Page 1


2

3

04 Make the bOat gO fasteR

Where to for Pacific Fibre?

07 kaIPakIhI

The rise of Maori enterprise

10 FIt fOR the bOaRd How business thinking could help sports governance get in shape

WELCOME to the first issue of MEttle: a freshly-pressed publication curated by Minter Ellison Rudd Watts about the people, issues and questions

14 LOST IN TRANSLATION

There’s more to successfully doing business offshore than buying a Lonely Planet guide…

influencing business discussions and decisions in New Zealand today. We need MEttle to ensure that Kiwi businesses succeed at home and overseas. For us, that means having grit, courage, spirit and determination - all attributes we hope this publication will inspire in you and those you share it with.

20 CENTRE Of attentIOn

SKYCITY’s proposals for the NZICC have generated heat - and shed some light

- on the group’s long-term commitment to New Zealand

Cathy Quinn

24 The Bright Thing

Chair, Minter Ellison Rudd Watts

Diversity of thought on company boards is essential for the growth of NZ Inc.

28 MIlkIng It

Synlait Milk’s Chief Executive, John Penno, downloads after the IPO


2

3

04 Make the bOat gO fasteR

Where to for Pacific Fibre?

07 kaIPakIhI

The rise of Maori enterprise

10 FIt fOR the bOaRd How business thinking could help sports governance get in shape

WELCOME to the first issue of MEttle: a freshly-pressed publication curated by Minter Ellison Rudd Watts about the people, issues and questions

14 LOST IN TRANSLATION

There’s more to successfully doing business offshore than buying a Lonely Planet guide…

influencing business discussions and decisions in New Zealand today. We need MEttle to ensure that Kiwi businesses succeed at home and overseas. For us, that means having grit, courage, spirit and determination - all attributes we hope this publication will inspire in you and those you share it with.

20 CENTRE Of attentIOn

SKYCITY’s proposals for the NZICC have generated heat - and shed some light

- on the group’s long-term commitment to New Zealand

Cathy Quinn

24 The Bright Thing

Chair, Minter Ellison Rudd Watts

Diversity of thought on company boards is essential for the growth of NZ Inc.

28 MIlkIng It

Synlait Milk’s Chief Executive, John Penno, downloads after the IPO


4

5

Make the bOat gO fasteR

KIWIS LOVE THE INTERNEt ↗↗ 91 percent of New Zealanders used the internet

in the 12 months to mid-August 2013

↗↗ 60 percent of New Zealanders use the internet to look for information ↗↗ 20: New Zealand’s 2013 ranking out of 144 countries based on their ability to benefit from new digital technologies (World Economic Forum)

Where to for Pacific Fibre?

The failure of Pacific Fibre to raise the necessary $400m to provide a second international cable from New Zealand to the United States was described as ‘tragic news for the New Zealand market’ by Telecommunications Users Association CEO Paul Brislen - and he’s not alone in that thinking. Proponents argue that a second cable would increase data allowances with 25 times more capacity, remove the international bottle neck, and cut costs through more competition. MEttle wanted to know more about New Zealand’s need for another cable, so we asked Rod Drury, Pacific Fibre’s co-founder and director and Xero CEO - to share his thoughts on this hot-button issue.

“New Zealand has already sold a minority stake in some of the more old world assets - so why don’t we take this opportunity to invest in some cool new assets that will actually make the boat go faster?” Rod Drury, Pacific Fibre’s co-founder and director - and Xero CEO


4

5

Make the bOat gO fasteR

KIWIS LOVE THE INTERNEt ↗↗ 91 percent of New Zealanders used the internet

in the 12 months to mid-August 2013

↗↗ 60 percent of New Zealanders use the internet to look for information ↗↗ 20: New Zealand’s 2013 ranking out of 144 countries based on their ability to benefit from new digital technologies (World Economic Forum)

Where to for Pacific Fibre?

The failure of Pacific Fibre to raise the necessary $400m to provide a second international cable from New Zealand to the United States was described as ‘tragic news for the New Zealand market’ by Telecommunications Users Association CEO Paul Brislen - and he’s not alone in that thinking. Proponents argue that a second cable would increase data allowances with 25 times more capacity, remove the international bottle neck, and cut costs through more competition. MEttle wanted to know more about New Zealand’s need for another cable, so we asked Rod Drury, Pacific Fibre’s co-founder and director and Xero CEO - to share his thoughts on this hot-button issue.

“New Zealand has already sold a minority stake in some of the more old world assets - so why don’t we take this opportunity to invest in some cool new assets that will actually make the boat go faster?” Rod Drury, Pacific Fibre’s co-founder and director - and Xero CEO


6

7

The failure of the fibre

UFB: A white elephant?

Drury says that at the end of the day, Pacific Fibre simply didn’t have enough New Zealand funding to get the project off the ground: “We did manage to get debt and equity funding offers from China, and strong interest from a super fund in Australia. However to remove the last bit of risk we’d have needed to sell to a carrier that already had international cable investment.

In early August 2013, it was reported that just 3% of those who are able to access the UFB network had taken it up - a rate which is said to be in line with international practice. However, Drury argues that without cost effective international broadband Kiwi customers have no real reason to connect to UFB. It is not significantly faster than what many people are already used to.

“It was a bit of a chicken and egg situation really. At the end of the day, no existing player wants you to join the club - but if you do get in - they’ll need and want to work with you.”

“The fact of the matter is this: we have a bottle neck of international capacity, even with the rollout of the UFB network. UFB is actually under quite a bit of risk - they need to complete the wholesale rate card to include international rates so people have a reason to connect.

“On the flip side, one of the more positive outcomes was that it raised the profile of broadband capacity as a public issue in New Zealand - something which hadn’t really been done to this level before.” Snail’s pace: the implications of slow internet

Drury is adamant that the way for New Zealand to prosper is through better internet connections and capacity: “If we don’t secure an international cable that increases bandwidth capacity, it will be business as usual for New Zealand; is that what we want for our future?” “The key implication of not having this cable is that we’re building businesses with bandwidth constraints. In the US, for example, people are sitting there for hours chatting with multiple friends on Google Hangouts, and they wouldn’t even think about connections not working - we’re on a different path. “We’re constrained in our thinking because we have an international bottleneck that the USA simply doesn’t have and we are therefore missing the many opportunities the cloud provides.” “For example, I have fibre at home and I’m always working on international calls, and yet I can’t do multi-person video and I can’t have reliable conference calls. We can’t do reliable web demonstrations so we end up hiring staff in the US rather than sourcing those roles locally. These are serious barriers to our growth and operations.” Drury says capacity is also about having a risk management strategy: “New Zealand’s economy depends largely on our ability to trade with overseas markets. We could easily have another SARS type episode at any time and we simply can’t travel. So having best in class communications to the world makes a lot of sense.”

“Ultimately, a second international cable is required to make sure UFB isn’t a white elephant for New Zealand. We’re essentially building an intranet. The Pacific Fibre cable could have really bolstered UFB uptake - but we’re not looking backwards, we’re looking forward and exploring the opportunities still out there.” Opportunities all round to support NZ Inc. (and co)

Drury maintains that the benefits of building New Zealand’s broadband infrastructure at a national level and creating competitive advantage are not limited to big business. “Business owners could increase exports, and sectors like education and health could build deeper relationships with overseas staff, partners, customers and experts, creating untold new opportunities. Investors with money tied up in superannuation and who are looking for good, long-term infrastructure investment would be well-placed to consider cable as a strong investment opportunity. “There are also jobs to be created - over a generation we can provide higher value jobs that are not as labour intensive so older people can continue to earn later in life - which would certainly meet some of New Zealand’s superannuation entitlement issues.” Not a one man job: working with Government and Treasury

Drury says that the task is bigger than any private company, so he is now working with Government to see if the cable can be pulled off as a new crown entity. The New Zealand Government has realised the value in that approach, with a recent announcement that it will be contributing a set amount of funds towards a second international cable in partnership with a private provider.

kaIPakIhI The rise of MAori enterprise

The world of Māori enterprise is big business. At a most recent estimate of around $37 billion, Māori investment has a powerful - if understated - presence across New Zealand’s commercial environment, from fisheries to forests, power generation to property - and many sectors in between. For example, if you use a Two Degrees mobile phone, go shopping at The Base in Hamilton or feel the adrenaline of the Shotover Jet, you’ll be reaping the benefit of Māori investment. MEttle spoke to Trevor Burt, Chair of the board of Ngāi Tahu Holdings Corporation, with assets under management of $747.87m as at 30 June 2012, to understand more how Māori business is providing a means for Māori growth, and to get insight on the approach and opportunities for those looking to work with the juggernaut that is Māori enterprise in Aotearoa.


6

7

The failure of the fibre

UFB: A white elephant?

Drury says that at the end of the day, Pacific Fibre simply didn’t have enough New Zealand funding to get the project off the ground: “We did manage to get debt and equity funding offers from China, and strong interest from a super fund in Australia. However to remove the last bit of risk we’d have needed to sell to a carrier that already had international cable investment.

In early August 2013, it was reported that just 3% of those who are able to access the UFB network had taken it up - a rate which is said to be in line with international practice. However, Drury argues that without cost effective international broadband Kiwi customers have no real reason to connect to UFB. It is not significantly faster than what many people are already used to.

“It was a bit of a chicken and egg situation really. At the end of the day, no existing player wants you to join the club - but if you do get in - they’ll need and want to work with you.”

“The fact of the matter is this: we have a bottle neck of international capacity, even with the rollout of the UFB network. UFB is actually under quite a bit of risk - they need to complete the wholesale rate card to include international rates so people have a reason to connect.

“On the flip side, one of the more positive outcomes was that it raised the profile of broadband capacity as a public issue in New Zealand - something which hadn’t really been done to this level before.” Snail’s pace: the implications of slow internet

Drury is adamant that the way for New Zealand to prosper is through better internet connections and capacity: “If we don’t secure an international cable that increases bandwidth capacity, it will be business as usual for New Zealand; is that what we want for our future?” “The key implication of not having this cable is that we’re building businesses with bandwidth constraints. In the US, for example, people are sitting there for hours chatting with multiple friends on Google Hangouts, and they wouldn’t even think about connections not working - we’re on a different path. “We’re constrained in our thinking because we have an international bottleneck that the USA simply doesn’t have and we are therefore missing the many opportunities the cloud provides.” “For example, I have fibre at home and I’m always working on international calls, and yet I can’t do multi-person video and I can’t have reliable conference calls. We can’t do reliable web demonstrations so we end up hiring staff in the US rather than sourcing those roles locally. These are serious barriers to our growth and operations.” Drury says capacity is also about having a risk management strategy: “New Zealand’s economy depends largely on our ability to trade with overseas markets. We could easily have another SARS type episode at any time and we simply can’t travel. So having best in class communications to the world makes a lot of sense.”

