Tabcorp, one of the world’s largest publicly listed gambling entertainment companies, is a good match for Johnston's skill set - and longstanding passion for horseracing.
Joined Tabcorp: September 2003
Became CFO: June 2011
Came from: BHP Billiton
Team: 120 treasury/taxation/investor professionals
Direct reports: 10
Annual revenue 2015-16: A$2.19 billion
Net profit 2015-16: A$169.7 million
My role: “a good match”
Tabcorp’s businesses return about A$800 million a year to the racing industry and about A$200 million to shareholders. Our business model is essentially one where 70 per cent of our revenue goes back to the racing industry, government, pubs and clubs.
The state-based TABs [the former Totalisator Agency Boards] are critical to the funding of the racing industry.
When I joined in 2003, the company was in a growth phase. Tabcorp had just announced the acquisition of Jupiters Ltd and was looking for someone who had experience in merger integration, which I had.
Tabcorp was also looking for someone with a strong financial background, because with a merger comes financial accounting, reporting, treasury refinancing – all those sorts of things. With many years in corporate finance and business management – as well as being pretty well versed in mergers and acquisitions – my skill set was a good match.
Tabcorp – like many businesses – faces increased competition from overseas online platforms. The business has stepped up to meet the challenges, and right now we are performing very well.
My career path: “changing spaces”
Tabcorp followed on from a long time with BHP – 21 years – a pretty good innings. I started there as a graduate and relocated six times – Melbourne, Perth, Groote Eylandt, Newcastle, Hong Kong, Singapore ... we were pretty mobile. We left Melbourne with no kids and came back with four!
Having young kids and moving around that much wasn’t easy, but at that point of my career we thought that was the thing to do. My next position was going to be in the US and, with our oldest kids not far off secondary school, we thought it was time to find a new company, preferably one with a Melbourne head office.
After I had worked on the BHP Billiton merger, I applied for the Tabcorp role [group financial controller].
“I had an interest in racing going back to when my dad used to pencil for bookmakers. I’m a keen follower of horseracing still.”
To be a CFO, the most important thing is to want to be one ... You can’t be too relaxed about it. However, it doesn’t mean you have to get there in a hurry – I certainly didn’t, I was in my late 40s – but develop your CV in a way that is consistent with your aspiration.
My CV showed I was quite operationally focused, having worked at mining sites [WA Iron Ore and GEMCO in the Northern Territory] and steelmaking [BHP Steel in Newcastle] in the 1980s and 1990s. I thought some Asian experience would be good, so I went to Hong Kong and Singapore in regional finance roles.
Then I realised I was operationally experienced but lacking corporate experience. So I came back to the BHP corporate centre to work in the treasury function, and then managed BHP’s group accounting and reporting function. Adding that corporate experience to my operational background, ultimately culminating in the BHP Billiton merger, was a good move for me.
Game changers: “the right timing”
My greatest challenge was sorting out the financial reporting for the BHP Billiton merger in 2001. The complexity was that BHP was an Australian company reporting in Australian dollars under Australian GAAP [generally accepted accounting principles] and also reporting under US GAAP. Billiton was a UK company, reporting in US dollars under UK GAAP.
When we brought the two companies together, finding a way to organise reporting with a dual-listed company structure was complicated.
We eventually found a way through with ASIC [Australian Securities and Investments Commission] to allow reporting to BHP Billiton’s combined shareholder group on a common basis – reporting the same numbers to all the shareholders, not different numbers to different shareholders.
Another pivotal moment for me was the decision Tabcorp took to demerge its casinos business in 2010. I was deputy CFO at Tabcorp at the time. The incumbent CFO moved on with the casino company and the board appointed me to the CFO role. It was something I always thought might happen, but that was the point at which it became real. You need a bit of luck in running, and I was in the right place at the right time.
Thinking like a CFO value pack: Not only will you understand the CFOs viewpoint better, but you will learn the fundamental skills needed to be a strong leader.
Lessons learned and best advice
It’s common sense, but many people expect the CFO or CEO to know everything and to make all the decisions. There are obviously times when you’ve got to make a decision and get on with it, but when you’re trying to get change and outcomes through, the perception that you’re not just dictating is very important.
Nurture your talent
At Tabcorp, we have a proactive approach to skills development. We’re big supporters of CPA Australia and CPA Congress, and we have good relationships with the big accounting firms, which put on workshops and seminars for our team. We’re committed to continuous improvement.
Work with people
The most important thing I’ve learned is to have a constructive and collaborative approach to working with people, whether it’s your direct reports, the executive team, the board or stakeholders. Experience shows that if you can get people working with you, that’s the best way to get an outcome faster and more sustainably.
A final thought
You have to take responsibility for your career path to make it happen. People shouldn’t sit back and expect it to fall into their lap just because they’re performing well.