Good morning, ladies and gentlemen. I'm pleased to declare the Annual General Meeting of Shareholders of SAP SCE open. As required by the company's Artigals, As chairperson of the Supervisory Board, I'll be presiding over today's meeting. I welcome the shareholder representatives. We are happy to see that.
So many of you have accepted our invitation. I also would like to welcome our guests among them, especially the representatives of the press, whom we are grateful for the objective and unbiased reporting about our company last year. As usual, I must, first of all, cover the formal aspects of the organization of this meeting. The members of the executive boards and the Supervisory Board are all here except for Doctor. Erhard Scheperweit, who sends his apologies for his absence today's meeting.
Doctor. Olej Hofmann, Remi, not Republic is going to Take the minutes. He is a member of the Heidelberg Nursery Office. Welcome. Today's meeting was called with due notice in accordance with legal requirements, The provisions of the articles of incorporation notice was published in the A copy of the notice is available for inspection.
We'll be in next to the minutes. All notices required for convening this meeting were properly issued. No motions or candidacies were submitted by shareholders of the company. The official meeting zone includes this main hall of the SAP arena, plus all other rooms and areas in the SAP arena that are accessible to shareholders after passing through security at the entrance. These include the training hall opposite the entrance area where you find the catering services, the stairs leading to the galleries, the spectator stairs and the 1st floor where there are more catering facilities.
This is the attendance area. The meeting will be broadcast throughout the official meeting zone via loudspeakers. There's also a big screen in the training hall on which you can follow the meeting. So there's room enough in this whole. The attendance register is computerized and is constantly updated.
There's a terminal of the speakers table where you can expect register at any time. If you want to leave the shareholders' meeting early, you can also point the employees of the company present for their purpose as your proxy. Please use the proxy and instruction card in your ballot card booklets. You are allowed to instruct the proxies provided by the company exclusively with respect to voting on the management proposals published in the invitation. You can have entrusted form from the back section of your valid card, fill in your proxy's name and city of residence on the proxy form and give you proxy your ballot card book without your attendance card and proxy form.
To whom do we give the proxy form? Well, the German grammar seems to have gotten mixed up. You give your block plus the proxy form without the attendance card. So you give your proxy, your ballot card book without your attendance card in proxy form. Thank you.
On your way out, hand your completed proxy form to the staff at the door and keep your attendance card. If you wish to leave the meeting temporarily or early and do not wish to appoint a proxy, then please hand in your attendance As last year, online participation is also possible. Shareholders participating online can follow a live webcast of the entire meeting, cast their votes in real time and inspect the attendance register. In addition, shareholders participating via the Internet proxy appointment and instruction system have until the beginning of voting on management's announced proposals to send or amend the appointments and instructions regarding these proposals. All shareholders and proxies who wish to speak or ask questions are kindly asked to report to the speakers' table as soon as possible.
Please complete a speaker's request form and indicate clearly and legibly your name and the number of your ballot card book on the request form. I must insist that every shareholder or proxy wishing to speak without exception First hand in a request form at the speakers' table and then wait until call to speak. When it is your turn to speak, please go to 1 of the microphones in the main hall. Let me point out also that the entire Annual General Meeting of Shareholders is being publicly broadcast on the Internet. I have only what I'm saying now, and the speech of CEO, Bill McDonough, will be recorded and posted on the Internet after the meeting.
As in the previous year, we assume with your approval, we're allowing some television companies to broadcast highlights from the speech of Mr. McDermott, we are allowing the TV companies to show sections of his speech only. The entire meeting is also being documented in sound and video for the record. If shareholder proxy objects to the recording of his speech, will not record that speech except for the temporary record needed for technical reasons in connection with transmission On the Internet, the Executive Board will be using the services of Ladies and gentlemen, I would like to remind you that you are not permitted to make any sound or video recordings of the meeting yourselves. And now on to the agenda, ladies and gentlemen.
Let's first take item 1. For the record, I can report that the 2015 SAP SAE Financial Statements and the consolidated financial statements The combined management report for SAP Group and SAP SA, including the executive board's explanatory notes relating to the information provided to German Commercial Code, Sections 289-four and 354-four. The Supervisory Report and the Executive Board's proposal, a proposed resolution on the appropriation of retained earnings were available at the website, www.sap.com/agm from the time the general meeting of shareholders was called. These documents are also available for inspection in the meeting room. You'll find the documents at the speakers' table in the main hall and at the booth in front of the entrance to the main hall.
The auditor KPMG, PMG, Wirtschaftsbruchungsges Gesellschaft Berlin, Germany, examined the SAP SE Financial Statements, the consolidated financial statements and combined SAP SE and SAP Group Management report for fiscal 2015 and issued an unqualified audit opinion. At its March 24, 2016 meeting, the Supervisory Board examined and approved the 2015 SAP SE Financial Statements, The consolidated financial statements and the combined management report for SAP SE and the SAP Groups submitted by the Executive Board, The 2015 financial statements and management report was thus formally adopted. The Supervisory Board compiled the written report, which is published on on Pages 18 through 25 of the annual report. As in previous years, the Supervisory Board relied on a close and constructive dialogue with the Executive Board to effectively perform its duties. The supervisor we board regularly receive full and timely reports from the Executive Board, both in person in writing on the fundamental corporate policy issues, the economic situation and performance of the SAP Group and on significant transactions and business measures.
Besides financial results, we also looked at company strategy and regularly discussed progress on its implementation with the Executive Board. At a number of meetings, we discussed The activities of the SAP Business Network division, which comprises the acquired companies, Ariba, Fieldglass and Concur and the integration into the SAP Group and how the cloud business is developing. There were 4 ordinary meetings and 4 extraordinary meetings of the Supervisory Board in 2015. We also adopted 2 further resolutions by correspondence, though. The Executive Board kept me as the chairperson of the Supervisory Board, fully informed between meetings of the Supervisory Board, notably through regular conversation with Bill McDermott, SAP's CEO.
In addition to dealing with matters in plen recessions, The Supervisory Board delegates activities to its various committees, which discuss topics in-depth with the Executive Board and prepare important Supervisory Board decisions that are within the committee's terms of reference. The chairpersons of the various committees regularly report their committees work to the full Supervisory Board meetings, Allowing close cooperation and sufficient exchange of information. At this Jean Coutu, I'd like to mention the changes in membership of the Executive and Supervisory Board. The Supervisory Board Appointed Michael Kleinemeyer, a member of the Executive Board effective 1st November 2015. Well, the effect from April 1, 26, Rune Pundit, Stephan Rees and Steve Singh, members of the Executive Board.
I'd like to welcome them and would now ask them to introduce themselves to our shareholders. Michael, would you like to briefly introduce yourself first and then followed by Stephan and Steve? Well, thank you very much, Russell, for the possibility to introduce myself briefly. Shareholders, ladies and gentlemen, I'm one of the newcomers to the Executive Board of SAP, a g, but not that new. My career began in 1989 with SAP, first in sales, consulting and training.
And from 2001, I was manager of SAP Deutschland and later on, on top of that, for Austria, Switzerland, Belgium and the Netherlands as well. In 2,007, I switched to Development as Head of Industrial Solutions. And in 2010, I returned to the German speaking markets, so important to SAP, German, Austria and Switzerland. And after 2012, I took over the global service units and in 2013 also CE and CIS markets, The Eastern countries. In 2015, I was appointed to the Global Management Board Reporting to Gerd Oswald for the areas of Global Services and Support.
And as of November 1, as Hassel Plattner said, I was appointed Executive Board Member and also a member of the Bit Com Group, which is an unpaid activity, I make sure that Germany is promoted as an IT location. In the past 26 years, we had a possibility to acquire competencies in nearly all areas. And I always worked closely with To me, the success of SAP customers is always in the focus of my activity. So I feel well equipped to continuing leading this executive board responsibility and advancing it. I can say, ladies and gentlemen, that I will work full Ladies and gentlemen, I'm Stephan Ries.
I'm in charge of personnel, human resources in SAP, for background of 26 years in HR matters. Since 2002, my family and I have been living in this metropolitan region. It's my pleasure to work and to live here. My career stages at the beginning led me Straight into the IT area, in the late '80s, I had a possibility to start my career with Microsoft. And then I moved through Compaq Computers, Unit Packet and ended up with SAP.
Over a period between 2,002 To 2010, I had a few leading and executive HR functions. There was a brief period outside of SAP in an HR consultancy. And in 2014, I returned to the company to assume responsibility for HR worldwide. At this stage, I'd like to thank on behalf of my organization and personally The Supervisory Board for the trust they are showing, which allows us to represent the important Our segment on the Supervisory Board, you know that staff enjoy a top ranking position in this company and it's part of my tradition to continue this in a positive light. We are in close Competition on a very intense market worldwide and we know that we have to seek external talent, but at the same time also motivate our in house talent through innovation and success and prepare them for the future.
To me, this is much of my duty, which, of course, I can't do alone with my organization, but only in close cooperation with my colleagues on the Executive Board and the standard leadership circle. I'm looking forward to this job. I'm very proud to represent this function of the Supervisory Board, and I'm looking forward to many years
My name is Steve Singh, and I run the Business Networks and Business Networks and Applications Group here at SAP. I have come to SAP through the acquisition of Concur. For the past 30 years, I've had the privilege to build 3 companies, the last of which And I'm honored to be a part of this organization,
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We drive innovation and value for our customers. Thank you to our Chairman and also the Supervisory Board
Ladies and gentlemen, in the course of this meeting, We have 3 newcomers to the Board. For Gerd Ostwald, it's going to be the last shareholders meeting, which he attends as a member of the Executive Board. He will change to the consultant status end of the year. On behalf of the Entrance Supervisory Board, I'd like to thank Mr. Oswald most warmly for his many years of circumspect and Gerd joined SAP in 1981.
He became Head of quality assurance and played a major role in the development of the SIPR2 network. Then He was responsible for the development and delivery of R3. We cooperated closely. In 1993, Gerd was appointed to the the Executive Management Board. And for the past 20 years, he's been a member of the Executive Board of SAP.
I'd like to mention also that this makes Gertr os, well, not only one the longest serving member of our Executive Board, but also the longest serving director of any DAX 30 company. And again, Osman's leadership, the SAP Active Global Support division with its innovative support services, which it continues to improve, demonstrate Clearly, that SAP is an industry leader. Last year, the Supervisory Board The Supervisory Board put Gert Osweld in charge of the new product quality enablement board area to ensure quality standards In times of ever shortening innovation and development cycles, in 35 years For SAP, Gerd Ostwald has exemplified continuity, dependability and vision. He not just witnessed change at SAP, but was instrumental in shaping the change. Again, Gail, thank you very much for your long exemplary service to the economy.
We'll miss you. There were also changes in membership of the Supervisory Board last year. On the shareholders side, Mr. Hapmut Medon resigned his seat on the Supervisory Board in May 2015. His replacement, Professor Doctor.
Gishi Joost was initially appointed member of the Supervisory Board by the Mannheim Municipal Court on May 28, 2015. The Supervisory Board proposes to today's Annual General Meeting of Shareholders that it links Ms. Jose To the Supervisory Board for the remainder of Mr. Bedon's term of office, I'd like to welcome Mrs. Joost to the meeting.
I'd like to welcome Professor Doctor. Joos to the meeting and would now ask you to introduce yourself to our shareholders. Thank you very much, Hasselbladner shareholders. I had the opportunity now for 1 year To work with the Supervisory Board, I'm happy to introduce myself to you personally. I represent design and usability, the user study design of taking my doctorate Tubingen after some stays abroad.
I ended up in Berlin with The Deutsche Telekom Laboratories and the public private partnership for researching new means of communication. And in the area of user experience, I worked with the Technical University of Berlin. For the past 6 years, I've built up a research area for design research. I Work on the man machine interface, electronics, variable Electronics, an innovative area, whose scientific aspects I'm leading. It also has a major impact on innovation culture, promoting talents and designing interaction.
I also work politically. Right now, I'm the Internet messenger of the federal government. I work a lot in Brussels, consulting with the European Commission on Digital Agenda. I act as a translator about digitization, politics and measures in that area between Brussels and Berlin, Supporting the German Ministry of Economics, politically and also technically, I work on behalf of digital change, which is very close to my heart. The topics of the Supervisory Board I'd like to stand for are innovation culture, that is how must you position yourself as a company to new talent, what are the roles of gender diversity, multifaceted nature of teams in the company, What is the role of user experience, user friendliness of software solutions in such a large area?
What can we forecast as the future when such a powerful engine, a wonderful Machine like HANA is available to us. What can we do with data in the future? Something I'm very interested in and where I see a lot of potential also as a result of my research. Design interaction concepts are my topic. And the 1st year on the Supervisory Board So far, it's been wonderful.
I enjoyed working with my colleagues. And I'd be happy if you could support me And lend me your confidence for me to continue working on the Supervisory Board. Thank you. Thank you, Mrs. Joost.
There were changes to on the employee represented side last year. The end of the Annual General Meeting of Shareholders on 20th May 2015 also marked the end of the term of office of the 9 employee representatives, who under the agreement on the involvement of employees We have pointed to the Supervisory Board on SAP's conversion to a European company. According, for new employee representatives were held in 2015, after which Catherine Bordelon, Christiane Kunzmeyer, Stefan Lescovar, Prod Reiner, Rosa Bijan and Stefan Schulz left the Supervisory Board. They were placed and Pierre Thierle. I wish to take this opportunity to thank all members who stepped down last year for their service to the Supervisory Board.
I'd now like to talk about changes to the Executive Board members' compensation package. The Supervisory Board has introduced a new long term incentive element for the Executive Board, the AP Long Term Incentive Program 2016, because rights under the ICO Milestone Plan 2015 were granted for the last time in 2015. You can find the details of the new LTI plan in the compensation report on pages 26 to 41 of the 2015 Annual Report. The Supervisory Board has already granted Executive Board members rights separately for each individual under the LTI plan and to link the contractual targets of the long term compensation element to the role and portfolio of each executive board member. It has also decided that base salary and The STI plan will be in U.
S. Dollars for the Executive Board members in the United States to neutralize the effects of exchange rate fluctuations. The Supervisory Board discussed Executive Board compensation in great depth at its meetings. When reviewing Executive Board compensation, it primarily considers Whether it's commensurate with SAP's size and global reach, SAP's operational and financial performance and directors' compensation at comparable international companies. In our opinion, the executive board compensates as appropriate.
This applies to the 2015 compensation and to the new compensation package applying from 2016, the like, which we are putting before today's shareholders meeting for approval. Ladies and gentlemen, I will now ask Bill McDermott To address here, because Bill McDermott doesn't speak German, his speech will be interpreted into German so that everyone can follow. Answers to questions from shareholders will also be interpreted into German. Bill, the floor is yours now.
Welcome in the SAP arena. Thank you for joining us. The next generation of real time. Today's businesses can finally become live businesses. Brand of SAP.
You, ladies and gentlemen, are the first to see our new TV commercial. Hasso, you're an inspiration to SAP and to all of us. And I'd like to personally thank you for your dedication and leadership. Thank you so much, Hasso Plattner. The new television commercial shows the pressures Facing businesses in today's economy.
Consumers have more information at their fingertips than we could ever imagine just a few short years ago. This is why so many people call this Would you like to have the appliances in your kitchen repaired before they actually break down? Would you like to personalize a motorcycle before you actually buy 1? Today's businesses are engaging directly with consumers throughout the entire relationship cycle, Technology is the only way forward. In 2010, we anticipated how businesses and improve people's lives.
And today, I'm proud to report We are growing more than 2 times faster than our largest competitor in our core business. And we are the fastest growing software company at scale In the world, now approaching 110,000,000 users, more than any other company in the cloud. Not bad. We're making some progress, right? Since 2010, We have grown our revenues and profits more than 60%.
We have more than tripled our customer base to 310,000 customers, and We're just getting started. Yes, you can feel good about your SAP. You may notice that today I'm wearing some tinted glasses due to an injury I suffered last year. And I'm happy to report to you that not only am I fully recovered, but I never stopped doing my work. And I'd like to particularly thank Hasso, my Board colleagues, and ladies and gentlemen, all of you, dear shareholders, Thank you.
I'd also like to recognize the 78,000 women and men of SAP for their hard work and dedication. It is their commitment to this company that makes it special and it drives those great results that I talked about. Please join me in congratulating them. It is affecting every business in every industry. 90% of the world's data has been created in the last 2 years.
There will be 9,000,000,000 mobile device users from industrial machines to household devices. And this is a major theme in our daily lives. They can better harvest crops. As cars connect to the Internet, Auto companies are collaborating with their service providers to offer in car payments and manufacturers are using Internet connected machinery to do predictive maintenance. In this environment, all companies are facing disruptive change, And they're also facing a clear choice: embrace digitization or go in decline.
And SAP is providing every customer access to a complete set of technology for their digital journey, from suppliers and networks to customer experience, to workforce engagement, to the Internet of Things and Big Data. In a digital world, companies need access to their data in real time. Core business processes like finance, manufacturing and supply chain can now be run on a totally modern set of business applications. To help businesses run their core operations. Our customers also want and easy to implement.
