Driven by an interest in corporate transformations, Adam Richford, Group Treasurer, Renewi plc, is now changing the treasury of a company operating at the heart of the ‘circular’ economy. Starting the financial year with ten key treasury projects, progress for him remains a motivating force.
Renewi plc is a market leader in European waste management. The FTSE 250 firm is the result of a 2017 merger between UK-based Shanks and the Netherlands’ Van Gansewinkel. The combined group generated revenues of €1.56bn in its first year from activities including the collection, sorting, processing, re-use and recycling of waste products and the production of lower-carbon alternatives to fossil fuels.
When Adam Richford joined Shanks Group at the beginning of 2016, immediately prior to its acquisition of Van Gansewinkel Groep, it marked the beginning of a treasury transformation that has seen him and his team barely pause for breath since.
Today, Richford is Group Treasurer of the result of that merger, Renewi plc. He heads up a small central team that supports four divisions: Commercial Waste, Hazardous Waste, Monostreams and Municipal. Together, they manage banking facilities in the region of €0.8bn, with an additional €0.3bn of guarantee facilities and €0.5bn of PFI/PPP facilities.
The team also recently completed the underwritten acquisition finance with a new €0.6bn bank facility with a reconstitution of its six-strong banking group. Renewi is now well-supported by the Benelux banks across the bulk of its operations in the region, and a major global institution in the UK. The process saw the renegotiation of around 30 bilateral derivative, cash management, invoice discounting and guarantee facilities, many of which are linked to an innovative common Global Guarantee Deed.
This year, Renewi further transformed its financing with a conversion of its main banking facility into a green loan and the introduction of a margin discount aimed at further improving its critical sustainability measures. Further leasing funding is now planned for investment in Renewi’s new Euro VI truck fleet. This is a €150m programme over three years, aimed at improving the group’s environmental impact through the reduction of nitrogen oxides (NOx) and particulates emissions on its waste collections activity.
As part of the post-merger integration, treasury has set about transforming its cash management approach. This will see it migrate from divisionally-led ownership, established under former Shanks Group control, to a centralised cash management approach. This, notes Richford, will save the Group €1m a year in interest expense resulting from idle cash.
As part of the programme to support this, levels of automation and consistency across treasury’s cash processes are being increased with the roll-out of a group treasury management system, Bellin TM5, to each of its four divisions.
Unsurprisingly, with these increased responsibilities, treasury has increased its headcount to a (still modest) team of four treasury professionals. With so much capital markets activity in the country, the UK headquarters will remain an important hub, sharing group functions with offices in the Netherlands, but the set-up is now fully capable of dynamically responding to market needs.
Path to treasury
All this suggests more than a little skill has been accumulated over the years by Richford. “I came into treasury following a focus on turnaround and working capital advisory, after ACA qualification in audit at EY,” recalls Richford. “Many turnaround situations heighten the focus on cash and funding and heavily involve the treasury teams in those organisations, so this provided my first exposure to corporate treasuries.”
His first line responsibility for treasury came at communications firm, Energis. Having completed his AMCT exams whilst there, Richford progressed to his first dedicated treasury role at GE Capital where he was responsible for real estate in Europe. After GE, he moved to betting and gaming firm Gala Coral, completing his MCT qualifications. Here, he supported the sale of Gala bingo halls business, and looked at various exit scenarios of Coral for its private equity investors, including the eventual reverse takeover of Ladbrokes plc. The call from Shanks Group at the beginning of 2016 signalled Richford’s first listed Group Treasurer position, this morphing not long after into today’s combined Renewi Group.
With two mergers under his belt to get to where he is today, Richford is well placed to offer a view on the process. “Listed company mergers and takeovers are complicated,” he observes. “The Gala Coral and Shanks transactions were both reverse takeovers, meaning the target was bigger than the listed entity in certain ways, and both involved Competition and Markets Authority (CMA) approvals at different levels.”
Working on different sides of the equation in these transactions – Gala Coral being private and Shanks being public – has afforded Richford some valuable commercial perspectives, not least in his exposure to the equity capital markets (ECM) and debt capital markets (DCM).
On the ECM side, there were multiple prospectuses, rights issues, placings, consideration shares, a share suspension and all the associated verifications that accompany these documents. “The debt quantum and covenants feed into the prospectus and associated working capital report and other verification, so it’s clearly an important aspect of the overall ECM process, as well as being the balancing item to fund the total consideration of the transaction.”
DCM activity saw treasury arrange a fully-underwritten debt finance package for the creation of Renewi. Gaining the right level of support saw treasury working closely with the underwriting bank and more broadly with its relationship banks. In addition to the obvious requirement to secure a good debt finance package – the key requirement – the additional key risk to manage in this undertaking was to ensure that the debt funding workstream, as part of the overall transaction, didn’t become an obstacle to the closing of the transaction.
A sense of good timing in relation to all the other simultaneous workstreams naturally demands a high degree of co-ordination and co-operation, explains Richford. “Communication is critical; we have to be able to resolve issues as they arise but also be in a position to escalate any significant risks throughout the closing process.” Another essential requirement, he says, is to be well-advised, the firm having assembled a strong team of lawyers, financial advisors and banking partners.
There is no doubt that the workload demands placed on treasury by a merger are heavy, comments Richford. “Firms undergoing this process don’t typically expand their resourcing availability; you just have to expand the time available to fit the task,” he says. “When you look back, although you will have worked hard, you will see that you have achieved something incredible. It’s very rewarding.”
