The CFO Middle East | December 2014

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VOL. 1 ISSUE 1

A NEW CHAMPION MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Assistant Editor Steven Pradia steven.pradia@cpimediagroup.com +971 4 440 9114 ADVERTISING Publishing Director Rajashree Rammohan raj.ram@cpimediagroup.com +971 4 440 9131 Commercial Director -­ Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120 DESIGN Head of Design Glenn Roxas Senior Graphic Designers Froilan Cosgafa IV Cris Malapitan John Magno Production Manager James Tharian Data Manager Rajeesh Melath Printed by Al Ghurair Printing & Publishing LLC

Head Office PO Box 13700, Dubai, UAE Tel: +971 (0) 4 440 9100 Fax: +971 (0) 4 447 2409

The function of the CFO has changed markedly in recent years. Beyond solely manning the firm’s financial reporting, audit and compliance, CFOs are advancing their respective positions by commanding a larger presence in the direction of company strategy, globalisation and portfolio management. CFO Magazine launches its inaugural issue during a time when the CFO’s position is redefining itself and with incredible results.

As the fallout from the recession eases yet holds the attention of a marketplace in fear of a double dip, tying an enterprise’s financials to its strategy has proven increasingly essential. A key alteration to a company’s agenda includes addressing new regulatory measures. Plus, with financial planning in mind, the economic downturn has additionally converted many of yesterday’s CFOs into leading global strategists.

To kick-start our coverage of this challenging remit, CFO cover subject Jean Hannout, Rotana’s Corporate VP of Finance, shares an exclusive interview with CFO Magazine, talking about the ways in which finance professionals are redefining their value. Hannout explains how the burgeoning hospitality concern he represents has grown to include 85 properties across the Middle East and in which ways Rotana’s aggressive stance will allow them to reach their goal of 100 Rotana branches by 2020.

With globalisation becoming a larger imperative for the role, it’s appropriate that brands are spreading their arms further afield in order to amass a wider international web and as a result key alliances are forming. This latest objective has catalysed the formation of a pioneering international CFO networking group. The third edition of the MECO CFO Conference met in Dubai in recent weeks with more than 200 finance industry professionals in tow. CFOs from industries as variant as finance, retail and trading were in attendance. The event is the first of its kind and a direct result of the continually advancing CFO landscape.

This shift in outlook is being met with a series of pressing questions. Whilst CFOs are increasingly being called upon to guide their companies in ways previously unforeseen, how are they creating new value for their company’s brand? Is new technology being properly factored into the discussion?

How does CFO portfolio management address once unchartered facets of a company’s balance sheet? And with such a widening scope, what are the chief concerns of today’s CFO? A series of articles throughout the issue delve into answering these questions and more.

The CFO’s role is rapidly evolving before the world’s eyes: a very warm welcome to a new publication which sets out to be the champion of this new protocol.

Steven Pradia Assistant Editor

TALK TO US: © Copyright 2014 CPI. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

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Twitter: @cpilive LinkedIn group: ae.linkedin.com/in/cpidubai

1994 - 2014

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BUILDING BE T TER BUSINESSES - GLOBALLY

CONTENTS 10

Infographic CFO - The new corporate leader

12

Analytics The need for market intelligence

14

CFO Forum MECA brings leading CFOs together in Dubai

16

24

ROTANA’S WORLD

Corporate Real Estate

The acclaimed hospitality provider continues to expand.

How CFOs are leveraging CRE

It is important to be aggressive in your ambition and aspirations to propel your enterprise into success.

26 Tasweek’s Offering

20 Technology Cloud computing is trending at an all-time high

With an IPO on the horizon, CEO Masood Al Awar explains how the company has stayed ahead of the curve.

CONTENTS valuation 30 Brand Quantifying

tracks 34 Making From Virgin

the intangible

Personnel crunch 38 An analysis of

Atlantic to Saudi industry.

42

changes in employee retention rates.

Q&A SAP’s George Riding

44 John Varghese HLB Hamt’s Crystal Clear Priorities

We are well equipped to meet the challenges presented by our clients.

38

48 Financial Shades of Grey 34

Concerns of the modernday CFO

64

62 Market Watch The challenging role of forensic accountants

54

58

Money Watch

Countdown Q4

The landscape for the Dollar, Pound and Euro

A time characterised by its deafening pressures doesn’t have to be so challenging.

70 Opinion Geetu Ahuja of CIMA on the likely directions of tomorrow’s CFO.

66 Tech Talk The best apps for prioritising your business

PROJECTIONS

CFO Infographic

C F O - T H E

N E W

THE CFO IN THE C-SUI H T TE WI

46%

:

CIO

p

pa

hi

rt

rs

ne

ne

rs

rt

hi

p

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O

ith

CF

:

Profits?

CSO

Strategic planning?

:

ith

CF O

w

pa

ip

rt

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ith

O CF

39%

25%

Innovation?

COO

:

CF

ith

O

w

24% CPO

C O

Risk?

20% CHRO

COLLABORATIVE INFLUENCE CEO 78% CFO 65% Others 24%

Most influential after the CEO

SOURCES: EY’s CFO and beyond – The possibilities and pathways outside finance | IBM’s Pushing the frontiers | EY’s CFO Capital Confidence Barometer | Accenture’s The CFO as an architect of business value

10

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PROJECTIONS

CFO Infographic

R P O R A T E

L E A D E R

THE ROLE OF THE CFO

73%

see lowering costs & increasing productivity as a priority

61%

are partnering effectively with other enterprise functions

79%

60%

are providing insightful analytics to the company

2/3

of CFOs agree that their financial expertise enables them to be more in demand for board-level roles

agree that the CFO has to act increasingly as the face of company performance

PREDICTIONS FOR THE FUTURE

29%

of CFOs say increased global political instability is their top risk

73%

are lowering costs and increasing productivity

35%

of CFOs in the Middle East and Africa are confident about credit availability

61%

will look at investing in analytics, planning, budgeting and forecasting

28%

see slower growth in emerging markets as a key economic risk

44%

say upgrading the skills of the finance staff is a key focus

PROMINENT CFOs CFOs ranked as the top four in The Wall Street Journal’s Best CFOs list

Carol Tomé, Home Depot

Karen Hoguet, Macy’s

Stacy Smith, Intel

Paul Clancy, Biogen Idec

Leading CFOs in the Middle East

Adel Al Wahedi, Abu Dhabi Ports Company

Khaled El Chidiac Majid Al Futtaim Ventures

Accenture’s Charting the path to growth | IBM’s The New Value Integrator – Insights from the Global Chief Financial Officer Study | EY’s The DNA of the CFO – A study of what makes a chief financial officer 2010

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ANALYTICS

Market Intelligence

THE NEED FOR MARKET INTELLIGENCE CFOs are being called upon to understand a much wider swathe of their respective enterprises in order to achieve continued growth.

Implementing market intelligence is a key step to laying a proper foundation for achieving a better strategic focus.

The survival of a company depends on the bottom line and as a result CFOs are expected to step up their involvement in order to ensure the firm’s endurance. The middle ground which CFOs have more commonly occupied alongside CEOs emanates from the need for transparency with regard to issues such as corporate governance, risk management and the maintenance of effective systems. Increased scrutiny of revenue and profits (in addition to every expense in between) has transformed CFOs from custodian of the balance sheet to the savior of a company’s reputation.

The primary function of the CFO is to ensure that the company remains financially sound and can continually meet its obligations. Looked upon as the ‘guardian of the books’, this responsibility has undoubtedly

12

remained as imperative today as ever before. Yet the role of the modern CFO has evolved into a wider and more generic range of responsibilities which require the expansion of the CFO’s forte to include fields beyond merely the bare financials.

In order to cater to the unprecedented and ever changing business environment, CFOs have to be familiar with market trends, threats from competitors and which avenues are ripe with new opportunities. They have to work hand in hand with management on budgeting, forecasting and financial reporting. The sustenance of any company depends on how well the CFO steers it in times of high volatility.

Converting data into insight Some of the most testing and

rampant problems CFOs face are shrinking revenues, limited funding, cautious investors and increased public scrutiny of financial performance.

This has forced many CFOs to confront media and stakeholder attention and communicate results to the public. They are also expected to reassure investors and analysts on the company’s behalf. They should convince internal stakeholders and employees on the strategy and financial performance.

They should be transparent with information whilst defending business decisions and strategies undertaken by the company.

CFOs are expected to take profitability management to new levels and establish marketing as more than just a discretionary expense. Vital information and management skills are important when

The CFO s forte includes

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ANALYTICS

Market Intelligence managing such complexities.

Businesses are constantly bombarded with market fluctuations and confusing external factors. The need of the hour is to integrate with internal financial and operational management to form decisions and opinions.

Additionally, CFOs will have to justify decisions by modelling scenarios and with timely reporting.

Market intelligence provides the visibility needed to understand just how a CFO can channel his presence to stand up to the competition and be aware of the strategic shifts in the marketplace such as new or changed business relationships, products or prices.

The initial focus should be on highly competitive sectors which have strong levels of ecommerce transactions in which management intelligence can have a strong impact on their success. The CFO should work closely with the R&D team to analyse what can be deciphered from these markets and clients.

The next step would be to match and combine data from various retailers, providing analytics that far exceed what is available. Collecting information is a tedious task. Sometimes knocking on doors is necessary as one may only receive fabricated data through methods which don’t require face to face interaction.

Often times, in order to truly penetrate the market and attain gainful knowledge, it is imperative to work at the field level.

It is important to understand the value of data within the ecommerce marketplace. It is

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also a challenge to find ways to automate the collection and analysis of unstructured data.

The data should be interpreted and organised in such a way that it actually improves business.

With the vast amount of data collected, companies can create an increasing number of analytical models and tools to provide higher levels of ecommerce marketplace intelligence. These tools will further the company’s capabilities to create a positive impact on the bottom line and truly help gain unique insight into the marketplace.

Identifying opportunity Every piece of information has a prospective value which could prove beneficial for the company. A CFO has to identify the means of optimising this value into the most ideal terms at the most favourable price point.

A key determinant is to understand the company’s competitive edge in the market place. What advantages exist as compared to firms similar?

Many CFOs consult with key suppliers to identify underlying opportunities. This is needed more so in the case of new products or services where the market has to be completely understood before testing the waters.

Decisions made early in the design process have a significant impact on the resulting product quality, cycle time and cost. As the development process forges ahead, it becomes increasingly difficult and costly to make design changes. It becomes crucial then, to gather as much

CFOs are expected to take profitability management to new levels and establish marketing as more than just a discretionary expense.

product, process and technical knowledge as possible early in the development process.

Companies whose development plans are well aligned with their key suppliers can lessen their overall development time.

Discussions with marketing to identify the future product planning scenarios provide an additionally important source of opportunities. The following key questions need to be analysed – What technologies will become important? Which regions are forecast to highest sales? Which parts of the business are growing and which are shrinking?

Through open discussions with marketing, a sense of growth opportunities and potential VDYLQJV FDQ EH LGHQWL¿HG CFOs have to keep themselves attuned to technical and technological upgrades in their specific industries. They should take the lead to apply analytics to meaningful operational decisions as well. This will help them strengthen ties throughout the business and expand influence outside core finance functions.

Staff management has also evolved as a prominent factor in the CFO remit. Teams and departments are streamlined and made smaller and more diverse, due to cost cutting. So it is vital to know who is more apt for which role and who is dispensable when downsizing.

CFOs who can bridge the gap between strategic and operational decision-making with analytical information, will be successful in driving the FRPSDQ\ WR DFKLHYH LWV ¿QDQFLDO goals. Modern day CFOs are H[SHFWHG WR PHUJH WKH GH¿QLQJ lines between ‘managing a business’ and ‘running a business’.

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MARKET OUTLOOK

CFO Forum

CFOs GATHER IN DUBAI Nearing its 2nd anniversary, The MECA CFO Alliance hosted a number of CFOs for its Leadership Conference in Dubai.

In its sixth edition, the MECA CFO Leadership Conference gathered more than 200 CFOs and senior finance executives at the Jumeirah Beach Hotel in Dubai. Speakers included Abdulla Al Gurg, Group General Manager of Easa Saleh Al Gurg Group, Saleem Sufi, founder of MECA CFO Alliance and CFO of Intercos America and senior executive officer of DIFC for Standard Chartered Bank Tarek Anwar, in addition to others.

The MECA CFO Alliance has grown tremendously since ODXQFKLQJ LWV ÂżUVW HYHQW LQ December 2012. Founder and 3UHVLGHQW 6DOHHP 6XÂż KDV EHHQ a key driving force behind

14

the Alliance’s aims to create a community for CFOs previously unforeseen, a desire he explains was driven by necessity. “The primary reason was I was looking for networking opportunities myself and , FRXOGQÂśW ÂżQG RQH ´ VDLG 6XÂż Âł, ZDQWHG WR FUHDWH D platform for CFOs to connect with each other. And today this organisation is not an association, it’s a community. It LV D FRPPXQLW\ RI VHQLRU ÂżQDQFH people. In a community there should be a purpose and the purpose from my point of view has always been networking for professional development and OHDGHUVKLS JURZWK ´

“This organisation is not an association, it’s a community.

It is a community of senior finance people.�

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MARKET OUTLOOK

CFO Forum

“Networking initiatives will not mean anything unless they create professional development.”

A wide range of finance executives gathered for the MECA CFO Conference.

Left: Saleem Sufi Right: Abdulla Al Gurg

This year’s conference featured a panel dedicated to exploring the business possibilities which will exist for Dubai in the years ahead.

“Dubai 2020: How Businesses are Adapting to Changing Dynamic and Emerging Opportunities” featured commentary from executives representing UAE Exchange, Jacky’s Electronics and Julius Baer private banking. The itinerary focused heavily on the mentorship alliance deliverables which MECA has been formed to provide.

Said Sufi: “My original idea was to start to bring these events at a broader level, and

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that gave me the idea to start a mentorship programme. We launched the CFO Mentorship Programme earlier this year.

We consulted our senior CFO members, and asked them if they’ll be willing to volunteer their time to coach and train younger finance professionals.

