1. Effective Pan-Baltic CM solution
8th February 2007, Tallinn
Jonas Slavinskas Treasurer Baltics AB Kraft Foods Lietuva
12/9/2018

2. Framework for Baltic Cash & Banking Pan-Baltic cash management
Table of content
Company profile
Selecting the bank
Framework for Baltic Cash & Banking
Pan-Baltic cash management
E-banking - a tool centralize operations
Summary
Kraft is a member of the Altria family of companies.
Other companies in the Altria family include:
Philip Morris USA Inc.
Philip Morris International Inc.
Philip Morris Capital Corporation
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3. #2 in Global Food & Beverage Revenue with $34 Billion Revenue in 2005
Company Profile
Kraft Foods
#2 in Global Food & Beverage Revenue with $34 Billion Revenue in 2005
Sales in more than 150 Countries
Operations in 70 Countries
Approximately 175 manufacturing and processing facilities worldwide
Approximately 94,000 employees worldwide
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4. Kraft Foods Lietuva - Baltics headquarter
Company Profile
Kraft Foods Baltics
Kraft Foods Lietuva - Baltics headquarter
Manufacturing / import / sales of Coffee, Confectionery, Salted Snacks
2 Plants - Confectionery and Salted Snacks
Manufacturing for I/C units worldwide
Sales to Lithuania, Latvia, Estonia and Kaliningrad
$92 Million Revenue in 2005
Kraft Foods Latvia
Advertising and market research service
Kraft Foods Eesti
Integrated back to Baltic in March, 2006
As of March 31, 2006, Altria has an 87.6% ownership in Kraft.
The remaining 12.4% is publicly traded on the New York Stock Exchange.
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5. What does company need from the bank?
Selecting the bank
What does company need from the bank?
Very broad question with specific answer for each client
each bank has S&W, the question is, how do these fit with corporate requirements
every bank offers every service, but not every service is offered in exactly the same way
most successful banks work hard to understand corporate business needs, treasury structure, how it operates
on a back they will offer a tailor-made solution, followed up with streamlined approach to implementation to ensure successful project
As of March 31, 2006, Altria has an 87.6% ownership in Kraft.
The remaining 12.4% is publicly traded on the New York Stock Exchange.
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6. Consider PPRC and your problem statement
Selecting a bank
Consider PPRC and your problem statement
Product
Corporate needs vs. capabilities of the bank
Flexibility to offer a tailor made solution is a strong driver
Technology is still a differentiator among the banks
Price
Is it competitive, transparent
Product structure determines overall cost and hidden charges
Standardized T&C and Pricing
Relationship
Strong commitment to the relationship
One point of contact is a key
Coverage
Cross-border services, regional specialization
How services are delivered (branches, partner banks)
Is it extensible (CEE, Nordic)
As of March 31, 2006, Altria has an 87.6% ownership in Kraft.
The remaining 12.4% is publicly traded on the New York Stock Exchange.
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7. Framework for Pan-Baltic Cash & Banking
Bank account structure reflects operational needs
Lithuania
Latvia
Estonia
KF LT
KF LV
KF EE
Customers
Suppliers
LTL IC
Suppliers / IC
LVL
EEK
Local currency account in each currency location
Advantage
Convenient for customers to pay and for the company to pay local suppliers
Faster credit clearing reduce float
Lower transaction cost
Disadvantage
Potentially lower coordination and central control of accounts
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
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8. Framework for Pan-Baltic Cash & Banking
Transferring surplus liquidity in EUR to central ‘pool’
Kraft Foods
Treasury Centre
KF Baltics
I/C lending / borrowing
Surplus liquidity transfer
EUR
Bank A/C limits
Citibank
(I/C Netting, USD, EUR,… payments)
Master / Participants accounts
Zero balance pooling
Kraft Foods Finance Europe AG - treasury center which acts as in-house bank for treasury business (FX deals, deposits, short term loans)
Investment limits defined for KF Baltics local bank A/C based on liquidity needs
Surplus balances converted in EUR and invested into Kraft Foods Finance Europe
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
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9. Framework for Pan-Baltic Cash & Banking
Migration to Kraft European Business Service Center (EBSC) challenged payments processing
Payments
Outgoing
Incoming
LT Bank
LV Bank
EE Bank
EBSC
KF LT
KF LV
KF EE
Bank Statements
Payment Orders
EBSC is a Shared Service Center established in Bratislava
Manages back office operations (AP, GA) on behalf of Kraft Foods affiliates across EU
Acts as a Payment Factory for all Kraft Foods Baltics entities
All payments done by using the bank accounts of the local group companies
Fixed timing of outgoing payments, allows greater control of cash
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

