Is your Business IPO ready

Is your business IPO ready ? Start here!1. Make sure you have the right people on the bus in the right seats before you start…how do you know ? Read Jim Collins “Good to

Great” Level 5 leaders

2. Engage ALL the stakeholders, ask questions and listen…

3. Understand your numbers in detail (Use a Value Driver Model to help with this), benchmark your performance & measure the theoretical gap. Then get the businesses to take ownership by doing “deep dives” into material gaps, understanding & verifying them, then develop plan to close gap.

4. Set the bar high…make sure your staff are not afraid to fail… your leadership style is critical for this.

5. Understand the risks and develop mitigation strategies

6. Synthesize your story/Strategy and communicate it to ALL. Make sure ALL the stakeholders understand the “size of the prize” or “how close the precipice is”…ensure they all share in the success

7. Instill Key Traits in your team for implementation;

1. Focus on what’s important – KPIs

2. Ensure there is Clear Accountability – Performance linked to incentive schemes and regular performance review

3. Discipline – You must have a Project Management Office (PMO) with leader with access to your ELT

4. Sense of Urgency (not impatience) – Daily, Weekly, Month Reporting

5. Persistence - never loose faith that you will prevail

8. You must have a closed loop “Planning & Performance” management process. This will help systematize the above traits.

9. Use the Pareto 80 / 20 approach to get low hanging fruit first

10. Use “Gilberts 6 windows on Human Performance” as a list of things you need to do to get your people performing

Stage 1

Listen & ask questions

Identify potential improvement

Sell Need for change

Stage 2Deep Dive Reviews

Benchmark &Re-engineerProcesses

Develop Actions

Stage 3Synthesize & Implement

It starts and ends with having a credible story that hangs together?Forget the final presentations which are easy, get these “Building Blocks” right which will give your story credibility.

2

Business Performance

Review

SYNTHESIZE, SIGN OFF. SYNDICATE, IMPLEMENT & MONITOR ACHIEVEMENT OF PLAN

Stewardship Review & Control Processes

Employee Survey

Top 20 Leadership Interviews &

Capability Review

Behavioral change plan developed

External Customer

Survey

KEY GAP “Deep Dives” TO SUPPORT TARGETS WITH ACTIONS

OHS & E Process

Manufacturing Excellence Capability

Work Cap. Mgt

Spend Contro

lS&OP

Management

IT Systems Capability

Internal. Customer Surveys by Dept

Governance Framework,

Policy & Process Standards

Risk Review

Recruitment, Training,

Development & Retention effectiveness

Customer Service

Excellence

Understand Strategy & Review Structure Alignment

Cash & Debt Mgt

Synthesize the critical reasons for change into a Story & Syndicate across/down the organisation to all stakeholders

Product & Market

Development Process

Sales CapabilitySupplier Transactional

Process EfficiencyProcure to Pay

Customer Transactional Process Efficiency

Order to Fulfillment

Employee Transactional Process EfficiencyPayroll & Expense Reimbursement

Planning & Performance Management Process

Margin / Pricing Management Process

Develop Value Driver Model & Theoretical Improvement Potential

3

Stage 1 – Building Blocks & Objectives Understand Strategy & Review Structure Alignment - Understand existing strategy (Shareholder

perceptions / expectations) & review alignment of organisation structure Top Leadership Review - Understand ideas (SWOT) & leadership capability for each of the senior

managers and high potential employee’s – “Are the right people on the bus in the right seats” Internal Customer Surveys - Understand how each department is perceived by its internal

customers for both KRAs and Key Behaviors Business Performance Review - Understand current & forecast business performance. Develop

80/20 broad range of critical KPIs to quickly instill focus, accountability & sense of urgency Risk Review - Understand the key business risks, their potential impact, the mitigation

strategies & probability before & after mitigation External Customer Survey - Understand the customer perceptions of our value proposition &

business performance (& our SWOT) Employee Survey - Understand the Employee perceptions of the business performance (&

SWOT) & their own performance Value driver model - Develop a “Theoretical Potential Improvement “ in the business by

Developing a Value Driver model and benchmark all its components against best practice and measure gap,

Synthesize Story & Syndicate - Ensure everyone in the business can see the prize or precipice so they understand why we have to change

4

Stage 2 – Building Blocks & Objectives Governance Framework, Policy & Process Standards - Ensure a governance framework is in

place that meets best practice & exceeds all listing requirements Behavioral Change Plan - From feedback, develop detailed behavioral change plan needed to

meet all stakeholder objectives (mission, values, targets, etc) Customer Service – Develop detailed plan to ensure the customer service is consistently

competitive, value enhancing & meeting our promise to the customer ? Stewardship Review & Control Processes - Verify Balance sheet values , identify any major

write-offs and/or control weakness with actionable plan Cash Management & Funding Process – Review adequacy of capital structure & funding

facilities. Implement a process ensuring CFO has day to day control of funding and all material cash outflows

CAPEX & Discretionary Spend Process – Put process in place to ensure all CAPEX & Discretionary Spend (Marcom, R&M, etc) is properly justified, approved, prioritised, controlled in timely manner with post implementation review.

