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 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 acquire businesses, to pay dividends on our shares, and to buy back SAP shares on the open market. On December 31, ~~2012, our cash, cash equivalents, and current investments were~~2015, primarily ~~held~~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		D
Cash and cash equivalents		3,411		3,328		83
Current investments		148		95		53
Group liquidity		3,559		3,423		136
Current financial debt		–567		–2,157		1,590
Net liquidity 1		2,992		1,266		1,726
Non-current financial debt		–8,607		–8,936		329
Net liquidity 2		–5,615		–7,670		2,055

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

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

–9%

Net cash flows from investing activities

–334

–7,240

–1,781

–95%

>100%

Net cash flows from financing activities

–3,356

4,298

–1,589

<–100%

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.

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
€ millions	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Financial liabilities⁽¹⁾		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
Purchase obligations⁽³⁾		872		428		260		118		66
Capital contribution commitments⁽³⁾		111		111		0		0		0
Other non-current non-financial liabilities⁽²⁾		331		0		201		36		94
Total		12,920		1,770		4,660		2,251		4,239

(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 ~~invest~~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

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.

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
Europe, Middle East, and Africa (EMEA)
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
Americas
United States		2.4		2.5		2.6
Canada		2.5		1.2		1.7
Central and South America, Caribbean		1.3		–0.3		–0.3
Asia Pacific Japan (APJ)
Japan		0.0		0.6		1.0
Asian developing economies		6.8		6.6	��	6.3
China		7.3		6.9		6.3

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

will expand only in the ~~financial assets~~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
World
Total IT		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
Europe, Middle East, and Africa (EMEA)
Total IT		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
Americas
Total IT		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
Asia Pacific Japan (APJ)
Total IT		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

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 ~~issuers or funds~~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

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.

We expect that non-IFRS total revenue will continue to depend largely on the revenue from cloud and software.

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 (non-IFRS) 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 ~~minimum credit rating~~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 ~~BBB,~~the profit expansion comes from our Applications, Technology, 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 investServices 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 ~~assets~~measures and our IFRS financial measures.

Non-IFRS Measures


€ millions	Estimated Amounts for 2016		Actual Amounts for 2015
Revenue adjustments		< 20		11
Share-based payment expenses		590 to 630		724
Acquisition-related charges		690 to 740		738
Restructuring		40 to 60		621

We do not expect any Company-wide restructuring programs in 2016.

The Company expects a full-year 2016 effective tax rate (IFRS) of ~~issuers with~~22.5% to 23.5% (2015: 23.4%) and an effective tax rate (non-IFRS) of 24.5% to 25.5% (2015: 26.1%).

Goals for Liquidity and Finance

On December 31, 2015, we had a ~~credit rating lower than BBB, and such investments were not material in 2012.~~

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. ~~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).~~

~~Part I~~

~~Item 5~~

~~The persistently strong free cash flow of recent years enabled us to pay back additional debts within~~In 2016, we expect a ~~short period of time. Furthermore, a balanced maturity profile prevents repayment peaks from occurring in any particular year.~~

To expand our business, we have made acquisitions of businesses, products, and technologies. For more information about our financial debt, mainly in connection with the acquisitions of SuccessFactors and Ariba, see the Cash Flows and Liquidity section. 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.

~~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 doing so, ensure a high level of independence, confidence, and financial flexibility.

~~We currently do not have a credit rating with any agency. We do not believe that a rating would have a substantial effect on our borrowing conditions and financing options.~~

Our general intention is to remain in a position to return excess liquidity to our shareholders by distributing annual dividends and repurchasing shares. The amount of future dividends and the extent of future purchases of treasury shares are closely aligned to thepositive development of our ~~liquid assets and further liquidity planning.~~

operating cash flow mainly due to lower restructuring related payments.

~~Capital Structure~~

      2012    2011    % Change
      € millions    % of
Equity and
liabilities    € millions    % of
Equity and
liabilities
Equity
   14,171       53       12,707       55       12
Current liabilities
   6,641       25       6,266       27       6
Non-current liabilities
   6,023       22       4,254       18       42
Liabilities
   12,664       47       10,520       45       20










Equity and liabilities
   26,835       100       23,227       100       16

~~In 2012, we took out short-term bank loans~~We intend to ~~finance the acquisitions of SuccessFactors and Ariba. Additionally, we issued~~repay a ~~two-tranche Eurobond and a~~US$600 million U.S. private placement ~~consisting~~when it matures in June. Additionally, we are planning to further repay our outstanding€1.25 billion bank loan.

By the time of ~~several tranches with maturities~~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 ~~three~~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 ~~15 years~~continue our dividend policy in 2017 as well, which ~~further optimized and extended~~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 ~~existing maturity profile. We used inflows from the newly issued bonds and private placement~~outlook guidance, we have taken into account all events known to ~~repay the short-term bank loans.~~

~~These financing activities changed our debt ratio (defined as the ratio of total liabilities to equity and liabilities) to 47%~~us at the ~~end of 2012 (as compared to 45% at~~time we prepared this report that could influence SAP’s business going forward.

Among the ~~end of 2011). These financing activities were partially offset by~~premises on which this outlook is based are those presented concerning economic development and the ~~operating cash flow~~assumption that there will be no effects from major acquisitions in ~~2012. As far as financing~~

~~activities in 2013 are concerned, a €600 million bond that will mature in August 2013 is intended to be repaid. We currently do not plan to refinance this bond at maturity.~~

Total liabilities on December 31, 2012, mainly comprised financial liabilities of €5,248 million (of which €4,446 million are non-current). Financial liabilities on December 31, 2012, consisted largely of financial debt, which included amounts in euros (€2,986 million)2016 and U.S. dollars (€2,008 million). Financial debt is held at fixed interest rates only. For more information about financial liabilities, see the Notes to the Consolidated Financial Statements section, Note (17).2017.

~~Part I~~

~~Item 5~~

Cash Flows and Liquidity

Group liquidity on December 31, ~~2012,~~2015, primarily comprised amounts in euros and U.S. ~~dollars (€941 million) and euros (€473 million).~~dollars. Current investments are included in other financial assets in the statement of financial position. ~~Bank loans, private placement transactions, and bonds~~Financial debts are included within financial liabilities in the statement of financial position.

~~Analysis~~Group Liquidity of ~~Net Liquidity~~SAP Group


€ millions	2012		2011		Change		2015		2014		D
Cash and cash equivalents		2,477		4,965		–2,488		3,411		3,328		83
Current investments		15		636		–621		148		95		53

Group liquidity		2,492		5,601		–3,109		3,559		3,423		136

Current bank loans		0		101		–101
Current private placement transaction		0		423		–423
Current bond		600		600		0

Current financial debt								–567		–2,157		1,590
Net liquidity 1		1,892		4,477		–2,585		2,992		1,266		1,726

Non-current bank loans		0		1		–1
Non-current private placement transaction		2,094		1,240		854
Non-current bond		2,300		1,600		700

Non-current financial debt								–8,607		–8,936		329
Net liquidity 2	–	2,502		1,636		–4,138		–5,615		–7,670		2,055

original maturities of greater than three months and remaining maturities of less than one year) as reported in our ~~IFRS~~ Consolidated Financial Statements.

Group Liquidity Development

Total financial debt consists of current financial liabilities (for example, overdrafts, current bank loans, bonds or private placements) and non-current financial liabilities (for example, bonds, or private placements) as reported in our IFRS Consolidated Financial Statements. For more information about our financial debt, see the Notes to the Consolidated Financial Statements section, Note (17).

Net liquidity is Group liquidity less total financial debt as defined above. ~~Net liquidity should be~~

~~considered in addition to, and not as a substitute for, cash and cash equivalents, other financial assets, and financial liabilities included in our IFRS Consolidated Financial Statements.~~

The ~~decrease~~increase in Group liquidity ~~from 2011~~compared to 2014 was mainly due to cash ~~outflows for the acquisition of SuccessFactors and Ariba, as well as dividend payments, which were partly offset by positive cash~~ inflows from our ~~operations.~~

operations and financing activities in issuing bonds. They were offset by cash outflows for dividend payments and repayments of borrowings.

~~Part I~~

~~Item 5~~

For information about the impact of cash, cash equivalents, current investments, and our financial liabilities on our income statements, see the

analysis of our ~~finance~~financial income, net, in the Operating Results (IFRS) section.

Analysis of Consolidated Statements of Cash Flows

Years ended December 31,

Change in %
2012 vs. 2011

Change in %
2011 vs. 2010

€ millions

2012

2011

2010

Years ended December 31,

2015

2014

2013

Change in % 2015
vs. 2014

Change in % 2014
vs. 2013

Net cash flows from operating activities

3,822

3,775

2,922

3,638

3,499

3,832

–9%

Net cash flows from investing activities

–5,964

–1,226

–3,994

>100

–69

–334

–7,240

–1,781

–95%

>100%

Net cash flows from financing activities

–194

–1,176

2,520

–84

<–100

–3,356

4,298

–1,589

<–100%

Analysis of Consolidated Statements of Cash ~~Flow: 2012~~Flows: 2015 compared to ~~2011~~2014

Net cash provided by operating activities increased ~~slightly by €47 million or 1%~~4% year-over-year to ~~€3,822~~€3,638 million in ~~2012 (2011: €3,775~~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 ~~2012,~~2015, days’ sales outstanding (DSO) for receivables, defined as the average number of days from the raised invoice to cash receipt from the customer, ~~was 59~~increased six days ~~a one-day decrease compared~~ to ~~2011 (60~~71 days (2014: 65 days).

Cash outflows from investment activities ~~totaled €5,964~~decreased significantly to€334 million in ~~2012, much increased~~2015 (2014:€7,240 million). Cash outflows from ~~the 2011 figure~~purchase of ~~€1,226 million. In 2012, cash~~intangible assets and property, plant, and equipment remained stable. Cash outflows ~~were~~in 2014 had resulted mainly ~~driven by acquisitions~~from business combinations of ~~consolidated companies such as SuccessFactors~~Concur and ~~Ariba, for which we paid €6,094 million in total.~~Fieldglass. For more information about current and planned capital expenditures, see the ~~Assets and~~ Investment Goals ~~sections. In contrast, the 2011 figure was mainly driven by investments in time deposits and German government bonds.~~section.

~~Cash~~Net cash outflows from financing activities ~~totaled €194~~were€3,356 million in ~~2012,~~2015, compared to ~~€1,176~~net cash inflows of€4,298 million in ~~2011. In 2012,~~2014. The 2015 cash ~~inflows were mainly driven by a successfully placed two-tranche Eurobond transaction totaling €1.3 billion~~outflows had resulted from repayments of€1,270 million bank loans,€550 million Eurobonds and ~~a U.S.~~US$300 million private ~~placement transaction~~placements. We refinanced another part of ~~US$1.4 billion consisting of several tranches. This was partly offset by repayments~~the bank loan through the issuance of a three-tranche Eurobond ~~tranche (€600 million)~~of€1,750 million in total. Cash inflows in 2014 were the result of issuing a€2,750 million Eurobond and ~~several~~drawing two tranches ~~(€611~~(of€1,270 million and€3,000 million) of ~~the promissory notes~~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 ~~issued in 2009. In the previous year, cash outflows were driven mainly by repayments of a credit facility we drew on~~assumed in connection with our acquisition of ~~Sybase.~~Concur.

The ~~increase~~dividend payment of€1,316 million made in ~~total dividends paid to €1,310~~2015 exceeded the amount of€1,194 million ~~was due to an increase~~ in the prior year resulting from the increased dividend ~~from €0.60~~paid per share ~~in the previous year~~from€1.00 to ~~€1.10 per share, of which €0.35 per share was an extraordinary payout to celebrate our 40~~€^th anniversary in the reporting year (total dividend payout in 2011: €713 million). In 2012, we repurchased shares in the amount of €53 million (2011: €246 million) in connection with our share-based payments.1.10.

Analysis of Consolidated Statements of Cash ~~Flow: 2011~~Flows: 2014 Compared to ~~2010~~2013

Net cash provided by operating activities ~~improved €853 million or 29%~~decreased 9% year-over-year to ~~€3,775~~€3,499 million in ~~2011 (2010: €2,922~~2014 (2013:€3,832 million). ~~The year’s good sales figures were the factor~~Payments in connection with the ~~greatest~~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 ~~flow in 2011. By effective management of working capital, we were again able to reduce the~~provided by operating activities. In 2014, days’ sales outstanding (DSO) for receivables, defined as the average number of days from ~~revenue recognition~~the raised invoice to cash receipt from the ~~customer. In 2011, we reduced DSO by five~~customer, increased three days to 6065 days ~~(2010: 65~~(2013: 62 days).

Cash outflows from investment activities ~~totaled €1,226~~increased significantly to€7,240 million in ~~2011, much reduced~~2014 (2013:€1,781 million). The increase resulted principally from the ~~2010 figure of €3,994 million. In 2011,~~Concur, Fieldglass, and SeeWhy acquisitions. For more information about current and planned capital expenditures, see the Investment Goals section.

Net cash outflows were mainly driven by investments in time deposits and German government bonds, and also by our business and infrastructure following the acquisition of tangible and intangible assets. In 2011, we paid €188 million for the acquisition of consolidated companies compared to €4,194 million in 2010. Much of the 2010 outflow was attributable to the purchase price paid for the acquisition of Sybase.

~~Part I~~

~~Item 5~~

~~Cash outflows~~inflows from financing activities ~~totaled €1,176~~were€4,298 million in ~~2011,~~2014, compared to net cash ~~inflows~~outflows of ~~€2,520~~€1,589 million in ~~2010. Our 2011 cash~~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 ~~were mainly due to~~arose chiefly from repayments of borrowings (€1,086 million) and the repayment of ~~a credit facility~~convertible bonds that we ~~entered into~~assumed in connection with our acquisition of ~~Sybase. This~~Concur (US$1,160 million). The 2013 cash outflows had resulted chiefly from dividends paid and the repayment of a€600 million bond.

The dividend payment of€1,194 million made in 2014 was ~~partly offset by a private placement completed~~greater than that of€1,013 million in the ~~United States on June 1, 2011, which led to a cash inflow of US$750 million. In the previous~~prior year ~~cash inflows were driven mainly by the incoming payments from our financing activities related to the acquisition of Sybase.~~

~~The increase in total dividend to €713 million was due to an increase in~~because the dividend paid ~~from €0.50~~ per share ~~in the previous year~~increased from€0.85 to ~~€0.60 in the reporting year (total dividend payout in 2010: €594 million). In 2011, we repurchased shares for treasury in the amount of €246 million (2010: €220 million).~~€1.00.

Credit Facilities

Other sources of capital are available to us through various credit facilities, if required.

We are party to a revolving ~~€1.5~~€2.0 billion ~~syndicated~~ credit facility ~~agreement~~contract with ~~an initial term of five years ending~~maturity in ~~December 2015.~~November 2020. The ~~use of the facility is not restricted by any financial covenants. Potential proceeds are~~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~~Euro Interbank Offered Rate (EURIBOR) or London ~~interbank offered rate~~Interbank Offered Rate (LIBOR) for the respective optional currency plus a margin

ranging from ~~0.45%~~0.3% to ~~0.75% that depends on the amount drawn.~~0.525%. We pay a commitment fee of ~~0.1575%~~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, ~~2012,~~2015, SAP AGSE had additional available credit facilities totaling ~~approximately €489~~€471 million. ~~As at December 31, 2012, there were no borrowings outstanding under these credit facilities.~~ Several of our foreign subsidiaries have credit facilities available that allow them to borrow funds ~~in their local currencies~~ at prevailing interest ~~rates, generally to the extent SAP AG has guaranteed such amounts.~~rates. As at December 31, ~~2012,~~2015, approximately ~~€48~~€49 million was available through such arrangements. There were noimmaterial borrowings outstanding under these credit facilities from ~~any of~~ our foreign subsidiaries as at December 31, ~~2012.~~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 ~~do not~~ have forms of material off-balance sheet arrangements that would require disclosure other than those already disclosed.

~~Part I~~

~~Item 5~~

CONTRACTUAL OBLIGATIONS

The table below presents our on- and off-balance sheet contractual obligations as of December 31, ~~2012:~~2015:


Contractual obligations			Payments due by period										Payments due by period
€ millions	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt obligations⁽¹⁾		5,885		881		1,599		1,457		1,948
Other non-current obligations on the statement of financial position⁽²⁾		98		3		9		3		83
Financial liabilities⁽¹⁾												10,127		863		3,759		1,822		3,683
Derivative financial liabilities⁽¹⁾												132		74		29		29		0
Operating lease obligations⁽³⁾		923		238		356		171		158		1,347		294		410		246		396
Purchase obligations⁽³⁾		588		317		144		74		53		872		428		260		118		66

Capital contribution commitments⁽³⁾												111		111		0		0		0
Other non-current non-financial liabilities⁽²⁾												331		0		201		36		94
Total		7,494		1,439		2,108		1,705		2,242		12,920		1,770		4,660		2,251		4,239

(1) For more information on financial liabilities and derivative financial liabilities see Note (24) to our Consolidated Financial Statements.

⁽¹⁾

~~This represents bank loans, private placement transactions, bonds, other financial liabilities and interest thereon.~~

(2) For more information on other non-current non-financial liabilities see Note (17c) to our Consolidated Financial Statements.

⁽²⁾	~~Amounts mainly consist of employee-related liabilities. Not included in the table are non-current tax liabilities of €388 million, which include provisions for uncertainties in income taxes.~~

⁽³⁾

See Note (22) to our Consolidated Financial Statements for additional information about operating lease and purchase obligations. Our expected contributions to our pension and other post employment benefit plans are not included in the table above. We expect to contribute in 2013 statutory minimum and discretionary amounts of €1 million to our German defined benefit plans and €16 million to our foreign defined benefit plans, all of which are expected to be paid as cash contributions. Our contributions to our German and foreign defined contribution plans have ranged from €136 million to €173 million in 2010 through 2012; we expect similar contributions to be made in 2013.

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

RESEARCH AND DEVELOPMENT

For information on our R&D activities see “Item 4. Information about SAP – Products, Research & Development, and ~~Development.~~Services.” For information on our R&D costs see “Item 5. Operating and Financial Review and Prospects – Operating ~~Results”~~Results (IFRS)” and for information related to our R&D employees see “Item 6. Directors, Senior Management and Employees – Employees.”

CRITICAL ACCOUNTING ESTIMATES

~~Part I~~

~~Item 5~~

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 payment;~~

~~accounting for income tax;~~

~~accounting for business combinations;~~

–

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.

~~subsequent accounting for goodwill and other intangibles;~~

~~accounting for legal contingencies; and~~

~~recognition of internally generated intangible assets from development.~~

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

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
Europe, Middle East, and Africa (EMEA)
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
Americas
United States		2.4		2.5		2.6
Canada		2.5		1.2		1.7
Central and South America, Caribbean		1.3		–0.3		–0.3
Asia Pacific Japan (APJ)
Japan		0.0		0.6		1.0
Asian developing economies		6.8		6.6	��	6.3
China		7.3		6.9		6.3

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

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

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.

~~Part I~~

~~Item 6~~

Trends in the IT Market –


Increased IT Spending Year-Over-Year
In %	2014e		2015p		2016p
World
Total IT		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
Europe, Middle East, and Africa (EMEA)
Total IT		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
Americas
Total IT		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
Asia Pacific Japan (APJ)
Total IT		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

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.

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

Operational Targets for 2016 (Non-IFRS)

Revenue and Operating Profit Outlook

We are providing the following outlook for the full-year 2016:

–

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.

We expect that non-IFRS total revenue will continue to depend largely on the revenue from cloud and software.

We expect that most of the total revenue growth (non-IFRS) 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.

The following table shows the estimates of the items that represent the differences between our non-IFRS financial measures and our IFRS financial measures.

Non-IFRS Measures


€ millions	Estimated Amounts for 2016		Actual Amounts for 2015
Revenue adjustments		< 20		11
Share-based payment expenses		590 to 630		724
Acquisition-related charges		690 to 740		738
Restructuring		40 to 60		621

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%).

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.

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.

We also communicated in 2015 that we aim at further improving the profitability of our on-premise software

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%).

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

SUPERVISORY BOARD

The current members of the Supervisory Board of SAP ~~AG,~~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
Prof. Dr. h.c. mult. Hasso Plattner, Chairman^{(1)(2)(5)(6)(7)(10)}

69


Chairman of the Supervisory Board

2003



2017

Pekka Ala-Pietilä^{(1)(6)(7)(10)}
56       Chairman of the Board of Directors, SolidiumOy 2002       2017
Prof. Anja Feldmann⁽¹⁾⁽⁶⁾
47       Professor at the Electrical Engineering and Computer Science Faculty at the Technische Universität Berlin 2012       2017
Prof. Dr. Wilhelm Haarmann^{(1)(2)(4)(10)}
62       Attorney at Law, Certified Public Auditor and Certified Tax Advisor; HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer 1988       2017
Bernard Liautaud^(1)(2)(6)(7)
50       General Partner, Balderton Capital 2008       2017
Dr. h.c. Hartmut Mehdorn^(1)(4)(5)
70       Independent Management Consultant 1998       2017
Dr. Erhard Schipporeit^{(1)(3)(9)(10)}
64       Independent Management Consultant 2005       2017
Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer^(1)(3)(6)

68


Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH

2007



2017

Christiane Kuntz-Mayr, Vice Chairperson^{(2)(5)(8)(10)}

50


Employee, Deputy Chairperson of the Works Council of SAP AG

2009



2017

Panagiotis Bissiritsas^(2)(4)(8)
44       Employee, Support Expert 2007       2017
Margret Klein-Magar^(2)(8)(10)
48       Employee, Vice President SAP Transformation 2012       2017
Lars Lamadé^(2)(8)(10)
41       Employee, Project Manager OPD COO 2002       2017
Dr. Kurt Reiner^(4)(6)(8)
54       Employee, Development Expert 2012       2017
Mario Rosa-Bian^(5)(6)(8)
56       Employee, Project Principal Consultant 2012       2017
Stefan Schulz^(3)6)(8)
43       Employee, Development Manager 2002       2017
Inga Wiele^(3)(6)(8)
42       Employee, Senior Internal Strategic Consultant 2012       2017


Name		Age		Principal Occupation	Year First Elected		Year Term Expires
Prof. Dr. h.c. mult. Hasso Plattner, Chairman^{(1)(2)(5)(6)(9)(10)}	��		72	Chairman of the Supervisory Board		2003		2019
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

⁽¹⁾	~~Elected by SAP AG’s shareholders on May 23, 2012.~~

⁽²⁾	~~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 Mediation Committee.~~

⁽⁶⁾	~~Member of the Technology and Strategy Committee.~~

⁽⁷⁾	~~Member of the Nomination Committee.~~

⁽⁸⁾	~~Elected by SAP AG’s employees on April 25, 2012.~~

⁽⁹⁾	~~Audit Committee financial expert.~~

⁽¹⁰⁾	~~Member of the Special Committee.~~

~~Part I~~

~~Item 6~~

⁽¹⁾ Elected by SAP SE’s shareholders on May 20, 2015.

⁽²⁾ 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

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 ~~German Co-determination Act~~Articles of ~~1976 (Mitbestimmungsgesetz),~~Incorporation of SAP SE and the Agreement on the Involvement of Employees in SAP SE, members of the Supervisory Board of SAP AGSE consist of ~~eight~~nine representatives of the shareholders and ~~eight~~nine representatives of the European employees. ~~Of the eight employee~~The current nine employees’ representatives ~~two must be nominated~~were appointed by the ~~trade unions. The elected employees must be at least 18 years of age and must have been in the employment of~~ SAP ~~AG or one of its German subsidiaries for at least one year. They must also fulfill the other qualifications for election codified in Section 8 of the German~~SE Works Council ~~Constitution Act. These qualifications include, among other things, not having been declared ineligible or debarred from holding public office by a court.~~Europe on May 6, 2015.

Certain current members of the Supervisory Board of SAP AGSE were members of supervisory boards and comparable governing bodies of enterprises other than SAP AGSE in Germany and other countries as of December 31, ~~2012.~~2015. See Note (29) to our Consolidated Financial Statements for more detail. Apart from pension obligations ~~towards~~for employees, SAP AGSE 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:

Name
   Year First
Appointed    Year Current
Term Expires
Bill McDermott, Co-CEO
   2008       2017
Jim Hagemann Snabe, Co-CEO
   2008       2017
Dr. Werner Brandt
   2001       2014
Lars Dalgaard
   2012       2015
Luisa Deplazes Delgado
   2012       2015
Gerhard Oswald
   1996       2014
Dr. Vishal Sikka
   2010       2017


Name	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

The following changes occurred in the Executive Board in ~~2012:~~

2015:

~~In April 2012, Lars Dalgaard became a member of~~On October 8, 2015, the SAP Supervisory Board appointed Michael Kleinemeier to the SAP Executive ~~Board.~~

~~In September 2012, Luisa Deplazes Delgado became a member of the Executive Board.~~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, ~~Co-CEO~~CEO (Vorstandssprecher), 5154 years old, holds a master’s degree in business ~~administration from Northwestern University’s Kellogg School of Management.~~administration. He joined SAP in 2002 and became a member of ~~the~~its Executive Board on July 1, 2008. On February 7, 2010 he

became Co-CEO alongside Jim Hagemann ~~Snabe. Besides the duties~~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 ~~responsible~~leading SAP with organizational responsibility for strategy, ~~and~~ business development, corporate development, communications, marketing ~~communications, corporate audit, board governance, sustainability, solutions, global sales~~ and ~~global partner~~internal audit. In addition he assumed responsibility for human resources and ~~channel management.~~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.

~~Jim Hagemann Snabe, Co-CEO~~Robert Enslin, ~~(Vorstandssprecher), 47~~53 years old, holds ~~a master’s degree~~diplomas in ~~operational research.~~data science as well as computer science and data management. He joined SAP in ~~1990~~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 ~~July 1, 2008. On February 7, 2010 he~~engineering and information technology. He joined SAP in 1994 and became ~~Co-CEO alongside Bill McDermott. Besides~~a member of the ~~duties as Co-CEO,~~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 ~~development, corporate development, marketing, communications, corporate audit, board governance, sustainability, solutions, global R&D portfolio, processes, and IT.~~

~~Werner Brandt~~~~, 59 years old, business administration graduate. Werner Brandt~~administration. He joined SAP in ~~early 2001 as the~~1996 and became Chief Financial Officer (CFO), Chief Operating Officer (COO) and a member of the Executive ~~Board.~~Board in July 2014. He is responsible for finance and administration including investor relations and data protection and privacy. ~~Prior to joining SAP, Werner Brandt was CFO and member~~In addition, as the company’s COO, Luka Mucic is responsible for the Process Office of the ~~Executive Board of Fresenius Medical Care AG since 1999. In this role, he was also responsible~~company and for ~~labor relations. Before joining Fresenius Medical Care AG, Werner Brandt headed the finance function of the European operations of Baxter International Inc.~~Business Innovation & IT.

~~Part I~~

~~Item 6~~

~~Lars Dalgaard~~, 45 years old, holds a master’s degree from Stanford Graduate School of Business and a Bsc. (Ha) from Copenhagen Business School. Lars is CEO of SuccessFactors, the company he founded in 2001 which went public in 2007, and joined SAP in 2012 when SAP acquired SuccessFactors. He became a member of SAP’s Executive Board on April 12, 2012. Lars is responsible for SAP’s cloud business including strategy, product development, and all go-to-market related capabilities.

~~Luisa Deplazes Delgado~~, 46 years old, holds a master’s degree in law from the University of London’s King’s College and London School of Economics and a licence en droit from the University of Geneva. On September 1, 2012 Luisa joined SAP as the Chief Human Resources Officer and member of the Executive Board. She also serves as Labor Relations Director of SAP AG. She is responsible for all human resources activities at SAP globally. Prior to joining SAP, she spent 22 years with Procter and Gamble, the last five as CEO of Procter and Gamble Nordic based in Stockholm, Sweden, previously as VP of HR for Western Europe based in Geneva, Switzerland, and before in diverse roles in Belgium, UK, and Portugal.

Gerhard Oswald,~~, 59~~ 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 ~~On Premise Delivery Board~~board area ~~including application development, installed base maintenance~~Product Quality & Enablement covering quality governance & validation, scale, enablement & transformation, logistics services, and ~~support, end to end services, active global support, and onpremise delivery COO.~~

~~Vishal Sikka~~, 45 years old, holds a PH. D. degree in computer science from Stanford University. He joined SAP in 2002 and became a member of the Executive Board on February 7, 2010 leading technology and innovation. He is responsible for technology and platform products development including SAP HANA, analytics, mobile, application platform and middleware, as well as SAP Research, SAP Labs Network and SAP Ventures. Before joining the Executive Board, he has been the first Chief Technology Officer at SAP since 2007, and prior to that was SAP’s Chief Software Architect. Before joining SAP, he was area vice president for platform technologies at Peregrine Systems, and prior to that he founded and led two start-ups – Bodha, Inc. and IBrain Software.special tasks.

The members of the Executive Board of SAP AGSE as of December 31, ~~2012~~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 AGSE 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 ~~2012~~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 ~~Executive Board members’~~ 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 ~~2012~~2015

The compensation for 2015 for Executive Board ~~members’ compensation for 2012~~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. ~~In 2012, it had~~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

~~A variable short-term incentive (STI) plan to reward performance in the plan year~~

~~A Restricted Share Unit-based long-term incentive (LTI) plan tied to the price of SAP shares (RSU Milestone Plan 2015)~~

~~Part I~~

~~Item 6~~

The Supervisory Board ~~set~~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 ~~2012:~~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; non-IFRS 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.

~~The fixed element is paid as a monthly salary.~~

The variable compensation under the STI 2012 plan depends on the SAP Group’s performance against the KPI target values for constant currency software revenue growth and non-IFRS constant currency operating margin as well as non-IFRS constant currency cloud subscription and support revenue. In addition, the STI element has a discretionary component that allows the Supervisory Board, at the end of the period in question, 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, and attractiveness as an employer. 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 ~~14, 2013,~~18, 2016, the Supervisory Board assessed SAP’s performance against the agreed targets and determined the amount of compensation payable under the STI ~~payable.~~2015 plan. The STI 2015 plan pays out after the Annual General Meeting of Shareholders in ~~June 2013.~~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

The long-term incentive element is called the RSU Milestone Plan 2015. “RSU” stands for “restricted share unit.” This four-year plan 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 SAP RSUs for the respective year based on a budget amount that was granted and paid out to each Executive Board member in 2012 already for the years 2012 through 2015. The number of RSUs allocated to each member for a given year is his or her target amount (an amount in euros) for

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 ~~year in question. If the~~respective year. The number of RSUs an Executive Board member ~~leaves before the end~~actually earns in respect of a ~~financial~~given year depends on the ~~RSUs~~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 ~~respective year as well as the subsequent years are forfeited.~~period to 2015. The plan objectives relate to two KPIs: non-IFRS total revenue and non-IFRS operating profit.

The number of RSUs an Executive Board member actually earns in respect of a given year could be greater or smaller than the initial allocation. It depends on 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 key performance indicators (KPIs): Our non-IFRS total revenue and our non-IFRS operating profit. The KPI targets have already been set for the entire life of the RSU Milestone Plan 2015 for the years 2012 to 2015 and will merely be adjusted for the effects of key acquisitions.

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 ~~to (and which then vest in)~~and vested in each Executive Board member. ~~There~~No RSUs vest if minimum performance levels of 60%, predefined for each of the two KPIs, are ~~objective-based performance hurdles to clear each year before any RSUs can vest.~~not achieved. There is also a ~~cap:~~cap. Normally, the quantity of vested RSUs a member can attain in respect of a plan year is capped at 150% of ~~his or her~~their initial RSU allocation for that year.

The Company strategy underlying the RSU Milestone Plan 2015 focuses on where SAP ~~aims~~aimed to be by the end of 2015, so the plan ~~gives~~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. ~~After~~Due to the ~~end of 2015,~~adjustment factor, the number of vested RSUs a member of the Executive Board actually receives for that year is revised. In circumstances where the targets for the individual years are not achieved but the 2015 targets are achieved, the outcome of this revision would be that a member would receive as many vested RSUsreceived for 2015 ~~as would make up for any that he or she did not receive in the earlier years by reason of failure~~has been revised according to ~~achieve targets. On the other hand, if the Company underachieves against the 2015 objectives, Executive Board members may in the worst case lose all of the vested RSUs allocated to them for 2015.~~plan terms.

~~Part I~~

~~Item 6~~

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 ~~his or her~~their vested RSUs for completed plan years but does not retain any allocated but unvested RSUs for the year during which ~~he or she leaves.~~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.

~~Subject to the requirements in the German Stock Corporation Act, section 87 (1), the Supervisory Board is entitled to revise the STI and the LTI in extraordinary and unforeseeable circumstances.~~

~~The LTI component consists of the issue of RSUs under the terms of the RSU Milestone Plan 2015.~~ 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.

~~(27). The number of RSUs to be issued to each member of the Executive Board in 2012 by way of long-term incentive was decided by the Supervisory Board on February 16, 2012.~~

The contracts of Executive Board members Bill McDermott ~~Lars Dalgaard,~~ and ~~Vishal Sikka~~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.

~~In prior years,~~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 ~~were granted a variable medium-term incentive (MTI) plan~~and to reward ~~performance~~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 ~~plan year and~~contractual target amount; taking into account the ~~two subsequent years. The variable compensation under~~achievement of the ~~MTI 2010 granted~~operating profit targets set for the ~~fiscal year 2010~~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 ~~Group’s performance~~share. If the increase of price of the SAP share over the ~~three years 2010~~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 ~~2012 against~~ the ~~KPI target values for software and software-related service revenue growth and earnings per~~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 ~~(both of which are non-IFRS, constant currency values). In addition, the MTI element has a discretionary component that is assessed by the Supervisory Board~~ at the end of the ~~plan~~vesting period of the PSUs is higher than the price at the start of this period. The ~~close~~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 ~~fiscal year 2012 represents~~SAP share over the ~~end~~four-year vesting period of the ~~plan period for~~PSUs underperforms the ~~MTI 2010, and therefore~~Peer Group Index, the ~~corresponding entitlement under the MTI 2010 is included in the compensation for the fiscal year 2012. The payment~~number of PSUs will be ~~due after~~reduced by a percentage equal to the ~~Annual General Meeting~~underperformance expressed as percentage points. No PSUs vest if the underperformance exceeds 50%.

Amount of ~~Shareholders in June 2013. MTI 2011 will pay out in 2014 respectively.~~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 share-based 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 ~~the Financial Year 2012~~2015 – Management View

€ thousands
Fixed Elements Performance-
Related Elements Compensation
for 2012⁽¹⁾
   Short-Term and
Medium-Term
Incentive Elements Long-Term
Incentive
Element
   Salary Other⁽²⁾ STI MTI 2010 Share-Based
Payment
(RSU Milestone
Plan 2015)⁽^1),⁽³⁾
Bill McDermott (co-CEO)⁽⁴⁾
1,203.3    415.9    1,581.5    1,259.6    4,318.4    8,778.7
Jim Hagemann Snabe (co-CEO)
1,150.0    163.8    1,545.7    1,067.6    4,318.4    8,245.5
Dr. Werner Brandt
700.0    26.7    935.5    645.1    1,549.1    3,856.4
Lars Dalgaard
(from April 12, 2012)⁽⁶⁾
528.9    0    690.4    0    1,156.2    2,375.5
Luisa Deplazes Delgado
(from September 1, 2012)
233.3    96.4    193.9    0    414.4    938.0
Gerhard Oswald
700.0    16.5    935.5    645.1    1,549.1    3,846.2
Dr. Vishal Sikka⁽⁵⁾
733.4    143.9    957.2    635.1    1,549.1    4,018.7

Total
5,248.9    863.2    6,839.7    4,252.5    14,854.7    32,059.0


€ thousands			Fixed Elements				Performance- Related Element		Compensation for 2015
€ thousands					Short-Term Incentive Element		Long-Term Incentive Element
	Salary		Other¹⁾		STI		Share-Based Payment (RSU Milestone Plan 2015)²⁾
Bill McDermott (CEO)		1,150.0		1,258.0		2,743.5		4,127.5		9,279.0
Robert Enslin		700.0		103.3		1,660.5		1,480.6		3,944.4
Michael Kleinemeier (from November 1, 2015)		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
Total		4,066.7		1,407.5		9,663.0		10,364.9		25,502.1

Executive Board Members’ Compensation for 2014 – Management View


€ thousands			Fixed Elements				Performance- Related Element		Compensation for 2014¹⁾
					Short-Term Incentive Elements		Long-Term Incentive Element
	Salary		Other¹⁾		STI		Share-Based Payment (RSU Milestone Plan 2015)²⁾
Bill McDermott (CEO)		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
Dr. Vishal Sikka (until May 4, 2014)		291.7		1,367.5		—		—		1,659.2
Total		4,216.3		6,454.3		5,525.4		8,097.7		24,293.7

⁽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 financial year 2012 including the plan tranche 2012 of LTI 2015 based on the grant value at time of grant.~~

~~Part I~~

~~Item 6~~

⁽²⁾	~~Insurance contributions, benefits in kind, expenses for maintenance of two households, relocation costs, non-recurring payments, use of aircraft, tax~~

⁽³⁾	~~Fair value at the time of grant.~~

⁽⁴⁾	Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: Salary for 2012: €53,300; profit-sharing bonus for 2012: €35,800; MTI 2010: €192,000.

⁽⁵⁾	Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: Salary for 2012: €33,400; profit-sharing bonus for 2012: €21,700; MTI 2010: €57,200.

⁽⁶⁾	~~Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: Salary for 2012: €24,900; profit-sharing bonus for 2012: €15,600.~~

In 2012, in addition to the LTI grant for 2012, Executive Board members have already received the LTI grants for the years 2013 to 2015, which are dependent on their uninterrupted tenure as Executive Board member in the years in question. Although these allocations are tied to the respective years and thus – from an economic perspective – represent compensation for the Executive Board members in the respective years, for the purpose of disclosure in the Compensation Report the grants must be included in the total compensation for Executive Board members for the respective year, ~~in which~~including the ~~grants were allocated pursuant to section 314 of the German Commercial Code. Vesting of a~~respective year’s plan tranche ~~is dependent~~of LTI 2015 based on the ~~respective Executive Board member’s continuous service for the Company in the respective fiscal year. The contracts~~grant value at time of Werner Brandt and Gerhard Oswald are currently set to expire in mid-2014, while the contracts of Lars Dalgaard and Luisa Deplazes Delgado are set to expire in mid-2015. As a result, the LTI allocations for the years 2014 to 2015 (for Werner Brandt

~~and Gerhard Oswald) and the LTI allocations for the year 2015 (for Lars Dalgaard and Luisa Deplazes Delgado) had not yet been allocated with legally binding force in 2012.~~

Assuming uninterrupted service on the Executive Board during the period in question, additional grants for Executive Board members for future years shall be €4,390,000 for each co-CEO and €1,574,800 for each regular Executive Board member, in each of 2013, 2014, and 2015 (except Luisa Deplazes Delgado, who shall receive €1,291,600 for the year 2013). The total compensation for 2012 pursuant to section 314 of the German Commercial Code, in other words, including this additional compensation as well as the long-term compensation tranches granted but not yet earned, amounts to €72,288,800, thereof: Bill McDermott: €21,948,700, Jim Hagemann Snabe €21,415,500, Werner Brandt €5,431,200, Lars Dalgaard €5,524,900, Luisa Deplazes Delgado €3,804,400, Gerhard Oswald €5,421,000, Vishal Sikka €8,743,100.

~~Assuming 100% target achievement, the amounts the MTI 2011 will pay out in 2014 are as follows:~~

~~MTI Target Payouts~~grant.


~~€ thousands~~	~~MTI 2011 Target~~ ~~Payouts 2014~~
~~Bill McDermott (co-CEO)~~		~~820.0~~
~~Jim Hagemann Snabe (co-CEO)~~		~~820.0~~
~~Dr. Werner Brandt~~		~~495.5~~
~~Gerhard Oswald~~		~~495.5~~
~~Dr. Vishal Sikka~~		~~495.5~~

~~Total~~		~~3,126.5~~

~~Part I~~

~~Item 6~~

The share-based payment amounts included in ~~2012~~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 2012
   Quantity    Grant Value per
Unit at Time of
Grant    Total Grant Value
at Time of Grant
      €    € thousands
Bill McDermott (co-CEO)
   95,414       45.26       4,318.4
Jim Hagemann Snabe (co-CEO)
   95,414       45.26       4,318.4
Dr. Werner Brandt
   34,226       45.26       1,549.1
Lars Dalgaard (from April 12, 2012)
   24,594       47.01       1,156.2
Luisa Deplazes Delgado (from September 1, 2012)
   8,332       49.73       414.4
Gerhard Oswald
   34,226       45.26       1,549.1
Dr. Vishal Sikka
   34,226       45.26       1,549.1




Total
   326,432          14,854.7

~~Total Executive Board Payment in 2011~~
      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
Michael Kleinemeier (from November 1, 2015)
   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
Total
   192,345          10,365

€ thousands
Fixed Elements Performance-
Related
Element Long-Term Incentive
Elements Total
Salary Other⁽¹⁾ Short-Term
Incentive (STI) Share-Based Payment
(SAP SOP 2010)⁽²⁾
Bill McDermott (co-CEO)⁽³⁾
1,279.9    408.0    3,935.5    950.0    6,573.4
Jim Hagemann Snabe (co-CEO)
1,150.0    107.6    3,271.2    950.0    5,478.8
Dr. Werner Brandt
700.0    29.7    1,979.6    577.0    3,286.3
Gerhard Oswald
700.0    34.5    1,979.6    577.0    3,291.1
Dr. Vishal Sikka⁽⁴⁾
700.0    120.5    2,103.7    577.0    3,501.2
Dr. Angelika Dammann
(member until July 8, 2011)⁽⁵⁾
466.7    45.9    1,163.1    384.7    2,060.4

Total
4,996.6    746.2    14,432.7    4,015.7    24,191.2

⁽¹⁾	~~Insurance contributions, benefits in kind, expenses for maintenance of two households due to work abroad, reimbursement of legal and tax advice fees, non-recurring payments, use of aircraft, tax.~~

⁽²⁾	~~Fair value at the time of grant.~~

⁽³⁾	~~Includes discrete payments arising through application of the fixed exchange-rate clause to the following items: Salary for 2011: €129,900; profit-sharing bonus for 2011: €664,300.~~

⁽⁴⁾	~~Includes a discrete payment arising through application of the fixed exchange-rate clause to the following item: Profit-sharing bonus for 2011: €124,100.~~

⁽⁵⁾

Angelika Dammann’s appointment as member of the Executive Board ended on July 8, 2011. Her contract with SAP AG ended on August 31, 2011. Due to the end of her contract on August 31, 2011, the number of virtual options issued to her in 2011 was reduced. The amount of the Short-Term Incentive includes pro rata temporis amounts of the STI 2011 (€585,000), the MTI 2011 (€330,300), and the MTI 2010 (€247,800).

~~Part I~~

~~Item 6~~

Share-Based Payment Under ~~SAP SOP 2010 (2011 Grants)~~RSU Milestone Plan 2015 (Grants for 2014)

2011 Grants
Quantity Fair Value per
Right at Time
of Grant Total Fair
Value at Time
of Grant
€ € thousands
Bill McDermott (co-CEO)
112,426    8.45    950.0
Jim Hagemann Snabe (co-CEO)
112,426    8.45    950.0
Dr. Werner Brandt
68,284    8.45    577.0
Gerhard Oswald
68,284    8.45    577.0
Dr. Vishal Sikka
68,284    8.45    577.0

Total
429,704    3,631.0


	Grants for 2014
	Quantity		Grant Value per Unit at Time of Grant		Total Grant Value at Time of Grant
			€		€ thousands
Bill McDermott (CEO)		76,374		52.90		4,040.50
Dr. Werner Brandt (until June 30, 2014)¹⁾		—		—		—
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
Gerhard Oswald		27,396		52.90		1,449.40
Dr. Vishal Sikka (until May 4, 2014)¹⁾		—		—		—
Total		153,909				8,097.70

¹⁾ 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.

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).

German Corporate Governance Code (Benefits Granted in 2014 and 2015)


Benefits Granted	Bill McDermott CEO								Robert Enslin Member of the Executive Board								Michael Kleinemeier Member of the Executive Board (from November 1, 2015)
	2015¹⁾		2015 (Min)		2015 (Max)		2014¹⁾		2015¹⁾		2015 (Min)		2015 (Max)		2014¹⁾		2015		2015 (Min)		2015 (Max)		2014
Fixed compensation		1,150.0		1,150.0		1,150.0		1,150.0		700.0		700.0		700.0		462.9		116.7		116.7		116.7		—
Fringe benefits²⁾		1,258.0		1,258.0		1,258.0		861.4		103.3		103.3		103.3		121.0		0		0		0		—
Total		2,408.0		2,408.0		2,408.0		2,011.4		803.3		803.3		803.3		583.9		116.7		116.7		116.7		—
One-year variable compensation		1,860.0		0		3,371.3		1,860.0		1,125.8		0		2,040.5		746.4		188.1		0		340.9		—
Multiyear variable compensation
RSU Milestone Plan 2015		—		0		NA		—		—		0		NA		939.4		315.0		0		NA		—
Total		4,268.0		2,408.0		NA		3,871.4		1,929.1		803.3		NA		2,269.7		619.8		116.7		NA		—
Service cost		682.4		682.4		682.4		646.8		308.0		308.0		308.0		148.1		0		0		0		—
Total		4,950.4		3,090.4		NA		4,518.2		2,237.1		1,111.3		NA		2,417.8		619.8		116.7		NA		—

German Corporate Governance Code (Benefits Granted in 2014 and 2015)


Benefits Granted	Bernd Leukert Member of the Executive Board								Luka Mucic Member of the Executive Board								Gerhard Oswald Member of the Executive Board
Benefits Granted	2015		2015 (Min)		2015 (Max)		2014		2015		2015 (Min)		2015 (Max)		2014		2015		2015 (Min)		2015 (Max)		2014
Fixed compensation		700.0		700.0		700.0		462.9		700.0		700.0		700.0		350.0		700.0		700.0		700.0		700.0
Fringe benefits²⁾		11.7		11.7		11.7		12.2		12.1		12.1		12.1		4.3		22.4		22.4		22.4		22.0
Total		711.7		711.7		711.7		475.1		712.1		712.1		712.1		354.3		722.4		722.4		722.4		722.0
One-year variable compensation		1,125.8		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
Multiyear variable compensation
RSU Milestone Plan 2015		—		0		NA		939.4		—		0		NA		729.0		—		0		NA		1,449.4
Total		1,837.5		711.7		NA		2,160.9		1,837.9		712.1		NA		1,650.8		1,848.2		722.4		NA		3,297.2
Service cost		0		0		0		0		0		0		0		0		0		0		0		0
Total		1,837.5		711.7		NA		2,160.9		1,837.9		712.1		NA		1,650.8		1,848.2		722.4		NA		3,297.2

¹⁾ 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.

The total Executive Board compensation granted according to the Code amounted to€13,330,900 (2014: €23,302,200).

German Corporate Governance Code (Allocation)


Allocation	Bill McDermott CEO				Robert Enslin Member of the Executive Board				Michael Kleinemeier Member of the Executive Board (from November 1, 2015)
Allocation	2015		2014		2015		2014		2015		2014
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		—
Total		2,408.0		2,011.4		803.3		583.9		116.7		—
One-year variable compensation		2,036.7		1,737.2		817.3		—		—		—
Multi-year variable compensation
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		—
Service cost		682.4		646.9		308.0		148.1		0		—
Total		5,127.1		5,785.3		1,928.6		732.0		116.7		—

German Corporate Governance Code (Allocation)


Allocation	Bernd Leukert Member of the Executive Board				Luka Mucic Member of the Executive Board				Gerhard Oswald Member of the Executive Board
Allocation	2015		2014		2015		2014		2015		2014
Fixed compensation		700.0		462.9		700.0		350.0		700.0		700.0
Fringe benefits¹⁾		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
Multi-year variable compensation
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
Service cost		0		0		0		0		0		0
Total		1,529.0		475.1		1,333.5		354.3		3,081.8		3,975.4

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.

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

~~Retirement Pension Plan~~

Members of the Executive Board receive a retirement pension when they reach the retirement age of 60 and vacate 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 AG. 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 is reached, 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.~~

~~Exceptional~~following retirement pension agreements apply to the ~~following~~individual members of the Executive ~~Board members:~~Board:

Prior to May 18, 2012, Bill McDermott and Vishal Sikka had rights to future benefits under the pension plan of SAP America. The pension plan of SAP America was a cash balance plan that on retirement provided either monthly pension payments or a lump sum. The pension became available from the beneficiary’s 65th birthday. Subject to certain conditions, the plan also provided earlier payment or invalidity benefits. The portion of the SAP America pension plan classified as “Qualified Retirement Plan” according to the U.S. Employee Retirement Income Security Act (ERISA) was terminated and all account balances were liquidated from the plan on May 18, 2012. Bill McDermott and Vishal Sikka transferred their account balance into their third-party pension accounts.

Bill McDermott still has rights to future benefits under the portion of the SAP America pension plan classified as “Non-Qualified Retirement Plan” according to 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.

–

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.

~~Part I~~

~~Item 6~~

SAP ~~also~~ made contributions to a third-party pension plan for Bill McDermott (2015:€682,400; 2014:€646,800) and ~~Vishal Sikka.~~Robert Enslin (2015:€308,000; 2014:€148,100). SAP’s contributions are based on payments by Bill ~~McDermott’s~~McDermott and ~~Vishal Sikka’s payments~~Robert Enslin into this pension plan. Additionally, in view of the close of the SAP America pension plan, SAP adjusted its payments to this non-SAP pension plan. In 2012, SAP paid contributions for Bill McDermott totaling €1,053,600 (2011: €470,800) and for Vishal Sikka totaling €215,300 (2011: €95,700).

Instead of paying for entitlements under the pension plan for Executive Board members, SAP pays equivalent amounts to a non-SAP pension plan for Jim Hagemann Snabe. In 2012, SAP paid contributions totaling €283,400 (2011: €283,800).

Gerhard Oswald’s performance-based retirement 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 will remain a member of the Executive Board after his 60th birthday until his retirement on June 30, 2014.

Lars Dalgaard has no entitlements under the pension plan for Executive Board members. SAP made no retirement pension plan contributions to a third-party pension plan with respect to Lars Dalgaard in 2012.

Total ~~Projected~~Defined Benefit ~~Obligation (PBO)~~Obligations (DBO) and the Total Accruals for Pension Obligations to Executive Board Members

€ thousands
Bill
McDermott
(co-CEO)⁽¹⁾ Dr. Werner
Brandt Luisa Deplazes
Delgado (from
September 1,
2012) Gerhard
Oswald Dr. Vishal
Sikka⁽¹⁾ Total
PBO January 1, 2011
1,073.2    1,284.3    n.a.    4,127.4    46.7    6,531.6
Less plan assets market value January 1, 2011
52.6    921.7    n.a.    3,374.9    45.0    4,394.2
Accrued January 1, 2011
1,020.6    362.6    n.a.    752.5    1.7    2,137.4
PBO change in 2011
66.3    215.4    n.a.    358.1    6.4    646.2
Plan assets change in 2011
4.0    209.3    n.a.    436.3    3.5    653.1
PBO December 31, 2011
1,139.5    1,499.7    n.a.    4,485.5    53.1    7,177.8
Less plan assets market value December 31, 2011
56.6    1,131.0    n.a.    3,811.2    48.5    5,047.3
Accrued December 31, 2011
1,082.9    368.7    n.a.    674.3    4.6    2,130.5
PBO change in 2012
–64.4    541.8    55.1    1,231.3    –53.1    1,710.7
Plan assets change in 2012
–56.6    217.0    48.3    383.3    –48.5    543.5
PBO December 31, 2012
1,075.1    2,041.5    55.1    5,716.8    0    8,888.5
Less plan assets market value December 31, 2012
0    1,348.0    48.3    4,194.5    0    5,590.8
Accrued December 31, 2012
1,075.1    693.5    6.8    1,522.3    0    3,297.7
⁽¹⁾
~~Prior to May 18, 2012 the qualified portion of the SAP America pension plan was terminated and account balances transferred to third-party pension accounts.~~
€ thousands
Bill McDermott
(CEO)

Michael
Kleinemeier
(from November 1,
2015)¹⁾
Bernd Leukert¹⁾ Luka Mucic¹⁾ Gerhard Oswald Total
DBO January 1, 2014
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
DBO change in 2014
169.8    —    123.2    102.8    1,404.9    1,800.7
Plan assets change in 2014
—    —    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
Accrued December 31, 2014 1,212.5    —    28.6    35.0    2,229.0    3,505.1
DBO change in 2015
170.0    29.7    129.2    129.9    –171.2    287.6
Plan assets change in 2015
—    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
Accrued December 31, 2015 1,382.5    4.3    12.2    26.9    1,700.9    3,126.8

~~Part I~~
~~Item 6~~
¹⁾ 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.
The table below shows the annual pension entitlement of each member of the Executive Board on reaching the scheduled retirement age 60(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, ~~2012.~~2015.
Annual Pension Entitlement

€ thousands
   Vested on
December 31,
2012    Vested on
December 31,
2011
Bill McDermott (co-CEO)⁽¹⁾
   78.1       98.3
Dr. Werner Brandt
   88.2       80.6
Luisa Deplazes Delgado (from September 1, 2012)⁽³⁾
   2.3       n.a.
Gerhard Oswald⁽²⁾
   259.9       243.7
Dr. Vishal Sikka⁽¹⁾
   n.a.       6.5
€ thousands    Vested on
December 31,
2015    Vested on
December 31,
2014
Bill McDermott (CEO)¹⁾
   106.9       94.0
Michael Kleinemeier (from November 1, 2015)
   0.7       —
Bernd Leukert
   8.8       3.5
Luka Mucic
   7.8       2.6
Gerhard Oswald²⁾
   302.5       279.4

⁽¹⁾
The rights shown here for Bill McDermott and Vishal Sikka refer solely to rights under the SAP America pension plan. Prior to May 18, 2012, the qualified portion of the SAP America, Inc., pension plan was terminated and accounts were transferred to third-party pension accounts.

