SAP Reports Record Fourth Quarter 2010 Software Revenue
- Fourth Quarter 2010 Software Revenue Increased 35% (25% at Constant Currencies) to Euro 1.5 Billion
- Full-Year 2010 Non-IFRS Software and Software Related Service Revenue Increased 20% (13% at Constant Currencies) and Exceeded Company Guidance
- Full-Year 2010 Non-IFRS Operating Margin At Constant Currencies Meets Company Guidance; Full-Year 2010 IFRS Operating Margin Negatively Impacted by Litigation Provision
- SAP Executive Board Will Recommend to the SAP Supervisory Board to Increase the 2010 Dividend by 20% from Euro 0.50 to Euro 0.60 Per Share
WALLDORF, Germany, Jan. 26, 2011 /PRNewswire/ -- SAP AG (NYSE: SAP) today announced its preliminary financial results for the fourth quarter and full-year ended December 31, 2010.
(Logo: http://photos.prnewswire.com/prnh/20110126/AQ34470LOGO )
FINANCIAL HIGHLIGHTS -- Fourth Quarter 2010
Fourth Quarter 2010(1) |
||||||||
IFRS |
Non-IFRS(2) |
|||||||
euro million, unless |
Q4 2010 |
Q4 2009 |
% change |
Q4 2010 |
Q4 2009 |
% change |
% change const. curr.(3) |
|
Software revenue |
1,507 |
1,120 |
35% |
1,507 |
1,120 |
35% |
25% |
|
Software and software-related service revenue |
3,273 |
2,566 |
28% |
3,309 |
2,566 |
29% |
20% |
|
Total revenue |
4,058 |
3,190 |
27% |
4,094 |
3,190 |
28% |
20% |
|
Total operating expenses |
-3,515 |
-2,168 |
62% |
-2,484 |
-2,055 |
21% |
15% |
|
- thereof TomorrowNow litigation |
-933 |
-49 |
>100% |
na |
na |
na |
na |
|
Operating profit |
543 |
1,022 |
-47% |
1,610 |
1,134 |
42% |
30% |
|
Operating margin (%) |
13.4 |
32.0 |
-18.6pp |
39.3 |
35.5 |
3.8pp |
3.0pp |
|
Profit after tax |
437 |
682 |
-36% |
1,103 |
761 |
45% |
||
Basic earnings per share (euro) |
0.37 |
0.57 |
-35% |
0.93 |
0.64 |
45% |
||
1) All figures are preliminary and unaudited. 2) Adjustments in the revenue line items are for the support revenue that would have been recognized had the acquired entities remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. 3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating profit of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's Non-IFRS constant currency numbers with the Non-IFRS number of the previous year's respective period. |
||||||||
Revenue -- Fourth Quarter 2010
- IFRS software revenue was euro 1.51 billion (2009: euro 1.12 billion), an increase of 35% (25% at constant currencies).
- IFRS software and software-related service revenue was euro 3.27 billion (2009: euro 2.57 billion), an increase of 28%. Non-IFRS software and software-related service revenue was euro 3.31 billion (2009: euro 2.57 billion), an increase of 29% (20% at constant currencies).
- Excluding the contribution from Sybase, SAP’s business contributed 21 percentage points to the growth of IFRS and Non-IFRS software and software related service revenue (13 percentage points at constant currencies).
- IFRS total revenue was euro 4.06 billion (2009: euro 3.19 billion), an increase of 27%. Non-IFRS total revenue was euro 4.09 billion (2009: euro 3.19 billion), an increase of 28% (20% at constant currencies).
Fourth quarter 2010 Non-IFRS software and software-related service revenue as well as total revenue exclude a deferred support revenue write-down from acquisitions of euro 36 million.
Income -- Fourth Quarter 2010
- IFRS operating profit was euro 543 million (2009: euro 1.02 billion), a decrease of 47%. Non-IFRS operating profit was euro 1.61 billion (2009: euro 1.13 billion), an increase of 42% (30% at constant currencies). In the fourth quarter of 2009, the IFRS and Non-IFRS operating profit was impacted by restructuring charges of euro 5 million and euro 6 million, respectively, resulting from a reduction of positions. In contrast, restructuring charges were insignificant in the fourth quarter of 2010. In the fourth quarter of 2010, IFRS operating profit was negatively impacted by euro 933 million (2009: euro 49 million), resulting from an increase in the provision for the TomorrowNow litigation.
- IFRS operating margin was 13.4% (2009: 32.0%), a decrease of 18.6 percentage points. Non-IFRS operating margin was 39.3% (2009: 35.5%), or 38.5% at constant currencies, an increase of 3.8 percentage points (3.0 percentage points at constant currencies). In contrast to the respective quarter in 2009, the fourth quarter of 2010 was not materially impacted by restructuring expenses which had, in the fourth quarter of 2009, negatively impacted the IFRS and Non-IFRS operating margin by 0.2 percentage points. In the fourth quarter of 2010, the IFRS operating margin was negatively impacted by 23.0 percentage points (2009: 1.5 percentage points), resulting from an increase in the provision for the TomorrowNow litigation.
- IFRS profit after tax was euro 437 million (2009: euro 682 million), a decrease of 36%. Non-IFRS profit after tax was euro 1.10 billion (2009: euro 761 million), an increase of 45%. IFRS basic earnings per share was euro 0.37 (2009: euro 0.57), a decrease of 35%. Non-IFRS basic earnings per share was euro 0.93 (2009: euro 0.64), an increase of 45%. The impact, net of tax, of the restructuring expenses incurred in the fourth quarter 2009 on the fourth quarter 2009 IFRS and Non-IFRS basic earnings per share was insignificant. In the fourth quarter of 2010, IFRS basic earnings per share was negatively impacted by euro 0.49 (2009: euro 0.03), resulting from an increase in the provision for the TomorrowNow litigation. The IFRS effective tax rate in the fourth quarter of 2010 was 3.1% (2009: 31.1%). Approximately 24 percentage points of the decrease in the IFRS effective tax rate for the fourth quarter 2010 was due to a tax effect resulting from an increase in the provision recorded for the TomorrowNow litigation.
Fourth quarter 2010 Non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of euro 36 million plus acquisition-related charges of euro 96 million (2009: euro 64 million) and discontinued activities totaling euro 935 million (2009: euro 49 million). Fourth quarter 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude a deferred support revenue write-down from acquisitions of euro 23 million plus acquisition-related charges of euro 67 million (2009: euro 49 million) and discontinued activities totaling euro 575 million (2009: euro 30 million) net of tax. The amounts excluded from operating profit for discontinued activities related to the TomorrowNow litigation was euro 933 million (2009: euro 49 million), and euro 586 million (2009: euro 31 million), net of tax.
“We finished 2010 with the highest fourth quarter for software revenue in our history. Our strong performance and our business outlook for 2011 demonstrate that SAP is confident about achieving double-digit growth and continued margin expansion,” said Werner Brandt, CFO of SAP. “Moreover, in light of our excellent results and our confidence in our business going forward, we will recommend to the Supervisory Board that we increase our dividend by 20% from euro 0.50 to euro 0.60 per share payable in 2011.”
“Our results prove that SAP is back to being a growth company,” said Bill McDermott, Co-CEO of SAP. “We showed rock solid revenue across the globe, particularly in the fast growing emerging markets where customers still have the most choice and are rapidly expanding their businesses. We also performed extremely well in all key customer segments. We have excellent momentum and we are confident in 2011 and beyond.”
“SAP fundamentally believes in innovation and choice as a sustainable business model for us and our customers,” said Jim Hagemann Snabe, Co-CEO of SAP. “We have a full pipeline of innovations and are expanding into new markets for mobility, on demand and in-memory computing. We are convinced that these new innovations will help us drive double digit growth and reach 1 billion users by 2015.”
TomorrowNow Litigation
SAP has great respect for the US legal system and Court decisions. However, SAP believes that the amount awarded by the jury in Oracle v. SAP/TomorrowNow is disproportionate and wrong. After the Court has entered final judgment SAP intends to file post-trial motions in the coming weeks asking the Court to reduce the amount of damages awarded, or to order a new trial. Depending on the outcome of the post-trial motion process, SAP may consider an appeal. Because the motions have not yet been filed and the outcome of the motions remains uncertain the amount by which the jury award would be reduced cannot be reliably measured at this time. Therefore, SAP has based the provision on the jury award. SAP will consider all new information and developments emerging over the coming weeks to determine the appropriate provision amount for SAP’s final full year 2010 financials. Therefore, SAP cannot exclude the possibility that the final provision differs from the preliminary amounts presented in this earnings release.