Working Capital Management – Put process in place to control & optimize WC % to “Best Practise”

Margin Management Review – Ensure Margin Management Performance & Processes are “Best Practise”. Identify margin improvement potential & process changes.

Planning & Performance Management System - Ensure there is a process in place that drives ongoing systematic improvement, provides clear accountability, focuses the business on things that are important and creates a sense of urgency

5

Stage 2 – Building Blocks & Objectives Supplier – Procure to Pay – Reengineer Process to be “Best Practice” Customer – Order to Fulfillment - Reengineer Process to be “Best Practice” Employee – Payroll & Exp Reimbursement - Reengineer Process to be “Best Practice” Sales Capability - Review Capability, Performance & Processes. Identify improvement opportunities Product & Market Development Process - Do we have an effective process & have we identified &

invested in a sufficient pipeline of growth opportunities to meet our growth targets ? IT / IS Systems Capability - Are these systems appropriate for our strategic & operational needs

and are they efficient and cost effective ? OHS&E - Reengineer Process to be “Best Practice” Manufacturing Capability - Reengineer Process to be “Best Practice” Supply Chain Management - Reengineer Process to be “Best Practice” People - Recruitment, Training, Development & Retention - Understand if performance shortfalls

are due to any systemic factor that can be corrected. Reengineer Process to be “Best Practice” Deep Dives - Turn “Theoretical Gap” into confirmed opportunities with management commitment

and detailed hard action plans

Strategy & Structure

5 Forces Review including trends and scenario’s

SWOT Review

Competitor Review

Vision, Targets

Options & Rational

Key Actions

Key Enablers, Resources & Risks

Sponsor: CEO 1 week timeframe Facilitated by CEO 2 day workshop with Board & Leadership Team

Objective: Understand existing strategy (and shareholder perceptions, expectations) and alignment of structure

6

Top 20 Leadership Review

Get all to read “Good to Great” & prepare comments

Do 360 degree Performance Reviews

List track record and key achievements in last 10 years

One on One Interview with CEO

Competency Gaps & progression potential Finalised

Development Plans completed and implemented started

Sponsor: CEO 6 week timeframe Facilitated by External HR Consultant CEO to identify review participants CEO to prepare plan on what changes will be

made

Objective: Understand ideas (SWOT) & leadership capability for each of the senior managers and high potential employee’s – “Are the right people on the bus in the right seats”

7

Level 5 Related Skills and Attributes

•Self Management•Goal Achievement•Results Orientation•Interpersonal Skills•Diplomacy and Tact•Personal Accountability•Influencing Others

•Developing Others•Flexibility•Versatility•Teamwork•Decision Making•Resiliency•Self Starting

•Accountability for Others•Continuous Learning•Conceptual Thinking•Empathetic Outlook•Leading Others•Customer Focus•Objective Listening

Level 5 Related Values and MotivatorsLearning Leading Results

The value of pursuit of knowledge, continuous improvement of self and the organization.

The value of personal recognition and control over their own destiny and others.

The value of practical achievements, ROI, on time achievement, energy and resources.

Level 5 Related Behavioral StylesConsistency Influence Controlling

Predictable, steady, composed. Steadiness supports the hedgehog concept.

Level 5s are not inherently charismatic. They tend to be compassionate, amiable, objective and logical.

Levels 5s are not domineering or highly driven. They are inclined to be purposeful, moderate and conservative.

Employee Survey

20% of employees interviewed by external facilitator

All employees do questionnaire compiled by

external consultant

Present findings

Redo every year to measure trend

Sponsor: CEO 4 week timeframe Facilitated by External HR Consultant Employee questionnaires… example questions;

Summarise your CV What are your Goals Rate your Job Satisfaction KRAs – describe your performance What are your strengths What do you need from company to perform better What do you like about culture that must be

retained What do we need to improve about the culture How can we improve the performance of the

department How can we improve the business performance

Redo in 12 months times to measure change

Objective: Understand the Employee perceptions of the business performance (& SWOT) & their own performance

8

13

Behaviours & Soft Skills - Our Customers (Presidents) Perceptions – Big Improvement

KEY BEHAVIOURS / SOFT SKILLS Nov-05 Jan-07 % ChangeLeadership 7 8 14%Business Acumen 7 7 0%Communication 8 8 0%Creativeness 7 8 14%Customer Focus 7 8 14%Commitment to Quality 7 8 14%Attention to Detail 4 8 100%Discipline 4 7 75%Problem Solving 5 8 60%Planning & Organising 3 8 167%Action Orientated 3 8 167%Interpersonal Sensitivity 8 7 (13%)Flexibility 4 8 100%Resilience 5 7 40%Energy 4 8 100%

Average 6 8 40%

Rating out of 10

Internal Customer Surveys

KRA’s

Behavior / Soft Skills

Sponsor: CEO 4 week timeframe Facilitated by VP HR For all Functional areas; Finance, IT, HR, Procurement,

CS, Logistics, SCM, Manufacturing, OHS & E, S& M Redo in 12 months to measure change

Objective: Understand how each department is perceived by its internal customers for both KRAs and Key Behaviors

14

KRA’s - Our Customers Perceptions - Still some upside, but improving

Key Result Areas Nov-05 Jan-07 % ChangeGovernance (Risk Management)