⁽²⁾
¹⁾ The rights shown here for Bill McDermott refer solely to rights under the pension plan for SAP America.
²⁾ 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).
Due to the extension of Gerhard Oswald’s contract beyond his 60th birthday, this value represents the retirement pension entitlement that he would receive after his current Executive Board contract expires on June 30, 2014, based on the entitlements vested on December 31, 2012.
⁽³⁾
Due to changes in tax regulations in Germany, for commitments after January 1, 2012, the minimum age to receive pension payments increased to age 62. The value shown for Luisa Deplazes Delgado represents the retirement pension entitlement that she would receive at the age of 62 based on the entitlements vested on December 31, 2012.
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 ~~of 60~~ will be higher than the amounts shown in the table.
Postcontractual ~~Noncompete~~Non-Compete Provisions
During the agreed 12-month postcontractual ~~noncompete~~non-compete period, each Executive Board member receives abstention payments corresponding to 50% of ~~his or her~~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 ~~noncompete~~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 ~~2012.~~2015. Actual postcontractual ~~noncompete~~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.

The table below shows Executive Board members’ holdings, on December 31, ~~2012,~~2015, of ~~restricted share units~~RSUs issued to them under the RSU Milestone Plan 2015. The plan is a cash-settled 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.

¹⁾ 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.

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.

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.

The holding on December 31, 2012, reflects the number of RSUs issued in 2012 multiplied by the 133.55% target achievement.

The table below shows Executive Board members’ holdings, on December 31, ~~2012,~~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 ~~are~~were exercisable beginning in September 2014 and the options issued in 2011 ~~are~~were exercisable beginning in June 2015.

~~The table below shows the current Executive Board members’ holdings, on December 31, 2012, of virtual share options issued under the SOP Performance Plan 2009.~~

The strike price for an option varies with the performance of SAP shares over time against the TechPGI index. The gross profit per option is limited to €30.80, corresponding to 110% of the SAP share price on the date of issue.

~~The issued options have a term of five years and can only be exercised on specified dates after the two-year vesting period. In this case, the options have been exercisable since May 2011.~~

~~The share options had a value of €3.47 per option on their exercise date in 2012.~~

The table below shows Executive Board members’ holdings, on December 31, 2012, of virtual share options issued to them under the SAP SOP 2007 plan since its inception, including virtual share options issued to them both during and before their respective membership of the Executive Board.

The strike price for an option is 110% of the base price. The issued options have a term of five years and can only be exercised on specified dates after the two-year vesting period. The options issued in 2007 could be exercised with effect from June 2009, following expiration of the two-year vesting period. The options issued in 2008 have been exercisable since March 2010, following expiration of the two-year vesting period.

~~In the report year and the prior year, total~~Total expense for the share-based payment plans of Executive Board members was ~~recorded~~recognized as follows.

~~The following tables set forth~~Note (7) to our Consolidated Financial Statements presents the number of employees, measured in full-time equivalents by functional area and by geographic ~~region:~~region.

The following table sets forth certain information regarding the beneficial ownership of the ordinary shares to the extent known to SAP as of March ~~7, 2013~~11, 2016 of: (i) each person or group known by SAP AGSE 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 AGSE 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.

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.

ITEM 8. FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

See “Item 18. Financial Statements” and pages F-1 through ~~F-99.~~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. In 2010, we recorded a provision of US$1.3 billion for the TomorrowNow litigation. When the trial judge set aside the 2010 verdict and offered Oracle a remittitur of US$272 million, we subsequently reduced the provision

Refer to US$272 million. Oracle did not accept the remittitur; rather, Oracle opted for a second trial. Prior to the second trial, the parties stipulated to a final judgment of US$306 million with each party reserving all appeal rights. Both parties have filed their respective notice of appeal. On appeal, Oracle is seeking three forms of relief: (1) reinstatement of the November 2010 $1.3 billion verdict; (2) as a first alternative, a new trial at which Oracle may again seek hypothetical license damages (based in part on evidence of alleged saved development costs) plus SAP’s alleged infringer’s profits without any deduction of expenses (Oracle does not put a number on its claim for the requested new trial); and (3) as a second alternative, increase of the remittitur (alternative to new trial) to $408.7 million (vs. the $272 million Oracle had previously rejected). SAP has dismissed its cross-appeal. Consequently, we increased the provision to US$306 million. Although the outcome of such proceedings and

claims cannot be predicted with certainty, management does not believe that the outcome of all other matters currently pending against us has had or will have a material adverse effect on our business, financial position, profit or cash flows. Any litigation, however, involves potential risk and potentially significant litigation costs, and therefore there can be no assurance that any litigation which is now pending or which may arise in the future will not have such a material adverse effect on our business, financial position, profit, cash flows or reputation.

~~See a detailed discussion of our legal proceedings in~~ Note (23) to our Consolidated Financial ~~Statements.~~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”~~— Dividends”.

Significant Changes

~~Conversion~~We are in the process of ~~Legal Form~~preparing the consolidation of intellectual property rights from hybris AG to ~~a European Company – a Societas Europaea~~SAP SE. For more information about this transfer, see Note (32).

~~On March 21, 2013 the~~The Supervisory Board of SAP ~~AG approved~~SE appointed Stefan Ries and Steve Singh to the ~~proposal of the~~SAP Executive Board, ~~to prepare~~with effect from April 1, 2016.

Stefan Ries will continue his role as Chief Human Resources Officer and also take on the ~~conversion~~role of SAP ~~AG into a European Company, otherwise referred~~Labor Relations Director. Steve Singh will continue to ~~as a Societas Europaea, or SE. This conversion of legal form requires shareholder approval, which is currently scheduled for~~lead the ~~Annual General Meeting of the Shareholders in 2014.~~ SAP Business Network Group.

The ~~Supervisory~~Global Managing Board and the Executive Board believe that the planned change of legal form reflects SAP’s position as an internationally-oriented company with European roots. In addition, this legal form offers the possibility to optimize both the corporate governance structure and the work of the corporate bodies of SAP AG. With the conversion into an SE, the shareholders of SAP AG will ~~automatically become shareholders of SAP SE and shareholders’ rights will remain unchanged.~~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

~~Part I~~

~~Item 9~~

principal trading market for the ordinary shares is Xetra, the electronic dealing platform of Deutsche Boerse AG. ~~The ordinary shares are issued only in bearer form.~~

ADRs representing SAP AGSE ordinary shares are listed on the New York Stock Exchange (NYSE) under the symbol “SAP,” and currently each ADR represents one ordinary share.

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$				Price per Ordinary Share in €				DAX⁽¹⁾ in points					Price per ADR in US$
	High		Low		High		Low		High		Low		High		Low		High			Low		High		Low
Annual Highs and Lows
2008		39.93		23.45		7,949.11		4,127.41		58.98		29.70
2009		35.26		25.00		6,011.55		3,666.41		52.37		31.69
2010		38.40		31.12		7,077.99		5,434.34		54.08		41.59
2011		45.90		34.26		7,527.64		5,072.33		68.31		48.39		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		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
Quarterly Highs and Lows
2011
2014
First Quarter		44.67		37.45		7,426.81		6,513.84		61.67		48.76		62.55		54.31		9,742.96			9,017.79		85.45		74.87
Second Quarter		45.90		41.07		7,527.64		7,026.85		68.31		58.19		59.15		54.41		10,028.80			9,173.71		81.77		74.21
Third Quarter		44.02		34.26		7,471.44		5,072.33		64.50		48.71		61.12		56.53		10,029.43			9,009.32		82.30		72.16
Fourth Quarter		44.72		36.87		6,346.19		5,216.71		62.72		48.39		58.73		50.90		10,087.12	��		8,571.95		71.70		64.14
2012
2015
First Quarter		54.51		41.45		7,157.82		6,017.23		72.31		53.25		67.60		54.53		12,167.72			9,469.66		73.53		63.56
Second Quarter		53.21		44.16		7,056.65		5,969.40		70.97		55.24		70.72		62.60		12,374.73			10,944.97		77.27		70.23
Third Quarter		56.69		44.71		7,451.62		6,387.57		72.90		55.50		68.77		55.89		11,735.72			9,427.64		74.60		63.37
Fourth Quarter		61.43		52.86		7,672.10		6,950.53		81.21		69.05		74.85		57.12		11,382.23			9,509.25		80.91		64.16
Monthly Highs and Lows
2012
2015
July		52.30		44.71		6,774.06		6,387.57		65.11		55.50		68.77		61.29		11,735.72			10,676.78		74.60		68.26
August		52.90		51.26		7,089.32		6,606.09		65.66		62.18		66.79		56.90		11,636.30			9,648.43		73.08		65.47
September		56.69		52.38		7,451.62		6,932.58		72.90		66.13		59.83		55.89		10,317.84			9,427.64		67.07		63.37
October		56.27		52.86		7,437.23		7,173.69		72.90		69.05		71.88		57.12		10,850.14			9,509.25		78.71		64.16
November		60.18		55.35		7,405.50		6,950.53		78.43		70.93		74.85		72.33		11,382.23			10,708.40		80.22		77.96
December		61.43		60.34		7,672.10		7,435.12		81.21		78.91		74.75		69.40		11,261.24			10,139.34		80.91		77.21
2013
2016
January		62.08		57.82		7,857.97		7,675.91		82.40		77.38		74.25		70.58		10,310.10			9,391.64		80.36		76.90
February		60.91		58.99		7,833.39		7,581.18		83.57		77.86		73.19		64.90		9,757.88			8,752.87		79.70		73.68
March (through March 7, 2013)		63.80		60.35		7,939.77		7,691.68		83.44		78.68
March (through March 11, 2016)														71.17		68.62		9,831.13			9,498.15		78.65		76.34

⁽¹⁾ 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⁾

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.

On March ~~7, 2013,~~11, 2016, the closing sales price per ordinary share on the Frankfurt Stock Exchange (Xetra Trading System) was ~~€63.80~~€69.97 and the closing sales price per ADR on the NYSE was ~~US$83.44,~~US $78.65, as reported by Reuters.

~~Part I~~

~~Item 10~~

ITEM 10. ADDITIONAL INFORMATION

ARTICLES OF INCORPORATION

Organization and Register

SAP AGSE is a ~~stock corporation~~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 AGSE is registered in the Commercial Register (Handelsregister) at the Lower Court of Mannheim, Germany, under the entry number “HRB ~~350269.~~719915.” SAP AGSE 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.~~

–

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 AGSE 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

~~to enter~~ into collaboration and joint venture agreements. SAP is further authorized to invest in enterprises of all kinds principally for ~~the purpose of placing financial resources.~~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 ~~AG,~~SE, as a ~~German stock corporation,~~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. ~~The Supervisory Board maintains a list~~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 AGSE in transactions between SAP AGSE 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.

~~Part I~~

~~Item 10~~

~~The German Co-determination Act~~Pursuant to Article 40 (3) sentence 1 of ~~1976 (Mitbestimmungsgesetz) requires~~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 ~~corporations with more than 2,000 employees~~ companies which, like SAP SE, have a capital stock exceeding€ 10,000,000, is limited

to consist of an equal number of representatives of the shareholders and representatives of the employees. The minimum total number of supervisory board members, and thus the minimum number of shareholder representatives and employee representatives, is legally fixed and depends on21 members. Moreover, the number of ~~employees employed~~members must be divisible by three. In line with these provisions as well as the ~~corporation and its German subsidiaries. Our~~EIA, the Articles of Incorporation of SAP SE provide that the Supervisory Board ~~currently~~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 ~~sixteen~~eighteen members, of which ~~eight~~nine members ~~have been~~were elected by SAP ~~AG’s~~SE’s shareholders at the Annual General Meeting of Shareholders in 2014, and ~~eight~~nine members ~~which have been elected~~were appointed by the ~~employees~~SAP SE Works Council Europe in 2015. The term of office of all eighteen members will end upon the conclusion of the ~~German~~Annual General Meeting of Shareholders in 2015.

The procedure for the appointment of the employees’ representatives on the Supervisory Board of SAP ~~entities (i.e. entities~~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 ~~Group having their registered office in Germany).~~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 ~~elected by~~appointed in accordance with the ~~employees~~EIA may be removed by ~~three quarters~~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 ~~votes cast by the~~ employees ~~of the German SAP entities.~~entitled to vote.

The Supervisory Board elects a chairperson and aone or two deputy ~~chairperson~~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 ~~its members. If such majority is not reached on the first vote,~~ the chairperson ~~will be chosen solely by~~and, in the ~~members elected by~~event that the ~~shareholders and~~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 chosen solely by the members elected by the employees. Unless otherwise provided by law, the Supervisory Board acts by simple majority. In the case of any deadlock the chairperson has the deciding vote.decisive (casting vote).

The members of the Supervisory Board cannot be elected or appointed, as the case may be, for a term longer than ~~approximately five~~six years. ~~The~~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 ~~and the Executive Board in~~for the fourth fiscal year following the year in which the ~~Supervisory Board was elected unless the Annual General Meeting of Shareholders specifies a shorter~~ term of office ~~when electing individual members~~ of the Supervisory Board ~~or the entire Supervisory Board.~~members commenced. Re-election is possible. Our Supervisory Board normally meets four times a year. The ~~remuneration~~compensation of the members of the Supervisory Board is ~~determined by~~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 ~~AG.~~SE. Further, as the compensation of the Supervisory Board members is ~~laid down~~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:

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.~~independence and quality. SAP’s Corporate Audit, ~~(CA),~~ SAP’s ~~Global~~Office of Legal Compliance ~~Office (GCO)~~and Integrity and SAP’s Risk Management Office

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~~(RMO)~~ report upon request or at the occurrence of certain findings, but in any case at least once a year ~~(GCO~~(Office of Legal Compliance and ~~RMO)~~Integrity and Risk Management Office) or twice a year ~~(CA)~~(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. ~~Furthermore the Audit Committee monitors the effectiveness of our internal risk management and other monitoring processes that are or need to be established.~~

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 (Prä~~sidial~~sidial- und 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 ~~remuneration~~

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 ~~remuneration~~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.

~~Required by the German Co-determination Act of 1976 (Mitbestimmungsgesetz), the Mediation~~The Technology and Strategy Committee (Vermittlungsausschuss) convenes only if the two-thirds majority required for appointing/revoking the appointment of Executive Board members is not attained. This committee has never held a meeting in SAP AG’s history.

The Technology and Strategy ~~and Technology~~ Committee ~~(Strategie- und Technologieausschuss)~~(Technologie-und Strategieausschuss) monitors technology transactions and provides the Supervisory Board with in-depth 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) ~~is tasked with coordinating~~deliberates on matters arising out of substantial exceptional risks, such as major litigations.

The People and ~~managing~~Organization Committee

The People and Organization Committee (Ausschuss für Mitarbeiter- und Organisationsangelegenheiten) deliberates and advises the Executive and Supervisory ~~Board’s external legal advisors concerned with~~Board on key personnel matters and major organizational changes below the ~~investigation~~Executive Board and ~~analysis of the facts in connection with the legal action brought by Oracle Corporation.~~Global Managing Board level as well as equal opportunities for women at SAP.

The duties ~~procedures~~ and ~~committees~~procedures of the Supervisory Board and its committees are specified in their respective ~~bylaws,~~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.

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.

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The Executive Board and the Supervisory Board ~~must~~ cooperate closely for the benefit of the Company. ~~Without being asked, the~~The Executive Board ~~must~~is required to provide to 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.~~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.~~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. ~~Currently,~~ SAP ~~AG’s~~SE’s Executive Board is currently comprised of ~~seven~~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 ~~AG.~~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 ~~AG,~~SE, and may be liable to SAP AGSE 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 ~~remuneration~~compensation of Executive Board members.

Under German law SAP ~~AG’s~~SE’s Supervisory Board members and Executive Board members have a duty of loyalty and care towards SAP ~~AG.~~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 AGSE 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 AGSE 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 ~~Global~~Office of Legal Compliance ~~Office (GCO), an extension of SAP’s Global Legal Department,~~and Integrity was created by the SAP Executive Board in 2006 to oversee and coordinate legal and regulatory policy compliance at SAP. ~~Effective March 1, 2007, the Company appointed a~~The Chief Global Compliance Officer ~~who~~heading the Office of Legal Compliance and Integrity directly reports to the ~~General Counsel,~~CFO of SAP SE and also has direct communication channels and reporting obligations to the ~~Executive Board and the~~ Audit Committee of the Supervisory Board. The ~~GCO~~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 ~~GCO~~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.

Pursuant to Sec. 289a of the German Commercial Code (Handelsgesetzbuch) the Executive Board of publicly listed companies like SAP AG are required to issue a corporate governance statement (Erklärung zur Unternehmensführung) every year together with its annual financial statements. Companies are free to include the corporate governance declaration in their management report or publish the declaration on their website. SAP has chosen to publish the declaration on its website under (http://www.sap.com/corporate-en/investors/governance/index.epx). As stipulated by law the declaration comprises the declaration of compliance with the recommendations of the GCGC pursuant to Sec. 161 of the German Stock Corporation Act, relevant disclosures of the

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company’s corporate governance practices such as ethical, work and welfare standards, and a description of the Executive Board and Supervisory Board’s rules of procedure as well as information on the composition and rules of procedure of their sub-committees.

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. ItThe Global Managing Board has advisory and decision-supporting functions for the Executive Board and comprises all Executive Board members as well as ~~Robert Enslin~~Helen Arnold, Quentin Clark, Stefan Ries and ~~Bob Calderoni.~~Steve Singh.

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 ~~eight~~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 AGSE holding in the aggregate a minimum of 5% of SAP ~~AG’s~~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 AGSE that would have an effect of delaying, deferring or preventing a change in control of SAP AGSE 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 (Wertpapiererwerbs- und 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 ~~a European Union~~an EEA stock exchange must publish an advance notice of its decision to make a tender offer, submit ~~a draft~~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 ~~bidder~~shareholder has acquired shares representing at least 30% of the voting ~~power of the target~~rights in an EEA-listed 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 ~~shareholders~~general shareholders’ meeting no ~~later~~earlier than 18 months in advance of such measures by a ~~takeover bid by~~ resolution of at least 75% of the ~~votes cast.~~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

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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 AGSE 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 ~~share capital represented and by the simple majority 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.

The share capital may be reduced by an amendment to the Articles of Incorporation approved by at least 75% of the ~~share capital represented and by the simple majority of the~~valid votes cast at the General Meeting of Shareholders. In addition, the Executive Board of SAP AGSE 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 AGSE 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 AGSE 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 ~~does not~~ mandatorily ~~require~~requires a certain majority. Section 21 (1) of SAP ~~AG’s~~SE’s Articles of Incorporation provides that resolutions may be passed at the General Meeting of Shareholders ~~by the majority as provided by law. This means that resolutions may be passed by~~with a majority of ~~50% plus one vote of~~valid votes cast, ~~(simple majority),~~ unless a larger majority is prescribed by law or the ~~law provides or requires a higher majority.~~Articles of Incorporation. SAP SE’s Articles of Incorporation as well as applicable European and German law ~~requires~~require that the following matters, among others, be approved by at least 75% of the ~~share capital represented and by the simple majority 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; and~~

~~a change of corporate form.~~

Section 21 (3) of SAP AG’s Articles of Incorporation provides that, if at an election no candidate receives a simple majority of votes during the first ballot in an election, a second, deciding ballot shall be conducted between 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;

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~~candidates who received the largest number of votes. If the second ballot is tied, the election shall be determined by drawing lots.~~
–
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 ~~share capital represented and by the simple majority 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 AGSE 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 ~~AG’s~~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 AGSE to notify SAP AGSE and the Federal Financial Supervisory Authority of the number orof 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 ~~result in~~convey an unconditional entitlement to acquire ~~on one’s initiative alone and~~ under a legally binding agreement, shares in SAP ~~AG,~~SE, to notify SAP AGSE and the Federal Financial Supervisory Authority if the thresholds mentioned above have been reached, exceeded or fallen

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~~€12,500 (or the equivalent in a foreign currency). In addition, German Residents (except for individuals and certain financial institutions) must report any ~~claims against~~accounts payable to or ~~any liabilities payable to~~receivable from Non-Residents if such ~~claims~~payables or ~~liabilities,~~receivables, in the aggregate, exceed €5€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 non-resident corporations with total assets of more than €3€3 million. Corporations residing in Germany with assets in excess of €3€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

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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 aan incorporated company is generally subject to German withholding tax at a

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 AGSE 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

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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, ~~2300 M Street~~4645 Reservoir Road NW, Washington, DC ~~20037,~~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.

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

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~~Item 10~~

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 ~~847,~~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 ~~AG,~~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.

~~Part I~~

~~Item 10~~

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 AGSE 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 AGSE 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 AGSE 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 AGSE 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 AGSE to an individual ~~after December 31, 2002~~ are treated as “qualified dividends” subject to capital gains rates, i.e. at a maximum rate of ~~15% if received prior to January 1, 2013 and~~ 20% ~~afterwards,~~, if SAP AGSE 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 ~~2012~~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 ~~2013~~2016 tax year. ~~Beginning on January 1, 2013, dividend income may also be subject to~~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 ~~on net investment income~~ 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 AGSE at no time is a PFIC, upon a sale or exchange of ordinary shares to a person other than SAP ~~AG,~~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. ~~Beginning on January 1, 2013, capital~~Capital gains may also be subject to the Medicare tax ~~on net investment income~~ at a rate of 3.8%. The deductibility of capital losses is subject to significant limitations. Upon a sale of ordinary shares to SAP ~~AG,~~SE, a U.S. Holder may recognize a capital gain or loss or, alternatively, may be considered to have received a distribution with

~~Part I~~

~~Item 10~~

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 ~~(currently~~

(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 AGSE 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 ~~AG’s~~SE’s income and assets, SAP AGSE 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 AGSE 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

~~SuccessFactors,~~Concur Technologies, Inc.

Pursuant to the Agreement and Plan of Merger dated as of ~~December 3, 2011~~September 18, 2014 by and among Concur Technologies, Inc., SAP America, Inc. and Congress Acquisition Corp., ~~a wholly owned subsidiary of SAP AG (SAP America), Saturn Expansion Corporation, a wholly owned subsidiary of~~on December 4, 2014 SAP America ~~(Saturn)~~acquired Concur, the leader in the multi-billion travel and ~~SuccessFactors, Inc. (SuccessFactors), Saturn commenced a cash tender offer~~expense management software industry, for ~~all of the outstanding shares of the common stock of SuccessFactors, par value~~ US$~~0.001~~129.00 per share ~~(each a share), at a price of US$40.00 per share, representing~~which represents an enterprise value of approximately US$~~3.6~~8.3 billion. On February 21, 2012, SAP acquired more than 90% of the outstanding ordinary shares of SuccessFactors. Subsequent to the acceptance of the shares for payment under the tender offer, SAP effected a short-form merger under Delaware and acquired the remaining shares for the same US$40.00 per share price that was paid in the tender offer. The transaction was funded primarily from ~~SAP’s cash on hand and~~ a €1EUR 7.0 billion credit facility.

~~Part I~~

~~Item 10, 11, 12~~

The preceding description is a summary of the Agreement and Plan of Merger and is qualified in its entirety by the Agreement and Plan of Merger which is incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by SuccessFactors on December 5, 2011.

~~Ariba, Inc.~~

Pursuant to the Agreement and Plan of Merger, dated as of May 22, 2012 by and among Ariba, Inc., SAP America, Inc. and Angel Expansion Corporation, (the “Merger Agreement”), on October 1, 2012 SAP America acquired Ariba, the leading cloud-based business commerce network, for US$45.00 per share, representing an enterprise value of approximately US$4.3 billion. The acquisition combines Ariba’s successful buyer-seller collaboration network with SAP’s broad customer base and deep business process expertise to create new models for business-to-business collaboration in the cloud. The transaction was funded from SAP’s free cash and a €2.4 billion term loan facility.

The preceding description is a summary of the Merger Agreement and is qualified in its entirety by the Merger Agreement which is incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by Ariba, Inc. on May 22, 2012.

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~~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 Group-wide 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.

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 ~~AG’s~~SE’s ADR program. ADR holders may be required to pay the following charges:

~~taxes and other governmental 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 ~~for the registration of transfers of~~be changed by agreement between 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;~~

$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)SE and the ~~surrender of ADRs as well as for the distribution of other securities;~~

~~Part I~~

~~Item 12~~

a maximum aggregate service fee of US$2.00 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

~~$5.00 or less per 100 ADSs (or portion thereof) to the Depositary for distribution of securities other than SAP ordinary shares or rights.~~

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 ~~Exhibit~~Exhibits 4.1.1 and 4.1.2 to ~~our 2010 Annual Report on Form 20-F filed with the Commission on March 18, 2011.~~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 book-entry 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

~~The~~In connection with the ADR program, the Depositary has agreed to make certain payments to SAP ~~as reimbursement for expenses incurred by SAP in connection with its~~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 ~~in support of SAP’s ongoing~~corporate actions, ADR broker desk services and ADR investor relations ~~activities related to the ADR program.~~services, including production of investor targeting, peer analysis, shareholder identification reports and market perception studies. For the ~~year ended December 31, 2012,~~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$2,632,581.79 for investor relations activities~~US $1,287,940.78 related to the ADR ~~program, including~~program. In 2015, the ~~production~~Depositary agreed to reimburse up to US $25,000 in legal fees associated with the cost of ~~annual reports and Form 20-F filings, 2012 NYSE listing fees, road shows, production~~renewal of ~~investor targeting, peer analysis, shareholder identification reports and perception studies, postage for mailing annual and interim reports and other communications to~~the ADR ~~holders and participation in retail investor activities, broker conferences, SAP sponsored analyst events and capital markets days.~~program.

~~Part II~~

~~Item 13, 14, 15, 16, 16A~~

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 ~~co-chief~~chief executive ~~officers (Co-CEOs)~~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 ~~Co-CEOs~~CEO and CFO the effectiveness of SAP’s disclosure controls and procedures as of December 31, ~~2012.~~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 ~~Co-CEOs~~CEO and CFO. Based on the foregoing, SAP’s management, including SAP’s ~~Co-CEOs~~CEO and CFO, concluded that as of December 31, ~~2012,~~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 ~~Co-CEOs~~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, ~~2012.~~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.~~Framework (2013)”.

Based on the assessment under these criteria, SAP management has concluded that, as of December 31, ~~2012,~~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

~~Part II~~

~~Item 16A, 16B, 16C~~

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 ~~CEOs~~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

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/policies-statutes.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 ~~billed~~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

~~Part II~~

~~Item 16C, 16D~~

(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.

We rely on this exemption. Our Audit Committee includes two ~~members who are non-executive~~ employees ~~of SAP AG, Inga Wiele~~representatives, Panagiotis Bissiritsas and ~~Stefan Schulz,~~Martin Duffek , who were ~~named~~appointed to our Supervisory Board pursuant to the ~~German Co-determination Act~~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.

~~Part II~~

~~Item 16E, 16F, 16G~~

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

~~We did not purchase any ADRs in 2012. The following table sets out information concerning repurchases of our ordinary shares, which we~~

mainly use to serve our employee discount stock purchase programs, Long-Term Incentive Plans, Stock Option Plans and other such plans. The maximum number of shares that we were authorized to repurchase under these plans and programs as of December 31, 2012 was 86,515,907.

Period
   (a)Total
Number of
Shares
Purchased    (b)Average Price
Paid per Share
(in €)    (c)Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
and Programs    (d)Maximum Number of
Shares that May Yet Be
Purchased Under these
Plans and Programs
January 1/1/12 – 1/31/12
   190,000       45.74       190,000       85,082,342
February 2/1/12 – 2/28/12
   910,000       48.64       910,000       85,184,921
March 3/1/12 – 3/31/12
   0       –       0       85,213,701
April 4/1/12 – 4/30/12
   0       –       0       85,246,300
May 5/1/12 – 5/31/12
   0       –       0       85,280,215
June 6/1/12 – 6/30/12
   0       –       0       86,225,823
July 7/1/12 – 7/31/12
   0       –       0       86,258,552
August 8/1/12 – 8/31/12
   0       –       0       86,289,354
September 9/1/12 – 9/30/12
   0       –       0       86,413,029
October 10/1/12 – 10/31/12
   0       –       0       86,443,467
November 11/1/12 – 11/30/12
   0       –       0       86,472,799
December 12/1/12 – 12/31/12
   0       –       0       86,515,907







Total
   1,100,000       48.14       1,100,000

~~Purchases between January 1, 2012 and December 31, 2012 were made in accordance with the authorization to acquire and use treasury shares granted at~~At the Annual General Meeting of Shareholders on June ~~8 2010, pursuant to which~~4, 2013, the Executive Board was authorized to acquire, on or before June ~~30, 2013,~~3, 2018, up to 120 million shares of SAP. The authorization from June ~~8, 2010~~4, 2013 replaced the authorization from ~~May 19, 2009.~~June 8, 2010.

~~Both authorizations were~~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

~~Part II~~

~~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 ~~source~~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 ~~stock corporation is~~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.

~~GERMAN STOCK CORPORATIONS ARE REQUIRED TO HAVE~~SAP SE IS A EUROPEAN COMPANY WITH A TWO-TIER BOARD SYSTEM

SAP is governed by three separate bodies: (i) the Supervisory Board, which counsels, supervises and

~~and~~

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, and that~~experience. Additionally, the Supervisory Board ~~includes what it considers an adequate~~is required to implement and adhere to concrete director independence criteria, including a consideration of the total number of independent ~~members. A~~Supervisory Board members as defined in Section 5.4.2 of the Code. According to this definition, a Supervisory Board member iswill not be considered independent in particular if s/he has personal or ~~she has no~~ business ~~or personal~~ relations with ~~SAP~~the company, its executive bodies, a controlling shareholder or ~~its Executive Board that~~an enterprise associated with any of the preceding persons and entities which could ~~give rise to~~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

~~Part II~~

~~Item 16G~~

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 ~~corporations is~~corporation which was subject to the principle of employee codetermination as outlined in the German Co-Determination 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 AGSE consists of 1618 members, of which ~~eight have been~~nine are representatives of SAP SE’s shareholders elected ~~by SAP AG’s shareholders~~ at the Annual General Meeting and ~~eight~~nine members ~~have been~~are representatives of the European employees. Only a shareholders’ representative may be elected ~~by employees of SAP AG and its German subsidiaries. Typically, the~~as chairperson of the ~~supervisory board~~Supervisory Board. In case

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 ~~shareholder representative. In case of a tie vote, the supervisory board chairperson may cast the~~shareholders’ representative, will be decisive ~~tie-breaking vote.~~(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, ~~Inga Wiele~~Panagiotis Bissiritsas and ~~Stefan Schulz,~~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. ~~With one exception,~~Applicable European and German corporate law does not mandate the creation of specific supervisory board committees. ~~Required by the German Co-Determination Act of 1976~~

~~Part II~~

~~Item 16G~~

(Mitbestimmungsgesetz), the Mediation Committee (Vermittlungsausschuss) convenes only if the 2/3 majority required for appointing/revoking the appointment of Executive Board Members is not attained. This committee has never been convened in SAP’s history. In addition, theThe GCGC recommends that the Supervisory Board establish an Audit Committee and a Nomination Committee. ~~In addition to the legally required Mediation 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 ~~Special~~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.

~~Part III~~

~~Item 17, 18, 19~~

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

The ~~Consolidate~~Consolidated Financial Statements are included herein on pages F-1 through ~~F-99.~~F-73.

The following are filed as part of this report:

~~Report of Independent Registered Public Accounting Firm.~~

–

Report of Independent Registered Public Accounting Firm.

–

Consolidated Financial Statements

–

Consolidated Income Statements for the years ended ~~2012, 2011,~~December 31, 2015, 2014, and ~~2010.~~2013.

–

Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2012, 2011~~2015, 2014 and ~~2010.~~2013.

–

Consolidated Statements of Financial Position as of December 31, ~~2012~~2015 and ~~2011.~~2014.

–

Consolidated Statements of Changes in Equity for the years ended December 31, ~~2012, 2011~~2015, 2014 and ~~2010.~~2013.

–

Consolidated Statements of Cash Flows for the years ended December 31, ~~2012, 2011~~2015, 2014 and ~~2010.~~2013.

–

Notes to the Consolidated Financial Statements.

ITEM 19. EXHIBITS

The following documents are filed as exhibits to this report:

~~ITEM 19. EXHIBITS~~

~~The following documents are filed~~
1 Articles of Incorporation (Satzung) of SAP SE, effective as ~~exhibits to this report:~~
1 ~~Articles of Incorporation (Satzung) of SAP AG, as amended effective November 20, 2012~~of May 20, 2015 (English translation).
2.1 Form of global share certificate for ordinary shares (English translation).⁽¹⁾
~~2.1~~
~~Form of global share certificate for ordinary shares (English translation).~~⁽¹⁾
Certain instruments which define rights of holders of long-term debt of SAP AG 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 AG and its subsidiaries. SAP AG
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.
4.1.1
~~4.1.2~~ Amended and Restated Deposit Agreement dated as of November 25, 2009 among SAP AG, 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 Receipts.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⁾
4.1.2
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⁾
~~4.8~~ ~~Agreement and Plan of Merger dated December 3, 2011 by and among SAP America, Inc., Saturn Expansion Corporation, SAP AG and SuccessFactors, Inc.~~⁽³⁾
4.9
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⁾
~~4.9~~ ~~Agreement and Plan of Merger dated May 22, 2012 by and among Ariba, Inc., SAP America, Inc. and Angel Expansion Corporation~~⁽⁴⁾
8 For a list of our subsidiaries see Note (33) to our Consolidated Financial Statements in “Item 18. Financial Statements”.
~~12.1~~ ~~Certification of Bill McDermott, Co-Chief~~
12.1 Certification of Bill McDermott, Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a).
~~12.2~~ ~~Certification of Jim Hagemann Snabe, Co-Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a).~~
~~12.3~~ ~~Certification of Werner Brandt, Chief Financial Officer, required by Rule 13a-14(a) or~~
12.2 Certification of Luka Mucic, Chief Financial Officer, required by Rule 13a-14(a) orRule 15d-14(a).

~~Part III~~

~~Item 19~~

~~13.1~~

~~Certification of Bill McDermott, Co-Chief~~

13.1	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.

~~13.2~~		~~Certification of Jim Hagemann Snabe, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~13.3~~		~~Certification of Werner Brandt,~~

13.2	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 of SAP AG’s Annual Report on Form 20-F filed on March 22, 2006.~~

(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.

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

⁽²⁾	~~Incorporated by reference to Exhibit 99(A) of Post Effective Amendment #1 to SAP AG’s Registration Statement on Form F-6 filed on November 25, 2009.~~
Name: Bill McDermott
Title: Chief Executive Officer

Dated: March 29, 2016

By: /s/ LUKA MUCIC

⁽³⁾	~~Incorporated by reference to Exhibit 2.1 to SuccessFactors, Inc.’s Current Report on Form 8-K filed on December 5, 2011.~~
Name: Luka Mucic

⁽⁴⁾	~~Incorporated by reference to Exhibit 2.1 to Ariba, Inc.’s Current Report on Form 8-K filed on May 22, 2012.~~

~~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.~~

Title: Chief Financial Officer

~~SAP AG~~

~~(Registrant)~~

~~By: /s/ BILL MCDERMOTT~~

~~Name: Bill McDermott~~

~~Title: Co-Chief Executive Officer~~

~~Dated: March 21, 2013~~

~~By: /s/ JIM HAGEMANN SNABE~~

~~Name: Jim Hagemann Snabe~~

~~Title: Co-Chief Executive Officer~~

~~Dated: March 21, 2013~~

~~By: /s/ WERNER BRANDT~~

~~Name: Dr. Werner Brandt~~

~~Title: Chief Financial Officer~~

~~Dated: March 21, 2013~~

~~SAP AG~~

Dated: March 29, 2016

SAP SE AND SUBSIDIARIES

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm


	~~Page~~
~~Report of Independent Registered Public Accounting Firm~~		~~F-2~~
~~Consolidated Financial Statements:~~
~~Consolidated Income Statements for the years ended 2012, 2011 and 2010~~		F-2
Consolidated Financial Statements:
Consolidated Income Statements for the years ended 2015, 2014 and 2013		F-3
Consolidated Statements of Comprehensive Income ~~for the years ended December 31, 2012, 2011 and 2010~~		~~F-4~~
~~Consolidated Statements of Financial Position as of December 31, 2012 and 2011~~		~~F-5~~
~~Consolidated Statements of Changes in Equity for the years ended December 31, 2012, 2011 and 2010~~		~~F-6~~
~~Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010~~		~~F-7~~
~~Notes to the Consolidated Financial Statements~~		~~F-8 to F-99~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~The Supervisory Board of SAP AG:~~

We have audited the accompanying consolidated statements of financial position of SAP AG and subsidiaries (“SAP” or “the Company”) as of December 31, 2012 and 2011, 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, 2012. We also have audited SAP’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control – Integrated Framework 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 AG and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB). Also in our opinion, SAP AG maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control – Integrated Framework issued by the COSO.

~~/s/ KPMG AG~~

~~Wirtschaftsprüfungsgesellschaft~~

~~Mannheim, Germany~~

~~February 21, 2013~~

~~SAP AG AND SUBSIDIARIES~~

~~CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONSOLIDATED INCOME STATEMENTS OF SAP GROUP~~

for the years ended December 31, 2015, 2014 and 2013

   Note (Unaudited)
2012⁽¹⁾    2012    2011    2010
   US$    €    €    €
   millions, unless otherwise stated
Software
   6,142       4,658       4,107       3,410
Cloud subscriptions and support
   356       270       18       14
Software and cloud subscriptions
   6,498       4,928       4,125       3,424
Support
   10,861       8,237       7,194       6,370
Software and software-related service revenue
   17,359       13,165       11,319       9,794
Consulting
   3,220       2,442       2,341       2,197
Other services
   812       616       573       473
Professional services and other service revenue
   4,032       3,058       2,914       2,670
Total revenue
   (5 ) 21,392       16,223       14,233       12,464
Cost of software and software-related services
   –3,364       –2,551       –2,107       –1,823
Cost of professional services and other services
   –3,315       –2,514       –2,248       –2,071
Total cost of revenue
   –6,679       –5,065       –4,355       –3,894
Gross profit
   14,713       11,158       9,878       8,570
Research and development
   –2,971       –2,253       –1,939       –1,729
Sales and marketing
   –5,152       –3,907       –3,081       –2,645
General and administration
   –1,249       –947       –715       –636
Restructuring
   –11       –8       –4       3
TomorrowNow litigation
   (23 ) 0       0       717       –981
Other operating income/expense, net
   (6 ) 30       23       25       9
Total operating expenses
   –16,032       –12,158       –9,352       –9,873
Operating profit
   5,360       4,065       4,881       2,591
Other non-operating income/expense, net
   (8 ) –228       –173       –75       –186
Finance income
   141       107       123       73
Finance costs TomorrowNow litigation
   –1       –1       8       –12
Other finance costs
   –229       –174       –169       –128
Finance costs
   –231       –175       –161       –140
Financial income, net
   (9 ) –90       –68       –38       –67
Profit before tax
   5,042       3,824       4,768       2,338
Income tax TomorrowNow litigation
   0       0       –281       377
Other income tax expense
   –1,319       –1,000       –1,048       –902
Income tax expense
   (10 ) –1,319       –1,000       –1,329       –525
Profit after tax
   3,722       2,823       3,439       1,813
Profit attributable to non-controlling interests
   0       0       1       2
Profit attributable to owners of parent
   3,722       2,823       3,438       1,811
Basic earnings per share, in €
   (11 ) 3.13       2.37       2.89       1.52
Diluted earnings per share, in €
   (11 ) 3.12       2.37       2.89       1.52

F-4

Consolidated Statements of Financial Position as of December 31, 2015 and 2014

⁽¹⁾

The 2012 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3186 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December 31, 2012.

F-5

~~The accompanying Notes are an integral part~~Consolidated Statements of ~~these Consolidated Financial Statements.~~

~~SAP AG AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP~~

Changes in Equity for the years ended December 31, 2015, 2014 and 2013

   Notes 2012    2011    2010
   € millions
Profit after tax
   2,823       3,439       1,813
Items that will not be reclassified to profit or loss

Actuarial gains (losses) on defined benefit pension plans
   (18 ) –12       –12       –39
Income tax relating to items that will not be reclassified
   (10 ) 4       5       18
Other comprehensive income after tax for items that will not be reclassified to profit or loss
   –8       –7       –21
Items that will be reclassified subsequently to profit or loss
   (20 )
Exchange differences on translations
   –214       106       193
Available-for-sale financial assets
   (26 ) 13       –7       3
Cash flow hedges
   (25 ) 63       –1       –21
Income tax relating to items that will be reclassified
   (10 ) –20       7       0
Other comprehensive income after tax for items that will be reclassified to profit or loss
   –157       105       175
Other comprehensive income net of tax
   –165       98       154
Total comprehensive income
   2,658       3,537       1,967
    attributable to owners of parent
   2,658       3,536       1,965
    attributable to non-controlling interests
   0       1       2

F-6

~~The accompanying~~ Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013

F-7

Notes ~~are an integral part of these~~to the Consolidated Financial ~~Statements.~~Statements

~~SAP AG AND SUBSIDIARIES~~F-8 to F-73

~~CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP~~

~~as at December 31,~~

   Note (Unaudited)
2012⁽¹⁾    2012    2011
   US$    €    €
   millions
Cash and cash equivalents
   3,266       2,477       4,965
Other financial assets
   (12 ) 203       154       817
Trade and other receivables
   (13 ) 5,165       3,917       3,493
Other non-financial assets
   (14 ) 388       294       187
Tax assets
   206       156       207
Total current assets
   9,228       6,998       9,669
Goodwill
   (15 ) 17,503       13,274       8,711
Intangible assets
   (15 ) 4,264       3,234       2,024
Property, plant, and equipment
   (16 ) 2,252       1,708       1,551
Other financial assets
   (12 ) 835       633       538
Trade and other receivables
   (13 ) 116       88       84
Other non-financial assets
   (14 ) 90       68       39
Tax assets
   224       170       146
Deferred tax assets
   (10 ) 870       660       465
Total non-current assets
   26,156       19,836       13,558
Total assets
   35,385       26,835       23,227
Trade and other payables
   (17 ) 1,147       870       937
Tax liabilities
   674       511       409
Financial liabilities
   (17 ) 1,058       802       1,331
Other non-financial liabilities
   (17 ) 2,817       2,136       1,981
Provision TomorrowNow litigation
   (23 ) 309       234    �� 231
Other provisions
   926       702       331
Provisions
   (18 ) 1,234       936       562
Deferred income
   (19 ) 1,828       1,386       1,046
Total current liabilities
   8,757       6,641       6,266
Trade and other payables
   (17 ) 83       63       43
Tax liabilities
   512       388       408
Financial liabilities
   (17 ) 5,862       4,446       2,925
Other non-financial liabilities
   (17 ) 129       98       92
Provisions
   (18 ) 518       393       268
Deferred tax liabilities
   (10 ) 757       574       474
Deferred income
   (19 ) 82       62       44
Total non-current liabilities
   7,942       6,023       4,254
Total liabilities
   16,699       12,664       10,520
Issued capital
   1,621       1,229       1,228
Share premium
   649       492       419
Retained earnings
   18,425       13,973       12,466
Other components of equity
   –256       –194       –37
Treasury shares
   –1,763       –1,337       –1,377
Equity attributable to owners of parent
   18,675       14,163       12,699
Non-controlling interests
   11       8       8
Total equity
   (20 ) 18,686       14,171       12,707
Equity and liabilities
   35,385       26,835       23,227

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.

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.

⁽¹⁾

~~The 2012 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3186 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on~~

/s/KPMG AG

Wirtschaftsprüfungsgesellschaft

Mannheim, Germany

February 25, 2016

SAP SE AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENTS OF SAP GROUP

for the years ended December 31, ~~2012.~~

~~The accompanying Notes are an integral part of these Consolidated Financial Statements.~~

~~SAP AG AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP~~

~~as at December 31,~~

Equity Attributable to Owners of Parent
Issued
Capital Share
Premium Retained
Earnings Other Components of Equity Treasury
Shares Total Non-
Controlling
Interests Total
Equity
Exchange
Differences �� Available-
for-Sale
Financial
Assets Cash
Flow
Hedges
€ millions
Note reference
(20 ) (20 ) (20 )
Statement of
Comprehensive Income
   (20 )
January 1, 2010
1,226    317    8,571    –319    13    –11    –1,320    8,477    14    8,491
Profit after tax
1,811    1,811    2    1,813
Other comprehensive income
–21    188    3    –16    154    154
Comprehensive income
0    0    1,790    188    3    –16    0    1,965    2    1,967
Share-based payments
2    2    2
Dividends
–594    –594    –594
Issuance of shares under share-based payments
1    23    24    24
Purchase of treasury shares
–220    –220    –220
Reissuance of treasury shares under share-based payments
–5    158    153    153
Other
0    1    1

December 31, 2010
1,227    337    9,767    –131    16    –27    –1,382    9,807    17    9,824
Profit after tax
3,438    3,438    1    3,439
Other comprehensive income
–7    112    –7    0    98    98
Comprehensive income
0    0    3,431    112    –7    0    0    3,536    1    3,537
Share-based payments
9    9    9
Dividends
–713    –713    –713
Issuance of shares under share-based payments
1    46    47    47
Purchase of treasury shares
–246    –246    –246
Reissuance of treasury shares under share-based payments
27    251    278    278
Change in non-controlling interests
–19    –19    –10    –29

December 31, 2011
1,228    419    12,466    –19    9    –27    –1,377    12,699    8    12,707
Profit after tax
2,823    2,823    0    2,823
Other comprehensive income
–8    –217    13    47    –165    –165
Comprehensive income
0    0    2,815    –217    13    47    0    2,658    0    2,658
Share-based payments
41    41    41
Dividends
–1,310    –1,310    –1,310
Issuance of shares under share-based payments
1    14    15    15
Purchase of treasury shares
–53    –53    –53
Reissuance of treasury shares under share-based payments
18    93    111    111
Other
2    2    0    2

December 31, 2012
1,229    492    13,973    –236    22    20    –1,337    14,163    8    14,171

~~The accompanying Notes are an integral part of these Consolidated Financial Statements.~~

~~SAP AG AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP~~

~~as at December 31,~~

Notes (Unaudited)
2012⁽¹⁾ 2012 2011 2010
US$ € € €
millions
Profit after tax
3,722    2,823    3,439    1,813
Adjustments to reconcile profit after taxes to net cash flow provided by operating activities:

Depreciation and amortization
(15),(16 ) 1,138    863    724    534
Income tax expense
(10 ) 1,319    1,000    1,329    525
Financial income, net
(9 ) 90    68    38    67
Decrease/increase in sales and bad debt allowances on trade receivables
–33    –25    –18    –49
Other adjustments for non-cash items
41    31    14    29
Decrease/increase in trade and other receivables
–393    –298    –426    –123
Decrease/increase in other assets
–45    –34    –59    –122
Decrease/increase in trade payables, provisions, and other liabilities
538    408    –380    1,116
Decrease/increase in deferred income
203    154    121    66
Cash outflows due to TomorrowNow litigation
(23 ) 9    7    –52    –102
Interest paid
–218    –165    –139    –66
Interest received
121    92    92    52
Income taxes paid, net of refunds
–1,453    –1,102    –908    –818
Net cash flows from operating activities
5,040    3,822    3,775    2,922
Business combinations, net of cash and cash equivalents acquired
(4 ) –8,036    –6,094    –188    –4,194
Purchase of intangible assets and property, plant, and equipment
–713    –541    –445    –334
Proceeds from sales of intangible assets or property, plant, and equipment
51    39    55    44
Purchase of equity or debt instruments of other entities
–1,348    –1,022    –2,046    –842
Proceeds from sales of equity or debt instruments of other entities
2,181    1,654    1,398    1,332
Net cash flows from investing activities
–7,864    –5,964    –1,226    –3,994
Purchase of non-controlling interests
0    0    –28    0
Dividends paid
(21 ) –1,727    –1,310    –713    –594
Purchase of treasury shares
(21 ) –70    –53    –246    –220
Proceeds from reissuance of treasury shares
119    90    251    127
Proceeds from issuing shares (share-based payments)
20    15    46    23
Proceeds from borrowings
7,619    5,778    519    5,380
Repayments of borrowings
–6,216    –4,714    –1,005    –2,196
Net cash flows from financing activities
–256    –194    –1,176    2,520
Effect of foreign currency exchange rates on cash and cash equivalents
–200    –152    74    186
Net decrease/increase in cash and cash equivalents
–3,281    –2,488    1,447    1,634
Cash and cash equivalents at the beginning of the period
(21 ) 6,547    4,965    3,518    1,884
Cash and cash equivalents at the end of the period
(21 ) 3,266    2,477    4,965    3,518

⁽¹⁾	The 2012 figures have been translated solely for the convenience of the reader at an exchange rate of US$1.3186 to €1.00, the Noon Buying Rate certified by the Federal Reserve Bank of New York on December 31, 2012.

~~The accompanying Notes are an integral part of these Consolidated Financial Statements.~~

~~SAP AG~~
millions, unless otherwise stated    Notes
(Unaudited)
2015⁽¹⁾
US$

2015
€

2014
€

2013
€

Cloud subscriptions and support
      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
Cloud and software
      18,693       17,214       14,315       13,505
Services
      3,887       3,579       3,245       3,310
Total revenue
   (5)    22,579       20,793       17,560       16,815
Cost of cloud subscriptions and support
      –1,109       –1,022       –481       –314
Cost of software licenses and support
      –2,488       –2,291       –2,076       –2,056
Cost of cloud and software
      –3,597       –3,313       –2,557       –2,370
Cost of services
      –3,598       –3,313       –2,716       –2,660
Total cost of revenue
      –7,195    –6,626    –5,272       –5,031
Gross profit
      15,384       14,167       12,288       11,784
Research and development
      –3,090       –2,845       –2,331       –2,282
Sales and marketing
      –5,865       –5,401       –4,304       –4,131
General and administration
      –1,138       –1,048       –892       –866
Restructuring
   (6)    –675       –621       –126       –70
TomorrowNow and Versata litigation
   (23)    0       0       –309       31
Other operating income/expense, net
      1       1       4       12
Total operating expenses
      –17,962    –16,541    –13,230       –12,336
Operating profit
      4,618       4,252       4,331       4,479
Other non-operating income/expense, net
   (8)    –278    –256    49       –17
Finance income
      262       241       127       115
Finance costs
      –267       –246       –152       –181
Financial income, net
   (9)    –5    –5    –25       –66
Profit before tax
      4,334       3,991       4,355       4,396
Income tax TomorrowNow and Versata litigation
      0       0       86       –8
Other income tax expense
      –1,016       –935       –1,161       –1,063
Income tax expense
   (10)    –1,016       –935       –1,075       –1,071
Profit after tax
      3,318       3,056       3,280       3,325
Attributable to owners of parent
      3,327       3,064       3,280       3,326
Attributable to non-controlling interests
      –9       –8       0       –1
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.

SAP SE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF SAP GROUP

for the years ended December 31,


€ millions	Notes	2015		2014		2013
Profit after tax			3,056		3,280		3,325
Items that will not be reclassified to profit or loss
Remeasurements on defined benefit pension plans	(18)		–19		–30		16
Income tax relating to items that will not be reclassified	(10)		2		7		–3
Other comprehensive income after tax for items that will not be reclassified to profit or loss			–17		–23		13
Items that will be reclassified subsequently to profit or loss	(20)
Exchange differences			1,845		1,161		–576
Available-for-sale financial assets	(26)		128		128		60
Cash flow hedges	(25)		15		–38		0
Income tax relating to items that will be reclassified	(10)		10		31		–8
Other comprehensive income after tax for items that will be reclassified to profit or loss			1,997		1,282		–524
Other comprehensive income net of tax			1,980		1,259		–511
Total comprehensive income			5,036		4,539		2,814
Attributable to owners of parent			5,044		4,539		2,815
Attributable to non-controlling interests			–8		0		–1

The accompanying Notes are an integral part of these Consolidated Financial Statements.

SAP SE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION OF SAP GROUP

as at December 31,


millions	Notes	(Unaudited) 2015⁽¹⁾ US$		2015 €		2014 €
Cash and cash equivalents			3,704		3,411		3,328
Other financial assets	(12)		381		351		678
Trade and other receivables	(13)		5,728		5,275		4,342
Other non-financial assets	(14)		508		468		435
Tax assets			255		235		215
Total current assets			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
Tax assets			306		282		231
Deferred tax assets	(10)		492		453		343
Total non-current assets			34,370		31,651		29,566
Total assets			44,945		41,390		38,565

Trade and other payables	(17)		1,181		1,088		1,032
Tax liabilities			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
Trade and other payables	(17)		88		81		55
Tax liabilities			437		402		371
Financial liabilities	(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
Total non-current liabilities			11,107		10,228		10,457
Total liabilities			19,650		18,095		19,031
Issued capital			1,334		1,229		1,229
Share premium			606		558		614
Retained earnings			21,766		20,044		18,317
Other components of equity			2,781		2,561		564
Treasury shares			–1,221		–1,124		–1,224
Equity attributable to owners of parent			25,266		23,267		19,499

Non-controlling interests			30		28		34
Total equity	(20)		25,296		23,295		19,534
Total equity and liabilities			44,945		41,390		38,565

The accompanying Notes are an integral part of these Consolidated Financial Statements.

