financial assets
15
12
Trade and other receivables
64
53
Pension provisions
98
87
Share-based payments
163
107
Other provisions and obligations
431
403
Deferred income
104
76
Carryforwards of unused tax losses
621
752
Research and development and
foreign tax credits
187
85
Other
149
172
1,955
1,869
1,234
1,241
62
51
389
623
93
69
Pension provisions
5
4
Share-based payments
4
3
Other provisions and obligations
112
118
Deferred income
40
11
11
9
1,950
2,129
5
ⳮ260
Total deferred tax assets
Deferred tax liabilities
Intangible assets
Property, plant, and equipment
Tax effect of:
ⳮ126
ⳮ117
ⳮ116
61
63
158
ⳮ103
ⳮ86
ⳮ146
115
111
87
Research and
development and foreign
tax credits
ⳮ31
ⳮ41
ⳮ41
Prior-year taxes
ⳮ55
ⳮ10
ⳮ113
43
41
60
ⳮ24
ⳮ37
21
935
1,075
1,071
23.4
24.7
24.4
Foreign tax rates
Other financial assets
Trade and other receivables
Non-deductible expenses
Tax exempt income
Withholding taxes
Reassessment of deferred
tax assets, research and
development tax credits,
and foreign tax credits
Other
Total income tax expense
Effective tax rate (in %)
Other
Total deferred tax liabilities
Total deferred tax assets/
liabilities, net
We retrospectively adjusted the provisional amounts
recognized for deferred tax assets and liabilities related
to the 2014 business combinations by a corresponding
increase in goodwill in the amount of €102 million. The
adjustments reflect new information obtained about
facts and circumstances as of the acquisition date,
mainly about the valuation of the carrying amount of
investments in subsidiaries and the utilization of
carryforwards of unused tax losses.
F-22
Items Not Resulting in a Deferred Tax Asset
€ millions
2015
2014
2013
279
140
68
95
63
43
704
672
525
1,078
875
636
122
96
178
34
32
25
0
0
1
Expiring after the following year
20
22
1
Total unused tax credits
54
54
27
Unused tax losses
Not expiring
Expiring in the following year
Expiring after the following year
Total unused tax losses
Deductible temporary
differences
Total Income Tax
Unused research and
development and foreign tax
credits
Not expiring
Expiring in the following year
The proposed dividend payment of €1.15 per share for
the year ended December 31, 2015, will not have any
effects on the income tax of SAP SE.
€429 million (2014: €441 million; 2013: €421 million) of
the unused tax losses relate to U.S. state tax loss
carryforwards. As described above, prior-year numbers
for unused tax losses related to the 2014 business
combinations were adjusted, resulting in a decrease in
the amount of €235 million.
In 2015, subsidiaries that suffered a tax loss in either the
current or the preceding period recognized deferred tax
assets in excess of deferred tax liabilities amounting to
€129 million (2014: €73 million, 2013: €61 million),
because it is probable that sufficient future taxable profit
will be available to allow the benefit of the deferred tax
assets to be utilized.
We have not recognized a deferred tax liability on
approximately €9.95 billion (2014: €8.87 billion) for
undistributed profits of our subsidiaries, because we are
in a position to control the timing of the reversal of the
temporary difference and it is probable that such
differences will not reverse in the foreseeable future.
€ millions
2015
2014
2013
Income tax recorded in profit
935
1,075
1,071
Income tax recorded in share
premium
ⳮ14
ⳮ3
ⳮ5
ⳮ2
ⳮ7
3
Available-for-sale financial
assets
2
0
0
Cash flow hedges
4
ⳮ10
0
ⳮ16
ⳮ21
8
909
1,034
1,077
Income tax recorded in other
comprehensive income that will
not be reclassified to profit and
loss
Remeasurements on defined
benefit pension plans
Income tax recorded in other
comprehensive income that will
be reclassified to profit and loss
Exchange differences
Total
We are subject to ongoing tax audits by domestic and
foreign tax authorities. Currently, we are mainly in
dispute with the German and the Brazilian tax
authorities. The German dispute is in respect of
intercompany financing matters and certain secured
capital investments, while the Brazilian dispute is in
respect of license fee deductibility. In all cases, we
expect that we will need to initiate litigation to prevail. For
all of these matters, we have not recorded a provision as
we believe that the tax authorities’ claims have no merit
and that no adjustment is warranted. If, contrary to our
view, the tax authorities were to prevail in their
arguments before the court, we would expect to have an
additional tax expense (including related interest
expenses and penalties) of approximately €1,045 million
in total.
F-23
(11) EARNINGS PER SHARE
€ millions, unless otherwise stated
2015
2014
2013
Profit attributable to equity holders of SAP SE
3,064
3,280
3,326
Issued ordinary shares1)
1,229
1,229
1,229
–32
–34
–35
1,197
1,195
1,193
2
3
2
Weighted average shares outstanding, diluted1)
1,198
1,197
1,195
Earnings per share, basic, attributable to equity holders of SAP SE
(in €)
2.56
2.75
2.79
Earnings per share, diluted, attributable to equity holders of SAP SE
(in €)
2.56
2.74
2.78
Effect of treasury shares1)
Weighted average shares outstanding, basic1)
Dilutive effect of share-based payments1)
1)
Number of shares in millions
(12) OTHER FINANCIAL ASSETS
€ millions
Loans and other financial receivables
Debt investments
Equity investments
Available-for-sale financial assets
Derivatives
Investments in associates
Total
2014
2015
Current
Non-Current
Total
Current
Non-Current
Total
195
243
437
173
286
459
26
0
26
40
0
40
1
881
882
1
596
597
27
881
908
41
596
637
129
154
283
464
90
554
0
58
58
0
49
49
351
1,336
1,687
678
1,021
1,699
Loans and Other Financial Receivables
Loans and other financial receivables mainly consist of
time deposits, investments in pension assets for which
the corresponding liability is included in employeerelated obligations (see Note (18b)), other receivables,
and loans to employees and third parties. The majority of
our loans and other financial receivables are
concentrated in the United States.
As at December 31, 2015, there were no loans and other
financial receivables past due but not impaired. We have
no indications of impairments of loans and other financial
receivables that are not past due and not impaired as at
the reporting date. For general information about
financial risk and the nature of risk, see Note (24).
Available-for-Sale Financial Assets
Our available-for-sale financial assets consist of debt
investments in bonds of mainly financial and nonfinancial corporations and municipalities and equity
investments in listed and unlisted securities, mainly held
in U.S. dollars.
For more information about fair value measurement with
regard to our equity investments, see Note (26).
Derivatives
Detailed information about our derivative financial
instruments is presented in Note (25).
F-24
(13) TRADE AND OTHER RECEIVABLES
€ millions
NonCurrent
Current
Trade receivables, net
Total
Total
Current
NonCurrent
Total
5,198
2
5,199
4,253
2
4,255
77
86
163
89
99
188
5,275
87
5,362
4,342
100
4,443
Other receivables
Carrying Amounts of Trade Receivables
Aging of Trade Receivables
€ millions
2015
2014
Gross carrying amount
5,428
4,440
Sales allowances charged to revenue
ⳮ153
ⳮ134
ⳮ75
ⳮ52
Allowance for doubtful accounts
charged to expense
Carrying amount trade
receivables, net
2014
2015
5,199
4,255
The changes in the allowance for doubtful accounts
charged to expense were immaterial in all periods
presented.
€ millions
2015
2014
Not past due and not individually
impaired
3,918
3,362
Past due 1 to 30 days
473
345
Past due 31 to 120 days
428
339
Past due 121 to 365 days
257
118
Past due over 365 days
38
16
1,196
818
85
75
5,199
4,255
Past due but not individually
impaired
Total past due but not individually
impaired
Individually impaired, net of allowances
Carrying amount of trade
receivables, net
For more information about financial risk and how we
manage it, see Notes (24) and (25).
(14) OTHER NON-FINANCIAL ASSETS
€ millions
2014
2015
Current
Non-Current
Total
Current
Non-Current
Total
232
83
315
212
66
277
113
0
113
101
0
101
Capitalized contract cost
77
250
327
90
99
188
Miscellaneous other assets
46
0
46
33
0
33
468
332
800
435
164
599
Prepaid expenses
Other tax assets
Total
Prepaid expenses primarily consist of prepayments for
operating leases, support services, and software
royalties.
F-25
(15) GOODWILL AND INTANGIBLE ASSETS
€ millions
Goodwill
Software and
Database
Licenses
Acquired
Technology/
IPRD
Customer
Relationship and
Other
Intangibles
Total
13,785
558
1,929
3,036
19,308
Foreign currency exchange differences
1,242
13
160
297
1,712
Additions from business combinations
6,072
14
540
1,312
7,938
Other additions
0
86
0
2
88
Retirements/disposals
0
ⳮ4
ⳮ42
ⳮ3
ⳮ49
21,099
667
2,587
4,644
28,997
Foreign currency exchange differences
1,666
15
204
379
2,264
Additions from business combinations
27
0
6
5
38
Other additions
0
53
0
6
59
Retirements/disposals
0
ⳮ8
ⳮ1
ⳮ1
ⳮ10
22,792
727
2,796
5,033
31,348
95
367
1,071
1,129
2,662
Foreign currency exchange differences
4
7
73
81
165
Additions amortization
0
78
255
282
615
Retirements/disposals
0
ⳮ4
ⳮ42
ⳮ3
ⳮ49
99
448
1,357
1,489
3,393
Foreign currency exchange differences
4
10
84
89
187
Additions amortization
0
76
372
361
809
Retirements/disposals
0
ⳮ8
ⳮ1
ⳮ1
ⳮ10
103
526
1,812
1,938
4,379
December 31, 2014
21,000
219
1,230
3,155
25,604
December 31, 2015
22,689
201
984
3,095
26,969
Historical cost
January 1, 2014
December 31, 2014
December 31, 2015
Accumulated amortization
January 1, 2014
December 31, 2014
December 31, 2015
Carrying amount
The additions, other than from business combinations, to
software and database licenses in 2015 and 2014 were
individually acquired from third parties and include
cross-license agreements and patents.
F-26
Significant Intangible Assets
€ millions, unless otherwise stated
Carrying Amount
2015
2014
Remaining
Useful Life
(in years)
104
126
6 to 9
80
149
approx. 1
Sybase – Customer relationships: Maintenance
363
418
8
SuccessFactors – Acquired technologies
149
184
4
SuccessFactors – Customer relationships: Subscription
395
402
10
Ariba – Acquired technologies
137
166
5
Ariba – Customer relationships
525
516
10 to 12
hybris – Acquired technologies
100
128
5
hybris – Customer relationships
127
136
2 to 12
89
96
7
387
445
6
Concur – Customer relationships
1,299
1,233
15 to 19
Total significant intangible assets
3,755
3,999
Business Objects – Customer relationships: Maintenance
Sybase – Acquired technologies
Fieldglass – Acquired technologies
Concur – Acquired technologies
Goodwill Impairment Testing
SAP had two operating segments in 2015 (in 2014, we
had a single operating segment). The carrying amount of
goodwill has been allocated for impairment testing
purposes to SAP’s operating segments.
Goodwill by Operating Segment
€ millions
Applications,
Technology &
Services
SAP Business
Network
Single Segment
(2014)
Unallocated
Total
January 1, 2015, prior to adjustment
0
0
15,412
5,533
20,945
Adjustment
0
0
ⳮ31
86
55
January 1, 2015, after adjustment
0
0
15,381
5,619
21,000
14,401
6,599
ⳮ 15,381
ⳮ 5,619
0
Additions from business combinations
27
0
0
0
27
Foreign currency exchange differences
1,070
592
0
0
1,662
15,497
7,191
0
0
22,689
Reallocation due to changes in segment
composition
December 31, 2015
The amount unallocated on January 1, 2015, relates to
the goodwill from the acquisition of Concur in December
2014.
Prior-year goodwill amounts have been adjusted by
€55 million relating mainly to tax and non-controlling
interest adjustments. For more information, see
Note (10).
F-27
The key assumptions on which management based its cash flow projections for the period covered by the underlying
business plans are as follows:
Key Assumption
Basis for Determining Values Assigned to Key Assumption
Budgeted revenue growth
Revenue growth rate achieved in the current fiscal year, adjusted for an expected
increase in SAP’s addressable cloud, mobility, and database markets; expected growth
in the established applications and analytics markets. Values assigned reflect our past
experience and our expectations regarding an increase in the addressable markets.
Budgeted operating margin
Operating margin budgeted for a given budget period equals the operating margin
achieved in the current fiscal year, increased by expected efficiency gains. Values
assigned reflect past experience, except for efficiency gains.
Pre-tax discount rates
Our estimated cash flow projections are discounted to present value using pre-tax
discount rates. Pre-tax discount rates are based on the weighted average cost of capital
(WACC) approach.
Terminal growth rate
Our estimated cash flow projections for periods beyond the business plan were
extrapolated using the segment-specific terminal growth rates. These growth rates do
not exceed the long-term average growth rates for the markets in which our segments
operate.
Key Assumptions
Percent
Applications, SAP Business
Technology &
Network
Services
Budgeted revenue growth
(average of the budgeted
period)
4.5
16.2
Pre-tax discount rate
11.7
13.0
Terminal growth rate
3.0
3.0
Applications, Technology & Services
The recoverable amounts of the segment have been
determined based on value-in-use calculations. The
calculations use cash flow projections based on actual
operating results and a group-wide five-year business
plan approved by management.
We believe that any reasonably possible change in any of
the above key assumptions would not cause the carrying
amount of our Applications, Technology & Services
segment to exceed the recoverable amount.
SAP Business Network
The recoverable amounts of the segment have been
determined based on fair value less costs of disposal
calculations. The fair value measurement was
categorized as a level 3 fair value based on the inputs
used in the valuation technique. The cash flow
projections are based on actual operating results and
specific estimates covering a ten-year period and the
terminal growth rate thereafter. The calculations use
cash flow projections based on actual operating results
and a group-wide five-year business plan approved by
management. The projected results were determined
based on management’s estimates and are consistent
with the assumptions a market participant would make.
The segment operates in a relatively immature area with
significant growth rates projected for the near future. We
therefore have a longer and more detailed planning
period than one would apply in a more mature segment.
We are using a target margin of 33% for the segment at
the end of the budgeted period as a key assumption,
which is within the range of expectations of market
participants (for example, industry analysts).
The recoverable amount exceeds the carrying amount by
€1,764 million.
The following table shows amounts by which the key
assumptions would need to change individually for the
recoverable amount to be equal to the carrying amount:
Sensitivity to Change in Assumptions
Percentage points
Budgeted revenue growth (average of the
budgeted period)
SAP Business
Network
ⳮ2.1
Pre-tax discount rate
1.4
Terminal growth rate
ⳮ1.7
The recoverable amount for the SAP Business Network
segment would equal the carrying amount if a margin of
only 27% was achieved by 2022.
F-28
(16) PROPERTY, PLANT, AND EQUIPMENT
€ millions
Land and
Buildings
Other Property,
Plant, and
Equipment
Advance
Payments and
Construction in
Progress
Total
December 31, 2014
1,010
1,050
42
2,102
December 31, 2015
1,053
1,073
66
2,192
Carrying amount
Total additions (other than from business combinations)
amounted to €580 million (2014: €629 million) and
relate primarily to the replacement and purchase of
computer hardware and vehicles acquired in the normal
course of business and investments in data centers.
(17) TRADE AND OTHER PAYABLES, FINANCIAL
LIABILITIES, AND OTHER NON-FINANCIAL
LIABILITIES
(17a) Trade and Other Payables
€ millions
2014
2015
NonCurrent
Current
Total
Current
NonCurrent
Total
Trade payables
893
0
893
782
0
782
Advance payments received
110
0
110
112
0
112
Miscellaneous other liabilities
85
81
166
138
55
193
1,088
81
1,169
1,032
55
1,087
Trade and other payables
Miscellaneous other liabilities mainly include deferral
amounts for free rent periods and liabilities related to
government grants.
(17b) Financial Liabilities
€ millions
2014
2015
Nominal Volume
Carrying Amount
Nominal Volume
Carrying Amount
Current
NonCurrent
Current
NonCurrent
Total
Current
NonCurrent
Current
NonCurrent
Total
0
5,750
0
5,733
5,733
631
4,000
631
3,998
4,629
551
1,607
551
1,651
2,202
247
1,936
247
1,948
2,195
16
1,250
16
1,245
1,261
1,279
3,000
1,277
2,985
4,261
567
8,607
567
8,628
9,195
2,157
8,936
2,155
8,931
11,086
Derivatives
NA
NA
70
58
128
NA
NA
287
46
333
Other financial liabilities
NA
NA
204
ⳮ5
199
NA
NA
119
4
123
2,561
8,980
11,542
Bonds
Private placement
transactions
Bank loans
Financial debt
Financial liabilities
841
8,681 9,522
F-29
Financial liabilities are unsecured, except for the
retention of title and similar rights customary in our
industry. Effective interest rates on our financial debt
(including the effects from interest-rate swaps) were
1.30% in 2015, 1.77% in 2014, and 2.48% in 2013.
For an analysis of the contractual cash flows of our
financial liabilities based on maturity, see Note (24). For
information about the risk associated with our financial
liabilities, see Note (25). For information about fair
values, see Note (26).
Bonds
2015
2014
Maturity
Issue Price
Coupon Rate
Effective
Interest Rate
Eurobond 2 – 2010
2017
99.780%
3.50% (fix)
3.59%
€500
488
490
Eurobond 5 – 2012
2015
NA
NA
NA
€0
0
549
Eurobond 6 – 2012
2019
99.307%
2.125% (fix)
2.29%
€750
774
778
Eurobond 7 – 2014
2018
100.000%
0.208% (var.)
0.23%
€750
749
748
Eurobond 8 – 2014
2023
99.478%
1.125% (fix)
1.24%
€1,000
993
992
Eurobond 9 – 2014
2027
99.284%
1.75% (fix)
1.86%
€1,000
989
990
Eurobond 10 – 2015
2017
100.000%
0.127% (var.)
0.14%
€500
499
0
Eurobond 11 – 2015
2020
100.000%
0.259% (var.)
0.23%
€650
648
0
Eurobond 12 – 2015
2025
99.264%
1.00% (fix)
1.13%
€600
593
0
5,733
4,547
0
82
5,733
4,629
Eurobonds
Other bonds
Bonds
Since September 2012, we have used a debt issuance
program to issue bonds in a number of tranches.
