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2011 ANNUAL REPORT FINANCIAL AND NON-FINANCIAL PERFORMANCE IMPROVING PEOPLE’S LIVES The Best-Run Businesses Run SAP® To be all set for the future, 183,000 customers in 120 countries look to SAP for new technologies, tools, and strategies today. SAP solutions help them respond to the needs of people living longer, healthier lives; analyze and understand the complex connections between climate change and business operations; open up new opportunities and business mod- els in globalized markets; and apply technology and innovation that makes work simpler and more efficient. SAP helps our customers run their businesses with ideas and solutions that make them leaders. Key Facts Performance Summary € millions, unless otherwise stated 2011 2010 Change in % Financial key performance indicators Software revenue 3,971 3,265 22 Software and software-related service revenue (IFRS) 11,319 9,794 16 Non-IFRS adjustments 27 74 –64 Software and software-related service revenue (non-IFRS) 11,346 9,868 15 Total revenue (IFRS) 14,233 12,464 14 Non-IFRS adjustments 27 74 –64 Total revenue (non-IFRS) 14,260 12,538 14 Operating profit (IFRS) 4,881 2,591 88 Non-IFRS adjustments –171 1,416 –112 Operating profit (non-IFRS) 4,710 4,007 18 Operating margin in % (IFRS) 34.3 20.8 65 Operating margin in % (non-IFRS) 33 32 3 Free cash flow 3,333 2,588 29 Net liquidity 1,636 –850 292 Days’ sales outstanding (DSO) 60 65 –8 Equity ratio (total equity as a percentage of the total assets) 54.7 47.0 16 Research and development Research and development expenses 1,939 1,729 12 Research and development expenses as a percentage of total revenue (non-IFRS) 13.9 13.6 Number of employees in research and development at year-end 1) 15,884 15,861 0 Shares and dividend Weighted average shares, basic in millions 1,189 1,188 0 Earnings per share in € 2.89 1.52 90 Dividend per share in € 1.10 0.60 83 Share prices at year-end in € 40.85 38.10 7 Market capitalization in € billions 50.2 46.7 7 Performance Summary € millions, unless otherwise stated 2011 2010 Change in % Employees 1) Number of employees at year end 55,765 53,513 4 Personnel expenses per employee (excluding share-based compensation) 1) 108 105 3 Employee engagement in % 77.0 68.0 13 Business Health Culture Index in % 65.0 59.0 10 Women in % 1) 30.0 30.0 0 Female managers in % 1), 2) 18.7 17.8 5 Employee retention in % 1) 93.0 93.0 0 Customer Customer satisfaction (scale from 1 to 10) 7.7 7.6 1 Environmental Greenhouse gas emissions in kilotons 490 455 8 Greenhouse gas emissions per employee 3) in tons 9.0 8.7 3 Greenhouse gas emissions per € revenue in tons 34.4 36.3 –5 Total energy consumed in GWh 860 845 2 Energy consumed per employee 3) in MWh 15.8 16.1 –2 Renewable energy sourced in % 47.0 45.0 4 Data center energy consumed in GWh 155 145 7 Data center energy per employee 3) in KWh 2,824 2,746 3 1) Based on full-time equivalents 2) Relates to different levels of management position 3) Based on full-time equivalents excluding acquisition About This Report CONTENT AND STRUCTURE DaTA This report comprises details of our material financial and non- All of the data and information for the reporting period were financial performance. The financial data presented includes collected and/or reported utilizing SAP software solutions and Consolidated Financial Statements, a Management Report, and were sourced from the responsible business units. certain financial measures derived from SAP’s management reporting. The non-financial data presented includes social and The reporting period is the financial year 2011. The report environmental aspects of our overall sustainability perfor- encompasses global SAP operations and all subsidiaries of the mance. Further information on SAP’s sustainability performance SAP Group. To make this report as current as possible, we can be found in our annual Sustainability Report at have included relevant information available up to the editorial www.SAPSustainabilityReport.com. deadline of February 23, 2012. The report is published each year in English and in German. BASIS FOR PRESENTATION Our Consolidated Financial Statements are prepared in accor- INDEPENDENT AUDIT AND ASSUraNCE dance with International Financial Reporting Standards (IFRS). KPMG AG Wirtschaftsprüfungsgesellschaft has audited our Internal control over financial reporting ensures the reliability Consolidated Financial Statements and the Management of the information presented in the Consolidated Financial Report. For the audit opinion please refer to page 63 of this Statements. SAP’s management confirmed the effectiveness Annual Report. of SAP’s internal control over financial reporting. KPMG Sustainability has provided assurance for the non- Our Management Report is prepared in accordance with Ger- financial, social and environmental data and information man law, German Accounting Standards and the IFRS Practice related materiality assessment in accordance with the Interna- Statement ‘Management Commentary’. tional Standard on Assurance Engagements 3000 and the AA1000 Accountability Principles Standard, two standards for The social and environmental data and information included in the assurance of sustainability reporting. The independent the Management Report is prepared in accordance with the assurance report for social and environmental data and infor- international guidelines (G3.1) of the Global Reporting Initiative mation is part of SAP’s annual Sustainability Report. (GRI) and in accordance with the AA1000 Accountability Principles Standard. Greenhouse gas data was prepared using SAP’s own internal criteria based on the Greenhouse Gas Protocol. 