COMPIRICUS & DOMINION BOND ISSUANCE MANAGEMENT WITH SAP TRM€¦ · 2 AGENDA Introduction US Bond...
Transcript of COMPIRICUS & DOMINION BOND ISSUANCE MANAGEMENT WITH SAP TRM€¦ · 2 AGENDA Introduction US Bond...
COMPIRICUS & DOMINION
BOND ISSUANCE MANAGEMENT WITH SAP TRM
Dallas, TX, 10-28-2015
2
AGENDA
Introduction
US Bond Issuance Market
and System Requirements
SAP TRM Functionality
SAP TRM Implementation
at Dominion
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
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 IR Reference Book March 2015r.pdf • Source: Dom.com 2Q15 Earnings Release Kit*
• 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
• 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
Company History
• 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
Tailored Treasury Solutions Experts in Treasury, Cash & Risk Management
Clients Industry Focus Revenue in Corporate Industry
Locations Team
COMPIRICUS - FACTS AND NUMBERS
6
TIMELINE COMPIRICUS
7
AGENDA
Introduction
US Bond Issuance Market
and System Requirements
SAP TRM Functionality
SAP TRM Implementation
at Dominion
8
US CORP. BOND ISSUANCE DEVELOPMENT & DJIA IN COMPARISON
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
DJ
IA (
Ye
ar
En
d)
US
Bo
nd
Issu
an
ce
in
Bil
lio
n U
SD
Callable Fixed Rate Callable Floating Rate
Non-Callable Fixed Rate Non-callableFloating Rate
Convertible Dow Jones Industrial Average
Source: Issuance Data from SIFMA (Securities Industry and Financial Markets Association)
DJIA Data from Google/Finance
9
REASONS FOR INCREASING BOND MARKET
For companies it is easier (and
cheaper) to get money via capital
markets than from banks
Spread between bank loans and
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
Issuer Perspective
Capital Market Perspective
10
INFLUENCE FACTORS OF BOND ISSUANCE
Complex SEC
Require-
ments Bond
Issuance
Influence
Factors GAAP
Accounting
(esp. ASC 835
and 470)
Credit
Rating
System
Capabilities
(esp. for complex
issuances)
11
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
INSTRUMENTS & ACCOUNTING REQUIREMENTS 1/2
12
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
INSTRUMENTS & ACCOUNTING REQUIREMENTS 2/2
13
AGENDA
Introduction
US Bond Issuance Market
and System Requirements
SAP TRM Functionality
SAP TRM Implementation
at Dominion
14
SAP TRM PROVIDES TO YOU 1/2
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
COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT
15
Cash
Man
ag
em
en
t
Po
sitio
n
Man
ag
em
en
t
Su
b-L
ed
ge
r
Acco
un
ting
Gen
era
l
Led
ger
Acco
un
ting
in
External & Internal Reporting
Custody Info for
debt programs
Custody
Bank
Lead
Under-
writer
Incoming & out-
going Payment for
Issuances
Market
Data
Market Data from Bloom-
berg or Reuters with
Financial Adapter
SAP TRM PROVIDES TO YOU 2/2
COMPREHENSIVE FUNCTIONALITY FOR DEBT ISSUANCE MANAGEMENT
16
COMPIRICUS ENRICHED THE CURRENT FUNCTIONALITY WITH A
SPECIFIC ISSUANCE AMORTIZATION PACKAGE
17
AGENDA
Introduction
US Bond Issuance Market
and System Requirements
SAP TRM Functionality
SAP TRM Implementation
at Dominion
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
TRM Project
Original Scope
Long term debt tracking
– Bonds
– Variable Bonds
– Sinking
– Swaps
Management & Regulatory reporting
Investments for intercompany borrowing
Use Representative Test Data
Historical data to BW
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
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