Leveraging SAP technology to support global treasury vision.

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2 Leveraging SAP technology to support global treasury vision. January 2016 Leo Di Amato Treasury Manager - Sappi International S.A Daniel David Manager SAP Core - Sappi Europe S.A

3 Agenda Overview Treasury project Applications Next steps 3

4 Sappi Limited Overview #2 Global producer of coated woodfree paper (60% of sales) Forecast: Capacity and demand down 1.5% through 2019* #1 Global producer of dissolving wood pulp (15% of sales) Forecast: Demand up 6% and capacity up 3.3% through 2016** 4 * EMGE March 2015 ** RISI April 2015

5 Sappi at a glance Sappi Limited 2015 Sales = US$6 billion with 12,800 employees EBITDA : $650 million / Targeted leverage ratio of 2 times Sappi Trading Sappi Europe 51% 2015 sales Sappi North America 25% 2015 sales Sappi Southern Africa 24% 2015 sales Graphic paper Graphic paper Paper and paper packaging Speciality paper Specialised cellulose Specialised cellulose Release paper Forests 5

6 Geographic diversification Our global presence allows us take advantage of opportunities where markets are strong Three paper and specialised cellulose mills Seven paper mills 13 sales offices on six continents Six paper and specialised cellulose mills 567,000ha of forests 6

7 Group Treasury Structure Board of Directors Dealer Treasury committee Deputy Treasurer Treasury Manager Analyst Cash Executive CEO/CFO Group Treasurer Accounting Manager SAP& Systems Manager Responsibilities - Cash management - Foreign Exchange risk - Interest Rate risk - Funding - Cash flow forecasting - Counterparty risk - Hedge accounting - Treasury systems support - Commodity hedging - Factoring - Securitization program - Credit insurance - Collection factory - Payments solutions - Supply chain finance - Rating agencies Accountant Accountant 7

8 Agenda Overview Treasury project Applications Next steps 8

9 Treasury function overview : Before project ) Suppliers Infopool/Payment System Bank 1 Bank 2 Bank 3 Bank 4 SAP# boxes Bank 1 Bank 2 Bank 3 Bank 4 SA Bank GTM (Brussels Only) Excel (Regional Treasury Offices) TMS (SA Treasury Office) Thomson Reuters Multiple systems Non standardised treasury reporting Large number of interfaces to maintain Minimal IT support Manual payments 9

10 Drivers for transformation & Opportunities Absence of centralised treasury policies & processes Inefficiencies of cash management structure Internal Bank Weak segregation of duties ( internal audit ) Increased demands for information / assistance from regions Existing system licence up for renewal Senior management support to revisit the treasury mandate Centralised Decentralised WTC WTC/SEC GTC/STC GTC/RTC RTC World Treasury Center WTC World Treasury Center WTC and Satellite Execution Centers SEC Group Treasury Center GTC with Satellite Treasury Centers STC Group Treasury Center GTC with Regional Treasury Centers RTC Regional Treasury Center RTC Treasury function should be co-ordinated and executed centrally 10

11 Group long-term Treasury vision Treasury Vision & Strategy System Specifications Standardised Policies, Processes and accounting treatments Optimise the cash management structure rationalise the number of accounts maximise the interest returns Manage an in-house bank Improved Control and Accuracy (Sarbanes Oxley) Single treasury system in line with IT group strategy Internal Banking Capability High levels of Security and Segregation of responsibilities Comprehensive Reporting Capability Business and Treasury Flows Fully integrated system offering automated accounting link Treasury function executed centrally to the extent possible Objective : Add value back to the Business 11

12 Project scope Cash Management SAP Treasury module Internal Bank Single external payments platform Internal payments optimization 12

