Published: January 26, 2016
It is hard to believe that TMI’s Corporate Recognition and Editor’s Choice Awards, which I introduced soon after I became editor of TMI, are now a decade old, while the awards for banks, technology companies and consultants are now in their seventeenth year. Few awards programmes, and indeed few specialist publications, are able to demonstrate the same degree of resilience, flexibility and agility in which TMI has excelled over this period. This is entirely due to the combination of a marvellous team at TMI, our readers, our banking, technology and consulting partners and in particular, the treasurers from around the world who share their experiences and expertise through articles, interviews and case studies. Once again, we would like to thank BNP Paribas for sponsoring the 2015 awards, reflecting the bank’s commitment to promoting best practices and innovation across the treasury profession.
A great deal has changed over the decade since the Corporate Recognition Awards were first introduced, but the measure of innovation and excellence remain the same: what value are treasurers contributing to the enterprise? Corporate finance, risk management, and cash and liquidity management have always been crucial to the role of most treasury functions, but the importance of liquidity and risk in particular has become more widely recognised. In addition, treasurers’ influence is expanding into related areas such as working capital and financial supply chain management, and increasingly commodities risk management.
As these awards have become more widely recognised and respected, they have also become more hotly contested. Not only are all the articles submitted by corporate treasury and finance professionals published during the course of 2015 eligible for awards, but we have received a remarkable number of submissions and nominations from corporate treasurers, their banks, vendors and consultancy partners. As usual, the calibre has also been very high, and we would like to thank everyone who entered, either on their own behalf or on behalf of customers.
Awarded to: Borealis
Represented by: Koen Timmermans, Group Financial Risk Manager, Borealis AG
TMI Article: Five Steps to Managing Commodity Risk and Adding Value. Edition 239, November/ December 2015
Treasurers are increasingly taking responsibility for commodity risk management, but Borealis was a pioneer in this regard, having taken direct responsibility for commodity risk management since 2009. In this article, Koen Timmermans, Group Financial Risk Manager, outlined the five-step process that his team take to managing commodity risk, consistent with other forms of risk such as foreign exchange. As he explains,
“Bearing in mind the significant market volatility, commodity risk management should be high on the treasury agenda for companies that have a heavy reliance on traded commodities. Production companies should fully understand the risks and rewards of the commodities used in their supply chain and focus specifically on financial price risk management as a distinct activity outside the scope of a normal procurement or sales process.”
He continues,
“Treasury is well-equipped to take on this responsibility, bearing in mind its expertise in managing complex, high value financial risks, and policies, processes, systems and reporting capabilities. As its role has developed over time, treasury also has the ability to build connections and encourage dialogue between related departments. By doing so, the ability for treasury to add value to the enterprise, and limit the company’s vulnerability to price volatility can be enormous.”
Awarded to: Menarini Group
Represented by: Alessandro Nesti, Financial Activities Corporate Director, Menarini Group
TMI Article: A Centralised Approach to Cash Management at Menarini Group. Edition 234, April 2015
Pharmaceutical company Menarini Group has worked extensively with partner bank UniCredit since 2012 to rationalise bank relationships, centralise cash and liquidity management, and streamline financial processes, including in key markets of Eastern Europe as well as Italy. The aim was to establish timely, accurate visibility and control over cash, to increase financial efficiency and reduce risk. As a result of its partnership with UniCredit, Menarini has rationalised its accounts, centralised balances through a zero-balancing cash pool and achieved visibility and control over cash. Menarini is now working with the bank to explore opportunities to expand the reach of the cash pool further, including Russia, as well as building an efficient pan-European payments factory.
