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the excessive consumption of our products at the detriment of public health policy objectives in that
country.

5.2 Environmental hazard in China
It is morally wrong to show complete disregard towards the local environment by contaminating water
and harming wildlife. This issue is compounded by the unprofessional behavior of ignoring what is

clearly a serious issue, or refusing responsibility on grounds that it is caused by the contracted
construction workers, which could have serious implications on our brand name as well as the local
environment (duty of care). There is a second ethical issue here, which is that, it would be morally
wrong to mislead the public by stating that action was being taken, when in fact, this was not the case.

Recommendation We should immediately open communications with local groups to understand
their concerns and to clear communication paths. In order to appease these groups, it would be
beneficial for us to plant new trees around the sites or to support any cleaning of water supplies (water

is first resource/input to our drinks), as well as immediately review the waste disposal practice of all
new sites. We should also caution the contracted company to deliver more effective supervision over
the activities of its employees serving on our facilities as we cannot deny accountability for the actions

of our contractors and their employees on our premises. Furthermore, integrated reporting aims to
ensure that the 3ps are addressed: People (social), profits (Returns) and Planet (environment) – we
have to be seen to be striving for that in all conduct and practices, hence upholding our brand!

6. CONCLUSION

Let’s re-iterate and summarise the key actions the Board must now take:
1. On executing for Synergies, immediately begin the process of applying project and feedforward
control techniques to ensure effective integration of the two entities. Projections show if this is not

done, the project will overrun its costs by 54%, miss its 4year schedule by a further 2+ years and
under-deliver on projected cost synergies by as much as much as US$0.7billion.
2. On deal funding, immediately start the process of raising the requisite US$105.5 billion through a

combination of 92% debt and 8% equity. Unlike equity finance, debt equity advances our financial
objectives: it delivers on our Dividend Per Share (DPS) growth objective of 10%, Total Shareholder
Returns (TSR) objective of 14% and keeps our gearing below 40% as required;
3. On the B2B and Downstream Supply Chain Strategy, introduce new technologies, e.g. extranet
and Electronic Data Interchange (EDI) to reduce the cost of the cost-generating activities, lock-in

the supermarkets and weaken their power over Newco. The options to stop selling to
supermarkets, persuading them to reduce the cost of cost-generating activities, or, going into direct
retailing with customers have negative side effects that will undermine the cost savings and

profitability enhancements we wish week to achieve from the exercise.

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2018'
www.charterquest.co.za | Email: thecfo@charterquest.co.za