Currently, the total volume available under the program
(including the amounts issued) is €8 billion.
Nominal
Carrying
Carrying
Volume
Amount
Amount
(in respective (in € millions) (in € millions)
currency in
millions)
All of our Eurobonds are listed for trading on the
Luxembourg Stock Exchange.
F-30
Private Placement Transactions
Effective Nominal Volume
Interest Rate
(in respective
currency in
millions)
2015
2014
Carrying
Amount
(in € millions)
Carrying
Amount
(in € millions)
Maturity
Coupon Rate
Tranche 1 – 2010
2015
NA
NA
US$0
0
247
Tranche 2 – 2010
2017
2.95% (fix)
3.03%
US$200
180
161
Tranche 3 – 2011
2016
2.77% (fix)
2.82%
US$600
551
494
Tranche 4 – 2011
2018
3.43% (fix)
3.50%
US$150
135
121
Tranche 5 – 2012
2017
2.13% (fix)
2.16%
US$242.5
221
197
Tranche 6 – 2012
2020
2.82% (fix)
2.86%
US$290
271
238
Tranche 7 – 2012
2022
3.18% (fix)
3.22%
US$444.5
426
372
Tranche 8 – 2012
2024
3.33% (fix)
3.37%
US$323
318
277
Tranche 9 – 2012
2027
3.53% (fix)
3.57%
US$100
100
88
2,202
2,195
2015
2014
Effective Nominal Volume
Interest Rate
(in respective
currency in
millions)
Carrying
Amount
(in € millions)
Carrying
Amount
(in € millions)
U.S. private placements
Private placements
The U.S. private placement notes were issued by one of
our subsidiaries that has the U.S. dollar as its functional
currency.
Bank Loans
Maturity Coupon Rate
Concur term loan – Facility A
2015
NA
NA
€0
0
1,268
Concur term loan – Facility B
2017 0.45% (var.)
0.93%
€1,250
1,245
2,984
INR 1026
16
9
1,261
4,261
Other loans
Bank loans
Other Financial Liabilities
Our current other financial liabilities mainly comprise
liabilities for accrued interest and customer funding
liabilities amounting to €90 million (2014: €58 million).
F-31
(17c) Other Non-Financial Liabilities
€ millions
2014
2015
Current
Non-Current
Total
Current
Non-Current
Total
2,255
126
2,381
1,979
122
2,101
Share-based payment liabilities
555
205
760
289
97
386
Other taxes
597
0
597
543
0
543
3,407
331
3,738
2,811
219
3,030
Other employee-related liabilities
Other non-financial liabilities
Other employee-related liabilities mainly relate to
vacation accruals, bonus and sales commission accruals,
as well as employee-related social security obligations.
For more information about our share-based payments,
see Note (27).
Other taxes mainly comprise payroll tax liabilities and
value-added tax liabilities.
(18) PROVISIONS
€ millions
2014
2015
Current
NonCurrent
Total
Current
NonCurrent
Total
0
117
117
2
86
88
Other provisions (see Note (18b))
299
63
362
148
65
213
Total
299
180
479
150
151
301
Pension plans and similar obligations (see Note (18a))
(18a) Pension Plans and Similar Obligations
Defined Benefit Plans
The measurement dates for our domestic and foreign
benefit plans are December 31.
Present Value of the Defined Benefit Obligations (DBO) and the Fair Value of the Plan Assets
€ millions
Domestic Plans
Foreign Plans
Other PostEmployment Plans
Total
2015
2014
2015
2014
2015
2014
2015
2014
724
780
333
276
82
46
1,139
1,102
724
780
293
239
61
26
1,078
1,045
0
0
40
37
21
20
61
57
716
767
265
234
42
13
1,023
1,014
8
13
69
42
40
33
117
88
Non-current other financial assets
0
0
0
0
0
0
0
0
Current provisions
0
0
0
ⳮ2
0
0
0
ⳮ2
Non-current provisions
ⳮ8
ⳮ13
ⳮ69
ⳮ40
ⳮ40
ⳮ33
ⳮ117
ⳮ86
Total
ⳮ8
ⳮ13
ⳮ69
ⳮ42
ⳮ40
ⳮ33
ⳮ117
ⳮ88
Present value of the DBO
Thereof fully or partially funded plans
Thereof unfunded plans
Fair value of the plan assets
Net defined benefit liability (asset)
Amounts recognized in the Consolidated
Statement of Financial Position:
F-32
€664 million (2014: €714 million) of the present value of
the DBO of our domestic plans relate to plans that
provide for lump sum payments not based on final
salary, and €287 million (2014: €234 million) of the
present value of the DBO of our foreign plans relate to
plans that provide for annuity payments not based on
final salary.
The following weighted average assumptions were used
for the actuarial valuation of our domestic and foreign
pension liabilities as well as other post-employment
benefit obligations as at the respective measurement
date:
Actuarial Assumptions
Percent
Domestic Plans
Foreign Plans
Other Post-Employment Plans
2015
2014
2013
2015
2014
2013
2015
2014
2013
Discount rate
2.7
2.2
3.6
0.7
1.1
2.1
4.0
4.2
5.2
Future salary increases
2.5
2.5
2.5
1.7
1.7
1.7
6.3
3.8
4.7
Future pension increases
2.0
2.0
2.0
0
0
0
0.0
0
0.0
Employee turnover
2.0
2.0
2.0
10.3
10.1
9.9
8.7
1.3
2.5
Inflation
2.0
0
0
1.4
1.3
1.3
1.0
1.3
1.1
The sensitivity analysis table shows how the present
value of all defined benefit obligations would have been
influenced by reasonable possible changes to above
actuarial assumptions. The sensitivity analysis table
presented below considers change in one actuarial
assumption at a time, holding all other actuarial
assumptions constant. A reasonable possible change in
actuarial assumptions of 50 basis points in either
direction, except for the discount rate assumption, would
not materially influence the present value of all defined
benefit obligations.
Sensitivity Analysis
€ millions
Domestic Plans
Foreign Plans
Other PostEmployment Plans
2015 2014 2013 2015 2014 2013 2015 2014 2013
Total
2015
2014 2013
Present value of all defined
benefit obligations if:
Discount rate was 50 basis points
higher
678
725
585
311
259
217
79
44
32 1,068 1,028
834
Discount rate was 50 basis points
lower
775
840
675
359
296
246
87
49
36
957
1,221
1,185
Total Expense of Defined Benefit Pension Plans
€ millions
Domestic Plans
Foreign Plans
Other PostEmployment Plans
Total
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
Current service cost
10
3
7
21
16
15
9
6
3
40
25
25
Interest expense
17
22
19
3
5
4
3
2
1
23
29
24
ⳮ17
ⳮ23
ⳮ20
ⳮ3
ⳮ5
ⳮ4
ⳮ2
ⳮ1
ⳮ1
ⳮ22
ⳮ29
ⳮ25
0
0
0
0
0
1
0
0
0
0
0
1
10
3
6
21
16
16
10
7
4
41
26
26
ⳮ76
133
10
0
10
9
2
1
1
ⳮ74
144
20
Interest income
Past service cost
Total expense
Actual return on plan assets
F-33
Our investment strategy on domestic benefit plans is to
invest all contributions in stable insurance policies.
risk-diversified portfolio consisting of a mix of assets,
both the defined benefit obligation and plan assets can
fluctuate over time, which exposes the Group to actuarial
and market (investment) risks. Depending on the
statutory requirements in each country, it might be
necessary to reduce any underfunding by addition of
liquid assets.
Our investment strategies for foreign benefit plans vary
according to the conditions in the country in which the
respective benefit plans are situated. Generally, a longterm investment horizon has been adopted for all major
foreign benefit plans. Although our policy is to invest in a
Plan Asset Allocation
€ millions
2014
2015
Quoted in an
Active Market
Not Quoted in
an Active Market
Quoted in an
Active Market
Not Quoted in
an Active Market
93
0
75
0
101
0
60
0
5
0
1
0
43
0
31
0
Insurance policies
0
736
0
780
Cash and cash equivalents
9
0
41
0
36
0
27
0
287
736
234
780
Asset category
Equity investments
Corporate bonds
Government bonds
Real estate
Others
Total
Our expected contribution in 2016 to our domestic and
foreign defined benefit pension plans is immaterial. The
weighted duration of our defined benefit plans amounted
to 14 years as at December 31, 2015, and 14 years as at
December 31, 2014.
Total future benefit payments from our defined benefit
plans as at December 31, 2015, are expected to be
€1,432 million (2014: €1,409 million). Eighty-three
percent of this amount has maturities of over five years.
Maturity Analysis
€ millions
Domestic Plans
Foreign Plans
Other Post-Employment
Plans
2015
2014
2015
2014
2015
2014
Less than a year
19
10
26
23
2
2
Between 1 and 2 years
18
17
43
40
2
2
Between 2 and 5 years
65
56
63
58
8
6
935
983
223
195
28
17
1,037
1,066
355
316
40
27
Over 5 years
Total
F-34
Total Expense of Defined Contribution Plans and State
Plans
Defined Contribution Plans/State Plans
We also maintain domestic and foreign defined
contribution plans. Amounts contributed by us under
such plans are based on a percentage of the employees’
salaries or the amount of contributions made by
employees. Furthermore, in Germany and some other
countries we make contributions to public pension plans
that are operated by national or local government or a
similar institution.
€ millions
2015
2014
2013
Defined contribution plans
218
188
182
State plans
429
360
316
Total expense
647
548
498
(18b) Other Provisions
€ millions
1/1/
2015
Addition
Accretion
Utilization
Release
Currency
Impact
12/31/
2015
Employee-related provisions
47
59
0
ⳮ46
ⳮ3
1
58
Customer-related provisions
39
91
0
ⳮ71
ⳮ1
3
61
Intellectual property-related
provisions
12
5
0
ⳮ1
ⳮ6
1
11
Restructuring provisions
60
638
0
ⳮ496
ⳮ17
ⳮ1
184
Onerous contract provisions (other
than from customer contracts)
24
1
2
ⳮ13
ⳮ1
2
15
Other provisions
31
3
0
0
ⳮ2
1
33
213
797
2
ⳮ627
ⳮ30
7
362
Total other provisions
Thereof current
Thereof non-current
148
299
65
63
Intellectual property-related provisions relate to litigation
matters. Customer-related provisions relate primarily to
disputes with individual customers. Both classes of
provision are described in Note (23).
For more information about our restructuring plans, see
Note (6).
The cash outflows associated with employee-related
restructuring costs are substantially short-term in
nature. In 2015, employees received, under certain
restructuring activities, credits to their working time
accounts which will allow them to discontinue work
earlier than their retirement date. These obligations are
classified as employee-related provisions rather than
restructuring provisions.
Onerous contract and other provisions comprise facilityrelated and supplier-related provisions. The timing of
these cash outflows associated is dependent on the
remaining term of the underlying lease and of the
supplier contract.
(19) DEFERRED INCOME
Deferred income consists mainly of prepayments made
by our customers for cloud subscriptions and support;
software support and services; fees from multipleelement arrangements allocated to undelivered
elements; and amounts recorded in purchase accounting
at fair value for obligations to perform under acquired
contracts in connection with acquisitions.
€ millions
Deferred Income
Thereof deferred revenue from cloud
subscriptions and support
2014
2015
Current
NonCurrent
Total
Current
NonCurrent
Total
2,001
106
2,107
1,680
78
1,758
957
0
957
689
0
689
F-35
(20) TOTAL EQUITY
Issued Capital
As at December 31, 2015, SAP SE had issued
1,228,504,232 no-par value bearer shares (December 31,
2014: 1,228,504,232) with a calculated nominal value of
€1 per share. All the shares issued are fully paid.
Change in Issued Capital and Treasury Shares
Shares (in millions)
January 1, 2013
Issued
Capital
Treasury
Shares
Issued
Capital
Treasury
Shares
1,229
ⳮ37
1,229
ⳮ1,337
0
2
0
57
1,229
ⳮ35
1,229
ⳮ1,280
0
2
0
56
1,229
ⳮ33
1,229
ⳮ1,224
0
2
0
100
1,229
ⳮ31
1,229
ⳮ1,124
Reissuance of treasury shares under share-based payments
December 31, 2013
Reissuance of treasury shares under share-based payments
December 31, 2014
Reissuance of treasury shares under share-based payments
December 31, 2015
Authorized Shares
The Articles of Incorporation authorize the Executive
Board to increase the issued capital by:
– Up to a total amount of €250 million by issuing new
no-par value bearer shares against contributions in
cash until May 19, 2020 (Authorized Capital I). The
issuance is subject to the statutory subscription
rights of existing shareholders.
– Up to a total amount of €250 million by issuing new
no-par value bearer shares against contributions in
cash or in kind until May 19, 2020 (Authorized Capital
II). Subject to the consent of the Supervisory Board,
the Executive Board is authorized to exclude the
shareholders’ statutory subscription rights in certain
cases.
Contingent Shares
SAP SE’s share capital is subject to a contingent capital
increase which may be effected only to the extent that
the holders or creditors of convertible bonds or stock
options issued or guaranteed by SAP SE or any of its
directly or indirectly controlled subsidiaries under certain
share-based payments exercise their conversion or
subscription rights, and no other methods for servicing
these rights are used. As at December 31, 2015,
€100 million, representing 100 million shares, was still
available for issuance (2014: €100 million).
Value (in € millions)
Other Comprehensive Income
Items Recognized in Other Comprehensive Income That
Will Be Reclassified to Profit or Loss Before Tax
€ millions
2015
2014
2013
Gains (losses) on exchange
differences
1,845
1,161
ⳮ576
181
130
79
Reclassification adjustments
on available-for-sale financial
assets
ⳮ53
ⳮ2
ⳮ19
Available-for-sale financial
assets
128
128
60
ⳮ59
ⳮ41
78
Reclassification adjustments
on cash-flow hedges
74
3
ⳮ78
Cash-flow hedges
15
ⳮ38
0
Gains (losses) on remeasuring
available-for-sale financial
assets
Gains (losses) on cash-flow
hedges
F-36
Treasury Shares
By resolution of SAP SE’s General Meeting of
Shareholders held on June 4, 2013, the authorization
granted by the General Meeting of Shareholders of
June 8, 2010, regarding the acquisition of treasury
shares was revoked to the extent it had not been
exercised at that time, and replaced by a new
authorization of the Executive Board of SAP SE to
acquire, on or before June 3, 2018, shares of SAP SE
representing a pro rata amount of capital stock of up to
€120 million in aggregate, provided that the shares
purchased under the authorization, together with any
other shares in the Company previously acquired and
held by, or attributable to, SAP SE do not account for
more than 10% of SAP SE’s issued share capital.
Although treasury shares are legally considered
outstanding, there are no dividend or voting rights
associated with shares held in treasury. We may redeem
or resell shares held in treasury, or we may use treasury
shares for the purpose of servicing option or conversion
rights under the Company’s share-based payment plans.
Also, we may use shares held in treasury as
consideration in connection with mergers with, or
acquisitions of, other companies.
Dividends
The total dividend available for distribution to SAP SE
shareholders is based on the profits of SAP SE as
reported in its statutory financial statements prepared
under the accounting rules in the German Commercial
Code (Handelsgesetzbuch). For the year ended
December 31, 2015, the Executive Board intends to
propose that a dividend of €1.15 per share (that is, an
estimated total dividend of €1,378 million), be paid from
the profits of SAP SE.
Dividends per share for 2014 and 2013 were €1.10 and
€1.00 respectively and were paid in the succeeding year.
(21) ADDITIONAL CAPITAL DISCLOSURES
Capital Structure Management
The primary objective of our capital structure
management is to maintain a strong financial profile for
investor, creditor, and customer confidence, and to
support the growth of our business. We seek to maintain
a capital structure that will allow us to cover our funding
requirements through the capital markets at reasonable
conditions, and in so doing, ensure a high level of
independence, confidence, and financial flexibility.
SAP SE’s long-term credit rating is “A” by Standard and
Poor’s and “A2” by Moody’s, both with stable outlook.
Since their initial assignment in September 2014, the
ratings and outlooks have not changed.
Capital Structure
Δ in %
2015
2014
€ millions
% of
Total equity and
liabilities
€ millions
% of
Total equity and
liabilities
23,295
56
19,534
51
19
7,867
19
8,574
22
ⳮ8
10,228
25
10,457
27
ⳮ2
Liabilities
18,095
44
19,031
49
ⳮ5
Total equity and liabilities
41,390
100
38,565
100
7
Equity
Current liabilities
Non-current liabilities
In 2015, we repaid €1,270 million in bank loans that we
had taken to finance the Concur acquisition and
refinanced another part of this loan through the issuance
of a three-tranche Eurobond of €1.75 billion in total with
maturities of two to 10 years. We also repaid a
€550 million Eurobond and a US$300 million U.S.
private placement tranche at their maturity. Thus, the
ratio of total financial debt to total equity and liabilities
decreased by seven percentage points to 22% at the end
of 2015 (29% as at December 31, 2014).
Total financial debt consists of current and non-current
bank loans, bonds, and private placements. For more
information about our financial debt, see Note (17).
As part of our financing activities in 2016, the Company
intends to repay a US$600 million U.S. private
placement tranche when it matures and a further
substantial portion of our outstanding bank loans.
F-37
While we continuously monitor the ratios presented in
and below the table above, we actively manage our
liquidity and structure of our financial indebtedness:
Group Liquidity of SAP Group
€ millions
2014
Δ
3,411
3,328
83
148
95
53
Group liquidity
3,559
3,423
136
Current financial debt
ⳮ567
ⳮ2,157
1,590
Net liquidity 1
2,992
1,266
1,726
Non-current financial debt
ⳮ8,607
ⳮ8,936
329
Net liquidity 2
ⳮ5,615
ⳮ7,670
2,055
Cash and cash equivalents
Current investments
2015
Distribution Policy
Our general intention is to remain in a position to return
liquidity to our shareholders by distributing annual
dividends totaling more than 35% of our profit after tax.
There are currently no plans for future share buybacks.
In 2015, we distributed €1,316 million in dividends from
our 2014 profit (compared to €1,194 million in 2014 and
€1,013 million in 2013 related to 2013 and 2012 profit,
respectively), representing €1.10 per share.
