Group Financial Director – Pearlstock Holdings
High-profile multinational companies provided D’Shorne Human with a wealth of experience for his position at South Africa’s largest manufacturer of veneer products.


CIARAN RYAN: This is CFO Talks and this morning I am delighted to be able to welcome D’Shorne Human, who is the group financial director at Pearlstock Holdings, which is a medium-size wholesaling, manufacturing and distribution business with high-profile private equity interests. He’s been in this position since 2017, he’s a qualified Chartered Accountant and also a Chartered Global Management Accountant in the US and a Fellow Chartered Management Accountant for the UK. Prior to joining Pearlstock Holdings, D’Shorne served as CFO at Trafigura Mawson West Limited. Welcome, D’Shorne, how are you this morning, this cold, freezing morning in the Highveld?

D’SHORNE HUMAN: I’m great, thank you and thanks for having me.

CIARAN RYAN: You’re most welcome, I see from your CV that you have worked around in different companies, some very interesting ones, we mentioned Trafigura, which is a Canadian listed mining company and before that you were head of finance in Africa for Ampcontrol, that’s an Australian electrical manufacturing group. You did your articles at Deloitte and you worked at BHP Billiton, ALSTOM and Total. Wow, so you have worked for Australian companies, French companies, you’ve been all over the place. Tell us a little bit about your background and also about Pearlstock Holdings where you are right now.

D’SHORNE HUMAN: Thanks, Pearlstock is a third-generation family business that started off as a manufacturer of wooden veneers by the current MD and CEO’s grandfather. Veneer is the thin layer of actual wood that’s stuck onto boards of presswood or superwood when furniture or cupboards are built. From this business the grandfather’s sister then started another business, which sold edging and the edging is the narrow stripe of veneer that gets fixed on the edges of these boards. In recent years this newer business grew in leaps and bounds, and it expanded into decorative building materials. At the end of 2015 we had a group restructure where one of the Oppenheimer private equity funds took up a sizeable stake in the business, which currently consists only of 30% veneer manufacturing and 70% trade and distribution of decorative building materials. We import these and then supply large DIY retail chains in South Africa.

CIARAN RYAN: So the veneer and the edgings on wood paneling and that kind of thing, so the obvious question there is what’s business like, we are now four months into the lockdown, are things tough at the moment?

D’SHORNE HUMAN: We took a knock for the whole of April, where we had no sales, we couldn’t trade, and we weren’t deemed to be a supplier of essential goods. So we opened up again in May, and luckily for us we recouped a lot of the sales that we lost in April, so we had a very good May and a very good June. So at this stage looking at the seven-month figures for 2020, we are still lagging compared to the prior year and also our budget but it’s not as bad as one would have imagined luckily. So you can’t really complain if you compare it to some of the other industries that are still a bit strapped.

CIARAN RYAN: That’s quite interesting because the stories that we’re getting out of the construction sector are that things are pretty desperate at the moment. Okay, so you did have a lockdown there for a short period of time, but things have picked up then quite nicely since then?

D’SHORNE HUMAN: Yes, indeed, I think it’s because we supply a lot of these large retail chains and they’ve got – although they also shut down for a while – they’ve got a long logistics pipeline that they need to ensure is filled so that they can supply as soon as we go to our local Builder’s Express or Leroy Merlin. We have almost constant orders with those guys that just spilt over into the next month.

Oppenheimer stake in Pearlstock

CIARAN RYAN: Just tell us a little bit more about Pearlstock, is this a privately owned company, you mentioned the Oppenheimer’s have bought a stake in this, and for people who are listening overseas, the Oppenheimer family are, of course, almost royalty in South Africa, they were the founders of the Anglo American Corporation and De Beers diamonds and so on. Tell us a little bit about the ownership.

D’SHORNE HUMAN: We are 50% owned by this private equity fund of the Oppenheimer’s at the moment and the other 50% remains in the hands of the original family. So it is a private company, therefore, our results are not public and we are operating, as you alluded to in the introduction, in the medium-size business landscape. So it’s not a huge company, we’ve got about 300 people in the headcount in South Africa and we only operate within the South African landscape. We sell to some of our offshore customers in the SADC countries, but all our operations and branches are in South Africa.