Safety & Environmental Management 8 8 0%On Time & Accurate Reporting 2 8 300%Working Capital Management 4 7 75%P&L Management 2 5 150%Capital Management 3 7 133%Budgetting & Forecasting 4 8 100%Stores Management 7 8 14%

Performance ImprovementCustomer Service Leadership 6 7 17%

7 7 0%

3 5 67%Asset Management 6 7 17%Strategic Sourcing 8 8 0%

Growth

4 7 75%CEA Project Leadership 7 7 0%

Average 5 7 34%

Employee Recruitment, Training & Development

Rating out of 10

Manage Customer & Product Profitablity Process (CPP)

Manage Value Improvement / Creation Process

COMMERCIALKey Result Areas Nov-05 Jan-07 % ChangeGovernance (Risk Management)

Safety & Environmental Management 8 8 0%6 6 0%

Tax Management 8 8 0%Transaction Management 6 6 0%Administration Management 5 5 0%

Performance ImprovementCustomer Service Leadership 6 7 17%Tax Planning 6 6 0%Transactional Process Improvement 6 6 0%

Growth

4 7 75%

Average 6 7 7%

Employee Recruitment, Training & Development

Rating out of 10

Cash Management

SHARED SERVICES

9

EXAMPLEEXAMPLE EXAMPLEEXAMPLE

Business Performance Review

OHS&E

Financials

Market

Operations

Sponsor: CFO 2 week timeframe Facilitated by CFO One week preparation inputting 5 year history and

forecasts 1 day workshop presenting to Management Team to

review performance. Agree on initial 80/20 KPIs Design & implement daily, weekly reporting

(see example in Appendix 1)

Objective: Understand current & forecast business performance. Develop initial 80/20 broad range of critical KPIs to quickly instill focus, accountability & sense of urgency

10

Risk Review

Brainstorm Key Risks

Select Top 10 Risks

Agree on Potential impact (develop models)

Potential Mitigation Strategies

Probability before & after

If risk & impact still too high develop more mitigation

11

Sponsor: CFO 1 week timeframe Facilitated by External

consultant 2 day workshop with

Board & Leadership Team

Ensure they are incorporated into ongoing monthly reporting so that mitigation efforts are progressed

Objective: Understand the key business risks, their potential impact, the mitigation strategies & probability before & after mitigation

Sponsor: VP S&M 8 week timeframe Facilitated by Market Research Consultant Customer questionnaires. … example questions;

Rate our performance levels relative to competitors Rate our behaviors relative to competitors What are our biggest threats What are our biggest opportunities How can we help your business

Redo in 12 months times to measure change

Objective: Understand the customer perceptions of our value proposition & business performance (& our SWOT)

12

External Customer Survey

20% of customers interviewed by external facilitator

All customers asked do questionnaire compiled by

external consultant

Present findings

Redo every year to measure trend

Value Driver Model

Develop Draft Conceptual Models

Populate models with data

Benchmark model components to best practice

Identify High Level gaps with targeted performance

Sponsor: CFO 8 week timeframe Facilitated by Consultant Prepare draft conceptual model

(see example in Appendix 2) 1 day initial workshop with commercial team &

management reviewing/ explaining model concept and data requirements

Four week preparation inputting & verifying 5 year history and forecasts

Three weeks for benchmarking components 1 day workshop presenting to Management Team to

review performance and see major targeted performance gaps (see example in Appendix 3)

Objective: Develop a “Theoretical Potential Improvement “ in the business by Developing a Value Driver model and benchmark all its components against best practice and measure gap,

13

Objective: Ensure a governance framework is in place that meets best practice & exceeds all listing requirements

Sponsor: Chairman One week timeframe Facilitated by CFO & Auditor

Listing & Regulatory governance requirements

Examples of “Best Practice” governance policies at other companies

CFO to provide example of DOA for review CFO to provide example of Planning & Control

Framework (See Appendix 4) Two Day workshop attended by

ALL Board members All ELT members Facilitator

Conduct workshops to communicate all policies across all employees run by VP HR

14

Governance Framework

Mission & Values

Delegation of Authorities

Compliance & Audit

Code of Conduct

Planning & Control

Syndicate

Behavioral Change Plan

Review Stage 1 feedback from stakeholders

Identify behavioral barriers to achieve objectives

Identify solutions to remove barriers

Develop action plan to implement

Communicate to stakeholders

Sponsor: CEO 8 week timeframe Appoint external Consultant to Facilitate

1513

Behaviours & Soft Skills - Our Customers (Presidents) Perceptions – Big Improvement

KEY BEHAVIOURS / SOFT SKILLS Nov-05 Jan-07 % ChangeLeadership 7 8 14%Business Acumen 7 7 0%Communication 8 8 0%Creativeness 7 8 14%Customer Focus 7 8 14%Commitment to Quality 7 8 14%Attention to Detail 4 8 100%Discipline 4 7 75%Problem Solving 5 8 60%Planning & Organising 3 8 167%Action Orientated 3 8 167%Interpersonal Sensitivity 8 7 (13%)Flexibility 4 8 100%Resilience 5 7 40%Energy 4 8 100%

Average 6 8 40%

Rating out of 10EXAMPLEEXAMPLE

Objective: From feedback, develop detailed behavioral change plan needed to meet all stakeholder objectives (mission, values, targets, etc)

Recruitment, Training, Develop. & Retention

Effectiveness

Is there clear Directional Info. (PD,KRAs,Targets) ?

