From Insight to Action Best Practice Treasury Transformation

Transcription

1 From Insight to Action Best Practice Treasury Transformation Steffen Diel, Head of Global Treasury, SAP Global Treasury, SAP SE Marc Astor, Global Centre of Excellence, Treasury & Finance, SAP SE

2 Financial Risk Management 2

3 SAP s Global Treasury Organization Group CFO Assistant SAP s Global Treasury Treasury Committee Front Office Treasury Finance (Middle Office) Treasury Operations and Processes (Back Office) Equity Programs & Projects Further Treasury Units Dealing (FX, MM, Securities, Equities, Derivatives) Financial Risk Management Cash Management Stock Based Compensation Regional Treasury Center Subsidiary Service Center FX, MM and Investments FX Hedging & Optimization Capital Market Strategy & Debt Investor Relations Subsidiary Service & Policy Deal Checking & Settlement Worldwide Bank Connectivity Liquidity Planning Projects with Subsidiaries Treasury Center Ireland Share Buyback Strategy & Execution Interest Rate and Asset Management Bank Relationship Management Support Post-Merger Integration and Other Projects Bank Account Administration Projects with Global Tax Ariba Treasury Financial Market Regulation External & Internal Funding Forecast Finance Income & FX Result 3

4 The Foundation: SAP s Treasury Guidelines Contents Rationale Scope Framework for all Treasury activities throughout the Group Definition of goals and principles of SAP's financial management based on SAP's corporate values, strategies and policies Support of SAP's global strategy by enhancing financial goals Ensure compliance with (legal) requirements Risk of non-compliance: loss of assets reduction of financial flexibility insufficient view on financial risks wrong strategic decisions Applies to: all SAP Group companies management of Corporate and Business Services or Finance Functions all SAP employees who are responsible for and / or conduct Treasury activities Enforced by: Global Treasury, GIAS, management and external auditors 4

5 Financial Risk Management: Overview Foreign Exchange Rate Risk Volatility of exchange rates can adversely impact SAP s operating performance and financial stability Interest Rate Risk Interest rate movements can negatively influence SAP s financial performance on the asset and liability side (e.g. bank deposits, bank loans, private placements, bonds) Counterparty Risk SAP has to protect itself against the default of its counterparties, i.e. banks. Strong increase in importance since the financial market crisis and the bankruptcy of Lehman Brothers Liquidity Risk Liquidity has to be maintained at any time. Furthermore, SAP has to ensure that additional funds (loans, bonds) can be raised when they are needed and debt can be repaid on time Operating Risk SAP has to ensure that internal and external systems for core processes (payments, settlement of FX deals) are available and executable at all times

6 One Single Source of Truth Counterparty Risks Deals and Investments Balance Sheet Exposure Hedging ERP/ Treasury Cash and Liquidity Loans and Receivables Forecasted Exposure Hedging 6

7 FX SAP Goals and Principles of SAP s FX Management: Reduction of P&L volatility Safeguard EPS Use of appropriate and approved hedging instruments No speculation Exposure (= amount at risk) definitions: Economic Exposure Translation Exposure Transaction Exposure Hedging exchange rate fluctuations can result in a competitive advantage or a disadvantage compared to competitors operating with a different currency mix Accounting Exposure The translation of a foreign entity s financial statement (local currency) to the group s financial statement (group s currency) can result in gains and losses Balance Sheet Exposure: revaluation of balance sheet items in foreign currency Forecast Exposure: exchange rate fluctuations can have negative impact on expected future cash flows (cash inflows and outflows) 7

8 Balance Sheet Exposure SAP Balance Sheet SAP SAP SE SAP Group (w/o SAP SE) 7 main currencies* All currencies (w/o main currencies*) All currencies Exposure quantification Fully automated in SAP s ERP Fully automated in SAP s ERP Fully automated in SAP s ERP Risk management approach All balance sheet exposures across all companies and all currencies within SAP Group can be calculated fully automated in SAP s ERP This single source of truth ensures compliance with SAP s guidelines and a flexible calculation of FX balance sheet exposures at any time * AUD, CAD, CHF, GBP, JPY, USD, ZAR Calculation of VaR in SAP s ERP Calculation of Hedge Ratios in SAP s ERP Calculation of absolute EUR counter-values in SAP s ERP Calculation of absolute EUR counter-values in SAP s ERP 8

