How does a man with no printing experience wind up in charge of Australia’s third-biggest transac-tional printer? John Stewart could be described as SEMA’s accidental managing director. The business process outsourcing company’s founders, Peter Davies and Paul Costello, brought him in as a consultant in April this year, not long before it lurched into administration. The damage was done by the time Stewart joined, but he saw potential to turn the fallen giant around, and ultimately led the four-man manage-ment buyout (MBO), completed in June.
While Stewart, 54, acknowledges that he’s not a printer and still has a lot to learn, he hasn’t been daunted with his entry into this new world – because he doesn’t regard SEMA as a printer.
“I look at this as a technology company before a printing company. I think the challenges the technology provides are very exciting. Print is just the end product.
“Capturing the data from the major clients and their legacy databases, and being able to put a layer over the top that turns that data into information the client can use – that’s an exciting challenge. The print component is perhaps just the end of what is an exciting and complex business.
“I’m a businessman first and foremost, but I’ve been involved with various software companies over the years. That, plus my service industry background, gives me the experience to help very experienced practitioners run a more efficient and profitable company,” he says.
Stewart has had his fair share of jobs and causes over the years. He’s chaired the NSW branch of the Institute of Chartered Accountants, served on government health boards and held numerous non-executive directorships, including at MYOB. He also spent the past six years as deputy president of UNICEF Australia.
“I’ve always got some part of my working life that’s devoted to not-for-profit. It’s just something I do. There are some very valid causes out there. There are always people who are less fortunate than yourself and I think you’ve got an obligation to assist.”
Those “experienced practitioners” at SEMA he mentioned are the other three members of the MBO team. Chief operating officer Brent McCulloch and chief sales and marketing officer Brian Smith have continued the roles they held in the old SEMA, while former ABnote business manager Chris Williams has become director of sales.
“The other members of the MBO team have very deep experience in this industry. I’m a facilitator for their skills rather than someone who has to undertake everything himself. I help them do their job. They have great experience in the industry. I just have to make sure they have the right resources and financial systems in place to do their jobs properly.”
Being an outsider allows Stewart to bring a unique perspective. “Everything I look at is new. Perhaps I’m sometimes a bit slow on the uptake, but we’re looking at the way we do everything here. I’m questioning of everything before we’re spending money and seeing a client,” he says.
“There’s more investigation because they have to explain things to me or get me into the loop. While on some days, it’s a pain in the neck for them, on other days it’s giving them a new perspective on how we operate.”
A need for change
It’s clear that the company is in need of new thinking. Under the previous leadership team, SEMA had accumulated debts of up to $7.3 million when it collapsed in May. Some of these liabilities remain with the previous entity – the management buyout was for certain assets, not the business or its mountain of debt. But the new leadership team has taken over some of the debts, says Stewart.
“It’s not true that we haven’t taken on the debt. We haven’t taken on the unsecured creditors. We’ve taken on the employee liabilities for 250 staff, the lease of the Impika [inkjet press] and some of the other leases for the operating machines.
“We’ve ended up with a lot of the old debt. The really important thing is that 250 people’s jobs were preserved, their entitlements were taken on and their length of service is recognised by us. We took over employee entitlements in the many millions of dollars.”
This new, streamlined version of the business process outsourcer has experienced such a turnaround that it should return to profit by September, says Stewart. “We’ve significantly reduced our cost base. We’ve got back to what we do well and profitably. We’ve dropped overly ambitious re-engineering plans.
“The only way we could complete the MBO was if we had a financial plan that made sense. So, yes, we’re on a firm financial footing. We’ve got a reasonable cost base now and the significant majority of our clients have stayed with us, so the expected profit will be reasonable for
a business of this size.”
Stewart is confident the fresh faces at SEMA will succeed where the old management failed. While two of the senior members of the new entity also held management positions in the failed company, Stewart stresses that they were not responsible for the missteps that pushed it over the edge.
“Chris Williams is new to the company. I’m new to the company. Brent McCulloch and Brian Smith were part of the old company, but outside the strategic loop that made the decisions that caused the company much of its problems.
“Brent actually resigned from the board in frustration in November last year and was made redundant in January. He was only called back in when I arrived to start cleaning things up because they realised they needed his assistance.”
The team will also see the benefits of Stewart’s experience. As a consultant specialising in distressed companies and the former chief executive of forensic accountancy firm Ferrier Hodgson, he has intimate knowledge of how to turn around a failed business. The fact he has put his money where his mouth is with SEMA can be read as evidence of its underlying viability.
Stewart says the new leadership team has been well received by SEMA’s clients and that many have popped into the Sydney site to inspect the continuous colour inkjet technology. It helped that the company had built up a good reputation for servicing its niche, he adds.
“SEMA had a real role to play in the market. It was a valid competitor to the other big players and there is a particular expertise SEMA has around direct mail. It’s not easily replicated by its competitors. We’re not silly enough to say others can’t do it, it’s just difficult for customers to easily move some of that work.”
Stewart says although customers have continued returning since the MBO, it’s too early to say whether the new SEMA is selling more than the old version.
“It’s hard to answer that at the moment. There’s a catch-up on work that didn’t get done during the administration and this is traditionally the strongest quarter for the company. But if the question is about our expectations then we’re beating our expectations on the sales front.”
