January 2016

Treasury Manager - Sappi International S.A

Leveraging SAP technology to support

global treasury vision.

Leo Di Amato Daniel David

Manager SAP Core - Sappi Europe S.A

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Agenda

Overview

Treasury project

Applications

Next steps

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Sappi Limited

#2 Global producer of coated woodfree paper (60% of sales)

Forecast: Capacity and demand down 1.5% through 2019*

Overview

#1 Global producer of dissolving wood pulp (15% of sales)

Forecast: Demand up 6% and capacity up 3.3% through 2016**

* EMGE March 2015 ** RISI April 2015

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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 Europe

51% 2015 sales

Graphic paper

Speciality paper

Sappi North America

25% 2015 sales

Graphic paper

Specialised cellulose

Release paper

Sappi Southern Africa

24% 2015 sales

Paper and paper packaging

Specialised cellulose

Forests

Sappi Trading

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Geographic diversification Our global presence allows us take advantage of opportunities where markets are strong

Three paper and specialised

cellulose mills

Six paper and specialised

cellulose mills

567,000ha of forests

Seven paper mills

13 sales offices on six continents

Group Treasury Structure

Treasury Manager

Cash Dealer Analyst

Executive

CEO/CFO

Board of Directors

Accounting

Manager

SAP& Systems

Manager

Group Treasurer Deputy Treasurer

Accountant Accountant

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

Treasury

committee

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Agenda

Overview

Treasury project

Applications

Next steps

Bank 1

GTM

(Brussels Only)

SAP# boxes

Excel (Regional Treasury Offices)

Infopool/Payment

System

Bank 2 Bank 3

Bank 4

Suppliers

Thomson Reuters

Treasury function overview : Before project )

TMS (SA Treasury Office)

Bank 1 Bank 2

Bank 3

Bank 4

SA Bank

•Multiple systems

•Non standardised

treasury reporting

•Large number of

interfaces to maintain

•Minimal IT support

•Manual payments

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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

WTC WTC/SEC GTC/STC GTC/RTC RTC

Centralised Decentralised

Group Treasury Center ‘GTC’ with Satellite Treasury Centers ‘STC’

World Treasury Center ‘WTC’

World Treasury Center ‘WTC’ and Satellite Execution Centers ‘SEC’

Group Treasury Center ‘GTC’ with Regional Treasury Centers ‘RTC’

Regional Treasury Center ‘RTC’

Treasury function should be co-ordinated and executed centrally

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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)

Treasury function executed centrally to the

extent possible

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

Objective : Add value back to the Business

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Project scope

Internal Bank

Cash Management SAP Treasury module

Single external payments

platform

Internal payments

optimization

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NZD Header Account

NZD Master Account

SAPPI UK

SAPPI AUSTRIA

SAPPI GERMANY

SAPPI BENELUX

Petty cash, payroll, trade

Local payment instruments

Collection account

Disbt account

Disbt account

G L O B A L

B A N K

Local Bank Entity

Collection account

Collection account

Collection account

Disbt account

Disbt account

Disbt account

Disbt account

Disbt account

Disbt account

Entity 1, 2, 3…

SISA

Domestic, XB and Int’l Mass payments

Domestic, XB and Int’l Collections

Collection Master Account

Group Treasury

Header A/C

ZBA

Main collection account EUR int’l receipts

London-based

Active investment by currency

Funding

CHF Master Account SEK

Master Account DKK

Master Account CAD

Master Account ZAR

Master Account GBP

Master Account

AUD Master Account

JPY Collect. Master Account

In-country

SISA

SISA

USD Concentration

Account

SFPNA

USD X- regional concentration with North America

USD funding by Group Treasury CHF

Master Account SEK

Master Account DKK

Master Account CAD

Master Account ZAR

Master Account GBP

Master Account

AUD Master Account

JPY GT Header Account

USD and other currencies Collection

Master A/C for Asia Pacific

Cash Management - Target balancing structure

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SAP Treasury module

Transaction Manager

SAP Treasury functionality

Analysis

In-House

Cash Cash

Management

Market Risk

Analyser Credit Risk

Analyser

Transaction Manager

Liquidity

Planner

Money

Market Securities FX Derivatives

Financial

Acc.

R/3 Enterprise

Credit Risk Analyser

• Comprehensive limit

functionality

• Counterparty credit /

settlement risk management

In House Cash

• Intercompany

payment netting

• Current account

functionality

• Payment factory

solution

• Central receipts on

behalf

Market Risk

Analyser

• Mark to market

• FX exposure

• Interest rate

gapping

• Sensitivity reports

• Scenario analysis

Cash Management

• Link to underlying exposures in SAP

(AP, AR, Sales , Purchase orders etc)

• Cash forecasting and balance reporting

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Single external payments platform

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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)

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SAP

Web Based

Banking

System

Thomson Reuters

Treasury function overview : After project

Suppliers

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Agenda

Overview

Treasury project

Applications

Next steps

Factoring

Mills Sales Org Lanaken Fin. Sappi International

Customer

Invoice

Cash

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Factoring

Mills Sales organization

Treasury Factoring entity

Interco S. org Interco Mill Customer

Customer

IHB IHB

Interco IHB mill

Interco IHB S. org

Interco IHB Fact

IHB

Citibank

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External / Internal bank integration

Treasury

Bank accts

Treasury

MT940

IHC transfer FINSTA

Pay runs

Citibank

Platform

MT940

Suppliers

Payments

IHC Affiliates

Customers

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Facts & Figures

Quantitative

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

Qualitative

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

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Agenda

Overview

Treasury project

Applications

Next steps

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

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Thank you

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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 2005. 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.