I received a positive response from them and around 126 CFOs registered to offer their time to become mentors.”

As an active CFO, Sufi brings the right order of knowhow to the conference and has in a remarkably small window expanded to include three events a year. With the advent of the mentorship programme,

which he is erecting to include an online and thus global platform, and a consistently growing interest across the Middle East, the MECA CFO Alliance possesses a wide berth for growth in the years ahead.

Said Sufi: “There is more trust for learning in this region. Here in this region we have a shortage of senior level finance professionals, so there is more demand and that is why I see more value coming out of MECA in this region. And as I have mentioned earlier, this networking initiative will not mean anything unless it creates professional development.”

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INTERVIEW

Jean Hannout

ROTANA’S WORLD When Jean Hannout joined the realm of Rotana as Corporate VP of Finance, the hotel chain was a brand just gaining a foothold in the market. Today with Rotana locations dotting the Emirates, the name has become synonymous with high-end hospitality in the UAE. Hannout sat with CFO magazine and shared his passionate approach to establishing financial control as well as the importance of being aggressive.

Jean Hannout, Corporate VP of Finance, Rotana

16

www.thecfome.com

INTERVIEW

Jean Hannout

What  attracted  you  to  ¿QDQFH" Even as a junior student, I have always had this passion for using numbers to derive decisions. , IRFXVHG RQ ¿QDQFH FRXUVHV during my studies; accounting was my nightmare until I practiced it. Since then, I have been doing my best to merge ERWK FRPPRQ VHQVH ¿QDQFH DQG control. Once you manage that, it is easy to raise the interest of the colleagues and drive results through them.

I graduated with a BS in business administration. I UHPHPEHU KROGLQJ P\ ÂżUVW 3URÂżW & Loss meeting with the team of department heads, how anxious they looked at the outset. Now, with each passing month, they have become experts in giving WLSV DQG DGYLFH RQ ÂżQDQFLDOV 'R \RX UHFDOO D NH\ OHDUQLQJ FXUYH LQ \RXU FDUHHU" I was lucky to be selected as a ÂżQDQFH PDQDJHPHQW WUDLQHH DW Intercontinental which was one of the busiest hotels in Dubai back in 1998. This is where I had to learn to do things myself under a very busy operation.

Relieving every position under WKH ÂżQDQFH GHSDUWPHQW , took over all the operations myself. This two-year exercise

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was the sound base that helped me launch my career.

Furthermore my eagerness to take over challenges in various environments such as in new regions and new hotel openings have helped me a lot in grooming my career.

I also spent two years in Nigeria helping establish a hotel there. Initially, I faced a lot of resistance as an outsider on their turf. But soon they opened up to me and we built a 565-room hotel with just 165 employees.

It was called EKO Meridien and was rated as one of the PRVW SUR¿WDEOH KRWHOV LQ WKH world. What I learned from this experience is that camaraderie with your colleagues is as important as establishing control and procedure. +RZ GLG \RX MRLQ 5RWDQD" After initially working in the hospitality sector I later moved into trading. Soon, I realized that KRVSLWDOLW\ ¿QDQFH LV P\ UHDO calling and that is where I want to shape my career. Observing Rotana’s fast expansion, I took up the challenge and joined this leading hospitality management company as the director of ¿QDQFH RI WKHLU ÀDJVKLS KRWHO Beach Rotana Abu Dhabi. That was back in 2007 which was a

booming year for the hospitality sector in the UAE. In 2008, we managed to achieve the best revenue in the hotel’s history. +RZ GLG \RX ULVH WR WKH SRVLWLRQ RI &93" :KDW ZHUH WKH IDFWRUV WKDW KHOSHG \RX LQ \RXU MRXUQH\" :HOO ZKHQ , ¿UVW MRLQHG 5RWDQD I expressed my desire to manage WKH ÀDJVKLS KRWHO %HDFK 5RWDQD and then move on to handle the areas of Abu Dhabi and Al Ain. With eight hotels under my portfolio it was a very challenging WDVN $PELWLRQ ZDV WKH ¿UVW factor which fueled this career move; being at the right place in the right time with Rotana was another. Rotana is a company that believes in every single colleague’s strengths, abilities and skills. It provides the opportunity to develop a successful career for every employee. The fast expansion of the company needed a certain driving force from a ¿QDQFH DQG FRQWURO SHUVSHFWLYH and I felt I was the person to helm that change. +RZ ZRXOG \RX GH¿QH DQ DXWKHQWLF 5RWDQD H[SHULHQFH" In order to ensure our brand is delivered with consistency and integrity we have instilled a set

17

INTERVIEW

Jean Hannout of values that clearly represent our character. Our team strives to live these values every day. We call this The Rotana Life.

L stands for Long-term – this represents our commitment to create and nurture lifelong relationships with owners and partners, colleagues and guests. We are focused on delivering moments that will be remembered for years to come.

I stands for Innovation – this is symbolised by us acknowledging that each one of our owners and partners, colleagues and guests is different. We respond accordingly by striving to create new ways to meet their individual needs.

F stands for Friendly – this represents Rotana’s value to share our passion to serve and provide an experience that is genuine and above all neighbourly. We always have time for our owners and partners, colleagues and guests, just as we would offer a friend.

E stands for Ethical – this is for treating our owners and partners, colleagues and guests with the utmost respect. We act with integrity every day, in each moment, in every way.

How  do  you  ensure  a  happy  clientele  in  an  industry  which  is  dedicated  to  the  satisfaction  of  its  consumers?

Clients are external and internal.

I have minimal exposure with our guests, however I try to maintain a good rapport with some of the main solution providers such as the credit card companies, system providers, insurance companies, suppliers, and others. I try to keep everyone connected by meeting in order to spotlight new trends which relate

18

to hospitality.

Though innovation is the need of the hour, I personally prefer the conventional methods of establishing relationships. With so much widespread automation being implemented in the hotel industry, the friendly touch is diminishing. At Rotana we don’t encourage self kiosks and automated services much.

We give more prominence to interpersonal interactions.

You have to juggle with two essential balls: quality and pricing.

What  types  of  challenges  do  you  face  in  such  a  competitive  sector?

In order to lead in competitive markets like Dubai and Abu Dhabi, you have to juggle with two essential balls: quality and pricing, meanwhile keeping a very close eye on the competition.

If you drop one you are surely no longer competing and this is a well-known fact.

How  have  accounting  methods  and  techniques  changed  over  the  years?

I don’t think the various changes in some of the accounting principles are what matters. It is the way of communicating the implication of accounting transactions to stakeholders which has evolved over the years. )LQDQFLHUV ZHUH FDOOHG ¿QDQFLDO FRQWUROOHUV ZKHQ , ¿UVW MRLQHG WKH industry. In certain hotel chains they are called business support managers. Financiers are moving from the image of introverted PDQDJLQJ ¿JXUHV WR EHLQJ PRUH engaged in the understanding and management of the operations.

What  are  the  pitfalls  you  have  encoutered  in  the  accounting  process?

Accounting in principle is easy. However, setting up a

Beach Rotana, Abu Dhabi

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INTERVIEW

Jean Hannout proper accounting system from the outset helps you avoid undetected mistakes over the years. A few of those main mistakes are not balancing your bank accounts, neglecting your receivables, lacking in the SHULRGLF UHYLHZ RI \RXU ¿QDQFLDO statements, and inconsistency.

Where does Rotana stand now? What does it hope to achieve in the future?

Rotana is very aggressive in its stance to compete with the hotels which exist in the big leagues. It is important to be aggressive in your ambition and aspirations to propel your enterprise into success.

Today, as the leading hotel management company in the region, we have a portfolio of 85 properties across the Middle East, Africa, South Asia and Eastern Europe. We cater to all segments of society under the umbrella of Rotana Hotels & Resorts by offering something for every type and level of traveler. For instance, Arjaan Hotel Apartments are developed for both long term guests and families; Centro Hotels meet the demands of the new generation of travellers seeking ¿QHVVH DQG IXQFWLRQDOLW\ DW reasonable rates; Rayhaan Hotels & Resorts, our dry hotel’s brand, respects the beliefs and culture of our guests whilst fostering the image of new Arabia in today’s world; and The Residences by Rotana are geared for longer stays, focusing on guests looking for a permanent home within their country of residence.

Our strategic goal is to operate 100 hotels by 2020. We have announced earlier the opening of our new hotels in Turkey, Erbil, Jordan and Qatar and lately the signing of 10 new hotels in the UAE, Iran, Tanzania and Sudan.

www.thecfome.com

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TECHNOLOGY

Riding the Cloud

RIDING THE CLOUD

Cloud computing is offering the world a number of advantages which are streamlining business practices. By helping to cut costs and centralise a company’s data, more and more enterprises are turning to the service. Despite the advance of the trend however, a range of quirks and gaps in the cloud are worth understanding before jumping aboard.

The principles of accounting haven’t altered much over the past 500 years. Over the last few decades however, the needs of businesses have changed dramatically. The explosion of information requirements, the changing global economic landscape, the evolving regulatory and competitive environment, and the rapid adoption of the internet and mobile technologies has led to a need for smarter and faster systems to keep pace with the WLPHV $V D UHVXOW WKH ÀRRGJDWHV IRU (53 ¿QDQFH DQG DFFRXQWLQJ systems have been opened to meet the demand. &ORXG EDVHG ¿QDQFLDO management architecture

20

enables businesses to address current challenges with precision. This virtual advent provides on-premises accounting systems at its core while also offering improved business insight, increased agility, and the strengthening of internal controls.

7KH ¿QDQFH GHSDUWPHQW has a particular responsibility which include the funding of departmental budgets, the investment of a company’s capital, and the adherence to strict compliance rules. And VLQFH ¿QDQFH RIWHQ KDV WKH ¿QDO say on major IT investments, LW VWDQGV WR UHDVRQ WKDW ¿QDQFH decision makers should additionally have a grasp on

STAT FACTS

$620m MENA cloud industry’s estimated value

HYDOXDWLQJ WKH EHQH¿WV RI FORXG computing.

“Based on many recent analyst reports, a cloud computing model helps customers save up to 50 to 67% in the life cycle costs of computer equipment and infrastructure. It also delivers greater investment returns and shorter payback periods when compared to traditional on-premises delivery options,” says Sajeev K. Perunnelly, division manager at Alpha Data. “Government and public sector customers are compelled to move towards a government initiated community cloud model while small and medium business will greatly gravitate towards

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TECHNOLOGY

Riding the Cloud

With economic instability and reductions in capital expenditure (CAPEX) budgets, CFOs are keen to trade owned IT costs.

Sajeev K. Perunnelly, Alpha Data

public cloud offerings of local and internationally prominent players. Banking and telecom sector enterprises are large enough to build their own private cloud infrastructure.�

Configuring the cloud Cloud computing is evolving at a rapid rate and with good reason. Companies of all shapes and sizes are adapting to this new technology due to a number of reasons.

With economic instability and reductions in capital expenditure (CAPEX) budgets, CFOs are keen to trade owned IT costs for solutions that can be logged as operating expenditures (OPEX).

With cloud computing, instead

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of making a large up-front investment in IT infrastructure, staff, and resources, customers rent computer capacity, saving the CAPEX budget for revenuegenerating efforts. Cloud offerings such as Oracle Cloud Services, for example, offer a manageable operating cost that can be scaled up or down based on need.

Cloud computing reduces the cost of hiring, training, and managing IT staff. Managers are also able to reduce their spending on tech solutions. In the end, this means managers spend less time working on IT and more time thinking about the business.

When enterprise IT is managed by a cloud service,

it is faster to implement and easier to change. This helps companies go about their business more quickly and reduces long-term costs.

Despite the vast number of advantages, there are a few pitfalls which may impact those relying too heavily on the cloud. Security is the biggest concern due to a company essentially giving away private data and information in order to participate. Privacy concerns exist hand in hand with companies having their security exposed in the cloud. A large scale dose of trust must exist due to users needing to believe that their cloud service vendors will protect their data from unauthorised users.

Another major disadvantage is the implicit dependency on the provider which companies PXVW UHO\ XSRQ ,W LV GLIÂżFXOW and sometimes impossible, to migrate from a provider once you have used its service. If you wish to switch to a different provider, it can be incredibly cumbersome to transfer huge data from the old provider to the new one.

The entire setup is dependent on internet access, thus any network or connectivity problems present will render the setup useless. All systems may face dysfunctional behavior from time to time. Outage and downtime is H[LVWHQW ZLWKLQ HYHQ WKH ÂżQHVW RI cloud service providers.

Since the applications and services run on remote, thirdparty virtual environments, companies and users have limited control over the function and execution of the hardware and software. Moreover, since remote software is being used, it usually lacks the features of an application running locally.

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TECHNOLOGY

Riding the Cloud

The Cloud in the UAE Many CIOs in the country are seeking cloud based solutions to provide the performance, scalability and accessibility demand, which has led to increased awareness of the opportunities offered by cloud computing. “Customers in the UAE have realised that the change to the cloud is inevitable. The question today is not whether to change or not, but how soon,â€? poses Perunnelly. “Infrastructure as a service (IaaS) has been very popular among customers who are in the initial stages of consuming public cloud solutions. Microsoft has been successful to a large extent in positioning their cloud solutions VXFK DV 2IÂżFH 0LFURVRIW online services and Azure, in the top bracket. In software, early adopters such as salesforce.com have made good inroads into customers’ cloud strategy. Many additional organisations will start evaluating and considering software as a service in the areas of CRM, HRMS, incentives and compensation applications, big data and analytics, etc.â€? “The UAE has been at the forefront of Business Analytics and big data adoption in the Middle East with over 40% of CIOs in the country planning investments in these sectors. With ever increasing demands and expectations of customers and citizens, big data and analytics will be the key to success in the areas of government services and population statistics, health care, retail, banking and telecom.â€? “High competition, dramatic increase in claim events and HURGLQJ XQGHUZULWLQJ SURÂżWV

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The UAE has been at the forefront of BA and big data adoption in the Middle East with over 40% of CIOs in the country planning investments in these sectors.

have forced many demanding industries like health care insurance providers to follow alternative approaches to conventional methods of delivering IT services to their internal as well as external customers,� he says.

