How to Transition into Treasury Seamlessly with Toby Shore

Foreign.

So there you go. That was an amazing podcast with Toby Shaw. But I am absolutely thrilled for you guys listening today to be able to bring you up to date. Toby is live with me actually on video. So sorry. You know, if you're listening on the podcast, hope you enjoy it. But you can also see some of our video live as well. Look for it on the stream and everything else. But when Toby and I last spoke, well, I was laughing with Toby at the beginning when I was doing a briefing then. How treasurers navigate International crises with Toby Shaw in October 2020. If only we knew then what we know now. Goodness gracious, Toby, I'm going to throw it over the microphone over to you, sir. Talk us through what's it been like, how, you know, we went in and out of a global pandemic. How's it been for you and the team at EGA and everything else and yourself?

Yeah, thanks, Mike. Nice to be back. Look, I think when we speak last October, sorry, 2020, so a little over 18 months ago now, look, I think first up, most of 2020 and 2021 seem like one year, one very, very long year, very, very much indistinguishable, I think certainly from a risk landscape for us. We've handled the pandemic here in the UAE and in Dubai in particular, where I live, very, very pragmatically, we've needed to keep the borders open as much as we can. Dubai is obviously a service based economy. So I think certainly from a perspective of living from working here in the Emirates, it's been relatively okay compared to if I see my colleagues in Melbourne in Australia, which were locked down for many, many months and nearly 18 months, et cetera. So I think from a personal perspective, it was one of the better places to ride out the global pandemic. Professionally, obviously we've had people working from home. We're now all back in the office, I think at almost 100% and we'll get onto that a bit later. But I think more importantly, the business continued as uninterrupted as practical. We faced challenges mainly, I think around for us the supply chain. And that's been well written about in many, many financial presses in terms of the financial or the supply chain disruption that continues today and causes us all sorts of logistical challenges. Obviously we, we're an exporting company. We export about 85% of our product to 42 different markets. So logistics is a big, big part of our business. We had to change the way we did it last year for a significant portion of Our business, which was up until that point all containerized, we had to look at brake bulk shipments, moving product in a different form. Right. So that's created challenges, obviously, with delays in logistics and shipping, working capital comes under pressure. We have more product in the pipelines, we have more product on the high seas. The working capital is something that people can actually lose sight of on occasions because they get buried on the balance sheet until your shareholders start asking you, why aren't you giving them a better return and what's all this capital doing on the balance sheet? So I think that was probably our biggest challenge last year from a Treasury perspective, was the management of that working capital facilities and that working capital number. Then really it was about how do we continue to progress and continue along the transformation journey we started many, many years ago, because otherwise it was all too easy just to sit and say, oh, my gosh, the pandemic's here. We can't do anything. And so it was really about keeping people motivated, keeping the new ideas flowing through, keeping the momentum up in terms of what we're trying to achieve as a Treasury team and as an organization. And I think, by and large, we've achieved that. It hasn't necessarily been to the timeframes that we would have achieved pre2020, but we implemented Swiftnet last year where we moved all our payments onto Swift, which has been fantastic for us. We've got a lot more granular detail and greater insight into where our payments and our receivables are coming from and going to. It makes the payment mechanisms a whole lot smoother and we're going to be gradually rolling that out. So if we could roll that out last year through the pandemic, that's quite a very, very big achievement for us.

One of the things I recently caught up with Felix Mayor from abb and we were talking about exactly as you said, one of the. An interesting thing for him, he's very much focused on the technology automation side. I know that was. I just re. Listened to our podcast. That was a key thing for you, that you really want to automate a lot of process and everything else. Felix actually made the comment, he said previously, getting everybody in the office in one place, oh, I've got to be in the office, I can't be there. He said, actually, it was quite nice in a way, you know, despite the situation, he said, because people can say, oh, I can't hop on a virtual. Oh, yeah, I can, you know, so he. But he. He said from his point of view and project management that they were able to keep on pushing forward with these. Now, as you said, there have been logistical and challenges and stuff. How have you prioritized that? You know this, but at the same time, knowing that there was all these other challenges for people versus automation, making progress in treasury, how have you balanced the two, would you say, as you come through these challenging couple of years, sort of thing?