13 Cash Management - Target balancing structure USD Concentration Account SFPNA G L O B A L B A N K London-based In-country USD X- regional concentration with North America SISA SISA SISA Entity 1, 2, 3 Funding Collection account Disbt account Collection account Disbt account NZD NZD Master Header CHF CHF USD funding by Group Treasury Account Account Master Master SEK SEK Account Account Master Master DKK DKK Active Account Account Group Master Master investment CAD CAD Treasury Account Account Header A/C by currency Master Master ZAR ZAR Account Account Master Master GBP GBP Account Account Master Master AUD AUD Account Account Collection Master Master JPY Collect. JPY GT Master Account Account Master Header Account Account Account ZBA Collection account Disbt account Main collection account EUR int l receipts Collection account Disbt account USD and other currencies Collection Master A/C for Asia Pacific Domestic, XB and Int l Collections Domestic, XB and Int l Mass payments Local Bank Entity Disbt account Disbt account Disbt account Disbt account Petty cash, payroll, trade Local payment instruments 13 SAPPI BENELUX SAPPI GERMANY SAPPI UK SAPPI AUSTRIA

14 SAP Treasury module Market Risk Analyser Mark to market FX exposure Interest rate gapping Sensitivity reports Scenario analysis In House Cash Intercompany payment netting Current account functionality Payment factory solution Central receipts on behalf In-House Cash SAP Treasury functionality Money Market Market Risk Analyser Analysis Transaction Manager Cash Management Credit Risk Analyser Securities FX Derivatives Transaction Manager Cash Management Financial Acc. Liquidity Planner R/3 Enterprise Link to underlying exposures in SAP (AP, AR, Sales, Purchase orders etc) Cash forecasting and balance reporting Credit Risk Analyser Comprehensive limit functionality Counterparty credit / settlement risk management 14

15 15 Single external payments platform

16 Internal payment optimization Prior SAP IHB: Own In-House bank Application Own development EUR only Interest calculation / Statement print out Full integration with Factoring process (high level of automation) No integration with SAP payment programs No integration with SAP bank statement upload SAP IHB: SAP standard Multi currencies Interest calculation / Statement print out / Statement upload No integration with Factoring process => need additional developments Integration with SAP payment programs (Treasury and AP) Integration with SAP bank statement upload (important for our zero balancing) Cash Concentration (tax unit) 16

17 Treasury function overview : After project Web Based Banking System SAP Thomson Reuters Suppliers 17

18 Agenda Overview Treasury project Applications Next steps 18

19 Factoring Customer Mills Sales Org Lanaken Fin. Sappi International Invoice Cash 19

20 Factoring Interco S. org Interco Mill Customer IHB IHB Interco IHB mill Interco IHB S. org Interco IHB Fact Mills Treasury Sales organization Factoring entity IHB Customer Citibank 20

21 External / Internal bank integration Customers Payments Treasury Bank accts MT940 Treasury IHC transfer IHC FINSTA Affiliates Pay runs MT940 Citibank Platform Suppliers 21

22 Facts & Figures Quantitative Qualitative 1 single ERP SAP box worldwide 150 external bank accounts 99.9% bank statement upload Very high % of automated reconciliation 200+ IHB accounts 150+ Trading partners 10,000 FX trades / year 1,000 money market deals / year 35,000+ treasury postings / year 15,000 internal payments / year Decrease of overall banking fees Interest returns optimization Capex pay-back time way below target Small central staff fully dedicated to separate function to add value Full control on bank account matrix STP execution of treasury postings from one central place System roles & profiles capabilities to meet required segregations of duties Fasten monthly closing activities Eliminate mistakes (zero posting error) Plug & Play structure 22

23 Agenda Overview Treasury project Applications Next steps 23

24 Next steps Migration to HANA => Mid of November as a preparation step for Simple Finance Single chart of Account Preparation for Simple Finance => Fixing data inconsistencies => Enabling pre-requisites for Simple Finance (EA-FIN, ) Simple Finance => Use BPC for Cash Forecast Improve exposure report for central management Full automation of EMIR reporting 24

25 25 Thank you

26 A clear strategy focusing on finance, intelligence and innovation : cross industry projects with attention to quality and long-term collaboration INTENSUM is an independent European consulting agency founded in Our objective is to align business & IT through a unique service offering combining senior SAP & SAS competencies with solid business expertise. We deliver first-class implementation skills, focusing on the optimization of the Financial Supply Chain & Treasury processes, Business Analytics & Planning and process improvement through innovative solutions. 26