Good morning, ladies and gentlemen. I am pleased to declare this year's Annual General Meeting of Shareholders of SAP S E open. Welcome. This year, as last, the Annual General Meeting of Shareholders is taking place under unusual conditions due to the COVID-nineteen pandemic. And for that reason, we are once again welcoming you to a purely virtual meeting being held at SAP Group headquarters here in Waldorf, Germany without the physical presence of our shareholders.
We know that you, dear shareholders, greatly appreciate the dialogue You have with us the Supervisory Board and the Executive Board of SAP at our Annual Meeting of Shareholders. The format of a virtual Annual General Meeting of Shareholders only offers limited opportunities for direct dialogue to take a place. Of course, we will answer all your questions and try to address the comments we received from you in advance of the meeting during this virtual event. To enhance the shareholders' rights of involvement compared to last year, We also made it possible with respect to this Annual General Meeting for participants to submit comments in the form of video messages, which we then made accessible to the other shareholders. Another peculiarity of this Annual General Meeting of Shareholders is that it will not, as is customary, be chaired by the SAP Supervisory Board Chairman, Hassel Plattner.
This is also due to the COVID-nineteen pandemic. Mr. Blatner is currently abroad and in view of the ongoing travel restrictions, It was unclear as to whether and how he would be able to make the journey to today's meeting. He has therefore asked me to chair this Annual General Meeting of Shareholders. Mr.
Plattner has, however, joined the meeting online and will later report personally on the work of the supervisory board in the past fiscal year. Ladies and gentlemen. Following these preliminary remarks, I now need to announce the formalities of this virtual Annual General to shareholders, which are of course significantly different from those of an AGM taking place in the physical presence of shareholders. For the record, The Executive Board members, Christian Klein, Sabine Bendig, Luka Muttich and Thomas Sauer Esik are physically present here in the room. Also present in the room is the Supervisory Board Deputy Chairperson, Margaret Kleinmager.
The other executive board and supervisory board members, except Julia White and Aisha Evans, who send their apologies, are following the AGM via the Internet. As such, we are complying with the contract restrictions imposed on us as a result of the coronavirus pandemic. I would like to welcome Doctor. Stefan Felmett, notary public, who is also physically present here in the room and We'll be taking the minutes. Today's meeting was called with due notice in accordance with the legal requirements and provisions of the articles of incorporation.
Notice of the meeting was published in the Bundesanzeiger, the undine German Federal Gazette on March 31, 2021. A copy of the notice will be annexed to the minutes. All notices that are required for convening the Annual General Meeting of Shareholders were properly issued. No motions or candidacies were submitted by shareholders to the company. Although there are no shareholders physically present in the room Where this virtual annual meeting is held, we are keeping an electronic attendance register.
The attendance register lists the proxies designated by the company who are present here in the room. They represent shareholders who have already appointed and instructed them accordingly or who do so during the course of the meeting. A printed copy of the attendance register is here in the meeting room. Shareholders who properly applied through their custodian bank to attend the meeting and were sent their voting right card, we're able to exercise their voting rights in advance of the meeting either by postal vote or by appointing and instructing the proxies designated by the company. But there's still time now for shareholders to use their voting right card to appoint and instruct the proxies designated by the company Autocast their votes electronically via the password protected shareholder portal right up until the executive board Have finished answering the questions submitted by shareholders and voting begins.
At that point, I will issue a clear reminder to shareholders that this is their final opportunity to cast their votes or issue voting instructions. This virtual form of holding, the Annual General Meeting, will still provides for shareholders to ask questions that are then answered at the meeting. In line with the COVID-nineteen Act, the Executive Board and Supervisory Board offered shareholders who properly registered to attend the meeting 2021. Questions received in advance of the Annual General Meeting of Shareholders will be answered after the speech given by SAP's CEO, Christian Klein. In accordance with the legal requirements for the virtual Annual General Meeting, we will, of course, answer all of the questions submitted.
We will also try to answer these questions in as much detail as we would at an AGM at which the participants are physically present. As I mentioned at the start of the meeting, we also offered shareholders who properly registered to attend the meeting the opportunity to submit their comments via video message in the run up to the meeting. We then made these video messages available to all other properly registered shareholders on the shareholder portal. The objective here is to improve our shareholders' involvement in the Annual General Meeting and ensure greater diversity of Pinyon. We received 2 video messages, which have been published on the shareholder portal.
I would like to point out that this virtual Annual General Meeting of Shareholders is not only accessible online to registered shareholders, But it's being publicly broadcast on the Internet. However, only what I'm saying now, after the meeting. Ladies and gentlemen, now to the agenda. Let us first take item 1. I can report that the following documents were available at the website, www sapsap.com/investors from the time the General Meeting of Shareholders was called.
The adopted SAP SE Financial Statements, the approved consolidated financial statements, the combined management report from the SAP Group and the SAP SE, including the compensation report and the Executive Board's explanatory notes relating to the information provided pursuant to the German Commercial Code Sections 289A1 and 315A1, the Supervisory Board report and the Executive Board's proposed resolution on the appropriation of retained earnings. These documents are here in the meeting room And they can also be accessed on our website for the duration of this meeting. The auditor, KPMG AG, to Svensgesellschaft. Examine the SAP SE financial statements, the consolidated financial statements and combined SAP SE and SAP Group Management Report for fiscal year 2020 and issued an unqualified audit opinion. The Supervisory Board reviewed the aforementioned documents and approved them on February 24, 2021.
The SAP SE financial statement for 2020 were thus formally adopted. I'd now like to ask Kassel Platner to report on the focus of the Supervisory Board's work in 2020.
Dear shareholders, ladies and gentlemen, let me start By welcoming you all to this year's Annual General Meeting. No, I'm in California and the light is right above me. And I've got to admit, we tested out everything beforehand, but what we did not take into account was the fact that this AGM takes place in the middle of the night here in And that's why I'm looking somewhat different than the way you would see me in a professional TV studio. I apologize for this. The ongoing pandemic situation has again prevented us from holding a meeting at the SAP Arena in Mannheim as we've done in the past.
And for this reason, I was again unable to travel to Waldorf. However, this virtual form also makes it possible for me to Join you today from here and to report on the work of the Supervisory Board and my capacity as the Chairman of the Supervisory Board. I would like to thank Frederica Roch For chairing the meeting as you did last year. And because I cannot take on this task remotely because The legal framework of a virtual Annual General Meeting does not permit this. I would like to take this opportunity to address Some of the issues the Supervisory Board and I as its chair dealt with in the last year.
You will find our detailed supervisory board report published in SAP's integrated report to which I refer here. As far as the nature of our work is concerned, our supervisory board meetings as well as this AGM We're held primarily virtually due to the pandemic situation. But even with these changed conditions, We have remained in constant communication with the Executive Board and also with all Supervisory Board members And have continued to perform our monitoring and advisory duties conscientiously. As far as topics are concerned, 1st and foremost, it is the ongoing pandemic situation, which has of course also had a major impact on SAP, its customers And all our business operations. Christian Klein will go into this in more detail in a moment.
Even though I believe SAP has come through the pandemic well so far, it has presented our company, the executive board and all our employees With major challenges, all business processes had to switch to a virtual format virtually overnight. The vast majority of our employees have been working from home offices since the outbreak of the pandemic. And my sincere thanks goes to all our employees for ensuring that this continues to work so effectively. Among our global customers, this has decisively reinforced the trend towards the cloud, a trend to which SAP also had to respond. As a result of the pandemic, SAP has vigorously accelerated the transformation Into a cloud company it had already embarked on earlier.
The executive board adjusted its strategy in the fall and coordinated this step closely with the supervisory board. Even though this move was painful for us shareholders in view of the strong share price reaction, I still believe it was the right move. And believe me, as SAP's largest single shareholder, I clearly felt the impact of this strategy adjustment on the value of the SAP share. But this move gives us the ability to act now, Which we need in order to drive our transformation to a cloud company even faster. Even if this announcement in October unsettled some investors, I am convinced that this will Serve the success of our customers and thus also of our company.
I therefore call upon you to trust the Executive Board On this journey to implement our strategy. The implementation of this strategy was also supported by the changes We made to the Executive Board last year and at the beginning of this year. Even though this has unintentionally led to a number of changes on the Executive Board recently, Which unfortunately dominated the public perception of SAP, it has restored calm in the management. We've been able to strengthen the executive board very well. With her experience, Sabine Bendig as Labor Relations Officer, Chief People Officer And Chief Operating Officer is already providing important impetus to the company.
And with Scott Russell, who is responsible for customer success, Sales and Advisory and Julia White at the helm of Marketing Communications and Solutions, The strong international character of our company is once again represented. All three will be introducing themselves to you in a moment. From the supervisory board's perspective, we have now a management team That is fully committed to pursuing and implementing our corporate strategy as a team. This makes me very confident about the future of SAP, in spite of all of the uncertainties we are currently experiencing. I also would like to thank Adaire Fox Martin, who left the executive board at her own request.
She worked at SAP for many years in various positions and regions, most recently as the member of the Executive Board Responsible for customer success, which is the area which is now headed by Scott Russell. Let me also briefly touch on the subject of executive board compensation. At last year's Annual General Meeting, we presented our compensation system in accordance with the new rules Of the German Stock Corporation Act for approval. Excuse me. And this approval was granted By a large majority of shareholders.
Nevertheless, there was also criticism of individual elements of the compensation system. The Supervisory Board addressed this criticism in the follow-up of last year's AGM. Now we were unable to respond to all of the criticism because some of the demands made by investors Actually contradicted each other. In response to the criticism voiced, however, we have further increased the transparency of our And we will continue to communicate with investors to discuss and examine Any further need for change? The enormous economic consequences of the COVID-nineteen crisis also affected the compensation of the Executive Board.
The targets for the short term incentive, STI, which is the short term performance related compensation, Which was set at the beginning of last year, even before the outbreak of the COVID-nineteen pandemic, now they could not be achieved so that no Annual bonuses were paid to the members of the Executive Board. While the Executive Board adjusted targets for the employees' bonuses due to COVID-nineteen, The Supervisory Board did not follow suit for the Executive Board members. Excuse me. So the supervisory board did not follow suit for the executive board members. However, In the Supervisory Board's view, the Executive Board members made the right decisions over the past year In addressing the challenges posed by the pandemic and they led SAP well through this crisis.
Despite all the negative economic effects, SAP had a solid year. Without resorting to short time working or government aid packages, we are therefore in a position today To propose to shareholders the payment of an increased dividend compared with the previous year. For this reason, the Supervisory Board has decided To reward the outstanding performance of the members of the Executive Board in this exceptional year with an additional compensation, Which is meant as a positive signal for the current members of the Executive Board, Not for those who have left. It is also important to us that this exceptional move is also taken in line With the interest of the shareholders. The net amount of the additional compensation Must therefore be invested by the Executive Board members in SAP shares and these shares must be held for 3 years.
We think that this move is appropriate in view of the special circumstances in which we currently find ourselves. Ladies and gentlemen, looking at today's agenda, I also would like to address The future composition of the Supervisory Board. With Xi Lou and Ruven Westphal, The Supervisory Board is proposing 2 new members for election to the Supervisory Board. The 2 candidates Are to replace Diane Greene and Pekka Alla Pietrela who are leaving the Supervisory Board. Diane Greene already in December, Pekka a la Pietela at the end of this Annual General Meeting.
Allow me first of all to take this opportunity to thank both departing members of the Supervisory Board Quarterly for their work. Diane Greene with her technology expertise has brought the important Silicon Valley View to our Supervisory Board, which is very important in our industry. And Pekka a la Pietala, Over many years together in our Supervisory Board, I have come to appreciate as a valuable, prudent and level headed advisor. We think with Schilu and Ruven Westphal, we can gain new important impulses and expertise for our Supervisory Board. Shiloh brings extensive technology experience from the U.
S. Software industry and can become an important adviser to the Executive Board For the increasingly important Asian market, Parely appointed as a member of the Supervisory Board by court order, he has already been able to prove this. Ruven Westphal brings extensive experience and knowledge in the area of technology as well as finance and accounting and knows the SAP business and the competitive Environment very well. Both candidates will introduce themselves in a personal video in a moment. I'm sure That both candidates will be strong independent voices on the Supervisory Board, and I would like to ask for your support for these two election proposals.
Ladies and gentlemen, I would like to conclude by addressing a personal topic That I am increasingly being asked about in my discussions with investors, It is about my personal succession. As you all know, I have been with this company from day 1. I founded it from nothing with a handful of colleagues, spent many years on the Executive Board and I think I can say this With pride, together with many dedicated colleagues shaping it into a global company and also in my current role as Chairman of the Supervisory Board, I've made my contribution to ensuring that this company continues to grow and flourish. It now remains for me as the last active founder in the company to ensure that this role is also Successfully handed over to the next generation of managers. Rest assured that I'm already working with the Supervisory Board To set the course for this.
But I'm doing this my way with deliberation, calm and with heart and soul For this company, because SAP's success comes first for me. However, SAP is currently in a very important and critical phase On the path to transformation into a cloud company. After the recent leadership changes on the executive board, it is now Particularly important to ensure stability and continuity in the management of the company. For this reason, I already announced at last year's AGM that I plan to stand for reelection One last time for a further 2 years in 2022 when my current Short term of office expires, and I am thus only aiming for full term of office totaling 5 years. In this way, I would like to accompany the Executive Board during this critical phase of the transformation And avoid unrest caused by another change of leadership.
This Will then also give me the opportunity for a calm and coordinated handover to a successor. From my point of view, my succession on the supervisory board has been and is assured at all times. However, I do not want to be a lame duck, and I will inform you of all of the specific details in due course. At present, I expect this to happen at least 6 months before my last Annual General Meeting. I kindly ask you for your support on this path.
Thank you very much, and I wish you a successful AGM.
Thank you for your report, Hasso. Ladies and gentlemen, As Hassel Plattner already mentioned, the Executive Board welcomed 3 new members since the last Annual General Meeting. The Supervisory Board appointed Sabine Bendig to the Executive Board with effect from January 1, 2021. Ms. Bendig currently serves as Labor Relations Director and Chief People Officer and will assume the additional role of Chief Operating Officer on July 1 of this year.
I would like to welcome Sabine Bendig to the meeting and ask her now to briefly introduce herself to our shareholders. Yes. Thank you, Fredericke, and thank you, Professor Platner Hassel. Dear shareholders, shareholders' representatives, ladies and gentlemen. I'm very grateful for the opportunity to introduce myself personally to you all.
It's a great honor for me to have joined the management board of SAP SE in as of January of this year. I mean, I moved from Munich, but still I'm quite familiar with the Rheineken region. I went to school in Heidelberg, Got my Abitur there, studied for my Bachelor's degree in Economics in Mannheim. After several years of work, I got a Master's degree in Management Science from the MIT in 1996. I have considerably more than 20 years of professional experience as an executive in the technology Sri.
Before joining SAP, I was Chairwoman of the Management Board at Microsoft Germany. Before that, I also have the position of Vice President and General Manager for EMC Germany. And prior to that, I was responsible for Dell's Small and Medium Business in Germany, Switzerland, Austria and U. K. At the beginning of my career, I worked for McKinsey, Busan, Antsystem, Nixdorf Information System And also Joint Venture Capital.
As Chief People Officer and Labor Relations Director, I head the HR organization. And thus, it is my task to bring SAP's global people strategy to live. As of July, I will combine, as Professor Blutner has just said, the roles of Chief People Officer and Chief Operating Officer. So with that, I have to bring the 2 areas together, people and processes. As Chief People Officer, it is my job to prepare our employees for the challenges of the digital transformation.
And also I have to prepare them to develop our role as a support to our customers so that they can live up to their challenges. And as Chief Operating Officer, I have to ensure that All our processes are agile enough to respond to this new agility and to the customers' expectations. In this sense, these are two sides of the same coin because we are the front runner in the field of technology. Finally, all that remains for me to tell you is, I'm looking forward to many successful years in a great management team in the executive board. And I would like to thank you, dear shareholders, and all of you, my colleagues of the management board and you, the members of the supervisory board.
I would like to express my thanks for the trust you place in me and I wish us all a successful Annual General Meeting. Thank you. Thank you, Sabine, and once again, welcome. On February 1, 2021, Scott Russell took over the Customer Success Board area. And on March 1, Julia White was appointed Chief Marketing and Solutions Officer.
Both Executive Board members reside abroad and are unable to be here on-site due to the ongoing travel restrictions. As such, they would each like to introduce themselves to you in a short video.
I'm Scott Russell, member of the Executive Board and Head of our Customer Thank you so much for the opportunity to connect with all of you today. I've had the privilege of taking on the in February of this year and with it the responsibility for leading the execution of SAP's customer engagement strategy going forward. As an Australian native, I've spent the bulk of my career helping organizations of diverse size, industry and geography Choose, deploy and extract the greatest possible value from their technology investments. A lot of who I am Professionally, it was shaped early in my life. My parents, who both took career choices that helped them give back to their communities.
My father spent much of his life helping those afflicted with physical disabilities, while my mother served decades in health care. They both instilled in me a sense of service in everything that I did and still do. As a young boy, on my paper route, I made sure I spoke with each household and the customers to understand where they prefer their paper each morning as they started their new day. Fast forward to Well, I had numerous opportunity to apply this service to customers' business outcome. And for the past 11 years With SAP, I've been trusted to lead functions, markets and regions in delivering value at every touch Along the engagement lifecycle for literally thousands of our customers.
This immersion Across the breadth of the customer value chain has helped prepare me and my team of nearly 40,000 sales, services and customer engagement to us for the ultimate ambition to help all of our customers transition to and transform in the cloud at unprecedented scale And derive the greatest possible value and the best possible experience from their investments in SAP. This aspiration excites me to the very core. Our customers are primed for the shift, not only running their lines of business, but also moving their mission critical and differentiating processes to the cloud at scale. And SAP is facilitating this move Through substantial investment in our customers' long term success, more innovation, improved integration, heightened security, Enhanced reliability and of course availability across all of our solutions. Working with teams across all of our board areas And our extensive ecosystem, customer success has orchestrated itself to help our customers and SAP grow in the cloud.
Our goal is to continually simplify the buying experience for every one of our customers, finding faster ways to deploy solutions across Their business and support them by deriving the greatest possible value from their investments over the long term. The premise is simple. SAP is only successful when our customers are successful. And we will constantly improve upon this motion To help them become intelligent enterprises and our strongest and most important advocates. We will continue to build upon the very proud heritage Of what has set SAP apart for nearly 5 decades, our deep customer relationships, especially in the last 12 months, We have been there for our customers when they needed us the most.
And we will continue to be there for them too as economies and industries return To what I'm confident will be a more sustainable and a more inclusive growth. Our customers' success, SAP's success and our shareholder success is more tightly intertwined than ever before. I firmly believe that the way we work with our customers and what we help them achieve today demonstrates more than ever, both shareholder value And our shareholders' values. Thank you so much for your continued trust in SAP. I really do look forward to joining you in person at the next event.
But until then, I wish you all the very best. Stay safe, stay healthy, stay well.
Hi. I'm Julia White, the newest member of the Executive Board and I'm thrilled to be at SAP. From a career perspective, I've literally been working in cloud technology my entire career. My first job was in online banking before the Internet was considered safe for banking. Then just a few short years later, people couldn't imagine a world without banking on the Internet.
This rapid pace of change And continual reinvention is why I love technology and I've spent my entire career in this industry. Before joining SAP, I spent nearly 20 years at Microsoft. I was one of the initial leaders helping drive the Microsoft Office products to the cloud and become Office 365. Over the course of about 10 years, we transitioned a multibillion dollar on premise software suite into the world's biggest SaaS business on the planet. We had to go through massive internal change to make this transition and I have the opportunity to be on the front lines of exactly what this transformation required.
Following that, I spent my last 5 years leading product marketing for Microsoft Azure. When I began that position, Azure was just a few $100,000,000 business and we are nearly 6 years behind Amazon. After the next few years, we grew the business Doubling it in some years to deliver it's now being a $1,000,000,000 multi $1,000,000,000 business today. These are just a couple of the transformation and growth experiences I've been fortunate enough to be part of and I'm really excited to bring these experiences now to SAP. There's so much growth potential across SAP.
Now to my new Board area, I'd like to say that will be the 3rd leg of the stool that gives us balance in partnership with engineering and customer success. Ultimately, my new organization needs to help deliver growth for SAP. We'll do that in a few ways. 1st, partnering closely with engineering organizations to ensure we're identifying our differentiated customer value aligned with our innovation priorities. And then inspiring and delighting our customers with the compelling value of SAP solutions.
And then of course supporting our sales and partners With the resources, programs and offers they need to exceed their targets both in revenue and in adoption. Thank you so much. I hope to meet you in the future.
Ladies and gentlemen, I now call on SAP's CEO, Christian Klein, to address you. His speech was published on May 4 on our Annual General Meeting website.
Ladies and gentlemen, dear shareholders, colleagues, I welcome you to the SAP SE Annual General Meeting of Shareholders. Once again, it's a virtual event, but health and safety, of course, take absolute priority. Nevertheless, I hope very much that next year, We can come together in person again in the SAP arena. 2020 was very successful for SAP despite the coronavirus pandemic. For this, I would like to Sincerely thank our more than 100,000 people around the world who give their best day in, day out.
I'd also like to extend my thanks to our Supervisory Board for his advice, foresight and confidence in SAP's Last year, we didn't just demonstrate Just how resilient and effective we are even under the toughest of circumstances. We also set the course for continued success. That's what I would like to talk about today. Our lives and businesses will stay challenging for quite a while yet. Our thoughts go out to all those who have been particularly affected by the pandemic and our thanks to all those Who are making extraordinary contributions to our communities, but we are seeing light at the end of the tunnel.
We hope that we can soon start offering vaccinations at SAP for our colleagues and their families. Using our own facilities and company doctors will perhaps also help ease the burden on vaccination centers and local doctors' practices. We're looking ahead, and we have a solid foundation to build on, a foundation that we have continuously strengthened Since the company's inception 49 years ago, 2020 was no different. Cloud revenue increased by 18% And continue to be the major growth driver. A decrease in business travel impacted the transactional revenue in our intelligence spend business.
Excluding this effect, cloud revenue grew by 27%. Current cloud backlog, the contractually committed cloud revenue SAP expects to recognize over the upcoming 12 months increased by 14%. This result shows just how successful we are in the cloud because it reflects committed revenue from new contracts and from contract renewals. Total revenue, meanwhile, grew 1%. This shows that with all our success, we are still in the middle of the transformation of our Core business.
Operating profit increased by 4%. Gross margin of a cloud, Which is an indicator of how efficient our products are in the cloud, increased by 1.4 percentage points. Operating cash flow, an indicator of whether a company can finance important investments from internal resources, doubled since last year to €7,200,000,000 We also got off to an excellent start in 2021. In new cloud business and software licenses, we recorded the fastest growth in 5 years. Our portfolio is performing exceptionally well and we're capturing ever more market share, and that's just the beginning.
Our innovation pipeline and our network of more than 22,000 partners are stronger than ever. All of this is proof positive that our strategy is spot on. All the signs point to robust growth in the cloud. Yet a foundation is more than just numbers. What else did we accomplish last year?
We listened to our customers. We responded and to take one example, made fantastic progress in the integration of our solutions. We continue to strengthen our portfolio. We're focused on the areas where we clearly stand out from the competition And divested others that were not part of our core business. We successfully took Qualtrics public And laid the foundation for further growth.
Qualtrics' market capitalization is around 20 $1,000,000,000 more than double the original purchase price. We invested further in security. Day after day, customers entrust us with their data, and that is why we subscribe to the highest security standards. We extended our partner network because together we're stronger. We co innovate with other market leaders such as Microsoft, Google, Siemens, Honeywell and Bosch, for everyone's benefit.
We have made SAP more efficient, not just on the product side, but internally as well on an organizational level. We merged our sales and service teams into one board area, which means each customer now has just one contact company wide. There have also been some changes on our executive board since last May. In Julia White and Sabine Bendig, we have Brought 2 top executives with strong cloud expertise onto our executive board. Giulia, Sabine, a warm welcome to both of you.
Adaire Fox Martin decided to leave SAP after 13 successful years at the company. Scott Russell has taken over responsibility of our global sales business, Focusing on the long term success of our customers. Sabina, Julia, Scott, I wish you all the best Ladies and gentlemen, 2020 Saw the world turn upside down. It was a very tough year for individuals and for businesses. The pandemic has massively accelerated the trend towards digitalization.
The shift from analog to digital has been underway for some years, But this increased pace of change has been forced on entire industries, which might have preferred a slower pace in other circumstances. And all the customers I spoke to said one thing. They want a fast and easy route to digital transformation. Because digital technologies are helping them overcome the pandemic and the companies That have already digitalized their business models are coping better with the current situation. The cloud has a major role to play here Because of its many benefits, chief among them is flexibility and an even better access to data, to knowledge.
Cloud services make employees more productive because they can easily work from anywhere. Work from home during a lockdown? No problem. Cloud services also enable companies to react faster even when the unexpected happens. Long before the pandemic began, we were helping our customers migrate to the cloud.
But suddenly, we had to move much faster. The pace became faster For our customers and for SAP, because the alternative would have been for customers to go ahead without us. For us, one thing was absolutely clear. We had to respond decisively to the needs of our customers. Otherwise, SAP wouldn't have had a future.