Does the person have sufficient Resources or Tools

to do the job ?

Are rewards competitive, performance reviews effective &

sufficient recognition given ?

Are there training and development plans ?

Do the employees have the capacity to do their role ?

Are they motivated… a good fit or enjoyable workplace

environment ?

Sponsor: VP HR 8 week timeframe Appoint External HR Consultant to Facilitate Use Gilberts 6 window model to determine process

issues

Objective: Understand if performance shortfalls are due to any systemic factor that can be corrected

16

Stewardship Review & Control Processes

Prepare templates

Undertake Stewardship Review

Management signoff of findings & action plan

Management process in place to ensure gaps are closed

Implement Actions

Sponsor: CFO 3 week timeframe Facilitated by CFO & Auditor – Template provided

by CFO & signed off by Auditor Three weeks to fill in template by accounting team

with all supporting schedules 2 day review with finance team facilitated by CFO

& Auditor with output being actionable issue list

17

Objective: Verify Balance sheet values , identify any major write-offs and/or control weakness with actionable plan

Cash Management & Funding Process

Appoint Regional Cash Management Bank

Design & Implement online payment process

Review Capital structure, facilities

Develop & implement centralized funding

arrangements, align DOA

Sponsor: CFO 8 week timeframe including implementation Facilitated by Treasurer 2 day workshop designing online payment process

led by Treasurer & Bank Review Capital structure, facilities and WAC Gain approval for changes from CEO & Board

Objective: Review adequacy of capital structure & funding facilities. Implement a process ensuring CFO has day to day control of funding and all material cash outflows

18

CAPEX & Discretionary Spend Control Process

Justification Templates & Models

Approval Review

Ranking Process

Implementation Control

Post Implementation Review

Communicate across organisation

Review DOA spend limits

Sponsor: CFO 8 Week Timeframe Appoint facilitator 2 day workshop to review and test process Process signed off by ELT Communication Workshops across all relevant

people run by CFO

Objective: Put process in place to ensure all CAPEX & Discretionary Spend (Marcom, R&M, etc) is properly justified, approved, prioritised, controlled in timely manner with post implementation review.

19

Working Capital Management

Set targets after understanding Value Proposition WC terms & benchmark its

competitiveness

Minimize payment runs to one per month

Make Sales Dept responsible for collection & set weekly collection

targets

Clear Credit Limit, stop credit and legal proceeding rules enforced by Finance

Implement Weekly Cash & WC Forecast / Control process

Cost VP WC Terms into CPP margin numbers

Monthly Sales & Operation Planning meeting to optimize DOI

Objective: Put process in place to control & optimize WC % to “Best Practise”

Sponsor: CFO 8 week timeframe Appoint facilitator

20

Margin Management Review

Margin Calculation Definition & Costing Methodology

Pricing Process & DOA Compliance

Cost Plus v Market Based

Discount & Rebate Structure

CPP Matrix Analysis (Variation)

Reporting

Sponsor: CFO 8 week timeframe Appoint Consultant to Facilitate (PCM ?) Understand margins

Pricing policies and processes Costing policies and processes

Explain variations Identify total improvement potential for margins Identify gaps to “Best Practice” & agree on process

changes

Objective: Ensure Margin Management Performance & Processes are “Best Practise”. Identify margin improvement potential & process changes.

21

Supplier Procure to Pay

Identify Best Practice

Map “AS IS” process

Document Gaps to “Best Practice”

Understand Risk/cost/resources to close gap

Develop longer term plan for delivering last 20%

Develop 80 / 20 strategy for quick implementation

Objective: Reengineer Process to be “Best Practice”

Sponsor: CFO 8 week timeframe Facilitated by Consultant, FC & VP IS/IT

22

CustomerOrder to Fullfillment








Sponsor: CFO 8 week timeframe Facilitated by Consultant, FC & VP S&M

23

Employee Payroll & Exp. Reimbursement








Sponsor: CFO 8 week timeframe Facilitated by Consultant, FC & VP IS/IT

24

Sales Capability

Value Proposition Competitiveness

Project Pipeline & Market Intelligence Data Systems

4P Effectiveness (Marcom) & Sales Incentives

Customer & Channel Relationship & Selling Skills

CPP Matrix Analysis (Variation) & Reporting

Bid Quality & Turnaround Times

Sponsor: VP Sales & Marketing 8 week Timeframe Appoint Consultant to Facilitate KPIs compared;

Segment analysis – Quantity. margin p/t, MS% Value Proposition – lead time, quality, Terms Spend on Marcom, # of people, people cost

Objective: Review Capability, Performance & Processes. Identify improvement opportunities

25

Product & Market Development Process

New Channels

New Products / Services

Expand Up / Down Value Chain

New Segments

M & A opportunities

Geographic Footprint Expansion / Coverage

Sponsor: VP Sales & Marketing 8 week Timeframe Facilitated by External Consultant With conservative development success, is there

sufficient projects in the long term pipeline to meet growth targets ?