As a result of our equity-settled share-based payments
transactions (as described in Note (27)), we have
commitments to grant SAP shares to employees. We
intend to meet these commitments by reissuing treasury
shares or issuing ordinary shares. For more information
about contingent capital, see Note (20).
(22) OTHER FINANCIAL COMMITMENTS
€ millions
2015
2014
Operating leases
1,347
1,332
Contractual obligations for acquisition of
property, plant, and equipment and
intangible assets
162
111
Other purchase obligations
710
748
Purchase obligations
872
859
111
77
2,330
2,268
Capital contribution commitments
Total
Our operating leases relate primarily to the lease of office
space, hardware, and vehicles, with remaining noncancelable lease terms between less than one and
33 years. On a limited scale, the operating lease
contracts include escalation clauses (based, for example,
on the consumer price index) and renewal options. The
contractual obligations for acquisition of property, plant,
and equipment and intangible assets relate primarily to
the construction of new and existing facilities and to the
purchase of hardware, software, patents, office
equipment, and vehicles. The remaining obligations
relate mainly to marketing, consulting, maintenance,
license agreements, and other third-party agreements.
Historically, the majority of such purchase obligations
have been realized.
SAP invests and holds interests in other entities. As of
December 31, 2015, total commitments to make such
equity investments amounted to €197 million (2014:
€123 million) of which €86 million had been drawn
(2014: €46 million). By investing in such equity
investments, we are exposed to the risks inherent in the
business segments in which these entities operate. Our
maximum exposure to loss is the amount invested plus
unavoidable future capital contributions.
€ millions
December 31, 2015
Operating Leases
Purchase Obligations
Capital Contribution
Commitments
Due 2016
294
428
111
Due 2017 to 2020
657
378
0
Due thereafter
396
66
0
1,347
872
111
Total
Our rental and operating lease expenses were
€386 million, €291 million, and €273 million for the years
2015, 2014, and 2013, respectively.
F-38
(23) LITIGATION AND CLAIMS
We are subject to a variety of claims and lawsuits that
arise from time to time in the ordinary course of our
business, including proceedings and claims that relate to
companies we have acquired, claims that relate to
customers demanding indemnification for proceedings
initiated against them based on their use of SAP
software, and claims that relate to customers being
dissatisfied with the products and services that we have
delivered to them. We will continue to vigorously defend
against all claims and lawsuits against us. We currently
believe that resolving the claims and lawsuits pending as
of December 31, 2015, will neither individually nor in the
aggregate have a material adverse effect on our
business, financial position, profit, or cash flows.
Consequently, the provisions recorded for these claims
and lawsuits as of December 31, 2015, are neither
individually nor in the aggregate material to SAP.
However, the outcome of litigation and claims is
intrinsically subject to considerable uncertainty.
Management’s view of the litigation may also change in
the future. Actual outcomes of litigation and claims may
differ from the assessments made by management in
prior periods, which could result in a material impact on
our business, financial position, profit, cash flows, or
reputation. Most of the lawsuits and claims are of a very
individual nature and claims are either not quantified by
the claimants or claim amounts quantified are, based on
historical evidence, not expected to be a good proxy for
the expenditure that would be required to settle the case
concerned. The specifics of the jurisdictions where most
of the claims are located further impair the predictability
of the outcome of the cases. Therefore, it is not
practicable to reliably estimate the financial effect that
these lawsuits and claims would have if SAP were to
incur expenditure for these cases.
Among the claims and lawsuits are the following classes:
Intellectual Property-Related Litigation and Claims
Intellectual property-related litigation and claims are
cases in which third parties have threatened or initiated
litigation claiming that SAP violates one or more
intellectual property rights that they possess. Such
intellectual property rights may include patents,
copyrights, and other similar rights.
The carrying amount of the provisions recognized for
intellectual property-related litigation and claims and the
change in the carrying amount in the reporting period are
disclosed in Note (18b). The expected timing of any
resulting outflows of economic benefits from these
lawsuits and claims is uncertain and not estimable as it
depends generally on the duration of the legal
proceedings and settlement negotiations required to
resolve them. Uncertainties about the amounts result
primarily from the unpredictability of the outcomes of
legal disputes in several jurisdictions. For more
information, see Note (3c).
Contingent liabilities exist from intellectual propertyrelated litigation and claims for which no provision has
been recognized. Generally, it is not practicable to
estimate the financial impact of these contingent
liabilities due to the uncertainties around the litigation
and claims, as outlined above. The total amounts claimed
by plaintiffs in those intellectual property-related
lawsuits or claims in which a claim has been quantified
were not material to us as of December 31, 2015 and
2014. Based on our past experience, most of the
intellectual property-related litigation and claims tend to
be either dismissed in court or settled out of court for
amounts significantly below the originally claimed
amounts and not material to our consolidated financial
statements. Only a few cases (specifically the
TomorrowNow and the Versata litigation) ultimately
resulted in a significant cash outflow in 2014.
The individual cases of intellectual property-related
litigation and claims are:
In April 2007, United States-based Versata Software, Inc.
(formerly Trilogy Software, Inc.) (Versata) instituted
legal proceedings in the United States District Court for
the Eastern District of Texas against SAP. Versata
alleged that SAP’s products infringe one or more of the
claims in patents held by Versata. In August 2014, after
numerous legal proceedings (for details, see our Annual
Report 2014 on Form 20–F, Notes to the Consolidated
Financial Statements section, Note (24)), Versata and
SAP entered into a Patent License and Settlement
Agreement (the “Agreement”) to settle the patent
litigation between the companies. Under the terms of the
Agreement, Versata has licensed to SAP certain patents
in exchange for a one-time cash payment and a potential
additional contingent payment. Such contingent
payment is not material to SAP. The Agreement also
provides for general releases, indemnification for its
violation, and dismisses the existing litigation with
prejudice.
In February 2010, United States-based TecSec, Inc.
(TecSec) instituted legal proceedings in the United
States against SAP (including its subsidiary Sybase) and
many other defendants. TecSec alleged that SAP’s and
Sybase’s products infringe one or more of the claims in
five patents held by TecSec. In its complaint, TecSec
seeks unspecified monetary damages and permanent
injunctive relief. The lawsuit is proceeding but only with
respect to one defendant. The trial for SAP (including its
subsidiary Sybase) has not yet been scheduled – the
lawsuit for SAP (including its subsidiary Sybase) remains
stayed.
F-39
In April 2010, SAP instituted legal proceedings (a
declaratory judgment action) in the United States
against Wellogix, Inc. and Wellogix Technology Licensing,
LLC (Wellogix). The lawsuit seeks a declaratory judgment
that five patents owned by Wellogix are invalid or not
infringed by SAP. The trial has not yet been scheduled.
The legal proceedings have been stayed pending the
outcome of six reexaminations filed with the United
States Patent and Trademark Office (USPTO). In
September 2013, the USPTO issued a decision on four of
the six reexaminations, invalidating every claim of each
of the four patents. SAP is awaiting a decision on the two
remaining reexamination requests. In response to SAP’s
patent Declaratory Judgment action, Wellogix has reasserted trade secret misappropriation claims against
SAP (which had previously been raised and abandoned).
The court granted SAP’s motion for an early dispositive
decision on the trade secret claims; Wellogix’s appeal of
that decision is pending. In February 2015, SAP filed a
declaratory judgment action in Frankfurt/Main,
Germany, asking the German court to rule that SAP did
not misappropriate any Wellogix trade secrets.
Customer-Related Litigation and Claims
Customer-related litigation and claims include cases in
which we indemnify our customers against liabilities
arising from a claim that our products infringe a third
party’s patent, copyright, trade secret, or other
proprietary rights. Occasionally, consulting or software
implementation projects result in disputes with
customers. Where customers are dissatisfied with the
products and services that we have delivered to them in
routine
consulting
contracts
or
development
arrangements, we may grant functions or performance
guarantees.
The carrying amount of the provisions recorded for
customer-related litigation and claims and the
development of the carrying amount in the reporting
period are disclosed in Note (18b). The expected timing
or amounts of any resulting outflows of economic
benefits from these lawsuits and claims is uncertain and
not estimable as they generally depend on the duration
of the legal proceedings and settlement negotiations
required to resolve the litigation and claims and the
unpredictability of the outcomes of legal disputes in
several jurisdictions. For more information, see
Note (3c).
Contingent liabilities exist from customer-related
litigation and claims for which no provision has been
recognized. Generally, it is not practicable to estimate
the financial impact of these contingent liabilities due to
the uncertainties around these lawsuits and claims
outlined above.
Non-Income Tax-Related Litigation and Claims
We are subject to ongoing audits by domestic and
foreign tax authorities. Along with many other companies
operating in Brazil, we are involved in various
proceedings with Brazilian authorities regarding
assessments and litigation matters on non-income taxes
on intercompany royalty payments and intercompany
services. The total potential amount related to these
matters for all applicable years is approximately
€75 million. We have not recorded a provision for these
matters, as we believe that we will prevail.
For more information about income tax-related litigation,
see Note (10).
(24) FINANCIAL RISK FACTORS
We are exposed to various financial risks, such as market
risks (including foreign currency exchange rate risk,
interest-rate risk, and equity price risk), credit risk, and
liquidity risk.
Market Risk
a) Foreign Currency Exchange Rate Risk
As we are active worldwide, our ordinary operations are
subject to risks associated with fluctuations in foreign
currencies. Since the Group’s entities mainly conduct
their operating business in their own functional
currencies, our risk of exchange rate fluctuations from
ongoing ordinary operations is not considered
significant. However, we occasionally generate foreign
currency-denominated receivables, payables, and other
monetary items by transacting in a currency other than
the functional currency. To mitigate the extent of the
associated foreign currency exchange rate risk, the
majority of these transactions are hedged as described
in Note (25).
In rare circumstances, transacting in a currency other
than the functional currency also leads to embedded
foreign currency derivatives being separated and
measured at fair value through profit or loss.
In addition, the intellectual property (IP) holders in the
SAP Group are exposed to risks associated with
forecasted intercompany cash flows in foreign
currencies. These cash flows arise out of royalty
payments from subsidiaries to the respective IP holder.
The royalties are linked to the subsidiaries’ external
revenue. This arrangement leads to a concentration of
the foreign currency exchange rate risk with the IP
holders, as the royalties are mostly denominated in the
subsidiaries’ local currencies, while the functional
currency of the IP holders with the highest royalty
volume is the euro. The highest foreign currency
exchange rate exposure of this kind relates to the
F-40
currencies of subsidiaries with significant operations, for
example the U.S. dollar, the pound sterling, the Japanese
yen, the Swiss franc, the Brazilian real, and the Australian
dollar.
flow risk from the consideration to be paid in U.S. dollars
for the acquisition of Concur and Fieldglass in 2014, as
the funds were provided through our free cash and
acquisition term loans, both mostly generated in euros.
For more information, see Note (25).
Generally, we are not exposed to any significant foreign
currency exchange rate risk with regard to our investing
and financing activities, as such activities are normally
conducted in the functional currency of the investing or
borrowing entity. However, we were exposed to a cash
b) Interest-Rate Risk
We are exposed to interest-rate risk as a result of our
investing and financing activities mainly in euros and U.S.
dollars as follows:
€ millions
2014
2015
Cash Flow Risk
Fair Value Risk
Cash Flow Risk
Fair Value Risk
Investing activities
3,078
480
2,445
1,003
Financing activities
3,157
6,038
5,009
6,077
c) Equity Price Risk
We are exposed to equity price risk with regard to our
investments in listed equity securities (2015:
€320 million; 2014: €209 million) and our share-based
payments (for the exposure from these plans, see
Note (27)).
Credit Risk
To reduce the credit risk in investments, we arrange to
receive rights to collateral for certain investing activities
in the full amount of the investment volume, which we
would be allowed to make use of only in the case of
default of the counterparty to the investment. In the
absence of other significant agreements to reduce our
credit risk exposure, the total amounts recognized as
cash and cash equivalents, current investments, loans
and other financial receivables, trade receivables, and
derivative financial assets represent our maximum
exposure to credit risks, except for the agreements
mentioned above.
Liquidity Risk
The table below is an analysis of the remaining
contractual maturities of all our financial liabilities held at
December 31, 2015. Financial liabilities for which
repayment can be requested by the contract partner at
any time are assigned to the earliest possible period.
Variable interest payments were calculated using the
latest relevant interest rate fixed as at December 31,
2015. As we generally settle our derivative contracts
gross, we show the pay and receive legs separately for all
our currency and interest-rate derivatives, whether or
not the fair value of the derivative is negative, except for
the derivative forward contracts entered into in
connection with the acquisition of Concur, where we
bought and sold US$8.5 billion because we settled those
net. The cash outflows for the currency derivatives are
translated using the applicable forward rate.
For more information about the cash flows for
unrecognized but contractually agreed financial
commitments, see Note (22).
Contractual Maturities of Non-Derivative Financial Liabilities
€ millions
Trade payables
Financial liabilities
Total of non-derivative financial liabilities
Carrying
Amount
Contractual Cash Flows
12/31/2015
2016
2017
2018
2019
2020
Thereafter
ⳮ893
ⳮ893
0
0
0
0
0
ⳮ9,395
ⳮ863
ⳮ2,778
ⳮ980
ⳮ836
ⳮ986
ⳮ3,683
ⳮ10,288
ⳮ1,756
ⳮ2,778
ⳮ980
ⳮ836
ⳮ986
ⳮ3,683
F-41
€ millions
Carrying
Amount
Contractual Cash Flows
12/31/2014
2015
2016
2017
2018
2019
Thereafter
ⳮ782
ⳮ782
0
0
0
0
0
Financial liabilities
ⳮ11,209
ⳮ2,377
ⳮ625
ⳮ3,976
ⳮ958
ⳮ827
ⳮ3,262
Total of non-derivative financial liabilities
ⳮ11,990
ⳮ3,159
ⳮ625
ⳮ3,976
ⳮ958
ⳮ827
ⳮ3,262
Trade payables
Contractual Maturities of Derivative Financial Liabilities and Financial Assets
€ millions
Carrying
Amount
12/31/2015
Contractual Cash Flows
2016
Thereafter
Carrying Contractual Cash Flows
Amount
12/31/2014
2015
Thereafter
Derivative financial liabilities
Currency derivatives not designated as
hedging instruments
–117
Cash outflows
Cash inflows
Currency derivatives designated as
hedging instruments
–2,896
–58
–4,110
–44
2,834
0
3,836
0
–10
Cash outflows
Cash inflows
Interest-rate derivatives designated as
hedging instruments
–310
–22
–489
0
–487
0
475
0
464
0
0
–1
Cash outflows
0
0
–7
–24
Cash inflows
0
0
9
19
–76
–58
–295
–49
Total of derivative financial liabilities
–128
–333
Derivative financial assets
Currency derivatives not designated as
hedging instruments
69
Cash outflows
Cash inflows
Currency derivatives designated as
hedging instruments
Cash inflows
–1,236
0
3,073
0
1,656
0
10
–266
0
–162
0
275
0
163
0
77
–43
–225
–34
–293
77
300
62
313
183
106
75
498
449
20
55
30
17
165
154
–29
Cash inflows
Total of derivative financial liabilities
and assets
0
100
Cash outflows
Total of derivative financial assets
–3,010
14
Cash outflows
Interest-rate derivatives designated as
hedging instruments
411
F-42
(25) FINANCIAL RISK MANAGEMENT
We manage market risks (including foreign currency
exchange rate risk, interest-rate risk, and equity price
risk), credit risk, and liquidity risk on a Group-wide basis
through our global treasury department. Our risk
management and hedging strategy is set by our treasury
guideline and other internal guidelines, and is subject to
continuous internal risk analysis. Derivative financial
instruments are only purchased to reduce risks and not
for speculation, which is defined as entering into
derivative instruments without a corresponding
underlying transaction.
In the following sections we provide details on the
management of each respective financial risk and our
related risk exposure. In the sensitivity analyses that
show the effects of hypothetical changes of relevant risk
variables on profit or other comprehensive income, we
determine the periodic effects by relating the
hypothetical changes in the risk variables to the balance
of financial instruments at the reporting date.
Foreign Currency Exchange Rate Risk Management
We continually monitor our exposure to currency
fluctuation risks based on monetary items and
forecasted transactions and pursue a Group-wide
strategy to manage foreign currency exchange rate risk,
using derivative financial instruments, primarily foreign
exchange forward contracts, as appropriate, with the
primary aim of reducing profit or loss volatility.
Currency Hedges Not Designated as Hedging
Instruments
The foreign exchange forward contracts we enter into to
offset
exposure
relating
to
foreign-currency
denominated monetary assets and liabilities are not
designated as being in a hedge accounting relationship,
see Note (3a).
Currency hedges not designated as hedging instruments
also include foreign currency derivatives embedded in
non-derivative host contracts that are separated and
accounted for as derivatives according to the
requirements of IAS 39 (Financial Instruments:
Recognition and Measurement).
In addition, during 2014 we held foreign exchange
forward contracts and foreign currency options to hedge
the cash flow risk from the consideration paid in U.S.
dollars for the acquisition of Concur.
Currency Hedges Designated as Hedging
Instruments (Cash Flow Hedges)
We enter into derivative financial instruments, primarily
foreign exchange forward contracts, to hedge significant
forecasted cash flows (royalties) from foreign
subsidiaries denominated in foreign currencies with a
defined set of hedge ratios and a hedge horizon of up to
12 months. Specifically, we exclude the interest
component and only designate the spot rate of the
foreign exchange forward contracts as the hedging
instrument to offset anticipated cash flows relating to the
subsidiaries with significant operations. We generally use
foreign exchange derivatives that have maturities of
12 months or less, which may be rolled over to provide
continuous coverage until the applicable royalties are
received.
For the years ended December 31, 2015 and 2014, no
previously highly probable transaction designated as a
hedged item in a foreign currency cash flow hedge
relationship ceased to be probable. Therefore, we did not
discontinue any of our cash flow hedge relationships.
Also, we identified no ineffectiveness in all years
reported. Generally, the cash flows of the hedged
forecasted transactions are expected to occur and to be
recognized in profit or loss monthly within a time frame
of 12 months from the date of the statement of financial
position.
