Riaan Koppeschaar on using new tools for old jobs

NEW TOOLS

FOR OLD JOBS

FD Riaan Koppeschaar explains how Exxaro used drones during Covid-19 lockdown level 5 for remote stockpile assessment in tricky mining locations. This is one example of the company’s broader adoption of technology, with Riaan’s finance team embracing the power of digitalisation. By Kate Thompson Davy

CFO South Africa spoke to Riaan Koppeschaar, finance director of the listed mining powerhouse Exxaro Resources, after their latest results came out mid-2020. It was a stellar year for them, with group revenue increasing by 18 percent to R14.1 billion during the six months ended June 2020 [see highlights box on page 36]. Their results – as well as the fact that they were able to report on time despite the Covid-19 pandemic – tell a story of resilience despite the hardships of 2020. Key to enabling that resilience is digital agility, as their compiling, reporting, and audit – undertaken at the height of the Covid-19 lockdown – had to shift entirely online.

Distributed teamwork

Like so many professionals in 2020, Riaan’s finance teams were working from home. This transition was largely smooth, he says, but it did help that Exxaro leased some 800 routers and made these available to staff to enable them to be reliably and consistently accessible online.

Another “help” was that Riaan’s own leadership style lends itself to remote working. Riaan says he believes firmly in the capability of his team – arguing that “most of them could step in for me as needed”. With this confidence, he didn’t feel the need to micromanage them, or to “clock-watch”. His staff also know their deliverables and are self-motivated, he explains, so between their proactivity and his feedback, they soon settled into the new remote work paradigm. Naturally, not all employees want to work remotely indefinitely, and not everyone’s home circumstances are conducive to it either. There were tech and hardware challenges, some of them – like loadshedding – are beyond their control. A final consideration is the fact that remote work simply isn’t everyone’s style, Riaan says. “When you’re all working from your homes, you might be better able to focus, but there’s less casual communication, less collaboration.” Working from home, he suggests, can mean less of that intangible team connection – like bouncing ideas back and forth, and supporting each other. What some experience as space, others experience as isolation, so there really is no cookie-cutter solution.

In light of this, they scheduled regular meetings and check-ins using video conferencing tools like Microsoft Teams and Skype for Business. As Riaan previously told CFO Magazine sister site MandA.co.za, “The team became creative in finding ways to get tasks completed in different ways and during flexible hours, depending on personal circumstances.”

Preparation is key

Riaan’s team had thankfully embraced the power of technology prior to this disaster. They’d been managing the migration of their data and accounting tools to SAP, Oracle's Hyperion, and cloud options in the preceding four years. This meant that a significant amount of the groundwork had already been covered, which allowed them to pivot quicker in the face of need.

This is part of a broader Exxaro digitisation programme from which they hope to achieve various things. As explained in the results report for the same period: “We continue to roll out the integrated operations centres across all our operations to enable the visualisation of the value chain. The increased visualisation of the overall value chain, as well as data-driven insights gained from our operations, will highlight inefficiencies and will enable improved in-time decision making relating to safety, productivity improvements and cost performance.” “By shifting to the cloud, your tools and information are accessible wherever you are,” explains Riaan, “So we are able to compile the financials while working remotely, and then our auditors – PwC – are able to extract the data they need too.” Regarding the audit specifically, Riaan explains: “As this was interim results, we had an external ‘review’ and not a full audit as you have for full-year reporting. The review of the interim results was performed virtually by our external auditors. There were no contact sessions with the auditors, only virtually meetings that were held using Microsoft Teams.” In order to best manage this, he says, detailed planning and due dates were communicated before the review started. “Our auditors also implemented a secure virtual platform to which all deliverables to the auditors were uploaded. This was visible to the full audit team, as well as the Exxaro reporting team. As mentioned, the auditors also had access to our systems to extract data as required.”

New tools for old jobs

Exxaro is deeply associated with coal, but also has minerals and renewable energy in the mix, including the Amakhala Emoyeni Wind Farm Project and the Tsitsikamma Community Development Wind Farm Project. These had to be added for physical asset valuation, but travel had been restricted under level 5 lockdown. Here again, Exxaro’s proactive approach to digital transformation proved to be a boon, as they

“Mining often takes place in locations that are sometimes dangerous, for various reasons. When we can’t risk sending people in, drones are used.”

had previously brought in the use of drones for remote stockpile assessment in tricky mining locations. Lessons from this came in handy as the country – and the globe – shutdown in early 2020. “Mining often takes place in locations that are sometimes dangerous, for various reasons. When we can’t risk sending people in, drones are used to take photos of – for example – coal stockpiles.” Technology is used to create a “digital twin” of a mine or location, and this data then feeds into planning, forecasting, and other logistical and financial processes, and likewise it can be used to assess turbines and other plants in situ on wind farms.

Another adjustment that needed to be made was moving board meetings and the like to a virtual environment. This necessitated the creation of digital board packs and materials, all delivered in time, as well as tools for efficient online meeting management. This kind of move is always met with a mix of responses that also require stakeholder management: some board members are more “old school” and prefer paper, others have been itching to shift entirely electronic for a while. Either way, with Covid numbers climbing, digital became the only path – for the board, and all office staff.

The future of accounting work

Does the success of this virtual reporting mean they’ll be closing up the office for support staff in future? Not likely. “Although we expect to go back to the office eventually, this experience of working from home has demonstrated that it can be done. I do believe it will translate into much more flexibility for employees and teams in future, and we will continue to use technology and look for ways to be innovative,” he adds. But, as much as he and the team embraced and thrived with remote work, Riaan still believes it is the creative and insightful elements of reporting and accounting that make all the difference.

This is why, Riaan explains, he doesn’t see a future in which people are excluded from the accounting function completely, even as we continue to work more and more digital and technological tools into it. “Tech still can’t write a report,” he explains. “It can extract and crunch the numbers, but at the moment it can’t really provide the level of insight we need. It can’t connect the dots.” Furthermore, it can’t manage the relationships, it doesn’t come to the table with the context and a grasp of stakeholder management that Riaan’s team does – remotely or face-to-face. For that extra magic, Riaan still looks to his team: “What we learnt is that during a crisis, our teams pull together working towards a common goal.” And there’s no software swap for that. l

Financial Highlights

• Interim dividend of R2.3 billion or R6.43 per share down from

R3.09 billion or R8.64 per share • Consolidated group core Ebitda increased by 40 percent, mainly as a result of the higher revenue • Headline earnings were down 24 percent to R3.3 billion from

R4.34 billion, mainly due to the accounting of non-controlling interest of R1.22 billion, which equated to basic headline earnings per share of R13.21 per share from R17.30 per share