Many organisations in the UAE now want to take advantage of the major cloud EHQHÂżWV OLNH TXLFN GHSOR\PHQW of IT resources, shared resource usage, and the ability to monitor usage. According to WKH UHVHDUFK ÂżUP ,QWHUQDWLRQDO Data Corporation (IDC) total spending on cloud delivery in the UAE is expected to record DQ LQFUHDVH RI SHU FHQW \HDU on year. IDC states that growth is happening in the private cloud, but expects public cloud to catch up in the near future as more and more global providers begin to push their offerings aggressively in the region.

Only a handful of organisations in the UAE have gone the full distance in terms of converting these highly virtualised environments to

IXOO ÀHGJHG SULYDWH FORXG deployments.

Switching to the cloud The very idea of another system overhaul can terrify DQ ,7 RU ÂżQDQFH PDQDJHU %XW ultimately, this transition is easier and more cost-effective than continuing to operate an obsolete ERP system whose annual maintenance cost runs IURP WR RI WKH RULJLQDO system cost. Because cloud services are typically sold on a subscription/contract basis, spending is redirected from capital acquisition to pay-asyou-go operations.

Organisations should look for the right opportunity to change WKHLU ÂżQDQFLDO PDQDJHPHQW systems to cloud-based systems.

They should seriously consider switching to the cloud if they have a pending ERP upgrade, a change in company leadership or strategy, a merger or acquisition, or any changes that require an accounting reformat, new regulatory requirements, or a need for improved governance.

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ACCOUNTING FOR EXCELLENCE THE MIDDLE EAST ACCOUNTANCY AND FINANCE EXCELLENCE AWARDS WEDNESDAY 10 DECEMBER 2014 AT THE JUMEIRAH BEACH HOTEL, DUBAI Once again, the very best talent in the world of accountancy and finance will be celebrated by ICAEW at a stellar awards ceremony.

ICAEW is a professional membership organisation supporting over 142,000 chartered accountants around the world. And, on Wednesday 10 December 2014, at the Jumeirah Beach Hotel in Dubai, we’ll be recognising excellence in ten categories featuring: Business Leader of the Year, CFO of the Year, Corporate Finance Deal of the Year and the Internal Audit Excellence Award.

With an impressive line-up of speakers, special guests and entertainment, it all adds up to a truly memorable evening.

To submit a nomination or for more information, visit icaew.com/middleeastawards Nominations close on 1 October 2014

A WORLD LEADER OF THE ACCOUNTANCY AND FINANCE PROFESSION

MARKET WATCH

Corporate Real Estate

REAL ESTATE FINANCE HOW YOUR CRE CAN BE TURNED INTO A REVENUE GENERATING ASSET

CFOs are finding their roles becoming more entwined with their respective enterprises real estate strategies. With the advantages of controlling larger amounts of corporate real estate and the related profit margins in play, the housing market has ample reason to pique the interest of today’s leading CFOs. Corporate real estate (CRE) is often one of the largest items on a firm’s balance sheet, yet a concern which often receives little attention from the CFO. After all, this asset is typically managed by the company’s various operating units or by a separate real estate function.

And unlike the supply chain or sales operations, its ability to change quickly and influence a company’s strategic goals is not always immediately apparent. CFOs are now taking a fresh look at CRE in terms of its commercial maintenance and viability as an asset.

Under pressure to improve financial performance, many have concluded that real estate warrants significant personal

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attention.

As the CFO’s role has expanded from the keeper of financial results to one that calls for deeper involvement in strategic planning, many finance executives are coming to recognise that an illconceived approach to CRE can hinder an ambitious growth plan or block efforts to reduce the company’s operation.

Capitalising on CRE Ideally a CFO should use creative financial structuring to optimise their real estate portfolios. They can most effectively arrive at an optimal decision by considering three perspectives: the corporate real estate market, business

CFOs are now taking a fresh look at CRE in terms of its commercial maintenance and viability as an asset.

unit needs, and investor preferences. After gathering the relevant information and evaluating the pros and cons of the full range of financial structures, the CFO should make a sound recommendation to the business unit and the finance department. The solution should be acceptable to the marketplace, provide flexibility in the event of an altered business model, and provide the space at the most reasonable cost.

Companies rely on internal financing (operating cash flows) and external financing such as long-term leasing, joint ventures, property mortgages and sale/leaseback arrangements. The top-ranked

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MARKET WATCH

Corporate Real Estate methods of finance include operating cash flows, property mortgages, leasing and sales/ leasebacks. Use of real estate investment trusts, collateralised mortgage obligations and mortgage-backed securities were the lowest-ranked forms of financing.

The CRE function, therefore, should not only be technically competent but also take the relevant initiative when it comes to finding new opportunities for cost savings.

Such areas of savings can include: ‡ %XON SXUFKDVLQJ RI IXUQLWXUH and equipment ‡ ,GHQWLI\LQJ OHDVHV DERXW WR expire and renegotiating them ‡ /RRNLQJ IRU RSSRUWXQLWLHV WR consolidate holdings across the portfolio ‡ 'LVSRVLQJ RI H[FHVV UHDO HVWDWH

through a capital lease or an operating lease. The lessee in a capital lease a) must reflect the subject property as an asset and a corresponding liability on company financial statements, and b) is generally deemed to be the owner for tax purposes and may be able to depreciate the property and deduct interest payments.

'HVSLWH WKH FRVW DGYDQWDJHV over a period of ownership, there are many reasons a company might prefer to acquire an interest in real estate through a lease, particularly an operating lease. Companies often prefer an operating lease because it allows them to avoid reporting building related assets and liabilities on their balance sheets. Reducing reported assets and liabilities can enhance key ÂżQDQFLDO SHUIRUPDQFH UDWLRV notably return on assets, return on equity, and debt coverage ratios.

Leasing your CRE ,I D FRPSDQ\ FDQ XWLOLVH D building reasonably well for ten years or more, ownership is generally more cost-effective than leasing. Ownership provides the company with interest and depreciation tax benefits. Overall ownership costs are not encumbered by a landlord/investor’s administrative burden or profit margin. Using its corporate credit, a company can usually place debt on a property at a lower interest rate than is available to commercial real estate companies or investors.

Finally, at the end of the holding period the building’s residual value accrues to the corporate owner.

Alternately, a company can acquire an interest in real estate

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CFO’s role in CRE The CFO’s major concerns regarding real estate is that planning for CRE is rarely well integrated with corporate VWUDWHJLF SODQV ,QWHJUDWLRQ is not equally important to all companies, of course. For a distributor, CRE may be a relatively straightforward matter of securing inexpensive warehouses. For others — including companies with a strategy that calls for expansion or cost cutting— real estate is a more complex and important consideration.

Companies should also consider outsourcing extra CRE resources to generate a source of income.

A centralised CRE function can provide the CFO with the

A company can usually place debt on a property at a lower interest rate than is available to commercial real estate companies or investors.

real estate data necessary for managing corporate financial property. To do this in the most effective, efficient, valueadded way, meetings should be held twice a month and include senior members of the business unit, the CRE and the CFO. Other problems endured by the CFO include a lack of consolidated information about the company’s real estate holdings, and conflicts between the CRE strategies of business units due to a lack of coordination. Poorly managed CRE becomes a business risk.

When facilities are acquired and operated by branch or field-level staff, companies often fail to conduct a rigorous assessment of potential legal liabilities or property-related hazards. They may even fail to develop contingencies, exposing themselves to risks such as disruption of operations, employee health and safety, and ,7 V\VWHP YXOQHUDELOLW\ To make the most of CRE, however, CFOs will have to guide their companies past a variety of obstacles, ranging from a fragmented management structure to a lack of accurate, consolidated information about the real HVWDWH SRUWIROLR 'HSHQGLQJ RQ the company, this may call for a centralised structure, the use of technology and outsourcing, and a concerted effort to put real estate issues before the company’s strategic planners. ,Q WKH HQG WKH UHDO EHQHILW RI good CRE management is to free resources tied up in real estate and allow the CFO to reallocate them to revenuegenerating areas of the business such as employees, sales and marketing, or manufacturing.

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MARKET WATCH

Tasweek IPO

TASWEEK’S OFFERING CEO of Tasweek Masood Al Awar has for the last seven years helped position the UAE real estate concern to include an impressive collection of projects. With the aid of a highly valued CFO and foresight gained in the market previous to heading up the company, Tasweek is on the eve of its biggest venture yet.

Gallons of ink have been spilled over how much the global real estate market was turned on its side in 2008. Leading Emirati contractor Tasweek occupies a unique position within the ÂżDVFR KRZHYHU KDYLQJ ODXQFKHG just after the collapse in 2009.

Bearing a strategy which was cautiously honed as the global market began to piece itself back together and with the knowhow of executives who collectively SRVVHVV GHFDGHV RI H[SHULHQFH Tasweek is readying an initial public offering in the coming months.

The company has ascended rapidly on account of the

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guidance of the adept pairing of CEO Masood Al Awar and CFO Sohail Abbas Rajani. With a diverse offering of projects in WKH *&& 1RUWK $IULFD DQG $VLD Tasweek has attained capital gains of 300 million dirhams ($81.67 million) due largely to the calculated manner the enterprise was formed. “We are a private joint-stock FRPSDQ\ ZKLFK VWDUWHG DIWHU WKH UHFHVVLRQ ´ VDLG 7DVZHHN CEO Al Awar. “The company shareholders collected the PRQH\ EHWZHHQ DQG knowing that there would be a need for a lot of upscale real estate. The company was fully

The adept pairing of CEO Masood Al Awar and CFO Sohail Abbas Rajani has guided Tasweek’s ascendance

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MARKET WATCH

Tasweek IPO

Witnessing the reticence of the marketplace, Al Awar has been keen to stand apart from the crowd.

Tasweek CEO Masood Al Awar

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formed by the end of 2008, but then the markets went crashing down.”

Despite the ruin that sent a number of enterprises running for cover, Al Awar leaned on the near decade he’d amassed working for Emaar in Dubai and Sorouh Properties in Abu Dhabi and opted to move forward.

Witnessing the reticence of the marketplace, Al Awar was keen to stand apart from the crowd by applying an old adage.

Said Al Awar: “I joined Tasweek in 2009, the market was totally on hold. So I put a lot of business plans and aspects together to show what

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MARKET WATCH

Tasweek IPO

Taking the company public has involved a series of calculated steps similar to the manner the company has expanded its real estate offerings.

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I have learned from the period of 9 years in Dubai and Abu Dhabi. From day one the board members told me ‘Don’t catch a falling knife’, and I told them ‘Yes, don’t catch a falling knife, catch it only if you’re an expert.’”

The company’s daring foresight has been on display in a number of ways, most clearly via the diversity of projects Tasweek has invested in. While the company has produced a large number of high end real estate with large scale villa projects in key geographies such as Abu Dhabi, a rare opportunity in North Africa has given rise to a daring new project in Morocco.

Marrakech Healthcare City is comprised of a private hospital, boutique hotel and village of apartments. Due to its strategic position, Tasweek has positioned the wellness development as an attraction for both Africans and Europeans who wish to take advantage of this newest addition to the growing medical tourism market. With an eye also on projects centred on education, Tasweek has created a ‘no pain’ pledge to investors based on possessing a foundation stable enough to catalyse plans for a forthcoming IPO. Taking the company public has involved a series of calculated steps similar to the manner the company has expanded its real estate offerings.

“An IPO means a larger shareholder base. When you have the credibility for formulating effective business plans, people VKRXOG DOVR KDYH D FRQ¿GHQFH LQ your brand that it can generate money,” opines Al Awar.

“The idea of an IPO is your business should generate money DQG \RXU LQYHVWRUV DUH FRQ¿GHQW enough to pour in money and

STAT FACTS

300m Tasweek’s capital gains in AED

1bn Reported value of forthcoming IPO in AED

see it grow. Here at Tasweek we also ensure that at all times RXU ¿QDQFLDO VWUXFWXUHV DUH YHU\ strong. Making sure that we are under no obligation of liquidity issues, we have income that covers the operational costs, and we made sure from day one that the fundamentals of the brand will grow within Tasweek. So investors who come on board know that there is a business plan, there’s cash and there is liquidity to continue and deliver WKH UHTXLUHG SUR¿W ´ Tasweek’s IPO is planned for Q4 yet the deadline may be extended to January of 2015 to accommodate key preparations.

Central to Al Awar’s performance he explains is the priceless assistance he’s received from his CFO Sohail Abbas Rajani.

Al Awar said: “A CFO is in FKDUJH RI WKH ¿QDQFLDOV RI WKH company. For example, when you are driving a car you have a navigator. Can a driver win a race without a navigator? I doubt that, because the driver will go off-track without a navigator.

So that’s the role of the CFO in this matter. A good relationship between the CEO and the CFO is important to make the company’s ride as smooth as possible.”

Al Awar counts on his CFO as his number two in the company, an indispensable role considering KRZ HVVHQWLDO WKH ¿QDQFLDO planning and performance of the company have proven to be throughout its history and will continue to be moving forward.

“We look forward to a very successful 2014 and 2015. The year 2015 is when we’ll see the sector really picking up. This sector will be more sustainable, because we are now working on a much different equation,” states Al Awar.

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ANALYTICS

Brand Valuation

BRAND VALUATION QUANTIFYING THE INTANGIBLE

Branding is a concept that doesn’t always fit into the balance sheet. What are the factors determining brand worth and why do some brands resonate and others fail?

Branding involves propagation of creativity, imagination, impact and image of the company in the eyes of the public. It portrays feelings of trust, loyalty, service, experience, emotion and reputation. ‘Brand’ may be an intangible asset for accounting purposes, but the value of a brand is hard to deny. No company can afford to invest for long in branding without a measurable return on the costs incurred.

Measuring the brand As a company’s chief risk officer, there really is no one better positioned to undertake the role of brand steward than the CFO. He or she should work in conjunction with marketing to defend and expand a company’s brand.

CFOs should make branding executives realize that they can no longer side step the need for quantifiable benchmarks that drive the rest of the organisation. Marketing and

30

other activities must be managed and measured by the criteria that guide other strategic investments. Without accountability, resources are wasted and responsibility is diffused. Branding executives should understand they are handicapped by a lack of measurement.

