Corporate Vision June 2017

28 CORPORATE VISION / June 2017 , Australian Dairy Industry, where overall national milk volume has diminished by between 10 - 15 % over the past twelve months following the collapse of questionable milk pricing practices by Australia’s two leading milk processors. This has led to severe shortages of not just milk, but also of cream and butter, with the entire industry having been affected. So far, we have managed this situation quite well and look forward to seeing improved industry conditions later in the year. My early working life started with the Australian associate of BDO Chartered Accountants firstly in audit and then later in Business Services working as Senior Manager for 5 years. In 1989 I transferred to BDO’s London office in its Corporate Finance department where I was involved with the high-profile Sock Shop administration in 1990 as well doing numerous due diligence and investigating accountant’s reports for clients operating in the travel, textile and manufacturing industries. In 1992, following my return to Australia, I joined The Original Juice Co. as its Finance Manager and Company Secretary. The Original Juice grew to be Australia’s biggest fresh juice manufacturer prior to its acquisition by Golden Circle in 2002 where I was appointed as Group Manager of Finance and Operations. Deciding to focus on other projects, in 2004 I went out on my own and set up an Accounting Practice as well consult to smaller niche type fruit juice manufacturers. Prior to this I had already obtained both my Registered Company Auditor and Registered Tax Agent licences. Also during this time, I was fulfilling the external accountant’s role with Procal Dairies and was heavily involved with procuring bank finance for the factory construction. I joined the company as its CFO in mid 2010. Being CFO allows you to play a significant role in setting business strategy, identifying goals and milestone objectives and measuring and being accountable for its progress throughout the journey. You must be able to work closely with all departments in establishing business investment cases and ensuring that they strictly adhere to strong financial disciplines which must be clearly communicated and understood by everyone concerned. Where possible, I believe it is vitally important for the CFO to join with other senior staff in developing relationships we have with our key suppliers, customers and distributors as this is the key to enduring business success. Having been Procal’s CFO for 7 years now, the company has certainly had its fair share of significant challenges growing its turnover from $36m when I first joined in 2010 to $65m today in a highly competitive market. As far as the remainder of 2017 is concerned, it is a matter of concentrating on the basics and our critical strengths and competencies within an industry which has, for the reasons outlined above, recently endured a great deal of turmoil. In 2018, the company plans to expand into export markets, particularly South East Asia, with its range of yoghurt products and a proposed investment in new processing and packaging equipment capable of packing milk in either UHT or ESL (extended shelf life) formats. The company always remains on the lookout for other new product opportunities including alternative packaging formats and plant based beverages. With the key advantage of having an efficient and motivated distribution system servicing 4,000 customers, there are many other beverage styled products that can be introduced to complement Procal’s existing product range. 10 KEYS TO A CFO’S SUCCESS 1. Strategy – Be involved in understanding, setting and implementing key business strategies. 2. Business Relationships – Get to know your key stakeholders, suppliers, customers and distributors very well. Always work to improve these relationships. 3. Staff – Build a strong administration and finance team to support you. Engender enthusiastic performance and encourage them to improve their skill sets. 4. Corporate Risk – Understand the business’s critical risk profile and work to manage and improve it. Establish implementable disaster recovery plans. 5. Rolling Financial Forecasts – Without diminishing the importance of budgets, the trouble is that they can become quickly out of date. Focus equally or give more time to prepare rolling quarterly P & L forecasts out over the next 18 months to take account of updated business conditions at the end of every quarter. 6. Key Performance Indicators – Prepare yourself to be able to quote key daily, weekly and monthly performance indicators spontanteously. 7. Cash Generation – Understand how business performance and beneath the surface subtleties impacts on cash flow. Higher profits do not always translate to cash in the bank. Update your cash projections regularly. 8. EBITDA & EBIT – Understand your EBITDA performance and how new (and indeed existing business) and investment opportunities may or may not improve EBITDA by sale $ or by unit of production. Aim to grow EBIT at a faster rate than the rate of investment in Net Operating Assets year on year. 9. Power of One Sensitivity – Determine what impact a 1% change in price, volume, cost of sales and overheads has as well as a reduction of one day in debtor collections and stock turnover and one day increase in creditor payments. 10. Know your Limitations – Both business and yourself personally.