Gerard Tyler reflects on managing a financial crisis, treasury decisions, and capital spending. He discusses how the Fukushima incident affected contracts and why different departments need to work together to handle foundational business changes.
I was there through the financial crash and the banking crisis and it was really interesting. I think I've never written so many board papers in succession as to when the banks were banking crisis was on because almost every week we were reviewing the counterpart banks and were we happy that they were still good for us and could we rely on them for the facilities that they were promising us? Did we want to put any of our cash with those banks? And in the end you kind of got comfortable that, well, RBS has been rescued. The other really big banks in the UK are probably going to be bailed out by the government if they have to be. So they're probably okay. But a number of the other banks, we just said, look, we're not putting any money with them for the time being. We'll just wait and see what happens. And in the end, for the banks that we had, it all turned out well. But you choose your bank group very carefully because when the market turns down, it's not only the money you've got with them, it's the promises that they've made to you that need to be, be honored. There was a very big capital expenditure program that continued in my early years at Eurenko and we went up to about 3.2 billion euros about four or five years ago. And since then we've actually been spinning off a lot of cash and paying down debt so that at the end of 2018 we were back down to 1.44 billion of debt. Incredible rate of cash generation. And that will continue for a few years. But we know that we're living on contracts that were put in place before the Fukushima incident in Japan. And that incident took out 10% of the nuclear reactor market at a stroke as they closed everything and gradually they're reopening, but it's taking a long time to do that. And if you've got a market that's imbalance and you take out that much demand, prices drop. And so the contracts we're signing today are nowhere near as lucrative as the ones we're executing now. So we have a kind of one time opportunity to, to harvest the cash on these valuable contracts. And we're doing that using that to pay down debt deals. De risk the business for the future. Look for opportunities to work on projects together, include them. And if you're, if you're looking at doing something, make sure you include those sort of colleagues, the right colleagues from those areas in your planning for treasury activities and things you're going to do. If you start off on a project without including them, they'll probably derail you later on because they'll think of something that affects them that you haven't thought about. So work with interdisciplinary groups. And we all, all sit very, very close to these colleagues in other teams. And it can be less informal, too. People come to your desk and say, can you just tell me a bit about this letter I got about my pension scheme? That's a good way of getting to know colleagues and also on the commercial side, because if the commercial teams are outselling in different places or to different types of customers, sometimes there's opportunities to say, look, we can help you, we can put together a trade finance package. Or have you thought about structuring the payment. Payment stream you're going to get from that customer to protect the business? They're not a very. That might not be a very good credit rating you're dealing with, or it might be coming from a country that's got a poor record of paying. So keeping your ear to the ground with those guys, and they often don't think in terms of treasury things, but you can bring them assistance. And you might say, well, why don't you structure it in a different currency? Then you'll get. It works for them and it'll work for us. And sometimes that gives them a bit of an edge when they're negotiating for a contract, something that affects them that you haven't thought about. So work with interdisciplinary groups. And we all sit very, very close to these colleagues and other teams. So. And it can be less informal, too. You know, people come to your desk and say, can you just tell me a bit about this letter I got about my pension scheme? Yeah, that's a good way of getting to know.