Yeah, look, I think there's a quite important question. Obviously, the first and foremost priority is to maintain the business, maintain liquidity, maintain our cash forecasting capabilities, maintain our core operational readiness. We're quite lucky that we're fairly well down the path in a lot of that, as well as actually having a team that's very much concentrated on continuous improvement. So once everyone buys into that, it almost creates its own momentum. And I think certainly bringing on some of the junior members of the team and giving them some responsibility, it enables them to actually be a bit more visible. Certainly if I'm looking for a positive of the pandemic through zoom calls and remote working, et cetera, you can have 10 people on a call now. Not all of them might not be contributing, but they're all visible, they're all actually at least participating. And I think that's probably been one of the biggest advantages or the biggest outcomes of where we have been for the last two and a half years, is it's got some of those younger team members engaged in these projects and actually being able to drive these projects forward. And I think that's been quite invaluable for them as well as us, for an entity as well. It creates talent, it builds talent and it just widens that talent pool.

And now, as we move forward, you and I were both talking before the show about this new way of working, you know, working from home, balance and, you know, that's enforced in different areas of the world. You know, in the uk, we're still, you know, trying to get that right balance and, you know, different parts of the world and us. And you mentioned there about seeing a role in Australia that was fully remote, which is a brand new thing, wouldn't have happened a few years ago. How are you finding it with you guys and what's your sort of post as we move out of this phase and into this new way of working? What's your ethos as treasurer and as a finance leader? What are you seeing?

So, look, we're slightly different. The mainstay of our business is 24, seven operations so close on 75, 80% of our workforce, if not more, have to come to the office because we can't turn the smelters off. So we've always tried to balance the, shall we say, the fairness between our blue collar workers having to come to the office and the white collar workers, the corporate staff that can actually sit at home and continue to do their job. So I mean where we are now is probably a good compromise for that. We do have flexible working hours and I was just saying to you before Mike, that the UAE is recently enshrined that in our labor law in terms of flexibility, gender equality and that that whole work life balance. And it's one of the very few countries in the world that I do see that enshrined in the labor law. So you know, our office is now what, 70, probably about 95% full, which is great. People are coming into the office willingly, you know that they are happy, they're enjoying that interaction. We do offer flexible working hours and I think that's great for those employees with families or those employees that do have some time to travel to work. Certainly over the last six or seven months Dubai has been booming with expo. So the traffic has come back and the traffic jams are back, et cetera. So all the things that we didn't miss for 18 months has been great. I think probably what has been unspoken of, and I'm not sure that we spoke about it earlier, is that just before Christmas we were notified as a country that we were changing our working week. So historically we've worked Sunday through to Thursdays and now from the 2nd of January we work Mondays through to Fridays. So as an opportunity to embrace work life balance, etc. The corporate guys close the office at 12:30, one o' clock on a Friday. So in essence you're getting a two and a half day weekend every weekend. That doesn't mean that productivity has lapsed. We still require people to do the same amount of hours. I'm very, very keen on that. But we're just looking to change the work life pattern and to give people more ability and more time back to actually enjoy the personal aspects of their being rather than just concentrating purely on work. And I think that's probably been more, more thoughtful and better well received than whether I give someone a day off or some flexible hours, etc.

Yeah, amazing, right? So the future you've talked about, the flexible working, where are you seeing things going now? How you know, the business sort of recovering and going forward, you know what's looking in your crystal ball? I know, you know, if you have the lottery numbers, give Those to me as well, that'd be great.

But, yeah, just every time I think that we're going to start with something that is going to be a sense of enlightenment and positivity, I figure out that there is no such thing as Black Swan events anymore. They occur far too regularly. So, you know, certainly we came into 2022 with a sense of optimism. We came in with a sense of excitement that at least the worst of the pandemic was behind us. That lasted for about four or five weeks until the events in Russia and Ukraine took over and unfolded there. And that certainly put the cat amongst the pigeons. And I don't mean that in any way disparagingly about the happening there, but just in terms of where we thought 22 was going to go and certainly turned our whole expectations upside down. So for us, that period of time from a Treasury side was quite uncertain. And I think if you talk to most bankers, most treasury guys, the sanctions were very unclear between the eu, between the UK and the us. The velocity in which they were rolled out was unprecedented. And I think we were left, like a lot of people scrambling to figure out what we could do, what we couldn't do, and try to marry those with obviously our contractual and commercial obligations. And this is relationships that we'd had for many, many years. I caveat all those. Our exposure to Russia is not big, but we still have to manage those relationships, we still have to manage the sanctions and we still have to be, in effect, a good corporate citizen and so trying to actually navigate what was fairly an unclear territory. If you'd asked me that six weeks ago or even three weeks before that, I would have said, absolutely not. Okay, there is torque, there is smoke, but would it actually develop into what is essentially a war between the two countries? Absolutely not. So, you know, I think that was probably a big shock for us. The resultant impact upon that has been again, quite shocking. On the upside for us, aluminium prices are at record highs, which is not great. You don't like to make hey while others suffer. But certainly the commodity markets have reacted extraordinarily strongly. We've gone back into a big lockdown of China's second largest city, 27 million people, whatever it might be, all locked up in Shanghai, which is having an impact upon, again, supply chain disruptions, but also the commodity business as well as. So Chinese proverb of May you live in interesting times, I think can be also a curse. And saying that every time that we think that life has gone back to normalcy, we start to question what that normalcy might look like. And as I said, that old axiom of Black Swan events probably needs to be rethought because these events are happening more and more regularly and the Black Swan is no longer a Black Swan in terms of something, it's becoming every 18 months more and more regular.