The show must go on
Post-merger, the work continues. Within the context of ‘essential integration activities’, Richford started this financial year with ten key treasury projects, including green financing, truck leasing, cash management transformation, further funding optimisation, and the strengthening of the treasury function. “We’re working hard towards completing this ambitious list and making good progress so far,” he says.
For Renewi, the overriding focus is on delivering against its synergy targets which, as a listed business, it has committed to the city. The aim is to transform the EBITDA profile of the group by €40m over three years, towards a level of around €200m. This will be supplemented by a second wave which will target margin expansion through continuous improvement and commercial effectiveness. A third wave will target strategic expansion. “Treasury has a key role in supporting a number of these initiatives across the group,” says Richford.
To support the integration, Renewi’s leverage ratio has risen as it invests in accessing the synergies, rebranding and completing the operational integration. The EBITDA benefits will then come through and subsequently enable deleveraging. For Richford, “this is a critical phase from a treasury perspective as we monitor, closely manage and communicate regularly with our key stakeholders”.
In describing these ongoing processes, it is apparent that Renewi’s treasury operates at a strategic level. “It’s something I fully recognise,” says Richford. “In fact, the majority of my time is focused on ‘strategic’ aspects which transform the treasury function and the company.”
Having played a key role in deciding how group leverage will change over time, structuring the debt package to fit, Richford says there is now a need to think holistically in terms of the transformation of the treasury function and the company. The function now needs to ensure that the support is available for the business, whether it is for M&A, delivering post-merger integration synergies or engaging in innovative transactions such as green finance.
Indeed, taking a holistic and innovative approach to funding by linking debt pricing to Renewi’s corporate social responsibility (CSR) KPIs through green finance, treasury is both supporting thre firm’s corporate strategy to be a “pure play sustainability-focused company at the heart of the circular economy”, and getting a good deal. This has been possible due to the strong support of Renewi’s banking group.
Indeed, two of the leading Dutch banks acted as Renewi’s sustainability co-ordinators on the recent green finance transaction, with the other four banks stepping up to support this approach in their facilities too. “Being an all-lender decision, as it relates to margin, we needed to have full support from every one of them, otherwise we wouldn’t have been able to do it.”
Of course, at a commercial level, the benefit of being a sustainability-focused company goes well beyond debt pricing. “It is an important discussion point with our existing and potential new equity investors, many of whom are focused on Socially Responsible Investing,” explains Richford.
So convinced is Richford of the value of green finance, that he believes all businesses should consider using it “wherever possible, as a differentiator to investments that do not contribute environmentally or socially”. Over time, he feels that this should result in more capital being deployed for positive impact.
As a pure play issuer, the costs and complexity are “minimal”. By strengthening the internal connection between finance and the company’s CSR credentials, its helps tell the broader equity story, positively positioning the business within its market place and with its stakeholders. “I don’t see any real downside,” Richford concludes.
Technology the enabler
Having inherited a somewhat fractured Excel-based treasury function upon his arrival at Shanks, Richford set about ensuring that, through the deployment of technology, including the TMS, the merged business would have almost immediate full visibility of its day-to-day cash balances. Preparing the ground in this way allowed the team to create the business case for further transforming its cash management approach.
Across the group, Renewi has deployed financial shared services centres, using “a few robots” within these to take on various routine cash processing activities “that humans aren’t very good at because they lose concentration”. The robots have been “well received” and are “delivering the expected benefits”.
Technology, he says, “is an important part of being able to make the transition from just being able to see the balances or make transactions across the banking infrastructure, to being able to forecast the cash position, aggregate that data and manage the accounting entries that come out of that, and to begin creating group-wide process homogeneity that should give us a more resilient environment.”
The robots may be a useful part of Richford’s treasury but the human element remains core to its success. For him, the most important human skills and characteristics – those that are enabling treasury to deliver so much with a small team – are the ability to focus and seek continuous improvement. “There is always a need to ruthlessly prioritise the available opportunities, constantly improving and simplifying processes, eliminating waste and freeing up time for the most valuable aspects,” he says.
Formal education has played a part of his success, even if “every time I’ve said I will never do another exam again”. Being both FCA and FCT qualified are fundamental to his current role, he believes. “I’ll always benefit from being able to talk debits and credits with our accounting teams, but it is the treasury qualifications that support me every day.”
The value he sees in formal training extends to his team. “This has been a prerequisite for most positions I’ve hired over the past ten years. It’s not just the qualification itself but the commitment to continued professional development and learning that it signals that is most relevant.”
With treasurers taking on strategic importance and increasingly being called upon to work closely with professionals from other functions, Richford is also an advocate of developing the so-called ‘soft skills’. Although these are often seen as the poor relation to their technical counterpart, it is an area of development that he feels should be progressed in the individual “at similar pace”.
It is certainly something he subscribes to himself. “I’ve been working closely with an executive coach over the past year to focus on some of the soft skills, to complement my technical understandings, and this has been invaluable,” he explains. “At all stages of a treasurer’s career, the opportunity to take feedback from those around you, understand your strengths and weaknesses, and then to shape this into actionable development areas, is a vital part of building the future leadership skills required as your career progresses.”
For those just starting out, in addition to formal qualifications, Richford’s advice is to “try to work in a succession of roles that you love”, develop the technical skills and soft skills in parallel and “to have as much fun in the office as you can”.
It helps to have fun outside work too, he says. For him that often centres on charity sporting challenges such as marathons, cycling sportives and triathlons. Having already raised significant sums for cancer charities, he says he is now “looking for the next challenge”. This is perhaps unsurprising: as the treasury transformations continue, this quest characterises his approach to treasury too.