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Town meeting discussion about transformation and the impact and role of the finance function

Town meeting discussion about transformation and the impact and role of the finance function. Pieter Verboom CFO Schiphol Group. Hennie Wesseling Director ICT Mail TNT. Frank van den Broek Director European Patent Office. Jouke van der Veer CFO Albron. Jan van den Belt CFO Océ.

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Town meeting discussion about transformation and the impact and role of the finance function

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  1. Town meeting discussion about transformation and the impact and role of the finance function

  2. Pieter Verboom • CFO Schiphol Group

  3. Hennie Wesseling • Director ICT Mail TNT

  4. Frank van den Broek • Director European Patent Office

  5. Jouke van der Veer • CFO Albron

  6. Jan van den Belt • CFO Océ

  7. Jaarcongres Finance Transformation Jan van den Belt, CFO Océ N.V. 12 december 2007

  8. Americas (43%) Europe (51%) ROW (6%) Océ Group Profile • Founded in 1877 • Leading supplier of printing systems and document-related business services. Only European player in a global industry • Market leader in selected market segments • Direct sales and service organisations in 30 countries • 24,000 employees worldwide • 17,500 in direct sales and service • 1,800 in Research and Development • Active in over 90 countries, with revenues of € 3.1 billion Revenues by region

  9. Océ Group Pofile: Strategic Business Units % of Market Market Financial revenues position CAGR performance • DDS (=< A3 size) • Corporate Printing 36% 2-5 5% • Commercial Printing 21% 4 11% • Business Services 14% 5 9% • WFPS (> A3 size) • TDS 18% 1-2 0% • DGS 3% 4 6% • Imaging Supplies 8% n/a n/a -/- +/+

  10. Major Changes in Industry during the past 10 years • Transformation from analogue to digital • Rapid growth in Colour • Commoditization of Black & White • Increased importance of Software, which has become a distinguishing feature • Rapid ascent of Japanese competitors • Consolidation in the industry • Decline and rise of the Euro • Trend to outsourcing of document management

  11. Océ’s Financial Performance 1996-2006 96 97 98 99 00 01 02 03 04 05 06 € 1 = USD 1.31 1.14 1.11 1.08 0.93 0.89 0.93 1.11 1.23 1.25 1.25 EBIT ex lease (€ million) 88 126 155 148 167 100 110 21 11 72 75 RoCE % 9.1 10.1 11.0 10.3 10.6 8.4 9.3 6.8 7.7 8.9 5.6 Autonomous growth revenues 15 6 7 1 4 -1 -3 -5 0 0 0 GM as % of revenues (ex lease) 41 41 42 42 41 40 41 41 41 41 40 OPEX as % of revenues 35 35 35 35 34 35 36 39 39 37 37 Financial performance Océ requires structural improvement

  12. Strategic Objectives 2007 - 2010 • Strive for leading and sustainable positions in strategic market segments • Financial objectives 2007-2010 • RoCE: > 13% by 2010 • Average organic growth: 5% per annum • Maintain relative gross margins • Investment grade rating • Q3 2007 ytd • RoCE ~ 7% • Organic revenue growth 3.7% • Stable relative GM √ • Net debt/EBITDA 2.1 • Colour % revenues 20% • Not yet there but clearly improving in highly • competitive and adverse currency environment

  13. Business Transformation in Océ Distribution Power In order to achieve its strategic objectives Océ is in the midst of executing a strategic re-orientation to optimize its performance in these 3 strategically critical areas Competitive Products & Services Operational Excellence

  14. Business Transformation in Océ • Acquisition (2005) Imagistics USA: • full line portfolio (OEM office) and new distribution/service model • New Business activities & distribution channels through acquisition: • Outsourcing Document Management (Bus. Services in ’98) • Display Graphics (DGS in 2003) • Distribution partnerships • From only own R&D to alliances • From own products only to full line portfolio based on: • Smart mix own (2/3) and OEM (1/3) products • New high growth activities: Business Services & DGS • From in-house leasing to (off B/S) lease partners • From P&L focus to balanced view on P&L, B/S, CF • From own manufacturing to outsourcing Far East • Major restructuring (4x) & process harmonization Distribution Power Competitive Products & Services Operational Excellence

  15. Role Finance in Business Transformation (1) Distribution Power Pro-active full participant in all business (transformation) processes, sometimes in the lead Finance has independent position, and should positively challenge all change processes Lead the external communication with analysts and investors Competitive Products & Services Operational Excellence

  16. Role Finance in Business Transformation (2) Distribution Power • M&A: valuation, negotiation, integration, evaluation • Set up partnerships in distribution • Partnerships supply products (1/3 sales OEM products) • Outsourcing/transfer manufacturing to Far East (2008: 80% Venlo manufacturing value) • Actively support creation of natural hedges versus USD, GBP and Yen • Outsourcing lease portfolio (€ 800 mln) without disturbing business or business processes • Active role in rationalizing cost structure (~4000 FTE’s) and optimizing working capital • Active role in business process harmonization project • Ensure processes, systems (IT and information) and controls framework Competitive Products & Services Operational Excellence

  17. Even though Senior Finance staff should be high level specialists, the role of the CFO should not necessarily be filled by a Finance expert. It is even beneficial that the CFO will, more often than is the case now, be a non-finance professional with broad business experience. This will prevent a withdrawal of the Finance function into the “Finance Box” and ensure full pro-active participation of Finance in tactical and strategic business decision processes. Role Finance in Business Transformation (3) • Finance is, due to independent position and specific expertise in Treasury, Tax, Audit, IR and reporting and controls, capable to perform a key role in business transformation (support and lead) • Due to recent emphasis on Corporate Governance (SOx, Tabaksblat), the role of Finance in the past 5 years tended to revert back to controls and reporting • Finance should operate outside its “comfort zone” in business transformation processes, probably as the close advisor to the CEO

  18. Een non financial moet de positie van CFO bekleden.

  19. De CFO van de toekomst moet minimaal twee andere disciplines binnen het bedrijf bekleden, zodat de CFO breed georiënteerd is

  20. Een decentraal opgezette financiële functie heeft zijn langste tijd gehad

  21. Het is niet verstandig om de CIO aan de CFO te laten rapporteren

  22. Business Transformatie is niet functie afhankelijk, maar kan het beste worden uitgevoerd door talenten die in het bedrijf aanwezig zijn.

  23. Eisen vanuit de statutaire verantwoordelijkheid belemmeren de leidende business transformatie rol van de CFO.

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