SAP SE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY OF SAP GROUP

as at December 31,


€ millions	Equity Attributable to Owners of Parent																Non- Controlling Interests		Total Equity
	Issued Capital		Share Premium		Retained Earnings		Other Components of Equity						Treasury Shares		Total
	Issued Capital		Share Premium		Retained Earnings		Exchange Differences		Available- for-Sale Financial Assets		Cash Flow Hedges		Treasury Shares		Total
Notes		(20)		(20)		(20)		Statement of Comprehensive Income						(20)
January 1, 2013		1,229		492		13,934		–236		22		20		–1,337		14,125		8		14,133
Profit after tax						3,326										3,326		–1		3,325
Other comprehensive income						13		–584		60						–511				–511
Comprehensive income						3,339		–584		60						2,815		–1		2,814
Share-based payments				30												30				30
Dividends						–1,013										–1,013				–1,013
Reissuance of treasury shares under share-based payments				29										57		86				86
Other changes						–2										–2		1		–1
December 31, 2013		1,229		551		16,258		–820		82		20		–1,280		16,040		8		16,048
Profit after tax						3,280										3,280				3,280
Other comprehensive income						–23		1,182		128		–28				1,259				1,259
Comprehensive income						3,257		1,182		128		–28				4,539				4,539
Share-based payments				34												34				34
Dividends						–1,194										–1,194				–1,194
Reissuance of treasury shares under share-based payments				29										56		85				85
Additions from business combinations																		26		26
Other changes						–4										–4				–4
December 31, 2014		1,229		614		18,317		362		211		–8		–1,224		19,499		34		19,534
Profit after tax						3,064										3,064		–8		3,056
Other comprehensive income						–17		1,861		125		11				1,980				1,980
Comprehensive income						3,047		1,861		125		11				5,044		–8		5,036
Share-based payments				–136												–136				–136
Dividends						–1,316										–1,316				–1,316
Reissuance of treasury shares under share-based payments				80										100		180				180
Other changes						–4										–4		2		–2
December 31, 2015		1,229		558		20,044		2,223		336		3		–1,124		23,267		28		23,295

The accompanying Notes are an integral part of these Consolidated Financial Statements.

SAP SE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS OF SAP GROUP

for the years ended December 31,


millions	Notes		(Unaudited) 2015⁽¹⁾ US$		2015 €		2014 €		2013 €
Profit after tax				3,318		3,056		3,280		3,325
Adjustments to reconcile profit after taxes to net cash provided by operating activities:
Depreciation and amortization		(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
Decrease/increase in sales and bad debt allowances on trade receivables				49		45		47		42
Other adjustments for non-cash items				–2		–2		70		62
Decrease/increase in trade and other receivables				–917		–844		–286		–110
Decrease/increase in other assets				–340		–313		–329		–136
Decrease/increase in trade payables, provisions, and other liabilities				823		757		573		–176
Decrease/increase in deferred income				236		218		16		125
Cash outflows due to TomorrowNow and Versata litigation		(23)		0		0		–555		–1
Interest paid				–187		–172		–130		–159
Interest received				89		82		59		67
Income taxes paid, net of refunds				–1,541		–1,420		–1,356		–1,295
Net cash flows from operating activities				3,950		3,638		3,499		3,832
Business combinations, net of cash and cash equivalents acquired				–43		–39		–6,360		–1,160
Cash receipts from derivative financial instruments related to business combinations				289		266		–111		0
Total cash flows for business combinations, net of cash and cash equivalents acquired		(4)		246		226		–6,472		–1,160
Purchase of intangible assets and property, plant, and equipment				–691		–636		–737		–566
Proceeds from sales of intangible assets or property, plant, and equipment				73		68		46		55
Purchase of equity or debt instruments of other entities				–2,032		–1,871		–910		–1,531
Proceeds from sales of equity or debt instruments of other entities				2,041		1,880		833		1,421
Net cash flows from investing activities				–362		–334		–7,240		–1,781
Dividends paid		(20)		–1,430		–1,316		–1,194		–1,013
Proceeds from reissuance of treasury shares				70		64		51		49
Proceeds from borrowings				1,899		1,748		7,503		1,000
Repayments of borrowings				–4,183		–3,852		–2,062		–1,625
Net cash flows from financing activities				–3,644		–3,356		4,298		–1,589
Effect of foreign currency rates on cash and cash equivalents				146		135		23		–191
Net decrease/increase in cash and cash equivalents				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

The accompanying Notes are an integral part of these Consolidated Financial Statements.

SAP SE AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL INFORMATION ABOUT CONSOLIDATED FINANCIAL STATEMENTS

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).

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

~~General Information about Consolidated Financial Statements~~

The accompanying Consolidated Financial Statements of SAP AG and its subsidiaries (collectively, “we,” “us,” “our,” “SAP,” “Group,” and “Company”) have been prepared in accordance with International Financial Reporting Standards (IFRS). The designation “IFRS” includes all standards issued by the International Accounting Standards Board (IASB) and related interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

We have applied all standards and interpretations that were effective on and endorsed by the European Union (EU) as at December 31, 2012. There were no standards or interpretations impacting our Consolidated Financial Statements for the years ended December 31, 2012, 2011, and 2010, that were effective but not yet endorsed. Therefore our Consolidated Financial Statements comply with both IFRS as issued by the IASB and with IFRS as endorsed by the EU.

~~Our Executive Board approved the Consolidated Financial Statements on February 21, 2013, for submission to our Supervisory Board.~~

~~(2)~~

~~Scope of Consolidation~~

~~The Consolidated Financial Statements include SAP AG and all subsidiaries of SAP AG. Subsidiaries are all entities that are controlled directly or indirectly by SAP AG.~~

The financial statements of SAP AG and its subsidiaries used in the preparation of the Consolidated Financial Statements have December 31 as their reporting date. All financial statements were prepared applying the same IFRS Group accounting policies. Intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the SAP Group are eliminated in full.

~~The following table summarizes the changes in the number of entities included in the Consolidated Financial Statements.~~

Entities Consolidated in the Financial Statements

   German    Foreign      Total
December 31, 2010
   21       182         203
Additions
   4       9         13
Disposals
   –2       –15         –17
December 31, 2011
   23       176         199
Additions
   4       92         96
Disposals
   –5       –23         –28
December 31, 2012
   22       245         267


	Total
December 31, 2013		272
Additions		58
Disposals		–43
December 31, 2014		287
Additions		8
Disposals		–40
December 31, 2015		255

The additions relate to legal entities added in connection with acquisitions and foundations. The disposals are mainly due to ~~sales,~~ mergers and liquidations of ~~consolidated or acquired~~ legal entities.

~~In 2012, we acquired SuccessFactors (in February 2012) and Ariba (in October 2012), which are~~

~~both individually significant to some positions in our financial statements and may affect comparability~~(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(3a) Bases of our 2012 Consolidated Financial Statements with our 2011 and 2010 Consolidated Financial Statements. For more information about our business combinations and the effect on our Consolidated Financial Statements, see Note (4).Measurement

~~(3)~~

~~Summary of Significant Accounting Policies~~

~~(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 (except for investments in certain equity instruments without a quoted market price), and liabilities for cash-settled share-based payments are measured at fair value.

~~Foreign exchange receivables and payables are translated at period-end exchange rates.~~

~~Post-employment benefits are measured according to IAS 19 (Employee Benefits) as described in Note (18a).~~

–

Derivative financial instruments, available-for-sale financial assets, and liabilities for cash-settled share-based 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).

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

~~(3b)~~

~~Relevant Accounting Policies~~

Reclassifications

We ~~have reclassified certain~~modified and simplified the presentation of our services revenue ~~items~~ in our ~~consolidated~~ income ~~statements~~statement starting with the first quarter of 2015 to ~~provide additional transparency into~~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 ~~particularly~~(2014:€337 million, 2013:€259 million). Simultaneously with ~~respect~~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 ~~generated from~~subtotal labeled software and software-related service revenue is renamed cloud ~~subscription~~ and ~~support. Revenue from~~software and accordingly no longer includes premium support revenue. All of these changes have been applied retrospectively.

The two other revenue line items cloud subscriptions and ~~related~~ support and total revenue are ~~no longer included in the line item Subscription~~not affected by any of these changes and other software-related service revenue, but are presented as a separate line item within Software and software-related service revenue. We also present a separate subtotal for software and cloud subscription revenue within the line item Software and software-related service revenue. Additionally we have split up revenues from multi-year licensing arrangements and all other revenues thus far included in the Subscription and other software-related service revenue into their software portion and support portion and reclassified them accordingly to the Software revenue line item (2011: €136 million; 2010: €145 million) and Support revenue line item (2011: €227 million; 2010: €237 million) respectively. As a consequence of this reclassification, the Subscription and other

~~software-related service revenue line item no longer exists. Comparative amounts for prior periods presented have been reclassified accordingly to conform with the current presentation.~~remain unaltered.

Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method as at the closing date, which is the date on which the acquirer obtains control of the acquiree. The consideration transferred in an acquisition is measured at the fair value of the assets transferred and liabilities incurred at the date of transfer of control. Settlements of preexisting relationships are not included in the consideration transferred. Such amounts are recognized in profit and loss. Identifiable assets acquired and liabilities assumed in a business combination (including contingent consideration) are measured at their acquisition-date fair values. Changes in contingent consideration classified as a liability at the acquisition date are recognized in profit and loss provided they do not occur during the measurement period. We decide on a transaction-by-transaction basis whether to measure the non-controlling interest in the acquiree ~~either~~ at fair value or at the proportionate share of the acquiree’s identifiable net assets. ~~Where a business combination is achieved in stages, SAP recognizes the gain or loss from remeasuring the equity interest to fair value in finance income.~~ 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~~general and administration expense.

~~The excess of the consideration transferred in a business combination over the fair value of the identifiable net assets acquired is recorded as goodwill.~~

~~With respect to at-equity investments, the carrying amount of goodwill is included in the carrying amount of the investment.~~

Foreign Currencies

~~Assets~~Income and ~~liabilities~~expenses and operating cash flows of our foreign subsidiaries that use a functional currency other than the euro are translated at ~~the closing rate at the date of the Statement of Financial Position. Income and expenses are translated at~~ average rates of foreign exchange (FX) computed on a monthly basis. ~~All resulting exchange differences are recognized in~~

~~other comprehensive income.~~ Exchange differences resulting from monetary items denominated in foreign currency transactions that are part of a long-term investment (that is, settlement is neither planned nor likely to occur in the foreseeable future) are also included in other comprehensive income. When a foreign operation is disposed of, liquidated, or abandoned, the foreign currency translation adjustments applicable to that entity are reclassified from other comprehensive income to profit or loss.

~~On initial recognition,~~ foreign currency transactions are recorded in the respective functional currencies of Group entities by applying to the foreign currency amount the exchange rate at the date of the transaction. Monetary assets and liabilities that are denominated in foreign currencies are remeasured at the period-end closing rate. Resulting exchange differences are

recognized ~~in the period in which they arise,~~ in other non-operating income/expense, ~~net in the Consolidated Income Statements.~~

Operating cash flows of foreign subsidiaries are translated into euros using average rates of exchange computed on a monthly basis. Investing and financing cash flows of foreign subsidiaries are translated into euros using the exchange rates in effect at the time of the respective transaction. The effect of exchange rate changes on cash is reported in a separate line item in the Consolidated Statements of Cash Flows.

Any goodwill arising from the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising from the acquisition are treated as assets and liabilities of the foreign operation and translated at the respective closing rates.

net.

The exchange rates of key currencies affecting the Company were as follows:

Exchange Rates


		Closing Rate as at December 31				Annual Average Exchange Rate
Equivalent to €1		2012		2011		2012		2011		2010
Equivalent to€1												Middle Rate as at December 31						Annual Average Exchange Rate
Equivalent to€1														2015		2014		2015		2014		2013
U.S. dollar	USD		1.3194		1.2939		1.2862		1.3863		1.3201		USD		1.0887		1.2141		1.1071		1.3198		1.3301
Pound sterling	GBP		0.8161		0.8353		0.8104		0.8656		0.8570		GBP		0.7340		0.7789		0.7255		0.8037		0.8482
Japanese yen	JPY		113.61		100.20		103.05		110.17		115.07		JPY		131.07		145.23		134.12		140.61		130.21
Swiss franc	CHF		1.2072		1.2156		1.2055		1.2299		1.3699		CHF		1.0835		1.2024		1.0688		1.2132		1.2302
Canadian dollar	CAD		1.3137		1.3215		1.2843		1.3739		1.3583		CAD		1.5116		1.4063		1.4227		1.4645		1.3710
Australian dollar	AUD		1.2712		1.2723		1.2419		1.3436		1.4198		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, ~~(b) the use of our hosted cloud subscription software offerings~~ and (c) standardized and premium support services, consulting, customer-specific on-premise software development agreements, training, and other services. ~~The majority of our~~

Cloud and software ~~arrangements include support services, and many also include professional services and other elements.~~

~~Software and software-related service~~ revenue, as ~~shown~~presented in our Consolidated Income Statements, is the sum of our ~~Software~~cloud subscriptions and support revenue, our ~~Support~~software licenses revenue, and our ~~Cloud subscriptions and~~software support revenue. ~~Professional services and other service~~

–

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-based-infrastructure (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

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 ~~shown~~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 ~~sum~~nature of ~~our Consulting~~the service for which the out-of-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 ~~Other service revenue. Other service revenue as shown in our Consolidated Income Statements mainly consists~~associated costs can be measured reliably and collection of ~~revenue from training services, messaging services, and SAP marketing events. Revenue information by segment and geographic region~~the related receivable is ~~disclosed in Note (28).~~

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 collectability becomes unlikely before all revenue from an arrangement is recognized, we recognize revenue only to the extent of the fees that are successfully collected unless collectability becomes reasonably assured again. If a customer is specifically identified as a bad debtor, we stop recognizing revenue from ~~this~~the customer except to the extent of the fees that have already been collected.

~~We account~~In general, we invoice fees for ~~out-of-pocket expenses invoiced by SAP~~standard software upon contract closure and ~~reimbursed by customers as support,~~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 ~~consulting, or other service~~ revenue ~~depending on~~is recognized as the ~~nature of the service~~services are performed. Where a periodical fixed fee is agreed for ~~which the out-of-pocket expenses were incurred.~~

~~Software 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 posession of~~continuously access and use a cloud offering for a certain term, the ~~software~~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 ~~installation on~~as distinct deliverables with the ~~customer’s premises (on-premise software).~~ respective revenue being classified as service revenue and recognized as the set-up 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 ~~in line with~~upon delivery of the ~~requirements for selling goods stated in IAS 18 (Revenue)~~software, that is, when ~~evidence of an arrangement exists, delivery~~the customer has ~~occurred, the risks and rewards of ownership have been transferred~~access to the customer, the amount of revenue and associated costs can be measured reliably, and collection of the related receivable is reasonably assured. The fee of the sale is recognized net of returns and allowances, trade discounts, and volume rebates.

~~We usually sell or license on-premise software on a perpetual basis.~~software. Occasionally, we license on-premise 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 ~~do not~~ include neither acceptance-testing ~~provisions.~~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 sell-through 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.

~~Sometimes we enter into~~Software licenses revenue from customer-specific on-premise software development ~~agreements. We recognize software~~agreements that qualify for revenue ~~in connection with these arrangements~~recognition by reference to the stage of completion of the contract activity is recognized using ~~the percentage-of-~~

~~completion~~

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. If we do not have a sufficient basis to reasonably measure the progress of completion or to estimate the total contract revenue and costs, revenue is recognized only to the extent of the contract costs incurred for which we believe recoverability to be probable. When it becomes probable that total contract costs exceed total contract revenue in an arrangement, the expected losses are recognized immediately as an expense based on the costs attributable to the contract.

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 ~~services~~ during the on-premise software subscription term. ~~Customers~~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~~software licenses revenue and ~~Support~~software support revenue line items in our Consolidated Income Statements.

On-premise software rental contracts also combine software and support service elements. Under such contracts the customer is provided with current software products and support, but not with the right to receive unspecified future software products. Customers pay a periodic fee over the rental term and we recognize fees from software rental contracts ratably over the term of the arrangement. Revenue from rental contracts is split to be allocated to the Software revenue and Support revenue line items in our Consolidated Income Statements.

Support revenue represents fees earned from providing customers with unspecified future software updates, upgrades, and enhancements, and technical product support for on-premise software products. We recognize support revenue based on our performance under the support arrangements. Under our ~~major~~standardized support services, our performance obligation is to stand ready to provide technical product support and ~~to provide~~ unspecified updates, upgrades, and enhancements on a when-and-if-available basis. ~~For these support services~~Consequently, we recognize support revenue ratably over the term of the support arrangement.

We ~~do not separately sell technical product support or unspecified software upgrades, updates, and enhancements. Accordingly, we do not distinguish~~

~~within software and software-related service~~recognize services revenue ~~or within cost of software and software-related services the amounts attributable to technical support services and unspecified software upgrades, updates, and enhancements.~~

Revenue from cloud subscriptions and support relates to arrangements that provide the customer with the right to use certain software functionality hosted by SAP, but do not include the right to terminate the hosting contract and take possession of the software without significant penalty. Cloud subscription and support revenue is recognized as the services are performed. Where a 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.

We recognize consulting and other service revenue when the services are performed. Consulting revenue primarily results from implementation contracts to install and configure our software products and cloud offerings.rendered. Usually, our ~~consulting~~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-of-completion method of ~~accounting as outlined above.~~

~~Other service revenue consists of fees from training services, application management services (AMS),~~accounting. For messaging services, ~~revenue from SAP marketing events, and referral fees. Training services provide educational services to customers and partners regarding~~we measure the ~~use~~progress of our software products. We recognize training revenue when the services are rendered. Our AMS contracts provide post-implementation application support, optimization, and improvements to a customer’s IT solution. We recognize revenue from AMS services when the services are rendered. Messaging revenue mainly represents fees earned from transmitting electronic text messages from one mobile phone provider to another. We recognize revenue from message servicesservice rendering based ~~upon~~on the number of messages successfully processed and ~~delivered. Revenue from~~delivered except for fixed-price messaging arrangements, for which revenue is recognized ratably over the contractual term of the arrangement. Revenue from ~~marketing events hosted by SAP, for which SAP sells tickets to its customers,~~our training services is recognized after the marketing event takes place. Fees from referral services are commissions from partners to which we have referred customers. We recognize these fees in revenue upon providing the referral service.

The majority of our arrangements contain multiple elements. We account for software, support, cloud subscription, consulting and other service deliverables as separate units of accounting and allocate revenue based on fair value. Fair value is determined by establishing either company-specific objective evidence, or an estimated stand-alone selling price.

~~Revenue from multiple-element arrangements is allocated to the different elements based on their individual fair values. The revenue amounts allocated to the individual elements are~~ recognized when the ~~revenue recognition criteria described above have been met for~~customer consumes the respective ~~element.~~

~~We determine~~classroom training. For on-demand training services, whereby our performance obligation is to stand ready and provide the ~~fair value of~~customer with access to the training courses and ~~allocate~~learning content services, revenue ~~to each element based on its company-specific objective evidence of fair value, which~~ is recognized ratably over the price charged 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 we fail to establish such company-specific objective evidence of fair value for one or more elements of an arrangement, we proceed as follows:

~~We apply the residual method of revenue recognition when company-specific objective evidence of fair value exists for all~~contractual term of the undelivered elements in the arrangement, but does not exist for one or more delivered elements. This is generally the case in multiple-element arrangements involving on-premise software and services related to on-premise software where company-specific objective evidencearrangement.

Measurement of fair value exists for all the services (for example, support services, consulting services) in the arrangement, but does not exist for the on-premise software. Under the residual method, revenue 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 (FASB ASC 985-605), where applicable, as authorized by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8).~~

Where company-specific objective evidence of fair value cannot be established for undelivered elements, we determine the fair value of the respective element by estimating its stand-alone selling price. This is generally the case for our cloud subscription offerings.

We derive the company-specific objective evidence of fair value for our 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 software license fee charged to the customer. The majority of our customers renew their annual support service contracts at these rates. Estimated stand-alone selling price (ESP) for our cloud subscription offerings is determined based on the rates agreed with the individual customers to apply if and when the subscription arrangement renews. We determine ESP for all deliverables for which we do not have company-specific objective evidence of fair value or third-party evidence of selling price by considering multiple factors which include, but are not limited to, the following: i) substantive renewal rates contained within an arrangement for cloud subscription deliverables; ii) gross margin objectives and internal costs for services; and iii) pricing practices, market conditions, and competitive landscape.

We consider FASB ASC 985-605 in our accounting for options that entitle the customer to purchase, in the future, additional on-premise software. We allocate revenue to future incremental discounts whenever customers are granted 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.

Our consideration of whether on-premise software, consulting or other services, or cloud subscriptions and services are to be accounted for separately or as one combined element of the arrangement depends on:

~~Whether the arrangement involves significant production, modification, or customization of the software or cloud subscription, and~~

~~Whether the services are not available from third-party vendors and are therefore deemed essential to the software.~~

If neither of the above is the case, revenue for the on-premise software or cloud subscription element, and the other elements, are recognized separately. In contrast, if one or both of the above applies, the respective elements of the arrangement are combined and accounted for as a single unit of accounting, and the portion of the arrangement fee allocated to this single unit of accountRevenue 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.~~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 ~~the~~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

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, company-specific 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 on-premise 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).

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.

Cost of ~~Software~~Cloud and ~~Software-Related Services~~Software

Cost of ~~software~~cloud and ~~software-related services~~software includes the ~~cost~~costs incurred in producing the goods and providing the services that generate ~~software~~cloud and ~~software-related service~~software revenue. Consequently, this line item primarily includes employee expenses relating to these services, amortization of acquired intangibles, fees for third-party licenses, shipping, ~~and~~ ramp-up cost, and ~~so on.~~depreciation of our property, plant, and equipment.

Cost of ~~Professional Services and Other~~ Services

Cost of ~~professional services and other~~ services includes the ~~cost~~costs incurred in providing the services that generate ~~professional service and other~~ service revenue including messaging revenues. The item also includes sales and marketing expenses related to our ~~professional services and other~~ services that result from sales and marketing efforts that cannot be clearly separated from providing the services.

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.

Development activities involve the application of research findings or other knowledge to a plan or design of new or substantially improved software products before the start of commercial use. Development expenditures are capitalized only if all of the following criteria are met:

~~The development cost can be measured reliably.~~

~~The product is technically and commercially feasible.~~

~~Future economic benefits are probable.~~

~~We intend to complete development and market the product.~~

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, ~~all~~ 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 ~~solutions, software-related service portfolio,~~ and cloud ~~business.~~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.

~~Leases~~Accounting for Uncertainties in Income Taxes

We ~~are a lessee of property, plant,~~measure current and ~~equipment, mainly buildings, hardware,~~deferred tax liabilities and ~~vehicles, under operating leases that do not transfer to us the substantive risks and rewards of ownership. Rent expense~~assets for uncertainties in income taxes based on ~~operating leases is recognized on a straight-line basis over the life~~our best estimate of the ~~lease including renewal terms if, at inception of the lease, renewal is reasonably assured.~~

~~Some of our operating leases contain lessee incentives, such as up-front payments of costs~~most likely amount payable to or free or reduced periods of rent. The incentives are amortized over the life of the lease and the rent expense is recognized on a straight-line basis over the life of the lease. The same applies to contractually-agreed future increases of rents.

~~Income Tax~~

Deferred taxes are accounted for under the liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Consolidated Statements of Financial Position and

their respective tax bases and on the carryforwards of unused tax losses and unused tax credits. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses, and unused tax credits can be utilized.

~~Deferred tax assets and liabilities are measured at~~recoverable from the tax ~~rates~~authorities, assuming that ~~are expected~~the tax authorities will examine the amounts reported to ~~apply to the period when the asset is realized or the liability is settled, based on tax rates~~them and ~~tax laws that~~ have ~~been enacted or substantively enacted by the end~~full knowledge of the reporting period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss, unless related to items directly recognized in equity, in the period of (substantive) enactment.

The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all ~~of the deferred tax assets to be utilized.~~relevant information.

Share-Based Payments

Share-based payments cover cash-settled and equity-settled awards issued to our employees. The ~~fair values of both equity-settled and cash-settled awards~~respective expenses are ~~measured at grant date using an option-pricing model.~~

~~The fair value of equity-settled awards is not subsequently remeasured. The grant-date fair value of equity-settled awards is~~ recognized as ~~personnel expense~~employee benefits expenses and classified in ~~profit or loss over~~our Consolidated Income Statements according to the ~~period in which~~activities that the employees ~~become unconditionally entitled to~~owning the ~~rights, with a corresponding increase in share premium. The amount recognized as an expense is adjusted to reflect the actual number of equity-settled~~ awards ~~that ultimately vest.~~ perform.

We grant our employees discounts on certain share-based ~~payments.~~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.

For the share-based payments that are settled by paying cash rather than by issuing equity instruments, a provision is recorded for the rights granted reflecting the vested portion of the fair value of the rights at the reporting date. Personnel expense is accrued over the period the beneficiaries are expected to perform the related service (vesting period), with a corresponding increase in provisions.

Cash-settled awards are remeasured to fair value at each Statement of Financial Position date until the award is settled. Any changes in the fair value of the provision are recognized as personnel expense in profit or loss. The amount of unrecognized compensation expense related to non-vested share-based payments granted under our cash-settled plans is dependent on the final intrinsic value of the awards. The amount of unrecognized compensation expense is dependent on the future price of our ordinary shares which we cannot reasonably predict.

~~In the event~~Where we hedge our exposure to cash-settled awards, changes in the fair value of the respective hedging instruments are also recognized as ~~personnel expense~~employee benefits expenses in profit or loss. The fair values ~~for hedged programs~~of hedging instruments are based on market data reflecting current market expectations.

For more information about our share-based payments, see Note (27).

~~Other Components of Equity~~

~~Other components of equity include:~~

Currency effects arising from the translation of the financial statements of our foreign operations as well as the currency effects from intercompany long-term monetary items for which settlement is neither planned nor likely to occur in the foreseeable future

~~Unrealized gains and losses on available-for-sale financial assets~~

~~Gains and losses on cash flow hedges comprising the net change in fair value of the effective portion of the respective cash flow hedges that have not yet impacted profit or loss~~

~~Treasury Shares~~

Treasury shares are recorded at acquisition cost and are presented as a deduction from total equity. Gains and losses on the subsequent reissuance of treasury shares are credited or charged to share premium on an after-tax basis. On cancellation of treasury shares, any excess of their carrying amount over the calculated par value is charged to retained earnings.

~~Earnings per Share~~

~~We present basic and diluted earnings per share (EPS). Basic earnings per share is determined by~~

dividing profit after tax attributable to equity holders of SAP AG by the weighted average number of ordinary shares outstanding during the respective year. Diluted earnings per share reflect the potential dilution assuming the conversion of all dilutive potential ordinary shares. The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options is based on market prices for the period during which the options were outstanding.

Financial Assets

These assets are recognized and measured in accordance with IAS 39 (Financial Instruments: Recognition and Measurement ). Accordingly, financial assets are recognized in the Consolidated Statements of Financial Position if we have a contractual right to receive cash or other financial assets from another entity. Regular way purchases or sales of financial assets are recorded at the trade date. Financial assets are ~~initially recognized at fair value plus, in the case of~~only classified as financial assets not at fair value through profit or loss, directly attributable transaction costs. Interest-free or below-market-rate loans and receivables are initially measured at the present value of the expected future cash flows. The subsequent measurement depends on the classification of our financial assets to the following categories according to IAS 39:

Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are neither quoted in an active market nor intended to be sold in the near term. This category comprises trade receivables, receivables and loans included in other financial assets, and cash and cash equivalents. We carry loans and receivables at amortized cost less impairment losses. For further information on trade receivables, see the Trade and Other Receivables section.

Available-for-sale financial assets: Available-for-sale financial assets are non-derivative financial assets that are not assigned to either of the two other categories and mainly include equity investments and debt investments. If readily determinable from market data, available-for-sale financial assets are measured at fair value, with changes in fair value being reported net of

tax in other comprehensive income. Fair value changes are not recognized in profit or loss until the assets are sold or impaired. Available-for-sale financial assets for which no market price is available and whose fair value cannot be reliably estimated in the absence of an active market are carried at cost less impairment losses.

~~Financial assets at fair value through profit or loss: Financial~~ assets at fair value through profit or loss ~~comprise only those financial assets that~~if they are held for trading, as we do not designate financial assets at fair value through profit or ~~loss on initial recognition. This category solely contains embedded~~loss. All other financial assets are classified as loans and ~~freestanding derivatives with positive fair values, except where hedge accounting is applied. All changes in the fair value~~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 ~~this category~~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 ~~immediately~~ recognized in ~~profit or loss.~~financial income, net. For ~~more information about derivatives, see the Derivatives section.~~

~~All~~available-for-sale financial assets, which are non-derivative financial assets that are not ~~accounted for~~assigned to loans and receivables or financial assets at fair value through profit or loss, are assessed for impairment at each reporting date or if we become aware of objective evidence of impairment as a result of one or more events that indicate that the carrying amount of the asset may not be recoverable. Objective evidence includes but is not limited to a significant or prolonged decline of the fair value below its carrying amount, a high probability of insolvency, or a material breach of contract by the issuer such as a significant delay or a shortfall in payments due. Impairment losses in the amount of the difference of an asset’s carrying amount and the present value of the expected future cash flows or current fair value, respectively, are recognized in Finance income, net. For available-for-sale financial assets such 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. ~~Impairment losses are reversed if the reason for the original impairment loss no longer exists. No such reversals are made for available-for-sale equity investments.~~

Income/expenses and gains/losses on financial assets consist of impairment losses and reversals, interest income and expenses, dividends, and gains and losses from the disposal of such assets. Dividend income is recognized when earned. Interest income is recognized based on the effective interest method. Neither dividend nor

interest income is included in net gains/losses at the time of disposal of an asset. Financial assets are derecognized when contractual rights to receive cash flows from the financial assets expire or the financial assets are transferred together with all material risks and benefits.

~~Investments in Associates~~

~~Companies in which we do not have control, but over which we can exercise significant operating and financial influence (associates), are accounted for using the equity method.~~

Derivatives

~~We account for derivatives and hedging activities in accordance with IAS 39 at fair value.~~

Derivatives ~~Without~~Not Designated ~~Hedge Relationship~~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. ~~For the hedging of~~To hedge currency risks inherent in ~~foreign currency~~foreign-currency denominated and recognized monetary assets and liabilities, we do not designate our held-for-trading derivative financial instruments as accounting hedges, asbecause the ~~realized~~ profits and losses from the underlying transactions are recognized in profit or loss in the same periods as the ~~realized~~ profits or losses from the derivatives.

~~Embedded Derivatives~~

WeIn addition, we occasionally have contracts that ~~require payment streams in currencies other than the functional currency of either party to the contract. Such embedded~~contain foreign currency embedded derivatives ~~are separated from the host contract and~~to be accounted for ~~separately if the following are met:~~separately.

Derivatives Designated as Hedging Instruments

~~The economic characteristics~~We use derivatives to hedge foreign currency risk or interest-rate risk and ~~risks of the host contract and the embedded derivative are not closely related.~~

~~A separate instrument with the same terms~~designate them as ~~the embedded derivative would meet the definition of a derivative.~~

~~The combined instrument is not measured at~~cash flow or fair value ~~through profit or loss.~~

~~Derivatives with Designated Cash Flow Hedge Relationship~~

~~Derivatives that are part of a hedging relationship that qualifies~~hedges if they qualify for hedge accounting under IAS 39 are carried at their fair value. We designate and document the hedge relationship, including the nature of the risk, the identification of the hedged item, the hedging instrument, and how we will assess the hedge effectiveness. The accounting for changes in fair value of the hedging instrument depends on the effectiveness of the hedging relationship. The effective portion of the unrealized gain or loss on the derivative instrument determined to be an effective hedge is recognized in other comprehensive income. We subsequently reclassify the portion of gains or losses from other comprehensive income to profit or loss when the hedged transaction affects profit or loss. The ineffective portion of gains or losses is recognized in profit or loss immediately.39. For more information about our hedges, see Note ~~(25)~~(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 fair value of our derivatives is calculated by discounting the expected future cash flows using relevant interest rates, and spot rates over the remaining lifetime of the contracts.~~

Gains or losses on the spot price and the intrinsic values of the derivatives designated and qualifying as cash flow hedges are recognized directly in other comprehensive income, while gains and losses on the interest element and on those time values excluded from the hedging relationship are recognized in profit or loss immediately.

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~~interest-rate swaps, we also apply the critical terms match as the notional amounts, currencies, maturities, basis of the variable legs ~~(EURIBOR),~~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~~interest-rate swaps. Therefore, over the life of the hedging instrument, the changes in ~~cash flows~~the designated components of the hedging ~~relationship components~~instrument will offset the impact of fluctuations of the underlying ~~forecasted transactions.~~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

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.

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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 ~~software~~cloud and ~~software-related services~~software or cost of ~~professional services and other~~ 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 ~~approximates fair value due to their short-term nature.~~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.

~~Purchased~~All our purchased intangible assets ~~with~~other than goodwill have finite useful ~~lives~~lives. They are ~~recorded~~initially measured at acquisition cost and ~~are~~subsequently amortized either based on expected ~~usage~~consumption of economic benefits or on a straight-line basis over their estimated useful lives ranging from two to 1620 years. ~~All of our intangible assets, with the exception of goodwill, have finite useful lives and are therefore subject to amortization.~~

~~We recognize~~Amortization for acquired in-process research and development ~~projects as an intangible asset separate from goodwill if a~~ project ~~meets the definition of an asset. Amortization for these intangible~~ 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 ~~software~~cloud and ~~software-related services,~~software, cost of ~~professional services and other~~ services, research and development, sales and marketing, and general and administration, depending on ~~their use.~~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, ~~and~~ less accumulated depreciation. ~~Interest incurred during the construction of qualifying assets is capitalized and amortized over the related assets’ estimated useful lives.~~

Property, plant, and equipment are depreciated over their expected useful lives, generally using the straight-line method.

Useful Lives of Property, Plant, and Equipment


	~~Useful Lives of Property,~~ ~~Plant, and Equipment~~
Buildings		25 to 50 years
Leasehold improvements		Based on the term of the lease contract
Information technology equipment		3 to 5 years
Office furniture		4 to 20 years
Automobiles		4 to 5 years

Leasehold improvements are depreciated using the straight-line method over the shorter of the term of the lease or the useful life of the asset. If a renewal option exists, the term used reflects the additional time covered by the option if exercise is reasonably assured when the leasehold improvement is first put into operation.

Impairment of Goodwill and Non-Current Assets

We test goodwill for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of a cash-generating unit to which goodwill has been allocated to is less than its carrying value.

The ~~recoverable amount of goodwill is estimated each year at the same time. 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.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the operating segments that are expected to benefit from the synergies of the combination. If the carrying amount of the operating segment to which the goodwill is allocated exceeds the recoverable amount, an impairment loss on goodwill allocated to this operating segment is recognized. The ~~recoverable amount is the higher of the operating segment’s fair value less cost to sell (FVLCS) and its value in use. FVLCS is the~~

amount obtainable from the sale of an asset or cash generating unit in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit. Impairment losses on goodwill are not reversed in future.

We review non-current assets, such as property, plant, equipment, and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. Intangible assets not yet available for use are tested for impairment annually.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. If assets do not generate cash inflows that are largely independent of those from other assets or groups of assets, the impairment test ~~is not performed at an individual asset level; instead, it~~ is performed at the ~~level of the cash-generating unit (CGU) to which the asset belongs.~~

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. The recoverable amount of an asset or its CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of thesame time ~~value of money and the risks specific to the asset.~~for all operating segments.

Impairment losses are ~~recognized~~presented in other operating ~~income,~~income/expense, net in profit or loss.

Impairment losses for non-current assets recognized in the prior periods are assessed at each reporting date for indicators that the loss has decreased or no longer exists. Accordingly, if there is an indication that the reasons that caused the impairment no longer exist, we would consider the need to reverse all or a portion of the impairment through profit or loss.

~~Contingent Assets~~

We carry insurance policies amongst others to offset the expenses associated with defending against litigation matters as well as other risks. To mitigate the risk of customer default, our trade receivables are partially covered by merchandise credit insurance. We recognize the respective

~~reimbursements in profit or loss when it is virtually certain that the reimbursement will be received and retained by us.~~

Liabilities

Financial Liabilities

Financial liabilities include trade and other payables, bank loans, issued bonds, private placements, and other financial liabilities ~~which~~that comprise derivative and non-derivative financial liabilities.

~~Financial liabilities~~ They are recognized and measured in accordance with IAS 39. Accordingly, they are recognized in the Consolidated Financial Statements if we have a contractual obligation to transfer cash or another financial asset to another party. Financial liabilities are initially recognized at fair value. In the case ofclassified as financial liabilities ~~not~~at amortized cost and at fair value through profit or loss, this includes directly attributable transaction costs. If material, financial liabilities are discounted to present value based on prevailing market rates adjusted for credit risk, with the discount being recognized over time as interest expense.loss. The ~~subsequent measurement depends on the allocation of financial liabilities to the following categories according to IAS 39:~~

~~Financial liabilities at fair value through profit or loss~~latter include only ~~comprise~~ those financial liabilities that are held for trading, as we do not designate financial liabilities at fair value through profit or ~~loss~~loss.

Customer funding liabilities are funds we draw from and make payments on ~~initial recognition. This category solely contains embedded~~on behalf of our customers for customers’ employee expense reimbursements, related credit card payments, and ~~other derivatives with negative fair values, except where hedge accounting is applied. All changes~~vendor payments. We present these funds in ~~the fair value~~cash and cash equivalents and record our obligation to make these expense reimbursements and payments on behalf of ~~financial liabilities in this category are immediately recognized in profit or loss. For more information about derivatives, see the Derivatives section.~~our customers as customer funding liabilities.

~~Financial liabilities at amortized cost include all non-derivative financial liabilities not quoted in an active market which are measured at amortized cost using the effective interest method.~~

Expenses and gains/losses on financial liabilities mainly consist of interest ~~expenses, and gains and losses from the disposal of such liabilities. Interest~~ expense, which is recognized based on the effective interest method.

~~Financial liabilities~~Provisions

The employee-related provisions include, amongst others, long-term employee benefits. They are ~~derecognized when the contractual obligation is discharged, canceled, or has expired.~~

~~Non-Financial Liabilities~~

~~Other non-financial liabilities with fixed or determinable payments that are not quoted in an active market are mainly the result of obligations to employees and fiscal authorities~~secured by pledged reinsurance coverage and are ~~generally measured at amortized cost.~~

~~Provisions~~

~~Provisions are recorded when all of~~offset against the ~~following conditions are met:~~

~~It is more likely than not that we have a legal or constructive obligation to third parties as a result of a past event.~~

~~The amount can be reasonably estimated.~~

~~It is probable that there will be an outflow of future economic benefits to settle the obligation, while there may be uncertainty about the timing or~~settlement amount of the ~~future expenditure required in the settlement.~~secured commitment.

We regularly adjust provisions as further information becomes available or circumstances change. Non-current provisions are reported at the present value of their expected settlement amounts as at the reporting date. Discount rates are regularly adjusted to current market interest rates.

Post-Employment Benefits

~~We measure~~The discount rates used in measuring our ~~pension-benefit~~post-employment benefit assets and liabilities are derived from rates available on high-quality corporate bonds and ~~other post-employment benefits based on actuarial computations using~~government bonds for which the ~~projected-unit-credit method in accordance with IAS 19.~~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). AsNet 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 post-retirement plan that is fully financed with qualifying insurance policies, current service cost may become a credit as a result of adjusting the ~~actuarial calculation for each plan, we recognize an asset or liability for the overfunded or underfunded status of the respective~~ defined benefit ~~plan. We classify a portion of the liability as current (determined on a plan-by-plan basis) if the~~

liability’s carrying amount ~~by which the actuarial present value of benefits included in the benefit obligation payable within the next 12 months exceeds~~to the fair value of the qualifying plan assets. ~~Changes~~Such adjustments are recorded in the amount of the defined benefit obligation or plan assets resulting from demographic and financial data different than originally assumed and from changes in assumptions can result in actuarial gains and losses. We recognize all actuarial gains and losses directly in retained earnings.

SAP’s pension benefits are classified as defined contribution plans if the payment to a separate fund relieves SAP of all obligations from the pension plan. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit or loss when paid or due.

Certain of our foreign subsidiaries are required to provide termination indemnity benefits to their employees regardless of the reason for termination (retirement, voluntary, or involuntary). We treat these plans as defined benefit pension plans if the substance of the post-employment plan is a pension-type arrangement. Most of these arrangements provide the employee with a one-time payout based on compensation levels, age, and years of service ~~on termination independent of the reason (retirement, voluntary, or involuntary).~~cost.

Deferred Income

Deferred income is recognized as ~~software revenue, support revenue,~~ cloud ~~subscription~~subscriptions and support revenue, ~~consulting~~software licenses revenue, ~~development revenue, training~~software support revenue, or ~~other service~~services revenue, depending on the ~~reasons~~reason for the deferral, once the basic applicable revenue recognition criteria have been met. These criteria are met, for example, when the ~~related~~ services are performed or when the discounts that relate to a material right granted in a purchase option are ~~used.~~applied.

~~Presentation in the Consolidated Statements~~(3c) Management Judgments and Sources of ~~Cash Flows~~Estimation Uncertainty

~~We classify interest and taxes paid as well as interest and dividends received as cash flows from operating activities. Dividends paid are classified as cash flows from financing activities.~~

~~(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 intangibles~~

~~Accounting for legal contingencies~~

~~Recognition of internally generated intangible assets from development~~

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Revenue recognition

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Valuation of trade receivables

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Accounting for share-based payments

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Accounting for income tax

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Accounting for business combinations

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Subsequent accounting for goodwill and other intangible assets

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Accounting for legal contingencies

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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 ~~persuasive evidence of an arrangement exists, delivery has occurred,~~ the ~~risks and rewards of ownership have been transferred to the customer, the~~

amount of revenue can be measured reliably and collection of the related receivable is ~~reasonably assured.~~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 ~~most of~~the accounting for our ~~revenue-generating~~multiple-element arrangements, we sell to the customer more than one product solution or service. Additionally, we have ongoing relationships with many of our customers and often enter into several transactions with the same customer within close proximity in time. We therefore 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

~~Which arrangements~~The determination of whether different contracts with the same customer are to be accounted for as one ~~arrangement~~

~~Which deliverables under one arrangement are to be accounted for separately~~

~~How to allocate the total arrangement fee to the individual elements of one arrangement~~

~~The determination of whether different arrangements with the same customer are to be accounted for as one arrangement~~contract is highly judgmental, as it requires us to evaluate whether the ~~arrangements~~contracts are negotiated together or linked in any other way. The timing and amount of revenue recognition can vary depending on whether two ~~arrangements~~contracts are accounted for separately or as one ~~arrangement.~~single contract.

Under ana multiple-element arrangement including a cloud subscription, or on-premise software, ~~or cloud subscription,~~ and other deliverables, we do not account for the cloud subscription, or on-premise software, ~~or cloud subscription,~~ 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 on-premise ~~software, or cloud subscription.~~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.

~~We also do not account separately for different deliverables under an arrangement if we have no basis for~~In the area of allocating the ~~overall arrangement~~transaction fee to the different ~~elements of~~deliverables under the arrangement. However, we believe that such allocation basis exists if we can demonstrate for each undelivered element of the arrangement either company-specific objective evidence of fair value, or for cloud subscription deliverables, estimated stand-alone selling price, if company-specific objective evidence of fair value cannot be established, as further defined in the Revenue Recognition section

~~of Note (3b). Judgment~~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~~

–

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.

Revenue from consulting, other professional services, and customer-specific on-premise software development projects is determined by applying the percentage-of-completion method. 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 and expenses reported. If we do not have a sufficient basis to measure the progress of completion or to estimate the total contract revenue and costs, revenue recognition is limited to the amount of contract costs incurred. The determination of whether a sufficient basis to measure the progress of completion exists is judgmental. Changes in estimates of progress towards completion and of contract revenue and contract costs are accounted for as cumulative catch-up adjustments to the reported revenue for the applicable 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, particularly in the global economic circumstances resulting from the recent global financial crisis.~~development. Changes in our estimates about the allowance for doubtful accounts could materially impact ~~the~~ reported assets and expenses, ~~in our financial statements,~~ and our profit could be adversely affected if actual credit losses exceed our estimates. ~~To mitigate this risk, our trade receivables are partially covered by merchandise credit insurance.~~

Accounting for Share-Based Payments

~~As described in Note (27), we have issued both equity-settled, as well as cash-settled share-based payments.~~

We use certain assumptions in estimating the fair values for our share-based payments, including expected future ~~stock~~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. ~~All~~Changes to these assumptions ~~may significantly impact~~and outcomes that differ from these assumptions could require material adjustments to the ~~fair value determination and thus the~~carrying amount ~~and timing of our share-based payment expense. Furthermore, the fair values~~ of the options granted under our 2009 Plan (SOP PP) are dependent on our performance against the Tech Peer Group Index (TechPGI) since the respective grant date, the volatility and the expected correlation between the market price of this index, and our share price.liabilities we have recognized for these share-based payments.

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 ~~the~~our cash-settled plans, the price of ~~SAP’s shares~~SAP stock will be the most relevant factor. The fair values of the Restricted Share Units (RSUs) granted under our Employee Participation Plan (EPP) and Long Term Incentive Plan (LTI) 2015 depend on SAP’s share price directly after the announcement of the preliminary fourth quarter and full-year results for the last financial year of the respective performance period under the EPP (three-year-holding period under the LTI 2015), and thus may be significantly above or below the budgeted amounts. With respect to our plan granted in 2009 (SOP PP), we believe that future payout will be significantly impacted not only by our share price but also by the requirement to outperform the TechPGI. 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 ~~conduct operations and earn income in numerous foreign countries and~~ 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 ~~have made reasonable~~make our estimates about the ultimate resolution of our tax uncertainties based on current tax laws and our interpretation thereof. ~~Such judgment can have a~~Changes to the assumptions underlying these estimates and outcomes that differ from these assumptions could require material ~~effect on~~adjustments to the carrying amount of our income tax ~~expense, income tax provision, and profit after tax.~~provisions.

The ~~carrying amount of~~assessment whether a deferred tax asset is ~~reviewed at~~impaired requires management judgment, as we need to estimate future taxable profits to determine whether the ~~end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all~~utilization of the deferred tax ~~assets to be utilized. This assessment requires management judgment, estimates, and assumptions.~~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 ~~expectations of~~assumptions about future market conditions and ~~other facts~~future profits of SAP. Changes to these assumptions and ~~circumstances. Any adverse change to the underlying facts or our estimates and~~outcomes that differ from these assumptions could require ~~that we reduce~~material adjustments to the carrying amount of our ~~net~~ deferred tax assets.

For more information about our income tax, see Note (10).

Accounting for Business Combinations

identifiable assets acquired and liabilities assumed involves considerable management judgment. The necessary measurements are based on information available aton 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, ~~among which are~~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).

–

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 Accounting for Goodwill and Other ~~Intangibles~~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 ~~allocated~~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.

–

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

–

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 weighted-average cost of capital. ~~Due to these factors, actual cash flows~~These judgments impact the carrying amounts of our intangible assets and ~~values could vary significantly from~~goodwill as well as the ~~forecasted future cash flows and related values derived using the discounted cash flow method. Although we believe the assumptions and estimates we have made~~amounts of impairment charges recognized in ~~the past have been reasonable and appropriate, different assumptions and estimates could materially affect our financial position and profit.~~profit or loss.

The ~~results~~outcome of goodwill impairment tests and thus the carrying amounts of our recognized goodwill may depend on the allocation of goodwill to our operating

segments. This allocation ~~is judgmental~~involves judgment as it is based on our estimates regarding which operating segments are expected to benefit from the synergies of the business combination.

~~We recognized no impairment losses on~~ Additionally, judgment is required in the determination of our operating segments. Changes to the assumptions underlying our goodwill ~~and no significant~~ impairment ~~losses on~~tests could require material adjustments to the carrying amount of our ~~intangible assets during 2012. Although we do not currently have an indication of any significant impairment, there can be no assurance that impairment losses will not occur in the future.~~recognized goodwill. For more information about the goodwill allocation and impairment testing, see Note (15).

~~Accounting~~Share-Based Payments

Share-based payments cover cash-settled and equity-settled 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 share-based 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.

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 ~~Legal Contingencies~~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 non-derivative 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-for-trading 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.

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

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

Trade and Other Receivables

–

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

Intangible Assets

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 straight-line method.

Useful Lives of Property, Plant, and Equipment


Buildings		25 to 50 years
Leasehold improvements		Based on the term of the lease contract
Information technology equipment		3 to 5 years
Office furniture		4 to 20 years
Automobiles		4 to 5 years

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 non-derivative 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 post-employment 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.

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

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 ~~(23)~~(3b), we do not recognize revenue before the

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 ~~currently involved~~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 ~~various claims~~determining the stage of completion affect the timing and ~~legal proceedings. We review~~amounts of revenue recognized.

In the ~~status~~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

The determination of ~~each significant matter~~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.

Under a multiple-element arrangement including a cloud subscription, or on-premise software, and other deliverables, we do not ~~less frequently than each quarter~~account for the cloud subscription, or on-premise software, and ~~assess our potential financial~~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 on-premise software. The determination whether an undelivered element is essential to the functionality of the delivered element requires the use of judgment. The timing and ~~business exposures related~~amount of revenue recognition can vary depending on how that judgment is exercised, because revenue may be recognized over a longer service term.

In the area of allocating the transaction fee to ~~such matters. Significant~~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.

Valuation of Trade Receivables

~~Determining~~when we evaluate available information about a particular customer’s financial situation to determine whether ~~an obligation exists~~

~~Determining the probability of outflow of economic benefits~~

~~Determining whether~~it is probable that a credit loss will occur and the amount of such loss is reasonably estimable and thus an ~~obligation~~allowance for that specific account is ~~estimable~~

~~Estimating~~necessary. Basing the ~~obligation~~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.

~~Due to uncertainties relating~~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 ~~matters, provisions~~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.

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 ~~best information available at~~assumptions underlying these estimates and outcomes that differ from these assumptions could require material adjustments to the ~~time.~~

~~At the end~~carrying amount of ~~each reporting period,~~our income tax provisions.

The assessment whether a deferred tax asset is impaired requires management judgment, as we ~~reassess the potential obligations related~~need 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 issueestimate future taxable profits to determine whether ~~this provides additional information regarding conditions that existed at~~ the ~~end~~utilization of the ~~reporting period. Such revisions to~~deferred tax asset is probable. In evaluating our estimates of the potential obligations could have a material impact on our financial position and profit. The change in the provision for the TomorrowNow litigation had a material impact on our 2010 and 2011 consolidated financial statements. For further information about this case, see Notes (18b) and (23).

~~Recognition of Internally Generated Intangible Assets from Development~~

Under IAS 38, internally generated intangible assets from the development phase are recognized if certain conditions are met. These conditions include the technical feasibility, intention to complete, the ability to ~~use or sell~~utilize our deferred tax assets, we consider all available positive and negative evidence, including the ~~asset under development,~~level of historical taxable income and projections for future taxable income over the ~~demonstration of how~~periods in which the ~~asset will generate probable~~deferred tax assets are recoverable. Our judgment regarding future economic benefits. The cost of a recognized internally generated intangible asset comprises all directly attributable cost necessary to make the asset capable of being used as intended by management. In contrast, all expenditures arising from the research phase are expensed as incurred.

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~~taxable income is based on assumptions about future market conditions ~~customer demand~~ and ~~other developments.~~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).

~~The term “technical feasibility”~~Accounting for Business Combinations

In our accounting for business combinations, judgment is ~~not defined~~required 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 is identifiable, and ~~whether a cost is necessary for completing a development.~~

~~We have determined that~~should be recorded separately from goodwill. Additionally, estimating the conditions for recognizing internally generated intangible assets from our software development activities are not met until shortly before the developed products are available for sale. This assessment is monitored by us on a regular basis.

~~(3d)~~

~~New Accounting Standards Adopted in the Current Period~~

The new accounting standards adopted in fiscal year 2012 did not have a material impact on our Consolidated Financial Statements. The amendments to IFRS 7 (Financial Instruments: Disclosures) detailing additional disclosures for certain transfers of financial assets have so far not necessitated any additional disclosures on our part.

~~(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~~acquisition date ~~of issuance~~fair values of the ~~Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective:~~

Amendments to IFRS 7 (Financial Instruments: Disclosures) – Offsetting financial assets and financial liabilities, which become mandatory for our 2013 Consolidated Financial Statements and require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure and which might result in additional disclosures in the future.

IFRS 9 (Financial Instruments), which becomes mandatory for our 2015 Consolidated Financial Statements and is expected to impact the classification and measurement of financial assets. We have not yet completed the determination of the impact on our Consolidated Financial Statements.

IFRS 10 (Consolidated Financial Statements), IFRS 11 (Joint Arrangements), and IFRS 12 (Disclosure of Interests in Other Entities) including amendments to the transition guidance for IFRS 10-12 issued in June 2012: This new set of standards provides a single consolidation model that identifies control as the basis for consolidation for all types of entities, establishes principles for the financial reporting by parties to a joint arrangement, and combines, enhances and replaces the current disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a consequence of these new IFRSs, the IASB also issued amended and retitled IAS 27 (Separate Financial Statements) and IAS 28 (Investments in Associates and Joint Ventures). We will adopt the new set of standards for our 2013 Consolidated Financial Statements. The adoption of these standards will not have a material impact on our Consolidated Financial Statements.

IFRS 13 (Fair Value Measurement) defines fair value, sets out in a single IFRS a framework for measuring fair value, and requires disclosures about fair value measurements. The new standard becomes mandatory for our 2013 Consolidated Financial Statements and is not expected to have a significant impact on our Consolidated Financial Statements.

Amendments to IAS 1 (Presentation of Financial Statements), which become mandatory for the Group’s 2013 Consolidated Financial Statements, aim to improve and align the presentation of items of other comprehensive income in financial statements prepared in accordance with IFRS and U.S. GAAP, and will impact the presentation of items within the Consolidated Statements of Comprehensive Income. While not early-adopting the amendments to IAS 1, SAP already provides additional disclosures to enhance the reader’s insight into which elements of SAP’s cumulative other comprehensive income will, through recycling, impact profit or loss in the future.

