Financial Modelling

CEO’s briefing to staff following release of the annual report year ended 31 December 2022

[extracts]

60 YEARS OF EXCELLENCE IN THE GREAT OUTDOORS

So much is happening in our company and the industry at present, that we need to think about options and consider current events and global issues. There are broader economic, social and political consequences from this decision-making process. In addition, there are risks for us, and we need to think about relevant risk management strategies. I want to encourage you to show innovation and creativity, and think into the future, asking such questions as, where are we, and where do we want to get to? You all know the drivers of the business — work from there.

• During the past year we’ve seen competition is getting stronger, not only from existing competitors but also from the growing number of small, niche retailers. Our customers are able to purchase items from anywhere in the world online. We’ve seen increasing price pressure and the need to be innovative and timely in our decision-making to satisfy our customer base.

• We’re shaping the culture of the organisation. We need to make sure everyone has a value-added and sustainable focus. I’m going to address each team individually. Firstly, the finance team …

I need the finance team to provide input in all areas. Not just finance, but also marketing, management, strategy and information technology. You occupy a pivotal place in the company with an important role in strengthening the information flow. It’s essential your team understands the complexities of all areas of the business so you can provide relevant and useful information. You need to help the other managers appreciate the financial dynamics that underpin their actions if we’re to survive this current economic crisis.

• At any point in time we need to be able to ‘tell the story of the figures’. We need to provide information and knowledge in a form that is truly meeting the needs of different audiences, both within and outside the company, and adding value to the operation of all our business functions. That includes helping the Board to understand any financial and non-financial information critical to the future success of the business.

• As you’re aware the December 2022 results were disappointing. Our revenue, margins and profit all dropped. This was due in part to our loss of focus – unhappy customers, stocking products that are not core to our business, poor online sales and an over-reliance on discounting to sell inventory. In addition, we have not really taken our commitment to sustainability seriously. We’re not following through on the promises that we’ve made to our stakeholders. We made some commitments to change in our 2023 budget. However, we realise now that those changes were not enough. So we need to start planning significant changes for 2024.

• I’m relying on you, the finance team, to play a key role in this turnaround.