FINANCIAL HIGHLIGHTS -- Full-Year 2010
Full Year 2010(1) |
||||||||
IFRS |
Non-IFRS(2) |
|||||||
euro million, unless |
FY 2010 |
FY 2009 |
% change |
FY 2010 |
FY 2009 |
% change |
% change const. curr.(3) |
|
Software revenue |
3,265 |
2,607 |
25% |
3,265 |
2,607 |
25% |
16% |
|
Software and software-related service revenue |
9,794 |
8,198 |
19% |
9,866 |
8,209 |
20% |
13% |
|
Total revenue |
12,464 |
10,672 |
17% |
12,536 |
10,683 |
17% |
11% |
|
Total operating expenses |
-9,875 |
-8,084 |
22% |
-8,592 |
-7,756 |
11% |
6% |
|
- thereof TomorrowNow litigation |
-980 |
-56 |
>100% |
na |
na |
na |
na |
|
Operating profit |
2,589 |
2,588 |
0% |
3,944 |
2,927 |
35% |
23% |
|
Operating margin (%) |
20.8 |
24.3 |
-3.5pp |
31.5 |
27.4 |
4.1pp |
3.1pp |
|
Profit after tax |
1,816 |
1,750 |
4% |
2,694 |
2,001 |
35% |
||
Basic earnings per share (euro) |
1.53 |
1.47 |
4% |
2.27 |
1.68 |
35% |
||
1) All figures are preliminary and unaudited. 2) Adjustments in the revenue line items are for the support revenue that would have been recognized had the acquired entities remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. 3) Constant currency revenue and operating profit figures are calculated by translating revenue and operating profit of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's Non-IFRS constant currency numbers with the Non-IFRS number of the previous year's respective period. |
||||||||
Revenue -- Full-Year 2010
- IFRS software revenue was euro 3.27 billion (2009: euro 2.61 billion), an increase of 25% (16% at constant currencies)
- IFRS software and software-related service revenue was euro 9.79 billion (2009: euro 8.20 billion), an increase of 19%. Non-IFRS software and software-related service revenue was euro 9.87 billion (2009: euro 8.21 billion), an increase of 20% (13% at constant currencies).
- Excluding the contribution from Sybase, SAP’s business contributed 16 percentage points to the growth of IFRS and Non-IFRS software and software related service revenue (10 percentage points at constant currencies).
- IFRS total revenue was euro 12.46 billion (2009: euro 10.67 billion), an increase of 17%. Non-IFRS total revenue was euro 12.54 billion (2009: euro 10.68 billion), an increase of 17% (11% at constant currencies).
Full-year 2010 Non-IFRS software and software-related service revenue as well as total revenue exclude a deferred support revenue write-down from acquisitions of euro 72 million (2009: euro 11 million).
Income -- Full-Year 2010
- IFRS operating profit was euro 2.59 billion (2009: euro 2.59 billion). Non-IFRS operating profit was euro 3.94 billion (2009: euro 2.93 billion), an increase of 35% (23% at constant currencies). For the full-year 2009, the IFRS and Non-IFRS operating profit was impacted by restructuring charges of euro 198 million and euro 194 million, respectively, resulting from a reduction of positions. In contrast, restructuring charges were insignificant for the full-year 2010. For the full-year 2010, IFRS operating profit was negatively impacted by euro 980 million (2009: euro 56 million), resulting from an increase in the provision for the TomorrowNow litigation.
- IFRS operating margin was 20.8% (2009: 24.3%), a decrease of 3.5 percentage points. Non-IFRS operating margin was 31.5% (2009: 27.4 %), or 30.5% at constant currencies, an increase of 4.1 percentage points (3.1 percentage points at constant currencies). In contrast to the full-year 2009, the full-year 2010 was not materially impacted by restructuring expenses which had, for the full-year 2009, negatively impacted the IFRS and Non-IFRS operating margin by 1.9 percentage points and 1.8 percentage points, respectively. For the full-year 2010, the IFRS operating margin was negatively impacted by 7.9 percentage points (2009: 0.5 percentage points), resulting from an increase in the provision for the TomorrowNow litigation.
- IFRS profit after tax was euro 1.82 billion (2009: euro 1.75 billion), an increase of 4%. Non-IFRS profit after tax was euro 2.69 billion (2009: euro 2.00 billion), an increase of 35%. IFRS basic earnings per share was euro 1.53 (2009: euro 1.47), an increase of 4%. Non-IFRS basic earnings per share was euro 2.27 (2009: euro 1.68), an increase of 35 %. The impact, net of tax, of the restructuring expenses incurred for the full-year 2009 on the full-year 2009 IFRS and Non-IFRS basic earnings per share was euro 0.12. For the full-year 2010, IFRS basic earnings per share was negatively impacted by euro 0.52 (2009 euro 0.03), resulting from a provision for the TomorrowNow litigation. The IFRS effective tax rate for the full-year 2010 was 22.3% (2009: 28.1%). Approximately 5 percentage points of the decrease in the IFRS effective tax rate for the full-year 2010 was due to a tax effect resulting from an increase in the provision recorded for the TomorrowNow litigation.
Full-year 2010 Non-IFRS operating profit excludes a deferred support revenue write-down from acquisitions of euro 72 million (2009: euro 11 million) plus acquisition-related charges of euro 300 million (2009: euro 271 million) and discontinued activities totaling euro 983 million (2009: euro 57 million). Full-year 2010 Non-IFRS profit after tax and Non-IFRS basic earnings per share exclude a deferred support revenue write-down from acquisitions of euro 47 million (2009: euro 7 million) plus acquisition-related charges of euro 217 million (2009: euro 202 million) and discontinued activities totaling euro 614 million (2009: euro 35 million) net of tax. The excluded amounts from discontinued activities related to the TomorrowNow litigation was euro 980 million (2009: euro 56 million) and euro 615 million (2009: euro 36 million), net of tax.
Cash Flow -- Full-Year 2010
Operating cash flow for the full-year 2010 was euro 2.95 billion (2009: euro 3.02 billion). Free cash flow was euro 2.62 billion (2009: euro 2.79 billion), a decrease of 6%. Free cash flow was 21% of total revenue (2009: 26%). At December 31, 2010, SAP had a total group liquidity of euro 3.53 billion (December 31, 2009: euro 2.28 billion), which includes cash and cash equivalents and short term investments. Net liquidity at December 31, 2010 was euro -850 million, which included euro 4.38 billion of debt, of which euro 2.20 billion resulted from the proceeds of two successful bond transactions. These debt offerings were very well received in the market.
SAP Executive Board Recommends Dividend Increase
The SAP Executive Board will recommend to the SAP Supervisory Board to propose at the AGM to increase the dividend by 20% from euro 0.50 to euro 0.60 per share for the fiscal year 2010, payable in 2011.
Business Outlook
For 2011, the Company is adjusting its definition of Non-IFRS operating profit and Non-IFRS operating margin to align with the performance measures used internally in managing SAP’s segments and reflected in SAP’s segment reporting, and to enhance comparability with other software companies. For 2011, Non-IFRS operating profit and Non-IFRS operating margin will exclude stock based compensation expenses and restructuring charges, in addition to the items that were already excluded in the past (deferred support revenue write-downs from acquisitions, acquisition related charges and discontinued activities).
SAP is providing the following outlook for the full-year 2011.
- The Company expects full-year 2011 Non-IFRS software and software-related service revenue to increase in a range of 10% - 14% at constant currencies (2010: euro 9.87 billion).
- The Company expects full-year 2011 Non-IFRS operating profit to be in a range of euro 4.45 billion - euro 4.65 billion at constant currencies (2010: euro 4.00 billion), resulting in a 2011 Non-IFRS operating margin increasing in a range of 0.5 - 1.0 percentage points at constant currencies (2010: 31.9%).
- For the full-year 2011, the Company projects an IFRS effective tax rate of 27.0% - 28.0% (2010: 22.3%) and a Non-IFRS effective tax rate of 27.5% - 28.5% (2010: 27.2%).
Major Customer Wins
In the fourth quarter of 2010, SAP closed major contracts in key regions.
EMEA: |
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Americas: |
|
Asia Pacific/Japan: |
|
SAP Business ByDesign |
|
Webcast / Supplementary Financial Information
SAP senior management will host a press conference in Frankfurt today at 10:00 AM (CET) / 9:00 AM (GMT) / 4:00 AM (Eastern) / 1:00 AM (Pacific), followed by an investor conference at 2:00 PM (CET) / 1:00 PM (GMT) / 8:00 AM (Eastern) / 5:00 AM (Pacific). Both conferences will be web cast live on the Company’s website at www.sap.com/investor and will be available for replay. Supplementary financial information pertaining to the full-year and quarterly results can be found at www.sap.com/investor.
2010 Annual Report
The 2010 Annual Report is scheduled to be published on March 24, 2011, and will be available for download at www.sap.com/investor.