And that is why, ladies and gentlemen, we acquired the best cloud companies on the planet. SAP integrates every solution, whether it's on premise or in the cloud. In fact, many customers have chosen to run a combination of applications, which we call a hybrid environment. Regardless of how customers consume our software, SAP's completeness of vision We discussed the advantages of HANA in detail, including 10 times smaller footprint, Simply put, SAP HANA enables us to move beyond the limitations Early last year, we launched our next generation ERP, SAP S4HANA. S4HANA applications are natively designed with SAP Fiori, I'm really pleased that SAP Fiori won the Red Dot Award, One of the most prestigious awards recognizing great design.
SAP Fiori brings the convenience of a consumer user experience together with the power of SAP Enterprise Software. With SAP HANA and Sfour HANA, our customers can make data driven decisions in real time And companies can recreate their business processes on the fly. Companies can even rethink their entire business model, taking full advantage of these new capabilities. Earlier, I gave farming and manufacturing examples. It's important for you to know that SAP HANA And S4HANA is at the center of reinventing 25 distinctly different industries.
And since its launch last year, S4HANA has already achieved more than 3,200 Customers, obviously, we are onto something really, really big here. Just last week, SAP announced a new partnership with Apple, the world's most valuable company. As the leader of enterprise software, with 76% of business transactions touching an SAP system. SAP is the ideal partner to help us truly transform how businesses around the world are run on iPhone and iPad. So by building a software development kit and enabling 2,500,000 developers to build a great way to build a great way to build a great way to build a great way to build a great way to build a
great way to build a great way
to build a great way to build a great way SAP is committed to clear roadmaps so our customers can take advantage of this modern architecture at their own speed. Therefore, we have also committed to providing support for their existing SAP business suite through 2025. So how about this? Let's show you an example of 1 of our Hana retail customers. How about it for HANA?
Is it a HANA world? It's a HANA world. We could be proud of the impact HANA is SAP Cloud Solutions, unlike our traditional software licenses, are rented in a subscription model and downloaded from the Internet. This gives customers access to the latest innovations, while not having to worry about the on-site infrastructure to support them. Cloud solutions offer customers simplified delivery and fast innovation.
Now let's discuss our line of business cloud solutions, beginning with Human Capital Management. Success Factors from SAP helps organizations manage their most important asset, They're people. This means hiring, developing and empowering people to be their best. While our competitors focus only on English speaking countries, Our solutions are localized for 75 countries in more than 40 languages, with more than 1500 local regulatory updates performed annually. You see the difference?
As companies manage these volatile economic conditions, many are now turning to temporary workers to increase workforce capacity. With SAP SuccessFactors and SAP Fieldglass, We are the only company that delivers total workforce management solutions across permanent and contingent labor. Now let's talk about customer engagement. Traditional Customer Relationship Management. Today, a successful business needs to offer seamless and anywhere the work is being done.
That's why SAP enables businesses to connect the front and back office in real time. SAP customers are responding to this offering, which is driving triple digit growth for SAP in 2015. In this highly connected world, processes can no longer stop At the four walls of a company, most businesses have a network of external collaborators who are critical to their success. Businesses need to stay in close contact with these networks to drive efficient partnerships. SAP has assembled business networks focused on the biggest enterprise spend categories, including suppliers, travel expenses and workforce management.
Our business network companies, SAP Ariba, Concur and SAP Fieldglass address exactly these areas. SAP Ariba focuses on suppliers. The Ariba network is leading a marketplace used by approximately 2,000,000 companies. These companies conduct more than €800,000,000,000 in commerce every year. Ariba helps companies by making it easier for employees to process invoices, accounts payable and other core procurement functions.
With around 40,000,000 users, Concur is the world's leading travel and expense management system. The Concur system not only automates basic expense reports, it also supports better decision making For employee travel, including air, hotel and entertainment, here is a real life example of our network solutions working together. Now let's touch on the SAP, HANA Enterprise Cloud and the HANA Cloud Platform. SAP offers security and control with our HANA Enterprise Cloud, a privately managed cloud environment run-in SAP and partner data centers. Customers can realize HANA's advantages immediately without investing in a large database infrastructure project.
Companies simply pay subscription fees by volume for this service. And it gives them is a standards based open platform that allows customers to add unique functionality into their SAP applications, whether cloud or on premise. And many customers are using the HANA Cloud Platform to empower their developers to build next generation digital applications. Every SAP customer is accumulating massive amounts of valuable data. Our analytics solutions, such as SAP Cloud for Analytics, helps companies make use of this information.
With SAP's digital boardroom, You're actually working with live data that enables you to simulate options and even predict business outcomes. And this is how we run SAP in all boardrooms around the world. And our ecosystem is expanding quickly. For example, Daimler Trucks North America uses SAP Cloud Analytics to identify potential sales for dealers. The National Football League, National Basketball Association, the National Hockey League, All major sports leagues in the United States as well as our own beloved German national football team also use SAP Analytics to drive a smarter experience for millions of fans And of course, athletes as well.
How about that German National Football team? And when all of this technology from cloud to analytics In January, I met with business and political leaders at the 2016 World Economic Forum in Davos. The theme was the 4th Industrial Revolution, also known as Industry 4.0. And a major topic was the Internet of Things, which is one of the many names given to the connection of billions of devices to the Internet. We're actually seeing this trend unfold everywhere in the world.
Growing economies with a rising middle class like China and India are investing heavily in digital to grow. Important customers such as Siemens and Hamburg Port Authority have selected the SAP Internet of Things platform as the basis for their efforts. And SAP is committed to leading the Internet of Things Revolution. And we really believe this has only just begun. Now as I shift back to our entire solution portfolio, we've also adopted our products for small and medium sized enterprises.
SAP Business One, SAP Business All in One and SAP Anywhere are designed specifically for smaller companies to benefit from SAP Innovation. Our more than 12,000 partners enhance our reach With large and small companies alike, they sell our software, develop complementary solutions and support our customers across all geographies. And think about this, In addition to our SAP colleagues, we have more than 2,000,000 partner colleagues globally who support SAP, that's pretty special. Think about the jobs we're creating all over the world. In 2015, our performance was strong across all dimensions, both financial and non financial.
In fact, we had a tremendous year in 2015. Our results were strong across all markets and industries in our core business as well as our rapidly expanding cloud business. Now please note that all figures I share with you are non IFRS. That will keep the Investor Relations team very happy. We set ambitious targets as you would expect from us for the full year.
And best of all, We over delivered with Cloud and Software revenue growing by 12% at constant currencies, clearly You're like me, you love the results section. We continued our fast growth in the cloud and achieved our guidance with €2,000,000,000 in cloud subscriptions and support revenue at constant currencies. Cloud subscriptions and support revenue continued its fast growth at 109 percent to €2,300,000,000 And even without the contribution of Concur and Fieldglass, so if you want to look at it in a purely organic sense, We grew 32%, outpacing most every competitor in the industry. So let's take a closer look at the cloud. And keep in mind, the cloud contracts are valid over a period of time and they're paid to SAP as a subscription.
This means that the total contract value is not immediately recognized in our revenue, but rather over the course of the entire contracted period. Therefore, It is essential to look at the total value of our committed cloud business. And you can do this by looking at 2 metrics: backlog and deferred cloud revenue. At the end of 2015, our cloud subscriptions and support backlog was €3,700,000,000 And our deferred cloud subscriptions was another €1,000,000,000 This means that we have €4,600,000,000 in contracted business that hasn't even entered our revenue, but will over the coming quarters. This committed business will continue to drive strong cloud growth in 2016 and beyond as really good for the company.
Now turning to a regional view, I'd like to highlight the excellent performance In the Americas, we grew cloud by 120% and cloud and software by 31%. In EMEA, our cloud growth was 83% 12% for cloud and software. In APJ, we grew by 99% in the cloud and 20% and the strength of S4HANA. S4HANA is a major growth driver already for the company. As our software licenses grew by 10% to €4,800,000,000 in 2015.
And now to our support revenue. Our support revenue has now reached €10,100,000,000 and grew by 14%. The stability of our support revenue continues to be driven by a 96% renewal rate. And our share of more predictable revenue, which comprises our fast growing cloud and steadily growing support revenue increased by another 3 percentage points this year to over 60%. This transition to cloud subscription revenue has brought further predictability and stability to our revenue in the company.
Now, these strong 2015 results Let us to record cloud and software revenue that grew by 20% to $17,200,000,000 far outpacing the market. On the bottom line, we exceeded the guidance range for our operating profit with 5.904 €1,000,000,000 in profit at constant currency. And while speaking about operating profit, We actually have 3 cloud businesses: our Business Networks, Our public cloud and our private cloud. In a mature state, We expect our business networks and public cloud businesses to reach an 80% gross margin. And there is already good progress with business networks around 75% gross margins and public cloud at around 70%.
The HANA Enterprise Cloud is a private cloud And it's vital for new software sales and adoption. As you know, initially, This required startup investment on the part of SAP. But over the past year, less investment was necessary. In 2015, we returned to revenue growth in our services business, which is very good news. And this is due to customer demand for fast time to business value.
In our fast growing cloud business. Therefore, there are fewer large on premise implementation projects. So we do not expect that the services business will return to the margin profile of prior innovation cycles. By operating out in core businesses more effectively, we are driving the expansion of our overall operating profit And the surge in operating profit for the full year 2015 reflects the continued success of a well planned strategy. Now here, I'd like to discuss the company wide transformation program that we also enacted in 2015.
To successfully complete the business transition, At the same time, we had to adjust capacity in areas that were no longer growing as fast. And therefore, the program was a success as it was highly a triple digit €1,000,000 positive impact, mainly in the on premise business. This program helped lay the groundwork for improving operating profit and leverage in operating profit going forward. Finally, for the full year 2015, Our earnings per share was €3.77 up 8% year over year. Following the strong finish to 2015, we reported And what did we see?
We saw continued fast growth in the cloud with non IFRS earnings per share up 9%. Please note that this result substantially exceeds our peer group benchmark. These Our solid results in our seasonally smallest quarter. You know, traditional financial measures alone do not paint a full picture of a company's true performance. Leading companies integrate financial and non financial value creation, both internally and externally.
In March, For the 4th year in a row, we published our integrated report to role model this integration. For example, a 1 percentage point change in our business health culture index, which measures the overall health of our employees, has an impact on our operating profit of up to €85,000,000 And that is why increased 2 full percentage points to 81%. That's the highest it's been in 10 years. The Business Health Culture Index continued its positive trend, increasing 3 percentage points to 75%. Customer loyalty is now measured by a new model, But it also improved year over year.
Leadership remains a focus for us, and we continue numerous programs to develop our leaders. And our efforts are bearing fruit. Our Leadership Trust Index in the company rose to 52.3 percent, an increase of 5.5 percentage points year on year. Diversity is another important aspect of our leadership approach. We remain committed to achieving 25% of management positions held by women by 2017.
And here, we also saw an increase of the number of women in management from 21.3% at end of 2014 to 23.6 percent at the end of 2015. That's good. On a broader scale, yes, let's give it up for the women. On a broader scale, SAP aspires to foster an inclusive culture throughout the company. We focus on diversity in all of its forms: gender, Generational, ethnic and differently abled.
We also reduced our environmental impact in 2015, with CO2 And this is due in particular to our green cloud policy. Our data centers and facilities are powered by 100% renewable energy worldwide. And as a socially responsible leader, We enable our customers to do well so they can do good. As we further realize our vision to help the world run better and improve people's lives, A local example of our software in action.
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Thank you. Turning now to our stock performance. Since we began our journey together in 2010, our share price has increased by an impressive 110%. In 2015, the stock achieved new all time highs and ended the year with a 26% increase year over year. SAP is the most valuable DAX listed company with a market capitalization of approximately €85,000,000,000 Therefore, I think the market is beginning to recognize our innovation strategy is in flight.
And it's clear that's why for 2015, the Executive Board and the Supervisory Board Proposed to raise the dividend by 5% to €1.15 per share. This represents a dividend payout of approximately €1,400,000,000 and a payout ratio Ladies and gentlemen, please note the agenda Ladies and gentlemen, as I close it out today, let me say clearly that SAP's Completeness of vision is resonating everywhere. From the strong core To the Internet of Things, the SAP story is one of momentum and growth. We are very confident in our strategy and the goals we have set for 2016 and beyond. Our innovation portfolio, our geographic depth and our domain expertise across 25 industries gives us strong confidence.
Customers are looking to SAP On behalf of the entire SAP Executive Board, I'd like to thank you very, very much
Thank you, Bill. In addition to Item 1, I'm now calling All other agenda items, that is to say, items 2 to 8 in the invitation to the meeting, of which copies are available in the meeting room and which also contains the management's proposals. Notation to item 2 on the agenda concerning the appropriation of retained earnings. Please note that the Executive Board and the Supervisory Board have adjusted their proposal as announced in the invitation to reflect a change in the number of shares entitled to dividend. However, the proposed dividend of EUR 1.15 The Executive and Supervisory Boards, therefore, now ask that the meeting resolve that the retained earnings of €9,256,334,334,334,334,333 from fiscal year A dividend of €1.15 per pay be paid for each qualifying NOA per share, which results in, Bill, 1,377,839,829 €1,000,000,000 be transferred to other revenue reserves and that the balance be carried forward to the new account, which equals to 6 €878,000,000,000,000 €878,000,000 €4105.68 The text of this proposal is available on the speakers' table.
I'd also like to point out that the Executive Board has provided a written report on Agenda Item 8. The report was reproduced in the invitation to this meeting and is available here now. I hereby open the discussion section of the meeting, which I will take as a general debate on all agenda items together. We have 5 requests for the floor. And I first invite Ms.
Jelabeiner Heineacher Right. Now the mic works. Ladies and gentlemen, Bill McDermott, good that you're fit and in good health. Quite frankly, we were quite worried about you, About our Chairman of the Executive Board. Now you're up on the stage Well, actually, I wanted to say that the glasses look good on you, but I'm only allowed to do this as a woman.
But jokes aside, I'm Jelle Bella Heineken. I'm speaking here on behalf of the German Association of Retail Investors, a member of sending 1,800,000 SAP Shares. Ladies and gentlemen, you all know the discussions about the Industrial Revolution, 4.0. We are right in the middle of this. We talk about self driving cars.
We talk about the fridge that orders by itself, all what's missing and SAP Once not only be right in the middle of all this, but you want to take the lead. You want to be in the driver's seat and really Show the direction. The Strategy 2020, you've explained this several times during the AGMs. It is quite clear as follows: SAP wants to be the cloud company powered by HANA. For us as ordinary people, that means that we live in the cloud, and that's the new business model.
As we've seen on the picture right behind me now. But we are not quite there yet. We have not made 2020 yet. We are still in a phase of transition, a phase of transformation. But we all know that the road is maybe slightly rocky.
The margins are getting less positive. And in the end, The economy of scales will pay out and then we'll have a great margin in the future. Superlatives, ladies and gentlemen, that was the topic for many years at SAP. For many years, We've heard about record figures and as shareholders, well, we expect a lot. And This year again, I have to offer some praise.
2015 was another record year, and the 4th quarter was the These were no records, yes. The share price, too, developed very well in the last fiscal year. And as of October, it went up like a rocket really and left the DAX 30 behind it. Today, the share stand at just under €68,000,000 So we're heading in the right direction. When the dividend comes into play, well, we can't complain here.
€1.15 that's a payout ratio of 45% of the IFRS profit. That comes pretty close to our target. So you might say, here again, you're on the right track. The transition or the change is something we feel not only within the company or in Waldorf and the surroundings, but also At the Executive Board, the Executive Board is getting younger and stronger. We've seen the new members.
They introduced themselves. Currently, we have 8 members of the Executive Board. And the so called Global Managing Board Mr. Platten, one question here. So has it fulfilled its mission?
And what is happening with those that were still in it and are not member of the Executive Board yet? And can we now assume that the successors or that all the plans for the Executive Board are completed now and that we have enough successes in the mid- to long run. We've all read that the contract of Bill McDermott and Luka Modic We're extended prematurely until 2021. I think that is a clear indication that we have the top executive team for the future. And Mr.
Plattner, with that, you have eliminated all speculations regarding the setup of the Executive Board. However, there will be one change in the Executive Board at the latest by the 30th June 2017 because By then, you have planned to have 1 woman on the Board. Mr. Oswald's contract, we've heard this, We'll end at the end of 2016. So there will be room for a woman on the Board.
Mr. Platt, now we've discussed this topic, women at the Board for several times. So as yet, this wasn't a success story, but hopefully, that will change. So my question now, When will we see the new lady? When will we meet her?
And have you already started or completed your search for her? In the Supervisory Board, you discussed not only the new Executive Board, but we look at the agenda, you also looked at the remuneration. You spent Three meetings on that. Also, the personnel committee discussed this. And you looked at the adequacy of the remuneration of the Executive Board.
You also had 2 expert opinions, 1 a legal opinion by Allen Aubery. I'd like to know what the actual scope of this was and also the result and the second expert opinion As regards to the adequacy of the remuneration, here again, I'd like to know the criterion used for this Expert opinion and also what the price of these expert opinions was. That, ladies and gentlemen, takes me directly to today's agenda. Agenda item 5, resolution on the approval of the System of the Executive Board remuneration, which has been explained here. I have a couple of questions In that context, I'd like to know what peer group you have selected For this new variable remuneration, as DSW take a critical view is the leeway or the discretionary scope of the Supervisory Board is so large when it comes to the ARSEO.
It's between 80% 120%, in your case, of the and now it agreed in the contract. And for us as shareholders, it's always difficult to understand because we don't know the precise target values of the Board. But Mr. Plattner, You can shed some light on this matter and give us a practical calculation example so that we can actually understand how this works. If we are to approve of this new structure and link it Or apply it to the previous year's figures, we'd like to know where we stand right now.
