Keep an eye on the future with Hyperion Strategic Finance
"The implementation of HSF has resulted in a cycle of continuous improvements in the strategic long-term planning process at Anglo Platinum. The potential impact of future projects on the overall group portfolio can be assessed and multiple future scenarios tested so as to assist in decision-making. HSF has proven itself as a powerful and flexible planning tool for the SLTP analysts," says Gordon Smith, Head of Strategic Long Term Planning (SLTP).
Anglo Platinum is the world's leading producer of platinum group metals. It is listed on the Johannesburg and London stock exchanges. The software is supplied and implemented by local Hyperion distributor Futuresense.
The Anglo Platinum group is a long-term user of Hyperion Strategic Finance (HSF) as a strategic planning tool. Through the use of HSF, the company can project future outcomes and performance of the group as a whole and down to the prospects of individual shafts over as much as a 30-year period.
Xhead = Powerful platform
Realising that the capabilities of spreadsheets were limited and the process of planning, modelling and consolidating various models using these tools was complex and error-prone, Anglo Platinum scanned the market for a more reliable and powerful modelling tool, eventually opting for HSF. This financial modelling and forecasting package has become the primary tool used by analysts in the Strategic Long Term Planning (SLTP) and Corporate Finance departments at Anglo Platinum.
"The structure of HSF allows individual components of the organisation to be modelled independently and then consolidated up into a multi-level hierarchy to division company or group level," says Gordon Smith, Head of SLTP. "To keep our eye firmly on the ball, Anglo Platinum models at reef level on individual shafts through a suite of about 200 investment centres. In HSF, we can then consolidate this information upwards to enable us to examine future plans, projects and prospects."
The HSF solution has been customised for Anglo Platinum through a set of template files that are used to model investment centres and consolidated entities to allow for more precise analysis of the whole or certain operational units. Global assumptions (global data such as the exchange rate, metal recoveries, metal prices and more) can be linked to all the models as required.
Using these templates as a foundation, SLTP uses HSF to model the operational areas of the group, including current and conceptual projects. Operations are simulated on a shaft and reef-type level, and then consolidated upwards to mine, company and group level.
Xhead = Best future scenarios
Data used in modelling scenarios is collected in a centralised data warehouse and imported into the models. The modelling process calculates operational and financial metrics such as refined metal production, cash flow forecasts, NPV and IRR.
"These calculations are done for the coming year, as well as for years into the future to provide our executives with the best future scenarios possible," adds Smith. "Users can then alter variables to determine the effect of alternate economic or market scenarios on the company and its performance - such as a rising or falling exchange rate, interest rate hikes or even a fall in the global metals markets."
"Various Anglo Platinum departments can then obtain a range of data needed for their own use - whether it be cash flow or net profit over a five-year period, or the tonnage we expect to mine in a particular region, for example. This data can be consolidated up to group level to provide the CEO with a bird's eye view of the probable future (according to specific variables), or broken down to shaft level to help mine managers determine the best allocation of resources."
Futuresense has been working with Anglo Platinum for many years as an HSF design partner. The Anglo Platinum team defines the models it requires in business terms and Futuresense builds the actual models and maintains them for the company.
SLTP members believe the outsourced development work is the most cost-effective and efficient means of handing the development work, allowing them to focus on issues core to the company, with a trusted technical partner always available to assist with the design and maintenance of models where required.
The client-server architecture of the HSF application allows the SLTP department to centrally control models while making projections and scenario planning capabilities available to various departments and users. Rights and permissions can be granted to various users with respect to their needs and capabilities, without risking the underlying stability of the system or the data it contains.
"Unlike the spreadsheet approach, HSF provides great flexibility to users for planning and project valuation without allowing anyone to undermine the integrity of the core data," Smith adds.
Smith says one of the reasons for choosing the system is its ability to quickly consolidate models in a user-defined manner. Few, if any, other products can offer the same facilities, customisable to the group's needs.
“The implementation of HSF has resulted in a cycle of continuous improvements in the strategic long-term planning process at Anglo Platinum," concludes Smith. "The potential impact of future projects on the overall group portfolio can be assessed and multiple future scenarios tested so as to assist in decision making. HSF has proven itself as a powerful and flexible planning tool for the SLTP analysts."
Futuresense is an Oracle partner in South Africa that specialises in Oracle Hyperion and BI performance management solutions to enable faster reporting and better decision-making within a company. With the combination of specialised software from Oracle, a vast range of highly valued skills and years of experience in the South African business environment, Futuresense delivers an effective and efficient enterprise financial planning and modelling solution, sets up controlled budgeting and planning environments, and efficiently implements group reporting functions, including consolidations. Web site: www.futuresensesolutions.co.za