KPIs compared; Time to Market

New Channel New Segment New Product New Geographic Location

% Projects on / ahead of target 3,5 Year Forecast Gap to Target

Objective: Do we have an effective process & Have we identified & invested in a sufficient pipeline of growth opportunities to meet our growth targets ?

26

IS / IT Systems Capability

Measurement KPIs

Competitiveness of IS system

Age of Infrastructure

Outsourcing Options

Skills & Experience

Technology as enabler of growth

Sponsor: CFO 8 week timeframe Appoint external IS/IT Consultant to Facilitate Do we have sufficient measurement systems ie KPIs =

downtime, Support costs, Development Costs, Coms Costs , manual and legacy systems

Along with pareto analysis , reason codes for all problems

Do we know “Best Practice” performance and process ?

Objective:Are these systems appropriate for our needs and are they efficient and cost effective ?

27

Customer Service Excellence

Measurement of KPIs (Lead Time, Stock Outs, $DOI,

DIFOT%, distribution costs)

Benchmark & Pareto Performance Gap

Competitiveness of Value Proposition

Quality Process

On Time Process

Sponsor: VP Operations 8 week timeframe Appoint external Consultant to Facilitate Do we have sufficient measurement systems ie KPIs =

Customer complaints & Returns, DIFOT%, Customer Loyalty - % of their spend, premium over Next Best Alternative



28

Objective: Develop detailed plan to ensure the customer service is consistently competitive, value enhancing & meeting our promise to the customer ?

OHS & E Process

Does the leadership put OHS & E as #1 priority ?

Have we implemented mitigating strategies for all High

Impact risks / activities ?

Do we measure incident pyramid ?

Do 100% of employees conduct and questioned in regular audits

?

Are all issues raised in Audits closed out in a timely matter

Is there regular and sufficient training given ?

Sponsor: VP Operations 8 week timeframe Appoint External OHS & E Consultant to Facilitate If we don’t know what is “Best Practice” then we need

to find out… eg BHPSTEEL in 1995 sort advice from leader DUPONT

Objective: Are the OHS & E processes and performance at “Best Practice” levels

29

X

Manufacturing Excellence Capability

Measurement

Fit for purpose Raw Materials & efficient utilization & batch size

Appropriate Equipment (quality and efficiency)

Repairs & Maintenance

Skills & Experience

Production Planning Process & Product Complexity

Sponsor: VP Operations 8 week timeframe Appoint external manufacturing Consultant to

Facilitate Do we have sufficient measurement systems ie KPIs =

downtime, Yield Loss, Throughput, Material Usage Variance, Variable costs, Fixed costs



Objective: Are the Manufacturing processes and performance at “Best Practice” levels

30

Supply Chain Management

Procurement

Warehousing & Stock Management

Distribution

Forecast Accuracy

Outsourcing

Production Planning Process & Product Complexity

Sponsor: VP Operations 8 week timeframe Appoint external manufacturing Consultant to

Facilitate Do we have sufficient measurement systems ie KPIs =

Procurement cost, Stock Outs, $DOI, Distribution Costs



Monthly Sales and Operations Planning Meeting

Objective: Are these processes and performance at “Best Practice” levels

31

Planning & Performance Process

Strategy, Value Driver Model,

benchmark & 5Year targets

Actions to Close Gap & 1 year budget

Integrate with

individual STI targets

KPI Reporting Daily, Weekly, Monthly

Corrective Actions

One on One Performance

Reviews

Objective: Ensure there is a process in place that drives ongoing systematic improvement, provides clear accountability, focuses the business on things that are important and creates a sense of urgency

Planning & Performance Management Process

Strategy , benchmark & 5 year plans

Action Plans to close gap along with 1 year budget

Integrate with Individual STI targets

Monitor PerformanceDaily, Weekly, Monthly

KPI Reporting

Take Corrective Actions to close gaps

Undertake Individual Performance

Reviews

Sponsor: CFO 8 week timeframe Facilitated by External Consultant See example in Appendix 5

32

Performance Gap “Deep Dives”

Identify items that make up at least 90% of Gap

Undertake “Deep Dives” for these items with “Best”

Understand why, & develop plan for closure of gap

Reviewed & Signed off by CFO

Sponsor: CFO 8 week timeframe Facilitated by See example “Deep Dive” in Appendix 6

Objective: Turn “Theoretical Gap” into confirmed opportunities with management commitment and detailed hard action plans

33

Synthesize Story & Syndicate

Objective: Ensure everyone in the business can see the prize or precipice so they understand why we have to change

34

Sponsor: CEO 1 week timeframe Facilitated by CEO

& ELT

APPENDIX

35

7

Example – Stage BSimple Value Driver Model

Revenue p /t.

Raw M aterial costs per Input Ton ne.

% Yield .Raw M aterial costs p/t

Distribu tion O ut costs p/t.

M aterial Spread p /t

Electrici ty cost per kwh.

# Kwh p/t.Electrici ty cost p/t

G as cost per M BTU.

M BTU p/t.G as cost p /t

Commissions/Royalties.

Packag ing .