The share scale, is it more than they have According to the old system or is it less? So it would be helpful if you could give us a calculation based on the 2015 figures. And then we know whether we can approve this resolution or not. Then agenda item 7, by election of the Supervisory Board member. DSW does not object here.
Quite to the contrary, We welcome the proposal of Professor Joost explicitly. I think an Internet ambassador, that is something Agenda item 8, the new authorization to issue convertible and or warrant linked bonds, profit sharing rights and or income bonds or a combination of these instruments. When I read this, Mr. Mucic, I actually wondered why do we need this. Why do we have to have this on the agenda?
You have said several times over that in 2016 2017, We want to reduce debts. That's the main focus, and we don't plan any major acquisitions. And then I wonder why do I have this resolution here? We don't need it, do we? Maybe you want to cancel it or take it off the agenda today.
Back to the restructuring of SAP. When we look at the 2015 figures, We can see that it costs more than €600,000,000 Last year, that was cost for restructuring. Restructuring, that doesn't sound appropriate for SAP because SAP is not a case for modernization or because it should be it should actually be called transformation costs. And of course, they are linked to the shedding of jobs. And the question always is, what's the actual mood?
What's Feeling like in the company, this transformation, has it affected people's minds and people's heads? Have the employees changed their attitude as well? As shareholders, quite frankly, we have to get used to the fact that we only have 2 fields of business: 1, The applications, technologies and services with €19,000,000,000 in terms of top line that is. That's the big brother, as it were. And then we have a second area, the business networks, with 1,600,000,000
Euro,
that's the little system. For us as shareholders, This new structure also means that there is less transparency because today, we Don't know exactly which revenues and results occur in the individual segments. Obviously, we'd like to know in great detail about the results of the public cloud, the private cloud. How well does this Management Cloud Business fair at all? We get indications, But actually, it's a bit clouded, this transparency.
Also, when it comes to the business networks, I'd call it SAP Mini because in terms of revenues, it's fairly small. You see a huge market potential. But here again, we don't quite understand how specific the development will be this year 2017. Also, when it comes to the key performance indicators, the transformation is obvious. The new KPI now is new cloud bookings.
That's the success parameters for Sales in the Cloud business. Here again, we have to get used to these KPIs and also what is actually meant by them, And we have to find out what they actually means. Over the past years, and I'm sure you will remember that we heard about Acquisitions a lot, and we discussed these acquisitions. The last big one was the acquisition of Conquer. And Today, we heard next to nothing about acquisitions because there wasn't any.
But we'd also like to know What happened with these old fairly expensive acquisitions such as Concur? So let's look back Or let's take stock. Let's look at the acquisitions over the last 3 years, including Concur. How has This payout, what about the integration? Has this run according to plan?
Here, I'd like to know more details. At SAP, it's always worthwhile to look at the costs for research and development because that's the investment into our future. In 2015, you've increased cost Here, the ratio is 13.7 percent of total revenues of SAP. Well, it's difficult to assess it if you don't know what the competitors do. What is the Competitor spend on F and E, what's the ratio at your classical competitors, IBM, Microsoft and also the competitors at the Cloud Business, for instance, sales force.
Salesforce. Well, the competitors are not asleep. Salesforce is now active in Germany, too. They invest allegedly EUR 1,000,000,000 to gain a foothold in your home market. And sales force, and that's nothing new either, is fairly aggressive.
At the same bid, they hired 2 big holds, and they are Trying to catch customers. Questions now. Have you seen changes in your business due the sales force activities, the changes in terms of market position within Germany, how Do the SAP Midsized customer respond to this aggressive behavior of sales force? And talking about sales force, I'd also have to pick up on what we read in the newspapers. Sales force the question therefore, why did you reject this offer?
Doesn't it make sense To cooperate or to start a partnership? Because if I look at what's Happening within this industry, you've started cooperations and partnerships with Apple and IBM. You just announced them. So in some areas, your competitors in other areas, your partners. So I'd like to know what you expect from these partnerships with IBM and Apple.
Now briefly, legal issues. Since The old topic tomorrow now, we are quite sensitive in this field. The explanations When it comes to the reserves, it doesn't say anything on what we read in Speedy online Because there was a claim that our successful daughter, Hana, allegedly wasn't developed by HANA or Hubris, it allegedly was developed by someone else. So Teradata, Oracle or IBM, it was alleged with mothers of Hannah and Spiegel. Spiegel wrote that the SAP acquired or used rights of databases from Other companies and a former employee of SAP in accounting allegedly announced that.
And by now, courts are supposed to be involved here. Here, I'd like to know more about that. Is that true? Is it just A news story, what's in it? What about this 3rd party development?
Mr. Plattner, maybe you could expatiate on that and provide us with more details. Who is suing whom, in which courts? And maybe We should provide some reserves here. Ladies and gentlemen, the future of SAP, well, That is something, quite frankly, I'm not worried about, especially after the exciting presentation of Bill McDermott.
Of course, There will be setbacks. We the margin will, here and there, not be as we expected. But the capitalization of SAP, as such, speaks for itself and is an excellent Sign, really. SAP, right, currently is the most valuable into the future, and that is something we like a lot. You're very committed as you're building your €50,000,000 in Bangalore, €60,000,000 in Israel, more than €30,000,000 in New York City And also, the home market here in Germany, as we can read, is faring well.
And that, ladies and gentlemen, is a clear signal for the future at Waldorf. €71,000,000 R2B invested for a new office building in Waldorf and another €58,000,000 for a new Computer Center, so just under €130,000,000 investment here at the location. I think This is a clear commitment to the location. Now finally, let's look ahead, 2016 and beyond. You've hinted that the gross margin will be more or less like 2015.
The effects from the restructuring costs will decrease. So all in all, you expect €40,000,000 to €60,000,000 in 2016. In the Q1, we've seen EUR 11,000,000. That suggests that we'll be rather at the lower at the bottom end, so better than planned. And yet, in the Q1, we had a little drawback because of the software licenses, we were slightly below The plan.
Still, you're quite confident that across the complete fiscal year, you'll be able to accept this. And then, ladies and gentlemen, once the targets 2016s will be completed and achieved, we can expect further increases of the share, And we can also expect an even better dividend. So the short term perspective for us as shareholders is good. And if I believe all you have told us As regards the 2020 objectives, then it seems as if We will achieve these objectives because the FAB has the midterm target for 2017. They've increased the targets for 2017.
So a lot of things seem to point out that the Model 2020 for SAP will become reality. And ladies and gentlemen, and then We can safely say that this is a huge success. As we've heard from Bill McDermott, when we achieve this, We have truly made a major step. We've reached a milestone. Thank you.
It's my turn. I see. The next request from the floor is In the meantime, let me announce the next request after Mr. Kienlis, Mr. Hans Martin Buhlmann of VIP, Professor Plattner, Mr.
McDermott, ladies and gentlemen of the administration, co shareholders, I'm Markus Skinner. I'm a member of the Board of the Schulzke Mineschaftekaertalenbrand. Mr. McDonough, that was a most impressive presentation. Indeed, You seem to have Invested all your energy and your life into this company, that's indeed a model.
The figures you presented showed the non IFRS figures, which you reached The return on investment measured on the basis of the equity 13.17 measured on the 21st 2015 year also and your capital expenses. This company is an equity quarter of more than 15%, which is not customary in this industry. For us, shareholder, you announced to participate in the success of the company with a higher Nevertheless, these figures are not reflected in the group surplus. The operating margins, irrespective of whether on IFRS on non IFRS basis have declined continuously compared to a 5 year period. This is due, as you said, to the switch of business to cloud business, where the share increase And volume to achieve significant market share was in the foreground to reach a market position, which then Made the optimum scaling of successful figures possible.
So we are in the investment phase, but how do we ensure that this sales driven quantitative Growth is not going to detract from the profit. And what do you think It's necessary in terms of revenue to make optimum use of the scaling effect. When do you want to collect The harvest of this quantity driven growth process in connection with the value of your company, will you assume that application technology and services will show on the average 4.5% of revenue growth and the rest of the business will grow by 16%. What your forecast for the Application and Technology Services forecast is almost on the dot, Your planned assumption for business networks of 150.6 percent growth is far outside the planning corridor. Did you plan unrealistically for the business segment area?
For the business segments, you Assume different sales for the business networks. You have a system more than 100 percentage point over the other one. For the 2 segments, Please tell us the following parameters: risk or basic, interest rates, market risk, premium and beta factor. The structure of your segment reporting is not found in the report about providential specialty revenue of this business segment are not shown separately. Why?
The income structure of The cloud structure, as you said, Mr. McDermott, differs basically from that of licensed business because income from cloud business is not a onetime payment. But in a prorated scheme over the term of the contract, in the license business where replacement or expansion Investments of the customer depend on the economic situation. Is the cloud business less cyclic? And does it carry lower risk than the license business?
The question about margin development after the end of maturing or transformation process. Here you said the old margins will not be reached again. But by what rate are we going to fall behind that margin after the There is a sort of displacement process between cloud and the old license business. You assume that after the restructuring phase, the clearly reduced license process will still be profitable or will for that Lose the critical amount, which is necessary to reach the critical mass. You manage your company not in accordance with IFRS but corrected non IFRS figures.
But It's customary in the industry, which doesn't make it any clearer. Most of these distortions you mentioned because of the IFRS figures Due to the growth, especially treatment of purchased contracts on the revenue level, don't understand this. Consolidation means that the revenue of the subsidiary are consolidated in the parent company. So on the revenue level, There should not be any deviation. Of course, it's correct to say that the revenue also The purchasing price was paid for the contracts required, which would have to be taken into account on the capital level.
But when you have a proper purchasing price allocation, there shouldn't be any distortion because the organically generated sales should also be minus the operating cost. In the revenue purchase, this should mean a difference in revenue. There should be a difference in revenue only If there are different accounting standards between the acquired company and the parent company, which will have to be leveled out in the consolidation, but that would not be a problem of acquisition, but of different accounting standards. This revenue effect, would you represent this with respect to the Revenue problem, also extraordinary effects which may be cleared, is doubtful. In the IT business, things moving fast.
So a certain basic level of restructuring expenses seem to be quite regular. But even if you argue differently, you must Why the share based remuneration should be clear? Well, this is an integral part of the old and the new system, which means they will be recurrent annually, which brings me to the item of the executive board pay system. The SDK is not going to approve it. We welcome that pay is variable and thus meeting the requirements of at least 66 percent of variable pay.
But we think the short term component of variable Premium duration over 1 year is not agreeable with the Joint Stock Corporation Act. Well, you can see that this part of The pay is found in almost all pay systems. We support the abolition of transition Termination of a contract and irrespective of who is responsible, we support your argument. We find that It is indeed magnanimous to release an Executive Board member prematurely. But a bonus for that, leaving should be granted only if there's an important reason which the company has to stand for.
The culminating points are the change of control clauses, which are anachronistic, which Only because of changes in the shareholders' group provide for a premature payment of Board members leaving early, even in Anglo Saxon countries, this is no longer The case changes are irrelevant because this does not affect the shareholders. Pension is contribution oriented. The STK feels that the annual contributions should be limited 20% of the fixed cost. The targets of the parameters must be defined as whatever. And what part is covered by the fixed amount, relatively large amount of discretion of the allocation isn't really up to the facts.
To respond to special situations, this bandwidth is not necessary as the parameters Used for KRPs and are based on non IFRS, the question is whether it would be better to have also dividend policy aligned by modified non IFRS base so that we would have equal movements on both sides. Executive Board, Meridel, thanks for the successful year. I'd like to ask the Executive Board to convey our thanks to the staff. Apologies from the interpreter. He didn't have the text, which was read out at top speed.
Thank you, Mr. Kienle. Let me Read out the updated list of attendance of the basic capital of 1,000,000,000 EUR 228,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 into just as many shares. These are represented in the press meeting, 863,188,200 and 20 shares with the same number of votes, which is 70.26 percent of the capital stock. On top, 700 and 50,293,000 shares are covered by written notes.
This will later be included inverting on items to 863,900 863,930,513 shares are represented or represented by written vote, which is 70 point 3% to 2% of the capital stock. This is going to change a number of times. And now, Mr. Bullman. And then next, I'd like to invite Mr.
Wolfgang Buhlmann. Thank you. Chairman, ladies and gentlemen, I'm Hans Martin Buhlmann. Chairman of VLP represents 6,338,019 shares. As long as you aren't watching me, but watching the cloud behind me, you see the Important point of discussion today, we are looking at the cloud like the we're waiting for the Lake to bite.
When will there be the shower of good results and high dividends coming out of the cloud? And What's about the cloud which is strong behind me with the high rises? The margin has been reduced. Right now, We have participation and interest, but we don't really feel any joy about these acquisitions. But as you are watching me, Is the result in place?
When is the dividend where you keep forecasting in 2020 or 2018? The first steps. Please indicate a reliable, a binding bit of information because today, We're being given FENIX more as a dividend. We say thank you, we are happy, it's nice to have it, but it's not the end of the development. And in order To prevent you from being criticized later on, you then add to the agenda, Mr.
Chairman, a point about approval of the Executive Board Pay System. We are still in the cloud. We don't really see too clearly. And then we should We are supposed to tell you what Board members are supposed to be paid. Strange situation.
I'll come back to this. We are supposed to elect Mrs. Yost, member of the Supervisory Board. When I heard that she was doing design research, I thought, why do I invite somebody to join the A supervisory board who does design in an IT company. Well, I thought she's a woman and we need a woman.
Nasty idea, but I learned from your presentation, Mrs. Eoss, that it's highly intelligent, obviously, To incite you to become a member of the Supervisory Board and to hear the advice you can give us, most of all, the Board members. Have two questions. How will Hana be dressed or
what
Do you wear on the cloud? Once you have arrived on the cloud, as an angel, what do you wear on the cloud? And How do you build a computer and introduce it into my suit? Oh, here, You had the question, Mr. Kirchimpair, Mrs.
Joost. Perhaps you could explain this just a wee bit. The instrument build, We have a quarterly result to look at, which isn't arousing any enthusiasm in anybody. January was a small hole. Cloud margins moved upward, but the figures were quite surprising to everybody.
How should you assess When announcing the quarterly result, you mentioned the salient point as being A strong move in the Q2. Mr. Murchic, that's the absolute challenge. You should tell us now the Q2 is Now tell us, you are just the managers, we are the owners. Tell us How good is it?
What do you have in your pocket? And what are you expecting? On June 30, did you reach The point where you want it to be, do we have to hope for gold in October again? The gross margin in 2015 for SAP is lower. Equity return on equity is clearly lower and the operating margin was reduced from 25 to 20 points.
It dropped. So when Will this move upward again? Well, your speech was committed, Mr. McDermott, full of enthusiasm. If I understood you correctly, you wanted to tell me and all the others, SAP is everywhere.
SAP is not just where Lidl, A cheap seller has shops but is also in Daimler Trucks, upper class vehicles and also in calls With the city of law and always operating on green current of NBW, the utilities, The bridge between one flow and the other current will also be introduced by SAP as well, that should put wings on our feelings. Now let me talk about the details of a difficult point. On 27 of the report you said the Supervisory Board has a discretion. It pays We know the executive board in its discretion. I can only say it was that way before.
It's no longer as it should be. And then the Supervisory Board, in a long term incentive, The portion shares of the executive board, so the better the company delivers, the higher the Speed at which the Executive Board makes money. Well, that can't be. An executive board must be diligent, must like work, must also Be motivated and occasionally has to tell their wives. Now it's impossible to work now.
I have no time. But You carry away €10,000,000 that's all right. Then somebody makes €10,000,000 in a year Difficult to understand, difficulties to understand. I think this is where the Supervisory Board, If this discretion is as wide as we just heard, here the supervisory board should be careful. Nothing works without a caregiver.
You said that. But Mr. Plutner, Incidentally, I don't want to appear as your teacher, but make things simple with the The attendance cards would be given to the internal revenue of RATs. Your proxies are collected at the door. All the men gave their proxies to me, and all the women gave it to Mrs.
Stella Heineken. That would be a sound solution. If in fact You paid €10,000,000 to 1 of the Executive Board members on a clearly reduced scaled just a few million to some others. I think it's too reduced. I think of the others who get clearly less.
You must motivate those 2. It's 76,986 people. You must motivate them so that the Incidentally, I was pleased to hear Mr. Ruiz that you have moved all around you. So Microsoft, you worked for HP, you worked as a consultant, And now you have all this knowledge, and I hope you'll stay with us and transfer your knowledge collected elsewhere, Leading the staff into a new future of SAP, which, among other things, means an award of economic Diligence for gender equality.
It's an award interesting to see. Could you tell me briefly What you changed in the female part of population? We have more and more sales now due to EMEA, is revenue from the Middle East, North Africa and Europe also out of Karlsruhe. And the increasingly faster growth of sales, thanks to the cloud, is in the United States, Especially China or the Pacific area Asia Pacific also contribute nicely. Does that change the culture of the company?
Does it change The culture of the staff, does it change the values of SAP? If the quality of sales revenue come from other parts of the world at this rate. The best thing about SAP, and this is important, is its cash flow. The free cash flow, which has now exceeded the €3,000,000,000 limit, we expect that's the stability of our business, A company which has a balance sheet figure, the first time in this quarter, We enter less than half the amount for goodwill, half of the balance sheet, €4,000,000 cash €8,000,000,000 of debt. Now you are paid to run into debt, and you have to pay if somebody watches your money.
