Transformer

Neil Chatfield FCPA is a modest man. The CFO of the year (as judged by CFO magazine) considers the honour one 'that is as much for Toll as it is for myself'. The judging panel singled Chatfield out as a 'CFO at the top of his game'. That may be so, but he's much more comfortable talking about the company, which he has been with for 10 eventful years, than himself.

Although he appears relaxed, the last two years have been anything but for Chatfield. There have been two public company acquisitions, the hostile takeover of the Patrick Corporation and the acquisition of Singapore logistics company Semblog. There has also been a company demerger and restructuring into two separate publicly listed entities: the logistics company Toll and infrastructure company Asicano. In that period the company's market capitilisation has grown more than threefold, from $4.5 billion to $15.2 billion (including Asicano).

He singles out the $1.1 billion purchase of a majority stake in Semblog Logistics as one 'that will give us a vital toe hold in Asia. It was a lot of money but it's been fairly low-risk'. (The deal was funded primarily by $900 million worth of debt.)

The Singapore-based company is one of the leading integrated logistics companies in the Asia-Pacific region. 'It's a very established business, with networks in China and India,' Chatfield explains. It's a fantastic beachhead for us in Asia. We really want to build our capability in Asia. It's not only China and India that are important, Thailand is becoming very important because of the auto sector. And then there's the economic growth in the region itself, with trade flows in and out that are likely to grow. All multinationals want to establish themselves in this region.'

The deal has given the company a real presence in the region. 'It's really important to be on the ground in a country you want to do business with,' Chatfield says. 'Five to six years ago we were successful in a tender against a global logistics player for an automotive contract into Australia. We won only because our competitor didn't have a presence in Australia.'

As well as being heavily involved in strategy setting and working with key parts of the business, Chatfield spends a significant amount of time on investor relations.

'Toll used to be considered a trucking company. And the market considers [that] these are unsophisticated businesses and these kinds of companies trade on low multiples as a result,' he explains.

'Whereas all our major customers don't talk about trucking, they talk about supply chains. Certainly, if Toll can be recognised as no longer merely a transport company but a multifaceted logistics business, it's a reflection of the industry as a whole,' he says.

'The logistics industry is in [a] state of flux. Everyone is attempting to build scale. Logistics has a huge fixed cost base, which we try to scale down.'

Chatfield says customers want a service that takes product from factory floor to the retail outlet, and the key to being able to offer this is the appropriate information technology.

'There's continuing need to invest in systems,' he says. 'After the 2000-2001 tech boom, what we were left with was better visibility and access to data. Customers could track and trace their shipments more easily, and it was cheaper for customers to access information.'

He sees the role of IT as having an integral relationship with finance, and has recently promoted a member of the finance team to the position of chief information officer.

'While I think people from IT can take on the CIO role, it's important to have the whole-of-business experience that comes from working in the finance department.'

Although he travels 'a lot' to stay close to the businesses, Chatfield says his management style is fairly hands off. 'While I have a strong relationship with each of the business leaders,' he says, 'from our point of view, with a decentralised organisation you tend to get better innovation and better responsibility for the business from the top to the bottom.'

He acknowledges that 'good people are hard to come by in any environment' but says Toll is not really suffering from the skills shortage, particularly the lack of finance professionals.

'There's some appeal in working for our organisation, and we receive a lot of speculative resumes,' he explains. 'And we do generally have a low turnover of people. We've got a number of people growing into their jobs and who are really now quite outstanding. I think our culture is good. They buy the strategy, it's a very focused organisation. It has a flat structure, with little bureaucracy, although I am probably speaking from a position of privilege.'

According to Chatfield, the future for Toll is one of continued growth in order to become a truly global logistics business.

'We are in a fiercely competitive market so we really put the organisation first,' he says. 'And we try to maintain an environment that keeps people enthusiastic.'

Out of hours

What keeps you awake at night?
I sleep a lot, I'm very relaxed, some people say I'm too relaxed. But I sometimes worry about a particular acquisition, that may keep me awake.

How do you relax?
I spend a lot of my time with my family. We have two grandchildren, who are a lot fun. And we travel for enjoyment. Italy is a favourite place, mainly because of the people.

What are you reading?
I've just finished The J-Curve: A new way to understand why nations rise and fall, by Ian Bremmer. He's a US writer who brings together social, political and economic issues.

Reference: March 2008, volume 78:02, p. 21-22