Amendments to IAS 19 (Employee Benefits), which become mandatory for our 2013 Consolidated Financial Statements, aim to improve the understanding of how defined benefit plans affect an entity’s financial position, financial performance, and cash flows, and are likely to impact, for example, the amount of actuarial gains and losses that will impact profit and loss versus be allocated to other comprehensive income as remeasurements. The application of the revised standard will mainly

~~result in more types of obligations qualifying as “other long-term employee benefits” and additional disclosures.~~

~~Amendments to IAS 32 (Financial Instruments: Presentation) – Offsetting financial assets and financial liabilities, which become mandatory for~~

the Group’s 2014 Consolidated Financial Statements, aim to eliminate inconsistencies when applying the offsetting criteria and include some clarifications. We have not yet completed the determination of the extent of the impact on our Consolidated Financial Statements.

~~(4)~~

~~Business Combinations~~

~~In 2012, we concluded the following business combinations:~~

~~Acquired Businesses~~

~~Sector~~

~~Acquisition~~
~~Type~~

~~Acquired Voting~~
~~Interest~~

~~Acquisition Date~~

~~Purisma Inc,~~
~~Short Hills, NJ,~~
~~USA~~

~~Master Data Management Solution Business~~

~~Asset Deal~~

~~n/a~~

~~January 18, 2012~~

~~Datango AG,~~
~~Berlin, Germany~~

~~Solution for Workforce Performance Support~~

~~Asset Deal~~

~~n/a~~

~~February 7, 2012~~

~~SuccessFactors, Inc,~~
~~San Mateo, CA,~~
~~USA~~

~~Provider of cloud-based human capital management (HCM) solutions~~

~~Share Deal~~

~~100%~~

~~February 21, 2012~~

~~Syclo LLC,~~
~~Hoffman~~
~~Estates, Il, USA~~

~~Provider of enterprise mobile applications and technologies~~

~~Share Deal~~

~~100%~~

~~June 6, 2012~~

~~Ariba, Inc.,~~
~~Sunnyvale, CA,~~
~~USA~~

~~Provider of cloud-based business network solution~~

~~Share Deal~~

~~100%~~

~~October 1, 2012~~

In 2012, SuccessFactors and Ariba were material business combinations to SAP; the remaining business combinations were immaterial individually and in the aggregate. We acquire businesses in specific areas of strategic interest to us. In 2012, we complemented our existing product portfolio primarily with the acquisition of cloud and mobile solutions.

~~Acquisition of SuccessFactors~~

On February 21, 2012, we acquired more than 90% of the outstanding ordinary shares of SuccessFactors, Inc. (NYSE: SFSF). After the acceptance of the tender offer, we effected a short-form merger and acquired the remaining shares. SAP paid US$40.00 per share, representing consideration transferred of approximately €2.7 billion.

~~SuccessFactors is a provider of cloud-based human capital management (HCM) solutions. As a~~

result of the acquisition, we established ourselves as a provider of cloud applications, platforms, and infrastructure and were able to establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.

~~Acquisition of Ariba~~

On October 1, 2012, we acquired Ariba, Inc. (Nasdaq: ARBA), a leading cloud-based business network. SAP offered US$45.00 per share, representing consideration transferred of approximately €3.5 billion.

The acquisition combines Ariba’s buyer-seller collaboration network with SAP’s broad customer base and business process expertise to create new models for business-to-business collaboration in the cloud.

~~Financial Impact of Our Acquisitions as of the Acquisition Date~~

~~The following tables summarize the consideration transferred, and the values for~~ identifiable assets acquired and liabilities assumed asinvolves considerable management judgment. The necessary measurements are based on information available on the acquisition date and are based on

–

Subsequent negative changes in the estimated fair values of assets may result in additional expense from impairment charges.

–

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 ~~acquisition date.~~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

–

Both the amortization period and the amortization method have an impact on the amortization expense that is recorded in each period.

~~Consideration Transferred~~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 weighted-average 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

€ millions    2012    Thereof
SuccessFactors
Thereof
Ariba

Cash
   6,237       2,659       3,424
Liabilities incurred
   158       59       91
Total consideration transferred
   6,395       2,717       3,515

Ofsegments. This allocation involves judgment as it is based on our estimates regarding which operating segments are expected to benefit from the ~~total~~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 liabilities incurred, €144 million relate to the earned portion of unvested share-based payment awards. These liabilities were incurred, by replacing, upon acquisition, equity-settled share-based payment awards held by employees of SuccessFactors and Ariba with cash-settled share-based payment awards, which are subject to forfeiture. The potential amounts of all future payments that SAP could be required to make under these share-based payments is between €90 million and €158 million. The respective liabilities represent the portion of the replacement awards that relates to pre-acquisition services provided by the acquiree’s employees and were measured, at the

~~fair value determined under IFRS 2 as required by IFRS 3.~~our recognized goodwill. For more information about ~~these share-based payments,~~the goodwill allocation and impairment testing, see Note ~~(27)~~(15).

~~The acquisition-related costs incurred totaled €26 million in 2012 for our 2012 business combinations, all of which were recognized in general and administration expense.~~

The initial accounting for the Ariba acquisition is provisional in our financial statements with respect to tax-related assets and liabilities, contingent liabilities, as well as litigation and similar liabilities, as we are still validating our valuation assumptions.

~~Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed~~

€ millions    Total    Thereof
SuccessFactors
Thereof
Ariba

Cash and cash equivalents
   249       80       168
Other financial assets
   52       9       43
Trade and other receivables
   134       60       72
Other non-financial assets
   26       12       14
Property, plant, and equipment
   36       10       25
Intangible assets
   1,734       786       901
Thereof customer relationship and other intangibles
   1,152       493       646
Customer relationship
   939       400       528
Trade name
   48       24       23
Other intangible assets
   165       69       94
Thereof acquired technology
   578       290       255
Thereof software and database licenses
   4       3       0
Current and deferred tax assets
   68       7       59
Total identifiable assets
   2,299       965       1,282
Trade accounts payable
   68       23       43
Loans and borrowings
   1       1       0
Current and deferred tax liabilities
   159       152       7
Provisions and other non-financial liabilities
   103       33       67
Deferred revenue
   212       132       77
Total identifiable liabilities
   543       341       194
Total identifiable net assets
   1,756       624       1,088
Goodwill
   4,639       2,094       2,427
Total consideration transferred
   6,395       2,717       3,515

~~Valuation of Trade Receivables Acquired~~

~~The fair value of trade receivables acquired has been estimated as follows:~~

~~Valuation of Trade Receivables Acquired~~

€ millions    Value as at
Acquisition
Date    Thereof
SuccessFactors    Thereof
Ariba
Gross carrying amount
   136       62       72
Allowance for doubtful accounts
   2       2       0
Fair value of receivables
   134       60       72

~~Impact of Material Business Combinations on Our Financials~~

~~The amounts of revenue and profit or loss of the material businesses acquired in 2012 since the acquisition date included in the consolidated income statements for the reporting period are as follows:~~

~~Impact of Material Business Combinations~~

€ millions    2012 as
Reported    Thereof
SuccessFactors
Thereof
Ariba

Revenue
   16,223       236       80
Profit after tax
   2,823       –117       –31

~~Proforma Financial Information for Material Business Combinations~~

~~Had SuccessFactors and Ariba been consolidated as of January 1, 2012, our consolidated income statements for the reporting period would have presented the following amounts:~~

~~Proforma Financial Information~~

€ millions    2012
Proforma    Thereof
SuccessFactors
Thereof
Ariba

Revenue
   16,865       269       373
Profit after tax
   2,587       –150       –86

~~These amounts were calculated after applying the Company’s accounting policies and after adjusting the results for SuccessFactors and Ariba to reflect the following:~~

~~Additional depreciation and amortization that would have been charged assuming the fair value adjustment to property, plant, and equipment and intangible assets had been applied from January 1, 2012~~

~~The impact of deferred revenue write-downs on a full-year basis~~

~~The borrowing costs on the funding levels and debt/equity position of the company after the business combination~~

~~Related tax effects~~

These proforma numbers have been prepared for comparative purposes only. The proforma revenue and profit numbers are not necessarily indicative of either the results of operations that would have actually occurred had the acquisition been in effect at the beginning of the respective periods or of future results.

~~Prior year acquisitions are described in the Consolidated Financial Statements in our 2011 Annual Report.~~

~~(5)~~

~~Revenue~~

~~For detailed information about our revenue recognition policies, see Note (3).~~

~~For revenue information by segment and geographic region, see Note (28).~~

Revenue from construction-type contracts (contract revenue) is included in software revenue and consulting revenue depending on the type of project. The status of our construction projects in progress at the end of the reporting period accounted for under IAS 11 was as follows:

~~Construction Projects in Progress~~

€ millions    2012    2011    2010
Revenue recognized in the respective year
   196       172       141
Aggregate cost recognized (multi-year)
   255       229       163
Recognized result (+profit/-loss; multi-year)
   2       14       17
Advance payments received
   3       5       5
Gross amounts due from customers
   7       20       21
Gross amounts due to customers
   15       44       35
Loss provisions
   34       27       28

~~(6)~~

~~Other Operating Income/Expense, Net~~

~~Other operating income/expense, net, was as follows:~~

~~Other Operating Income/Expense, Net~~

€ millions    2012    2011    2010
Miscellaneous other operating expenses
   –3       –3       –5
Gain/loss on disposals of non-current assets
   –5       18       3
Miscellaneous other operating income
   31       10       11
Other operating income/expense, net
   23       25       9

~~(7)~~

~~Employee Benefits Expense and Headcount~~

~~Employee Benefits Expense~~

~~Employee benefits expense comprises the following:~~

~~Employee Benefits Expense~~

€ millions    2012    2011    2010
Salaries
   5,706       4,939       4,383
Social security expense
   777       642       607
Pension expense
   190       176       149
Share-based payment expense
   522       68       58
Termination benefits
   61       59       63
Employee-related restructuring expense
   6       0       1
Employee benefits expense
   7,262       5,884       5,261

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.

~~Number of Employees~~

~~On December 31, 2012, the breakdown of our full-time equivalent employee numbers by function in SAP and by region was as follows:~~

~~Number of Employees~~

December 31, 2012 December 31, 2011 December 31, 2010
Full-time equivalents EMEA⁽¹⁾ Americas Asia
Pacific
Japan Total EMEA⁽¹⁾ Americas Asia
Pacific
Japan Total EMEA⁽¹⁾ Americas Asia
Pacific
Japan Total
Software and software-related services
4,559    2,628    3,364    10,551    4,068    2,079    2,816    8,963    3,804    1,827    2,254    7,885
Professional services and other services
7,020    4,399    2,840    14,259    6,808    3,963    2,497    13,268    6,787    3,955    2,410    13,152
Research and development
8,952    3,672    5,388    18,012    8,713    3,028    4,120    15,861    8,617    3,154    4,113    15,884
Sales and marketing
5,697    6,220    2,982    14,899    4,856    4,581    2,343    11,780    4,593    4,214    2,180    10,987
General and administration
2,243    1,383    660    4,286    2,073    1,120    542    3,735    2,053    1,005    518    3,576
Infrastructure
1,286    821    308    2,415    1,182    702    274    2,158    1,135    628    266    2,029
SAP Group (December 31)
29,757    19,123    15,542    64,422    27,700    15,473    12,592    55,765    26,989    14,783    11,741    53,513
Thereof acquisitions
791    2,987    1,038    4,816    264    49    90    403    1,174    1,975    1,084    4,233
SAP Group (months’ end average)
29,009    17,619    14,506    61,134    27,296    15,010    12,040    54,346    25,929    13,164    10,877    49,970

⁽¹⁾	~~Europe, Middle East, Africa~~

~~The increase of our full-time equivalent employee numbers in 2012 was mainly due to the acquisition of SuccessFactors in February 2012 and Ariba in October 2012.~~

~~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 expense items is as follows:~~

Share-Based Payments

€ millions    2012    2011    2010
Cost of software and software-related services
   42       5       4
Cost of professional services and other services
   104       11       9
Research and development
   125       16       19
Sales and marketing
   123       15       16
General and administration
   127       21       10

Share-based payments
   522       68       58
Thereof cash-settled share-based payments
   450       33       29
Thereof equity-settled share-based payments
   72       35       29

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.

Derivatives

Derivatives Not Designated as Hedging Instruments

In addition, we occasionally have contracts that contain foreign currency embedded derivatives to be accounted for separately.

Derivatives Designated as Hedging Instruments

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.

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

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

Trade and Other Receivables

~~(8)~~–

~~Other Non-Operating Income/Expense, Net~~

–

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-operating~~Non-Financial Assets

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 straight-line method.

Useful Lives of Property, Plant, and Equipment


Buildings		25 to 50 years
Leasehold improvements		Based on the term of the lease contract
Information technology equipment		3 to 5 years
Office furniture		4 to 20 years
Automobiles		4 to 5 years

Impairment of Goodwill and Non-Current Assets

Impairment losses are presented in other operating income/expense, net in profit or loss.

Liabilities

Financial Liabilities

Expenses and gains/losses on financial liabilities mainly consist of interest expense, which is recognized based on the effective interest method.

Provisions

Post-Employment Benefits

liability’s carrying amount to the fair value of the qualifying plan assets. Such adjustments are recorded in service cost.

Deferred Income

(3c) Management Judgments and Sources of Estimation Uncertainty

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

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.

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

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.

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 on-premise 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.

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.

Valuation of Trade Receivables

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.

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

–

Subsequent negative changes in the estimated fair values of assets may result in additional expense from impairment charges.

–

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

–

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 weighted-average 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

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

–

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.

–

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.

(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).

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
Aggregate cost recognized(multi-year)		294		201		221
Recognized result (+ profit/– loss; multi-year)		20		92		87

(6) RESTRUCTURING


€ millions	2015		2014		2013
Employee-related restructuring expenses		610		119		57
Onerous contract-related restructuring expenses		11		7		13
Restructuring expenses		621		126		70

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 cost-intensive 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).

If not presented separately in our income statement, restructuring expenses would break down by functional area as follows:

~~Other Non-Operating Income/Expense, Net~~Restructuring Expenses by Functional Area

€ millions 2012 2011 2010
Foreign currency exchange gain/loss, net
–154    –58    –175
Thereof from financial assets/liabilities at fair value through profit or loss
–102    44    44
Thereof from available for sale financial assets
–2    0    0
Thereof from loans and receivables
–32    –177    –293
Thereof from financial liabilities at amortized cost
–20    79    75
Thereof from non-financial assets/liabilities
2    –4    –1
Miscellaneous other non-operating income
4    2    3
Miscellaneous other non-operating expense
–23    –19    –14
Other non-operating income/expense, net
–173    –75    –186


€ millions	2015		2014		2013
Cost of cloud and software		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

(7) EMPLOYEE BENEFITS EXPENSE AND HEADCOUNT

Employee Benefits Expense

~~(9)~~

~~Financial Income, Net~~


€ 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
Employee benefits expense		10,170		7,877		7,489

~~Financial Income,~~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


Full-time equivalents	December 31, 2015								December 31, 2014								December 31, 2013
Full-time equivalents	EMEA		Americas		APJ		Total		EMEA		Americas		APJ		Total		EMEA		Americas		APJ		Total
Cloud and software		6,095		3,920		4,976		14,991		5,953		3,983		5,138		15,074		4,859		2,861		3,541		11,261
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 (December 31)		33,906		22,166		20,914		76,986		33,340		22,071		18,995		74,406		30,993		19,568		16,011		66,572
Thereof acquisitions		73		0		0		73		814		2,890		1,831		5,535		511		571		29		1,111
SAP Group (months’ end average)		33,561		21,832		19,788		75,180		31,821		19,797		16,725		68,343		30,238		19,418		15,752		65,409

Allocation of Share-Based Payment Expense

The allocation of expense for share-based payments, net ~~was~~of the effects from hedging these instruments, to the various operating expense items is as follows:

~~Financial Income, Net~~Share-Based Payments

€ millions    2012    2011    2010
Finance income

Interest income from

available-for-sale financial assets (debt)
   1       2       0
loans and receivables
   49       62       34
derivatives
   27       37       25
Gains on

available-for-sale financial assets (debt)
   0       1       2
available-for-sale financial assets (equity)
   30       12       9
Share of result of associates
   0       9       3
Finance income
   107       123       73
Finance cost

Interest expense from

financial liabilities at amortized cost
   –130       –123       –77
derivatives
   –28       –37       –31
TomorrowNow litigation
   –1       8       –12
Losses on

available-for-sale financial assets (equity)
   –1       0       –1
Impairment losses from

available-for-sale financial assets (equity)
   –7       –2       –3
Fee expenses
   –8       –7       –16
Finance cost
   –175       –161       –140
Financial income, net
   –68       –38       –67


€ millions	2015		2014		2013
Cost of cloud and software		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
Share-based payments		724		290		327
Thereof cash-settled share-based payments		637		193		240
Thereof equity-settled share-based payments		87		96		87

For more information about our share-based payments, see Note (27).

(8) OTHER NON-OPERATING INCOME/EXPENSE, NET
€ millions    2015    2014    2013
Foreign currency exchange gain/loss, net    –230       71       4
Thereof from financial assets/liabilities at fair value through profit or loss
   –12       83       –75
Thereof from available for sale financial assets
   –1       0       0
Thereof from loans and receivables
   –213       –219       184
Thereof from financial liabilities at amortized cost
   –2       226       –105
Thereof from non-financial assets/liabilities
   –3       –13       0
Miscellaneous income
   1       3       1
Miscellaneous expense
   –27       –25       –22
Other non-operating
income/expense, net    –256    49       –17
(9) FINANCIAL INCOME, NET
€ millions    2015    2014    2013
Finance income
   241       127       115
Thereof available-for-sale financial assets (equity)
   176       30       46
Finance costs
   –246    –152       –181
Thereof interest expense from financial liabilities at amortized cost
   –135       –93       –131
Thereof interest expense from derivatives
   –72       –28       –23
Financial income, net
   –5    –25       –66
(10) INCOME TAX
~~Income Tax~~

~~Income tax expense for the years ended December 31 is attributable to the following regions:~~

Tax Expense According to Region

€ millions    2012    2011    2010
Current tax expense

Germany
   699       635       413
Foreign
   506       521       459
Total current tax expense
   1,205       1,156       872
Deferred tax expense/income

Germany
   –5       –12       23
Foreign
   –200       185       –370
Total deferred tax expense/income
   –205       173       –347
Total income tax expense
   1,000       1,329       525

~~Income tax expense for the years ended December 31 comprised the following components:~~


€ millions	2015		2014		2013
Current tax expense
Germany		859		770		836
Foreign		408		422		326
Total current tax expense		1,267		1,192		1,162
Deferred tax expense/income
Germany		–74		84		51
Foreign		–258		–201		–142
Total deferred tax income		–332		–117		–91
Total income tax expense		935		1,075		1,071

Major Components of Tax Expense


€ millions	2012		2011		2010		2015		2014		2013
Current tax expense
Current tax expense/income
Tax expense for current year		1,172		1,152		862		1,278		1,168		1,249
Taxes for prior years		33		4		10		–11		24		–87
Total current tax expense		1,205		1,156		872		1,267		1,192		1,162
Deferred tax expense/income
Origination and reversal of temporary differences		–258		162		–388		–428		–126		–168
Unused tax losses, research and development tax credits and foreign tax credits		53		11		41
Total deferred tax expense/income		–205		173		–347
Unused tax losses, research and development tax credits, and foreign tax credits								96		9		77
Total deferred tax income								–332		–117		–91
Total income tax expense		1,000		1,329		525		935		1,075		1,071

~~Profit before tax for the years ended December 31 consisted of the following:~~

Profit Before Tax

€ millions    2012    2011    2010
Germany
   2,482       2,323       2,009
Foreign
   1,342       2,445       329
Total
   3,824       4,768       2,338

€ millions    2015    2014    2013
Germany
   3,161       3,338       3,126
Foreign
   830       1,017       1,270
Total
   3,991       4,355       4,396

The following table reconciles the expected income tax expense computed by applying our combined German tax rate of ~~26.47% (2011: 26.34%~~26.4% (2014: 26.4%; ~~2010: 26.29%~~2013: 26.4%) to the actual income tax expense. Our ~~2012~~2015 combined German tax rate includes a corporate income tax rate of ~~15.00% (2011: 15.00%~~15.0% (2014: 15.0%; ~~2010: 15.00%~~2013: 15.0%), plus a solidarity surcharge of 5.5% (2014: 5.5%; 2013: 5.5%) thereon, and trade taxes of ~~10.64% (2011: 10.51%~~10.6% (2014: 10.6%; ~~2010: 10.46%~~2013: 10.6%).

Relationship Between Tax Expense and Profit Before Tax

€ millions, unless otherwise stated    2012    2011    2010
Profit before tax
   3,824       4,768       2,338
Tax expense at applicable tax rate of 26,47% (2011: 26.34%; 2010: 26.29%)
   1,012       1,256       615
Tax effect of:

Foreign tax rates
   –114       77       –68
Non-deductible expenses
   111       89       101
Tax exempt income
   –169       –149       –96
Withholding taxes
   71       93       39
Research and development and foreign tax credits
   –29       –33       –53
Prior-year taxes
   15       –25       –27
Reassessment of deferred tax assets, research and development tax credits, and foreign tax credits
   31       0       11
Other
   72       21       3
Total income tax expense
   1,000       1,329       525
Effective tax rate in %
   26.2       27.9       22.5

~~Deferred tax assets and liabilities on a gross basis as at December 31 are attributable to the following items:~~


€ 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
Tax effect of:
Foreign tax rates		–126		–117		–116
Non-deductible expenses		61		63		158
Tax exempt income		–103		–86		–146
Withholding taxes		115		111		87
Research and development and foreign tax credits		–31		–41		–41
Prior-year taxes		–55		–10		–113
Reassessment of deferred tax assets, research and development tax credits, and foreign tax credits		43		41		60
Other		–24		–37		21
Total income tax expense		935		1,075		1,071
Effective tax rate (in %)		23.4		24.7		24.4

Recognized Deferred Tax Assets and Liabilities

€ millions    2012    2011
Deferred tax assets

Intangible assets
   118       68
Property, plant, and equipment
   36       16
Other financial assets
   2       12
Trade and other receivables
   34       23
Net operating loss carryforwards
   570       57
Pension provisions
   77       104
Share-based payments
   102       31
Other provisions and obligations
   306       286
Deferred income
   46       44
Research and development and foreign tax credits
   37       17
Other
   141       103
Deferred tax assets
   1,469       761
Deferred tax liabilities

Intangible assets
   853       421
Property, plant, and equipment
   55       58
Other financial assets
   382       210
Trade and other receivables
   28       15
Pension provisions
   4       37
Share-based payments
   2       0
Other provisions and obligations
   2       1
Deferred income
   21       3
Other
   36       25
Deferred tax liabilities
   1,383       770
Deferred tax assets/liabilities, net
   86       –9


€ millions	2015		2014
Deferred tax assets
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
Total deferred tax assets		1,955		1,869
Deferred tax liabilities
Intangible assets		1,234		1,241
Property, plant, and equipment		62		51
Other financial assets		389		623
Trade and other receivables		93		69
Pension provisions		5		4
Share-based payments		4		3
Other provisions and obligations		112		118
Deferred income		40		11
Other		11		9
Total deferred tax liabilities		1,950		2,129
Total deferred tax assets/liabilities, net		5		–260

~~The~~We retrospectively adjusted the provisional amounts recognized for deferred tax assets and ~~deferred tax~~ liabilities ~~especially on net operating loss carryforwards, intangible assets and other financial assets, increased mainly because of our~~related to the 2014 business combinations ~~in 2012. The~~by a corresponding increase in ~~deferred tax liabilities is caused by significant differences between the fair values of the acquired assets and assumed liabilities and their respective tax bases.~~

~~Current income tax payments were reduced in 2012~~goodwill in the amount of ~~€4 million (2011: €53 million; 2010: €1 million) due to~~€102 million. The adjustments reflect new information obtained about facts and circumstances as of the ~~TomorrowNow litigation.~~acquisition date, mainly about the valuation of the carrying amount of investments in subsidiaries and the utilization of carryforwards of unused tax losses.

~~Deferred tax assets have not been recognized in respect of the following items for the years ended December 31:~~

Items Not Resulting in a Deferred Tax Asset


€ millions	2012		2011		2010		2015		2014		2013
Unused tax losses
Not expiring		49		38		9		279		140		68
Expiring in the following year		6		10		5		95		63		43
Expiring after the following year		1,260		93		103		704		672		525
Total unused tax losses		1,315		141		117		1,078		875		636
Deductible temporary differences		202		30		21		122		96		178
Unused research and development and foreign tax credits
Not expiring		32		17		21		34		32		25
Expiring in the following year								0		0		1
Expiring after the following year		36		3		2		20		22		1
Total unused tax credits		68		20		23		54		54		27

The increase in items for which a deferred tax asset has not been recognized results mainly from our business combinations in 2012. For most of the underlying tax benefits it is uncertain that they can be utilized due to regulations of local tax law. €967€429 million ~~(2011: €34~~(2014:€441 million; ~~2010: €23~~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 ~~€5.84~~€9.95 billion ~~(2011: €5.54~~(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.

The proposed dividend payment of ~~€0.85~~€1.15 per share for the year ended December 31, ~~2012,~~2015, will not have any effects on the income tax of SAP ~~AG.~~

~~Total income tax including the items charged or credited directly to share premium and other comprehensive income for the years ended December 31 consists of the following:~~SE.

Total Income Tax

€ millions    2012    2011    2010
Income tax recorded in profit
   1,000       1,329       525
Income tax recorded in share premium
   –4       –10       –1
Income tax recorded in other comprehensive income that will not be reclassified to profit and loss

Actuarial gains/losses on defined benefit pension plans
   –4       –5       –18
Income tax recorded in other comprehensive income that will be reclassified to profit and loss

Gains/losses on cash flow hedges
   17       –1       –5
Currency effects
   3       –6       5
Total
   1,012       1,307       506


€ millions	2015		2014		2013
Income tax recorded in profit		935		1,075		1,071
Income tax recorded in share premium		–14		–3		–5
Income tax recorded in other comprehensive income that will not be reclassified to profit and loss
Remeasurements on defined benefit pension plans		–2		–7		3
Income tax recorded in other comprehensive income that will be reclassified to profit and loss
Available-for-sale financial assets		2		0		0
Cash flow hedges		4		–10		0
Exchange differences		–16		–21		8
Total		909		1,034		1,077

~~The income tax recorded in share premium relates to our equity-settled share-based payment.~~

We are subject to ongoing tax audits by domestic and foreign tax authorities. ~~As a result of the tax audit of SAP AG and its German subsidiaries for the years 2003 through 2006,~~Currently, we are mainly in dispute with the German and the Brazilian tax ~~authorities~~authorities. The German dispute is in respect of intercompany financing ~~matters. We strongly disagree with~~matters and certain secured capital investments, while the ~~tax authorities’ position and intend to vigorously contest it. Currently,~~Brazilian dispute is in respect of license fee deductibility. In all cases, we expect that we will need to initiate litigation to prevail. WeFor all of these matters, we have not recorded a provision ~~for this matter~~ as we believe that the tax authorities’ ~~claim has~~claims have no merit and that no adjustment is warranted. If, contrary to our view, the ~~German~~ tax authorities

were to prevail in their arguments before the court, we would expect to have an additional tax expense (including related interest ~~expense) for the tax audit period 2003 through 2006~~expenses and ~~for the following years 2007 through 2012~~penalties) of approximately ~~€148~~€1,045 million in total.

~~(11)~~

~~Earnings per Share~~

Restricted shares (the bonus shares in the Share Matching Plan as discussed in Note (27) below) granted to employees under our share-based payments are included in the diluted earnings per share calculations to the extent they have a dilutive effect.

~~Earnings per share for the years ended December 31 was calculated as follows:~~

~~Earnings per Share~~(11) EARNINGS PER SHARE

€ millions, unless otherwise stated    2012    2011    2010
Profit attributable to owners of parent
   2,823       3,438       1,811
Issued ordinary shares
   1,229       1,227       1,226
Effect of treasury shares
   –37       –38       –38
Weighted average shares – basic⁽¹⁾
   1,192       1,189       1,188
Dilutive effect of share-based payments⁽¹⁾
   1       1       1
Weighted average shares – diluted⁽¹⁾
   1,193       1,190       1,189
Basic earnings per share, in €, attributable to owners of parent
   2.37       2.89       1.52
Diluted earnings per share, in €, attributable to owners of parent
   2.37       2.89       1.52


€ 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
Effect of treasury shares¹⁾		–32		–34		–35
Weighted average shares outstanding, basic¹⁾		1,197		1,195		1,193
Dilutive effect of share-based payments¹⁾		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

⁽¹⁾	¹⁾Number of shares in millions

~~(12)~~

~~Other Financial Assets~~

~~Other financial assets as at December 31 were as follows:~~

~~Other Financial Assets~~(12) OTHER FINANCIAL ASSETS


	2012						2011
€ millions													2015						2014
€ millions	Current		Non-Current		Total		Current		Non-Current		Total		Current		Non-Current		Total		Current		Non-Current		Total
Loans and other financial receivables		35		332		367		269		313		582		195		243		437		173		286		459
Debt investments		15		14		29		400		0		400		26		0		26		40		0		40
Equity investments		0		201		201		0		161		161		1		881		882		1		596		597
Available-for-sale financial assets		15		215		230		400		161		561		27		881		908		41		596		637
Derivatives		104		40		144		148		17		165		129		154		283		464		90		554
Investments in associates		0		46		46		0		47		47		0		58		58		0		49		49
Total		154		633		787		817		538		1,355		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 ~~insurance policies relating to~~ pension assets ~~(semi-~~

~~retirement and time accounts)~~ for which the corresponding liability is included in employee-related obligations (see Note (18b)), other receivables, and loans to ~~employees.~~employees and third parties. The majority of our loans and other financial receivables isare concentrated in ~~Germany.~~the United States.

As at December 31, ~~2012,~~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 onabout 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 non-financial corporations and municipalities and equity investments in listed and unlisted ~~securities.~~

securities, mainly held in U.S. dollars.

~~These available-for-sale financial assets are denominated in the following currencies:~~

~~Currencies of Available-for-Sale Financial Assets~~

€ millions    2012    2011
Euros
   36       432
U.S. dollars
   185       123
Other
   9       6
Total
   230       561

Our equity investments include securities measured at cost because they do not have a quoted market price and fair value cannot be reliably measured. These equity investments had a carrying value of €149 million and €122 million as at December 31, 2012, and 2011, respectively. Effects from impairment losses, reclassifications, and gains/losses from sales of such equity investments were immaterial for all periods presented.

~~As of December 31, 2012, we have no plans to sell any equity investments at cost in the near future.~~ For more information onabout fair value measurement with regard to our equity investments, ~~at cost,~~ see Note (26).

Derivatives

Detailed information about our derivative financial instruments is presented in Note (25).

~~(13)~~

~~Trade and Other Receivables~~

~~Trade and other receivables were as follows:~~

~~Trade and Other Receivables~~(13) TRADE AND OTHER RECEIVABLES


	2012						2011
€ millions													2015						2014
€ millions	Current		Non-Current		Total		Current		Non-Current		Total		Current		Non- Current		Total		Current		Non- Current		Total
Trade receivables, net		3,837		0		3,837		3,431		0		3,431		5,198		2		5,199		4,253		2		4,255
Other receivables		80		88		168		62		84		146		77		86		163		89		99		188
Total trade and other receivables		3,917		88		4,005		3,493		84		3,577
Total														5,275		87		5,362		4,342		100		4,443

~~The carrying amounts of our trade receivables as at December 31 are as follows:~~

Carrying Amounts of Trade Receivables

€ millions    2012    2011
Gross carrying amount
   3,943       3,566
Sales allowances charged to revenue
   –73       –94
Allowance for doubtful accounts charged to expense
   –33       –41
Carrying amount trade receivables, net
   3,837       3,431

€ millions 2015 2014
Gross carrying amount
5,428    4,440
Sales allowances charged to revenue
–153    –134
Allowance for doubtful accounts charged to expense –75    –52
Carrying amount trade receivables, net 5,199    4,255

The changes in the allowance for doubtful accounts charged to expense were immaterial in all periods presented.

~~Concentrations of credit risks are limited due to our large customer base and its distribution across many different industries and countries worldwide.~~

~~The aging of trade receivables as at December 31 was:~~

Aging of Trade Receivables

€ millions    2012    2011
Not past due and not individually impaired
   3,068       2,803
Past due but not individually impaired

Past due 1-30 days
   368       308
Past due 31-120 days
   246       163
Past due 121-365 days
   90       58
Past due over 365 days
   14       13
Total past due but not individually impaired
   718       542
Individually impaired, net of allowances
   51       86
Carrying amount of trade receivables, net
   3,837       3,431

~~We believe that the recorded sales and bad debt allowances adequately provide for the credit risk inherent in trade receivables.~~


€ millions	2015		2014
Not past due and not individually impaired		3,918		3,362
Past due but not individually impaired
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
Total past due but not individually impaired		1,196		818
Individually impaired, net of allowances		85		75
Carrying amount of trade receivables, net		5,199		4,255

For more information about financial risk and how we manage it, see Notes (24) and (25).

~~(14)~~

~~Other Non-Financial Assets~~

~~Other Non-Financial Assets~~(14) OTHER NON-FINANCIAL ASSETS


	2012						2011
€ millions													2015						2014
€ millions	Current		Non-Current		Total		Current		Non-Current		Total		Current		Non-Current		Total		Current		Non-Current		Total
Prepaid expenses		149		68		217		95		39		134		232		83		315		212		66		277
Other tax assets		74		0		74		68		0		68		113		0		113		101		0		101
Advance payments		11		0		11		11		0		11
Inventories		59		0		59		11		0		11
Capitalized contract cost														77		250		327		90		99		188
Miscellaneous other assets		1		0		1		2		0		2		46		0		46		33		0		33
Total other non-financial assets		294		68		362		187		39		226
Total														468		332		800		435		164		599

Prepaid expenses primarily consist of prepayments for operating leases, support services, and software ~~royalties that will be recognized as an expense in future periods.~~royalties.

~~(15)~~ ~~Goodwill and Intangible Assets~~

~~Goodwill and Intangible Assets~~(15) GOODWILL AND INTANGIBLE ASSETS


€ millions	Goodwill		Software and Database Licenses		Acquired Technology/ IPRD		Customer Relationship and Other Intangibles		Total		Goodwill		��	Software and Database Licenses		Acquired Technology/ IPRD		Customer Relationship and Other Intangibles		Total
Historical cost
January 1, 2011		8,524		417		1,240		1,903		12,084
January 1, 2014												13,785			558		1,929		3,036		19,308
Foreign currency exchange differences		117		1		19		28		165		1,242			13		160		297		1,712
Additions from business combinations		172		1		26		11		210		6,072			14		540		1,312		7,938
Other additions		0		76		0		0		76		0			86		0		2		88
Retirements/disposals		–5		–6		–18		–12		–41		0			–4		–42		–3		–49

December 31, 2011		8,808		489		1,267		1,930		12,494

December 31, 2014												21,099			667		2,587		4,644		28,997
Foreign currency exchange differences		–77		–2		–3		–27		–109		1,666			15		204		379		2,264
Additions from business combinations		4,639		4		578		1,152		6,373		27			0		6		5		38
Other additions		0		60		0		0		60		0			53		0		6		59
Retirements/disposals		0		–18		–64		–1		–83		0			–8		–1		–1		–10

December 31, 2012		13,370		533		1,778		3,054		18,735
December 31, 2015												22,792			727		2,796		5,033		31,348

Accumulated amortization
January 1, 2011		96		249		527		408		1,280
January 1, 2014												95			367		1,071		1,129		2,662
Foreign currency exchange differences		1		0		12		13		26		4			7		73		81		165
Additions amortization		0		49		171		266		486		0			78		255		282		615
Retirements/disposals		0		–3		–18		–12		–33		0			–4		–42		–3		–49

December 31, 2011		97		295		692		675		1,759

December 31, 2014												99			448		1,357		1,489		3,393
Foreign currency exchange differences		–1		–3		–6		–8		–18		4			10		84		89		187	��
Additions amortization		0		57		192		316		565		0			76		372		361		809
Retirements/disposals		0		–14		–64		–1		–79		0			–8		–1		–1		–10
Transfers		0		0		29		–29		0
December 31, 2015												103			526		1,812		1,938		4,379

December 31, 2012		96		335		843		953		2,227

Carrying value December 31, 2011		8,711		194		575		1,255		10,735

Carrying value December 31, 2012		13,274		198		935		2,101		16,508
Carrying amount
December 31, 2014												21,000			219		1,230		3,155		25,604
December 31, 2015												22,689			201		984		3,095		26,969

The additions, other than from business combinations, to software and database licenses in ~~2012~~2015 and ~~2011~~2014 were individually acquired from third parties and include cross-license agreements and ~~patents, whereas the additions to acquired technology and other intangibles primarily result from our business combinations discussed in Note (4).~~patents.

~~We carry the following significant intangible assets:~~

Significant Intangible Assets

      Carrying Amount
in € Millions    Remaining Useful
Life in Years
      2012    2011
Business Objects – Maintenance-related customer relationships
   181       215       9-12
Sybase – Acquired Technologies
   330       435       2-4
Sybase – Customer Relationships: Maintenance
   581       706       10
Sybase – Customer Relationships: Messaging and License
   109       173       1-8
SuccessFactors – Acquired Technologies
   260       0       7
SuccessFactors – Backlog subscription
   62       0       4
SuccessFactors – Customer Relationships: Subscription
   404       0       14
Ariba – Acquired Technologies
   238       0       8
Ariba – Customer Relationships
   508       0       13-15
Ariba – Backlog: Subscription and Network
   83       0       6
Total significant intangible assets
   2,756       1,529


€ millions, unless otherwise stated	Carrying Amount				Remaining Useful Life (in years)
€ millions, unless otherwise stated	2015		2014		Remaining Useful Life (in years)
Business Objects – Customer relationships: Maintenance		104		126		6 to 9
Sybase – Acquired technologies		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
Fieldglass – Acquired technologies		89		96		7
Concur – Acquired technologies		387		445		6
Concur – Customer relationships		1,299		1,233		15 to 19
Total significant intangible assets		3,755		3,999

~~In 2012 the composition of SAP’s~~

Goodwill Impairment Testing

SAP had two operating segments ~~changed: In January 2012,~~in 2015 (in 2014, we ~~integrated the activities of the Sybase segment into the segments Product, Consulting and Training. The reallocation of the Sybase goodwill was done on~~had a relative fair value basis. In the third quarter of 2012, the segments Consulting and Training were combined to form the segment On-Premise Services. In addition, the Cloud Application segment and the Ariba segment were established in the third and fourth quarter of 2012, respectively. For more information about our segments see Note (28)single operating segment).

The carrying amount of goodwill ~~by segments at December 31, 2012, and 2011, was as follows:~~has been allocated for impairment testing purposes to SAP’s operating segments.

Goodwill by Operating Segment


€ millions	Segments per December 31, 2012						Segments per December 31, 2011						Applications, Technology & Services		SAP Business Network		Single Segment (2014)		Unallocated		Total
		On- Premise Products	On- Premise Services	Cloud Applications	Ariba	Total		Product	Consulting	Training	Sybase	Total
January 1, 2012								5,206	781	176	2,548	8,711
Reallocations due to changes in segment composition		7,415	1,118	34	145	8,711		–5,206	–781	–176	–2,548	–8,711
January 1, 2015, prior to adjustment														0		0		15,412		5,533		20,945
Adjustment														0		0		–31		86		55
January 1, 2015, after adjustment														0		0		15,381		5,619		21,000
Reallocation due to changes in segment composition														14,401		6,599		–15,381		–5,619		0
Additions from business combinations		109	9	2,094	2,427	4,639								27		0		0		0		27
Foreign currency exchange differences		–62	–5	39	–49	–76								1,070		592		0		0		1,662

December 31, 2012		7,462	1,122	2,167	2,523	13,274		0	0	0	0	0
December 31, 2015														15,497		7,191		0		0		22,689

The amount unallocated on January 1, 2015, relates to the goodwill from the acquisition of Concur in December 2014.

~~Goodwill impairment testing~~

~~Testing of segments On-Premise Products, On-Premise Services and Cloud Applications~~

~~The recoverable~~Prior-year goodwill amounts ~~for the segments On-Premise Products, On-Premise Services and Cloud Applications~~ have been ~~determined based on “value in use” calculations. The calculations use cash flow projections based on actual operating results~~adjusted by€55 million relating mainly to tax and ~~a company-wide three-year business plan approved by management.~~non-controlling interest adjustments. For ~~the Cloud Application segment a eight-year business plan approved by management was used. The Cloud Application segment operates in a relatively~~

~~immature area with significant growth rates projected for the near future thus requiring a longer detailed planning period than the two other,~~ more mature segments. Cash flows for periods beyond these business plans were extrapolated using the segment-specific terminal growth rates disclosed in the table below. These terminal growth rates do not exceed the long-term average growth rates for the markets in which our operating segments operate. Our estimated cash flow projections are discounted to present value by means of the pre-tax discount rates disclosed in the table below together with the terminal revenue growth rates. These pre-tax discount rates are based on a weighted average cost of capital approach (WACC)information, see Note (10).

      On-Premise
Product On-Premise
Services Cloud
Applications
Pre-tax discount rates
   11.5 % 10.7 % 13.1 %
Terminal revenue growth rate
   2.9 % 2.1 % 3.4 %

The ~~recoverable amounts of the segments On-Premise Products, On-Premise Services and Cloud Applications are based on the following key assumptions. These~~ key assumptions on which management ~~has~~ based its cash flow projections for the period covered by the underlying business plans are as follows:


Key ~~assumption~~Assumption		Basis for ~~determining values assigned~~Determining Values Assigned to ~~key assumption~~ Key Assumption
Budgeted revenue growth		Revenue growth rate achieved in the current fiscal year, ~~increased~~adjusted for an expected increase in SAP’s addressable ~~market in the areas of~~ cloud, mobility, and database ~~as well as~~markets; expected growth in the established ~~categories of~~ applications and ~~analytics.~~analytics markets. Values assigned reflect our past experience ~~as well as~~and our expectations regarding an increase in the addressable ~~market.~~markets.
Budgeted operating margin		Operating margin budgeted for a given budget period equals the operating margin achieved in the current fiscal year, increased ~~for~~by expected efficiency ~~improvements.~~gains. Values assigned reflect past experience, except for efficiency ~~improvements.~~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, Technology & Services		SAP Business Network
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 ~~value~~amount of our ~~On-Premise Product or On-Premise~~Applications, Technology & Services segment to exceed ~~their respective~~the recoverable ~~amounts.~~amount.

SAP Business Network

The ~~Cloud Applications segment’s~~ recoverable ~~amount exceeds its carrying amount by €281 million. The projected cash flows for this~~amounts of the segment ~~are derived from the budgeted operating margins and~~have been determined based on fair value less costs of disposal calculations. The fair value measurement was categorized as a ~~range of revenue~~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 ~~rates of 14 – 51% during the eight-year~~rate thereafter. The calculations use cash flow projections based on actual operating results

and a group-wide five-year business plan approved by ~~management,~~management. The projected results were determined based on management’s estimates and are consistent with the ~~higher~~assumptions a market participant would make. The segment operates in a relatively immature area with significant growth rates ~~expected~~projected for the near future. We therefore have a longer and more detailed planning period than one would apply in ~~the earlier years. In addition, the cash flow projection depends on the Cloud Application segment becoming profitable and achieving an operating~~a more mature segment.

We are using a target margin of ~~26%~~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 ~~2020. If~~€1,764 million.

The following table shows amounts by which the ~~Cloud Applications~~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	SAP Business Network
Budgeted revenue growth (average of the budgeted period)		–2.1
Pre-tax discount rate		1.4
Terminal growth rate		–1.7

The recoverable amount for the SAP Business Network segment ~~does not achieve an operating~~would equal the carrying amount if a margin of at least 24% in the terminal growth period, the goodwill allocated to the segments might, in future periods, be subject to an impairment charge. In 2012, the segment slightly exceeded the cash flow projections established for 2012.

~~Testing of Ariba segment~~

~~The recoverable value of the Ariba segment~~only 27% was based on “fair value less cost to sell” calculations, using a market approach. The market approach assumes that companies operating in the same industry will share similar characteristics and that the cash generating unit’s value (in our case theachieved by 2022.

segment) will correlate to those characteristics. Therefore, a comparison of a cash generating unit to similar companies whose financial information is publicly available may provide a reasonable basis to estimate fair value. The Ariba segment consists primarily of the Ariba business acquired as of October 1, 2012. Due to the close proximity of the Ariba acquisition to our fiscal year-end, we believe that the calculations that were based on trading and transaction multiples of benchmark companies comparable to the business for this

~~recent acquisition represent the best estimate of fair value. The data gathered for the benchmark companies was obtained from publicly available information.~~(16) PROPERTY, PLANT, AND EQUIPMENT

The fair value for the Ariba segment based upon the market approach approximates its carrying amount. Consequently, any adverse change in key assumptions would, individually, cause an impairment loss to be recognized.


€ millions	Land and Buildings		Other Property, Plant, and Equipment		Advance Payments and Construction in Progress		Total
Carrying amount
December 31, 2014		1,010		1,050		42		2,102
December 31, 2015		1,053		1,073		66		2,192

~~Assumptions used in prior year~~

~~The following assumptions were used for the goodwill impairment test completed in 2011 for the segments existing in 2011:~~

      Product Consulting Training Sybase
Pre-tax discount rates
   12.7 % 12.1 % 12.6 % 13.6 %
Terminal revenue growth rate
   3.6 % 3.2 % 2.4 % 3.6 %

~~(16)~~

~~Property, Plant, and Equipment~~

€ millions Land and
Buildings
Other Property,
Plant, and
Equipment

Advance Payments
and Construction in
Progress
Total
Historical cost

January 1, 2011
1,336    1,393    10    2,739
Foreign currency exchange differences
7    3    0    10
Additions
29    337    6    372
Retirements/disposals
–19    –183    –1    –203
Transfers
7    1    –8    0

December 31, 2011
1,360    1,551    7    2,918

Foreign currency exchange differences
–12    –16    –1    –29
Additions from business combinations
13    22    1    36
Other additions
55    397    20    472
Retirements/disposals
–44    –236    –5    –285
Transfers
1    3    –4    0

December 31, 2012
1,373    1,721    18    3,112

Accumulated depreciation

January 1, 2011
425    865    0    1,290
Foreign currency exchange differences
4    1    0    5
Additions depreciation
47    191    0    238
Retirements/disposals
–16    –150    0    –166

December 31, 2011
460    907    0    1,367

Foreign currency exchange differences
–5    –12    0    –17
Additions depreciation
56    243    0    299
Retirements/disposals
–42    –203    0    –245

December 31, 2012
469    935    0    1,404

Carrying value

December 31, 2011
900    644    7    1,551

December 31, 2012
904    786    18    1,708

~~The~~Total additions (other than from business combinations) amounted to€580 million (2014:€629 million) and ~~disposals in other property, plant, and equipment~~ relate primarily to the replacement and purchase of computer hardware and vehicles acquired in the normal course of ~~business.~~

business and investments in data centers.

~~(17)~~ ~~Trade and Other Payables, Financial Liabilities, and Other Non-Financial Liabilities~~
(17) TRADE AND OTHER PAYABLES, FINANCIAL LIABILITIES, AND OTHER NON-FINANCIAL LIABILITIES

~~(17a)~~

~~Trade and Other Payables~~

~~Trade and other payables as at December 31 were as follows:~~

(17a) Trade and Other Payables


	2012						2011
€ millions													2015						2014
€ millions	Current		Non-Current		Balance on 12/31/2012		Current		Non-Current		Balance on 12/31/2011		Current		Non- Current		Total		Current		Non- Current		Total
Trade payables		684		0		684		727		0		727		893		0		893		782		0		782
Advance payments received		81		0		81		95		0		95		110		0		110		112		0		112
Miscellaneous other liabilities		105		63		168		115		43		158		85		81		166		138		55		193
Trade and other payables		870		63		933		937		43		980		1,088		81		1,169		1,032		55		1,087

Miscellaneous other liabilities mainly include ~~mainly~~ deferral amounts for free rent periods and liabilities related to government grants.

~~(17b)~~

~~Financial Liabilities~~

~~Financial liabilities as at December 31 were as follows:~~

(17b) Financial Liabilities


€ millions													2015										2014
													Nominal Volume				Carrying Amount						Nominal Volume				Carrying Amount
	2012						2011						Current		Non- Current		Current		Non- Current		Total		Current		Non- Current		Current		Non- Current		Total
€ millions	Current		Non-Current		Balance on 12/31/2012		Current		Non-Current		Balance on 12/31/2011
Bonds		600		2,287		2,887		600		1,595		2,195		0		5,750		0		5,733		5,733		631		4,000		631		3,998		4,629
Private placement transactions		0		2,088		2,088		423		1,237		1,660		551		1,607		551		1,651		2,202		247		1,936		247		1,948		2,195
Bank loans		0		0		0		101		1		102		16		1,250		16		1,245		1,261		1,279		3,000		1,277		2,985		4,261
Financial debt														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		202		71		273		207		92		299		NA		NA		204		–5		199		NA		NA		119		4		123
Financial liabilities		802		4,446		5,248		1,331		2,925		4,256						841		8,681		9,522						2,561		8,980		11,542

Financial liabilities are unsecured, except for the retention of title and similar rights customary in our industry. Effective interest rates on our ~~financing~~financial debt (including the effects from interest-rate swaps) were ~~2.87%~~1.30% in ~~2012, 2.98%~~2015, 1.77% in ~~2011,~~2014, and ~~2.76%~~2.48% in ~~2010.~~2013.

AnFor an analysis ~~showing~~of the contractual cash flows of our financial liabilities based on maturity, ~~is provided in~~see Note (24). ~~Information on~~For information about the risk associated with our financial liabilities, ~~is provided in~~see Note (25)~~, and~~. For information onabout fair values, ~~is provided in~~see Note (26).

Bonds

~~As at December 31, 2012, we had outstanding bonds with the following terms:~~

~~Bonds~~


	2015											2014
	Maturity		Issue Price		Coupon Rate	Effective Interest Rate		Nominal Volume (in respective currency in millions)		Carrying Amount (in € millions)		Carrying Amount (in € millions)
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
Eurobonds											5,733		4,547
Other bonds											0		82
Bonds											5,733		4,629

   Maturity Issue Price Coupon Rate Effective
Interest Rate Nominal Volume
in € millions Balance on
12/31/2012
in € millions Balance on
12/31/2011
in € millions
Eurobond 1 – 2010
2014    99.755 % 2.50% (fix)    2.64 % 500    499    498
Eurobond 2 – 2010
2017    99.780 % 3.50% (fix)    3.58 % 500    498    498
Eurobond 3 – 2010
2012    99.863 % 1.75% (fix)    2.01 % 600    0    600
Eurobond 4 – 2010
2013    99.857 % 2.25% (fix)    2.38 % 600    600    599
Eurobond 5 – 2012
2015    99.791 % 1.00% (fix)    1.17 % 550    547    0
Eurobond 6 – 2012
2019    99.307 % 2.125% (fix)    2.27 % 750    743    0

Bonds
2,887    2,195

InSince September 2012, we ~~implemented~~have used a ~~Debt Issuance Program which is valid for an initial renewable period of 12 months. Under this~~debt issuance program ~~we are permitted~~ to issue bonds in a number of ~~tranches in different currencies up to a~~tranches. Currently, the total volume available under the program (including the amounts issued) is€8 billion.

~~volume~~All of ~~€2.4 billion. In November 2012, we issued bonds under this program as shown in the table above.~~

~~All~~ our Eurobonds are listed for trading on the Luxembourg Stock Exchange.

Private Placement Transactions

~~Our private placement transactions have the following terms:~~

~~Private Placements~~


	2015										2014
	Maturity		Coupon Rate		Effective Interest Rate		Nominal Volume (in respective currency in millions)		Carrying Amount (in € millions)		Carrying Amount (in € millions)
U.S. private placements
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
Private placements										2,202		2,195

   Maturity Coupon Rate Effective
Interest Rate Nominal Volume
in Respective
Currency
in millions Balance on
12/31/2012
in € millions Balance on
12/31/2011
in € millions
German promissory note

Tranche 1 – 2009
2012    4.04% (fix)    4.08%    €63.5    0    64
Tranche 2 – 2009
2012    3.46% (variable)    3.51%    €359.5    0    359
Tranche 3 – 2009
2014    4.92% (fix)    4.98%    €86    86    86
Tranche 4 – 2009
2014    3.81% (variable)    3.86%    €158    0    158
Tranche 5 – 2009
2014    3.72% (variable)    3.76%    €30    0    30
U.S. private placements

Tranche 1 – 2010
2015    2.34% (fix)    2.40%    US$ 300    227    231
Tranche 2 – 2010
2017    2.95% (fix)    3.03%    US$ 200    151    154
Tranche 3 – 2011
2016    2.77% (fix)    2.82%    US$ 600    454    463
Tranche 4 – 2011
2018    3.43% (fix)    3.50%    US$ 150    113    115
Tranche 5 – 2012
2017    2.13% (fix)    2.16%    US$ 242.5    183    0
Tranche 6 – 2012
2020    2.82% (fix)    2.86%    US$ 290    219    0
Tranche 7 – 2012
2022    3.18% (fix)    3.22%    US$ 444.5    336    0
Tranche 8 – 2012
2024    3.33% (fix)    3.37%    US$ 323    244    0
Tranche 9 – 2012
2027    3.53% (fix)    3.57%    US$ 100    75    0

Private placements
2,088    1,660

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~~

~~Our bank loans have the following terms:~~

Bank Loans


	Maturity		Coupon Rate		Effective Interest Rate		Nominal Volume in € millions		Balance on 12/31/2012 in € millions		Balance on 12/31/2011 in € millions		2015										2014
Additional term loan		2012		2.64% (variable)		2.64%		100		0		100
													Maturity		Coupon Rate		Effective Interest Rate		Nominal Volume (in respective currency in millions)		Carrying Amount (in € millions)		Carrying Amount (in € millions)
														2015		NA		NA		€0		0		1,268
Concur term loan – Facility B														2017		0.45% (var.)		0.93%		€1,250		1,245		2,984
Other loans		—		variable		variable		2		0		2								INR 1026		16		9

Bank loans										0		102										1,261		4,261

~~The coupon and the effective interest rate for the additional term loan were calculated based on the last 12-month EURIBOR interest rate fixing for this financing instrument in 2011.~~

Other Financial Liabilities

Our current other financial liabilities mainly comprise ~~derivative liabilities and~~ liabilities for accrued ~~interests.~~interest and customer funding liabilities amounting to€90 million (2014:€58 million).