“Ultimately, a second international cable is required to make sure UFB isn’t a white elephant for New Zealand. We’re essentially building an intranet. The Pacific Fibre cable could have really bolstered UFB uptake - but we’re not looking backwards, we’re looking forward and exploring the opportunities still out there.” Opportunities all round to support NZ Inc. (and co)

Drury maintains that the benefits of building New Zealand’s broadband infrastructure at a national level and creating competitive advantage are not limited to big business. “Business owners could increase exports, and sectors like education and health could build deeper relationships with overseas staff, partners, customers and experts, creating untold new opportunities. Investors with money tied up in superannuation and who are looking for good, long-term infrastructure investment would be well-placed to consider cable as a strong investment opportunity. “There are also jobs to be created - over a generation we can provide higher value jobs that are not as labour intensive so older people can continue to earn later in life - which would certainly meet some of New Zealand’s superannuation entitlement issues.” Not a one man job: working with Government and Treasury

Drury says that the task is bigger than any private company, so he is now working with Government to see if the cable can be pulled off as a new crown entity. The New Zealand Government has realised the value in that approach, with a recent announcement that it will be contributing a set amount of funds towards a second international cable in partnership with a private provider.

kaIPakIhI The rise of MAori enterprise

The world of Māori enterprise is big business. At a most recent estimate of around $37 billion, Māori investment has a powerful - if understated - presence across New Zealand’s commercial environment, from fisheries to forests, power generation to property - and many sectors in between. For example, if you use a Two Degrees mobile phone, go shopping at The Base in Hamilton or feel the adrenaline of the Shotover Jet, you’ll be reaping the benefit of Māori investment. MEttle spoke to Trevor Burt, Chair of the board of Ngāi Tahu Holdings Corporation, with assets under management of $747.87m as at 30 June 2012, to understand more how Māori business is providing a means for Māori growth, and to get insight on the approach and opportunities for those looking to work with the juggernaut that is Māori enterprise in Aotearoa.


8

9

“For Ngai Tahu, the assets have to speak to who we are. That means having a sense of pride about what we own, the returns we provide, and the way in which we are successful in the business community.” Trevor Burt, Chair of the board of Ngai Tahu Holdings Corporation

NgaI Tahu GrOuP Asset PROfIle (by funds employed) Year end 2012

1%

8%

10%

11%

17%

17%

36%

Seafood

Seafood quota &

Development

Ngai Tahu

Rural Land

Ngai Tahu

Investment

Operations

Marine Farm Licences

Properties

Tourism

Capital

Properties

(Excluding TOKM Quota)

Values + commercial focus = investment success

Risky business: inter-generational approach

Commercial success leads to social wins

To the year end in 2012, Ngāi Tahu Holdings reported total net profit of $96.66m, with the bulk of its assets in Property, Rural land, Tourism, Seafood and other investments.

In an era when some business leaders have been spectacularly caught out by prioritising short-term wins over sustained longer-term success, Ngāi Tahu takes an entirely different - and what may seem as counter-intuitive - approach, says Burt.

As the New Zealand population ages, one question that is increasingly being raised across many quarters is what are the economic, social, health and educational consequences for New Zealand if the Māori population, and Māori businesses, don’t succeed.

Unsurprisingly for an entity of this scale and success, Ngāi Tahu Holdings puts commercial reality at the heart of its transactions and portfolio structure. However, that doesn’t describe the full picture, says Trevor Burt. “We have a unique ownership model which differentiates us from other organisations. We also have an adage that guides our business dealings and decisions: ‘For Ngāi Tahu the assets have to speak to who we are’. This means having a sense of pride about what Ngāi Tahu owns, the returns we provide, and the way in which we are commercially successful in the business community. “The term shareholder doesn’t accurately depict the way the owners of Ngāi Tahu feel; there is a much greater connection there than in other business entities, which we think creates a point of difference in our business dealings.” Burt says that the owners of Ngāi Tahu increasingly look to their board to reflect their value set in the organisation’s decision-making. “It becomes as much of a value investment as a commercial investment. For example, under our formal investment policy we wouldn’t invest in casinos because that doesn’t align with the values of the iwi.”

“You have to recognise we are an inter-generational investor. After all, there are few other inter-generational investors that can compare with an iwi. This means that we are able to take greater risk over the long term, rather than less risk. “Part of the challenge today is that investment managers operating on a short time horizon don’t have time for failure, as there is often insufficient time available to work through any issues that may arise. “However, if you look far enough ahead and build your portfolio right, any issues along the way can be worked through over the longer term. Our inter-generational principles are reflected right through to our core value set - ‘for us and our children after us’ - and that’s a powerful statement that drives the success of our thinking and decision-making.

Burt says that social development follows from - and relies upon - economic development. “When you consider that our ownership model is comprised of our iwi, the economic success we have leads to social benefit for the community in which the owners are based. “For example, Ngāi Tahu Holdings pays a regular and sustainable dividend to the tribal arm to fund a range of programmes to enhance the people of the tribe. The dividend is not a hand-out, it's a hand up; it goes towards funding the development of a range of cultural, social and educational programmes including a very healthy Superannuation fund for family members. He adds that social and economic successes between Māori and Pākehā also rely on a two-way cultural street. Recent announcements about university courses in tikanga protocol and te reo Māori being offered to business people, such as Waikato University’s Irikura, Suspended Treasures course, offer a necessary pathway towards shared understanding, says Burt. “Some people see tikanga and the understanding of Māori protocol as an obligation, but it’s not.

“Respect and understanding between business parties should be standard practice. For example, at Silver Ferns Farms who employ large numbers of Māori, the simple courtesy of knowing what to do when a haka is performed is seen as good common sense. It has nothing to do with being a Māori business person or a non-Māori business person: it’s about good employee relations and good external relations.” A pathway to future shared success

So, where do Kiwi businesses, Māori and non-Māori, go to from here if they want to succeed? Burt says it’s about looking for opportunities and thinking about the long-term business landscape. “If you are looking to make a 100 year investment, which organisations, entities and businesses will be there throughout that time period? There will be the Crown, local government and iwi. That’s a pretty short list, and that’s why we take a long-term, inter-generational approach to business and the relationships we have. “The Crown needs to look for opportunities for iwi to be partners in commercial opportunities for development and the same goes for local government. This is the time for businesses of all sizes and sectors to make new connections and explore new and different avenues of sustainable revenue-generation.”


8

9

“For Ngai Tahu, the assets have to speak to who we are. That means having a sense of pride about what we own, the returns we provide, and the way in which we are successful in the business community.” Trevor Burt, Chair of the board of Ngai Tahu Holdings Corporation

NgaI Tahu GrOuP Asset PROfIle (by funds employed) Year end 2012

1%

8%

10%

11%

17%

17%

36%

Seafood

Seafood quota &

Development

Ngai Tahu

Rural Land

Ngai Tahu

Investment

Operations

Marine Farm Licences

Properties

Tourism

Capital

Properties

(Excluding TOKM Quota)

Values + commercial focus = investment success

Risky business: inter-generational approach

Commercial success leads to social wins

To the year end in 2012, Ngāi Tahu Holdings reported total net profit of $96.66m, with the bulk of its assets in Property, Rural land, Tourism, Seafood and other investments.

In an era when some business leaders have been spectacularly caught out by prioritising short-term wins over sustained longer-term success, Ngāi Tahu takes an entirely different - and what may seem as counter-intuitive - approach, says Burt.

As the New Zealand population ages, one question that is increasingly being raised across many quarters is what are the economic, social, health and educational consequences for New Zealand if the Māori population, and Māori businesses, don’t succeed.

Unsurprisingly for an entity of this scale and success, Ngāi Tahu Holdings puts commercial reality at the heart of its transactions and portfolio structure. However, that doesn’t describe the full picture, says Trevor Burt. “We have a unique ownership model which differentiates us from other organisations. We also have an adage that guides our business dealings and decisions: ‘For Ngāi Tahu the assets have to speak to who we are’. This means having a sense of pride about what Ngāi Tahu owns, the returns we provide, and the way in which we are commercially successful in the business community. “The term shareholder doesn’t accurately depict the way the owners of Ngāi Tahu feel; there is a much greater connection there than in other business entities, which we think creates a point of difference in our business dealings.” Burt says that the owners of Ngāi Tahu increasingly look to their board to reflect their value set in the organisation’s decision-making. “It becomes as much of a value investment as a commercial investment. For example, under our formal investment policy we wouldn’t invest in casinos because that doesn’t align with the values of the iwi.”

“You have to recognise we are an inter-generational investor. After all, there are few other inter-generational investors that can compare with an iwi. This means that we are able to take greater risk over the long term, rather than less risk. “Part of the challenge today is that investment managers operating on a short time horizon don’t have time for failure, as there is often insufficient time available to work through any issues that may arise. “However, if you look far enough ahead and build your portfolio right, any issues along the way can be worked through over the longer term. Our inter-generational principles are reflected right through to our core value set - ‘for us and our children after us’ - and that’s a powerful statement that drives the success of our thinking and decision-making.

Burt says that social development follows from - and relies upon - economic development. “When you consider that our ownership model is comprised of our iwi, the economic success we have leads to social benefit for the community in which the owners are based. “For example, Ngāi Tahu Holdings pays a regular and sustainable dividend to the tribal arm to fund a range of programmes to enhance the people of the tribe. The dividend is not a hand-out, it's a hand up; it goes towards funding the development of a range of cultural, social and educational programmes including a very healthy Superannuation fund for family members. He adds that social and economic successes between Māori and Pākehā also rely on a two-way cultural street. Recent announcements about university courses in tikanga protocol and te reo Māori being offered to business people, such as Waikato University’s Irikura, Suspended Treasures course, offer a necessary pathway towards shared understanding, says Burt. “Some people see tikanga and the understanding of Māori protocol as an obligation, but it’s not.

“Respect and understanding between business parties should be standard practice. For example, at Silver Ferns Farms who employ large numbers of Māori, the simple courtesy of knowing what to do when a haka is performed is seen as good common sense. It has nothing to do with being a Māori business person or a non-Māori business person: it’s about good employee relations and good external relations.” A pathway to future shared success

So, where do Kiwi businesses, Māori and non-Māori, go to from here if they want to succeed? Burt says it’s about looking for opportunities and thinking about the long-term business landscape. “If you are looking to make a 100 year investment, which organisations, entities and businesses will be there throughout that time period? There will be the Crown, local government and iwi. That’s a pretty short list, and that’s why we take a long-term, inter-generational approach to business and the relationships we have. “The Crown needs to look for opportunities for iwi to be partners in commercial opportunities for development and the same goes for local government. This is the time for businesses of all sizes and sectors to make new connections and explore new and different avenues of sustainable revenue-generation.”