Awarded to: World Vision International
Represented by: Ashwin Ramji, Global Assistant Treasurer, World Vision International
In 2015, global humanitarian, relief and advocacy organisation World Vision International launched a bank rationalisation project across 58 countries, and appointed a strong, committed banking panel of eight international banks with extensive correspondent banking networks and innovative cash management solutions that were complementary to World Vision International’s operations. Treasury had a very clear and precise list of requirements that would equip the organisation to meet the challenges of humanitarian and emergency relief operations from highly efficient electronic payment solutions, products to support local employees, cash investment solutions and full cash visibility and control, with a view to developing a standardised global scorecard. We look forward to featuring a more detailed article on World Vision International’s project during 2016.[[[PAGE]]]
Awarded to: Joe & the Juice
Represented by: Sebastian Vestergaard, CFO, Joe & the Juice
TMI Article: Facilitating Growth through Efficient Working Capital. Edition 237, September 2015
Treasurers and CFOs are well aware that managing working capital is essential to the financial health of a business, but it is often difficult to know where to start, and where the greatest value can be added. Danish-headquartered corporation Joe & the Juice has enhanced its working capital fundamentals whilst strengthening the physical and financial supply chain, which has been critical to its success. Initiatives include selling loyalty cards to accelerate receivables, highly automated inventory management across all stores, and building strategic partnerships with suppliers and construction firms. These initiatives are instrumental in ensuring quality, consistency, and customer satisfaction, but also in managing working capital effectively. Banking partner SEB has played a key role in facilitating success, particularly as Joe & the Juice expands its operations in North America and Asia.
Paula da Silva, Head of Transaction Services, SEB illustrates,
“Joe & the Juice is exemplary in the huge strides it has taken towards optimising working capital, with demonstrable success that has led to accelerated growth. Sebastian and his team have been at the forefront of industry best practice by identifying and exploiting working capital and liquidity opportunities within the business as a complement, and indeed a precursor to seeking bilateral financing from banking partners. This is an approach we would warmly recommend to our clients, and Joe & the Juice’s amazing growth story bears witness to its success.”
Awarded to: Toyota Financial Services
Represented by: Theodore Zarrabi, Director, Balance Sheet Strategy
Toyota Financial Services was looking to expand its existing funding platform to maintain its leadership position in a changing regulatory environment, expand its investor base and develop innovative funding solutions to meet changing investor needs. To achieve this, treasury took a multifaceted approach, one of of which was the industry’s first ever asset-backed ‘green bond’ to fund consumer financing of Toyota’s portfolio of hybrid vehicles. This was met with considerable interest from both traditional investors and the growing population of socially responsible investors, allowing the organisation to upsize the deal with no negative impact on pricing. This was accompanied by three oversubscribed D&I bonds, a floating rate commercial paper programme and innovative structured notes, all of which were designed specifically to address investor requirements. The outcome has been significant interest savings, a stable funding base and a large proportion of new investors. Most importantly, Toyota Financial Services maintained its leadership position as an innovator in financial services, and reinforced Toyota’s corporate-wide commitment to environmental sustainability, innovation, diversity and social responsibility.
We look forward to featuring Toyota Financial Services more fully in TMI in the year ahead.
Awarded to: Hyundai Capital America
Represented by: Frank Boroch, Director, Investor Relations, Hyundai Capital America
Hyundai Capital America, the US financing subsidiary for Hyundai and Kia, has experienced rapid growth since 2008-9, becoming a top 10 auto lender as a result of both redesigned Hyundai and Kia product lines, and Hyundai Capital America’s gains in market share. Following a detailed needs assessment, treasury has been engaged in a multi-year plan since 2012 to reorganise the treasury function across eight specific expertise domains. The objectives were to develop a robust risk management framework, put in place a proactive investor and rating agency management infrastructure, and establish talent development and retention programmes to curate world-class financial expertise.
The programme has proved extremely successful with far greater focus on building relationships with external stakeholders, transforming market perception of Hyundai Capital America from an emerging market issuer to an investment grade issuer. In early 2015, Standard & Poor’s upgraded Hyundai Capital America to A-, enhancing its credit profile and lowering funding costs.
During 2016, we hope to provide readers with more information on Hyundai Capital America’s impressive transformation project and its outcomes.