About SAP
As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 109,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
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For more information, press only: |
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Appendix -- Financial Information to Follow
FINANCIAL INFORMATION |
|||
FOR THE FOURTH QUARTER AND FULL YEAR 2010 |
|||
– Condensed, Preliminary and Unaudited – |
|||
Page |
|||
Financial Statements (IFRS) |
|||
Income Statements – Quarter |
F1 |
||
Statements of Comprehensive Income - Quarter |
F2 |
||
Income Statements – Full Year |
F3 |
||
Statements of Comprehensive Income – Full Year |
F4 |
||
Statements of Financial Position |
F5 |
||
Statements of Changes in Equity |
F6 |
||
Statements of Cash Flows |
F7 |
||
Supplementary Financial Information |
|||
Reconciliations from Non-IFRS Numbers to IFRS Numbers |
F8 to F9 |
||
Revenue by Region |
F10 to F11 |
||
Share-Based Compensation |
F12 |
||
Free Cash Flow |
F12 |
||
Days Sales Outstanding(DSO) |
F12 |
||
Number of Employees |
F12 |
||
Multi-Quarter Summary |
F13 |
||
Explanations of Non-IFRS Measures |
F14 to F16 |
||
Financial Statements (IFRS) |
||||
CONSOLIDATED INCOME STATEMENTS OF SAP GROUP |
||||
for the three months ended December 31 |
||||
euro millions, unless otherwise stated |
2010 |
2009 |
Change in % |
|
Software revenue |
1,507 |
1,120 |
35 |
|
Support revenue |
1,656 |
1,364 |
21 |
|
Subscription and other software-related service revenue |
110 |
82 |
34 |
|
Software and software-related service revenue |
3,273 |
2,566 |
28 |
|
Consulting revenue |
625 |
519 |
20 |
|
Other service revenue |
160 |
105 |
52 |
|
Professional services and other service revenue |
785 |
624 |
26 |
|
Total revenue |
4,058 |
3,190 |
27 |
|
Cost of software and software-related services |
-549 |
-465 |
18 |
|
Cost of professional services and other services |
-592 |
-428 |
38 |
|
Research and development |
-481 |
-470 |
2 |
|
Sales and marketing |
-787 |
-609 |
29 |
|
General and administration |
-177 |
-169 |
5 |
|
Restructuring |
2 |
-5 |
<-100 |
|
TomorrowNow litigation |
-933 |
-49 |
>100 |
|
Other operating income/expense, net |
2 |
27 |
-93 |
|
Total operating expenses |
-3,515 |
-2,168 |
62 |
|
Operating profit |
543 |
1,022 |
-47 |
|
Other non-operating income/expense, net |
-50 |
-11 |
>100 |
|
Finance income |
17 |
5 |
>100 |
|
Finance costs TomorrowNow litigation |
-12 |
0 |
N/A |
|
Other finance costs |
-40 |
-23 |
74 |
|
Finance costs |
-52 |
-23 |
>100 |
|
Other financial gains/losses, net |
-7 |
-3 |
>100 |
|
Financial income, net |
-42 |
-21 |
100 |
|
Profit before tax |
451 |
990 |
-54 |
|
Income tax TomorrowNow litigation |
359 |
18 |
>100 |
|
Other income tax expense |
-373 |
-326 |
14 |
|
Income tax expense |
-14 |
-308 |
-95 |
|
Profit after tax |
437 |
682 |
-36 |
|
– Profit attributable to non-controlling interests |
0 |
1 |
-100 |
|
– Profit attributable to owners of parent |
437 |
681 |
-36 |
|
Basic earnings per share, in euros* |
0.37 |
0.57 |
-36 |
|
Diluted earnings per share, in euros* |
0.37 |
0.57 |
-36 |
|
* For the three months ended December 31, 2010 and 2009 the weighted average number of shares were 1,187 million (Diluted: 1,188 million) and 1,189 million (Diluted: 1,189 million), respectively (treasury stock excluded). |
||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP |
|||
for the three months ended December 31 |
|||
euro millions |
2010 |
2009 |
|
Profit after tax |
437 |
681 |
|
Gains (losses) on exchange differences on translation, before tax |
139 |
23 |
|
Reclassification adjustments on exchange differences on translation, before tax |
6 |
-2 |
|
Exchange differences on translation |
145 |
21 |
|
Gains (losses) on remeasuring available-for-sale financial assets, before tax |
0 |
13 |
|
Reclassification adjustments on available-for-sale financial assets, before tax |
-2 |
0 |
|
Available-for-sale financial assets |
-2 |
13 |
|
Gains (losses) on cash flow hedges, before tax |
-22 |
-8 |
|
Reclassification adjustments on cash flow hedges, before tax |
20 |
19 |
|
Cash flow hedges |
-2 |
11 |
|
Actuarial gains (losses) on defined benefit plans, before tax |
-37 |
-11 |
|
Other comprehensive income before tax |
104 |
34 |
|
Income tax relating to components of other comprehensive income |
9 |
-1 |
|
Other comprehensive income after tax |
113 |
33 |
|
Total comprehensive income |
550 |
714 |
|
– attributable to non-controlling interests |
0 |
1 |
|
– attributable to owners of parent |
550 |
713 |
|
CONSOLIDATED INCOME STATEMENTS OF SAP GROUP |
||||
for the twelve months ended December 31 |
||||
euro millions, unless otherwise stated |
2010 |
2009 |
Change in % |
|
Software revenue |
3.265 |
2.607 |
25 |
|
Support revenue |
6.135 |
5.285 |
16 |
|
Subscription and other software-related service revenue |
394 |
306 |
29 |
|
Software and software-related service revenue |
9.794 |
8.198 |
19 |
|
Consulting revenue |
2.197 |
2.074 |
6 |
|
Other service revenue |
473 |
400 |
18 |
|
Professional services and other service revenue |
2.670 |
2.474 |
8 |
|
Total revenue |
12.464 |
10.672 |
17 |
|
Cost of software and software-related services |
-1.830 |
-1.658 |
10 |
|
Cost of professional services and other services |
-2.070 |
-1.851 |
12 |
|
Research and development |
-1.724 |
-1.591 |
8 |
|
Sales and marketing |
-2.645 |
-2.199 |
20 |
|
General and administration |
-638 |
-564 |
13 |
|
Restructuring |
3 |
-198 |
<-100 |
|
TomorrowNow litigation |
-980 |
-56 |
>100 |
|
Other operating income/expense, net |
9 |
33 |
-73 |
|
Total operating expenses |
-9.875 |
-8.084 |
22 |
|
Operating profit |
2.589 |
2.588 |
0 |
|
Other non-operating income/expense, net |
-185 |
-73 |
>100 |
|
Finance income |
56 |
32 |
75 |
|
Finance costs TomorrowNow litigation |
-12 |
0 |
N/A |
|
Other finance costs |
-108 |
-101 |
7 |
|
Finance costs |
-120 |
-101 |
19 |
|
Other financial gains/losses, net |
-3 |
-11 |
-73 |
|
Financial income, net |
-67 |
-80 |
-16 |
|
Profit before tax |
2.337 |
2.435 |
-4 |
|
Income tax expense TomorrowNow litigation |
377 |
20 |
>100 |
|
Other income tax expense |
-898 |
-705 |
27 |
|
Income tax expense |
-521 |
-685 |
-24 |
|
Profit after tax |
1.816 |
1.750 |
4 |
|
– Profit attributable to non-controlling interests |
2 |
2 |
0 |
|
– Profit attributable to owners of parent |
1.814 |
1.748 |
4 |
|
Basic earnings per share, in euro* |
1,53 |
1,47 |
4 |
|
Diluted earnings per share, in euro* |
1,53 |
1,47 |
4 |
|
* For the twelve months ended December 31, 2010 and 2009 the weighted average number of shares were 1,188 million (Diluted: 1,189 million) and 1,188 million (Diluted: 1,189 million), respectively (treasury stock excluded). |
||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP |
|||
for the twelve months ended December 31 |
|||
euro millions |
2010 |
2009 |
|
Profit after tax |
1.816 |
1.750 |
|
Gains (losses) on exchange differences on translation, before tax |
141 |
76 |
|
Reclassification adjustments on exchange differences on translation, before tax |
0 |
-2 |
|
Exchange differences on translation |
141 |
74 |
|
Gains (losses) on remeasuring available-for-sale financial assets, before tax |
5 |
15 |
|
