Case Study - Not-For-Profit Manufacturing
A leading Australian not-for-profit (NFP) toilet paper manufacturer, well known to households across the country, has achieved strong growth through a purpose-driven mission to improve sanitary facilities in third-world countries. With global supply chains and offshore subsidiaries, the company faced significant exposure to foreign exchange (FX) risks.
Challenges
The company’s main challenges were:
Operating in a relatively commoditised marketplace, where protecting gross margins was critical.
Inventory purchased in USD exposed the company to FX movements, with a weakening AUD increasing costs and reducing operational surpluses.
A complex organisational structure, including a treasury entity responsible for hedging, added complexity to hedge accounting documentation and compliance.
Forecast-based hedging required improvements in internal financial forecasting processes.
Limited direct experience within the finance team in developing and implementing hedge accounting programs.
Our support
Hedge Effective Advisory supported the company by:
Developing a hedge accounting strategy aligned with AASB 9 compliance.
Tailoring hedge accounting documentation for each currency being hedged.
Providing managed services to administer the hedge accounting program.
Implementing Hedgehog Software for multiple finance team members to streamline processes.
Delivering ongoing advice and audit support to ensure sustained compliance.
Outcome
With our support the company achieved:
Reduced accounting volatility resulting from the foreign exchange risk management policy.
Improved confidence within the finance team that hedging activities would not distort financial results.
Allowed their internal resources to focus on core finance activities rather than hedge accounting administration.
Positioned the business for a potential future listing, with confidence in the accounting policy and derivative treatment.
By partnering with Hedge Effective Advisory, the company built a robust hedge accounting program that supports its continued growth and mission-driven success.