Housing Treasury – Financing Risk

B4: Treasury skills, training and

key competencies

Speaker: James Lockyer

Development Director Association of Corporate Treasurers (ACT)

Chair: Deepak Chandra

Head of Treasury bpha

James Lockyer

Development Director, ACT

23 October 2013

Treasury Skills, Training & Key Competencies NHF Housing Treasury – Financing Risk Conference 2013

• A chartered professional body established 1979

• A global community of professionals engaged in treasury and advanced business finance

• The voice of corporate treasury – speaking for the treasury profession and financial managers in the Real Economy

• An education provider – qualifications, examinations and training for those working in treasury, risk and corporate finance worldwide.

What is the ACT?

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• The international business of strategic financial management

• The interface between the company and financial markets

• A specialist discipline, key in determining the financial future of a business

• Strategically, Corporate treasury asks 3 critical questions:

1. How do we decide what to invest in?

• What is the business strategy?

2. How do we raise the money to make those investments?

• What is our financial strategy and policy?

3. How do we control risk in the organisation?

• Tactically, Treasury can be split into 5 core elements:

– Capital markets and funding

– Cash and liquidity management

– Corporate financial management

– Financial risk management

– Treasury operations and controls

What does the ACT mean by corporate treasury?

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• Change in customer – threat or opportunity? – More complex relationships

– Opportunity to focus, sell…

• Balance of Charity / NFP and For-Profit activities – Why diversify? What’s the investor need?

– Diversification doesn’t necessarily reduce risk

• What are core strengths / USPs? – Core strengths vs diversification

– Housebuilding? For which sector?

– Service provider? Particular expertise?

• Other – What’s the competition?

– Look outside UK?

What is the Business Strategy?

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• Depends on the strategy… – Historically based around housebuilding and a single customer

• Capital structure? – Consider equity as well as debt? Hybrids?

– Hold cash?

• Debt considerations… – Debt – is long term, fixed rate GBP still appropriate?

– Debt providers – single source or multi source?

– ?

• Ancillary funding… – Working capital

– Derivatives MTM

How do we fund the business?

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• Change = Uncertainty = Opportunity / Threat – RM framework

– Take advantage of opportunities

– Avoid / transfer / retain threats

• Governance overlay – tone at the top

• Treasury – financial risk specialists – But financial risk management impacts and is impacted by the

business

• Integrated approach essential

How do we manage the risks?

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Risk, Return, Governance & Control

8 24/10/2013

• Liquidity risk management – Need multiple sources of funds – new providers

– Funding / maturity plan

– Increase in ancillary funding needs? – Change certainly

– Accounting changes and effect on covenants, perceptions

• Cash management – Multi customer complexities

– Credit control

– Churn

• Financial risk management – Revisit interest rate risk management policy?

– Counterparty risk

– Impact of regulation

– Tech issue – future of Libor

Some immediate treasury issues 1

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• Political risk – Overall – the State derisking => social housing providers

– Social housing ‘profiteers’?

– Tax (Global accounts raw rate 1%)

– Pricing & CPI / RPI basis change

– Reversal / change to welfare reform, Affordable Rent, Decent Homes Standard, grant rates

• Pace of change – Faster than ever

– Innovation

– Experience decreasingly useful in anticipating / coping with the future

– Competitive landscape

Some immediate treasury issues 2

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Tomorrow’s provider could look like…

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• Membership for individuals helping to:

• Sustain expertise

• Access support

• Develop networks

• Build confidence

• Benefit from: – Use of relevant designatory letters (FCT, MCT, AMCT, CertITM)

– Access to learning and CPD resources including technical updates, briefing notes, course materials, webinars

– Free subscription to THE TREASURER magazine

– Technical advice; informed and unbiased guidance

– Preferential rates at conferences, events and training courses

– Member-only events and regional group meetings

ACT membership Creating advantage

12 www.treasurers.org/membership

• ACT teaches, examines and qualifies treasury professionals through its internationally-recognised suite of qualifications

• Respected worldwide as the benchmark in treasury education

– ACT Certificates

– AMCT Diploma

– MCT Advanced Diploma

• Part-time study anywhere

– Online distance learning – course materials, online forums, video tuition

– Face-to-face teaching and revision courses (optional)

– Tuition schools in UK and overseas

– Two enrolment intakes each year – March and September

ACT professional qualifications Building futures

13 www.treasurers.org/qualifications

Level of ability

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ACT qualifications and membership route

AMCT Stage 3 Select 2 electives to complete AMCT or take as individual certificates

Broad practical understanding of

treasury

ACT Faculty Member

Fundamentals of financial and

management accounting, economics,

corporate tax and law for business

CertFin Certificate in Financial Fundamentals for Business

AMCT Stage 1 Can be taken as part of AMCT or as individual certificate

AMCT Stage 2 Compulsory for AMCT or can be taken as individual certificate

CertITM Certificate in International Treasury Management

CertICM

International

Cash

Management

CertRM

Risk

Management

CertCFF

Corporate Finance

and Funding

CertFMM

Financial Maths

and Modelling

AMCT Diploma Modular syllabus comprising 3 stages, exemptions available

MCT Advanced Diploma Two exams, one project

FCT MCT plus senior level experience

Advanced treasury knowledge and strategic

decision making – proven ability and

expertise

Member of the ACT

Breadth and depth of treasury knowledge –

acknowledged standard of technical

competency

Associate Member of the ACT

Specialist skills – technical depth of

knowledge in key treasury and finance

disciplines

ACT Faculty Member

Highest level senior finance professional

Fellow of the ACT

Accountants are exempt from Stage 1

NHF Housing Treasury – Financing Risk Conference 2013

Any Questions?

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ACT Website (register for updates on Events etc)

Association of Corporate Treasurers LinkedIn group

Association of Corporate Treasurers on Facebook

Professional qualifications…