Reclassification adjustments on available-for-sale financial assets, before tax |
-2 |
0 |
|
Available-for-sale financial assets |
3 |
15 |
|
Gains (losses) on cash flow hedges, before tax |
-88 |
-41 |
|
Reclassification adjustments on cash flow hedges, before tax |
67 |
84 |
|
Cash flow hedges |
-21 |
43 |
|
Actuarial gains (losses) on defined benefit plans, before tax |
-40 |
-6 |
|
Other comprehensive income before tax |
83 |
126 |
|
Income tax relating to components of other comprehensive income |
18 |
-12 |
|
Other comprehensive income after tax |
101 |
114 |
|
Total comprehensive income |
1.917 |
1.864 |
|
– attributable to non-controlling interests |
2 |
2 |
|
– attributable to owners of parent |
1.915 |
1.862 |
|
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP |
||||
as at December 31, 2010 and 2009 |
||||
euro millions |
2010 |
2009 |
Change in % |
|
Assets |
||||
Cash and cash equivalents |
3.518 |
1.884 |
87 |
|
Other financial assets |
158 |
486 |
-67 |
|
Trade and other receivables |
3.101 |
2.546 |
22 |
|
Other non-financial assets |
180 |
147 |
22 |
|
Tax assets |
186 |
192 |
-3 |
|
Total current assets |
7.143 |
5.255 |
36 |
|
Goodwill |
8.378 |
4.994 |
68 |
|
Intangible assets |
2.376 |
894 |
>100 |
|
Property, plant, and equipment |
1.450 |
1.371 |
6 |
|
Other financial assets |
404 |
284 |
42 |
|
Trade and other receivables |
78 |
52 |
50 |
|
Other non-financial assets |
31 |
35 |
-11 |
|
Tax assets |
123 |
91 |
35 |
|
Deferred tax assets |
735 |
398 |
85 |
|
Total non-current assets |
13.575 |
8.119 |
67 |
|
Total assets |
20.718 |
13.374 |
55 |
|
euro millions |
2010 |
2009 |
Change in % |
|
Equity and liabilities |
||||
Trade and other payables |
908 |
638 |
42 |
|
Tax liabilities |
160 |
125 |
28 |
|
Financial liabilities |
142 |
146 |
-3 |
|
Other non-financial liabilities |
1.727 |
1.577 |
10 |
|
Provision TomorrowNow litigation |
998 |
93 |
>100 |
|
Other provisions |
287 |
239 |
20 |
|
Provisions |
1.285 |
332 |
>100 |
|
Deferred income |
911 |
598 |
52 |
|
Total current liabilities |
5.133 |
3.416 |
50 |
|
Trade and other payables |
50 |
35 |
43 |
|
Tax liabilities |
371 |
239 |
55 |
|
Financial liabilities |
4.449 |
729 |
>100 |
|
Other non-financial liabilities |
11 |
12 |
-8 |
|
Provisions |
291 |
198 |
47 |
|
Deferred tax liabilities |
576 |
190 |
>100 |
|
Deferred income |
63 |
64 |
-2 |
|
Total non-current liabilities |
5.811 |
1.467 |
>100 |
|
Total liabilities |
10.944 |
4.883 |
>100 |
|
Issued capital |
1.227 |
1.226 |
0 |
|
Treasury shares |
-1.382 |
-1.320 |
5 |
|
Share premium |
337 |
317 |
6 |
|
Retained earnings |
9.769 |
8.571 |
14 |
|
Other components of equity |
-194 |
-317 |
-39 |
|
Equity attributable to owners of parent |
9.757 |
8.477 |
15 |
|
Non-controlling interests |
17 |
14 |
21 |
|
Total equity |
9.774 |
8.491 |
15 |
|
Equity and liabilities |
20.718 |
13.374 |
55 |
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP |
|||||||||||
for the twelve months ended December 31 |
|||||||||||
euro millions |
Issued Capital |
Share Premium |
Retained Earnings |
Other Components of Equity |
Treasury Shares |
Equity Attributable to Owners of Parent |
Non-Controlling Interests |
Total Equity |
|||
Exchange Differences |
Available-for-Sale Financial Assets |
Cash Flow Hedges |
|||||||||
January 1, 2009 |
1.226 |
320 |
7.422 |
-393 |
-1 |
-43 |
-1.362 |
7.169 |
2 |
7.171 |
|
Profit after tax |
1.748 |
1.748 |
2 |
1.750 |
|||||||
Other comprehensive income |
-6 |
74 |
14 |
32 |
114 |
114 |
|||||
Share-based compensation |
-2 |
-2 |
-2 |
||||||||
Dividends |
-594 |
-594 |
-594 |
||||||||
Treasury shares transactions |
-6 |
42 |
36 |
36 |
|||||||
Convertible bonds and stock options exercised |
5 |
5 |
5 |
||||||||
Other |
1 |
1 |
10 |
11 |
|||||||
December 31, 2009 |
1.226 |
317 |
8.571 |
-319 |
13 |
-11 |
-1.320 |
8.477 |
14 |
8.491 |
|
Profit after tax |
1.814 |
1.814 |
2 |
1.816 |
|||||||
Other comprehensive income |
-22 |
136 |
3 |
-16 |
101 |
101 |
|||||
Share-based compensation |
0 |
0 |
|||||||||
Dividends |
-594 |
-594 |
-594 |
||||||||
Treasury shares transactions |
-4 |
0 |
-153 |
-157 |
-157 |
||||||
Convertible bonds and stock options exercised |
1 |
24 |
0 |
91 |
116 |
116 |
|||||
Other |
0 |
1 |
1 |
||||||||
December 31, 2010 |
1.227 |
337 |
9.769 |
-183 |
16 |
-27 |
-1.382 |
9.757 |
17 |
9.774 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP |
|||
as at December 31 |
|||
euro millions |
2010 |
2009 |
|
Profit after tax |
1.816 |
1.750 |
|
Adjustments to reconcile profit after taxes to net cash provided by operating activities: |
|||
Depreciation and amortization |
534 |
499 |
|
Income tax expense |
521 |
685 |
|
Finance income and finance costs, net |
67 |
80 |
|
Gains/losses on disposals of non-current assets |
-3 |
-11 |
|
Decrease/increase in sales and bad debt allowances on trade receivables |
-49 |
64 |
|
Other adjustments for non-cash items |
25 |
14 |
|
Decrease/increase in trade receivables |
-125 |
593 |
|
Decrease/increase in other assets |
-28 |
62 |
|
Decrease/increase in trade payables, provisions and other liabilities |
927 |
178 |
|
Decrease/increase in deferred income |
66 |
48 |
|
Cash paid due to TomorrowNow litigation |
-102 |
-19 |
|
Interest paid |
-65 |
-111 |
|
Interest received |
56 |
33 |
|
Income taxes paid, net of refunds |
-686 |
-850 |
|
Net cash flows from operating activities |
2.954 |
3.015 |
|
Business combinations, net of cash and cash equivalents acquired |
-4.194 |
-73 |
|
Purchase of intangible assets and property, plant, and equipment |
-334 |
-225 |
|
Proceeds from sales of intangible assets or property, plant, and equipment |
43 |
45 |
|
Purchase of equity or debt instruments of other entities |
-841 |
-1.073 |
|
Proceeds from sales of equity or debt instruments of other entities |
1.334 |
1.027 |
|
Net cash flows from investing activities |
-3.992 |
-299 |
|
Dividends paid |
-594 |
-594 |
|
Purchase of treasury shares |
-220 |
0 |
|
Proceeds from reissuance of treasury shares |
127 |
24 |
|
Proceeds from issuing shares (share-based compensation) |
23 |
6 |
|
Proceeds from borrowings |
5.380 |
697 |
|
Repayments of borrowings |
-2.196 |
-2.303 |
|
Purchase of equity-based derivative instruments (hedge for cash-settled share-based payment plans) |
-14 |
0 |
|
Proceeds from exercise of equity-based derivative financial instruments |
4 |
4 |
|
Net cash flows from financing activities |
2.510 |
-2.166 |
|
Effect of foreign exchange rates on cash and cash equivalents |
162 |
54 |
|
Net decrease/increase in cash and cash equivalents |
1.634 |
604 |
|
Cash and cash equivalents at the beginning of the period |
1.884 |
1.280 |
|
Cash and cash equivalents at the end of the period |
3.518 |
1.884 |
|
Supplementary Financial Information RECONCILIATIONS FROM NON-IFRS NUMBERS TO IFRS NUMBERS (Preliminary and unaudited) The following tables present a reconciliation from our non-IFRS numbers (including our non-IFRS at constant currency numbers) to the respective most comparable IFRS numbers. Note: Our non-IFRS numbers are not prepared under a comprehensive set of accounting rules or principles. |
|||||||||||||||||||||||
euro millions, unless otherwise stated |
Three months ended December 31 |
||||||||||||||||||||||
2010 |
2009 |
Change in % |
|||||||||||||||||||||