Consumab les.

Environmental.

O ther.

O ther Variab le Costs p/t

Var iable M argin p /t

L ine Speed - L ineal M PM .

M ix - M 2 per tonne.

Schedu led & Unschedu led M aint..

Production Capacity

Forecast 5 year CAG R%.% Capacity Utili sation

Capaci ty Constrained

YOY % G rowth.M arket Size

% M arketshare .Demand Constrai ned

Pri me Tonnes Despatched

Var iable Contr ibu tion

# Employees.

Payro l l & Oncosts per emp loyee.Payrol l & Oncosts

M o tor Veh icles.

Coms & Computers .

Travel & Entertainment.

M arketing & Growth costs.

Rep airs & M aint.

Premises cost.

Consu ltan ts.

Other.

F ixed Overhead

Life .Depreciation

Abnorm als.

EBIT

* The value driver modeling was a technique I learnt from Neil Sylvester (now Partner in PIP) when he was engaged by Boral in the 1990s.

36

APPENDIX 1

EXAMPLE

EXAMPLE

DAILY (Email Template)Good News - WinsMTI, LTI, Enviro Incident, Fraud IncidResignations - Key ManagementBad NewsDespatches Unit Volume - Yesterday Unit Volume - MTD % of Mth FcstMargin % - Act & Mth FcstOrders Received Unit Volume - % of Mth Fcst Margin % - Act & Mth FcstCashflow - Act & Mth FcstCash Position

WEEKLY KPIs. (Email Template)Act Cashflow v 1 week FcstFcst Cashflow Next WeekAct Sales Rev v 1 week FcstFcst Sales Rev Next WeekInterco Payables Overdue% Receivables Overdue% Inventory Over 30 daysInventory - % of Mth FcstDIFOT % - Act & Mth Fcst

MONTHLY ELT REVIEW AGENDAMinutes of Last MeetingTraffic Light SummaryOHS&EC.S. - DIFOT % & Lead Time DaysPEOPLE - Behavioural Change AgendaEBIT - Variance Analysis Volume - Pipeline & Market Margin Spread Selling Price Variable Costs Costs & Efficiencies Manufacturing Logistics S & M Admin & OtherREVENUE - Variance AnalysisCASHFLOW - Variance Analysis WC Inventories Receivables & Payables Capex & DisposalsProject Progress UpdateRisks & OpportunitiesAgreed Actions & Checkout

ONE HOUR ALERT (Phone Call)LTIEnvironment IssueFraud

Reporting / KPI pipeline – Daily, Weekly, Monthly

37

APPENDIX 2

EXAMPLE

EXAMPLE

Value Driver Model

EXAMPLES OF EBIT IMPROVEMENT PROCESS

8

Example – Stage D - Benchmark Gap analysisColumn indented Item Names NZ & PI NSW QLD VIC & TAS BEST NZ & PI NSW QLD VIC & TAS NZ & PI NSW QLD VIC & TAS NZ & PI NSW QLD VIC & TASROC% 4% -3% 7% 7% 17% 16% 14% 24%

Assets Employeed 195 125 123 152 4.0 150 101 101 100Fixed Assets 150 100 100 100 150 100 100 100Working Capital 38 20 19 47 0.0 (43) (23) (22) (51) (4) (3) (3) (4)

Working Capital Days 90 60 60 110 (10) (10) (10) (10) (10)Inventory 25.6 9.9 12.8 25.6 0.0 13 0 3 13 12.8 10.7 9.6 12.8

Inventory Days 60 30 40 60 30 30 0 10 30 30 30 30 30Receivables 21.4 16.4 12.8 29.9 0.0 13 10 6 21 8.5 7.1 6.4 8.5

Receivable Days 50 50 40 70 20 30 30 20 50 20 20 20 20Payables 8.5 6.6 6.4 8.5 0.0 (17) (13) (13) (17) 25.6 21.4 19.2 25.6

Payable Days 20 20 20 20 60 (40) (40) (40) (40) 60 60 60 60Other 7.0 5.0 4.0 5.0 4.0 (3) (1) 0 (1) 4 4 4 4

EBIT 8.3 (3.5) 9.0 10.9 (1.0) (17.5) (20.2) (6.5) (12.9) 25.4 16.2 14.6 23.8Variable Contribution 33.9 22.6 29.6 39.9 0.0 43.4 36.2 32.6 43.4

Variable Margin p/t 282 226 328 333 362 (79.6) (136.0) (33.4) (29.1) (9.9) (14.1) (3.9) (3.5) 362 362 362 362Material Spread p/t 340 292 375 382 395 (55.1) (103.7) (20.1) (13.8) (7.0) (10.9) (2.7) (1.7) 395 395 395 395

Revenue p/t 1,300 1,200 1,300 1,300 1,300 0.0 (100.0) 0.0 0.0 0.0 (10.0) 0.0 0.0 1,300 1,300 1,300 1,300Raw Material costs p/t 960 908 925 918 905 55.1 3.7 20.1 13.8 6.6 0.4 1.8 1.7 905 905 905 905