That is why we adjusted our strategy to make moving to the cloud even faster, Even easier and even more efficient. And that's why we are investing in an even better infrastructure and particularly into innovation. I'll come back to that in a moment. Clearly, this decision has a financial impact. Because we're taking our business into the cloud, profits are shifted into the future.
How come? In the past, when customers purchased software licenses, they paid the full amount upfront when they signed the contract. In the cloud, there are no one time upfront payments. Instead, customers pay as they go Or buy a subscription. This means we have accelerated growth and recurrent profit, but in the transition phase, This slows down our overall profit growth.
So this is a transitional phase, which will be over at some point and then our revenue and profit growth will accelerate and we are expecting double digit growth. However, all of that has had an impact on the SAP stock price. I know that for you, our shareholders, this hasn't been easy. But it was the right decision. It was the right decision to work on our strategy because our growth potential and Our success cannot be sacrificed just to optimize margins.
That would undermine trust in SAP, Building long term value for you, for our customers and for SAP is our absolute priority. In 2020, again, we paid a high dividend and returned €1,500,000,000 to our shareholders Under a share buyback program. For fiscal 2020, we have proposed a dividend of €1.85 €0.85 per share. This is an increase by 17%. Over the past 10 years, our stock price has increased by 11% on average.
And since the beginning of this year, it has risen by more than 7%. SAP is a good investment for sustainable long term growth. Let me show you why. Number 1, our people. SAP is a global company.
Our people come from and work all over the world just like our customers. They are At the heart of our success because they give their all every day and have more than risen to the challenges of the crisis For our customers and for you, our shareholders, and for society as a whole. Take our colleague, Dimitri. Outside of work, he takes care of COVID-nineteen patients in intensive care units. Or Grace, Who has collected more than 3,000 kilograms of food for families in need.
Marika and Joaquin are helping ensure That young people have access to education during the lockdown. Take the people who in record time Built apps that find hospitals with free bed capacity across the country. All those who have collected money and medical supplies always simply there for those who need it the most. SAP is full of examples like these and that makes me proud. And so does the fact that employee satisfaction has risen to a record high of 86% despite the pandemic.
We know that our people have made this company what it is today. We also know how challenging these uncertain times are, Which is why we are investing in initiatives for health, but also in monetary rewards. We want to recognize our employees' outstanding performance. One of the ways we are doing this Is through the additional stock plan we set up. That takes me to number 2, focus on customers.
Our customers come first. They are at the center of what we do. Always, every product, every service, every process is built around them. Last year, I promised you new licensing models and clear business value for our customers, Fast and agile delivery with innovations in the cloud. We delivered the proof in 2020, our satisfaction increased significantly by 10 points on the year before.
One reason is that our solutions are now better integrated, And we want to push our score even higher by focusing even more closely on the needs of our customers And implementing them with agility. Customer satisfaction is a measure of our success. Since 2020, executive board remuneration has been linked to it. The crisis has shown once more That we are the reliable partner for our customers. Our software has helped develop and distribute vaccines, Making supply chains more resilient and adapt business processes, Skilled are people and we've enabled companies to offer employees and customers what they need.
In short, We've helped businesses and society to keep on going and to keep moving forward. Let's roll the film. Since 1972, SAP has changed the way companies work, always at the side of our customers. We were there during every step as partners, drivers of their transformation and are giving ideas. But now we've reached a turning point.
Even before the pandemic, digital transformation was Very high up on the agenda of companies because challenges are increasing. The climate change is happening. There is social unrest, Inequality or changing global trade relationships are only a few examples of many. In a world where change is the new reality, Companies need to keep changing along with the changes that are happening. And no matter whether we're talking about companies, national economies or networks, SAP supports you with its experience and technology for stable supply chains, robust networks, supply chains, financials, Dedicated staff, excellent production, personalized action, all new business models that need to be implemented.
When Frosta, the food changed or wanted to change the food industry, they built an intelligent platform based on blockchain analysis solutions and artificial intelligence. This is how Frosta can use real time data to trace Where the ingredients for their products come from and how they're processed. When COVID-nineteen stopped Trade and Stores, Casey's revolutionized their offerings with a mobile app and even increased revenue. When the pandemic turned the world upside down, pharmaceutical companies like CureVac and Moderna Produce a vaccine within 1 year, and we are providing the right network to support all projects, all Transactions with maximum transparency. One thing is for sure, companies need to be resilient, Profitable and sustainable more than before in order to stand up to the challenges today.
The opportunities were never greater to improve people's lives. Never was it more important to become An intelligent company, and we of SAP show you how we can do this together. I think that video shows us quite well what SAP stands for and that takes me to my number 3, innovation. Innovation hand in hand with our customers. This has made SAP great.
The foundation of our portfolio is SAP HANA, our database For data driven decisions and actions in real time. And last year, we picked up the pace of innovation once again. We build trust. How? By listening.
What do our customers need? How can we support them even better During the pandemic and beyond. One example is RISE with SAP, our new offering That allows companies to transform holistically. Why is this so important? Think of the shops in your town.
Until last year, retail outlets were doing well. And then the first lockdown happened. Online shops had to be set up and quickly On vaccine logistics, it isn't just about making the IT more efficient. The entire process from production to vaccination has to be as short as possible. Digitalization is more than just transferring analog processes into the digital world 1 to 1.
Companies have to optimize their processes and business models, tap into new markets and sectors. They will not achieve this by simply migrating the IT environment into the cloud. They must also completely transform their business processes. And that is exactly what RISE with SAP does. It doesn't just get your company started in the cloud, It brings together the best of SAP and our partner network.
Our experience from working with hundreds of thousands of customers, Our insights into business processes across 25 secondtors are market leading technologies and services. The core components of RISE with SAP are our intelligent ERP SAP S4HANA Cloud and our SAP Business Technology Platform. But it also encompasses services, consulting and analytical functions to build intelligence into business processes. No matter where our customers are on their digital journey, we are on hand to provide individual tailored solutions, A single package from a single source. Only SAP can do that.
Because we know how business processes must run-in order to be successful in this digital age, And we're always trying to improve. To become even better here, we've acquired Synavio. At the beginning of the year, this was, We made a part of our portfolio of solutions for business process management. This solution is part of RISE with SAP and helps identify and remove possible workflow Yes, it is. But RISE with SAP is just one example of innovation.
We are also improving our infrastructure, One aim being to ensure we achieve the highest cybersecurity standards. We are migrating our transactional applications such as the function employees use to enter a leave request to the cloud, and we are enriching them with smart features powered by artificial intelligence. We are building on the strength of our core applications. Together with our partners, we are expanding our solutions and creating ground Breaking functionalities. For instance, we are working with Microsoft on enabling MS Teams and SAP applications to share data.
SAP is combining the business software with a collaboration platform, so users don't have to switch between individual applications anymore. This is how we're making employees more productive and shaping the future of work. We have made huge progress On integration, and we will continue working on this in 2021 because only an integrated company is an intelligent company. This is where our SAP Business Technology Platform comes in. It allows us to integrate, build and extend applications easily.
We offer pricing models with maximum flexibility, SAP Business Technology Platform is also where our modular industry specific cloud solutions reside. Together with our partners, we create solutions that allow our customers to adjust their processes to suit their individual requirements Because every company is unique. A good example of this is our joint venture with The investors, Dedic. Together, we will build industry solutions in the cloud for banks and insurance companies Based on SAP technology and embedded in our portfolio. However, this is not a blueprint for other industries.
It is our way to make the most of the huge opportunities in the financial services market. But no company is in Ireland. With the SAP Business Network, our customers can manage complex supply chain networks With all parties in real time. Because if your usual business partner can't deliver, you need a plan B quickly. And we go one step further.
We help our customers ensure that human rights are adhered to, That their supply chains are free of child labor, that their suppliers meet their own sustainability standards. Let's stick with the topic of sustainability for a bit. When you buy a washing machine, it's simple. The greener the eco rating on the scale from A to G on the label, the more energy efficient it is. We are now applying this principle to the carbon footprint of products and services.
We are embedding sustainability into our applications. We show the entire carbon footprint of a product And make it comparable end to end. The carbon footprint of suppliers, emissions from factories, offices, energy use, waste, Business trips and transportation of goods. We include all direct and indirect emissions involved in the manufacturing shipping of products to the end customers. Hundreds of thousands of companies all over the world rely on our software to run their supply chains, personnel and business networks.
Now they can use this data not just to manage revenue and operating profit, But also to make climate protection measurable. And because sustainability is more than just climate protection, Our solutions also help promote diversity. How diverse is my company? How can I reach out to underrepresented candidates? Do I really pay fairly?
How diverse is my leadership team? We can answer all these questions. Number 4 is corporate social responsibility. The challenges we faced over the last year reconfirmed the relevance of SAP as well as our extensive And the impact we can have on the economy, on society and on the environment. We are proud to support the global fight against COVID-nineteen.
Our vaccine collaboration hub helps ensure vaccines get to where they're needed Safely and efficiently. The corona warning app has been downloaded more than 27,000,000 times. It has alerted some 3,000,000 people of possible exposure to the virus, and it has helped detect Many COVID-nineteen infections, 17 of the top 20 global vaccine producers run SAP systems. We also support many logistics companies and organizations around the globe that are at the forefront of vaccine distribution. Vaccination, the global challenge.
When COVID-nineteen started changing the world And our live scientists got up and got to work. The pandemic started and we started developing mRNA based vaccine immediately, they were made available in record time, but the race against time continues. There are people all over the world who need to be vaccinated everywhere. This is an unparalleled logistical challenge. It is a big challenge in finding the pandemic.
Vaccines are sensitive. In order to store them safely and to distribute them Reliability, we need a stable global network and the right equipment and transparent processes and dedicated staff. We need SAP Solutions to make our vaccines on a global scale. SAP Technologies and Solutions support upscaling of production and global Distribution of vaccines monitored by administrations to bring The vaccines to doctors and to users, producing billions of syringes and vials, Packaging the material and bringing them to the different patients. Together with SAP, we developed the first solution that complies with all requirements.
This is decisive in getting the vaccines to the patients. Wacker supports The fight against COVID-nineteen. SAP is extremely important for our supply chain, and it makes sure that our processes always perform well. The SAP collaboration hub provides end to end transparency and tracing, And SAP was part of it. Everyone can concentrate on their task and communicate with their partners across the whole chain from planning, manufacturing To storage, to transportation, to delivery, to tracing, to checking, to administering the vaccines.
The solutions enable us digitalized planning and also materials management and delivery. In order to protect people, stabilizing the economy and to bring us all together again, finally. We are fighting for a society in which social justice and equality are a given. In 2020, we held digital skill building and coding programs for more than 2,000,000 people from Socially disadvantaged groups. We are partnering with UNICEF on a curriculum that will give young people The skills they need for the jobs they want.
We support nonprofit organizations and social enterprises. We are entering into new partnerships. We are building digital solutions that help tackle some of our biggest challenges such as climate change and social inequality. There is no place for racism or discrimination at SAP in any form whatsoever. Within the next 3 years, we want to double the percentage Blacks and African Americans in the workforce in the U.
S, 27.6% of our managers are women and that number is rising. We remain committed to reaching our goal of 30% by 2022. This year, Pride at SAP, our network for lesbian, gay, bisexual, transsexual and intersexual people celebrated its 20th anniversary. More than 200 people who have autism work at 34 of our locations in 16 countries. We're also moving faster on climate protection.
I spoke earlier about how we're helping our customers achieve their climate targets, but We want SAP to be a pacesetter itself. We will become carbon neutral in 2023, 2 years sooner than planned. Ladies and gentlemen, 2020 was a successful year for us despite the coronavirus pandemic, And we expect 2021 to be a successful year, too. After a strong Q1, we even raised our guidance. Vaccination programs are rolling out all over the world.
We believe the demand environment will gradually improve in the second half of twenty twenty one. We expect cloud revenue to grow by 14% 18%, cloud and software revenue to reach between €23,400,000,000 23,800,000,000 operating profit to be between €7,800,000,000 8 €200,000,000 The share of more predictable revenue, the total of cloud revenue and software support revenue, Recurring revenue that is to reach approximately 75% of sales revenues. We expect our cloud revenue to nearly triple by 2020 5, reaching more than €22,000,000,000 And We are well on our way to achieving our midterm goals. Dear shareholders, Over the past year, many of us have wondered how it's possible to stay operational when certainty is an illusion And the extraordinary is the new normal. But we've shown that we are successful even during this And we have everything it takes to be successful in the future too.
Focus on innovation, the broadest product portfolio, A strong customer base, reliable partners and people who give their best every day. We have a unique opportunity to guide our customers on their journey into the digital world, and we're seizing that opportunity. Ladies and gentlemen, you can count on us to continue putting our customers first, To accelerate the pace of innovation further, to give our employees An environment that encourages and supports them to foster lasting social equality, To deliver long term value to you, our shareholders. Take my word for it and measure me by my words. I'm excited about shaping SAP's future success with you.
Next year, SAP will celebrate its 50th anniversary. I believe that our company has never been more relevant Because we are reinventing the way businesses run, because we are making economies of the world run better, and certainly, Because we are improving people's lives, SAP has a big heart. Thank you very much.
Thank you, Christian, for these interesting insights. I'm now calling in addition to item 1, all other agenda items, that is to Saiga and are on our website and which also contains the management's proposals. On your screen, you can now see an overview of the agenda items for today's AGM. This include, among other things, the resolution on the appropriations of the 2020 retained earnings, the resolution on the formal approval of the to the executive and supervisory boards in the preceding fiscal year, the appointment of the auditor for the current fiscal year and also 2 by elections for the supervisory board. As already explained by Mr.
Plautner, Doctor. Chi Liu and Doctor. Ruben Westphal are standing for election as to Diane Greene and Pekka Alla Pietila, respectively. General restrictions once again preclude the candidates from introducing themselves personally. Both gentlemen have prepared a short video instead.
Hi. My name is Qiu Lu. I'm the Founder and CEO of Medical Plus, a startup accelerator based in China. Prior to that, I was the President and the COO of Baiji, which roughly can be considered as the Google of China. Before that, I served as the Executive Vice President of Microsoft in And Services Group, which includes all of the company's software applications and services Such as Office and Office 365.
Further before that, I worked at the Yahoo! For over 10 years, developing the bulk of its products and services. I have a PhD degree in Computer Science from Carnegie Mellon University. I'm thrilled to join the Supervisory Board of SAP Because of our proud history, deep technologies and a strong global customer base, I'm excited about the opportunities of working together with you all, with our employees and shareholders together To unleash the much greater potentials ahead in digital transformation of all enterprises around the world. Thank
you.
Dear shareholders, ladies and gentlemen, my name is Ruven Westphal, and I would like to introduce myself as a candidate for the seat on the SAP Supervisory Board That will be vacated when Pekka Alla Pietila resigns. As Pekka's original mandate runs until 2022 and the company's articles require that I cannot be appointed for a period beyond that point. Today, I'm running for an initial period of only 1 year. So in a way, this is a kind of extended probation period. My intentions are more long term.
But before that decision comes, you will have 1 year's time to get your own idea how I fulfill my mandate in the interest of And what experience and skills I contribute to the work of the Supervisory Board. I have spent my entire career in the playing field of software companies, investment Management and Entrepreneurship. Starting my career at Anderson Consulting, later Accenture, I got to know the customer partners side of the SAP ecosystem early on. That work familiarized me with the challenges of complex transformation projects, The development environment and the software. As Co Founder and CEO of Exasol AG, A tech company specializing in memory database systems, I can speak from experience.
I know what it means and how long it can take to bring innovations into the market Make them commercially successful. That technology and its market are also the focus of SAP today. As investor, I have worked in the global financial markets for decades, especially in the technology segment in the private and public equity asset classes. I have held several previous supervisory board mandates, So I can bring in relevant experience from supervisory board work at software vendors or professional service providers which are active in these markets. As member of the executive board of the Hasso Plattner Foundation, I represent 1 of the largest individual shareholders of SAP.
So I've known SAP and management very well for many years. I am aware of the current challenges we are facing, but also of SAP's unique potential. As Director of the Foundation and Head of the Investment Office, I'm responsible to ensure long term funding of nonprofit projects Of the foundation. Hence, I have special interest in the commercial success and economic well-being of SAP, Reflected not least in a positive stock price development and a stable dividend policy. And even though Hasso Plattner and I have known each other quite well and Quite a long time through our work.
I wish to stress that the foundation is completely independent from Hazapatna. I see my future role on the supervisory board as being an independent voice of the shareholders. And this is in line with Hasso Plattner's idea Of a supervisory board member because if you know him, you know that he doesn't like to surround himself with yes men or order takers. He appreciates independent thinking and contradictory views. If they are justified, you can and should expect that I would deliver both.
And I would like to represent the investors' view on the supervisory board in as broader form as possible. I know many shareholders personally and I know How crucial the protection and growth of those asset positions is not only for foundations and funds, but also for individuals. Therefore, I would like to be pleased I would be pleased to contribute my expertise and the perspective of a shareholder with a long term strategy to the discussions and deliberations of the Supervisory Board Because I'm convinced that my position will also represent your interests as shareholders of this company well. For this, I'm asking for your trust and your votes. Thank you very much.
We hope that these videos and the candidate information we published on our homepage and in the invitation to this meeting Have helped convey an initial personal impression of both nominees. A further topic On today's meeting agenda is the authorization to issue convertible and warrant bonds and the related creation of to new contingent capital. Because the authorization for the existing facilities expired on May 11, 2021, It is now to be renewed. In addition, 2 amendments to SAP's articles of incorporation are to be put to the vote today. The first change is an to cover SAP's business activities in the cloud.
The second change is an update due to the rules for shareholders registration to the Annual General Meeting, specifically concerning proof of the shareholder. This change became necessary upon the introduction of the second EU shareholder rights. Ladies and gentlemen, before we start answering the questions by I would like to remind you once again of the different options for exercising your voting rights. As explained earlier, you can still submit or change your votes for the individual agenda items during the course of this meeting. To do so, you can use the password protected shareholder portal and either point and instruct the proxies designated by the company, change your proxy appointments or submit your votes electronically.
Please note that we close the corresponding functions in the shareholder portal shortly after all the shareholders questions have been answered. Ladies and gentlemen, let us now turn to the questions submitted by shareholders and shareholders representatives. And to that, I hand over to Christian Klein.
Yes. Phil, Thank you very much, Ms. Roch. So we will now turn to the questions of the shareholders for the company. We will start with the questions Of the shareholder associations, then the investment companies will follow.
And thereafter, we will answer the questions of the individual shareholders. Now as we have received identical or almost identical questions on some topics, we will cluster them and we will announce this when we read them out. The names of the shareholders who asked the question will be announced if they approved of this beforehand. And I would like to Answer now the questions of Ms. Bena Heineher of the Shareholders Association, DSW.
You do not tire emphasizing the alliances with hyperscalers such as Microsoft. What is the specific advantage of These alliances, what is different now than before? Please give us some examples. What are the specific impacts onto the figures and numbers of SAP? Hanser, we're using the cloud infrastructure of the hyperscalers in order to expand our own capacities in the cloud infrastructure area in a flexible and cost efficient manner.
And here we are open with our 4 plus 1 strategy As to which hyperscalers our customers go for. This is a competitive edge because thus we are better able to meet the demands of our customers While achieving cost benefits at the same time. Now what's important for SAP is the success of SAP HANA, of our SAP Business technology platforms and our applications. And with our new offering RISE with SAP, we Bring all of these components and the infrastructure together into one single offering in a flexible manner. And as we've already seen, This is well received by our customers.
Being infrastructure vendors of SAP, hyperscalers thus reduce our cost of Capital and support our sales growth because they increase the geographic reach of our cloud solutions. And With infrastructure services that we purchase at optimal cost, they also contribute to our profitability. Compared to last year, in this context, Our collaboration with Microsoft turned from a sheer sales alliance to a much stronger development alliance. Many of our clients have already opted for Microsoft Azure as the cloud infrastructure service provider of choice. That is why we will further integrate our respective product portfolios.
And here, I especially would like to mention the seamless integration of the Microsoft Teams solutions into our applications. Here we're bringing the leading corporate communication solution together with the leading corporate software solution. And the advantages for our customers are unique. Next question. After years of acquisitions, You are now in the process of better integrating the entire portfolio.
In 2021, you announced to further push this. What is the current status of integration of Ariba, Fieldglass, SuccessFactors and Concur? When do you think that this integration will be complete, Especially takeovers took place in the past in the area of platforms. Now how well is SAP positioned on the whole? Are there any weaknesses left in the area of platforms?
How do you want to overcome these weaknesses? By takeovers or alliances Such as the one with Microsoft Teams. Now Thomas Sauer, next to me, is smiling. This means that we're making good progress In our integration efforts, which our customers have also confirmed. And integration has always been a key focus of our development work and will always remain so because Integrated companies, as I just mentioned, are intelligent companies.
Over the course of the last year, we supplied a seamlessly integrated intelligence suite, Which includes the cloud solutions mentioned before, Ariba, Fieldglass, SuccessFactors and Concur. In the next step now, this integration has to be Further refined continuously with a clear focus on core topics such as the integration of non SAP solutions For the openness of our solution, uniform data models between the applications, pre integrated analytical functions And standardized scalability. And for all of this, our open SAP Business Technology platform plays a central role. And this is also an element which we continuously further develop. And in that context, we always perform make by or Partner analysis to decide whether we build things on our own, whether we purchase them or whether we team up with partners.
And this applies not only to our platform, but to the entire portfolio. We identify respective areas on the basis of our strategic priorities. As an example, let me give you the expansion of industry specific cloud solutions or the expansion of our solutions in order to manage entire corporate networks. Collaboration with our partners will further develop and will focus even more strongly on development. But the focus here will always be On a consistent solution architecture based upon the SAP Business Technology Platform.
Now regarding the following major topic, we have received questions From other shareholders in addition to those from Ms. Bernal Heinegger. And therefore, we cluster these answers. The next coup or should I should say the next speedboat is the spin off of business with financial service providers that has been just announced, Which you will contribute to a joint venture together with Dedic. Now, and you are going to satisfy yourselves with a Share of only 20%, which is not really what I would consider a joint venture.
How do you want to make sure that SAP has got sufficient influence, Which corporate governance structures are planned? Who's going to be the CEO of the new company? What is the volume and volume contributed by SAP? SAP and Dedic will provide financial resources, technology, development know how and a comprehensive ecosystem to the new unit. SAP's S4HANA is the definite market leader for ERP solutions in the banking and insurance Environment and will also continue to sell and support solutions for enterprise information management and Industry specific solutions to customers of the financial services industry.
So SAP customers will remain SAP customers. The new unit will focus on core banking such as commercial loan and retail client business as well as on core insurance areas. It will provide solutions to meet the new accounting requirements in the insurance and banking sector. The new solutions Will be established as part of the SAP Industry Solutions in the cloud and they are based upon SAP technologies and applications Such as SAP HANA, SAP S4HANA and our business technology platform. The solutions of the joint venture will cover all processes of banks and insurance companies and will help them to meet regulatory requirements.
They are based upon integrated data and offer the possibility to move processes for financial service providers Onto the business technology platform in the cloud. Credit solutions for banks, for example, cover all phases from the extension of a credit To the credit risk review and up to refinancing and bank management. All of the related Data are stored in a single place. This will significantly reduce IT costs and complexity. We will manage this unit together.
The unit will have the name SAP Pioneer And the SAP managers who are experienced in Financial Services will be on the board, Dierkrod's CEO, Retho Sacco And Mike Dyer as the Head of Product Development. Then there was an additional question of the other shareholder. Is Dedek a share financial investor or is there development know how in the BFSI environment? Specifically, Do the partners have proven experience in the software system integrated environment? Now Didik is an entrepreneurial investor Focusing on IT and digital companies.
Didig collaborates closely with its portfolio companies in order to create special products and services. Each Didig investment is set up separately independently and with an unlimited time horizon. That's very important to us. And we are pleased to enter into a strong partnership with Didak, a partnership for the financial services industry. And together with Didig, we thus also enhance our system of alliances to financial partners.
As an investor, Didig also is experienced in financial services IT. 2 of its portfolio companies are in the business of financial services IT. They employ between 501,000 employees and together Generate annual revenues of almost €100,000,000 So they do have a fairly good know how of what customers need in these sectors in order to be successful. The plan is to transfer all FSI solutions services and the 3rd level and development support into the FSI unit. A project team, which will also include colleagues from the FSI teams, It's currently working on transferring the solutions into the new business.
This brings us to the next question. The European Cloud Gaia X is the dream of the Europeans to make the European standards the gold standard. However, the U. S. Cloud Act conflicts with data protection in the EU and there's still no successor solution for the privacy shield.
At first glance, the project looks attractive, but isn't it too complex and too unspecific? Does this project have Prospect at all if American and Chinese partners are admitted as well. Wouldn't it be better to perform a couple of use cases first? Well, public reporting indeed does criticize that American and Chinese companies are also involved in Gaia X. Being a standard related organization, however, GAIA X is obliged by antitrust law To establish objective criteria for a membership.
And we want to position the GAIA X reference design As a global standard and recognition in use outside of the EU is therefore specifically desirable, SAP has stated repeatedly That Gaia X has to prove its added value in specific application scenarios. And one example is the Catina X automotive network, Which is considered the biggest industrial project based on GEAx. GEAx is to be established as a reference design For trustworthy data networks and cloud architectures. Thus, the requirements of regulated industries such as the health sector Or aerospace and the public sector will be modeled there. Next question.