CIARAN RYAN: Interesting company and the Oppenheimer’s are not known for making foolish decisions. When did they buy into the company, by the way?

D’SHORNE HUMAN: This was at the end of 2015, we had a Section 45 group restructure, where the original businesses that were different companies at that stage got consolidated into a new operating company in which they then took up the 50% stake.

CIARAN RYAN: What is your take on the South African construction industry? I guess your business would be related to the construction cycle to some extent, what is your take on that, are we in really difficult times, as we read, or are things pretty much as they were in prior years?

D’SHORNE HUMAN: We are somewhat exposed to the construction side of the business because we’ve got 30% manufacturing of veneers that go into these newly built office buildings and a lot of the buildings in Sandton, as well as Waterfall, so we have definitely seen some strain coming from that side. I think construction is in a tight spot at the moment. We are lucky in the sense that we are diversified across the wholesale side of the decorative building materials moulds, so 70% of our turnover comes from there, which is our saving grace, and that continues to do quite well. But, generally, even if I look at my own portfolio of construction shares, there’s nothing to write home about. If there’s any positivity coming up in the reopening in the future medium term, it’s now time to position yourself to buy that…

CIARAN RYAN: Sorry, I missed that last point.

D’SHORNE HUMAN: I said if you are an investor and looking for an easy picking kind of low-cost share that would probably be one of the ones that I see on my portfolio, which is now quite low. Fundamentally if you do buy into the notion that things are turning around in the country as a whole and even more so now that we are coming out of Covid, I think construction is integral to developing that infrastructure again. So I am a bit of an optimist at heart and I believe that that will recover but it’s going to take some time.

CIARAN RYAN: I’m inclined to agree with you there, I think the construction sector has been beaten down for so long and I think there’s going to be a fairly massive injection of investment into the sector going forward and that’s certainly been spoken about at the top levels of government. I think it’s a sector to watch, so I am inclined to agree with you there. Okay, let’s move on, you’ve got quite a background here as an accountant and I want you to talk about that for a minute, you are a Fellow Chartered Management Accountant from the UK and from the US, you have worked overseas, you’ve got a lot of experience in South Africa as well. Tell us what’s the state of the accounting industry at the moment, is South Africa slipping in international terms or is it still holding its own?

D’SHORNE HUMAN: Well, I think that the regulatory response to the accounting profession is probably justified in light of our latest epic debacles like Steinhoff that still leaves a bitter taste in our mouths. I wouldn’t go so far as to say that the profession is really in a bad position or has lost its way because I know of many an accounting professional who still lives by the values and the integrity that should be installed in all of us but even more so when dealing with other people’s money. I just feel that there might be a bigger issue that actually is a bit of an irony in the sense that something like the Laffer Curve when it comes to tax is an example where if you regulate some industries too excessively or even a profession or in this case the tax base, you proportion [indistinct] rebellious kind of non-compliance or at the very least a reluctance to comply. So I think it’s a difficult position for the accounting profession because there is an outcry from the public to provide them with reliable information and something that they can trust but at the same time we are edging onto this thin line of overregulation, so that’s my impression. It’s a case of sometimes less is more in some cases. I am by no means advocating a complete relaxation of rules but if we can return to a point where those trying to comply are not over-policed, it could return some of the balance to this sensitive scale. Having said that, generally I’m a firm believer in quick and decisive action by, for example, regulatory bodies. If we want the public to remain comfortable whenever they engage with a person from a professional body, those bodies have to demonstrate without hesitation that they will act harshly on members deviating from their code of conduct or ethical standards and I don’t think that has been done adequately in South Africa.

‘I think there should have been quicker reaction and more definite actions taken on the CFO’

CIARAN RYAN: Interesting, you don’t think that the Independent Regulatory Board for Auditors has acted fast enough to bring accountants to heel, you think they’ve been a little bit sluggish on that?

D’SHORNE HUMAN: Yes, if I look at the SAICA response and even the IRBA response but more so SAICA in the case of Steinhoff, I think there should have been quicker reaction and more definite actions taken on the CFO and any other members of these bodies in that debacle. Especially as a member who prides myself on the integrity of an institute like SAICA and when I compare it to CGMA and CIMA it’s really world class. I just feel that there’s a risk that we could be perceived that we are a bit complacent or just delayed in our reaction to these kinds of problems.