Foreign Currency Exchange Rate Exposure
In line with our internal risk reporting process, we use the
cash flow-at-risk method to quantify our risk positions
with regard to our forecasted intercompany transactions
and value-at-risk for our foreign-currency denominated
financial instruments. In order not to provide two
different methodologies, we have opted to disclose our
risk exposure based on a sensitivity analysis considering
the following:
– The SAP Group’s entities generally operate in their
functional currencies. In exceptional cases and limited
economic environments, operating transactions are
denominated in currencies other than the functional
currency, leading to a foreign currency exchange rate
risk for the related monetary instruments. Where
material, this foreign currency exchange rate risk is
hedged. Therefore, fluctuations in foreign currency
exchange rates neither have a significant impact on
profit nor on other comprehensive income with regard
to our non-derivative monetary financial instruments
and related income or expenses.
– Our free-standing derivatives designed for hedging
foreign currency exchange rate risks almost
completely balance the changes in the fair values of
the hedged item attributable to exchange rate
movements in the Consolidated Income Statements
in the same period. As a consequence, the hedged
items and the hedging instruments are not exposed to
foreign currency exchange rate risks, and thereby
have no effect on profit.
F-43
Consequently, we are only exposed to significant foreign
currency exchange rate fluctuations with regard to the
following:
– Derivatives held within a designated cash flow hedge
relationship (excluding the interest element, which is
not part of the assigned cash flow hedge
relationships) affecting other comprehensive income
– Foreign currency embedded derivatives affecting
other non-operating expense, net.
We calculate our sensitivity on an upward/downward
shift of +/–25% of the foreign currency exchange rate
between euro and Brazil real and +/–10% of the foreign
currency exchange rate between euro and all other major
currencies (2014: upward shift for Swiss franc +20%, all
other major currencies +10%, downward shift for all
major currencies –10%; 2013: upward/downward shift of
+/–10% for all major currencies). If on December 31,
2015, 2014, and 2013, the foreign currency exchange
rates had been higher/lower as described above, this
would not have had a material effect on other nonoperating expense, net and other comprehensive
income.
Our foreign currency exposure as at December 31 (and if
year-end exposure is not representative, also our
average/high/low exposure) was as follows:
Foreign Currency Exposure
€ billions
2015
2014
Year-end exposure toward all
our major currencies
1.0
1.0
Average exposure
1.1
2.7
Highest exposure
1.2
7.7
Lowest exposure
1.0
1.0
During 2015, our sensitivity to foreign currency exchange
rate fluctuations decreased compared to the year ended
December 31, 2014, mainly due to the hedging
transactions for the acquisition of Concur in 2014.
Interest-Rate Risk Management
The aim of our interest-rate risk management is to
reduce profit or loss volatility and optimize our interest
result by creating a balanced structure of fixed and
variable cash flows. We therefore manage interest-rate
risks by adding interest-rate-related derivative
instruments to a given portfolio of investments and debt
financing.
Derivatives Designated as Hedging Instruments (Fair
Value Hedges)
The majority of our investments are based on variable
rates and/or short maturities (2015: 87%; 2014: 71%)
while most of our financing transactions are based on
fixed rates and long maturities (2015: 66%; 2014: 55%).
To match the interest-rate risk from our financing
transactions to our investments, we use receiver
interest-rate swaps to convert certain fixed rate financial
liabilities to floating, and by this means secure the fair
value of the swapped financing transactions. The desired
fix-floating mix of our net debt is set by the Treasury
Committee. Including interest-rate swaps, 36% (2014:
30%) of our total interest-bearing financial liabilities
outstanding as at December 31, 2015, had a fixed interest
rate.
None of the fair value adjustment from the receiver
swaps, the basis adjustment on the underlying hedged
items held in fair value hedge relationships, and the
difference between the two recognized in financial
income, net is material in any of the years presented.
Interest-Rate Exposure
A sensitivity analysis is provided to show the impact of
our interest-rate risk exposure on profit or loss and
equity in accordance with IFRS 7, considering the
following:
– Changes in interest rates only affect the accounting
for non-derivative fixed rate financial instruments if
they are recognized at fair value. Therefore, such
interest-rate changes do not change the carrying
amounts of our non-derivative fixed rate financial
liabilities as we account for them at amortized cost.
Investments in fixed rate financial assets classified as
available-for-sale were not material at each year end
reported. Thus, we do not consider any fixed rate
instruments in the equity-related sensitivity
calculation.
– Income or expenses recorded in connection with nonderivative financial instruments with variable interest
rates are subject to interest-rate risk if they are not
hedged items in an effective hedge relationship. Thus,
we take into consideration interest-rate changes
relating to our variable rate financing and our
investments in money market instruments in the
profit-related sensitivity calculation.
The designation of interest-rate receiver swaps in a fair
value hedge relationship leads to interest-rate changes
affecting financial income, net. The fair value movements
related to the interest-rate swaps are not reflected in the
sensitivity calculation, as they offset the fixed interestrate payments for the bonds and private placements as
hedged items. However, changes in market interest rates
affect the amount of interest payments from the
interest-rate swap. As a consequence, those effects of
market interest rates on interest payments are included
in the profit-related sensitivity calculation.
Due to the different interest-rate expectations for the
U.S. dollar and the euro area, we base our sensitivity
analyses on a yield curve upward shift of +100/+50 basis
F-44
points for the U.S. dollar/euro area (2014: +100/+50
basis points for the U.S. dollar/euro area; 2013: +100
bps) and a yield curve downward shift of –50 basis
points for both the U.S. dollar/euro area (2014: –50 bps;
2013: –20 bps).
If, on December 31, 2015, 2014, and 2013, interest rates
had been higher/lower as described above, this would
not have had a material effect on financial income, net for
our variable interest-rate investments and would have
had the following effects on financial income, net.
Interest-Rate Sensitivity
€ millions
Effects on Financial Income, Net
2015
2014
2013
–105
–116
–24
62
70
5
Interest rates +50 bps in euro area
–39
–65
0
Interest rates –50 bps in euro area
19
65
0
Derivatives held within a designated fair value hedge relationship
Interest rates +100 bps in U.S. dollar area/+50 bps in euro area
(2014: +100 bps in U.S. dollar area/+50 bps in euro area; 2013: +100 bps in
U.S. dollar/euro area)
Interest rates –50 bps in U.S. dollar/euro area
(2014: –50 bps in U.S. dollar/euro area; 2013: –20 bps in U.S. dollar/euro area)
Variable rate financing
Our interest-rate exposure as at December 31 (and if
year-end exposure is not representative, also our
average/high/low exposure) was as follows:
Interest-Rate Risk Exposure
€ billion
2014
2015
Year-End
Average
High
Low
Year-End
Average
High
Low
0.03
0.05
0.07
0.03
0.04
0.05
0.08
0.04
From investments (including cash)
3.08
3.09
3.37
2.62
2.45
2.48
2.74
2.13
From financing
3.16
3.73
4.63
3.16
5.03
0.75
5.03
0
From interest-rate swaps
2.69
2.67
2.74
2.64
2.55
2.44
2.55
2.39
Fair value interest-rate risk
From investments
Cash flow interest-rate risk
Equity Price Risk Management
Our investments in equity instruments with quoted
market prices in active markets (2015: €320 million;
2014: €209 million) are monitored based on the current
market value that is affected by the fluctuations in the
volatile stock markets worldwide. An assumed 20%
increase (decrease) in equity prices as at December 31,
2015 (2014), would not have a material impact on the
value of our investments in marketable equity securities
and the corresponding entries in other comprehensive
income.
We are exposed to equity price risk with regard to our
share-based payments. In order to reduce resulting
profit or loss volatility, we hedge certain cash flow
exposures associated with these plans through the
purchase of derivative instruments, but do not establish
a designated hedge relationship. In our sensitivity
analysis we include the underlying share-based
payments and the hedging instruments. Thus, we base
the calculation on our net exposure to equity prices as
we believe taking only the derivative instrument into
account would not properly reflect our equity price risk
exposure. An assumed 20% increase (decrease) in
equity prices as at December 31, 2015, would have
increased (decreased) our share-based payment
expenses by €200 million (€198 million) (2014:
increased by €158 million (decreased by €80 million);
2013: increased by €126 million (decreased by
€90 million)).
F-45
Credit Risk Management
To mitigate the credit risk from our investing activities
and derivative financial assets, we conduct all our
activities only with approved major financial institutions
and issuers that carry high external ratings, as required
by our internal treasury guideline. Among its stipulations,
the guideline requires that we invest only in assets from
issuers with a minimum rating of at least “BBB flat”. We
only make investments in issuers with a lower rating in
exceptional cases. Such investments were not material
in 2015. The weighted average rating of our financial
assets is in the range A+ to A. We pursue a policy of
cautious investments characterized by predominantly
current investments, standard investment instruments,
as well as a wide portfolio diversification by doing
business with a variety of counterparties.
To further reduce our credit risk, we require collateral for
certain investments in the full amount of the investment
volume which we would be allowed to make use of in the
case of default of the counterparty to the investment. As
such collateral, we only accept bonds with at least
investment grade rating level.
In addition, the concentration of credit risk that exists
when counterparties are involved in similar activities by
instrument, sector, or geographic area is further
mitigated by diversification of counterparties throughout
the world and adherence to an internal limit system for
each counterparty. This internal limit system stipulates
that the business volume with individual counterparties
is restricted to a defined limit, which depends on the
lowest official long-term credit rating available by at least
one of the major rating agencies, the Tier 1 capital of the
respective financial institution, or participation in the
German Depositors’ Guarantee Fund or similar
protection schemes. We continuously monitor strict
compliance with these counterparty limits. As the
premium for credit default swaps mainly depends on
market
participants’
assessments
of
the
creditworthiness of a debtor, we also closely observe the
development of credit default swap spreads in the
market to evaluate probable risk developments to timely
react to changes if these should manifest.
The default risk of our trade receivables is managed
separately,
mainly
based
on
assessing
the
creditworthiness of customers through external ratings
and our past experience with the customers concerned.
Outstanding receivables are continuously monitored
locally. For more information, see Note (3). The impact of
default on our trade receivables from individual
customers is mitigated by our large customer base and
its distribution across many different industries,
company sizes, and countries worldwide. For more
information about our trade receivables, see Note (13).
For information about the maximum exposure to credit
risk, see Note (24).
Liquidity Risk Management
Our liquidity is managed by our global treasury
department with the primary aim of maintaining liquidity
at a level that is adequate to meet our financial
obligations.
Generally, our primary source of liquidity is funds
generated from our business operations. The majority of
our subsidiaries pool their cash surplus to our global
treasury department, which then arranges to fund other
subsidiaries’ requirements or invest any net surplus in
the market. With this strategy we seek to optimize yields,
while ensuring liquidity, by investing only with
counterparties and issuers of high credit quality, as
explained above. Hence, high levels of liquid assets and
marketable securities provide a strategic reserve,
helping keep SAP flexible, sound, and independent.
Apart from effective working capital and cash
management, we have reduced the liquidity risk inherent
in managing our day-to-day operations and meeting our
financing responsibilities by arranging an adequate
volume of available credit facilities with various financial
institutions on which we can draw if necessary.
In order to retain high financial flexibility, on November 13,
2013, SAP SE entered into a €2.0 billion syndicated credit
facility agreement with an initial term of five years plus
two one-year extension options. In 2015, the original term
of this facility was extended for an additional period of one
year to November 2020. The use of the facility is not
restricted by any financial covenants. Borrowings under
the facility bear interest of EURIBOR or LIBOR for the
respective currency plus a margin of 22.5 basis points.
We are also required to pay a commitment fee of
7.88 basis points per annum on the unused available
credit. We have never drawn on the facility.
Additionally, as at December 31, 2015, and 2014, SAP SE
had available lines of credit totaling €471 million and
€471 million, respectively. As at December 31, 2015, and
2014, there were no borrowings outstanding under these
lines of credit.
(26) ADDITIONAL FAIR VALUE DISCLOSURES ON
FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
We use various types of financial instrument in the
ordinary course of business, which are classified as
either: loans and receivables (L&R), available-for-sale
(AFS), held-for-trading (HFT), or amortized cost (AC).
For those financial instruments measured at fair value or
for which fair value must be disclosed, we have
categorized the financial instruments into a three-level
fair value hierarchy depending on the inputs used to
determine fair value and their significance for the
valuation techniques.
F-46
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions
Category
December 31, 2015
Carrying
Amount
Measurement
Categories
At
Amortized
Cost
At Fair
Value
Fair Value
Level 1 Level 2 Level 3
Total
Assets
Cash and cash equivalents1)
L&R
Trade and other receivables
3,411
3,411
5,362
Trade receivables1)
L&R
5,199
Other receivables2)
—
163
Other financial assets
5,199
1,687
Available-for-sale financial assets
Debt investments
AFS
26
26
26
Equity investments
AFS
882
882
299
—
58
—
121
L&R
316
FX forward contracts
—
14
Interest-rate swaps
—
FX forward contracts
Investments in associates2)
26
21
562
882
Loans and other financial receivables
Financial instruments related to
employee benefit plans2)
Other loans and other financial
receivables
316
316
316
14
14
14
100
100
100
100
HFT
69
69
69
69
Call options for share-based
payments
HFT
94
94
94
94
Call option on equity shares
HFT
6
6
Derivative assets
Designated as hedging instrument
Not designated as hedging instrument
6
6
F-47
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions
Category
December 31, 2015
Carrying
Amount
Measurement
Categories
At
Amortized
Cost
At Fair
Value
Fair Value
Level 1 Level 2 Level 3
Total
Liabilities
Trade and other payables
–1,169
Trade payables1)
AC
–893
Other payables2)
—
–276
Financial liabilities
–893
–9,522
Non-derivative financial liabilities
Loans
AC
–1,261
–1,261
–1,261
Bonds
AC
–5,733
–5,733
Private placements
AC
–2,202
–2,202
–2,288
–2,288
Other non-derivative financial liabilities
AC
–199
–199
–199
–199
FX forward contracts
—
–10
–10
–10
–10
Interest-rate swaps
—
0
0
0
0
HFT
–117
–117
–117
–117
1,064 –5,500 –3,261
568 –8,192
–5,825
–1,261
–5,825
Derivatives
Designated as hedging instrument
Not designated as hedging instrument
FX forward contracts
Total financial instruments, net
–232
–1,361
F-48
Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy
€ millions
Category
December 31, 2014
Carrying Measurement Categories
Amount
At Fair
At
Value
Amortized
Cost
Fair Value
Level 1
Level 2 Level 3
Total
Assets
Cash and cash equivalents1)
L&R
Trade and other receivables
Trade receivables1)
L&R
receivables2)
—
Other
3,328
3,328
4,443
Other financial assets
4,255
4,255
188
1,699
Available-for-sale financial assets
Debt investments
AFS
40
40
40
Equity investments
AFS
597
597
108
—
49
Financial instruments related to employee
benefit plans2)
—
136
Other loans and other financial receivables
L&R
324
Investments in associates2)
40
101
388
597
Loans and other financial receivables
324
324
324
Derivative assets
Designated as hedging instrument
FX forward contracts
—
10
10
10
10
Interest-rate swaps
—
77
77
77
77
FX forward contracts
HFT
411
411
411
411
Call options for share-based payments
HFT
43
43
43
43
Call option on equity shares
HFT
13
13
Not designated as hedging instrument
13
13
Liabilities
ⳮ1,087
Trade and other payables
payables1)
AC
ⳮ782
Other payables2)
—
ⳮ305
Trade
ⳮ782
ⳮ11,542
Financial liabilities
Non-derivative financial liabilities
Loans
AC ⳮ4,261
ⳮ4,261
ⳮ4,261
ⳮ4,261
Bonds
AC ⳮ4,629
ⳮ4,629
Private placements
AC ⳮ2,195
ⳮ2,195
ⳮ2,301
ⳮ2,301
Other non-derivative financial liabilities
AC
ⳮ123
ⳮ123
ⳮ123
ⳮ123
FX forward contracts
—
ⳮ22
ⳮ22
ⳮ22
ⳮ22
Interest-rate swaps
—
ⳮ1
ⳮ1
ⳮ1
ⳮ1
ⳮ310
ⳮ310
ⳮ310
858 ⳮ4,663 ⳮ6,053
400 ⳮ10,315
ⳮ4,811
ⳮ4,811
Derivatives
Designated as hedging instrument
Not designated as hedging instrument
FX forward contracts
Total financial instruments, net
HFT
ⳮ310
ⳮ3,159
ⳮ4,084
We do not separately disclose the fair value for cash and cash equivalents, trade receivables, and accounts payable as their carrying
amounts are a reasonable approximation of their fair values.
2) Since the line items trade receivables, trade payables, and other financial assets contain both financial and non-financial assets or
liabilities (such as other taxes or advance payments), the carrying amounts of non-financial assets or liabilities are shown to allow a
reconciliation to the corresponding line items in the Consolidated Statements of Financial Position.
1)
F-49
Fair Values of Financial Instruments Classified According to IAS 39
€ millions
Category
December 31, 2015
Carrying Amount
At Amortized Cost
At Fair Value
Financial assets
At fair value through profit or loss
HFT
169
169
Available-for-sale
AFS
908
908
Loans and receivables
L&R
8,926
HFT
ⳮ117
AC
ⳮ10,288
8,926
Financial liabilities
At fair value through profit or loss
At amortized cost
€ millions
ⳮ117
ⳮ10,288
Category
December 31, 2014
Carrying Amount
At Amortized Cost
At Fair Value
Financial assets
At fair value through profit or loss
HFT
467
467
Available-for-sale
AFS
637
637
Loans and receivables
L&R
7,906
HFT
ⳮ310
AC
ⳮ11,991
7,906
Financial liabilities
At fair value through profit or loss
At amortized cost
Determination of Fair Values
It is our policy that transfers between the different levels
of the fair value hierarchy are deemed to have occurred
ⳮ310
ⳮ11,991
at the beginning of the period of the event or change in
circumstances that caused the transfer. A description of
the valuation techniques and the inputs used in the fair
value measurement is given below:
Financial Instruments Measured at Fair Value on a Recurring Basis
Type
Fair Value Determination of Fair
Hierarchy Value/Valuation Technique
Significant
Unobservable
Inputs
Interrelationship
Between Significant
Unobservable Inputs
and Fair Value
Measurement
Other financial assets
Debt investments
Level 1
Quoted prices in an active
market
NA
NA
Listed equity
investments
Level 1
Quoted prices in an active
market
NA
NA
Level 2
Quoted prices in an active
market deducting a discount
for the disposal restriction
derived from the premium for
a respective put option.
