Published: January 01, 2011
AkzoNobel
Many readers have commented on the series of interviews that TMI has conducted this year with Peter van Rood, Group Treasurer, AkzoNobel and his colleagues. In 2007, Peter van Rood was tasked to transform the company’s treasury function entirely, turning it from an execution centre, focused on routine, repetitive tasks to a strategic centre that was best-in-class in its industry. This coincided with some of the most significant events in the life of the company in recent years, with 60% of the company’s debt maturing between April 2008 and March 2009, the peak of the financial crisis, and the acquisition of ICI.
Since then, every aspect of treasury has seen radical change and enhancement. The company has rationalised its banking partners, devised new policies and procedures, implemented new technology, enhanced its cash and working capital framework, secured financing at the peak of the crisis, and is well-respected as a leading force in the treasury profession. This success is directly attributable to Peter van Rood, the excellent team that he has appointed, and their key banking partners, including ING, and suppliers. As Peter van Rood confirms,
“Transforming each of these areas has required considerable support from treasury staff, our key banks and other business partners”.
While this is the first time we have given an award for the Treasury Team of the Year, the efforts of Peter and his team have been truly impressive, and we are delighted to have featured their accomplishments in TMI.
Corporate Recognition Award for Innovation and Excellence in Treasury Technology
Caterpillar
This year’s Award is given to Caterpillar, following Martin Bina’s article ‘Simplicity, Standardisation and Security with SWIFT’ that appeared in the TMI 2010 SWIFT Connectivity Guide. Caterpillar recognised that the launch of SCORE (Standardised Corporate Environment) would enhance the value proposition for SWIFT, and enable the company to achieve its technology and bank communication objectives. Caterpillar has a very strong relationship with its primary bank, and with its TMS vendor, which it also appointed as its SWIFT service bureau. These relationships have proved vital in enabling the company to implement SWIFT successfully, and to address the challenges that invariably materialise in a project of this scale and complexity. For example, as Martin explains, “We found ourselves at the forefront of ISO 20022 adoption without necessarily expecting this.”
He also emphasises, “SWIFTNet is commonly described as the most reliable network in the world, but a payments or cash management process is only as reliable as the weakest link in the overall cycle. With a variety of internal processes and systems, as well as SWIFTNet, attention needs to be given to increasing the resilience of the whole process as opposed to simply focusing on individual elements or relying on the final step.”
Skanska Poland
Maciej Müldner, Treasurer of Skanska Poland, first described the company’s approach to managing risk during the crisis in TMI edition 171, back in 2009. A year later (TMI, 190), he reviewed his strategy and its outcomes. Like many other companies, Skanska has taken a multi-faceted approach to risk, with a particular emphasis on comprehensive operational risk assessments for each project, including financial risks. The project manager is responsible for all aspects of project delivery, so there is a strong connection between the business and finance throughout. Skanska extended its focus on counterparty risk during the crisis, both customers and suppliers. For example, the company has a close and proactive relationship with its suppliers, and a disciplined approach to identifying and managing supplier risk, which has been successful in avoiding any negative impact resulting from supplier failures. What is clear from Skanska’s experience is that a combined approach to business risk and financial risk can be very positive, and ensures that all employees’ objectives are aligned. As Maciej Müldner outlines,
“For Skanska, a major achievement in recent times has been the strengthening of the relationship between treasury and the business as a whole. Each business function now understands what treasury does, the financial needs of the company and how each department can help to mitigate risk and further our financial objectives.” [[[PAGE]]]
Aviapartner
As Mike Ballet’s article in edition 185 of TMI, ‘Strategies for Centralisation, Visibility and Control in Uncertain Times’ illustrated, Aviapartner was in the midst of a liquidity crisis, with fully utilised credit facilities and breached financial covenants. Aviapartner took a highly pragmatic, effective and (seemingly!) calm approach to addressing the situation and reversing its position, becoming a financially robust entity with a positive future. The first step was to appoint the right people, which was critical in ensuring the success of the company’s recovery strategy. Mike and his team went on to identify the key priorities that would contribute to success: establishing a new cash management framework, focused on centralising cash; appointing a new partner bank, and achieving standardisation by migrating to SEPA. Being an early adopter has brought considerable advantages. As Mike Ballet suggests,
“With SEPA approaching inexorably… there are opportunities for every treasury to enhance the way they operate…Treasurers should at least investigate the potential for reshaping treasury flows and taking advantage of more efficient and cost-effective cash management practices.”
TenneT
This Award was the most difficult decision, as so many companies have been obliged by necessity to find new ways to finance the business. As Otto Jager’s article, ‘Hybrid Innovation at TenneT’ (TMI edition 186) explained, TenneT had a unique situation to contend with, in that it is a state-owned business, but its debt obligations are not guaranteed by the state. Although the hybrid market collapsed during the banking crisis, Otto Jager, Group Treasurer, recognised that a hybrid structure would enable TenneT to maintain its strong credit profile and ensured continued access to debt financing in the future, therefore meeting its most important financing objectives. TenneT’s hybrid bond was immediately and heavily oversubscribed, emphasising investors’ appetite for this type of structure. Otto Jager explains,
“Hybrid bonds are complex, and in many cases, there is a lack of familiarity with these instruments amongst the corporate community, with 95% of hybrid bonds still issued by the financial sector. However, hybrid debt is attractive and could be used more widely.”
François Masquelier
Few regular readers will need an introduction to François. Not only is he a pioneering force at RTL, where he is Head of Corporate Finance and Treasury, and with the EACT as Honorary Chairman, but he very generously finds the time to write for TMI. Once again, we are delighted to honour François’ unparalleled contribution to TMI, and thank him for his time, wisdom and practicality that we, and our readers value so highly.
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