While branding intangibles may be hard to measure, the results are not. How many customers bought how much?

How much did it cost to attain their attention? How much profit did the last campaign generate? The answers to such questions can give valuable insight into the cost of branding and help quantify it to a major extent.

For brand owners, the market has really been driven around monitoring retailers to see if they are adhering to pricing compliance of the retail agreements. A CFO should understand across brands and domains what is really going on in the marketplace and what is

As a company’s chief risk officer, there really is no one better positioned to undertake the role of brand steward than the CFO.

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ANALYTICS

Brand Valuation click through rates, repeat purchase rates, as well as less tangible metrics (customer loyalty, media coverage, etc.) finance can help marketing not only calculate the incremental value that a brand creates for an enterprise, but also identify where brand value is potentially eroding. ‡ 7R JXDUG WKH HQWHUSULVH against potential brand attacks, finance should work with marketing to develop a reporting mechanism that captures the drivers of brand value/brand risk. ‡ 3URKLELWLQJ EUDQG DWWDFNV These do occur, which is why a calculated action plan should be developed jointly by finance and marketing in case of such an assault. The response should include strategies for investment in brand resilience, depending on the scenario.

Additionally, finance and marketing should engage all the appropriate stakeholders to respond in a unified manner.

Why brands fail

really driving these trends. This will help them truly compete and actually increase revenue and gain market share. In a non-retail context, fluctuation in share price, the status of M&A attention, market share and customer research about brand recognition and take-up are all key factors to monitor and observe.

Some brands fail... primarily because companies do not address the current market.

of information and the interconnectivity of the social media landscape, information can spread like wildfire.

Reputation can be negatively impacted overnight by factors such as consumer reviews, disgruntled employees or even the image of brand ambassadors.

Making your brand stand out

The critical factors in brand evaluation include:

Nowadays creating brand reputation is more precarious than ever. Given the speed

‡ ([SORULQJ WDQJLEOH PHWULFV ‡ %\ HYDOXDWLQJ SULFH SUHPLXPV

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With so much attention and effort exerted on branding, eventually some brands do fail. This is primarily because companies do not address the current market directives and trends.

The usual culprits are improper timing of projecting a brand, lack of understanding of the brand, product shortcomings and inadequate funding. Based on market characteristics, customer requirements, and competitive realities, brand imperatives establish the ground rules identifying and retaining potential customers.

These imperatives include

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ANALYTICS

Brand Valuation buyer-seller relationships, branding goals, organisational process, technology and most importantly measurement.

It is important to realise that branding imperatives have changed with time. Even the most strategic branding moves may fall flat at times. To surf the tides of change, CFOs should be abreast of emerging market imperatives.

Branding is becoming difficult these days due to too much communication and competition. This has been magnified greatly as a result of the worldwide web.

To project your brand amidst the ‘clutter’ of information, the CFO should aim at proper positioning. A proper position is the optimum identity of the brand which makes it stand out from the rest.

Customer connections Legendary management guru Peter F. Drucker states that ‘The purpose of business is not to make a sale but to make and keep a customer’.

Due to the multitude of products, customers no longer go by brand names and popularity. They just seek products that are innovative and add value or convenience.

Companies have now begun to understand that customers define brands by their experience and even word of mouth, and not by what the companies try to tell them.

Retention branding generates profitability.

Existing customers represent recurring revenue with their ongoing support. Motivated by trust and loyalty, existing customers are less price sensitive than new customers.

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Ultimately, branding in the customer economy means viewing prospects as candidates for relationships rather than markets for products.

They are expected to spend at least 20 per cent more on the brands they trust. This makes retention a key factor to sales recovery. When sales dip, some firms frantically try to attract new customers to reverse the slide. A wiser move would be to leverage the customer base.

Ultimately, branding in the customer economy means viewing prospects as candidates for relationships rather than markets for products.

Surviving brand attack The company should create a framework that can help CFOs identify and execute initiatives to reduce brand risk and build the organisational capacity to dispel brand sabotage before it occurs. The first step entails identifying all the potential threats to your brand, which can include everything from third-party websites posting scathing reviews of your products to disgruntled employees blogging about how poorly they feel you treated them. Building brand risk intelligence not only means identifying potential points of attack, but also narrowing those down to the most serious ones that could breach the trust customers have placed in your brand.

Preventing brand sabotage also requires building awareness of the threat and teaching employees to assume personal responsibility for preempting, detecting, and reducing the possibility of its occurrence. For CFOs, this education begins in the finance department by assessing the staff’s current brand risk awareness and by developing a

STAT FACTS

71% CFOs surveyed who say their strategic influence has increased

targeted training programme to help employees identify brand risks and team with marketing to mitigate them.

By establishing reporting programmes and channels to measure and track potential threats, a company builds its capabilities related to brand risk. These can include leveraging some of the capabilities that are already embedded within social media platforms, building your own feedback generator, or relying on the plethora of third-party solutions focused on reputation management.

A CFO should realise that a brand crisis is a hidden opportunity to improve internal processes. This can be instrumental in the development of key performance indicators (KPIs) that relate to the brand.

By setting the cadence for measuring, analysing, and reporting performance, finance can better understand whether the efforts to manage brand risks are actually working.

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MARKET WATCH

Making Tracks

MAKING TRACKS Edward Collis relinquished his role as group treasurer at Virgin Atlantic to work for a Saudi Arabian heavy machinery supplier. It would have been a mistake if he hadn’t, he tells Sally Percy.

(GZDUG &ROOLV ZDV À\LQJ KLJK DV JURXS WUHDVXUHU DW 9LUJLQ $WODQWLF $LUZD\V ZKHQ KH ZDV RIIHUHG D UROH LQ WKH 0LGGOH (DVW LQ 7KH FKDQFH WR UHORFDWH WR 6DXGL $UDELD DQG EHFRPH FRUSRUDWH WUHDVXUHU DQG KHDG RI FUHGLW DQG ULVN DW KHDY\ PDFKLQHU\ VXSSOLHU =DKLG 7UDFWRU ZDV D FKDOOHQJH WKDW &ROOLV FRXOGQ¶W UHVLVW ³7KH HQYLURQPHQW ZDV FRPSOHWHO\ QHZ DQG WKHUH ZDV QR ZD\ , FRXOG WXUQ WKH RSSRUWXQLW\ GRZQ ´ KH H[SODLQV ,W ZDV D EROG PRYH VLQFH &ROOLV DOUHDG\ KDG ZKDW PDQ\ ZRXOG FRQVLGHU D GUHDP WUHDVXU\ MRE DW 8. EDVHG DLUOLQH 9LUJLQ $WODQWLF %XW KH EHOLHYHV LW LV LPSRUWDQW WR NHHS EURDGHQLQJ \RXU KRUL]RQV ³,I \RX GRQ¶W ORRN DW RSSRUWXQLWLHV \RX¶OO QHYHU JR DQ\ZKHUH ´ KH UHÀHFWV ³7KHUH¶V KXJH YDOXH LQ KDYLQJ H[SHULHQFHV RXWVLGH RI \RXU KRPH FRXQWU\ , WKLQN LW¶V DOPRVW PDQGDWRU\ LI

34

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STAT FACTS

40 the number of branches Zahid Tractor has in Saudi Arabia

3 Zahid Tractor’s worldwide position as a Caterpillar dealer by unit sales

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MARKET WATCH

Making Tracks STAT FACTS

1950 The year in which Zahid Tractor was appointed a dealer in Caterpillar machinery and equipment

3,000 The number of people who are employed by Zahid Tractor

EDWARD’S TOP TIPS FOR SUCCESS

“Do something that interests you, not something you feel you should do.”

“Research each role carefully, and make sure you join a company with a good, broad treasury function, which allows personal development in as many areas of treasury as possible.” ‘‘Many people say no too quickly. Be open-minded to new opportunities and career changes. Listen carefully to what’s on offer before saying ‘no’.”

“Success in treasury is down to an attention to detail combined with an ability to see the wood from the trees.

Make sure you don’t lose sight of the detail, but be able to make the broader decisions away from the detail.”

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argues that determination and commitment are crucial to success. “Before you start, you should be totally clear on your lifestyle for that period, to make VXUH WKDW \RX GHGLFDWH VXI¿FLHQW time to doing it,” he advises.

“Studying for the MCT is not an add-on, it has to become a core part of your life.”

Although he’s a fan of the MCT, Collis believes that it is perceived as being “relatively inaccessible”. If the course were to be redesigned, he suggests that LW VKRXOG ÀRZ RQ PRUH QDWXUDOO\ from the AMCT course without losing its “rigour” and “quality”.

He also proposes that a modular approach – one that incorporates DGYDQFHG GLSORPD FHUWL¿FDWHV DV “stepping stones along the way” – might encourage more treasurers WR VWXG\ IRU WKH TXDOL¿FDWLRQ Once he had the MCT under his belt, Collis was keen to gain KHDG RI¿FH WUHDVXU\ H[SHULHQFH So, in 2001, he became deputy treasurer at industrial services specialist Rentokil Initial. He worked with Colin Tyler, the ACT’s current CEO, whom Collis FLWHV DV ³D VLJQL¿FDQW LQÀXHQFH on my treasury career”. Then, in 2006, he took over from Tyler as treasurer, remaining in this role for four years.

Collis is currently responsible for a team of around 80 people at Zahid Tractor, and he has been instrumental in establishing the company’s brand new enterprise risk management framework, WKH ¿UVW SKDVH RI ZKLFK ZLOO EH completed in June 2014. “It’s a great challenge and I’m very pleased with the progress we’ve made to date,” says Collis. “I am proud to be part of successful change in management in a culture that is not my own.”

The MCT has been invaluable

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MARKET WATCH

Making Tracks to Collis in his new role. “I don’t think I would be able to set the direction for the treasury team with the same consistency and depth if I didn’t have the MCT,â€? he admits. Unsurprisingly, WUHDVXU\ TXDOLÂżFDWLRQV WRS KLV OLVW ZKHQ KH LV UHFUXLWLQJ Âł4XDOLÂżHG candidates typically have more breadth and depth, even if they have limited experience,â€? he explains.

But the pool of treasury professionals in Saudi Arabia ZLWK $&7 TXDOLÂżFDWLRQV LV VPDOO Collis also has a responsibility to develop local talent, which makes it even harder for him to source $&7 TXDOLÂżHG WUHDVXU\ VWDII +H FDQÂśW MXVW EULQJ LQ TXDOLÂżHG expats; he is rightly expected to nurture promising locals and guide them through their treasury TXDOLÂżFDWLRQV “The ACT has done a fantastic job overall in the Middle East of raising the awareness of the TXDOLÂżFDWLRQV LW RIIHUV ´ VD\V Collis. “Nevertheless, recognition of the ACT in Saudi is still very low and we’re trying, with the support of the ACT, to start to change this.â€?

While Collis had not been looking to leave Virgin Atlantic when the job with Zahid Tractor came up, he’s very glad he took the plunge. “There’s huge opportunity in Saudi and it’s a great place to work,â€? he says. “Companies here are very loyal to their employees, big on personal development and really try to encourage the absolute best out of you.â€? +H FRQWLQXHV Âł7KH KLUH DQG ÂżUH side of things doesn’t exist here in the same way as it does in Europe, and that’s a real positive. I’m a big fan of relationship banking and I think some of the long-standing relationship banking practices in

36

The hire

here in the Europe, and

the UK have been diluted prior to, and since, the 2008 economic crisis. In the Middle East, there is a huge focus on relationship banking, which I think is a strength.�

Collis says the move to the Middle East has been “hugely positive from both a work and family perspective.� Among his family’s favourite activities are tennis and water sports, and he enjoys scuba diving in the Red Sea with his sons. The move has broadened the family’s horizons, he says, and the quality of life in Saudi Arabia is good.

Although Collis admits to missing the green landscape and varied seasons in the UK, he has adjusted to life in a warmer climate. “When they open the plane door and you step out in Saudi Arabia and feel that blast of heat, it’s fantastic,� he

explains. Collis plans to stay in Saudi Arabia for a few more years and hopes that his experience in the Middle East may be a good foundation for a CFO role in the future.

Since moving to the Middle East, Collis hasn’t looked back. “Almost without exception, whenever I’ve taken opportunities it’s been positive and has resulted in me developing my career,�

KH UHĂ€HFWV Âł,I ,ÂśG VDLG ÂľQRÂś LW would have been a mistake and I would have missed out.â€? He says the secret to his success is this openness to new possibilities. “The biggest piece of advice I’d give somebody is to look twice.

Often when you look a little bit deeper, there’s lot more there, and my job is absolutely living proof of that.�

-Sally Percy is editor of The Treasurer and Middle East Treasurer

EDWARD’S CURRICULUM VITAE QUALIFICATIONS ACA, AMCT, MCT, FCT 2012-PRESENT Corporate Treasurer and Head of Credit and Risk Zahid Tractor, Jeddah 2010-2012 Group Treasurer Virgin Atlantic Airways

1999-2001 Central and Eastern Europe Treasury Director Merck & Co (Merck Sharp & Dohme Finance Europe) 1997-1999 Treasurer Merck & Co (Merck Sharp & Dohme BV)

2006-2010 Treasurer Rentokil Initial plc

1995-1997 European Treasury Analyst Merck & Co (Merck Sharp & Dohme Finance Europe)

2001-2006 Deputy treasurer Rentokil Initial plc

1994-1995 Financial Analyst Glaxo

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Don’t discover it’s counterfeit toner after it’s too late 2ULJLQDO +3 7RQHU ZRUNV ƭUVW WLPH HYHU\ WLPH 1 unlike cheap WRQHUV ZKLFK IDLO RYHU KDOI RI WKH SHRSOH ZKR WU\ LW 2 Non+3 WRQHU FDQ FRPSURPLVH \RXU SULQWHUoV SHUIRUPDQFH WR JLYH \RX VWUHDNHG EORWFK\ RU IDGHG SULQWV 2QO\ RULJLQDO +3 7RQHU FDUWULGJHV GHOLYHU XQPDWFKHG TXDOLW\ IRU WKH PRVW SURIHVVLRQDO ORRNLQJ SULQWV RI{WKH WLPH 1

1 A QualityLogic 2010 study commissioned by HP comparing original HP LaserJet Monochrome print cartridges with nine brands of non-HP toner cartridges available in Europe, Middle East and Africa for the HP LaserJet P1505 and P4015 printers, HP 36A and 64A. For details, see www.qualitylogic.com/EMEAmonotonertest.pdf. 2 From a 2012 EMEA Lyra Research study, commissioned by HP. Results based on a total of 1050 HP Color LaserJet users who have used both original HP and non-HP toner cartridges, of whom 552 experienced problems with non-HP cartridges.

