William Meek. Photo / Supplied
William Meek believes growing a business while ensuring it doesn't run out of cash is the key to being a good chief financial officer. And it's a strategy that has helped the Mercury CFO to be named as the 2021 Deloitte Top 200 Chief Financial Officer of the Year.
Early in 2021, Mercury teamed up with a Queensland pension fund for a $3 billion takeover of Australasian wind farm developer Tilt Renewables is expected to complete a deal to buy Trustpower's retail business which will make it New Zealand's largest energy retailer.
"I've got a strong growth focus — for me M&A is a big part of what I do, generation development, the deployment of capital for the firm is really important — managing your balance sheet," says Meek.
"What gets companies in trouble is they go bust — they run out of money — and that is something a CFO never wants to happen because the wolves come after you when that happens."
Meek says good investor relations are also vital including fairly representing the situation of the company.
"Sometimes that is quite challenging because I think we love talking about the good stuff and we tend to shy away from the things that might not be going so well. Having a balanced representation with your external stakeholders, not just shareholders — customers are a key stakeholder group, is really important."
Meek said he had a big team of people that supported him and those people were key to the organisation running well.
"A champion team will beat a team of champions. For me that is really important — developing your people, creating new learning experiences, seeing people promoted to different parts of the organisation or leaving the firm to go on to bigger and better things for me I find that really rewarding as a manager."
Meek joined Mercury Energy in 1993 straight out of university.
"I was working in the wholesale team and Mighty River Power acquired Mercury in 1999 and I became CFO in 2008. I've been the CFO for 13 years."
During that time he has seen everything from the 1998 power blackouts in Auckland city to the tragic death of Folole Muliaga in 2007 — a woman dependent on an oxygen machine who died within two hours of her power being cut.
"That was a firestorm in the media with the prime minister accusing the company of killing people — that really kicked off the industry's response to medically dependent customers which has been a great outcome for customers."
Meek said his proudest moments as a CFO included the IPO.
"We floated for $3.5 billion and now we are at $8.4b. That for me, as CFO, is a significant achievement in terms of ultimately creating value. I don't think as an SOE CFO I really understood the difference between being listed in terms of the transparency and expectation that creates versus being government-owned.
"I'm an economist by training, particularly in public economics — I was surprised at the difference that extra scrutiny, the clarity of your vision and purpose, your key milestones and executing well, how that is different in the private sector versus public where I think you have got a slightly more confused agenda."
Meek said he was also hugely proud at Mercury being a big contributor to New Zealand's journey to decarbonise the country: "I think climate change is an emergency and I think the things our sector does and what this company does is hugely powerful and really important."
Meek said his focus in 2022 would be integrating the new businesses Mercury had acquired.
"The Trustpower retail transaction, which hopefully we will conclude in the first quarter of 2022, will welcome 570 people to Mercury. We will take a large well-established power brand and we need to do something with that and our retail and Trustpower business combined."
Top 200 Judge Jonathan Mason said Meek was a great example of a CFO who builds his knowledge of an industry and converts it into great strategic initiatives for his company.
"William is well-known in the market and by directors as a highly competent CFO who thoroughly understands the financial statements of Mercury and how Mercury creates value, backed by deep industry experience in the mechanics of the energy markets.
"In 2021, William supported the CEO in making two acquisitions for Mercury — the New Zealand assets of Tilt Renewables and the retail assets of Trustpower. These were well received by the market and saw Mercury achieve a 32 per cent total shareholder return."
Finalist: Bevan McKenzie — Fletcher Building
McKenzie joined Fletcher Building at the start of 2014 and has spent the last five in the chief financial officer role much of it alongside CEO Ross Taylor.
Unlike other CFOs he didn't come up through a finance route.
"In a company like Fletcher Building — a large portfolio company — a lot of what you are doing is you are shaping strategy. You are shaping portfolio choices, capital allocation — a lot of that is about strategic decision making.
"I came into this role because particularly in company like Fletchers ... there is a lot of choice ... a lot of the role I play alongside Ross Taylor is helping shape those decisions — helping decide where we are going to invest and equally where we are not."
It's been a tough few years for Fletchers undertaking a major reset and then with lockdowns forcing the closure of its building sites.
"We had significant issues with our construction business which created a pretty big hole in the balance sheet. There were very clearly some challenges around getting ourselves fit and reset is how I would describe it. There were some tough times. I wouldn't dwell on those. I think Ross and I were pretty clear about what we needed to do and you get on and do it."
