When coronavirus hit, Tate & Lyle like so many of its peers, had to undertake a number of emergency actions to offset the economic uncertainties created by the pandemic.
Given the challenges created by the global lockdown that threatened to choke demand for its range of food additives, the 160-year old company was faced with a need to protect its cash position.
For Oliver Whiddett, group treasurer of the FTSE-250 stalwart, the moment was a chance to put in practice a skill set developed at real estate group Grosvenor and mining giant Anglo American.
Whiddett’s team quickly established a daily cash war room, to monitor cash balances and assess any issues on a real time basis. “From a credit worthiness and payment performance perspective, we can just make sure we’re aware of anything on a timely basis and we can respond proactively.
“As a function we’ve also undertaken lots of scenario analysis to provide comfort internally to the board and external announcements around the strength of Tate & Lyle’s balance sheet,” he adds.
Under his leadership the group also took advantage of benign conditions in global credit markets to raise more funds. In May the group raised $200m in the US private placement markets, “further strengthening our strong liquidity position,” says Whiddett.
“In the midst of the pandemic we also extended our $800m undrawn revolving credit facility by a further year- to 2025, which included a sustainability linked mechanism linked to the achievement of annual milestones against our targets for C02 emissions, beneficial use of waste and water usage.
“I’m really proud of that transaction, it speaks to the strength of our relationships, even during a period of some stress in financial markets, banks are willing to extend their credit commitment to us,” he says.
“I think in times like this the treasury function can be a real differentiator for an organisation, providing real clarity around the financial position, understanding the key risks to the business, and supporting calm, rational decision-making against a backdrop of uncertainty,” he adds.
Whiddett says Tate & Lyle’s ability to ride out the storm was also aided by the fact that the group had entered the pandemic in a financially strong position, reflected in a trading update in May. It said the group had a net debt/ebitda ratio of 0.9x, access to over $1bn of liquidity and “significant covenant headroom on borrowings.”
He says the balance sheet of Tate & Lyle, which transformed from a sugar group to a diversified provider of ingredients and solutions for the food, beverage and industrial market, had been shored up since it had experienced tough market conditions in 2014/15.
Notwithstanding this, the group maintained its progressive dividend policy during that period and subsequently. More recently, CEO Nick Hampton and CFO Imran Nawaz have initiated a programme to accelerate growth.
On 21 May Tate & Lyle’s full year results revealed adjusted pre-tax profit had increased from £309m to £331m on revenue that was up five percent to £2.9bn compared to the year before. In the announcement Tate & Lyle CEO Nick Hampton said that strong demand for products combined with financial strength, “gives me confidence we will navigate this period successfully and that our future prospects remain strong.”
Whiddett’s career development has been a result of the efforts he has put into developing personal relationships, he says. “Having been in treasury 10 years, I’m still working with many of the bankers I met in my first month in treasury. Those relationships operate at an institutional level, but also at a personal level, having people you know you can trust and turn to when you’re coming up against a problem you haven’t dealt with before, has been of great benefit to me,” he says.
With that in mind it may be less of a surprise to learn Whiddett studied psychology at Edinburgh University, which he says gave him a “great interest in human behaviour, the importance of diversity in teams and a great skill set around forming relationships.”
After graduating, he joined Arthur Andersen, which provided “a really fast paced, energetic and empowering culture” working in the business assurance division, but also across corporate finance, transactions support, and forensic accounting. When Andersens was terminated after the collapse of US energy giant Enron, Whiddett transferred to Deloitte, but after returning from a six-month travelling sabbatical, decided shortly after to move into the corporate arena.
Whiddett joined real estate group Grosvenor, an audit client of Deloitte, in a management accounting and statutory accounting role, becoming closely involved in Liverpool ONE, a big city centre development there, a big project while he was there.
“I got a good, solid understanding of the fundamentals of core finance and controls, working very closely with the accounts payable and receivables team and with managers and the project management team on some of the developments we were working on,” he says.
A move to mining giant Anglo American, provided experience of working in a large listed group. Backed by several bosses who supported his career progression, Whiddett ended up staying ten years, including the transition into treasury.