IFRS |
Adj.* |
Non-IFRS* |
Currency impact** |
Non-IFRS constant currency** |
IFRS |
Adj.* |
Non-IFRS* |
IFRS |
Non-IFRS* |
Non-IFRS constant currency** |
|||||||||||||
Non-IFRS Revenue Numbers |
|||||||||||||||||||||||
Software revenue |
1.507 |
0 |
1.507 |
-110 |
1.397 |
1.120 |
0 |
1.120 |
35 |
35 |
25 |
||||||||||||
Support revenue |
1.656 |
36 |
1.692 |
-106 |
1.586 |
1.364 |
0 |
1.364 |
21 |
24 |
16 |
||||||||||||
Subscription and other software-related service revenue |
110 |
0 |
110 |
-5 |
105 |
82 |
0 |
82 |
34 |
34 |
28 |
||||||||||||
Software and software-related service revenue |
3.273 |
36 |
3.309 |
-221 |
3.088 |
2.566 |
0 |
2.566 |
28 |
29 |
20 |
||||||||||||
- thereof SAP excluding Sybase |
3.105 |
0 |
3.105 |
-206 |
2.899 |
2.566 |
0 |
2.566 |
21 |
21 |
13 |
||||||||||||
Consulting revenue |
625 |
0 |
625 |
-37 |
588 |
519 |
0 |
519 |
20 |
20 |
13 |
||||||||||||
Other service revenue |
160 |
0 |
160 |
-7 |
153 |
105 |
0 |
105 |
52 |
52 |
46 |
||||||||||||
Professional services and other service revenue |
785 |
0 |
785 |
-44 |
741 |
624 |
0 |
624 |
26 |
26 |
19 |
||||||||||||
Total revenue |
4.058 |
36 |
4.094 |
-265 |
3.829 |
3.190 |
0 |
3.190 |
27 |
28 |
20 |
||||||||||||
Non-IFRS Operating Expense Numbers |
|||||||||||||||||||||||
Cost of software and software-related services |
-549 |
65 |
-484 |
-465 |
44 |
-421 |
18 |
15 |
|||||||||||||||
Cost of professional services and other services |
-592 |
4 |
-588 |
-428 |
1 |
-427 |
38 |
38 |
|||||||||||||||
Research and development |
-481 |
1 |
-480 |
-470 |
1 |
-469 |
2 |
2 |
|||||||||||||||
Sales and marketing |
-787 |
29 |
-758 |
-609 |
18 |
-591 |
29 |
28 |
|||||||||||||||
General and administration |
-177 |
2 |
-175 |
-169 |
2 |
-167 |
5 |
5 |
|||||||||||||||
Restructuring |
2 |
-2 |
0 |
-5 |
-1 |
-6 |
<-100 |
-100 |
|||||||||||||||
TomorrowNow litigation |
-933 |
933 |
0 |
-49 |
49 |
0 |
>100 |
0 |
|||||||||||||||
Other operating income/expense, net |
2 |
0 |
2 |
27 |
0 |
27 |
-93 |
-93 |
|||||||||||||||
Total operating expenses |
-3.515 |
1.031 |
-2.484 |
131 |
-2.353 |
-2.168 |
113 |
-2.055 |
62 |
21 |
15 |
||||||||||||
Non-IFRS Profit Numbers |
|||||||||||||||||||||||
Operating profit |
543 |
1.067 |
1.610 |
-134 |
1.476 |
1.022 |
113 |
1.134 |
-47 |
42 |
30 |
||||||||||||
Other non-operating income/expense, net |
-50 |
-14 |
-64 |
-11 |
-2 |
-13 |
>100 |
>100 |
|||||||||||||||
Finance income |
17 |
0 |
17 |
5 |
0 |
5 |
>100 |
>100 |
|||||||||||||||
Finance costs TomorrowNow litigation |
-12 |
12 |
0 |
0 |
0 |
0 |
N/A |
0 |
|||||||||||||||
Other finance costs |
-40 |
0 |
-40 |
-23 |
0 |
-23 |
74 |
74 |
|||||||||||||||
Finance costs |
-52 |
12 |
-40 |
-23 |
0 |
-23 |
>100 |
74 |
|||||||||||||||
Other financial gains/losses, net |
-7 |
0 |
-7 |
-3 |
0 |
-3 |
>100 |
>100 |
|||||||||||||||
Financial income, net |
-42 |
12 |
-30 |
-21 |
0 |
-21 |
100 |
43 |
|||||||||||||||
Profit before tax |
451 |
1.065 |
1.516 |
990 |
111 |
1.101 |
-54 |
38 |
|||||||||||||||
Income tax TomorrowNow litigation |
359 |
-359 |
0 |
18 |
-18 |
0 |
>100 |
0 |
|||||||||||||||
Other income tax expense |
-373 |
-40 |
-413 |
-326 |
-14 |
-340 |
14 |
21 |
|||||||||||||||
Income tax expense |
-14 |
-399 |
-413 |
-308 |
-32 |
-340 |
-95 |
21 |
|||||||||||||||
Profit after tax |
437 |
666 |
1.103 |
682 |
79 |
761 |
-36 |
45 |
|||||||||||||||
Profit attributable to non-controlling interests |
0 |
0 |
0 |
1 |
0 |
1 |
-100 |
-100 |
|||||||||||||||
Profit attributable to owners of parent |
437 |
666 |
1.103 |
681 |
79 |
760 |
-36 |
45 |
|||||||||||||||
Non-IFRS Key Ratios |
|||||||||||||||||||||||
Operating margin in % |
13,4 |
39,3 |
38,5 |
32,0 |
35,5 |
-18,6pp |
3,8pp |
3,0pp |
|||||||||||||||
Effective tax rate in % |
3,1 |
27,2 |
31,1 |
30,9 |
-28,0pp |
-3,7pp |
|||||||||||||||||
Basic earnings per share, in euros |
0,37 |
0,93 |
0,57 |
0,64 |
-35 |
45 |
|||||||||||||||||
euro millions, unless otherwise stated |
Twelve months ended December 31 |
|||||||||||||||||||||
2010 |
2009 |
Change in % |
||||||||||||||||||||
IFRS |
Adj.* |
Non-IFRS* |
Currency impact** |
Non-IFRS constant currency** |
IFRS |
Adj.* |
Non-IFRS* |
IFRS |
Non-IFRS* |
Non-IFRS constant currency** |
||||||||||||
Non-IFRS Revenue Numbers |
||||||||||||||||||||||
Software revenue |
3.265 |
0 |
3.265 |
-244 |
3.021 |
2.607 |
0 |
2.607 |
25 |
25 |
16 |
|||||||||||
Support revenue |
6.135 |
72 |
6.207 |
-313 |
5.894 |
5.285 |
11 |
5.296 |
16 |
17 |
11 |
|||||||||||
Subscription and other software-related service revenue |
394 |
0 |
394 |
-13 |
381 |
306 |
0 |
306 |
29 |
29 |
25 |
|||||||||||
Software and software-related service revenue |
9.794 |
72 |
9.866 |
-570 |
9.296 |
8.198 |
11 |
8.209 |
19 |
20 |
13 |
|||||||||||
- thereof SAP excluding Sybase |
9.537 |
0 |
9.537 |
-545 |
8.992 |
8.198 |
11 |
8.209 |
16 |
16 |
10 |
|||||||||||
Consulting revenue |
2.197 |
0 |
2.197 |
-118 |
2.079 |
2.074 |
0 |
2.074 |
6 |
6 |
0 |
|||||||||||
Other service revenue |
473 |
0 |
473 |
-22 |
451 |
400 |
0 |
400 |
18 |
18 |
13 |
|||||||||||
Professional services and other service revenue |
2.670 |
0 |
2.670 |
-140 |
2.530 |
2.474 |
0 |
2.474 |
8 |
8 |
2 |
|||||||||||
Total revenue |
12.464 |
72 |
12.536 |
-709 |
11.827 |
10.672 |
11 |
10.683 |
17 |
17 |
11 |
|||||||||||
Non-IFRS Operating Expense Numbers |
||||||||||||||||||||||
Cost of software and software-related services |
-1.830 |
199 |
-1.631 |
-1.658 |
184 |
-1.474 |
10 |
11 |
||||||||||||||
Cost of professional services and other services |
-2.070 |
9 |
-2.061 |
-1.851 |
4 |
-1.847 |
12 |
12 |
||||||||||||||
Research and development |
-1.724 |
5 |
-1.719 |
-1.591 |
4 |
-1.587 |
8 |
8 |
||||||||||||||
Sales and marketing |
-2.645 |
80 |
-2.565 |
-2.199 |
73 |
-2.126 |
20 |
21 |
||||||||||||||
General and administration |
-638 |
16 |
-622 |
-564 |
3 |
-561 |
13 |
11 |
||||||||||||||
Restructuring |
3 |
-5 |
-2 |
-198 |
4 |
-194 |
<-100 |
-99 |
||||||||||||||
TomorrowNow litigation |
-980 |
980 |
0 |
-56 |
56 |
0 |
>100 |
0 |
||||||||||||||
Other operating income/expense, net |
9 |
0 |
9 |
33 |
0 |
33 |
-73 |
-73 |
||||||||||||||
Total operating expenses |
-9.875 |
1.283 |
-8.592 |
369 |
-8.223 |
-8.084 |
327 |
-7.756 |
22 |
11 |
6 |
|||||||||||
Non-IFRS Profit Numbers |
||||||||||||||||||||||
Operating profit |
2.589 |
1.355 |
3.944 |
-340 |
3.604 |
2.588 |
339 |
2.927 |
0 |
35 |
23 |
|||||||||||
Other non-operating income/expense, net |
-185 |
-5 |
-190 |
-73 |
-2 |
-75 |
>100 |
>100 |
||||||||||||||
Finance income |
56 |
0 |
56 |
32 |
0 |
32 |
75 |
75 |
||||||||||||||
Finance costs TomorrowNow litigation |
-12 |
12 |
0 |
0 |
0 |
0 |
N/A |
0 |
||||||||||||||
Other finance costs |
-108 |
0 |
-108 |
-101 |
0 |
-101 |
7 |
7 |
||||||||||||||
Finance costs |
-120 |
12 |
-108 |
-101 |
0 |
-101 |
19 |
7 |
||||||||||||||
Other financial gains/losses, net |
-3 |
0 |
-3 |
-11 |
0 |
-11 |
-73 |
-73 |
||||||||||||||
Financial income, net |
-67 |
12 |
-55 |
-80 |
0 |
-80 |
-16 |
-31 |
||||||||||||||
Profit before tax |
2.337 |
1.362 |
3.699 |
2.435 |
337 |
2.772 |
-4 |
33 |
||||||||||||||
Income tax TomorrowNow litigation |
377 |
-377 |
0 |
20 |
-20 |
0 |
>100 |
0 |
||||||||||||||
Other income tax expense |
-898 |
-107 |
-1.005 |
-705 |
-66 |
-771 |
27 |
30 |
||||||||||||||
