Cash & Liquidity Management

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Limagrain Group Sophie Rack interviews Dominique Fraisse, Director of Treasury and Finance at Limagrain Group

Dominique Fraisse

Director of Treasury and Finance – Limagrain Group

 “We have a dual organisational structure and finance level”

La Lettre du Trésorier

You were born and bred in the Auvergne region: I believe the early part of your career was quite varied?

Dominique Fraisse

Indeed. After I completed my postgraduate studies in banking and finance in Lyons in 1987, I worked at Banque Veuve Morin Pons for four years, at Crédit Agricole in Grenoble for three years and at a financial holding company, ABCIA, which specialises in acquiring companies in difficulty, where I was responsible for setting up the treasury management function and was also involved in refinancing the acquisitions. I joined Limagrain in July 1998. The treasury team currently has three members of staff.

LdT
Your group’s best-known brands are Vilmorin, Clause and Pain Jacquet. Are there any others?

DF: Limagrain’s specific feature is primarily that it is a federation of SMEs and consolidates, under the aegis of the Limagrain cooperative, which has around 600 members in over 100 companies. The seeds and gardening products business within Vilmorin accounts for approximately 82% of the total revenues, which amount to €1,136.5 million, cereal ingredients (semolina and flours) and bread-making make up the remaining 18%. The group operates in 36 countries with a workforce of 6,000 people, including more than 1,200 people who are involved in research, and only one-third of the revenues are generated in France.

In fact, you are responsible for the treasury management of not one company but two?

DF: In organisational terms, we have a dual structure. Firstly there is Vilmorin & Cie which is listed on the Paris stock exchange. Since July 2006 the company has combined the large-scale farming - maize and cereals etc. - and the vegetable seeds activities and is financially autonomous. In order to ensure that it operates smoothly we have set up a syndicated credit facility. At Vilmorin & Cie a cash pooling system provides a centralisation and daily balancing out process between the subsidiaries, although they are still responsible for managing their operating cash flows.

The second organisational level relates to the Limagrain Holding Group, a key shareholder of Vilmorin & Cie which encompasses the parent company as well as the ingredients and bread-making activities. Here again, we have a cash pooling system but exclusively for activities which are not part of the Vilmorin structure.

We have not yet introduced a cash management system to centralise collections and payments but will probably do so in three to four years’ time. In view of the dispersion of the various operational units, we preferred to keep the management of client relations local in order to handle the constraints arising from the seasonal nature of our activities in the best manner.

In this context, how do you work with banks?

DF: We prefer to adopt a real partnership approach with our banks based on the long term and on the support of the group strategy. In order to set up the syndicated credit facility of €300 million for Vilmorin & Cie, we assembled a group of 13 banks - only five of which are French - to support us in the form of a club deal. Of these banks, BNP Paribas, Société Générale, Natixis, Crédit Agricole and Rabobank also feature not just in the seeds sector but also in the ingredients and bread-making sectors and therefore share Limagrain’s global vision. We completed our facilities by adding foreign banks specialising in specific geographical areas. For example, in Spain and in South America, we work with BBVA, and in the United Kingdom and the Commonwealth we use HSBC while in Germany and the Eastern European countries we chose Commerzbank and KBC, in northern Europe, Fortis etc. On international markets we are supported by the networks of our partners such as Calyon, BNP, Société Générale, HSBC etc.

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