1. Treasury focused on growth
Etienne Kleuters
Michel Hanssen
14 November 2014

2. Table of Contents Introduction
Business case for Treasury Management System
Treasury system landscape
Cash and Liquidity Management
Hedge Management
Business forecasting
Exposure Management
Next steps
Lessons Learned

3. SAP Finance Consultant
SAP Treasury Theory
1. Introduction - Qrcus
Michel Hanssen
SAP Finance Consultant
OCI Nitrogen

4. 1. Introduction - OCI NV Facts and figures
Leading global nitrogen fertilizer producer and engineering & construction contractor
Employing more than 55,000 people in 35 countries
Listed on NYSE Euronext as AEX-fund in Amsterdam
Founded in 1950 as a construction company
First fertilizers activities acquired in 2008,
nowadays top 3 nitrogen-based fertilizer producer

5. 1. Introduction - OCI Fertilizers
Locations

6. 1. Introduction - OCI Nitrogen
Key strategic player within OCI Fertilizers
Location HQ in Geleen (The Netherlands) (approx. 800 employees worldwide)
Production Ammonia, Mineral Fertilizers and Melamine
Annual Turnover
EUR 1.2 billion
One of the European market
leaders in fertilizers and
ammonia products and the
largest producer of melamine
worldwide. Over 80 years of
history and as from 2010 part
of OCI
Challenges:
Combining two separate companies into one OCI Nitrogen
Disconnected from corporate environment and operate as a stand alone company

7. 2. Business case for TMS Challenges: Develop a sustainable system
< 2010
2010
2014 ?
Organization
Meeting first requirements stand alone treasury organization
Integration in corporate treasury
Fully integrated in corporate treasury DSM
Upscaling to increased requirements (risk management, regulatory, accounting, financing, public listing parent)
Policies
Information
Challenges:
Develop a sustainable system
Achieve process efficiency
Secure accuracy / Data integration
Meet the increased need for information

8. SAP Cash & Liquidity Management SAP Bank Communication Management
3. Treasury system landscape
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Credit Risk
Market Risk
Portfolio Analyzer
BPC
Forecasting
Transaction Manager
Hedge Management
Exposure Management
Money Market
Foreign exchange
Derivates
Debt Mgmt
Securities
Commodities
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
SAP In-House Cash
SAP Bank Communication Management

9. 3. Treasury system landscape Cash & Liquidity Management
Treasury applications from SAP
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning

10. Today Today +1 Today +2 Today +3 Today +4 Cash position
Level / Short text
D C
D C
D C
D C
D C
Cash position
A0 FI Banks
A0 FI Banks
500
500
500
500
800
-800
Payment in Transit
B1 Outgoing Payment subledger
-800
B3 Incoming Payment subledger
Treasury deals
T1 Treasury in
T1 Treasury out
Liquidity position
AP/AR
F1 Creditors
-800
F2 Debtors
300
Sales and Purchases
P1 Purchase orders
-800
P2 Sales orders
300

11. SAP Cash & Liquidity Management
3. Treasury system landscape Hedge Management
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
Transaction Manager
Hedge Management
Money Market
Foreign exchange
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning

12. 3. Treasury system landscape
Hedge Management
Types of risk which are hedged by OCIN:
Foreign currency risk
Interest rate risk
Hedging aims to mitigate the impact of economic risks on an entity’s performance.
Hedge accounting:
Adjust the accounting treatment of a hedging instrument and/or a hedged item to enable recognition of gains and losses on the hedging instrument in the income statement in the same period as offsetting losses and gains on the hedged item.(Matching concept).

13. 3. Treasury system landscape
Hedge Management
Strict criteria:
Existence of formal documentation
Achievement of effectiveness tests (80%- 125%)
Effectiveness tests:
Retrospective
Prospective
Key date valuation
Interim or annual financial
statements
Inception date
Interim or annual financial statements

14. SAP Cash & Liquidity Management
3. Treasury system landscape SAP Business Planning & Consolidation (BPC)
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
BPC
Forecasting
Transaction Manager
Hedge Management
Money Market
Foreign exchange
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning

15. 3. Treasury system landscape
SAP BPC
SAP BPC is used for:
Budget & Forecast
Ad hoc simulations
Advantages:
Integration with SAP ECC ERP system
Shared responsibility Business Controllers
One-time input of (forecast) data
Possibility to delegate responsibilities of data input to other departments

16. 3. Treasury system landscape
SAP BPC
Input currencies &
Basic Assump.
Prices Raw Materials
Calculate Cost prices
Sales Volume & Prices
Logistical Tariffs
P&L Reporting BS
Reporting
Exposure
Mgmt
BPC
Automated CF Statement
Identify exposures
Scenario analysis
Cash flow

17. SAP Cash & Liquidity Management
3. Treasury system landscape Exposure Management
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Market Risk
BPC
Forecasting
Transaction Manager
Hedge Management
Exposure Management
Money Market
Foreign exchange
Derivates
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning

18. 3. Treasury system landscape
Exposure Management
Main requirements:
Identify FX exposures
Analyse Sensitivity
Accurate reporting FX results
Qualitative analysis to identify types of FX risk
Transactional (economic) versus Translational (accounting)
Direct and indirect
Different price commitment periods
Mainly EURUSD (long and short)
Quantative analysis to determine sensitivity
“OCI Nitrogen looked for a structural solution to get the required insight and understanding of their FX exposure”

19. 3. Treasury system landscape
Exposure Management

20. SAP Cash & Liquidity Management SAP Bank Communication Management
4. Next steps
Treasury applications from SAP
SAP Treasury and Risk Management
Risk Analyzer
Credit Risk
Market Risk
Portfolio Analyzer
BPC
Forecasting
Transaction Manager
Hedge Management
Exposure Management
Money Market
Foreign exchange
Derivates
Debt Mgmt
Securities
Commodities
SAP Cash & Liquidity Management
Cash Management
Liquidity Planning
SAP In-House Cash
SAP Bank Communication Management

21. 5. Lessons Learned Understanding the business is key
Identify key (corporate) objectives and quick wins
Early involvement relevant stakeholders
Stay flexible
Don’t let best get in the way of better (2014, Peter Fels, Sabic)

22. Thank you Etienne Kleuters Treasury & Credit officer
Michel Hanssen
SAP Finance consultant