So we usually wrap up each week's podcast and we did before, and you gave some amazing advice about being courageous within a lot. The dynamic changing environment of Treasury. This is from earlier in the show. Take control of your education and gaining breadth of treasury experience across different areas. Now, I'm not going to ask you for your further tips because it would be disingenuous and going back to, oh, yes, give us some more tips. What I was going to ask really was more for, you know, just an observation, really, from you or some recommendations. You know, we've got people watching today that are going to look at this, they're going to have listened to this amazing show that we did, you know, before, which was a great, you know, educational lesson for treasury guys out there, professionals, yourself. You brought us up to date now, you just talked there about treasurers and the way, as you say, Black Swan events, a regular thing now. So they're not Black Swan, they're out the window, they're regular things. What advice would you give to the people watching today or listening and say, look, if you are in treasury, if you are listening, these are the things you need to plan for. These are the things you need to think about, you know, just as. As takeaways. If they're sort of. A lot of people say they listen in the car or they listen on their way to work and everything else, and they're thinking, right, actually, yeah, that's a good thing to think about. What should they have in their back pocket, would you say?

So I think for me, in no particular order, now that the world is starting to open up, people are coming back into the offices, either part time, full time or some sort of hybrid. Dust off those networks, start networking again. People have been isolating for two years for good reason, and certainly we've been no different. It takes a real change in mindset to go out and meet people again. And that's your bankers, that's your insurers, that's your colleagues, that's your other industry peers, that you can't lose sight of the power of networking and not just for job opportunities, but for professional growth, for swapping ideas and just to actually have that connection. People buy people and you get more out of a 35 minute phone or 35 minute meeting with someone than an hour zoom call, at least I do anyway. It tends to be a bit more natural and you start to swap stories rather than just what's the point? So certainly, I think that would be the biggest thing I would urge you listeners to concentrate on this year. It's far too easy for us to sit at home and just say, well, we'll get on a zoom call, et cetera. And I find that even in the office now, a guy at the other end of the floor will zoom come down and talk to me. So those sorts of things, number one, I think in that respect would be really looking to reinvigorate those networks, those relationships, on a personal perspective. Secondly, I can't re. Emphasise enough education. If the listeners here haven't taken the opportunity of working from home or remote working for the last two years to do some sort of professional education in that treasury space, it's probably a lost opportunity because you're not necessarily going to get those one, two or three hours of commute time back, especially if you go back into the office, but if you are sitting on a train in your car, whatever, take the opportunity to study something. The treasury space has changed, it will continue to evolve and I think it's certainly beholden amongst all of us to stay abreast of those. And that's really important as a Treasury professional. And then I think thirdly really is, don't be complacent. As I said, every year I wake up 1st of January, it's going to be a new year, it's going to be, this is my plans for the year, etc. Invariably it's either one week or six weeks into it, my year is shot.

I'd say day two.

Yeah. It has been on day two and day three on occasions.

Yeah.

But I think it's really about always expect the unexpected. I was planned for that unexpectedness. Don't think today is going to be like tomorrow or it's going to be like yesterday. Really think about, you know, what could impact upon your business. Be a bit more thoughtful, be a bit more courageous, again using that word, courageous, about things that may impact your business, your liquidity profile, your working capital and start putting plans in place today, because tomorrow could be too late and it could cost you.

Yeah, exactly. Amazing advice there. I mean, I am going to jump back in on one thing, because usually I say, I can't wait to see you in person, which I can't as well. That's, you know, zoom is all right, but you know over a bar and a beer is much better but the good thing actually just this morning I was talking to my colleague about and again to reflect what you said there Toby that we are going to be networking and I can't wait to do the real thing you know September we're just we've just put we're going to see everyone at Euro Finance in Vienna we're then following up with AFP in Philadelphia and actually we're planning our own event in November in London to Treasury Career Corner live maybe even getting lovely Toby across you never know we'll try and persuade him over horrible wet London Dubai no okay let's move on but joking aside exactly you're right we can't wait to see people and I really concur with that so amazing sir as always thanks to have you and a great update and look forward to again at one of those events or somewhere else seeing you very soon excellent thanks Mike cheers.