SAP S/4HANA Cloud for Finance Compliance as a Service Giuseppe Lillo, Presales Specialist, SAP

SAP experience Day SAP S/4HANA Cloud: l ERP as a Service - 21 febbraio 2018 SAP S/4HANA Cloud for Finance Compliance as a Service Giuseppe Lillo, Presales Specialist, SAP

Compliance As a Burden CUSTOM SOFTWARE Core ERP

Compliance As a Service CORE FINANCE Intelligent ERP Core FINANCE ERP

Focus on IFRS 16

New Leasing regulations to add $3tn of leases to balance sheets globally New leasing standards released by FASB and IASB Operating leases can no longer be treated as "off balance sheet". Every IFRS and US-GAAP reporting company will be impacted $3 trillion of lease commitments will come onto the balance sheets of affected companies* * Source: Financial Times 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 5

Significant Changes for Balance Sheets IAS 17 IFRS 16 Finance leases Operating leases All leases Assets Liabilities $$$$ Off balance sheet rights / obligations $$$$ 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ PUBLIC 6

S/4HANA Cloud for Contract & Lease Management: Contract types Lease contracts describe contractual agreements between two partners: the Lessor and the Lessee. The lessor is the owner of an asset, the lessee has a right of use asset during the period of time agreed in the lease contract. For the use of the asset, the lessee must pay lease payments, which are agreed in the lease contract. Contract types Cloud for Contract & Lease Management Lease-in Lease-out Service Contract Sublease * * Planned for 1802 S/4HANA Cloud for Contract & Lease Management helps customers standardize their Lease-in, Lease-out and Service contract management activities Planned for 1802: enablement of Sublease contracts* * enabling intercompany and external leasing scenarios to support comprehensive and complex leasing processes that comply with the new regulations. Contract object Real Estate, Machinery, Equipment, Vehicles, Computer hardware, etc Covering real estate, as well as machinery, equipment, vehicles and computer hardware. Additional contract attributes can be defined by customer 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 7

S/4HANA Cloud for Contract & Lease Management Integrated Leasing Scenario Multi-GAAP Posting Contract Management 5 different lease types for lease in, lease out and service contract Leasing partners Top 10 predefined types of contract items Terms and conditions for notice and renewal options (validity) Lease payment cash flow with full integration Critical dates and reminders Document management Multi-GAAP enabling (IFRS, US GAAP, HGB) Manage right-of-use assets and liabilities Customer / Vender accounting Post depreciation and repayments Lease payments Controlling / Profit center accounting Valuation and Classification Classification and evaluation rules Calculate and report on net present value, depreciation, repayment and interest rate Change management / Re-valuation Support transition scenarios Create / Link to fixed assets 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ INTERNAL 8

CONTRACT LEASE CONTRACT DIGITIZATION LEASE CONTRACT LEASE CONTRACT GENERAL LEDGER Debit: Depreciation CONTRACT & LEASE MANAGEMENT Add-on ACCOUNTS PAYABLE PROCUREMENT ASSET ACCOUNTING Credit: Accumulated depreciation BUSINESS PARTNER Journal Entry API RoA GL Posting Debit: RoA RoA Credit: Finance Lease Liability Masterdata UNIVERSAL JOURNAL GL Posting Debit: Interest Expenses Credit: Finance Lease Liability GL Posting Debit: Finance Lease Liability Credit: Lease Reconcil Account TIME 1 TIME 2 CORE ERP S/4HANA CLOUD