SAP said its supervisory board had approved a management proposal for extra payouts either through share repurchases or a special dividend. Photo: Tatyana Makeyeva/Reuters

FRANKFURT – German business software group SAP said on Monday that it would return an extra €1.5 billion (R24.5 billion) to shareholders in 2020, with the enhanced payout made possible by its strong financial and operational performance.

SAP, Europe’s most valuable technology firm, said after US market hours that its supervisory board had approved a management proposal for extra payouts either through share repurchases or a special dividend.

The announcement comes ahead of SAP’s capital markets day on November 12 in New York at which some investors – including US activist fund Elliott that declared a stake in SAP earlier this year – had hoped for a far larger buyback.

SAP said, however, that the extra capital return to shareholders – which comes on top of its policy of paying out 40 percent of after-tax profits in dividends – would be made with the company’s long-term prospects in mind.

“The Supervisory Board and Executive Board are confident that SAP’s strategy of investment in innovation and profitable growth, together with a disciplined capital return, will maximise shareholder value for the long term,” it said in a statement.

The capital markets day will be the first major outing for new co-chief executives Jennifer Morgan and Christian Klein. The duo has taken over from long-time boss Bill McDermott, who is leaving to head up ServiceNow.

SAP announced recently that it had reached a three-year deal with Microsoft to help its large enterprise customers move their business processes into the cloud.

The partnership called “Embrace” will help clients to run operations hosted at remote servers supported by SAP’s flagship S/4HANA database, Morgan said as SAP released its final third-quarter results in line with preliminary figures released on October 11.

Reuters