Solid Performance Across All Areas of Business Sees SAP Continue to Produce Significant Growth in Africa Region in FY06

SAP Africa today announced that it continued to produce significant growth in product and services revenue in sub-Saharan Africa in 2006. SAP Africa managing director Claas Kuehnemann says the performance in the region is very pleasing, particularly as it included an improvement in profitability.

"Africa made a strong contribution to the EMEA region, which was the result of a solid performance across all areas of the business," said Kuehnemann. "Financial services and mining are industries where SAP continued to do especially well in 2006, with the retail sector also still showing growth. In addition, we strengthened SAP's footprint in Africa beyond South Africa, an encouraging indication of prospects in the region."

Kuehnemann said 2006 was a breakthrough year for SAP in the small and midsize enterprise (SME) sector in South Africa: "SAP formally entered the SME market only relatively recently, and we are greatly encouraged by continuing increases in both customers and channel partners, who are central to success in this market."

In the public sector, SAP concluded significant new agreements and is looking forward to further growth in this area.

Kuehnemann says that SAP Africa will shortly launch a major recruitment drive to attract between 75 and 100 IT professionals to the company. "It's clear that we need to boost the ranks of our staff given the strong performance of the past year and our expectations of continued good growth across all areas of the business in 2007," he says.

"We see this ability to continue to grow and develop skills that are important to the economy as a good indicator of the boost South Africa can expect from government's ASGISA programme. The increasing investment in infrastructure and capacity-building extends to substantial new information technology projects, and we believe SAP is positioned constructively to support this effort," says Kuehnemann.

He said preliminary indications of the final content of the government's Codes of Good Practice for broad-based black economic empowerment, due to be released shortly, suggest that this will be a significant step in providing the clarity and certainty that business needs to continue making progress in this area. The board of SAP AG has in consequence now approved the next step in SAP's black economic empowerment (BEE) process. This involves restructuring its Africa operations, bringing together in one entity the South African part of its operations and SAP Public Services, previously a standalone business in South Africa. SAP's business in other African countries will fall under a separate entity. The legal and administrative processes required to finalise this reorganisation are expected to be completed shortly.

The 30% shareholding in SAP Public Services (South Africa) of Blitec, the investment arm of the Black IT Forum, will be converted into an approximate 10.7% stake in the new entity to be known as SAP South Africa.

"This is an important further step in SAP's development in South Africa," said Kuehnemann. "It is another milestone in our long-standing efforts to support BEE, and we expect to take further steps in the foreseeable future. Our original transaction with Blitec in 1999 was well ahead of its time. That equity stake was fully paid for some time ago, so Blitec's revised holding in the larger SAP South Africa is unencumbered and fully owned without restriction. Blitec has been a strong shareholder and contributor since 1999 and we are pleased that they will be central to the next phase of SAP's progress on BEE."

Blitec chairman, Lufuno Nevhutalu, says achieving a significant stake in the larger SAP South Africa vindicates the company's pioneering role in BEE in the IT sector.

"Our decision as Blitec to take a pioneering role in BEE with SAP not only provided us with an excellent financial return, but also demonstrated what can be achieved," said Nevhutalu. "While the debate about workable financial models in BEE has been going on, Blitec has managed to pay for its stake in SAP in South Africa in full. We believe that this has provided Blitec with a strong platform to continue contributing in a meaningful way to full transformation in the IT sector."

Kuehnemann believes transformation in the IT sector can accelerate further in the coming months as government completes and publishes detailed regulations that will enable companies to have a complete and final picture of what exactly is required to turn good BEE intentions into reality.

1SAP does not disclose financial performance figures for individual countries.