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2012 ANNUAL REPORT HELPING T H E WORLD E WORLD HELPING R UN BETTER THE WORLD 2012 ANNU 2012 RUN BETTER A L REPO L R T The Best-Run Businesses Run SAP® In a world of accelerated change, we are at an inflection point. Companies today need to be able to react and adapt rapidly to this change. SAP® innovations are helping the world run better by enabling our 232,000 customers to run more efficiently, be closer to their own customers, motivate their employees, gain real- time insight into their business, and optimize scarce resources. Our innovations matter to our customers. Our innovations matter to people. Our innovations matter to the world. We help the world run better and improve people’s lives. Key Facts Performance Summary € millions, unless otherwise stated 2012 2011 Change in % Financial key performance indicators Software and cloud subscriptions (IFRS) 4,928 4,125 19 Non-IFRS adjustments 73 0 n.a. Software and cloud subscriptions (non-IFRS) 5,001 4,125 21 Software and software-related service revenue (IFRS) 13,165 11,319 16 Non-IFRS adjustments 81 27 200 Software and software-related service revenue (non-IFRS) 13,246 11,346 17 Total revenue (IFRS) 16,223 14,233 14 Non-IFRS adjustments 81 27 200 Total revenue (non-IFRS) 16,304 14,260 14 Operating profit (IFRS) 4,065 4,881 –17 Non-IFRS adjustments 1,148 –171 n.a. Operating profit (non-IFRS) 5,214 4,710 11 Operating margin in % (IFRS) 25.1 34.3 –27 Operating margin in % (non-IFRS) 32.0 33.0 –3 Free cash flow 3,281 3,330 –1 Net liquidity –2,502 1,636 –253 Days’ sales outstanding (DSO) 59 60 –2 Equity ratio (total equity as a percentage of total assets) 52.8 54.7 –3 Research and development Research and development expenses 2,253 1,939 16 Research and development expenses as a percentage of total revenue (non-IFRS) 13.9 13.9 0 Number of employees in research and development at year-end 1) 18,012 15,861 14 Shares and dividend Weighted average shares, basic in millions 1,192 1,189 0 Earnings per share in € 2.37 2.89 –18 Dividend per share in € 0.85 1.10 –23 Share prices at year-end in € 60.69 40.85 49 Market capitalization in € billions 74.7 50.2 49 Performance Summary € millions, unless otherwise stated 2012 2011 Change in % Employees Number of employees at year-end 1) 64,422 55,765 16 Personnel expenses per employee – excluding share-based compensation 1) 110 107 3 Employee engagement in % 79 77 3 Business Health Culture Index in % 66 65 2 Women in % 1) 30 30 0 Female managers in % 2) 19.4 18.7 4 Employee retention in % 1) 94 93 1 Customer Net Promoter Score 3) 8.9 n.a. n.a. Environmental Greenhouse gas emissions in kilotons 485 490 –1 Greenhouse gas emissions per employee 1) in tons 7.9 9.0 –12 Greenhouse gas emissions per € revenue in grams 30.0 34.4 –13 Total energy consumed in GWh 860 860 0 Energy consumed per employee 1) in MWh 14.0 15.7 –11 Renewable energy sourced in % 60 47 28 Data center energy consumed in GWh 160 155 3 Data center energy per employee 1) in KWh 2,598 2,824 –8 1) Based on full-time equivalents (FTEs) 2) Relates to different levels of management position 3) In 2012, we adopted a new methodology for measuring customer loyalty: Net Promoter Score (NPS). Therefore, there are no comparative values for the NPS for the years prior to 2012. About This Report CONTENT data was prepared using our internal criteria based on the Starting in 2012, we report on our financial, social, and Greenhouse Gas Protocol. environmental performance in one integrated report (“SAP Integrated Report 2012”), which is available at DaTA www.sapintegratedreport.com. The SAP Integrated Report All of the data and information for the reporting period were 2012 contains a comprehensive and integrated presentation collected and/or reported utilizing SAP® software solutions and of our performance in 2012 based on both financial and non- were sourced from the responsible business units. financial measures and is available exclusively online. Additionally, we continue to provide an annual report (“SAP Annual Report The reporting period is the financial year 2012. The report 2012”) comprising all of the information required by accounting encompasses global SAP operations and all subsidiaries of the and disclosure standards applicable to us within this report. SAP Group. To make this report as current as possible, we This SAP Annual Report 2012 is an extract from the SAP have included relevant information available up to the auditor’s Integrated Report 2012 and is available online as well as in print. opinion and the responsibility statement dated February 21, 2013. The report is published each year in English and in