Janko Hahn

J. Hahn / Head Treasury Operations, July 2014

Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts

Agenda

1. Autoneum at a glance

2. Project POWER: a centralized gateway

• Starting Point• Project DRIVE: standardized business processes with SAP• Via SAP & FIDES to the banks (and back)

3. Outlook: the years ahead

• Inhouse bank & payment-on-behalf• Collection-on-behalf• Virtual Accounts• SAP Treasury enhancements• Formats

4. Lessons learned

5. Contact

3Project POWER – from Bank Connectivity to In-House Cash and Virtual Accounts

1. Autoneum at a glanceProduct lines

• Broad range of technologies

• Innovative materials and processes

• Customized systems and components

• Cost effective and lightweight solutions

• Total vehicle optimization

• Simulation tools and measurement systems

Engine Bay

Interior Floor

Underbody

Body Treatment


1. Autoneum at a glanceKey Facts & Figures

Net Sales 2013: 2’053.3 million CHF

Represented in more than 20 countries

About 45 locations worldwide

Operating result before interest and taxes* (EBIT) Some 9’600 employees

Stock listed company (SIX Swiss Exchange)

* before one-time expenses


1. Autoneum at a glanceWell-diversified global customer base

* Share in net sales 2013

42%*

BG North America


2. Project POWER: a centralized gatewayStarting point

Status Quo 2012: • Centralized Treasury Operations, 2 FTEs• Autoneum Group in a net debt position• Larger positions of local based cash• Large number of bank accounts with broad variety of banks

Goals:• Full daily overview over cash & liquidity• Better transparency of cash flows globally (…where possible)• Cost savings

System landscape: • Out-dated Treasury Management System (TMS)• Independent / outdated ERP landscape


2. Project POWER: a centralized gatewayProject DRIVE: standardized business processes with SAP

July 2012: Board decision for global project («DRIVE») of process re-engineering by using SAP as instrument (global roll-out of SAP FI, CO, SD, MM, etc)

Agenda: 2 – 3 Roll-Outs / year, starting with CH Legal units time frame until2017 for Project DRIVE

Group Treasury – Project POWER:• TMS evaluation 2nd half of 2012, SAP selected as new TMS in 11/2012• In-House Cash licensed for future use Benefit of integration into DRIVE landscape Consulting partner for SAP Treasury:

Key changes short term:• Centralized transmission of payment runs & bank statements• Single gateway to the banks & local benefits of TRM use


2. Project POWER: a centralized gatewayVia SAP & FIDES to the banks (and back)

Status Quo:• FIDES already in place: daily collection of MT940 & MT942• Payment runs executed locally in numerous systems & following different

processes

Goals: • Single gateway for statements AND payments globally• SWIFT connectivity for non-CH / non-EUR zone Go-Lives• Increased transparency of payments released• Profiting from choosing «the right format»: ISO 20022 / XML

Evaluation:• Comparison of a few service providers (e.g. «classical» SWIFT Service

Bureaus)• FIDES solution chosen as result



Approach before SAP / BCM & FIDES



New approach with SAP / BCM & FIDES

Middle-ware


3. Outlook: the years aheadInhouse bank & payment-on-behalf

Status Quo 2012:• Decentralized payment execution• SAP In-House Cash module licensed• Inhouse bank Roll-Out planned to start in 2014

Goals:• Replace monthly IC netting (managed outside SAP so far)• Move to payment-on-behalf for CHF and EUR

Benefit of ISO 20022 format Start with CH legal units followed by France; cover all legal units in Business

Group Europe (BG EU) over the years Extend to other currencies used in BG EU & corporate centre


3. Outlook: the years aheadCollection-on-behalf

Status Quo:• EUR and CHF accross Europe: centralized access via daily Zero-

Balancing, but still larger EUR balances locally (ca. EUR 8 MIO)• «Large» number of local bank accounts (over 100 globally)• Variety of bank relations (ca. 45) globally

Goals:• Reduce local cash & (not supportive) bank relations + number of accounts• Get access to cash faster & without delay readyness for next downturn

(Automotive industry!)• Reduce interest costs 3rd / bank charges & leverage bank relations

Extend In-House Cash also to collection on-behalf (again for BG Europe)


3. Outlook: the years aheadVirtual accounts

Challenges implementing an on-behalf approach:• On-behalf solution still requires several bank accounts for cash collection

(difficulty to apply cash legal unit by legal unit)• Leads to replacement of old EUR Cash Pool with a new one

Solution:• Maintain one bank account to cover on-behalf payments & collections

across Europe• Easy application of cash & mapping such movements to in-house bank

account for each legal unit

Implement on-behalf solution in combination with a virtual account setup


3. Outlook: the years aheadVirtual accounts – payment-on-behalf

SAP

FIPa

rty

Invo

lved

Transfers payment run to Bank stating virtual account in EUR

Autoneum X AG

SAP

In-H

ouse

C

ash

Aut

oneu

mX

AG

ph

ysic

al b

ank

acc.

