Treasury Function Optimisation Case Study

Treasury Function Optimisation Case Study

A rapidly growing oil company that was aggressively ramping up production.

  • Funding conditions included pre-requisite hedging of commodity price risk
  • The majority of income was in USD and the majority of costs were in AUD
  • Balance sheet risk on a USD denominated bond
  • No official/documented treasury or risk management policy in place
  • Decision making was ad-hoc and often ’knee jerk’ reactions to the market.

Rochford was engaged to:

  • Construct a treasury policy covering the multifaceted nature of the company’s financial risks
  • Develop management reporting process and templates
  • Create a process of weekly exposure reporting to a risk management committee
  • Up-skill internal resources on treasury risk management
  • Provide mark to market (MTM) reports of derivative positions
  • Work with the finance function to develop a cash management policy and maximize returns of AUD and USD deposits while maintaining sufficient liquidity
  • Work with the finance function to develop an FX risk management strategy aligned with the company’s pricing mechanism and invoice process
  • Advise on the execution and structure of medium-term strategic hedges
  • Provide monthly policy compliance board reporting

Outcomes:

  • With Rochford’s expertise and support, management could focus on growing the business, confident in the knowledge that strategic objectives would not be compromised by market risks.
  • The business went from having no official treasury function to a function that was equipped with the skills, resources, policies and processes to manage all the financial risks of business, and deliver a tangible result to the bottom line.