German. The financial data presented include our Consolidated Financial Statements, a Management Report, and certain financial INDEPENDENT AUDIT AND assURANCE measures derived from SAP’s management reporting. The non- KPMG AG Wirtschaftsprüfungsgesellschaft has audited our financial data presented includes both social, environmental, Consolidated Financial Statements and the Management and economic aspects derived from our materiality assessment. Report. For the audit opinion, see page 51 of this report. The information audited by KPMG does not include the BasIS OF PRESENTATION additional information on SAP’s Web site that is referenced in The management report of SAP AG and its subsidiaries has this report. However, as indicated on our Web site, KPMG has been prepared in accordance with sections 315 and 315a of the provided assurance on selected non-financial, social, and German Commercial Code and German Accounting Standards environmental data and information in accordance with the No. 17 and 20. The Management Report is also a management International Standard on Assurance Engagements (ISAE) commentary complying with the International Financial 3000 and the AA1000 Assurance Standard, two pertinent Reporting Standards (IFRS) Management Commentary practice standards for the assurance of sustainability reporting. The statement. independent assurance report for social and environmental data and information is part of the SAP Integrated Report Our Consolidated Financial Statements are prepared in online. accordance with IFRS. Internal control over financial reporting ensures the reliability of the information presented in the For more information about why SAP publishes an integrated Consolidated Financial Statements. SAP’s management report, about our materiality assessment, and about the confirmed the effectiveness of SAP’s internal control over related stakeholder engagement, see the “Why Integrated financial reporting. Reporting,” “Materiality,” and “Stakeholder Engagement” sections of the SAP Integrated Report 2012 online. The social and environmental data and information included in the SAP Integrated Report is prepared in accordance with the international guidelines (G3.1) of the Global Reporting Initiative (GRI), who also confirmed that the requirements of meeting application level A+ have been met. In addition, the non-financial information has been prepared by applying the principles of inclusivity, materiality, and responsiveness as defined in the AA1000 Accountability Principles Standard. Greenhouse gas 1 Contents To Our Stakeholders 5 Combined Management Report 55 Financial Statements 155 Additional Information 271 2 5 To Our Stakeholders 155 Consolidated Financial Statements IFRS Letter from the Co-CEOs Consolidated Income Statements Global Managing 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 55 Combined Management Report Management’s Annual Report on Internal Control over Financial Reporting in the Consolidated Financial Statements General Information About This Management Report Vision, Mission, and Strategy Business Activity and Organization 271 Additional Information Portfolio of Products, Solutions, and Services Sales, Marketing, and Distribution Five-Year Summary Customers Glossary Research and Development Addresses Partner Ecosystem Financial and Sustainability Publications Acquisitions Financial Calendar Employees and Social Investments Publication Details Energy and Emissions Measures Cited in This Report Economic Conditions Assets, Finances, and Operating Results Assets, Finances, and Operating Results of SAP AG Overall Financial Position Corporate Governance Information Concerning Takeovers Opportunity Report Risk Report Supplementary Report Outlook 3 63% OF THE WORLD’S TraNSACTION REVENUE TOUCHES AN SAP SYSTEM 5 To Our Stakeholders 6 Letter from the Co-CEOs 10 Global Managing Board 12 Investor Relations 17 Corporate Governance Report 21 Report by the Supervisory Board 34 Compensation Report 50 Responsibility Statement 51 Independent Auditor’s Report 5 Letter from the Co-CEOs Dear Stakeholders, The real-time world has now become reality. Cloud computing is changing the way software is consumed, evidenced by a shift in spending from hardware to software. Currently, there are more mobile devices in the world than people, giving billions of people computing power in their pockets. Fifteen billion of those devices are connected to the Internet, bringing people and businesses closer to each other across the globe. Technology has moved beyond supporting business. More than ever, technology is the business. At the same time,

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