10

11

FIt fOR the bOaRd How business thinking could help sports governance get in shape

New Zealand is often recognised for its ability to punch far above its weight in sport. We all know that we need to give our sportsmen and women access to the best training and resources available in order to ensure that this proud sporting pedigree continues. The same applies to the governance of sport. Below the surface, the sports industry isn’t all about budding basketball stars, Olympic gold medals and Rugby World Cup victories. There are significant issues bubbling around how sports are governed, including financial mismanagement and conflict between boards, clubs, coaches and players. Making sure the right decisionmakers are in place is increasingly important. Many sports have and are taking steps to “lift their game.� But there is a genuine need to improve governance in sports across the board, especially when you add in to the mix the fact that several key international events are being hosted in New Zealand in the next few years - including the World Masters Games in 2017 in Auckland. Those in the know argue that sports boards could benefit from taking some valuable lessons from the corporate world, including the separation of management from governance and focusing on engagement and creating long term value for their members.


10

11

FIt fOR the bOaRd How business thinking could help sports governance get in shape

New Zealand is often recognised for its ability to punch far above its weight in sport. We all know that we need to give our sportsmen and women access to the best training and resources available in order to ensure that this proud sporting pedigree continues. The same applies to the governance of sport. Below the surface, the sports industry isn’t all about budding basketball stars, Olympic gold medals and Rugby World Cup victories. There are significant issues bubbling around how sports are governed, including financial mismanagement and conflict between boards, clubs, coaches and players. Making sure the right decisionmakers are in place is increasingly important. Many sports have and are taking steps to “lift their game.� But there is a genuine need to improve governance in sports across the board, especially when you add in to the mix the fact that several key international events are being hosted in New Zealand in the next few years - including the World Masters Games in 2017 in Auckland. Those in the know argue that sports boards could benefit from taking some valuable lessons from the corporate world, including the separation of management from governance and focusing on engagement and creating long term value for their members.


12

13

What’s the problem, ref?

So, what sort of people are the most match-fit?

“I'm there to govern the sport, I'm not there to mark the field, but some people do think that’s their job.”

According to Sir John, sports governance could take tips from governance within the business world, placing sharp focus on objectivity and emphasising asking the right questions of management.

So speaks Sir John Wells, one of New Zealand’s most experienced sports leaders and a leading proponent of good sports governance. “Over the last 25 years, New Zealand has seen a major evolution within the sporting industry,” he says. “Once largely driven by passionate amateurs, with individual funding grants and sponsorship, the industry now operates within a funding model that has driven a need for greater accountability from both management and boards to the taxpaying public. “Unfortunately, some people in a governance role focus their efforts on their passion for the on-field sport itself, rather than concentrating on the way that sport is governed. They prefer to take the volunteer role and be involved on the pitch - wanting to be visible and seen to be doing something with the sport - so it can be a hard balance to strike to ensure that everyone plays the right part.” Cameron Taylor, Minter Ellison Rudd Watts partner and former Olympian, says that one of the sporting industry’s key issues is increased competition and dwindling memberships. “In an increasingly competitive sports landscape, members are demanding more for their subscriptions and will readily move to join another organisation or seek other options if they aren’t satisfied.”

“On a board, you cannot think widely enough. Legal skills, commercial acumen, marketing and sporting expertise, accounting and financial skills - these are all essential skill sets.” Sir John Wells, sports governance leader

“Boards have an increasingly difficult task in reconciling the demands of a membership model under intense pressure with the increased responsibility to oversee the allocation of funds wisely, while at the same time being transparent and accountable to all parties. This can be particularly challenging when 60-80% of a sporting body’s funding often comes from Government or other third parties with set conditions.” The need to find solutions to often incompatible and competing issues is increasingly necessary. Sir John adds that other key issues include board members promoting an isolated interest group to the wider detriment of the sport and the contradiction between boards needing increasingly skilled, knowledgeable and business-minded members while the majority of people on sporting boards are volunteers who don’t get paid. “Asking people to be held to professional standards in a volunteer environment is a challenge,” he says. “We need to attract the most capable people for these roles, particularly at a time when board members also face increased personal risks and scrutiny.”

“On a board, you cannot think widely enough. Legal skills, commercial acumen, marketing and sporting expertise, accounting and financial skills - these are all essential skill sets that any board, whether sports, business or charity, needs in order to function effectively and efficiently.” “Sound management around the risk side of sports is fundamentally important. If sports governance is going to be effective, the combination and quality of boards is absolutely paramount going forward. We need individuals with corporate backgrounds to get onto sports boards and apply their business nous to the benefit of the sport.” In a prime example of the inherent issues with the classic governance model, Sir John says that a few years ago he was on a board that had representatives across the spectrum: from Government, Internal Affairs, the NZ Olympic committee, a special interest group, and two independent board members. “I was one of the independent board members. However, at meetings it was only the other independent and I who were engaging in discussion. It was only at decision time that the rest of the board engaged - presumably so they could report to their respective group or region, say ‘look what we achieved’ and basically tick the boxes of being a board member. “Today there is a far more skills-based, collective best outcome approach to the composition of sports boards. As such, members can and should be covering off a more diverse range of skills and expertise than we’ve seen in years gone by.

Improving the game for sports governance: what’s required ↗↗ Increased accountability to meet funding requirements ↗↗ The right mix and balance of skills and people ↗↗ Board members having access to advice, mentors and training ↗↗ Issues being addressed, members educating themselves about the sport, the industry, governance and business ↗↗ Constructive questioning and challenging the status quo.

Selecting the right team

Sir John says that other lessons from the corporate world centre on selecting a well-balanced team. “Increasingly, forward-thinking sports governance operates through a selection process whereby the stakeholders who represent a cross-section of interests select and recommend individuals and then put a list of names forward to be ratified.” It is undeniable that sports governance has unique challenges, risks and variables: from a reliance on membership, meeting budget requirements, and ensuring that events and sponsorship are managed effectively, to media demands and profile issues, and of course limited funding opportunities. “Just consider the variables for a major sporting event like the World Masters Games,” says Sir John. “This major event will see over 25,000 participants, representing 30 different sports, compete in Auckland in 2017: facilities, transport, athlete performance, weather, changing rooms, ticket sales - these are all factors that can affect overall delivery.” The game plan moving forward

Although there are many talented people in the board space, the need to extend and increase that pool is strong, alongside providing better access to training and resources to ensure boards and their members are fit enough. Seeking professional advice will give people a great steer to build their skills, pointing them in the right direction to upskill, network and ultimately ensure sports governance in New Zealand is in a continually strengthening position moving forward.


12

13

What’s the problem, ref?

So, what sort of people are the most match-fit?

“I'm there to govern the sport, I'm not there to mark the field, but some people do think that’s their job.”

According to Sir John, sports governance could take tips from governance within the business world, placing sharp focus on objectivity and emphasising asking the right questions of management.

So speaks Sir John Wells, one of New Zealand’s most experienced sports leaders and a leading proponent of good sports governance. “Over the last 25 years, New Zealand has seen a major evolution within the sporting industry,” he says. “Once largely driven by passionate amateurs, with individual funding grants and sponsorship, the industry now operates within a funding model that has driven a need for greater accountability from both management and boards to the taxpaying public. “Unfortunately, some people in a governance role focus their efforts on their passion for the on-field sport itself, rather than concentrating on the way that sport is governed. They prefer to take the volunteer role and be involved on the pitch - wanting to be visible and seen to be doing something with the sport - so it can be a hard balance to strike to ensure that everyone plays the right part.” Cameron Taylor, Minter Ellison Rudd Watts partner and former Olympian, says that one of the sporting industry’s key issues is increased competition and dwindling memberships. “In an increasingly competitive sports landscape, members are demanding more for their subscriptions and will readily move to join another organisation or seek other options if they aren’t satisfied.”

“On a board, you cannot think widely enough. Legal skills, commercial acumen, marketing and sporting expertise, accounting and financial skills - these are all essential skill sets.” Sir John Wells, sports governance leader

“Boards have an increasingly difficult task in reconciling the demands of a membership model under intense pressure with the increased responsibility to oversee the allocation of funds wisely, while at the same time being transparent and accountable to all parties. This can be particularly challenging when 60-80% of a sporting body’s funding often comes from Government or other third parties with set conditions.” The need to find solutions to often incompatible and competing issues is increasingly necessary. Sir John adds that other key issues include board members promoting an isolated interest group to the wider detriment of the sport and the contradiction between boards needing increasingly skilled, knowledgeable and business-minded members while the majority of people on sporting boards are volunteers who don’t get paid. “Asking people to be held to professional standards in a volunteer environment is a challenge,” he says. “We need to attract the most capable people for these roles, particularly at a time when board members also face increased personal risks and scrutiny.”

“On a board, you cannot think widely enough. Legal skills, commercial acumen, marketing and sporting expertise, accounting and financial skills - these are all essential skill sets that any board, whether sports, business or charity, needs in order to function effectively and efficiently.” “Sound management around the risk side of sports is fundamentally important. If sports governance is going to be effective, the combination and quality of boards is absolutely paramount going forward. We need individuals with corporate backgrounds to get onto sports boards and apply their business nous to the benefit of the sport.” In a prime example of the inherent issues with the classic governance model, Sir John says that a few years ago he was on a board that had representatives across the spectrum: from Government, Internal Affairs, the NZ Olympic committee, a special interest group, and two independent board members. “I was one of the independent board members. However, at meetings it was only the other independent and I who were engaging in discussion. It was only at decision time that the rest of the board engaged - presumably so they could report to their respective group or region, say ‘look what we achieved’ and basically tick the boxes of being a board member. “Today there is a far more skills-based, collective best outcome approach to the composition of sports boards. As such, members can and should be covering off a more diverse range of skills and expertise than we’ve seen in years gone by.

Improving the game for sports governance: what’s required ↗↗ Increased accountability to meet funding requirements ↗↗ The right mix and balance of skills and people ↗↗ Board members having access to advice, mentors and training ↗↗ Issues being addressed, members educating themselves about the sport, the industry, governance and business ↗↗ Constructive questioning and challenging the status quo.

Selecting the right team

Sir John says that other lessons from the corporate world centre on selecting a well-balanced team. “Increasingly, forward-thinking sports governance operates through a selection process whereby the stakeholders who represent a cross-section of interests select and recommend individuals and then put a list of names forward to be ratified.” It is undeniable that sports governance has unique challenges, risks and variables: from a reliance on membership, meeting budget requirements, and ensuring that events and sponsorship are managed effectively, to media demands and profile issues, and of course limited funding opportunities. “Just consider the variables for a major sporting event like the World Masters Games,” says Sir John. “This major event will see over 25,000 participants, representing 30 different sports, compete in Auckland in 2017: facilities, transport, athlete performance, weather, changing rooms, ticket sales - these are all factors that can affect overall delivery.” The game plan moving forward

Although there are many talented people in the board space, the need to extend and increase that pool is strong, alongside providing better access to training and resources to ensure boards and their members are fit enough. Seeking professional advice will give people a great steer to build their skills, pointing them in the right direction to upskill, network and ultimately ensure sports governance in New Zealand is in a continually strengthening position moving forward.


