Professional services firm, Deloitte has established an advisory taskforce to work with the racing and horse breeding industry to better manage the financial threats facing many organisations and business owners affected by the Equine Influenza (EI) crisis.

The taskforce will comprise 10 Deloitte partners across several service lines, as well as key former and current industry consultants which will advise organisations and business owners on how to best manage the crisis in the short and longer term.

“For the industry, organisations and business owners, there will be immediate financial crisis issues to manage, such as cash flow management in the short and medium term,” said Deloitte Adelaide partner Stephen Harvey.

Mr Harvey will head the Deloitte EI taskforce.

He has been a Director of the Australian Racing Board since October 2001 and a Director of Thoroughbred Racing SA Limited [TRSA] and its predecessor since 1999, including the last six years as Chairman of TRSA.

“The EI crisis is currently having a significant and potentially disastrous impact on the thoroughbred racing industry, as well as other equine industries such as, harness racing, competition riders (eventers and show jumpers etc), trainers, owners, breeders etc,” he said.

Mr Harvey applauded the actions of the Racing Industry, the Federal Department of Agriculture, Fisheries and Forestry and the various State Government equivalents for acting quickly to minimise the spread of the disease.

“These actions, together with the prompt appointment of recently retired High Court Judge, Justice Ian Callinan QC, to conduct an independent inquiry into the ‘entry and spread of equine influenza (EI) in Australia in August 2007’ are important milestones in relation to the EI disaster.

“However, the future prosperity and perhaps even survival of many organisations would depend on how they now responded in the weeks ahead,” Mr Harvey said.

Mr Harvey advised organisations and businesses to focus on:

• Rapidly assessing the immediate and medium term financial impact scenarios
• ensuring cash flow and funding impacts are understood
• ensuring management and Boards are making decisions based on credible and up to date financial information
• co-ordinating communications plans to key financial stakeholders – shareholders, financiers, regulators, insurers and others.

Corporate Reorganisation partner David McCarthy, an expert on assisting businesses facing immediate financial crisis, stressed that management needed to focus on actions necessary to maintain their organisation’s value during and after the crisis:

• Maintaining critical client  and supplier relationships
• pre-empting actions of opportunistic competitors
• working with key stakeholders including clients, financiers, suppliers and regulators.

“As with any crisis assignments, such as product recalls, natural disaster, accidents and agricultural incidents, the EI crisis will similarly require a disciplined response and management,” Mr McCarthy said.

“During any operational crisis, the call on management time can be extreme. Stakeholders from all directions will be demanding management attention.”

Mr McCarthy said in the face of these demands, organisations must still focus upon and work through a number of key financial questions.

“They need to examine the short term cash flow outlook over the period of the current lock-down and understand how long can they operate under these circumstances,” he said.

“Organisations need to balance the need to minimise cash outflows, but also maintain the business ready for re-launch when the lockdown is lifted.

They will need to assess the level of financial support required to remain solvent, and how they can work with their financiers, suppliers and other key financial stakeholders to do so.

“Then once the lock down is over, these organisations will need to ask how has the business changed? Will my funding requirements be different going forward?

“These are all fundamental issues, on which both boards and management have a duty to be informed.” Mr McCarthy said.

Assurance and Advisory partner Helen Hamilton-James, an event rider and Deloitte spokesperson for the impact on the other equine industries, highlighted that the EI crisis seriously risked the careers of many event riders who have now had their Olympic preparations disrupted.