Post on 20-Mar-2022
Investing in Growth: Funding a Treasury Transformation Initiative
Tracy Park Senior Manager, Treasury First Quantum Minerals Ltd.
Lorne Hamilton Regional Sales Director Reval
First Quantum Minerals Ltd. at a Glance • An established and rapidly growing mining and
metals company operating seven mines and developing five projects worldwide.
• We currently produce copper, nickel, gold, zinc and platinum elements.
• Compounded annual return of over 30% since listing on the TSX in 2000.
• Acquired Inmet Mining Corporation in March 2013.
• Broaden Treasury focus beyond execution to Strategic analysis and management
• Respond to Senior Management rapidly & comprehensively
• Integrated with Business Units
• Assess impacts of major events
• Plan proactively
• Access the power of integrated data
Source: Treasury Strategies, 3.0 Analysis
End Goal : More Strategic and Agile
Business drivers at FQM Key Issue Primary Need
1. Legacy Technology Integrate FQM onto Inmet legacy platform
2. Cash Visibility Cash Positioning; Forecasting, CONNECTIVITY
3.Investment Portfolio Mgmt/Liquidation
Portfolios funded by Inmet liquidated by FQM on acquisition
2. FX / Commodity Management
Future requirements, Visibility to exposures, Efficient hedge execution (STP)
3. Counterparty Risk • Cash at Risk (Bank accounts & Investments)
• Potential Risk (Derivatives, Credit facilities) 4. Policy Compliance Limits, Performance Metrics
5. Reporting Dashboards, Ad-hoc reports, KPI’s
6. Strategic Planning • Leveraging analytics/intelligence for strategic decision making
• Support for future growth plans
Define Requirements • Determine Priorities
– SaaS vs ASP vs In House – Supplier and Platform – Functional requirements
− Cash Positioning − Cash Forecasting − Financial Transactions (Debt, Inv, FX, Der) − Risk Management − Payments − Pooling − Intercompany loans and external debt − General Ledger and Hedge Accounting − Bank Account Management (FBAR) − Connectivity (Trading Portals, Balance Reporting, Payments, etc.)
• Weight Functions According to Their Importance
• Assess Technical and Interface Requirements
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Treasury Challenges at Inmet and FQML • Previous TMS was not performing the activities originally
implemented nor being supported by vendor – Bank polling and positioning – Journal entry creation
• Too many spreadsheets! • Future growth of the company would include:
– Hedging – More intercompany loans and external facilities – Debt Issue – Foreign Exchange trading – STP – Forecasting – Leveraging the TRM used by Inmet for the FQM treasury processes and
entities We needed a TRM system that could provide for our current and future needs
Phases of a Business Transformation at FQML
Catalyst • Something
changed • Business • Technology
Strategy • Objectives • Learning • A Plan • Executive
Commitment
People • Build Team • Alignment on
Strategy
Execution • Partners • Project • Process • Technology
Synergy • Performance
Management • Improve
Treasurer Feedback - Challenges What is required in 2014 • Staying in Front of Issues
– Planning ….. not reacting – Tools required
• Monitoring and Compliance with Policies
– Preservation and Safety of Cash and Liquidity • Early warning system to CFO
• Ensuring exposures in Separately Managed Accounts didn’t breach policy
limits
• Growth of Bottom up forecasts rather than Top down…. Better information
• Accurate forecasting would be crucial for $6B Panama project costs for Inmet 9
Treasurer Feedback Areas of Focus • Focus on Global Visibility of Cash
– Independent of geographic locations – Independent of banks – Inmet used only one bank for most of its entities. FQM uses
many banks making the use of a TRM more important to ensure accurate daily balances are easily and quickly visible.
