IFRS 16 ‘Leases’: Implications for SAP’s 2019 Financials · Prof. Dr. Christoph Hütten,...
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Prof. Dr. Christoph Hütten, Chief Accounting Officer SAP IFRS 16 ‘Leases’: Implications for SAP’s 2019 Financials
Transcript of IFRS 16 ‘Leases’: Implications for SAP’s 2019 Financials · Prof. Dr. Christoph Hütten,...
Prof. Dr. Christoph Hütten, Chief Accounting Officer SAP
IFRS 16 ‘Leases’: Implications for SAP’s 2019 Financials
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Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect SAP’s future financial results are discussed more fully in SAP’s filings with the U.S. Securities and Exchange Commission (“SEC”), including SAP’s most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates.
Safe Harbor Statement
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How SAP transitions to IFRS 16
What’s Different under IFRS 16?Major Differences to Previous Accounting
Estimated Impact on SAP
AGENDA
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How SAP transitions to IFRS 16Transition Approach Determines Comparability Transition Approach
Modified Retrospective Approach
Old = Previous accounting / New = IFRS 16 accounting
Financial Statements 2018 Financial Statements 2019
Statements
2018 2017
Profits Old Old
Assets Old Old
Liabilities Old Old
Cash Flows Old Old
... Old Old
Notes
2018 2017
Disclosures Old Old
ExpectedImpact of IFRS 16We expect the following impact in 2019: …
Statements
2019 2018
Profits New Old
Assets New Old
Liabilities New Old
Cash Flows New Old
... New Old
IFRS 16Notes
2019 2018
Disclosures New Old
Impact of IFRS 16Explanation of January 1 differences between lease commitments under old policies and lease liabilities under IFRS 16
Voluntary info in earnings communications in 2019 providing further insight into the IFRS 16 impact
SAP transitions to IFRS 16 using the Modified Retrospective Approach
To be considered when comparing2019 financials
with respective prior year numbers
Different transition approaches available
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PreviousAccounting
New IFRS 16 Accounting
On Balance Sheet
Lease AssetsLease Liabilities
Off Balance Sheet
Operating Leases
What’s New under IFRS 16?Major Differences to Previous Accounting
Statement of Financial Position Income StatementPreviousAccounting
New IFRS 16 Accounting
Operating Profit
Single Operating Lease Expense
DepreciationExpense
Financial Income, net Interest Expense
Profit beforeTax
Effect if total expensediffers from previousaccounting
Cash Flow Statement
PreviousAccounting
New IFRS 16 Accounting
Operating Cash Flow
Single Operating Lease Cash Flow
Interest Portion of Lease Cash Flow
InvestingCash Flow
Financing Cash Flow
Principal Portion ofLease Cash Flow
Assets é
Liabilities é
Debt/Equity Ratio é
Operating Profit é
Financial Income, net ê
Profit before Tax é/ è/ê
EPS é/ è/ê
Operating Cash Flow é
Investing Cash Flow è
Financing Cash Flow ê
Total Cash Flow è
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PreviousAccounting
New IFRS 16 Accounting
On Balance Sheet
Lease AssetsLease Liabilities
Off Balance Sheet
Operating Leases
What’s New under IFRS 16?Estimated Impact on SAP
Statement of Financial Position Income StatementPreviousAccounting
New IFRS 16 Accounting
Operating Profit
Single Operating Lease Expense
DepreciationExpense
Financial Income, net Interest Expense
Profit beforeTax
Effect if total expensediffers from previousaccounting
Cash Flow StatementPreviousAccounting
New IFRS 16 Accounting
Operating Cash Flow
Single Operating Lease Cash Flow
Interest Portion of Lease Cash Flow
InvestingCash Flow
Financing Cash Flow
Principal Portion ofLease Cash Flow
Assets é €1.7 to €1.9 bill.
Liabilities é €1.8 to €2.0 bill.
Equity ê €0.1 bill.
Operating Profit é <<€0.1 bill.***
Financial Income, net ê <<€0.1 bill.***
Profit before Tax Inconsequential
EPS Inconsequential
Operating Cash Flow é €0.3 to €0.4 bill.
Investing Cash Flow è no impact
Financing Cash Flow ê €0.3 to €0.4 bill.
Total Cash Flow è no impact
* Estimate of Impact on 2019 Opening Balance Sheet ** Estimate of FY 2019 impact assuming leasing volumes unchanged YoY *** ‚<<‚ stands for ‚significantly below‘
Estimate* Estimate** Estimate**
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What’s New under IFRS 16?Estimated Impact on SAP (cont.)
Under IFRS 16 the principalportion of lease cash flows areneither included in Operating Cash Flow nor Investing Cash Flow
òFree Cash Flow as currentlydefined would increase
Starting Q1/2019 SAP will use a modified Free CashFlow definition
Operating Cash Flow– Cash Flow from purchases of
intangibles and PPE*– Principal portion of lease
cash flows = Free Cash Flow
SAP‘s Free Cash Flow will not beimpacted byIFRS 16
SAP regularly reports a Free Cash Flow measurecurrently defined as
Operating Cash Flow– Cash Flow from purchases
of intangibles and PPE*= Free Cash Flow
* Sub-item of Investing Cash Flow