Š 2014 Hewlett-Packard Development Company, L.P.

MARKET WATCH

Finance Personnel Crunch

FINANCE PERSONNEL CRUNCH The UAE is one of the fastest growing countries in the world. Despite that growth, recent studies have shown that companies are finding it hard to retain their finance work force. The following analysis digs deeper into the trend to find out just why key number crunchers are jumping ship so quickly.

The onus of ‘creating’ money, irrespective of the performance of the company, is borne by ¿QDQFH SHUVRQQHO ,Q WKH 8$(¶V WKULYLQJ HFRQRP\ ¿QDQFH DQG DFFRXQWLQJ SURIHVVLRQDOV DUH SXWWLQJ LQ ORQJ KRXUV WR FDWHU WR WKH GHPDQGLQJ IDFHWV RI WKHLU H[WHQGHG MRE SRUWIROLR ZKLFK QRZ LQFOXGH FRUSRUDWH JRYHUQDQFH DQG UHJXODWLRQ EXVLQHVV SDUWQHULQJ IXQFWLRQV DQG PRQWK HQG UHVSRQVLELOLWLHV DSDUW IURP WKHLU GHVLJQDWHG UROHV 7KH ODWHVW *OREDO &DUHHU Satisfaction survey by H)LQDQFLDO&DUHHUV ZKLFK SROOHG SURIHVVLRQDOV LQ WKH ¿QDQFH VHFWRU LQGLFDWHV WKDW UHVLJQDWLRQV LQ WKLV ¿HOG DUH RQ

38

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¿QDQFH HPSOR\HHV LQ WKH UHJLRQ

More than half of survey respondents in the Middle East are now actively looking for a new job.

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MARKET WATCH

Finance Personnel Crunch STAT FACTS

64% Finance executives polled who expressed a desire to hire more permanent staff

are among the most burnt out in the world.

Nearly two in ten (19 per cent) said they feel totally exhausted at work. Job satisfaction ratings in the Middle East (61 per cent) are lagging behind other markets, such as the UK and Australia. eFinancialCareers Gulf also stated that many professionals, HVSHFLDOO\ WKRVH LQ WKH ÂżQDQFH sector, are unhappy that the ÂżQDQFLDO UHZDUGV WKH\ KDYH UHFHLYHG IRU WKH \HDU IDLOHG to meet expectations. 84% of accountants are working RYHUWLPH RQH RU PRUH WLPHV D ZHHN RI ÂżQDQFH H[HFXWLYHV feel they need to hire additional permanent staff.

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The Art of Talent Management ³7KH ¿QGLQJV IURP WKH H)LQDQFLDO&DUHHUV VXUYH\ DUH QRW too dissimilar to our own,� said Gareth El Mettouri, Associate Director of Robert Half. ³$FFRUGLQJ WR D VXUYH\ RI VHQLRU H[HFXWLYHV LQ 'XEDL DQG $EX Dhabi, more than three quarters RI WKRVH VXUYH\HG DUH FRQFHUQHG with losing top performers to other job opportunities. This is not surprising, as according WR WKLV VDPH VXUYH\ JURXS 93% plan to continue hiring, whether by creating new roles or replacing departing employees.

This compounds what is already D VHYHUH FDQGLGDWH VKRUWDJH

across the UAE.� “Candidates know they are in demand. Companies are increasing remuneration in order to attract the best talent and businesses that do not look at their own reward and recognition programmes may ILQG WKHPVHOYHV ORVLQJ WDOHQW While the nature of the Middle East job market is transient, with skilled professionals PRYLQJ LQ DQG RXW RI WKH UHJLRQ and financial reward a key PRWLYDWRU IRU PDQ\ EXVLQHVVHV need to adopt retention programmes in a bid to keep WKHLU PRVW YDOXHG HPSOR\HHV RQ ERDUG 7KLV LQYROYHV ORRNLQJ DW WKH NH\ PRWLYDWRUV IRU VWDII including both financial and QRQ ILQDQFLDO LQFHQWLYHV OLNH flexible working, schooling allowance and additional DQQXDO OHDYH ´ KH DGGHG One of the main reasons finance professionals are EHDULQJ WKH EUXQW RI RYHUZRUN is the lack of good talent management. They are not being trained properly and FRQVLVWHQWO\ WR GHYHORS WKH DGGLWLRQDO VNLOOV ZKLFK KDYH been integrated into their work portfolio. Another reason is LQHIIHFWLYH FRPPXQLFDWLRQ among the different departments with accounts which translate into a serious lag in accounting information.

A lack of career progression is another factor which compel finance professionals to look for better job opportunities.

(YHQ DIWHU SXWWLQJ LQ ORQJ hours and stretching their neck to get the work done, they feel they are not adequately compensated. Most of them do QRW KDYH UHJXODU PHHWLQJV ZLWK WKHLU UHVSHFWLYH OLQH PDQDJHUV to communicate their needs.

39

MARKET WATCH

Finance Personnel Crunch

A favourable economic environment and increased hiring has companies investing in their permanent headcount.

40

Tension of Retention An employee’s ability to manage work and personal obligations positively affects his or her job performance, resulting in a more productive as well as happier workplace. This also helps with retention efforts which have now become a major concern of managers.

The employee-manager relationship also plays an important role in staff retention.

Among the employees who are not actively looking for a new job, 19 per cent stated their relationship with their line manager keeps WKHP VDWLV¿HG Employers need to ensure that their workers strike the right balance between work and leisure.

It is therefore imperative that employers open the lines of communication to help foster a good relationship between the employee and the manager.

Communication should be the key factor. Retention strategies that need to be addressed are working environment, employee relationship, employee support, employee growth and most GH¿QLWLYHO\ FRPSHQVDWLRQ The most successful organisations will be able to balance both local and expatriate recruitment to create a team with both the cultural understanding and global exposure to drive real and measurable value across the organisation.

The 2014 Robert Half Middle East Salary Guide revealed that ¿QDQFLDO VHUYLFHV FRPSDQLHV DUH paying competitively and thereby creating an imbalance amongst staff whose remuneration has not kept pace.

7KHVH ¿UPV PD\ KDYH WR reconsider remuneration plans for their top professionals. Just over half of businesses surveyed

STAT FACTS

93% Number of senior executives in Dubai and Abu Dhabi who plan to continue hiring into the new year

admitted that the number of employee resignations increased following last year’s bonus payout, with only 15% saying that the number decreased, suggesting WKDW ERQXVHV ZHUH QRW VXI¿FLHQW WR maintaining staff retention. This is likely to result in candidates feeling they can get more money elsewhere (a speculation backed by the fact that a high proportion RI ¿QDQFLDO VHUYLFHV FDQGLGDWHV¶ remuneration expectations have increased over the past 12 months).

The Accounting Skill Set When asked what makes candidates from this region the most suitable for their organisation, one quarter said the market/ business environment was the chief reason they would look to this part of the world. This was followed by the accounting standards (20 percent) and language skills (16 percent). Other criteria include the regulatory environment, education and cultural awareness.

A favourable economic environment and increased hiring has companies investing in their permanent headcount to manage new projects and initiatives, business expansion and new market penetration.

The reality on the ground is that PRVW FRPSDQLHV ¿QG D VKRUWDJH RI JRRG FDQGLGDWHV ZKR ZLOO ¿W into all of these requirements “It is also essential that we ensure that the Middle East is an attractive option for expatriate talent. Our ability as employers to identify and recruit individuals from abroad while concurrently ensuring that local talent have the education, skills and experience required by the market will help address the talent shortage in the immediate and long term future,” stated El Mettouri.

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INTERVIEW

George Riding

Q&A WITH SAP’S

GEORGE RIDING As a global leader in the provision of software designed to impact the bottom lines of businesses across a range of industries, SAP is already building a strong foothold in the Middle East.

Faced with a landscape dominated by the energy sector and a different order of doing business, SAP Middle East’s CFO shares just how he’s forging ahead.

Walk  me  through  who  SAP  is  as  a  company.

Founded in 1972 and headquartered in Walldorf, Germany, with locations in more than 130 countries, SAP SE is the world leader in enterprise software and software-related services. We offer business solutions across a wide range of functions and industries, to help businesses run simple and better. Typically we aim to streamline processes and give greater insight into performance to allow these companies to improve over time.

What  brings  SAP  to  the  MENA  region?

We have about 65,000 employees globally and have been present in MENA since 2008. A particularly strong connection to the MENA region is the energy, oil, and gas sector, for which we have many proven solutions and prominent customers. We have a longgrowth strategy for MENA, and have been rapidly expanding over the last three to four years, thanks to a board-sponsored growth plan.

How  has  your  role  as  CFO  factored  into  SAP’s  aims?

0\ UROH DV &)2 IRU WKH PDUNHW unit is to be part of the executive leadership team in the Middle (DVW GULYLQJ WKH SURÂżWDEOH growth of our software business, and help our MENA customers

42

ascend to the next level in leveraging technology in their business.

6SHFLÂżFDOO\ DV D EXVLQHVV partner I am responsible for ensuring that we allocate resources in the most effective way within our plan, we do so in a compliant way, and the processes that support the execution of EXVLQHVV ZRUN HIÂżFLHQWO\ 2Q top of this I have the standard responsibilities around our accounting statements and the robustness of our corporate household, which is extremely important as we expand across the Middle East.

Which  challenges  have  you  faced  which  are  specific  to  this  region?

2QH PDMRU FKDOOHQJH LV WR make sure that SAP is doing business in a compliant way. It’s a constant on going challenge everywhere, but particularly here because of the young talent we have on board, whilst having great potential, haven’t had the level of experience in big multinational companies and therefore are not used to applying the rules we need to comply with.

I need to make sure that our guys are being given the right training to ensure that they know what to do in given VLWXDWLRQV DQG DUH FRQÂżGHQW to refer to me and my team when they need to. Personally I address this by getting on the

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INTERVIEW

George Riding

“My role helps our MENA customers ascend to the next level in leveraging technology in their business.�

ground with the teams, and supporting them in customer engagements. This has many EHQH¿WV DOORZLQJ PH WR DVVHVV WKH WHDPœV EHKDYLRU WR OHDG E\ H[DPSOH WR JHW WR NQRZ WKH team and support them to be VXFFHVVIXO Which  areas  are  SAP  focusing  squarely  on  the  years  ahead?

We are very focused on driving RXU FORXG VWUDWHJ\ DQG RXU VROXWLRQV IRU ZRUNLQJ ZLWK WKH KXJH YROXPH RI EXVLQHVV GDWD ZH VHH WRGD\ 2XU FORXG VROXWLRQV ¹ OHG E\ 6$3 +$1$ ¹ DUH DFURVV DOO EXVLQHVV DUHDV EXW PRVW QRWDEO\ SURFXUHPHQW +5 DQG &50 $OO RI WKHVH KDYH KDG FRPSHOOLQJ EXVLQHVV FDVHV behind them, and adoption has VHHQ D VKDUS LQFUHDVH LQ WKH ODVW 12 months, which we expect to FRQWLQXH &XVWRPHUV UHDOO\ OLNH the ease of adoption and the ORZHU RQ JRLQJ 7&2 On the Big Data question, we KDYH LQYHVWHG KHDYLO\ LQ LQGXVWU\ VSHFL¿F XVH FDVHV ZKLFK DUH FUHDWLQJ QHZ ZD\V RI ORRNLQJ at a business’s performance.

We now have some amazing customer references that show ZKDW FDQ EH GRQH 7KLV LV DOO EDFNHG XS E\ RXU ZRUOG FODVV DQDO\WLFV WRROV ZKLFK DUH VXSSRUWHG E\ RXU XQSDUDOOHOHG LQ PHPRU\ GDWDEDVH 7KH IXWXUH LV YHU\ EULJKW IRU 6$3 DQG RXU FXVWRPHUV LQ 0(1$

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43

INTERVIEW

John Varghese

CRYSTAL CLEAR PRIORITIES In the auditing and financial service sector, HLB Hamt is the hallmark of quality, efficiency and professionalism. As they celebrate their 15th anniversary in the UAE, the company continues to be driven by the quest to excel beyond even their own standards. In a career spanning 26 years, Managing Partner John Varghese totes with him extensive audit experience from reputed organizations Fraser & Ross and PricewaterhouseCoopers. Due to a business acumen accumulated across a number of industries and an understanding of local rules and regulations in the UAE and GCC business environments, Varghese has helped to position the company as a frontline contender in the UAE. Varghese additionally brings his membership as a fellow of the Institute of Chartered Accountants of India to the table.

In a candid interview, Varghese shares the success story of HLB Hamt and his aspirations for the future of the company.

44

Which experiences helped to shape your career?

As a student, while most others found math tough, I realised that numbers and their methodology could be used to simplify life. Naturally, my career choice was auditing and I was lucky enough to work with reputed ¿UPV OLNH )UDVHU & Ross and PricewaterhouseCoopers.

When you work in a country like India which harbours different types of clientele, one will discover that each client has a different set of dynamics.

Understanding their needs and catering to their demands have been the biggest learning experiences of my life. The lessons learned from those initial years of establishing meticulous systems and controls in accounting, whilst maintaining relationships with clients, are themes I have implemented throughout my career.

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INTERVIEW

John Varghese

We believe in creating values and sustaining those values through everlasting relationships which enhance the commitment and performance of our clients.

What  are  the  core  values  of  HLB  Hamt?