Income tax expense |
-521 |
-484 |
-1.005 |
-685 |
-86 |
-771 |
-24 |
30 |
||||||||||||||
Profit after tax |
1.816 |
878 |
2.694 |
1.750 |
251 |
2.001 |
4 |
35 |
||||||||||||||
Profit attributable to non-controlling interests |
2 |
0 |
2 |
2 |
0 |
2 |
0 |
0 |
||||||||||||||
Profit attributable to owners of parent |
1.814 |
878 |
2.692 |
1.748 |
251 |
1.999 |
4 |
35 |
||||||||||||||
Non-IFRS Key Ratios |
||||||||||||||||||||||
Operating margin in % |
20,8 |
31,5 |
30,5 |
24,3 |
27,4 |
-3,5pp |
4,1pp |
3,1pp |
||||||||||||||
Effective tax rate in % |
22,3 |
27,2 |
28,1 |
27,8 |
-5,8pp |
-0,6pp |
||||||||||||||||
Basic earnings per share, in euros |
1,53 |
2,27 |
1,47 |
1,68 |
4 |
35 |
||||||||||||||||
* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures for details. ** Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period. Starting in 2011, our non-IFRS operating margin will additionally exclude share-based compensation expenses as well as restructuring expenses. Our share-based compensation expense amounted to euro 58 million for 2010 and restructuring expenses were euro 2 million. Excluding these two items from the Non-IFRS operating profit in the table above results in the operating profit number under our new Non-IFRS definition and is the basis for the Non-IFRS margin of 31.9% that we have provided as the 2010 comparable number for our profit margin outlook for 2011. The same reconciling items (net of tax of euro 44 million) were used in determining the non-IFRS tax rate for 2010 of 27.2% that we have provided as the 2010 comparable number for our Non-IFRS tax rate outlook for 2011. Differences may exist due to rounding. |
||||||||||||||||||||||
REVENUE BY REGION (Preliminary and unaudited) The following tables present our IFRS and non-IFRS revenue by region based on customer location. The tables also present a reconciliation from our non-IFRS revenue (including our non-IFRS revenue at constant currency) to the respective most comparable IFRS revenue. Note: Our non-IFRS revenues are not prepared under a comprehensive set of accounting rules or principles. |
||||||||||||||||||||
euro millions |
Three months ended December 31 |
|||||||||||||||||||
2010 |
2009 |
Change in % |
||||||||||||||||||
IFRS |
Adj.* |
Non-IFRS* |
Currency impact** |
Non-IFRS constant currency** |
IFRS |
Adj.* |
Non-IFRS* |
IFRS |
Non-IFRS* |
Non-IFRS constant currency** |
||||||||||
Software revenue by region |
||||||||||||||||||||
EMEA |
724 |
0 |
724 |
-23 |
701 |
578 |
0 |
578 |
25 |
25 |
21 |
|||||||||
Americas |
553 |
0 |
553 |
-53 |
500 |
359 |
0 |
359 |
54 |
54 |
39 |
|||||||||
Asia Pacific Japan |
230 |
0 |
230 |
-34 |
196 |
184 |
0 |
184 |
25 |
25 |
7 |
|||||||||
Software revenue |
1.507 |
0 |
1.507 |
-110 |
1.397 |
1.120 |
0 |
1.120 |
35 |
35 |
25 |
|||||||||
Software and software-related service revenue by region |
||||||||||||||||||||
Germany |
524 |
0 |
524 |
0 |
524 |
491 |
0 |
491 |
7 |
7 |
7 |
|||||||||
Rest of EMEA |
1.122 |
11 |
1.133 |
-47 |
1.086 |
895 |
0 |
895 |
25 |
27 |
21 |
|||||||||
Total EMEA |
1.646 |
11 |
1.657 |
-47 |
1.610 |
1.386 |
0 |
1.386 |
19 |
20 |
16 |
|||||||||
United States |
804 |
19 |
823 |
-68 |
755 |
600 |
0 |
600 |
34 |
37 |
26 |
|||||||||
Rest of Americas |
331 |
3 |
334 |
-35 |
299 |
221 |
0 |
221 |
50 |
51 |
35 |
|||||||||
Total Americas |
1.135 |
22 |
1.157 |
-103 |
1.054 |
822 |
0 |
822 |
38 |
41 |
28 |
|||||||||
Japan |
133 |
2 |
135 |
-21 |
114 |
112 |
0 |
112 |
19 |
21 |
2 |
|||||||||
Rest of Asia Pacific Japan |
358 |
2 |
360 |
-50 |
310 |
246 |
0 |
246 |
46 |
46 |
26 |
|||||||||
Total Asia Pacific Japan |
492 |
3 |
495 |
-71 |
424 |
358 |
0 |
358 |
37 |
38 |
18 |
|||||||||
Software and software-related service revenue |
3.273 |
36 |
3.309 |
-221 |
3.088 |
2.566 |
0 |
2.566 |
28 |
29 |
20 |
|||||||||
Total revenue by region |
||||||||||||||||||||
Germany |
724 |
0 |
724 |
0 |
724 |
653 |
0 |
653 |
11 |
11 |
11 |
|||||||||
Rest of EMEA |
1.350 |
11 |
1.361 |
-56 |
1.305 |
1.083 |
0 |
1.083 |
25 |
26 |
20 |
|||||||||
Total EMEA |
2.074 |
11 |
2.085 |
-56 |
2.029 |
1.736 |
0 |
1.736 |
19 |
20 |
17 |
|||||||||
United States |
1.012 |
19 |
1.031 |
-84 |
947 |
754 |
0 |
754 |
34 |
37 |
26 |
|||||||||
Rest of Americas |
402 |
3 |
405 |
-43 |
362 |
278 |
0 |
278 |
45 |
46 |
30 |
|||||||||
Total Americas |
1.414 |
22 |
1.436 |
-127 |
1.309 |
1.032 |
0 |
1.032 |
37 |
39 |
27 |
|||||||||
Japan |
153 |
2 |
155 |
-25 |
130 |
128 |
0 |
128 |
20 |
21 |
2 |
|||||||||
Rest of Asia Pacific Japan |
418 |
2 |
420 |
-59 |
361 |
294 |
0 |
294 |
42 |
43 |
23 |
|||||||||
Total Asia Pacific Japan |
571 |
3 |
574 |
-82 |
492 |
422 |
0 |
422 |
35 |
36 |
17 |
|||||||||
Total revenue |
4.058 |
36 |
4.094 |
-265 |
3.829 |
3.190 |
0 |
3.190 |
27 |
28 |
20 |
|||||||||
euro millions |
Twelve months ended December 31 |
||||||||||||||||||||||||
2010 |
2009 |
Change in % |
|||||||||||||||||||||||
IFRS |
Adj.* |
Currency impact** |
Non-IFRS constant currency** |
IFRS |
Adj.* |
Non-IFRS* |
IFRS |
Non-IFRS* |
Non-IFRS constant currency** |
||||||||||||||||
Software revenue by region |
|||||||||||||||||||||||||
EMEA |
1.471 |
0 |
1.471 |
-49 |
1.422 |
1.304 |
0 |
1.304 |
13 |
13 |
9 |
||||||||||||||
Americas |
1.247 |
0 |
1.247 |
-118 |
1.129 |
855 |
0 |
855 |
46 |
46 |
32 |
||||||||||||||
Asia Pacific Japan |
548 |
0 |
548 |
-78 |
470 |
449 |
0 |
449 |
22 |
22 |
5 |
||||||||||||||
Software revenue |
3.265 |
0 |
3.265 |
-244 |
3.021 |
2.607 |
0 |
2.607 |
25 |
25 |
16 |
||||||||||||||
Software and software-related service revenue by region |
|||||||||||||||||||||||||
Germany |
1.564 |
0 |
1.564 |
0 |
1.564 |
1.439 |
0 |
1.439 |
9 |
9 |
9 |
||||||||||||||
Rest of EMEA |
3.319 |
21 |
3.339 |
-125 |
3.214 |
2.897 |
4 |
2.901 |
15 |
15 |
11 |
||||||||||||||
Total EMEA |
4.883 |
21 |
4.903 |
-125 |
4.778 |
4.336 |
4 |
4.340 |
13 |
13 |
10 |
||||||||||||||
United States |
2.497 |
40 |
2.537 |
-151 |
2.386 |
2.018 |
6 |
2.024 |
24 |
25 |
18 |
||||||||||||||
Rest of Americas |
930 |
5 |
935 |
-98 |
837 |
700 |
0 |
700 |
33 |
34 |
20 |
||||||||||||||
Total Americas |
3.427 |
45 |
3.472 |
-250 |
3.222 |
2.718 |
6 |
2.724 |
26 |
27 |
18 |
||||||||||||||
Japan |
448 |
3 |
451 |
-54 |
397 |
404 |
0 |
404 |
11 |
12 |
-2 |
||||||||||||||
Rest of Asia Pacific Japan |
1.037 |
3 |
1.040 |
-141 |
899 |
740 |
1 |
741 |
40 |
40 |
21 |
||||||||||||||
Total Asia Pacific Japan |
1.485 |
6 |
1.491 |
-195 |
1.296 |
1.144 |
1 |
1.145 |
30 |
30 |
13 |
||||||||||||||
Software and software-related service revenue |
9.794 |
72 |
9.866 |
-570 |
9.296 |
8.198 |
11 |
8.209 |
19 |
20 |
13 |
||||||||||||||
Total revenue by region |
|||||||||||||||||||||||||
Germany |
2.195 |
0 |
2.195 |
-1 |
2.194 |
2.029 |
0 |
2.029 |
8 |
8 |
8 |
||||||||||||||
Rest of EMEA |
4.068 |
21 |
4.089 |
-154 |
3.935 |
3.614 |
4 |
3.618 |
13 |
13 |
9 |
||||||||||||||
Total EMEA |
6.263 |
21 |
6.283 |
-154 |
6.129 |
5.643 |
4 |
5.647 |
11 |
11 |
9 |
||||||||||||||
United States |
3.243 |
40 |
3.284 |
-192 |
3.092 |
2.695 |
6 |
2.701 |
20 |
22 |
14 |
||||||||||||||
Rest of Americas |
1.192 |
5 |
1.197 |
-130 |
1.067 |
925 |
0 |
925 |
29 |
29 |
15 |
||||||||||||||
Total Americas |
4.435 |
45 |
4.480 |
-322 |
4.158 |
3.620 |
6 |
3.626 |
23 |
24 |
15 |
||||||||||||||