Together with other companies, you have Established the Automotive Alliance as a so called new European standard platform for the automotive industry and You're selling this as the industry cloud for this industry. Are there other key industries where similar models could be developed? What is the current status of the Automotive Alliance, are there already visible results? The Catena X Automotive Network, the former automotive alliance is to provide a uniform standard For the exchange the safe exchange of data information between automotive OEMs and suppliers along the entire value chain. Together with BMW, Mercedes Benz, Volkswagen, Telecom, Bosch, Siemens, ZF, Rihtigshafen and many other partners, we're currently working On the creation of an open scalable network based on the European Cloud Data Infrastructure, GEAx.
Basically, the cloud based network is open to all members and participants of the European Automotive value And this open approach allows a joint value creation of all participants and it supports Application scenarios, for example, in the area of sustainability. Using fully connected data flows, companies will also be able To measure, analyze and manage the ecological footprint. Now this is an approach which is highly relevant for many industries. And of course, further industrial Networks would be conceivable such as in the public sector or in industries such as aerospace, health and energy. Now before the end of this year, we intend To ship first applications in the areas of traceability, sustainability, circular economy and quality.
And with that, I now would like to hand over to our CFO, Luca. Thank you very much, Christian. The next question by Ms. Bena Heinegrohe is as follows. Mr.
Butchitz likes to use the image of the tanker and many speedboats. Thanks for citing me as your source. Now at the beginning of this year, you launched the first one with the IPO of Qualtrics. The purchase price in the initial one was US8 $1,000,000,000 market capitalization at the IPO US23 $1,000,000,000 SAP is currently holding 84%. Now you say that you want to retain majority in the long run, but 51% would also be sufficient.
Does this mean that in 2021 you will sell further shares at attractive prices? Well, let me first of all tell you that the so called Fully diluted share, which is the share held by SAP, if we take the Standing Qualtrics employee options into account. Now this fully diluted share is at 75%. Now we do not have a specific time schedule yet. Nevertheless, we intend to increase the capitalization of Qualtrics with a follow on offering To allow them to continue pursue their growth strategy, potentially also by growing inorganically.
SAP provided Qualtrics with a capital of US500 $1,000,000 at the time of the IPO, but over time We want to provide an amount of US1 $1,000,000,000 of capital to the company. But beyond that, Our medium term plan with Qualtrics does not include a significant change of the current equity share. Against the background of the great potential growth of Qualtrics, we want to participate in potential value increases. Next question by Ms. Bena Heinehauer is as follows.
Now media have reported That's Zalando recently introduced S4HANA. However, there seems to be great skepticism whether about 35 1,000 existing customers will really migrate and when migration to S4HANA and then into the cloud will take place. Now there are some first positive signals such as The increase of the KPI current cloud backlog, but can you confirm this trend? Yes, we definitely can. And Christian Klein already touched upon it in his presentation.
Especially with the current crisis, Digitalization has moved higher and higher on the list of priorities of basically all companies in all industries. And for this reason, towards the end of last year and especially in the Q1, we have seen a very strong willingness to invest again. And with our new offering, Ryze with SAP, we feel that we are just in the middle of the trend, which the market is asking for, namely Holistic Business Transformation as a Service. And please remember that we launched this offering only 2 months Go, but since then we've already been able to conclude more than 100 contracts with clients. So demand is still really outstanding.
Pipeline keeps Growing and growing. That's why we feel that we're on the right track. And in the future, we want, of course, to provide transparency on our progress. And For that reason, as of the Q1, we will also always report and disclose our current cloud backlog And the S4HANA revenues. And all in all, as I said, we are very confident that we will be able To support our customers in an optimum manner into cloud, producing respective growth also for SAP.
Next question. Your forecast for cloud growth so far was between €9,100,000,000 €9,500,000,000 Now cloud revenues Are expected to increase by €100,000,000 and the guidance is to be between €9,200,000,000 €9,500,000 Cloud and software resolutions were at €23,300,000,000 to €23,800,000,000 before the adjustment. You have now raised the lower value to €23,400,000,000 Now this already sounds a bit more positive than previously and the gratifying effect was the share price increased almost towards €120 Now what is the outlook for an SAP investor with a medium and long term horizon? How much longer do we have to be patient until we see share prices again as in last September? Well, I think what matters now is Prove that the strategy change and the transition into the cloud really does work.
So we're thus Building upon a long term and sustainable business model, existing customers are very much interested in the rise with SAP offering, Which gives us great confidence in the first place. The results the business results in the Q4 2020 and also in Q1 2021 have demonstrated that customers are increasing their investment volumes again in order to get prepared for the future. And that's what we have seen, for example, in our order intake numbers in the cloud in the Q1. In addition to the strong cloud new business in the last two quarters, however, this trend also manifests itself in the growing cloud pipeline. RISE with SAP is here the definite driver, but not the only one.
The rest of our cloud portfolio also had an excellent start into this year, Which gives us great confidence that we will also be able to advance our overall portfolio excellently. And We also see a positive trend in market share development. In the 1st months of this year, we were able to Position ourselves significantly better in many areas versus our competitors and thus win new customers for the SAP solutions. And we believe that we will thus tap the full potential of SAP in the next Couple of years and that's why I'm quite confident that the share prices, the high share prices reached so far will not be the end of the story yet. Next question is about the goodwill of Concur.
According to the annual report, the goodwill of Concur amounts to 3 point €3,000,000,000 According to the sensitivity analysis, you're planning a negative revenue growth of minus 4.1 percent for This segment, the target of the operating margin is to be minus 26% at the end of the planning horizon. Now what is the actual planning horizon that you applied? Which assumptions did you apply in your plans for Concur for 2021? What is the headroom? And do you expect extraordinary write downs on the goodwill?
Well, the last It's the most important question. Therefore, let me take this one first. No, we do not expect that. For the goodwill impairment test 2020, a planning Horizon of 9 years was applied for Concur and the headroom amounted to a quite comfortable €11,500,000,000 For further information, please see the D2 Annex of the consolidated notes. The planning for 2021 reflects our assessment for the expected development of business, taking numerous aspects into account such as The ongoing impact of the lockdown and the availability and effectiveness of vaccines onto The volume of business traveling in 2021.
And let me once again emphasize very clearly, Concur has stabilized on a low level compared to the previous years, but for the remaining year, Part of this year, we do not expect a strong recovery yet. However, regarding the overall business development of I also would like to refer to our statements in the quarterly release for the Q1 2021. In the beginning of the year 2021, we still saw a somewhat sluggish business development at Concur. But looking ahead, we expect the Concur business to recover significantly together with market share increases of Concur in their relevant markets. At this point, let me also emphasize that as part of our focusing and restructuring, the Concur Segment in the beginning of this year was basically distributed among the Was transferred to the Applications Technology and Support segment.
The entire goodwill previously allocated To concur is now monitored comprehensively within the new segment structure. And that marks the end of my questions so far. And I Hand back to Fredericchi again.
Thank you very much. Another question comes from Ms. Bena Heineacher. Despite the criticism from investors and agreement or approval in 20 20% of only 78%, why has SAP not improved the remuneration system and Submitted this for approval. Additional cost of €23,000,000 were caused by decisions And changes on the Executive Board, which is why we withhold approval Be for the Executive Board members who left in 2020, we are also Getting a lot of feedback on the structure on the Executive Board remuneration.
PACE system should be sustainable. And after revising it in 2019 2020, We decided that we would not change the remuneration system again because the majority of shareholders approved, but we're aware that a minority is critical of this. And this is something we looked into after The AGM last year, but we cannot follow all points of criticisms always because in some cases, we have contradictory Demands from investors, but of course, we haven't been sitting on our hands based on investor feedback. We have further increased the level of Currency in the compensation report. Starting with the SAP Integrated report for 2020, we now publish 100% target amounts for the short term incentive program.
Further, we have discussed the feedback to the compensation system in the context of our unique position as a European company operating in a U. S. Centered Industry. While we have not yet decided on further changes, We feel it important that we continue to discuss and evaluate the feedback from the investor community. The LTI tranches for Jennifer Morgan is €8,300,000 approximately for Michael EMEA about €8,000,000 and Stefan Reiss are up approximately €5,800,000 The values are based on the Distribution amounts depend on the development of the stock price and the development of the performance criteria.
And for the next question from DSO, I'll hand over to Thomas. Thank you, Frederic. Next question is we heard that Last year, SAP started the Climate 21 initiative, which is supposed to enable companies To collect climate relevant data and against the background of a public discussion and upcoming regulation, for example, on the EU's estate with Finance, it seems that you have the right instincts. Could you explain how far this initiative goes and what hopes you have there and Are there product already? And what do you expect in terms of revenue potential?
And what competition do you expect? Well, that was very Forward looking activity because as part of the Climate 21 initiative, the SAP product Carbon Footprint Analytics Was delivered early, and we should add here that SAP has been addressing Sustainability for a long time in its portfolio, including diversity and inclusion in HR software with SAP Product management will go one step further from August. We'll offer our customers the opportunity to register and analyze the Carbon footprint of products across the whole value chain. And in addition to products to support climate protection, We're also developing more sustainability products, and this includes products which support Circular economy or holistic company management. We want sustainability To be another dimension in transactional and analytical applications, and our strategy is trailblazing and pioneering for the whole industry.
We expect a very positive contribution from our Climate 21 initiative for our business development, and it will make our whole Folio more attractive and sustainable. Many of our customers want to invest more into sustainability. And with our solutions, We are giving the transparency to make better long term decisions and to Reach sustainability goals. Since the market for sustainability solutions is still very new and There is no single vendor that has established itself. We see a huge market growth potential and very clear competitive advantages We are ideally positioned because we have seamless integration with our products and the business processes of our customers.
The next number of questions comes from the SDK. And for that, I will hand back to Christian Klein. Yes. Thank you very much, Thomas. Markus Kienle submitted the questions on behalf of SDK.
In 2020, in the middle of a pandemic, you made adjustments to the corporate strategy. Why did this make sense? Or why was it necessary to change things at that point in time. What major adjustments were made and what financial impact do they have? Well, as a result of the COVID-nineteen situation, many companies decided to speed up their transition to the cloud.
Last year showed clearly there is no alternative to the digital transformation. Companies with digitalized business processes have a significant competitive advantage. It's the only way to become more resilient And flexible. The demand for cloud solutions has increased accordingly. This is why we adjusted our strategy consistently To support the accelerated shift to the cloud and the resulting business transformation of our customers.
2nd question. The core elements of the strategy adjustment we carried out are: Firstly, we bring our customers into the Our new offering, RISE with SAP, which we introduced in January, plays an essential role here. Secondly, we focus more on organic development of the company. We kept our promise of better corporate integration. At the same time, we are accelerating our speed of innovation And stepping up our development funding in a balanced, measured way.
The clear increase in customer satisfaction shows that our customers appreciate this. Thirdly, we are improving our cloud infrastructure even further To make the operation of our cloud more cost efficient, we are replacing faster than before the The Regenius infrastructures are acquisitions of our acquisitions with a homogeneous modern infrastructure. We will also migrate Our existing customers to that new infrastructure. All adjustments have an investment character. Because we are bringing our business into the cloud faster, corporate profits will be moved into the future.
The reason for this is that we are converting the Classic business model of selling licenses to the subscription model, the typical cloud model. In the long term, this model produces higher recurring revenue. However, in the transition phase, total revenue growth and bottom line are impacted. The financial impact is fully factored into our financial ambition for 2025, which we published last fall. And with that, I hand over to Luca again.
Thank you, Christian. I need to take a deep breath for a whole Number of questions. The first one was also asked by Mr. Schmidt of DWS and Mr. Gebler in a similar form anyway.
So we will answer them together with one from Mr. Keene. The figures for the last business year Show that you got through the corona pandemic well and that you can continue implementing your strategy. The Q1 2021 delivered robust figures, which speaks for the good position of SAP? In which areas did you have the biggest impact due to the pandemic?
And do you expect further impact to Come in the year 2021. Well, the biggest effect of the pandemic was probably In our Concur business, which is, of course, travel cost management Software and due to the lockdown in nearly all countries all over the world, this business went down and that had a significant negative impact on Concur business. We also believe that for the rest of the year 2021, the development will be very moderate at Concur. And in 2022, we expect more increases and more contribution to the cloud by Concur. But apart from that, we are proud that despite the challenging conditions during the pandemic, We were able to serve our customers effectively, for example, by virtual sales and also implementations, which is something that was Very successful.
Many go live in 2020 across our whole portfolio. Now The global uncertainty leads to an impact, but we have been very disciplined In spending and hiring, and although we did not Save too much, sir, as to endanger our position. In fact, we invested. We used opportunities, for example, Saving costs by traveling less or by having less cost for office buildings or office space. So despite the difficult market environment, we have been able to increase operating profit Non IFRS at constant currency and also of the operating margin.
Overall, we're expecting A long term digitalization push as a result of the pandemic and a move into the cloud, And that will be positive for our strategy. The next question, the gross margin Rose, what is your target gross margin? Well, this is one of our pet subjects. Here, we're investing in 2021 2022, And this is something that we heard in the CEO's speech. This investment, a mid-three digit €1,000,000 amount Will result in the next 3 years to increase the cloud gross margin, but It will still have a homeopathic effect.
Starting from 2023, that increase will soar. This is what we expect because we will have a very elastic and harmonized cloud infrastructure at that time, And that will be the basis for very good scalability. So in 2025, our cloud gross margin Is expected to be at about 80%. Next question, cloud revenue 2021, you're Assuming growth of 17%, but in 2025, you want to be at a figure higher than €22,000,000,000 If you assume a Growth of 70% up to the year 2025. You arrive at cloud revenues Of about €18,000,000,000 in 2025.
So how are you going to achieve your target in Now it's important to understand here that the revenue in the Clalar business is a subordinate indicator and the growth In 2021, we're seeing in 2021 is basically a product of a slightly weaker order intake Due to the pandemic in 2021, conversely, that mechanism means that The very strong order intake in the second quarter or in the first quarter and which we also expect in the coming quarters We'll accelerate the revenue growth, and this is driven, of course, Through our RISE with SAP program, which took off in January and has become Pipeline increasing factors and has already contributed, but also due to new innovations, industry networks, industry Solutions, Business Networks, also our Business Process Intelligence business that we're building up is going to And of course, the continuing robust growth of our software as a service portfolio. So we're expecting based on that strong new business in 1st quarter, actually starting with the 2nd quarter, stronger cloud So we're not afraid that we will not achieve the €22,000,000,000 The next one from Mr. Kienle. The same question applies to the development of the operating profit in the period up to 2025 because in 2021, you're even Expecting a decline, this is true.
But as we reported in Q3 last year, our outlook for 2021 And our midterm ambition is comprised of several factors, influential factors. And the important one is the accelerated change To a different business model, the cloud model. And that accelerated change results in several things. For one thing, Revenue that used to be realized immediately Will be shifted into the future, and this will have a slightly lower gross margin, although that will go up in the coming years. In addition to that, the investments over the next 2 years into our cloud infrastructure, we mentioned this, and also further innovation oriented investments Into our development portfolio and our organization, all that results In a situation in the next 2 years where we'll have operating profit with a flat or slightly negative increase rate, But after that, starting in 2023, when the cloud is the dominant This model has become the dominant business model.
With a rising share and higher profitability, we expect our operating profit To be in the 2 digit range and also highly scaling, upscaling growth. And the next question for the years 'twenty two and 'twenty 5, you stated planned sales revenues, but not for 2021. Why Is this information missing on sales revenues in 2021? The answer is easy. Basically, As part of the annual forecast, SAP is always focused on cloud and software Revenue because these are the strategic revenue components and other revenue sources like service are The consequence of this, this is why this is the main factor for the strategic value creation, but we have Published midterm ambitions, for example, in the past for the year 2020 or also as part of our midterm ambition up to the year 20 25, we state overall sales targets.
This is because we're looking ahead into the future quite far And the exact composition of the individual sources of revenue or the revenues are more difficult to predict Then doing this on an overall yearly basis. In the years where such midterm ambition was published, We gave a total sales figure, too, in 2021. This was The case based on the 2015 ambition, and it will also be true for the 'twenty five ambition. But between that, we're focused on the cloud and Revenue from the sources.
Next question. You saw the communication you went to SDA, but at the same time, you want to focus your activities with communication products. How do these opposite to weight of behavior fit? And the second question here, Why did you sell SGA in the 1st place and what kind of return investment did you achieve? Well, first of all, we don't deem this as opposite ways of behavior.
When we sold SDA to the Swedish Synch AB. It was the result of a continuous monitoring of our Product portfolio, which we do regularly. That was a messaging platform, a texting platform. That's a core telecommunications business, and that's not the core of our business model. And due to the investment required in this field, we came to the conclusion that it's better to sell it to a specialized provider That would provide a better harbor for SDI.
Independent of that, you have to see that the proposed changes in the article of incorporation, Because in the context of our core activity or core business strategy that is providing cloud services, There are installed functionalities in the cloud products by way of nature, so to speak, the nature of the cloud that in both telecommunication aspects and that is to be covered in the modifications proposed. As regards to the second part, Why did we sell SDI? Well, just the reasons. I've mentioned it's not part of our core business model and with that, We've identified a better home with a specialized provider, who by the way offered a fair price for us, EUR 225,000,000 had been agreed on and that led to a positive net effect of €194,000,000 IFRS and €128,000,000 non IFRS, So the return on capital employed cannot be identified in an isolated fashion because The SDI business was interconnected with several business units of Sybase when we purchased from Hubert purchases as well as SAP. And accordingly, there were no stand alone assessment here.
Then Mr. Kindly had several questions regarding to the IPO of Qualtrics. For Qualtrics, in 2019, you paid roughly €5,000,000,000
which
With 78% of the purchasing price, in 2021, you've done a part IPO. Why did you Took it public to fully use the potential. Well, there were several reasons for that. On the one hand, It results in a greater level of independence. And as a result, Qualtrics can be active within SAP customer base, but also outside of the SAP customer base.
The IPO enabled Qualtrics to be closer to the customer to develop their own acquisition strategy and also to attract the qualified staff required for the tremendous growth by Offering interesting stock option plans. Is the IPO of Qualtrics in line with the Adaptation of the corporate strategy. No, no, no. The decision was taken prior to the adaptation of the strategy. What was the stock value of Qualtrics.
Well, based on the issuing price per share, Qualtrics achieved $18,000,000,000 that's 100% increase that refers to the next topic too, what's the return on the share you've brought to the stock exchange? What do you expect in terms of return on investment? Once again, return of investments of individual Acquisition projects are not published. However, KPIs such as the return on investment are integrated part of our Assessment criteria for acquisitions. So rest assured, we only acquire companies that will guarantee an increase in value for SAP.
Now the next question, have you already identified reinvestment options to the inflow recorded. Well, first of all, due to the IPO, SAP has received €1,800,000,000 But we're not seeing this separately and We'll use it for one specific purpose. No, it's part of our general cash flow from financing activities And will that be used for other for the same general purposes as the other remaining cash flow? We have a clear list of priorities. First of all, organic investment, then reduction of financial liabilities, Payment of the regular dividend, which once again has been increased this year.
Then the funding of acquisitions. And if they make sense here and if the cash overhang remains After all these priorities have been covered, a further disbursement to our investors. Then Mr. Kienle, you asked about the acquisition of Emasis. I think Last year, you asked about the purchasing price.
Well, we paid €600,000,000 And the second question was revenue and earnings of that company over the past 3 years starting in 2020. Whereas for 2020, You expect that in 2020 there was no full consolidation. Well, all I can say here is that revenue and earnings of the company are seen as not material for SAP. I therefore ask for a year understanding that we can publish more detailed figures here. And then also you asked about the return on investment.
Well, same answer here. We don't publish individual returns on investment for individual acquisitions. However, we make sure that there will be a positive ROI. That's part of our business plan. We only Acquire companies that result in an increase in value.
Then the turnover can curve That depends on global traveling, which has drastically been reduced due to the COVID pandemic. Do you expect a recovery of the travel business to the pre crisis level. What is the future development of Concur? Well, as regards to the first question, not in the short run. It will take some time, But we expect that as of the next year, Concur will provide or will find a better business environment.
We can see that we offer the strongest solution in the market, and we expect further strong market potential and that will make use of that and gain additional market share That will have a positive contribution as of next year from Concur, and that's also the long term development we expect. I see no reasons whatsoever why Concur shouldn't be as successful as all the other solutions we have. Another question is related to the day sales outstanding. That increased from 71 to 78 days. Was the pandemic the reason for that?
And what are the long term or sustainable DSO you are aiming for. Well, the pandemic, of course, It's one reason, but furthermore, this increase is due to the method we apply to Dermin, the DSO. We arrive at the DSO number by dividing the average volume of invoice receivables of the last 12 months by the average payments received in the last 12 months. And thanks to an improved working capital management, a great success in 2020. We've reduced it considerably below the 2019 number.
And as a result, at the end of 2020, we had this increase in the DSO. As you have seen in our Q1 results, we no longer report the DSO KPI externally anymore because we focus more on cash flow. That is why we focus more on cash flow also for controlling purposes. Now the equity ratio of 51%, With that, you are sure to be one of the strongest companies with the strongest equity ratio. Chiu.
What is the appropriate equity ratio and as of when do you want to achieve it? Well, in a nutshell, with our current equity ratio, we feel Well positioned to comply with all the obligations we have versus customers, employees and investors. And the actual development of the ratio depends on diverse factors such as the economy, The payout of dividends, the dividend of profits, share buybacks, Exchange rates. We don't have a specific target figure for equity ratio, but we also observe the development closely to Take immediate action. And the current ratio has been constant over the past years, and we aim to maintain it.
And the next question for the past fiscal year, you have a return on equity of more than 17%, that's an increase of more than 7 percentage point. What is the long term equity ratio you want to achieve in the long run? You might expect the IFRS equity return on equity is not a central Key performance indicator. On the one hand and the past years are good expect, there are one off effects That lead to substantial fluctuations. On the other hand, it's also depending on the capital structural policy.
So Higher return expectations will lead to Higher fluctuations and volatility, which not necessarily will increase the value and that is why we still focus on our operative Or post tax results and the cash flows linked to that. Then a question As regard to sustainability, you've been able to reduce greenhouse gas emissions and energy consumption considerably.
What share
of that reduction is due to the corona restrictions? Well, yes, in 2020, our gross Greenhouse gas emissions have been reduced considerably, mainly of course due to the impact of the COVID-nineteen pandemic. You can see that the gross greenhouse gas emissions went down from 7.94 kilotons in 2019 to 410 kilotons CO2 in 2020. This equals a reduction of 48.3% against 2019. Heads over proportional.
And then of course, the travel reductions here played a major role. The Energy consumptions decreased from 9.55 gigawatt hours in 2019 to 6.93 gigawatt hours. This is a limited reduction of 27.4%, Small compared to the reduction in the CO2 emissions. Then the last answer because I can catch my breath. In the fight against bribery, You have received whistleblower information against possible infringements of the anti bribery law in the USA, which the Office of Ethics of SAP and an external law firm investigate.
What kind of Actions have allegedly infringed on the Anti Bribery Act. Well, SAP has received possible Hint regarding possible infringements linked to sales partners. SAP has thus involved an external law firm to investigate these hints. And all business transactions with the partners came to a halt and additional compliance controls are established. SAP is working on the complete investigation and fully cooperates with the responsible authorities.
Ethical business behavior and the keeping of laws and regulation is a major pillar of all our actions throughout the world. For legal reasons, we can't give you further details until the current investigations Come to a close. This takes us to the end of Mr. Kiele's questions and continue with Mr. Boulmer's questions.
He's from the back to Christian Klein. Yes, I'm happy to give you some break now. So first question, early April, we could read in the news that Google mother Alphabet has replaced the Software Oracle by SAP Solution. Is that true? And what's the reason behind it?
Does it mean that you won this by huge discounts And that it was a loss making transaction? No, actually with Google, we are combined in a long term successful partnership It wasn't unexpected for us. This decision had been taken some years ago. The migration of the system to SAP S4HANA rent according to plan. The fact that Google's the reason for the report was internal Google communication.
It was about Process changes in the FI aero, which were triggered by the migration and Google employees published information about this. The contract with Alphabet was a standard terms. It was mainly the quality of SAP products, which led to the decision in our favor because Alphabet wants to grow as well. And all that together, the quantity and the value added of our solutions led to this decision in our favor. Now next question.
Globalization has now come under criticism in view of the crisis. We see trends towards deglobalization. And would you be able to break down the established structures to smaller units? And how Strongly is the business of SAP impacted by the interference in the free trade. And The same topic.
In Russia, you see trends towards less more independence. Have you felt This and has it had implications on your business? Well, in fact, Some countries are erecting digital borders again, and this may indeed endanger what we've achieved throughout globalization. In larger markets, SAP works with hyperscalers such as Microsoft Azure, Amazon Web Services and Google Cloud Platforms and has local Computing centers in smaller markets, it's often a matter of economic Considerations in countries who don't follow the international cloud might be precluded and excluded from technical expectations. But we see that highly volatile market environments often result in an acceleration of digital transformations Adding customers investing more funds into cloud solutions like supply chain management to allow them to react more flexibly.
And SAP is one of the leading suppliers here. So also when it comes to the trend of Globalization SAP Benefits. On your second question, the political situation in Russia is impacting the economic development and that in turn It's having an effect on our business. As a result of this, the performance of our business unit in Russia was slightly weaker compared with previous years. Now over to you, Frederica.