Do we have to change our balance sheet policy? And Did you include item 8 into your agenda only because you want to rephrase your debt at a lower price level and the €4,000,000,000 on the account will then be invested right away because this is what you show on the balance sheet. The difficult thing about the cloud is that you want to understand how it works. Front of the store, but still in the attendance area, Chairman, we have an explanation. You are telling us in the 1st years, Cloud will be expensive.
After 4 years, it will become profitable. And by year 7, I don't quite know what is going to happen. Don't have to be afraid, in the period between 2018 2021, you want to harvest So is that adding up the fixed costs, which you're now spending in your computer center? Or do we Do you expect other negative surprises in that area? Well, when looking at the P and L statement, we must say that with €3,000,000,000 more sales, only €2,000,000,000 more profit.
The operating result is almost all the way down. It's a negative development clearly because we have high acquisition costs, €738,000,000 for restructuring, 2,000 people laid off or changed. Well, on the one hand, you hire people. On the other hand, you lay off people. And you have to pay €600,000,000 more than some of us have.
Can't that be reduced? And There's an extraordinary expense of €2,000,000,000 in the current year. Revenues by segment. You introduced a new structure. Right way.
These figures from cloud subscription and support Sales, can they be extrapolated? They rose from $600,000,000 to $850,000,000 depending on non or IFRS, can they be extrapolated from what we saw in the Q1, 33% plus? Can they be extrapolated in the direction which you plan them? And can we take this as a base? Or do we have to regenerate this revenue every year.
Does that increase automatically? Mr. McDermott, in your speech, I found a major problem. You told us that late in 2015, The volume of orders in hand for cloud subscription and support amounted to €3,700,000,000 So when I have The order book of a truck manufacturer is simple. He starts today, keeps building trucks, And that takes care of the backlog of orders.
Why do we have a backlog of orders and why don't we deliver you cash in that €1,000,000,000 why do you separate it? Now I'm not going To talk about the impairment depreciation, but there is one question about the participations, the interest freeboard. SAP America, With €402,000,000 but with a minus sign in front allows. Why does that have to be? Ariba, if it's reported correctly, with an annual result of -145 The positive side is €500,000,000 positive.
When will these figures turn black? When will they become pleasant figures? Or did you benefit from this by cross selling and we can't understand individual figures anymore. SAP Save themselves, they've understood their business model, which you tell us, SAP CISA is solidly increasing benefit. We shareholders only want to know when does it arrive in our process, What will we see?
SAP is and it wasn't really They're constantly arguing with Bayer. You'll have to work every day that one price goes up and the other goes down, And we must remain the most expensive most valuable company. When do we know whether S400, S4? S4 because it's based on Industry 4.0. S4HANA And when will the cloud have the largest share in the success of the next few years?
Mr. Osman, when somebody spent 35 years of his life in 1 company And you ask yourself, does he really know any other part of the world? If somebody spends 20 years and was Executive Board member listed on the DAX. It's valuable to the company and is also a sign of excellence to the holder of this chair. The applause is to you.
Thank you very much.
That was a surprising finish. I wasn't prepared for that. So I need to sort myself. Got sorting problems here. Next speaker is Rolf Nestl and then Doctor.
Anna Polza Mr. Plutner, Mr. McDermott, ladies and gentlemen of the Executive Board, Ladies and gentlemen of the Supervisory Board, dear shareholders, ladies and gentlemen, in your report 2015, we read that you work for 300,000 customers. There is also the information elsewhere that there are 50,000 midsized companies to which you're selling your products. What can you do Are you providing the right kind of mentor training so that to your staff So that your company will continue to perform, when was the last company meeting and what was it like?
I also have some questions on the operating margin, the 20.5% last year And the year before, it was 24.6%. And for the sake of completion, Let me say that according to the annual report in 2011, it was 34.3%. Is going to partner or has partnered with SAP to do better business with companies. Now this cooperation with these companies, how will that reflect I don't know what impact will that have on your revenue and earnings. Thank you very much for your attention.
Thank you, Rolf Nestel. And now Anna Polze and then Doctor. Klaus Walford, Professor Plutner, Mr. McDermott, ladies and gentlemen, dear shareholders, I'm Hannah Polze. I'm a member of the German Association of Female Lawyers, and I work as a lawyer.
Our objective is to achieve equal equality of women in all areas of society. And this means equal career opportunities for all men and women. This is why we have a project, shareholders, female shareholders are demanding equal rights. The query of possibilities for women, we're also active at the European level. With our partner organizations, we visit France, Spain and other EU states and AGMs in those countries, the results from the AGM visits were presented in February this year in Brussels.
Here in Germany, in May 2015, The law for the equal participation of women and men in managerial positions in the public sector and the private sector was enacted. This is a milestone law on the path towards more parity The new legal framework against this background, I have the following questions. First of all, the Supervisory Board. The law stipulates that your kind of company should have a supervisory board of which at least 30% should be women. This minimum share of 30% on the supervisory board should be taken into consideration when new members are elected or new seats are created.
Starting 1st January 2016, your company has 2 women on the shareholder and labor bench. This is 22%. For the by elections, Professor Gasset Juste is a female candidate, and she was already part of the supervisory board and on a temporary basis. So nothing would change about The ratio of women and men in the supervisory board, how will you make sure in your company that you will fulfill the quota of 30% in future? And I have the following question to the Executive Board.
The law I mentioned stipulates that there's a certain target value, and there should be a public report on the achievement of the target quota with regard to women on the Executive Board. According to your annual report, the quota of women on the Executive Board We'll be 1 woman by the 1st June 2017. What specific measures are you going to take to Fill that vacancy, if you like. Is there a public profile? And how can you make sure that there will always be female candidates suitable for the posts On the Executive Board.
My next question concerns the overall percentage of women in your headcount. According to your annual report, that ratio is 31% of women. Does this apply to Germany as well? And according to the law I mentioned, The 2 management levels below the executive board should also have women's quota. And I would be like and I would be interested in the current Figures in Germany.
How many women work at the first level below the executive vote and on the second level below the executive vote? Please give me the absolute number of women and the percentages for the respective managerial levels. You have targets for of 23% on the first and 17% on the 7th level, below the Executive Board level. It seems that this is just conserving the status quo. Could you not have been more ambitious in setting your targets?
And the percentages do not correspond to the number of women among your headcount. Are you planning to adjust your target figures In the not too distant future, how many women are active in mid managerial positions? Please give us the absolute figures and the percentages. My next question concerns the promotion of women. How many women and how many men were promoted last year to the 1st and second level below the Executive Board level.
Please give me the absolute figures and the percentages. Finally, how do you identify future managers, women managers? How do you For their development, at the management level, please let us know what measures you're taking and what effect they are having. The people who are in charge of HR, do they have measurable goals to make sure that talented women can exploit their full potential in your company? And if so, does the performance of managers flow into the evaluation and possible bonus payments.
Who has responsibility for the achievement of these results? It's a reporting chain Through the Executive Board to the Supervisory Board. And my final question concerns corporate communication. We really wanted to ask how do you communicate The change, there seems to be a trend To keep your status quo, are you planning to change the status quo with regard to women? And how do you communicate this?
And how do you address management and your employees with regard to the topic of Thank you very much, Doctor. Werner Polser. Next, Claus Wolferts. And after that, Jens Starkovuschko will be the next speaker after him. Mr.
McDermott, Mr. Plattner, ladies and gentlemen of the Executive and Supervisory Boards and Dear Shareholders, I'm Karls Walford. I come from Karlsruhe. I'm a self employed engineer. I'm pensioned, and I represent my own shares.
Many of my listed questions have already been asked Mr. McDermott, in your presentation With the video, you reported about innovations in Karlsruhe. Now I'm a citizen of Karlsruhe. Is the headquarters of the E and BMW with its AGM, and Waldorf is not far. But the innovation you presented is something which was hardly covered or not covered in the media.
Is this Because SAP is just working behind the scenes with the database and with the IT, because it was only one position on the Torrenberg Hill, where this nice innovation was demonstrated. Now I'm skeptical whether up there, a bit away from the city or center, There will be any electric vehicles to recharge their batteries at their charging station because that's basically Almost in the forest. And are the 2 partners, SAP and E and BW, Do they have an equal position in this partnership? Or is there a leading company? Then I looked at the headcount in recent years, and I try to extrapolate a bit.
At the moment, we have about 80,000 or you have about 80,000 staff. If The development goes on for the next 3 or 4 years in 2019. We will probably have a 6 digit number that is more than 100,000 staff. And if there are any acquisitions, this figure might be reached even quicker. Now what can we expect If we look at personnel expenditure, which is reported at per capita spending in the past is about €110,000 per staff member.
Last year, there was a 15% increase to 126 €1,000 per staff member. Your headcount in those 4 years My question is, the higher expenses for HR, is this Due to more spending in the area of finding qualified talent or winning new talent or enticing staff members away from other companies? Or are there other reasons for this increase in spending and if so, what is that reason? Then let me talk about R and D. If you compare the figures related to revenue, In the past 4 years or 5 years, we have seen 13.5% as a percentage of revenue.
If you relate this to the operating expenditure, then this is this went from 20% to 17% per year, a decrease. So where does this discrepancy come from? Then item 2 of the agenda In the dividend payout and the distribution, there's a difference between profit provisions, 1 €1,000,000,000 exactly and the carry forward to new account, €6,800,000,000 carried forward to new account. Why is Where does this difference come from? Does this have tax reasons or other reasons?
Finally, the question of the institutional investors, several of them, mainly in Europe and the founding members, hold between 14% 20% of The stock capital of SAP SE 14% 20%. And the private investors lie at about 18%, and private investors include Unknown shareholders, but you have shares with names on them. You know all your shareholders. Finally, a point Not on the annual report, but about the AGM. I have been shareholder for several years.
I remember the first Annual meetings in the Palatine Hotel in Wiesloch, the number of staff of SAP were had 4 digit, several 1,000. And The last members of the executive board and members of the supervisory board, Well, 2 of them are left and soon it will be only 1. Now that was a completely different kind of AGM than we are seeing here. And of course, at that time, there weren't any security provisions. Now I must admit, I have a mustache, So I may look like a terrorist.
And hence, I was searched not once but several times On entering, I had to pass the security gate Several times, my nail clipper was taken away and this little 3.5 centimeter large, you can't even see it, I'm sorry, this little metal clamp because it could be a weapon with which I could maybe threaten the life of a member of the Executive Board The Supervisory Board question, is this really necessary? Thank you. Those were my comments. Thank you, Doctor. Klaus Walfords.
Would have to call the translator from his lunch. I am an independent consultant, and I'm here because I wonder if SAP is an investment into which I should invest more money. My first personal contact with SAP was when I studied Economics and IT. This is a long time ago. As you can see from my head, I then went into a different industry, selling consumer goods.
But actually, SAP would have been a bad choice, neither as an employer nor as a share. And those of you who have been there for such a long time, congratulations. I would like to talk about the topic of courage. And courage is something that the picture on your annual report inspires, reimagine your business. For those who are who don't know very much in English, this means something like change your business completely.
Now Mr. Buhlmann Where we are at the moment, most of us here, if they're not staff members of SAP or people associated, May, of course, have a bit of a hard time. This the cloud, this is something that's intangible in a way. What And dear ladies and gentlemen of the Executive Board and the Supervisory Board, a business model that has been successful for years has changed. Change business model overnight.
If you change your go to market as dramatically as SAP does from a license model where you get a lot of money when the contract is signed and later you get less to a model where you get a little in the beginning and then the revenue is spread out over time. This takes courage because many things can go wrong. You have to invest heavily at the outset And you see the earnings later. Now we, as Germans, always accuse the Americans of being interested not only in as opposed to be successful in long range. I think that deserves a hand, at least from me.
And we've talked about companies like Salesforce. They are very aggressive on the market. They have a big customer service, and they really focus on revenue and market share. And I think SAP is a bit different, which is a very good thing. Secondly, courage.
Oh, I have another question. In Q1, We see that the revenue changed by €170,000,000 increase in the cloud. And overall, the cloud and the normal business by €190,000,000 So the cloud grew hugely. The normal business, is it flattening out because there's hardly any growth? Basic business, €20,000,000 That's nothing almost.
Can we expect this to start having effect? And does the cloud really have to step on the accelerator so that we can really grow? What can we expect in 2 or 3 years' time? Will the core business continue to grow? Or are we expecting a shrinking business here?
If the cloud keeps on growing like it has and will also contribute a contribution margin then, of course, is something we can live with. But I wonder how is this going to happen. Mr. Buhlmann addressed this too. What will happen in 2020?
When will we see this turning point? When will we really see the taking off, becoming so profitable that the rest is maybe not negligible, but nothing we will have to worry about. 2nd topic, where you received the Red Dot Award. Now it's great, of course, that also with Ms. Joost, You have someone on the supervisory board who looks into this usability.
When I studied, SAP was One thing above all, incredibly difficult to operate and extremely boring for users. This is something they did not want to change and no one wanted to use an SAP system at the time. Now making this user experience better is nice. Now entering figures will never be as sexy and and to say, let's change that user interface. The 3rd aspect of courage oops, I've got another one.
And one little example, by the way, why this works in design and also Paying attention to applications. This is a Faber Castell pencil. It is called Grip 2,001. This is probably the leading pencil globally. Everyone who uses a pencil or buys a pencil when you've Felt it has a very nice surface.
You never want to use another pencil again. It's the best in the world. So I hope the same goes for the Fiori system. Once you've used it, you never want to go back to anything else after that. And You also worry too much about the cost.
Now you can get a pencil for €0.20 We buy this pencil, it costs €1, but people who've used it will never want to go back to the old cheap pencils. Now the 3rd aspect Of courage, diversity is something you talked about, and I think this is good. It's a good thing that you mentioned this in the end of your speech, Mr. McDermott Bill, and of course, I work for an American company. So I can call you Bill, can't I?
No, it's good that at the end, it wasn't the hard figures, but the soft factors. What do we do for the people and with the people now? This is very important. Nearly 80,000 people work for SAP. And something I like Very much getting the perspective, looking at the health index, for example, what this means for us as shareholders.
So we must have a vital interest in the health of your staff that you work in great offices under great conditions and You have great support personally because this makes us richer. And this link is something that many companies haven't realize SAP is leading in this respect. And of course, it helps us very much that we get these inspirations from America. Now one question about that, Nearly all figures rose. The number of people who want to stay with SAP, I think, went down by 2 percentage points, I believe.
Why is this so if all other figures rise? Can you explain that? And I said when I started Talking that I feel a bit like Berkshire Hathaway. Why? Now I think we have a smaller audience, but it's also a stadium.
And Berkshire Hathaway is also there or one of the founders is up there on the podium. Mr. Plattner as one of the Supervisory Board members or as the chair of the Supervisory Board. And we are here in the SAP arena, so we can all be proud. All shareholders can be really proud of this, So stick to that.
And something else, unlike other AGMs, most people are sitting there with a broad Thank you very much for all that praise. Ladies and gentlemen, Members of the Executive Board and the Supervisory Board, dear shareholders, large and small, I must say I subscribed to. Now that commitment of SAP In traffic, it is something that is not visible in Karlsruhe. The day before yesterday, I was at the AGM of E and BW, If you think that Karlsruhe is worth mentioning as a city when it comes to traffic, now you really put your foot in it Because at the moment, Karlsruhe is the city with so many traffic problems and construction areas, You wouldn't believe it. And Mr.
Mentrup, as the mayor, is not really responsible for it because it was his predecessor who started this. But this is something I don't really want to go into because this is irrelevant here. But what is relevant here, your Really trust the share price more than your words. Now the share price did go up, But your pricing does not seem to be in line with the development of the share price. I've been a shareholder for 40 years.
And for 40 years, I've been watching stock prices. And I know one thing. If the stock price isn't going up, then something's wrong. Maybe it will in a while. But at the moment, it is stuck to its position.
And So much for that. And to repeat myself here, what you talked about, what you said about Karlsruhe, I'm not only a small shareholder, I'm also a person with a job. I work For a company that uses SAP software, it was implemented a little while ago. I must say, When I started working in 1983, I started working in the IT department. I've always worked with IT, and I've always tried to present the applications to users in such a way that they could work with them.
Now of course, you may say that the service group is stupid. They're not able to understand it or to implement it. It's also possible, though, that your software is simply too complicated. Right. And the person who spoke before me, he presented a pencil.
I'll give you an example. Now using a pencil, if I stand here and if I look At the faces around me, all the shareholders, I would say about 60% of them are older than 60. And we know that people you may argue that this is not true, but let me just assume it for the sake of argument. But a pencil, rather than trying to create monuments which the users don't appreciate. And as a final remark, The person who spoke before me from Karlsruhe, I need to confirm what he said.
And got one of those bottles back because maybe she wanted to You're taking perfume bottles away from women. You should be ashamed. What would you do if I were Going to carry a condom in. Will you take that away from me too? Because I could pull that over my head and be a terrorist.
This is ridiculous. Sure, are doing great work for SAP. And sorry if I say so, but you members of the Executive Board and the Supervisory Board, You make so much money. I don't really want to thank you. I think you've got gratitude enough as it is.
Thank you.
