Treasury s role is changing

s role is changing 1 KPMG TREASURY TEAM s role is changing kpmg.se

s role is changing 3 KPMG Team is a complex business which demands great practical knowledge of financial s and financial processes. Our team provides our clients with a versatile set of services. We perform different kinds of analyses, e.g. of the current state of our clients treasuries. We define solutions for the future treasury set-ups and related issues, and support our clients in implementing the defined solutions. Per Areskär Head of +46 (0)76-632 67 13 per.areskar@kpmg.se Yvonne Eliasson Processes +46 (0)723 991 840 yvonne.eliasson@kpmg.se Our team has the capabilities to tackle any treasury related challenge. Erik Krohn Risk +46 (0)8-723 9100 erik.krohn@kpmg.se Fredrik Yngvesson Valuation +46 (0)76-633 68 98 fredrik.yngvesson@kpmg.se Malin Karström Processes +46 (0)8-723 9100 malin.karstrom@kpmg.se Rasmus Liljegren Head of Valuation +46 (0)8-723 96 94 rasmus.liljegren@kpmg.se Jonathan Araya Valuation +46 (0)76-164 67 13 jonathan.arya@kpmg.se Jan Forsell Head of Financial Risk +46 (0)70-597 92 08 jan.forsell@kpmg.se

4 s role is changing s role is changing 5 Areas of responsibility in a traditional treasury set-up Long and short term funding FX- and Interest rate management Bank relationship management Cash and liquidity management Finance net (forecasts and follow ups) These areas are still very important, but The Treasurer s Role is changing Scope is expanding The interaction between the boards and treasury on management strategies and governance issues is increasing, and the treasurer s role is thus expanding. Treasurers need to take on a broader strategic role and support management and business units in other treasury related areas. Expanding areas and responsibilities for treasurers may include: Value Based Capital structure & cost of capital Risk adjusted performance measurement Mergers & Acquisitions Valuation support Risk and investment analyses Financial due diligence Enterprise Risk Commodity management Operational management Customer credit management Customer and Supplier Financing Sales and Export finance Structured & Asset Finance Financial Leasing Cash and Working Capital Working capital optimization Customer / supplier / credit terms Cash flow forecasting Pension Managing pension arrangements Implement tax effective structures Corporate Governance Regulations Insurance The Treasurer s role is changing Increasing its responsibility Scope of Treasurer s Role Core role executional Analytical role Strategic role Adding Value Becoming a value-adding entity has become more important for treasury functions. The role of treasury has grown and changed, and a wider scope increases demands and requirements. functions are under pressure to demonstrate the value they provide to the business, while simultaneously reducing costs and increasing transparency. Treasurers often see their value in bank relationship management and decision support, though shareholders see their value-added activity as financial management. However, in this changing environment, traditional treasury activities, such as transaction processing, are increasingly considered less valueadding. The commonality of payment methods, for example, has led to this type of activity becoming largely commoditized. The increased focus on governance and control has highlighted treasury activities as control functions in themselves, which some consider an opportunity to add value to senior management by monitoring, analyzing and reporting on underlying business cash flow and. Clever and expensive treasury resources should primarily be used for value adding tasks throughout the group as well as in supporting business units. There is an increased emphasis on measuring treasury performance, due to the recent focus on adding value. Group Funding FX Risk Traditional responsibilities Cash & Liquidity Interest Rate Risk Group + Corp. Finance Credit Risk Commodity Risk Work. Capital Increasing responsibilities Insurance Trade Finance Pensions Regulations

6 s role is changing s role is changing 7 KPMG Services overview 1. Strategy 5. System & Infrastructure reviews and benchmarking System need analysis Governance and policies Specification of requirements cases / feasibility studies System procurement and implementation Integration 8. Tax 7. Debt Advisory & Debt 6. Accounting 1. Strategy Strategy Implementation 5. System & Infrastructure Design Compliance 2. Transformation 3. Risk & Valuation 4. Cash & Liquidity Value creation 2. Transformation Mergers & acquisition (integration, treasury build-up) Organizational changes Education (tailor made seminars, workshops) Regulatory impact 3. Risk & Valuation Risk exposure assessments, sensitivity analysis Hedge & trading strategies, asset allocation Valuations, market data quality assessments Risk reporting, follow-up 4. Cash & Liquidity Bank and payment infrastructure Cash pools, netting systems Liquidity planning & liquidity management Working capital management Process re-engineering/stp 6. Accounting Accounting principles Classification & measurement of investments Hedge accounting Day-to-day accounting 7. Debt Advisory & Debt Financing need analysis Financing strategy Debt procurement, Documentation support Trade and asset finance Pension management 8. Tax Tax planning Intercompany financing Ruling and opinion support Transfer pricing

8 s role is changing s role is changing 9 Examples of projects Transformation We support our clients in analyzing and defining various organizational setups for the treasury function within a company, as well as in organizing the treasury unit itself. Strategy We support our clients in analyzing the strategic role of the treasury function. This includes defining geographical and organizational scope, responsibilities and relevant activities. Board CEO CFO Support Planning, pricing, sales, purchases, investments A Finance B Finance Risk Risk exposure identification, cash flow forecasting, financial transactions Control, Accounting Financial accounting, taxation, authority relations Investor Relations Mergers & Aquisitions and performance management Risks We support our clients in identifying various exposures and how to manage these. We also help define measures and follow up procedures. Processes & Systems We help our customers analyze, describe and redefine treasury processes, both on a strategic and a detailed level, in order to redefine and optimize processes to increase efficiency and minimize operational s. Furthermore, we provide support in analyzing the system need for managing financial s and cash flow. Where appropriate, we also help customers with procurement and implementation. framework and prerequisites Risk awareness information Policies and guidelines Liquidity Political Credit Environmental hazard Market Financial Hazard Physical damage Enterprise Strategic Legal Operational Systems operations People Process Transaction factory Front O ce Back O ce Accounting Risk management Market intelligence Funding Liquidity management Deal execution Portfolio management Deal processing Matching Confirmations Payment/netting Reconciliation Bank statements Daily accounting Closing Hedge accounting Policy Reporting and follow-up We develop and support the implementation of treasury reporting to management, which ensures transparency and follow up of mandates and current positions, liquidity reserves etc. Risk control and reporting Middle O ce Valuation Performance Risk control Reporting Regulatory compliance Information quality and TMS We also define and document treasury policies, manuals and other relevant instructions that support our customers treasury activities and ensure compliance.

10 s role is changing s role is changing 11 Is your department ready to meet the future? Is the capital structure of the company supporting your current business model and needs? Are financial s in your company well balanced and aligned with shareholder preferences? Do you have a suitable mix of term loans, revolvers and overdraft facilities? Is the handling of s in line with the policy and is it regularly followed up? Is the business organized to achieve a good level of financial efficiency? Is the valuation of financial instruments correct? Is the business regulated according to the requirements from the board? Does the policy provide necessary support to and business units? Is there potential to improve cash flow by optimizing the working capital? Are cash and bank balances spread worldwide? I s working according to best practice? Is the captive ready to meet Solvency II regulations? Why select KPMG as your partner in developing your? KPMG Advisory has a number of teams worldwide specialized in treasury development. The KPMG professionals have been involved in developing all fields and aspects of the treasuries of large and medium-size corporates. Based on the cumulative knowledge of our team as well as on our experience of working with corporates in all sizes and industries, we are confident in stating that KPMG provides an excellent support to our clients when developing their treasury.

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