• Organizational efficiencies rather than just departmental – Accounting – creating journal entries for all treasury transactions
saved hours for the accounting area – Procurement – Sales
Treasurer Feedback - Challenges What is required in 2014 • Integration of Business units into a
single platform • Support business global expansion and
capital requirements – Available liquidity - Domestic and Global – Tax implications – Global cash movements – Intercompany Funding Structures
Treasurer Feedback – Challenges 2014 • Analysis of Operations
– Cash and Liquidity Optimization – Counterparty Management – Policy Compliance – Scenario Stress Testing – Forecasting Analytics
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Treasurer Feedback Areas of Focus • Counterparty Limit Management
– Global – Name based as well as country based
• Operational efficiencies – In-house bank – Payment hubs – Multilateral netting programs – Time savings – Automate processes – Cross Department
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Treasurer Feedback Areas of Focus • Moving away from Unique Practices to
Best Practices – More benchmarking – Peer group discussions – Asking “Why”
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Treasurer Feedback Requirements for 2014 and Onward • One solution/ one platform - Full TRM capabilities
• Scalability to grow with the Company when and as required
• Partner who can bring best practices to the table along with Peer
group that drives a continuous improvement cycle to development of product and services – Power of the Crowd High value people doing high value activities, analysis and management
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Corporate Technology Tools
Bank Websites
Trading & Specialized Portals
Market Rate Providers
Internal Environment External Environment
FQML Selection Process • Issued a comprehensive RFP in January 2012 • RFP responses and demos held with each supplier in
February 2012 • Reval selected in March 2012 • Phase 1 of implementation started in April 2012
– Bank polling and positioning
– Portfolio management
– Automation of journal entries
• Parallel testing complete and Go Live in July 2012
Key elements to selecting a Vendor at FQML • Ability to handle our current needs and help us plan
for the future • Strong reputation as the industry leader for Hedge
accounting • Reporting capabilities • Lower cost than other platforms without any reduction
in capabilities of the system • Dedicated and responsive implementation personnel • Reval took care of the bank connectivity via Fides • Built in redundancies for some of our current
processes and some that fulfill our wish list – STP, Portal investments, FX trading
Assess Vendor STP Community To extend the value provided to their customers by improving treasury workflow and enhancing the overall user experience
Mission
• Focused on facilitating STP workflow and simplifying the client experience
• Joint Partner Commitment to establishing tightly integrated user and technical interfaces
• Strong Partner Alignment beginning with Sales all the way through Implementation and Production Support
• Independent Vendors working as a “team” for the benefit of “their Customer”
Goals
Standard of Excellence
Flexibility
Accessibility
Responsiveness
Cost Effectiveness
Client Server Software
Avoid Change
Old Technology
Long Upgrades
Hidden Costs
SaaS Solutions
Embrace Change
New Technology
No Upgrades
Transparent Costs
Assessment of Technical Platforms at FQML
Why Build a Business Case?
• Treasury Transformation Drives a New Level of Business Value for the Organization – Competitive & Compelling Business Value vs. Cost Center
• Required To Support the Funding for a Successful
Treasury Transformation Project – Strategy Investment vs. Tactical “Plug the Problem”
• Helps Define the Strategic Value To Internal Clients /
Partners – Promotes A Stronger Internal Partnership with Business Units
How FQM Assessed and Developed the Business Case • Treasury ROI “Ingredients”
– Business Value Drivers: • Managing Financial Market Risk • Liquidity Planning • Compliance • Operational Efficiency & Effectiveness
– Technology Drivers: • Enablement • Cost • Supplier risk
• Business Case Model
– Revenue – Expense – ROI
Analyze Present & Determine Future • Analyze/Improve/Eliminate Current Processes
− Identify areas of “pain” where is improvement is mandatory − Identify areas where improvement is desired – “best practices” − Identify all resources required for a timely and successful
implementation − Prioritize immediate and near term needs
• Determine if Help (Consulting) Needed − Process Review − Selection Process − Implementation
Treasury as the Financial Advisory Center
Treasury
Tax
Accounting
Procurement /Sales
FP&A
IT
Operations
CFO
Risk Management Committee
Treasurer Feedback Treasury & Risk Management • Emergence of the Financial Risk Management Policy
Committee
• Hedging and Risk management no longer viewed as “win-lose” decisions
• An appreciation for “Margin Conservation” – Interest Rate, FX Rate, Commodity
• The use of more sophisticated instruments that better
match to company’s objectives – Collars – Options
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Treasurer Feedback What is the Market saying and doing 2014 • Move towards a SaaS solution
– Growing understanding that it is different than ASP or Hosted – IT independence – Regulatory compliance – Ease of access and distribution – Scalability – No Excel slippage
• Platform or Portal agnostic yet providing STP
– MMK funds – FX Trading
• Bank Connectivity Solutions
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Questions? Lorne Hamilton Regional Sales Director Reval 416 622 2338 Lorne.Hamilton@reval.com Tracy Park Senior Manager, Treasury First Quantum Minerals Ltd 416 953 4014 tracypark42@hotmail.com
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