BAT Treasury Transformation Project
Regional Treasury Manager - British American Tobacco (BAT) Asia Pacific Treasury in Singapore. With BAT for over 15 years. Father of 3 boys 1
Agenda Introducing BAT General triggers for change in Treasury Drivers for transformation at BAT Initiatives undertaken and benefits Key takeaways 2
BAT Facts and Figures Formed in 1902, as a joint venture between the UK s Imperial Tobacco Company and the American Tobacco Company World s second largest quoted tobacco group by global market share Operating in over 180 markets 45.8bn in gross turnover 5.4bn profit from operations Net debt of 8.6bn and cash of 2.1bn Annually paying 30.7bn in taxes (incl. excise duties) 3
Triggers for Change... 1. Organic growth of the organization 2. Desire to be innovative and best-in-class 3. Event-driven (merger, acquisition, spin-off) 4. External factors (financial crisis, regulation) 5. The changing role of corporate treasury 4
Treasury in the near future. RECENT PAST NOW and NEAR FUTURE Treasury Organisation Decentralised, local processes Virtual Organisation IHB and Payments Factory Shared Services Banking Landscape Multiple banks, E-banking, single cash pools Balance Banking wallet Simple bank ac structure Independent bank connectivity System Infrastructure Standalone systems, non-automated Interfaces, multiple systems 1 Global system Automation Interfaces Treasury and workflow processes Many different processes, labor intensives Uniform More with less Paperless 5
Agenda Introducing BAT General triggers for change in Treasury Drivers for Transformation at BAT Steps undertaken and benefits Key takeaways 6
m Drivers for BAT Treasury Transformation Process Cost Payments Collections Accounting Tax Treasury Audit Planning & Reporting Business Partnering Mgmt. & Admin. Overhead Technology * versus FMCG median TOTAL 8 10 Opportunity * 20 +3 11-7 16 +4 16 +6 15 +4 14 158** +7 +3 25 +5 14 +6 In 2007 Conducted Hackett studies and results were as follows Treasury costs more than double the average of comparable organisations, why? - 230% more bank accounts. - Bank charges are significantly higher +9-2 +44 ** representing circa 80% of finance cost base 7
Drivers for treasury transformation Roll back to 2008. 8
Drivers for treasury transformation Creaking head office centralised treasury system Manual work and non standardised processes Lack of reliable data: - No consistent definition of FX exposures - No standard analysis of FX impact - No regular reporting 9
Steps for treasury transformation 1. Must do: multi-currency rolling cash flow forecast 2. Define the Target Operating Model (TOM) 3. Treasury Transformation: Back to Basics - FX Optimisation - Cash management and banking efficiency - Bank account rationalisation - Inter-company netting In House Bank 10
Treasury organisation Evolution De-Centralised Centralised Automated Manual Treasury Transformation Start TaO Interim GTO To-Be 11
BAT s SAP deployment Programme TaO, started in early 2011, covering: - Operations, Marketing and Finance, including Treasury (+ SWIFT connectivity) - Scope Covering 100+ countries Jan 2011 - Pilot in Malaysia market + Global Treasury - Live in Sept 2012 Subsequent global deployment in five waves, complete by end-2015 Specifically for Asia Pacific: Jan 2013 - Australasia, Pakistan, Bangladesh and Sri Lanka live Jan 2014 Mid 2013 Rest of Asia Pacific Live May 2014 12
Benefits Doing the basics well realises value: 60% of total benefits realised before system roll-out The savings are in the following areas - Banking - Cash management - Funding costs - Overheads Savings GBP25mn pa More ambition = more effort = more benefits! - More than 8x s the initial estimate 13
Conclusions and lessons learnt 1. Get the basics right - Easy Steps to Big Impacts/Wins 2. Sell tangible benefits to win people over easier 3. Use the experts 4. Anticipate challenges, every step of the way. Best planning need adapting. 5. Stay focussed on your vision as the results are worth it. 14