Raw Material costs per Input Tonne 950 900 920 900 900 50 0 20 0 6.0 0.0 1.8 0.0 900 900 900 900% Yield 99.0% 99.1% 99.5% 98.0% 99.5% -0.5% -0.4% 0.0% -1.5% 0.6 0.4 0.0 1.7 99.5% 99.5% 99.5% 99.5%

Distribution Out costs p/t 18.0 20.0 25.0 15.0 15.0 3 5 10 0 0.4 0.5 0.9 0.0 15.0 15.0 15.0 15.0Other Variable Costs p/t 58.3 66.0 47.0 49.0 33.7 24.6 32.3 13.3 15.3 2.9 3.2 1.2 1.8 33.7 33.7 33.7 33.7

Electricity cost p/t 8.3 4.0 4.0 4.5 3.2 5.1 0.8 0.8 1.3 0.6 0.1 0.1 0.2 3.2 3.2 3.2 3.2Electricity cost per kwh 0.15 0.10 0.08 0.10 0.08 0.07 0.02 0.00 0.02 0.08 0.08 0.08 0.08# Kwh p/t 55.0 40.0 50.0 45.0 40.0 15 0 10 5 40.0 40.0 40.0 40.0

Gas cost p/t 20.0 21.0 9.0 12.5 7.5 12.5 13.5 1.5 5.0 1.5 1.4 0.1 0.6 7.5 7.5 7.5 7.5Gas cost per MBTU 4.0 3.0 3.0 2.5 2.5 1.5 0.5 0.5 0.0 2.5 2.5 2.5 2.5MBTU p/t 5.0 7.0 3.0 5.0 3.0 2.0 4.0 0.0 2.0 3.0 3.0 3.0 3.0

Commissions/Royalties 4.0 6.0 7.0 5.0 4.0 0.0 2.0 3.0 1.0 0.0 0.2 0.3 0.1 4.0 4.0 4.0 4.0Packaging 8.0 15.0 12.0 10.0 8.0 0.0 7.0 4.0 2.0 0.0 0.7 0.4 0.2 8.0 8.0 8.0 8.0Consumables 12.0 10.0 5.0 7.0 5.0 7.0 5.0 0.0 2.0 0.8 0.5 0.0 0.2 5.0 5.0 5.0 5.0Environmental 3.0 5.0 5.0 5.0 3.0 0.0 2.0 2.0 2.0 0.0 0.2 0.2 0.2 3.0 3.0 3.0 3.0Other 3.0 5.0 5.0 5.0 3.0 0.0 2.0 2.0 2.0 0.0 0.2 0.2 0.2 3.0 3.0 3.0 3.0

Prime Tonnes Despatched 120,000 100,000 90,000 120,000 120,000 100,000 90,000 120,000Production Capacity 200,000 125,000 125,000 125,000 230,000 145,833 152,778 138,889

Line Speed - Lineal MPM 100 90 90 90 100 0 (10) (10) (10) 100 100 100 100Mix - M2 per tonne 300 400 500 500 300 0 100 200 200 300 300 300 300Scheduled & Unscheduled Maint. 20% 10% 15% 5% 5% 15% 5% 10% 0% 5% 5% 5% 5%

% Capacity Utilisation 60% 80% 72% 96% 52% 69% 59% 86%Forecast 5 year CAGR% 3% 3% 5% 10% 3% 3% 5% 10%

Fixed Overhead 17.6 20.1 15.6 24.0 6.6 5.1 2.6 9.4 11.0 15.0 13.0 14.6Payroll & Oncosts 7.5 10.0 10.0 14.4 1.5 0.0 2.0 4.8 6.0 10.0 8.0 9.6

# Employees 500 400 500 600 400 100 0 100 200 400 400 400 400Payroll & Oncosts per employee 15,000 25,000 20,000 24,000 15,000 25,000 20,000 24,000 15,000 25,000 20,000 24,000

Motor Vehicles 1.0 1.2 0.8 0.7 0.7 0.3 0.5 0.1 0.0 0.7 0.7 0.7 0.7Coms & Computers 0.6 0.5 0.8 1.0 0.5 0.1 0.0 0.3 0.5 0.5 0.5 0.5 0.5Travel & Entertainment 1.0 0.5 0.7 1.0 0.5 0.5 0.0 0.2 0.5 0.5 0.5 0.5 0.5Marketing & Growth costs 4.0 3.0 2.0 3.0 2.0 2.0 1.0 0.0 1.0 2.0 2.0 2.0 2.0Repairs & Maint 1.5 1.3 0.5 2.0 0.5 1.0 0.8 0.0 1.5 0.5 0.5 0.5 0.5Premises cost 0.5 0.6 0.3 0.4 0.3 0.2 0.3 0.0 0.1 0.3 0.3 0.3 0.3Consultants 1.0 2.0 0.3 1.0 0.3 0.7 1.7 0.0 0.7 0.3 0.3 0.3 0.3Other 0.5 1.0 0.2 0.5 0.2 0.3 0.8 0.0 0.3 0.2 0.2 0.2 0.2

Depreciation 6.0 5.0 4.0 4.0 0.0 1.0 0.0 0.0 6.0 4.0 4.0 4.0Life 25.0 20.0 25.0 25.0 25.0 0.0 (5.0) 0.0 0.0 25 25 25 25