NA
NA
F-50
Type
Fair Value Determination of Fair
Hierarchy Value/Valuation Technique
Significant
Unobservable
Inputs
Interrelationship
Between Significant
Unobservable Inputs
and Fair Value
Measurement
Unlisted equity
investments
Level 3
Market approach. Comparable company valuation
using revenue multiples
derived from companies
comparable to the investee.
Peer companies
used (revenue
multiples range from
2.7 to 8.3)
Revenues of
investees;
Discounts for lack of
marketability (10%
to 30%)
The estimated fair value
would increase
(decrease) if:
The revenue multiples
were higher (lower)
The investees’ revenues
were higher (lower)
The liquidity discounts
were lower (higher).
Market approach. Venture
capital method evaluating a
variety of quantitative and
qualitative factors such as
actual and forecasted results,
cash position, recent or
planned transactions, and
market comparable
companies.
NA
NA
Last financing round
valuations
NA
NA
Liquidation preferences
NA
NA
Net asset value/Fair market
value as reported by the
respective funds
NA
NA
Call options for
share-based
payment plans
Level 2
Monte-Carlo Model.
Calculated considering riskfree interest rates, the
remaining term of the
derivatives, the dividend
yields, the stock price, and
the volatility of our share.
NA
NA
Call option on
equity shares
Level 3
Market approach. Company
valuation using EBITDA
multiples based on actual
results derived from the
investee.
EBITDA multiples
used
EBITDA of the
investee
The estimated fair value
would increase
(decrease) if:
The EBITDA multiples
were higher (lower)
The investees’ EBITDA
were higher (lower)
Other financial assets/Financial liabilities
FX forward
contracts
Level 2
Discounted cash flow using
Par-Method.
Expected future cash flows
based on forward exchange
rates are discounted over the
respective remaining term of
the contracts using the
respective deposit interest
rates and spot rates.
NA
NA
Interest-rate
swaps
Level 2
Discounted cash flow.
Expected future cash flows
are estimated based on
forward interest rates from
observable yield curves and
contract interest rates,
discounted at a rate that
reflects the credit risk of the
counterparty.
NA
NA
F-51
Financial Instruments Not Measured at Fair Value
Type
Fair Value Hierarchy
Determination of Fair Value/Valuation
Technique
Fixed rate bonds (financial liabilities)
Level 1
Quoted prices in an active market
Fixed rate private placements/ loans
(financial liabilities)
Level 2
Discounted cash flows.
Future cash outflows for fixed interest and
principal are discounted over the term of the
respective contracts using the market interest
rates as of the reporting date.
Financial liabilities
For other non-derivative financial assets/liabilities and
variable rate financial debt, it is assumed that their
carrying value reasonably approximates their fair values.
Transfers Between Levels 1 and 2
Transfers of available-for-sale equity investments from
Level 2 to Level 1 which occurred because disposal
restrictions lapsed and deducting a discount for such
restriction was no longer necessary were not material in
all years presented, while transfers from Level 1 to Level
2 did not occur at all.
Level 3 Disclosures
The following table shows the reconciliation from the
opening to the closing balances for our unlisted equity
investments and call options on equity shares classified
as Level 3 fair values:
Reconciliation of Level 3 Fair Values
€ millions
2015
2014
Unlisted Equity Investments and
Call Options on Equity Shares
Unlisted Equity Investments
400
239
12
0
ⳮ80
ⳮ29
170
141
ⳮ22
ⳮ36
9
27
Included in available-for-sale financial assets in other
comprehensive income
34
21
Included in exchange differences in other
comprehensive income
45
37
568
400
0
0
January 1
Transfers
Into Level 3
Out of Level 3
Purchases
Sales
Gains/losses
Included in financial income, net in profit and loss
December 31
Change in unrealized gains/losses in profit and loss for
investments held at the end of the reporting period
Changing the unobservable inputs to reflect reasonably
possible alternative assumptions would not have a
material impact on the fair values of our unlisted equity
investments held as available-for-sale as of the reporting
date.
(27) SHARE-BASED PAYMENTS
SAP has granted awards under various cash-settled and
equity-settled share-based payments to its directors and
employees. Most of these awards are described in detail
below. SAP has other share-based payment plans not
described below, which are individually and in aggregate,
immaterial to our Consolidated Financial Statements.
F-52
a) Cash-Settled Share-Based Payments
SAP’s cash-settled share-based payments include the
following programs: Employee Participation Plan (EPP)
and Long-Term Incentive Plan (LTI Plan for the Global
Managing Board) 2015, Stock Option Plan 2010 (SOP
2010 (2010–2015 tranches)), Restricted Stock Unit Plan
(RSU (2013–2015 tranches)).
As at December 31, 2015, the valuation of our
outstanding cash-settled plans was based on the
following parameters and assumptions:
Fair Value and Parameters Used at Year End 2015 for Cash-Settled Plans
SOP 2010
RSU
LTI Plan 2015 (2012 EPP 2015 (2015 (2010 – 2015 (2013 – 2015
– 2015 tranches)
tranche)
tranches)
tranches)
Weighted average fair value as at 12/31/2015
€71.45
€73.38
€16.06
€71.90
Other1)
Other1)
Monte-Carlo
Other1)
Information how fair value was measured at
measurement date
Option pricing model used
€73.38
Share price
Risk-free interest rate (depending on maturity)
Expected volatility SAP shares
Expected dividend yield SAP shares
Weighted average remaining life of options
outstanding as at 12/31/2015 (in years)
€73.24
ⳮ0.25% to
ⳮ0.39%
NA
ⳮ0.03% to
ⳮ0.38%
ⳮ0.16% to
ⳮ0.39%
NA
NA
22.0% to
41.9%
NA
1.56%
NA
1.56%
1.56%
1.7
0.1
3.4
1.2
1) For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until
maturity of the respective award from the prevailing share price as of the valuation date.
As at December 31, 2014, the valuation of our
outstanding cash-settled plans was based on the
following parameters and assumptions:
Fair Value and Parameters Used at Year End 2014 for Cash-Settled Plans
SOP 2010
RSU
LTI Plan 2015 (2012 EPP 2015 (2014 (2010 – 2014 (2013 – 2014
– 2014 tranches)
tranche)
tranches)
tranches)
Weighted average fair value as at 12/31/2014
€56.40
€58.26
€10.17
€54.09
Other1)
Other1)
Monte-Carlo
Other1)
Information how fair value was measured at
measurement date
Option pricing model used
€58.26
Share price
Risk-free interest rate (depending on maturity)
Expected volatility SAP shares
Expected dividend yield SAP shares
Weighted average remaining life of options
outstanding as at 12/31/2014 (in years)
€57.37
ⳮ0.1%
NA
ⳮ0.1% to
0.02%
ⳮ0.1% to
ⳮ0.01%
NA
NA
19.9% to
23.4 %
NA
1.74%
NA
1.74%
1.76%
1.8
0.1
3.5
1.1
1) For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until
maturity of the respective award from the prevailing share price as of the valuation date.
F-53
Expected volatility of the SAP share price is based on a
blend of implied volatility from traded options with
corresponding lifetimes and exercise prices as well as
historical volatility with the same expected life as the
options granted.
Expected remaining life of the options reflects both the
contractual term and the expected, or historical, exercise
behavior. The risk-free interest rate is derived from
German government bonds with a similar duration.
Dividend yield is based on expected future dividends.
Changes in Numbers of Outstanding Awards Under Our Cash-Settled Plans
thousands
Outstanding as at 12/31/2013
LTI Plan 2015
EPP 2015
SOP 2010
RSU
(2012 – 2015 (2013 – 2015 (2010 – 2015 (2013 – 2015
tranches)
tranches)
tranches)
tranches)
515
1,845
21,666
1,427
Granted in 2014
242
2,177
8,965
2,001
Adjustment based upon KPI target achievement in 2014
ⳮ41
ⳮ458
NA
ⳮ88
Exercised in 2014
ⳮ70
ⳮ1,845
ⳮ2,730
ⳮ734
Forfeited in 2014
ⳮ55
ⳮ104
ⳮ1,619
ⳮ378
591
1,615
26,282
2,228
Granted in 2015
277
2,605
10,866
5,125
Adjustment based upon KPI target achievement in 2015
109
495
NA
109
Exercised in 2015
0
ⳮ1,614
ⳮ6,585
ⳮ1,337
Forfeited in 2015
0
ⳮ131
ⳮ1,436
ⳮ548
977
2,970
29,127
5,577
12/31/2014
0
0
3,313
0
12/31/2015
0
0
4,120
0
12/31/2014
45
94
167
56
12/31/2015
74
205
283
166
12/31/2014
38
94
49
0
12/31/2015
76
218
110
0
2014
54.96
57.48
56.65
56.62
2015
NA
56.94
66.20
65.83
2013
ⳮ11
118
83
34
2014
13
82
29
58
2015
28
200
187
193
Outstanding as at 12/31/2014
Outstanding as at 12/31/2015
Outstanding awards exercisable as at
Total carrying amount (in € millions) of liabilities as at
Total intrinsic value of vested awards (in € millions) as at
Weighted average share price (in €) for share options
exercised in
Total expense (in € millions) recognized in
F-54
a.1) Employee Participation Plan (EPP) and LongTerm Incentive Plan (LTI Plan) 2015
SAP implemented two share-based payments in 2012: an
Employee Participation Plan (EPP) 2015 for employees
and a Long-Term Incentive (LTI) Plan 2015 for members
of the Global Managing Board.
The plans are focused on SAP’s share price and the
achievement of two financial key performance indicators
(KPIs): non-IFRS total revenue and non-IFRS operating
profit, which are derived from the Company’s 2015
financial KPIs. Under these plans, virtual shares, called
restricted share units (RSUs), are granted to
participants. Participants are paid out in cash based on
the number of RSUs that vest.
The RSUs were granted and allocated at the beginning of
each year through 2015, with EPP 2015 RSUs subject to
annual Executive Board approval. Participants in the LTI
Plan 2015 have already been granted a budget for the
years 2012 to 2015 (2015 for new plan participants
joining in 2015). All participants in the LTI Plan 2015 are
members of the Global Managing Board.
The RSU allocation process took place at the beginning
of each year based on SAP’s share price after the
publication of its preliminary annual results for the last
financial year prior to the performance period.
At the end of the given year, the number of RSUs that
finally vest with plan participants depends on SAP’s
actual performance for the given year, and might be
higher or lower than the number of RSUs originally
granted. If performance against both KPI targets reaches
at least the defined 60% (80% for 2012 and 2013
tranches) threshold, the RSUs vest. Depending on
performance, the vesting can reach a maximum of 150%
of the budgeted amount. If performance against either or
both of those KPI targets does not reach the defined
threshold of 60% (80% for 2012 and 2013 tranches), no
RSUs vest and RSUs granted for that year will be
forfeited. The adjustment to the threshold of those
performance indicators was made to reflect our updated
expectations due to the accelerated shift to the cloud.
For the year 2015, the RSUs granted at the beginning of
the year vested with 112.96% (2014: 77.89%)
achievement of the KPI targets for the LTI Plan. For the
EPP, the Executive Board set the achievement of the KPI
targets at 120.00% (2014: 77.89%).
Under the EPP 2015, the RSUs are paid out in the first
quarter of the year after the one-year performance
period, whereas the RSUs for members of the Global
Managing Board under the LTI Plan 2015 are subject to a
three-year holding period before payout, which occurs
starting in 2016.
The LTI Plan 2015 includes a “look-back” provision, due
to the fact that this plan is based on certain KPI targets in
2015. The number of RSUs vested under the 2015
tranche was adjusted to reflect the overall achievement
for 2015 than represented by the number of RSUs vested
from the 2012 to 2014 tranches. However, RSUs that
were already fully vested in prior years did not forfeit.
The final financial effect of each tranche of the EPP 2015
and the LTI Plan 2015 will depend on the number of
vested RSUs and the SAP share price, which is set
directly after the announcement of the preliminary fourth
quarter and full-year results for the last financial year
under the EPP 2015 (of the respective three-year holding
period under the LTI Plan 2015), and thus may be
significantly above or below the budgeted amounts.
a.2) SAP Stock Option Plan 2010 (SOP 2010 (2010–
2015 Tranches))
Under the SAP Stock Option Plan 2010, we granted
members of the Senior Leadership Team/Global
Executives, SAP’s Top Rewards (employees with an
exceptional rating/high potentials) between 2010 and
2015 and only in 2010 and 2011 members of the
Executive Board cash-based virtual stock options, the
value of which depends on the multi-year performance of
the SAP share.
The grant-base value is based on the average fair market
value of one ordinary share over the five business days
prior to the Executive Board resolution date.
The virtual stock options granted under the SOP 2010
give the employees the right to receive a certain amount
of money by exercising the options under the terms and
conditions of this plan. After a three-year vesting period
(four years for members of the Executive Board), the
plan provides for 11 predetermined exercise dates every
calendar year (one date per month except in April) until
the rights lapse six years after the grant date (seven
years for members of the Executive Board). Employees
can exercise their virtual stock options only if they are
employed by SAP; if they leave the Company, they forfeit
them. Executive Board members’ options are nonforfeitable once granted – if the service agreement ends
in the grant year, the number of options is reduced pro
rata temporis. Any options not exercised at the end of
their term expire.
The exercise price is 110% of the grant base value (115%
for members of the Executive Board) which is
€39.03 (€40.80) for the 2010 tranche, €46.23
(€48.33) for the 2011 tranche, €49.28 for the 2012
tranche, €59.85 for the 2013 tranche, €60.96 for the
2014 tranche, and €72.18 for the 2015 tranche.
Monetary benefits will be capped at 100% of the exercise
price (150% for members of the Executive Board).
F-55
a.3) Restricted Stock Unit Plan (RSU Plan (2013–
2015 tranches))
We maintain share-based payment plans that allow for
the issuance of restricted stock units (RSU) to retain and
motivate executives and certain employees.
Under the RSU Plan, we granted a certain number of
RSUs between 2013 and 2015 representing a contingent
right to receive a cash payment determined by the
market value of the same number of SAP SE shares (or
SAP SE American Depositary Receipts on the New York
Stock Exchange) and the number of RSUs that ultimately
vest. Granted RSUs will vest in different tranches, either:
– Over a one-to-three year service period only, or
– Over a one-to-three year service period and upon
meeting certain key performance indicators (KPIs).
The number of RSUs that could vest under the 2015
tranche with performance-based grants was mostly
contingent upon a weighted achievement of the following
performance milestones for the fiscal year ended on
December 31, 2015:
– Non-IFRS total revenue (50%); and
– Non-IFRS operating profit (50%).
b) Equity-Settled Share-Based Payments: Share
Matching Plan (SMP)
Under the Share Matching Plan (SMP) implemented in
2010, SAP offers its employees the opportunity to
purchase SAP SE shares at a discount of 40%. The
number of SAP shares an eligible employee may
purchase through the SMP is limited to a percentage of
the employee’s annual base salary. After a three-year
holding period, such plan participants will receive one
free matching share of SAP for every three SAP shares
acquired.
The terms for the members of the Senior Leadership
Team/Global Executives are slightly different than those
for the other employees. They do not receive a discount
when purchasing the shares. However, after a three-year
holding period, they receive two free matching SAP
shares for every three SAP shares acquired. This plan is
not open to members of the SAP Executive Board.
The following table shows the parameters and
assumptions used at grant date to determine the fair
value of free matching shares, as well as the quantity of
shares purchased and free matching shares granted
through this program in 2015, 2014, and 2013:
Depending on performance, the number of RSUs vesting
could have ranged between 50% and 150% of the
number initially granted. Performance against the KPI
targets was 112.96% (2014: 90.27%) in fiscal year 2015.
The RSUs are paid out in cash upon vesting.
Fair Value and Parameters at Grant Date for SMP
Grant date
Fair value of granted awards
2015
2014
2013
6/5/2015
6/4/2014
9/4/2013
€62.98
€52.49
€51.09
Information how fair value was measured at grant date
Option pricing model used
Share price
Risk-free interest rate
Expected dividend yield
Weighted average remaining contractual life of awards outstanding at
year end (in years)
Number of investment shares purchased (in thousands)
Other1)
€66.31
€55.61
€54.20
ⳮ0.08%
0.13%
0.43%
1.67%
1.87%
1.92%
1.5
0.9
1.6
1,492
1,550
1,559
1) For these awards, the fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of
the respective award from the prevailing share price as of the valuation date.
F-56
Changes in Numbers of Outstanding Awards Under SMP
thousands
SMP
Outstanding as at 12/31/2013
3,986
Granted in 2014
568
Exercised in 2014
ⳮ432
Forfeited in 2014
ⳮ187
Outstanding as at 12/31/2014
3,935
Granted in 2015
551
ⳮ2,808
Exercised in 2015
ⳮ78
Forfeited in 2015
Outstanding as at 12/31/2015
1,600
Recognized Expense at Year End for SMP
€ millions
2015
2014
2013
Expense recognized relating to
discount
36
35
32
Expense recognized relating to
vesting of free matching shares
44
54
51
Total expense relating to SMP
80
89
83
(28) SEGMENT AND GEOGRAPHIC INFORMATION
General Information
On December 4, 2014, we completed our acquisition of
Concur and in the first quarter of 2015 we announced our
intention to combine all SAP network offerings (that is,
predominantly the activities of the purchased Concur
business and the network activities of the Ariba and
Fieldglass businesses acquired earlier) and launch the
SAP Business Network, a network of networks which
covers sourcing, procurement, and travel and expenses.
Since fiscal year 2015 SAP thus has two reportable
segments that are regularly reviewed by our Executive
Board, which is responsible for assessing the
performance of our Company and for making resource
allocation decisions as our Chief Operating Decision
Maker (CODM): the Applications, Technology & Services
segment and the SAP Business Network segment. These
two segments are largely organized and managed
separately according to their product and service
offerings, notably whether the products and services
relate to our business network activities or cover other
areas of our business.
The Applications, Technology & Services segment
derives its revenue primarily from the sale of software
licenses, subscriptions to our cloud applications, and
related services (mainly support services and various
professional services and premium support services, as
well as implementation services of our software products
and education services on the use of our products).
