ASAA 2022 Citi Yearbook

Overall Winner Corporate Treasurer of the Year 2022 Joseph Chua Executive Director, Treasury, Lenovo Joseph Chua shows the value of foresight and strong leadership at Lenovo During the pandemic, Lenovo’s business grew by 42% in an environment of massive supply chain disruption, a rapid shift to remote working and an additional US$4bn working capital requirement. Joseph has instigated a centralised cash management approach via a hub model to optimise group liquidity across approximately 300 entities and nine factory plants in five regions. His team of 30, mostly located in Singapore, but also in China, USA, Brazil and Hong Kong, manages relationships with approximately 40 banking partners, with around 1,000 bank accounts in more than 50 currencies. Financing the business During the 2021-22 financial year, Lenovo achieved a net cash position of US$602m, the first time for five years, while driving down year-on-year finance costs by US$47m, a reduction of 11%, while revenues increased by 18%. By prioritising cash optimisation, Joseph and his team has freed up cash to reduce Lenovo’s debt level by US$600m over the last financial year. Strong business performance and the increase in net cash within a disrupted macro environment has enabled Lenovo to obtain investment-grade credit ratings with upgrades from Moody’s to Baa2 and Fitch to BBB. As a result, the company’s current debt as a percentage of total debt has dropped from 48% to 23%. Lower cost refinancing Lenovo’s credit rating upgrades have enabled Joseph and his team to negotiate more flexible tenors and additional liquidity at a lower cost. His current focus is the refinancing of the US$1.5bn committed five years revolving credit facility that matures in March 2023. The deal was completed in July 2022 with an increased size of US$2bn. The final agreed term sheet has a great improvement in pricing with an all-in margin reduced by 35 bps, commitment fee cut by almost half from 62.5 bps to 35 bps, and preferential financial covenants and undertakings. Tailored financing tools With net cash generated from operating activities reaching a new record level of US$4.1bn as a result of strong business growth, effective business strategy and prudent working capital management, treasury is supporting this growth through tailored funding programmes. This includes a securitisation and receivables factoring programme which are backed with strong funding support from relationship banks and private equity investors owing to Lenovo’s excellent credit history and upgraded credit rating. On Joseph’s initiative, treasury also set-up a receivables purchase programme to complement the securitisation programme, providing Lenovo with the flexibility to scale up its funding to support the exceptionally strong business growth. Managing the impact of supply chain disruption and chip shortages Joseph and his team worked to secure sufficient liquidity to overcome risks associated with component shortages, logistics and supply chain issues. The team worked with its partner banks to set up a US$1.5-2bn buy-ahead programme to ensure the business could buy semiconductor chips during a period of supply shortage and avoid disruption to its business. Environmental, social and governance (ESG) Lenovo Group has a net zero target in ten years and is proactively aiming to achieve this within five years. Joseph has a strong personal commitment to aligning treasury’s culture and objectives with the group’s sustainability ambitions, and inspiring change across the business. He is doing this in a variety of ways, including: 14 | treasurytodayasia Adam Smith Awards Asia © February 2023