What about me? Can I say thank you to you? Well, thank you. I express my thanks. There's another request for the floor, Thomas Kugler.
Please take the floor. Ladies and gentlemen, good day. I have one item I'd like to address. It's about the long term orientation of SAP. In the business model, SAP has specified that they are making less money, but will make Even today, during our AGM, we live With a focus on the very immediate future, why do we use just to throw away cups and plates?
Why don't we use If there are no further requests for the floor, I think we start with the answering of the questions. We all agree? Right. Let's start with Ms. Jela Bena Heineken.
She asked about the Global Management Board. It's been canceled. Well, we founded this at a phase when SAP was oriented or was restructured with a lot of strategic decision to be taken. And during that phase, the extended management platform of the Global Management Board was relevant. This was proven its worth because, as you've learned today, many of the member of the former management board are now a member of the Executive Board.
That's Michael Klein and Mayap and Borika Dukha Mutted, Divak Pris and We are well prepared for future tasks. We have 8 members of the Executive Board, including Gerd Ostwald, whose contract will end towards the end of this year. We are very happy that Helmut Arnold will take over the responsibility for Data as a Service in the U. S, And she will report to Steve Sink. And Quentin Clark is responsible for Strategy Portfolio M and A and the Partner Management.
Another question related to when the new lady will be presented that will join the Executive Board as of 2017. Well, it's correct that the surprise report at its March 19, 2015 meeting set itself the goal of having 1 woman on the Executive Board of SAP SE by June 30, 2017. But please bear with us that the Supervisory Board does not specify the recruitment process, both due to the interest of the company and also to protect future candidates. So we treat this confidentiality. And this also applies to information about where we are in the process and what our plan for the selection procedure is.
Among other considerations, we want to avoid in which it might be possible for potential candidates to ascertain whether we have already approached other candidates before. Then in our question referred to the peer group we used for the new variable remuneration system. The peer group index included the following competitors, both from IT as from the Cloud area: Microsoft Oracle IBM Salesforce Adobe VMware Symantec Workday NetSuite and Tableau. Then the question as regards the adequacy of the remuneration. Ernst and Young was commissioned to decide on the LTI plan and decide on the adequacy and also to assess the ambitious goals and to assess the adequacy of the individual role based remunerations.
The adequacy was in line with size of the SAP. And since there are no similar sized companies, we've this survey also looked at global competitors, not our German competitors alone to live up to the global orientation of the company and also the business situation. The remuneration is such that with a view to our global competitors, it is internationally competitive and Thus, an incentive to work in an international environment. The benchmark analysis confirms that the three elements of the remuneration are in line with what's usual on the market. But to consider the main competitors in the future, the future remuneration will be focused more on the on similar competitors At the global level, we increased the long term incentive, and we will also pay the remuneration for international executive boardrooms in their local currency.
The structure that was introduced in 2012 is still valid, and the adequacy was confirmed by our from Ernst and Young. The following criteria were used to assess the adequacy. Total remuneration has needs to be in appropriate ratio to the task and performances of the Executive Board members and it mustn't exceed usual remuneration without special reasons. So a horizontal comparison was done based on companies of similar size and complexity. There is a legal survey by Algon Ovary and the LTI Our SEU Milestone Plan 2015, for the last time in 2015, leads to a regular allocation of so called Restricted share units and ends with the end of the current fiscal year.
It will be replaced by a new LTA, LTI, the SAP Long Term Incentive Program 2016. In this context, Allen Overy was required from a leader point of view To assess whether the remuneration system is compatible with the rules and regulations let down in the German Stock Operation Act. The costs of the 2 regulation, the legal opinion costs, €12,000 and the survey regarding the adequacy costs, €30,000 net, both of them. Now we were also asked to provide a practical calculation Using the 2016 remunerations on the figures of 2015, well, Basically, I have to point out that the direct comparison of the previous RSU milestone plan 2015 with the new LTI 2016 is not feasible since Both include long term remuneration combination based on different performance criteria, which I'd like to expatiate. The LTAI 2016 is a remuneration component, which, apart from the share price development of the SAP, is based on the outperformance compared to peer group index.
The Supervisory Board decided to take a peer group index as a basis for this plan. The peer group index consists of the main competitors, both from the field of IT as well as cloud. Beyond that, we've weighed the companies within the index, which, that will strengthen smaller and more volatile companies and qualifies the index as a very ambitious performance criterion. The existing RSUs milestone plan 2015 was focusing, apart from the share price, on the purely Financial key performance indicators derived from the Strategy 2015, revenues and operating profit based on non IFRS. To answer your questions, we took the following assumptions.
During the calculation, we did not consider the share price development. Target of achievement of the financial KPIs at RSU for 2015 is 112.96%. In addition, the individual adjustment factor for the calculation is not considered. This is a specialty of the RSU Milestone Plan 2015, which refers to the length of the plan. Assuming these assumptions, the LTI 2016 will lead to a target achievement of 108%, thus being below the targeted achievement of the RSA milestone plan 2015.
So these were the first questions. I can tick off. Right, I can continue. My apologies. My voice is not quite up to standard.
I've got a cold. But still, I do my best for you. So first of all, You asked about Agenda Item 8 since debt service is our focus. Well, the reason simply is the following. We had a similar authorization, which will Spire briefly after this AGM and is to be replaced and is to be renewed for another 5 years.
It's clear. It's a kind of shelf resolution to be prepared for all eventualities. As the Swabians say, the devil is in the detail. And we want to be prepared and we want to be flexible. But we have no specific plans right now.
We have no specific plans. And in the past, we've shown too that We are rather prudent and careful in handling these authorization. We've never used them, so we'd be very happy to get your trust and your approval. The second question referred to the segments Because you said we don't know which revenues are done where. What about Private Cloud and we only had 1 business segment.
Now we have 2 business segments. So per definition, For the Business Network, we have very high transparency. And this segment, Business Networks, When it comes to cloud subscription revenues at the non IFRS business, we have an increase of 159%. The gross margin was roughly 75%, as mentioned before. In public cloud and private cloud, They are indeed under style subscription.
They are shown under Application and Services here. And this segment increased by 64% and the gross margin for public cloud was roughly 70%. The gross margin private cloud negative in 2015 because we're building up this segment, but clearly better than 2014. And we assume that by 2016, in the Private Cloud, we'll reach breakeven. And in 2020, we'll have a gross margin of roughly 40%, similar to other segments.
We expect gross margin of 80%. Then the question, The Spire Online report and this HANA, who is suing whom, in which courts and whether reserves or provisions have to be made. Let me be specific here. And Hassel Plattner has commented this report, And he will comment on this once again. Quite clearly, the database technology HANA was developed independently by SAP.
We carefully investigated the approaches. We have no proof that SAP IP rights. And neither in Germany nor in the U. S, any competitors have sued us For violation of IP rights. Well, let me add one thing here.
The research as regards this column based database was Dan at the Hasso Plattner Institute in Potsdam. All my Students, all the persons involved in this research work, All the people doing a master study have signed an agreement that they've Never worked with Terra Data Systems, IBM or Oracle. This presentation at the large database, Confluence in Providence, Rhode Island, which I gave, and all the database competitors or the where they were present. Well, at then, no one of them worked on a column based in memory database. The only such Database, which was successful in the market, was from Sybase.
And we purchased Sybase and thus it became part of SAP. So this reproach that we Nipped or Nicked, the column based in memory database or that we copied something is ridiculous, and it's frivolous. Thank you, Hasso. Before I hand over to Bill, I Would answer some questions of Mr. Kienle.
First of all, the volume that is required to get an ideal From our midterm guidance, you can clearly see that by 2017, we expect the cloud subscription revenues to be between €2,800,000,000 and €4,000,000,000 That brings us pretty close to the subscription Software license fees. And by 2018, we expect that We will exceed the license for the first time. And if you look at our midterm guidance for 2017 2020, that during that period, the increase of operating results increases considerably. And in 2017, we assume an operating profit between €6,700,000,000 for 2016. Our guidance is €6,400,000,000 €400,000,000,000 and €6,700,000,000 And we assume that in 2020, will reach somewhere between €8,000,000,000 €9,000,000,000 So as of 2018, we'll reach the point where Cloud will contribute over proportionately to our increase in profits.
Then the question referring to the discounting rates used for the different segments and the question Why the discount factor for the Business Network segment is 100 basis points higher than the ADS segment despite the fact that the higher risk is in the Business segment. Well, the Application Technology Services segment, which is the classical SAP business act in a very mature market and is At a globally very differentiated market where we're active in very different countries with strong growth, different to that, The business network is fairly young and dynamic and is active in a dynamic environment where there are lower access barriers and there's also regional diversification, which is not explicit yet as in our classical segment. Then you look at the impairment test In the Business Network segment, and you asked the question whether this segment was not planned properly in our impairment test. Well, first of all, we have to say that in our impairment test, We assumed the 10 years period or we looked at a 10 years period. That is why it doesn't make sense to look at just 1 year.
We assume growth across the entire period of this 10 years period of roughly 16%. That will make a major contribution to achieve the subscription revenues in 2020 between €6,500,000 €8,000,000 And that's a growth rate of 28% between 2015 2020. And here, we expect a significant contribution of the business network, which in the 1st years of this period will develop more dynamically than in the average. But Be that as it may, even those even in that period, we will reach the market saturation, And that is why we expect 16% overall. And this impairment test, we also had To look at the current value below, and here, we have To focus on externally available information, we can't rely on management planning alone.
The analysis we have across 4 to 5 years assume growth of 20% and accordingly, the 16% are appropriate. Then you also asked about this risk free base interest for them and the beta factor for the 2 segments. Let me briefly refer to that in the ATS segment. The base interest rate, 2.0 percent market risk premium, 6.7% and the beta factor, 1.0. In the SBN segment, Risk free base interest, 3 percent market risk premium, 6.1 percent beta factor, 1.1.
Indeed, slightly different values. But as I've said, that's due to the different valuation parameters for the 2 segments. Even the riskless base interest varies because the Business Networks segment is active more in the American area compared to the Application Technology and Services segment, which is stronger in Europe. Both segments have a different orientation, and the ATS segment sells services, subscriptions, whereas the network covers the segment mentioned before, and that is why we have a different market risk premium and a different beta factor for the 2 segments. Then we have different interest level in the U.
S. And in Europe, In the SBN segment, stronger focus on revenues in the U. S. Accordingly, higher risk free basis. Interest rate, but there is a lower market risk premium in the U.
S. Market. That is why we have this market risk premium that is 0.6% lower in the beta factor that is slightly higher in the SBN segment, results from the more dynamic environment which we have in this segment. We have 2 requests for the floor. And then maybe you can answer all the questions one go.
So Doctor. Barbara Timberg and after her, your surveillance. Ladies and gentlemen, I'm Barbara Glembach. I started Business Economics, And I got my doctoral thesis in that. Doctor.
Plattner, you were quite surprised that one speaker finished so quickly. And now I'm quite In your presentation or in the presentation of Bill McDermott, there was Well, I thought it was quite weak, I thought. I attend other AGMs, whether it's AGMs in Germany, the traditional AGs or SEs. And during these AGMs, We get more figures, more factored figures than you have presented. We get factored figures regarding the balance sheet, the financing.
We have segment reporting, and that is what I've been missing here. You had no small balance sheet, as you were. You had no small P and L and no revenues, no matter what you call it. And you had no Liquidity calculation, no cash flow calculation. That's different in other AGMs.
Why did you didn't you do that? Instead, we had, well, a U. S. Business show. It was entertainment, Movies.
It was a nice presentation. But actually, I think that's entertainment. And that's nothing to do with the factorial AGM. I mean, I traveled from Bochum this morning. I started with a train at 5:40 To have a coffee at 10 o'clock, I couldn't get it.
And there was no more coffee. There were no more rolls. I think, well, that's weak. In your presentations, you said SAP sets the course. I don't think so.
When it
comes to the ladies and the Board, you didn't set the pace. There are other companies have More women on the board for a longer period of time. Well, setting the pace, well, you talked in great detail about your Software for predictive maintenance, preventive repair work, yes, well, we drive a Fiat. And a simple Fiat, it's a panda. It's available at €10,000 Even for such a car, Fiat tells you, well, think about it during the next maintenance to replace whatever.
That's preventive maintenance, 2, if you go to Industrial Fairs, that's been announced since 2000. They announced it, this preventive maintenance, it's been a matter of course. And you announced this as something new. I think that's not new. It's not so future oriented.
And then you said the link between front office and back office. Well, this information isn't brilliant. I'm not up to scratch in every respect, but I think that in 1996 or 1997, I gave the first Speeches on the links of information between front office and back office, that's roughly 20 years ago. And you announced this as the latest news. Well, that's a bit embarrassing.
And there are more embarrassing factors. Your references, The Hamburg Port Authority, Hala, that's the brief word for that. That's not a Good reference because Bejalar, of all port authorities, as far as I know, has the worst result. There's only one port Worse than that is Wilhelmshaven. But that's Wilhelmshaven that's under development.
But look at Bemalagerhaus or Rotterdam, Amsterdam, they're all faring much better than Hamburg. And what is more, I was surprised To hear that you gave some financial figures, and then you announced increases in the cloud. And the other are the increases in the Cloud plus Software. I didn't understand it. You buy an SAP solution once.
I install it as an island solution on my company, in my Corporate Network. And the other version is I hire the cloud as well. And sorry, I don't get it. And in the context with the detailed figures, I think it's rather poor That you don't make any differentiated comments on revenues and expenses regarding licenses, software And to differentiate according to the different types here, whether you use it yourselves, whether you use it and also with a view to the products, the industries, the corporate sectors, whether it's just for procurement, this was mentioned several times, or whether it's for the warehouse or for accounting Yes, the executive board is international. If you look at the family names alone, they all sound international, not just purely German.
And also, when it comes to the many nationalities you have amongst your employees, yes, more international than other companies who generates more than 70% abroad. Then we had the ladies from the Lawyers Associations with their women's quota. You said 23% Management positions are in women's hand. But what is that? I mean, How many are at which level?
A management level, is that the main secretary To the undersecretary, is that the first level of management? Or where does management start, the executive level? If you just have 1 or 2 people under you, is that executive level? Or is that a small department, a project group? So I think I want to have more details here.
Ma'am? You're looking for new fields of business. And you also mentioned Renewable Energies. You've developed software, too, For the transfer of currents into grids, because obviously, there are a lot of problems here. There is no different metering available in the different grids.
In this context of the I'd like you mentioned Lidl. I mean, this as a paid software, when did they introduce it? When did to establish contact with Lille? And when was it implemented? And what is your Revenue and how long will the contract run?
Then you also mentioned that you want to hire new staff, you want to have university leaders, interns, and you want to motivate them to file for a job with you, to apply for a job. I mean, 1995 to 2010, I Applied several times at the Plattner Institute at Potsdam and also answered job ads at SAP. And if I was lucky, I got an answer telling me, no, I am not suitable. And I expect that if I don't even get a negative answer, you think I'll get the message. And then you mentioned real time.
I think real time is something that's been mentioned since 1999, just in time information. I mean, everyone has it. It's been available for many years. You have it on your mobile, on your laptop or on your whatever you call the device, real time consumptions and whatever. I can only refer to Fiat.
I had a Punto before. Now I try the Panda. And this Punto had Real time. It cost €12,000 back then. I had real time information there.
I've pressed the button and got real time consumption there over the last 10 kilometers. I consume that. On average, it consumes that If they offer real time figures, I think that's nothing special. Right. Next item.
Today, we also talk about by elections. What I'd like to know, Professor Who will replace Mr. Miron? I would like to know why Mr. Miron stepped down.
Then I think it's nice that the lady will join the Board. That's good. Also, with academic degree, more than the gentlemen have, That's good. But what I'm surprised to hear, I mean, in the CV, as you've published in the invitation, the main course of study, that's quite questionable. First, she studied at a University of Applied Science.
Then she added a SHOWS A brief study of Referex. I mean, I studied and Referex, that's something you do 1 or 2 semesters. But to study rhetoric full time, that is something, well, I've never heard of. Well, one woman is nice, but more women would be better. Maybe You could have find someone else in the field of IQ Mathematics.
As regards to Professor Joost, I'd like to know What their teaching obligations are, the number of SWS. And if you look at the invitation, She has 6 additional jobs positioned, amongst others, the Internet ambassador for the EU. And she said that She travels to Brussels a lot. Then there are other 6 positions. She mentioned she has one main job and 7 ancillary jobs.
And she also works for a company That is a start up company. And you know that, that kind of companies are quite chaotic and chaotic and require a lot of time, even more than ordinary, well established companies. So if we assume that there are 5 Supervisory 5 meetings for each of these ancillary jobs she's mentioned, and she's got 7. That's 35 meetings A year, and I wonder how much time she still has to do all to fulfill all her jobs. And I'd like to know how many shares Ms.
Yorges had before she was appointed to the Board. That The previous speakers also mentioned that there are not enough Women on the board, what about myself? Well, I couldn't get a job with the SAP Plutner, but maybe I could get a Board position. I've been trying since 2000, but until now, it didn't work. But I'm not the one to blame for that.
I'm fully motivated. But as I've said, I didn't get a job offer. What is more, I'd like to know, and that's been published everywhere, T TIP, what's your assessment regarding the T TIP? Would that enable you to sell more software due to the fact that the companies are required to do different type of accounting, but also because new markets would open up to you. Then we have a dividend of €1.15 this year.