The SAP Business Network segment emerged from
combining all SAP network offerings into one network of
networks that covers temporary workforce sourcing,
other procurement, and end-to-end travel and business
travel expense management. The SAP Business Network
segment derives its revenues mainly from transaction
fees charged for the use of SAP’s cloud-based
collaborative business network and from services
relating to the SAP Business Network (including cloud
applications, professional services, and education
services). Within the SAP Business Network segment, we
mainly market and sell the cloud offerings developed by
Ariba, Fieldglass, and Concur.
Our Concur and Fieldglass acquisitions are included in
the segment information since their respective
acquisition dates (December 4, 2014, for Concur and
May 2, 2014, for Fieldglass).
The SAP Business Network qualifies as an operating
segment and as a reportable segment under IFRS 8.
F-57
Revenue and Results of Segments
€ millions
Applications, Technology & Services
2015
SAP Business Network
2014
2015
Total Reportable Segments
2014
2015
2014
Actual
Currency
Constant
Currency
Cloud subscriptions
and support
961
849
585
1,337
1,151
515
2,297
2,000
1,101
Software licenses
4,835
4,580
4,381
ⳮ1
ⳮ1
0
4,834
4,579
4,381
Software support
10,061
9,388
8,806
31
26
29
10,092
9,414
8,835
Software licenses
and support
14,896
13,968
13,187
30
25
28
14,926
13,993
13,216
Cloud and software
15,856
14,817
13,772
1,367
1,176
544
17,223
15,993
14,316
3,270
3,035
3,099
247
213
101
3,517
3,248
3,199
19,126
17,852
16,871
1,614
1,389
644
20,740
19,241
17,515
ⳮ452
ⳮ421
ⳮ263
ⳮ336
ⳮ293
ⳮ128
ⳮ788
ⳮ715
ⳮ390
ⳮ1,994
ⳮ1,831
ⳮ1,823
ⳮ1
ⳮ1
ⳮ3
ⳮ1,994
ⳮ1,831
ⳮ1,826
Cost of cloud and
software
ⳮ2,446
ⳮ2,252
ⳮ2,085
ⳮ337
ⳮ294
ⳮ131
ⳮ2,783
ⳮ2,546
ⳮ2,216
Cost of services
ⳮ2,897
ⳮ2,735
ⳮ2,479
ⳮ193
ⳮ171
ⳮ87
ⳮ3,090
ⳮ2,905
ⳮ2,565
Total cost of
revenue
ⳮ5,343
ⳮ4,987
ⳮ4,564
ⳮ530
ⳮ465
ⳮ217
ⳮ5,873
ⳮ5,451
ⳮ4,781
13,784
12,865
12,307
1,084
924
427
14,868
13,790
12,734
ⳮ5,865
ⳮ5,484
ⳮ5,207
ⳮ771
ⳮ675
ⳮ322
ⳮ6,637
ⳮ6,158
ⳮ5,530
7,918
7,382
7,099
312
250
105
8,231
7,631
7,204
Services
Total segment
revenue
Cost of cloud
subscriptions and
support
Cost of software
licenses and
support
Segment gross profit
Total segment
expenses
Segment profit
Actual
Actual Constant
Actual
Actual Constant
Actual
Currency Currency Currency Currency Currency Currency Currency
F-58
Revenue and Results of Segments
€ millions
Applications, Technology & Services
2014
SAP Business Network
2013
2014
Total Reportable Segments
2013
2014
2013
Actual
Currency
Constant
Currency
585
585
413
515
512
344
1,101
1,097
757
Software
licenses
4,381
4,381
4,519
0
0
0
4,381
4,381
4,519
Software
support
8,806
8,915
8,280
29
29
30
8,835
8,943
8,310
Software licenses
and support
13,187
13,296
12,799
28
28
31
13,216
13,324
12,829
Cloud and software
13,772
13,881
13,211
544
541
375
14,316
14,422
13,586
Services
3,099
3,136
3,175
101
101
85
3,199
3,236
3,259
16,871
17,017
16,386
644
641
460
17,515
17,658
16,846
ⳮ263
ⳮ263
ⳮ124
ⳮ128
ⳮ127
ⳮ84
ⳮ390
ⳮ389
ⳮ208
Cost of
software
licenses and
support
ⳮ1,823
ⳮ1,839
ⳮ1,741
ⳮ3
ⳮ3
ⳮ8
ⳮ1,826
ⳮ1,842
ⳮ1,749
Cost of cloud and
software
ⳮ2,085
ⳮ2,102
ⳮ1,865
ⳮ131
ⳮ130
ⳮ91
ⳮ2,216
ⳮ2,232
ⳮ1,956
Cost of services
ⳮ2,479
ⳮ2,518
ⳮ2,447
ⳮ87
ⳮ88
ⳮ68
ⳮ2,565
ⳮ2,606
ⳮ2,516
Total cost of
revenue
ⳮ4,564
ⳮ4,619
ⳮ4,312
ⳮ217
ⳮ218
ⳮ160
ⳮ4,781
ⳮ4,837
ⳮ4,472
Segment gross
profit
12,307
12,397
12,074
427
423
300
12,734
12,820
12,374
ⳮ5,207
ⳮ5,269
ⳮ5,018
ⳮ322
ⳮ322
ⳮ201
ⳮ5,530
ⳮ5,591
ⳮ5,218
7,099
7,128
7,056
105
101
99
7,204
7,229
7,155
Cloud
subscriptions
and support
Total segment
revenue
Cost of cloud
subscriptions
and support
Total segment
expenses
Segment profit
Actual
Actual Constant
Actual
Actual Constant
Actual
Currency Currency Currency Currency Currency Currency Currency
Segment asset/liability information is not regularly
provided to our CODM. Goodwill by operating segment is
disclosed in Note (15).
Measurement and Presentation
Our management reporting system reports our
intersegment services as cost reductions and does not
track them as internal revenue. Intersegment services
mainly represent utilization of human resources of one
segment by another segment on a project-by-project
basis. Intersegment services are charged based on
internal cost rates including certain indirect overhead
costs, excluding a profit margin.
Most of our depreciation and amortization expense
affecting segment profits is allocated to the segments as
part of broader infrastructure allocations and is thus not
tracked separately on the operating segment level.
Depreciation and amortization expense that is directly
allocated to the operating segments is immaterial in all
operating segments presented.
Our management reporting system produces a variety of
reports that differ by the currency exchange rates used
in the accounting for foreign-currency transactions and
operations. Reports based on actual currencies use the
same currency rates as are used in our financial
F-59
statements. Reports based on constant currencies
report revenues and expenses using the average
exchange rates from the previous year’s corresponding
period.
We use an operating profit indicator to measure the
performance of our operating segments. However, the
accounting policies applied in the measurement of
operating segment revenue and profit differ as follows
from the IFRS accounting principles used to determine
the operating profit measure in our income statement:
The measurements of segment revenue and results
include the recurring revenues that would have been
recorded by acquired entities had they remained standalone entities but which are not recorded as revenue
under IFRS due to fair value accounting for customer
contracts in effect at the time of an acquisition.
The expenses measured exclude:
– Acquisition-related charges
▪ Amortization expense and impairment charges for
intangibles acquired in business combinations and
certain stand-alone acquisitions of intellectual
property (including purchased in-process research
and development)
▪ Settlements of pre-existing relationships in
connection with a business combination
▪ Acquisition-related third-party costs
– Expenses from the TomorrowNow litigation and the
Versata litigation
– Share-based payment expenses
– Restructuring expenses
Certain corporate-level activities are not allocated to our
segments, including finance, accounting, legal, human
resources, and marketing. They are disclosed in the
reconciliation under other expenses and other revenue
respectively.
The segment information for prior periods has been
restated to conform to the new two-segment structure.
Reconciliation of Revenue and Segment Results
€ millions
2015
2014
2013
Actual
Currency
Constant
Currency
Actual
Currency
Constant
Currency
Actual
Currency
20,740
19,241
17,515
17,658
16,846
64
58
64
65
51
0
1,505
0
ⳮ142
0
ⳮ11
ⳮ11
ⳮ19
ⳮ19
ⳮ82
20,793
20,793
17,560
17,560
16,815
8,231
7,631
7,204
7,229
7,155
64
58
64
65
51
ⳮ1,947
ⳮ1,786
ⳮ1,631
ⳮ1,665
ⳮ1,725
0
443
0
ⳮ9
0
ⳮ11
ⳮ11
ⳮ19
ⳮ19
ⳮ82
Acquisition-related charges
ⳮ738
ⳮ738
ⳮ562
ⳮ562
ⳮ555
Share-based payment expenses
ⳮ724
ⳮ724
ⳮ290
ⳮ290
ⳮ327
Restructuring
ⳮ621
ⳮ621
ⳮ126
ⳮ126
ⳮ70
0
0
ⳮ309
ⳮ309
31
4,252
4,252
4,331
4,331
4,479
ⳮ256
ⳮ256
49
49
ⳮ17
ⳮ5
ⳮ5
ⳮ25
ⳮ25
ⳮ66
3,991
3,991
4,355
4,355
4,396
Total segment revenue for reportable segments
Other revenue
Adjustment for currency impact
Adjustment of revenue under fair value accounting
Total revenue
Total segment profit for reportable segments
Other revenue
Other expenses
Adjustment for currency impact
Adjustment for
Revenue under fair value accounting
TomorrowNow and Versata litigation
Operating profit
Other non-operating income/expense, net
Financial income, net
Profit before tax
F-60
Geographic Information
We have aligned our revenue by region disclosures with
the changes made to the structure of our income
statement as outlined in Note (3b).
The amounts for revenue by region in the following tables
are based on the location of customers. The regions in
the following table are broken down into EMEA (Europe,
Middle East, and Africa), Americas (North America and
Latin America) and APJ (Asia Pacific Japan).
Revenue by Region
€ millions
Cloud Subscriptions
and Support Revenue
EMEA
Americas
APJ
SAP Group
Total Revenue by Region
Cloud and Software Revenue
2015
2014
2013
2015
2014
2013
507
277
176
7,622
6,819
6,616
1,579
709
457
6,929
5,276
5,097
200
101
64
2,663
2,221
2,237
2,286
1,087
696
17,214
14,315
13,950
Non-Current Assets by Region
€ millions
2015
2014
2013
€ millions
2015
2014
Germany
2,771
2,570
2,513
Germany
2,395
2,399
Rest of EMEA
6,409
5,813
5,462
The Netherlands
2,843
2,917
EMEA
9,181
8,383
7,975
France
2,175
2,116
United States
6,750
4,898
4,487
Rest of EMEA
2,557
2,477
Rest of Americas
1,678
1,591
1,746
EMEA
9,969
9,909
8,428
6,489
6,233
United States
19,124
17,568
667
600
631
139
152
Rest of APJ
2,517
2,088
1,975
19,264
17,720
APJ
3,185
2,688
2,606
APJ
599
518
20,793
17,560
16,815
SAP Group
29,832
28,147
Americas
Japan
SAP Group
Rest of Americas
Americas
The table above shows non-current assets excluding
financial instruments, deferred tax assets, postemployment benefits, and rights arising under insurance
contracts.
For information about the breakdown of our workforce
by region, see Note (7).
F-61
(29) BOARD OF DIRECTORS
Executive Board
Memberships on supervisory boards and other
comparable governing bodies of enterprises, other than
subsidiaries of SAP on December 31, 2015
Bill McDermott
Chief Executive Officer, Labor Relations Director
Strategy, Governance, Business Development,
Corporate Development,
Communications and Marketing, Human Resources,
Business Network
Board of Directors, ANSYS, Inc., Canonsburg, PA,
United States
Board of Directors, Under Armour, Inc., Baltimore, MD,
United States
Robert Enslin
Global Customer Operations
Global Sales, Industry & LoB Solutions Sales, Services
Sales, Sales Operations, Global Customer Office
Michael Kleinemeier (from November 1, 2015)
Global Service & Support
Global Consulting Delivery, Global and Regional Support
and Premium Engagement Functions, Maintenance
Go-to-Market, Global User Groups, Mobile Services
Bernd Leukert
Chief Technology Officer
Products & Innovation
Global Development Organization, Innovation & Cloud
Delivery, Product Strategy, Development Services, SAP
Global Security
Supervisory Board, DFKI (Deutsches
Forschungszentrum für Künstliche Intelligenz GmbH),
Kaiserslautern, Germany (from October 13, 2015)
Luka Mucic
Chief Financial Officer, Chief Operating Officer
Global Finance and Administration including Investor
Relations and Data Protection & Privacy, Process Office,
Business Innovation & IT
Supervisory Board
Memberships on supervisory boards and other
comparable governing bodies of enterprises, other than
subsidiaries of SAP on December 31, 2015
Prof. Dr. h.c. mult. Hasso Plattner 2), 4), 6), 7), 8)
Chairman
Margret Klein-Magar 1), 2), 4)
Deputy Chairperson
Vice President, Head of SAP Alumni Relations
Chairperson of the Spokespersons’ Committee of Senior
Managers of SAP SE
Pekka Ala-Pietilä 4), 5), 6), 7)
Chairman of the Board of Directors, Huhtamäki Oyj,
Espoo, Finland
Chairman of the Board of Directors, Solidium Oy,
Helsinki, Finland (until April 22, 2015)
Board of Directors, Pöyry Plc, Vantaa, Finland
Chairman of the Board of Directors, CVON Group
Limited, London, United Kingdom
Board of Directors, CVON Limited, London,
United Kingdom
Chairman of the Board of Directors, CVON Innovation
Services Oy, Turku, Finland
Board of Directors, CVON Future Limited, London,
United Kingdom
Chairman of the Board of Directors, Blyk International
Ltd., London, United Kingdom
Board of Directors, Sanoma Corporation, Helsinki,
Finland
Panagiotis Bissiritsas 1), 3), 4), 5)
Support Expert
Martin Duffek (from May 20, 2015) 1), 3), 8)
Product Manager
Prof. Anja Feldmann 4), 8)
Professor at the Electrical Engineering and Computer
Science Faculty at the Technische Universität Berlin
Gerhard Oswald
Product Quality & Enablement
Quality Governance & Validation, Scale, Enablement &
Transformation, Logistics Services
F-62
Prof. Dr. Wilhelm Haarmann 2), 5), 7), 8)
Attorney-at-law, certified public auditor, certified tax
advisor
Linklaters LLP, Rechtsanwälte, Notare, Steuerberater,
Frankfurt am Main, Germany
Supervisory Board, Celesio AG, Stuttgart, Germany
(until March 1, 2015)
Andreas Hahn (from May 20, 2015) 1), 2), 4)
Product Expert, Industry Standards & Open Source
Prof. Dr. Gesche Joost (from May 28, 2015) 4), 8)
Professor for Design Research and Head of the Design
Research Lab, University of Arts Berlin
Dr. Erhard Schipporeit 3), 7)
Independent Management Consultant
Supervisory Board, Talanx AG, Hanover, Germany
Supervisory Board, Deutsche Börse AG, Frankfurt am
Main, Germany
Supervisory Board, HDI V.a.G., Hanover, Germany
Supervisory Board, Hannover Rückversicherung SE,
Hanover, Germany
Supervisory Board, Fuchs Petrolub SE, Mannheim,
Germany
Supervisory Board, BDO AG, Hamburg, Germany
Board of Directors, Fidelity Funds SICAV, Luxembourg
Supervisory Board, Rocket Internet AG, Berlin, Germany
(until June 23, 2015)
Robert Schuschnig-Fowler (from May 20, 2015) 1), 8)
Account Manager, Senior Support Engineer
Lars Lamadé 1), 2), 7), 8)
Head of Customer & Events GSS COO
Managing Director, Rhein Neckar-Loewen GmbH,
Kronau, Germany
Bernard Liautaud 2), 4), 6)
General Partner Balderton Capital, London,
United Kingdom
Board of Directors, nlyte Software Ltd., London,
United Kingdom
Board of Directors, Talend SA, Suresnes, France
Board of Directors, Wonga Group Ltd., London,
United Kingdom
Board of Directors, SCYTL Secure Electronic Voting SA,
Barcelona, Spain
Board of Directors, Vestiaire Collective SA, LevalloisPerret, France
Board of Directors, Dashlane, Inc., New York, NY,
United States
Board of Directors, Recorded Future, Inc., Cambridge,
MA, United States
Board of Directors, eWise Group, Inc., Redwood City, CA,
United States
Board of Directors, Qubit Digital Ltd., London,
United Kingdom
Board of Directors, Stanford University, Stanford, CA,
United States
Board of Directors, Citymapper Ltd., London,
United Kingdom
Board of Directors, Sunrise Atelier, Inc., New York, NY,
United States (until February 11, 2015)
Board of Directors, Opbeat Inc., San Francisco, CA,
United States
Dr. Sebastian Sick (from May 20, 2015) 1), 2), 5), 7)
Head of Company Law Unit, Hans Böckler Foundation
Supervisory Board, Georgsmarienhütte GmbH,
Georgsmarienhütte, Germany
Jim Hagemann Snabe 2), 5)
Supervisory Board Member
Board of Directors, Bang & Olufsen A/S, Struer,
Denmark
Board of Directors, Danske Bank A/S, Copenhagen,
Denmark
Supervisory Board, Allianz SE, Munich, Germany
Supervisory Board, Siemens AG, Munich, Germany
Pierre Thiollet (from May 20, 2015) 1), 4)
Webmaster
Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer 3)
Managing Director of Dr. Klaus Wucherer Innovationsund Technologieberatung GmbH, Erlangen, Germany
Deputy Chairman of the Supervisory Board, HEITEC AG,
Erlangen, Germany
Supervisory Board, Dürr AG, Bietigheim-Bissingen,
Germany (until December 31, 2015)
Deputy Chairman of the Supervisory Board, LEONI AG,
Nuremberg, Germany
Chairman of the Supervisory Board, Festo AG & Co. KG,
Esslingen, Germany
Christine Regitz (from May 20, 2015) 1), 4), 8)
Vice President User Experience
Chief Product Expert
F-63
Supervisory Board Members Who Left During 2015
Catherine Bordelon (until May 20, 2015)
Christiane Kuntz-Mayr (until May 20, 2015)
Steffen Leskovar (until May 20, 2015)
Dr. h. c. Hartmut Mehdorn (until May 15, 2015)
Dr. Kurt Reiner (until May 20, 2015)
Mario Rosa-Bian (until May 20, 2015)
Stefan Schulz (until May 20, 2015)
The share-based payment as defined in section 314 of
the German Commercial Code (HGB) amounts to
€263,200 and 4,622 RSUs respectively (2014:
€8,720,200) based on the allocation for 2015 for Michael
Kleinemeier, which was granted in 2015 in line with his
appointment to the Executive Board. The prior-year
amount includes the allocations for 2014 and 2015 for
Robert Enslin, Bernd Leukert and Luka Mucic, which
were granted in 2014 in line with their appointment to the
Executive Board.