~~(17c)~~ ~~Other Non-Financial Liabilities~~

~~Other non-financial liabilities as at December 31 were as follows:~~

(17c) Other Non-Financial Liabilities


	2012						2011
€ millions	Current		Non-Current		Balance on 12/31/2012		Current		Non-Current		Balance on 12/31/2011		2015						2014
€ millions													Current		Non-Current		Total		Current		Non-Current		Total
€ millions		1,700		98		1,798		1,541		92		1,633		2,255		126		2,381		1,979		122		2,101
Share-based payment liabilities														555		205		760		289		97		386
Other taxes		436		0		436		440		0		440		597		0		597		543		0		543
Other non-financial liabilities		2,136		98		2,234		1,981		92		2,073		3,407		331		3,738		2,811		219		3,030

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 ~~mainly~~ payroll tax liabilities and value-added tax liabilities.

~~(18)~~

~~Provisions~~

~~Provisions based on due dates as at December 31 were as follows:~~

~~Provisions~~(18) PROVISIONS


	2012						2011
€ millions													2015						2014
€ millions	Current		Non-Current		Total		Current		Non-Current		Total		Current		Non- Current		Total		Current		Non- Current		Total
Pension plans and similar obligations (see Note (18a))		3		71		74		25		71		96		0		117		117		2		86		88
Other provisions (see Note (18b))		933		322		1,255		537		197		734		299		63		362		148		65		213
Total		936		393		1,329		562		268		830		299		180		479		150		151		301

~~(18a)~~

(18a) Pension Plans ~~and Similar Obligations~~

~~We maintain several defined benefit~~ and ~~defined contribution pension plans for our employees in Germany and at foreign subsidiaries, which provide for old age, disability, and survivors’ benefits.~~ Similar Obligations

Defined Benefit Plans

The measurement dates for ~~the~~our domestic and foreign benefit plans are December 31. Individual benefit plans have also been established for members of our Executive Board. Furthermore, in certain countries we provide termination indemnity benefits to employees regardless of the cause for termination. These types of benefits are typically defined by law in these foreign countries.

~~Our domestic defined benefit pension plans provide participants with pension benefits that are based on the length of service and compensation of employees.~~

There is also a domestic employee-financed pension plan for which SAP guarantees a minimum return on investment which is equivalent to the return guaranteed by the insurer. Even though the risk that SAP would be liable for a return that cannot be met by the insurance company is very remote, these employee-financed plans do not qualify as defined contribution plans under IFRS and are included in domestic plan assets and plan liabilities.

~~Foreign defined benefit pension plans provide participants with pension benefits that are based on compensation levels, age, and length of service.~~

~~The following table shows the change in present values of the defined benefit obligations and the fair value of the plan assets with a reconciliation of the funded status to net amounts:~~

~~Change in the~~ Present Value of the ~~DBO~~Defined Benefit Obligations (DBO) and the Fair Value of the Plan Assets

Domestic
Plans Foreign
Plans Other Post-
Employment Plans Total
€ millions 2012 2011 2012 2011 2012 2011 2012 2011
Change in benefit obligation

Benefit obligation at beginning of year
462    416    457    439    27    25    946    880
Service cost
–2    –2    15    19    3    3    16    20
Interest cost
21    20    8    14    1    1    30    35
Employee contributions
26    25    5    4    0    0    31    29
Actuarial loss (+)/gain (–)
94    11    7    0    6    –1    107    10
Benefits paid
–5    –5    –4    –28    –2    –2    –11    –35
Acquisitions/divestitures
0    –4    0    –1    1    0    1    –5
Curtailments/settlements
0    0    –265    –3    –3    0    –268    –3
Other changes
1    1    0    0    0    0    1    1
Past service cost
0    0    0    –3    0    0    0    –3
Foreign currency exchange rate changes
0    0    –2    16    0    1    –2    17
Benefit obligation at year-end
597    462    221    457    33    27    851    946
Thereof fully or partially funded plans
597    462    181    417    18    13    796    892
Thereof unfunded plans
0    0    40    40    15    14    55    54
Change in plan assets

Fair value of plan assets at beginning of year
460    414    387    386    5    4    852    804
Expected return on plan assets
21    19    4    7    1    1    26    27
Employer contributions
1    2    31    17    4    3    36    22
Employee contributions
26    25    5    4    0    0    31    29
Benefits paid
–5    –5    –3    –28    –1    –2    –9    –35
Acquisitions/divestitures
0    –4    0    0    0    0    0    –4
Settlements
0    0    –256    –3    0    0    –256    –3
Other changes
1    0    0    0    0    –1    1    –1
Actuarial loss (–)/gain (+)
85    9    9    –7    0    0    94    2
Foreign currency exchange rate changes
0    0    3    11    0    0    3    11
Fair value of plan assets at year-end
589    460    180    387    9    5    778    852
Funded status at year-end
–8    –2    –41    –70    –24    –22    –73    –94
Amounts recognized in the Consolidated Statement of Financial Position:

Non-current pension assets
0    0    1    2    0    0    1    2
Accrued benefit liability (current)
0    0    –3    –25    0    0    –3    –25
Accrued benefit liability (non-current)
–8    –2    –39    –47    –24    –22    –71    –71
Total
–8    –2    –41    –70    –24    –22    –73    –94


€ millions	Domestic Plans				Foreign Plans				Other Post- Employment Plans				Total
€ millions	2015		2014		2015		2014		2015		2014		2015		2014
Present value of the DBO		724		780		333		276		82		46		1,139		1,102
Thereof fully or partially funded plans		724		780		293		239		61		26		1,078		1,045
Thereof unfunded plans		0		0		40		37		21		20		61		57
Fair value of the plan assets		716		767		265		234		42		13		1,023		1,014
Net defined benefit liability (asset)		8		13		69		42		40		33		117		88
Amounts recognized in the Consolidated Statement of Financial Position:
Non-current other financial assets		0		0		0		0		0		0		0		0
Current provisions		0		0		0		–2		0		0		0		–2
Non-current provisions		–8		–13		–69		–40		–40		–33		–117		–86
Total		–8		–13		–69		–42		–40		–33		–117		–88

€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 ~~for Defined Benefit Liabilities~~


	Domestic Plans						Foreign Plans						Other Post- Employment Plans
Percent	2012		2011		2010		2012		2011		2010		2012		2011		2010			Domestic Plans						Foreign Plans						Other Post-Employment Plans
Percent																				2015		2014		2013		2015		2014		2013		2015		2014		2013
Percent		3.3		4.6		4.9		1.9		3.2		3.3		4.6		5.4		5.7			2.7		2.2		3.6		0.7		1.1		2.1		4.0		4.2		5.2
Rate of compensation increase		2.5		2.5		2.5		1.8		1.8		1.8		4.0		3.0		5.0
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 ~~assumed discount rates are derived from rates available on high-quality corporate bonds and government bonds for which~~sensitivity analysis table shows how the ~~timing and amounts~~present value of ~~payments match the timing and the amounts of our projected pension payments.~~

~~The components of total expense of~~all defined benefit ~~pension plans~~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 ~~years 2012, 2011, and 2010 recognized in operating expense were as follows:~~discount rate assumption, would not materially influence the present value of all defined benefit obligations.

Sensitivity Analysis


€ millions	Domestic Plans						Foreign Plans						Other Post- Employment Plans						Total
€ millions	2015		2014		2013		2015		2014		2013		2015		2014		2013		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		1,221		1,185		957

Total Expense of Defined Benefit Pension Plans

   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010
Service cost
–2    –2    –4    15    19    17    3    3    3    16    20    16
Interest cost
21    20    18    8    14    17    1    1    1    30    35    36
Expected return on plan assets
–21    –19    –17    –4    –7    –19    –1    –1    0    –26    –27    –36
Losses (gains) on curtailments and settlements
0    0    0    –9    0    0    2    0    0    –7    0    0
Past service cost
0    0    0    0    –3    –3    0    0    0    0    –3    –3
Total expense
–2    –1    –3    10    23    12    5    3    4    13    25    13
Actual return on plan assets
106    28    26    12    5    18    1    0    0    119    33    44

Due to the fact that our domestic defined benefit pension plans primarily consist of an employee-financed post-retirement plan that is fully financed with qualifying insurance policies, current service

~~cost may turn into 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.~~

€ millions Domestic Plans Foreign Plans Other Post-
Employment 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
Interest income
–17    –23    –20    –3    –5    –4    –2    –1    –1    –22    –29    –25
Past service cost
0    0    0    0    0    1    0    0    0    0    0    1
Total expense
10    3    6    21    16    16    10    7    4    41    26    26
Actual return on plan assets
–76    133    10    0    10    9    2    1    1    –74    144    20

~~We have recognized the following amounts of actuarial gains and losses for our defined benefit pension plans:~~

~~Actuarial Gains (Losses) on Defined Benefit Pension Plans~~

   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2012 2011 2010 2012 2011 2010 2012 2011 2010 2012 2011 2010
Beginning balance of actuarial gains (–) and losses (+) on defined benefit plans
–4    –6    –10    97    86    53    –1    0    –2    92    80    41
Actuarial gains (–) and losses (+) on defined benefit plans recognized during the period
9    2    4    –2    7    30    6    –1    2    13    8    36
Other changes
2    0    0    –1    0    0    –1    –1    0    0    –1    0
Foreign currency exchange rate changes
0    0    0    –1    4    3    0    1    0    –1    5    3
Ending balance of actuarial gains (–) and losses (+) on defined benefit plans
7    –4    –6    93    97    86    4    –1    0    104    92    80

For the determination of the total expense for the years 2012, 2011, and 2010, the projection of the defined benefit obligation and the fair value of the plan assets as at December 31, 2012, 2011, and 2010, the following principal actuarial assumptions (expressed as weighted averages for our foreign and post-employment benefit plans) were used:

~~Actuarial Assumptions for Total Expense~~

   Domestic Plans Foreign Plans Other Post-
Employment Plans
Percent 2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate
4.6    4.9    5.1    2.2    3.2    4.4    5.3    5.3    5.6
Expected return on plan assets
4.5    4.5    4.5    2.4    1.5    5.1    8.3    7.8    7.6
Rate of compensation increase
2.5    2.5    2.2    1.8    1.8    1.8    3.2    3.1    4.9

Our investment strategy on domestic benefit plans is to invest all contributions in stable insurance policies. ~~The expected rate of return on plan assets for our domestic benefit plans is calculated~~

~~by reference to the expected returns achievable on the insured policies given the expected asset mix of the policies.~~

The expected return assumptions for our foreign plan assets are based on weighted average expected long-term rates of return for each asset class, estimated based on factors such as historical return patterns for each asset class and forecasts for inflation. We review historical return patterns and other relevant financial factors for appropriateness and reasonableness and make modifications to eliminate certain effects when considered necessary. Our foreign benefit plan asset allocation at December 31, 2012, and our target asset allocation for the year 2013 are as follows:

~~Plan Asset Allocation for Foreign Plans and Other Post-Employment Obligations~~

Percent    Target Asset
Allocation 2013    Actual % of 2012
Plan Assets    Target Asset
Allocation 2012    Actual % of 2011
Plan Assets
Asset category

Equity
   23       22       12       10
Fixed income
   42       49       66       60
Real estate
   19       15       3       3
Insurance policies
   4       4       1       1
Cash and other assets
   12       10       18       26

Total
   100       100       100       100

Our investment strategies for foreign benefit plans vary according to the ~~respective~~ conditions in the country in which the respective benefit plans are situated. Generally, a long-term investment horizon has been adopted for all major foreign benefit plans. ~~Our~~Although our policy is to invest in a ~~risk-diversified portfolio~~

risk-diversified portfolio consisting of a mix of assets, ~~within~~both the ~~above target asset allocation range.~~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.

Plan Asset Allocation


€ millions	2015				2014
€ millions	Quoted in an Active Market		Not Quoted in an Active Market		Quoted in an Active Market		Not Quoted in an Active Market
Asset category
Equity investments		93		0		75		0
Corporate bonds		101		0		60		0
Government bonds		5		0		1		0
Real estate		43		0		31		0
Insurance policies		0		736		0		780
Cash and cash equivalents		9		0		41		0
Others		36		0		27		0
Total		287		736		234		780

Our expected contribution in ~~2013 is €1 million for~~2016 to our domestic ~~defined benefit pension plans~~ and ~~€16 million for~~ foreign defined benefit pension plans ~~all~~is immaterial. The weighted duration of ~~which is~~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 ~~paid in cash.~~€1,432 million (2014:€1,409 million). Eighty-three percent of this amount has maturities of over five years.

~~The amounts for the current year and four preceding years of pension obligation, plan assets, funded status, and experience adjustments are as follows:~~

~~Pension Obligation, Plan Assets, Funded Status, and Experience Adjustments~~Maturity Analysis

   Domestic Plans Foreign Plans Other Post-
Employment Plans Total
€ millions 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008 2012 2011 2010 2009 2008
Defined benefit obligation
597    462    416    346    314    221    457    439    343    306    33    27    25    20    18    851    946    880    709    638
Liability experience adjustments
94    11    13    –13    –10    7    0    29    31    –45    6    –1    2    0    0    107    10    44    18    –55
Plan assets
589    460    414    345    314    180    387    386    311    261    9    5    4    4    3    778    852    804    660    578
Asset experience adjustments
85    9    9    –18    –8    9    –7    –1    28    –99    0    0    0    0    0    94    2    8    10    –107

Funded status
–8    –2    –2    –1    0    –41    –70    –53    –32    –45    –24    –22    –21    –16    –15    –73    –94    –76    –49    –60


€ millions	Domestic Plans			Foreign Plans			Other Post-Employment Plans
€ millions		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
Over 5 years		935	983		223	195		28	17
Total		1,037	1,066		355	316		40	27

Defined Contribution ~~Plan/~~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 ~~as well as in~~and some other countries we make contributions to public pension plans that are operated by national or local government or a similar institution. ~~The expenses of defined contribution plans and state plans for the years 2012, 2011, and 2010, were as follows:~~

Total Expense of Defined Contribution Plans and State Plans


€ millions	2012		2011		2010		2015		2014		2013
Defined contribution plans		173		151		136		218		188		182
State plans		296		244		215		429		360		316

Total expense		469		395		351		647		548		498

~~(18b)~~

~~Other Provisions~~

~~Changes in other provisions over the reporting year were as follows:~~

(18b) Other Provisions


€ millions	Balance 1/1/2012		Addition		Additions from business combinations		Utili- zation		Release		Currency Impact		Balance 12/31/2012		1/1/ 2015		Addition		Accretion		Utilization		Release		Currency Impact		12/31/ 2015
Employee-related provisions																47		59		0		–46		–3		1		58
Provisions for share-based payments		119		518		144		–195		–1		–6		579
Other employee-related provisions		189		126		0		–87		–3		–1		224
Customer-related provisions		48		68		0		–28		–13		–1		74		39		91		0		–71		–1		3		61
Litigation-related provisions
TomorrowNow litigation		231		32		0		–10		–13		–6		234
Other litigation-related provisions		53		11		0		–7		–1		–1		55
Intellectual property-related provisions																12		5		0		–1		–6		1		11
Restructuring provisions																60		638		0		–496		–17		–1		184
Onerous contract provisions (other than from customer contracts)		64		7		7		–23		–2		0		53		24		1		2		–13		–1		2		15
Other provisions		30		16		8		–11		–7		0		36		31		3		0		0		–2		1		33

Total other provisions		734		778		159		–361		–40		–15		1,255		213		797		2		–627		–30		7		362
Thereof current		537												933		148												299
Thereof non-current		197												322		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 ~~share-based payments,~~restructuring plans, see Note ~~(27)~~(6).

~~Other~~The cash outflows associated with employee-related provisions primarily comprise obligations for time credits, severance payments, jubilee expenses, and semiretirement. While most of these employee-related provisions could be claimed within the next 12 months, we do not expect the related cash flows within this time period.

~~Customer-related provisions include performance obligations, as well as expected contract losses from contracts with customers. The associated cash outflows~~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.

Litigation-related provisions relate primarily to the litigation matters described in Note (23). They include the expenses related to the provision established for the related litigation as well as any related legal fees incurred to date and expected to be incurred in the future less any insurance reimbursements recognized. We have established provisions taking into account the facts of each case. The timing of the cash outflows associated with legal claims cannot be reasonably determined in all cases. The legal and litigation-related provisions assumed in connection with the 2012 acquisitions are measured at provisional values. For details see Note (3c). The estimate regarding the provision for the TomorrowNow litigation was adjusted substantially following the judgment of the court in September 2011. For more details, see Note (23).

Onerous contract and other provisions ~~have been recorded in connection with unused lease space.~~comprise facility-related and supplier-related provisions. The ~~utilization~~timing of ~~onerous leases depends~~these cash outflows associated is dependent on the ~~terms~~remaining term of the underlying lease ~~contract.~~

~~Other provisions relate to decommissioning, restoration,~~ and similar liabilities associated with leased facilities, warranty obligations, and restructuring provisions. The associated cash outflows for decommissioning, restoration, and similar liabilities, which are typically long-term in nature, are generally expected to occur at the dates of exit of the facilities to which they relate. The related outflow for warranty obligations is of short-term nature. Restructuring provisions comprise various restructuring activities that occurred in 2012 as a result of certain organizational changes in the sales and go-to-market areas as well a shift of positions from mature markets to high-growth markets. It is expected that substantially all of the expenditure not yet incurred will be incurred in the next financial year.supplier contract.

(19) DEFERRED INCOME

~~(19)~~

~~Deferred Income~~

Deferred income consists mainly of prepayments made by our customers for ~~support services,~~ cloud subscriptions and ~~professional services,~~support; software support and services; fees from ~~multiple element~~multiple-element arrangements allocated to undelivered ~~elements,~~elements; and amounts recorded in purchase accounting at fair value for obligations to perform under acquired ~~support~~ contracts in connection with acquisitions.


€ millions	2015						2014
€ millions	Current		Non- Current		Total		Current		Non- Current		Total
Deferred Income		2,001		106		2,107		1,680		78		1,758
Thereof deferred revenue from cloud subscriptions and support		957		0		957		689		0		689

~~(20)~~ ~~Total Equity~~

(20) TOTAL EQUITY

Issued Capital

As at December 31, ~~2012,~~2015, SAP AGSE had issued 1,228,504,232 no-par value bearer shares (December 31, ~~2011: 1,228,083,382)~~2014: 1,228,504,232) with a calculated nominal value of €1€1 per share. All the shares issued are fully paid. ~~The following table shows the changes in the number and the value of issued shares and treasury shares in millions.~~

Change in Issued Capital and Treasury Shares

   Number of Shares
in Millions    Value in € Millions
      Issued
Capital    Treasury
Shares    Issued
Capital    Treasury
Shares
January 1, 2010
   1,226       –37       1,226       –1,320
Issuing shares under share-based payments
   1       0       1       0
Purchase of treasury shares
   0       –6       0       –220
Reissuance of treasury shares under share-based payments
   0       4       0       158

December 31, 2010
   1,227       –39       1,227       –1,382
Issuing shares under share-based payments
   1       0       1       0
Purchase of treasury shares
   0       –6       0       –246
Reissuance of treasury shares under share-based payments
   0       7       0       251

December 31, 2011
   1,228       –38       1,228       –1,377
Issuing shares under share-based payments
   1       0       1       0
Purchase of treasury shares
   0       –1       0       –53
Reissuance of treasury shares under share-based payments
   0       2       0       93

December 31, 2012
   1,229       –37       1,229       –1,337


	Shares (in millions)				Value (in € millions)
	Issued Capital		Treasury Shares		Issued Capital		Treasury Shares
January 1, 2013		1,229		–37		1,229		–1,337
Reissuance of treasury shares under share-based payments		0		2		0		57
December 31, 2013		1,229		–35		1,229		–1,280
Reissuance of treasury shares under share-based payments		0		2		0		56
December 31, 2014		1,229		–33		1,229		–1,224
Reissuance of treasury shares under share-based payments		0		2		0		100
December 31, 2015		1,229		–31		1,229		–1,124

Authorized Shares

The Articles of Incorporation authorize the Executive Board to increase the issued ~~capital:~~capital by:

Up to a total amount of €250 million by issuing new ordinary shares against contributions in cash until June 7, 2015 (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 ordinary shares against contributions in cash or in kind until June 7, 2015 (Authorized Capital II). Subject to certain preconditions and the consent of the Supervisory Board, the Executive Board is authorized to exclude the shareholders’ statutory subscription rights.

Up to a total amount of €30 million by issuing new ordinary shares against contributions in cash or in kind until June 7, 2015 (Authorized Capital III). The new shares can only be used for share-based payments (as employee shares). Shareholders’ subscription rights are excluded.

–

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 ~~AG’s issued~~SE’s share capital is subject to a contingent capital increase ~~of ordinary shares. The contingent increase~~which may be effected only to the extent that the holders or creditors of ~~the~~ convertible bonds ~~and~~or stock options ~~that were~~ issued or guaranteed by SAP AGSE or any of its directly or indirectly controlled subsidiaries under certain share-based payments exercise their conversion or subscription ~~rights.~~rights, and no other methods for servicing these rights are used. As at December 31, ~~2012, €100~~2015,€100 million, representing 100 million shares, was still available for issuance ~~(2011: €134~~(2014:€100 million).

~~Share Premium~~

Share premium represents all capital contributed to SAP with the proceeds resulting from the issuance of issued capital in excess of their calculated par value. Share premium arises mainly from issuance of issued capital, treasury shares transactions, and share-based payments.

~~Retained Earnings~~

Retained earnings contain prior years’ undistributed profit after tax and unrecognized pension costs. Unrecognized pension costs comprise actuarial gains and losses relating to defined benefit pension plans and similar obligations.

Other Comprehensive Income

~~The component of other comprehensive income before tax that will be reclassified to profit or loss in the future includes the following items:~~

Items Recognized in Other Comprehensive Income That Will Be Reclassified to Profit or Loss Before Tax


€ millions	2012		2011		2010		2015		2014		2013
Gains (losses) on exchange differences on translation		–214		106		193
Gains (losses) on exchange differences								1,845		1,161		–576
Gains (losses) on remeasuring available-for-sale financial assets		33		–6		5		181		130		79
Reclassification adjustments on available-for-sale financial assets		–20		–1		–2		–53		–2		–19

Available-for-sale financial assets		13		–7		3		128		128		60
Gains (losses) on cash flow hedges		21		–23		–88
Reclassification adjustments on cash flow hedges		42		22		67

Cash flow hedges		63		–1		–21
Gains (losses) on cash-flow hedges								–59		–41		78
Reclassification adjustments on cash-flow hedges								74		3		–78
Cash-flow hedges								15		–38		0

Treasury Shares

By resolution of SAP ~~AG’s Annual~~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 ~~AG was authorized~~SE to ~~purchase,~~acquire, on or before June ~~30, 2013,~~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 ofpurchased under the ~~Company on the condition that such share purchases,~~authorization, together with any other shares in the Company previously acquired ~~shares,~~and held by, or attributable to, SAP SE do not account for more than 10% of SAP ~~AG’s~~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 ~~subscription rights and~~option or conversion rights under the Company’s share-based ~~payments.~~payment plans. Also, we may use ~~the~~ shares held in treasury as consideration in connection with ~~the acquisition~~mergers with, or acquisitions of, other companies.

~~Miscellaneous~~Dividends

~~Under the German Stock Corporation Act (Aktiengesetz), the~~The total ~~amount of dividends~~dividend available for distribution to SAP ~~AG’s~~SE shareholders is based on the profits of SAP AGSE as

reported in its statutory financial statements ~~which are determined~~prepared under the accounting rules ~~stipulated by~~in the German Commercial Code (Handelsgesetzbuch).

For the year ended December 31, ~~2012,~~2015, the Executive Board ~~of SAP AG~~ intends to propose that a dividend of ~~€0.85~~€1.15 per share (that is, an estimated total dividend of ~~€1,013~~€1,378 million) to, be paid from the profits of SAP ~~AG.~~SE.

Dividends per share for ~~2011~~2014 and ~~2010~~2013 were ~~€1.10~~€1.10 and ~~€0.60~~€1.00 respectively and were paid in the succeeding year.

(21) ADDITIONAL CAPITAL DISCLOSURES

~~(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.

~~We currently do not have a~~SAP SE’s long-term credit rating is “A” by Standard and Poor’s and “A2” by Moody’s, both with ~~any agency. We do~~stable outlook. Since their initial assignment in September 2014, the ratings and outlooks have not ~~believe that a rating would have a substantial effect on our borrowing conditions and financing options.~~changed.

Capital Structure


	2012				2011				% Change		2015				2014				D in %
	€ millions		% of Equity and liabilities		€ millions		% of Equity and liabilities		% Change		€ millions		% of Total equity and liabilities		€ millions		% of Total equity and liabilities
Equity		14,171		53		12,707		55		12		23,295		56		19,534		51		19
Current liabilities		6,641		25		6,266		27		6		7,867		19		8,574		22		–8
Non-current liabilities		6,023		22		4,254		18		42		10,228		25		10,457		27		–2
Liabilities		12,664		47		10,520		45		20		18,095		44		19,031		49		–5
Equity and liabilities		26,835		100		23,227		100		16
Total equity and liabilities												41,390		100		38,565		100		7

In ~~2012,~~2015, we ~~took out short-term~~repaid€1,270 million in bank loans that we had taken to finance the ~~acquisitions~~Concur acquisition and refinanced another part of ~~SuccessFactors and Ariba. Additionally, we issued~~this loan through the issuance of a ~~two-tranche~~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 USUS$300 million U.S. private placement consisting of several tranches with maturities of three to 15 years which further optimized and extended our existing maturity profile. We used inflows from the newly issued bonds and private placement to repay the short-term bank loans.

~~These financing activities changed our debt ratio (defined as the ratio of total liabilities to equity and liabilities) to 47%~~tranche at the end of 2012 (as compared to 45% at the end of 2011). These financing activities were partially offset by the operating cash flow in 2012. As far as financing activities in 2013 are concerned, a €600 million bond that will mature in August 2013 is intended to be repaid. We currently do not plan to refinance this bondtheir maturity.

~~Due to these financing activities,~~ Thus, the ratio of total financial debt to total equity and liabilities ~~increased slightly~~decreased by seven percentage points to ~~19%~~22% at the end of ~~2012 (17%~~2015 (29% as at December 31, ~~2011)~~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.

While we continuously monitor ~~these~~the ratios ~~continuously,~~presented in and below the table above, we actively manage our ~~main focus is on the management~~liquidity and structure of our ~~net liquidity position as outlined in the following table:~~financial indebtedness:

Group Liquidity of SAP Group

€ millions    2012    2011    Change
Cash and cash equivalents
   2,477       4,965       –2,488
Current investments
   15       636       –621

Group liquidity
   2,492       5,601       –3,109
Current bank loans
   0       101       –101
Current private placement transactions
   0       423       –423
Current bonds
   600       600       0

Net liquidity 1
   1,892       4,477       –2,585
Non-current bank loans
   0       1       –1
Non-current private placement transactions
   2,094       1,240       854
Non-current bonds
   2,300       1,600       700

Net liquidity 2
   –2,502       1,636       –4,138

Net liquidity 1 is Group liquidity minus current financial debt. The decrease of current financial debts relates to repayments, mainly two tranches (€423 million) of the promissory notes, we issued in 2009.

Net liquidity 2 is net liquidity 1 minus non-current financial debt. In 2012, we sucessfully placed a two-tranche Eurobond transaction totalling €1.3 billion and a US private placement transaction of US$1.4 billion consisting of several tranches. This was partly offset by repayments of a Eurobond tranche (€600 million) and two

~~tranches (€188 million) of the promissory notes, we issued in 2009.~~

We intend to reduce our financial debt as and when the debt falls due. We will consider issuing new debt, such as bonds or U.S. private placements, on an as-needed basis only and if market conditions are advantageous. We currently have no concrete plans for future share buybacks.

~~For further information about our financial debt, see Note (17b).~~


€ millions	2015		2014		D
Cash and cash equivalents		3,411		3,328		83
Current investments		148		95		53
Group liquidity		3,559		3,423		136
Current financial debt		–567		–2,157		1,590
Net liquidity 1		2,992		1,266		1,726
Non-current financial debt		–8,607		–8,936		329
Net liquidity 2		–5,615		–7,670		2,055

Distribution Policy

Our general intention is to remain in a position to return ~~excess~~ liquidity to our shareholders by distributing annual dividends ~~and repurchasing shares. The amount~~totaling more than 35% of our profit after tax. There are currently no plans for future ~~dividends and the extent of future repurchases of shares will be balanced with our effort to continue to maintain an adequate liquidity position.~~share buybacks.

In ~~2012,~~2015, we ~~were able to distribute €1,310~~distributed€1,316 million in dividends from our ~~2011~~2014 profit ~~(as compared~~(compared to ~~€713~~€1,194 million in ~~2011~~2014 and ~~€594~~€1,013 million in ~~2010~~2013 related to ~~2010~~2013 and ~~2009~~2012 profit, respectively),

representing ~~€1.10~~€1.10 per ~~share, including~~share.

As a ~~special dividend~~result of €0.35 per share to celebrate SAP’s 40th anniversary. Aside from the distributed dividend, in 2012, 2011, and 2010 we also returned €53 million, €246 million, and €220 million respectively to our shareholders by repurchasing our own shares.

~~Commitments exist in connection with~~ our equity-settled share-based payments transactions (as described in Note (27)), ~~which~~ 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 and Contingent Liabilities~~

~~Other Financial Commitments~~

~~Our other financial commitments as at December 31, 2012, and 2011, were as follows:~~

~~Other Financial Commitments~~(22) OTHER FINANCIAL COMMITMENTS

€ millions    2012    2011
Operating leases
   923       878
Contractual obligations for acquisition of property, plant, and equipment and intangible assets
   66       76
Other purchase obligations
   522       496
Purchase obligations
   588       572

Total
   1,511       1,450


€ 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
Capital contribution commitments		111		77
Total		2,330		2,268

Our operating leases relate primarily to the lease of office space, hardware, and ~~cars,~~vehicles, with remaining non-cancelable lease terms between less than one and 3533 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 ~~vehicle purchase obligations.~~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.

~~Commitments under operating leasing contracts and purchase obligations as at December 31, 2012, were as follows:~~

~~Other Financial Commitments~~


€ millions	December 31, 2015
€ millions	Operating Leases		Purchase Obligations		Capital Contribution Commitments
Due 2016		294		428		111
Due 2017 to 2020		657		378		0
Due thereafter		396		66		0
Total		1,347		872		111

€ millions    Operating Leases    Purchase Obligations
Due 2013
   238       317
Due 2014–2017
   527       218
Due thereafter
   158       53

Total
   923       588

Our rental and operating lease expenses were ~~€277~~€386 million, ~~€241~~€291 million, and ~~€267~~€273 million for the years ~~2012, 2011,~~2015, 2014, and ~~2010,~~2013, respectively.

~~Contingent Liabilities~~(23) LITIGATION AND CLAIMS

In the normal course of business, we usually indemnify our customers against liabilities arising from a claim that our software products infringe a third party’s patent, copyright, trade secret, or other proprietary rights. In addition, we occasionally grant function or performance guarantees in routine consulting contracts or development arrangements. Also, our software license agreements generally include a clause guaranteeing that the software substantially conforms to the specifications as described in applicable documentation for a period of six to 12 months from delivery. Our product and service warranty liability, which is measured based on historical experience and evaluation, is included in other provisions (see Note (18b)).

~~For contingent liabilities related to litigation matters, see Note (23).~~

~~(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, ~~and~~ claims that relate to customers demanding indemnification for proceedings initiated against them based on their use of SAP ~~software.~~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 record a provision for such matters when it is probable that we have a present obligation that results from a past event, is reliably estimable, and the settlement of which is probable to require an outflow of resources embodying economic benefits. For the TomorrowNow litigation, we have recorded a provision of US$306 million (US$272 million as at December 31, 2011, US$1.3 billion as at December 31, 2010). We currently believe that resolving ~~all other~~the claims and lawsuits ~~against us,~~pending as of December 31, 2015, will neither individually ornor in the aggregate ~~did not and will not~~ have a material adverse effect on our business, financial position, profit, or cash flows. Consequently, the provisions ~~currently~~ recorded for these ~~other~~ claims and lawsuits as of December 31, 2015, are neither individually nor in the aggregate material to SAP.

However, the outcome of litigation and ~~other~~ claims ~~or lawsuits~~ is intrinsically subject to considerable uncertainty. Management’s view of the litigation may also change in the future. Actual outcomes of litigation and ~~other~~ claims ~~or lawsuits~~ 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. ~~We cannot~~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 ~~maximum possible loss in case of an unfavorable outcome.~~

~~For a description of the development of the provisions recorded~~financial effect that these lawsuits and claims would have if SAP were to incur expenditure for ~~litigation, see Note (18b).~~these cases.

Among the claims and lawsuits are the ~~following:~~following classes:

Intellectual ~~Property~~Property-Related Litigation and Claims

~~In March 2007, United States-based Oracle Corporation~~Intellectual property-related litigation and ~~certain~~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 ~~its subsidiaries (Oracle) instituted~~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 inand settlement negotiations required to resolve them. Uncertainties about the United States against TomorrowNow, Inc., its parent company SAP America, Inc. and SAP America’s parent company SAP AG (SAP). Oracle filed several amended complaints between 2007 and 2009. As amended,amounts result

primarily from the ~~lawsuit alleges copyright infringement, violations~~unpredictability of the ~~Federal Computer Fraud~~outcomes of legal disputes in several jurisdictions. For more information, see Note (3c).

Contingent liabilities exist from intellectual property-related litigation and ~~Abuse Act~~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 ~~California Computer Data Access~~Versata litigation) ultimately resulted in a significant cash outflow in 2014.

The individual cases of intellectual property-related litigation and Fraud Act, unfair competition, intentional and negligent interference with prospective economic advantage, and civil conspiracy. The lawsuit alleges that SAP unlawfully copied and misappropriated proprietary, copyrighted software products and other confidential materials developed by Oracle to service its own customers. The lawsuit sought injunctive relief and monetary damages, including punitive damages, alleged by Oracle to be in the billions of U.S. dollars. The trial was held in November 2010. Prior to trial, SAP AG, SAP America and TomorrowNow stipulated to liability for certain claims and SAP agreed to pay Oracle US$120 million for attorneys’ fees. After the trial, the jury returned a damages verdict of US$1.3 billion. The judgment which was issued on February 3, 2011, additionally provided for prejudgment interest of US$15 million. The judgment amount is also subject to post-judgment interest, which accrues from the time judgment is entered.

The jury based its verdict on the theory of a hypothetical license, that is, the value of what TomorrowNow would have paid if it had negotiated with Oracle a license for the copyrights infringed by TomorrowNow. Before and during the course of the trial, various damages amounts had been presented by the parties to the litigation. They included the following:

a)	Before the trial, Oracle had requested damages in excess of US$3.5 billion based on alleged “saved acquisition costs”; the court dismissed that damage claim based on a pretrial motion, but Oracle has the right to appeal that dismissal.

b)	~~During the trial, Oracle’s damages experts presented an amount of US$408 million based on lost profits and disgorgement of infringer’s profit.~~

During the trial, members of Oracle management presented, as part of their testimonies, amounts of up to US$5 billion. Oracle’s damages expert presented a damages estimate of “at least” US$1.655 billion under a hypothetical license theory. Oracle’s counsel asked the jury to award “somewhere between US$1.65 and US$3 billion.”

d)	During the trial, the damages expert for TomorrowNow and SAP presented an amount of US$28 million based on lost profits and infringer’s profits or, alternatively, US$40.6 million based on a hypothetical license theory. Counsel for SAP and TomorrowNow asked the jury to award US$28 million.

We believed both before and during the trial and continue to believe that the hypothetical license theory is not an appropriate basis for calculating the damages. Instead, we believe that damages should be based on lost profits and infringer’s profits. As such, SAP filed post-trial motions asking the judge to overturn the judgment. A hearing on the post-trial motions was held in July 2011. On September 1, 2011, the trial judge issued an order which set aside the jury verdict and vacated that part of the judgment awarding US$1.3 billion in damages. The trial judge also gave Oracle the choice of accepting reduced damages of US$272 million or having a new trial based on lost profits and infringer’s profits. Oracle filed a motion seeking an early appeal from the ruling vacating the jury’s damages award, which was denied by the judge. Consequently, Oracle elected to proceed with a new trial. In lieu of a new trial, the parties stipulated to a judgment of US$306 million while each preserving all rights for appeal. Both parties have filed their respective notice of appeal. On appeal, Oracle is seeking

three forms of relief: (1) reinstatement of the November 2010 $1.3 billion verdict; (2) as a first alternative, a new trial at which Oracle may again seek hypothetical license damages (based in part on evidence of alleged saved development costs) plus SAP’s alleged infringer’s profits without any deduction of expenses (Oracle does not put a number on its claim for the requested new trial); and (3) as a second alternative, increase of the remittitur (alternative to new trial) to $408.7 million (vs. the $272 million Oracle had previously rejected). SAP has dismissed its cross-appeal.

Additionally, in June 2007, SAP became aware that the United States Department of Justice (U.S. DOJ) had opened an investigation concerning related issues and had issued subpoenas to SAP and TomorrowNow. The DOJ investigation has been resolved by way of a plea agreement which includes TomorrowNow pleading guilty to 11 counts of violations of the Computer Fraud and Abuse Act, one count of criminal copyright infringement, the payment of a US$20 million fine and three years probation. No charges were brought against SAP AG or subsidiaries thereof other than TomorrowNow.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 ~~each of five~~ patents held by Versata. In ~~its complaint, Versata sougth unspecified monetary damages and permanent injunctive relief. The first trial was held in~~ August ~~2009. The jury returned a verdict in favor of~~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 ~~awarded~~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 ~~US$138.6 million for past damages. In January 2011, the court vacated the jury’s damages award and ordered a new trial on damages. The re-trial was held~~has licensed to SAP certain patents in May 2011. The jury returned a verdict in favor of Versata and awarded Versata US$345 million for past damages. In September 2011, the judge denied SAP’s post-trial motions with the exception of reducing the damages verdict by US$16 million to approximately US$329 million. The judge also ordered approximately US$60 million in pre-judgment interest. Additionally, the judge granted Versata’s requestexchange for a broad injunction which prohibits SAP from 1) selling products in the United States with the infringing functionality, 2) providing maintenance to or accepting maintenance revenue from existing customers in the United States until such customers disable the infringing functionality and verify such disablement, and 3) licensing additional users to existing customers in the United States until such customers disable the infringing functionality and

verify such disablement. Finally, the judge stayed the injunction pending the outcome of an appeal. Both parties are appealing and the appeal briefs have been filed. The hearing is scheduled for February 2013. Additionally, SAP has filed a petition with the United States Patent Office (“USPTO”) challenging the validity of the asserted Versata patent. The USPTO has granted SAP’s request to reconsider the validity of Versata’s patent and instituted the relevant procedure (transitional post grant review).

~~In January 2007, German-based CSB-Systems AG (CSB) instituted legal proceedings in Germany against SAP. CSB alleged that SAP’s products infringe one or more of the claims of a German patent~~one-time cash payment and a ~~German utility model held by CSB. In its complaint, CSB set the amount in dispute at €1 million and sought permanent injunctive relief. Within these proceedings CSB~~potential additional contingent payment. Such contingent payment is not precluded from requesting damages in excess of the amount in dispute. In July 2007, SAP filed its response in the legal proceedings including a nullity action and cancelation proceeding against the patent and utility model, respectively. The nullity hearing on the German patent was held in January 2009 and the German court determined that the patent is invalid. On appeal in June 2011, the Federal Supreme Court also concluded the patent was invalid. The cancelation hearing for the utility model was held in May 2009 and the court determined that the utility model was invalid. CSB is appealing the invalidity determination of the utility model, however, the infringement hearing has been stayed pending the appeals.

In May 2010, CSB-Systems International, Inc. (CSB) instituted legal proceedings in the United States against SAP. CSB alleged that SAP’s products infringe one or more of the claims in one patent held by CSB. In its complaint, CSB sought unspecified monetary damages and permanent injunctive relief. In February 2013, SAP and CSB resolved this dispute for an amount not material to ~~SAP’s business, financial position, profit, or cash flows.~~

~~In August 2007, United States-based elcommerce.com, Inc. (elcommerce) instituted legal proceedings in~~SAP. The Agreement also provides for general releases, indemnification for its violation, and dismisses the United States against SAP. elcommerce alleged that SAP’s products infringe one or more of the claims in one patent held by elcommerce. In its complaint, elcommerce sought unspecified monetary damages and permanent injunctive relief. The court in East Texas granted SAP’s request to transfer theexisting litigation ~~from East Texas to Pennsylvania. Subsequent to the Markman ruling by the court, the parties agreed to the entry of final judgment~~

~~regarding non-infringement by SAP. elcommerce has appealed the court’s Markman ruling. The hearing for the appeal was held in May 2012.~~with prejudice.

In February 2010, United States-based TecSec, Inc. (TecSec) instituted legal proceedings in the United States against SAP ~~Sybase, IBM~~(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 legal proceedings have been stayed against all defendants pending~~scheduled – the ~~outcome of an appeal by TecSec regarding the court’s determination that IBM does not infringe the patents.~~lawsuit for SAP ~~along with the other defendants, is now appealing. The hearing is scheduled for March 2013.~~(including its subsidiary Sybase) remains stayed.

In April 2010, SAP instituted legal proceedings (a ~~Declaratory Judgment~~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 ~~and/~~or not infringed by SAP. The trial has not yet been scheduled. The legal proceedings have been stayed pending the outcome of ~~re-examinations~~six reexaminations filed with the ~~U.S.~~United States Patent and Trademark ~~Office.~~

~~Other Litigation~~

In April 2008, South African-based Systems Applications Consultants (PTY) Limited (Securinfo) instituted legal proceedings in South Africa against SAP. Securinfo alleges that SAP has caused one of its subsidiaries to breach a software distribution agreement with Securinfo. In its complaint, Securinfo seeks damages of approximately €610 million plus interest.Office (USPTO). In September ~~2009,~~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 re-asserted 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 ~~motion~~declaratory judgment action in Frankfurt/Main, Germany, asking the German court to ~~dismiss~~rule that SAP did not misappropriate any Wellogix trade secrets.

Customer-Related Litigation and Claims

Customer-related litigation and claims include cases in which ~~was rejected. A trial date~~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 ~~was scheduled for June 2011~~no provision has been ~~postponed.~~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

In November 2012, SAP filed a motion to dismiss based on a procedural aspect of the case. The court followed SAP’s argument and dismissed the claim by Securinfo. Securinfo appealed against this decision on December 19, 2012.

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 ~~€87~~€75 million. We have not recorded a provision for these matters, as we believe that we will ~~prevail on these matters.~~prevail.

For more information about income ~~tax risk-related~~tax-related litigation, see Note (10).

(24) FINANCIAL RISK FACTORS

~~(24)~~

~~Financial Risk Factors~~

We are exposed to various financial risks, such as market risks (including foreign currency exchange rate risk, ~~interest rate~~interest-rate risk, and equity price risk), credit risk, and liquidity risk.

Market Risk

a) Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk of loss due to adverse changes in foreign currency exchange rates. Under IFRS, foreign currency exchange rate risks arise on account of monetary financial instruments denominated in currencies other than the functional currency where the non-functional currency is the respective risk variable; translation risksAs we are ~~not taken into consideration.~~

~~As a globally~~ active ~~enterprise, we~~worldwide, our ordinary operations are subject to risks associated with fluctuations in foreign ~~currencies with regard to our ordinary operations.~~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 we generate ~~foreign-currency-denominated~~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~~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 ~~most 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

currencies of subsidiaries with significant operations, for example the U.S. dollar, the pound sterling, the Japanese yen, the Swiss franc, the ~~Canadian dollar,~~Brazilian real, and the Australian dollar.

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, ~~during 2012~~ we were exposed to a cash

flow risk from the consideration to be paid in U.S. dollars for the ~~acquisitions~~acquisition of ~~SuccessFactors~~Concur and ~~Ariba, Inc.~~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).

b) ~~Interest Rate~~Interest-Rate Risk

Interest-rate risks result from changes in market interest rates, which can cause changes in the fair values of fixed-rate instruments and in the interest to be paid or received for variable-rate instruments. We are exposed to interest-rate risk as a result of our investing and financing activities mainly in euros and U.S. ~~dollars.~~

~~As at December 31, 2012, our liquidity was mainly invested in time deposits and bonds with fixed yields, and money market instruments with variable yields, held~~dollars as cash equivalents and current and non-current investments. Since we do not account for the fixed-yield time deposits held at year-end at fair value, we are not exposed to an interest-rate risk with regard to these investments. However, a fair value interest rate exposure arises from the bonds classified as available for sale. Also, we are exposed to a cash flow risk from the variable-yield money market funds, mainly held in the U.S.

As at December 31, 2012, we are not exposed to an interest-rate risk from our financing activities (for more information about the individual instruments, see Note (17b)) as all our issued bonds with a total volume of €2.9 billion, the U.S. private placement notes with a volume of US$2.65 billion, and the remaining tranche of €86 million of the German promissory notes pay fixed interest.follows:


€ millions	2015				2014
€ millions	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

~~Equity-price risk is the risk of loss due to adverse changes in equity markets.~~ We are exposed to ~~such~~equity price risk with regard to our investments in listed equity securities ~~(2012: €52~~(2015:€320 million; ~~2011: €39~~2014:€209 million) and our share-based payments (for the exposure from these plans, see Note (27)).

Credit Risk

~~Credit risk is the risk of economic loss of principal or financial rewards stemming from a counterparty’s failure to repay or service debt according to the contractual obligations.~~

To reduce the credit risk in ~~trade receivables and~~ investments, we ~~have made the following arrangements:~~

~~An agreement with an insurer~~arrange to ~~insure part of our trade receivables against credit losses~~

~~The receipt of~~receive rights to collateral for certain investing activities in the full amount of the investment volume, which we would ~~only~~ be allowed to make use of only in the case of default of the counterparty to the investment.

~~With~~ In the ~~exception~~absence of ~~these transactions, we have not executed~~other significant agreements to reduce our ~~overall~~ credit risk exposure, ~~such as master~~

~~netting arrangements. Therefore,~~ 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

~~Liquidity risk results from the potential inability to meet financial obligations, such as payments to suppliers or employees. A maturity~~The table below is an analysis ~~that provides~~of the remaining contractual maturities of all our financial liabilities held at December 31, ~~2012, is shown in the table below.~~2015. Financial liabilities ~~shown in the table below~~ 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 ~~last~~latest relevant interest rate fixed as at December 31, ~~2012.~~2015. As we generally settle our derivative contracts gross, we show the pay and receive legs separately for all our currency and ~~interest rate~~interest-rate derivatives, whether or not the fair value of the derivative is ~~negative.~~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.

~~The~~For more information about the cash flows for unrecognized but contractually agreed financial commitments, ~~are shown in~~see Note ~~(23)~~(22).

Contractual Maturities of Non-Derivative Financial Liabilities

€ millions

Carrying
Amount

Contractual Cash Flows

12/31/2015

2016

2017

2018

2019

2020

Thereafter

Trade payables

–893

Financial liabilities

–9,395

–863

–2,778

–980

–836

–986

–3,683

Total of non-derivative financial liabilities

–10,288

–1,756

–2,778

–980

–836

–986

–3,683

€ millions    Carrying
Amount    Contractual Cash Flows
   12/31/2014    2015    2016    2017    2018    2019    Thereafter
Trade payables
   –782       –782       0       0       0       0       0
Financial liabilities
   –11,209       –2,377       –625       –3,976       –958       –827       –3,262
Total of non-derivative financial liabilities
   –11,990    –3,159       –625       –3,976       –958       –827       –3,262

Contractual Maturities of Derivative Financial Liabilities and Financial Assets


	Carrying Amount		Contractual Cash Flows
€ millions	12/31/2012		2013		2014		2015		2016		2017		Thereafter		Carrying Amount		Contractual Cash Flows				Carrying Amount		Contractual Cash Flows
Non-derivative financial liabilities
Trade payables		–684		–684		0		0		0		0		0
Financial liabilities		–5,051		–757		–705		–874		–534		–904		–1,922

Total of non-derivative financial liabilities		–5,735		–1,441		–705		–874		–534		–904		–1,922

Derivative financial liabilities and assets
€ millions															12/31/2015		2016		Thereafter		12/31/2014		2015		Thereafter
€ millions
Currency derivatives without designated hedge relationship		–195
Currency derivatives not designated as hedging instruments																–117						–310
Cash outflows				–2,996		–10		–10		–10		–9		–26				–2,896		–58				–4,110		–44
Cash inflows				2,875		0		0		0		0		0				2,834		0				3,836		0
Currency derivatives with designated hedge relationship		–2
Currency derivatives designated as hedging instruments																–10						–22
Cash outflows				–157		0		0		0		0		0				–489		0				–487		0
Cash inflows				154		0		0		0		0		0				475		0				464		0
Interest rate derivatives with designated hedge relationship		0
Interest-rate derivatives designated as hedging instruments																0						–1
Cash outflows				0		0		0		0		0		0				0		0				–7		–24
Cash inflows				0		0		0		0		0		0				0		0				9		19
Total of derivative financial liabilities																–128		–76		–58		–333		–295		–49
Derivative financial assets
Currency derivatives without designated hedge relationship		46
Currency derivatives not designated as hedging instruments																69						411
Cash outflows				–2,690		0		0		0		0		0				–3,010		0				–1,236		0
Cash inflows				2,735		0		0		0		0		0				3,073		0				1,656		0
Currency derivatives with designated hedge relationship		29
Currency derivatives designated as hedging instruments																14						10
Cash outflows				–460		0		0		0		0		0				–266		0				–162		0
Cash inflows				485		0		0		0		0		0				275		0				163		0

Interest-rate derivatives designated as hedging instruments																100						77
Cash outflows																		–43		–225				–34		–293
Cash inflows																		77		300				62		313
Total of derivative financial assets																183		106		75		498		449		20
Total of derivative financial liabilities and assets		–122		–54		–10		–10		–10		–9		–26		55		30		17		165		154		–29

~~Contractual Maturities of Financial Liabilities and Financial Assets~~(25) FINANCIAL RISK MANAGEMENT

Carrying Amount Contractual Cash Flows
€ millions 12/31/2011 2012 2013 2014 2015 2016 Thereafter
Non-derivative financial liabilities

Trade payables
–727    –727    0    0    0    0    0
Financial liabilities
–4,034    –1,264    –687    –840    –276    –495    –792

Total of non-derivative financial liabilities
–4,761    –1,991    –687    –840    –276    –495    –792

Derivative financial liabilities and assets

Derivative financial liabilities

Currency derivatives without designated hedge relationship
–179
Cash outflows
–2,887    –10    –10    –10    –10    –40
Cash inflows
2,797    0    0    0    0    0
Currency derivatives with designated hedge relationship
–34
Cash outflows
–569    –50    0    0    0    0
Cash inflows
534    49    0    0    0    0
Interest rate derivatives with designated hedge relationship
–8
Cash outflows
–9    –5    –3    0    0    0
Cash inflows
6    3    1    0    0    0
Derivative financial assets

Currency derivatives without designated hedge relationship
118
Cash outflows
–2,172    0    0    0    0    0
Cash inflows
2,281    0    0    0    0    0
Currency derivatives with designated hedge relationship
4
Cash outflows
–82    0    0    0    0    0
Cash inflows
87    0    0    0    0    0

Total of derivative financial liabilities and assets
–99    –14    –13    –12    –10    –10    –40

The change in our non-derivative financial liabilities will lead to an overall increase in cash outflows compared to the end of 2012. This is because the 2012 financing activities totaled €2.3 billion whereas repayments were only €1.3 billion in 2012. For more information, see Note (17b).

~~(25)~~

~~Financial Risk Management~~

We manage market risks (including foreign currency exchange rate risk, ~~interest rate~~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 ~~Without~~Not Designated ~~Hedge Relationship~~as Hedging Instruments

The foreign exchange forward contracts we enter into to offset exposure relating to ~~foreign currency-denominated~~foreign-currency denominated monetary assets and liabilities ~~from our operating activities~~ are not designated as being in a hedge accounting relationship, ~~because the realized currency gains and losses from the underlying items are recognized in profit or loss in the same periods as the gains and losses from the derivatives.~~seeNote (3a).

Currency hedges ~~without a~~not designated ~~hedge relationship~~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.~~39 (Financial Instruments: Recognition and Measurement).

In addition, during ~~2012~~2014 we held foreign exchange forward contracts and foreign currency options ~~and deal-contingent forward contracts~~ to ~~partially~~ hedge the cash flow risk from the consideration paid in U.S. dollars for the ~~acquisitions~~acquisition of ~~SuccessFactors and Ariba.~~Concur.

Currency Hedges ~~with~~ Designated ~~Hedge Relationship~~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 1512 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, including the United States, the United Kingdom, Japan, Switzerland, Canada, and Australia.~~operations. We generally use foreign exchange derivatives that have maturities of 1512 months or less, which may be rolled over to provide continuous coverage until the applicable royalties are received.

In 2012, net gains totaling €17 million (2011: net losses of €14 million; 2010: net losses of €55 million) resulting from the change in the component of the derivatives designated as hedging instruments were recorded in other comprehensive income.