Well, that's not really great. If you look at the share price of €68, It's just 2%. On the other hand, where do we have this profit of EUR 9,200,000,000, which you indicate and then split into the dividend and also The SAP share price was mentioned too. But if you look at the SAP share price, we also have to bear in mind that there are not many alternatives. Interest rates are really down.
So what can you do? You buy shares. And that is why many people say that the share price is inflated artificially because the other alternative would be to buy a small flat
or
to buy a house or land. And it was also mentioned that the remuneration was addressed. In this context, I like to know The special bonus paid to your employees. How many staff do you have? How many of these employees are paid according to the wage negotiations and how many get a bonus.
What was the maximum bonus and the minimum bonus in euro, not in percent? In the context with the invitation, this invitation booklet, I can only come up with nasty comments. The title is quite nice, Reimagine your business. But Ri, Is this kind of reinvention? I mean, the skyscrapers are getting through the cloud.
So you're above the cloud. I think that's quite confusing. If you produce skyscrapers, Yes, I could have understand that the clouds dilutes the picture so much on that. But The invitation. What I don't like here compared to other invitations to AGMs, On the second, 3rd, 4th or 5th page, you find a table indicating The most important figures of the balance sheet, a brief overview regarding financial figures or the balance sheet.
You could have shown that as well because you're a group that wants to help others to be transparent. Linked to the high remuneration, you should also consider that you are only the employees of the company. The shareholders are the owners, and that is why I think it's just an excuse if you say we requested A expert opinion, and they just confirmed that others are doing it likewise. Others did it likewise and are longer around. I think that's a rather Banal statement.
What I'd like to know is what are the SAP costs for the listing at the Stock Exchange, expenses for stock losses and other administrative costs Connected to the listing at the Stock Exchange, the investors, Do you pay contributions to the Handelskammers, the Chambers of Commerce in Germany? How many FTEs at SAP work in the tax department? How many FTEs work in the legal department? And how many FTEs Work in the field of real research and development, that's true innovation, which will result in licenses to be sold, which will affect the future of the company, too. Now The new remuneration of your Executive Board, you should bear in mind that you should learn From the mistakes, the examples of other companies.
What about pension provisions for the new Executive Board members? I'm sure that I mean, that has been indicated. But why? If I have an income of €10,000,000, Without any problem, I can spend €1,000,000 or €1,500,000 as my private old age provisions. As a small company, I'd like to mention PTHN or BeHala, BeHamburg Port Authority.
There are no pension provisions, no provisions for newly appointed Board members. They get a base remuneration of 300,000 to 400,000. And on top, they get performance related Pay, and they can finance their pensions themselves. I mean, if, on the other hand, you say that your employees, As shown in the press, they should take care of their old age, and they have an average annual income of JPY 65,000,000 to JPY 80,000,000. And they have to save on that.
For the future, I mean, you could save if you make it CHF 1,000,000 or CHF 10,000,000 or even more. So I think it's just not acceptable. Now coming back to your profit of €9,260,000,000 part of which is paid as a dividend. So the first question, Where does this retained earning come from? Or is that just a studio earning like a balance sheet extensions?
That's what other companies have done in Germany. If you have a true annual profit From your product sales and product includes your services or others, so if that is a true profit from your core business, Then this profit should be distributed in 3 parts: 1, new investment onethree employees, but that includes you as the Executive Board and onethree for the shareholders Because they provide the capital or even more, you split into 4 and to build provisions for think that sounds really arrogant. You should also bear in mind that the €10,000,000 that are paid out, just Calculate them and break it down to the entire costs. This is a big cost factor also for Germany and Europe. And I'd also like to know what The VATs that you pay sorry, no, no, the VAT which you pay on all you purchase, license, material, current or what have you, and what's the VAT which you earn as for the services which you sell as your core business?
And what are the costs of the AGM, as regards catering, the local public transport ticket, I couldn't benefit from that, but I think that's very generous. Security, invitation and what have you. How many shareholders do you have in total? How many shareholders have you invited? How many have registered?
And how many are here today? And I also like to know the number of improvements tabled by your employees. How many were implemented how many were tabled? How many were implemented? And what And what are the benefits or savings resulting from these proposals?
And what's your age structures? What was the age of the oldest person hired in 2015? What was the contract he or she got? And what does He or she do. Thank you very much for your attention, and thank you for not limiting my speaking time.
And I wish you all the best and Think about the fact that part of what you Told you was a bit of a lie, really.
I think we'll Let me take Three questions. The figure from 'ninety five, 'ninety six, HPI, it's not the Platt Institute, the Hasso At that time, there was no possibility to apply for a job. Mr. Maison stepped down from the Serprazi Board because I asked him to do so In order to meet the legal requirements and adopt a woman As a candidate for the Supervisory Board, hence, I had to ask somebody to step down. Your remark about secretary and secretary and plus undersecretaries, that was really not up to standard.
As we have another request for the floor, I'm Josef Edelmann. I'm a minority shareholder. Nor would I want to apply to SAP for a job, I'm a pensioner. I have a question about cooperation with Apple or IBM. When to market leaders as strong as these companies cooperate, Agree on cooperation.
Then most probably, Something really strong will emerge from that cooperation. It means more market presence, use of synergies, etcetera. But the question about cooperation is always Which partner? Afterwards, we'll have access to clients? Is it both?
If it's both partners, how do you harmonize your approaches? Or How do you agree on market allocation? Is it one only? Then, of course, the question arises, Which of the 2 is it? Will the customer then in the end buy through the Apple Store or the SAP store.
And this is linked to another question. How do we protect our SAP software? How does SAP protect against the knowledge strained to the partner? I'd appreciate your reply. Thank you.
Thank you very much, the Chairman. After simple answers, Why we are using throwaway dishes? Well, The SAP Arena, for security and safety reasons, will not make available any dishes made of porcelain, but the Dishes and cutlery we are using can be composted and is good for the environment. The security aspect is handled by a security company, not by SAP. And another point, And then it's for you again.
How in your company do you ensure that you will have a quarter of 30% of women? Well, I contributed to that point by asking other supervisory Board members to step down and return the purse company as these mandates can be used up to the regular end. And the next election will be in 2019. We will have To meet the legal quota of 30% of women on the Supervisory Board, we are trying how to find qualified suitable candidates In order, by 2019, the latest or should the supervisor brought their belief earlier, Proposed suitable candidates. We take it that this will allow us to meet the legal quota.
There was another question by Doctor. Anna Polza about the Share of Women in the Executive Board. She said quite rightly, the Supervisory Board said that the Executive Board of SAP SAE By June 30, 2017, should also include the women. Different measures support our goal to increase the number of women in our executive positions, which applies to Executive Board positions, starting from recruiting. Clear criteria for shortlisted men and women.
This is done by special management programs. And there is also a clearly defined succession planning with at least 1 female candidate. So We will clearly see to it that women in their personal development will be raised to the next higher development stage. For instance, in so called fast track programs where especially Female candidates are trained specially and sponsored and prepared for the step to the next higher career level. Please bear with us.
The Supervisory Board is not going to divulge the selection procedure For Executive Board members, this is confidential. Hence, there is no public profile of criteria. We make sure that when appointing a new member, suitable female candidates are included and in succession planning for the members of the Executive Board. Internal and external candidates such as are to include suitable qualified candidates and short they should be shortlisted Mr. Mucic goes on.
Let me continue and then pass on to Bill later on. Cloud Business, is it less cyclic and more stable and low in risk than license business? Yes, it is. That's natural only because in the cloud business, customers have no advanced investments of a high level, but make their investments over a level of time in the subscription contract, which he can give up when he has no sufficient satisfaction with the solution, no confidence in the solution. So he has more flexibility, which in terms of volatile economic environments also has a certain element of charm and is attractive to clients.
Next question. After completion of the Patient Phase, will the cloud business yield as much profit as the permanent business? Well, at a mature condition, The cloud business may be as profitable as classic license business or even more. Taking into account different factors with various business models in the cloud, which have other optimum gross margin prospects. In the Business Cloud, they're a bit lower than in the Public Cloud.
We have a phase where the Cloud business must be scaled up. There will be an increase in profitability for structural reasons. But when the share of the extension business increases relative to new business, The improvement in profitability in the cloud model will increase, which is quite normal. So we've taken that. Our profitability will be increased also in that respect.
Then the question, is there a risk that after the end of the restructuring phase, clearly, smaller license business can be run profitably or whether or is there no critical amount for probability? If you look at our midterm guidance, we said that also in our classical license and maintenance business in total, the gross margin will be 2% higher by 2020. That's our plan. Our maintenance business rises stably and will continue to rise in a calculable way. So within the classic license business, The relative share of the highly profitable maintenance business compared to the less profitable new license business is likely to rise.
So we don't have to worry. And then again, the question about the structure of the P and L segmental reporting not shown in the P and L statement. Why so? As I said to Ms. Bella Reinacher, we are quite transparent.
We have 2 business segments, Application Technologies and services and SAP Business Network. The individual contributions made by these segments can be found Transparently, why don't we show this in the P and L statement by separate sales columns? Well, because many of these revenues are comparable in Apologies and Technologies, you have cloud revenue. Also in the Business Network column, you have these contributions. To make the P and L structure simpler, I think it's better To show the different contributions and so on transparently, if you look at subscription revenue then in segment reported, you see €961,000,000 Revenue for Cloud and Application and Technology and Services, dollars 1,137,000,000 for subscription in the SAP Business Network and then the addition to €2,300,000,000 a bit less.
So I think we are indeed quite transparent. Then on non IFRS Figures, Mr. Kienle, why share based remuneration? Well, 2 reasons and also make us comparable with our competitors, which As a matter of principle, exclude share based remuneration from its pay figures in order to make apples comparable with apples by the analysts. But there's also operational control.
We manage the company also Alnon, I have asked key figures. Why so? Because we have would have had a hard time to influence The stock price, of course, we can by having a positive operating activity. But there may be external factor causing high volatility If the share base remuneration were Included, it would mix up the situation. Hence, we don't want to have these extrinsics factors affect the final figures.
Then the dividend policy, shouldn't that too be based on non IFRS quantities? Well, there is one problem with non IFRS results I used as a reference. Cash flow effective effects would not be taken into account. Ultimately, The payout sum must be affordable in monetary terms. Only the amount effectively available can be considered.
So it's factual that the alpha is a result of the taxes. It's taken as a reference base, which is customary. Now Bill, on to you.
I just wanted to thank you for your kind remarks today. I greatly appreciated them. Thank you. To enter your questions, I have a couple of them. You entered into partnerships with IBM and Apple.
What are your and putting this in a cloud platform with essentially the software development kit from SAP, where we can access 2,500,000 developers to build new innovative applications On top of our software development kit, one of the developments in the enterprise is that people that come to work in the enterprise Consumer grade experiences on their enterprise technologies. So Apple and SAP joined together, bring that to life on these devices. You look at beautiful applications on beautiful devices. It entices you to buy more SAP software. And for Apple, it's pretty simple.
They have to grow their enterprise business. They have a 25,000,000,000 enterprise business now. They'd like to take it to 1 Very large and significant SAP customer with the largest single instance of SAP of any company with 80 terabyte system and they love SAP And we'd like to encourage them to run SAP as Wahana. So there will be a nice reference for us as we offer them. Another question was, we didn't hear a lot about acquisitions today.
What has happened to the former relatively expensive Acquisitions such as Concur and what has been the contribution from these acquisitions so far? Has the integration of the acquired company has gone according to plan? Very good question. First of all, we're really satisfied with all of our major acquisitions because they fit beautifully into our product portfolio. If you think about the platform, the applications, the cloud and the network In SAP, controlling all of that, these acquired companies were very important to our future vision.
And we have successfully integrated these companies. And in the cases of the network, we capitalize on non integration because they can attract So many more net new customers to SAP. So our reach goes much further and much wider. Our strong growth rates did not just happen in 2015, but over the past 12 quarters. In fact, over the past 12 quarters, We have increased our cloud subscription revenue by much more than 30% on a run rate basis, And we have achieved the upper end or better than our guidance range consistently.
So everything is going according to plan. Additional input might be, if you think new cloud bookings is an important measure of cloud performance, We have done pretty well. In 2015, new cloud bookings increased by 100% to $874,000,000 So when you see the revenue and then you see the bookings that are growing even faster than the revenue, it gives you a great deal of
Looking at your 2015 numbers, you can see SAP had more than DKK600 1,000,000 restructuring expenses. What is the mood in the company? Do the employees believe in the transformation of the company? Have the employees shifted their attitude? The results of our 20 15, employee survey, are the best indicator of the mood among our employees.
It is measured by the employee engagement index, which had an extraordinary high rating in 2015. The index has a stable upward trend and increased 2 percentage points to 81%, its highest level since 2010, 2010. Employee satisfaction increased in almost all aspects and questionnaire items. With our vision of helping the world run better and improving people's lives, We won't stop here. We have identified 2 priorities for 2016 From the results of this survey, simplifying our processes and our ability to innovate.
Employee engagement remains one of our strategic goals, and we remain committed to achieving 82% in 2016. This is an ambitious goal Since in comparison to external norms, our current level of engagement is already in the top 10%. Employers are very open to the transformation and embrace communication initiatives Like, tell it like it is. We are also investing in our growth markets internationally and in Germany,
Large market opportunity, one that we think that SAP has the right solutions and capacity to serve. Today, Concur very effectively serves the SMB customer segment. We think we have a very rich set of ERP solutions, E commerce solutions, HR solutions that can be delivered into the SMB customer base, And that's a high priority for us in the years ahead. And it's one that will be an area of strong focus for myself. Thank you.
Well, let me go on then handling Mrs. Bellerheinhofer's question about the cost for R and D. As you were correctly mentioning, The quarter of 13.7 percent, in particular, is an investment into the future of SAP. As far as we are concerned, it's remarkable because we are in the middle of a transformation process. The question was, how do we fare compared to our competitors, both in classical business, where Oracle, Microsoft, IBM, we mentioned these examples and also vis a vis competitors in our cloud business, sales force, for instance.
When considering the key figure, the share of R and D costs and the overall Revenue, we must compare with our competitors and say first that these are indeed different levels of business and maturity of companies, but also companies which have different business models. Let me repeat although Cloud subscription revenue is a topic mentioned repeatedly today. In particular, upstarts, and there's clearly more into R and D and have to do so more than established old companies. In young and especially young cloud companies. Research and development costs, relatively speaking, are still clearly higher again because In subscription based revenues, the business is building up gradually, and there won't immediately be a reflection in the balance sheet.
Now for instance, you asked about Workday, which have a research and development share of more than 33 NetSuite and others, competitors in the cloud have nearly 14% sales force, only 12.4%. Those were some first data but competitors in the cloud. And you can see that the different Shares, even in cloud based companies, show the degree of maturity and Status on the market. Working relatively young company with relatively low sales, but a high capitalization on the stock exchange shows relatively high investment costs. By contrast, sales force available adaptive in the cloud business for a long time has only a share of 12.4% compared to Workday.
In the area of classical competitors, comparison with Oracle, the R and D costs So there's 13.2%. And they try also to take some first steps into the cloud. 13.7% in our case is roughly comparable with Oracle. As as far as the percentage of R and D cost compared to sales is concerned. So we invest continuously into research and development, and we benefit especially of the fact that these investments and also The know how, both for software as a service and for subscription based approaches and for the upfront sales can be used for both approaches.
It applies to applications because here we follow an approach to the fact that we first develop for the cloud and then take another step where these innovations are then made available to the on premise solutions that are integrated and then delivered. I'd like to conclude by saying that we have a clearly more efficient approach than many of our competitors, which is also reflected
Let's take Apple first. One of the interesting statistics since the announcement with Apple last week, we have 4,500,000,000 impressions on the Internet. So it's pretty obvious that the world was interested in that announcement and 2 global juggernauts working together The customers, again, this consumer grade user experience in the enterprise So it's a win win. Similarly, the HANA Cloud Platform is huge to our future and the software in our cloud platform. And yes, of course, provisioning that to Apple Devices is a win win.
On the subject of IBM, one interesting part of this partnership, because as you all know very well, it's been on for a great number of years is that IHANA Enterprise Cloud is a wonderful way to provide our customers solutions in a private cloud environment. IBM has openly embraced And IBM is now channeling their sales force to support S4HANA in the enterprise. That's good for our software sales, and it's also good for IBM because sometimes their hardware and their services will
I propose that we now let Mr. Riese answer here. He's got all the numbers to answer Doctor. Pols' questions. Thank you, Luca.
Well, Doctor. Pols' You asked a few questions about the support and promotion of women. One question was how many men and women We'll move to the 1st and second executive levels below the Executive Board level. For the first executive level, 1 woman and 1 man were promoted. So it's a fifty-fifty relation.
Globally, last year, it was 1 woman, 16.7% and 5 men, 83.3% for the 1st management level below the Executive Board. For the 2nd management level In the past year in Germany, 6 women, that is 25% and 18 men, which is 75%, were Promoted to the 2nd executive level, below the Executive Board. Comparison for The past year, it was 10 women, 20.8 percent and 38 men, which is 79.2%. 2nd executive or management level below the executive board. Your second question was about Whether the numbers of female executives at the first and second Management level were maintained.
