The challenge was to bring about best practice in risk management, treasury operations, treasury accounting and treasury controls within SABMiller globally. It then had to standardise wherever possible across the European environment and emerging markets. “In many cases we were not only training the business unit but often the in-country banks (local subsidiaries of some of the major global banks) on what was possible and what was absolutely required,” explains Alan Chitty, Treasury Controller.
Ensuring localisations were kept to a minimum required an analysis of central bank regulations, examples of what other banks within that country were doing, examples of what the same bank was doing in other markets and occasional pressure to be placed on the global relationship manager.
Two requests for proposal (RFPs) were developed and three regional treasury centres (RTCs) established, while country treasury operations were centralised. On the debt side the company issued a $1.1 billion bond issue with a five-year maturity split between two tranches, a $750m fixed and a $350m floating rate tranche. SABMiller were very happy that they were able to price through their curve by 3bps on the fixed rate tranche.
Other components of the solution implemented include:
Hedge accounting for commodities – this was automated within IT2.
Additional IFRS 7 and IFRS 13 disclosures agreed with PwC well before year-end.
eBAM went live with Citi.
Negotiating the first use of 360T in South Africa with two banks.
Two treasury management system (IT2) upgrades over twelve months.
CP issuance and tri-party repos to spread the counterparty risk out of financial institutions.
Changed confirmation system to Misys, including roll-out in the Africa region (first corporate in Africa).
Automated non-deliverable forward, commodity and option confirmations through Misys.
Implemented dynamic hedge programme using Citi Early Warning System.
Implementation of corporate SWIFT payments and confirmations in ten new countries – seven of which were among the first in that country.
Supply chain financing over three continents with RBS, Citi and Westpac.
Fully compliant on EMIR trade reporting, back loading of deals dating back 18 months and quarterly portfolio reconciliation with an in-house automated solution from the TMS that allows reporting of internal derivatives and can be adapted to meet other G20 regulatory requirements.
Diagram 1: Connectivity
Best practice and innovation
This has been a real team effort across four continents and four different locations improving efficiencies and implementing best practices in everything from bond issuance, RFPs and bank relationships to dealing automation, payments, confirmations, hedge accounting and automated accounting interfacing to multiple ERPs. The project has fostered the continued centralisation of treasury operations (front office, middle office and back office) into centres of excellence – regional treasury centres leading to more efficient, more cost-effective and higher quality treasury operations.
“This has delivered large benefits in terms of interest, FX and bank fee savings within the business units due to regional fee structures. At the same time the group treasury, based in the UK, has become more sophisticated and complex in its risk management and cash management based on the foundation of increasing straight through processing. This has also allowed the scope and volume of treasury to increase dramatically whilst not increasing the headcount or departmental budget,” explains Chitty.
“Our judging panel felt the continued march towards being the best treasury team, based on complete straight through processing and treasury technology allowing the team to adopt cutting edge treasury best practice and becoming a much appreciated value-add partner to the business was worthy of a Highly Commended in the Top Treasury Team category this year.
This has allowed the whole SABMiller Group Treasury team to achieve a phenomenal amount of change, scope increase and efficiency gains over the last 12 months,” says Richard Parkinson, Managing Director, Treasury Today.
Diagram 2: MaxTrad portal – invoice processing