Published: November 20, 2012
“Project management, difficult but exciting”
Technip, one of the world leaders in project management, engineering and construction in the energy sector, employs almost 30,000 people in 48 countries. Business ranges from subsea to offshore and onshore infrastructure – engineering, construction and installation of fixed or floating platforms, onshore facilities for the production, processing and transport of oil and gas, petrochemicals, even renewable energy such as offshore wind farms. The group also has industrial assets and 34 ships involved in the installation of pipes and underwater construction. In 2011, turnover was €6.8bn, operating profit was €709m and the order book €10.4bn. Technip, which is listed on Euronext Paris – and a member of the CAC 40 – has a market capitalisation of €8.7bn.
In 1999, we put a central office in place, intended to pool the needs and surplus of our subsidiaries, as well as hedge market risk. The department has two jobs: firstly and primarily managing the treasury and market risk via the central office, but also to ensure the monitoring and control of the group’s financial and legal commitments, managing banking relationships and compliance with management procedures, the latter with these two words in mind: securitisation and optimisation. The securitisation of cash flow, throughput and commitments is very important for us and goes a long way towards explaining our policies: in the field of investment and financing, for example, we use very reliable products and careful risk management of bank counterparties.
In addition, our role is to disseminate good management practice and to support our subsidiaries in the areas of treasury and the IT systems linked to them. The team, which has a dozen members, is run by Paul-Alain Mulner, director of the treasury group, and myself. There are three parts to it: the front office, the back office – which is also involved in banking and corporate guarantees, the back office for long-term financing, and deals with bank documentation – and cash management. These services are supported by cross-functional ‘project SI [Information System]’ teams made up of some of our employees. Financing for the group and our projects is run by a separate department.
I don’t have a set cash pooling policy. The pragmatism is de rigueur: it depends on our aims – maximum centralisation of needs and surplus, optimising cash pooling and minimising the internal costs for the treasury and for accounting – but also on specific local conditions and the level of responsibility that the group wishes to allow to subsidiaries. We can therefore turn to a banking service or to manual cash pooling where the transfers are initiated by the subsidiaries. The latter system is very reliable because of a detailed weekly view of the cash and debts of each subsidiary, thanks to an Oracle-Hyperion Planning IT system that was put in place seven years ago.[[[PAGE]]]
Our policy is to hedge ourselves against all financial risk. In the field of foreign exchange, hedging of projects that we have launched is mostly done outright back-to-back via the central office. A trickier part is related to hedging in a period of invitation to tender: aside from the costs, which are usually higher, pooling of risks and working in accordance with IFRS standards is a complex business. In the area of interest rates, we work mostly with straightforward tools, usually secured with long-term financing, syndicated credit, convertible bonds, or even, in the analysis of projects that have specific debts, driven by joint ventures. Finally, from time to time we hedge certain raw materials, fuel oil or copper for example, the difficulty being quantifying amounts and qualifying operations according to IFRS standards.
On the financial side, we have a small programme of commercial paper. As for investments, we operate mostly by fixed-term deposits or accounts, certificates of deposit and short-term notes. As of July 2007, we no longer use SICAVs.
Project management, difficult but exciting, is basically one of my favourite hobbies. It allows one to remove oneself from everyday life, to disseminate good practice and to establish permanent procedures through the group, but also to de-compartmentalise the treasury. I also see it as good support for management, and for the creativity and motivation of the teams. After the installation of an Oracle-Hyperion Planning reporting system in 2010, the following year we started on the construction and deployment of a platform for the treasury and its interfaces. From a technical perspective, one must not lose sight of the basics: the software must be quick to deploy and integrate with other systems. This is the case with Diapason software from MCC, a proper finance and treasury ERP, of which we were the beta-testers. This matched our need for a generic tool, to go together with the creation of new functions and to work flexibly with Technip’s characteristics, notably the project aspect. The constant support from the finance director and the director of the treasury group has allowed us to embark on this venture with a team which I wanted to keep small in order to be able to carry out this ambitious plan.
After putting in place the front and back offices and cash-management modules of the central office, the next move was to link some subsidiaries to the central office, then to equip the main subsidiaries with software which can perform all the functions of the treasury, including administration, which we did last year in the United States, in Asia and the Pacific and in France, and will do this year in Brazil and Italy in particular. Other components of management, such as accounting and drawing up budgets, are foreseeable. This could be an even greater tool for increasing profitability, by avoiding gaps in flow of information and covering consistently the computerisation of accounting, long-term cash forecasts and foreign exchange position.
I began my career as a financial controller after an MAS in Management and Finance. Shortly after that I began working in treasury, first at Accor Services, then at Technip in 2000, where I joined the treasury group, working in the front office. Over three years I familiarised myself with financial risk management, investments and financing, and was offered an international position as the co-ordinator for the Netherlands and the Middle East. I was then named as head of the back office and cash management, all the while managing IT systems projects – which I am still doing – then, in 2007, I became the joint director.
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