COMPIRICUS & DOMINION

BOND ISSUANCE MANAGEMENT WITH SAP TRM

Dallas, TX, 10-28-2015

2

AGENDA

Introduction

US Bond Issuance Market

and System Requirements

SAP TRM Functionality

SAP TRM Implementation

at Dominion

3

Dominion Profile

Dominion (NYSE:D), headquartered in

Richmond, VA, is one of the nation’s largest

producers and transporters of energy, with a

portfolio of approximately:

• 24,600 megawatts of electricity generation

• 12,200 miles of natural gas transmission,

gathering and storage pipeline

• 6,455 miles of electric transmission lines.

Dominion operates one of the nation’s largest

natural gas storage systems with 928 billion

cubic feet of storage capacity and serves retail

energy customers in 13 states.

Live with SAP in 1998

Current Components FI, HR, SCM, RE, BW

4

Dominion Long Term Debt

• 24.5bn LTD at 6/30/15*

• 78 LTD issuance

positions

• 8 derivative positions

w/1.7bn notional

• Intercompany

borrowing/investments

• 4 legal entities with public

debt

Source: Dom.com IR Reference Book March 2015r.pdf • Source: Dom.com 2Q15 Earnings Release Kit*

• COMPIRICUS team members can leverage

more than 20 years experience to provide

excellent consulting services in the area

of:

• Asset, Debt & Treasury Managemt.

• Investment Accounting

• Investmebt/Debt Forecast &

Projection

• Services and Solutions from Front to Back

Office to Accounting and Reporting

• Partner for technical, business and

process tasks in Treasury, Cash and Risk

Management

• Founded in 2009 as a team of experienced

consultants and software developers

• Committed so Services and Solutions for

Treasury, Asset & Risk Management

• Offices in Frankfurt, Dusseldorf (Germany)

and Boston (USA)

• SAP Service Partner and SAP Application

Development Partner (HANA and

Insurance Statutory Reporting)

• Software Provider for the Financial

Adapter® and further Software Packages

Company History

• Scalable platform solutions for globally

and locally operating companies

• Efficient SAP Standard Implementations

for Asset, Risk, Treasury & Cash

Management Applications

• Customer individual enhancement for

more comprehensive software

enhancements such as for derivatives or

complex amortization requirements

• Cloud & Outsourcing Services

Tailored Treasury Solutions Experts in Treasury, Cash & Risk Management

Clients Industry Focus Revenue in Corporate Industry

Locations Team

COMPIRICUS - FACTS AND NUMBERS

6

TIMELINE COMPIRICUS

7

AGENDA

Introduction

US Bond Issuance Market

and System Requirements

SAP TRM Functionality

SAP TRM Implementation

at Dominion

8

US CORP. BOND ISSUANCE DEVELOPMENT & DJIA IN COMPARISON

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

0,0

200,0

400,0

600,0

800,0

1.000,0

1.200,0

1.400,0

1.600,0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

DJ

IA (

Ye

ar

En

d)

US

Bo

nd

Issu

an

ce

in

Bil

lio

n U

SD

Callable Fixed Rate Callable Floating Rate

Non-Callable Fixed Rate Non-callableFloating Rate

Convertible Dow Jones Industrial Average

Source: Issuance Data from SIFMA (Securities Industry and Financial Markets Association)

DJIA Data from Google/Finance

9

REASONS FOR INCREASING BOND MARKET

For companies it is easier (and

cheaper) to get money via capital

markets than from banks

Spread between bank loans and

debt securities got smaller

Investors absorb high volumes

in their search for yield

highly rated corporates are a

good opportunity for secure

and more profitable investment

Issuer Perspective

Capital Market Perspective

10

INFLUENCE FACTORS OF BOND ISSUANCE

Complex SEC

Require-

ments Bond

Issuance

Influence

Factors GAAP

Accounting

(esp. ASC 835

and 470)

Credit

Rating

System

Capabilities

(esp. for complex

issuances)

11

Flexible Conditions

Fix to Float and Float to Fix

Sinking Fund Structures

Embedded (Multiple) Call Options

(Mandatory) Convertibles

Transactions

Complex Non-Current to Current Transfers

Debt and Investment transaction on same SMF for I/C business events

Lot Accounting for

Re-Openings

Buy-Backs

INSTRUMENTS & ACCOUNTING REQUIREMENTS 1/2

12

Amortization Different Amortization Calculations for

Premium/Discounts

Various Fees (Underwriting/Legal/etc.)

Different Amortization Target Dates for Amortizations Flows in

parallel

To Call Date

To Maturity Date

Hedge Accounting with

Interest Rate Swaps and (flat) Compounding Swaps

for running Issuances

Forwarded starting Swaps for Pre-Issuance Hedges

INSTRUMENTS & ACCOUNTING REQUIREMENTS 2/2

13

AGENDA

Introduction

US Bond Issuance Market

and System Requirements

SAP TRM Functionality

SAP TRM Implementation

at Dominion

14

SAP TRM PROVIDES TO YOU 1/2

Short Term

Debt Programs

Long Term

Debt Programs

Hedging

Instruments

Hedge

Accounting

General Ledger

Integration

Commercial Papers, Credit Lines (Facilities) and Guaranties/

Letter of Credits (planned) as Instruments in SAP TRM

Bond Issuances with complex condition structures (incl. (multiple)

call conditions and amortization package from COMPIRICUS

Interest rate swaps (incl. (flat) compounding swaps), FX

forwards and options as hedging instruments

Hedge Accounting functionality for Interest rate and FX

exposure hedges

Hedge Accounting functionality for Interest rate and FX

exposure hedges

COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT

15

Cash

Man

ag

em

en

t

Po

sitio

n

Man

ag

em

en

t

Su

b-L

ed

ge

r

Acco

un

ting

Gen

era

l

Led

ger

Acco

un

ting

in

External & Internal Reporting

Custody Info for

debt programs

Custody

Bank

Lead

Under-

writer

Incoming & out-

going Payment for

Issuances

Market

Data

Market Data from Bloom-

berg or Reuters with

Financial Adapter

SAP TRM PROVIDES TO YOU 2/2

COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT

16

COMPIRICUS ENRICHED THE CURRENT FUNCTIONALITY WITH A

SPECIFIC ISSUANCE AMORTIZATION PACKAGE

17

AGENDA

Introduction

US Bond Issuance Market

and System Requirements

SAP TRM Functionality

SAP TRM Implementation

at Dominion

18

Treasury at Dominion

Initial SAP TRM install in 2003

– Commercial Paper – uploads from bank

– Cash Management – highly customized

All long term debt managed and reported from Access Database

Accounting for LTD very manual, separate department

Project initiated in 2014 to move from Access to SAP

Project Drivers:

– Stability of platform & maintenance issues

– Personnel rotations causing loss of knowledge of highly customized

database

– Desire to integrate / automate processes

19

TRM Project

Original Scope

Long term debt tracking

– Bonds

– Variable Bonds

– Sinking

– Swaps

Management & Regulatory reporting

Investments for intercompany borrowing

Use Representative Test Data

Historical data to BW

Scope Creep

Upgrade to supported treasury module

Payment processing modifications

Input all active long term debt into test

system

Configuration of new companies for CP and

investments

20

Project Takeaways

Educate users on level of integration with accounting early

Involve the accountants early AND throughout the project

Understanding of how current payment processes work

Analysis of product types during project scoping

Validation of SAP system status

Look across landscape and corporate initiatives impacting

SAP system – GRC, EHP7, Data Volume Management