Strategic Treasury

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Interview – Louis Soudré Keolis is the number one private operator of public transport in France, and holds a key position in Europe, with a strong presence in the United Kingdom, the Benelux countries and Scandinavia. Louis Soudré, Accounts and Finance Manager at Keolis, gives TMI an overview of the company, and explains why, whilst operationally decentralised, certain roles are centralised. He also explains the cash flow systems the company has in place, the cash management strategy and the make-up of the company’s financing and treasury management team.

Louis Soudré

Accounts & Finance Manager, Keolis

“The group has put up a genuine fight for cash”

Can you give us an overview of your company?

Keolis is the number one private operator of public transport in France, and holds a key position in Europe, with a strong presence in the United Kingdom, the Benelux countries and Scandinavia. The company manages networks of buses and coaches, metros, trams and trains, on behalf of local communities, after invitation to tender. Keolis’s role is to design and manage high-performance, reliable transport solutions, adapted to the local area and environmentally aware. Operationally decentralised, the company has 45,000 salaried employees, achieved a turnover of EUR 3.4bn in 2009, and operates in 12 countries, three of which, Australia, Canada and the United States, are new this year. France remains dominant, accounting for over 55% of revenue, yet foreign countries are making steady progress and have the same rates of profitability. The company’s investors complement one another: on one side, we have SNCF, the main industrial shareholder, and on the other the financial companies, Axa Private Equity and la Caisse du depot et placement du Québec. All believe in regular and profitable growth: since 2001, our business has increased by over 12% each year. 

Are there any exceptions to your policy of decentralisation?

Certain roles are indeed centralised, and among them is finance. However, in accounting and financial control, there is a level between the subsidiary companies and the holding company: shared service centres, several in France and, in general, one in each country where the company operates. The financial core is organised into three departments: accounting, which produces consolidated accounts and reporting, and sets the group’s shared standards; cash management; finance and accounts, of which I am in charge.

What sort of finance do you mean?

The remit of this department includes group finance. One of our important steps was the negotiation of a new credit agreement in 2007 on beneficial terms, particularly because the effects of the subprime mortgage crisis weren’t yet apparent. We also deal with the financing of assets, as the group isn’t always just an operator, it sometimes provides the buses or trains which it manages. In addition we are responsible for project financing, which is necessary when we tender with partners for joint public-private contracts. Finally, we negotiate guarantees whether they are put in place at the time of invitation to tender or in the context of contractual monitoring of operational performance.

We carried out a reorganisation fo the banking pool in 2005, which led to cutting down from 16 banks to three.

What cash flow systems do you have in place?

There is a cash pool in each country, operated by local banks, and a worldwide cash pool, but without bank overlay, because we decided that that method was not profitable. As far as cash flow in France is concerned, we carried out a reorganisation of the banking pool in 2005, which led to cutting down from 16 banks to three. On the technical side, we are using XRT-Sage solutions with Universe for fund management and XBE/online banking for a centralised platform that deals with the payments of 150 operational units in France. For banking communication, the substitution of Etebac 3 and Etebac 5 and the transition to Sepa will happen in 2011, at the same time as the updating of existing software. A priori, the retained solution will be Ebics, but we have yet to decide on the version including the transmission of personal signatures, corresponding to Etebac 5.

Did the leveraged buy-out put in place between 2004 and 2006 change your cash management strategy?

The group has put up a real fight for cash, signalling a net change in the control of operational liquidity management. This meant it was necessary to put in place the same methods for measuring cash generation and consumption in each subsidiary, to develop a cash culture in the group, whilst at the same time permanently heightening managers’ awareness of the optimisation of working capital, both for the business negotiation phase and the duration of contracts, and increasing their interest in performance in this area. In addition, we pay close attention to this issue in our development, and as a result we choose the contracts that swallow as little cash as possible. We try to show financial creativity in business set-ups that allow us to have use of assets – buses, trains, etc – without ownership. One of the difficulties in this area is the compatibility of these set-ups with the standard IFRS standards, which are very demanding.

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