Noble Group has experienced compounded growth of over 35% in the past ten years. From a treasury perspective, it is therefore essential to keep up with the pace of growth, stay ahead of the company’s funding needs and keep the company’s financial infrastructure current. In order to fulfil these goals, a number of initiatives have been employed which have led to a wide range of achievements across the spectrum of treasury activities.

The finance department has actively worked on improving its capital structure and has addressed capital and loan market requirements. During the past 24 months, the company issued a $250m, seven-year convertible bond and a $500m, five-year straight bond.

The deals were well accepted by the international investment community, the latter more than eight times oversubscribed. Meanwhile, the senior notes programme issued in 2008 received an award for the best high yield bond issuance by an Asian corporate.

During this period, the company has also further increased its syndicated revolving credit facility to $1.2 billion and twice extended and increased by syndication a revolving standby letter of credit and bank guaranteed facility to the current value of $800m.

The latter has enabled the company to issue contingent instruments in support of margin calls and other financial commitments and received a Best Deals of the Year award.

“In the face of increasing financial headwind, Noble Group has been able to stay well ahead of growth needs.”

At the end of 2008, Noble successfully closed its first Islamic loan facility, thus accessing a new source of funding. This was accomplished during a very challenging period of tight liquidity and the transaction received an award for the best Islamic loan by a Greater China based corporate. Also in 2008, the company increased a credit insured receivable discounting programme to over $300m, allowing it to sell a range of its trade receivables to one of its core banks on an ongoing basis.

While 2008 was characterised by bank deleveraging efforts, Noble’s treasury department increased its bilateral bank capacity by over 30% without a material increase in margin. These facilities are provided on a predominantly unsecured basis with loan availability at the holding company level, allowing for the continuing pari passu (ie equal) treatment of commercial bank debt and issued senior notes.

On the working capital management side, Noble actively works to turn its working capital assets, which is important in an industry typified by thin margins. By supporting the receivable and inventory sales process, the treasury helped to reduce account receivable days on hand (DOH) to nine days and inventory DOH to 22 days by the end of 2008. As such, Noble has one of the most efficient working capital management practises in its peer group.

Additional projects undertaken by Noble include the implementation of a global cash management solution provided by HSBC, which supports the group’s major operating companies and provides increased clarity over global cash balances. Noble is also in the final stages of implementing a new treasury management system and foreign exchange dealing system.

In the face of increasing financial headwind, Noble Group has been able to stay well ahead of growth needs (revenues grew by 54% during 2008) and has implemented unique structures. Visibility over cash and financial risk management has been significantly improved globally and the company is best in class in its industry group in terms of its cash conversion cycle.