Status quo wasn't really the proper name. Let's comment that the law that was introduced only granted us a short period of time up until 2017. And indeed, we are assuring the status quo because we think it's unrealistic in that short period of time prescribed by law to achieve this increase in any other way. But certainly, when defining future goals, We will have a close look at where we want to increase these numbers, Which also leads to the next question you had where, again, you inquired whether we're planning to increase these target figures in about female managing the staff because it doesn't correspond to the female quota in the workforce. On the 3rd years of September 2015, the Executive Board stated that the status quo will be retained.
At the present time, a high quota is not adequate in our opinion. The reasons being that we are a technology based company, and we're still, especially in Germany, have very low numbers of graduates In this so called mathematical computer science, natural sciences and technology Disciplines. Target of 30% or more would mean that more than 1 out of 2 women would want to move up into an executive position, which we think is not realistic also because there are women and men who prefer a technical career to any managerial position. Next question that was about the identification that way, how do you identify future Women who are to be advanced, how do you support them? Please tell us about measures and their implementation.
Let me answer like this. The identification of future management, women in management is achieved in different ways. On a central basis, we, as you clear, criteria that men and women should be represented, must be represented on a shortlist so that at least 1 female candidate also appears when succession is planned. In Fast Track and Sponsoring Programs, female candidates with a special potential for the next management level and not only identified but also qualified individually. Regular internal and external communication ensure that the targets for more women in managerial positions are not just lip service, No lip service at all, but are consistently implemented by clearly defined programs in SAP.
The development of female talent, On the general and executive level, cover various areas. Let me emphasize 1, the Leadership Excellence Acceleration Program, LEAP, And therefore, in 60 degree evaluation and role based development plans for each managerial and executive development programs to strengthen our trust and confidence culture. Your next question was about how many women are active at middle executive levels, absolute numbers and percentage. Globally, The middle management of SFP 365 Women Work that is 19.3%. Next question was about Germany.
Share of women in the company is 31%. Does that figure apply to Germany as well? Germany, the share of women, the workforce of the company is 5,000 474,000,000 in absolute numbers, the share is 29%. That is the Status of March 31, 2016. Next question was about you're wanting to know whether we put before our managers measurable goals so that talented female staff can make full use of their potential.
And if so, is that also So as is by managers and by their bonuses, first responsible for the result is their reporting Shane, we are the executive board up to the Supervisory Board. Let me answer like this. It's the duty of every manager to best develop his or her staff members. We need this for development and the change of the company into the cloud. To make this measurable, every executive, as Bill McDermott said today, is evaluated with the so called Leadership Trust Index so that every staff member and every manager are able to evaluate each other's performance.
The staff can evaluate the performance of his superior. Suitable programs about personal development, of course, handled by my segment HR and are offered. In general terms, The performance of the respective managers is the basis for their assessment and also for calculating the bonuses, which applies also to the staff, not just to managers. Hence, your question must be answered in the affirmative. It is included.
For identification and promotion of future women in management positions, the SAP organization is responsible in total. Areas like our sales, which recognize not just talents but also converts them and also cooperates with us in HR in developing promotion programs and offering them. On a Supervisory Board level, Especially the committee and staff and organization matters is involved in the subject, and it reports to the No, the Executive Board reports to it regularly. Next question on many women born in your company, the first and second managerial level In Germany, immediately under the Executive Board and the 2nd managerial level, absolute figures at the first Executive level below the executive board, we have 3 women, 27.3%. 2nd managerial level is 13%, which is 14.6%.
Are you planning to change the company in order to have more women in executive positions? And how do you communicate This intention and how do you communicate to your staff and to management this question? The answer, the Plan change to introduce more women into management position is a permanent part of our corporate philosophy. We communicate this not just in information events on the spot, but use also technology by so called virtual live sessions, staff meetings and events such as the internal so called Women Executive Leadership Forum, where staff members, male and female, are addressed directly and are incorporated in support programs. For internal communication platforms such as SAP JEM, we have a regular exchange of information on top of that.
Executives and managers, in addition, are informed not only in newsletters and teleconferences but Also separately about the subject of women in managerial positions and also informed about the offerings and the measures are 3 more responses addressed to other speakers. Mr. Wolf Nestle asked, When we're your staff members trained for the last time in order to good read To produce good results in the future, I must say, there is no last time. It's a recurrent process. Our staff simply are the most valuable capital we have.
And this is why SAP invests into a continuous advanced education program across all career levels. Our staff have the possibility at any time to participate in trainings. And what's important, in particular, we learn not just in training courses, But we also learned very much in direct contact with our customers and also among each other in order to pass on experience and knowledge. SAP, just to give you an example, in 2015, had an annual global budget of more than €100,000,000 for these purposes. 2nd question by Mr.
Rolf Neslin. That was largely answered by Rob Enslin. When did you have the last In 2015, again, the results were outstanding Out of 77% or from 77% in 2013 to 79% in 2014, we've now reached 81% in 2015 of staff commitment, an exceptional level, which also within the DAX listed companies and in Germany is unparalleled, the employee engagement index is Last but not least, an answer to Mr. Jens Stakebuschko. Almost all numbers increased.
Only the number of people who want to stay with SAP dropped by 2%, 2.5% points. Why when all the other figures keep rising? Well, initially, we're extremely proud that more than 90% Of our staff, 2015 wanted to stay with a company which is quite low rate. It is far, far above the average of the industry. But of course, we also see the global Competition and the fluctuations of this about 2% compared to 2014, which we attribute to the fact that on the one hand, We had restructuring programs.
And on the other hand, we have a very interesting target or are an interesting target for other companies, which are fond to lure away the highly trained stuff in this of SAP. Back to you, Hassel. Well, yes, and there were there was one contribution, which maybe Geiger Jost could make. Yes. Thank you very much.
Two questions were addressed to me. 1 by Mr. Pullman, what you will have to wear in the cloud, Well, weather computing, as I said in my introduction, it's a major trend. You know the fitness trackers you can Where your arm, it's a trend, I investigate. Microcontrollers are integrated into clothes.
And then, of course, they are connected with the cloud and communicate via the Internet. This can be used for fitness tracking, for rehabilitation, health services for monitoring. And this is why Clothes in the future will become part of the Internet of Things more and more so. These are questions I investigate in my research activities and which I'd like to also propose in SAP. The other question is Barbara Gremberg.
She worried about my variety of activities. Well, no problem. The activities I represent on the Executive Board of the Studienstiftungdestructionfolpist or the Goethe Institut, These are societal commitments, unpaid and no paid jobs. Strydien Stiftung meet 1 or twice annually over the weekend normally. And my work also as a digital ambassador is reduced to evenings in discussion events, much of it taking place in Berlin.
So I can really Do all this, and I'll be able to occupy my mandate with SAP. I have a research professorship, So I have 4 lectures per week, which is little compared to 9 or 12 less per week. All right. Now we have another request for the floor. Mr.
Gerdaujian wants to step up to the mic again.
Thank you for giving me the opportunity to speak. Who spoke a little while ago. What she said was very true. Now from my point of view, she could be an excellent Last year or the year before, it was that Hugh that she applied for a post actually, but unfortunately, you have You're born as a member of the Executive Board or the Supervisory Board, don't you? Because it's not easy to get in.
But once you're in, you can collect these posts like stamps. So I hope you don't mind my saying so. It's a bit provocative. Now the thing about Mr. Medan, I remember it was last year or the year before only costs money.
And at that time, there was already A quota for women, which should have been fulfilled. So why didn't they choose Ms. Joost or Maybe the other lady who spoke, why weren't they invited in? So That's a bit strange, isn't it? So my specific question is The resignation of Mr.
Miron, to make room for women, you Suggested to Mr. Maimon, Nylon, that he resigned from his function so that you could get a woman in that you chanced upon.
How was that transacted
financially, the departure of Mr. Miron? Or How was it remunerated or what kind of severance payment was made? In other words, what kind of cost was incurred by SAP to shed Mr. Mid on Was it a severance payment or a pension guarantee or anything else?
So what kind of future cost will be incurred, caused by his departure. And finally, I would like to say that there are some speakers left, women or men
The question was A very interesting one. 2nd quarter results, do you expect to deliver on your expectations by June 30? Thank you for the question. We do not provide guidance for an individual quarter, as you know. We provide an outlook for the full year and our midterm guidance.
So you have a good feeling now for 2016 and our midterm guidance of 2017 2020. I can say that we have a strong pipeline And we're ever confident based on our strong product portfolio that we'll remain a leader, and we look forward
In Q1, revenues in the cloud increased by €170,000,000 The total of Cloud and Normal Business by €190,000,000 €1,000,000 Is the normal business drying up already? Does the Cloud business need to run at full speed now in order to achieve true growth? And what can we expect in 2 to 3 years? How will the Cloud business grow through 2020? So the answer is you may have noticed that software was weaker than expected in Q1, Our smallest quarter, this is reflected in your calculated absolute growth rates.
But there is no reason to be unduly concerned because we have experienced very strong growth in our On premise and Cloud Business in the final quarter of 2015. The order volume we built up last year is now being incrementally realized as revenue. What's more, we grew our Cloud revenue by 33% at constant currencies in the first quarter and increased our gross margins in the Cloud. You can see from our outlook that we expect strong Cloud and Software growth of 6% to 8% at constant currency for 2016.
Next question I would like to answer from Ms. Grimberg. She asked about new business fields. Whether the industry of the energy industry could be a possible field of business, does SAP also developed software for the transmission of electricity into national or Regional Grids. The energy industry is undergoing massive change.
Together with PricewaterhouseCoopers and but also from our discussions with customers, we saw that these changes are coming very quickly and they are radical. One statement from the study proves that the leading Energy companies in Germany and Europe report 35% of them report that the existing business models today don't work anymore. There is the buzzword of the prosumer. These are consumers of electricity who also generate electricity in their house. So there is a change towards a much more final customer oriented business.
You have to understand consumers to be able to give individual offers to individual Households and together with hybrids e Commerce, we have a perfect solution offering, which Even today, it's being used by many customers in the energy industry or they are in the process of being implemented. But also our industrial solution for power utilities and electric companies, also Other public utilities, gas and water supply, that was also modernized. In the implementation of the legal deregulation requirements in Germany, we are taking a leading role in that process, but also in the change of business models. Again, let me remind you of the new prosumers. This involves different customer relationships, but also different billing solutions.
With IS Utilities, Right. Then I have another batch of answers. First of all, 2 questions by Mr. Buhlmann. First of all, When will we have an impact on the dividend from the takeovers, 2020 or 2018?
I would say it is already having an impact because for years, our dividend has risen continuously. It is in line with the continuous strong rise of top line and bottom line, although transformation towards a top company is being developed, and this means we seeing increases in cloud subscription revenue. So the dividend already reflects The success of these takeovers, the operating margin, IFRS, 2015, 4 percentage points down. When will it rise again? It is already rising.
In the Q1, we saw this. And the reason is that in 2015, the special effects Impacts for restructuring, this was already addressed by Bill McDermott. This is something that reduced the margin In IFRS results, €600,000,000 last year and for this year, we are not expecting any significant impacts. We have a guidance between €40,000,000 60,000,000 out. And you need to take into consideration then that in the cloud, we're still in the investment phase.
The absolute result of the cloud is already positive, especially in the public cloud and business networks. But of course, Given the strong scaling, the profitability, the margin is not rising as much yet. But as I said, from 2018, there will be an over proportional contribution by the cloud and hence our midterm guidance. So you can expect that from 2018 onwards, we will see disproportionately high contributions from the cloud. There was a question about the culture of SAP.
When revenue is generated in other regions of the world, now this is nothing new for SAP. SAP draws its strength from the fact that it is a global company. In Waldorf alone, we have people from about 80 countries. We're very proud of that diversity. We're a globally Composed leadership, not just in the U.
S. And Germany, we have very strong leaders and also women, I might add in other regions of the world, Asia is a very good example. Fox Martin does a very good job. And this makes us strong to have strong leadership on the local markets, and this is why we attach a lot of importance to the diversity of our staff. Then there was a question about the cloud and the fixed cost.
Can we expect any negative surprises with regard to investments into the cloud? No. Our big investments, of course, have been made and we need to invest continually Because if we generate such a large order volume as we did 2015 with 3 digit growth in some areas. We need to make sure that our data center infrastructure can absorb the capacity required to cater for those customers when they've gone live. This is something, however, which because of a big scaling of the cloud business we've done already, €2,300,000,000 revenue by 2016, that is supposed to rise to €3,000,000,000 Now this is something we can digest, if you like.
And in the past 1.5 years, Our gross cloud margins have been positive. They have risen, And we are now able to finance our projects from our operating cash flow. So no one need worry about any reductions In profits, now €4,000,000 cash, €8,000,000,000 debt. Are we reorganizing our debt? No.
The measure is there To add flexibility, these instruments have been used in the past. This is item 8 of the agenda. The Segment revenue, has that been restructured? No, not really. But the Net sales are reported following our internal reporting, which is different from the profit and loss of the group according to IFRS.
Then there was a question Regarding the possibility to extrapolate the cloud revenue, when you have a growth of 33%, Can we extrapolate this during the course of the year? Well, basically, the cloud Business is a very predictable business. This is one of the advantages. And when you look at the renewal of cloud contracts And when if you're able to do this, then you can, of course, extrapolate from the previous year What kind of situation you have financially at the end of the year, which is an advantage over the more volatile software business, The traditional software business, otherwise, we couldn't give any cloud guidance for the year 2016 within such a small bandwidth of only €100,000,000 We wouldn't be able to do this if the business weren't so predictable. Then the orders at hand for cloud subscription, why aren't we delivering or how about The deferred income, the deferred revenue, why isn't that realized?
Well, there are certain accounting we have to follow. So we're not sitting on our hands. It's just that we deliver service over a certain period of time. Say, at the beginning of the year, the customer is billed for the yearly subscription, but we still need to defer. And over the whole year, we then spread out the revenue as we have delivered our service over the year.
The same for our order backlog, we have contracts with a term of 3 years. We have an annual billing scheme agreed with the customer. So at the beginning of the 1st year, we bill the customer for the 1st annual amount, which is then deferred profit or deferred revenue. And the rest is, of course, counted as order backlog because the 2nd and third year still has to come. So there's a difference between that cloud business and the classic business.
Last but not least, when will we know whether As for HANA or the cloud business will contribute more to the success. We believe that both elements will have a massive positive contribution and S4HANA is also available in all deployment models. It can also be consumed in the cloud. It is increasingly consumed as a managed cloud solution. So I don't think we need to separate the 2.
I think across Our cloud portfolio, including as for HANA, we can expect our business to be vastly successful. Then a Question about our shareholdings. This is also an old favorite. Many companies like Ariba report is concur as well. Do we need to worry about this?
And when will they reach breakeven? It doesn't make sense to look at the results of our shareholdings and pick those figures out and conclude to the Success or lack thereof of individual business. The reason is that several companies which were sales or which had sales companies In the regional organizations, we're integrated in the national companies of SAP. So a lot of sales are generated With the regional companies, whereas the cost, for example, for developing certain solutions, which were still in the pipeline in the original company are booked for that company. So you cannot really conclude from these figures to the profitability of the underlying business.
Well, Hartmut Medan, he was member of the SAP Supervisory Board for quite some time. I've known him for a long time. And as member of the Supervisory Board, he performed excellent work. I I'm a good judge of that. You cannot because you're not member of the Supervisory Board of SAP.
Thank you. The task or the question of having 30% of women on the supervisory board, it is my task to be on the lookout for potential female candidates. When a woman candidate was found in the person of Geshe Joost. I went to my colleagues of the Supervisory Board and I asked if anyone was willing to surrender to give up their position so that we could And a point Geshe used as member of the Supervisory Board, Hartmut Medorn then went to me and said that he was ready to resign. Shortly thereafter, he fell seriously ill, which created the impression that his resignation had to do with his disease.
He has recovered in the meantime. We wish him well. We never received any severance payment or similar payments, and there is also no consulting contract with him. This is something we would have had to decide during the AGM, by the way. So there is no need for concern at all.
There was nothing like the thing that you suggested there. Ms. Barbara Grimberg asked How about pension provisions for executive board members? In Germany, when there are pension commitments to be made, then SAP enters into life insurance contract with a coverage insurance company, Quite a mouthful, in German. And the money is reserved for the purpose of pensions, and this is excluded from the capital of SAP.
The financing situation is revised annually and adjusted where necessary. In the United States, or the members who are U. S. Residents, here the financing happens through Securities for Stefan Rees. This year, we will make pension provisions for the first time.
For Steve Singh, no pension commitment has been made. Another question, how high is the cost of the AGM for catering, Public transport, tickets, invitation, etcetera. The total cost of the ADM in 2015 were about €2,300,000 The invoice for this year has not been received, and we're still here. It depends on how much more we eat and drink. Yes, euros 2,300,000 and the cost for tickets for public transport Approximately €1 per shareholder present.
How many shareholders do you have in total? How many did you invite? How many came and how many guests are there? We do not know how many shareholders we have because our shares Do not align a conclusion back to the shareholders. And our invitation was to all shareholders.
About 8,000 Shareholders said that they would come, and the presence is about 3,000 shareholders. And then I'll take the next one, further questions from Doctor. Grinberg. How about the cost one? Cost for the listing on the stock exchange, administrative cost in that context and investor events, expenditure for investor events like the Capital Markets Day in New York or also our analyst meeting at our SAPPHIRE in Orlando amount to about $250,000 The cost in the context of the stock exchange listing for Deutsche Borse is about €10,000 and for the stock exchange in New York, A similar amount.