Well, Mr. Buhlmann also asked Questions about the compensation and the composition of the Supervisory Board. Shortly of the publication of your annual report, the trade paper, Handelblad, wrote, SAP pays severance pay of more than €23,000,000 to former board members. The board reshuffle incurred high sums, high costs for the DAX company. And I wonder which part of that sum is truly earned?
And what about the remaining sum? Is the supervisory board liable for damages to our company. Well, the Supervisory Board is bound by the contract agreed with the Executive Board members. These contracts all laid down that in case of premature termination caused by the company, the member of the executive board receives severance pay. The payment consists of different components based on the German corporate governance code.
The level of severance pay is derived from outstanding base salary plus target STIs for the remaining term of the contract. It is our objective to keep members of the Executive Board for the term of their contract. However, for various reasons, changes to the Board might be necessary. We're confident that after several changes in the past years, Things were quite down now. We deem the current composition of the Executive Board as well suited to face the present challenges And beyond that, to ensure also the long term success for SAP.
And regarding the compensation system adopted last year, I would like to know why uncapped opening clauses are applied with or without cause. Why target adjustment throughout the year reverse the results and why even agree caps and hurdles Can be ignored. Does the supervisory board act like a medieval landlord ignoring the shareholders' vote on the compensation system Mr. Buhlmann, that is not the case. The compensation system adopted by the AGMs in 2020 is the basis of all compensation decisions of the supervisory board.
That also applies to the variable bonus systems that were taken by the Supervisory Board. No targets were adjusted throughout the year, nor any caps or hurdles ignored. There was no payout of SCIs As targets and hurdles established beforehand were not achieved as a result of the COVID-nineteen crisis. And the decision of the Supervisory Board to pay a bonus by way of exception, to the Executive Board members active in 2020 are in line with the compensation system. This additional bonus Honors their tremendous activity by this unprecedented pandemic and the economic crisis.
The compensation as such allows for that. So the supervisory board Looked at this in great detail and took the decision because the members of the executive board have ensured in this extraordinary times that the company remains Profitable stays well on course that focuses on long term success. And for that, I'd like to express our thanks to the Executive Board.
Now there's a question on the composition of the supervisor board. Mr. Buhlmann says, The agenda item on the buy election for the Supervisory Board includes election proposal for Doctor. Sidhu, who's got Chinese and American origins. Now we appreciate diversity and cultural diversity very much and consider it a very strong asset.
Our respect for Asian business partners Maybe it should also cause us not only to use German and English on our homepage. In other words, cultural diversity should not be a one way street, but it should be a Healthy and confident two way street. Will you address the concerns voiced in the Western world regarding the social situation And the human rights in China through Doctor. Lu. Mr.
Buhmann, we agree with you that cultural diversity It's a very valuable asset. For that reason, the topic of diversity also has plays a very strong role at SAP. And for that purpose, we also set ourselves ambitious targets on all levels of the company. And of course, we also address our customers On the websites of the SAP Companies, not only in English, but also in their respective national language. The election of Mr.
Chi Lu is to increase his diversity of various perspectives through his comprehensive technological Experience in the U. S, American and Chinese software industry, thus increasing diversity and know how in our supervisory board and thus also giving us Important impulses for the further successful business development, especially in the very important Chinese market. SAP has always promoted the protection of the human rights. In the public, the executive board, which is the body that is responsible for operating business, is also responsible for Representing the attitude of the company and to address those issues which are relevant from our point of view. The executive force did so, for example, After the Black Lives Matter protests in the U.
S. Now there are questions on SAP Cloud, which will be answered by Mr. Sauer Essig. Well, another question by Mr. Buhlmann is, Why are Europeans so poor cloud performance?
Does Europe has a chance against America at all? How high would in Europe you'd Be the monetary entry barrier for a European cloud in order to catch up with the American vendors. Well, I think here we've got to differentiate the cloud categories, infrastructure as a service, platform as a service and software as a service. Amongst the vendors of a pure cloud infrastructure, which is infrastructure as a service in the traditional sense, well here UMS American providers such as Amazon, Microsoft and Google are really leading. And every year, they invest massively to maintain and enhance their capacities and have reached significant economies of scale.
Now for us, however, it is even all the more important to be infrastructure agnostic In the field of cloud platforms, that is platforms as a service. So we want to be independent from the infrastructure because this gives our customers the flexibility That they need. And that's very important for us because we want to support our clients To push the business transformation in their business because that's not going to take place in the infrastructure area alone. And this also means that it's not only necessary to transform the IT landscape, but also the IT processes. And here Our SAP Business Technology Platform is the important basis to facilitate innovation in business processes.
Amongst the vendors of cloud based applications that is software as a service, there's a continuously increasing number of very European vendors and of course there's no doubt SAP is in the leading position here. Against the background of the European Cloud initiative, GEAX, it is to be noted positively that industry specific alliances such as CataniaX and the Automotive Industry Ken represent a counterweight to the U. S. American dominance. And here, SAP is collaborating very closely with partners in the industry to develop solutions For an industry cloud in the various industries.
And this of course has to be seen in the European context. And in both initiatives, GEAx and CatenaX, SAP has been one of the founding members. Another question by Mr. Bullman relates to Quant Technology. Question is as follows.
Recently, we read a lot about Quant Technology and this is a Business which is dominated by American companies. What scares me is the outlook of conventional security systems being outwitted and Artificial intelligence has also become much more powerful with Quant Technology. How does SAP view the situation and especially The situation of security, is that a threat for your customers and applications? Does Quant Technology play a role for SAP, especially in the cloud? Yes, SAP is doing active research in quant technology and is collaborating very closely with the industrial partners, universities and research institutes.
Thus, we want to be Prepared for any changes in good time and build up our know how our in house know how at the same time. The quant technology is still in its infancy And it does not offer any specific use case and no scalability yet. However, it is highly probable that Quant Technologies can influence our business in the medium to long run. And we see opportunities in all areas where there's room for optimization, For example, in route planning and logistics. On the other hand, however, conventional data encryption is a risk because it can be decrypted by a powerful Quant Computer.
For that reason, today we are already doing research into possibilities that will make our solutions safe In the so called post RSA encryption world. And after the technical questions, Mr. Buhlmann has got some questions on the financial results, which will be answered by Mr. Muchis. Well, thanks, Thomas.
The next question goes back to my hobby horse, namely the cloud gross margin. Mr. Buhlmann says That without currency effects, it was at an impressive 69.3% last year. Can you explain to us how the individual Cloud segments performed and explained the large gap between the gross margin and the operating margin. Considering this level of profitability, does it make sense to Continued divest less profitable business units.
Your segment based reporting makes it difficult for outsiders to determine which actions actually produce specific effects. Can you improve on this? Now on the one hand, indeed, the cloud gross margin developed positively in 2020 without currency effects. Was at 69.6%. And what is most gratifying is that all cloud business models contributed to this growth.
Software as a Service and Platform as a Service margin increased by 2 percentage points to 71%. The infrastructure as a service margin increased by 5 percentage points to 34% and the intelligence margin by 1 percentage point To 79%. And by the way, this is also reported very transparently in our segment reporting. Although our operating margin also increased year over year, I would recommend not directly comparing it to the cloud gross margin. On the one hand, the operating margin also includes the margin of our entire services business, which is at 27%, Which is an absolutely leading performance in the services business, but due to the nature of the business model, it's not on the same level.
And on the other hand, it also includes the expenditures of many support functions such as research and development units where we're investing massively as we touched upon before All the sales and marketing costs and the general sales and administrative costs, which are also important for the future and the growth of this company, But which do not manifest themselves in the gross margin. Nevertheless and we had the example of the SEI. Nevertheless, The Executive Board at regular intervals reviews its portfolio activities to determine whether they are still strategically relevant For the strategic focus of SAP. And if that is not the case and if at the same time they do not meet the financial expectations Of SAP regarding the overall profitability of the company. Then of course we also openly discuss the question of whether The long term future of such a business might be better served outside of the company.
Now we took that decision with SDI And in the year before, if you remember that for our business in the regulatory content environment and we will continue applying this approach. However, our current portfolio, let me emphasize this, is a portfolio which we consider to be strategically relevant also in a sustainable manner. Now the question about business segments. Well, here we provide all of the data Which we are obliged to disclose according to IFRS 8. And beyond that, we also Disclose further data, for example, about the sale of our communications unit SDI or about the takeover of Signavio And we disclosed this information in our quarterly reports if they have a respective impact onto our segment structure.
And we do believe that thus we also provide relevant information to the capital market. Next question. Could you explain a bit more precisely what the microscopic amendment of the articles of incorporation Actually signifies in item number 8, well, microscopic is the right adjective, Mr. Buhlmann. Actually, it's about 2 Fairly simple things.
On the one hand, the corporate purpose is to be amended to include the area of telecommunications, not Because all of a sudden we wanted to become a telecommunications company to compete with Vodafone Or Deutsche Telekom in their core business, but rather because operation of cloud solutions Also makes it necessary for customers to access the Internet and therefore the solutions have to include Telecommunications Solutions and that is of course something we also want to demonstrate in our corporate purpose. On the other hand, on this occasion, We also want to modernize linguistically modernize the description of the purpose of the company Using the currently applicable terms. Now Mr. Buhlmann went on. He said, we noted positively that you now Are strongly committed to integrating the takeovers.
The successful spin off of units and the quick growing together of units Creates added value and also cost savings. Do you have a clear plan for both of these dimensions and measurable volume? And how will you report on this today and in the future? Well, my question is similar to the one related to the business segments. According to the IFRS standards, Certain disclosures are necessary, not mandatory.
These are included in SAP's consolidated notes on material actions. For example, we provide qualitative statements On the synergistic effects which we expect from respective takeovers and furthermore this revenue and profit contributions of The companies in the year after they take over as well as certain pro form a data are disclosed. Furthermore, we also disclose data On how the goodwill of the company is distributed onto the respective segments including the expected synergies. SAP is also going to meet the disclosure duties based on the IFRS standards in the future. However, at present, they do not require any Specific quantitative statements on sales and cost synergies.
Another question regarding the share price slump last October, which caught everybody by surprise. And Mr. Buhlmann says, I would consider this an information disaster. Is SAP today less valuable than in September 2020? Why didn't you explain this better beforehand?
And when do you want to recover this drop in share price? Now first of all, Let us clearly emphasize that we know and we are aware of the fact that 2020 Was a turning point for SAP in various regards and this also applies to our strategic focus. However, In the context of the COVID-nineteen crisis, we clearly realized that a fundamental The transformation of the demand preferences of our customers has taken place also in our core business ERP. And the pandemic has also brought about A massive acceleration of the willingness of our customers to transform into the cloud. And this is something we had to respond to actively and that's why we acted quickly And we developed a strategy until fall, which we then also of course attach respective financial targets to.
That was then also submitted to the Supervisory Board and then the respective consequences were taken. We mentioned this before With the shift from an upfront business model to a prorator based business model with the respective consequences onto profitability. And of course, We are aware of the fact that this was surprising news for the capital market. However, you also have to bear in mind That the way how we communicate strategy changes Is also subject to certain regulatory requirements. In this case, we were obliged To immediately provide this information to the capital markets by an ad hoc message As soon as the respective decisions have been taken by the Executive Board and the Supervisory Board.
However, I've had various meetings and discussions Investors after that news had been made available to all to the general public. And The feedback from all of these investors was that this strategy is viewed as being the right one and A value enhancing one in the long run. And we now have to just to make sure that we also implement it properly And the results of the Q1 have also been appreciated positively by the market observers. And This has now also started in manifesting itself in a recovery of the share price. And then last but not least, Mr.
Buhlmann says, in the context of the Qualtrics IPO, And this is a question which was also asked by Mr. Henrik Schmidt from DWS and by Mr. Ingo Spey from Deca. So for that reason, I would like to answer these questions together. Now in January, you had a successful IPO of Qualtrics.
Was this just a test To deal with other parts of the company in a similar manner, well, it would at least be a good solution to better protect The goodwill in the balance sheet. Now first of all, thank you very much. You were right. The IPO of Qualtrics was very successful. Nevertheless, for several reasons, we can The thesis that this was a test for other parts of the company.
On the one hand, Qualtrics had been part of our group of companies only for a short time, which Means it had not been as well integrated as other parts of the company. On the other hand, Qualtrics as a solution is rather an analytical platform Rather than a transactional business process application, which most of other our other solutions are and that's For which stronger integration is more important also for the Purpose of our customers. So for that reason, this was not kind of a test run, but it really was a unique One off measure, which however turned out very positively. And the successful IPO of Qualtrics certainly also confirmed the valuation Of the Qualtrics goodwill. But in the final analysis, an IPO cannot generate such a value itself.
But what really is decisive is the outlook look for the future and the respective Payment and cash flows, they are actually determining the valuation or recoverability of the goodwill. And this in individual cases Can also be influenced positively by changes in the ownership structure. And we also said That with the help of Qualtrics, we'll also be able to better succeed in non SAP ecosystems. But this is really A question that you need to answer on a case by case basis. It's not a general question.
And this brings me To a question Mr. Buhlmann had on the employer situation. And for that purpose, I hand over to Sabine.
Thank you, Luka. And effects of work, working from home, Mr. Giebler had another shareholder Whose name will not be given here has asked, what effect do you see and expect From the fact that many of your staff work from home, what does this mean for your locations and what will be the future? If I can respond to this briefly, I would like to point out that I think we have a consensus that flexible work as a result of a pandemic It's here to stay, not just for SAP, but for many companies. And since we are a tech company, this is helping us.
But as employers of more than 100,000 staff, this is something That will continue. Before the pandemic, we already had flexible working modes for our staff. They could work from home Flexibly, depending on the local legislation, of course, we now have 90% to 95% Of our employees working from home, and we are currently evaluating how this develops and how we can Continue the flexible working modes even after the pandemic. But today, we cannot make any statements on locations And effect on locations, it's too early for that. And that, I think, takes all the questions of the VIP.
And we then move on to Ingoos Peijhof, Dieker Investment. And that takes me to the end of my part, and I'll hand over to Christian Klein. Right. First question, when will you have finished the cleaning up after the McDermott era? And when will you have a conclude When we have concluded the integration of your acquisitions to a decent degree?
In the course of last year, we created one foundation for a seamlessly integrated This includes cloud solutions such as Ariba Fieldglass, SuccessFactors and Concur. And they are now seamlessly integrated with SAP S4HANA. Now as a next step, we are expanding that integration step by step, and our focus will clearly be on core subjects like In integration into non SAP solutions, unified data models between applications, pre integrated analytics and uniform extensibility. And our open SAP Business Technology platform plays a central role in all that. We will keep our customers informed about our progress on a regular and transparent basis.
The fact that we are successful here is shown, for example, in the fact that the satisfaction of our customers rose significantly during 2020 by 10 points year on year. The next question was already asked in a similar way by Markus Galinski of Union Investment. So we'll take This question or these two questions at this point. How will you get your customers to move away from the license business and into the cloud? Well, the pandemic has massively accelerated the trend toward digitalization.
The change from analog to digital has been taking place for years, but it has now made industries move, which might have taken a little longer in other circumstances. No matter which customer I talk to, they all want a fast and easy route to digital transformation. Because digital technologies are helping them overcome the pandemic and Companies that have already digitalized their business models are coping better with the current situation. The cloud has a major role to play here because apart From its many other benefits, chief among them are flexibility and even better access to data And hence knowledge. With RISE with SAP, we are offering customers business transformation as a service To make the digital shift into the cloud as easy as possible, this offering is addressed to existing And to new customers, in the Q1 2021, we already got more than 100 contracts for RISE signed And the demand continues to be high.
Our SAP Business Technology Platform also has a crucial role to play In the transition of our customers into the cloud, it makes integration, building and enhancing solutions easy and it is also the foundation For our modular industry specific cloud solutions. Now a question from Mr. Spych. How do you balance margin development with growth? For us, it is clear that we will not weigh the success of our customers and the significant growth potential of SAP against short term priorities.
This is why we are making investments into our portfolio and in that process. Because we are bringing our business into the cloud faster, corporate profits will be moved into the future. The reason for this is that we are converting the classic business model of selling licenses to the subscription model, the typical cloud model. In the long term, this model produces higher recurring revenue. However, in the transition phase, total revenue growth and bottom line are impacted.
We expect that from 2023, most of that phase of transition will be behind us. Then Revenue and profit growth will clearly accelerate, and we are expecting double digit growth here. Such effects have already been observed With other successful software companies like Adobe, which went through this business model transition already. Despite that, we are exercising continued spending discipline. And here, we've made significant progress last year.
For example, we could increase our profitability in the cloud and improve non IFRS cloud gross margin From 68% in 2019 to approximately 70%. We assume That this positive trend will continue and that in 2025, we will achieve a non IFRS cloud gross margin around 80 In sales and marketing, we have streamlined our structures further. In the administration, there are significant economies of scale and a high automation potential. Important processes are already transacted digitally and independent of the location, starting with sales to signing Contract to implementation and operation of our software, which also works really well during a crisis in remote mode. Our development is becoming more efficient.
We continue to invest there. And one thing should be clear, we see this area Not as a margin driver, but as a growth driver. Next question is, Given your current sluggish speed, how are you going to catch up with your competitors, Salesforce and Workday? We have I already mentioned that why our revenue is a little lower at the moment because our cloud business is Growing rapidly, and it is above the growth of our competitors. We have significantly increased the speed of our transformation In the last few months, this is also reflected in our performance figures.
Cloud revenue increased by 18% in 2020 and continue to be the major growth driver. A decrease in business travel impacted transactional revenue in our intelligence Excluding this effect, our cloud revenue grew by an impressive 27%, Which is actually competitive with our competitors. This Fast growth is absolutely comparable with that of our competitors in the cloud that you mentioned. And as we said, we expect a further acceleration of cloud revenue. In Q1, we could report the fastest growth in new cloud business in 5 years.
Our revenue with S4HANA Cloud, our ERP Core product has grown by 43% in Q1. There is no competitive solution that is growing faster. With RISE with SAP, we are accelerating the migration of our existing customers into the cloud and we are also winning a significant number of customers. We've also stepped up our speed of innovation. The central component here is our SAP Business Technology Platform.
At this year's SAPPHIRE, our annual customer conference in early June, we will announce a real firework of innovations. And with that, I'll hand over to Fredericke. Mr. Sprague asked a question to Mr. Plattner, which other Shareholders have also mentioned and that concerns his succession planning.
Mr. Golinski of Union Investment and Mr. Henrik Schmidt of DWS
Investment asked the same or a similar question.
So I'd asked the same or a similar question. So I will respond on behalf of Mr. Plattner. And the question was or were the questions were, when will you, Mr. Plattner, hand over the staff?
We see this concentration of power critically, And we think there should be a succession arrangement, which will result in more independence and also becoming younger of the Supervisory Board. As you could hear in his contribution, Hasso Plattner made a specific statement on this. So at this Point, I would like to refer you to what he said. And I can only reiterate here that Hasso Plattner intends To stand for another period of a maximum of 2 years again. And after that reelection, he will hand over His function as Chair of the Supervisory Board to a successor.
And at this point, let May I add something from the point of view of the supervisory board. The planning, the succession planning for Hasso Plattner as chair of The supervisory board is, of course, a task for the whole supervisory board, not just a personal choice of Hassa Plattner. We are all very aware that this is a very important step for the company because the last Founder will leave the company. Describing what Hasso Plattner did For this company would be too much for this AGM. We could only say That it's hard to imagine SAP without him.
It's impossible to do it. And without him, This very successful company wouldn't exist. So it's in the interest of SAP to go this step in such a way As to ensure stability and continuity of leadership, especially in that phase of transformation towards a cloud company Where this is so important. And next is a question from Mr. Spreich, too.
In 2021, the supervisory board reduced the threshold value for the short term incentive from 75 50%. Why was this reduction done only after the new remuneration system existed for The threshold which will apply From the year 2021, 50% for the short term incentive was decided in early 2020 and was part of the Remuneration system presented to the AGM in May 2020. The reasons Lie in the overall concept of the SEI plan. The short term incentive is measured by the achievement of 6 targets. The Targets, these individual targets all have a minimum threshold of 50%.
In addition, there is another hurdle For total achievement score, and in order to harmonize these two levels of hurdles, The threshold for overall target achievement was changed from 75% to 50% Starting in 2021, we consider this appropriate because our short term incentive has very ambitious goals. And they are always reported in our remuneration report for the previous year. And I'll hand over to Sabine for questions on employees. Mr. Speicher, two questions Concerning our employees, and I'll be happy to take them.
The first one, diversity quota are not a panacea, but what are you doing specifically to make SAP more diverse? Will it help you to improve a lack of innovation ability? Well, first of all, SAP has no Internal quota or percentages for management level, but what we do have are clear targets in different dimensions of And these extend to all areas of business and all regions, and they are individually fine tuned. SAP SAP's goal by 2023 is to have a global share of women in managerial positions of 30%. And Of course, for us, it goes without saying that diversity and heterogeneous teams have an absolutely Fantastic effect on the innovation power of the company.
So we are training our managers with regard To personnel recruiting, and we are making sure that there is very close collaboration of the different HR departments in the regions And especially when it comes to reskilling and retraining managers. The next question from Mr. Spych How high was the fluctuation rate on the first and second management level since the last AGM. And how does this compare to the previous year? The answer is quick.
The fluctuation rate in the first on the first and second Management level rose slightly. In May 2021, this was at 5.9 percent 5.7 percent and in the previous year, 4.8%. And with that, I'll hand over to Luka Mucic for the financial questions. Yes. Thank you very much, Sabine.
The first question on the financial effect on the changed strategy. In addition to Mr. Buhlmann, Mr. Schmidt after EWS, Mr. Girdler submitted similar questions.
So we are responding to those questions en bloc here. Can you describe the development of your revenue and margin targets for 2025 over the next years? And what makes you So sure that you'll achieve them after 2 disappointing years. Well, on average, our cloud revenue and our sales revenues in total Starting 2020 up to the year 2025, we'll grow by 22% per year 6% respectively, but with a different growth characteristic in the 1st 2 years Versus the year from 2023. In the revenue development, the strategy and the change of the business model Now having an impact and because of the faster transition to the cloud, the share of immediately realized Versus recurring revenue is changing, so the increase will be slow at 1st and then starting 2023, the curve will go up faster when we have a higher Share of business in the cloud.
On the operating profit side, the target is more than €11,500,000 In the period up to 2025, and this corresponds to a growth of 7% per annum Between 2025. And here, the accelerated change to the cloud is important because Currently, the margin profile is different compared with the software license and support business, although With 80% by 2025, the gross margin target is pretty close to the classic margin. In order to achieve these cloud margins, and I think we mentioned this, we will significantly harmonize Efficiency of our cloud infrastructure over the next 2 years, and we have to invest into that in the next 2 years. And this will be a mid 3 digit €1,000,000 amount in 2021 2022 and that will Reduce the increases on the operating profit side, but after that, it will take effect and it will accelerate the margin. There will also be investments into development resources to make sure that innovation continues in the cloud.
And in the next 2 years, We will also have a little bit of headwind, and that will be reflected in a flat performance or a slightly Signing performance, which will have an effect on the operating margin, but we see these investments as necessary in order to position SAP For the future in a sustainable way, and this means that our assumption for the development of our recurring Revenue is positive and up to the year 2025, we are going for relatively high share Of the more predictable revenues and in a situation as we've seen now, This is worth a lot. It's making us resilient and it's the way to go forward. So in the year 2021 'twenty 2, We see we are optimistic. The changes we are making are right. And after that, we'll be in excellent shape For a disproportionately high growth rate, both on the revenue side, but also on the bottom line side, Where we will return to double digit growth.
And the cloud portfolio will obviously contribute very much to this. From the existing portfolio, we have growth rates of 15% to 20%. And on top of that, We have the RISE with SAP contribution. That initiative is contributing. And at the beginning of the year, We already showed that with the strong growth of S4HANA Cloud that our growth potential Apparently, a report on that development and show you that this strategy is working.
And we'll certainly increase trust on the capital market that we're on the right track, Which will be value enhancing for SAP.
Then a couple of questions related to sustainability, and I'm very happy about that because I'm the board sponsor of sustainability. How high will the share of suppliers be that you integrate in your climate targets 2025? Well, in a nutshell, 100 percent, because we expect all suppliers to deal responsibly with the environment and to be committed to environmental protection. In our SAP code for suppliers, they are called upon to contribute to achieving the SAP climate targets. And the second question here, do you plan a fixed Investment contribution to acquire or to gain a share in companies similar to the Climate Innovation Fund by Microsoft.
Yes, we do this. Since 2012, we've been investor in the livelihoods carbon funds and For years, we've invested strategic investments in environmental projects with highest quality standards, which Have ecological and social effects. And we also have introduced an internal CO2 price on business flights, and We plan further strategic investment in certified environmental projects, which have a positive contribution to the reduction in greenhouse gas emissions. And the last question here. With the current sustainability strategy, do you think you're well positioned with that even though that the EU And the federal court have posed more even stricter requirements.
Yes, absolutely. To achieve our vision, our sustainable business strategy focuses on positive implements and changes in the limits of planetary borders and to implement any legal requirements early on. You might know that SAP was one of the first Companies to offer integrated reports covering non financial aspects of the business too because And we've been the leading company in the Dojo and Sustainability Index for Software Companies. And over the past years, We've set ourselves even higher and more ambitious environmental targets. Last time, the Advancing the level of being carbon neutral by 2023, 2 years sooner as I said before, we want to have maximum transparency and be the front runner in this field.