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15

LOST IN TRANSLATION There’s more to successfully doing business offshore than buying a lonely planet guide…

Kiwi businesses have rarely if ever had better opportunities to exploit new areas of growth overseas. When China surpassed Australia as New Zealand’s largest export market in early 2013, a sea-change in traditional trade relations was marked. This was followed in mid-2013 when New Zealand became the first OECD nation to sign a Free Trade Agreement with Taiwan. And there are plans for many more agreements of this type on the horizon. At this time when overseas markets represent both a golden age of opportunity and a key growth driver for New Zealand, what pathway should Kiwi business leaders follow if they are keen to be successful offshore? MEttle talked to some acknowledged experts to learn more:


14

15

LOST IN TRANSLATION There’s more to successfully doing business offshore than buying a lonely planet guide…

Kiwi businesses have rarely if ever had better opportunities to exploit new areas of growth overseas. When China surpassed Australia as New Zealand’s largest export market in early 2013, a sea-change in traditional trade relations was marked. This was followed in mid-2013 when New Zealand became the first OECD nation to sign a Free Trade Agreement with Taiwan. And there are plans for many more agreements of this type on the horizon. At this time when overseas markets represent both a golden age of opportunity and a key growth driver for New Zealand, what pathway should Kiwi business leaders follow if they are keen to be successful offshore? MEttle talked to some acknowledged experts to learn more:


16

17

Plan and prepare carefully

Be adaptable

Campbell Gower, Chief Executive of global baby brand success story phil&teds, says businesses should start out with the intention of exporting.

One of the character traits that make New Zealanders successful at home is likely to prepare them to do well overseas, says Peter Chrisp, Chief Executive of New Zealand Trade & Enterprise.

“If you’ve got the confidence that you can succeed offshore - do it. The logistical, administrative, banking and compliance stuff, you can set that all up later. The key to offshore success is in finding your customer first.” Silvana Schenone, a proud Chilean by birth, partner at Minter Ellison Rudd Watts in Auckland and an international trade advisor, encourages businesses looking to make the jump into international commerce to take care with their planning to ensure that they make the opportunity a positive one. “Many Kiwi businesses want to jump straight into larger overseas markets, which can be quite a risky move. If it’s your first time operating offshore, testing the water with a smaller, more similar offshore market to your own environment is a smart idea.”

“If you’ve got the confidence that you can succeed offshore - do it. The key to offshore success is in finding your customer first.” Campbell Gower, Chief Executive, phil&teds

David Green, Managing Director of ANZ Institutional, seconds this advice: “Dipping your toe in the water before taking the plunge is often preferable and ultimately improves the chances of success when you are taking your business offshore. Major offshore markets like China or India are too vast and diverse to approach as one market; identify and get to understand a manageable segment within the market and focus on that.” Green says that when making funding decisions, ANZ looks for businesses with strong leadership and management capability along with a good track record and experience: “That is particularly true when it is a business looking to go offshore. In addition, having a well-developed business plan and good in-market advice and intelligence is critical, as is partnering with the right parties.”

“New Zealanders are well suited to adapting to new environments. In some ways, it’s a function of our scale. We can’t play with arrogance, because if we did we wouldn’t exist. New Zealand’s strengths are in being niche, and partnering for success. “The result is that Kiwis have become extremely good at adapting. We listen and respond to other cultures, which provides us with the capacity to work well overseas.” Gower takes a similar view, saying that it can be useful - but not essential - for exporters to play on their Kiwi roots. “What is valuable, rather than important, is to play on the Kiwi way: that is, tapping into the concepts of being friendly, approachable, adaptable, having no enemy nations, not being a threat, having no negative preconceptions, and generally capitalising on that beautiful-clean-green-low-populationholiday-democracy-destination image.” Take time to immerse yourself in the culture

Any business unwilling to head overseas and get immersed in the culture of the target market is quite frankly, kidding itself. All the commentators and industry players MEttle spoke to were unanimous in the view that visiting the target country preferably numerous times - is a prerequisite element of the export experience. Green says that some businesses greatly underestimate the time and complexities involved in entering new markets. “There is no substitute for spending time on the ground getting to know the market and customer and developing key relationships. This may take longer in offshore markets when compared to New Zealand.” Schenone echoes this view, adding that businesses need to do more than learn theoretically about the target country. “Go there - many times - and spend some time with the local people. Don’t think a week-long holiday will do the trick. Take time, and watch and absorb how business is done, because this is going to be your environment.

“There is no substitute for spending time on the ground getting to know the market and developing key relationships.” David Green, Managing Director, ANZ Institutional

“There are the mechanics of doing business and then there’s the cultural side of living - and most of the time, doing business is a cultural activity. In some jurisdictions conducting business is all about personal relationships and in other areas, you simply cannot take trust as a given. Knowing the difference is everything.” Gower says that companies should not under estimate the power of fronting up and heading overseas. “Foreigners love it. See the world as your market not from the New Zealand perspective. Do your homework on your target market, but for goodness sake - go!”


16

17

Plan and prepare carefully

Be adaptable

Campbell Gower, Chief Executive of global baby brand success story phil&teds, says businesses should start out with the intention of exporting.

One of the character traits that make New Zealanders successful at home is likely to prepare them to do well overseas, says Peter Chrisp, Chief Executive of New Zealand Trade & Enterprise.

“If you’ve got the confidence that you can succeed offshore - do it. The logistical, administrative, banking and compliance stuff, you can set that all up later. The key to offshore success is in finding your customer first.” Silvana Schenone, a proud Chilean by birth, partner at Minter Ellison Rudd Watts in Auckland and an international trade advisor, encourages businesses looking to make the jump into international commerce to take care with their planning to ensure that they make the opportunity a positive one. “Many Kiwi businesses want to jump straight into larger overseas markets, which can be quite a risky move. If it’s your first time operating offshore, testing the water with a smaller, more similar offshore market to your own environment is a smart idea.”

“If you’ve got the confidence that you can succeed offshore - do it. The key to offshore success is in finding your customer first.” Campbell Gower, Chief Executive, phil&teds

David Green, Managing Director of ANZ Institutional, seconds this advice: “Dipping your toe in the water before taking the plunge is often preferable and ultimately improves the chances of success when you are taking your business offshore. Major offshore markets like China or India are too vast and diverse to approach as one market; identify and get to understand a manageable segment within the market and focus on that.” Green says that when making funding decisions, ANZ looks for businesses with strong leadership and management capability along with a good track record and experience: “That is particularly true when it is a business looking to go offshore. In addition, having a well-developed business plan and good in-market advice and intelligence is critical, as is partnering with the right parties.”

“New Zealanders are well suited to adapting to new environments. In some ways, it’s a function of our scale. We can’t play with arrogance, because if we did we wouldn’t exist. New Zealand’s strengths are in being niche, and partnering for success. “The result is that Kiwis have become extremely good at adapting. We listen and respond to other cultures, which provides us with the capacity to work well overseas.” Gower takes a similar view, saying that it can be useful - but not essential - for exporters to play on their Kiwi roots. “What is valuable, rather than important, is to play on the Kiwi way: that is, tapping into the concepts of being friendly, approachable, adaptable, having no enemy nations, not being a threat, having no negative preconceptions, and generally capitalising on that beautiful-clean-green-low-populationholiday-democracy-destination image.” Take time to immerse yourself in the culture

Any business unwilling to head overseas and get immersed in the culture of the target market is quite frankly, kidding itself. All the commentators and industry players MEttle spoke to were unanimous in the view that visiting the target country preferably numerous times - is a prerequisite element of the export experience. Green says that some businesses greatly underestimate the time and complexities involved in entering new markets. “There is no substitute for spending time on the ground getting to know the market and customer and developing key relationships. This may take longer in offshore markets when compared to New Zealand.” Schenone echoes this view, adding that businesses need to do more than learn theoretically about the target country. “Go there - many times - and spend some time with the local people. Don’t think a week-long holiday will do the trick. Take time, and watch and absorb how business is done, because this is going to be your environment.

“There is no substitute for spending time on the ground getting to know the market and developing key relationships.” David Green, Managing Director, ANZ Institutional

“There are the mechanics of doing business and then there’s the cultural side of living - and most of the time, doing business is a cultural activity. In some jurisdictions conducting business is all about personal relationships and in other areas, you simply cannot take trust as a given. Knowing the difference is everything.” Gower says that companies should not under estimate the power of fronting up and heading overseas. “Foreigners love it. See the world as your market not from the New Zealand perspective. Do your homework on your target market, but for goodness sake - go!”


18

19

Get good local partners and advisors

Schenone and Chrisp advise that securing a good, serious business partner to act as your local counterpoint is also essential to help you navigate the local business environment. “Finding the right local partner should be part of your due diligence before you go offshore,” says Schenone. “I have seen first-hand how relations can sour when information is lost in translation. Once, in Chile, a New Zealand business wanted to get into the market as an incorporated limited liability company. The Chilean advisor said that a single share in the company would be held by the advisors, which the New Zealand team weren’t happy with, as they wanted it to be a wholly-owned subsidiary and thought they were being charged a share as a fee. “It was lost in translation that under Chilean law, there were good reasons to have a local shareholder in the circumstances. Relations would have got off to a more positive start if there was clear communication, without risking the loss of goodwill between the two parties.” Green says that when it comes to securing funding for offshore activities, working with and understanding local partners is imperative: “Exporters need to understand their partners and agents offshore, and the strength of the companies they’re dealing with. If they can research and provide that information to the bank it makes the funding decision easier for us.” But there are two sides to this coin. Gower says that when it comes to offshore partners, it is often better to be direct and avoid third parties if you can: “If you can avoid a distributor do so, because they add less value than you think. If you do have to have a distributor, then make sure you still visit your end customers, and spend time in-market. You can’t contract everything out, and while of course you do need sales agents and logistics partners, no one is better than you in building your brand, product and market presence.” Look for the money: Securing funding

Green says that there are several factors to keep in mind when seeking funding for offshore operations. “In addition to a well-developed business plan, having a growth strategy combined with strong, sustainable cashflows, recognition of the challenges and the capacity to deal with the unexpected, will make funding approval more achievable. At ANZ, we’ll look closely at the capital structure of the business and we’ll ask: does it operate from a strong enough capital base to fund offshore expansion?

