Group Treasurer – Somfy SA
“We have not opted for hedge accounting under IAS”
La Lettre du Trésorier
You progressed within the business in line with its own growth?
Yes, that’s true. After studying for a BTS qualification in accountancy and management, I joined Somfy in 1988 as a management accounting assistant. Two years later, I moved to the Treasury Department to replace someone. In 2001-2002, I enhanced my career path by studying for a diploma at the ESC in Grenoble. During this time the company’s sales rose from e76 million to e720 million in 2007; 70% of the sales are made outside France. The company now has 4,700 employees - including 1,200 at the industrial site in Cluses – eight production sites and 52 subsidiaries. There are two and a half people in charge of group treasury operations. In addition, one treasurer is responsible exclusively for the cash flows for the French group.
Has the company’s history fluctuated?
VB: Somfy, a family-owned company, was formed in the 1960s in Cluses, which is a major centre for precision engineering in Haute Savoie. The first major turning point was in 1984 when Damart SA acquired Somfy, allowing it to grow. The second important date was in 2002 when Damart SA was divided into two separate companies - Damartex and Somfy SA - which now have separate listings.
In early 2006, we set up a cash pooling system for all our European subsidiaries in euros.
Somfy is now the world leader in motors and control systems for the automatic movement of products around the home and workplace. It main markets are France – 28.2%; Southern Europe – 20.4%; Northern Europe – 14.9%; Germany – 13.6% and the USA – 9.7%.
What are the company’s activities?
VB: Somfy SA, the holding company, is also the pivotal point of the group’s cash management function (management of foreign exchange risk and group banking relations). In early 2006, we set up a cash pooling system for all our European subsidiaries in euros. In France, we have 12 subsidiaries, which have automatic ZBA on a day-to-day value basis. In addition, there are nine foreign subsidiaries - three in Italy, three in Germany, two in the Benelux countries and one in Spain - for which we escalate the balances on a daily basis. We currently manage 80% of the group’s net cash flow.
In the interests of production and reliability, we automated our cash pooling system and implemented an automatic accounting system for all the ZBA entries. We notify our subsidiaries of their current accounts and their interest scales through our intranet. They, for their part, send us their cash flow projections, which after being validated by our team, are automatically integrated into our treasury system.
Were you able to renegotiate with your banks?
VB: We have taken advantage of the introduction of cash pooling to renegotiate our local banking terms. We selected HSBC to implement the cash pooling system. Their IBOS network, that is their local banking partners, are also mostly partners of our subsidiaries.
As we wanted the subsidiaries to follow this project as well, they needed to see a reduction in their banking costs, which was the case as we reduced costs by around 30%. At present, the ones which are not yet included in the process are eager to join it.
Somfy has retained its four network banks. We also work with some banks that specialise in asset management in order to invest our recurring financial surpluses.