10. Framework for Pan-Baltic Cash & Banking
Quite a complex region to manage complex operations
Three legal and tax systems, three currencies, three clearing systems
Complex business structure across the three countries - one point sales location with the 2 servicing legal entities
Multiple bank accounts structure with different nature of operations - generate net cash and make purchases in each currency location
Complex integration to Shared Service Center to manage payments from abroad for three countries and from local bank accounts
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
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11. Pan-Baltic cash management
Pan-Baltic banking concept - to leverage e-banking and simplify cash management across 3 countries & legal entities
Kernel criteria
Pan-Baltic bank with strong presence in all three Baltic countries
Single electronic banking system to integrate and manage all Baltic business units accounts across three countries
To deliver
Coordination and central control of bank accounts
Single pipe for payments (all payments to be processed through one central point at the bank)
Economies of scale (reduce bank cost and fees)
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

12. Pan-Baltic cash management
Cross-border cash pooling offers all the advantage of being in-country and maintain central control on liquidity
LVL
SUB A/C
EEK
A/C
LTL
EUR/MC
TARGET A/C
Lithuania
Latvia
Estonia
KF LV
KF EE FX
Cross-border zero balancing pool
SEB
Same bank for all transactions
Cash concentration within single location and single currency
End-of-day net balance swept with the same-day-value date
Fixed FX deals arrangement to convert LVL, EEK in EUR
O/N investments of consolidated balances
One point transfer to central ‘pool’
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
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13. Pan-Baltic cash management
LC investment limits and centralized debt facility require specific approach on funding day-to-day operations
LVL / EE
SUB A/C
ZBA
EUR / MC
TARGET A/C
Lithuania
Estonia
In-house Bank
I/C Debt
I/C
AR, AP
KF LV
LVL
A/C
Cr limit
KF EE
EEK
Receipts
Latvia
LTL
SEB
Financing with the collections
Fix timing of outgoing payments
Match with the receipts
Forecast, Forecast, Forecast
Back-up for potential receipts phasing
Maintain reserves, watch for idle cash
In-house bank S/T loans
Suspend sweeping, accumulate cash
Exploit intra-group transfers
One-point funding
Same day value
Free of charge
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

14. E-banking - a tool to centralize operations
Be aware of potential e-banking system weaknesses and design controls accordingly
Secure Operation
Access Rights - define within the application in accordance with the business processes, segregate the duties - prevent users from having conflicting responsibilities
File Transfer Security - 'end to end', from the accounting application generating the payment instructions all the way to the bank
Dual Approval - split and segregate critical action (static data, payment process, security changes, etc) between 2 users
Audit Trail - critical information should be reviewed on frequent and regular basis such as logon, release of payments, critical changes to the security, etc
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

15. E-banking - a tool to centralize operations
Central control of all Baltic bank accounts and one point of entry for payments processing
Latvia
SEB
A/C
Estonia
Lithuania
SWIFT MT101
SWIFT MT940
Payment Orders
Account Statements
E-banking (Web)
EBSC
Cash Monitoring
PO / Bank posting LC
Pay/Rec
KF Baltic
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
MT101 - request for transfer from third-party bank accounts
MT940 - account statement message
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16. E-banking - a tool to centralize operations
Fully automated single pipe for payments leveraged AP operations in Shared Service Center
Import text file to e-banking
Process payments
Import text file
SEB e-bank (UNB)
Text file
Generate and export text file
Single
bank feed format for payments in three countries
Payer A/C mapped with the Bank
LC payments
Bank LT
Bank LV
ERP
Consider LC format differences (eg Tax codes in LT, Tax A/C in LV)
Invoice scanning and upload
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

17. Summary
Three countries, differentiated bank account structure, in-house bank requirements, integration to Shared Service Center - a complex business to manage
One region, one bank with one point of entry approach challenged complexity
Exploited economy of scale and rationalized bank relationship
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
12/9/2018

18. Thank You!
Across the globe, Kraft has been given numerous awards for its policies and workplace environment. In 2005 we received recognition as a family-friendly employer by the German Federal Families Minister.
In the US, “Black Professionals” magazine put Kraft on its list of “Top 25 Companies for African Americans.” "DiversityInc." magazine ranked Kraft among the top 10 companies in the US that support diversity in the workplace. And "Hispanic" magazine selected the company as one of its "Corporate 100" for providing the most opportunities for Hispanics.
In Brazil, the “Guidebook of Good Corporate Citizenship” named Kraft as one of the 10 model companies for social responsibility.
Published by “Exame,” the most important Brazilian business magazine, the Guidebook pointed out that Kraft has enacted initiatives that impact both the community and consumers. These include a sustainability project to benefit families that harvest cashews in the Brazilian state of Ceará, as well as our policy regarding marketing to children.
Jonas Slavinskas
12/9/2018