Japan |
513 |
3 |
516 |
-61 |
455 |
476 |
0 |
476 |
8 |
8 |
-4 |
||||||||||||||
Rest of Asia Pacific Japan |
1.253 |
3 |
1.256 |
-171 |
1.085 |
933 |
1 |
934 |
34 |
34 |
16 |
||||||||||||||
Total Asia Pacific Japan |
1.766 |
6 |
1.772 |
-233 |
1.539 |
1.409 |
1 |
1.410 |
25 |
26 |
9 |
||||||||||||||
Total revenue |
12.464 |
72 |
12.536 |
-709 |
11.827 |
10.672 |
11 |
10.683 |
17 |
17 |
11 |
||||||||||||||
* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. See Explanations of Non-IFRS Measures for details. ** Constant currency revenue figures are calculated by translating revenue of the current period using the average exchange rates from the previous year's respective period instead of the current period. Constant currency period-over-period changes are calculated by comparing the current year's non-IFRS constant currency numbers with the non-IFRS number of the previous year's respective period. Differences may exist due to rounding. |
|||||||||||||||||||||||||
SHARE-BASED COMPENSATION (Preliminary and unaudited) |
||||||||
euro millions |
Twelve months ended December 31 |
|||||||
2010 |
2009 |
Change in % |
||||||
Share-based compensation per expense line item |
||||||||
Cost of software and software-related services |
4 |
5 |
-20 |
|||||
Cost of professional services and other services |
9 |
8 |
13 |
|||||
Research and development |
19 |
18 |
6 |
|||||
Sales and marketing |
16 |
12 |
33 |
|||||
General and administration |
10 |
10 |
0 |
|||||
Total share-based compensation |
58 |
53 |
9 |
|||||
Note: The share-based compensation expenses do not differ between SAP's IFRS and non-IFRS measures. Differences may exist due to rounding. |
||||||||
FREE CASH FLOW (Preliminary and unaudited) |
||||
euro millions |
Year ended December 31 |
|||
2010 |
2009 |
Change in % |
||
Net cash flows from operating activities |
2.954 |
3.015 |
-2 |
|
Additions to non-current assets excluding additions from acquisitions |
-334 |
-225 |
48 |
|
Free cash flow |
2.620 |
2.790 |
-6 |
|
Differences may exist due to rounding. |
||||
DAYS SALES OUTSTANDING (DSO) (Unaudited) |
||||
as at December 31, 2010 and December 31, 2009 |
||||
2010 |
2009 |
Change in days |
||
Days sales outstanding (DSO) in days* |
65 |
79 |
-14 |
|
* Day Sales Outstanding measures the length of time it takes to collect receivables. SAP calculates DSO by dividing the average invoiced accounts receivables balance of the last 12 months by the average monthly sales of the last 12 months. |
||||
NUMBER OF EMPLOYEES (in Full-Time Equivalents) |
|||||||||
December 31, 2010 |
December 31, 2009 |
||||||||
EMEA |
Americas |
Asia Pacific Japan |
Total |
EMEA |
Americas |
Asia Pacific Japan |
Total |
||
Software and software-related services |
3.804 |
1.827 |
2.254 |
7.885 |
3.227 |
1.276 |
1.919 |
6.422 |
|
Professional services and other services |
6.787 |
3.955 |
2.410 |
13.152 |
6.635 |
3.473 |
2.240 |
12.348 |
|
Research and development |
8.617 |
3.154 |
4.113 |
15.884 |
8.525 |
2.534 |
3.755 |
14.814 |
|
Sales and marketing |
4.593 |
4.214 |
2.180 |
10.987 |
4.202 |
3.559 |
1.752 |
9.513 |
|
General and administration |
2.053 |
1.005 |
518 |
3.576 |
1.919 |
724 |
408 |
3.051 |
|
Infrastructure |
1.135 |
628 |
266 |
2.029 |
854 |
408 |
174 |
1.436 |
|
SAP Group (December 31) |
26.989 |
14.783 |
11.741 |
53.513 |
25.362 |
11.974 |
10.248 |
47.584 |
|
thereof Sybase |
813 |
1.866 |
1.047 |
3.726 |
|||||
SAP Group (months' end average) |
25.929 |
13.164 |
10.877 |
49.970 |
25.927 |
12.288 |
10.554 |
48.769 |
|
MULTI-QUARTER SUMMARY (IFRS and non-IFRS; preliminary und unaudited) |
||||||||||
euro millions, unless otherwise stated |
Q4/2010 |
Q3/2010 |
Q2/2010 |
Q1/2010 |
Q4/2009 |
Q3/2009 |
Q2/2009 |
Q1/2009 |
||
Software revenue (IFRS) |
1.507 |
656 |
637 |
464 |
1.120 |
525 |
543 |
418 |
||
Revenue adjustment* |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Software revenue (non-IFRS) |
1.507 |
656 |
637 |
464 |
1.120 |
525 |
543 |
418 |
||
Support revenue (IFRS) |
1.656 |
1.559 |
1.526 |
1.394 |
1.364 |
1.333 |
1.337 |
1.252 |
||
Revenue adjustment* |
36 |
36 |
0 |
0 |
0 |
0 |
0 |
11 |
||
Support revenue (non-IFRS) |
1.692 |
1.595 |
1.526 |
1.394 |
1.364 |
1.333 |
1.337 |
1.263 |
||
Subscription and other software-related service revenue (IFRS) |
110 |
101 |
95 |
89 |
82 |
79 |
73 |
71 |
||
Revenue adjustment* |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Subscription and other software-related service revenue (non-IFRS) |
110 |
101 |
95 |
89 |
82 |
79 |
73 |
71 |
||
Software and software-related service revenue (IFRS) |
3.273 |
2.316 |
2.258 |
1.947 |
2.566 |
1.937 |
1.953 |
1.741 |
||
Revenue adjustment* |
36 |
36 |
0 |
0 |
0 |
0 |
0 |
11 |
||
Software and software-related service revenue (non-IFRS) |
3.309 |
2.352 |
2.258 |
1.947 |
2.566 |
1.937 |
1.953 |
1.752 |
||
Total revenue (IFRS) |
4.058 |
3.003 |
2.894 |
2.509 |
3.190 |
2.508 |
2.576 |
2.397 |
||
Revenue adjustment* |
36 |
36 |
0 |
0 |
0 |
0 |
0 |
11 |
||
Total revenue (non-IFRS) |
4.094 |
3.039 |
2.894 |
2.509 |
3.190 |
2.508 |
2.576 |
2.408 |
||
Operating profit (IFRS) |
543 |
716 |
774 |
557 |
1.022 |
619 |
641 |
307 |
||
Revenue adjustment* |
36 |
36 |
0 |
0 |
0 |
0 |
0 |
11 |
||
Expense adjustment* |
1.031 |
131 |
66 |
54 |
113 |
68 |
69 |
78 |
||
Operating profit (non-IFRS) |
1.610 |
883 |
840 |
612 |
1.134 |
687 |
710 |
396 |
||
Operating margin (IFRS) |
13,4 |
23,8 |
26,7 |
22,2 |
32,0 |
24,7 |
24,9 |
12,8 |
||
Operating margin (non-IFRS) |
39,3 |
29,1 |
29,0 |
24,4 |
35,5 |
27,4 |
27,6 |
16,4 |
||
Effective tax rate (IFRS) |
3,1 |
27,3 |
27,4 |
25,7 |
31,1 |
20,5 |
28,5 |
31,7 |
||
Effective tax rate (non-IFRS) |
27,2 |
28,7 |
26,8 |
25,3 |
30,5 |
21,0 |
28,1 |
30,1 |
||
Basic earnings per share, in euro (IFRS) |
0,37 |
0,42 |
0,41 |
0,33 |
0,57 |
0,38 |
0,36 |
0,17 |
||
Basic earnings per share, in euro (non-IFRS) |
0,93 |
0,51 |
0,46 |
0,37 |
0,64 |
0,42 |
0,40 |
0,22 |
||
Headcount** |
53.513 |
52.921 |
48.021 |
47.598 |
47.584 |
47.810 |
48.567 |
49.922 |
||
* Adjustments in the revenue line items are for support revenue that entities acquired by SAP would have recognized had they remained stand-alone entities but that SAP is not permitted to recognize as revenue under IFRS as a result of business combination accounting rules. Adjustments in the operating expense line items are for acquisition-related charges and discontinued activities. See Explanations of Non-IFRS Measures for details. ** in full-time equivalents at quarter end Differences may exist due to rounding. |
||||||||||
EXPLANATIONS OF NON-IFRS MEASURES
This document discloses certain financial measures, such as non-IFRS revenue, non-IFRS expenses, non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax, non-IFRS earnings per share, free cash flow as well as constant currency revenue and operating profit measures 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 be considered in addition to, and not as substitutes for or superior to, revenue, operating profit, operating margin, cash flows, or other measures of financial performance prepared in accordance with IFRS. Our non-IFRS financial measures included in this document are reconciled to the nearest IFRS measure in the tables on the pages F8 to F13 above.