For the years ended December 31, ~~2012~~2015 and ~~2011,~~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. In 2012, we reclassified net losses of €24 million (2011: net losses of €13 million; 2010: net losses of €44 million) from other comprehensive income to profit or loss due to the hedged items affecting income. 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 1512 months from the date of the statement of financial position. ~~It is estimated that €20 million of the net gains recognized in other comprehensive income in 2012, will be reclassified from other comprehensive income to profit or loss during fiscal year 2013.~~

Foreign Currency Exchange Rate Exposure

In line with our internal risk reporting process, we use the ~~value-at-risk~~cash flow-at-risk method to quantify our risk positions ~~and~~with regard to ~~manage foreign currency exchange rate risk. Our calculation of the value-at-risk includes both, our foreign currency-denominated financial instruments, and~~ our forecasted intercompany transactions ~~although the latter are scoped out of IFRS 7. As~~and value-at-risk for our ~~internal calculation of value-at-risk is thus~~foreign-currency denominated financial instruments. In order not ~~in line with the requirements of IFRS 7,~~to provide two different methodologies, we have opted to disclose our risk exposure based on a sensitivity analysis considering the following:

Since the SAP Group’s entities generally operate in their functional currencies, the majority of our non-derivative monetary financial instruments, such as cash and cash equivalents, trade receivables, trade payables, loans to employees and third parties, bank liabilities, and other financial liabilities, are denominated in the respective entities’ functional currency. Thus, a foreign currency exchange rate risk in these transactions is nearly non existent. In exceptional cases and limited economic environments, operating and financing transactions are denominated in currencies other than the functional currency, leading to a foreign currency exchange rate risk for the related monetary instruments. Where we hedge against currency impacts on cash flows, these foreign-currency-denominated financial instruments are economically converted into the functional currency by the use of forward exchange contracts or options. 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.

–

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.

Income or expenses recorded in connection with the non-derivative monetary financial instruments discussed above are mainly recognized in the relevant entity’s functional currency. Therefore, fluctuations in foreign currency exchange rates neither have a significant impact on profit nor on other comprehensive income in this regard.

Consequently, we are only exposed to significant foreign currency exchange rate fluctuations with regard ~~to:~~to the following:

~~Derivatives held within a designated cash-flow~~
–
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 ~~assigned cash flow hedge relationships)~~

~~Foreign currency embedded derivatives~~

~~The~~ foreign currency ~~options held as at~~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, ~~2011, in connection with~~2015, 2014, and 2013, the ~~acquisition of SuccessFactors.~~

~~If we do~~foreign currency exchange rates had been higher/lower as described above, this would not have had a ~~significant exposure towards a single currency, we disclose our sensitivity to our major foreign currencies (as described in Note (24)) in total.~~material effect on other non-operating expense, net and other comprehensive income.

~~Foreign Currency Sensitivity~~

   Effects on Other
Non-Operating Expense, Net    Effects on Other
Comprehensive Income
€ millions    2012    2011    2010    2012    2011    2010
Derivatives held within a designated cash-flow hedge relationship

All major currencies –10%
            60       70       46
All major currencies +10%
            –60       –70       –46
Embedded derivatives

Swiss franc –10%
   38       41       42
Swiss franc +10%
   –38       –41       –42
other currencies –10%
   3       0       0
other currencies +10%
   –3       0       0
Freestanding foreign currency options related to SuccessFactors acquisition

U.S. dollar –10%
   0       6       0
U.S. dollar +10%
   0       –50       0

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	2012		2011		2015		2014
Year end exposure towards all our major currencies		1.0		2.4
Year-end exposure toward all our major currencies						1.0		1.0
Average exposure		2.4		1.3		1.1		2.7
Highest exposure		3.7		2.4		1.2		7.7
Lowest exposure		1.0		0.8		1.0		1.0

~~Our~~During 2015, our sensitivity to foreign currency exchange rate fluctuations ~~has~~ decreased compared to the year ended December 31, ~~2011,~~2014, mainly ~~because there were no acquisition-related foreign currency derivatives outstanding.~~

due to the hedging transactions for the acquisition of Concur in 2014.

~~Interest Rate~~Interest-Rate Risk Management

The ~~primary~~ aim of our ~~interest rate~~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~~interest-rate risks by adding ~~interest rate-related~~interest-rate-related derivative instruments to a given portfolio of investments and debt financing.

~~As at December 31, 2012, a cash flow interest rate~~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 ~~existed with regard~~from our financing transactions to our ~~investing activities in money market instruments with variable yields in~~investments, we use receiver interest-rate swaps to convert certain fixed rate financial liabilities to floating, and by this means secure the ~~amount~~fair value of ~~€396 million.~~

~~All (2011: 97%~~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, ~~2012, had a fixed interest rate whereas 65% (2011: 69%) of our interest-bearing investments~~2015, had a fixed interest rate.

~~Therefore, we are mainly exposed to an interest rate risk~~None of the fair value adjustment from ~~our variable-yield money market instruments.~~

~~Derivatives with Designated Hedge Relationship (Cash Flow Hedges)~~

~~During 2012, we~~the receiver swaps, the basis adjustment on the underlying hedged items held ~~interest rate derivatives with a designated~~in fair value hedge ~~relationship for which we reclassified net losses of €7 million (2011: net losses of €4 million; 2010: net losses of €6 million) out of other comprehensive income to finance~~relationships, and the difference between the two recognized in financial income, net ~~due to the hedged items affecting income or being repaid early. We did not record any ineffectiveness for these hedges~~is material in any of the ~~fiscal~~ years ~~reported.~~presented.

~~Interest Rate~~Interest-Rate Exposure

A sensitivity analysis is provided to show the impact of our ~~interest rate~~interest-rate risk exposure on profit or loss and equity in accordance with IFRS 7, considering the following:

Changes in interest rates only affect non-derivative fixed-rate financial instruments if they are recognized at fair value. Therefore, we do not have a fair value risk in our non-derivative financial liabilities as we account for them at

–

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. ~~On December 31 of each year end reported, we had fixed-rate bonds classified as available-for-sale as described~~Investments in ~~Note (24). We therefore consider interest~~fixed rate ~~changes relating to the fair value measurement of such fixed-rate non-derivative~~ 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 non-derivative 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.

Income or expenses recorded in connection with non-derivative 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.

~~Due to the~~The designation of ~~interest rate payer~~interest-rate receiver swaps toin a ~~cash flow~~fair value hedge relationship ~~the interest rate~~leads to interest-rate changes ~~affect the respective amounts recorded in other comprehensive income.~~affecting financial income, net. The fair value movements related to the ~~interest rate swaps’ variable leg~~interest-rate swaps are not reflected in the sensitivity calculation, as they offset the ~~variable-interest-rate~~fixed interest-rate payments for the ~~SSD. We therefore only consider~~bonds and private placements as hedged items. However, changes in market interest ~~rate sensitivity in discounting~~rates affect the amount of interest ~~rate swaps’ fixed leg cash flows~~payments from the interest-rate swap. As a consequence, those effects of market interest rates on interest payments are included in the ~~equity-related~~profit-related sensitivity ~~calculation for the interest rate swaps designated to be in a hedge relationship.~~calculation.

Due to the ~~current low interest rate level~~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/~~–20~~+50 basis

points for the U.S. dollar/euro area (2014: +100/+50 basis points ~~to avoid negative interest rates.~~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, ~~2012, 2011,~~2015, 2014, and ~~2010,~~2013, interest rates had been ~~100 basis points higher (20 basis points lower),~~higher/lower as described above, this would not have had a material effect on ~~the following:~~

~~The gains/losses on available-for-sale~~ financial ~~assets positions in other comprehensive income~~

~~Finance~~ income, net for our ~~variable-interest-rate~~variable interest-rate investments and would have had the following effects on financial ~~debt~~income, net.

Interest-Rate Sensitivity


€ millions	Effects on Financial Income, Net
€ millions	2015		2014		2013
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)		–105		–116		–24
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)		62		70		5
Variable rate financing
Interest rates +50 bps in euro area		–39		–65		0
Interest rates –50 bps in euro area		19		65		0

~~The effective portion of the interest rate cash flow hedge in other comprehensive income~~

Our ~~interest rate~~interest-rate exposure as at December 31 (and if ~~year end~~year-end exposure is not representative, also our average/high/low exposure) was as follows:

~~Interest rate risk exposure~~Interest-Rate Risk Exposure


€ billions	2012								2011
€ billions	Year end		Average		High		Low		Year end		Average		High		Low
Fair value interest rate risk
€ billion																	2015								2014
€ billion																	Year-End		Average		High		Low		Year-End		Average		High		Low
Fair value interest-rate risk
From investments		0.03		0.1		0.3		0		0.4		0.25		0.5		0		0.03		0.05		0.07		0.03		0.04		0.05		0.08		0.04
Cash flow interest rate risk
From investments		0.4		0.9		1.4		0.4		1.4		1.3		1.4		0.875
Cash flow interest-rate risk
From investments (including cash)																		3.08		3.09		3.37		2.62		2.45		2.48		2.74		2.13
From financing		0		1.1		3.2		0		0.1		0.308		1.1		0.1		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

~~Equity-Price~~Equity Price Risk Management

Our investments in equity instruments with quoted market prices in active markets ~~(2012: €52~~(2015:€320 million; ~~2011: €39~~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, ~~2012 (2011)~~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, ~~2012,~~2015, would have increased (decreased) our share-based payment expenses by ~~€139~~€200 million ~~(€117~~(€198 million) ~~(2011:~~(2014: increased by ~~€27~~€158 million (decreased by ~~€25~~€80 million); ~~2010: €53~~2013: increased by€126 million (decreased by€90 million)).

Credit Risk Management

To mitigate the credit risk ~~for~~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 which was lowered from A– due to the current market environment.~~“BBB flat”. We only make investments in issuers with a lower rating in exceptional cases. ~~However, such~~Such investments were not material in ~~2012.~~2015. The weighted average rating of our financial assets is in the range AA+ to ~~A–.~~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 ~~of non-financial corporations~~ 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 ~~the~~ market participants’ assessments of the creditworthiness of a debtor, we also closely observe the development of ~~CDS~~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 ~~historical~~past experience with ~~respective~~the customers ~~and it is partially covered by merchandise credit insurance.~~

concerned. Outstanding receivables are continuously monitored locally. ~~Credit risks are accounted for through individual and portfolio allowances (described in detail in~~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.

~~Our~~Generally, our primary source of liquidity is funds generated from our business ~~operations, which have historically been the primary source of the liquid funds needed to maintain our investing and financing strategy.~~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, seeking~~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, ~~as at December 15, 2010,~~on November 13, 2013, SAP AGSE entered into a ~~€1.5~~€2.0 billion syndicated credit facility agreement with an initial term of five years ~~ending in December 2015.~~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 4522.5 basis ~~points to 75 basis points, depending on the amount drawn.~~points. We are also required to pay a commitment fee of ~~15.75~~7.88 basis points per annum on the unused available credit. ~~Since the inception, we~~We have ~~not~~never drawn on the facility. Furthermore, as at December 15, 2011, SAP AG secured another credit facility in the amount of €200 million bearing fixed interest with the exact borrowing rate determined at the date of drawdown at the applicable EURIBOR plus a margin of 35 basis points per annum.

Additionally, as at December 31, ~~2012,~~2015, and ~~2011,~~2014, SAP AGSE had available lines of credit totaling ~~€489~~€471 million and ~~€490~~€471 million, respectively. As at December 31, ~~2012,~~2015, and ~~2011,~~2014, there were no borrowings outstanding under these lines of credit. As at December 31, 2012, and 2011, certain subsidiaries had lines of credit available that allowed them to borrow in local currencies at prevailing interest rates up to €48 million and €54 million, respectively. There were no borrowings outstanding under these credit facilities from any of our foreign subsidiaries as at December 31, 2012, and borrowings as at December 31, 2011, were immaterial.

(26) ADDITIONAL FAIR VALUE DISCLOSURES ON FINANCIAL INSTRUMENTS

~~(26)~~

~~Additional Fair Value Disclosures on Financial Instruments~~

Fair Value of Financial Instruments

We use various types of financial ~~instruments~~instrument in the ordinary course of business, which are ~~grouped into the following categories:~~classified as either: loans and receivables (L&R), available-for-sale (AFS), held-for-trading (HFT), ~~and~~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.

~~The table below shows~~Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy


€ millions	Category		December 31, 2015
			Carrying Amount		Measurement Categories				Fair Value
					At Amortized Cost		At Fair Value		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents¹⁾		L&R		3,411		3,411
Trade and other receivables				5,362
Trade receivables¹⁾		L&R		5,199		5,199
Other receivables²⁾		—		163
Other financial assets				1,687
Available-for-sale financial assets
Debt investments		AFS		26				26		26						26
Equity investments		AFS		882				882		299		21		562		882
Investments in associates²⁾		—		58
Loans and other financial receivables
Financial instruments related to employee benefit plans²⁾		—		121
Other loans and other financial receivables		L&R		316		316						316				316
Derivative assets
Designated as hedging instrument
FX forward contracts		—		14				14				14				14
Interest-rate swaps		—		100				100				100				100
Not designated as hedging instrument
FX forward contracts		HFT		69				69				69				69
Call options for share-based payments		HFT		94				94				94				94
Call option on equity shares		HFT		6				6						6		6

Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy

€ millions

Category

December 31, 2015

Carrying
Amount

Measurement
Categories

Fair Value

At
Amortized
Cost

At Fair
Value

Level 1

Level 2

Level 3

Total

Liabilities

Trade and other payables

–1,169

Trade payables¹⁾

–893

Other payables²⁾

—

–276

Financial liabilities

–9,522

Non-derivative financial liabilities

Loans

–1,261

Bonds

–5,733

–5,825

Private placements

–2,202

–2,288

Other non-derivative financial liabilities

–199

Derivatives

Designated as hedging instrument

FX forward contracts

—

–10

Interest-rate swaps

—

Not designated as hedging instrument

FX forward contracts

HFT

–117

Total financial instruments, net

–232

–1,361

1,064

–5,500

–3,261

568

–8,192

Fair Values of Financial Instruments and Classification Within the Fair Value Hierarchy

€ millions

Category

December 31, 2014

Carrying
Amount

Measurement Categories

Fair Value

Amortized
Cost

At Fair
Value

Level 1

Level 2

Level 3

Total

Assets

Cash and cash equivalents¹⁾

L&R

3,328

Trade and other receivables

4,443

Trade receivables¹⁾

L&R

4,255

Other receivables²⁾

—

188

Other financial assets

1,699

Available-for-sale financial assets

Debt investments

AFS

Equity investments

AFS

597

108

101

388

597

Investments in associates²⁾

—

Loans and other financial receivables

Financial instruments related to employee benefit plans²⁾

—

136

Other loans and other financial receivables

L&R

324

Derivative assets

Designated as hedging instrument

FX forward contracts

—

Interest-rate swaps

—

Not designated as hedging instrument

FX forward contracts

HFT

411

Call options for share-based payments

HFT

Call option on equity shares

HFT

Liabilities

Trade and other payables

–1,087

Trade payables¹⁾

–782

Other payables²⁾

—

–305

Financial liabilities

–11,542

Non-derivative financial liabilities

Loans

–4,261

Bonds

–4,629

–4,811

Private placements

–2,195

–2,301

Other non-derivative financial liabilities

–123

Derivatives

Designated as hedging instrument

FX forward contracts

—

–22

Interest-rate swaps

—

–1

Not designated as hedging instrument

FX forward contracts

HFT

–310

Total financial instruments, net

–3,159

–4,084

858

–4,663

–6,053

400

–10,315

¹⁾ We do not separately disclose the fair value for cash and cash equivalents, trade receivables, and accounts payable as their carrying amounts ~~and~~are a reasonable approximation of their fair ~~values of financial assets and liabilities by category of financial instrument as well as by category of IAS 39.~~values.

²⁾ Since the line items ~~“Trade~~trade receivables,~~” “Trade payables”,~~ trade payables, and ~~“Other~~other financial ~~assets”~~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 ~~in the column headed “Not in Scope of IFRS 7”~~ to allow a reconciliation to the corresponding line items in the Consolidated Statements of Financial Position. ~~The carrying amounts and fair values of our financial instruments as at December 31 were as follows:~~

Fair Values of Financial Instruments Classified According to IAS 39

€ millions
2012 2011
Book
Value
12/31
/2012 Measurement
Categories Fair
Value
12/31
/2012 Not in
Scope of
IFRS 7 Book
Value
12/31
/2011 Measurement
Categories Fair
Value
12/31
/2011 Not in
Scope of
IFRS 7
Category At
Amortized
Cost At
Cost At
Fair
Value At
Amortized
Cost At
Cost At
Fair
Value
Assets

Cash and cash equivalents
L&R 2,477    2,477    2,477    4,965    4,965    4,965
Trade receivables
L&R 4,005    3,837    3,837    168    3,577    3,431    3,431    145
Other financial assets
787    1,355
Debt securities
L&R/AFS 29    29    400    400
Equity securities
AFS 149    52    52    46    122    39    39    47
Other non-derivative financial assets
L&R 159    159    208    396    396    186
Derivative assets

With hedging relationship
– 29    29    4    4
Without hedging relationship
HFT 115    115    161    161
Liabilities

Trade payables
AC –933    –684    –684    –249    –980    –727    –727    –253
Financial liabilities
–5,248    –4,256
Non-derivative financial liabilities
AC –5,051    –5,228    –4,034    –4,107
Derivatives

With hedging relationship
– –2    –2    –43    –43
Without hedging relationship
HFT –195    –195    –179    –179
Total financial instruments, net
1,088    738    149    28    589    173    4,661    4,031    122    382    4,340    125
Aggregation according to
IAS 39

Financial assets

At fair value through profit or loss
HFT 115    115    115    161    161    161
Available-for-sale
AFS 230    149    81    81    561    122    439    439
Loans and receivables
L&R 6,641    6,473    6,473    168    8,937    8,792    8,792    145
Financial liabilities

At fair value through profit or loss
HFT –195    –195    –195    –179    –179    –179
At amortized cost
AC –5,984    –5,735    –5,912    –249    –5,014    –4,761    –4,834    –253
Outside scope of IAS 39

Financial instruments related to employee benefit plans
208    208    186    186
Investment in associates
46    46    47    47
Derivatives with hedging relationship
27    27    27    –39    –39    –39
Total financial instruments, net
1,088    738    149    28    589    173    4,660    4,031    122    382    4,340    125

€ millions

Category

December 31, 2015

Carrying Amount

At Amortized Cost

At Fair Value

Financial assets

At fair value through profit or loss

HFT

169

Available-for-sale

AFS

908

Loans and receivables

L&R

8,926

Financial liabilities

At fair value through profit or loss

HFT

–117

At amortized cost

–10,288

€ millions

Category

December 31, 2014

Carrying Amount

At Amortized Cost

At Fair Value

Financial assets

At fair value through profit or loss

HFT

467

Available-for-sale

AFS

637

Loans and receivables

L&R

7,906

Financial liabilities

At fair value through profit or loss

HFT

–310

At amortized cost

–11,991

Determination of Fair Values

~~IAS 39 defines~~It is our policy that transfers between the different levels of the fair value ashierarchy are deemed to have occurred

at the ~~amount for which an asset could be exchanged,~~beginning of the period of the event or ~~a liability settled, between knowledgeable, willing parties~~change in ~~an arm’s length transaction. Accordingly, best evidence~~circumstances that caused the transfer. A description of the valuation techniques and the inputs used in the fair value provides quoted prices in an active market. Where market prices are not readily available, valuation techniques have to be used to establish fair value. We have classified our financial instruments into those that are measured at fair value and those that are measured at cost or amortized cost.measurement is given below:

Financial Instruments Measured at Fair Value

~~Depending~~ on ~~the inputs used for determining fair value, we have categorized our financial instruments at fair value into~~ a ~~three-level fair value hierarchy as mandated by IFRS 7.~~

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The inputs used to measure fair value for one single instrument may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

~~The levels of the fair value hierarchy, its application to our financial assets and liabilities, and the respective determination of fair value are described below:~~

~~Level 1: Quoted prices in active markets for identical assets or liabilities.~~

~~Marketable available-for-sale debt and equity investments: The fair values of these marketable securities are based on quoted market prices as at December 31.~~

Level 2: Inputs other than those that can be observed, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Derivative financial instruments: The fair value of foreign exchange forward contracts is based on discounting the expected future cash flows over the respective remaining term of the contracts using the respective deposit interest rates and spot rates. The fair value of our foreign currency options is calculated taking into account current spot rates and strike prices, the volatility of the respective currencies, the remaining term of the options as well as market interest rates. The fair value of the derivatives entered into to hedge our share-based payments are calculated considering risk-free interest rates, the remaining term of the derivatives, the dividend yields, the stock price, and the volatility of our share.

Available-for-sale equity investments in public companies: Certain of our equity investments in public companies were restricted from being sold for a limited period. Therefore, fair value is determined based on quoted market prices as at December 31, deducting a discount for the disposal restriction based on the premium for a respective put option.

~~Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

The following table allocates those financial assets and liabilities that are measured at fair value in accordance with IAS 39 either through profit or loss or other comprehensive income as at December 31, 2012, to the three levels of the fair value hierarchy according to IFRS 7.

~~Classification of Financial Instruments~~Recurring Basis

2012 2011
€ millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial assets

Debt investments
29    0    0    29    400    0    0    400
Equity investments
52    0    0    52    18    21    0    39
Available-for-sale financial assets
81    0    0    81    418    21    0    439
Derivative financial assets
0    144    0    144    0    165    0    165

Total
81    144    0    225    418    186    0    604

Financial liabilities

Derivative financial liabilities
0    197    0    197    0    222    0    222

Total
0    197    0    197    0    222    0    222


	Type	Fair Value Hierarchy	Determination of Fair 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
	Listed equity investments	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

Type Fair Value
Hierarchy
Determination of Fair
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 risk-free 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

Financial Instruments Not Measured at ~~Cost/at Amortized Cost~~Fair Value

~~The fair values of these financial instruments are determined as follows:~~

~~Cash and cash equivalents, trade receivables,~~For other non-derivative financial ~~assets: Because the~~assets/liabilities and variable rate financial ~~assets are primarily short-term,~~debt, it is assumed that their carrying ~~values approximate~~value reasonably approximates their fair values. ~~Non-interest-bearing or below market-rate non-current loans~~

Transfers Between Levels 1 and 2

Transfers of available-for-sale equity investments from Level 2 to ~~third parties or employees are discounted~~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 ~~present value~~closing balances for our unlisted equity investments and call options on equity shares classified as Level 3 fair values:

Reconciliation of ~~estimated future cash flows using the original effective interest rate the respective borrower would have to pay to a bank for a similar loan.~~Level 3 Fair Values


€ millions	2015		2014
	Unlisted Equity Investments and Call Options on Equity Shares		Unlisted Equity Investments
January 1		400		239
Transfers
Into Level 3		12		0
Out of Level 3		–80		–29
Purchases		170		141
Sales		–22		–36
Gains/losses
Included in financial income, net in profit and loss		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
December 31		568		400
Change in unrealized gains/losses in profit and loss for investments held at the end of the reporting period		0		0

Available-for-sale equity investments in private companies: For these investments in equity instruments primarily consisting of venture capital investments, fair values cannot readily be observed as they doChanging the unobservable inputs to reflect reasonably possible alternative assumptions would not have a quoted market price in an active market. Also, calculating fair value by discounting estimated future cash flows is not possible as a determination of cash flows is not reliable. Therefore, such investments are accounted for at cost approximating fair value, with impairment being assessed basedmaterial impact on ~~revenue~~

multiples of similar companies and review of each investment’s cash position, financing needs, earnings and revenue outlook, operational performance, management and ownership changes, and competition.

Accounts payable and non-derivative financial liabilities: Non-derivative financial liabilities include financial debt and other non-derivative financial liabilities. Accounts payable and other non-derivative financial liabilities are mainly short-term, and thus theirthe fair values ~~approximate their carrying values. The carrying values~~ of ~~financial debt with variable interest rates generally approximate~~our unlisted equity investments held as available-for-sale as of the ~~fair values. The fair value of fixed-rate financial debt is based on quoted market prices or determined by discounting the cash flows using the market interest rates on December 31.~~reporting date.

(27) SHARE-BASED PAYMENTS

~~(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 ~~payments, none of~~payment plans not described below, which are individually orand in ~~the~~ aggregate, ~~are material~~immaterial to ~~the~~our Consolidated Financial Statements.

a)	*~~Cash-Settled Share-Based Payments~~*

a) Cash-Settled Share-Based Payments

SAP’s ~~stock appreciation rights are~~ cash-settled share-based payments ~~and~~ include the following programs: Employee Participation Plan (EPP) and ~~Long Term~~Long-Term Incentive Plan (LTI Plan for the ~~Executive Board and~~ Global Managing Board) 2015, Stock Option Plan ~~(SOP 2007 (2008 tranche)), SOP Performance Plan 2009 (SOP PP), Stock Option Plan~~ 2010 (SOP

2010 (2010–~~2012~~2015 tranches)), ~~BO Rights (former Business Objects awards assumed in connection with the Business~~Restricted Stock Unit Plan (RSU (2013–2015 tranches)).

Objects acquisition in 2008), acquired SFSF Rights (former SuccessFactors awards assumed in connection with the SuccessFactors acquisition in 2012), and acquired Ariba Rights (former Ariba awards assumed in connection with the Ariba acquisition in 2012). SAP purchased various call options to hedge part of the anticipated cash flow exposure relating to its share-based payments. The call options have been structured to replicate the payouts required, if any, under the terms of the rights. Through the hedging program, the change in fair value of the call options offsets the personnel expense on the options recognized.

~~The following parameters and assumptions were used for calculating the fair value at grant date:~~

~~Fair Value and Parameters at Grant Date by Cash-Settled Plan~~

2012 2011 2010
Plan LTI Plan
2015 (2012
Tranche)
EPP 2015
(2012
Tranche)

SOP 2010
(2012
Tranche)

SFSF
Rights¹⁾

Ariba
Rights¹⁾

SOP 2010
(2011
Tranche)

SOP 2010
(2010
Tranche)

2/7/–
Grant date
9/1/2012    4/5/2012    6/8/2012    2/21/2012    10/1/2012    6/9/2011    9/9/2010
Weighted average fair value
€45.33    €49.91    €8.16    €30.24    €34.79    €8.24    €6.46
Expected life in years
3.9    0.8    5.7    n.a.    n.a.    5.8    5.8
Risk-free interest rate (depending on maturity)
0.56 % 0.10 % 0.64 % n.a.    n.a.    2.64 % 1.63 %
Grant price of SAP share
€46.01    €46.01    €44.80    n.a.    n.a.    €42.03    €35.48
Price of SAP share
€48.20    €50.78    €45.38    n.a.    n.a.    €41.73    €35.45
Expected volatility of SAP shares
n.a.    n.a.    30.2%    n.a.    n.a.    27.1 % 26.9 %
Expected dividend yield of SAP shares
1.53 % 2.14 % 2.07 % n.a.    n.a.    1.66 % 1.65 %

1)	~~Fair value at acquisition date~~

As at December 31, ~~2012,~~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

   LTI Plan
2015 (2012
Tranche) EPP 2015
(2012
Tranche)
SOP 2007
(2008
Tranche)
SOP PP
SOP 2010
(2010–2012
Tranche)

SFSF
Rights
Ariba Rights BO Rights
Option pricing model used
Other ¹ Other ¹ Binomial
Monte-
Carlo
   Monte-Carlo    n.a.    n.a.    Other ¹
Range of grant dates
2/7/2012    4/5/2012    3/3/2008    5/6/2009    9/9/2010    2/21/2012    10/1/2012    2/10/1998
9/1/2012    6/8/2012    1/21/2008
Quantity of awards issued in thousands
349    2,752    8,650    10,321    18,920    4,534    4,091    5,162
Weighted average fair value as at December 31, 2012
€57.79    €60.69    €23.30    €7.36    €17.06    €30.32    €34.11    €57.06
Weighted average intrinsic value as at December 31, 2012
€60.69    €60.69    €24.73    €4.76    €14.79    €30.32    €34.11    €57.06
Expected remaining life as at December 31, 2012 in years
3.1    0.1    0.1    1.2    4.1    0.9    0.7    1.9
Risk-free interest rate (depending on maturity)
0.06%    0.00%    –0.01%    –0.04%    0.03% to 0.41%    n.a.    n.a.    n.a.
Expected volatility SAP shares
n.a.    n.a.    55.0%    19.8%    25.8% to 29.6%    n.a.    n.a.    n.a.
Expected dividend yield SAP shares
1.55%    n.a.    1.55%    1.55%    1.55%    n.a.    n.a.    n.a.
Share price of reference index
n.a.    n.a.    n.a.    €192.95    n.a.    n.a.    n.a.    n.a.
Expected volatility reference index
n.a.    n.a.    n.a.    5.5%    n.a.    n.a.    n.a.    n.a.
Expected dividend yield reference index
n.a.    n.a.    n.a.    1.39%    n.a.    n.a.    n.a.    n.a.
Expected correlation SAP share/reference index
n.a.    n.a.    n.a.    42.1%    n.a.    n.a.    n.a.    n.a.

LTI Plan 2015 (2012
– 2015 tranches)

EPP 2015 (2015
tranche)

SOP 2010

(2010 – 2015
tranches)

RSU

(2013 – 2015
tranches)

Weighted average fair value as at 12/31/2015

€71.45

€73.38

€16.06

€71.90

Information how fair value was measured at measurement date

Option pricing model used

Other¹⁾

Monte-Carlo

Other¹⁾

Share price

€73.38

€73.24

Risk-free interest rate (depending on maturity)

–0.25% to

–0.39%

–0.03% to

–0.38%

–0.16% to

–0.39%

Expected volatility SAP shares

22.0% to
41.9%

Expected dividend yield SAP shares

1.56%

Weighted average remaining life of options outstanding as at 12/31/2015 (in years)

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.

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

LTI Plan 2015 (2012
– 2014 tranches)

EPP 2015 (2014
tranche)

SOP 2010

(2010 – 2014
tranches)

RSU

(2013 – 2014
tranches)

Weighted average fair value as at 12/31/2014

€56.40

€58.26

€10.17

€54.09

Information how fair value was measured at measurement date

Option pricing model used

Other¹⁾

Monte-Carlo

Other¹⁾

Share price

€58.26

€57.37

Risk-free interest rate (depending on maturity)

–0.1%

–0.1% to
0.02%

–0.1% to

–0.01%

Expected volatility SAP shares

19.9% to
23.4 %

Expected dividend yield SAP shares

1.74%

1.76%

Weighted average remaining life of options outstanding as at 12/31/2014 (in years)

1.8

0.1

3.5

1.1

Expected volatility of the SAP share price is based on a ~~mixture~~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. ~~For the SOP PP valuation, the expected volatility of the Tech Peer Group Index (ISIN DE000A0YKR94) (TechPGI) is based on the historical volatility derived from the index price history.~~

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 ~~expectations of~~expected future dividends.

~~The number of awards under our cash-settled plans developed as follows in the years ended December 31, 2012, 2011, and 2010:~~

Changes in Numbers of Outstanding Awards Under Our Cash-Settled Plans

€ thousands LTI Plan
2015
(2012
Tranche)
EPP 2015
(2012
Tranche)

SOP 2007
(2007/
2008
Tranche)
SOP PP
SOP 2010
(2010 –
2012
Tranche)
SFSF
Rights Ariba
Rights BO
Rights
Outstanding as at 12/31/2009
n.a.    n.a.    13,488    10,078    n.a.    n.a.    n.a.    1,887
Granted in 2010
n.a.    n.a.    0    0    5,397    n.a.    n.a.    0
Exercised/paid in 2010
n.a.    n.a.    –167    0    0    n.a.    n.a.    –571
Expired in 2010
n.a.    n.a.    0    0    0    n.a.    n.a.    0

Forfeited in 2010
n.a.    n.a.    –323    –503    –24    n.a.    n.a.    –216

Outstanding as at 12/31/2010
n.a.    n.a.    12,998    9,575    5,373    n.a.    n.a.    1,100
Granted in 2011
n.a.    n.a.    0    0    5,192    n.a.    n.a.    0
Exercised/paid in 2011
n.a.    n.a.    –8,172    0    0    n.a.    n.a.    –432
Expired in 2011
n.a.    n.a.    0    0    0    n.a.    n.a.    0
Forfeited in 2011
n.a.    n.a.    –832    –632    –515    n.a.    n.a.    –130

Outstanding as at 12/31/2011
n.a.    n.a.    3,994    8,943    10,050    n.a.    n.a.    538

Granted in 2012
349    2,752    0    0    8,331    4,534    4,091    0
Adjustment based upon KPI achievement in 2012
117    880    n.a.    n.a.    n.a.    n.a.    n.a.    n.a.
Exercised/paid in 2012
0    0    –3,170    –3,294    0    –1,826    –1,587    –195
Expired in 2012
0    0    –414    0    0    0    0    0
Forfeited in 2012
0    –130    –8    –805    –954    –305    –144    –30

Outstanding as at 12/31/2012
466    3,502    402    4,844    17,427    2,403    2,360    313

Additional information

Awards exercisable as at 12/31/2010
n.a.    n.a.    12,998    0    0    n.a.    n.a.    1,060
Awards exercisable as at 12/31/2011
n.a.    n.a.    3,994    8,943    0    n.a.    n.a.    538

Awards exercisable as at 12/31/2012
0    0    402    4,844    0    0    0    313

Aggregate intrinsic value of vested awards in € millions, as at 12/31/2010
n.a.    n.a.    15    0    0    n.a.    n.a.    22
Aggregate intrinsic value of vested awards in € millions, as at 12/31/2011
n.a.    n.a.    15    0    0    n.a.    n.a.    10

Aggregate intrinsic value of vested awards in € millions, as at 12/31/2012
28    213    10    23    0    3    3    18

Weighted average share price in € for share options exercised in 2010
n.a.    n.a.    36.98    n.a.    n.a.    n.a.    n.a.    35.38
Weighted average share price in € for share options exercised in 2011
n.a.    n.a.    43.46    n.a.    n.a.    n.a.    n.a.    42.12

Weighted average share price in € for share options exercised in 2012
n.a.    n.a.    51.06    60.40    n.a.    30.32    34.11    49.40

Provision as at 12/31/2010 in € millions
n.a.    n.a.    59    36    4    n.a.    n.a.    24
Provision as at 12/31/2011 in € millions
n.a.    n.a.    20    28    27    n.a.    n.a.    17

Provision as at 12/31/2012 in € millions
53    212    9    36    137    39    51    18

Expense recognized in 2010 in € millions
n.a.    n.a.    0    21    4    n.a.    n.a.    6
Expense recognized in 2011 in € millions
n.a.    n.a.    –4    –8    28    n.a.    n.a.    5

Expense recognized in 2012 in € millions
53    216    3    20    74    38    21    9


thousands	LTI Plan 2015 (2012 – 2015 tranches)		EPP 2015 (2013 – 2015 tranches)		SOP 2010 (2010 – 2015 tranches)		RSU (2013 – 2015 tranches)
Outstanding as at 12/31/2013		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		–41		–458		NA		–88
Exercised in 2014		–70		–1,845		–2,730		–734
Forfeited in 2014		–55		–104		–1,619		–378
Outstanding as at 12/31/2014		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		–1,614		–6,585		–1,337
Forfeited in 2015		0		–131		–1,436		–548
Outstanding as at 12/31/2015		977		2,970		29,127		5,577

Outstanding awards exercisable as at
12/31/2014		0		0		3,313		0
12/31/2015		0		0		4,120		0

Total carrying amount (in€ millions) of liabilities as at
12/31/2014		45		94		167		56
12/31/2015		74		205		283		166

Total intrinsic value of vested awards (in€ millions) as at
12/31/2014		38		94		49		0
12/31/2015		76		218		110		0

Weighted average share price (in€) for share options exercised in
2014		54.96		57.48		56.65		56.62
2015		NA		56.94		66.20		65.83

Total expense (in€ millions) recognized in
2013		–11		118		83		34
2014		13		82		29		58
2015		28		200		187		193

~~a.1)~~

~~Employee Participation Plan (EPP) and Long Term Incentive Plan (LTI Plan) 2015~~

a.1) Employee Participation Plan (EPP) and Long-Term Incentive Plan (LTI Plan) 2015

SAP implemented two ~~new~~ share-based payments in 2012: an Employee Participation Plan (EPP) 2015 for employees and a ~~Long Term~~Long-Term Incentive (LTI) Plan 2015 for members of ~~the Executive Board and~~ 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.

~~Starting in 2012, the~~The RSUs ~~will be~~were granted and allocated at the beginning of each year through 2015, with EPP 2015 RSUs subject to annual Executive Board approval. Participants ~~under~~in the LTI Plan 2015 have already been granted a budget for the years 2012 ~~– 2015. Almost all~~to 2015 (2015 for new plan participants ~~under~~joining in 2015). All participants in the LTI Plan 2015 are members of the ~~Executive~~Global Managing Board. ~~The total amount granted to the Executive Board members in 2012 was €55 million.~~

The RSU allocation process ~~will take~~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 ~~KPIs achieve~~KPI targets reaches at least athe defined ~~80%~~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 ~~one~~performance against either or both of those ~~KPIs do~~KPI targets does not ~~achieve~~reach the defined threshold of ~~80%~~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 ~~2012,~~2015, the RSUs granted at the beginning of the year vested with ~~133.55%~~112.96% (2014: 77.89%) achievement of ~~such KPIs.~~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 ~~Executive Board/~~Global Managing

Board under the LTI Plan 2015 are subject to a ~~three-year-holding~~three-year holding period before payout, which occurs starting in 2016.

The ~~plans include~~LTI Plan 2015 includes a “look-back” provision, due to the fact that ~~these plans are~~this plan is based on ~~reaching~~ certain KPI ~~levels~~targets in 2015. IfThe number of RSUs vested under the 2015 tranche was adjusted to reflect the overall achievement infor 2015 ~~is higher or lower~~ than represented by the number of RSUs vested from the 2012 to 2014 ~~the number of RSUs granted in 2015 can increase or decrease accordingly.~~tranches. However, RSUs that were already fully vested in prior years ~~cannot be forfeited. For the EPP, the application of the “look-back”-provision is subject to approval by the Executive Board in 2015.~~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 2007 (SOP 2007 (2008 Tranche))~~

~~Under the~~ SAP Stock Option Plan ~~2007, in 2008 we granted top executives and top performers cash-based virtual stock options, the value of which was dependent on the multi-year performance of the SAP share.~~2010 (SOP 2010 (2010–2015 Tranches))

The virtual stock options granted under the SOP 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 vesting period of two years, the plan provides for 11 predetermined exercise dates every calendar year (one date per month except in April) until the rights lapse five years after the grant date.

The exercise price is 110% of the grant base value, which is derived from the average fair market value of one ordinary share over the 20 business days following the announcement date of the Company’s preliminary results for the preceding fiscal year. The awards granted in 2008 have a grant-base value of €32.69.

~~Monetary benefits under the SOP are capped at 100% of the exercise price (€35.96 for options granted in 2008).~~

~~a.3)~~

~~SOP Performance Plan 2009 (SOP PP)~~

Under the SOP Performance Plan 2009, we granted to top executives and top performers cash-based virtual stock options, the value of which depends on the multi-year performance of the SAP share relative to an industry-specific share price index, the TechPGI.

The future payout at the exercise date will be based on the outperformance of the SAP share price over the TechPGI. Exercise is only possible if the SAP share price has outperformed the TechPGI. For that purpose, the SOP PP 2009 agreement defines the initial value of the TechPGI (€97.54) as well as the SAP initial exercise price (€28.00 per share). After a vesting period of two years, the plan provides for 12 predetermined exercise dates every calendar year (one date per month) until the rights lapse five years after the grant date.

~~Monetary benefits are capped at 110% of the grant price (€30.80). The dynamic exercise price at valuation date is €55.93.~~

~~a.4)~~

~~SAP Stock Option Plan 2010 (SOP 2010 (2010 – 2012 Tranches))~~

Under the SAP Stock Option Plan 2010, ~~in 2010, 2011, and 2012~~ we granted members of the Senior Leadership ~~Team,~~Team/Global Executives, SAP’s Top Rewards (employees with an exceptional ~~rating)~~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 ~~only~~ exercise their virtual stock options ~~provided~~only if they are

employed by SAP; if they leave the ~~company,~~Company, they forfeit them. Executive Board members’ options are non-forfeitable 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 ~~the respective~~their term expire.

The exercise price is 110% of the grant base value (115% for members of the Executive Board) which is ~~€39.03 (€~~€39.03 (€40.80) for the 2010 tranche, ~~€46.23 (€~~€46.23 (€48.33) for the 2011 tranche, ~~and €49.28~~€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).

~~a.5)~~

~~SuccessFactors Cash-Settled Awards Replacing Pre-Acquisition SuccessFactors Awards (SFSF Rights)~~

~~In conjunction with the acquisition of SuccessFactors in 2012, under the terms of the acquisition agreement, SAP exchanged unvested~~a.3) Restricted Stock ~~Awards (RSAs), Restricted Stock Units (RSUs), and Performance Stock Units (PSUs) held by employees of SuccessFactors for cash-settled~~Unit Plan (RSU Plan (2013–2015 tranches))

We maintain share-based payment ~~awards~~plans that allow for the issuance of ~~SAP (SFSF Rights).~~restricted stock units (RSU) to retain and motivate executives and certain employees.

~~RSAs,~~Under the RSU Plan, we granted a certain number of RSUs between 2013 and ~~PSUs unvested at the closing of the acquisition were converted into the~~2015 representing a contingent right to receive ata cash payment determined by the ~~originally agreed vesting dates, an amount in cash equal to~~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 ~~RSAs and~~ RSUs ~~held at the vesting date multiplied by US$40.00 per share.~~

~~There were 4,533,713 unvested RSAs,~~that ultimately vest. Granted RSUs and PSUs at the acquisition date, representing a fair value of €128 million after considering forfeitures dependent on grant dates and remaining vesting periods. Of the total fair value, €59 million was allocated to consideration transferred and €68 million was allocated to future services to be provided and will ~~be recognized as post-acquisition compensation expense as the awards~~ vest ~~over the remainder of the original vesting terms – the remaining vesting period for such SuccessFactors Rights are~~ in a range of up to four years from acquisition date. From February 21, 2012, to December 31, 2012, 1,821,943 SFSF Rights vested. The unrecognized expense related to SFSF Rights was €34 million as at December 31, 2012, and will be recognized over a remaining vesting period of up to 3.0 years.different tranches, either:

~~a.6)~~–

~~Ariba Cash-Settled Awards Replacing Pre-Acquisition Ariba Awards (Ariba Rights)~~

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 ~~terms~~number of RSUs that could vest under the 2015 tranche with performance-based grants was mostly contingent upon a weighted achievement of the ~~acquisition agreement under which SAP acquired Ariba in 2012 required SAP to exchange unvested Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs) held by employees of Ariba~~following performance milestones for ~~cash-settled share-based payment awards of SAP (Ariba Rights).~~

~~RSAs and RSUs unvested at~~ the ~~closing of the acquisition were converted into the right to receive an amount in cash equal to~~fiscal year ended on December 31, 2015:

–

Non-IFRS total revenue (50%); and

–

Non-IFRS operating profit (50%).

Depending on performance, the number of ~~RSAs~~RSUs vesting could have ranged between 50% and ~~RSUs held at the vesting date multiplied by US$45.00 per share in accordance with the respective vesting terms.~~

There were 4,091,225 unvested RSAs and RSUs at the acquisition date, representing a fair value of €138 million after considering forfeitures dependent on grant dates and remaining vesting periods. Of the total fair value, €86 million was allocated to consideration transferred and €52 million was allocated to future services to be provided and will be recognized as post-acquisition compensation expense as the awards vest over the remainder150% of the ~~vesting terms –~~number initially granted. Performance against the ~~remaining vesting period for such Ariba Rights~~KPI targets was 112.96% (2014: 90.27%) in fiscal year 2015.

The RSUs are paid out in a range of up to 3.5 years at acquisition date (in accordance with the originally agreed vesting dates). From October 1, 2012, to December 31, 2012, 1,586,747 Ariba Rights vested. The unrecognized expense related to Ariba Rights was €30 million as at December 31, 2012, and will be recognized over a remaining vesting period of up to 3.25 years.

~~a.7)~~

~~Business Objects Cash-Settled Awards Replacing Pre-Acquisition Business Objects Awards (BO Rights)~~

Prior to being acquired by SAP, the employees of Business Objects companies were granted equity-settled awards giving rights to Business Objects shares. Following the Business Objects acquisition in 2008, the Business Objects shares were no longer publicly traded and mechanisms were implemented to allow the employees to cash out their awards either by receiving cash instead of Business Objects shares (cash payment mechanism or CPM) or by receiving Business Objects shares that they subsequently sell to SAP France (liquidity agreement mechanism or LAM). In substance, the implementation of CPM and LAMupon vesting.

resulted in a conversion of the equity-settled awards to cash-settled share-based payment awards (replacing awards) that replaced the stock options and Restricted Stock Units (RSUs) originally granted (replaced awards).

~~The replaced awards had vesting periods in the range of two to five years, and contractual terms in the range of two to ten years.~~

~~The replacing awards closely mirror the terms of the replaced awards (including conditions such as exercise price and vesting) except that:~~

~~The replaced awards were planned to be settled by issuing equity instruments, whereas the replacing awards are settled in cash either through the CPM or through the LAM.~~

The replaced awards were indexed to Business Objects’ share price whereas the replacing awards are indexed to SAP’s share price as follows: SAP’s offering price for Business Objects shares during the tender offer (€42) is divided by SAP AG’s share price at the tender offer closing date (€32.28), and the result is multiplied by the weighted average closing price of the SAP share during the 20 trading days preceding the exercise or disposition date.

The benefit resulting from the stock option exercise or the RSUs vesting is either paid directly to the employees (in countries where the CPM applies) or the employees continue to receive shares of Business Objects on stock options exercise or RSUs vesting (in countries where the LAM applies). In these cases, the employees have a put option to resell the shares to SAP within three months from exercise, while SAP has a call option on these shares.

In both cases, these awards are accounted for as a cash-settled award because the obligation to the employee is ultimately settled in cash, both under the CPM and the LAM mechanism. The weighted average exercise price is €20.42.

b)	*~~Equity-Settled Share-Based Payments~~*

~~Equity-settled plans include primarily the~~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 AGSE 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 ~~(in 2012: five)~~ free matching share of SAP for every three SAP shares acquired.

The terms for the members of the Senior Leadership ~~Team (SLT)~~Team/Global Executives are slightly different than

those for the other employees. ~~Members of the SLT~~They do not receive a discount when purchasing the shares. However, after a three-year holding period, ~~members of the SLT~~they receive two ~~(in 2012: five)~~ free matching ~~shares of~~ SAP ~~stock~~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~~free matching shares, as well as the quantity of shares purchased and ~~free-matching~~free matching shares granted through this program in ~~2012, 2011,~~2015, 2014, and ~~2010:~~2013:

Fair Value and Parameters at Grant Date for SMP

   2012 2011 2010
Grant date
6/6/2012    6/8/2011    9/8/2010
Share price at grant date
€45.43    €41.73    €35.45
Purchase price set by the Executive Board
€48.23    €44.07    €35.12
Risk-free interest rate
0.12%    1.95%    0.82%
Expected dividend yield of SAP shares
2.13%    1.70%    1.65%
Expected life of free-matching shares in years
3.0    3.0    3.0
Free-matching share fair value at grant date
€42.54    €39.69    €33.71
Number of shares purchased in thousands
1,926    1,334    1,591
Free-matching shares granted in thousands
3,210    481    571


	2015		2014		2013
Grant date		6/5/2015		6/4/2014		9/4/2013
Fair value of granted awards		€62.98		€52.49		€51.09
Information how fair value was measured at grant date
Option pricing model used				Other¹⁾
Share price		€66.31		€55.61		€54.20
Risk-free interest rate		–0.08%		0.13%		0.43%
Expected dividend yield		1.67%		1.87%		1.92%
Weighted average remaining contractual life of awards outstanding at year end (in years)		1.5		0.9		1.6
Number of investment shares purchased (in thousands)		1,492		1,550		1,559

~~The following table shows~~¹⁾ For these awards, the ~~breakdown~~fair value is calculated by subtracting the net present value of expected future dividend payments, if any, until maturity of the ~~expense recognized for this program~~respective award from the prevailing share price as of the valuation date.

Changes in ~~2012, 2011, and 2010 and the unrecognized expense at year end in € millions:~~Numbers of Outstanding Awards Under SMP


thousands			SMP
Outstanding as at 12/31/2013			3,986
Granted in 2014			568
Exercised in 2014			–432
Forfeited in 2014			–187
Outstanding as at 12/31/2014			3,935
Granted in 2015			551
Exercised in 2015			–2,808
Forfeited in 2015			–78
Outstanding as at 12/31/2015			1,600

Recognized ~~and Unrecognized~~ Expense at Year End for SMP

€ millions, unless otherwise stated    2012    2011    2010
Expense recognized relating to discount
   34       22       24
Expense recognized relating to vesting of free-matching shares
   34       9       2

Total expense relating to SMP
   68       31       26

Unrecognized expense as at December 31
   107       22       15
Average remaining vesting period in years as at December 31
   2.2       2.2       2.7


€ 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

~~(28)~~

~~Segment and Geographic Information~~

General Information

~~General~~

~~Information~~

~~Following SAP’s increased focus on the cloud business, in the 3rd quarter~~On December 4, 2014, we completed our acquisition of ~~2012 we changed both the structure of the components that SAP management uses to make decisions about operating matters,~~Concur and ~~the main profit measure used for the purposes of allocating resources to~~

these components and measuring their performance. The segment information for earlier periods has been restated to conform with these changes. As part of this realignment, the previous Consulting and Training segments have been aggregated into the On-Premise Services segment. Certain activities of the previous Consulting and Training segments were shifted to the On-Premise Product segment. Discrete financial information for the previous Consulting and Training segments is no longer used by SAP management.

~~At the beginning of~~in the first quarter of ~~2012,~~2015 we ~~had already integrated~~announced our intention to combine all SAP network offerings (that is, predominantly the activities of the ~~former Sybase segment into~~purchased Concur business and the ~~segments existing at that time (Product, Consulting, Training).~~ 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.

The ~~decision to discontinue Sybase~~SAP Business Network qualifies as an ~~independent organization~~operating segment and ~~the subsequent integration was driven~~as a reportable segment under IFRS 8.

Since fiscal year 2015 SAP thus has two reportable segments that are regularly reviewed by our decision to support our planned growth in the area of mobility and database & technology. Subsequent to the integration, discrete financial information for the previous Sybase segment is no longer used by SAP management.

Our internal reporting system produces reports in which business activities are presented in a variety of ways, for example, by line of business, geography, and areas of responsibility of the individual Board members. Based on these reports, the Executive Board, which is responsible for assessing the performance of ~~various company components~~our Company and for making resource allocation decisions as our Chief Operating Decision Maker (CODM)~~, evaluates business activities in a number of different ways.~~

~~The most important factors we use to identify operating~~: the Applications, Technology & Services segment and the SAP Business Network segment. These two segments are ~~distinctions among our~~largely organized and managed separately according to their product and service offerings, ~~notably:~~

~~Between divisions,~~notably whether the ~~software delivery model (software~~products and services relate to ~~be installed on the customer’s hardware (on-premise software), distinct from software for delivery in the cloud)~~

~~Within the On-Premise division, the types~~our business network activities or cover other areas of ~~services offered~~

~~Within the Cloud division, the fields in which the cloud applications are used~~

~~SAP has two divisions – On-Premise and Cloud, which are further divided into operating segments. Our On-Premise division is comprised of two~~

~~operating segments: On-Premise Products and On-Premise Services. In the third quarter of 2012,~~ our Cloud division was comprised of one operating segment: Cloud Applications. Following the acquisition of Ariba, we established a second operating segment in the Cloud division, mainly consisting of the acquired Ariba business (Ariba). The operations of Crossgate, which we acquired in 2011, are also included in the operating segment containing the acquired Ariba business. ~~All operating segments are reportable segments.~~

The ~~On-Premise division~~Applications, Technology & Services segment derives its ~~revenues~~revenue primarily from the sale of ~~on-premise~~ software ~~(that is, software designed for use on hardware on the customer’s premises)~~licenses, subscriptions to our cloud applications, and ~~mobile software (that is, software designed for use on mobile devices) and~~related services ~~relating to such software. Within the On-Premise division, the On-Premise Products segment is primarily engaged in marketing and licensing our on-premise and mobile software products and providing~~(mainly support services ~~for these software products. The On-Premise Services segment primarily performs~~and various professional services ~~mainly~~and premium support services, as well as implementation services of our software products and ~~educational~~education services on the use of our ~~software products.~~products).

The ~~Cloud division~~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 ~~primarily~~mainly from transaction fees charged for the ~~sale~~use of ~~cloud software (that is, software designed for delivery through the cloud)~~SAP’s cloud-based collaborative business network and from services relating to ~~such software~~the SAP Business Network (including ~~support services,~~cloud applications, professional services, ~~educational~~and education services). Within the ~~Cloud division,~~SAP Business Network segment, we mainly market and sell the ~~Cloud Applications segment is primarily engaged in marketing and selling subscriptions to the~~ cloud ~~software offerings developed by SAP and SuccessFactors. The Ariba segment primarily markets and sells the cloud software~~ offerings developed by Ariba, Fieldglass, and ~~derives revenue from its cloud-based collaborative business network.~~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).