1 Contents Climate Change Myriam Cohen-Welgryn Vice President, Nature Danone Demographic Change Subra Sripada Vice President & Chief Information Officer (CIO) Beaumont Health System Urbanization Patricia de Lille South African politician and Mayor of Cape Town Globalization Jason Li Vice President & Chief Financial Officer (CFO) Aigo Electronics Technology Co., Ltd. 2 13 To Our 169 Financial Shareholders Statements Letter from the Co-CEOs Consolidated Income Statements Executive Board Consolidated Statements of Investor Relations Comprehensive Income Corporate Governance Report Consolidated Statements of Financial Position Report by the Supervisory Board Consolidated Statements of Compensation Report Changes in Equity Responsibility Statement Consolidated Statements of Independent Auditor’s Report Cash Flows Notes to the Consolidated Financial Statements Management’s Annual Report on Internal 67 Management Report Control over Financial Reporting in the Consolidated Financial Statements General Information About This Management Report The SAP Group of Companies Portfolio of Software and Services Customers 277 Additional Research and Development Information Partner Ecosystem Five-Year Summary Acquisitions and Disposals Glossary Employees and Social Engagement Addresses Energy and Emissions Publications for Shareholders Financial Measures Cited in This Report Financial Calendar Economic Conditions Publication Details Assets, Finances, and Operating Results Assets, Financial Position, and Income of SAP AG Overall Financial Position Corporate Governance Information Concerning Takeovers Risk Report Events after the Reporting Period Outlook 3 CLIMATE CHANGE GLOBAL CLIMATE CHANGE MEANS PERMANENT, LONG-TERM CHANGES IN TEMPERATURE, PRECIPITATION, HUMIDITY, WIND, AND SEASONS. OVER THE NEXT DECADE, THESE SHIFTS WILL NOT ONLY AFFECT NATURAL ECOSYSTEMS BUT ALSO COUNTRIES, ECONOMIES, AND PEOPLE. Making carbon reduction an everyday priority Customer Profile What impact do global climate change trends ductivity. For instance, when you reduce the weight of Danone is one of the fastest-growing food com- Quick Facts have on Danone? packaging, you achieve both: CO2 reduction and panies in the world. Its mission is to bring health savings. But as we progressed, CO2 reduction became through food to as many people as possible. Industry: Consumer Products Myriam Cohen-Welgryn: Danone is a €19 billion more challenging and detailed measurement a key The group whose products are sold on five conti- Employees: 100,000 company that enjoys leading positions in four healthy issue. nents, has more than 180 production plants Headquarters: Paris, France food businesses – fresh dairy products, water, baby and around 100,000 employees. In 2011, Danone Website: www.danone.com nutrition, and medical nutrition. Our mission is to bring How did SAP contribute to meet this measurement generated revenues of €19 billion, of which more Solution: SAP ERP application, SAP BusinessObjects health through food to as many people as possible. challenge? than half were in emerging markets. Profitability and Cost Management application, Danone products depend to a large extent on natural SAP BusinessObjects Financial Information Manage- ecosystems. It is thus in our best interest to make Myriam Cohen-Welgryn: Calculating the carbon SAP BusinessObjects solutions help Danone ment application, SAP BusinessObjects Data care for the environment an integral part of our busi- footprint for one single Danone product can be very collect, measure, and analyze its carbon footprint, Services software ness activities. In 2008, we decided to include carbon complex – we have to cover multiple categories reducing it by 30% from 2008 to 2012. footprint as a global indicator because it reflects a and full product lifecycles. Thus, managing large vol- wide range of environmental criteria, and consequently, umes of data took a lot of time and we could only we committed to reducing our carbon use by an do it on an annual basis. We were looking for a robust ambitious 30% over the 2008–2012 period. and powerful solution where collected data can be audited and fully traced. To meet this challenge, Danone How has Danone’s commitment to the environ- and SAP brought together their expertise and know- ment changed your organization? how to build an innovative solution to measure our environmental footprint. SAP BusinessObjects solu- Myriam Cohen-Welgryn: This 30% reduction target tions offer the perfect combination of tools to mea- was unreachable without a breakthrough approach.