“We also want to know if there is an established demand for the product or service in the target market that would lend itself to supporting increased borrowing. If not, and it's more a case of establishing a 'beach-head' in that market, then it becomes more of an equity proposition, and ensuring that key resources are not being diverted away from the core business that supports the current capital structure.” Have a go - but get ready to make mistakes

NZTE sees a lot of younger companies and start-ups going overseas, says Chrisp. “One thing I will mention is that to succeed offshore you have to make mistakes to learn. You’ve got to get burned and get some scar tissue in the offshore market it will better equip you for the future. I’d agree that it is crucial to have people on the ground, whether it’s your own team or people who are effectively an extension of it.” Schenone adds that operating successfully in new markets really comes down to understanding the local regulatory and cultural landscape. “Relationships and interests, such as joint ventures and regulations around overseas investment, are critical.” Chrisp echoes this view, saying that doing business offshore is about ensuring all parties are satisfied with the outcome.

“You have to go offshore and you have to make mistakes to learn - we’re talking a bare minimum of ten trips. You’ve got to get burned and get some scar tissue in the offshore market it will better equip you for the future.” Peter Chrisp, Chief Executive, New Zealand Trade & Enterprise

“The best offshore arrangements we see is when all interests are served simultaneously. The thinking used to be that if a business is doing well in the New Zealand market, it will automatically succeed overseas, but increasingly we are seeing Kiwi companies enter offshore markets as a supplier in a chain, rather than putting a product direct to market.” “More often than not, you’ll be working with a range of other suppliers, agents and engineers to create something, which is a game changer in the way offshore business is approached.” However, Gower says that becoming a supplier in a chain and providing the ingredients for someone else’s brand is not necessarily the direction in which New Zealand should be looking to head. “New Zealand is good at making and sending bulk commodities offshore - butter, milk powder, logs, meat, and so on - which end up as ingredients for someone else’s brand. With phil&teds, we want to build the consumer brand by ourselves, and for ourselves - because ultimately, the value chain rewards the brand owner and the product designer way more than the bulk producer.”

What it takes to succeed

At the end of the day, most people understand that New Zealand’s ability to grow depends on our collective ability to export to overseas markets and capitalise on being innovative and adding value. So the question is: what is it really going to take to make Kiwi businesses succeed?

“I would also ban all local government from providing support to exporters. It’s just a waste of money with well-intended but unknowledgeable people leading well-intended but unlikelyto-succeed businesses. We need a more cohesive approach to supporting exporters.

We could start by sorting out our internet issues and promote learning more relevant languages in schools, says Gower. “To build a country whose businesses are going to thrive on the international stage, we must sort out our pathetic broadband and roaming charges, and promote learning languages that are relevant to our export markets.

“We should also be looking to build good notoriety around some of the more exemplar companies and people who personify qualities of innovation and growth, particularly those creating value-added products not just exporting bulk, because that’s where the opportunities and value can be found.”


18

19

Get good local partners and advisors

Schenone and Chrisp advise that securing a good, serious business partner to act as your local counterpoint is also essential to help you navigate the local business environment. “Finding the right local partner should be part of your due diligence before you go offshore,” says Schenone. “I have seen first-hand how relations can sour when information is lost in translation. Once, in Chile, a New Zealand business wanted to get into the market as an incorporated limited liability company. The Chilean advisor said that a single share in the company would be held by the advisors, which the New Zealand team weren’t happy with, as they wanted it to be a wholly-owned subsidiary and thought they were being charged a share as a fee. “It was lost in translation that under Chilean law, there were good reasons to have a local shareholder in the circumstances. Relations would have got off to a more positive start if there was clear communication, without risking the loss of goodwill between the two parties.” Green says that when it comes to securing funding for offshore activities, working with and understanding local partners is imperative: “Exporters need to understand their partners and agents offshore, and the strength of the companies they’re dealing with. If they can research and provide that information to the bank it makes the funding decision easier for us.” But there are two sides to this coin. Gower says that when it comes to offshore partners, it is often better to be direct and avoid third parties if you can: “If you can avoid a distributor do so, because they add less value than you think. If you do have to have a distributor, then make sure you still visit your end customers, and spend time in-market. You can’t contract everything out, and while of course you do need sales agents and logistics partners, no one is better than you in building your brand, product and market presence.” Look for the money: Securing funding

Green says that there are several factors to keep in mind when seeking funding for offshore operations. “In addition to a well-developed business plan, having a growth strategy combined with strong, sustainable cashflows, recognition of the challenges and the capacity to deal with the unexpected, will make funding approval more achievable. At ANZ, we’ll look closely at the capital structure of the business and we’ll ask: does it operate from a strong enough capital base to fund offshore expansion?

“We also want to know if there is an established demand for the product or service in the target market that would lend itself to supporting increased borrowing. If not, and it's more a case of establishing a 'beach-head' in that market, then it becomes more of an equity proposition, and ensuring that key resources are not being diverted away from the core business that supports the current capital structure.” Have a go - but get ready to make mistakes

NZTE sees a lot of younger companies and start-ups going overseas, says Chrisp. “One thing I will mention is that to succeed offshore you have to make mistakes to learn. You’ve got to get burned and get some scar tissue in the offshore market it will better equip you for the future. I’d agree that it is crucial to have people on the ground, whether it’s your own team or people who are effectively an extension of it.” Schenone adds that operating successfully in new markets really comes down to understanding the local regulatory and cultural landscape. “Relationships and interests, such as joint ventures and regulations around overseas investment, are critical.” Chrisp echoes this view, saying that doing business offshore is about ensuring all parties are satisfied with the outcome.

“You have to go offshore and you have to make mistakes to learn - we’re talking a bare minimum of ten trips. You’ve got to get burned and get some scar tissue in the offshore market it will better equip you for the future.” Peter Chrisp, Chief Executive, New Zealand Trade & Enterprise

“The best offshore arrangements we see is when all interests are served simultaneously. The thinking used to be that if a business is doing well in the New Zealand market, it will automatically succeed overseas, but increasingly we are seeing Kiwi companies enter offshore markets as a supplier in a chain, rather than putting a product direct to market.” “More often than not, you’ll be working with a range of other suppliers, agents and engineers to create something, which is a game changer in the way offshore business is approached.” However, Gower says that becoming a supplier in a chain and providing the ingredients for someone else’s brand is not necessarily the direction in which New Zealand should be looking to head. “New Zealand is good at making and sending bulk commodities offshore - butter, milk powder, logs, meat, and so on - which end up as ingredients for someone else’s brand. With phil&teds, we want to build the consumer brand by ourselves, and for ourselves - because ultimately, the value chain rewards the brand owner and the product designer way more than the bulk producer.”

What it takes to succeed

At the end of the day, most people understand that New Zealand’s ability to grow depends on our collective ability to export to overseas markets and capitalise on being innovative and adding value. So the question is: what is it really going to take to make Kiwi businesses succeed?

“I would also ban all local government from providing support to exporters. It’s just a waste of money with well-intended but unknowledgeable people leading well-intended but unlikelyto-succeed businesses. We need a more cohesive approach to supporting exporters.

We could start by sorting out our internet issues and promote learning more relevant languages in schools, says Gower. “To build a country whose businesses are going to thrive on the international stage, we must sort out our pathetic broadband and roaming charges, and promote learning languages that are relevant to our export markets.

“We should also be looking to build good notoriety around some of the more exemplar companies and people who personify qualities of innovation and growth, particularly those creating value-added products not just exporting bulk, because that’s where the opportunities and value can be found.”


20

21

CeNTRe Of attentIOn SKYCITY’s proposals for the NZICC have generated heat - and shed some light - on the group’s long-term commitment to New Zealand

Much has been written and said over recent months about the New Zealand International Convention Centre (NZICC) and the Bill to cement a deal between SKYCITY and the Government, which passed its first reading in Parliament in July.

The key to SKYCITY’S future

With media criticism rampant, MEttle wanted to hear another side to the debate,

Ultimately, the NZICC deal is as much about securing the longevity of SKYCITY’s licence as anything. Morrison explains: “Our current licence is up for renewal in 2021. Under the reapplication rules, we couldn’t apply until two years out from the 2021 renewal date. We calculated a 5% possibility of it not being renewed, with insufficient time for alternative strategies, which was a risk we couldn’t really tolerate as a public company, particularly as we have long-term debt funding.”

so we sat down with SKYCITY Entertainment Group CEO Nigel Morrison to understand what the convention centre will mean for the group, for Auckland’s economy and for NZ Inc. as a whole.

For SKYCITY, developing the conference centre has been nothing less than the key to the future of the wider business, as Auckland represents around 50-60 % of the group’s earnings.

The question Morrison asked of the situation was: with a lack of complete certainty, what do you, your investors and your bankers do? “The licence risk was unacceptable to us. We therefore looked to our alternatives, which included talking to Government about developing a conference centre.”


20

21

CeNTRe Of attentIOn SKYCITY’s proposals for the NZICC have generated heat - and shed some light - on the group’s long-term commitment to New Zealand

Much has been written and said over recent months about the New Zealand International Convention Centre (NZICC) and the Bill to cement a deal between SKYCITY and the Government, which passed its first reading in Parliament in July.

The key to SKYCITY’S future

With media criticism rampant, MEttle wanted to hear another side to the debate,

Ultimately, the NZICC deal is as much about securing the longevity of SKYCITY’s licence as anything. Morrison explains: “Our current licence is up for renewal in 2021. Under the reapplication rules, we couldn’t apply until two years out from the 2021 renewal date. We calculated a 5% possibility of it not being renewed, with insufficient time for alternative strategies, which was a risk we couldn’t really tolerate as a public company, particularly as we have long-term debt funding.”

so we sat down with SKYCITY Entertainment Group CEO Nigel Morrison to understand what the convention centre will mean for the group, for Auckland’s economy and for NZ Inc. as a whole.

For SKYCITY, developing the conference centre has been nothing less than the key to the future of the wider business, as Auckland represents around 50-60 % of the group’s earnings.

The question Morrison asked of the situation was: with a lack of complete certainty, what do you, your investors and your bankers do? “The licence risk was unacceptable to us. We therefore looked to our alternatives, which included talking to Government about developing a conference centre.”


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23

Negotiations not uncommon

THE NZICC NUMBERS GAME:

Morrison says that the Government took the view that it simply didn’t have the money to spend on developing this sort of asset and was very clear that it was looking for creative ways to finance the centre.

↗↗ 1000 jobs to be created through construction

“Here in New Zealand, not only does the government determine the regime in which we operate but they are also our biggest revenue beneficiary through all the forms of taxes we pay, including GST, gaming tax and PAYE through the 3500 people we employ here in Auckland. With that in mind, there is absolutely nothing unusual in negotiating the framework in which you operate as a business, and most astute business people will acknowledge that.