~~Information About Profit or Loss, Assets, and Liabilities~~

~~Operating Segments~~ Revenue and ~~Profit or Loss~~Results of Segments

   On-Premise Division    Cloud Division    Total
€ millions
On-Premise
Products

On-Premise
Services

Division
Total

Cloud
Applications
   Ariba
Division
Total

2012

External revenue
   12,881       2,967       15,848       336       120       456       16,304
Cost of revenue
   –1,990       –2,298       –4,289       –158       –75       –233       –4,523
Gross profit
   10,891       669       11,559       178       45       223       11,782
Sales and marketing costs
   –3,410       0       –3,410       –231       –43       –275       –3,684
Operating segment profit/loss
   7,481       669       8,150       –53       2       –51       8,098
2011

External revenue
   11,325       2,901       14,226       29       4       33       14,260
Cost of revenue
   –1,762       –2,201       –3,963       –66       –9       –75       –4,038
Gross profit
   9,564       700       10,264       –37       –5       –42       10,222
Sales and marketing costs
   –2,919       0       –2,919       –32       –2       –34       –2,954
Operating segment profit/loss
   6,644       700       7,344       –69       –7       –77       7,268
2010

External revenue
   9,853       2,663       12,516       21       0       21       12,537
Cost of revenue
   –1,569       –2,041       –3,610       –60       –4       –64       –3,674
Gross profit
   8,284       622       8,906       –39       –4       –43       8,863
Sales and marketing costs
   –2,520       0       –2,520       –29       –1       –30       –2,550
Operating segment profit/loss
   5,764       622       6,386       –68       –5       –73       6,313


€ millions	Applications, Technology & Services						SAP Business Network						Total Reportable Segments
	2015				2014		2015				2014		2015				2014
	Actual Currency		Constant Currency		Actual Currency		Actual Currency		Constant Currency		Actual Currency		Actual Currency		Constant Currency		Actual 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		–1		–1		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
Services		3,270		3,035		3,099		247		213		101		3,517		3,248		3,199
Total segment revenue		19,126		17,852		16,871		1,614		1,389		644		20,740		19,241		17,515
Cost of cloud subscriptions and support		–452		–421		–263		–336		–293		–128		–788		–715		–390
Cost of software licenses and support		–1,994		–1,831		–1,823		–1		–1		–3		–1,994		–1,831		–1,826
Cost of cloud and software		–2,446		–2,252		–2,085		–337		–294		–131		–2,783		–2,546		–2,216
Cost of services		–2,897		–2,735		–2,479		–193		–171		–87		–3,090		–2,905		–2,565
Total cost of revenue		–5,343		–4,987		–4,564		–530		–465		–217		–5,873		–5,451		–4,781
Segment gross profit		13,784		12,865		12,307		1,084		924		427		14,868		13,790		12,734
Total segment expenses		–5,865		–5,484		–5,207		–771		–675		–322		–6,637		–6,158		–5,530
Segment profit		7,918		7,382		7,099		312		250		105		8,231		7,631		7,204

Revenue and Results of Segments


€ millions	Applications, Technology & Services						SAP Business Network						Total Reportable Segments
€ millions	2014				2013		2014				2013		2014				2013
	Actual Currency		Constant Currency		Actual Currency		Actual Currency		Constant Currency		Actual Currency		Actual Currency		Constant Currency		Actual Currency
Cloud subscriptions and support		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
Total segment revenue		16,871		17,017		16,386		644		641		460		17,515		17,658		16,846
Cost of cloud subscriptions and support		–263		–263		–124		–128		–127		–84		–390		–389		–208
Cost of software licenses and support		–1,823		–1,839		–1,741		–3		–3		–8		–1,826		–1,842		–1,749
Cost of cloud and software		–2,085		–2,102		–1,865		–131		–130		–91		–2,216		–2,232		–1,956
Cost of services		–2,479		–2,518		–2,447		–87		–88		–68		–2,565		–2,606		–2,516
Total cost of revenue		–4,564		–4,619		–4,312		–217		–218		–160		–4,781		–4,837		–4,472
Segment gross profit		12,307		12,397		12,074		427		423		300		12,734		12,820		12,374
Total segment expenses		–5,207		–5,269		–5,018		–322		–322		–201		–5,530		–5,591		–5,218
Segment profit		7,099		7,128		7,056		105		101		99		7,204		7,229		7,155

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 ~~operating~~ 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

~~The~~

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 ~~measurements~~measurement of ~~the~~ operating ~~segments’ revenues~~segment revenue and ~~profits~~profit differ as follows from the IFRS accounting principles ~~described~~used to determine the operating profit measure in ~~Note (3) as follows:~~our income statement:

The measurements of ~~the operating segments revenues~~segment revenue and profits generally attributes revenue to the segment based on the nature of the business regardless of revenue classification in our income statement. Thus, for example, the Cloud Applications segment’s revenue mayresults include ~~certain amounts classified as software revenue in our Consolidated Income Statements.~~

~~The measurements of the operating segments’ revenues and profits includes~~ the recurring ~~revenue~~revenues that would have been ~~reflected~~recorded by acquired entities had itthey remained a stand-alone ~~entity~~entities but which are not ~~reflected~~recorded as revenue under IFRS ~~as a result of purchase~~due to fair value accounting for customer contracts in effect at the time of an acquisition.

The ~~measurements~~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 operating segments’ profits excludes share-based payment expense, and restructuring costs as well as research and development expense and general and administration expense at segment level. These expenses are managed and reviewed at the Group level only.

~~The measurements of the operating segments’ profits exclude the following acquisition-related charges:~~

~~Amortization expense/impairment charges of intangibles acquired in business combinations and certain stand-alone acquisitions of intellectual property~~

~~Expenses from purchased in-process research and development~~

~~Restructuring~~reconciliation under other expenses and ~~settlements of pre-existing relationships~~other revenue respectively.

~~Acquisition-related third-party costs that are required~~The segment information for prior periods has been restated to ~~be expensed~~

The measurements of the operating segments’ profits excludes results of the discontinued operations that qualify as such under IFRS in all respects except if they do not represent a major line of business. For all periods presented this relates exclusivelyconform to the ~~operations of TomorrowNow.~~

Cost of revenue for our On-Premise Services segment also includes sales and marketing expenses related to professional services and other services that result from sales and marketing efforts that cannot be clearly separated from providing the services and as such, no sales and marketing expenses have been allocated to this segment.new two-segment structure.

Reconciliation of ~~Revenues~~Revenue and Segment Results

€ millions    2012    2011    2010
Total revenues for operating segments
   16,304       14,260       12,537
Adjustment recurring revenues
   –81       –27       –74

Total revenue
   16,223       14,233       12,464

Total profit for operating segments
   8,098       7,268       6,313
Adjustment recurring revenues
   –81       –27       –74
Research and development expense
   –2,125       –1,898       –1,706
General and administration expense
   –783       –685       –610
Other operating income/expense, net
   23       25       9
Restructuring
   –8       –4       3
Share-based payments
   –522       –68       –58
TomorrowNow litigation / Loss from discontinued operations
   0       717       –981
Acquisition-related charges
   –537       –448       –305

Operating profit
   4,065       4,881       2,591
Other non-operating income/expense, net
   –173       –75       –186

Finance income, net
   –68       –38       –67
Profit before tax
   3,824       4,768       2,338


€ millions	2015				2014				2013
€ millions	Actual Currency		Constant Currency		Actual Currency		Constant Currency		Actual Currency
Total segment revenue for reportable segments		20,740		19,241		17,515		17,658		16,846
Other revenue		64		58		64		65		51
Adjustment for currency impact		0		1,505		0		–142		0
Adjustment of revenue under fair value accounting		–11		–11		–19		–19		–82
Total revenue		20,793		20,793		17,560		17,560		16,815

Total segment profit for reportable segments		8,231		7,631		7,204		7,229		7,155
Other revenue		64		58		64		65		51
Other expenses		–1,947		–1,786		–1,631		–1,665		–1,725
Adjustment for currency impact		0		443		0		–9		0
Adjustment for
Revenue under fair value accounting		–11		–11		–19		–19		–82
Acquisition-related charges		–738		–738		–562		–562		–555
Share-based payment expenses		–724		–724		–290		–290		–327
Restructuring		–621		–621		–126		–126		–70
TomorrowNow and Versata litigation		0		0		–309		–309		31
Operating profit		4,252		4,252		4,331		4,331		4,479
Other non-operating income/expense, net		–256		–256		49		49		–17
Financial income, net		–5		–5		–25		–25		–66
Profit before tax		3,991		3,991		4,355		4,355		4,396

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 ~~research and development expense as well as the general and administration expense presented~~amounts for revenue by region in the reconciliation differs from the corresponding expense in the consolidated income statement because the portions of share-based payments-related expenses, restructuring expenses, and acquisition-related expenses thatfollowing tables are ~~included in the research and development line item respectively the general and administration expense line item in the income statement, are presented as separate items in the reconciliation.~~

~~Geographic Information~~

The tables below show the breakdown of software revenue by location of contract negotiation and by customer location. The presentation by location of contract negotiation reflects the fact that in some cases, software contracts are negotiated and the customer’s buying decision is made in one country but an affiliated legal entity of the same customer in another country serves as the contracting party.

~~A revenue-by-region reporting~~ based on the ~~customer location attributes the revenue to the home country of the contracting legal entity. SAP believes that the~~ location of customers. The regions in the ~~contract negotiation provides more useful insight~~following table are broken down into ~~where the revenue was earned. Therefore, since the second quarter of 2012, we have reported software revenue both by customer location~~EMEA (Europe, Middle East, and ~~by location of negotiation. Between these two~~

views, the attribution of software revenues to the different geographies only differs for transactions where, based on objective evidence, all contract negotiations were performed in a country other than the domicile of the legal entity contracting on the customer’s behalf. Under both views, the software revenue from a given contract is always attributed to one geography, that is, revenues are not split between geographies.Africa), Americas (North America and Latin America) and APJ (Asia Pacific Japan).

Revenue by Region

~~Software Revenue by Places Where Contracts Were Negotiated~~

€ millions    2012    2011    2010
EMEA
   2,005       1,852       1,555
Americas
   1,774       1,534       1,305
APJ
   879       722       549
SAP Group
   4,658       4,107       3,410

~~Software Revenue by Location of Customers~~


€ millions	Cloud Subscriptions and Support Revenue						Cloud and Software Revenue
€ millions	2015		2014		2013		2015		2014		2013
EMEA		507		277		176		7,622		6,819		6,616
Americas		1,579		709		457		6,929		5,276		5,097
APJ		200		101		64		2,663		2,221		2,237
SAP Group		2,286		1,087		696		17,214		14,315		13,950

€ millions    2012    2011    2010
EMEA
   2,041       1,851       1,555
Americas
   1,733       1,534       1,300
APJ
   884       722       554
SAP Group
   4,658       4,107       3,410

~~Software and Cloud Subscription Revenue by Location of Customers~~

€ millions    2012    2011    2010
EMEA
   2,107       1,864       1,565
Americas
   1,920       1,540       1,304
APJ
   901       722       555
SAP Group
   4,928       4,125       3,424

~~Software and Software-Related Service Revenue by Location of Customers~~

€ millions    2012    2011    2010
Germany
   1,821       1,726       1,564
Rest of EMEA
   4,285       3,803       3,319

Total EMEA
   6,106       5,529       4,883

United States
   3,537       2,870       2,497
Rest of Americas
   1,283       1,088       930

Total Americas
   4,820       3,958       3,427

Japan
   699       579       448
Rest of APJ
   1,540       1,253       1,036

APJ
   2,239       1,832       1,484

SAP Group
   13,165       11,319       9,794

Total Revenue by ~~Location of Customers~~Region


€ millions	2012		2011		2010		2015		2014		2013
Germany		2,380		2,347		2,195		2,771		2,570		2,513
Rest of EMEA		5,106		4,644		4,068		6,409		5,813		5,462

EMEA		7,486		6,991		6,263		9,181		8,383		7,975

United States		4,461		3,699		3,243		6,750		4,898		4,487
Rest of Americas		1,639		1,392		1,192		1,678		1,591		1,746

Americas		6,100		5,091		4,435		8,428		6,489		6,233

Japan		789		652		513		667		600		631
Rest of APJ		1,848		1,499		1,253		2,517		2,088		1,975

APJ		2,637		2,151		1,766		3,185		2,688		2,606

SAP Group		16,223		14,233		12,464		20,793		17,560		16,815

Non-Current Assets by Region


€ millions	2012		2011		2015		2014
Germany		2,318		2,162		2,395		2,399
The Netherlands						2,843		2,917
France						2,175		2,116
Rest of EMEA		5,371		5,537		2,557		2,477

EMEA		7,689		7,699		9,969		9,909

United States		10,476		4,513		19,124		17,568
Rest of Americas		97		96		139		152

Americas		10,574		4,609		19,264		17,720

Japan		22		12
Rest of APJ		216		196

APJ		238		208		599		518

SAP Group		18,500		12,516		29,832		28,147

~~Non-current assets as presented in the~~The table above ~~table follow the requirements of IFRS 8 which requires a geographical breakdown of~~shows non-current assets excluding financial instruments, deferred tax assets, post-employment benefits, and rights arising under insurance contracts.

For information about the breakdown of our ~~full-time equivalent employee numbers~~workforce by region, see Note (7).

~~(29)~~ ~~Board of Directors~~

(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


~~Executive Board~~		~~Memberships on supervisory boards and other~~ ~~comparable governing bodies of enterprises, other than~~ ~~subsidiaries of SAP on December 31, 2012~~
~~Bill McDermott~~ ~~Co-Chief Executive Officer~~ Strategy and Business Development, Corporate Development, Marketing, Communications, Corporate Audit, Board Governance, Sustainability, Solutions, Global Sales and Global Partner and Channel Management		~~Board of Directors, ANSYS, Inc.,~~ ~~Canonsburg, Philadelphia, United States~~ ~~Board of Directors, Under Armour, Inc.,~~ ~~Baltimore, Maryland, United States~~

~~Jim Hagemann Snabe~~ ~~Co-Chief Executive Officer~~ ~~Strategy and Business Development, Corporate Development,~~ ~~Marketing, Communications, Corporate Audit, Board Governance, Sustainability, Solutions, Global R&D Portfolio, Processes and IT~~		~~Board of Directors, Thrane & Thrane A/S, Lyngby, Denmark (until June 29, 2012)~~ ~~Board of Directors, Bang & Olufsen a/s, Stuer, Denmark~~

~~Dr. Werner Brandt~~ ~~Chief Financial Officer~~ ~~Finance and Administration including Investor Relations and Data Protection & Privacy~~		~~Supervisory Board, Deutsche Lufthansa AG, Frankfurt am Main, Germany~~ ~~Supervisory Board, QIAGEN N.V., Venlo, the Netherlands~~

~~Lars Dalgaard (from April 12, 2012)~~ ~~Cloud Business including Strategy, Product Development, and Go-To-Market related Capabilities~~

~~Luisa Deplazes Delgado (from September 1, 2012)~~ ~~Human Resources, Labor Relations Director~~		~~Supervisory Board, INGKA Holding B.V. (also called the IKEA Group), Leiden, the Netherlands~~ ~~Board of Directors of SAFILO Group S.p.A., Padua, Italy~~

~~Gerhard Oswald~~ ~~Application Development and Support~~

~~Dr. Vishal Sikka~~ ~~Technology and Innovation~~ Products Development for Technology and Platform Products, SAP Research, SAP Labs Network and SAP Ventures. SAP Chief Technology Officer for the overall technology, architecture and product standards across the entire SAP product portfolio

~~Supervisory Board~~ ~~Memberships on supervisory boards and other~~
~~comparable governing bodies of enterprises, other than~~
~~subsidiaries of SAP on December 31, 2012~~
~~Prof. Dr. h. c. mult. Hasso Plattner~~^{2), 4), 5), 7), 8)}
~~Chairman~~
~~Board of Directors, Bramasol, Inc., San Francisco, California, USA (from August 1, 2012)~~
~~Supervisory Board, Oligo Lichttechnik GmbH, Hennef, Germany (from November 5, 2012)~~
~~Christiane Kuntz-Mayr~~^{1), 4), 5)}
~~Deputy Chairperson~~
~~Deputy Chairperson of the Works Council at SAP AG~~
~~Pekka Ala-Pietilä~~^{5), 7), 8)}
~~Chairman of the Board of Directors, Solidium Oy, Helsinki, Finland~~
~~Board of Directors, Pöyry Plc, Vantaa, Finland~~
~~Chairman of the Board of Directors, CVON Group Limited, London, UK~~
~~Board of Directors, CVON Limited, London, UK~~
~~Board of Directors, CVON Innovations Limited, London, UK (until August 1, 2012)~~
~~Chairman of the Board of Directors, Blyk Ltd., London, UK (until August 1, 2012)~~
~~Chairman of the Board of Directors, Blyk Services Oy, Helsinki, Finland (until May 20, 2012)~~
~~Chairman of the Board of Directors, CVON Innovation Services Oy, Turku, Finland~~
~~Board of Directors, CVON Future Limited, London, UK~~
~~Chairman of the Board of Directors, Blyk (NL) Ltd., London, UK (until August 1, 2012)~~
~~Chairman of the Board of Directors, Blyk (DE) Ltd., London, UK (until July 3, 2012)~~
~~Chairman of the Board of Directors, Blyk (ES) Ltd., London, UK(until August 1, 2012)~~
~~Chairman of the Board of Directors, Blyk (BE) Ltd., London, UK (until August 1, 2012)~~
~~Board of Directors, Blyk.nl NV, Amsterdam, the Netherlands (until May 23, 2012)~~
~~Chairman of the Board of Directors, Blyk.be SA, Hoeilaart, Belgium (until May 23, 2012)~~
~~Chairman of the Board of Directors, Blyk International Ltd., London, UK~~
~~Board of Directors, Huhtamäki Oyj, Espoo, Finland (from April 24, 2012)~~
~~Thomas Bamberger (until May 23, 2012)~~
~~Chief Audit Executive~~
~~Panagiotis Bissiritsas~~^{1), 2), 6)}
~~Support Expert~~
~~Prof. Anja Feldmann (from May 23, 2012)~~⁵⁾
~~Professor at the Electrical Engineering and Computer Science Faculty at the Technische Universität Berlin~~
~~Prof. Dr. Wilhelm Haarmann~~^{2), 6), 8)}
~~Attorney-at-law, certified public auditor, certified tax advisor~~
~~Senior Partner HAARMANN Partnerschaftsgesellschaft, Rechtsanwälte, Steuerberater, Wirtschaftsprüfer, Frankfurt am Main, Germany~~
~~Chairman of the Supervisory Board, CinemaxX AG, Hamburg, Germany (from August 30, 2012)~~
~~Chairman of the Supervisory Board, vwd Vereinigte Wirtschaftsdienste AG, Frankfurt a. M., Germany (from August 22, 2012 until December 15, 2012)~~
~~Margret Klein-Magar (from May 23, 2012)~~^{1), 2), 8)}
~~Vice President SAP Transformation~~
Bill McDermott

~~Supervisory Board~~
~~Memberships on supervisory boards and other~~
~~comparable governing bodies of enterprises, other than~~
~~subsidiaries of SAP on December 31, 2012~~
~~Peter Koop (until May 23, 2012)~~
~~Industry Business Development Expert~~
~~Lars Lamadé~~^{1), 2), 8)}
~~Project Manager OPD COO~~
~~Bernard Liautaud~~^{2), 5), 7)}
~~General Partner Balderton Capital, London, UK~~
~~Board of Directors, Clinical Solutions Holdings Ltd., Basingstoke, Hampshire, UK (until May 22, 2012)~~
~~Board of Directors, nlyte Software Ltd., London, UK~~
~~Board of Directors, Talend SA, Suresnes, France~~
~~Board of Directors, Cap Gemini, Paris, France~~
~~Board of Directors, Quickbridge (UK) Ltd., London, UK~~
~~Board of Directors, SCYTL Secure Electronic Voting SA, Barcelona, Spain~~
~~Board of Directors, Abiquo Group Inc., Redwood City, California, United States~~
~~Board of Directors, Vestiaire Collective SA, Levallois-Perret, France~~
~~Board of Directors, Dashlane, Inc., New York, New York, United States~~
~~Board of Directors, Recorded Future, Inc., Cambridge, Massachusetts, United States (from January 30, 2012)~~
~~Board of Directors, eWise Group, Inc., Redwood City, California, United States (from August 30, 2012)~~
~~Board of Directors, Qubit Digital Ltd., London, UK (from November 26, 2012)~~
~~Dr. Gerhard Maier (until May 23, 2012)~~
~~Development Project Manager~~
~~Dr. h. c. Hartmut Mehdorn~~^{4), 6)}
~~Independent Management Consultant~~
~~Board of Directors, Air Berlin PLC & Co. Luftverkehrs KG, Berlin~~
~~Advisory Board, Fiege-Gruppe, Greven, Germany~~
~~Board of Directors, RZD – Russian Railways, Moscow, Russia~~
~~Dr. Hans-Bernd Meier (until May 23, 2012)~~
~~Independent Consultant for SAP Projects~~
~~Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h. Joachim Milberg (until May 23, 2012)~~
~~Chairman of the Supervisory Board, BMW AG, Munich, Germany~~
~~Supervisory Board, Bertelsmann AG, Gütersloh, Germany~~
~~Supervisory Board, Festo AG, Esslingen, Germany~~
~~Supervisory Board, Festo AG & Co. KG, Esslingen, Germany~~
~~Board of Directors, Deere & Company, Moline, Illinois, United States~~
~~Dr. Kurt Reiner (from May 23, 2012)~~^{1), 5), 6)}
~~Development Expert~~
~~Mario Rosa-Bian (from May 23, 2012)~~^{1), 4), 5)}
~~Project Principal Consultant~~
~~Dr. Erhard Schipporeit~~^{3), 8)}
~~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 AG, Hanover, Germany~~
~~Supervisory Board, Fuchs Petrolub AG, Mannheim, Germany~~
~~Supervisory Board, BDO AG, Hamburg, Germany~~
~~Board of Directors, TUI Travel PLC, London, UK~~
~~Board of Directors, Fidelity Funds SICAV, Luxembourg~~
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, MaintenanceGo-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
Gerhard Oswald
Product Quality & Enablement
Quality Governance & Validation, Scale, Enablement & Transformation, Logistics Services
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
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
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, Levallois-Perret, 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
Christine Regitz (from May 20, 2015)^{1), 4), 8)}
Vice President User Experience
Chief Product Expert
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
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 Wucherer³⁾
Managing Director of Dr. Klaus Wucherer Innovations- und 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
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)
~~Memberships on supervisory boards and other~~
~~comparable governing bodies of enterprises, other than~~
~~subsidiaries of SAP on December 31, 2012~~
~~Stefan Schulz~~^{1), 3), 5)}
~~Development Project Manager~~
~~Inga Wiele (from May 23, 2012)~~^{1), 3), 5)}
~~Senior Internal Strategic Consultant~~
~~Prof. Dr.-Ing. Dr.-Ing. E. h. Klaus Wucherer~~^{3), 5)}
~~Managing Director of Dr. Klaus Wucherer Innovations- und Technologieberatung GmbH, Erlangen, Germany~~
~~Supervisory Board, Heitech AG, Erlangen, Germany~~
~~Supervisory Board, Dürr AG, Bietigheim-Bissingen, Germany~~
~~Supervisory Board, LEONI AG, Nuremberg, Germany~~
~~Supervisory Board, Festo AG & Co. KG, Esslingen, Germany (from April 19, 2012)~~

Information as at December 31, ~~2012~~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 Mediation Committee~~

5)	^{Member of the Company’s Technology and Strategy Committee}

6)⁵⁾	^{Member of the Company’s Finance and Investment Committee}

7)⁶⁾	^{Member of the Company’s Nomination Committee}

8)⁷⁾	^{Member of the Company’s Special Committee}

~~The~~

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 ~~2012, 2011,~~2015, 2014, and ~~2010~~2013 was as follows:

Executive Board Compensation


€ thousands	2012		2011		2010		2015	2014	2013
Short-term employee benefits		17,204		20,176		13,254	15,137	16,196	24,728
Share-based payment¹⁾		14,855		4,016		3,920	10,365	8,098	8,603

Subtotal¹⁾		32,059		24,191		17,174	25,502	24,294	33,331

Post-employment benefits		3,263		1,547		1,999	1,278	3,249	1,324
thereof defined-benefit		1,711		696		797
thereof defined-contribution		1,552		850		1,202
Termination benefits		0		4,125		10,948
Other long-term benefits		0		4,031		3,407

Thereof defined-benefit							288	2,276	189
Thereof defined-contribution							990	973	1,135
Total¹⁾		35,322		33,894		33,527	26,780	27,543	34,655

¹⁾ Portion of total executive compensation allocated to the respective year based on management view

1)	~~Portion of total executive compensation allocated to the respective year~~

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.

~~In addition to the LTI grant for 2012, the~~The Executive Board members already received, in 2012, the LTI grants for the years ~~2013~~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

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. Since the contracts of Werner Brandt and Gerhard Oswald currently expire mid 2014 and the contracts for Lars Dalgaard and Luisa Deplazes Delgado expire mid 2015, the LTI grants for the years 2014 – 2015 (for Werner Brandt und Gerhard Oswald) respectively 2015 (for Lars

Company.

~~Dalgaard and Luisa Deplazes Delgado) had not yet been allocated with legally binding force in 2012.~~

The share-based payment ~~amounts~~as defined in ~~the table above only disclose the LTI grants for the year 2012. Including the entire grants to the Executive Board for future years calculated as required~~

~~under~~ 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.

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 ~~€55,085 thousands. Including this amount, the subtotal Executive Board compensation amounts to €72,289 thousands~~€15,400,400 (2014:€23,216,200) and the total Executive Board compensation amounts to ~~€75,552 thousands.~~€16,678,400 (2014:€26,464,700).

Share-Based Payment for Executive Board Members


	2012		2011		2010		2015		2014		2013
Number of RSUs granted		326,432		0		0		192,345		153,909		152,159
Number of stock options granted		0		475,227		559,926		0		0		0
Total expense in € thousands		57,429		4,420		2,988		22,310		11,133		–8,596

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 ~~projected~~defined benefit obligation ~~(PBO)~~(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	2012		2011		2010		2015		2014		2013
PBO December 31		8,889		7,291		7,327
DBO December 31								8,948		11,273		9,077
Annual pension entitlement		429		437		466		427		475		452

~~Subject to the adoption of the dividend resolution by the shareholders at the Annual General Meeting of Shareholders on June 4, 2013, the~~

The total annual compensation of the Supervisory Board members for ~~2012~~2015 is as follows:

Supervisory Board Compensation

€ thousands    2012    2011    2010
Total compensation
   2,981       3,028       2,875
thereof fixed compensation
   901       874       870
thereof committee remuneration
   340       465       325
thereof variable compensation
   1,741       1,688       1,680


€ thousands	2015		2014		2013
Total compensation		3,728		3,227		2,966
Thereof fixed compensation		3,250		924		870
Thereof committee remuneration		479		515		416
Thereof variable compensation		NA		1,788		1,680

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.

The total compensation of all Supervisory Board members in 2012 for work for SAP excluding compensation relating to the office of Supervisory Board member was €1,084 thousands (2011: €1,688 thousands; 2010: €1,028 thousands).

~~During the fiscal year 2012, payments to former Executive Board members were as follows:~~

Payments ~~to / PBO~~to/DBO for Former Executive Board Members

€ thousands    2012    2011    2010
Pension benefits
   1,360       1,346       1,290
PBO
   30,551       25,267       24,878


€ thousands	2015		2014		2013
Payments		1,580		3,462		1,387
DBO December 31		32,758		33,764		29,181

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 ~~2012, 2011,~~2015, 2014, or ~~2010.~~

~~On December 31, 2012, the shareholdings of SAP’s board members were as follows:~~2013.

Shareholdings of Executive and Supervisory Board Members


Number of SAP shares	2012		2011		2010		2015		2014		2013
Executive Board		35,271		20,569		13,747		45,309		36,426		30,201
Supervisory Board		121,363,858		121,524,139		122,156,130		90,262,686		107,467,372		119,316,444

(30) RELATED PARTY TRANSACTIONS

~~(30)~~

~~Related Party Transactions~~

Certain Executive Board and Supervisory Board members of SAP AGSE currently hold, or held within the last year, positions of significant responsibility with other entities, as presented inNote (29). We have relationships with certain of these entities in the ordinary course of business, whereby we buy and sell ~~a wide variety of~~ products, assets and services at prices believed to be consistent with those negotiated at arm’s length between unrelated parties.

~~After his move~~Companies controlled by Hasso Plattner, chairman of our Supervisory Board and Chief Software Advisor of

SAP, engaged in the following transactions with SAP: providing consulting services to SAP, receiving sport sponsoring from ~~SAP’s~~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.

Occasionally, members of the Executive Board of SAP SE obtain services from SAP for which they pay a consideration believed to ~~SAP’s Supervisory Board in May 2003, Hasso Plattner entered into a contract~~be consistent with ~~SAP AG under which he provides consulting services for SAP. The contract provides for~~those negotiated at arm’s length between unrelated parties.

All amounts related to the ~~reimbursement of out-of-pocket expenses only, which~~abovementioned transactions were immaterial to SAP in all periods presented.

~~Hasso Plattner is the sole proprietor of H.P. Beteiligungs GmbH, which itself holds 90% of Bramasol, Inc., San Francisco, California, United States. He is also a member~~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 ~~Directors~~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).

In total, we sold services to members of ~~Bramasol, Inc. Bramasol is an SAP partner with which we generated revenue which was immaterial to SAP in all periods presented. The amounts charged to SAP for~~ the ~~services of Bramasol were immaterial to SAP in all periods presented.~~

~~Hasso Plattner holds a 80% share in Hasso Plattner Ventures GmbH & Co. KG which itself held 25.65% of Datango AG at the time when SAP~~

~~acquired the business activities of Datango AG through an asset deal in 2012. The purchase price agreed was €46 million, €37 million thereof were paid in 2012~~Executive Board and the ~~remaining €9~~Supervisory Board in the amount of€2 million ~~will be paid in 2013.~~

~~In 2011, SAP purchased land~~(2014:€0 million) and we received services from ~~Campus am Jungfernsee GmbH & Co. KG, a company that is wholly owned by Hasso Plattner. The purchase price agreed is €2.6 million to be paid in 2012.~~

SAP supports the family & kids @ work gemeinnützige UG organization (“family & kids @ work”). Family & kids @ work looks after children whose parents work for SAP and other employers in Germany. Christiane Kuntz-Mayr, who is the vice chairpersonmembers of the ~~SAP~~ Supervisory Board ~~is engaged by family & kids @ work~~(including services from employee representatives on the Supervisory Board in their capacity as ~~a manager. In 2012, SAP supported family & kids @ work with a total~~employees of ~~€0.6 million~~SAP) in the ~~form~~amount of ~~a donation, an annual fee,~~€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 ~~a payment made~~interest free and settlement is expected to ~~secure that a defined number of spots~~occur in ~~the daycare center are reserved for children of SAP employees (2011: €2.3 million).~~cash.

Wilhelm Haarmann practices as a partner of the law firm HAARMANN Partnerschaftsgesellschaft in Frankfurt am Main, Germany. The amounts charged to SAP for the services of HAARMANN Partnerschaftsgesellschaft were immaterial to SAP in all periods presented.

~~Please refer to Note (29) for disclosures of~~For information about the compensation of our Executive Board and Supervisory Board ~~members.~~members, see Note (29).

~~(31)~~ ~~Principal Accountant Fees and Services~~

(31) PRINCIPAL ACCOUNTANT FEES AND SERVICES

At the Annual General Meeting of Shareholders held on May ~~23, 2012,~~20, 2015, our shareholders elected KPMG AG Wirtschaftsprüfungsgesellschaft as SAP’s

independent auditor for ~~2012.~~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 ~~2012~~2015 and the previous years:

Fees for Audit and Other Professional Services


	2012						2011						2010
€ millions	KPMG AG (Germany)		Foreign KPMG Companies		Total		KPMG AG (Germany)		Foreign KPMG Companies		Total		KPMG AG (Germany)		Foreign KPMG Companies		Total		2015						2014						2013
																			KPMG AG (Germany)		Foreign KPMG Firms		Total		KPMG AG (Germany)		Foreign KPMG Firms		Total		KPMG AG (Germany)		Foreign KPMG Firms		Total
Audit fees		2		8		10		2		7		9		2		8		10		3		6		9		2		6		8		2		7		9
Audit-related fees		2		0		2		0		0		0		0		0		0		0		0		0		0		0		0		1		0		1
Tax fees		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0
All other fees		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0		0
Total		4		8		12		2		7		9		2		8		10		3		6		9		2		6		8		3		7		10

Audit fees are the aggregate fees charged by KPMG for ~~the audit of~~auditing our ~~Consolidated Financial Statements as well as audits of~~consolidated financial statements and the statutory financial statements of SAP AGSE 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~~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

~~(32)~~

~~Subsequent Events~~

~~No events have occurred after~~After December 31, ~~2012 which have~~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 ~~material impact on the Company’s Consolidated financial statements.~~range between approximately€180 million and€220 million in 2016.

(33) SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

Subsidiaries


Name and Location of Company	Owner- ship		Total Revenue in 2015¹⁾		Profit/ Loss (-) after Tax for 2015¹⁾		Total Equity as at 12/31/2015¹⁾		Number of Employees as at 12/31/2015²⁾		Foot- note
	%		€ thousands		€ thousands		€ thousands
Major Subsidiaries
Ariba, Inc., Palo Alto, CA, United States		100.0		642,877		–145,271		3,697,333		1,425
Concur Technologies, Inc., Bellevue, WA, United States		100.0		638,122		–18,115		6,552,341		2,741
LLC SAP CIS, Moscow, Russia		100.0		356,480		–18,607		42,319		659
SAP (Beijing) Software System Co., Ltd., Beijing, China		100.0		759,818		–83,167		–94,864		4,562
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		¹⁰	⁾
SAP America, Inc., Newtown Square, PA, United States		100.0		4,559,147		–402,385		14,709,940		6,114
SAP Asia Pte Ltd, Singapore, Singapore		100.0		386,585		–35,614		34,567		1,020
SAP Australia Pty Ltd, Sydney, Australia		100.0		631,863		–7,537		187,392		1,064
SAP Brasil Ltda, São Paulo, Brazil		100.0		527,180		–15,176		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		^7), 9)
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		¹¹	⁾
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

~~(33)~~

~~Subsidiaries, Associates, and Other Equity Investments~~

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾
Profit/Loss (–)
after Tax
for 2012¹⁾
Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
I. Fully Consolidated Subsidiaries

GERMANY

Ariba Deutschland GmbH, Frankfurt³⁾
100.0    769    15    1,099    13
OutlookSoft Deutschland GmbH, Walldorf
100.0    —    –1    –1    —
Plateau Systems GmbH, Garching³⁾
100.0    —    —    –177    —
SAP Beteiligungs GmbH, Walldorf
100.0    3    1    50    —
SAP Business Compliance Services GmbH, Siegen
100.0    4,164    –144    698    39
SAP Deutschland AG & Co. KG, Walldorf^8),9)
100.0    2,934,138    551,439    1,317,337    4,990
SAP Dritte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^5),8)
100.0    —    8,668    561,821    —
SAP Erste Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^5),8)
100.0    —    303    804,847    —
SAP Foreign Holdings GmbH, Walldorf
100.0    –168    120    58    —
SAP Fünfte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf⁸⁾
100.0    —    150,799    2,423,451    —
SAP Hosting Beteiligungs GmbH, St. Leon-Rot
100.0    —    0    26    —
SAP Portals Europe GmbH, Walldorf
100.0    —    84    124,199    —
SAP Portals Holding Beteiligungs GmbH, Walldorf
100.0    —    –311    930,126    —
SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf^5),8)
100.0    —    922    324,824    —
SAP Puerto Rico GmbH, Walldorf
100.0    33,029    –1,936    –4,086    30
SAP Retail Solutions Beteiligungsgesellschaft mbH, Walldorf
100.0    —    –617    12,954    —
SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf⁸⁾
100.0    —    0    25    —
SAP Ventures Investment GmbH, Walldorf³⁾
100.0    —    –2    7,601    —
SAP Vierte Beteiligungs- und Vermögensverwaltung GmbH, Walldorf
100.0    —    0    25    —
SAP Zweite Beteiligungs- und Vermögensverwaltung GmbH, Walldorf^5),8)
100.0    —    –193,356    –28,320    —
SuccessFactors Germany GmbH, Garching³⁾
100.0    13,756    211    506    59
TechniData GmbH, Markdorf
100.0    246    –529    29,404    —

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
REST OF EUROPE, MIDDLE EAST, AFRICA

Ambin Properties (Proprietary) Limited, Johannesburg, South Africa
100.0    —    314    1,408    —
Ariba Belgium N.V., Heverlee, Belgium³⁾
100.0    399    17    1,338    8
Ariba Czech s.r.o., Prague, Czech Republic³⁾
100.0    1,694    76    1,601    130
Ariba France, S.A.S., Paris, France³⁾
100.0    2,728    99    2,489    54
Ariba Iberia, S.L., Madrid, Spain³⁾
100.0    488    20    641    14
Ariba International Sweden AB, Stockholm, Sweden³⁾
100.0    620    30    264    10
Ariba Italia Srl, Rome, Italy³⁾
100.0    327    12    –739    9
Ariba Middle East & North Africa FZ-LLC, Dubai, United Arab Emirates³⁾
100.0    78    4    25    2
Ariba Slovak Republic s.r.o., Kosice, Slovakia³⁾
100.0    443    19    334    35
Ariba Switzerland GmbH, Zurich, Switzerland³⁾
100.0    252    12    1,028    5
Ariba Technologies Ireland Ltd., Dublin, Ireland³⁾
100.0    229    10    –97    11
Ariba Technologies Netherlands B.V., Amsterdam, the Netherlands³⁾
100.0    347    35    6,159    7
Ariba UK Limited, Egham, United Kingdom³⁾
100.0    3,387    468    5,057    58
Armstrong Laing Limited, London, United Kingdom
100.0    —    —    3,137    —
b-process, Paris, France³⁾
100.0    3,456    –408    –3,352    57
Business Objects (UK) Limited, London, United Kingdom¹⁰⁾
100.0    —    –481    31,945    —
Business Objects Holding B.V., s-Hertogenbosch, the Netherlands
100.0    —    16    4,224    —
Business Objects Software Limited, Dublin, Ireland
100.0    897,670    381,071    4,425,059    239
Cartesis UK Limited, London, United Kingdom
100.0    —    –3    0    —
Christie Partners Holding CV, Rotterdam, the Netherlands
100.0    —    –2    –21,826    —
Crossgate Italia S.p.A., Milan, Italy
100.0    778    –1,113    575    —
Crossgate UK Ltd., Slough, United Kingdom¹⁰⁾
100.0    448    –1,158    —    —
Crystal Decisions (Ireland) Limited, Dublin, Ireland
100.0    —    16    44,543    —
Crystal Decisions Holding Limited, Dublin, Ireland
100.0    —    21    77,729    —
Crystal Decisions UK Limited, London, United Kingdom¹⁰⁾
100.0    —    —    2,254    —
Edgewing Limited, London, United Kingdom
100.0    —    7    41    —
Epista Software A/S, Copenhagen, Denmark³⁾
100.0    2,718    1,238    4,977    10

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
EssCubed Procurement Pty. Ltd., Johannesburg, South Africa³⁾
100.0    8    0    –1,003    —
Joe D Partners CV, Utrecht, the Netherlands
100.0    82,412    –27,686    526,853    —
Limited Liability Company “SAP Labs”, Moscow, Russia³⁾
100.0    393    12    1,004    5
Limited Liability Company SAP CIS, Moscow, Russia
100.0    402,792    16,259    105,133    749
Limited Liability Company SAP Kazakhstan, Almaty, Kazakhstan
100.0    27,735    –344    5,191    20
Limited Liability Company SAP Ukraine, Kiev, Ukraine
100.0    28,327    –290    –2,781    90
Merlin Systems Oy, Espoo, Finland
100.0    10,873    479    3,062    31
NL Quotaholder 1 B.V., Amsterdam, the Netherlands³⁾
100.0    —    —    —    —
NL Quotaholder 2 B.V., Amsterdam, the Netherlands³⁾
100.0    —    —    —    —
Plateau Systems UK Ltd., Guildford, United Kingdom³⁾
100.0    —    —    –7,310    —
Quadrem Africa Pty. Ltd., Johannesburg, South Africa³⁾
100.0    228    286    –355    93
Quadrem Europe S.A.S., Paris, France³⁾
100.0    –214    10    528    —
Quadrem Netherlands B.V., Amsterdam, the Netherlands³⁾
100.0    8,354    –6,445    45,700    4
Quadrem Overseas Cooperatief U.A., Amsterdam, the Netherlands³⁾
100.0    —    —    —    —
S.A.P. Nederland B.V., s-Hertogenbosch, the Netherlands
100.0    393,320    34,044    413,867    413
SAP – NOVABASE, A.C.E., Porto Salvo, Portugal
66.7    —    —    —    —
SAP (Schweiz) AG, Biel, Switzerland
100.0    606,328    86,113    188,968    617
SAP (UK) Limited, Feltham, United Kingdom
100.0    757,380    43,453    21,525    1,310
SAP Belgium NV/SA, Brussels, Belgium
100.0    208,428    10,241    119,918    254
SAP BULGARIA EOOD, Sofia, Bulgaria
100.0    3,129    225    879    4
SAP Business Services Center Europe, s.r.o., Prague, Czech Republic
100.0    26,387    293    7,574    341
SAP Business Services Center Nederland B.V., Utrecht, the Netherlands
100.0    265,062    6,383    39,984    45
SAP Commercial Services Ltd., Valletta, Malta
100.0    —    –5    –17    —
SAP ČR, spol. s r.o., Prague, Czech Republic
100.0    77,037    4,106    19,041    253
SAP CYPRUS Ltd, Nicosia, Cyprus
100.0    2,798    –125    –2,084    2
SAP d.o.o., Zagreb, Croatia
100.0    6,793    99    –775    13
SAP Danmark A/S, Copenhagen, Denmark
100.0    164,990    17,589    29,089    162
SAP Egypt LLC, Cairo, Egypt
100.0    7,681    –4,223    –8,295    69
SAP EMEA Inside Sales S.L., Barcelona, Spain
100.0    18,380    582    2,794    126

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
SAP España – Sistemas, Aplicaciones y Productos en la Informática, S.A., Madrid, Spain
100.0    230,048    12,708    213,354    375
SAP Estonia OÜ, Tallinn, Estonia
100.0    2,999    182    356    1
SAP Finland Oy, Espoo, Finland
100.0    108,551    12,316    57,436    110
SAP France Holding, Paris, France
100.0    1,571    139,075    5,037,099    4
SAP France, Paris, France
100.0    794,711    147,017    1,550,177    1,387
SAP HELLAS S.A. – SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING, Athens, Greece
100.0    26,097    682    9,900    52
SAP Hungary Rendszerek, Alkalmazások és Termékek az Adatfeldolgozásban Informatikai Kft., Budapest, Hungary
100.0    48,635    894    17,800    415
SAP Ireland Limited, Dublin, Ireland
100.0    3,893    1,060    237    —
SAP Ireland US-Financial Services Ltd., Dublin, Ireland
100.0    248    320,731    4,391,939    3
SAP Israel Ltd., Ra’anana, Israel
100.0    34,578    2,251    1,613    60
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Milan, Italy
100.0    336,707    17,133    281,354    547
SAP Labs Bulgaria EOOD, Sofia, Bulgaria
100.0    23,815    924    4,112    467
SAP Labs Finland Oy, Espoo, Finland
100.0    7,146    322    41,341    47
SAP LABS France S.A.S., Mougins, France
100.0    44,946    1,458    21,191    302
SAP Labs Israel Ltd., Ra’anana, Israel
100.0    49,147    1,494    14,916    356
SAP Latvia SIA, Riga, Latvia
100.0    2,615    258    –225    3
SAP Malta Investments Ltd., Valletta, Malta
100.0    —    –5    –17    —
SAP Middle East and North Africa L.L.C., Dubai, United Arab Emirates⁴⁾
49.0    120,640    –26,718    –21,060    279
SAP Nederland Holding B.V., s-Hertogenbosch, the Netherlands
100.0    —    385    521,914    —
SAP Norge AS, Lysaker, Norway
100.0    79,188    2,147    21,736    95
SAP Österreich GmbH, Vienna, Austria
100.0    180,027    16,858    25,398    343
SAP Polska Sp. z o.o., Warsaw, Poland
100.0    68,429    3,807    19,943    124
SAP Portals Israel Ltd., Ra’anana, Israel
100.0    61,740    17,598    53,204    226
SAP Portugal – Sistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda., Porto Salvo, Portugal
100.0    57,247    –882    10,793    149
SAP Public Services Hungary Kft., Budapest, Hungary
100.0    2,358    319    776    5
SAP Romania SRL, Bucharest, Romania
100.0    22,664    2,622    10,035    172
SAP Saudi Arabia Software Services Limited, Riyadh, Kingdom of Saudi Arabia
100.0    31,736    2,713    35,477    51

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
SAP Saudi Arabia Software Trading Limited, Riyadh, Kingdom of Saudi Arabia
75.0    63,979    –2,713    –171    62
SAP Service and Support Centre (Ireland) Limited, Dublin, Ireland
100.0    71,454    1,925    31,375    804
SAP sistemi, aplikacije in produkti za obdelavo podatkov d.o.o., Ljubljana, Slovenia
100.0    15,691    373    7,711    24
SAP Slovensko s.r.o., Bratislava, Slovakia
100.0    36,904    2,005    22,815    175
SAP Svenska Aktiebolag, Stockholm, Sweden
100.0    146,473    7,926    8,877    148
SAP Training and Development Institute FZCO, Dubai, United Arab Emirates³⁾
100.0    395    –239    –213    18
SAP Türkiye Yazilim Üretim ve Ticaret A.S., Istanbul, Turkey
100.0    64,409    –17,206    –3,921    131
SAP UAB (Lithuania), Vilnius, Lithuania
100.0    1,808    –317    –165    3
SAPV (Mauritius), Ebene, Mauritius⁷⁾
0    —    –42    16,105    —
SAP West Balkans d.o.o., Belgrade, Serbia
100.0    13,742    1,381    5,338    28
SuccessFactors (UK) Limited, London, United Kingdom³⁾
100.0    17,498    340    645    89
SuccessFactors Denmark ApS, Copenhagen, Denmark³⁾
100.0    2,931    55    109    5
SuccessFactors France S.A.S., Paris, France³⁾
100.0    7,932    6    284    33
SuccessFactors Ireland Limited, Dublin, Ireland³⁾
100.0    1,081    23    46    6
SuccessFactors Italy S.R.L, Milan, Italy³⁾
100.0    903    –9    27    4
SuccessFactors Netherlands B.V., Amsterdam, the Netherlands³⁾
100.0    3,165    62    16,566    18
SuccessFactors Schweiz GmbH, Zurich, Switzerland³⁾
100.0    1,747    –192    –137    5
Sybase (UK) Limited, Maidenhead, United Kingdom
100.0    40,596    1,333    21,640    —
Sybase France S.a.r.l., Paris, France
100.0    115,639    1,469    2,819    109
Sybase Iberia S.L., Madrid, Spain
100.0    17,299    35    63,226    30
Sybase Luxembourg S.a.r.l, Luxembourg
100.0    125    39    14    —
Sybase Nederland B.V., Utrecht, the Netherlands
100.0    13,032    213    –1,316    12
Sybase South Africa (Proprietary) Limited, Johannesburg, South Africa
100.0    6,951    667    –458    —
Systems Applications Products Africa Region (Proprietary) Limited, Johannesburg, South Africa
100.0    45,884    4,005    18,293    27
Systems Applications Products Africa (Proprietary) Limited, Johannesburg, South Africa
100.0    —    16,307    81,424    —

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
Systems Applications Products Nigeria Limited, Abuja, Nigeria
100.0    17,641    1,267    3,994    40
Systems Applications Products South Africa (Proprietary) Limited, Johannesburg, South Africa
89.5    240,675    6,180    11,791    475
Syclo International Limited, Leatherhead, United Kingdom³⁾
100.0    195    –2,925    –6,152    19
The Infohrm Group Ltd., London, United Kingdom³⁾
100.0    17    –504    –485    —
TomorrowNow (UK) Limited, Feltham, United Kingdom¹⁰⁾
100.0    —    –7    15    —
TomorrowNow Nederland B.V., Amsterdam, the Netherlands
100.0    —    –17    –3,292    —
AMERICAS

110405, Inc., Newtown Square, Pennsylvania, USA
100.0    —    0    15,835    —
Alliente, Inc., Pittsburgh, Pennsylvania, USA³⁾
100.0    —    —    —    —
Ariba Canada, Inc., Mississauga, Canada³⁾
100.0    1,188    47    1,222    15
Ariba Holdings, Inc., Grand Cayman, Cayman Islands³⁾
100.0    —    —    —    —
Ariba, Inc., Sunnyvale, California, USA³⁾
100.0    56,410    –29,402    3,335,740    1,180
Ariba International Holdings, Inc., Wilmington, Delaware, USA³⁾
100.0    —    —    —    —
Ariba International, Inc., Wilmington, Delaware, USA³⁾
100.0    1,656    61    –1,603    37
Ariba Investment Company, Inc., Wilmington, Delaware, USA³⁾
100.0    —    1,746    218,354    —
Business Objects Argentina S.R.L., Buenos Aires, Argentina
100.0    —    0    68    —
Business Objects Option, LLC, Wilmington, Delaware, USA
100.0    –53    –9    64,484    —
Congo Acquisition LLC, San Mateo, California, USA³⁾
100.0    251    220    214    —
Extended Systems, Inc., Boise, Idaho, USA
100.0    —    10    17,227    —
Financial Fusion, Inc., Concord, Massachusetts, USA
100.0    —    —    —    —
FreeMarkets International Holdings Inc. de Mexico, de S. de R.L. de C.V., Mexico City, Mexico³⁾
100.0    —    —    –63    —
FreeMarkets Ltda., São Paulo, Brazil³⁾
100.0    22    –19    –156    —
iAnywhere Solutions Canada Ltd., Waterloo, Canada
100.0    30,908    269    3,823    133
iAnywhere Solutions Inc., Dublin, California, USA
100.0    54,520    –43,550    137,171    65
INEA Corporation USA, Wilmington, Delaware, USA
100.0    —    11    337    —
Inxight Federal Systems Group, Inc., Wilmington, Delaware, USA
100.0    —    –28    69    —
Jam Acquisition II LLC, San Mateo, California, USA³⁾
100.0    1    –15    –15    —

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
Jobs2Web, Inc., Minnetonka, Minnesota, USA³⁾
100.0    1,884    –304    –56    —
Plateau Systems LLC, Arlington, Virginia, USA³⁾
100.0    12,795    11,595    1,950    —
Quadrem Brazil Ltda., Rio de Janeiro, Brazil³⁾
100.0    6,604    1,332    3,698    157
Quadrem Canada Ltd., Mississauga, Canada³⁾
100.0    323    5    525    11
Quadrem Chile Ltda., Santiago de Chile, Chile³⁾
100.0    2,843    –374    2,429    185
Quadrem Colombia SAS, Bogota, Colombia³⁾
100.0    159    9    0    4
Quadrem International Holdings, Ltd., Plano, USA³⁾
100.0    —    –11    –5,494    —
Quadrem International Ltd., Hamilton, Bermuda³⁾
100.0    —    656    76,453    —
Quadrem Mexico S. de R. de C.V., Mexico City, Mexico³⁾
100.0    150    4    9    3
Quadrem Peru S.A.C., Lima, Peru³⁾
100.0    680    –248    –885    95
Quadrem U.S., Inc., Plano, Texas, USA³⁾
100.0    —    —    —    —
SAP America, Inc., Newtown Square, Pennsylvania, USA
100.0    3,595,396    66,688    5,090,227    5,883
SAP Andina y del Caribe C.A., Caracas, Venezuela
100.0    21,279    –22,168    –15,530    30
SAP ARGENTINA S.A., Buenos Aires, Argentina
100.0    163,188    6,368    23,277    614
SAP Brasil Ltda, São Paulo, Brazil
100.0    492,164    20    72,794    1,384
SAP Canada Inc., Toronto, Canada
100.0    743,904    42,435    478,346    2,082
SAP Chile Limitada, Santiago, Chile
100.0    —    —    14,560    —
SAP Colombia S.A.S., Bogota, Colombia
100.0    92,123    –1,587    –12,849    193
SAP Costa Rica, S.A., San José, Costa Rica
100.0    8,995    –2,714    –119    12
SAP Financial Inc., Toronto, Canada
100.0    —    26,512    7,544    —
SAP Global Marketing, Inc., New York, New York, USA
100.0    280,572    930    23,902    522
SAP Government Support & Services, Inc., Newtown Square, Pennsylvania, USA
100.0    146,524    30,605    157,444    242
SAP HANA REAL TIME FUND, San Mateo, California, USA^3),7)
0    —    –596    –589    —
SAP Industries, Inc., Newtown Square, Pennsylvania, USA
100.0    496,225    58,198    403,207    396
SAP International, Inc., Miami, Florida, USA
100.0    24,792    125    13,001    62
SAP Investments, Inc., Wilmington, Delaware, USA
100.0    —    25,369    671,287    —
SAP LABS, LLC, Palo Alto, California, USA
100.0    519,573    83,246    220,683    2,130
SAP México S.A. de C.V., Mexico City, Mexico
100.0    271,356    –18,381    –29,798    492
SAP PERU S.A.C., Lima, Peru
100.0    34,433    –537    831    50
SAP Public Services, Inc., Washington, D.C., USA
100.0    342,411    20,381    261,126    210

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
SAP Technologies Inc., Palo Alto, California, USA
100.0    —    —    —    —
SAP Ventures Fund I, L.P., Wilmington, Delaware, USA⁷⁾
0    —    23,753    46,097    —
SuccessFactors, Inc., San Mateo, California, USA³⁾
100.0    221,260    –131,317    2,662,376    1,318
SuccessFactors Brasil Consultoria e Assistência em Vendas Limitada, Sao Paulo, Brazil³⁾
100.0    2,218    27    66    15
SuccessFactors Canada Inc., Ottawa, Canada³⁾
100.0    6,906    109    389    26
SuccessFactors Cayman, Ltd., Grand Cayman, Cayman Islands³⁾
100.0    —    —    218    —
SuccessFactors de México, S. de R.L. de C.V., Mexico City, Mexico³⁾
100.0    1,612    9    28    13
SuccessFactors International Holdings, LLC, San Mateo, California, USA³⁾
100.0    —    —    107    —
SuccessFactors International Services, Inc., San Mateo, California, USA³⁾
100.0    2,605    47    130    11
SuccessFactors Middle East Holdings, LLC, San Mateo, California, USA³⁾
100.0    —    —    —    —
Surplus Record, Inc., Chicago, Illinois, USA³⁾
100.0    744    191    7,348    —
Sybase 365 LLC, Dublin, California, USA
100.0    75,612    –6,469    58,214    125
Sybase 365 Ltd., Tortola, British Virgin Islands
100.0    —    1,005    –949    —
Sybase Argentina S.A., Buenos Aires, Argentina
100.0    3,591    540    1,786    12
Sybase Canada Ltd., Waterloo, Canada
100.0    36,565    972    6,269    76
Sybase Global LLC, Dublin, California, USA
100.0    —    —    7,384    —
Sybase Intl Holdings LLC, Dublin, California, USA
100.0    —    –190    11,859    —
Sybase, Inc., Dublin, California, USA
100.0    501,011    143,240    4,464,086    1,195
Syclo LLC, Hoffman Estates, Illinois, USA³⁾
100.0    16,684    1,251    110,466    151
The Inforhrm Group Inc., Washington, Columbia, USA³⁾
100.0    —    –23    –21    —
TomorrowNow, Inc., Bryan, Texas, USA
100.0    —    1,716    –186,084    3
YouCalc, Inc., San Mateo, California, USA³⁾
100.0    —    —    —    —
ASIA PACIFIC JAPAN

Ariba (China) Limited, Hong Kong, China³⁾
100.0    —    —    —    —
Ariba Australia Pty Ltd., Sydney, Australia³⁾
100.0    2    0    20    —
Ariba India Pvt. Ltd., Gurgaon, India³⁾
100.0    1,006    –45    1,917    39
Ariba International Singapore Pte. Ltd., Singapore, Singapore³⁾
100.0    2,257    –132    –5,358    16

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
Ariba Singapore Pte. Ltd., Singapore, Singapore³⁾
100.0    —    —    —    —
Ariba Software Technology Services (Shanghai) Co. Ltd., Shanghai, China³⁾
100.0    381    214    588    1
Ariba Technologies India Pvt. Ltd., Bangalore, India³⁾
100.0    4,926    480    5,525    539
Beijing Zhang Zhong Hu Dong Information Technology Co. Ltd., Beijing, China
100.0    306    1,459    862    7
Business Objects Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia
100.0    —    3    269    —
Business Objects Software (Shanghai) Co., Ltd., Shanghai, China
100.0    7,735    543    7,606    88
iAnywhere Solutions K.K., Tokyo, Japan
100.0    13,267    –902    –3,454    23
Nihon Ariba K.K., Tokyo, Japan³⁾
100.0    665    18    1,663    12
Plateau Systems Australia Ltd, Brisbane, Australia³⁾
100.0    —    —    –862    —
Plateau Systems Pte. Ltd., Singapore, Singapore³⁾
100.0    —    —    –507    —
PT SAP Indonesia, Jakarta, Indonesia
100.0    53,976    4,780    7,488    61
PT Sybase 365 Indonesia, Jakarta, Indonesia
100.0    187    –11    412    —
Quadrem Asia Pte. Ltd., Singapore, Singapore³⁾
100.0    16    0    108    1
Quadrem Australia Pty Ltd., Brisbane, Australia³⁾
100.0    758    –115    1,023    25
Quadrem China Ltd., Hong Kong, China³⁾
100.0    —    —    14    —
Right Hemisphere Ltd., Auckland, New Zealand
100.0    308    –2,763    4,321    —
Ruan Lian Technologies (Beijing) Co. Ltd., Beijing, China
100.0    29    210    –942    1
SAP (Beijing) Software System Co., Ltd., Beijing, China
100.0    403,440    –45,551    31,697    3,526
SAP Asia Pte Limited, Singapore, Singapore
100.0    339,899    30,208    81,561    784
SAP Asia (Vietnam) Co. Ltd., Ho Chi Minh City, Vietnam
100.0    1,162    47    457    34
SAP Australia Pty Limited, Sydney, Australia
100.0    504,708    14,595    279,758    655
SAP HONG KONG CO. LIMITED, Hong Kong, China
100.0    37,022    –1,377    –544    112
SAP INDIA (HOLDING) PTE LTD., Singapore, Singapore
100.0    —    –8    305    —
SAP INDIA PRIVATE LIMITED, Bangalore, India
100.0    409,978    36,209    210,466    1,768
SAP JAPAN Co., Ltd., Tokyo, Japan
100.0    753,947    47,159    490,916    1,005
SAP Korea Limited, Seoul, South Korea
100.0    154,265    7,507    24,885    297

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
SAP Labs India Private Limited, Bangalore, India
100.0    178,290    –6,255    –3,073    4,635
SAP Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia
100.0    74,873    6,001    24,023    123
SAP New Zealand Limited, Auckland, New Zealand
100.0    57,580    5,032    36,565    91
SAP PHILIPPINES, INC., Makati, Philippines
100.0    39,433    –349    9,218    45
SAP R&D Center Korea, Inc., Seoul, South Korea
100.0    12,809    426    17,457    103
SAP SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING (THAILAND) LTD., Bangkok, Thailand⁶⁾
49.0    58,933    2,008    37,725    63
SAP TAIWAN CO., LTD., Taipei, Taiwan
100.0    69,778    6,325    32,385    92
Shanghai SuccessFactors Software Technology Co., Ltd., Shanghai, China³⁾
100.0    8,639    440    771    145
SuccessFactors (Philippines), Inc., Pasig City, Philippines³⁾
100.0    1,058    27    130    59
SuccessFactors Asia Pacific Limited, Hong Kong, China³⁾
100.0    11    0    222    —
SuccessFactors Australia Holdings Pty Ltd., Brisbane, Australia³⁾
100.0    —    –1,441    15,826    —
SuccessFactors Australia Pty Limited, Brisbane, Australia³⁾
100.0    17,544    1,525    41,871    89
SuccessFactors Business Solutions India Private Limited, Bangalore, India³⁾
100.0    5,447    297    399    158
SuccessFactors Hong Kong Limited, Hong Kong, China³⁾
100.0    2,312    38    87    10
SuccessFactors Japan K.K., Tokyo, Japan³⁾
100.0    1,978    3    135    8
SuccessFactors Korea Ltd., Seoul, South Korea³⁾
100.0    23    –1    35    —
SuccessFactors Singapore Pte. Ltd., Singapore, Singapore³⁾
100.0    2,175    47    89    11
Sybase (Singapore) Pte Limited, Singapore
100.0    14,203    403    1,512    172
Sybase 365 Ltd. (HK), Hong Kong, China
100.0    —    —    —    —
Sybase Australia Pty Limited, Sydney, Australia
100.0    23,754    1,023    9,454    31
Sybase Hong Kong Limited, Hong Kong, China
100.0    6,215    –193    367    —
Sybase India, Ltd., Mumbai, India
100.0    —    –42    2,494    —
Sybase K.K., Tokyo, Japan
100.0    37,360    278    2,004    63
Sybase Philippines Inc., Makati City, Philippines
100.0    —    –12    –24    —

As at December 31, 2012 Ownership
Total
Revenue
in 2012¹⁾

Profit/Loss (–)
after Tax
for 2012¹⁾

Total Equity
as at
12/31/2012¹⁾
Number of
Employees as
at 12/31/2012²⁾
Name and Location of Company % €(000) €(000) €(000)
Sybase Software (China) Co. Ltd., Beijing, China
100.0    24,536    –108    16,402    375
Sybase Software (India) Private Ltd, Mumbai, India
100.0    10,299    2,408    8,731    238
Sybase Software (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia
100.0    2,545    24    2,207    —
TomorrowNow Australia Pty Limited, Sydney, Australia
100.0    —    3    407    —
TomorrowNow Singapore Pte Limited, Singapore, Singapore
100.0    —    –10    72    —
II. INVESTMENTS IN ASSOCIATES

Alteryx Inc., Irvine, California, USA
9.19    21,448    –5,078    –4,587    145
ArisGlobal Holdings, LLC, Stamford, Connecticut, USA
16.00    39,154    241    8,223    776
China DataCom Corporation Limited, Guangzhou, China
28.30    37,278    3,722    35,446    880
Greater Pacific Capital (Cayman), L.P., Grand Cayman, Cayman Islands¹¹⁾
5.35    946    –457    306,489    —
Original1 GmbH, Frankfurt am Main, Germany
40.00    26    –3,231    –1,309    3
Procurement Negócios Eletrônicos S/A, Rio de Janeiro, Brazil
17.00    20,781    1,065    14,759    —

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.