Then there was a question, how many chambers of industry on commerce receive contributions from SAP. The answer is 16 Chambers of Industry on Commerce. And for 2015, We expect contributions to the tune of about €6,000,000 How high is the VAT that we pay in the sense of Tax deduction and how high is the VAT on our own services and goods. In 2015, the SAP SE and the national company in Germany paid about €1,800,000,000 And The amount of input value added tax was about €1,500,000,000 The question That you would like to hear more figures from our balance sheet or from our profit and loss account In Bill McDermott's speech, we want to focus on our strategic development and also the core financial parameters, And we want to give you a picture of what SAP is actually doing for its customers. This is why we gave practical examples.
The financial figures in the annual report in absolute transparency. And of course, you're invited to participate in our quarterly conference calls where we give all the information for investors, all the figures. And there was a question about cloud and cloud and software increases. What does it mean? What's the difference?
It's easy to explain. Our cloud and software revenue item is not a separate item class, but it is the sum of cloud subscription and support and software license and support together. So this means revenue from our on premise products and license expectations and also the revenue from our cloud solutions. It covers both. You had a question about a specific customer and their contractual relationship with us.
I will have to ask you to understand that we cannot disclose any information about individual customers. There was one question about the stock price, whether that is Pushed up due to the fact that the interest rate is practically 0 for savings accounts. Of course, shares are becoming more attractive because of the interest rate situation. There are very few in alternatives that yield sufficient interests. But the reason for our stock price is also Our success as a business, we outperformed the DAX in 2015 and now is the strongest market capitalization company.
Thank you. Then there was another question. Part of our retained earnings is disbursed as dividends. Where does it come from? Is that just pseudo profit in the sense of balance sheet trick?
Well, We do accounting according to a proper accounting principle. So this is not pseudo profit. It is real profit and is also externally audited. Nevertheless, and this brings me to the question from Doctor. Wolferts.
I think that one reason can also be a misunderstanding. There's a difference between €1,000,000,000 reserves and one item that was carried forward in your account. This is linked to the previous question. The retained earnings relate to the balance sheet profit, which is the annual surplus After tax of the previous business year and also profits already taxed that were not used, Hence, the high number we're talking about because of the use of profit already tax considerations do not play a role in the Question of the appropriation of retained earnings. Your second question related to the investor structure or the shareholder structure.
Our investors, mainly in Europe and the founders, heard 40% to 20% and private investors, 18%. And when you have registered shares, why do you say that the shareholders are unknown? Now these are registered shares and not registered shares with name. So When we represent the shareholder structure, this is not completely clear. Private shareholders and institutional shareholders can be identified and also assigned or situated regionally if they cross the reporting threshold according to the Securities Act, which is 3%.
And then R and D expenditure, The relative share of 20% to 17% per year, in other words, why did the figure go down or where from where Does this discrepancy come? Mr. Leuker said already that we are still Doing a lot of R and D, the transition to the cloud, the investment into the new business model will result in a different cost structure. We need to invest more into the cloud infrastructure, And that is the reason why, relatively speaking, the R and D expenditure seems to be lower, which, however, has actually gone up in absolute figures. One final question from Mr.
Nestle, which I think I've almost answered already, the operating margin in 2015 at 20.5%, 20.11%, 34.3%, when we will get back into the 35% region. As I said, the 20.5%, this is our IFRS margin in 2015. That was very negative because of reorganization expenditures. Also, during the Q1, you may have seen if you followed our financial metrics, since the phase is over, the 2nd quarter figures have developed very positively. The margin has gone up, and we believe that this will continue over the course of the year.
Our own targets relate to non IFRS metrics, and there, we assume that in the years from 2018, as a result of the disproportionately high contribution to profit from the cloud, there will be a positive development of the margin. If you look at our targets for 2020, Then we want to have total top line between €26,000,000,000 €28,000,000,000 And €8,000,000,000 to €9,000,000,000 in operating profit, which means the operating margin is between 31% to 32%. So I have no further questions to answer here. So back to Gerd Varian. The Women's quota came in force in 2016.
Before that, it was a recommendation. Why couldn't we make the decision for the change of the supervisor we wrote last year during the AGM?
Because
Ms. Geshe Joost and Hartmut Meidorn, their preparedness to agree to that change had not been that agreement had not been given, at least not in the period that was necessary Before the AGM, that is the notice period for publication, the remuneration or severance I said that already, there has been no severance payment, and that concludes my remarks.
Okay. I'll continue. Mr. Oberon, you mentioned that we won a prize for the topic Economic Dividends for Gender Equality called EDGE, that's right. That's an award which we received independent from the industry, With regard in North America regarding sort of certificates and transparency, regarding gender equality, and that working hours and also the corporate culture in general will be certified.
We're quite happy that we received this award for this region. Doctor. Grebenbach, Hasselbladner has answered your question as regards Who is management and who is not management? The definition is quite easy. Women in Management are those who have HR responsibilities, so team managers as well as mid- and top management.
And you also asked how many people work at the tax department, how many lawyers work and how many FTEs work in our The F and E. As of 31 December, we had 101 FTEs in the Tax Department, 392 FTEs in the Legal Department, 20,938
FT feet
feet feet feet feet feet feet feet feet feet feet Feet Es in R and D. Next question referred to remuneration. The bonus at the employee level. Well, first of all, as you can see from the annual report, And the bonus depends on the career level, and they vary according to that level. So there are variable components.
Almost all of them have variable components. And as you might remember from previous years, we have no tariff related pay. So the top and minimum bonus is something that the SAP does not report at the employee level, and I do hope that you understand why we don't do it. And the next questions refer to the age structure above 1,2015. The following information split up according to the different generations.
So people hired Last year, older than 1946 born in 1946, 15 people than the baby boomer generation, 1946 to 1963 model year, so to speak, 8,573 people. Then Generation X, 1964 to 1978, that's 35,246 people Generation Y, 1979 to 1994, 32,877 people in that age group. And last but not least, Generation Z after 1995, that's 65 people. And another question What was the oldest person you hired? Where does he or she work and what does she do?
The oldest person we hired in 2015 was 71 years old at the time, has a permanent contract and works in North America as a senior audit specialist. Next question, ideas management of SAP. How many ideas were filed? How many were implemented? What have we done?
Well, in the last 12 months, 610 ideas were filed, 107 were accepted and they are being implemented right now. All in all, 52 were completely implemented with a huge benefit both for staff and for our customers. And in 2016 Q, we continued to work on the standardization, automatization and the user friendliness of our internal processes. Now three questions from Doctor. Wolferts.
I answered some of them, but again, here, I'll rush through them. First question refers to Women in Leadership, recapping what I said before. The share of employees In companies, 5,474, that's a ratio of 29% as at the 31st March 2016. And you also asked about the distribution within the different levels below the Executive Board. So in Germany, we have the following figures.
At the first level, with 3 women, 27.3 percent 2nd, management level 13, equals 14.6%. Globally, I've mentioned that before, we have 7 Women at the first level, 23.3 percent and at the 7 Management level, 34%, that equals 16.7%. Again, that's as of 31st December 2015 and includes the acquisition. Doctor. Wolford then asked about the number of employees we have.
We have 18 1,000 right now, will it go up to more than 100,000? What's your forecast? Well, we assume that We'll have an organic growth similar to the previous years. And therefore, We also expect to be successful in the market, too. The last question also, Doctor.
Wolford refers to Personnel expenses, you found that from 2010 to 2014, we had constant figures per staff around about €110 per year end infra year this year. This figure is up by 50% to 126 €1,000 But the reason this increased expense per HR is due to 2 topics: 1st of all, currency effects and secondly, the expenses linked to our restructuring measures. Thank you. No. Attendance.
I have to read that out immediately. Attendance has changed. I'm going to read out the latest figures. Under the stock capital of 1,200,000,002,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, 28,504,000,000,000, €204,232, divided into equal number of shares Right now, 862,00931,048 Shares with equal number of votes are present. That equals 70.6 of the stock capital.
And as mentioned before, we have written votes of 80,593 votes. So in total, we have 863,680,000 341 shares present or present by written votes that equals a share of 7 point 30% of the stock capital, right.
I'm interested in your position on TTIP. Would help you sell even more software, would help In gaining new markets, while we cannot make an assessment on how TTIP will affect our business
Then there was a question from Mr. Edelmann, regarding the partnership SAP and Apple, how do we protect our SAP software? How do we Protect our us against knowledge drain. We have a strategy to protect our IP, of course. We greatly emphasize to we make sure that all innovations are secured by And if we do co engineering with partners like Apple, We have contracts that cover the access to IP.
And we have rules and regulations that cover all aspects here. And we are greatly interested also in winning as many external partners and developers to and to develop applications on our mobile HANA platform and develop services and use services which we will provide because in the future, we foresee huge growth potential in that field. We will not only have applications via the classical subscription business, We also offer business economic services on this platform and make it available to the external developers community. And another question by Doctor. Wolferts referring to the video and innovation in Karl's room.
Together with E and BMW, we have this smart city light. It's an intelligent city light. We've shown the innovation plan there. Let me make some basic comments there. These streetlights, which we've developed together with our partner, are not just used as a hotspot and as a charging station for e cars, they're also used as sensors to assess mobility and also emissions.
So from our of view, it does make sense to have them up on the turmeric. And the question is whether SFP only provides a database and technology. That would explain data coverage. But in BW, at the Frankfurt Motor Show presented this concept. And this year, at the SABID, we introduced the project at 1 of our stores.
We introduced this intelligent streetlight. We generated huge media interest, and the Chancellor herself came to us to with this and all interested visitors at this EBIT have come up to us. And ever since that event, since the EBIT and since the Frankfurt Motor Show, We have seen a huge interest from the media, but we take your comment seriously and
Sales force is now very active in Germany. Have you already noticed changes in SAP's business? Has your market position in Germany changed? How are the SAP midsize companies reacting to this aggressive behavior of sales force? And a second part to that question, recently, sales force reached out to SAP in interest of a cooperation that you did not accept.
Our home market Germany is not immune to the impact of globalization. Our U. S. Competitors are stepping up their efforts to gain a foothold in Europe and Germany. We take every competitor seriously on principle, and we are keeping a careful eye on the situation.
Nevertheless, Our innovative extensive and coherent product offering puts us in a very strong position. As regards sales force, we are convinced that we are pursuing a considerably broader approach than they are, particularly with SAP Hybris and our omni channel strategy, focusing not only on the line of business sales. Therefore, We are going beyond what traditional customer relationship management has to offer. Our focus is very much on engaging with the consumer and on aligning with consumer behavior. Customer engagement and loyalty are taking on a very different significance in this context.
The SME space has always been important to us. Our product offerings and our strong partner network mean we are very successful in it. Now that Steve Singh is responsible for SAP's small and midsized enterprise business, We will be devoting even more attention to its future, The impressive growth figures we have achieved over numerous past quarters in Germany are yet more proof of our strength in our Home market. To return to your question about why we didn't address salesforce.com's inquiry. We think that the future market for customer relationship management will be dominated by customer engagements and commerce.
Beyond CRM. When it comes to making acquisitions, our focus is on companies that are complementary to our business. In the case of Salesforce, the company's valuation and consequently, its purchase price would have been disproportionate to the benefits.
Can you use the shares you had prior? Yes. There was a question by Mr. Brimbank. How many shares I own when I was Appointed to the Supervisory Board will add no SAP shares at the time.
I'm having a look. I have no further requests for the floor. So I'd like to ask, Is anyone else wishing to speak? Mr. Kindler.
Yes, Chairman. The question is still open regarding revenues And acquisitions, that has not been answered yet. Yes. Well, I'm going to answer this. I think I can do this.
Let's see the IFRS rules. Debt and acquisition values have to be evaluated at the net value. The debts to be valued also include deferred assets from service, for instance, that will be rendered later. When it comes to the price allocation, it is assessed first whether there is whether services have still to be rendered? If no, the surface has already been supplied.
But if there are extended terms of payment, Payment hasn't been rendered yet, then the deferred income will not be part of the balance sheet. In the second step, this deferred income where there's still an obligation to service will be reassessed. Typically, the actual value is lower than the actual book value. That results in so called haircut. That is linked to the fact that the current value will establish bottom up, and the remaining costs For the services to be rendered is assumed, and costs that have already occurred are Not considered in the opening balance, these deferred income taxes are the result and leads to revenues, but compared to the book value, they are lower.
When you then translate it to the non IFRS, This haircut will be corrected to get a better comparability from one period to the next. And that results in the difference from IFRS to non IFRS. That's what our accounting does. Well done. Yes, that's what we do, Hasso.
We're really good. I'm really happy that I don't have to talk about accounting any longer. So big hand to Luca and his team. So there are no further requests for the floor. Is anyone requesting the floor?
That's not the case. I have now established that no one else wishes to speak. Am I right in assuming that all questions from the floor have therefore been answered? Do I have to wait? If no one raises objections, Going, going, gone.
Okay. That's the case. So I state that For the record that all questions from the floor have been answered, I'm now closing the discussion on all agenda items. I've announced the attendance. That takes us to the voting.
Ladies and gentlemen, we now come to the votes. Now we come to the votes of the management proposals in respect to items 2 to 8 on the agenda. As last year, we will take all of the votes on the management proposals for items 2 to 8 on the agenda on One single go. I will now explain the voting procedure. The vote here in the meeting area participants use online multi item voting card 1.
Voting results are determined using this obstruction procedure, which only the no votes and abstentions are collected and counted. In other words, You only have to submit multi item voting card 1 or the online multi item voting card 1. The yes votes are then counted by subtracting the no votes and abstentions from the current attendance count. Multi Item Card 1 and the online multi item voting card 1 show each item by number from Item 2 through Item 8. Next to each item requiring a resolution, there is a checkbox for no and a checkbox for abstain.
Put across in or click the no or abstain box as appropriate If you wish to vote yes for all agenda items, you do not need to hand in multiitemcard 1 or Let me now advise all shareholders and proxies in the official meeting zone that voting cards will be collected here in the main hall only. Therefore, if you're against 1 or more of the proposals that are now before the meeting If you want to vote, please raise your hand when the vote is called and have Multi Item Voting Card 1 ready to put in the ballot box. I would like to emphasize once again that with the chosen method of voting, any shareholder or proxy who is present in the official meeting zone and who does not submit a voting card or multi item voting card, is voting in favor of All of the management proposals concerning items to aid. If you are attending online, I would like to emphasize that with the chosen method of voting, any shareholder or proxy who is present online during the voting and who does not submit an online multi item card 1 is voting in favor of all of the management proposals concerning items 2 to 8.
I would like to inform shareholders who appointed employees of the company as their proxies, The proxies present will cast your votes by releasing your voting instructions as they have been entered in the IT system. On release, the instructions flow into the vote counting system and are thus reflected in the results. The same applies to the institutional investors and shareholders associations who have used the facility we offer to have noes or abstentions pre entered in our computer systems. Shareholders once again had the opportunity to submit their votes prior to the meeting by mail ballot. These votes have likewise been entered in the IT system.
To help ensure that attendance counts are accurate, I would kindly ask shareholders and proxies not to leave the official meeting soon not to end their online participation during voting. I am now calling for votes on the management's proposals in respect of Item 2 to 8 on the agenda. Item 2 on the agenda. As I explained earlier, the Executive Board and Supervisory Board have adjusted their proposal concerning the appropriation of retained earnings. They proposed the following: At the retained earnings of EUR 9,256,000,000,34,334 €33,000,000 from fiscal year 2015, reported in the annual financial report be applied as follows: A dividend of €1.15 be paid out for each no par share that qualifies for dividend, which makes 1,377,839,829.65 that EUR 1,000,000,000 be transferred to other revenue reserves and let the balance be carried forward to the new account at EUR 6,878,194 The wording of the management proposal for Item 3 to 8 is the same as was published in the announcement in the German Federal Gazette In the interest of avoiding repetitions, I refer you to this announcement.
Wording is also provided in your invitation to this Annual General Meeting of Shareholders. With regard to Agenda Items 34, I expressly draw your attention to the voting exclusion in Section 136 of the German Stock Cooperation Act. A single majority is required for the resolutions in connection with Agenda Items 2 to 7. A 3 quarters majority vote is required for the resolution in connection with Agenda Item 8. From this point, shareholders who have appointed proxies in our Internet system cannot give or 2 to 8 to the vote.
All shareholders and proxies who wish to vote against any For all of the proposals made by the management for items 2 to 8 or wish to abstain on any of them, please come to the main hall, shareholders and proxies online who wish to vote against Any or all of the proposals made by the management for items 2 to 8 or wish to abstain on any of them, Are there any arms raised? Is anyone trying to vote? Please indicate this with your arms raised or please shout out. Ms. Vanuschka, I'm quite happy that I've learned that even I could get a job At SAP of my age, it was a good question you asked.
I like that. So again, that's jokes aside, Has everyone had the opportunity to hand in their votes? I see that everyone has had the opportunity. Have all the shareholders and proxies present in the official meeting soon So I've repeated the question. I've repeated it before.
So I see that everyone has had the opportunity, and I'm closing the voting now. I will announce the results of the voting as soon as I have them. That takes
Before the results will be coming, I'd like tell you that the detailed information about the voting results can be found at The meeting table by interested shareholders. If you agree, I'd like to restrict my comments on the vote by saying that the necessary majority was reached. Somebody disagrees with that salary treatment,