Books IC receivable + calculates interest + charges bank fees

Physical account debited, pmt. shows LU Virt. account number as payment account

Legal Unit (LU)

Executes payment runs

Inhouse bankaccount of LU showsnew balance; sendsinhousebankstatement

Beneficiary

Receives payment, text shows LU as counterpart & Autoneum X AG as executing party

Reconciles daily inhouse bank statements

1 2

34

45

6


3. Outlook: the years aheadVirtual accounts – collection-on-behalf

SAP

FIPa

rty

Invo

lved Autoneum X AG

SAP

In-H

ouse

C

ash

Aut

oneu

mX

AG

ph

ysic

al b

ank

acc.

Identifies credit andbeneficiary LU, books IC liability toLU

Physical account credited, ref. Text shows LU virtual account

Legal Unit (LU)

Inhouse bankaccount of LU shows new balance, statement sent toLU

Customer

Reconciles previous day bank statement

1

32

4


3. Outlook: the years aheadSAP Treasury Enhancements - overview

Automated confirmation of FX Deals with the banks via MT300 (TRM / New Correspondence Framework)

Treasury «Cockpit» for easier navigation across the Treasury Transactions in SAP

EMIR compliance (Dodd-Frank TBD)

Graphical analysis of data & improved reports: SAP LUMIRA

Timeline for implementing further Enhancements: Q4/2014 – Q2/2015


3. Outlook: the years aheadSAP Treasury Enhancements – Treasury Cockpit


3. Outlook: the years aheadSAP Treasury Enhancements – LUMIRA


3. Outlook: the years aheadFormats

Bank Statements:• Move from MT940 / MT942 to CAMT.053 / CAMT.052• Currently not an option due to missing bank readiness

Payments:• Evaluate change to CGI• Depending on acceptance by banks

ACK/NAKs (pain.002):• Currently received from FIDES by e-mail• Target to implement into SAP BCM

Timeline for implementation of ACK/NAKs: Q4/2014 (depends on FIDES)


4. Lessons learnedGo-Live CH Legal Units 2013 (bank-connectivity)

Manage external dependencies• FIDES (e.g. testing windows, converter settings)• Banks - format definitions• Knowledge of FI consultants in regards to Treasury needs

Manage internal dependencies• Accounting team (e.g. creation of test files) • Manage setup of several developement and testing mandates & impact on

bank connectivity in SAP (e.g. middleware configuration)

Thorough testing a MUST

Thorough training of ALL people involved well in advance (IT, Accounting, etc) clear definition of processes (Treasury as «black-box» for other teams)


4. Lessons learnedGo-Live preparation USA & CA 2014

Sufficient time calculated for preparation / planning / testphases• US/CA project involved 2 timezones and 4 different parties (bank, FIDES,

Autoneum team and SAP consultants) multiplication of time needed due to complexity

• Bank internal project guidelines lead to additional time needs (e.g. severalUAT cycles, testing freeze, cheque Go-Live schedules)

• Definition of ACH formats (CTX, CCD, PPD, etc.)

Don’t rely on local knowledge: ACH requirements («don’t know, we alwayspaid by cheque»)

Complexity to get reduction of cheques agreed on vs. timing to get reductionof cheque payments implemented


4. Lessons learnedPlanned implementation of In-House Cash & Virtual Accounts

Intensive legal & tax review required for on-behalf approach

Virtual account solution: importance of clarifying which names will show upin payments to suppliers (ordering entity vs. executing entity)

Instrument benefits mainly for EUR zone (SEPA payments) – costs ofadditional implementation for GBP, PLN, CZK and USD might mitigate thebenefits

Product is a new solution also for bank side – not all processes 100% clearly defined in pre-project discussions

No progress doable when ERP Roll-Out delayed (project DRIVE delayimpacts schedule for project POWER)


5. Contact

Contact details: Janko HahnHead Treasury Operations

Autoneum Management AG T +41 52 244 82 [email protected]

Documents

Janko Hahn