CIARAN RYAN: You mentioned the Laffer Curve, of course the Laffer Curve is the principle that when you increase taxes too much you actually as a government start receiving less in revenue and there’s a point where you hit that optimum point and it’s quite a good analogy that you make when you overregulate you can start to get a breakdown in compliance. I’m maybe putting words in your mouth but am I correct, is that what you are saying?

D’SHORNE HUMAN: Yes, indeed and at the same time sometimes as the profession we try to provide more useful information to users, we often end up almost alienating the reasonable man on the street even further by adding just more chapters to an already onerous financial report that very few stakeholders have the appetite to study. So the first response of the profession is usually let’s increase disclosures. I know of so few people that actually, barring analysts, who find the value that you would expect from these integrated reports, financial reports because it’s now become a massive document that is almost too overwhelming to try and comprehend.

CIARAN RYAN: I totally agree with you, when you look at companies that are listed on the stock exchange having to put out a document that is maybe 300 pages long, full of compliances and who has the time to go through that. As an analyst you’d zero in on particular parts of a report but there’s no way that you’re going to cover this whole thing, it’s just become so burdensome. Let’s just talk now a bit about the changing role of the chief financial officer or the financial executive, you’ve kind of led into this quite neatly, a lot of compliance issues coming up, are you spending most of your time on those compliances or is it managing, just take us through your role as a finance executive at Pearlstock?

D’SHORNE HUMAN: Sure, at the moment operating in a medium-sized company, a lot of the compliance issues end up with me, I have to make sure that the company remains compliant and that as good as possible governance is implemented in the company. So we have a few managers who assist at a divisional level but those guys are more operationally orientated. What I found in the past is in your bigger multinationals you have more support structures, so it is probably easier to delegate some of these responsibilities to quite a competent workforce across the globe but at the same time having to do this hands-on and be the steerer of the financial strategy, as well as compliance and governance and all those good things, in this industry and in this size company is, personally for me, very rewarding. There are a few trends that I have seen for finance executives over the past years that is changing and that’s resulting in some elements of the job becoming a little bit more challenging. In my environment, for example, I have noticed an international trend for the C-suite members is that they have to become more and more operationally involved. Even in other levels of management there’s an increasing expectation to not simply sit in your corner office and review reports or make top-down decisions but to sometimes get your hands dirty right at the coalface, and then linking to this I found that financial support teams are becoming leaner, as well as meaner, in a work hard, play hard kind of way. So at our business there’s not so much of a hype, for example, about the trend around the Fourth Industrial Revolution, which I personally find exciting and daunting at the same time, but due to costs and legacy issues, our company has not yet jumped onto this bandwagon and implemented nifty AI tools but it is the next thing on my radar.

Advice for aspiring CFOs

CIARAN RYAN: It’s interesting that you described the role that you did, I have interviewed probably more than 50 CFOs on this podcast over the last couple of years and it’s becoming clear that the CFO is no longer just an accountant. They may have qualified as a Chartered Accountant but that’s not what they are doing anymore and it’s a phenomenon not just in South Africa. Queen’s University in Ontario, Canada, recently issued a research paper called Moving from CA to CFO, in which they highlighted about 34 competencies that an ideal CFO needs to possess to be recognised by future employees and what you have been describing obviously meets those competencies. The South African Qualification Authority has recently approved a new designation for CFO, called the Certified Financial Officer, which is CFO (SA). As a result, CFOs can now obtain objective verification about their role that they perform and they can compare themselves to their peers, both in South Africa and globally. If you had to give advice to aspiring CFOs on how to obtain the skills for the role, what would you recommend? What would those skills be?