During the administration, PPB Advisory was forced to slash jobs as it put the company back into shape, but the new management team hasn’t followed suit, says Stewart.
“There have been no layoffs. The MBO plan is going according to expectations. We started with the right number of staff. We’ve actually hired – particularly in the sales area – and we’re trying to engage with the workforce on a much more regular basis.”
Stewart identifies staff engagement as a focus for the board. Entering administration was a shock, he says, so the new leadership team has had to reassure the 250 remaining staff that the company is now secure, their jobs are safe and they are part of an exciting future.
The directors are also trying to recreate what Stewart describes as SEMA’s traditional family culture. He says it’s not hard to generate a sense of intimacy – even among such a large workforce – if those at the top pay close attention and set the right example. The key is to be visible, transparent and make it clear to staff what is expected of them and what the future holds.
Stewart says the combination of improved staff morale and a sound business model has set the company up for a promising year.
“We think our sales pipeline looks strong. We still need to complete negotiations with a lot of clients. All of that is going well. We look like we’ve having a very busy first quarter. That quarter after Christmas isn’t visible to us yet, but if we’re on budget or a little better for that March quarter, then I think that next 12 months looks reasonably encouraging.”
The management team has completed negotiations over its premises and equipment – and “all in line with the MBO plan and projected costs”, says Stewart. But there’s one piece of equipment ProPrint wants to talk about that Stewart won’t discuss – SEMA’s ‘missing’ industrial inkjet press.
The old SEMA made a $10 million investment in two Impika iPrint eVolutions, which were intended to let it compete with rivals Salmat and Computershare, which had both made similar inkjet investments. The first iPrint was commissioned at the Sydney plant in March. The other was supposed to arrive in Melbourne by May, but with the company entering administration in the same month, it never came.
Stewart told ProPrint in June – shortly after completing the MBO – that talks about acquiring the second iPrint were ongoing. However, he wouldn’t discuss the subject this time around.
The iPrints are targeted at high-volume, personalised printing of transactional documents such as bank statements – SEMA’s bread and butter.
Sticking to its guns
The new management team is not planning to change or diversify the company’s business in any way, says Stewart. Instead, the focus is on better interacting with clients’ technology and solving their problems.
“I think what we’re about is making the assets we’ve already got far more effective. It’s about our ability to capture and transform the data and encourage clients towards the high-speed continuous colour technology. It’s also about taking that data and pushing it down other channels like email, digital and SMS,” he says.
“Perhaps the old SEMA wasn’t selling as proactively as we’re now asking our sales team to do. We’re more about providing solutions to client problems rather than sitting and waiting for clients to request us to undertake particular projects.”
One area that fits within the SEMA model is digital postboxes. Stewart told ProPrint in June that the company was likely to follow Salmat and Computershare into this emerging field, though through partnerships rather than its own venture. However, while there have been ongoing talks with various parties, there have been no meaningful discussions, he says.
“It will be an important component of the way our customers and clients talk to their customers and clients. But what it’s about for us is capturing the data in a way that allows our customers to choose the channel they would like to put it down and allows us to efficiently provide access to that channel.”
If Stewart sounds like he has a lot on his plate, it’s because he does. He’s been so busy restructuring SEMA that his spare time has all but disappeared.
“All I’m doing is working. It’s settling down, but there’s a lot of work to do. We can see light at the end of the tunnel. Our systems are coming back on board There are a lot of good things happening. As they do, the pressure will come off and the business will become more predictable and easier to manage.”
He will see this through. Stewart says the role is tremendously stimulating and is one he intends to hold for many years.
“I’m the majority shareholder, so I intend to make the best of the investment I’ve made. I think the company has a long future,” he says.
“It’s fascinating. It’s been more exciting than I expected. There are a whole lot of little gems in this company given its age and history we keep discovering.”
Resumé
Born Sydney, 1957
Career history 2012-present: managing director, SEMA; 1988-present: managing director, Stewarts (management consulting firm specialising in distressed companies); 2002: chief executive, Ferrier Hodgson NSW; 1987-1997: principal, various chartered accounting firms
Education St Patrick’s College Strathfield; University of Technology Sydney
Family Wife and four children, aged 18 to 25
JOHN STEWART ON…
Baptism by fire
I’m learning very quickly. I have three fellow directors who are very good teachers and we’re enjoying the ride. We haven’t got everything fixed. I’m very new to the industry and still learning.
Winning back customers
Most of them have come to visit and looked at the continuous colour technology. We’ve been working at very high levels with them. It’s been a positive experience all round.
Workplace relations
I suspect we’re asking the staff
of the new SEMA to do more with less than might have been around before, but we’re hoping we’re giving them better strategic direction and feedback on how the business and their performance is going. As a result it’s a more enjoyable place to work.
Sweating the data
Capturing data is at the heart of everything. Our clients are challenged with the amount of data they collect and the need to do more with that data at a lower cost, and we think if we work smartly we can provide them with solutions.
Hiring after the cutting
The workforce may grow in the next 12 months, but only in line with our ability to grow our sales. We’re not being overly ambitious. We want to preserve the core we’ve taken over from the old business, but if we grow our sales appropriately, we may need to grow our staff. We’ve got a little bit of room to move at the moment.
His management style
I would think that it’s strategic and to the point – but it’s only a job. There has to be an element of fun and enjoy-ment to get the job done.
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