HLB Hamt believes in exerting professionalism in each and HYHU\ ¿HOG RI LWV VHUYLFH DFXPHQ :H KDYH LPSOHPHQWHG D PXWXDOO\ EHQH¿FLDO FRGH RI RSHUDWLRQV IRU RXU HPSOR\HHV DV ZHOO DV RXU FOLHQWV )RU DQ\ SURIHVVLRQDO ¿UP WR DFKLHYH VXFFHVV WKHLU SHUVRQQHO VKRXOG EH JLYHQ WKH RSSRUWXQLW\ WR JURZ DV ZHOO 7KHLU FRQILGHQFH OHYHOV VKRXOG EH KLJKHU DQG WKH\ VKRXOG EH PRWLYDWHG WR VWULYH WRZDUGV WKH EHWWHUPHQW RI WKH RUJDQLVDWLRQ :H EHOLHYH LQ FUHDWLQJ YDOXHV DQG VXVWDLQLQJ WKRVH YDOXHV WKURXJK HYHUODVWLQJ UHODWLRQVKLSV ZKLFK HQKDQFH WKH FRPPLWPHQW DQG SHUIRUPDQFH RI RXU FOLHQWV How  did  your  rise  to  the  position  of  managing  partner?  7KURXJKRXW P\ FDUHHU , KDYH KDG WKH IRUWXQH RI ZRUNLQJ ZLWK YDULRXV FRPSDQLHV RI GLIIHUHQW VWDWXUH $V D SDUW RI P\ HGXFDWLRQ , MRLQHG D VPDOO DXGLW ¿UP LQ P\ KRPH WRZQ LQ .HUDOD ,QGLD 7KHUH , OHDUQHG WKH EDVLFV RI DXGLWLQJ DQG DFFRXQWLQJ 7KHQ , PRYHG WR )UDVHU 5RVV ,W ZDV

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OLNH MXPSLQJ IURP D SRRO DQG LQWR WKH RFHDQ :KDW , UHDOL]HG GXULQJ WKLV WUDQVLWLRQ LV WKDW LQ ELJ ¿UPV SROLFLHV DQG SURFHGXUHV DUH WKH NH\ (YHU\ RSHUDWLRQ IROORZV WKURXJK ZLWK SURSHU DXGLWLQJ SURFHGXUHV DQG H[HFXWLRQ , UHDFKHG 'XEDL LQ ZLWK KDQGV RQ H[SHULHQFH DIWHU ZRUNLQJ ZLWK GLIIHUHQW OHYHOV RI DXGLWLQJ ¿UPV ,Q ZH VWDUWHG +/% +DPW DQG FDUHIXOO\ LPSOHPHQWHG all the positive aspects garnered from the experience for the better IXQFWLRQLQJ RI WKH ¿UP :H KDYH ULVHQ LQ WKH UDQNV DV RQH RI WKH PRVW WUXVWHG PLG WLHU DXGLWLQJ ¿UPV LQ WKH FRXQWU\ :H DUH ZHOO HTXLSSHG WR PHHW WKH FKDOOHQJHV SUHVHQWHG E\ RXU FOLHQWV UHJDUGOHVV RI WKHLU VL]H RU EXVLQHVV DFWLYLW\ ZRUNLQJ FORVHO\ ZLWK WKHP WR PHHW WKHLU FKDOOHQJHV How  have  you  managed  a  good  working  relationship  with  your  clients?

We have established a good FRPPXQLFDWLRQ V\VWHP ZKHUHE\ ZH FDQ DGGUHVV DOO RXU FOLHQWV DFFRXQWLQJ DQG EXVLQHVV UHODWHG LVVXHV (DFK FOLHQW LV KDQGOHG E\

DQ DXGLWRU ZKR LV PRQLWRUHG E\ D VHQLRU DXGLWRU DQG UHYLHZHG E\ WKH DXGLW PDQDJHU XQGHU the responsibility of one of the ILUP¶V SDUWQHUV :H VHUYH PDQ\ 60(V ZKR GR QRW KDYH SURSHU DFFRXQWLQJ FRQWUROV LQ SODFH )RU VXFK FOLHQWV ZH LPSOHPHQW SURSHU DFFRXQWLQJ V\VWHPV DV SHU WKHLU EXVLQHVV QHHGV DQG JLYH WKHP PRQWKO\ IHHGEDFN RQ WKH EDVLV RI 0,6 UHSRUWV VR WKDW WKH\ FDQ identify their limitations and PDNH SURSHU GHFLVLRQV WR UHFWLI\ DQ\ GUDZEDFNV How  has  your  company  mastered  working  in  a  place  as  diverse  as  Dubai? +/% +DPW KDV JURZQ IURP D VPDOO RI¿FH LQ 'HLUD WR D UH¿QHG RUJDQLVDWLRQ ZLWK RI¿FHV LQ SULPH locations in all of the major HPLUDWHV 2XU JURZWK KDV EHHQ H[FLWLQJ EXW QRW HDV\ :H ZRUN ZLWK RXU FOLHQWV LQ RUGHU WR PHHW WKHLU FKDOOHQJHV , DP KRQRXUHG WR VWDWH WKDW RXU ¿UVW FOLHQW LV VWLOO ZLWK XV 2XU ¿UP KDV JURZQ DORQJVLGH WKRVH ZH VHUYH :H KDYH FOLHQWV ZLWK WXUQRYHUV ranging from billions to millions

45

INTERVIEW

John Varghese

“We have consistently improved our audit quality by using the latest audit software to ensure that our processes are systematic.�

and even thousands in capital.

So the biggest challenge is to cater to all of them with the same commitment and expertise.

What  types  of  avoidable  PLVWDNHV GR \RX ¿QG FRPSDQLHV PDNLQJ LQ WKHLU DFFRXQWLQJ SURFHVVHV" Sometimes companies do not realize the importance of keeping their accounts up to date and transparent. They do not implement regular followups. At the year-end audit they frantically update the accounts in order to prepare the audited ¿QDQFLDO VWDWHPHQWV We generally insist for our clients to have all the accounting information online. Any valuable information which is not provided timely, will not be useful for the management to make the right decisions at the right time.

We keep periodic meetings with our clients to review their ÂżQDQFLDOV ,I WKH\ KDYH DQ\ LVVXHV we try to sort it out in an effective and prompt manner.

We also pursue a clear quality strategy to deal with any clients who are reluctant to keep the proper books of accounts to JHQHUDWH WKH ÂżQDQFLDO VWDWHPHQWV +RZ GR \RX LPSOHPHQW DFFRXQWLQJ VWDQGDUGV DQG TXDOLW\" After the global economic turndown, a great deal of regulations have been put into place for accounting standards and operations. Major changes in accounting standards are the

46

STAT FACTS

8 Number of HLB Hamt offices across the UAE

2,000+ Clients across the Middle East

result of worldwide accounting scandals and it indicates that the standards failed to keep up with the sophistication and complexity of business transactions and economic models they were supposed to represent.

On our end, the HLB ,QWHUQDWLRQDO RIÂżFLDOV FRQGXFW periodic reviews of service quality and performance. Based on these observations, they submit reports and recommend areas for improvement for our compliance. We have consistently improved our audit quality by using the latest audit software to ensure that our processes are systematic and disciplined to improve the effectiveness of our ÂżUPÂśV SUDFWLFHV :LWK D ZHOO HDUQHG \HDUV LQ WKH FRPSDQ\ÂśV UHDUYLHZ ZKHUH GRHV +/% +DPW VWDQG WRGD\" :KDW GRHV LW KRSH WR DFKLHYH LQ WKH IXWXUH" For the past 15 years, our concentration has been on this dynamic country, the UAE. Currently we have 8 RIÂżFHV DFURVV WKH HPLUDWHV with separate divisions for payroll processing, company incorporation, organisational FRQVXOWDQF\ ,7 FRQVXOWDQF\ DQG FRUSRUDWH ÂżQDQFH :H DOVR KDYH DQ RIÂżFH LQ ,QGLD WR VXSSRUW RXU UAE operations.

We aim to spread our wings to other cities in the GCC such as Doha, Muscat and Dammam.

Accordingly we have recently started our operation in Qatar and expect to move to other cities in the near future.

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Stars of Business has become an iconic awards brand like no other in the region. It recognizes the very best SMEs across 26 business categories.

It’s universally respected as scientifically assessed and unimpeachably judged.

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nominate now at www.starsofbusinessawards.com

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TROUBLESHOOTING

Financial Shades of Grey

FINANCIAL SHADES OF GREY AREAS OF CONCERN & CONTENTION FOR A CFO

As the business landscape continues to change post-financial crisis, the CFO’s role is continually shifting. We review exactly how and why - and the best ways to reap the benefits.

48

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TROUBLESHOOTING

Financial Shades of Grey There s a widening rift between the importance a CFO attributes to certain activities and how well he or she thinks team performs them.

It would be an understatement for any CFO to simply proclaim that we are living in testing and volatile times. As the economic determinants of the world continue to fluctuate, the pressures on finance chiefs and their respective companies to perform continue to mount.

Certain burdens, such as regulatory uncertainty, are ongoing. Meanwhile others, such as concerns related to data security, have quickly come to the fore. Individually, each concern signifies an area that demands financial leadership.

Collectively they illustrate just how integral finance is to the day-to-day operation of any organisation.

Some of the most pressing concerns for CFOs include measuring and monitoring business performance, providing input towards enterprise strategy, and developing talent in service of the finance of an organisation.

But CFOs are not fully aware of how well their own finance organisation fulfills some of these duties. Moreover, there’s a widening rift between the importance a CFO attributes to certain activities and how well he or she thinks the finance team performs them.

Core concerns As the CFO gears up to propel the company toward financial success which doesn’t hinder quality, he can’t help but wonder - will these competing interests ever meet? Listed below are a few key areas which are a cause of constant concern for a CFO: Cost control Cost-management success

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TROUBLESHOOTING

Financial Shades of Grey is what earns a CFO the right to become an agent for transformation. A key to successful transformation will be discovered in finding the right balance between global and local operations that support the growth agenda.

To attain this, companies should consider a globally integrated operating model that pulls back- and middleoffice functions into a single organisation agile enough to react swiftly in today’s volatile markets.

Rigorous cost management and a disciplined drive for operational efficiencies help fuel profitability. But even as CFOs continue to drive the next iteration of cost take-out, to maximise revenue growth they also need to keep strategic reinvestment in the business on the table. That may require a shift in cash-allocation strategies.

Uncertainty of policy and regulation CFOs need to ensure that their organisations are flexible enough to respond to more complex governmental regulations, including the ongoing management of the evolving International Financial Reporting Standards as well as mounting pressure to fulfill environmental and labor obligations across multiple geographies. New markets can mean new compliance requirements.

Two main areas of apprehension of the present day CFO are based in corporate taxes and health care. The underlying cause for this is often a lack of clarity on both fronts. If the regulations go one

Even as CFOs continue to drive the next iteration of cost take-out, to maximise revenue growth they also need to keep strategic reinvestment in the business on the table.

Retention and motivation of key performers Employees want their contributions to be recognised – in both monetary and non-monetary ways. Timely appraisals and monetary incentives are a key factor in retaining a good employee.

Employees need to understand how they are contributing to company success as a direct result of their toil. They should be given regular objectives and as a result constant reviews of their performance. If an employee is not making a substantial contribution to the company’s performance, then a firm decision should be taken regarding whether the individual’s retention is necessary.

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TROUBLESHOOTING

Financial Shades of Grey priorities. Attacks are becoming more frequent, opportunistic and sophisticated. Given the proliferation of mobile devices, the concern is not only to keep hackers out, but to ward them away from proprietary and private data in the unfortunate case that they gain entry.

The changing competitive landscape compels the CFO to have an increasing say in strategic decisions. way, costs may go up. If these guidelines are structured in other ways however, a company’s entire business model may have to change. To combat this issue, CFOs must spend more time studying regulatory affairs.

Security Concerns With the commonplace nature of security breaches worldwide, cybersecurity has ascended rapidly on most CFOs list of

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The cost of talent Finding and developing the right talent is invariably a top agenda item for CFOs. Doing so accurately means identifying people not only with the necessary skill sets, but also priceless intangibles— such as curiosity and the ability to team up—which will help finance become a better business partner. All these parameters come at a cost in terms of developing effective performance management systems, compensation systems, training programs and coaching. And while human resources should be the natural support organisation in all these areas, CFOs often find they have to rely on their own teams to get the work done.

Competitive Threats While finance chiefs are surging ahead with their growth plans, one area that is proving troublesome is predicting the next steps of competitors. The changing competitive landscape compels the CFO to have an increasing say in strategic decisions, especially corporate or cross-unit decisions, such as deciding which industries to enter/exit and which businesses to grow/shrink. When it comes to competitive forces, CFOs help determine which of the threats to fight and which to ignore.

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TROUBLESHOOTING

Financial Shades of Grey

([HFXWLRQ ÀDZV Externally, CFOs may worry about competitors and the economic environment, but internally, they have another fear: their organisation’s ability to execute. In particular, they may grow concerned with the implementation of the company’s aims when up against existing and new strategies, business plans and priorities. The fear is magnified as companies expand globally and must juggle a multitude of issues related to foreign accounting, tax, legal issues, compliance and fraud risks.

Data Challenges While there’s really no limit to the amount of data gathered, the question is how that data, particularly about customers, is used in a logical, meaningful fashion. Most companies today assign ownership of analytics to finance, which innately knows how to balance the risk/reward equation.

Opportunity costs CFOs have indicated a bias toward pursuing opportunities over limiting risks on growing/ scaling business opportunities.

They are under continuous pressure from CEOs to focus squarely on cost control. This sets up a delicate balancing act between investing for growth and maintaining aggressive cost agendas. How CFOs manage them may spell the difference between a successful business move and a dreadful loss.

Risk management When bad things happen, they can occur as an unexpected series of correlated or

52

uncorrelated events that could add up to a significant loss.

Identifying risk is a challenge in itself. Combating risk with the correct measure of action and timely intervention is a whole new ball game in itself.

A CFO should sharpen his intuition and apply his expertise in spotting internal and external risks as well as taking corrective action against them.