D’SHORNE HUMAN: I didn’t know about that new qualification from SAQA, that’s quite interesting. But the first thing is that I have to qualify that I am still learning every single day and I am at this stage just over 40 years old and it’s an exciting time when you know enough to implement principles that you’ve seen in your strategic exposure to finance but at the same time, as I say, I am learning on the fly and continually developing a lot of competencies that is quite unique in some industries. My advice would be to try and…in my case I didn’t specialise in any specific industry, I really from the onset tried to become a well-rounded CFO, where I’ve got depth of possible cross-pollination in the workplace where there were certain principles that I learned in certain industries that some might say is industry-specific but I found that they added value in unrelated industries, simply because the principle is sound. For me, accounting and finance remain a largely principle-based discipline after all. So I spent a lot of my early days in multinationals in that kind of landscape and although I enjoyed those challenges and the dynamics, I reached a point and I think a lot of the aspiring CFOs will probably also reach a point where you want to now implement and you want to apply all those things that you’ve seen and learnt. So that’s when I wanted to try my hand at more entrepreneurial business and apply those governance and strategic principles that I learnt in the corporate environment to build a more mature and robust finance function, and ultimately a business as a whole, and that’s what Pearlstock afforded me, exactly that opportunity. I’ve really enjoyed the fact that an entrepreneurial business is noticeably more agile and responsive to changing conditions, decision-making and implementation. But if I look at some of my peers, and I would never judge them, I think that it’s also important to remember that it’s great to be technically sound and have this wealth of experience but your EQ is equally important, especially when you have to manage teams in turbulent times, when you have to take control of change management because you are restructuring a business. So connecting with a team but maintaining that respect that they earn for you through your work ethic, that is important. Some CFOs are brilliant and then, I guess, in a way almost subconsciously feel they don’t have to compensate with the emotional quotient, they can just basically do their day-to-day job but, for me, I found a lot of wealth in investing in my relationship with my team and with the staff as a whole.

CIARAN RYAN: Okay, let’s talk about the lockdown, that’s the big discussion point for everybody at the moment. You mentioned that you’re also involved…and I find that quite interesting that you came from this multinational background, BHP Billiton, ALSTOM, Total and companies like that, and you went to a smaller family-owned business, which is very entrepreneurial. That, of course, has got different challenges, has it not, particularly during this time of lockdown. Most of the businesses at the moment what are their focuses, if you’re a finance executive I guess it’s liquidity, how are you going to survive the month, how are you going to meet payroll, how are you going to finance the expansion plans that you’ve got. What are the challenges that you are facing there, I’m talking particularly around lockdown?

D’SHORNE HUMAN: The first thing is that Covid and the lockdown taught us to keep our hands a lot cleaner, literally [laughing]. Firstly, luckily, we are quite cash secure and it’s largely attributable to our strong business model that we have and it’s a very healthy company offering a lot of security to the staff. Covid and this lockdown in many ways accelerated advances or changes that were in the pipeline anyway. So this might only be applicable to the SME businesses but we quickly learnt that it is probably best to have any office staff who could potentially work remotely already set up on a laptop instead of having to move desktops home and struggle with connectivity, resulting in days of downtime. Most corporates that’s standard issue, you get your laptop and your mobile from the get-go. Whereas with us that wasn’t always the case. During the phased reopening, coming out of lockdown, we realised that some processes didn’t require as many staff as we had assigned to that previously. So we are currently in the process of optimising our headcount and streamlining some procedures. In bigger companies that whole process, that whole exercise will take a lot longer to facilitate and to go through it but we are closer to the operations and we see that there are improvements that we can pick at the so-called low hanging fruit. Lastly, we realised that in this time we should, and the bigger companies have most of this in place, but we should prioritise the improvement of our online presence in being accessible to customers for e-commerce in addition to our traditional ways of doing business.

‘This massive ship that is our country is in the process of slowly turning in the right direction’

CIARAN RYAN: Okay, so you are embracing technology and the automation tools that you said is next on your agenda but, I guess, one of the things that a lot of companies are having to do is develop their online presence a lot more aggressively than they have in the past. Are you optimistic for the future, what’s your take on it, how’s the rest of the year going to play out?

D’SHORNE HUMAN: I used to describe myself as a realist but in recent times when I compare my attitude to those of some of my peers, I have come to realise I may be leaning more towards the optimistic side of the spectrum. I think it’s because the challenges arising from this turmoil, this change or hardship that we’re facing is at the same time the labour pains of what I hope will be our African renaissance and thereby like an incubator for opportunities. I think I mentioned this earlier but I am also supportive of the notion that this massive ship that is our country is in the process of slowly turning in the right direction but that will take time. I already think that we’re in a much better state than we were in a decade ago but once again we have to see that justice plays out in order for the public to trust that we are winning the fight against the corruption and the crime. So yes, I am optimistic for the future.