“I worked across reporting, FP&A and controls, where I demonstrated an ability to simplify and automate processes, build high performing and diverse teams and also increase the impact the teams had on the business, I think those are skills I’ve developed that have really helped me during my career,” he says.
In 2010 Whiddett was offered the chance to become Anglo American’s assistant treasurer. He jumped at the chance when he recognised the importance of treasury in light of the impact of the global financial crisis (GFC). “As head of financial reporting, the going concern memo covering liquidity and ability to access markets in 2008 went from being a half side of A4 to a 60 side document covering all sorts of scenario and risk analysis. I worked really closely with the group treasurer on that process, and got my first insight into treasury, how strategic it was,” he reveals.
“In 2008 Anglo American needed to access financial markets within the next 12 months in order to continue in business. So it was significant judgements being made at very senior levels, which attracted me to the role,” says Whiddett.
“Though treasury was previously perceived as a very niche and technical area, what I’ve found having joined is that as well as the strategic challenges, there’s a huge amount of variety as it brings in analytical problem solving and relationship-building, both internal and external.
“The exposure you get at a board and audit committee comes fairly early on in your career, and then the analytical side, the logic, the problem solving, the relationship building, all those components together make it a really fascinating area,” he adds.
At Anglo American, Whiddett experienced a series of market cycles that included a boom period in 2012/13 and then a commodity crisis in early 2016. “It’s really during those tough times that you develop a really strong skill set and you broaden your capabilities,” he says.
In early 2016 he devised and led a $1.5bn bond buy-back, a liquidity neutral transaction that allowed Anglo American to acquire bonds below par, a deal that won many plaudits at the time. “It showed even though the company was having a really tough time, treasury can really add value and support the group, when there were question marks around the ability of the group to continue as an entity,” he adds.
Raising the bar
When he joined Tate & Lyle in late 2016, the group was being reshaped for what would become a period of growth. “Although smaller in size than Anglo American, I quickly realised it was an equally complex business with fewer resources to help you navigate the complexity of doing business around the world,” he says.
After interrogating stakeholders across the group, Whiddett discovered they wanted to see more of treasury in the business, supporting growth. “We devised a clear vision in treasury, of simplifying processes to free up time to do more exciting things and grow peoples’ careers, being business partners supporting strategic growth and protecting the balance sheet through strong controls, a robust capital structure and driving working capital management,” he says.
“We’ve introduced dashboards to help the businesses understand their exposures and how we can help manage them, we’ve significantly reduced the number of bank accounts and partners we have around the globe. We’ve also simplified our systems landscape, making it easier to know where our cash is at any point,” he adds.
A quantum treasury management system that had been under-utilised is now being fully exploited to increase automation, and it has been synched with banking platforms and the group’s SAP system.
“These technologies are really helping us to get better visibility. It gives you confidence knowing where your cash is and is available to deploy it when you need it, and gives you a much more efficient capital structure,” says Whiddett.
“In treasury we now own the delivery of cash flow around the group, we’ve enhance the capabilities within the team, and sought to drive working capital performance,” he adds.
Whiddett’s track record within Tate & Lyle has also led him to take on extra projects. “I’m probably most proud of leading the implementation of zero-based budgeting across the organisation, providing real clarity on where we spend money and leading to some significant cost savings”. He was Tate & Lyle’s representative negotiating with the group’s pension fund trustee and insurer Legal & General on last year’s UK pension scheme buy-in. “We removed all investment and longevity risk from that scheme, and it saves us about £20m in cash contributions per year,” he says.
He has also led Tate & Lyle’s Finance Excellence initiative on simplification of processes, increasing the impact of finance on the business and developing its people, a project he has now passed into the execution phase.
Whiddett is now looking at how treasury will play a role in helping Tate & Lyle as the global economy eases out of the short-term shock created by Covid-19 and seeks new opportunities- including potential acquisitions.
He says treasury has performed well during lock down, although he adds: “I’ve been missing the sort of close working that comes with sitting next to colleagues every day.”
But Whiddett is not afraid to consult peers, to find out how they are doing in the difficult conditions. “I think treasurers are incredibly well networked. We tend to pick up the phone to each other, across businesses, and share experiences and insights,” he says.