↗↗ 90,000: number of delegates (approximately)

↗↗ 800 additional jobs when the NZICC becomes operational

set to use the space in its early months ↗↗ $90m: estimated amount that NZICC will add to New Zealand’s economy ↗↗ Bill back before Parliament

“It’s certainly a little more confrontational in New Zealand, but as we speak, the New South Wales and the Queensland Government are negotiating in this way, welcoming investment.”

“What it comes down to is that

Demand to fuel local returns

SKYCITY really does want to

Morrison is of the view that convention centres make a lot of sense for the cities where SKYCITY is progressing plans, such as Auckland and Adelaide, even if not always for their operators.

invest in New Zealand.”

“The central problem with convention centres is that as individual assets they don’t necessarily make a return for the developer-operator on the capital invested in them. However, good returns are made by the surrounding hoteliers, restaurants, taxi drivers, airport, airlines - the whole myriad of tourism. And that’s why invariably they’re funded by governments in one form or another, whether they’re subsidised or crosssubsidised.” “The fact is, there is real demand for a convention centre of this size, which will easily be able to host 3500 delegates per convention,” says Morrison. “So far, some 50-odd conventions have expressed interest in coming to the centre. This will bring in around 90,000 delegates from about 2017 onwards.” The government has estimated the NZICC could add around $90m a year to the economy, plus a considerable boost through attracting more high-spending visitors and high-net worth businesses - people who can then be targeted to spend more time in the country as tourists.

Nigel Morrison, CEO, SKYCITY

After the bill passed its first reading in July, Economic Development Minister Steven Joyce underscored that it was about investment, jobs and growth. “Parties in favour of jobs for New Zealanders are supporting the Bill. Parties that don't care about jobs for New Zealanders are opposing it,” he said. This is firmly endorsed by Morrison. “Auckland is fast becoming an international city, presenting a great opportunity to expand our business as it continues to solidify its place as New Zealand’s most successful city. “Aside from the convention centre, people often don’t realise that SKYCITY is the biggest single site employer in Auckland, the biggest CBD taxpayer and the biggest CBD ratepayer, so we contribute to the local economy every day of our operations.”

Plans for expansion

Morrison says that SKYCITY’s market capitalisation recently overtook Echo Entertainment, making the group the second largest casino operator in Australasia, partly through the transactions they have been negotiating with governments over the last three years. And growth will continue to be the focus of SKYCITY’s strategy, in New Zealand and internationally. Offshore, the company is spending about $400m in Adelaide, examining opportunities in Queensland and looking further offshore, with the Philippines a particular area of focus. As Morrison says, SKYCITY is happy to invest $400+ million in Auckland to get the NZICC built, but the deal had to fit

within the group’s multinational objectives. “If New Zealand doesn’t want our investment, we would have to go and invest somewhere else, inevitably offshore. And is that, necessarily, good for the country?” Morrison says that beneath the noise of the NZICC deal, the negotiation has set up SKYCITY as a long-term contributor to New Zealand’s future. “What it comes down to is that SKYCITY really does want to invest in New Zealand. 90% of our shareholders live in New Zealand, representing around 50% of our shareholder value. The NZICC deal gives us certainty for our future and for our investors, which is what I am after.”


22

23

Negotiations not uncommon

THE NZICC NUMBERS GAME:

Morrison says that the Government took the view that it simply didn’t have the money to spend on developing this sort of asset and was very clear that it was looking for creative ways to finance the centre.

↗↗ 1000 jobs to be created through construction

“Here in New Zealand, not only does the government determine the regime in which we operate but they are also our biggest revenue beneficiary through all the forms of taxes we pay, including GST, gaming tax and PAYE through the 3500 people we employ here in Auckland. With that in mind, there is absolutely nothing unusual in negotiating the framework in which you operate as a business, and most astute business people will acknowledge that.

↗↗ 90,000: number of delegates (approximately)

↗↗ 800 additional jobs when the NZICC becomes operational

set to use the space in its early months ↗↗ $90m: estimated amount that NZICC will add to New Zealand’s economy ↗↗ Bill back before Parliament

“It’s certainly a little more confrontational in New Zealand, but as we speak, the New South Wales and the Queensland Government are negotiating in this way, welcoming investment.”

“What it comes down to is that

Demand to fuel local returns

SKYCITY really does want to

Morrison is of the view that convention centres make a lot of sense for the cities where SKYCITY is progressing plans, such as Auckland and Adelaide, even if not always for their operators.

invest in New Zealand.”

“The central problem with convention centres is that as individual assets they don’t necessarily make a return for the developer-operator on the capital invested in them. However, good returns are made by the surrounding hoteliers, restaurants, taxi drivers, airport, airlines - the whole myriad of tourism. And that’s why invariably they’re funded by governments in one form or another, whether they’re subsidised or crosssubsidised.” “The fact is, there is real demand for a convention centre of this size, which will easily be able to host 3500 delegates per convention,” says Morrison. “So far, some 50-odd conventions have expressed interest in coming to the centre. This will bring in around 90,000 delegates from about 2017 onwards.” The government has estimated the NZICC could add around $90m a year to the economy, plus a considerable boost through attracting more high-spending visitors and high-net worth businesses - people who can then be targeted to spend more time in the country as tourists.

Nigel Morrison, CEO, SKYCITY

After the bill passed its first reading in July, Economic Development Minister Steven Joyce underscored that it was about investment, jobs and growth. “Parties in favour of jobs for New Zealanders are supporting the Bill. Parties that don't care about jobs for New Zealanders are opposing it,” he said. This is firmly endorsed by Morrison. “Auckland is fast becoming an international city, presenting a great opportunity to expand our business as it continues to solidify its place as New Zealand’s most successful city. “Aside from the convention centre, people often don’t realise that SKYCITY is the biggest single site employer in Auckland, the biggest CBD taxpayer and the biggest CBD ratepayer, so we contribute to the local economy every day of our operations.”

Plans for expansion

Morrison says that SKYCITY’s market capitalisation recently overtook Echo Entertainment, making the group the second largest casino operator in Australasia, partly through the transactions they have been negotiating with governments over the last three years. And growth will continue to be the focus of SKYCITY’s strategy, in New Zealand and internationally. Offshore, the company is spending about $400m in Adelaide, examining opportunities in Queensland and looking further offshore, with the Philippines a particular area of focus. As Morrison says, SKYCITY is happy to invest $400+ million in Auckland to get the NZICC built, but the deal had to fit

within the group’s multinational objectives. “If New Zealand doesn’t want our investment, we would have to go and invest somewhere else, inevitably offshore. And is that, necessarily, good for the country?” Morrison says that beneath the noise of the NZICC deal, the negotiation has set up SKYCITY as a long-term contributor to New Zealand’s future. “What it comes down to is that SKYCITY really does want to invest in New Zealand. 90% of our shareholders live in New Zealand, representing around 50% of our shareholder value. The NZICC deal gives us certainty for our future and for our investors, which is what I am after.”


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25

The bRIght thIng Diversity of thought on company boards is essential for the growth of NZ Inc.

“Diversity in the workplace should be a mirror image of diversity in the community.” Mariëtte van Ryn, General Manager Regulatory Affairs Corporate Services and General Counsel, Westpac New Zealand

Why bother with diversity?

Mariëtte van Ryn, General Manager, Regulatory Affairs, Corporate Services and General Counsel of Westpac New Zealand, says while there is a fair level of understanding for why diversity should be a priority, there is still more work to be done. She also notes that the ability to understand and articulate the ‘why’ of diversity is critical to anyone in a leadership position: “New Zealand society and business has long understood the business case for diversity from a social responsibility and ethical perspective. The value of diversity in the composition of boards is well recognised. “However, there is probably some distance to travel before leaders generally appreciate the benefits and competitive advantages that diversity can bring. Business leaders need to have a clear understanding of the business case, not just in their own organisations or industry, but also in terms of the overall economy.” What should boardroom diversity look like?

At a time of unprecedented scrutiny and accountability in boardrooms across the world, a number of high profile groups advocating the benefits of diversity at the most senior levels of business have emerged in 2013. From DiverseNZ Inc., a new entity that aims to improve diversity at the highest levels of New Zealand business, to the Women of Influence awards programme, spearheaded by Westpac NZ and Fairfax Media, the push for increased diversity is here to stay. MEttle spoke to some of the personalities driving diversity as a key business issue, and asked them to offer their views on why a variety of perspectives makes a difference, in this special MEttle feature on diversity in the boardroom.

Bruce Hassall, CEO of PricewaterhouseCoopers New Zealand and a founding board member of DiverseNZ Inc., says that the group is taking the definition of diversity much further than the traditional view. “For too long, little more has been done than talk and make a low investment in solving the challenge of how to get more women and people from a variety of ethnic groups into leadership positions. “Really, we haven’t paid enough attention to the real opportunity: the benefits that can be gained from diversity of thought and the perspectives that people from different backgrounds can add to the decision-making process. And this is what we aim to solve through DiverseNZ Inc.” This view is shared by Sue Sheldon, Chair of Chorus and a vocal sponsor of the economic advantages of increased diversity on boards, and another of the founding board members of DiverseNZ Inc.

“There shouldn’t be a one-size-fits-all board structure. It’s about what individual organisations require, so their board should be looking at the business skills and capabilities needed to make it work. It’s also about the attributes of the board members, ensuring there is alignment with your customers, stakeholders, shareholders and employees. Ultimately, a board has to work well as a team.” van Ryn offers a useful analogy for what successfully diverse organisations and boards should resemble: “Diversity in the workplace should be a mirror image of diversity in the community - and this is precisely what Westpac is aiming to achieve.” Selection on capabilities, not connections

Sheldon says that board appointments based upon a ‘who do we know that might come?’ approach inevitably ends in people appointing acquaintances who are just like them, rather than using professional recruitment processes to find the most capable and skilled people. “Take the finance company insolvencies of recent years: board members generally all looked and thought the same, so decisions were rarely questioned. Challenges to the dominant way of thinking have to be broad and deep to be effective.” Hassall equally notes the dangers of too much similarity in the board environment: “Imagine a board meeting where everyone's background, opinions and experiences are similar: directors quickly nod in agreement to proposals tabled, concerns are easily resolved and they're slapping each other on the back for a job well done in no time. “And now imagine a competitor whose leadership team more closely matches the diversity of its customers. How do you think their board meeting and quality of their decisions would be different?” van Ryn reflects that view, saying a key driver of Westpac’s diversity efforts is to ensure their workforce represents their customer base, with a broad range of ages and ethnicities as well as a good balance of gender.


24

25

The bRIght thIng Diversity of thought on company boards is essential for the growth of NZ Inc.

“Diversity in the workplace should be a mirror image of diversity in the community.” Mariëtte van Ryn, General Manager Regulatory Affairs Corporate Services and General Counsel, Westpac New Zealand

Why bother with diversity?