A CFO should sharpen his intuition and apply his expertise in spotting internal and external risks as well as taking corrective action against them.

Time Constraints Time is an asset which is not recyclable or irrecoverable, and as many CFOs may attest to — exhaustive. On average, finance chiefs put in 12 to 15-hour days—a pace that is simply not sustainable, whether personally or professionally. Remedying the situation takes planning, delegation and the ability to let go of the little things. It also requires the willpower to place limits on internal and external demands. This means devising a system for limiting the number of your direct reports and picking your battles. It requires scheduling both personal time off and time to think effortlessly on the next strategic move of your domain of responsibilities.

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MARKET WATCH

SME CURRENCY

MONEY WATCH The team at Western Union Business Solutions shares the following comprehensive outlook on the three major currencies in the market – the USD, EUR and GBP.

USD The forecast calls for smoother sailing for the US currency which has been on a tear for the better part of the summer.

The US economy has regained a bounce in its step, thanks to the strongest stretch of monthly hiring in more than a decade.

Moreover, trends in housing have been positive and could add another tailwind to the economy over the balance of this year. Consumers continue to spend and growth continues to quicken for manufacturing and services companies. Steady

54

signs of a strengthening US economy have caught Federal Reserve officials’ eyes and have the central bank on course to end its bond buying stimulus in October and raise interest rates next year. Mounting US optimism has rewarded the Dollar with its most meaningful rally in a while and has it poised for ongoing appreciation.

The buck’s outperformance also traces back to weakness abroad in places like Europe and Japan. The Eurozone economy flat-lined during the second quarter while Japan

STAT FACTS

5% USD’s growth vs. the Euro in 2014

shifted into reverse and contracted nearly seven per cent. Sputtering growth abroad points to more stimulus overseas at a time when the Fed is leaning the other way and contemplating when to raise rates from record lows.

Bear in mind, though, that risks remain and lurk near the surface for the US Dollar. Take US bond yields, for instance.

They help shape how attractive investors perceive the US currency. The yield on the 10-year note recently sank below 2.40 per cent, the lowest in

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MARKET WATCH

SME CURRENCY There still remains a high degree of external risk for the Euro stemming from geopolitical concerns in the Ukraine, Iraq, Gaza and Scotland.

ECONOMIC INDICATORS

3-month deposit: 0.23% GDP: 4.0% (ann.) Q2 Inflation: 2.0% July Unemployment: 6.2% Jul Trade deficit: -US$ 41.5 billion June

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more than a year. The longer yields hover lower, the more of a drag they can be on the Dollar, limiting its upward mobility.

Hurdles ahead for the Dollar in September include the monthly jobs report on September 5, and a Federal Reserve meeting on September 16 to 17. Further improvement on the jobs front would keep the Fed on a path to raising rates next year, which at WKH YHU\ OHDVW NHHS D VWXUG\ ÀRRU under the Dollar.

EUR What will the end of the third quarter hold? There are a number of variables that will continue to sway currency markets towards the end of the third quarter, but ultimately the euro’s direction should come from the European Central Bank’s monetary policy outlook.

It should not be forgotten that the September ECB’s policy announcement will need to be taken in the context of what investors are facing in the months ahead. There still remains a high degree of external risk stemming from geopolitical concerns (Ukraine, Iraq, Gaza) as well as the Scottish referendum on the 18th of the month.

Furthermore, speculation over the outcome of the ECB’s stress tests/asset quality review on European banks going into October could sway markets temporarily.

Once markets get past geopolitical risk, referendums and stress test results, focus will continue to fall back on where the Eurozone economy is headed and what will need to be done to support it. At the central bank’s August meeting,

policy makers acknowledged the external downside growth risks for the economy, but also said that it was too soon to measure any prolonged negative impact.

Perhaps that was slightly optimistic. While Russia is only Germany’s eleventh largest trading partner, the government announced that exports fell 15.5 per cent in the first half of this year. The pace of export declines to Russia picked up over the second quarter, which certainly did not help growth figures.

Growth in Italy and France turned negative over the second quarter, while Germany’s 0.7 per cent q/q growth rate seen earlier this year dropped to zero per cent. The Eurozone growth outlook remains weak according to economic data. At the end of August flash PMI surveys, which monitor growth in the manufacturing and service sectors, came in below forecast suggesting a slower pace of growth for the Eurozone continues and that the recovery process remains hampered.

What was more disturbing was that the inflation component of the PMI survey showed firms cutting prices for the 29th consecutive month despite the extraordinary easing of practices taken by the ECB in June to halt deflationary tendencies. Indeed, the lack of private sector loan growth and slack in the economy remain a primary threat to deflationary tendencies that may already be occurring.

Consumer prices rose 0.4 per cent y/y in July, which is the same level that was seen at the height of the financial crisis in

55

MARKET WATCH

SME CURRENCY GBP

EUR ECONOMIC INDICATORS

3-Month Deposit Rate: 0.19% GDP (annual rate): 0.70% Inflation (annual rate): 0.40% Unemployment: 11.5% Trade Balance: EUR 16.8 billion

2009 and well below the central bank’s two per cent target rate.

The bigger problem is that LQĂ€DWLRQ KDV UHPDLQHG ORZ IRU D long period of time, which can LQĂ€XHQFH LQĂ€DWLRQ H[SHFWDWLRQV Currency markets are already pricing in the possibility of a move towards quantitative easing measures by the ECB early next year. The month of September might actually see some investors bringing forward the timeline for policy action by the ECB, which would ultimately help to weaken the currency or at least limit its upside from here.

STAT FACTS

13 GBP has returned to its previous rate of 13 months prior

Coming into August some analysts were predicting that it is now “game over� for Sterling following some aggressive selling in July. Was this fall really the beginning of a deeper correction lower or just a temporary levelling out? Mark Carney’s latest monetary policy guidance ahead of September’s Scottish Independence vote are currently pointing to more potential losses for the Pound in the coming weeks.

Sterling suffered its biggest one-day fall in nearly six months after the Bank of England’s Quarterly Inflation Report in August caused markets to unwind bets on Governor Carney raising interest rates before 2015.

The Bank of England said that with wage growth still so weak, it was not in any hurry to begin hiking borrowing costs. The QHZV FRLQFLGHG ZLWK ¿JXUHV showing that British wages fell IRU WKH ¿UVW WLPH VLQFH despite the UK’s unemployment rate hitting its lowest point since 2008.

More losses for sterling followed later in August, triggered by unexpectedly weak UK inflation data which gives the BoE more room to hold off on raising rates.

Sterling has plunged six cents in the space of just five weeks against the Dollar, coming close to five-month lows towards the end of August.

This has also created problems for Sterling against other currencies including the Euro.

The latest UK wage growth and inflation figures will be key focal points again in September while minutes from the BoE’s September meeting, due to be released on September 17, are likely to be overshadowed somewhat by the Scotland vote a day later. Nevertheless, the minutes could help Sterling build part of a recovery. In August, two BoE MPC members voted for higher interest rates. If this 7-2 vote becomes 6-3, and Scotland also votes against breaking away, then the Pound could snap back.

ECONOMIC INDICATORS

BoE Interest Rate: 0.5%

Currency markets are already pricing in the possibility of a move towards quantitative easing measures by the ECB early next year.

56

GDP: 0.8% Q2 (q/q) Inflation: 1.6% July Unemployment: 6.4% June

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PROJECTIONS

Countdown to Q4

Q4 COUNTDOWN TO

The dreaded Q4 is a scary time of year. It’s a period when entrepreneurs realise that certain goals haven’t been attained, quotas not yet reached, and budgets not adhered to. Yet only the most successful enterprises prove to be quick, agile and nimble - and the challenge of Q4 can just as easily result in a time of celebration, achievement and goals met. The following analysis explains why it’s never too late to start successfully planning your Q4 delivery strategy.

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PROJECTIONS

Countdown to Q4 Business owners traditionally abhor Q4 and view it with trepidation. With the right approach to business planning however, the fourth quarter should be one of rejoicing and sighs of relief because goals were reached or are within sight, quotas are on track and business owners are prepared and FRQ¿GHQW DERXW WKH XSFRPLQJ YLVLW IURP WKH DFFRXQWDQW Perhaps this all only exists in a perfect world as in reality desired quotas are often not PHW FOLHQWV GUDJ WKHLU IHHW RQ signing contracts, contracts JHW FDQFHOOHG PLG VWUHDP DQG business plans don’t get written RU LPSOHPHQWHG As a business heads towards Q4, it is never too late to UHYLHZ SHUIRUPDQFH DQG VHW D UHYLVHG PRUH VWUDWHJLF SODQ for the future. So what are the key Q4 activities that will ensure an entrepreneur steers an their enterprise in the right direction?

Failing to prepare is preparing to fail

As a business heads towards Q4, it is never too late to review performance and set a revised, more strategic plan for the future. www.thecfome.com

:KLOH 4 PD\ EH WRR ODWH WR achieve all of the goals set for the year, it is never too late to evaluate plans. Businesses should start by reviewing WKHLU \HDU PRQWK E\ PRQWK WR VHH ZKDW REVWDFOHV ZHUH encountered and how the business responded. Was there a contingency plan in place; was an entrepreneur’s reaction to unexpected events proactive or reactive? A well WKRXJKW RXW FRPSUHKHQVLYHO\ strategic plan will take into account the various scenarios WKDW D EXVLQHVV PD\ IDFH DQG how to respond appropriately.

Although there will always be the unknown, by reviewing

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PROJECTIONS

Countdown to Q4

Q4 can surely grow into a love/hate relationship. This period however, is the perfect time to reset goals and objectives.

Plans can be adjusted; attitudes can change.

WKH SDVW D EXVLQHVV PD\ VHH D SDWWHUQ HPHUJH WKDW ZLOO HQDEOH WKHP WR GUDIW D EOXHSULQW WKDW LQFOXGHV VROXWLRQV WR SUREOHPV that could occur.

Planning for the future 4 LV DOVR D JRRG WLPH WR UHYLHZ or prepare planning and seek LQYHVWPHQW IURP YHQWXUH capitalists or other external sources. Working with the EXVLQHVV SODQ ÂżUPV VKRXOG UHYLHZ WKHLU SHUIRUPDQFH and adjust their overall strategy and tactics for the future. Additionally, resellers should invest in research DQG GHYHORSPHQW LQ RUGHU WR introduce new brand features WR WKH PDUNHW DQG VXEVWDQWLDOO\ H[SDQG PDUNHW FRYHUDJH E\ adding new sales outlets.

Suppliers should continue WKHLU HIIRUWV WR LPSURYH product reliability, production scheduling and capacity utilisation. Both parties should continue to invest in technology DQG SURFHGXUHV WR VWUHDPOLQH the supply chain.

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Study the market 4 LV DOVR D JRRG WLPH IRU entrepreneurs to consider expanding their business VWUDWHJ\ E\ VWXG\LQJ WKH PDUNHW ÂżQDQFLDO DQG RSHUDWLRQDO GDWD WR GHWHUPLQH KRZ WR EHWWHU PHHW FXVWRPHU QHHGV LPSURYH HFRQRPLHV RI VFDOH DGG WR WKH ERWWRP OLQH DQG VXUSDVV WKH FRPSHWLWLRQ 5HVHOOHUV FDQ explore licensing opportunities DQG WKH GHYHORSPHQW RI strategic alliances with other resellers.

Strategic planning isn’t just what pops out of people’s KHDGV GXULQJ ZDWHU FRROHU conversations. Strategic planning is the intentional and deliberate process of reviewing the business for new ideas and GHFLVLRQ PDNLQJ SURFHVVHV ,WœV LPSRUWDQW WKDW WKHUH LV D process behind the ideas and discussions. Strategic planning DQG WKH UH HYDOXDWLRQ RI EXVLQHVV SHUIRUPDQFH GXULQJ Q4 allows an organisation to set a course, detour when QHFHVVDU\ EXW EXLOG PRPHQWXP

with intention. It is the FRPSDQ\ WKDW WDNHV WKH WLPH and effort to strategically plan IRU WKHLU RUJDQLVDWLRQÂśV ZHOO being that will be in the race for the long haul. A business will never have a “perfectâ€? plan.

A strategic plan is an active GRFXPHQW WKDW FDQ EH XSGDWHG as the business changes and JURZV $V WKH IDPLOLDU VD\LQJ goes: “A good plan today is better than a perfect plan WRPRUURZ ´ Every strategy needs to be DGDSWDEOH 7KH PDUNHW DQG WKH HQYLURQPHQW FKDQJH DQG D FRPSDQ\ PXVW EH DEOH WR UHDG those changes and recalibrate VWUDWHJ\ WR ÂżW D Ă€XLG VLWXDWLRQ 7KH EXVLQHVV HQYLURQPHQW LV littered with the wreckage of FRPSDQLHV ZKR FRXOGQÂśW DGDSW and thus didn’t survive. Q4 is WKH SHUIHFW WLPH WR UHVHW JRDOV and objectives. Plans can be adjusted, attitudes can change.

(QWUHSUHQHXUV PXVW UHPHPEHU the good that has occurred during the trading year, it will help to develop a plan that is focused on the positive aspects of the business and how owners DQG PDQDJHUV FDQ DQG ZLOO PRYH LW IRUZDUG 7KHUH LV QRWKLQJ PRUH stressful than Q4 for a business owner and it can surely grow into a love/hate relationship.

Entrepreneurs relish the pressure of Q4 calendars being MDPPHG ZLWK ELJ PHHWLQJV GDLO\ texts with updates on the largest GHDOV DQG VWUDWHJLVLQJ PHHWLQJV ZLWK VDOHV WHDPV \HW DW WKH VDPH WLPH WKHUH LV WRR PXFK WR DFFRPSOLVK DQG QRW HQRXJK KRXUV LQ WKH GD\ :KHQ LW FRPHV to the love/hate relationship FRPSDQLHV KDYH ZLWK 4 WKH DQVZHU LV VLPSOH \RX KDYH WR EH in it to win it.

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MARKET WATCH

Forensic Accountants

THE CHANGING ROLE OF FORENSIC ACCOUNTANTS Whilst combatting misconceptions generated by popular culture and expectations which run rampant in the business landscape, forensic accountants bring an ever developing skill set to their respective markets.