Abnormals 2.0 1.0 1.0 1.0 1.0 1.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0

2009 PotentialGAP TO BEST - KPI2009 Financials GAP TO BEST - $m

38

APPENDIX 3

EXAMPLE

EXAMPLE

MISSION VALUES COC & DOA VISION TARGETS

REPORTING• Hourly Alert • Daily – KPIs• Weekly – Cash• Monthly – BPR• Qtrly – Forecasts• Annual – Budget

• A• B• C• D

• A• B• C• D

SITE VISITS• CEO Business Reviews• CEO / CFO Major Capital Project Reviews• CFO Stewardship & Commercial Reviews• ELT Monthly Reviews• Board Meetings• External & Internal Audits

ELT GOVERNANCE FRAMEWORK

OTHER• “Whistle Blower” System• OHS & E Alert System• Weekly Telecons – Cash• COC & DOA Training Programs• Values / Leadership Training Program

OCT• Forecast

Review

JUL• LY Review

FEB• Capex & WC

AUG• Behavioral

Change

MAR• Deep Dive

Signoff

SEP• OHS&E

APR• Budget &

Risk Review

JAN• Strategy &

Growth

MAY• Stewardship &

Internal Audit

NOV• Benchmark

JUN• People &

KRAs

DEC• CPP

ELT MONTHLY ONE DAY REVIEWS SPECIAL AGENDA (DEEP DIVES)

APPENDIX 4

39

EXAMPLE

EXAMPLE

40

APPENDIX 5KPI: Owner: Target % Change:

Key Objective: EBIT Sensitivity 1% :Performance: Target EBIT Impact:

Forecast % Change:Forecast EBIT Impact:

10

Increase Uptime from average of 70% in 2006 to 83% in 2007YTD Uptime is 2% below BUD (10% higher than LY). Expect to finish the year 1% below BUD (12% higher than LY). YTD improvement is due to Uptime Project. Month – worse than forecast: Due to Bottom Dross removal.

UPTIME % - MCL VP Manufacturing

YTD Downtime % - Pareto AnalysisYTD Downtime % - Pareto Analysis

STATUS COMMENTSSTATUSIMPACTWHOTOP 3 ACTIONS / PROJECTS TO DELIVER THIS QTR FORECASTREF.

UML3

UML2

UML1

On-trackMCL MgrBottom Dross Issue: Manage bottom dross growth until main pot replacement, by consistency of schedule cleaning and implement of dross grab to removed mushy dross.

On-trackMCL MgrProcedure: Implement Reliability Workshop action plans

DoneMCL MgrEquipment: Replace MCL Welder control to give consistency of welding quality

On-trackMaint MgrJul’07Review potential local vendor for pot replacement.UML7

UML8

STATUS COMMENTSSTATUSIMPACTWHOWHENTOP 5 ACTIONS / PROJECTS TO IMPACT BEYOND THIS QTRREF.

On-trackMaint MgrOct’07Equipment : Placing PO and commitment for main pot replacement project.UML6

InitiatedMCL Manager

Dec ’07Standardization process map resin areaUML5

UML4 InitiatedVP MfgOct ‘07Bottom dross issue: Ensure new pot design is capable of minimizing dross build-up

10.6

3.7 3.4 1.5 1.3 0.5 0.2 - 0.2-5.0

10.015.020.025.0

%

10.6

3.7 3.4 1.5 1.3 0.5 0.2 - 0.2-5.0

10.015.020.025.0

%

Trend – MonthTrend – MonthPerformancePerformance

83

88

82

7269

7570

81

88

82 79

50556065707580859095

100

Month YTD Full Year

%Last Year Bud Fcst Actual

83

88

82

7269

7570

81

88

82 79

50556065707580859095

100

Month YTD Full Year

%Last Year Bud Fcst Actual

50556065707580859095100

J A S O N D J F M A M J

%Last year Budget

Forecast Actual

13%US$0.3m *US$3.9m12%US$3.6m

EXAMPLE

EXAMPLE

MONTHLY KPI REPORT – Situation, Reason, Action

EXAMPLES OF EBIT IMPROVEMENT PROCESS

9

Example - E - Deep Dive Summary on Material Benchmark Gap for Packaging cost per tonne

SBU - NSW

• Implementation Leader – Joe Brown (NSW Packaging Mgr)

• ARITHMETIC BENCHMARK GAP TO BE ANALYSED = A$700k

Cost per Tonne = A$15 , Best A$8 ( SBU NZ )

Annual Tonnes despatched by Company NSW = 100,000 , therefore A$7 p/t gap = A$700,000 p.a.

Key reasons

Different material type of packaging – impact A$200k p.a.

Outsourcing used by NSW but in-house by NZ – impact A$400k p.a.

Different labor rates between countries that two businesses operate – impact A$100k. The labor rate difference

cannot be closed as it reflects different market rates between the two countries..but will attempt to recover it in the

selling price to the customer (see spread analysis)

Risks – Ensure NSW customers will accept NZ packaging

Therefore Agreed Gap for targeted closure – A$600k

Target implementation completion – Week 45

41

APPENDIX 6

EXAMPLE

EXAMPLE

Documents

Is your Business IPO ready