Information as at December 31, 2015
1) Elected by the employees
2) Member of the Company’s General and Compensation Committee
3) Member of the Company’s Audit Committee
4) Member of the Company’s Technology and Strategy Committee
5) Member of the Company’s Finance and Investment Committee
6) Member of the Company’s Nomination Committee
7) Member of the Company’s Special Committee
8) Member of the Company’s People and Organization Committee
Allocating the fair value of the share-based payments to
the respective years they are economically linked to the
total compensation of the Executive Board members for
the years 2015, 2014, and 2013 was as follows:
Executive Board Compensation
€ thousands
2015
2014
2013
Short-term employee
benefits
15,137
16,196
24,728
Share-based payment1)
10,365
8,098
8,603
25,502
24,294
33,331
1,278
3,249
Thereof definedbenefit
288
Thereof definedcontribution
Subtotal1)
Post-employment
benefits
Total1)
the German Commercial Code (HGB) requires them to
be included in the total compensation number for the
year of grant. Upon his appointment to the Executive
Board in 2015, Michael Kleinemeier received a grant
related to 2015. Vesting of the LTI grants is dependent on
the respective Executive Board member’s continuous
service for the Company.
Considering the grant date fair value of the RSUs
allocated during the year instead of the economically
allocated amount of share-based payments in the table
above, the sum of short-term employee benefits and
share-based payment amounts to €15,400,400 (2014:
€23,216,200) and the total Executive Board
compensation amounts to €16,678,400 (2014:
€26,464,700).
Share-Based Payment for Executive Board Members
2015
2014
2013
Number of RSUs
granted
192,345
153,909
152,159
Number of stock
options granted
0
0
0
1,324
11,133
ⳮ8,596
189
Total expense in
€ thousands
22,310
2,276
990
973
1,135
26,780
27,543
34,655
Portion of total executive compensation allocated to the respective
year based on management view
1)
The share-based payment amounts disclosed above are
based on the grant date fair value of the restricted share
units (RSUs) issued to Executive Board members during
the year.
The Executive Board members already received, in 2012,
the LTI grants for the years 2012 to 2015 subject to
continuous service as member of the Executive Board in
the respective years. Although these grants are linked to
and thus, economically, compensation for the Executive
Board members in the respective years, section 314 of
In the table above, the share-based payment expense is
the amount recorded in profit or loss under IFRS 2 in the
respective period.
The defined benefit obligation (DBO) for pensions to
Executive Board members and the annual pension
entitlement of the members of the Executive Board on
reaching age 60 based on entitlements from
performance-based and salary-linked plans were as
follows:
Retirement Pension Plan for Executive Board Members
€ thousands
2015
2014
2013
DBO December 31
8,948
11,273
9,077
427
475
452
Annual pension entitlement
F-64
The total annual compensation of the Supervisory Board
members for 2015 is as follows:
Supervisory Board Compensation
€ thousands
2015
2014
2013
Total compensation
3,728
3,227
2,966
3,250
924
870
479
515
416
Thereof fixed compensation
Thereof committee
remuneration
Thereof variable
compensation
NA
1,788
1,680
SAP, engaged in the following transactions with SAP:
providing consulting services to SAP, receiving sport
sponsoring from SAP, making purchases of SAP
products and services.
Christiane Kuntz-Mayr, vice chairperson and member of
the SAP Supervisory Board until May 20, 2015, acted as
a managing director of family & kids @ work
gemeinnützige UG (“family & kids @ work”).
Wilhelm Haarmann practices as a partner in the law firm
Linklaters LLP in Frankfurt am Main, Germany. SAP
occasionally purchased and purchases legal and similar
services from Linklaters.
The Supervisory Board members do not receive any
share-based payment for their services. As far as
members who are employee representatives on the
Supervisory Board receive share-based payment, such
compensation is for their services as employees only and
is unrelated to their status as members of the
Supervisory Board.
Occasionally, members of the Executive Board of SAP SE
obtain services from SAP for which they pay a
consideration believed to be consistent with those
negotiated at arm’s length between unrelated parties.
Payments to/DBO for Former Executive Board Members
In total, we sold products and services to companies
controlled by members of the Supervisory Board in the
amount of €1 million (2014: €4 million), we bought
products and services from such companies in the
amount of €7 million (2014: €1 million), and we provided
sponsoring and other financial support to such
companies in the amount of €5 million (2014:
€7 million). Outstanding balances at year end from
transactions with such companies were €0 million (2014:
€2 million) for amounts owed to such companies and
€0 million (2014: €1 million) for amounts owed by such
companies. All these balances are unsecured and
interest free and settlement is expected to occur in cash.
Commitments (the longest of which is for 10 years)
made by us to purchase further goods or services from
these companies and to provide further sponsoring and
other financial support amount to €11 million as at
December 31, 2015 (2014: €13 million).
€ thousands
2015
2014
2013
Payments
1,580
3,462
1,387
32,758
33,764
29,181
DBO December 31
SAP did not grant any compensation advance or credit
to, or enter into any commitment for the benefit of, any
member of the Executive Board or Supervisory Board in
2015, 2014, or 2013.
Shareholdings of Executive and Supervisory Board
Members
Number of SAP
shares
Executive Board
Supervisory Board
2015
2014
2013
45,309
36,426
30,201
90,262,686 107,467,372 119,316,444
(30) RELATED PARTY TRANSACTIONS
Certain Executive Board and Supervisory Board
members of SAP SE currently hold, or held within the last
year, positions of significant responsibility with other
entities, as presented in Note (29). We have relationships
with certain of these entities in the ordinary course of
business, whereby we buy and sell products, assets and
services at prices believed to be consistent with those
negotiated at arm’s length between unrelated parties.
Companies controlled by Hasso Plattner, chairman of
our Supervisory Board and Chief Software Advisor of
All amounts related to the abovementioned transactions
were immaterial to SAP in all periods presented.
In total, we sold services to members of the Executive
Board and the Supervisory Board in the amount of
€2 million (2014: €0 million) and we received services
from members of the Supervisory Board (including
services from employee representatives on the
Supervisory Board in their capacity as employees of
SAP) in the amount of €1 million (2014: €2 million).
Amounts owed to Supervisory Board members from
these transactions were €0 million as at December 31,
2015 (2014: €0 million). All these balances are
unsecured and interest free and settlement is expected
to occur in cash.
For information about the compensation of our Executive
Board and Supervisory Board members, see Note (29).
F-65
(31) PRINCIPAL ACCOUNTANT FEES AND SERVICES
At the Annual General Meeting of Shareholders held
on May 20, 2015, our shareholders elected KPMG
AG
Wirtschaftsprüfungsgesellschaft
as
SAP’s
independent
auditor
for
2015.
KPMG
AG
Wirtschaftsprüfungsgesellschaft and other firms in the
global KPMG network charged the following fees to SAP
for audit and other professional services related to 2015
and the previous years:
Fees for Audit and Other Professional Services
€ millions
2014
2015
2013
KPMG AG
(Germany)
Foreign
KPMG
Firms
Total
KPMG AG
(Germany)
Foreign
KPMG
Firms
Total
KPMG AG
(Germany)
Foreign
KPMG
Firms
Total
Audit fees
3
6
9
2
6
8
2
7
9
Audit-related fees
0
0
0
0
0
0
1
0
1
Tax fees
0
0
0
0
0
0
0
0
0
All other fees
0
0
0
0
0
0
0
0
0
Total
3
6
9
2
6
8
3
7
10
Audit fees are the aggregate fees charged by KPMG for
auditing our consolidated financial statements and the
statutory financial statements of SAP SE and its
subsidiaries. Audit-related fees are fees charged by
KPMG for assurance and related services that are
reasonably related to the performance of the audit or
review of our financial statements and are not reported
under audit fees. Tax fees are fees for professional
services rendered by KPMG for tax advice on transfer
pricing, restructuring, and tax compliance on current,
past, or contemplated transactions. The All other fees
category includes other support services, such as
training and advisory services on issues unrelated to
accounting and taxes.
(32) EVENTS AFTER THE REPORTING PERIOD
After December 31, 2015, the following change took
place:
We are in the process of preparing the consolidation of
intellectual property rights held by SAP’s group company
hybris AG at the level of SAP SE in Germany. Based on
deviating applicable tax rates, the Group expects an
overall positive income tax effect in a range between
approximately €180 million and €220 million in 2016.
F-66
(33) SUBSIDIARIES AND OTHER EQUITY INVESTMENTS
Subsidiaries
Name and Location of Company
Owner- Total Revenue Profit/ Loss (-) Total Equity as
Number of Footship
in 20151)
after Tax for at 12/31/20151)
Employees as note
20151)
at 12/31/20152)
%
€ thousands
€ thousands
€ thousands
Ariba, Inc., Palo Alto, CA, United States
100.0
642,877
ⳮ145,271
3,697,333
1,425
Concur Technologies, Inc., Bellevue, WA,
United States
100.0
638,122
ⳮ18,115
6,552,341
2,741
LLC SAP CIS, Moscow, Russia
100.0
356,480
ⳮ18,607
42,319
659
SAP (Beijing) Software System Co., Ltd.,
Beijing, China
100.0
759,818
ⳮ83,167
ⳮ94,864
4,562
Major Subsidiaries
SAP (Schweiz) AG, Biel, Switzerland
100.0
751,860
45,934
44,193
611
SAP (UK) Limited, Feltham, United
Kingdom
100.0
1,132,753
16,073
15,358
1,511
SAP America, Inc., Newtown Square, PA,
United States
100.0
4,559,147
ⳮ402,385
14,709,940
6,114
SAP Asia Pte Ltd, Singapore, Singapore
100.0
386,585
ⳮ35,614
34,567
1,020
SAP Australia Pty Ltd, Sydney, Australia
100.0
631,863
ⳮ7,537
187,392
1,064
SAP Brasil Ltda, São Paulo, Brazil
100.0
527,180
ⳮ15,176
17,826
1,481
SAP Canada, Inc., Toronto, Canada
100.0
669,947
22,740
455,322
2,598
SAP Deutschland SE & Co. KG, Walldorf,
Germany
100.0
3,477,774
466,454
1,258,713
4,505
SAP France, Levallois Perret, France
100.0
1,095,886
218,454
1,582,376
1,427
SAP India Private Limited, Bangalore, India
100.0
488,794
53,742
254,822
1,800
SAP Industries, Inc., Newtown Square, PA,
United States
100.0
601,898
40,492
538,411
385
SAP Italia Sistemi Applicazioni Prodotti in
Data Processing S.p.A., Vimercate, Italy
100.0
464,458
20,554
337,584
601
SAP Japan Co., Ltd., Tokyo, Japan
100.0
681,109
30,866
515,703
994
SAP Labs India Private Limited, Bangalore,
India
100.0
285,633
26,359
28,703
5,947
SAP Labs, LLC, Palo Alto, CA, United
States
100.0
582,128
10,367
314,276
1,924
SAP Nederland B.V., ‘s-Hertogenbosch,
the Netherlands
100.0
494,173
21,096
17,016
504
SAP Service and Support Centre (Ireland)
Limited, Dublin, Ireland
100.0
114,647
6,430
41,152
1,131
SuccessFactors, Inc., South San
Francisco, CA, United States
100.0
714,646
21,254
3,152,160
1,104
Sybase, Inc., Dublin, CA, United States
100.0
597,125
390,137
5,897,666
677
10)
7), 9)
11)
F-67
Name and Location of Company
Ownership
Footnote
Name and Location of Company
%
Ownership
%
“SAP Kazakhstan” LLP, Almaty,
Kazakhstan
100.0
ClearTrip Private Limited, Mumbai,
India
100.0
110405, Inc., Newtown Square, PA,
United States
100.0
CNQR Operations Mexico S. de. R.L. de.
C.V., San Pedro Garza Garcia, Mexico
100.0
Concur (Austria) GmbH, Vienna,
Austria
100.0
Ambin Properties (Proprietary) Limited,
Johannesburg, South Africa
Concur (Canada), Inc., Toronto, Canada
100.0
Ariba Czech s.r.o., Prague, Czech
Republic
100.0
Concur (France) SAS, Paris, France
100.0
100.0
Concur (Germany) GmbH, Frankfurt am
Main, Germany
100.0
Ariba India Private Limited, Gurgaon,
India
Ariba International Holdings, Inc.,
Wilmington, DE, United States
100.0
Concur (Italy) S.r.l., Milan, Italy
100.0
Ariba International Singapore Pte Ltd,
Singapore, Singapore
100.0
Concur (New Zealand) Limited,
Wellington, New Zealand
100.0
Ariba International, Inc., Wilmington,
DE, United States
100.0
Concur (Philippines) Inc., Makati City,
Philippines
100.0
Ariba Investment Company, Inc.,
Wilmington, DE, United States
100.0
Concur (Switzerland) GmbH, Zurich,
Switzerland
100.0
Ariba Slovak Republic s.r.o., Košice,
Slovakia
100.0
Concur Czech (s.r.o.), Prague, Czech
Republic
100.0
Ariba Software Technology Services
(Shanghai) Co., Ltd., Shanghai, China
100.0
Concur Denmark ApS, Frederiksberg,
Denmark
100.0
Ariba Technologies India Private
Limited, Bangalore, India
100.0
Concur Holdings (France) SAS, Paris,
France
100.0
Ariba Technologies Netherlands B.V.,
‘s-Hertogenbosch, the Netherlands
100.0
11)
Concur Holdings (Netherlands) B.V.,
Amsterdam, the Netherlands
100.0
0
5)
Concur Holdings (US) LLC, Wilmington,
DE, United States
100.0
Concur International Holdings
(Netherlands) CV, Amsterdam, the
Netherlands
100.0
Concur Technologies (Australia) Pty.
Limited, Sydney, Australia
100.0
Concur Technologies (Hong Kong)
Limited, Hong Kong, China
100.0
Other Subsidiaries 3)
Beijing Zhang Zhong Hu Dong
Information Technology Co., Ltd.,
Beijing, China
Footnote
Concur (Japan) Ltd., Bunkyo-ku, Japan
54.2
75.0
11)
b-process, Paris, France
100.0
Business Objects (UK) Limited, London,
United Kingdom
100.0
Business Objects Holding B.V.,
‘s-Hertogenbosch, the Netherlands
100.0
Business Objects Option LLC,
Wilmington, DE, United States
100.0
Concur Technologies (India) Private
Limited, Bangalore, India
100.0
Business Objects Software (Shanghai)
Co., Ltd., Shanghai, China
100.0
Concur Technologies (Singapore) Pte
Ltd, Singapore, Singapore
100.0
Business Objects Software Limited,
Dublin, Ireland
100.0
Concur Technologies (UK) Limited,
London, United Kingdom
100.0
10)
Christie Partners Holding C.V., Utrecht,
the Netherlands
100.0
ConTgo Consulting Limited, London,
United Kingdom
100.0
10)
ConTgo Limited, London, United
Kingdom
100.0
10)
ConTgo MTA Limited, London, United
Kingdom
100.0
10)
ConTgo Pty. Ltd., Sydney, Australia
100.0
Crossgate UK Limited, Slough, United
Kingdom
100.0
ClearTrip Inc. (Mauritius), Ebene,
Mauritius
54.2
ClearTrip Inc., George Town, Cayman
Islands
54.2
Cleartrip MEA FZ LLC, Dubai, United
Arab Emirates
54.2
11)
F-68
Name and Location of Company
Ownership
Footnote
Name and Location of Company
%
Ownership
Footnote
%
Crystal Decisions (Ireland) Limited,
Dublin, Ireland
100.0
Nihon Ariba K.K., Tokyo, Japan
100.0
100.0
Crystal Decisions Holdings Limited,
Dublin, Ireland
100.0
OutlookSoft Deutschland GmbH,
Walldorf, Germany
Crystal Decisions UK Limited, London,
United Kingdom
100.0
Plateau Systems Australia Ltd,
Brisbane, Australia
100.0
100.0
Plateau Systems LLC, South
San Francisco, CA, United States
100.0
EssCubed Procurement Pty. Ltd.,
Johannesburg, South Africa
Extended Systems, Inc., Dublin, CA,
United States
100.0
PT Sybase 365 Indonesia, Jakarta,
Indonesia
100.0
Fieldglass AsiaPac PTY Ltd, Brisbane,
Australia
100.0
Quadrem Africa Pty. Ltd.,
Johannesburg, South Africa
100.0
Fieldglass Europe Limited, London,
United Kingdom
100.0
Quadrem Australia Pty Ltd., Brisbane,
Australia
100.0
Financial Fusion, Inc., Dublin, CA, United
States
100.0
Quadrem Brazil Ltda., Rio de Janeiro,
Brazil
100.0
FreeMarkets International Holdings Inc.