62

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MARKET WATCH

Forensic Accountants STAT FACTS

6.7% Average revenue growth forecast for the forensic accounting industry

Once the battleground of hardened career auditors seeking to add another string to their bow, forensic accountants were traditionally used in dispute processes as independent expert witnesses, offering their opinion on the value of a claim.

However, the role and make-up of forensic accountants in disputes is evolving from their previously QDUURZ GHÂżQLWLRQ WR D PRUH strategic approach adopted by the new breed of forensic accountants that work alongside multidisciplinary investigation teams.

What is a “Forensic Accountant�?

To some, perhaps not as many as forensic accountants would like, the term “Forensic $FFRXQWDQW´ FRQMXUHV XS DQ image of a sunglasses-donning sleuth sitting in a high-tech laboratory, quickly getting to the bottom of a complex fraud by applying an unlikely hypothesis to a vast amount of data – a result of television shows such as CSI, which have adopted the term “forensic� and applied its literal meaning very liberally.

While the image is true to a degree, particularly given the latest generation of analysis tools, a forensic accountant is primarily an accountant who performs their work with the knowledge WKDW LW PD\ EH VXEMHFW WR GHWDLOHG dissemination in a court proceeding or similar setting, and therefore needs to be capable of withstanding interrogation from any counterparty.

Mechanics of a Damage Claim A forensic accountant may be hired by either the Claimant or the Defendant in a dispute.

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In the case of the Claimant, the forensic accountant will be asked to quantify the damages allegedly suffered as a result of the Defendant’s action or inaction. In response, the Defendant might engage a forensic accountant to contest the analysis prepared by the Claimant’s accountant.

In these cases, the forensic accountant usually prepares their own independent damage estimate and possibly even, a counterclaim.

The Claimant in a case will seek to prove: i. Liability: The Claimant must prove damage and that the Defendant is at fault. ii. Damages. Once the Claimant has proven liability, it must then establish and quantify the extent to which it has suffered loss and damage.

By way of illustration, in a breach of contract case, the Claimant would usually try to prove that it lost a certain DPRXQW RI SURÂżW DV D UHVXOW of the Defendant’s breach (‘causation’). In most cases, the Claimant must prove that the damage was incurred as a direct result of the Defendant’s act.

When performing a damages calculation, the basic steps performed by the forensic accountant will include, among other things: ‡ 'HWHUPLQLQJ WKH VWUDWHJLF DQG ¿QDQFLDO REMHFWLYHV RI WKH client involved in the dispute ‡ 'HYHORSLQJ DQ XQGHUVWDQGLQJ of the applicable rules of recovery together with

63

MARKET WATCH

Forensic Accountants instructing counsel ‡ $JUHHLQJ WR WKH GLVSXWHG and undisputed facts and assumptions upon which the case is based ‡ 'HWHUPLQLQJ ZKLFK documentary evidence and data is necessary and available ‡ 2EWDLQLQJ DGGLWLRQDO information, documentation and data, as required ‡ 3HUIRUPLQJ WKH GDPDJHV calculation(s) ‡ 3UHSDUDWLRQ RI VFKHGXOHV RI damages; and ‡ 5HSRUWLQJ DQG DV UHTXLUHG the provision of both written and oral testimony.

Types of Damages Claims The basis for a damages claim ZLOO GHSHQG RQ WKH MXULVGLFWLRQ Damages claims typically/always require a breach of legal duty and typically, in the common law context, usually arise from either of the following: i. A ‘breach of contract’; or ii. A ‘tort’ A breach of contract claim involves lodging a claim that an agreement between, or amongst, two or more parties was breached. There are numerous instances where this may apply.

Common examples may include claims in respect of: ‡ YLRODWLRQV RI QRQ FRPSHWH agreements ‡ IDLOXUH WR FRPSO\ ZLWK WHUPV of supply agreements ‡ XQDXWKRULVHG XVH RU manufacture of intellectual property ‡ EUHDFKHV RI D MRLQW YHQWXUH agreements ‡ QRQ FRPSOLDQFH ZLWK investment agreements

64

‡ EXVLQHVV YDOXDWLRQV DQG HDUQ outs ‡ GHOD\V RU GHIHFWV LQ FRQVWUXFWLRQ SURMHFWV In instances of breach of contract, any resulting damages must be traceable solely to the breach.

In the context of a civil case, a tort is taken to mean a wrong which unfairly causes someone else to suffer loss or harm, resulting in a legal liability. The Claimant in a tort claim will assert that the Defendant owed a legal duty to the Claimant and that this duty was breached. For example, a company might sue DQ RLO DQG JDV PDMRU LQ UHODWLRQ WR WKH ORVV RI SUR¿WV DV D UHVXOW RI DQ RLO VSLOO RU D WUDQVSRUW ¿UP may face a claim resulting from the disruption caused by one of their vehicles that was involved in an accident, blocking access to a company’s premises.

Damages are typically either compensatory or punitive in nature. In the case of compensatory damages, the Claimant is usually entitled to recover those damages that would put it in the same position that it would have been in had the wrongful event not occurred. ,Q MXULVGLFWLRQV WKDW SHUPLW WKH recovery of indirect damages (as a result of ‘consequential’ losses), these damages may be recovered if such losses should have been within the reasonable contemplation of the parties at the time the relationship was entered into.

The traditional approach A forensic accounting expert testifying in court must be able to support and explain the assumptions they have used and conclusions they have reached in calculating damages, and it

STAT FACTS

39% Global finance executives surveyed who reported corruption occurring frequently in their countries

is vital that their opinions be deemed reliable by the court.

The most successful forensic accountants are those who not RQO\ DUH DEOH WR SUR¿FLHQWO\ analyse the information provided to them by their instructing client and legal team, but also utilise their experience and identify new information to help complete or corroborate the story, or to disrupt, dismantle and call into question the veracity of the opposition’s claims.

Traditional forensic accountants and experts rely heavily upon searches of commercial databases and analyst reports from brokers/ investment banks to identify additional information to inform their analysis.

While relevant for many SURMHFWV WRGD\ LW LV DSSDUHQW WKDW public sources might not provide

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MARKET WATCH

Forensic Accountants assumptions used to underpin a damages claim at face value.

A failure of intelligence

a complete picture, particularly in cross-border disputes.

forensic accountants can produce robust expert advice based on the best available information.

The new breed of forensic accountant

The complete picture

The new breed of forensic accountant has at its disposal a wide range of skill sets required to identify the hard to reach information, the differentiating factor or, simply put, the intelligence that might be the difference between winning and losing a case.

In frontier markets, tax KDYHQV DQG RSDTXH MXULVGLFWLRQV online public records are scarce and often incomplete.

It is important therefore, to be able to call upon a network of in-country sources, to be able to identify and analyse all available intelligence. Using this intelligence, the most successful

5DUHO\ GRHV HLWKHU VLGH KDYH DOO the facts so in most cases the party ZLWK WKH EHVW LQWHOOLJHQFH EHQHÂżWV $VVXPSWLRQV FRQMHFWXUH DQG VSHFXODWLRQ DUH DOO E\ GHÂżQLWLRQ open to both interpretation and questioning, so facts are preferred wherever possible.

Not having the complete picture may result in either the client being unable to properly quantify and plead their loss, or the client being unable to appropriately interrogate the opposing expert’s testimony.

Inevitably, in these cases, substantial time and costs may be wasted. A good forensic accountant never takes the

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Clients need to understand the dangers of not involving forensic accountants early on in the case.

5HFHQWO\ ZH ZHUH DVNHG WR DFW LQ a damages claim relating to the WKHIW RI ,3 EXW E\ QRW JDWKHULQJ the intelligence early enough in the case the Claimants were unable to demonstrate that the WKHIW RI LWV ,3 KDG UHVXOWHG LQ D ORVV RI LWV RZQ SURÂżWV The Claimant needed to provide evidence that its product had unique attributes, that the same attributes had been misappropriated and used to create a competing product OHDGLQJ WR D ORVV RI SURÂżWV Frustratingly, in the event, this ‘failure of intelligence’ proved critical – lesson learned.

The Claimants’ legal team was unaware that if involved early in the case, forensic accountants may have been able to assist in JDWKHULQJ HYLGHQFH RI ,3 WKHIW using for example, Forensic IT or Cyber Crime specialists or even by gathering additional intelligence to support the case.

In another recent case, short of evidence to support their case, the client and his attorney turned to Forensic Accountants for advice – the intelligence team were able to collect supplementary documentary evidence used in support of the client’s position, and even, to REWDLQ VLJQHG ZLWQHVV DI¿GDYLWV which helped the client win its damages claim. Choosing forensic accountants with access to the right cross-disciplinary skill set and involving them in disputes as soon as possible more often than not, proves money well spent.

65

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APPS

AT YOUR FINGERTIPS SUPERCHARGE YOUR BUSINESS WITH THESE FANTASTIC MOBILE APPS!

EVERNOTE This is an excellent app for business professionals across any industry sector. Evernote is a one-stop-solution for all your business needs – it allows you to take notes, save images and record audio notes. More importantly, the app makes all of your data accessible across all devices you use creating a cohesive platform. It also enables sharing information with other users including partners, managers and employees. Additionally, for frequent travellers, it saves travel plans, maps and other documents. If your business requires you to be constantly on-thego, Evernote is the perfect app to stay connected with your staff – and business – 24/7!

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AVAILABLE ON

Mobile devices such as iPad, iPhone, iPod Touch, Android, Windows Phone and BlackBerry COST

Free

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TECH TALK

APPS

WALLY To begin with, this app lets you record all of your expenses in a systematic way – enter the amount spent, location, time and the category of expense (food, clothes, transport, and so on). Another notable feature is that the user can scan and save images of receipts. The app can identify the amount, date, venue and category automatically, saving you valuable time! Wally supports multiple global currencies so that even if you are on a business trip or family vacation, you can keep track of your daily expenses. The application offers a weekly, monthly and yearly breakdown of your spending – divided categorically – in the form of an easy pictorial representation that’s a lot easier to read and understand than a complicated Excel sheet or an unending pile of bank statements.

An added plus is that by using the app you can access your expenses anywhere and at any time.

AVAILABLE ON

iPhone COST

Free

LOGMEIN LogMeIn is perhaps one of the most useful apps you’ll come across. Following a few basic instructions, the app allows you to remotely access your computer using your Android device. You may be in a client meeting, where you need to urgently get ahold of additional information to close the deal with very limited time on-hand. Using LogMeIn, you can easily get all the files on your computer without having to travel at all! Of course, you do have to ensure that your computer has the LogMeIn software installed.

AVAILABLE ON

App Store and Google Play COST

Basic version and services – Free

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TECH TALK

APPS

HAIKU DECK This innovative app is a fantastic for creating impactful business presentations. Apart from access to images from the Web, Dropbox, Instagram, etc., the app also allows the integration of pie charts, bar diagrams and other graphics into the presentation. So next time you ZDQW WR FRQYHUW \RXU 52, ¿JXUHV LQWR D VLPSOH EDU FKDUW \RX FDQ GR LW HDVLO\ DW \RXU ¿QJHUWLSV +DLNX 'HFN LV H[WUHPHO\ YDOXDEOH IRU &)2V ZKR FRQVWDQWO\ ¿QG WKHPVHOYHV LQ VWUDWHJLF PHHWLQJV $OO LQ DOO WKLV app’s simplicity and clean features will allow you to easily produce a professional presentation which leaves your clients, senior directors and other stakeholders impressed!

AVAILABLE ON

iOS and several other platforms COST

Free

LINKEDIN PULSE This popular app will completely change the way you access your daily news. LinkedIn Pulse enables you to get all your stories in one news feed offering a truly seamless experience. As the name suggests, the app is a part of LinkedIn and users have the option to log in using their LinkedIn accounts. The application delivers news stories from most major publications and users can customise their content – so that what you read is personalised based on your interests. What is particularly attractive about LinkedIn Pulse is its ability to download news for offline reading, so you don’t have to worry about internet connectivity.

AVAILABLE ON

App Store and Google Play COST

Free

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PERSONALITIES

Opinion: CIMA

CFOs AS TODAY’S BUSINESS LEADERS

By Geetu Ahuja, Head of GCC at CIMA

Kenneth Blanchard, the author of the best-selling book ‘The One Minute Manager’ once said: “The key to successful leadership today is influence, not authority.”

This statement could not be more true in the case of today’s C-suite executives, particularly that of the CFO. In the wake of the global financial crisis, the role and responsibilities of a CFO have undergone a transformational shift. CFOs are no longer restricted to keeping a tight hold over their organisation’s purse strings, their job function now extends to wearing multiple hats, including that of a leader, planner, visionary, creative head and

“A CFO should encourage and facilitate an innovative mindset across all business areas and management levels.”

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many, many more.

Globally, CFOs are becoming instrumental in driving new initiatives, adding even more dimensions to their ever-expanding responsibilities. As creative catalysts, the CFO and finance team are deeply embedded in the processes of innovation. They partner early with other departments to identify concepts with market potential, replace rigid financial metrics with staged measurements to avoid eliminating ideas too soon, and accept that failure is a tolerable outcome for projects along the path to commercialisation.

Closer to home, a similar scenario is seen in practice. As Middle Eastern markets expand and businesses open up to new ventures and investment opportunities, CFOs have a huge responsibility to connect the dots and present a clear understanding of how the different parts of their organisation can create value whilst remain mindful of the potential pitfalls.

As an organisation’s torchbearer, a CFO should encourage and facilitate an innovative mindset across all business areas and management levels.

Developing such a framework will not only help in creating an organisation that thrives on innovation and productivity but also becomes open to failures and sees missteps as impetus for the development of areas that need closer attention.

In order to understand and execute a wider organisational strategy, a CFO has to embed his extended finance team in the innovation process to help build the business case for upcoming ideas.

The role of a new age CFO is not without challenges. In the words of Bill Gates, “As we look ahead into the next century, leaders will be those who empower others.” As a business leader, a successful CFO will be the one who can demonstrate strong business acumen to inspire and bring out the best in an organisation’s work force.

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