How Barratt Development’s Kate Moorcroft has built a home in treasury

Kate Moorcroft’s year as group treasurer at Barratt Developments has been eventful, involving a US private placement and a cash management review, writes Liz Loxton

Kate Moorcroft, group treasurer at housebuilder Barratt Developments, describes herself as someone who has simply always wanted to work.

She joined Coventry Building Society at 18 as a cashier and worked her way up very quickly to mortgage adviser.

The next steps on the ladder, however, were to work towards becoming a branch manager, a move that didn’t really appeal. Looking for a new post internally, she noticed that a trainee place had come up in the Midlands building society’s treasury function.

“It looked to me like a career path, which was what I wanted,” she says.

A career path was exactly what it turned out to be. Moorcroft applied for the role, was accepted and began benefiting straight away from the broad experience treasury offered.

Pre-financial crisis, the treasury function had a front, middle and back office, and Moorcroft enjoyed the dealing side in particular. The credit crunch, while testing for the financial sector as a whole, proved particularly interesting.

“Just seeing all the different situations play out was fascinating,” she remarks. “Moody’s and Fitch downgraded Coventry, which was bad news for the business, but interesting to see.”

Formative years

After 11 years at the building society, ultimately as senior manager to a dealing team of two within group treasury, Moorcroft could see that staying put was unlikely to yield much more in the way of useful experience.

“A job came up for a treasury manager at National Express, which I was convinced I wasn’t going to get,” she says.

She did secure the role, however, and found herself joining National Express just as the transport company was in the process of moving its entire finance function from London to Birmingham. That gave Moorcroft and the woman who hired her – the then-deputy group treasurer Michelle Dovey – a clean sheet in terms of setting up a brand-new operation.

“This was great for me, because we were revisiting everything, looking at policies and procedures. I learnt so much,” she says.

Both Moorcroft and Dovey were newcomers to National Express, getting to know the business from scratch. National Express is global, with operations in the US and Spain, which provided a steep learning curve.

“I hadn’t done much FX dealing previously and there was also fuel hedging to master, but learning on the job was the best way; it makes you ask questions,” she says.

From that point, Moorcroft progressed steadily, completing the AMCT she had begun work on at Coventry Building Society. Moving to a non-financial corporate helped to consolidate the syllabus, since it provided a very different environment.

“As soon as I moved to National Express, the AMCT all slotted into place. I went through every exam, with no exemptions, but that provided a solid start in treasury. The corporate finance and funding elements have proved so relevant to the role I am in now.”

Moorcroft continues to find the AMCT useful in her day-to-day life. She also prizes her interaction with the ACT. The Conference and Annual Dinner are useful networking opportunities, she says, and the AMCT is a massive tick in the box when it comes to recruiting.

“Two of my recruits at National Express, Michael Payne and Charley Edwards, are also previous Ones to Watch participants,” she says.

Stepping up

In 2012, Moorcroft was promoted to assistant treasurer at National Express and deputy group treasurer, in 2014. Dovey left the company in 2015 to take up the role of group treasurer at publishing and information group Informa.

At that point, National Express was left without a group treasurer. Moorcroft stepped into the role as an interim for 10 months. It was clearly a pivotal move that left her well placed for her next role as group treasurer at FTSE 100 Barratt Developments.

At Barratt, Moorcroft’s main considerations are funding strategy, supporting the divisions in land purchases, and managing relationships with banks and sureties.

The housebuilder buys land throughout the financial year, preferably on deferred terms, and receives funds once houses are completed and sold. It operates a large revolving credit facility (RCF) and issues bonds and guarantees to support the land-purchasing and site-development process.

Moorcroft works with regional FDs on land purchases that require specialist input on the guarantee front to ensure that all purchases are counterbalanced with sensible provisioning.

“When we are purchasing land,” she notes, “we aim to secure attractive deferred payment terms. In some cases, we give security in the form of a parental guarantee, legal charge over the land or a bank guarantee. For any form of bond guarantee, I will use a bank or surety company.”

Development

Moorcroft places a premium on training and developing her team, so that whatever she is working on she can bring them in. Currently, she has two permanent members of staff, treasury manager Vijay Chavda, and a treasury assistant, Sukhjinder Giran.

She has recently brought in a graduate on a 12-month fixed contract to help support the team while they work on a cash management project, the aim of which is to assess and ultimately consolidate Barratt’s bank accounts. Bringing in a graduate rather than a consultant will give the team valuable experience.

“That way, the team can still manage the project,” she points out. “I could have appointed someone more senior or a treasury professional from outside, but I didn’t want to take that development opportunity away from the team.”

Moorcroft also supports two younger treasury professionals outside Barratt via the ACT’s Mentor Me programme, having heard another mentor speak at the 2016 Cash Management Conference.

“If I can help support anyone who is looking to have a treasury career,” she notes, “that seems to me to be worthwhile. Seeing how people develop gives me so much pride. Michelle Dovey informally mentored me from day one, so I know how valuable it is to have someone there to provide help and support.”

