What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
Controlling manufacturing costs has been key. Adopting lean manufacturing processes with a focus on continuous improvement can render beneficial reductions in input costs. However, all of that work can be undone with a ten-PIP movement in exchange rates or an adverse movement in commodity prices. After lots and lots of modelling work and also working closely with HSBC, we have the most robust hedging we have had in place since we started exporting.
What is your position on whether the UK should leave or remain within the EU, and what impact will the outcome of the referendum have on your business?
I feel we should remain in Europe. The eurozone represents more than 45% of our exports so it is a significant proportion of our business. The risk of added complexity of moving goods across Europe, and the introduction of associated duties/tariffs, means opting out could have big implications for exporters.
Which capex projects will you be focusing on in 2016, and how will these be financed?
Primarily, the move to our new factory which we hope to take place in the first quarter is the priority. This will enable us to consolidate all of our operations under one roof right here in London. Bringing our operations together will enable us to have greater focus on efficiency gains, removing inefficient processes from manufacture. Secondly, we are in the latter stages of developing a new bicycle which is going to dramatically change how people travel across cities. All capex projects are currently funded through working capital, giving us greater control and nimbleness as the needs of the business change.
What business-friendly policies do you want the next government to undertake to improve the environment for UK corporates?
Not so much directed at the UK government but more of a global trade “wish list”. We would like to see the TTIP North American/EU agreement sped up from the current likely implementation in 2020. The aim of the agreement is to make green products, including bicycles, duty-free between EU and North American countries. Additionally, any improvements for simplifying exports and reductions in tariffs would be gratefully received by exporters such as ourselves.
What is the biggest project the finance function will undertake to support your business’s strategic aims in the year ahead?
As we become more global the business model is changing. We now have subsidiaries in the UK, Netherlands, US, Hong Kong and China. Having knowledge of local policies/taxes/customs/employment laws is imperative as is having the right local partner. The complexities involved in supporting these operations has transformed the finance function to much more of a business consultancy function.
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Jeremy Fletcher, interim finance director and change-management consultant, currently at Global Shared Services, gives his views on the year ahead