9 Balance Sheet Exposure SAP Calculation for Group TOP 25 overview of total (absolute) Balance Sheet Exposures List shows the sum of the absolute balance sheet exposure across all currencies per CC in descending order Companies with high exposures can be identified immediately Significant time savings in analyzing the exposures can be realized Single companies and their exposures can be analyzed with the group exposure transaction (for all currencies) and the single company transaction (up to 10 currencies) Drill-down function available for detailed analysis of exposures 9

10 Forecasted Exposure Hedging Layered Hedging of Expected Transactions AUD BRL CHF GBP JPY USD Forecast provided by subsidiaries for the upcoming 12 months Volume to be hedged = 70% of Forecasted Exposure Hedge volume split into two hedges / layers Hedging of expected I/Co license revenues of SAP SE, focus on transaction risk Six main currencies are currently being hedged on a rolling basis with max. hedging horizon of 12 months 1 st Layer: 12 months maturity 40%-60% of hedge volume 2 nd Layer: 6 months maturity 80%-100% of hedge volume Hedge ratios of layers as sole criterion for hedging decisions 10

11 Counterparty Risk: Management Reporting Today Successful liquidity protection during the financial crisis Risk concept ensures broad investment diversification between business partners No investment in complex financial products Professional credit risk management 11

12 We practice what we preach Every day EMIR: SAP Global Treasury leverages SAP s treasury solution for Central Reporting of all SAP group treasury activities and collects data that have to be sent to the transaction register at t+1 automatically Payment Factory with Global Formats for payments/ reporting. Automated 24x7 posting of p.a. > payments > bank account statements > statement transactions for > 250 subsidiaries globally > 700 bank accounts globally By bringing intragroup payments inhouse with SAP In-House Cash, we have been able to reduce bank fees, minimize costs associated with foreign exchange rates, and significantly lower our risk as an enterprise operating globally Andreas Hartmann Head of Treasury Front Office, SAP AG Gerd Klevenz, Head of Treasury Operations, SAP AG

13 Finance Transformation at SAP The Finance Run Better Together Program Transform the business Drive Growth & Innovation Simplify IT & Processes Enable our people

14 Bringing Applications & Analytics together New innovation in Finance powered by a new technology platform New SAP Accounting Alternative in-memory functionality for ERP customers New SAP Cash Management New product for Group Cash Management Integrated Business Planning New capabilities and enhanced integration for ERP and BPC. Business Suite on HANA All Applications Run all transactional and analytical applications on the same set of data at the same time in real-time SAP HANA Platform 10,000x Faster Process massive amounts of data, and deliver information at unprecedented speeds Vastly Simplified IT Deployable on-premise or in the cloud, SAP HANA dramatically simplifies complex and expensive IT architectures

15 Transforming Financial Management with SAP HANA Our achievements 55 days To implement and go live 65,000 Users on a single instance of SAP ERP >400 hours Cut from financial close processes The financials add-on for SAP Business Suite powered by SAP HANA was deployed in less than two months without any disruption to our business. We now have one common platform for both regulatory and managerial accounting as well as on-the-fly financial processes. This innovation will help us deliver stronger financial leadership through better advice on strategic and operational plans that impact the business performance and effectiveness of SAP. Luka Mucic, Chief Financial Officer, SAP AG

16 Real-time Insight to Action New user experience

17 Practicing what we preach New Cash SAP Group Treasury Daily Cash Operations Cash Positions Short-Term Cash Forecasting Bank Transfers and Payment Approval Analyze Payment Details Payment Statistics Bank Account Management Liquidity Management Mid-term Liquidity Forecast Actual Cash Flow Analysis Embedded Liquidity Plan and Variance Analysis

18 THANK YOU Steffen Diel Head of Global Treasury Marc Astor Global COE Finance & Treasury