But McKenzie said when the first lockdown came in March 2020 it felt like the rug was pulled out from under their feet. He said Fletchers managed to get a bunch of calls broadly right and kept the business solid financially through that period.
He said the company had had a couple of knocks to its reputation in the past. "But that is not the company that exists today. It's a company that is investing, building, trying to get behind some pretty cool things. It is good to start to see some acknowledgment of that in the public domain."
The big challenge was building on Fletcher's foundation. "We are really focused on what our decisions mean for Fletchers in five or 10 years. Often when companies get into trouble it is when companies are very short-term focused in their decision making. You have reporting cycles that come around quickly and you have to deliver results but you can't be obsessed by that you have got to have the clarity to make those longer-term calls.
"Keeping that perspective and making sure you are investing for the future is critical."
Judge Jonathan Mason said McKenzie had played a central role in the strategic repositioning of Fletcher, including a simplification of the portfolio and focus on the performance and growth of its core businesses in NZ and Australia.
"Bevan is an example of a strategic CFO who not only ably leads the finance function but also assists the CEO in building value for the shareholders," said Mason. "He has endured multiple challenges over the past couple of years, including managing a significant cost reduction programme to moderate the impact of the pandemic on Fletcher's business, lowering balance sheet gearing and leading successful capital raises and debt restructuring.
"These initiatives combined with a strong rebound of the building sector saw Fletcher almost double its share price in 2021, backed by improved margins, operating cash flows and lower leverage. Bevan has been a key part of the team that has significantly improved the outlook for one of New Zealand's largest companies."
Finalist: Graham Leaming — Skellerup Holdings
Graham Leaming can't single out any one moment as his proudest in his time as a chief financial officer at Skellerup. But he is pretty chuffed by the specialist rubber maker's record financial result in 2021 when it made a net profit of $40.2 million.
"That was a really pleasing moment and the fact it was achieved over such a broad base of our businesses was pretty satisfying for everyone."
"Business is about a lot more than financial outcomes but ultimately our obligation is to look after shareholders' money and make a contribution to the communities we are in and the people we employ and we were able to do that pretty well last year."
Leaming said the past two years had not been easy for the company, which has business divisions all over the world, to manage under Covid travel restrictions and supply chain challenges. "It hasn't been easy for our businesses to be able to continue to operate and get the materials we need. Probably the last two years — I'm pretty proud of that."
Leaming has been CFO for the last nine years and joined the company not long after the Canterbury earthquakes. "When I joined we were in the throes of trying to negotiate the settlement with the insurers — that was an initial challenge that I led and we got a good outcome with and then the next big challenge was to find a site to build a new facility on.
"That was a period of time where we were spending a substantial amount of capital, a lot more than the company had spent in the preceding years. It was a project that was ultimately very successful and run very well, helped by the fact we had a very experienced board and also had an experienced project champion in Sir Ron Carter."
Leaming said his other major challenge as CFO had been getting investors and analysts to better understand the business. "There were two perceptions — expectations of Skellerup's performance were closely correlated with milk prices and we spent a lot of time helping people understand the company is a lot broader than the dairy business.
"Our dairy business equates to about 30 per cent of the revenue of the business and that is a lot more closely correlated to milk production not milk price and we have significant markets overseas, so it's not just a New Zealand story."
"Skellerup probably doesn't always get the profile that it deserves. We have certainly had a pretty good couple of years. But it is not as widely understood how broad our business is so it shines a bit of light on Skellerup as well."
Judge Jonathan Mason said Leaming's understanding of different markets allied with his financial and commercial expertise had made him a key contributor to Skellerup's success over recent years.
During his period as Skellerup's CFO the company has posted an annual shareholder return of 26 per cent — among the top 10 per cent returns in the NZ market.
"Graham has run the finance function, given directors and the market confidence in his thorough understanding of financial reports, and used his knowledge of Skellerup's value drivers to optimise shareholder value," he said.
Skellerup had more than 75 per cent of its sales from outside NZ and Leaming's great understanding of international finance and accounting issues was invaluable. "His work, along with the CEO, has also seen Skellerup post record-breaking earnings and operating cash flow in 2021," said Mason.
• The Chief Financial Officer of the Year award is sponsored by Tax Traders.
Dairy export revenue has lifted 16% to a record $27 billion.