 If I can help support anyone who is looking to have a treasury career, that seems to me to be worthwhile 

The initial stage of the cash management project is data capture. The company uses the four clearing banks. “It would help us to smooth out processes and accounts,” she says, “but we have 27 divisions, with more than 400 users of online banking, so there are quite a lot of end users.”

Gaining buy-in from those divisions will be key to the project’s outcome. “A key precept,” she points out, “is for everyone to understand why you’re doing the project. We need to learn what they want from those banks. We might have to change the set-up they’re used to working to – but hopefully we’ll end up with a more streamlined framework.”

From an anti-fraud point of view, reducing the number of bank accounts and streamlining processes is the sensible course.

“We did look at going to just one bank,” she says. “But given the nature of our business in that our customers are buying their dream homes, if there was an issue with the one bank, we need to make sure we have back-up.”

Funding

While Moorcroft has only been with Barratt a short time, she hasn’t lost any time in gaining valuable experience herself.

Last December, she carried out an amend-and-extend on the RCF, and in May, she completed a private placement in the US market, the first time she has taken the leading role in raising debt.

Barratt Developments has used the US private placement market previously, and this route helps it to diversify its funding sources. An existing facility of $80m that the company wanted to refinance was due to expire in August. Nevertheless, Moorcroft began by reviewing the options to ensure this was the correct route this time.

As Barratt isn’t currently rated, the public bond market wasn’t attractive. Securing a rating for a one-off transaction didn’t seem like a good use of resources.

“We looked at a public bond, a schuldschein in the German private placement market, and at the banks. However, we know private placement investors well; they have always been supportive,” she says.

“We decided that it was the right market, but Barratt hasn’t issued in that market for around 10 years and not many housebuilders use it. We had two banks as agents on the deal.”

The private placement is also comparable on a security basis. “We have covenants within the RCF and the same covenants in the private placement, so it’s no more onerous. And we do, very much, work on a relationship basis.”

The transaction was highly successful. Planning and preparation were key as was promotional activity, spearheaded by CEO David Thomas, as private placements need international buy-in.

The company conducted a roadshow in the UK and an investor call in the US. Ultimately, Barratt raised £200m against a target of £100m on a 10-year tenor with a coupon of 2.77%, compared to 7.50% last time.

Fundraising aside, Moorcroft is keen to ensure that treasury provides solid support to other divisions in the company, particularly around banking and land purchases.

The regions are required to report and forecast each month so that treasury can ensure there is sufficient coverage for their needs from a bonds point of view.

“I want treasury to give something back to the divisions, so we are looking at the feedback we can give,” she says.

Future planning

Looking ahead, the housebuilder is in good shape. It has just released a trading update, announcing more than 17,300 completions and the purchase of nearly £1bn of land. The company has net cash of £720m.

“Due to the levels of cash we are holding,” Moorcroft notes, “counterparty risk and credit risk are a big area of focus for us, so making sure bank creditworthiness is being monitored closely is important.”

As yet, Brexit is not causing too many headaches. “We’ve had the highest level of completions for nine years, we have a strong balance sheet and record order book of forward sales. In the event of challenges, we’re in a good position,” she says.

Barratt can be confident of its treasury function providing solid support going forward.

Barratt in numbers

17,395 Total number of completions (including joint ventures) for the financial year ending June 2017

20% Proportion of completions in the affordable housing sector

£765m Expected profits before tax

Five stars Recognition from the Home Builders Federation

5.9% Increase in the total average selling price per unit on completions

Kate's top tips for other treasurers

Building a strong team around you is so important. Even if you give 100% and do the best you can, if your team doesn’t share your enthusiasm, passion and future ambitions for treasury, it will be very difficult to succeed. Training, development and being a supportive boss is the key to building a talented and successful treasury department.

I don’t have an accounting background and I didn’t go to university, so the AMCT was a very important qualification for me. It has given me a foundation on which to build my treasury career, as it covers such a broad spectrum of topics. I don’t believe I would have been able to progress to the role I am in without the AMCT.

I’m sure I’m not the only one who will say this, but my favourite gadget has got to be my iPhone. I don’t go anywhere without it; I organise my whole life on it!

Never give up, believe in yourself and ask questions, lots of them! There is so much to learn in treasury, I can honestly say I am learning all the time, whether it be new regulations, new projects or keeping on top of market and company information. The key is to ask questions – it’s the only way to learn.

I always try to give 100% in everything I do. I am very lucky to say that I love my job and I always strive to do things to the best of my ability. I am continuously looking at ways to develop my knowledge and skills.

The best way to wind down after a stressful day is to take my dog for a countryside walk with my husband. That is ideally followed with a well-deserved glass of wine. I enjoy sitting in my garden with some music on and talking through the day with my husband. It’s definitely a good stress reliever.

About the author

Kate's CV

2016-present Group treasurer, Barratt Developments

2014-2016 Deputy group treasurer, National Express

2012-2014 Assistant treasurer, National Express

2010-2012 Treasury manager, National Express

1999-2010 Various roles, Coventry Building Society

About the author

Liz Loxton is editor of The Treasurer

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