de Mexico, de S. de R.L. de C.V., Mexico
City, Mexico
100.0
Quadrem Chile Ltda., Santiago de Chile,
Chile
100.0
FreeMarkets Ltda., São Paulo, Brazil
100.0
Quadrem Colombia SAS, Bogotá,
Colombia
100.0
Gelco Information Network, Inc.,
Minneapolis, MN, United States
100.0
Quadrem International Ltd., Hamilton,
Bermuda
100.0
GlobalExpense (Consulting) Limited,
London, United Kingdom
100.0
Quadrem Netherlands B.V.,
Amsterdam, the Netherlands
100.0
GlobalExpense (UK) Limited, London,
United Kingdom
100.0
Quadrem Overseas Cooperatief U.A.,
Amsterdam, the Netherlands
100.0
H-G Holdings, Inc., Wilmington, DE,
United States
100.0
Quadrem Peru S.A.C., Lima, Peru
100.0
100.0
Ruan Lian Technologies (Beijing) Co.,
Ltd., Beijing, China
100.0
H-G Intermediate Holdings, Inc.,
Wilmington, DE, United States
100.0
San Borja Partricipadoes LTDA, São
Paulo, Brazil
100.0
hybris (US) Corp., Wilmington, DE,
United States
100.0
SAP Andina y del Caribe, C.A., Caracas,
Venezuela
100.0
hybris AG, Zug, Switzerland
hybris Australia Pty Limited, Surry Hills,
Australia
100.0
SAP Argentina S.A., Buenos Aires,
Argentina
100.0
hybris GmbH, Munich, Germany
100.0
100.0
hybris Hong Kong Limited, Hong Kong,
China
100.0
SAP Asia (Vietnam) Co., Ltd., Ho Chi
Minh City, Vietnam
SAP Azerbaijan LLC, Baku, Azerbaijan
100.0
hybris UK Limited, London, United
Kingdom
100.0
SAP Belgium NV/SA, Brussels, Belgium
100.0
100.0
SAP Beteiligungs GmbH, Walldorf,
Germany
100.0
Inxight Federal Systems Group, Inc.,
Wilmington, DE, United States
SAP Bulgaria EOOD, Sofia, Bulgaria
100.0
KXEN Limited, Feltham, United
Kingdom
100.0
SAP Business Compliance Services
GmbH, Siegen, Germany
100.0
LLC “SAP Labs”, Moscow, Russia
100.0
100.0
SAP Business Services Center Europe
s.r.o., Prague, Czech Republic
100.0
LLC “SAP Ukraine”, Kiev, Ukraine
Merlin Systems Oy, Espoo, Finland
100.0
Multiposting SAS, Paris, France
100.0
SAP Business Services Center
Nederland B.V., ‘s-Hertogenbosch, the
Netherlands
100.0
4)
Multiposting Sp.z o.o., Warsaw, Poland
100.0
4)
SAP Chile Limitada, Santiago, Chile
100.0
PT SAP Indonesia, Jakarta, Indonesia
99.0
10)
10)
9)
10)
11)
4)
11)
F-69
Name and Location of Company
Ownership
Footnote
Name and Location of Company
%
Ownership
Footnote
%
SAP China Co., Ltd., Shanghai, China
100.0
4)
SAP China Holding Co., Ltd., Beijing,
China
100.0
4)
SAP India (Holding) Pte Ltd, Singapore,
Singapore
100.0
SAP International Panama, S.A.,
Panama City, Panama
100.0
SAP Colombia SAS., Bogotá, Colombia
100.0
SAP Commercial Services Ltd., Valletta,
Malta
100.0
SAP International, Inc., Miami, FL,
United States
100.0
SAP Costa Rica, S.A., San José, Costa
Rica
100.0
SAP Investments, Inc., Wilmington, DE,
United States
100.0
SAP ČR, spol. s r.o., Prague, Czech
Republic
100.0
SAP Ireland Limited, Dublin, Ireland
100.0
SAP Cyprus Ltd, Nicosia, Cyprus
100.0
SAP Ireland-US Financial Services Ltd.,
Dublin, Ireland
100.0
SAP d.o.o., Zagreb, Croatia
100.0
SAP Danmark A/S, Copenhagen,
Denmark
100.0
SAP Israel Ltd., Ra’anana, Israel
100.0
SAP Korea Ltd., Seoul, South Korea
100.0
SAP Labs Bulgaria EOOD, Sofia,
Bulgaria
100.0
SAP Labs Finland Oy, Espoo, Finland
100.0
SAP Dritte Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
SAP East Africa Limited, Nairobi, Kenya
100.0
SAP Labs France SAS, Mougins, France
100.0
SAP Egypt LLC, Cairo, Egypt
100.0
SAP Labs Israel Ltd., Ra’anana, Israel
100.0
SAP EMEA Inside Sales S.L., Barcelona,
Spain
100.0
SAP Labs Korea, Inc., Seoul, South
Korea
100.0
SAP Erste Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
SAP España – Sistemas, Aplicaciones y
Productos en la Informática, S.A.,
Madrid, Spain
100.0
SAP Estonia OÜ, Tallinn, Estonia
100.0
SAP Financial, Inc., Toronto, Canada
100.0
SAP Finland Oy, Espoo, Finland
100.0
SAP Foreign Holdings GmbH, Walldorf,
Germany
8), 9)
8), 9)
SAP Latvia SIA, Riga, Latvia
100.0
SAP Malaysia Sdn. Bhd., Kuala Lumpur,
Malaysia
100.0
SAP Malta Investments Ltd., Valletta,
Malta
100.0
SAP México S.A. de C.V., Mexico City,
Mexico
100.0
SAP Middle East and North Africa
L.L.C., Dubai, United Arab Emirates
49.0
100.0
SAP National Security Services, Inc.,
Newtown Square, PA, United States
100.0
SAP France Holding, Levallois Perret,
France
100.0
SAP Nederland Holding B.V., ‘sHertogenbosch, the Netherlands
100.0
SAP Fünfte Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
SAP New Zealand Limited, Auckland,
New Zealand
100.0
SAP Norge AS, Lysaker, Norway
100.0
SAP Global Marketing, Inc., New York,
NY, United States
100.0
SAP North West Africa Ltd, Casablanca,
Morocco
100.0
SAP Hellas S.A., Athens, Greece
100.0
SAP Österreich GmbH, Vienna, Austria
100.0
SAP Holdings (UK) Limited, Feltham,
United Kingdom
100.0
SAP PERU S.A.C., Lima, Peru
100.0
100.0
SAP Philippines, Inc., Makati,
Philippines
100.0
SAP Hong Kong Co., Ltd., Hong Kong,
China
SAP Polska Sp. z o.o., Warsaw, Poland
100.0
SAP Hosting Beteiligungs GmbH, St.
Leon-Rot, Germany
100.0
SAP Portals Europe GmbH, Walldorf,
Germany
100.0
SAP Hungary Rendszerek,
Alkalmazások és Termékek az
Adatfeldolgozásban Informatikai Kft.,
Budapest, Hungary
100.0
SAP Portals Holding Beteiligungs
GmbH, Walldorf, Germany
100.0
SAP Portals Israel Ltd., Ra’anana, Israel
100.0
9)
10)
5)
11)
4)
F-70
Name and Location of Company
Ownership
Footnote
Name and Location of Company
%
SAP Portugal – Sistemas, Aplicações e
Produtos Informáticos, Sociedade
Unipessoal, Lda., Porto Salvo, Portugal
100.0
SAP Projektverwaltungs- und
Beteiligungs GmbH, Walldorf, Germany
100.0
SAP Public Services Hungary Kft.,
Budapest, Hungary
Ownership
Footnote
%
SAP Zweite Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
8), 9)
Sapphire SAP HANA Fund of Funds,
L.P., Wilmington, DE, United States
0
6)
100.0
Sapphire Ventures Fund I, L.P.,
Wilmington, DE, United States
0
6)
SAP Public Services, Inc., Washington,
DC, United States
100.0
Sapphire Ventures Fund II, L.P.,
Wilmington, DE, United States
0
6)
SAP Puerto Rico GmbH, Walldorf,
Germany
100.0
SAPV (Mauritius), Ebene, Mauritius
0
6)
100.0
4)
SAP Retail Solutions
Beteiligungsgesellschaft mbH, Walldorf,
Germany
100.0
SAS Financière Multiposting, Paris,
France
SeeWhy (UK) Limited, Windsor, United
Kingdom
100.0
10)
SAP Romania SRL, Bucharest, Romania
100.0
100.0
SAP Saudi Arabia Software Services
Ltd, Riyadh, Kingdom of Saudi Arabia
100.0
Shanghai SuccessFactors Software
Technology Co., Ltd., Shanghai, China
SuccessFactors (Philippines), Inc.,
Pasig City, Philippines
100.0
SuccessFactors (UK) Limited, London,
United Kingdom
100.0
SuccessFactors Asia Pacific Limited,
Hong Kong, China
100.0
SuccessFactors Australia Holdings Pty
Ltd, Brisbane, Australia
100.0
SuccessFactors Australia Pty Limited,
Brisbane, Australia
100.0
SuccessFactors Cayman, Ltd., Grand
Cayman, Cayman Islands
100.0
SAP Saudi Arabia Software Trading Ltd,
Riyadh, Kingdom of Saudi Arabia
9)
75.0
SAP Sechste Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
SAP sistemi, aplikacije in produkti za
obdelavo podatkov d.o.o., Ljubljana,
Slovenia
100.0
SAP Slovensko s.r.o., Bratislava,
Slovakia
100.0
SAP Software and Services LLC, Doha,
Qatar
8)
49.0
9)
4), 5)
SAP Svenska Aktiebolag, Stockholm,
Sweden
100.0
SuccessFactors Hong Kong Limited,
Hong Kong, China
100.0
SAP Systems, Applications and
Products in Data Processing (Thailand)
Ltd., Bangkok, Thailand
100.0
SuccessFactors International Holdings,
LLC, San Mateo, CA, United States
100.0
100.0
Sybase (UK) Limited, Maidenhead,
United Kingdom
100.0
SAP Taiwan Co., Ltd., Taipei, Taiwan
SAP Technologies Inc., Palo Alto, CA,
United States
100.0
Sybase 365 Ltd., Tortola, British Virgin
Islands
100.0
SAP Training and Development Institute
FZCO, Dubai, United Arab Emirates
100.0
Sybase 365, LLC, Dublin, CA, United
States
100.0
SAP Türkiye Yazilim Üretim ve Ticaret
A.Ş., Istanbul, Turkey
100.0
Sybase Angola, LDA, Luanda, Angola
100.0
Sybase Iberia S.L., Madrid, Spain
100.0
SAP UAB, Vilnius, Lithuania
100.0
SAP Ventures Investment GmbH,
Walldorf, Germany
100.0
SAP Vierte Beteiligungs- und
Vermögensverwaltungs GmbH,
Walldorf, Germany
100.0
SAP West Balkans d.o.o., Belgrade,
Serbia
100.0
9)
Sybase India Ltd., Mumbai, India
100.0
Sybase International Holdings
Corporation, LLC, Dublin, CA, United
States
100.0
Sybase Philippines, Inc., Makati City,
Philippines
100.0
Sybase Software (China) Co., Ltd.,
Beijing, China
100.0
10)
F-71
Name and Location of Company
Ownership
Footnote
6) SAP SE does not hold any ownership interests in four structured
entities, SAPV (Mauritius), Sapphire SAP HANA Fund of Funds, L.P.,
Sapphire Ventures Fund I, L.P. and Sapphire Ventures Fund II, L.P.
However, based on the terms of limited partnership agreements under
which these entities were established, SAP SE is exposed to the
majority of the returns related to their operations and has the current
ability to direct these entities’ activities that affect these returns, in
accordance with IFRS 10 (Consolidated Financial Statements).
Accordingly, the results of operations are included in SAP’s
consolidated financial statements.
%
Sybase Software (India) Private Ltd.,
Mumbai, India
100.0
Syclo International Limited, Leeds,
United Kingdom
100.0
Systems Applications Products Africa
(Proprietary) Limited, Johannesburg,
South Africa
100.0
Systems Applications Products Africa
Region (Proprietary) Limited,
Johannesburg, South Africa
100.0
Systems Applications Products Nigeria
Limited, Victoria Island, Nigeria
100.0
Systems Applications Products South
Africa (Proprietary) Limited,
Johannesburg, South Africa
89.5
5) Agreements with the other shareholders provide that SAP SE fully
controls the entity.
7)
Entity whose personally liable partner is SAP SE.
8)
Entity with profit and loss transfer agreement.
Pursuant to HGB, section 264 (3) or section 264b, the subsidiary is
exempt from applying certain legal requirements to their statutory
stand-alone financial statements including the requirement to prepare
notes to the financial statements and a review of operations, the
requirement of independent audit and the requirement of public
disclosure.
9)
10) Pursuant to sections 479A to 479C of the UK Companies Act 2006,
the entity is exempt from having its financial statements audited on the
basis that SAP SE has provided a guarantee of the entity’s liabilities in
respect of its financial year ended 31 December 2015.
TechniData GmbH, Markdorf, Germany
100.0
Technology Licensing Company, LLC,
Atlanta, GA, United States
100.0
TomorrowNow, Inc., Bryan, TX, United
States
100.0
Travel Technology, LLC, Atlanta, GA,
United States
100.0
Pursuant to article 2:403 of the Dutch Civil Code, the entity is
exempt from applying certain legal requirements to their statutory
stand-alone financial statements including the requirement to prepare
the financial statements, the requirement of independent audit and the
requirement of public disclosure on the basis that SAP SE has
provided a guarantee of the entity’s liabilities in respect of its financial
year ended 31 December 2015.
TripIt LLC, Wilmington, DE, United
States
100.0
Other Equity Investments
TRX Data Service, Inc., Glen Allen, VA,
United States
100.0
TRX Europe Limited, London, United
Kingdom
100.0
TRX Fulfillment Services, LLC, Atlanta,
GA, United States
100.0
TRX Germany GmbH, Berlin, Germany
100.0
TRX Luxembourg, S.a.r.l., Luxembourg
City, Luxembourg
100.0
TRX Technologies India Private Limited,
Raman Nagar, India
100.0
TRX Technology Services, L.P., Atlanta,
GA, United States
100.0
TRX UK Limited, London, United
Kingdom
100.0
TRX, Inc., Atlanta, GA, United States
100.0
11)
Name and Location of Company
Ownership
%
10)
Joint Arrangements and Investments in
Associates
10)
These figures are based on our local IFRS financial statements prior
to eliminations resulting from consolidation and therefore do not
reflect the contribution of these companies included in the
Consolidated Financial Statements. The translation of the equity into
Group currency is based on period-end closing exchange rates, and on
average exchange rates for revenue and net income/loss.
Convercent, Inc., Denver, CO, United States
44.16
Evature Technologies (2009) Ltd., Ramat Gan,
Israel
30.46
5.35
Nor1, Inc., Santa Clara, CA, United States
18.64
Procurement Negócios Eletrônicos S/A, Rio de
Janeiro, Brazil
17.00
SAP - NOVABASE, A.C.E., Porto Salvo, Portugal
66.66
StayNTouch Inc., Bethesda, MD, United States
37.40
Visage Mobile Inc., San Francisco, CA, United
States
40.60
Yapta, Inc., Seattle, WA , United States
46.49
As at December 31, 2015, including managing directors, in FTE.
Figures for profit/loss after tax and total equity pursuant to HGB,
section 285 and section 313 are not disclosed if they are of minor
significance for a fair presentation of the profitability, liquidity, capital
resources and financial position of SAP SE, pursuant to HGB, section
313 (2) sentence 3 no. 4 and section 286 (3) sentence 1 no. 1.
3)
4)
28.30
Greater Pacific Capital (Cayman) L.P., Grand
Cayman, Cayman Islands
1)
2)
China DataCom Corporation Limited,
Guangzhou, China
Name and Location of Company
Equity Investments with Ownership of at Least 5%
Alchemist Accelerator Fund I LLC, San Francisco, CA,
United States
Consolidated for the first time in 2015.
F-72
Name and Location of Company
Name and Location of Company
All Tax Platform - Solucoes Tributarias S.A., São Paulo, Brazil
MuleSoft, Inc., San Francisco, CA, United States
Alteryx, Inc., Irvine, CA, United States
Amplify Partners II L.P., Cambridge, MA, United States
MVP Strategic Partnership Fund GmbH & Co. KG, Grünwald,
Germany
Amplify Partners L.P., Cambridge, MA, United States
Narrative Science, Inc., Chicago, IL, United States
AP Opportunity Fund, LLC, Menlo Park, CA, United States
Notation Capital, L.P., Brooklyn, NY, United States
ArisGlobal Holdings LLC, Stamford, CT, United States
On Deck Capital, Inc., New York, NY, United States
Char Software, Inc., Boston, MA, United States
OpenX Software Limited, Pasadena, CA, United States
Costanoa Venture Capital II L.P., Palo Alto, CA,
United States
Patent Quality, Inc., Bellevue, WA, United States
Costanoa Venture Capital QZ, LLC, Palo Alto, CA,
United States
Point Nine Capital Fund III GmbH & Co. KG, Berlin, Germany
Cyphort, Inc., Santa Clara, CA, United States
Data Collective II L.P., San Francisco, CA, United States
Data Collective III L.P., San Francisco, CA, United States
EIT ICT Labs GmbH, Berlin, Germany
FeedZai S.A., Lisbon, Portugal
Follow Analytics, Inc., San Francisco, CA, United States
GK Software AG, Schöneck, Germany
IDG Ventures USA III, L.P., San Francisco, CA, United States
InnovationLab GmbH, Heidelberg, Germany
Integral Ad Science, Inc., New York, NY, United States
iYogi Holdings Pvt. Ltd., Port Louis, Mauritius
Jibe, Inc., New York, NY, United States
Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
Post for Systems, Cairo, Egypt
PubNub, Inc., San Francisco, CA, United States
Realize Corporation, Tokyo, Japan
Return Path, Inc., New York, NY, United States
Rome2rio Pty. Ltd., Albert Park, Australia
Scytl, S.A., Barcelona, Spain
Smart City Planning, Inc., Tokyo, Japan
Socrata, Inc., Seattle, WA, United States
Storm Ventures V, L.P., Menlo Park, CA, United States
SV Angel IV L.P., San Francisco, CA, United States
T3C Inc., Mountain View, CA, United States
TableNow, Inc., San Francisco, CA, United States
Kaltura, Inc., New York, NY, United States
Technologie- und Gründerzentrum Walldorf Stiftung GmbH,
Walldorf, Germany
Krux Digital, Inc., San Francisco, CA, United States
The Currency Cloud Group Limited, London, United Kingdom
Lavante, Inc., San Jose, CA, United States
The SAVO Group Ltd., Chicago, IL, United States
Local Globe VII, L.P., St. Peter Port, Guernsey, Channel
Islands
TidalScale, Inc., Santa Clara, CA, United States
Looker Data Sciences, Inc., Santa Cruz, CA, United States
Upfront V, L.P., Santa Monica, CA, United States
F-73
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GROUP HEADQUARTERS
SAP SE
Dietmar-Hopp-Allee 16
69190 Walldorf
Germany
www.sap.com
www.sap.com/investor
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