That brings us to the end of the questions brought forward by Decker. And that takes us to Union Investment and Markus Kolinsky's questions. I'd like to hand over to Christian. Now the first question. With the consistent Alignment to the cloud based business model, did SAP actually wait too long with that reorientation?
Shouldn't you have prepared the market sooner and prevent the shock? Well, the decision to reorient SAP to a cloud based business model was the consequence of several independent events. As mentioned before, the start of a COVID pandemic increased the demand of customers to modernize their system, environments, landscapes and to migrate to the cloud to be more agile and better prepared for the crisis. When I became sole CEO of SAP, That happened during the beginning of the COVID pandemic. And one of the first Actions I took was the new strategy, which was finalized in accordance with the Supervisory Board.
At the same time, the strategy update was Here the financial impact of the corona pandemic, the recovery scenarios and the latest developments The final discussions with the Supervisory Board and the following approval Happened briefly before we published Q3 results. As a result, the strategy update and the latest finance figures Had to be immediately published as an ad hoc report. With the publication of the Q2 2020 results, we've already indicated that a strategic change was imminent. However, Due to the unfinished aspects, we couldn't publish further detail. And next question, When will SAP come back return to the future growth path?
Where are the biggest risks? Well, in 2020, we expect our cloud revenues to raise from €8,000,000,000 to €22,000,000,000 in 2025, so an average growth of 22% per year. All in all, In 2025, we expect sales revenues of at least €36,000,000 as of calculated as of 2020. This equals an annual growth of at least 6%. As communicated before, due to the sheer mechanic of the existing Change in business model.
We expect moderate growth in total revenues for this year and next year. However, we expect considerable increase In the speed of development as of 2023, this also applies to our operative profit in terms of non IFRS. The biggest risks here are covered by in our integrated report in the chapter Risk Management and Risks. Now we continue with questions related to the supervisory board and I hand back to Fredericke. Yes, Mr.
Golinski, too, has Send us questions directly to Mr. Plutner, and I'm going to answer in his name. Mr. Plutner, We request an independent composition of the committees of the supervisory board that is not given right now. When will you comply with these requests?
By the course of the last year, we have considerably refurbished the Supervisory Board, thus preparing the company for the challenges over the next 10 years. SAP has mapped the competencies of the board members with a comprehensive competence profile, has reduced average Term of office increased the number of independent members and also increased diversity. At the same time, we've Shape the terms of office more flexible so that we can respond faster if changes in the setup are required and if shareholders so that shareholders can select and elect their representatives more often. This year, we continue the reshuffle of the Supervisory Board. And insofar as the AGM approves the Nominees Doctor.
Chi Liu and Doctor. Ruhan Westphal will have 2 more independent members in the supervisory board and as a result also the committees. Soon after the AGM, the Supervisory Board would also look into the setup of the committees and Strengthening the independence will be a major criterion when we decide on the setup of the committees. And another question. Mr.
Plattner, will the sustainability goals also become a Part and parcel of the long term variable remuneration of the Executive Board. We'd welcome that. Well, since 2020, Sustainability goals are part of the STI. These are annual goals. However, they are derived from our midterm targets.
Thus, we're currently of the opinion that sustainability goals are appropriately considered in the pay of the executive boards. Currently, we don't plan to consider sustainability goals in the long term plan. However, We relish the feedback from investors and we discuss and monitor that regularly in the supervisory board. Next, the questions from Henrik Schmid from DWS and Christian takes over. Yes, first question.
The revision of your business goals for 2020, above all, as The revision of the midterm outlook past October led to clearly negative reaction at the stock exchange. What were the major reasons for these decisions and what do we expect in terms of short term revenue and Earnings Development. Well, the 2020 figures were adapted in line with at the beginning of the COVID pandemic to reflect the impact the pandemic had on demand and forecasts. Along the same line, the midterm outlook was adapted to cover the financial impact of to the COVID pandemic and the recovery scenarios and the development of the U. S.
Dollars. The strategy update was also translated updated financial targets until 2025, which includes the decision to faster develop towards a to cloud based business model. The outbreak of the corona pandemic was one of the driver of the strategy updates because The demand of customers increased to modernize their system landscapes and to migrate to the clouds and be better and more agile prepared for the crisis. Due to the transition from the upfront license business to the gradual cloud business, revenues We'll drop due to the we'll grow slower due to switch in the business model, but as of 2023, growth will be faster. Similarly, the growth of operating result will be moderate so that in 2021 or 2022, we expect no or slightly negative growth.
This results mainly from the investment in the cloud business, for instance, by the increased harmonization in the cloud infrastructure, which we plan to implement in 2021 2022. Next question. To what extent have the current development in the context of the COVID development impacted your decisions? Well, the outbreak of the corona pandemic was one of the main driver to update the strategy since the customer demand increased to modernize their system landscape and migrate into the cloud to be better Prepared for the crisis. Next question, what's the feedback of your customers and of your employees regarding the new targets?
Well, We get both from customers as well as from employees extremely positive feedback, both in numerous personal meetings as well as In the strategic surveys, we can see that our employee engagement index increased from 83% to 86% in 2020. The leadership trust that's the KPI for the trust of employees in the managers rose from 59 to 62. And at the customer side, the Net Promoter Score with which we measure customer loyalty, this Net Promoter Score increased by 10%. Next question. Which role play acquisitions in the framework of the new midterm strategy?
Well, to achieve our new mid term strategy, acquisitions will only play a minor role. Our focus still is on organic to achieving our short, mid and long term goals. In addition, we might have targeted acquisitions to supplement our solutions and to cover important strategic markets in a better fashion. Next question. What's the current status of customer migration regarding SAP S4HANA?
Well, the momentum of SAP S4HANA is still unbroken. At the end of the Q1 2021, More than 16,400 customers have opted for this solution, of which more than 9,600 Have gone live. As regards financial figures, I'd like to hand over to Luca. Thank you. Next question deals with the margin development.
You've redefined your targets for the period until 2025 and you expect an expected growth In the cloud field and negative effects in the license business, how would that impact margin? Well, the margin has grown for 2 years over the next 2 years, 2021 2022 due to the additional investment in the cloud infrastructure and due to the transformation of the business model towards an increased shift into the cloud model with lower gross margin. We expect a decline In margin, but as of 2023, once the biggest share of our business, The new business will be transformed into the cloud. We expect considerable increases in operative margins. So as of 2023, Margins will skyrocket again.
Next question, what is the impact of the new strategy On the service revenues, where the new strategy, in particular, the new rise with SAP to support existing customers and transform them to the cloud will lead to a decrease in service revenues to the benefit of faster growth in the cloud revenues. So we expect a drop over the next years in Service revenues on average in the lower to mid single digit percentage share. Next question, which implication has the new strategy regarding the development of recurring revenues? Well, of course, it leads to a considerable growth of more predictable revenues By 3 percentage point to 75%.
And
By the end of 2025, we expect this share to increase to 85%. And another question, what are the new KPIs you're going to use To assess the implemented strategy and do adjustments, well, on the one hand, we've been doing this since the Q1 2021 with our new KPI current cloud backlog and specific Distributions of the SAP S4HANA cloud. And in addition, as of next year, as an additional metrics, we plan to use the annualized ARR for this area. But for that, we have to provide the internal requirements so that we can report it reliably. Then Mr.
Schmidt Had also questions as regards corporate governance, and I'd like to hand over to Frederica. Well, can you please put into perspective the €15,000,000 paid as severance payment to Jennifer Morgan, which parameter determined this value and how did the Supervisory Board establish that that's a matter of course That is usual. The severance paid to Jennifer Morgan was based on the contractual conditions. The level of the severance Pay is based on the base salary and the outstanding SDIs for the remaining terms of contract. And here the rules and regulations of the German corporate governance code were considered.
Next question, we will vote in favor of Mr. Juju and we welcome The consolidation of the expertise in the Asian, specifically the Chinese market. Please tell us which mandates he held and how much time he Has to spend and also the potential for conflict of interest? Well, Doctor. Liu has the following mandates in other companies as the SAP.
He is a member in the Board of Directors of Pinduoduo Inc, a publicly listed Chinese company. In addition, he's the Chairman of the Board of Directors of 3 further companies, namely Pinefield Holdings Limited, Cayman Islands and 100 Percent Daughters Pinefield Holdings Limited in Hong Kong, China and Pinefield Limited Peking China. The time required for the task involved can be assessed as follows. The mandate as Pinduoduo Inc. As one of the big Publicly listed company can be compared to the activities in the Supervisory Board at SAP.
The 3 Pinefield mandates, however, will be considerably less time consuming at Pine Fields Limited, seated in Peking. That's a Chinese startup company that's hold by a holding company in Hong Kong, which in turn is hold by a holding company in Cayman Islands. This is usual construction in China to hold investment in Chinese companies abroad. Thus, the Board mandates in the 2 holding companies cannot be compared with independent control activities Let's go beyond the control of the activities of the operative Chinese daughter company with a view to the sheer Cope of the control and monitoring activity. In the end, it's only the mandate at the Operative Torta Company that counts.
And here with the Pine field mandate, it has to be considered that Doctor. Lu already does this in the course of his main job as a CEO of Markel Plus That acts as a foundation center and start up investor. All in all, we thus assume that Doctor. Lu has sufficient time to fully fulfill all tasks linked to the mandate at SAP. And we don't see any Reasons to assume that due to these mandates that there might arise a conflict of interest for Doctor.
Luh. In particular, there are no relevant business relationships between SAP P and Pinduoduo neither with SAP and Pinefield.
Mr. Schmidt had asked some questions about the organization of this AGM, which were also asked By Mr. Givler, and I'd like to answer those questions together now. First question, how many questions did you receive for the AGM? We received a total of 123 clusters of questions with a total of 269 individual questions.
Next question. How many questions will you answer? As you certainly know, It is up to this question of the Executive Board to duly decide on the way questions are to be answered And all of this is based upon the COVID-nineteen Act. However, we will answer all questions Comprehensively, either individually or if there are identical questions, of course, we will answer them together. Which are the criteria that are Applied for answering the questions.
Well, as we answer all questions, no specific criteria were applied. Only if there was Obvious duplication of questions. We clustered them and we then also Close the names of the shareholders who had asked the questions if that was desired, and then we provided the answers. Now this marks the end of the list of questions Mr. Schmidt, but he has also asked us to read out the following lines.
We thank the Executive Board and the Supervisory Board and, of course, also all employees Who have worked hard for the success of the company in the past and also in the current fiscal year in such difficult times. And we ask you to pass on this gratitude to all of the employees. We thank you for answering these questions as part of the AGM And we expressly approve our names to be disclosed during the Q and A session. Well, thank you very much for these friendly words, Mr. Schmidt.
And we now continue with the questions of the individual shareholders. And the next Shareholder does not want his name to be disclosed. And I hand over to Christian again. Thank you very much, Frederic, and I also would like to thank Mr. Schmidt for his positive statement.
Now the question is as follows. I agree with the Executive Board and the Supervisory Board in the decision to accelerate the implementation of the cloud Now this decision I think was overview. If you look at the status other companies have reached with their cloud strategy and they have even built up new Economies on this basis. Now compared to that, SAP is lagging behind like the one or the other customer. SAP wants to become the Amazon of the industries.
Now integrated cloud strategy also requires an appropriate risk management. And my question on this is follows. How can you make sure That the own cloud servers can actually handle the tripling until 2025 as announced. Now we have Adopted a so called 4 plus 1 cloud strategy for SAP. And according to that strategy, the SAP cloud infrastructure can be operated In data centers owned by SAP and also at 4 hyperscalers: AWS, Google Cloud, Microsoft Azure and Alibaba Cloud.
In this context, SAP draws up a comprehensive capacity plan, which covers its own data centers as well as the hyperscaler capacities. Thus, we make sure that both environments are prepared for the expected growth. Next question. How high is the capacity utilization of the existing service today? And which CPU use have been installed in their own service?
These only X86 processes. Now the capacity utilization of the internal infrastructure is subject to fluctuations It always marks a compromise between efficiency and the safety buffer. In most cases, it ranges Between 50% 75%, but there are major differences to be observed. The less elastic legacy infrastructures which we have You've already taken over in the framework of company acquisitions. They usually have a significantly lower capacity utilization Compared to our new standardized and much more flexible converged cloud infrastructure.
This year and next year, We want to migrate our cloud existing customers to this new infrastructure. This should lead to a significant increase of the average capacity utilization. We cannot discuss details of the technical composition of our cloud infrastructure at this point. However, It goes without saying that we apply commercial standards, which undoubtedly also include X86 processes. How does SAP assess the risk of X86 processes being attacked by hackers, for example, through Side channel attacks.
Answer. Over the last few years, there have been several simulated and also actual hacker attacks, Which specifically targeted X86 and X64 processes. SAP has implemented a comprehensive Software Lifecycle Management in order to support our own infrastructure. Operation of the current versions at any time also using corresponding side channel protection represents an additional Safety and security level. The operating system and special software is always kept up to date in order to Block off any potential attacks.
Next question. Is the implementation of the cloud strategy slowed down By the shortness of chips, which has been present for months. Now the current situation also Does not go unnoticed by us. However, it has not led to a delay in our cloud strategy. We're working together with hardware providers on a strategic level.
This Just transparency of our supply chain and just also high availability of future shipments. How does it develop How does demand develop regarding in house and hyperscale cloud services? Is the hyperscale business growing faster? The hyperscaler capacity used has recently grown faster than the internal capacities. And according to our plan, this is also to remain so.
Intensive utilization of the hyperscaler capacities is part and parcel of our 4 +1 strategy. With the help of this strategy, we can lower our costs of capital and increase the flexibility of our cost base. Major purchasing volumes furthermore also lead to more attractive purchasing terms and conditions with the hyperscalers. Next question. What are the margins that you generate with your in house and with the hyperscaler services?
Very good question. But in order to avoid potential disadvantages compared to our competitors, we cannot discuss any details here. But let me tell you this. Irrespective of the infrastructure used, we expect an adequate profitability and that is also Expressed in our target to reach a cloud gross margin of approximately 80% by 2025. Now regarding the hyperscale, the capacity we obtained from hyperscalers, here we benefit from attractive purchasing terms and conditions as mentioned initially Due to the bundling of customer demand and due to the competition amongst the hyperscalers for the very attractive SAP workloads and data.
And At any time, we've got the option to switch to in house capacities if this makes sense economically speaking. On the whole, however, It will also be very decisive to reduce the capacity demand of the individual cloud solutions and we are working very intensively on this. Next question. Can the hyperscaler capacities be ramped up quickly if demand picks up rapidly? Hyperscalers have significant cloud infrastructure capacities on a global scale as Thomas has already stated.
And usually they are fully sufficient for the SAP demand. In order to ensure that at any time we can also cover peak loads On a regional basis or for specific cloud services, now for that purpose, we have introduced A demand forecasting and planning process with the hyperscalers. And we thus transmit early indicators to the hyperscalers to Allow for efficient capacity planning. Next question. How does SAP handle the security risk due to cloud instances of different vendors, which Still do not have any standardized security protocols.
The public cloud infrastructures are implemented Those used by SAP at least are implemented on the basis of the secure by default standard and also reviewed Regularly. SAP uses the native security functions of the respective vendor and also uses internal external security software, which allows us to set up standardized Security controls. With this combination, not only do we ensure that industry and legal standards are complied with, but we offer An industry leading security concept which goes far beyond that. And for the next couple of questions, I hand over to Luca again. Thanks, Christian.
Next question. The announcement of the accelerated implementation of the cloud strategy and the related costs lead to a massive slump of the share price From a price close to the all time high, almost down to the COVID-nineteen low. Now that strategic Plan, which is a significant wasn't it discussed with major investors in beforehand or were you not able to convince them of the Benefits and success of the accelerated implementation of the cloud strategy. Well, I already tried to explain to you that the significant change of our strategy And the related financial consequences, once we had developed them, while we considered them as or we had to consider them as insider information Because we had to expect that they might have led to a significant market response which actually happened. Well and in that situation, If you want to stick to the law, which we do, in that situation, you cannot discuss this information selectively with Strategic investors beforehand in order to know what their view is.
Therefore, the answer clearly is No, we would not have been allowed by law to discuss this adjustment with major investors beforehand and that's why we didn't do so in the first place. 2nd question. Were the massive support changes especially by the Hassel Plattner Foundation discussed beforehand with Executive Board and or the Supervisory Board, this question also goes to candidate for the Supervisory Board Mr. Westphal. Now let me first of all remind you That at this AGM, no questions can be directed to Mr.
Westphal, who is today only a candidate for the Supervisory Board. But I can answer your question nevertheless. The shares purchased specifically by Hasselbladner Single Asset GmbH and CoKG and Hasselbladner Single Asset GmbH and CoKG In late October, had not been coordinated in any way with the executive board or the supervisory board, but they were based upon independent And furthermore, we would not consider these purchases as support purchases because the overall Volume was not significant compared to the overall market capitalization of SAP. Furthermore, Just for the sake of completeness, I also would like to emphasize that amongst others, Christian Klein, I myself and some other Board members and supervisory board members purchased SAP shares after the publication and the decrease in share price. And we did so To send out a signal of trust in the course and the strategy adopted by the company.
And of course, all of these transactions We're made fully transparent by SAP in accordance with the capital market rules and laws. Now Did the Executive Board have any indications of intensified short selling activities? No, we did not have such indications. Now is Mr. Westfallen also proposed As a representative of the shareholders and the supervisory board because as a Managing Director of Hassel Plattner Foundation, he Represented not only a major investor, but also a strategically important shareholder.
Now we would like to emphasize that the nomination of Doctor. Wessel for The Supervisory Board is specifically as an independent candidate and His nomination is only based upon the profile of his know and expertise. Yes, Doctor. Westphal is member of the Board of the Nonprofit Hasso Plutner Foundation that was established by Professor Plutner, which is an independent one, however, of his person. The foundation is currently holding SAP shares to the extent of about 3% of the equity of SAP SE and Professor Doctor.
Platten is not a controlling shareholder SAP, according to the German corporate governance code. Now there's a comprehensive list of questions of a shareholder On the recent settlement with the U. S. Criminal prosecution authorities in the Iran sanction Procedure. First question, why did SAP conduct non approved Iran transactions over many years, especially As this has happened in the term of Bill McDermott who is a U.
S. American and who is a natural person even is complied to comply with U. S. Sanctions. Now let me clearly state this.
The SAP policy prohibits transactions in countries where due to Our software and services is not available and this also includes Iran. Most of the transactions at issue occurred Because 3rd party resellers violated SAP policies and conducted non authorized transactions with Iranian companies. Other non authorized transactions occurred due to control gaps within the companies taken over by SAP. SAP has remediated these problems and will continue to comply with all applicable laws. Secondly, did SAP not apply for approval for these transactions or was such an application rejected?
Answer, We did not apply for approval for the Iranian transactions. Next question. Who did put these violations in 2017 onto the agenda of the Executive Board? SAP's compliance team and the export control team Have identified the problem and escalated them to the Executive Board. Next question.
Now it said that SAP is the 1st company Which utilized the voluntary self disclosure program of the U. S. Government, which was launched in 2016. What triggered this decision? Answer, As a company listed in the U.
S, SAP is obliged to report Certain Iran activities to SEC in the framework of the 20 F disclosures. Now due to the nature of the Iran violations, SAP Then also decided to utilize the benefits of the program on monetary sale of disclosure. 5th, now what has changed in risk management That caused SAP consider the risk of charges brought forward by the U. S. Authority To be lower than the penalty or the fine expected under the voluntary set of disclosure program.
As specified by US authorities, The voluntary self disclosure program offers the possibility of having lower fines and a possibility to avoid criminal prosecution for acts of the past. SAP has been able To benefit from these advantages, however, this was not based upon a long term risk assessment. But as soon as The violations became known. We then immediately also resorted to the voluntary self disclosure program. 6th question, did the takeover of the American government by President Trump and his rejection of the Iran agreement and the tightening of sanctions, Did that play any role?
Answer, no. 7th question, did U. S. Authorities threaten to file charges against us? Answer, No.
SAP disclosed the potential violations to the U. S. Authorities proactively and voluntarily. Due to the voluntary self disclosure of the company, the comprehensive willingness to cooperate and the strong remediation measures of SAP, and that's important. Now for that reason, U.
S. Authorities decided not to file charges against SAP. Next question. Now was that voluntary self disclosure in the U. S.
Done based upon a recommendation of the Supervisory Board? Well, the voluntary set of disclosure in the U. S. Was based upon a decision of the executive board, which, however, was closely coordinated with the supervisor board. 9th question, Who communicated the decision to the customers affected and how did they respond?
SAP and its lawyers communicated The situation with various customers and found appropriate solutions. 10th, which Supervisory Board Committees dealt with the comprehensive investigation? It was the Audit Committee which continued to deal with that matter and which was also notified regularly. 11th, What exactly was the result of the investigation regarding risk management? Had it already been set up for effective dealing with U.
S. Sanctions? Answer, SAP has remediated the behavior in the past and has also developed stronger controls which are now better suited to mitigate the risks. 12, can you exclude the possibility that departure of the 2 U. S.
American board members, Bill McDermott and Jennifer Morgan and departure of the Supervisory Board Member Diane Greene, who is also a U. S. American from the Supervisory Board, is somehow related to The violations against U. S. Sanctions against Iran, which now you have admitted to.
Answer, the departure of the members of the Executive Board and the Supervisory Board were not related at all to these investigations. Now did these persons potentially Assume personal liability for the violations against U. S. Sanctions which occurred during their terms, did U. S.
Authorities Threatened these persons to launch criminal prosecution? Answer, no. The authorities did not U. S. Authorities did not threaten to launch Criminal prosecution activities against board members.
Next question. With its decision to appoint Mr. Lew as successor For Mr. Green, according to item 6 of the agenda. Now did the Mannheim District Court do so in order to have Another U.
S. Citizen on the Supervisory Board. I assume that the appointment of Mr. Lou is based upon also discussions with SAP Supervisor Board. The court order to appoint Mr.
Lou was indeed based upon a proposal of the supervisor board, but there were no requirements By the district court that it has to be a U. S. American citizen. He was only selected due to his knowhand experience, which is Very good supplement to the competence and know of the Supervisory Board. Now was the citizenship of Mr.
Lou Part of the agreement with the U. S. Criminal prosecution or through authorities to make sure that in future there's another U. S. Citizen again on the Supervisory Board To monitor compliance with U.
S. Sanctions? Answer, no, there was no such agreement. Next question, did the court order an appointment As a supervisory board member of Ms. Evans, U.
S. American in 'twenty seven somehow relate to sanction violations? Answer, no. In connection with the violations and their remiation, was there also communication with the U. S.
Embassy in Berlin? Answer, no. Did SAP Notify the German federal government and or EU bodies on short notice on the violations and potential threats of the U. S. Authorities answer.
SAP notified the competent German authorities on the investigation and the agreement. 19th, if so, Did SAP coordinate these actions that is the voluntary self disclosure with these authorities? And was SAP supported in the view of the Executive Board? SAP only notified the German authorities and of course that procedure was coordinated within the executive board. Does the set of disclosure and the payment of a fine mean that Executive Board and the Supervisory Board with the purchase of SAP Software and Services by Iranian customers Share the view of the U.
S. Authorities that SAP has thereby undermined the objectives of the U. S. Sanctions against Iran, I. E.
Primarily the prevention of support for terrorism And Iranian aggression, in particular against Israel and in connection with this, the further potential development of the Iranian nuclear program also for military purposes And the U. S. National Security according to U. S. Attorney General, Nathaniel Mendel.
Answer, It is not up to us as SAP to assess the targets of the U. S. Sanctions against Iran As established by the U. S. Government, SAP would like to emphasize that all of the 3 U.
S. Authorities Have appreciated SAP's significant efforts to strengthen its export controls. For Any further information, we'd like to refer to the actual agreements with the U. S. Authorities and SAP's public disclosure regarding the consensual solution.
Next question. Mr. Mendel is also quoted as follows. It wasn't anything that would pose a more serious threat. It was the more standard SAP suite.
Now, does indeed that does actually say that the business with Iranian customers and the SAP software does not pose any serious threat? Don't you thus see the opportunity to obtain approval for business with Iranian customers? The answer, again, once again, it is not up to SAP To assess the interpretation of the targets of the U. S. Sanctions against Iran by an official of the U.
S. Government. Now we as SAP, we always Want to comply with all the existing export control and sanction laws. The regarding policy has once again been confirmed by SAP On its website, SAP dotcomunderexportcontrolandsanctions. And for further information, we once again would like to refer you to the actual agreements With the U.
S. Authorities and SAP's public statement regarding the consensual solution. Next question. In spite of comprehensive cooperation with U. S.
Authorities, the proceedings lasted for 3 years. Why did that take so long? The investigation did take some years because as is usually in comparable cases because Comprehensive and very thorough investigations had to be conducted. Next question. What does it mean that the Executive Board and Supervisory Board assume full responsibility for the sanction violations?
Does this mean that the Executive Board and Supervisory Board will Compensate the company for the existing damage. As part of the agreement with the U. S. Authorities, SAP assumed responsibility For the sanction violations detected, however, in context with the investigations performed, no individual Fault of individual existing or former Executive Board of Supervisory Board members was identified. There's also no basis for any potential damage claims Against members of the Executive Board or Supervisory Board.
