Regional Treasurer Asia Pacific
British multinational WPP is a truly global brand. It is the world’s largest marketing communications services group with 3,000 offices, in 110 countries, offering services in advertising; media investment management; data investment management; public relations and public affairs; branding and identity; healthcare communications; direct, digital, promotion and relationship marketing and specialist communications. The group works with 351 of the Fortune Global 500, all 30 of the Dow Jones 30 and 69 of the NASDAQ 100.
Change has been a strong feature in the life of Alex Koh. Currently in his second tenure as Regional Treasurer Asia Pacific, a role which he has held in total for over ten years, Koh has seen the business change considerably, as media services, digital marketing and big data have become increasingly important throughout the region. “The landscape has transformed in terms of advertising. Asia Pacific is a major growth engine and home to some of the world’s largest consumer markets,” says Koh. “Since I joined in 1998, WPP’s Asia Pacific revenue has increased at least six fold.”
The path to a career in corporate treasury is not always direct. This was certainly true for Koh. He began his working life wanting to be a systems analyst and taking a job at KPMG in London working as a computer auditor that was meant to provide the launch pad for this ambition. Twenty nine years later, his CV tells of a very different trajectory.
All roads lead to treasury
Following five years at KPMG, Koh moved into the banking sector with UBS London as a Treasury Accountant with Group Finance before moving to Operations, where he headed the funding desk. It was here that he made his first foray into the world of corporate treasury. “I looked after the dispositions and cash management team across the corporate and investment bank, so I dealt a lot with banking operations which facilitated the move to treasury,” he says. “After four years at UBS I moved back to Malaysia and after comparing opportunities in banking and corporate sectors, joined a nascent corporate treasury discipline within general finance.”
It wasn’t the career change which Koh thought would prove the most challenging, having already notched up some treasury experience. “After working in the UK for almost 10 years I thought I might struggle a bit in Malaysia due to the difference in work culture,” he says. Being a Malaysia national these fears went unfounded. “I understood the cultural and personal relationship aspects, having also worked briefly for KPMG Malaysia, so was able to assimilate back in quickly.”
Koh’s first job in Malaysia was for Hong Leong, an owner-managed listed group, as Head of Finance and Treasury. This saw him responsible for all treasury matters related to the listed companies owned by Hong Leong. “In addition to the day-to-day treasury activities, I also reported to the chairman and acted as a face for the group, meeting potential investors and fund managers.” A role which he admits was “unusual at the time.”
Koh’s next move saw him step from a patriarch-led business into a government-linked company, assuming the role of Group Treasurer at Sime Darby, which at the time was the largest conglomerate in Malaysia. “This role was very different to the one at Hong Leong,” recalls Koh, “primarily because we were cash rich while Hong Leong had net debt”. During his time at Sime Darby, Koh leveraged this position and established the group’s first cash pool. From Sime Darby he moved on to take his first commission at WPP, heading up its regional treasury based in Hong Kong.
Despite making his mark at WPP, Koh was lured away by McKinsey where he became Director of Finance Asia. “I was very happy at WPP but McKinsey is a tremendous brand and it was a hard opportunity to turn down,” he explains. But ever-mindful of a need to progress, and with a keen eye on moving to “where the action was happening,” Koh departed McKinsey three years later to become CFO of China Real Estate Opportunities PLC, a UK AIM listed Irish property development and management company, in Shanghai. “I wanted to move to China for my career path and experience working there rather than having to look after China from other locations.” Unfortunately this was at the time when the sub-prime led financial crisis took hold and private equity investors and bank financing departed the property sector.
To date, inspired by change, Koh has gathered a wealth of experience and skills and worked for a wide range of companies from owner managed to government linked, partnership and FTSE100 entities. “They are all very different with their own operating models, culture and people,” he says. To navigate these differences Koh believes that treasurers need their own working model and reference points, which can be carried from one job to the next. “If you are able to adapt, it will be fine moving through different environments.”
Triple action treasury
Koh is now fully focused on supporting the growth of WPP in Asia Pacific where the regional treasury team has an important role to play as both a facilitator for the business networks to grow and also as a watchdog over what is happening across the region. With the WPP business networks on the ground servicing clients and developing innovative offerings throughout the region, it is the role of the treasury to support them and facilitate their ability to win new business. On the other hand the treasury team has to ensure that pursuit of revenue is carried out with stringent financial discipline, such as managing working capital efficiently. “We are both a friend and foe,” jokes Koh.
Indeed, the management of liquidity and working capital is one of the primary challenges for the WPP treasury. “We have systems and processes in place which help to monitor what is happening on the ground,” he says. “If there are any problems we are able to act quickly and communicate with the business teams to identify and address the issues.”
“Due to the nature of the advertising business, we are constantly acquiring other businesses across the region,” says Koh. “This is the third area which dominates our team’s time.” He admits that these deals can be challenging because of the myriad of regulatory constraints across the region. Some countries, for example, require regulatory approval before funds can enter the country and/or have requirements over the remittance process. “Obtaining approvals and managing the cashflows on completion can often be complex and time consuming, so we have to handhold the process, ensure all stakeholders are in the loop and communicate with them constantly – as it’s only too easy to inadvertently commit to a timetable or completion process which may be impacted by factors beyond our control.”