We believe that the supplemental historical and prospective non-IFRS financial information presented in this document provides useful supplemental information to investors because it is also used by our management – in addition to financial data prepared in accordance with IFRS – to attain a more transparent understanding of our past performance and our future results. At the beginning of 2010 the non-IFRS measures (as defined below) replaced the non-GAAP measures we used until the termination of our U.S. GAAP reporting. Specifically, we use these non-IFRS measures consistently in our planning and forecasting, reporting, compensation, and external communication 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 remuneration components of our Executive Board members and employees are based on non-IFRS revenue and non-IFRS operating profit rather than the respective IFRS measures.
- The annual budgeting process for all management units is based on non-IFRS revenues and non-IFRS operating profit numbers rather than the respective IFRS numbers with costs such as share-based compensation and restructuring only being considered on a Company level.
- All forecast and performance reviews with all senior managers globally are based on these non-IFRS measures, rather than the respective IFRS numbers.
- Company-internal target setting and guidance provided to the capital markets are both based on non-IFRS revenues and non-IFRS profit measures rather than the respective IFRS numbers.
We believe that our non-IFRS measures are useful to investors for the following reasons:
- The non-IFRS measures provide investors with insight into management's decision-making since management uses these non-IFRS measures to run our business and make financial, strategic and operating decisions.
- 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.
Our non-IFRS financial measures reflect adjustments based on the items below, as well as adjustments for the related income tax effects:
Non-IFRS Revenue
Revenues in this document identified as non-IFRS revenue have been adjusted from the respective IFRS numbers by including the full amount of support revenue that would have been recorded by entities acquired by SAP had they remained stand-alone entities but which we are not permitted to record as revenue under IFRS due to fair value accounting for the support contracts in effect at the time of the respective acquisitions.
Under IFRS, we record at fair value the support contracts in effect at the time entities were acquired. Consequently, our IFRS support revenue, our IFRS software and software-related service revenue and our IFRS total revenue for periods subsequent to acquisitions do not reflect the full amount of support revenue that would have been recorded for these support contracts absent these acquisitions by SAP. Adjusting revenue numbers for this revenue impact provides additional insight into the comparability across periods of our ongoing performance.
Non-IFRS Operating Expense
Operating expense figures in this report that are identified as non-IFRS operating expense have been adjusted by excluding the following:
- Acquisition-related charges
- Amortization expense/impairment charges of intangibles acquired in business combinations and certain standalone acquisitions of intellectual property (including purchased in-process research and development)
- Restructuring expenses and settlements of pre-existing relationships incurred in connection with a business combination
- Acquisition-related third-party expenses
- Discontinued activities: Results of the discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major line of business
The operating profit and operating margin outlook provided for 2011 and the comparable 2010 operating profit and operating margin numbers are based on an updated non-IFRS definition which additionally excludes the following:
- Expenses relating to share-based compensation
- Restructuring expenses
Non-IFRS Operating Profit, non-IFRS Operating Margin, non-IFRS Profit After Tax and non-IFRS Earnings Per Share
Operating profit, operating margin, profit after tax and earnings per share in this document identified as non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax and non-IFRS earnings per share have been adjusted from the respective IFRS measures by adjusting for the above mentioned non-IFRS revenues and non-IFRS operating expenses.
We exclude certain acquisition-related expenses for the purpose of calculating non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit after tax and non-IFRS earnings per share when evaluating the continuing operational performance of the Company 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 has no influence on these expenses we generally do not consider these expenses for the purpose of evaluating the performance of management units.
Additionally, our non-IFRS measures have been adjusted from the respective IFRS measures for the results of the discontinued operations that qualify as such under IFRS in all respects except that they do not represent a major line of business. We refer to these activities as "discontinued activities." Under U.S. GAAP, which we provided until 2009, we presented the results of operations of the TomorrowNow entities as discontinued operations. Under IFRS, results of discontinued operations may only be presented as discontinued operations if a separate major line of business or geographical area of operations is discontinued. Our TomorrowNow operations were not a separate major line of business and thus did not qualify for separate presentation under IFRS. We believe that this additional non-IFRS adjustment to our IFRS numbers for the results of our discontinued TomorrowNow activities is useful to investors for the following reasons:
- Despite the migration from U.S. GAAP to IFRS, we will continue to internally treat the ceased TomorrowNow activities as discontinued activities and thus will continue to exclude potential future TomorrowNow results, which are expected to mainly comprise of expenses in connection with the Oracle lawsuit, from our internal management reporting, planning, forecasting, and compensation plans. Therefore, adjusting our non-IFRS measures for the results of the discontinued TomorrowNow activities provides insight into the financial measures that SAP uses internally.
- By adjusting the non-IFRS numbers for the results from our discontinued TomorrowNow operations, the non-IFRS numbers are more comparable to the non-GAAP measures that SAP used through the end of 2009, which make SAP's performance measures before and after the full IFRS migration easier to compare.
The operating profit and operating margin outlook provided for 2011 and the comparable 2010 operating profit and operating margin numbers are based on an updated non-IFRS definition which additionally excludes the expenses relating to share-based compensation and restructuring expenses from our non-IFRS numbers. These expenses are allocated and managed on corporate level only and are not factored in our management's view when managing the continuing operational performance of the Company.
We include the revenue adjustments outlined above and exclude the expense adjustments when making decisions to allocate resources, both on a Company level and at lower levels of the organization. In addition, we use these non-IFRS measures to gain a better understanding of the Company's comparative operating performance from period to period. We believe that our non-IFRS financial measures described above have limitations, which include but are not limited to the following:
- The eliminated amounts may 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 non-IFRS profit numbers reflect the elimination of certain acquisition-related expenses, no eliminations are made for the additional revenues and other revenues that result from the acquisitions.
- The acquisition-related charges that we eliminate in deriving our non-IFRS profit numbers are likely to recur should SAP enter into material business combinations in the future.
- The acquisition-related amortization expense that we eliminate in deriving our non-IFRS profit 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' support 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 post-acquisition periods while the expense adjustment aims to improve the comparability between post-acquisition periods and pre-acquisition periods. This should particularly be considered when evaluating our non-IFRS operating profit and non-IFRS operating margin numbers as these combine our non-IFRS revenue and non-IFRS expenses despite the absence of a common conceptual basis.
- Our discontinued activities could result in significant cash outflows.
- The valuation of our cash-settled shared based payment plans could fluctuate significantly due to the development of our share price and other parameters used in the valuation of these plans
- We have in the past and intend to continue in the future to issue share based compensation awards to our employees every year. Thus our share-based compensation expense are recurring although the amounts usually change from period to period.
We believe, however, that the presentation of the non-IFRS measures in conjunction with the corresponding IFRS measures together with the relevant reconciliations, provides useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations. We therefore do not evaluate our growth and performance without considering both non-IFRS measures and the relevant IFRS measures. We caution the readers of this document to follow a similar approach by considering our non-IFRS measures only in addition to, and not as a substitute for or superior to, revenues or other measures of our financial performance prepared in accordance with IFRS.
Constant Currency Period-Over-Period Changes
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 year-over-year changes in revenue and operating profit by translating foreign currencies using the average exchange rates from the previous year instead of the current year.
We believe that data on constant currency period-over-period changes have limitations, particularly as the currency effects that are eliminated constitute a significant element of our revenue and expenses and may severely impact our performance. We therefore limit our use of constant currency period-over-period changes 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 period-over-period changes in non-IFRS revenue and non-IFRS operating profit on the one hand and changes in revenue, expenses, profit, or other measures of financial performance prepared in accordance with IFRS on the other. We caution the readers of this document to follow a similar approach by considering data on constant currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenue, expenses, profit, or other measures of financial performance prepared in accordance with IFRS.
Free Cash Flow
We use our free cash flow measure to estimate the cash flow remaining after all expenditures required to maintain or expand the organic business have been paid off. This assists management with the supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities minus additions to non-current assets, excluding additions from acquisitions. Free cash flow should be considered in addition to, and not as a substitute for or superior to, cash flow or other measures of liquidity and financial performance prepared in accordance with IFRS.
SOURCE SAP AG
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