Next question. Do you see an opportunity possibility that The fine paid by SAP and the loss of business of the Iran business is Recovered or is paid is compensated for by SA by EU on the basis of the blocking statute if this is not fully covered by the DNO insurance? No, we do not see this possibility. Next question. Does the Executive Board and the Supervisory Board see the risk that SAP We'll be fined by the EU on the basis of the blocking statute because SAP submitted to U.
S. Sanctions? Answer, no. We consider this risk to be low. Does SAP also check whether SAP partners have conducted non approved businesses with Iranian customers or still do so?
And does SAP adopt any sanctions against these partners? Yes, we monitor the SAP partners And their compliance with the SAP policies 27, if so, how many partners are affected by this? The answer is quite simple. All partners because we expect all partners to comply with the policies and processes. If sanctions have been imposed against SAP partners, are these partners then also threatened by charges legal charges brought forward by the U.
S? Answer, as far as we know, the U. S. Government has not designated any other entities which might be facing proceedings. 29, Did SAP damages to Iranian customers for contractual obligations not fulfilled after 2017 or for any contracts that have been terminated Or are such claims by the customers affected against SAP still pending?
Answer, no. Next question. To what Amand, did you form provisions in the annual financials 2020 for the settlement aimed for with the U. S. Authorities?
The provision set up as of the 31 December 2020 within the framework of the investigations regarding embargo to go violations We're nonmaterial from the point of view of the SAP Group as shown in the annex to the consolidated financial statements in Section Z3 and on Page 213 of our integrated report. Is SAP talking to other countries or authorities of other countries regarding sanction violations? No. Do the Supervisory Board and Executive Board see the risk that the customers will not Adopt a cloud strategy to the extent anymore because it is now known that U. S.
Authorities, governmental and non governmental ones might do so as well, Are able to control or check the network used by SAP in the respective cloud services? The answer is no. The next question On the supervisory board will then be answered by Fredericke Roch, and I will be able to catch some breath again. On item number 6 of the agenda, by elections of the Supervisory Board, the question is as follows. What is decisive for the successful work in the Supervisory Board is not only the know how and the competence, but also the question of whether the candidates Can contribute their know how to effectively in their respective tasks, thus representing the values which SAP stands for And thus also securing integrity of the company.
Can you explain to us which special know how and capabilities The Supervisory Board has lost with the departure of Ms. Green and Mr. Alaa Pietila who has been a long term member of the Supervisory Board And also regarding the contents of the change of the articles of associations have to be replaced.
Ms.
Diane Greene contributed expertise in software and cloud For example, from her experience with VMware and her work for Google. Pekka Alla Pietile supported us in many years of service Because of his leading position at Nokia and his function in other bodies of companies, some of them public, and you could give important impulses with his And as a long standing member of the Supervisory Board of SAP SE, he knew SAP and our business very well. Of course, you cannot replace a Member of the supervisory board, 1 to 1. But we believe that the 2 candidates who stand for election today Have excellent technological and entrepreneurial expertise. To replace that of Ms.
Green and Mr. Alaa Pietile with Glu. We could win a software expert and As an IT specialist with a degree with a long career in Famous companies like Yahoo! Microsoft and Baidu in software in the U. S.
And China And Ruben Westphal, who brings in deep knowledge of SAP Business Model and He also has experience in starting up a technology company and can contribute that. And under Item 8 of the agenda, we are proposing a change to the articles. And If your question refers to that, let's say that the purpose of the company is Expanded to include telecommunications activities. This does not mean that the field of activities of the company becomes larger and That the supervisory board will have to have specific telecommunications expertise in the future. Rather the change of the wording is due to the fact that we want to include The cloud area better because many of our cloud products have telecommunications functionality and expertise In the area of cloud technology is already there in our supervisory board.
Next question, Can the Supervisory Board give an example? So, Lew could already bring in his Ample experience in the American and Chinese software industry since he was appointed. Yes, Mr. Lu has been member of the Supervisory Board Since December and since the beginning of this year, he's been member of the China Strategy and Committee of the Advisory Board and here he's been able to bring in his excellent knowledge of the Chinese software industry and the Chinese market and he could give us important Information and expertise regarding the China strategy of SAP. How many of the startups Mr.
Westfall Founded are SAP partners today or were acquired by SAP or are supported by SAPPHIRE Ventures. The start ups founded by Mr. Westphal, none of them was taken over by SAP, None of them is supported by Sapphire Ventures and none of them has the status of an SAP partner. Next question, how do you Plain where executives working more than 40 hours per week surely take the time To effectively monitor or supervise a dynamic company such as SAP, even If the requirement of a mandate on the supervisory board are becoming more and more demanding, Being member of a supervisory board is still envisaged by the lawmakers as Side activity or auxiliary activities. So there is no reason why a person should not have That task or that function in addition to a main job and it's of course always a matter of efficiency and individual workload capacity.
And usually, people in management positions can handle high volumes, high work volumes and organize themselves well. And we can see this When we look at the members of the Supervisory Board of SAP, we also have executive functions with their employers. And because They are personally we can make very high demands on them and they can contribute very efficiently their abilities to the Supervisory Board activities of SAP. Another question is that the Supervisory Board Has checked that the candidates have enough time for the office. And Based on its experience and looking at the increasing demands and requirements for the coming years, please comment.
According to the rules of procedure, there are 4 regular meetings per year, And the members also participate in meetings of the different committees of which they are members and they also attend the Annual General Meeting of Shareholders of PSE. And depending on the situation, there can be extraordinary meetings of the supervisory board or its Committees and for new members of the supervisory board, depending on where they're active or what their activities focus on And depending on their membership on the committees, there might be additional time required for individual onboarding and skill measures, but it is difficult to forecast an exact amount of time required. This depends on the memberships On the committees, and it depends on to what extent there will be extraordinary meetings of the supervisory board, which In turn depends on the business performance or business development or individual business transactions, which require approval or discussion by the So please understand that at the moment, we are unable to give any exact information how much Time members will require for their future work on the supervisory board. If the supervisory board Do the does the supervisory board have any documentation or Proof that the candidates are allowed enough time by their Employers for their offices answer.
There is no requirement to present such evidence, but of course, the supervisory Board takes into consideration the ability of a candidate To fulfill their office on the supervisory board, and we make sure that they have enough time if this is necessary. And Of course, the supervisory board meetings are also held virtually. How does this work when you have different time zones With the Supervisory Board with members in America, Europe and the Far East. Answer, you are Quite right. The coordination of virtual meeting times is a challenge if the members Are at different geographical locations, and they work in different time zones.
This requires a high degree of flexibility of the members of the supervisory board and especially in the current time where we're still Navigating through the corona crisis that some of the supervisory board members need to attend the supervisory board Meeting at a very early or very late time of the day. So at this point, I would like to thank the colleagues for Being prepared to do so. And I'll hand over to Christian Klein for further questions. Yes. Thank you, Frederica.
Have there been connections from financial service to the insolvent company Wirecard? And what opportunities and risks arise Through the bankruptcy of that company. The answer is that the Wirecard AG was no SAP customer. It is no SAP customer. And by the way, at the time, it was the only DAX40 listed company that was not using SAP software.
So From our point of view, there are no risks that arise from the case. On the contrary, we believe that SAP Solutions contribute largely to transparency Companies. And that facilitates supervising and monitoring and auditing processes. Moving on to the next question. Lee, with regard to the development of the business of SAP SE.
SAP advocates fair, transparent and open which continues to exist, but there is no immediate negative effect on the word economy or our business. Are there comparable competitor products To SAP in China or from China and how has their market share changed compared with SAP products? Well, there are a number of Chinese ERP companies, for example, John Chu and Kingdee. John Chu is a partner, And it is a market leader in the Chinese ERP market. According to industry analysts, Chinese companies have been able to expand their market share in the past decade.
But this is also true for SAP, although to a lesser degree, we have been able to increase our market share. In international competition, Chinese ERP vendors play no sizable role. For the financial part of the question, I will hand over to Luka. The next question has to do with financing alternatives. The European Central Bank is currently buying bonds of publicly listed companies.
To what extent Has SAP used this funding option? And how does this option compare with other funding options? Is SAP planning in the next months or years to issue further bonds knowing that the European Central Bank will buy them? It's true that through the engagement of Deutsche Bundesbank, the ECB has participated In such emission programs, for example, as part of the PEP program, the pandemic emergency purchase program 2020, which helps obviously, and it also influences the price of bonds positively. But In the case of larger M and A, external funding is required, but only then.
Otherwise, our investments are funded from our own cash flow. So at the moment, we are not Planning any further admissions. Another number of questions Where we have received similar questions also from Mr. Geberla and another shareholder. So this is a block answer to all of them.
Well, how high is the cost of a virtual AGM compared with a presence AGM? The cost of a physical AGM in 2019 was €2,400,000 The virtual AGM in 2020 Was about €1,000,000 lower. And for 2021, we expect the figure to be similar as last year. Will SAP try to enable hybrid AGMs In the future, so that you can participate online in the future too, the different experience of companies and shareholders in the format of a virtual AGM This year and last year have resulted in intense discussions about the future of AGMs in general. And this concerns the question, example, whether individual elements of individual AGMs or a real interactive online AGM Could be integrated into the concept of a classic AGM, a physical AGM.
Now this political discussion It is ongoing. We are following that discussion, but we don't want to make any statements here. We believe and we are looking forward To be honest, we're looking forward to having another regular AGM In the SAP arena, in Mannheim, a physical AGM. But as in the years before the pandemic, we will, of course, Stream the AGM live on the Internet. We think that AGM could be combined with digital elements, for example, electronic transmission of proxies and Voting by correspondence.
What speaks against such a hybrid form of AGM? The answer, an AGM is an opportunity to present the current situation of the company, but also invites an open exchange of opinions Shareholders, which is very important to the executive and for the supervisory boards of SAP. I can speak for both of them here. And so we think that the classic format of an AGM is better suited than a purely virtual form because Physical presence of the shareholders does make for a more lively exchange. Individual elements of a virtual AGM like the possibility To submit votes in by electronic means or to point proxies could be useful Enhancements, other aspects, for example, asking questions live, however, It offers very little value added for shareholders.
On the other hand, they require a lot of organizational input. The same goes for combining a physical with a real online AGM with interactive elements, for example, a live chat with Shareholders during the AGM. In addition to that, we see the risk that such interactive elements will result in legal uncertainties The next number of questions from this shareholder will be answered by Thomas Sorensik. Thank you, Luka. How often was SAP SE the target of cyber attacks in the past 12 months?
As a global multinational software company, which is active in nearly all business areas today, SAP is With many cyber related incidents and activities, in a digital world, these have become Something normal. On average, SAP registers 31,000,000 attempts to get access to our global network Or to take advantage of it. And €2,300,000 of them are phishing attacks. The security teams of SAP work every day To recognize such hacks and to fend off attacks, and they're always looking for potential threats And how they can be combated. Next question, what do you know about where these attacks come from?
The different types of attack are manifold. It starts with a simple malware, which tries to get access to the system. Then there are phishing campaigns that tries to get log on data And financially motivated or cross border cybercrime. The Since these attacks are anonymous, it's difficult to say where exactly they come from, but our cyber intelligence team is working successfully with partners To identify threats to SAP and its customers and to combat threats. The next question is, Have you ever paid, for example, bitcoins because For ransom as a result of a ransomware attack, we do not give any information about this for security reasons.
How high are the investments to fend off cyber attacks? The 3 digit €1,000,000 amount into the modernization And enhancing of the cyber capabilities and SAP is also investing Continuously into the quality of our defense systems, we use modern threat analysis process is to analyze potential weaknesses. How satisfied are you regarding collaboration With investigating authorities. Of course, we're working closely with partners from the public sector, the intelligence services and All over the world to get relevant and early information about threats to investigate together and also to identify the actors. So far, this collaboration has gone very well.
Another question. In which business areas did you hold patents in the past 12 months and the years before? And where did you apply for new patents? On the 31st December 2020, SAP held a total of 10,900 and 31 valid patents and 897 were granted in the year 2020. 12% of the patents are in the area of analytics, 21% of the patents were Fell into the area of business applications and 67% of the patents were on technology.
Currently, 1900 patents are still in the are still pending. How important is protecting IP in the strategy of SAP? Of course, we always try to protect Intellectual property actively and our innovations serve to strengthen our market position as a leading And that takes care of the questions of our shareholder. And with that, I'll hand back to Frederica.
Thank you, Thomas. The next questions refer to the share of women. First question, composition of the Supervisory Board, the Stock Operations Act sees the 30% ratio as minimum ratio. The Appointments to Federal Bodies Act foresees a ratio of 50% for the appointments to federal bodies. Will you follow this act and increase the ratio until you read 50% here and maintain that?
Well, today, the Supervisory Board of SAP S of today has a share of 44.4% women. Why is there a drop compared to 2019? 2019, the share was 50%. Be that as it may, the SAP is taking the lead when it comes to the composition of the supervisory board Because you exceed the minimum ratio of 30%. So you are a role model for other companies.
Now the first question. This federal act only applies to the appointment of representatives of the German federal states to federal bodies and not to private companies. The SAP ratio of The minimum share of 30% either men or women. Since it's only a minimum ratio, it's not that the share of women exceeds 30% and that is the case because We currently exceed the minimum of 30% because we have a share of 44.4%. And the second answer, It's true that since the 2019 AGM, the share in women was at 50% until December 2020.
With the resignation of Mrs. Green from the civil advisory board and the appointment of Doctor. Lou as her successor in December 2020, the share of women dropped to 44.4%. With that, however, we still exceed the minimum share of at least 30% and quite considerably so. And Even after the election of Doctor.
Lu by today's AGM, we still comply with the requirements. And the question as regards to the setup of the executive board. We welcome that you generally follow the recommendations of the German corporate government code Let me consider diversity and inclusion and particularly consider the share of women. The average share of women in German DAX Companies is still below 15%. At SAP, currently the women's share In the executive board is under 30%, 5 men and 2 women in the executive board, a considerable increase compared to 2018, Back then, 22.2%.
What do you do to maintain this extraordinary situation? The Supervisory Board has set a target figure of At least 2 women in the Executive Board that was set to be achieved by the 13th June 2020. In line with this objective, we have 2 women right now amongst the 7 board members and we aim to maintain this share to also achieve The target let down set down by the Supervisory Board. And now I'd like to hand over to Sabine. So the shareholder had some detailed questions regarding the Women's share in the company.
So, setup of women's in at the executive level. With a share of 27.5 percent in 2020, the women's share, You're close to the 30% you set of sales for 2020. So it's positive to see this and we are happy about that and We are happy that you follow the targets set by the Edge organization. And now the question, which measures have you taken to initiate this Target, in addition to the programs, Women's Professional Growth, Hey Mama, SAP Women Forward and SAP Women in Tech. And now the answer.
In the past years, we've been able to Consistently improve our figures and we're happy about that. And thus, getting closer to our 30% objective. We have made major progress here. We still focus on more visibility of our female managers And we offer a maximum of flexible adapted working model models and HR process without discriminations. We will get an overview on all open management expert positions in critical tech areas via virtual job forum and a direct access to our hiring managers.
To increase visibility, rules such as diverse interview panels help to Overcome Structural Disadvantages. In addition, in all regions, we have introduced tailored Measures to bring role models and overcome gender stereotypes and all Regions focus on initiatives such as the equal share of paid work and care work amongst to all genders. The share of female employees rests at 34%. Why don't you Raise your figure amongst female executives and have it higher than 30%. Well, we looked at The objectives are try to become more ambitious and that is why for 2,030, we have the Objectives of gender parity.
That means that the share of female employees in general as well as the share of Female managers is to reach 50% by 2,030. With the so called early talents, the hiring target even now is at 50%. So that's the target value, 50%. Another question, do you have specific targets to Hire Women for management positions and internal promotions. Well, Especially in those areas where women are underrepresented, we focus on hiring female candidates.
The targets vary depending on the board regions and the regions and also the regional female hiring potential and Accordingly, they vary. 4th question, disclosing the female management levels. The term women in management position refers to the share of female executives amongst the total number of Managers at SAP make the following distinctions: managers, manager managing teams, that Managers, heading a team with at least 1 person. Managers, managing, managers that covers managers who manage other managers and then 3rd, executive board members. So Question, how do you distinguish between the mid and the top management?
Well, our answer in our reporting, we decide or distinguish between manager managing managers and manager managing teams. Another distinction or differentiation Within is something we don't do. The share of women amongst all positions was 23.5% in 2020. What's the percentage share between team managers, female Between team managers where there is 1 staff and MMT Without another team. Well, as a rule, an MMT always manages 1 at least one additional person.
If this position is not occupied currently, that's only temporary situation and is not reported. And the female share of all MMT positions in 2020 was 29%. How do you explain that the share of women in the middle and upper management with 23.5% is considerably smaller Then amongst the team managers with 29%. What's positive here is that the share of women with management responsibility Increased from 2019 to 2020 by 1 percentage point. Our Target is to fill our talent pipeline successively bottom up with female talents and to further develop our female channels.
That's in line with our hiring target of early talents of 50% for women. All our measures focus on promote female channels along the career ledger and That is why we come up with this 29% share of women in MMT roles and 23.5 percent in roles. 5th question, incentives for equal patient. The implementation for the act of equal participation and the development of female channels Is an executive task. How do you guarantee that your mainly male executives take decision free of discrimination?
Our entire human resources team, as well as our diversity responsibilities in the respective areas and regions, I'm in close contact with the executives and inform and monitor to the best of their knowledge Inbar, the regional specificities. So we focus the attention of Our managers in executive calls at all hands. The global Campaign activating men for parity, focus tremendously on conveying knowledge from the business itself. Another question, what incentives do you have to achieve defined women ratio 30% by 2020? Well, the answer here, since the beginning of this year for all board areas, we have set so called people goals.
One share of this people goal is also the increase of the share of women in the company in general and also the share of women in leading positions. These set down goals are part and parcel of the performance management and thus our incentive to achieve these corporate goals. Are there individual target agreements in that context? In the context of performance management, these targets are breaking down to the individual board areas. So as a result, the managers contribute to the corporate goals with a view to diversity 2.
Question, how do you Convence decision makers to work towards this goal and to overcome traditional, sometimes subconscious wave of behavior. Well, across all board members, we observe a strong proactive attitude to actively work on that and to further educate themselves. Our entire HR team and the diversity responsibility Orange loves context with all decision makers. Measures such as the inclusive leadership challenge, Convey knowledge, transport knowledge and motivate also to contribute to achieving these targets. Next question, engineers, women in tech within SAP.
Well, SAP is strong in software development to handle business processes, accounting controlling, sales, procurement, production, Warehousing and HR. So that is why you have to hire engineers as one of the most demand groups of people. And we welcome your initiative SAP Women in Tech. How many female how many engineers do you have in total? How many Female engineers, how many male engineers, how many engineers work in top management, how many female and how many male engineers, How many engineers work in middle management?
How many female and how many male engineers? How many Engineers work as team managers? How many male? How many female? And the answer is now.
In Germany, we have a share of university graduate of more than 80%. Technical courses are most relevant and are still the focus. Since we offer solutions in different businesses, we rely on the know how of our employees in different sectors. We don't report in detailed fetches which graduates or which university degrees have been attended. But generally, we can say that more than 50 percent of employees have a degree in engineering or in computer science.
This also applies to career starters we hired in 2020 and the share of women is in proportion to the overall employee structure. Now, university graduates, 7th question. University graduates are the talent pool of a company. How many engineers, women in tech, Have you hired directly from the university as career starters? How many male, how many female engineers?
In the most relevant board areas, we've hired more than 1500 early talents. Just under 1 third were women. Amongst the new hires of new talents, you have a share of 35.5 Women. Do you have any target regarding the share of women you want to recruit amongst the young talents. And why did this share drop from 37.5% in 2019 to 35.5% in 2020?
Our answers, Our objective is 50% women when it comes to hiring early talents. This drop, I guess it's due to the pandemic related external hires, but also since we focus on critical areas and also the changes in applications due to the pandemic. But of course, we are going to monitor that in detail over the next years. But we'll stick to our objective of 50%. The next questions also refer to our employees.
Jan Steffens asked, how does SAP Explain why they offer an additional holiday to all employees and the answer is, the physical and mental well-being of our employees It is dear to our heart and is central for today's and future business success of SAP. Against the backdrop, SAP invests into the Health and well-being of the employees has been doing this for a long time and is leading in terms of corporate health management. As SAP, we recognize absolutely that 2020 and 2021 have posed major challenges to our employees and that these challenges continue to exist. So that SAPs can address their physical health, SAP Board Decided in addition to the global RUOK campaign for more physical health, decided to offer the Mental Health Day on the 27th April 2021. And The same free day was offered to all.
So this principle was chosen so that the effect of the Global Mental Health Day can be Failed at the following day, because no tasks, no mails will have been received during the 27th. What's important to make Clear one thing, it's not a holiday because that could have been taken any time and would have increased, of course, our provisions in case it be transferred to the next business year. But since many employees Have also taken additional holiday to cover the bridging day. We've been able to reduce our holiday provisions, which wasn't our primary goal, but a positive side effect. SAP hopes with the Mental Health Day and the continuous ROK campaign to contribute to the mental health And the reduction of the productive losses due to health issues would lead to sick days because they Lead to directly high costs.
In our employee surveys, we found higher stress levels in 20 with 1 third of our employees. This shows that we have to take proactive action to avoid An overload and preserve the health of our employees. And the last question for me, Mr. Scheffman also asked how much do 102, 430 102,430 staff multiplied with the daily average cost of SAP. Well, Let's modify the answer.
Total HR expense in the business 2020 was €13,400,000,000 If we assume the average number of FTEs, 101,476, the personnel expense per Staff end year is €132,000 That includes the expenses for share based shares.
Thank you, Sabine. The first question for me to answer is the following. Why are companies such as Salesforce able to operate much more efficiency with less employees? Now That is something I definitely have to correct Mr. Stephens.
I dare say that the SAP employees Are significantly more efficient than the competitor you mentioned. It depends on the criterion that you apply. For me, these are profitability KPIs such as the IFRS operating income. And if you compare this for the 2 companies and if you then break it down onto the individual employees, then The employees of SAP generate an IFRS operating income, which is 9 times higher than that of the competitor. And you would get the same result if you look at the gross margin or the operating margin.
For that reason, I cannot confirm The observation which your question is based upon. Now comes a question from Mr. Stephens on compensation of the Executive Board, and that's something for Fredericke to answer. To what extent does the Executive Board contribute to shouldering the cost of the crisis and what was the justification of the Supervisory Board of Waldorf S. A.
To approve an additional compensation for several executive board members at its meeting in February. The compensation system approved by the shareholders at the AGM 2020 is the basis for all compensation decisions of the supervisory board. For the year 2020, no target adjustments were applied during the year. No short term incentive was paid out for 2020 Because the targets and lower thresholds that had been set early on were not reached due to the COVID-nineteen crisis, The long term incentive is paid out only after 4 years and the amount of the LGI is Influenced by performance criteria and the share price development. As of the 31st December 2020, The ratio of the target parameter for the LTI trends versus the currently calculated theoretical payout amounts Was at 45.5%.
After thorough deliberation, the supervisory board decided To grant an additional compensation to the Executive Board members for last year as an exceptional measure. Now, the Supervisory Board decided to act so because the Executive Board members ensured in these extraordinary times That the company remains on a profitable and proper track, which aims at the long term and sustainable success. Specifically, the executive board members responded immediately to the dynamics and situation And amongst others, ensured through virtual distribution and remote implementations, ensured the Safety and security of employees, partners and customers, while maintaining and continuing business operations. A pandemic crisis staff Was established in order to take the needs and demands of the employees into account. We have just heard about some of them and to make sure that they are all well.
Taking the needs and demands of customers' employees into account also manifests itself in an increase of the customer net promoter Score by 10 points and an increase of the employee engagement index to a new record level. Within this virtually within this fully virtual setting, the executive board even increased the speed of transformation of SAP. The Executive Board did not introduce any short time working. It did not consider any terminations of contracts and it did not use any Governmental aid packages. It ensured profitability.
It generated growth in cloud and software revenues and if applicable also implemented Cost savings, which altogether resulted in an increase of the operating profit of SAP and a free cash flow at a record level of €6,000,000,000 In 2020, SAP exceeded all of the adjusted revenue targets for 2020 And reached even the upper end of its guidance for the operating income, and this in spite of the ongoing COVID-nineteen crisis. Except for the cloud revenues, SAP and final analysis reached all of its forecasts announced in 2020. In 2020, SAP paid out a higher dividend and also completed a share buyback program to the amount of €1,500,000,000 For this reason, the supervisory board considers the additional compensation a positive signal for current and future executive board members And consider this also possibility to strengthen their commitment to SAP and to Secure the long term success of the company. This brings me to the next question. And for this, I hand back to Luca again.
Thank you. And this takes us to the exciting area of taxes and sports sponsoring. I mean, they're not directly related, But nevertheless, I will answer both of them. Taxes first. How much corporate tax did SAP SE pay in 2020?
Now the answer is as follows. In Germany, SAP SE has an unlimited tax liability and therefore pays corporate tax and a solidarity So it's hard in Germany and also respective trade tax in some municipalities. This can be tax advances for the current year and or tax Arrears for the previous years. Furthermore, SAP SE has a limited tax liability in various Other countries and with its respective revenues is subject to the respective withholding tax deduction. This also shows that the topic of taxes is very multifaceted and that individual statements on individual tax items in certain taxable periods It's not really meaningful.
