COMPIRICUS & DOMINION BOND ISSUANCE MANAGEMENT WITH SAP TRM. Dallas, TX,

Transcription

1 COMPIRICUS & DOMINION BOND ISSUANCE MANAGEMENT WITH SAP TRM Dallas, TX,

2 2 AGENDA Introduction US Bond Issuance Market and System Requirements SAP TRM Functionality SAP TRM Implementation at Dominion

3 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 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 2Q15 Earnings Release Kit* Source: Dom.com IR Reference Book March 2015r.pdf

5 COMPIRICUS - FACTS AND NUMBERS Clients Industry Focus Revenue in Corporate Industry Locations Team Company History 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 Tailored Treasury Solutions 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 Experts in Treasury, Cash & Risk Management 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

6 TIMELINE COMPIRICUS 6

7 7 AGENDA Introduction US Bond Issuance Market and System Requirements SAP TRM Functionality SAP TRM Implementation at Dominion

8 US Bond Issuance in Billion USD DJIA (Year End) US CORP. BOND ISSUANCE DEVELOPMENT & DJIA IN COMPARISON 1.600, , , ,0 800,0 600,0 400,0 200,0 0, Callable Fixed Rate Non-Callable Fixed Rate Convertible Callable Floating Rate Non-callableFloating Rate Dow Jones Industrial Average Source: Issuance Data from SIFMA (Securities Industry and Financial Markets Association) DJIA Data from Google/Finance 8

9 9 REASONS FOR INCREASING BOND MARKET Issuer Perspective For companies it is easier (and cheaper) to get money via capital markets than from banks Spread between bank loans and Capital Market Perspective 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

10 10 INFLUENCE FACTORS OF BOND ISSUANCE Complex SEC Requirements GAAP Accounting (esp. ASC 835 and 470) Bond Issuance Influence Factors Credit Rating System Capabilities (esp. for complex issuances)

11 11 INSTRUMENTS & ACCOUNTING REQUIREMENTS 1/2 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

12 12 INSTRUMENTS & ACCOUNTING REQUIREMENTS 2/2 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

13 13 AGENDA Introduction US Bond Issuance Market and System Requirements SAP TRM Functionality SAP TRM Implementation at Dominion

14 14 SAP TRM PROVIDES TO YOU 1/2 COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT 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

15 15 SAP TRM PROVIDES TO YOU 2/2 COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT Market Data Custody Bank Market Data from Bloomberg or Reuters with Financial Adapter Custody Info for debt programs Cash Management Position Management Sub-Ledger Accounting General Ledger Accounting in Lead Underwriter Incoming & outgoing Payment for Issuances External & Internal Reporting

16 COMPIRICUS ENRICHED THE CURRENT FUNCTIONALITY WITH A SPECIFIC ISSUANCE AMORTIZATION PACKAGE 16

17 17 AGENDA Introduction US Bond Issuance Market and System Requirements SAP TRM Functionality SAP TRM Implementation at Dominion

18 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 19 TRM Project Original Scope Long term debt tracking Bonds Variable Bonds Sinking Swaps Management & Regulatory reporting Investments for intercompany borrowing 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 Use Representative Test Data Historical data to BW

20 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