ASSETS

Growth of Assets; Analysis of Balance Sheet

Our total assets rose 37% from the previous year’s € 10,161 million to € 13,900 million in 2008. The principal reason for the increase was the acquisition of Business Objects. A 109% increase in total long-term assets to € 8,329 million (2007: € 3,977 million) resulted chiefly from a 249% rise in goodwill to € 4,975 million (2007: € 1,426 million) and a 181% rise in intangible assets to € 1,140 million (2007: € 405 million). The acquisition of Business Objects also explains the steep rise in investments.

On the other hand, our current assets decreased 10% to € 5,571 million (2007: € 6,184 million) because financing the acquisition of Business Objects reduced our cash including restricted cash 41% to € 1,280 million (2007: € 2,158 million).

Our rolling 12-month average collection period, which is measured in days’ sales outstanding (DSO), increased five days to 71 (2007: 66). The rise was the result of the tight economic situation in some countries, which led to extended payment terms and delayed payments.

Our profit before income taxes reinforced the shareholders’ equity, which increased € 705 million in 2008. The equity ratio (that is, the ratio of shareholders’ equity to total assets) decreased from 64% to 52%, because although shareholders’ equity grew 11%, our total liabilities grew 82%, principally in connection with the acquisition of Business Objects.

Competitive Intangibles

Market Value of Equity Significantly Higher Than Book Value

The assets that truly underpin our success today and in the future do not appear on the balance sheet. This is apparent from a comparison of the market capitalization of SAP AG, which was € 30.9 billion at the end of the year (2007: € 44.3 billion), with the shareholders’ equity on the consolidated balance sheet, which was € 7.2 billion (2007: € 6.5 billion). The difference is chiefly due to certain intangible assets that the applicable accounting standards do not allow to be recorded (at all or at fair value) on the balance sheet. They include customer capital (our customer base and customer relations), employees and their knowledge and skills, our ecosystem of partners, software we developed ourselves, our ability to innovate, the brands we have built up – in particular the SAP brand itself – and our organization. We intensified our marketing activities in order to convince current and potential customers, as well as the general public, of the special benefits of our solution portfolio, while also increasing the value of the SAP brand. This work was rewarded with increased awareness. In 2008, SAP ranked 31st on the Interbrand and Business Week scoreboard of 100 Top Global Brands, compared to 34th in the previous year. Our brand equity grew 13%, the eighth successive annual increase. Interbrand determined a value of US$ 12.2 billion (2007: US$10.9 billion) for the SAP brand. Since 2000, when we first gained a place in the standings, the value of our brands has nearly doubled and SAP is one of the fastest growing brands after Apple and Google. Against other German brands, the SAP brand ranked third behind Mercedes-Benz and BMW, and globally against other IT brands we ranked 10th.