Forest floor to customer's door
By Josh Martin - 24 October 2012
When Harvest Pro merged with Smith and Davies to become Kiwi Forestry, Hayes Knight was there to support the newly formed company every step of the way...
As featured in Idealog Magazine
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When you've been a stalwart performer in the forestry transport
infrastructure sector for more than 80 years and never had an
independent audit, surely you're doing fine without one? She'll be
right - right? Not necessarily.
Smith and Davies had been in business since 1927, but after
merging with Harvest Pro to create Kiwi Forestry International,
former Smith and Davies manager Graham MacKinnon was glad he
inherited Harvest Pro's auditor and advisor Hayes Knight.
"We had to ensure we were using the best internal systems,"
MacKinnon says. "After merging two private companies into one, with
an international corporate partner, obviously the reporting
requirements changed dramatically."
Hayes Knight Audit Director
Craig Fisher and Kiwi Forestry
Executive Director Andrew Chalmers
The company now offers a completely integrated supply chain
incorporating forest management, harvesting, roading and civil
infrastructure works, log and transportation services, and export
and domestic log trading.
The joint managing director credits Hayes Knight audit director
and his team for helping them achieve a seamless synchronisation of
accounting and reporting systems, which ensures the right decisions
are made about New Zealand's 'wall of wood'.
Forestry is a significant industry in New Zealand, contributing
an annual gross income of around $5 billion, 3 percent of New
Zealand's GDP and directly employing around 20,000 people. Wood
products are New Zealand's third largest export earner behind dairy
and meat. The sector is entering an exciting new phase, as wood
production volumes are expected to increase significantly in the
coming years as forests planted in recent decades reach
"We needed to get it right from the start and we had to make
sure our house was in order," MacKinnon says.
The audit and advisory services offered by the Hayes Knight team
included assisting with the merger of two financial systems,
adopting more rigorous financial reporting disciplines needed for
independent audits and preparing consolidated financial statements
for the much
larger combined group.
Kiwi Forestry also adopted the much more complex International
Financial Reporting Standards, which Fisher knew was key in
ensuring information they were generating for new audiences was
"reliable and credible".
Moving forward as a new company with a solid foundation of
financial and operations information has allowed the company to
"Kiwi Forestry is certainly gaining traction in the market now
that we can offer a fully integrated supply chain. This is where we
can capitalise on huge opportunities overseas." MacKinnon remains
adamant about the
growth trajectory the business is on and despite the global
slowdown, the company has established a strategic relationship with
Japanese industrial heavyweight Itochu Corporation of Japan. Itochu
is recognised as one of Japan's leading trading houses with annual
turnover of US$145 billion.
Joint managing director Zane Cleaver also understood that if
opportunities to step up to the world stage came, their accounting,
governance and managerial systems would need a makeover.
"We needed to secure raw materials and provide excellent
service, but also present ourselves as credible and reliable to
outside partners," Cleaver says. So when Itochu came knocking, the
hard work of Kiwi Forestry and the Hayes Knight team paid off.
Hayes Knight audit director Craig Fisher applauds the company
for succeeding where many other Kiwi companies fall short -
evolving their back room procedures with their revenue gains and
growth opportunities. Fisher is certain that the partnership
between Kiwi Forestry and the Japanese multinational would not have
occurred without the more mature financial systems and
"They had the foresight to recognise they needed to work on the
not-so-exciting financial systems and reporting at the same time as
they were looking strategically ahead to grow the business
following the merger," Fisher says.
"It's sad, but often when Kiwi companies get a
chance to supercharge their growth, they have to madly scramble to
backfill their reporting competency - but not Kiwi Forestry. The
company is a great example of a merger formed from innovative
Executive director and chairman Andrew Chalmers agrees the
ongoing relationship with Hayes Knight is a strong one built on
shared values and trust, which can put the company in good stead no
matter what the challenge. "In our period of growth and
opportunity, Hayes Knight is the best fit for us, because they all
put forward their best efforts every time."
If you have a query regarding independent
audits, or wish to discuss any of the points in this article please
T: 09 367 1654