2)	~~As at December 31, 2012, including managing directors, in FTE.~~

3)	~~Consolidated for the first time in 2012.~~

4)	~~Agreements with the other shareholders provide that SAP AG fully controls the entity.~~

5)	~~Entity with profit and loss transfer agreement.~~

6)	~~SAP AG holds 91% of the voting rights. The remaining shares are the preference shares with 9% of the voting rights.~~

7)	~~Consolidated in accordance with IAS 27 in conjunction with SIC 12.~~

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)	~~Entity whose personally liable partner is SAP AG.~~

~~10)~~

Pursuant to sections 479A to 479C of the UK Companies Act 2006 the subsidiaries are exempt from having their financial statements audited on the basis that SAP AG has provided a guarantee of these subsidiaries’ liabilities in respect of their financial year ended December 31, 2012.

~~11)~~

Greater Pacific Capital (Cayman) is part of a fund-of-funds concept acting as one of the feeder-funds to the partnership. There are neither financial statements for the year ended December 31, 2012 nor budget or forecast available hence the information provided is based on the audited financial statements for the year ended December 31, 2011.

~~As at December 31, 2012~~
Name and Location of Company Owner-
ship Foot-
note
%
~~III. OTHER EQUITY INVESTMENTS~~
~~(ownership of 5% or more)~~Other Subsidiaries³⁾

“SAP Kazakhstan” LLP, Almaty, Kazakhstan 100.0
110405, Inc., Newtown Square, PA, United States 100.0
Ambin Properties (Proprietary) Limited, Johannesburg, South Africa 100.0
Ariba Czech s.r.o., Prague, Czech Republic 100.0
Ariba India Private Limited, Gurgaon, India 100.0
Ariba International Holdings, Inc., Wilmington, DE, United States 100.0
Ariba International Singapore Pte Ltd, Singapore, Singapore 100.0
Ariba International, Inc., Wilmington, DE, United States 100.0
Ariba Investment Company, Inc., Wilmington, DE, United States 100.0
Ariba Slovak Republic s.r.o., Košice, Slovakia 100.0
Ariba Software Technology Services (Shanghai) Co., Ltd., Shanghai, China 100.0
Ariba Technologies India Private Limited, Bangalore, India 100.0
Ariba Technologies Netherlands B.V.,
‘s-Hertogenbosch, the Netherlands 100.0 ¹¹ ⁾
Beijing Zhang Zhong Hu Dong Information Technology Co., Ltd., Beijing, China 0 ⁵ ⁾
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 ¹¹ ⁾
Business Objects Option LLC, Wilmington, DE, United States 100.0
Business Objects Software (Shanghai) Co., Ltd., Shanghai, China 100.0
Business Objects Software Limited, Dublin, Ireland 100.0
Christie Partners Holding C.V., Utrecht, the Netherlands 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


Name and Location of Company	Owner- ship		Foot- note
	%
ClearTrip Private Limited, Mumbai, India		54.2
CNQR Operations Mexico S. de. R.L. de. C.V., San Pedro Garza Garcia, Mexico		100.0
Concur (Austria) GmbH, Vienna, Austria		100.0
Concur (Canada), Inc., Toronto, Canada		100.0
Concur (France) SAS, Paris, France		100.0
Concur (Germany) GmbH, Frankfurt am Main, Germany		100.0
Concur (Italy) S.r.l., Milan, Italy		100.0
Concur (Japan) Ltd., Bunkyo-ku, Japan		75.0
Concur (New Zealand) Limited, Wellington, New Zealand		100.0
Concur (Philippines) Inc., Makati City, Philippines		100.0
Concur (Switzerland) GmbH, Zurich, Switzerland		100.0
Concur Czech (s.r.o.), Prague, Czech Republic		100.0
Concur Denmark ApS, Frederiksberg, Denmark		100.0
Concur Holdings (France) SAS, Paris, France		100.0
Concur Holdings (Netherlands) B.V., Amsterdam, the Netherlands		100.0		¹¹	⁾
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
Concur Technologies (India) Private Limited, Bangalore, India		100.0
Concur Technologies (Singapore) Pte Ltd, Singapore, Singapore		100.0
Concur Technologies (UK) Limited, London, United Kingdom		100.0		¹⁰	⁾
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


Name and Location of Company	Owner- ship		Foot- note
	%
Crystal Decisions (Ireland) Limited, Dublin, Ireland		100.0
Crystal Decisions Holdings Limited, Dublin, Ireland		100.0
Crystal Decisions UK Limited, London, United Kingdom		100.0
EssCubed Procurement Pty. Ltd., Johannesburg, South Africa		100.0
Extended Systems, Inc., Dublin, CA, United States		100.0
Fieldglass AsiaPac PTY Ltd, Brisbane, Australia		100.0
Fieldglass Europe Limited, London, United Kingdom		100.0		¹⁰	⁾
Financial Fusion, Inc., Dublin, CA, United States		100.0
FreeMarkets International Holdings Inc. de Mexico, de S. de R.L. de C.V., Mexico City, Mexico		100.0
FreeMarkets Ltda., São Paulo, Brazil		100.0
Gelco Information Network, Inc., Minneapolis, MN, United States		100.0
GlobalExpense (Consulting) Limited, London, United Kingdom		100.0
GlobalExpense (UK) Limited, London, United Kingdom		100.0		¹⁰	⁾
H-G Holdings, Inc., Wilmington, DE, United States		100.0
H-G Intermediate Holdings, Inc., Wilmington, DE, United States		100.0
hybris (US) Corp., Wilmington, DE, United States		100.0
hybris AG, Zug, Switzerland		100.0
hybris Australia Pty Limited, Surry Hills, Australia		100.0
hybris GmbH, Munich, Germany		100.0		⁹	⁾
hybris Hong Kong Limited, Hong Kong, China		100.0
hybris UK Limited, London, United Kingdom		100.0		¹⁰	⁾
Inxight Federal Systems Group, Inc., Wilmington, DE, United States		100.0
KXEN Limited, Feltham, United Kingdom		100.0
LLC “SAP Labs”, Moscow, Russia		100.0
LLC “SAP Ukraine”, Kiev, Ukraine		100.0
Merlin Systems Oy, Espoo, Finland		100.0
Multiposting SAS, Paris, France		100.0		⁴	⁾
Multiposting Sp.z o.o., Warsaw, Poland		100.0		⁴	⁾


Name and Location of Company	Owner- ship		Foot- note
	%
Nihon Ariba K.K., Tokyo, Japan		100.0
OutlookSoft Deutschland GmbH, Walldorf, Germany		100.0
Plateau Systems Australia Ltd, Brisbane, Australia		100.0
Plateau Systems LLC, South San Francisco, CA, United States		100.0
PT SAP Indonesia, Jakarta, Indonesia		99.0
PT Sybase 365 Indonesia, Jakarta, Indonesia		100.0
Quadrem Africa Pty. Ltd., Johannesburg, South Africa		100.0
Quadrem Australia Pty Ltd., Brisbane, Australia		100.0
Quadrem Brazil Ltda., Rio de Janeiro, Brazil		100.0
Quadrem Chile Ltda., Santiago de Chile, Chile		100.0
Quadrem Colombia SAS, Bogotá, Colombia		100.0
Quadrem International Ltd., Hamilton, Bermuda		100.0
Quadrem Netherlands B.V., Amsterdam, the Netherlands		100.0		¹¹	⁾
Quadrem Overseas Cooperatief U.A., Amsterdam, the Netherlands		100.0
Quadrem Peru S.A.C., Lima, Peru		100.0
Ruan Lian Technologies (Beijing) Co., Ltd., Beijing, China		100.0
San Borja Partricipadoes LTDA, São Paulo, Brazil		100.0
SAP Andina y del Caribe, C.A., Caracas, Venezuela		100.0
SAP Argentina S.A., Buenos Aires, Argentina		100.0
SAP Asia (Vietnam) Co., Ltd., Ho Chi Minh City, Vietnam		100.0
SAP Azerbaijan LLC, Baku, Azerbaijan		100.0		⁴	⁾
SAP Belgium NV/SA, Brussels, Belgium		100.0
SAP Beteiligungs GmbH, Walldorf, Germany		100.0
SAP Bulgaria EOOD, Sofia, Bulgaria		100.0
SAP Business Compliance Services GmbH, Siegen, Germany		100.0
SAP Business Services Center Europe s.r.o., Prague, Czech Republic		100.0
SAP Business Services Center Nederland B.V., ‘s-Hertogenbosch, the Netherlands		100.0		¹¹	⁾
SAP Chile Limitada, Santiago, Chile		100.0


Name and Location of Company	Owner- ship		Foot- note
	%
SAP China Co., Ltd., Shanghai, China		100.0		⁴	⁾
SAP China Holding Co., Ltd., Beijing, China		100.0		⁴	⁾
SAP Colombia SAS., Bogotá, Colombia		100.0
SAP Commercial Services Ltd., Valletta, Malta		100.0
SAP Costa Rica, S.A., San José, Costa Rica		100.0
SAP ČR, spol. s r.o., Prague, Czech Republic		100.0
SAP Cyprus Ltd, Nicosia, Cyprus		100.0
SAP d.o.o., Zagreb, Croatia		100.0
SAP Danmark A/S, Copenhagen, Denmark		100.0
SAP Dritte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany		100.0		⁸	^), 9)
SAP East Africa Limited, Nairobi, Kenya		100.0
SAP Egypt LLC, Cairo, Egypt		100.0
SAP EMEA Inside Sales S.L., Barcelona, Spain		100.0
SAP Erste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany		100.0		⁸	^), 9)
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		100.0
SAP France Holding, Levallois Perret, France		100.0
SAP Fünfte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany		100.0		⁹	⁾
SAP Global Marketing, Inc., New York, NY, United States		100.0
SAP Hellas S.A., Athens, Greece		100.0
SAP Holdings (UK) Limited, Feltham, United Kingdom		100.0		¹⁰	⁾
SAP Hong Kong Co., Ltd., Hong Kong, China		100.0
SAP Hosting Beteiligungs GmbH, St. Leon-Rot, Germany		100.0
SAP Hungary Rendszerek, Alkalmazások és Termékek az Adatfeldolgozásban Informatikai Kft., Budapest, Hungary		100.0


Name and Location of Company	Owner- ship		Foot- note
	%
SAP India (Holding) Pte Ltd, Singapore, Singapore		100.0
SAP International Panama, S.A., Panama City, Panama		100.0
SAP International, Inc., Miami, FL, United States		100.0
SAP Investments, Inc., Wilmington, DE, United States		100.0
SAP Ireland Limited, Dublin, Ireland		100.0
SAP Ireland-US Financial Services Ltd., Dublin, Ireland		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 Labs France SAS, Mougins, France		100.0
SAP Labs Israel Ltd., Ra’anana, Israel		100.0
SAP Labs Korea, Inc., Seoul, South Korea		100.0
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		⁵	⁾
SAP National Security Services, Inc., Newtown Square, PA, United States		100.0
SAP Nederland Holding B.V., ‘s-Hertogenbosch, the Netherlands		100.0		¹¹	⁾
SAP New Zealand Limited, Auckland, New Zealand		100.0
SAP Norge AS, Lysaker, Norway		100.0
SAP North West Africa Ltd, Casablanca, Morocco		100.0		⁴	⁾
SAP Österreich GmbH, Vienna, Austria		100.0
SAP PERU S.A.C., Lima, Peru		100.0
SAP Philippines, Inc., Makati, Philippines		100.0
SAP Polska Sp. z o.o., Warsaw, Poland		100.0
SAP Portals Europe GmbH, Walldorf, Germany		100.0
SAP Portals Holding Beteiligungs GmbH, Walldorf, Germany		100.0
SAP Portals Israel Ltd., Ra’anana, Israel		100.0


Name and Location of Company	Owner- ship		Foot- note
	%
SAP Portugal – Sistemas, Aplicações e Produtos Informáticos, Sociedade Unipessoal, Lda., Porto Salvo, Portugal		100.0
SAP Projektverwaltungs- und Beteiligungs GmbH, Walldorf, Germany		100.0		⁸	⁾
SAP Public Services Hungary Kft., Budapest, Hungary		100.0
SAP Public Services, Inc., Washington, DC, United States		100.0
SAP Puerto Rico GmbH, Walldorf, Germany		100.0		⁹	⁾
SAP Retail Solutions Beteiligungsgesellschaft mbH, Walldorf, Germany		100.0
SAP Romania SRL, Bucharest, Romania		100.0
SAP Saudi Arabia Software Services Ltd, Riyadh, Kingdom of Saudi Arabia		100.0
SAP Saudi Arabia Software Trading Ltd, Riyadh, Kingdom of Saudi Arabia		75.0
SAP Sechste Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany		100.0		⁹	⁾
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		49.0		⁴	^), 5)
SAP Svenska Aktiebolag, Stockholm, Sweden		100.0
SAP Systems, Applications and Products in Data Processing (Thailand) Ltd., Bangkok, Thailand		100.0
SAP Taiwan Co., Ltd., Taipei, Taiwan		100.0
SAP Technologies Inc., Palo Alto, CA, United States		100.0
SAP Training and Development Institute FZCO, Dubai, United Arab Emirates		100.0
SAP Türkiye Yazilim Üretim ve Ticaret A.Ş., Istanbul, Turkey		100.0
SAP UAB, Vilnius, Lithuania		100.0
SAP Ventures Investment GmbH, Walldorf, Germany		100.0		⁹	⁾
SAP Vierte Beteiligungs- und Vermögensverwaltungs GmbH, Walldorf, Germany		100.0
SAP West Balkans d.o.o., Belgrade, Serbia		100.0


Name and Location of Company	Owner- ship		Foot- note
	%
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	⁾
Sapphire Ventures Fund I, L.P., Wilmington, DE, United States		0		⁶	⁾
Sapphire Ventures Fund II, L.P., Wilmington, DE, United States		0		⁶	⁾
SAPV (Mauritius), Ebene, Mauritius		0		⁶	⁾
SAS Financière Multiposting, Paris, France		100.0		⁴	⁾
SeeWhy (UK) Limited, Windsor, United Kingdom		100.0		¹⁰	⁾
Shanghai SuccessFactors Software Technology Co., Ltd., Shanghai, China		100.0
SuccessFactors (Philippines), Inc., Pasig City, Philippines		100.0
SuccessFactors (UK) Limited, London, United Kingdom		100.0		¹⁰	⁾
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
SuccessFactors Hong Kong Limited, Hong Kong, China		100.0
SuccessFactors International Holdings, LLC, San Mateo, CA, United States		100.0
Sybase (UK) Limited, Maidenhead, United Kingdom		100.0
Sybase 365 Ltd., Tortola, British Virgin Islands		100.0
Sybase 365, LLC, Dublin, CA, United States		100.0
Sybase Angola, LDA, Luanda, Angola		100.0
Sybase Iberia S.L., Madrid, Spain		100.0
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


Name and Location of Company	Owner- ship		Foot- note
	%
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
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
TripIt LLC, Wilmington, DE, United States		100.0
TRX Data Service, Inc., Glen Allen, VA, United States		100.0
TRX Europe Limited, London, United Kingdom		100.0		¹⁰	⁾
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		¹⁰	⁾
~~Aepona Ltd.~~TRX, Inc., ~~Belfast,~~ ~~Northern Ireland,~~Atlanta, GA, United ~~Kingdom~~States		100.0

¹⁾ 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.

²⁾ As at December 31, 2015, including managing directors, in FTE.

³⁾ 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.

⁴⁾ Consolidated for the first time in 2015.

⁵⁾ Agreements with the other shareholders provide that SAP SE fully controls the entity.

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.

⁷⁾ Entity whose personally liable partner is SAP SE.

⁸⁾ Entity with profit and loss transfer agreement.

⁹⁾ 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.

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.

¹¹⁾ 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.

Other Equity Investments


Name and Location of Company	Owner- ship
	%
Joint Arrangements and Investments in Associates
China DataCom Corporation Limited, Guangzhou, China		28.30
Convercent, Inc., Denver, CO, United States		44.16
Evature Technologies (2009) Ltd., Ramat Gan, Israel		30.46
Greater Pacific Capital (Cayman) L.P., Grand Cayman, Cayman Islands		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


Name and Location of Company
Equity Investments with Ownership of at Least 5%
Alchemist Accelerator Fund I LLC, San Francisco, ~~California, USA~~CA, United States


~~Apriso Corporation, Long Beach,~~ ~~California, USA~~ Name and Location of Company
	All Tax Platform - Solucoes Tributarias S.A., São Paulo, Brazil
~~Connectiva Systems,~~Alteryx, Inc., ~~New York,~~ ~~New York, USA~~Irvine, CA, United States
Amplify Partners II L.P., Cambridge, MA, United States
Amplify Partners L.P., Cambridge, MA, United States
AP Opportunity Fund, LLC, Menlo Park, CA, United States
ArisGlobal Holdings LLC, Stamford, CT, United States
Char Software, Inc., Boston, MA, United States
Costanoa Venture Capital II L.P., Palo Alto, CA, United States
Costanoa Venture Capital QZ, LLC, Palo Alto, CA, United States
Cyphort, Inc., Santa Clara, CA, United States
Data Collective II L.P., San Francisco, ~~California, USA~~CA, United States
~~Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern, Germany~~Data Collective III L.P., San Francisco, CA, United States
EIT ICT Labs GmbH, Berlin, Germany
	FeedZai S.A., Lisbon, Portugal
~~Ignite Technologies,~~Follow Analytics, Inc., ~~Frisco, Texas,~~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
~~iTAC Software AG, Dernbach, Germany~~
iYogi Holdings Pvt. Ltd., Port Louis, Mauritius
~~JasperSoft Corporation,~~Jibe, Inc., New York, NY, United States
Kaltura, Inc., New York, NY, United States
Krux Digital, Inc., San Francisco, ~~California, USA~~CA, United States
Lavante, Inc., San ~~José~~Jose, CA, United States
Local Globe VII, L.P., ~~California,~~ ~~USA~~St. Peter Port, Guernsey, Channel Islands
Looker Data Sciences, Inc., Santa Cruz, CA, United States


Name and Location of Company
MuleSoft, Inc., San Francisco, ~~California, USA~~CA, United States
MVP Strategic Partnership Fund GmbH & Co. KG, Grünwald, Germany
Narrative Science, Inc., Chicago, IL, United States
	Notation Capital, L.P., Brooklyn, NY, United States
On Deck Capital, Inc., New York, ~~New York, USA~~NY, United States
~~Onventis GmbH, Stuttgart,~~ ~~Germany~~OpenX Software Limited, Pasadena, CA, United States
Patent Quality, Inc., Bellevue, ~~Washington, USA~~WA, United States
~~PayScale Inc., Seattle, Washington, USA~~ Point Nine Capital Fund II GmbH & Co. KG, Berlin, Germany
	Point Nine Capital Fund III GmbH & Co. KG, Berlin, Germany
Post for Systems, Cairo, Egypt
~~Powersim Corporation, Herndon, Virginia, USA~~PubNub, Inc., San Francisco, CA, United States
Realize Corporation, Tokyo, Japan
~~Retail Solutions, Inc. (legal name: T3C, Inc.), Mountain View, California, USA~~
Return Path, Inc., New York, ~~New York, USA~~NY, United States
~~RIB Software AG, Stuttgart, Germany~~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, ~~California, USA~~CA, United States
T3C Inc., Mountain View, CA, United States
TableNow, Inc., San Francisco, CA, United States
Technologie- und Gründerzentrum Walldorf Stiftung GmbH, Walldorf, Germany
	The Currency Cloud Group Limited, London, United Kingdom
The SAVO Group Ltd., Chicago, ~~Illinois, USA~~IL, United States
~~Ticketfly,~~TidalScale, Inc., ~~San Francisco, California, USA~~Santa Clara, CA, United States
	Upfront V, L.P., Santa Monica, CA, United States

~~F-99~~F-73


Title of each class		Name of each exchange on which registered
American Depositary Shares, each Representing one Ordinary Share, without nominal value		New York Stock Exchange
Ordinary Shares, without nominal value		New York Stock Exchange*


~~INTRODUCTION~~Introduction			1
~~FORWARD-LOOKING STATEMENTS~~Forward-Looking Statements			1
~~MEASURES CITED IN THIS REPORT~~Performance Management System			2
PART I			109
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			109
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE			109
ITEM 3. KEY INFORMATION			109
Selected Financial Data			109
Exchange Rates			1211
Dividends			1211
Risk Factors			1312
ITEM 4. INFORMATION ABOUT SAP			24
Overview of the SAP Group			25
~~Vision, Mission,~~Strategy and ~~Strategy~~Business Model			26
~~Business Activity and Organization~~Seasonality			2729
~~Portfolio of~~ Products, ~~Solutions,~~Research & Development, and Services			2829
~~Sales, Marketing, and Distribution~~Acquisitions			34
~~Research and Development~~			35
Partner Ecosystem			3834
~~Acquisitions~~Customers			3935
Environmental Performance: Energy and Emissions			40
~~Seasonality~~			4137
Intellectual Property, Proprietary Rights and Licenses			4239
Description of Property			4239
ITEM 4A. UNRESOLVED STAFF COMMENTS			4341
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			4341
Overview			41
Economy and the Market			41
Performance Against Outlook for 2015 (Non-IFRS)			43
~~Economic Conditions~~			44
~~Outlook for 2012~~Operating Results (IFRS)			45
Foreign Currency Exchange Rate Exposure			63
~~Outlook~~			6358
Liquidity and Capital Resources			6858
Off-Balance Sheet Arrangements			7262
Contractual Obligations			7362
Research and Development			7363
Critical Accounting Estimates			7363
New Accounting Standards ~~Not Yet~~not yet Adopted			7463
Expected Developments			63
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			7569
Supervisory Board			7569
Executive Board			7670
Compensation Report			7771
Employees			9387
Share Ownership			9488
Share-Based Compensation Plans			9488
ITEM 7. MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS			9588
Major Shareholders			9588
Related-Party Transactions			9689
ITEM 8. FINANCIAL INFORMATION			9689
Consolidated Financial Statements and Financial Statement Schedule			9689
Other Financial Information			9689


ITEM 9. THE OFFER AND LISTING			9689
General			9689
Trading on the Frankfurt Stock Exchange and the NYSE			9790
ITEM 10. ADDITIONAL INFORMATION			9891
Articles of Incorporation			9891
Corporate Governance			9891
Change in Control			~~102~~95
Change in Share Capital			~~103~~95


Rights Accompanying ~~Our~~our Shares			~~103~~96
Taxation			~~104~~97
Material Contracts			~~109~~101
Documents on Display			~~110~~101
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			~~110~~101
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			~~110~~102
American Depositary Shares			~~110~~102
PART II			~~112~~103
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			~~112~~103
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			~~112~~103
ITEM 15. CONTROLS AND PROCEDURES			~~112~~103
Evaluation of Disclosure Controls and Procedures			~~112~~103
Management’s Annual Report on Internal Control Over Financial Reporting			~~112~~103
Changes in Internal Control Over Financial Reporting			~~112~~103
ITEM 16. [RESERVED]			~~112~~103
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT			~~112~~103
ITEM 16B. CODE OF ETHICS			~~113~~103
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES			~~113~~104
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees			~~113~~104
Audit Committee’s Pre-Approval Policies and Procedures			~~113~~104
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			~~114~~104
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			~~115~~105
ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT			~~115~~105
ITEM 16G. DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES			~~115~~105
Introduction			~~115~~105
Legal Framework			~~116~~105
Significant Differences			~~116~~105
~~German Stock Corporations are Required to have~~SAP SE is a European Company With a Two-Tier Board System			~~116~~105
Director Independence Rules			~~116~~106
Audit Committee Independence			~~117~~107
Rules on Non-Management Board Meetings are Different			~~117~~107
Rules on Establishing Committees Differ			~~117~~107
Rules on Shareholders’ Compulsory Approval are Different			~~118~~107
Specific Principles of Corporate Governance			~~118~~107
Specific Code of Business Conduct			~~118~~107
PART III			~~119~~108
ITEM 17. FINANCIAL STATEMENTS			~~119~~108
ITEM 18. FINANCIAL STATEMENTS			~~119~~108
ITEM 19. EXHIBITS			~~119~~108
Signatures			~~121~~109
Index to the Consolidated Financial Statements			F-1
Report of ~~the~~ Independent Registered Public Accounting Firm			F-2
Consolidated Financial Statements			F-3


Year	Average⁽¹⁾		High		Low		Average⁽¹⁾		High		Low
2008		1.4695		1.6010		1.2446
2009		1.3955		1.5100		1.2547
2010		1.3216		1.4536		1.1959
2011		1.4002		1.4875		1.2926		1.4002		1.4875		1.2926
2012		1.2909		1.3463		1.2062		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


Large accelerated filer þ		Accelerated filer ¨		Non-accelerated filer ¨


€ millions, unless otherwise stated	for the years ended December 31
	2012										2011
	IFRS		Adj.		Non-IFRS		Currency Impact		Non-IFRS Constant Currency		IFRS		Adj.		Non-IFRS
Revenue measures
Software		4,658		0		4,658		–134		4,524		4,107		0		4,107
Cloud subscriptions and support		270		73		343		–21		322		18		0		18
Software and cloud subscriptions		4,928		73		5,001		–155		4,846		4,125		0		4,125
Support		8,237		9		8,246		–286		7,959		7,194		27		7,221
Software and software-related service revenue		13,165		81		13,246		–441		12,806		11,319		27		11,346
Consulting		2,442		0		2,442		–95		2,347		2,341		0		2,341
Other services		616		0		616		–18		599		573		0		573
Professional services and other service revenue		3,058		0		3,058		–113		2,945		2,914		0		2,914

Total revenue		16,223		81		16,304		–553		15,751		14,233		27		14,260

Operating expense measures
Cost of software and software-related services		–2,551		414		–2,137						–2,107		285		–1,822
Cost of professional services and other services		–2,514		128		–2,385						–2,248		32		–2,216
Research and development		–2,253		129		–2,124						–1,939		41		–1,898
Sales and marketing		–3,907		223		–3,684						–3,081		127		–2,954
General and administration		–947		164		–783						–715		30		–685
Restructuring		–8		8		0						–4		4		0
TomorrowNow litigation		0		0		0						717		–717		0
Other operating income/expense, net		23		0		23						25		0		25

Total operating expenses		–12,158		1,067		–11,090		362		–10,728		–9,352		–198		–9,550

Operating profit measures
Operating profit		4,065		1,148		5,214		–191		5,023		4,881		–171		4,710
Operating margin in %		25.1				32.0				31.9		34.3				33.0


€ millions, unless otherwise stated	2015										2014
	IFRS		Adj.		Non-IFRS		Currency Impact		Non-IFRS Constant Currency		IFRS		Adj.		Non-IFRS
Revenue measures
Cloud subscriptions and support		2,286		10		2,296		–297		1,999		1,087		14		1,101
Software licenses		4,835		1		4,836		–255		4,581		4,399		0		4,399
Software support		10,093		0		10,094		–678		9,416		8,829		5		8,834
Software licenses and support		14,928		2		14,930		–933		13,997		13,228		5		13,233
Cloud and software		17,214		11		17,226		–1,230		15,996		14,315		19		14,334
Services		3,579		0		3,579		–276		3,304		3,245		0		3,245
Total revenue		20,793		11		20,805		–1,505		19,299		17,560		19		17,580
Operating expense measures
Cost of cloud subscriptions and support		–1,022		232		–789						–481		88		–393
Cost of software licenses and support		–2,291		283		–2,008						–2,076		258		–1,818
Cost of cloud and software		–3,313		516		–2,797						–2,557		346		–2,211
Cost of services		–3,313		180		–3,133						–2,716		125		–2,590
Total cost of revenue		–6,626		696		–5,930						–5,272		471		–4,801
Gross profit		14,167		707		14,874						12,288		490		12,778
Research and development		–2,845		202		–2,643						–2,331		127		–2,204
Sales and marketing		–5,401		449		–4,952						–4,304		170		–4,134
General and administration		–1,048		116		–932						–892		86		–806
Restructuring		–621		621		0						–126		126		0
TomorrowNow and Versata litigation		0		0		0						–309		309		0
Other operating income/expense, net		1		0		1						4		0		4
Total operating expenses		–16,541		2,084		–14,457		1,062		–13,395		–13,230		1,288		–11,942
Operating profit		4,252		2,095		6,348		–443		5,904		4,331		1,307		5,638


millions, unless otherwise stated	2015⁽¹⁾ US$		2015 €		2014 €		2013 €		2012 €		2011 €
Income Statement Data: Years ended December 31,
Cloud subscriptions and support		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
Earnings per share⁽²⁾
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
Other Data:
Weighted-average number of shares outstanding
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
Statement of Financial Position Data: At December 31,
Cash and cash equivalents		3,704		3,411		3,328		2,748		2,477		4,965
Total assets⁽³⁾		44,945		41,390		38,565		27,091		26,306		23,227
Current financial liabilities⁽⁴⁾		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
Total equity		25,296		23,295		19,534		16,048		14,133		12,689


millions, unless otherwise stated	2012⁽¹⁾		2012		2011		2010		2009		2008
	US$		€		€		€		€		€
Income Statement Data: Years ended December 31,
Software and software-related service revenue		17,359		13,165		11,319		9,794		8,198		8,457
Total revenue		21,392		16,223		14,233		12,464		10,672		11,575
Operating profit		5,360		4,065		4,881		2,591		2,588		2,701
Operating margin in %⁽²⁾		25.1		25.1		34.3		20.8		24.3		23.3
Profit after tax		3,722		2,823		3,439		1,813		1,750		1,848
Profit attributable to owners of parent		3,722		2,823		3,438		1,811		1,748		1,847
Earnings per share⁽²⁾
Basic in €		3.13		2.37		2.89		1.52		1.47		1.55
Diluted in €		3.12		2.37		2.89		1.52		1.47		1.55
Other Data:
Weighted-average number of shares outstanding
Basic		1,192		1,192		1,189		1,188		1,188		1,190
Diluted		1,193		1,193		1,190		1,189		1,189		1,191
Statement of Financial Position Data: At December 31,
Cash and cash equivalents		3,266		2,477		4,965		3,518		1,884		1,280
Total assets⁽³⁾		35,385		26,835		23,227		20,839		13,374		13,900
Current financial liabilities⁽⁴⁾		1,058		802		1,331		142		146		2,563
Non-current financial liabilities⁽⁴⁾		5,862		4,446		2,925		4,449		729		40
Issued capital		1,621		1,229		1,228		1,227		1,226		1,226
Total equity		18,686		14,171		12,707		9,824		8,491		7,171


Month	High		Low
2015
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
2016
January		1.0964		1.0743
February		1.1362		1.0868
March (through March 11, 2016)		1.1180		1.0845


	Dividend Paid per Ordinary Share
Year Ended December 31,	€			US$
2008		0.50			0.68	⁽¹⁾
2009		0.50			0.60	⁽¹⁾
2010		0.60			0.85	⁽¹⁾
2011		1.10	⁽²⁾		1.38	⁽¹⁾
2012 (proposed)		0.85	⁽³⁾		1.11	^(3),(4)


Year Ended December 31,	Dividend Paid per Ordinary Share
Year Ended December 31,	€			US$
2011		1.10	⁽²⁾		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)


Name of Subsidiary	~~Ownership~~ %	Country of Incorporation	~~Function~~
Germany
SAP Deutschland AGSE & Co. KG, Walldorf	~~100~~	Germany	~~Sales & Marketing, Consulting,~~ ~~Training and Administration~~
Rest of EMEA
SAP (UK) Limited, Feltham	~~100~~	Great Britain	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
SAP (Schweiz) AG, Biel	~~100~~	Switzerland	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
SAP France, ~~Paris~~Levallois Perret	~~100~~	France
SAP Nederland B.V., ‘s-Hertogenbosch	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~The Netherlands
SAP Italia Sistemi Applicazioni Prodotti in Data Processing S.p.A., Vimercate	Italy
United States
SAP America, Inc., Newtown Square	~~100~~USA
SAP Industries, Inc., Newtown Square	USA
SuccessFactors, Inc., South San Francisco	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~USA
Ariba, Inc., Palo Alto	USA
Concur Technologies, Inc., Bellevue	USA
Rest of Americas
SAP ~~Canada Inc., Toronto~~Brasil Ltda, São Paulo	~~100~~	~~Canada~~	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~Brazil
Japan
SAP ~~JAPAN~~Japan Co., Ltd., Tokyo	~~100~~	Japan	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~
Rest of APJ
SAP Australia Pty ~~Limited,~~Ltd., Sydney	~~100~~Australia
SAP (Beijing) Software System Co. Ltd., Beijing	~~Australia~~	~~Sales & Marketing, Consulting, Training, Customer Support, Research and Development and Administration~~China


Industry Sector	Industry Portfolio
Consumer	~~Industry Portfolio~~ SAP for Consumer Products
	SAP for Life Sciences
	SAP for Retail
	SAP for Wholesale Distribution
Discrete manufacturing	SAP for Aerospace & Defense
	SAP for Automotive
	SAP for High Tech
	SAP for Industrial Machinery & Components

~~Process manufacturing~~Energy and natural resources	SAP for Chemicals
	SAP for Mill Products
	SAP for Mining
~~Consumer products~~	~~SAP for Consumer Products~~

~~Energy and natural resources~~	SAP for Oil & Gas
~~Energy and natural resources~~	~~SAP for Mining~~
	SAP for Utilities

~~Retail and wholesale distribution~~Financial services	SAP for ~~Retail~~Banking
~~Retail and wholesale distribution~~Financial services		SAP for ~~Wholesale Distribution~~
	Insurance
Public services	SAP for Defense & Security
	SAP for ~~Higher Education & Research~~Healthcare
	SAP for ~~Public Sector~~Higher Education & Research

~~Financial services~~	SAP for ~~Banking~~
	~~SAP for Insurance~~
	Public Sector
Services	SAP for Engineering, Construction & Operations
	SAP for Media
	SAP for Professional Services
	SAP for ~~Telecommunications~~Sports & Entertainment
	SAP for ~~Transportation & Logistics~~Telecommunications

~~Health sciences~~	SAP for ~~Healthcare~~Travel & Transportation


€ millions, except operating margin	IFRS Financial Measure		Support Revenue Not Recorded Under IFRS		Acquisition- Related Charges		Share- based compensation		Restruc- turing		Discon- tinued Activities		Non-IFRS Financial Measure		Currency Effect on the Non-IFRS Financial Measure		Non-IFRS Financial Measure at Constant Currency
Software and software-related service revenue		13,165		81		n.a.		n.a.		n.a.		n.a.		13,246		–441		12,806
Total revenue⁽¹⁾		16,223		81		n.a.		n.a.		n.a.		n.a.		16,304		–553		15,751
Operating profit⁽¹⁾		4,065		81		537		522		8		0		5,214		–191		5,023
Operating margin in %		25.1		0.4		3.3		3.2		0		0		32.0		–0.1		31.9


€ millions, except operating margin	IFRS Financial Measure		Recurring Revenue not Recorded Under IFRS		Acqui- sition- Related Charges		Share- Based Payments		Restruc- turing		Non-IFRS Financial Measure		Currency Effect on the Non- IFRS Financial Measure		Non-IFRS Financial Measure at Constant Currency
Cloud subscriptions and support		2,286		10		NA		NA		NA		2,296		–297		1,999
Software licenses and support		14,928		2		NA		NA		NA		14,930		–933		13,997
Cloud and software		17,214		11		NA		NA		NA		17,226		–1,230		15,996
Total revenue⁽¹⁾		20,793		11		NA		NA		NA		20,805		–1,505		19,299
Operating profit⁽¹⁾		4,252		11		738		724		621		6,348		–443		5,904
Operating margin (in %)		20.5		0		3.5		3.5		3.0		30.5		0.1		30.6


	~~Forecast 2012~~	~~Results 2012~~
~~Software- and Software-related service revenue (non-IFRS, at constant currency)~~⁽¹⁾	~~+10.5% to 12.5%~~⁽²⁾	~~+13%~~
~~Operating profit (non-IFRS, at constant currency)~~	~~€5.05 bn to €5.25 bn~~	~~€5.02 bn~~
~~Effective tax rate (IFRS)~~	~~26.5% to 27.5%~~	~~26.2%~~
~~Effective tax rate (non-IFRS)~~	~~27.0% to 28.0%~~	~~27.5%~~


	Forecast for 2015		Results for 2015
Cloud subscriptions and support revenue		€1.95 billion		€2.00 billion
(non-IFRS, at constant currencies)		to €2.05 billion
Cloud and software revenue		+8%		+12%
(non-IFRS, at constant currencies)		to +10%
Operating profit		€5.6 billion		€5.90 billion
(non-IFRS, at constant currencies)		to €5.9 billion
Effective tax rate (IFRS)		25.0%		23.4%
		to 26.0%
Effective tax rate (non-IFRS)		26.5%		26.1%
		to 27.5%


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%
Americas		8,428		6,489		30%
Japan		667		600		11%
Rest of APJ		2,517		2,088		21%
APJ		3,185		2,688		18%
SAP Group		20,793		17,560		18%


Revenue by Industry
€ millions	2012		2011		Change in % 2012 vs 2011			2015		2014		Change in % 2015 vs 2014
Energy & Natural Resources									4,834		4,158		16%
Discrete Manufacturing		3,110		2,617		19	%		3,672		3,051		20%
Process Manufacturing		1,684		1,461		15	%
Consumer Products		1,516		1,433		6	%
Energy & Natural Resources		2,241		2,001		12	%
Consumer									4,934		4,045		22%
Public Services									2,174		1,786		22%
Financial Services									1,881		1,697		11%
Services		2,484		2,190		13	%		3,298		2,824		17%
Financial Services		1,444		1,196		21	%
Public Services		1,437		1,399		3	%
Retail & Wholesale		1,541		1,300		19	%
Healthcare & Life Sciences		766		636		20	%
Total revenue		16,223		14,233		14	%		20,793		17,560		18%


€ millions	2012		% of total revenue⁽¹⁾		2011		% of total revenue⁽²⁾		Change in % 2012 vs 2011
Cost of software and software-related services		–2,551		16%		–2,107		15%		21%
Cost of professional services and other services		–2,514		15%		–2,248		16%		12%
Research and development		–2,253		14%		–1,939		14%		16%
Sales and marketing		–3,907		24%		–3,081		22%		27%
General and administration		–947		6%		–715		5%		32%
Restructuring		–8		0%		–4		0%		n.a.
TomorrowNow litigation		0		0%		717		5%		n.a.
Other operating income/expense, net		23		0%		25		0%		–8%
Total operating expenses		–12,158		75%		–9,352		66%		30%


€ millions, except for operating margin	2012		2011		Change in % 2012 vs 2011
Operating profit		4,065		4,881		–17%
Operating margin in %		25.1%		34.3%		–9.2pp


Operating Profit and Operating Margin
€ millions, except for operating margin	2015		2014		Change in % 2015 vs 2014
Operating profit		4,252		4,331		–2%
Operating margin (in %)		20.5%		24.7%		–4.2pp


€ millions, unless otherwise stated (Non-IFRS)	2015		2014		Change in %		Change in % (Constant Currency)
Segment revenue		1,614		644		150%		116%
Gross margin (in %)		67%		66%		1pp		0pp
Cloud subscription and support margin (in %)		75%		75%		–0pp		–1pp
Segment profit		312		105		199%		139%
Segment margin (in %)		19%		16%		3pp		2pp


Applications, Technology & Services Segment
€ millions, unless otherwise stated (Non-IFRS)	2014		2013		Change in %		Change in % (Constant Currency)
Segment revenue		16,871		16,386		3%		4%
Gross margin (in %)		73%		74%		–1pp		–1pp
Cloud subscriptions and support margin (in %)		55%		70%		–15pp		–15pp
Segment profit		7,099		7,056		1%		1%
Segment margin (in %)		42%		43%		–1pp		–1pp


€ millions, unless otherwise stated	IFRS Financial Measure		Support Revenue Not Recorded Under IFRS		Operating Expenses⁽¹⁾		Discontinued Activities⁽³⁾		Non-IFRS Financial Measure
Software and cloud subscription revenue		4,928		73		n.a.		n.a.		5,001
Software and software-related service revenue		13,165		81		n.a.		n.a.		13,246
Total revenue⁽²⁾		16,223		81		n.a.		n.a.		16,304
Operating profit⁽²⁾		4,065		81		1,067		0		5,214


€ millions	Estimated Amounts for ~~2013~~2016		Actual Amounts for ~~2012~~2015
~~Deferred revenue write-down~~Revenue adjustments		~~65 to 75~~< 20		81
~~Discontinued activities~~		~~<10~~		011
Share-based payment expenses		~~500~~590 to ~~540~~630		~~522~~724
Acquisition-related charges		~~510~~690 to ~~530~~740		~~537~~738
Restructuring ~~charges~~		2540 to 3060		8621


Name	Year First Appointed		Year Current Term Expires
Bill McDermott, Co-CEO		2008		2017
Jim Hagemann Snabe, Co-CEO		2008		2017
Dr. Werner Brandt		2001		2014
Lars Dalgaard		2012		2015
Luisa Deplazes Delgado		2012		2015
Gerhard Oswald		1996		2014
Dr. Vishal Sikka		2010		2017


€ thousands	Fixed Elements				Performance- Related Elements						Compensation for 2012⁽¹⁾
					Short-Term and Medium-Term Incentive Elements				Long-Term Incentive Element
	Salary		Other⁽²⁾		STI		MTI 2010		Share-Based Payment (RSU Milestone Plan 2015)⁽^1),⁽³⁾
Bill McDermott (co-CEO)⁽⁴⁾		1,203.3		415.9		1,581.5		1,259.6		4,318.4		8,778.7
Jim Hagemann Snabe (co-CEO)		1,150.0		163.8		1,545.7		1,067.6		4,318.4		8,245.5
Dr. Werner Brandt		700.0		26.7		935.5		645.1		1,549.1		3,856.4
Lars Dalgaard (from April 12, 2012)⁽⁶⁾		528.9		0		690.4		0		1,156.2		2,375.5
Luisa Deplazes Delgado (from September 1, 2012)		233.3		96.4		193.9		0		414.4		938.0
Gerhard Oswald		700.0		16.5		935.5		645.1		1,549.1		3,846.2
Dr. Vishal Sikka⁽⁵⁾		733.4		143.9		957.2		635.1		1,549.1		4,018.7

Total		5,248.9		863.2		6,839.7		4,252.5		14,854.7		32,059.0


	Grants for 2012
	Quantity		Grant Value per Unit at Time of Grant		Total Grant Value at Time of Grant
			€		€ thousands
Bill McDermott (co-CEO)		95,414		45.26		4,318.4
Jim Hagemann Snabe (co-CEO)		95,414		45.26		4,318.4
Dr. Werner Brandt		34,226		45.26		1,549.1
Lars Dalgaard (from April 12, 2012)		24,594		47.01		1,156.2
Luisa Deplazes Delgado (from September 1, 2012)		8,332		49.73		414.4
Gerhard Oswald		34,226		45.26		1,549.1
Dr. Vishal Sikka		34,226		45.26		1,549.1

Total		326,432				14,854.7


	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
Michael Kleinemeier (from November 1, 2015)		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
Total		192,345				10,365


€ thousands	Fixed Elements				Performance- Related Element		Long-Term Incentive Elements		Total
	Salary		Other⁽¹⁾		Short-Term Incentive (STI)		Share-Based Payment (SAP SOP 2010)⁽²⁾
Bill McDermott (co-CEO)⁽³⁾		1,279.9		408.0		3,935.5		950.0		6,573.4
Jim Hagemann Snabe (co-CEO)		1,150.0		107.6		3,271.2		950.0		5,478.8
Dr. Werner Brandt		700.0		29.7		1,979.6		577.0		3,286.3
Gerhard Oswald		700.0		34.5		1,979.6		577.0		3,291.1
Dr. Vishal Sikka⁽⁴⁾		700.0		120.5		2,103.7		577.0		3,501.2
Dr. Angelika Dammann (member until July 8, 2011)⁽⁵⁾		466.7		45.9		1,163.1		384.7		2,060.4

Total		4,996.6		746.2		14,432.7		4,015.7		24,191.2


	2011 Grants
	Quantity		Fair Value per Right at Time of Grant		Total Fair Value at Time of Grant
			€		€ thousands
Bill McDermott (co-CEO)		112,426		8.45		950.0
Jim Hagemann Snabe (co-CEO)		112,426		8.45		950.0
Dr. Werner Brandt		68,284		8.45		577.0
Gerhard Oswald		68,284		8.45		577.0
Dr. Vishal Sikka		68,284		8.45		577.0

Total		429,704				3,631.0


€ thousands	Bill McDermott (co-CEO)⁽¹⁾		Dr. Werner Brandt		Luisa Deplazes Delgado (from September 1, 2012)		Gerhard Oswald		Dr. Vishal Sikka⁽¹⁾		Total
PBO January 1, 2011		1,073.2		1,284.3		n.a.		4,127.4		46.7		6,531.6
Less plan assets market value January 1, 2011		52.6		921.7		n.a.		3,374.9		45.0		4,394.2
Accrued January 1, 2011		1,020.6		362.6		n.a.		752.5		1.7		2,137.4
PBO change in 2011		66.3		215.4		n.a.		358.1		6.4		646.2
Plan assets change in 2011		4.0		209.3		n.a.		436.3		3.5		653.1
PBO December 31, 2011		1,139.5		1,499.7		n.a.		4,485.5		53.1		7,177.8
Less plan assets market value December 31, 2011		56.6		1,131.0		n.a.		3,811.2		48.5		5,047.3
Accrued December 31, 2011		1,082.9		368.7		n.a.		674.3		4.6		2,130.5
PBO change in 2012		–64.4		541.8		55.1		1,231.3		–53.1		1,710.7
Plan assets change in 2012		–56.6		217.0		48.3		383.3		–48.5		543.5
PBO December 31, 2012		1,075.1		2,041.5		55.1		5,716.8		0		8,888.5
Less plan assets market value December 31, 2012		0		1,348.0		48.3		4,194.5		0		5,590.8
Accrued December 31, 2012		1,075.1		693.5		6.8		1,522.3		0		3,297.7

Fair Value Hierarchy

Determination of Fair Value/Valuation
Technique

Financial liabilities

Fixed rate bonds (financial liabilities)

Quoted prices in an active market

Fixed rate private placements/ loans (financial liabilities)

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.