Mariëtte van Ryn, General Manager, Regulatory Affairs, Corporate Services and General Counsel of Westpac New Zealand, says while there is a fair level of understanding for why diversity should be a priority, there is still more work to be done. She also notes that the ability to understand and articulate the ‘why’ of diversity is critical to anyone in a leadership position: “New Zealand society and business has long understood the business case for diversity from a social responsibility and ethical perspective. The value of diversity in the composition of boards is well recognised. “However, there is probably some distance to travel before leaders generally appreciate the benefits and competitive advantages that diversity can bring. Business leaders need to have a clear understanding of the business case, not just in their own organisations or industry, but also in terms of the overall economy.” What should boardroom diversity look like?

At a time of unprecedented scrutiny and accountability in boardrooms across the world, a number of high profile groups advocating the benefits of diversity at the most senior levels of business have emerged in 2013. From DiverseNZ Inc., a new entity that aims to improve diversity at the highest levels of New Zealand business, to the Women of Influence awards programme, spearheaded by Westpac NZ and Fairfax Media, the push for increased diversity is here to stay. MEttle spoke to some of the personalities driving diversity as a key business issue, and asked them to offer their views on why a variety of perspectives makes a difference, in this special MEttle feature on diversity in the boardroom.

Bruce Hassall, CEO of PricewaterhouseCoopers New Zealand and a founding board member of DiverseNZ Inc., says that the group is taking the definition of diversity much further than the traditional view. “For too long, little more has been done than talk and make a low investment in solving the challenge of how to get more women and people from a variety of ethnic groups into leadership positions. “Really, we haven’t paid enough attention to the real opportunity: the benefits that can be gained from diversity of thought and the perspectives that people from different backgrounds can add to the decision-making process. And this is what we aim to solve through DiverseNZ Inc.” This view is shared by Sue Sheldon, Chair of Chorus and a vocal sponsor of the economic advantages of increased diversity on boards, and another of the founding board members of DiverseNZ Inc.

“There shouldn’t be a one-size-fits-all board structure. It’s about what individual organisations require, so their board should be looking at the business skills and capabilities needed to make it work. It’s also about the attributes of the board members, ensuring there is alignment with your customers, stakeholders, shareholders and employees. Ultimately, a board has to work well as a team.” van Ryn offers a useful analogy for what successfully diverse organisations and boards should resemble: “Diversity in the workplace should be a mirror image of diversity in the community - and this is precisely what Westpac is aiming to achieve.” Selection on capabilities, not connections

Sheldon says that board appointments based upon a ‘who do we know that might come?’ approach inevitably ends in people appointing acquaintances who are just like them, rather than using professional recruitment processes to find the most capable and skilled people. “Take the finance company insolvencies of recent years: board members generally all looked and thought the same, so decisions were rarely questioned. Challenges to the dominant way of thinking have to be broad and deep to be effective.” Hassall equally notes the dangers of too much similarity in the board environment: “Imagine a board meeting where everyone's background, opinions and experiences are similar: directors quickly nod in agreement to proposals tabled, concerns are easily resolved and they're slapping each other on the back for a job well done in no time. “And now imagine a competitor whose leadership team more closely matches the diversity of its customers. How do you think their board meeting and quality of their decisions would be different?” van Ryn reflects that view, saying a key driver of Westpac’s diversity efforts is to ensure their workforce represents their customer base, with a broad range of ages and ethnicities as well as a good balance of gender.


26

27

Talent pipeline essential

New Zealand still lacks the critical mass of having diverse boards everywhere they are needed, and our contributors all agree that having strong and supported talent pipelines is the key; it’s not just about having increased numbers of women on boards, it’s about an increase in the range of backgrounds and perspectives that enhance the quality of decisions being made. Sheldon and van Ryn both note that supporting the pipeline of talent within companies is crucial if diversity levels on boards are to be improved. van Ryn says that while New Zealand largely reflects the challenges that exist in other geographies, arguably, New Zealand has had a greater level of success with at least gender balance, with some of the most senior leadership roles in the country having been - and currently are - held by women. “At Westpac, 50% of our executive team positions are occupied by women and have been for a number of years. More broadly however, New Zealand struggles to achieve diversity (for example, ethnic, gender, age, experience) at the senior and board levels. A principal reason for this is an insufficient pipeline at the lower levels of organisations, coupled with a higher attrition rate for some minority groups at the mid management level. This is a key issue worldwide which must be addressed.”

While it can sometimes appear that there is a concerted effort to keep women out of top leadership and board positions, van Ryn says that often the lack of women at the senior levels of business can be due to decisions and factors that are made on a personal level rather than courtesy of institutionalised sexism: “In my experience, whilst women - particularly in law firm partnerships - remain in the minority, this is more as a result of high attrition rates driven by the desire to start families and other reasons, than any specific gender prejudice against women per se. “The answer to the pipeline issue lies largely in the extent to which organisations can ‘hire for fit and train for skills’. Those organisations who can achieve this, combined with a purposeful focus on getting minority groups into the pipeline, will definitely see a better representation of gender and ethnicity at their leadership levels. They will subsequently be at a competitive advantage over their industry peers.” Sheldon says that there are practical tools for CEOs and senior management to improve their board structures and uncover conscious and unconscious biases that might be holding people back from appointing a diverse board member.

“We haven’t paid enough attention to the real opportunity: the benefits that can be gained from diversity of thought and the perspectives that people from different backgrounds can add to the decision-making process.” Bruce Hassall, CEO, PwC New Zealand

“There are tools that help people to recognise their own bias, for example it might be about accent, skin colour, or even a name. Most of the time people don’t even realise they make decisions based on these subtle factors, but once you are aware of it, you can take purposeful steps to remedy the habit. The more unconscious (and conscious) bias we can weed out, the better.” Similarly, van Ryn outlines the various initiatives Westpac NZ has in place to support gender diversity and how they are driving the bank to hit its FY13 target of having 43% of its leadership roles filled by women: “We run a variety of internal programmes aimed at developing women and equipping them for leadership positions in the organisation, including a focus on return from parental leave, Women of Influence, and Westpac Outstanding Women as well as our leadership development programs with external partners like Global Women.” Courage TO challenge

Silvana Schenone, a partner with Minter Ellison Rudd Watts, says companies need to have courage to embrace their diversity and not be ashamed of it. “Be courageous and confident, because it does require courage to take on - or be - a diverse person in the boardroom. Most importantly, don’t give up because it’s too hard. “It is true that sometimes the more diverse viewpoint can be too different and too ‘out there’, so not all ideas should be adopted. However, in order to grow and succeed we need to have those conversations and give new ideas consideration. Ultimately, boards need to have the wins with diversity to be encouraged to do more of it, just like with anything else.” And van Ryn has a word of advice for those individuals seeking success in the corporate world as a woman or member of a minority group: “Be assiduous, never give up!”

10% bottom line gains to be found - minimum

Sheldon and van Ryn both say that all the international evidence around genuine boardroom diversity points in the same direction. van Ryn notes: “It is well documented that organisations that achieve a greater gender balance at all levels in their structures achieve greater innovation and creativity in their decision making and are more productive and profitable.” Sheldon says there has even been research done to put a value figure on the difference diversity of thought can make to profit: “Broader thinking around the board table leads to economic gain, with international research showing that genuine diversity on a company board can add between 10 11% to the bottom line. “If you apply that gain on a country-wide level, diversity on boards represents a tangible opportunity to increase New Zealand’s GDP - and that is why we have to be serious about it. The push for increased diversity on boards doesn’t come from the fact that it is the right thing to do - it’s because it’s the bright thing to do.”

“The push for increased diversity on boards doesn’t come from the fact that it is the right thing to do it’s because it’s the bright thing to do.” Sue Sheldon, Chair, Chorus

Taking steps to improve diversity on boards: ↗↗ Diversity means diverse skills and experience brought to bear to add value to boards ↗↗ Real diversity of thought also means challenging views deeply and broadly

↗↗ Use tools to identify internal barriers to diversity ↗↗ Support the internal talent pipeline ↗↗ Utilise professional recruitment to find the best people for board roles


26

27

Talent pipeline essential

New Zealand still lacks the critical mass of having diverse boards everywhere they are needed, and our contributors all agree that having strong and supported talent pipelines is the key; it’s not just about having increased numbers of women on boards, it’s about an increase in the range of backgrounds and perspectives that enhance the quality of decisions being made. Sheldon and van Ryn both note that supporting the pipeline of talent within companies is crucial if diversity levels on boards are to be improved. van Ryn says that while New Zealand largely reflects the challenges that exist in other geographies, arguably, New Zealand has had a greater level of success with at least gender balance, with some of the most senior leadership roles in the country having been - and currently are - held by women. “At Westpac, 50% of our executive team positions are occupied by women and have been for a number of years. More broadly however, New Zealand struggles to achieve diversity (for example, ethnic, gender, age, experience) at the senior and board levels. A principal reason for this is an insufficient pipeline at the lower levels of organisations, coupled with a higher attrition rate for some minority groups at the mid management level. This is a key issue worldwide which must be addressed.”

While it can sometimes appear that there is a concerted effort to keep women out of top leadership and board positions, van Ryn says that often the lack of women at the senior levels of business can be due to decisions and factors that are made on a personal level rather than courtesy of institutionalised sexism: “In my experience, whilst women - particularly in law firm partnerships - remain in the minority, this is more as a result of high attrition rates driven by the desire to start families and other reasons, than any specific gender prejudice against women per se. “The answer to the pipeline issue lies largely in the extent to which organisations can ‘hire for fit and train for skills’. Those organisations who can achieve this, combined with a purposeful focus on getting minority groups into the pipeline, will definitely see a better representation of gender and ethnicity at their leadership levels. They will subsequently be at a competitive advantage over their industry peers.” Sheldon says that there are practical tools for CEOs and senior management to improve their board structures and uncover conscious and unconscious biases that might be holding people back from appointing a diverse board member.

“We haven’t paid enough attention to the real opportunity: the benefits that can be gained from diversity of thought and the perspectives that people from different backgrounds can add to the decision-making process.” Bruce Hassall, CEO, PwC New Zealand

“There are tools that help people to recognise their own bias, for example it might be about accent, skin colour, or even a name. Most of the time people don’t even realise they make decisions based on these subtle factors, but once you are aware of it, you can take purposeful steps to remedy the habit. The more unconscious (and conscious) bias we can weed out, the better.” Similarly, van Ryn outlines the various initiatives Westpac NZ has in place to support gender diversity and how they are driving the bank to hit its FY13 target of having 43% of its leadership roles filled by women: “We run a variety of internal programmes aimed at developing women and equipping them for leadership positions in the organisation, including a focus on return from parental leave, Women of Influence, and Westpac Outstanding Women as well as our leadership development programs with external partners like Global Women.” Courage TO challenge

Silvana Schenone, a partner with Minter Ellison Rudd Watts, says companies need to have courage to embrace their diversity and not be ashamed of it. “Be courageous and confident, because it does require courage to take on - or be - a diverse person in the boardroom. Most importantly, don’t give up because it’s too hard. “It is true that sometimes the more diverse viewpoint can be too different and too ‘out there’, so not all ideas should be adopted. However, in order to grow and succeed we need to have those conversations and give new ideas consideration. Ultimately, boards need to have the wins with diversity to be encouraged to do more of it, just like with anything else.” And van Ryn has a word of advice for those individuals seeking success in the corporate world as a woman or member of a minority group: “Be assiduous, never give up!”