The current tax expenses, which were determined in accordance with the legal stipulations, amounts €770,000,000 for SAP SE in fiscal year 2020. This includes a balance of all cash inflows and outflows, which are cash effective In the past fiscal year and or in future ones, information on income tax paid How high were the expenditures for sports spending in the fiscal year and how did they distribute onto the individual sports? How long are the contractual obligations? In the year 2020, total expenditures amounted to about €80,000,000 and the main items were Soccer, that is European football, euros 13,000,000 Hockey, euros 11,000,000 Basketball, euros 9,000,000 Sports arenas, also €9,000,000 And then next, We have equestrian, sports and then small amounts for various other sports. And I think I do not need to read out all of these small amounts to you.
We've got several active contracts, The term of which varies between 1 to 10 years. And for obvious reasons, especially confidentiality towards our contractual We cannot disclose any further details on these contracts. How high are the expenditures for TSC 1899, Hoffenheim and FC Bayern Munchen? The sponsoring expenditures for soccer in the year 2020, as I said, amounted to approximately €13,000,000 This also Includes our sponsoring expenses for TSC, Haufenheim and FC Bayern Munchen, But the rest, as before, is subject to confidentiality. Who decides to which extent sports Are supported or sponsored?
Well, there is a dedicated team which develops the respective proposals, but in the final analysis, It is the Executive Board which decides on every single measure. Last but not least, what's the benefit of these sponsoring activities? Or how Are there impacts onto corporate success measured? As with all marketing activities, it is very difficult To measure the specific success of individual measures and to quantify it. However, sponsoring is an important element of our overall marketing strategy, Amongst others in the areas of product marketing and events, in branding or brand marketing, but also when it comes to positioning SAP As an attractive employer and so on.
Of course, all of these activities are afterwards analyzed, for example, Regarding the reach of the respective measures, how many additional visits were thus generated for our websites and so on and so forth. And it's obvious that the sponsoring market is still a highly attractive one, which also manifests itself in Some recent agreements our competitors concluded and in some cases these were even Much smaller companies which dedicated a very high volume to these activities. Then our shareholder Norbert Loos had a question on item number 5 of the agenda. What are the expenditures for the group's auditor? Now we disclosed this in the consolidated notes in Annex G7 and for the year 2020, the overall Fee amounted to €14,000,000 €12,000,000 of which were audit fees and €2,000,000 were so called audit related fees.
Then our shareholder, Istvan Salle, had the following questions. Number 1, which Targets did SAP set itself in terms of carbon neutrality and to what extent is this also promoted by the Executive Board? Well, we already Stated that by the end of the year 2023, we want to be carbon neutral in our own operations, which is 2 years earlier Then what we had initially aimed for. And for SAP, this applies to all direct, indirect emissions and also to selected Emissions from the supply chain, for example, such which are caused by business trips, by airplane Or by rental cars or by data centers of 3rd party vendors. SAP's the SAP Executive Board supports this goal As what common goal and each board member is called upon to reduce the CO2 emissions in their respective divisions And the annual CO2 reduction targets, as we've already indicated to you, are part of the criteria For the short term executive board compensation.
Next question, are there any takeover offers of foreign investors for SAP? No, that's not the case. This brings us to further questions by Mr. Michael Ruoff. First question, now our SAP actually should be at the forefront Of IT management of shareholders and their invitations to the AGM.
Then why did I get 3 invitations to the AGM by mail? Wouldn't that be possible with 1 shareholder account, which includes all of the shareholders of this shareholder Which is also the basis for the electronic invitation to the AGM for the shares registered there. This time I had to log on 3 times And then vote three times. Well, it can't be any more cumbersome. Is SAP going to change this?
And then next question, it seems that SAP Has retained the DZ Bank AG to handle invitations and dispatch the voting cards, but is DZ Bank doing this really on themselves? Well, the center of the voting cards is Deutsche Werther Peer Service Bank AG, which is already the 2nd intermediary And the Internet portal is then operated by Computershare Deutsche GmbH Co, which is probably the only professional service provider in this regard. Next question. What Are the fees or commissions which the banks, the DSAT Bank and DWS Bank Receives, can this be handled more easily out of one stop? And certainly then also the post dispatch time could be reduced.
And then we will get the invitations on May 2, which is only 3 days before closing. Well, I fully understand your question and this is really a hot topic, but you've got to realize that it is the share class Which determines this procedure. SAP shares are not registered shares, but bearer shares and thus we do not personally know The SAP shareholders and for that reason, we can only reach out to them via the custodian bank. Now about 50% of the DAX companies have issued registered shares and 50% have issued bearer shares such as SAP. And your custodian bank is in charge of sending out the invitation and the registration documents.
Therefore, it is your custodian bank which decides Whether it offers you the possibility of an electronic or analog registration and at that time you receive the documents. If you then have several share portfolios or even portfolios With several institutes, then it is normal that the invitation and voting cards are sent to you several times because with registered With bearer shares, there is no central share register. SAP reviews the share class at regular intervals And has several times already considered whether a change would result in improvements in the process or in transparency. However, changing the share class would require a resolution by the AGM and would also trigger a long term project. Now the chain of intermediaries you noted in your second question is also due to the share class.
The Estonian Banks charge SAP for sending out the invitations and registration documents. No commissions are paid and the cost volume for dispatch of the documents in the year 2020 amounted to 500 €1,000 However, by switching to electronic invitations and by not printing any documents anymore, we this year Expect the cost for the dispatch of the invitations to be significantly lower. And Frederica will now take the next question. Now these are several questions about the formal approval of the acts of this Executive and Supervisory Board. Now My question is why did the supervisory board not decide on the individual formal approval of the Executive board members and supervisory board members, which is customary at various other German listed companies and even on an international scale.
Now this collective approval approach rather fits with the new political collective socialism and not with a modern democratic Service Society. If you have looked at the individual targets in the compensation system and The respective compensation of the executive board members. Then of course, every shareholder also would like to assess for themselves how they Consider the performance of the individual executive board members and also supervisory board members. Mr. Chairman, I call upon you To have individual approval of the acts of the persons under items 23 of the agenda.
And if you Refuse to do so today, then think about this for the future and give us shareholders the possibility to individually assess the performance of the executive and Supervisory Board members. No shareholder does have to do so, but some would like to do that. Now we received a question by Mr. Rufe, why under items 23, we have a collective approval of the act Of management, probably the question relates rather to items 3 and 4, whereas other companies decided to have Individual ratification of the Act and Mr. Rufe called upon us also to switch to individual ratification.
Let me answer as follows. According to the Stock Corporation Act, the standard is collective ratification, whereas individual ratification is the exemption. Now in our view, for that reason, apart from SAP, numerous other well known companies also adopt collective Ratification. Individual ratification is recommended especially in those areas where individual executive board members and Advisory Board members are exposed in a particular manner. However, we cannot see this for our company neither for the past year nor otherwise.
We believe We still believe that collective ratification is still appropriate and we also want to retain this mode for today, especially As many shareholders have already cast their vote before today's virtual AGM in this manner. Of course, for next year, we will also Consider whether there are any reasons to have the individual ratification of the act of management of the supervisory And Executive Board members. Thus Mr. Rolf's questions have been answered, And we now continue with the questions of another shareholder. The question is as follows.
Here, I'd like to draw your attention to the following mistake. The following the section on motions, election proposals by shareholders reads as follows: In accordance with the statutory provisions, all motions and the election proposals relating to the items on the above agenda received by us in due form by April 27, 2021, 24 hour CEES T will be made available and marked with a letter. If you wish to vote on such shareholder motions, election proposals, Please cast your vote below under the respective motion election proposal or give corresponding instructions In each case, in the event that a vote is taken, if you do not tick any of the boxes, you will be deemed to have Abstain. Is that correct? That was the question.
And here comes the answer. This question relates to a note on our shareholder portal. If shareholders there select the option exercise voting rights by postal vote, then an input screen appears With the individual agenda items and the option to click yes, no or abstain behind each individual agenda item. Below this Is the note quoted by the shareholder to voting on motions and election proposals by shareholders? This note is correct.
It means that the electronic voting option in the shareholder portal would have been supplemented by a corresponding voting item In the event of a counter motion or election proposal submitted properly. However, we did not receive any counter motions Or election proposals from shareholders. For that reason, it was not necessary to supplement the input And we continue with the next question, and I hand over to Christian.
Thank you, Frederica. The question is after EU sanctions were imposed on China, Fashion chains were boycotted. What if SAP got dragged into similar conflicts And what plans exist to avoid damage? Answer, SAP always advocates human rights and Fair to Central Trade. So we will watch any possible touch points with our business and Possible violations of our principles.
The next shareholder has questions about the technology. Therefore, the answers will be given by Thomas Thoressig. What's your strategy to map and process business processes with cryptocurrencies? And in which applications are you planning or have you implemented using blockchain technology? SAP Has looked into blockchain technology and cryptocurrencies for some years, but non regulated Currencies just such as bitcoins, as an example of a blockchain application, are not Operational currencies, some Applications can, however, use cryptocurrencies.
Of course, we are monitoring the development, and We're always ready to implement the corresponding functions in our applications If such currencies are introduced and we're using blockchain, for example, in digitalized Supply chains, for example, information collaboration, Hunt for Life Sciences, maps, Real time check of pharmaceutical products via blockchain and the SAP Logistics Business network allows blockchain based tracing along a complex supply chain and across company Borders. Another technical question from the shareholder, Salai. What does SAP do to build up Artificial intelligence and can SAP Alleviate the burden or facilitate automotive production, how much are you investing? SAP offers customers, partners and the SAP development team a growing offering of so called AI services, Services around artificial intelligence through its business technology platform, and we want to embed these functions into our standard Business applications and provide specific services via interfaces for certain business context. We are not generally competing with General AI Services and AI Platforms as are provided by hyperscalers.
Our AI Technologies Are directed at SAP Solutions and the business processes of our customers. For example, in the automotive industry, People use the information, the semantics of the data To cover artificial intelligence applications. So of course, SAP is investing in the development of such services along the whole development process Across the whole product portfolio. So artificial intelligence is an integral part of our product development. Another Large question from a shareholder.
What will SAP do In the not too distant future to bring its product quality in line with its price policy, We cannot accept a situation where With the patches of SAP accounting software, errors are delivered, and they result in Wrong statements and tax reports. And this is it's very embarrassing that these Glitches are fixed later on by patches. So a brand product which is not exactly Cheap should offer more quality. And last year, your answer to my question That you thought that the pricing policy of SAP is appropriate. Answer, with the accelerated Moving to the cloud, quality is becoming an even more important dimension in evaluating vendors of corporate software And therefore, successful quality management at SAP is important, and we are constantly working On improving our product quality, and this is reflected in the Net Promoter Score of our customers, Which has increased by 10 points.
We're also reacting swiftly to any legal or tax changes and we've shown that especially in the pandemic period. For example, during the 1st 50 days of the pandemic, More than 80 legal changes were implemented. And it's true that in the case you're referring to, we did have to Provide a correction, but it is a very complex subject because there are many legal changes, especially in Payroll accounting, and often these have to be implemented at very short notice. Of course, we're prepared And happy to discuss this topic in detail with you. The payroll accounting is certainly one of SAP's products Where most adaptations or changes are provided due to legal changes.
And as I said, Many additional legal changes were caused by the COVID-nineteen situation, and all that Had to be provided as part of the existing maintenance model, but let me assure you that quality is an absolute foundation of our business, And we are really focused on it. And with that, I'll hand over to Sabine for further questions. Thank you. First of all, hello, there was a question about the share of people working in Germany. The answer is that at the end of last year, 31 December 2020, The employees working in Germany were 22,944.
Expressed in FTEs and full time Employees, this was 22,182 or 21.7 Then there were questions About our pay structure, and while I'm answering these questions, Mr. Gebla I had the same question, so I'm responding to his question too. The question was what is the pay structure outside the Executive Board, Total pay, including all bonuses and LTI, number of persons in excess of €120,000 €250,000 €50,000 €1,000,000 annual salary. How many people in each case? Based on the target pay on full time basis, including long term incentive for 2021, The distribution outside the executive board is as follows: 27.2% of staff earn more than €120,000 4.5% of employees earn more than €250,000 0.4% of staff And more than €500,000 and 0.1 percent of our employees earn more than €1,000,000 The second question was how many People in Germany have a gross annual salary of more than €120,000 250,000 And €500,000 and how have these rates developed compared with last year?
Answer, The salary structure outside the board based on target Pay on a full time basis, including long term incentive is distributed as follows: 32%, more than €120,000 1.4% More than €250,000 0.2 percent of staff, more than €500,000 3%, more than €1,000,000 And the year before, 30% of staff, more than €120,000 1.3 Percent, slight reduction here, less than this year, more than €250,000 0.2 percent of Staff members more than €500,000 and 0.03 percent of our employees earn more than €1,000,000 So This takes care of this question and I'll hand back to Luca. Thank you, Sabine. Now we come to a Very long catalog of questions from 1 shareholder, Matthias Geberla. The total were 85 questions, But some of them have already been answered before. So let's take care of the delta then.
The question is left. How long will the virtual ATM probably take? Well, we did have to take a little more time for the questions because more than last year came in this year. How long it is going to take is, of course, guesswork. But since it's now a little after 3 in Germany, I hope that we will maybe finish by 4 o'clock No guarantees.
And secondly, how do you sort the questions? By shareholders, for example, Answer mainly by shareholders, but also sorted according to topics. How many participants at the beginning of the virtual AGM at the end of the CEO's speech at the time of answering the questions and as a maximum at the beginning of Virtual AGM, 1176 at the end of the CEO address 3,514. Currently, we have 4,949 participants online and this is Also the maximum at what time did you receive the last questions? This was Monday, May 10, 1930.
And how many questions Were submitted outside the shareholder portal, none because all of them were submitted through the portal. How high was the how much time did it take to Answer the questions in previous years, the time to answer the questions was from opening the shareholder portal on the 21st April Up until May 12, how many internal and external staff members were working on this? About 20 colleagues processed these questions at different intensities. We did not Trace the time exactly. All answers came from internal sources.
There was no external support for the 2020 AGM. It was the same. And then the question, what external lawyers from what firms We're involved in 2021 2020. I answered Doctor. Claus of van der Linden Of linked latest, Dusseldorf helped us regarding legal questions in the context of the AGM of SAP SE.
Prior to this year's AGM, we did coordinate and discuss the answers to some of the shareholder questions with him. Will you stream or will you make the full AGM On the Internet, like BAG and not just until the CEO address, We will stream the whole meeting, but the recording will Go up to the question that answers. Why was there no opportunity to ask questions As is the case, for example, with Beiersdorf AG or Deutsche Bank. And so we are aware that the rights of shareholders During a virtual AGM, especially the right to contribute and ask questions are limited. And in order to Allow more interaction among shareholders, we've decided to give the possibility to shareholders To submit video messages through the shareholder portal where they can make their statements, the video messages that we received shareholders were made available on the shareholder portal, and all registered shareholders could watch them.
And this is more than the law requires. However, We did not provide the possibility to shareholders to ask add on follow-up questions During the virtual AGM, the law provides that questions can be asked Up until one day before the AGM, so we did not deem an additional possibility to submit questions, additional questions Unnecessary. On the other hand, this requires a lot of organizational input, and answering many questions during the virtual AGM would have required A similarly large number of staff to be busy in the physical back office as is would be the case With a physical AGM, but under the current pandemic conditions where most staff of SAP is working from home, this wouldn't have been possible. On the other hand, in a virtual back office, the coordination of answering questions among staff members in a very short time during a live event Would have been very difficult. So these were reasons that made us decide that To go for this balanced approach, as I think.
Did you have problems Preparing or processing jobs or projects because of corona? No. We did not have any additional or any significant difficulties or additional Burdens, we responded quickly to the corona pandemic, and we focused, of course, on customers, Staff and the company, and we had a virtual sales and remote implementation strategy so that many Of our staff was working from home and to give customers good service. And with that, I'll hand over to Sabine again. Mr.
Gabriel, you wanted to know is there short time work at locations or have locations been closed No, there is no short time working and no locations have been closed. Of course, like all others, There were certain measures because of the pandemic restricting access to individual buildings, but Since staff members can work from home or from another office building, this is not the same as Closing a location temporarily, and it cannot be compared to that. The next question was, are you providing additional Funds to top up the short time work pay, the answer is no. But Are you providing extra money for higher income classes? Or how is that So organized, well, the answer was we do not pay any extra money.
So there is no Prorating, there is no distribution. How did you act in other countries? And is there a similar strategy? And answer, SAP did not use get any state support. Can we expect that the staff number to be decreased as a result of a pandemic?
And if so, Where and how many? At the moment, we do not expect our payroll to be reduced as a result of a COVID pandemic. How high was the fluctuation of the group in the current year and the previous year in Germany, in Europe, in Asia and America, including South America. No surprise the fluctuation went down a little bit. The figures are That is people leaving the company.
The rate was 1.1% Germany, in 2020, in 2019, 1.5%. In EMEA, it was 3.2%. In 2019, it was 4.5% in APJ, that is Asia Pacific Japan at 6.4% compared with 9.3% in 2019 and in the Americas, North and Latin America, 5.3% Compared with 7.6% the year before. That decrease is due to more It's due to the COVID situation and fewer people leaving. How As fluctuation developed in Germany in terms of voluntary levers and also people leaving because of Because they're pensioned.
The voluntary levers is 1.1% in Germany in the current year Compared with 1.2% in 2019, the natural attrition of fluctuation because people are pensioned in 2020 It was very low because of a restructuring program in 2019 where people had the option to Participate in part time retirement and the Levers due to 8% in full time equivalents was 8.70% in 2020, 3.8% compared with 168.8% in And with that, we continue with Luca and financial questions.
Thank you, Sabine. Taxes, again, how many taxes has the company and they're all internal or local Corporate companies paid in Germany and how does it this figure is distributed according to the 5 biggest tax Types. Well, in total, we've paid EUR740,000,000 that includes reimbursements for previous years, not included are deductions, which we've transferred to the finance authority. Here, VAT has the highest share, followed by COVID income tax plus the solidarity surcharge, trade tax, the employee share, the salary Tax and car tax. Due to the consolidation of the internal water companies, we can't specify the figures further.
Another figure. What's the share of the employees In terms of tax, social and pension contributions, well, the SAP has paid Salary tax in the amount of €572,500,000 for SAP SE Germany and for the Other employees of SAP Companies, NOK 206,900,000. This tax was paid by the employees. The employee share in the social securities contribution Was it €280,200,000 for SAP S E and for the SAP Group €68,600,000 What are profit and loss transfer agreements? Were the profits completely booked or which part was left at the daughter companies?
With all profit and loss transfer agreements, the complete profit was transferred. Next question is as far as applicable, For which companies did you have accept losses? What were the reasons for there and what do we do to transfer the companies to the profit zones? Well, in the context of profit and loss transfer agreement, the company has accepted losses from These companies, well, they are investment companies basically or where we have a share. The losses are mainly due to operative expenses, which were not offset by revenues.
We expect, however, that the companies will develop positively in the short to mid term and will generate profit over the next years. Next, do you expect problems with refinancing requirements? No, SAP has Solid rating, stable single A rating at S and P and a stable HU rating With Moody's strong free cash flow in 2020, we've proven that we're strong here and We can definitely use the cash we have for any operative expenses, but Also fulfill any finance liabilities, so no cause for concerns. Next question, to what extent have you been able to adapt your costs due to the crisis? Well, Last year, in particular, we saved in the field of business trips more than €600,000,000 versus budget.
And in addition, We had savings because we temporarily closed SAP sites and we had less The expenditure in our car fleet that led to lower repair and fuel costs. And in addition, We have to underpin that the company that the employees voluntarily contributed in forms of further savings, IT Hardware for instance, because they followed our request for a considerate order behavior that was excellent. And as board, We are really grateful. So these and other effects meant that SAP in total Have been able to save more than €1,000,000,000 against the originally planned budget. Next question, have you shortened or postponed investment?
Well, CapEx to invest in fiscal 2020 are almost identical with the ones in previous year, EUR 860,000,000 so Against €870,000,000 in 2019. You have to consider however that despite the growth of SAP The strategic orientation towards hyperscale led to lower investment in IT hardware and due to the global pandemic Investment in fleet, end user equipment and office area were postponed. Next question, what financial losses do you expect due to the ongoing COVID crisis? Well, Once again, in the field of our Concur travel business software, we still expect in the rest of 2021 to have further drops in revenues or at least no strong increase due to the lockdown still exist. Apart from that, across the entire Remaining of the portfolio, we see strong growth above all when it comes to Incoming payments, we don't expect any negative impacts.
So did you use any corona support programs by the state? We did not. Due to the crisis, did you impact existing credit Facilities, no, we complied with all the financial liabilities, reduced them according to plan for and For 2021, we don't have to pay back anything according to plan. So which bank do you have credit facilities and which conditions? Well, in addition to our revolving credit facility, RCF, in the amount of EUR 2,500,000,000 with our core banks.
In 2020, we had additional bilateral credit lines in the amount of €433,000,000 The SAP core banks include amongst others Deutsche Bank, JPMorgan, HSBC, BBVA, Societe Generale and Citibank. The agreed conditions are competitive and are regularly monitored. The use of bilateral lines as well as our RCF We're not required due to our liquidity. Have you paid negative interest to what amount and what have you done to write those? And please give the names.
We Can avoid negative interest for the double digit million investment we have. However, with the short term investment, we have to pay negative investment. We try to avoid and reduce those. But to limit the exposure risk, I mean, risk management is our Strictest objective here, we follow a strict guideline that stipulates a minimum rating for the PENX and also a maximum investment volume. So in 2019 2020, we paid a Single digit million volume, please let add that our commercial paper financing Also led to negative interest in our interest, so that we have partly offset the negative interest.
In addition, with our core banks, we also invest in The spot market front of Morgan Stanley Asset Management and BlackRock. Now some HR question back to Sabine. Mr. Gable, you asked how many people worked From home, prior to the start of the pandemic, well, we also we always offer a high level of flexibility. So that is something we haven't measured so far.
So we have We have had a high level of flexibility. So how many people work from home right now in Germany? Well, considerably more than 90% of our employees were working from home right now. So do you live up to the regulations to allow for maximum work from home. Well, we live up to the legislation because we offer an extreme level of flexibility.
How many costs could you save after overcoming the COVID crisis if only 10% of the working hours would be work from home. Well, even prior to the global pandemic, hybrid working model was part of the everyday life at SAP. So Globally, at least 10% of employees work from home or remote on average. So that is why we don't expect A direct savings if we talk about Home Office level of 10%. So how many employee of the to mother company, German companies and foreign companies have suffered from corona.
Were there any death cases? And have you offered financial support to the remaining families? And how many working days were lost due to quarantine? And were some areas Not covered. Well, first of all, health and safety of our employee take first priority, in particular since the beginning of the COVID pandemic and we respect and protect the private fear of our employee.
And that of course includes health data as well. So we don't communicate any figures like people with COVID or positive cases, even in particular because in many countries, The employees are not obliged to inform the employer. So We have specific regulations when it comes to support for remaining families, surviving families. And we don't distinguish between the type of illness that led to E. J.
F. Basically, all employees has been instructed to work from home as far as possible. In addition, the employee the employer Does not know about the type of illness, so we can't provide you with any information regarding warrantine times. So for inspection protection reason, of course, we've issued access restriction for individual buildings. But since the employees couldn't work from home or from other offices, this is not the shutdown of A operating site compared to a producing company.
And with that, I'd like to hand over to Christian Klein because there are more strategic questions. Thank you, Sabine. So question, what is it the Executive Board and the Advisory Board want to do better in 2021. Well, as regards to the Executive Board, We set ourselves ambitious targets for 2021. Our guidance 2021 Well has been covered several times during this AGM.
We're quite confident that we will achieve these targets, thus Laying a solid basis for achieving our midterm targets by 2021. As regards to the Supervisory Board, I'd like to hand over to Frederic Roch. Well, as regards the task of the Supervisory Board, I cover that when I answer the Union Investments question. In 2021, we want to continue our redesign of the supervisory board. Should the AGM approve Doctor.
Chi Lu and Doctor. Rune Westphal's nominations, we'll have to further independent members in the Supervisory Board and also in the committees. The Supervisory Board will convene Soon after the AGM to also modify the composition of the committees and here the strengthening of the independence of the committees will play a major role. Back to Christian. Thank you, Frederica.
So next question. Apart from the COVID-nineteen crisis, what will be the major childhood for 2021? Well, as I've explained in my presentation, we see light at the end of the tunnel as regards the COVID-nineteen. So I would no longer like to talk about risks, but more about opportunities and chances here. Near quite clearly the transformation of our core business into the cloud.
Which specific software do you use for the executive board meetings and the supervisor board meetings and how to guarantee Privacy and security so that important data cannot be transferred to external servers. For our board meetings, we use Microsoft Teams and Zoom. And for the exchange of the documents, our in house application for the display of relevant finance customer and personnel data analysts. For the reports of finance figures, we use our digital boardroom. The security and privacy is guaranteed by the use of the relevant security and encryption standards as well as an additional identity check of all the participants.
The conference solutions used are regularly checked to make sure that they comply with safety standards. For the exchange of Confidential documents we use our own SAP solution. With this solution, all data are stored on servers of our own computer centers. Users only get access via multi factor authentication. How many legal issues do you have right now with customers?
SAP has 100 of 1000 of customers in more than 180 countries. And of course, it might happen The litigation arises linked to product services, functionalities or software, even though We're always willing to conclude them swiftly. This can also include smaller non court Discussions in those countries where SAP is active, we don't have a comprehensive statistics. Our litigation team That works on global litigation teams. Well, they only centrally handle the most important litigation typically.
