Project Pyramid

PwC was engaged by an integrated cold chain food products and agribusiness company to enhance its understanding of divisional performance across its various business lines. The Company produces, processes, distributes and retails a wide variety of food products including beef, dairy, chicken, pork, eggs, fish, flour, stock-feed and day-old chicks. This involved ensuring the proper allocation of centrally incurred and reported costs to each business line, as well as streamlining reporting procedures to enhance cost visibility in order to identify the profitable segments of the business and facilitate strategic decision-making.​

• Review and analysis of management accounting policies and records with a viewof understanding the existing cost allocation approach.
• Developed a rationalised cost allocation basis for the central costs / overheads​.
• Segmented reporting to derive performance of divisions on a stand alone basis​.
• Obtained an understanding of the existing financial reporting systems and current functionalities to determine the design and data requirements for the analytics dashboard. This process also helped us identify any existing reporting gaps.​
• Using the above, developed an integrated and dynamic analytics dashboard for divisional and Group reporting.​

The review helped the client to better analyse their group structure and understand whether it is fit for purpose through:​

• Ensured an appropriate allocation of centrally incurred / reported costs to each of the lines of business;​
• Streamlining reporting procedures so that the profitability and divisions contribution in terms of revenue, contribution margin and profitability for each of the divisions could be identified;​
• Established a baseline cost allocation and reporting framework that can be used to prepare management information and be a basis for decision making going forward on profitability and pricing;​
• Reviewing and preparing divisional balance sheets that allowed for calculation of Return on Capital Employed for key investments or lines of business; ​
• Developed appropriate Group and divisional dashboards for reporting performance.​

The cost visibility exercise enabled the group to strategically restructure the business by divesting from loss-making segments while retaining profitable lines.

Value impact

Restructuring of operations

Improved cost visibility and proper allocation of overheads across the individual entities enabled the business to identify loss making segments and enabled the group to restructure its operations​.

Better cost tracking

Dashboarding and analytics for performance monitoring per segment led to better cost tracking.

Improved efficiency and profitability

Streamlined performance measurement and better cost tracking led to overral improvements in operational efficiency and profitability.