CIARAN RYAN: Just explain that point where you say we’re in a better position than we were a decade ago because I think a lot of South Africans are extremely negative at the moment. So you’re a bit of an iconoclast there, you’re taking a different path, so how do you come to that conclusion?

D’SHORNE HUMAN: I know, a decade ago we were firmly in the grips of the Zuma administration and now that we are starting to realise more and more of the scope of what actually happened at that time. For me it really feels like with the current president we are starting to see a change, although, shame, sometimes I feel like he must feel like a salmon swimming upstream against everything he’s facing. I honestly feel that the approach that he’s taking to rebuild this country and try to recover from the losses that we’ve made under the previous administration is admirable. I know that there’s a lot of criticism towards him, there are a lot of my friends and colleagues who might have unfriended and unfollowed me on LinkedIn and Facebook because I don’t support the negative commentary that I see. Yes, he should be criticised and kept on his toes, but I think we should also recognise the work that has been done up to date. With the right leadership and even with the right opposition keeping that leadership alert I think we are on the right track.

CIARAN RYAN: Very good viewpoint, thanks for sharing that. Okay, final question here, D’Shorne, any books that you would recommend, something that really gripped you?

D’SHORNE HUMAN: I may disappoint you now but after battling finances and business 12 hours a day I usually relax by reading something completely off topic. Some of my all-time favourites remain books like Cry, the Beloved Country by Alan Paton, and also Tuesdays with Morrie by Mitch Albom. For me, a good book is like art and it should do different things for different people, it can inspire or teach, but most importantly for me is when it gives me perspective and awareness. Sometimes I want to feel larger than life and other times it’s necessary to feel small and for me books can do both.

CIARAN RYAN: What did you particularly like about Cry, the Beloved Country?

D’SHORNE HUMAN: It’s actually a book that I read shortly after I completed my studies, so it’s been a decade or so, but the angle that it started off at with this person who is really passionate about the country and then the problems that the country goes through and the changes, and coming out of that the new potential that arises. It’s something that has always just gripped me, and I remember that it was quite an enjoyable one for me.

CIARAN RYAN: It’s interesting, my go-to book, also going back to my school years, was Lost Sands of the Kalahari by Laurens van der Post, and I went back to that, I have probably read it five or six times, believe it or not. But it basically describes his expedition into Botswana, to the Bushmen or the San people, as they are now known today. What was very interesting about that book because Laurens van der Post grew up pretty much on the border with Botswana and he was describing the early part of the last century, and he never saw any racial discrimination or apartheid or serious discrimination. He said the first time that he went down to Pietermaritzburg was the first time that he encountered what you would consider apartheid and I just found that very interesting. There are nuances and there are subtleties in South African history, which are often missed because we make these gross generalisations, which are not supported by the history. Anyway, that’s my recommendation and I like your one as well, I have read the book and I loved it. I think let’s wrap it up there, D’Shorne, it’s been fascinating talking to you, I really enjoyed the conversation and I appreciate your input. I like your positivity, whether it’s warranted or not I’m sure the next few months will tell us…

D’SHORNE HUMAN: [Laughing] Noted, Ciaran, I agree.

CIARAN RYAN: Your career has been quite fascinating, thanks for sharing some of those insights for people who are listening here in South Africa and around the world. Let’s get you back on in a short period of time and see how things are working out, in terms of the lockdown I really want to find out if the business starts taking off as we emerge out of the lockdown, it will be a good follow-up discussion to have if you are okay with that?

D’SHORNE HUMAN: Indeed, that would be great, as long as you don’t test my positivity resolutions, I’m going to be held to that [laughing].

CIARAN RYAN: [Laughing] That was D’Shorne Human, who is the group financial director at Pearlstock Holdings.

Ciaran is a seasoned journalist and podcast host. He has a back-ground in finance and mining, having pre-viously headed up a gold mining operation in Ghana.In this podcast he interviews various CFOs, get-ting more detail on the role of the CFO and their daily challenges and solutions.


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