So right now, we have 10 open cases. Next question. How many SAP launch projects at customers We're not completed in time in 2020 and 2019, on budget And not in time. What about the problems? Are there any geographic or sector related repetitive Casey.
Since the majority the tremendous majority of SAP launches will be carried out by implementation partners. I can't give you a full answer. However, as regards our own consulting business, we've been able to maintain the high level of quality of previous years. Despite the pandemic related transition to a virtual model, there were no observable quality problems. And as you've heard.
Customer satisfaction has significantly improved.
For the next questions, I would like to hand over to Luca again. Thanks, Christian. The next question is, which realistic risks Do currently still exist which might impact our share price? Well, basically it's the risks which We have also already covered in the respective risks section in our integrated report 2020, which is mainly Macroeconomic and Industry Specific Developments, but also internal risks in our company such as Fluctuations in order intake or revenues or profit and cash flow development outside of our expectations. What is the current forecast for sales and profit for the current fiscal year?
Due to the strong development in the cloud new business, we have increased Our outlook on 13th April for the full year 2021. And here, we assume the revenues from our software license business will continue to decline As more customers go for the subscription offering rise with SAP. Furthermore, in this outlook, we also expect That COVID-nineteen increases will gradually decrease due to global progress in vaccination, which means that global demand will further improve in the second half of the year. For fiscal year 2021, we now expect cloud revenues, non IFRS currency adjusted in a range between €9,200,000,000 €9,500,000,000 Which is equivalent to a currency adjusted growth rate of 14% to 18%. Cloud and software revenues, also non IFRS, currency adjusted in a range between 23.4 And €23,800,000,000 which is corresponds to a currency adjusted growth rate of 1% to 2%.
The operating income non IFRS currency adjusted in a range between €7,800,000,000 €8,200,000,000 which is equivalent To a currency adjusted decrease from minus 1% to minus 6% and last but not least, the share of better plannable revenues Defined as the total of cloud revenues and software support revenues is to reach a share of about 75% of total revenues. Next question. What is the current level of non operating capital at the company and the group as a whole? And only if applicable, how many pieces of Alden similar assets With what total value does the company and its German group companies possess, which undoubtedly must be non operating? Now our assets mainly include goodwill intangible assets, tangible assets mainly consisting of Property and buildings and our IT infrastructure, receivable trade receivables as well as cash.
And we need all of these It's definitely for operation of our business and we do not have any non operating capital In the overall capital of the SAP Group, the SAP collection of arts comprises a total of 2,000 pieces of art. Most are located And these are handed out on a temporary basis to Other locations regularly and the total value of the collection is estimated to be in the low single digit €1,000,000 amount. What is your investment plan for the next 5 years? And how do you distribute the investments into the traditional business areas and opening up new business areas? Answering, in order to support the accelerated transformation of our customers into the cloud, we're planning significant investments in research and development in the next 5 years As well as into the accelerated harmonization of the SAP infrastructure for cloud operation.
And we will also have an additional investment in the middle 3 digit €1,000,000 area for the years 2021 2022. In addition, in the other functional areas, we will invest in accordance with the group growth and in accordance with our strategic initiatives. Our investment applies to traditional business areas and also on to opening up new business areas. Regarding the traditional This is Erbis. We invest on the one hand into a better integration of our existing product portfolios and into the accelerated harmonization of our cloud infrastructure.
On the other hand, We also invest in new functionalities and into the performance of our existing products. Regarding new business areas, We refer to our strategic initiatives such as Business Process Intelligence, Industry Cloud, Business Networks and RISE with SAP, For which a significant share of the total investment volume has been earmarked for the next couple of years. Then was another question only if applicable, Which relates to the number and purchase costs of potential Wirecard shares In the books of our company, well, we don't need to answer that question because we do not have any Wirecard shares in our books, neither did we ever have them in our books. Next question, which consequences were drawn within the executive board and Supervisory Board after the Wirecard disaster regarding the selection of the auditor or which ones were considered. Now on the one hand, of course, The audit committee in 2020 also received comprehensive information on the activities of the audit and the quality of the audit.
The review of the quality The review of the quality of the auditor included regular reporting of the auditor on its quality management The system as well as key findings which resulted from internal quality audits, external quality inspections as part of so called peer review and also from Inspections carried out by regulators and supervisory bodies. Furthermore, we had one meeting of the audit committee also The positive impacts of the Wirecard scandal onto the external audit and corporate governance. Furthermore, the audit committee also dealt with the impacts of The act to strengthen the financial market integrity which is a direct consequence of the Wirecard situation. Next question. Can you rule out Phantom revenues in the company and how specifically is that insured?
The answer is as follows. The integrated report of SAP says that the orderliness of the posting of revenues It's ensured through stringent internal accounting guidelines and policies. Furthermore, we have established numerous internal controls in the area Of revenue recognition in order to ensure that we comply with these legislation In recognizing sales revenues and SAP of course is subject to the U. S. SEC requirements which are very stringent and which we have been For many years, recognition of revenues from software license represents An important focus area of the audit of our auditor, not only as part of the year end audit, but also during a quarterly Review of selected contracts.
Next question. How has the equity ratio developed in the last 24 months In the individual months and in which 3 months did you have the lowest level? For our internal management, we only identify equity ratio On a quarterly basis, because we do not expect any essential fluctuations on a monthly basis, which was confirmed in the last couple of months and years, This also manifests itself in the development of the last 24 months. Equity ratio in 2019 2020 was always in a stable level Between 58% to 51% of the overall equity. And in the Q1 'twenty one, equity ratio was similar Was on a similar level to the previous year's namely at 52%.
Next question. Are there any letters of comfort For or by the company? If so, to what extent and towards whom? And it was also said that in the list Of shareholders with footnote 16, the companies are identified for which SAP has issued letters of comfort. The extent can vary and usually during the term, SAP commits itself to Equip the respective subsidiaries financially in such a manner that at any point in time it is able To meet its liabilities to existing and future ones towards the contractual partners in due time.
Next question, to what extent Our assets of the company pledged as securities for loans are how high is the total of uncollateralized assets. The good news is we have Not pledged any assets of the company as part of credit loans or loans, Which manifests itself in negative clauses or so called negative pledges in our contracts. Were there any impairment tests Which resulted in a write down requirement in the reporting year or in the course of the year 2021. If so, to what extent in the Polling year 2020, there were no significant extraordinary write downs. As a response to the COVID-twenty 19 pandemic, We have especially reviewed the goodwill and the intangible assets on a quantitative and quantitative basis at regular intervals as to The need for an impairment, the regulatory impairment test which was performed in the year 2020 was appreciated also by the auditor during the year end audit in With the accelerated harmonization of the SAP infrastructure for cloud operation, in the Q1 of 2021, we took an extraordinary Impairment of €150,000,000 for tangible assets as restructuring expenditures.
Next question. What was your biggest damage in the reporting year 'twenty in the reporting year and was it fully covered by the insurance? Now if I understand The question properly then you're referring to insurance damage. And I can tell you that in the reporting year, no significant insurance damage occurred. Next question.
What are the following data for the companies listed in the list of shareholdings of The parent company in India. A, revenues in euro and change a percent over previous year. B, profit in euros before profit transfer And change in percent over the previous year. See number of respective employees and change in percent compared to previous year. D, total equity in euros and change in percent Over the previous year end, which respective measures did the Executive Board and the Supervisory Board take If there were any negative deviations on A to D, the answer is as follows.
In the Section G9 in our Consolidated notes, you will find the shareholding list for the biggest consolidated companies. This includes the numbers you're asking for regarding revenues, Profit numbers of employees and also the equity of per company. Our 3 strongest companies in terms of revenues and also 1 of the 3 companies causing a deficit are included in that list. The shareholding list Of the year 2020 and of the year 2019 include the numbers of the reporting year and also of the previous year. The 2 Other ones of the 3 highest deficit companies in 2020 were Calidus Software Inc.
And SAP Ventures TMBH, their loss after taxes amounted to approximately €50,000,000 in 2020 and has changed Hardly changed compared to the previous year. Your question number E, the internal reporting at SAP About individual companies insured through an automated dashboard. This dashboard shows the most important KPIs and Provides transparency over relevant KPIs such as operating profit, operating margin, shareholders' equity, debt equity ratio and it also allows for viewing of data, analyzing deviations and making them available to the respective decision makers if required So that they can take appropriate measures. So here we have really a very tight monitoring system, which also allows us To initiate measures if that is required. Next question.
Which amount was set as the materiality threshold, As a quantitative materiality threshold for the auditor annual financial statements as a whole and at what percent Was the de minimis posting level set and which changes did these two values see compared to the previous year? Our Auditor determines the quantitative materiality threshold based on the percentage of our operating income And this doesn't include one off effects such as restructuring efforts. This percentage in 2020 amounted to about 20 Percent, which was unchanged over the previous year. And for the audit of the individual annual financial statements of SAP SE, It was about 5% of the adjusted corresponding pretax profit. The deminiminist posting level in the year 2020, as in the previous year, was at 75% of the materiality as a whole.
For the audit of transactions with related persons In the SEDAR compensation report, now for here lower materiality thresholds were applied. How high were the costs For the payment office for the dividend in 2020, now our payment office in the past fiscal year received A conversation in the 5 digit range. Please understand that to protect our business relationships with that bank, we do not want to disclose any further details. What was The strangest litigation in 2020 and what was it about? Well, all litigations we are involved in are taken very seriously by us and We apply the utmost diligence to maintain the interests of SAP.
And for that reason, our None of the litigations that we have deserves the adjective curious or strange. How many subsidiaries are located in so called tax havens, which means they are somewhat lenient in terms of taxes? And which functions do these subsidiaries have? The German federal government in March of this year launched the draft for so called tax haven defense act. It is to avoid tax evasion and unfair tax competition.
The draft is currently going through a legislative procedure Regarding critical countries or tax havens, the draft act refers to a joint list of the Council of Europe on non cooperating tax countries Promoting abusive tax practices. Now we are doing business in one of the countries listed In that list we have a subsidiary. This is an operating sales subsidiary and in its functional profile it does not differ from many other Sales subsidiaries with whom we serve local markets with our software and services. Then a question to the transparency register. The federal government wants to introduce them.
The question is how many lobbies does the group employ internally and globally? Our government affairs unit currently employs 2 employees, 12 of them in Germany. And secondly, how high were in 2019 2020 in Germany and globally costs for lobbying of the group? The costs for external lobbying or outside lobbying based on the Lobbying Disclosure Act for the U. S.
Amounted to US2.57 million dollars for the year 2020. These costs were primarily borne by our U. S. Organization. In the year 2019, the amount was slightly higher, namely €2,710,000 Next question.
Is the parent company or one of its subsidiaries member of the World Economic Forum in Davos? And if so, What annual fees and entry tickets to the annual meeting were paid in 2020 and how many of which persons participated in this? Yes, SAP has been a member of the WAF And pays an annual membership fee of €545,000 or CHF 600,000. In accordance with the WEF rules in 2024, executive board members participated in the annual WEF meeting in Davos, Christian Klein, Jennifer Morgan, Adere Fox Martin and Thomas And for each board member, an attendance fee of CHF27000 was paid. And for the next questions, I hand over to Fredericke again.
Thank you. Question, Who has drawn up the compensation system for the executive board members? Now were external advisers Are consultants retained for that purpose? If so, who was that and which costs were paid? Now who actually determines the compensation amounts for the individual executive board members on the basis of the system.
Who verifies the results of these calculations? Is this done internally Or are also external specialists retained for that purpose? Answer: The compensation system for the Executive Board members was drawn up Under the auspices of the Supervisory Board with the help of internal and external support, legal consultancy For the supervisory board was provided by the law firm Ellen and Overy, which resulted in costs of about €130,000 Basically, executive board members receive a fixed base salary in a variable compensation. Variable compensation is based upon several measurable performance criteria, which are assessed At the end of the respective performance term and which then determine the amount paid out, the necessary calculations Performed internally on the 4 I principle in collaboration with our controlling HR department. The calculation of the target achievement According to our long term compensation, we obtained market data from an external service provider.
Furthermore, the external audit is also involved In the context of the audit of the annual financial statements, question, why did Ms. Green on 9th December 2020 escape the Of Leigh from the Supervisory Board, what was the reason for her departure? Why did she not depart only As of the AGM, which would be the usual approach. Answer, it is correct that in coordination with SAP, Ms. Green resigned from the Supervisory Board of SAP on 9th December 2020 for personal reasons.
As public reporting indicated, Ms. Green last year took over a new role as the Chairman of the Advisory Council of the well known Massachusetts Institute of Technology And this was no longer properly to be reconciled with assuming her supervisory board mandate at SAP. Question, How did the Supervisory Board identify the new candidates to the Supervisory Board and which key selection criteria were applied? The selection of candidates The selection of candidates for the Supervisory Board is the responsibility of the nomination committee. Possible new candidates are discussed by this committee.
Selection criteria, apart from the general deliberations on the Focus and composition of the Supervisory Board include the level of skills and the type of skills in NOHA and the diversity of the concept Of SAP as well after published targets for the composition of the Supervisory Board. Question, how many persons were on the shortlist on the longlist? In the very first phase of the selection process, a total of 20 persons were put onto an extended list of candidates. Question, Did the Supervisory Board select the candidates proposed for election itself or was an HR consultant Involved and if so, which one and which costs did that cause? Of course, the nomination committee and then also the supervisory board Chose the candidates proposed for election themselves.
To support the search for possible candidates, The HR consultancy, HR Zendo was maintained and for that purpose costs Of about €250 were incurred. Question, who had preliminary meetings with the Persons proposed for election or have they introduced themselves at a meeting of the Supervisory Board? Answer, the members of the nomination committee held Interviews with the candidates. Question, which major shareholders We're involved in discussions on the composition and election to the Supervisory Board and who held these meetings and discussions. Hanser, In his role as the Chairman of the Supervisory Board, Hasso Plattner regularly meets with representatives of large institutional investors.
And during these meetings, questions of corporate governance are addressed as well. On that occasion, the topic of the composition of the Supervisory Board And changes on the Supervisory Board are discussed as well. However, there is no influence taken by shareholders or any agreements with shareholders in this And now once again back to Luca for further questions.
Thank you. Next question In 2020, how high were traveling expenses with the parent company and with the German Subsidiaries, and how about last year and how high were they in this year? Traveling expenses in 20 20 were more than €20,000,000 for the parent company, which is a reduction of 50% year on year. In 2021, traveling expenses are negligible because of travel restrictions due to corona. For the subsidiaries in Germany, traveling expenses in 2020 were €4,000,000 which is a reduction by More than 50% compared with the previous year and the traveling expenses 2021 are negligible again because of the corona related Traveling restrictions.
And finally, how much equity is there per share and How much liabilities? The capital stock was on the 31st December 2021, EUR 228,000,000,000,000,000 €4,232 This means €1,228,000,000,000 504,232, No par value shares with a nominal value of €1, and according To the consolidated IFRS statement of SAP of 31st December 2020, liabilities per share were €23 And for the following questions on the corona warning app, I will hand over to Christian Klein. The question on that app, I hope, of course, that you're an active user, Luca, but of course, you are. Right. The question was, Hasn't the corona app failed because only 12.76% of all infections were reported Or registered.
And what is the use of that app? Why should it still be there? It's no failure at all. In the past 4 weeks, 63% of users shared their positive test result through the corona warning app. This is more than 83,000 people who warned 5 to 6 other citizens.
In the past month, millions of people were warned of possible infections. They could go into quarantine and interrupt the infectious chain. The app still plays a very important central role in containing the pandemic. Yesterday, The app had according to data yesterday, the app has been downloaded 28,000,000 times. It's the most Successful tracing app in the EU.
Has the Corona app failed because of data protection? From our point of view, the corona warning app is very successful. It is based on current data privacy Laws and many people trust it, which is why so many people download it and the trend is going up. Why didn't you develop the app further prioritizing according to health And then issued a separate version. The answer is we are in a global crisis which can only be navigated together.
An app like this must come from the government or from a public authority in order to provide an offering that is uniform and reaches as many people as possible. The The pandemic will be overcome only if we all pull it together. Therefore, the app remains voluntary. The fact that it fulfills the high data privacy and data security requirements Has resulted in a high degree of trust among people and experts. Where are the IP rights of the Corona app?
This app is issued by the Robert Koch Institute, AKRKI, for the German Federal Government and the source code was Published on the open source platform GitHub. Why was there no selection? Why is there no selection function of the Corona app where a person can say, I renounce the data protection rights. Nearly 28,000,000 downloads 500,000 users who have shared their test results are not a bad ride. We are applying Current data protection laws, and we have earned the trust of the population within a few weeks.
Nearly 7,000,000 users who are voluntarily giving their data to the app. And this means that the app is very effective. What is the total cost and how many man hours have gone into the Corona app? And what's the distribution between SAP and Deutsche Telecom. Also, the corona warning app is being developed continuously and the cost is charged according to ours work.
And As soon as the work is finished, the federal government will probably publish the figures. What is the contribution of German society or of SAP to society in fighting the pandemic? At the beginning of the COVID crisis, SAP programmed a solution for the foreign office, which was used to Get back more than 120,000 stranded holiday tourists to fly them back into Germany. And after that, SAP and Deutsche Telekom got the order to or the contract to program the corona warning app. From the point of view, the Corona Warning app supports Us in identifying and informing people who are in danger.
It provides a number of functions to Help as an additional element in fighting the corona pandemic. At the beginning of the AGM, I Gave you many more examples of how we are contributing to fighting the pandemic. Final question, why did SAP not Provide any software to alleviate the problem with giving people Appointments for vaccinations. The corona app was also developed relatively quickly. Well, different authorities were responsible, and the federal states decided To go for other vendors, SAP and Deutsche Telekom got the award in Saxony for Vaccination logistics and for appointments.
And the final two questions will be answered by Ms. Roche. Why weren't you neutral in the shareholder portal? Did you not violate neutrality rules On the portal, what is the advantage in programming the portal as you did? Mr.
Gebla, you're talking about the possibility to support all suggestions on all Proposed resolutions, this function was designed in the way it was Because speaking from experience, the predominant share of users Vote yes on the proposals of the executive and supervisory boards. So it makes sense to Pre populate the fields in this way. This is something we also see in With other companies and also the physical voting cards I've always had the option to take one field or put across into one field to support all Or to vote for all proposals by the executive and supervisory boards. We do not think that this constitutes Influencing people in the way they vote. And the final remark by Mr.
Geberla, and This concerns the full reading out the full details Of the voting results, and we will do that. Ladies and gentlemen, we have now answered All questions which were submitted before the Annual General Meeting of Shareholders via the shareholder portal. We hope that we have answered all of your questions Satisfactorily. In this connection, I would like to inform you that all shareholders who have properly registered For our Annual General Meeting and exercise their voting right as provided for in law Have the right to object to 1 or more of the resolutions to be passed at this general meeting Should they see any grounds for doing so? I have now received information About the attendance, and I'll read out the attendance report.
The capital stock of a company Of EUR 1,228,000,000,005,200 and €32 divided in the same number of shares represented at this meeting are 760,000,000 763,331 no par value shares With the same number of votes, this corresponds to 58.34% of the capital stock. In addition to that, we've received postal votes, 145,000,000,000 338,800 And 44 shares, these were later taken into consideration when The voting results are determined on the agenda items 2 to 9. So 862,000,000,001 100 and 2,175 shares are present All represented by postal vote. This means 70.17% of the capital stock. Ladies and gentlemen, we now come to the votes on the management proposals in respect of agenda items The agenda items are now displayed in their short versions on your screens again.
As I explained earlier, You now have one last opportunity to appoint and instruct the proxies designated by the company, Change your proxy appointments or cast your votes electronically via the password protected shareholder portal. If you wish to make use of this opportunity, please do so now. We will close the corresponding
functions in the shareholder portal
in a few short moments. The company proxies appointed by you will then cast your votes By releasing your voting instructions as they have been entered in the system. The postal votes received Before the deadline, we'll also be included in the final count. A simple majority vote is required for The resolutions in connection with the agenda items 2 to 6. The vote on agenda items 7 to 9 requires a majority of at least Three quarters of the capital stock represented during the voting on the resolution.
With regard to agenda items 3 and 4, I expressly draw your attention to the voting exclusion in Section 136 of the German Stock Operation Act. Ladies and gentlemen, I assume that all shareholders have had sufficient time to exercise their voting rights. The functions for voting and for appointing and instructing proxies in the shareholder portal have been closed. The proxies appointed by the company are now casting your votes by releasing your voting instructions in the system. And this concludes the vote.
I will interrupt the general meeting while the voting results are being determined. Notary public Doctor. Felmed will supervise the counting of the votes. I will announce the results of voting as soon as I have them.
Ladies and gentlemen, I now have the voting results and we'll proceed with the meeting. I will now determine and announce the results. To comply with the shareholder request we've received, I will read the full version with all details. The voting results will be published without delay on our website. I will also give the notary a printout of the detailed voting results for his minutes.
Ladies and gentlemen, I now have the results of the votes on the proposals on agenda items 2 to 9, And I determined and announced the results. The AGM with a presence of 760,000,000,801,963 Nopar value shares with 1 vote each as well as 145,592,228 for The written votes, which totals 17.2% of the capital stock Divided into 1,228,000,000,000,000 5,004,200 and 32,000,000 no par value shares, which also includes 48,924,892 Owned shares undecided as follows. Results on proposals on agenda item 2, Number of shares with valid boats, 895,000,000,380 6,225, that's 69.95 of the stock capital Vote in favor, 855,000,000 799,000,000. I stated it clear that thus The AGM has approved with 99.98% the appropriation of the retained earnings according to the resolution. The result on agenda item 3, Number of shares with valid votes, 852,170 1,173, that's 69.37 percent of the grand stock.
Vote against 5,916,000 votes in favor 846,000,000 73,700 and 57, and I state and declare that thus the AGM has approved Agenda item 3 with 99.2% and has approved the members of the Board in fiscal 2020. On behalf of the Executive Board, I would like to express my thanks to the trust shown here. We will start on agenda item 4. Number of shares with valid votes, 760,000,000,000,339,836,000,000, that's 61.9 percent of the capital stock. Vote against 115,000,000, 47,653,000,000 votes in favor, 645,000,000, 346,183, I stated it clear that thus the AGM has approved Agenda Item 4 with 84.7 percent that is in line with the single majority required and does thus approve the acts of the Supervisory Board members in fiscal 2020.
On behalf of the Supervisory Board, I'd like to express my thanks for the trust shown in us. Now agenda item 5, Number of shares with valid votes, 859,000,273,006 That's 69.94 percent of the capital stock. Vote against, euros 34,000,000, 22,019. Votes in favor, 825,000,000,000,285,594. I stated in the clear that the AGM Has approved with 96.04 percent of the valid votes in line with the single majority required, Has appointed KPMG as auditor for fiscal year 2021.
Now we'll start on agenda item 6A. Number of valid votes, 8 156,960,400 and 8, that's 69 0.76% of the cattle stock. Vote against, 23,676,035 Vote in favor, 833,284,000,000. I stated it clear that thus the AGM has approved the by election with 97.04% in line with the required single majority and has thus elected Doctor. Chi Lu to the Supervisory Board.
Congratulations. Now Resolution 6P, number of shares with valid votes 856,975,120,000 that equals 69 point 76% of the capital stock votes against, euros 34,590 1,209 votes in favor, 822,385,911. So state and declare Thus, the AGM has approved with 95.96% of the proposal and has thus elected Doctor. Roeland Westphal to the Supervisory Board. Congratulations.
Result on agenda item 7. Number of shares with valid votes, 836,000,000,386,138, That's 68.08 percent of the stock capital votes against, 56,200,000 724 votes in favor, 780,000,000,185,414. I state in the clear that thus this AGM has thus approved with 93.28% in line with the capital majority required, thus Granting the authorization of the executive order issue convertible and or wanting bonds, The option to exclude shareholder subscription rights, the cancellation of contingent Capital 1 and the creation of new contingent Capital and the corresponding amendment to Article 4 as let down in the proposal that were published under Agenda Item 7 in the invitation. Results on Item 8 of the agenda, number of shares with Valid votes, 859,000,000,85,286 that equals 69.39 percent of the stock capital. Votes against 142,000 969 votes in favor, 858,000,000 915,000 317.
I stated in it clear that thus the AGM has thus approved with 99.98% of the votes KAIST. Reaching the requirements and has thus approved the amendments of Article 2, Section 1 of the articles of incorporation as let down in the invitation under Agenda Item 8 And results of the vote on agenda item 9. Number of shares with valid votes 859,000,000,000,000,199,000,000 that equals 69.93 percent of the stock capital votes against 184,120 to votes in favor, 858,971,112. I state and declare that thus the AGM has approved with 99.98% of the votes cast That is reaching the required couple of vote majorities, has approved the amendment of Article 18 of the articles of incorporation, to attend the General Meeting of Shareholders' proof of shareholding in line with the resolutions let down in the invitation under Agenda Item 9. Ladies and gentlemen.
All agenda items have now been addressed. I will now close this Virtual Annual General Meeting. On behalf of the supervisory board and the executive board, thank you very much for attending this virtual AGM. I would also like to add my own thanks and those of the shareholders to the Executive Board and all employees of SAP. Thank you very much.
Stay safe, stay healthy. See you next year.