Awarded to: AstraZeneca plc
Represented by: Cristiane Candeloro, Assistant Treasurer – Operations, AstraZeneca and Andrew Marshall, Director, Covarius
TMI Article: Realising the Benefit of Online Dealing Portals at AstraZeneca. Edition 239, November/ December 2015, plus an independent submission
AstraZeneca prides itself on its sophisticated treasury technology infrastructure and aims to implement highly efficient and secure processes wherever possible. One key area of development has been the implementation of FIS’ (formerly SunGard’s) Short-Term Cash Management portal (‘STCM’) for short-term cash investment instruments, such as money market funds (MMFs). One of the most common objectives when implementing an investment portal is to standardise and automate the transaction process across multiple funds and providers, and achieve straight-through processing to the treasury management system (TMS). While the automatic integration of transactions into the TMS was essential for AstraZeneca, streamlining month end processes was just as important to reduce the amount of time taken to collate, standardise and reconcile month end reporting from each provider. Previously, this took around two days each month, but today this is a far more efficient process. Rebate processes had also been very complicated in the past, particularly given AstraZeneca’s complex, multi-tier rebate calculation structure. Andrew Marshall, Director of consultancy practice Covarius, who has supported the project throughout, comments,
“At the time that we reviewed independent MMF portals, providers tended to focus on their front-end capabilities and fund coverage when pitching their solutions… In reality, this is not where the differentiation between solutions really lies. Instead, there are often important distinctions in areas such as integration, risk reporting, back office processing e.g., for interest and rebate reconciliation and posting.”
This is only one of the innovative initiatives in which AstraZeneca has been engaged, and we look forward to discussing some of its successes more fully during the course of 2016.
Awarded to: Etihad Airways
Represented by: Adam Boukadida, Deputy Group Treasurer, Etihad Airways
Like many other airlines, the scale, complexity and global reach of Etihad Airways’ business brings payment and cash management requirements that are more challenging than other corporations of a comparable size. In many countries in which Etihad operates, the banking and regulatory infrastructure is relatively undeveloped, which makes it difficult to digitise and standardise payment practices that are at a relatively early stage of development. Indeed, some of the countries that Etihad flies to do not yet use SWIFT – the globally-accepted standard for banking and payments connectivity and messaging.
To manage its complex payment needs today, and anticipate further growth and complexity in the future, Etihad’s treasury decided to rationalise and replace its various legacy platforms and opted for D+H’s Global Transaction Banking Solution (formerly Fundtech) for payments and connectivity. Initially, the solution was implemented for vendor payments, and latterly for treasury payments. As a result, Etihad has achieved a more consistent, robust and secure approach to payment processing, bank integration and connectivity, whilst also enabling bank relationships and account structures to be simplified, improving economies of scale and optimising excess balances.
We hope to feature more on Etihad Airways’ project in forthcoming editions of TMI.[[[PAGE]]]
In addition to the specialist awards this year, we featured a variety of articles, and received a number of submissions that reflected innovation and excellence in the way that corporations had addressed challenges and leveraged opportunities in particular regions. As a result, we wanted to recognise some of these achievements through three regional awards, as follows:
Awarded to: AkzoNobel
Represented by: Yosymar Vasquez, Regional Treasury Manager, Latin America, AkzoNobel
TMI Article: Dancing to the Local Beat. Edition 238, October 2015
With business operations in eight countries (Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, Venezuela), representing around 10%of annual revenues, LatAm is an important region for the AkzoNobel Group. AkzoNobel has a regional treasury centre in LatAm, which works closely with group treasury in the Netherlands. One of the group treasury objectives is to optimise visibility and control over cash wherever possible. This is more difficult in LatAm than other regions due to the diversity of currencies, banking and regulatory frameworks that exist.
Despite these obstacles, AkzoNobel is implementing a combination of in-country (domestic) cash pooling in local currency and USD, and cross-border pooling wherever it is feasible to do so. However, restrictions on cross-border transfers, complex central bank reporting and conditions on export revenues make this particularly challenging. Treasury has worked systematically through the various domestic and cross-border regulations and is now finalising the implementation of a sophisticated liquidity management structure that combines physical and notional pooling with two banks: one for regional cash pooling, and one bank for Brazil. Yosymar Vasquez, Regional Treasury Manager, Latin America, AkzoNobel concludes,
“This will complete a long and extensive process of evaluation and exploration, but we recognise that as regulations and market conditions change, we will need to constantly review and refine our cash and liquidity management structures in the region. The outcome, however, is highly significant for the AkzoNobel group, in that we are achieving far better visibility of our cash balances in each country, an essential first step in an efficient treasury strategy, and centralising these wherever possible.”
