Initial Public Offering in SAP S/4 Hana

Schott Pharma went public on the German stock exchange on September 28, 2023. It was the largest and most successful IPO of the year in Germany. However, the groundwork had to be laid first. An essential part of the preparations was the formation of a subgroup via a carve-out (the spin-off of parts of the company into a legally independent unit), in which the business processes and data of the pharma division had to be reorganized within the parent company's SAP S/4 Hana system.

For the new subgroup, everything had to function as before: for example, the complete integration of the parent company's S/4 system, the connection of all interfaces and the transfer of a country-specific data history. In addition, the extensive requirements for reporting with separate disclosure and the legal separation of the companies of the Schott Pharma division within the overall group had to be implemented.

Triple complexity

The SAP restructuring project was initiated at the end of January 2022. Not only was the tight timeframe challenging, with a planned go-live in August of the same year, but Schott was still in the hypercare phase of the S/4 transformation at the time, with the go-live scheduled for fall 2021. The carve-out therefore followed almost seamlessly and was planned during the final phase of the S/4 Hana project.
Another challenge was the fact that many company codes and processes were used in the SAP system for both the pharmaceutical division and other business units, which made it difficult to transfer data and documents cleanly. Despite the many complexities, there was no question of postponing the project. Schott CIO Andreas Beeres emphasizes: "The right timing was crucial for the strategic decision to take Schott Pharma public as an independent company."

The project team, consisting of experts from Schott and the consulting firm cbs - Corporate Business Solutions, first drew up a comprehensive target picture. "As the various business units at Schott are closely interwoven, we first had to find out how many units were affected and what options there were for dealing with them," explains Sebastian Hellman, Consulting Director at cbs, and continues: "Carve-outs, reverse carve-outs, founding new companies or phasing out old companies - there were many different forms of reorganization in the scope. We were talking about an impact of 900 million euros in business turnover out of Schott's total turnover of 2.9 billion euros."

Beeres adds: "The carve-out was basically an S/4 migration in miniature. Data had to be extracted from the system, restructured and reintegrated. This also included selective retroactive migrations from previous financial years." Various operating models also had to be discussed and defined in advance and organizational adjustments had to be made.

Carve-out approach

For the submission of the stock exchange documents, Schott required the historical data, both for the stock exchange year started and the previous year, which now had to be reported in accordance with the new subgroup structure. For the largest German company, a retrospective approach was chosen and all previously posted documents were retroactively changed and adjusted to the new subgroup structure. This retrospective change required precise and careful planning to ensure that no historical data was lost or distorted. For the other companies, a spin-off balance sheet was prepared retrospectively for the current month.

The retrospective implementation of the financial and controlling documents for the start of the financial year and the IPO date ensures that all relevant data was correct and complete at the time of the go-live and met the requirements of the IPO. Schott Pharma went live in the carve-out phase of the overall project on schedule in August 2022 in the new subgroup structure using the big-bang approach.

Following the carve-out, Schott reorganized the structural segment presentation prior to the IPO and, together with cbs, established data structures and processes for legal segment reporting in accordance with IFRS 8 in SAP S/4 Hana and SAP BI and in consolidation in SEM-BCS. In addition, the transaction data and operational reporting in the SAP applications were reorganized based on the target reporting structure and hierarchy of the IPO. Another important aspect of the project was the conversion of the document data in New GL's Profit Center Accounting (Universal Journal including active document splits) as well as the dependent data objects in the CO/MM/SD/PS & IM modules.

As an important milestone, Schott began generating all new documents in the new subgroup structure from June 1, 2023. A partial migration was also deliberately scheduled for January 14, 2024, after the go-live of the system and the IPO. This is because certain business units in the Group did not have their annual financial statements until January in accordance with legal requirements. The financial statements for the current year were then reported using so-called update rules, which Schott implemented in the consolidation system and management reporting system.

The cut-over for segment reporting took place with a downtime of 2.5 hours, during which data migration and validation were carried out. "We are very satisfied with the result. The cut-over was highly performant and professional," reports Oliver Böhm, Head of Financial Services & Systems at Schott AG.

Result

Schott Pharma was able to successfully enter the capital market on September 28, 2023 and tap into new growth potential, also thanks to the successful preparations, which meet all requirements for modern reporting and controlling.

An important success factor here was the collaborative partnership between the project team, consisting of employees from Schott and cbs. Both companies and their teams can look back on many years of cooperation. Schott opted for cbs' holistic, selective approach to the S/4 transformation: "Given the complexity and timeframe of the project, it was important for us to choose an experienced partner with the necessary expertise. You wouldn't climb Mount Everest without experienced Sherpas," explains Schott CIO Andreas Beeres.

This history facilitated communication and mutual understanding and made it possible to implement the complex requirements of the subgroup formation within a short period of time. Sebastian Hellmann, Consulting Director at cbs, adds: "I am delighted that we have been working together for so long and have been able to realize so many challenging projects together that are unique in the world. This pioneering spirit drives both Schott and cbs."

Schott AG

Schott is one of the world's leading manufacturers of specialty glass, glass-ceramics and other high-tech materials. The technology group employs around 17,300 people at more than 30 locations worldwide. Schott is a globally respected partner for high-tech industries such as healthcare, consumer electronics, semiconductors and data communication, optics, energy, automotive, household appliances and living as well as aerospace. Schott employs 600 engineers and developers who form a global research network. In the 2023 financial year, the successful global player achieved a turnover of 2.9 billion euros.

schott-pharma.com

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