10% bottom line gains to be found - minimum

Sheldon and van Ryn both say that all the international evidence around genuine boardroom diversity points in the same direction. van Ryn notes: “It is well documented that organisations that achieve a greater gender balance at all levels in their structures achieve greater innovation and creativity in their decision making and are more productive and profitable.” Sheldon says there has even been research done to put a value figure on the difference diversity of thought can make to profit: “Broader thinking around the board table leads to economic gain, with international research showing that genuine diversity on a company board can add between 10 11% to the bottom line. “If you apply that gain on a country-wide level, diversity on boards represents a tangible opportunity to increase New Zealand’s GDP - and that is why we have to be serious about it. The push for increased diversity on boards doesn’t come from the fact that it is the right thing to do - it’s because it’s the bright thing to do.”

“The push for increased diversity on boards doesn’t come from the fact that it is the right thing to do it’s because it’s the bright thing to do.” Sue Sheldon, Chair, Chorus

Taking steps to improve diversity on boards: ↗↗ Diversity means diverse skills and experience brought to bear to add value to boards ↗↗ Real diversity of thought also means challenging views deeply and broadly

↗↗ Use tools to identify internal barriers to diversity ↗↗ Support the internal talent pipeline ↗↗ Utilise professional recruitment to find the best people for board roles


28

29

MIlkIng It Synlait Milk’s Chief Executive, John Penno, downloads after the IPO

Hot on the heels of one of the most successful Initial Public Offerings on the NZX in recent years, John Penno, Managing Director, Chief Executive and co-founder of Rakaia-based dairy industry innovator Synlait Milk Limited, spoke to MEttle about what made the IPO so successful, lessons learned along the way and the next steps for New Zealand’s dairy industry. This interview followed an IPO in July that generated gross proceeds of $114m from new shareholders, with the milk processing company ending its first day of trading at a 24.5% premium to its $2.20 issue price.

“The number one lesson we’ve learned from the IPO is that there is no quick road to success.” John Penno, Chief Executive, Synlait Milk

ME t t l e :

Synlait?

In your view, what made the IPO so successful for

The IPO did all the things an IPO should do. It provided our long-standing shareholders with liquidity on their investments, as well as providing fresh capital for the continued development of the business. It also gives us access to capital should we need it in the future, which will be significant for our business going forward.

John Penno:

Our focus has been on building an internationally-oriented export business, and the IPO was the next step for us. It allows us to present ourselves internationally as a publicly listed company with all the implied transparent checks and balances. This brings comfort to our international customers that we are a company of substance. ME t t l e : What made the IPO so exciting for the business sector here in New Zealand? JP: Part of the interest was driven by the industry we are in: dairy is New Zealand’s most important industry and it’s globally competitive. There is a limited range of options for investors in our industry, so our IPO was well supported by the market.

Synlait is well positioned within the dairy industry and also within the markets we’re selling to, because we do things differently to how they’ve been done in the past. That fresh approach is being received particularly well.


28

29

MIlkIng It Synlait Milk’s Chief Executive, John Penno, downloads after the IPO

Hot on the heels of one of the most successful Initial Public Offerings on the NZX in recent years, John Penno, Managing Director, Chief Executive and co-founder of Rakaia-based dairy industry innovator Synlait Milk Limited, spoke to MEttle about what made the IPO so successful, lessons learned along the way and the next steps for New Zealand’s dairy industry. This interview followed an IPO in July that generated gross proceeds of $114m from new shareholders, with the milk processing company ending its first day of trading at a 24.5% premium to its $2.20 issue price.

“The number one lesson we’ve learned from the IPO is that there is no quick road to success.” John Penno, Chief Executive, Synlait Milk

ME t t l e :

Synlait?

In your view, what made the IPO so successful for

The IPO did all the things an IPO should do. It provided our long-standing shareholders with liquidity on their investments, as well as providing fresh capital for the continued development of the business. It also gives us access to capital should we need it in the future, which will be significant for our business going forward.

John Penno:

Our focus has been on building an internationally-oriented export business, and the IPO was the next step for us. It allows us to present ourselves internationally as a publicly listed company with all the implied transparent checks and balances. This brings comfort to our international customers that we are a company of substance. ME t t l e : What made the IPO so exciting for the business sector here in New Zealand? JP: Part of the interest was driven by the industry we are in: dairy is New Zealand’s most important industry and it’s globally competitive. There is a limited range of options for investors in our industry, so our IPO was well supported by the market.

Synlait is well positioned within the dairy industry and also within the markets we’re selling to, because we do things differently to how they’ve been done in the past. That fresh approach is being received particularly well.


30

ME t t l e : What lessons have you learned from the process that you’d pass onto others? JP: The number one lesson we’ve learned from the process is that there is no quick road to success. For us, the IPO was not something we had been focused on achieving. We’ve worked with international investors for some time now, so we think about life as an international business with the best possible products and customers.

Listing Synlait was the next logical step for us because we wanted to build our capital and shareholder bases, provide equity for the company and lay the platform for further growth. For us, listing was not the end game - it was just a step along the journey. What sticks out in your mind as the one thing you would have done differently? ME t t l e :

We’d ended up with quite a complex business structure, which we have been working to simplify for some years now. The IPO helped us to simplify that structure, so my advice to others would be to have simple structures for your business early on in the game. JP:

If we’d understood the value of simplicity earlier, it would have saved some time and effort through the IPO as we were trying to unwind and streamline our structures at the same time as preparing for the float. I would also advise that as you grow and evolve your business, try to think a long way forward to where you want to end up, rather than setting it up for how it is and what it is right now.

“Our focus has been on building an internationally-oriented export business,

I see businesses who always insist on sitting around the table with their customers in New Zealand, but when they go offshore they expect to somehow do it without leaving the country. Equally, I hear a lot of businesses talking about going offshore to do business, but not putting in enough time to understand their overseas target markets. There is no substitute for building relationships and getting out there - you have to commit and then do it and be sure you are spending the time you need to with your overseas customers. Travel is an absolutely necessary part of being successful overseas. Email and distance communication are so simple, so it can be very easy to get trapped into relying on these tools as your main form of business and relationship-building contact. The trick is not allowing the distance to stop normal interactions from occurring. There’s nothing else to do but get on that plane. ME t t l e : How do you manage the interests of your numerous on - and offshore investors? JP: We have 23 large corporates on our share register, including investors from China, Japan, Holland and Australia, so we have a reasonable mix of overseas investment, with the remainder being Kiwis.

That’s part of the success of the Synlait IPO: New Zealanders now have the opportunity to invest alongside some of these very large overseas players, which we think is a good combination. ME t t l e :

What’s next for Synlait?

For us, the next couple of years is about executing the plan and seeking to meet and exceed the numbers we have forecast.

JP:

and the IPO was the next step for us.”

To do that, we are working to expand our manufacturing site to provide volume capacity and further growth as we continue to add value to our products.

What would be your pointers for other Kiwi businesses looking to do business offshore?

Overall, we did follow advice in terms of how we set up the IPO, and the formula worked. Our advisor set up the prospectus and worked with the investment banks: a tried and true formula that certainly worked for us.

ME t t l e :

In a globalised world, it is becoming much simpler to do business offshore. To be honest, we have never thought about any difference between doing business offshore and onshore, so we have always aligned our planning around being an international company.

JP:


30

ME t t l e : What lessons have you learned from the process that you’d pass onto others? JP: The number one lesson we’ve learned from the process is that there is no quick road to success. For us, the IPO was not something we had been focused on achieving. We’ve worked with international investors for some time now, so we think about life as an international business with the best possible products and customers.

Listing Synlait was the next logical step for us because we wanted to build our capital and shareholder bases, provide equity for the company and lay the platform for further growth. For us, listing was not the end game - it was just a step along the journey. What sticks out in your mind as the one thing you would have done differently? ME t t l e :

We’d ended up with quite a complex business structure, which we have been working to simplify for some years now. The IPO helped us to simplify that structure, so my advice to others would be to have simple structures for your business early on in the game. JP:

If we’d understood the value of simplicity earlier, it would have saved some time and effort through the IPO as we were trying to unwind and streamline our structures at the same time as preparing for the float. I would also advise that as you grow and evolve your business, try to think a long way forward to where you want to end up, rather than setting it up for how it is and what it is right now.

“Our focus has been on building an internationally-oriented export business,

I see businesses who always insist on sitting around the table with their customers in New Zealand, but when they go offshore they expect to somehow do it without leaving the country. Equally, I hear a lot of businesses talking about going offshore to do business, but not putting in enough time to understand their overseas target markets. There is no substitute for building relationships and getting out there - you have to commit and then do it and be sure you are spending the time you need to with your overseas customers. Travel is an absolutely necessary part of being successful overseas. Email and distance communication are so simple, so it can be very easy to get trapped into relying on these tools as your main form of business and relationship-building contact. The trick is not allowing the distance to stop normal interactions from occurring. There’s nothing else to do but get on that plane. ME t t l e : How do you manage the interests of your numerous on - and offshore investors? JP: We have 23 large corporates on our share register, including investors from China, Japan, Holland and Australia, so we have a reasonable mix of overseas investment, with the remainder being Kiwis.

That’s part of the success of the Synlait IPO: New Zealanders now have the opportunity to invest alongside some of these very large overseas players, which we think is a good combination. ME t t l e :

What’s next for Synlait?

For us, the next couple of years is about executing the plan and seeking to meet and exceed the numbers we have forecast.

JP:

and the IPO was the next step for us.”

To do that, we are working to expand our manufacturing site to provide volume capacity and further growth as we continue to add value to our products.

What would be your pointers for other Kiwi businesses looking to do business offshore?

Overall, we did follow advice in terms of how we set up the IPO, and the formula worked. Our advisor set up the prospectus and worked with the investment banks: a tried and true formula that certainly worked for us.

ME t t l e :

In a globalised world, it is becoming much simpler to do business offshore. To be honest, we have never thought about any difference between doing business offshore and onshore, so we have always aligned our planning around being an international company.

JP:


CURATED BY

minterellison.co.nz

Mettle Issue One  

A collection of interviews by business leaders, for business leaders.

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