Awarded to: Emirates National Oil Company (ENOC)
Represented by: Jitendra Sharma, Group Manager, Treasury & Insurance, ENOC
A key part of ENOC’s international expansion strategy is to develop its footprint in Africa, where the provision of reliable energy is essential to building economic prosperity and stability. In February, ENOC concluded a $300m transaction through the Government of Tanzania, but rather than dealing with a single counterparty, there were 50 mid-cap and small to medium-sized enterprises (SMEs) involved, resulting in a large number of letters of credit (LCs) reflecting each product sale. ENOC’s treasury found it difficult to manage this scale of labour-intensive processing and so recognised the urgent need to find an alternative solution for subsequent contracts.
ENOC appointed partner bank ADCB to provide its Document Preparation Service for the subsequent contract, which involved shipping six oil vessels within a four-week period, with 170 LCs to 40 individual buyers. Each needed to be confirmed by ADCB to guarantee payment, and the entire LC documentation process had to be prepared accurately and promptly. Based on the success of this service, ENOC was enthusiastic about continuing with ADCB’s services for the contracts that followed. The success of the service at ENOC was due in part to the structured approach that ENOC and ADCB took to transitioning and managing the LC business, as well as ADCB’s expertise, automation and processing capacity.
As a result of outsourcing this process to ADCB, ENOC reduced its payment period to around 50 days, a considerable improvement on the previous contract, which has been enhanced even further for future contracts. Customers have also had a positive experience, which is important in securing future contracts, while the logistics team has also been impressed by the speed and accuracy of processing.
Awarded to: Arup Group
Represented by: Richard Abigail, Group Treasurer, Arup Group
TMI Article: A Flagship Project to Unlock RMB Onshore Liquidity. Edition 232, March 2015
In December 2014, global consulting and engineering company Arup Group, supported by partner bank HSBC, became the first corporation outside the Shanghai Free Trade Zone (SFTZ) to perform an automated, cross-border RMB sweep between Shanghai and London. This has resulted in successfully integrating Arup’s onshore RMB (CNY) pool account into its global multi-currency cash pool with HSBC with two-way sweeping. This operates on a target balance basis: any cash in the domestic cash pool header account above RMB 40m is automatically pooled into Arup’s UK-based treasury fund; if the balance falls below this level, funds are automatically swept back from London. Richard Abigail, Group Treasurer, Arup Group explains,
“By connecting China into our global cash pool, we have significantly enhanced our liquidity position both in China and globally. We are managing our credit risk and liquidity far more effectively, with more than 80% of global cash now available to treasury…. As a result, we have calculated savings of around £1m each year in addition to the less tangible, but equally important benefits of improved operational, credit and financial risk management.”
Finally, in an awards sweep that only Meryl Streep, Katherine Hepburn and Jack Nicholson can beat, we would once again like to offer this special award to François Masquelier for the tenth year. François is familiar to all TMI readers as Senior Vice President, Head of Treasury & Risk Management at RTL Group, Chairman of the Association of Corporate Treasurers of Luxembourg (ATEL) and Honorary Chairman of the European Association of Corporate Treasurers (EACT). In addition, his regular, insightful articles on issues such as financial regulation and treasury accounting principles, enterprise risk and a range of other key topics continue to inspire engagement, dialogue and common priorities across the treasury community. We would like to thank François wholeheartedly for the value he brings to TMI and to the wider treasury community, and it is a great honour to be able to offer him this award once again.
The 2016 Awards
It’s never too early to think about this year’s Awards! If you have a project or initiative that you would like to see in TMI, then please let us know and we can help to put together an article or case study. Alternatively, banks, consultants and technology vendors are welcome to let us know about innovative client projects with which you have been engaged. Please email me at [email protected]. We look forward to hearing from you!
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