The voice of treasury
To ensure that the regional treasury team is able to conduct these roles effectively, Koh spends a lot of his time communicating with the operating companies, understanding the challenges they are facing and how these can be overcome. “I am a great believer in teamwork and communication,” says Koh. “It is not possible for the treasury to work in isolation. To be an effective treasury team we need to have a holistic view of the business and constantly communicate with the people who run it. Unless you make this effort and build up trust with the business so that they view treasury as a value added function, we cannot be effective.” In his time at WPP Koh has worked hard to ensure that the treasury is seen by the wider business management as a knowledge centre which can be called upon when needed. “It is a two way street, we are there for them when they need us and in return they are happy to abide by parent company guidelines, it is a dynamic which works well.”
It is not just the operating companies below which hear the voice of the treasury, the C-Suite above are also keen to know its performance and views. “The nature of our business is such that working capital metrics dominate the balance sheet and have significant impact on operating cashflows,” says Koh. “The board takes a keen interest on treasury performance.” The global head of treasury in London sits down regularly with the CEO, CFO and main board to give an update on treasury activity globally and discuss both operational and group corporate finance matters, thereby ensuring that the treasury aspect remains intertwined in the broader business strategy.
Flexibility is key
The time zone differential within Asia Pacific, with up to seven and a half hours difference at the two extremes and a further adjustment to UK time means, that the Asia Pacific treasury team needs to be flexible in its working practices and hours.
“We can’t work to set hours or lock the hours into a specific time zone. Our team recognises that and we do what is needed to fulfil our responsibilities,” says Koh. “I am fortunate to work with a great team in the region who work hard and are committed. However I think anyone in a regional role faces a similar challenge and will be able to relate, but this is a requirement of the job.”
Unsurprisingly for a person with an active interest in the power of IT, technology plays a key role in the WPP treasury, with the focus being on achieving maximum control and efficiency. When dealing with operating companies, treasury is required to dive deep into the granular data of their balance sheets to build a clear picture of the working capital dynamics of theoperations, then identify and communicate any issues with the finance teams. This requires an effective ERP to capture and process the data, given the size and complexity of WPP.
“We are constantly exploring technology solutions to enhance efficiency or analytical effectiveness,” says Koh. “The driver comes from a desire within the treasury to continually improve how data is gathered and used and technology is a powerful tool to achieve this.”
Despite the technological developments, spreadsheets still play an important role in the treasury and for Koh are indispensable tools. “The finance community loves spreadsheets because of their versatility and ability to model, then slice and dice very quickly. The downside is security and lack of structure inherent in an ERP. Hence there needs to be happy medium between the two and over time a stabilised spreadsheet algorithm should migrate to the ERP,” says Koh. “We deal with a lot of data and hence rely on technology tools to simplify and automate as much as possible.”
The theme of control runs through into the WPP banking operations as well. The relationship which the company has with its banks in Asia Pacific is something which has undergone transformation during Koh’s time in charge of the regional treasury. Since 1998 WPP’s bank accounts and partners across the region have been consolidated in order to obtain greater control and oversight.
For Koh, leaner banking partners also mean stronger relationships, which he believes is vital in such a diverse cultural and regulatory environment such as Asia Pacific where having the correct treasury-related information is a key. The question is where can this information be obtained from? For Koh, “the key to unlocking the information lies with the banks.” The focus again is on forming relationships and a two way flow of communication and trust. “We rely on our banks for their insight into regulatory developments in-country and also what is happening across the region, so we focussed on forming strong banking relationships and communicating our business requirements. The relationship managers should understand our business and value add by highlighting information and changes which impact our businesses.
“Despite the consolidation which has taken place, it is impossible to have just one banking partner across the region,” admits Koh. “The reason for this is twofold, firstly the regulations across the region restrict the services which foreign banks can offer in certain countries. Secondly, in some markets local banks offer an extensive branch network which is a key requirement for our businesses which operate in remote locations or new markets where foreign banks don’t have a footprint.”
In terms of the services which banks offer and the prices charged for these Koh is of the belief that they can always be more competitive. “For me, it is about fairness,” he says, “over the years there has been consolidated pressure from the treasury community on banks to lower their fees and I believe that pricing is becoming more reasonable.” However, things can change quickly. “With the global liquidity market tightening and Basel III regulations beginning to take hold, banks are increasing the price of liquidity and evaluating relationships holistically.”
A changing world
Koh, like many in the region, cited the usual suspects of trapped cash, regulatory complexity and currency volatility, when asked about the challenges faced. However Koh is acutely aware that something new is often waiting around the corner. “The biggest fear is that the world will dramatically change again, just as it did in 2007/8, and the countries in the region which were opening up and relaxing their foreign exchange controls reverse this trend,” he says. “A situation where the market suddenly panics and causes chaos is almost impossible to predict accurately and is an ever present black swan.”
To ensure that the WPP treasury are prepared for any new challenges which are around the corner Koh ensures that it does not stand still. “We are constantly looking at what we can do better and how,” says Koh, “it is a process of constant improvement because everything is changing.” Actions reflect Koh’s philosophical view to this challenge. “Ultimately we can’t control the changes in the environment which we work in, but we can anticipate them and plan our response to ensure that we remain in control.”
Koh sees treasury as a profession which will continue to grow and become an increasingly important value add function to the business. And when asked how he would sell the role of the treasury to the rest of the world he responded – “imagine a world without risk – if you can’t, then welcome to the treasury profession.” Not a bad marketing slogan for the industry.